SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JULY 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER 1-9411
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BAILEY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 13-3229215
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
700 LAFAYETTE ROAD
P.O. BOX 307
SEABROOK, NEW HAMPSHIRE 03874
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
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(603) 474-3011
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF CLASS ON WHICH REGISTERED
COMMON STOCK, $.10 PAR VALUE NASDAQ NATIONAL MARKET SYSTEM
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL RE-
PORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EX-
CHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PE-
RIOD 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 [ ]
State the aggregate market value of the voting stock held by non-
affiliates of the registrant: $18,790,283.75 (based upon the closing bid
price of the stock of NASDAQ-National Market System on October 23, 1995).
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
NUMBER OF SHARES OUTSTANDING
TITLE OF EACH CLASS AT OCTOBER 23, 1995
COMMON STOCK, $.10 PAR VALUE 5,353,558
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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 CON-
TAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR IN-
FORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM
10-K OR ANY AMENDMENT TO THIS FORM 10-K. [X]
PART I
ITEM 1. BUSINESS
I. GENERAL
Bailey Corporation (the "Company") is a manufacturer of molded and
painted plastic exterior components for North American original equipment
manufacturers ("OEMs") of cars, light trucks, sport utility vehicles and
mini-vans. The Company has experienced significant sales growth since fis-
cal 1991 through expansion of its product line by working closely with
customers in the development of new components, the redesign of existing
components and through significant acquisitions in fiscal 1992, 1993 and
1994.
In June 1992 the Company acquired the assets and business of Trans-
plastics, Inc. (the "Conneaut Acquisition"); in July 1993 the Company ac-
quired the assets and business of Contour Technologies ("Contour"), a di-
vision of The Boler Company. ("Boler"); and effective July 31, 1994, the
Company acquired the assets and business of Premix/E.M.S. Inc. (the "Pre-
mix/EMS Acquisition").
The Company's products ("components") include grille opening panels
and reinforcements, bumper covers, body side moldings and claddings, fair-
ings, fender extensions, wheel lips, spoilers and, as a result of the Pre-
mix/EMS Acquisition, molded bumper beams and larger body panels such as
hoods, sunroofs, doors and liftgates.
The Company is generally selected to supply a component two to four
years in advance of production. Once selected, the Company usually sup-
plies the component on a sole source basis for the life of a vehicle
model, which has typically ranged from three to four years for cars and
seven to ten years for light trucks, sport utility vehicles, and mini-
vans.
The Company's business strategy is to capitalize on trends in the au-
tomotive industry including (i) increased use of a variety of plastic com-
ponents to reduce vehicle weight and cost, (ii) increased outsourcing by
OEMs of component engineering and design, and (iii) efforts by OEMs to re-
duce the number of their component suppliers. These trends are increasing
competitive pressures on many smaller companies that do not possess a full
range of manufacturing, engineering, and design capabilities. The Compa-
ny's response to these trends has been to place emphasis on efforts to
achieve internal growth and to pursue its acquisition strategy.
II. THE NORTH AMERICAN AUTOMOBILE INDUSTRY
The North American OEM supply industry with regard to passenger cars
and light trucks is composed of two distinct markets, the original equip-
ment market and the service market. The Company's sales of components into
the original equipment market are made to OEMs for the use on new vehicles
and its sales to the service market are made to OEMs for resale to their
dealers as replacement components. For fiscal year 1995, most of the Com-
pany's sales were to the original equipment market. Industry factors which
affect the Company's current and future competitiveness, as well as its
growth and performance, include trends in the automotive market, changing
policies of OEMs with respect to suppliers, and developments in technology
and materials.
TRENDS IN THE AUTOMOTIVE MARKET
The overall market for cars, light trucks, sport utility vehicles, and
mini-vans in North America is large and cyclical, and considerable growth
or decline routinely occurs within specific vehicle model lines. In par-
ticular, light truck, sport utility vehicle, and mini-van sales have grown
rapidly. The Company's components for Ford's F-Series trucks, Ranger pick-
up truck, the Explorer, the Mercury Villager van, and the Nissan Quest van
are examples of this trend. The Company believes it will continue to be
well positioned as a supplier of components to OEMs in this high-growth
market.
CHANGING POLICIES REGARDING SUPPLIERS
Certain developments have substantially altered the competitive envi-
ronment for OEM suppliers, including increased outsourcing by OEMs of com-
ponent engineering and design and efforts by OEMs to reduce the number of
their component suppliers.
Outsourcing. Outsourcing by OEMs provides a major source of potential
growth for component suppliers. Domestic OEMs are continuing to increase
outsourcing to qualified suppliers for the manufacture, engineering, and
design of plastic components. OEMs benefit from such outsourcing because
outside suppliers generally have significantly lower cost structures than
the OEM divisions which would otherwise supply the components.
Reduction of Supplier Base; Competitive Selection Process. Starting in
the 1980's, North American OEMs began to reduce the number of suppliers
from whom they purchased components, granting long-term sole source agree-
ments to a limited number of suppliers. This reduction is one of a number
of strategies OEMs initiated to control vehicle costs. The criteria for
selection and retention as a supplier now include not only cost, quality,
and responsiveness, but also certain full-service capabilities including,
among others, engineering and design. See "Business Strategy -- Engineer-
ing and Design Capability."
Competition for business within the Company's industry generally con-
sists of a competitive selection process in which the OEM approaches one
or a few suppliers for an intended component with a conceptual design of
the component and target pricing. After discussions with each potential
supplier concerning its ability to manufacture, engineer, and design the
component, the OEM selects one supplier to work in conjunction with the
OEM's design team to design and develop a component which will satisfy the
OEM's quality standards and target pricing. OEMs also have rigorous pro-
grams for evaluating and rating suppliers, which encompass quality, cost
control, reliability of delivery, new technology implementation, and over-
all management.
USE OF PLASTICS
The combined pressures of cost reduction and fuel economy have caused
OEMs to concentrate on developing and employing lower cost, lighter mate-
rials. As a result, plastic content in cars, light trucks, sport utility
vehicles, and mini-vans has increased significantly. Plastics are now com-
monly used in such structural components as grille opening reinforcements
and in such nonstructural components as exterior and interior trim, door
panels, instrument panels, grilles, bumpers, duct systems, tail lights,
and fluid reservoirs. Increasingly, automobile content requires large
plastic injection molded assemblies for both the exterior and interior.
Moreover, further advances in molding and painting technologies are im-
proving the performance and appearance of molded plastic components. The
Company believes that use of plastics for exterior trim and other exterior
applications will continue to increase.
III. BUSINESS STRATEGY
The Company's business strategy is to supply an increasing number of
components for new vehicles manufactured by its existing OEM customers as
well as to expand its OEM customer base. The Company believes a principal
source for continued growth and increased market share lies in capitaliz-
ing on its engineering and design capabilities and its status as a manu-
facturer of high quality components for North American OEMs. To pursue its
growth objective, the Company follows a business strategy based upon the
following elements.
HIGH QUALITY PRODUCTS
The Company emphasizes the importance of product quality to all of its
employees and provides ongoing training in its quality assurance methods.
The Company has made substantial investments in advanced design equipment,
machinery, and production techniques. The Company uses advanced testing
equipment and methods including Statistical Process Control ("SPC") to
continue to improve quality standards across all product lines. SPC is a
quality assurance method developed to avoid producing defective products
by monitoring key stages of the manufacturing process to identify and cor-
rect deviations from established manufacturing process parameters, rather
than merely testing for defects at the end of production.
ENGINEERING AND DESIGN CAPABILITY
In the past several years, the Company has increased its commitment to
component engineering and design in response to the evolving purchasing
policies of Ford and, to a lesser degree, other North American OEMs. These
OEMs have focused increasingly on shortening design cycles and reducing
design and production costs, and have involved component suppliers earlier
in the process of designing a vehicle. The Company has invested substan-
tial resources in developing engineering and design capabilities to meet
these new demands, including expanding its Dearborn, Michigan, design cen-
ter where the Company's sales professionals and engineers provide sophis-
ticated engineering and design services to its customers from the clay
model stage of the design process through actual component manufacture.
RELIABLE AND TIMELY DELIVERY
As OEMs have moved to just-in-time inventory management, the timeli-
ness and reliability of shipments by their suppliers have become increas-
ingly important. The Company believes it has established a reputation as a
highly reliable and timely supplier able to meet its customers' demanding
delivery requirements.
STRATEGIC ACQUISITIONS
Increased outsourcing by OEMs of component engineering and design and
efforts by OEMs to reduce the number of their component suppliers have in-
creased competitive pressures for many smaller companies that do not pos-
sess a full range of manufacturing, engineering, and design capabilities.
Although not competitive as stand-alone operations, certain of these
smaller companies could, if combined with the Company, enhance the overall
competitiveness of the Company. The Company intends to continue to con-
sider acquisitions of companies which will further the Company's objec-
tives of broadening its product line, establishing or expanding relation-
ships with additional OEMs and expanding the Company's manufacturing capa-
bilities.
IV. PRODUCTS AND CUSTOMERS
The Company produces injection and compression molded exterior plastic
components for North American OEMs of cars, light trucks, sport utility
vehicles, and mini-vans. The Company's products must meet or exceed the
increasingly exacting color, weatherability, and durability standards set
by its customers. The Company believes that its success in being selected
as a supplier is a result of, among other things, its ability to manufac-
ture, engineer, and design high quality components. The Company's primary
products include grille opening panels and reinforcements, bumper covers,
body side moldings and claddings, fairings, fender extenders, wheel lips,
spoilers, molded bumper beams and larger body panels such as hoods, sun-
roofs, doors and liftgates.
V. SERVICE MARKET
The service market consists of components manufactured for sale by
OEMs to their dealers as replacement components. Prior to the Conneaut Ac-
quisition, the Company only manufactured a given component for the service
market if it had previously manufactured that component for the original
equipment market. With the Conneaut Acquisition, the Company now manufac-
tures certain components for the service market which it had not previ-
ously manufactured for the original equipment market.
VI. ENGINEERING, DESIGN, AND MARKETING
The Company's sales of molded plastic components have grown, in part,
as a result of increased outsourcing by OEMs of component engineering and
design. In recent years, the Company has significantly expanded its capa-
bilities for providing complete engineering and design services to support
its product line. Because molded plastic components must be designed at an
early stage of the model development cycle, the Company is increasingly
given the opportunity to participate earlier in the product planning pro-
cess. This has resulted in opportunities to identify a broader range of
components which could be manufactured by the Company.
Sales of the Company's products are generally made directly by the
Company's sales and engineering staff headquartered in Dearborn, Michigan.
In addition, sales to certain customers are made via a sales representa-
tive organization. The Company also has field representatives at Ford's
manufacturing plants in Atlanta, Georgia; Avon Lake, Ohio; Chicago, Illi-
nois; Dearborn, Michigan; Kansas City, Missouri; and Louisville, Kentucky.
VII. MANUFACTURING
The Company's manufacturing facilities are as follows:
<TABLE>
<CAPTION>
LOCATION OPERATIONS
<S> <C>
Seabrook, NH Molding, Painting and Secondary or
Assembly Departments
Conneaut, OH Molding, Painting and Secondary or
Assembly Departments
Hillsdale, MI Molding, Painting and Secondary or
Assembly Departments
Madison, IN Painting Department
Lancaster, OH Molding, Painting and Secondary or
Assembly Departments
Portland, IN Molding, Painting and Secondary or
Assembly Departments
Hartford City, IN Molding, Painting and Secondary or
Assembly Departments
</TABLE>
See Item 2, "Properties." The molding departments include resin mixing
and molding compound preparation as well as mold and tool maintenance and
refurbishment functions. The painting departments include equipment to
prime and finish coat the wide range of component shapes and sizes that
make up the Company's product lines. The secondary and assembly operations
include trimming, attachment of hardware, and various final processing ac-
tivities. At each of the Company's plants, operations are supported by
production planning, purchasing, manufacturing, engineering, quality as-
surance, and human resources staff.
VIII. RAW MATERIALS AND MATERIAL SUPPLIERS
The Company produces components using a variety of processes and raw
materials. The Company's raw materials include fiberglass reinforced poly-
ester, thermoplastic polyolefin ("TPO"), polyethylene terephthalate
("PET"), thermoplastic polyurethane ("TPU"), a variety of compounds for
the preparation of sheet molding compounds ("SMC"), as well as paints and
hardware items. The Company has at least two active suppliers for each of
the raw materials it uses and believes there is an adequate supply of
these raw materials.
IX. COMPETITION
The molded plastic exterior component industry is highly competitive.
The Company competes with many component suppliers, several of whom are
larger and have greater financial resources than the Company. In addition,
the Company's OEM customers design and manufacture some components and
could decide to increase this production, thereby reducing opportunities
for the Company. The Company competes primarily on the basis of manufac-
turing, engineering, and design capability, product quality, cost, deliv-
ery, and customer service.
X. EMPLOYEES
As of October 1, 1995, the Company had a total of 1,668 employees. Of
that total 1,290 are hourly and 378 are salaried. Hourly employees at two
of the Company's facilities (Seabrook, NH and Lancaster, OH) are covered
by collective bargaining agreements with the UAW, which expire in 1999 and
1997, respectively. The Company considers relations with its employees to
be good.
XI. ENVIRONMENTAL MATTERS
From time to time, the Company has been subject to claims asserted
against it by regulatory agencies for environmental matters relating to
the generation and disposal of hazardous substances and wastes. Some of
these claims related to properties or business lines acquired by the Com-
pany after a release had occurred. In each known instance, however, the
Company believes that the claims asserted against it, or obligations in-
curred by it, will not result in a material adverse effect upon the Compa-
ny's financial position or results of operations. Nonetheless, there can
be no assurance that activities at these facilities or facilities acquired
in the future, or changes in environmental laws and regulations, will not
result in additional environmental claims being asserted against the Com-
pany or additional investigations or remedial actions being required.
The Company has been notified of its status as a potentially responsi-
ble party ("PRP") at the ReSolve Superfund site in North Dartmouth, Massa-
chusetts, at the Solvents Recovery Services site in Southington, Connecti-
cut, and at the Old Southington Landfill Superfund site in Southington,
Connecticut, at the Spectron, Inc. site in Elkton, Maryland, and at the
Hazardous Waste Disposal Inc. site in Farmingdale, New York. At all five
sites, the Company and all other PRPs are jointly and severally liable for
all remediation costs under applicable hazardous waste laws. Therefore,
the Company's proportionate share is subject to increase upon the insol-
vency of other PRPs.
With respect to the ReSolve site, the Company and its immediate prede-
cessor, USM Corporation's Bailey division (in the name of Emhart Corpora-
tion), have been named as PRPs for wastes sent to the site during the
1970s. Although the Company cooperated with USM in litigation against
USM's insurers to obtain indemnification for costs incurred by the Company
and USM at the site, the Company did not obtain any recovery in that ac-
tion, which was recently settled. Recent estimates provided by the PRP
group responsible for the site's remediation indicate that the Company's
potential liability for clean-up efforts at the site is approximately
$300,651 for which the Company is fully reserved and it has posted a let-
ter of credit in favor of the PRP group. The assessment paid by the Com-
pany for the fiscal period July 1, 1994 through June 30, 1995 was $32,748,
the payment of which was charged to the previously established reserve.
The group voted not to impose an annual assessment for the fiscal period
extending from July 1, 1995 through June 30, 1996. The recent discovery of
the presence of contaminants in a form not currently susceptible of short-
term remediation, however, has created uncertainty about the future scope
and cost of clean-up efforts at this site, and a possibility that the ul-
timate cost of remediation may be higher than previously estimated. The
Company is unable to predict what, if any, effect this recent discovery
may have on the Company.
On June 18, 1992, the Company received notice from the Environmental
Protection Agency (the "EPA") that it was a PRP under the federal Super-
fund law with respect to the Solvents Recovery Services of New England
Site in Southington, Connecticut (the "SRSNE Site"). Based upon a volumet-
ric ranking dated July 7, 1993, the waste allocated to the Company repre-
sents 0.11593% of the total identified waste at the SRSNE Site. Under the
terms of a settlement with Emhart, the Company agreed to assume liability
for wastes sent to the SRSNE Site by USM's Seabrook, New Hampshire facil-
ity and Emhart agreed to assume liability for wastes sent by USM's Ames-
bury, Massachusetts facility. The identified PRPs have organized a group
to negotiate with the EPA, and the Company has joined that group. The
group has successfully negotiated with the EPA to reduce the total esti-
mated cost of the initial removal action at the SRSNE Site from an origi-
nal estimate of $14 million down to a current estimate of approximately $4
million. The total estimated cost of long-term remediation at the SRSNE
Site is not yet known.
In January 1994, the Company received a Notice of Potential Liability
for the Old Southington Landfill Superfund Site (the "OSL Site") located
in Southington, Connecticut. The EPA alleged that because the Amesbury,
Massachusetts facilities of USM Corporation sent spent solvents to the
SRSNE Site for recycling prior to 1968, it was also liable for cleanup of
the OSL Site because still bottoms and other waste from the SRSNE Site had
been disposed of at the OSL Site. Both the Company and USM/Emhart received
notices of liability for the share of OSL Site costs allocated to USM Cor-
poration (Amesbury, Massachusetts). The Company and Emhart entered into a
settlement agreement under which Emhart will assume sole responsibility
for all cleanup costs, imposed by the EPA, arising out of the alleged lia-
bilities of USM Corporation's Bailey division (Amesbury, Massachusetts)
for the OSL Site.
In June 1989, the EPA notified the Company that it was a PRP under the
federal Superfund law for the Spectron, Inc. site located in Elkton, Mary-
land. A group of PRPs ("Steering Committee") entered into an agreement
with the EPA to fund and conduct a $2.8 million emergency response action
to remove stored wastes at the site. The Steering Committee also entered
into a separate agreement to pay the government's past costs associated
with the site, approximately $635,000. There are several thousand PRPs at
this site, with most being small generators with low dollar exposure. In
December 1989, nearly 800 entities, including the Company, that sent small
quantities of waste to the site participated on a cash-out basis in the
settlement for past costs and the removal action, and the Company's allo-
cated share was $8,061.90. Participation in the cash-out settlement gives
the Company protection against contribution claims from third parties for
the first phase of the site cleanup ("Phase I").
In August 1990, a separate PRP group ("Phase II PRP Group") was formed
and negotiated an agreement with the EPA to remediate contaminated seeps
on the site and perform a limited privately-funded remedial investigation/
feasibility study for the site (the so-called Phase II activities). The
Company was not asked to join the Phase II PRP Group because that group
determined that the companies that paid for Phase I of the cleanup (the
so-called "Spectron customers" because they sent their waste to the site
primarily during the time period when it was owned and operated by Spec-
tron, Inc.) would not be asked to make any financial contributions toward
Phase II until the Galaxy customers (so-called because they did business
with the site during the time period when it was owned by the Galaxy com-
pany) have paid out an amount per gallon equal to that paid by the Spec-
tron parties. An additional investigation was conducted as part of the
Phase II activities to determine the nature and extent of a new form of
contamination discovered on the site; additional design work will be com-
menced soon.
In October 1995, the Company received a notice from the EPA that it
was a PRP that has liability for conducting a Remedial Investigation/Fea-
sibility Study ("RI/FS") at the Spectron site. The Company has sixty days
in which to decide whether to participate with a group of other PRPs in
making a good faith offer to the EPA for performance of the RI/FS. In con-
nection with this, the Company may have an opportunity to enter into a de
minimis party cash out settlement with the EPA and the other PRPs. No es-
timate can be made at this time as to the amount of the Company's liabil-
ity at the Spectron site.
In 1995, the New York Department of Environmental Conservation ("DEC")
notified the Company that it was named a responsible party under the Envi-
ronmental Conservation Law of the State of New York with respect to the
Hazardous Waste Disposal, Inc. site located in Farmingdale, New York. The
site was allegedly used to store, treat and dispose of hazardous and toxic
materials between 1979 and 1981. Various investigations have been under-
taken to date. DEC is looking to the named parties to perform a Remedial
Investigation/Feasibility Study and then a cleanup of the site as war-
ranted. The scope of the ultimate cleanup may depend, in large part, on
whether the site is viewed as a source of contamination of the nearby
Fairchild Republic Site. At this time, two hazardous waste manifests have
been produced by DEC which suggest that USM Corporation's Bailey division
(Seabrook, New Hampshire) shipped two-55 gallon drums of polyol to the
site in January 1981. Based on available information, the Company's in-
volvement at the site appears to be de minimis. Additional investigations
have been undertaken to determine: (1) whether there are any other enti-
ties that shipped wastes to the site between 1979 and 1981; and (2)
whether any of the named parties actually shipped more than was originally
attributed to them. The results to date do not suggest that the Company's
ranking at the site will change significantly. The Company has demanded
that Emhart Corporation assume the defense of this claim. Emhart Corpora-
tion has taken the Company's demand for defense and indemnification under
advisement. In doing so, Emhart Corporation has taken the position that it
did not receive "prompt written notice" of the claim.
The Company also faces the possibility of liability if it is deemed a
successor to TransPlastics with respect to wastes generated and disposed
of by TransPlastics when it owned the Conneaut property. TransPlastics has
been identified as a PRP at the Millcreek site in Millcreek Township,
Pennsylvania, and at the New Lyme site located in Dodgeville, Ashtabula
County, Ohio, two sites currently undergoing remediation. TransPlastics
also received notice of a potential third party claim in connection with
the Huth Oil Site in Cleveland, Ohio. The Company did not agree to assume
any environmental liabilities of TransPlastics and no claim has been as-
serted against the Company in connection with those liabilities. Further,
under the terms of the Conneaut Acquisition agreement, TransPlastics and
its parent companies must indemnify the Company and BTP for any liability
arising out of any such claim. Nevertheless, there can be no assurance
that TransPlastics and its parent companies will have sufficient assets to
satisfy the Company's potential liability for the remediation and any dam-
ages to third parties caused by the contamination.
The Company also faces potential liability in connection with the Con-
tour Acquisition. An environmental site assessment completed by Boler de-
termined that the ground water at the Contour facility in Hillsdale, Mich-
igan, was contaminated with chlorinated solvents as a result of past site
activities. The ground water contamination plume has migrated onto adja-
cent properties. In addition, Contour is listed as a PRP for a number of
off-site disposal locations. The Contour Acquisition Purchase and Sale
Agreement, however, requires Boler to indemnify the Company for any envi-
ronmental liabilities which arise in connection with use of the property
prior to closing. In addition, Boler has executed a remediation agreement
in which it agreed to remediate, at its own expense, the identified ground
water contamination at the Hillsdale, Michigan, facility. If Boler has in-
sufficient resources to complete remediation of any contamination for
which it has indemnified the Company or otherwise becomes insolvent, the
Company could incur successor liability for the costs of remediation and
any damages to third parties.
The Company also has potential liability in connection with contamina-
tion at certain property in Cuba, Missouri, which had been leased by the
Company from 1985 to 1992. The landlord has undertaken to remediate this
property at its own expense. The Company has negotiated the termination of
all obligations of the Company with respect to the lease.
As a result of the environmental investigation conducted as part of
its due diligence during the acquisition of the three Premix/E.M.S. Inc.
facilities, the Company identified a number of environmental concerns.
Premix/E.M.S. Inc., as part of the acquisition agreement, agreed to pursue
and address these concerns, most of which it has completed. Pursuant to
the acquisition agreement, the Company performed certain post-acquisition
investigations which appeared to confirm the presence of subsurface con-
tamination, of which it has informed Premix/E.M.S. Inc. Under the acquisi-
tion agreement, Premix/E.M.S. Inc. is obligated to undertake necessary re-
mediation of this problem, if in fact any is required. Premix/E.M.S. Inc.
has entered into an Environmental Indemnification Agreement for the bene-
fit of the Company and has granted to the Company certain limited rights
of offset against the Convertible Debenture. The shareholders of Premix-
/E.M.S. Inc. have also severally undertaken to reimburse the Company in
certain limited circumstances, to the extent of distributions received by
them from Premix/E.M.S. Inc., and to the extent that Premix/E.M.S. Inc.
does not directly satisfy its indemnification obligations.
ITEM 2. PROPERTIES
The Company's manufacturing operations are performed at seven plants
located in Seabrook, New Hampshire; Conneaut, Ohio; Hillsdale, Michigan;
Madison, Indiana; Lancaster, Ohio; Hartford City, Indiana; and Portland,
Indiana. The Seabrook plant is owned by the Company and consists of an ap-
proximately 390,000 square foot building. The Company's executive offices
are located in the Seabrook plant. The Conneaut plant is leased by the
Company and consists of an approximately 183,000 square foot building. The
Hillsdale plant is owned by the Company and consists of an approximately
119,000 square foot building. The Madison plant is owned by the Company
and consists of a 71,000 square foot building. The Lancaster plant is
owned by the Company and consists of an approximately 156,000 square foot
building. The Hartford City plant is owned by the Company and consists of
an approximately 116,000 square foot building. The Portland plant is owned
by the Company and consists of an approximately 120,000 square foot build-
ing. The Dearborn engineering and design center is leased by the Company
and consists of approximately 9,500 square feet of office space.
The Company believes that its facilities and equipment are in good
condition and, including planned additions to and refurbishment of machin-
ery and equipment, its existing facilities will be adequate for the fore-
seeable future.
ITEM 3. LEGAL PROCEEDINGS
Other than the matters set forth in Item 2, Section XI ("Environmental
Matters") above, the following is the only material pending legal proceed-
ing to which the Company is a party or as to which any of its property is
subject.
SUNA ET AL. V. BAILEY CORPORATION
On June 2, 1994, the Company was served with a summons and complaint
with respect to Vicki Match Suna and Lori Rosen v. Bailey Corporation, a
purported class action suit brought in the United States District Court
for the District of New Hampshire. The complaint alleged that the Company
violated Rule 10b-5 of the Securities Exchange Act of 1934 by a purported
dissemination of misleading information as to its financial position in
connection with the purchase and sale of its securities. The Company was
successful in having the complaint dismissed, and also in rebuffing the
plaintiffs' attempt to file an amended complaint. The Court allowed the
plaintiffs to make one more attempt, however, and on September 1, 1995 a
second amended complaint was filed. The Company intends to move to dismiss
this complaint also and the action in its entirety. If this effort is un-
successful, the Company intends vigorously to assert defenses which it be-
lieves to be meritorious. The complaint does not specify an amount of dam-
ages and the proceeding is still in its infancy. The extent of any expo-
sure of the Company, therefore, cannot be determined at this time.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Common Stock has been quoted on the NASDAQ-National Market System
("NASDAQ- NMS") under the trading symbol "BAIB" since July 1, 1993. Prior
to that time, the Common Stock was quoted on the NASDAQ-Small Cap Market
and traded on the Boston Stock Exchange.
The following table sets forth, on a fiscal quarterly basis, the high
and low closing sale price for the period from the beginning of the fiscal
quarter ended October 30, 1993 through the close of fiscal year 1995 on
NASDAQ-NMS:
<TABLE>
<CAPTION>
HIGH LOW
<S> <C> <C>
FISCAL 1995
First Quarter Ended October 30, 1994 $ 7 3/4 $ 5 3/4
Second Quarter Ended January 29, 1995 9 6 3/4
Third Quarter Ended April 30, 1995 7 3/4 5 7/8
Fourth Quarter Ended July 30, 1995 7 5/8 4 1/2
FISCAL 1994
First Quarter Ended October 30, 1993 $13 3/4 $10 1/2
Second Quarter Ended January 29, 1994 16 1/2 11 1/2
Third Quarter Ended April 30, 1994 15 7/8 9
Fourth Quarter Ended July 31, 1994 11 5 1/4
</TABLE>
As of October 23, 1995, there were 563 record holders of Common Stock.
The Company has never paid cash dividends on the Common Stock. The
Company intends to retain all earnings for general corporate purposes and
does not anticipate paying cash dividends on the Common Stock in the fore-
seeable future. The Company's credit agreement with its principal bank
lender does not permit the payment of cash dividends on the capital stock
of the Company without the lender's prior consent.
ITEM 6. SELECTED FINANCIAL DATA
BAILEY CORPORATION AND SUBSIDIARIES
FOR THE FISCAL YEARS ENDED 1995, 1994, 1993, 1992 AND 1991
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Operating Data:
Net sales $ 168,228 $ 108,313 $ 91,398 $ 56,127 $ 23,954
Cost of products sold 151,414 92,379 77,010 48,360 21,285
Selling, general and adminis-
trative expenses 15,300 9,313 7,366 4,515 4,324
Interest 3,871 1,648 1,913 1,607 1,284
Provision for income taxes
(benefit) (778) 2,207 2,044 639 (975)
Net Income (loss) $ (1,579) $ 2,766 $ 3,065 $ 1,006 $ (1,964)
Per Share Data:
Net income (loss) $ (.29) $ .52 $ .73 $ .26 $ (.52)
Weighted Average Shares
Outstanding 5,444,000 5,356,000 4,187,000 3,941,000 3,744,000
Financial Position -- Year End:
Working capital (deficiency) $ (2,082) $ 7,566 $ (1,487) $ (5,004) $ (4,713)
Total assets 100,721 91,721 52,210 38,821 24,289
Short-term debt including cur-
rent portion of long-term
debt and bank overdraft 18,710 5,857 10,836 9,812 7,563
Long-term debt and capital
leases 33,136 35,438 16,674 11,830 6,761
Common stockholders' equity 18,880 20,600 6,988 2,020 839
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the percentage relationships of certain
categories of costs and expenses to net sales for the fiscal years presented:
<TABLE>
<CAPTION>
Fiscal Years Ended
JULY 30, July 31, July 31,
1995 1994 1993
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of products sold 90.0 85.3 84.3
Gross profit 10.0 14.7 15.7
Selling, general and administrative expenses 9.1 8.6 8.0
Operating income 0.9 6.1 7.7
Interest expense (net) 2.3 1.5 2.1
Income (loss) before income taxes (1.4) 4.6 5.6
Provision for income tax (benefit) (0.5) 2.0 2.2
Net income (loss) (0.9 %) 2.6% 3.4%
</TABLE>
1995 COMPARED TO 1994
The Company made the Premix/EMS Acquisition effective July 31, 1994,
and the Contour Acquisition on July 1, 1993. Accordingly, the historical results
of operations exclude the Premix/EMS Acquisition for 1994 and 1993 and include
the Contour Acquisition for one month in 1993.
Net sales in fiscal 1995 increased $59.9 million, or 55.3 % to $168.2
million, compared to $108.3 million in fiscal 1994. The increased sales are net
of planned price decreases that were effected during the year. Contributing to
the sales increase was $55.3 million of sales of the product lines purchased in
the Premix/EMS Acquisition; $9.6 million from 27 new components introduced
during the year; and $5.9 million from higher unit deliveries of 33 components
carried over from the prior year. These higher sales were offset by $10.9
million of lower sales of 50 components carried over from the prior year. The
most significant products in this category were 6 components for the Ford
Tempo/Topaz which phased out of production early in the year, and 23 components
for the Taurus/Sable which phased out at the beginning of the fourth quarter
contributing to a substantially lowered level of sales in the fourth fiscal
quarter and a net reduction for the full fiscal year.
The new product introductions during the year were primarily for the
restyled 1995 Ford Explorer sport utility vehicle and new models of the Channel
Master satellite dishes which accounted for 74.3% and 20.1%, respectively, of
the $9.6 million of new component sales.
Gross profit in fiscal 1995 increased 5.5%, to $16.8 million compared
to $15.9 million in the prior year. This increase was primarily due to the sales
volume increase resulting from the acquired Premix/EMS operations. As a
percentage of net sales, however, gross profit for fiscal 1995 declined to 10.0%
compared to 14.7% in fiscal 1994. The comparatively lower gross margin was
primarily attributable to (a) the lower average gross margin associated with the
product lines acquired in the Premix/EMS Acquisition; (b) new product launch
costs; (c) under-utilization of manufacturing capacity particularly during the
second half of the fiscal year; (d) planned price decreases effected during the
year, and (e) the gradual replacement during the year of more mature product
lines with newly introduced lower margin components.
Selling, general and administrative expenses in fiscal 1995 increased
$6.0 million, or 64.3%, to $15.3 million compared to $9.3 million in fiscal
1994. The year-to-year increase was principally due to the addition of selling
and administrative expenses associated with the acquired Premix/EMS operations
and in part due to planned increases in design engineering and program
management functions. As a percentage of net sales, selling, general and
administrative expenses increased to 9.1% in fiscal 1995 compared to 8.6% in
fiscal 1994.
Interest expense in fiscal 1995 increased $2.2 million, or 135%, to
$3.9 million compared to $1.7 million in fiscal 1994. The increase was due to
the additional interest associated with $23.0 million of debt issued to finance
the purchase of the Premix/EMS acquisition and increased utilization of the
Company's revolving line-of-credit.
Before provision for income taxes, the Company incurred a loss of $2.4
million for the fiscal year ended July 30, 1995 compared to pre-tax income of
$5.0 million for the prior year. Accordingly, the Company was able to avail
itself of income tax benefits attributable to the fiscal 1995 net operating loss
carried back to prior years. The benefit thus recognized was at an effective
rate of 33% compared to a tax expense rate of 44% for fiscal 1994.
For the fiscal year ended July 30, 1995, the Company incurred a net
loss of $1.6 million, or $.29 per share, compared to net income of $2.8 million,
or $.52 per share in fiscal 1994. This negative operating performance for fiscal
1995 was most pronounced in the fourth quarter. For the fourth quarter ended
July 30, 1995, on sales of $34.3 million the Company incurred a net loss of $4.2
million or $.77 per share. These adverse operating results were caused by the
stretching out of new product launching activities, greater than planned
acquisition assimilation costs, certain raw material cost increases and a
shortfall in sales during the final four months of the year.
1994 COMPARED TO 1993
The Company made the Premix/EMS Acquisition effective July 31, 1994,
and the Contour Acquisition on July 1, 1993. Accordingly, the historical results
of operations exclude the Premix/EMS Acquisition for both 1994 and 1993 and
include the Contour Acquisition for one month in 1993.
Net sales in fiscal 1994 increased $16.9 million, or 18.5% to $108.3
million, compared to $91.4 million in fiscal 1993. The increased sales are net
of planned price decreases that were effected during the year. Contributing to
the sales increase was $12.1 million from 19 new components introduced during
the year; $17.0 million of sales of the product line purchased in the Contour
Acquisition; and $2.5 million from higher unit deliveries of 27 components
carried over from the prior year. These increases were offset by a $10.7 million
decline in sales resulting from a reduction in unit deliveries of 39 components
carried over from the prior year.
The new product introductions during the year were primarily for the
new 1994 Ford Mustang and the new Thunderbird which accounted for 61.0% and
38.6% of the $12.1 million of new component sales, respectively. The sales
decline in carryover products was primarily associated with the Tempo/Topaz,
Taurus/Sable and Explorer which were lower in fiscal 1994 compared to fiscal
1993 by 32.3%, 14.2% and 13.0%, respectively.
Gross profit in fiscal 1994 increased $1.5 million, or 10.7%, to $15.9
million compared to $14.4 million in the prior year. This increase was primarily
due to increased sales compared to fiscal 1993. As a percentage of net sales,
gross profit for fiscal 1994 declined to 14.7% compared to 15.7% in fiscal 1993.
The reduction in gross margin was primarily attributable to (a) planned price
decreases effected during the year; (b) comparatively lower sales of components
for the Tempo/Topaz, Explorer and Taurus/Sable programs which, as more mature
products, had provided a greater contribution to manufacturing margins; (c)
under-utilized capacity during most of the year at the Hillsdale and Madison
facilities; and (d) product launch costs associated with the start-up of the
Ford Mustang and Thunderbird programs and the transfer of production of the
Mercury Villager and Nissan Quest components to one of the facilities purchased
in the Contour Acquisition.
The negative impact on gross margin for fiscal 1994 resulting from the
foregoing factors was nevertheless offset by several planned manufacturing
productivity improvements effected during the year. These included (a) material
usage reductions and labor efficiencies gained from additions to robotics in
both molding and painting processes; (b) revisions to fixtures used in some
operations; (c) improvements in packaging; and (d) changes in material handling
techniques.
Selling, general and administrative expenses in fiscal 1994 increased
$1.9 million, or 26.4%, to $9.3 million compared to $7.4 million in fiscal 1993.
The year-to-year increase was principally due to planned additions to design
engineering, marketing, program management and senior management functions. As a
percentage of net sales, selling, general and administrative expenses increased
to 8.6% in fiscal 1994 compared to 8.0% in fiscal 1993.
Interest expense in fiscal 1994 decreased $265,000, or 13.9%, to $1.6
million compared to $1.9 million in fiscal 1993. The decrease was due to a lower
average amount of short-term borrowings and long-term debt outstanding during
fiscal 1994 compared to the prior year.
The Company's effective tax rate was 44.4% for fiscal 1994 compared to
40.0% for fiscal 1993. The higher rate for fiscal 1994 is due to (a) the
adoption by the Company during the year of Financial Accounting Standards Board
Statement 109 which resulted in a one-time, non-tax deductible charge of $84,000
and (b) the recognition during the year of a non-tax deductible charge of
$300,000 related to an environmental settlement.
Net income in fiscal 1994 decreased $299,000 to $2.8 million ($.52 per
fully diluted share) compared to $3.1 million ($.73 per fully diluted share) in
fiscal 1993. As a percentage of net sales, net income in fiscal 1994 was 2.6%
compared to 3.4% in fiscal 1993. Fully diluted per share amounts reflect a 27.9%
increase in shares outstanding, calculated on a weighted average of 5,356,000
shares outstanding in fiscal 1994 compared to 4,187,000 shares outstanding in
fiscal 1993.
LIQUIDITY AND CAPITAL RESOURCES
At the inception of the fiscal year ended July 30, 1995 the Company
acquired substantially all of the assets of Premix/E.M.S. Inc. for an aggregate
purchase price of $34.5 million. The acquisition was financed via issuance to
the Sellers of a $7.0 million secured promissory note plus a $9.0 million
convertible debenture, payment in cash of $9.9 million, and the assumption of
$8.6 million of current liabilities. In connection with the Acquisition, the
Company negotiated an amended credit agreement with a bank which, with
amendments, provided a new $8.0 million term loan, a revolving line-of-credit of
$24.0 million and an equipment lease line-of-credit of $2.5 million. By
subsequent amendment, $4.0 million of the revolver was carved out into a 3-year
fixed maturity note.
During the fiscal year ended July 30, 1995, the Company operated at an
expanded level primarily due to the addition of the sales volume and facilities
purchased in the Premix/EMS Acquisition. The increased operating rate required
increased investments in inventories and reimbursable automation equipment.
Meanwhile planned capital expenditures plus assets acquired under capitalized
leases totaled $9.0 million. Also, during the last four months of the fiscal
year, sales declined as certain higher-margin products phased out while
launching of new products with associated start-up costs stretched out over
protracted schedules. Meanwhile, higher than planned acquisition assimilation
costs were incurred and several raw material suppliers posted price increases.
As a result, operations generated a $4.2 million net loss in the fourth quarter.
Faced with the reduced level of operating performance during the fourth
quarter, the Company accelerated measures to curtail costs and expenses. In this
connection, during August, 1995, the Company announced a temporary phasing down
of operations at its Portland, Indiana production facility and the transfer of
production to other Company plants to improve facility utilization. This plant
deactivation is planned for an interim period until product engineering and
development projects related to 1997 and 1998 programs are ready to be started
into production.
As a result of the foregoing, at July 30, 1995 total capitalization
amounted to $52.0 million with long-term debt at $33.1 million, or 63.7%, and
stockholders' equity of $18.9 million, or 36.3% of total capitalization.
Meanwhile, during July 1995 a fixed asset note due July 1, 1996 in the amount of
$5.0 million became a current liability thereby contracting net working capital
with the result that at July 30, 1995, the Company's current ratio was .95 to 1.
With these conditions developing, as of the end of the fourth quarter,
there were instances of non-compliance with technical covenants of the Company's
bank credit agreement. The bank has issued waivers and mutually satisfactory
amended covenants are being determined for subsequent periods.
Faced with contraction of liquidity, the Company put in place for
fiscal year 1996 operating plans, budgets and expenditure curtailments so as to
operate within prospective financial resources. These measures have begun to
show progress with the outlook that the Company anticipates that cash flow and
credit availability will be adequate to meet requirements including debt
retirement obligations for the next twelve months.
COSTS AND EXPENSES RELATED TO PROTECTION OF THE ENVIRONMENT
During fiscal 1995 the Company incurred costs and expenses, satisfied
certain liabilities and made capital expenditures in connection with on-going
management of compliance with environmental laws and regulations and in response
to mandated contributions to the remediation of contaminated sites as to which
it has been identified as a potentially responsible party ("PRP"). The expenses
of on-going compliance in fiscal 1995 amounted to approximately $598,000 and
consisted primarily of the removal of hazardous wastes generated at the
Company's operating facilities, monitoring, testing and reporting activities,
depreciation of control equipment and legal expense related to environmental
matters. These expenses in fiscal 1994 and 1993 were approximately $637,000 and
$669,000, respectively. In addition, as of May 1994, the Company incurred a
one-time charge of $300,000 as the cost of full and final settlement of claims
in the State of New Hampshire related to alleged instances of non-compliance
with certain hazardous waste handling regulations.
At July 30, 1995, and July 31, 1994, the Company's environmental
accruals totaled $289,000 and $322,000, respectively. The Company's fiscal 1995
share of mandated payments as a PRP for remediation of off-site locations
amounted to approximately $33,000, which was charged to previously accrued
liabilities. The Company believes that it has identified its potential
environmental exposures that are of a material nature and has accrued the low
end of the range of its likely exposure. The Company does not believe that any
additional liability relating to identified sites is material to its liquidity,
financial position or results of operations.
During fiscal 1996 the Company expects that on-going costs of
compliance with environmental regulations will be approximately $725,000.
Capital expenditures related to environmental matters in fiscal 1996 are
expected to be approximately $650,000.
CLASS ACTION LITIGATION
In July 1994, the Company was served with a summons and complaint with
respect to a purported class action suit brought in the United States District
Court for the District of New Hampshire. The complaint alleged that the Company
violated Rule 10b-5 of the Securities and Exchange Act of 1934 by a purported
dissemination of misleading information as to its financial position in
connection with the purchase and sale of its securities. The Company was
successful in having the complaint dismissed, and sought to rebuff the
plaintiff's attempt to file an amended complaint. However, the Court allowed the
plaintiffs to make one more attempt and on September 1, 1995, a second amended
complaint was filed. The Company has moved to dismiss this amended complaint and
the action in its entirety. The Court's decision is pending. Since the complaint
does not specify an amount of damages and the proceeding is still in its early
stages, the extent of the Company's exposure cannot be determined at this time.
However, should this action proceed, the Company intends to vigorously assert
defenses which it believes to be meritorious.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BAILEY CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Auditors 16
Consolidated Balance Sheets -- July 30, 1995 and July 31, 1994 17
Consolidated Statements of Operations for the Fiscal Years ended 1995, 1994
and 1993 18
Consolidated Statements of Stockholders' Equity for the Fiscal Years ended
1995, 1994 and 1993 19
Consolidated Statements of Cash Flows for the Fiscal Years ended 1995, 1994
and 1993 20
Notes to Consolidated Financial Statements 21
SCHEDULES
II Valuation and Qualifying Accounts for the Fiscal Years ended 1995,
1994 and 1993 36
</TABLE>
All other schedules called for under Regulation S-X are not submitted
because they are not applicable or not required or because the required
information is included in the financial statements or notes thereto.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
BAILEY CORPORATION AND SUBSIDIARIES
We have audited the accompanying consolidated balance sheets of Bailey
Corporation and subsidiaries as of July 30, 1995, and July 31, 1994, and
the related consolidated statements of operations, stockholders' equity
and cash flows for each of the years in the three-year period ended July
30, 1995. In connection with our audits of the consolidated financial
statements, we have also audited the financial statement schedule as
listed in the accompanying index. These consolidated financial statements
and financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consoli-
dated financial statements and financial statement schedule 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Bailey Corporation and subsidiaries as of July 30, 1995 and July 31, 1994,
and the results of their operations and their cash flows for each of the
years in the three-year period ended July 30, 1995, in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
October 25, 1995
BAILEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JULY 30, 1995 AND JULY 31, 1994
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
ASSETS
Current assets:
Cash $ 313 $ 201
Restricted cash (Note 8) 817 500
Accounts receivable, net of allowances of $763 in 1995 and $215 in 1994
(Note 7) 13,751 19,809
Inventories (Notes 3 and 7) 18,325 15,500
Prepaid expenses and other current assets (Note 4) 4,026 1,419
Deferred income taxes (Note 11) 3,709 1,142
Total current assets 40,941 38,571
Property, plant and equipment, net (Notes 2, 5 and 8) 50,391 43,240
Other assets, net (Note 6) 9,389 9,910
$ 100,721 $ 91,721
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft $ 1,585 $ 321
Short-term debt (Note 7) 9,360 3,846
Current portion of long-term debt (Note 8) 7,765 1,690
Accounts payable 18,611 18,554
Accrued liabilities and other current liabilities 5,535 6,468
Income taxes payable (Note 11) 167 126
Total current liabilities 43,023 31,005
Long-term debt, less current portion (Note 8) 33,136 35,438
Other long-term liabilities (Note 9) 2,245 2,104
Deferred income taxes (Note 11) 3,437 2,574
Commitments and contingencies (Note 15) -- --
Total liabilities 81,841 71,121
Stockholders' equity (Note 12):
Common stock, $.10 par value, 20,000,000 shares authorized; 5,393,558 and
5,382,058 shares issued in 1995 and 1994, respectively 539 538
Additional paid-in capital 13,805 13,587
Retained earnings 5,202 6,781
Minimum pension liability adjustment (Note 10) (403) (306)
Treasury stock, 40,000 shares at cost (263) --
Total stockholders' equity 18,880 20,600
$ 100,721 $ 91,721
</TABLE>
See accompanying notes to consolidated financial statements.
BAILEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEARS ENDED 1995, 1994 AND 1993
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Net sales (Note 13) $ 168,228 $ 108,313 $ 91,398
Cost and expenses:
Cost of products sold 151,414 92,379 77,010
Selling, general and administrative expenses 15,300 9,313 7,366
Operating income 1,514 6,621 7,022
Interest expense (net) (3,871) (1,648) (1,913)
Income (loss) before income taxes (2,357) 4,973 5,109
Income tax provision (benefit) (Note 11) (778) 2,207 2,044
Net income (loss) $ (1,579) $ 2,766 $ 3,065
Net income (loss) per common share:
Primary $ (.29) $ .52 $ .80
Fully diluted $ (.29) $ .52 $ .73
Weighted average shares outstanding:
Primary 5,444,000 5,313,000 3,842,000
Fully diluted 5,444,000 5,356,000 4,187,000
</TABLE>
See accompanying notes to consolidated financial statements.
BAILEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE FISCAL YEARS ENDED 1995, 1994 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
MINIMUM
ADDITIONAL PENSION
PAID-IN RETAINED LIABILITY TREASURY
SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT STOCK TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
Balance July 26, 1992 3,744 $ 374 $ 696 $ 950 $ -- $ -- $ 2,020
Private placement of common
stock (Note 12) 327 33 1,870 -- -- -- 1,903
Net income -- -- -- 3,065 -- -- 3,065
Balance July 31, 1993 4,071 407 2,566 4,015 -- -- 6,988
Public offering of common
stock (Note 12) 1,076 108 10,488 -- -- -- 10,596
Exercise of stock options
(Note 12) 119 12 439 -- -- -- 451
Exercise of warrants (Note
12) 116 11 (11) -- -- -- --
Tax benefit from exercise of
stock options (Note 11) -- -- 105 -- -- -- 105
Minimum pension liability ad-
justment (Note 10) -- -- -- -- (306) -- (306)
Net income -- -- -- 2,766 -- -- 2,766
Balance July 31, 1994 5,382 538 13,587 6,781 (306) -- 20,600
Purchase of treasury stock -- -- -- -- -- (263) (263)
Exercise of stock options
(Note 12) 12 1 25 -- -- -- 26
Tax benefit from exercise of
stock options (Note 11) -- -- 193 -- -- -- 193
Minimum pension liability ad-
justment (Note 10) -- -- -- -- (97) -- (97)
Net loss -- -- -- (1,579) -- -- (1,579)
Balance at July 30, 1995 5,394 $ 539 $ 13,805 $ 5,202 $ (403) $ (263) $ 18,880
</TABLE>
See accompanying notes to consolidated financial statements.
BAILEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED 1995, 1994 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (1,579) $ 2,766 $ 3,065
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
Depreciation and amortization 5,268 3,120 2,353
Loss (gain) on disposal of property, plant and equipment 2 (23) (27)
Deferred income taxes (1,433) 1,010 672
Gain on early payment of debt -- (165) --
Change in assets and liabilities, net of effects of acquisi-
tions:
Decrease (increase) in accounts receivable 6,058 (1,146) (1,227)
(Increase) decrease in inventory (2,825) 158 (2,392)
(Increase) decrease in prepaid expenses and other current
assets (2,607) (208) 116
Increase in other assets -- net (3,035) (1,724) (306)
Increase (decrease) in accounts payable 57 2,390 (1,137)
(Decrease) increase in accrued liabilities and other cur-
rent liabilities (453) (561) 475
Increase (decrease) in income taxes payable 234 (1,107) 1,248
(Decrease) increase in other liabilities (227) 278 (138)
Net cash (used in) provided by operating activities (540) 4,788 2,702
Cash flows from investing activities:
Capital expenditures (7,506) (4,333) (4,011)
Acquisition of businesses, net of cash acquired (723) (9,375) (73)
Proceeds from sale of property and equipment 36 77 316
Net cash used in investing activities (8,193) (13,631) (3,768)
Cash flows from financing activities:
Increase (decrease) in short-term debt (including bank over-
drafts), net 6,778 (3,800) 1,151
Proceeds from long-term borrowings 4,000 8,000 --
Payments on long-term debt and capital leases (1,696) (6,459) (4,010)
Issuance of 9% convertible subordinated promissory notes -- -- 1,278
Proceeds from issuance of common stock -- 10,596 1,875
Proceeds from exercise of stock options 26 451 --
Purchase of treasury stock (263) -- --
Decrease in restricted cash -- -- 845
Net cash provided by financing activities 8,845 8,788 1,139
Net increase (decrease) in cash 112 (55) 73
Cash, beginning of year 201 256 183
Cash, end of year $ 313 $ 201 $ 256
</TABLE>
See accompanying notes to consolidated financial statements.
BAILEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR FISCAL YEARS ENDED 1995, 1994 AND 1993
(1) SIGNIFICANT ACCOUNTING POLICIES
Business Operations
Bailey Corporation (the "Company") is a manufacturer of high quality
molded plastic exterior components for sale to automobile manufacturers.
Customers include original equipment manufacturers and other suppliers to
the automobile industry in the United States and Canada.
Fiscal Year
The fiscal year of the Company ends on the nearest Sunday prior to or
at July 31. All references herein to 1995, 1994, and 1993 mean the fiscal
years ended July 30, 1995, July 31, 1994, and July 31, 1993, respectively.
Principles of Consolidation
The consolidated financial statements include the accounts of the Com-
pany and its wholly owned subsidiaries. All significant intercompany
transactions and balances are eliminated in consolidation.
Inventories
Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market (net realizable value).
Depreciation and Amortization
Depreciation and amortization is provided on a straight-line basis
over the estimated useful lives of owned assets. Assets held under capital
leases are depreciated over their respective lease term. The following is
a summary of estimated useful lives:
<TABLE>
<CAPTION>
<S> <C>
Land improvements 5 years
Buildings and improvements 15-30 years
Machinery and equipment 3-11 years
</TABLE>
Goodwill
Goodwill consists principally of excess purchase price over fair mar-
ket value of net assets acquired, and is being amortized over 40 years
using the straight-line method.
Deferred Tooling, Design and Pre-production Costs
Unreimbursed costs incurred in excess of reimbursements for customer- owned
tooling are recorded as deferred tooling costs. Costs incurred for the design of
components to be built for customers are recorded as de- ferred design,
engineering and pre-production costs. These costs are amortized based on units
produced in each year over the term of production contracts (generally 3 to 5
years) to which the tooling, design and pre-production costs relate.
Reimbursable Deferred Automation
In connection with production programs, the Company purchases automa-
tion equipment for which it is reimbursed by the customer on a per piece
shipped basis. Amounts estimated to be reimbursed in the succeeding twelve
months are classified as current. Reimbursements estimated to be received
beyond one year are included in other assets. Imputed interest on such re-
imbursements are recognized as shipments are made. Title to the equipment
reverts to the customer upon completion of the production program.
Earnings per Share
Earnings per share are calculated by dividing net income by the
weighted average common shares outstanding during each period, including
the dilutive effect of warrants and options outstanding during the period.
Fully diluted earnings per share also include the assumed conversion of
convertible debt. In fiscal 1995 warrants, options and convertible debt
were anti-dilutive, and accordingly, have not been included in the calcu-
lation.
Income Taxes
Amounts in the financial statements related to income taxes are calcu-
lated using the principles of Financial Accounting Standards Board State-
ment No.109, "Accounting for Income Taxes" (FAS 109). Prepaid and deferred
taxes reflect the impact of temporary differences between the amounts of
assets and liabilities recognized for financial reporting purposes and the
amounts recognized for tax purposes. These deferred balances are measured
by applying currently enacted tax rates. A valuation allowance reduces de-
ferred tax assets when it is "more likely than not" that some portion or
all of the deferred tax assets will not be recognized.
Prior to the adoption of the provisions of Statement No. 109, the Com-
pany accounted for income taxes under the deferred method (APB 11). APB 11
required deferred income taxes to be recognized for income and expense
items reported in different years for financial reporting and income tax
purposes using current tax rates. Under the deferred method, deferred
taxes are not adjusted for subsequent changes in tax rates.
Revenue Recognition
Sales are recognized upon shipment of products to customers.
(2) BUSINESS ACQUISITIONS
Effective July 31, 1994, the Company acquired substantially all of the
assets of Premix/EMS Inc. (the "Premix/EMS Acquisition"), a manufacturer
of automotive molded plastic exterior components, for an aggregate pur-
chase price of $34,484,000, subject to post-closing adjustments. Payment
consisted of a secured five year promissory note in the principal amount
of $7,000,000, bearing interest annually at a floating prime rate; a five-
year convertible debenture in principal amount of $9,000,000, bearing in-
terest at a fixed rate of 8% per annum, and convertible into Bailey Corpo-
ration common stock at $10 per share; cash of $9,855,000 less $480,000
held pending satisfaction of certain conditions (in fiscal 1995, this
amount was fully paid); and assumption of certain liabilities totaling
$8,629,000. The acquisition has been accounted for as a purchase with the
purchase price allocated over the estimated fair value of the assets and
liabilities assumed, resulting in goodwill of $3,227,000 at July 31, 1994.
The determination of the final purchase price was subject to a post-
closing audit which was completed in fiscal year 1995. As a result of the
audit and receipt of final appraisals of the fair market value of the net
assets acquired, the entire amount of goodwill was reclassified to machin-
ery and equipment in the fourth quarter. Additionally, the Company has un-
successfully sought recovery of a portion of the purchase price and has
instituted arbitration procedures with the sellers. It is anticipated that
the arbitration process will be resolved in the second quarter of fiscal
1996. Should any of the purchase price be recovered, it will reduce the
recorded values of the acquired property, plant and equipment.
On July 1, 1993, the Company acquired certain assets totaling
$7,801,000 and assumed certain liabilities totaling $1,580,000 of the Con-
tour Technologies Division of the Boler Company (the "Contour Acquisi-
tion"), a manufacturer of automotive plastic parts. Payment consisted of a
fixed asset note in the principal amount of $5,047,000 payable on July 1,
1996 with certain extension provisions (Note 8), bearing interest at 8%
per annum; and a working capital note in the principal amount of
$1,174,000 bearing interest at 8% and payable weekly from the proceeds of
the acquired accounts receivable. The acquisition has been accounted for
as a purchase with the purchase price allocated over the fair value of the
assets acquired and liabilities assumed. The operating results of Contour
Technologies have been included in the consolidated operating results
since the date of acquisition.
The following unaudited pro forma summary presents the consolidated
results of operations assuming that the Premix/EMS Acquisition occurred at
the beginning of fiscal 1994, after giving effect to certain adjustments,
including interest expense on the acquisition debt and related income tax
effects. The pro forma results have been prepared for comparative purposes
only and do not purport to be indicative of what would have occurred had
the Premix/EMS Acquisition been made as of that date or of results which
may occur in the future.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
JULY 31, 1994
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C>
Net sales $ 166,894
Net (loss) $ (1,573)
Net (loss) per share $ (.29)
</TABLE>
(3) INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Raw materials $ 7,424 $ 7,433
Work-in-process 2,555 2,480
Finished goods 2,745 3,548
Tooling 5,601 2,039
$18,325 $15,500
</TABLE>
(4) PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the following (in
thousands):
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Prepaid insurance $ 595 $ 202
Prepaid expenses 430 206
Miscellaneous receivables 614 828
Other 99 183
Reimbursable deferred automation (Note 1) 1,240 --
Income taxes receivable 1,048 --
$4,026 $1,419
</TABLE>
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost and consists of the
following (in thousands):
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Land and improvements $ 1,098 $ 1,095
Buildings and improvements 16,557 14,200
Machinery and equipment 51,791 41,870
Total 69,446 57,165
Less accumulated depreciation (19,055) (13,925)
Net $ 50,391 $ 43,240
</TABLE>
Included in property, plant and equipment is equipment held under cap-
italized leases. This equipment has a cost basis of $5,685,000 and
$4,237,000 at July 30, 1995, and July 31, 1994, respectively. Accumulated
depreciation relating to this equipment amounted to $1,874,000 and
$1,443,000 at July 30, 1995, and July 31, 1994, respectively.
Depreciation expense, including amortization of capitalized leases,
was $5,256,000, $3,108,000, $2,341,000, in fiscal 1995, 1994, and 1993,
respectively.
(6) OTHER ASSETS
Other assets consist of the following (in thousands):
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Goodwill, net of accumulated amortization of $48 and $36 in 1995
and 1994 (Note 2) $ 410 $3,649
Deferred tooling, design, and pre-production costs (Note 1) 4,782 3,654
Reimbursable deferred automation, net of current portion of
$1,240 (Note 1) 2,144 --
Pension intangible assets and prepaid costs (Note 10) 1,446 1,583
Restricted Cash (Note 8) -- 317
Other assets, net 607 707
$9,389 $9,910
</TABLE>
Amortization of goodwill amounted to $12,000 in each of the fiscal
years 1995, 1994, and 1993.
(7) SHORT-TERM DEBT
Short-term debt consists of the revolving credit facility which car-
ried a balance of $9,360,000 and $3,846,000 at July 30, 1995, and July 31,
1994, respectively.
In connection with the Premix/EMS Acquisition (Note 2), the Company
renegotiated its credit agreement with a bank. The agreement consists of a
term note with an initial advance of $8,000,000 (Note 8). Additionally,
the Company maintains a revolving credit facility with a maximum avail-
ability of $24,000,000, subject to certain limitations based on the levels
of accounts receivable and inventory.
On July 28, 1995, the Company elected to issue a $4,000,000 Fixed Ma-
turity Carve Out Note under the existing credit agreement which reclassi-
fied $4,000,000 of outstanding borrowings under the revolving credit fa-
cility to long term debt. The Fixed Maturity Carve Out Note is due in its
entirety on August 1, 1998, provided that no event of default has occurred
prior to the due date.
Obligations to the bank are secured by substantially all assets of the
Company. The term note bears interest at the bank's prime rate (8.75% at
July 30, 1995) plus 0.5%. The revolving credit facility and the Fixed Ma-
turity Carve Out Note bear interest at the bank's prime rate. The credit
agreement includes, among other provisions, restrictive covenants relating
to the maintenance of certain financial and earnings ratios, prohibits the
payment of cash dividends, and restricts the incurrence of additional
debt, except with approval of the bank. As of July 30, 1995 as to certain
of these covenants there were conditions of non-compliance by the Company.
The bank has issued waivers and has agreed to determine mutually satisfac-
tory covenants for subsequent periods.
(8) LONG-TERM DEBT
Long term debt outstanding consists of the following (in thousands):
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Term note payable to bank (Note 7) $ 7,333 $ 8,000
Fixed Maturity Carve Out Note (Note 7) 4,000 --
Ohio Bond Fund(a) 2,476 2,730
Fixed asset note(b) 5,047 5,047
Secured promissory note(c) 7,000 7,000
8% convertible debenture(d) 9,000 9,000
Industrial Revenue Bonds at various rates from 5% to 7% and due
in varying amounts to 2003 975 1,198
Capital lease obligations, at various rates from 8.5% to 13.0%
and due in varying amounts to 2003 3,820 2,903
Total secured debt 39,651 35,878
9% convertible subordinated notes(e) 1,250 1,250
40,901 37,128
Less amounts payable in one year 7,765 1,690
$33,136 $35,438
(a) This funding was received from the Director of Development of the
State of Ohio in the form of a long term lease. Ten percent or
$317,000 was withheld to reduce the amount of the final payment and an
additional $500,000 was withheld as additional security for payments
under the lease. Both are reflected as restricted cash under current
assets. In August 1995, the Company filed an application with the Di-
rector of Development for the State of Ohio requesting conversion of
both restricted cash amounts ($817,000) to letters of credit, accord-
ingly it is anticipated that these funds will be collected within fis-
cal year 1996.
(b) This note relates to the Contour Acquisition (Note 2) and is payable
by July 1, 1996 (the "Fixed Asset Note Extension Date"). The note
bears interest at the rate of 8% and is secured by the acquired equip-
ment and by mortgages on each of the Hillsdale and Madison properties.
If the Company fails to pay the entire principal on or prior to the
Fixed Asset Note Extension Date, the principal shall be increased by
(i) an amount equal to 17.65% of the principal plus (ii) the interest
that would have accrued from closing to the Fixed Asset Note Extension
Date at an interest rate of 8%. Principal would then mature and be
payable in annual installments of $1,000,000 on July 1, 1996 and 1997,
with the remaining unpaid balance due on July 1, 1998. It is manage-
ment's intention to pay this note in full by July 1, 1996.
(c) This note relates to the Premix/EMS Acquisition (Note 2). Principal
payments of $625,000 are to be made bi-annually beginning on January
31, 1996, with a final installment of $2,625,000 due on July 31, 1999.
The note bears interest at a floating prime rate and is secured by the
acquired property, plant and equipment.
(d) This note relates to the Premix/EMS Acquisition (Note 2) and matures
on July 31, 1999. The note is convertible into Bailey Corporation com-
mon stock at $10 per share and requires the Company to obtain an ef-
fective registration statement to register the "convertible shares."
(e) These notes were issued through a private placement during April 1993
(Note 12). The notes are convertible into common stock in the Company
at $10 per share, and mature in the year 2000.
</TABLE>
Aggregate principal payments due over the next five years (and there-
after) are as follows for the fiscal years ending (in thousands):
<TABLE>
<S> <C>
July 28, 1996 $ 7,765
July 27, 1997 3,472
July 26, 1998 3,827
July 25, 1999 5,486
July 31, 2000 18,902
Thereafter 1,449
$40,901
</TABLE>
(9) OTHER LONG-TERM LIABILITIES
Other long-term liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Additional minimum pension liability (Note 10) $1,848 $1,635
Deferred gain on sale of equipment 108 147
Environmental liability (Note 15) 289 322
$2,245 $2,104
</TABLE>
(10) PENSION PLANS
The Company has various retirement plans covering substantially all
employees. The Company maintains five defined benefit pension plans cover-
ing certain full-time hourly and salaried employees. After meeting certain
qualifications, an employee acquires a vested right to future benefits.
The benefits payable under the plans are generally determined on the basis
of the employees' length of service and earnings. For all plans, the Com-
pany's funding policy is to make at least the minimum annual contributions
required by Federal law and regulation.
The components of net pension cost are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service costs -- benefits earned during the period $ 316 $ 108 $ 199
Interest cost on projected benefit obligations 873 505 427
Return on assets (1,001) (108) (321)
Net amortization and deferral 450 (85) 101
Net pension cost $ 638 $ 420 $ 406
</TABLE>
The funded status of the defined benefit plans was as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1994
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits $3,865 $ 6,231 $3,271 $ 4,962
Nonvested benefits 181 346 275 319
Effect of union negotiations -- -- -- 692
Accumulated benefit obligation 4,046 6,577 3,546 5,973
Projected benefit obligation 4,770 6,968 4,096 5,973
Market value of plan assets 5,181 4,438 4,596 3,469
Excess (deficiency) of assets over projected benefit
obligation 411 (2,530) 500 (2,504)
Unrecognized net loss 330 674 162 325
Unrecognized prior service costs -- 879 -- 973
Unrecognized net transition obligation -- 294 -- 336
Prepaid (accrued) pension cost $ 741 $ (683) $ 662 $ (870)
</TABLE>
An additional liability of $1,848,000 and $1,635,000 related to cer-
tain plans has been included in other long-term liabilities at July 30,
1995 and July 31, 1994, respectively, to reflect the required minimum lia-
bility for unrecognized prior service costs. As a result of recording this
additional liability the Company recorded a reduction to stockholders' eq-
uity of $403,000 at July 30, 1995, and an adjustment of $306,000 at July
31, 1994, net of applicable deferred income taxes. In addition, an intan-
gible asset in the amount of $1,173,000 and $1,309,000 has been included
in other assets at July 30, 1995, and July 31, 1994, respectively, to re-
flect the allowable asset recognizable up to the amount of unrecognized
prior service costs.
The weighted-average assumed discount rate and rate of return on plan
assets was 8% and 8.5% in 1995 and 1994. The expected rate of increase in
compensation levels used was 4.5% for both 1995 and 1994.
Plan assets consist principally of cash and cash equivalents, listed
common stocks, debentures, and fixed income securities.
On December 31, 1992, a salaried pension plan was frozen and no fur-
ther service liability will accrue under the plan. Effective January 1,
1993, a defined contribution plan was established whereby eligible employ-
ees may contribute up to 10% of their salary, with a dollar-for-dollar
match by the Company of up to 2% of an employee's salary. The Company re-
corded expense under this plan of $286,000, $220,000 and $148,800 for
1995, 1994 and 1993, respectively.
During fiscal year 1994 the Company and the Union agreed to tempo-
rarily freeze benefit accruals of the Bailey Hourly Pension Plan in con-
sideration for providing an increasing schedule of benefit levels during
the course of the bargaining agreement. The schedule of increasing monthly
benefit levels for each year of service is as follows for retirements
occurring on or after:
<TABLE>
<S> <C>
February 7, 1994 $18.00
June 8, 1995 $19.00
June 8, 1996 $20.00
June 8, 1997 $21.00
June 8, 1998 $22.00
</TABLE>
(11) INCOME TAXES
As of August 1, 1993, the Company adopted Financial Accounting Stan-
dards Board Statement 109. The cumulative effect of this change in ac-
counting for income taxes was immaterial and was included in selling, gen-
eral and administrative expenses in the consolidated statement of opera-
tions for the year ended July 31, 1994. Prior years' financial statements
have not been restated to apply the provisions of Statement 109.
Total income tax expense (benefit) for the years ended July 30, 1995
and July 31, 1994 was allocated as follows (in thousands):
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
JULY 30, JULY 31,
1995 1994
<S> <C> <C>
Income from operations $(778) $2,207
Stockholders' equity, for compensation expense for tax pur-
poses in excess of amounts recognized for financial re-
porting purpose (193) (105)
$(971) $2,102
</TABLE>
Income tax expense (benefit) from operations consists of (in thou-
sands):
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
<S> <C> <C> <C>
Year ended July 30, 1995:
U.S. Federal $ 513 $(1,218) $ (705)
State and local 142 (215) (73)
$ 655 $(1,433) $ (778)
Year ended July 31, 1994:
U.S. Federal $1,001 $ 698 $1,699
State and local 355 153 508
$1,356 $ 851 $2,207
Year ended July 31, 1993:
U.S. Federal $ 996 $ 672 $1,668
State and local 376 -- 376
$1,372 $ 672 $2,044
</TABLE>
The differences between the statutory Federal rate and the effective
tax rate are as follows:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
JULY 30, JULY 31, JULY 31,
1995 1994 1993
<S> <C> <C> <C>
Statutory Federal income tax rate 34.0% 34.0% 34.0%
State taxes (benefit), net (3.1) 6.9 4.9
Environmental settlement -- 2.1 --
Other, net 2.1 1.4 1.1
33.0% 44.4% 40.0%
</TABLE>
For the year ended July 31, 1993, deferred income tax expense of
$672,000 resulted in differences in the recognition of income and expense
for income tax and financial reporting purposes. The sources and tax ef-
fects of those timing differences are presented below (in thousands):
<TABLE>
<CAPTION>
JULY 31,
1993
<S> <C>
Alternative minimum tax $183
Depreciation 225
Pension (53)
Inventory (48)
Deferred tooling, design and pre-production costs 382
Other, net (17)
$672
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at July
30, 1995, and July 31, 1994 are presented below (in thousands):
<TABLE>
<CAPTION>
JULY 30, JULY 31,
1995 1994
<S> <C> <C>
Deferred tax assets:
Accounts receivable $ 450 $ 43
Inventories 414 206
Other reserves and accruals 979 420
Minimum pension adjustment 271 --
Alternative minimum tax credit carryforwards 1,329 473
Net operating loss carryforwards 160 --
Environmental liability 106 --
Total deferred tax assets 3,709 1,142
Deferred tax liabilities:
Property, plant and equipment (2,732) (2,054)
Deferred tooling, design and pre-production costs (640) (506)
Other (65) (14)
Total deferred tax liabilities (3,437) (2,574)
Net deferred tax liabilities $ 272 $(1,432)
</TABLE>
Management believes the Company will obtain the full benefit of State
net operating loss carryforwards and other temporary differences recorded
as deferred tax assets on the basis of its evaluation of the Company's an-
ticipated profitability over the period of years that the temporary dif-
ferences are expected to become tax deductions. It believes that suffi-
cient book and taxable income will be generated to realize the benefit of
these tax assets. This assessment of profitability takes into account the
Company's expected future earnings based on automotive supply contracts
awarded for parts to be produced beginning with the 1997 model year. Man-
agement also considered the fact that the Company has alternative minimum
tax credit carryforwards available to reduce future regular income taxes,
if any, over an indefinite period.
(12) STOCKHOLDERS' EQUITY
Public Offering
In September, 1993, the Company completed a public offering of
1,076,600 shares of its $.10 par value common stock. The net proceeds from
the offering of $10,596,000 were used to reduce short-term borrowings, pay
down certain long-term debt, retire the subordinated debentures payable to
related parties, and to fund working capital requirements.
Private Placement
During April 1993, the Company raised $3,125,000, before expenses,
from the private placement of 312,500 shares ($1,875,000) of the Company's
common stock, $.10 par value per share (the "Common Stock"), and
$1,250,000 of 9% Convertible Subordinated Notes maturing in the year 2000
(the "9% Notes"). The 9% Notes are convertible into Common Stock at $10.00
per share. In addition to the aforementioned issuance of 312,500 shares of
Common Stock, the Company issued 14,166 shares of its Common Stock in pay-
ment of a fee in connection with the private placement.
Common Stock Warrants
In addition to warrants issued with subordinated debentures issued in
June 1992, the Company, in connection with a financing agreement in 1988,
issued a warrant to a lender to purchase 115,794 shares of common stock at
$.0033 per share. The estimated value of this warrant at the time of issu-
ance was $175,000, which was recorded as a liability. The warrant was sub-
ject to certain put and call provisions, which expired on June 30, 1992.
Therefore the amount of the expired put option was transferred to addi-
tional paid-in capital in 1992. On August 5, 1993, 115,794 shares of com-
mon stock were issued pursuant to the exercise of these warrants. At July
30, 1995, 62,500 warrants remain outstanding relating to the subordinated
debentures issued in June 1992.
Stock Option Plans
In April 1986, the Company adopted an incentive stock option plan
("the 1986 plan"). The Company has reserved 200,000 shares of common stock
for distribution under the 1986 plan. Options to purchase common stock
under the 1986 plan will be exercisable during a period not to exceed ten
years from the date the options are granted with option prices of not less
than 100% of the fair market value of the stock on the respective date of
grant, or 110% of the fair market value if granted to persons owning more
than 10% of the outstanding stock.
On November 2, 1994, 10,000 options were granted under the 1986 plan
at equivalent exercise prices and vesting periods as the non-qualified
stock options discussed below.
The following is a summary of option activity under the 1986 plan for
1995, 1994, and 1993:
<TABLE>
<CAPTION>
OPTIONED
SHARES PRICE
<S> <C> <C>
Balance, July 26, 1992 101,300 $1.00-$3.00
Granted 100,500 $5.88-$7.50
Exercised -- --
Cancelled (1,800) $ 3.00
Balance, July 31, 1993 200,000 $1.00-$7.50
Granted -- --
Exercised (59,025) $1.00-$7.50
Cancelled -- --
Balance, July 31, 1994 140,975 $1.00-$7.50
Granted 10,000 $ 7.18
Exercised (11,500) $1.00-$5.88
Cancelled (23,750) $ 5.88
Balance, July 30, 1995 115,725 $1.00-$7.50
</TABLE>
At July 30, 1995, options for 89,038 shares were exercisable in accor-
dance with provisions of the incentive plan.
On November 2, 1994, the Company granted 293,000 non-qualifiied stock
options to key employees at an exercise price equivalent to the fair mar-
ket value on the date of grant ($7.18). Up to 25% of the options are exer-
cisable on the grant date with all remaining options vesting ratably over
three years. In the event of a change of control of the company, 100% of
the grant may be exercised immediately. The options expire on November 2,
2002, or ninety days after employment terminates, whichever date is ear-
lier. Subsequent to November 2, 1994, 55,000 options were cancelled as a
result of termination of the employees' employment. As of July 30, 1995,
238,000 options were outstanding with 59,500 exercisable.
In connection with a four-year employment agreement with an officer of
a subsidiary, on June 26, 1992 the Company granted options to purchase
120,000 shares of the Company's common stock, exercisable for 30,000
shares immediately and an additional 30,000 shares on each anniversary of
the employment agreement. The options are exercisable at $4.75 per share
as determined by the agreement. In fiscal year 1994, 60,000 shares were
exercised. No shares were exercised in fiscal year 1995. Therefore 60,000
shares were outstanding and exercisable at July 30, 1995.
During 1994 the Company granted two option agreements to two officers
of the Corporation. The first agreement granted options to purchase 50,000
shares of the Company's common stock at $6.125 per share (market value on
date of issuance), exercisable for 12,500 shares immediately and an addi-
tional 12,500 shares on each anniversary of the agreement. The second
agreement granted options to purchase 100,000 shares of the Company's com-
mon stock at $11 per share (market value on date of issuance), exercisable
for 25,000 shares immediately and an additional 25,000 shares on each an-
niversary of the agreement. No shares have been purchased under these
agreements.
(13) MAJOR CUSTOMERS
Sales to third parties are concentrated in a few major customers and
consisted of the following percentages of the Company's total net sales:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Ford Motor Company 57% 83% 93%
General Motors Corporation 28% 5% 3%
Freightliner Corporation 5% 5% --
Other 10% 7% 4%
100% 100% 100%
</TABLE>
(14) RELATED PARTY TRANSACTIONS
Certain nonemployee directors provided consulting services to the Com-
pany totaling $288,000, $298,000, and $280,000 in 1995, 1994, and 1993,
respectively.
Interest payments made to related parties on subordinated debentures
which were retired in the first quarter of fiscal 1994 amounted to $15,000
and $63,000 in fiscal years 1994 and 1993, respectively.
In July 1993 the Company negotiated an agreement with Rall Leasing, a
partnership which includes certain officers and directors who are also
stockholders of Bailey, to terminate the Company's entire obligation under
a real property lease in exchange for $230,000, thereby releasing it from
all obligations under the lease. Charges to operations under this lease
were $292,000 in 1993 (including the settlement).
(15) COMMITMENTS AND CONTINGENCIES
The Company is subject to a variety of legal proceedings, contractual
obligations and environmental issues, arising out of the conduct of its
business, which are pending or threatened.
Environmental Costs
The Company and its immediate predecessor, USM's Bailey Division, have
been named as potentially responsible parties ("PRP") at the Resolve Su-
perfund site and at the Solvents Recovery Services site. At both sites,
the Company and all other PRP's are jointly andseverally liable for all
remediation costs under applicable environmental laws. The Company is pur-
suing indemnification from USM and/or USM's insurers for some of its costs
associated with the remediation efforts at both sites.
The Company also faces potential environmental liability relating to
the Conneaut, Contour and Premix/EMS Acquisitions if the former owners
cannot fulfill the environmental obligations relating to their ownership.
For each acquisition the Company has been indemnified for environmental
obligations arising prior to its ownership as part of the acquisition
agreements. Additionally, part of the purchase consideration for the Con-
neaut Acquisition was escrowed and the right to offset debt issued by the
Company in connection with the Contour and Premix/EMS Acquisitions exists
to specifically cover environmental obligations of the former owners.
The Company's policy is to accrue environmental costs of a non-capital
nature when it is both probable that a liability has been incurred and the
amount can be reasonably estimated. On-going costs of compliance with en-
vironmental laws are charged to expense when incurred. Where the estimate
is a range and no amount within the range is a better estimate than any
other amount, the Company accrues the minimum amount in the range. The re-
liability and precision of the environmental accruals are affected by nu-
merous factors, such as different stages of site evaluation, the allocation
of responsibility among PRP's and the assertion of additional claims. The
Company adjusts its accruals as new remediation requirements are defined,
as information becomes available permitting reasonable estimates to be
made, and to reflect new and changing facts. At July 30, 1995, and July
31, 1994, the Company's environmental accruals totalled $289,000 and
$322,000, respectively and related to its share of mandated payments as a
PRP for remediation of the Resolve site. The Company believes it has iden-
tified and accrued for its material likely environmental exposures and
that any additional liability relating to identified sites is immaterial
to its liquidity, financial position and results of operations.
During fiscal 1995 and 1994, the Company paid approximately $33,000
and $370,000, respectively, for mandated payments as a PRP for remediation
of the Resolve site which was charged against previously accrued liabili-
ties. Additionally, in May 1994, the Company settled alleged waste han-
dling violations through payment of a $300,000 fine. The settlement re-
solved all claims by the state of New Hampshire arising out of a 1990 re-
view.
Litigation
In June 1994, the Company was served with a summons and complaint with
respect to a purported class action suit brought in the United States Dis-
trict Court for the District of New Hampshire. The complaint alleged that
the Company violated Rule 10b-5 of the Securities Exchange Act of 1934 by
a purported dissemination of misleading information as to its financial
position in connection with the purchase and sale of its securities. The
Company was successful in having the complaint dismissed, and also in re
buffing the plaintiff's attempt to file an amended complaint. The Court
allowed the plaintiffs to make one more attempt, however, and on September
1, 1995, a second amended complaint was filed. The Company intends to move
to dismiss this complaint as well, and the action in its entirety. If this
effort is unsuccessful, the Company intends to vigorously assert defenses
which it believes to be meritorious. The complaint does not specify an
amount of damages and the proceeding is still in its infancy. Accordingly,
the extent of any exposure of the Company cannot be determined at this
time.
The Company is also involved in other litigation arising in the normal
course of business. Management does not believe that such litigation will
have a material impact on its financial position or results of operations.
Development Joint Venture
The Company has entered into a joint venture for the development of
certain non-automotive plastic products. The joint venture, a limited lia-
bility company named Rail Pak, LLC (the Venture), is 60% owned by the Com-
pany and 40% by an unrelated third party corporation. Under the agreement,
the Company has committed to providing limited technical support and to
funding initial product development up to $300,000 (Phase I) and at the
option of the Company, at its sole discretion, may either elect to con-
tinue funding for production (Phase II) or may surrender its interests in
the venture with no remaining liability. During the fiscal year ended July
30, 1995, the Company funded the venture in the cash amount of $240,000
and is committed to an additional $60,000 of funding to the Venture for
Phase I. Due to the uncertainty of continuation of the Venture on the part
of the Company, Phase I costs are expensed as engineering costs in the
Company's financial accounts. In the event that the Company elects to pro-
ceed with funding Phase II (the production phase), the accounts of the
Venture will be included in the Company's consolidated financial state-
ments.
Nonemployee Directors' Retirement Agreements
In October 1994, four nonemployee directors rescinded existing agree-
ments issued during fiscal 1994 in exchange for new retirement agreements,
the terms of which are under negotiation. The new agreements are expected
to provide a maximum benefit of $60,000 per year for five years after re-
tirement from the board, plus lifetime participation in the Company's
healthcare plan.
Leases
The Company leases certain office facilities, machinery and equipment
and automobiles under operating leases with unexpired terms ranging from
one to five years. Payments due under operating leases over the next five
years are as follows for the fiscal years ending (in thousands):
<TABLE>
<S> <C>
July 29, 1996 $ 709
July 28, 1997 484
July 27, 1998 155
July 26, 1999 62
July 25, 2000 22
$1,432
</TABLE>
Rent expense under operating leases was $911,000, $589,000, and
$453,000, for the fiscal years ended 1995, 1994 and 1993, respectively.
Letters of Credit
At July 30, 1995, the Company was contingently liable for $1,096,000
related to letters of credit outstanding which guarantee various trade ac-
tivities.
(16) SUPPLEMENTAL CASH FLOW INFORMATION
Selected cash payments and noncash activities were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
(IN THOUSANDS)
<S> <C> <C> <C>
Cash paid for:
Interest $3,061 $ 1,716 $1,826
Income taxes 1,206 2,680 418
Net assets acquired through issuance of debt in the Premix/EMS
Acquisition (Notes 2 and 8) -- 16,480 --
Net assets acquired through issuance of debt in the Contour ac-
quisition (Notes 2 and 8) -- -- 6,221
Minimum pension liability charge to equity (Note 10) 97 306 --
Gain on debt extinguishment (Note 8) -- 165 --
Tax benefit from exercise of stock options (Note 11) 193 105 --
Assets acquired under capitalized leases 1,469 212 705
Issuance of stock for services in lieu of cash (Note 12) -- -- 28
</TABLE>
(17) QUARTERLY FINANCIAL DATA (UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
<S> <C> <C> <C> <C> <C>
1995
Net sales $ 45,177 $41,057 $47,729 $34,265 $168,228
Gross profit (loss) $ 6,740 $ 5,479 $ 5,798 $(1,203) $ 16,814
Operating income (loss) $ 3,355 $ 1,777 $ 1,964 $(5,582) $ 1,514
Net income (loss) $ 1,473 $ 522 $ 588 $(4,162) $ (1,579)
Net income (loss) per share -- primary $ .27 $ .10 $ .11 $ (.77) $ (.29)
Net income (loss) per share -- fully di-
luted $ .25 $ .10 $ .11 $ (.77) $ (.29)
1994
Net sales $ 26,903 $26,653 $30,677 $24,080 $108,313
Gross profit $ 4,058 $ 3,958 $ 4,834 $ 3,084 $ 15,934
Operating income $ 2,076 $ 1,853 $ 2,098 $ 594 $ 6,621
Net income $ 940 $ 867 $ 894 $ 65 $ 2,766
Net income per share -- primary(1) $ .19 $ .16 $ .16 $ .01 $ .52
Net income per share -- fully diluted $ .18 $ .16 $ .16 $ .01 $ .52
(1) Note: Due to rounding, the sum of quarterly figures do not equal full
year net income per share.
</TABLE>
(18) SUBSEQUENT EVENTS
Portland Plant Shutdown
On August 3, 1995, the Company announced its intention to temporarily
curtail operations in its Portland, Indiana, manufacturing facility. The
Company does not expect any material costs to be incurred relating to this
curtailment. Losses to be recognized in connection with the curtailment
will be recognized in the first quarter of fiscal 1996.
Stockholder Rights Plan
On September 28, 1995, the Board of Directors of the Company adopted a
stockholder rights plan. Under the plan, the Company declared a dividend of one
Right for each outstanding share of common stock, par value $.10 per share. The
Rights will be issued to the holders of record of shares of Common Stock
outstanding on September 28, 1995, and with respect to shares of Common Stock
issued thereafter until the Distribution Date (as defined in the Rights
Agreement) and, in certain circumstances, with respect to shares of Common Stock
issued after the Distribution Date. Each Right, when it becomes exercisable as
defined in the Rights Agreement, would initially entitle the registered holder
to purchase from the Company one share of Common Stock at an exercise price of
$28. The Rights expire September 28, 2005 and, under certain conditions, may be
redeemed by the Company at a price of $.01 per Right. The Rights have no voting
privileges and are not currently separable from the Common Stock.
The Rights are not currently exercisable, but would become exercisable if
certain events occurred relating to a person or group (the "Acquiring Person")
acquiring or attempting to acquire 15% or more of the outstanding shares of
Common Stock. Upon the occurrence of such an event, each right (except the
Rights beneficially owned by the Acquiring Person, which become null and void)
entitles its holder to purchase for $28 the economic equivalent of Common Stock,
or in certain circumstances, securities of the Acquiring Person, or its
affiliate, worth twice as much. The description and terms of the Rights are set
forth in a Rights Agreement dated as of September 28, 1995 between the Company
and State Street Bank and Trust Company, as Rights Agent.
BAILEY CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEARS ENDED 1995, 1994 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
CHARGED TO
BALANCE AT COSTS AND BALANCE AT
DESCRIPTION BEGINNING OF YEAR EXPENSES DEDUCTIONS END OF YEAR
<S> <C> <C> <C> <C>
Year ended July 30, 1995:
Allowance for doubtful accounts $ 215 $ 1,300 $ 752 $ 763
Year ended July 31, 1994:
Allowance for doubtful accounts $ 254 $ 690 $ 729 $ 215
Year ended July 31, 1993:
Allowance for doubtful accounts $ 317 $ 580 $ 643 $ 254
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
In accordance with Paragraph (3) of General Instruction G to Form 10-
K, Part III of this Report is omitted because the registrant will file
with the Securities and Exchange Commission not later than 120 days after
the end of the fiscal year ended July 30, 1995, a definitive proxy state-
ment pursuant to Regulation 14A involving the election of directors, which
proxy statement is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements, Financial Statement Schedules, and Exhibits.
1. Financial Statements. See Item 8 for the Financial Statements
of the Company filed as a part hereof. (Exhibits omitted)
2. Financial Statement Schedules. See Item 8 for the Financial
Statement Schedules of the Company filed as a part hereof.
3. Exhibits. Pursuant to Rule 12b-32 and General Instruction G,
the following Exhibits are required to be filed with this Report by
Item 14 above and are incorporated by reference from the reference
source cited in the Exhibit Index below, are filed herewith, or are
not applicable.
(b) Reports on Form 8-K.
On October 2, 1995, the Company filed a Current Report on Form 8-K
with the Securities and Exchange Commission ("SEC") to report the adoption
by the Company on September 28, 1995 of a stockholder rights plan.
The Company filed with the SEC Quarterly Reports on Form 10-Q for each
of the quarters ended October 30, 1994, January 29, 1995, and April 30,
1995, in each case within 45 days of the end of the respective quarter.
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, THERETO DULY AUTHORIZED.
BAILEY CORPORATION
Dated: October 26, 1995 By: /s/ ROGER R. PHILLIPS
ROGER R. PHILLIPS
CHAIRMAN OF THE BOARD,
PRESIDENT AND
CHIEF EXECUTIVE OFFICER AND
SECRETARY
(PRINCIPAL EXECUTIVE OF-
FICER)
Dated: October 26, 1995 By: /s/ LEONARD J. HEILMAN
LEONARD J. HEILMAN
EXECUTIVE VICE PRESIDENT --
FINANCE AND
ADMINISTRATION, TREASURER
AND ASSISTANT SECRETARY
(PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF
THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
Dated: October 26, 1995 By: /s/ ROGER R. PHILLIPS
ROGER R. PHILLIPS
DIRECTOR, CHAIRMAN OF THE
BOARD, PRESIDENT,
CHIEF EXECUTIVE OFFICER AND
SECRETARY
Dated: October 26, 1995 By: /s/ E GORDON YOUNG
E GORDON YOUNG
DIRECTOR
Dated: October 26, 1995 By: /s/ LOUIS T. ENOS
LOUIS T. ENOS
DIRECTOR
Dated: October 26, 1995 By: /s/ ALLAN B. FREEDMAN
ALLAN B. FREEDMAN
DIRECTOR
Dated: October 26, 1995 By: /s/ JOHN G. OWENS
JOHN G. OWENS
DIRECTOR
Dated: October 26, 1995 By: /s/ WILLIAM A. TAYLOR
WILLIAM A. TAYLOR
DIRECTOR
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. TITLE METHOD OF FILING
<S> <C> <C>
3.1 Certificate of Incorporation Incorporated by reference
from Form 10-K, Exhibit 3.01,
filed on October 24, 1992
3.2 Amended and Restated By-Laws Filed herewith
4.1 Stockholder Rights Agreement, dated Incorporated by reference
as of September 28, 1995, between from Form 8-K, Exhibit 4(a)
Bailey Corporation and State Street filed on October 2, 1995
Bank and Trust Company, as Rights
Agent
10.01 Amended and Restated Agreement of Incorporated by reference
Purchase and Sale, dated May 5, 1992, from Form 8-K, Exhibit 2.01
and effective as of April 9, 1992 filed on July 13, 1992
10.02 Subordinated Debenture due June 25, Incorporated by reference
1995, in the amount of $200,000 from Form 8-K, Exhibit 4.01
issued to Anthony A. Martino filed on July 13, 1992
10.03 Warrant to Purchase 50,000 Shares Incorporated by reference
of Common Stock of Bailey Corporation from Form 8-K, Exhibit 4.02
dated June 26, 1992, as issued to filed on July 13, 1992
Anthony A. Martino
10.04 Subordinated Debenture due June 26, Incorporated by reference
1995, in the amount of $50,000 issued from Form 8-K, Exhibit 4.03
to Allan B. Freedman filed on July 13, 1992
10.05 Warrant to Purchase 12,500 Shares Incorporated by reference
of Common Stock of Bailey Corporation from Form 8-K, Exhibit 4.04
dated June 26, 1992, as issued to filed on July 13, 1992
Allan B. Freedman
10.06 Subordinated Debenture due June 26, Incorporated by reference
1995, in the amount of $50,000 issued from Form 8-K, Exhibit 4.05
to self-directed pension account FBO filed on July 13, 1992
Roger R. Phillips
10.07 Subordinated Debenture due June 26, Incorporated by reference
1995, in the amount of $50,000 issued from Form 8-K, Exhibit 4.06
to William A. Taylor filed on July 13, 1992
10.08 Subordinated Debenture due June 29, Incorporated by reference
1995, in the amount of $50,000 issued from Form 8-K, Exhibit 4.07
to self-directed pension account FBO filed on July 13, 1992
Roger R. Phillips
10.09 Subordinated Debenture due June 26, Incorporated by reference
1995, in the amount of $50,000 issued from Form 8-K, Exhibit 4.08
to Louis T. Enos filed on July 13, 1992
10.10 Subordinated Debenture due June 26, Incorporated by reference
1995, in the amount of $50,000 issued from Form 8-K, Exhibit 4.09
to John G. Owens filed on July 13, 1992
10.11 Subordinated Debenture due June 26, Incorporated by reference
1995, in the amount of $50,000 issued from Form 8-K, Exhibit 4.10
to E Gordon Young filed on July 13, 1992
10.12 Conformed copy of Subordinated Incorporated by reference
Debenture Purchase Agreement from Form 8-K, Exhibit 4.11
entered into by Louis T. Enos, John filed on July 13, 1992
G. Owens, and E Gordon Young with
Bailey Corporation
10.13 Conformed copy of Subordinated Incorporated by reference
Debenture and Warrant Purchase from Form 8-K, Exhibit 4.12
Agreement entered into by Allan B. filed on July 13, 1992
Freedman, Anthony A. Martino, Orion
Group Money Purchase Plan FBO, Roger
R. Phillips and William A. Taylor
with Bailey Corporation
10.14 Warrant to Purchase 115,794 Shares Incorporated by reference
of Common Stock of Bailey Corporation from Form 10-K, Exhibit 4.13
issued to Heller Financial, Inc. filed on October 24, 1992
dated November 16, 1988
10.15 Stock and Note Purchase Agreement Incorporated by reference
dated April 13, 1993 from Registration Statement
on Form S-3, Registration No.
33-62698
10.16 Form of 9% Convertible Subordinated Incorporated by reference
Promissory Note Due 2000 from Registration Statement
on Form S-3, Registration No.
33-62698
10.17 Lease between Rall Leasing, Ltd. Incorporated by reference
(Landlord) and Bailey Corporation from Form 10-K, Exhibit 10.01
(Tenant) for premises located in filed on October 24, 1992
Cuba, Missouri, dated November 1,
1985, together with Assignment by
Rall Leasing, Ltd. to Rall Leasing
Associates
10.18 Bailey Corporation 1986 Incentive Incorporated by reference
Stock Option Plan from Form 10-K, Exhibit 10.02
filed on October 24, 1992
10.19 Lease for Dearborn, Michigan Incorporated by reference
premises dated December 11, 1991, from Form 10-K, Exhibit 10.03
between Ford Motor Land Development filed on October 24, 1992
Corporation and Bailey Manufactur-
ing Corporation
10.20 Long-Term Agreement between Ford Incorporated by reference
Motor Company and Bailey from Form 10-K, Exhibit 10.04
Manufacturing Corporation dated filed on October 24, 1992
June 24, 1992 and effective for the
term August 1, 1992 to December 31,
1995
10.21 Employment and Option Agreement Incorporated by reference
between Bailey Transportation from Form 8-K, Exhibit 28.1
Products, Inc. and Anthony A. Martino filed on July 13, 1992
dated as of June 26, 1992
10.22 Non-Negotiable Working Capital Note Incorporated by reference
dated June 26, 1992, in the amount from Form 8-K, Exhibit 28.2
of $500,000 from Bailey Transpor- filed on July 13, 1992
tation Products, Inc. and payable
to TransPlastics, Inc.
10.23 Non-Negotiable Purchase Note dated Incorporated by reference
June 26, 1992, in the amount of from Form 8-K, Exhibit 28.3
$1,868,953 from Bailey Transpor- filed on July 13, 1992
tation Products, Inc. and payable
to TransPlastics, Inc.
10.24 Trust Agreement dated as of April Incorporated by reference
1, 1988, between the State of Ohio from Form 10-K, Exhibit 10.08
and The Provident Bank, Trustee filed on October 24, 1992
10.25 Twenty-Eighth Supplemental Trust Incorporated by reference
Agreement dated as of July 1, 1992, from Form 10-K, Exhibit 10.09
between the State of Ohio and The filed on October 24, 1992
Provident Bank, Trustee
10.26 Ohio State Economic Development Incorporated by reference
Revenue Bond in the amount of from Form 10-K, Exhibit 10.10
$3,170,000 as issued to The filed on October 24, 1992
Prudential Insurance Company of
America
10.27 Guaranty Agreement dated as of July Incorporated by reference
1, 1992, among Bailey Corporation, from Form 10-K, Exhibit 10.11
Bailey Transportation Products, filed on October 24, 1992
Inc. and The Provident Bank, Trustee
10.28 Lease dated July 1, 1992, between Incorporated by reference
the Director of Development of the from Form 10-K, Exhibit 10.12
State of Ohio and Bailey filed on October 24, 1992
Transportation Products, Inc.
10.29 Amended and Restated Credit Incorporated by reference
Agreement among BayBank, Bailey from Form 10-K, Exhibit 10.13
Corporation, and Bailey filed on October 24, 1992
Manufacturing Corporation
dated April 30, 1992
10.30 First Amendment to Amended and Incorporated by reference
Restated Credit Agreement among from Form 10-K, Exhibit 10.14
BayBank, Bailey Corporation, filed on October 24, 1992
and Bailey Manufacturing
Corporation dated June 26, 1992
10.31 Second Amendment to Amended and Incorporated by reference
Restated Credit Agreement among from Registration Statement
BayBank, Bailey Corporation, on Form S-2, Registration No.
and Bailey Manufacturing 33-66244
Corporation dated July 26, 1992
10.32 Third Amendment to Amended and Incorporated by reference
Restated Credit Agreement among from Registration Statement
BayBank, Bailey Corporation, on Form S-2, Registration No.
and Bailey Manufacturing 33-66244
Corporation dated January 29, 1993
10.33 Consent and Fourth Amendment to Incorporated by reference
Amended and Restated Credit from Registration Statement
Agreement among BayBank, Bailey on Form S-2, Registration No.
Corporation, and Bailey Manufac- 33-66244
turing Corporation dated July 1, 1993
10.34 Loan Agreement dated as of July 29, Incorporated by reference
1992, between the Director of from Form 10-K, Exhibit 10.15
Development of the State of Ohio and filed on October 24, 1992
Bailey Transportation Products,
Inc.
10.35 Promissory Note dated July 29, 1992, Incorporated by reference
in the principal amount of $1,000,000 from Form 10-K, Exhibit 10.16
from Bailey Transportation Prod- filed on October 24, 1992
ucts, Inc. payable to the Director
of Development of the State of Ohio
10.36 Subordination Agreement dated as of Incorporated by reference
July 26, 1992, among Bailey from Form 10-K, Exhibit 10.17
Transportation Products, Inc., the filed on October 24, 1992
Director of Development of the State
of Ohio, The Provident Bank, Trustee,
and Ashtabula County 503 Corporation
10.37 Guaranty dated as of July 29, 1992, Incorporated by reference
by Bailey Corporation to the Director from Form 10-K, Exhibit 10.18
of Development of the State of Ohio filed on October 24, 1992
10.38 Bill of Sale from Bailey Corporation Incorporated by reference
and Bailey Manufacturing Corpora- from Form 10-K, Exhibit 10.19
tion to Anthony A. Martino for one filed on October 24, 1992
Farrel Injection Molding Machine
dated August 17, 1992
10.39 Lease and Security Agreement for Incorporated by reference
Farrel Injection Molding Machine from Form 10-K, Exhibit 10.20
between Anthony A. Martino (Lessor) filed on October 24, 1992
and Bailey Transportation Products,
Inc. (Lessee) dated August 17, 1992
10.40 Lease and Security Agreement for Incorporated by reference
Farrel Injection Molding Machine from Registration Statement
between Anthony A. Martino (Lessor) on Form S-2, Registration No.
and Bailey Transportation Products, 33-66244
Inc. (Lessee) dated November 19, 1992
10.41 Lease and Security Agreement for Incorporated by reference
Farrel Injection Molding Machine from Registration Statement
between Anthony A. Martino (Lessor) on Form S-2, Registration No.
and Bailey Transportation Products, 33-66244
Inc. (Lessee) dated March 1, 1993
10.42 Agreement for Purchase and Sale of Incorporated by reference
Assets between Bailey Corporation, from Registration Statement
Bailey Manufacturing Corporation on Form S-2, Registration No.
and The Boler Company. regarding 33-66244
Bailey Corporation's purchase of the
assets and business of the Contour
division of The Boler Company. dated
July 1, 1993
10.43 Indemnification Agreement between Incorporated by reference
Bailey Corporation, Bailey Manu- from Registration Statement
facturing Corporation, and The Boler on Form S-2, Registration No.
Company. dated July 1, 1993 33-66244
10.44 Non-Negotiable Fixed Asset Note in Incorporated by reference
the amount of $5,046,730 given by from Registration Statement
Bailey Corporation and Bailey on Form S-2, Registration No.
Manufacturing Corporation to The 33-66244
Boler Company. dated July 1, 1993
10.45 Non-Negotiable Working Capital Incorporated by reference
Promissory Note in the amount of from Registration Statement
$1,174,606 given by Bailey on Form S-2, Registration No.
Corporation and Bailey Manufactur- 33-66244
ing Corporation to The Boler Company.
dated July 1, 1993
10.46 Security Agreement made by Bailey Incorporated by reference
Manufacturing Corporation in favor from Registration Statement
of The Boler Company. dated July 1, on Form S-2, Registration No.
1993 33-66244
10.47 Remediation Agreement executed by Incorporated by reference
The Boler Company. in favor of Bailey from Registration Statement
Corporation and Bailey Manufactur- on Form S-2, Registration No.
ing Corporation dated July 1, 1993 33-66244
10.48 Form of Option Agreement between Incorporated by reference
Bailey Corporation and Roger R. from Form 10-K, Exhibit 10.48
Phillips filed on October 29, 1993
10.49 Form of Employment Agreement between Incorporated by reference
Bailey Corporation and Roger R. from Form 10-Q, Exhibit 10.49
Phillips filed on March 14, 1994
10.50 Form of Employment Agreement between Incorporated by reference
Bailey Corporation and William A. from Form 10-Q, Exhibit 10.50
Taylor filed on March 14, 1994
10.51 Form of Noncompetition Agreement Incorporated by reference
between Bailey Corporation and Roger from Form 10-Q, Exhibit 10.51
R. Phillips filed on March 14, 1994
10.52 Form of Noncompetition Agreement Incorporated by reference
between Bailey Corporation and from Form 10-Q, Exhibit 10.52
William A. Taylor filed on March 14, 1994
10.53 Form of Noncompetition Agreement Incorporated by reference
between Bailey Corporation and Louis from Form 10-Q, Exhibit 10.53
T. Enos filed on March 14, 1994
10.54 Form of Noncompetition Agreement Incorporated by reference
between Bailey Corporation and Allan from Form 10-Q, Exhibit 10.54
B. Freedman filed on March 14, 1994
10.55 Form of Noncompetition Agreement Incorporated by reference
between Bailey Corporation and John from Form 10-Q, Exhibit 10.55
G. Owens filed on March 14, 1994
10.56 Form of Noncompetition Agreement Incorporated by reference
between Bailey Corporation and E from Form 10-Q, Exhibit 10.56
Gordon Young filed on March 14, 1994
10.57 Asset Purchase and Sale Agreement Incorporated by reference from
between Bailey Corporation and Exhibit 2.1 to Current Report
Premix/E.M.S. Inc., dated as of July on Form 8-K filed on August
31, 1994 18, 1994
10.58 Secured Promissory Note by Bailey Incorporated by reference
Corporation in favor of Premix- from Form 10-K, Exhibit 10.58
/E.M.S. Inc., dated August 3, 1994 filed on October 31, 1994
10.59 8% Convertible Debenture due 1999 Incorporated by reference
by Bailey Corporation in favor of from Form 10-K, Exhibit 10.59
Premix/E.M.S. Inc., dated August 3, filed on October 31, 1994
1994
10.60 Purchase Money First Mortgage and Incorporated by reference
Security Agreement by Bailey from Form 10-K, Exhibit 10.60
Corporation in favor of Premix- filed on October 31, 1994
/E.M.S. Inc., dated as of July 31,
1994, with respect to Lancaster, Ohio
site
10.61 Purchase Money First Mortgage and Incorporated by reference
Security Agreement by Bailey from Form 10-K, Exhibit 10.61
Corporation in favor of Premix- filed on October 31, 1994
/E.M.S. Inc., dated as of July 31,
1994, with respect to Hartford City,
Indiana site
10.62 Purchase Money First Mortgage and Incorporated by reference
Security Agreement by Bailey from Form 10-K, Exhibit 10.62
Corporation in favor of Premix- filed on October 31, 1994
/E.M.S. Inc., dated as of July 31,
1994, with respect to Portland,
Indiana site
10.63 Non-Environmental Indemnification Incorporated by reference
Agreement between Bailey Corpora- from Form 10-K, Exhibit 10.63
tion and Premix/E.M.S. Inc., dated filed on October 31, 1994
as of July 31, 1994
10.64 Environmental Indemnification Incorporated by reference
Agreement between Bailey Corpora- from Form 10-K, Exhibit 10.64
tion and Premix/E.M.S. Inc., dated filed on October 31, 1994
as of July 31, 1994
10.65 Amended and Restated Credit Agreement Incorporated by reference
among BayBank, Bailey Corporation, from Form 10-K, Exhibit 10.65
Bailey Manufacturing Corporation, filed on October 31, 1994
and Bailey Transportation Products,
Inc., dated as of July 29, 1994
10.66 Amended and Restated Revolving Note Incorporated by reference
by Bailey Corporation, Bailey from Form 10-K, Exhibit 10.66
Manufacturing Corporation, and filed on October 31, 1994
Bailey Transportation Products,
Inc., in favor of BayBank, dated July
29, 1994
10.67 Term Note by Bailey Corporation, Incorporated by reference
Bailey Manufacturing Corporation, from Form 10-K, Exhibit 10.67
and Bailey Transportation Products, filed on October 31, 1994
Inc., in favor of BayBank, dated July
29, 1994
10.68 Amended and Restated Security Incorporated by reference
Agreement by Bailey Corporation in from Form 10-K, Exhibit 10.68
favor of BayBank, dated as of July filed on October 31, 1994
29, 1994
10.69 Amended and Restated Security Incorporated by reference
Agreement by Bailey Manufacturing from Form 10-K, Exhibit 10.69
Corporation in favor of BayBank, filed on October 31, 1994
dated as of July 29, 1994
10.70 Security Agreement by Bailey Incorporated by reference
Transportation Products, Inc., in from Form 10-K, Exhibit 10.70
favor of BayBank, dated as of July filed on October 31, 1994
29, 1994
10.71 Recission Agreement between Bailey Incorporated by reference
Corporation and Louis T. Enos, dated from Form 10-K, Exhibit 10.71
as of September 28, 1994, with filed on October 31, 1994
respect to Noncompetition Agreement
between Bailey Corporation and Louis
T. Enos, dated as of February 14,
1994
10.72 Recission Agreement between Bailey Incorporated by reference
Corporation and Allan B. Freedman, from Form 10-K, Exhibit 10.72
dated as of September 28, 1994, with filed on October 31, 1994
respect to Noncompetition Agreement
between Bailey Corporation and Allan
B. Freedman, dated as of February
14, 1994
10.73 Recission Agreement between Bailey Incorporated by reference
Corporation and John G. Owens, dated from Form 10-K, Exhibit 10.73
as of September 28, 1994, with filed on October 31, 1994
respect to Noncompetition Agreement
between Bailey Corporation and John
G. Owens, dated as of February 14,
1994
10.74 Recission Agreement between Bailey Incorporated by reference
Corporation and E Gordon Young, dated from Form 10-K, Exhibit 10.74
as of September 28, 1994, with filed on October 31, 1994
respect to Noncompetition Agreement
between Bailey Corporation and E
Gordon Young, dated as of February
14, 1994
10.75 First Amendment to Amended and Filed herewith
Restated Credit Agreement among Bailey
Corporation, Bailey Manufacturing
Corporation, Bailey Transportation
Products, Inc. and BayBank, dated as
of September 20, 1994
10.76 Environmental Indemnity Agreement by Filed herewith
Bailey Corporation, Bailey Manufactur-
ing Corporation, Bailey Transportation
Products, Inc. in favor of BayBank,
dated as of October 10, 1994
10.77 Second Amendment to Amended and Filed herewith
Restated Credit Agreement and
Amendment to Revolving Note among
Bailey Corporation, Bailey Manufactur-
ing Corporation, Bailey Transportation
Products, Inc. and BayBank, dated as
of April 6, 1995
10.78 Third Amendment to Amended and Restated Filed herewith
Credit Agreement and Second Amendment
to Revolving Note among Bailey Corp-
oration, Bailey Manufacturing Corporation,
Bailey Transportation Products, Inc. and
BayBank, dated as of May 12, 1995
10.79 Fourth Amendment to Amended and Restated Filed herewith
Credit Agreement, Third Amendment to
Revolving Note and Modification of Third
Amendment to Amended and Restated Credit
Agreement among Bailey Corporation,
Bailey Manufacturing Corporation, Bailey
Transportation Products, Inc. and BayBank,
dated as of July 28, 1995
10.80 Fixed Maturity Carve Out Note dated July Filed herewith
28, 1995, in the amount of $4,000,000
from Bailey Corporation, Bailey
Manufacturing Corporation and Bailey
Transportation Products, Inc. payable
to BayBank
10.81 Fifth Amendment to Amended and Restated Filed herewith
Credit Agreement and Modification of
Third and Fourth Amendments, among Bailey
Corporation, Bailey Manufacturing
Corporation, Bailey Transportation
Products, Inc. and BayBank, dated as of
September 1, 1995
10.82 Agreement between Bailey Manufacturing Filed herewith
Corporation and Emhart Corporation
regarding the Solvents Recovery Service
of New England Superfund Site and the
Old Southington Landfill Superfund Site,
dated February 10, 1995
10.83 Joint Declaration between Bailey Filed herewith
Manufacturing Corporation and Emhart
Corporation regarding the Solvents
Recovery Service of New England Site
and the Old Southington Landfill Site
21.1 Subsidiaries of Bailey Corporation Filed herewith
23.1 Consent of KPMG Peat Marwick Filed herewith
27.1 Financial Data Schedule Filed herewith
</TABLE>
EXHIBIT 3.2
AMENDED AND RESTATED
BY-LAWS
OF
BAILEY CORPORATION
Adopted October 26, 1995
ARTICLE I - OFFICES
SECTION 1. REGISTERED OFFICE. -- The registered office shall be
established and maintained at 1209 Orange Street, City of Wilmington, in the
County of New Castle, in the State of Delaware.
SECTION 2. OTHER OFFICES. -- The corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II - MEETING OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. -- Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the notice
of the meeting, shall be held at such place, either within or without the State
of Delaware, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of the meeting. In the event the
Board of Directors fails to so determine the time, date and place of meeting,
the annual meeting of stockholders shall be held at the registered office of the
corporation in Delaware within 120 days of the close if its fiscal year.
The President of the Corporation may (on one or more occasions)
reschedule the date for the annual meeting of stockholders once that date has
initially been set as otherwise required by this Section, if rescheduling is
required by reason of the process of preparation, review and approval of proxy
solicitation materials or other filings and disclosures required by applicable
law. The rescheduled meeting date or dates must fall within 210 days of the end
of the preceding fiscal year. The President shall promptly advise the Board in
writing of any exercise of authority hereunder.
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
may transact such other corporate business as shall be stated in the notice of
the meeting.
SECTION 2. OTHER MEETINGS. -- Meetings of stockholders for any purpose
other than the election of directors may be held at such time and place, within
or without the State of Delaware, as shall be stated in the notice of the
meeting.
SECTION 3. VOTING. -- Each stockholder entitled to vote in accordance
with the terms and provisions of the Certificate of Incorporation and these
By-Laws shall be entitled to one vote, in person or by proxy, for each share of
stock entitled to vote held by such stockholder, but no proxy shall be voted
after three years from its date unless such proxy provides for a longer period.
Upon the demand of any stockholder, the vote for directors and upon any question
before the meeting shall be by ballot. All elections for directors shall be
decided by plurality vote; all other questions shall be decided by majority vote
except as otherwise provided by the Certificate of Incorporation or the laws of
the State of Delaware.
SECTION 4. STOCKHOLDER LIST. -- The officer who has charge of the stock
ledger of the corporation shall at least 10 days before each meeting of
stockholders prepare a complete alphabetical addressed list of the stockholders
entitled to vote at the ensuing election, with the number of shares held by
each. Said list shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall be available for inspection at the meeting.
SECTION 5. QUORUM. -- Except as otherwise required by law, by the
Certificate of Incorporation or these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
constitute a quorum for purposes of such meeting and shall have the power to
vote on all matters presented at such meeting.
SECTION 6. SPECIAL MEETINGS. -- Special meetings of the stockholders,
for any purpose, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the directors
or stockholders entitled to vote. Such request shall state the purpose of the
proposed meeting.
SECTION 7. NOTICE OF MEETINGS. -- Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote at his address
as it appears on the records of the corporation, not less than ten nor more than
fifty days before the date of the meeting.
SECTION 8. BUSINESS TRANSACTED. -- No business other than that stated
in the notice shall be transacted at any meeting without the unanimous consent
of all the stockholders entitled to vote thereat.
SECTION 9. ACTION WITHOUT MEETING. -- (a) Unless otherwise provided in
the Certificate of Incorporation, any action to be required to be taken at any
annual or special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
(b) Consents to corporate action shall be valid for a maximum of sixty
(60) days after the date of the earliest dated consent delivered to the
corporation in the manner provided in Section 228(c) of the Delaware General
Corporation Law. Consents may be revoked by written notice (i) to the
corporation, (ii) to the stockholder or stockholders soliciting consents or
soliciting revocations in opposition to action by consent (the "Soliciting
Stockholders"), or (iii) to a proxy solicitor or other agent designated by the
corporation or the Soliciting Stockholders.
(c) Within ten (10) business days after receipt of the earliest dated
consent delivered to the corporation in the manner provided in Section 228(c) of
the Delaware General Corporation Law or the determination by the Board of
Directors of the corporation that the corporation should seek corporate action
by written consent, as the case may be, the Secretary of the corporation shall
engage nationally recognized independent inspectors of elections for the purpose
of performing a ministerial review of the validity of the consents and
revocations. The cost of retaining inspectors of election shall be borne by the
corporation.
(d) Following appointment of the inspectors, consents and revocations
shall be delivered to the inspectors upon receipt by the corporation, the
Soliciting Stockholder or their proxy solicitors or other designated agents. As
soon as practicable following the earlier of (i) the receipt by the inspectors,
a copy of which shall be delivered to the corporation, of any written demand by
the Soliciting Stockholders, or (ii) sixty (60) days after the date of the
earliest dated consent delivered to the corporation in the manner provided in
Section 228(c) of the Delaware General Corporation Law, the inspectors shall
issue a preliminary report to the corporation and the Soliciting Stockholders
stating the number of valid and unrevoked consents and whether, based on their
preliminary count, the requisite number of valid and unrevoked consents has been
obtained to authorize or take the action specified in the consents.
(e) Unless the corporation and the Soliciting Stockholders shall agree
to a shorter or longer period, the corporation and the Soliciting Stockholders
shall have 48 hours to review the consents and revocations and to advise the
inspectors and the opposing party in writing as to whether they intend to
challenge the preliminary report of the inspectors. If no written notice of an
intention to challenge the preliminary report is received within 48 hours after
the inspectors' issuance of the preliminary report, the inspectors shall issue
to the corporation and the Soliciting Stockholders their final report containing
the information from the inspectors' determination with respect to whether the
requisite number of valid and unrevoked consents was obtained to authorize and
take the action specified in the consents. If the corporation or the Soliciting
Stockholders issue written notice of an intention to challenge the inspectors'
preliminary report within 48 hours after the issuance of that report, a
challenge session shall be scheduled by the inspectors as promptly as
practicable. Following completion of the challenge session, the inspectors shall
as promptly as practicable issue their final report to the Soliciting
Stockholders and the corporation, which report shall contain the information
included in the preliminary report, plus any change in the vote total as result
of the challenge and a certification of whether the requisite number of valid
and unrevoked consents was obtained to authorized or take the action specified
in the consents.
SECTION 10. NOMINATION OF DIRECTORS. -- Only persons who are nominated
in accordance with the following procedures shall be eligible for election as
directors. Nomination for election to the Board of Directors of the corporation
at a meeting of the stockholders may be made by the Board of Directors or by any
stockholder of the corporation entitled to vote for the election of the
directors at such meeting who complies with the notice procedures set forth in
this Section 10. Such nominations, other than those made by or on behalf of the
Board of Directors, shall be made by notice in writing delivered or mailed by
first class United States mail, postage prepaid, to the Secretary, and received
not less than 60 days nor more than 90 days prior to such meeting; provided,
however, that if less than 70 days' notice or prior public disclosure of the
date of the meeting is given to stockholders, such nomination shall have been
mailed or delivered to the Secretary not later than the close of business on the
10th day following the date on which the notice of the meeting was mailed or
such public disclosure was made, whichever occurs first. Such notice shall set
forth (a) as to each proposed nominee (i) the name, age, business address and,
if known, residence address of each such nominee, (ii) the principal occupation
or employment of each such nominee, (iii) the number of shares of stock of the
corporation which are beneficially owned by each such nominee, and (iv) any
other information concerning the nominee that must be disclosed as to nominees
in proxy solicitations pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including such person's written consent to be named as
a nominee and to serve as a director if elected); and (b) as to the stockholder
giving the notice (i) the name and address, as they appear on the corporation's
books, of such stockholder and (ii) the class and number of shares of the
corporation which are beneficially owned by such stockholder. The corporation
may require any proposed nominee to furnish such other information as may
reasonably be required by the corporation to determine the eligibility of such
proposed nominee to serve as a director of the corporation.
The chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
SECTION 11. NOTICE OF BUSINESS AT ANNUAL MEETINGS. -- At an annual
meeting of the stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. To be properly brought before an
annual meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
otherwise properly brought before the meeting by or at the discretion of the
Board of Directors, or (c) otherwise properly brought before an annual meeting
by a stockholder. For business to be properly brought before an annual meeting
by a stockholder, if such business relates to the election of directors of the
corporation, the procedures in Section 10 must be complied with. If such
business relates to any other matter, the stockholder must have given timely
notice thereof in writing to the Secretary. To be timely, a stockholder's notice
must be delivered to or mailed and received at the principal executive offices
of the corporation not less than 60 days nor more than 90 days prior to the
meeting; provided, however, that in the event that less than 70 days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the date on which
such notice of the date of the meeting was mailed or such public disclosure was
made, whichever occurs first. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (b) the name and address, as they appear on the corporation's books, of
the stockholder proposing such business, (c) the class and number of shares of
the corporation which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. Notwithstanding anything
in these By-Laws to the contrary, no business shall be conducted at any annual
meeting except in accordance with the procedures set forth in this Section 11
and except that any stockholder proposal which complies with Rule 14a-8 of the
proxy rules (or any successor provision) promulgated under the Securities
Exchange Act of 1934, as amended, and is to be included in the corporation's
proxy statement for an annual meeting of stockholders shall be deemed to comply
with the requirements of this Section 11.
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 11, and if he should so
determine, the chairman shall so declare to the meeting that any such business
not properly brought before the meeting shall not be transacted.
ARTICLE III - DIRECTORS
SECTION 1. NUMBER AND TERM. -- The number of directors shall be 3 to 7.
The directors shall be elected at the annual meeting of the stockholders and
each director shall be elected to serve until his successor shall be elected and
shall qualify. The number of directors may not be less than three except that
where all the shares of the corporation are owned beneficially and of record by
either one or two stockholders, the number of directors may be less than three
but not less than the number of stockholders.
SECTION 2. RESIGNATIONS. -- Any director, member of a committee or
other officer may resign at any time. Such resignation shall be made in writing,
and shall take effect at the time specified therein, and if no time be
specified, at the time of its receipt by the President or Secretary. The
acceptance of a resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. -- If the office of any director, member of a
committee or other officer becomes vacant, the remaining directors in office,
though less than a quorum by a majority vote, may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen.
SECTION 4. REMOVAL. -- Any director or directors may be removed either
for or without cause at any time by the affirmative vote of the holders of a
majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of the stockholders called for the purpose and the vacancies
thus created may be filled, at the meeting held for the purpose of removal, by
the affirmative vote of a majority in interest of the stockholders entitled to
vote.
SECTION 5. INCREASE OF NUMBER. -- The number of directors may be
increased by amendment of these By-Laws by the affirmative vote of a majority of
the directors, though less than a quorum, or, by the affirmative vote of a
majority in interest of the stockholders, at the annual meeting or at a special
meeting called for that purpose, and by like vote the additional directors may
be chosen at such meeting to hold office until the next annual election and
until their successors are elected and qualify.
SECTION 6. COMPENSATION. -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the Board a fixed fee and expenses of attendance may be allowed
for attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
SECTION 7. LOCATION OF MEETINGS. -- The Board of Directors of the
corporation may hold meetings, both regular and special, either within or
without the State of Delaware.
SECTION 8. FIRST MEETING OF NEWLY ELECTED BOARD. -- The first meeting
of each newly elected Board of Directors shall be held at such time and place as
shall be fixed by the vote of the stockholders at the annual meeting and no
notice of such meeting shall be necessary to the newly elected directors in
order legally to constitute the meeting, provided a quorum shall be present. In
the event of the failure of the stockholders to fix the time or place of such
first meeting of the newly elected Board of Directors, or in the event such
meeting is not held at the time and place so fixed by the stockholders, the
meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meeting of the Board of Directors, or
as shall be specified in a written waiver signed by all the directors.
SECTION 9. REGULAR MEETINGS. -- Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board.
SECTION 10. SPECIAL MEETINGS. -- Special meetings of the Board may be
called by the president on two (2) days' notice to each director, either
personally or by mail, facsimile or telegram. Special meetings shall be called
by the president or secretary in like manner and on like notice on the written
request of two (2) directors.
SECTION 11. QUORUM. -- At all meetings of the Board, a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
SECTION 12. MEETINGS BY TELEPHONE CONFERENCE CALLS. -- Any one or more
directors may participate in a meeting of the Board of Directors or any
committee thereof by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each other
and participation by such means shall constitute presence in person at such
meeting.
SECTION 13. ACTION BY WRITTEN CONSENT. -- Unless otherwise restricted
by the Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings or the Board or committee.
SECTION 14. JOINT MEETINGS. -- Joint meetings of the Board of Directors
of the corporation and of the Board of Directors of the corporation's
subsidiary, Bailey Manufacturing Corporation, may be held at such time and such
place as shall from time to time be determined by the Board.
SECTION 15. COMMITTEES OF DIRECTORS. -- The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors
establishing the committee or any other resolution hereafter adopted by the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or
revocation of a dissolution, or amending the By-Laws of the corporation; and,
unless the resolution or the Certificate of Incorporation expressly so provides,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors. Members of a committee may be removed from office, with
or without cause, by resolution adopted by a majority of the whole Board of
Directors. Each committee shall keep regular minutes of its meetings and report
the same to the Board of Directors when required.
SECTION 16. -- INTERESTED DIRECTORS AND OFFICERS. In the absence of
fraud, no contract or other transaction between this corporation and any other
corporation or any partnership or association shall be affected or invalidated
by the fact that any director or officer of this corporation is pecuniarily or
otherwise interested in or is a director, member or officer of such other
corporation or of such firm, association or partnership or is a party to or is
pecuniarily or otherwise interested in such contract or other transaction or in
any way connected with any person or persons, firm, association, partnership or
corporation pecuniarily or otherwise interested therein; any director may be
counted in determining the existence of a quorum at any meeting of the Board of
Directors of this corporation for the purpose of authorizing any such contract
or transaction with like force and effect as if he were not so interested, or
were not a director, member or officer of such other corporation, firm,
association or partnership.
ARTICLE IV - OFFICERS
SECTION 1. OFFICERS. -- The officers of the corporation shall consist
of a President, a Treasurer, and a Secretary, and shall be elected by the Board
of Directors and shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a Chairman, one or more
Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as it
may deem proper. None of the officers of the corporation need be directors. The
officers shall be elected at the first meeting of the Board of Directors after
each annual meeting. More than two offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. -- The Board of Directors may
appoint such officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such power and perform such duties as
shall be determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. -- The Chairman of the Board of Directors, if one
be elected, shall preside at all meetings of the Board of Directors. The
Chairman of the Board of Directors shall have the primary role in arranging
financial funding for the corporation and shall be the principal corporate
officer maintaining liaison with financial institutions and other sources of
capital. He shall be designated Chairman of the Audit Committee and shall be
assigned to and serve on other committees of the Board of Directors as
determined by the Board. Jointly with the President and Chief Executive Officer,
he shall have general supervision, direction and control over the long-term,
strategic planning of the business affairs of the Corporation. He shall have and
perform such other duties as from time to time may be assigned to him by the
Board of Directors.
SECTION 4. PRESIDENT. -- The President shall be the chief executive
officer of the corporation and shall have the general powers and duties of
supervision and management usually vested in the office of President of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the corporation Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts in behalf of the
corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer.
SECTION 5. VICE-PRESIDENT. -- Each Vice-President shall have such
powers and shall perform such duties as shall be assigned to him by the
directors.
SECTION 6. TREASURER. -- The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, or the President, taking proper vouchers for
such disbursements. He shall render to the President and Board of Directors at
the regular meetings of the Board of Directors, or whenever they may request it,
an account of all his transactions as Treasurer and of the financial condition
of the corporation. If required by the Board of Directors, he shall give the
corporation a bond for the faithful discharge of his duties in such amount and
with such surety as the Board shall prescribe.
SECTION 7. SECRETARY. -- The Secretary shall give, or cause to be
given, notice of all meetings of stockholders and directors, and all other
notices required by law or by these By-Laws, and in case of his absence or
refusal or neglect so to do, any such notice may be given by any person
thereunto directed by the President, or by the directors, or stockholders upon
whose requisition the meeting is called as provided in these By-Laws. He shall
record all the proceedings of the meetings of the corporation and of directors
in a book to be kept for that purpose. He shall keep in safe custody the seal of
the corporation, and when authorized by the Board of Directors, affix the same
to any instrument requiring it, and when so affixed, it shall be attested by his
signature or by the signature of any assistant secretary.
SECTION 8. ASSISTANT TREASURERS & ASSISTANT SECRETARIES. -- Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.
ARTICLE V
SECTION 1. CERTIFICATES OF STOCK. -- Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the chairman or vice-chairman of the Board of Directors,
or the president or a vice-president and the treasurer or an assistant
treasurer, or the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by him in the corporation. If the
corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations, or restrictions of such
preferences, and/or rights shall be set forth in full or summarized on the face
or back of the certificate which the corporation shall issue to represent such
class of series of stock, provided that, except as otherwise provided in section
202 of the General Corporation Law of Delaware, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the corporation shall issue to represent such class or series of stock, a
statement that the corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights. Where a certificate is countersigned (1) by a transfer agent
other than the corporation or its employee, or (2) by a registrar other than the
corporation or its employee, the signatures of such officers may be facsimiles.
SECTION 2. LOST CERTIFICATES. -- New certificates of stock may be
issued in the place of any certificate therefore issued by the corporation,
alleged to have been lost or destroyed, and the directors may, in their
discretion, require the owner of the lost or destroyed certificate or his legal
representatives, to give the corporation a bond, in such sum as they may direct,
not exceeding double the value of the stock, to indemnify the corporation
against it on account of the alleged loss of any such new certificate.
SECTION 3. TRANSFER OF SHARES. -- The shares of stock of the
corporation shall be transferrable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the corporation by
the delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other persons as the directors may designate, by who they
shall be cancelled, and new certificates shall thereupon be issued. A record
shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDER RECORD DATE. -- (a) The Board of Directors may
fix a record date, which shall not be more than sixty (60) nor less than ten
(10) days before the date of any meeting of stockholders, nor more than sixty
(60) days prior to the time for any other action hereinafter described, as of
which there shall be determined the stockholders who are entitled: (i) to notice
of or to vote at any meeting of stockholders or any adjournment thereof; (ii) to
express consent to corporate action in writing without a meeting consistent with
and as provided in subsection (b) below; (iii) to receive payment of any
dividend or other distribution or allotment of any rights; or (iv) to exercise
any rights with respect to any change, conversion or exchange of stock or with
respect to any other lawful action.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than (10) days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. Any stockholder of record seeking to have the stockholders authorize
or take corporate action by written consent shall, by written notice to the
Secretary of the corporation, request the Board of Directors to fix a record
date. The Board of Directors shall promptly, but in all events within ten (10)
days after the date on which such a request is received by the Secretary, adopt
a resolution fixing the record date, and such record date shall be binding upon
the corporation and its stockholders for purposes of determining the
stockholders entitled to consent to such corporate action. If no record date has
been fixed by the Board of Directors within ten (10) days of the date on which
such a request is received, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting, when no
prior action by the Board of Directors is required by applicable law, shall be
the first date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
any officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or certified or registered
mail, return receipt requested. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required by applicable
law, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the date on which the Board of Directors adopts the resolution taking such
prior action.
SECTION 5. DIVIDENDS. -- Subject to the provisions of the Certificate
of Incorporation the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividends there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.
SECTION 6. SEAL. -- The corporate seal shall be circular in form and
shall contain the name of the corporation, the year of its creation and the
words 'CORPORATE SEAL DELAWARE." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or otherwise reproduced.
SECTION 7. FISCAL YEAR. -- The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS. -- All checks, drafts, or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by the officer or officers, agent or agents of
the corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE. -- Whenever any notice is
required by these By-Laws to be given, personal notice is not meant unless
expressly stated, and any notice so required shall be deemed to be sufficient if
given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his address as it appears on the
records of the corporation, and such notice shall be deemed to have been given
on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by
statute.
Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Certificate of
Incorporation of the corporation or these By-Laws, a waiver thereof in writing
signed by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed proper notice.
ARTICLE VI - AMENDMENTS
These By-Laws may be altered and repealed and By-Laws may be made at
any annual meeting of the stockholders or at any special meeting thereof if
notice thereof is contained in the notice of such special meeting by the
affirmative vote of a majority of the stock issued and outstanding or entitled
to vote thereat, or by the regular meeting of the Board of Directors, at any
regular meeting of the Board of Directors, or at any special meeting of the
Board of Directors, if notice thereof is contained in the notice of such special
meeting.
EXHIBIT 10.75
FIRST AMENDMENT TO
AMENDED AND RESTATED
CREDIT AGREEMENT
BAILEY CORPORATION ("Bailey"), a Delaware corporation, its wholly-owned
subsidiary BAILEY MANUFACTURING CORPORATION ("BMC"), a Delaware corporation,
each with a principal place of business at 700 Lafayette Road, P.O. Box 307,
Seabrook, New Hampshire 03874, its wholly-owned subsidiary BAILEY TRANSPORTATION
PRODUCTS, INC. ("BTP"), a Delaware corporation, with its principal place of
business at 333 Gore Road, Conneaut, Ohio 44030, and BAYBANK, a Massachusetts
trust company, with its principal place of business at 7 New England Executive
Park, Burlington, Massachusetts 01803, (the "Bank") hereby agree to amend that
certain Amended and Restated Credit Agreement dated as of July 29, 1994 among
Bailey, BMC, BTP and the Bank (the "Credit Agreement").
Bailey, BMC, BTP and the Bank agree that Section 1.7 of the Credit
Agreement is hereby deleted and the following is substituted therefor:
1.7 Interest on Term Notes and the Revolving Credit; Pricing Options.
The Borrower shall pay interest on the unpaid principal amount of each Note at
the following rates per annum, as selected by the Borrowers, as provided below:
(a) Interest on the 1988 Term Note.
Amounts outstanding under the 1988 Term Note shall
bear interest at the annual rate of interest announced by the Bank from
time to time as its "prime rate" (the "Prime Rate") plus 0.5%, interest
payable monthly in arrears.
(b) Interest on the 1994 Term Note.
(1) Prime Rate Advance. Loans or advances based on
the Bank's Prime Rate ("Prime Rate Advances"), shall bear interest at
the Prime Rate plus 0.5% payable monthly in arrears.
(2) Eurodollar Advances. Loans or advances based on
the London interbank offered rate (or "LIBOR" as defined below; each
such loan referred to herein as a "Eurodollar Advance"), at the
Eurodollar Rate plus 2.50%, payable at the end of each Interest Period
except in the case of an Interest Period of more than three months in
which case interest shall be payable on the 90th day following the
Advance. The "Eurodollar Rate" shall mean the rate per annum equal to
the quotient of (a) LIBOR divided by (b) a number equal to 1.0 minus
the rate (expressed as a decimal) of the reserve requirements current
on the day that is two Banking Days prior to the beginning of the
applicable Interest Period (including without limitation, basic,
supplemental, marginal and emergency reissues) under any regulation
promulgated by the Board of Governors of the Federal Reserve System (or
any other governmental authority having jurisdiction over the Bank) as
in effect from time to time dealing with reserve requirements
prescribed for eurocurrency funding including any reserve requirements
with respect to "eurocurrency liabilities" under Regulation D of the
Board of Directors of the Federal Reserve System. "Banking Day" shall
mean any day on which commercial banks are not authorized or required
to close in Boston and, if such day relates to a borrowing of, a
payment or prepayment of principal or interest on a Eurodollar Advance
or a notice by the Borrower with respect to any such borrowing,
payment, prepayment, a day which is also a day on which dealings in
Dollar deposits are carried out in the London interbank market.
"Interest Period" shall mean such period commencing on the date such
Eurodollar Advance is made and ending, in the case of Eurodollar
Advances under the 1994 Term Note, on the third or sixth monthly
anniversary of such date and in the case of Eurodollar Advances under
the Revolving Credit on the first, second or third monthly anniversary
of such date, as selected by the Borrower. "LIBOR" shall mean for a
subject Interest Period, the rate of interest, at approximately 11:00
a.m. Burlington, Massachusetts time, two Banking Days prior to the
first day of such Interest Period, as being the rate at which deposits
in Dollars are offered to the Bank by first-class banks on the London
interbank market for deposits for such Interest Period in amounts
comparable to the then aggregate principal amount of the requested
Eurodollar Advance.
(c) Interests on the Revolving Credit.
(1) Prime Rate Advances. Prime Rate Advances under
the Revolving Credit shall bear interest at the Prime Rate.
(2) Eurodollar Advances. Eurodollar advances shall
bear interest at the Eurodollar Rate plus 2.00% payable at the end of
each Interest Period, which shall be one, two or three months as
selected by the Borrower.
IN WITNESS WHEREOF, the parties have caused this amendment to be
executed by their duly authorized representatives to take effect as of September
20, 1994.
BAYBANK BAILEY CORPORATION
By: /s/ James F. Carr, V.P. By: /s/ Leonard J. Heilman
BAILEY MANUFACTURING
CORPORATION
By: /s/ Leonard J. Heilman
BAILEY TRANSPORTATION
PRODUCTS, INC.
By: /s/ Leonard J. Heilman
EXHIBIT 10.76
ENVIRONMENTAL
INDEMNITY AGREEMENT
This Indemnity Agreement is entered into as of October 10, 1994 by
Bailey Corporation ("Bailey"), a Delaware corporation with a principal place of
business at 700 Lafayette Road, P.O. Box 307, Seabrook, New Hampshire 03874,
Bailey Manufacturing Corporation ("BMC"), a Delaware corporation with a
principal place of business at 700 Lafayette Road, P.O. Box 307, Seabrook, New
Hampshire 03874 and Bailey Transportation Products, Inc. ("BTP"), a Delaware
corporation with a principal place of business at 333 Gore Road, Conneaut, Ohio
44030 ("Bailey", "BMC" and "BTP" are herein referred to collectively as the
"Indemnitors") in favor of BayBank (the "Lender" or "Indemnitee") a
Massachusetts trust company with its main branch at 7 New England Executive
Park, Burlington, MASS 01803.
BACKGROUND AND PURPOSE
Pursuant to an Amended and Restated Credit Agreement dated as of July
29, 1994 Lender has extended, and may from time to time hereafter extend,
financial accommodations to the Indemnitors, including an $8,000,000 term loan
and a $12,500,000 revolving, demand credit facility (collectively, the "Loans").
To evidence and secure the borrowings under the term loan and revolving credit,
the Indemnitors have executed and delivered to the Lender, the Amended and
Restated Credit Agreements, various notes, security agreements and mortgages
(together with any amendments thereto, the "Loan Documents") including mortgages
(collectively the "Mortgages") on various parcels of real property in New
Hampshire, Michigan, Indiana and Ohio as more fully described on Exhibits A-G
hereto (the "Property").
As a condition of its continuing to extend financial accommodations to
the Indemnitors, Lender has requested that the Indemnitors supplement certain
indemnities previously given and, as expressly and more fully set forth below,
indemnify and hold Lender harmless from any Environmental Claim, any
Requirements of Environmental Law, and any violation of any Environmental
Permit, and all Costs (as the foregoing terms are defined in Exhibit A hereto)
relating to the Property. This Agreement is not intended to be, nor shall it be,
secured by the Mortgages and is not intended to secure payment of the Loans but
rather is an independent obligation of Indemnitors.
DEFINITIONS
The definitions assigned to capitalized terms used in this Agreement
which are not otherwise defined in the text are set forth at the attached
Schedule I.
AGREEMENT
To induce the Lender to continue to extend financial accommodations to
the Indemnitors and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Indemnitors hereby covenant and
agree as follows:
1. Indemnification.
(a) Indemnitors shall protect, defend, indemnify, and hold
harmless Lender, its officers, directors, shareholders, agents and employees and
their respective heirs, legal representatives, successors and assigns (Lender
and all such other persons and entities being referred to herein individually as
an "Indemnitee" and collectively as "Indemnitees") from and against all Costs
which may be imposed upon the Property, the Indemnitees, or any of them, arising
out of or in connection with (i) Requirements of Environmental Law; (ii)
Environmental Claims; (iii) the failure of Indemnitors, or any other party
directly or indirectly connected with the Property, or affiliated with
Indemnitors having any control over or responsibility for the use and operation
of the Property to obtain, maintain or comply with any Environmental Permit
and/or (iv) the presence, existence or threat of release of Hazardous Materials
at, on, about, under, within or in connection with the Property.
(b) In the event that any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any kind or
nature (the "Remedial Work") is required under any applicable local, state or
federal law or regulation, any judicial order, or by any governmental or
non-governmental entity or person because of, or in connection with, the current
or future presence, suspected presence, release or suspected release or threat
of release of Hazardous Materials in or into the air, soil, ground water,
surface water or soil, vapor at, on, about, under, within the Property (or any
portion thereof), Indemnitors shall within thirty (30) days after written demand
for performance thereof by any Indemnitee or by any federal, state, local or
other governmental agency (or such shorter period of time as may be required
under any applicable law, regulation, order or agreement), promptly commence, or
cause to be commenced, and thereafter diligently prosecute to completion, all
such Remedial Work. All Costs related to such Remedial Work shall be paid by
Indemnitors including, without limitation, Costs incurred by any Indemnitee in
connection with monitoring or review of such Remedial Work. In the event
Indemnitors shall fail to promptly commence, or cause to be commenced, or fail
to diligently prosecute to completion, such Remedial Work, Lender may, but shall
not be required to, cause such Remedial Work to be performed and all Costs shall
become an Environmental Claim hereunder.
(c) The obligation to indemnify created under this Agreement
shall survive (i) payment in full and cancellation of any notes evidencing the
Loans, (ii) satisfaction, assignment or reconveyance of the Mortgages and
release of other security provided in connection with the Loans; (iii)
foreclosure of any of the Mortgages and other security instruments; (iv)
acquisition of the Property by Lender; and (v) transfer of all Lender's rights
in the Loans and the Property.
(d) Nothing contained in this Agreement shall prevent or in
any way diminish or interfere with any rights or remedies, including, without
limitation, the right to contribution, which any Indemnitee may have against
Indemnitors or any other party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (codified at Title 42 U.S.C. ss.9601 et
seq.), as it may be amended from time to time, or any other applicable federal,
state or local laws, all rights being hereby expressly reserved.
2. Notice of Actions.
(a) Indemnitors shall give immediate written notice to Lender
of: (i) any proceeding, inquiry, notice, or other communication to it or of
which it has knowledge by or from any governmental or non-governmental entity
regarding the presence or suspected presence of any unpermitted Hazardous
Material at, on, about, under within or in connection with the Property or any
migration thereof from or to the Property; (ii) any actual or alleged violation
of any Requirements of Environmental Law; (iii) all Environmental Claims; (iv)
the discovery of any occurrence or condition on any real property adjoining or
in the vicinity of the Property that could reasonably cause the Property or any
part thereof to be subject to any restrictions on ownership, occupancy,
transferability, or use, or subject the owner or any person having any interest
in the Property to any liability, penalty, or disability under any Requirements
of Environmental Law; and (v) the receipt of any notice or discovery of any
information regarding any actual, alleged, or potential spillage, seepage,
release, discharge, disposal or any other presence or existence of any Hazardous
Material at, on, about, under, or within the Property.
(b) Immediately upon receipt of the same, Indemnitors shall
deliver to Lender copies of any and all Environmental Claims, and any and all
orders, notices, permits, applications, reports, and other communications,
documents, and instruments pertaining to the actual, alleged, or potential
presence or existence of any unpermitted Hazardous Material at, on, about, or
within the Property.
(c) Indemnitors shall not object to Lender seeking to to join
and participate in, as a party if it so elects, any legal proceedings or actions
in connection with the Property involving any Environmental Claim, any Hazardous
Material or Requirements of Environmental Law.
3. Procedures Relating to Indemnification.
In any circumstance in which this Agreement applies, Lender
may, but shall not be obligated to, following the occurrence of an Event of
Default under the Loan Documents employ its own legal counsel and consultants to
investigate, prosecute, negotiate, or defend any such Environmental Claim and
Lender shall have the right to compromise or settle the same without the
necessity of showing actual liability therefor and, provided at such time that
Indemnitors are in material default under the Loan Documents, without the
consent of Indemnitors. Indemnitors shall promptly upon written request of
Lender reimburse Lender for all Costs incurred by Lender, including the amount
of all Costs of settlements entered into by Lender.
4. Binding Effect. This Agreement shall be binding upon the
Indemnitors, their respective successors and assigns and shall inure to the
benefit of the Indemnitee and its successors and assigns, including as to
Lender, without limitation, any holder of any notes evidencing Loans and any
affiliate of Lender which acquires all or part of the Property by any sale,
assignment, deed in lieu of foreclosure, foreclosure under the Mortgage, or
otherwise. The obligations of Indemnitors under this Agreement shall not be
assigned without the prior written consent of Lender, which consent may be given
or withheld in the sole discretion of Lender.
5. Liability of Indemnitor. The liability of each party comprising the
Indemnitors shall be joint and several. The liability of Indemnitors under this
Agreement shall in no way be limited or impaired by the provisions of the
Mortgages or any note or any of the other documents evidencing or securing the
Loans, or any amendment, modification, extension or renewal thereof. In
addition, the liability of Indemnitors under this Agreement shall in no way be
limited or impaired by any sale, assignment, or foreclosure of any note
evidencing the Loans or the Mortgage or any sale or transfer of all or any part
of the Property or any interest therein. No delay on the Lender's part in acting
under this Indemnity shall operate as a waiver of any of the Lender's rights
hereunder. No waiver hereunder by the Lender in any instance shall constitute a
waiver in any other instance.
6. Waiver. Indemnitors waive any right or claim of right to cause a
marshalling of the assets of Indemnitors or to cause Lender to proceed against
any of the security for the Loan before proceeding under this Agreement against
Indemnitors; Indemnitors agree that any payments required to be made hereunder
shall become due on demand; to the extent permitted by applicable law,
Indemnitors expressly waive and relinquish all rights and remedies accorded by
applicable law to indemnitor or guarantors, except any rights of subrogation
that Indemnitors may have; provided that the indemnity provided for hereunder
shall neither be contingent upon the existence of any such rights of subrogation
nor subject to any claims or defenses whatsoever that may be asserted in
connection with the enforcement or attempted enforcement of such subrogation
rights, including, without limitation, any claim that such subrogation rights
were abrogated by any acts or omissions of Lender.
7. Notices. All notices, consents, approvals, elections and other
communications (collectively "Notices") hereunder shall be in writing (whether
or not the other provisions of this Agreement expressly so provide) and shall be
deemed to have been duly given if mailed by United States registered or
certified mail, with return receipt requested, postage prepaid, or by United
States Express Mail, overnight delivery or courier service to the parties at the
addresses set forth at the beginning of this Agreement (or at such other
addresses as shall be given in writing by any party to the others) with copies
to each parties counsel as follows:
In the case of Bailey, BMC or BTP:
Alan L. Reische, Esq.
Sheehan, Phinney, Bass & Green
P.O. Box 3701
1000 Elm Street
Manchester, NH 03105--3701
In the case of Lender:
Jon D. Schneider, P.C.
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
8. Attorneys' Fees. In the event that any Indemnitee brings or
otherwise becomes a party to any suit or other proceeding (including, without
limitation, any administrative proceedings) with respect to the subject matter
or enforcement of this Agreement, such Indemnitee shall, in addition to such
other relief as may be awarded, be entitled to recover from Indemnitors
attorneys' fees, expenses and costs of investigation as are actually incurred
(including, without limitation, reasonable attorneys' fees, expenses and costs
of investigation incurred in appellate proceedings, costs incurred in
establishing the right to indemnification, or in any action or participation in,
or in connection with, any case or proceeding under Chapter 7, 11 or 13 of the
Bankruptcy Code, 11 U.S.C. ss.101 et seq., or any successor statutes).
9. Governing Law. This Agreement and the rights and obligation of the
parties hereunder shall in all respects be governed by, and construed and
enforced in accordance with the laws of the Commonwealth of Massachusetts
("State"). Indemnitors hereby irrevocably submit to the non-exclusive
jurisdiction of any federal court or state court of general jurisdiction sitting
in Massachusetts over any suit, action or proceeding, Service of process may be
made by certified or registered mail, return receipt requested, directed to
Indemnitors at the address indicated in Section 7 hereof, and service so made
shall be complete five (5) days after the same shall have been so mailed.
10. Successive Actions. A separate right of action hereunder shall
arise each time Lender acquires knowledge of any matter indemnified by
Indemnitors under this Agreement. Separate and successive actions may be brought
hereunder to enforce any of the provisions hereof at any time and from time to
time. No action hereunder shall preclude any subsequent action, and Indemnitors
hereby waive and covenant not to assert any defense in the nature of splitting
of causes of action or merger of judgments.
11. Partial Invalidity. If any provision of this Agreement shall be
determined to be unenforceable in any circumstances by a court of competent
jurisdiction, then the balance of this Agreement shall be enforceable
nonetheless, and the subject provision shall be enforceable in all other
circumstances.
12. Interest on Unpaid Amounts. All amounts required to be paid or
reimbursed to any Indemnitee hereunder shall bear interest from the date of
expenditure by such Indemnitee or the date of written demand to Indemnitors
hereunder, whichever is later, until paid to Indemnitee(s). The interest rate
shall be the lesser of (a) a rate per annum equal to the rate announced by the
Lender from time to time as its "prime rate" plus 5% or (b) the maximum rate
then permitted for the parties to contract for under applicable law.
IN WITNESS WHEREOF, Indemnitors have executed this Agreement under seal
as of the date first set forth above.
Bailey Corporation.
By: /s/ Leonard J. Heilman
Its: Executive Vice President - Finance
Bailey Manufacturing Corporation
By: /s/ Leonard J. Heilman
Its: Executive Vice President - Finance
Bailey Transportation Products, Inc.
By: /s/ Leonard J. Heilman
Its: Senior Vice President - Finance
SCHEDULE 1
TO INDEMNITY AGREEMENT
Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
(a) "Costs" shall mean all liabilities, losses, costs,
damages, (including consequential damages), expenses, claims, attorneys' fees,
experts' fees, consultants' fees and disbursements of any kind or of any nature
whatsoever. For the purposes of this definition, such losses, costs and damages
shall include, without limitation, remedial, and related costs, expenses,
losses, damages, penalties, fines, obligations, defenses, judgments, suits,
proceedings and disbursements.
(b) "Environmental Claim" shall include, but not be limited
to, any claim, demand, action, cause of action, suit, loss, costs, damage, fine,
penalty, expense, liability, judgment, proceeding, or injury, whether
threatened, sought, brought, or imposed, that seeks to impose costs or
liabilities for (i) noise; (ii) pollution or contamination of the air, surface
water, ground water, or soil; (iii) solid, gaseous, or liquid waste generation,
handling, treatment, storage, disposal, or transportation; (iv) exposure to
Hazardous Materials; (v) the manufacture, processing, distribution in commerce,
use, or storage of Hazardous Materials; (vi) injury or death of any person or
persons directly or indirectly connected with Hazardous Materials directly or
indirectly related to the Property; (vii) destruction or contamination of any
property directly or indirectly connected with Hazardous Materials and directly
or indirectly related to the Property; or (viii) any and all penalties directly
or indirectly connected with Hazardous Materials and directly or indirectly
related to the Property. The term "Environmental Claim" also includes (i) the
costs of removal of any and all Hazardous Materials from all or any portion of
the Property, (ii) costs required to take necessary precautions to protect
against the release of Hazardous Materials at, on, in, about, under, within,
near or in connection with the Property in or into the air, soil, surface water,
ground water, or soil vapor, any public domain, or any surrounding areas, and
(iii) costs incurred to comply, in connection with all or any portion of the
Property, with all applicable laws with respect to Hazardous Materials,
including any such laws applicable to the work referred to in this sentence.
"Environmental Claim" also means any asserted or actual breach or violation of
any Requirements of Environmental Law, or any event, occurrence, or condition as
a consequence of which, pursuant to any Requirements of Environmental Law, (i)
Indemnitors, Lender, or any owner, occupant, or person having any interest in
the Property shall be liable or suffer any disability, or (ii) the Property
shall be subject to any restriction on use, ownership, transferability, or (iii)
any Remedial Work shall be required.
(c) "Environmental Permit" means any permit, license,
approval, or other authorization with respect to any activities, operations, or
businesses conducted on or in relation to the Property under any applicable law,
regulation, or other requirement of the United States or any state,
municipality, or other subdivision or jurisdiction related to pollution or
protection of health or the environment, or any private agreement (such as
covenants, conditions and restrictions), including laws, regulations or other
requirements relating to emissions, discharges, or releases or threatened
releases of Hazardous Materials into ambient air, surface water, ground water,
or soil, or otherwise relating to the manufacture, processing, distribution,
use, generation, treatment, storage, disposal, transportation, or handling of
Hazardous Materials directly or indirectly related to the Property.
(d) "Hazardous Materials" shall include the following:
(i) Those substances included within the definitions
of "hazardous substances," "hazardous materials," "toxic substances,"
or "solid waste" in the Comprehensive Environmental Response
Compensation and Liability Act of 1980 (42 U.S.C. ss.9601 et seq.)
("CERCLA"), as amended by Superfund Amendments and Reauthorization Act
of 1986 (Pub. L. 99-499 100 Stat. 1613) ("SARA"), the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. ss.6901 et seq.)
("RCRA"), the Toxic Substance Control Act of 1976 ("TSCA"), and the
Hazardous Materials Transportation Act, 49 U.S.C. ss.1801 et seq., and
in the regulations promulgated pursuant to said laws, all as amended;
(ii) Those substances listed in the United States
Department of Transportation Table (49 CFR 172.101 and amendments
thereto) or by the Environmental Protection Agency (or any successor
agency) as hazardous substances (40 CFR Part 302 and amendments
thereto);
(iii) Any material, waste or substance which is (A)
petroleum, (B) asbestos, (C) polychlorinated biphenyls, (D) designated
as a "hazardous substance" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C. ss.1251 et seq. (33 U.S.C. ss.1321) or listed pursuant
to Section 307 of the Clean Water Act (33 U.S.C. ss.1317); (E)
flammable explosives; or (F) radioactive materials; and
(iv) Such other substances, materials and wastes
which are or become regulated as hazardous or toxic under applicable
local, state or federal law, or the United States government, or which
are classified as hazardous or toxic under federal, state, or local
laws or regulations.
(e) "Requirements of Environmental Law" means all requirements
of environmental or ecological laws or regulations or controls related to the
Property, including all requirements imposed by any law, rule, order, or
regulations of any federal, state, or local executive, legislative, judicial,
regulatory, or administrative agency, board, or authority, or any private
agreement (such as covenants, conditions and restrictions), which relate to (i)
noise; (ii) pollution or protection of the air, surface water, ground water, or
soil; (iii) solid, gaseous, or liquid waste generation, treatment, storage,
disposal, or transportation; (iv) exposure to Hazardous Materials; or (v)
regulation of the manufacture, processing, distribution and commerce, use, or
storage of Hazardous Materials.
EXHIBIT A
A certain tract of land, with the buildings and improvements thereon,
situated in Seabrook, Rockingham County, New Hampshire and shown as Lot 8-55 on
a plan entitled "Boundary Plan of Land, USM Corporation, Seabrook, N.H.," Scale:
1' = 100", dated May 27, 1982, as revised July 28, 1982, prepared by Thomas F.
Moran, Inc. and recorded in the Rockingham County Registry of Deeds as Plan No.
D-10999.
Excepting and reserving therefrom the following property:
(1) the premises conveyed to the State of New Hampshire by deed dated
January 5, 1984 and recorded in the Rockingham County Registry of Deeds at Book
2477, Page 1526;
(2) the premises conveyed to Nelson J. Murray and Susan L. Murray by
deed dated February 24, 1987 and recorded in the Rockingham County Registry of
Deeds at Book 2663, Page 627; and
(3) the premises conveyed to the Seabrook Housing Authority by deed
dated August 23, 1989 and recorded in the Rockingham County Registry of Deeds at
Book 2805, Page 1087.
EXHIBIT B
TRACT 1
Being a part of the Southwest Quarter of Section 14, Township 4 North, Range 10
East located in Madison Township of Jefferson County, Indiana described as
follows:
Commencing at a brass pin (found) at the southwest corner of the Southwest
Quarter of Sec. 14, T4N, R10E; thence South 86 degrees 00 minutes 45 seconds
East (grid) bearing relative to the Indiana State Plane Coordinate System, East
Zone), 3.96 feet with the south line of Section 14 to a point in the centerline
of Michigan Road (formerly U.S. Highway 421, formerly State Highway # 29) and
the ACTUAL POINT OF BEGINNING; (said point being on a circular curve from which
the radius point of said curve bears South 88 degrees 34 minutes 25 seconds
East, 8594.37 feet); thence northerly on said centerline and a circular curve
having a central angle of 01 degrees 59 minutes 05 seconds, radius 8594.37 feet,
arc length 297.69 feet and chord bearing North 02 degrees 25 minutes 07 seconds
East, 297.67 feet to a point; thence South 88 degrees 46 minutes 44 seconds East
(South 86 degrees 46 minutes 44 seconds East by Deed), 50.04 feet to a Re-bar
found on the east right-of-way of Michigan Road; thence continuing South 88
degrees 46 minutes 44 seconds East (South 86 degrees 46 minutes 44 seconds East
by Deed), 300.00 feet to a Re-bar found; thence North 04 degrees 00 minutes 50
seconds East 176.00 feet to Re-bar found at the south line of the Faith Lutheran
Church property; thence South 88 degrees 46 minutes 44 seconds East (South 86
degrees 46 minutes 44 seconds East by Deed), 180.16 feet to a steel T-bar;
thence South 00 degrees 39 minutes 50 seconds West 469.95 feet to a steel T-bar
on the north right-of-way line of Ivy Tech Drive (formerly Satan Lane); thence
South 00 degrees 39 minutes 50 seconds West 30.05 feet to the section line;
thence North 86 degrees 00 minutes 45 seconds West 550.49 feet to the point of
beginning.
This tract contains 4.6451 acres (with 0.3431 acres lying inside the
right-of-way of Michigan Road and 0.3445 acres lying inside the right-of-way of
Ivy Tech Drive (formerly Satan Lane).
TRACT 2
A part of the Southwest Quarter of Section 14, Township 4 North, Range 10 East
located in Madison Township of Jefferson County, Indiana also being a part of
Lot No. 1 in Ringwald Addition, the plat of which is recorded in Plat Book 1,
Page 12A., in the Recorder's Office, Jefferson County, Indiana, described as
follows:
Commencing at the northwest corner of said lot; thence South along the West line
of said lot and the East right-of-way line of Michigan Road a distance of 176
feet to a point thence East a distance of 300 feet to a point; thence North a
distance of 176 feet to a point; thence West 300 feet to the place of beginning.
Which real estate has been found by survey to be more accurately described as
follows:
Being a part of the Southwest Quarter Section 14, Township 4 North, Range 1
Madison Township, Jefferson County, Indiana described as follows:
Commencing at a brass pin (found) at the Southwest Corner of the Southwest
Quarter of Section 14, T4N, R10E; thence South 86 degrees 00 minutes 45 seconds
East (grid bearing relative to the Indiana State Plane Coordinate System-East
Zone), 3.96 feet with the South line of Section 14 to a point in the centerline
of Michigan Road (formerly U.S. Highway # 421, formerly State Highway # 29),
said point being on a circular curve from which the radius point of said curve
bears South 88 degrees 34 minutes 25 seconds East 8594.37 feet; thence northerly
on said centerline and a circular curve having a central angle of 01 degrees 59
minutes 05 seconds radius 8594.37 feet; arc length 297.69 feet and chord bearing
North 02 degrees 25 minutes 07 seconds East 297.67 feet to a point on said curve
from which the radius point bears South 86 degrees 35 minutes 20 seconds East
8594.37 feet and the ACTUAL POINT OF BEGINNING; thence continuing on said
circular curve having a central angle of 01 degrees 10 minutes 24 seconds,
radius 8594.37 feet, arc length 176.01 feet and chord bearing North 03 degrees
59 minutes 52 seconds East 176.01 feet to a point from which the radius point
bears South 85 degrees 24 minutes 57 seconds East 8594.37 feet; thence South 88
degrees 46 minutes 44 seconds East (South 86 degree 46 minutes 44 seconds East
by Deed) 50.09 feet to a steel T-bar at the intersection of the North line of
Lot # 1 of the Ringwald Addition, see Plat Book 2, Page 17, and the easterly
right-of-way of Michigan Road; thence continuing with the north line of Lot # 1
of Ringwald Addition South 88 degrees 46 minutes 44 seconds East (South 86
degrees 46 minutes 44 seconds East by Deed) 300.00 feet to steel T-bar; thence
South 04 degrees 00 minutes 55 seconds West 176.00 feet to a Re-bar; thence
North 88 degrees 46 minutes 44 seconds West (North 86 degrees 46 minutes 44
seconds West by Deed) 300.00 feet to a Re-bar found thence continuing North 88
degrees 46 minutes 44 seconds West (North 86 degrees 44 minutes 44 seconds West
by Deed) 50.04 feet to a northwest corner of the first tract described above and
the point and place of beginning of this tract.
This tract contains 1.212 acres along with 0.202 acres lying inside of the
right-of-way of Michigan Road for a total of 1.414 acres.
EXHIBIT C
Land in the City of Hillsdale, County of Hillsdale and State of Michigan,
described as follows:
PARCEL A:
A parcel of land being a part of the Southwest 1/4 of the Northeast 1/4 of
Section 26, Township 6 South, Range 3 West, City of Hillsdale, Hillsdale County,
Michigan, including a part of Lot 157, Clover Hill Addition, being part of the
West 1/2 of the Northeast 1/4 of Section 26, Town 6 South, Range 3 West,
according to the Plat thereof as recorded in Liber 2 of Plats, Page 36,
Hillsdale County Records, described as:
Commencing at the center of said Section 26; thence East along the East-West 1/4
line of said Section 26, 337.00 feet; thence North 00"34'10" East, 33 feet to
the point of beginning; thence continuing North 00"34'10" East, along the East
line of Superior Street (being 66 feet wide), 847.30 feet; thence South
60"05'51" East, 320.77 feet; thence South 00"34'10 West, 37.85 feet; thence
South 60"05'51" East, 22.93 feet; thence North 89"09'09" East, 280.00 feet;
thence South 00"16'10" West, 310.63 feet; thence along the arc of a curve
concave Southerly (Curve Data: Delta = 05"47'26", Radius = 3786.83', Arc =
382.72', Chord = 382.56', Tan = 191.52', Chord Bearing = South 76"15'14" East)
382.72 feet to the West line of Wolcott Street (being 66 feet wide); thence
South 76"15'16" West, along the West side of Wolcott Street, 67.04 feet; thence
along the arc of a curve concave Southerly (Curve Data: Delta = 06"59'22",
Radius = 3852.83', Arc = 470.01', Chord = 469.72', Tan = 233.23', Chord Bearing
= North 75"49'53" West), 470.01 feet; thence South 00"16'10" West, 288.58 feet
to the North line of Bacon Street (being 66 feet wide); thence West along the
North line of Bacon Street, 215.58 feet; thence North 00"34'10" East, 178.25
feet; thence West 144.92 feet; thence South 00"34'10" West, 178.25 feet to the
North line of Bacon Street; thence West along the North line of Bacon Street,
138.08 feet to the point of beginning.
PARCEL B:
A parcel of land being a part of the Southwest 1/4 of the Northeast 1/4 of
Section 26, Township 6 South, Range 3 West, City of Hillsdale, Hillsdale County,
Michigan, including a part of Lot 157, Clover Hill Addition, being part of the
West 1/2 of the Northeast 1/4 of Section 26, Town 6 South, Range 3 West,
according to the Plat thereof as recorded in Liber 2 of Plats, Page 36,
Hillsdale County Records, described as:
Commencing at the center of said Section 26; thence East along the East-West 1/4
line of said Section 26, 271.00 feet; thence North 00"34'10" East, along the
West line of Superior Street (being 66 feet wide), 631.43 feet to the North line
of the New York Central Railroad right of way (being 100 feet wide) the point of
beginning; thence North 66"57'11" West, along the North line of said New York
Central Railroad, 293.27 feet; thence North 00"34'10" East, 153.00 feet; thence
North 89"09'09" East, 271.07 feet to the West line of said Superior Street;
thence South 00"34'10" West, along the West line of said Superior Street, 271.82
feet to the point of beginning.
PARCEL C:
CLOVERHILL ADDITION - FIRST WARD: Lots 57, 58, 59, 60, 61, 62, 63 and 64, part
of Hayward prop. on Marion Street according to the plat thereof.
EXHIBIT D
A part of the Southwest Quarter and a part of the Northwest Quarter of Section
10, Township 23 North, Range 10 East; also a part of the Southeast Quarter and a
part of the Northeast Quarter of Section 9, Township 23 North, Range 10 East in
Licking Township, Blackford County, Indiana, described as follows:
Beginning at a point on the South line of the Northwest Quarter of Section 10,
Township 23 North, Range 10 East, said point being North 89 degrees 50 minutes
07 seconds East 40.00 feet (assumed bearing) from the Southwest corner of said
Quarter Section; thence North 00 degrees 00 minutes 00 seconds 50.00 feet
parallel with the West line of said Quarter Section; thence North 89 degrees 50
minutes 07 seconds East 595.00 feet, thence North 00 degrees 00 minutes 00
seconds 945.57 feet to the South line of McDonald Street; thence North 89
degrees 56 minutes 11 seconds West 595.00 feet to a point 40 feet East of the
West line of said Quarter Section; thence South 00 degrees 00 minutes 00 seconds
248.35 feet to a point on the Southerly right-of-way line of Maynard Street
extended East; thence North 90 degrees 00 minutes 00 seconds West 530.50 feet
along said right-of-way line into the Northeast Quarter of Section 9, Township
23 North, Range 10 East to the center line of the railroad switch to the Bathey
Manufacturing Company; thence South 00 degrees 02 minutes 06 seconds West 585.77
feet along said center line to the point of beginning of a curve, said point
being North 89 degrees 57 minutes 54 seconds West 649.74 feet from the radius of
said curve; thence Southeasterly 460.26 feet along said curve to a point that is
South 49 degrees 26 minutes 54 seconds West 649.74 feet from the radius of said
curve, said point being where said curve intersects the Northerly right-of-way
line of a railroad (formerly the Pittsburg, Cincinnati & St. Louis Railroad);
thence South 64 degrees 43 minutes 51 seconds East 426.87 feet along said
Northerly line to a point, said point being in the Southwest Quarter of Section
10, Township 23 North, Range 10 East and being 40 feet Easterly from the West
line of said Quarter Section; thence North 01 degrees 28 minutes 00 seconds West
441.05 feet to the point of beginning.
EXHIBIT E
Legal Description
PARCEL A:
Situated in the City of Lancaster, County of Fairfield, State of Ohio and more
particularly described as follows:
Being a part of the east half of Section 4, township 14 (Berne), range
18, bounded and beginning at an iron pipe which is first north with the section
line, being also the centerline of Quarry Road, 1275.32 feet (by previous
description), thence west 1712.40 feet, from the southeast corner of said
section 4; thence continuing west 874.40 feet to an iron pipe: thence with the
south right-of-way line of the Penn-Central Railroad north 0(degree)-31' west
852.00 feet to an iron pipe; thence with the south right-of-way line of the
Penn-Central Railroad north 78(degree) 24' east 884.60 feet to an iron pipe;
thence south 0(degree)-53' east 1029.58 feet to the place of beginning.
PARCEL NUMBER 053-58033-00
PARCEL B:
Situated in the City of Lancaster, Ohio, and more particularly bounded and
described as follows:
Being a part of the east half of Section 4, Township 14, Range 18,
Berne Township, Fairfield County, Ohio. Beginning, for reference at the
southeast corner of Section 4, T. 14, R 18 Berne Township; Thence with the east
line of said section (by previous description) North a distance of 1275.30 feet
to a railroad spike; Thence leaving the east line of said section West a
distance of 1562.40 feet to a 5/8" iron pin said iron pin being the principal
place of beginning of the tract herein described; Thence West a distance of
150.00 feet to an iron pipe found on the southeast corner of an 18.82 acre tract
from which an iron pipe found on the half section line at the southwest corner
of said 18.82 acre tract bears West a distance of 874.40 feet; Thence with the
east line of said 18.82 acre tract, North 0" 53' West a distance of 1029.58 feet
to an iron pipe found at the northeast corner of said 18.82 acre tract on the
south right of way line of the Penn-Central Railroad; Thence with the south
right of way line of said railroad, North 78(degree) 24' East a distance of
152.64 feet to a point; Thence leaving said right of way line, South 0(degree)
53' East, passing through a 5/8" iron pin set at 30.70 feet, going a total
distance of 1060.28 feet to the principal place of beginning.
PARCEL NUMBER 053-50030-20
EXHIBIT F
The following real estate in the Southeast Quarter of Section 20, Township 23
North, Range 14 East, Second Principal Meridian, Wayne Township, Jay County,
Indiana, including Lots Numbered 138 thru 163 inclusive located in the Original
plat of South Portland, now City of Portland, Indiana.
ALSO, including the G.R. and I. Railroad ground and the acreage West of the
railroad right of way as described and including proposed Third Street extension
dedicated to the City of Portland, Indiana. ALSO, vacated alleys and streets.
Commencing at an iron axle found at the Northwest corner of Lot No. 157 of the
Town of South Portland, Indiana, where it intersects the East line of the G.R.
and I. Railroad and the South line of the L.E. and W. railroad for the point of
beginning; thence South 32 degrees 17 minutes 50 seconds East (assumed bearing)
along the South right of way line of the L.E. and W. railroad a distance of
230.82 feet to an iron pin on the West line of Bridge Street a distance of
1317.61 feet to the Southwest corner of Lot No. 138; thence South 89 degrees 35
minutes 10 seconds West along the South line of Lot No. 138 a distance of 148.00
feet to an iron pin at the Southeast corner of Lot No. 138 a distance of 148.00
feet to an iron pin at the Southeast corner of Lot No. 163; thence South 89
degrees 35 minutes 10 seconds West along the North line of an alley a distance
of 123.73 feet to the Southwest corner of Lot No. 162, being the East right of
way line of the G.R. and I. Railroad; thence South 05 degrees 32 minutes 10
seconds West along the East right of way line of the G.R. and I. Railroad a
distance of 181.30 feet to an iron pin on the South line of the Southeast
Quarter of Section 20; thence North 89 degrees 45 minutes 54 seconds West along
the South line of the Southeast Quarter of Section 20 a distance of 140.30 feet
to an iron pin; thence North 05 degrees 32 minutes 08 seconds East a distance of
280.00 feet to an iron pin; thence North 89 degrees 45 minutes 54 seconds West
parallel to the South line of the Southeast Quarter of Section 20 a distance of
135.00 feet to an iron pin; thence North 05 degrees 30 minutes 09 seconds East a
distance of 1011.93 feet to an iron pin on the South line of vacated Union
Street; thence South 89 degrees 48 minutes 52 seconds East along the South line
of vacated Union Street where it intersects the West right of way line of the
G.R. and I. Railroad a distance of 175.60 feet to an iron pin; thence North 05
degrees 32 minutes 08 seconds East along the West line of said Railroad right of
way a distance of 667.21 feet to an iron pin; North 15 degrees 54 minutes 54
seconds West along the West right of way line of said railroad a 54 minutes 54
seconds West along the West right of way line of said railroad a distance of
61.00 feet to an iron pin; thence North 50 degrees 08 minutes 11 seconds East
along the West right of way line of said railroad a distance 61.00 feet to an
iron pin; thence North 05 degrees 32 minutes 08 seconds East along the West
right of way line of said railroad a distance of 108.20 feet to an iron pin;
thence South 77 degrees 57 minutes 45 seconds East a distance of 100.52 feet to
an iron pin on the East right of way line of said railroad; thence South 05
degrees 32 minutes 10 seconds West along the East right of way line of said
railroad a distance of 305.27 feet to the place of beginning.
TOGETHER WITH, those portions of vacated alleys and streets appurtenant to said
real estate as vacated by Ordinance of Vacation 1989-8, recorded March 30, 1990,
in Deed Record 77, Page 762.
EXHIBIT G
TO INDEMNITY AGREEMENT
[Reserved]
EXHIBIT 10.77
SECOND AMENDMENT TO
AMENDED AND RESTATED
CREDIT AGREEMENT
AND AMENDMENT TO
REVOLVING NOTE
BAILEY CORPORATION ("Bailey"), a Delaware corporation, its wholly-owned
subsidiary BAILEY MANUFACTURING CORPORATION ("BMC"), a Delaware corporation,
each with a principal place of business at 700 Lafayette Road, P.O. Box 307,
Seabrook, New Hampshire 03874, its wholly-owned subsidiary BAILEY TRANSPORTATION
PRODUCTS, INC. ("BTP"), a Delaware corporation, with its principal place of
business at 333 Gore Road, Conneaut, Ohio 44030, and BAYBANK, a Massachusetts
trust company, with its principal place of business at 7 New England Executive
Park, Burlington, Massachusetts 01803, (the "Bank") hereby agree to further
amend that certain Amended and Restated Credit Agreement dated as of July 29,
1994 among Bailey, BMC, BTP and the Bank , as previously amended by a First
Amendment dated as of September 20, 1994, (the "Credit Agreement") and to amend
the Amended and Restated Revolving Note dated July 29, 1994 (the "Revolving
Note") so as to increase the amount which may be borrowed under the Revolving
Credit of the Credit Agreement to $14,000,000.00 to make corresponding changes
in the Revolving Note.
Bailey BMC, BTP and the Bank agree as follows:
Amendments to Credit Agreement
A. The second paragraph of the Credit Agreement entitled "Background"
is hereby amended by deleting the figure "$12,500,000" in the fourth line
thereof and substituting the figure "$14,000,000" therefor.
B. Section 1.4 of the Credit Agreement is hereby amended by deleting
the figure "$12,500,000" in the fourth line thereof and substituting the figure
"$14,000,000" therefor.
C. Section 1.5 of the Credit Agreement is hereby amended by deleting
the figure "$12,500,000" in line four thereof and substituting the figure
"$14,000,000" therefor.
Amendment to Revolving Note
D. The Revolving Note is hereby amended (i) by deleting the figure
"$12,500,000" in the upper left hand corner and substituting the figure
"$14,000,000" therefor and (ii) by deleting the first paragraph and substituting
the following therefor:
For value received the undersigned, jointly and
severally, hereby promise to pay to the order of BAYBANK (the
"Bank"), ON DEMAND, the principal sum of $14,000,000 or, if
less, the aggregate unpaid principal amount of all advances
made by the Bank under the "Revolving Credit" as defined in
the Amended and Restated Credit Agreement referred to below
and outstanding at the time of such demand, together with
interest thereon or on such portion thereof as may be from
time to time outstanding at such rate and payable at such
times and in such manner as are provided in the said Amended
and Restated Credit Agreement. As provided in the said Amended
and Restated Credit Agreement, the aggregate amount borrowed
under the "Revolving Credit" shall not exceed $14,000,000.
E. The Bank agrees to mark the original of the Revolving Note to refer
to this Amendment and to affix a copy of this Amendment to the original of the
Revolving Note.
IN WITNESS WHEREOF, the parties have caused this amendment to be
executed by their duly authorized representatives to take effect as of April 6,
1995.
BAYBANK BAILEY CORPORATION
By: /s/ James F. Carr, Vice President By: /s/ Leonard J. Heilman
BAILEY MANUFACTURING
CORPORATION
By: /s/ Leonard J. Heilman
BAILEY TRANSPORTATION
PRODUCTS, INC.
By: /s/ Leonard J. Heilman
EXHIBIT 10.78
THIRD AMENDMENT TO
AMENDED AND RESTATED
CREDIT AGREEMENT
AND SECOND AMENDMENT TO
REVOLVING NOTE
BAILEY CORPORATION ("Bailey"), a Delaware corporation, its wholly-owned
subsidiary BAILEY MANUFACTURING CORPORATION ("BMC"), a Delaware corporation,
each with a principal place of business at 700 Lafayette Road, P.O. Box 307,
Seabrook, New Hampshire 03874, its wholly-owned subsidiary BAILEY TRANSPORTATION
PRODUCTS, INC. ("BTP"), a Delaware corporation, with its principal place of
business at 333 Gore Road, Conneaut, Ohio 44030, and BAYBANK, a Massachusetts
trust company, with its principal place of business at 7 New England Executive
Park, Burlington, Massachusetts 01803, (the "Bank") hereby agree to further
amend that certain Amended and Restated Credit Agreement dated as of July 29,
1994 among Bailey, BMC, BTP and the Bank, as previously amended by a First
Amendment dated as of September 20, 1994 and a Second Amendment dated as of
April 6, 1995 (the "Credit Agreement") and to amend the Amended and Restated
Revolving Note dated July 29, 1994 as amended April 6, 1995 (the "Revolving
Note") so as to increase the amount which may be borrowed under the Revolving
Credit of the Credit Agreement to $24,000,000.00, to make corresponding changes
in the Revolving Note and to make certain other modifications. Terms defined in
the Credit Agreement shall have the same meaning herein as in the Credit
Agreement.
Bailey, BMC, BTP and the Bank agree as follows:
Amendments to Credit Agreement
A. The second paragraph of the Credit Agreement entitled "Background"
is hereby amended by deleting the figure "$14,000,000" in the fourth line
thereof and substituting the figure "$24,000,000" therefor.
B. Section 1.4 of the Credit Agreement is hereby amended by deleting
the figure "$14,000,000" in the fourth line thereof and substituting the figure
"$24,000,000" therefor.
C. Section 1.5 of the Credit Agreement is hereby amended by deleting
the figure "$14,000,000" in line four thereof and substituting the figure
"$24,000,000" therefor.
D. Section 1.11 of the Credit Agreement is hereby amended by deleting
the figure "$5,000,000" in the fourth line thereof and the figure "$1,000,000"
in the fifth line thereof and substituting therefor the figures $6,000,000 and
$2,000,000, respectively.
E. Section 6.13 of the Credit Agreement is hereby deleted and the
following substituted therefor:
6.13 Fixed Asset Expenditures. The Borrower shall not
make any expenditures for fixed assets, the principal portion
of payments on leases which are classified as "capitalized
leases" under generally accepted accounting principles,
conditional sales agreements or similar agreements relating to
the acquisition or use of personal property or leasehold
improvements exceeding $6,000,000 in the aggregate for the
fiscal year ending July 1994, $18,000,000 in the aggregate for
the fiscal year ending July 1995 and $10,000,000 for any
fiscal year thereafter; provided, however, that Borrower may
expend (excluding the assumption of liabilities) $27,000,000
pursuant to the Premix Acquisition.
F. Section 6.16 of the Credit Agreement is hereby deleted and the
following substituted therefor:
6.16 Ratio of Cash Flow to Current Maturities of Long
Term Debt. Bailey shall not permit the ratio of (i) the sum of
(A) its consolidated net income and (B) the amount of its
consolidated depreciation expense and amortization for each
fiscal year to (ii) all expenditures for fixed assets which
have not been acquired through capitalized leases, conditional
sales agreements or long term debt plus all amounts of
principal with respect to long-term indebtedness including
capitalized lease obligations of the Borrowers which will
become due during the same fiscal year, to be less than 0.5 to
1 for the fiscal year ending July 1994; 0.7 to 1 for the
fiscal year ending July 1995; 1.0 to 1 for the fiscal year
ending July 1996 and 1.1 to 1 for each fiscal year thereafter
(calculated annually as at the end of each fiscal year).
Amendment to Revolving Note
G. The Revolving Note is hereby amended (i) by deleting the figure
"$14,000,000" in the upper left hand corner and substituting the figure
"$24,000,000" therefor and (ii) by deleting the first paragraph and substituting
the following therefor:
For value received the undersigned, jointly and
severally, hereby promise to pay to the order of BAYBANK (the
"Bank"), ON DEMAND, the principal sum of $24,000,000 or, if
less, the aggregate unpaid principal amount of all advances
made by the Bank under the "Revolving Credit" as defined in
the Amended and Restated Credit Agreement referred to below
and outstanding at the time of such demand, together with
interest thereon or on such portion thereof as may be from
time to time outstanding at such rate and payable at such
times and in such manner as are provided in the said Amended
and Restated Credit Agreement. As provided in the said Amended
and Restated Credit Agreement, the aggregate amount borrowed
under the "Revolving Credit" shall not exceed $24,000,000.
H. The Bank agrees to mark the original of the Revolving Note to refer
to this Amendment and to affix a copy of this Amendment to the original of the
Revolving Note.
Security Agreements
Bailey, BMC and BTP confirm that the obligations under the Credit
Agreement and the Notes, as herein amended, are secured by the Security
Documents including a security interest in all personal property of Bailey and
BMC pursuant to Amended and Restated Security Agreements dated as of July 29,
1994 and a security interest in inventory, accounts and other intangible
personal property of BTP pursuant to a Security Agreement dated as of July 29,
1994.
Effectiveness of Amendment
This Amendment shall not become effective until the Bank shall have
received:
(i) a certificate of the Secretary or Assistant Secretary of each
Borrower as to the action taken to authorize this Amendment and the transactions
contemplated hereby;
(ii) an opinion, satisfactory in scope, form and substance to the Bank
and its counsel as to the due authorization, execution and delivery and legal
and binding effect of this Amendment and the absence of conflict with any
mortgage, indenture or other material agreement known to such counsel.
This Amendment shall remain in full force in effect until June 30, 1995
but shall terminate and be of no further force and effect thereafter unless the
Borrower shall have furnished to the Bank amendments to the mortgages previously
granted the Bank by Bailey in property located in Ohio and Indiana and by BMC on
real property located in New Hampshire, Michigan and Indiana to reflect the
increase in the secured obligations pursuant to this Amendment and furnish the
Bank appropriate endorsements to the mortgagee's title insurance policies
previously furnished.
This Amendment may be executed in several counterparts, each of which
shall be an original, and with the same effect as if signatures thereto were all
upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized representatives as of May __, 1995.
BAYBANK BAILEY CORPORATION
By: /s/ James F. Carr By: /s/ Leonard J. Heilman
Vice President Executive Vice President
BAILEY MANUFACTURING
CORPORATION
By: /s/ Leonard J. Heilman
Executive Vice President
BAILEY TRANSPORTATION
PRODUCTS, INC.
By: /s/ Leonard J. Heilman
Senior Vice President
EXHIBIT 10.79
FOURTH AMENDMENT TO
AMENDED AND RESTATED
CREDIT AGREEMENT,
THIRD AMENDMENT TO REVOLVING NOTE
AND
MODIFICATION OF THIRD AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT
BAILEY CORPORATION ("Bailey"), a Delaware corporation, its wholly-owned
subsidiary BAILEY MANUFACTURING CORPORATION ("BMC"), a Delaware corporation,
each with a principal place of business at 700 Lafayette Road, P.O. Box 307,
Seabrook, New Hampshire 03874, its wholly-owned subsidiary BAILEY TRANSPORTATION
PRODUCTS, INC. ("BTP"), a Delaware corporation, with its principal place of
business at 333 Gore Road, Conneaut, Ohio 44030, and BAYBANK, a Massachusetts
trust company, with its principal place of business at 7 New England Executive
Park, Burlington, Massachusetts 01803, (the "Bank") hereby agree to further
amend that certain Amended and Restated Credit Agreement dated as of July 29,
1994 among Bailey, BMC, BTP and the Bank, as previously amended by a First
Amendment dated as of September 20, 1994, a Second Amendment dated as of April
6, 1995 and a Third Amendment dated as of May 12, 1995 (the "Credit Agreement")
and to amend the Amended and Restated Revolving Note dated July 29, 1994 as
amended April 6, 1995 and May 12, 1995 (the "Revolving Note") so as to permit up
to $4,000,000 of the revolving demand borrowings to be placed on a fixed
maturity basis. Terms defined in the Credit Agreement shall have the same
meaning herein as in the Credit Agreement.
Bailey, BMC, BTP and the Bank agree as follows:
Amendments to Credit Agreement
A. The second paragraph of the Credit Agreement entitled "Background"
is deleted and the following is substituted therefor:
BACKGROUND
The Borrowers have amended and restated the Credit Agreement
and confirmed with the Bank a credit facility under which Bailey, BMC
and BTP may make borrowings up to $24,000,000 on a revolving, demand
basis (subject to the Borrowers' election to place up to $4,000,000 on
a fixed maturity basis) and a credit facility under which the Borrowers
have made borrowings in the original principal amount of $8,000,000 on
a term basis. Bailey has heretofore entered into an Purchase and Sale
Agreement dated as of July 31, 1994 (the "Purchase and Sale Agreement")
with Premix/EMS, Inc. ("Premix") for the acquisition of the assets and
business of Premix (the "Premix Acquisition"). The Borrowers are all
engaged in manufacturing and related services primarily for the
automotive industry and their respective businesses are integrally
related in such a way that increased access to credit for any one
Borrower will result in direct and indirect benefits to the other
Borrowers. All Borrowings will be on a joint and several basis and are
to be secured by real and personal property of Bailey and BMC and the
personal property of BTP, excluding all of BTP's machinery and
equipment. The Bank is willing to amend the Agreement and extend such
credit to the Borrowers under the terms and conditions hereinafter set
forth and is willing to so consent and amend the Credit Agreement,
subject to the conditions set forth herein.
B. Sections 1.1 and 1.2 of the Credit Agreement are hereby deleted and
the following substituted therefor:
1.1 The Term Credit. At the time of the initial closing under
the Credit Agreement Bailey and BMC borrowed, subject to the terms and
conditions hereof, and the Bank made an advance of funds to Bailey and
BMC in the amount of $5,280,000, now repaid with proceeds of the 1994
term facility. Under this Amended and Restated Credit Agreement the
Borrower may borrow, subject to the terms and conditions hereof, and
the Bank will make an advance of funds to the Borrower in the amount of
$8,000,000 under the 1994 term facility.
1.2 The Term Notes. The original advance under the Term Credit
is evidenced by a promissory note dated December 30, 1988 in the form
of Exhibit A-1 attached hereto (the "1988 Term Note") of Bailey and BMC
payable to the Bank in the principal amount of $5,280,000. The 1988
Term Note bears interest, payable monthly, at a rate designated in
Section 1.7. The amount borrowed by Bailey under the 1994 term facility
is evidenced by a promissory note in the form of Exhibit A-2 attached
hereto (the "1994 Term Note"), payable to the Bank in the principal
amount of $8,000,000 dated as of July 29, 1994 and delivered at the
closing under the 1994 Term Note (the "1994 Term Loan Closing"). The
1994 Term Note shall bear interest as provided in Section 1.7. The
principal of the 1994 Term Note is payable in equal monthly
installments of $66,667 commencing October 1, 1994 with a final
installment in the amount of the then remaining balance of principal
and interest on September 1, 1999. Payments of interest and principal
on the 1994 Term Note (sometimes hereinafter referred to as the "Term
Note") shall be due on the first day of each month.
C. Sections 1.4-1.9 of the Credit Agreement are hereby deleted and the
following substituted therefor:
1.4 The Revolving Credit. Subject to the terms and conditions
hereof but subject at all times to the discretion of the Bank, the
Borrowers may borrow, repay and reborrow funds from the Bank under the
revolving credit (the "Revolving Credit") in an aggregate amount not to
exceed (a) the Borrowing Base, as defined below or (b) $24,000,000 (the
"Revolving Credit Availability"). All Loans by the Bank under the
Revolving Credit are subject to the discretion of the Bank and are
payable ON DEMAND; provided, however, that at the election of the
Borrowers $4,000,000 may be placed on a fixed maturity basis, payable
August 1, 1998 (the "Fixed Maturity Carve Out Loan"). The availability
of borrowings under the Revolving Credit shall be subject to annual
review by the Bank and shall not be extended beyond December 31 in any
year unless the Bank in its discretion, based upon circumstances at
that time, elects to extend the Revolving Credit for a further period.
Without intending to limit the discretion of the Bank in determining
whether or not to extend the Revolving Credit, it is understood that
any extension shall include the establishment of mutually satisfactory
financial covenants for such extension period, based upon financial
projections furnished by the Borrowers pursuant to Section 5.1(g). If
the Bank elects not to extend the Revolving Credit and no Event of
Default (as hereinafter defined) shall have occurred and be continuing,
the Bank will provide the Borrowers with a written notice at least
ninety (90) days prior to terminating the Revolving Credit.
1.5 The Revolving Note.
(a) Advances under the Revolving Credit are evidenced in an
amended and restated, demand promissory note of the Borrowers in the
form of Exhibit B attached hereto (the "Revolving Note") payable to the
order of the Bank in the principal amount of $24,000,000 or, if less,
the aggregate amount of all unpaid advances under the Revolving Credit
minus the Fixed Maturity Carve Out Loan. The Revolving Note shall bear
interest, payable monthly on the first day of each month at a rate
designated in Section 1.7.
(b) The Borrowers' election of the Fixed Maturity Carve Out
Loan shall be evidenced by the execution and delivery of a fixed
maturity promissory note of Borrowers in the form of Exhibit B-2 (the
"Fixed Maturity Carve Out Note") payable to the order of the Bank in
the principal amount of $4,000,000 to be due and payable on August 1,
1998. Provided that no event of default has occurred, no principal
payments are required on the Fixed Maturity Carve Out Note prior to
maturity. The Fixed Maturity Carve Out Note shall bear interest,
payable monthly on the first day of each month at a rate designated in
Section 1.7.
1.6 Prepayments on the Revolving Credit. Subject to compliance
with Section 1.10, amounts borrowed under the Revolving Credit
(including amounts under the Fixed Maturity Carve Out Loan) may be
prepaid, in whole or in part, at any time and, prior to demand or the
occurrence of an event of default and subject at all times to the
discretion of the Bank, may be reborrowed. Payments with respect to the
Revolving Credit by check or draft on accounts assigned as security to
the Bank will be credited as payment against the Revolving Credit
receipt of such payment by the Bank.
1.7 Interest on the Term Note and the Revolving Credit;
Pricing Options. The Borrower shall pay interest on the unpaid
principal amount of each Note at the following rates per annum, as
selected by the Borrowers, as provided below:
(a) Interest on the 1988 Term Note.
Amounts outstanding under the 1988 Term Note
shall bear interest at the annual rate of interest announced
by the Bank from time to time as its "prime rate" (the "Prime
Rate") plus 0.5%, interest payable monthly in arrears.
(b) Interest on the 1994 Term Note.
(1) Prime Rate Advance. Loans or advances
based on the Bank's Prime Rate ("Prime Rate Advances"), shall
bear interest at the Prime Rate plus 0.5% payable monthly in
arrears.
(2) Eurodollar Advances. Loans or advances
based on the London interbank offered rate (or "LIBOR" as
defined below; each such loan referred to herein as a
"Eurodollar Advance"), at the Eurodollar Rate plus 2.50%,
payable at the end of each Interest Period except in the case
of an Interest Period of more than three months in which case
interest shall be payable on the 90th day following the
Advance. The "Eurodollar Rate" shall mean the rate per annum
equal to the quotient of (a) LIBOR divided by (b) a number
equal to 1.0 minus the rate (expressed as a decimal) of the
reserve requirements current on the day that is two Banking
Days prior to the beginning of the applicable Interest Period
(including without limitation, basic, supplemental, marginal
and emergency reissues) under any regulation promulgated by
the Board of Governors of the Federal Reserve System (or any
other governmental authority having jurisdiction over the
Bank) as in effect from time to time dealing with reserve
requirements prescribed for eurocurrency funding including any
reserve requirements with respect to "eurocurrency
liabilities" under Regulation D of the Board of Directors of
the Federal Reserve System. "Banking Day" shall mean any day
on which commercial banks are not authorized or required to
close in Boston and, if such day relates to a borrowing of, a
payment or prepayment of principal or interest on a Eurodollar
Advance or a notice by the Borrower with respect to any such
borrowing, payment, prepayment, a day which is also a day on
which dealings in Dollar deposits are carried out in the
London interbank market. "Interest Period" shall mean such
period commencing on the date such Eurodollar Advance is made
and ending, in the case of Eurodollar Advances under the Term
Note, on the third or sixth monthly anniversary of such date
and in the case of Eurodollar Advances under the Revolving
Credit on the first, second or third monthly anniversary of
such date, as selected by the Borrower. "LIBOR" shall mean for
a subject Interest Period, the rate of interest, at
approximately 11:00 a.m. Burlington, Massachusetts time, two
Banking Days prior to the first day of such Interest Period,
as being the rate at which deposits in Dollars are offered to
the Bank by first-class banks on the London interbank market
for deposits for such Interest Period in amounts comparable to
the then aggregate principal amount of the requested
Eurodollar Advance.
(c) Interest on the Revolving Credit (including
Fixed Maturity Carve Out Loan).
(1) Prime Rate Advances. Prime Rate Advances
under the Revolving Credit shall bear interest at the Prime
Rate.
(2) Eurodollar Advances. Eurodollar advances
shall bear interest at the Eurodollar Rate plus 2.00% payable
at the end of each Interest Period, which shall be one, two or
three months as selected by the Borrower.
1.8 Requests for Advances; Selection of Applicable Pricing
Option and Interest Period. Requests for loans or advances under the
Revolving Credit or the election of a new interest rate mode or the
continuation of a Eurodollar Advance under the Term Note or the
Revolving Credit may be made on any Banking Day in writing or by
telephone and confirmed in writing. Each request shall constitute a
confirmation by the Borrowers that all representations and warranties
contained in Section III remain true and correct as though made at the
time of the proposed borrowing (except to the extent such
representation and warranty related specifically to an earlier date)
and the Bank, may at its option, require a certificate to such effect
signed by the chief financial officer of Bailey. The Borrowers agree to
indemnify and hold the Bank harmless for any action, loss or expense
taken or incurred by the Bank in good faith in reliance upon any loan
or advance request. Each loan or advance request shall specify the
amount of the loan or advance, the date the loan or advance request is
to be made, the pricing option - whether a Prime Rate Advance or a
Eurodollar Advance. In the event the Borrowers fail to choose a pricing
option with respect to a loan or advance request or with respect to the
continuation or conversion of a Eurodollar Advance at maturity, the
Borrowers shall be deemed to have chosen the Prime Rate. All requests
for loans or advances may be made by Bailey as agent for the Borrowers.
(a) Prime Rate Advances. Requests for Prime Rate
Advances may be made on any Banking Day in writing or by
telephone by a representative of the Borrowers. If such a
request is received by the Bank prior to 2:00 P.M. on a
Banking Day, the advance shall be made on such Banking Day and
otherwise on the next Banking Day. All advances under the
Revolving Credit shall be made by crediting the account of
Bailey, BMC or BTP, as designated in the request for advance,
at the Bank or another bank in the BayBank system. If an
account is not designated in the request for advance, the
proceeds of the advance shall be credited to the account of
Bailey as agent for the Borrowers.
(b) Eurodollar Advances. Each request for a
Eurodollar Advance shall be irrevocable and shall be made
before 2:00 P.M. two Banking Days prior (a) to the date such
Eurodollar Advance is to be made or (b) the end of an Interest
Period on an outstanding Eurodollar Advance which is to be
continued as a Eurodollar Advance. The Borrower shall specify
in the loan request the Interest Period for the loan, which
shall be one, two but not more than three months. In the event
the Borrowers request a Eurodollar Advance but fail to state
the duration of the Interest Period, the Borrowers shall be
deemed to have selected one month. Each Eurodollar Advance
shall be at least equal to $1,000,000 and higher multiples of
$500,000.
1.9 Conversion or Continuation of Interest Election under the
Term Note and the Revolving Credit. Eurodollar Advances shall mature
and become payable in full on the last day of the Interest Period
relating to such Eurodollar Advance. The Borrowers may, from time to
time, elect to convert advances outstanding under the Term Note and the
Revolving Credit from Prime Rate Advances to Eurodollar Advances and at
the maturity of a Eurodollar Advance may continue such Eurodollar
Advance or convert to Prime Rate Advances; provided however that there
may not be more than one Eurodollar Advance outstanding at any time
under each of the Term Note and the Revolving Credit.
D. Section 1.12 of the Credit Agreement is hereby deleted and the
following substituted therefor:
1.12 Mandatory Prepayment on the Revolving Credit. If at any
time the unpaid principal amount of the Revolving Note and the Fixed
Maturity Carve Out Notice exceeds the Revolving Credit Availability or
Borrowing Base, whichever is less, the Borrowers shall immediately make
a payment on the Revolving Note in an amount equal to such excess, and
the Bank may, without prior notice to the Borrowers, charge accounts of
such Borrowers with the Bank to effect such payment.
E. Section 1.16 of the Credit Agreement is hereby deleted and the
following is substituted therefor:
1.16 Use of Proceeds. Proceeds of the 1994 Term Note and
borrowings under the Revolving Credit were used to finance a portion of
the Premix Acquisition, to refinance existing debts and for working
capital and up to $500,000 may be used by Bailey to repurchase its
common stock which will be held as treasury stock.
F. Section 1.18 of the Credit Agreement is hereby deleted and the
following substituted therefor:
1.18 Yield Protection, Etc.
(a) Additional Costs. If any present or future
applicable law ("Applicable Law"), which expression as used herein
includes statutes, rules and regulations thereunder and interpretations
thereof by any competent court or by any governmental or other
regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and
notices at any time or from time to time hereafter made upon or
otherwise issued to the Bank by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law),
including without limitation any change according to a prescribed
schedule of increasing requirements, whether or not known or in effect
as of the date hereof, shall with respect to the Term Note, the
Revolving Credit or undertakings of the Bank under this Agreement
(i) subject the Bank to any tax, levy,
impost, duty, charge, fee, deduction or withholding of any
nature with respect to this Agreement or undertakings of the
Bank hereunder or the payment to the Bank of any amounts due
to it hereunder,
(ii) materially change the basis of taxation
of payments to the Bank of the principal of or interest on any
amounts payable to the Bank hereunder,
(iii) impose or increase or render
applicable any special or supplemental deposit or reserve or
similar requirements or assessment against assets held by, or
deposits in or for the account of, or any liabilities of, or
loans by the Bank in respect of the transactions contemplated
herein,
(iv) impose on the Bank any other condition
or requirement with respect to this Agreement, the Revolving
Credit, the Term Note or loans or advances thereunder;
and if the result of any of the foregoing is
(A) to increase the cost to the Bank of making,
funding or maintaining all or any part of the Revolving
Credit, the Term Note or advances or loans,
(B) to reduce the amount of principal, interest or
other amount payable to the Bank hereunder, or
(C) to require the Bank to make any payment or to
forego any interest or other sum payable hereunder, the amount
of which payment or foregone interest or other sum is
calculated by reference to the gross amount of any sum
receivable or deemed received by the Bank from the Borrowers
hereunder,
then, and in each such case not otherwise provided for hereunder, the
Borrowers will upon demand promptly following the Bank's notice
pertaining to such matters accompanied by calculations thereof in
reasonable detail, pay to the Bank such additional amounts as will be
sufficient to compensate it for such additional cost, reduction,
payment or foregone interest or other sum; provided that the foregoing
provisions of this sentence shall not apply in the case of any
additional cost, reduction, payment or foregone interest or other sum
resulting from any taxes charged upon or by reference to the overall
net income, profits or gains of the Bank.
(b) Capital Adequacy. If, after the date hereof, the
Bank shall have determined that any Applicable Law regarding capital
requirements for banks or bank holding companies generally, or any
change therein or in the interpretation or administration thereto by
any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by the
Bank with any of the foregoing, either imposes a requirement upon the
Bank to allocate additional capital resources or increases the Bank's
requirement to allocate capital resources or its undertaking to make,
or to its maintenance of, the Revolving Credit, the Term Note or loans
or advances thereunder, which has or would have the effect of reducing
the return on the Bank's capital to a level below that which it could
have achieved (taking into consideration its then existing policies
with respect to capital adequacy and assuming full utilization of its
capital) but for such applicability, change, interpretation,
administration or compliance, by any amount deemed by the Bank to be
material, the Bank shall promptly after its determination of such
occurrence give notice thereof to the Borrowers. In such event
commencing on the date of such notice (but not earlier than the
effective date of any such applicability, change, interpretation,
administration or compliance), the fees payable hereunder shall
increase by an amount which will, in the Bank's reasonable
determination, evidenced by calculations in reasonable detail furnished
to the Borrowers, compensate the Bank for such reduction, its
determination of such amount to be conclusive and binding upon the
Borrower, absent manifest error. In determining such amount, the Bank
may use any reasonable methods of averaging, allocating or attributing
such reduction among its customers.
G. Section 2.1 of the Credit Agreement is hereby deleted and the
following substituted therefor:
2.1 Security Documents. The Term Note, the Revolving Note and
the Fixed Maturity Carve Out Note (the "Notes") and all other
obligations of each of the Borrowers to the Bank, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising (collectively, the "Obligations") shall be secured by
a security interest in all personal property of Bailey and BMC pursuant
to amended and restated security agreements dated July 29, 1994 and a
security interest in inventory, accounts and other intangible personal
property of BTP pursuant to a security agreement dated July 29, 1994
(collectively, the "Security Agreements"), by a mortgage on BMC's real
estate located in Seabrook, NH, mortgages on BMC's real estate in
Michigan and Indiana and by mortgages on the real estate acquired by
Bailey in the Premix Acquisition located in Ohio and Indiana (the
"Mortgages"). The Security Agreements, and the Mortgages may, from time
to time hereafter, be referred to as the "Security Documents".
H. Section 7.1 of the Credit Agreement is hereby deleted and the
following substituted therefor:
7.1 Defaults. In the event of any of the following ("Events of
Default") if:
a. any Borrower shall fail to pay any
principal or interest on the Notes;
b. any representation or warranty of any
Borrower herein, in any of the Security Documents, or in any
certificate delivered hereunder shall prove to have been false
in any material respect as of the time made or furnished;
c. any Borrower shall fail to perform any
covenant contained in Section VI hereof;
d. any Borrower shall fail to perform any
other term, covenant or agreement contained herein or in any
of the Security Documents and such default shall continue for
ten days after notice thereof has been received by such
Borrower from any source;
e. any Borrower shall fail to pay at
maturity, or within any applicable period of grace, any
obligation for borrowed monies or advances or any capitalized
or non-capitalized lease obligations or fail to observe or
perform any term, covenant or agreement contained in any
agreement by which it is bound, evidencing or securing
borrowed monies or advances, for such period of time as would,
or would have permitted (assuming the giving of appropriate
notice if required) the holder or holders thereof or of any
obligations issued thereunder to accelerate the maturity
thereof but only to the extent that the acceleration of such
obligation would have a Material adverse effect on the
financial condition, business or continued operations of any
Borrower;
f. any Borrower shall admit in writing its
inability to pay its debts;
g. any Borrower shall suffer a receiver or
trustee for all or substantially all of its property to be
appointed; or institute or suffer to be instituted against it
in any proceedings under any law relating to bankruptcy,
insolvency, arrangement, reorganization or relief of debtors;
h. any Borrower shall suffer any judgment to
be entered against it and not dismissed, satisfied or stayed
within 60 days, or any writ of attachment issued and not
released within 60 days or any execution or any similar
process to be issued or levied against a substantial part of
its property;
i. any Borrower terminates its existence or
dissolves; or
j. the trustee of any Pension Plan shall
fail to pay when due all benefits payable thereunder
then, and in every such event, the Bank may declare all amounts owing
with respect to the Term Note and the Fixed Maturity Carve Out Note and
all other obligations to be, and they shall upon written notice and the
lapse of the time periods specified above forthwith become, immediately
due and payable without presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived. Notwithstanding the
foregoing recital of defaults with respect to the Term Note and the
Fixed Maturity Carve Out Note, the Revolving Note shall at all times be
due and payable on demand without regard to the existence or
non-existence of an Event of Default, provided, however, that upon the
occurrence of an Event of Default under subsection (g) above all such
amounts due under the Term Note, the Fixed Maturity Carve Out Note and
the Revolving Note shall automatically become immediately due and
payable without demand or any action on the part of the Bank.
I. Section 9.1 of the Credit Agreement is hereby amended by adding,
immediately following the definition of "Finished Goods Inventory, the
following:
"Fixed Maturity Carve Out Loan" see ss. 1.4.
"Fixed Maturity Carve Out Note" see ss. 1.5(b).
J. The Credit Agreement is hereby amended by the addition of a new
Exhibit B-I in the form attached hereto.
Amendments to Revolving Note
K. The Revolving Note is hereby amended by deleting the first paragraph
and substituting the following therefor:
For value received the undersigned, jointly and
severally, hereby promise to pay to the order of BAYBANK (the
"Bank"), ON DEMAND, the principal sum of $24,000,000 or, if
less, the aggregate unpaid amount of all advances made by the
Bank under the "Revolving Credit" as defined in the Amended
and Restated Credit Agreement referred to below and
outstanding at the time of such demand (minus the outstanding
balance of the Fixed Maturity Carve Out Loan as defined in the
Amended and Restated Credit Agreement), together with interest
thereon or on such portion thereof as may be from time to time
outstanding, at such rate and payable at such times and in
such manner as are provided in the said Amended and Restated
Credit Agreement. As provided in the said Amended and Restated
Credit Agreement, the aggregate amount borrowed under the
"Revolving Credit" shall not exceed $24,000,000.
L. The Bank agrees to mark the original of the Revolving Note to refer
to this Amendment and to affix a copy of this Amendment to the original of the
Revolving Note.
Security Agreements
Bailey, BMC and BTP confirm that the obligations under the Credit
Agreement, as herein amended, and the Notes are secured by the Security
Documents including a security interest in all personal property of Bailey and
BMC pursuant to Amended and Restated Security Agreements dated as of July 29,
1994 and a security interest in inventory, accounts and other intangible
personal property of BTP pursuant to a Security Agreement dated as of July 29,
1994.
Effectiveness of Amendment
Upon receipt by the Bank of:
(i) a certificate of the Secretary or Assistant Secretary of
each Borrower as to the action taken to authorize this Amendment and
the transactions contemplated hereby; and
(ii) an opinion, satisfactory in scope, form and substance to
the Bank and its counsel as to the due authorization, execution and
delivery and legal and binding effect of this Amendment and the absence
of conflict with any mortgage, indenture or other material agreement
known to such counsel;
this Amendment shall become effective as of the 28th day of July, 1995.
Failure of the Borrowers to furnish to the Bank amendments to the
mortgages previously granted the Bank by Bailey in property located in Ohio and
Indiana and by BMC on real property located in New Hampshire, Michigan and
Indiana to reflect the increase in the secured obligations pursuant to this
Amendment and to furnish the Bank appropriate endorsements to the mortgagee's
title insurance policies previously furnished on or before August 31, 1995
shall, constitute an Event of Default under the Credit Agreement.
The Bank and the Borrowers also agree that the Third Amendment to the
Credit Agreement shall be amended by the substitution of "August 31, 1995" for
"June 30, 1995" in the penultimate paragraph.
This Amendment may be executed in several counterparts, each of which
shall be an original, and with the same effect as if signatures thereto were all
upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized representatives as of July 28, 1995.
BAYBANK BAILEY CORPORATION
By: /s/ James F. Carr By: /s/ Leonard J. Heilman
Vice President
BAILEY MANUFACTURING
CORPORATION
By: /s/ Leonard J. Heilman
BAILEY TRANSPORTATION
PRODUCTS, INC.
By: /s/ Leonard J. Heilman
EXHIBIT B-2
FIXED MATURITY CARVE OUT NOTE
$4,000,000
July 28, 1995
Burlington, Massachusetts
For value received the undersigned, jointly and severally, hereby
promise to pay to the order of BAYBANK (the "Bank"), on or before August 1,
1998, the principal sum of $4,000,000 together with interest thereon or on such
portion thereof as may be from time to time outstanding at such rate and payable
at such times and manner as are provided in the Credit Agreement.
Payments of principal and interest shall be made at the times and in
the manner specified in the Credit Agreement. Payments shall be made, in such
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts, at the office of the Bank in
Burlington, Massachusetts or, at the option of the holder hereof, in such manner
and at such other place in the United States of America as the holder shall have
designated to the Company in writing.
This Note is issued under the Amended and Restated Credit Agreement
dated as of July 29, 1994, as amended, (the "Credit Agreement") between the
undersigned and the Bank and is subject to the terms and conditions of the
Credit Agreement, is subject to certain mandatory payments, and may be prepaid
in whole or in part upon the terms and conditions specified in the Credit
Agreement.
Under certain circumstances, as specified in the Credit Agreement, the
principal of this Note may be declared due and payable in the manner and with
the effect provided in the Credit Agreement.
BAILEY CORPORATION
(Corporate Seal)
By:____________________________
BAILEY MANUFACTURING
CORPORATION
(Corporate Seal)
BY:___________________________
BAILEY TRANSPORTATION PRODUCTS,
INC.
(Corporate Seal)
BY:___________________________
EXHIBIT 10.80
FIXED MATURITY CARVE OUT NOTE
$4,000,000
July 28, 1995
Burlington, Massachusetts
For value received the undersigned, jointly and severally, hereby
promise to pay to the order of BAYBANK (the "Bank"), on or before August 1,
1998, the principal sum of $4,000,000 together with interest thereon or on such
portion thereof as may be from time to time outstanding at such rate and payable
at such times and manner as are provided in the Credit Agreement.
Payments of principal and interest shall be made at the times and in
the manner specified in the Credit Agreement. Payments shall be made, in such
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts, at the office of the Bank in
Burlington, Massachusetts or, at the option of the holder hereof, in such manner
and at such other place in the United States of America as the holder shall have
designated to the Company in writing.
This Note is issued under the Amended and Restated Credit Agreement
dated as of July 29, 1994, as amended, (the "Credit Agreement") between the
undersigned and the Bank and is subject to the terms and conditions of the
Credit Agreement, is subject to certain mandatory payments, and may be prepaid
in whole or in part upon the terms and conditions specified in the Credit
Agreement.
Under certain circumstances, as specified in the Credit Agreement, the
principal of this Note may be declared due and payable in the manner and with
the effect provided in the Credit Agreement.
BAILEY CORPORATION
(Corporate Seal)
By: /s/ Leonard J. Heilman
BAILEY MANUFACTURING
CORPORATION
(Corporate Seal)
BY: /s/ Leonard J. Heilman
BAILEY TRANSPORTATION PRODUCTS,
INC.
(Corporate Seal)
BY: /s/ Leonard J. Heilman
EXHIBIT 10.81
FIFTH AMENDMENT TO
AMENDED AND RESTATED
CREDIT AGREEMENT,
AND MODIFICATION
OF THIRD AND FOURTH AMENDMENTS
BAILEY CORPORATION ("Bailey"), a Delaware corporation, its wholly-owned
subsidiary BAILEY MANUFACTURING CORPORATION ("BMC"), a Delaware corporation,
each with a principal place of business at 700 Lafayette Road, P.O. Box 307,
Seabrook, New Hampshire 03874, its wholly-owned subsidiary BAILEY TRANSPORTATION
PRODUCTS, INC. ("BTP"), a Delaware corporation, with its principal place of
business at 333 Gore Road, Conneaut, Ohio 44030, and BAYBANK, a Massachusetts
trust company, with its principal place of business at 7 New England Executive
Park, Burlington, Massachusetts 01803, (the "Bank") hereby agree to further
amend that certain Amended and Restated Credit Agreement dated as of July 29,
1994 among Bailey, BMC, BTP and the Bank, as previously amended by a First
Amendment dated as of September 20, 1994, a Second Amendment dated as of April
6, 1995, a Third Amendment dated as of May 12, 1995 and a Fourth Amendment dated
as of July 28, 1995 (the "Credit Agreement"). Terms defined in the Credit
Agreement shall have the same meaning herein as in the Credit Agreement.
Bailey, BMC, BTP and the Bank agree that Section 1.7 of the Credit
Agreement is hereby amended by deleting subsection 1.7(c) and substituting
therefor the following:
(c) Interest on the Revolving Credit (including
Fixed Maturity Carve Out Loan).
(1) Prime Rate Advances. Prime Rate
Advances under the Revolving Credit shall bear interest at the
Prime Rate plus 1/4 of 1%.
(2) Eurodollar Advances. Eurodollar
advances shall bear interest at the Eurodollar Rate plus 2.25%
payable at the end of each Interest Period, which shall be
one, two or three months as selected by the Borrower.
The Bank and the Borrowers also agree that (a) the Third Amendment to
the Credit Agreement shall be amended by the substitution of "September 30,
1995" for "August 31, 1995" in the penultimate paragraph and (b) the Fourth
Amendment to the Credit Agreement shall be amended by substitution of "September
30, 1995" for "August 31, 1995" in the third to last paragraph.
This Amendment may be executed in several counterparts, each of which
shall be an original, and with the same effect as if signatures thereto were all
upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their duly authorized representatives as of September 1, 1995.
BAYBANK BAILEY CORPORATION
By: /s/ James F. Carr By: /s/ Leonard J. Heilman
Vice President
BAILEY MANUFACTURING
CORPORATION
By: /s/ Leonard J. Heilman
BAILEY TRANSPORTATION
PRODUCTS, INC.
By: /s/ Leonard J. Heilman
EXHIBIT 10.82
AGREEMENT
Bailey Manufacturing Corporation ("Bailey") (formerly known as Bailey
Corporation) and Emhart Corporation ("Emhart") enter into the following
agreement with respect to the Solvents Recovery Service of New England ("SRSNE")
Superfund Site and the Old Southington Landfill ("OSL") Superfund Site.
WHEREAS, the U.S. Environmental Protection Agency ("EPA") has notified
both Bailey and Emhart that they have liability for costs at the SRSNE Superfund
Site for wastes attributed to USM Corporation (Seabrook, NH) ("USM/Seabrook")
and USM Corporation (Amesbury, MA) ("USM/Amesbury");
WHEREAS, EPA has notified both Bailey and Emhart that they have
liability for costs at the OSL Superfund Site for wastes attributed to
USM/Amesbury; and
WHEREAS, Bailey and Emhart wish to allocate responsibility between
themselves for all costs associated with EPA's claims for the SRSNE Site and the
OSL Site which are attributable to or arise out of USM/Seabrook or USM/Amesbury;
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is acknowledged, Bailey and Emhart agree as follows:
1. For purposes of this Agreement, "sole responsibility" means all
costs associated with EPA's claims for the remediation and monitoring of the
site in issue, including all "Operable Units" and all cost recovery and
contribution actions arising therefrom but not including natural resource damage
claims and private third party claims for personal injury or property damage.
2. At the SRSNE Site, Bailey assumes sole responsibility for wastes
attributed to USM/Seabrook, and Emhart assumes sole responsibility for wastes
attributed to USM/Amesbury.
3. At the OSL Site, Emhart assumes sole responsibility for wastes
attributed to USM/Amesbury.
4. Each party agrees that it will defend and indemnify the other party
against any and all claims, costs, suits, expenses and the like, for which that
party has agreed to assume sole responsibility under this Agreement.
5. This Agreement is made without admission of liability regarding the
SRSNE and OSL Superfund Sites, and Bailey and Emhart explicitly deny any
liability with respect to the SRSNE and OSL Superfund Sites. Further, this
Agreement is for purposes of the SRSNE and OSL Sites only and is made without
prejudice to Bailey and Emhart asserting different positions regarding
liability, cost sharing, or indemnification, or insurance coverage, for
environmental liabilities at any other sites or in any other litigation arising
between Bailey and Emhart, including at the SRSNE and OSL Superfund Sites for
matters other than those allocated by this Agreement.
6. As indicated in Appendix A, Bailey has made payments in the amount
of $1,581 to the SRSNE PRP Group for USM/Amesbury. Within thirty (30) days of
the effective date of this Agreement, Emhart will forward to Bailey a check in
the amount of $1,581 in full satisfaction of all sums that Bailey has paid to
date in connection with the SRSNE and OSL Sites on behalf of USM/Amesbury.
7. Bailey and Emhart have entered into a separate document entitled
"Joint Declaration Between Bailey Manufacturing Corporation and Emhart
Corporation Regarding the Solvents Recovery Service of New England Superfund
Site and the Old Southington Landfill Superfund Site, Southington, Connecticut"
("Joint Declaration"), for the purposes of satisfying EPA's need for a joint
declaration to allocate liability between the parties for the SRSNE and OSL
Sites. The Joint Declaration is attached hereto as Appendix B. To the extent
that there may be any conflict between the terms of the Joint Declaration and
this Agreement, the terms of this Agreement shall govern.
8. Bailey and Emhart covenant not to sue or make claims against each
other or insurers of each other regarding the SRSNE and OSL Sites; provided,
however, that the parties may bring suit against each other to enforce the terms
of this Agreement.
9. This Agreement shall be governed by the laws of the State of New
Hampshire.
10. If any provision of this Agreement shall be adjudged to be illegal
or otherwise contrary to law in a final nonappealable ruling by a court having
jurisdiction over the matter, that provision shall be deemed to have been struck
from this Agreement and all remaining provisions shall remain in full force and
effect.
11. This Agreement may be executed in one or more counterparts, each of
which shall constitute a separate document, and all of which taken together
shall constitute a single Agreement.
12. This Agreement shall become effective immediately upon its
execution by duly authorized representatives of Bailey and Emhart.
BAILEY MANUFACTURING CORPORATION
By: /s/ Leonard J. Heilman
Duly Authorized
Leonard J. Heilman
Typed Name of Signator
Executive Vice President
Title
2/10/95
Date
EMHART CORPORATION
By: /s/ Linda H. Biagioni
Duly Authorized
Linda H. Biagioni
Typed Name of Signator
Vice President, Environmental Affairs
Title
12/27/94
Date
APPENDIX A
PAYMENTS MADE BY BAILEY MANUFACTURING CORPORATION
TO THE SRSNE SUPERFUND SITE PRP GROUP
(AS OF 8/8/94)
<TABLE>
<CAPTION>
GROUP BAILEY USM/ USM/ TOTAL PAID
ASSESSMENT # CORP. SEABROOK AMESBURY BY BAILEY
<S> <C> <C> <C> <C>
1 40 134 76 250
2 100 0* 0** [100 credit to Bailey]
3 62 207 117 386
4 188 633 357 1,178
5 544 1,827 1,031 3,402
Total Paid
to Date: $934 $2,801 $1,581 $5,316
# Gallons 9,067 30,470 17,215 56,752 Total
% Gallons 15.98% 53.69% 30.33% 100.0%
*Bailey owes $150 to B&D owes Bailey $1,581
SRSNE Group **B&D owes SRSNE Group $250
</TABLE>
APPENDIX B
JOINT DECALRATION Between
BAILEY MANUFACTURING CORPORATION And
EMHART CORPORATION
Regarding the
SOLVENTS RECOVERY SERVICE of NEW ENGLAND SITE
And the
OLD SOUTHINGTON LANDFILL SITE
Southington, Connecticut
This Joint Declaration sets forth an agreement between Bailey
Manufacturing Corporation ("Bailey") (formerly known as Bailey Corporation) and
Emhart Corporation ("Emhart") relating to EPA's claims against "Bailey Corp.
Parties/Emhart Corporation" at the Solvents Recovery Service of New England
("SRSNE") Superfund Site and the Old Southington Landfill Superfund Site
("OSL").
At the SRSNE Site, Bailey and Emhart agree to the following terms as
they relate to "Bailey Corp. Parties/Emhart Corporation" listed on the July 7,
1993 EPA volumetric ranking. Bailey agrees to accept responsibility for the
costs associated with EPA's claims against "Bailey Corp." and "U.S.M. Corp.
(Seabrook, NH)." Emhart agrees to accept responsibility for the costs associated
with EPA's claims against "U.S.M. Corp. (Amesbury, MA)." The U.S.M. Corp.
(Amesbury, MA) shipments will be aggregated under the entity designated as
"Black & Decker-Related Parties" on the July 7, 1993 EPA volumetric ranking.
At the OSL Site, Emhart agrees to accept responsibility for costs
associated with EPA's claims against "Bailey Corp. Parties/Emhart Corporation -
U.S.M. Corp. (Amesbury, MA)." The U.S.M. Corp. (Amesbury, MA) shipments will be
aggregated under the entity designated as "Black & Decker-Related Parties" on
the February 24, 1994 EPA volumetric ranking.
This Joint Declaration between Bailey and Emhart is made without
admission of liability regarding the SRSNE and OSL Sites, and Bailey and Emhart
explicitly deny any liability with respect to the SRSNE and OSL Sites. Further,
this declaration is for purposes of EPA claims regarding the SRSNE and OSL Sites
only and is made without prejudice to Bailey and Emhart asserting different
positions regarding liability, cost sharing, or indemnification with respect to
claims by other persons or with respect to environmental liabilities at any
other sites.
On behalf of Bailey
Manufacturing Corporation On behalf of Emhart Corporation
Name: Leonard J. Heilman Name: Linda H. Biagioni
Title: Executive Vice President Title: Vice President, Environ. Affairs
Date: 2/10/95 Date: 12/27/94
EXHIBIT 10.83
JOINT DECALRATION Between
BAILEY MANUFACTURING CORPORATION And
EMHART CORPORATION
Regarding the
SOLVENTS RECOVERY SERVICE of NEW ENGLAND SITE
And the
OLD SOUTHINGTON LANDFILL SITE
Southington, Connecticut
This Joint Declaration sets forth an agreement between Bailey
Manufacturing Corporation ("Bailey") (formerly known as Bailey Corporation) and
Emhart Corporation ("Emhart") relating to EPA's claims against "Bailey Corp.
Parties/Emhart Corporation" at the Solvents Recovery Service of New England
("SRSNE") Superfund Site and the Old Southington Landfill Superfund Site
("OSL").
At the SRSNE Site, Bailey and Emhart agree to the following terms as
they relate to "Bailey Corp. Parties/Emhart Corporation" listed on the July 7,
1993 EPA volumetric ranking. Bailey agrees to accept responsibility for the
costs associated with EPA's claims against "Bailey Corp." and "U.S.M. Corp.
(Seabrook, NH)." Emhart agrees to accept responsibility for the costs associated
with EPA's claims against "U.S.M. Corp. (Amesbury, MA)." The U.S.M. Corp.
(Amesbury, MA) shipments will be aggregated under the entity designated as
"Black & Decker-Related Parties" on the July 7, 1993 EPA volumetric ranking.
At the OSL Site, Emhart agrees to accept responsibility for costs
associated with EPA's claims against "Bailey Corp. Parties/Emhart Corporation -
U.S.M. Corp. (Amesbury, MA)." The U.S.M. Corp. (Amesbury, MA) shipments will be
aggregated under the entity designated as "Black & Decker-Related Parties" on
the February 24, 1994 EPA volumetric ranking.
This Joint Declaration between Bailey and Emhart is made without
admission of liability regarding the SRSNE and OSL Sites, and Bailey and Emhart
explicitly deny any liability with respect to the SRSNE and OSL Sites. Further,
this declaration is for purposes of EPA claims regarding the SRSNE and OSL Sites
only and is made without prejudice to Bailey and Emhart asserting different
positions regarding liability, cost sharing, or indemnification with respect to
claims by other persons or with respect to environmental liabilities at any
other sites.
On behalf of Bailey
Manufacturing Corporation On behalf of Emhart Corporation
/s/ Leonard J. Heilman /s/ Linda H. Biagioni
Name: Leonard J. Heilman Name: Linda H. Biagioni
Title: Executive Vice President Title: Vice President, Environ. Affairs
Date: 2/10/95 Date: 12/27/94
EXHIBIT 21.1
SUBSIDIARIES OF BAILEY CORPORATION
Bailey Manufacturing Corporation
Bailey Transportation Products, Inc.
EXHIBIT 23.1
The Board of Directors
Bailey Corporation and Subsidiaries:
We consent to incorporation by reference in the registration statements (No.
33-62698) on Form S-3 and (No. 33-66692) on Form S-8 of Bailey Corporation of
our report dated October 25, 1995, relating to the consolidated balance sheets
of Bailey Corporation and subsidiaries as of July 30, 1995, and July 31, 1994,
and the related consolidated statements of operations, stockholders' equity,
and cash flows for each of the years in the three-year period ended July 30,
1995, and the related schedule, which report appears in the July 30, 1995
annual report on Form 10-K of Bailey Corporation.
KPMG Peat Marwick LLP
Boston Massachusetts
October 27, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from S.E.C. Form
10-K for the year ended July 30, 1995 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-30-1995
<PERIOD-START> AUG-01-1994
<PERIOD-END> JUL-30-1995
<CASH> 313
<SECURITIES> 0
<RECEIVABLES> 14,514
<ALLOWANCES> (763)
<INVENTORY> 18,325
<CURRENT-ASSETS> 40,941
<PP&E> 69,446
<DEPRECIATION> (19,055)
<TOTAL-ASSETS> 100,721
<CURRENT-LIABILITIES> 43,023
<BONDS> 33,136
<COMMON> 539
0
0
<OTHER-SE> 18,341
<TOTAL-LIABILITY-AND-EQUITY> 100,721
<SALES> 168,228
<TOTAL-REVENUES> 168,228
<CGS> 151,414
<TOTAL-COSTS> 166,714
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,871
<INCOME-PRETAX> (2,357)
<INCOME-TAX> (778)
<INCOME-CONTINUING> (1,579)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,579)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> (.29)
</TABLE>
