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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
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THE BIBB COMPANY
(Exact name of registrant as specified in its charter)
Delaware 58-2253133
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
237 Coliseum Drive, Macon, Georgia 31201
(Address of principal executive offices) (Zip Code)
(912) 752-6700
(Registrant's telephone number, including area code)
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Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value per share
(Title of Class)
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Item 1. Business
The Bibb Company, a Delaware corporation (the "Company") is a leading
domestic manufacturer and marketer of textile products, principally sheets,
pillowcases and other bedding accessories, towels and other terry products for
use in the home, as well as sheets, towels and damask table linen products for
use by hotels, hospitals, linen service companies and others serving the
hospitality market. The Company also manufactures fabrics for apparel,
principally chambray, and specially engineered textile products used primarily
in producing high-pressure hoses and conveyor belts. For a description of the
Company's corporate history and matters concerning the bankruptcy reorganization
(the "Reorganization") of the Company on September 27, 1996 under chapter 11 of
title 11 of the United States Code, 11 U.S.C. (S)(S) 101 et seq. (the
"Bankruptcy Code"), see "Item 1, Business--Corporate History." The Company
(formerly known as The New Bibb Company) is the successor to The Bibb Company, a
Delaware corporation ("Old Bibb"), as a result of the merger of Old Bibb with
and into the Company on September 27, 1996 (the "Merger"). Upon consummation of
the Reorganization and Merger, the Company was renamed The Bibb Company.
References herein to the business of the Company for periods prior to September
27, 1996 refer to the business of Old Bibb as the predecessor to the business
and operations of the Company.
Description of the Business
General
The Company is a vertically integrated textile manufacturer which buys
basic raw materials, such as cotton and synthetic fibers, and converts them
primarily into finished textile goods ready for marketing. The Company's
principal products include: muslin and percale sheets and pillowcases; quilted
and nonquilted bedspreads, comforters, slumberbags, draperies and other bedding
accessories; bath towels and finished terry fabric; damask table linen;
chambray, a light-weight, yarn-dyed, woven fabric popular for use in sports and
casual wear; and specially-treated engineered yarns and fabrics for industrial
uses, such as high-pressure hoses and conveyor belts. Customers consist
primarily of national retail chains, such as J.C. Penney Company, Inc. ("J.C.
Penney") and Sears Roebuck and Co. ("Sears"), mass merchants, such as Wal-Mart,
Kmart and Target, and department stores which resell to consumers at the retail
level. In addition, the Company sells to hotels, hospitals, linen service
companies and others serving the hospitality market. The Company operates
eleven manufacturing plants located in the southeastern United States.
Products
The Company's four product groups are Sheeting, Bedding and
Accessories ("Bedding"), Terry ("Terry"), Apparel Fabrics ("Apparel"), and
Engineered Products ("Engineered").
Bedding. Bedding products consist of sheets, pillowcases, bedspreads,
comforters, draperies, slumberbags and other home furnishing accessories. These
products are sold to department stores, national retail chains, mass merchants
and distributors and wholesalers, under both private and Company labels. The
Royalton product line of high-quality fully coordinated
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bed and bath merchandise is being sold to upscale department and specialty
stores as part of the Company's continuing effort to expand its share of the
home fashions market. Certain of the Company's adult bedding products are sold
pursuant to licensing agreements under designer names such as Jessica
McClintock(TM) and Joseph Abboud(TM). In addition, the Company also dyes and
prints adult bedding products for non-vertically integrated textile
manufacturers.
The Company is one of the market leaders in juvenile bedding products.
Many of the Company's juvenile bedding products are sold bearing themes and
characters under licensing agreements and, to a lesser extent, themes and
characters developed internally by the Company. Current popular licensed themes
and characters include Barbie(TM), Batman(TM) , Space Jam(TM), Looney Tunes(TM)
and logos of major league baseball teams (Major League Baseball(TM)), National
Football League teams (NFL(TM)) and NASCAR(TM).
Third party licensing agreements are generally for terms of one to
three years and may include renewal options.
The Bedding products group also produces sheets, pillowcases and other
bedding accessories for sale to hotels, hospitals, linen service companies and
others serving the hospitality market. The Company concentrates on supplying
hotels and other institutions which require higher quality bedding products,
such as percales and other higher thread-count fabrics, for greater comfort,
longevity and style. The Company believes it is one of the largest suppliers of
sheets to the hospitality market.
Terry. The Terry product group includes bath towels and other terry
products as well as damask table linen products. Bath towels and other terry
products are sold primarily to retail and specialty chains under private label
programs. The Company produces a retail line of bath towel products under the
Royalton(TM) brand name, which are sold to upscale department and specialty
stores. The Company also produces a retail line of bath towel products under the
"Bibb" brand name.
Bath towels and damask table linen products are also sold to hotels,
hospitals, linen service companies and others serving the hospitality market.
In addition, the Company supplies finished terry to converters and embellishers
for finishing and sewing into a variety of terry products.
The Company works closely with its retail customers and with a
significant portion of its institutional customers to develop and manufacture
specific bath and other terry products.
Apparel. The Company produces cotton and blended fabrics, principally
chambray, a light-weight, yarn-dyed, woven fabric popular for use in sports and
casual wear. The Company sells Apparel products primarily to converters that
purchase fabric in relatively small quantities, and services these customers by
stocking both finished roll stock for immediate shipment and semi-finished roll
stock which can be readily converted in accordance with customer specifications.
Engineered. The Company manufactures and markets specialty yarns and
fabrics used primarily in producing high-pressure hoses and conveyor belts. The
Company's manufacturing process enhances the rubber properties of purchased yarn
and woven fabric to meet high-performance customer specifications. The Company
generally sells its Engineered products to
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companies which use the specialty yarns and fabrics in the production of their
own products or further process or include these products in the goods they
sell.
Marketing and Customers
The Company principally markets its products throughout North America,
primarily through its own in-house sales force from principal sales offices in
New York City, Chicago, Dallas, Southern California, Atlanta and Macon. The
Company has a salaried sales force (including support personnel) of
approximately 100 people. Compensation of the salaried sales force includes
salary and performance-based bonuses. The Company also utilizes independent
sales representatives for certain of its products.
The Company's customers consist primarily of department stores,
national retail chains and mass merchants as well as hotels, hospitals, linen
service companies and others serving the hospitality market. The Company's ten
largest customers accounted for approximately 38% of net sales in 1995, 1994 and
1993. In 1995, net sales to the Company's ten largest customers were
approximately $150.5 million, or 38.6% of its net sales, compared to
approximately $176.9 million, or 38.5% of its net sales, for 1994. Of these,
one customer, J.C. Penney, accounted for approximately 11.5% and 10.5% of net
sales in 1995 and 1994, respectively.
The Company supplies a number of diverse product programs to each of
its major customers. The purchasing decisions within a product program are
generally not interdependent and, as is common in the industry, the Company has
no long-term supply agreement with any of its major customers. Product programs
are developed specifically for the customer and are typically carried for a
period of one to three years.
Competition
The textile market is highly competitive, with the degree of
competition varying among the Company's product lines.
The Company competes with many companies for sales of Bedding and
Terry products. Its primary competition comes from three of the largest home
furnishing textile companies: WestPoint Stevens Inc. ("West Point"), Springs
Industries, Inc. ("Springs"), and Fieldcrest Cannon, Inc. ("Fieldcrest"). These
competitors are larger than the Company and market a broader array of textile
products than the Company. In marketing such products for consumer use, the
Company competes primarily on the basis of styling, service and, to a lesser
extent, price and by providing customers with specialized offerings such as
licensed products and various "concept" selling programs. In sales to the
hospitality market, the Company competes by offering timeliness of delivery and
a broad array of styles and fabrics at competitive prices.
A large number of weaving companies are involved in the production and
sale of apparel fabrics. However, the number producing chambray, the Company's
principal apparel fabric, is much smaller. The Company estimates that four
firms, including the Company, Spartan Mills, Greenwood Mills and Dan River
Mills, Inc., account for a majority of the sales in the chambray market. The
Company believes it competes by being very service oriented, offering customers
both
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finished roll stock for immediate shipment and semi-finished roll stock
which can be readily converted in accordance with customer specifications.
The Company competes with a variety of firms in the manufacture and
sale of engineered yarns and fabrics. Many competitors are divisions of non-
textile manufacturers such as chemical companies or end-users such as tire
companies. Competition for Engineered products is based on being able to meet
required technical specifications, quality, price and service.
Management of the Company does not believe that competition from
foreign manufacturers has been a significant factor within the Company's
principal lines of business. Foreign textile manufacturers have generally
concentrated their U.S. marketing efforts on finished apparel products rather
than on the types of products manufactured and sold by the Company. However,
the Company does face competition from foreign manufacturers in the sale of
lower thread-count sheets and towels targeted for the hospitality market,
especially lower quality textile products supplied to certain health care
institutions and commercial linen suppliers. In response, the Company has
concentrated its sales efforts on hotels, hospitals and other institutions which
require high level customized quality production, timeliness of delivery and a
broad array of styles and fabrics.
Raw Materials
The Company's operations require substantial quantities of cotton and
man-made fibers, both of which have been and are expected to continue to be
available in sufficient supply from a wide variety of sources. The Company is
not dependent on any one supplier as a source of raw materials. The Company's
general procedure is to match cotton purchases with anticipated production
requirements. However, when management concludes that a certain grade of cotton
may be in short supply or that prices may be substantially higher in the near
term, the Company will buy additional cotton for future delivery. Although the
Company has always been able to acquire sufficient supplies of cotton for its
operations in the past, any shortage in the cotton supply by reason of weather,
disease or other factors could adversely affect the Company's operations.
The price of man-made fibers such as polyester is influenced by
demand, manufacturing capacity and costs, petroleum prices, cotton prices and
the price of polymers used in producing man-made fibers. Any significant
prolonged petrochemical shortages could significantly affect the availability of
man-made fibers and cause a substantial increase in demand for cotton, resulting
in decreased availability and, possibly, increased price. The Company also
utilizes substantial quantities of dyes and chemicals. Dyes and chemicals also
have been and are expected to continue to be available in sufficient supply from
a wide variety of sources.
Seasonality
Demand for certain of the Company's products is affected by, among
other things, the relative strength or weakness of the retail sales industry.
The Company's third and fourth fiscal quarters (July through December) are
generally its strongest sales periods due to increased consumer spending during
these periods, although this seasonal effect is partially offset by the absence
of seasonality in the Company's sales of sheets, towels and damask table linen
to the
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hospitality market. The seasonal nature of the Company's business requires the
Company to increase its inventory of certain items to meet the seasonal demand.
Backlog
The Company's backlog of unfilled customer orders was approximately
$33,652,000 at August 31, 1996 as compared with approximately $37,469,000 at
August 31, 1995.
Employees
The Company employed approximately 5,100 people on September 21, 1996.
Of these employees, approximately 4,800 were employed in manufacturing, 100 in
sales and 200 in administration. Approximately 1,250 employees at the Company's
Roanoke Rapids, North Carolina facilities are covered by a collective bargaining
agreement which expires February 1, 1997. The Company believes that its
employee relations are satisfactory.
Manufacturing Facilities
The Company's manufacturing process primarily involves the following
operations: (i) spinning raw cotton and polyester into yarn; (ii) weaving yarn
into fabric; (iii) finishing the fabric; (iv) cutting and sewing and (v)
packaging and distributing the product.
The Company produces its greige (unfinished) goods for Bedding at
integrated spinning and weaving plants located in Columbus, Georgia and
Greenville, South Carolina and for Apparel at its spinning and weaving plant
located in Columbus, Georgia. Greige goods for Bedding and Apparel are
bleached, dyed and printed at one of the Company's two finishing plants located
in Juliette, Georgia and Brookneal, Virginia. Cut and sew operations and
packaging for Bedding are performed at the Company's three cut and sew
facilities located in Fort Valley and Sargent, Georgia and Brookneal, Virginia.
The Company's four plants located in Roanoke Rapids, North Carolina
produce Terry goods and damask table linen products. These plants are integrated
spinning, weaving, bleaching, dyeing and finishing, fabricating and packaging
operations. The Roanoke Rapids plants are highly automated and are capable of
manufacturing a wide variety of table linen products and towel and other Terry
products with a high degree of efficiency and quality control. Distribution for
these products is performed at the Company's distribution facility located in
Roanoke Rapids, North Carolina.
All of the Company's Engineered products are manufactured at the
Porterdale, Georgia facility. Fabrics and yarns are treated to enhance rubber
adhesion and other physical property qualities in accordance with customer
specifications.
For more information about the Company's facilities, see "Item 3,
Properties."
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Environmental and OSHA Considerations
Since 1970, a wide variety of federal, state, local and foreign
environmental laws, regulations and ordinances have been, and continue to be,
adopted and amended.
Some of these laws, regulations and ordinances hold current owners or
operators of land or businesses liable for their own and for previous owners' or
operators' releases of hazardous substances. Because of its operations and the
operations of previous owners or operators of certain of its properties and by
predecessor owners of certain of the businesses, and the use, production and
discharge of certain substances at its facilities, the Company is affected by
these laws and regulations. Various of the Company's facilities have
experienced some level of regulatory scrutiny in the past and are or may be
subject to further regulatory inspections or future requests for investigation.
At the Abbeville facility in South Carolina (which is now closed), the
Company has been working with the South Carolina Department of Health and
Environmental Control to identify the source of low levels of freon and certain
other volatile organic compounds ("VOCs") which were found in a water supply
well located on-site. As a result of the Company's investigation of this
matter, the Company has initiated a lawsuit against WestPoint Stevens regarding
potential migration of contaminants to the Company's facility from an off-site
dump which had been owned by WestPoint Stevens.
At the Company's building in Macon, Georgia, the State of Georgia
required a groundwater investigation and remediation relating to the presence of
VOCs in the groundwater underlying the facility. Monitoring wells and a pump
and treatment system utilizing an air stripper were installed. Additional
pumping wells were also added to control the migration off-site of impacted
groundwater. The State of Georgia notified the Company that the facility would
not be listed on the Georgia List of Hazardous Sites. Therefore, the Company
does not believe that material expenditures for this site will be incurred under
the Georgia Hazardous Sites Program. However, there can be no assurance that
the Company will not incur costs under some other program or law with respect to
this matter.
In connection with the removal of former underground storage tanks, in
November 1993, at the Roanoke No. 2 Plant in North Carolina, the Company
discovered the presence of petroleum constituents in soils and groundwater. The
presence of these constituents in soils and groundwater was reported to the
State of North Carolina. At the State's direction, impacted soils were taken
off-site for treatment. No active on-site remediation is being required by the
State at this time.
The Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 ("CERCLA") (commonly known as Superfund), provides for responses to and
liability for releases of hazardous substances into the environment. These
obligations are imposed on the current owner or operator of a facility, the
owner or operator of a facility at the time of the disposal of hazardous
substances at the facility, on anyone who arranged for the treatment or disposal
of hazardous substances at the facility, and on any person who accepted
hazardous substances for transport to a facility selected by such person.
Generally, liability to the government under CERCLA is joint and several.
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The Company has been named as one of several hundred third-party
defendants in connection with litigation relating to the Keystone Sanitary
Landfill (located in Adams County, Pennsylvania), a federal Superfund matter.
The Company is alleged to have disposed of 1,800 cubic yards of material at this
site. The United States Environmental Protection Agency reportedly has
estimated the total volume of wastes allegedly disposed of at the site by viable
potentially responsible parties to be in excess of a half a million cubic yards.
The Company disputes its allocated volume, the toxicity of its waste and further
contends that its share of responsibility, if any, is minimal. Given the large
number of potentially responsible parties and the low volume of waste allocated
to the Company (even if correct), the Company does not believe that it will
incur material costs in connection with this matter.
The Clean Air Act, the Clean Water Act, the Resource Conservation and
Recovery Act, the Safe Drinking Water Act, the Emergency Planning and Community
Right to Know Act, each as amended, and similar state or local counterparts to
these federal laws, regulate air emissions, water discharges, hazardous
substances and wastes and require public disclosure related to the use of
various hazardous substances. The Company's operations are also governed by
laws and regulations relating to workplace safety and worker health, primarily
the Occupational Safety and Health Act and regulations thereunder. While the
Company believes it is in substantial compliance with these laws and
regulations, from time to time the Company receives from various government
agencies notifications or complaints that allege violation of requirements which
the Company then works to resolve. Except with respect to the Brookneal
facility matters described below, no such notice is outstanding and unresolved
for which the Company expects to incur material costs. Compliance with
environmental laws and regulations also may require the acquisition or
modification of permits or other authorizations for certain activities and
compliance with various standards or procedural requirements.
In February, 1996, the Company entered into a Special Order on Consent
("Order") with the Virginia Water Control Board in connection with its
wastewater discharge permit at the Brookneal, Virginia facility. The Order
requires the Company to undertake certain activities including upgrading its
wastewater treatment facilities. The Company estimates that the cost of
complying with the Order, including the construction of new wastewater treatment
facilities, will be approximately $2,000,000 to be incurred over the next four
years. Pursuant to the Order, the Commonwealth of Virginia also agreed that the
Company could perform closure of the existing wastewater treatment systems and
groundwater remediation relating thereto under the Virginia Voluntary
Remediation Program. On April 10, 1995, the Company had entered into a
Voluntary Remediation Agreement with Virginia providing for the investigation
and on-site remediation of groundwater and soils. The Company presently
estimates that this remediation would cost less than $200,000 although further
investigation is ongoing.
In addition, while the Company believes that its facilities are in
substantial compliance with current regulatory standards applicable to air
emissions, several of its facilities will be required to obtain new operating
permits under the Clean Air Act Amendments of 1990 ("CAAA"). The Company is
currently preparing Title V permit applications under the CAAA with respect to
the facilities at Juliette, Georgia and Brookneal, Virginia and has submitted a
Title V permit application for three of the plants at Roanoke Rapids, North
Carolina. Synthetic minor permit
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applications have been submitted for the facilities at Roanoke No. 2, Roanoke
Rapids, North Carolina, Columbus and Porterdale, Georgia and Greenville, South
Carolina. The Company also is preparing an application for a new wastewater
discharge permit at the Porterdale, Georgia facility. At this time, the Company
cannot estimate when other new air or wastewater standards will be imposed or
what technologies or changes in processes the Company may have to install or
undertake to achieve compliance with any applicable new requirements at these or
its other facilities. However, the Company does not believe that such
expenditures are likely to be material.
The Company's capital expenditures for environmental matters were
approximately $73,000 in 1995. The Company has budgeted approximately $225,000
for environmental capital expenditures in 1996 and $1,463,000 during 1997 to
maintain compliance. See "Item 2, Financial Information -- Management's
Discussion and Analysis of Financial Condition and Result of Operations."
Corporate History
The Company was organized as a Delaware corporation in June, 1996.
The Company (formerly known as The New Bibb Company) is the successor to Old
Bibb as a result of the Merger. Upon consummation of the Reorganization and
Merger, the Company was renamed The Bibb Company. Unless the context otherwise
requires, the "Company" means The New Bibb Company, Old Bibb (formerly The NTC
Group, Inc.), and its predecessor, The Bibb Company, a Georgia corporation.
The Company has been engaged in the manufacturing and marketing of textile
products since 1876.
Negotiations with Creditors; Reorganization under the Plan
Beginning in the second quarter of 1995, following Old Bibb's failure
to meet certain of its interest payment obligations, representatives of Old Bibb
met with representatives of certain holders of Old Bibb's 14% Senior
Subordinated Notes due 1999 and 13.875% Senior Subordinated Notes due 1999
(collectively, the "Old Subordinated Notes"), who had formed a steering
committee (the "Steering Committee") to discuss the possibility of restructuring
Old Bibb's indebtedness.
Beginning in May, 1995, Old Bibb entered into a series of forbearance
agreements with the group of creditors led by Citibank, North America, Inc., as
agent (the "Banks"), in which the Banks agreed to, among other things, forbear
from exercising their rights with respect to certain events of default under Old
Bibb's Credit Agreement dated as of August 4, 1993 as amended, (the "Old Credit
Agreement") through the filing of Old Bibb's bankruptcy petition.
Until February, 1996, representatives of Old Bibb engaged in extensive
discussions and negotiations regarding the terms and conditions of a
restructuring or reorganization of Old Bibb's outstanding indebtedness with the
Steering Committee.
Old Bibb and each of the specified holders of the Old Subordinated
Notes of the Company and NTC Group, Inc. entered into a Restructuring Agreement
dated as of February 1, 1996 (the "Restructuring Agreement"). The Restructuring
Agreement provided, among other things, that the members of the Steering
Committee: (i) would vote for acceptance of a Plan of Reorganization of
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Old Bibb (the "Plan") to be entered into with respect to all Old Subordinated
Notes owned by such member of the Steering Committee and, accordingly, would
tender to Old Bibb an executed and properly-completed ballot in favor of
acceptance of the Plan; (ii) would not withdraw or otherwise revoke the ballot
referred to in clause (i) above; and (iii) would not vote for or otherwise
consent to any action or agreement that would impede, interfere with, delay,
postpone or attempt to discourage consummation of the Plan, including, but not
limited to, any vote for or recommendation in favor of any alternative plan of
reorganization not proposed by Old Bibb under the Bankruptcy Code.
On July 3, 1996, following receipt of approval by the requisite
creditors and securityholders of Old Bibb for a "prepackaged" bankruptcy
reorganization, Old Bibb filed voluntary petitions for relief under chapter 11
of the Bankruptcy Code with the United States Bankruptcy Court for the District
of Delaware (the "Bankruptcy Court"). On September 12, 1996, the Bankruptcy
Court issued an order confirming the Plan. The Plan was consummated on
September 27, 1996 (the "Effective Date").
Principal Provisions of the Plan
On the Effective Date and pursuant to the Plan, the following events,
among other things, occurred:
(i) The Loan and Security Agreement dated as of September 12,
1996, by and among Congress Financial Corporation (Southern), as agent,
("Congress") and the lenders party thereto (Congress and the lenders are
collectively referred to herein as the "New Banks") and the Company (the
"New Credit Agreement") became operative, thereby providing the Company
with a source of financing. On the Effective Date, all outstanding
indebtedness to the Banks relating to pre-Effective Date obligations
arising under the Old Credit Agreement was repaid (or, in the case of then-
outstanding letters of credit, cash collateralized) in full.
(ii) Each holder of the Company's outstanding 14% Senior
Subordinated Notes and 13.875% Senior Subordinated Notes became entitled to
receive 59.9177745 and 57.5877576 shares, respectively, of the Company's
Common Stock, $.01 par value per share (the "Common Stock") for each $1,000
principal amount of Old Subordinated Notes held by such holder (the right
to receive distributions with respect to all Old Subordinated Notes
represents in the aggregate approximately 9,500,000 shares, or 95% of the
Common Stock, assuming all Old Subordinated Notes are exchanged, as of the
Effective Date).
(iii) Each holder of pre-Merger common stock, (the "Old Common
Stock" or "Old Equity Interests") became entitled to receive, in exchange
for each share of Old Common Stock, 50.9511043 shares of Common Stock (the
right to receive distributions with respect to all Old Equity Interests
represents in the aggregate approximately 500,000 shares, or 5% of the
Common Stock, assuming all shares of Old Common Stock are exchanged, as of
the Effective Date).
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The New Credit Agreement
Set forth below is a summary of the terms and provisions of the New Credit
Agreement. Such summary does not purport to be complete and is qualified in its
entirety by reference to the New Credit Agreement.
A. Available Borrowings
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As part of the New Credit Agreement, the Company is entitled to borrow up
to a maximum of $110 million principal amount (and up to a maximum of $115
million principal amount during the months of July through November in each
calendar year). The borrowings under the New Credit Agreement are in the form
of a term loan and revolving loans (including letters of credit of up to $15
million). Borrowings are in the form of a term loan of $25 million, and the
remainder of such borrowings are in the form of revolving loans available to the
extent that a sufficient borrowing base is present. The borrowing base for
revolving loans is equal to a specific percentage of eligible receivables and
eligible inventory in which the New Banks would have a perfected first priority
security interest subject to applicable reserves.
B. Interest
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Borrowings under the New Credit Agreement bear interest at a rate per annum
equal to, either one (1%) percent per annum above the rate announced from time
to time by CoreStates Bank, N.A. as its "prime rate" and increase or decrease by
an amount equal to each increase or decrease in such prime rate, effective as of
the first day of the month after any such change, or, at the Company's option, a
rate of three and one-quarter percent (3.25%) per annum above the Adjusted
Eurodollar Rate used by the Agent, subject to the Agent's customary terms
applicable to Eurodollar rate-based loans for interest periods of one, two or
three months duration as selected by the Company ("Eurodollar Rate Loans"). The
Adjusted Eurodollar Rate is calculated based on the average of rates of interest
per annum at which CoreStates Bank, N.A. is offered deposits of U.S. dollars in
the London interbank market for the applicable interest period, adjusted by the
reserve percentage prescribed by governmental authorities as determined by the
Agent. The maximum amount of the Eurodollar Rate Loans at any time shall not
exceed eighty percent (80%) of the daily average of the principal amount of the
loans which is anticipated will be outstanding during the applicable interest
period. After maturity or an event of default under the New Credit Agreement or
the termination, interest on all loans shall be increased by two percent (2%)
per annum above the pre-default rates referred to above. Interest on Eurodollar
Rate Loans shall be subject to reduction based upon certain financial
performance.
C. Maturity
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The New Credit Agreement is for a minimum term of three (3) years, expiring
on September 27, 1999, subject to one-year extensions, unless terminated by the
New Banks or the Company. The New Credit Agreement shall be subject to earlier
termination upon an event of default.
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D. Optional Prepayments; Mandatory Repayments
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Under the New Credit Agreement, the Company may repay during the initial
three years of the facility all borrowings in full upon payment of specified
premiums not to exceed 1% of the amount of the then-existing facility. The
foregoing premiums are subject to specified reductions in the event of a sale of
the Company (by way of all of the Company's stock or substantially all of the
Company's assets). The term loan under the New Credit Agreement shall amortize
monthly in an amount equal to 1/84th of the original amount of the term loan,
with the unpaid balance due upon termination or maturity of such facility.
E. Security
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As security for its obligations under the New Credit Agreement, the Company
granted to the New Banks first priority security interests in substantially all
of the assets of the Company, including its receivables.
F. Covenants
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The New Credit Agreement contains numerous restrictive financial and other
covenants, including: (i) restrictions on the incurrence of indebtedness and
liens; (ii) restrictions on mergers, acquisitions, asset sales and transactions
with affiliates; (iii) restrictions on dividends and distributions; (iv)
restrictions on capital expenditures; and (v) financial tests, including, among
others, those measuring the Company's debt service coverage ratio, change in
minimum net worth, working capital ratio and minimum operating cash flow.
G. Events of Default
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The New Credit Agreement contains certain standard events of default which
include: (i) failure to pay any principal of a note or letter of credit
obligation when due or any interest when due; (ii) any representation or
warranty made by the Company to the New Banks being false in any material
respect when made; and (iii) default in the observance of certain post-
confirmation provisions or agreements of the New Credit Agreement. If an event
of default occurs, the New Banks may declare all or a portion of the amounts
owing under the New Credit Agreement to be immediately due and payable.
Accounting for Restructuring
The Company will account for the restructuring described herein using the
principles of "fresh start" reporting as required by SOP No. 90-7. Pursuant to
such principles, the Company's assets and liabilities are revalued as of the
Effective Date and the assets are stated at their reorganization value (the
"Reorganization Value"), which is defined as the value of the Company before
considering liabilities.
The restatement of the Company's assets and liabilities, referred to as
"fresh-start" reporting, applies the following principles:
(1) The Company's Reorganization Value is allocated to its assets
as though the Company had been acquired in a transaction reported using the
purchase method, under which specific tangible assets and identified
intangible assets of the Company are adjusted to their fair market values.
If any portion of the Reorganization Value cannot be attributed to specific
tangible or identified intangible assets, such portion is reported as an
intangible asset identified as "reorganization value in excess of amounts
allocable to identifiable assets," and such excess would then be amortized
in accordance with applicable financial reporting procedures.
(2) Each liability existing on the Effective Date, other than
deferred taxes, is stated at the present value of the future amounts to be
paid thereon as determined by discounting such payments at an appropriate
current interest rate, if material.
(3) Deferred taxes are reported in conformity with generally
accepted accounting principles. When realized, benefits from pre-
confirmation net operating loss carryforwards reduce the reorganization
value in excess of amounts allocable to identifiable assets and other
intangibles until such excess is exhausted and thereafter are reported as a
direct addition to paid-in capital.
(4) Changes in accounting principles that will be required in the
Company's financial statements within the twelve months following the
adoption of "fresh-start" reporting should be adopted at the time the
fresh-start reporting is adopted.
Adopting fresh-start reporting in essence results in a new reporting entity
with no beginning retained earnings or deficit.
Recent Developments
Appointment of President and Chief Executive Officer
In August, 1996, Michael L. Fulbright was appointed to serve as President
and Chief Executive Officer of Old Bibb. See "Item 5. Directors and Executive
Officers" contained herein.
Appointment of Directors
Immediately prior to the Merger, C. Scott Bartlett, Jr., Marvin B. Crow,
Michael L. Fulbright, Irwin N. Gold, Stewart M. Kasen, George A. Poole, Jr. and
James A. Williams were
-11-
<PAGE>
appointed to the Company's Board of Directors. See "Item 5. Directors and
Executive Officers" contained herein.
Risk Factors
In addition to the following considerations, the Company's business and
financial condition are dependent on the factors described under "Item 1,
Business--Description of the Business," including those matters pertaining to
the availability and the price of raw materials, the seasonality and cyclicality
of the Company's business and competitive factors.
Absence of Public Market
The Company's Common Stock is not currently listed or admitted to unlisted
trading privileges on a national securities exchange or included for quotation
through an inter-dealer quotation system of a registered national securities
association. The Company also is not aware of any dealer or "market maker" in
the Common Stock and, consequently, the trading market for such securities is
limited. On September 18, 1996, the Company filed a preliminary application
with The Nasdaq Stock Market to list the Common Stock on the Nasdaq National
Market, which was approved on [ ] subject to the satisfaction of
certain listing requirements. Notwithstanding the foregoing, the Company is
unable to predict whether a more active trading market for the Common Stock will
develop. Even if such a market does develop, due to industry and other
conditions beyond the control of the Company, there can be no assurance that
such a market would continue to exist.
In addition, holders of Common Stock who are deemed to be "underwriters" as
defined in subsection 1145(b) of the Bankruptcy Code or who are otherwise deemed
to be "affiliates" of, or persons who exercise "control" over, the Company
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), are unable to freely transfer or sell their shares of Common Stock,
except pursuant to an effective registration statement or in reliance on an
available exemption from registration under the Securities Act and under
equivalent state securities or "blue sky" laws.
Capital Expenditure Needs
The Company anticipates it will make significant capital expenditures in
the near term to modernize its facilities and reduce operating costs. Capital
expenditures are budgeted to be approximately $9 million in 1996 and
approximately $17 million in 1997, although the Company may seek to finance a
portion of its facility modernization program through operating leases or vendor
financing. The Company also intends to pursue additional projects, with the
intention of financing those projects through operating leases. There can be no
assurance that the Company will be able to fund these capital requirements
sufficiently to remain competitive.
Secured Debt; Ability to Refinance
Although completion of the Reorganization has significantly reduced the
Company's debt service obligations, the Company's indebtedness pursuant to the
New Credit Agreement is
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<PAGE>
substantial in relation to its stockholders' equity. Although no assurances can
be given, the Company believes that sufficient cash flow will be generated to
meet the Company's operating requirements. However, it is not anticipated that
the operations of the Company will generate funds sufficient to pay the entire
principal amount due under the New Credit Agreement at maturity. Accordingly,
satisfaction of the principal amount of the indebtedness under the New Credit
Agreement at maturity will depend in part on the ability of the Company to
refinance this facility at maturity, or to raise sufficient capital from other
sources to make such payment. However, there can be no assurance that any such
refinancing or additional capital can be obtained, or that, if obtained, it will
be on terms favorable to the Company and will yield sufficient proceeds to meet
the Company's obligations.
The Company's significant leverage also could limit its ability to
withstand competitive pressures and adverse economic conditions, to make
acquisitions or to take advantage of significant business opportunities that may
arise.
Competition
The markets for the Company's products are highly competitive. The
Company's products compete with those of a substantial number of companies, many
of which are larger and have resources, financial or otherwise, substantially
greater than those of the Company. There can be no assurance that the Company
will be able to compete effectively with these companies. See "Item 1, Business
- -- Competition."
Significance of the Retail Sales Industry
A significant portion of the Company's sales are made to customers in the
retail sales industry. Customers consist primarily of national retail chains,
such as J.C. Penney and Sears, mass merchants, such as Wal-Mart, K-Mart and
Target, and department stores which resell to customers at the retail level.
Demand for certain of the Company's products is affected by, among other things,
the relative strength or weakness of the retail sales industry.
Environmental Risks
The Company's operations and properties are subject to federal, state and
local laws, rules, regulations and ordinances relating to the use, storage,
handling, generation, treatment, emission, release, discharge and disposal of
certain materials, substances and wastes. The nature of the Company's current
and historic operations and that of previous owners and operators of certain of
its properties and businesses exposes it to the risk of claims with respect to
environmental matters and there can be no assurance that material costs or
liabilities will not be incurred in connection with such claims or matters.
Based upon the Company's experience to date, the Company believes that the
future cost of compliance with existing environmental laws, rules, regulations
and ordinances will not have a material adverse effect on the Company's business
or financial position. However, future events, such as changes in existing laws
and regulations or their interpretation, may give rise to additional compliance
costs or liabilities that could have a material adverse effect on the Company's
results of
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<PAGE>
operations and financial condition. Compliance with more stringent laws or
regulations, as well as more vigorous enforcement policies of regulatory
agencies or stricter or different interpretations of existing laws, may require
additional expenditures by the Company which may be material. See "Item 1,
Business -- Environmental and OSHA Concerns."
Raw Materials
One of the principal raw materials used by the Company in the manufacture
of its products is cotton in various grades and staple lengths. Because the
price of cotton fluctuates over time, the Company is subject to the risk of
increased cotton prices that may adversely impact the cost of production and
cash flows. See "Item 1, Business -- Raw Materials."
Labor Considerations
Approximately 25% of the Company's employees, who are located at Roanoke
Rapids, North Carolina, are represented by a labor union with which the Company
has a collective bargaining agreement. The Company's current union contract
expires February 1, 1997. The Company believes that its wage rates are
competitive with other unionized competitors and that its relations with its
employees and with its labor unions are generally good. However, there can be no
assurance regarding the impact of any future labor contract negotiations on the
Company's operating results or operating efficiencies or that work stoppages
will not occur in the future in connection with labor negotiations or otherwise.
In addition, the Company cannot predict the extent to which labor contracts
negotiated in the future by the Company's competitors will influence the
Company's labor negotiations in the future. See "Item 1, Business -- Employees."
Dividends
The Company does not anticipate having funds available in the foreseeable
future to pay cash dividends on any shares of Common Stock. Moreover, the New
Credit Agreement prohibits the payment of cash dividends on Common Stock until
after the payment in full of the loans made thereunder. See "Item 1, Business --
Corporate History--The New Credit Agreement."
Item 2. Financial Information
Selected Financial Data
The following selected historical consolidated financial data of the
Company for the fiscal years 1991 through 1995 have been derived from the
audited financial statements of the Company. The selected historical
consolidated financial data for the six month periods ended July 1, 1995 and
June 29, 1996, and as of July 1, 1995 and June 29, 1996, have been derived from
unaudited consolidated financial statements of the Company. The following data
should be read in conjunction with the Consolidated Financial Statements of the
Company and the notes thereto provided as Item 13 of this Registration Statement
and the "Management's Discussion and Analysis of Financial Condition and Results
of Operations" below.
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<PAGE>
THE BIBB COMPANY
SELECTED FINANCIAL DATA
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
YEAR END
1995 1994 1993 1992 1991
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data
Net Sales $ 389,998 $ 459,192 $487,892 $429,896 $381,408
Cost of Sales 366,040 432,235 410,713 369,751 332,410
--------- --------- -------- -------- --------
Gross Profit 23,958 26,957 77,179 60,145 48,998
Selling and Administrative Expenses 34,538 41,765 43,134 38,893 34,621
Financial Restructuring Advisory Fees 1,592 0 0 0 0
Management Fee to NTC(a) 3,368 4,000 4,000 4,000 3,896
--------- --------- -------- -------- --------
Operating (Loss) Profit (15,540) (18,808) 30,045 17,252 10,481
Interest Expense
Senior Debt (5,627) (4,095) (3,495) (4,131) (3,693)
Subordinated Debt (22,299) (22,284) (22,110) (22,784) (22,357)
Interest Income from Woods 1,172 1,174 586 0 2,348
Loan Fee Amortization and Expense (2,486) (1,795) (1,847) (1,479) (1,551)
Gain on Sale of Investments 0 0 3,182 (b) 0 0
Other, net (2,811) (2,108) (1,275) 410 (609)
--------- --------- -------- -------- --------
Income (Loss) (d)
Before Extraordinary Item (47,591) (47,916) 5,086 (10,732) (15,381)
Extraordinary Item
Loss from Retirement of Debt
in Connection 0 0 (738) 0 0
with Refinancing --------- --------- -------- -------- --------
Net Income (Loss) Available for Common $ (47,591) $ (47,916) $ 4,348 $(10,732) $(15,381)
Stockholders ========= ========= ======== ======== ========
Net Income (Loss) per Common Share ($4,957) ($4,991) $ 453 ($1,118) ($1,602)
Cash Dividends Declared per Common Share 0 0 0 0 0
Depreciation and Amortization 15,644 14,283 12,239 12,292 11,196
(exclusive of loan fee amortization)
Capital Expenditures 5,489 11,129 13,807 9,245 20,578
Balance Sheet Data (at end of period)
Current Assets $ 98,134 $ 118,921 $127,354 $167,802 $146,195
Current Liabilities 289,265 259,296 57,252 52,614 46,495
Working Capital (191,131) (140,375) 70,102 115,188 99,700
Property, Plant and Equipment, net 77,414 85,024 88,064 86,560 89,580
Investment in Woods 15,270 14,098 14,924 19,898 19,898
Total Assets 198,638 228,171 238,104 279,638 261,158
Long Term Debt, Less Current Maturities 0 11,000 175,353 225,542 202,550
Stockholders' (Deficit) Equity (90,627) (42,125) 5,499 1,482 12,113
<CAPTION>
SIX MONTHS ENDED
-----------------------------------
June 29, 1996 July 1, 1995
(unaudited) (unaudited)
-----------------------------------
<S> <C> <C>
Income Statement Data
Net Sales $ 169,038 $ 201,457
Cost of Sales 152,215 188,407
--------- ---------
Gross Profit 16,823 13,050
Selling and Administrative Expenses 16,888 17,634
Financial Restructuring Advisory Fees 434 291
Management Fee to NTC(a) 1,328 2,000
--------- ---------
Operating (Loss) Profit (1,827) (6,875)
Interest Expense
Senior Debt (2,484) (2,793)
Subordinated Debt (11,148) (11,149)
Interest Income from Woods 586 586
Loan Fee Amortization and Expense (564) (1,215)
Gain on Sale of Investments 3,685 (c) 0
Other, net (996) (1,559)
--------- ---------
Income (Loss) (d)
Before Extraordinary Item (12,748) (23,005)
Extraordinary Item
Loss from Retirement of Debt
in Connection 0 0
with Refinancing --------- ---------
Net Income (Loss) Available for Common $ (12,748) $ (23,005)
Stockholders ========= =========
Net Income (Loss) per Common Share ($1,328) ($2,396)
Cash Dividends Declared per Common Share 0 0
Depreciation and Amortization 6,392 7,561
(exclusive of loan fee amortization)
Capital Expenditures 1,965 2,999
Balance Sheet Data (at end of period)
Current Assets $ 104,873 $ 118,547
Current Liabilities 305,334 289,244
Working Capital (200,461) (170,697)
Property, Plant and Equipment, net 74,013 81,673
Investment in Woods 15,621 14,684
Total Assets 201,959 224,153
Long Term Debt, Less Current Maturities 0 0
Stockholders' (Deficit) Equity (103,375) (65,091)
</TABLE>
-15-
<PAGE>
Notes to Selected Financial Data
(a) Prior to February 1, 1996, pursuant to a Management Services Agreement (the
"Management Services Agreement") between the Company and NTC Group, Inc.
("NTC"), NTC received fees equal to 2% of the Company's average month-end equity
book value plus interest-bearing debt. Pursuant to the Restructuring Agreement,
during the period between February 1, 1996 and the Effective Date, NTC was
entitled to receive management fees under the Management Services Agreement
equal to $141,633 per month. See "Item 7 -- Management Services Agreement".
(b) During the year ended January 1, 1994, the Company sold its investment in
an unconsolidated subsidiary. See Note 2 to the Consolidated Financial
Statements.
(c) On December 21, 1989, the Company received $11,388,000 in principal amount
under a note receivable owed to the Company by TB Woods Incorporated ("Woods"),
which was an affiliate of the Company. In 1991, the Company readvanced
$5,644,000 to Woods under the note receivable. In 1993, Woods repaid the Company
$5,560,000 and the remaining principal was restructured to include two new notes
and a warrant, pursuant to which the Company acquired 375,000 shares of common
stock of Woods' parent corporation. In August 1994, one of those notes for
$2,000,000 was paid in full. During the first quarter of 1996 the Company sold
the shares of stock in an underwritten public offering in which it received net
proceeds of $4,185,000. See Note 9 of the Consolidated Financial Statements.
(d) Prior to the Merger, the Company was an "S" Corporation under the Internal
Revenue Code. Because all items of income, expense and credit of an "S"
Corporation generally pass through to its stockholders, the Company did not pay
federal income taxes or certain state and local income taxes during the period
it was an "S" Corporation.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
General
The following discussion and analysis of the financial condition and the
results of operations should be read in conjunction with the Section herein
entitled "Selected Financial Data" and the Consolidated Financial Statements of
the Company and the notes thereto provided as Item 13 of this Registration
Statement. The Company's fiscal year ends on the Saturday nearest December 31.
References herein to a "fiscal" year mean the Company's 52- or 53-week fiscal
year, ending on the Saturday nearest December 31.
Results of Operations
Six Months Ended June 29, 1996 Compared to Six Months Ended July 1, 1995.
Net sales for the six months ended June 29, 1996 were $169,038,000. Net
sales for the six months decreased $32,419,000 or approximately
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<PAGE>
16.1%. Sales were lower than the comparable prior year six month period due to
(i) the Company's decision to de-emphasize its marketing and sales of lower-
margin commodity bedding and terry products, and (ii) weaker demand for bedding
products during the latter portion of the second quarter.
Gross profit for the six months was $16,823,000 (10% of sales), an increase
in absolute dollars of $3,773,000 from $13,050,000 (6.5% of sales) for the
comparable prior year six month period. The gross profit percentage for the six
month period benefited from a shift in product mix toward higher-margin
products, consistent with the Company's decision to de-emphasize its presence in
commodity bedding and terry products. The margin improvement from the shift in
product mix was partially offset by weaker demand for bedding products during
the second quarter of 1996.
Selling, general and administrative expenses for the six month period were
$17,322,000 and decreased by $603,000 from the comparable prior year six month
period.
The operating profit for the six month period was a loss of $1,827,000
compared to a loss of $6,875,000 for the comparable prior six month period,
representing an improvement of $5,048,000.
Interest expense, including both senior and subordinated borrowings,
decreased $310,000 for the six month period over the comparable prior year six
month period. Interest expense decreased due to lower outstanding senior
borrowings.
Gain on sale of investments of $3,685,000 in the first six months of 1996
resulted from the sale by the Company of shares of stock of Woods' parent as
part of the latter company's initial public offering.
For the six month period, the Company had a net loss of $12,748,000 compared to
a net loss of $23,005,000 for the comparable prior year six month period.
Fiscal 1995 Compared to Fiscal 1994.
Net sales for 1995 were $389,998,000 compared to $459,192,000 for the prior
year, a decrease of $69,194,000 or 15.1%. Sales were lower than the prior year
due to (i) the Company's decision to de-emphasize its marketing and sales of
lower-margin commodity bedding and terry products, (ii) lower shipments of
bedding products during July caused by a computer systems conversion, and (iii)
weaker demand for products from the Apparel group.
Gross profit for 1995 was $23,958,000 compared to $26,957,000 for the prior
year, a decrease of $2,999,000. Gross profit as a percentage of net sales
increased to 6.1% for 1995 from 5.9% for the prior year. The improvement in the
gross profit percentage resulted from improved manufacturing productivity and
offset several significant adverse factors, including (i) record cotton costs
experienced during the second half of 1995, (ii) costs incurred to close out
discontinued commodity bedding and terry products,
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<PAGE>
and (iii) costs incurred to shut two manufacturing facilities and one
distribution facility and to downsize other continuing facilities.
Selling and administrative expenses were $36,130,000 for 1995 compared to
$41,765,000 for the prior year, a decrease of $5,635,000. Selling and
administrative expenses as a percentage of net sales increased to 9.3% for 1995
from 9.1% for the prior year. The 1995 expenses declined in absolute dollars in
conjunction with the downsizing of the Company's sales base. The 1995 expenses
also included advisory costs associated with the financial restructuring.
As a result of the above factors, operating loss for 1995 decreased to
$15,540,000 from $18,808,000 in the prior year.
Interest expense was $27,926,000 in 1995 compared to $26,379,000 in the
prior year. Payments in the amount of $2,859,000 in 1995 and $2,107,000 in 1994
made to the purchasers of trust certificates issued in connection with the
Company's accounts receivable securitization program (the "Receivables Trust")
are included in Other, Net. Interest expense and Other, Net increased due to
increases in interest rates.
As a result of the above factors, net loss decreased to $47,591,000 from
$47,916,000 in the prior year.
Fiscal 1994 Compared to Fiscal 1993.
Net sales for 1994 were $459,192,000 compared to $487,892,000 for the prior
year, a decrease of $28,700,000 or 5.9%. The Company's performance in 1994 was
affected by a faster than anticipated decline in sales of juvenile licensed
bedding products, particularly licensed bedding products bearing the Barney
theme and character, compared with the prior year period. This decline in
juvenile sales resulted in a decline in overall sales and high close out and
other inventory related losses. Increased sales of lower margin promotional
consumer products partially offset the decline in juvenile products sales. Net
sales were also adversely affected by heavy rains and flooding in Central
Georgia in the first week of July 1994, which interrupted operating and shipping
schedules.
Gross profit for 1994 was $26,957,000 compared to $77,179,000, a decrease
of $50,522,000 or 65.1%. Gross profit was primarily affected by (i) a change in
the sales mix, with less sales of juvenile bedding products, carrying higher
profit margins, and more sales of promotional adult bedding products at lower
margins, (ii) higher cotton and polyester prices, (iii) increased provision for
LIFO expense, and (iv) the flood mentioned above, which resulted in curtailed
shipping schedules which reduced margins and increased manufacturing costs as a
result of having plants idled during the flood period.
Selling and administrative expenses were $41,765,000 for 1994 compared to
$43,134,000, a decrease of $1,369,000 or 3.2%. Selling and administrative
expenses as a percentage of sales increased to 9.1% in 1994 from 8.8% in 1993,
as sales fell more rapidly than selling and administrative spending. The
decrease in selling and administrative expenses in absolute dollars in 1994
resulted from lower incentive compensation expense and a cost reduction program,
which included restructuring the Company's management organization and the sales
and marketing operation relating to consumer products. Although this program
was initiated in the third quarter, benefits from this cost reduction program
were not realized
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<PAGE>
until the fourth quarter inasmuch as severance and related costs of the program
were incurred in the third quarter.
As a result of the above factors, operating loss for 1994 was $18,808,000
compared to an operating profit of $30,045,000 in 1993.
Interest expense was $26,379,000 in 1994 compared to $25,605,000 in 1993.
Payments of $2,107,000 in 1994 and $777,000 in 1993 made to holders of trust
certificates issued in the Receivables Trust are included in Other, Net.
On April 2, 1993, Woods, a former affiliate of the Company, completed a
recapitalization and, in connection therewith, the Company received $5,560,000
in cash, two new subordinated promissory notes, including a subordinated note
with an aggregate principal amount of $13,218,000 (the "Wood's Subordinated
Note") and warrants in settlement of amounts owed on the then existing note
payable to the Company. See Note 9 to the Consolidated Financial Statements of
the Company included elsewhere herein. The Company recognized interest income
from Woods of $1,174,000 in 1994 and $586,000 in 1993.
In the fourth quarter of 1993, Bibb Yarns, Inc., an unconsolidated
subsidiary of the Company, sold substantially all of its assets to Aladdin
Mills, Inc. In connection with the sale, Bibb Yarns, Inc. redeemed all of the
shares of common stock and preferred stock held by the Company. The Company
received cash in the aggregate amount of $3,725,000 for the shares of common
stock and preferred stock that were redeemed. The Company recognized a gain on
the sale of the stock in the amount of $3,182,000. The cash proceeds received by
the Company were used to reduce outstanding indebtedness under the Company's Old
Credit Agreement.
During 1993, the Company recorded an extraordinary loss of $738,000 in
connection with expensing the remaining unamortized loan fees associated with
the retirement of its original senior revolving credit facility. See the
consolidated financial statements and notes thereto of the Company.
As a result, the Company experienced a net loss of $47,916,000 compared to
net income of $4,348,000 in 1993.
Inflation
The Company believes that the relatively moderate rate of inflation over
the past few years has not had a significant impact on its sales or
profitability.
Liquidity and Capital Resources
General. Prior to the Reorganization, the Company's principal sources of
funds were cash flow from operations, borrowings under various debt agreements
and the repayment and sale of certain securities of Woods and its parent
corporation, which were former affiliates of the Company. See Note 9 of the
Consolidated Financial Statements of the Company provided as Item 13 of this
Registration Statement. Following the Reorganization, the Company's principal
sources of funds are expected to be cash flow from operations, borrowings under
the New Credit Agreement and possible sales of non-core assets.
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<PAGE>
Liquidity. The Company experiences significant fluctuations in its working
capital requirements primarily associated with its retail customers' late summer
and fall inventory purchasing. The Company's primary ongoing cash requirements
will be to fund debt service, make capital expenditures and finance working
capital. The Company believes that it will generate sufficient cash flow from
operations, as supplemented by its available borrowings under the New Credit
Agreement and operating leases, to meet anticipated working capital and capital
expenditure requirements as well as debt service requirements under the New
Credit Agreement.
New Credit Agreement; Repayment of Industrial Development Revenue Bonds. As
part of the New Credit Agreement, the Company is entitled to borrow up to a
maximum of $110 million principal amount (and up to a maximum of $115 million of
principal amount during the months July through November in each calendar year),
subject to borrowing base availability and applicable revolving loan reserves.
See "Item 1, Business -- Corporate History -- The New Credit Agreement."
Industrial development revenue bonds (the "IRBs") were issued and sold to
refinance the purchase of certain of the Company's plants in 1991. These IRBs
are backed by letters of credit for which the Company is obligated in the amount
of approximately $11.1 million. The Company intends to cause the IRBs to be
repaid in full prior to 1997.
Capital Expenditures. The Company anticipates that it will make significant
capital expenditures in the near term to modernize its facilities and reduce
operating costs. Capital expenditures are budgeted to be approximately $9
million in 1996 and approximately $17 million in 1997, although the Company may
seek to finance a portion of its facility modernization program through
operating leases. As of August 31, 1996, the Company has incurred approximately
$2,646,000 of capital expenditures during 1996. Under the terms of the New
Credit Agreement, a borrowing base availability reserve of $6 million was
created at the time of the Reorganization for the purpose of funding capital
expenditures of a like amount. The Company's ability to draw advances under the
New Credit Agreement for the purpose of funding capital expenditures, however,
remains subject to compliance with the terms and conditions of the New Credit
Agreement (including its borrowing base requirements). The Company also intends
to pursue additional projects, with the intention of financing those projects
through operating leases.
Item 3. Properties
As of September 20, 1996, the Company operated manufacturing and
distribution facilities and office space with a total area of approximately
5,906,000 square feet. Management believes the Company's facilities and
equipment are in good condition and are adequate for the Company's present and
anticipated operations. For more information about the Company's facilities, see
"Item 1, Business--Facilities."
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<PAGE>
The location, primary use and size of each facility operated by the Company is
as follows:
<TABLE>
<CAPTION>
Location Primary Use of Facility Square Feet
- --------------------------------------------------------------------------------
<S> <C> <C>
Macon, GA Corporate administrative offices 78,000
Atlanta, GA (1) Corporate executive and sales offices 19,000
New York, NY (1) Showroom and sales offices 47,000
Columbus, GA Manufacturing facility for weaving of 1,298,000
Bedding products and Apparel fabrics
Juliette, GA Manufacturing facility for Bedding 448,000
products and Apparel fabrics
Fort Valley, GA (2) Manufacturing facility for Bedding 333,000
products
Sargent, GA Manufacturing facility for Bedding 431,000
products
Porterdale, GA Manufacturing facility for production 689,000
of Engineered products
Greenville, SC Manufacturing facility for weaving of 417,000
Bedding products
Brookneal, VA Manufacturing facility for Bedding 391,000
products
Roanoke Rapids, NC Manufacturing facility for weaving, 1,755,000
finishing, fabricating and
distribution of Terry products
================================================================================
</TABLE>
(1) All of the Company's facilities are owned except the Company's
New York sales office, which is leased pursuant to a lease which expires in
December 2000, and the Company's Atlanta office, which is leased pursuant to a
lease which expires in July 1998.
(2) The Fort Valley plant consists of two principal buildings, one of
which is subject to a mortgage note of approximately $600,000 in outstanding
principal.
Substantially all of the Company's property, plant and equipment is
encumbered by a first security interest in favor of the lenders under the New
Credit Agreement.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The table below sets forth information regarding the beneficial
ownership (as such term is defined under Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), of the Company's Common
Stock as of September 30, 1996, assuming the issuance of all 10,000,000 shares
of Common Stock entitled to be issued as of the Effective Date pursuant to the
Plan, by (i) each of the Company's directors or Named Officers (as defined in
Item 5 below), (ii) all directors and officers as a group and (iii) each person
who beneficially owns more than 5% of the Company's outstanding Common Stock.
Except as noted below, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them, other than shares deemed to be beneficially owned by
them.
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<PAGE>
<TABLE>
<CAPTION>
================================================================================
Shares Beneficially Owned
-------------------------
- --------------------------------------------------------------------------------
Name and Address of Beneficial
----------
Owner Number of Shares Percent
----- ---------------- -------
- --------------------------------------------------------------------------------
<S> <C> <C>
Merrill Lynch & Co., Inc. (1)
250 Vesey Street, North Tower 2,404,484 24.04
New York, NY 10281
- --------------------------------------------------------------------------------
Franklin Custodian Funds, Inc., 2,097,121 20.10
Income Series (2)
777 Mariners Island Blvd.
San Mateo, CA 94404
- --------------------------------------------------------------------------------
Romulus Holdings, Inc. and Related
Entities
25 Coligni Avenue 746,778 7.47
New Rochelle, NY 10801
- --------------------------------------------------------------------------------
Michael L. Fulbright 0 0
- --------------------------------------------------------------------------------
William A. Ott 0 0
- --------------------------------------------------------------------------------
Neal J. McGrail 0 0
- --------------------------------------------------------------------------------
Frank X. Sheehan 0 0
- --------------------------------------------------------------------------------
C. Scott Bartlett, Jr. 0 0
- --------------------------------------------------------------------------------
Marvin B. Crow 0 0
- --------------------------------------------------------------------------------
Stewart M. Kasen 0 0
- --------------------------------------------------------------------------------
George Poole, Jr. 0 0
- --------------------------------------------------------------------------------
James A. Williams 0 0
- --------------------------------------------------------------------------------
Irwin N. Gold 0 0
- --------------------------------------------------------------------------------
Thomas C. Foley 475,543 4.76
- --------------------------------------------------------------------------------
All directors and officers as a group
(11 persons) 475,543 4.76
================================================================================
</TABLE>
(1) Includes 2,073,778 shares beneficially owned by Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"), a wholly owned subsidiary of Merrill
Lynch & Co., Inc. ("ML&Co.") and 330,706 shares beneficially owned by the
Merrill Lynch Phoenix Fund, Inc. ("Phoenix Fund"). Phoenix Fund is an investment
company registered under the Investment Company Act of 1940, the investment
adviser of which is a limited partnership of which the general partner is an
indirect, wholly owned subsidiary of ML&Co. ML&Co. disclaims beneficial
ownership of the shares owned by MLPF&S and Phoenix Fund. MLPF&S disclaims
beneficial ownership of any shares of which ML&Co. or Phoenix Fund may be deemed
to be beneficial owners. Phoenix Fund disclaims beneficial ownership of any
shares of which ML&Co. or MLPF&S may be deemed to be beneficial owners.
(2) Excludes 419,424 shares of Common Stock owned by Franklin ValueMark
Funds, Income Securities Fund, as to which shares Franklin Custodian Funds,
Inc., Income Series, disclaims beneficial ownership.
Item 5. Directors and Executive Officers
The following sets forth the names, ages and positions of the
executive officers and directors of the Company as of September 30, 1996.
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<PAGE>
<TABLE>
<CAPTION>
Name Age Position
- ------------------------ --- --------------------------------------------
<S> <C> <C>
Michael L. Fulbright 46 President, Chief Executive Officer, Director
A. William Ott 40 Vice President and Chief Financial Officer
Neal J. McGrail 40 Corporate Controller
Frank X. Sheehan 50 Vice President, Industrial Relations
C. Scott Bartlett, Jr. 63 Director
Marvin B. Crow 64 Director
Stewart M. Kasen 57 Director
George A. Poole, Jr. 65 Director
James A. Williams 53 Director
Irwin N. Gold 39 Director
Thomas C. Foley 44 Director
</TABLE>
The principal occupations and positions for the past five years, and
in certain cases prior years, of each of such directors and executive officers
of the Company are as follows:
Michael L. Fulbright has been the President and Chief Executive
Officer of the Company since August 1996, and a Director since September 1996.
Prior to coming to the Company, Mr. Fulbright was the President of the Denim
Division of Cone Mills, Inc. from December 1994 until August 1996. From August
1992 through November 1994 Mr. Fulbright was President of the Greige
Manufacturing Division of Springs Industries, Inc., where he also served as the
President of Wamsutta/Pacific Home Products Division from January 1990 through
August 1992.
A. William Ott was elected to serve as Vice President-Chief Financial
Officer in April 1995. From December 1994 to April 1995, he served as Vice
President-Finance. He originally joined the Company in September 1992 as Vice
President-Controller. Prior to coming to the Company, Mr. Ott was the
Controller of C.S. Brooks, Inc., a wholly-owned subsidiary of Springs
Industries, Inc., from April 1991 through September 1992. From 1987 to 1991,
Mr. Ott was Chief Financial Officer and Corporate Controller for C.S. Brooks
Corporation.
Neal J. McGrail was elected Corporate Controller on March 1, 1995.
Mr. McGrail originally joined the Company in November 1992 as Assistant
Controller. Mr. McGrail previously had served as Vice President-Assistant to
the Chairman of Avis Industrial Corporation from November 1989 to May 1992.
Frank X. Sheehan was elected to serve as the Company's Vice-President-
Industrial Relations on April 1, 1989. Mr. Sheehan has been an employee of the
Company since 1968.
C. Scott Bartlett, Jr. has been a Director since September 1996.
Since 1990 Mr. Bartlett has been a self-employed consultant specializing in
advising financial institutions in the areas of credit policy, loan approval and
loan workout. Mr. Bartlett is also a director of Harvard Industries, Inc., NVR
Incorporated,
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<PAGE>
The Western Transmedia Company, Inc., Darling International Inc., Triangle Wire
& Cable, Inc., Bucyrus International Inc. and Janus Industries, Inc.
Marvin B. Crow has been a Director since September 1996. Since 1989
Mr. Crow has served as President of KBO Enterprises, Inc. Mr. Crow is also a
management consultant and serves as a director of Dyersburg Corporation and
National Spinning Company, Inc.
Stewart M. Kasen has been a Director since September 1996. Mr. Kasen
was the Chief Executive Officer of Best Products Co., Inc., which filed for
federal bankruptcy protection in September 1996, from June 1991 to May 1996.
Mr. Kasen also served as Chairman, President and Chief Operating Officer while
at Best. Mr. Kasen is also a director of Markel Corporation, Spreckels
Industries, Inc. and O'Sullivan Industries Holdings, Inc.
George A. Poole, Jr. has been a Director since September 1996. Mr.
Poole has been a private investor for more than five years and also serves as a
director of Bucyrus International Inc., Anacomp, Inc. and U.S. Home Corporation.
James A. Williams has been a Director since September 1996. Mr.
Williams has been the President and Chief Executive Officer of Great American
Knitting Mills, Inc., a division of Biderman Industries, U.S.A., both of which
filed for federal bankruptcy protection in July 1995, since 1991. Mr. Williams
is also a director of the National Association of Hosiery Manufacturers, The
Fashion Association and the American Apparel Manufacturers Association.
Irwin N. Gold has been a Director since September 1996. Mr. Gold has
been the Managing Director and Co-Head of the Financial Restructuring Group of
Houlihan Lokey Howard & Zukin, Inc. for more than five years. Mr. Gold is also
a director of Cole National Corporation.
Thomas C. Foley was appointed, pursuant to the Restructuring
Agreement, to serve as a non-voting member of the Company's Board of Directors,
in September 1996. Prior to the Reorganization, Mr. Foley had served as
Chairman of the Board, Chief Executive Officer and a Director of Old Bibb from
May 1985 through August 1996, and, at various times during that period, had also
served as President and as Chief Operating Officer of Old Bibb. Mr. Foley also
serves as president and a director of NTC, Chairman and a director of TB Wood's
Corporation and Chairman of the Board of TB Wood's Incorporated, which are
former affiliates of Old Bibb, as well as a director of several private
companies that are not affiliated with the Company. See also "Item 7, Certain
Relationships and Related Transactions."
Each of Messrs. Ott, McGrail and Sheehan served as executive officers,
and Mr. Foley was the Chief Executive Officer, a Director and a principal
shareholder of Old Bibb, which filed a plan of reorganization under the
Bankruptcy Code with the United States Bankruptcy Court for the District of
Delaware in July 1996. Such plan of reorganization was confirmed by the court
on September 12, 1996. See "Item 1, Business -- Corporate History."
Directors and executive officers are elected annually and hold office
until their successors are elected and qualified. Pursuant to the Restructuring
Agreement and as part of the Reorganization, the Board of Directors was
reconstituted with individuals who were originally designated by the Steering
Committee. There are, however, no continuing arrangements or understandings
with respect to the
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<PAGE>
designation of such Directors, except that the Restructuring Agreement provides
that Mr. Foley is entitled to serve as a non-voting member of the Board of
Directors for a period of one year from the Effective Date. See "Item 7, Certain
Relationships and Related Transactions."
Item 6. Executive Compensation
The following Summary Compensation Table sets forth, for the Company's
fiscal years ending December 30, 1995, December 31, 1994 and January 1, 1994,
certain information regarding the cash compensation paid by the Company, as well
as certain other compensation paid or accrued for those years, to the Company's
Chief Executive Officer and to each of the Company's most highly compensated
executive officers (the "Named Officers") whose salary and bonus exceeded
$100,000 for fiscal year 1995:
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------
Awards
---------------------------------------------------------------------------
(a) (b) (c) (d) (e) (g) (i)
Other
Annual Securities
Compen- Underlying All other
Name and Principal Salary Bonus sation Options/ Compensation
Position Year ($)(1) ($)(2) ($)(3) SARS(#) ($)(4)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Foley 1995 0 - - - -
Chairman and Chief 1994 0 - - - -
Executive Officer (5) 1993 200,937 - - - -
A. William Ott 1995 161,601 - - - 810
Vice President, Chief 1994 130,039 10,000 - - 568
Financial Officer 1993 118,875 40,000 - 25(6) 530
Neal J. McGrail 1995 90,883 - - - 383
Corporate Controller 1994 77,252 - - - 304
1993 72,380 10,000 10,637(7) - 304
Frank X. Sheehan, 1995 110,212 - - - 2,304
Vice President, 1994 103,002 - - - 1,340
Industrial Relations 1993 97,292 - - - 1,241
</TABLE>
(1) The amounts shown include compensation earned in the given fiscal year and
deferred by the named executive officer pursuant to the Company's Executive
Deferred Compensation Plan (described below).
(2) The amounts shown represent bonuses earned in the given fiscal year
pursuant to Old Bibb's bonus plan or discretionary bonuses awarded by the Board
of Directors.
(3) The aggregate amount of personal benefits received by each named executive
officer did not exceed the lesser of $50,000 or 10% of the total annual salary
and bonus reported for each such named executive officer.
(4) The amounts shown represent life insurance premium payments by the Company.
(5) Effective in August 1996, Mr. Foley resigned as Chief Executive Officer and
Michael L. Fulbright was appointed as President and Chief Executive Officer.
(6) Shares of Old Common Stock issuable pursuant to options granted by Old
Bibb, all of which were cancelled as of the Effective Date pursuant to the Plan.
(7) The amount shown for Mr. McGrail in 1993 represents payments provided for
moving and other incidental expenses and settlement costs.
Retention Bonus Plan
In February, 1996, the Company adopted a retention bonus plan covering
key employees, pursuant to which covered employees of the Company on the
Effective Date are entitled to receive specified amounts
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<PAGE>
(aggregating a maximum of $828,000 for all covered employees) during the first
year following the Effective Date.
Deferred Compensation Plan
Since January 1, 1983, the Company has provided to eligible executives
the opportunity of deferring compensation pursuant to the terms of an Executive
Deferred Compensation Plan. As of September 30, 1996, the Company owed
approximately $2,786,251 to participants under such Plan.
Employment Agreements; Termination Provisions
The Company entered into an employment agreement with Michael L.
Fulbright in August, 1996, (the "Employment Agreement"), pursuant to which he
was appointed President and Chief Executive Officer. The Employment Agreement
provides for an initial base salary of $400,000 and reimbursement of certain
expenses. His base salary will be increased to $425,000 after the first year
and $450,000 after the second. Mr. Fulbright is also entitled to an annual
bonus of between 50% and 100% of his base salary, based upon specified
performance, with a guaranteed cash bonus of at least 33% of his base salary in
the first year, and certain stock options. In addition, Mr. Fulbright is
entitled to a $125,000 signing bonus, the purchase by the Company of his
Greensboro, North Carolina residence, and certain additional relocation
expenses. The Employment Agreement is for an initial term of three years, with
automatic one year renewals thereafter unless otherwise terminated.
Upon a termination of employment by the Company without "Cause" and
not as a result of Mr. Fulbright's death or "Disability," or by Mr. Fulbright
for "Good Reason," (as each such term is defined in the Employment Agreement),
Mr. Fulbright is entitled to specified severance compensation. If the
termination occurs within the first two years of the Employment Agreement, Mr.
Fulbright is entitled to a payment equal to twice his base salary and the
continuation of certain fringe benefits for the remainder of the initial three
year employment period. If the termination occurs after two years of employment
under the Employment Agreement, Mr. Fulbright is entitled to a payment equal to
his base salary and the continuation of certain enumerated benefits. If a
"Change in Control" occurs between the second and third anniversary of the date
of the Employment Agreement and termination as described occurs after such
"Change in Control," Mr. Fulbright is entitled to a payment equal to twice his
base salary and the continuation of certain enumerated benefits.
Pursuant to the terms of the Employment Agreement, the Company agreed
to grant to Mr. Fulbright options (the "Options") to acquire the Company's
shares of Common Stock as follows: (A) the Options would apply to an amount of
shares of Common Stock equal to 2% of the Company's Common Stock as of the date
of grant calculated on a fully-diluted basis; (B) the exercise price of the
Options would be based upon a $100 million aggregate valuation on all of the
Company's shares of Common Stock calculated on a fully-diluted basis; (C) shares
of Common Stock subject to the Options would vest ratably on the first, second
and third anniversary of the date of grant during the employment period,
provided that, in the event of a "Change in Control" or in the event of a
termination of the Employment Period (other than by the Company for "Cause" or
by Mr. Fulbright without "Good Reason"), all shares of Common Stock subject to
the Option would vest immediately; and (D) the Options would be exercisable
commencing immediately upon vesting and ending on the fifth year after the grant
of the Options.
-27-
<PAGE>
Compensation of Directors
Each director who is not an employee of the Company (and excluding Mr.
Foley) is paid $24,000 annually for his services as a director, and $1,000 for
attendance at each committee meeting which does not occur in conjunction with a
directors meeting and is reimbursed for reasonable travel expenses for each such
meeting he attends.
Compensation Committee
The Board of Directors has designated Messrs. Gold, Poole and Kasen to
serve as the members of the compensation committee. During 1993, 1994 and 1995
Old Bibb's Board of Directors, of which Mr. Foley (the Chairman and Chief
Executive Officer of Old Bibb) was a member, determined executive officer
compensation.
Item 7. Certain Relationships and Related Transactions
Restructuring Agreement
The Restructuring Agreement includes the following provisions and covenants:
Co-Sale
Each of Franklin Custodian Fund, Income Series, and Franklin Value
Mark Funds, Income Securities Fund (collectively referred to as the "Franklin
Holder") agreed that, in the event any such Franklin Holder grants to any other
member of the Steering Committee (which would include Merrill Lynch, Pierce,
Fenner & Smith Inc., Showa Leasing (U.S.A.) Inc. and Romulus Holdings, Inc. and
certain of its affiliates) any "co-sale," "tag-along" or other similar right or
other opportunity to sell such other member of the Steering Committee's equity
securities of the Company (or any securities or other property exchanged
therefor) on substantially the same terms and conditions as any Franklin Holder
may sell, each such Franklin Holder shall grant the same right or other
opportunity to each former holder of Old Common Stock as of February 1, 1996,
with respect to equity securities of the Company (or any securities or other
property exchanged therefor).
Non-Voting Director
For a period through and including one year after the effective date
of the Merger, the Company and the members of the Steering Committee have agreed
as follows: (i) Mr. Foley shall be a member of the board of directors of the
Company with full opportunity to attend, participate in and be heard at all
meetings of the board of directors, whether regular, special, telephonic or
otherwise; provided, however, that Mr. Foley shall have no vote as a member of
the board of directors, nor shall he receive any fee for his service on the
board of directors; (ii) the Company shall provide Mr. Foley with as much
advance notice of all meetings as is provided to any other director; (iii) the
Company shall provide Mr. Foley with all other information with respect to such
meetings as is provided to members of the board of directors at the same time as
so provided to such persons; and (iv) the Company shall provide Mr. Foley with
advance notice of, and an opportunity to be heard with respect to, any action
contemplated to be taken by written consent of
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<PAGE>
its board of directors in lieu of a meeting thereof and, as soon as reasonably
practicable thereafter, shall notify Mr. Foley of any action so taken.
Management Services Agreement
Pursuant to the Management Services Agreement, dated as of April 1,
1989, the Company retained NTC (an entity affiliated with Mr. Foley) to provide
general management, financial and other corporate advisory services. Pursuant
to such agreement, NTC received aggregate fees of approximately $4,000,000,
$4,000,000 and $3,368,000 in fiscal 1993, 1994 and 1995, respectively. Pursuant
to the Restructuring Agreement, the fee arrangements were modified to provide
that during the period between February 1, 1996 and the Effective Date, NTC was
entitled to receive management fees under the Management Services Agreement
equal to $141,633 per month. Pursuant to those arrangements, during the period
from February 1, 1996 through September 27, 1996, the Company paid NTC an
aggregate of approximately $1,125,000. In accordance with the provisions of the
Restructuring Agreement, the Management Services Agreement was terminated at the
effective time of the Merger.
Woods Note
On April 2, 1993, Woods, a subsidiary of a corporation of which Mr.
Foley is a director and a principal stockholder, acquired new product lines and
completed a recapitalization. In settlement of amounts owed to the Company
pursuant to an obligation of Woods, the Company received a cash payment of
$5,560,000, two new notes and a warrant exercisable by the Company to purchase
certain shares of common stock of Woods' parent. The new notes received
consisted of (i) a ten-year, $13,218,000 principal amount subordinated
promissory note, with interest of $576,000 accruing semi-annually, and payments
of interest commencing on the third anniversary of the date of the note, and
(ii) a ten-year, $2,000,000 principal amount non-interest bearing, subordinated
promissory note. In August 1994, the $2,000,000 principal amount subordinated
promissory note was paid in full. In February 1996, the Company sold 375,000
shares of Common Stock of Woods' parent in an underwritten public offering for a
net purchase price of approximately $4,185,000. In July 1996, the Company sold
the $13,218,000 principal amount subordinated promissory note to the issuer for
$10,670,000.
Financial Advisory Services
The Steering Committee, with the Company's consent, engaged Houlihan
Lokey Howard & Zukin ("Houlihan Lokey"), at the Company's expense, to act as the
Steering Committee's financial advisor in connection with the Reorganization and
to provide certain services to the Company in connection with the
Reorganization. Pursuant to an Agreement between the Company and Houlihan
Lokey, Houlihan Lokey received $390,000 during 1995, for services performed on
behalf of the Steering Committee, plus the reimbursement of reasonable and
documented out-of-pocket expenses incurred by Houlihan Lokey in connection
therewith. In addition, the Company agreed to pay Houlihan Lokey a fee, payable
in shares of Common Stock, equal to seventy-five basis points (0.75%) of the
aggregate value of the Common Stock issued to the holders of the Old
Subordinated Notes pursuant to the Plan, based upon a specified calculated value
of the Company. The number of shares of Common Stock to be issued was to be
based on the average closing trading price of the Common Stock for the 20 days
prior to October 15, 1996. The Company, however, anticipates that the precise
method of calculating the number of shares to be issued to Houlihan Lokey will
be modified by mutual agreement, as there was no trading market for the Common
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<PAGE>
Stock during the designated period. Irwin N. Gold, who was appointed a Director
of the Company in September 1996, is a Managing Director of Houlihan Lokey.
Legal Services
Barton J. Winokur, who served as a director of Old Bibb until the
effective time of the Merger is a partner in the law firm of Dechert Price &
Rhoads, which is counsel for the Company and provided legal services to Old Bibb
and the Company in 1995 and 1996.
Item 8. Legal Proceedings
On July 3, 1996, Old Bibb commenced a voluntary Chapter 11 bankruptcy
case in the United States Bankruptcy Court for the District of Delaware. For a
more complete description of this case, see "Item 1, Business--Background of
Bankruptcy; Plan of Reorganization."
From time to time, the Company is a party to various legal actions
arising in the normal course of its business. The Company is not currently a
party to any litigation which, if adversely determined, would have a material
adverse affect on the liquidity or results of operations of the Company.
Item 9. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters
Absence of Public Market
The Company's Common Stock is not currently listed or admitted to
unlisted trading privileges on a national securities exchange or included for
quotation through an inter-dealer quotation system of a registered national
securities association. The Company also is not aware of any dealer or "market
maker" in the Common Stock and, consequently, the trading market for such
securities is limited. On September 18, 1996, the Company filed a preliminary
application with The Nasdaq Stock Market to list the Common Stock on the Nasdaq
National Market, which was approved on ___________, 1996 subject to the
satisfaction of certain listing requirements. Notwithstanding the foregoing,
the Company is unable to predict whether a more active trading market for the
Common Stock will develop. Even if such a market does develop, due to industry
and other conditions beyond the control of the Company, there can be no
assurance that such a market would continue to exist.
Shares Eligible for Future Sale
The Common Stock issued under the Plan was issued pursuant to the
exemption from the registration requirements of the Securities Act (and of
equivalent state securities or "blue sky" laws) provided by Section 1145(a)(1)
of the Bankruptcy Code. Generally, Section 1145(a)(1) of the Bankruptcy Code
exempts the issuance of securities from the registration requirements of the
Securities Act and equivalent state securities and "blue sky" laws if the
following conditions are satisfied: (i) the securities are issued by a debtor
(or its successor) under a plan of reorganization; (ii) the recipients of the
securities hold a claim against, an interest in, or a claim for an
administrative expense against, the debtor; and (iii) the securities are issued
entirely in exchange for the recipient's claim against or interest in the
debtor, or are
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<PAGE>
issued "principally" in such exchange and "partly" for cash or property. The
Company believes that the issuance of the Common Stock under the Plan satisfies
the aforementioned requirements.
The Common Stock may be resold by the holders thereof without
restriction unless, as more fully described below, any such holder is deemed to
be an "underwriter" with respect to such securities, as defined in Section
1145(b)(1) of the Bankruptcy Code, or are otherwise deemed to be "affiliates" or
"control persons" of the Company within the meaning of the Securities Act.
Generally, Section 1145(b)(1) of the Bankruptcy Code defines an "underwriter" as
any person who (i) purchases a claim against, or interest in, a bankruptcy case,
with a view towards the distribution of any security to be received in exchange
for such claim or interest; (ii) offers to sell securities issued under a
bankruptcy plan on behalf of the holders of such securities; (iii) offers to buy
securities issued under a bankruptcy plan from persons receiving such
securities, if the offer to buy is made with a view towards distribution of such
securities or (iv) is an issuer as contemplated by Section 2(11) of the
Securities Act. Although the definition of the term "issuer" appears in Section
2(4) of the Securities Act, the reference (contained in Section 1145(b)(1)(D) of
the Bankruptcy Code) to Section 2(11) of the Securities Act purports to include
as "underwriters" all persons who, directly or indirectly, through one or more
intermediaries, control, are controlled by, or are under common control with, an
issuer of securities. "Control" (as such term is defined in Rule 405 of
Regulation C under the Securities Act) means the possession, direct or indirect,
of the power to direct or cause the direction of the policies of a person,
whether through the ownership of voting securities by contract, or otherwise.
Accordingly, each officer and director of the Company may be deemed to be a
"control person," particularly if such management position is coupled with the
ownership of a significant percentage of the Common Stock. The legislative
history of Section 1145 of the Bankruptcy Code suggests that a creditor who owns
at least 10% of the securities of a reorganized debtor is a presumptive "control
person."
With respect to "underwriters" of the Common Stock within the meaning
of Section 1145(b), the Common Stock may be eligible for resale by such persons
pursuant to the safe-harbor resale provisions of Rule 144 under the Securities
Act.
Shares of Common Stock acquired from any "affiliate" (as such term is
defined in Rule 144(a)(1) under the Securities Act) of the Company and shares of
Common Stock held by an affiliate of the Company may, under certain
circumstances, be sold to the public without registration under the Securities
Act in reliance on an exemption contained in Rule 144 promulgated thereunder.
In general, under Rule 144 (a "safe harbor" for the resale of
restricted securities or other securities by an "affiliate" of the Company to
the public without registration), a person (or group of persons whose shares are
aggregated) who has beneficially owned restricted shares of the Company
(together with its predecessors) for at least two years, including any person
who may be deemed to be an "affiliate" of the Company, is entitled to sell to
the public, within any three-month period, a number of shares that does not
exceed the greater of (i) one percent of the total number of shares of Common
Stock that are not "restricted securities" (including shares of Plan Common
Stock), and (ii) the average weekly trading volume during the four calendar
weeks preceding the date on which notice of the sale is filed with the
Securities and Exchange Commission. Sales under Rule 144 are also subject to
certain manner of sale provisions, notice requirements and the availability of
adequate "current public information" about the Company. The Company will not
be deemed to have such information available until the expiration of at least 90
days following the effective date of this Registration Statement on Form 10. A
person who is not deemed to
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<PAGE>
have been an "affiliate" of the Company at any time during the 90 days preceding
a sale and who has beneficially owned his or her restricted shares for at least
three years would, pursuant to Rule 144(k), be entitled to sell such restricted
shares to the public without regard to the volume limitations described above
and the other conditions of Rule 144.
As of the date hereof, no shares of Common Stock are eligible for
resale under Rule 144. As noted above, there is no active trading market for
the Common Stock, and no prediction can be made of the effect, if any, that
sales of shares of Common Stock under Rule 144 or the availability of shares for
sale will have on the market price of the Common Stock prevailing from time to
time after the date of this Registration Statement on Form 10. The Company is
unable to estimate the number of shares that may be sold in the public market
under Rule 144, because such amount will depend on the trading volume in and
market price for the Common Stock and other factors. Nevertheless, sales of
substantial amounts of shares in the public market, or the perception that such
sales could occur, could adversely affect the market price of the Common Stock.
Due to the limited trading market for the Common Stock, however, the trading
volume therefor may be low and the market price volatile, making reliance on
Rule 144 unpredictable.
Number of Holders
As of September 30, 1996, on a pro forma basis assuming all Old Equity
Interests and all Old Subordinated Notes were exchanged pursuant to the Plan,
there were _____ holders of record of the Company's Common Stock.
Dividends
The Company does not anticipate having funds available to pay cash
dividends on any shares of the Common Stock in the foreseeable future. The New
Credit Agreement contains restrictive financial and operating covenants and
prohibitions, including provisions that will prohibit the payment of cash
dividends on the Common Stock and will otherwise limit the Company's ability to
make distributions to holders of Common Stock.
Item 10. Recent Sales of Unregistered Securities
Effective as of September 27, 1996, the Company was obligated to issue
10,000,000 shares of Common Stock to holders of claims against and interests in
the Company pursuant to the Plan. All such issuances may be made pursuant to an
exemption from the registration requirements of the Securities Act provided by
Section 1145 of the Bankruptcy Code. For details of such issuances, see "Item
1, Business--Corporate History--Negotiations with Creditors; Reorganization
under the Plan."
Thomas C. Foley, a Director of the Company who served as Chief
Executive Officer of Old Bibb until August 1996, acquired 100 shares of Common
Stock as part of the Company's initial capitalization which issuance was made by
a private placement in reliance upon the exemption from the registration
provisions of the Securities Act provided in Section 4(2) thereof.
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<PAGE>
Item 11. Description of Registrant's Securities to be Registered
Pursuant to the Company's Certificate of Incorporation and amendment
thereto (the "Certificate of Incorporation"), the Company's authorized capital
stock consists of 12,000,000 shares of Common Stock, $.01 par value per share,
and 5,000,000 shares of Preferred Stock, $.01 par value per share. As of
September 30, 1996, 10,000,000 shares of Common Stock are entitled to be issued
and outstanding pursuant to the Plan. No shares of Preferred Stock have been
issued. The following summary description of the Common Stock and certain
provisions of the Company's Certificate of Incorporation and By-Laws does not
purport to be complete and is qualified in its entirety by reference to the more
detailed provisions of the Certificate of Incorporation and the By-laws of the
Company.
Common Stock
The holders of Common Stock shall vote on all matters as a single
class and each holder of Common Stock shall be entitled to one vote for each
share of Common Stock that it owns, except as may be otherwise required by law.
Holders of Common Stock will not have cumulative voting rights. The Company's
Certificate of Incorporation provides that, subject to the rights of holders of
any series of Preferred Stock, any action required or permitted to be taken by
stockholders must be effected at an annual or special meeting of stockholders
and may not be effected by written consent in lieu thereof.
Subject to the prior rights of holders of Preferred Stock, if any, the
holders of Common Stock will be entitled to such dividends (whether payable in
cash, property or capital stock) as may be declared from time to time by the
Board of Directors from funds, property or stock legally available therefor, and
will be entitled, after payment of all prior claims, to receive pro rata all
assets of the Company upon the liquidation, dissolution or winding up of the
Company. Holders of Common Stock have no redemption, conversion or preemptive
rights to purchase or subscribe for securities of the Company.
Under the Company's Certificate of Incorporation, the Board of
Directors of the Company has the authority to issue up to 12,000,000 shares of
Common Stock (10,000,000 of which are entitled to be received pursuant to the
Plan). The Company believes that the Board's ability to issue additional shares
of Common Stock could facilitate certain financings and acquisitions and provide
a means for meeting other corporate needs that might arise. The authorized but
unissued shares of Common Stock will be available for issuance without further
action by the Company's stockholders, unless stockholder action is required by
applicable law or the rules of any stock exchange or system on which the Common
Stock may then be listed. The Board's ability to issue additional shares of
Common Stock could, under certain circumstances, either impede or facilitate the
completion of a merger, tender offer or other takeover attempt.
Transfer Agent and Registrar
The transfer agent and registrar for the Common Stock is American Stock
Transfer and Trust Company.
Preferred Stock
The Company is authorized to issue up to 5,000,000 shares of Preferred
Stock without further stockholder approval, except as may be required by
applicable law or other applicable requirements. The
-33-
<PAGE>
shares of Preferred Stock may be issued in one or more series, with the number
of shares of each series and the rights, preferences and limitations of each
series to be determined by the Board of Directors. Among the specific matters
that may be determined by the Board of Directors are dividend rights, if any,
redemption rights, if any, the terms of a sinking or purchase fund, if any, the
amount payable in the event of any voluntary liquidation, dissolution or winding
up of the affairs of the Company, conversion rights, if any, and voting powers,
if any.
The issuance of shares of Preferred Stock, or the issuance of rights
to purchase such shares, could be used to discourage an unsolicited acquisition
proposal. For instance, the issuance of a series of Preferred Stock might
impede a business combination by including class voting rights that would enable
the holder to block such a transaction, or facilitate a business combination by
including voting rights that would provide a required percentage vote of the
stockholders. In addition, under certain circumstances, the issuance of
Preferred Stock could adversely affect the voting power of the holders of the
Common Stock. Although the Board of Directors is required to make any
determination to issue such stock based on its judgment as to the best interests
of the stockholders of the Company, the Board of Directors could act in a manner
that could discourage an acquisition attempt or other transaction that some, or
a majority, of the stockholders might believe to be in their best interests or
in which stockholders might receive a premium for their stock over the then-
market price of such stock. The Board of Directors does not at present intend
to seek stockholder approval prior to any issuance of currently authorized
stock, unless otherwise required by applicable law or other requirements. The
Company has no present plans to issue any Preferred Stock.
Delaware Law
The Company is a Delaware corporation and is subject to Section 203 of
the Delaware General Corporation Law. In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of a
corporation's outstanding voting stock) from engaging in a "business
combination" (as defined in Section 203) with a Delaware corporation for three
years following the date such person became an interested stockholder unless (i)
before such person became an interested stockholder, the board of directors of
the corporation approved the transaction in which the interested stockholder
became an interested stockholder or approved the business combination, (ii) upon
consummation of the transaction that resulted in the interested stockholder
becoming an interested stockholder, the interested stockholder owns at least 85%
of the voting stock of the corporation outstanding at the time such transaction
commenced (excluding stock held by directors who are also officers of the
corporation and by employee stock plans that do not provide employees with the
right to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer) or (iii) following the transaction in
which such person became an interested stockholder, the business combination is
approved by the board of directors of the corporation and authorized at a
meeting of stockholders by the affirmative vote of the holders of at least two-
thirds of the outstanding voting stock of the corporation not owned by the
interested stockholder. Under Section 203, the restrictions described above
also do not apply to certain business combinations proposed by an interested
stockholder following the announcement or notification of one of certain
extraordinary transactions involving the corporation and a person who had not
been an interested stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the corporation's
directors and whose transaction is approved or not opposed by a majority of the
board of directors then in office.
-34-
<PAGE>
Item 12. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law ("Section 145")
(a) gives Delaware corporations broad powers to indemnify their present and
former directors and officers and those of affiliated corporations against
expenses incurred in the defense of any lawsuit to which they are made parties
by reason of being or having been such directors or officers, subject to
specified conditions and exclusions, (b) gives a director or officer who
successfully defends an action the right to be so indemnified and (c) authorizes
the corporation to buy directors' and officers' liability insurance. Such
indemnification is not exclusive of any other right to which those indemnified
may be entitled under any by-law, agreement, vote of stockholders or otherwise.
As permitted by Delaware law, the Company's Certificate of
Incorporation provides that directors of the Company shall not be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, relating to prohibited dividends or distributions or the repurchase or
redemption of stock, or (iv) for any transaction from which the director derives
an improper personal benefit. In addition, the Company's By-laws provide for
indemnification of the Company's officers, directors, employees and agents to
the fullest extent permitted under Delaware Law. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
The Company also maintains liability insurance in the aggregate amount
of $10,000,000 for the purpose of covering its future potential liability for
indemnification under Section 145 as discussed above and certain future
potential liability of individual officers or directors incurred in their
capacity as such which is not subject to indemnification.
Item 13. Financial Statements and Supplementary Data
The financial statements and Supplementary Data required by this item
appear in this Form 10 commencing at page F-1.
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Item 15. Financial Statements and Exhibits
(a) List of Financial Statements
An Index to Financial Statements appears at Page F-1 hereof.
(b) Exhibits
-35-
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ---------- ----------------------
<S> <C>
2(a) Plan of Reorganization of The Bibb Company.
2(b) Restructuring Agreement dated as of February 1, 1996, as amended,
among The Bibb Company and each of the specified holders of 13-7/8%
Senior Subordinated Notes Due 1999 and 14% Senior Subordinated
Notes Due 1999 of The Bibb Company and NTC Group, Inc.
3(a) Certificate of Incorporation of The Bibb Company (formerly The New
Bibb Company), and Amendment thereto.
3(b) Bylaws of The Bibb Company (formerly the New Bibb Company), as amended.
4 Form of specimen stock certificate
10(a) Loan and Security Agreement dated as of September 12, 1996 by and
among The Bibb Company and Congress Financial Corporation
(Southern), as agent, and the lenders parties thereto.
10(b) Management Services Agreement dated as of April 1, 1989 between
The Bibb Company and NTC Group, Inc.
10(c) The Bibb Company Executives Deferred Compensation Plan originally
effective January 1, 1983, and as revised through January 1, 1992.
10(d) Agreement between TB Woods Incorporated and The Bibb Company dated
as of July 3, 1996.
10(e) Employment Agreement between The Bibb Company and Michael L.
Fulbright dated as of August 26, 1996.
27 Financial Data Schedule
</TABLE>
-36-
<PAGE>
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
The Bibb Company
By /s/ A. William Ott
-------------------------
Name: A. William Ott
Title: Vice President, Chief Financial Officer
Date: October 29, 1996
-37-
<PAGE>
THE BIBB COMPANY AND SUBSIDIARY INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
Page
----
Consolidated Financial Statements as of June 29, 1996 (Unaudited):
Consolidated Balance Sheet as of June 29, 1996 (Unaudited) F-2
Consolidated Statements of Operations for the Six Months Ended
June 29, 1996 and July 1, 1995 (Unaudited) F-3
Consolidated Statement of Changes in Stockholders' Deficit for the Six
Months Ended June 29, 1996 (Unaudited) F-4
Consolidated Statements of Cash Flows for the Six Months Ended
June 29, 1996 and July 1, 1995 (Unaudited) F-5
Notes to Consolidated Financial Statements (Unaudited) F-6
Financial Statements as of December 30, 1995 and December 31, 1994:
Report of Independent Public Accountants F-12
Consolidated Balance Sheets as of December 30, 1995
and December 31, 1994 F-13
Consolidated Statements of Operations for the Years Ended December 30,
1995, December 31, 1994 and January 1, 1994 F-14
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
for the Years Ended December 30, 1995, December 31, 1994 and
January 1, 1994 F-15
Consolidated Statements of Cash Flows for the Years Ended December 30,
1995, December 31, 1994 and January 1, 1994 F-16
Notes to Consolidated Financial Statements F-18
Schedule II-Valuation and Qualifying Accounts F-31
Supplemental schedules other than that listed above are omitted for the reason
that they are not required or are not applicable, or the information is included
in the Notes to Consolidated Financial Statements.
F-1
<PAGE>
THE BIBB COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(In Thousands, Except Share Data)
(UNAUDITED)
<TABLE>
<CAPTION>
June 29, 1996
-------------
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $144
Restricted cash 12,898
Accounts receivable, net of allowance
for doubtful accounts, discounts and
claims of $6,864 3,572
Inventories 84,835
Prepaid expenses and other current assets 3,424
--------
Total current assets 104,873
PROPERTY, PLANT and EQUIPMENT, net 74,013
INVESTMENT IN AND NOTE RECEIVABLE FROM
T.B. WOODS' SONS COMPANY 15,621
OTHER ASSETS 7,452
--------
$201,959
========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Current maturities of long-term debt $207,697
Accounts payable 37,993
Accrued payroll and other compensation 15,177
Accrued interest 38,217
Other accrued liabilities 6,250
--------
Total current liabilities 305,334
--------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Preferred stock, Series A cumulative,
$10 par value 250,000 shares
authorized; 0 shares issued
and outstanding
Common stock, $.10 par value, 500,000
shares authorized; 9,600 shares issued
and outstanding 1
Additional paid-in capital 3,427
Retained (deficit) (105,853)
Minimum pension liability adjustment (950)
---------
Total stockholders' deficit (103,375)
---------
$201,959
=========
</TABLE>
The accompanying notes are an integral part of this balance sheet.
F-2
<PAGE>
THE BIBB COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months Ended June 29, 1996 and July 1, 1995
(In Thousands, Except Share Data)
(unaudited)
SIX MONTHS ENDED
----------------
<TABLE>
<CAPTION>
June 29, 1996 July 1, 1995
------------- ------------
<S> <C> <C>
NET SALES $169,038 $201,457
COST OF SALES 152,215 188,407
-------- --------
Gross Profit 16,823 13,050
-------- --------
SELLING AND ADMINISTRATIVE EXPENSES 17,322 17,925
MANAGEMENT FEES TO AFFILIATE 1,328 2,000
-------- --------
Operating Profit (Loss) (1,827) (6,875)
-------- --------
OTHER INCOME (EXPENSE)
Interest Expense-Senior (2,484) (2,793)
Interest Expense-Subordinated (11,148) (11,149)
Interest Income from Affiliate -
T.B. Wood's Sons Company 586 586
Loan fee amortization and expense (564) (1,215)
Gain on sale of investment 3,685 0
Other, net (996) (1,559)
------- -------
(10,921) (16,130)
------- -------
NET (LOSS) ($12,748) ($23,005)
======== ========
NET (LOSS) PER SHARE OF
COMMON STOCK ($1,327) ($2,396)
======= =======
WEIGHTED AVERAGE SHARES
OUTSTANDING 9,600 9,600
======= =======
</TABLE>
The accompanying notes are an integral part of these statements
F-3
<PAGE>
THE BIBB COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Six Months Ended June 29, 1996
(In Thousands)
(unaudited)
<TABLE>
<CAPTION>
Minimum
Additional Pension
Preferred Common Paid-In Retained Liability
Stock Stock Capital Earnings Adjustment TOTAL
--------- ------ ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 30, 1995 $-- $1 $3,427 ($93,105) ($950) ($90,627)
Net loss -- -- -- (12,748) -- (12,748)
--------- ------ ---------- ---------- ------------ -----------
BALANCE, June 29, 1996 $--- $1 $3,427 ($105,853) ($950) ($103,375)
========= ====== ========== ========== ====== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
F-4
<PAGE>
THE BIBB COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 29, 1996 and July 1, 1995
(In Thousands)
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
June 29, 1996 July 1, 1995
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) ($12,748) ($23,005)
Adjustments to reconcile net (loss) to
net cash provided by (used for) operating
activities:
Depreciation and amortization 6,392 7,561
Loan fee amortization 564 1,215
Net (gain) loss on sales of assets (395) 50
Net (gain) loss on sale of investment (3,685) 0
Changes in operating assets and liabilities:
Restricted cash (4,932) (3,973)
Decrease in accounts receivable 4,354 11,332
(Increase) in inventories (4,650) (4,636)
(Increase) in prepaid expenses and
other current assets (1,517) (2,605)
Increase in accounts payable and accrued
expenses 17,343 13,586
--------- ---------
Net cash provided by (used for) operating
activities 726 (475)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,965) (2,999)
Disposal of fixed assets 738 2
Proceeds from sale of investment 4,185 0
Other, net (1,830) (1,348)
--------- ---------
Net cash provided by (used for) investing
activities 1,128 (4,345)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under revolving
line of credit (1,274) 5,435
Other, net (586) (586)
--------- ---------
Net cash (used for) provided by financing
activities (1,860) 4,849
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS (6) 29
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 150 113
--------- ---------
CASH AND EQUIVALENTS AT END OF PERIOD $144 $142
========= =========
INCOME TAXES PAID IN THE PERIOD, net $-- $--
=== ===
INTEREST PAID IN THE PERIOD $3,932 $6,489
====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
THE BIBB COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 29, 1996
(unaudited)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures normally
included in annual consolidated financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to those rules and regulations. It is
suggested that these condensed consolidated financial statements be read
in conjunction with the Company's audited consolidated financial
statements and notes thereto.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Company's
financial position as of June 29, 1996 and the results of its
consolidated operations and its consolidated cash flows for the six
months ended June 29, 1996 and July 1, 1995. Certain prior year amounts
have been reclassified to agree with current year presentation.
Annual results of operations of the Company have been reported for the
52- or 53-week period ending nearest December 31. Interim results for
the six months ended June 29, 1996 and July 1, 1995 are for 26 weeks
each. Interim results of operations are not necessarily indicative of
the results that may be expected for the full year.
2. INVENTORIES
The major classes of inventories were as follows (thousands of dollars):
<TABLE>
<CAPTION>
June 29, 1996
<S> <C>
Raw materials and supplies $ 10,393
Work-in-process 39,560
Finished goods 52,479
---------
Total at FIFO cost, which approximates
replacement cost 102,432
Excess of FIFO cost over LIFO cost (17,597)
---------
Total at LIFO cost $ 84,835
=========
</TABLE>
3. INVESTMENT IN AFFILIATE - T.B. WOOD'S SONS COMPANY
On April 2, 1993, Woods acquired new product lines and completed a
recapitalization. In settlement of amounts owed on the note payable to
the Company (the "Woods Note"), the Company received a cash payment of
$5,560,000, two new notes and a warrant exercisable by the Company to
purchase up to 375,000 shares of common stock of Woods at an exercise
price of $.003 per share. The new notes received consisted of (i) a ten-
year, $13,218,000 subordinated promissory note, with semiannual interest
payments
F-6
<PAGE>
of $576,000 commencing on the third anniversary of the date of the note,
and a final payment of principal and interest due at maturity, and (ii) a
ten-year, $2,000,000 non-interest bearing, subordinated promissory note.
The $2,000,000 note was paid in full on August 26, 1994. The carrying
value of the $13,218,000 subordinated promissory note plus accrued
interest has been calculated by discounting future cash flows at 8.5%.
The Company believes that the consideration received from Woods
approximated the fair value resulting from an arms length transaction.
In December 1993, the Company exercised its warrants to purchase 375,000
shares of Woods common stock. The investment in Woods is being accounted
for under the cost method. During the first quarter of 1996, the Company
sold all 375,000 shares of common stock as part of Woods' initial public
offering. As a result of the sale, the Company received net proceeds of
approximately $4,200,000.
On July 18, 1996, Woods prepaid the subordinated promissory note and all
accrued interest through that date. The Company received approximately
$10,600,000 in consideration for the subordinated promissory note and
recorded a loss of $5,015,000.
4. INCOME TAXES
In June 1989, the stockholders of the Company filed elections with the
Internal Revenue Service and certain state taxing authorities to be
treated as an S Corporation beginning April 2, 1989. As an S
Corporation, the Company generally will not be subject to corporate level
taxes on its net income because such income will be attributed to the
Company's stockholders and taxes on such income will be directly payable
by them. As a result, the Company generally intends to make quarterly
distributions to its stockholders in amounts equal to such taxes
estimated to be payable by them.
Subsequent to the S Corporation election, the Company remains subject to
state and local income taxes in certain states and municipalities. The
Company has net operating loss carryforwards available to offset future
taxable income in these states and municipalities.
F-7
<PAGE>
5. LONG-TERM DEBT
Long-term debt consisted of the following (thousands of dollars):
<TABLE>
<CAPTION>
June 29, 1996
<S> <C>
14% Senior Subordinated Notes, due 1999 $127,004
13 7/8% Senior Subordinated Notes, due
1999, net of unamortized discount of $71 32,771
Payable under Senior Revolving Credit 36,326
Facility
Industrial Development Revenue Bonds,
variable rate interest, due in 2003 11,000
and 2004
Other 596
---
207,697
Less Current Maturities 207,697
--------
$ 0
========
</TABLE>
During 1995, the Company defaulted on interest payments due on its 14%
and 13-7/8% subordinated notes and was in default on certain loan
covenants under its financing arrangements as of June 29, 1996.These
defaults give the lenders the right to accelerate the due dates.
Accordingly, all debt has been classified as current in the accompanying
balance sheet.
Senior Subordinated Notes
The 14% senior subordinated notes were sold in October 1989 (the "1989
Notes") in an underwritten public offering and are redeemable at the
option of the Company, in whole or in part, after October 1, 1994, at a
premium of 104%. The redemption price decreases on October 1, 1995 and
1996 to 102% and 100% respectively. The 1989 Notes are subordinated in
right of payment to all senior indebtedness of the Company, as defined,
which includes borrowings under the senior revolving credit facility
discussed below.
The 13-7/8% senior subordinated notes were sold in August 1987 ("1987
Notes") in an underwritten public offering and are redeemable at the
option of the Company, in whole or in part. At June 29, 1996, the
redemption price, which decreases annually on August 1 of each year
through 1998 to 100%, was 103%. The 1987 Notes are subordinated in right
of payment to all senior indebtedness of the Company, as defined, which
includes borrowings under the senior revolving credit facility discussed
below.
On July 25, 1990, the Company issued $27,004,000 aggregate principal
amount of its 1989 Notes in exchange for $27,177,000 aggregate principal
amount of the 1987 Notes pursuant to an exchange offer for all of the
outstanding 1987 Notes. In connection with the exchange, the Company
fulfilled approximately 66% of its mandatory redemption payments related
to the 1987 Notes. As such, the Company is subject to remaining
mandatory redemption payments related to the 1987 Notes through two
annual sinking fund payments of $423,000 and $13,800,000 on August 1,
1997 and 1998, respectively. These payments, plus the exchange of
$27,177,000 aggregate principal amount of 1987 Notes are calculated to
retire 69% of the issue prior to maturity.
The Company is subject to certain covenants under the terms of the 1989
Notes and the 1987 Notes, including restrictions as to payments of
dividends and other payments, as defined, as well as limitations on
additional indebtedness. As discussed in Note 1, the Company has
defaulted on interest payments due on
F-8
<PAGE>
its 14% and 13-7/8% subordinated notes and is currently in default, and
was in default, as of June 29, 1996 of certain loan covenants under
the terms of the 1989 Notes and the 1987 Notes.
Senior Revolving Credit Facility
On August 13, 1993, the Company refinanced its senior revolving credit
facility (the "Refinancing"). The Refinancing was comprised of two
parts. First, the Company entered into a new credit agreement (the
"Credit Agreement") with its existing senior lenders providing for a
three-year revolving credit facility (the "Credit Facility"). Under the
Credit Facility, the Company may borrow up to an aggregate of $45,000,000
for working capital purposes (up to $20,000,000 of which may be issued as
letters of credit).
Under the Credit Agreement, the Company granted its senior lenders a
first priority security interest in substantially all of the Company's
assets including real property, equipment, inventory, accounts receivable
not transferred pursuant to the trade receivable transaction discussed
below, personal property, and intangible assets. The Credit Agreement
contains numerous restrictive financial and other covenants, including,
among other things, restrictions on the incurrence of additional
indebtedness, sale of assets, creation of liens, and the making of
investments; restrictions on mergers, acquisitions, and transactions with
affiliates; restrictions on distributions and dividends to the Company's
stockholders; restrictions on redemption, prepayment, and repurchases
with respect to other debt; restrictions on capital expenditures; and
certain financial tests, including maintaining certain levels of the
Company's income, current ratio, and fixed charge on interests coverage
ratios, as defined. Under the Credit Agreement, the Company is
prohibited from paying any dividends without the consent of the lending
banks, except for dividends to the Company's stockholders to enable them
to pay all applicable income taxes attributable to them as a result of
the election of the Company to be treated as an S corporation.
On July 25, 1994, the Company and its senior lenders amended the Credit
Agreement, effective July 2, 1994. Among other things, the amendment (i)
increased the amount the company may borrow under the Credit Facility
from $45,000,000 to $60,000,000 subject to certain specified borrowing
base requirements and increased the amount which may be issued as letters
of credit from $20,000,000 to $25,000,000, which amount is subject to
permanent reduction in the event of certain mandatory prepayments, (ii)
shortened the term of the Credit Agreement to January 1, 1996, (iii)
further restricted the amounts of certain restricted junior payments, as
defined, payable under certain circumstances, (iv) revised certain of the
financial tests contained in the restrictive covenants to levels that
better reflect the Company's recent operating results, and (v) added an
additional financial covenant requiring the Company to meet a minimum
cash flow test. The Credit Facility was reduced to $55,000,000 on
December 15, 1994, as stated in the amendment. In consideration of the
execution and delivery of the amendment, the Company paid a $1,000,000
fee to its senior lender. This amount was fully amortized during 1995.
The Credit Agreement also contains certain subjective covenants relating
to any material adverse change in the financial or other conditions of
the Company. The Company is currently in default of certain loan
covenants under the Credit Agreement.
As the second part of the Refinancing, the Company sold its trade
accounts receivable, exclusive of certain international and miscellaneous
receivables (collectively, the "Receivables"), to BF Funding, with
recourse, for a cash purchase price of $50,000,000 (the "Trade
Receivables Transaction"). BF Funding is a limited partnership formed by
the Company and an affiliate. The Company has limited partnership
interests representing 98.5% of the total capital of BF Funding. BF
Funding transferred the Receivables to a trust in accordance with terms
of an agreement (the "Pooling and Servicing Agreement") dated August 13,
1993 among BF Funding, the Company, and a financial institution, as
Trustee thereunder, in exchange for trust certificates, and the trust
certificates were sold to investors. The proceeds from the sale were used
to pay the Company for the Receivables purchased by BF Funding.
F-9
<PAGE>
During the term of the Trade Receivables Transaction (57 Months), the
cash generated by the receivables will be used to make payments to the
investors and/or to purchase additional receivables originated by the
Company. Payments made to investors are based on a floating rate indexed
to the London InterBank Offering Rate ("LIBOR"), and such payments are
included in the accompanying statements of operations in other, net.
Under the terms of the Pooling and Servicing Agreement, the Company acts
as servicer (as defined therein) for the receivables.
One of the early amortization events contemplated in the Pooling and
Servicing Agreement relates to the occurrence of an insolvency event with
respect to the Company, as servicer in the Trade Receivables Transaction.
Insolvency event is defined in the Pooling and Servicing Agreement as the
failure by a person to generally pay its debts as such debts become due.
On July 5, 1996, the Company repurchased the accounts receivable from BF
Funding for par plus accrued interest in the total amount of
approximately $50,155,000. The repurchase was financed with proceeds
from the Company's senior lenders under its revolving credit facility.
The interest rates on borrowings under the Credit Agreement are at the
base rate, as defined, plus 2%, or at the Eurodollar rate, as defined,
plus 4.25%, as selected by the Company. At June 29, 1996, the interest
rate on outstanding borrowings was 10.25% per annum. The annual interest
rate will be reduced by up to a maximum of one-half of 1% if certain
financial performance requirements in the Credit Agreement are met. In
addition, the Company pays monthly a facility fee of one-half of 1% per
annum of the average daily unused portion of the facility and a letter of
credit fee of 2.75% per annum of the average withdrawn face amount of
each outstanding letter of credit.
Industrial Development Revenue Bonds
Industrial development revenue bonds were issued and sold to refinance
the purchase of certain plants from West Point Stevens Inc. These Bonds
are backed by letters of credit issued under the Credit Facility in the
amount of approximately $11,141,000. These Bonds mature in December 2003
and October 2004. No amortization is required as the entire principal
amount is due at maturity. Interest on the bonds is at a floating rate,
which is reset weekly. At June 29, 1996, the interest rate on these bonds
was 4.33%. The Company is subject to certain covenants with respect to
the bonds, primarily to maintain their tax-exempt status.
In January 1996, the Company closed the plants that were purchased in
connection with the issuance of the industrial development revenue bonds.
This financing agreement states that the loan payments are subject to
mandatory prepayment upon a cessation of operation. The bond indenture
determines that a cessation of operation shall not be deemed to have
occurred until 60 days shall have elapsed after written notice has been
given to the Company, as borrower, the bank, and the trustee by the
issuer that operation of the project, as defined, shall have ceased. The
Company has not yet received such notice.
6. SUBSEQUENT EVENTS
On July 3, 1996 (the "Filing Date"), following receipt of approval by the
requisite creditors and security holders of the Company, the Company
filed voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code with the United States Bankruptcy Court for the District of Delaware
(the "Bankruptcy Court"). On September 12, 1996, the Bankruptcy Court
issued an order confirming the Plan. The Plan was consummated on
September 27, 1996 (the "Effective Date").
F-10
<PAGE>
Principal Provisions of the Plan
On the Effective Date and pursuant to the Plan, the following events,
among other things, occurred:
(i) The Loan and Security Agreement dated as of September 12, 1996, by
and among Congress Financial Corporation (Southern), as agent,
("Congress") and the lenders party thereto (Congress and lenders
are collectively referred to herein as the "New Banks") and the
Company (the "New Credit Agreement") became operative, thereby
providing the Company with a source of financing. On the Effective
Date, all outstanding indebtedness to the Banks relating to pre-
Effective Date obligations arising under the Old Credit Agreement
was repaid (or, in the case of then-outstanding letters of credit,
cash collateralized) in full.
(ii) Each holder of the Company's outstanding 14% Senior Subordinated
Notes and 13.875% Senior Subordinated Notes become entitled to
receive 59.9177745 and 57.5877576 shares, respectively, of the
Company's Common Stock, $.01 par value per share (the "Common
Stock") issued and outstanding as of the Effective Date for each
$1,000 principal amount of Old Subordinated Notes held by such
holder (the right to receive distributions with respect to all Old
Subordinated Notes represents in the aggregate approximately
9,500,000 shares, or 95% of the Common Stock, assuming all Old
Subordinated Notes are exchanged, as of the Effective Date).
(iii) Each holder of pre-Merger common stock, (the "Old Common Stock" or
"Old Equity Interests") became entitled to receive, in exchange
for each share of Old Common Stock, 50.9511043 shares of Common
Stock (the right to receive distributions with respect to all Old
Equity Interests represents in the aggregate approximately 500,000
shares, or 5% of the Common Stock, assuming all shares of Old
Common Stock are exchanged, as of the Effective Date).
Appointments of President and Chief Executive Officer and Directors
In August 1996, Michael L. Fulbright was appointed to serve as President
and Chief Executive Officer of the Company.
In September 1996, the Company appointed C. Scott Bartlett, Jr., Marvin
B. Crow, Michael L. Fulbright, Irwin N. Gold, Stewart M. Kasen, George A.
Poole, Jr. and James A. Williams to its Board of Directors, to serve with
Thomas C. Foley, an existing director.
F-11
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
The Bibb Company and Subsidiary;
We have audited the accompanying consolidated balance sheets of THE BIBB
COMPANY (a Delaware corporation) AND SUBSIDIARY as of December 30, 1995 and
December 31, 1994 and the related consolidated statements of operations,
changes in stockholders' equity (deficit), and cash flows for each of the
three years in the period ended December 30, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Bibb Company and
subsidiary as of December 30, 1995 and December 31, 1994 and the results of
their operations and their cash flows for each of the three years in the
period ended December 30, 1995 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from
operations, has a net capital deficiency, has defaulted on interest payments
due on its senior subordinated notes and is in default of certain covenants
under its financing agreements, all of which raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1.
On July 3, 1996, the Company filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Court. On September 12, 1996,
the bankruptcy court issued an order confirming the reorganization. The
reorganization was consummated on September 27, 1996. The financial statements
do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
consolidated financial statements is presented for purposes of complying with
the Securities and Exchange Commission's rules and is not a required part of
the basic financial statements. This schedule has been subjected to the
auditing procedures applied in our audits of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 8, 1996
(except with respect to the fourth paragraph
of Note 1, the thirteenth paragraph of
Note 5, the third paragraph of Note 9, and
the fifth, sixth and seventh paragraphs of
Note 1, as to which the dates are July 3,
1996, July 5, 1996, July 18, 1996, and
September 27, 1996, respectively)
F-12
<PAGE>
THE BIBB COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 30, 1995 and December 31, 1994
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS'
ASSETS 1995 1994 DEFICIT 1995 1994
------ ---- ---- ------- ---- ----
CURRENT ASSETS: CURRENT LIABILITIES:
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $150 $113 Current maturities of long-term debt $208,971 $197,128
Restricted cash 7,966 6,902 Accounts payable 33,107 35,865
Accounts receivable, net of Accrued payroll and other compensation 13,999 16,017
allowances for doubtful accounts, Accrued interest 26,984 6,959
discounts, and claims of $5,134 and Other accrued liabilities 6,204 3,327
$4,667 as of December 30, 1995 and -------- --------
December 31, 1994, respectively 7,926 25,074 Total current liabilities 289,265 259,296
-------- --------
LONG-TERM DEBT less current
Inventories 80,185 86,697 maturities 0 11,000
Prepaid expenses and other current -------- --------
assets 1,907 135 COMMITMENTS AND CONTINGENCIES (Note 11)
------ -------
Total current assets 98,134 118,921
STOCKHOLDERS' DEFICIT:
PROPERTY, PLANT AND EQUIPMENT, net 77,414 85,024 Preferred stock, Series A
cumulative, $10 par value;
250,000 shares authorized, 0
INVESTMENT IN AND NOTE RECEIVABLE shares issued and outstanding 0 0
FROM T.B. WOOD'S SONS COMPANY 15,270 14,098 Common stock, $.10 par value;
500,000 shares authorized,
9,600 shares issued and out-
standing 1 1
Additional paid-in capital 3,427 3,427
Retained deficit (93,105) (45,514)
OTHER ASSETS 7,820 10,128 Minimum pension liability
adjustment (950) (39)
-------- --------
Total stockholders' deficit (90,627) (42,125)
-------- -------- -------- --------
$198,638 $228,171 $198,638 $228,171
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
balance sheets.
F-13
<PAGE>
THE BIBB COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 31, 1994 AND JANUARY 1, 1994
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
December 30, December 31, January 1,
1995 1994 1994
------------- ------------- ------------
<S> <C> <C> <C>
NET SALES $389,998 $459,192 $487,892
COST OF SALES 366,040 432,235 410,713
------------- ------------- ------------
Gross profit 23,958 26,957 77,179
SELLING AND ADMINISTRATIVE
EXPENSES 36,130 41,765 43,134
MANAGEMENT FEES TO AFFILIATE 3,368 4,000 4,000
------------- ------------- ------------
Operating (loss) profit (15,540) (18,808) 30,045
------------- ------------- ------------
OTHER (EXPENSE) INCOME:
Interest expense (27,926) (26,379) (25,605)
Interest income from T.B. Wood's
Sons Company 1,172 1,174 586
Loan fee amortization and
related expenses (2,486) (1,795) (1,847)
Gain on sale of unconsolidated
subsidiary 0 0 3,182
Other, net (2,811) (2,108) (1,275)
------------- ------------- ------------
(32,051) (29,108) (24,959)
------------- ------------- ------------
(LOSS) INCOME BEFORE
EXTRAORDINARY ITEM (47,591) (47,916) 5,086
EXTRAORDINARY ITEM, loss from
retirement of debt in connection
with refinancing 0 0 738
------------- ------------- ------------
NET (LOSS) INCOME $(47,591) $(47,916) $ 4,348
============= ============= ============
PER SHARE OF COMMON STOCK:
(Loss) income before
extraordinary item $ (4,957) $ (4,991) $ 529
Extraordinary item 0 0 76
------------- ------------- ------------
NET (LOSS) INCOME PER SHARE OF
COMMON STOCK $ (4,957) $ (4,991) $ 453
============= ============= ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 9,600 9,600 9,600
============= ============= ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-14
<PAGE>
THE BIBB COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 31, 1994, AND JANUARY 1, 1994
(In Thousands)
<TABLE>
<CAPTION>
Minimum
Additional Retained Pension
Preferred Common Paid-In Earnings Liability
Stock Stock Capital (Deficit) Adjustment Total
--------- ----------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 2, 1993 $0 $1 $3,427 $ (1,946) $ 0 $ 1,482
Net income 0 0 0 4,348 0 4,348
Net pension liability adjustment 0 0 0 0 (331) (331)
--------- ----------- ------------ ----------- ------------ -----------
BALANCE, January 1, 1994 0 1 3,427 2,402 (331) 5,499
Net loss 0 0 0 (47,916) 0 (47,916)
Net pension liability adjustment 0 0 0 0 292 292
--------- ----------- ------------ ----------- ------------ -----------
BALANCE, December 31, 1994 0 1 3,427 (45,514) (39) (42,125)
Net loss 0 0 0 (47,591) 0 (47,591)
Net pension liability adjustment 0 0 0 0 (911) (911)
--------- ----------- ------------ ----------- ------------ -----------
BALANCE, December 30, 1995 $0 $1 $3,427 $(93,105) $(950) $(90,627)
========= =========== ============ =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-15
<PAGE>
THE BIBB COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 30, 1995, DECEMBER 31, 1994, AND JANUARY 1, 1994
(In Thousands)
<TABLE>
<CAPTION>
December 30, December 31, January 1,
1995 1994 1994
------------ ------------ ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $(47,591) $(47,916) $ 4,348
Adjustments to reconcile net (loss) income to net cash
provided by (used in) operating activities:
Depreciation and amortization 15,644 14,283 12,239
Loan fee amortization and related expenses 2,486 1,795 1,309
Extraordinary loss on retirement of debt 0 0 738
Gain on sale of unconsolidated subsidiary 0 0 (3,182)
Net loss (gain) on sale and retirement of assets (50) 4 (11)
Interest receivable on note receivable from T.B. Wood's Sons
Company (1,172) (1,174) (586)
Changes in operating assets and liabilities:
Restricted cash (1,064) (1,558) (5,344)
Accounts receivable 17,148 (7,800) 48,740
Inventories 6,512 15,763 (2,550)
Prepaid expenses and other current assets (1,772) 949 (354)
Accounts payable and accrued liabilities 17,215 5,294 4,300
------------ ------------ ----------
Net cash provided by (used in) operating activities 7,356 (20,360) 59,647
------------ ------------ ----------
</TABLE>
F-16
<PAGE>
<TABLE>
<CAPTION>
December 30, December 31, January 1,
1995 1994 1994
------------ ------------ ----------
<S> <C> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (5,489) (11,129) (13,807)
Proceeds from sale of fixed assets 249 32 108
Proceeds from sale of unconsolidated subsidiary 0 0 3,750
Repayment of notes receivable from
T.B. Wood's Sons Company, net 0 2,000 5,560
Other, net (2,922) (2,265) (2,629)
------------ ------------ ----------
Net cash used in investing activities (8,162) (11,362) (7,018)
------------ ------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (64) (67) (59)
Net borrowings (repayments) under revolving line of credit 907 31,756 (50,123)
Deferred loan fees 0 0 (2,403)
------------ ------------ ----------
Net cash provided by (used in) financing activities 843 31,689 (52,585)
------------ ------------ ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 37 (33) 44
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 113 146 102
------------ ------------ ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 150 $ 113 $ 146
============ ============ ==========
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 10,538 $ 27,866 $ 26,278
============ ============ ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-17
<PAGE>
THE BIBB COMPANY AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 1995, DECEMBER 31, 1994, AND JANUARY 31, 1994
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
The Bibb Company ("Bibb" or the "Company") is engaged in the manufacturing
and marketing of consumer products for the home, principally sheets,
pillowcases, towels, and other bedding and bath accessories, as well as
apparel fabrics and other specialty engineered textile products used in
making high-pressure hoses and other industrial products. The Company has
manufacturing plants located in Georgia, South Carolina, North Carolina,
and Virginia. The Company has been engaged in the manufacturing and
marketing of textile products since 1876. in April 1991, The Company
introduced the Royalton product line, which includes licensed designer bed
and bath products targeted to upscale department and specialty stores.
The Company's top customers are primarily retailers throughout the United
States.
In 1993, The Company entered into an agreement of limited partnership with
an affiliate whereby the Company agreed to contribute receivables to BF
Funding, L.P. ("BF Funding" or the "Partnership"), a Georgia limited
partnership, in exchange for limited partnership interests representing
98.5% of the total capital of BF Funding. The primary purpose of BF
Funding is to acquire receivables of the Company which will be transferred
to a trust and sold to third-party investors (Note 5). Under the
agreement, the profits and losses of BF Funding are allocated in
proportion to each partner's share of capital contributions.
Going Concern Matters
For the years ended December 30, 1995 and December 31, 1994 , the Company
has incurred significant operating losses. as of December 30, 1995 and
December 31, 1994, the Company was in default of certain loan covenants
under its financing arrangements. During 1995, the Company defaulted on
interest payments due on its 14% and 13 7/8% senior subordinated notes
(Note 5). These defaults give the lenders the right to accelerate the due
dates of all debt. Accordingly, all debt has been classified as current
in the accompanying consolidated balance sheet as of December 30, 1995.
In addition, the Company had a stockholders' deficit of $90,627 and
$42,125 as of December 30, 1995 and December 31, 1994, respectively.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern.
On July 3, 1996, the Company filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Court. As part of the
reorganization plan (the "Plan"), the holders of the 14% and 13 7/8%
senior subordinated notes would receive 95% of the issued and outstanding
common stock of the Company in exchange for 100% of the outstanding
principal amount of the senior subordinated notes, including all interest
due thereon. The Plan does not alter, adjust, or reduce the Company's
obligations to its other creditors.
On September 12, 1996, the bankruptcy court issued an order confirming the
Plan. The Plan was consummated on September 27, 1996 (the "Effective
Date").
As of the Effective Date, in accordance with AICPA Statement of Position
90-7, "Financial Reporting by Entities in Reorganization under the
Bankruptcy Code" ("SOP 90-7"), the Company will be required to adopt
"fresh-start" reporting. Pursuant to the adoption of fresh-start
reporting, the Company will be required to determine its reorganization
value, which represents the fair value of the entity before considering
liabilities and approximates the amount a willing buyer would pay for the
assets of the Company immediately after its emergence from Chapter 11
status.
On the Effective Date and pursuant to the Plan, the Company obtained
financing from lending institutions to repay its senior revolving credit
facility (Note 5) and finance additional capital expenditures (the "Loan
and Security Agreement"). Under the Loan and Security Agreement, the
Company is entitled to borrow up to a maximum of $110
F-18
<PAGE>
million ($115 million during the months of July through November in each
calendar year). Borrowings in the form of a term loan of $25 million and
in the form of revolving loans for the remainder of such borrowings are
only available to the extent that a sufficient borrowing base, calculated
based on eligible receivables and inventory, exists. Borrowings under this
credit facility bear interest at "prime rate," as defined, plus 1%, or at
the Company's option, the Adjusted Eurodollar Rate plus 3.25%. This credit
agreement is for a minimum of three years, subject to one-year extensions
unless terminated by the lenders or the Company. Substantially, all of the
assets of the Company are pledged as collateral under the Loan and
Security Agreement. This credit facility contains numerous restrictive
financial and other covenants including restrictions on the incurrence of
indebtedness, liens, mergers, acquisitions, asset sales, and dividends,
among others.
In addition, the Company has implemented a plan to improve its operations
through the downsizing and disposal of certain unprofitable operations and
product lines and the reduction of certain operating expenses. The
downsizing included the closing of two manufacturing plants and one
distribution center. There can be no assurances that the ongoing
negotiations with the Company's lenders or the Company's future operations
will be successful or that future financing will be available.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern and do not
include any adjustments relating to the recoverability and classification
of asset carrying amounts or the amount and classification of liabilities
that might result should the Company be unable to continue as a going
concern.
Certain risks
The Company is subject to certain risks in the ordinary course of
business. Among those is the risk of an increase in cotton prices that
significantly affects the cost of production and cash flows (Note 11).
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements include the accounts of the Company and the
Partnership. All significant intercompany accounts and transactions have
been eliminated in consolidation. The minority interest in the net assets
of BF Funding has been combined with the accounts of the Company in the
accompanying financial statements as the minority interest is owned by the
principal stockholder of the Company.
The Company's annual reporting period is the 52- or 53-week period ending
on the Saturday nearest December 31. The Company's results of operations
and cash flows are presented for the years ended December 30, 1995 (52
weeks), December 31, 1994 (52 weeks), and January 1, 1994 (52 weeks).
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Cash, Cash Equivalents, and Restricted Cash
The Company considers all short-term deposits with an original maturity of
three months or less to be cash equivalents.
F-19
<PAGE>
Restricted cash represents cash required to be held in connection with the
sale of receivables to the Partnership as discussed in Note 5.
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost less accumulated
depreciation and are depreciated using the straight-line method over
estimated useful asset lives of 15 to 50 years for buildings and
improvements and 3 to 15 years for machinery and equipment. Leasehold
improvements are depreciated over the shorter of the estimated useful
asset life or the term of the related lease.
Maintenance and repair costs are charged to expense as incurred, and major
renewals and betterments are capitalized. When property or equipment is
retired or otherwise disposed of, the related carrying value and
accumulated depreciation are removed from the accounts and any resulting
gain or loss is recorded in the statement of operations.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the last-in, first-out ("LIFO") method except for certain supplies,
for which cost is determined on the first-in, first-out ("FIFO") method.
Market is defined as net realizable value. Cost includes raw materials,
direct labor, and manufacturing overhead. Approximately 96% of total
inventories were valued using the LIFO method at December 30, 1995 and
December 31, 1994.
Sale of Unconsolidated Subsidiary
During the year ended January 1, 1994, the Company sold its investment in
an unconsolidated subsidiary. The gain on the sale is included in other
income in the accompanying statement of operations for the year ended
January 1, 1994.
Pensions and Other Postretirement Benefits
Statement of Financial Accounting Standards ("SFAS") No. 87 requires that
a company record an additional minimum pension liability to the extent
that a company's accumulated pension benefit obligation exceeds the fair
value of pension plan assets and accrued pension liabilities. This
additional minimum pension liability is offset by an intangible asset, not
to exceed prior service costs of the pension plan. Amounts in excess of
prior service costs are reflected as a reduction in stockholders' equity.
Prior to 1993, the Company accounted for retiree health care and life
insurance benefits on a pay-as-you-go basis. Effective January 2, 1993,
the Company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." As more fully described in
Note 8, the Company has elected to amortize the impact of SFAS No. 106
ratably over 10.5 years.
Extraordinary Item
In connection with the refinancing as described in Note 5, the Company
recorded an extraordinary loss of $738,000 to write off deferred loan
costs related to the original senior revolving credit facility. This loss
is included as an extraordinary item in the accompanying statement of
operations for the year ended January 1, 1994.
Net (Loss) Income Per Share
Net (loss) income per share is based on the weighted average number of
shares of common stock outstanding during each fiscal year, which was
9,600 for the years ended December 30, 1995, December 31, 1994, and
January 1, 1994.
F-20
<PAGE>
Fair Value of Financial Instruments
The following notes summarize the major methods and assumptions used in
estimating the fair values of financial instruments:
Cash, Cash Equivalents, and Accounts Receivable
The carrying amount approximates fair value due to the short
maturity period of these instruments.
Investment
The fair value of the Company's investment in T. B. Wood's Sons
Company ("Woods") (375,000 shares and a note receivable) was
$14,800,000 at December 30, 1995 (Note 9). The fair value at December
31, 1994 was $14,100,000, which approximates the carrying amount.
Debt
The fair value of the Company's debt is estimated based on the
adjusted market prices for the same or similar issues or on the
current rates offered to the Company for debt of the same remaining
maturities.
At December 30, 1995, the senior subordinated notes were traded in the
open market at the following bid prices:
Bid Price
Per $100
Note
-----------
Issue:
13 7/8% $34
14% 34
The carrying amounts of the senior revolving credit facility and the
industrial development revenue bonds approximate fair value based on
current interest rates for similar financial instruments.
Accounting Pronouncements Not Yet Adopted
In March 1995, the Financial Accounting Standards Board issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of," which establishes accounting standards
for the impairment of long-lived assets, certain identifiable intangibles
and goodwill related to those assets to be held and used, as well as for
long-lived assets and certain identifiable intangibles to be disposed of.
The Company will be required to adopt the new standard in the first
quarter of 1996. Management has not yet determined the effect that the
adoption of the new standard will have on the consolidated financial
position or results of operations.
Reclassification
Certain prior year amounts have been reclassified to conform with the
current year presentation.
F-21
<PAGE>
3. INVENTORIES
The major categories of inventories are as follows (in thousands):
<TABLE>
<CAPTION>
December 30, December 31,
1995 1994
------------ ------------
<S> <C> <C>
Raw materials and supplies $ 11,708 $ 15,164
Work in progress 40,558 38,828
Finished goods 46,592 48,112
------------ ------------
Total at FIFO cost 98,858 102,104
Excess of FIFO cost over LIFO cost (18,673) (15,407)
------------ ------------
Total at FIFO cost $ 80,185 $ 86,697
============ ============
</TABLE>
Substantially all inventories are pledged as collateral under the senior
revolving credit facility (Note 5).
4. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
December 30, December 31,
1995 1994
--------------- ---------------
<S> <C> <C>
Machinery and equipment $119,721 $116,910
Land, buildings, and improvements 43,922 42,119
--------------- ---------------
163,643 159,029
Less accumulated depreciation 86,229 74,005
--------------- ---------------
$ 77,414 $ 85,024
=============== ===============
</TABLE>
Substantially all property, plant, and equipment are pledged as collateral
under the senior revolving credit facility (Note 5).
F-22
<PAGE>
5. LONG-TERM DEBT
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
December 30, December 31,
1995 1994
------------ ------------
<S> <C> <C>
14% senior subordinated notes $127,004 $127,004
13 7/8% senior subordinated notes, net
of unamortized discount of $62 and $81
at December 30, 1995 and December 31,
1994, respectively 32,761 32,742
Payable under senior revolving credit
facility 37,563 36,656
Industrial development revenue bonds,
variable rate interest 11,000 11,000
Other 643 726
----------- -----------
208,971 208,128
Less current maturities 208,971 197,128
----------- -----------
$ 0 $ 11,000
=========== ===========
</TABLE>
During 1995, the Company defaulted on interest payments due on its 14% and
13 7/8% subordinated notes and was in default of certain loan covenants
under its financing arrangements as of December 30, 1995 and December 31,
1994. These defaults give the lenders the right to accelerate the due
dates. Accordingly, all debt has been classified as current in the
accompanying balance sheet as of December 30, 1995. (See Note 1 regarding
a refinancing on September 27, 1996).
Senior Subordinated Notes
The 14% senior subordinated notes were sold in October 1989 (the "1989
Notes") in an underwritten public offering and are redeemable at the
option of the Company, in whole or in part, after October 1, 1994, at a
premium of 104%. The redemption price decreases on October 1, 1995 and
1996 to 102% and 100%, respectively. The 1989 Notes are subordinated in
right of payment to all senior indebtedness of the Company, as defined,
which includes borrowings under the senior revolving credit facility
discussed below.
The 13 7/8% senior subordinated notes were sold in August 1987 ("1987
Notes") in an underwritten public offering and are redeemable at the
option of the Company, in whole or in part. At December 30, 1995, the
redemption price, which decreases annually on August 1 of each year
through 1998 to 100%, was 103%. The 1987 Notes are subordinated in right
of payment to all senior indebtedness of the Company, as defined, which
includes borrowings under the senior revolving credit facility discussed
below.
On July 25, 1990, the Company issued $27,004,000 aggregate principal
amount of its 1989 Notes in exchange for $27,177,000 aggregate principal
amount of the 1987 Notes pursuant to an exchange offer for all of the
outstanding 1987 Notes. In connection with the exchange, the Company
fulfilled approximately 66% of its mandatory redemption payments related
to the 1987 Notes. As such, the Company is subject to remaining mandatory
redemption payments related to the 1987 Notes through two annual sinking
fund payments of $423,000 and $13,800,000 on August 1, 1997
F-23
<PAGE>
and 1998, respectively. These payments, plus the exchange of $27,177,000
aggregate principal amount of 1987 Notes, are calculated to retire 69% of
the issue prior to maturity.
The Company is subject to certain covenants under the terms of the 1989
Notes and the 1987 Notes, including restrictions as to payments of
dividends and other payments, as defined, as well as limitations on
additional indebtedness. As discussed in Note 1, the Company has defaulted
on interest payments due on its 14% and 13 7/8% subordinated notes and is
currently in default, and was in default, as of December 30, 1995 of
certain loan covenants under the terms of the 1989 Notes and the 1987
Notes.
Senior Revolving Credit Facility
On August 13, 1993, the Company refinanced its senior revolving credit
facility (the "Refinancing"). The Refinancing was comprised of two parts.
First, the Company entered into a new credit agreement (the "Credit
Agreement") with its existing senior lenders providing for a three-year
revolving credit facility (the "Credit Facility"). Under the Credit
Facility, the Company may borrow up to an aggregate of $45,000,000 for
working capital purposes (up to $20,000,000 of which may be issued as
letters of credit).
Under the Credit Agreement, the Company granted its senior lenders a first
priority security interest in substantially all of the Company's assets
including real property, equipment, inventory, accounts receivable not
transferred pursuant to the trade receivables transaction discussed below,
personal property, and intangible assets. The Credit Agreement contains
numerous restrictive financial and other covenants, including, among other
things, restrictions on the incurrence of additional indebtedness, sale of
assets, creation of liens, and the making of investments; restrictions on
mergers, acquisitions, and transactions with affiliates; restrictions on
distributions and dividends to the Company's stockholders; restrictions on
redemption, prepayment, and repurchases with respect to other debt;
restrictions on capital expenditures; and certain financial tests,
including maintaining certain levels of the Company's income, current
ratio, and fixed charge and interest coverage ratios, as defined. Under
the Credit Agreement, the Company is prohibited from paying any dividends
without the consent of the lending banks, except for dividends to the
Company's stockholders to enable them to pay all applicable income taxes
attributable to them as a result of the election of the Company to be
treated as an S corporation (Note 7).
On July 25, 1994, the Company and its senior lenders amended the Credit
Agreement, effective July 2, 1994. Among other things, the amendment (i)
increased the amount the Company may borrow under the Credit Facility from
$45,000,000 to $60,000,000 subject to certain specified borrowing base
requirements and increased the amount which may be issued as letters of
credit from $20,000,000 to $25,000,000, which amount is subject to
permanent reduction in the event of certain mandatory prepayments, (ii)
shortened the term of the Credit Agreement to January 1, 1996, (iii)
further restricted the amounts of certain restricted junior payments, as
defined, payable under certain circumstances, (iv) revised certain of the
financial tests contained in the restrictive covenants to levels that
better reflect the Company's recent operating results, and (v) added an
additional financial covenant requiring the Company to meet a minimum cash
flow test. The Credit Facility was reduced to $55,000,000 on December 15,
1994, as stated in the amendment. In consideration of the execution and
delivery of the amendment, the Company paid a $1,000,000 fee to its senior
lender. This amount was fully amortized during 1995.
The Credit Agreement also contains certain subjective covenants relating
to any material adverse change in the financial or other conditions of the
Company. As discussed in Note 1, the Company is currently in default of
certain loan covenants under the Credit Agreement.
As the second part of the Refinancing, the Company sold its trade accounts
receivable, exclusive of certain international and miscellaneous
receivables (collectively, the "Receivables"), to BF Funding, with
recourse, for a cash purchase price of $50,000,000 (the "Trade Receivables
Transaction"). BF Funding transferred the Receivables to a trust in
accordance with terms of an agreement (the "Pooling and Servicing
Agreement") dated August 13, 1993 among BF Funding, the Company, and a
financial institution, as Trustee thereunder, in exchange for trust
certificates, and the trust certificates were sold to investors. The
proceeds from the sale were used to pay the Company for the
F-24
<PAGE>
Receivables purchased by BF Funding. During the term of the Trade
Receivables Transaction (57 months), the cash generated by the receivables
will be used to make payments to the investors and/or to purchase
additional receivables originated by the Company. Payments made to
investors are based on a floating rate indexed to the London InterBank
Offering Rate ("LIBOR"), and such payments are included in the
accompanying statements of operations in other, net. Under the terms of
the Pooling and Servicing Agreement, the Company acts as servicer (as
defined therein) for the receivables.
One of the early amortization events contemplated in the Pooling and
Servicing Agreement relates to the occurrence of an insolvency event with
respect to the Company, as servicer in the Trade Receivables Transaction.
Insolvency event is defined in the Pooling and Servicing Agreement as the
failure by a person to generally pay its debts as such debts become due.
On July 5, 1996, the Company repurchased the accounts receivable from BF
Funding for par plus accrued interest in the total amount of approximately
$50,155,000. The repurchase was financed with proceeds from the Company's
senior lenders under its revolving credit facility.
The interest rates on borrowings under the Credit Agreement are at the
base rate, as defined, plus 2%, or at the Eurodollar rate, as defined,
plus 4.25%, as selected by the Company. At December 30, 1995 and December
31, 1994, the interest rate on outstanding borrowings was 10.5% per annum.
The annual interest rate will be reduced by up to a maximum of one-half of
1% if certain financial performance requirements in the Credit Agreement
are met. In addition, the Company pays monthly a facility fee of one-half
of 1% per annum of the average daily unused portion of the facility and a
letter of credit fee of 2.75% per annum of the average undrawn face amount
of each outstanding letter of credit.
Industrial Development Revenue Bonds
Industrial development revenue bonds were issued and sold to refinance the
purchase of certain plants from Westpoint Stevens Inc. These bonds are
backed by letters of credit issued under the Credit Facility in the amount
of approximately $11,141,000. These bonds mature in December 2003 and
October 2004. No amortization is required as the entire principal amount
is due at maturity. Interest on the bonds is at a floating rate, which is
reset weekly. At December 30, 1995 and December 31, 1994, interest rates
on the bonds were 5.4% and 5.65%, respectively. The Company is subject to
certain covenants with respect to these bonds, primarily to maintain their
tax-exempt status.
In January 1996, the Company closed the plants that were purchased in
connection with the issuance of the industrial development revenue bonds.
This financing agreement states that the loan payments are subject to
mandatory prepayment upon a cessation of operation. The bond indenture
determines that a cessation of operation shall not be deemed to have
occurred until 60 days shall have elapsed after written notice has been
given to the Company, as borrower, the bank, and the trustee by the issuer
that operation of the project, as defined, shall have ceased. The Company
has not yet received such notice.
6. STOCKHOLDERS' DEFICIT
As a result of Bibb's merger into NTC Holdings in a reorganization on
March 31, 1989 (the "Reorganization"), Bibb's outstanding capital stock
was canceled and NTC Holdings' 9,600 shares of issued and outstanding $.10
par value common stock became the outstanding capital stock of the
Company.
Pursuant to stockholders' agreements, which were entered into in
connection with the Reorganization, the controlling stockholder and the
Company have the right of first and second refusal, respectively, in the
event a minority stockholder wishes to sell any of his or her shares of
common stock to a third party. In addition, during the term of the
agreements, (a) the controlling stockholder may purchase all the shares of
the minority stockholders, (b) the controlling stockholder may not sell
his shares of common stock unless the minority stockholders are given the
right to participate
F-25
<PAGE>
in any such transaction on identical terms, and (c) the minority
stockholders have been granted certain registration rights for
certain future offerings by the Company of its common stock.
7. INCOME TAXES
In June 1989, the stockholders of the Company filed elections with the
Internal Revenue Service and certain state taxing authorities to be
treated as an S corporation beginning April 2, 1989. As an S corporation,
the Company generally will not be subject to corporate level taxes on its
net income because such income will be attributed to the Company's
stockholders and taxes on such income will be directly payable by them. As
a result, the Company generally intends to make quarterly distributions to
its stockholders in amounts equal to such taxes estimated to be payable by
them. Subsequent to the S corporation election, the Company remains
subject to state and local income taxes in certain states and
municipalities.
As a result of the S corporation election, the Company may be subject to
additional taxes based on the net difference in the tax basis and fair
market value of the Company's assets on the effective date of the S
corporation election, if such assets are sold or inventories liquidated by
the Company within ten years of the date of the S corporation election.
The Company currently does not anticipate any asset sales or inventory
liquidations which would result in material additional taxes.
Effective January 3, 1993, the Company adopted SFAS No. 109, "Accounting
for Income Taxes," which requires the use of the liability method in
accounting for income taxes. Under SFAS No. 109, deferred tax assets and
liabilities are determined based on the difference between the financial
reporting and tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse.
The effect of adopting SFAS No. 109 was not material to the Company's
financial position or the results of its operations. The financial
accounting basis was exceeded by the income tax basis of the Company's
assets and liabilities by approximately $24,300,000 and $19,800,000 as of
December 30, 1995 and December 31, 1994, respectively.
8. BENEFIT PLANS
In November 1990, the Company entered into stock option agreements (the
"1990 Options") with certain key employees ("Optionees"), whereby the
Company granted the Optionees options to purchase 624.7 shares of the
Company's common stock with exercise prices ranging from approximately
$115 per share to $10,417 per share. The majority of the options became
exercisable beginning in October 1992 and were exercisable until one year
thereafter. During 1993, the board of directors elected to extend the
exercise period of the 1990 Options to October 25, 2003. In addition, the
$10,417 exercise price was lowered to $7,812.50. The remaining options are
exercisable beginning in May 1997 and until one year thereafter. All stock
options under the agreements vest beginning at 30% after the second
anniversary of the measuring date, as defined in each agreement, and
ratably at 15% per annum through the sixth anniversary and 10% on the
seventh anniversary. During 1994, the Company granted to certain other
employees options to purchase 90 shares of the Company's common stock.
These options are exercisable for a one-year period commencing on the
seventh anniversary of the measuring date, as defined in each agreement.
In November 1990, the Company adopted a dividend participation plan for
the same executives who were granted the stock options at that time.
Under the terms of the plan, if a dividend, other than a stock or tax
dividend, is paid to stockholders of the Company, a compensating amount is
earned by the participants equal to the dividend per share amount.
Amounts earned up to a base amount, as defined in the agreement, are
credited to the participants' accounts and paid only when the participants
exercise the stock options. Any amounts earned which exceed the base
amount are paid to the participants as earned concurrent with the payment
of dividends to the Company's stockholders. Under this plan, the Company
records compensation expense when the dividends are earned. There was no
compensation expense recorded under this plan in 1995, 1994, or 1993.
F-26
<PAGE>
The Company maintains an incentive compensation plan for its salaried
employees, which provides for incentive awards based on certain levels of
earnings. The amounts awarded under the plan and charged to expense in
the accompanying statements of operations were $0, $150,000, and
$2,150,000 for the years ended December 30, 1995, December 31, 1994, and
January 1, 1994, respectively.
The Company maintains a separate defined contribution 401(k) profit-
sharing plan covering substantially all hourly and salaried employees.
Under this plan, the Company contributes a specified percentage of each
eligible employee's contributions. Amounts contributed under the plan were
$786,000, $874,000, and $814,000 for the years ended December 30, 1995,
December 31, 1994 and January 1, 1994, respectively.
The Company also maintains an executive deferred compensation plan under
which eligible executives may elect to defer up to 50% of their
compensation. Amounts deferred are paid to the executives or their
beneficiaries following retirement, termination, or death. A liability for
amounts deferred under this plan of approximately $2,768,835 and
$3,424,000 at December 30, 1995 and December 31, 1994, respectively, is
included in accrued payroll and other compensation in the accompanying
balance sheets.
Postretirement Benefits
The Company provides reduced life insurance benefits to retired employees
who were employed prior to January 1, 1974. On January 3, 1993, the
Company adopted SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." This standard requires that the expected
cost of these benefits be charged to expense during the years that the
employees render service. This was a change from the Company's prior
policy of recognizing postretirement benefits on a cash basis. Based on
actuarial estimates, using currently available data, the postretirement
benefit obligation at January 3, 1993, measured in accordance with SFAS
No. 106, was approximately $2,400,000. The Company elected to amortize the
obligation over a 10.5 year period, the average remaining life expectancy
of the participants, beginning January 3, 1993.
The net periodic postretirement benefit cost includes the following
components for the years ended December 30, 1995 and December 31, 1994,
respectively (in thousands):
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Interest cost on accumulated
postretirement benefit obligation
$146 $165
Amortization of transition benefit 229 229
------ ------
$375 $394
====== ======
</TABLE>
The accumulated postretirement benefit obligation was determined using a
discount rate of 8%.
Pension Plan
The Company maintains a noncontributory defined benefit pension plan
covering substantially all of its hourly and salaried employees. The
benefits under the plan are based on years of service and compensation
during the period in which the employees participate in the plan. The
Company's funding policy is to contribute an amount based on actuarially
determined values required to sustain the plan on a sound financial basis.
F-27
<PAGE>
The net periodic pension cost consisted of the following components (in
thousands):
<TABLE>
<CAPTION>
December 30, December 31, January 1,
1995 1994 1994
-------------- ------------- ------------
<S> <C> <C> <C>
Service cost--benefits earned
during the period $1,358 $1,629 $1,162
Actual (return) loss on plan
assets (423) 132 (180)
Interest cost on projected
benefit obligation 419 311 172
Net amortization and deferral 73 (316) 48
-------------- ------------- ------------
Net periodic pension cost $1,427 $1,756 $1,202
============== ============= ============
</TABLE>
The following table sets forth the plan's funded status and amounts
recognized in the Company's balance sheets (in thousands):
<TABLE>
<CAPTION>
December 30, December 31,
1995 1994
-------------- --------------
<S> <C> <C>
Accrued pension cost:
Accumulated and projected benefit
obligation, including vested
benefits of $5,754 and $4,142
for 1995 and 1994, respectively $ 6,937 $ 4,690
Less plan assets at fair value (5,497) (3,918)
-------------- --------------
Projected benefit obligation in
excess of plan assets 1,440 772
Unrecognized net loss (950) (39)
Unrecognized net transition
obligation at adoption date of
plan, being recognized over 15
years, included in other assets (4) (4)
Unrecognized prior service cost,
being recognized over 15 years,
included in other assets (155) (178)
Adjustment required to recognize
minimum liability 1,109 221
-------------- --------------
Accrued pension liability $1,440 $ 772
============== ==============
</TABLE>
The weighted average discount rate used in determining the actuarial
present value of the projected benefit obligation in 1995 and 1994 was
8.25% and 9%, respectively. The decrease in the discount rate in 1995
resulted in a $741,329 increase in the accumulated benefit obligation.
The expected long-term rate of return on assets used in 1995 and 1994
was 9%.
9. TRANSACTIONS WITH AFFILIATES
On April 2, 1993, Woods acquired new product lines and completed a
recapitalization. In settlement of amounts owed on a note payable to the
Company (the "Woods Note"), the Company received a cash payment of
$5,560,000, two new notes, and a warrant exercisable by the Company to
purchase up to 375,000 shares of common stock of Woods at an exercise
price of $.003 per share. The new notes received consisted of (i) a ten-
year, $13,218,000 subordinated promissory note, with semiannual interest
payments of $576,000 commencing on the third anniversary of the date of
the note, and a final payment of principal and interest due at maturity,
and (ii) a ten-year, $2,000,000 noninterest-bearing subordinated
promissory note. The $2,000,000 note was paid in full on August 26, 1994.
The carrying value of the $13,218,000 subordinated promissory note plus
accrued interest has been calculated by discounting future cash flows at
8.5%. The Company believes that the consideration received from Woods
approximated the fair value resulting from an arms length transaction.
F-28
<PAGE>
In December 1993, the Company exercised its warrants to purchase 375,000
shares of Woods common stock. The investment in Woods is being accounted
for under the cost method. During the first quarter of 1996, the Company
sold all 375,000 shares of common stock as part of Woods' initial public
offering. As a result of the sale, the Company received net proceeds of
approximately $4,200,000.
On July 18, 1996, Woods prepaid the subordinated promissory note and all
accrued interest through that date. The Company received approximately
$10,600,000 in consideration for the subordinated promissory note and
recorded a loss of $5,015,000.
Pursuant to a management services agreement dated April 1, 1989, the NTC
Group, Inc. ("NTC") provides certain management, corporate development,
and financial consulting services to the Company. The management services
agreement provides that NTC shall receive a management fee equal to the
lesser of 2% of the Company's average equity book value plus interest-
bearing debt, as defined, or $4,000,000. The Company incurred expense of
$3,368,000, $4,000,000 and $4,000,000 in 1995, 1994, and 1993,
respectively, which is shown as management fees to affiliate in the
accompanying consolidated statement of operations.
10. SIGNIFICANT CUSTOMERS
The Company's ten largest customers accounted for approximately 38% of
net sales in 1995, 1994, and 1993. Of these, one customer accounted for
approximately 11.5% and 10.5% of net sales in 1995 and 1994, respectively.
11. COMMITMENTS AND CONTINGENCIES
Litigation
The Company is subject to certain legal actions arising in the ordinary
course of its business. In management's opinion, the outcome of these
actions will not have a material adverse effect on the Company's financial
position or results of operations.
Leases
The Company leases office space, office equipment, and other items under
noncancelable operating leases. Rental expense under these noncancelable
operating leases was approximately $9,407,000, $9,344,000, and $8,190,000
for the years ended December 30, 1995, December 31, 1994, and January 1,
1994, respectively.
At December 30, 1995, future minimum lease payments under noncancelable
operating leases are as follows (in thousands):
<TABLE>
<S> <C>
1996 $ 7,849
1997 6,753
1998 4,760
1999 3,343
Thereafter 1,884
---------
$24,589
=========
</TABLE>
Other
At December 30, 1995, the Company had contractual commitments in the
ordinary course of business to purchase approximately $15,033,000 of
inventory, with delivery dates through December 1996.
F-29
<PAGE>
The Company had contractual commitments to make minimum guaranteed
payments under various product licensing agreements expiring through
December 31, 1998 of approximately $6,627,000. These commitments are
not expected to result in future losses.
During 1991, the Company entered into a cogeneration energy supply
agreement with an unrelated party wherein the Company has committed to
purchase all steam and chilled water consumed at the Roanoke Group plants
at prices as defined in the agreement, for a period of 25 years.
F-30
<PAGE>
THE BIBB COMPANY AND SUBSIDIARY
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 30, 1995, December 31, 1994
and January 1, 1994
(In Thousands)
<TABLE>
<CAPTION>
Additions
-----------------------------
Balance at Charged to Charged to Balance
beginning costs and other at end
Description of year expenses accounts Deductions of year
- -------------------------------- ------------- ------------ ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Year ended December 30, 1995
Allowance for doubtful accounts $2,963 $357 - - $3,320
======== ======= ======== ======== ========
Allowance for discounts and claims $1,704 - $8,387 ($8,277) $1,814
======== ======= ======== ======== ========
Year ended December 31, 1994
Allowance for doubtful accounts $2,166 $ 797 - - $2,963
======== ======= ======== ======== ========
Allowance for discounts and claims $1,520 - $8,225 ($8,041) $1,704
======== ======= ======== ======== ========
Year ended January 1, 1994
Allowance for doubtful accounts $1,718 $448 - - $2,166
======== ======= ======== ======== ========
Allowance for discounts and claims $783 - $7,676 ($6,939) $1,520
======== ======= ======== ======== ========
</TABLE>
F-31
<PAGE>
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re ) Chapter 11
)
THE BIBB COMPANY, ) Case No. 96 -
)
Debtor. )
PLAN OF REORGANIZATION
OF
THE BIBB COMPANY
----------------
JULY 3, 1996
KAYE, SCHOLER, FIERMAN, YOUNG, CONAWAY, STARGATT
HAYS & HANDLER, LLP & TAYLOR
Co-Counsel for the Debtor Co-Counsel for the Debtor
425 Park Avenue 11th Floor - Rodney Square North
New York, New York 10022 P.O. Box 391
Wilmington, Delaware 19899-0391
DECHERT PRICE & RHOADS
Corporate Counsel for the Debtor
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103-2793
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I. DEFINITIONS............................... A-3
ARTICLE II. ADMINISTRATIVE EXPENSE CLAIMS
AND PRIORITY TAX CLAIMS................... A-11
ARTICLE III. CLASSIFICATION............................ A-11
ARTICLE IV. TREATMENT OF UNIMPAIRED CLASSES................. A-12
ARTICLE V. TREATMENT OF IMPAIRED CLASSES............. A-14
ARTICLE VI. NO BAR DATE; DISPUTED CLAIMS; OBJECTIONS
TO CLAIMS................................. A-15
ARTICLE VII. IMPLEMENTATION OF THE PLAN................ A-16
ARTICLE VIII. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.. A-21
ARTICLE IX. CONDITIONS PRECEDENT............................ A-22
ARTICLE X. MODIFICATION, REVOCATION OR WITHDRAWAL
OF THE PLAN............................... A-23
ARTICLE XI. RETENTION OF JURISDICTION....................... A-24
ARTICLE XII. MISCELLANEOUS PROVISIONS.................. A-26
</TABLE>
EXHIBITS
- --------
Exhibit A New Credit Agreements
Exhibit B Form of New By-Laws
Exhibit C Form of New Certificate of Incorporation
Exhibit D Restructuring Agreement
EXHIBITS TO THE PLAN ARE AVAILABLE UPON WRITTEN REQUEST TO
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP, 425 PARK AVENUE,
NEW YORK, NEW YORK 10022, ATTN: HOWARD A. BECKER, ESQ.
A-2
<PAGE>
The Bibb Company, debtor and debtor-in-possession, proposes this
plan of reorganization pursuant to section 1121(a) of title 11 of the United
States Code:
ARTICLE I.
DEFINITIONS
Rules of Interpretation. As used herein, the following terms have the
respective meanings specified below, and such meanings shall be equally
applicable to both the singular and plural, and masculine and feminine, forms of
the terms defined. The words "herein," "hereof," "hereto," "hereunder" and
others of similar import refer to the Plan as a whole and not to any particular
section, subsection or clause contained in the Plan. Captions and headings to
articles, sections and exhibits are inserted for convenience of reference only
and are not intended to be part of or to affect the interpretation of the Plan.
The rules of construction set forth in section 102 of the Bankruptcy Code shall
apply. In computing any period of time prescribed or allowed by the Plan, the
provisions of Bankruptcy Rule 9006(a) shall apply. Any capitalized term used
herein that is not defined herein but is defined in the Bankruptcy Code shall
have the meaning ascribed to such term in the Bankruptcy Code. In addition to
such other terms as are defined in other sections of the Plan, the following
terms (which appear in the Plan as capitalized terms) have the following
meanings as used in the Plan.
I.1. "Administrative Expense Claim" means any Claim (including,
without limitation, any Claim arising under the DIP Facility or the Cash
Collateral Order, any Professional Fee Claim, and any Post-Restructuring
Management Claim which arose after the Petition Date) entitled to the priority
afforded by sections 503(b) and 507(a)(1) of the Bankruptcy Code.
I.2. "Allowed" means, with respect to any Claim, proof of which has
been properly Filed or, if no proof of claim was so Filed, which was or
hereafter is listed on the Schedules as liquidated in amount and not disputed or
contingent, and, in either case, a Claim as to which no objection to the
allowance thereof, or motion to estimate for purposes of allowance, shall have
been Filed on or before any applicable period of limitation that may be fixed by
the Bankruptcy Code, the Bankruptcy Rules and/or the Bankruptcy Court, or as to
which any objection, or any motion to estimate for purposes of allowance, shall
have been so Filed, to the extent allowed by a Final Order, provided that all
Class 7 Claims (excluding any Claims arising pursuant to Article VIII of the
Plan) shall be treated for all purposes as if the Chapter 11 Case was not filed,
and the determination of whether any such Claim shall be allowed and/or the
amount thereof (which shall not be listed on the Schedules, and as to which no
proof of Claim need be Filed) shall be determined, resolved or adjudicated, as
the case may be, in the manner in which such Claim would have been determined,
resolved or adjudicated if the Chapter 11 Case had not been commenced.
I.3. "Ballot Agent" means the agent to be selected who will receive,
tabulate and certify ballots cast in connection with Plan, which agent may
include an officer of the Company.
I.4. "Ballot Record Date" means June 4, 1996.
I.5. "Ballot Return Date" means 5:00 p.m., Eastern Daylight Time, on
June 28, 1996,
A-3
<PAGE>
unless and to the extent such date is reduced or extended by the Debtor in
accordance with the provisions of the Disclosure Statement.
I.6. "Ballots" mean the ballots and/or master ballots distributed to
the holders of Old Subordinated Notes and Old Equity Interests for the purposes
of voting on the Plan.
I.7. "Bank Claims" mean either (i) all Claims of the New Banks
arising under or relating to the New Pre-Petition Facility, or, if the New Pre-
Petition Facility is not entered into, (ii) all Claims of the Banks against the
Debtor arising under or relating to the Old Credit Agreement, including all
Claims thereunder for fees and expenses of the Pre-Petition Bank Agent. For
purposes of the Plan, the Allowed Bank Claims are deemed to be fully secured.
I.8. "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended from time to time, set forth in sections 101 et seq. of title 11 of the
United States Code.
I.9. "Bankruptcy Court" means the United States Bankruptcy Court for
the District of Delaware, or such other court that exercises jurisdiction over
the Chapter 11 Case or any proceeding therein, including the United States
District Court for the District of Delaware to the extent that the reference of
the Chapter 11 Case or any proceeding therein is withdrawn.
I.10. "Bankruptcy Rules" mean, collectively, the Federal Rules of
Bankruptcy Procedure, as amended and promulgated under section 2075, title 28 of
the United States Code, and the local rules and standing orders of the
Bankruptcy Court.
I.11. "Banks" mean, as of any date, such financial institutions which
shall have become parties to the Old Credit Agreement and excluding such
institutions which were no longer parties to such agreement as of such date.
I.12. "Business Day" means a day other than a Saturday, Sunday or
"legal holiday" or other day on which banks in New York, New York are authorized
or required by law to be closed.
I.13. "Cash Collateral Order" means all order(s) of the Bankruptcy
Court, if any, authorizing the Debtor to use, subject to the terms and
provisions thereof, the Banks' cash collateral (as such term is defined in
section 363(a) of the Bankruptcy Code) and non-cash collateral.
I.14. "Chapter 11 Case" means the case under chapter 11 of the
Bankruptcy Code with respect to the Debtor, pending or to be pending in the
District of Delaware.
I.15. "Claim" means (a) any right to payment from the Debtor arising
before the Confirmation Date, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (b) any right to an
equitable remedy against the Debtor arising before the Confirmation Date for
breach of performance if such breach gives rise to a right of payment from the
Debtor, whether or not such right to an equitable remedy is reduced to judgment,
fixed,
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contingent, matured, unmatured, disputed, undisputed, secured or unsecured.
I.16. "Class" means one of the classes of Claims or Interests defined
in Article III hereof.
I.17. "Confirmation Date" means the date on which the Confirmation
Order is entered on the docket by the Clerk of the Bankruptcy Court.
I.18. "Confirmation Order" means the order of the Bankruptcy Court
confirming the Plan in accordance with the provisions of chapter 11 of the
Bankruptcy Code.
I.19. "Congress" means Congress Financial Corporation, individually
and, if applicable, as agent for the New Banks.
I.20. "Creditors' Committee" means the official committee of
unsecured creditors as may be appointed in the Chapter 11 Case by the United
States Trustee pursuant to section 1102 of the Bankruptcy Code as constituted by
the addition or removal of members from time to time.
I.21. "Debtor" means, unless the context otherwise requires, The Bibb
Company, the debtor in the Chapter 11 Case and, following the Effective Date,
Newco.
I.22. "DIP Facility" means the obligations of the Debtor under the
New Credit Agreements pursuant to section 364 of the Bankruptcy Code (other than
pursuant to the Cash Collateral Order), relating to borrowings made by the
Company during the Chapter 11 Case, together with the documents, agreements and
order(s) of the Bankruptcy Court authorizing and governing such obligations.
I.23. "Disclosure Statement" means the Debtor's Disclosure Statement,
dated June 10, 1996, as amended, modified, restated or supplemented from time to
time, pertaining to the Plan.
I.24. "Distribution Record Date" means the Petition Date.
I.25. "Effective Date" means the later to occur of (i) the first
Business Day which is eleven days after entry of the Confirmation Order, and
(ii) the date on which all of the conditions specified in Section 9.01 hereof
are first satisfied and/or waived in accordance with Article IX of the Plan.
I.26. "Employee Claim" means a Claim based on salaries, wages, sales
commissions, expense reimbursements, accrued vacation pay, health-related
benefits, incentive programs, employee compensation guarantees, severance or
similar employee benefits.
I.27. "Filed" means filed with the Bankruptcy Court in the Chapter 11
Case.
I.28. "Final Order" means an order or judgment entered on the docket
by the Clerk of the Bankruptcy Court or any other court exercising jurisdiction
over the subject matter and the parties (a) that has not been reversed, stayed,
modified or amended, (b) as to which no appeal,
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certiorari proceeding, reargument or other review or rehearing has been
requested or is still pending and (c) as to which the time for filing a notice
of or petition for certiorari, or request for reargument or further review or
rehearing shall have expired; provided, that the possibility that a motion under
Rule 59 or 60 of the Federal Rules of Civil Procedure, or any analogous Rule
under the Bankruptcy Rules, may be field with respect to such order or judgment
shall not cause such order or judgment not to be a Final Order.
I.29. "Foley" means Thomas C. Foley, the holder of a majority of the
Old Common Stock.
I.30. "Interest" means the rights of the owners of the issued and
outstanding shares of the Old Common Stock and the Old Options.
I.31. "IRBs" mean all Industrial Development Revenue Bonds to which
the Debtor is an obligor, including the $11,000,000 in original aggregate
principal amount of Industrial Development Revenue Bonds due 2003 and 2004,
respectively, relating to the Debtor's Richmond County, North Carolina and
Abbeyville, South Carolina plants.
I.32. "IRB Claims" mean the Claims against the Debtor evidenced by,
arising under or relating to the IRBs including, without limitation, any and all
Claims for the principal amount thereof or interest thereon, whether accrued or
unaccrued.
I.33. "Lien" means any mortgage, lien, pledge, charge, security
interest, encumbrance or other security device of any kind affecting any
asset(s) of the Debtor.
I.34. "Management Agreement" means the management services agreement,
dated as of April 1, 1989, as amended, between NTC and the Debtor.
I.35. "Management Agreement Claims" mean the Claims against the
Debtor evidenced by, arising under or relating to the Management Agreement other
than the Post-Restructuring Management Claims.
I.36. "New Banks" mean the banks and/or financial institutions which
from time to time are parties to any or all of the New Credit Agreements.
I.37. "New By-laws" mean the by-laws of Newco, substantially in the
form of Exhibit B hereto.
I.38. "New Certificate of Incorporation" means the post-Effective
Date certificate of incorporation of Newco, substantially in the form of Exhibit
C hereto, which shall, among other things, (a) authorize the issuance of 12.0
million shares of New Common Stock and (b) prohibit the issuance of non-voting
equity securities to the extent required by section 1123(a)(6) of the Bankruptcy
Code.
I.39. "Newco" means a Delaware corporation to be formed on or prior
to the Effective Date, into which the Debtor will be merged as of the Effective
Date and which will be the
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survivor in such Merger.
I.40. "New Common Stock" means the post-Effective Date common stock,
$0.01 par value per share, of the Debtor, authorized for issuance pursuant to
the New Certificate of Incorporation.
I.41. "New Credit Agreements" mean the Credit Agreement or Agreements
to be entered into, between the Debtor, as borrower and Congress (or such other
financial institutions as may provide pre-petition, debtor-in-possession and/or
post-confirmation financing to the Debtor), as lender, pursuant to which the
Debtor shall have, among other things, credit availability prior to, during, and
following the Chapter 11 Case agreed to by the Company and such lender and, on
substantially the terms set forth in Exhibit A hereto or such other terms as may
be agreed to by the Company and such lender and approved by the Bankruptcy
Court.
I.42. "New Pre-Petition Facility" means the obligations of the
Company arising under the New Credit Agreements relating to borrowings made by
the Company prior to the commencement of the Chapter 11 Case for purposes of
satisfying the obligations of the Banks under the Old Credit Agreement and
repurchasing the Receivables, together with the documents and agreements
governing such obligations.
I.43. "NTC" means The NTC Group, Inc., a Delaware corporation, and
any successor corporation thereto.
I.44. "Old Common Stock" means the pre-Effective Date common stock,
$.01 par value per share, of the Debtor.
I.45. "Old Credit Agreement" means the Credit Agreement, dated as of
August 4, 1993, as amended, modified, restated or supplemented from time to
time, between the Debtor, the Pre-Petition Bank Agent and the Banks, together
with any security and ancillary documents related thereto or entered into in
connection therewith.
I.46. "Old Equity Interests" mean the Old Common Stock and all
unexercised rights to acquire shares of Old Common Stock whether by way of
option or other legal or contractual right, including the Old Options.
I.47. "Old Indentures" mean the 14% Note Indenture and the 13.875%
Note Indenture.
I.48. "Old Options" mean all unexercised rights, as of the Petition
Date, to acquire Old Common Stock, including, without limitation, (a) all
options issued pursuant to the Old Stock Option Plans and (b) all rights to
receive or acquire such options.
I.49. "Old Stock Option Plans" mean (a) the Debtor's 1990 Non-
Qualified Stock Option Plan, as amended, modified, restated or supplemented from
time to time and (b) the Debtor's 1993 Non-Qualified Stock Option Plan, as
amended, modified, restated or supplemented from time to time.
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I.50. "Old Stockholders' Agreements" mean the Stockholders'
Agreements, dated as of March 31, 1989, as amended, modified, restated or
supplemented from time to time, by and among the Debtor, Foley and other holders
of the Old Common Stock.
I.51. "Old Subordinated Notes" mean, collectively, the 14% Senior
Subordinated Notes and the 13.875% Senior Subordinated Notes.
I.52. "Other Priority Claim" means any Claim for an amount entitled
to priority in right of payment under section 507(a) (3), (4), (5) or (6) of the
Bankruptcy Code.
I.53. "Petition Date" means the date on which the petition for relief
commencing the Chapter 11 Case was filed, which date is expected to be on or
about July 15, 1996. All calculations measured by the date of the filing have
assumed a July 15 filing date, and must be adjusted to the extent that the
Petition Date is prior or subsequent to July 15.
I.54. "Plan" means this plan of reorganization, as amended, modified,
restated or supplemented from time to time.
I.55. "Post-Confirmation Facility" means those obligations of the
Debtor arising under the New Credit Agreements relating to borrowings made by
the Company from and after the Effective Date, together with the documents and
agreements governing such obligations.
I.56. "Post-Restructuring Board" means the Board of Directors of the
Debtor as of the Effective Date, as provided in Section 7.11 hereof.
I.57. "Post-Restructuring Management Claim" means any Claim against
the Debtor evidenced by, arising under or relating to the Management Agreement
from and after the effective date of the Restructuring Agreement, as and to the
extent provided for therein.
I.58. "Pre-Petition Bank Agent" means Citicorp North America, Inc.,
as agent for the Banks under the Old Credit Agreement.
I.59. "Priority Tax Claim" means a Claim, other than an
Administrative Expense Claim, of a governmental unit of the kind entitled to
priority under section 507(a)(8) of the Bankruptcy Code.
I.60. "Professional Fee Claim" means a Claim of a professional
retained in the Chapter 11 case for compensation and reimbursement of expenses
as allowed by the Bankruptcy Court.
I.61. "Qualifying Offer" means an offer for the Debtor's Engineered
Products Division business (other than an offer made by Foley or any entity
owned or controlled by Foley) made and accepted in accordance with the terms and
conditions of Section 4.1 of the Restructuring Agreement. Unless a Qualifying
Offer is otherwise consummated prior to the Petition Date, the Debtor will seek
the approval of the Bankruptcy Court of the accepted Qualifying Offer
simultaneously with or prior to the date of the hearing to consider confirmation
of the Plan.
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I.62. "Receivables" means certain of the Debtor's receivables, sold
by the Debtor to BF Funding, L.P., a Delaware limited partnership, and
transferred to a trust pursuant to a Pooling and Servicing Agreement dated
August 13, 1993 among BF Funding, the Debtor and NationsBank of Virginia, N.A.,
as trustee.
I.63. "Restructuring Agreement" means the Restructuring Agreement
dated as of February 1, 1996, as amended, among the Debtor, NTC, Foley and the
individual members of the Steering Committee, a copy of which is annexed hereto
as Exhibit D.
I.64. "Ruling Request" means the private letter ruling request
attached as Exhibit B to the Restructuring Agreement, including any amendments
thereof or supplements thereto.
I.65. "Schedules" mean the schedules of assets and liabilities and
the statement of financial affairs Filed by the Debtor pursuant to section 521
of the Bankruptcy Code, as amended, modified, restated or supplemented from time
to time.
I.66. "Secured Claim" means any Claim against the Debtor held by any
person or entity, including, without limitation, an affiliate or judgment
creditor of the Debtor, to the extent such Claim is secured by a Lien, or
otherwise constitutes a secured Claim under sections 506(a) or 1111(b) of the
Bankruptcy Code.
I.67. "Steering Committee" means the unofficial committee of holders
of the Old Subordinated Notes, collectively holding as of the date hereof 59.9%
and 27.7% in aggregate outstanding principal amount of the 14% Senior
Subordinated Notes and 13.875% Senior Subordinated Notes, respectively, which
are signatories to the Restructuring Agreement and which participated in the
negotiation of the proposed terms of the Plan and the transactions contemplated
thereby, and whose members are (i) Franklin Custodian Fund, Income, (ii)
Franklin Value Mark Funds, Income Securities Fund, (iii) Merrill Lynch, Pierce,
Fenner & Smith Incorporated, (iv) Showa Leasing (U.S.A.) Inc., (v) Romulus
Holdings, Inc., (vi) Brad and Beth Singer Children's Trust, (vii) Gary and Karen
Singer Children's Trust, (viii) Steven G. Singer Children's Trust, and (ix)
Second Singer Trust .
I.68. "Subsidiary" of an entity means any corporation, limited
liability company, general or limited partnership, or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned or controlled by such entity, one
or more of the other subsidiaries of such entity or any combination thereof.
I.69. "Trade Claim" means any Claim of any entity against the Debtor
for goods provided and/or services rendered in the ordinary course by such
entity to the Debtor.
I.70. "13.875% Note Indenture" means the Indenture, dated as of
August 1, 1987 with Chemical Bank (formerly Manufacturers Hanover Trust
Company), as trustee thereunder, with respect to the 13.875% Senior Subordinated
Notes.
I.71. "13.875% Senior Subordinated Note Claims" mean the Claims
against the Debtor
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evidenced by, arising under or relating to the 13.875% Senior Subordinated Notes
and/or the 13.875% Note Indenture, including, without limitation, any and all
Claims for the principal amount thereof or interest thereon, whether accrued or
unaccrued, penalty or otherwise, and any claims or causes of action relating
thereto or arising thereunder, whether assertible against the Debtor or any
other person or entity.
I.72. "13.875% Senior Subordinated Notes" means the $60,000,000 in
original aggregate principal amount of 13.875% Senior Subordinated Notes due
1999, issued pursuant to the 13.875% Note Indenture, for which the Debtor is the
obligor.
I.73. "14% Note Indenture" means the Indenture, dated as of October
1, 1989, as amended, between the Debtor and NationsBank of Georgia, N.A., as
successor in interest to The Citizens and Southern National Bank, as trustee
thereunder, with respect to the 14% Senior Subordinated Notes.
I.74. "14% Senior Subordinated Note Claims" means the Claims against
the Debtor evidenced by, arising under or relating to the 14% Senior
Subordinated Notes and/or the 14% Note Indenture, including, without limitation,
any and all Claims for the principal amount thereof or interest thereon, whether
accrued or unaccrued, penalty or otherwise, and any claims or causes of action
relating thereto or arising thereunder, whether assertible against the Debtor or
any other person or entity.
I.75. "14% Senior Subordinated Notes" means the $100,000,000 in
original aggregate principal amount of the Debtor's issued and outstanding 14%
Senior Subordinated Notes due 1999, issued pursuant to the 14% Note Indenture.
ARTICLE II.
ADMINISTRATIVE EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
II.1. Administrative Expense Claims and Priority Tax Claims. Each
holder of an Allowed Administrative Expense Claim and each holder of an Allowed
Priority Tax Claim shall be paid in full in cash on the later of (a) the
Effective Date and (b) the date on which such Claim becomes Allowed, unless such
holder shall agree to a different treatment of such Claim (including, without
limitation, any different treatment that may be provided for in any
documentation, statute or regulation governing such Claim); provided, however,
that Trade Claims, Employee Claims and Post-Restructuring Management Claims that
arise during the Chapter 11 Case shall be paid by the Debtor in the ordinary
course of business and in accordance with any terms and conditions of the
particular transaction, and any agreements relating thereto and Professional Fee
Claims shall be paid only after they are Allowed by the Bankruptcy Court in
connection with an application for allowance of compensation and reimbursement
of expenses pursuant to sections 330 or 331 of the Bankruptcy Code.
Notwithstanding the foregoing, any Administrative Expense Claim based on an
obligation of the Debtor which becomes due and payable in accordance with the
terms of the underlying agreement during the Chapter 11 Case may be paid by the
Debtor at the time such obligation becomes due and payable; provided, further,
that, in accordance with section 1129(a)(9)(C), holders of Allowed Priority Tax
Claims may be paid, at the sole option of the Debtor, through deferred cash
payments, over a period not exceeding six (6) years from the date
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of the assessment of the underlying tax obligation, together with interest at a
rate of six (6%) percent per year (or such other interest rate as the Bankruptcy
Court may direct).
ARTICLE III.
CLASSIFICATION
For purposes of the Plan, Claims and Interests are classified as
provided below. A Claim or Interest is classified in a particular Class only to
the extent that such Claim or Interest qualifies within the description of such
Class and is classified in a different Class to the extent that such Claim or
Interest qualifies within the description of such different Class.
III.1. Class 1: Other Priority Claims. Class 1 consists of all
Other Priority Claims.
III.2. Class 2: Miscellaneous Secured Claims. Class 2 consists of
all Secured Claims which are not otherwise classified pursuant hereto,
including, without limitation, mortgages secured by real property, but excluding
the Bank Claims and the IRB Claims.
III.3. Class 3: Bank Claims. Class 3 consists of all Bank Claims.
III.4. Class 4: IRB Claims. Class 4 consists of all IRB Claims.
III.5. Class 5: Post-Restructuring Management Claims. Class 5
consists of all unpaid Post-Restructuring Management Claims which arose prior to
the Petition Date.
III.6. Class 6: Old Subordinated Note Claims. Class 6 consists of
all 13.875% Senior Subordinated Note Claims and 14% Senior Subordinated Note
Claims.
III.7. Class 7: General Unsecured Claims. Class 7 consists of all
unsecured claims which are not otherwise classified pursuant hereto, including,
without limitation, Employee Claims and Trade Claims and Claims, if any, arising
from the rejection by the Debtor of Executory Contracts in accordance with
Section 365 of the Bankruptcy Code or pursuant to the Plan, but excluding
unsecured claims that are otherwise classified hereby.
III.8. Class 8: Old Equity Interests. Class 8 consists of all Old
Equity Interests.
ARTICLE IV.
TREATMENT OF UNIMPAIRED CLASSES
IV.1. Class 1 (Other Priority Claims). Each holder of an Allowed
Class 1 Claim shall be paid in full in cash the amount of its Allowed Class 1
Claim on the later of (a) the Effective Date and (b) the date on which such
Claim becomes Allowed, unless such holder and the Debtor shall agree to a
different treatment of such Claim (including, without limitation, any different
treatment that may be provided for in any documentation governing such Claim).
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IV.2. Class 2 (Miscellaneous Secured Claims). With respect to each
Allowed Class 2 Claim, unless the holder thereof and the Debtor shall agree to a
different treatment of such Claim, such holder shall receive one of the
following alternative treatments, at the election of the Debtor made on or prior
to the Effective Date:
(a) The legal, equitable and contractual rights to which such
Claim entitles the holder thereof shall be unaltered by the Plan;
(b) Such Claim shall receive the treatment described in section
1124(2) of the Bankruptcy Code; or
(c) All collateral securing such Claim shall be transferred and
surrendered to such holder, without representation or warranty by or
recourse against the Debtor.
With respect to any Claim which receives the treatment described in
clause "a" or "b" above, the Debtor's failure to object to such Claim in the
Chapter 11 Case shall be without prejudice to the Debtor's right to contest or
otherwise defend against such Claim in an applicable nonbankruptcy forum when
and if such Claim is sought to be enforced by the holder thereof after the
Effective Date. With respect to any Claim which receives the treatment described
in clause "c" above, upon receipt of such property, all Liens held by or inuring
to the benefit of the holder thereof shall be deemed released, discharged and
extinguished, and any deficiency claim (i.e., the amount by which the Debtor's
obligation to such holder exceeds the value of the collateral securing such
Claim) shall be treated as a Class 7 Claim.
IV.3. Class 3 (Bank Claims). With respect to each Allowed Class 3
Claim, unless the holder thereof and the Debtor shall agree to a different
treatment of such Claim, such holder shall receive one of the following
alternative treatments, at the election of the Debtor made on or prior to the
Effective Date:
(a) The legal, equitable and contractual rights to which such
Claim entitles such holder shall be unaltered by the Plan;
(b) Such Claim shall receive the treatment described in section
1124(2) of the Bankruptcy Code; or
(c) upon the entry of an order approving the DIP Facility and
authorizing the Debtor to borrow sufficient funds thereunder to satisfy in full
the Bank Claims, each a holder of an Allowed Class 3 Claim shall be paid in full
in cash the amount of its Allowed Class 3 Claim (other than that portion of any
Bank Claim arising under an outstanding letter of credit, which shall be
satisfied by the replacement, reinstatement or cash-collateralization thereof in
accordance with the terms of the Old Credit Agreement or as otherwise agreed
between the Debtor and such holder), whereupon all Liens held by or inuring to
the benefit of the holder thereof shall be deemed released, discharged and
extinguished.
IV.4. Class 4 (IRB Claims). With respect to each Allowed Class 4
Claim, unless the holder thereof and the Debtor shall agree to a different
treatment of such Claim, such holder shall
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receive one of the following alternative treatments, at the election of the
Debtor made on or prior to the Effective Date:
(a) The legal, equitable and contractual rights to which such
Claim entitles the holder thereof shall be unaltered by the Plan;
(b) Such Claim shall receive the treatment described in section
1124(2) of the Bankruptcy Code; or
(c) All collateral securing such Claim shall be transferred and
surrendered to the holder thereof, without representation or warranty
by or recourse against the Debtor.
With respect to any IRB Claim which receives the treatment described
in clause "a" or "b" above, the Debtor's failure to object to such Claim in the
Chapter 11 Case shall be without prejudice to the Debtor's right to contest or
otherwise defend against such Claim in an applicable nonbankruptcy forum when
and if such Claim is sought to be enforced by the holder thereof after the
Effective Date. With respect to any IRB Claim which receives the treatment
described in clause "c" above, upon receipt of such property, all Liens held by
or incurring to the benefit of the holder thereof shall be deemed released,
discharged and extinguished.
IV.5. Class 5 (Post-Restructuring Management Claims). Each holder of
an Allowed Post-Restructuring Management Claim shall be paid in full in cash the
amount of its Allowed Class 5 Claim on the later of (a) the Effective Date and
(b) the date such Claim becomes Allowed, unless the Debtor and such holder shall
agree to a different treatment of such Claim.
IV.6. Class 7 (General Unsecured Claims). With respect to each
Allowed Class 7 Claim, unless the holder thereof and the Debtor shall agree to a
different treatment, such holder shall receive one of the following alternative
treatments, at the election of the Debtor made on or prior to the Effective
Date:
(a) The legal, equitable and contractual rights to which such
Claim entitles the holder thereof shall be unaltered by the Plan; or
(b) Such Claim shall receive the treatment described in section
1124(2) of the Bankruptcy Code.
The Debtor's failure to object to such Claim in the Chapter 11 Case
shall be without prejudice to the Debtor's right to contest or otherwise defined
against such Claim in an applicable nonbankruptcy forum when and if such Claim
is sought to be enforced by the holder thereof after the Effective Date.
IV.7. Unimpaired Classes. By virtue of the foregoing provisions of
this Article IV, the Claims in Classes 1, 2, 3, 4, 5 and 7 are not impaired by
the Plan. Pursuant to section 1126(f) of the Bankruptcy Code, such Classes and
each holder of a Claim or Interest in such Classes are conclusively presumed to
have accepted the Plan, and solicitation of acceptances of holders in such
Classes is not required.
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ARTICLE V.
TREATMENT OF IMPAIRED CLASSES
V.1. Class 6 (13.875% Senior Subordinated Note Claims and 14% Senior
Subordinated Note Claims). On the Effective Date, each holder of an Allowed
Class 6 Claim shall receive, in exchange for its Claim, subject to adjustment as
provided below and subject also to Section 7.19 hereof, its pro rata portion of
such number of shares of New Common Stock as will result in an aggregate
distribution to the holders of all Class 6 Claims of 95% of the New Common Stock
outstanding on the Effective Date; provided, however, that if a Qualifying Offer
is accepted in accordance with the provisions of Section 4.01 of the
Restructuring Agreement and thereafter consummated, the Class 6 distribution
will be decreased on a pro rata basis by one-half of one percent of the New
Common Stock, so that the aggregate distribution of New Common Stock to the
holders of Allowed Class 6 Claims would, in that event, be reduced in the
aggregate to 94 1/2% of the New Common Stock outstanding on the Effective Date.
Assuming a Petition Date of July 15, 1996, and assuming further that no
Qualifying Offer is accepted, each holder of outstanding 14% Senior Subordinated
Notes and 13.875% Senior Subordinated Notes shall be entitled to receive,
respectively, 59.9163 and 57.5936 shares of New Common Stock for each $1,000
principal amount of Old Subordinated Notes held by such holder.
V.2. Class 8 (Old Equity Interests). On the Effective Date, each
holder of Old Common Stock and each holder of an Old Option who exercises a
right to acquire shares of Old Common Stock prior to the Confirmation Date shall
receive, in exchange for its Old Equity Interest, subject to adjustment as
provided below and also subject to Section 7.19 hereof, its pro rata portion of
such number of shares of New Common Stock as will result in an aggregate
distribution to the holders of all Class 8 Interests of 5% of the New Common
Stock outstanding on the Effective Date; provided, however, that if a Qualifying
Offer is accepted in accordance with the provisions of Section 4.01 of the
Restructuring Agreement and thereafter consummated, the Class 8 distribution
will be increased on a pro rata basis by one-half of one percent of the New
Common Stock, so that the aggregate distribution of New Common Stock to the
holders of Allowed Class 8 Interests would, in that event, be increased in the
aggregate to 5 1/2% of the New Common Stock outstanding on the Effective Date.
On the Effective Date, all unexercised rights to acquire shares of Old Common
Stock whether by way of option or other legal or contractual right, including
unexercised Old Options, shall be canceled. No distributions shall be made in
respect of such unexercised rights to acquire shares of Old Common Stock,
including unexercised Old Options, nor shall any holder thereof receive or
retain any property in respect thereof. Assuming a Petition Date of July 15,
1996, and assuming further that no Qualifying Offer is accepted, each holder of
Old Common Stock will receive, in exchange for each share of Old Common Stock,
52.0833 shares of New Common Stock.
V.3. Impaired Classes. By virtue of the foregoing provisions of this
Article V, Classes 6 and 8 are impaired under the Plan. Pursuant to section
1126(a) of the Bankruptcy Code, holders in Classes 6 and 8 are entitled to vote
to accept or reject the Plan.
ARTICLE VI.
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NO BAR DATE; DISPUTED CLAIMS; OBJECTIONS TO CLAIMS
VI.1. No Bar Date; Disputed Claims; Objections to Claims. No bar date
pursuant to Bankruptcy Rule 3003(c)(3) shall be fixed as a deadline for the
filing of proofs of Claim against the Debtor. Only Claims that are Allowed shall
be entitled to distributions under the Plan. The Debtor reserves the right to
contest and object to any Claims, including, without limitation, those Claims
that are specifically referenced herein, are not listed in the Schedules, are
listed therein as disputed, contingent and/or unliquidated in amount, or are
listed therein at a lesser amount than asserted by the holder of such Claim.
Unless otherwise ordered by the Bankruptcy Court, all objections to Claims
(other than Administrative Expense Claims) shall be Filed and served upon
counsel to the Debtor, counsel to the Creditors' Committee, and counsel to the
Steering Committee, as necessary, and the holder of the Claim objected to on or
before the later of (a) the Effective Date and (b) 25 days after the date (if
any) on which a proof of claim is Filed in respect of such Claim. The last day
for filing objections to Administrative Expense Claims shall be set pursuant to
an order of the Bankruptcy Court. All disputed Claims shall be resolved by the
Bankruptcy Court, except to the extent that (y) the Debtor may otherwise elect
consistent with the Plan and the Bankruptcy Code or (z) the Bankruptcy Court may
otherwise order. Notwithstanding the foregoing, in the event the Bankruptcy
Court sua sponte determines that a bar date be established, then all holders of
Claims and Interests required by the Bankruptcy Code, the Bankruptcy Rules or
Order of the Bankruptcy Court to file a proof of claim or interest shall do so
within the time and in the manner prescribed in the Order of the Bankruptcy
Court establishing the bar date.
ARTICLE VII.
IMPLEMENTATION OF THE PLAN
VII.1. Merger. On the Effective Date, the Debtor will be merged,
pursuant to applicable state law, with and into Newco. Newco shall be the
surviving corporation in the merger.
VII.2. New Certificate of Incorporation and New By-Laws. On the
Effective Date, the New Certificate of Incorporation and New By-Laws of Newco
shall become operative as the certificate of incorporation and the by-laws,
respectively, of the Debtor. Except to the extent prohibited by the terms and
provisions of any then existing agreement, applicable law or the Plan, after the
Effective Date, the Debtor may amend the New Certificate of Incorporation and
may amend the New By-Laws in accordance with the New Certificate of
Incorporation, the New By-Laws and applicable state law.
VII.3. Issuance of New Common Stock. On the Effective Date, the Debtor
shall, in accordance with the Plan, issue the New Common Stock to the holders of
the Allowed Class 6 Claims and Class 8 Interests, respectively.
VII.4. New Credit Agreements. Those provisions under the New Credit
Agreements which relate to borrowings made by the Debtor under the Post-
Confirmation Facility shall be the source of financing of the Debtor from and
after the Effective Date.
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VII.5. Effectiveness of Securities, Instruments and Agreements. On the
Effective Date, all securities, instruments and agreements entered into pursuant
to the Plan, including, without limitation, (a) the New Common Stock, (b) the
New Credit Agreements giving rise to the Post-Confirmation Facility and (c) any
security, instrument or agreement entered into in connection with any of the
foregoing, shall become effective and binding in accordance with their
respective terms and conditions upon the parties thereto and shall be deemed to
become effective simultaneously.
VII.6. Cancellation of New Pre-Petition Facility or Old Credit
Agreement. The Company is currently negotiating with a group of banks led by
Congress for the purpose of obtaining pre-petition, post-petition and post-
confirmation financing. Pursuant to these discussions, as part of the pre-
petition financing, shortly before the commencement of the Chapter 11 Case, the
New Banks may advance funds sufficient to pay to the Banks all obligations
arising under the Old Credit Agreement, thereby causing the termination thereof
and the release of all Liens associated therewith. In the event the Company is
not successful in entering into definitive documentation with such banks, the
Company will seek debtor in possession financing with alternative lending
institutions. Upon the approval of the DIP Facility, funds are expected to be
made available to the Company to pay all obligations due under the New Pre-
Petition Facility or, if such facility has not been entered into, then the
obligations in favor of the Banks arising under the Old Credit Agreement. Upon
the termination of each of the New Pre-Petition Facility and the Old Credit
Agreement, or such other time as all obligations due the Banks or the New Banks,
as the case may be, are satisfied in full (other than that portion of any such
Claim arising under an outstanding letter of credit, which shall be satisfied by
the replacement, reinstatement or cash-collateralization thereof in accordance
with the terms of the Old Credit Agreement, the New Pre-Petition Facility or as
otherwise agreed between the Company and such holder), and except as otherwise
provided in the Plan, the underlying agreement will be deemed canceled and
terminated, and the obligations of the Company relating to, arising under, in
respect of or in connection with such agreement, and any Liens granted or
inuring to the benefit of the Banks or New Banks as provided for thereunder,
will thereupon be deemed released, discharged and extinguished.
VII.7. Cancellation of Securities, Instruments and Agreements Relating
to Impaired Claims and Interests. On the Effective Date, except as otherwise
provided herein or ordered by the Bankruptcy Court, all securities, instruments
and agreements governing any Claims and Interests impaired hereby, including,
without limitation, (a) the Old Common Stock, (b) the Old Subordinated Notes,
(c) the Old Indentures, (d) the Old Stock Option Plan, (e) the Old Stockholders'
Agreement, (f) the Management Agreement and (g) any security, instrument or
agreement entered into in connection with any of the foregoing, in each case,
shall be deemed canceled and terminated, and the obligations of the Debtor
relating to, arising under, in respect of or in connection with such securities,
instruments and agreements shall be released and discharged. Notwithstanding the
foregoing, except as otherwise provided herein, the holders of Claims and
Interests evidenced by such securities, instruments and agreements may enforce
any obligations of the Debtor arising under the terms and provisions of the
Plan, and any securities, instruments and agreements related thereto.
VII.8. Waiver of Subordination. The distributions under the Plan take
into account the
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relative priority of each Class in connection with any contractual subordination
provisions relating thereto. Accordingly, the distributions under this Plan
shall not be subject to levy, garnishment, attachment or other legal process by
any holder (a "Senior Creditor") of a Claim or Interest purporting to be
entitled to the benefits of contractual or non-contractual subordination. On the
Effective Date, all Senior Creditors shall be deemed to have waived any and all
subordination rights which they may have with respect to such distributions, and
shall be permanently enjoined from enforcing or attempting to enforce any
subordination rights they may otherwise have had.
VII.9. Surrender of Securities. Each holder of a promissory note or
other instrument evidencing a Claim or Interest impaired hereby shall surrender
the same to the Debtor, and the Debtor shall distribute or shall cause to be
distributed to the holders thereof the appropriate distribution of property
hereunder. No distribution of property hereunder shall be made to or on behalf
of any such holder unless and until such promissory note or other instrument is
received by the Debtor, or the unavailability of such note or other instrument
is established to the satisfaction of the Debtor. Any such holder that fails to
surrender or cause to be surrendered such promissory note or other instrument,
or to execute and deliver an affidavit of loss and indemnity satisfactory to the
Debtor and, in the event that the Post-Restructuring Board so requests with
respect to the Old Subordinated Notes which have been lost or are otherwise
unavailable, fails to furnish a bond in form and substance (including, without
limitation, with respect to amount) reasonably satisfactory to the Debtor within
one year after the Confirmation Date, shall be deemed to have forfeited all
Claims against the Debtor represented by such note or other instrument and all
property in respect of such forfeited distribution, including (if applicable)
interest accrued thereon, shall revert to the Debtor. Notwithstanding the
foregoing, all Claims shall be discharged and all Interests shall be terminated
by this Plan to the extent provided herein regardless of whether and when any
surrender, indemnity or bond required by this Section is provided, and
regardless of whether the Debtor makes a distribution hereunder in the absence
of compliance by any holder of a Claim with the requirements of this Section.
The Debtor may waive the requirements of this Section. To the extent necessary
or appropriate, a Distribution Agent satisfactory to the Debtor and the Steering
Committee may be engaged to accept the surrender of promissory notes or other
instruments under the Plan and to effect distributions to such holders in
accordance with the terms of the Plan.
VII.10. Releases. (a) Except as otherwise provided herein or in any
agreement, instrument or securities related hereto, on the Effective Date, the
Debtor releases unconditionally, and hereby is deemed to have released
unconditionally as of such date (i) each of the Debtor's officers, directors,
shareholders, employees, consultants, attorneys, accountants and other
representatives, NTC and Foley, (ii) the Creditors' Committee and, solely in
their capacity as members or representatives of the Creditors' Committee, each
member, consultant, attorney, accountant or other representative of the
Creditors' Committee, (iii) the Steering Committee and, solely in their capacity
as members or representatives of the Steering Committee, each member,
consultant, attorney, accountant or other representative of and for the Steering
Committee, and (iv) the Banks and, solely in their capacity as representatives
of the respective Banks, each of the Banks' respective officers, directors,
employees, consultants, attorneys, accountants and other representatives (the
persons and entities specified in clauses (i), (ii), (iii), and (iv) are
referred to collectively as, the "Released Parties"), from any and all claims,
obligations, suits, judgments, damages, rights, causes of action and liabilities
whatsoever, whether known or unknown, foreseen or unforeseen, existing or
hereafter arising, in law, equity or otherwise, based in whole or in part
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upon any act or omission, transaction, event or other occurrence taking place on
or prior to the Effective Date in any way relating to the Released Parties, the
Debtor, the Chapter 11 Case or the Plan, provided, however, that the release
granted hereunder shall not be deemed to cover claims which any holder of the
Old Subordinated Notes may have against any other holder of Old Subordinated
Notes which are not related to the Debtor's restructuring, the transactions
contemplated thereby or this Plan.
(a) Except as otherwise provided herein or in any agreement,
instrument or securities related hereto, on the Effective Date, each holder of a
Claim or Interest (i) who has accepted the Plan, (ii) whose Claim is in a Class
that has accepted or is deemed to have accepted the Plan pursuant to section
1126 of the Bankruptcy Code or (iii) who may be entitled to receive a
distribution of property pursuant to the Plan, shall be deemed to have
unconditionally released the Released Parties, from any and all rights, claims,
causes of action, obligations, suits, judgments, damages and liabilities
whatsoever which any such holder may be entitled to assert, whether known or
unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity
or otherwise, based in whole or in part upon any act or omission, transaction,
event or other occurrence taking place on or before the Effective Date in any
way relating to the Released Parties, the Debtor, the Chapter 11 Case or the
Plan, provided, however, that the foregoing shall not apply to all rights,
claims and obligations created by or arising under the Plan, or any agreement,
instrument or securities made or issued under the Plan, nor shall the release
granted hereunder be deemed to cover claims which any holder of the Old
Subordinated Notes may have against any other holder of Old Subordinated Notes
which are not related to the Debtor's restructuring, the transactions
contemplated thereby or this Plan.
VII.11. Management of the Debtor. On the Effective Date, the
operation and management of the Debtor shall become the general responsibility
of the Post-Restructuring Board in accordance with applicable law and the terms
of the Restructuring Agreement.
VII.12. Setoffs. The Debtor may, but shall not be required to, set
off against any Claim and the distributions to be made pursuant to the Plan in
respect of such Claim, any claims of any nature whatsoever which the Debtor may
have against the holder of such Claim, but neither the failure to do so nor the
allowance of any Claim hereunder shall constitute a waiver or release of any
such claim the Debtor may have against such holder.
VII.13. Distribution of Unclaimed Property. Any distribution of
property under the Plan which is unclaimed after one year following the
Effective Date shall irrevocably revert to the Debtor.
VII.14. Address for Notice. Any distributions or notice to which the
holder of a Claim or Interest shall be or become entitled under the provisions
of this Plan shall be delivered to such holder by regular mail, postage prepaid,
in an envelope addressed to such holder as it or its authorized agent may direct
in a request filed on or before the Effective Date with the Bankruptcy Court and
served upon the Debtor; provided however, that if no such request is filed, the
address shown in the Schedules, ledgers or books and records of the Debtor, or
if a different address is stated in a Proof of Claim duly filed, to such address
contained in the Proof of Claim, shall be deemed the proper and correct address
for purposes hereof. Distributions delivered in accordance
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herewith will be deemed delivered to the holder regardless of whether such
distributions are actually received by such holder.
VII.15. Returned Distributions. Notwithstanding any of the foregoing
provisions, if any distribution made hereunder is returned as not forwardable,
and the addressee has failed to notify the Debtor or its attorneys (Kaye,
Scholer, Fierman, Hays & Handler, LLP, 425 Park Avenue, New York, New York
10022, Attn.: Howard A. Becker, Esq. or Dechert, Price & Rhoads, 4000 Bell
Atlantic Tower, 1717 Arch Street, Philadelphia, Pennsylvania 19103, Attn.: David
Schulman, Esq.), as the case may be, of its proper address within sixty (60)
days after the distribution has been made, then such party shall have waived its
right to any distribution under the Plan.
VII.16. Saturday, Sunday or Legal Holiday. If any payment or act
under the Plan is required to be made or performed on a date that is not a
Business Day, then the making of such payment or the performance of such act may
be completed on the next succeeding Business Day, but shall be deemed to have
been completed as of the required date.
VII.17. Corporate Action. Upon the Effective Date, all actions
contemplated by the Plan and the Restructuring Agreement shall be authorized and
approved in all respects (subject to the provisions of the Plan), including,
without limitation, the following: (a) the merger of the Debtor with and into
Newco, (b) the adoption by Newco of the New By-Laws and the adoption and filing
by Newco with the Secretary of State of the State of Delaware of the New
Certificate of Incorporation, (c) the issuance by Newco of the New Common Stock,
and (d) the execution, delivery and performance of the New Credit Agreements and
all documents and agreements relating to any of the foregoing. All matters
provided for under the Plan involving the corporate structure of the Debtor in
connection with the Plan, and any corporate action required by the Debtor in
connection with the Plan and the Restructuring Agreement, shall be deemed to
have occurred and shall be in effect pursuant to section 303 of the Delaware
General Corporation Law and the Bankruptcy Code, without any requirement of
further action by the stockholders or directors of the Debtor. On the Effective
Date, the appropriate officers of the Debtor and members of the board of
directors of the Debtor are authorized and directed to execute and deliver the
agreements, documents and instruments contemplated by the Plan and the
Disclosure Statement in the name of and on behalf of the Debtor.
VII.18. Retiree Benefits. On and after the Effective Date, to the
extent required by sec tion 1129(a)(13) of the Bankruptcy Code, the Reorganized
Debtor shall continue to pay all retiree benefits (if any), as that term is
defined in section 1114 of the Bankruptcy Code, maintained or established by the
Debtor prior to the Effective Date, without prejudice to the Reorganized
Debtor's rights under applicable non-bankruptcy law to modify, amend or
terminate the foregoing arrangements.
VII.19. Fractional Shares. The New Common Stock shall not be issued
in fractional shares. If, but for this Section, an Entity would be entitled to
receive a fractional share, then such Entity shall be issued in lieu thereof
either no share (if such fraction is less than one-half) or one whole share (if
such fraction is equal to or greater than one-half).
VII.20. Timing of Distributions. Notwithstanding anything to the
contrary herein, (a) any
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distribution required by the Plan to be made on the Effective Date in respect of
a Claim shall be made as soon as practicable after the later of (i) the
Effective Date and (ii) the date on which such Claim becomes Allowed and any
other condition to distribution with respect to such Claim shall have been
satisfied, and (b) any distribution required by the Plan to be made on a date
subsequent to the Effective Date shall be made on the later of (i) such date and
(ii) as soon as practicable after the date on which the pertinent Claim becomes
Allowed and any other conditions to distribution with respect to such Claim
shall have been satisfied.
VII.21. Final Order. Any requirement in the Plan for a Final Order
may be waived by the Debtor with the consent of the Steering Committee, or, in
the event that the Steering Committee is reconstituted as the Creditors'
Committee, the Creditors' Committee, upon written notice to the Bankruptcy
Court; provided, however, that nothing contained herein shall prejudice the
right of any party in interest to seek a stay pending appeal with respect to
such Final Order.
VII.22. Ballot Record Date; Distribution Record Date. The Debtor
shall distribute, or cause to be distributed, all distributions of property to
be made pursuant to the Plan to the record holders of Allowed Old Subordinated
Note Claims as of the Ballot Record Date, unless, prior to the Distribution
Record Date, the holder of any such Claim furnishes (or causes its transferee to
furnish) the Debtor, or its agent, with sufficient evidence (in the Debtor's or
its agent's sole and absolute discretion) of the transfer of such Claim, in
which event the Debtor shall distribute, or cause to be distributed, all
distributions of property to the holder of such Claim as of the Distribution
Record Date. As of the close of business on the Distribution Record Date, the
transfer ledgers with respect to the Old Subordinated Notes shall be closed and
the Debtor, the Debtor and the indenture trustees with respect to the Old
Subordinated Note Indentures shall have no obligation to recognize any transfer
of the Old Sub ordinated Notes occurring thereafter.
ARTICLE VIII.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
VIII.1. Generally. Effective on and as of the Effective Date, all
executory contracts and unexpired leases that exist between the Debtor and any
person or entity which are not otherwise terminated in accordance with the terms
of the Plan, are hereby specifically assumed, except for any executory contracts
and unexpired leases that have been specifically rejected by the Debtor with the
approval of the Bankruptcy Court, whether on motion by the Debtor or as part of
the approval of the Plan, on or before the Effective Date or in respect of which
a motion for rejection has been Filed on or before the Effective Date.
VIII.2. Assumption. Entry of the Confirmation Order by the Clerk of
the Bankruptcy Court shall constitute approval of all executory contracts and
unexpired leases to be assumed by the Debtor in accordance with Section 8.01
hereof pursuant to section 365(a) of the Bankruptcy Code, including the
Company's bonus plan pursuant to which up to $828,000 may be paid to certain of
the Company's employees as retention bonuses. Upon the Effective Date of the
Plan and subject to approval by the Bankruptcy Court in accordance with Section
327 of the Bankruptcy Code, the engagement letter between the Debtor and
Houlihan Lokey, Howard & Zukin dated June 15, 1995, as amended, shall be
assumed.
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VIII.3. Rejection. Claims created by or arising in connection with
the rejection of executory contracts and unexpired leases of the Debtor must be
Filed no later than 20 days after service by the Debtor upon the party or
parties to such contracts or leases of a notice of entry of a Final Order
authorizing such rejection. Any such Claims not Filed within such time shall be
forever barred from assertion against the Debtor, the Reorganized Debtor and
their property and estate. Each Claim resulting from such rejection shall
constitute a Class 2 Claim to the extent it is secured and a Class 7 Claim to
the extent it is unsecured; provided, however, that neither Foley nor NTC shall
have a separate Management Agreement Claim, beyond those expressly provided for
herein, arising from the termination or rejection of the Management Agreement.
VIII.4. Officers' and Directors' Indemnification Rights.
Notwithstanding any other provisions of the Plan, the obligations of the Debtor
to indemnify its or its affiliates' directors, officers and employees as of the
Petition Date against any obligations, liabilities, costs or expenses pursuant
to the certificate of incorporation or by-laws of the Debtor, applicable state
law, specific agreement, or the customary past practices of the Debtor or any
combination of the foregoing, shall survive confirmation of the Plan, remain
unaffected thereby, and not be discharged, regardless of whether indemnification
is owed in connection with an event occurring prior to, upon or subsequent to
the commencement of the Chapter 11 Case, and any such indemnification rights
shall, upon the Effective Date, be deemed obligations assumed by the Debtor.
VIII.5. Compensation and Benefit Programs. All employee compensation
and benefit plans, policies and programs of the Debtor applicable generally to
its employees as in effect on the Effective Date, including, without limitation,
all savings plans, retirement plans, health care plans, disability plans,
severance benefit plans, incentive plans and life, accidental death and
dismemberment insurance plans, including benefits severance or other rights
accorded certain employees of the Debtor under the terms of the Restructuring
Agreement, shall continue in full force and effect, and shall be deemed
obligations assumed by the Debtor, without prejudice to the Debtor's rights
under applicable non-bankruptcy law to modify, amend or terminate any of the
foregoing arrangements; provided, however, that any such obligations in favor of
Foley or NTC which arise after the Effective Date shall be deemed waived.
ARTICLE IX.
CONDITIONS PRECEDENT
IX.1. Conditions to Effective Date. The Plan shall not become
effective unless and until the following conditions shall have been satisfied or
waived pursuant to Section 9.02 hereof:
(a) The Confirmation Order in form and substance reasonably
satisfactory to the Debtor and the Steering Committee, or, in the
event that the Steering Committee is reconstituted as the Creditors'
Committee, the Creditors' Committee, shall have become a Final Order.
(b) The New Credit Agreements shall have been executed by the
respective parties thereto, and all of the conditions precedent to the
effectiveness of any advances
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under the Post-Confirmation Facility (other than that the Plan be
effective) shall have been satisfied in full or duly waived.
(c) The Debtor shall have concurrently satisfied all of the
obligations under the DIP Facility.
(d) The Revenue Ruling shall continue to be in full force and
effect.
(e) All other actions required by Article VII and Section 12.01
hereof to occur on or before the Effective Date shall have occurred.
IX.2. Waiver of Conditions. The Debtor, with the consent of the
Steering Committee, or, in the event that the Steering Committee is
reconstituted as the Creditors' Committee, the Creditors' Committee, may waive
any of the conditions set forth in Section 9.01 hereof, with the exception of
Sections 9.01(b) and 9.01(c), the waiver of which, in addition, will require the
consent of the Banks.
ARTICLE X.
MODIFICATION, REVOCATION OR WITHDRAWAL OF THE PLAN
X.1. Modification of Plan. The Debtor, with the consent of the
Steering Committee, or, in the event that the Steering Committee is
reconstituted as the Creditors' Committee, the Creditors' Committee, may alter,
amend or modify the Plan pursuant to section 1127 of the Bankruptcy Code at any
time prior to the time that the Bankruptcy Court has signed the Confirmation
Order. After such time and prior to the substantial consummation of the Plan,
the Debtor may, so long as the treatment of holders of Claims and Interests
under the Plan is not adversely affected, institute proceedings in Bankruptcy
Court to remedy any defect or omission or to reconcile any inconsistencies in
the Plan, the Disclosure Statement or the Confirmation Order and any other
matters as may be necessary to carry out the purposes and effects of the Plan;
provided, however, prior notice of such proceedings shall be served in
accordance with Bankruptcy Rule 2002 or as the Bankruptcy Court may otherwise
direct.
X.2. Revocation or Withdrawal of Plan.
(a) Right to Revoke. The Debtor reserves the right to revoke
or withdraw the Plan at any time prior to the Confirmation Date.
(b) Effect of Withdrawal or Revocation. If the Debtor revokes
or withdraws the Plan prior to the Confirmation Date, then the Plan
shall be deemed null and void. In such event, nothing contained herein
shall be deemed to constitute a waiver or release of any claims by or
against the Debtor or any other entity or to prejudice in any manner
the rights of the Debtor or any entity in any further proceedings
involving the Debtor.
X.3. Nonconsensual Confirmation. If all of the applicable
requirements for confirmation of the Plan are met as set forth in section
1129(a)(1) through (a)(13) of the Bankruptcy Code except subsection (8) thereof,
the Debtor intends to request that the
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Bankruptcy Court confirm the Plan pursuant to section 1129(b) of the Bankruptcy
Code notwithstanding the requirements of section 1129(a)(8) thereof, on the
basis that the Plan is fair and equitable and does not discriminate unfairly
with respect to any nonaccepting impaired Class.
ARTICLE XI.
RETENTION OF JURISDICTION
XI.1. Jurisdiction of Bankruptcy Court.
(a) Following the Effective Date, the Bankruptcy Court will
retain exclusive jurisdiction of the Chapter 11 Case for the following
purposes:
(i) To hear and determine any pending applications for
the rejection of executory contracts or unexpired leases, and
the allowance of Claims resulting therefrom.
(ii) To determine any adversary proceedings,
applications, contested matters and other litigated matters
pending on the Effective Date.
(iii) To ensure that distributions to holders of Allowed
Claims and Interests are accomplished as provided herein.
(iv) To hear and determine objections to or requests for
estimation of Claims, including any objections to the
classification of any Claim, and to allow, disallow and/or
estimate any Claim, in whole or in part.
(v) To enter and implement such orders as may be
appropriate in the event the Confirmation Order is for any
reason stayed, revoked, modified or vacated.
(vi) To issue any appropriate orders in aid of execution
of the Plan or to enforce the Confirmation Order and/or the
discharge, or the effect of such discharge, provided to the
Debtor.
(vii) To hear and determine any applications to modify
the Plan, to cure any defect or omission or to reconcile any
inconsistency in the Plan or in any order of the Bankruptcy
Court, including, without limitation, the Confirmation Order.
(viii) To hear and determine all applications for
compensation and reimbursement of expenses of professionals or
members of the Creditors' Committee (and if applicable, the
Steering Committee) under sections 330, 331, 503(b) and/or 1103
of the Bankruptcy Code.
(ix) To hear and determine disputes arising in
connection with the interpretation, implementation or
enforcement of the Plan.
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(x) To hear and determine other issues presented or
arising under the Plan.
(xi) To hear and determine any other matters related
hereto and not inconsistent with chapter 11 of the Bankruptcy
Code.
(xii) To enter a final decree closing the Chapter 11
Case.
(b) Following the Effective Date, the Bankruptcy Court will
retain non-exclusive jurisdiction of the Chapter 11 Case for the
following purposes:
(i) To recover all assets of the Debtor and property of
the estate, wherever located.
(ii) To hear and determine any motions or contested
matters involving taxes, tax refunds, tax attributes and tax
benefits and similar or related matters with respect to the
Debtor or its estate arising prior to the Effective Date or
relating to the period of administration of the Chapter 11
Case, including, without limitation, matters concerning state,
local and federal taxes in accordance with sections 346, 505
and 1146 of the Bankruptcy Code.
(iii) To hear any other matter not inconsistent with the
Bankruptcy Code.
XI.2. Failure of Bankruptcy Court to Exercise Jurisdiction. If the
Bankruptcy Court abstains from exercising or declines to exercise jurisdiction
over any matter arising under, arising in or related to the Chapter 11 Case,
including with respect to the matters set forth above in Sec tions 11.01(a) and
(b) hereof, this Article shall not prohibit or limit the exercise of
jurisdiction by any other court having competent jurisdiction with respect to
such subject matter.
ARTICLE XII.
MISCELLANEOUS PROVISIONS
XII.1. Possible Sale of Engineered Products Division; Binding Vote.
In the event a Qualifying Offer is accepted in accordance with the terms of
Section 4.01 of the Restructuring Agreement, and provided such transaction is
not consummated prior to the Petition Date, the Debtor shall seek Bankruptcy
Court approval thereof at or prior to the Confirmation Hearing (the "Sale
Motion"). Approval by the Bankruptcy Court of a Qualifying Offer as part of a
Sale Motion made at or prior to the Confirmation Hearing shall be deemed to
satisfy the requirements Section 4.01 of the Restructuring Agreement. As set
forth in Article V of the Plan, consummation of such sale will affect the
percentage distribution to the holders of Allowed Class 6 Claims and Allowed
Class 8 Interests. The acceptance of the Plan by any Class of Claims or
Interests shall be deemed binding on such Class, whether or not a Qualifying
Offer is pursued, accepted or thereafter consummated.
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XII.2. Payment of Statutory Fees. All fees payable pursuant to
section 1930 of title 28 of the United States Code, as determined by the
Bankruptcy Court at the hearing pursuant to section 1128 of the Bankruptcy Code,
shall be paid on or before the Effective Date.
XII.3. Discharge of Debtor. Except as otherwise expressly provided
herein, the confirmation of the Plan shall, provided that the Effective Date
shall have occurred, discharge all Claims and terminate all Interests, to the
fullest extent authorized or provided for by the Bankruptcy Code, including,
without limitation, to the extent authorized or provided for by sections 524 and
1141 thereof.
XII.4. Injunction. Except as otherwise expressly provided herein, the
entry of the Confirmation Order shall, provided that the Effective Date shall
have occurred, permanently enjoin all persons or entities that have held,
currently hold or may hold a Claim, or other debt or liability that is
discharged pursuant to the Plan or who have held, currently hold or may hold an
Interest that is terminated pursuant to the Plan from taking any of the
following actions in respect of such discharged Claim, debt or liability or such
terminated Interest: (a) commencing, conducting or continuing in any manner,
directly or indirectly, any suit, action or other proceeding of any kind against
the Debtor, NTC, or their respective affiliates, shareholders or directors, or
their property; (b) enforcing, levying, attaching, collecting or otherwise
recovering in any manner or by any means, whether directly or indirectly, any
judgment, award, decree or order against the Debtor, NTC, or their respective
affiliates, shareholders or directors, or their property; (c) creating,
perfecting or enforcing in any manner, directly or indirectly, any lien or
encumbrance of any kind against the Debtor, NTC, or their respective affiliates,
shareholders or directors, or their property; (d) asserting any setoff, right of
subrogation or recoupment of any kind, directly or indirectly, against any debt,
liability or obligation due to the Debtor, NTC, or their respective affiliates,
shareholders or directors, or their property; and (e) proceeding in any manner
in any place whatsoever that does not conform to or comply with or is
inconsistent with the provisions of the Plan.
XII.5. Vesting. Except as otherwise expressly provided herein, on the
Effective Date, all property and assets of the estate of the Debtor shall vest
in the Debtor, free and clear of all Claims, Interests, Liens and other
interests of creditors and equity security holders arising on or before the
Effective Date, and the Debtor may operate its business, from and after the
Effective Date, free of any restrictions imposed by the Bankruptcy Code or the
Bankruptcy Court.
XII.6. Employee Benefits. As described in Section 4.5 of the
Restructuring Agreement, the Debtor has reviewed with the individual members of
the Steering Committee the importance of retaining the services of key employees
(other than Foley) and, with the approval of the individual members of the
Steering Committee and the recommendation of their financial advisor, has
adopted a bonus plan in form and substance satisfactory to the Majority Holders
(as defined in the Restructuring Agreement). The Debtor, on or prior to the
first anniversary following confirmation of the Plan, will adopt one or more
stock option plans pursuant to which then-current employees (in no event to
include Foley) identified on Exhibit C to the Restructuring Agreement will be
---------
granted options covering shares of New Common Stock, all in amounts and with
exercise prices and other terms customary for key employees of publicly-traded
textile companies as determined by the Debtor's Post-Restructuring Board. The
Debtor will continue to
A-25
<PAGE>
honor the deferred compensation obligations owed to its employees (other than
Foley), a copy of which is set forth on Exhibit D to the Restructuring
---------
Agreement.
XII.7. Exculpation. Neither the Debtor, the Banks, the Creditors'
Committee, NTC, any shareholder of the Debtor, nor the Steering Committee, nor
any of their respective members, officers, directors, shareholders, employees,
agents, attorneys, accountants or other advisors, shall have or incur any
liability to any holder of a Claim or Interest for any act or failure to act in
connection with, or arising out of, the pursuit of confirmation of the Plan, the
consummation of the Plan or the administration of the Plan or the property to be
distributed under the Plan, except for any act or failure to act that
constitutes willful misconduct or recklessness as determined pursuant to a Final
Order, and in all respects, such persons and entities (a) shall be entitled to
rely upon the advice of counsel with respect to their duties and
responsibilities under the Plan, and shall be fully protected from liability in
acting or in refraining from action in accordance with such advice and (b) shall
be fully protected from liability with respect to any act or failure to act that
is approved or ratified by the Bankruptcy Court.
XII.8. Abandonment of Avoidance Actions. Any avoidance actions
arising under any provision of the Bankruptcy Code or applicable state law
accruing to the Debtor shall be deemed abandoned by the Debtor as of the
Effective Date.
XII.9. Reconstitution of Board. The individuals who will serve on the
Post-Restructuring Board shall be designated by the Creditors' Committee prior
to the Confirmation Date and will be announced at the hearing to consider
confirmations of the Plan prior to the Effective Date or at such other time as
the Bankruptcy Court may direct.
XII.10. Creditors' Committee. The existence of each official
statutory committee appointed in the Chapter 11 Case shall terminate on the
Effective Date.
XII.11. Governing Law. Except to the extent the Bankruptcy Code, the
Bankruptcy Rules or other federal laws are applicable, the laws of the State of
Delaware shall govern the construction and implementation of the Plan and all
rights and obligations arising under the Plan.
XII.12. Withholding and Reporting Requirements. In connection with
the Plan and all instruments issued in connection therewith and distributions
thereon, the Debtor shall comply with all withholding, reporting, certification
and information requirements imposed by any federal, state, local or foreign
taxing authority and all distributions hereunder shall, to the extent
applicable, be subject to any such withholding, reporting, certification and
information requirements. Entities entitled to receive distributions hereunder
shall, as a condition to receiving such distributions, provide such information
and take such steps as the Debtor may reasonably require to ensure compliance
with such withholding and reporting requirements, and to enable the Debtor to
obtain the certifications and information as may be necessary or appropriate to
satisfy the provisions of any tax law.
XII.13. Time. Unless otherwise specified herein, in computing any
period of time prescribed or allowed by the Plan, the day of the act or event
from which the designated period begins to run shall not be included. The last
day of the period so computed shall be included, unless it is not a Business
Day, in which event the period runs until the end of the next succeeding
A-26
<PAGE>
day which is a Business Day.
XII.14. Section 1146 Exemption. Pursuant to section 1146(c) of the
Bankruptcy Code, the issuance, transfer or exchange of any security under the
Plan, or the execution, delivery or recording of an instrument of transfer
pursuant to, in implementation of or as contemplated by the Plan, or the
revesting, transfer or sale of any real property of the Debtor pursuant to, in
implementation of or as contemplated by the Plan shall not be taxed under any
state or local law imposing a stamp tax, transfer tax or similar tax or fee.
Consistent with the foregoing, each recorder of deeds or similar official for
any county, city or governmental unit in which any instrument hereunder is to be
recorded shall, pursuant to the Confirmation Order, be ordered and directed to
accept such instrument, without requiring the payment of any documentary stamp
tax, deed stamps, stamp tax, transfer tax, intangible tax or similar tax.
XII.15. Severability. In the event that any provision of the Plan is
determined to be unenforceable, such determination shall not limit or affect the
enforceability and operative effect of any other provisions of the Plan.
XII.16. Binding Effect. The provisions of the Plan shall bind all
holders of Claims and Interests, whether or not they have accepted the Plan.
XII.17. Notices. All notices, requests or demands in connection with
the Plan shall be mailed by registered or certified mail, postage prepaid,
return receipt requested, or overnight courier service, and if sent to the
Debtor, addressed to:
THE BIBB COMPANY
237 Coliseum Drive
Macon, GA 31201
Attention: A. William Ott
and
THE BIBB COMPANY
c/o NTC Group, Inc.
Three Pickwick Plaza
Suite 200
Greenwich, CT 06830
Attn: Thomas C. Foley
and
DECHERT, PRICE & RHOADS
4000 Bell Atlantic Tower
17171 Arch Street
Philadelphia, PA 19103-2793
Attn: David E. Schulman, Esq.
A-27
<PAGE>
and
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP
425 Park Avenue
New York, NY 10022
Attn: Howard A. Becker, Esq.
with a copy to:
JONES, DAY, REAVIS & POGUE
(at the address set forth below)
if to the Creditors' Committee or the Steering Committee, addressed to:
JONES, DAY, REAVIS & POGUE
599 Lexington Avenue
New York, NY 10022
Attn: Marc S. Kirschner, Esq.
with a copy to:
THE BIBB COMPANY
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP
AND DECHERT PRICE & RHOADS
(at the respective addresses set forth above)
XII.18. Plan Controls. In the event and to the extent that any
provision of the Plan is inconsistent with the provisions of the Disclosure
Statement, or any other instrument or agreement contemplated to be executed
pursuant to the Plan, the provisions of the Plan shall control and take
precedence.
XII.19. Successors and Assigns. The rights, duties and obligations of
any person or entity named or referred to in the Plan shall be binding upon, and
shall inure to the benefit of, the successors and assigns of such person or
entity.
A-28
<PAGE>
XII.20. Section Headings. The section headings contained in the Plan
are for reference purposes only and shall not constitute a portion of the Plan
or affect in any way the meaning, construction or interpretation of the Plan.
Dated: Wilmington, Delaware
July 3, 1996
Respectfully submitted,
THE BIBB COMPANY, Debtor
By: /s/ A. William Ott
-----------------------------
A. William Ott
KAYE, SCHOLER, FIERMAN, YOUNG, CONAWAY, STARGATT
HAYS & HANDLER, LLP & TAYLOR
Co-Counsel for the Debtor Co-Counsel for the Debtor
425 Park Avenue 11th Floor - Rodney Square North
New York, New York 10022 P.O. Box 391
Wilmington, Delaware 19899-0391
DECHERT PRICE & RHOADS
Corporate Counsel for the Debtor
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103-2793
A-29
<PAGE>
CERTIFICATE OF INCORPORATION
OF
THE NEW BIBB COMPANY
1. Name. The name of the Corporation is The New Bibb Company.
----
2. Registered Office and Agent. The address of the Corporation's
---------------------------
registered office in the State of Delaware is 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
3. Purpose. The purposes for which the Corporation is formed are to
-------
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware and to possess and
exercise all of the powers and privileges granted by such law and any other law
of the State of Delaware.
4. Authorized Capital. The aggregate number of shares of stock which
------------------
the Corporation shall have authority to issue is 110 shares, divided into two
(2) classes consisting of 10 shares of Preferred Stock, par value $.01 per share
("Preferred Stock"), and 100 shares of Common Stock, par value $.01 per share
("Common Stock").
The following is a statement of the designations, preferences,
qualifications, limitations, restrictions and the special or relative rights
granted to or imposed upon the shares of each such class.
A. PREFERRED STOCK
1. Issue in Series. Preferred Stock may be issued from time to
---------------
time in one or more series, each such series to have the terms stated
herein and in the resolution of the Board of Directors of the
Corporation providing for its issue. All shares of any one series of
Preferred Stock will be identical, but shares of different series of
Preferred Stock need not be identical or rank equally except insofar
as provided by law or herein.
2. Creation of Series. The Board of Directors will have
------------------
authority by resolution to cause to be
<PAGE>
created one or more series of Preferred Stock, and to determine and
fix with respect to each series prior to the issuance of any shares
of the series to which such resolution relates:
(a) the distinctive designation of the series and the
number of shares which will constitute the series, and whether
or not such number may be increased or decreased (but not below
the number of shares then outstanding) from time to time by
action of the Board of Directors;
(b) the dividend rate and the times of payment of
dividends, if any, on the shares of the series, whether
dividends will be cumulative, and if so, from what date or
dates;
(c) whether or not the shares of the series are redeemable
and, if so, the price or prices at which, and the terms and
conditions on which, the shares of the series may be redeemed
at the option of the Corporation;
(d) whether or not the shares of the series will be
entitled to the benefit of a retirement or sinking fund to be
applied to the purchase or redemption of such shares and, if so
entitled, the amount of such fund and the terms and provisions
relative to the operation thereof;
(e) whether or not the shares of the series will be
convertible into, or exchangeable for, any other shares of
stock of the Corporation or other securities, and if so
convertible or exchangeable, the conversion price or prices, or
the rates of exchange, and any adjustments thereof, at which
such conversion or exchange may be made, and any other terms
and conditions of such conversion or exchange;
(f) the rights of the shares of the series in the event of
voluntary or involuntary liquidation, dissolution or winding up
of the Corporation;
(g) whether or not the shares of the series will have
priority over or be on a parity
- 2 -
<PAGE>
with or be junior to the shares of any other series or class in
any respect or will be entitled to the benefit of limitations
restricting the issuance of shares of any other series or class
having priority over or being on a parity with the shares of
such series in any respect, or restricting the payment of
dividends on or the making of other distributions in respect of
shares of any other series or class ranking junior to the
shares of the series as to dividends or assets, or restricting
the purchase or redemption of the shares of any such junior
series or class, and the terms of any such restriction;
(h) whether or not the series will have voting rights, in
addition to any voting rights provided by law, and, if so, the
terms of such voting rights; and
(i) any other preferences, qualifications, privileges,
options and other relative or special rights and limitations of
that series.
B. COMMON STOCK
1. Dividends. Holders of Common Stock will be entitled to
---------
receive such dividends as may be declared by the Board of Directors.
2. Voting Rights. The holders of Common Stock shall have the
-------------
general right to vote for all purposes, including the election of
Directors, as provided by law. Subject to the terms of the
Preferred Stock Designation, each holder of Common Stock shall be
entitled to one vote for each share thereof held.
The Corporation will not issue any non-voting equity securities;
provided, however, that this provision, included in this Amended and Restated
- -------- -------
Certificate of Incorporation in compliance with section 1123(a)(6) of title 11
of the United States Code, as amended (the "Bankruptcy Code"), will have no
force and effect beyond that required by section 1123(a)(6) of the Bankruptcy
Code and will be effective only for so long as section 1123(a)(6) of the
Bankruptcy Code is in effect and applicable to the Corporation.
- 3 -
<PAGE>
5. Incorporator. The name and mailing address of the incorporator is
------------
Luann M. Taiariol, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia,
Pennsylvania 19103-2793.
6. Bylaws. The Board may make, amend, and repeal the Bylaws of the
------
Corporation. Any Bylaw made by the Board under the powers conferred hereby may
be amended or repealed by the Board (except as specified in any such Bylaw so
made or amended) or by the stockholders in the manner provided in the Bylaws of
the Corporation.
7. Directors.
---------
(a) Number, Election, and Terms of Directors. Subject to the
----------------------------------------
rights, if any, of the holders of any series of Preferred Stock to elect
additional Directors, the number of the Directors of the Corporation will
not be less than three nor more than nine and will be fixed from time to
time in the manner described in the Bylaws of the Corporation.
(b) Newly Created Directorships and Vacancies. Subject to the
-----------------------------------------
rights, if any, of the holders of any series of Preferred Stock to elect
additional Directors, newly created Directorships resulting from any
increase in the number of Directors and any vacancies on the Board
resulting from death, resignation, disqualification, removal, or other
cause will be filled solely by the affirmative vote of a majority of the
remaining Directors then in office, even though less than a quorum of the
Board, by a sole remaining Director, or, if there is no remaining
Director, by the stockholders. Any Director elected in accordance with
the preceding sentence will hold office for the remainder of the full
term of the class of Directors in which the new Directorship was created
or the vacancy occurred and until such Director's successor has been
elected and qualified. No decrease in the number of Directors
constituting the Board may shorten the term of any incumbent Director.
8. Right to Amend. The Corporation reserves the right to amend any
--------------
provision contained in this Certificate as the same may from time to time be in
effect in the manner now or hereafter prescribed by law, and all rights
conferred on stockholders or others hereunder are subject to such reservation.
9. Limitation on Liability. The Directors of the Corporation shall be
-----------------------
entitled to the benefits of all limitations on the liability of Directors
generally that are now or hereafter become available under the General
Corporation Law of Delaware.
- 4 -
<PAGE>
Without limiting the generality of the foregoing, no Director of the Corporation
shall be liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except for liability (i) for any breach
of the Director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the Director derived an
improper personal benefit. Any repeal or modification of this Article 9 shall
be prospective only, and shall not affect, to the detriment of any Director, any
limitation on the personal liability of a Director of the Corporation existing
at the time of such repeal or modification.
10. Meetings. Subject to the rights of the holders of any series of
--------
Preferred Stock, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of stockholders of the Corporation and may not be effected by
any consent in writing of such stockholders.
Dated: June 7, 1996
/s/ Luann M. Taiariol
-------------------------------
Luann M. Taiariol, Incorporator
- 5 -
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THE NEW BIBB COMPANY
(BEFORE RECEIPT OF PAYMENT FOR STOCK)
____________________________
The New Bibb Company, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "Company"),
DOES HEREBY CERTIFY:
FIRST: That by written consent of all of the directors of the Company, a
resolution was duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of the Company. The resolution setting
forth the amendment is as follows:
RESOLVED, that Article 4 of the Certificate of Incorporation of the
Company be amended so that the same as amended would read as
follows:
4. Authorized Capital. The aggregate number of shares of stock which
------------------
the Corporation shall have authority to issue is 17,000,000 shares, divided into
two (2) classes consisting of 5,000,000 shares of Preferred Stock, par value
$.01 per share ("Preferred Stock"), and 12,000,000 shares of Common Stock, par
value $.01 per share ("Common Stock").
The following is a statement of the designations, preferences,
qualifications, limitations, restrictions and the special or relative rights
granted to or imposed upon the shares of each such class.
A. PREFERRED STOCK
1. Issue in Series. Preferred Stock may be issued from time to
---------------
time in one or more series, each such series to have the terms
stated herein and in the resolution of the Board of Directors of the
Corporation providing for its issue. All shares of any one series
of Preferred Stock will be identical, but shares of different series
of Preferred Stock
- 6 -
<PAGE>
need not be identical or rank equally except insofar as provided by
law or herein.
2. Creation of Series. The Board of Directors will have
------------------
authority by resolution to cause to be created one or more series of
Preferred Stock, and to determine and fix with respect to each
series prior to the issuance of any shares of the series to which
such resolution relates:
(a) the distinctive designation of the series and the
number of shares which will constitute the series, and whether
or not such number may be increased or decreased (but not below
the number of shares then outstanding) from time to time by
action of the Board of Directors;
(b) the dividend rate and the times of payment of
dividends, if any, on the shares of the series, whether
dividends will be cumulative, and if so, from what date or
dates;
(c) whether or not the shares of the series are redeemable
and, if so, the price or prices at which, and the terms and
conditions on which, the shares of the series may be redeemed
at the option of the Corporation;
(d) whether or not the shares of the series will be
entitled to the benefit of a retirement or sinking fund to be
applied to the purchase or redemption of such shares and, if so
entitled, the amount of such fund and the terms and provisions
relative to the operation thereof;
(e) whether or not the shares of the series will be
convertible into, or exchangeable for, any other shares of
stock of the Corporation or other securities, and if so
convertible or exchangeable, the conversion price or prices, or
the rates of exchange, and any adjustments thereof, at which
such conversion or exchange may be made, and any other terms
and conditions of such conversion or exchange;
(f) the rights of the shares of the series in the event of
voluntary or involuntary
- 7 -
<PAGE>
liquidation, dissolution or winding up of the Corporation;
(g) whether or not the shares of the series will have
priority over or be on a parity with or be junior to the shares
of any other series or class in any respect or will be entitled
to the benefit of limitations restricting the issuance of
shares of any other series or class having priority over or
being on a parity with the shares of such series in any
respect, or restricting the payment of dividends on or the
making of other distributions in respect of shares of any other
series or class ranking junior to the shares of the series as
to dividends or assets, or restricting the purchase or
redemption of the shares of any such junior series or class,
and the terms of any such restriction;
(h) whether or not the series will have voting rights, in
addition to any voting rights provided by law, and, if so, the
terms of such voting rights; and
(i) any other preferences, qualifications, privileges,
options and other relative or special rights and limitations of
that series.
B. COMMON STOCK
1. Dividends. Holders of Common Stock will be entitled to
---------
receive such dividends as may be declared by the Board of Directors.
2. Voting Rights. The holders of Common Stock shall have the
-------------
general right to vote for all purposes, including the election of
Directors, as provided by law. Subject to the terms of the
Preferred Stock Designation, each holder of Common Stock shall be
entitled to one vote for each share thereof held.
The Corporation will not issue any non-voting equity securities;
provided, however, that this provision, included in this Amended and Restated
- -------- -------
Certificate of Incorporation in compliance with section 1123(a)(6) of title 11
of the United States Code, as amended (the "Bankruptcy Code"), will have no
force and effect beyond that required by section 1123(a)(6) of the Bankruptcy
Code and will be effective only for so long as
- 8 -
<PAGE>
section 1123(a)(6) of the Bankruptcy Code is in effect and applicable to the
Corporation.
SECOND: That the Company has not received any payment for any of its
stock.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 241 of the General Corporation Law of the State of
Delaware.
- 9 -
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed by all of its directors, this 9th day of September, 1996.
THE NEW BIBB COMPANY
By:/s/ Robert E. Bridgeman
--------------------------------
Robert E. Bridgeman
Director
By:/s/ Thomas C. Foley
---------------------------------
Thomas C. Foley
Director
By:/s/ A. William Ott
---------------------------------
A. William Ott
Director
- 10 -
<PAGE>
_______________________________________________
_______________________________________________
THE BIBB COMPANY
BYLAWS
As Amended and Restated
on September 27, 1996
_______________________________________________
_______________________________________________
<PAGE>
THE BIBB COMPANY
BYLAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
STOCKHOLDERS' MEETINGS....................................... 1
1. Time and Place of Meetings......................... 1
2. Annual Meeting..................................... 1
3. Special Meetings................................... 1
4. Notice of Meetings................................. 2
5. Inspectors......................................... 2
6. Quorum............................................. 2
7. Voting............................................. 2
8. Order of Business.................................. 3
DIRECTORS.................................................... 5
9. Function........................................... 5
10. Number and Term of Office.......................... 5
11. Vacancies and New Directorships.................... 5
12. Removal............................................ 6
13. Nominations of Directors; Election................. 6
14. Resignation........................................ 7
15. Regular Meetings................................... 7
16. Special Meetings................................... 7
17. Quorum............................................. 8
18. Written Action..................................... 8
19. Participation in Meetings by Telephone Conference.. 8
20. Committees......................................... 8
21. Compensation....................................... 9
22. Rules.............................................. 9
NOTICES...................................................... 9
23. Generally.......................................... 9
24. Waivers............................................ 9
OFFICERS ................................................... 10
25. Generally.......................................... 10
26. Compensation....................................... 10
27. Succession......................................... 10
28. Authority and Duties............................... 10
</TABLE>
- i -
<PAGE>
<TABLE>
<S> <C>
STOCK........................................................ 10
29. Certificates....................................... 10
30. Classes of Stock................................... 11
31. Transfers.......................................... 11
32. Lost, Stolen, or Destroyed Certificates............ 11
33. Record Dates....................................... 11
INDEMNIFICATION.............................................. 12
34. Damages and Expenses............................... 12
35. Insurance, Contracts, and Funding.................. 18
GENERAL..................................................... 19
36. Fiscal Year........................................ 19
37. Seal............................................... 19
38. Reliance Upon Books, Reports, and Records.......... 19
39. Time Periods....................................... 19
40. Amendments......................................... 19
41. Certain Defined Terms.............................. 19
</TABLE>
- ii -
<PAGE>
STOCKHOLDERS' MEETINGS
1. Time and Place of Meetings. All meetings of the stockholders for the
--------------------------
election of Directors or for any other purpose will be held at such time and
place, within or without the State of Delaware, as may be designated by the
Board or, in the absence of a designation by the Board, the Chairman, or the
President and stated in the notice of meeting. The Board, the Chairman, or a
Vice Chairman may postpone any previously scheduled annual or special meeting of
the stockholders.
2. Annual Meeting. An annual meeting of the stockholders will be held at
--------------
such date and time as may be designated from time to time by the Board, at which
meeting the stockholders will elect by a plurality vote the Directors to succeed
those whose terms expire and will transact such other business as may properly
be brought before the meeting in accordance with Bylaw 8.
3. Special Meetings. (a) Special meetings of the stockholders, for any
----------------
purpose or purposes, unless otherwise prescribed by law or by the Certificate of
Incorporation, may be called only by (i) the Chairman or the President or (ii)
the Secretary within 10 calendar days after receipt of the written request of a
majority of the Whole Board or (iii) as provided in (b) below. Any such request
by a majority of the Whole Board must be sent to the Chairman and the Secretary
and must state the purpose or purposes of the proposed meeting. Special
meetings of holders of the outstanding Preferred Stock, if any, may be called in
the manner and for the purposes provided in the applicable resolution or
resolutions providing for the issuance of such Preferred Stock (the "Preferred
Stock Designation").
(b) Upon the receipt by the Company of a written request executed by
the holders of not less than a majority of the outstanding shares of Common
Stock (a "Meeting Request"), the Board will (i) call a special meeting of the
stockholders for any lawful purpose (which may not, however, include the
election of Directors) and (ii) fix a record date for the determination of
stockholders entitled to notice of and to vote at such meeting, which record
date will not be later than 60 calendar days after the date of receipt by the
Company of the Meeting Notice. Notwithstanding any provision of the Certificate
of Incorporation or these Bylaws to the contrary, this Bylaw 3(b) may not be
amended or repealed by the Board, and no provision inconsistent therewith may be
adopted by the Board, without the affirmative vote of the holders of at least a
majority of the outstanding shares of Common Stock present or represented by
proxy and entitled to vote at any annual or special meeting of stockholders at
which such vote is to be taken.
<PAGE>
4. Notice of Meetings. Written notice of every meeting of the
------------------
stockholders, stating the place, date, and hour of the meeting and, in the case
of a special meeting, the purpose or purposes for which the meeting is called,
will be given not less than 10 nor more than 60 calendar days before the date of
the meeting to each stockholder of record entitled to vote at such meeting,
except as otherwise provided herein or by law. When a meeting is adjourned to
another place, date, or time, written notice need not be given of the adjourned
meeting if the place, date, and time thereof are announced at the meeting at
which the adjournment is taken; provided, however, that if the adjournment is
-------- -------
for more than 30 calendar days, or if after the adjournment a new record date is
fixed for the adjourned meeting, written notice of the place, date, and time of
the adjourned meeting must be given in conformity herewith. At any adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting.
5. Inspectors. The Board may appoint one or more inspectors of election
----------
to act as judges of the voting and to determine those entitled to vote at any
meeting of the stockholders, or any adjournment thereof, in advance of such
meeting. The Board may designate one or more persons as alternate inspectors to
replace any inspector who fails to act. If no inspector or alternate is able to
act at a meeting of stockholders, the presiding officer of the meeting may
appoint one or more substitute inspectors.
6. Quorum. Except as otherwise provided by law or in a Preferred Stock
------
Designation, the holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, will
constitute a quorum at all meetings of the stockholders for the transaction of
business thereat. If, however, such quorum is not present or represented at any
meeting of the stockholders, the stockholders entitled to vote thereat, present
in person or represented by proxy, will have the power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum is present or represented.
7. Voting. Except as otherwise provided by law or in a Preferred Stock
------
Designation, each stockholder will be entitled at every meeting of the
stockholders to one vote for each share of stock having voting power standing in
the name of such stockholder on the books of the Company on the record date for
the meeting and such votes may be cast either in person or by written proxy.
Every proxy must be duly executed and filed with the Secretary. A stockholder
may revoke any proxy that is not irrevocable by attending the meeting and voting
in person or by
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<PAGE>
filing an instrument in writing revoking the proxy or another duly executed
proxy bearing a later date with the Secretary. The vote upon any question
brought before a meeting of the stockholders may be by voice vote, unless
otherwise required by these Bylaws or unless the Chairman or the holders of a
majority of the outstanding shares of all classes of stock entitled to vote
thereon present in person or by proxy at such meeting otherwise determine.
Every vote taken by written ballot will be counted by the inspectors of
election. When a quorum is present at any meeting, the vote of the holders of a
majority of the stock which has voting power present in person or represented by
proxy and which has actually voted will decide any question properly brought
before such meeting, unless the question is one upon which by express provision
of law, the Certificate of Incorporation, a Preferred Stock Designation, or
these Bylaws, a different vote is required, in which case such express provision
will govern and control the decision of such question.
8. Order of Business. (a) The Chairman, or such other officer of the
-----------------
Company designated by a majority of the Whole Board, will call meetings of the
stockholders to order and will act as presiding officer thereof. Unless
otherwise determined by the Board prior to the meeting, the presiding officer of
the meeting of the stockholders will also determine the order of business and
have the authority in his or her sole discretion to regulate the conduct of any
such meting, including without limitation by imposing restrictions on the
persons (other than stockholders of the Company or their duly appointed proxies)
who may attend any such stockholders' meeting, by ascertaining whether any
stockholder or his proxy may be excluded from any meeting of the stockholders
based upon any determination by the presiding officer, in his or her sole
discretion, that any such person has unduly disrupted or is likely to disrupt
the proceedings thereat, and by determining the circumstances in which any
person may make a statement or ask questions at any meeting of the stockholders.
(b) At an annual meeting of the stockholders, only such business will
be conducted or considered as is properly brought before the meeting. To be
properly brought before an annual meeting, business must be (i) specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board in accordance with Bylaw 4, (ii) otherwise properly brought before the
meeting by the presiding officer or by or at the direction of a majority of the
Whole Board, or (iii) otherwise properly requested to be brought before the
meeting by a stockholder of the Company in accordance with Bylaw 8(c).
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<PAGE>
(c) For business to be properly requested by a stockholder to be
brought before an annual meeting, the stockholder must (i) be a stockholder of
the Company of record at the time of the giving of the notice for such annual
meeting provided for in these Bylaws, (ii) be entitled to vote at such meeting,
and (iii) 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 Company not fewer than 60 calendar days
prior to the annual meeting; provided, however, that in the event public
-------- -------
announcement of the date of the annual meeting is not made at least 75 calendar
days prior to the date of the annual meeting, notice by the stockholder to be
timely must be so received not later than the close of business on the 10th
calendar day following the day on which public announcement is first made of the
date of the annual meeting. A stockholder's notice to the Secretary must set
forth as to each matter the stockholder proposes to bring before the annual
meeting (A) a description in reasonable detail 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 Company's
books, of the stockholder proposing such business and the beneficial owner, if
any, on whose behalf the proposal is made, (C) the class and number of shares of
the Company that are owned beneficially and of record by the stockholder
proposing such business and by the beneficial owner, if any, on whose behalf the
proposal is made, and (D) any material interest of such stockholder proposing
such business and the beneficial owner, if any, on whose behalf the proposal is
made in such business. Notwithstanding the foregoing provisions of this Bylaw
8(c), a stockholder must also comply with all applicable requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder with respect to the matters set forth in this Bylaw
8(c). For purposes of this Bylaw 8(c) and Bylaw 13, "public announcement" means
disclosure in a press release reported by the Dow Jones News Service, Associated
Press, or comparable national news service or in a document publicly filed by
the Company with the Securities and Exchange Commission pursuant to Section 13,
14, or 15(d) of the Exchange Act, or furnished to stockholders. Nothing in this
Bylaw 8(c) will be deemed to affect any rights of stockholders to request
inclusion of proposals in the Company's proxy statement pursuant to Rule 14a-8
under the Exchange Act.
(d) At a special meeting of stockholders, only such business may be
conducted or considered as is properly brought before the meeting. To be
properly brought before a special meeting, business must be (i) specified in the
notice of the meeting (or any supplement thereto) given by or at the direction
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<PAGE>
of the Chairman or the President or a majority of the Whole Board in accordance
with Bylaw 4 or (ii) otherwise properly brought before the meeting by the
presiding officer or by or at the direction of a majority of the Whole Board.
(e) The determination of whether any business sought to be brought
before any annual or special meeting of the stockholders is properly brought
before such meeting in accordance with this Bylaw 8 will be made by the
presiding officer of such meeting. If the presiding officer determines that any
business is not properly brought before such meeting, he or she will so declare
to the meeting and any such business will not be conducted or considered.
DIRECTORS
---------
9. Function. The business and affairs of the Company will be managed
--------
under the direction of the Board.
10. Number and Term of Office. Subject to the rights, if any, of any
-------------------------
series of Preferred Stock to elect additional Directors under circumstances
specified in a Preferred Stock Designation and to the minimum and maximum number
of authorized Directors provided in the Certificate of Incorporation, the
authorized number of Directors may be determined from time to time by (i) a vote
of a majority of the Whole Board or (ii) by the affirmative vote of a majority
of the holders of the outstanding shares of Common Stock. The Directors, other
than those who may be elected by the holders of any series of the Preferred
Stock, will be classified with respect to the time for which they severally hold
office in accordance with the Certificate of Incorporation.
11. Vacancies and New Directorships. Subject to the rights, if any, of
-------------------------------
the holders of any series of Preferred Stock to elect additional Directors under
circumstances specified in a Preferred Stock Designation, vacancies and newly
created directorships resulting from any increase in the authorized number of
Directors and any vacancies on the Board resulting from death, resignation,
disqualification, removal or other cause will be filled solely by the
affirmative vote of a majority of the remaining Directors then in office, even
though less than a quorum of the Board, or by a sole remaining Director. Any
Director elected in accordance with the preceding sentence will hold office for
the remainder of the full term of the class of Directors in which the new
directorship was created or the vacancy occurred and until such Director's
successor is elected and qualified. No decrease in the number of Directors
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<PAGE>
constituting the Board will shorten the term of an incumbent Director.
12. Removal. Subject to the rights, if any, of the holders of any series
-------
of Preferred Stock to elect additional Directors under circumstances specified
in a Preferred Stock Designation, any Director may be removed from office with
or without cause by the Board upon the vote of a majority of the Whole Board or
by the stockholders upon the vote of a majority of the stockholders.
13. Nominations of Directors; Election. (a) Subject to the rights, if
----------------------------------
any, of the holders of any series of Preferred Stock to elect additional
Directors under circumstances specified in a Preferred Stock Designation, only
persons who are nominated in accordance with the following procedures will be
eligible for election at a meeting of stockholders as Directors of the Company.
(b) Nominations of persons for election as Directors of the Company
may be made only at an annual meeting of stockholders (i) by or at the direction
of the Board or (ii) by any stockholder who is a stockholder of record at the
time of giving of notice provided for in this Bylaw 13, who is entitled to vote
for the election of Directors at such meeting, and who complies with the
procedures set forth in this Bylaw 13. All nominations by stockholders must be
made pursuant to timely notice in proper written form to the Secretary.
(c) To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Company not less
than 60 calendar days prior to the annual meeting of stockholders; provided,
--------
however, that in the event that public announcement of the date of the annual
- -------
meeting is not made by the Company by inclusion in a report filed with the
Securities and Exchange Commission or furnished to stockholders, or by mail,
press release or otherwise more than 75 calendar days prior to the date of the
annual meeting, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th calendar day following the day on
which public announcement is first made of the date of the annual meeting. To
be in proper written form, such stockholder's notice must set forth or include
(i) the name and address, as they appear on the Company's books, of the
stockholder giving the notice and of the beneficial owner, if any, on whose
behalf the nomination is made; (ii) a representation that the stockholder giving
the notice is a holder of record of stock of the Company entitled to vote at
such annual meeting and intends to appear in person or by proxy at the annual
meeting to nominate the person or persons specified in the notice; (iii) the
class and number of
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<PAGE>
shares of stock of the Company owned beneficially and of record by the
stockholder giving the notice and by the beneficial owner, if any, on whose
behalf the nomination is made; (iv) a description of all arrangements or
understandings between or among any of (A) the stockholder giving the notice,
(B) the beneficial owner on whose behalf the notice is given, (C) each nominee,
and (D) any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the stockholder giving the
notice; (v) such other information regarding each nominee proposed by the
stockholder giving the notice as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission under the Exchange Act had the nominee been nominated, or intended to
be nominated, by the Board; and (vi) the signed consent of each nominee to serve
as a director of the Company if so elected. At the request of the Board, any
person nominated by the Board for election as a Director must furnish to the
Secretary that information required to be set forth in a stockholder's notice of
nomination which pertains to the nominee. The presiding officer of any annual
meeting will, if the facts warrant, determine that a nomination was not made in
accordance with the procedures prescribed by this Bylaw 13, and if he or she
should so determine, he or she will so declare to the meeting and the defective
nomination will be disregarded. Notwithstanding the foregoing provisions of
this Bylaw 13, a stockholder must also comply with all applicable requirements
of the Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Bylaw 13.
14. Resignation. Any Director may resign at any time by giving written
-----------
notice of his resignation to the Chairman, the President or the Secretary. Any
resignation will be effective upon actual receipt by any such person or, if
later, as of the date and time specified in such written notice.
15. Regular Meetings. Regular meetings of the Board may be held
----------------
immediately after the annual meeting of the stockholders and at such other time
and place as may from time to time be determined by the Board. Notice of
regular meetings of the Board need not be given.
16. Special Meetings. Special meetings of the Board may be called by the
----------------
Chairman or the President on one day's notice to each Director by whom such
notice is not waived, given either personally or by mail, telephone, telegram,
telex, facsimile, or similar medium of communication, and will be called by the
Chairman or the President in like manner and on like notice on the written
request of a majority of the Directors. Special meetings of the Board may be
held at such time and place either
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<PAGE>
within or without the State of Delaware as is determined by the Board or
specified in the notice of any such meeting.
17. Quorum. At all meetings of the Board, a majority of the total number
------
of Directors then in office will constitute a quorum for the transaction of
business. Except for the designation of committees as hereinafter provided and
except for actions required by these Bylaws or the Certificate of Incorporation
to be taken by a majority of the Whole Board, the act of a majority of the
Directors present at any meeting at which there is a quorum will be the act of
the Board. If a quorum is not present at any meeting of the Board, the
Directors present thereat may adjourn the meeting from time to time to another
place, time, or date, without notice other than announcement at the meeting,
until a quorum is present.
18. Written Action. Any action required or permitted to be taken at any
--------------
meeting of the Board 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 or proceedings
of the Board or committee.
19. Participation in Meetings by Telephone Conference. Members of the
-------------------------------------------------
Board, or any committee designated by the Board, may participate in a meeting of
the Board, or any such committee, by means of telephone conference or similar
means by which all persons participating in the meeting can hear each other, and
such participation in a meeting will constitute presence in person at the
meeting.
20. Committees. (a) The Board, by resolution passed by a majority of the
----------
Board, may designate one or more committees, each such committee to consist of
one or more Directors (which, unless otherwise prescribed by the Board, in each
case must include either the Chairman or the Vice Chairman, or both) and each to
have such lawfully delegable powers and duties as the Board may confer.
(b) Each committee of the Board will serve at the pleasure of the
Board or as may be specified in any resolution from time to time adopted by the
Board. The Board may designate one or more Directors as alternate members of
any such committee, who may replace any absent or disqualified member at any
meeting of such committee.
(c) Except as otherwise provided in these Bylaws or by law, any
committee of the Board, to the extent provided, if applicable, in the resolution
of the Board designating such
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<PAGE>
committee, will have and may exercise all the powers and authority of the Board
in the direction of the management of the business and affairs of the Company.
Any such committee designated by the Board will have such name as may be
determined from time to time by resolution adopted by the Board. Except as
otherwise prescribed by the Board, a majority of the members of any committee of
the Board will constitute a quorum for the transaction of business, and the act
of a majority of the members (which, unless otherwise prescribed by the Board,
must include the affirmative vote of the Chairman or the President or, in the
absence of the Chairman or the President, the person designated by the Board to
take the place of the Chairman or the President) will be the act of such
committee. Each committee of the Board may prescribe its own rules for calling
and holding meetings and its method of procedure, subject to any rules
prescribed by the Board, and will keep a written record of all actions taken by
it.
21. Compensation. The Board may establish such compensation for, and
------------
reimbursement of the expenses of, Directors for membership on the Board and on
committees of the Board, attendance at meetings of the Board or committees of
the Board, or for other services by Directors to the Company or any of its
majority-owned subsidiaries, as the Board may determine.
22. Rules. The Board may adopt rules and regulations for the conduct of
-----
its meetings and the management of the affairs of the Company.
NOTICES
-------
23. Generally. Whenever by law or under the provisions of the Certificate
---------
of Incorporation or these Bylaws, notice is required to be given to any Director
or stockholder, it will not be construed to require personal notice, but such
notice may be given in writing, by mail, addressed to such Director or
stockholder, at his, her, or its address as it appears on the records of the
Company, with postage thereon prepaid, and such notice will be deemed to be
given at the time when the same is deposited in the United States mail. Notice
to Directors may also be given by telephone, telegram, telex, facsimile, or
similar medium of communication or as may otherwise be permitted by these
Bylaws.
24. Waivers. Whenever any notice is required to be given by law or under
-------
the provisions of the Certificate of Incorporation or these Bylaws, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time of the event for which notice is to be given,
will be deemed equivalent to such notice. Attendance of a
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<PAGE>
person at a meeting will constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened.
OFFICERS
--------
25. Generally. The officers of the Company will be elected by the Board
---------
and will consist of a Chairman, a President, a Secretary, and a Treasurer. The
Board may also choose any one or more Vice Chairmen or Vice Presidents and such
other officers as the Board may from time to time determine. Notwithstanding
the foregoing, by specific action the Board may authorize the Chairman or the
President to appoint any person to any office other than Chairman, Vice
Chairman, President, Secretary, or Treasurer. Any number of offices may be held
by the same person. Any of the offices may be left vacant from time to time as
the Board may determine. In the case of the absence or disability of any
officer of the Company or for any other reason deemed sufficient by a majority
of the Board, the Board may delegate the absent or disabled officer's powers or
duties to any other officer or to any Director.
26. Compensation. The compensation of all officers and agents of the
------------
Company who are also Directors of the Company will be fixed by the Board or by a
committee of the Board. The Board may fix, or delegate the power to fix, the
compensation of other officers and agents of the Company to an officer of the
Company.
27. Succession. The officers of the Company will hold office until their
----------
successors are elected and qualified. Any officer may be removed at any time as
determined by the Board. Any vacancy occurring in any office of the Company may
be filled by the Board as provided in Bylaw 25.
28. Authority and Duties. Each of the officers of the Company will have
--------------------
such authority and will perform such duties as are customarily incident to their
respective offices or as may be specified from time to time by the Board or by
the Chairman or the Vice Chairman as provided in Bylaw 25.
STOCK
-----
29. Certificates. Certificates representing shares of stock of the
------------
Company will be in such form as is determined by the Board or an authorized
committee thereof, subject to applicable legal requirements. Each such
certificate will be numbered and its issuance recorded in the books of the
Company, and such
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<PAGE>
certificate will exhibit the holder's name and the number of shares and will be
signed by, or in the name of, the Company by the Chairman or the President and
the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer, and will also be signed by, or bear the facsimile signature of, any
properly designated transfer agent of the Company. Any or all of the signatures
and the seal of the Company, if any, upon such certificates may be facsimiles,
engraved, or printed. Such certificates may be issued and delivered
notwithstanding that the person whose facsimile signature appears thereon may
have ceased to be such officer at the time certificates are issued and
delivered.
30. Classes of Stock. The designations, preferences, and relative
----------------
participating, optional, or other special rights of the various classes of stock
or series thereof, and the qualifications, limitations, or restrictions thereof,
will be set forth in full or summarized on the face or back of the certificates
which the Company issues to represent its stock or, in lieu thereof, such
certificates will set forth the office of the Company from which the holders of
certificates may obtain a copy of such information.
31. Transfers. Upon surrender to the Company or the transfer agent of the
---------
Company of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment, or authority to transfer, it will be the
duty of the Company to issue, or cause its transfer agent to issue, a new
certificate to the person entitled thereto, cancel the old certificate, and
record the transaction upon its books.
32. Lost, Stolen, or Destroyed Certificates. The Secretary may direct a
----------------------------------------
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Company alleged to have been lost,
stolen, or destroyed upon the making of an affidavit of that fact, satisfactory
to the Secretary, by the person claiming the certificate of stock to be lost,
stolen, or destroyed. As a condition precedent to the issuance of a new
certificate or certificates, the Secretary may require the owners of such lost,
stolen, or destroyed certificate or certificates to give the Company a bond in
such sum and with such surety or sureties as the Secretary may direct as
indemnity against any claims that may be made against the Company with respect
to the certificate alleged to have been lost, stolen, or destroyed or the
issuance of the new certificate.
33. Record Dates. (a) In order that the Company may determine the
------------
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board
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<PAGE>
may fix a record date, which will not be more than 60 nor less than 10 calendar
days before the date of such meeting. If no record date is fixed by the Board,
the record date for determining stockholders entitled to notice of or to vote at
a meeting of stockholders will be at the close of business on the calendar day
next preceding the day on which notice is given, or, if notice is waived, at the
close of business on the calendar next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to
vote at a meeting of the stockholders will apply to any adjournment of the
meeting; provided, however, that the Board may fix a new record date for the
-------- -------
adjourned meeting.
(b) In order that the Company may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion, or exchange of stock, or for the purpose of any other lawful
action, the Board may fix a record date, which record date will not be more than
60 calendar days prior to such action. If no record date is fixed, the record
date for determining stockholders for any such purposes will be at the close of
business on the calendar day on which the Board adopts the resolution relating
thereto.
(c) The Company will be entitled to treat the person in whose name any
share of its stock is registered as the owner thereof for all purposes, and will
not be bound to recognize any equitable or other claim to, or interest in, such
share on the part of any other person, whether or not the Company has notice
thereof, except as expressly provided by applicable law.
INDEMNIFICATION
---------------
34. Damages and Expenses. (a) Without limiting the generality or effect
--------------------
of Article 10 of the Certificate of Incorporation, the Company will to the
fullest extent permitted by applicable law as then in effect indemnify any
person (an "Indemnitee") who is or was involved in any manner (including without
limitation as a party or a witness) or is threatened to be made so involved in
any threatened, pending, or completed investigation, claim, action, suit, or
proceeding, whether civil, criminal, administrative, or investigative (including
without limitation any action, suit, or proceeding by or in the right of the
Company to procure a judgment in its favor) (a "Proceeding") by reason of the
fact that such person is or was or had agreed to be a Director, officer,
employee or agent of the Company, or is or was serving at the request of the
Board of the Company as a director, officer, employee or agent of another
corporation,
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<PAGE>
partnership, joint venture, trust, or other entity, whether or not for profit
(including the heirs, executors, administrators, or estate of such person), or
anything done or not done by such person in any such capacity, against all
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such Proceeding. Such indemnification will be a contract right and will include
the right to receive payment in advance of any expenses incurred by an
Indemnitee in connection with such Proceeding, consistent with the provisions of
applicable law as then in effect.
(b) The right of indemnification provided in this Bylaw 34 will not be
exclusive of any other rights to which any person seeking indemnification may
otherwise be entitled, and will be applicable to Proceedings commenced or
continuing after the adoption of this Bylaw 34, whether arising from acts or
omissions occurring before or after such adoption.
(c) In furtherance, but not in limitation of the foregoing provisions,
the following procedures, presumptions, and remedies will apply with respect to
advancement of expenses and the right to indemnification under this Bylaw 34;
(i) All reasonable expenses incurred by or on behalf of an
Indemnitee in connection with any Proceeding will be advanced to the
Indemnitee by the Company within 30 calendar days after the receipt by
the Company of a statement or statements from the Indemnitee
requesting such advance or advances from time to time, whether prior
to or after final disposition of such Proceeding. Such statement or
statements will reasonably evidence the expenses incurred by the
Indemnitee and, if and to the extent required by law at the time of
such advance, will include or be accompanied by an undertaking by or
on behalf of the Indemnitee to repay such amounts advanced as to which
it may ultimately be determined that the Indemnitee is not entitled.
If such an undertaking is required by law at the time of an advance,
no security will be required for such undertaking and such undertaking
will be accepted without reference to the recipient's financial
ability to make repayment.
(ii) To obtain indemnification under this Bylaw 34, the
Indemnitee will submit to the Secretary a written request, including
such documentation supporting the claim as is reasonably available to
the Indemnitee and is reasonably necessary to determine
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<PAGE>
whether and to what extent the Indemnitee is entitled to
indemnification (the "Supporting Documentation"). The determination
of the Indemnitee's entitlement to indemnification will be made not
less than 60 calendar days after receipt by the Company of the written
request for indemnification together with the Supporting
Documentation. The Secretary will promptly upon receipt of such a
request for indemnification advise the Board in writing that the
Indemnitee has requested indemnification. The Indemnitee's
entitlement to indemnification under this Bylaw 34 will be determined
in one of the following ways: (A) by a majority vote of the
Disinterested Directors (as hereinafter defined), if they constitute a
quorum of the Board, or, in the case of an Indemnitee that is not a
present or former officer of the Company, by any committee of the
Board or committee of officers or agents of the Company designated for
such purpose by a majority of the Board of Directors; (B) by a written
opinion of Independent Counsel (as hereinafter defined) if (1) a
Change in Control (as hereinafter defined) has occurred and the
Indemnitee so requests or (2) in the case of an Indemnitee that is a
present or former officer of the Company, a quorum of the Board
consisting of Disinterested Directors is not obtainable or, even if
obtainable, a majority of such Disinterested Directors so directs; (C)
by the stockholders (but only if a majority of the Disinterested
Directors, if they constitute a quorum of the Board, presents the
issue of entitlement to indemnification to the stockholders for their
determination); or (D) as provided in subparagraph (iii) below. In
the event the determination of entitlement to indemnification is to be
made by Independent Counsel pursuant to clause (B) above, a majority
of the Disinterested Directors will select the Independent Counsel,
but only an Independent Counsel to which the Indemnitee does not
reasonably object; provided, however, that if a Change of Control has
-------- -------
occurred, the Indemnitee will select such Independent Counsel, but
only an Independent Counsel to which the Board does not reasonably
object.
(iii) Except as otherwise expressly provided in this Bylaw 34,
the Indemnitee will be presumed to be entitled to indemnification
under this Bylaw 34 upon submission of a request for indemnification
together with the Supporting Documentation in accordance with
subparagraph (c)(ii) above, and thereafter the Company
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<PAGE>
will have the burden of proof to overcome that presumption in reaching
a contrary determination. In any event, if the person or persons
empowered under subparagraph (c)(ii) to determine entitlement to
indemnification has not been appointed or has not made a determination
within 60 calendar days after receipt by the Company of the request
therefor together with the Supporting Documentation, the Indemnitee
will be deemed to be entitled to indemnification and the Indemnitee
will be entitled to such indemnification unless (A) the Indemnitee
misrepresented or failed to disclose a material fact in making the
request for indemnification or in the Supporting Documentation or (B)
such indemnification is prohibited by law. The termination of any
Proceeding described in paragraph (a) of this Bylaw 34, or of any
claim, issue, or matter therein, by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent, will
---- ----------
not, of itself, adversely affect the right of the Indemnitee to
indemnification or create a presumption that the Indemnitee did not
act in good faith and in a manner which the Indemnitee reasonably
believed to be in or not opposed to the best interests of the Company
or, with respect to any criminal Proceeding, that the Indemnitee had
reasonable cause to believe that his or her conduct was unlawful.
(iv) (A) In the event that a determination is made pursuant to
subparagraph (c)(ii) that the Indemnitee is not entitled to
indemnification under this Bylaw 34, (1) the Indemnitee will be
entitled to seek an adjudication of his entitlement to such
indemnification either, at the Indemnitee's sole option, in (x) an
appropriate court of the State of Delaware or any other court of
competent jurisdiction or (y) an arbitration to be conducted by a
single arbitrator pursuant to the rules of the American Arbitration
Association, (2) any such judicial proceeding or arbitration will be
de novo and the Indemnitee will not be prejudiced by reason of such
-- ----
adverse determination, and (3) in any such judicial proceeding or
arbitration the Company will have the burden of proving that the
Indemnitee is not entitled to indemnification under this Bylaw 34.
(B) If a determination is made or deemed to have been made,
pursuant to subparagraph (c)(ii) or (iii) of this Bylaw 34 that the
Indemnitee is entitled to indemnification, the Company will be
obligated to pay
- 15 -
<PAGE>
the amounts constituting such indemnification within five business
days after such determination has been made or deemed to have been
made and will be conclusively bound by such determination unless (1)
the Indemnitee misrepresented or failed to disclose a material fact in
making the request for indemnification or in the Supporting
Documentation or (2) such indemnification is prohibited by law. In
the event that advancement of expenses is not timely made pursuant to
subparagraph (c)(i) of this Bylaw 34 or payment of indemnification is
not made within five business days after a determination of
entitlement to indemnification has been made or deemed to have been
made pursuant to subparagraph (c)(ii) or (iii) of this Bylaw 34, the
Indemnitee will be entitled to seek judicial enforcement of the
Company's obligation to pay to the Indemnitee such advancement of
expenses or indemnification. Notwithstanding the foregoing, the
Company may bring an action, in an appropriate court in the State of
Delaware or any other court of competent jurisdiction, contesting the
right of the Indemnitee to receive indemnification hereunder due to
the occurrence of any event described in subclause (1) or (2) of this
clause (B) (a "Disqualifying Event"); provided, however, that in any
-------- -------
such action the Company will have the burden of proving the occurrence
of such Disqualifying Event.
(C) The Company will be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to the provisions of this
subparagraph (c)(iv) that the procedures and presumptions of this
Bylaw 34 are not valid, binding, and enforceable and will stipulate in
any such court or before any such arbitrator that the Company is bound
by all the provisions of this Bylaw 34.
(D) In the event that the Indemnitee, pursuant to the provisions
of this Subparagraph (c)(iv), seeks a judicial adjudication of, or an
award in arbitration to, enforce his or her rights under, or to
recover damages for breach of, this Bylaw 34, the Indemnitee will be
entitled to recover from the Company, and will be indemnified by the
Company against, any expenses actually and reasonably incurred by the
Indemnitee if the Indemnitee prevails in such judicial adjudication or
arbitration. If it is determined in such judicial adjudication or
arbitration that the Indemnitee is entitled to receive part but not
all of the
- 16 -
<PAGE>
indemnification or advancement or expenses sought, the expenses
incurred by the Indemnitee in connection with such judicial
adjudication or arbitration will be prorated accordingly.
(v) For purposes of this paragraph (c):
(A) "Change in Control" means the occurrence of any of the
following events:
(1) The Company is merged, consolidated, or reorganized into
or with another corporation or other legal entity, and as a
result of such merger, consolidation, or reorganization, less
than a majority of the combined voting power of the then-
outstanding securities of such corporation or entity immediately
after such transaction are held in the aggregate by the holders
of the then-outstanding securities entitled to vote generally in
the election of directors of the Company immediately prior to
such transaction;
(2) The Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other
legal entity and, as a result of such sale or transfer, less than
a majority of the combined voting power of the then-outstanding
securities of such other corporation of entity immediately after
such sale or transfer is held in the aggregate by the holders of
the then-outstanding securities entitled to vote generally in the
election of directors of the Company immediately prior to such
sale or transfer;
(3) If, during any period of two consecutive years,
individuals who at the beginning of any such period constitute
the Directors cease for any reason to constitute at least a
majority thereof; provided, however, that for purposes of this
-------- -------
clause (3) each Director who is first elected, or first nominated
for election by the Company's stockholders, by a vote of at least
two-thirds of the Directors (or a committee of the Directors),
then still in office who were Directors at the beginning of any
such period will be deemed to have been a Director at the
beginning of such period.
- 17 -
<PAGE>
(B) "Disinterested Director" means a Director of the Company who
is not or was not a party to the Proceeding in respect of which
indemnification is sought by the Indemnitee.
(C) "Independent Counsel" means a law firm or a member of a law
firm that neither presently is, nor in the past five years has been,
retained to represent (1) the Company or the Indemnitee in any matter
material to either such party or (2) any other party to the Proceeding
giving rise to a claim for Indemnification under this Bylaw 34.
Notwithstanding the foregoing, the term "Independent Counsel" will not
include any person who, under the applicable standards of professional
conduct then prevailing under the law of the State of Delaware, would
be precluded from representing either the Company or the Indemnitee in
an action to determine the Indemnitee's rights under this Bylaw 34.
(d) If any provision or provisions of this Bylaw 34 are held to be
invalid, illegal, or unenforceable for any reason whatsoever; (i) the validity,
legality, and enforceability of the remaining provisions of this Bylaw 34
(including without limitation all portions of any paragraph of this Bylaw 34
containing any such provision held to be invalid, illegal, or unenforceable,
that are not themselves invalid, illegal, or unenforceable) will not in any way
be affected or impaired thereby and (ii) to the fullest extent possible, the
provisions of this Bylaw 34 (including without limitation all portions of any
paragraph of this Bylaw 34 containing any such provision held to be invalid,
illegal, or unenforceable, that are not themselves invalid, illegal, or
unenforceable) will be construed so as to give effect to the intent manifested
by the provision held invalid, illegal, or unenforceable.
35. Insurance, Contracts, and Funding. The Company may purchase and
---------------------------------
maintain insurance to protect itself and any Indemnitee against any expenses,
judgments, fines, and amounts paid in settlement or incurred by any Indemnitee
in connection with any Proceeding referred to in Bylaw 34 or otherwise, to the
fullest extent permitted by applicable law as then in effect. The Company may
enter into contracts with any person entitled to indemnification under Bylaw 34
or otherwise, and may create a trust fund, grant a security interest, or use
other means (including without limitation a letter of credit) to ensure the
payment of such amounts as may be necessary to effect indemnification as
provided in Bylaw 34. Notwithstanding anything to the contrary contained in
Bylaw 34, in the event that
- 18 -
<PAGE>
the Company enters into a contract with any person explicitly providing that
indemnification of such person pursuant to such contract is the exclusive
indemnification obligation by the Company with respect to such person, the
provisions of such contract will exclusively govern the Company's obligations in
respect of indemnification for or advancement of fees or disbursements of such
person's counsel or any other professional engaged by such person.
GENERAL
-------
36. Fiscal Year. The fiscal year of the Company will be fixed from time
-----------
to time by the Board.
37. Seal. The Board may adopt a corporate seal and use the same by
----
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
38. Reliance Upon Books, Reports, and Records. Each Director, each member
-----------------------------------------
of a committee designated by the Board, and each officer of the Company will, in
the performance of his or her duties, be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports, or statements presented to the Company by any of the Company's officers
or employees, or committees of the Board, or by any other person or entity as to
matters the Director, committee member, or officer believes are within such
other person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Company.
39. Time Periods. In applying any provision of these Bylaws that requires
------------
that an act be done or not be done a specified number of days prior to an event
or that an act be done during a period of a specified number of days prior to an
event, calendar days will be used unless otherwise specified.
40. Amendments. Except as otherwise provided by law or by the Certificate
----------
of Incorporation or these Bylaws, these Bylaws or any of them may be amended in
any respect or repealed at any time, either (a) at any meeting of stockholders,
provided that any amendment or supplement proposed to be acted upon at any such
meeting has been described or referred to in the notice of such meeting, or (b)
at any meeting of the Board, provided that no amendment adopted by the Board may
vary or conflict with any amendment adopted by the stockholders.
41. Certain Defined Terms. Terms used herein with initial capital letters
---------------------
that are defined in the Certificate of Incorporation are used herein as so
defined.
- 19 -
<PAGE>
THE BIBB COMPANY
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
CUSIP 088667 10 0
THIS CERTIFIES that
is the owner of
FULLY-PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
THE PAR VALUE OF
$.01 EACH OF
THE BIBB COMPANY
<PAGE>
transferable only on the books of the Corporation by the holder hereof in
person or by his duly authorized attorney upon surrender of this
certificate properly endorsed.
This certificate is not valid unless countersigned and registered by the
Transfer Agent and Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
Vice President, Chief Financial Officer
President, Chief Executive Officer
COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
(NEW YORK, NEW YORK)
TRANSFER AGENT
AND REGISTRAR
<PAGE>
BY:
AUTHORIZED SIGNATURE
<PAGE>
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM
TEN ENT
JT TEN
..
A
..
A
..
A
as tenants in common
as tenants by the entireties
as joint tenants with right of
survivorship and not as tenants
in common
..
UNIF GIFT MIN ACT A Custodian
(Cust) (Minor)
under Uniform Gifts to Minors
Act
(State)
Additional abbreviations may also be used though not in the above list.
<PAGE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in
the premises.
Dated
NOTICE:
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed:
<PAGE>
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND
CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad -15.
<PAGE>
RESTRUCTURING AGREEMENT
dated as of February 1, 1996
among
THE BIBB COMPANY
and
EACH OF THE SPECIFIED HOLDERS OF
13-7/8% SENIOR SUBORDINATED NOTES DUE 1999
and
14% SENIOR SUBORDINATED NOTES DUE 1999
OF THE BIBB COMPANY
and
NTC GROUP, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1 Definitions..................................................... 1
-----------
Section 2 Prepackaged Plan Solicitation................................... 4
-----------------------------
2.1 Solicitation.................................................... 4
2.2 Acceptance and Submission of Prepackaged Plan................... 5
Section 3 Restrictions Upon Transfers..................................... 5
---------------------------
3.1 Restrictions.................................................... 5
3.2 Permitted Transfers............................................. 6
Section 4 Certain Covenants and Representations........................... 6
-------------------------------------
4.1 Engineered Productions Division................................. 6
4.2 Board Observer.................................................. 7
4.3 Negative Covenants.............................................. 7
4.4 CEO Search...................................................... 8
4.5 Employee Benefits............................................... 8
4.6 Management Services............................................. 8
4.7 Mutual Releases................................................. 9
4.8 Ruling Request Certification.................................... 9
4.9 Specified Holders' Representations.............................. 10
4.10 Company's Representations...................................... 10
4.11 NTC Representations............................................ 11
4.12 Foley Representations.......................................... 12
4.13 Co-Sale........................................................ 12
Section 5 Miscellaneous................................................... 13
-------------
5.1 No Waiver; Modifications in Writing............................. 13
5.2 Notices......................................................... 13
5.3 Term............................................................ 14
5.4 Execution in Counterparts....................................... 14
5.5 Assignment...................................................... 14
5.6 Governing Law................................................... 14
5.7 Severability of Provisions...................................... 14
5.8 Headings........................................................ 14
</TABLE>
(i)
<PAGE>
RESTRUCTURING AGREEMENT
Restructuring Agreement (the "Agreement") dated as of February 1, 1996
---------
among The Bibb Company, a Delaware corporation (the "Company"), NTC Group, Inc.,
-------
a Delaware corporation ("NTC"), Thomas C. Foley, and each holder of 13-7/8%
---
Senior Subordinated Notes due 1999 of the Company (the "13-7/8% Notes") and 14%
-------------
Senior Subordinated Notes due 1999 of the Company (the "14% Notes" and, together
---------
with the 13-7/8% Notes and all rights relating to both such notes, the "Old
---
Notes") listed on Exhibit A hereto (each, a "Specified Holder" and,
- ----- --------- ----------------
collectively, the "Specified Holders").
-----------------
BACKGROUND:
----------
The Specified Holders own the principal amount of Old Notes set forth on
Exhibit A. As described herein, the Specified Holders consent to and will
- ---------
support the Company's solicitation (the "Solicitation") of votes for acceptance
------------
of the Company's plan of reorganization in the form attached hereto as Exhibit B
---------
(the "Prepackaged Plan") under chapter 11 of title 11 of the United State Code
----------------
(the "Bankruptcy Code") from the Company's securityholders.
---------------
TERMS:
-----
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company agrees with each Specified Holder and each Specified
Holder agrees with the Company as follows:
SECTION 1
DEFINITIONS
-----------
"Act" means the Securities Act of 1933, as amended, and the rules and
---
regulations of the Commission thereunder.
"Affiliate" of any specified Person means any other Person directly or
---------
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" having meanings correlative to the foregoing.
"Bankruptcy Court" means the United States Bankruptcy Court for the
----------------
District of Delaware in which a case will be commenced by the Company to seek
confirmation of the Prepackaged Plan.
<PAGE>
"Beneficial Ownership" (and other correlative terms) shall have the meaning
--------------------
used in Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
"Business Day" means each day, other than a Saturday or Sunday, which is
------------
not a day on which banking institutions in the City of New York are authorized
or obligated by law or executive order to close.
"Capitalized Lease Obligation" means any obligation to pay rent or other
----------------------------
amounts under a lease of (or other agreement conveying the right to use) real or
personal property that is required to be classified and accounted for as a
capital lease obligation under generally accepted accounting principles as
reflected in the financial statements of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Common Stock" means the Common Stock, par value $.01 per share, of the
------------
Company.
"Disclosure Statement" means the Disclosure Statement to be distributed by
--------------------
the Company in connection with the Solicitation.
"Foley Entity" means a corporation or other entity in which Thomas C. Foley
------------
("Foley"), directly or indirectly, owns a majority of the beneficial interests
-----
of the voting common stock in such corporation or other entity or has the power
to elect the majority of the board of directors of such corporation or other
entity.
"Franklin Holder" means each specified holder designated as a "Franklin
---------------
Affiliate" on Exhibit A attached hereto, together with their respective
---------
successors, Affiliates, persons with whom any of them are acting in concert and,
only prior to the time of the Merger, any of their respective Transferees.
"Holders" means any holder of Old Notes including, without limitation, the
-------
Specified Holders.
"Indebtedness" means without duplication (a) any liability (including
------------
obligations to pay principal, interest and premium, as applicable) of the
Company or any Subsidiary for borrowed money or evidenced by a bond, note,
debenture or similar instrument (including a purchase money obligation) given in
connection with the acquisition of any businesses, properties or assets of any
kind (other than a trade payable or a current liability arising in the ordinary
course of business or any Capitalized Lease Obligation) to the extent it would
appear as a liability upon a balance sheet of the Company prepared on a
consolidated basis in accordance with generally accepted accounting principles,
(b) any liability of the Company or any Subsidiary under any reimbursement
obligation relating to a letter of credit; and (c) any liability of others
described in clauses (a) or (b) above
2
<PAGE>
that the Company or any Subsidiary has guaranteed, directly or indirectly (to
the extent of such guarantee), or that is otherwise the Company's or any
Subsidiary's legal liability.
"Interest Rate Contracts" means interest rate swap agreements, interest
-----------------------
rate cap agreements, interest rate collar agreements, interest rate insurance
and other agreements or arrangements designed to provide protection against
fluctuations in interest rates.
"Majority Holders" means any one or more Specified Holders who own in the
----------------
aggregate a majority in principal amount of all Old Notes then held by all
Specified Holders.
"Permitted Indebtedness" means (a) Indebtedness of the Company represented
----------------------
by the Old Notes, (b) Indebtedness of the Company not to exceed $100,000,000
outstanding at any time (including, but not limited to, Indebtedness of the
Company (i) under the Old Credit Agreement (as hereinafter defined), (ii)
evidenced by trade letters of credit, (iii) arising out of sale and leaseback
arrangements and (iv) which is a purchase money obligation), (c) obligations
pursuant to Interest Rate Contracts, to the extent that the notional principal
amount of such obligations does not exceed the amount of Permitted Indebtedness
outstanding on the date such Interest Rate Contracts are entered into, (d) any
Indebtedness of a Subsidiary owed to the Company or to another Subsidiary or
Indebtedness of the Company owed to any Subsidiary, (e) Indebtedness of the
Company not to exceed $50,000,000 outstanding at any time with respect to the
Company's existing receivables securitization facility pursuant to which the
Company's Floating Rate Trade Receivables Asset Backed Certificates Series 1993-
1 were issued (the "Receivables Financing"), (f) Indebtedness of the Company
---------------------
approved by the Bankruptcy Court and (g) Indebtedness incurred in refinancing
any of the Indebtedness described in clauses (a) through (f).
"Person" means an individual, corporation, limited liability company,
------
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, government (or an agency or political subdivision thereof)
or other entity of any kind.
"Ruling Request" means the private letter ruling request attached hereto as
--------------
Exhibit C, including any amendments thereof or supplements thereto.
- ---------
"Senior Bank Debt" means any Indebtedness incurred pursuant to the Credit
----------------
Agreement dated as of August 4, 1993, as amended, among the Company, the Lenders
named therein (the "Banks") and Citicorp North America, Inc., as Agent, as such
-----
agreement may be amended, supplemented or modified from time to time (the "Old
---
Credit Agreement").
- ----------------
3
<PAGE>
"Subsidiary" means, with respect to any Person, (i) a corporation a
----------
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by one or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof or (ii) any other Person (other than a corporation) in
which such Person, one or more Subsidiaries thereof or such Person and one or
more Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, has at least majority ownership interest.
"Successor Company" means a newly-formed Delaware corporation initially to
-----------------
be named "Successor Bibb Company" into which, in accordance with the Prepackaged
Plan, the Company would merge in a merger in which the newly-formed corporation
survives (the "Merger").
------
"Termination Event" means the earliest to occur of any of the following:
-----------------
(a) the Company's failure, as of the Voting Deadline, to obtain the consents of
Holders of Old Notes necessary (both in number and amount of claims) to obtain
confirmation of the Prepackaged Plan under the Bankruptcy Code; (b) the failure
by April 30, 1996 of the Internal Revenue Service to issue to the Company a
private letter ruling confirming, in all material respects, the legal
conclusions requested in the Ruling Request unless, by such date, both the
Company and the Majority Holders have executed the waiver to the Ruling Request
contemplated by Section 2.2(b) below; and (c) the failure of the Company to
execute by May 15, 1996 definitive agreements with the applicable financial
institutions regarding financing which are not inconsistent with the Bank
Commitment (as defined below) in any materially adverse respect.
"Voting Deadline" means the voting deadline specified in the Disclosure
---------------
Statement prior to which ballots with respect to the Prepackaged Plan will be
accepted by the Company, as such voting deadline may be extended by the Company.
Notwithstanding the foregoing, the Voting Deadline shall not exceed six weeks
following the date of the Disclosure Statement unless extended further with the
consent of the Majority Holders.
"Wood's Junior Subordinated Note" means the Subordinated Note in the
-------------------------------
original principal amount of $13,218,000 dated March 31, 1993, issued by TB
Wood's Corporation in favor of the Company.
SECTION 2
PREPACKAGED PLAN SOLICITATION
-----------------------------
Section 2.1 Solicitation. Subject to applicable law, within five Business
------------
Days following execution by the Company and the applicable financial
institutions of one or more commitment
4
<PAGE>
letters which are on terms satisfactory to the Majority Holders in all material
respects (the "Bank Commitment"), the Company will commence the Solicitation by
distributing the Disclosure Statement to the Banks, the Holders, the Company's
stockholders and such other persons as specified therein.
Section 2.2 Acceptance and Submission of Prepackaged Plan.
---------------------------------------------
(a) Subject to Section 2.2(b) below, each of the Specified Holders
covenants and agrees that such Specified Holder: (i) will vote for acceptance
of the Prepackaged Plan with respect to all Old Notes owned by such Specified
Holder and, accordingly, will tender to the Company an executed and properly-
completed ballot in favor of acceptance of the Prepackaged Plan by the Voting
Deadline; (ii) will not withdraw or otherwise revoke the ballot referred to in
clause (i) above; and (iii) will not vote for or otherwise consent to any action
or agreement that would impede, interfere with, delay, postpone or attempt to
discourage consummation of the Prepackaged Plan, including, but not limited to,
any vote for or recommendation in favor of any alternative plan of
reorganization not proposed by the Company under the Bankruptcy Code.
(b) Notwithstanding anything to the contrary contained herein, the
Prepackaged Plan will not be submitted to the Bankruptcy Court unless (i) on or
prior to April 30, 1996, the Internal Revenue Service has issued to the Company
a private letter ruling confirming, in all material respects, the legal
conclusions requested in the Ruling Request, or by April 30, 1996, both the
Company and the Majority Holders have executed a waiver to the condition
specified in clause (i) above; and (ii) the Company shall have executed
definitive agreements with the applicable financial institutions regarding
financing which are not inconsistent with the Bank Commitment in any materially
adverse respect. Following any Termination Event, the parties understand and
agree that the Company may withdraw the Ruling Request. Prior to any
Termination Event, the Company may withdraw the Ruling Request with the prior
written approval of the Majority Holders.
SECTION 3
RESTRICTIONS UPON TRANSFERS
---------------------------
Section 3.1 Restrictions. No Specified Holder shall sell, assign,
------------
transfer, pledge, hypothecate, make gifts of or in any manner whatsoever dispose
of or encumber (any such sale, assignment, transfer, pledge, hypothecation, gift
or disposition being hereinafter referred to as a "Transfer") any Old Notes
--------
(including the Old Notes set forth opposite such Specified Holders' name on
Exhibit A) or any interest therein, except pursuant to a permitted Transfer
- ---------
specified in Section 3.2. Any purported Transfer by any Specified Holder in
violation of this
5
<PAGE>
Agreement shall be null and void and of no force and effect and the purported
transferee shall have no rights or privileges in or with respect to the Company.
Section 3.2 Permitted Transfers. Notwithstanding anything to the contrary
-------------------
contained in Section 3.1, a Specified Holder may Transfer any or all Old Notes
pursuant to a permitted Transfer as follows: (a) Transfer of Old Notes to any
Person if the proposed transferee agrees in a writing delivered to the Company
to become a party to this Agreement and pursuant to which writing such proposed
transferee (i) shall be bound by the terms and conditions of this Agreement in
the same manner and to the same extent as the Specified Holder who proposes to
Transfer such Old Notes (including without limitation the obligations set forth
in Section 2), and (ii) shall be entitled to the benefit of the provisions of
this Agreement in the same manner and to the same extent as the Specified Holder
who proposes to Transfer such Old Notes; and (b) a Transfer of Old Notes in
connection with the transactions contemplated by the Prepackaged Plan following
the Merger.
SECTION 4
CERTAIN COVENANTS AND REPRESENTATIONS
-------------------------------------
Section 4.1 Engineered Productions Division. If the Majority Holders
-------------------------------
deliver a written notice to the Company requesting the marketing of the
Company's Engineered Products Division business ("EPD") for a possible sale
---
pursuant to the Prepackaged Plan, then as part of any such possible sale:
(a) the Company will enlist the assistance of Houlihan, Howard and Zukin
("Houlihan") on terms and conditions mutually satisfactory to Houlihan, the
--------
Company and the Majority Holders, or, if such firm is unable or unwilling to
assist, such other investment banking firm selected by the Company which is
satisfactory to the Majority Holders (the "Investment Banker") in preparing an
-----------------
information summary, including historical financial data, relating to EPD (the
"EPD Information") and in marketing EPD;
- ----------------
(b) prospective buyers of EPD will only be entitled to conduct "due
diligence" and to review appropriate financial and business information,
including the EPD Information, relating to EPD upon execution of an appropriate
confidentiality agreement between the Company and such prospective buyer in form
and substance satisfactory to Houlihan, the Company and Majority Holders;
(c) the Majority Holders will have the right to designate in writing to
the Company any third party as the proposed purchaser of EPD, and subject to
applicable fiduciary duties advised by counsel and subject to the receipt of
applicable
6
<PAGE>
Bankruptcy Court approval, the Company will sell EPD as part of the Prepackaged
Plan to any such designated third party; Foley, in his capacity as a director of
the Company, will vote in favor of such sale in any vote taken by the Company's
directors; and
(d) in the event the Company enters into an agreement to sell, or
otherwise sells, EPD to a third party other than a Foley Entity prior to or in
connection with the confirmation of the Prepackaged Plan by the Bankruptcy
Court, the equity ownership in the Successor Company shall be adjusted as
contemplated by Article V of the Prepackaged Plan (so as to increase the equity
ownership of the Company's existing stockholders from 5% to 5-1/2% of the
Successor Company's equity on a fully-diluted basis as of effective date of the
Merger and to decrease the equity ownership of the Holders of Old Notes from 95%
to 94-1/2%).
Section 4.2 Board Observer.
--------------
(a) Until a Termination Event and subject to the last sentence of this
Section 4.2(a) below, one authorized representative selected by the Majority
Holders as evidenced in a writing delivered to the Company (the
"Representative") may attend all meetings of the Board of Directors of the
--------------
Company in a nonvoting observer capacity. The Company shall provide the
Representative with such notice of and other information with respect to such
meetings as are provided to members of the Board of Directors at the same time
as so provided to such persons. As a condition to any Representative receiving
any notice or information or attending any meetings contemplated by this Section
4.2, such Representative must execute and deliver to the Company a
Confidentiality Agreement in the form and substance acceptable to the Majority
Holders.
(b) The Majority Holders shall at all times have the right to designate a
new Representative to replace any existing Representative by written notice to
the Company.
Section 4.3 Negative Covenants. The Company hereby covenants and agrees
------------------
that, until any Termination Event, the Company will not:
(a) Limitation on Restricted Payments. Declare or pay any dividend on, or
---------------------------------
purchase, redeem or retire for value, or make any payment on the account of the
purchase, redemption or other acquisition or retirement for value, of any Common
Stock of the Company, except as contemplated by the Prepackaged Plan.
(b) Limitation on Indebtedness. Create, incur or assume, directly or
--------------------------
indirectly, any Indebtedness other than Permitted Indebtedness.
(c) Limitation on Mergers and Asset Sales. Merge or consolidate with any
-------------------------------------
Person or acquire all or any substantial part of the properties or assets of any
Person or sell, assign,
7
<PAGE>
lease, transfer, exchange or otherwise dispose of any material property, except
for (i) sales of goods and services made in the ordinary course of business and
assets relating to the Company's facilities located at Goldsboro, North
Carolina, Abbeyville, South Carolina, Rockingham, North Carolina and Roanoke
Rapids, North Carolina, (ii) any sale of EPD in accordance with Section 4.1
above, (iii) any sale of shares of the Wood's Corporation pursuant to a
registered public offering, (iv) any sale of Wood's Junior Subordinated Note
approved by the Majority Holders and (v) as provided in Section 4.7, any
purchase or sale of the Company's receivables involving the Company's
Receivables Financing or any refinancing thereof.
(d) Limitation on Capital Expenditures. Make any capital expenditures in
----------------------------------
the aggregate during any one fiscal year exceeding $16 million (net of vendor
financing and proceeds from applicable sales of existing equipment).
(e) Limitation on Change of S-Corp Tax Election. Make any filing with the
-------------------------------------------
Internal Revenue Service or take any other action which renders the Company's
election under Section 1362(a) of the Code ineffective.
Section 4.4 CEO Search. The Company agrees to initiate a search process
----------
to attempt to hire a chief operating officer for the Company who may, upon
consummation of the Prepackaged Plan, become the Chief Executive Officer of the
Company (the "CEO") on an interim or permanent basis as follows: (a) the
---
Company will select one or more executive recruiting firms to identify possible
CEO candidates; (b) the Company will review the list of possible CEO candidates
with the Specified Holders and will add any candidates suggested by the Majority
Holders in writing to the Company; and (c) if the Company determines to hire any
candidate as CEO prior to confirmation of the Prepackaged Plan, then, subject to
applicable fiduciary duties advised by counsel, the Company will not hire any
candidate without the written approval of the Majority Holders (which approval
will not be unreasonably withheld).
Section 4.5 Employee Benefits. The Company has reviewed with the
-----------------
Specified Holders the importance of retaining the services of key employees
(other than Foley) and, with the approval of the Specified Holders and the
recommendation of their financial advisor, has adopted the Bonus Plan attached
hereto as Exhibit D. The Company, on or prior to the first anniversary
---------
following confirmation of the Prepackaged Plan by the Bankruptcy Court, will
adopt one or more stock option plans pursuant to which then-current employees
(in no event to include Foley) identified on Exhibit D will be granted options
---------
covering shares of the Successor Company's common stock, all in amounts and with
exercise prices and other terms customary for key employees of publicly-traded
textile companies as determined by the Company's Board of Directors in
accordance with their fiduciary duties. The Company will continue to honor the
deferred compensation
8
<PAGE>
obligations owed to its employees (other than Foley), including the obligations
set forth on Exhibit E through the date listed therein.
---------
Section 4.6 Management Services. Under the terms of a management services
-------------------
agreement (the "Management Agreement") between the Company and the NTC, the
--------------------
Company has retained the management services of NTC. Effective as of the date
hereof, the Company will pay the management fees to NTC under the Management
Agreement (the "Management Fees") as follows:
---------------
(a) for the period beginning on the date hereof and ending on the Voting
Deadline, the Management Fees shall equal $1,699,600 per annum, payable as
provided below;
(b) if the Company obtains the consents of Holders of Old Notes necessary
(both in number and amount of claims) to obtain confirmation of the Prepackaged
Plan under the Bankruptcy Code, then, for the period beginning from the Voting
Deadline and ending on the date of the confirmation of the Prepackaged Plan by
the Bankruptcy Court, the Management Fees shall equal $1,699,600 per annum,
payable as provided below; and
(c) upon the occurrence of any Termination Event, the Management Fees
shall equal the fee required to be paid under the Management Agreement and in
effect prior to the date hereof.
The Management Fees owed to NTC pursuant to Section 4.6(a) and (b) shall be due
and payable in advance, in immediately available funds equal to $141,633, on or
prior to the first day of each calendar month. The Specified Holders hereby to
consent to the matters referred to in this Section 4.6, and agree to support
such Management Fees as part of the Prepackaged Plan. Effective upon the time of
the Merger, the Management Agreement will terminate in accordance with the
Prepackaged Plan.
Section 4.7 Mutual Releases. Effective upon the date hereof but subject
---------------
to the termination provisions of Section 5.3, except with respect to the
representations, warranties, covenants and agreements by each of the parties
hereto (other than the Company), each of the parties to this Agreement (other
than the Company), for itself, its Affiliates, its successors and assigns, does
hereby release and forever discharge the other parties to this Agreement (other
than the Company), and their Affiliates, successors and assigns, from any and
all claims, obligations, suits, judgments, damages, rights, causes of action and
liabilities whatsoever, whether known or unknown, foreseen or unforeseen,
existing or hereafter arising, in law, equity or otherwise, based in whole or in
part upon any act or omission, transaction, event or other occurrence taking
place on or prior to the date of the Merger in any way relating to or arising
out of each party's respective ownership, operation, involvement or association
with the Company (including, without limitation, in such party's capacity as an
officer, director, employee,
9
<PAGE>
securityholder or service provider); it being understood and agreed that the
foregoing releases by the parties hereto (other than the Company) shall not
apply, with respect to each such other Person, to matters not relating to or
involving the Company.
Section 4.8 Ruling Request Certification. Each of the Specified Holders
----------------------------
and Foley will execute and deliver to the Company a Representation Statement of
Noteholder and Shareholder, as applicable, attached hereto as Exhibit F on the
---------
date hereof and on the date of confirmation of the Prepackaged Plan.
Section 4.9 Specified Holders' Representations. Each of the Specified
----------------------------------
Holders severally (but not jointly) represents and warrants to the Company that:
(a) Authority. Such Specified Holder has full legal right, power and
---------
authority to enter into this Agreement and to perform such Specified Holder's
obligations hereunder without the need for the consent of any other person.
(b) Ownership. Such Specified Holder is the sole beneficial owner of the
---------
principal amount of Old Notes set forth opposite the name of such Specified
Holder on Exhibit A.
---------
(c) Enforceability. This Agreement has been duly authorized, executed and
--------------
delivered and constitutes the legal, valid and binding obligation of such
Specified Holder enforceable against such Specified Holder in accordance with
the terms hereof, except as such enforcement may be limited by bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
(d) Compliance. The execution, delivery and performance of this Agreement
----------
by such Specified Holder does not, in any material respect, (i) violate any
provision of applicable law, rule, regulation or ordinance (other than the
consents to be obtained as contemplated by this Agreement), (ii) violate any
judgment, order, writ or decree of any court or other tribunal applicable to
such Specified Holder, (iii) violate or result in a default under any of the
provisions of the Certificate of Incorporation or the By-Laws (or other
constitutive documents) of such Specified Holder or (iv) violate or otherwise
constitute a default (with or without the giving of notice or the lapse of time
or both) under any material agreement to which such Specified Holder is a party.
Each such Specified Holder is a sophisticated institutional investor with
respect to its ownership of the Old Notes and is an "accredited investor" as
defined in Rule 501(a) of Regulation D under the Act.
Section 4.10 Company's Representations. The Company represents and
-------------------------
warrants to each of the Specified Holders that:
10
<PAGE>
(a) Organization. The Company is a corporation validly existing and in
------------
good standing under the laws of the State of Delaware and has all requisite
corporate power and corporate authority to own, lease and operate its properties
and assets as now owned, leased and operated.
(b) Authority. The Company has the full legal right, power and authority
---------
to enter into this Agreement and to perform its obligations hereunder without
the need for the consent of any other person (except as may be required under
the applicable agreements relating to Permitted Indebtedness).
(c) Enforceability. This Agreement has been duly authorized, executed and
--------------
delivered and constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with the terms hereof, except as
such enforcement may be limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
(d) Compliance. The execution, delivery and performance of this Agreement
----------
by the Company does not, in any material respect, (i) violate any provision of
applicable law, rule, regulation or ordinance (other than the consents to be
obtained as contemplated by this Agreement), (ii) violate any judgment, order,
writ or decree of any court or other tribunal applicable to the Company, (iii)
violate or result in a default under any of the provisions of the Certificate of
Incorporation or the By-Laws of the Company or (iv) except with respect to the
applicable agreements relating to Permitted Indebtedness, violate or otherwise
constitute a default (with or without the giving of notice or the lapse of time
or both) under any material agreement to which the Company is a party.
(e) Financial Information. The Company has previously delivered to
---------------------
Houlihan, on behalf of the Specified Holders, copies of (i) an unaudited balance
sheet, income statement and statement of cash flows of the Company as of and for
the year ended December 31, 1994 (the "Unaudited Annual Financial Statements")
and (ii) an unaudited balance sheet, income statement and statement of cash
flows of the Company as of and for the nine months ended September 30, 1995 (the
"Interim Financial Statements"). Except as noted therein, the Unaudited Annual
Financial Statements and the Interim Financial Statements have been prepared
from the corporate books and records of the Company in accordance with generally
accepted accounting principles and present fairly in all material respects the
financial position of the Company as of the dates thereof and the results of its
operations for the periods covered thereby (subject to the absence of notes and,
in the case of the Interim Financial Statements, year-end audit adjustments).
Section 4.11 NTC Representations. NTC represents and warrants to each of
-------------------
the Specified Holders that:
11
<PAGE>
(a) Organization. NTC is a corporation validly existing and in good
------------
standing under the laws of the State of Delaware and has all requisite corporate
power and corporate authority to own, lease and operate its properties and
assets as now owned, leased and operated.
(b) Authority. NTC has the full legal right, power and authority to enter
---------
into this Agreement and to perform its obligations hereunder without the need
for the consent of any other person.
(c) Enforceability. This Agreement has been duly authorized, executed and
--------------
delivered and constitutes the legal, valid and binding obligation of NTC
enforceable against NTC in accordance with the terms hereof, except as such
enforcement may be limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
(d) Compliance. The execution, delivery and performance of this Agreement
----------
by NTC does not, in any material respect, (i) violate any provision of
applicable law, rule, regulation or ordinance (other than the consents to be
obtained as contemplated by this Agreement), (ii) violate any judgment, order,
writ or decree of any court or other tribunal applicable to NTC, (iii) violate
or result in a default under any of the provisions of the Certificate of
Incorporation or the By-Laws of NTC or (iv) violate or otherwise constitute a
default (with or without the giving of notice or the lapse of time or both)
under any material agreement to which NTC is a party.
Section 4.12 Foley Representations. Foley represents and warrants to each
---------------------
of the Specified Holders that:
(a) Authority. Foley has full legal right, power and authority to enter
---------
into this Agreement and to perform Foley's obligations hereunder without the
need for the consent of any other person.
(b) Ownership. Foley is the sole beneficial owner of a majority of the
---------
outstanding shares of Common Stock.
(c) Enforceability. This Agreement has been duly authorized, executed and
--------------
delivered and constitutes the legal, valid and binding obligation of Foley
enforceable against Foley in accordance with the terms hereof, except as such
enforcement may be limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
(d) Compliance. The execution, delivery and performance of this Agreement
----------
by Foley does not, in any material respect, (i) violate any provision of
applicable law, rule, regulation or ordinance (other than the consents to be
obtained as contemplated
12
<PAGE>
by this Agreement), (ii) violate any judgment, order, writ or decree of any
court or other tribunal applicable to Foley, (iii) violate or result in a
default under any of the provisions of the Certificate of Incorporation or the
By-Laws (or other constitutive documents) of Foley or (iv) violate or otherwise
constitute a default (with or without the giving of notice or the lapse of time
or both) under any material agreement to which Foley is a party.
Section 4.13 Co-Sale. Each Franklin Holder covenants and agrees that, in
-------
the event any such Franklin Holder grants to any other Specified Holder any "co-
sale," "tag-along" or other similar right or other opportunity to sell such
other Specified Holder's equity securities of the successor Company (or any
securities or other property exchanged therefor) on substantially the same terms
and conditions as any Franklin Holder may sell, each such Franklin Holder shall
grant the same right or other opportunity to each existing holder of Common
Stock as of the date hereof with respect to equity securities of the successor
Company (or any securities or other property exchanged therefor).
SECTION 5
MISCELLANEOUS
-------------
Section 5.1 No Waiver; Modifications in Writing. No failure or delay on
-----------------------------------
the part of the Company or any Specified Holder or NTC in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to any party at law or in equity or otherwise.
No waiver of or consent to any departure by the Company from any provision of
this Agreement shall be effective unless signed in writing by the party entitled
to the benefit thereof, provided that notice of any such waiver shall be given
to each party hereto as set forth below. Except as otherwise provided herein,
no amendment, modification or termination of any provision of this Agreement
shall be effective unless signed in writing by or on behalf of the Majority
Holders, NTC, Foley and the Company. Any amendment, supplement or modification
of or to any provision of this Agreement, any waiver of any provision of this
Agreement and any consent to any departure by any Person from the terms of any
provision of this Agreement, shall be effective only in the specific instance
and for the specific purpose for which made or given. Except where notice is
specifically required by this Agreement, no notice to or demand on any Person in
any case shall entitle such Person to any other or further notice or demand in
similar other circumstances.
Section 5.2 Notices. All notices, demands and other communications
-------
provided for hereunder shall be in writing, and,
13
<PAGE>
if to the Specified Holders or NTC, shall be given by registered or certified
mail, return receipt requested, telex, telegram, telecopy, courier service or
personal delivery, addressed to each Specified Holder and NTC as shown on the
execution pages hereof or to such other address as such person may designate to
the Company in writing and, if to the Company, shall be given by similar means
to the Company: The Bibb Company, 237 Coliseum Drive, Macon, Georgia 31201, or
to such other address as the Company may designate in writing, and shall be
deemed given when received. Copies of all such notices shall be provided to:
Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York, NY 10022, Attention:
Marc S. Kirschner, Esq.; and Dechert Price & Rhoads, 4000 Bell Atlantic Tower,
1717 Arch Street, Philadelphia, PA 19103-2793, Attention: David E. Schulman,
Esq.
Section 5.3 Term. This Agreement shall terminate upon the earliest to
----
occur of (a) a Termination Event, (b) the Merger and (c) the first anniversary
of the date hereof; provided, however, that, if the Merger shall occur within
-------- -------
the first anniversary following the date hereof, Section 4.5, Section 4.7 and
Section 4.13 shall survive without limitation. Upon termination of this
Agreement, there shall be no liability on the part of any party, except for
liabilities arising from a breach of this Agreement prior to such termination.
Section 5.4 Execution in Counterparts. This Agreement may be executed in
-------------------------
two or more counterparts, each of which shall constitute an original and all of
which together shall constitute one and the same Agreement. Delivery of an
executed counterpart of a signature page by telecopier shall be effective as a
delivery of a manually executed counterpart hereof.
Section 5.5 Assignment. This Agreement shall be binding upon the Company,
----------
NTC and each Specified Holder, and their permitted successors and assigns. Any
assignment in violation of this provision shall be null and void.
Section 5.6 Governing Law. This Agreement shall be governed under the
-------------
laws of the State of New York, and without regard to the conflicts of law
principles thereof. Each of the parties hereto agrees to submit to the non-
exclusive jurisdiction of the courts of the State of Delaware and the State of
New York or, if such jurisdiction can be obtained, to the United States District
Court for Delaware and the United States District Court for the Southern
District of New York in any action or proceeding arising out of or relating to
this Agreement.
Section 5.7 Severability of Provisions. Any provision of this Agreement
--------------------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereby or
affecting the validity or enforceability of such provision in any other
jurisdiction.
14
<PAGE>
Section 5.8 Headings. The Section headings and Table of Contents used or
--------
contained in this Agreement are for convenience or reference only and shall not
affect the construction of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers hereunto duly authorized, as of the date
first above written.
THE BIBB COMPANY
By:/s/ Thomas C. Foley
--------------------------------
Name: Thomas C. Foley
Title: Chairman
Accepted and Agreed as of the
date first above written:
Specified Holders:
- -----------------
FRANKLIN CUSTODIAN FUND, INCOME
SERIES
By: /s/ Deborah R. Gatzek
----------------------------
Name: Deborah R. Gatzek
Title: VP
Address: 777 Mariners Island Blvd.
--------------------------
San Mateo, CA 94404
--------------------------
Telephone: (415) 312-2000
---------------------
Telecopy:______________________
FRANKLIN VALUE MARK FUNDS,
INCOME SECURITIES FUND
By: /s/ Deborah R. Gatzek
----------------------------
Name: Deborah R. Gatzek
Title: VP
Address: 777 Mariners Island Blvd.
--------------------------
San Mateo, CA 94404
--------------------------
Telephone:_____________________
Telecopy:______________________
15
<PAGE>
FRANKLIN ADVISERS, INC.
By: /s/ Deborah R. Gatzek
----------------------------
Name: Deborah R. Gatzek
Title: VP
Address: 777 Mariners Island Blvd.
--------------------------
San Mateo, CA 94404
--------------------------
Telephone:_____________________
Telecopy:______________________
ROMULUS HOLDINGS, INC.
By:/s/ Steven Singer
----------------------------
Name: Steven Singer
Title: Vice President
Address: 25 Glegni Avenue
-----------------------
New Rochele, NY 10801
-----------------------
Telephone: (914) 235-8800
---------------------
Telecopy: (914) 235-8849
----------------------
BRAD AND BETH SINGER CHILDREN'S TRUST
By:/s/ Steven Singer
----------------------------
Name: Steven Singer
Title: Vice President
Address: 10 Loman Ct
-----------------------
Cresskill, NJ 07626
-----------------------
Telephone: (914) 235-8800
---------------
Telecopy: (914) 235-8849
---------------
16
<PAGE>
GARY AND KAREN SINGER CHILDREN'S TRUST
By:/s/ Steven Singer
----------------------------
Name: Steven Singer
Title: Vice President
Address: 10 Loman Ct
-----------------------
Cresskill, NJ 07626
-----------------------
Telephone: (914) 235-8800
---------------------
Telecopy: (914) 235-8849
----------------------
STEVEN G. SINGER CHILDREN'S FUND
By:/s/ Steven Singer
----------------------------
Name: Steven Singer
Title: Vice President
Address: 10 Loman Ct
-----------------------
Cresskill, NJ 07626
-----------------------
Telephone: (914) 235-8800
---------------------
Telecopy: (914) 235-8849
----------------------
SECOND SINGER TRUST
By:/s/ Steven Singer
-----------------
Name: Steven Singer
Title: Vice President
Address: 25 Glegni Avenue
-----------------
New Rochele, NY 10801
-----------------------
Telephone: (914) 235-8800
---------------
Telecopy: (914) 235-8849
--------------
17
<PAGE>
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
By:/s/ Thomas J. Gahan
---------------------------------
Name: Thomas J. Gahan
Title: Managing Director
Address: 250 Vesey Street/North Tower
-----------------------------
New York, New york 10281
-----------------------------
Telephone: (212) 449-4960
---------------------
Telecopy: (212) 449-4004
----------------------
SHOWA LEASING (U.S.A.) INC.
By: /s/ Etsuro Sato
-------------------------------
Name: Etsuro Sato
Title: President
Address: 405 Park Avenue, 8th Floor
----------------------------
New York, NY 10022
----------------------------
Telephone: (212) 750-7960
--------------------------
Telecopy:(212) 750-7967
---------------------------
NTC:
- ---
NTC GROUP, INC.
By: /s/ Thomas C. Foley
-------------------------------
Name: Thomas C. Foley
Title: President
Address: 3 Pickwick Plaza
----------------------------
Greenwich, CT 06831
----------------------------
Telephone: (203) 862-2850
--------------------------
Telecopy: (203) 622-6538
---------------------------
18
<PAGE>
Foley:
- -----
/s/ Thomas C. Foley
- -------------------------------
Thomas C. Foley
Address: 62 Khakum Wood Road
-----------------------
Greenwich, CT 06831
-----------------------
Telephone:(203) 862-2850
---------------------
Telecopy:(203) 622-6538
----------------------
19
<PAGE>
Exhibit A
---------
Specified Holders
-----------------
<TABLE>
<CAPTION>
Principal Amount
Name of Old Notes
- ------------------------------- ---------------------------
13-7/8% Notes 14% Notes
------------- ------------
<S> <C> <C>
Franklin Custodian Fund, Income* $ -0- $35,000,000
Franklin Value Mark Funds, $ -0- $ 7,000,000
Income Securities Fund*
Romulus Holdings, Inc. $ 5,085,000 $ 5,765,000
Brad and Beth Singer $ 500,000 $ -0-
Children's Trust
Gary and Karen Singer $ 500,000 $ -0-
Children's Trust
Steven G. Singer Children's $ -0- $ 600,000
Trust
Second Singer Trust $ -0- $ 250,000
Merrill Lynch, Pierce, $ -0- $23,073,000
Fenner & Smith Incorporated
Showa Leasing (U.S.A.) Inc. $ -0- $ 5,000,000
</TABLE>
*Each such person, a "Franklin Affiliate."
- ------------------------------------------
20
<PAGE>
AMENDMENT TO RESTRUCTURING AGREEMENT
------------------------------------
This is an Amendment dated as of May 14, 1996 (the "Amendment") to the
Restructuring Agreement dated as of February 1, 1996 (the "Restructuring
Agreement") among The Bibb Company, the Specified Holders (as defined in the
Restructuring Agreement), NTC Group, Inc. and Thomas C. Foley.
The parties hereto hereby amend the definition of "Termination Event"
to provide that clause (c) reads as follows:
"(c) the failure of the Company to execute by July 31,
1996 definitive agreements (which are satisfactory to the
Majority Holders) with the applicable financial
institutions regarding debtor-in-possession financing
during the Company's case under the Bankruptcy Code in
the Bankruptcy Court."
The parties hereto hereby amend Section 2.2(b) to provide that clause
(ii) of the first sentence read as follows:
"(ii) the Company shall have executed definitive
agreements (which are satisfactory to the Majority
Holders) with the applicable financial institutions
regarding debtor-in-possession financing during the
Company's case under the Bankruptcy Code in the
Bankruptcy Court."
Except as specifically amended above by this Amendment, the
Restructuring Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first above written.
THE BIBB COMPANY
By: /s/ Thomas C. Foley
-----------------------------------
21
<PAGE>
SPECIFIED HOLDERS:
-----------------
FRANKLIN CUSTODIAN FUND, INCOME
SERIES
By: /s/ KV Domingues
-----------------------------------
Vice President
FRANKLIN VALUE MARK FUNDS,
INCOME SECURITIES FUND
By:/s/ KV Domingues
------------------------------------
Vice President
FRANKLIN ADVISERS, INC.
By:/s/ KV Domingues
------------------------------------
Senior Vice President
ROMULUS HOLDINGS, INC.
By:/s/ Steven Singer
---------------------------------------
BRAD AND BETH SINGER CHILDREN'S
TRUST
By:/s/ Steven Singer
---------------------------------------
GARY AND KAREN SINGER CHILDREN'S
TRUST
By:/s/ Steven Singer
---------------------------------------
22
<PAGE>
STEVEN G. SINGER CHILDREN'S TRUST
By:/s/ Steven Singer
---------------------------------------
SECOND SINGER TRUST
By:/s/ Steven Singer
---------------------------------------
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:/s/ JV Engelen
---------------------------------------
JV Engelen
Managing Director
SHOWA LEASING (U.S.A.) INC.
By:/s/ Etsuro Sato
---------------------------------------
Etsuro Sato, President
NTC:
---
NTC GROUP, INC.
By: /s/ Thomas C. Foley
---------------------------------------
FOLEY:
-----
/s/ Thomas C. Foley
---------------------------------------
Thomas C. Foley
23
<PAGE>
Loan and Security Agreement
by and among
CONGRESS FINANCIAL CORPORATION (SOUTHERN)
as Agent
THE LENDERS PARTIES HERETO
and
THE NEW BIBB COMPANY
(to be known as The Bibb Company)
as Borrower
Dated as of: September 12, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. DEFINITIONS.................................................................... 1
SECTION 2. CREDIT FACILITY................................................................ 23
2.1 Revolving Loans................................................................ 23
2.2 Letter of Credit Accommodations................................................ 25
2.3 Term Loan...................................................................... 28
2.4 Availability Reserves.......................................................... 28
2.5 Commitments.................................................................... 30
SECTION 3. INTEREST AND FEES.............................................................. 31
3.1 Interest....................................................................... 31
3.2 Commitment and Closing Fees.................................................... 33
3.3 Servicing Fee.................................................................. 34
3.4 Unused Line Fee................................................................ 34
3.5 Maximum Interest............................................................... 34
3.6 Changes in Laws and Increased Costs of Loans................................... 36
SECTION 4. CONDITIONS PRECEDENT........................................................... 37
4.1 Conditions Precedent to the Initial Loans...................................... 37
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations.......... 43
SECTION 5. GRANT OF SECURITY INTEREST..................................................... 44
SECTION 6. COLLECTION AND ADMINISTRATION.................................................. 45
6.1 Borrower's Loan Account........................................................ 45
6.2 Statements..................................................................... 45
6.3 Collection of Accounts......................................................... 46
6.4 Payments....................................................................... 47
6.5 Sharing of Payments, Etc....................................................... 48
6.6 Authorization to Make Loans.................................................... 49
6.7 Settlement Procedures.......................................................... 49
6.8 Use of Proceeds................................................................ 51
SECTION 7. COLLATERAL REPORTING AND COVENANTS............................................. 52
7.1 Collateral Reporting........................................................... 52
7.2 Accounts Covenants............................................................. 53
7.3 Inventory Covenants............................................................ 55
7.4 Equipment Covenants............................................................ 56
7.5 Power of Attorney.............................................................. 56
7.6 Right to Cure.................................................................. 57
7.7 Access to Premises............................................................. 57
7.8 Food Security Act.............................................................. 58
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 8. REPRESENTATIONS AND WARRANTIES................................................. 60
8.1 Corporate Existence, Power and Authority; Subsidiaries......................... 60
8.2 Financial Statements; No Material Adverse Change............................... 60
8.3 Chief Executive Office; Collateral Locations................................... 60
8.4 Priority of Liens; Title to Properties......................................... 61
8.5 Tax Returns.................................................................... 61
8.6 Litigation..................................................................... 61
8.7 Compliance with Other Agreements and Applicable Laws........................... 62
8.8 Environmental Compliance....................................................... 62
8.9 Employee Benefits.............................................................. 63
8.10 Plan; Merger................................................................... 64
8.11 Accuracy and Completeness of Information....................................... 65
8.12 Survival of Warranties; Cumulative............................................. 66
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS............................................. 66
9.1 Maintenance of Existence....................................................... 66
9.2 New Collateral Locations....................................................... 66
9.3 Compliance with Laws, Regulations, Etc......................................... 67
9.4 Payment of Taxes and Claims.................................................... 69
9.5 Insurance...................................................................... 69
9.6 Financial Statements and Other Information..................................... 70
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc........................ 72
9.8 Encumbrances................................................................... 74
9.9 Indebtedness................................................................... 75
9.10 Loans, Investments, Guarantees, Etc............................................ 76
9.11 Dividends and Redemptions...................................................... 76
9.12 Transactions with Affiliates................................................... 77
9.13 Working Capital Ratio.......................................................... 77
9.14 Changes in Tangible Net Worth.................................................. 77
9.15 Capital Expenditures........................................................... 77
9.16 EBITDA......................................................................... 77
9.17 After-Tax Fixed Charge Coverage Ratio.......................................... 77
9.18 Compliance with ERISA.......................................................... 78
9.19 Consultant; Strategic Plan..................................................... 78
9.20 Costs and Expenses............................................................. 79
9.21 Further Assurances............................................................. 81
SECTION 10. EVENTS OF DEFAULT AND REMEDIES................................................. 81
10.1 Events of Default.............................................................. 81
10.2 Remedies....................................................................... 83
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW.................................................... 85
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.......... 85
11.2 Waiver of Notices.............................................................. 87
11.3 Amendments and Waivers......................................................... 87
11.4 Waiver of Counterclaims........................................................ 87
11.5 Indemnification................................................................ 88
</TABLE>
(ii)
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 12. THE AGENT...................................................................... 88
12.1 Appointment, Powers and Immunities............................................. 88
12.2 Reliance by Agent.............................................................. 89
12.3 Defaults or Events of Default.................................................. 89
12.4 Rights as a Lender............................................................. 90
12.5 Indemnification................................................................ 90
12.6 Non-Reliance on Agent and Other Lenders........................................ 91
12.7 Failure to Act................................................................. 92
12.8 Resignation of Agent........................................................... 92
12.9 Consents and Releases of Collateral under Financing Agreements................. 92
12.10 Collateral Matters............................................................. 93
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS............................................... 93
13.1Term 93
13.2 Notices........................................................................ 95
13.3 Partial Invalidity............................................................. 95
13.4 Successors and Assigns......................................................... 96
13.5 Assignments and Participations................................................. 96
13.6 Confidentiality................................................................ 99
13.7 Entire Agreement............................................................... 100
13.8 Modification of Agreement...................................................... 100
</TABLE>
(iii)
<PAGE>
INDEX TO
EXHIBITS AND SCHEDULES
----------------------
Exhibit A Information Certificate
Exhibit B Assignment and Assumption Agreement
Schedule 8.4 Existing Liens
Schedule 8.8 Environmental Disclosure
Schedule 8.9 ERISA Disclosure
Schedule 9.9 Existing Indebtedness
Financial Covenants
Schedule
<PAGE>
LOAN AND SECURITY AGREEMENT
---------------------------
This Loan and Security Agreement dated as of September 12, 1996 is entered
into by and among The New Bibb Company, a Delaware corporation, to be known as
The Bibb Company after the Effective Date referred to below ("Borrower"), the
lenders listed on the signature pages hereof or which hereafter shall become a
"Lender" hereunder (each, individually, a "Lender" and, collectively, "Lenders")
and Congress Financial Corporation (Southern), a Georgia corporation, as agent
hereunder for Lenders (in such capacity, "Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrower has requested that Lenders and Agent enter into certain
financing arrangements with Borrower pursuant to which Lenders shall severally
(and not jointly) agree to make loans and provide other financial accommodations
to Borrower; and
WHEREAS, each of Lenders is willing to agree (severally and not jointly) to
make such loans and provide such other financial accommodations on a pro rata
--- ----
basis according to its Commitment (as defined below), and Agent is willing to
act as Agent for Lenders, in each case on the terms and conditions set forth
herein and in the other Financing Agreements (as defined below);
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
-----------
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural. All references to
Borrower, Agent and Lenders pursuant to the definitions set forth in the
recitals hereto, or to any other person herein, shall include their respective
successors and assigns, including, without limitation, as debtor and debtor-in-
possession under the U.S. Bankruptcy Code, any trustee or other fiduciary
hereafter appointed as its legal representative or with respect to the property
of the estate of such person under Chapter 11 or Chapter 7 of the U.S.
Bankruptcy Code and its successors upon dismissal, conversion or conclusion of
any such Chapter 7 or Chapter 11 case. The words "hereof", "herein",
"hereunder", "this Agreement" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not any
<PAGE>
particular provision of this Agreement and as this Agreement now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced. The words "ratable" or "ratably" or words of similar import when used
in this Agreement or any of the other Financing Agreements shall refer to a
sharing or allocation based on the respective Pro Rata Shares of Lenders. An
--- ----
Event of Default shall exist or continue or be continuing until such Event of
Default is waived in accordance with Section 11.3 hereof or is cured in a manner
satisfactory to Agent and Required Lenders. Any accounting term used herein
unless otherwise defined in this Agreement shall have the meanings customarily
given to such term in accordance with GAAP. For purposes of this Agreement, the
following terms shall have the respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of Borrower to
payment for goods sold or leased or for services rendered, which are not
evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by
dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to: (i) one (1.0) minus (ii) the Reserve Percentage. For purposes
-----
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not the Reference
Bank actually holds or has made any such deposits or loans. The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage; provided that Agent shall not make adjustments with
--------
respect to the Adjusted Eurodollar Rate as applicable to Borrower in a different
manner than Congress generally makes adjustments to such rate as applicable to
other borrowers of Congress under like provisions.
1.3 "After-Tax Fixed Charge Coverage Ratio" shall mean, with respect to
Borrower and its subsidiaries for any measurement period, the ratio of:
(i) the amount equal to (A) EBITDA of Borrower and its
subsidiaries for such period minus (B) the sum for such period for
-----
Borrower and its subsidiaries of (1) the lesser of (x) Capital
Expenditures or (y) Maximum Base Capital Expenditures, plus (2) the
provision for income taxes, but excluding
-2-
<PAGE>
any tax benefits for such period to the extent they exceed the
provision for income taxes for such period, to
(ii)Interest Expense and principal paid or payable by Borrower
and its subsidiaries during such period on all indebtedness for
borrowed money of Borrower and its subsidiaries, including, without
limitation, capital leases and the deferred purchase price for long
term assets.
1.4 "Assignee" shall have the meaning set forth in Section 13.5 hereof.
1.5 "Assignment Agreement" shall mean an Assignment and Assumption
Agreement in the form of Exhibit B hereto by and between a Lender and a
permitted assignee pursuant to Section 13.5 hereof, as acknowledged by Agent.
1.6 "Availability Reserves" shall mean, as of any date of determination,
the reserves implemented by the Agent under Sections 2.4(b) and 9.7(b)(iii)
hereof (unless otherwise directed from time to time by the Required Lenders and
except for the Agent's discretion to phase-in establishment of the Licensed
Goods Reserve as provided in Section 2.4(b)) and such other amounts as Agent may
from time to time establish and revise in good faith reducing the amount of
Revolving Loans and Letter of Credit Accommodations which would otherwise be
available to Borrower under the lending formula(s) provided for herein: (a) to
reflect events, conditions, contingencies or risks which, as determined by Agent
in good faith, do or may affect either (i) the Collateral or any other property
which is security for the Obligations or its value, (ii) the assets or business
of Borrower or any Obligor or (iii) the security interests and other rights of
Agent in the Collateral, held for itself and the ratable benefit of Lenders
(including the enforceability, perfection and priority thereof and realization
thereon), or (b) to reflect Agent's good faith belief that any collateral report
or financial information furnished by or on behalf of Borrower or any Obligor to
Agent is or may have been incomplete, inaccurate or misleading in any material
respect, or (c) to reflect outstanding Letter of Credit Accommodations as
provided in Section 2.2(c) hereof, or (d) without duplication, to implement the
reserves provided in the definition of Eligible Accounts or Eligible Inventory
or elsewhere herein or in the other Financing Agreements, other than in Section
2.4(b) or in Section 9.7(b)(iii), or (e) in respect of any state of facts which
Agent determines in good faith constitutes a Default or Event of Default.
1.7 "Bankruptcy Court" shall mean the United States Bankruptcy Court for
the District of Delaware.
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<PAGE>
1.8 "Bibb" shall mean The Bibb Company, a Delaware corporation, as debtor
and debtor-in-possession in the Chapter 11 Case, being one of the constituent
corporations (but not the surviving corporation) of the Merger, together with
its predecessor prior to the commencement of the Chapter 11 Case.
1.9 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.10 "Borrower" shall mean The New Bibb Company, a Delaware corporation,
to be known as The Bibb Company, and to be the surviving corporation of the
Merger to be consummated on the Effective Date, and its successors and assigns.
Unless otherwise expressly provided herein to the contrary, in applying any
provision of this Agreement or the other Financing Agreements that refers to a
fiscal, measurement or other period that has a beginning date prior to the
Effective Date, references to Borrower in such provision shall include Bibb in
such fiscal, measurement or other period to the extent of the portion of such
period prior to the Effective Date.
1.11 "Business Day" shall mean (a) for all Prime Rate Loans, any day other
than a Saturday, Sunday, or other day on which commercial banks are authorized
or required to close under the laws of the State of Georgia or the Commonwealth
of Pennsylvania, and a day on which the Reference Bank and Agent are open for
the transaction of business, and (b) for all Eurodollar Rate Loans, any such day
as described in (a) above in this definition of Business Day, excluding any day
on which banks are closed for dealings in dollar deposits in the London
interbank market or other applicable Eurodollar Rate market.
1.12 "Capital Expenditures" shall mean all expenditures for any fixed or
capital assets or improvements, or for replacements, substitutions or additions
thereto, which have a useful life of more than one (1) year including, but not
limited to, the direct or indirect acquisition of such assets by way of
purchase, capital or finance lease, increased product service charges, offset
items or otherwise, but excluding expenditures to acquire Equipment to the
extent of amounts financed under capital leases or through incurrence of
purchase money financing secured by purchase money security interests (in each
case as permitted under Sections 9.8 and 9.9 hereof).
1.13 "Chapter 11 Case" shall mean the voluntary Chapter 11 case of
Borrower under the U.S. Bankruptcy Code commenced by Borrower in the Bankruptcy
Court on July 3, 1996. (Case No. 96-1050 (HSB)).
1.14 "Citicorp" shall mean Citicorp North America, Inc., a Delaware
corporation, and its successors and assigns.
-4-
<PAGE>
1.15 "Citicorp Group" shall mean the lenders for whom, in connection with
Bibb's financing arrangements, Citicorp has acted and acts as agent, and their
respective successors and assigns.
1.16 "Closing Date" shall mean the date upon which the conditions
precedent to the making of the initial Loans to Borrower hereunder are fully
satisfied or otherwise provided for in a manner satisfactory to Lenders and
Agent and the initial Loans are made hereunder.
1.17 "Closing Fee" shall mean the fee to be paid by Borrower to Lenders as
described in Section 3.2 hereof.
1.18 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.19 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.20 "Commitment" shall have the meaning set forth in Section 2.5 hereof.
1.21 "Commitment Percentage" shall mean, as to each Lender, the percentage
of the highest Maximum Credit provided for hereunder represented by such
Lender's Commitment. The Commitment Percentage of each Lender signing this
Agreement is set forth on the signature pages hereto below each Lender's
respective signature.
1.22 "Commodity Raw Cotton and Fiber Inventory" shall mean the commodity
raw cotton and fiber inventory of Borrower used by Borrower in the production of
finished goods.
1.23 "Confirmation Order" shall mean the Order, in form and substance
satisfactory to Lenders and Agent, entered by the Bankruptcy Court confirming
the Plan and authorizing this Agreement and the other Financing Agreements.
1.24 "Congress" shall mean Congress Financial Corporation (Southern), a
Georgia corporation, and its successors and assigns.
1.25 "Consultant" shall mean the consulting firm retained by Borrower as
contemplated in Section 4.1(j) hereof, and any replacement or successor
consulting firm acceptable to Agent and Required Lenders.
1.26 "Credit Facility" shall mean the secured financing arrangements
entered into among Lenders, Borrower and Agent on
-5-
<PAGE>
the date hereof, subject to the terms and conditions set forth herein and in the
other Financing Agreements, as the foregoing now exist or may hereafter be
amended, modified, supplemented, renewed, restated or replaced.
1.27 "Default" shall mean the occurrence of any event or existence of any
condition that would, with notice or passage of time, or both, constitute an
Event of Default.
1.28 "Default Rate" shall have the meaning set forth in the definition of
Interest Rate hereunder.
1.29 "DIP Credit Facility" shall mean the secured credit facility provided
by the Citicorp Group to Bibb as debtor and debtor-in-possession during the
pendency of the Chapter 11 Case.
1.30 "EBITDA" shall mean, for any measurement period, the Net Income
(Loss) for such period, plus Interest Expense, provision for income tax,
----
depreciation expense, amortization expense, LIFO expense and expenses relating
to the write-down of the book value of goodwill or deferred financing costs,
minus LIFO income, income tax benefit, extraordinary gains and other non-
- -----
operating income, such as gains from the sale of long-term assets and gains, net
of professional fees and other restructuring charges, recognized under "fresh
start" accounting in bankruptcy pursuant to SOP-97, as properly applied to
Borrower and its subsidiaries in the fiscal year in which the Effective Date
occurs, in each case, of Borrower and its subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, to the extent
included in the determination of such Net Income (Loss).
1.31 "Effective Date" shall mean the effective date of the Plan confirmed
by the Confirmation Order entered in Borrower's Chapter 11 Case.
1.32 "Eligible Accounts" shall mean Accounts created by Borrower which are
and continue to be acceptable to Agent based on the criteria set forth below.
In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
---- ----
delivery of goods by Borrower or rendition of services by Borrower in the
ordinary course of its business which transactions are completed in accordance
with the terms and provisions contained in any documents related thereto;
(b) such Accounts other than Accounts arising from the sale of Generic
Towels, are not unpaid more than sixty (60) days after the original maturity
date of the invoice therefor, but in no event more than ninety (90) days after
the date of the original invoice for them;
-6-
<PAGE>
(c) such Accounts that arise from the sale of Generic Towels (i) are
not unpaid more than one hundred fifty (150) days after the date of the original
invoice for them and (ii) are outstanding in amounts and have program terms,
including return privileges in the case of direct sales of Generic Towels to
grocery retailers (but no return privileges shall exist as to sales to
distributors), consistent with Borrower's past practices;
(d) such Accounts comply with the terms and conditions contained in
Section 7.2(c) of this Agreement;
(e) such Accounts (other than Accounts arising from the sale of
Generic Towels directly by Borrower to grocery retailers) do not arise from
sales on consignment, guaranteed sale, sale and return, sale on approval, or
other terms under which payment by the account debtor may be conditional or
contingent;
(f) the chief executive office of the account debtor with respect to
such Accounts is located in the United States of America, or, at Agent's option,
if either: (i) the account debtor has delivered to Borrower an irrevocable
letter of credit issued or confirmed by a United States bank satisfactory to
Agent, sufficient to cover such Account, in form and substance satisfactory to
Agent and, if required by Agent, the original of such letter of credit has been
delivered to Agent or Agent's agent and the issuer thereof notified of the
assignment of the proceeds of such letter of credit to Agent, or (ii) such
Account is subject to credit insurance payable to Agent, for itself and the
ratable benefit of Lenders, issued by an insurer and on terms and in an amount
acceptable to Agent, or (iii) such Account is otherwise acceptable in all
respects to Agent (subject to such lending formula with respect thereto as Agent
may determine); provided, that, notwithstanding the foregoing, foreign Accounts
-------- ----
payable in the United States of America in United States Dollars or Canadian
Dollars by Canadian account debtors shall be treated as domestic Accounts if (x)
all perfection steps deemed necessary or appropriate by Lenders or Agent have
been taken in the province where the account debtor is located and Availability
Reserves are established by Agent to cover any potential liens or claims against
such Accounts entitled to preference or priority over Agent's or Lenders'
interests therein under Canadian Federal or provincial law, and (y) in the case
of any such foreign accounts payable in Canadian Dollars, the amounts collected
thereon are remitted to the Blocked Accounts in United States Dollars and the
Net Amount of Eligible Accounts in respect of any such foreign accounts
determined to be Eligible Accounts shall be calculated based on the United
States Dollar equivalent of the Canadian Dollar amounts thereof, as determined
by Agent from time to time.
-7-
<PAGE>
(g) such Accounts do not consist of progress billings, bill and hold
invoices or retainage invoices, except, as to bill and hold invoices, if Agent
shall have received an agreement in writing from the account debtor, in form and
substance satisfactory to Agent, confirming the unconditional obligation of the
account debtor to take the goods related thereto and pay the invoice amount
thereof, which agreement may be either contained in Borrower's form of sales
contract signed by the Borrower and the account debtor, or in a separate written
agreement signed by the Borrower and the account debtor, and in either case
expressly stating that the Borrower's lenders may rely thereon;
(h) the account debtor with respect to such Accounts has not asserted
a counterclaim, defense or dispute and does not have, and does not engage in
transactions which may give rise to, any right of setoff against such Accounts
(but the portion of any otherwise Eligible Accounts of such account debtor in
excess of the amount at any time and from time to time owed by Borrower to such
account debtor or claimed owed by such account debtor shall be deemed Eligible
Accounts);
(i) there are no facts, events or occurrences which could reasonably
be expected to impair the validity, enforceability or collectability of such
Accounts or reduce the amount payable or delay payment thereunder;
(j) such Accounts are owned by Borrower, subject to the first
priority, valid and perfected security interest of Agent, for itself and the
ratable benefit of Lenders, and any goods giving rise thereto are not, and were
not at the time of the sale thereof, subject to any liens, except those
permitted in this Agreement;
(k) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee or agent of
or affiliated with Borrower directly or indirectly by virtue of family
membership, ownership, control, management or otherwise;
(l) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, the Federal
Assignment of Claims Act of 1940, as amended or any similar State or local law,
if applicable, has been complied with in a manner satisfactory to Agent;
(m) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to
-8-
<PAGE>
such Accounts which, if adversely determined against such account debtors, could
reasonably be expected to result in any material adverse change in any such
account debtor's financial condition;
(n) such Accounts of a single account debtor or its affiliates do not
constitute more than fifteen (15%) percent of all otherwise Eligible Accounts
(but the portion of any otherwise Eligible Accounts not in excess of such
percentage may be deemed Eligible Accounts);
(o) such Accounts, other than those arising from the sale of Generic
Towels, are not owed by an account debtor as to whom such Accounts that are
unpaid more than sixty (60) days after the original maturity date of the invoice
therefor or more than ninety (90) days after the date of the original invoice
for them, constitute more than fifty (50%) percent of the total of such Accounts
of such account debtor;
(p) such Accounts that arise from the sale of Generic Towels are not
owed by an account debtor as to whom such Accounts that are unpaid more than
sixty (60) days after the original maturity date therefor, or more than one
hundred fifty (150) days after the date of the original invoice for them,
constitute more than fifty (50%) percent of the total of such Accounts of such
account debtor;
(q) such Accounts are owed by account debtors whose total indebtedness
to Borrower does not exceed the credit limit with respect to such account
debtors as determined by Agent and identified to Borrower from time to time (but
the portion of the Accounts not in excess of such credit limit may be deemed
Eligible Accounts); and
(r) such Accounts are owed by account debtors deemed creditworthy at
all times by Agent, as determined by Agent.
General criteria for Eligible Accounts may be established and revised from time
to time by Agent in good faith, upon notice to Borrower of any such changes.
Any Accounts which are not Eligible Accounts shall nevertheless be part of the
Collateral.
1.33 "Eligible Inventory" shall mean Inventory, consisting of Commodity
Raw Cotton and Fiber Inventory, Greige Goods Inventory, work-in-process
(excluding Greige Goods Inventory) and finished goods held for resale in the
ordinary course of the business of Borrower, in each case which is acceptable to
Agent based on the criteria set forth below. In general, Eligible Inventory
shall not include (a) component parts for goods requiring assembly which are not
part of finished goods; (b) spare parts for equipment; (c) packaging and
shipping materials; (d) supplies used or consumed in Borrower's business; (e)
-9-
<PAGE>
Inventory at premises other than those owned and controlled by Borrower, except
if Agent shall have received an agreement in writing from the person in
possession of such Inventory and/or the owner or operator of such premises in
form and substance satisfactory to Agent acknowledging Agent's first priority
security interest in the Inventory, for itself and the ratable benefit of
Lenders, waiving or subordinating to Agent's satisfaction all security interests
and claims by such person against the Inventory and permitting Agent and Lenders
access to, and the right to remain on, the premises so as to exercise Agent's
and, subject to the provisions of Section 12.3(b) of this Agreement, Lenders'
rights and remedies and otherwise deal with the Collateral; (f) Inventory
subject to a security interest or lien in favor of any person other than Agent
(for itself and the ratable benefit of Lenders), except those (if any) permitted
in this Agreement; (g) bill and hold goods, except for bill and hold goods
otherwise constituting Eligible Inventory, as to which the related Account is
not deemed an Eligible Account solely by reason of Borrower's failure to deliver
to Agent the agreement from the account debtor referred to in subsection (g) of
the definition of Eligible Accounts; (h) unserviceable, obsolete or slow moving
Inventory; (i) Inventory which is not subject to the first priority, valid and
perfected security interest of Agent, for itself and the ratable benefit of
Lenders; (j) damaged and/or defective Inventory (including damaged and/or
defective returned Inventory); (k) returned Inventory with respect to which a
credit by Borrower against the related Account has not yet been reported to
Agent; and (l) Inventory purchased or sold on consignment. General criteria for
Eligible Inventory may be established and revised from time to time by Agent in
good faith, upon notice to Borrower of any such changes. Any Inventory which is
not Eligible Inventory shall nevertheless be part of the Collateral.
1.34 "Environmental Laws" shall mean all federal, state, district, local
and foreign laws, rules, regulations, ordinances, and consent decrees relating
to health, safety, hazardous substances, pollution and environmental matters, as
now or at any time hereafter in effect, applicable to Borrower's business and
facilities (whether or not owned by it), including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contamination,
chemicals, or hazardous, toxic or dangerous substances, materials or wastes into
the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals, or
hazardous, toxic or dangerous substances, materials or wastes.
1.35 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment, machinery, computers and computer hardware and software
(whether owned or licensed), vehicles,
-10-
<PAGE>
tools, furniture, fixtures, all attachments, accessions and property now or
hereafter affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.
1.36 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.37 "ERISA Affiliate" shall mean any person required to be aggregated
with Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.38 "Eurodollar Rate" shall mean, with respect to the Interest Period for
a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrower and approved by Agent) on or
about 9:00 a.m. (Atlanta, Georgia time) two (2) Business Days prior to the
commencement of such Interest Period in amounts substantially equal to the
principal amount of the Eurodollar Rate Loans requested by and available to
Borrower in accordance with this Agreement, with a maturity of comparable
duration to the Interest Period selected by Borrower.
1.39 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.40 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.41 "Excess Availability" shall mean at any time, the amount, as
determined by Agent, equal to:
(a) the lesser of: (i) the amount of Revolving Loans which would be
available to Borrower as of such time based on the applicable lending formulas
multiplied by the Net Amount of Eligible Accounts and the Value of Eligible
Inventory, as determined by Agent, and subject to the applicable sublimits and
Availability Reserves at such time established by Agent hereunder, and (ii) the
Revolving Loan Limit, minus
-----
(b) the sum of: (i) the amount of all then outstanding and unpaid
Obligations (other than the Term Loan), plus (ii)(A) the aggregate amount of all
then outstanding and unpaid accounts payable of Borrower (including those
relating to
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held checks) which have remained unpaid more than sixty (60) days past their
original due dates as of such time and (B) unpaid costs, fees and expenses of
the transactions contemplated hereby (including, the Credit Facility, the
Chapter 11 Case, the Plan and the Merger.
1.42 "Final Order" shall mean a final order duly entered by the Bankruptcy
Court, which has not been modified, vacated, reversed, revoked, rescinded or
stayed and with respect to which order no appeal or request for rehearing or
petition for writ of certiorari shall have been filed or granted and which is no
longer subject to appeal or request for rehearing or further appeal or petition
for writ of certiorari or other or further review in any forum.
1.43 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements and other agreements, documents and
instruments now or at any time hereafter executed and/or delivered by Borrower
or any Obligor in connection with this Agreement, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.44 "Financing Orders" shall mean, collectively, the orders of the
Bankruptcy Court providing for secured financing to Bibb during the pendency of
the Chapter 11 case.
1.45 "Food Security Act" shall mean the Food Security Act, 7 U.S.C.A.
(S)1631, as the same now exists or may hereafter be amended or supplemented,
together with all regulations now or hereafter promulgated thereunder.
1.46 "Free Cash Flow" shall mean, for any measurement period, (i) EBITDA
for such period minus (ii) the sum for Borrower and its subsidiaries for such
-----
period of (A) lesser of (x) Capital Expenditures and (y) the aggregate Maximum
Base Capital Expenditures, (B) the provision for income taxes, but excluding any
tax benefits for such period to the extent they exceed the provision for income
taxes for such period and (C) Interest Expense and principal paid or payable by
Borrower and its subsidiaries during such period on all indebtedness for
borrowed money of Borrower and its subsidiaries, including, without limitation,
capital leases and the deferred purchase price of long term assets.
1.47 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronounce ments
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination
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consistently applied, except that, for purposes of the financial covenants
contained in Sections 9.13 through 9.17 hereof, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent with those
used in the preparation of the audited financial statements delivered to Agent
prior to the date hereof.
1.48 "Generic Towels" shall mean Inventory of Borrower consisting of
generic towels sold to, or sold to distributors for resale to, grocery
retailers.
1.49 "Greige Goods Inventory" shall mean Inventory of Borrower consisting
of undyed and unfinished woven fabric on rolls, used by Borrower in the
production of finished goods.
1.50 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes
that are or become regulated under any Environmental Law (including, without
limitation, any that are or become classified as hazardous or toxic under any
Environmental Law).
1.51 "Information Certificate" shall mean the Information Certificate of
Borrower constituting Exhibit A hereto containing material information with
respect to Borrower, its business and assets, after giving effect to the
consummation of the Merger, the other provisions of the Plan and the
Confirmation Order, in the form provided by or on behalf of Borrower to Agent
and Lenders in connection with the preparation of this Agreement and the other
Financing Agreements and the financing arrangements provided for herein.
1.52 "Interest Expense" shall mean, for any period, the amount which
would, in conformity with GAAP, be set forth opposite the caption "interest
expense" or any like caption on a consolidated statement of operations of the
Borrower and its subsidiaries prepared on a consolidated basis in accordance
with GAAP, excluding amortization of deferred financing costs, plus fees and
----
expenses attributable to transfers involving the sale or financing of Accounts
through the Trust (prior to the repurchase by and reconveyance of the Trust
Receivables to Bibb).
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1.53 "Interest Period" shall mean, for any Eurodollar Rate Loan, a period
of approximately one (1), two (2), or three (3) months duration as Borrower may
elect, commencing three (3) Business Days following Agent's receipt of a request
by Borrower for such Interest Period under Section 3.1(b) hereof, the exact
duration to be determined in accordance with the customary practice in the
applicable Eurodollar Rate market; provided, that, Borrower may not elect an
-------- ----
Interest Period which will end after the last day of the term of this Agreement.
1.54 "Interest Rate" shall mean, as to Prime Rate Loans, a rate of one
(1%) percent per annum in excess of the Prime Rate and, as to Eurodollar Rate
Loans, subject to adjustment pursuant to the provisions of Section 3.1(f)
hereof, a rate of three and one-quarter (3 1/4%) percent per annum in excess of
the Adjusted Eurodollar Rate (based on the Eurodollar Rate applicable for the
Interest Period selected by Borrower for such Eurodollar Rate Loans in
accordance with the terms hereof, whether such rate is higher or lower than any
rate previously quoted to Borrower); provided, that, upon prior notice to
-------- ----
Borrower, the Agent may require, and upon the written direction of the Required
Lenders shall require, that the interest rate payable as to each of the Prime
Rate Loans and the Eurodollar Rate Loans (if not converted to Prime Rate Loans
as provided herein) be increased by two (2%) percent per annum (such increased
rate, the "Default Rate"), without notice, (a) for the period on and after (i)
the date of termination of this Agreement pursuant to Section 10.2 or 13.1
hereof and until such time thereafter as all Obligations are indefeasibly paid
in full (notwithstanding entry of any judgment against Borrower), or (ii) the
date of the occurrence of any Default or Event of Default, and for so long as
such Event of Default or Default exists or is continuing, and (b) on the Loans
at any time outstanding in excess of the amounts available to Borrower under
Section 2 hereof (whether or not such excess(es), arise or are made with or
without Agent's knowledge or consent and whether made before or after a Default
or Event of Default).
1.55 "Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired raw materials, work in process, finished goods and all
other inventory of whatsoever kind or nature, wherever located.
1.56 "Letter of Credit Accommodations" shall mean, with respect to the
Credit Facility, the letters of credit or other guaranties which are from time
to time either (a) issued or opened by Agent for the account of Borrower or any
Obligor or (b) with respect to which Agent or any Lender has agreed to indemnify
the issuer or guaranteed to the issuer the performance by Borrower of its
obligations to such issuer.
1.57 "Licensed Goods Reserve" shall mean an Availability Reserve equal to
five (5%) percent of the cost of Inventory on
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hand bearing licensed trademarks, logos or other intellectual property, as to
which Borrower has not provided the Agent with a written agreement executed by
the licensor of the kind described in Section 4.1(q)(ii) hereof, adjusted
monthly.
1.58 "Loans" shall mean, collectively, the Revolving Loans and the Term
Loan.
1.59 "Material Adverse Effect" shall mean any material adverse effect upon
the business, assets or financial condition of Borrower, or any material adverse
effect upon the Collateral or the Agent's or any Lender's rights or interests in
or with respect to the Collateral or Borrower's ability to pay and perform the
Obligations.
1.60 "Maximum Base Capital Expenditures" shall mean, as to the respective
measurement periods set forth on the Financial Covenants Schedule annexed
hereto, the respective amounts shown for such periods on the Financial Covenants
Schedule under the column entitled "Maximum Base Capital Expenditures".
1.61 "Maximum Credit" shall mean the amount of (i) $115,000,000 at all
times between July 1 and November 30 in each calendar year or (ii) $110,000,000
at all times between December 1 and June 30 in each calendar year, in each case
reduced by the aggregate amount of payments and prepayments, applied to the Term
Loan after the Closing Date.
1.62 "Maximum Interest Rate" shall mean the maximum non-usurious rate of
interest under applicable Federal or State law as in effect from time to time
that may be contracted for, taken, reserved, charged or received in respect of
the indebtedness of Borrower to Agent and Lenders, or to the extent that at any
time such applicable law may thereafter permit a higher maximum non-usurious
rate of interest, then such higher rate. Notwithstanding any other provision
hereof, the Maximum Interest Rate shall be calculated on a daily basis (computed
on the actual number of days elapsed over a year of three hundred sixty-five
(365) or three hundred sixty-six (366) days, as the case may be).
1.63 "Merger" shall mean the merger of Newco with and into Bibb, with
Newco being the surviving corporation, pursuant to the Plan, the Merger
Agreements and applicable law.
1.64 "Merger Agreements" shall mean, collectively, the Agreement and Plan
of Merger and the Certificate of Merger by and between Bibb and Newco executed
and delivered on or prior to the date hereof, as authorized by the Confirmation
Order, providing for the Merger to be effective on the Effective Date in
accordance with the Plan and applicable law, together with all
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documents, instruments and certificates delivered thereunder and pursuant
thereto.
1.65 "Mortgages" shall mean, individually and collectively, each of the
following and each other mortgage, deed to secure debt or deed of trust or other
instrument at any time granting Agent, for itself and the ratable benefit of
Lenders, a lien upon any of Borrower's Real Property (as the same now exist or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced): (a) the Deed to Secure Debt and Security Agreements, dated as of the
Closing Date, by Borrower in favor of Agent, for itself and the ratable benefit
of Lenders, with respect to the Real Property and related assets of Borrower in
Columbus, Fort Valley, Juliette, Sargent, Porterdale and Macon, Georgia (b) the
Deed of Trust, Assignment of Rents and Leases and Security Agreement, dated as
of the Closing Date, by Borrower in favor of Douglas S. Granger, as Trustee, for
the benefit of Agent, for itself and the ratable benefit of Lenders, with
respect to the Real Property and related assets of Borrower in Brookneal,
Virginia, (c) the Open End Mortgage and Security Agreements, dated as of the
Closing Date, by Borrower in favor of Agent, for itself and the ratable benefit
of Lenders, with respect to the Real Property and related assets of Borrower in
Abbeville and Greenville, South Carolina, and (d) the Deed of Trust and Security
Agreements, dated as of the Closing Date, by Borrower in favor of Kenneth M.
Greene, as trustee, for the benefit of Agent, for itself and the ratable benefit
of Lenders, with respect to the Real Property and related assets of Borrower in
Goldsboro, Roanoke Rapids and Rockingham, North Carolina.
1.66 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof and (b) returns, discounts, claims, credits and allowances of any nature
at any time issued, owing, granted, outstanding, available or claimed with
respect thereto.
1.67 "Net Income (Loss)" shall mean, for any fiscal period, the aggregate
net income (or loss) after provision (benefit) for income taxes of Borrower and
its subsidiaries, if any, for such period, determined on a consolidated basis in
accordance with GAAP.
1.68 "Newco" shall mean The New Bibb Company, a Delaware corporation,
formed for the purpose of becoming party to and the surviving corporation of the
Merger, and its successors and assigns. The corporation defined as "Borrower"
herein is the same corporate entity as Newco and is sometimes referred to as
Newco herein with respect to the period prior to the Effective Date.
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1.69 "Obligations" shall mean any and all Revolving Loans, the Term Loan,
Letter of Credit Accommodations and all other obligations, liabilities and
indebtedness of every kind, nature and description owing by Borrower to Agent or
any Lender and/or its affiliates, arising under or in connection with or
relating to this Agreement or the other Financing Agreements, including
principal, interest, charges, fees, costs and expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement, before or after the commencement
of any case with respect to Bibb or Borrower under the U.S. Bankruptcy Code or
any similar statute, or before or after the confirmation of or Effective Date of
the Plan (and including, without limitation, all principal, interest, fees,
costs, expenses and other amounts owed to Agent or Lenders in connection with or
relating to further proceedings in the Chapter 11 Case or any converted or
succeeding case or proceeding), whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, secured or unsecured, and however acquired by Agent or any
Lender.
1.70 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrower.
1.71 "Overformula Loans" shall mean Revolving Loans made or Letter of
Credit Accommodations issued or caused to be issued that, when made or issued,
cause the aggregate outstanding principal amount of Revolving Loans and Letter
of Credit Accommodations to exceed (or to exceed by a greater amount) the
Revolving Loan Availability at such time.
1.72 "Participant" shall mean any financial institution that acquires and
holds a participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
13.5 of this Agreement governing participations.
1.73 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.74 "Permitted Overformula Loans" shall mean Overformula Loans made by
Agent, for the ratable account and risk of Lenders, in Agent's discretion from
time to time:
(i) without the need for consent by any of the Lenders:
(A) in amounts that do not, to the actual knowledge of
Agent, after giving effect
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to such Overformula Loans, cause the aggregate Revolving Loans
and Letter of Credit Accommodations outstanding at such time
to exceed (or exceed by a greater amount) the Revolving Loan
Availability at such time, plus $5,000,000, or cause the
outstanding Loans and Letter of Credit Accommodations to
exceed the Maximum Credit at such time; provided, however,
-------- -------
that no Overformula Loan shall constitute a Permitted
Overformula Loan for purposes of this clause (i)(A) if, to
Agent's actual knowledge, there have been any Overformula
Loans outstanding at one or more times during the immediately
preceding thirty (30) day period, unless either (x) there has
been a period of at least fifteen (15) consecutive days during
such immediately preceding thirty (30) day period during which
no Overformula Loan was outstanding (such fifteen (15)
consecutive day period, a "Cleanup Period"), or (y) not more
than thirty (30) days have elapsed after the first day upon
which an Overformula Loan was outstanding that has not been
followed by a Cleanup Period, in each case under clauses
(i)(A)(x) and (y), based on Agent's actual knowledge as to
whether any such Overformula Loans are or were outstanding;
and provided, further, that Agent may only make Voluntary
-------- -------
Overadvances (as defined below) under this clause (i)(A)
during no more than four (4) periods of up to thirty (30) days
as permitted under this clause (i)(A) during any one fiscal
year of Borrower, and, in addition to any amounts under clause
(i)(A),
(B) in amounts, not to exceed $5,000,000 outstanding to
Agent's actual knowledge under this clause (i)(B) at any one
time, that do not cause the outstanding Loans and Letter of
Credit Accommodations to exceed the Maximum Credit, and that
Agent believes are necessary for the direct preservation or
protection of the Collateral or its value or the interests of
Agent or Lenders therein; and/or
(ii) in amounts and on terms approved by the Required Lenders.
As used in clause (i)(A), the term "Voluntary Overadvance" shall mean an
Overformula Loan that is voluntarily and intentionally made by Agent under this
clause (i)(A) with actual knowledge that
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an Overformula Loan will thereby exist in excess of the initial amount of any
Overformula Loans that first arose or were first known by Agent to exist during
the same period of up to thirty (30) days under clause (i)(A), other than those
that arose through a prior Voluntary Overadvance.
1.75 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Internal Revenue Code of 1986, as amended),
limited liability corporation, limited liability partnership, business trust,
unincorporated association, joint stock corporation, trust, joint venture or
other entity or any government or any agency or instrumentality or political
subdivision thereof.
1.76 "Plan" shall mean Borrower's Plan of Reorganization, in the form
filed with the Bankruptcy Court on July 3, 1996, or such other form as shall be
satisfactory to Agent and approved in writing by Lenders.
1.77 "Pre-Tax Profit" shall mean, for any fiscal year of Borrower, the Net
Income (Loss) before taxes of Borrower and its subsidiaries for such fiscal
year, on a consolidated basis in accordance with GAAP, adjusted by (a) excluding
therefrom, LIFO income and all extraordinary gains and other non-operating
income (such as gains from the sale of long-term assets) of Borrower and its
subsidiaries in such fiscal year, and by adding back LIFO expense all expenses
of Borrower and its subsidiaries in such fiscal year attributable to the write-
down of the book value of goodwill or of deferred financing costs, and further
adjusted, without duplication of items adjusted under clause (a), by (b)
excluding therefrom all gains, net of professional fees and other restructuring
charges, and adding back all losses, in each case as recognized under "fresh
start" accounting in bankruptcy pursuant to SOP-97, as properly applied to
Borrower and its subsidiaries in the fiscal year in which the Effective Date
occurs.
1.78 "Prime Rate" shall mean the rate from time to time publicly announced
by CoreStates Bank, N.A., or its successors, at its office in Philadelphia,
Pennsylvania, as its prime rate, whether or not such announced rate is the best
rate available at such bank.
1.79 "Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms hereof.
1.80 "Professional Fees Carve-Out" shall mean the priority lien and
administrative expense claim, not to exceed the aggregate sum of $500,000, for
allowed fees of the attorneys, accountants, investment advisors and other
professionals of
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Borrower and the creditors committee of Borrower incurred during the pendency of
the Chapter 11 Case or any succeeding or converted case, available on the terms
and conditions set forth in the Financing Orders, to the extent continued
pursuant to the Confirmation Order.
1.81 "Pro Rata Share" shall mean, with respect to each Lender, its
--- ----
proportionate share of the Loans and the risk under Letter of Credit
Accommodations, based on its Commitment Percentage, except as otherwise provided
for in Section 6.7(d) hereof for purposes of calculation of the respective
shares of Lenders in interest and fees collected and received from Borrower as
provided under such Section.
1.82 "Real Property" shall mean all now owned and hereafter acquired real
property of Borrower, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located, including
without limitation, the real property and related assets more particularly
described in the Mortgages.
1.83 "Records" shall mean all of Borrower's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of Borrower with respect to the
foregoing maintained with or by any other person).
1.84 "Reference Bank" shall mean CoreStates Bank, N.A., or such other bank
as Agent may from time to time designate.
1.85 "Required Lenders" shall mean, as of any date of determination
thereof, Lenders having aggregate Commitment Percentages of seventy (70%)
percent or more; provided, however, that in connection with any matter hereunder
-------- -------
permitting or requiring the approval, consent or direction by the Required
Lenders, upon request to the Agent made by any Lender having a Commitment
Percentage at the time of the request of at least twenty (20%) percent, net of
all participating interests it has granted to Participants, the Required Lenders
shall mean Lenders and/or Participants having aggregate Commitment Percentages
of seventy (70%) percent or more, the Commitment Percentage of (i) each Lender
to be determined, for purposes only of this proviso, based on the amount of its
Commitment, net of all participating interests it has granted to Participants,
and (ii) each Participant to be deemed for purposes only of this proviso, equal
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to its percentage participating interest expressed as a percentage of the
aggregate Commitments of the Lenders.
1.86 "Revolving Loan Availability" shall mean, at any time, the aggregate
amount of Revolving Loans that Agent determines would be available to Borrower
at such time based on the lending formulas and subject to the sublimits and
Availability Reserves provided for in Section 2.1 hereof, assuming, solely for
purposes of such determination, that the outstanding Revolving Loans and Letter
of Credit Accommodations are zero at the time of determination.
1.87 "Revolving Loan Limit" shall mean, an amount equal to (i) $90,000,000
at all times during the period July 1 through November 30 in each calendar year,
or (ii) $85,000,000 at all times during the period December 1 through June 30 in
each calendar year.
1.88 "Revolving Loans" shall mean the loans made to or for the benefit of
Borrower by Lenders or, at Agent's option, by Agent for the ratable account of
Lenders, on a revolving basis pursuant to the Credit Facility (involving
advances, repayments and readvances) as set forth in Section 2.1 hereof.
1.89 "Revolving Notes" shall mean the promissory notes made by Borrower in
favor of each Lender evidencing the Obligations of Borrower to each Lender with
respect to Revolving Loans made by Lenders pursuant to the Credit Facility, with
each Revolving Note being in a maximum principal amount equal to the respective
Lender's Pro Rata Share of the Revolving Loan Limit.
--- ----
1.90 "Strategic Plan" shall mean the business plan to be prepared and
adopted by Borrower with the advice and recommendations of the Consultant,
setting forth, inter alia, Borrower's proposed actions, the objectives and
----- ----
timetable thereof, and the supporting financial projections therefor.
1.91 "Subordinated Noteholders" shall mean the holders of the Subordinated
Notes, any trustee(s) for such holders, and all of their successors and assigns.
1.92 "Subordinated Notes" shall mean the 13.875% Senior Subordinated Notes
due 1999 and 14% Senior Subordinated Notes due 1999 heretofore issued by Bibb.
1.93 "Supplemental Capital Expenditures Allowance" shall mean an allowance
for Capital Expenditures which the Borrower shall be permitted to make, in
addition to the Capital Expenditures permitted to be made in the respective
measurement periods as provided in Sections 9.15(i) and (ii) hereof. The amount
of such additional allowance for Capital Expenditures shall, at any date of
determination be calculated as follows, but
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such amount shall only be permitted to be expended if such amount is a positive
amount as of the date of expenditure:
(a) $1,500,000 plus an amount equal to $1,500,000 multiplied by
---------- --
the number of full fiscal quarters of Borrower that have
commenced after the Closing Date and on or prior to the date
of determination (but not to exceed in the aggregate, the
amount of $6,000,000); plus
----
(b) an amount, not less than zero, equal to fifty (50%) percent of
the cumulative positive or negative Free Cash Flow for
Borrower's fiscal year(s) ended on or after December 31, 1996
and prior to the date of determination, as calculated based on
Borrower's audited annual consolidated financial statements
for such fiscal years delivered under Section 9.6 hereof;
minus
-----
(c) all Capital Expenditures previously made under the
Supplemental Capital Expenditure Allowance prior to the date
of determination.
1.94 "Supplemental Capital Expenditures Reserve" shall mean the
Availability Reserve established by Agent on the Closing Date hereof pursuant to
Section 2.4(b) hereof, initially in an amount equal to $6,000,000.
1.95 "Tangible Net Worth" shall mean, as to any Person, at any time, in
accordance with GAAP (except as otherwise specifically set forth below), on a
consolidated basis for such Person and its subsidiaries (if any), the amount
equal to: (a) the difference between: (i) the aggregate net book value of all
assets of such Person and its subsidiaries (excluding good will and other
intangible assets), calculating the book value of inventory for this purpose on
a first-in-first-out basis, after deducting from such book values all
appropriate reserves in accordance with GAAP (including all reserves for
doubtful receivables, obsolescence, depreciation and amortization) and (ii) the
aggregate amount of the indebtedness and other liabilities of such Person and
its subsidiaries (including tax and other proper accruals) plus (b) indebtedness
----
of such Person and its subsidiaries which is subordinated in right of payment to
the full and final payment of all of the Obligations on terms and conditions
acceptable to Agent and Required Lenders.
1.96 "Term Loan" shall mean the term loan made to Borrower by Lenders, or
at Agent's option, by Agent for the ratable account of Lenders, pursuant to the
Credit Facility as provided for in Section 2.3 hereof.
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1.97 "Term Loan Reserve" shall mean the Availability Reserve in the amount
of $10,000,000 established by Agent on the Closing Date.
1.98 "Term Notes" shall mean the promissory notes made by Borrower in
favor of each Lender evidencing the Obligations of Borrower to each Lender with
respect to the Term Loan made by Lenders pursuant to the Credit Facility, with
each Term Note being in a principal amount equal to the respective Lender's Pro
---
Rata Share of the Term Loan.
- ----
1.99 "Transamerica" shall mean Transamerica Business Credit Corporation, a
Delaware corporation, and its successors and assigns.
1.100 "Trust" shall have the meaning set forth in Section 4.1(d) hereof.
1.101 "Trust Receivables" shall have the meaning set forth in Section
4.1(d) hereof.
1.102 "U.S. Bankruptcy Code" shall mean the United States Bankruptcy Code,
being Title 11 of the United States Code, as the same now exists or may from
time to time hereafter be amended, modified, recodified or supplemented,
together with all official rules thereunder or related thereto.
1.103 "Value" shall mean, as determined by Agent in good faith, with
respect to Inventory, the lower of (a) cost computed on a first-in-first-out
basis in accordance with GAAP, or (b) market value.
1.104 "Working Capital Ratio" shall mean as to any Person, at any time, in
accordance with GAAP, on a consolidated basis for such Person and its
subsidiaries (if any), the ratio of: (a) the aggregate net book value of all
current assets of such Person and its subsidiaries (as determined in accordance
with GAAP), calculating the book value of inventory for this purpose on a first-
in-first-out basis, to (b) all current liabilities of such Person and its
subsidiaries (as determined in accordance with GAAP); provided, that, as to
-------- ----
Borrower, for purposes of calculating the Working Capital Ratio hereunder, the
liabilities of Borrower and its subsidiaries to the Agent and Lenders under the
Credit Facility shall not be considered current liabilities (whether or not
classified as current liabilities in accordance with GAAP).
SECTION 2. CREDIT FACILITY
---------------
2.1 Revolving Loans.
---------------
(a) Subject to and upon the terms and conditions contained herein,
each of the Lenders agrees severally (and not
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jointly) to fund its Pro Rata Share of Revolving Loans to Borrower from time to
--- ----
time in amounts requested by Borrower, up to the amount at any one time
outstanding equal to the sum of:
(i) eighty-five (85%) percent of the Net Amount of Eligible
Accounts, subject to the sublimit set forth in Section 2.1(c) hereof;
plus
----
(ii) the lesser of (A) $55,000,000, or (B) the sum of:
(1) seventy (70%) percent of the Value of Eligible
Inventory consisting of Commodity Raw Cotton and Fiber
Inventory; plus
(2) sixty-five (65%) percent of the Value of Eligible
Inventory consisting of finished goods and Greige Goods
Inventory; plus
(3) the lesser of (x) $2,300,000, or (y) fifteen (15%)
percent of the Value of Eligible Inventory consisting of work-
in-process of Borrower (excluding Greige Goods Inventory);
less
----
(iii)all Availability Reserves.
The Revolving Loans shall be (a) evidenced by the Revolving Notes duly executed
and delivered by Borrower to each Lender, (b) repaid, together with interest and
other amounts, in accordance with this Agreement, the Revolving Notes and the
other Financing Agreements and (c) secured by all of the Collateral.
(b) Agent may, in its discretion, from time to time, upon not less
than five (5) days prior notice to Borrower, (i) reduce the lending formulas
with respect to Eligible Accounts to the extent that Agent determines in good
faith that: (A) the dilution with respect to the Accounts for any period (based
on the ratio of (1) the aggregate amount of reductions in Accounts other than as
a result of payments in cash to (2) the aggregate amount of total sales) has
increased in any material respect or may be reasonably anticipated to increase
in any material respect above historical levels, or (B) the general
creditworthiness of account debtors has declined or (ii) reduce the lending
formula(s) with respect to Eligible Inventory to the extent that Agent
determines that: (A) the number of days of the turnover of the Inventory for any
period has changed in any material respect or (B) the liquidation value of the
Eligible Inventory (based upon updated appraisals at Borrower's expense
acceptable to
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<PAGE>
Agent, which Agent shall have the right to require once during each twelve (12)
month period prior to an Event of Default and at any time(s) after an Event of
Default), or any category thereof, has decreased, or (C) the nature and quality
of the Inventory has deteriorated. In determining whether to reduce the lending
formula(s), Agent may consider events, conditions, contingencies or risks which
are also considered in determining Eligible Accounts, Eligible Inventory or in
establishing Availability Reserves.
(c) The maximum amount of Revolving Loans available in respect of
Eligible Accounts arising from the sale of Generic Towels shall not exceed (i)
$2,125,000 at any one time in respect of all such Eligible Accounts, or (ii)
$1,275,000 in respect of all such Eligible Accounts that are unpaid more than
ninety (90) days past their original invoice dates (up to a maximum of one
hundred fifty (150) days past their original invoice dates), in each case
notwithstanding the total amount of such Eligible Accounts at any time
outstanding.
(d) The aggregate amount of the Loans and the Letter of Credit
Accommodations outstanding at any time shall not exceed the Maximum Credit. The
aggregate amount of the Revolving Loans and the Letter of Credit Accommodations
outstanding at any time shall not exceed the lesser of (i) the Revolving Loan
Limit or (ii) the Revolving Loan Availability; provided, that in the Agent's
--------
discretion, the Agent may make or permit to remain outstanding Permitted
Overformula Loans. In the event that the outstanding amount of any component of
the Revolving Loans, or the aggregate amount of the outstanding Revolving Loans
and Letter of Credit Accommodations, exceeds the Revolving Loan Limit or
Revolving Loan Availability or any applicable sublimit, including the sublimit
for Letter of Credit Accommodations set forth in Section 2.2(d), or the
aggregate amount of the Loans and the Letter of Credit Accommodations
outstanding at any time shall exceed the Maximum Credit, such event shall not
limit, waive or otherwise affect any rights of Agent and Lenders in that
circumstance or on any future occasions and Borrower shall, upon demand by
Agent, which may be made at any time or from time to time, immediately repay to
Agent, for the ratable benefit of Lenders, the entire amount of any such
excess(es) for which payment is demanded.
2.2 Letter of Credit Accommodations.
-------------------------------
(a) Subject to and upon the terms and conditions contained herein, at
the request of Borrower, Agent agrees, for the ratable risk of Lenders,
according to their Pro Rata Shares, to provide or arrange for Letter of Credit
--- ----
Accommodations to be issued for the account of Borrower containing terms and
conditions acceptable to Agent and the issuer thereof. Any payments made by
Agent or Lenders to any issuer thereof and/or
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related parties in connection with the Letter of Credit Accommodations shall
constitute additional Revolving Loans to Borrower pursuant to Section 2.1
hereof.
(b) In addition to any charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations, Borrower shall
pay to Agent, for the ratable benefit of Lenders, a letter of credit fee at a
rate equal to two and one-half (2 1/2%) percent per annum on the daily
outstanding balance of the Letter of Credit Accommodations for the immediately
preceding month (or part thereof), payable in arrears as of the first day of
each succeeding month, except that Agent may, and upon written direction of the
Required Lenders shall, require Borrower to pay to Agent, for the ratable
benefit of Lenders, such letter of credit fee, without notice, at a rate equal
to four and one-half (4 1/2%) percent per annum or such daily outstanding
balance for: (i) the period from and after the date of termination hereof until
Agent has received, for the ratable benefit of Lenders, full and final payment
of all Obligations (notwithstanding entry of a judgment against Borrower) and
(ii) the period from and after the date of the occurrence of a Default or Event
of Default for so long as such Default or Event of Default is continuing. Such
letter of credit fee shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed and the obligation of Borrower to pay
such fee shall survive the termination of this Agreement.
(c) No Letter of Credit Accommodations shall be available unless on
the date of the proposed issuance of any Letter of Credit Accommodations, the
unused portion of the Revolving Loan Availability is (subject to the Revolving
Loan Limit) equal to or greater than an amount equal to one hundred (100%)
percent of the face amount thereof and all other commit ments and obligations
made or incurred by Agent or any Lender with respect thereto. Effective on the
issuance of each Letter of Credit Accommodation, an Availability Reserve shall
be established in the applicable amount set forth in this Section 2.2(c).
(d) Except in Agent's discretion, with the consent of the Required
Lenders, the aggregate amount of all outstanding Letter of Credit Accommodations
and all other commitments and obligations made or incurred by Agent and Lenders
in connection therewith shall not at any time exceed $15,000,000. At any time
an Event of Default exists or has occurred and is continuing, the Agent may, and
upon the written direction of the Required Lenders shall, require Borrower to
either furnish cash collateral to secure the reimbursement obligations to the
issuer in connection with any or all Letter of Credit Accommodations or furnish
cash collateral to Agent, for itself and the ratable benefit of Lenders, for the
Letter of Credit Accommodations, and in either
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<PAGE>
case (i) such cash collateral shall be in an amount equal to one hundred five
(105%) percent of the outstanding face amount of all Letter of Credit
Accommodations, and (ii) the Revolving Loans otherwise available to Borrower
shall not be reduced as provided in Section 2.2(c) upon such cash collateral
being so furnished as required in this Section.
(e) Borrower shall indemnify and hold Agent and Lenders harmless from
and against any and all losses, claims, damages, liabilities, costs and expenses
which any of Agent or Lenders may suffer or incur in connection with any Letter
of Credit Accommodations and any documents, drafts or acceptances relating
thereto, including, but not limited to, any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation, but if Agent
or Lender is the issuer of a Letter of Credit Accommodation, Borrower shall not
be required to indemnify such person (who is the issuer) for any losses, claims,
damages, liabilities, costs and expenses directly caused by such person's own
gross negligence or wilful misconduct, as determined by a final, non-appealable
judgment of a court of competent jurisdiction. Borrower assumes all risks with
respect to the acts or omissions of the drawer under or beneficiary of any
Letter of Credit Accommodation and for such purposes the drawer or beneficiary
shall be deemed Borrower's agent. Borrower assumes all risks for, and agrees to
pay, all foreign, Federal, State and local taxes, duties and levies relating to
any goods subject to any Letter of Credit Accommodations or any documents,
drafts or acceptances thereunder. Borrower hereby releases and holds Agent and
Lenders harmless from and against any acts, waivers, errors, delays or
omissions, whether caused by Borrower, by any issuer or correspondent or
otherwise with respect to or relating to any Letter of Credit Accommodation.
The provisions of this Section 2.2(e) shall survive the payment of the
Obligations and the termination of this Agreement.
(f) Nothing contained herein shall be deemed or construed to grant
Borrower any right or authority to pledge the credit of Agent or Lenders in any
manner. Agent and Lenders shall have no liability of any kind with respect to
any Letter of Credit Accommodation provided by an issuer other than Agent,
unless Agent has duly executed and delivered to such issuer the application or a
guarantee or indemnification in writing with respect to such Letter of Credit
Accommodation. Borrower shall be bound by any interpretation made in good faith
by Agent, or any other issuer or correspondent under or in connection with any
Letter of Credit Accommodation or any documents, drafts or acceptances
thereunder, notwithstanding that such interpretation may be inconsistent with
any instructions of Borrower. Agent shall have the sole and exclusive right and
authority to, and Borrower shall not: (i) at any time an Event of Default exists
or
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<PAGE>
has occurred and is continuing, (A) approve or resolve any questions of non-
compliance of documents, (B) give any instructions as to acceptance or rejection
of any documents or goods or (C) execute any and all applications for steamship
or airway guaranties, indemnities or delivery orders, and (ii) at all times, (A)
grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents, and (B) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Agent may take such actions either in its
own name or in Borrower's name.
(g) Any rights, remedies, duties or obligations granted or undertaken
by Borrower to any issuer or correspondent in any application for any Letter of
Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by Borrower to Agent and Lenders. Any duties or
obligations undertaken by Agent or any Lender to any issuer or correspondent in
any application for any Letter of Credit Accommodation, or any other agreement
by Agent or any Lender in favor of any issuer or correspondent relating to any
Letter of Credit Accommodation, shall be deemed to have been undertaken by
Borrower to Agent or the applicable Lender(s) and to apply in all respects to
Borrower.
2.3 Term Loan. Subject to satisfaction of each of the conditions
---------
precedent set forth in Section 4.1 hereof, each of Lenders severally (and not
jointly) agrees to fund its Pro Rata Share of a term loan to Borrower, in a
--- ----
single advance, in the aggregate original principal amount of $25,000,000. The
Term Loan shall be (a) evidenced by the Term Notes in the aggregate original
principal amount of $25,000,000 duly executed and delivered by Borrower to
Lenders concurrently herewith (b) repaid, together with interest and other
amounts, in accordance with this Agreement, the Term Notes and the other
Financing Agreements, and (c) secured by all of the Collateral.
2.4 Availability Reserves.
---------------------
(a) All Revolving Loans and Letter of Credit Accommodations otherwise
determined by Agent to be available to Borrower pursuant to the lending formulas
and subject to the Maximum Credit, the Revolving Loan Limit and other applicable
sublimits hereunder shall be subject to Agent's continuing right to establish
and revise Availability Reserves.
(b) Without limiting any other rights of Agent under this Agreement
with respect to the establishment of Availability Reserves or otherwise, and in
addition to any other
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<PAGE>
Availability Reserves at any time established by Agent, Agent hereby establishes
Availability Reserves in the amount of (i) the Supplemental Capital Expenditures
Reserve, (ii) the Term Loan Reserve, (iii) the Professional Fees Carve-Out, (iv)
past due real property taxes plus interest and penalties accrued and accruing
thereon, which reserve and increases thereof may be estimated by Agent and shall
be adjusted monthly until all such unpaid amounts are fully paid, and (v) the
Licensed Goods Reserve; provided, that in Agent's sole discretion, Agent may
-------- ----
phase-in the establishment of the Licensed Goods Reserve in installments over a
period not to exceed ninety (90) days after the Closing Date, subject to Agent's
right to implement the balance of the Licensed Goods Reserve in full at any
time. Unless, on or before December 31, 1996, all past due real property taxes,
plus interest and penalties accrued and accruing thereon through the date of
payment, shall be paid in full by Borrower and evidence thereof and of the
discharge of all liens securing such taxes and related amounts is delivered to
Agent, then, in addition to all other rights and remedies of Agent, Agent may
directly pay such taxes and related amounts at any time thereafter for
Borrower's account, all such amounts so paid by Agent to be deemed Revolving
Loans hereunder. The Availability Reserve established by Agent hereunder to
cover such taxes and related amounts shall be released (x) to the extent Agent
makes such payments for Borrower's account and the liens securing such taxes and
related amounts so paid are discharged, or (y) to the extent Borrower makes
arrangements satisfactory to Agent for the use of Revolving Loans thereby made
available hereunder for purposes of effecting payment by Borrower of such taxes
and related amounts and the discharge of all liens securing such taxes and
related amounts so paid.
(c) Unless a Default or Event of Default shall exist or shall have
occurred and be continuing, the Supplemental Capital Expenditures Reserve shall
be adjusted by Agent monthly after receipt of each Covenant Compliance
Certificate delivered by Borrower under Section 9.6(e), to effect partial
releases of such Availability Reserve by the amounts expended for, or, at
Agent's option, by amounts to be used to fund Revolving Loans to be used by
Borrower, under arrangements satisfactory to Agent, solely for permitted Capital
Expenditures under the portion of the Supplemental Capital Expenditures
Allowance provided in clause (a) of the definition of Supplemental Capital
Expenditures Allowance.
(d) Unless a Default or Event of Default shall exist or shall have
occurred and be continuing, the Term Loan Reserve shall be released by Agent
upon the satisfaction of all of the following conditions:
(i) Borrower shall have timely delivered to Agent and Lenders
the Phase I and Phase II
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<PAGE>
environmental reports as provided for in the engagement delivered
pursuant to Section 4.1(b)(ii) and such reports shall be in form
satisfactory to Agent and Lenders and shall not indicate potential
investigation and/or remediation costs in an aggregate amount in
excess of $3,000,000 for all facilities covered by such reports other
than Abbeville, South Carolina, or in an aggregate amount in excess
of $3,000,000 for Abbeville, South Carolina;
(ii) Borrower shall have timely delivered to Agent and Lenders
its Strategic Plan, as required under Section 9.19(b) hereof; and
(iii) Borrower shall have completed all of the elements of
its Strategic Plan referred to in Section 9.19(c) hereof (including
obtaining any required written consents from Agent and/or Lenders in
connection therewith and fulfillment of all terms and conditions of
such consents).
Without limiting the terms and conditions the Agent and/or Lenders may require
as referred to in clause (iii) of this Section 2.4(d), such conditions shall
include, without limitation, the requirement that, out of the proceeds received
from any permitted sale of the divisions and facilities described in Section
9.19(c)(i), Borrower shall make a mandatory prepayment of (A) Revolving Loans in
amounts that Agent determines are attributable to Eligible Accounts and Eligible
Inventory of such divisions so sold or whose value is determined by Agent to be
impaired by such sale, and (B) the Term Loan by an amount sufficient to reduce
the outstanding principal amount thereof to an amount equal to (1) the lesser of
(x) seventy five (75%) percent of the appraised orderly liquidation value of the
Borrower's remaining owned Equipment that is subject to a first priority
security interest in favor of Agent, for itself and the ratable benefit of
Lenders, excluding the Equipment at Abbeville, South Carolina and Rockingham,
North Carolina, such appraisal to be a then-current appraisal addressed to Agent
(or upon which Agent and Lenders shall be permitted to rely) and prepared at
Borrower's expense by an appraiser and having scope, methodology and form
acceptable to Agent, or (y) $18,000,000, minus (2) all payments and prepayments
-----
made in respect of the Term Loan prior to the prepayment required under clause
(B) of this Section 2.4(d); and such mandatory prepayment of the Term Loan shall
be applied to the principal installments thereunder in the inverse order of the
maturities thereof.
2.5 Commitments. The Commitments of the Lenders shall be the respective
-----------
amounts set forth below each Lender's signature on the signature pages thereto,
as the same may from time to time be amended with the written acknowledgment of
the Agent in
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<PAGE>
connection with executed Assignment Agreements executed and delivered to
evidence permitted assignments by the Lenders as provided in Section 13.5
hereof.
SECTION 3. INTEREST AND FEES
-----------------
3.1 Interest.
--------
(a) Borrower shall pay to Agent, for the ratable benefit of Lenders,
interest on the outstanding principal amount of the non-contingent Obligations
at the Interest Rate. All interest accruing hereunder on and after the date and
during the continuance of any Event of Default or on or after the date of
termination hereof shall be payable ON DEMAND.
(b) Borrower may from time to time request that Prime Rate Loans be
converted to Eurodollar Rate Loans or that any existing Eurodollar Rate Loans
continue for an additional Interest Period. Such request from Borrower shall
specify the amount of the Prime Rate Loans which will constitute Eurodollar Rate
Loans (subject to the limits set forth below) and the Interest Period to be
applicable to such Eurodollar Rate Loans. Subject to the terms and conditions
contained herein, three (3) Business Days after receipt by Agent of such a
request from Borrower, such Prime Rate Loans shall be converted to Eurodollar
Rate Loans or such Eurodollar Rate Loans shall continue, as the case may be,
provided, that, as of such date each of the following conditions is satisfied as
- -------- ----
determined by Agent: (i) no Default or Event of Default exists or has occurred
and is continuing, (ii) no party hereto shall have sent any notice of
termination of this Agreement, (iii) Borrower shall have complied with such
customary procedures as are established by Agent and specified by Agent to
Borrower from time to time for requests by Borrower for Eurodollar Rate Loans,
(iv) no more than five (5) Interest Periods may be in effect at any one time,
(v) the amount of each Eurodollar Rate Loan must be in an amount not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof, (vi) the
maximum amount of the Eurodollar Rate Loans at any time requested by Borrower
shall not exceed the amount equal to eighty (80%) percent of the daily average
of the principal amount of the Loans which it is anticipated will be outstanding
during the applicable Interest Period, in each case as determined by Agent (but
with no obligation of Agent or Lenders to make such Loans) and (vii) Agent shall
have determined that the Interest Period or Adjusted Eurodollar Rate is
available to Agent or Lenders through the Reference Bank and can be readily
determined as of the date of the request for such Eurodollar Rate Loan by
Borrower. Any request by Borrower to convert Prime Rate Loans to Eurodollar
Rate Loans or to continue any existing Eurodollar Rate Loans shall be
irrevocable. Notwithstanding anything to the contrary contained herein, none of
Agent, Lenders or Reference
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<PAGE>
Bank shall be required to purchase United States Dollar deposits in the London
interbank market or other applicable Eurodollar Rate market to fund any
Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if
Agent or Lenders and Reference Bank had purchased such deposits to fund the
Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Agent has
received and approved a request to continue such Eurodollar Rate Loan at least
three (3) Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans shall, at Agent's option, or as directed in
writing by the Required Lenders, upon notice by Agent to Borrower, convert to
Prime Rate Loans in the event that (i) an Event of Default shall exist or shall
have occurred and be continuing, (ii) this Agreement shall terminate, or (iii)
the aggregate principal amount of the Prime Rate Loans which have previously
been converted to Eurodollar Rate Loans or existing Eurodollar Rate Loans
continued, as the case may be, at the beginning of an Interest Period shall at
any time during such Interest Period exceed either (A) the aggregate principal
amount of the Loans then outstanding, or (B) the Loans then available to
Borrower under Section 2 hereof. Borrower shall pay to Agent, for itself and
the ratable benefit of Lenders, upon demand by Agent (or Agent may, at its
option, charge to any loan account of Borrower) any amounts required to
compensate Agent, any Lender, the Reference Bank or any Participant for any loss
(including loss of anticipated profits), cost or expense incurred by such
person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate
Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrower to Agent, for the benefit of
Lenders, monthly in arrears not later than the first day of each calendar month
and shall be calculated on the basis of a three hundred sixty (360) day year and
actual days elapsed. Borrower hereby acknowledges and understands that the
calculation of interest on the basis of the actual days elapsed over the period
of a three hundred and sixty (360) day year as opposed to a year of three
hundred sixty-five (365) or three hundred and sixty-six (366) days results in a
higher effective rate of interest. The interest rate on non-contingent
Obligations (other than Eurodollar Rate Loans) shall increase or decrease by an
amount equal to each increase or decrease in the Prime Rate effective on the
first day of the month after any change in such Prime Rate is announced based on
the Prime Rate in effect on the last day of the month in which any such change
occurs.
(e) On the date hereof, the Prime Rate is eight and one-quarter
(8.25%) percent and, therefore, the rate of interest that would be in effect
hereunder for Prime Rate Loans if any
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<PAGE>
were made and outstanding on the date of this Agreement, expressed in simple
interest terms is nine and one-quarter (9.25%) percent per annum.
(f) The Interest Rate with respect to Eurodollar Rate Loans is
subject to adjustment as follows:
(i) if Borrower's Pre-Tax Profit is at least $6,000,000 for
its fiscal year ending December 31, 1996, then the pre-default
Interest Rate for Eurodollar Rate Loans will be reduced to three (3%)
percent per annum above the Adjusted Eurodollar Rate.
(ii) if Borrower's Pre-Tax Profit is at least $16,000,000
for its fiscal year ending December 31, 1997, and Borrower previously
became entitled to the reduction in the pre-default Interest Rate for
Eurodollar Rate Loans as described in Section 3.1(f)(i) above, then
the pre-default Interest Rate for Eurodollar Rate Loans will be
further reduced to two and three-quarters (2.75%) percent per annum
above the Adjusted Eurodollar Rate.
(iii) If Borrower's Pre-Tax Profit for its fiscal year ending
December 31, 1996 is less than $6,000,000, but Borrower's Pre-Tax
Profit for its fiscal year ending December 31, 1997 is at least
$16,000,000, then the pre-default Interest Rate for Eurodollar Rate
Loans will be reduced to three (3%) percent per annum above the
Adjusted Eurodollar Rate.
(iv) Each adjustment in the Interest Rate for Eurodollar
Rate Loans shall be effective as to each Interest Period that
commences on or after the tenth (10th) day after the delivery to
Agent of audited financial statements of the Borrower for the
applicable fiscal year showing that the required financial results
were achieved and accompanied by the unqualified audit report and
opinion thereon of independent certified public accountants
acceptable to Agent.
(v) No adjustments in the pre-default Interest Rate for
Eurodollar Rate Loans as described in this Section 3.1(f) shall
become effective if, at the time an adjustment would otherwise be
made under this Section 3.1(f), a Default or Event of Default exists
or has occurred and is continuing.
3.2 Commitment and Closing Fees.
---------------------------
(a) Pursuant to or in connection with the Merger
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Agreements and as approved pursuant to the Confirmation Order, Bibb shall, on
behalf of Borrower, pay to Agent for the ratable benefit of Lenders, based on
their Pro Rata Shares, a Commitment fee in the sum of $250,000, which fee is
--- ----
fully earned and payable in immediately available funds upon the execution and
delivery hereof. Such fee shall not be refundable in any event.
(b) Borrower shall pay to the Agent for the ratable benefit of
Lenders, based on their Pro Rata Shares, a fee of $1,000,000, earned and payable
--- ----
in full on the Closing Date.
3.3 Servicing Fee. Borrower shall pay annually to the Agent, for its own
-------------
account, a servicing fee in an amount equal to $100,000 for each year or part
thereof during the term (including any renewal term) of the Credit Facility
after the first anniversary of the date of this Agreement, and for so long
thereafter as any of the Obligations are outstanding, which fee shall be fully
earned as of and payable in advance on each anniversary of the date hereof,
commencing with the first anniversary of the date of this Agreement.
3.4 Unused Line Fee. Borrower shall pay to the Agent, for the ratable
---------------
benefit of Lenders, based on their Pro Rata Shares, on the first day of each
--- ----
month while this Agreement is in effect and for so long thereafter as any of the
Obligations are outstanding, an unused line fee at a rate equal to one-half of
one (.5%) percent per annum calculated upon the amount by which (i) the
Revolving Loan Limit in effect during the immediately preceding month exceeds
(ii) the aggregate principal balance of Revolving Loans and Letter of Credit
Accommodations outstanding during the immediately preceding month (or part
thereof).
3.5 Maximum Interest.
----------------
(a) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Financing Agreements, in no event whatsoever shall
the aggregate of all amounts that are contracted for, charged or received by
Lenders or by Agent, for itself or the benefit of Lenders, pursuant to the terms
of this Agreement or any of the other Financing Agreements and that are deemed
interest under applicable law, exceed the Maximum Interest Rate (including, to
the extent applicable, the provisions of Section 5197 of the Revised Statutes of
the United States of America as amended, 12 U.S.C. Section 85, as amended). No
agreements, conditions, provisions or stipulations contained in this Agreement
or any of the other Financing Agreements, or any Event of Default, or the
exercise by Agent of the right to accelerate the payment or the maturity of all
or any portion of the Obligations, or the exercise of any option whatsoever
contained in this Agreement or any of the other Financing Agreements, or the
prepayment by Borrower of any of the
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<PAGE>
Obligations, or the occurrence of any event or contingency whatsoever, shall
entitle Agent or Lenders to contract for, charge or receive in any event,
interest or any charges, amounts, premiums or fees deemed interest by applicable
law in excess of the Maximum Interest Rate. In no event shall Borrower be
obligated to pay interest or such amounts as may be deemed interest under
applicable law in amounts which exceed the Maximum Interest Rate. All
agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel Borrower to pay
interest or such amounts which are deemed to constitute interest in amounts
which exceed the Maximum Interest Rate shall be (i) without binding force or
effect, at law or in equity, to the extent of the excess of interest or such
amounts which are deemed to constitute interest over such Maximum Interest Rate,
and (ii) deemed amended to conform to the provisions of this Section 3.5.
(b) In the event any interest is charged or received in excess of the
Maximum Interest Rate ("Excess"), Borrower acknowledges and stipulates that any
such charge or receipt shall be the result of an accident and bona fide error,
---- ----
and that any Excess received by Agent or Lenders, shall be applied, first, to
the payment of the then outstanding and unpaid principal hereunder; second to
the payment of the other Obligations then outstanding and unpaid; and third,
returned to Borrower, it being the intent of the parties hereto not to enter
into a usurious or otherwise illegal relationship. The right to accelerate the
maturity of any of the Obligations does not include the right to accelerate any
interest that has not otherwise accrued on the date of such acceleration, and
Agent and Lenders do not intend to collect any unearned interest, in the event
of any such acceleration. Borrower recognizes that, with fluctuations in the
rates of interest set forth in Section 3.1 of this Agreement and the Maximum
Interest Rate, such an unintentional result could inadvertently occur. All
monies paid to Agent or Lenders hereunder or under any of the other Financing
Agreements, whether at maturity or by prepayment, shall be subject to any rebate
of unearned interest as and to the extent required by applicable law.
(c) By its execution of this Agreement, Borrower agrees that (i) the
credit or return of any Excess shall constitute the acceptance by Borrower of
such Excess, and (ii) Borrower shall not seek or pursue any other remedy, legal
or equitable, against Agent or any Lender, based in whole or in part upon
contracting for, charging or receiving any interest or such amounts which are
deemed to constitute interest in excess of the Maximum Interest Rate. For the
purpose of determining whether or not any Excess has been contracted for,
charged or received by Agent or Lenders, all interest at any time contracted
for, charged or received from Borrower in connection with this Agreement or any
of the other Financing Agreements shall, to the
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extent permitted by applicable law, be amortized, prorated, allocated and spread
during the entire term of this Agreement in accordance with the amounts
outstanding from time to time hereunder and the Maximum Interest Rate from time
to time in effect in order to lawfully charge the maximum amount of interest
permitted under applicable laws.
(d) Borrower, Agent and Lenders shall, to the maximum extent permitted
under applicable law, (i) characterize any non-principal payment, other than
payments of interest pursuant to Section 3.1 hereof, as an expense, fee or
premium rather than as interest and (ii) exclude voluntary prepayments and the
effects thereof.
(e) The provisions of this Section 3.5 shall be deemed to be
incorporated into each of the other Financing Agreements (whether or not any
provision of this Section is referred to therein). Each of the Financing
Agreements and communications relating to any interest owed by Borrower and all
figures set forth therein shall, for the sole purpose of computing the extent of
the Obligations, be automatically recomputed by Borrower, and by any court
considering the same, to give effect to the adjustments or credits required by
this Section.
3.6 Changes in Laws and Increased Costs of Loans.
--------------------------------------------
(a) Notwithstanding anything to the contrary contained herein, all
Eurodollar Rate Loans shall, upon notice by any affected Lender or by Agent to
Borrower, convert to Prime Rate Loans in the event that (i) any change in
applicable law or regulation (or the interpretation or administration thereof)
shall either (A) make it unlawful for Agent, any Lender, Reference Bank or any
Participant to make or maintain Eurodollar Rate Loans or to comply with the
terms hereof in connection with the Eurodollar Rate Loans, by an amount deemed
by any affected Lender to be material, or (B) shall result in the increase in
the costs to Agent, any Lender, Reference Bank or any Participant of making or
maintaining any Eurodollar Rate Loans or (C) reduce the amounts received or
receivable by Agent or any Lender in respect thereof, by an amount deemed by
Agent or such Lender to be material or (ii) the cost to Agent, any Lender,
Reference Bank or any Participant of making or maintaining any Eurodollar Rate
Loans shall otherwise increase by an amount deemed by Agent or any affected
Lender to be material. Borrower shall pay to Agent, for itself and the ratable
benefit of the affected Lenders, upon demand by Agent (or Agent may, at its
option, charge any loan account of Borrower for) any amounts required to
compensate Agent, any affected Lender, the Reference Bank or any Participant for
any loss (including loss of anticipated profits), cost or expense incurred by
such person as a result of the foregoing, including, without limitation, any
such loss, cost or expense
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incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such person to make or maintain the Eurodollar Rate Loans or any
portion thereof. A certificate of Agent or the affected Lender setting forth
the basis for the determination of such amount necessary to compensate the Agent
or affected Lender as aforesaid shall be delivered to Borrower and shall be
conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar Rate
Loans are received by Agent, other than on the last day of the applicable
Interest Period (whether pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of collections under Section
6.3 or any other payments made with the proceeds of Collateral, Borrower shall
pay to Agent, for itself and the ratable benefit of Lenders, upon demand by
Agent (or Agent may, at its option, charge any loan account of Borrower) any
amounts required to compensate Agent, any Lender, the Reference Bank or any
Participant for any additional loss (including loss of anticipated profits),
cost or expense incurred by such person as a result of such prepayment or
payment, including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Person to make or maintain such Eurodollar Rate Loans or any portion
thereof.
SECTION 4. CONDITIONS PRECEDENT
--------------------
4.1 Conditions Precedent to the Initial Loans. Each of the following is
-----------------------------------------
a condition precedent to the Lenders making the initial Loans:
(a) Agent shall have received, in form and substance satisfactory to
Agent and Lenders, all releases, terminations and such other documents as Agent
or Lenders may request to evidence and effectuate the termination by the
Citicorp Group and each member thereof of all financing arrangements with
Borrower, Bibb (including the DIP Credit Facility and any financing arrangements
in effect prior to the commencement of the Chapter 11 Case), Newco or any
Obligor and the termination and release by the Citicorp Group and each member
thereof of any interest in and to any assets and properties of Borrower, Bibb,
Newco and each Obligor held by Citicorp, individually or as agent, or any other
member of the Citicorp Group, with respect to such financing arrangements, duly
authorized, executed and delivered by it, including, but not limited to, (i)
Uniform Commercial Code termination statements for all Uniform Commercial Code
financing statements previously filed by it or its predecessors, as secured
party, and Borrower, Bibb, Newco or any Obligor, and (ii) satisfactions and
discharges of any mortgages, deeds of trust or deeds to secure debt
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previously granted by Bibb or its predecessor, Newco, Borrower or any Obligor in
favor of Citicorp, individually or as agent, or a trustee acting on its behalf,
or any other member of the Citicorp Group, in form acceptable for recording in
the appropriate governmental offices;
(b) (i) Agent shall have received (A) reports of Phase I
environmental audits addressed to Agent (or upon which Agent and Lenders are
expressly permitted to rely) with respect to Borrower's owned Real Property,
other than the graphics facility in Macon, Georgia and the facilities referred
to in clause (B), such audits and reports to be conducted and prepared at
Borrower's expense by Water and Air Research, Inc. or other independent
environmental engineering firm acceptable to Agent and Lenders, as of an
acceptable date and in form, scope and methodology satisfactory to Agent and
Lenders, and (B) in the case of Borrower's owned Real Property in Abbeville,
South Carolina, Greenville, South Carolina (White Horse Plant), Fort Valley,
Georgia and Juliette, Georgia (Plant Camellia), a review report of prior Phase I
environmental audits as to such facilities, each such review report to be
prepared by Water and Air Research or other independent environmental
engineering firm acceptable to Agent and Lenders; and each such report under
clauses (A) and (B) shall confirm, in the case of Real Property other than
Borrower's Real Property located at Abbeville, South Carolina and Brookneal,
Virginia, that (x) Borrower is in compliance with all applicable Environmental
Laws in all material respects and (y) there is not any material potential or
actual liability of Borrower for any remedial action with respect to any
environmental condition or any other significant environmental problems; and
(ii) Agent shall have received, in form and substance
satisfactory to Lenders, an engagement letter between Borrower and Water and Air
Research Inc. or other independent environmental engineering firm acceptable to
Agent, under which, at Borrower's expense, additional environmental audit,
testing and evaluation shall be conducted and a current Phase I environmental
report rendered with respect to Borrower's Real Property located at Abbeville,
South Carolina and current Phase II environmental reports rendered with respect
to Borrower's Real Property located at Greenville, South Carolina (White Horse
Plant), Fort Valley, Georgia and Juliette, Georgia (Plant Camellia), all in such
form, scope and methodology acceptable to Agent and Lenders, and providing for
completion of such audit, testing, evaluation and delivery of such Phase I and
Phase II reports, all by no later than October 31, 1996, and which reports shall
be addressed to Agent, or upon which Agent and Lenders are expressly permitted
to rely;
(c) Agent shall have received, in form and substance satisfactory to
Agent and Lenders, valid and effective
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title insurance policies (or marked and effective binders therefor) issued by a
company and agent acceptable to Agent and Lenders (i) insuring the priority,
amount and sufficiency of the Mortgages, (ii) insuring against matters that
would be disclosed by surveys and (iii) containing any legally available
endorsements, assurances or affirmative coverage requested by Lenders for
protection of their interests;
(d) Agent shall have received evidence, in form and substance
satisfactory to Agent and Lenders, of the termination of The Bibb Trade
Receivables Master Trust (the "Trust"), and the related pooling and servicing
agreement, satisfaction of all indebtedness of Bibb, Borrower and B.F. Funding
L.P. to such Trust or the trustee thereof, and the satisfaction of all
indebtedness owed by Bibb, Borrower, B.F. Funding L.P. or the Trust to the
holders of trust certificates issued by such Trust, and the repurchase by, and
reconveyance to, Bibb or Borrower of, and the release of all liens or security
interests encumbering, all Accounts of Bibb previously purchased by B.F. Funding
L.P. and thereafter sold, pledged or otherwise transferred to such Trust (the
"Trust Receivables"), and termination of all restrictions on Bibb's or B.F.
Funding L.P.'s cash or cash equivalents in effect pursuant to such arrangements
and the application of such cash in reduction of the obligations of the Trust to
the trust certificate holders.
(e) Agent shall have received, in form and substance satisfactory to
Agent and Lenders, evidence that the Merger Agreements were duly executed and
delivered on or prior to the date hereof by and to the appropriate parties
thereto and the Merger has been consummated in accordance therewith and is
effective in accordance with applicable law and the Merger Agreements (including
the fulfillment, not merely the waiver, of all conditions precedent)
contemporaneously with or prior to the making of the initial Loans on the
Closing Date;
(f) all actions and proceedings required by the Merger Agreements,
applicable law or regulation shall have been taken and the transactions required
thereunder shall have been duly and validly taken and consummated;
(g) no court of competent jurisdiction shall have issued any
injunction, restraining order or other order which prohibits the consummation of
the transactions described in the Merger Agreements or Financing Agreements, and
no governmental or other action or proceeding shall have been threatened or
commenced, seeking any injunction, restraining order or other order which seeks
to void or otherwise modify the transactions described in the Merger Agreements
or Financing Agreements;
(h) the Confirmation Order shall be subsisting as a Final Order, a
certified copy thereof shall have been delivered
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to Agent and Lenders, and all steps to be taken on the Effective Date shall have
been taken and all conditions precedent to the effectiveness of the Plan shall
have been fulfilled, in each case prior to or contemporaneously with the making
of the initial Loans on the Closing Date;
(i) without limiting any of the conditions of Section 4.1(h) hereof,
(A) pursuant to the Plan, prior to or contemporaneously with the making of the
initial Loans on the Closing Date, all amounts and claims owing to the
Subordinated Noteholders by Bibb or Borrower in respect of the Subordinated
Notes (including all principal, interest and other sums) shall have been
converted into shares of common stock of Borrower comprising not less than
ninety-five (95%) percent of the authorized and outstanding common stock of
Borrower (on a fully diluted basis) in accordance with the Plan and all claims
by the trustees under the respective indentures covering the Subordinated Notes
shall have been released and discharged, and (B) prior to or contemporaneously
with the making of the initial Loans on the Closing Date, Agent shall have
received, in form and substance satisfactory to the Lenders, evidence that Bibb
will continue to be an S Corporation under the Code through the end of the
taxable year that ends on and includes the Effective Date, but Borrower shall
not be an S Corporation under the Code immediately following the Effective Date,
and cancellation of indebtedness of Bibb realized in connection with the Plan
will be excluded from the gross income of Bibb and Borrower, and losses or
suspended losses previously incurred by Bibb will be available to offset, for
income tax attribute reduction purposes, any cancellation of indebtedness income
realized by Bibb in connection with the Plan before reduction of any other
income tax attributes;
(j) Agent shall have received evidence, in form and substance
satisfactory to Lenders, that Bibb or Borrower shall have hired a chief
executive officer selected by Borrower and acceptable to Agent and Lenders, who
shall have agreed with Borrower to become or remain the chief executive officer
of Borrower as of the Effective Date, pursuant to an employment agreement having
terms (including term of employment, compensation and severance payments)
acceptable to Lenders; and Agent shall have received, in form and substance
satisfactory to Agent and Lenders, a preliminary Strategic Plan including a
summary description of the key elements thereof and supporting financial
projections giving effect thereto;
(k) Agent shall have received evidence, in form and substance
satisfactory to Agent and Lenders, that Agent has been granted and holds, for
itself and for the ratable benefit of Lenders, valid perfected and first
priority security interests in and liens upon the Collateral and any other
property which is intended to be security for the Obligations or the liability
of
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any Obligor in respect thereof, subject only to the security interests and liens
permitted herein or in the other Financing Agreements;
(l) the Excess Availability as determined by Agent, as of the Closing
Date, shall be not less than $3,000,000 after giving effect to the initial Loans
and establishment of Availability Reserves hereunder, but excluding, solely for
purposes of determining Excess Availability under this Section 4.1(l), the
Licensed Goods Reserve;
(m) Lenders shall have received, in form and substance satisfactory to
Lenders, the audited financial statements of Borrower for the fiscal years ended
December 31, 1994 and December 31, 1995, indicating a financial condition and
results as at such date and for the fiscal year then ended and not indicating
any adverse deviation in excess of five (5%) percent as to any of the following
line items: Borrower's total current assets, total current liabilities, total
assets, total liabilities, net worth, or EBITDA when compared with the
corresponding line items contained in the final drafts of such financial
statements contained in the Disclosure Statement with respect to the Plan, a
copy of which has previously been delivered to Lenders;
(n) all requisite corporate action and proceedings in connection with
this Agreement and the other Financing Agreements and with respect to the other
steps to be taken upon the Effective Date of the Plan, shall be satisfactory in
form and substance to Agent and Lenders, and Agent shall have received all
information and copies of all documents, including, without limitation, records
of requisite corporate action and proceedings which Agent or Lenders may have
requested in connection therewith, such documents where requested by Agent or
Lenders to be certified by appropriate corporate officers or governmental
authorities;
(o) no material adverse change shall have occurred in the assets,
business or prospects of Bibb or Borrower since the date of Agent's latest field
examination and no change or event shall have occurred which would impair the
ability of Borrower or any Obligor to perform its obligations hereunder or under
any of the other Financing Agreements to which it is a party or of Agent or
Lenders to enforce the Obligations or realize upon the Collateral;
(p) Agent and Transamerica shall have completed a field review of the
Records and such other information with respect to the Collateral as Agent and
Transamerica may require to determine the amount of the initial Loans, the
results of which shall be satisfactory to Agent and Transamerica, not more than
three (3) business days prior to the Closing Date;
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(q) Agent shall have received, in form and sub stance satisfactory to
Agent and Lenders, all consents, waivers, acknowledgments and other agreements
from third persons which Agent or Lenders may deem necessary or desirable in
order to permit, protect and perfect its security interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement and
the other Financing Agreements, including, without limitation (i)
acknowledgements by lessors, mortgagees and warehousemen of Agent's security
interests in the Collateral, for itself and the ratable benefit of Lenders,
waivers by such persons of any security interests, liens or other claims by such
persons to the Collateral and agreements permitting Agent and, subject to
Section 12.3 hereof, Lenders' access to, and the right to remain on, the
premises to exercise its and their rights and remedies and otherwise deal with
the Collateral and (ii) agreements from licensors of trademarks and other
intellectual property permitting Agent and, subject to Section 12.3 hereof,
Lenders to use the marks, logos or other intellectual property licensed by such
persons to Bibb or Borrower to exercise Agent's and, subject to Section 12.3
hereof, Lenders' rights and remedies and otherwise deal with the assets of
Borrower, or if such agreements from licensors are not delivered, Agent shall
establish a Licensed Goods Reserve with respect to the licensed Inventory;
(r) Agent shall have received evidence of insurance and loss payee
endorsements required hereunder and under the other Financing Agreements, in
form and substance satisfactory to Agent and Lenders, and certificates of
insurance policies and/or endorsements naming Agent, for itself and the ratable
benefit of Lenders, as loss payee;
(s) Agent shall have received, in form and substance satisfactory to
Agent and Lenders, such opinion letters of counsel to Borrower (including,
without limitation, Georgia counsel to Borrower) dated the Closing Date with
respect to the Financing Agreements and such other matters as Agent or Lenders
may request;
(t) Agent shall have received, in form and substance satisfactory to
Lenders, a guarantee of payment by B.F. Funding, L.P. of all Obligations,
secured by a first and only security interest in favor of Agent, for itself and
the ratable benefit of Lenders, in all of the existing and future assets of B.F.
Funding, L.P., unless Agent has received satisfactory evidence that B.F.
Funding, L.P., has been liquidated;
(u) Borrower shall have established the initial Blocked Accounts and
Agent shall have received, in form and substance satisfactory to Agent and
Lenders, all agreements with the depository banks and Borrower with respect to
the initial Blocked Accounts as Agent and Lenders may require pursuant to
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Section 6.3 hereof, duly authorized, executed and delivered by such depository
banks and Borrower;
(v) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Agent
and Lenders, in form and substance satisfactory to Agent and Lenders;
(w) Agent shall have received a certificate, dated the Closing Date,
executed and delivered by each of the chief executive officer and the chief
financial officer of Borrower, in form and substance satisfactory to Agent and
Lenders, with respect to the matters set forth in Sections 4.1(x) and 4.2 hereof
with respect to the initial Loans hereunder; and
(x) between the date hereof and the Closing Date, Bibb shall not have
taken any action that would have been prohibited to be taken, or failed to take
any action that could have been required to be taken, by Borrower under the
terms of this Agreement had the Effective Date and the transactions to be
consummated on such date (including the Merger) occurred on the date hereof.
Agent shall be entitled to require a written certificate dated the Closing Date
executed by each Lender, or Agent may rely on the provision of funds by each
Lender in respect of the initial Loans made hereunder, as an acknowledgment by
such Lender that the conditions set forth in this Section 4.1 have been
satisfied or provided for in a manner satisfactory to such Lender.
4.2 Conditions Precedent to All Loans and Letter of Credit
------------------------------------------------------
Accommodations. Each of the following is an additional condition precedent to
- --------------
Agent or Lenders making Loans and/or providing any Letter of Credit
Accommodations to Borrower under the Credit Facility, including the initial
Loans and Letter of Credit Accommodations and any future Loans and Letter of
Credit Accommodations under the Credit Facility:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan or providing each such
Letter of Credit Accommodation and after giving effect thereto (except that any
representations and warranties that are expressly limited to an earlier date
shall be deemed repeated and shall be true and correct as of such earlier date,
and provided that, with respect to the initial Loans made on the Closing Date,
any representations that are limited to the date hereof shall nevertheless be
deemed repeated and shall be true and correct as of the Closing Date); and
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(b) no Default or Event of Default shall exist or have occurred and
be continuing on and as of the date of the making of such Loan or providing each
such Letter of Credit Accommodation and after giving effect thereto.
SECTION 5. GRANT OF SECURITY INTEREST
--------------------------
To secure payment and performance of all Obligations, Borrower hereby
grants to Agent, for itself and the ratable benefit of Lenders, a continuing
security interest in, a lien upon, and a right of set off against, and Borrower
hereby assigns to Agent, for itself and the ratable benefit of Lenders, as
security, the following property and interests in property, whether now owned or
hereafter acquired or existing, and wherever located (collectively, the
"Collateral"):
5.1 Accounts;
5.2 all present and future contract rights, general intangibles
(including, but not limited to, tax and duty refunds, registered and
unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, trade secrets, good will, processes, drawings,
blueprints, customer lists, licenses, whether as licensor or licensee, choses in
action and other claims and existing and future leasehold interests in
equipment, real estate and fixtures), chattel paper, documents, instruments,
letters of credit, bankers' acceptances and guaranties, excluding, however, any
--------- -------
licenses as to which Borrower is licensee and leasehold interests in equipment
or in real estate or in fixtures as to which the consent of the other party
thereto is required for the grant by Borrower of a security interest in or
collateral assignment of such license or leasehold interest, and has not been
obtained (and Borrower agrees to use commercially reasonable efforts to obtain
any such required consents);
5.3 all present and future monies, securities, credit balances, deposits,
deposit accounts and other property of Borrower now or hereafter held or
received by or in transit to Agent or any Lender or its affiliates or at any
other depository or other institution from or for the account of Borrower,
whether for safekeeping, pledge, custody, transmission, collection or otherwise,
and all present and future liens, security interests, rights, remedies, title
and interest in, to and in respect of Accounts and other Collateral, including,
without limitation, (a) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other insurance
related to the Collateral, (b) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, (c) goods described in invoices, documents, contracts
or instruments with respect to,
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or otherwise representing or evidencing, Accounts or other Collateral,
including, without limitation, returned, repossessed and reclaimed goods, and
(d) deposits by and property of account debtors or other persons securing the
obligations of account debtors;
5.4 Inventory;
5.5 Equipment;
5.6 Real Property, excluding, however, any Real Property as to which the
--------- -------
consent of any lessor or mortgagee is required for the grant by Borrower of a
security interest in or lien upon such Real Property, and has not been obtained
(and Borrower agrees to use commercially reasonable efforts to obtain any such
required consents, but such efforts shall not require the payment by Borrower to
any mortgagee or lessor of money to obtain any such consent or material adverse
modifications to any mortgage or lease in consideration of any such consent);
5.7 Records; and
5.8 all products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and any claims against third parties for
loss or damage to or destruction of any or all of the foregoing.
SECTION 6. COLLECTION AND ADMINISTRATION
-----------------------------
6.1 Borrower's Loan Account. Agent shall maintain one or more loan
-----------------------
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including, without limitation, fees,
charges, costs, expenses and interest. All entries in the loan account(s) shall
be made in accordance with Agent's customary practices as in effect from time to
time.
6.2 Statements. Agent shall render to Borrower each month a statement
----------
setting forth the balance in Borrower's loan account(s) maintained by Agent for
Borrower pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Agent but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrower and conclusively binding
upon Borrower as an account stated except to the extent that Agent receives a
written notice from Borrower of any specific exceptions of Borrower thereto
within thirty (30) days after the date such statement has been mailed by Agent.
Until such time as Agent shall have rendered to
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Borrower a written statement as provided above, the balance in Borrower's loan
account(s) shall be presumptive evidence of the amounts due and owing by
Borrower to Agent and Lenders.
6.3 Collection of Accounts.
----------------------
(a) Borrower shall establish and maintain, at its expense, blocked
accounts or lockboxes and related blocked accounts (in either case, "Blocked
Accounts"), as Agent may specify, with such banks as are acceptable to Agent
into which Borrower shall promptly deposit and direct its account debtors to
directly remit all payments on Accounts and all payments constituting proceeds
of Inventory or other Collateral in the identical form in which such payments
are made, whether by cash, check or other manner. The banks at which the
Blocked Accounts are established shall enter into an agreement, in form and
substance satisfactory to Agent, providing that all items received or deposited
in the Blocked Accounts are the property of Agent and Lenders according to their
interests hereunder, that the depository bank has no lien upon, or right to
setoff against, the Blocked Accounts, the items received for deposit therein, or
the funds from time to time on deposit therein and that the depository bank will
wire, or otherwise transfer, in immediately available funds, on a daily basis,
all funds received or deposited into the Blocked Accounts to such bank account
of Agent as Agent may from time to time designate for such purpose ("Payment
Account"). Borrower agrees that all payments made to such Blocked Accounts or
other funds received and collected by Agent, whether on the Accounts or as
proceeds of Inventory or other Collateral or otherwise shall be the property of
Agent and Lenders according to their interests hereunder.
(b) For purposes of calculating interest hereunder, such payments or
other funds received will be applied (conditional upon final collection) to the
Obligations one (1) business day following the date of receipt of immediately
available funds by Agent in the Payment Account. For purposes of calculating
the amount of the Revolving Loans available to Borrower, such payments will be
applied (conditional upon final collection) to the Obligations on the business
day of receipt by Agent in the Payment Account, if such payments are received
within sufficient time (in accordance with Agent's usual and customary practices
as in effect from time to time) to credit Borrower's loan account on such day,
and if not, then on the next business day.
(c) Borrower and all of its affiliates, subsidiaries, shareholders,
directors, employees or agents shall, acting as trustee for Agent and Lenders,
receive, as the property of Agent and Lenders according to their interests
hereunder, any monies, checks, notes, drafts or any other payment relating to
and/or proceeds of Accounts or other Collateral which come into their possession
or under their control and shall, if
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practicable, on the day of receipt thereof, and, in any event, within one (1)
business day after receipt thereof, deposit or cause the same to be deposited in
the Blocked Accounts, or remit the same or cause the same to be remitted, in
kind, to Agent. In no event shall the same be commingled with Borrower's own
funds. Borrower agrees to reimburse Agent and Lenders on demand for any amounts
owed or paid to any bank at which a Blocked Account is established or any other
bank or person involved in the transfer of funds to or from the Blocked Accounts
arising out of Agent's or Lenders' payments to or indemnification of such bank
or person. The obligation of Borrower to reimburse Agent or Lenders for such
amounts pursuant to this Section 6.3 shall survive the termination of this
Agreement.
6.4 Payments.
--------
(a) All Obligations shall be payable to the Payment Account as
designated under Section 6.3 or such other place as Agent may designate from
time to time. The Obligations shall be payable upon the effective date of
termination of this Agreement pursuant to Section 10.2 or 13.1 hereof, or
maturity of the Credit Facility, or earlier upon an Event of Default, or
otherwise as provided elsewhere herein or in the other Financing Agreements.
Agent may apply payments received or collected from Borrower or for the account
of Borrower (including, without limitation, the monetary proceeds of collections
or of realization upon any Collateral) to such of the Obligations in respect of
the Revolving Loans, whether or not then due, and to such other Obligations then
due, in each case in such order and manner as Agent determines.
(b) At Agent's option, all principal, interest, fees, costs, expenses
and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of Borrower, whether
or not a Default or Event of Default exists or has occurred and is continuing.
(c) Borrower shall make all payments to Agent on the Obligations free
and clear of, and without deduction or withholding for or on account of, any
setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
withholding, restrictions or conditions of any kind. If after receipt of any
payment of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Agent or any Lender is required to surrender or return such payment
or proceeds to any Person for any reason, then the Obligations intended to be
satisfied by such payment or proceeds shall be reinstated and continue and this
Agreement shall continue in full force and effect as if such payment or proceeds
had not been received by Agent or such Lender. Borrower shall be liable to pay
to Agent and each Lender, and does hereby indemnify and hold Agent and
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each Lender harmless for the amount of any payments or proceeds surrendered or
returned. This Section 6.4 shall remain effective notwithstanding any contrary
action which may be taken by Agent in reliance upon such payment or proceeds.
This Section 6.4 shall survive the payment of the Obligations and the
termination of this Agreement.
6.5 Sharing of Payments, Etc.
-------------------------
(a) Borrower agrees that, in addition to (and without limitation of)
any right of setoff, banker's lien or counterclaim Agent or a Lender may
otherwise have, each Lender shall be entitled, at its option (but subject, as
among Agent and Lenders, to the provisions of Section 12.3(b) hereof), to offset
balances held by it for the account of Borrower at any of its offices, in
dollars or in any other currency, against any principal of or interest on any
Loans owed to such Lender or any other amount payable to such Lender hereunder,
that is not paid when due (regardless of whether such balances are then due to
Borrower), in which case it shall promptly notify Borrower and Agent thereof;
provided, that, such Lender's failure to give such notice shall not affect the
- -------- ----
validity thereof.
(b) If any Lender (including Agent) shall obtain from Borrower payment
of any principal of or interest on any Loan owing to it or payment of any other
amount under this Agreement or any other Financing Agreement through the
exercise of any right of setoff, banker's lien or counterclaim or similar right
or otherwise (other than from Agent as provided herein), and, as a result of
such payment, such Lender shall have received a greater percentage of its Pro
---
Rata Share of the principal of or interest on the Loans or such other amounts
- ----
then due hereunder or thereunder by Borrower to such Lender than the percentage
thereof received by any other Lender, it shall promptly pay to Agent, for the
benefit of Lenders, the amount of such excess and simultaneously purchase from
such other Lenders a participation in the Loans or such other amounts,
respectively, owing to such other Lenders (or in interest due thereon, as the
case may be) in such amounts, and make such other adjustments from time to time
as shall be equitable, to the end that all Lenders shall share the benefit of
such excess payment (net of any expenses that may be incurred by such Lender in
obtaining or preserving such excess payment) in accordance with their respective
Pro Rata Shares. Amounts received by Agent under this Section 6.5(b) shall be
- --- ----
treated as payments received from Borrower under Section 6.4 hereof. To such
end all Lenders shall make appropriate adjustments among themselves (by the
resale of participation sold or otherwise) if such payment is rescinded or must
otherwise be restored.
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(c) Borrower agrees that any Lender so purchasing such a participation
(or direct interest) may exercise, in a manner consistent with this Section 6.5,
all rights of setoff, banker's lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender were a direct holder of Loans
or other amounts (as the case may be) owing to such Lender in the amount of such
participation.
(d) Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of Borrower. If, under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a setoff to
which this Section 6.5 applies, such Lender shall, to the extent practicable,
assign such rights to Agent for the benefit of Lenders and, in any event,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of Lenders entitled under this Section 6.5 to share in the benefits
of any recovery on such secured claim.
6.6 Authorization to Make Loans. Agent is authorized to make the Loans
---------------------------
and provide the Letter of Credit Accommodations for the account and risk of
Lenders based upon telephonic or other instructions received from anyone
purporting to be an officer of Borrower or other authorized person or, at the
discretion of Agent, if such Loans are necessary to satisfy any Obligations.
All requests for Loans or Letter of Credit Accommodations hereunder shall
specify the date on which the requested advance is to be made or Letter of
Credit Accommodations established (which day shall be a business day) and the
amount of the requested Loan. Requests received after 11:00 a.m. Atlanta,
Georgia time on any day shall be deemed to have been made as of the opening of
business on the immediately following business day. All Loans and Letter of
Credit Accommodations under this Agreement shall be conclusively presumed to
have been made to, and at the request of and for the benefit of, Borrower when
deposited to the credit of Borrower or otherwise disbursed or established in
accordance with the instructions of Borrower or in accordance with the terms and
conditions of this Agreement.
6.7 Settlement Procedures.
---------------------
(a) In order to administer the Credit Facility in an efficient manner
and to minimize the transfer of funds between Agent and Lenders, Agent shall,
subject to the following paragraphs (b), (c) and (d), make available, on behalf
of Lenders, the full amount of the Loans requested or charged to Borrower's loan
account(s) or otherwise to be advanced by Lenders pursuant to the terms hereof,
without any requirement of prior notice to Lenders of the proposed Loans.
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(b) With respect to all Loans made by Agent on behalf of Lenders as
provided in this Section 6.7, the amount of each Lender's Pro Rata Share of the
--- ----
outstanding Loans shall be computed weekly, and shall be adjusted upward or
downward on the basis of the amount of the outstanding Loans as of 5:00 P.M.
(Atlanta, Georgia time) on the business day immediately preceding the date of
each settlement computation; provided, that, Agent retains the absolute right at
-------- ----
any time or from time to time to make the above described adjustments at
intervals more frequent than weekly. Agent shall deliver to each of the Lenders
after the end of each week, or such lesser period or periods as Agent shall
determine, a summary statement of the amount of outstanding Loans for such
period (such week or lesser period or periods being hereinafter referred to as a
"Settlement Period"). If the summary statement is sent by Agent and received by
a Lender prior to 12:00 Noon (Atlanta, Georgia time) then such Lender shall make
the settlement transfer described in this Section by no later than 3:00 P.M.
(Atlanta, Georgia time) on the day such summary statement was sent, and if such
summary statement is sent by Agent and received by a Lender after 12:00 Noon
(Atlanta, Georgia time), such Lender shall make such settlement transfer by no
later than 3:00 P.M. (Atlanta, Georgia time) on the next business day following
the date of receipt. If, as of the end of any Settlement Period, the amount of
a Lender's Pro Rata Share of the outstanding Loans is more than such Lender's
--- ----
Pro Rata Share of the outstanding Loans as of the end of the previous Settlement
- --- ----
Period, then such Lender shall forthwith (but in no event later than the time
set forth in the immediately preceding sentence) transfer to Agent by wire
transfer in immediately available funds the amount of the increase;
alternatively, if the amount of a Lender's Pro Rata Share of the outstanding
--- ----
Loans in any Settlement Period is less than the amount of such Lender's Pro Rata
--- ----
Share of the outstanding Loans for the previous Settlement Period, Agent shall
forthwith transfer to such Lender by wire transfer in immediately available
funds the amount of the decrease. The obligation of each of the Lenders to
transfer such funds and effect such settlement shall be irrevocable and
unconditional and shall not require any warranty by Agent or require or result
in any assumption by Agent of any obligations to any Lender not expressly
provided for herein.
(c) To the extent that Agent has made any such amounts available and
the settlement described above shall not yet have occurred, upon repayment of
any Loans by Borrower, Agent may apply such amounts repaid directly to any
amounts made available by Agent pursuant to this Section 6.7. In lieu of weekly
or more frequent settlements, Agent may at any time require each Lender to
provide Agent with immediately available funds representing its Pro Rata Share
--- ----
of each Loan, prior to Agent's disbursement of such Loan to Borrower.
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(d) Because Agent, on behalf of Lenders, may be advancing or may be
repaid Loans prior to the time when Lenders will actually advance or be repaid
Loans, interest and fees with respect to the outstanding Loans shall be
allocated by Agent to each Lender (including Agent), and the amount of each
Lender's (including Agent's) Pro Rata Share shall be computed daily, in
--- ----
accordance with the amount of the outstanding Loans actually advanced by and
repaid to each Lender (including Agent) on each day during each Settlement
Period and shall accrue from and including the date such Loans are advanced by
Agent to but excluding the date such Loans are repaid by Borrower in accordance
with the terms of this Agreement or actually settled by the applicable Lender as
described in this Section 6.7. On or before the third business day of each
month, Agent shall calculate each Lender's Pro Rata Share of interest and fees
--- ----
actually received and collected from Borrower for the benefit of Lenders in
respect of the immediately prior month and, provided that a Lender has made all
payments required to be made by it under this Agreement and the other Financing
Agreement, Agent will, promptly following such calculation, pay to such Lender,
by wire transfer to such Lender, such Lender's Pro Rata Share of such interest
--- ----
and fees actually received and collected from Borrower for the benefit of
Lenders.
(e) Nothing in this Section 6.7 or elsewhere in this Agreement or the
other Financing Agreements shall be deemed to require Agent to advance funds on
behalf of any Lender or to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that Borrower may have against
any Lender as a result of any default by any Lender hereunder in fulfilling its
Commitment.
6.8 Use of Proceeds.
---------------
(a) Borrower shall use the proceeds of the initial Loans (i) to pay
all indebtedness owed by Borrower (as successor to Bibb) to the Citicorp Group
in respect of pre-petition loans and loans under the DIP Credit Facility, (ii)
to provide cash collateral for outstanding letters of credit issued by the
Citicorp Group for Bibb's account, (iii) to pay the Closing Fee, and (iv) to pay
all other amounts required to be paid by Borrower (as successor to Bibb) on the
Effective Date under the Plan and/or pursuant to the Confirmation Order.
(b) The initial Letter of Credit Accommodations arranged under the
Credit Facility shall not be available until appropriate preparation, review and
processing of applications can be completed by Borrower, Agent and the issuer
after the Closing Date, and shall be used to substitute for (upon return of the
corresponding cash collateral provided to the Citicorp Group as referred to in
Section 6.8(a) above) the letters of credit outstanding on the Closing Date
issued in favor of (i) IBJ
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Schroder Bank and Trust Company as trustee for the holders of certain industrial
revenue bonds issued to finance certain facilities of Borrower, (ii) Liberty
Mutual Insurance Company, in connection with workers' compensation financial
assurance bonds, (iii) the lessor of Borrower's New York City office as a
security deposit, and (iv) IBM Credit Corp. as lessor/secured party of certain
of Borrower's computer equipment.
(c) All other Loans and Letter of Credit Accommodations provided to
Borrower pursuant to the Credit Facility shall be used exclusively for working
capital of Borrower or other proper corporate purposes not prohibited by the
terms hereof or of the other Financing Agreements.
(d) None of the proceeds of any Loans or Letter of Credit
Accommodations under the Credit Facility will be used, directly or indirectly,
for the purpose of purchasing or carrying any margin security or for the
purposes of reducing or retiring any indebtedness which was originally incurred
to purchase or carry any margin security or for any other purpose which might
cause any of the Loans to be considered a "purpose credit" within the meaning of
Regulation G of the Board of Governors of the Federal Reserve System, as
amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
----------------------------------
7.1 Collateral Reporting. Borrower shall provide Agent with the
--------------------
following documents in a form satisfactory to Agent: (a) on a daily basis, a
schedule of invoiced sales, credits issued and cash received; (b) on a weekly
basis or more frequently as Agent may request, (i) perpetual Inventory reports,
(ii) Inventory reports by category and (iii) agings of accounts payable, (c)
upon Agent's request, (i) copies of customer statements and credit memos,
remittance advices and reports, and copies of deposit slips and bank statements,
(ii) copies of shipping and delivery documents, and (iii) copies of purchase
orders, invoices and delivery documents for Inventory and Equipment acquired by
Borrower; (d) agings of accounts receivable on a monthly basis or more
frequently as Agent may request; and (e) such other reports as to the Collateral
as Agent shall reasonably request from time to time. If any of Borrower's
records or reports of the Collateral are prepared or maintained by an accounting
service, contractor, shipper or other agent, Borrower hereby irrevocably
authorizes such service, contractor, shipper or agent to deliver such records,
reports, and related documents to Agent and to follow Agent's instructions with
respect to further services at any time that an Event of Default exists or has
occurred and is continuing.
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7.2 Accounts Covenants.
------------------
(a) Without limiting Borrower's periodic reporting Obligations
hereunder, Borrower shall notify Agent promptly on a separate basis of: (i) any
material delay in Borrower's performance of any of its obligations to any
account debtor or the assertion of any claims, offsets, defenses or
counterclaims by any account debtor involving an amount in excess of $100,000,
or any disputes with account debtors, or any settlement, adjustment or
compromise thereof, (ii) all material adverse information relating to the
financial condition of any account debtor and (iii) any event or circumstance
which, to Borrower's knowledge would cause Agent to consider any then existing
Accounts as no longer constituting Eligible Accounts. No credit, discount,
allowance or extension or agreement for any of the foregoing shall be granted to
any account debtor without Agent's consent, except in the ordinary course of
Borrower's business in accordance with practices and policies disclosed in
writing to Agent prior to the granting thereof. So long as no Event of Default
exists or has occurred and is continuing, Borrower shall settle, adjust or
compromise any claim, offset, counterclaim or dispute with any account debtor.
At any time that an Event of Default exists or has occurred and is continuing,
Agent shall, at its option, have the exclusive right to settle, adjust or
compromise any claim, offset, counterclaim or dispute with account debtors or
grant any credits, discounts or allowances.
(b) Without limiting Borrower's periodic reporting Obligations
hereunder, Borrower shall promptly report on a separate basis to Agent any
return of Inventory by an account debtor having a value in excess of $200,000.
At any time that Inventory is returned, reclaimed or repossessed, the Account
(or portion thereof) which arose from the sale of such returned, reclaimed or
repossessed Inventory shall not be deemed an Eligible Account. In the event any
account debtor returns Inventory when an Event of Default exists or has occurred
and is continuing, Borrower shall, upon Agent's request, (i) hold the returned
Inventory in trust for Agent, (ii) segregate all returned Inventory from all of
its other property, (iii) dispose of the returned Inventory solely according to
Agent's instructions, and (iv) not issue any credits, discounts or allowances
with respect thereto without Agent's prior written consent.
(c) With respect to each Account: (i) the amounts shown on any invoice
delivered to Agent or schedule thereof delivered to Agent shall be true and
complete, (ii) no payments shall be made thereon except payments immediately
delivered to Agent pursuant to the terms of this Agreement, (iii) no credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor except as reported to Agent in accordance with
this Agreement and except
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for credits, discounts, allowances or extensions made or given in the ordinary
course of Borrower's business in accordance with practices and policies
disclosed in writing to Agent prior to the granting thereof, (iv) there shall be
no setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto, except as reported to Agent in accordance with
the terms of this Agreement, (v) none of the transactions giving rise thereto
will violate any applicable State or Federal laws or regulations, (vi) all
documentation relating thereto will be legally sufficient under such laws and
regulations and (vii) all such documentation will be legally enforceable in
accordance with its terms.
(d) Agent shall have the right at any time or times, in Agent's name
or in the name of a nominee of Agent, to verify the validity, amount or any
other matter relating to any Account or other Collateral, by mail, telephone,
facsimile transmission or otherwise.
(e) Upon the Agent's request, Borrower shall deliver or cause to be
delivered to Agent, with appropriate endorsement and assignment, with full
recourse to Borrower, all chattel paper and instruments which Borrower now owns
or may at any time acquire immediately upon Borrower's receipt thereof, except
as Agent may otherwise agree.
(f) Agent may, at any time or times that an Event of Default exists or
has occurred and is continuing, (i) notify any or all account debtors that the
Accounts have been assigned to Agent and that Agent has a security interest
therein, for itself and the ratable benefit of Lenders, and Agent may direct any
or all accounts debtors to make payment of Accounts directly to Agent, for
itself and the ratable benefit of Lenders, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any duty
to do so, and neither Agent nor any Lender shall be liable for any failure of
the Agent to collect or enforce the payment thereof or for the negligence of any
agents or attorneys of the Agent employed with respect thereto and (iv) take
whatever other action Agent may in good faith deem necessary or desirable for
the protection of its and Lenders' interests. At any time that an Event of
Default exists or has occurred and is continuing, at Agent's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Agent, for itself and the
ratable benefit of Lenders, and are payable directly and only to Agent, for
itself and the ratable
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benefit of Lenders, and Borrower shall deliver to Agent such originals of
documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts as Agent may require.
7.3 Inventory Covenants. With respect to the Inventory: (a) Borrower
-------------------
shall at all times maintain Inventory records reasonably satisfactory to Agent,
keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory, Borrower's cost therefor and daily
withdrawals therefrom and additions thereto; (b) Borrower shall conduct a full
physical count of its Inventory at least once each year or, in lieu of a full
annual physical count, Borrower may conduct cycle counts of its Inventory at
intervals and using methodology approved by Agent, except that on or after an
Event of Default Borrower shall conduct a full physical count of its Inventory
at any time or times as Agent shall request; and, in any case, promptly
following each cycle count or full physical count shall supply Agent with a
report in the form and with such specificity as may be reasonably satisfactory
to Agent concerning such cycle count or full physical count, accompanied, in the
case of cycle counts, by a letter at least annually from Borrower's independent
certified public accountants acceptable to Agent, delivered in any event not
later than upon delivery of Borrower's audited financial statements for each
fiscal year, confirming that the cycle counts have been conducted in a manner
consistent with generally accepted auditing standards, consistently applied; (c)
Borrower shall not remove any Inventory from the locations set forth or
permitted herein, without the prior written consent of Agent, except for sales
of Inventory in the ordinary course of Borrower's business and except to move
Inventory directly from one location set forth or permitted herein to another
such location; (d) upon Agent's request, Borrower shall, at its expense, no more
than once in any twelve (12) month period, but at any time or times as Agent may
request on or after an Event of Default, deliver or cause to be delivered to
Agent written reports or appraisals as to the Inventory in form, scope and
methodology acceptable to Agent and by an appraiser acceptable to Agent,
addressed to Agent or upon which Agent and Lenders are expressly permitted to
rely; (e) Borrower shall produce, use, store and maintain the Inventory, with
all reasonable care and caution and in accordance with applicable standards of
any insurance and in conformity with applicable laws (including, but not limited
to, the requirements of the Federal Fair Labor Standards Act of 1938, as amended
and all rules, regulations and orders related thereto); (f) Borrower assumes all
responsibility and liability arising from or relating to the production, use,
sale or other disposition of the Inventory; (g) except for Generic Towels sold
by Borrower directly to grocery retailers on terms and consistent with past
practices and previously disclosed in writing to Agent, Borrower shall not sell
Inventory to any customer on approval, or any other basis which entitles the
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customer to return or may obligate Borrower to repurchase such Inventory; (h)
Borrower shall keep the Inventory in good and marketable condition; and (i)
Borrower shall not, without prior written notice to Agent, acquire or accept any
Inventory on consignment or approval.
7.4 Equipment Covenants. With respect to the Equipment: (a) upon Agent's
-------------------
request, Borrower shall, at its expense, at any time or times as Agent may
request on or after an Event of Default and during the continuance thereof,
deliver or cause to be delivered to Agent written reports or appraisals as to
the Equipment in form, scope and methodology acceptable to Agent and by AccuVal
Associates, Inc. or other appraiser acceptable to Agent; (b) Borrower shall keep
the Equipment in good order, repair, running and marketable condition (ordinary
wear and tear excepted); (c) Borrower shall use the Equipment with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with all applicable laws; (d) the Equipment is and
shall be used in Borrower's business and not for personal, family, household or
farming use; (e) Borrower shall not remove any Equipment from the locations set
forth or permitted herein, except to the extent necessary to have any Equipment
repaired or maintained in the ordinary course of the business of Borrower or to
move Equipment directly from one location set forth or permitted herein to
another such location and except for the movement of motor vehicles used by or
for the benefit of Borrower in the ordinary course of business; (f) the
Equipment is now and shall remain personal property and Borrower shall not
permit any of the Equipment to be or become a part of or affixed to real
property other than Real Property upon which Agent holds, for itself and the
ratable benefit of Lenders, a first priority Mortgage; and (g) Borrower assumes
all responsibility and liability arising from the use of the Equipment.
7.5 Power of Attorney. Borrower hereby irrevocably designates and
-----------------
appoints Agent (and all persons designated by Agent) as Borrower's true and
lawful attorney-in-fact, and authorizes Agent, in Borrower's or Agent's name,
to: (a) at any time an Event of Default exists or has occurred and is
continuing (i) demand payment on Accounts or other proceeds of Inventory or
other Collateral, (ii) enforce payment of Accounts by legal proceedings or
otherwise, (iii) exercise all of Borrower's rights and remedies to collect any
Account or other Collateral, (iv) sell or assign any Account upon such terms,
for such amount and at such time or times as the Agent deems advisable, (v)
settle, adjust, compromise, extend or renew an Account, (vi) discharge and
release any Account, (vii) prepare, file and sign Borrower's name on any proof
of claim in bankruptcy or other similar document against an account debtor,
(viii) notify the post office authorities to change the address for delivery of
Borrower's mail to an address designated by Agent, and open and dispose of all
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mail addressed to Borrower, and (ix) do all acts and things which are necessary,
in Agent's determination, to fulfill Borrower's Obligations under this Agreement
and the other Financing Agreements and (b) at any time to (i) take control in
any manner of any item of payment or proceeds thereof, (ii) have access to any
lockbox or postal box into which Borrower's mail is deposited, (iii) endorse
Borrower's name upon any items of payment or proceeds thereof and deposit the
same in Agent's account for application to the Obligations, (iv) endorse
Borrower's name upon any chattel paper, document, instrument, invoice, or
similar document or agreement relating to any Account or any goods pertaining
thereto or any other Collateral, (v) sign Borrower's name on any verification of
Accounts and notices thereof to account debtors and (vi) execute in Borrower's
name and file any Uniform Commercial Code financing statements or amendments
thereto. Borrower hereby releases Agent and each Lender and their officers,
employees and designees from any liabilities arising from any act or acts under
this power of attorney and in furtherance thereof, whether of omission or
commission, except as a result of Agent's or any Lender's own gross negligence
or wilful misconduct as determined pursuant to a final non-appealable judgment
of a court of competent jurisdiction.
7.6 Right to Cure. Agent may, at its option, at any time a Default or
-------------
Event of Default exists or has occurred and is continuing (a) cure any default
by Borrower under any agreement with a third party or pay or bond on appeal any
judgment entered against Borrower, (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (c) pay any amount, incur any expense or perform any act
which, in Agent's good faith judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of Agent and Lenders
with respect thereto. Agent may add any amounts so expended to the Obligations
and charge Borrower's loan account therefor, such amounts to be repayable by
Borrower ON DEMAND. Agent shall be under no obligation to effect such cure,
payment or bonding and shall not, by doing so, be deemed to have assumed any
obligation or liability of Borrower. Any payment made or other action taken by
Agent under this Section shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed accordingly.
7.7 Access to Premises. From time to time as requested by Agent, at the
------------------
cost and expense of Borrower, (a) Agent or its designee, and, so long as
Transamerica is a Lender, Transamerica or its designee, shall have complete
access to all of Borrower's premises during normal business hours and after
notice to Borrower, or at any time and without notice to Borrower if an Event of
Default exists or has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral
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and all of Borrower's books and records, including, without limitation, the
Records, and (b) Borrower shall promptly furnish to Agent and, so long as
Transamerica is a Lender, to Transamerica, such copies of such books and records
or extracts therefrom as Agent or Transamerica may request, and (c) use during
normal business hours such of Borrower's personnel, equipment, supplies and
premises as may be reasonably necessary for the foregoing and, if an Event of
Default exists or has occurred and is continuing, for the collection of Accounts
and realization on other Collateral. Notwithstanding the foregoing, Borrower
shall not be required to reimburse Agent or Transamerica for the costs and
expenses of their (or their designees) in visiting Borrower's premises more
frequently than four (4) times during any calendar year, unless an Event of
Default exists or has occurred and is continuing.
7.8 Food Security Act.
-----------------
(a) Borrower shall not purchase any cotton or other farm products from
a person engaged in farming operations or an agent for such person. Without
limiting the foregoing, Borrower shall not purchase any cotton or other goods
which would constitute farm products if the seller were a person engaged in
farming operations, unless Borrower acquires good title to such goods free and
clear of all security interests and other liens (except in favor of Agent, for
itself and the ratable benefit of Lenders), and, in particular, free from any
statutory or other grower's or producer's liens or any security interests in
favor of any secured party or lienholder who has taken steps under the Food
Security Act or any other federal or state statute to preserve its security
interest or other lien rights upon such goods notwithstanding the passage of
title directly or indirectly to Borrower. Borrower shall not enter into any
agreement for the purchase of cotton or other goods that would constitute farm
products if the seller were a person engaged in farming operations, unless (i)
such agreement is in writing and contains an express or is deemed to contain an
implied warranty by the seller that Borrower will acquire good title to such
goods, the transfer is rightful and that the goods will be delivered free and
clear of all security interests, liens and encumbrances not known to Borrower
(and Borrower shall not purchase such goods if it knows of any such security
interests, liens or encumbrances) and (ii) the seller has adequate financial
resources to pay a claim for breach by seller of such agreement.
(b) Borrower has not, within the one (1) year period prior to the date
hereof, received written notice pursuant to the applicable provisions of the
Food Security Act or pursuant to the Uniform Commercial Code or any other
applicable local laws from (i) any of its suppliers or sellers (collectively,
"Sellers") of cotton or other farm products or (ii) any secured party or secured
parties of any such Sellers of cotton or other
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farm products or (iii) the Secretary of State (or equivalent official) of any
State in which cotton or other farm products purchased by Borrower are produced,
advising or notifying Borrower of a lien or security interest, or of the
intention of a Seller's secured party to maintain a lien or other security
interest, in and to cotton or any other farm products which may be purchased by
Borrower or intended for resale to Borrower (all of the foregoing, the "Food
Security Act Notices").
(c) Borrower shall in all respects comply with all applicable Food
Security Act Notices during their periods of effectiveness under the Food
Security Act, including, without limitation, directions to make payments to the
Sellers by issuing payment instruments directly to the Seller's secured party or
jointly payable to the Seller and the Seller's secured party, as specified in
the Food Security Act Notice, so as to terminate or release the security
interests in cotton or other farm products maintained under the Food Security
Act. If at any time, with Agent's prior written consent, Borrower shall
purchase cotton or other farm products from a person engaged in farming
operations or an agent for such person, and without limiting any other
provisions of this Section 7.8, Borrower shall take all other steps as may be
required, if any, to ensure that all cotton or other farm products are purchased
free and clear of any security interest, lien or other claim by the Sellers
thereof or their secured parties. Borrower shall notify Agent in writing within
five (5) business days' after receipt by Borrower of any applicable or
purportedly applicable Food Security Act Notice or amendment to a previous Food
Security Act Notice or notice of any such other security interest, lien or other
claim and provide Agent with a copy of such Food Security Act Notice or
amendment or notice.
(d) If at any time, with Agent's prior written consent, Borrower shall
purchase cotton or other farm products from a person engaged in farming
operations or an agent for such person, and without limiting any other
provisions of this Section 7.8, then, if the jurisdiction where the cotton or
other farm products so purchased by Borrower are grown has implemented the
provisions of the Food Security Act with respect to the creation of a "central
filing system", Borrower shall promptly register, with the Secretary of State
(or equivalent official) of each such jurisdiction, pursuant to the registration
requirements of the Food Security Act, and shall promptly notify Agent in
writing of such registration with the central filing system and provide Agent
with copies of any Food Security Act Notices, master lists, supplements thereto
or other materials then or thereafter received from the Secretary of State (or
other official) of the central filing system by Borrower.
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SECTION 8. REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower hereby represents and warrants to Agent and Lenders the following
(which shall survive the execution and delivery of this Agreement), the truth
and accuracy of which are a continuing condition of the making of Loans and
providing Letter of Credit Accommodations to Borrower hereunder:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Borrower is
------------------------------------------------------
a corporation duly organized and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify has
not and could not reasonably be expected to result in a Material Adverse Effect.
The execution, delivery and performance of this Agreement, the other Financing
Agreements and the transactions contemplated hereunder and thereunder are all
within Borrower's corporate powers, have been duly authorized and are not in
contravention of law or the terms of Borrower's certificate of incorporation,
by-laws, or other organizational documentation, or any indenture, agreement or
undertaking to which Borrower is a party or by which Borrower or its property
are bound, except for any contravention of any indenture, agreement or
undertaking which has not and could not reasonably be expected to result in a
Material Adverse Effect. This Agreement and the other Financing Agreements
constitute legal, valid and binding obligations of Borrower enforceable in
accordance with their respective terms. Borrower does not have any
subsidiaries, except as set forth on the Information Certificate.
8.2 Financial Statements; No Material Adverse Change. All financial
------------------------------------------------
statements relating to Borrower which have been or may hereafter be delivered by
Borrower to Agent or Lenders have been prepared in accordance with GAAP (except,
with respect to any interim statements, for the absence of footnotes and subject
to normal year-end adjustments consistent with prior periods) and fairly present
the financial condition and the results of operation of Borrower as at the dates
and for the periods set forth therein. Except as disclosed in any interim
financial statements furnished by Bibb or Borrower to Agent and Lenders prior to
the date hereof, there has been no material adverse change in the assets,
liabilities, properties and condition, financial or otherwise, of Bibb or
Borrower, since the date of the most recent audited financial statements
furnished by Borrower to Agent and Lenders prior to the date hereof.
8.3 Chief Executive Office; Collateral Locations. The chief executive
--------------------------------------------
office of Borrower and Borrower's Records
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concerning Accounts are located only at the address set forth below and its only
other places of business and the only other locations of Collateral, if any, are
the addresses set forth in the Information Certificate, subject to the right of
Borrower to establish new locations in accordance with Section 9.2 below. The
Information Certificate correctly identifies any of such locations which are not
owned by Borrower and sets forth the owners and/or operators thereof and to the
best of Borrower's knowledge, the holders of any mortgages on such locations.
8.4 Priority of Liens; Title to Properties. The security interests and
--------------------------------------
liens granted to Agent, for itself and the ratable benefit of Lenders, under
this Agreement and the other Financing Agreements constitute valid and perfected
first priority liens and security interests in and upon the Collateral, subject
only to the liens indicated on Schedule 8.4 hereto and the other liens permitted
under Section 9.8 hereof, except that any liens on Schedule 8.4 hereto that are
indicated thereon to be terminated and released as of the Closing Date shall be
so terminated and released prior to or contemporaneously with the making of the
initial Loans hereunder. Borrower has good and marketable title to all of its
properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those granted to Agent,
for itself and the ratable benefit of Lenders, and such others as are
specifically listed on Schedule 8.4 hereto or permitted under Section 9.8
hereof.
8.5 Tax Returns. Borrower has filed, or caused to be filed, in a timely
-----------
manner all tax returns, reports and declarations which are required to be filed
by it (without requests for extension except as previously disclosed in writing
to Agent), except where the failure to file has not and could not reasonably be
expected to result in a Material Adverse Effect. All information in such tax
returns, reports and declarations is complete and accurate in all material
respects. Borrower has paid or caused to be paid all taxes due and payable or
claimed due and payable in any assessment received by it, except (a) taxes the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to Borrower and (b) taxes which were neither
required to be paid during the pendency of the Chapter 11 Case nor upon the
Effective Date, and, in either case under clause (a) or (b), with respect to
which adequate reserves have been set aside on its books (without limiting
Agent's rights to establish Availability Reserves for such taxes as provided
hereunder). Adequate provision has been made for the payment of all accrued and
unpaid Federal, State, county, local, foreign and other taxes whether or not yet
due and payable and whether or not disputed.
8.6 Litigation. Except as set forth on the Information Certificate,
----------
there is no present investigation by any
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governmental agency pending, or to the best of Borrower's knowledge threatened,
against or affecting Borrower, its assets or business and there is no action,
suit, proceeding or claim by any Person pending, or to the best of Borrower's
knowledge threatened, against Borrower or its assets or goodwill, or against or
affecting any transactions contemplated by this Agreement, which, if adversely
determined against Borrower, could reasonably be expected to result in a
Material Adverse Effect.
8.7 Compliance with Other Agreements and Applicable Laws. Borrower is
----------------------------------------------------
not in default in any respect under, or in violation in any respect of any of
the terms of, any agreement, contract, instrument, lease or other commitment to
which it is a party or by which it or any of its assets are bound and Borrower
is in compliance in all respects with all applicable provisions of laws, rules,
regulations, licenses, permits, approvals and orders of any foreign, Federal,
State or local governmental authority, except for any such default, violation or
non-compliance which has not and could not reasonably be expected to result in a
Material Adverse Effect.
8.8 Environmental Compliance.
------------------------
(a) Except as set forth on Schedule 8.8 hereto, each of Bibb and
Borrower has not generated, used, stored, treated, transported, manufactured,
handled, produced or disposed of any Hazardous Materials, on or off its premises
(whether or not owned by it) in any manner which at any time violates any
applicable Environmental Law or any license, permit, certificate, approval or
similar authorization thereunder and the operations of Borrower comply in all
material respects with all Environmental Laws and all licenses, permits,
certificates, approvals and similar authorizations thereunder, except for any
such violation or non-compliance which has not and could not reasonably be
expected to result in a Material Adverse Effect.
(b) Except as set forth on Schedule 8.8 hereto, to the best of
Borrower's knowledge, there has been no investigation, proceeding, complaint,
order, directive, claim, citation or notice by any governmental authority or any
other person nor to the best of Borrower's knowledge is any pending or
threatened, with respect to any non-compliance with or violation of the
requirements of any Environmental Law by Bibb or Borrower or the release, spill
or discharge, threatened or actual, of any Hazardous Material or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials or any other environmental, health or safety
matter, except for any such non-compliance or violation which has not and could
not reasonably be expected to result in a Material Adverse Effect.
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(c) Except as set forth on Schedule 8.8 hereto, to Borrower's
knowledge after due investigation, Borrower has no material liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials.
(d) Except as set forth on Schedule 8.8, Borrower has all licenses,
permits, certificates, approvals or similar authorizations required to be
obtained or filed in connection with the operations of Borrower under any
Environmental Law and all of such licenses, permits, certificates, approvals or
similar authorizations are valid and in full force and effect, except where the
failure to obtain, file or maintain as valid and effective any of the foregoing
has not and could not reasonably be expected to result in a Material Adverse
Effect.
(e) The aggregate costs of investigation and remediation by Borrower
as of the date hereof of the matters disclosed on Schedule 8.8 hereto with
respect to the Brookneal, Virginia facility of Borrower are not, after due
investigation, expected by Borrower to exceed $2,300,000, and with respect to
the Abbeville, South Carolina facility of Borrower, after due investigation are
not expected by Borrower to exceed $3,000,000.
8.9 Employee Benefits.
-----------------
(a) Each of Bibb and Borrower has not engaged in any transaction in
connection with which Bibb or Borrower or any of their ERISA Affiliates could be
subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA
or a tax imposed by Section 4975 of the Code, including any accumulated funding
deficiency described in Section 8.9(c) hereof and any deficiency with respect to
vested accrued benefits described in Section 8.9(d) hereof, in any case
involving an amount in excess of $250,000.
(b) Except for the contractual obligations described in Schedule 8.9
hereto, no liability to the Pension Benefit Guaranty Corporation has been or is
expected by Borrower to be incurred by Bibb or Borrower with respect to any
employee benefit plan of Bibb or Borrower or any of Borrower's ERISA Affiliates,
as such ERISA Affiliates are determined as of and after the Effective Date.
There has been no reportable event (within the meaning of Section 4043(b) of
ERISA) or any other event or condition with respect to any employee benefit plan
of Bibb or Borrower or any of Borrower's ERISA Affiliates, as such ERISA
Affiliates are determined as of and after the Effective Date, which presents a
material risk of termination of any such plan by the Pension Benefit Guaranty
Corporation.
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(c) Full payment has been made of all amounts which Bibb or Borrower
or any of their ERISA Affiliates is required under Section 302 of ERISA and
Section 412 of the Code to have paid under the terms of each employee benefit
plan as contributions to such plan as of the last day of the most recent fiscal
year of such plan ended prior to the date hereof, and, except as described in
Schedule 8.9 hereto, no accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, exists with
respect to any employee benefit plan, including any penalty or tax described in
Section 8.9(a) hereof and any deficiency with respect to vested accrued benefits
described in Section 8.9(d) hereof, in each case involving an amount in excess
of $250,000.
(d) The current value of all vested accrued benefits under all
employee benefit plans maintained by Bibb or Borrower that are subject to Title
IV of ERISA does not exceed the current value of the assets of such plans
allocable to such vested accrued benefits, including any penalty or tax
described in Section 8.9(a) hereof and any accumulated funding deficiency
described in Section 8.9(c) hereof. The terms "current value" and "accrued
benefit" have the meanings specified in ERISA.
(e) Neither of Bibb nor Borrower nor any of their ERISA Affiliates is
obligated to contribute to any "multiemployer plan" (as such term is defined in
Section 4001(a)(3) of ERISA) that is subject to Title IV of ERISA.
8.10 Plan; Merger.
------------
(a) The Confirmation Order has been duly entered on the date hereof
and, as of the Closing Date, shall be subsisting as a Final Order. All steps to
be taken on the Effective Date shall be taken and all conditions precedent to
the effectiveness of the Plan shall be fulfilled, in each case prior to or
contemporaneously with the making of the initial Loans hereunder, such that the
Effective Date will occur on or prior to the Closing Date.
(b) The Merger Agreements have been duly executed and delivered and
all transactions and obligations to be performed or consummated through the date
hereof have been duly performed or consummated in accordance with their terms by
the respective parties thereto in all respects, including the fulfillment (not
merely the waiver, except as disclosed to Agent and Lenders and consented to in
writing by Agent and Lenders on or prior to the date hereof) of all conditions
precedent set forth therein. Without limiting the foregoing, contemporaneously
with or prior to the making of the initial Loans hereunder, the Merger shall
become effective according to applicable law and the terms of the Merger
Agreements.
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(c) All actions and proceedings required by the Merger Agreements,
applicable law or regulation to be taken as of the date hereof have been taken
and the transactions required thereunder to be taken as of the date hereof have
been duly and validly taken and consummated.
(d) No court of competent jurisdiction has issued any injunction,
restraining order or other order which prohibits consummation of the
transactions described in the Merger Agreements and no governmental or other
action or proceeding has been threatened or commenced, seeking any injunction,
restraining order or other order which seeks to void or otherwise modify the
transactions described in the Merger Agreements.
(e) Borrower has delivered, or caused to be delivered, to Agent and
Lenders true, correct and complete copies of the Merger Agreements and a true
copy of the Confirmation Order in the form duly entered by the Bankruptcy Court
on the date hereof.
(f) Pursuant to the Plan, upon the Effective Date, all amounts and
claims owing to the Subordinated Noteholders by Bibb or Borrower in respect of
the Subordinated Notes (including all principal, interest and other sums) shall
be converted into shares of common stock of Borrower comprising not less than
ninety-five (95%) percent of the authorized and outstanding common stock of
Borrower (on a fully diluted basis), and all claims by the trustees under the
respective indentures covering the Subordinated Notes shall be released and
discharged.
(g) Bibb will continue to be an S Corporation under the Code through
the end of the taxable year that ends on and includes the Effective Date, but
Borrower shall not be an S Corporation under the Code immediately following the
Effective Date, and cancellation of indebtedness of Bibb realized in connection
with the Plan will be excluded from the gross income of Bibb and Borrower, and
losses or suspended losses previously incurred by Bibb will be available to
offset, for income tax attribute reduction purposes, any cancellation of
indebtedness income realized by Bibb in connection with the Plan before
reduction of any other income tax attributes.
8.11 Accuracy and Completeness of Information. All information furnished
----------------------------------------
by or on behalf of Borrower in writing to Agent or Lenders in connection with
this Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, including, without limitation, all information
on the Information Certificate is true and correct in all material respects on
the date as of which such information is dated or certified and does not omit
any material fact necessary in order to make such information not misleading.
No event or circumstance has occurred which has had or could reasonably be
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expected to have a material adverse affect on the business, assets or prospects
of Borrower, which has not been fully and accurately disclosed to Agent and
Lenders in writing.
8.12 Survival of Warranties; Cumulative. All representations and
----------------------------------
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Agent and Lenders on the date of each additional
borrowing or other credit accommodation hereunder (except that any
representations and warranties that are expressly limited to an earlier date
shall be deemed repeated and shall be true and correct as of such earlier date,
and provided that, with respect to the initial Loans made on the Closing Date,
any representations that are limited to the date hereof shall nevertheless be
deemed repeated and shall be true and correct as of the Closing Date), and shall
be conclusively presumed to have been relied on by Agent and Lenders regardless
of any investigation made or information possessed by Agent and Lenders. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which Borrower shall now or
hereafter give, or cause to be given, to Agent and Lenders.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
9.1 Maintenance of Existence. Borrower shall at all times preserve,
------------------------
renew and keep in full, force and effect its corporate existence and rights and
franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or proposed to be
conducted. Borrower shall give Agent thirty (30) days prior written notice of
any proposed change in its corporate name, which notice shall set forth the new
name and Borrower shall deliver to Agent a copy of the amendment to the
Certificate of Incorporation of Borrower providing for the name change certified
by the Secretary of State of the jurisdiction of incorporation of Borrower as
soon as it is available.
9.2 New Collateral Locations. Borrower may open any new location within
------------------------
the continental United States provided Borrower (a) gives Agent thirty (30)
days' prior written notice of the intended opening of any such new location and
(b) executes and delivers, or causes to be executed and delivered, to Agent such
agreements, documents, and instruments as Agent may deem reasonably necessary or
desirable to protect its and Lenders' interests in the Collateral at such
location, including, without limitation, Uniform Commercial Code financing
statements.
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9.3 Compliance with Laws, Regulations, Etc..
---------------------------------------
(a) Borrower shall, at all times, comply in all material respects with
all laws, rules, regulations, licenses, permits, approvals and orders applicable
to it and duly observe all requirements of any Federal, State or local
governmental authority, including, without limitation, the Employee Retirement
Security Act of 1974, as amended, the Occupational Safety and Hazard Act of
1970, as amended, the Fair Labor Standards Act of 1938, as amended, and all
statutes, rules, regulations, orders, permits and stipulations relating to
environmental pollution and employee health and safety, including, without
limitation, all of the Environmental Laws, except where the failure to so comply
does not and could not reasonably be expected to result in a Material Adverse
Effect.
(b) Borrower shall establish and maintain, at its expense, a system to
effectuate and monitor its continued compliance in all material respects with
all applicable Environmental Laws in all of its operations, which system shall
include annual reviews of such compliance by employees or agents of Borrower who
are familiar with the requirements of the Environmental Laws. Copies of all
environmental surveys, audits, assessments, feasibility studies and results of
remedial investigations and remediation programs shall be promptly furnished, or
caused to be furnished, by Borrower to Agent. Borrower shall take prompt and
appropriate action to respond to any non-compliance with any of the
Environmental Laws and all remedial investigations (except where the failure to
so respond does not and could not reasonably be expected to result in a Material
Adverse Effect) and shall regularly report to Agent on each such response.
(c) Borrower shall give both oral and written notice to Agent, as soon
as practicable following, Borrower's receipt of any notice of, or Borrower's
otherwise obtaining actual knowledge of, (i) the occurrence of any event
involving the release, spill or discharge, threatened or actual, of any
Hazardous Material or (ii) any investigation, proceeding, complaint, order,
directive, claims, citation or notice with respect to: (A) any non-compliance
with or violation of any Environmental Law by Borrower or (B) the release, spill
or discharge, threatened or actual, of any Hazardous Material or (C) the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or (D) any other
environmental, health or safety matter, which affects in any material respect
Borrower or its business, operations or assets or any properties at which
Borrower transported, stored or disposed of any Hazardous Materials.
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(d) Without limiting the generality of the foregoing, whenever Agent
reasonably determines that there is any material non-compliance, or any
condition which requires any action by or on behalf of Borrower in order to
avoid any material non-compliance, with any Environmental Law, Borrower shall,
at Agent's request and Borrower's expense: (i) cause an independent
environmental engineer acceptable to Agent to conduct such tests of the site
where Borrower's non-compliance or alleged non-compliance with such
Environmental Laws has occurred as to such non-compliance and prepare and
deliver to Agent a report as to such non-compliance setting forth the results of
such tests, a proposed plan for responding to any environmental problems
described therein, and an estimate of the costs thereof and (ii) provide to
Agent a supplemental report of such engineer whenever the scope of such non-
compliance, or Borrower's response thereto or the estimated costs thereof, shall
change in any material respect. Without limiting the foregoing, Borrower shall
implement a further investigation and a remediation program with respect to the
matters disclosed in Schedule 8.8 hereof and any additional environmental
matters recommended for further investigation and/or remediation pursuant to the
current Phase I and Phase II environmental reports to be delivered pursuant to
the engagement letter delivered pursuant to Section 4.1(b)(ii) hereof. Such
Phase I and Phase II reports shall be delivered to Agent and Lenders as soon as
practicable, but by no later than October 31, 1996. Borrower shall provide
Agent and each Lender with quarterly written reports of Borrower's
investigations and the progress of its remediation program.
(e) Borrower shall indemnify and hold harmless each of Agent and
Lenders, their respective directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including attorneys' fees and
legal expenses) directly or indirectly arising out of or attributable to the
use, generation, manufacture, reproduction, storage, release, threatened
release, spill, discharge, disposal or presence of a Hazardous Material,
including, without limitation, the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of Borrower and the
preparation and implementation of any closure, remedial or other required plans,
except that Borrower shall not be required to indemnify any such person for any
such losses, claims, damages, liabilities, costs and expenses directly caused by
such person's own gross negligence or wilful misconduct as determined by a
final, non-appealable judgment of a court of competent jurisdiction. All
representations, warranties, covenants and indemnifications in this Section 9.3
shall survive the payment of the Obligations and the termination of this
Agreement.
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9.4 Payment of Taxes and Claims. Borrower shall duly pay and discharge
---------------------------
all taxes, assessments, contributions and governmental charges upon or against
it or its properties or assets, except for (a) taxes the validity of which are
being contested in good faith by appropriate proceedings diligently pursued and
available to Borrower and (b) taxes neither required to be paid during the
pendency of the Chapter 11 Case nor upon the Effective Date, and in either case
under clause (a) or (b), with respect to which adequate reserves have been set
aside on its books (without limiting Agent's rights to establish Availability
Reserves for such taxes and related amounts as provided hereunder). Borrower
shall be liable for any tax or penalties imposed on Agent or any Lender as a
result of the financing arrangements provided for herein and Borrower agrees to
indemnify and hold Agent and each Lender harmless with respect to the foregoing,
and to repay to Agent and each Lender on demand the amount thereof, and until
paid by Borrower such amount shall be added and deemed part of the Revolving
Loans; provided, that, nothing contained herein shall be construed to require
-------- ----
Borrower to pay any income or franchise taxes attributable to the income of
Agent or any Lender derived from any amounts charged or paid hereunder to Agent
or any Lender. The foregoing indemnity shall survive the payment of the
Obligations and the termination of this Agreement.
9.5 Insurance. Borrower shall, at all times, maintain with financially
---------
sound and reputable insurers insurance with respect to the Collateral against
loss or damage and all other insurance, including business interruption and
liability insurance, of the kinds and in the amounts customarily insured against
or carried by corporations of established reputation engaged in the same or
similar businesses and similarly situated. Said policies of insurance shall be
satisfactory to Agent as to form, amount and insurer. Borrower shall furnish
certificates, policies or endorsements to Agent as Agent shall require as proof
of such insurance, and, if Borrower fails to do so, Agent is authorized, but not
required, to obtain such insurance at the expense of Borrower. All policies of
insurance shall provide for at least thirty (30) days' prior written notice to
Agent of any cancellation or reduction of coverage and that Agent may act as
attorney for Borrower in obtaining, and at any time an Event of Default exists
or has occurred and is continuing, adjusting, settling, amending and canceling
such insurance. Borrower shall cause Agent to be named as a loss payee on all
policies of casualty and business interruption insurance, and Agent and each
Lender as an additional insured (but without any liability for any premiums)
under liability insurance policies and Borrower shall obtain non-contributory
lender's loss payable endorsements to all insurance policies in form and
substance satisfactory to Agent. Such lender's loss payable endorsements shall
specify that the proceeds of such insurance shall be payable to Agent, for
itself and the ratable benefit of Lenders, as their interests
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may appear and further specify that Agent, for itself and the ratable benefit of
Lenders, shall be paid regardless of any act or omission by Borrower or any of
its affiliates. At its option, Agent may apply any insurance proceeds received
by Agent at any time to the cost of repairs or replacement of Collateral and/or
to payment of the Obligations, whether or not then due, in any order and in such
manner as Agent may determine or hold such proceeds as cash collateral for the
Obligations; provided, however, that if no Default or Event of Default exists or
-------- -------
has occurred and is continuing, and no component of the Revolving Loans exceeds
the amounts determined by Agent in good faith to be then available under the
applicable lending formula(s) and subject to all applicable limits and sublimits
set forth herein, Agent shall make available to Borrower (i) all insurance
proceeds so received by Agent with respect to Inventory and (ii) insurance
proceeds, with respect to Equipment or Real Estate, not to exceed the aggregate
amount of $1,000,000 in any fiscal year of Borrower, in each case under
arrangements satisfactory to Agent for the replacement of the Inventory or the
repair, replacement or restoration of the Equipment or Real Estate to which the
insurance proceeds relate and upon which replaced, repaired or restored
Inventory, Equipment or Real Estate Agent shall hold, for itself and the ratable
benefit of Lenders, a first priority security interest and lien to secure the
Obligations.
9.6 Financial Statements and Other Information.
------------------------------------------
(a) Borrower shall keep proper books and records in which true and
complete entries shall be made of all dealings or transactions of or in relation
to the Collateral and the business of Borrower and its subsidiaries in
accordance with GAAP and Borrower shall furnish or cause to be furnished to
Agent and Lenders: (i) within ninety (90) days after the Effective Date, an
opening balance sheet prepared by Borrower with the assistance of its
independent certified public accountants, which accountants shall be an
independent certified public accounting firm selected by Borrower and acceptable
to Agent and the Required Lenders, and accompanied by a certificate of
Borrower's chief financial officer to the effect that such opening balance sheet
has been prepared in accordance with GAAP and presents fairly in all material
respects the financial condition of Borrower and its subsidiaries as of the
Effective Date, after giving effect to the consummation of the transactions
contemplated by the Plan and the Merger Agreements on the Effective Date and the
initial Loans under this Agreement, (ii) within twenty (20) days after the end
of each fiscal month (or within thirty (30) days after the end of each fiscal
month that coincides with the end of a fiscal quarter), monthly unaudited
consolidated financial statements, and, if Borrower has any subsidiaries,
unaudited consolidating financial statements (including in each case balance
sheets, statements of income and loss, statements of cash flow, and statements
of shareholders'
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equity), all in reasonable detail, fairly presenting in all material respects
the financial position and the results of the operations of Borrower and its
subsidiaries as of the end of and through such fiscal month, subject to normal
year-end adjustments consistent with prior periods, and (iii) within ninety (90)
days after the end of each fiscal year, audited consolidated financial
statements of Borrower and its subsidiaries (including in each case balance
sheets, statements of income and loss, statements of cash flow and statements of
shareholders' equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting in all material respects the financial position and
the results of the operations of Borrower and its subsidiaries as of the end of
and for such fiscal year, together with the unqualified opinion of independent
certified public accountants, which accountants shall be an independent
accounting firm selected by Borrower and acceptable to Agent, that such
financial statements have been prepared in accordance with GAAP, and present
fairly the results of operations and financial condition of Borrower and its
subsidiaries as of the end of and for the fiscal year then ended.
(b) Borrower shall promptly notify Agent in writing of the details of
(i) any loss, damage, investigation, action, suit, proceeding or claim involving
greater than $100,000 in value of Collateral or any other property which is
security for the Obligations or which would result in any material adverse
change in Borrower's business, properties, assets, goodwill or condition,
financial or otherwise and (ii) the occurrence of any Default or Event of
Default.
(c) Borrower shall promptly after the sending or filing thereof
furnish or cause to be furnished to Agent and Lenders copies of all reports
which Borrower sends to its stockholders generally and copies of all reports and
registration statements which Borrower files with the Securities and Exchange
Commission, any national securities exchange or the National Association of
Securities Dealers, Inc.
(d) Borrower shall furnish or cause to be furnished to Agent and
Lenders such budgets, forecasts, projections and other information respecting
the Collateral and the business of Borrower, as Agent may, from time to time,
reasonably request. Agent is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrower to any court or other government agency or, subject to Section 13.6
hereof, to any Participant or Assignee or prospective participant or assignee.
Borrower hereby irrevocably authorizes and directs all accountants or auditors
to deliver to Agent, at Borrower's expense, copies of the financial statements
of Borrower and any reports or management letters prepared by such accountants
or auditors on behalf of Borrower and to disclose to Agent and Lenders such
information as they may have
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regarding the business of Borrower. Any documents, schedules, invoices or other
papers delivered to Agent may be destroyed or otherwise disposed of by Agent one
(1) year after the same are delivered to Agent, except as otherwise designated
by Borrower to Agent in writing.
(e) Borrower shall deliver to Agent and Lenders monthly a Covenant
Compliance Certificate, in form satisfactory to Agent, executed by the chief
financial officer of Borrower, setting forth Borrower's calculations (which
shall not be binding on Agent or Lenders) of each of the financial covenant
tests provided under Sections 9.13 through 9.17 as of the end of each
measurement period set forth on the Financial Covenants Schedule ending with the
end of the month for which the Covenant Compliance Certificate is delivered. In
addition, each monthly Covenant Compliance Certificate shall also include a
description in reasonable detail of all Capital Expenditures made during the
month for which the Certificate is delivered and all Capital Expenditures
expected to be made in the next month thereafter, and shall set forth Borrower's
calculations supporting Borrower's entitlement to make such Capital
Expenditures.
(f) If Borrower shall have elected to conduct and Agent has approved
the use of cycle counts of Inventory in lieu of an annual full physical count,
Borrower shall deliver to Agent and Lenders within ninety (90) days after the
end of each fiscal year, the letter from Borrower's accountants referred to in
Section 7.3(b) with respect to the cycle counts conducted by Borrower.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Borrower
--------------------------------------------------------
shall not, directly or indirectly:
(a) merge into or with or consolidate with any other Person or permit
any other Person to merge into or with or consolidate with it, except for the
Merger on the Effective Date, or
(b) sell, assign, lease, transfer, abandon or otherwise dispose of any
stock or indebtedness to any other Person or any of its assets to any other
Person, except for:
(i) sales of Inventory in the ordinary course of business,
(ii) the disposition of worn-out or obsolete Equipment or
Equipment no longer used in the business of Borrower so long as (A)
any proceeds are paid to Agent for application to the Obligations
(whether or not then due) first to the principal installments under
the Term Loan, in the inverse order of the maturities thereof, and
thereafter in such order and
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manner as Agent shall determine, and (B) such sales do not involve
Equipment having an aggregate orderly liquidation value (as shown in
the most recent Equipment appraisal delivered to and accepted by
Agent) in excess of $200,000 for all such Equipment disposed of in
any fiscal year of Borrower, and
(iii) in addition to dispositions permitted under clause (ii)
and provided no Default or Event of Default exists or has occurred
and is continuing, Borrower may, on not less than fifteen (15) days
prior written notice to Agent, sell for all cash to non-affiliated
persons, Equipment located, on the date hereof, at Borrower's
facilities at Abbeville, South Carolina and/or Rockingham, North
Carolina and having an appraised orderly liquidation value as shown
in the AccuVal Associates Inc. appraisal dated April, 1996, not to
exceed $2,000,000 for all such Equipment to be so sold, so long as
(A) the net cash proceeds of such sales received by Borrower are not
less than two thirds of such appraised orderly liquidation values and
(B) such net cash proceeds are used either (1) to prepay the
principal installments under the Term Loan in the inverse order of
the maturities thereof or (2) to replace such Equipment with owned
Equipment located and used at Borrower's owned operating facilities
("Replacement Equipment"); provided, that (w) in Agent's discretion,
-------- ----
Agent may require evidence that the orderly liquidation value of the
Replacement Equipment (as indicated by a then-current appraisal
addressed to Agent and prepared at Borrower's expense by an appraiser
and having scope, methodology and form acceptable to Agent), is in an
aggregate amount not less than such net cash proceeds of sale, (x)
Agent shall be granted and/or hold for itself and the ratable benefit
of Lenders, a first priority security interest in and lien upon such
Replacement Equipment to secure all Obligations, and which
Replacement Equipment shall be subject to no other security interests
or liens, (y) such Replacement Equipment shall be acquired within one
hundred eighty (180) days following the sale giving rise to the net
sale proceeds to be so used, and (z) pending such acquisition of
Replacement Equipment, such net sale proceeds shall be remitted to
Agent and applied to the Revolving Loans and an Availability Reserve
established in the same amount, to be released upon Borrower's
compliance with the provisions of clause (B)(2) of this Section
9.7(b)(iii), including clauses (w), (x) and (y) of this proviso to
clause (B)(2); and provided, further that any portion of such
-------- -------
Availability Reserves not released for purposes of
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funding Revolving Loans used to acquire Replacement Equipment in
compliance herewith within such one hundred eighty day (180) day
period may, at Agent's option, or shall, at the direction of Required
Lenders, be released in order to fund Revolving Loans applied as
prepayments of the principal installments of the Term Loan in the
inverse order of the maturities thereof, or
(c) form or acquire any subsidiaries; or
(d) wind up, liquidate or dissolve; or
(e) agree to do any of the foregoing.
9.8 Encumbrances. Borrower shall not create, incur, assume or suffer to
------------
exist any security interest, mortgage, pledge, lien, charge or other encumbrance
of any nature whatsoever on any of its assets or properties, including, without
limitation, the Collateral, except: (a) liens and security interests of Agent,
------
for itself and the ratable benefit of Lenders; (b) liens securing the payment of
taxes, either not yet overdue or the validity of which are being contested in
good faith by appropriate proceedings diligently pursued and available to
Borrower and with respect to which adequate reserves have been set aside on its
books or such liens the enforcement of which has been and remains stayed
pursuant to the Plan or extension agreements acceptable to Lenders (without
limiting Agent's rights to establish Availability Reserves for such taxes and
related amounts as provided hereunder); (c) non-consensual statutory liens (such
as carrier's, warehousemen's and mechanic's liens, but excluding liens securing
the payment of taxes) arising in the ordinary course of Borrower's business to
the extent: (i) such liens secure indebtedness which is not overdue or (ii) such
liens secure indebtedness relating to claims or liabilities which are fully
insured and being defended at the sole cost and expense and at the sole risk of
the insurer or being contested in good faith by appropriate proceedings
diligently pursued and available to Borrower, in each case prior to the
commencement of foreclosure or other similar proceedings and with respect to
which adequate reserves have been set aside on its books; (d) zoning
restrictions, easements, licenses, covenants and other restrictions affecting
the use of Real Property which do not interfere in any material respect with the
use of such Real Property or ordinary conduct of the business of Borrower as
presently conducted thereon or materially impair the value of the Real Property
which may be subject thereto; (e) purchase money security interests in Equipment
(including capital leases) provided such security interests do not apply to any
property of Borrower other than the Equipment so acquired, and the indebtedness
secured thereby does not exceed the cost of the Equipment so acquired, and such
indebtedness is permitted to be
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incurred hereunder; (f) the Professional Fees Carve-Out to the extent not
satisfied through payments of allowed fees or otherwise reduced pursuant to the
Confirmation Order or other Final Order of the Bankruptcy Court entered on or
after the date hereof; and (g) cash security deposits required to be made to
secure worker's compensation obligations; (h) cash security deposits required to
be made with utilities or by lessors under leases not prohibited hereby; (i)
judgment liens, so long as the same remain stayed, or are fully bonded (subject
nevertheless to Section 10.1 hereof); and (j) the security interests and liens
set forth on Schedule 8.4 hereto, except that any liens on Schedule 8.4 hereto
that are indicated thereon to be terminated and released as of the Closing Date
shall be so terminated and released prior to or contemporaneously with the
making of the initial Loans hereunder.
9.9 Indebtedness. Borrower shall not incur, create, assume, become or be
------------
liable in any manner with respect to, or permit to exist, any obligations or
indebtedness for borrowed money, including, without limitation, capital leases
and the deferred purchase price of long term assets, except: (a) the
------
Obligations; (b) trade obligations and normal accruals in the ordinary course of
business; (c) on not less than fifteen (15) days' prior written notice to Agent,
purchase money indebtedness (including capital leases) to the extent such
indebtedness is not incurred or secured by liens (including capital leases) in
violation of any other provision of this Agreement, including Section 9.8, and
not in violation of Section 9.17 on a pro forma basis as if such indebtedness
--- -----
had been incurred on the first day of the measurement period for the financial
covenant contained in Section 9.17 that has ended most recently prior to the
date of incurrence, as set forth in the Financial Covenants Schedule; and (d)
the indebtedness set forth on Schedule 9.9 hereto; provided, that, as to the
-------- ----
indebtedness referred to in Sections 9.9(c) and (d) hereof, (i) Borrower may
only make regularly scheduled payments of principal and interest in respect of
such indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such indebtedness as in effect on the date hereof
or, if later, the date of original issuance thereof, and mandatory prepayments
required under such agreements or instruments to be made in the event of a
condemnation or casualty event with respect to property securing such
indebtedness and funded with the proceeds of condemnation awards or casualty
insurance, but only to the extent such property and proceeds are not subject to
a prior security interest or lien of Agent or any Lender, (ii) Borrower shall
not, directly or indirectly, (A) amend, modify, alter or change the terms of
such indebtedness or any agreement, document or instrument related thereto as in
effect on the date hereof, (other than to decrease the interest or fees
thereunder or to extend or postpone the date for any payment thereunder) or (B)
redeem, retire, defease, purchase or otherwise acquire such
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indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, and (iii) Borrower shall furnish to Agent all notices or demands in
connection with such indebtedness either received by Borrower or on its behalf,
promptly after the receipt thereof, or sent by Borrower or on its behalf,
concurrently with the sending thereof, as the case may be.
9.10 Loans, Investments, Guarantees, Etc. Borrower shall not, directly or
------------------------------------
indirectly, make any loans or advance money or property to any person, or invest
in (by capital contribution, dividend or otherwise) or purchase or repurchase
the stock or indebtedness or all or a substantial part of the assets or property
of any person, or guarantee, assume, endorse, or otherwise become responsible
for (directly or indirectly) the indebtedness, performance, obligations or
dividends of any Person or agree to do any of the foregoing, except: (a) the
------
endorsement of instruments for collection or deposit in the ordinary course of
business; (b) investments in: (i) short-term direct obligations of the United
States Government, (ii) negotiable certificates of deposit issued by any bank
satisfactory to Agent, payable to the order of the Borrower or to bearer and
delivered to Agent, (iii) commercial paper rated A1 or P1; and (iv) existing
investments and loans shown on the Information Certificate; provided, that, as
-------- ----
to any of the foregoing, unless waived in writing by Agent, Borrower shall take
such actions as are deemed necessary by Agent to perfect the security interest
of Agent, for itself and the ratable benefit of Lenders, in such investments;
(c) the guarantees set forth in the Information Certificate; provided, that, (i)
-------- ----
Borrower shall not, directly or indirectly, (A) amend, modify, alter or change
the terms of such guarantees as in effect on the date hereof, or (B) redeem,
retire, defease, purchase or otherwise acquire the obligations arising pursuant
to such guarantees, or set aside or otherwise deposit or invest any sums for
such purpose, and (ii) Borrower shall furnish to Agent all notices or demands in
connection with such guarantee or other indebtedness subject to such guarantee
either received by Borrower or on its behalf, promptly after the receipt
thereof, or sent by Borrower or on its behalf, concurrently with the sending
thereof, as the case may be; (d) advance deposits in cash required by the holder
of indebtedness permitted by Section 9.9(c) or the seller of any property, the
purchase of which does not violate any provision of this Agreement; and (e)
travel advances made to employees of Borrower in the ordinary course of business
in accordance with past practices, not to exceed the aggregate amount of
$150,000 for all such advances at any one time outstanding.
9.11 Dividends and Redemptions. Borrower shall not, directly or
-------------------------
indirectly, declare or pay any dividends on account of any shares of class of
capital stock of Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease,
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purchase or otherwise acquire any shares of any class of capital stock (or set
aside or otherwise deposit or invest any sums for such purpose) for any
consideration other than common stock or apply or set apart any sum, or make any
other distribution (by reduction of capital or otherwise) in respect of any such
shares or agree to do any of the foregoing.
9.12 Transactions with Affiliates. Borrower shall not, directly or
----------------------------
indirectly, (a) purchase, acquire or lease any property from, or sell, transfer
or lease any property to, any officer, director, agent or other person
affiliated with Borrower, or (b) make any payments of management, consulting or
other fees for management or similar services, or of any indebtedness owing to
any officer, employee, shareholder, director or other person affiliated with
Borrower, except reasonable compensation to officers, employees and directors
for services rendered to Borrower in the ordinary course of business.
9.13 Working Capital Ratio. Borrower shall, at all times, maintain a
---------------------
Working Capital Ratio of not less than 2.75 to 1.00.
9.14 Changes in Tangible Net Worth. Borrower shall, as of the end of each
-----------------------------
measurement period listed on the Financial Covenants Schedule, maintain Tangible
Net Worth of not less than the amount of Tangible Net Worth as of the Effective
Date, plus the positive or negative adjustment to such amount set forth for such
----
period on the Financial Covenants Schedule under the column entitled "Minimum
Increase (Maximum Decrease) in Tangible Net Worth".
9.15 Capital Expenditures. Borrower shall not, directly or indirectly,
--------------------
make any Capital Expenditures during any measurement period listed on the
Financial Covenants Schedule, in excess of (i) the amount listed on the
Financial Covenants Schedule under the column entitled "Maximum Base Capital
Expenditures" for such measurement period, plus (ii) an amount equal to the net
----
proceeds received by Borrower from dispositions of certain equipment to the
extent expended for Replacement Equipment timely purchased in accordance with
the provisions of Section 9.7(b)(iii) hereof, plus (iii) the Supplemental
----
Capital Expenditures Allowance (if any) available at the time of expenditure in
such period.
9.16 EBITDA. Borrower shall earn EBITDA for each of the measurement
------
periods listed on the Financial Covenants Schedule, in an amount not less than
the respective amount shown for such measurement period on the Financial
Covenants Schedule under the column entitled "Minimum FIFO Basis EBITDA".
9.17 After-Tax Fixed Charge Coverage Ratio. Borrower shall maintain an
-------------------------------------
After-Tax Fixed Charge Coverage Ratio for each of the measurement periods listed
on the Financial Covenants Schedule, in a ratio not less than the respective
ratio shown on the
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Financial Covenants Schedule for such measurement period under the column
entitled "Minimum After-Tax Fixed Charge Coverage Ratio to 1.00".
9.18 Compliance with ERISA. Borrower shall not with respect to any
---------------------
"employee benefit plans" maintained by Borrower or any of its ERISA Affiliates:
(a) Terminate any of such employee benefit plans so as to incur any
liability to the Pension Benefit Guaranty Corporation established pursuant to
ERISA, (i) allow or suffer to exist any prohibited transaction involving any of
such employee benefit plans or any trust created thereunder which would subject
Borrower or such ERISA Affiliate to a tax or penalty or other liability on
prohibited transactions imposed under Section 4975 of the Code or ERISA, (ii)
fail to pay to any such employee benefit plan any contribution which it is
obligated to pay under Section 302 of ERISA, Section 412 of the Code or the
terms of such plan, or any contribution required to be paid under the agreement
with the Pension Benefit Guaranty Corporation described in Schedule 8.9 hereto,
(iii) except as described in Schedule 8.9 hereto, allow or suffer to exist any
accumulated funding deficiency, whether or not waived, with respect to any such
employee benefit plan, (iv) allow or suffer to exist any occurrence of a
reportable event or any other event or condition which presents a material risk
of termination by the Pension Benefit Guaranty Corporation of any such employee
benefit plan that is a single employer plan, which termination could result in
any liability to the Pension Benefit Guaranty Corporation or (v) incur any
withdrawal liability with respect to any multiemployer pension plan.
(b) As used in this Section 9.18, the term "employee benefit plans",
"accumulated funding deficiency" and "reportable event" shall have the
respective meanings assigned to them in ERISA, and the term "prohibited
transaction" shall have the meaning assigned to it in Section 4975 of the Code
and ERISA.
9.19 Consultant; Strategic Plan
--------------------------
(a) Within thirty (30) days after the Closing Date, (i) Borrower
shall retain a consulting firm chosen by Borrower and acceptable to Agent and
Required Lenders (the "Consultant") pursuant to an engagement letter having
terms (including compensation, scope, duration of the engagement and work to be
performed) acceptable to Agent and Required Lenders, and (ii) the Consultant
shall have initiated its field work. Thereafter, Borrower shall continue such
retention in effect, or the retention of a replacement or successor Consultant
acceptable to Agent and Required Lenders under a retention agreement having
terms acceptable to Agent and Required Lenders.
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(b) On or before December 31, 1996, Borrower shall deliver to Agent
and Lenders its Strategic Plan, together with a Secretary's Certificate of
Directors' Resolutions evidencing adoption of the Strategic Plan by the Board of
Directors of Borrower. Borrower shall keep the Agent and Lenders advised of its
progress in developing the Strategic Plan. Borrower shall authorize, and hereby
does authorize, the Consultant to communicate freely with Agent and Lenders
concerning all aspects of and to provide all written and other information
pertaining to the Strategic Plan and any other matters for which the Consultant
is or may hereafter be retained.
(c) Borrower acknowledges that, although only certain key elements of
the Strategic Plan have been identified as of the date hereof as summarized in
the preliminary Strategic Plan delivered pursuant to Section 4.1(j) hereof,
Agent and Lenders have entered into this Agreement and are and will be providing
Loans and other financial accommodations to Borrower hereunder in reliance upon
the preliminary Strategic Plan and accompanying financial projections and
related information prepared and delivered by Borrower to Agent and Lenders
pursuant to Section 4.1(j) hereof, each of which key elements shall be included
in the final Strategic Plan.
(d) All aspects of the Strategic Plan shall be open to the advice and
recommendations to be provided by the Consultant, including any recommendations
for actions in addition to those described in the preliminary Strategic Plan
delivered on the date hereof.
(e) Borrower shall implement the Strategic Plan in accordance with
applicable law, as promptly as practicable consistent with the other
requirements of the terms of financing set forth herein, subject only to such
modifications thereto as Borrower's Board of Directors shall approve after
receiving the recommendations of Borrower's management and the Consultant.
Borrower acknowledges that the financial covenants set forth herein have been
mutually agreed upon based on the financial projections delivered on or prior to
the date hereof as part of the preliminary Strategic Plan delivered as described
in Section 4.1(j) hereof showing the financial effects of certain key elements
to be included in the Strategic Plan and summarized in such preliminary
Strategic Plan. No failure by Borrower to adopt or implement the Strategic Plan
and no modification thereto shall relieve Borrower from its Obligations to
comply with the financial covenants or any other term or provision hereof.
9.20 Costs and Expenses. Borrower shall pay to Agent, ON DEMAND, all
------------------
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Agent's
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and Lenders' rights in the Collateral, any prior proposed financing arrangements
for Bibb and/or Borrower, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments, supplements
or consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, whether or not the Credit Facility
shall close, including, but not limited to: (a) all costs and expenses of filing
or recording (including Uniform Commercial Code financing statement filing taxes
and fees, documentary taxes, intangibles taxes and mortgage recording taxes and
fees, if applicable); (b) costs and expenses and fees for title insurance and
other insurance premiums, environmental audits, surveys, assessments,
engineering reports and inspections, appraisal fees and search fees; (c)
customary costs and expenses of remitting loan proceeds, collecting checks and
other items of payment, and establishing and maintaining the Blocked Accounts,
together with Agent's customary charges and fees with respect thereto; (d)
charges, fees or expenses charged by any bank or issuer in connection with the
Letter of Credit Accommodations; (e) costs and expenses of preserving and
protecting the Collateral; (f) costs and expenses paid or incurred in connection
with obtaining payment of the Obligations, enforcing the security interests and
liens of Agent and Lenders, selling or otherwise realizing upon the Collateral,
and otherwise enforcing the provisions of this Agreement and the other Financing
Agreements or defending any claims made or threatened against Agent or any of
Lenders arising out of the transactions contemplated hereby and thereby
(including, without limitation, preparations for and consultations concerning
any such matters); (g) all out-of-pocket expenses and costs heretofore and from
time to time hereafter incurred by Agent and, so long as Transamerica is a
Lender, of Transamerica during the course of periodic field examinations of the
Collateral and Borrower's operations, plus a per diem charge at the rate of $600
per person per day for each of Agent's and Transamerica's examiners in the field
and office; and (h) the reasonable fees and disbursements of counsel (including
legal assistants) to Agent in connection with any of the foregoing. In addition
(and without limiting the rights of Agent under this Section 9.20 or under the
other Financing Agreements), Borrower agrees to pay (x) to Transamerica, ON
DEMAND, all costs and expenses of Transamerica incurred in connection with the
negotiation, execution, delivery and performance through the Closing Date of
this Agreement and the other Financing Agreements and all other documents
related hereto or thereto, including, but not limited to, the reasonable fees
and disbursements of counsel (including legal assistants) to Transamerica, and
(y) to each Lender, after an Event of Default, the reasonable fees and
disbursements of counsel (including legal assistants) to such Lender, in
connection with any or all of the foregoing matters described in this Section
9.20.
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9.21 Further Assurances. At the request of Agent at any time and from
------------------
time to time, Borrower shall, at its expense, duly execute and deliver, or cause
to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper in the good faith determination of Agent to evidence, perfect, maintain
and enforce the security interests and the priority thereof of Agent, for itself
and the ratable benefit of Lenders, in the Collateral and to otherwise
effectuate the provisions or purposes of this Agreement or any of the other
Financing Agreements. Agent may at any time and from time to time request a
certificate from an officer of Borrower representing that all conditions
precedent to the making of Loans and providing Letter of Credit Accommodations
contained herein are satisfied. In the event of such request by Agent, each
Lender may, at its option, cease to make any further Loans or provide any
further Letter of Credit Accommodations until Agent has received such
certificate and, in addition, Agent has determined that such conditions are
satisfied. Where permitted by law, Borrower hereby authorizes Agent to execute
and file one or more Uniform Commercial Code financing statements signed only by
Agent.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
------------------------------
10.1 Events of Default. The occurrence or existence of any one or more of
-----------------
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) Borrower fails to pay any of the Obligations within one
(1) business day after the same becomes due and payable or (ii) Borrower or any
Obligor fails to perform any of the terms, covenants, conditions or provisions
contained in this Agreement or any of the other Financing Agreements other than
as described in Section 10.1(a)(i) and such failure shall continue for twenty
(20) days; provided, that, such twenty (20) day period shall not apply in the
-------- ----
case of: (A) any failure to observe any such term, covenant, condition or
provision which is not capable of being cured at all or within such twenty (20)
day period or which has been the subject of a prior failure within the
immediately preceding six (6) month period or (B) an intentional breach by
Borrower or any Obligor of any such term, covenant, condition or provision, or
(C) the failure to observe or perform any of the covenants or provisions
contained in Sections 6.8, 7.1, 7.2, 7.3, 7.4, 7.7, 7.8, 9.1, 9.2, 9.3, 9.5,
9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13, 9.14, 9.15, 9.16, 9.17 or 9.19(a) of this
Agreement or any covenants or agreements covering substantially the same matter
as such sections in any of the other Financing Agreements; or
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(b) any representation, warranty or statement of fact made by
Borrower to Agent and Lenders in this Agreement, the other Financing Agreements
or any other agreement, schedule, confirmatory assignment or otherwise shall
when made or deemed made be false or misleading in any material respect;
(c) any Obligor revokes, terminates or fails to perform any of the
terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Agent and any or all of Lenders;
(d) any Obligor (being a natural person or a general partner of an
Obligor which is a partnership) dies or Bibb, Borrower or any Obligor, which is
a partnership, limited liability company, limited liability partnership or
corporation, dissolves or suspends or discontinues doing business;
(e) any judgment for the payment of money is rendered against Bibb,
Borrower or any Obligor in excess of $250,000 in any one case or in excess of
$500,000 in the aggregate and shall remain undischarged or unvacated for a
period in excess of thirty (30) days or execution shall at any time not be
effectively stayed, or any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against Bibb,
Borrower or any Obligor or any of their assets;
(f) Borrower or any Obligor becomes insolvent (however defined or
evidenced), makes a general assignment for the benefit of creditors, makes or
sends notice of a bulk transfer or calls a meeting of its creditors or principal
creditors;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against Bibb, Borrower or any Obligor or all or any part of
its properties and such petition or application is not dismissed within thirty
(30) days after the date of its filing or Bibb, Borrower or any Obligor shall
file any answer admitting or not contesting such petition or application or
indicates its consent to, acquiescence in or approval of, any such action or
proceeding or the relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or
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equity) is filed by Borrower or any Obligor or for all or any part of its
property;
(i) any default by Bibb, Borrower or any Obligor under any agreement,
document or instrument relating to any indebtedness for borrowed money owing to
any person other than any of Agent or Lenders, or any capitalized lease
obligations, contingent indebtedness in connection with any guarantee, letter of
credit, indemnity or similar type of instrument in favor of any person other
than any of Lenders, in any case in an amount in excess of $150,000, which
default continues for more than the applicable cure period, if any, with respect
thereto, or any default by Bibb, Borrower or any Obligor under the Plan, the
Confirmation Order or any material contract (including, without limitation, the
agreement, dated on or about the date hereof between Bibb and the Pension
Benefit Guaranty Corporation), lease, license or other obligation to any person
other than any of Agent or Lenders, which default continues for more than the
applicable grace or cure period, if any, with respect thereto;
(j) any change in the controlling ownership of Bibb or Borrower,
except upon the Effective Date pursuant to the Plan;
(k) the indictment or threatened indictment of Bibb, Borrower or any
Obligor under any criminal statute, or commencement or threatened commencement
of criminal or civil proceedings against Borrower or any Obligor, pursuant to
which statute or proceedings the penalties or remedies sought or available
include forfeiture of any of the property of Borrower or such Obligor;
(l) there shall be a material adverse change in the business, assets
or prospects of Bibb, Borrower or any Obligor after the date hereof; or
(m) there shall be an event of default under any of the other
Financing Agreements, not cured within the applicable grace period thereunder
(if any).
10.2 Remedies.
--------
(a) At any time an Event of Default exists or has occurred and is
continuing, Agent shall have all rights and remedies provided in this Agreement,
the other Financing Agreements, the Uniform Commercial Code and applicable law,
all of which rights and remedies may be exercised without notice to or consent
by Borrower or any Obligor, except as such notice or consent is expressly
provided for hereunder or the Financing Orders or required by applicable law.
All rights, remedies and powers granted to Agent hereunder, under any of the
other Financing Agreements, the Uniform Commercial Code or other applicable law,
are cumulative, not exclusive and enforceable, in
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Agent's discretion, alternatively, successively, or concurrently on any one or
more occasions, and shall include, without limitation, the right to apply to a
court of equity for an injunction to restrain a breach or threatened breach by
Borrower of this Agreement or any of the other Financing Agreements. Agent may,
at any time or times, proceed directly against Borrower or any Obligor to
collect the Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Agent may, in its discretion and
without limitation, and, upon specific direction by the Required Lenders, shall
(i) accelerate the payment of all Obligations and demand immediate payment
thereof to Agent, for itself and the ratable benefit of Lenders, (ii) with or
without judicial process or the aid or assistance of others, enter upon any
premises on or in which any of the Collateral may be located and take possession
of the Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrower, at Borrower's expense, to
assemble and make available to Agent, any part or all of the Collateral at any
place and time designated by Agent, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of Agent or elsewhere) at such prices or
terms as Agent may deem reasonable, for cash, upon credit or for future
delivery, with the Agent or any Lender having the right to purchase the whole or
any part of the Collateral at any such public sale, all of the foregoing being
free from any right or equity of redemption of Borrower, which right or equity
of redemption is hereby expressly waived and released by Borrower and/or (vii)
terminate this Agreement; provided, that, upon the occurrence of an Event of
-------- ----
Default under Section 10.1(a)(ii) by reason of a default under the provisions of
Section 9.19(a) hereof, or of an Event of Default under Section 10.1(g) or (h)
hereof, the Obligations shall thereupon be deemed automatically accelerated and
all obligations of Agent and Lenders to provide to Borrower any future Loans or
Letter of Credit Accommodations shall thereupon be deemed terminated. If any of
the Collateral is sold or leased by Agent upon credit terms or for future
delivery, the Obligations shall not be reduced as a result thereof until payment
therefor is finally collected by Agent, for itself and the ratable benefit of
Lenders. If notice of disposition of Collateral is required by law, five (5)
days prior notice by Agent to Borrower designating the time and place of any
public sale or the time after which any
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private sale or other intended disposition of Collateral is to be made, shall be
deemed to be reasonable notice thereof and Borrower waives any other notice. In
the event Agent institutes an action to recover any Collateral or seeks recovery
of any Collateral by way of prejudgment remedy, Borrower waives the posting of
any bond which might otherwise be required.
(c) Agent may apply the cash proceeds of Collateral actually received
by Agent from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Agent may elect, whether or not then due. Borrower shall remain liable to
Agent, for itself and the ratable benefit of Lenders, for the payment of any
deficiency with interest at the highest rate provided for herein and all costs
and expenses of collection or enforcement, including reasonable attorneys' fees
and legal expenses.
(d) Without limiting the foregoing, upon the existence or occurrence
of a Default or Event of Default, Agent may, at its option, and upon direction
by the Required Lenders (subject, nevertheless, to Section 12.3(a) hereof),
without notice, (A) cease making Loans or arranging for Letter of Credit
Accommodations or reduce the lending formulas or amounts of Loans and Letter of
Credit Accommodations available to Borrower and/or (B) terminate any provision
of this Agreement providing for any future Loans or Letter of Credit
Accommodations to be made to Borrower.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
--------------------------------
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
--------------------------------------------------------------
Waiver.
- ------
(a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of Georgia
(without giving effect to principles of conflicts of law), except as expressly
provided in any other Financing Agreement with respect to governing law for
purposes of such other Financing Agreement.
(b) Borrower, Agent and Lenders irrevocably consent and submit to the
non-exclusive jurisdiction of the Superior Court of Fulton County, Georgia and
the United States District Court for the Northern District of Georgia and waive
any objection based on venue or forum non conveniens with respect to any action
----- --- ----------
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or
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related or incidental to the dealings of the parties hereto in respect of this
Agreement or any of the other Financing Agreements or the transactions related
hereto or thereto, in each case whether now existing or hereafter arising, and
whether in contract, tort, equity or otherwise, and agree to the fullest extent
permitted by law that any dispute with respect to any such matters shall be
heard only in the courts described above, except that Agent shall have the right
to bring any action or proceeding against Borrower or its property in the courts
of any other jurisdiction which Agent deems necessary or appropriate in order to
realize on the Collateral or to otherwise enforce its rights against Borrower or
its property).
(c) Borrower hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by certified
mail (return receipt requested) directed to its address set forth on the
signature pages hereof and service so made shall be deemed to be completed five
(5) days after the same shall have been so deposited in the U.S. mails, or, at
Agent's option, by service upon Borrower in any other manner provided under the
rules of any of the foregoing courts. Within thirty (30) days after such
service, Borrower shall appear in answer to such process, failing which Borrower
shall be deemed in default and judgment may be entered by Agent against Borrower
for the amount of the claim and other relief requested.
(d) BORROWER, AGENT AND LENDERS EACH HEREBY WAIVES TO THE FULLEST
EXTENT PERMITTED BY LAW ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER
FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE
OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY OR OTHERWISE. BORROWER, AGENT AND LENDERS EACH HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR AGENT OR ANY LENDER MAY FILE
AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
(e) Neither Agent nor any Lender shall have any liability to Borrower
(whether in tort, contract, equity or otherwise) for losses suffered by Borrower
in connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, except to the extent it is determined by a
final and non-appealable judgment by a court of competent jurisdiction that the
losses were the result of such party's own acts or omissions constituting gross
negligence or willful misconduct. In any such litigation, Agent
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and each of Lenders shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary care
in the performance by it of the terms of this Agreement.
11.2 Waiver of Notices. Borrower hereby expressly waives demand,
-----------------
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein or in the
applicable provisions of the other Financing Agreements. No notice to or demand
on Borrower which Agent may elect to give shall entitle Borrower to any other or
further notice or demand in the same, similar or other circumstances. Without
limiting the generality of the foregoing, Borrower waives (a) notice prior to
Agent's taking possession or control of any of the collateral or any bond or
security which might be required by any court prior to allowing Agent to
exercise any of Agent's remedies, including the issuance of an immediate writ of
possession, except for any such notice expressly required pursuant to the
applicable provisions of the other Financing Agreements, and (b) the benefit of
all valuation, appraisement and exemption laws.
11.3 Amendments and Waivers. Neither this Agreement nor any provision
----------------------
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement approved as required under Section 13.8
hereof and signed by an authorized officer of each Lender or the Required
Lenders, as the case may be (and, if required by Section 13.8, with the prior
written consent of Agent) and as to amendments, other than amendments to any
provisions of Sections 12 or 13.5 hereof, as also signed by an authorized
officer of Borrower. No Lender or Agent shall, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of Agent's or any
Lender's rights, powers and/or remedies unless such waiver shall be in writing
and signed by an authorized officer of Agent or such Lender, as the case may be.
Any such waiver shall be enforceable only to the extent specifically set forth
therein. A waiver of any right, power and/or remedy of the Agent or any Lender
on any one occasion shall not be construed as a bar to or waiver of any such
right, power and/or remedy which Agent or any Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.
11.4 Waiver of Counterclaims. Borrower waives all rights to interpose any
-----------------------
claims, deductions, rights of recoupment, setoffs or counterclaims of any nature
(other then compulsory counterclaims) in any action or proceeding with respect
to this
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Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 Indemnification. Borrower shall indemnify and hold Agent, Lenders
---------------
and their respective directors, agents, employees and counsel, harmless from and
against any and all losses, claims, damages, liabilities, costs or expenses
imposed on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
reasonable fees and expenses of counsel, except that Borrower shall not be
required to indemnify any such person for any such losses, claims, damages,
liabilities, costs or expenses carried directly by such person's own gross
negligence or wilful misconduct, as determined by a final non-applicable
judgment of a court of competent jurisdiction. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion which it is permitted to pay under applicable law to Agent
and/or the effected Lender(s) in satisfaction of indemnified matters under this
Section. The foregoing indemnity shall survive the payment of the Obligations
and the termination of this Agreement.
SECTION 12. THE AGENT
---------
12.1 Appointment, Powers and Immunities. Each Lender hereby irrevocably
----------------------------------
appoints and authorizes Congress to act as its agent (i.e., the Agent) hereunder
----
and under the other Financing Agreements with such powers as are specifically
delegated to Agent by the terms of this Agreement and of the other Financing
Agreements, together with such other powers as are reasonably incidental
thereto. Agent (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and in the other Financing Agreements, and
shall not by reason of this Agreement or any other Financing Agreement be a
trustee or fiduciary for any Lender; (b) shall not be responsible to Lenders for
any recitals, statements, representations or warranties contained in this
Agreement or in any other Financing Agreement, or in any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement or any other Financing Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Financing Agreement or any other document referred to or provided for
herein or therein or for any failure
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by Borrower or any Obligor or any other Person to perform any of its obligations
hereunder or thereunder; and (c) shall not be responsible to Lenders for any
action taken or omitted to be taken by it hereunder or under any other Financing
Agreement or under any other document or instrument referred to or provided for
herein or therein or in connection herewith or therewith, except for its own
gross negligence or wilful misconduct as determined by a final non-appealable
judgment of a court of competent jurisdiction. Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it in good faith. Agent may
deem and treat the payee of any note as the holder thereof for all purposes
hereof unless and until the assignment thereof pursuant to an executed
Assignment Agreement (if and to the extent permitted herein) shall have been
delivered to and acknowledged by Agent.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
-----------------
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not
expressly provided for by this Agreement or any other Financing Agreement, Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder or thereunder in accordance with instructions given by Required
Lenders or all of Lenders as is required in such circumstance, and such
instructions of such Lenders and any action taken or failure to act pursuant
thereto shall be binding on all Lenders.
12.3 Defaults or Events of Default.
-----------------------------
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or Event of Default or other failure of a condition
precedent to the Loans and Letter of Credit Accommodations hereunder, unless and
until Agent has received written notice from a Lender or Borrower specifying
such Default or Event of Default or any unfulfilled condition precedent, and
stating that such notice is a "Notice of Default or Failure of Condition". In
the event that Agent receives such a Notice of Default or Failure of Condition,
Agent shall give prompt notice thereof to Lenders. Agent shall (subject to
Section 12.7) take such action with respect to any such Default or Event of
Default or failure of condition precedent as shall be directed by Required
Lenders; provided that, unless and until Agent shall have received such
-------- ----
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to or by reason of such Default or
Event of Default or failure of condition precedent, as it shall deem advisable
in the best interest of Lenders. Without limiting
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the foregoing, and notwithstanding the existence or occurrence and continuance
of a Default or Event of Default or any other failure to satisfy any of the
conditions precedent set forth in Section 4 of this Agreement to the contrary,
the Agent may, but shall have no obligation to, continue to make Loans and issue
or cause to be issued Letter of Credit Accommodations (including Permitted
Overformula Loans) for the ratable account and risk of Lenders from time to time
if Agent believes making such Loans or issuing or causing to be issued such
Letter of Credit Accommodations will be in the best interests of Lenders, unless
and until the Required Lenders shall direct Agent to cease making such Loans or
issuing or causing to be issued Letter of Credit Accommodations by reason of a
Default or Event of Default that exists or has occurred and is continuing or any
other failure to satisfy any of the conditions precedent in Section 4 hereof.
In addition, at all times, notwithstanding any Default or Event of Default or
any other failure to satisfy any of the conditions precedent in Section 4
hereof, or any direction received by Agent from Required Lenders with respect
thereto pursuant to the other provisions of this Agreement, Agent may, for the
ratable account and risk of Lenders, make Loans or issue or cause to be issued
Letter of Credit Accommodations if Agent believes the same are necessary for the
direct protection or preservation of the Collateral or its value or the
interests of Agent and Lenders therein.
(b) Except with the prior written consent of Agent, no Lender may
assert or exercise any enforcement right or remedy in respect of the Loans,
Letter of Credit Accommodations or other Obligations, as against Borrower or any
Obligor or any of the Collateral or other property of Borrower or any Obligor.
12.4 Rights as a Lender. With respect to its Commitment and the Loans
------------------
made and Letter of Credit Accommodations issued or caused to be issued by it
(and any successor acting as Agent), so long as the Agent shall be a Lender
hereunder, it shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as Agent, and the
term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include Agent in its individual capacity as Lender hereunder. Congress (and
any successor acting as Agent) and its affiliates may (without having to account
therefor to any Lender) lend money to, make investments in and generally engage
in any kind of business with the Borrower and Obligors (and any of their
subsidiaries or affiliates) as if it were not acting as Agent, and Congress and
its affiliates may accept fees and other consideration from Borrower and
Obligors for services in connection with this Agreement or otherwise without
having to account for the same to Lenders.
12.5 Indemnification. Lenders agree to indemnify Agent (to the extent not
---------------
reimbursed by Borrower hereunder and without
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limiting the Obligations of Borrower hereunder) ratably, in accordance with
their Pro Rata Shares, for any and all claims of any kind and nature whatsoever
--- ----
that may be imposed on, incurred by or asserted against Agent (including by any
Lender) arising out of or by reason of any investigation in or in any way
relating to or arising out of this Agreement or any other Financing Agreement or
any other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including the costs and expenses
that Agent is obligated to pay hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents, provided, that, no
-------- ----
Lender shall be liable for any of the foregoing to the extent they.arise from
the gross negligence or willful misconduct of the party to be indemnified as
determined by a final non-appealable judgment of a court of competent
jurisdiction.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that it
---------------------------------------
has, independently and without reliance on Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of Borrower and any Obligors and has made its own decision to
enter into this Agreement and that it will, independently and without reliance
upon Agent or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the
other Financing Agreements. Agent shall not be required to keep itself informed
as to the performance or observance by Borrower or any Obligor of any term or
provision of this Agreement or any of the other Financing Agreements or any
other document referred to or provided for herein or therein or to inspect the
properties or books of Borrower or any Obligor. Agent will use reasonable
efforts to provide Lenders with any information received by Agent from Borrower
which is required to be provided to Lenders hereunder, with a copy of any Notice
of Default or Failure of Condition received by Agent from Borrower or any Lender
and with a copy of any notice of a Default or Event of Default delivered by
Agent to Borrower; provided, however, that Agent shall not be liable to any
-------- -------
Lender for any failure to do so, except to the extent that such failure is
attributable to Agent's own gross negligence or willful misconduct as determined
by a final non-appealable judgment of a court of competent jurisdiction. Except
for notices, reports and other documents expressly required to be furnished to
Lenders by Agent hereunder, Agent shall not have any duty or responsibility to
provide any Lender with any other credit or other information concerning the
affairs, financial condition or business of Borrower or any of its subsidiaries
(or any of their affiliates) that may come into the possession of Agent or any
of its affiliates. Agent will use reasonable efforts to provide to the Lenders
upon their reasonable request, other information received from Borrower, it
being agreed that
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Agent shall not be liable for any failure to provide such other information.
12.7 Failure to Act. Except for action expressly required of Agent
--------------
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
12.8 Resignation of Agent. Subject to the appointment and acceptance of a
--------------------
successor Agent as provided below, Agent may resign at any time by giving notice
thereof to Lenders and Borrower. Upon any such resignation, the Required Lenders
shall have the right to appoint a successor Agent with the consent of Borrower,
which consent shall not be unreasonably withheld. If no successor Agent shall
have been so appointed by the Required Lenders, so consented to by Borrower and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of Lenders, appoint (without the consent of Borrower) a successor Agent that
shall be a bank, commercial finance company or other financial institution.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent
in accordance with the terms hereof, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 12 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Agent.
12.9 Consents and Releases of Collateral under Financing Agreements.
--------------------------------------------------------------
Except as otherwise provided in Section 13.8 hereof with respect to certain
amendments or modifications to this Agreement, Agent may, with the prior consent
of the Required Lenders (but not otherwise), consent to any modification,
supplement or waiver under any of the Financing Agreements; provided, that,
-------- ----
without the prior consent of each Lender, Agent shall not release any Collateral
or otherwise terminate any lien under any Financing Agreement, except that no
such consent shall be required, and Agent is hereby authorized (i) to release
any lien covering Collateral which is the subject of a disposition permitted
hereunder or under the other Financing Agreements, or (ii) to release in the
Agent's discretion without the approval or consent of any Lender, any lien
covering Collateral the value of which released Collateral does not exceed
$250,000 in any fiscal year of Borrower.
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12.10 Collateral Matters.
------------------
(a) Except as otherwise expressly provided for in this Agreement,
Agent shall have no obligation whatsoever to any Lender or any other Person to
investigate, confirm or assure that the Collateral exists or is owned by
Borrower or any Obligor or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or other Credit accommodations
hereunder, or whether any particular Availability Reserves are appropriate, or
that the liens and security interests granted to Agent herein or pursuant hereto
have been properly or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent in this Agreement or in any of the other Financing
Agreements, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, Agent may act in any manner it may
deem appropriate, in its discretion, given Agent's own interest in the
Collateral as a Lender and that Agent shall have no duty or liability whatsoever
to any other Lender, other than liability for its own gross negligence or
willful misconduct as determined by a final non-appealable judgment of a court
of competent jurisdiction.
(b) Each Lender hereby appoints each other Lender as agent for the
purpose of perfecting Lenders' security interest in assets which, in accordance
with Article 9 of the Code can be perfected only by possession. Should any
Lender (other than Agent) obtain possession of any such Collateral, such Lender
shall notify Agent thereof and, promptly upon Agent's request therefor, shall
deliver such Collateral to Agent or in accordance with Agent's instructions.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
--------------------------------
13.1 Term.
----
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the third anniversary of the date
hereof (the "Renewal Date") and from year to year thereafter, unless sooner
terminated pursuant to the terms hereof. Agent, at the direction of any Lender
shall, or Borrower may, terminate this Agreement and the other Financing
Agreements effective on the Renewal Date or on the anniversary of the Renewal
Date in any year by giving to the other parties to this Agreement at least sixty
(60) days' prior written notice; provided, that this Agreement and all other
--------
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<PAGE>
Financing Agreements must be terminated simultaneously. Upon the effective date
of termination of the Financing Agreements, Borrower shall pay to Agent, for
itself and the ratable benefit of Lenders, in full, all outstanding and unpaid
Obligations and shall furnish cash collateral to Agent, for itself and the
ratable benefit of Lenders, in such amounts as Agent determines are reasonably
necessary to secure Agent and Lenders from loss, cost, damage or expense,
including attorneys' fees and legal expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which Agent and Lenders have not yet received final and indefeasible payment.
Such payments in respect of the Obligations and cash collateral shall be
remitted by wire transfer in Federal funds to such bank account of Agent, as
Agent may, in its discretion, designate in writing to Borrower for such purpose.
Interest shall be due until and including the next business day, if the amounts
so paid by Borrower to the bank account designated by Agent are received in such
bank account later than 12:00 noon, Atlanta, Georgia time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Agent's continuing security interest in the Collateral, for itself and the
ratable benefit of Lenders, and the rights and remedies of Agent hereunder,
under the other Financing Agreements and applicable law, shall remain in effect
until all such Obligations have been fully and finally discharged and paid.
(c) If for any reason this Agreement is terminated prior to the end
of the then-current term or renewal term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lenders' lost
profits as a result thereof, Borrower agrees to pay to Agent, for the ratable
benefit of Lenders, the amount set forth below if termination of this Agreement
becomes effective in the period indicated:
Amount Period
------ ------
$1,150,000 September 12, 1996 to and including
September 12, 1997
$ 862,500 September 13, 1997 to and including
September 12, 1998
$ 575,000 September 13, 1998, to but not including
September 12, 1999
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<PAGE>
The early termination fee shall be presumed to be the amount of damages
sustained by Agent and Lenders as a result of such termination and loss of the
opportunity to provide the remainder of the Credit Facility, and Borrower agrees
that it is reasonable under the circumstances currently existing.
Notwithstanding the foregoing, if Borrower terminates the Credit Facility upon
the acquisition by a non-affiliated person of all of Borrower's common stock or
of all or substantially all of Borrower's assets prior to three (3) years from
the date hereof, then Borrower shall pay to Agent, for the ratable benefit of
Lenders, an early termination fee as follows, in lieu of the early termination
fee otherwise payable under this Section 13.1(c):
Amount Period
------ ------
$ 862,500 September 12, 1996 to and including
September 12, 1997
$ 431,250 September 13, 1997 to and including
September 12, 1998
$ -0- September 13, 1998, and thereafter
The early termination fee provided for in this Section 13.1(c) shall be deemed
included in the Obligations.
(d) In the event the Closing Date shall not have occurred by October
1, 1996, the Commitments shall be automatically reduced to zero and terminated,
without notice, and Lenders and Agent shall have no obligation to provide Loans
or Letter of Credit Accommodations or any other or further obligation to
Borrower or any other Person hereunder or relating hereto of any kind, nature or
description.
13.2 Notices. All notices, requests and demands hereunder shall be in
-------
writing and (a) made to Agent and Lenders at their respective addresses set
forth below and to Borrower at its chief executive office set forth below, or to
such other address as any such party may designate by written notice to the
others in accordance with this provision, and (b) deemed to have been given or
made: if delivered in person, immediately upon delivery; if by telex, telegram
or facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with instructions
to deliver the next business day, one (1) business day after sending; and if by
certified mail, return receipt requested, five (5) days after mailing.
13.3 Partial Invalidity. If any provision of this Agreement is held to be
------------------
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not
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<PAGE>
contain the particular provision held to be invalid or unenforceable and the
rights and obligations of the parties shall be construed and enforced only to
such extent as shall be permitted by applicable law.
13.4 Successors and Assigns. This Agreement and the other Financing
----------------------
Agreements shall be binding on and shall inure to the benefit of Borrower,
Agent, Lenders, and their respective successors and assigns, except as otherwise
provided herein or therein. Borrower may not assign, delegate, transfer,
hypothecate or otherwise convey its rights, benefits, obligations or duties
hereunder or under any of the Financing Agreements without the prior express
written consent of Agent and all Lenders. Any such purported assignment,
transfer, hypothecation or other conveyance by Borrower without such prior
express written consent shall be void. No Lender may assign its rights and
obligations under this Agreement (or any part thereof) without the prior written
consent of all Lenders and Agent, except as permitted under Section 13.5(b)
hereof. Any purported assignment by a Lender without such prior express consent
or compliance with Section 13.5(b) where applicable, shall be void. The terms
and provisions of this Agreement and the other Financing Agreements are for the
purpose of defining the relative rights and obligations of Borrower, Agent and
Lenders with respect to the transactions contemplated hereby and there shall be
no third party beneficiaries of any of the terms and provisions of this
Agreement or any of the other Financing Agreements.
13.5 Assignments and Participations.
------------------------------
(a) Any Lender may, in the ordinary course of its commercial banking
or finance business and in accordance with applicable law, at any time sell to
one or more banks, commercial finance companies or other financial institutions
("Participants"), participating interests in all or a portion of its rights and
obligations under this Agreement or any other Financing Agreement (including all
or a part of its interest in the Obligations). In the event of any such sale by
a Lender of a participating interest to a Participant, such Lender's obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of any such obligations for all
purposes under this Agreement and the other Financing Agreements, and Borrower
and Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Financing Agreements. Borrower agrees that if amounts outstanding
under this Agreement are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable
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<PAGE>
law, be deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement; provided that, in purchasing such participating interest, such
-------- ----
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 6.5 hereof. Notwithstanding anything to
the contrary contained herein, no Lender shall grant any participation under
which the Participant shall have rights to approve any amendment to or waiver of
or consent under this Agreement or the other Financing Agreements, except (i)
with respect to the matters specified in clauses (a) through (f) of the proviso
to Section 13.8, and (ii) to the extent the relevant participation agreements
shall provide for a voting mechanism not in conflict with any provision of this
Agreement.
(b) Any Lender may, in accordance with applicable law, at any time
and from time to time assign to any Lender or any affiliate thereof, or, in
connection with the sale of its business or all or substantially all of its loan
portfolio, with the written consent of Agent (which shall not be unreasonably
withheld), to a bank, commercial finance company or other financial institution
(an "Assignee") all (or, with the consent of Agent, less than all), of its
Commitment, rights and obligations under this Agreement and the other Financing
Agreements, pursuant to an Assignment Agreement executed by such Assignee, such
assigning Lender and delivered to Agent for its acceptance and recording in its
records; provided, however that the Assignee shall either (i) be organized under
-------- -------
the laws of the United States of America or any state thereof, or (ii) furnish
to the Agent and Borrower a certificate or other appropriate document evidencing
that such Assignee is entitled to receive payments of principal and interest
hereunder and under the other Financing Agreements without deduction and free
from withholding of any taxes imposed by the jurisdiction of its organization
and such Assignee provides additional or renewed certificates or other documents
upon the expiration thereof, or (iii) expressly waive as to it, the requirement
of Section 6.4(c) that payments be made to it without deduction or withholding
for such taxes. Upon such execution, delivery, acceptance and recording, from
and after the effective date determined pursuant to such Assignment Agreement,
the Assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment Agreement, (A) have the rights and obligations of a Lender
hereunder with a Commitment and Commitment Percentage as set forth therein, and
(B) the assigning Lender thereunder shall, to the extent provided in such
Assignment Agreement, be released from its obligations under this Agreement
(and, in the case of an Assignment Agreement covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such assigning Lender shall cease to be a party hereto).
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<PAGE>
(c) Agent, on behalf of the Borrower, shall maintain at the address
of Agent referred to in Section 13.2 hereof a copy of each Assignment Agreement
delivered to it and a record of the names and addresses of the Lenders and the
Commitments of each Lender from time to time. Such records maintained by Agent
shall be conclusive, in the absence of manifest error, and Borrower, Agent and
Lenders may treat each Person whose name appears in such records as the owner of
a Loan or other Obligations hereunder as the owner thereof for all purposes of
this Agreement and the other Financing Agreements, notwithstanding any notice to
the contrary. The Agent's records under this Section 13.5 shall be available for
inspection by Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(d) Upon its receipt of an Assignment Agreement executed by an
assigning Lender and an Assignee, Agent shall (i) promptly accept such
Assignment Agreement and (ii) on the effective date determined pursuant thereto
record the information contained therein in Agent's records and give notice of
such acceptance and recordation to Lenders and Borrower. On or prior to such
effective date, Borrower, at its own expense, shall execute and deliver to Agent
(in exchange for notes of the assigning Lender) new notes to the order of such
Assignee corresponding to the Commitment assumed by it pursuant to such
Assignment Agreement and, if the assigning Lender has retained a Commitment
hereunder, a new note to the order of the assigning Lender in an amount equal to
the Commitment retained by it hereunder. Such new notes shall be dated the
Closing Date and shall otherwise be in the form of the notes replaced thereby.
The notes surrendered to Agent shall be returned by Agent to Borrower marked
"cancelled".
(e) Except as otherwise provided in this Section 13.5, no Lender
shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the
Obligations owed to such Lender. Any Lender permitted to sell assignments and
participations under this Section 13.5 may, subject to Section 13.6 hereof,
furnish any information concerning Borrower and its subsidiaries and affiliates
in the possession of that Lender from time to time to Assignees and Participants
(including, prospective Assignees and Participants).
(f) Borrower shall assist any Lender permitted to sell assignments or
participations under this Section 13.5 in whatever manner reasonably necessary
in order to enable or effect any such assignment or participation, including
(but not limited to) the execution and delivery of any and all agreements, notes
and other documents and instruments as shall be reasonably requested and the
delivery of informational materials, appraisals
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<PAGE>
then in existence or required hereunder, or other documents for, and the
participation of relevant management in meetings and conference calls with,
potential Assignees or Participants. Borrower shall certify the correctness,
completeness and accuracy of all descriptions of Borrower and its affairs
provided, prepared by Borrower that are contained in any selling materials and
all other information provided by Borrower and included in such materials.
13.6 Confidentiality.
---------------
(a) Each of Agent and Lenders shall use all reasonable efforts to
keep confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by Borrower pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information is
furnished by Borrower to Agent or such Lender, provided, that, nothing contained
-------- ----
herein shall limit the disclosure of any such information: (i) to the extent
required by statute, rule, regulation, subpoena or court order, (ii) to bank
examiners and other regulators, auditors and/or accountants, (iii) in connection
with any litigation to which Agent or such Lender is a party, (iv) to any
Assignee or Participant (or prospective Assignee or Participant) so long as such
Assignee or Participant (or prospective Assignee or Participant) shall have
first agreed in writing to treat such information as confidential in accordance
with this Section 13.6, or (v) to counsel for Agent or such Lender or any
Participant or Assignee (or prospective Participant or Assignee).
(b) In no event shall this Section 13.6 or any other provision of
this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of information that has been or is made public by Borrower or any
third party without breach of this Section 13.6 or otherwise become generally
available to the public other than as a result of a disclosure in violation
hereof, (ii) to apply to or restrict disclosure of information that was or
becomes available to Agent or any Lender on a non-confidential basis from a
person other than Borrower, (iii) require Agent or any Lender to return any
materials furnished by Borrower to Agent or any Lender or (iv) prevent Agent or
any Lender from responding to routine informational requests in accordance with
the Code of Ethics for the Exchange of Credit Information promulgated by The
-----------------------------------------------------
Robert Morris Associates or other applicable industry standards relating to the
exchange of credit information. The obligations of Agent and Lenders under this
Section 13.6 shall supersede and replace the obligations of Agent or any Lender
under any confidentiality letter signed prior to the date hereof.
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<PAGE>
13.7 Entire Agreement. This Agreement, the other Financing Agreements,
----------------
any supplements hereto or thereto, and any instru ments or documents delivered
or to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any conflict between the terms
of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.
13.8 Modification of Agreement. Neither this Agreement nor any other
-------------------------
Financing Agreement nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the Required Lenders; provided, that, no such change,
-------- ----
waiver, discharge or termination shall, without the consent of each affected
Lender and Agent, (a) extend the scheduled final maturity of any Loan, or any
portion thereof, or reduce the rate or extend the time of payment of interest
thereon or fees (other than as provided in Section 3.1(f) hereof or a result of
waiving or not requiring the applicability of any post-default increase in
interest rates or fees for outstanding Letter of Credit Accommodations or
increased interest rates on Overformula Loans), or reduce the principal amount
thereof, or increase the Commitment of such Lender over the amount thereof then
in effect or provided hereunder (it being understood that a waiver of any
Default or Event of Default shall not constitute a change in the terms of any
Commitment of any Lender), (b) release a material amount of the Collateral
(except as expressly required by the Financing Agreements and except as
permitted under Section 12.9 hereof), (c) amend, modify or waive any provision
of this Section 13.8, (d) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders, (e) consent to the assignment or
transfer by Borrower of any of its rights and obligations under this Agreement
or (f) increase the stated advance percentages or the sublimits under the
lending formulas. Any Lender who does not consent to a proposed amendment,
consent or waiver requiring each Lender's approval, as contemplated by clauses
(a) through (f) above, agrees that, if such amendment, waiver or consent has
been approved by the Required Lenders, then any other Lender or Lenders shall
have the right to purchase, in accordance with the terms otherwise applicable to
permitted assignment under Section 13.5(b), all of such non-consenting Lender's
Commitment and interests in the Loans (and in the Collateral and the Financing
Agreements) at their par value, without any early termination fee. No provision
of Section 12 may be amended and no change, waiver, discharge or termination
which affects the duties or rights of Agent under this Agreement or any other
Financing Agreement or increases any costs or
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<PAGE>
administrative burdens of Agent or creates or increases any risk of liability of
the Agent, without, in each case, the prior written consent of Agent.
IN WITNESS WHEREOF, Agent, Lenders and Borrower have caused these presents
to be duly executed as of the day and year first above written.
AGENT BORROWER
- ----- --------
CONGRESS FINANCIAL CORPORATION THE NEW BIBB COMPANY (to be
(SOUTHERN), as Agent (known as The Bibb Company)
By: /s/ Barry T. Griffith By: /s/ A. William Ott
Title: Vice President Title: Vice President, Chief
Financial Officer
Address: Chief Executive Office:
- ------- ----------------------
1000 Parkwood Circle 237 Coliseum Drive
Suite 800 Macon, Georgia 31201
Atlanta, Georgia 30339
LENDERS
-------
CONGRESS FINANCIAL CORPORATION TRANSAMERICA BUSINESS CREDIT
(SOUTHERN) CORPORATION
By: /s/ Barry T. Griffith By: /s/ Terrell W. Harris
Title: Vice President Title: Regional Credit
Manager
Address: Address:
-------- --------
1000 Parkwood Circle 2 Ravinia Drive
Suite 800 Atlanta, Georgia 30346
Atlanta, Georgia 30339
Commitment: Commitment:
----------- -----------
$78,000,000 $37,000,000
Commitment Percentage: Commitment Percentage:
--------------------- ---------------------
67.82609% 32.17391%
<PAGE>
MANAGEMENT SERVICES AGREEMENT
-----------------------------
THIS IS A MANAGEMENT SERVICES AGREEMENT dated as of April 1, 1989
between the NTC GROUP, INC., a Delaware corporation ("NTC") and THE BIBB
COMPANY, a Georgia corporation ("Bibb").
Background
----------
NTC is an investment and management services company which oversees
investments for persons who own a majority of the outstanding common stock of
Bibb. Bibb desires certain management services which NTC is willing to provide
upon the terms and subject to the conditions stated in this agreement.
Terms and Conditions
--------------------
Intending to be legally bound, the parties hereto agree as follows:
1. Appointment. Bibb hereby engages and appoints NTC as an
-----------
independent contractor to furnish the management services specified below for a
term to end December 31, 1994, subject to automatic renewal from year to year
thereafter until terminated at the end of the initial or any renewal term by
either party giving to the other written notice thereof at least three months
prior to the end of such term.
2. Services. NTC shall provide general management, financial and
--------
other corporate advisory services to Bibb. These services shall be performed by
the officers, employees or agents of NTC as it may determine from time to time.
3. Management Fee. In consideration of the services to be rendered
--------------
by NTC hereunder, Bibb shall agree to pay to NTC a management fee of 2% of
Bibb's average investment (investment being the sum of Bibb's equity book value
and interest-bearing debt measured at the end of each month of the year and then
averaged) in each of the years of this contract. These amounts shall be accrued
quarterly, in arrears, in equal amounts calculated to be 25% of the projected
annual amount as of the beginning of the year. These amounts shall be payable
upon demand by NTC. However, Bibb shall not be required to make any payment to
NTC under this agreement which would violate the terms and conditions of Bibb's
financing agreements.
4. Binding Effect; Assignability. This agreement shall be binding
-----------------------------
upon and inure to the benefit of the parties hereto and their successors and
permitted assigns until termination by notice thereof in accordance with the
provisions of Paragraph 1. This agreement may not be transferred or assigned by
either party without the written consent of the other party.
<PAGE>
5. Entire Agreement; Amendment. This agreement constitutes the
---------------------------
entire agreement and understanding between the parties with respect to the
subject matter hereof and supercedes all prior agreements or understandings
relating to the subject matter hereof, including the agreements between the
parties dated April 30, 1987 and April 1, 1988. This agreement may not be
supplemented or amended except by a mutual written agreement of the parties
hereto.
6. Governing Law. This agreement shall be governed by New York law.
-------------
IN WITNESS WHEREOF, the parties have duly executed this agreement as
of the date and year first above written.
THE NTC GROUP, INC.
By: /s/ Thomas C. Foley
------------------------
Thomas C. Foley, Chairman
THE BIBB COMPANY
By: /s/ Alan V. Davis
------------------------
Alan V. Davis, President
-2-
<PAGE>
AGREEMENT
---------
THIS AGREEMENT (the "Agreement") is dated as of July 3, 1996, by and
between TB WOOD'S INCORPORATED (formerly T.B. Wood's Sons Company), a
Pennsylvania corporation ("TBW"), and THE BIBB COMPANY, a Delaware corporation
("Bibb").
Background
----------
Bibb owns a Subordinated Note in the original principal amount of
$13,218,000 dated March 31, 1993, issued by TBW in favor of Bibb (the "Note")
outstanding on the date hereof. As of the date hereof, the aggregate principal
amount of the Note, including accrued interest added thereto, equals
$16,674,000. Based upon the current principal amount and other payment terms of
the Note, TBW's current ability to service its obligations (including the Note),
recent indications of interest by third parties to purchase the Note, and other
matters relating to the Note, Bibb and TBW have agreed that the Note should be
valued at the Purchase Price described below. On the terms and subject to the
conditions set forth herein, the parties desire that TBW repurchase the Note as
described herein.
Terms
-----
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1
TRANSACTION
Section 1.1 Sale of Note.
------------
(a) Subject to the terms and conditions of this Agreement: (i) the
purchase price for the Note to be sold hereunder shall be $10,671,360, plus (A)
$2,000 per day (up to and including the Closing Date) for each day for which the
Closing occurs after July 15, 1996, minus (B) any cash interest paid under the
Note on and after the date hereof (the "Purchase Price"); and (ii) the closing
of the sale and purchase of the Note (the "Closing") shall take place at TBW's
offices located at 440 North Fifth Avenue, Chambersburg, PA 17201, on July 15,
1996, or if the conditions to Closing set forth in Section 1.2 of this Agreement
shall not have been satisfied by such date, as soon as practicable after such
conditions shall have been satisfied; provided, however, that the Closing shall
-------- -------
not occur later than
<PAGE>
the termination of this Agreement as provided in Section 4.6 of this Agreement.
The date on which Closing shall occur is hereinafter referred to as the "Closing
Date".
(b) On the Closing Date, subject to the terms and conditions of this
Agreement: (i) Bibb will transfer and deliver to TBW the certificate
representing the Note, with appropriate executed bond powers, free and clear of
all liens and other liabilities of any nature whatsoever; and (b) TBW will
deliver to Bibb the Purchase Price in immediately available funds.
Section 1.2 Conditions.
----------
(a) The obligations of TBW to purchase the Note are subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions (any one or more of which may be waived in whole or in part by TBW in
its sole discretion):
(i) Performance of Agreements; Representations and Warranties.
---------------------------------------------------------
Bibb shall have performed or complied in all respects with all agreements,
covenants and conditions required by this Agreement to be performed or complied
with by it at or prior to the Closing; the representations and warranties set
forth in this Agreement made by Bibb shall have been true and correct in all
respects when made and as of the Closing Date as though made on and as of the
Closing Date; and TBW shall have been furnished with a certificate of the
President or a Vice President of Bibb, dated the Closing Date, certifying to the
foregoing.
(ii) Injunction; Litigation. No statute, rule or regulation or
----------------------
order of any court or governmental authority shall be in effect which prohibits
the transactions contemplated by this Agreement.
(iii) Bankruptcy Court Approval. The sale of the Note
-------------------------
contemplated by this Agreement to TBW (A) shall continue at all times prior to
the Final Order described below to be identified and included in the Company's
Plan of Reorganization (the "Plan") filed in the Company's case (the "Bankruptcy
Case") under Chapter 11 of Title 11 of the United States Code in the United
States District Court for the District of Delaware (the "Bankruptcy Court"), and
(B) shall be approved by the Bankruptcy Court in a final order entered on the
docket by the Clerk of the Bankruptcy Court which (x) has not been reversed,
stayed, modified or amended, (y) as to which no appeal, certiorari proceeding,
reargument or other review or rehearing has been requested or is still pending,
and (z) as to which the time for filing a notice of or petition for certiorari,
or request for
-2-
<PAGE>
reargument or further review or rehearing shall have expired (such order, a
"Final Order").
(b) The obligations of Bibb to sell the Note are subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions (any one or more of which may be waived in whole or in part by Bibb
in its sole discretion):
(i) Performance of Agreements; Representations and Warranties.
---------------------------------------------------------
TBW shall have performed or complied in all respects with all agreements,
covenants and conditions required by this Agreement to be performed or complied
with by it at or prior to the Closing; the representations and warranties set
forth in this Agreement made by TBW shall have been true and correct in all
respects when made and as of the Closing Date as though made on and as of the
Closing Date; and TBW shall have been furnished with a certificate of the
President or a Vice President of TBW, dated the Closing Date, certifying to the
foregoing.
(ii) Injunction; Litigation. No statute, rule or regulation or
----------------------
order of any court or governmental authority shall be in effect which prohibits
the transactions contemplated by this Agreement.
(iii) Bankruptcy Court Approval. The sale of the Note contemplated
-------------------------
by this Agreement to TBW shall be approved by the Bankruptcy Court in a Final
Order.
Section 1.3 Absence of Transfers; Plan. Bibb hereby agrees that it
---------------------------------------
shall not sell, assign, transfer, pledge, hypothecate, make gifts of or in any
manner whatsoever dispose of or encumber (any such sale, assignment, transfer,
pledge, hypothecation, gift or disposition being hereinafter referred to as a
"Transfer") the Note; it being understood that the Note is subject to certain
liens in favor of Bibb's secured lenders. Any purported Transfer by Bibb in
violation of this Agreement shall be null and void and of no force and effect,
and the purported transferee shall have no rights or privileges in or with
respect to such securities. Bibb hereby covenants and agrees that it will not
initiate or consent to any action or agreement (including without limitation any
amendment of the Plan) that would have, as a specific purpose, the impediment,
nullification or postponement of the sale of the Note as contemplated by this
Agreement.
-3-
<PAGE>
Section 2
REPRESENTATIONS AND WARRANTIES OF TBW
TBW represents and warrants to Bibb:
Section 2.1 Due Authorization; Validity. TBW has the corporate power and
---------------------------
corporate authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate or other action
of TBW, and this Agreement constitutes a valid and legally binding obligation of
TBW enforceable against TBW in accordance with its terms.
Section 3
REPRESENTATIONS AND WARRANTIES OF BIBB
Bibb represents and warrants to TBW:
Section 3.1 Ownership. Bibb is the sole owner of the Note, free and clear
---------
of all liens, adverse claims and encumbrances (other than with respect to any
existing liens in favor of Bibb's secured lenders). The delivery of the Note to
TBW will transfer to TBW in accordance with the terms hereof good and valid
title to the Note, free and clear of all liens, adverse claims and encumbrances.
Section 3.2 Due Authorization; Validity. Bibb has the corporate power and
---------------------------
corporate authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate or other action
of Bibb, and this Agreement constitutes a valid and binding obligation of Bibb,
enforceable against Bibb in accordance with its terms.
Section 3.3 Plan. A true and correct copy of the Plan to be proposed by
----
Bibb as its plan of reorganization pursuant to Section 1121(a) of Title 11 of
the United States Code is attached hereto as Annex A.
-------
Section 4
MISCELLANEOUS
Section 4.1 Amendment and Modification. No amendment, modification or
--------------------------
termination of any provision of this Agreement shall be effective unless signed
in writing by or on behalf of TBW and Bibb.
-4-
<PAGE>
Section 4.2 Survival of Representations and Warranties. All
------------------------------------------
representations, warranties, covenants and agreements set forth in this
Agreement will survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
Section 4.3 Successors and Assigns; Entire Agreement. This Agreement and
----------------------------------------
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns and
executors, administrators and heirs; provided that neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned (which
term excludes mergers under operation of applicable law) by any party hereto
without the prior written consent of the other party. This Agreement sets forth
the entire agreement and understanding between the parties as to the subject
matter hereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature between them as to the subject matter
hereof.
Section 4.4 Separability. In the event that any provision of this
------------
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision.
Section 4.5 Governing Law. The validity, performance, construction and
-------------
effect of this Agreement shall be governed by and construed in accordance with
the internal law of the State of Delaware, without giving effect to principles
of conflicts of law.
Section 4.6 Termination.
-----------
(a) When Agreement may be Terminated. This Agreement may be terminated:
--------------------------------
(i) by mutual written consent of TBW and Bibb at any time prior to Closing; or
(ii) by TBW if the Final Order or the Closing shall not have occurred by July
31, 1996; or (iii) by Bibb if the Closing shall not have occurred by November
30, 1996.
(b) Effect of Termination. In the event of termination of this Agreement
---------------------
by either TBW or Bibb or both of them as provided in Section 4.6(a), this
Agreement shall immediately terminate and be of no further force and effect, and
there shall be no liability on the part of either TBW or Bibb (except for
liabilities arising from a wilful breach of this Agreement prior to such
termination).
-5-
<PAGE>
Section 4.7 Counterparts. This Agreement may be executed in two or more
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same instrument.
Section 4.8 Further Assurances. Each party shall cooperate and take such
------------------
action as may be reasonably requested by the other party in order to carry out
the provisions and purposes of this Agreement and the transactions contemplated
hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers hereunto duly authorized, as of the date
first above written.
TB WOOD'S INCORPORATED
By: /s/ Michael L. Hurt
---------------------------
Name: Michael L. Hurt
Title: President
THE BIBB COMPANY
By: /s/ Thomas C. Foley
----------------------------
Name: Thomas C. Foley
Title: Chairman
-6-
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of this
26th day of August, 1996 (the "Effective Date") by and between The Bibb Company,
a Delaware corporation (the "Company"), and Michael L. Fulbright (the
"Executive").
BACKGROUND
----------
A. The Company is engaged in the manufacturing and marketing of
consumer products for the home, principally sheets, pillowcases, towels and
other bedding and bath accessories, as well as apparel fabrics and other
specially engineered textile products used in making high-pressure hoses and
other industrial products (the "Business").
B. The Company desires to employ Executive, and Executive is willing
to be employed by the Company, upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and intending to be legally bound hereby, the parties agree as follows:
TERMS
-----
SECTION 1. Employment. The Company hereby employs Executive, and
----------
Executive hereby accepts such employment and agrees to serve as the Company's
President and Chief Executive Officer (the "President and CEO") during the
Employment Period set forth in Section 6, subject to the terms and conditions
hereinafter set forth.
SECTION 2. Management Duties. As President and CEO of the Company
-----------------
during the Employment Period, Executive shall carry out such duties as are
applicable to the position of President and Chief Executive Officer as set forth
in the Company's Bylaws, which duties shall however, in all cases be subject to
policies set by, and at the direction and control of, the Company's Board of
Directors. The Company shall, subject to applicable fiduciary duties of the
Company's directors as advised by counsel, nominate the Executive to serve on
the Company's Board of Directors for each election of directors during the
Employment Period (other than elections of directors in which Executive's then-
existing term as a director does not then expire).
SECTION 3. Extent of Services. During the Employment Period,
------------------
Executive shall devote his full working time and attention and give his best
efforts, skills and abilities exclusively to the management and operations of
the Company and
<PAGE>
its Business; it being understood and agreed that Executive shall be permitted
to: (a) serve as a director or officer of any trade association, civic,
educational or charitable organization or governmental entity or (b) serve as a
director of any corporation which is not a direct or indirect competitor of the
Company, provided that Executive's service as described in clauses (a) and (b)
does not materially interfere with Executive's performance of his duties
hereunder. Executive shall perform his services hereunder at the Company's
Macon, Georgia and Atlanta, Georgia offices and at such other places as are
required for the effective management of the Company and its Business.
SECTION 4. Compensation and Benefits.
-------------------------
(a) Executive shall receive, during the Employment Period, as
compensation for his services a salary (the "Base Salary") at the annual rate
of: (i) until the first anniversary of the date hereof, Four Hundred Thousand
Dollars ($400,000) per annum; (ii) on and after the first anniversary of the
date hereof and until the second anniversary of the date hereof, Four hundred
and Twenty-Five Thousand Dollars ($425,000) per annum; and (iii) on and after
the second anniversary of the date hereof, Four Hundred and Fifty Thousand
Dollars per annum. The Base Salary shall be payable in equal installments at
such intervals as the Company pays its employees generally (but in no event less
than once per month).
(b) The Executive shall be eligible to participate in an annual cash
bonus program which shall contain financial performance formulas and criteria to
be agreed upon by the Company and the Executive and pursuant to which the
Company and the Executive intend for Executive to be eligible to earn an amount
equal to from 50% to 100% of the Executive's then-existing Base Salary upon
satisfaction of the specified financial performance formulas and criteria (the
"Bonus Program"); it being understood and agreed that, with respect to the
initial year of the Employment Period, Executive shall receive a cash bonus no
less than 33% of the Executive's then-existing Base Salary. The amount of each
of the three annual cash bonuses to which Executive is entitled shall be
determined and the bonus shall be paid to Executive as soon as the underlying
financial data is available (but in no event later than 70 days following the
end of the year for which the bonus is calculated).
(c) The Company agrees to grant to Executive options (the "Options")
to acquire the Company's shares of common stock (the "Common Stock") as follows:
(A) the Options would apply to
- 2 -
<PAGE>
an amount of shares of Common Stock equal to 2% of the Company's Common Stock as
of the date of grant calculated on a fully-diluted basis; (B) the exercise price
of the Options would be based upon a $100 million aggregate valuation on all of
the Company's shares of Common Stock calculated on a fully-diluted basis; (C)
shares of Common Stock subject to the Options would vest ratably on the first,
second and third anniversary of the date of grant during the Employment Period,
provided that, in the event of a Change in Control (as defined in Section 7(e))
- --------
or in the event of a termination of the Employment Period other than in
accordance with Section 7(a)(iv) or Section 7(a)(v), all shares of Common Stock
subject to the Option would vest immediately; and (D) the Options would be
exercisable commencing immediately upon vesting and ending on the fifth year
after grant of the Options.
(d) Effective upon the signing of this Agreement, the Company hereby
pays and Executive hereby acknowledges receipt of One Hundred and Twenty-Five
Thousand Dollars ($125,000) to compensate Executive for incentive compensation
forfeited by Executive as a result of his termination of his immediate prior
employment.
(e) During the Employment Period, Executive shall be entitled to
participate in the employee benefit plans and programs, including medical,
health, dental and other plans described on Exhibit A, together with any
---------
additional plans and programs generally offered to any other senior executive
officers of the Company during the Employment Period.
(f) The Company hereby agrees, during the Employment Period, to
maintain and pay for policy premiums with respect to one or more term life
insurance policies (i) naming Executive's designees as beneficiaries and (ii)
possessing death benefits aggregating no less than 200% of the Executive's then-
existing Base Salary.
(g) Executive shall be entitled to four (4) weeks of paid vacation
per year.
(h) All payments to Executive or his estate made pursuant to this
Agreement shall be subject to such withholding as may be required by any
applicable laws.
SECTION 5. Expense Reimbursements.
----------------------
(a) During the Employment Period, the Company shall reimburse
Executive for all reasonable and itemized out-of-pocket
- 3 -
<PAGE>
expenses incurred by Executive in the ordinary course of the Company's business,
provided such expenses are properly reported to the Company in accordance with
its accounting procedures.
(b) The Company shall also reimburse the Executive for: (i) all
relocation expenses from Greensboro, North Carolina to Atlanta, Georgia (or any
location within 50 miles thereof), (ii) reasonable closing costs in connection
with the Executive's purchase of a new home in Atlanta, Georgia (or any location
within 50 miles thereof) made within eighteen months following the execution of
this Agreement; (iii) reasonable lodging expenses in or near Atlanta, Georgia
incurred by Executive and his family during the initial 180 days following the
date hereof; and (iv) up to a maximum of Thirty-Five Thousand Dollars ($35,000)
for actual membership initiation costs incurred by Executive in connection with
his joining a private club in Georgia. The reimbursable relocation expenses
referred to above shall include, but not necessarily be limited to, the
following costs and expenses, for the contemplated relocation: (1) the costs of
packing, transporting and storage (for six months), adequate insurance to cover
all items at 100% of value, costs of unpacking and appliance installation, and
(2) the real estate related costs associated with the relocation including
transaction fees, mortgage loan filing fees, recording and title research and
transfer fees, mortgage points and attorney and legal fees associated with these
expenses and costs. If so requested, the Company shall advance funds to the
Executive in order to enable the Executive to pay all such reimbursable
relocation expenses.
(c) The Company hereby agrees: (i) to purchase, within 30 days after
the Effective Date, the Executive's currently-owned condominium unit located in
Greensboro, North Carolina for $325,000, against delivery by the Executive to
the Company of good, marketable and fee simple title fee to the condominium unit
free and clear of any mortgages, leases, liens and encumbrances (other than the
condominium documents and easements servicing the condominium); and (ii) to
assume all costs associated with or collateral to the foregoing purchase up to
$10,000 in the aggregate.
SECTION 6. Term. The period of Executive's employment under this
----
Agreement (the "Employment Period") shall commence as of the date hereof and,
unless sooner terminated pursuant to Section 7 of this Agreement or extended
pursuant to the proviso to this sentence, shall continue until the close of
business on third anniversary of the date of this Agreement, and shall
- 4 -
<PAGE>
terminate at such time; provided however that the Employment Period shall be
-------- -------
extended for an additional one-year period on the third anniversary of the date
of this Agreement and on each anniversary thereafter, unless either the Company
or the Executive shall have given written notice to the other, no later than 90
days prior to the last day of the then-existing Employment Period, that the term
of this Agreement shall not be so extended.
SECTION 7. Termination and Severance.
-------------------------
(a) Notwithstanding anything to the contrary contained herein, the
Employment Period shall terminate upon the earliest to occur of the following
(which may occur at any time as provided below):
(i) the close of business on the last day of the then-existing
Employment Period (as such Employment Period may be extended from time to time
pursuant to Section 6) where either the Company or the Executive has not elected
to extend the Employment Period in accordance with the proviso contained in
Section 6;
(ii) the Executive's death;
(iii) delivery by the Company to Executive of a written notice of
the Company's election to terminate Executive's employment hereunder because of
Executive's Disability (as defined below);
(iv) delivery by the Company to Executive of a written notice of
the Company's election to terminate Executive's employment hereunder for Cause
(as defined below) ;
(v) the close of business which is 90 days after the date on which
Executive delivered to the Company a written notice of Executive's election to
terminate Executive's employment hereunder and such termination is not for Good
Reason (as defined below);
(vi) delivery by the Company to Executive of a written notice of
the Company's election to terminate Executive's employment hereunder and such
termination is not for Cause or as a result of Executive's death or Disability;
or
- 5 -
<PAGE>
(vii) delivery by Executive to the Company of a written notice of
Executive's election to terminate Executive's employment hereunder and such
termination is for Good Reason.
(b) For purposes of this Agreement, "Disability" shall mean that
Executive suffers from an illness or other physical or mental impairment which,
in the judgment of the Board of Directors of the Company, even with reasonable
accommodations prevents Executive from performing his duties hereunder for a
period of one-hundred eighty (180) consecutive days. For the purposes of this
Agreement, the term "Cause" shall mean (i) the willful and continuing failure by
Executive substantially to perform his duties with the Company (other than any
such failure resulting from Disability) under this Agreement, provided that,
--------
solely with respect to any act or omission by Executive which remains curable
without significant cost to the Company, "Cause" shall not be deemed to exist
under this clause (i) unless Executive has been provided by the Company with at
least thirty (30) days prior written notice to Executive of the Company's
intention to terminate Executive's employment hereunder for Cause and Executive
has not cured or corrected such performance defaults within such thirty-day
period, or (ii) the willful and continuing failure by Executive to perform
Executive's obligations under Section 9 hereunder, or (iii) the commission by
Executive of theft, embezzlement or other felony or misdemeanor crimes against
the Company. For purposes of the foregoing definition of "Cause," no act, or
failure to act, shall be considered "willful" unless done, or omitted to be
done, in bad faith and without reasonable belief that the action or omission was
in the best interest of the Company. Notwithstanding the foregoing or any other
provision hereof, Executive shall not be deemed to have been terminated for
Cause unless there shall have been delivered to Executive a copy of a resolution
duly adopted by the affirmative vote of not less than a majority of the entire
membership of the Board of Directors of the Company at a meeting of the Board of
Directors of the Company called and held for such purpose (after reasonable
notice to Executive and an opportunity for the Executive, together with his
counsel, to be heard before the Board), finding that, in the reasonable and good
faith opinion of the Board of Directors of the Company, Executive was guilty of
conduct set forth above and specifying the particulars thereof in reasonable
detail. For purposes of this Agreement, "Good Reason" shall mean (i) the
willful and continuing failure by the Company substantially to perform its
obligations under this Agreement, provided that, solely with respect to any act
--------
or omission by the Company which remains curable without significant cost to the
Executive, "Good Reason" shall not be deemed to exist
- 6 -
<PAGE>
under this clause (i) unless the Company has been provided by the Executive with
at least thirty (30) days prior written notice to the Company of the Executive's
intention to terminate Executive's employment hereunder for Good Reason and the
Company has not cured or corrected such performance defaults within such thirty-
day period, or (ii) any material alteration or diminution in Executive's
responsibilities to the Company under this Agreement or as delegated to
Executive by the Company's Board of Directors in accordance with the Company's
Bylaws (other than as a result of a reasonable and good faith determination by
the Board of Directors of the Company that such alteration or diminution is in
the best interest of the Company).
(c) Following any termination of Executive's employment hereunder, all
obligations of the Company under this Agreement (other than (x) any obligations
with respect to the payment of accrued and unpaid salary, accrued and unpaid
bonus (including the stipulated bonus for the first year), accrued and unpaid
vacation, and expense reimbursement under Sections 4 and 5 hereof through the
date of Executive's termination of employment hereunder, (y) any of the
obligations of the Company with respect to any Options of Executive that have
vested on or prior to the effective date of such termination, and (z) as set
forth in Section 7(d)and (e)) shall terminate.
(d) In the event of any termination of Executive's employment
hereunder pursuant to Section 7(a)(vi) or Section 7(a)(vii) after the date
hereof but prior to the second anniversary of the date of this Agreement, the
Company shall pay to Executive severance compensation in an amount equal to 200%
of Executive's Base Salary as in effect on the date of such termination and
Executive shall be entitled to continue to be covered by the employee benefit
programs and policies described in Section 4(e) and Section 4(f) for the
remainder of the three-year period following the date hereof (or, if the terms
of such programs and policies do not allow coverage of former employees, the
Company shall provide Executive with cash payments sufficient to enable
Executive to obtain reasonably equivalent coverage from other sources
satisfactory to the Company and the Executive) (such employee benefit programs
and policies, the "Employee Benefits").
(e) In the event of any termination of Executive's employment
hereunder pursuant to Section 7(a)(vi) or Section 7(a)(vii) after the second
anniversary of the date of this Agreement, the Company shall pay to Executive
severance compensation in an amount equal to 100% of Executive's Base
- 7 -
<PAGE>
Salary as in effect on the date of such termination and Executive shall be
entitled to continue to be covered by the Employee Benefits; provided, however,
-------- -------
if a Change of Control occurs between the second and third anniversary of the
date of this Agreement and Executive's employment hereunder is terminated
pursuant to Section 7(a)(vi) or Section 7(a)(vii) following such a Change of
Control, then the Company shall pay to Executive severance compensation in an
amount equal to 200% of Executive's Base Salary as in effect on the date of such
termination and Executive shall be entitled to continue to be covered by the
Employee Benefits. For purposes of this Agreement, "Change in Control" means (i)
any sale of all or substantially all of the Company's assets to any person or
entity (a "Person"), or (ii) any sale or series of related sales which, in the
aggregate, transfer 80% or more of the voting shares of the Company to any
Person or group of Persons (as the term "group" is defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended), or (iii) any merger of the
Company with any other Person following which the Company is not the surviving
entity; it being understood and agreed that "Change of Control" shall not
include (x) any sale, merger or consolidation with or to any Person in which the
shareholders of the Company immediately prior to such sale, merger or
consolidation own or obtain controlling voting power of such Person immediately
following such transaction, or (y) any merger by and between the Company and
Newco as more specifically described in the Company's Disclosure Statement dated
June 10, 1996 to holders of the Company's Old Subordinated Notes and Old Equity
Interests.
(f) All cash severance compensation amounts owed pursuant to Section
7(d) and 7(e) shall be paid within thirty (30) days following the effective date
of Executive's termination, as applicable. The Company shall be responsible for
ensuring that any successor to the Company, as a result of a Change in Control,
fully honors the Company's obligations under this Agreement.
(g) Any termination by the Company or by Executive of Executive's
employment hereunder shall be communicated by written notice which shall
indicate the specific termination provision in this Agreement relied upon.
(h) Any severance compensation granted in Section 7 of the Agreement
shall be the sole and exclusive compensation or benefit due to Executive upon
termination of Executive's employment.
- 8 -
<PAGE>
(i) Notwithstanding anything to the contrary contained herein, the
parties understand and agree that this Agreement shall be subject to, and the
effectiveness of this Agreement shall be conditioned upon, approval by the
United States Bankruptcy Court for the District of Delaware (the "Approval").
In the event the Approval is sought through the filing of a motion, the parties
further understand and agree that the Company shall review the Motion with
Executive prior to filing and shall not mention the name of the Executive
without the consent of the Executive. The Debtor agrees to promptly seek the
Approval. In the event that the Approval is not obtained by September 30, 1996,
this Agreement shall be null and void.
SECTION 8. Representations, Warranties and Acknowledgments of
--------------------------------------------------
Executive.
- ---------
(a) Executive represents and warrants that he is not a party to or
otherwise subject to or bound by the terms of any contract, agreement or
understanding (including without limitation any contract, agreement or
understanding containing terms and provisions similar in any manner to those
contained in Section 9 hereof) which in any manner would limit or otherwise
affect his ability to perform his obligations hereunder. Executive further
represents and warrants that his employment with the Company will not require
him to disclose or use any confidential information belonging to prior employers
or other persons or entities.
(b) Executive represents and warrants that he acknowledges the
Company's belief that it would cause the Company serious and irreparable injury
and cost if Executive were to use his ability and knowledge in competition with
the Company or to otherwise breach the obligations contained in Section 9.
(c) Executive recognizes and acknowledges that: (i) in the course of
Executive's employment by the Company it will be necessary for Executive to
acquire information which could include, in whole or in part, information
concerning the Company's experimental and development plans, trade secrets,
secret procedures, information relating to ideas, improvements, and inventions,
disclosures, processes, systems, formulas, composition, patents, patent
applications, machinery, materials research activities and plans, customers or
vendors and prospective customers, the Company's product costs, the Company's
prices, profits and volume of sales, and future business plans, and other
confidential or proprietary information belonging to the Company or relating to
the Company's affairs, even if such
- 9 -
<PAGE>
information has been disclosed to one or more third parties pursuant to
distribution agreements, joint research agreements or other agreements entered
into by the Company or any of its affiliates (collectively, such information is
referred to herein as the "Confidential Information"); (ii) the Confidential
Information is the property of the Company; (iii) the use, misappropriation or
disclosure of the Confidential Information would cause irreparable injury to the
Company; and (iv) it is essential to the protection of the Company's good will
and to the maintenance of the Company's competitive position that the
Confidential Information be kept secret and that Executive not disclose the
Confidential Information to others or use the Confidential Information to
Executive's own advantage or the advantage of others (except as may be necessary
for the performance of Executive's duties hereunder).
(d) Executive further recognizes and acknowledges that his duties at
the Company may include the preparation of materials, including written or
graphic materials, and that any such materials conceived or written by him shall
be done as "work made for hire" as defined and used in the Copyright Act of
1976, 17 U.S.C. (S) 1 et seq. In the event of publication of such materials,
-- ---
Executive acknowledges that since the work is "work made for hire," the Company
will solely retain and own all rights in said materials, including right of
copyright.
SECTION 9. Executive's Covenants and Agreements.
------------------------------------
(a) Executive agrees to hold and safeguard the Confidential
Information in trust for the Company, its successors and assigns and agrees that
he shall not, without the prior written consent of the Board of Directors of the
Company, disclose or make available to anyone for use outside the Company's
organization at any time, either during his employment with the Company or
subsequent to the termination of his employment with the Company for any reason,
any of the Confidential Information, whether or not developed by Executive,
except as required in the performance of Executive's duties to the Company.
Notwithstanding anything to the contrary contained herein, the foregoing
confidentiality obligations of the Executive shall not apply to any information
or data that is generally available within the public domain or otherwise
publicly accessible through legal means (in no event, in any case, as a result
of Executive's breach of his obligations hereunder).
- 10 -
<PAGE>
(b) Upon the termination of Executive's employment with the Company
for any reason Executive shall promptly deliver to the Company all
correspondence, drawings, blueprints, manuals, letters, notes, notebooks,
reports, flow-charts, programs, proposals, price lists, customer lists, company
credit cards, company vehicles and any documents concerning the Company's
customers or concerning products or processes used by the Company and, without
limiting the foregoing, will promptly deliver to the Company any and all other
documents or materials containing or constituting Confidential Information.
(c) Executive covenants and agrees that during the period of
Executive's employment hereunder and, if applicable, during the Non-Compete
Period, Executive shall not, anywhere in the world, directly or indirectly,
engage (whether as principal, agent, officer, director, employee, consultant,
shareholder, or otherwise, whether alone or in association with any other
person, corporation or other entity) in any business or other enterprise which
sells or attempts to sell in competition with the Company any products or
services which are the same as or substantially similar to the products or
services sold or proposed to be sold by the Company at any time during the last
two (2) years prior to the termination of Executive's employment hereunder. For
purposes of this Agreement, "Non-Compete Period" means the following period of
time after any termination of Executive's employment by Executive pursuant to
Section 7(a)(v): the shorter of (x) two (2) years immediately following the
termination of Executive's employment by Executive under this Agreement, and (y)
the amount of time otherwise remaining in the three-year period ending on the
third anniversary of the date of this Agreement.
(d) Executive agrees that during his employment with the Company he
shall not, directly or indirectly, solicit the trade of, or trade with, any
customer, prospective customer or supplier of the Company for any purpose other
than for the benefit of the Company.
(e) Executive agrees that, for two (2) years following termination of
Executive's employment with the Company hereunder for any reason, Executive
shall not, directly or indirectly, solicit or induce, or attempt to solicit or
induce, any employee of the Company to leave the employ of the Company for any
reason whatsoever nor shall Executive offer or provide employment (whether such
employment is with the Executive or any other business or enterprise), either on
a full-time basis or part-time or consulting basis, to any person who then
currently is, or who
- 11 -
<PAGE>
within one year prior thereto had been, employed by the Company or any of its
subsidiaries.
SECTION 10. Remedies. Executive acknowledges that his promised
--------
services hereunder are of a special, unique, unusual, extraordinary and
intellectual character, which give them peculiar value the loss of which cannot
be reasonably or adequately compensated in an action of law, and that, in the
event there is a breach hereof by Executive, the Company will suffer irreparable
harm, the amount of which will be impossible to ascertain. Accordingly, the
Company shall be entitled, if it so elects, to institute and prosecute
proceedings in any court of competent jurisdiction, either at law or in equity,
to obtain damages for any breach or to enforce specific performance of the
provisions or to enjoin Executive from committing any act in breach of this
Agreement. The remedies granted to the Company in this Agreement are cumulative
and are in addition to remedies otherwise available to the Company at law or in
equity. If the Company is obliged to resort to the courts for the enforcement
of any of the covenants of Executive contained in Section 9 hereof, each such
covenant shall be extended for a period of time equal to the period of such
breach, if any, which extension shall com mence on the later of (i) the date on
which the original (unex tended) term of such covenant is scheduled to terminate
or (ii) the date of the final court order (without further right of appeal)
enforcing such covenant.
SECTION 11. Waiver of Breach. The waiver by the Company or Executive
----------------
of a breach of any provision of this Agreement by the other party (the
"Breaching Party") shall not operate or be construed as a waiver of any other or
subsequent breach by the Breaching Party of such or any other provision. No
delay or omission by the Company or Executive in exercising any right, remedy or
power hereunder or existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by the Company or
Executive from time to time and as often as may be deemed expedient or necessary
by the Company or Executive in its or his sole discretion.
SECTION 12. Notices. All notices required or permitted hereunder
-------
shall be made in writing by hand-delivery, certified or registered first-class
mail, or air courier guaranteeing overnight delivery to the other party at the
following addresses:
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<PAGE>
To the Company:
The Bibb Company
237 Coliseum Drive
Macon, GA 31201
Attention: Board of Directors
To Executive:
Michael L. Fulbright
10 Sturbridge Lane
Greensboro, NC 27408
or to such other address as either of such parties may designate in a written
notice served upon the other party in the manner provided herein. All notices
required or permitted hereunder shall be deemed duly given and received when
delivered by hand, if personally delivered; on the third day next succeeding the
date of mailing if sent by certified or registered first-class mail; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
SECTION 13. Severability. If any term or provision of this Agreement
------------
or the application thereof to any person or circumstance shall, to any extent,
be held invalid or unenforceable by a court of competent jurisdiction, the
remainder of this Agreement or the application of any such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law. If any of the provisions contained in this Agreement shall for any reason
be held to be excessively broad as to duration, scope, activity or subject, it
shall be construed by limiting and reducing it, so as to be valid and
enforceable to the extent compatible with the applicable law or the
determination by a court of competent jurisdiction.
SECTION 14. Governing Law. The implementation and interpretation of
-------------
this Agreement shall be governed by and enforced in accordance with the laws of
the State of Georgia without giving effect to the conflicts of law provisions
thereof.
SECTION 15. Binding Effect and Assignability. The rights and
--------------------------------
obligations of both parties under this Agreement shall inure to the benefit of
and shall be binding upon their heirs, successors and assigns. Neither party's
rights under this
- 13 -
<PAGE>
Agreement shall, in any voluntary or involuntary manner, be assignable and may
not be pledged or hypothecated without the prior written consent of the other
party; it being understood that no merger or consolidation involving the Company
shall be deemed an assignment.
SECTION 16. Attorneys' Fees; Costs. If a party hereto prevails in a
----------------------
proceeding for damages or injunctive relief, that party, in addition to other
relief, shall be entitled to reasonable attorneys' fees, costs and the expenses
of litigation incurred by such party in securing the relief granted by the
Court.
SECTION 17. Counterparts; Section Headings. This Agreement may be
------------------------------
executed in any number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument. The section headings of this Agreement are for convenience of
reference only.
SECTION 18. Survival. Notwithstanding the termination of this
--------
Agreement or Executive's employment hereunder for any reason, Sections 8, 9, 10,
14, 16 and 18 hereof (and any other provisions that explicitly contemplate
extending beyond the termination of this Agreement or the Employment Period)
shall survive any such termination.
SECTION 19. Entire Agreement. This instrument constitutes the entire
----------------
agreement with respect to the subject matter hereof between the parties hereto
and replaces and supersedes as of the date hereof any and all prior oral or
written agreements and understandings between the parties hereto. This
Agreement may only be modified by an agreement in writing executed by both
Executive and the Company.
- 14 -
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement the
date and year first written above.
Company:
-------
The Bibb Company
By: /s/ A. William Ott
-----------------------------
Executive:
---------
/s/ Michael L. Fulbright
-----------------------------
Michael L. Fulbright
- 15 -
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF THE BIBB COMPANY AS OF DECEMBER 30, 1995 AND THE
RELATED CONSOLIDATED STATEMENTS OF INCOME SHAREHOLDERS' INVESTMENT AND CASH
FLOWS FOR THE YEAR ENDED DECEMBER 30, 1995.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> DEC-31-1994
<PERIOD-END> DEC-30-1995
<CASH> 8,116,000
<SECURITIES> 0
<RECEIVABLES> 13,060,000
<ALLOWANCES> 5,134,000
<INVENTORY> 80,185,000
<CURRENT-ASSETS> 98,134,000
<PP&E> 163,643,000
<DEPRECIATION> 86,229,000
<TOTAL-ASSETS> 198,638,000
<CURRENT-LIABILITIES> 289,265,000
<BONDS> 208,971,000
0
0
<COMMON> 1,000
<OTHER-SE> (90,628,000)
<TOTAL-LIABILITY-AND-EQUITY> 198,638,000
<SALES> 389,998,000
<TOTAL-REVENUES> 389,998,000
<CGS> 366,040,000
<TOTAL-COSTS> 366,040,000
<OTHER-EXPENSES> 41,843,000
<LOSS-PROVISION> 466,000
<INTEREST-EXPENSE> 29,240,000
<INCOME-PRETAX> (47,591,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (47,591,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (47,591,000)
<EPS-PRIMARY> (4,957.29)
<EPS-DILUTED> (4,957.29)
</TABLE>
<PAGE>
THE BIBB COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
EFFECTIVE JANUARY 1, 1983,
REVISED JANUARY 1, 1989,
REVISED JANUARY 1, 1992
Preamble
- --------
The purpose of this Plan is to provide all Eligible Executives of The Bibb
Company the opportunity of deferring compensation until a later date.
Section 1. Definitions
-----------
"Average Cost of Funds" means the sum of the weekly "Cost of Funds" as
defined below, divided by the number of weeks in the quarterly period. The
quarterly periods shall be based on the calendar quarters ending on March 31,
June 30, September 30 and December 31 of each calendar year.
"Board" means the Board of Directors of The Bibb Company.
"Committee" means the Compensation Committee of the Board of Directors.
"Company" means The Bibb Company.
"Company Contribution" means the amount that the Company contributes to a
Participant's account over and above the Participant's Deferred Compensation.
"Company Contribution Account" means the account or accounting entry which
represents the total amount of Company Contributions with respect to each
Participant, adjusted from time to time as provided in the Plan.
<PAGE>
"Cost of Funds" means either the Effective Borrowing Rate to the Company if
the Company is in a borrowing position or the Investing Rate if the Company is
in an investing position. The Company shall, for purposes of this Plan, be in a
borrowing position if at any time during any calendar quarter the Company is
obligated to any bank or other financial institution for any debt with a
maturity less than one year; if the Company is not so obligated, then the
Company shall be in an investing position for any such calendar quarter.
"Deferred Compensation" means all base salary and EBBIT (Earnings before
Bonuses, Interest and Taxes) Bonus Plan Awards elected by the Participant to be
deferred.
"Deferred Compensation Account" means the account or accounting entry which
represents the total amount of Deferred Compensation with respect to each
Participant, adjusted from time to time as provided in the Plan.
"Deferred Compensation Election Form" means the form by which Eligible
Executives elect to become Participants.
"Effective Borrowing Rate" means the Company's average cost to secure short
term bank financing for periods of less than one year, for any such calendar
quarter.
"Eligible Executive" means an employee of the Company designated by the
Board of Directors to be eligible to participate in the Plan.
-2-
<PAGE>
"Investing Rate" means the average effective rate of return on investments
of the Company with maturities less than one year, for any such calendar
quarter.
"Participant" means an Eligible Executive who is participating in the Plan.
"Plan" means the Executive Deferred Compensation Plan as described herein
and as amended from time to time.
Section 2. Participation
-------------
Each Eligible Executive who receives compensation for service as an
employee shall be eligible to participate in the Plan. Each Eligible Executive
must make a valid election by executing and filing with the Committee, before
the commencement of such calendar year (or in the case of a new Eligible
Executive, before the commencement of his employment in such calendar year).
Such election shall:
(a) be valid if and only if it (i) contains a statement that the Eligible
Executive elects to defer amounts in hundred dollar increments, but not more
than 50% of the compensation due him for service as Executive; and/or (ii)
contains a statement that the Eligible Executive elects to defer a stated
percentage of his EBBIT Bonus Plan Award; or (iii) contains a statement that the
Eligible Executive only elects to receive the Company Contributions;
-3-
<PAGE>
(b) apply to such calendar year during all, or part, of which the
Participant remains eligible, until the calendar year following the calendar
year in which the Participant files with the Committee a revised Deferred
Compensation Election Form or a written revocation of the election within such
calendar year; in the event a Participant files a written revocation within such
Plan Year, both the Deferred Compensation Amount and Company Contribution being
contributed on behalf of any such Participant shall automatically cease and the
Participant shall not be eligible to participate in the Plan for the remainder
of such calendar year.
(c) with respect to each such calendar year to which it applies pursuant to
(b) above, be irrevocable as to all matters described in (a) above, upon
commencement of each such calendar year, subject only to modification by the
Committee in the event of severe financial hardship as provided in Section 3
below.
(d) specify that the Participant's Deferred Compensation shall be paid to
him in a lump sum or the number of monthly installments (60, 90 or 120) over
which such Deferred Compensation shall be paid pursuant to Section 3(a) below;
(e) in addition to the Participant's voluntary Deferred Compensation, the
Company may contribute an amount, expressed as a percentage of the Participant's
base salary before any other deferrals. The Company Contribution will be
established at the
-4-
<PAGE>
discretion of the Board and may be changed with respect to any Participant on a
prospective basis at any time during the calendar year.
Upon receipt of an Eligible Executive's Deferred Compensation Election
Form, the Committee shall establish an individual Deferred Compensation Account
and Company Contribution Account for such Eligible Executive and each month
shall credit to his account the amount of such compensation that Executive has
elected to be deferred which would have otherwise been payable to such Executive
for the calendar year to which the election applies and the amount of the
Company Contribution with respect to such Participant for any such month.
Section 3. Payment of Deferred Compensation and Method of Computation
----------------------------------------------------------
(a) Payments of Deferred Compensation (except as provided in the case of
severe financial hardship under Section 3(c)) shall commence on the first day of
the second month following termination of the Participant's status as an
employee due to resignation, disability, retirement, death or otherwise.
Payment shall be made in a lump sum or in 60, 90 or 120 equal monthly
installments as previously elected by the Participant; notwithstanding any
election by the Participant, in the case of resignation, payments may, at the
Committee's option, be made in 60 equal monthly installments to the Participant.
-5-
<PAGE>
In the event that the Participant, his spouse, or any minor child of
the Participant (or, if applicable, the beneficiary) incurs a severe financial
hardship, the Committee, in its absolute discretion, may revise the payment
schedule, notwithstanding any election by the Participant. Such severe
financial hardship shall include, but not be limited to, any tuition or other
education expenses, hospitalization, or other medical expense, mortgage payment,
clothing, food or support payments or any other expenses which, in the
Committee's discretion, would result in financial ruin to the Participant.
(b) The amounts to be paid to a Participant (or beneficiary or personal
representative) pursuant to Section 3(a) hereof shall be computed and paid in
accordance with the following procedures (subject only to modification by the
Committee in the event of severe hardship).
Interest will accrue, on a compounded basis, at the "Average Cost of
Funds" to the Company, on the last day of each calendar quarter, with respect to
the Deferred Compensation Account and the Company Contribution Account of each
Participant. During the payout period, interest will accrue on the declining
balance of the Deferred Compensation Account and the Company Contribution
Account of each Participant on the last day of each calendar quarter at the
"Average Cost of Funds" to the Company
-6-
<PAGE>
and will be distributed in the form of cash as soon as practical thereafter on a
quarterly basis.
(c) If a Participant's Deferred Compensation Account and Company
Contribution Account, combined, is $10,000, or less, on the date distribution is
scheduled to commence under Section 3(a), such account balance may be
distributed in a lump sum, at the discretion of the Committee, notwithstanding
any election by the Participant.
Section 4. Death of Participant
--------------------
In the event of the death of a Participant, all amounts, if any, from his
Deferred Compensation Account and Company Contribution Account shall be paid to
such beneficiary as the Participant has designated in writing on the latest
valid Election Form of the Participant, or in the absence of such designation,
to his personal representative. Payment of the amount deferred by the
Participant or contributed by the Company for any calendar year shall be made in
accordance with the executed Deferred Compensation Election Form for any such
calendar year.
Section 5. Administration of the Plan - Committee
--------------------------------------
This Plan shall be administered by the Compensation Committee of the Board.
The Committee shall act by vote or by written consent of a majority of its
members. The Plan may be amended, modified, or terminated by the Board except
that no such
-7-
<PAGE>
action shall (without the consent of the Participant, or as applicable, his
beneficiary, or personal representative) alter the rights of a Participant with
respect to Compensation earned and deferred, including any increase thereof
pursuant to this Plan, or any Contributed Amount by the Company, prior to the
date of such amendment, modification, or termination.
Section 6. Participant's Rights Unsecured
------------------------------
The right of a Participant to receive any distribution hereunder shall be
an unsecured claim against the general assets of the Company. Assets, if any,
which may be set aside by the Company for accounting purposes shall not in any
way be held in trust for, or be subject to, any prior claim by a Participant,
his beneficiary, or personal representative. Neither the Company nor the
Committee shall have any duty whatsoever to invest any amounts credited to any
Deferred Compensation Account or Company Contribution Account.
Section 7. Forfeiture and Reduction
------------------------
Notwithstanding anything contained herein to the contrary, if a Participant
terminates employment prior to the fifth anniversary of his Date of Hire with
the Company for any reason other than death or disability, his Company
Contribution Account, including Accrued Interest attributable thereto, will be
forfeited in its entirety. If a Participant terminates
-8-
<PAGE>
employment for any reason after attaining age 60, his Company Contribution
Account will not be subject to forfeiture.
If a Participant is indebted to the Company at the time of termination of
employment, then the amount payable under this Plan to the Participant shall be
reduced by the debt of the Participant, in which case the debt shall be deemed
satisfied.
Section 8. Alienation
----------
No amount, the payment of which has been deferred by the Participant or
contributed by the Company under this Plan, shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, levy
or charge, and any attempt to alienate, sell, transfer, assign, pledge,
encumber, levy or charge the same shall be void; nor shall any such amount be in
any manner liable for or subject to the debts, contracts, liabilities,
engagements or torts of the person entitled to such benefit.
Section 9. Employment Contract
-------------------
A Participant's participation in the Plan shall not constitute an
employment contract, and the Company shall have the right at any time to
terminate his employment, with or without cause, to reduce his cash compensation
or to take such other action in connection with his employment as the Company
deems appropriate without regard to this Plan, including the right to reduce or
terminate Company Contributions on his behalf at any
-9-
<PAGE>
time. The Company shall be authorized to withhold any federal income tax from
any deferred compensation payment, as required by law.
Section 10. Consent
-------
Each Participant shall be deemed conclusively to have accepted and
consented to all terms of this Plan, and all actions or decisions made by the
Company, the Board, or the Committee with regard to the Plan. Such terms and
conditions apply to the beneficiaries and personal representative of each
Participant.
This _____ day of ________________________, 1991.
THE BIBB COMPANY
By: /s/ Alan V. Davis
------------------------
Chairman
Compensation Committee
Attest: /s/ Lowell Belk
--------------------
Vice-President
and Secretary
-10-
