<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
---------------
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1993
</TABLE>
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-5731
</TABLE>
------------------------
WILLCOX & GIBBS, INC.
(Exact name of registrant as specified in charter)
<TABLE>
<S> <C>
NEW YORK 13-1474527
(State of (I.R.S. employer identification
Incorporation) no.)
530 FIFTH AVENUE, NEW YORK, NEW YORK 10036
(Address of principal executive offices)
212-869-1800
(Telephone Number)
</TABLE>
------------------------
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Common stock, par value $1 per share New York Stock Exchange, Inc.
The Pacific Stock Exchange, Incorporated
Preference stock purchase rights New York Stock Exchange, Inc.
The Pacific Stock Exchange, Incorporated
7% Convertible Subordinated Debentures New York Stock Exchange, Inc.
Due 2014
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of March 1, 1994: 24,438,952 shares of Common Stock were outstanding; and
the aggregate market value of shares held by non-affiliates was $115,717,769
(For these purposes, a reported closing market price of $8.125 per share on
March 1, 1994 has been used and "affiliates" have been arbitrarily determined to
be Rexel, S.A. (formerly known as Compagnie de Distribution de Materiel
Electrique), International Technical Distributors, Inc. (see Item 1 of this
Report) and all directors and officers, although the Company does not
acknowledge that any such entity or person is actually an "affiliate" within the
meaning of the federal securities laws.)
Documents Incorporated By Reference: definitive proxy statement for 1994
Annual Meeting of Stockholders (Part III).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART I
ITEM 1. BUSINESS
Willcox & Gibbs, Inc. (the "Company" or "W&G") is a New York corporation
that was incorporated in 1866. It is the fifth largest distributor of electrical
parts and supplies in the United States, based on 1993 pro forma sales.
During the last several years, the Company has undertaken a major
restructuring. On April 22, 1992, the Company, Rexel, S.A. (formerly known as
Compagnie de Distribution de Materiel Electrique) ("Rexel"), International
Technical Distributors, Inc. ("ITD"), a subsidiary of Rexel, and Southern
Electric Supply Company, Inc. ("SES"), a subsidiary of ITD engaged in the
distribution of electrical materials, entered into a Purchase Agreement (the
"Purchase Agreement"). Pursuant to the Purchase Agreement, the Company issued to
Rexel and ITD 6,284,301 shares of Company Common Stock in exchange for all of
the stock of SES and approximately $10 million in cash. In addition, pursuant to
the Purchase Agreement, the Company declared a dividend consisting of one share
of common stock of the Company's subsidiary Worldtex, Inc. ("Worldtex") for each
share of Company Common Stock outstanding on November 23, 1992 (the
"Distribution"). In August 1992, the Company transferred to Worldtex all of the
stock of the Company's subsidiaries engaged in the manufacture of covered
elastic yarn.
Also during 1992, the Company disposed of its data communications equipment
distribution business, conducted by Data Net, Inc. and Dataspan Systems, Inc.,
and its Montrose Supply and Equipment Division, which distributed equipment to
the knitting trade.
In April 1993, the Company acquired Sacks Electrical Supply Co. ("Sacks"), a
distributor of electrical supplies and components with three locations in Ohio,
for $13,635,000. On December 17, 1993, the Company acquired Summers Group Inc.
("Summers") for $60,000,000 in cash and a $25,000,000 three year note issued to
the seller, plus contingent consideration to be determined based on Summers'
profits before interest and taxes for 1993 and 1994, subject to a maximum
purchase price of $120,000,000. Summers is a distributor of electrical parts and
supplies with locations principally in Texas, Oklahoma, Louisiana, California
and Arkansas.
The Company has also decided to sell its remaining apparel parts and
supplies distribution business and has engaged an investment banking firm to
seek a purchaser. Accordingly, this business is shown as a discontinued
operation in the Company's Consolidated Financial Statements included elsewhere
in this report.
On March 1, 1994, the Company sold 3,491,280 newly-issued shares of Company
Common Stock to Rexel for $31,421,520 in cash. In connection with that sale, the
size of the Company's Board of Directors was reduced to nine and two additional
nominees of Rexel became directors of the Company. As a result, five of the
Company's nine current directors are nominees of Rexel.
ELECTRICAL DISTRIBUTION OPERATIONS
The Company operates 170 electrical distribution centers in 18 states,
principally in the southern tier of the United States. The Company conducts its
electrical distribution operations through four principal divisions: the
Consolidated Electric Supply group ("Consolidated"), Sacks, SES and Summers.
Consolidated, which was acquired by the Company in January 1984, has been
engaged in the wholesale distribution of electrical materials since 1947.
Headquartered in Miami, Consolidated operates 61 distribution centers, of which
33 are located in Florida, 11 in Ohio, three in Delaware, two in Maryland, one
in Washington, D.C., four in the Atlanta, Georgia area, six in Southern
California and one in Freeport, Grand Bahamas. Thirty-four of the distribution
centers have been added during the time the Company has owned Consolidated.
Sacks, acquired by the Company in April 1993, distributes electrical
materials through three locations in Ohio.
2
<PAGE>
SES, acquired by the Company in November 1992, is engaged in the wholesale
distribution of electrical materials through 29 distribution centers in six
states, consisting of six distribution centers in Alabama, seven in Florida,
four in Louisiana, nine in Mississippi, two in Tennessee and one in Oklahoma.
Summers, acquired by the Company in December 1993, distributes electrical
materials through 79 locations in 10 states, consisting of thirty-six in Texas,
eleven in Louisiana, eight in Oklahoma, eight in California, seven in Arkansas,
four in Missouri, two in Arizona, and one in each of Colorado, Illinois and New
Mexico. Unless otherwise expressly stated below, the statistical information
discussed below concerning the Company's electrical distribution business does
not include Summers' operations.
Each of the Company's electrical distribution centers serves an area with
approximately a 50 mile radius and specializes in serving the needs of small-to
medium-sized electrical contractors engaged in construction work on plants,
schools, utilities, office buildings, hotels, condominiums, town houses and
single family homes. In 1993, the Company's electrical distribution subsidiaries
served over 23,000 customers with no single customer accounting for more than
1.9% of total annual sales. The Company's ten largest customers in 1993
represented less than 6% of sales.
Management believes that approximately 60% of the sales of the Company's
electrical distribution subsidiaries are from products used in new construction.
The remainder are sold for maintenance and residential remodeling and to
original equipment manufacturers.
Management believes that the Company is the fifth largest distributor of
electrical parts and supplies in the United States, although there are other
companies which account for significantly greater national volume. The Company's
subsidiaries compete with national chains (some of which are affiliated with
manufacturing companies) and other independent distributors operating single or
multiple outlets. Because the electrical supply business is fragmented and
highly competitive, service and price are essential components of success. In
order to achieve a competitive advantage in serving its customers, the Company's
subsidiaries maintain an inventory of approximately 15,000 items at each
distribution center, employ a sales staff that calls on customers and works with
architects, engineers and manufacturers' representatives on major construction
projects, provide next day and same day on-site delivery with its truck fleet
and endeavor to obtain volume discounts to maintain profit margins while being
competitive in price.
The extensive product line of the Company's subsidiaries includes electrical
supplies, including wire, cable, cords, boxes, covers, wiring devices, conduit,
raceway duct, safety switches, motor controls, breakers, panels, lamps, fuses
and related supplies and accessories, residential, commercial and industrial
electrical fixtures and other special use fixtures, as well as materials and
special cables for computers and advanced communications systems. The products
sold by the Company's subsidiaries are purchased from over 5,000 manufacturers
and other suppliers, the three largest of which accounted in the aggregate for
approximately 13% of the total purchases by the Company's electrical
distribution subsidiaries during 1993, with none of the remainder accounting for
more than three percent.
DISCONTINUED OPERATIONS
APPAREL PARTS AND SUPPLIES DISTRIBUTION -- SUNBRAND
The Company's Sunbrand Division markets to the apparel industry a wide range
of sewing equipment parts, supplies and other equipment, including pressing and
finishing equipment, fabric spreading machines and reconditioned equipment. Its
product line includes needles, tools, electric and electronic devices and
warehouse equipment. Sunbrand's executive offices are located in Atlanta and it
catalogs over 140,000 items. Sunbrand has seven office/distribution centers
located near major apparel manufacturing areas in Atlanta, El Paso, Fall River
(Massachusetts), Miami, Mexico City, Nashville, and Santo Domingo (Dominican
Republic).
3
<PAGE>
For over 20 years, Sunbrand has been a major distributor of a number of name
brand ("genuine") parts to the apparel industry. It has agreements for the
importation and sale of genuine sewing equipment parts manufactured by G.M.
Pfaff AG of Germany ("Pfaff") and Pegasus Sewing Machine Mfg. Co., Ltd. of Japan
("Pegasus") for the United States and Puerto Rico which extend through 1998 and
which are exclusive (with certain exceptions) through 1994.
Sunbrand services over 13,000 customers, the largest of which accounted for
approximately 5.4% of total 1993 sales. Its ten largest customers accounted, in
the aggregate, for approximately 17.5% of Sunbrand's sales for 1993.
Sunbrand is well known for its 1,200 page catalog, which serves as a
reference standard for the industry. This catalog, which is published once every
three years, is a valuable marketing tool that is used by many existing and
potential buyers of parts and supplies.
Products sold by Sunbrand are purchased from some 1,200 different companies,
of which Pfaff and Pegasus account for the largest volume. In 1993, Pfaff
accounted for 12.4% and Pegasus accounted for 10.0% of purchases from suppliers.
The five largest suppliers accounted for 36.8% of total purchases in 1993.
There is strong competition throughout the marketing areas served by
Sunbrand. Most of its competitors are small regional distributors, though there
are two national competitors. The principal competitive factors in Sunbrand's
business are availability of parts and timely delivery. Customers rely on
Sunbrand to supply parts that minimize downtime. Sunbrand's management believes
that it is one of the largest distributors of its type in the United States.
OTHER APPAREL PARTS AND SUPPLIES DISTRIBUTION
In addition to Sunbrand, during 1993 the Company was engaged in three other
operations involving distribution to the apparel and textile trades.
The Company's Unity Sewing Supply Division ("Unity"), which the Company
believes is one of the two largest importers and distributors of non-trademarked
("generic") parts for industrial sewing machines, is headquartered in New York
with branch offices in Los Angeles and Miami. It sells to dealers, not to
manufacturers or end users. Generic parts have become increasingly popular in
the needle trades as a method to reduce manufacturing costs. In recent years,
Unity has emphasized its export business to South and Central America and the
Caribbean. The majority of Unity's parts are manufactured in Japan, Germany and
the United States.
Willcox & Gibbs, Ltd., a wholly-owned United Kingdom subsidiary, markets
sewing equipment in certain Common Market countries and sells generic sewing
equipment parts in the United Kingdom.
The Company's subsidiary, Leadtec Systems, Inc. ("Leadtec"), distributes to
the apparel industry a computer-based real-time production control system,
marketed under the name "Satellite Plus", which utilizes hardware manufactured
by others and proprietary software designed by Leadtec.
In the markets in which Unity, Willcox & Gibbs, Ltd. and Leadtec operate,
there is vigorous competition both in the United States and abroad.
COVERED ELASTIC YARN
Prior to 1993, the Company owned Worldtex and its subsidiaries, which
engaged in the manufacture of covered elastic yarn. These operations were
disposed of by the Company pursuant to the Distribution on November 12, 1992.
While owned by the Company, Worldtex's principal product was nylon covered
spandex used in the manufacture of women's pantyhose, which accounted for 58% of
Worldtex's 1992 sales. Worldtex also sold covered spandex and covered latex
rubber for use in the manufacture of men's, women's and children's socks.
4
<PAGE>
EMPLOYEES
As of December 31, 1993, the Company had a total of approximately 3,100
employees, including approximately 2,800 who were employed by Consolidated, SES,
Sacks and Summers, and approximately 300 who were employed by Sunbrand and the
Company's other distribution divisions. Approximately 45 employees of Summers
and Sacks are covered by collective bargaining agreements. The Company has
experienced no significant labor problems during recent years and considers that
its employee relations are good.
ITEM 2. PROPERTIES
The Company's executive offices are located in leased office space at 530
Fifth Avenue, New York, New York.
Consolidated's headquarters in Miami, Florida, and most of Consolidated's
distribution centers are in facilities owned by subsidiaries of the Company.
Leases of remaining premises, which are classified as operating leases, expire
in various years through 2001.
SES' headquarters in Meridian, Mississippi, and eleven of its locations are
leased from Robert Merson, a Vice President of the Company and President of SES,
and/or members of his or his wife's family, for terms extending through 2002
(except for one lease expiring in 1994). The Company believes that these leases
are on terms at least as favorable as SES could have obtained from an
unaffiliated third party. The remainder of SES' locations are leased for terms
expiring in various years through 1999.
Summers' headquarters in Dallas, Texas, is leased, as are 67 of its
distribution centers. Summers owns 12 of its distribution centers.
The Sunbrand Division's headquarters in Atlanta consists of approximately
110,000 square feet under a lease which runs through 1994. The other Sunbrand
branches also occupy leased space. The Company's other parts and equipment
distribution divisions operate from leased premises in London, England, Long
Island, New York, Los Angeles and Miami.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings as of the date of this
Report to which the Company or any of its subsidiaries is a party or to which
any of their property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the last quarter of the Company's fiscal year, no matters were
submitted to a vote of the Company's security holders.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
NAME AGE TITLE AND PERIOD OF SERVICE
- ------------------------- --- ------------------------------------------------------
<S> <C> <C>
Alain Viry 45 President and Chief Executive Officer (March 1994 to
present).
Allan M. Gonopolsky 49 Vice President, Chief Financial Officer and Corporate
Controller (since November 1992); Vice President and
Corporate Controller (May 1991 to November 1992);
Corporate Controller (1978 to April 1991).
Wayne Campbell 57 Vice President (March 1984 to present).
Robert M. Merson 56 Vice President (November 1992 to present).
</TABLE>
The officers of the Company are elected annually by the Board of Directors.
Mr. Viry also serves as a director of the Company.
5
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is listed on the New York Stock Exchange and the
Pacific Stock Exchange. The following table sets forth the high and low per
share sales prices for the Common Stock on the New York Stock Exchange as
reported by the Dow Jones Historical Stock Quote Reporter Service for each
quarter since December 31, 1991. The trading price of the Company's Common Stock
was affected by the Distribution, which was declared on November 12, 1992.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
1992:
1st Quarter........................................................... $ 10.25 $ 7.25
2nd Quarter........................................................... 10.75 8.25
3rd Quarter........................................................... 11.63 9.50
4th Quarter........................................................... 12.88 3.75
1993:
1st Quarter........................................................... 7.50 4.75
2nd Quarter........................................................... 7.00 5.25
3rd Quarter........................................................... 7.13 5.00
4th Quarter........................................................... 8.13 6.00
1994:
1st Quarter (through March 25)........................................ 8.63 7.00
</TABLE>
At March 25, 1994, there were approximately 1,448 holders of record of
Common Stock.
No dividends have been paid on the Company's Common Stock since the last
quarter of 1991. Future payment of cash dividends by the Company will be
dependent on such factors as business conditions, earnings and the financial
condition of the Company.
The Company's Note Agreement, dated as of April 2, 1991, as amended,
restricts dividends and certain other payments with respect to the Company's
capital stock if the sum thereof for the period since December 31, 1992, exceeds
the sum of (i) 35% of net cash proceeds from the sale of stock and certain
subordinated debt for such period, plus (ii) 35% of consolidated net income (as
defined) for such period. In addition, the Note Agreement and the Company's
Revolving Credit and Reimbursement Agreement, dated as of December 17, 1993,
require that the Company meet certain financial tests that could have the effect
of restricting the Company's ability to pay dividends.
ITEM 6. SELECTED FINANCIAL DATA
WILLCOX & GIBBS, INC. AND SUBSIDIARIES
The following tables set forth certain consolidated financial data of the
Company and its subsidiaries for the five fiscal years ended December 31, 1993,
which has been derived from the Company's audited financial statements, and
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto of the Company appearing elsewhere in this Report on Form 10-K.
6
<PAGE>
The selected financial data of the Company for the years set forth below are
not directly comparable due to acquisitions and dispositions during such
periods.
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Net sales.............................................. $ 521,519 $ 359,080 $ 370,103 $ 394,768 $ 384,000
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Income (loss) from continuing operations before income
taxes................................................. $ 11,928 $ (17,588) $ (6,095) $ 1,728 $ 13,839
Income tax provision (benefit)......................... 5,038 (5,186) (1,656) 281 4,294
----------- ----------- ----------- ----------- -----------
Income (loss) from continuing operations............... 6,890 (12,402) (4,439) 1,447 9,545
Income from discontinued operations.................... 1,517 7,527 6,123 4,067 8,364
----------- ----------- ----------- ----------- -----------
Income (loss) before extraordinary charge and
cumulative effect of accounting change................ 8,407 (4,875) 1,684 5,514 17,909
Extraordinary charge................................... -- (1,436) --
Cumulative effect of accounting change................. 660 -- -- -- --
----------- ----------- ----------- ----------- -----------
Net income (loss)...................................... $ 9,067 $ (4,875) $ 248 $ 5,514 $ 17,909
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Earnings per common share
Primary
Income (loss) from continuing operations............. $ .33 $ (.85) $ (.32) $ .10 $ .69
Income from discontinued operations.................. .07 .52 .44 .30 .61
----------- ----------- ----------- ----------- -----------
Income (loss) before extraordinary charge and
cumulative effect of accounting change.............. .40 (.33) .12 .40 1.30
Extraordinary charge................................. -- -- (.10) -- --
Cumulative effect of accounting change............... .03 -- -- -- --
----------- ----------- ----------- ----------- -----------
Net income (loss).................................... $ .43 $ (.33) $ .02 $ .40 $ 1.30
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Fully Diluted
Income from continuing operations.................... $ .72
Income from discontinued operations.................. .57
----------- ----------- ----------- ----------- -----------
Income before extraordinary charge and cumulative
effect of accounting change......................... 1.29
Extraordinary charge................................. --
Cumulative effect of accounting change............... --
----------- ----------- ----------- ----------- -----------
Net income........................................... (b) (b) (b) (b) $ 1.29
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total assets......................................... $ 428,816 $ 285,309 $ 365,429 $ 365,005 $ 295,809
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Long-term obligations................................ $ 129,503 $ 114,251 $ 113,447 $ 83,445 $ 80,397
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Cash dividends per common share (a).................. $ -0- $ -0- $ .10 $ .10 $ .0922
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<FN>
- ------------------------
(a) Per share amounts have been adjusted to give effect to the four-for-three
stock split effected on June 30, 1989.
(b) Not shown as effect is anti-dilutive.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SIGNIFICANT TRANSACTIONS
During the last several years, the Company has undertaken a major
restructuring. On April 22, 1992, the Company, Rexel, S.A. (formerly known as
Compagnie de Distribution de Materiel Electrique) ("Rexel"), International
Technical Distributors, Inc. ("ITD"), a subsidiary of Rexel, and Southern
Electric Supply Company, Inc. ("SES"), a subsidiary of ITD engaged in the
distribution of
7
<PAGE>
electrical materials, entered into a Purchase Agreement (the "Purchase
Agreement"). Pursuant to the Purchase Agreement, the Company issued to Rexel and
ITD 6,284,301 shares of Company Common Stock in exchange for all of the stock of
SES and approximately $10 million in cash. In addition, pursuant to the Purchase
Agreement, the Company declared a dividend consisting of one share of common
stock of the Company's subsidiary Worldtex, Inc. ("Worldtex") for each share of
Company Common Stock outstanding on November 23, 1992 (the "Distribution" and,
together with such transactions with Rexel, the "1992 Transactions"). In August
1992, the Company transferred to Worldtex all of the stock of the Company's
subsidiaries engaged in the manufacture of covered elastic yarn. Accordingly,
these businesses are reflected as discontinued operations in the Company's
Consolidated Financial Statements.
Also during 1992, the Company sold its data communications equipment
distribution business and an apparel related unit.
In April 1993, the Company acquired Sacks Electrical Supply Co. ("Sacks"), a
distributor of electrical supplies and components with three locations in Ohio,
for $13.6 million. On December 17, 1993, the Company acquired Summers Group Inc.
("Summers") for $60 million in cash and a $25 million three year note issued to
seller, plus contingent consideration to be determined based on Summers' profits
before interest and taxes for 1993 and 1994, subject to a maximum purchase price
of $120 million. Summers is a distributor of electrical parts and supplies with
locations principally in Texas, Louisiana, Oklahoma, California and Arkansas.
The Company has also decided to sell its remaining apparel parts and
supplies distribution businesses (the "Apparel Division") and has engaged an
investment banking firm to seek a purchaser. Accordingly, the Apparel Division
is shown as a discontinued operation in the Company's Consolidated Financial
Statements.
On March 1, 1994, the Company sold 3,491,280 newly-issued shares of Company
Common Stock to Rexel for $31.4 million in cash, which the Company has used to
reduce short-term debt.
As a result of the aforementioned transactions and discontinuances, the
Company is now engaged in only one business segment: the distribution of
electrical parts and supplies, principally in the southern tier of the United
States. If the above-mentioned acquisitions had occurred as of January 1, 1992,
the Company's unaudited pro forma sales would have been $958.5 million and
$907.3 million in 1993 and 1992, respectively.
RESULTS OF CONTINUING OPERATIONS
The following table sets forth the percentages which certain income and
expense items bear to net sales:
<TABLE>
<CAPTION>
1993 1992 1991
---- ------ ------
<S> <C> <C> <C>
Net sales......................................... 100% 100 % 100 %
---- ------ ------
---- ------ ------
Gross profit...................................... 20.6% 20.4% 20.6%
Operating costs and expenses:
Selling & administrative........................ 17.3 18.3 19.1
Transaction costs............................... -- 4.3 --
Restructuring charges........................... -- 1.2 1.5
---- ------ ------
Operating profit (loss)........................... 3.3 (3.4) --
Interest expense.................................. 1.1 1.5 1.8
Other income...................................... -- -- .1
---- ------ ------
Income (loss) from continuing
operations before income taxes................... 2.2% (4.9)% (1.7)%
---- ------ ------
---- ------ ------
</TABLE>
8
<PAGE>
1993 V. 1992
The Company's sales increased by $162.4 million in 1993, to $521.5 million.
Excluding the impact of the acquisitions of SES, Sacks and Summers, full-year
sales were up about 3.8%. The Company's Consolidated Electric Supply division
("CES") increase resulted primarily from the improving housing market, although
commercial construction continues to lag. Full-year sales for SES, Sacks, and
Summers as a group were up in 1993 compared with 1992, reflecting the continued
market-share strength of these units in their respective geographic areas. Sales
for these divisions totalled $601.3 million in 1993. Certain geographic regions
showed an upturn in 1993. However, no assurance can be given that this trend
will continue. Declining copper prices and strong competition for market share
continue to put pressure on the Company's gross margin, which increased slightly
in 1993, to 20.6%.
Selling and administrative expenses increased $24.4 million in 1993,
reflecting the additional operations added through the above-mentioned
acquisitions. However, as a percentage of sales such expenses decreased to 17.3%
in 1993 as compared to 18.3% in 1992, reflecting cost containment programs and a
higher level of sales.
Interest expense in 1993 was $5.9 million, compared with $5.4 million a year
ago. Although the Company reduced its debt at the end of 1992 in connection with
the 1992 Transactions, it increased its borrowings in 1993 to fund the
acquisitions of Sacks and Summers. Other income-net in 1993 was $.7 million,
compared to $0.1 million in 1992, reflecting principally earnings from
short-term investments during the first half of 1993.
Income from continuing operations increased $19.3 million to $6.9 million in
1993, reflecting principally the costs for 1992 Transactions and restructuring
charges that were accrued in 1992.
1992 V. 1991
Sales in 1992 decreased $11.0 million, or 3.0%, to $359.1 million. The 1991
period includes results of two data communications units that the Company sold
during 1992. 1992 sales included $14.9 million from SES from mid-November.
Excluding sales of units sold, electrical supply sales, including SES,
increased by $11.9 million, or 3.4%, to $359.1 million. Excluding SES, sales
decreased by $3.0 million or 0.9%. The business continued to be impacted during
the year by the softness in the housing market and the effect of tightened
Company credit policies. Strong competition for market share continued to put
pressure on profit margins, but margins held when compared to the prior period.
SES sales for 1992 totalled $114.5 million.
Selling and administrative expenses for the Company were 18.3% of sales for
1992 as compared with 19.1% for 1991, reflecting the absence of expenses related
to units sold and cost containment programs instituted in 1991. Such expenses in
1992 decreased $4.5 million, or 6.4%, to $66.0 million.
In connection with the 1992 Transactions, including the Worldtex spin-off,
the Company incurred costs totalling $15.3 million, principally relating to
certain investment advisor services, legal and accounting fees and executive
incentive payments.
Restructuring actions ($4.3 million and $5.5 million in 1992 and 1991,
respectively) included principally the disposal of two data communications units
which no longer related to the Company's core business. In 1992 and 1991,
certain restructuring actions initiated in 1991 and 1990 required more costs to
implement than originally expected. The additional costs, included in
restructuring charges for these periods, changed based on the revised estimates
and experience to date.
The decrease in interest expense of $1.3 million for 1992 as compared to
1991 reflects the net effect of the sale of the $50 million 9.78% Senior Notes
in April, 1991, the redemption of the $23 million 13% Senior Subordinated Notes
in August, 1991 and changing levels of borrowing under the Company's prior
revolving credit arrangement.
9
<PAGE>
Loss from continuing operations increased $8.0 million to $12.4 million in
1992, reflecting principally the impact of transaction costs relating to the
1992 Transactions, partially offset by the absence of operating losses from
units sold, certain cost containment measures, and reduced restructuring charges
and interest expense.
DISCONTINUED OPERATIONS
As discussed above, the results of the Apparel Division and Worldtex are
included in the financial statements as discontinued operations. Summarized
results are as follows (000's):
<TABLE>
<CAPTION>
1993 1992 1991
--------- ----------- -----------
<S> <C> <C> <C>
Sales:
Apparel Division...................................... $ 76,850 $ 78,977 $ 73,745
Worldtex, Inc......................................... -- 157,463 155,838
--------- ----------- -----------
$ 76,850 $ 236,440 $ 229,583
--------- ----------- -----------
--------- ----------- -----------
Net Income:
Apparel Division...................................... $ 1,517 $ 353 $ 608
Worldtex, Inc......................................... -- 7,174 5,515
--------- ----------- -----------
$ 1,517 $ 7,527 $ 6,123
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
Sales for the Apparel Division decreased $2.1 million for 1993 compared with
1992. Excluding units sold, sales increased 4.3%. 1992 sales (excluding the
units sold) increased $9.6 million, or 13.9%, compared to 1991. These year over
year increases resulted from increased market share, particularly in foreign
markets such as Mexico, Central and South America and the Caribbean.
Covered yarn sales increased $1.6 million in 1992 compared to 1991,
reflecting growth in each of covered yarn's markets, offset somewhat by
inclusion of such sales in the Company's results only through mid-November 1992.
INCOME TAXES
The Company had effective income tax rates of 43%, (6.3)% and 62.5% in 1993,
1992 and 1991. The 1993 rate reflects the impact of state and local taxes,
non-deductible goodwill amortization and increase in the deferred tax asset
valuation allowance, reduced by the impact of the utilization of federal capital
loss carryforwards, the increase in the federal corporate income tax rate and
the current deductibility of certain prior year transaction costs. The 1992 rate
reflects the benefit of the Company's operating loss, reduced by the impact of
state and local taxes, goodwill amortization, and certain transaction costs.
Effective January 1, 1993, the Company changed its method of accounting from
the deferred method to the liability method required by SFAS No. 109,
"Accounting for Income Taxes" (see Note 10 of the Notes to the Consolidated
Financial Statements). As permitted under Statement 109, prior years' financial
statements have not been restated. The cumulative effect of adopting Statement
109 as of January 1, 1993 was to increase net income by $660 or $.03 per share.
At December 31, 1993, the Company had state net operating loss carryforwards
for tax purposes of approximately $16.5 million that expire between 1998 and
2008.
Under Statement 109 the Company has recognized deferred tax assets of $11.3
million, arising primarily from basis differences between the recorded value for
financial reporting purposes and tax basis of accounts receivable, inventory and
various liabilities and reserves, including restructuring and transaction costs.
Such deferred tax assets have been reduced by a valuation allowance of $1.1
million. In addition, the Company has recognized deferred tax liabilities
totalling $7.8 million arising principally from a higher recorded value over tax
basis of property, plant and equipment and certain acquisitions. It is
management's belief that the net deferred tax asset as reflected on the
consolidated financial statements will be realized based upon forecasted future
pretax earnings and
10
<PAGE>
taxable income as well as utilization of certain carryback and/or carryforward
opportunities. Such forecasts reflect the disposals of operations that do not
relate to the Company's core business as well as the expected results of the
Company's most recent acquisitions.
NET INCOME (LOSS)
The Company reported net income (loss) of $9.1 million, ($4.9) million, and
$0.2 million in 1993, 1992, and 1991. Earnings per share was 43 cents in 1993
compared with a loss per share of 33 cents in 1992 and earnings per share of 2
cents in 1991. Results during this three-year period were significantly impacted
by the 1992 Transactions and restructuring charges in 1992 and 1991.
LIQUIDITY; CAPITAL RESOURCES
At December 31, 1993, the Company had $19.1 million in cash and cash
equivalents, compared to $15.6 million at December 31, 1992, and had $196.7
million of indebtedness for borrowed money (including current installments and
short-term debt), compared to $109.6 million at December 31, 1992. Total assets
increased $143.5 million at year end 1993 to $428.8 million, due almost entirely
to the acquisitions as discussed below.
During 1993, the Company generated $5.8 million in cash from its operating
activities compared to $14.4 million in 1992, reflecting primarily changes in
various working capital items. Net cash used in investing activities totalled
$62.8 million and $17.6 million in 1993 and 1992, respectively. The increase in
cash usage in 1993 reflected the Company's acquisitions of Sacks and Summers
($68.3 million), offset partially by proceeds from sales of short-term
investments ($12.9 million). Capital expenditures decreased $5.8 million in 1993
to $5.4 million, reflecting primarily the absence of historical expenditures
related to Worldtex. Net cash provided by financing activities in 1993 totalled
$60.6 million compared to $10.7 million in 1992. The $49.9 million increase
reflects borrowings under the Company's current credit arrangements to fund
acquisitions.
In April 1993, the Company acquired Sacks for $13.6 million in cash, and in
December 1993 the Company acquired Summers for $60 million in cash and a $25
million three year note, plus contingent consideration, subject to a maximum
purchase price of $120 million. The Company regularly reviews possible
acquisitions of businesses, and may from time to time in the future acquire
other businesses. The Company otherwise currently expects that its capital
expenditures during 1994 will be consistent with historical requirements for the
electrical distribution business.
In connection with the acquisition of Summers, the Company terminated its
$20 million line of credit and entered into the Revolving Credit and
Reimbursement Agreement, dated as of December 17, 1993 (the "Credit Agreement"),
with NationsBank of Florida, N.A., and Credit Lyonnais New York Branch. The
Credit Agreement provides for borrowings from time to time through December 1997
of up to the lesser of (i) $70 million and (ii) the sum of 80% of eligible
accounts receivable and 50% of eligible inventory. The Company borrowed $60
million under the Credit Agreement in December 1993 to fund the cash purchase
price for Summers. On March 1, 1994, the Company sold 3,491,280 shares of newly
issued Company Common Stock to Rexel for $31.4 million, which was applied to
repay debt under the Credit Agreement. Borrowings under the Credit Agreement
bear interest at NationsBank's prime rate or at a rate based on rates in the
certificate of deposit market or LIBOR plus a margin, which margin varies
depending on the Company's financial performance. The Credit Agreement includes
various covenants, including restrictions on liens, debt and lease obligations
and requirements that certain financial ratios be maintained. As of March 1,
1994, $26.8 million was outstanding under the Credit Agreement and $43.2 million
was available for future borrowings. It is expected that any cash proceeds from
the sale of the Apparel Division will be used to repay borrowings under the
Credit Agreement. Upon the closing of such sale, the $70 million amount
available for borrowings under the Credit Agreement must be reduced to $50
million.
The Company's working capital requirements are generally met by internally
generated funds and short-term borrowings. Management believes sufficient cash
resources will be available to support its long-term growth strategies through
internally generated funds, credit arrangements and the
11
<PAGE>
ability of the Company to obtain additional financing. However, no assurance can
be given that financing will continue to be available on attractive terms. In
addition, any issuance by the Company, of its capital stock or securities
convertible into its capital stock prior to December 31, 1994 must be approved
by Rexel.
THREE-YEAR COMPARISONS
The following financial data were impacted by the distribution of Worldtex
and acquisitions of SES, Sacks and Summers, as discussed in Notes 2, 3 and 4 of
the Notes to Consolidated Financial Statements. The Net assets of the Apparel
Division are shown as "Net assets of discontinued operations" as of December 31,
1993. The balance sheet at December 31, 1992 has not been reclassified.
Total long-term debt was $126.0 million, $109.2 million and $113.4 million,
respectively, at December 31, 1993, 1992 and 1991.
Working capital was $71.3 million, $122.3 million and $84.4 million,
respectively, at December 31, 1993, 1992 and 1991, reflecting a decrease of
$51.0 million and an increase of $37.9 million, respectively, in 1993 and 1992
and a current ratio of 1.34, 2.40 and 1.61 at the end of 1993, 1992 and 1991.
Working capital is impacted by the fact that the net assets of the discontinued
Apparel Division are included as noncurrent assets as of December 31, 1993,
including $37.0 of net current assets. Any cash proceeds from the sale of the
Apparel Division will be used to repay short-term debt.
Net worth was $92.5 million, $84.2 million and $111.9 million, respectively,
at December 31, 1993, 1992 and 1991, with the decrease in 1992 attributable to
the charge to retained earnings for the distribution of Worldtex ($58.5
million), partially offset by adjustments to common stock and capital surplus in
connection with the stock issuance to Rexel as discussed in Notes 2, 3 and 4 of
the Notes to the Consolidated Financial Statements. (See the Consolidated
Statement of Changes in Stockholders' Equity for additional information).
The ratio of net worth to long-term debt was .73 to 1 at December 31, 1993,
.77 to 1 at December 31, 1992 and .99 to 1 at December 31, 1991. On a pro forma
basis, had the additional equity investment by Rexel been made as of December
31, 1993, the ratio of net worth to long-term debt would have been .98 to 1.
The number of days sales represented by accounts receivable was 51.8, 59.1
and 59.1, respectively, at December 31, 1993, 1992 and 1991. Inventories, as a
percentage of cost of sales, were 20.5%, 25.2% and 23.8%, at December 31, 1993,
1992 and 1991. These differences for 1993 as compared to prior years are
principally due to the increase in the Company's receivables and inventories
attributable to the electrical distribution business in 1993.
The Company continually reviews the impact of inflation. Pricing policies
are reviewed regularly and, to the extent permitted by competition, the Company
passes increased costs on by increasing sales price. The Company will continue
to monitor the impact of inflation and will consider these matters in setting
its pricing policies.
12
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements, supplementary financial information and
schedules are filed as part of this Report:
Report of Independent Accountants
Financial Statements:
Consolidated Balance Sheets,
December 31, 1993 and 1992
Consolidated Statements of Income,
Years Ended December 31, 1993, 1992
and 1991
Consolidated Statement of Changes in
Stockholders' Equity,
Years Ended December 31, 1993, 1992
and 1991
Consolidated Statements of Cash Flows,
Years Ended December 31, 1993, 1992
and 1991
Notes to Consolidated Financial
Statements
Supplementary Financial Information
Financial Statement Schedules:
Schedule II -- Amounts Receivable from
Related
Parties and Underwriters, Promoters,
and
Employees Other than Related Parties,
Years Ended December 31, 1993, 1992
and 1991
Schedule VIII -- Valuation and
Qualifying Accounts,
Years Ended December 31, 1993, 1992
and 1991
Schedule IX -- Short-Term Borrowings,
Years Ended December 31, 1993, 1992
and 1991
All schedules not mentioned above are omitted for the reason that they are not
required or are not applicable, or the information is included in the
Consolidated Financial Statements or the Notes thereto.
The foregoing financial statements are incorporated by reference in certain
registration statements on Form S-8 of the Company and the prospectuses relating
thereto in reliance upon the report of Coopers & Lybrand pertaining to such
financial statements given upon the authority of such firm as experts in
accounting and auditing.
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Willcox & Gibbs, Inc.:
We have audited the accompanying consolidated balance sheets of Willcox &
Gibbs, Inc. as of December 31, 1993 and 1992, and the related consolidated
statements of income, stockholders' equity and cash flows for the years ended
December 31, 1993, 1992 and 1991. We have also audited the financial statement
schedules as noted in the accompanying index listed in Item 8 of this Form 10-K
for the years ended December 31, 1993, 1992 and 1991. These financial statements
and financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Willcox &
Gibbs, Inc. as of December 31, 1993 and 1992 and the consolidated results of its
operations and cash flows for the years ended December 31, 1993, 1992 and 1991
in conformity with generally accepted accounting principles. In addition, in our
opinion, the financial statement schedules referred to above, when considered in
relation to the basic financial statements taken as a whole, present fairly, in
all material respects, the information required to be included therein.
As discussed in Note 10 of the consolidated financial statements, in 1993
the Company changed its method of accounting for income taxes.
/s/ Coopers & Lybrand
--------------------------------------
Coopers & Lybrand
New York, New York
March 4, 1994 except as to the
information presented in the last
paragraph of Note 11 for which
the date is March 18, 1994.
14
<PAGE>
WILLCOX & GIBBS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
1993 1992
---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents............................................................ $ 19,131 $ 15,567
Short-term investments............................................................... -- 12,874
Accounts and notes receivable, less allowance for doubtful accounts of $4,023 in 1993
and $10,035 in 1992................................................................. 129,163 84,146
Inventories.......................................................................... 117,577 91,432
Income taxes receivable.............................................................. 1,407 1,893
Prepaid expenses and other current assets............................................ 9,002 3,230
Deferred income taxes................................................................ 1,796 --
---------- ----------
Total current assets............................................................... 278,076 209,142
Investments and noncurrent receivables, less marketable equity security adjustment of
$625 in 1993.......................................................................... 2,599 5,136
Property, plant and equipment, at cost:
Land................................................................................. 8,059 5,575
Buildings and leasehold improvements................................................. 29,630 20,899
Machinery and equipment.............................................................. 29,765 19,753
---------- ----------
67,454 46,227
Less, accumulated depreciation and amortization...................................... 14,772 16,906
---------- ----------
Property, plant and equipment -- net............................................... 52,682 29,321
---------- ----------
Net assets of discontinued operations.................................................. 43,337 --
Other assets........................................................................... 4,350 3,306
Deferred income taxes.................................................................. 693 7,168
Cost in excess of net assets of acquired businesses, net of accumulated amortization of
$3,857 in 1993 and $3,016 in 1992..................................................... 47,079 31,236
---------- ----------
$ 428,816 $ 285,309
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt...................................................................... $ 61,500 --
Current installments of long-term debt............................................... 9,261 $ 386
Accounts and notes payable -- trade, and other liabilities........................... 136,030 86,445
---------- ----------
Total current liabilities.......................................................... 206,791 86,831
Long-term debt......................................................................... 125,975 109,207
Other long-term liabilities............................................................ 3,528 5,044
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock (authorized 600,000 shares, none issued)............................. -- --
Preferred stock (authorized 2,000,000 shares, none issued)........................... -- --
Common stock (21,213,953 and 20,585,523 shares issued in 1993 and 1992).............. 21,214 20,586
Common stock to be issued (628,430 shares in 1992)................................... -- 628
Capital surplus...................................................................... 53,818 53,818
Retained earnings.................................................................... 21,874 12,807
Cumulative foreign translation adjustment............................................ (1,333) (1,186)
Marketable equity security adjustment................................................ (625) --
Treasury stock, at cost (266,281 shares in 1993 and 1992)............................ (2,426) (2,426)
---------- ----------
Total stockholders' equity......................................................... 92,522 84,227
---------- ----------
$ 428,816 $ 285,309
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
15
<PAGE>
WILLCOX & GIBBS, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1993 1992 1991
----------- ------------- ------------
<S> <C> <C> <C>
Net sales............................................................. $ 521,519 $ 359,080 $ 370,103
Cost of goods sold.................................................... 414,027 285,713 294,022
----------- ------------- ------------
Gross profit........................................................ 107,492 73,367 76,081
Selling and administrative expense.................................... 90,365 65,980 70,495
Transaction costs (Note 2)............................................ -- 15,344 --
Restructuring charges................................................. -- 4,338 5,549
----------- ------------- ------------
Operating profit (loss)............................................. 17,127 (12,295) 37
Interest expense...................................................... 5,890 5,389 6,680
Other income -- net................................................... 691 96 548
----------- ------------- ------------
Income (loss) from continuing operations before income taxes........ 11,928 (17,588) (6,095)
Income tax provision (benefit)........................................ 5,038 (5,186) (1,656)
----------- ------------- ------------
Income (loss) from continuing operations............................ 6,890 (12,402) (4,439)
Income from discontinued operations, net of income taxes of $1,303,
$4,858 and $4,480.................................................... 1,517 7,527 6,123
----------- ------------- ------------
Income (loss) before extraordinary charge and cumulative effect of
accounting change.................................................. 8,407 (4,875) 1,684
Extraordinary charge, net of income tax benefit of $794............... -- -- (1,436)
Cumulative effect of accounting change for income taxes............... 660 -- --
----------- ------------- ------------
Net income (loss)................................................... $ 9,067 ($ 4,875) $ 248
----------- ------------- ------------
----------- ------------- ------------
Income (loss) per common share:
Income (loss) from continuing operations............................ $ .33 ($ .85) ($ .32)
Income from discontinued operations, net of income taxes............ .07 .52 .44
----------- ------------- ------------
Income (loss) before extraordinary charge and cumulative effect of
accounting change.................................................. .40 (.33) .12
Extraordinary charge, net of income tax benefit..................... -- -- (10)
Cumulative effect of accounting change for income taxes............. .03 -- --
----------- ------------- ------------
Net income (loss)................................................... $ .43 ($ .33) $ .02
----------- ------------- ------------
----------- ------------- ------------
Average number of common and common equivalent shares................. 20,970,000 14,629,000 13,711,000
----------- ------------- ------------
----------- ------------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
16
<PAGE>
WILLCOX & GIBBS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON CUMULATIVE MARKETABLE
STOCK FOREIGN EQUITY TREASURY
COMMON TO BE CAPITAL RETAINED TRANSLATION SECURITY STOCK AT
STOCK ISSUED SURPLUS EARNINGS ADJUSTMENT ADJUSTMENT COST TOTAL
------- ------ ------- --------- ------------ ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1991.............. $13,825 $22,451 $ 77,338 $ 1,661 $ (2,391) $ 112,884
Net income.............................. 248 248
Cash dividends -- $.10 per share........ (1,357) (1,357)
Issuance of 16,588 shares pursuant to
Stock Option Plan...................... 16 52 68
Issuance of 778 shares pursuant to Stock
Acquisition Plan....................... 1 8 9
Foreign translation adjustment.......... 74 74
------- ------ ------- --------- ------------ ----------- --------- ---------
Balance at December 31, 1991............ 13,842 22,511 76,229 1,735 (2,391) 111,926
Net loss................................ (4,875) (4,875)
Dividend of Worldtex, Inc............... (58,547) 800 (57,747)
Issuance of 583,116 shares pursuant to
Stock Option Plan and 3,185 treasury
shares acquired as payment............. 583 4,178 (35) 4,726
Issuance of 778 shares pursuant to Stock
Acquisition Plan....................... 1 9 10
Foreign translation adjustment.......... (3,721) (3,721)
Issuance of 1,647,307 shares to Rexel
for cash, net of issuance costs of
$2,056................................. 1,648 6,181 7,829
Issuance of 4,636,994 shares for the
acquisition of SES..................... 4,009 $ 628 16,461 21,098
Issuance of 503,543 shares to key
executives in connection with the
Purchase Agreement with Rexel.......... 503 4,478 4,981
------- ------ ------- --------- ------------ ----------- --------- ---------
Balance at December 31, 1992............ 20,586 628 53,818 12,807 (1,186) (2,426) 84,227
Net income.............................. 9,067 9,067
Issuance of 628,430 shares.............. 628 (628) --
Foreign translation adjustment.......... (147) (147)
Marketable equity security adjustment... $ (625) (625)
------- ------ ------- --------- ------------ ----------- --------- ---------
Balance at December 31, 1993............ $21,214 $-- $53,818 $ 21,874 $ (1,333) $ (625) $ (2,426) $ 92,522
------- ------ ------- --------- ------------ ----------- --------- ---------
------- ------ ------- --------- ------------ ----------- --------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
17
<PAGE>
WILLCOX & GIBBS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................................................... $ 9,067 $ (4,875) $ 248
--------- --------- ---------
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization................................................... 5,161 8,395 7,928
Provision for losses on accounts receivable..................................... 2,154 2,532 4,687
Deferred income taxes........................................................... 5,639 (2,327) 900
Extraordinary charge on early extinguishment of
debt........................................................................... -- -- 2,230
Cumulative effect of accounting change for income taxes......................... (660) -- --
Changes in assets and liabilities, net of effect of acquisitions, dividend of
Worldtex and sale of net assets:
Decrease (increase) in accounts and notes receivable.......................... 6,107 (9,755) (3,218)
Decrease (increase) in inventory.............................................. 1,054 (5,734) (911)
(Increase) decrease in prepaid expenses and other current assets.............. (124) 2,652 (382)
(Decrease) increase in accounts and notes payable -- trade, and other
liabilities.................................................................. (19,292) 9,173 (943)
(Decrease) increase in income taxes receivable................................ (1,372) 1,094 (578)
Net (payments) provision for restructuring activities........................... (1,302) 2,559 5,783
Net (payments) provision for transaction costs.................................. (777) 10,805 --
Other, net...................................................................... 135 (149) 63
--------- --------- ---------
Total adjustments............................................................. (3,277) 19,245 15,559
--------- --------- ---------
Net cash provided by operating activities..................................... 5,790 14,370 15,807
--------- --------- ---------
Cash flows from investing activities:
Sale (purchase) of short-term investments....................................... 12,874 (12,874) --
Capital expenditures............................................................ (5,381) (11,158) (10,922)
Contingent payments to former shareholders of acquired businesses............... -- (168) (598)
Cost of acquisitions, net of cash acquired...................................... (68,329) -- (342)
Cash from acquisition acquired for stock, net of closing costs.................. -- 1,975 --
Proceeds from sale of net assets................................................ -- 3,350 --
Other investing activities...................................................... (1,963) 1,314 (361)
--------- --------- ---------
Net cash used in investing activities......................................... (62,799) (17,561) (12,223)
--------- --------- ---------
Cash flows from financing activities:
Net borrowings (payments) under line of credit arrangements..................... 61,500 6,851 (28,974)
Proceeds from issuance of common stock to Rexel, net of issuance costs.......... -- 7,829 --
Prepayment of debt of acquired company.......................................... -- (5,950) --
Proceeds from exercise of stock options......................................... -- 4,042 68
Cash transferred in connection with dividend of Worldtex........................ -- (1,215) --
Dividends paid.................................................................. -- -- (1,357)
Proceeds from sale of Senior Notes.............................................. -- -- 50,000
Redemption of 13% Senior Subordinated Notes..................................... -- -- (23,000)
Other debt payments and financing activities.................................... (927) (873) 473
--------- --------- ---------
Net cash provided by (used in) financing activities........................... 60,573 10,684 (2,790)
--------- --------- ---------
Net increase in cash and cash equivalents..................................... 3,564 7,493 794
Cash and cash equivalents at beginning of year.................................... 15,567 8,074 7,280
--------- --------- ---------
Cash and cash equivalents at end of year...................................... $ 19,131 $ 15,567 $ 8,074
--------- --------- ---------
--------- --------- ---------
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest...................................................................... $ 9,779 $ 14,548 $ 16,449
Income taxes.................................................................. $ 1,183 $ 459 $ 1,554
Supplemental information of businesses acquired:
Fair value of assets acquired................................................... $ 179,113 $ 43,403 $ 856
Liabilities assumed............................................................. (79,490) (22,033) (515)
Note issued to seller........................................................... (25,000) -- --
Common stock issued............................................................. -- (21,098) --
--------- --------- ---------
Cash paid..................................................................... $ 74,623 $ 272 $ 341
--------- --------- ---------
--------- --------- ---------
</TABLE>
18
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and all of its subsidiaries. All significant intercompany
transactions and balances have been eliminated.
(b) CASH EQUIVALENTS
Highly liquid investments with a maturity of three months or less when
purchased are generally considered to be cash equivalents.
(c) SHORT-TERM INVESTMENTS
Short-term investments are stated at cost plus accrued interest, which
approximates market, and consist of direct obligations of the U.S.
Government.
(d) INVENTORIES
Inventories are stated at the lower of cost (determined by LIFO for
continuing operations or FIFO for discontinued operations) or market.
The cost of inventories determined on a LIFO basis comprised 80.9% and
68.9% of total inventories at December 31, 1993 and 1992, respectively.
Had the FIFO method been used to value all inventories, total
inventories would have increased $5,884 and $6,569 at December 31, 1993
and 1992, respectively.
(e) INVESTMENTS AND NONCURRENT RECEIVABLES
Investments and noncurrent receivables are carried at cost, which
approximates market, except for investments in companies over which the
Company has significant influence, but not a controlling interest, which
are carried under the equity method, and noncurrent marketable
securities, which are carried at the lower of quoted market value or
cost. Unrealized losses are accumulated in the marketable equity
securities adjustment component of stockholders' equity.
(f) DEPRECIATION AND AMORTIZATION
Depreciation, computed by means of straight-line and accelerated
methods, is based on the estimated useful lives of the related assets.
Leasehold improvements are amortized over their respective lease terms
or their estimated useful lives, if shorter.
Cost in excess of net assets of acquired businesses ("goodwill") is
amortized over 40 years. The Company periodically reviews the carrying
value of goodwill in relation to current and expected operating results
of the businesses which benefit therefrom in order to assess whether
there has been a permanent impairment of goodwill.
(g) FORWARD EXCHANGE CONTRACTS
The Company enters into forward exchange contracts as a hedge against
accounts payable denominated in foreign currency. These contracts are
used by the Company to minimize exposure and reduce risk from exchange
rate fluctuations in the regular course of its foreign business. Gains
and losses on forward contracts are deferred and included in the
measurement of the related foreign currency transaction. Cash provided
and used for forward contracts is included in the cash flows resulting
from changes in accounts and notes payable - trade. Contracts amounting
to $128 were outstanding at December 31, 1993.
19
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) INCOME TAXES
No provision is made for income taxes which may be payable if
undistributed earnings of foreign subsidiaries were to be paid as
dividends to the Company, since the Company intends that such earnings
will continue to be invested in those countries. At December 31, 1993,
the cumulative amount of foreign undistributed earnings amounted to
approximately $6,312. Foreign tax credits may be available as a
reduction of United States income taxes in the event of such
distributions.
(i) EARNINGS PER SHARE
Primary earnings per share are based on the weighted average number of
common and common equivalent shares outstanding during the year.
(j) RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the
1993 presentation.
2. SIGNIFICANT TRANSACTIONS
On November 12, 1992, pursuant to a Purchase Agreement dated April 22, 1992
among the Company, Rexel, S.A. (formerly known as Compagnie de Distribution de
Materiel Electrique) ("Rexel"), International Technical Distributors, Inc.
("ITD"), a subsidiary of Rexel, and Southern Electric Supply Company ("SES"), a
subsidiary of ITD engaged in the distribution of electrical components and
supplies, the Company issued to Rexel and ITD 6,284,301 shares of the Company's
common stock. In exchange for such stock issuance, the Company received $9,885
in cash and all the capital stock of SES. The SES acquisition was accounted for
by the purchase method (see Note 3). Common stock and capital surplus have been
adjusted for the proceeds received from the common stock issuance less issue
costs of $2,056.
Pursuant to the Purchase Agreement (including an Investment Agreement),
Rexel had agreed to certain limitations on its ownership of the outstanding
common stock of the Company and to certain other restrictions during the five
years after closing. However, the Company, Rexel and ITD executed an amendment
to the Investment Agreement which, among other things, permits Rexel to increase
its beneficial ownership of Company common stock to 45% and provides for
termination of the Investment Agreement on December 31, 1994. On March 1, 1994,
the Company sold to Rexel 3,491,280 newly issued shares of Company common stock
for a total cash purchase price of $31,422 which was used to repay short-term
debt (see Note 5). As a result, Rexel increased its beneficial ownership of the
outstanding common stock of the Company from 30% to 40%.
In connection with the November 12, 1992 transaction, the Company
distributed Worldtex, Inc. ("Worldtex"), its covered yarn manufacturing segment,
as a dividend to its stockholders during the fourth quarter of 1992. Worldtex
owns the former subsidiaries of the Company engaged in the manufacture of
covered yarn. Effective with the dividend, retained earnings was charged $58,547
for the book value of the net assets distributed, including assets of $152,407
and liabilities of $93,860. Liabilities included $32,000 of debt assumed by
Worldtex which was previously outstanding under the Company's prior revolving
credit arrangement. The results of the covered yarn operation for 1992 and 1991
are included in the Consolidated Statements of Income as discontinued operations
(see Note 4).
Results for 1992 include transaction-related costs of $15,344, including
certain investment advisor services, legal and accounting fees and executive
incentive payments, in connection with these transactions.
20
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
3. ACQUISITIONS
On April 12, 1993 the Company acquired the common stock of Sacks Electrical
Supply Co. ("Sacks"), a distributor of electrical supplies and components with
three locations in Ohio, for $13.9 million (including $0.3 million of
acquisition costs).
On December 17, 1993, the Company acquired the common stock of Summers
Group, Inc. ("Summers") for $60.7 million in cash (including $0.7 million of
acquisition costs) and a $25 million three-year note issued to the seller, plus
contingent consideration to be determined based on defined profits of Summers,
subject to a maximum purchase price of $120 million. Summers is a distributor of
electrical parts and supplies with locations principally in Texas, Oklahoma,
Louisiana, California and Arkansas.
Each of these 1993 acquisitions has been recorded as a purchase, and the
excess of the total purchase price over the fair value of the net assets
acquired ($6.9 million for Sacks and $11.5 million for Summers) is being
amortized over 40 years. Sacks' and Summers' results of operations are included
in the Company's financial statements from the respective dates of acquisition.
As discussed in Note 2 of the Notes to Consolidated Financial Statements,
the Company acquired all of the issued capital stock of SES in exchange for the
issuance of 4,636,994 shares of the Company's common stock. The total purchase
price was $21,370, representing market value of the shares and certain closing
costs. The shares include 628,430 shares issued in 1993. SES' results of
operations are included in the Company's financial statements from the date of
acquisition. The acquisition has been recorded as a purchase and the excess of
the total purchase price over the fair value of the net assets acquired
($10,475) is being amortized over 40 years.
The following table summarizes the effect on consolidated sales and income
(loss) from continuing operations of the Company, on an unaudited pro forma
basis, assuming the Sacks and Summers acquisitions had been consummated as of
January 1, 1992 and the SES acquisition had been consummated as of January 1,
1991.
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Sales.................................................. $ 958,518 $ 907,322 $ 468,282
----------- ----------- -----------
----------- ----------- -----------
Income (loss) from continuing operations............... $ 12,622 $ (6,273) $ (2,975)
----------- ----------- -----------
----------- ----------- -----------
Income (loss) per share from continuing operations..... $ .60 $ (.43) $ (.22)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The pro forma results above are not necessarily indicative of what actually
would have occurred if the acquisitions had been in effect at the beginning of
each period or are they necessarily indicative of future consolidated results.
4. DISCONTINUED OPERATIONS
The Company has decided to sell its apparel parts and supplies distribution
business ("Apparel") and has engaged an investment banking firm, of which a
director of the Company is president, to seek a purchaser. Accordingly, this
business is included in the Consolidated Statements of Income as
21
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
4. DISCONTINUED OPERATIONS (CONTINUED)
discontinued operations for all periods presented. As discussed in Note 2, the
covered yarn operation is included as discontinued operations in 1992 and 1991.
Summarized results of the discontinued operations are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- ----------- -----------
<S> <C> <C> <C>
Sales:
Apparel............................................... $ 76,850 $ 78,977 $ 73,745
Covered yarn.......................................... -- 157,463 155,838
--------- ----------- -----------
$ 76,850 $ 236,440 $ 229,583
--------- ----------- -----------
--------- ----------- -----------
Net income:
Apparel............................................... $ 1,517 $ 353 $ 608
Covered yarn.......................................... -- 7,174 5,515
--------- ----------- -----------
$ 1,517 $ 7,527 $ 6,123
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
Interest expense of $3,927, $4,078 and $3,634 for the years ended December
31, 1993, 1992 and 1991, respectively, have been allocated to apparel operation
results based upon net assets of the apparel operation. Interest expense of
$1,148 and $1,162 for the years ended December 31, 1992 and 1991, respectively,
has been allocated to covered yarn operation results determined by applying the
Company weighted average borrowing rate during the respective periods to
weighted average levels of the Company corporate debt to be assumed by Worldtex.
The assets of the apparel operations at December 31, 1993 are included in
the accompanying Consolidated Balance Sheet as "Net assets of discontinued
operations." The assets and liabilities of the apparel operation included in the
Consolidated Balance Sheets at December 31, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Current assets...................................................... $ 43,632 $ 44,148
Property, plant and equipment -- net................................ 2,795 2,741
Investment and noncurrent receivables............................... 1,180 1,495
Other assets........................................................ 759 833
Cost in excess of net assets of acquired businesses -- net.......... 1,590 1,618
--------- ---------
Total assets.................................................... 49,956 50,835
Current liabilities................................................. 6,619 9,396
--------- ---------
Net assets...................................................... $ 43,337 $ 41,439
--------- ---------
--------- ---------
</TABLE>
The Company's continuing operations consist solely of the distribution of
electrical parts and supplies, principally in the southern tier of the United
States.
5. SHORT-TERM DEBT
In connection with the acquisition of Summers, the Company terminated its
$20 million line of credit and entered into the Revolving Credit and
Reimbursement Agreement, dated as of December 17, 1993 (the "Credit Agreement"),
with NationsBank of Florida, N.A., and Credit Lyonnais New York Branch. At
December 31, 1993, $61.5 million was outstanding under this agreement at a
weighted average interest rate of 4.57%. The $31.4 million cash received March
1, 1994 from the sale of common stock to Rexel was applied to repay debt under
this agreement. The Credit Agreement provides for borrowings from time to time
through December 1997 of up to the lesser of (i) $90 million
22
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
5. SHORT-TERM DEBT (CONTINUED)
($70 million as of March 1, 1994) and (ii) the sum of 80% of eligible accounts
receivable and 50% of eligible inventory. Borrowings under the Credit Agreement
bear interest at NationsBank's prime rate or at a rate based on rates in the
certificate of deposit market or LIBOR plus a margin, which varies depending on
the Company's financial performance. The Credit Agreement includes various
covenants, including restrictions on liens, debt and lease obligations and
requirements that certain financial ratios be maintained. The Company pays a fee
of 1/4 of 1% of the total unused portion of the line of credit. Upon the sale of
the apparel operation, the $70 million amount available for borrowings under the
Credit Agreement must be reduced to $50 million.
6. LONG-TERM DEBT
Long-term debt, less current installments, consists of:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1993 1992
----------- -----------
<S> <C> <C>
9.78% Senior Notes due March 15, 2001...................................... $ 50,000 $ 50,000
7% Convertible Subordinated Debentures, due August 1, 2014................. 50,000 50,000
4.375% Senior Notes due December 17, 1996.................................. 25,000 --
Mortgage notes payable..................................................... 6,596 6,672
Other notes payable (net of unamortized discount of $119 and $158 at
December 31, 1993 and 1992, respectively)................................. 3,640 2,921
----------- -----------
135,236 109,593
Less, current installments............................................. 9,261 386
----------- -----------
$ 125,975 $ 109,207
----------- -----------
----------- -----------
</TABLE>
In April 1991, the Company sold $50,000 of Senior Notes in a private
placement. The notes are payable ratably over a seven-year period commencing
March 15, 1995 with interest payable semiannually at a rate of 9.78% per annum.
Based on borrowing rates currently available to the Company for long-term debt
with similar terms and average maturities, the fair value of the notes is
approximately $54,055. Under the terms of the Senior Notes (as amended), the
Company may pay dividends and make other restricted payments (as defined) to the
extent of 35% of consolidated net income (as defined) plus certain other amounts
and is subject to certain restrictions on the incurrence of additional debt and
other transactions and to other covenants calling for minimum levels of working
capital and certain financial ratios.
The 7% Convertible Subordinated Debentures are due August 1, 2014 with
interest payable semiannually on February 1 and August 1. The debentures are
convertible into common stock of the Company at $9.57 per share, as adjusted in
connection with the dividend of Worldtex, and are subject to a sinking fund,
commencing August 1, 2000, calculated to retire 70% of the debentures prior to
final maturity. The debentures are subordinated to present and future senior
indebtedness (as defined) of the Company. In certain circumstances involving the
occurrence of a Risk Event (as defined) prior to August 1, 1999, the Company
will be required to offer to repurchase all or part of the debentures at 100% of
their principal amount plus accrued interest. The Company has the option to pay
the repurchase price in cash or shares of its common stock. At December 31,
1993, approximately 6,452,000 shares would have been necessary to repurchase the
debentures. At December 31, 1993, the debentures, which trade on the New York
Stock Exchange, had a fair market value of $49,000.
23
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
6. LONG-TERM DEBT (CONTINUED)
The Senior Note due December 17, 1996 was issued to the seller in connection
with the Summers acquisition and is payable in three annual installments
commencing on December 17, 1994 with interest at 4.375% per annum.
The mortgage notes payable are due in monthly installments of $59, including
interest at 9.5% through December 31, 1996. The principal balance outstanding on
December 31, 1996 is due in one payment on that date. The notes are
collateralized by a mortgage and security agreement and a collateral assignment
of rents and leases relative to various property located in Florida. Based on
borrowing rates currently available to the Company for long-term debt with
similar terms and average maturities, the fair value of the notes is
approximately $7,036.
Long-term debt maturities during the next five years are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
- --------------------------------------------------------------- ---------
<S> <C>
1994........................................................... $ 9,297
1995........................................................... 16,466
1996........................................................... 22,344
1997........................................................... 7,618
1998........................................................... 7,668
</TABLE>
7. STOCKHOLDERS' EQUITY
The authorized capital stock of the Company is 37,600,000 shares, consisting
of 600,000 shares of Preferred Stock with a par value of $12 per share,
2,000,000 shares of Preference Stock with a par value of $1 per share and
35,000,000 shares of Common Stock with a par value of $1 per share. The Board of
Directors may issue the Preference Stock from time to time in one or more series
and fix the dividend rates, voting rights and liquidation preferences and
establish redemption, sinking fund, conversion, exchange and other relative
rights, preferences and limitations of a particular series.
On January 10, 1989, the Board of Directors declared a dividend distribution
of one preference stock purchase right (the "Rights") for each share of common
stock outstanding. Each right entitles the holder to purchase one one-hundredth
of a share of newly created Junior Participating Preference Stock, par value
$1.00 per share. The Rights Agreement was amended on November 12, 1992 pursuant
to the agreement with Rexel and the dividend discussed in Note 2 of the Notes to
Consolidated Financial Statements and was amended on March 1, 1994, in
connection with the purchase by Rexel of additional shares of common stock of
the Company. The Rights will become exercisable upon the occurrence of certain
events at an exercise price of $15 for each one one-hundredth of a preference
share. In the event a person or group acquires 20% or more of the Company's
outstanding common stock, each right shall entitle the holder to purchase, by
paying the $15 exercise price, stock of the Company with a value of twice the
exercise price provided that ownership of the Company's stock by Rexel and its
Affiliates (as such term is defined in the Rights Agreement) will not trigger
such exercise right so long as Rexel and all its Affiliates do not own, in the
aggregate, voting securities of the Company which, on a fully exercised basis,
are in excess of 45% of the aggregate number of votes which may be cast by
holders of outstanding voting securities of the Company. In addition, if the
Company is acquired in a merger or other business combination, the rightholder
shall be entitled to purchase, by paying the $15 exercise price, common stock of
the acquiring company with a value of twice the exercise price, except as
otherwise provided in the Rights Agreement. The Rights are redeemable by the
Company at $.01 per Right under certain circumstances and will expire December
31, 1994. 500,000 shares of preference stock have been reserved for issuance
upon exercise of the Rights.
24
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
7. STOCKHOLDERS' EQUITY (CONTINUED)
Shares of common stock as at December 31, 1993 are reserved for:
<TABLE>
<CAPTION>
SHARES
-----------
<S> <C>
Conversion of Subordinated Debentures............................................ 5,224,660
Stock options.................................................................... 851,133
Stock Acquisition Plan........................................................... 7,148
</TABLE>
8. STOCK OPTION PLANS, STOCK ACQUISITION PLAN AND EMPLOYEE STOCK OWNERSHIP PLAN
Under the Company's 1988, 1985 and 1982 Stock Option Plans, options to
purchase up to 1,266,667 shares, 829,630 shares and 379,259 shares of common
stock, respectively, were available to be granted to key employees of the
Company. The 1988 Plan also provides that each director of the Company, other
than one who is an officer or employee, be granted a non-qualified stock option
to purchase 10,000 shares of Company common stock. For each plan, the option
period is either ten or eleven years from the date of grant, and no option may
be exercised prior to the first anniversary of the date of grant.
Information regarding the Company's stock option plans is summarized below:
<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE NUMBER OF SHARES
SHARES PER SHARE EXERCISABLE
---------- --------------- -----------------
<S> <C> <C> <C>
Outstanding at January 1, 1991............... 600,709 $3.80 - $7.00 157,208
Granted.................................... 157,000 7.31 - 8.88
Exercised.................................. (16,588) 3.80 - 5.75
Terminated and cancelled................... (10,000) 7.00
----------
Outstanding at December 31, 1991............. 731,121 3.80 - 8.88 280,653
Exercised.................................. (685,113) 3.80 - 8.88
Terminated and cancelled................... (15,070) 5.75 - 7.31
----------
Outstanding at December 31, 1992............. 30,938 3.80 - 8.88 30,938
Granted.................................... 597,000 6.56 - 6.69
Terminated and cancelled................... (10,820) 7.00 - 8.88
----------
Outstanding at December 31, 1993............. 617,118 $3.80 - $7.00 20,118
----------
----------
</TABLE>
All options were granted at market value on the date of grant.
As of December 31, 1993, options for the purchase of 218,753 shares and
15,262 shares were available for future grant under the 1988 and 1985 plans,
respectively.
The Company's Stock Acquisition Plan provides for the issuance of up to
237,037 shares of common stock to key employees over specified employment
periods. As of December 31, 1993, 229,889 shares of common stock have been
issued, and 7,148 shares are available for award.
The Company's Employee Stock Ownership Plan, which became effective in 1981,
provides eligible employees with an opportunity to purchase the Company's common
stock through payroll deductions, which are matched by the Company, subject to
certain limitations. Contributions to the plan are invested by an independent
trustee in common stock of the Company. Stock attributable to Company
contributions vests at the rate of 10% for each twelve months of contributions
by the employee, with 100% vesting after five years of service. The Company's
contributions to the plan, net of forfeitures, charged to income for 1993, 1992
and 1991 were $695, $758 and $393, respectively.
25
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
9. PENSION AND PROFIT-SHARING PLANS AND POSTRETIREMENT BENEFIT PLANS
The Company has two qualified noncontributory defined benefit pension plans
covering certain eligible domestic employees. The Company's funding policy is to
contribute annually the maximum amount that can be deducted for Federal income
tax purposes. The Company also has a non-qualified defined benefit supplemental
retirement plan covering key employees, which is not funded. The benefits of
both plans are based on years of service and defined levels of compensation.
The Company also has a defined benefit plan maintained for eligible
employees of certain United Kingdom subsidiaries included in the apparel
operation. The plan is funded annually for the maximum amount permitted by
statute. The benefits are based on years of service and defined levels of
compensation.
Under the collective bargaining agreement of the textile industry in France,
employees of a subsidiary Worldtex are entitled to a lump-sum payment at
retirement based on their length of service at retirement and final pay. All
obligations under this plan were assumed by Worldtex in connection with the
dividend.
The following table sets forth the plans' funded status at December 31, 1993
and 1992:
<TABLE>
<CAPTION>
1993 1992
-------------------------------------------------- -------------------------------------
DOMESTIC DOMESTIC
------------------------------------- ------------------------
UNITED NON- UNITED NON-
KINGDOM QUALIFIED QUALIFIED QUALIFIED KINGDOM QUALIFIED QUALIFIED
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Vested benefit obligation.......... $ (1,144) $ (1,745) $ (5,071) $ (1,174) $ (1,171) $ (1,415) $ (4,033)
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Accumulated benefit obligation..... $ (1,249) $ (1,884) $ (5,223) $ (1,178) $ (1,278) $ (1,521) $ (4,148)
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Projected benefit obligation......... $ (1,753) $ (1,884) $ (6,052) $ (1,692) $ (1,795) $ (1,521) $ (4,841)
Plan assets at fair value............ 1,555 -- 4,342 1,867 1,683 -- 3,928
----------- ----------- ----------- ----------- ----------- ----------- -----------
Projected benefit obligation (in
excess of) less than plan
assets............................ (198) (1,884) (1,710) 175 (112) (1,521) (913)
Unrecognized net loss (gain)......... 352 (334) 1,150 362 362 (599) 354
Unrecognized prior service cost...... -- -- (259) -- -- -- (280)
Unrecognized net transition (asset)
obligation.......................... (118) 236 92 -- (136) 263 101
----------- ----------- ----------- ----------- ----------- ----------- -----------
Accrued pension asset
(liability)....................... $ 36 $ (1,982) $ (727) $ 537 $ 114 $ (1,857) $ (738)
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
The qualified domestic plan assets include guaranteed investment contracts,
mutual and money market funds, government securities, whole life insurance
policies and common stock of the Company and Worldtex (such stock with a
combined market value of $520 and $515 at December 31, 1993 and 1992,
respectively). The United Kingdom plan assets are comprised of certain deferred
annuity contracts.
26
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
9. PENSION AND PROFIT-SHARING PLANS AND POSTRETIREMENT BENEFIT
PLANS (CONTINUED)
Net periodic pension cost for 1993, 1992 and 1991 included the following
components:
<TABLE>
<CAPTION>
INTEREST COST NET
ON PROJECTED ACTUAL NET PERIODIC
BENEFIT RETURN ON AMORTIZATION PENSION
SERVICE COST OBLIGATIONS ASSETS AND DEFERRAL COST
------------- --------------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C>
1993
United Kingdom........................... $ 76 178 (157) (15) $ 82
Domestic:
Non-Qualified.......................... $ 49 131 -- (8) $ 172
Qualified.............................. $ 322 403 (221) (101) $ 403
Qualified.............................. $ 22 92 (127) -- $ (13)
-----
$ 644
-----
-----
1992
France................................... $ 9 19 -- -- $ 28
United Kingdom........................... $ 102 199 (196) (18) $ 87
Domestic:
Non-Qualified.......................... $ 97 230 -- 33 $ 360
Qualified.............................. $ 299 343 (260) (84) $ 298
-----
$ 773
-----
-----
1991
France................................... $ 8 20 -- -- $ 28
United Kingdom........................... $ 96 124 (149) (17) $ 54
Domestic:
Non-Qualified.......................... $ 81 227 -- 34 $ 342
Qualified.............................. $ 283 367 (372) 24 $ 302
-----
$ 726
-----
-----
</TABLE>
For both the qualified domestic plans, the weighted average discount used in
determining the actuarial present value of the projected benefit obligation was
7.25% at December 31, 1993 and the rates of increase in future compensation used
were 4.5% and 4.0% at December 31, 1993. The weighted average discount rate and
the rate of increase in future compensation levels used at December 31, 1992 and
1991 for the one plan were 8.25% and 6.0%, respectively. The expected long-term
rates of return on assets were 8.0% and 8.5% for 1993 and 9.5% for all other
years.
For the non-qualified domestic plan, the weighted average discount rate used
was 7.5% at December 31, 1993 and 9.5% for all other years. For 1993 and 1992,
no salary increase was assumed as the Company has frozen salaries under the plan
at current levels. The rate of increase in future compensation in 1991 was 5.0%.
Liabilities under this plan attributable to Worldtex employees were assumed by
Worldtex in connection with the dividend of Worldtex.
For the United Kingdom plan, the assumed discount rate at December 31, 1993
was 9.0% and for all other years the rate was 10.0%. The rate of increase in
future compensation levels was 9.0% for all years and the expected long-term
rate of return on assets was 9.0% at December 31, 1993 and 10.0% for all other
years.
27
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
9. PENSION AND PROFIT-SHARING PLANS AND POSTRETIREMENT BENEFIT
PLANS (CONTINUED)
For the French plan, the assumed discount rate and rate of increase in
future compensation levels were 9.0% and 5.0%, respectively.
Certain subsidiaries have noncontributory profit-sharing plans and defined
contribution pension plans providing for minimum contributions based upon
defined levels of subsidiary income or employee compensation.
Pension and profit-sharing expense for the years ended December 31, 1993,
1992 and 1991 amounted to approximately $1,338, $2,141 and $1,234, respectively.
A subsidiary of the Company, acquired in 1993 provides certain health care
benefits for eligible retired employees. The status of the plan at December 31,
1993 is as follows:
<TABLE>
<S> <C>
Accumulated postretirement benefit obligation................................ $ 722
Unrecognized net gain........................................................ 5
---------
Accrued postretirement benefit cost.......................................... $ 727
---------
---------
</TABLE>
The postretirement benefit cost in 1993 consisted of interest cost of $39 on
the accumulated postretirement benefit obligation ("APBO"). The plan is
unfunded. The discount rate used in determining APBO was 7.25%. Increasing
assumed health care trends one percentage point will increase the APBO by $66 as
of December 31, 1993.
10. INCOME TAXES
Effective January 1, 1993, the Company adopted SFAS No. 109, "Accounting for
Income Taxes." Under Statement 109, the liability method is used in accounting
for income taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. Prior to
the adoption of Statement 109, income tax expense was determined using the
deferred method. Deferred tax expense was based on items of income and expense
that were reported in different years in the financial statements and tax
returns and were measured at the tax rate in effect in the year the difference
originated.
As permitted by Statement 109, the Company has elected not to restate the
financial statements of any prior years. The effect of the change on pretax
income from continuing operations for the year ended December 31, 1993 was not
material; however, the cumulative effect of the change as of January 1, 1993
increased net income by $660 or $.03 per share.
The Company and its U.S. subsidiaries file Federal income tax returns on a
consolidated basis. The provision (benefit) for income taxes has been classified
as follows in the consolidated statements of income:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Tax provision (benefit) from continuing operations..................... $ 5,038 $ (5,186) $ (1,656)
Provision for discontinued operations.................................. 1,303 4,858 4,480
Tax benefit of extraordinary charge.................................... -- -- (794)
--------- --------- ---------
$ 6,341 $ (328) $ 2,030
--------- --------- ---------
--------- --------- ---------
</TABLE>
28
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
10. INCOME TAXES (CONTINUED)
The provision (benefit) for income taxes is comprised of the following:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Federal:
Current.............................................................. $ 259 $ (1,204) $ (1,278)
Deferred............................................................. 4,251 (3,164) 1
State and local:
Current.............................................................. 297 873 620
Deferred............................................................. 1,361 9 63
Foreign:
Current.............................................................. 146 2,330 1,788
Deferred............................................................. 27 828 836
--------- --------- ---------
$ 6,341 $ (328) $ 2,030
--------- --------- ---------
--------- --------- ---------
</TABLE>
Deferred income taxes result from temporary differences in the recognition
of revenue and expenses for financial statement and income tax reporting
purposes. The tax effects of each as of December 31, 1993 are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Accounts receivable...................................................... $ 2,245
Inventory................................................................ 1,716
Other liabilities and reserves........................................... 3,206
Accrued restructuring and transaction costs.............................. 2,808
Federal capital loss and AMT credit carryforward......................... 422
State net operating loss carryforwards................................... 938
Valuation allowance...................................................... (1,093)
---------
Total deferred tax assets.............................................. 10,242
---------
Deferred tax liabilities:
Property, plant and equipment............................................ 1,811
Book/tax difference on asset valuation upon acquisition.................. 5,942
---------
Total deferred tax liabilities......................................... 7,753
---------
Net deferred tax assets................................................ $ 2,489
---------
---------
</TABLE>
Income (loss) before income taxes is comprised of the following:
<TABLE>
<CAPTION>
1993 1992 1991
--------- ---------- ---------
<S> <C> <C> <C>
Continuing operations:
Domestic.......................................................... $ 11,861 $ (18,275) $ (6,402)
Foreign........................................................... 67 687 307
--------- ---------- ---------
11,928 (17,588) (6,095)
Discontinued operations............................................. 2,820 12,385 10,603
Extraordinary charge................................................ -- -- (2,230)
--------- ---------- ---------
$ 14,748 $ ( 5,203) $ 2,278
--------- ---------- ---------
--------- ---------- ---------
</TABLE>
29
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
10. INCOME TAXES (CONTINUED)
A reconciliation for 1993, 1992 and 1991 between the amount computed using
the Federal income tax rate and the effective rate of tax on income (loss),
including discontinued operations, but excluding extraordinary charge, is as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Statutory Federal income tax rate........................................ 35.0% (34.0)% 34.0%
State and local income taxes, net of Federal income tax effect........... 5.9 11.2 10.8
Compensation-related credits............................................. -- -- (1.4)
Amortization of goodwill................................................. 2.1 5.3 6.7
Transaction costs........................................................ (1.4) 6.3 7.1
Recognition of acquisition liabilities................................... -- -- (2.3)
(Decrease) increase in taxes resulting from foreign income subject to
foreign income tax but not expected to be subject to U.S. tax in
foreseeable future...................................................... (0.8) 4.5 8.2
Impact on deferred taxes of 1993 federal corporate tax rate change to
35%..................................................................... (1.7) -- --
Utilization of federal capital loss carryforward not previously
recognized.............................................................. (2.2) -- --
Increase in deferred tax asset valuation allowance....................... 2.6 -- --
Alternative minimum tax.................................................. 0.6 -- --
Other, net............................................................... 2.9 0.4 (0.6)
--- ----- ---
Effective tax rate................................................... 43.0% (6.3)% 62.5%
--- ----- ---
--- ----- ---
</TABLE>
At December 31, 1993, the Company had state net operating loss carryforwards
for tax purposes of approximately $16,500. These loss carryforwards will expire
from years 1998 to 2008.
11. COMMITMENTS AND CONTINGENCIES
At December 31, 1993, annual minimum rental commitments under noncancelable
operating leases, primarily for real property, are summarized as follows:
<TABLE>
<S> <C>
1994.............................................................. $ 9,325
1995.............................................................. 6,791
1996.............................................................. 4,829
1997.............................................................. 3,564
1998.............................................................. 2,663
1999 and thereafter............................................... 6,056
---------
$ 33,228
---------
---------
</TABLE>
The minimum annual commitments include amounts payable to an officer of the
Company and/or members of his and his wife's family and amounts payable to an
officer of a subsidiary as follows: 1994 -- $841; 1995 -- $820; 1996 -- $710;
1997 -- $658; 1998 -- $630; thereafter -- $2,519.
Total rent expense charged to operations for the years ended December 31,
1993, 1992 and 1991 amounted to approximately $6,589, $5,148 and $5,447,
respectively.
At December 31, 1993, the Company was contingently liable for outstanding
letters of credit in the amount of $1,001.
30
<PAGE>
WILLCOX & GIBBS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
In the normal course of business, the Company is sometimes named as a
defendant in litigation. In the opinion of management, based upon the advice of
counsel, any uninsured liability which may result from the resolution of any
present litigation or asserted claim will not have a material effect on the
Company's financial position or results of operations.
In connection with the resignation of an executive of the Company on March
18, 1994, the Company has entered into an agreement with such executive which
provides, among other things, certain payments and acceleration of certain other
payments in connection with the executive's related employment agreement. As of
December 31, 1993, the Company's remaining commitments under this agreement
total approximately $1.1 million.
12. ACCOUNTS AND NOTES PAYABLE -- TRADE, AND OTHER LIABILITIES
Accounts and notes payable -- trade and other liabilities consist of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1993 1992
----------- ---------
<S> <C> <C>
Accounts and other payables -- trade........................................ $ 99,072 $ 58,980
Salaries, wages and other compensation...................................... 12,875 5,544
Pensions, profit sharing and employee benefits.............................. 5,769 4,622
Taxes, other than income taxes.............................................. 2,080 1,864
Interest.................................................................... 3,068 3,068
Restructuring accruals...................................................... 421 2,869
Transaction cost accruals................................................... 1,444 1,880
Other....................................................................... 11,301 7,618
----------- ---------
$ 136,030 $ 86,445
----------- ---------
----------- ---------
</TABLE>
13. RESULTS OF OPERATIONS
The Company has recorded charges to operations of $5,586 and $6,508 for the
years ended December 31, 1992 and 1991, respectively, related to certain
restructuring actions initiated by the Company ($1,248 and $959 for the years
ended December 31, 1992 and 1991, respectively, are included in discontinued
apparel operations.)
In 1992, the Company sold its data communications equipment distribution
business and an apparel-related unit in return for $3,350 in cash, $1,858 of
short and long-term notes and a marketable equity security with a fair market
value of $1,500. The disposal of these businesses relate to actions originally
initiated in 1991. The Company also initiated other restructuring actions,
including the disposal of other operations, that do not relate to the Company's
core business.
In 1991, the Company initiated certain restructuring actions, including the
disposal of certain operations, that did not relate to the Company's core
business. These operations included the above-mentioned data communications and
apparel-related businesses.
In 1992 and 1991, certain restructuring actions initiated in 1991 and 1990
required more costs to implement than originally expected. The additional costs,
included in the restructuring charges for these periods, changed based on the
revised estimates and experience to date.
On August 16, 1991, the Company redeemed all of the outstanding 13% Senior
Subordinated Notes due April 15, 1997 at a redemption price of 100% of the
principal amount thereof ($23,000) together with accrued interest to the
redemption date. An extraordinary charge of $1,436, net of a tax benefit of
$794, was recorded to reflect the write-off of unamortized discount and expense.
31
<PAGE>
WILLCOX & GIBBS, INC.
SUPPLEMENTARY FINANCIAL INFORMATION
YEARS ENDED DECEMBER 31, 1993 AND 1992
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRIMARY EARNINGS (LOSS) PER SHARE (1)(3)
-------------------------------------------------
INCOME
INCOME (LOSS) (LOSS)
BEFORE BEFORE
UNAUDITED INCOME INCOME (LOSS) CUMULATIVE INCOME INCOME (LOSS) CUMULATIVE
QUARTERLY (LOSS) FROM FROM EFFECT OF (LOSS) FROM FROM EFFECT OF NET
FINANCIAL NET GROSS CONTINUING DISCONTINUED ACCOUNTING NET INCOME CONTINUING DISCONTINUED ACCOUNTING INCOME
DATA (1) SALES PROFIT OPERATIONS OPERATIONS CHANGE (LOSS) OPERATIONS OPERATIONS CHANGE (LOSS)
- ------------------ -------- ----------- ------------- ------------- ---------- ----------- -------------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1993:
First..... $111,824 $ 22,764 $ 1,198 $ 624 $ 1,822 $ 2,482 $ .06 $ .03 $ .09 $ .12
Second.... 126,427 25,740 1,275 869 2,144 2,144 .06 .04 .10 .10
Third..... 138,691 28,045 2,125 157 2,282 2,282 .10 .01 .11 .11
Fourth.... 144,577 30,943 2,292 (133) 2,159 2,159 .11 (.01) .10 .10
-------- -------- ----------- ------------- ------------- ---------- ----- ----- ----- -------
$521,519 $107,492 $ 6,890 $ 1,517 $ 8,407 $ 9,067 $ .33 $ .07 $ .40 $ .43
-------- -------- ----------- ------------- ------------- ---------- ----- ----- ----- -------
-------- -------- ----------- ------------- ------------- ---------- ----- ----- ----- -------
1992:
First..... $ 81,116 $ 16,821 $ 7 $ 2,273 $ 2,280 $ 2,280 $ -- $ .17 $ .17 $ .17
Second.... 84,779 16,882 254 2,443 2,697 2,697 .02 .18 .20 .20
Third..... 89,900 17,696 (432) 2,658 2,226 2,226 (.03) .19 .16 .16
Fourth (2)... 103,285 21,968 (12,231) 153 (12,078) (12,078) (.71) .01 (.70) (.70)
-------- -------- ----------- ------------- ------------- ---------- ----- ----- ----- -------
$359,080 $ 73,367 $ (12,402) $ 7,527 $ (4,875) $ (4,875) $ (.85) $ .52 $ (.33) $ (.33)
-------- -------- ----------- ------------- ------------- ---------- ----- ----- ----- -------
-------- -------- ----------- ------------- ------------- ---------- ----- ----- ----- -------
- ----------
(1) Fully diluted amounts are anti-dilutive in 1993 and 1992.
(2) Refer to Note 2 of the Consolidated Financial Statements.
(3) Quarterly income (loss) per share amounts for 1992 do not equal the total for the year because of the impact of the issuance of
6,284,307 shares to Rexel in the fourth quarter.
</TABLE>
32
<PAGE>
SCHEDULE II
WILLCOX & GIBBS, INC.
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DEDUCTIONS
---------------------- BALANCE AT
BALANCE AT AMOUNTS END OF PERIOD
BEGINNING AMOUNTS WRITTEN --------------------------
NAME OF DEBTOR AND DESCRIPTION OF PERIOD ADDITIONS COLLECTED OFF CURRENT NON CURRENT
- -------------------------------------------------- ---------- --------- ---------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Mr. Wayne Campbell, Corporate Vice President --
8 1/2% Mortgage note due in monthly
installments of $1.538, including interest
through October 1, 2016........................ $ 126 $ -- $ 8 $ -- $ 9 $ 109
--
--
----- --------- --- ---------- -----
----- --------- --- ---------- -----
Year ended December 31, 1992:
Mr. Wayne Campbell, Corporate Vice President --
Mortgage note.................................. $ 190 $ -- $ 64 $ -- $ 8 $ 118
--
--
----- --------- --- ---------- -----
----- --------- --- ---------- -----
Year ended December 31, 1991:
Mr. Wayne Campbell, Corporate Vice President --
Mortgage note.................................. $ 193 $ -- $ 3 $ -- $ 2 $ 188
--
--
----- --------- --- ---------- -----
----- --------- --- ---------- -----
</TABLE>
33
<PAGE>
SCHEDULE VIII
WILLCOX & GIBBS, INC.
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN C
----------------------
COLUMN B ADDITIONS COLUMN E
---------- ---------------------- COLUMN D ----------
COLUMN A BALANCE AT CHARGES TO ------------- BALANCE AT
- ---------------------------------------- BEGINNING COSTS AND DEDUCTIONS CLOSE OF
DESCRIPTION OF PERIOD EXPENSES OTHER FROM RESERVES PERIOD
- ---------------------------------------- ---------- ---------- -------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Allowance for doubtful accounts....... $ 10,035 $ 2,154 $ 451(B) $ 8,617(A) $ 4,023
---------- ---------- -------- ------------- ----------
---------- ---------- -------- ------------- ----------
Year ended December 31, 1992:
Allowance for doubtful accounts....... $ 8,667 $ 3,692 $ 300(B) $ 2,624(A) $ 10,035
---------- ---------- -------- ------------- ----------
---------- ---------- -------- ------------- ----------
Year ended December 31, 1991:
Allowance for doubtful accounts....... $ 8,614 $ 4,687 $-- $ 4,634(A) $ 8,667
---------- ---------- -------- ------------- ----------
---------- ---------- -------- ------------- ----------
<FN>
- ------------------------
Notes:
(A) Accounts charged off, recoveries, and other adjustments, net, including
reclassification of apparel net assets, sale of companies and dividend of
Worldtex.
(B) Additions resulting primarily from acquired companies.
</TABLE>
34
<PAGE>
SCHEDULE IX
WILLCOX & GIBBS, INC.
SHORT-TERM BORROWINGS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN C
--------- COLUMN D COLUMN E COLUMN F
COLUMN A COLUMN B WEIGHTED -------------- ---------------- ------------------
- ---------------------------------------- ------------- AVERAGE MAXIMUM AMOUNT AVERAGE AMOUNT WEIGHTED AVERAGE
CATEGORY OF AGGREGATE BALANCE AT INTEREST OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM BORROWINGS END OF PERIOD RATE DURING PERIOD DURING PERIOD(1) DURING PERIOD (2)
- ----------------------- ------------- --------- -------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Notes payable to banks:
Line of credit -- Corporate......... $ 61,500 4.57% $ 70,500 $ 3,252 6.64%
Year ended December 31, 1992:
Notes payable to banks:
Line of credit -- Corporate......... -- -- $ 35,330 $ 21,144 5.48%
Line of credit -- France (3)........ -- -- 6,638 5,202 11.24%
Line of credit -- France (3)........ -- -- 30,254 27,813 11.66%
Year ended December 31, 1991:
Notes payable to banks:
Line of credit -- Corporate......... $ 17,050 6.12% $ 46,900 $ 13,427 8.84%
Line of credit -- France 4,060 10.86% 10,271 7,881 11.13%
Line of credit -- France 28,957 11.31% 44,646 32,215 10.67%
<FN>
- ------------------------
Notes:
(1) The average amount outstanding during the period represents the average
daily principal balances outstanding during the period.
(2) The weighted average interest rates during the period were computed by
dividing the actual interest incurred on short-term borrowings by the
average short-term borrowings.
(3) All debt in France was included in the dividend of Worldtex.
</TABLE>
35
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is made to the information responsive to the Items comprising this
Part III that is contained in the Company's definitive proxy statement for its
1994 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A under
the Securities Exchange Act of 1934, which is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
FINANCIAL STATEMENTS AND SCHEDULES
The financial statements and financial statement schedules included in this
Report are listed in the introductory portion of Item 8.
EXHIBITS
The following exhibits are filed as part of this Report (for convenience of
reference, exhibits are listed according to numbers assigned in the exhibit
tables of Item 601 of Regulation S-K under the Securities Exchange Act of 1934
and management contracts and compensatory plans are indicated by an asterisk):
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Purchase Agreement, dated as of April 22, 1992, among the Company, Rexel, ITD and SES -- filed as Exhibit
2.1 to the Company's Current Report on Form 8-K dated April 22, 1992, and incorporated herein by
reference.
2.2 Purchase Agreement, dated as of November 20, 1993, among Willcox & Gibbs Delaware, Inc., Willcox & Gibbs,
Inc., Summers Group, Inc., SGDHC, Inc. and BTR Dunlap, Inc. -- filed as Exhibit 2 to the Company's
Current Report on Form 8-K dated December 17, 1993 and incorporated herein by reference.
2.3 Purchase Agreement, dated as of December 10, 1993, among Willcox & Gibbs, Inc., ITD and Rexel -- filed as
Exhibit 2 to the Company's Current Report on Form 8-K dated March 1, 1994 and incorporated herein by
reference.
3.1 Composite certificate of incorporation -- filed herewith.
3.2 By-laws of the Company -- filed herewith.
4.1 Note Agreement, dated as of April 2, 1991, between the Company and The Prudential Insurance Company of
America -- filed as Exhibit 4.1 to the Company's report on Form 10-Q for the quarter ended March 31,
1991 and incorporated herein by reference.
4.2 Amendment No. 2, dated as of November 11, 1992, to the Note Agreement, dated as of April 2, 1991 -- filed
as Exhibit 4.2 to the Company's annual report on Form 10-K for 1992 and incorporated herein by
reference.
4.3 Amendment No. 3, dated as of March 30, 1993, to the Note Agreement, dated as of April 2, 1991 -- filed
herewith.
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
4.4 Amendment No. 4, dated as of December 17, 1993, to the Note Agreement, dated as of April 2, 1991 -- filed
herewith.
4.5 Indenture dated as of August 1, 1989 between the Company and Manufacturers Hanover Trust Company, as
Trustee relating to the 7% Debentures -- filed as Exhibit 4 to the Company's report on Form 10-Q for the
quarter ended June 30, 1989 and incorporated herein by reference.
4.6 Mortgage notes dated December 11, 1986 from a subsidiary of the Company to two insurance company lenders,
in the original principal amount of $7,000,000. [This instrument is not filed pursuant to instruction
(b)(4)(iii) of Item 601 of Regulation S-K; a copy will be furnished to the Commission upon request.]
10.1 Amended Employment Contact dated as of July 12, 1988 between the Company and Sidney B. Becker -- filed as
Exhibit 10.1 to the Company's annual report on Form 10-K for 1988 and incorporated herein by reference.*
10.2 Amendment dated January 17, 1990, to the Amended Employment Contract between the Company and Sidney B.
Becker -- filed as Exhibit 10.2 to the Company's annual report on Form 10-K for 1990 and incorporated
herein by reference.*
10.3 Letter Agreement, dated April 22, 1992, between the Company and Sidney B. Becker relating to his Amended
Employment Contract -- filed as Exhibit E to the Company's Proxy Statement, dated September 2, 1992, and
incorporated herein by reference.*
10.4 Employment Contract dated as of July 12, 1988 between the Company and Allan M. Gonopolsky -- filed as
Exhibit 10.2 to the Company's annual report on Form 10-K for 1988 and incorporated herein by reference.*
10.5 Letter Agreement, dated April 22, 1992, between the Company and Allan M. Gonopolsky relating to his
Employment Contract -- filed as Exhibit G to the Company's Proxy Statement, dated September 2, 1992, and
incorporated herein by reference.*
10.6 Amended Employment Contract dated as of July 12, 1988 between the Company and Richard J. Mackey -- filed
as Exhibit 10.4 to the Company's annual report on Form 10-K for 1988 and incorporated herein by
reference.*
10.7 Amendment dated January 8, 1991, to the Amended Employment Contract between the Company and Richard J.
Mackey -- filed as Exhibit 10.5 to the Company's annual report on Form 10-K for 1990 and incorporated
herein by reference.*
10.8 Letter Agreement, dated April 22, 1992, between the Company and Richard J. Mackey relating to his Amended
Employment Contract -- filed as Exhibit F to the Company's Proxy Statement, dated September 2, 1992, and
incorporated herein by reference.*
10.9 Employment Contract dated as of April 22, 1992 between the Company and John K. Ziegler -- filed as
Exhibit C to the Company's Proxy Statement, dated September 2, 1992, and incorporated herein by
reference.*
10.10 Employment Contract dated April 22, 1992, between the Company and Robert M. Merson -- filed as Exhibit D
to the Company's Proxy Statement, dated September 2, 1992, and incorporated herein by reference.*
10.11 Employment Contract dated as of January 1, 1991 between the Company and Wayne Campbell -- filed on
Exhibit 10.9 to the Company's annual report on Form 10-K for 1990 and incorporated herein by reference.*
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
10.12 Distributorship Agreement dated as of September 1, 1982 between the Company and a subsidiary of Pfaff
providing for distribution of industrial sewing equipment parts -- filed as Exhibit 10-(1) to the
Company's report on Form 8-K dated September 22, 1982 and incorporated herein by reference.
10.13 Amendment dated as of December 15, 1986 to the Distributorship Agreement with Pfaff -- filed as Exhibit
10.15 to the Company's annual report or Form 10-K for 1987 and incorporated herein by reference.
10.14 Distributorship Agreement dated as of September 1, 1982 between the Company and Pegasus providing for
distribution of industrial sewing equipment parts -- filed as Exhibit 10-(2) to the Company's report on
Form 8-K dated September 22, 1982 and incorporated herein by reference.
10.15 Amendment dated as of December 15, 1986 to the Distributorship Agreement with Pegasus -- filed as Exhibit
10.17 to the Company's annual report on Form 10-K for 1987 and incorporated herein by reference.
10.16 Revolving Credit and Reimbursement Agreement dated as of December 17, 1993, among the Company and
NationsBank of Florida, National Association, and Credit Lyonnais New York Branch -- filed herewith.
10.17 1988 Stock Incentive Plan, as amended and restated effective March 9, 1993 -- filed as Exhibit A to the
Company's Proxy Statement for its annual meeting of stockholders to be held on May 21, 1993 and
incorporated herein by reference.*
10.18 1985 Stock Option Plan as amended -- filed as Exhibit A to the Company's Proxy Statement for its annual
meeting of stockholders held on May 10, 1985 and amended as described in the Proxy Statement for the
annual meeting held on May 9, 1986 and incorporated herein by reference.*
10.19 1982 Stock Option Plan -- filed as Exhibit A to the Company's Proxy Statement for its annual meeting of
stockholders held on May 14, 1982 and incorporated herein by reference.*
10.20 Incentive Compensation Plan for Key Employees -- filed as Exhibit 10.22 to the Company's annual report on
Form 10-K for 1983 and incorporated herein by reference.*
10.21 Form of indemnification agreement, dated as of November 18, 1986, between the Company and its directors
and officers -- filed as Exhibit 10.30 to the Company's annual report on Form 10-K for 1986 and
incorporated herein by reference.
10.22 Rights Agreement, dated as of January 10, 1989 -- filed as Exhibit 1 to the Company's registration
statement on Form 8-A, dated January 17, 1989 and incorporated herein by reference.
10.23 Amendment, dated November 12, 1992, to the Rights Agreement, dated as of January 10, 1989 -- filed as
Exhibit 4.1 to Amendment No. 2 on Form 8, dated November 30, 1992, to Registration Statement on Form 8-A
and incorporated herein by reference.
10.24 Third Amendment, dated March 1, 1994, to the Rights Agreement, dated as of January 10, 1989 -- filed as
Exhibit 10.2 to the Company's Current Report on Form 8-K dated March 1, 1994 and incorporated herein by
reference.
10.25 Investment Agreement, dated as of November 12, 1992, among the Company, CDME and ITD -- filed as Exhibit
10.24 to the Company's annual report on Form 10-K for 1992 and incorporated herein by reference.
10.26 Amendment No. 1, dated as of March 1, 1994, to the Investment Agreement, dated as of November 12, 1992 --
filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated March 1, 1994 and incorporated
herein by reference.
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
10.27 Distribution Agreement, dated as of November 12, 1992, between the Company and Worldtex, Inc. -- filed as
Exhibit 10.25 to the Company's annual report on Form 10-K for 1992 and incorporated herein by reference.
10.28 Tax Sharing Agreement, dated as of November 12, 1992, between the Company and Worldtex, Inc. -- filed as
Exhibit 10.26 to the Company's annual report on Form 10-K for 1992 and incorporated herein by reference.
10.29 Severance Agreement, dated as of March 18, 1994, between the Company, Steinthal Sample Co., Inc. and John
K. Ziegler -- filed herewith.
11.1 Statement re computation of per share earnings -- filed herewith.
21.1 Subsidiaries of the Company -- filed herewith.
23.1 Consent of Coopers & Lybrand -- filed herewith.
24.1 Powers of Attorney executed by certain directors and officers of the Company -- filed herewith.
</TABLE>
8-K REPORTS
During the last quarter of the Company's 1993 fiscal year, the Company did
not file a Current Report on Form 8-K.
39
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: March 30, 1994 WILLCOX & GIBBS, INC.
By: /s/ Allan M. Gonopolsky
-----------------------------------
Allan M. Gonopolsky
VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND CORPORATE CONTROLLER
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 30, 1994 by the following persons on
behalf of the registrant and in the capacities indicated.
<TABLE>
<S> <C>
ALAIN VIRY* President and Chief Executive
- ---------------------------------------------------- Officer and Director
Alain Viry
/s/ Allan M. Gonopolsky Vice President, Chief Financial
---------------------------------------------------- Officer, Corporate Controller
Allan M. Gonopolsky
ATTORNEY FOR PERSONS INDICATED BY
ASTERISK
FREDERIC DE CASTRO* Director
- ----------------------------------------------------
Frederic de Castro
JOHN B. FRASER* Director
- ----------------------------------------------------
John B. Fraser
R. GARY GENTLES* Director
- ----------------------------------------------------
R. Gary Gentles
AUSTIN LIST* Director
- ----------------------------------------------------
Austin List
ERIC LOMAS* Director
- ----------------------------------------------------
Eric Lomas
GERALD E. MORRIS* Director
- ----------------------------------------------------
Gerald E. Morris
NICOLAS SOKOLOW* Director
- ----------------------------------------------------
Nicolas Sokolow
SERGE WEINBERG* Director
- ----------------------------------------------------
Serge Weinberg
</TABLE>
40
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Purchase Agreement, dated as of April 22, 1992, among the Company, Rexel, ITD and SES -- filed as Exhibit
2.1 to the Company's Current Report on Form 8-K dated April 22, 1992, and incorporated herein by
reference.
2.2 Purchase Agreement, dated as of November 20, 1993, among Willcox & Gibbs Delaware, Inc., Willcox & Gibbs,
Inc., Summers Group, Inc., SGDHC, Inc. and BTR Dunlap, Inc. -- filed as Exhibit 2 to the Company's
Current Report on Form 8-K dated December 17, 1993 and incorporated herein by reference.
2.3 Purchase Agreement, dated as of December 10, 1993, among Willcox & Gibbs, Inc., ITD and Rexel -- filed as
Exhibit 2 to the Company's Current Report on Form 8-K dated March 1, 1994 and incorporated herein by
reference.
3.1 Composite certificate of incorporation -- filed herewith.
3.2 By-laws of the Company -- filed herewith.
4.1 Note Agreement, dated as of April 2, 1991, between the Company and The Prudential Insurance Company of
America -- filed as Exhibit 4.1 to the Company's report on Form 10-Q for the quarter ended March 31,
1991 and incorporated herein by reference.
4.2 Amendment No. 2, dated as of November 11, 1992, to the Note Agreement, dated as of April 2, 1991 -- filed
as Exhibit 4.2 to the Company's annual report on Form 10-K for 1992 and incorporated herein by
reference.
4.3 Amendment No. 3, dated as of March 30, 1993, to the Note Agreement, dated as of April 2, 1991 -- filed
herewith.
4.4 Amendment No. 4, dated as of December 17, 1993, to the Note Agreement, dated as of April 2, 1991 -- filed
herewith.
4.5 Indenture dated as of August 1, 1989 between the Company and Manufacturers Hanover Trust Company, as
Trustee relating to the 7% Debentures -- filed as Exhibit 4 to the Company's report on Form 10-Q for the
quarter ended June 30, 1989 and incorporated herein by reference.
4.6 Mortgage notes dated December 11, 1986 from a subsidiary of the Company to two insurance company lenders,
in the original principal amount of $7,000,000. [This instrument is not filed pursuant to instruction
(b)(4)(iii) of Item 601 of Regulation S-K; a copy will be furnished to the Commission upon request.]
10.1 Amended Employment Contact dated as of July 12, 1988 between the Company and Sidney B. Becker -- filed as
Exhibit 10.1 to the Company's annual report on Form 10-K for 1988 and incorporated herein by reference.*
10.2 Amendment dated January 17, 1990, to the Amended Employment Contract between the Company and Sidney B.
Becker -- filed as Exhibit 10.2 to the Company's annual report on Form 10-K for 1990 and incorporated
herein by reference.*
10.3 Letter Agreement, dated April 22, 1992, between the Company and Sidney B. Becker relating to his Amended
Employment Contract -- filed as Exhibit E to the Company's Proxy Statement, dated September 2, 1992, and
incorporated herein by reference.*
10.4 Employment Contract dated as of July 12, 1988 between the Company and Allan M. Gonopolsky -- filed as
Exhibit 10.2 to the Company's annual report on Form 10-K for 1988 and incorporated herein by reference.*
10.5 Letter Agreement, dated April 22, 1992, between the Company and Allan M. Gonopolsky relating to his
Employment Contract -- filed as Exhibit G to the Company's Proxy Statement, dated September 2, 1992, and
incorporated herein by reference.*
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
10.6 Amended Employment Contract dated as of July 12, 1988 between the Company and Richard J. Mackey -- filed
as Exhibit 10.4 to the Company's annual report on Form 10-K for 1988 and incorporated herein by
reference.*
10.7 Amendment dated January 8, 1991, to the Amended Employment Contract between the Company and Richard J.
Mackey -- filed as Exhibit 10.5 to the Company's annual report on Form 10-K for 1990 and incorporated
herein by reference.*
10.8 Letter Agreement, dated April 22, 1992, between the Company and Richard J. Mackey relating to his Amended
Employment Contract -- filed as Exhibit F to the Company's Proxy Statement, dated September 2, 1992, and
incorporated herein by reference.*
10.9 Employment Contract dated as of April 22, 1992 between the Company and John K. Ziegler -- filed as
Exhibit C to the Company's Proxy Statement, dated September 2, 1992, and incorporated herein by
reference.*
10.10 Employment Contract dated April 22, 1992, between the Company and Robert M. Merson -- filed as Exhibit D
to the Company's Proxy Statement, dated September 2, 1992, and incorporated herein by reference.*
10.11 Employment Contract dated as of January 1, 1991 between the Company and Wayne Campbell -- filed on
Exhibit 10.9 to the Company's annual report on Form 10-K for 1990 and incorporated herein by reference.*
10.12 Distributorship Agreement dated as of September 1, 1982 between the Company and a subsidiary of Pfaff
providing for distribution of industrial sewing equipment parts -- filed as Exhibit 10-(1) to the
Company's report on Form 8-K dated September 22, 1982 and incorporated herein by reference.
10.13 Amendment dated as of December 15, 1986 to the Distributorship Agreement with Pfaff -- filed as Exhibit
10.15 to the Company's annual report or Form 10-K for 1987 and incorporated herein by reference.
10.14 Distributorship Agreement dated as of September 1, 1982 between the Company and Pegasus providing for
distribution of industrial sewing equipment parts -- filed as Exhibit 10-(2) to the Company's report on
Form 8-K dated September 22, 1982 and incorporated herein by reference.
10.15 Amendment dated as of December 15, 1986 to the Distributorship Agreement with Pegasus -- filed as Exhibit
10.17 to the Company's annual report on Form 10-K for 1987 and incorporated herein by reference.
10.16 Revolving Credit and Reimbursement Agreement dated as of December 17, 1993, among the Company and
NationsBank of Florida, National Association, and Credit Lyonnais New York Branch -- filed herewith.
10.17 1988 Stock Incentive Plan, as amended and restated effective March 9, 1993 -- filed as Exhibit A to the
Company's Proxy Statement for its annual meeting of stockholders to be held on May 21, 1993 and
incorporated herein by reference.*
10.18 1985 Stock Option Plan as amended -- filed as Exhibit A to the Company's Proxy Statement for its annual
meeting of stockholders held on May 10, 1985 and amended as described in the Proxy Statement for the
annual meeting held on May 9, 1986 and incorporated herein by reference.*
10.19 1982 Stock Option Plan -- filed as Exhibit A to the Company's Proxy Statement for its annual meeting of
stockholders held on May 14, 1982 and incorporated herein by reference.*
10.20 Incentive Compensation Plan for Key Employees -- filed as Exhibit 10.22 to the Company's annual report on
Form 10-K for 1983 and incorporated herein by reference.*
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
10.21 Form of indemnification agreement, dated as of November 18, 1986, between the Company and its directors
and officers -- filed as Exhibit 10.30 to the Company's annual report on Form 10-K for 1986 and
incorporated herein by reference.
10.22 Rights Agreement, dated as of January 10, 1989 -- filed as Exhibit 1 to the Company's registration
statement on Form 8-A, dated January 17, 1989 and incorporated herein by reference.
10.23 Amendment, dated November 12, 1992, to the Rights Agreement, dated as of January 10, 1989 -- filed as
Exhibit 4.1 to Amendment No. 2 on Form 8, dated November 30, 1992, to Registration Statement on Form 8-A
and incorporated herein by reference.
10.24 Third Amendment, dated March 1, 1994, to the Rights Agreement, dated as of January 10, 1989 -- filed as
Exhibit 10.2 to the Company's Current Report on Form 8-K dated March 1, 1994 and incorporated herein by
reference.
10.25 Investment Agreement, dated as of November 12, 1992, among the Company, CDME and ITD -- filed as Exhibit
10.24 to the Company's annual report on Form 10-K for 1992 and incorporated herein by reference.
10.26 Amendment No. 1, dated as of March 1, 1994, to the Investment Agreement, dated as of November 12, 1992 --
filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated March 1, 1994 and incorporated
herein by reference.
10.27 Distribution Agreement, dated as of November 12, 1992, between the Company and Worldtex, Inc. -- filed as
Exhibit 10.25 to the Company's annual report on Form 10-K for 1992 and incorporated herein by reference.
10.28 Tax Sharing Agreement, dated as of November 12, 1992, between the Company and Worldtex, Inc. -- filed as
Exhibit 10.26 to the Company's annual report on Form 10-K for 1992 and incorporated herein by reference.
10.29 Severance Agreement, dated as of March 18, 1994, between the Company, Steinthal Sample Co., Inc. and John
K. Ziegler -- filed herewith.
11.1 Statement re computation of per share earnings -- filed herewith.
21.1 Subsidiaries of the Company -- filed herewith.
23.1 Consent of Coopers & Lybrand -- filed herewith.
24.1 Powers of Attorney executed by certain directors and officers of the Company -- filed herewith.
</TABLE>
43
<PAGE>
Exhibit 3.1
COMPOSITE CERTIFICATE OF INCORPORATION
of
WILLCOX & GIBBS, INC.
(As in effect November 12, 1992)
FIRST:
The corporate name of the said Corporation is hereby declared to be Willcox
& Gibbs, Inc.
SECOND:
The purposes for which the said Corporation is formed are:
To manufacture, buy, sell, deal in and with, sewing machines of every type
and description, and parts, accessories and equipment therefor and for use in
connection therewith, and generally to conduct a manufacturing business in all
its branches;
To manufacture, purchase, or otherwise acquire, own, sell, lease, mortgage,
pledge, assign and transfer, or otherwise dispose of, to invest, trade, deal in
and with goods, commodities, wares, merchandise, services and real and personal
property of every type and description;
To acquire, and pay for in cash, stock or bonds of the said Corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation engaged in the same or similar business;
To acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage, or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trademarks and trade names, relating to
or useful in connection with any business of the said Corporation;
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2
To purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise
dispose of shares of the capital stock of, or any bonds, securities or evidences
of indebtedness created by any other corporation or corporations organized under
the laws of the State of New York or any other state, country, nation or
government, and while the owner thereof to exercise all the rights, powers and
privileges of ownership;
To issue bonds, debentures, or obligations of the said Corporation from
time to time, for any of the objects or purposes of the said Corporation, and to
secure the same by mortgage, pledge, deed of trust, or otherwise;
To purchase, hold, sell and transfer the shares of its own capital stock;
provided it shall not use its funds or property for the purchase of its own
shares of capital stock when such use would cause any impairment of its capital
except as otherwise permitted by law; and provided further that shares of its
own capital stock belonging to it shall not be voted upon directly or
indirectly;
To have one or more offices, to carry on all or any of its operations and
business, and without restriction or limit as to amount to purchase or otherwise
acquire, hold, own, mortgage, sell, convey, or otherwise dispose of real and
personal property of every class and description, in any of the states,
districts, territories or colonies of the United States, and in any and all
foreign countries, subject to the laws of such state, district, territory,
colony or country;
In general, to carry on any other similar business in connection with the
foregoing, and to have and exercise all the powers conferred by the laws of the
State of New York upon corporations formed under the Stock Corporation Law of
the State of New York, and to do any or all of the things hereinbefore set forth
to the same extent as natural persons might or could do.
The foregoing clauses shall be construed both as objects and powers, and it
is hereby expressly provided that the foregoing enumeration of specific powers
shall not be held to limit or restrict in any manner the powers of the said
Corporation.
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<PAGE>
3
THIRD:
The aggregate number of shares which the Corporation shall have authority
to issue is thirty-seven million six hundred thousand (37,600,000), to consist
of six hundred thousand (600,000) shares of Preferred Stock having a par value
of twelve dollars ($12) each, two million (2,000,000) shares of Preference Stock
having a par value of one dollar ($1) each and thirty-five million (35,000,000)
shares of Common Stock having a par value of one dollar ($1) each.
A. PREFERRED STOCK
(1) Preferred Stock may be issued from time to time in one or more series, each
of such series to have such designations, relative rights, preferences and
limitations as are stated and expressed in this Article and in the resolution or
resolutions providing for the issue of such series adopted by the Board of
Directors as hereinafter provided.
(2) Authority is hereby expressly granted to the Board of Directors, subject to
the provisions of this Article, to establish and designate one or more series of
Preferred Stock and to fix the variations in the relative rights, preferences
and limitations of each series, including without limitation:
(a) The number of shares to constitute such series and the distinctive
designations thereof;
(b) The dividend rate to which such shares shall be entitled and the
restrictions, limitations and conditions upon the payment of such dividends,
whether dividends shall be cumulative, the date or dates from which dividends
(if cumulative) shall accumulate and the dates on which dividends (if declared)
shall be payable;
(c) Whether or not the shares of such series shall be redeemable and, if
so, the terms, limitations and restrictions with respect to such redemption,
including without limitation the manner of selecting shares for redemption if
less than all shares are to be redeemed, and the amount, if any, in addition to
any accrued dividends thereon, which the holders of shares of such series shall
be entitled to receive upon the redemption thereof, which amount may vary at
different redemption dates and may be different with respect to shares redeemed
through the operation of any purchase, retirement or sinking fund and with
respect to shares otherwise redeemed;
(d) The amount in addition to any accrued dividends thereon which the
holders of shares of such series shall be entitled to receive upon the voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, which
amount may vary at different dates and may vary depending on whether such
liquidation, dissolution or winding up is voluntary or involuntary;
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4
(e) Whether or not the shares of such series shall be subject to the
operation of a purchase, retirement or sinking fund and, if so, the terms,
limitations and restrictions with respect thereto, including without limitation
whether such purchase, retirement or sinking fund shall be cumulative or non-
cumulative, the extent to and the manner in which such fund shall be applied to
the purchase, retirement or redemption of the shares of such series for
retirement, or to other corporate purposes and the terms and provisions relative
to the operation thereof;
(f) Whether or not the shares of such series shall have conversion
privileges and, if so, prices or rates of conversion and the method, if any, of
adjusting the same;
(g) The voting powers, if any, of such series in addition to the voting
powers provided in paragraph A(6) below; and
(h) Any other relative rights, preferences and limitations thereof as
shall not be inconsistent with this Article.
(3) All shares of any one series of Preferred Stock shall be identical with
each other in all respects, except that shares of any one series issued at
different times may differ as to the dates from which dividends thereon shall be
cumulative; and all series shall rank equally and be identical in all respects,
except as permitted by the foregoing provisions of paragraph A(2).
(4) The Board of Directors may provide that dividends on Preferred Stock shall
be declared and paid, or set apart for payment, and that the Corporation shall
not be in default under any obligation to redeem shares of Preferred Stock,
before any dividends shall be declared and paid, or set apart for payment, and
before any other distributions shall be made, on the Common Stock (except
dividends or other distributions in shares of Common Stock) or before the
Corporation shall acquire any shares of Common Stock (except in exchange for or
out of the proceeds of sale of Common Stock).
(5) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation shall be made to or set apart for
the holders of shares of any class or classes of stock of the Corporation
ranking junior to the Preferred Stock, the holders of the shares of each series
of the Preferred Stock shall be entitled to receive payment of the amount per
share fixed by the Board of Directors for the particular series, plus an amount
equal to all dividends accrued thereon to the date of final distribution to such
holders; but they shall be entitled to no further payment. For the purposes of
this paragraph A(5), the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially all
of the property or assets of the Corporation or a consolidation or merger of the
Corporation with one or more corporations shall not be deemed to be a
dissolution, liquidation or winding up, voluntary or involuntary.
(6) So long as any of the Preferred Stock is outstanding, the Corporation:
(a) will not, without the affirmative vote or written consent of the
holders of at least a majority of all the Preferred Stock at the time
outstanding, given in person or by proxy, either
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<PAGE>
5
in writing or by resolution adopted at a meeting called for the purpose, at
which the holders of the Preferred Stock, regardless of series, shall vote
separately as a class, (i) create any other class or classes of stock ranking
prior to the Preferred Stock either as to dividends or liquidation, or increase
the authorized number of shares of any such other class of stock, or (ii) amend,
alter or repeal any of the provisions of this Article so as adversely to affect
the preferences, rights or powers of the Preferred Stock;
(b) will not, without the affirmative vote or written consent of the
holders of at least a majority of any adversely affected series of the Preferred
Stock at the time outstanding, given in person or by proxy, either in writing or
by resolution adopted at a meeting called for the purpose (the holders of such
series of the Preferred Stock consenting or voting, as the case may be,
separately as a class), amend, alter or repeal any of the provisions herein or
in the resolution or resolutions adopted by the Board of Directors providing for
the issue of such series so as adversely to affect the preferences, rights or
powers of the Preferred Stock of such series; provided, however, that any vote
or consent required by clause (ii) of subparagraph (a) above may be given and
made effective by the filing of an appropriate amendment of the Corporation's
Certificate of Incorporation without obtaining the vote or consent of the
holders of the Common Stock of the Corporation, the right to give such vote or
consent being expressly waived by holders of such Common Stock, unless the
action to be taken would adversely affect the preferences, rights or powers of
the Common Stock; and provided further that any vote or consent required by this
subparagraph (b) may be given and made effective by the filing of an appropriate
amendment of the Corporation's Certificate of Incorporation without obtaining
the vote or consent of the holders of any other series of the Preferred Stock or
the holders of the Common Stock of the Corporation, the right to give such vote
or consent being expressly waived by all holders of such other series of
Preferred Stock and Common Stock, unless the action to be taken would adversely
affect the preferences, rights or powers of such other series of Preferred
Stock or Common Stock, as the case may be; and
(c) the term "outstanding", when used in reference to shares of stock,
shall mean issued shares, excluding shares held by the Corporation and shares
called for redemption, funds for the redemption of which shall have been set
aside or deposited in trust.
(7) The shares of Preferred Stock may be issued by the Corporation from time to
time for such consideration, not less than the par value thereof, as may be
fixed from time to time by the Board of Directors.
B. PREFERENCE STOCK
(1) The Preference Stock may be issued from time to time in one or more series.
Authority is hereby expressly granted to the Board of Directors to establish and
designate one or more series of Preference Stock and to fix the variations in
the relative rights, preferences and limitations of each such series, including,
but not limited to, the following:
(a) The number of shares to constitute such series and the designation of
the shares of such series.
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6
(b) The dividends, if any, payable on such series, the conditions and
dates upon which such dividends shall be payable, the preference or relation
which such dividends shall bear to the dividends payable on any other class or
series of stock and whether such dividends shall be cumulative and, if so, from
what dates.
(c) Whether the shares of such series shall be subject to redemption by
the Corporation or at the option of the holder or both and, if so, the times,
prices and other terms and conditions of such redemption.
(d) Whether the shares of such series shall be subject to the operation of
a purchase, retirement or sinking fund and, if so, the terms and conditions
thereof.
(e) Whether the shares of such series shall be convertible into or
exchangeable for shares of any other class or series or any other securities
and, if so, the times, prices, rates, adjustments and other terms and conditions
of such conversion or exchange.
(f) Whether the shares of such series shall have voting rights in addition
to any voting rights provided by law and this Certificate of Incorporation and,
if so, the terms of such voting rights, which may be general or limited.
(g) The conditions, limitations or restrictions, if any, on payment of
dividends or the making of distributions on, or the purchase, redemption or
other acquisition of, any other stock, on the creation of indebtedness or on the
issue or reissue of any additional stock.
(h) The rights of the holders of the shares of such series upon the
voluntary or involuntary liquidation, dissolution or winding up of, or upon any
distribution of the assets of, the Corporation.
(2) Shares of any series of Preference Stock which have been purchased,
redeemed (whether through the operation of a purchase, retirement or sinking
fund or otherwise) or otherwise reacquired by the Corporation or which, if
convertible or exchangeable, have been converted into or exchanged for shares of
stock of any other class or series or any other securities, which are cancelled
by the Board of Directors, shall have the status of authorized and unissued
shares of Preference Stock and may be reissued as a part of the series of which
they were originally a part or may be reissued as part of a new series of
Preference Stock to be created by the Board of Directors or as part of any other
series of Preference Stock, all subject to the conditions or restrictions on
issuance required by the resolution or resolutions adopted by the Board of
Directors providing for the issue of any series of Preference Stock, by this
Certificate of Incorporation or by law.
C. COMMON STOCK
(1) Each share of Common Stock shall have one vote and, except as provided by
law or by the resolution or resolutions providing for the issue of any series of
Preferred or Preference Stock adopted by the Board of Directors as hereinabove
provided, the exclusive voting power for all purposes shall be vested in the
holders of Common Stock. The holders of Common Stock shall not have cumulative
voting power.
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7
(2) In the event of any liquidation, dissolution or winding up of the
Corporation, the holders of the Common Stock shall be entitled, after payment or
provision for payment of the debts and other liabilities of the Corporation, and
the amounts to which the holders of the Preferred and Preference Stock shall be
entitled, to share ratably in the remaining net assets of the Corporation.
D. PREEMPTIVE RIGHTS
Unless otherwise provided by the Board of Directors, no holder of shares of
the Corporation of any class, now or hereafter authorized, shall have any
preemptive right (as such holder) to subscribe for or purchase any securities
now or hereafter authorized by the Corporation, including without limitation any
shares of stock of the Corporation of any class, any obligations or securities
of the Corporation convertible into or exchangeable for such shares or any
options, warrants or rights to acquire any of the foregoing.
FOURTH:
The said Corporation shall commence on the second day of March in the year
one thousand eight hundred and sixty six, and its duration shall be perpetual.
FIFTH:
The following provisions are inserted for the management of the business
and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The number of directors of the Corporation (exclusive of directors (the
"Preferred Stock Directors") who may be elected by the holders of any one or
more series of Preferred Stock which may at any time be outstanding, voting
separately as a class or classes) shall not be less than nine nor more than
twelve, the exact number to be fixed from time to time solely by resolution of
the Board of Directors, acting by not less than a majority of the entire Board
and to be fixed initially at nine.
(2) The Board of Directors (exclusive of Preferred Stock Directors) shall be
divided into three classes; with the term of office of one class expiring each
year. At the annual meeting of stockholders in 1983, three directors of the
first class shall be elected to hold office for a term expiring at the 1984
annual meeting, three directors of the second class shall be elected to hold
office for a term expiring at the 1985 annual meeting and three directors of the
third class shall be elected to hold office for a term expiring at the 1986
annual meeting. At each annual meeting commencing with the annual meeting of
1984, each class of directors whose term shall expire at the meeting shall be
elected to hold office for a three year term and until the election and
qualification of their respective successors in office. In case of any increase
in the number of directors (other than Preferred Stock Directors), the number of
directors in each class shall be as nearly equal as possible.
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8
(3) Subject to the rights of the holders of any one or more series of Preferred
Stock then outstanding, newly created directorships resulting from any increase
in the authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office for cause or other reason shall be filled solely by the Board of
Directors, acting by not less than a majority of the directors then in office.
Any director so chosen shall hold office until the next election of the class
for which such director shall be elected and qualified (subject to any
requirement of law specifically calling for an earlier vote of stockholders).
No decrease in the number of directors shall shorten the term of any incumbent
director.
(4) Except as otherwise provided in Article THIRD of this certificate of
incorporation with respect to the holders of any one or more series of Preferred
Stock or as otherwise provided by law, special meetings of stockholders for any
purpose or purposes shall be called solely by resolution of the Board of
Directors, acting by not less than a majority of the entire Board, and the power
of stockholders to call a special meeting is specifically DENIED. The place and
notice of any special meeting shall be as set forth in the by-laws. No business
shall be transacted and no corporate action shall be taken other than that
stated in the notice of meeting at a special meeting of stockholders.
(5) Subject to the rights of the holders of any one or more series of Preferred
Stock then outstanding, any director or the entire Board of Directors of the
Corporation may be removed, but such removal shall be only for cause. At any
annual meeting of a stockholders of the Corporation or at any special meeting of
stockholders of the Corporation the notice of which shall state that the removal
of a director or directors is among the purposes of the meeting, the holders of
stock of the Corporation entitled to vote thereon, by vote of a majority of the
outstanding shares thereof, may remove such director or directors for cause.
(6) No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the Corporation may be taken without a
meeting except by unanimous written consent of all stockholders entitled to vote
thereon, and the power of less than all such stockholders to consent in writing,
without such a meeting, to the taking of any action is specifically denied.
(7) Notwithstanding any other provisions of this certificate of incorporation
or the by-laws of the Corporation (and notwithstanding the fact that a lesser
percentage may be specified by law, this certificate of incorporation or the by-
laws), the affirmative vote of the holders of not less than 75 percent of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (which shall mean 75% of the votes
entitled to be cast by such shares) shall be required (i) to amend or repeal any
provision of this Article FIFTH (including, without limitation, this
section (7)) or (ii) to adopt any provision in this certificate of incorporation
or the by-laws of the Corporation which is inconsistent with any provision of
this article FIFTH or (iii) in general, to adopt, amend or repeal any provision
of the by-laws of the Corporation relating to meetings of stockholders or
directors (including, without limitation, voting or quorum requirements) or
qualification, election or removal of directors or officers.
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9
SIXTH:
The principal place of business of the said Corporation shall be in the
City of New York, in the County of New York, and State of New York.
SEVENTH:
The Secretary of the State of New York is hereby designated as the agent of
the Corporation upon whom process in any action or proceeding against it may be
served. The address to which the Secretary of State shall mail a copy of
process in any action or proceeding against the Corporation which may be served
upon him is 1440 Broadway, New York, New York 10018.
EIGHTH:
The affirmative vote of the holders of not less than 75 percent of the
outstanding shares of "Voting Stock" (as hereinafter defined) of the Corporation
shall be required for the approval or authorization of any "Business
Combination" (as hereinafter defined) of the Corporation with any Related Person
(as hereinafter defined); provided, however, that the 75 percent voting
requirement shall not be applicable if:
(1) A majority of the "Continuing Directors" (as hereinafter defined) of the
Corporation (a) have expressly approved in advance the acquisition of
outstanding shares of Voting Stock of the Corporation that caused the Related
Person to become a Related Person or (b) have approved the Business Combination
prior to the Related Person involved in the Business Combination having become a
Related Person; or
(2) The Business Combination is a merger or consolidation and the cash or fair
market value of the property, securities or other consideration to be received
per share by holders of Common Stock of the Corporation in the Business
Combination is not less than the highest per share price (with appropriate
adjustments for recapitalizations and for stock splits, stock dividends and like
distributions), as determined in good faith by a majority of the Continuing
Directors, paid by the Related Person in acquiring any of its holdings of the
Corporation's Common Stock.
For purposes of this Article EIGHTH:
(i) The term "Business Combination" shall mean (a) any merger or
consolidation of the Corporation or a subsidiary with or into a Related Person,
(b) any sale, lease, exchange, transfer or other disposition, including without
limitation a mortgage or any other security device, of all or any "Substantial
Part" (as hereinafter defined) of the assets either of the
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Corporation (including without limitation any voting securities of a subsidiary)
or of a subsidiary, or both, to a Related Person, (c) any merger or
consolidation of a Related Person with or into the Corporation or a subsidiary,
(d) any sale, lease, exchange, transfer or other disposition of all or any
Substantial Part of the assets of a Related Person to the Corporation or a
subsidiary, (e) the issuance of any securities of the Corporation or a
subsidiary to a Related Person, (f) any recapitalization that would have the
effect of increasing the voting power of a Related Person, (g) any agreement,
contract or other arrangement providing for any of the transactions described in
this definition of Business Combination and (h) any series of related
transactions which, if taken together, would come within this definition of
Business Combination.
(ii) The term "Related Person" shall mean and include any individual,
corporation, partnership or other person or entity which, together with its
"Affiliates" and "Associates" (as defined on April 1, 1983 in Rule 12b-2 under
the Securities Exchange Act of 1934), "Beneficially Owns" (as defined on
April 1, 1983 in Rule 13d-3 under the Securities Exchange Act of 1934) in the
aggregate ten percent or more of the outstanding Voting Stock of the
Corporation, any Affiliate or Associate of any such individual, corporation,
partnership or other person or entity and any assignee of any of the foregoing.
(iii) The term "Substantial Part" shall mean more than 20 percent of the
fair market value of the total assets of the corporation in question, as
determined in good faith by a majority of the Continuing Directors, as of the
end of its most recent fiscal year ending prior to the time the determination is
being made.
(iv) Without limitation, any shares of Common Stock of the Corporation that
any Related Person has the right to acquire pursuant to any agreement, or upon
exercise of conversion rights, warrants or options, or otherwise, shall be
deemed beneficially owned by the Related Person.
(v) For the purposes of paragraph (2) of this Article EIGHTH, the term
"other consideration to be received" shall include, without limitation, Common
Stock of the Corporation retained by its existing public stockholders in the
event of a Business Combination in which the Corporation is the surviving
corporation.
(vi) The term "Voting Stock" shall mean all outstanding shares of capital
stock of the Corporation or another corporation entitled to vote generally in
the election of directors and each reference to a proportion of shares of Voting
Stock shall refer to such proportion of the votes entitled to be cast by such
shares.
(vii) The term "Continuing Director" shall mean a Director who is not an
Affiliate or Associate of the Related Person and who (a) was a member of the
Board of Directors of the Corporation immediately prior to the time that the
Related Person involved in a Business Combination became a Related Person or
(b) is a successor of such a Director who is recommended to succeed such a
Director by a majority of the Continuing Directors then on the Board.
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The affirmative vote of the holders of not less than 75 percent of the
outstanding shares of Voting Stock of the Corporation shall be required to amend
or repeal any provision of this Article EIGHTH (including, without limitation,
this paragraph).
NINTH:
No director shall be personally liable to the Corporation or any
shareholder for damages for any breach of duty in such capacity, except if a
judgment or other final adjudication adverse to the director establishes that
(i) the director's acts or omissions were in bad faith or involved intentional
misconduct or a knowing violation of law, (ii) the director personally gained in
fact a financial profit or other advantage to which he was not legally entitled
or (iii) the director's acts violated Section 719 of the Business Corporation
Law of New York. If the Business Corporation Law of New York is amended after
approval by the stockholders of this provision to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of directors of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Business Corporation Law of New York, as so
amended. Neither the amendment nor repeal of this Article NINTH, nor the
adoption of any provision of this Certificate of Incorporation or the By-Laws of
the Corporation or of any statute inconsistent with this Article NINTH, shall
eliminate or reduce the effect of this Article NINTH in respect of any acts or
omissions occurring prior to such amendment, repeal or adoption of an
inconsistent provision.
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12
CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION
OF
WILLCOX & GIBBS, INC.
Under Section 805 of the Business Corporation Law
---------------------
WE THE UNDERSIGNED, RICHARD J. MACKEY and ALLAN M. GONOPOLSKY, being
respectively the President and Assistant Secretary of Willcox & Gibbs, Inc. (the
"Corporation"), do hereby certify:
1. The name of the Corporation is WILLCOX & GIBBS, INC. The original
name was WILLCOX & GIBBS SEWING MACHINE COMPANY.
2. The Certificate of Incorporation of the Corporation was filed by the
Department of State on the 2nd day of March, 1866.
3. The Certificate of Incorporation of the Corporation, as heretofore
amended, is hereby further amended by the following provisions stating the
number, designation, relative rights, preferences and limitations of a series of
Preference Stock, par value $1.00 per share, of the Corporation, designated as
Series A Junior Participating Preference Stock, as fixed by the Board of
Directors of the Corporation pursuant to the authority vested in it by the
Certificate of Incorporation, as amended, of the Corporation:
Series A Junior Participating Preference Stock:
Section 1. DESIGNATION. This series shall be designated as "Series A
Junior Participating Preference Stock" (hereinafter "this Series").
Section 2. NUMBER. The number of shares of this Series authorized to be
issued is 220,000.
Section 3. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of any shares
of any series of Preference Stock or Preferred Stock, par value $12.00 per
share, of the Corporation (the "Preferred Stock") ranking prior and superior to
this Series with respect to dividends, the holders of shares of this Series
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available therefor, semiannual dividends payable in cash on
the last day of April and October in each year (each such date being referred to
herein as a "Semiannual Dividend Payment Date") commencing on the first
Semiannual Dividend Payment Date after the first issuance of a share or fraction
of a share of this Series, in an amount per share (rounded to
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13
the nearest cent) equal to the greater of (a) $5.625 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions (other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock by reclassification or otherwise), declared on the Common
Stock, par value $1.00 per share, of the Corporation (the "Common Stock") since
the immediately preceding Semiannual Dividend Payment Date or, with respect to
the first Semiannual Dividend Payment Date, since the first issuance of any
share or fraction of a share of this Series. In the event the Corporation shall
at any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of this
Series were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on this
Series as provided in paragraph (A) of this Section immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); PROVIDED, HOWEVER, that in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Semiannual Dividend Payment Date and the next subsequent
Semiannual Dividend Payment Date, a dividend of $5.625 per share on this Series
shall nevertheless be payable on such subsequent Semiannual Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of this Series from the Semiannual Dividend Payment Date next preceding
the date of issue of such shares of this Series, unless the date of issue of
such shares is prior to the record date for the first Semiannual Dividend
Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a Semiannual
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of this Series entitled to receive a quarterly dividend and
before such Semiannual Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Semiannual Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of this Series in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of this Series entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 50 days
prior to the date fixed for the payment thereof.
Section 4. LIQUIDATION, DISSOLUTION OR WINDING UP. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation (a "Liquidation"), no distribution shall be made (x) to the holders
of shares of stock ranking junior (either as to dividends or upon Liquidation)
to this Series unless, prior thereto, the holders of shares of this
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14
Series shall have received $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, provided that the holders of shares of this Series shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (y) to the holders of stock
ranking on a parity (either as to dividends or upon Liquidation) with this
Series, except distributions made ratably on this Series and all other such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such Liquidation. In the event the Corporation shall
at any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders of shares of
this Series were entitled immediately prior to such event under the proviso in
clause (x) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
For purposes of this Certificate, the voluntary sale, lease, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the Corporation to, or a
consolidation or merger of the Corporation with, one or more corporations shall
not be deemed to be a Liquidation.
Section 5. REDEMPTION. The shares of this Series shall not be redeemable.
Section 6. VOTING RIGHTS. The holders of shares of this Series shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of this Series shall entitle the holder thereof to 100 votes on all
matters submitted to a vote of the Common shareholders of the Corporation. In
the event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of this Series were
entitled immediately prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation of the Corporation or by law, the holders of shares of this Series
and the holders of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of Common shareholders of the Corporation.
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15
(C) (i) If at any time dividends on any shares of this Series shall be in
arrears in an amount equal to three full semiannual dividends thereon, the
holders of this Series and all other series of Preference Stock (in each case to
the extent then entitled pursuant to the terms of such series), voting together
as one class, shall have the exclusive and special right to elect two directors
of the Corporation, and the number of directors constituting the Board of
Directors of the Corporation shall be increased by two (if not previously
increased in connection with the right of other series of Preference Stock
entitled to vote together with this Series to elect directors of the
Corporation) for such purpose.
(ii) Whenever any such right of the holders of this Series shall have
vested, such right may be exercised initially either at a special meeting of the
holders of this Series and all other series so entitled to vote, if any, called
as hereinafter provided, or at any annual meeting of shareholders, and
thereafter at annual meetings of shareholders. The right of the holders of this
Series voting separately as a class with such other series to elect members of
the Board of Directors of the Corporation as aforesaid shall continue until
such time as all dividends accrued on all shares of this Series shall have been
paid in full, or declared and set apart for payment, at which time the special
right of the holders of this Series so to vote separately as a class with such
other series for the election of directors shall terminate, subject to revesting
in the event of each and every subsequent occurrence of an arrearage specified
in subparagraph (C)(i) above.
(iii) At any time when such special voting power shall have vested in the
holders of this Series as provided in the preceding subparagraph (C)(i), the
proper officer of the Corporation shall, upon the written request of the holders
of record of at least 10% of the then outstanding voting power of shares of this
Series and all other series entitled to vote in the election of such directors
addressed to the Secretary of the Corporation, call a special meeting of the
holders of this Series for the purpose of electing directors pursuant to this
paragraph (C). Such meeting shall be held at the earliest practicable date. If
such meeting shall not be called by the proper officer of the Corporation within
twenty days after personal service of such written request upon the Secretary of
the Corporation, or within twenty days after mailing the same within the United
States of America, by registered mail addressed to the Secretary of the
Corporation at its principal office, then the holders of record of at least 10%
of the then outstanding voting power of shares of this Series and all other
series entitled to vote in the election of such directors may designate in
writing one of their number to call such meeting at the expense of the
Corporation, and such meeting may be called by such person so designated by
giving the notice required for annual meetings of shareholders. Any holder of
this Series so designated shall have access to the stock books of the
Corporation for the purpose of causing meetings of shareholders to be called
pursuant to these provisions. Notwithstanding the provisions of this
subparagraph (C)(iii), no such special meeting shall be called during the period
within ninety days immediately preceding the date fixed for the next annual
meeting of shareholders.
(iv) At any meeting held for the purpose of electing directors at which the
holders of this Series and any other series of Preference Stock shall have the
special right to elect directors as provided in this paragraph (C), the
presence, in person or by proxy, of the holders of one-third of the voting
power of the then outstanding aggregate number of shares of this Series
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16
and such other series shall be required to constitute a quorum for the election
of any director by the holders of such series. At any such meeting or
adjournment thereof, (a) the absence of a quorum shall not prevent the election
of directors other than those to be elected by all such series of Preference
Stock voting separately as a class, and the absence of a quorum for the election
of such other directors shall not prevent the election of the directors to be
elected by this Series and any other series of Preference Stock that may be
voting with it separately as a class, and (b) in the absence of either or both
such quorums, the holders of a majority of the voting power of the shares
present in person or by proxy of the stock or stocks which lack a quorum shall
have power to adjourn the meeting for the election of directors who they are
entitled to elect from time to time without notice other than announcement at
the meeting until a quorum shall be present.
(v) During any period when the holders of this Series have the right to
vote separately as a class for directors as provided in this paragraph (C), (1)
the directors so elected by the holders of the one or more series of Preference
Stock entitled to vote for such directors shall continue in office until the
next succeeding annual meeting or until their successors, if any, are elected by
such holders and qualify or, until termination of the right of the holders of
the one or more series of Preference Stock entitled to vote for such directors
to vote separately as a class for directors as provided in this paragraph (C)
and (2) vacancies in the Board of Directors shall be filled only by vote of a
majority (even if that be only a single director) of the remaining directors
theretofore elected by the holders of the one or more series of Preference Stock
which elected the directors whose office shall have become vacant or if there be
no such remaining director, directors to fill such vacancies shall be elected by
the holders of the one or more series of Preference Stock entitled to vote for
such directors at a special meeting called pursuant to the provisions of
subparagraph (C)(iii) hereof. Immediately upon any termination of the right of
the holders of this Series and any other series of Preference Stock to vote
separately as a class for directors as provided in this paragraph (C), the term
of office of the directors then in office so elected by the holders of this
Series and any such other series shall terminate. Whenever the term of office
of the directors so elected by the holders of this Series and any such other
series shall terminate and the special voting power vested in the holders of
this Series and any such other series as provided in this paragraph (C) shall
have terminated, the number of directors shall be such number as may be provided
for in the by-laws irrespective of any increase made pursuant to the provisions
of this paragraph (C).
(D) So long as any shares of this Series are outstanding, the Corporation
shall not, without the affirmative vote of the holders of two-thirds of the
outstanding shares of this Series, given by such holders as one class, amend the
Certificate of Incorporation of the Corporation in any manner which would
materially alter or change the powers, preferences or special rights of this
Series so as to affect them adversely.
(E) Except as provided herein, in the Certificate of Incorporation of the
Corporation or by law, holders of shares of this Series shall have no special
voting rights and their consent shall not be required for taking any corporate
action.
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17
Section 7. CERTAIN RESTRICTIONS.
(A) Whenever semiannual dividends or other dividends or distributions
payable on this Series as provided in Section 3 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of this Series outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon Liquidation) to this Series;
(ii) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon Liquidation)
with this Series, except dividends paid ratably on this Series and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon Liquidation) with
this Series; PROVIDED, HOWEVER, that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange for
shares of any stock of the Corporation ranking junior (either as to dividends or
upon Liquidation) to this Series; or
(iv) purchase or otherwise acquire for consideration any shares of this
Series, or any shares of stock ranking on a parity (either as to dividends or
upon Liquidation) with this Series, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 7,
purchase or otherwise acquire such shares at such time and in such manner.
Section 8. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
this Series shall at the same time be similarly exchanged for or changed into an
amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or otherwise than by
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18
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of this
Series shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 9. RANKING. This Series shall rank junior to all other series of
the Corporation's Preference Stock and Preferred Stock as to the payment of
dividends and the distribution of assets upon Liquidation, unless the terms of
any such series shall provide otherwise.
Section 10. FRACTIONAL SHARES. This Series may be issued in fractions of
a share which shall entitle the holder, in proportion to such holder's
fractional shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of this
Series.
Section 11. OTHER RIGHTS. The holders of shares of this Series shall not
have any other preferences or special rights.
4. The amendment referred to herein was authorized by resolution duly
adopted by the Board of Directors of the Corporation at a meeting thereof duly
called and held on January 10, 1989, at which a quorum was present and acting
throughout.
IN WITNESS WHEREOF, we have signed this Certificate this 11th day of
January, 1989, and we affirm the statements contained herein are true under
penalties of perjury.
______________________________
Richard J. Mackey
President
------------------------------
Allan M. Gonopolsky
Assistant Secretary
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19
CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION
OF
WILLCOX & GIBBS, INC.
Under Section 805 of the Business Corporation Law
---------------------
WE THE UNDERSIGNED, John K. Ziegler and Allan M. Gonopolsky, being
respectively the Chairman of the Board and Assistant Secretary of Willcox &
Gibbs, Inc. (the "Corporation"), do hereby certify:
1. The name of the Corporation is WILLCOX & GIBBS, INC. The original
name was WILLCOX & GIBBS SEWING MACHINE COMPANY.
2. The Certificate of Incorporation of the Corporation was filed by the
Department of State on the 2nd day of March, 1866.
3. The Certificate of Incorporation of the Corporation, as heretofore
amended, is hereby further amended by the following provisions stating the
number, designation, relative rights, preferences and limitations of a series of
Preference Stock, par value $1.00 per share, of the Corporation, designated as
Series B Junior Participating Preference Stock, as fixed by the Board of
Directors of the Corporation pursuant to the authority vested in it by the
Certificate of Incorporation, as amended, of the Corporation:
Series B Junior Participating Preference Stock:
Section 1. DESIGNATION. This series shall be designated as "Series B
Junior Participating Preference Stock" (hereinafter "this Series").
Section 2. NUMBER. The number of shares of this Series authorized to be
issued is 500,000.
Section 3. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of any shares
of any series of Preference Stock or Preferred Stock, par value $12.00 per
share, of the Corporation (the "Preferred Stock") ranking prior and superior to
this Series with respect to dividends, the holders of shares of this Series
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available therefor, semiannual dividends payable in cash on
the last day of April and October in each year (each such date being referred to
herein as a "Semiannual Dividend Payment Date") commencing on the first
Semiannual Dividend Payment Date after the first issuance of a share or fraction
of a share of this Series, in an amount per share (rounded to
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20
the nearest cent) equal to the greater of (a) $5.625 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions (other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock by reclassification or otherwise), declared on the Common
Stock, par value $1.00 per share, of the Corporation (the "Common Stock") since
the immediately preceding Semiannual Dividend Payment Date or, with respect to
the first Semiannual Dividend Payment Date, since the first issuance of any
share or fraction of a share of this Series. In the event the Corporation shall
at any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of this
Series were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on this
Series as provided in paragraph (A) of this Section immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); PROVIDED, HOWEVER, that in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Semiannual Dividend Payment Date and the next subsequent
Semiannual Dividend Payment Date, a dividend of $5.625 per share on this Series
shall nevertheless be payable on such subsequent Semiannual Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of this Series from the Semiannual Dividend Payment Date next preceding
the date of issue of such shares of this Series, unless the date of issue of
such shares is prior to the record date for the first Semiannual Dividend
Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a Semiannual
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of this Series entitled to receive a quarterly dividend and
before such Semiannual Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Semiannual Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of this Series in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of this Series entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 50 days
prior to the date fixed for the payment thereof.
Section 4. LIQUIDATION, DISSOLUTION OR WINDING UP. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation (a "Liquidation"), no distribution shall be made (x) to the holders
of shares of stock ranking junior (either as to dividends or upon Liquidation)
to this Series unless, prior thereto, the holders of shares of this
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21
Series shall have received $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment, provided that the holders of shares of this Series shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, or (y) to the holders of stock
ranking on a parity (either as to dividends or upon Liquidation) with this
Series, except distributions made ratably on this Series and all other such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such Liquidation. In the event the Corporation shall
at any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders of shares of
this Series were entitled immediately prior to such event under the proviso in
clause (x) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
For purposes of this Certificate, the voluntary sale, lease, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the Corporation to, or a
consolidation or merger of the Corporation with, one or more corporations shall
not be deemed to be a Liquidation.
Section 5. REDEMPTION. The shares of this Series shall not be redeemable.
Section 6. VOTING RIGHTS. The holders of shares of this Series shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of this Series shall entitle the holder thereof to 100 votes on all
matters submitted to a vote of the Common shareholders of the Corporation. In
the event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of this Series were
entitled immediately prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation of the Corporation or by law, the holders of shares of this Series
and the holders of shares of Common Stock shall vote together as one class on
all matters submitted to a vote of Common shareholders of the Corporation.
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(C) (i) If at any time dividends on any shares of this Series shall be in
arrears in an amount equal to three full semiannual dividends thereon, the
holders of this Series and all other series of Preference Stock (in each case to
the extent then entitled pursuant to the terms of such series), voting together
as one class, shall have the exclusive and special right to elect two directors
of the Corporation, and the number of directors constituting the Board of
Directors of the Corporation shall be increased by two (if not previously
increased in connection with the right of other series of Preference Stock
entitled to vote together with this Series to elect directors of the
Corporation) for such purpose.
(ii) Whenever any such right of the holders of this Series shall have
vested, such right may be exercised initially either at a special meeting of the
holders of this Series and all other series so entitled to vote, if any, called
as hereinafter provided, or at any annual meeting of shareholders, and
thereafter at annual meetings of shareholders. The right of the holders of this
Series voting separately as a class with such other series to elect members of
the Board of Directors of the Corporation as aforesaid shall continue until such
time as all dividends accrued on all shares of this Series shall have been paid
in full, or declared and set apart for payment, at which time the special right
of the holders of this Series so to vote separately as a class with such other
series for the election of directors shall terminate, subject to revesting in
the event of each and every subsequent occurrence of an arrearage specified in
subparagraph (C)(i) above.
(iii) At any time when such special voting power shall have vested in the
holders of this Series as provided in the preceding subparagraph (C)(i), the
proper officer of the Corporation shall, upon the written request of the holders
of record of at least 10% of the then outstanding voting power of shares of this
Series and all other series entitled to vote in the election of such directors
addressed to the Secretary of the Corporation, call a special meeting of the
holders of this Series for the purpose of electing directors pursuant to this
paragraph (C). Such meeting shall be held at the earliest practicable date. If
such meeting shall not be called by the proper officer of the Corporation within
twenty days after personal service of such written request upon the Secretary of
the Corporation, or within twenty days after mailing the same within the United
States of America, by registered mail addressed to the Secretary of the
Corporation at its principal office, then the holders of record of at least 10%
of the then outstanding voting power of shares of this Series and all other
series entitled to vote in the election of such directors may designate in
writing one of their number to call such meeting at the expense of the
Corporation, and such meeting may be called by such person so designated by
giving the notice required for annual meetings of shareholders. Any holder of
this Series so designated shall have access to the stock books of the
Corporation for the purpose of causing meetings of shareholders to be called
pursuant to these provisions. Notwithstanding the provisions of this
subparagraph (C)(iii), no such special meeting shall be called during the period
within ninety days immediately preceding the date fixed for the next annual
meeting of shareholders.
(iv) At any meeting held for the purpose of electing directors at which the
holders of this Series and any other series of Preference Stock shall have the
special right to elect directors as provided in this paragraph (C), the
presence, in person or by proxy, of the holders of one-third of the voting power
of the then outstanding aggregate number of shares of this Series and
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such other series shall be required to constitute a quorum for the election of
any director by the holders of such series. At any such meeting or adjournment
thereof, (a) the absence of a quorum shall not prevent the election of directors
other than those to be elected by all such series of Preference Stock voting
separately as a class, and the absence of a quorum for the election of such
other directors shall not prevent the election of the directors to be elected by
this Series and any other series of Preference Stock that may be voting with it
separately as a class, and (b) in the absence of either or both such quorums,
the holders of a majority of the voting power of the shares present in person or
by proxy of the stock or stocks which lack a quorum shall have power to adjourn
the meeting for the election of directors who they are entitled to elect from
time to time without notice other than announcement at the meeting until a
quorum shall be present.
(v) During any period when the holders of this Series have the right to
vote separately as a class for directors as provided in this paragraph (C),
(1) the directors so elected by the holders of the one or more series of
Preference Stock entitled to vote for such directors shall continue in office
until the next succeeding annual meeting or until their successors, if any, are
elected by such holders and qualify or, until termination of the right of the
holders of the one or more series of Preference Stock entitled to vote for such
directors to vote separately as a class for directors as provided in this
paragraph (C) and (2) vacancies in the Board of Directors shall be filled only
by vote of a majority (even if that be only a single director) of the remaining
directors theretofore elected by the holders of the one or more series of
Preference Stock which elected the directors whose office shall have become
vacant or if there be no such remaining director, directors to fill such
vacancies shall be elected by the holders of the one or more series of
Preference Stock entitled to vote for such directors at a special meeting called
pursuant to the provisions of subparagraph (C)(iii) hereof. Immediately upon
any termination of the right of the holders of this Series and any other series
of Preference Stock to vote separately as a class for directors as provided in
this paragraph (C), the term of office of the directors then in office so
elected by the holders of this Series and any such other series shall terminate.
Whenever the term of office of the directors so elected by the holders of this
Series and any such other series shall terminate and the special voting power
vested in the holders of this Series and any such other series as provided in
this paragraph (C) shall have terminated, the number of directors shall be such
number as may be provided for in the by-laws irrespective of any increase made
pursuant to the provisions of this paragraph (C).
(D) So long as any shares of this Series are outstanding, the Corporation
shall not, without the affirmative vote of the holders of two-thirds of the
outstanding shares of this Series, given by such holders as one class, amend the
Certificate of Incorporation of the Corporation in any manner which would
materially alter or change the powers, preferences or special rights of this
Series so as to affect them adversely.
(E) Except as provided herein, in the Certificate of Incorporation of the
Corporation or by law, holders of shares of this Series shall have no special
voting rights and their consent shall not be required for taking any corporate
action.
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Section 7. CERTAIN RESTRICTIONS.
(A) Whenever semiannual dividends or other dividends or distributions
payable on this Series as provided in Section 3 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of this Series outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon Liquidation) to this Series;
(ii) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon Liquidation)
with this Series, except dividends paid ratably on this Series and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon Liquidation) with
this Series; PROVIDED, HOWEVER, that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange for
shares of any stock of the Corporation ranking junior (either as to dividends or
upon Liquidation) to this Series; or
(iv) purchase or otherwise acquire for consideration any shares of this
Series, or any shares of stock ranking on a parity (either as to dividends or
upon Liquidation) with this Series, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 7,
purchase or otherwise acquire such shares at such time and in such manner.
Section 8. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
this Series shall at the same time be similarly exchanged for or changed into an
amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or otherwise than by
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payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of this
Series shall be adjusted by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 9. RANKING. This Series shall rank junior to all other series of
the Corporation's Preference Stock and Preferred Stock as to the payment of
dividends and the distribution of assets upon Liquidation, unless the terms of
any such series shall provide otherwise.
Section 10. FRACTIONAL SHARES. This Series may be issued in fractions of
a share which shall entitle the holder, in proportion to such holder's
fractional shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of this
Series.
Section 11. OTHER RIGHTS. The holders of shares of this Series shall not
have any other preferences or special rights.
4. The amendment referred to herein was authorized by resolution duly
adopted by the Board of Directors of the Corporation at a meeting thereof duly
called and held on November 12, 1992, at which a quorum was present and acting
throughout.
IN WITNESS WHEREOF, we have signed this Certificate this 12th day of
November, 1992, and we affirm the statements contained herein are true under
penalties of perjury.
______________________________
John K. Ziegler
Chairman of the Board
------------------------------
Allan M. Gonopolsky
Assistant Secretary
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Exhibit 3.2
WILLCOX & GIBBS, INC.
BY-LAWS
AS AMENDED AND IN EFFECT ON MARCH 18, 1994
ARTICLE I
PLACE OF BUSINESS
The principal office of the Company for the carrying on of its general
business and affairs, for the keeping of its books, papers, and records, for the
making of transfers of stock and for the payment of dividends shall be in the
Borough of Manhattan in the City of New York. Nothing herein contained shall be
construed to prevent the Directors from opening offices elsewhere for the
carrying on of the business of the Company.
ARTICLE II
STOCKHOLDERS' MEETINGS
SECTION 1. ANNUAL MEETING. The Annual Meeting of Stockholders for the
election of Directors and for action upon such other matters as may be brought
before such meeting shall be held on such date and at such place, within or
without the State of New York, as may be fixed in advance by the Board of
Directors.
No business shall be transacted at an Annual Meeting of Stockholders except
such business as shall be (i) specified in the notice (or supplemental notice)
of meeting given by or at the direction of the Board of Directors, (ii)
otherwise brought before the meeting by or at the direction of the Board of
Directors or the Chairman of the Board of Directors or (iii) brought before the
meeting by a stockholder of record entitled to vote at that meeting in
accordance with the following procedure. For business to be brought before an
Annual Meeting by a stockholder, the stockholder must have given timely notice
in writing to the Secretary of the Company. To be timely, a stockholder's
notice must be delivered or mailed to, and received at, the principal executive
offices of the Company not less than 90 days prior to the anniversary date of
the immediately preceding year's Annual Meeting of Stockholders; PROVIDED,
HOWEVER, that if the Annual Meeting date fixed by the Board of Directors is more
than 30 days before or after such anniversary date, a stockholder notice will
also be timely if delivered or mailed to, and received at, the principal
executive offices of the Company not later than the close of business on the
tenth day following the date on which the Company first makes public disclosure
of the date of the Annual Meeting. Each notice to the Secretary shall set forth
as to each matter the stockholder proposes to bring before the Annual Meeting
(i) a brief description of the business desired to be brought before the Annual
Meeting and the reasons for bringing such business before the Annual Meeting,
(ii) the name and address of the stockholder intending to propose such business,
(iii) a representation that the stockholder is a holder of record of stock of
the Company entitled to vote at such meeting (or if the record date for such
meeting is subsequent to the date required for such
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stockholder notice, a representation that the stockholder is a holder of record
at the time of such notice and intends to be a holder of record on the record
date for such meeting), specifying the classes and numbers of shares so held,
and that the stockholder intends to appear in person or by proxy at such meeting
to propose such business, and (iv) any material interest of the stockholder in
such business. The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 1; and, if
the Chairman should so determine and declare, any such business not properly
brought before the meeting shall not be transacted.
SECTION 2. SPECIAL MEETINGS. A special meeting of the stockholders may be
called at any time in accordance with the provisions of the Company's
Certificate of Incorporation.
SECTION 3. NOTICE. Notice of each meeting of stockholders shall be given
to each stockholder of record entitled to vote at such meeting. Such notice
shall be in writing, shall be signed by the Chairman of the Board, the
President, the Secretary or an Assistant Secretary, shall state the place, date
and hour of the meeting and, if the meeting is a special meeting, shall state
the purpose or purposes for which the meeting is called and the person or
persons calling the meeting; and a copy thereof shall be given either personally
or by mail not less than ten or more than fifty days before the meeting to each
stockholder entitled to such notice. If mailed, such notice shall be directed
to each stockholder entitled thereto, at his address as it appears upon the
stock book, unless he shall have filed with the Secretary of the Company a
written request that notices intended for him be mailed to some other address,
in which case it shall be mailed to the address designated in such request.
SECTION 4. PLACE OF SPECIAL MEETINGS. Special meetings of the
stockholders shall be held at such place within or without the State of New York
as may be fixed by the Directors or, if no such place is fixed, at the principal
place of business of the Company.
SECTION 5. VOTING. Every stockholder shall be entitled to one vote for
each share of stock of the Company entitled to vote, held by him of record at
the record date for the meeting.
SECTION 6. QUORUM. Except as otherwise provided by law, there shall be
present in person or by proxy, at all meetings of stockholders, in order to
constitute a quorum, stockholders owning a majority of the stock of the Company
entitled to vote but less than a quorum shall have power to adjourn any meeting
from time to time. At any such adjourned meeting at which a quorum may be
present, any business may be transacted which might have been transacted at the
meeting as originally called.
SECTION 7. PROXIES. At all meetings of the stockholders, any stockholder
shall be entitled to vote by proxy. All proxies shall be in writing, but need
not be sealed, witnessed or acknowledged, and shall be filed with the Secretary
at or before the meeting.
SECTION 8. INSPECTORS OF ELECTION. Three Inspectors of Election, to serve
at all meetings of the stockholders for the ensuing year and until their
successors are
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appointed, shall be appointed by the Board of Directors at the last regular
meeting of Directors preceding the Annual Meeting of Stockholders.
SECTION 9. WAIVER OF NOTICE. The giving of any notice required by this
Article may be waived by the stockholder or stockholders affected thereby.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. DUTIES AND METHOD OF SELECTION. The property and affairs of
the Company shall be managed and its corporate powers exercised by a Board of
Directors. Such Directors (except as hereinafter provided for the filling of
vacancies) shall be elected in accordance with the Company's Certificate of
Incorporation by the stockholders by a plurality vote of the whole number of
shares voting at the meeting at which such election shall take place.
Subject to any specified rights of the holders of any then outstanding
shares of Preference Stock to the contrary, nominations for the election of
directors may be made by or at the direction of the Board of Directors (or any
Nominating Committee of the Board) or, subject to the following, by any
stockholder entitled to vote for the election of directors. Any
stockholder entitled to vote for the election of directors at an annual meeting
or a special meeting called for the purpose of electing directors may nominate
persons for election as directors for whom they are entitled to vote at such
meeting only if written notice to the Secretary of the Company of such
stockholder's intent to make such nomination is delivered or mailed to, and
received at, the principal executive offices of the Company not later than
(i) in the case of an Annual Meeting, 90 days prior to the anniversary date of
the immediately preceding Annual Meeting; PROVIDED, HOWEVER, that if the date of
the Annual Meeting is more than 30 days before or after the anniversary date of
the immediately preceding Annual Meeting, written notice of such stockholder's
intent to make such nomination must instead be delivered or mailed to, and
received at, the principal executive offices of the Company not later than the
close of business on the tenth day following the date on which the Company first
makes public disclosure of the date of the Annual Meeting and (ii) in the case
of a special meeting, the close of business on the tenth day following the date
on which the Company first makes public disclosure of the date of the special
meeting. Each notice given by such stockholder shall set forth: (A) the name
and address of the stockholder who intends to make the nomination and of the
person or persons to be nominated; (B) a representation that the stockholder is
a holder of record of stock of the Company entitled to vote at such meeting (or
if the record date for such meeting is subsequent to the date required for such
stockholder notice, a representation that the stockholder is a holder of record
at the time of such notice and intends to be a holder of record on the record
date for such meeting), specifying the number and class of shares so held, and
that the stockholder intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (C) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (D) such other
information regarding each
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nominee proposed by such stockholder as would have been required to be included
in a proxy statement filed pursuant to the proxy rules of the Securities and
Exchange Commission had each nominee been nominated, or intended to be
nominated, by the Board of Directors; and (E) the consent of each nominee to
serve as a director of the Company if so elected. The Chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the provisions of this Section 1;
and, if the Chairman should so determine and declare, the defective nomination
shall be disregarded.
SECTION 2. ANNUAL MEETINGS. There shall be an Annual Meeting of the Board
of Directors for the election of officers, the appointment of committees and for
action upon such other matters as may be brought before such meeting. Said
meeting shall be held at the place of and immediately after the annual election
of Directors.
SECTION 3. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at the principal office of the Company unless the Board or a
notice of meeting shall prescribe a different place. The Board of Directors, at
or prior to the commencement of a particular calendar year, shall prescribe a
schedule for such meetings. The time and place of any such scheduled meeting
may be changed, however, in a notice of meeting or by subsequent action of the
Board of Directors.
SECTION 4. SPECIAL MEETINGS. The Chairman of the Board, the President,
the Secretary, or a majority of the Directors may call a special meeting of the
Board of Directors whenever he or they shall deem it proper. Such meeting shall
be called by the giving to each Director of
notice of the time and place thereof.
SECTION 5. NOTICE OF DIRECTORS' MEETINGS AND WAIVER THEREOF. Except as
otherwise provided by these By-Laws, notice of annual or regular meetings of the
Board of Directors need not be given. Notice of all special meetings of the
Board of Directors shall be mailed to each Director at the address given by him
to the Secretary for that purpose at least five days prior to the time of
holding the meeting, provided, however, such notice may be served personally
upon or telegraphed to each Director at the address given by him to the
Secretary for that purpose at least 48 hours prior to the time of holding the
meeting, but any such notice may be waived by any Director. In the absence of a
specific provision of these By-Laws to the contrary, no notice of the objects or
purposes of any meeting of the Board of Directors need be given, and unless
otherwise indicated in the notice thereof, any and all business may be
transacted at a special meeting.
SECTION 6. QUORUM. A majority of the Directors, but in no event less than
three Directors, shall constitute a quorum for the transaction of business, but
if a quorum shall not be present a majority of those present may adjourn any
meeting from time to time and the meeting may be held adjourned without further
notice or waiver.
SECTION 7. FILLING OF VACANCIES. Any vacancy in the Board of Directors
and any newly created directorship resulting from an increase in the number of
Directors may be filled by the Directors in accordance with the Company's
Certificate of Incorporation.
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SECTION 8. EXECUTIVE COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the entire Board, shall designate three or more of the
Directors as an Executive Committee. Except as prohibited by law, the Executive
Committee shall have all the authority of the Board of Directors.
SECTION 9. NOMINATING COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the entire Board, shall designate three or more of the
Directors as a Nominating Committee. Except as prohibited by law, the
Nominating Committee shall have all of the authority of the Board of Directors
to nominate candidates for election by the stockholders of the Company as
members of the Board of Directors of the Company.
SECTION 10. AUDIT COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the entire Board, shall designate three or more of the
Directors as the Audit Committee. The Audit Committee shall consult with
management and the Company's independent public accountants on matters related
to the annual audit, including the appointment of the Company's auditors, the
published financial statements, and the accounting principles and auditing
procedures being applied.
SECTION 11. EXECUTIVE COMPENSATION COMMITTEE. The Board of Directors, by
resolution adopted by a majority of the entire Board, shall designate three or
more of the Directors as an Executive Compensation Committee. Except as
prohibited by law, the Executive Compensation Committee shall have full
authority of the Board to review and approve the compensation of the officers of
the Company and to make awards under the Company's bonus, stock option,
incentive compensation and similar employee benefit plans.
SECTION 12. OTHER COMMITTEES. The Board of Directors may, by resolution
adopted by a majority of the entire Board, designate from among its members such
other Committees, consisting of three or more of the Directors, with such powers
as the Board may from time to time determine.
SECTION 13. MEETINGS AND REPORTS OF COMMITTEES. Each Committee shall fix
its
own rules and procedures and shall meet at such times and places as it may from
time to time determine. The presence of a majority of all its members shall be
necessary to constitute a quorum of the Committee. All action taken by any
Committee shall be recorded in minutes of the meeting at which the action was
taken and shall be reported to the Board of Directors as such Board may from
time to time require.
SECTION 14. TELEPHONIC PARTICIPATION. Any one or more members of the
Board of Directors or any Committee thereof may participate in a meeting of such
Board or Committee by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
at the same time. Participation by such means shall constitute presence in
person at a meeting.
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ARTICLE IV
SECTION 1. OFFICERS AND THEIR ELECTION. The officers of the Company shall
consist of a Chairman of the Board, a Vice Chairman of the Board, a President, a
Treasurer, a Secretary, a Controller and, at the discretion of the Board of
Directors, one or more Vice Presidents, one or more Assistant Treasurers, one or
more Assistant Secretaries and such other officers as may be designated by the
Board of Directors. The Board of Directors, at its annual meeting, shall elect
the officers for the ensuing year and shall thereafter fill for the unexpired
term any vacancy which may occur in any office. All officers shall hold office
until their respective successors have been elected. The same person may hold
simultaneously more than one office.
SECTION 2. THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors at
which he is present and shall have such other duties as shall be delegated to
him by the Board of Directors.
SECTION 3. THE VICE CHAIRMAN OF BOARD. The Vice Chairman of the Board
shall preside at all meetings of stockholders or of the Board of Directors at
which the Chairman of the Board is not present and at which the Vice Chairman is
present and shall have such other duties as shall be delegated to him by the
Board of Directors.
SECTION 4. THE PRESIDENT. The President shall be the Chief Executive
Officer of the Company and shall have such duties as shall be delegated to him
by the Board of Directors. The President shall be responsible for the day-to-
day management of the business and affairs of the Company and shall have such
other powers commonly incident to the office.
SECTION 5. VICE PRESIDENTS. Any Vice President shall possess such powers
and duties as shall be assigned from time to time by the Board of Directors or
the Chairman of the Board.
SECTION 6. THE TREASURER. The Treasurer shall possess the powers and
duties generally incident to his office, shall have charge of the monies,
securities and assets of the Company, and shall perform such other duties as may
be assigned by the Board of Directors or the Chairman of the Board.
SECTION 7. THE SECRETARY. The Secretary shall possess the powers and
duties generally incident to his office, shall keep a record of all proceedings
of the Board of Directors and of all meetings of the stockholders, shall attend
to the giving of all required notices of such meetings, shall keep the stock
book of the Company, shall have custody of the Company's Seal, shall attest the
Seal on all documents whose execution under seal is duly authorized, and shall
perform such other duties as may be assigned to him by the Board of Directors or
the Chairman of the Board.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The Company
shall have such Assistant Treasurers and Assistant Secretaries, if any, as may
be designated by the Board of Directors.
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Any Assistant Treasurer shall, subject to any limitation placed upon his
powers and duties by the Board of Directors, have all the powers and duties of
the Treasurer to be exercised as the occasion may require. He shall have such
other powers and perform such other duties as the Board of Directors or the
Chairman of the Board shall from time to time designate.
Any Assistant Secretary shall, subject to any limitation placed upon his
powers and duties by the Board of Directors, have all the powers and duties of
the Secretary to be exercised as the occasion may require. He shall have such
other powers and perform such other duties as the Board of Directors or the
Chairman of the Board shall from time to time designate.
SECTION 9. THE CONTROLLER. The Controller shall possess the powers and
duties generally incident to his office, shall supervise and cause to be kept
full and accurate financial accounts of the Company's business and shall perform
such other duties as may be assigned by the Board of Directors or the Chairman
of the Board.
SECTION 10. ADDITIONAL OFFICERS. The holders of any other offices created
by the Board of Directors shall perform such duties as may be assigned by the
Board of Directors or the Chairman of the Board.
SECTION 11. BONDING OFFICERS. The Board of Directors shall determine on
behalf of whom and in what amounts bonds shall be procured for the faithful
performance by the officers and employees of the Company of their respective
duties and such bonds shall be procured at the expense of the Company from a
surety company satisfactory to the Board of Directors.
ARTICLE V
RESIGNATIONS AND REMOVALS
SECTION 1. DIRECTORS. Any Director of the Company may resign at any time
by giving written notice of such resignation to the Board of Directors, the
Chairman of the Board, the President or the Secretary of the Company, such
resignation to take effect at the time specified therein, or, if no time be
specified, upon receipt thereof. Unless otherwise specified therein, acceptance
of such resignation shall not be necessary to make it effective.
SECTION 2. OFFICERS, AGENTS AND EMPLOYEES. Any officer, agent or employee
of the Company may resign at any time by giving written notice of such
resignation to the Board of Directors, the Chairman of the Board, the President
or the Secretary of the Company, such resignation to take effect at the time
specified therein, or, if no time be specified, upon receipt thereof. Unless
otherwise specified therein, acceptance of such resignation shall not be
necessary to make it effective. The Board of Directors, by a vote of not less
than two-thirds of the members thereof, may at any time, with or without cause,
remove from office or discharge any officer, agent or employee.
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ARTICLE VI
CAPITAL STOCK
SECTION 1. STOCK CERTIFICATES. The certificates for shares of the capital
stock of the Company shall be in such form, not inconsistent with the
Certificate of Incorporation, as shall be approved by the Board of Directors.
The certificates shall be signed by the Chairman of the Board, the President or
a Vice President, and also by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary, and shall be sealed with the Seal of the
Company. Such Seal may be a facsimile, engraved or printed. Where any such
certificate is countersigned (1) by a transfer agent other than the Company or
its employee or (2) by a registrar other than the Company or its employee, any
other signature on the certificate may be facsimile. All certificates shall be
consecutively numbered, and the name of the person owning the shares represented
thereby, with the number of shares and the date of issue, shall be entered on
the Company's books. The Board of Directors may appoint one or more transfer
agents and one or more registrars for the stock of the Company, in which event
no certificates shall be valid unless countersigned by a transfer agent or
registered by a registrar.
SECTION 2. TRANSFERS OF STOCK. Shares of stock may be transferred by
delivery of the certificate therefor accompanied either by an assignment in
writing on the back of the certificate or by a written power of attorney to
sell, assign and transfer the same on the books of the Company, signed by the
person appearing by the certificate to be the owner of the shares represented
thereby, and such shares of stock shall be transferable on the books of the
Company upon surrender of the certificate therefor so assigned or endorsed;
provided, however, that until the transfer is duly made upon the books of the
Company, the possession of a certificate of stock so endorsed or otherwise shall
not be regarded as vesting any ownership of the same (as between the Company and
such holder) in any other than the person in whose name it stands upon the books
of the Company.
SECTION 3. LOST CERTIFICATES. No new certificate shall be issued until
the former certificate is cancelled, except that the Board of Directors may
authorize the issuance of a duplicate in place of a lost, stolen or destroyed
certificate upon proof satisfactory to it or its designee of such loss, theft or
destruction and the giving of a satisfactory bond of indemnity.
SECTION 4. CLOSING OF TRANSFER BOOKS. The Board of Directors may fix in
advance a date not exceeding fifty days preceding the date of any meeting of
stockholders, or the date for the payment of any dividend, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
capital stock shall go into effect, or a date in connection with obtaining the
consent of stockholders for any purpose, as a record date for the determination
of the stockholders entitled to notice of, and to vote at, any such meeting and
any adjournment thereof, or to receive payment of any such dividend, or to any
such allotment of rights or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to give such consent, and in
such case such stockholders and only such stockholders as shall be stockholders
of record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting and any adjournment thereof, or to receive payment of such
dividend, or to
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receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Company after such record date fixed as aforesaid.
ARTICLE VII
DIVIDENDS AND RESERVES
The Board of Directors, subject to any restrictions contained in the
Certificate of Incorporation, shall have power to declare and pay dividends upon
the shares of the Company's capital stock as provided by the laws of the State
of New York. The Board of Directors shall have authority, from time to time, to
set apart, out of any of the funds of the Company available for dividends, a
reserve or reserves as working capital or for any other proper purpose or
purposes, and to abolish in whole or in part, or to add to any such reserve or
reserves, from time to time, as the Board may deem to be in the interest of the
Company; and the Board shall likewise have power to determine, in its
discretion, what part of the assets of the Company, lawfully available for
dividends, in excess of such reserve or reserves if any, shall be declared in
dividends and paid to the stockholders of the Company.
ARTICLE VIII
THE CORPORATE SEAL
The Company shall have a common Seal which shall be circular in form and
which shall have engraved upon it the name of the Company, the State and the
year of incorporation.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
Any person made, or threatened to be made, a party to an action or
proceeding, whether civil or criminal, by reason of the fact that he, his
testator or intestate then is or was a director or officer of the Company, or
then serves or has served any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity at the request
of the Company, shall be indemnified by the Company against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement to the full
extent permitted by the laws of the State of New York. To the full extent so
permitted, the foregoing shall apply to actions by or in the right of the
Company and require the Company to pay expenses in advance of final disposition.
The adoption of the foregoing provisions shall not adversely affect any right to
indemnification which any person may have under these By-Laws as in effect prior
to such adoption or apart from the provisions of these By-Laws as now, hereafter
or formerly in effect; and other rights to indemnification or advancement of
expenses may be provided by (i) a resolution of stockholders, (ii) a resolution
of directors or (iii) an agreement providing for such indemnification. If the
Board of Directors so determines, the Company may provide indemnity,
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on such terms and to such extent as may be fixed by the Board, to employees and
other persons to whom the foregoing provisions do not relate.
ARTICLE X
AMENDMENTS TO BY-LAWS
These By-Laws may be amended or repealed or new By-Laws may be adopted at
any meeting of the stockholders in accordance with the provisions of the
Company's Certificate of Incorporation, provided that notice of the proposed
alteration, amendment, repeal or adoption be included in the notice of the
meeting. These By-Laws may also be amended or repealed or new By-Laws may be
adopted by the Board of Directors, but any By-Laws adopted by the Board of
Directors may be amended or repealed by the stockholders as provided by law.
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Exhibit 4.3
AMENDMENT NO. 3 TO NOTE AGREEMENT
THIS AMENDMENT NO. 3 TO NOTE AGREEMENT is entered into as of March 30,
1993, by and between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential")
and WILLCOX & GIBBS, INC. (the "Company").
WITNESSETH:
WHEREAS, the parties hereto have executed and delivered that certain
Note Agreement, dated as of April 2, 1991 (as amended by agreements dated
March 25, 1992 and November 11, 1992, the "Note Agreement");
WHEREAS, Prudential is the holder of 100% of the Notes issued under
the Note Agreement; and
WHEREAS, the Company has requested that certain terms of the Note
Agreement be amended to the effect and as set forth herein;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. AMENDMENT OF PARAGRAPH 6A(2) OF THE NOTE AGREEMENT. Paragraph
6A(2) of the Note Agreement is hereby amended and restated as follows:
"6A(2). INTEREST COVERAGE RATIO. The Interest Coverage Ratio,
calculated as of the last day of any fiscal quarter of the Company
ending in any of the periods specified in the table below to be less
than the ratio set forth in such table opposite such period:
PERIOD RATIO
July 1, 1992 through and including 1.90 to 1.00
June 30, 1993
July 1, 1993 through and including 2.00 to 1.00
September 30, 1993
October 1, 1993 through and including 2.25 to 1.00
December 31, 1993
January 1, 1994 and thereafter 2.50 to 1.00
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2
2. AMENDMENT OF PARAGRAPH 6A(3) OF THE NOTE AGREEMENT. Paragraph
6A(3) of the Note Agreement is hereby amended and restated as follows:
"6A(3). FUNDED DEBT RATIO. (i) Consolidated Senior Funded Debt
to exceed 43% of Consolidated Tangible Gross Worth or (ii)
Consolidated Funded Debt to exceed (a) 71% of Consolidated Tangible
Gross Worth at any time for the period from the Closing Date through
and including September 30, 1992, (b) 72% of Consolidated Tangible
Gross Worth at any time for the period from and after September 30,
1992 through and including June 30, 1993 and (c) 71% of Consolidated
Tangible Gross Worth at any time after June 30, 1993."
3. AMENDMENT OF PARAGRAPH 10B OF THE NOTE AGREEMENT. The definition
of "Interest Coverage Ratio" in paragraph 10B of the Note Agreement is hereby
amended and restated as follows:
"'INTEREST COVERAGE RATIO' shall mean, as at any date of
determination thereof, the ration of Consolidated Net Income Available
for Fixed Charges for the four consecutive fiscal quarters of the
Company immediately preceding the determination date to Consolidated
Interest Expense for the same period, PROVIDED, HOWEVER, that:
(i) there shall be added to Consolidated Net Income Available
for Fixed Charges for the four consecutive fiscal quarters
ended on September 30, 1992 (a) the amount of losses booked
in the fourth quarter of 1991 from the Underperforming
Operations which amount shall not exceed, in the aggregate,
$1,545,000, and (b) the amount of reserves booked in the
fourth quarter of 1991 relating principally to the
disposition of the Underperforming Operations which amount
shall not exceed, in the aggregate, $6,508,000, and
(ii) there shall be added to Consolidated Net Income for Fixed
Charges for the fiscal quarter ended on December 31, 1992
(and, consequently, to each period of four consecutive
fiscal quarters that includes the fiscal quarter ended on
December 31, 1992) (a) the amount of additional losses
incurred in connection with the operations and disposition
of the Underperforming Operations which amount shall not
exceed, in the aggregate, $5,586,000 and (b) non-recurring
transaction costs incurred in connection with the
transactions contemplated by the Purchase Agreement dated as
of April 22, 1992 among the Company, Compagnie de
Distribution de Materiel Electrique, International Technical
Distributors, Inc. and Southern Electric Supply Company,
Inc. which amounts shall not exceed, in the aggregate,
$15,344,000."
4. EFFECTIVE DATE Paragraphs 1, 2 and 3 hereof, inclusive, shall
become effective on December 31, 1992 (the "effective date"), subject to receipt
by Prudential of an Officer's Certificate of the Company certifying that, after
giving effect to this Agreement and any
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3
other amendments or waivers delivered under other Debt agreements of the Company
and its Subsidiaries, no Default, Event of Default or default under any other
Debt agreement of the Company or any of its Subsidiaries would exist on the
effective date, together with copies of such waivers or amendments under other
Debt agreements of the Company and its Subsidiaries.
5. MISCELLANEOUS.
(a) Capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Note Agreement.
(b) On and after the effective date of this Agreement, each
reference in the Note Agreement, the Notes and other related
agreements shall mean and be a reference to the Note Agreement as
amended by this Agreement and any prior amendments.
(c) The Note Agreement, as amended by this Agreement, is and
shall continue to be in full force and effect and is hereby in all
respects ratified and confirmed.
(d) This Agreement may be executed in any number of counterparts
and by any combination of the parties hereto in separate counterparts,
each of which counterparts shall be an original and all of which taken
together shall constitute one and the same Agreement.
(e) In consideration of Prudential's preparation and delivery of
this Agreement, the Company shall pay, on or before April 1, 1993, a
fee of $62,500 to Prudential by wire transfer of immediately available
funds to Prudential's Account No. 050-54-526 at Morgan Guaranty Trust
Company of New York, 23 Wall Street, New York, New York (ABA No. 021-
000-238) with the following reference included: "Security No. 969207A
#6; Fee Income". The parties hereto agree that failure to pay such
fee shall constitute an Event of Default under paragraph 7A(vi) of the
Note Agreement if not cured within the period set forth therein.
(INTENTIONALLY BLANK; NEXT PAGE IS SIGNATURE PAGE)
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to set their hands below as of the day and year first above
written.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By:_________________________________________
Title: Second Vice President
WILLCOX & GIBBS, INC.
By:_________________________________________
Title:
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Exhibit 4.4
WILLCOX & GIBBS, INC.
$50,000,000 SENIOR NOTES DUE 2001
-----------------------------------------------------------
AMENDMENT NO. 4 TO NOTE AGREEMENT dated as of April 2, 1991
-----------------------------------------------------------
Dated as of December 17, 1993
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
WILLCOX & GIBBS, INC.
530 Fifth Avenue
New York, NY 10036
As of December 17, 1993
The Prudential Insurance Company
of America
c/o Prudential Capital Group
One Gateway Center, 11th Floor
Newark, NJ 07102-4427
Gentlemen:
Reference is made to the Note Agreement dated as of April 2, 1991 (as
amended by agreements dated as of March 25, 1992, November 11, 1992 and
March 30, 1993, the "Original Note Agreement"), between the undersigned Willcox
& Gibbs, Inc. (herein called the "Company") and you. Pursuant to paragraph 11C
of the Original Note Agreement, the Company has requested and, subject to the
terms and conditions herein set forth, you have agreed, to amend the Original
Note Agreement as set forth below. Accordingly, the Company hereby agrees with
you as follows:
1. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective immediately prior to the consummation of the transactions at the
Closing under the Summers Purchase Agreement, subject to satisfaction or waiver
of each of the following conditions as of such time and shall not be effective
if such Closing does not occur:
1A. OPINION OF COMPANY'S COUNSEL. You shall have received from
Hughes Hubbard & Reed, special counsel for the Company, an opinion in the form
of Exhibit A attached hereto.
1B. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The
representations and warranties of the Company contained in paragraph 8 of the
Original Note Agreement (excluding paragraphs 8B, 8D, 8E, 8H, 8I, 8J, 8K, 8L and
8N) and in paragraph 4 of this Amendment (after giving effect to the
consummation of the acquisition of the Summers Group pursuant to the Summers
Purchase Agreement and the borrowings under the New Bank Credit Agreement) shall
be true and correct as of the Effective Date of this Amendment and there shall
exist on the Effective Date (after giving effect to the consummation of the
acquisition of the Summers Group pursuant to the Summers Purchase Agreement and
the borrowings under the New Bank Credit Agreement) no Event of Default or
Default; and the Company shall have delivered to you an Officer's Certificate,
dated the Effective Date, to both such effects.
1C. PURCHASE AGREEMENT. The Purchase Agreement, dated as of
December 10, 1993, among the Company, Rexel, S.A. and International Technical
Distributors, Inc. shall not have been amended and shall be in full force and
effect.
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2
1D. NEW BANK CREDIT AGREEMENT. The Revolving Credit and
Reimbursement Agreement by and among, the Company and Nationsbank of Florida,
N.A. and Credit Lyonnais New York Branch shall have been executed and delivered,
and shall contain no terms as to which you shall object (the "New Bank Credit
Agreement").
1E. SUBSIDIARY GUARANTY. You shall have received a duly executed
Guaranty in substantially the form of Exhibit F to the Original Note Agreement
from each of the Company's Subsidiaries then proposed to guarantee obligations
under the New Bank Credit Agreement which have not theretofore executed and
delivered such a Guaranty.
1F. INTERCREDITOR AGREEMENT. The Banks which are parties to the
New Bank Credit Agreement shall have executed and delivered an Intercreditor
Agreement in substantially the form of Exhibit B attached hereto.
1G. PROCEEDINGS. All corporate and other proceedings taken or to
be taken in connection with the transactions contemplated hereby and by the
Summers Purchase Agreement and all documents incident thereto shall be
satisfactory in substance and form to you, and you shall have received all such
counterpart originals or certified or other copies of such documents as you may
reasonably request.
1H. FEE. The Company shall have delivered to you a fee of
$250,000 by wire transfer of immediately available funds to Account No. 050-54-
526 at Morgan Guaranty Trust Company of New York, 23 Wall Street, New York, New
York 10015 (ABA No. 021-000-238), which wire will include the following
reference: "Security No. 969207A #6 - Fee Income."
2. AMENDMENTS.
2A. Paragraph 5 of the Original Note Agreement is hereby amended
by adding a new paragraph 5L at the end thereof reading as follows:
5L. SUBSIDIARY GUARANTY. The Company covenants that it will
cause each Guarantor to execute and deliver, and each other Subsidiary that is
not a Guarantor and which is required to guarantee all or any portion of any
obligations under the New Bank Credit Agreement to execute and deliver (no later
than the time when its guarantee in respect of obligations under the New Bank
Credit Agreement becomes effective), to each holder of Notes an executed
Guaranty of such Subsidiary, together with evidence of the due authorization,
execution, delivery and enforceability of such Guaranty comparable to that
delivered under paragraph 3 with respect to the Guarantors.
2B. Paragraph 6 of the Original Note Agreement is hereby amended
by amending and restating paragraphs 6A, 6B, 6C, 6D(1), 6D(2), 6D(5), 6D(6)(v),
and 6D(7) thereof in their entirety to read as follows:
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6A. CURRENT AND DEBT RATIOS. The Company covenants that it will
not permit:
6A(1). CURRENT RATIO. The ratio of Consolidated Current Assets to
Consolidated Current Liabilities at any time prior to January 1, 1996 to be less
than 1.25 to 1.0 and at any time on or after that date to be less than 1.5 to
1.0.
6A(2). INTEREST COVERAGE RATIO. The Interest Coverage Ratio
calculated as of the last day of any fiscal quarter of the Company ending in any
of the periods specified in the table below to be less than the ratio set forth
in such table opposite such period:
Period Ratio
------ -----
December 1, 1993 through and including 2.25 to 1.00
December 30, 1994
December 31, 1994 and thereafter 2.50 to 1.00
6A(3). FUNDED DEBT RATIO.
(i) SENIOR FUNDED DEBT RATIO. Consolidated Senior Funded
Debt to exceed at any time during the periods specified in the table below the
percentage of Consolidated Tangible Gross Worth set forth in such table opposite
such period:
Period Percentage
------ ----------
December 1, 1993 through and including 68%
March 30, 1994
March 31, 1994 through and including 65%
December 30, 1994
December 31, 1994 through and 57%
including December 30, 1995
December 31, 1995 through and including 50%
December 30, 1996
December 31, 1996 and thereafter 45%
(ii) FUNDED DEBT RATIO. Consolidated Funded Debt at any time
during the periods specified in the table below to exceed the percentage of
Consolidated Tangible Gross Worth set forth in such table opposite such period:
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Period Percentage
------ ----------
December 1, 1993 through and including 90%
March 30, 1994
March 31, 1994 through and including 85%
December 30, 1994
December 31, 1994 through and 76%
including December 30, 1995
December 31, 1995 through and 70%
including December 30, 1996
December 31, 1996 through and 65%
including December 30, 1997
December 31, 1997 and thereafter 60%
6A(4). FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage Ratio
calculated as of the last day of any fiscal quarter of the Company ending in any
of the periods specified in the table below to be less than the ratio set forth
in such table opposite such period:
Period Ratio
------ -----
December 1, 1993 through and including 1.25 to 1.00
December 31, 1994
January 1, 1995 through and including 1.30 to 1.00
December 31, 1996
January 1, 1997 and thereafter 1.40 to 1.00
6B. TANGIBLE NET WORTH. The Company covenants that it will not
permit Consolidated Tangible Net Worth at any time to be less than the sum of
$70,000,000 and the Incremental Amount. At any particular date of determination
the "Incremental Amount" shall mean an amount equal to the sum of (x) 50% of
Consolidated Net Income for each fiscal quarter ending after September 30, 1993
and prior to such date of determination in which Consolidated Net Income is a
positive number and (y) 85% of the proceeds (with non-cash proceeds being valued
by the Board of Directors of the Company), net of underwriting discounts and
commissions, received by the Company after December 17, 1993 from the sale of
its capital stock and any options, warrants or rights to acquire its capital
stock and any debt securities convertible into or exchangeable for such capital
stock (but only to the extent such Debt securities are actually so converted or
exchanged).
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6C. WORKING CAPITAL REQUIREMENT. The Company covenants that it
will not permit Consolidated Working Capital at any time during the periods
specified in the table below to be less than the amounts set forth in such table
opposite such period:
Period Amount
December 1, 1993 through and including
March 31, 1994 $70,000,000
April 1, 1994 through and including
December 31, 1994 $85,000,000
January 1, 1995 and thereafter $100,000,000
6D. LIEN, DEBT AND OTHER RESTRICTIONS. The Company covenants
that it will not and will not permit any Subsidiary to:
6D(1). LIEN RESTRICTIONS. Create, assume or suffer to exist any
Lien upon any of its property or assets, whether now owned or hereafter acquired
or upon any income or profits therefrom (in all cases, whether or not provision
is made for the equal and ratable securing of Notes in accordance with the
provisions of paragraph 5C hereof), except:
(i) Liens for taxes, assessments or governmental charges
or levies the payment of which is not at the time required by
paragraph 5G;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics and materialmen incurred in the ordinary
course of business for sums not yet due or the payment of which is not
at the time required by paragraph 5G;
(iii) Liens (other than any Lien imposed by ERISA) incurred
or deposits made in the ordinary course of business (a) in connection
with workers' compensation, unemployment insurance and other types of
social security, or (b) to secure (or to obtain letters of credit that
secure) the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, performance bonds, purchase, construction
or sales contracts and other similar obligations, in each case not
incurred or made in connection with the borrowing of money, the
obtaining of advances or credit or the payment of the deferred
purchase price of property, and which do not in the aggregate
materially detract from the value of the property or assets, or
materially impair the use thereof in the operation of the business, of
the Company and its Subsidiaries, taken as a whole;
(iv) any Lien (including a Lien arising under a Capital
Lease)
(a) existing on any real or personal property of any
Person at the time it becomes a Subsidiary, or
existing on any real or personal property acquired by
the Company or any Subsidiary at the time such
property is so acquired
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through purchase, merger or consolidation or otherwise
(whether or not the Debt secured thereby is assumed by
the Company or such Subsidiary) in connection with an
acquisition of the securities of any Person permitted
under paragraph 6D(3)(ii) or an acquisition of all or
substantially all the assets of any Person or any line
of business of any Person, PROVIDED that any such Lien
shall at all times be confined solely to the item or
items of property so acquired and, if required by the
terms of the instrument originally initiating the
Lien, other property which is an improvement to or is
acquired for specific use in connection with such
acquired property;
(b) created to secure the purchase price, or to
secure Debt or other obligation incurred to pay, or to
finance or fund the payment of, the purchase price, of
any property acquired by the Company or any Subsidiary
after the date hereof in connection with an
acquisition of the securities of any Person permitted
under paragraph 6D(3)(ii) or acquisition of all or
substantially all the assets of any Person or any line
of business of any Person, PROVIDED that (1) any such
Lien not existing prior to the time of acquisition of
such property shall be created concurrently with or
within twelve months following the acquisition of such
property, (2) the Debt secured by such Lien shall not
exceed such purchase price, (3) the Debt secured by
such Lien shall not be prohibited by the provisions of
paragraph 6D(2), (4) any such Lien shall at all times
be confined solely to the item or items of property so
acquired and, if required by the terms of the
instrument originally creating the Lien, other
property which is an improvement to or is acquired for
specific use in connection with such acquired
property; or
(c) renewing, replacing or extending any such Lien,
PROVIDED that the principal amount of Debt secured
thereby is not increased or the maturity reduced
(PROVIDED that this provision shall not be deemed to
restrict the right of the Company or any Subsidiary to
prepay any Debt or other obligation permitted to be
secured by a Lien under this paragraph 6D(1)), the
Lien is not extended to other property and the Debt
secured thereby is permitted under paragraph 6A(3);
PROVIDED that neither the Company nor any of its
Subsidiaries shall create, incur or assume any Lien
pursuant to this clause (iv), unless, immediately
after giving effect thereto the aggregate outstanding
principal amount of all Debt of the Company and its
Subsidiaries secured by such Liens shall not exceed
10% of Consolidated Tangible Gross Worth; and PROVIDED
further that for purposes of calculating the amount of
Debt outstanding pursuant to the preceding proviso,
any obligation, other than Debt, that is secured by
any such Lien shall be deemed to be Debt in an amount
equal to the budgeted amount of such obligation for
the then current fiscal year of the Company, as
reported in the most recent Officer's Certificate
delivered pursuant to clause (b) of paragraph 5K;
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(v) Liens existing on the Closing Date and securing the
Debt of the Company or a Subsidiary referred to in Exhibit D attached
hereto;
(vi) any Lien renewing or extending any Lien permitted by
clause (v) above, PROVIDED that the principal amount of Debt secured
thereby is not increased or the maturity reduced (PROVIDED that this
provision shall not be deemed to restrict the right of the Company or
any Subsidiary to prepay any Debt or other obligation permitted to be
secured by a Lien under this paragraph 6D(1)), the Lien is not
extended to other property and the Debt secured thereby is permitted
under paragraph 6A(3); and
(vii) other Liens securing Debt of the Company or any
Subsidiary;
PROVIDED, that neither the Company nor any Subsidiary shall create, incur or
assume any Lien pursuant to clauses (vi) or (vii) of this paragraph 6D(1)
unless, immediately after giving effect thereto, the aggregate outstanding
amount of all Priority Debt of the Company and its Subsidiaries shall not exceed
6.8% of Consolidated Tangible Gross Worth.
6D(2). DEBT RESTRICTIONS. Create, incur, assume or suffer to exist
any Funded Debt or Current Debt except:
(i) Funded Debt represented by the Notes and the
Guaranties;
(ii) Debt of any Subsidiary to the Company or any other
Subsidiary and Subordinated Intercompany Debt of the Company to any
Subsidiary;
(iii) Debt represented by the Bank Guaranties;
(iv) other Debt of any Subsidiary, provided that the
aggregate amount of all Priority Debt of the Company and its
Subsidiaries shall not exceed 6.8% of Consolidated Tangible Gross
Worth;
(v) Current debt not in excess of $20,000,000 at any time
outstanding;
(vi) Debt permitted by the provisions of paragraph
6D(1)(iv);
(vii) Funded Debt that consists of guarantees, endorsements,
and other contingent liabilities (whether direct or indirect) entered
into in the ordinary course of the Company's or a Subsidiary's
business as is necessary to induce leasing companies to provide lease
financing to facilitate the purchase by customers of the Company or
any Subsidiary of equipment, goods and/or services provided by the
Company or its Subsidiaries; PROVIDED that such Funded Debt permitted
by this clause (vii) shall not exceed $2,000,000 at any time
outstanding;
(viii) the guaranty by Clark Consolidated Industries, Inc.
and certain other Subsidiaries of the Company of a capital lease and
mortgage debt at rates ranging from 6.9% to 7.75% per annum of Clark
Pulley Industries, Inc. as successor to Clark Pulley
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Corporation of Alabama, under arrangements with the Industrial
Development Board of Russellville, Alabama, in an amount not in excess
of $2,210,000; and
(ix) Funded Debt in addition to that otherwise permitted by
the foregoing provisions of this paragraph 6D(2), PROVIDED, that on
the date of the proposed creation, incurrence or assumption of such
additional Funded Debt the Company shall be in compliance with
paragraph 6A(3).
6D(5). LEASE RENTALS. Directly or indirectly become or remain
liable as lessee or as guarantor or other surety with respect to any Operating
Lease unless, at the end of the then current fiscal quarter, the aggregate
amount of all Net Rental Payments under such Operating Lease and all other
Operating Leases for the period of four consecutive fiscal quarters then ended
(taken as a cumulative whole) shall not exceed 1.25% of the Consolidated Gross
Revenues of the Company for such period.
6D(6). MERGER AND SALE OF ASSETS. Consolidate with or merge into
any other Person, or permit any other Person to consolidate with or merge into
it or sell, lease, abandon or otherwise dispose of all or substantially all of
its assets, except that:
* * *
(v) assets used or held for use in the Apparel Operations,
and the stock of any Subsidiary engaged in the Apparel Operations, may
be disposed of for a net price to the Company of not less than
$30,000,000;
* * *
6D(7). RESTRICTIONS ON SUBSIDIARIES. Except as permitted under
paragraph 6D(6)(iv), permit any Subsidiary to: (i) issue stock or other equity
interests in such Subsidiary or rights, options, convertible securities or
warrants convertible into or exercisable for such stock or other equity
interests, except to the Company or a Wholly-Owned Subsidiary, (ii) sell,
assign, pledge or otherwise dispose of any shares of stock or other equity
interests in such Subsidiary or rights, options, convertible securities or
warrants convertible into or exercisable for such stock or other equity
interests except to the Company or a Wholly-Owned Subsidiary, or (iii) enter
into any contract or agreement (including any provisions in its corporate
charter or articles or certificate of incorporation) that imposes restrictions
on its ability to pay dividends, except in connection with the transaction in
which such Subsidiary becomes a Subsidiary.
2C. Paragraph 6 of the Original Agreement is hereby further
amended by adding new paragraphs 6D(11) and 6D(12) at the end thereof reading as
follows:
6D(11). ACQUISITIONS. At any time during any fiscal year acquire any
Person or all or substantially all of the assets of any Person if the aggregate
of such purchase price for such acquisition and such purchase prices for all
previous acquisitions during such year exceeds $15,000,000. The Company hereby
agrees to give notice to the holders of the Notes promptly after any such
acquisition the purchase price of which exceeds $2,000,000. For purposes of the
foregoing provisions of this paragraph 6D(11), "purchase price" shall not
include (i) any payment
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9
which, at the time of creation of the obligation to make the payment, was
contingent upon future economic performance of the acquired Person or the
acquiror or (ii) any payment in the form of shares of capital stock of the
Company which, together with all previous such payments in the form of shares of
capital stock during the particular year, does not exceed $15,000,000. This
paragraph 6D(11) shall not apply to the acquisition by the Company of Summers
Group.
6D(12). NEW BANK CREDIT AGREEMENT. Amend, restate or otherwise
modify any term or provision of the New Bank Credit Agreement or the Bank
Guaranties if the effect thereof would be to (i) add covenants or events of
default or repurchase or similar obligations, or make any covenants or events of
default or repurchase or similar obligations more restrictive (unless the same
covenants, additions, events of default or repurchase or similar obligations are
incorporated herein by an instrument duly executed, delivered and binding on the
Company and delivered to all the holders of the Notes); PROVIDED that this
provision shall not restrict a waiver of any provision of the New Bank Credit
Agreement or Bank Guaranties by the Lenders thereunder.
2D. Paragraph 7A of the Original Agreement is amended by amending
and restating clause (v) thereof in its entirety to read as follows:
(v) the Company fails to perform or observe any agreements
contained in paragraph 5C, 5(I) (with respect to the Company's
corporate existence), 5L or 6; or Rexel, S.A. shall fail to purchase
shares of the Company's Common Stock for an aggregate purchase price
of at least $31,421,520 on or prior to March 31, 1994 as provided in
the Purchase Agreement dated December 10, 1993 among the Company,
Rexel, S.A. and International Technical Distributors, Inc.
2E. Paragraph 10B of the Original Note Agreement is hereby
amended by amending and restating in their entirety the following definitions to
read as follows:
"APPAREL OPERATIONS" shall mean the operations of the Company and its
Subsidiaries in connection with the Company's Sunbrand Division, its Unity
Sewing Supply Division and the following Subsidiaries: Allied Machine Parts
Ltd., J&E Sewing Supplies, Inc., Leadtec Systems, Inc., M.E.C. (Sewing Machines)
Ltd., W&G Daon, Inc., W&G Export Corporation, W&G Tennessee Imports, Inc.,
Willcox & Gibbs-Kennedy of Delaware, Inc. and Willcox & Gibbs, Ltd.
"INTEREST COVERAGE RATIO" shall mean with respect to the Company and
its Subsidiaries as of the end of any fiscal quarter the ratio of (i)
Consolidated Net Income plus all Consolidated Interest Expense plus taxes
imposed on income for the four fiscal quarters then ended, to (ii) Consolidated
Interest Expense for such four fiscal quarters; provided that with respect to
each of the first three fiscal quarters during 1994 such ratio shall be
determined based on the three, six and nine month periods, respectively,
beginning January 1, 1994.
"PRIORITY DEBT" shall mean, as at any date of determination thereof,
the sum (without duplication) of the aggregate principal amount of (i) all Debt
of Subsidiaries (excluding any Debt of Subsidiaries owing to the Company or
another Subsidiary) plus (ii) all Debt of the Company (excluding Debt of the
Company owing to any Subsidiary) secured by Liens permitted
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10
by paragraph 6D(1) (other than by clauses (i), (ii), (iii) and (iv) thereof)
(other than, in connection with any Debt of the Company owing to any bank, a
lien securing such Debt on any deposit or other account of the Company
maintained with such bank or on any Investments that such bank may owe to the
Company from time to time).
2F. Paragraph 10B of the Original Note Agreement is hereby
further amended by deleting in its entirety the definition of "Consolidated Net
Income Available for Fixed Charges."
2G. Paragraph 10B is further amended by adding the following
definitions in the appropriate alphabetical order:
"BANK GUARANTIES" shall mean the Guaranties executed and delivered
from time to time under the New Bank Credit Agreement.
"CAPITAL EXPENDITURES" shall mean, with reference to any period, the
sum of (i) the gross amount of additions to property, plant and equipment (which
are classified as such in accordance with generally accepted accounting
principles and at the time have a useful life in excess of one year) of the
Company and its Subsidiaries during such period, plus (ii) with respect to any
Capital Lease entered into by the Company or any Subsidiary during such period,
the capitalized amount thereof determined in accordance with generally accepted
accounting principles.
"CONSOLIDATED GROSS REVENUES" shall mean, with reference to any
period, the gross consolidated revenues of the Company and its Subsidiaries for
such period (taken as a cumulative whole and including revenues of the Summers
Group), all determined in accordance with generally accepted accounting
principles, after eliminating all intercompany transactions.
"FIXED CHARGE COVERAGE RATIO" shall mean, with respect to the Company
and its Subsidiaries, as of the end of any fiscal quarter, the ratio of (A) the
sum of (i) Consolidated Net Income, plus taxes on income, plus Consolidated
Interest Expense, plus depreciation and amortization MINUS Capital Expenditures,
all for the four fiscal quarters then ended and (ii) the current maturity of the
BTR Indebtedness, (as defined in the New Bank Credit Agreement) to (B) the sum
of (i) Consolidated Interest Expense, plus dividends and distributions of the
Company (other than of capital stock of the Company or rights, options or
warrants to acquire such stock), all for such four fiscal quarters, plus
(ii) current maturities of all Funded Debt (excluding the "Outstandings" as such
term is defined in the New Bank Credit Agreement), plus current maturities of
Capital Leases; PROVIDED, HOWEVER, that with respect to each of the first three
fiscal quarters of 1994 such ratio shall be determined based on the three, six
and nine month periods; respectively, beginning January 1, 1994 on an annualized
basis.
"INTERCREDITOR AGREEMENT" shall mean the Intercreditor Agreement dated
December 17, 1993 among The Prudential Insurance Company of America, NationsBank
of Florida, N.A. and Credit Lyonnais New York Branch.
"NEW BANK CREDIT AGREEMENT" shall mean the Revolving Credit and
Reimbursement Agreement dated December 17, 1993 by and among the Company and
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11
NationsBank of Florida, N.A. and Credit Lyonnais New York Branch as the same
shall be amended from time to time and be in effect in compliance with this
Agreement.
3. DEFINITIONS. 3A. Except where the context indicates
otherwise, capitalized terms used in this Amendment and not herein defined shall
have the meanings assigned thereto in the Original Note Agreement, as amended
hereby.
3B. The following terms shall have the following meanings:
"EFFECTIVE DATE" shall mean the date on which this Amendment shall be
executed and delivered by you and the Company and all conditions to the
effectiveness of this Amendment shall have been satisfied.
"SUMMERS GROUP" shall mean Summers Group, Inc., a Delaware
corporation.
"SUMMERS PURCHASE AGREEMENT" shall mean the Purchase Agreement dated
as of November 20, 1993 among the Company, Willcox & Gibbs Delaware, Inc.,
Summers Group, Inc., SGHDC, Inc. and BTR Dunlop, Inc. whereby the Company has
agreed to purchase Summers Group.
4. REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants to you as follows:
4A. The Company has furnished you with the following:
(i) a consolidated balance sheet of the Company and its
Subsidiaries as of the end of the fiscal year ended December 31, 1992
and the related consolidated statements of income, changes in
stockholders' equity and cash flows for such year all audited by
Coopers & Lybrand; and an unaudited consolidated balance sheet of the
Company and related consolidated statement of income as at and for the
nine month period ended September 30, 1993;
(ii) consolidated balance sheets of the Summers Group as of
the end of the fiscal year ended December 31, 1992, and the related
consolidated statements of income and cash flows for such year, all
audited by Ernst & Young;
(iii) an unaudited consolidated balance sheet of the Summers
Group and the related consolidated statement of income as at and for
the eight month period ended August 31, 1993;
(iv) a pro forma consolidated balance sheet of the Company
giving effect to the acquisition of the Summers Group as of the fiscal
year ending on December 31, 1993; and
(v) a projected consolidated balance sheet of the Company
as at the end of each fiscal year ended December 31, 1993,
December 31, 1994 and December 31, 1995, and projected consolidated
income and cash flow statements of the Company for each of the years
ended December 31, 1994 and December 31, 1995.
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12
All financial statements referred to in clauses (i) and (ii) above have been
prepared in accordance with generally accepted accounting principles
consistently applied among the financial statements of the applicable company,
except as stated in the notes to such financial statements and year-end audit
adjustments in the case of unaudited statements and present fairly in all
material respects the financial position of the Company and its Subsidiaries and
of the Summers Group, as the case may be, as of the date specified and the
results of their operations and cash flows for the periods indicated in
accordance with generally accepted accounting principle. There has been no
material adverse change in the business, financial condition, operations,
prospects, property or assets of the Company, its Subsidiaries and the Summers
Group, taken as a whole, since December 31, 1992. The aforementioned
information (excluding that referred to in clause (v)), taken as a whole, does
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained therein not misleading.
The pro forma consolidated financial statement information referred to in
clause (iv) above fairly presents in all material respects the information shown
therein and, in the opinion of the Company, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein. The projected financial information referred to in clause (v)
delivered to you has been prepared in good faith by the Company and except as
disclosed therein, on a basis consistent in all material respects with the
Company's past practices, and the assumptions made in preparing such projections
are reasonable as of the date of such projections and reflect the best available
estimates and good faith judgments of the management of the Company as of such
dates. Such projections provide, as of the date of such projections, reasonable
estimations of future performance subject to the uncertainty and approximation
inherent in any projections.
4B. DISCLOSURE. The information provided to you by the Company
in connection with this Amendment, taken as a whole, does not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which they were
made, not misleading. There is no fact peculiar to the Company or any of its
Subsidiaries or the Summers Group which materially adversely affects or in the
future will (so far as the Company can now reasonably foresee) materially
adversely affect the business, property, assets, prospects, financial condition
or operations of the Company, its Subsidiaries and the Summers Group, taken as a
whole, and which has not been set forth in this Amendment or disclosed to you
prior to the Effective Date of this Amendment.
4C. OUTSTANDING DEBT. Neither the Company, nor any of its
Subsidiaries has any Debt outstanding, nor, after the consummation of the
Closing under the Summers Purchase Agreement, will the Summers Group have any
Debt outstanding, except as permitted by paragraphs 6A(3) and 6D(2). There
exists no default under the provisions of any instrument evidencing such Debt or
of any agreement relating thereto which default would have a material adverse
effect on the business, financial condition, property, assets, prospects or
operations of the Company, its Subsidiaries and the Summers Group, taken as a
whole.
4D. TITLE TO PROPERTIES. To the knowledge of the Company, the
Company has and each of its Subsidiaries and the Summers Group has good and
indefeasible title to its respective real properties and good title to all of
its other properties and assets (other than, in each case, properties which it
leases), including the properties and assets reflected in the balance sheets as
at
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13
December 31, 1992, referred to in paragraph 4A(i) and (ii) (other than
properties and assets disposed of in the ordinary course of business) material
to the Company, its Subsidiaries and the Summers Group, taken as a whole,
subject (in the case of the Summers Group, after consummation of the Closing
under the Summers Purchase Agreement) to no Lien of any kind except Liens
permitted by paragraph 6D(1) of the Agreement. All leases of the Company or any
Subsidiary or the Summers Group necessary in any material respect for the
conduct of the business of the Company and its Subsidiaries and the Summers
Group, taken as a whole, are valid and subsisting and are in full force and
effect.
5. MISCELLANEOUS.
5A. DESCRIPTIVE HEADINGS. The descriptive headings of the
several paragraphs of this Amendment are inserted for convenience only and do
not constitute a part of this Amendment.
5B. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK.
5C. COUNTERPARTS. This Amendment shall be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, and all of which together shall constitute a single agreement.
5D. ORIGINAL NOTE AGREEMENT. Except as amended hereby, the
Original Note Agreement shall continue in full force and effect as in effect on
the date of this Amendment, and after the Effective Date of this Amendment all
references to the Note Agreement dated as of April 2, 1991 between Willcox and
Gibbs, Inc. and The Prudential Insurance Company of America shall be deemed to
refer to the Original Note Agreement as amended hereby.
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14
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
Company, whereupon this letter shall become a binding agreement between you and
the Company.
Very truly yours,
WILLCOX & GIBBS, INC.
By: _______________________
Title:
The foregoing agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:_______________________________
Title: Vice President
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EXHIBIT A
December 17, 1993
The Prudential Insurance Company of America
c/o Prudential Capital Corporation
One Gateway Center, 11th Floor
Newark, NJ 07102
Gentlemen:
We have acted as counsel to Willcox & Gibbs, Inc. (the "Company") in
connection with the execution and delivery of Amendment No. 4, dated as of
December 17, 1993 (the "Amendment"), to the Note Agreement, dated as of April 2,
1991, between the Company and you (as amended through the Amendment, the "Note
Agreement"), and, at the Company's request, we are delivering this opinion
letter pursuant to paragraph 1A of the Amendment. Capitalized terms used herein
that are not defined herein have the respective meanings specified in the Note
Agreement.
In rendering the opinions set forth below, we have examined the Amendment,
the Note Agreement, originals, photostatic or certified copies of certain of the
corporate records and documents of the Company, copies of public documents,
certificates of officers or representatives of the Company and such other
instruments and documents, have made such inquiries as to questions of fact of
officers and representatives of the Company and have made such examination of
law as we have deemed relevant and necessary as a basis for such opinions. In
such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
authentic original documents of all documents submitted to us as certified or
photostatic copies. As to questions of fact relevant to the opinions
hereinafter expressed, we have relied upon the representations and warranties of
the Company made in the Amendment and upon certain certificates of or
representations from employees of the Company. In rendering the opinions
expressed below, we have assumed that the Amendment has been duly authorized,
executed and delivered by you and constitutes the valid and binding obligation
of you, enforceable against you in accordance with its terms.
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2
We are members of the bar of the State of New York, and each of the
opinions expressed below is restricted to matters governed by the Federal laws
of the United States and the laws of the State of New York.
Based on and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation validly existing in good standing under
the laws of the State of New York.
2. The execution, delivery and performance of the Amendment by the
Company and the consummation of the transactions contemplated thereby are within
the corporate power of the Company and have been duly authorized by all
necessary corporate action of the Company, and the Amendment is a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms (subject, as to enforceability, to the effect of bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally and the application of general
principles of equity).
3. Neither the execution nor delivery of the Amendment by the Company,
nor fulfillment of nor compliance with the terms and provisions of the Amendment
by the Company, will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of, or result in the creation of any mortgage, pledge, lien or other
encumbrance upon any of the properties or assets of the Company or any of its
Subsidiaries pursuant to, (i) the charter or bylaws of the Company, or (ii) any
law or regulation, or, to the extent known to us, any award of any arbitrator,
any agreement, instrument, order, judgment or decree to which the Company is
subject. No consent, approval or authorization of, or the making of any
declaration or filing with, any governmental authority is required as a
condition to the valid execution or delivery by the Company of the Amendment or
the consummation by the Company of the transactions contemplated thereby.
Very truly yours,
2
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EXHIBIT B
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT, dated as of December 17, 1993 (as modified,
supplemented or amended from time to time, the "Agreement") among (x) the
Prudential Insurance Company of America ("Prudential"), (y) the banks listed on
the Signature pages hereof (herein, together with any other institution which
may become a Lender under the Revolving Credit Agreement referred to below, the
"Banks") and (z) NationsBank of Florida, National Association, as Agent for the
Banks (the "Agent").
WITNESSETH
WHEREAS, Prudential is the holder of $50,000,000 in aggregate principal
amount of the 9.78% Senior Notes (the "1991 Notes") due March 15, 2001, issued
by Willcox and Gibbs, Inc. (the "Company") to Prudential pursuant to the Note
Agreement between the Company and Prudential dated as of April 2, 1991 (as
amended and proposed to be amended on the date hereof pursuant to Amendment
No. 4, the "1991 Note Agreement"); and
WHEREAS, the Banks and the Agent intend to enter into a Revolving Credit
and Reimbursement Agreement with the Company, dated the date hereof,
concurrently with the execution and delivery hereof, pursuant to which the Banks
will commit to lend to the Company and to make available letters of credit and
acceptances up to $90,000,000 in aggregate principal amount (the "Revolving
Credit Agreement"); and
WHEREAS, it is a condition of the amendment of the 1991 Note Agreement that
Prudential, the Banks and the Agent execute and deliver an intercreditor
agreement substantially in the form hereof, and that the Company acknowledge
such agreement and consent thereto; and
WHEREAS, Prudential, the Banks and the Agent wish to set forth herein the
terms and conditions of their agreement with respect to the matters set forth
herein.
NOW, THEREFORE, it is agreed:
1. DEFINED TERMS. The following terms shall have the following
respective meanings:
"ACCEPTANCES" shall have the same meaning as in the Revolving Credit
Agreement.
"BANK NOTE" shall have the same meaning as the term "Note" in the Revolving
Credit Agreement.
"DEFAULT" or "EVENT OF DEFAULT" shall mean any Default or Event of Default
under, and as defined in, the 1991 Note Agreement or the Revolving Credit
Agreement.
"EXPOSURE PERCENTAGE" shall mean, with respect to any holder of Senior
Obligations at any particular time, the result of dividing the total principal
amount of Senior Obligations then
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2
outstanding and held by such holder by the total principal amount of all Senior
Obligations then outstanding.
"GENERAL ACCEPTANCE AGREEMENT" shall have the same meaning as in the
Revolving Credit Agreement.
"LETTERS OF CREDIT" shall have the same meaning as in the Revolving Credit
Agreement.
"LOANS" shall have the same meaning as in the Revolving Credit Agreement.
"1991 NOTES" and "1991 NOTE AGREEMENT" shall have the meanings specified in
the first "Whereas" above.
"1991 NOTE AGREEMENT OBLIGATIONS" shall mean all indebtedness, obligations
and liabilities of the Company to Prudential and any other holders of the 1991
Notes, now existing or hereinafter incurred under or arising out of or in
connection with, or related to or evidenced by, the 1991 Note Agreement or any
other document, agreement or instrument relating thereto. Without limitation of
the foregoing, such indebtedness, obligations and liabilities shall include the
principal amount of the 1991 Notes, interest, Yield Maintenance Premium (as
defined in the 1991 Note Agreement) and fees, indemnities and expenses under or
in connection with the 1991 Note Agreement, the 1991 Notes or any other
document, agreement or instrument relating thereto, and all extensions, renewals
and refinancings thereof. 1991 Note Agreement Obligations shall remain such
notwithstanding any assignment or transfer or any subsequent assignment or
transfer of any of the 1991 Note Agreement Obligations or any interest therein.
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"REQUIRED BANKS" shall have the same meaning as the term "Required Lenders"
in the Revolving Credit Agreement.
"REQUIRED HOLDERS" shall mean the holder or holders of at least a majority
of the aggregate principal amount of the 1991 Notes from time to time
outstanding.
"REIMBURSEMENT OBLIGATIONS" shall have the same meaning as in the Revolving
Credit Agreement.
"REVOLVING CREDIT AGREEMENT" shall have the meaning specified in the second
"Whereas" above.
"REVOLVING CREDIT AGREEMENT OBLIGATIONS" shall mean all indebtedness,
obligations and liabilities of the Company, now existing or hereinafter incurred
or arising out of or in connection with, or related to or evidenced by, the
Revolving Credit Agreement or any other Revolving Credit Agreement Obligation
Instrument. Without limitation of the foregoing, such indebtedness, obligations
and liabilities shall include the principal amount of Loans, Bank Notes,
interest, Reimbursement Obligations, and fees, indemnities, compensation and
expenses under or in
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3
connection with the Revolving Credit Agreement or any other Revolving Credit
Agreement Obligation Instrument, and all extensions, renewals and refinancings
thereof, but shall not include any unused portion of any Revolving Credit
Commitment. Revolving Credit Agreement Obligations shall remain such
notwithstanding any assignment or transfer or any subsequent assignment or
transfer of any of the Revolving Credit Agreement Obligations or any interest
therein.
"REVOLVING CREDIT AGREEMENT OBLIGATION INSTRUMENTS" shall mean the
Revolving Credit Agreement, the Bank Notes, the Letters of Credit, the
Acceptances, and the General Acceptance Agreement.
"SENIOR OBLIGATIONS" shall mean the 1991 Note Agreement Obligations and the
Revolving Credit Agreement Obligations.
"SUBSIDIARY" shall mean any corporation all of the stock of every class of
which, except directors' qualifying shares, at the time as of which any
determination is being made, are owned by the Company either directly or through
Subsidiaries.
2. PRO RATA SHARING OF CERTAIN PAYMENTS.
In the event that any holder of Senior Obligations realized any amount
by the exercise of the right of setoff or banker's lien in respect of any
account or against any other asset maintained by the Company or any Subsidiary
of the Company in respect of any Senior Obligations, then (X) such holder of
Senior Obligations (the "Purchasing Holder") shall purchase, for cash without
recourse or warranty, from each other holder of Senior Obligations, an interest
in all of the Senior Obligations held by such other holder in an aggregate
amount equal to the amount so realized by the Purchasing Holder multiplied by a
fraction, the numerator of which shall be the total amount of such other
holder's Senior Obligations then outstanding, and (Y) such other adjustments
shall be made from time to time as shall be equitable to ensure that all holders
of Senior Obligations share such payment ratably; PROVIDED, HOWEVER, that if all
or any portion of the amount so realized is thereafter recovered from the
Purchasing Holder, such purchase from each other holder of Senior Obligations
shall be rescinded and the purchase price restored (pro rata, based on each
holder's Exposure Percentage) to the extent of such recovery, but without
interest.
3. PARI PASSU NATURE OF OBLIGATIONS. Each of Prudential, the Banks and
the Agent acknowledges and agrees that the 1991 Note Obligations and the
Revolving Credit Agreement Obligations rank PARI PASSU, including, without
limitation, equal in seniority to each other.
4. AMENDMENT OR WAIVER OF THIS AGREEMENT. None of the terms and
conditions of this Agreement may be changed, waived, modified, or varied in any
manner whatsoever unless in writing duly signed by the Company (but no such
signature by the Company shall be required to effect any change, waiver,
modification, or variance to this Agreement unless such change, waiver,
modification, or variance hereto affects the Company in any manner), the
Required Holders and the Required Banks.
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4
5. TERMINATION.
This Agreement shall terminate on the date upon which either one of
the following conditions is satisfied: (i) all commitments to lend or issue
Letters of Credit or Acceptances under the Revolving Credit Agreement have been
terminated, no Letters of Credit or Acceptances remain outstanding and all
Revolving Credit Agreement Obligations have been indefeasibly paid in full or,
(ii) all 1991 Note Obligations have been indefeasibly paid in full.
6. INTERCREDITOR AGREEMENT CONTROLS. If any provision of this Agreement
shall be inconsistent with, or contrary to, any provision in the Revolving
Credit Agreement, any Revolving Credit Agreement Obligation Instrument, any Bank
Note, the 1991 Note Agreement or any 1991 Note, the provision in this Agreement
shall be controlling, and shall supersede such inconsistent provision to the
extent necessary to give full effect to all provisions contained in this
Agreement.
7. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and be governed by the laws of the State of New York (without
giving effect to the conflicts-of-law principles thereof).
8. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be given: (x) to the Company and the
holders of the 1991 Notes, in the manner prescribed in paragraph 11I of the 1991
Note Agreement, and (y) to the Banks, the Agent and any holders of the Revolving
Credit Agreement Obligations, in the manner prescribed in Section 12.02 of the
Revolving Credit Agreement.
9. FURTHER ASSURANCES. Each of the parties hereto agrees to execute and
deliver all such further documents and instruments and to use its best efforts
to take all such further action as may be reasonably necessary or advisable to
implement and give effect to the transactions contemplated hereby.
10. MISCELLANEOUS.
(a) This Agreement shall be binding upon the parties and the holders
from time to time of any Senior Obligations and shall inure to the benefit of
and be enforceable by the successors and assigns of the parties hereto.
(b) The headings in this Agreement are for purposes of reference only
and shall not limit or expand the meaning hereof.
(c) This Agreement shall be interpreted in such a way as to be fully
effective and valid under applicable law. If any provision of this Agreement
shall be held or deemed to be or shall in fact be inoperative or unenforceable
as applied in any particular case in any jurisdiction or jurisdictions, or in
all cases because it conflicts with any other provision or provisions hereof or
any constitution or statute or rule of public policy, or for any other reason,
such circumstance shall not have the effect of rendering the provision in
question inoperative or unenforceable in any other case or circumstance, or of
rendering any other provision or provisions herein contained invalid,
inoperative, or unenforceable to any extent whatever. Upon the determination
that any term or other provision of this Agreement is invalid, illegal, or
incapable of being enforced, the
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5
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of ther parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the maximum extent possible.
11. COUNTERPARTS. This Agreement may be executed in as many counterparts
as the parties hereto may deem necessary or convenient and by different parties
on separate counterparts, and each of which, when so executed, shall be deemed
to be an original, but all such counterparts shall constitute but one and the
same agreement.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By:_____________________________________
Name:
Title
NATIONSBANK OF FLORIDA, NATIONAL
ASSOCIATION
By:______________________________________
Name:
Title
CREDIT LYONNAIS NEW
YORK BRANCH
By:_____________________________________
Name:
Title
Acknowledged and Consented to:
WILLCOX & GIBBS, INC.
By:_____________________________
Name:
Title:
5
<PAGE>
Exhibit 10.16
REVOLVING CREDIT AND
REIMBURSEMENT AGREEMENT
by and among
WILLCOX & GIBBS, INC., as Borrower,
NATIONSBANK OF FLORIDA, NATIONAL ASSOCIATION
CREDIT LYONNAIS NEW YORK BRANCH,
as Lenders,
and
NATIONSBANK OF FLORIDA, NATIONAL ASSOCIATION, as Agent
and
CREDIT LYONNAIS NEW YORK BRANCH,
as Co-Agent
December 17, 1993
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Terms
1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . .18
1.03 UCC Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
ARTICLE II
Revolving Credit Facility
2.01 Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
2.02 Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
2.03 Interest Periods. . . . . . . . . . . . . . . . . . . . . . . . . . . .19
2.04 Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
2.05 Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . .20
2.06 Payment of Principal. . . . . . . . . . . . . . . . . . . . . . . . . .21
2.07 Borrower's Account. . . . . . . . . . . . . . . . . . . . . . . . . . .22
2.08 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
2.09 Pro Rata Payments . . . . . . . . . . . . . . . . . . . . . . . . . . .22
2.10 Reduction in Commitment . . . . . . . . . . . . . . . . . . . . . . . .22
2.11 Increase and Decrease in Amounts. . . . . . . . . . . . . . . . . . . .23
2.12 Conversions and Elections of Subsequent Interest Periods. . . . . . . .23
2.13 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
2.14 Deficiency Advances . . . . . . . . . . . . . . . . . . . . . . . . . .25
2.15 Adjustments by Agent. . . . . . . . . . . . . . . . . . . . . . . . . .25
2.16 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
2.17 Swing Line. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
2.18 Extension of Revolving Credit Termination Date. . . . . . . . . . . . .27
ARTICLE III
Letters of Credit and Acceptances
3.01 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . .27
3.02 Acceptances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
3.03 Creation of Acceptance. . . . . . . . . . . . . . . . . . . . . . . . .28
3.04 Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
3.05 Letter of Credit Fee. . . . . . . . . . . . . . . . . . . . . . . . . .32
3.06 Administrative Fees and Reserves. . . . . . . . . . . . . . . . . . . .32
i
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ARTICLE IV
Yield Protection and Illegality
4.01 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
4.02 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
4.03 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
ARTICLE V
Conditions to Making Loans and Issuing
Letters of Credit and Creating Acceptances
5.01 Conditions of Initial Advance and Issuance of
Letters of Credit and Creating Acceptances. . . . . . . . . . . . . . .35
5.02 Conditions of Advances. . . . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE VI
Guaranties
6.01 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . .37
ARTICLE VII
Representations and Warranties
7.01 Representations and Warranties as to Borrower and Subsidiary. . . . . .37
7.02 Representations and Warranties of Borrower. . . . . . . . . . . . . . .39
ARTICLE VIII
Affirmative Covenants
8.01 Financial Reports, Etc. . . . . . . . . . . . . . . . . . . . . . . . .42
8.02 Maintain Properties . . . . . . . . . . . . . . . . . . . . . . . . . .44
8.03 Existence, Qualification, Etc.. . . . . . . . . . . . . . . . . . . . .44
8.04 Regulations and Taxes . . . . . . . . . . . . . . . . . . . . . . . . .44
8.05 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
8.06 True Books. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
8.07 Pay Indebtedness to Lenders and Perform Other Covenants . . . . . . . .44
8.08 Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . .45
8.09 Observe all Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . .45
8.10 Covenants Extending to Subsidiaries . . . . . . . . . . . . . . . . . .45
8.11 Officer's Knowledge of Default. . . . . . . . . . . . . . . . . . . . .45
8.12 Suits or Other Proceedings. . . . . . . . . . . . . . . . . . . . . . .45
8.13 Environmental Reports . . . . . . . . . . . . . . . . . . . . . . . . .45
ii
<PAGE>
8.14 Notice of Discharge of Hazardous Material or Environmental Complaint. .45
8.15 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . .46
8.16 ERISA Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . .46
8.17 Authorization of Shares . . . . . . . . . . . . . . . . . . . . . . . .46
8.18 Repurchase of Securities. . . . . . . . . . . . . . . . . . . . . . . .46
8.19 Subordination of Indebtedness . . . . . . . . . . . . . . . . . . . . .47
8.20 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
8.21 New Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . .47
ARTICLE IX
Negative Covenants
9.01 Liens, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
9.02 Indebtedness for Money Borrowed . . . . . . . . . . . . . . . . . . . .48
9.03 Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . .48
9.04 Mergers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
9.05 Contingent Obligations. . . . . . . . . . . . . . . . . . . . . . . . .49
9.06 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
9.07 Sale of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
9.08 Sale and Leaseback. . . . . . . . . . . . . . . . . . . . . . . . . . .50
9.09 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
9.10 Sale of Subsidiary Interests. . . . . . . . . . . . . . . . . . . . . .51
9.11 Prepayments of Long-Term Debt . . . . . . . . . . . . . . . . . . . . .51
9.12 Consolidated Senior Indebtedness/Capital. . . . . . . . . . . . . . . .51
9.13 Consolidated Shareholders' Equity . . . . . . . . . . . . . . . . . . .52
9.14 Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
9.15 Consolidated Interest Coverage Ratio. . . . . . . . . . . . . . . . . .52
9.16 Senior Note Agreement . . . . . . . . . . . . . . . . . . . . . . . . .52
9.17 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . .53
9.18 Trading Asset Ratio . . . . . . . . . . . . . . . . . . . . . . . . . .53
9.19 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
9.20 Rate Hedging Obligations. . . . . . . . . . . . . . . . . . . . . . . .53
ARTICLE X
Events of Default and Acceleration
10.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . .54
10.02 Agent to Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
10.03 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . .56
10.04 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
10.05 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
10.06 Allocation of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . .57
iii
<PAGE>
ARTICLE XI
The Agent
11.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
11.02 Attorneys-in-fact . . . . . . . . . . . . . . . . . . . . . . . . . . .57
11.03 Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . . .58
11.04 Reliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
11.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . .58
11.06 No Representations. . . . . . . . . . . . . . . . . . . . . . . . . . .59
11.07 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
11.08 Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
11.09 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
11.10 Sharing of Payments, etc. . . . . . . . . . . . . . . . . . . . . . . .60
11.11 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
ARTICLE XII
Miscellaneous
12.01 Assignments and Participations. . . . . . . . . . . . . . . . . . . . .61
12.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
12.03 Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
12.04 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
12.05 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
12.06 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
12.07 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
12.08 Waivers by Borrower . . . . . . . . . . . . . . . . . . . . . . . . . .65
12.09 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
12.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
12.11 Representation and Warranty of the Lenders. . . . . . . . . . . . . . .66
12.12 Agreement Controls. . . . . . . . . . . . . . . . . . . . . . . . . . .66
12.13 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
12.14 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
EXHIBIT A Applicable Commitment Percentages. . . . . . . . . . . . . . . .69
EXHIBIT B Form of Assignment and Acceptance. . . . . . . . . . . . . . . .70
EXHIBIT C Notice of Appointment (or Revocation) of Authorized Officer. . .73
EXHIBIT D Form of Borrowing Base Certificate . . . . . . . . . . . . . . .74
EXHIBIT E Application and Agreement for Letter of Credit . . . . . . . . .76
EXHIBIT F-1 Borrowing Notice (Loan). . . . . . . . . . . . . . . . . . . . .77
EXHIBIT F-2 Borrowing Notice (Acceptance). . . . . . . . . . . . . . . . . .79
EXHIBIT G Form of Guaranty and Suretyship Agreement. . . . . . . . . . . .81
EXHIBIT H Form of Note . . . . . . . . . . . . . . . . . . . . . . . . . .88
EXHIBIT I Opinion of Counsel for Borrower and Subsidiaries . . . . . . . .90
EXHIBIT J Form of Compliance Certificate . . . . . . . . . . . . . . . . .92
iv
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EXHIBIT K Guarantors and Non-Guarantors. . . . . . . . . . . . . . . . . .95
EXHIBIT L Existing Liens, Indebtedness, Guaranties and Investments of
Borrower and Subsidiaries. . . . . . . . . . . . . . . . . . . .96
EXHIBIT M General Acceptance Agreement . . . . . . . . . . . . . . . . . .97
v
<PAGE>
REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT
THIS REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT, dated as of
December 17, 1993 (the "Agreement"), is made by and among:
WILLCOX & GIBBS, INC., a corporation organized and existing under the
laws of the State of New York and having its principal place of business located
in New York, New York (the "Borrower"); and
NATIONSBANK OF FLORIDA, NATIONAL ASSOCIATION ("NATIONSBANK"), CREDIT
LYONNAIS NEW YORK BRANCH and each other lender which may hereafter execute and
deliver an instrument of assignment with respect to this Agreement pursuant to
Section 12.01 (hereinafter NationsBank and such other lenders may be referred to
individually as a "Lender" or collectively as the "Lenders"); and
NATIONSBANK OF FLORIDA, NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States of
America and having its principal place of business in Tampa, Florida in its
capacity as agent for the Lenders (in such capacity, the "Agent"), and CREDIT
LYONNAIS, NEW YORK BRANCH, a branch licensed under the banking law of the State
of New York of a banking corporation organized under the laws of France and
having its principal place of business in New York, New York, as Co-Agent (the
"Co-Agent").
W I T N E S S E T H:
WHEREAS, NationsBank of North Carolina, National Association has
heretofore made a revolving loan to the Borrower pursuant to a Revolving Credit
Loan Agreement dated as of November 12, 1992 as amended to the date hereof (the
"Prior Agreement") which loan is evidenced by a Note dated November 12, 1992
(the "Prior Note"); and
WHEREAS, the Borrower has entered into a Purchase Agreement among
Willcox & Gibbs Delaware, Inc., the Borrower, Summers Group, Inc., SGDHC, Inc.
and BTR Dunlop, Inc. (the "Acquisition Agreement") pursuant to which the
Borrower has agreed to acquire Summers Group, Inc.; and
WHEREAS, the Borrower has requested that the Lenders make available to
it revolving loans, letters of credit and acceptances in an aggregate amount of
up to $90,000,000, the proceeds of which loans shall be used to (i) repay the
Prior Note, (ii) fund a portion of the purchase obligations arising under the
Acquisition Agreement, and (iii) provide funds for the general corporate
purposes of the Borrower; and
WHEREAS, the Lenders are willing to provide the revolving loans,
letters of credit and acceptances to the Borrower upon the terms and conditions
set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree
as follows:
<PAGE>
2
ARTICLE I
DEFINITIONS AND TERMS
1.01 DEFINITIONS. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Acceptance" means a draft drawn by the Borrower on, and accepted by
NationsBank under this Agreement, which Acceptance is eligible for discount by
Federal Reserve Banks pursuant to paragraph 7 of Section 13 of the Federal
Reserve Act (12 U.S.C. Section 372), as amended from time to time, and has a
maturity date of 30, 60, 90 or 180 days after the date such Acceptance was
created and does not extend beyond the Revolving Credit Termination Date;
"Acceptance Date" means that date upon which NationsBank creates an
Acceptance pursuant to Article III hereof;
"Acceptance Margin" means the Applicable Margin for a LIBOR Loan minus
one tenth of one percent (1/10%);
"Acceptance Rate" means, for each Acceptance of any particular face
amount and duration, an interest rate per annum equal to NationsBank Fund
Management Banker's Acceptance Rate, as established from time to time for
acceptances of like amount and duration;
"Accounts" shall mean and include all invoices, contracts, contract
rights, "general intangibles" (as defined in Article 9 of the Uniform Commercial
Code as presently in effect in the State of New York), claims, instruments,
chattel paper, leases, agreements and accounts, whether now existing or
hereafter arising, evidencing or representing indebtedness due or to become due
to Borrower or any of its Subsidiaries on account of goods sold or leased, or
services rendered or to be rendered, by Borrower or any of its Subsidiaries;
"Accounts Payable" means as at the date of determination thereof the total of
all accounts payable for goods and services purchased by the Borrower and its
Subsidiaries excluding any amounts payable with respect to Indebtedness for
Money Borrowed determined in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis;
"Addition Event" means the failure by the Borrower to reduce the
Revolving Credit Commitment to $70,000,000 or less by not later than six months
after the Closing Date;
"Advance" means a borrowing of new funds under (i) the Revolving
Credit Facility consisting of the aggregate principal amount of a Floating Rate
Loan or Fixed Rate Loan, as the case may be and (ii) the Swing Line consisting
of Floating Rate Loans;
"Apparel Operations" shall mean the operations of the Borrower and its
Subsidiaries in connection with the Borrower's Sunbrand Division, its Unity
Sewing Supply Division and the following Subsidiaries: Allied Machine Parts
Ltd., J&E Sewing Supplies, Inc., Leadtec Systems, Inc., M.E.C. (Sewing Machines)
Ltd., W&G Daon, Inc., W&G Export
2
<PAGE>
3
Corporation, W&G Tennessee Imports, Inc., Willcox & Gibbs-Kennedy of Delaware,
Inc. and Willcox & Gibbs, Ltd.
"Applicable Base Rate" means:
(i) for any Fixed CD Loan, in respect of the Interest Period
specified by the Authorized Officer in the Borrowing Notice
for such Fixed CD Loan, the per annum rate of interest
(expressed as a percentage and rounded upwards if necessary
to the nearest 1/100 of 1%) (which shall be the same for
each day of such Interest Period) determined in good faith
by the Agent in accordance with the usual procedures for its
customers generally (which determination shall be conclusive
absent manifest error) to be the rate per annum at which
NationsBank can in its reasonable judgment obtain funds in
the United States secondary certificate of deposit market at
approximately 10:00 A.M. Tampa, Florida time on the first
day of such Interest Period in an amount approximately equal
to the principal amount of, and for a period comparable to
the Interest Period for, such Fixed CD Loan and maturing at
the end of such Interest Period, and
(ii) for any Swing Line CD Loan, the per annum rate of interest
(expressed as a percentage and rounded upwards if necessary
to the nearest 1/100 of 1%) determined in good faith by the
Agent in accordance with the usual procedures for its
customers generally (which determination shall be conclusive
absent manifest error) to be the average of the secondary
market bid rates at approximately 10:00 A.M. Tampa, Florida
time on each day of at least two dealers of recognized
standing in negotiable certificates of deposit for the
purchase at face value of negotiable certificates of deposit
of major money center banks for delivery on such day in an
amount approximately equal to the principal amount of such
Swing Line Loan for a period of 90 days, and
(iii) for any LIBOR Loan, in respect of the Interest Period
specified by the Authorized Officer in the Borrowing Notice
for such LIBOR Loan, the rate (expressed as a percentage and
rounded upward if necessary to the nearest 1/100 of 1%)
(which shall be the same for each day of such Interest
Period) determined by the Agent in good faith in accordance
with its usual procedures for its customers generally (which
determination shall be conclusive absent manifest error) to
be the average of the rates per annum for deposits in
Dollars offered to major money center banks in the London
interbank market at approximately 11:00 A.M. London time two
(2) LIBOR Business Days prior to the commencement of the
applicable Interest Period in an amount approximately equal
to the principal amount of, and for a period comparable to
the Interest Period for, such LIBOR Loan;
3
<PAGE>
4
"Applicable Commitment Percentage" means, for each Lender, with
respect to the Obligations hereunder (each a type of "credit exposure"),
including its Participations and its obligations hereunder to NationsBank to
acquire Participations, a fraction (expressed as a percentage), the numerator of
which shall be the then amount of such Lender's Revolving Credit Commitment and
the denominator of which shall be the Total Revolving Credit Commitment, which
Applicable Commitment Percentage for each Lender as of the Closing Date is as
set forth in EXHIBIT A attached hereto and incorporated herein by this
reference; PROVIDED that the Applicable Commitment Percentage of each Lender
shall be increased or decreased to reflect any assignments to or by such Lender
effected in accordance with Section 12.01 hereof;
"Applicable Interest Addition" means in the case of a LIBOR Loan one
and one quarter percent (1-1/4%) per annum and in the case of a Fixed CD Loan
one and three-eighths percent (1-3/8%) per annum; PROVIDED, HOWEVER, in the
event that as at the end of any fiscal quarter of the Borrower ending on or
after September 30, 1994 (each such date, a "Determination Date"), the
Consolidated Interest Coverage Ratio for the period of four consecutive fiscal
quarters ending on the Determination Date is greater than 3.00 to 1.00 and the
Trading Asset Ratio as at the Determination Date is greater than 1.45 to 1.00,
then effective on the earlier to occur with respect to each Fixed Rate Loan of
(i) the first day of the Interest Period for such Loan, or (ii) five (5)
Business Days, following the date of delivery (the "Delivery Date") of the
Compliance Certificate setting forth such computations (an "Addition Adjustment
Date") to but not including the next succeeding Addition Adjustment Date with
respect to such Loan, the "Applicable Interest Addition" shall be one percent
per annum (1%) in the case of a LIBOR Loan and one and one-eighth percent per
annum (1-1/8%) in the case of a Fixed CD Loan. Prior to the delivery of such
Compliance Certificate the Borrower may deliver to the Agent a certificate of an
Authorized Officer (a "Preliminary Certificate") certifying as to the level of
such Ratios as of the most recent Determination Date, and the Applicable
Interest Addition shall be determined as provided above based on such
Preliminary Certificate treating the date of delivery thereof as a Delivery Date
until delivery of such Compliance Certificate; provided that (A) the accuracy of
and basis for computations contained in each Preliminary Certificate shall be
subject to verification by the Agent and (B) the Applicable Interest Addition
shall be readjusted retroactively to the preceding Addition Adjustment Date in
the event that the Compliance Certificate subsequently delivered in connection
therewith shall demonstrate that any previous adjustment to the Applicable
Interest Addition based on such Preliminary Certificate is not supported by the
computations contained in such Compliance Certificate;
"Applicable Margin" means the Applicable Interest Addition for a CD
Loan or LIBOR Loan, as the case may be, adjusted as follows:
(i) increased by one-fourth of one percent (1/4%) for any period
on or after the occurrence of an Addition Event, but only
for so long as the Total Revolving Credit Commitment shall
exceed $70,000,000;
(ii) increased by one-half of one percent (1/2%) for any period
on or after the occurrence of a Rexel Event (which increase
shall be retroactive to the Closing Date); and
4
<PAGE>
5
(iii) decreased by one-fourth of one percent (1/4%) upon the
occurrence of the mandatory permanent reduction in the Total
Revolving Credit Commitment described in Section 2.10(b)(i)
hereof.
"Applicable Reserve Requirement" means, for any CD Loan or LIBOR Loan
with respect thereto, the average maximum rate at which reserves (including,
without limitation, any marginal, supplemental or emergency reserves) are
required to be maintained with respect thereto under Regulation D by any of the
Lenders that are member banks of the Federal Reserve System on the first day of
the Interest Period for such Loan against (i) non-personal Dollar time deposits
in an amount of $100,000 or more in the case of any CD Loan or (ii) with respect
to Dollar funding in the London interbank market in the case of any LIBOR Loan.
Without limiting the effect of the foregoing, the Applicable Reserve Requirement
shall reflect any other reserves required to be maintained by such member banks
by reason of any change in regulations against (i) any category of liabilities
which includes deposits by reference to which the Applicable Base Rate is to be
determined or (ii) any category of extensions of credit or other assets which
include CD Loans or LIBOR Loans;
"Application and LC Agreement" means the Application and Agreement for
Letters of Credit in the form attached hereto as EXHIBIT E, as the same may be
amended, modified or supplemented from time to time; PROVIDED, HOWEVER, (i) that
to the extent that this Agreement and such Application shall be in conflict,
this Agreement shall control, and (ii) notwithstanding the execution and
delivery thereof on or after the date hereof, any provisions thereof (including,
without limitation, paragraphs 8 and 9) purporting to grant a security interest
or require delivery of collateral or specifying "Events of Default" or rights or
remedies exercisable upon the occurrence thereof, shall be deemed deleted
therefrom so long as this Agreement is in effect;
"Assessment Rate" means the rate per annum (rounded upward to the
nearest 1/100 of 1%) determined in good faith by the Agent in accordance with
its usual procedures for its customers generally (which determination shall be
conclusive absent manifest error) to be the current net assessment rate per
annum payable by NationsBank to the Federal Deposit Insurance Corporation (or
any successor) on such day of determination for insurance on Dollar time
deposits of NationsBank in the United States. The CD Rate shall be adjusted
automatically as of the effective date of each change in the Assessment Rate;
"Assignment and Acceptance" shall mean an Assignment and Acceptance in
the form of EXHIBIT B (with blanks appropriately filled in) delivered to the
Agent in connection with an assignment of a Lender's interest under this
Agreement pursuant to Section 12.01;
"Authorized Officer" means any of the Chairman, President, Senior Vice
Presidents or Vice Presidents of the Borrower or, with respect to financial
matters, the Treasurer or Chief Financial Officer of the Borrower or any other
person expressly designated by the Borrower as an Authorized Officer for
purposes of this Agreement, as set forth from time to time in a certificate in
the form attached hereto as EXHIBIT C;
"BTR" means BTR Dunlop, Inc., a Delaware corporation and subsidiary of
BTR, PLC, a company organized under the laws of England and Wales;
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"BTR Indebtedness" means the Indebtedness of Borrower initially issued
or issuable as of the date hereof to BTR or any of its affiliates evidenced by
promissory notes in an aggregate principal amount not in excess of $48 million;
"Board" means the Board of Governors of the Federal Reserve System (or
any successor body);
"Borrower's Account" means a demand deposit account with the Agent, or
any successor account with the Agent, which may be maintained at one or more
offices of the Agent, or an agent for the Agent;
"Borrowing Base" means (x) the sum, as most recently set forth in a
Borrowing Base Certificate, of (A) prior to the occurrence of the mandatory
permanent reduction of the Total Revolving Credit Commitment pursuant to Section
2.10(b)(i) hereof, (i) Eligible Accounts multiplied by 80% plus Eligible
Inventory valued at cost or fair market value, whichever is lower, multiplied by
50%, and (B) thereafter, (i) Eligible Accounts multiplied by 70% plus (ii)
Eligible Inventory valued at cost or fair market value, whichever is lower,
multiplied by 50% less (y) the amount of Consolidated Unsecured Senior
Indebtedness (other than Outstandings); provided that for purposes of
determining the Borrowing Base at or as of any date prior to the Closing Date,
the Summers Group shall be deemed to be a Subsidiary of the Borrower; PROVIDED,
HOWEVER that there shall be excluded all Accounts and Inventory that the Agent
may determine to exclude pursuant to the following procedure. The Agent may,
from time to time, deliver notice to the Borrower that it intends to review the
Eligible Accounts and Eligible Inventory and the Borrower shall cooperate with
the Agent in connection with such review. If, following such review, the Agent
reasonably determines that any of the percentages set forth above should be
adjusted as a result of a deterioration in credit quality of the obligor
thereunder, or for any other good faith reason, the Agent shall give the
Borrower written notice thereof, together with a description in reasonable
detail of the reasons for such determination. Thereafter the Agent and the
Borrower shall consult for the purposes of resolving any difference regarding
such notice. On the 45th day following the Borrower's receipt of such notice,
the percentage shall thereafter be adjusted;
"Borrowing Base Certificate" means a certificate in the form set forth
in EXHIBIT D attached hereto and incorporated herein by reference, together with
all exhibits and schedules affixed thereto as required to be provided by the
terms thereof;
"Borrowing Notice" means the telephonic request of the Authorized
Officer to (i) obtain an Advance or to elect a subsequent Interest Period for or
convert a Loan or Loans of any type hereunder, as the obtaining of such Advance,
such election or conversion of such Loan or Loans shall be otherwise permitted
herein or (ii) create an Acceptance. Any Borrowing Notice shall be binding on
and irrevocable by the Borrower, and (a) in the case of a notice for the
purposes set forth in (i) hereof, shall be confirmed in writing promptly by the
Authorized Officer in the form attached hereto as EXHIBIT F-1 and (b) in the
case of a notice for the purposes set forth in (ii) hereof, shall be confirmed
in writing not less than two (2) Business Days prior to the creation of such
Acceptance by an Authorized Officer in the form attached hereto as EXHIBIT F-2;
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"Business Day" means any day which is not a Saturday, Sunday or a day
on which banks are required to be open for business in the States of New York,
North Carolina and/or Florida;
"CD Loan" means all of the Loans for which the rate of interest is
determined by reference to the CD Rate;
"CD Rate" means, for any Fixed CD Loan, the rate of interest per annum
determined pursuant to the following formula:
Applicable Base Rate
--------------------
CD Rate = 1 - Applicable + Assessment Rate + Applicable Margin
Reserve Requirement
"Capital Expenditures" means for any period the sum of (i) the gross
amount of additions to property, plant and equipment (which are classified as
such in accordance with Generally Accepted Accounting Principles and at the time
have a useful life in excess of one year) of the Borrower and its Subsidiaries
during such period plus (ii) with respect to any Capital Lease entered into by
the Borrower or any Subsidiary during such period, the capitalized amount
thereof determined in accordance with Generally Accepted Accounting Principles;
"Capital Leases" means all leases of any Person which have been or
should be capitalized in accordance with Generally Accepted Accounting
Principles as in effect from time to time;
"Clark Pulley Guarantee" means the guarantee by a Subsidiary of the
Borrower of certain Indebtedness of Clark Pulley Industries, Inc., as successor
to Clark Pulley Corporation, in an original aggregate principal amount of
$2,210,000;
"Closing Date" means the date as of which this Agreement is executed
by the Borrower, the Lenders and the Agent and on which the conditions set forth
in Section 5.01 hereof have been satisfied;
"Commercial Letter of Credit" means a documentary letter of credit
issued by NationsBank pursuant to the terms hereof for the account of the
Borrower pursuant to Article III; provided that the expiry date of a Commercial
Letter of Credit (i) shall not be later than 12 months subsequent to the date of
issuance thereof and (ii) shall not provide for payment subsequent to the fifth
Business Day preceding the Stated Revolving Credit Termination Date (without
giving effect to the proviso to the definition thereof);
"Compliance Certificate" means that certificate of an Authorized
Officer required to be furnished by Borrower pursuant to Section 8.01(a)(ii) and
8.01(b)(ii) hereof in the form of EXHIBIT J attached hereto;
"Consistent Basis" in reference to the application of Generally
Accepted Accounting Principles means the accounting principles observed in the
period referred to are comparable in all material respects to those applied in
the preparation of the audited financial
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8
statements of the Borrower referred to in Section 7.02(b)(i) hereof; PROVIDED,
HOWEVER, that to the extent there shall be a change in Generally Accepted
Accounting Principles the Borrower shall not reflect such change in the
Compliance Certificate delivered following such change until the Agent shall
consent thereto, such consent to be deemed given if the Agent shall not so
advise the Borrower to the contrary within forty-five (45) days following
receipt of such Compliance Certificate;
"Consolidated Fixed Charge Coverage Ratio" means, with respect to the
Borrower and its Subsidiaries as of the end of any fiscal quarter, the ratio of
(A) the sum of (i) Consolidated Net Income, plus taxes on income, plus
Consolidated Interest Expense, plus depreciation and amortization MINUS Capital
Expenditures for the four fiscal quarters then ended and (ii) the current
maturity of the BTR Indebtedness DIVIDED BY (B) the sum of (i) Consolidated
Interest Expense, plus dividends and distributions of the Borrower only (other
than of stock or rights, options or warrants to acquire stock) for such four
fiscal quarters, plus (ii) current maturities of Indebtedness for Money Borrowed
having a maturity in excess of one year (excluding the amount of the
Outstanding), plus (iii) (to the extent not included in (ii)) current maturities
of Capitalized Leases; provided, however, that with respect to each of the first
three fiscal quarters during 1994 such ratio shall be determined based on the
three, six and nine month periods, respectively, beginning January 1, 1994 and
current maturities of BTR Indebtedness and current maturities of Indebtedness
for Money Borrowed and dividends and distributions above shall be appropriately
annualized;
"Consolidated Interest Coverage Ratio" means with respect to Borrower
and its Subsidiaries as of the end of any fiscal quarter the ratio of (i)
Consolidated Net Income plus Consolidated Interest Expense plus taxes on income
for the four fiscal quarters then ended to (ii) Consolidated Interest Expense
for such four fiscal quarters; provided that with respect to each of the first
three fiscal quarters during 1994 such ratio shall be determined based on the
three, six and nine month periods, respectively, beginning January 1, 1994;
"Consolidated Interest Expense" means, with respect to any period of
computation thereof, the gross interest expense of the Borrower and its
Subsidiaries, including without limitation (but without duplication) (i) the
amortization of debt discounts, (ii) the amortization of all fees (including,
without limitation, fees payable in respect of a Swap Agreement) payable in
connection with the incurrence of Indebtedness to the extent included in
interest expense and (iii) the portion of any liabilities incurred in connection
with Capital Leases allocable to interest expense, all determined on a
consolidated basis in accordance with Generally Accepted Accounting Principles
applied on a consistent basis;
"Consolidated Net Income" means, for any period, the net income (or
deficit) of the Borrower and its Subsidiaries for such period (taken as a
cumulative whole), after deducting all operating expenses, provisions for taxes
and reserves (including reserves for deferred income taxes) and all other proper
deductions, all determined in accordance with Generally Accepted Accounting
Principles on a consolidated basis after eliminating all intercompany
transactions and after deducting portions of income properly attributable to
minority interests, if any, in the stock and surplus of Subsidiaries, but
excluding (i) gains on the sale, conversion or other disposition of capital
assets (however, gains on sales or other disposition of equipment either worn
out, obsolete
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9
or no longer useful in the business of the Borrower and its Subsidiaries made in
the ordinary course of business shall not be excluded nor shall gains on the
sale of capital assets previously used in discontinued or restructured
operations (as to which a net loss has been taken) be excluded, to the extent
that such gains exceed the values for such capital assets used in determining
such net losses from such discontinued or restructured operations and to the
extent that such gains are taken within twelve months of the date on which such
net losses are taken), (ii) gains on the acquisition, retirement, sale or other
disposition of capital stock and other securities of the Borrower and its
Subsidiaries, (iii) gains on the collection of proceeds of life insurance
policies, (iv) any write-up of any asset and (v) any other gain or credit of an
extraordinary nature as determined in accordance with Generally Accepted
Accounting Principles applied on a consistent basis;
"Consolidated Senior Indebtedness" means all Indebtedness for Money
Borrowed of the Borrower and its Subsidiaries determined on a consolidated basis
in accordance with Generally Accepted Accounting Principles minus Consolidated
Subordinated Indebtedness;
"Consolidated Shareholders' Equity" means at any time as of which the
amount thereof is to be determined, the sum of the following in respect of the
Borrower and its Subsidiaries (determined on a consolidated basis in accordance
with Generally Accepted Accounting Principles and excluding any upward
adjustment after the Closing Date due to revaluation of assets): (i) the
amount of issued and outstanding share capital, plus (ii) the amount of
additional paid-in capital and retained earnings (or, in the case of a deficit,
minus the amount of such deficit);
"Consolidated Subordinated Indebtedness" means all Indebtedness for
Money Borrowed of Borrower and Subsidiaries determined on a consolidated basis
in accordance with Generally Accepted Accounting Principles which is (i)
outstanding under the Indenture or (ii) subordinated in right of payment to the
Obligations;
"Consolidated Total Capital" means the sum of Consolidated
Shareholders' Equity, Consolidated Senior Indebtedness and Consolidated
Subordinated Indebtedness; "Consolidated Total Liabilities" means the aggregate
amount of all liabilities (i.e., claims of creditors of Borrower and its
Subsidiaries that are to be satisfied by the disbursement or utilization of
corporate resources) of Borrower and its Subsidiaries, all determined in
accordance with Generally Accepted Accounting Principles applied on a
consistent basis including, in any event, all Acceptances;
"Consolidated Unsecured Senior Indebtedness" means Consolidated
Senior Indebtedness as to which there has not been created in favor of the
holder of such Indebtedness any Lien on any asset of Borrower or its
Subsidiaries other than rights of set off;
"Contingent Obligation" of any Person means any obligation of such
Person guaranteeing or in effect guaranteeing any Indebtedness, dividend or
other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including obligations of such Person however
incurred:
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(1) to purchase such Indebtedness or other obligation or any
property or assets constituting security therefor;
(2) to advance or supply funds in any manner (i) for the
purchase or payment of such Indebtedness or other obligation, or (ii)
to maintain a minimum working capital, net worth or other balance
sheet condition or any income statement condition of the primary
obligor;
(3) to grant or convey any lien, security interest, pledge,
charge or other encumbrance on any property or assets of such Person
to secure payment of such Indebtedness or other obligation;
(4) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the owner
or holder of such Indebtedness or obligation of the ability of the
primary obligor to make payment of such Indebtedness or other
obligation; or
(5) otherwise to assure the owner of the Indebtedness or such
obligation of the primary obligor against loss in respect thereof;
"Default" means any event or condition which, with the giving or
receipt of notice or lapse of time or both, would constitute an Event of Default
hereunder;
"Dollars" and the symbol "$" means dollars constituting legal tender
for the payment of public and private debts in the United States of America;
"Eligible Accounts" means all Accounts of Borrower and its
Subsidiaries less those Accounts which are sixty (60) or more days past due and
those Accounts the payment of which are being contested;
"Eligible Inventory" means the Inventory of the Borrower and its
Subsidiaries, all of which Inventory is usable and saleable, less any reserves
required by Generally Accepted Accounting Principles for obsolete inventory,
market value declines, bill and hold (deferred shipment) sales and goods
returned or rejected;
"Environmental Laws" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation
and Recovery Act, the Toxic Substances Control Act, as amended, the Clean Air
Act, as amended, the Clean Water Act, as amended, any other "Superfund" or
"Superlien" law or any other federal, or applicable state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to, or
imposing liability or standards of conduct concerning, any hazardous, toxic or
dangerous waste, substance or material, as now or at any time hereafter in
effect;
"ERISA" means, at any date, the Employee Retirement Income Security
Act of 1974 and the regulations thereunder, all as the same shall be in effect
at such date;
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"Event of Default" means any of the occurrences set forth as such in
Section 10.01 hereof;
"Federal Funds Effective Rate" for any day, as used herein, means the
rate per annum (rounded upward if necessary to the nearest 1/100 of 1%)
announced by the Federal Reserve Bank of New York (or any successor) on such day
as being the weighted average of the rates on overnight Federal funds
transactions arranged by Federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the "Federal Funds Effective
Rate" as of the date of this Agreement; provided, if such Federal Reserve Bank
(or its successor) does not announce such rate on any day, the "Federal Funds
Effective Rate" for such day shall be the Federal Funds Effective Rate for the
last day on which such rate was announced;
"Fiscal Year" means the 12 month period of the Borrower ending on
December 31 of each calendar year and commencing on January 1 of each calendar
year;
"Fixed CD Loan" means a CD Loan for which the Borrower elects an
Interest Period of 30, 60, 90 or 180 days pursuant to Section 2.04 hereof;
"Fixed Rate Loan" means a Loan which is either a Fixed CD Loan or a
LIBOR Loan;
"Floating Rate" with respect to any day means the greater of (i) the
Federal Funds Effective Rate in effect on such day plus one-half of one percent
(1/2%) or (ii) the rate of interest per annum announced publicly by the Agent as
its prime rate in effect on such day (such prime rate is not necessarily the
lowest or best rate offered by NationsBank to its customers). Any change in the
Floating Rate shall be effective as of the day of such change;
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate;
"General Acceptance Agreement" means the General Acceptance Agreement
in the form attached hereto and marked as Exhibit M;
"Generally Accepted Accounting Principles" means those principles of
accounting set forth in pronouncements of the Financial Accounting Standards
Board, the American Institute of Certified Public Accountants or which have
other substantial authoritative support and are applicable in the circumstances
as of the date of a report, as such principles are from time to time
supplemented and amended;
"Guarantors" means all Subsidiaries of the Borrower other than the
Non-Guarantors;
"Guaranty" means the unconditional Guaranty and Suretyship Agreement
in favor of the Lenders in the form attached hereto as EXHIBIT G delivered to
the Agent pursuant Article V hereof or pursuant to Section 8.21 hereof pursuant
to which the Guarantors guarantee the
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12
payment and performance of all obligations to the Lenders as more specifically
set forth in such Guaranty;
"Hazardous Material" means and includes any hazardous, toxic or
dangerous waste, substance or material, the generation, handling, storage,
disposal, treatment or emission of which is subject to any Environmental Law in
effect on any date;
"Indebtedness" means with respect to any Person, without duplication,
(i) all Indebtedness for Money Borrowed and all indebtedness of such Person for
the acquisition of property, other than purchases of property in the ordinary
course of business so long as payment therefor is due within one year, and (ii)
guaranties by such Person of Indebtedness referred to in clause (i) above of any
other Person (excluding the Clark Pulley Guaranty);
"Indebtedness for Money Borrowed" means, for any Person, without
duplication, (i) all indebtedness of such Person for money borrowed which is
evidenced by bonds, debentures, notes or other similar instruments, (ii) all
Capital Leases and (iii) all payment obligations under Rate Hedging Obligations
(the amount of which obligations shall be the aggregate net loss position, if
any, on all such Rate Hedging Obligations, taken as a whole); provided, however,
the term "Indebtedness for Money Borrowed" shall specifically exclude payroll
indebtedness and trade indebtedness incurred in the ordinary course of business
provided such trade indebtedness has a maturity of less than one year;
"Indenture" means the Indenture dated as of August 1, 1989 between the
Borrower and Manufacturers Hanover Trust Company, as Trustee, with respect to
$50,000,000 Convertible Subordinated Debentures due 2014;
"Interest Period" for each Fixed Rate Loan or Acceptance means a
period commencing on the date such Fixed Rate Loan is made or converted or such
Acceptance is created and each subsequent period commencing on the last day of
the immediately preceding Interest Period for such Fixed Rate Loan or
Acceptance, as the case may be, and ending, at the Borrower's option, (A) for
any Fixed CD Loan or Acceptance on the date 30, 60, 90 or 180 days thereafter as
notified to the Agent by the Authorized Officer two (2) Business Days prior to
the beginning of such Interest Period and (B) for any LIBOR Loan, on the date
one, two, three or six months thereafter as notified to the Agent by the
Authorized Officer three (3) LIBOR Business Days prior to the beginning of such
Interest Period; PROVIDED, that,
(i) if the Authorized Officer fails to notify the Agent of the
length of an Interest Period for any Fixed CD Loan two (2)
Business Days or for any LIBOR Loan three (3) LIBOR Business
Days, as the case may be, prior to the first day of such
Interest Period, the Revolving Loan for which such Interest
Period was to be determined shall be deemed to be a Floating
Rate Loan as of the first day thereof for an Interest Period
ending on the following Business Day; and
(ii) if an Interest Period for a Fixed Rate Loan or Acceptance
would end on a day which is not a Business Day or a LIBOR
Business Day, as the
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13
case may be, such Interest Period shall be extended to the
next Business Day or LIBOR Business Day (unless in the case
of any LIBOR Loan, such extension would cause the applicable
Interest Period to end in the succeeding calendar month, in
which case such Interest Period shall end on the next
preceding LIBOR Business Day);
"Inventory" means and includes any and all goods, merchandise and
other personal property, including, without limitation, goods in transit,
wheresoever located and whether now owned or hereafter acquired by the Borrower
or its Subsidiaries which is or may at any time be held for sale or lease,
furnished under any contract of service or held as raw materials, work-in-
process, or supplies or materials used or consumed in the Borrower's or its
Subsidiaries' businesses;
"LC/Acceptance Account Agreement" means the LC/Acceptance Account
Agreement dated as of December 17, 1993 between the Borrower and the Agent, as
amended or modified from time to time;
"Lending Office" means, as to each Lender, the Lending Office of such
Lender designated on the signature pages hereof or in an Assignment and
Acceptance or such other office of such Lender (or of an affiliate of such
Lender) as such Lender may from time to time specify to the Authorized Officer
and the Agent as the office by which its Loans are to be made and maintained;
"Letter of Credit" or "Letters of Credit" means a Commercial Letter(s)
of Credit or Standby Letter(s) of Credit issued by NationsBank for the account
of the Borrower as described in Article III hereof;
"Letter of Credit Facility" means the facility described in Article
III hereof providing for the issuance by NationsBank for the account of the
Borrower of Letters of Credit in an aggregate stated amount at any time
outstanding not exceeding $10,000,000;
"LIBOR Business Day" means a Business Day on which the relevant
international financial markets are open for the transaction of the business
contemplated by this Agreement in London, England and New York, New York;
"LIBOR Loan" means all of the Loans for which the rate of interest is determined
by reference to the LIBOR Rate;
"LIBOR Rate" means, for the Interest Period for any LIBOR Loan, the
rate of interest per annum determined pursuant to the following formula:
Applicable Base Rate
--------------------
LIBOR Rate = 1 - Applicable + Applicable Margin
Reserve Requirement
"Lien" means any interest in property securing any obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common
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14
law, statute or contract, and including but not limited to the lien or security
interest arising from a mortgage, encumbrance, pledge, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes (but excluding rights of setoff, retention or withholding,
combination of accounts, counterclaim or other similar right). For the purposes
of this Agreement, the Borrower and its Subsidiaries shall be deemed to be the
owners of any property which it or they have acquired or hold subject to a
conditional sale agreement, lease intended as a security interest, or other
arrangement pursuant to which title to the property has been retained by or
vested in some other Person for security purposes;
"Loan" or "Loans" means any of the Fixed Rate Loans or Floating Rate
Loans, as the context may require, made pursuant to Sections 2.01 and 2.17
hereof;
"Loan Documents" means this Agreement, the Notes, the Guaranty, the
General Acceptance Agreement, the LC/Acceptance Account Agreement and the
Subordination Agreement as the same may be amended, modified or supplemented
from the time to time;
"Material Adverse Effect" has the meaning assigned in Section 7.01;
"Non-Guarantor" means those entities listed as such on EXHIBIT K
attached hereto and by this reference made a part hereof;
"Notes" mean, collectively, the promissory notes of the Borrower
executed and delivered to the Lenders as provided in Section 2.08 hereof in
substantially the form attached hereto as EXHIBIT H, with appropriate insertions
as to amounts, dates and names of Lenders which Notes shall be delivered to
evidence the Revolving Loans provided for herein;
"Obligations" means the obligations, liabilities and Indebtedness of
the Borrower and its Subsidiaries with respect to (i) the principal and interest
on the Loans as evidenced by the Notes, (ii) the Reimbursement Obligations,
(iii) all liabilities of Borrower to any Lender which arise under a Swap
Agreement, and (iv) the payment and performance of all other obligations,
liabilities and Indebtedness of the Borrower and its Subsidiaries to the Lenders
or the Agent hereunder under any one or more of the other Loan Documents to
which the borrower is a party or with respect to the Loans;
"Outstandings" means the principal amount of Revolving Loans
outstanding plus the Swing Line Outstandings plus the Reimbursement Obligations
plus the Outstanding Letters of Credit plus outstanding Acceptances;
"Outstanding Letters of Credit" means the amount at any date of
computation available to be drawn under Letters of Credit;
"Participation" means, with respect to any Lender (other than
NationsBank), the extension of credit represented by the participation of such
Lender hereunder in the liability of NationsBank in respect of a Swing Line Loan
made, Letters of Credit issued or Acceptance created by NationsBank in
accordance with the terms hereof;
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"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a government or
agency or political subdivision thereof;
"Principal Office" means the principal office of the Agent at
NationsBank Plaza, 400 North Ashley Drive, Tampa, Florida 33602, Attention:
Corporate Banking Department or such other office and address as the Agent may
from time to time designate;
"Rate Hedging Obligations" means any and all obligations of the
Borrower, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all
agreements, devices or arrangements designed to protect, and entered into for
the primary purpose of protecting, at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options, puts,
warrants and those commonly known as interest rate "swap" agreements; and (b)
any and all cancellations, buybacks, reversals, terminations or assignments of
any of the foregoing;
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time;
"Reimbursement Obligation" shall mean at any time, the obligation of
the Borrower with respect to any Letter of Credit or Acceptance to reimburse
NationsBank and the Lenders to the extent of their respective Participations
(including by the receipt by NationsBank of proceeds of Loans pursuant to
Section 2.04(c)) for amounts theretofore paid by NationsBank pursuant to a
drawing under such Letter of Credit or payment of an Acceptance;
"Required Lenders" means, as of any date, Lenders on such date having
Credit Exposures (as defined below) aggregating at least 66-2/3% of the
aggregate Credit Exposures of all the Lenders on such date. For purposes of the
preceding sentence, the amount of the "CREDIT EXPOSURE" of each Lender shall be
equal to the aggregate principal amount of the Loans owing to such Lender plus
the aggregate unutilized amounts of such Lender's Revolving Credit Commitment
plus the amount of such Lender's Applicable Commitment Percentage of the
aggregate undrawn face amount of the outstanding Letters of Credit and of the
Reimbursement Obligations; provided that, if any Lender shall have failed to pay
to NationsBank its Applicable Commitment Percentage of any Swing Line Loan or
drawing under any Letter of Credit resulting in an outstanding Reimbursement
Obligation, such Lender's Credit Exposure attributable to Swing Line Loans,
Letters of Credit, Reimbursement Obligations and the Letter of Credit Commitment
shall be deemed to be held by NationsBank for purposes of this definition;
"Revolving Credit Commitment" means with respect to each Lender, the
obligation of such Lender to make Loans to the Borrower up to an aggregate
principal amount at any one time outstanding equal to the amount set forth in
EXHIBIT A as reduced in accordance with Section 2.10;
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"Revolving Credit Facility" means the facility described in Article II
hereof providing for Loans to the Borrower by the Lenders in the aggregate
principal amount of Total Revolving Credit Commitment less the aggregate amount
of outstanding Swing Line Loans and Outstanding Letters of Credit and
Acceptances;
"Revolving Credit Termination Date" means (i) the Stated Revolving
Credit Termination Date, or (ii) such earlier date of termination of Lenders'
obligations pursuant to Section 10.01 upon the occurrence of an Event of
Default, or (iii) such date as the Borrower may voluntarily permanently
terminate the Revolving Credit Facility by payment in full of all Obligations
(including the discharge of all Obligations of NationsBank and the Lenders with
respect to Letters of Credit, Acceptances and Participations) or (iv) such later
date as the Borrower and the Lenders shall agree in writing pursuant to Section
2.18 hereof;
"Revolving Loan" means Loans made by the Lenders to Borrower pursuant
to Section 2.01 hereof;
"Rexel" means Rexel, S.A., a corporation created under the laws of the
Republic of France, and a substantial stockholder of the Borrower;
"Rexel Event" means the failure of Rexel or any affiliate of Rexel to
purchase not later than December 10, 1994 capital stock of the Borrower for net
cash proceeds of not less than $20,000,000;
"Solvent" means, when used with respect to any Person, that at the
time of determination:
(i) the fair value of its assets (both at fair valuation and at
present fair saleable value on an orderly basis) is in
excess of the total amount of its liabilities, including,
without limitation, Contingent Obligations; and
(ii) it is then able and expects to be able to pay its debts as
they mature; and
(iii) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted;
"Standby Letter of Credit" means a letter of credit issued by
NationsBank pursuant to Article III for the account of Borrower in favor of a
Person advancing credit or securing an obligation on behalf of Borrower;
"Stated Revolving Credit Termination Date" means the third anniversary
of the Closing Date; provided that the Stated Revolving Credit Termination Date
shall be the first anniversary of the Closing Date if Borrower shall not have
sold shares of its capital stock to Rexel or any of its affiliates for net cash
proceeds of at least $20,000,000 by such first anniversary;
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"Subordination Agreement" means the Blanket Subordination Agreement of
even date herewith by and among the Agent and certain Subsidiaries, as the same
may be amended, modified or supplemented from time to time;
"Subsidiary" means any corporation in which at the time more than 50%
of its outstanding capital stock ordinarily entitled to vote for the election of
directors is owned directly or indirectly by the Borrower and/or by one or more
of the Borrower's Subsidiaries;
"Summers Group" means Summers Group, Inc., a Delaware corporation, all
of the capital stock of which is owned as of the date of this Agreement by
SGDHC, Inc., a subsidiary of BTR;
"Swap Agreement" means one or more agreements with respect to
Indebtedness evidenced by the Notes between Borrower and one or more Lenders, on
terms mutually acceptable to Borrower and such Lender or Lenders, which
agreements create Rate Hedging Obligations;
"Swing Line" means the revolving line of credit established by
NationsBank in favor of the Borrower pursuant to Section 2.17;
"Swing Line CD Loan" means a Swing Line Loan the rate of interest on
which is determined by reference to the Swing Line CD Rate;
"Swing Line CD Rate" means, for any Swing Line CD Loan, the rate of
interest per annum determined pursuant to the following formula:
Applicable Base Rate
--------------------
Swing Line CD Rate = 1 - Applicable + Assessment Rate
Reserve Requirement
"Swing Line Loans" means Loans made by NationsBank to Borrower
pursuant to Section 2.17;
"Swing Line Outstandings" means, as of any date of determination, the
aggregate principal Indebtedness of Borrower on all Swing Line Loans then
outstanding;
"Swing Line Rate" means the lesser of the Floating Rate or the Swing
Line CD Rate, any change in the Floating Rate or the Swing Line CD Rate to be
effective as of the date of any such change;
"Total Letter of Credit Commitment" means an amount not to exceed
$10,000,000;
"Total Revolving Credit Commitment" means an amount equal to
$90,000,000, as reduced in accordance with Section 2.10, provided, that, from
and after the first anniversary of the Closing Date the Total Revolving Credit
Commitment shall not exceed $70,000,000;
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"Trading Asset Ratio" means the ratio of (a) the sum of Accounts and
Inventory minus Accounts Payable of Borrower and its Subsidiaries to (b)
Consolidated Unsecured Senior Indebtedness.
1.02 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall have the meanings assigned to such terms and shall be interpreted
in accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis.
1.03 UCC TERMS. Each term defined in Article 1 or 9 of the New York
Uniform Commercial Code shall have the meaning herein given therein unless
otherwise defined herein.
ARTICLE II
Revolving Credit Facility
-------------------------
2.01 COMMITMENT. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to the Borrower from
time to time from the Closing Date until the Revolving Credit Termination Date
on a pro rata basis as to the total borrowing requested by the Borrower on any
day determined by its Applicable Commitment Percentage up to but not exceeding
the Revolving Credit Commitment of such Lender, PROVIDED, however, that the
Lenders will not be required and shall have no obligation to make any Advance
(i) so long as a Default or an Event of Default has occurred and is continuing
or (ii) if the Agent has accelerated the maturity of the Notes as a result of an
Event of Default, (iii) if Borrower has not furnished to the Agent the Borrowing
Base Certificate required pursuant to Section 8.01(d) hereof or (iv) any other
term or condition set forth in Sections 5.01 or 5.02 hereof, as the case may be,
to the extent applicable, which has not been satisfied or waived; PROVIDED
further, however, that immediately after giving effect to each Advance, the
principal amount of outstanding Revolving Loans plus the amount of all Swing
Line Outstandings, Acceptances, Outstanding Letters of Credit and Reimbursement
Obligations shall not exceed either the Total Revolving Credit Commitment or the
Borrowing Base as set forth on the Borrowing Base Certificate most recently
delivered to the Agent pursuant to Section 8.01(d). Within such limits, the
Borrower may borrow, repay and reborrow hereunder, on a Business Day in the case
of a Floating Rate Loan or Fixed CD Loan, and on a LIBOR Business Day in the
case of a LIBOR Loan, from time to time from the Closing Date until, but (as to
borrowings and reborrowings) not including, the Revolving Credit Termination
Date; PROVIDED, however, that (x) no Fixed CD Loan shall be made less than
thirty (30) days before the Stated Revolving Credit Termination Date and no
LIBOR Loan shall be made less than one month before the Stated Revolving Credit
Termination Date and (y) each Fixed Rate Loan may, subject to the provisions of
Section 2.06, be repaid only on the last day of the Interest Period with respect
thereto. The Borrower agrees that if at any time the Outstandings shall exceed
either the Borrowing Base or the Total Revolving Credit Commitment, the Borrower
shall immediately reduce the outstanding principal amount of the Loans such
that, as a result of such reduction, each of the Borrowing Base and the Total
Revolving Credit Commitment shall equal or exceed the Outstandings.
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2.02 AMOUNTS. Each Revolving Loan hereunder and conversions under
Section 2.12 shall be in an amount of at least $1,000,000, and in integral
multiples of $250,000 in excess thereof except as provided in Section 2.04(c)
and Section 2.17.
2.03 INTEREST PERIODS. Each Revolving Loan shall be, at the
option of the Borrower specified in the Borrowing Notice furnished to the Agent
pursuant to subsection 2.04 hereof, either a Floating Rate Loan or a Fixed Rate
Loan, which shall in each case be made or maintained by each Lender at its
applicable Lending Office. Floating Rate Loans and Fixed Rate Loans may be
outstanding at the same time, PROVIDED, however, there shall not be outstanding
at any one time Loans having more than six (6) different Interest Periods,
excluding Interest Periods for Acceptances; PROVIDED that all Floating Rate
Loans shall be treated as having a single Interest Period.
2.04 ADVANCES. (a) The Authorized Officer shall give the Agent (i) at
least two (2) Business Days' irrevocable telephonic notice of each Advance that
will be a Fixed CD Loan (whether representing an additional borrowing hereunder
or the conversion of borrowings hereunder from Floating Rate Loans or other
Fixed Rate Loans to Fixed CD Loans) prior to 10:30 A.M. Charlotte, North
Carolina time; (ii) at least three (3) LIBOR Business Days' irrevocable
telephonic notice of each Advance that will be a LIBOR Loan (whether
representing an additional borrowing hereunder or the conversion of borrowing
hereunder from Floating Rate Loans or other Fixed Rate Loans to LIBOR Loans)
prior to 10:30 A.M., Charlotte, North Carolina time; and (iii) irrevocable
telephonic notice of each Floating Rate Loan representing an additional
borrowing hereunder prior to 10:30 A.M. Charlotte, North Carolina time on the
day of such proposed Floating Rate Loan. Each such Borrowing Notice, which
shall be effective upon receipt by the Agent, shall specify the amount of the
borrowing, the type (Floating Rate, Fixed CD or LIBOR) of Revolving Loan, the
date of borrowing and, if a Fixed Rate Loan the Interest Period to be used in
the computation of interest. The Authorized Officer shall provide the Agent
written confirmation of each such telephonic notice in the form attached hereto
as EXHIBIT F-1 with appropriate insertions but failure to provide such
confirmation shall not affect the validity of such telephonic notice. Notice of
receipt of such Borrowing Notice shall be provided by the Agent to each Lender
by telephone with reasonable promptness, but not later than 12:00 noon,
Charlotte, North Carolina time on the same day as Agent's receipt of such
notice. The Agent shall provide each Lender written confirmation of such
telephonic confirmation but failure to provide such notice shall not affect the
validity of such telephonic notice. Failure to give notice of a conversion
shall not constitute a Default.
(b) Not later than 1:00 P.M., Charlotte, North Carolina time on the
date specified for each borrowing under this Article II, each Lender shall,
pursuant to the terms and subject to the conditions of this Agreement, make the
amount of the Advance or Advances to be made by it on such day available to the
Agent, by depositing or transferring the proceeds thereof in immediately
available funds at the Principal Office. The amount so received by the Agent
shall, subject to the terms and conditions of this Agreement, be made available
to the Borrower by the Agent by 1:00 P.M., Charlotte, North Carolina time by
depositing the proceeds thereof in immediately available funds, in the
Borrower's Account.
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(c) If a drawing is presented under any Letter of Credit in
accordance with the terms thereof or presentment is made of an Acceptance prior
to the Revolving Credit Termination Date and the Borrower shall not have
reimbursed NationsBank for the amount thereof in accordance with Section
3.04(a), then to the extent of the availability under the Swing Line, the amount
of such drawing or payment paid by NationsBank shall be declared an Advance
under the Swing Line on the date such payment is made by NationsBank. If a
drawing is presented under any Letter of Credit in accordance with the terms
thereof or presentment is made of an Acceptance and to the extent that an
Advance under the Swing Line as provided in the preceding sentence (an
"Unreimbursed Drawing") shall not be available for the amount of such draw or
payment, then notice of such drawing or payment shall be provided promptly by
NationsBank to the Agent and the Agent shall provide notice to each Lender by
telephone. If such notice to the Lenders of a drawing under any Letter of
Credit or payment pursuant to any Acceptance is given by the Agent at or before
12:00 noon Charlotte, North Carolina time on any Business Day, the Borrower
shall be deemed to have requested, and each Lender shall, pursuant to the terms
and subject to the conditions of this Agreement, make an Advance that is a
Floating Rate Loan in the amount of such Lender's Applicable Commitment
Percentage of such Unreimbursed Drawing and shall pay such amount to the Agent
for the account of NationsBank at the Principal Office in Dollars and in
immediately available funds before 2:30 P.M. Charlotte, North Carolina time
on the same Business Day. If such notice to the Lenders is given by the Agent
after 12:00 noon Charlotte, North Carolina time on any Business Day, the
Borrower shall be deemed to have requested, and each Lender shall, pursuant to
the terms and subject to the conditions of this Agreement, make an Advance that
is a Floating Rate Loan in the amount of such Lender's Applicable Commitment
Percentage of such Unreimbursed Drawing and shall pay such amount to the Agent
for the account of NationsBank at the Principal Office in Dollars and in
immediately available funds before 12:00 noon Charlotte, North Carolina time on
the next following Business Day. Such Floating Rate Loan shall be deemed made
for a period ending on the following Business Day, which shall be extended
automatically to the next succeeding Business Day unless and until the Borrower
converts such Floating Rate Loan in accordance with the terms of Section 2.12
hereof. Upon receipt by the Agent of proceeds of such Advance, the
Reimbursement Obligation represented by such drawing shall be deemed satisfied.
2.05 PAYMENT OF INTEREST. (a) The Borrower shall pay interest to the
Agent at the Principal Office for the account of each Lender on the outstanding
and unpaid principal amount of each Revolving Loan made by such Lender for the
period commencing on the date of such Revolving Loan until such Revolving Loan
shall be due at the then applicable Floating Rate for Floating Rate Loans, CD
Rate for Fixed CD Loans or LIBOR Rate for LIBOR Loans, as designated by the
Authorized Officer pursuant to Section 2.04 hereof or as otherwise provided
herein; provided, however, (i) upon the occurrence of the Rexel Event, that
portion of the additional interest PROVIDED for in clause (ii) of the definition
of Applicable Margin in Article I hereof upon the occurrence of such event
payable for the period from the Closing Date to the date of the Rexel Event,
shall be and become immediately due and payable on demand of the Agent from and
after the date of such Rexel Event, and (ii) that if any amount shall not be
paid when due (at maturity, by acceleration or otherwise), such amount shall
bear interest thereafter (i) in the case of a Fixed Rate Loan, until the end of
the Interest Period with respect to such Fixed Rate Loan, at a rate of two
percent (2%) above such Fixed Rate and (ii) thereafter, and with respect to
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Floating Rate Loans, at a rate of interest per annum which shall be two percent
(2%) above the Floating Rate or the maximum rate permitted by applicable law,
whichever is lower, from the date such amount was due and payable until the date
such amount is paid in full.
(b) Interest on each Loan shall be computed on the basis of a year of
360 days and calculated for the actual number of days elapsed. Interest on each
(a) Floating Rate Loan and Swing Line Loan shall be paid in arrears on the last
Business Day of each December, March, June or September, (b) Fixed Rate Loan on
the last day of the applicable Interest Period for each Fixed Rate Loan and if
such Interest Period extends for more than three months or 90 days,
respectively, at intervals of three months or 90 days, as appropriate, after
the first day of such Interest Period, and (c) upon payment in full of the
principal amount of such Loan. Payments of interest with respect to each Fixed
Rate Loan pursuant to the preceding sentence shall consist of accrued and unpaid
interest on the applicable Fixed Rate Loan from and including the first day of
the Interest Period applicable to such Fixed Rate Loan (or, in the case of the
payment of interest on the last day of an Interest Period of six months for a
LIBOR Loan or 180 days for a Fixed CD Loan, from and including the date of prior
payment of interest on such Loan during such Interest Period) to but excluding
the date of payment. Payments of interest with respect to each Floating Rate
Loan and Swing Line Loan pursuant to the second preceding sentence shall consist
of accrued and unpaid interest on the applicable Floating Rate Loan or Swing
Line Loan from and including the first day such Floating Rate Loan or Swing Line
Loan is outstanding to but excluding either the date of payment or conversion of
such Loan. The Agent shall endeavor to send the Borrower written notice of all
interest payments not later than the Business Day immediately prior to the
payment date therefor; provided, any failure of the Agent to send such notice
shall not affect the Borrower's obligations with respect to payment of interest
hereunder.
(c) Promptly after the determination of any interest rate provided
for herein or any change therein, the Agent shall give notice thereof to the
Borrower.
2.06 PAYMENT OF PRINCIPAL. (a) The principal amount of each Revolving
Loan and Swing Line Loan shall be due and payable in full on the Revolving
Credit Termination Date. The duration of the initial Interest Period for each
Fixed Rate Loan shall be as specified in the Borrowing Notice. The Borrower
shall have the option from time to time to elect the duration of subsequent
Interest Periods and to convert the Revolving Loans in accordance with Section
2.12 hereof. If the Agent does not receive a notice of election of duration of
an Interest Period or to convert by the time prescribed by Section 2.12 hereof,
such Fixed Rate Loan shall automatically convert to a Floating Rate Loan.
(b) The Borrower shall have the right, upon telephonic notice by
10:30 A.M., Charlotte, North Carolina time on the date of any payment, from time
to time to prepay all or any portion of the Loans without penalty other than as
provided in Section 4.03. Prepayments of Loans, other than Swing Line Loans and
other than those required under Section 4.03, shall be in minimum denominations
of $1,000,000 and in integral multiples of $250,000 in excess thereof. Each
payment of principal (including any prepayment) and payment of interest shall be
made to the Agent at the Principal Office, for the account of each Lender's
applicable Lending Office, in Dollars and in immediately available funds before
2:00 P.M. Charlotte, North Carolina time on the date such payment is due.
Dollar payments received by the Agent after 2:00 P.M., Charlotte,
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North Carolina time on any day shall be deemed received on the next succeeding
Business Day. The Agent may, but shall not be obligated to, debit the amount of
any such payment which is not made by such time to the Borrower's Account or any
ordinary deposit account of the Borrower with the Agent.
(c) In the event that any payment hereunder or under the Notes
becomes due and payable on a day other than a Business Day, then such due date
shall be extended to the next succeeding Business Day; provided that interest
shall continue to accrue during the period of any such extension.
2.07 BORROWER'S ACCOUNT. The Agent shall render to the Borrower each
quarter a Loan ledger statement and a copy of the statement of the Borrower's
Account.
2.08 NOTES. Loans made by each Lender shall be evidenced by, and be
repayable with interest in accordance with the terms of, a promissory note
payable to the order of such Lender in the amount of its Applicable Commitment
Percentage of the Total Revolving Credit Commitment, which Note shall be dated
the Closing Date or such later date pursuant to an Assignment and Acceptance and
shall be duly completed, executed and delivered by the Borrower.
2.09 PRO RATA PAYMENTS. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Revolving Loans, the
Acceptance Margin and fees (other than any underwriting or structuring fee and
the Agent's fees payable under Section 11.11 hereof, which shall be retained by
NationsBank or the Agent, as the case may be) described in this Agreement shall
be made to the Agent for the account of the Lenders pro rata based on their
Applicable Commitment Percentages, (b) all payments to be made by the Borrower
for the account of each of the Lenders on account of principal, interest,
Acceptance Margin and fees, shall be made without set-off or counterclaim, and
(c) the Agent will promptly distribute payments received to the Lenders.
2.10 REDUCTION IN COMMITMENT.
(a) OPTIONAL REDUCTIONS. The Borrower shall have the right from time
to time (but not more frequently than twice during each quarterly period), upon
not less than ten (10) Business Days' written notice to the Agent to reduce the
Total Revolving Credit Commitment. The Agent shall give each Lender, within one
(1) Business Day, telephonic notice (confirmed in writing) of such reduction.
Each such optional reduction shall be in the aggregate amount of $1,000,000 or
such greater amount which is in an integral multiple of $1,000,000, and shall
permanently reduce the Revolving Credit Commitment of the Lenders pro rata. No
such reduction shall result in the payment of any Fixed Rate Loan other than on
the last day of the Interest Period of such Loan.
(b) MANDATORY REDUCITONS. The Total Revolving Credit Commitment
shall be reduced (with a simultaneous reduction of the Revolving Credit
Commitment of the Lenders pro rata):
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(i) In an amount equal to $20,000,000 (or such lesser amount of
proceeds as shall cause the Total Revolving Credit
Commitment to be not greater than $70,000,000 after giving
effect to such reduction) upon the sale by the Borrower to
Rexel of equity securities (or securities exchangeable for,
convertible into or exercisable for equity securities) of
the Borrower, such reduction to be effective as of the
effective date of such sale; and
(ii) On the first anniversary of the Closing Date in the amount,
if any, by which the Total Revolving Credit Commitment on
such date exceeds $70,000,000.
Each reduction of the Total Revolving Credit Commitment shall be
accompanied by prepayment of the Notes to the extent that the Outstandings
exceed the Total Revolving Credit Commitment, after giving effect to such
reduction, together with accrued and unpaid interest on the amounts prepaid.
Any prepayment pursuant to this Section 2.10 shall be applied first to
prepayment of Floating Rate Loans, next to the prepayment of Swing Line Loans
and next to the prepayment of Fixed Rate Loans. Notwithstanding the foregoing,
in connection with any reduction in the Total Revolving Credit Commitment
required under clause (b)(i) above, if such required reduction would result in
payment of a Fixed Rate Loan prior to the end of its Interest Period, which
prepayment would require a payment under Section 4.03, then the Borrower may
defer the date of such prepayment until, but not later than, the earlier of the
last day of such Interest Period or 31 days if such deferral of payment would
eliminate the requirement that a payment be made under Section 4.03 hereof;
provided, the amount of such prepayment shall be either held in a demand
deposit account or invested in the manner permitted in any one or more of
Sections 9.06(i), (ii) or (iii).
2.11 INCREASE AND DECREASE IN AMOUNTS. The amount of the Total
Revolving Credit Commitment which shall be available to the Borrower shall be
reduced by the stated amount of all Swing Line Outstandings, Outstanding Letters
of Credit and outstanding Reimbursement Obligations and Acceptances.
2.12 CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST PERIODS.
Provided that no Default or Event of Default shall have occurred and be
continuing and subject to the limitations set forth below and in Sections
4.01(c) and 4.02 hereof, the Borrower may:
(a) on two (2) Business Days' notice to the Agent on or before 10:30
A.M. Charlotte, North Carolina time:
(i) elect a subsequent Interest Period for all or a portion of
Fixed CD Loans to begin on the last day of the Interest
Period for such Fixed CD Loans;
(ii) convert all or a portion of Floating Rate Loans to Fixed CD
Loans on any date; and
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(iii) convert all or a portion of LIBOR Loans to Fixed CD Loans
on the last day of the Interest Period for such LIBOR
Loans.
(b) on three (3) LIBOR Business Days' notice to the Agent on or
before 10:30 A.M. Charlotte, North Carolina time:
(i) elect a subsequent Interest Period for all or a portion of
LIBOR Loans to begin on the last day of the Interest
Period for such LIBOR Loans;
(ii) convert all or a portion of Fixed CD Loans to LIBOR Loans
on the last day of the Interest Period for such Fixed CD
Loans; and
(iii) convert all or a portion of Floating Rate Loans to LIBOR
Loans on any date.
Notice of any such elections or conversions shall specify the
effective date of such election or conversion and the Interest Period to be
applicable to the Revolving Loan as continued or converted. Each election and
conversion pursuant to this Section 2.12 shall be subject to the limitations on
Fixed CD Loans and LIBOR Loans set forth in the definition of "Interest Period"
herein and in Sections 2.01, 2.02, 2.03 and 2.04 hereof. All such continuations
or conversions of Revolving Loans shall be effected pro rata based on the
Applicable Commitment Percentages of the Lenders.
2.13 FEES. (a) For the period beginning on the Closing Date and
ending on the Revolving Credit Termination Date (or such earlier date on which
the Revolving Credit Facility has terminated), the Borrower agrees to pay to the
Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, an unused fee for such period at a rate of one-fourth
percent (1/4%) per annum on the sum of the daily amount by which the average
daily amount of the Total Revolving Credit Commitment exceeds the sum of average
daily (a) outstanding Revolving Credit Loans, (b) Outstanding Letters of Credit
and (c) outstanding Acceptances. The Swing Line Outstandings shall not be
outstanding Loans for purposes of determining such fee. Such payments of fees
provided for in this Section 2.13 shall be due in arrears on the last Business
Day of each December, March, June and September beginning December 31, 1993 to
and on the Revolving Credit Termination Date (or such earlier date on which the
Revolving Credit Facility has terminated). Notwithstanding the foregoing, so
long as any Lender fails to make available any portion of its Revolving Credit
Commitment when requested, such Lender shall not be entitled to receive payment
of its pro rata share of such fee until such Lender shall make available such
portion.
(b) In addition to the fees otherwise expressly provided for herein,
the Borrower agrees to pay to NationsBank, the Lenders and the Agent, as the
case may be, such other fees in connection with the Loans and the Letters of
Credit as the Borrower shall be or become committed to pay pursuant to any other
document to which Borrower is a signatory.
2.14 DEFICIENCY ADVANCES. No Lender shall be responsible for any
default of any other Lender in respect to such other Lender's obligation to make
any Loan hereunder nor
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shall the Revolving Commitment of any Lender hereunder be increased as a result
of such default of any other Lender. Without limiting the generality of the
foregoing, in the event any Lender shall fail to advance funds to the Borrower
as herein provided, the Agent may in its discretion, but shall not be obligated
to, advance under the Note in its favor as a Lender all or any portion of such
amount (the "deficiency advance") and shall thereafter be entitled to payments
of principal of and interest on such deficiency advance in the same manner and
at the same interest rate or rates to which such other Lender would have been
entitled had it made such advance under its Note; provided that, upon payment to
the Agent from such other Lender of the entire outstanding amount of such
deficiency advance, together with interest thereon, from the most recent date or
dates interest was paid to the Agent by the Borrower on each Revolving Loan
comprising the deficiency advance at the interest rate per annum for overnight
borrowing by the Agent from the Federal Reserve Bank, then such payment shall be
credited against the Note of the Agent in full payment of such deficiency
advance and the Borrower shall be deemed to have borrowed the amount of such
deficiency advance from such other Lender as of the most recent date or dates,
as the case may be, upon which any payments of interest were made by the
Borrower thereon.
2.15 ADJUSTMENTS BY AGENT. Notwithstanding the construction of "pro
rata" to mean based on the Applicable Commitment Percentages and any provisions
contained herein for the advancement of funds or distribution of payments on a
pro rata basis, the Agent may, in its discretion, but shall not be obligated to,
adjust downward or upward (but not in excess of any applicable Revolving Credit
Commitment) the principal amount of any Revolving Loan to be made by any Lender
to the nearest amount which is evenly divisible by $100, and make appropriate
related adjustment in the distribution of payments of principal and interest on
the Loans.
2.16 USE OF PROCEEDS. The proceeds of the Loans made pursuant to the
Revolving Credit Facility and Swing Line hereunder shall be used by the Borrower
to acquire the Summers Group, to refinance existing Indebtedness and for working
capital and other general corporate purposes of the Borrower.
2.17 SWING LINE. Notwithstanding any other provision of this
Agreement to the contrary, in order to administer the Revolving Credit Facility
in an efficient manner and to minimize the transfer of funds between the Agent
and the Lenders, NationsBank shall make available Swing Line Loans to the
Borrower prior to the Revolving Credit Termination Date. NationsBank shall not
make any Swing Line Loan pursuant hereto (i) if the Borrower is not in
compliance with all the conditions to the making of Revolving Loans set forth in
this Agreement, (ii) if after giving effect to such Swing Line Loan, the Swing
Line Outstandings exceed $5,000,000, or (iii) if after giving effect to such
Swing Line Loan, the Outstandings exceed either the Borrowing Base or the Total
Revolving Credit Commitment. Loans made pursuant to this Section 2.17 shall be
limited to Loans bearing interest at the Swing Line Rate.
(i) On each Business Day, in the absence of contrary
instructions from the Borrower (by telephone confirmed in
writing), NationsBank shall fund the Borrower's operating
account with NationsBank through credits to such account to
the extent necessary based on the balance in the account on
such day in order to fund that day's presentments for
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payment against the account. Each such credit shall
constitute an Advance as a Swing Line Loan hereunder and
each Business Day's Advances on Swing Line Loans shall be in
an aggregate principal amount of $100,000 or such greater
amount as is an integral multiple of $10,000. Upon each
such Advance, the Borrower shall be indebted to NationsBank
in the amount of such Advance, plus interest thereon, in
accordance with the terms and conditions hereof.
(ii) Not later than 3:00 P.M. (Charlotte, North Carolina time) on
each Business Day on which Advances under the Swing Line are
to be made, NationsBank shall inform the Borrower by
telephone (confirmed in writing) of the amount of such
Advances.
(iii) All Advances made by NationsBank under the Swing Line
pursuant to this Section 2.17 outstanding on any day shall
bear interest at the Swing Line Rate.
(iv) The Borrower and each Lender which is or may become a party
hereto acknowledge that all Swing Line Loans are to be made
solely by NationsBank to the Borrower but that such Lender
shall share the risk of loss with respect to such Advances
in an amount equal to such Lender's Applicable Commitment
Percentage of such Swing Line Loan. Upon demand made by
NationsBank, each Lender (including NationsBank) shall,
according to its Lender's Applicable Commitment Percentage
of such Swing Line Loan, promptly provide to NationsBank its
purchase price therefor in an amount equal to its
Participation therein, in which case such Swing Line Loan
shall be deemed from and after such date a Floating Rate
Loan made in accordance with this Agreement. The obligation
of each Lender to so provide its purchase price to
NationsBank shall be absolute and unconditional and shall
not be affected by the occurrence of an Event of Default or
any other occurrence or event.
(v) Prepayments and repayments of Swing Line Loans shall be in
minimum amounts of $100,000 and multiples of $10,000 in
excess thereof.
(vi) Borrower at its option may request an Advance as a Revolving
Loan pursuant to Section 2.01 in an amount sufficient to
repay any or all Swing Line Loans on any date and the Agent
shall upon the receipt of such Advance, provide to
NationsBank the amount necessary to repay such Swing Line
Loan or Loans (which NationsBank shall then apply to such
repayment) and credit any balance of the Revolving Loan in
immediately available funds to the Borrower's Account. The
proceeds of such Advances shall be paid to NationsBank for
application to the Swing Line Outstandings and the Lenders
shall then be deemed to have made Revolving Loans in the
amount of such Advances. The
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obligation of NationsBank to fund the Swing Line shall cease
upon the earlier of (i) the occurrence of a Default, or (ii)
the Revolving Credit Termination Date; provided that when a
Default is no longer continuing NationsBank shall be
obligated to provide Swing Line Loans.
2.18 EXTENSION OF REVOLVING CREDIT TERMINATION DATE. At the request
of the Borrower the Lenders may, in their sole discretion, elect to extend the
Stated Revolving Credit Termination Date then in effect for up to two additional
periods of one year each. The Borrower shall notify the Lenders of its request
for such an extension by delivering to the Agent and the Lenders notice of such
request signed by an Authorized Officer not more than one hundred and eighty
(180) days nor less than one hundred and twenty (120) days prior to the Stated
Revolving Credit Termination Date. If all the Lenders shall elect to so extend,
the Agent shall notify the Borrower in writing within sixty (60) days of its
receipt of such request for extension of the decision of the Lenders of whether
to extend the Revolving Credit Termination Date. Failure by the Agent to give
such notice shall constitute refusal by the Lenders to extend the Revolving
Credit Termination Date. Notwithstanding the foregoing provisions of this
Section 2.18 or anything to the contrary contained in the definition of "Stated
Revolving Credit Termination Date" or "Revolving Credit Termination Date" in
Article I hereof, in the event that on or before the one year anniversary of the
Closing Date the Borrower shall not have sold equity securities to Rexel or any
affiliate for a cash purchase price of not less than $20,000,000, then the
Revolving Credit Termination Date shall be such one year anniversary of the
Closing Date, and shall not be subject to further extension as provided in this
Section 2.18.
ARTICLE III
LETTERS OF CREDIT AND ACCEPTANCES
3.01 LETTERS OF CREDIT AND ACCEPTANCES. NationsBank agrees, subject
to the terms and conditions of this Agreement, upon request of Borrower to issue
from time to time for the account of the Borrower Letters of Credit upon
delivery to NationsBank of an Application and LC Agreement in the form attached
hereto as EXHIBIT E; PROVIDED, that the undrawn face amount of all Letters of
Credit outstanding plus all outstanding Reimbursement Obligations hereunder
shall not exceed the Total Letter of Credit Commitment. No Letter of Credit
shall be issued by NationsBank with an expiry date or payment date occurring
subsequent to the fifth Business Day preceding the Stated Revolving Credit
Termination Date (without giving effect to the proviso thereof) and no Letter of
Credit shall have an expiry date occurring more than twelve (12) months after
the date of its issuance. NationsBank shall not be required to issue any Letter
of Credit if the aggregate amount of the Outstandings and the face amount of any
requested Letter of Credit exceeds either the Borrowing Base or the Total
Revolving Credit Commitment.
3.02 ACCEPTANCES. NationsBank agrees, subject to the terms and
conditions hereof until the day prior to the Revolving Credit Termination Date,
upon the request of Borrower, to create, from time to time, Acceptances for the
benefit of Borrower. NationsBank shall create such Acceptances by accepting and
discounting drafts drawn by the Borrower under and pursuant to this Agreement.
NationsBank shall not accept any such drafts unless the resulting Acceptance
shall be an Acceptance as defined in Section 1.01 hereof. Upon accepting a
draft
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NationsBank may discount the resulting Acceptance at a rate per annum (based on
a year of 360 days) equal to the Acceptance Rate plus the Acceptance Margin.
NationsBank shall not be required to create any Acceptance if the amount payable
under such Acceptance when added to the Outstandings exceeds either the
Borrowing Base or the Total Revolving Credit Commitment. The face amount of
Acceptances shall be an integral multiple of $500,000 and shall not be less than
$1,000,000. The creation date and maturity date of each Acceptance shall be a
Business Day. Notwithstanding the foregoing, the Agent shall not be obligated
to create or discount any Acceptance, (i) if creation thereof would cause the
Agent to exceed the maximum amount of outstanding bankers' acceptances permitted
by applicable law, or (ii) if, in the reasonable opinion of the Agent, general
conditions in the public market for rediscounting bankers' acceptances render it
inadvisable to do so.
3.03 CREATION OF ACCEPTANCE. Any request for creation of an
Acceptance shall be made at least two (2) Business Days in advance of the day
upon which such Acceptance is to be created (the "Acceptance Date"); such
request to be in writing and in the form of the Borrowing Notice set forth in
EXHIBIT F-2. No Acceptance shall be created by NationsBank with a maturity date
occurring subsequent to the Revolving Credit Termination Date. If NationsBank
creates the requested Acceptance, then on or before 11:00 A.M., Miami, Florida
time on the Acceptance Date, NationsBank shall notify the Borrower of the
Acceptance Rate plus Acceptance Margin at which the Acceptance will be
discounted by NationsBank, and NationsBank shall promptly thereafter accept the
draft of Borrower for the amount and Interest Period requested. Upon the
discounting of each Acceptance, NationsBank shall credit Borrower's Account with
an amount equal to the net proceeds of such discounted Acceptance. In order to
enable NationsBank to create Acceptances in the manner specified in this Section
3.03, Borrower agrees to promptly upon request furnish to NationsBank a
sufficient number of drafts conforming to NationsBank requirements.
3.04 REIMBURSEMENT.
(a) The Borrower hereby unconditionally agrees immediately to pay to
NationsBank on demand at 150 S.E. Third Avenue, Second Floor, Miami, Florida
33131, Attention: International Bank, Letter of Credit Department (i) all
amounts required to pay all drafts drawn under the Letters of Credit and (ii)
the face amount of each draft accepted by NationsBank on the maturity date of
such draft in the event of an Event of Default or in the event an Acceptance is
determined not to be eligible for discount, and any and all out of pocket
expenses of every kind incurred by NationsBank in connection with the Letters of
Credit and Acceptances and in any event and without demand to place in the
possession of NationsBank (which shall include Advances under the Revolving
Credit Facility if permitted by Section 2.04(c) hereof) sufficient funds to pay
all debts and liabilities arising under any Letter of Credit and Acceptance.
The Borrower's obligations to pay NationsBank under this Section 3.04(a), and
the right of NationsBank to receive the same, shall be absolute and
unconditional and shall not be affected by any circumstance whatsoever.
NationsBank may charge the Borrower's Account or any other account the Borrower
may have with it for any and all amounts NationsBank pays under a Letter of
Credit and Acceptance, plus commissions, charges and expenses as from time to
time agreed to by NationsBank and the Borrower; provided that to the extent
permitted by Section 2.04(c), amounts shall be paid pursuant to Advances under
the Swing Line and/or the
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Revolving Credit Facility. The Borrower agrees that NationsBank may, in its
sole discretion, accept or pay, as complying with the terms of any Letter of
Credit or Acceptance, any drafts or other documents otherwise in order which may
be signed or issued by an administrator, executor, trustee in bankruptcy, debtor
in possession, assignee for the benefit of creditors, liquidator, receiver,
attorney in fact or other legal representative of a party who is authorized
under such Letter of Credit or Acceptance to draw or issue any drafts or other
documents. The Borrower agrees to pay NationsBank interest on any amounts not
paid when due hereunder at the lesser of the Floating Rate plus two percent
(2%), or the maximum rate permitted by law.
(b) In accordance with the provisions of Section 2.04(c) hereof,
NationsBank shall notify the Agent (and shall also notify the Borrower) of any
drawing under any Letter of Credit or payment of any draft constituting an
Acceptance issued for the account of the Borrower as promptly as practicable
following the receipt by NationsBank of such drawing or payment.
(c) Each Lender (other than NationsBank) shall automatically acquire
on the date of issuance thereof a Participation in the liability of NationsBank
in respect of such Letter of Credit or Acceptance in an amount equal to such
Lender's Applicable Commitment Percentage of such liability, and to the extent
that the Borrower is obligated to pay NationsBank under Section 3.04(a), each
Lender (other than NationsBank) thereby shall absolutely, unconditionally and
irrevocably assume, and shall be unconditionally obligated to pay to NationsBank
as hereinafter described, its Applicable Commitment Percentage of the liability
of NationsBank under such Letter of Credit or Acceptance. If a Reimbursement
Obligation shall be outstanding, upon demand from NationsBank or the Agent, each
Lender shall pay to NationsBank in the manner provided in Section 2.04(c) its
Applicable Commitment Percentage of such Reimbursement Obligation. If any
Lender is obligated to pay but does not pay amounts to the Agent for the account
of NationsBank in full upon such request as required by this Section 3.04(c),
such Lender shall, on demand, pay to the Agent for the account of NationsBank
interest on the unpaid amount for each day during the period commencing on the
date of notice given to such Lender pursuant to Section 2.04(c) until such
Lender pays such amount to the Agent for the account of NationsBank in full at
the interest rate per annum for overnight borrowing by NationsBank from the
Federal Reserve Bank.
(d) Promptly following the end of each calendar quarter, NationsBank
shall deliver to the Agent, and the Agent shall deliver to each Lender, a notice
describing the aggregate undrawn amount of all Letters of Credit outstanding at
the end of such quarter. Upon the request of any Lender from time to time,
NationsBank shall deliver to the Agent, and the Agent shall deliver to such
Lender, any other information reasonably requested by such Lender with respect
to each Letter of Credit and Acceptance then outstanding.
(e) The issuance by NationsBank of each Letter of Credit and
Acceptance shall, in addition to the conditions precedent set forth in Section
5.01 hereof, be subject to the conditions that such Letter of Credit and
Acceptance be in such form, contain such terms and support such transactions or
obligations as shall be reasonably satisfactory to NationsBank consistent with
the then current practices and procedures of NationsBank with respect to similar
letters of credit. All Letters of Credit shall be issued pursuant to and
subject to the Uniform Customs and Practice for Documentary Credits, 1983
revision, International Chamber of
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Commerce Publication No. 400 and all subsequent amendments and revisions
thereto. The Borrower shall have executed and delivered such other instruments
and agreements relating to such Letter of Credit and Acceptance as NationsBank
shall have reasonably requested consistent with such practices and procedures.
(f) Without duplication of Section 11.07 hereof, the Borrower hereby
indemnifies and holds harmless NationsBank and each other Lender and the Agent
from and against any and all claims and damages, losses, liabilities, costs or
out-of-pocket expenses which NationsBank, such other Lender or the Agent may
reasonably incur (or which may be claimed against NationsBank, such other Lender
or the Agent by any Person other than any party hereto) by reason of or in
connection with the issuance or transfer of or payment or failure to pay under
such Letter of Credit; provided that the Borrower shall not be required to
indemnify NationsBank, any other Lender or the Agent for any claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent,
(i) caused by the willful misconduct or gross negligence of the party to be
indemnified, (ii) caused by the failure of NationsBank to pay under any Letter
of Credit or Acceptance after the presentation to it of a request strictly
complying with the terms and conditions of such Letter of Credit or Acceptance,
unless such payment is prohibited by any law, regulation, court order or decree,
or (iii) paid or payable by any Lender under Sections 2.14 or 11.10 hereof.
(g) Without limitation or prejudice to any right or remedy available
to Borrower by contract or law, the obligation of Borrower to immediately
reimburse Agent for drawings made under Letters of Credit or Acceptance shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement, under all circumstances whatsoever,
including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of the Letter of
Credit or Acceptance, the obligation supported by the
Letter of Credit or Acceptance or any other agreement or
instrument relating thereto (collectively, the "Related
Documents");
(ii) the existence of any claim, setoff, defense or other rights
which Borrower may have at any time against any beneficiary
or any transferee of a Letter of Credit or Acceptance (or
any Persons for whom any such beneficiary or any such
transferee may be acting), Agent, Lenders or any other
Person, whether in connection with the Loan Documents, the
Related Documents or any unrelated transaction;
(iii) any breach of contract or other dispute between Borrower
and any beneficiary or any transferee of a Letter of Credit
or Acceptance (or any persons or entities for whom such
beneficiary or any such transferee may be acting), Agent,
Lenders or any other Person or entity;
(iv) any draft, statement or any other document presented under
the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any
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respect or any statement therein being untrue or inaccurate
in any respect whatsoever; or
(v) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing;
provided, however, that nothing contained herein shall be deemed to release
NationsBank or any other Lender or the Agent of any liability for actual loss
arising as a result of its gross negligence or willful misconduct.
(h) Borrower acknowledges and agrees that the pricing for
Acceptances hereunder is based upon the assumption that such Acceptances are
"eligible" for discount by the Federal Reserve Banks and that the Lenders are
not required to maintain reserves for such Acceptances under the regulations of
the Federal Reserve System. In the event the Federal Reserve System shall
conclude the Acceptances created hereunder are ineligible or that reserves are
required to be maintained in connection therewith, Borrower shall and does
hereby indemnify and hold the Agent and the Lenders harmless, and does hereby
agree to, pay all reasonable costs, expenses, legal fees and penalties, as well
as all retroactive, current and prospective reserve requirements arising in
connection with such Acceptances, except to the extent resulting from the
willful misconduct or gross negligence of NationsBank. Additionally, Borrower
acknowledges and agrees that upon the Federal Reserve System reaching such
conclusion, NationsBank shall have no further obligation to create Acceptances
and that in the event NationsBank agrees to create further Acceptances, those
created may, at the option of NationsBank, be priced at a rate higher than
indicated in Section 3.02 in order to compensate NationsBank for additional
reserve requirements and other transactional costs.
Notwithstanding anything to the contrary contained herein or
otherwise, Borrower shall have no obligation to indemnify NationsBank and the
other Lenders or to pay any extraordinary costs in connection with Acceptances
which are determined by the Federal Reserve System to be ineligible solely and
directly as a result of a mistake or error by NationsBank in performing
ministerial functions with respect to the Acceptances. Additionally, Borrower
shall be entitled, but shall not be obligated, to dispute and contest any
determination of ineligibility which gives rise to Borrower's indemnification
and promise to pay set forth herein, provided, however, Borrower shall
diligently and expeditiously prosecute such dispute or contest. The Borrower
acknowledges and agrees that the refusal of the Federal Reserve System to
recognize a dispute or contest raised by the Borrower shall in no way alter,
impair, diminish or affect the obligations of the Borrower set forth in this
Subsection. Should Borrower fail promptly to pay for, dispute or contest any
determination of ineligibility as herein provided, NationsBank and the other
Lenders shall be entitled to pay, contest or dispute same and all sums expended
by NationsBank and the other Lenders in doing so shall constitute additional
Indebtedness of Borrower to the Lenders and shall bear interest from the date
paid until the date repaid at the Floating Rate plus two percent (2%) per annum.
3.05 LETTER OF CREDIT FEE. For the period beginning on the Closing
Date and ending on the Revolving Credit Termination Date, the Borrower agrees to
pay to the Agent, for the pro rata benefit of the Lenders based on their
Applicable Commitment Percentages, (i) in the
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case of Commercial Letters of Credit a fee equal to one-fourth of one percent
(1/4%) per annum of the face amount of outstanding Commercial Letters of Credit,
and (ii) in the case of Standby Letters of Credit a fee equal to the Applicable
Interest Addition for LIBOR Loans at the date of issuance of such Standby Letter
of Credit. Such payment of fees provided for in the preceding sentence of this
Section 3.05 shall be due in advance on the Closing Date and on the last
Business Day of each December, March, June and September thereafter; provided
that should any Letter of Credit either terminate prior to its expiry date or be
drawn upon, then the amount of the fee (if any) due hereunder during the next
succeeding quarter shall be adjusted to give the Borrower the benefit of such
reduction in such outstanding Letters of Credit during such preceding calendar
quarter provided the Borrower shall have paid the full amount of such
Reimbursement Obligation either by means of a Swing Line Loan or Revolving Loan.
To the extent the adjustment cannot be made in the succeeding quarter,
NationsBank shall refund to the Borrower the amount of any such fees due it. In
addition, at the date of issuance of each Letter of Credit the Borrower shall
pay to NationsBank a capital adjustment fee equal to one-eighth percent (1/8%)
per annum of the face amount of such Letter of Credit.
3.06 ADMINISTRATIVE FEES AND RESERVES. The Borrower shall pay to
NationsBank administrative and other fees, if any, in connection with the
Letters of Credit and Acceptances in such amounts and at such times as
NationsBank and the Borrower shall agree from time to time. In addition, the
Borrower shall reimburse NationsBank for all costs or reduction in yield
occurring by reason of the issuance by NationsBank of the Letters of Credit.
ARTICLE IV
YIELD PROTECTION AND ILLEGALITY
4.01 INCREASED COSTS.
(a) If after the date of this Agreement, due to either (i) the
introduction of or any change (other than any change by way of imposition or
increase of reserve requirements) in or in the interpretation of any law or
regulation or (ii) the adoption of any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
other than, in each case, any introduction, change or adoption in respect of net
income, franchise or similar taxes, there shall be any increase in the cost to
any Lender of agreeing to make or making, funding or maintaining any Fixed Rate
Loan, then the Borrower shall from time to time, within 30 days after demand by
the Agent, pay to the Agent additional amounts sufficient to compensate such
Lender for such increased cost. A certificate documenting the amount of such
increased cost and indicating a reasonable basis therefor, submitted to the
Borrower by the Agent, shall be conclusive and binding for all purposes, absent
manifest error.
(b) If after the date of this Agreement, either (i) the introduction
of or any change in or in the interpretation of any law or regulation or (ii)
the adoption of any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by any Lender
or any corporation controlling any Lender and the Agent determines that the
amount of such capital is increased by or based upon the existence of the
commitments to lend hereunder and
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other commitments of this type, then, within 30 days after demand by the Agent,
the Borrower shall pay to the Agent, from time to time as specified by the
Agent, additional amounts sufficient to compensate such Lender in the light of
such circumstances, to the extent that the Agent reasonably determines such
increase in capital to be allocable to the existence of the commitments to lend
hereunder. A certificate documenting such amounts and indicating a reasonable
basis therefor submitted to the Borrower by the Agent shall be conclusive and
binding for all purposes, absent manifest error.
(c) If any Lender requests compensation from the Borrower under this
Section 4.01, the Borrower may, by notice to such Lender (with a copy to the
Agent), suspend the obligation of such Lender to make additional Advances of the
type with respect to which such compensation is requested until either (A) the
matter giving rise to such request ceases to be in effect or (B) such Lender
gives notice to the Borrower that it will no longer require the Borrower to pay
additional costs arising from such matter; provided that the Borrower shall
reimburse the Agent for its administrative expenses incurred by virtue of all
such suspensions. In the case of any such suspension, all Fixed Rate Loans that
would otherwise be required to be made by such Lender but for such suspension
shall instead be a Floating Rate Loan.
(d) Each Lender will notify the Borrower of any matter that will
entitle such Lender to compensation under paragraph (a) or (b) of this Section
4.01 as promptly as practicable, but in any event within 120 days, after such
Lender obtains actual knowledge thereof; provided, however, that if any Lender
fails to give such notice within 120 days after it obtains actual knowledge of
such matter, such Lender shall with respect to compensation payable pursuant to
this Section 4.01 in respect of any costs resulting from such matter, only be
entitled to payment under this Section 4.01 for costs incurred from and after
the date 120 days prior to the date that such Lender does give such notice; and
provided, further, that each Lender will designate a different lending office
for the Advances of such Lender affected by the matters requiring compensation,
and take other measures in its sole discretion, if such designation or other
measures will avoid the need for, or reduce the amount of, such compensation and
will not, in the sole opinion of such Lender, result in a material cost to, or
be otherwise disadvantageous to, such Lender.
(e) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof agrees that it will deliver to the Borrower
and the Agent (i) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 or successor applicable form, as the case may be, or
other manner or certification, establishing that payment of interest hereunder
are either not subject to or totally exempt from United States Federal
withholding tax and (ii) an Internal Revenue Service For W-8 or W-9 or successor
applicable form. Each such Lender also agrees to deliver to the Borrower and
the Agent two further copies of the said Form 1001 or 4224 and Form W-8 or W-9,
or successor applicable forms or other manner of certification, as the case may
be, on or before the date that any such form expires or becomes obsolete or
after the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower, and such extensions or renewals
thereof as the may reasonably be requested by the Borrower or the Agent, unless
in any such case an event (including, without limitation, any change in treaty,
law or regulation) has occurred prior to the date on which any such delivery
would otherwise be required which renders all such forms
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inapplicable or which prevent such Lender from duly completing and delivering
any such form with respect to it and such Lender so advises each of the Borrower
and the Agent. Such Lender shall certify (i) in the case of a Form 1001 or
4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and (ii) in
the case of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax.
4.02 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender to honor its
obligation to make or maintain LIBOR Loans hereunder, then such Lender shall
promptly notify the Borrower thereof (with a copy to the Agent) and such
Lender's obligation to make or continue LIBOR Loans, or convert Floating Rate
Loans or Fixed CD Loans into LIBOR Loans, shall be suspended until such time as
such Lender may again make and maintain LIBOR Loans, and such Lender's
outstanding LIBOR Loans shall be converted into Floating Rate Loans or Fixed CD
Loans in accordance with Section 2.12 hereof.
4.03 COMPENSATION. The Borrower shall promptly pay to each Lender,
upon the request of such Lender, such amount or amounts as shall be sufficient
(in the reasonable determination of Lender) to compensate it for any loss, cost
or expense incurred by it as a result of:
(a) any payment, prepayment (including prepayments pursuant to
Section 2.10) or conversion of a Fixed CD Loan or LIBOR Loan on a date other
than the last day of the Interest Period for such Fixed CD Loan or LIBOR Loan,
including without limitation any conversion required pursuant to Section 4.02;
or
(b) any failure by the Borrower to borrow a Fixed CD Loan or LIBOR
Loan on the date for such borrowing specified in the relevant Borrowing Notice
under Section 2.04 hereof; such compensation to include, without limitation, an
amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the principal amount so paid, prepaid or converted or not
borrowed for the period from the date of such payment, prepayment or conversion
or failure to borrow to the last day of the then current Interest Period for
such Loan (or, in the case of a failure to borrow, the Interest Period for such
Loan which would have commenced on the date scheduled for such borrowing) at the
applicable rate of interest for such Fixed CD Loan or LIBOR Loan provided for
herein, minus the Applicable Interest Addition for such Loan, over (ii) the
Applicable Base Rate (as reasonably determined by the Agent) for Dollar deposits
of amounts comparable to such principal amount and maturities comparable to such
period. A determination of a Lender as to the amounts payable pursuant to this
Section 4.03 shall be conclusive, provided that such determinations are made on
a reasonable basis. The Lender requesting compensation under this Section 4.03
shall furnish to the Authorized Officer calculations in reasonable detail
setting forth such Lender's determination of the amount of such compensation.
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ARTICLE V
CONDITIONS TO MAKING LOANS AND ISSUING
LETTERS OF CREDIT AND CREATING ACCEPTANCES
5.01 CONDITIONS OF INITIAL ADVANCE AND ISSUANCE OF LETTERS OF CREDIT
AND CREATING ACCEPTANCES. The obligation of the Lenders to make the initial
Advance and of NationsBank to issue the Letters of Credit and create Acceptances
is subject to the conditions precedent that the Agent shall have received, on
the Closing Date in form and substance satisfactory to the Agent and Lenders,
the following:
(a) executed originals of each of this Agreement and the Notes and
the other Loan Documents, together with all schedules and exhibits thereto in
form and substance satisfactory to the Agent and the Lenders;
(b) favorable written opinion of counsel to the Borrower dated the
Closing Date, addressed to the Agent and the Lenders and satisfactory to Smith
Helms Mulliss & Moore, special counsel to the Agent, substantially in the form
of EXHIBIT I attached hereto;
(c) resolutions of the board of directors (or of the appropriate
committee thereof) of the Borrower certified by its secretary or assistant
secretary as of the Closing Date, appointing the initial Authorized Officers and
approving and adopting the Loan Documents to be executed by the Borrower at the
Closing, and authorizing the execution and delivery thereof; specimen signatures
of officers of the Borrower executing the Loan Documents, certified by the
Secretary or Assistant Secretary of the Borrower;
(d) the charter documents of the Borrower certified as of the Closing
Date by the Secretary or Assistant Secretary of the Borrower as true and
correct;
(e) the by-laws of the Borrower certified as of the Closing Date as
true and correct by the secretary or assistant secretary of the Borrower;
(f) certificates issued as of a recent date by the Secretary of State
of the state of the incorporation of the Borrower as to the corporate good
standing of the Borrower therein;
(g) appropriate certificates of qualification to do business and of
corporate good standing issued as of a recent date by the Secretary of State of
each jurisdiction in which the failure to be qualified to do business would
materially adversely affect the business, operations or conditions, financial or
otherwise, of Borrower;
(h) with respect to each Subsidiary, if any, executing a Guaranty,
each of the opinions, certificates and documents described in subsections (b)
through (f) above;
(i) notice of appointment of the initial Authorized Officers;
(j) a Borrowing Base Certificate as of October 31, 1993 assuming that
the acquisition of the Summers Group was completed on such date;
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(k) a certificate evidencing compliance as of the Closing Date with
the covenant contained in Section 9.13;
(l) all fees payable by the Borrower on the Closing Date to the Agent
and the Lenders; and
(m) such other documents, instruments, certificates and opinions as
the Agent or any Lender may reasonably request on or prior to the Closing Date
in connection with the consummation of the transactions contemplated hereby.
5.02 CONDITIONS OF ADVANCES. The obligations of the Lenders to make
any Advance (other than pursuant to Section 2.04(c) or 2.17(iv)) and NationsBank
to issue Letters of Credit or create Acceptances hereunder on or subsequent to
the Closing Date are subject to the satisfaction of the following conditions:
(a) the Agent shall have received a notice of such borrowing or
request if required by Sections 2.04, 2.12 or 2.17 hereof;
(b) the representations and warranties of the Borrower set forth
in Article VII hereof and in each of the other Loan Documents shall be
true and correct in all material respects on and as of the date of
such Advance or issuance of such Letters of Credit or Acceptances, as
the case may be, with the same effect as though such representations
and warranties had been made on and as of such date;
(c) there shall have been no material adverse change in the
financial condition of the Borrower and its Subsidiaries, taken as a
whole, since the date of those financial statements most recently
delivered to the Agent and the Lenders pursuant to Section 8.01
hereof;
(d) in the case of the issuance of a Letter of Credit, Borrower
shall deliver to NationsBank notice of request for issuance of a
Letter of Credit;
(e) in the case of the creation of an Acceptance, the Borrower
shall have executed and delivered to NationsBank a General Acceptance
Agreement for Acceptances and a draft in form and content acceptable
to NationsBank together with such other instruments and documents as
it shall reasonably request; and
(f) at the time of each such Advance or issuance of each Letter
of Credit or creation of an Acceptance, as the case may be, no Default
or Event of Default specified in Article X hereof shall have occurred
and be continuing, and the Borrower shall have furnished to the Agent
a Borrowing Base Certificate pursuant to Section 8.01(d).
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ARTICLE VI
GUARANTIES
6.01 FURTHER ASSURANCES. At the request of the Agent, the Borrower
will cause each Guarantor to execute, alone or with the Agent, any certificate,
instrument, statement or document which the Agent reasonably deems necessary to
create, continue or preserve the Guaranty by such Subsidiary.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.01 REPRESENTATIONS AND WARRANTIES AS TO BORROWER AND SUBSIDIARY. The
Borrower represents and warrants (which representations and warranties shall
survive the delivery of the documents mentioned herein and the making of Loans),
that:
(a) ORGANIZATION AND AUTHORITY. (i) It and each Guarantor is a
corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation;
(ii) it and each Guarantor has the corporate power and
authority to own its properties and assets and to carry
on its business as now being conducted and is qualified
to do business in every jurisdiction in which failure
so to qualify would have a material adverse effect on
the financial condition, business or operations of the
Borrower and the Guarantors considered as a whole or
the ability of the Borrower or any Guarantor to perform
its obligations under any of the Loan Documents to
which it is a party (a "Material Adverse Effect");
(iii) it has the corporate power and authority to execute and
perform this Agreement, to borrow hereunder, and to
execute, deliver and perform each of the other Loan
Documents to which it is or is to be a party;
(iv) each Guarantor has the corporate power and authority to
execute, deliver and perform the Guaranty and
Subordination Agreement to which it is or is to be a
party; and
(v) each of the Loan Documents to which the Borrower or any
Guarantor is a party is the valid and binding
obligation of the Borrower or such Guarantor, as the
case may be, enforceable against the Borrower or such
Guarantor, as the case may be, in accordance with its
terms, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, reorganization or
other similar
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law affecting the enforceability of creditors' rights
generally and to the effect of general principles of
equity which may limit the availability of equitable
remedies (whether in a proceeding at law or in equity);
(b) LOAN DOCUMENTS. The execution, delivery and performance by
the Borrower and each Guarantor of each of the Loan Documents to which
it is a party:
(i) have been duly authorized by all requisite corporate
action (including any required shareholder approval) of
the Borrower or Guarantor, as the case may be, required
for the lawful execution, delivery and performance
thereof;
(ii) do not violate any provisions of (1) applicable law,
(2) any order of any court or other agency of
government binding on the Borrower or any Guarantor or
their properties, (3) the charter documents or by-laws
of the Borrower or any Guarantor or (4) any provisions
of any indenture, agreement or other instrument to
which the Borrower or any Guarantor is a party, or by
which the properties or assets of the Borrower or any
Guarantor are bound, which would have a Material
Adverse Effect;
(iii) will not, result in a breach of or constitute an event
of default, or an event which, with notice or lapse of
time, or both, would constitute an event of default,
under any indenture, agreement or other instrument to
which the Borrower or its Subsidiary is a party which
breach or event of default would have a Material
Adverse Effect; and
(iv) will not result in the creation or imposition of any
Lien, charge or encumbrance of any nature whatsoever
upon any of the properties or assets of the Borrower or
any Subsidiary (other than pursuant to the Loan
Documents).
(c) SOLVENCY. The Borrower and each of its Subsidiaries are
Solvent after giving effect to the transactions contemplated by this
Agreement and the other Loan Documents.
7.02 REPRESENTATIONS AND WARRANTIES OF BORROWER. The Borrower
represents and warrants that:
(a) SUBSIDIARIES AND STOCKHOLDERS. As of the Closing Date, it
has no Subsidiaries other than those Persons listed as Subsidiaries in
EXHIBIT K hereto; as of the Closing Date it does not own any equity
interest in any Person other than the Persons listed in EXHIBIT K
hereto;
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(b) FINANCIAL CONDITION. (i) As at the Closing Date, the
Borrower has heretofore furnished to each Lender an audited
unqualified consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 1992 and the notes thereto and the
related consolidated statements of income, cash flow and changes in
stockholders' equity for the Fiscal Year then ended as examined and
certified by Coopers & Lybrand and unaudited consolidated balance
sheets and related consolidated statements of income, without notes,
for and as of the end of the third fiscal quarter of the year
beginning January 1, 1993. Except as set forth therein, such
consolidated financial statements (including the notes thereto)
present fairly the consolidated financial condition of the Borrower
and the Subsidiaries as of the end of such Fiscal Year and third
fiscal quarter and consolidated results of their operations and the
changes in their stockholders' equity for the Fiscal Year and quarter
then ended, all in conformity with Generally Accepted Accounting
Principles applied on a consistent basis subject, in the case of
unaudited consolidated financial statements, to year-end adjustments
and the absence or reduced scope of footnote disclosure. Except as
disclosed therein or otherwise described or referred to in EXHIBIT L,
neither the Borrower nor any Subsidiary has, as of the date hereof,
any known and material direct liability;
(ii) since September 30, 1993 through the Closing Date,
there has been no material adverse change in the
condition, financial or otherwise, of the Borrower and
its Subsidiaries or in the businesses, properties and
operations of the Borrower and its Subsidiaries, in
each case, considered as a whole, nor have such
businesses or properties, taken as a whole, been
materially adversely affected as a result of any fire,
explosion, earthquake, accident, strike, lockout,
combination of workers, flood, embargo or act of God;
(c) SUMMERS GROUP. As of the Closing Date, the Borrower has
heretofore furnished to each Lender an audited unqualified
consolidated balance sheet of the Summers Group as at December 31,
1992 and the notes thereto and the related consolidated statements of
income, cash flow and changes in stockholder's equity for the fiscal
year then ended as examined and certified by Ernst & Young and
unaudited interim financial statements of the Summers Group consisting
of a consolidated balance sheet and statement of income, without
notes, for the eight month period ending August 31, 1993. Such
audited consolidated financial statements (including the notes
thereto) present fairly in all material respects the financial
condition of the Summers Group as at the end of the period reported
therein and results of their operations and changes in stockholder's
equity for the Fiscal Year then ended, all in conformity with
Generally Accepted Accounting Principles applied on a consistent
basis, and no information has come to the attention of the Borrower or
its chief executive, financial or accounting officers which would lead
it or them to believe that the interim financial statements of the
Summers Group dated August 31, 1993 are not accurate and complete in
all material respects or that any material financial information has
been omitted therefrom;
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(d) TITLE TO PROPERTIES. The Borrower and its Subsidiaries have
title to all their respective real and personal properties (except to
the extent not material to the financial condition of the Borrower and
the Subsidiaries taken as a whole) subject to no Liens, except for (i)
Liens included in the notes to the financial statements referred to in
Section 7.02(b) or otherwise described in EXHIBIT L attached hereto,
and (ii) Liens permitted under Section 9.01 hereof;
(e) TAXES. The Borrower and its Subsidiaries have filed or
caused to be filed all federal, state and local tax returns which are
required to be filed by them and except for taxes and assessments
being contested in good faith and against which adequate reserves to
the extent required in accordance with Generally Accepted Accounting
Principles have been established, have paid or caused to be paid all
taxes as shown on said returns or on any assessment received by them,
to the extent that such taxes have become due, except where the
failure to file or pay would not have a Material Adverse Effect;
(f) OTHER AGREEMENTS. As of the Closing Date, neither the
Borrower nor any Subsidiary is a party to any judgment, order, decree
or any agreement or instrument or subject to restrictions which could
reasonably be expected to have a Material Adverse Effect;
(g) LITIGATION. Except as set forth in SCHEDULE 7.02(h) hereto,
there is no action, suit or proceeding at law or in equity or by or
before any governmental instrumentality or agency or arbitral body
pending, or, to the best knowledge of the Borrower, threatened by or
against the Borrower or any Subsidiary which is reasonably likely to
be determined adversely to the Borrower or such Subsidiary and which,
if so determined, would have a Material Adverse Effect;
(h) MARGIN STOCK. Neither the Borrower nor any Subsidiary is
engaged principally in, or has as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying
any "margin stock" as such term is defined in Regulation U, as amended
(12 C.F.R. Part 221), of the Board. The proceeds of the borrowings
made pursuant to Section 2.01 hereof will be used by the Borrower only
for the purposes set forth in Section 2.16 hereof. None of such
proceeds will be used by the Borrower, directly or indirectly, for the
purpose of purchasing or carrying any margin stock or for the purpose
of reducing or retiring any Indebtedness which was originally incurred
to purchase or carry margin stock or for any other purpose which would
constitute any of the Loans under this Agreement a "purpose credit"
within the meaning of said Regulation U or Regulation X (12 C.F.R.
Part 224) of the Board. Neither the Borrower nor any agent authorized
to act and so acting in its behalf (other than the Agent and the
Lenders) has taken or will take any action which would cause this
Agreement or any of the documents or instruments delivered pursuant
hereto to violate any regulation of the Board or to violate the
Securities Exchange Act of 1934 or any state securities laws, in each
case as in effect on the date hereof;
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(i) INVESTMENT COMPANY. Neither the Borrower nor any Subsidiary
is an "investment company," or a company controlled by an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended (15 U.S.C. SECTION 80a-1, et seq.);
(j) PATENTS, ETC. The Borrower and its Subsidiaries own or have
the right to use, under valid license agreements or otherwise, all
material patents, licenses, franchises, trademarks, trademark rights,
tradenames, tradename rights, copyrights, trade secrets and know how
necessary to the conduct of their businesses as now conducted, without
known conflict with any patent, license, franchise, trademark, trade
secrets or confidential commercial or proprietary information,
tradename, copyright or other proprietary rights of any other Person,
except where the failure so to own or have the right to use or such
conflict would not have a Material Adverse Effect;
(k) NO UNTRUE STATEMENT. The representations and warranties of
the Borrower set forth in this Agreement and any other Loan Document
do not contain any misrepresentation or untrue statement of material
fact or omit to state a material fact necessary, in light of the
circumstance under which it was made, in order to make any such
representation or warranty not misleading in any material respect;
(l) NO CONSENTS, ETC. As of the Closing Date, neither the
respective businesses or properties of the Borrower or any Subsidiary,
nor any relationship between the Borrower or any Subsidiary and any
other Person, nor any circumstance in connection with the execution,
delivery and performance of the Loan Documents and the Acquisition
Agreement and the transactions contemplated hereby and thereby is such
as to require a consent, approval or authorization of, or filing,
registration or qualification with, any governmental or other
authority or any other Person on the part of the Borrower or any
Subsidiary as a condition to the execution, delivery and performance
of, or consummation of the transactions contemplated by, this
Agreement or the other Loan Documents or if so, such consent,
approval, authorization, filing, registration or qualification has
been obtained or effected, as the case may be or will be obtained or
effected in the ordinary course or where the failure to obtain or
effect the same could not reasonably be expected to have a Material
Adverse Effect;
(m) ERISA. All Plans (as defined in Section 3(3) of ERISA)
maintained by the Borrower and each Guarantor are in compliance in all
material respects with the applicable provisions of ERISA and the
Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations thereunder, and no Reportable Event has occurred and is
continuing with respect to any Plan maintained by the Borrower or any
Subsidiary, except where non-compliance or such occurrence would not
subject the Borrower and its Subsidiaries to liability in excess of
$1,000,000.
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(n) NO DEFAULT. As of the date hereof, there does not exist any
Default or Event of Default hereunder; and
(o) HAZARDOUS MATERIALS. Neither the Borrower nor any
Subsidiary nor, to the best of Borrower's knowledge, any previous
owner or operator of any real property currently owned or operated by
the Borrower or any Subsidiary (collectively, the "Property"), has
generated, stored, or disposed of any Hazardous Material on any
portion of the Property, or transferred any Hazardous Material from
the Property to any other location, giving rise to any liability of
the Borrower or any Subsidiary which would have a Material Adverse
Effect. The Borrower and each Subsidiary is in compliance with all
applicable Environmental Laws, except for any such noncompliance that
would not have a Material Adverse Effect, and neither Borrower nor any
Subsidiary has been notified of any action, suit, proceeding or
investigation which calls into question compliance by the Borrower or
any Subsidiary with any Environmental Laws or which seeks to suspend,
revoke or terminate any license, permit or approval necessary for the
generation, handling, storage, treatment or disposal of any Hazardous
Material, which would have a Material Adverse Effect.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Until the principal and interest of the Loans have been paid in full,
all fees due and payable by the Borrower hereunder have been paid in full, no
Letters of Credit, Acceptances or Reimbursement Obligations are outstanding and
the Total Revolving Credit Commitment has been terminated in accordance with the
terms hereof, unless the Required Lenders shall otherwise consent in writing,
Borrower will and, to the extent required by Section 8.10 below, will cause each
Subsidiary to:
8.01 FINANCIAL REPORTS, ETC. (a) as soon as practical and in any
event within 97 days after the end of each Fiscal Year of the Borrower, deliver
or cause to be delivered to the Agent and each Lender (i) consolidated balance
sheets of the Borrower and its Subsidiaries, and the notes thereto, and the
related consolidated statements of income, cash flow and changes in
stockholders' equity and the respective notes thereto for such Fiscal Year,
setting forth in each case comparative financial statements for the preceding
Fiscal Year, all prepared in accordance with Generally Accepted Accounting
Principles applied on a consistent basis (except as disclosed therein) and
accompanied by, with respect to the consolidated financial statements, opinions
of Coopers & Lybrand, KPMG Peat Marwick, Deloitte & Touche, Ernst & Young, Price
Waterhouse or Arthur Andersen & Co., or any successor firm thereto, or other
independent certified public accountants of recognized national standing
selected by the Borrower and reasonably acceptable to the Required Lenders,
which is unqualified as to the scope of the audit performed and as to the "going
concern" status of the Borrower, provided that delivery of a copy of Borrower's
Form 10-K as filed with the Securities and Exchange Commission shall be deemed
to satisfy the requirements of this clause (i); and (ii) a certificate of an
Authorized Officer
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demonstrating compliance with Sections 9.12, 9.13, 9.14, 9.15, 9.17 and 9.18 of
this Agreement, which certificate shall be in the form attached as EXHIBIT J;
(b) as soon as practical and in any event within 52 days after the
end of each quarterly period (except the last reporting period of the Fiscal
Year), deliver to the Agent and each Lender (i) consolidated balance sheets of
the Borrower and its Subsidiaries, as of the end of such reporting period and
the related consolidated statements of income, and changes in cash flow for the
period from the beginning of the Fiscal Year through the end of such reporting
period, certified by an Authorized Officer as presenting fairly in all material
respects the financial position of the Borrower and its Subsidiaries as of the
end of such reporting period and the results of their operations and the changes
in their cash flow for such reporting period, in conformity with the standards
and subject to the limitations set forth in Section 7.02(b)(i) with respect to
unaudited financial statements, subject to changes in Generally Accepted
Accounting Principles, provided that delivery of a copy of Borrower's Form 10-Q
for such quarterly period as filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements of this clause (i) and (ii) a
certificate of an Authorized Officer containing computations for such quarter
similar to that required pursuant to Section 8.01(a)(ii);
(c) together with each delivery of the financial statements required
by Section 8.01(a) hereof, deliver to the Agent and each Lender a letter from
the Borrower's accountants specified in Section 8.01(a) hereof stating that in
performing the examination necessary to render an opinion on the financial
statements delivered therewith, they obtained no knowledge of any Default or
Event of Default by the Borrower in the fulfillment of the terms and provisions
of this Agreement insofar as they relate to financial matters (which at the date
of such statement remains uncured) or if the accountants have obtained knowledge
of such Default or Event of Default, a statement specifying the nature and
period of existence thereof;
(d) as soon as practicable and in any event within thirty (30) days
of the end of each calendar month, a Borrowing Base Certificate as at the last
day of such calendar month;
(e) promptly upon their becoming available to the Borrower, the
Borrower shall deliver to the Agent, and each Lender, a copy of (i) all regular
or special reports or effective registration statements which the Borrower or
any Subsidiary shall publicly file with the Securities and Exchange Commission
(or any successor thereto) or any securities exchange (in each case, excluding
exhibits) and (ii) all reports, proxy statements, financial statements and other
information distributed by the Borrower to its stockholders, bondholders or the
financial community in general, and (iii) any material reports submitted to the
Borrower or any of its Subsidiaries by independent accountants in connection
with any annual, interim or special audit of the Borrower or any of its
Subsidiaries;
(f) promptly, from time to time, deliver or cause to be delivered to
each Lender such other information regarding Borrower's and each Subsidiary's
operations, business affairs and financial condition as such Lender may
reasonably request. The Agent and the Lenders are hereby authorized to deliver
a copy of any such financial information delivered hereunder to the Lenders or
the Agent to any regulatory authority having jurisdiction over any of the
Lenders pursuant to any written request therefor, and, subject to Section 12.13,
to any other Person who shall acquire
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or consider the acquisition of a participation interest in any Revolving Loan or
the Letters of Credit or Acceptances permitted by this Agreement;
8.02 MAINTAIN PROPERTIES. Maintain all properties and other personal
property necessary to its operations in good working order and condition and
make all needed repairs, replacements and renewals as are necessary to conduct
its business in accordance with customary business practices, except, in each
case, to the extent that the failure to do so would not have a Material Adverse
Effect; provided that the foregoing shall not prevent any action or transaction
permitted by Section 9.04, 9.07 or 9.10;
8.03 EXISTENCE, QUALIFICATION, ETC. Do or cause to be done all things
necessary to preserve and keep in full force and effect its existence and all
material rights and franchises, trade names, trademarks and permits and maintain
its license or qualification to do business as a foreign corporation and good
standing in each jurisdiction in which its ownership or lease of property or the
nature of its business makes such license or qualification necessary, except, in
case other than existence, to the extent that the failure to do so would not
have a Material Adverse Effect; provided that the foregoing shall not prevent
any action or transaction permitted by Section 9.04, 9.07 or 9.10;
8.04 REGULATIONS AND TAXES. Pay when due all taxes, assessments,
governmental charges, which, if unpaid, would become a lien against any of its
properties except those being contested in good faith and against which adequate
reserves have been established in accordance with Generally Accepted Accounting
Principles and except those which would not have a Material Adverse Effect;
8.05Insurance. Maintain with insurers recognized as adequate by prudent
business persons insurance with respect to its properties and business and
against such liabilities, casualties and contingencies of such types and in such
amounts as is customary in the case of corporations engaged in the same or a
similar business of comparable size.
8.05 INSURANCE. Maintain with insurers recognized as adequate by
prudent business persons insurance with respect to its properties and business
and against such liabilities, casualties and contingencies of such types and in
such amounts as is customary in the case of corporations engaged in the same or
a similar business of comparable size.
8.06 TRUE BOOKS. Keep true books of record and account in accordance
with Generally Accepted Accounting Principles.
8.07 PAY INDEBTEDNESS TO LENDERS AND PERFORM OTHER COVENANTS. (a)
Make full and timely payment of the principal of and interest on the Notes and
all other Obligations when due, whether now existing or hereafter arising; and
(b) duly perform all covenants contained in the Loan Documents to which it is a
party.
8.08 RIGHT OF INSPECTION. Permit any duly authorized agent designated
by any Lender, at the Lender's expense, to visit and inspect any of the
properties, corporate books and financial reports of Borrower, and to discuss
its affairs, finances and accounts with its principal officers and independent
certified public accountants, all at such reasonable times, at reasonable
intervals and with reasonable prior notice.
8.09 OBSERVE ALL LAWS. Conform to and duly observe in all material
respects all laws, regulations and other valid requirements of any regulatory
authority with respect to the
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conduct of its business, except where the failure to do so would not have a
Material Adverse Effect.
8.10 COVENANTS EXTENDING TO SUBSIDIARIES. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of Borrower in Sections 8.02 through 8.09, inclusive (other
than 8.07(a)).
8.11 OFFICER'S KNOWLEDGE OF DEFAULT. Upon the chief executive,
financial or accounting officer of Borrower obtaining knowledge of any Default
or Event of Default hereunder, promptly notify the Agent of the nature thereof,
the period of existence thereof, and what action Borrower proposes to take with
respect thereto.
8.12 SUITS OR OTHER PROCEEDINGS. Upon the chief executive, financial
or accounting officer of Borrower obtaining knowledge of any litigation or
proceedings instituted against Borrower or its Subsidiaries, which is reasonably
likely to result in a judgment or liability that will have a Material Adverse
Effect , promptly deliver to the Agent written notice thereof stating the nature
and status thereof.
8.13 ENVIRONMENTAL REPORTS. Promptly provide to Agent true, accurate
and complete copies of any and all documents, including reports, submissions,
notices, orders, directives, findings and correspondence made by Borrower or any
Subsidiary to the United States Environmental Protection Agency ("EPA"), or to
any other federal, state or local authority pursuant to any federal, state or
local law, code or ordinance and all rules and regulations promulgated
thereunder which require informational submissions concerning environmental
matters, but only to the extent, in each case, in connection with a matter that
is reasonably likely to result in a Material Adverse Effect.
8.14 NOTICE OF DISCHARGE OF HAZARDOUS MATERIAL OR ENVIRONMENTAL
COMPLAINT. Give to Agent immediate written notice of any complaint, order,
directive, claim, citation or notice by any governmental authority to Borrower
or any Subsidiary with respect to (i) air emissions, (ii) spills, releases or
discharges to soils or improvements located thereon, surface water, groundwater
or the sewer, septic system or waste treatment, storage or disposal systems
servicing the Property, (iii) noise emissions, (iv) solid or liquid waste
disposal, or (v) the use, generation, storage, transportation or disposal of
Hazardous Material, but only to the extent, in each case, in connection with a
matter that is reasonably likely to result in a Material Adverse Effect. Such
notices shall include, among other information, the name of the party who filed
the claim, the nature of the claim and the actual or potential amount of the
claim. Borrower shall promptly comply with its obligations under law with
regard to such matters. However, Borrower shall not be obligated to give such
notice to Agent in connection with any event or condition which occurs legally
in accordance with and pursuant to the terms and conditions of a valid
governmental permit, license, certificate or approval therefor.
8.15 FURTHER ASSURANCES. At its cost and expense, upon request of the
Agent, duly execute and deliver or cause to be duly executed and delivered, to
the Agent such further instruments, documents, certificates, and do and cause to
be done such further acts that may be
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reasonably necessary in the opinion of the Agent to carry out more effectively
the provisions and purposes of this Agreement and the other Loan Documents to
which the Borrower is a party.
8.16 ERISA Requirement. Comply in all material respects with all
requirements of ERISA applicable to it and furnish to the Agent as soon as
possible and in any event (i) within thirty (30) days after Borrower or duly
appointed administrator of a employee benefit plan knows or has reason to know
that any reportable event with respect to any employee benefit plan has
occurred, written statement of an Authorized Officer describing in reasonable
detail such reportable event and any action which the Borrower proposes to take
with respect thereto, together with a copy of the notice of such reportable
event given to the Pension Benefit Guaranty Corporation ("PBGC") or a statement
that said notice will be filed with the annual report of the United States
Department of Labor with respect to such plan if such filing has been
authorized, (ii) promptly after receipt thereof, a copy of any notice that the
Borrower or any Subsidiary may receive from the PBGC relating to the intention
of the PBGC to terminate any employee benefit plan or plans or to appoint a
trustee to administer any such plan, and (iii) within 10 days after a filing
with the PBGC pursuant to Section 412(n) of the Code of a notice of failure to
make a required installment or other payment with respect to a plan, a
certificate of an Authorized Officer setting forth details as to such failure
and the action that the Borrower or its Subsidiary proposes to take with respect
thereto, together with a copy of such notice given to the PBGC.
8.17 AUTHORIZATION OF SHARES. As long as any Securities (as defined
in the Indenture) remain outstanding, the Borrower will at all times, to the
extent necessary to comply with Section 8.18, (i) reserve a sufficient number of
authorized, but not outstanding, shares of common stock to make payment for all
such Securities then outstanding (valued as set forth in Section 14.01 of the
Indenture as if a Risk Event (as therein defined) had then occurred and all
holders of such Securities had elected to have such Securities repurchased as
provided in the Indenture), and (ii) cause such reserved shares to meet all the
requirements set forth in Article 14 of the Indenture for shares to be given as
payment for such Securities.
8.18 REPURCHASE OF SECURITIES. In the event that a Risk Event (as
defined in the Indenture) occurs and holders of any of the Securities (as
defined in the Indenture) require the Borrower to repurchase such Securities,
the Borrower agrees that it will make payment for such Securities only in shares
of common stock of the Borrower in the manner provided in the Indenture to the
extent that payment in cash would cause the Borrower to be in violation of any
provision of this Agreement.
8.19 SUBORDINATION OF INDEBTEDNESS. Cause all present and future
Indebtedness of Borrower to any Subsidiary to be subordinate in all respects to
the Obligations upon the terms set forth in the Subordination Agreement or other
terms reasonably acceptable to the Agent.
8.20 USE OF PROCEEDS. Use the proceeds of the Loans solely for the
purposes set forth in Section 2.16 hereof.
8.21 NEW SUBSIDIARIES. Promptly following the formation of any
Subsidiary or the acquisition of any Subsidiary permitted by the terms of this
Agreement, (i) give notice of the formation of such Subsidiary and (ii) cause to
be delivered to the Agent for the benefit of the
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Lenders a guarantee agreement of such Subsidiary, duly executed by such
Subsidiary substantially in the form of the Guaranty, together with evidence of
the due authorization, execution, delivery and enforceability thereof comparable
to that required to be delivered under Section 5.01 with respect to the
Guarantors.
ARTICLE IX
NEGATIVE COVENANTS
Until the principal and interest of the Loans have been paid in full,
all fees due and payable by the Borrower hereunder have been paid in full, no
Letters of Credit, Acceptances or Reimbursement Obligations are outstanding and
the Total Revolving Credit Commitment has been terminated in accordance with the
terms hereof, unless the Required Lenders shall otherwise consent in writing,
the Borrower will not, nor will it permit any Subsidiary to:
9.01 LIENS, ETC. Create or suffer to exist any Lien upon or with
respect to any of its properties and those of its Subsidiaries, whether now
owned or hereafter acquired, or assign any right to receive income, in each case
to secure or provide for the payment of any Indebtedness of any Person, other
than:
(i) Liens for taxes or assessments and similar charges
either (A) not delinquent or (B) being contested in
good faith by appropriate proceedings and as to which
it shall have set aside on its books adequate reserves
in accordance with Generally Accepted Accounting
Principles;
(ii) Liens (A) which exist on property at the time of
acquisition or on the property of any Person at the
time such Person becomes a Subsidiary, (B) which are
purchase money Liens to secure the purchase price of
property or to secure Indebtedness incurred solely for
the purpose of financing the acquisition of property or
(C) which are extensions, renewals or replacements of
any of the foregoing; PROVIDED that no such excepted
Liens shall extend to or cover any property other than
the particular property (or proceeds or products
thereof) being acquired or previously subject to the
Liens;
(iii) Liens incurred or pledges and deposits in connection
with worker's compensation, unemployment insurance,
old-age pensions and other social security or
retirement benefits or securing the performance of
bids, tenders, leases, contracts (other than for the
repayment of borrowed money), statutory obligations,
surety and appeal bonds and other obligations of like
nature, incurred in the ordinary course of business;
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(iv) non-consensual Liens imposed by law, such as
landlords', mechanics', carriers', warehousemen's,
materialmen's, employee's and vendors' liens, incurred
in the ordinary course of business;
(v) Liens of any Subsidiary in favor of the Borrower or any
Subsidiary;
(vi) existing Liens included in the notes to the financial
statements referred to in Section 7.02(b) or as
disclosed on EXHIBIT L attached hereto and any
extensions, renewals or replacements of any such Liens
in transactions in which the Indebtedness secured by
such Liens is not increased in any manner, provided
that such Lien does not extend to property (other than
proceeds and products thereof) not previously subject
to any such Liens;
(vii) Liens created pursuant to the Loan Documents; and
(viii) other Liens securing Indebtedness the outstanding
principal amount of which does not exceed $1,000,000 at
any time.
9.02 INDEBTEDNESS FOR MONEY BORROWED. Create, incur, assume or suffer
to exist any Indebtedness for Money Borrowed other than (i) the Loans and other
Indebtedness to the Lenders under the Loan Documents, (ii) existing letters of
credit and reimbursement obligations under the Prior Agreement, the BTR
Indebtedness and other Indebtedness of the Borrower and its Subsidiaries and the
Summers Group as disclosed on EXHIBIT L attached hereto, and any extensions,
renewals or refinancings of such Indebtedness, so long as the unpaid principal
amount of such Indebtedness is not increased in any manner, (iii) Indebtedness
subordinated (pursuant to terms reasonably satisfactory to the Required Banks),
to payment of the Obligations, (iv) Indebtedness (subordinated as required by
Section 8.19) owing by the Borrower to any Subsidiary and Indebtedness owing by
any Subsidiary to the Borrower or any other Subsidiary, (v) Indebtedness for
Money Borrowed permitted by Sections 9.05 or 9.20, and (vi) Indebtedness for
Money Borrowed not otherwise covered by clauses (i) through (v) above, provided
that the aggregate outstanding principal amount of all Indebtedness for Money
Borrowed of the Borrower and its Subsidiaries permitted under this clause (vi)
shall in no event exceed $5,000,000 in outstanding principal amount at any time.
9.03 LEASE OBLIGATIONS. At any time during any Fiscal Year, create
any obligations for the payment of rental for any property under leases or
agreements to lease (excluding those constituting Indebtedness) having a term of
one year or more ("Leases"), and/or increase the amount payable under any Lease
which was in existence at any time during the prior Fiscal Year, which causes
the aggregate rental obligations (including net lease items) of the Borrower and
its Subsidiaries on a consolidated basis, under all Leases payable during such
Fiscal Year to be $2,000,000 or more over the aggregate of such obligations
under all Leases payable during the prior Fiscal Year, provided that for
purposes of this Section 9.03, any acquisition permitted under Section 9.04
shall be deemed to have been consummated one year prior to the Closing Date.
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9.04 MERGERS, ETC. Merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, or acquire all or substantially all of the
assets of, any Person, except that (i) any Subsidiary may merge or consolidate
with or into, or transfer assets to, or acquire assets of, any other
Subsidiary, (ii) any Subsidiary may merge into or transfer assets to the
Borrower, (iii) the Borrower or any Subsidiary may effect an acquisition of
assets (by means of asset purchase, stock purchase, merger, consolidation or
otherwise) which is not prohibited by Section 9.14, (iv) any transaction that is
permitted under Section 9.07 is permitted hereunder, (v) the Borrower may merge
into or with a Subsidiary for the sole purpose of changing the Borrower's state
of incorporation to another one of the States of the United States, and (vi) the
Borrower or any Subsidiary may acquire the Summers Group.
9.05 CONTINGENT OBLIGATIONS. Guarantee, endorse, or become surety for
the obligations (including, without limitation, Contingent Obligations) of any
other Person, whether by agreement to purchase the Indebtedness of any other
Person or agreement for the furnishing of funds to any other Person, directly or
indirectly, through the purchase of goods, supplies or services for the purpose
of discharging the Indebtedness of any other Person, or otherwise (collectively,
for purposes of this Section 9.05 "guarantees"), except (i) the Contingent
Obligations and other transactions contemplated by the Loan Documents, (ii) the
Borrower and its Subsidiaries may endorse negotiable instruments for deposit in
the normal course of business, and may in the normal course of business
guarantee obligations of customers which are incurred to finance the acquisition
of goods from the Borrower or its Subsidiaries up to $1,000,000 in the aggregate
at any time, (iii) any Subsidiary may guarantee obligations of the Borrower or
any Subsidiary and the Borrower may guarantee obligations of any Subsidiary as
are consistent with this Agreement, (iv) the existing guarantees of the Borrower
and its Subsidiaries and the Summers Group listed in each case on EXHIBIT L
annexed hereto, and any renewals, extensions or replacements thereof which do
not involve any increase in the principal amount of the obligation being
guaranteed, (v) indemnifications of directors, officers and employees as
permitted by applicable law and of other Persons with respect to obligations or
liabilities of the Borrower or any Subsidiary and (vi) guarantees of loans or
advances of any Person if such loans or advances would be permitted to be made
by the Borrower or any Subsidiary under Section 9.06.
9.06 INVESTMENTS. Purchase or hold beneficially any stock, other
securities, or evidences of indebtedness of, or make loans or advances to, any
other Person, except for (i) full faith and credit obligations of the United
States Government or obligations guaranteed by the United States Government
maturing within one year, (ii) obligations of any Lender, or dollar denominated
time certificates of deposit issued by any commercial bank organized and
existing under the laws of the United States of America or any state thereof,
which bank is a member of the Federal Reserve System and has a combined capital
and surplus of not less than $100,000,000, (iii) commercial paper having a
maturity of not more than one year from the date of such investment and rated at
least A-1 by Standard and Poor's Corporation or P-1 by Moody's Investors
Services, Inc., (iv) the Subsidiaries or corporations which (immediately upon
such investments) will be Subsidiaries, (v) extensions of credit to, and notes
and other evidences of indebtedness received from, customers or others in the
ordinary course of business, (vi) securities or assets constituting the
acquisition of, or the acquisition of all or substantially all of the assets
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of, any Person if the acquisition is not prohibited by Section 9.14, (vii)
investments as disclosed on EXHIBIT L hereto, (viii) loans or advances to the
Borrower to the extent not otherwise prohibited in this Agreement, (ix) stock,
obligations or securities received in settlement of debts (created in the
ordinary course of business) owing to the Borrower or any Subsidiary, (x)
travel, relocation, sales commission and other like advances to officers and
employees incurred in the ordinary course of business, (xi) stock, obligations
or securities of another Person received in connection with the disposition of
assets (including, without limitation, securities) by the Borrower or any
Subsidiary not prohibited by Section 9.07, (xii) other stock, obligations,
securities, evidences of indebtedness, loans or advances in an aggregate amount
not in excess of $1,000,000, (xiii) stock, obligations or securities of a
corporation acquired in anticipation of such corporation's becoming a Subsidiary
if after giving effect to such acquisition, the aggregate purchase price for
such stock, obligations or securities of other than a Subsidiary owned by the
Borrower and its Subsidiaries shall not exceed $2,000,000 at any time and such
stock, obligations or securities shall not be owned by the Borrower or any
Subsidiary for more than 180 days following the acquisition thereof unless at or
prior to the end of such 180 day period such corporation becomes a Subsidiary,
(xiv) in the case of Subsidiaries that are incorporated outside the United
States, substantially equivalent foreign currency denominated investments, (xv)
stock, other securities or evidences of indebtedness held by, or loans or
advances made by the Summers Group, existing on the Closing Date, or by any
other Person that becomes a Subsidiary, existing on the date such Person becomes
a Subsidiary, the aggregate value of such investments not to exceed $1,000,000,
(xvi) securities or evidence of Indebtedness of any counterparty to the Borrower
or any Subsidiary represented by agreements, devices or arrangements
constituting Rate Hedging Obligations not prohibited under Section 9.20, and
(xvii) other investments received in respect of any of the foregoing.
9.07 SALE OF ASSETS. Sell, lease, transfer or otherwise dispose of
all or a substantial part of its properties or assets except (i) for sales,
leases, transfers or other dispositions by Subsidiaries to the Borrower or any
other Subsidiary, (ii) for sales, leases, transfers or other dispositions which
are specifically permitted by Section 9.04 or not prohibited by Section 9.10,
(iii) for sales, leases, transfers or other dispositions by non-Material
Subsidiaries which are not prohibited by Section 9.10, and (iv) for sales of
merchandise or other property in the ordinary course of business.
9.08 SALE AND LEASEBACK. Enter into any arrangement, directly or
indirectly, with any Person whereby it shall sell or transfer any property,
whether real or personal, and used or useful in its business, whether now owned
or hereafter acquired, if it or any of its Subsidiaries, at the time of such
sale or disposition, intends to lease or otherwise acquire the right to use or
possess (except by purchase) such property or like property for a substantially
similar purpose, unless such transaction is specifically permitted under
Sections 9.02 or 9.03.
9.09 ERISA. Permit any employee benefit plan maintained by the
Borrower or a Subsidiary to engage in a "prohibited transaction" within the
meaning of Section 4.06 of ERISA or Section 4975 of the Code, except in those
cases for which there is a statutory or administrative exemption available;
permit to exist with respect to any employee benefit plan maintained by the
Borrower or a Guarantor any accumulated funding deficiency within the meaning of
Section 412 of the Code, or incur any liability to the PBGC other than for
required insurance premiums;
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permit to exist any withdrawal liability within the meaning of Section 4201 of
ERISA; in the case of any of the foregoing if the result would be the incurrence
of a tax or creation of a liability of the Borrower or any Subsidiary which
would exceed $1,000,000.
9.10 SALE OF SUBSIDIARY INTERESTS. Sell or otherwise dispose of any
shares of stock of any Subsidiary whose revenues for the preceding Fiscal Year
constituted 10% or more of the Borrower's consolidated revenues for such year or
whose assets as of the end of the previous fiscal quarter constituted at least
10% of the Borrower's consolidated assets as of such time (a "Material
Subsidiary"), or permit any Material Subsidiary to sell or otherwise dispose of
its stock, except to the Borrower or a Subsidiary. Upon the disposition of any
Subsidiary which is not a Material Subsidiary, at the request and expense of the
Borrower, the Guaranty of such Subsidiary shall be terminated, provided that
there shall be no indebtedness outstanding from such Subsidiary to the Borrower
or any other Subsidiaries at the time of such disposition. Notwithstanding the
foregoing, assets used or held for use in the Apparel Operations, and the stock
of any subsidiary engaged in the Apparel Operations, may be disposed of for a
net price to the Borrower of not less than $30,000,000 so long as, immediately
after giving effect to such disposition, the Total Revolving Credit Commitment
is not more than $50,000,000.
9.11 PREPAYMENTS OF LONG-TERM DEBT. Repurchase, prepay, retire or
redeem, other than as mandatorily required by the terms of legally binding
agreements existing at the Closing Date or entered into after the Closing Date
in accordance with Section 9.02 hereof, any Indebtedness for Money Borrowed of
the Borrower or any Subsidiary which by its terms matures more than one year
from the date of such prepayment; except (i) with respect to Indebtedness owed
to any Lender, (ii) Indebtedness owed to the Borrower or any Subsidiary, (iii)
Consolidated Subordinated Indebtedness (A) to the extent permitted under Section
9.02, or (B) to the extent replaced with Indebtedness having a maturity date no
earlier than, repayment schedule reducing the principal amount no more quickly
than, and interest rate less than the Indebtedness prepaid and covenants and
conditions no more restrictive than those contained in Articles VIII, IX or X of
this Agreement, (iv) any Indebtedness constituting Rate Hedging Obligations, (v)
Indebtedness to the extent replaced with Indebtedness permitted by clause
(iii)(B) above, and (iv) other Indebtedness in an aggregate principal amount not
to exceed $1,000,000 during any Fiscal Year.
9.12 CONSOLIDATED SENIOR INDEBTEDNESS/CAPITAL. (a) Until the event
set forth in Section 2.10(b)(i) has occurred, permit the ratio of Consolidated
Senior Indebtedness to Consolidated Total Capital to exceed .625 to 1.00 and (b)
from and after the occurrence of the event set forth in Section 2.10(b)(i),
permit at any time during each of the Fiscal Years set forth below the ratio of
Consolidated Senior Indebtedness to Consolidated Total Capital to exceed that
set forth opposite such Fiscal Year:
<TABLE>
<CAPTION>
Fiscal Year Ratio
----------- -----
<S> <C>
1993 .55 to 1.00
1994 .55 to 1.00
1995 .55 to 1.00
1996 .45 to 1.00
1997 .40 to 1.00
</TABLE>
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9.13 CONSOLIDATED SHAREHOLDERS' EQUITY. Permit Consolidated
Shareholders' Equity to be less than $80,000,000 at any time from the Closing
Date and prior to December 31, 1993, such amount to be increased (i) as at
December 31, 1993 and as at the end of each fiscal quarter thereafter by 50% of
Consolidated Net Income (but shall not be reduced by any loss) for such fiscal
quarter, and (ii) 85% of the net proceeds to the Borrower from the sale to any
Person of an equity interest in the Borrower.
9.14 ACQUISITIONS. At any time during any year commencing on the day
following the Closing Date or anniversary date thereof, acquire any Person or
all or substantially all of the assets of any Person if the aggregate of such
purchase price for such acquisition and such purchase prices for all previous
acquisitions during such year exceeds $15,000,000. The Borrower hereby agrees
to give notice to the Agent promptly after any such acquisition the purchase
price of which exceeds $2,000,000. For purposes of the foregoing provisions of
this Section 9.14, "Purchase price" shall not include (i) any payment which, at
the time of creation of the obligation to make the payment, was contingent upon
future economic performance of the acquired Person or the acquiror or (ii) any
payment in the form of shares of capital stock of the Borrower which, together
with all previous such payments in the form of shares of capital stock during
the particular year, does not exceed $15,000,000. This Section 9.14 shall not
apply to the acquisition by the Borrower of Summers Group.
9.15 CONSOLIDATED INTEREST COVERAGE RATIO. Permit at any time during
each of the periods set forth below the Consolidated Interest Coverage Ratio to
be less than that set forth opposite such period:
<TABLE>
<CAPTION>
Consolidated Interest
Period Coverage Ratio
------ ---------------------
<S> <C>
December 17, 1993 through 2.25 to 1.00
December 30, 1994
December 31, 1994 and 2.50 to 1.00
thereafter
</TABLE>
9.16 SENIOR NOTE AGREEMENT. Amend, restate or otherwise modify any
term or provision of the Note Agreement between the Borrower and the Prudential
Insurance Company of America, dated as of April 2, 1991, as amended through
Amendment No. 4 thereto in a manner which would result in covenants more
restrictive than those contained in this Agreement or a maturity date earlier
than that presently existing therein, pursuant to which the Borrower issued its
Senior Notes, provided that this provision shall not restrict a waiver of any
provision of such Note Agreement or transaction permitted under Section 9.11.
9.17 FIXED CHARGE COVERAGE RATIO. Permit at any time during each of
the Fiscal Years set forth below the Consolidated Fixed Charge Coverage Ratio to
be less than that set forth below opposite such Fiscal Year:
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<TABLE>
<CAPTION>
Consolidated Fixed
Fiscal Year Charge Coverage Ratio
----------- ---------------------
<S> <C>
1993 1.25 to 1.00
1994 1.25 to 1.00
1995 1.30 to 1.00
1996 1.30 to 1.00
1997 1.40 to 1.00
</TABLE>
9.18 TRADING ASSET RATIO. (a) Until the event set forth in Section
2.10(b)(i) has occurred, permit the Trading Asset Ratio to be less than 1.00 to
1.00 and (b) from and after the occurrence of the event set forth in Section
2.10(b)(i), permit at any time during each of the Fiscal Years set forth below
the Trading Asset Ratio to be less than that set forth opposite such Fiscal
Year:
<TABLE>
<CAPTION>
Trading
Fiscal Year Asset Ratio
----------- -----------
<S> <C>
1993 1.15 to 1.00
1994 1.15 to 1.00
1995 1.25 to 1.00
and thereafter
</TABLE>
9.19 FISCAL YEAR. Change its Fiscal Year.
9.20 RATE HEDGING OBLIGATIONS. Incur any Rate Hedging Obligations or
enter into any agreements, arrangements, devices or instruments relating to Rate
Hedging Obligations, except (A) in regard to (i) Indebtedness evidenced by the
Loans, the aggregate amount of such outstanding Rate Hedging Obligation in no
event to exceed $70,000,000 in the aggregate, provided, however, that the
expiration or maturity date of such Rate Hedging Obligation or agreement or
arrangement relating thereto, may exceed the Revolving Credit Termination Date
and (ii) other existing Indebtedness, all such Rate Hedging Obligations to be
unsecured (except to the extent permitted under Section 9.01(viii)) and to be at
rates, in form and with counterparties consented to by the Agent, which consent
shall not be unreasonably withheld, and (B) Rate Hedging Obligations, the
payment obligations under which (calculated as provided in clause (iii) of the
definition of "Indebtedness") do not exceed $2,000,000 in the aggregate.
ARTICLE X
EVENTS OF DEFAULT AND ACCELERATION
10.01 EVENTS OF DEFAULT. If any one or more of the following
events (herein called "Events of Default") shall occur, that is to say:
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(a) if default shall be made in the due and punctual payment of
the principal of any Loan or Reimbursement Obligation, when and as the same
shall be due and payable, at maturity, by acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment of any
amount of interest on any Loan, any Reimbursement Obligation or any fees payable
under this Agreement on the date on which the same shall be due and payable and
such Default shall continue for more than five (5) Business Days; or
(c) if default shall be made in the performance or observance of any
covenant set forth in Section 8.11 or Article IX (other than Sections 9.03,
9.05, 9.06, 9.08 and 9.09) hereof;
(d) if a default shall be made in the performance or observance by
the Borrower of any covenant or agreement contained in this Agreement or the
other Loan Documents (other than as described in clauses (a), (b) or (c) above
and Section 8.07(a)) and such default shall continue for 30 or more days after
the earlier of receipt of notice of such default by the Borrower from the Agent,
or if any Loan Document ceases to be in full force and effect (other than by
reason of any action by the Agent or any Lender), or if without the written
consent of the Lenders, this Agreement or any other Loan Document shall be
disaffirmed or shall terminate, be terminable or be terminated or become void or
unenforceable for any reason whatsoever (in each case other than in accordance
with its terms in the absence of default or by reason of any action by the Agent
or any Lender); or
(e) if a default shall occur, which is not waived, (i) in the payment
of any principal, interest or premium with respect to any Indebtedness (other
than the Obligations) of the Borrower or any Subsidiary when the same becomes
due and payable and after the applicable grace period, if any, specified in the
instrument relating to such Indebtedness or (ii) in the performance or
observance of any term or covenant contained in any agreement or instrument
under or pursuant to which any such Indebtedness may have been issued, created,
assumed, guaranteed or secured by the Borrower or any Subsidiary, and such
default shall continue for more than the period of grace, if any, therein
specified, if the effect of such default is to accelerate or permit the holder
of any such Indebtedness to accelerate the maturity thereof, provided that in
any of the foregoing circumstances the aggregate unpaid Indebtedness shall
exceed $1,000,000; or
(f) if any representation or warranty in any certificate, report or
statement at any time furnished to the Agent or any Lender by the Borrower
pursuant to this Agreement shall be false in any material respect when given; or
(g) if the Borrower or any Material Subsidiary shall be unable to pay
its debts generally as they become due; file a petition to take advantage of any
insolvency statute; make a general assignment for the benefit of its creditors;
commence a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or any substantial part of its property;
file a petition or answer seeking reorganization or arrangement or similar
relief under the federal bankruptcy laws or any other applicable law or statute
of the United States of America or any state or similar law of any other
country; or
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(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of the Borrower or any Material Subsidiary or of the whole or any
substantial part of its properties, or approve a petition filed against the
Borrower or any Material Subsidiary seeking reorganization or arrangement or
similar relief under the federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state or similar law of any other
country, or if, under the provisions of any other law for the relief or aid of
debtors, a court of competent jurisdiction shall assume custody or control of
the Borrower or any Material Subsidiary or of the whole or any substantial part
of its properties; or if there is commenced against the Borrower or any Material
Subsidiary any proceeding or petition seeking reorganization, arrangement or
similar relief under the federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state which proceeding or
petition remains unstayed and undismissed for a period of 90 consecutive days;
or if the Borrower or any Material Subsidiary takes any action to indicate its
consent to or approval of any such proceeding or petition; or
(i) if (i) any judgment where the amount not covered by insurance (or
the amount as to which the insurer properly denies liability) is in excess of
$250,000 is rendered against the Borrower or any Subsidiary, and such judgment
remains unpaid, unstayed and undismissed for a period of sixty (60) consecutive
days; or
(j) a Reportable Event with respect to any employee benefit plan
shall have occurred with respect to which the Borrower or any Subsidiary may
incur a liability in excess of $1,000,000 and which continues unremedied for ten
(10) days after notice of such Reportable Event pursuant to Section 4043 (a) of
ERISA or, in the absence of such notice, for thirty (30) days after an Executive
Officer shall learn of the same;
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall then be continuing,
(A) either or both of the following actions may be taken: (i)
the Agent, with the consent of the Required Lenders, may, and at the
direction of the Required Lenders shall, declare any obligation of
the Lenders to make further Loans, issue Letters of Credit or create
Acceptances terminated, whereupon the obligation of each Lender to
make further Loans or issue Letters of Credit or create Acceptances
hereunder shall terminate immediately, and (ii) the Agent shall at
the direction of the Required Lenders, at their option, declare by
notice to the Borrower any or all of the Obligations to be
immediately due and payable, and the same, including all interest
accrued thereon and all other obligations of the Borrower to the
Lenders, shall forthwith become immediately due and payable without
presentment, demand, protest, further notice or other formality of
any kind, all of which are hereby expressly waived, anything
contained herein or in any instrument evidencing the Obligations to
the contrary notwithstanding; PROVIDED, however, that notwithstanding
the above, if there shall occur an Event of Default under clause
(g) or (h) above, then the obligation of the Lenders to lend or issue
Letters of Credit or create Acceptances hereunder shall automatically
terminate and any and all of the Obligations shall be immediately due
and payable without the
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56
necessity of any action by the Agent or the Required Lenders or
notice to the Agent or the Lenders; and
(B) Borrower shall, upon demand of Agent, deposit cash with the
Agent in an amount equal to the amount of any Letters of Credit and
Acceptances remaining undrawn, as collateral security for the
repayment of any future drawings under such Letters of Credit and
Acceptances, and Borrower shall forthwith deposit and pay such amounts
and such amounts shall be held by Agent pursuant to the terms of the
LC/ Acceptance Account Agreement.
10.02 AGENT TO ACT. In case any one or more Events of Default
shall occur and be continuing, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce their rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.
10.03 CUMULATIVE RIGHTS. No right or remedy herein conferred upon
the Lenders or the Agent is intended to be exclusive of any other rights or
remedies contained herein or in any other Loan Document, and every such right or
remedy shall be cumulative and shall be in addition to every other such right or
remedy contained herein and therein or now or hereafter existing at law or in
equity or by statute, or otherwise.
10.04 NO WAIVER. No course of dealing between the Borrower and
any Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies hereunder shall operate as a waiver
of any rights or remedies hereunder and no single or partial exercise of any
rights or remedies hereunder shall operate as a waiver or preclude the exercise
of any other rights or remedies hereunder or of the same right or remedy on a
future occasion.
10.05 DEFAULT. The Agent and the Lenders shall have no right to
accelerate any of the Loans upon the occurrence of any Default which shall not
also constitute an Event of Default; PROVIDED, however, nothing contained in
this sentence shall in any respect impair or adversely affect the right, power
and authority of the Agent and the Lenders (i) to take any action expressly
required or permitted to be taken under the Loan Documents upon the occurrence
of any Default (and including any action or proceeding which the Agent may
determine to be necessary or appropriate in furtherance of any such expressly
authorized action) and (ii) to take any action provided under the Loan Documents
or otherwise available by statute, at law or in equity upon the occurrence of
any Default.
10.06 ALLOCATION OF PROCEEDS. If an Event of Default has occurred
and is continuing, and the maturity of the Notes has been accelerated pursuant
to Article X hereof, all payments received by the Agent hereunder in respect of
any principal of or interest on the Obligations or any other amounts payable by
the Borrower hereunder shall be applied by the Agent in the following order:
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(i) amounts due to the Lenders or any of them pursuant to
Sections 2.13, 2.17, 3.05, 12.05 and 12.14 hereof;
(ii) amounts due to the Agent pursuant to Section 3.06 and
Section 11.11 hereof;
(iii) payments of interest, to be applied in accordance with
Section 2.09 hereof;
(iv) payments of principal, to be applied in accordance with
Section 2.09 hereof;
(v) payment of cash amounts to the Agent for deposit to the
Borrower's Account pursuant to Section 10.01(B) hereof; and
(vi) payments of all other amounts due under this Agreement, if
any, to be applied in accordance with each Lender's pro rata
share of all principal due to the Lenders.
ARTICLE XI
THE AGENT
11.01 APPOINTMENT. Each Lender (including NationsBank in its
capacity as maker of Swing Line Loans and as issuer of the Letters of Credit and
Acceptances) hereby irrevocably designates and appoints NationsBank as the Agent
of the Lenders under this Agreement, and each of the Lenders hereby irrevocably
authorizes NationsBank as the Agent for such Lender, to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers as are expressly delegated to the Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. The Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any of the
Lenders, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against the Agent.
11.02 ATTORNEYS-IN-FACT. The Agent may execute any of its duties
under this Agreement by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible to the Lenders for the gross negligence or
willful misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
11.03 LIMITATION ON LIABILITY. Neither the Agent nor any of its
officers, directors, employees, agents or attorneys-in-fact shall be liable to
the Lenders for any action lawfully taken or omitted to be taken by it or them
under or in connection with this Agreement except for its or their own gross
negligence or willful misconduct. Neither the Agent nor any of its affiliates
shall be responsible in any manner to any of the Lenders for any recitals,
statements, representations or
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warranties made by the Borrower, any of its Subsidiaries, or any officer thereof
contained in this Agreement or in any of the other Loan Documents, or in any
certificate, report, statement or other document referred to or provided for in
or received by the Agent under or in connection with this Agreement or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any of the other Loan Documents, or for any failure of the
Borrower to perform its obligations thereunder. The Agent shall not be under
any obligation to any of the Lenders to ascertain or to inquire as to the
observance or performance of any of the terms, covenants or conditions of this
Agreement or any of the other Loan Documents on the part of the Borrower or to
inspect the properties, books or records of the Borrower or its Subsidiaries.
11.04 RELIANCE. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any Note, writing, resolution, notice, consent
certificate, affidavit, letter, cablegram, telegram, telecopy or telex message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Note as
the owner thereof for all purposes unless an Assignment and Acceptance shall
have been filed with and accepted by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement unless
it shall first receive advice or concurrence of the Lenders or the Required
Lenders as provided in this Agreement or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all present and future holders
of the Notes.
11.05 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender, the Borrower or
any of the Subsidiaries referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Agent receives such a notice, the Agent shall promptly give
notice thereof to the Lenders and the Borrower (to the extent such notice was
not received from Borrower). The Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default as it
shall deem advisable in the best interests of the Lenders.
11.06 No Representations. Each Lender expressly acknowledges that
neither the Agent nor any of its affiliates has made any representations or
warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of the Borrower or any of its Subsidiaries, shall be
deemed to constitute any representation or warranty by the Agent to any Lender.
Each Lender represents to the Agent 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 appraisal of and
investigation into the financial condition,
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creditworthiness, affairs, status and nature of the Borrower and its
Subsidiaries and made its own decision to enter into this Agreement. Each
Lender also represents 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 analysis,
appraisals and decisions in taking or not taking action under this Agreement and
to make such investigation as it deems necessary to inform itself as to the
status and affairs, financial or otherwise, of the Borrower and its
Subsidiaries. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition or business of the
Borrower or any of its Subsidiaries which may come into the possession of the
Agent or any of its affiliates.
11.07 INDEMNIFICATION. The Lenders agree to indemnify the Agent
in its capacity as such (to the extent not reimbursed by the Borrower or any of
its Subsidiaries and without limiting any obligations of the Borrower or any of
its Subsidiaries so to do), ratably according to the respective principal amount
of the Notes held by them (or, if no Notes are outstanding, ratably in
accordance with their respective Applicable Commitment Percentages as then in
effect) from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may at any time (including without limitation at
any time following the payment of the Notes) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement or any other document contemplated by or referred to herein or the
transactions contemplated hereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or willful misconduct.
The agreements in this subsection shall survive the payment of the Obligations
and the termination of this Agreement.
11.08 LENDER. The Agent and its affiliates may make loans to,
accept deposits from and generally engage in any kind of business with the
Borrower and its Subsidiaries as though it were not the Agent hereunder. With
respect to its Loans made or renewed by it and any Note issued to it, the Agent
shall have the same rights and powers under this Agreement as any Lender and may
exercise the same as though it were not the Agent, and the terms "Lender" and
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity.
11.09 RESIGNATION. If the Agent shall resign as Agent under this
Agreement, then the Required Lenders may appoint a successor Agent for the
Lenders, which shall be a commercial bank organized under the laws of the United
States or any state thereof, having a combined surplus and capital of not less
than $500,000,000, whereupon such successor Agent shall succeed to the rights,
powers and duties of the former Agent and the obligations of the former Agent
shall be terminated and canceled, without any other or further act or deed on
the part of such former Agent or any of the parties to this Agreement; provided,
however, that the former Agent's resignation shall not become effective until
such successor Agent has been appointed; provided, further, if the Required
Lenders cannot agree as to a successor Agent within
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ninety (90) days after such resignation, the Agent shall appoint a successor
Agent meeting the qualifications set forth above and the parties hereto agree to
execute whatever documents are necessary to effect such action under this
Agreement or any other document executed pursuant to this Agreement; provided,
however in such event all provisions of this Agreement and the Loan Documents,
shall remain in full force and effect. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article XI shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement.
11.10 SHARING OF PAYMENTS, ETC. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, set-off, counterclaim
or otherwise, obtain payment with respect to its Obligations (other than any
payment pursuant to Section 2.17 or Article IV) which results in its receiving
more than its pro rata share of the aggregate payments with respect to all of
the Obligations (other than any payment pursuant to Section 2.17 or Article IV),
then (A) such Lender shall be deemed to have simultaneously purchased from the
other Lenders a share in their Obligations so that the amount of the Obligations
held by each of the Lenders shall be pro rata and (B) such other adjustments
shall be made from time to time as shall be equitable to insure that the Lenders
share such payments ratably; PROVIDED, however, that for purposes of this
Section 11.10 the term "pro rata" shall be determined with respect to both the
Revolving Credit Commitment of each Lender and to the Total Revolving Credit
Commitments after subtraction in each case of amounts, if any, by which any such
Lender has not funded its share of the outstanding Loans and Reimbursement
Obligations. If all or any portion of any such excess payment is thereafter
recovered from the Lender which received the same, the purchase provided in this
Section 11.10 shall be rescinded to the extent of such recovery, without
interest. The Borrower expressly consents to the foregoing arrangements and
agrees that each Lender so purchasing a portion of the other Lenders'
Obligations may exercise all rights of payment (including, without limitation,
all rights of set-off, banker's lien or counterclaim) with respect to such
portion as fully as if such Lender were the direct holder of such portion.
11.11 FEES. The Borrower agrees to pay to the Agent, for its
individual account, an annual Agent's fee in such amount as shall be agreed to
from time to time, such fee to be paid annually in advance, the first such
installment to be paid on the Closing Date and thereafter on the anniversary
date of the Closing Date.
ARTICLE XII
MISCELLANEOUS
12.01 ASSIGNMENTS AND PARTICIPATIONS.
(a) At any time after the Closing Date each Lender may, with the
prior consent of the Agent and the Borrower, assign to one or more banks or
financial institutions all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of the Note payable
to its order); PROVIDED, that (i) each such assignment shall be of a constant,
and not a varying, percentage of all of the assigning Lender's rights and
obligations (including Loans and Participations) under this Agreement, (ii) the
assigning Lender and the assignee and the Agent shall have executed and
delivered to the Borrower an Assignment and
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Acceptance and the Borrower hereby agrees to execute replacement Notes to give
effect to the assignment if the Borrower shall have consented to such
assignment, (iii) the minimum Revolving Credit Commitment which shall be
assigned is $10,000,000 (together with which the assigning Lender's applicable
portion of Participations and the Letter of Credit Commitment shall also be
assigned) and (iv) such assignee shall have an office located in the United
States, provided, that an assignment by NationsBank shall not include any
portion of the Swing Line or the obligation to issue Letters of Credit. Upon
such execution, delivery, approval and acceptance, from and after the effective
date specified in each Assignment and Acceptance, (x) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
or under such Note have been assigned or negotiated to it pursuant to such
Assignment and Acceptance have the rights and obligations of a Lender hereunder
and a holder of such Note and (y) the assignor thereunder shall, to the extent
that rights and obligations hereunder or under such Note have been assigned or
negotiated by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement, provided that
the assignor shall not be relieved from any liability arising prior to the
effectiveness of the assumption thereof by the assignee. No assignee shall have
the right to further assign its rights and obligations pursuant to this Section
12.01. Any Lender who makes an assignment shall pay to the Agent a one-time
administrative fee of $5,000.00 which fee shall not be reimbursed by Borrower.
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) the assignment made
under such Assignment and Acceptance is made under such Assignment and
Acceptance without recourse; (ii) such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower or any Subsidiary or the performance or observance by
the Borrower or any Subsidiary of any of its obligations under any Loan Document
or any other instrument or document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the financial statements delivered pursuant to Section 7.02(b) and
such other Loan Documents and other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Lender 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 action under
this Agreement; (v) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement,
the Note and the other Loan Documents as are delegated to the Agent by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender and a holder of such Note.
(c) The Agent shall maintain at its address referred to herein a copy
of each Assignment and Acceptance delivered to and accepted by it.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, the Agent shall give prompt notice thereof to Borrower.
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(e) Each Lender may sell participations to one or more banks or other
financial institutions as to all or a portion of its rights under this
Agreement; PROVIDED, that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such Lender
shall remain the holder of any Note issued to it for the purpose of this
Agreement, (iv) such participations shall be in a minimum amount of $5,000,000
and shall include an allocable portion of such Lender's Participation, and (v)
Borrower, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and with regard to any and all payments to be
made under this Agreement; provided, that the participation agreement between a
Lender and its participants may provide that such Lender will obtain the
approval of such participant prior to such Lender's agreeing to any amendment or
waiver of any provisions of this Agreement which would (A) extend the maturity
of the Note, (B) reduce the interest rate hereunder, or (C) increase the
Revolving Credit Commitment of the Lender granting the participation other than
as permitted by Section 2.11, and (vi) the sale of any such participations which
require Borrower to file a registration statement with the United States
Securities and Exchange Commission or under the securities regulations or laws
of any state shall not be permitted.
(f) No Lender may assign any rights under this Agreement or the Notes
or sell participations therein except in accordance with this Section 12.01.
(g) No assignee Lender shall be entitled to receive any greater
payment under Article IV than the assignee Lender would have been entitled to
receive in respect of the rights assigned.
12.02 NOTICES. Any notice shall be conclusively deemed to have
been received by any party hereto and be effective on the day on which delivered
to such party (against receipt therefor) at the address set forth below or such
other address as such party shall specify to the other parties in writing (or,
in the case of telephonic notice or notice by telecopy, telegram or telex (where
the receipt of such message is verified by return) expressly provided for
hereunder, when
received at such telephone, telecopy or telex number as may from time to time be
specified in written or verbal notice to the other parties hereto or otherwise
received), or if sent prepaid by certified or registered mail return receipt
requested on the third Business Day after the day on which mailed, addressed to
such party at said address:
(a) if to the Borrower:
Willcox & Gibbs, Inc.
530 Fifth Avenue
New York, New York 10036
Attention:
(b) if to the Agent:
NationsBank of Florida, National Association
150 S.E. Third Avenue
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Miami, Florida 33131
Attention: Corporate Banking Department
(c) if to NationsBank in its capacity as issuer of the Letters
of Credit:
NationsBank of Florida, National Association
150 S.E. Third Ave., Second Floor
Miami, Florida 33131
Attention: International Bank, Letter of Credit Department
(d) if to the Lenders:
At the addresses set forth on the signature pages hereof and on the
signature page of each Assignment and Acceptance.
12.03 SETOFF. The Borrower agrees that all of Borrower's deposits
or deposit accounts, of any kind, or any of Borrower's interest in any deposits
or deposit accounts thereof, now or hereafter pledged, mortgaged, transferred or
assigned to the Agent or any Lender or otherwise in the possession or control of
the Agent or any Lender (other than for safekeeping or as a fiduciary) for any
purpose for the account or benefit of the Borrower and including any balance of
any deposit account or of any credit of the Borrower with the Agent or any
Lender, whether now existing or hereafter established, shall be subject to the
right of setoff of the Agent and any Lender at any time or times during the
continuance of an Event of Default and Borrower authorizes the agent and any
Lender with or, to the extent permitted by applicable law, without prior notice,
to apply such balances or any part thereof to such of the Obligations of the
Borrower to the Agent or such Lender then past due and in such amounts as they
may elect, and whether or not the collateral or the responsibility of other
Persons primarily, secondarily or otherwise liable may be deemed adequate. For
the purposes of this paragraph, all remittances and property shall be deemed to
be in the possession of the Agent or such Lender as soon as the same may be put
in transit to it by mail or carrier or by other bailee.
12.04 SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the expiration of the Letters of Credit and Acceptances and the execution and
delivery to the Lenders of this Agreement and the Notes and shall continue in
full force and effect so long as any of Obligations remain outstanding or any
Lender has any commitment hereunder. Whenever in this Agreement, any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and permitted assigns of such party and all covenants, provisions
and agreements by or on behalf of the Borrower which are contained in this
Agreement and the Notes shall inure to the benefit of the successors and
permitted assigns of the Lenders or any of them.
12.05 EXPENSES. The Borrower agrees (a) to pay or reimburse the
Agent for all its reasonable and customary out-of-pocket costs and expenses
(including travel and copy expenses) incurred in connection with the
preparation, negotiation and execution of this Agreement or any of the other
Loan Documents, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable and customary fees
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and disbursements of counsel to the Agent, (b) to pay on demand all reasonable
out-of-pocket costs and expenses in connection with any modification, waiver or
amendment of this Agreement, the Notes and the other Loan Documents, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Agent with respect thereto, and all reasonable costs and expenses, if
any (including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of this Agreement, the Notes and the other Loan Documents. In
addition, the Borrower shall pay any and all stamp and documentary taxes payable
or determined to be payable in connection with the execution and delivery of
this Agreement, the Notes and the other Loan Documents, and agrees to save the
Agent and each Lender harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes.
12.06 AMENDMENTS. No amendment, modification or waiver of any
provision of this Agreement or any of the Loan Documents and no consent by the
Lenders to any departure therefrom by the Borrower shall be effective unless
such amendment, modification or waiver shall be in writing and signed by the
Agent, but only upon having received the written consent of the Required
Lenders, and the same shall then be effective only for the period and on the
conditions and for the specific instances and purposes specified in such
writing; PROVIDED, however, that, no such amendment, modification or waiver
(i) which changes, extends or waives any provision of Section
11.10 or this Section 12.06, the amount of or the due date
of any scheduled installment of or the rate of interest
payable on any Obligation, changes the definition of
Required Lenders, which increases or extends the Revolving
Credit Commitment of any Lender or which increases or
extends the Letter of Credit Facility or which waives any
condition to the making of any Loan shall be effective
unless in writing and signed by each of the Lenders;
PROVIDED, however, the Required Lenders may in their sole
discretion waive any Default or Event of Default (other than
any Event of Default under Section 10.01(a) or (b));
(ii) which releases any Subsidiary from its Guaranty (other than
in accordance with the terms of the Loan Documents) shall be
effective unless with the written consent of each of the
Lenders; or
(iii) which affects the rights, privileges, immunities or
indemnities of the Agent, shall be effective unless in
writing and signed by the Agent.
Notwithstanding any provision of the other Loan Documents to the contrary, as
between the Agent and the Lenders, execution by the Agent shall not be deemed
conclusive evidence that the Agent has obtained the written consent of the
Required Lenders. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances, except as otherwise expressly provided herein.
12.07 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed an
original, and it
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shall not be necessary in making proof of this Agreement to produce or account
for more than one such fully-executed counterpart.
12.08 WAIVERS BY BORROWER. In any litigation in any court with
respect to, in connection with, or arising out of this Agreement, the Loans, any
of the Notes, any of the other Loan Documents, the Obligations, or any
instrument or document delivered pursuant to this Agreement, or the validity,
protection, interpretation, collection or enforcement thereof, or any other
claim or dispute howsoever arising between the Borrower and the Lenders or the
Agent, the Borrower and each Lender and the Agent hereby waive trial by jury in
connection with any such litigation.
12.09 TERMINATION. The termination of this Agreement shall not
affect any rights of the Borrower, the Lenders or the Agent or any obligation of
the Borrower, the Lenders or the Agent, arising prior to the effective date of
such termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into or rights created or obligations incurred
prior to such termination have been fully disposed of, concluded or liquidated
and the Obligations arising prior to or after such termination have been
irrevocably paid in full. However, after the Revolving Credit Termination Date,
(i) no additional fees shall be payable under Section 2.13 hereof and (ii) if no
Letters of Credit or Acceptances remain outstanding no additional fees shall be
payable under Section 3.02 or Section 3.05 hereof. If after receipt of any
payment of all or any part of the Obligations, any Lender is for any reason
compelled to surrender such payment to any Person because such payment is
determined to be void or voidable as a preference, impermissible setoff, a
diversion of trust funds or for any other reason, this Agreement shall continue
in full force and the Borrower shall be liable to, and shall indemnify and hold
such Lender harmless for, the amount of such payment surrendered until such
Lender shall have been finally and irrevocably paid in full. The provisions of
the foregoing sentence shall be and remain effective notwithstanding any
contrary action which may have been taken by the Lenders in reliance upon such
payment, and any such contrary action so taken shall be without prejudice to the
Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.
12.10 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REFERENCE TO THE CHOICE OF LAW DOCTRINE OF SUCH STATE.
12.11 REPRESENTATION AND WARRANTY OF THE LENDERS. Each Lender hereby
represents that no part of any funds used by such Lender to fund any Loan or
other extension of credit to the Borrower made by it constitutes or will
constitute assets allocated to any "separate account" maintained by such Lender.
As used herein, the term "separate account" shall have the meaning assigned to
such term in Section 3 of ERISA. Each Lender hereby represents to the Borrower,
the Agent and the other Lenders that the Notes are being acquired by such Lender
as a result of making loans in the ordinary course of its commercial banking
business and are not being acquired with a view to or for sale in connection
with any distribution of the Notes, nor with any present intention of
distributing or selling the Notes (or any interest therein); provided, however,
that, subject to any contrary requirements of law, disposition of the property
of each Lender shall at all times be and remain within the control of such
Lender.
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12.12 AGREEMENT CONTROLS. In the event that any term of any of
the Loan Documents other than this Agreement conflicts with any term of this
Agreement, the terms and provisions of this Agreement shall control.
12.13 CONFIDENTIALITY. The Agent and the Lenders agree (on behalf
of themselves and each of their respective affiliates, directors, officers,
employees and representatives) to use reasonable precautions to keep
confidential, in accordance with safe and sound banking practices, any non-
public information supplied to it by the Borrower or any of its Subsidiaries
pursuant to this Agreement, provided that nothing herein shall limit the
disclosure of any such information (i) to the extent required by statute, rule,
regulation or judicial process, (ii) to counsel for the Agent or such Lender,
(iii) to bank examiners, auditors, regulators, accountants or appraisers, (iv)
to any assignee or participant (or prospective assignee or participant) so long
as such assignee or participant (or prospective assignee or participant) agrees
(in a written instrument furnished to and for the benefit of the Borrower) to
the provisions of this Section 12.13, (v) to any other Person in the course of
the enforcement of the Agent's or any Lender's rights or remedies hereunder or
under any other Loan Documents or (vi) to any other financial institution
creditor of the Borrower (and counsel to and other representatives of such
creditor) at any time during the continuance of an Event of Default.
12.14 INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by the Agent and each Lender and the extension of the
Revolving Credit Commitments and Swing Line, the Borrower hereby indemnifies,
exonerates and holds the Agent and each Lender and each of their respective
officers, directors, employees and agents (collectively, the "Indemnified
Parties") free and harmless from and against any and all actions, causes of
action, suits, losses, liabilities and damages, and reasonable out of pocket
expenses incurred in connection with any claim or litigation by any Person
(other than a party to this Agreement) (irrespective of whether any such
Indemnified Party is a party to the action for which indemnification hereunder
is sought), including reasonable attorneys' fees and disbursements
(collectively, the "Indemnified Liabilities"), incurred by the Indemnified
Parties or any of them as a result of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan
or supported by any Letter of Credit or Acceptance; or
(b) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties,
and if and to the extent that the foregoing undertaking may be unenforceable for
any reason, the Borrower hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law; provided, however, that the Borrower shall
have no obligation hereunder with respect to Indemnified Liabilities resulting
from the willful misconduct or gross negligence of the Agent or any Lender or
the breach by the Agent or any Lender of this Agreement or applicable law,
orders or regulations.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
WITNESS: WILLCOX & GIBBS, INC.
_______________________
_______________________ By:_______________________________
Title: ___________________________
NATIONSBANK OF FLORIDA,
NATIONAL ASSOCIATION, as Agent for
the Lenders
By:_______________________________
Title: Senior Vice President
NATIONSBANK OF FLORIDA,
NATIONAL ASSOCIATION
By:_______________________________
Title: Senior Vice President
Lending Office: NationsBank Plaza
400 North Ashley Drive
Tampa, Florida 33602
Wire Transfer Instructions:
NationsBank of North Carolina,
National Association
Tampa, Florida
ABA# 063100277
Reference
Attention:
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CREDIT LYONNAIS NEW YORK
BRANCH, individually and as Co-
Agent
By:_______________________________
Title:____________________________
Lending Office:
1301 Avenue of the Americas
New York, New York 10019
Wire Transfer Instructions:
Credit Lyonnais New York Branch
New York, NY
A/C #: 01-88179-2145-00
Reference: Willcox & Gibbs
Attention: Loan Servicing
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Exhibit 10.29
SEVERANCE AGREEMENT
AGREEMENT, dated as of March 18, 1994, by and among WILLCOX & GIBBS, INC.,
a New York corporation ("W&G"), STEINTHAL SAMPLE CO., INC., a New York
corporation ("Steinthal"), and JOHN K. ZIEGLER (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive has been employed as an executive of W&G pursuant to
an Employment Contract dated as of April 22, 1992 (the "Employment Contract");
and
WHEREAS, the parties wish to terminate the Employment Contract and end
their employment relationship on mutually agreeable terms;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and for other good and valuable consideration, the
parties hereto agree as follows:
1. TERMINATION OF EMPLOYMENT CONTRACT.
The Employment Contract and all rights and obligations arising
thereunder are terminated effective March 18, 1994.
2. RESIGNATIONS AND TERMINATION OF EMPLOYMENT.
(a) The Executive hereby resigns as a director, officer and employee
of W&G, as an officer and director of any of W&G's Subsidiaries or Affiliates
and from any corporate committee of W&G or any such Subsidiaries or Affiliates,
effective March 18, 1994. For purposes of this Agreement, a "Subsidiary" of a
corporation shall mean any corporation, association or other business entity
which is required to be consolidated with such corporation under generally
accepted accounting principles, and an "Affiliate" of a corporation shall mean a
person or other entity that directly or indirectly controls, or is controlled
by, or is under common control with such corporation.
(b) Executive agrees to give Delta Computec Inc. written notice of
his resignation as a director of that corporation on March 18, 1994, with a copy
thereof to W&G.
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3. PAYMENTS TO THE EXECUTIVE.
W&G shall pay the Executive the following amounts:
(a) $750,000, representing 200% of his current salary, payable on
March 18, 1994;
(b) $109,057, representing the bonus the Executive is entitled to
receive for services rendered during 1993 under W&G's Incentive Compensation
Plan for Key Employees (the "Incentive Plan") and under Section 5(a) of the
Employment Contract, payable on March 18, 1994;
(c) $506,380, representing the remaining twenty installments of
$25,319 per month the Executive is entitled to receive pursuant to Section
1(a)(iii) of his Employment Contract, payable on March 18, 1994;
(d) $31,250, representing the remaining unpaid salary the Executive
is entitled to receive through March 31, 1994, payable on March 18, 1994;
(e) 180 monthly payments of $13,890, representing the non-consulting
portion of amounts payable to the Executive under W&G's Supplemental Death and
Retirement Plan, payable on the first business day of every month commencing
April 1, 1994; and
(f) $90,000, representing full payment of any bonus the Executive
would be entitled to receive for services rendered during 1994 under the
Incentive Plan and under Section 5(a) of the Employment Contract, payable
March 18, 1994.
4. OPTIONS; RESTRICTED STOCK; AND BENEFIT PLANS.
(a) The Executive will be entitled to exercise in accordance with
their terms his outstanding stock options to purchase 24,000 shares of W&G
common stock that are scheduled to become exercisable on March 25, 1994. All
remaining stock options to purchase W&G common stock shall expire on March 18,
1994.
(b) W&G acknowledges that all of the Restricted Shares awarded to the
Executive pursuant to that certain Restricted Stock Grant Letter dated
November 12, 1992, have vested, and W&G either has or will, upon the Executive's
request and surrender of any certificate
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evidencing Restricted Shares, deliver to the Executive a new certificate
representing such shares free of all restrictive legends.
(c) W&G acknowledges that the Executive's benefits under the W&G,
Inc. Employee Stock Ownership Plan, (the "ESOP"), W&G, Inc. Section 401(k) Plan
(the "401(k) Plan"), and the Retirement Plan for the Employees of W&G, Inc. (the
"Retirement Plan") are fully vested.
5. STEINTHAL LOAN AND OTHER PAYMENTS.
(a) The Executive acknowledges that he is indebted to Steinthal in
the amount of $100,000 (the "Steinthal Debt") and that such amount is payable to
Steinthal, without interest, in seven annual installments on the first business
day of January commencing January 1995. The Executive further acknowledges that
such indebtedness is secured by a pledge (the "Pledge") of all shares of W&G
common stock acquired by the Executive under W&G's Stock Acquisition Plan. W&G
acknowledges that it has agreed to pay the Executive the sum of $100,000 in ten
annual installments on the first business day of January commencing January 1995
(the "Deferred Compensation").
(b) W&G, Steinthal, and the Executive agree that the Executive's
obligation to pay the Steinthal Debt and W&G's obligation to pay the Deferred
Compensation are cancelled and forgiven and that the Pledge is released, all
effective March 18, 1994.
(c) W&G and the Executive agree that, effective March 18, 1994, the
Executive shall be entitled to retain the possession, and W&G shall transfer
ownership, of the lap top computer, hard disk drive and the 1990 Mercedes
300SEL automobile provided to the Executive by W&G in exchange for the
Executive's payment of $6,346 therefor.
(d) W&G agrees to continue providing, at its expense, through
June 30, 1994, the health insurance currently provided by W&G to the Executive.
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6. CONSULTING AGREEMENT.
Simultaneously with the execution of this Agreement, W&G and the
Executive shall execute a consulting agreement in the form attached to this
Agreement as Exhibit A (the "Consulting Agreement"), which shall become
effective on March 18, 1994 if the Executive shall not have revoked this
Agreement at or before expiration of the period specified in Section 10 hereof.
7. NONSOLICITATION, NONCOMPETITION AND CONFIDENTIALITY AGREEMENTS.
(a) For a period of one year following the execution of this
Agreement, the Executive shall not, directly or indirectly, solicit any person
who is employed by W&G or any of its Subsidiaries or Affiliates to (A) terminate
his or her employment with W&G or such other company, or (B) accept employment
with anyone other than W&G or such other company.
(b) The Executive agrees that he will not, directly or indirectly
(individually or for, with or through any other person, firm or corporation),
compete with W&G or any of its Subsidiaries or Affiliates for a period of three
years following his termination of employment with W&G with respect to any
business carried on by W&G or any of its Subsidiaries or Affiliates as of March
18, 1994. Notwithstanding the foregoing, the Executive shall be permitted to
own not in excess of one percent of any class of securities of any publicly
traded company, provided the Executive is not part of any controlling group and
is solely a passive investor.
(c) All confidential information which the Executive may now have or
may have obtained during his employment by W&G relating to the business of W&G
or any Subsidiary or Affiliate thereof shall not be disclosed to any other
person (except as required by law) without the prior written permission of W&G,
and the Executive shall return all tangible evidence of such confidential
information to W&G on or prior to March 18, 1994 or promptly thereafter
following the Executive's discovery thereof. Such information shall not include
any information otherwise publicly known.
(d) Except as provided in Section 5(c) hereof, the Executive shall
also, no later than March 18, 1994, or promptly thereafter following the
Executive's discovery thereof, return
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to W&G any credit cards, cardkey passes, computer access codes, door and file
keys, and other physical or personal property provided by W&G, if any. W&G
acknowledges that a drawing of the City of London and a household sewing machine
and stand are owned by the Executive.
(e) Neither the Executive nor W&G shall make any statements to anyone
concerning the resignation of the Executive as an officer and director of W&G or
the termination of his employment that differs in any material respect from the
information concerning such resignation and termination set forth in the form of
press release attached hereto as Exhibit B unless such statement has been
approved in writing by the other party. W&G's annual report for 1993 shall
contain a statement concerning the resignation of the Executive as an officer
and director of W&G and the termination of his employment that does not differ
in any material respect from the information concerning such resignation and
termination set forth in the form of press release attached hereto as Exhibit B
unless such statement has been approved in writing by the Executive.
(f) All of Executive's interest in patents, patent applications,
inventions, technological innovations, copyrights, developments and processes
during his employment by W&G owned or developed by Executive relating to the
business of W&G or any affiliate of W&G, shall belong to W&G, and without
further compensation, but at W&G's expense, forthwith upon request of W&G,
Executive shall execute any and all such assignments and other documents and
take any and all such other action as W&G may reasonably request in order to
vest in W&G all Executive's right, title and interest in and to such patents,
patent applications, inventions, technological innovations, copyrights,
developments or processes, free and clear of liens, charges and encumbrances.
(g) Subject to Section 21 hereof, in the event of a breach or
threatened breach of the provisions of this Section 7, the Executive
acknowledges that W&G will be entitled to seek from a court any interim or
provisional relief that may be necessary to protect W&G's rights or property
pending the arbitral tribunal's determination of the merits of the controversy.
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(h) If it is determined that any of the provisions of this Section 7,
or any part thereof, is unenforceable because of the duration or scope of such
provision, it is the intention of the parties that the duration or scope of such
provision, as the case may be, shall be reduced so that such provision becomes
enforceable.
8. RELEASES.
(a) The Executive, having received independent legal advice,
voluntarily and knowingly releases W&G, each of its Subsidiaries and Affiliates
and their respective officers and directors from any and all claims, actions,
and causes of action he has or may have arising on or before the date of this
Agreement, whether known or unknown, relating to his employment by, or
termination of employment with, W&G or any of its Subsidiaries and Affiliates,
including, without limitation, (a) those arising under the Age Discrimination in
Employment Act of 1967, as amended, and other federal, state or local human and
civil rights or labor laws, and (b) those arising under the Employment Contract,
except that the Executive does not release (i) his right to have W&G perform its
obligations under this Agreement or the Consulting Agreement, (ii) his right to
benefits under the Retirement Plan, the ESOP and the 401(k) Plan, (iii) any
claim, action or cause of action against an officer or director of W&G or any of
its Subsidiaries or Affiliates for an intentional tort as to which the primary
factual basis is not known by the Executive as of the date of this Agreement or
(iv) his right to indemnification under (1) the certificate of incorporation or
bylaws of W&G or any of its Subsidiaries or Affiliates of which he has been an
officer or director, (2) the laws of the state of incorporation of W&G or any
such Subsidiary or Affiliate, (3) the Indemnity Agreement dated November 18,
1986, between the Executive and W&G (the "Indemnity Agreement"), or (4) any
insurance policy maintained by W&G or any such Subsidiary of Affiliate, as the
case may be.
(b) W&G voluntarily and knowingly releases the Executive from any and
all claims, actions and causes of action it has or may have arising on or before
the date of this Agreement, whether known or unknown, except that W&G does not
release its right to have the
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Executive perform his obligations under this Agreement or the Consulting
Agreement or any claim, action or cause of action that W&G may have against the
Executive to the extent it is determined by a final judgment adverse to the
Executive that the Executive's acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of law, or the Executive
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
9. COOPERATION IN LITIGATION.
The Executive shall cooperate and generally make himself available to
give testimony and assistance in connection with any litigation or arbitration
proceeding or any proceeding or investigation initiated by any governmental
authority or agency involving W&G or any of its Subsidiaries or Affiliates and
arising out of activities of W&G or its Subsidiaries or Affiliates prior to the
date of this Agreement and during the period of his employment with W&G. W&G or
one of its Subsidiaries or Affiliates shall reimburse the Executive for, or
advance to the Executive, all reasonable out-of-pocket travel and other expenses
incurred by the Executive at the specific request of W&G in connection with the
Executive's testimony, cooperation and assistance under this Section 9. Such
expenses shall be reimbursed or advanced promptly after the Executive's
submission to W&G of statements in such reasonable detail as W&G may require.
Time spent performing Executive's obligations under this Section 9 shall be
deemed to be time spent consulting pursuant to the Consulting Agreement and,
accordingly, the Executive's compensation for performing his obligations under
this Section 9 shall be governed by the Consulting Agreement.
10. OPPORTUNITY FOR REVIEW BY COUNSEL AND PERIOD TO REVOKE AGREEMENT.
The Executive acknowledges that he has been advised to consult with an
attorney before executing this Agreement. Until the close of business on March
25, 1994, the Executive may revoke this Agreement by notice to W&G pursuant to
Section 13 whereupon the rights and obligations of the parties to this Agreement
and the Consulting Agreement shall be revoked
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retroactively to March 18, 1994, and W&G and the Executive shall return to each
other any amounts or other benefits provided under this Agreement or the
Consulting Agreement.
11. RIGHTS RELATING TO EMPLOYMENT AND TERMINATION.
This Agreement integrates and embodies all understandings and
agreements among the Executive, W&G and/or any of its Subsidiaries or Affiliates
in connection with the Executive's employment and termination of employment with
W&G or any of its Subsidiaries or Affiliates. Except as specifically provided
in this Agreement, the Executive shall not be entitled to any payments or other
benefits on account of his having been employed by, or having terminated his
employment with, W&G or any of its Subsidiaries or Affiliates.
12. WITHHOLDING.
W&G shall withhold from all amounts payable to the Executive under
this Agreement all federal, state and local taxes required by law to be withheld
with respect to such payments. The withholding amounts for payments or other
benefits to be made or provided under this Agreement on March 18, 1994 are set
forth on Exhibit C.
13. NOTICE.
Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally or sent by registered or certified mail, postage prepaid, return
receipt requested, duly addressed to the party concerned at the address
indicated below or to such changed address as such party may subsequently give
notice of:
If to W&G or Steinthal: Willcox & Gibbs, Inc.
530 Fifth Avenue
New York, NY 10036
Attention: President
If to the Executive: John K. Ziegler
43 Huron Drive
Chatham, New Jersey 07928
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14. AMENDMENT OR WAIVER.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing, signed by the Executive and by an authorized officer of
W&G. No waiver by either party hereto of any breach by the other party of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar provision or condition at
the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Executive or an authorized officer of W&G, as the case may be.
15. SEVERABILITY.
In the event that any provision of this Agreement shall be held to be
invalid or unenforceable for any reason, in whole or in part, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect to the fullest extent permitted by law.
16. HEADINGS.
The headings of sections contained in this Agreement are for convenience
only and shall not be deemed to control or affect the meaning or construction of
any provision of this Agreement.
17. COUNTERPARTS.
This Agreement may be executed in one or more counterparts.
18. REFERENCES.
In the event of the Executive's death or a judicial determination of
his incompetence, references in this Agreement to the Executive shall be deemed,
where appropriate, to refer to his legal representative or to his beneficiary or
beneficiaries.
19. BINDING AGREEMENT; ASSIGNMENT.
Except as provided in Section 10 hereof, this Agreement is binding
upon the parties hereto and their respective successors, heirs and assigns. No
rights or obligations under this Agreement may be assigned or transferred by the
Executive except that the Executive's rights
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to compensation and benefits hereunder shall, in the event of death, pass to his
estate, or to his designated beneficiary, and may be transferred by will or
operation of law. In the event of a future disposition of (or including) the
properties and business of W&G, substantially as an entirety, by merger,
consolidation, sale of stock or assets or otherwise, then W&G shall require the
acquiring or surviving corporation (which shall be substituted for W&G
hereunder) to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that W&G would have been required to perform it
had no such disposition occurred. The Executive's rights under this Agreement
shall not be transferable by assignment or otherwise, shall not be subject to
commutation or encumbrance and shall not be subject to the claims of the
Executive's creditors.
20. PAYMENT OBLIGATION ABSOLUTE.
Except as provided in Section 10 hereof, W&G's obligation to make
payments provided for in this Agreement and otherwise perform its obligations
hereunder shall be absolute and unconditional and shall not be affected by any
setoff, counterclaim, recoupment, defense or other circumstance or rights which
W&G may have against the Executive or anyone else (including without limitation
any rights which W&G may have against the Executive for violation of Section 7
of this Agreement), all of which shall be required to be asserted in independent
proceedings. The Executive shall not be required to mitigate the amount of any
payment provided for herein by seeking other employment or taking any other
action nor shall the amount of any payment provided for herein be reduced by
amounts earned by the Executive from other employment or otherwise, except as
provided in the Consulting Agreement.
21. ARBITRATION; INDEMNIFICATION.
(a) Any controversy or claim arising out of or in connection with
this Agreement shall be settled by arbitration held in New York City in
accordance with the rules of the American Arbitration Association then in
effect, and judgment upon the award rendered (including an award for money
damages) may be entered in any court having jurisdiction. The
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costs of the arbitration proceedings shall be borne by W&G. Either party may,
without inconsistency with this Agreement, seek from a court any interim or
provisional relief that may be necessary to protect the rights or property of
that party pending the arbitral tribunal's determination of the merits of the
controversy.
(b) In addition to (and not in lieu of) any of the Executive's rights
to indemnification or otherwise, contained in W&G's certificate of
incorporation, by-laws, the Indemnity Agreement or any other agreement, if any
action, suit, proceeding (including any arbitration proceeding) or claim shall
be brought or asserted with respect to the enforcement or interpretation of this
Agreement or any provision contained herein, W&G, to the full extent permitted
by applicable law and its certificate of incorporation and by-laws as in effect
on the date hereof, hereby indemnifies the Executive for his reasonable
attorneys' fees and other expenses incurred in connection with such action,
suit, proceeding or claim and agrees to pay or reimburse the same promptly upon
demand by the Executive (plus interest at the applicable Federal rate provided
in Section 7872(f)(2) of the Internal Revenue Code of 1986, as amended),
provided that W&G shall not be obligated to indemnify the Executive under this
Agreement with respect to any action, suit, proceeding or claim brought by the
Executive in which it is finally determined that the Executive's interpretations
of this Agreement at issue, taken as a whole, are less correct than the
interpretations asserted by W&G. W&G shall preserve and make available to the
Executive all documents and information now or hereafter in the possession of
W&G which may be required by the Executive for the prosecution or defense of any
such action, suit, proceeding or claim.
22. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of New York
without reference to the principles of conflict of laws.
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IN WITNESS WHEREOF, the Executive, W&G, and Steinthal have caused this
Agreement to be executed as of the day and year first above written.
STEINTHAL SAMPLE CO., INC. WILLCOX & GIBBS, INC.
By: By:
--------------------------------- ---------------------------------
---------------------------------
John K. Ziegler
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Exhibit A
CONSULTING AGREEMENT
AGREEMENT made as of March 18, 1994, between WILLCOX & GIBBS, INC., a New
York corporation ("W&G"), and JOHN K. ZIEGLER (the "Consultant").
W I T N E S S E T H :
WHEREAS, the Consultant has previously been employed as an executive of W&G
and the parties now wish to enter into an arrangement whereby the Consultant
will act as a consultant to W&G;
WHEREAS, the Consultant is entitled to receive certain consulting fees
under the W&G Supplemental Death and Retirement Plan if he enters into and
continues to perform a ten-year consulting agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and for other good and valuable consideration, the
parties hereto agree as follows:
1 TERM.
The term of this Agreement shall commence on the date of this
Agreement and end on March 18, 2004, unless the Agreement is earlier terminated
due to Cause (as defined below).
2. SERVICES.
During the term of this Agreement, W&G shall retain the Consultant as
a consultant to W&G. During that period the Consultant shall consult with and
advise the officers of W&G with respect to such matters involving the business
and affairs of W&G as the officers may from time to time present to him. The
Consultant shall be available at the Company's executive offices in New York
City during normal business hours from the date hereof through March 31, 1994,
other than five vacation business days during such period. Thereafter, unless
Disability (as defined below) has occurred, the Consultant shall be obligated to
devote the equivalent of 15 business days to his consulting duties during any
yearly period (treating the balance of 1994 after March 31 as a yearly period
for these purposes) to the extent his physician
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advises his health permits. Such consultation shall be rendered at such times
as the Consultant shall reasonably advise the Board of Directors are appropriate
giving effect to his then regular personal and other business activities. W&G's
chief executive officer shall give the Consultant reasonable advance notice of
any requirements for consultation, and the Consultant shall use his reasonable
best efforts to perform such consultation on the schedule requested. Where the
Consultant is required to render any service on a particular day, he shall
receive credit for a full day's service. W&G may terminate this Agreement
without any further obligation hereunder in the event Cause has occurred.
3. FEES AND EXPENSES.
(a) On the first business day of every month during the term of this
Agreement, W&G shall pay the Consultant a monthly fee of $2,777 in full payment
for his services under this Agreement; provided, however, that such monthly fees
shall be reduced to the extent the Consultant realizes income from regular
employment during the term of this Agreement. In the event of the Consultant's
death or Disability during the term of this Agreement, any remaining fees
payable during the term of this Agreement shall become payable in monthly
installments to the Consultant's beneficiaries. If the Consultant is requested
by W&G to perform and the Consultant consents and does perform consulting
services hereunder in excess of 15 days per year (excluding the period through
March 31, 1994) he shall be paid at a rate of $250 per hour.
(b) The Consultant shall be entitled to reimbursement for expenses
reasonably and necessarily incurred by him in connection with the performance of
his consultation duties, in accordance with W&G's then applicable procedures,
including without limitation reimbursement for travel and related expenses to
and from whatever may be his then current place of residence or place where he
may be conducting other business activities.
4. DEFINITIONS OF DISABILITY AND CAUSE.
(a) "Cause" shall have occurred if the Consultant is convicted of a
felony relating to the conduct of the business of W&G or any affiliate of W&G,
the Consultant commits
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an act of personal dishonesty which is intended to personally enrich the
Consultant or members of his family at the financial expense of W&G or any
affiliate of W&G, or the Consultant fails to perform his obligations under this
Agreement in any material respect, other than due to death or Disability, after
being given five business days in which to cure his failure to perform.
(b) "Disability" shall have occurred if the Consultant has been
physically or mentally incapacitated or disabled for a period of six consecutive
months to an extent which renders the Consultant unable to perform his services
as evidenced by the written confirmation of the Consultant's physician and, if
W&G shall so require, an independent physician.
5. NOTICE.
Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally or sent by registered or certified mail, postage prepaid, return
receipt requested, duly addressed to the party concerned at the address
indicated below or to such changed address as such party may subsequently give
notice of:
If to W&G or Steinthal: Willcox & Gibbs, Inc.
530 Fifth Avenue
New York, NY 10036
Attention: President
If to the Executive: John K. Ziegler
43 Huron Drive
Chatham, New Jersey 07928
6. AMENDMENT OR WAIVER.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing, signed by the Consultant and by an authorized officer of
W&G. No waiver by either party hereto of any breach by the other party of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar provision or
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condition at the same or any prior or subsequent time. Any waiver must be in
writing and signed by the Consultant or an authorized officer of W&G, as the
case may be.
7. SEVERABILITY.
In the event that any provision of this Agreement shall be held to be
invalid or unenforceable for any reason, in whole or in part, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect to the fullest extent permitted by law.
8. HEADINGS.
The headings of sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
9. COUNTERPARTS.
This Agreement may be executed in one or more counterparts.
10. ASSIGNMENT.
No rights or obligations under this Agreement may be assigned or
transferred by the Consultant except that the Consultant's rights to
compensation and benefits hereunder shall, in the event of death, pass to his
estate, or to his designated beneficiary, and may be transferred by will or
operation of law. In the event of a future disposition of (or including) the
properties and business of W&G, substantially as an entirety, by merger,
consolidation, sale of stock or assets or otherwise, then W&G shall require the
acquiring or surviving corporation (which shall be substituted for W&G
hereunder) to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that W&G would have been required to perform it
had no such disposition occurred. The Consultant's rights under this Agreement
shall not be transferable by assignment or otherwise, shall not be subject to
commutation or encumbrance and shall not be subject to the claims of the
Consultant's creditors.
4
<PAGE>
5
11. ARBITRATION; INDEMNIFICATION.
(a) Any controversy or claim arising out of or in connection with
this Agreement shall be settled by arbitration held in New York City in
accordance with the rules of the American Arbitration Association then in
effect, and judgment upon the award rendered (including an award for money
damages) may be entered in any court having jurisdiction. The costs of the
arbitration proceedings shall be borne by W&G. Either party may, without
inconsistency with this Agreement, seek from a court any interim or provisional
relief that may be necessary to protect the rights or property of that party
pending the arbitral tribunal's determination of the merits of the controversy.
(b) In addition to (and not in lieu of) any of the Consultant's
rights to indemnification or otherwise, contained in W&G's certificate of
incorporation, by-laws, the Indemnity Agreement dated November 18, 1986, between
the Consultant and W&G or any other agreement, if any action, suit, proceeding
(including any arbitration proceeding) or claim shall be brought or asserted
with respect to the enforcement or interpretation of this Agreement or any
provision contained herein, W&G, to the full extent permitted by applicable law
and its certificate of incorporation and by-laws as in effect on the date
hereof, hereby indemnifies the Consultant for his reasonable attorneys' fees and
other expenses incurred in connection with such action, suit, proceeding or
claim and agrees to pay or reimburse the same promptly upon demand by the
Consultant (plus interest at the applicable Federal rate provided in Section
7872(f)(2) of the Internal Revenue Code of 1986, as amended), provided that W&G
shall not be obligated to indemnify the Consultant under this Agreement with
respect to any action, suit, proceeding or claim brought by the Consultant in
which it is finally determined that the Consultant's interpretations of this
Agreement at issue, taken as a whole, are less correct than the interpretations
asserted by W&G. W&G shall preserve and make available to the Consultant all
documents and information now or hereafter in the possession of W&G which may be
required by the Consultant for the prosecution or defense of any such action,
suit, proceeding or claim.
5
<PAGE>
6
12. NO MITIGATION OR OFFSET.
Except as provided in Section 3(a), the Consultant shall not be
obligated to mitigate the amount of any payment provided for under this
Agreement by seeking other employment or taking any other action nor shall the
amount of any payment provided for herein be reduced by amounts earned by the
Consultant from other employment or otherwise.
13. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of New York
without reference to the principles of conflict of laws.
IN WITNESS WHEREOF, the Consultant and W&G have caused this Agreement to be
executed as of the day and year first above written.
WILLCOX & GIBBS, INC.
By:
----------------------------------
----------------------------------
John K. Ziegler
6
<PAGE>
Exhibit B
FOR IMMEDIATE RELEASE COMPANY CONTACT:
Alain Viry
President
Telephone: (212) 869-1800
WILLCOX & GIBBS ANNOUNCES MANAGEMENT CHANGES
New York, New York - March 18, 1994
Willcox & Gibbs, Inc. (NYSE-WG) announced that John K. Ziegler had resigned
as Chairman of the Board, Chief Executive Officer and a director of W&G. Mr.
Ziegler, who has been with W&G for over 27 years, including the last 18 years as
Chief Executive, said "The restructuring program that we began in 1992 is
substantially complete, and I believe that the Company is now well positioned as
one of the largest distributors of electrical parts and supplies in the United
States. Given these accomplishments, I have decided that the time has come to
pursue certain personal interests."
The Company said that Alain Viry, formerly Executive Vice President of
Rexel, S.A. and a director of W&G since 1992, had been named President and Chief
Executive Officer of W&G. In addition, the Company said that Eric Lomas, a
director of the Company and President of Hill Thompson Group Ltd., had been
elected Chairman of the Board of Directors of W&G and Serge Weinberg, also a
director and Chairman and Chief Executive Officer of Rexel, had been named Vice
Chairman of W&G. Rexel, a major supplier of electrical equipment with
operations in 13 countries, is the owner of 40% of W&G's common stock.
Mr. Viry said "John Ziegler has achieved an outstanding record at W&G, and
the Company is grateful for his many years of contributions to the Company. We
look forward to building further on W&G's past accomplishments."
Willcox & Gibbs is the nation's fifth largest distributor of electrical
parts and supplies, with pro forma 1993 sales of approximately $1 billion. W&G
operates 170 distribution centers in eighteen states, principally in the
southern tier of the United States.
<PAGE>
Exhibit C
WITHHOLDING AMOUNTS FOR MARCH 18, 1994 PAYMENTS
AND MARCH 1, 1994 RESTRICTED STOCK VESTING
A. W&G PAYMENTS
1. Section 3(a) - 200% of current salary $ 750,000
2. Section 3(b) - 1993 bonus 109,057
3. Section 3(c) - total of monthly installments remaining 506,380
4. Section 3(d) - unpaid salary 31,250
5. Section 3(f) - 1994 bonus 90,000
6. Section 4(b) - restricted stock
152,242 shares - Willcox & Gibbs (@8.0625) 1,227,451*
152,242 shares - Worldtex (@5.0625) 770,725*
7. Section 5(b) - Steinthal Debt 100,000*
---------
3,584,863
B. WITHHOLDING AND JKZ PAYMENTS
1. Federal Supplemental Wage Withholding (28%) 1,003,762
2. Medicare Withholding (1.45%) 51,981
3. New York Supplemental Wage Withholding (8.375%) 300,232
4. New York City Nonresident Wage Withholding (.45%) 16,132
5. Payments for computer, hard disk drive and automobile
6,346
---------
1,378,453
C. NET CASH DUE MARCH 18, 1994 $108,234
---------
---------
- -------------------------
* Non-cash item.
<PAGE>
Exhibit 11.1
WILLCOX & GIBBS, INC.
Computation of Net Income Per
Common and Common Equivalent Share
Years ended December 31, 1993, 1992 and 1991
(in thousands)
------------------
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Income (loss) from continuing operations $6,890 ($12,402) ($4,439)
Income from discontinued operations 1,517 7,527 6,123
-------- -------- --------
Income (loss) before extraordinary charge and cumulative effect of
accounting change 8,407 (4,875) 1,684
Extraordinary charge - - (1,436)
Cumulative effect of accounting change for income taxes 660 - -
-------- -------- --------
Income (loss) applicable to primary common and common
equivalent shares 9,067 (4,875) 248
Interest reduction, net of taxes, upon conversion of Convertible
Subordinated Debentures 1,995 2,100 2,030
-------- -------- --------
Income (loss) applicable to fully diluted common shares $11,062 ($2,775) $2,278
-------- -------- --------
-------- -------- --------
Primary shares:
Weighted average number of common shares and common share
equivalents outstanding during the year:
Common (net of treasury stock) 20,947 14,503 13,573
Options 23 118 130
Warrants - 8 8
-------- -------- --------
20,970 14,629 13,711
-------- -------- --------
-------- -------- --------
Fully diluted shares:
Weighted average number of common shares and common share
equivalents outstanding during the year:
Common (net of treasury stock) 20,947 14,503 13,573
Options 23 118 130
Warrants - 8 8
Conversion of Subordinated Debentures 5,225 2,454 2,058
-------- -------- --------
26,195 17,083 15,769
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE>
Exhibit 21.1
SUBSIDIARIES
The following are subsidiaries of the Company:
Allied Machine Parts Ltd. England
Calcon Electric Supply, Inc. California
C.E.S. Industries, Inc. Delaware
Clark Cable Corporation Ohio
Clark Consolidated Industries Inc. Ohio
CMC Properties, Inc. Ohio
Consolidated Electric Supply, Inc. Delaware
Consolidated Electric Supply, Inc. (formerly B&W Electric
Supply Co., Inc.) Georgia
Consolidated Electric Supply (Bahamas) Ltd. Bahamas
Consolidated Sarasota Electric Supply, Inc. Florida
Duellman Electric Supply Company Ohio
Eildon Electronics Ltd. England
Elgee Electric Supply Co. Ohio
Engineered Apparel Concepts, Inc. Delaware
JCB Clark, Inc. Ohio
J&E Sewing Supplies, Inc. New York
Leadtec Systems, Inc. Delaware
M.E.C. (Sewing Machines) Ltd. England
Rawlinson Electric Company Texas
Rogers Lighting Company Texas
Robin Service Corp. New York
Sacks Electrical Supply Co. Ohio
Seaco Electrical Supplies, Inc. Florida
SEB Associates, Ltd. Delaware
Southern Electric Supply Company, Inc. Delaware
Spindletop Electric Distributing Company Texas
Steinthal Sample Co., Inc. New York
Summers Electric Company Texas
Summers Group, Inc. Delaware
Unique Sewing Machine Parts & Supply Corporation New York
W&G Daon, Inc. Delaware
W&G Export Corporation Georgia
W&G Tennessee Imports, Inc. Delaware
Willcox & Gibbs Delaware, Inc. Delaware
Willcox & Gibbs-Kennedy of Delaware, Inc. Delaware
WGI Properties, Inc. Delaware
Willcox & Gibbs of Alabama, Inc. Alabama
Willcox & Gibbs DN, Inc. Delaware
Willcox & Gibbs DS, Inc. Delaware
Willcox & Gibbs, Ltd. England
Willcox & Gibbs SEB of Delaware, Inc. Delaware
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
__________
We consent to the incorporation by reference in the registration statements of
Willcox & Gibbs, Inc. on Form S-8 which relate to the 1988 Stock Incentive Plan
(No. 33-32648), the 1985 Stock Option Plan (No. 33-4584), the 1982 Stock Option
Plan (No. 2-77570), the Employee Stock Ownership Plan (No. 33-14148), and the
1992 Restricted Stock Agreement (No. 33-54449) of our report, which includes an
explanatory paragraph regarding the Company's change in method of accounting for
income taxes, dated March 4, 1994, except as to the information presented in the
last paragraph of Note 11 for which the date is March 18, 1994, on our audits of
the consolidated financial statements and financial statement schedules of
Willcox & Gibbs, Inc. as of December 31, 1993 and 1992, and for the years ended
December 31, 1993, 1992 and 1991, which report is included in this Annual Report
on Form 10-K. We also consent to the reference to our firm as "Experts".
/s/ Coopers & Lybrand
-----------------
Coopers & Lybrand
New York, New York
March 30, 1994
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director and/or
officer of Willcox & Gibbs, Inc. (the "Corporation"), does hereby constitute and
appoint Alain Viry and Allan M. Gonopolsky, and each of them, his true and
lawful attorney or attorneys to execute in his name, place and stead in such
capacity or capacities (whether on behalf of the Corporation, or as a director
and/or officer of the Corporation, or otherwise), any and all instruments which
said attorney or attorneys may deem necessary or advisable in order to enable
the Corporation to comply with the Securities Exchange Act of 1934, as amended,
and any requirements of the Securities and Exchange Commission in respect
thereof, pertaining to annual reports of the Corporation on Form 10-K and
amendments thereof, including without limitation, power and authority to sign
his name (whether on behalf of the Corporation, or as a director and/or officer
of the Corporation, or by attesting the seal of the Corporation, or otherwise)
to any such annual reports on Form 10-K, and any amendments thereof, and other
documents in connection therewith, and to file any of the aforementioned
documents with the Securities and Exchange Commission, each of said attorneys to
have full power and authority to do and perform in the name and on behalf of the
undersigned, every act whatsoever necessary or advisable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on the
date set opposite his name.
Dated: March 18, 1994
/s/ Frederic de Castro
-------------------------
Frederic de Castro
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director and/or
officer of Willcox & Gibbs, Inc. (the "Corporation"), does hereby constitute and
appoint Alain Viry and Allan M. Gonopolsky, and each of them, his true and
lawful attorney or attorneys to execute in his name, place and stead in such
capacity or capacities (whether on behalf of the Corporation, or as a director
and/or officer of the Corporation, or otherwise), any and all instruments which
said attorney or attorneys may deem necessary or advisable in order to enable
the Corporation to comply with the Securities Exchange Act of 1934, as amended,
and any requirements of the Securities and Exchange Commission in respect
thereof, pertaining to annual reports of the Corporation on Form 10-K and
amendments thereof, including without limitation, power and authority to sign
his name (whether on behalf of the Corporation, or as a director and/or officer
of the Corporation, or by attesting the seal of the Corporation, or otherwise)
to any such annual reports on Form 10-K, and any amendments thereof, and other
documents in connection therewith, and to file any of the aforementioned
documents with the Securities and Exchange Commission, each of said attorneys to
have full power and authority to do and perform in the name and on behalf of the
undersigned, every act whatsoever necessary or advisable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on the
date set opposite his name.
Dated: March 18, 1994
/s/ Gerald E. Morris
------------------------
Gerald E. Morris
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director and/or
officer of Willcox & Gibbs, Inc. (the "Corporation"), does hereby constitute and
appoint Alain Viry and Allan M. Gonopolsky, and each of them, his true and
lawful attorney or attorneys to execute in his name, place and stead in such
capacity or capacities (whether on behalf of the Corporation, or as a director
and/or officer of the Corporation, or otherwise), any and all instruments which
said attorney or attorneys may deem necessary or advisable in order to enable
the Corporation to comply with the Securities Exchange Act of 1934, as amended,
and any requirements of the Securities and Exchange Commission in respect
thereof, pertaining to annual reports of the Corporation on Form 10-K and
amendments thereof, including without limitation, power and authority to sign
his name (whether on behalf of the Corporation, or as a director and/or officer
of the Corporation, or by attesting the seal of the Corporation, or otherwise)
to any such annual reports on Form 10-K, and any amendments thereof, and other
documents in connection therewith, and to file any of the aforementioned
documents with the Securities and Exchange Commission, each of said attorneys to
have full power and authority to do and perform in the name and on behalf of the
undersigned, every act whatsoever necessary or advisable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on the
date set opposite his name.
Dated: March 18, 1994
/s/ John B. Fraser
------------------------
John B. Fraser
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director and/or
officer of Willcox & Gibbs, Inc. (the "Corporation"), does hereby constitute and
appoint Alain Viry and Allan M. Gonopolsky, and each of them, his true and
lawful attorney or attorneys to execute in his name, place and stead in such
capacity or capacities (whether on behalf of the Corporation, or as a director
and/or officer of the Corporation, or otherwise), any and all instruments which
said attorney or attorneys may deem necessary or advisable in order to enable
the Corporation to comply with the Securities Exchange Act of 1934, as amended,
and any requirements of the Securities and Exchange Commission in respect
thereof, pertaining to annual reports of the Corporation on Form 10-K and
amendments thereof, including without limitation, power and authority to sign
his name (whether on behalf of the Corporation, or as a director and/or officer
of the Corporation, or by attesting the seal of the Corporation, or otherwise)
to any such annual reports on Form 10-K, and any amendments thereof, and other
documents in connection therewith, and to file any of the aforementioned
documents with the Securities and Exchange Commission, each of said attorneys to
have full power and authority to do and perform in the name and on behalf of the
undersigned, every act whatsoever necessary or advisable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on the
date set opposite his name.
Dated: March 18, 1994
/s/ R. Gary Gentles
------------------------
R. Gary Gentles
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director and/or
officer of Willcox & Gibbs, Inc. (the "Corporation"), does hereby constitute and
appoint Alain Viry and Allan M. Gonopolsky, and each of them, his true and
lawful attorney or attorneys to execute in his name, place and stead in such
capacity or capacities (whether on behalf of the Corporation, or as a director
and/or officer of the Corporation, or otherwise), any and all instruments which
said attorney or attorneys may deem necessary or advisable in order to enable
the Corporation to comply with the Securities Exchange Act of 1934, as amended,
and any requirements of the Securities and Exchange Commission in respect
thereof, pertaining to annual reports of the Corporation on Form 10-K and
amendments thereof, including without limitation, power and authority to sign
his name (whether on behalf of the Corporation, or as a director and/or officer
of the Corporation, or by attesting the seal of the Corporation, or otherwise)
to any such annual reports on Form 10-K, and any amendments thereof, and other
documents in connection therewith, and to file any of the aforementioned
documents with the Securities and Exchange Commission, each of said attorneys to
have full power and authority to do and perform in the name and on behalf of the
undersigned, every act whatsoever necessary or advisable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on the
date set opposite his name.
Dated: March 18, 1994
/s/ Eric Lomas
---------------------
Eric Lomas
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director and/or
officer of Willcox & Gibbs, Inc. (the "Corporation"), does hereby constitute and
appoint Alain Viry and Allan M. Gonopolsky, and each of them, his true and
lawful attorney or attorneys to execute in his name, place and stead in such
capacity or capacities (whether on behalf of the Corporation, or as a director
and/or officer of the Corporation, or otherwise), any and all instruments which
said attorney or attorneys may deem necessary or advisable in order to enable
the Corporation to comply with the Securities Exchange Act of 1934, as amended,
and any requirements of the Securities and Exchange Commission in respect
thereof, pertaining to annual reports of the Corporation on Form 10-K and
amendments thereof, including without limitation, power and authority to sign
his name (whether on behalf of the Corporation, or as a director and/or officer
of the Corporation, or by attesting the seal of the Corporation, or otherwise)
to any such annual reports on Form 10-K, and any amendments thereof, and other
documents in connection therewith, and to file any of the aforementioned
documents with the Securities and Exchange Commission, each of said attorneys to
have full power and authority to do and perform in the name and on behalf of the
undersigned, every act whatsoever necessary or advisable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on the
date set opposite his name.
Dated: March 21, 1994
/s/ Austin List
----------------------
Austin List
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director and/or
officer of Willcox & Gibbs, Inc. (the "Corporation"), does hereby constitute and
appoint Alain Viry and Allan M. Gonopolsky, and each of them, his true and
lawful attorney or attorneys to execute in his name, place and stead in such
capacity or capacities (whether on behalf of the Corporation, or as a director
and/or officer of the Corporation, or otherwise), any and all instruments which
said attorney or attorneys may deem necessary or advisable in order to enable
the Corporation to comply with the Securities Exchange Act of 1934, as amended,
and any requirements of the Securities and Exchange Commission in respect
thereof, pertaining to annual reports of the Corporation on Form 10-K and
amendments thereof, including without limitation, power and authority to sign
his name (whether on behalf of the Corporation, or as a director and/or officer
of the Corporation, or by attesting the seal of the Corporation, or otherwise)
to any such annual reports on Form 10-K, and any amendments thereof, and other
documents in connection therewith, and to file any of the aforementioned
documents with the Securities and Exchange Commission, each of said attorneys to
have full power and authority to do and perform in the name and on behalf of the
undersigned, every act whatsoever necessary or advisable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on the
date set opposite his name.
Dated: March 21, 1994
/s/ Alain Viry
---------------------
Alain Viry
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director and/or
officer of Willcox & Gibbs, Inc. (the "Corporation"), does hereby constitute and
appoint Alain Viry and Allan M. Gonopolsky, and each of them, his true and
lawful attorney or attorneys to execute in his name, place and stead in such
capacity or capacities (whether on behalf of the Corporation, or as a director
and/or officer of the Corporation, or otherwise), any and all instruments which
said attorney or attorneys may deem necessary or advisable in order to enable
the Corporation to comply with the Securities Exchange Act of 1934, as amended,
and any requirements of the Securities and Exchange Commission in respect
thereof, pertaining to annual reports of the Corporation on Form 10-K and
amendments thereof, including without limitation, power and authority to sign
his name (whether on behalf of the Corporation, or as a director and/or officer
of the Corporation, or by attesting the seal of the Corporation, or otherwise)
to any such annual reports on Form 10-K, and any amendments thereof, and other
documents in connection therewith, and to file any of the aforementioned
documents with the Securities and Exchange Commission, each of said attorneys to
have full power and authority to do and perform in the name and on behalf of the
undersigned, every act whatsoever necessary or advisable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on the
date set opposite his name.
Dated: March 18, 1994
/s/ Serge Weinberg
-----------------------
Serge Weinberg
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director and/or
officer of Willcox & Gibbs, Inc. (the "Corporation"), does hereby constitute and
appoint Alain Viry and Allan M. Gonopolsky, and each of them, his true and
lawful attorney or attorneys to execute in his name, place and stead in such
capacity or capacities (whether on behalf of the Corporation, or as a director
and/or officer of the Corporation, or otherwise), any and all instruments which
said attorney or attorneys may deem necessary or advisable in order to enable
the Corporation to comply with the Securities Exchange Act of 1934, as amended,
and any requirements of the Securities and Exchange Commission in respect
thereof, pertaining to annual reports of the Corporation on Form 10-K and
amendments thereof, including without limitation, power and authority to sign
his name (whether on behalf of the Corporation, or as a director and/or officer
of the Corporation, or by attesting the seal of the Corporation, or otherwise)
to any such annual reports on Form 10-K, and any amendments thereof, and other
documents in connection therewith, and to file any of the aforementioned
documents with the Securities and Exchange Commission, each of said attorneys to
have full power and authority to do and perform in the name and on behalf of the
undersigned, every act whatsoever necessary or advisable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on the
date set opposite his name.
Dated: March 18, 1994
/s/ Allan Gonopolsky
------------------------
Allan Gonopolsky
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned, a director and/or
officer of Willcox & Gibbs, Inc. (the "Corporation"), does hereby constitute and
appoint Alain Viry and Allan M. Gonopolsky, and each of them, his true and
lawful attorney or attorneys to execute in his name, place and stead in such
capacity or capacities (whether on behalf of the Corporation, or as a director
and/or officer of the Corporation, or otherwise), any and all instruments which
said attorney or attorneys may deem necessary or advisable in order to enable
the Corporation to comply with the Securities Exchange Act of 1934, as amended,
and any requirements of the Securities and Exchange Commission in respect
thereof, pertaining to annual reports of the Corporation on Form 10-K and
amendments thereof, including without limitation, power and authority to sign
his name (whether on behalf of the Corporation, or as a director and/or officer
of the Corporation, or by attesting the seal of the Corporation, or otherwise)
to any such annual reports on Form 10-K, and any amendments thereof, and other
documents in connection therewith, and to file any of the aforementioned
documents with the Securities and Exchange Commission, each of said attorneys to
have full power and authority to do and perform in the name and on behalf of the
undersigned, every act whatsoever necessary or advisable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on the
date set opposite his name.
Dated: March 25, 1994
/s/ Nicholas Sokolow
------------------------
Nicholas Sokolow
