IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF SOUTH CAROLINA
In re: ) CHAPTER 11
)
MARTIN COLOR-FI INC., )
a South Carolina corporation, ) Case No. 98-10145-W
)
Debtor. )
)
In re: ) CHAPTER 11
)
Star Fibers Corp., )
a South Carolina corporation, ) Case No. 98-10144-W
)
Debtor. )
AMENDED
PLAN OF REORGANIZATION
Filed by the Debtor-in-Possession
on May 17, 2000
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Table of Contents
Page
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Article I History and Other General Information Relating to the Proposed
Plan of Reorganization .................................... ...... 2
Article II General Provisions for Treatment of Claims and Interests ............. 13
Article III Classification of Creditors and Parties in Interest and the Provisions
of Treatment of Each Class and Party in Interest Dealt With
By the Plan ............................................... ...... 27
Article IV Feasibility of Plan of Reorganization ................................ 39
Article V Status of the Debtors After Confirmation ............................. 39
Article VI Treatment of Executory Contracts and Unexpired Leases ................ 40
Article VII Jurisdiction ......................................................... 42
Article VIII Effects of Plan Confirmation ......................................... 45
Article IX Post-Confirmation Acts ............................................... 54
Article X "Cram Down" For Impaired Creditors Not Accepting The Plan ............ 55
Article XI Miscellaneous Provisions ............................................. 55
Article XII Discharge of the Debtors ............................................. 58
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AMENDED PLAN OF REORGANIZATION
The Debtors-in-Possession, Martin Color-Fi, Inc. and Star Fibers Corp.
(collectively the "Debtors" or separately "Martin" and "Star"), propose the
following Amended Plan of Reorganization ("Plan") pursuant to Chapter 11 of the
U. S. Bankruptcy Code.
ARTICLE I
History and Other General Considerations Relating
to the Plan of Reorganization
1. Background. The history and background of the Debtors are fully provided
in the Debtors' Disclosure Statement and its attached exhibits filed March 24,
2000. The information in the Disclosure Statement is incorporated herein by
reference.
2. Financial Condition of the Debtors. The data providing the reader with
the current and historical financial condition of the Debtors are located in the
Disclosure Statement.
3. The Debtors' Reorganization Cases under Chapter 11. The information
found in the Disclosure Statement provides adequate history as to the Debtors'
reorganization cases.
4. Definitions. The following words, terms and definitions shall be used
and apply exclusively for this Plan and the Disclosure Statement:
A. Defined Terms. Any term used in the Plan that is not defined in the
Plan, either in this Article I (Definitions) or elsewhere, or in the Disclosure
Statement with its attached Exhibits, particularly the DS&P Agreement and Plan
of Merger, but that is used in the Bankruptcy Code, the Bankruptcy Rules or the
Local Bankruptcy Rules, has the meaning assigned to that term in the Bankruptcy
Code, the Bankruptcy Rules or the Local Bankruptcy Rules, as the case may be.
1. "Acceptance" A specific class of claims of creditors has accepted a plan
when such plan has been accepted by those voting creditors in that class that
hold at least two-thirds (2/3) in amount ($'s) and more than one-half (1/2) in
number (greater than 50%) of the voting individual allowed claims of that class
of creditors. A class of claims of interest holders has accepted a plan if such
plan has been accepted by holders of such interest that hold at least two-thirds
(2/3) in the amount of the allowed interest (i.e., number of shares held by
shareholders) that have voted in confirmation of such plan. It is important to
note that computation in the confirmation voting process is based only upon the
total amount of claims or interest holders actually voting rather than on claims
or interest holders proven and allowed. Notwithstanding any other provision of
this section, a class of claims that is unimpaired under this Plan is deemed by
law to have accepted this Plan, and solicitation of acceptances with respect to
such class is not otherwise required.
2. "Acquisition" has the same meaning set forth in the preface of the DS&P
Agreement and Plan of Merger.
3. "Assumed Liabilities" means trade payables incurred after filing of the
Cases in the Ordinary Course of Business and accrued as of the Closing Date,
severance obligations that are due and payable on or prior to the Closing Date
under Martin's Severance Policy for Salaried Employees and any severance
obligations under those certain Executive Severance Agreements that become due
and payable to Stephen A. Zagorski, Greg W. Anderson, Wiley H. Turner, Curtis R.
Wright, Scott Shipes, Jennifer P. Summer or Wilbur L. Ballard, cure payments
under assumed contracts in the amounts set forth on Exhibit C to the DS&P
Agreement and Plan of Merger, employee's salaries and commissions (and all
associated Tax obligations associated therewith) incurred in the Ordinary Course
of Business and accrued as of the Closing Date, unpaid fees and expenses
associated with the New Debt Financing owed by Martin, including, without
limitation all legal fees of the Lender's counsel, the fees and expenses of DS&P
and Acquisition (which fees and expenses of DS&P and Acquisition shall not
exceed $500,000), including without limitation legal fees incurred in connection
with the transactions contemplated in the DS&P Agreement and Plan of Merger,
accrued Tax Liabilities for the period prior to the Closing, and those taxes set
forth on Sections 4(h), 4(i), and 4(k) of the Disclosure Schedule of the DS&P
Agreement and Plan of Merger (to the extent not discharged by the bankruptcy).
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4. "Auction Hearing" means the hearing which the Debtors shall request be
held by the Bankruptcy Court for the purpose of considering any overbids to the
DS&P Agreement and Plan of Merger, as set forth in Section 5(i)(B) of the DS&P
Agreement and Plan of Merger.
5. "Availability Reserve" has the meaning set forth in Section 2(e)(iii) of
the DS&P Agreement and Plan of Merger .
6. "Bank" means Bank of America, N.A., a secured creditor of the Debtors.
7. "Bankruptcy Code" means 11 U.S.C. Sections 101 et seq.
8. "Bankruptcy Court" or "Court" means the United States Bankruptcy Court
for the District of South Carolina.
9. "Bar Date" means the date by which all Priority and Administrative
Claims and all other Claims must be filed, as contemplated in Section 7(a) of
the DS&P Agreement and Plan of Merger and in this Plan.
10. "Capital Contribution" has the meaning set forth in Section 2(e)(i) of
the DS&P Agreement and Plan of Merger.
11. "Cases" shall mean these two cases under Chapter 11 of the Bankruptcy
Code, which commenced as voluntary petitions in this Court on November 16, 1998
at Case Nos. 98-10145-W for Martin and 98-10144-W for Star.
12. "Cash on Hand" shall refer to the cash available in the Debtors'
accounts, on the Closing Date, and which is in the hands of the Debtors, and has
been derived from the total operations of the Debtors, but which does not
include any cash proceeds from the Capital Contribution or New Debt Financing.
13. "Cash Payments" made pursuant to the Plan will be in U. S. Dollars.
Cash Payments in an amount exceeding $1,000,000 may be made by wire transfer
from a domestic bank or by check drawn on good funds at the discretion of the
Plan Administrator. At the option of the Plan Administrator, Cash Payments of
foreign creditors may be made, in such funds and by such means as are necessary
or customary in a particular foreign jurisdiction. Cash Payments made pursuant
to the Plan shall be null and void if not negotiated within 90 days of the date
of the issuance thereof. Requests for reissuance of any check shall be made
directly to the Plan Administrator.
14. "Chapter 7" shall mean a hypothetical case which is administered under
11 U.S.C. Sections 701 et seq. wherein an estate having assets and liabilities
identical to the Debtors is liquidated, and the proceeds distributed in
accordance with the Bankruptcy Code.
15. "Chapter 11" shall mean a case being administered under 11 U.S.C.
Sections 1101 et seq., for the reorganization of the indebtedness of the
Debtors, and assuming continued operation of the manufacturing operations as
more fully described in the Disclosure Statement.
16. "Claims" shall mean any right or claim to a right to receive payment of
monies from the Debtors or right to an equity interest in the Debtors held by
any party, as more fully described in 11 U.S.C. ss.101(5).
a) "A Claim of Interest" shall mean any claim against the Debtors for
equity ownership, whether actual, or contingent.
b) "Allowed Claim" shall mean each creditor's Claim or Claim of Interest
whose validity is accepted by the Debtors for payment, or if challenged by the
Debtors or others by the filing of an objection to such Claim, a Claim which is
ultimately proven by that claimant and approved by the Court after notice. All
claims to which an objection has been filed must file a proof of Claim with the
clerk of court for their Claim to be allowed regardless of whether the Debtors'
schedules show the Claim as undisputed. Some Claims by law can be approved only
by the Court for payment, i.e., claims of professionals. The Debtors reserve the
right to object to Claims regardless of confirmation of the Plan and Claims
treated in the Plan will be paid only to the extent they are allowed by the
Court, except as provided herein.
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c) "Secured Claim" shall mean each Claim completely or partially secured by
real estate mortgages, security agreements, assignment agreements, consignment
agreements, chattel mortgages, recorded lease-purchase agreements, liens or any
other legal encumbrance which is entitled to secured status under Title 36 of
the Code of Laws of South Carolina (UCC provisions) or South Carolina law, or
other applicable law and as set forth in ss.506 of the Bankruptcy Code.
d) "Priority and Administrative Claims" shall mean all claims entitled to
priority status under 11 U.S.C. Section 507 and Section 364 or other specific
provisions of the Bankruptcy Code. These Claims include, but are not limited to,
all costs and expenses incurred during the reorganization proceeding; all wages
and other employee benefits allowed priority status which were owing by the
Debtors at the time of filing up to $4,300 per claimant; all post-petition wage
Claims due at confirmation; and certain taxes owing to the United States, and
any individual State or local taxing authority; all post-petition debts incurred
and unpaid since the commencement of this Case; and all other statutory costs or
fees assessed or assessable by the Court, and any Claims given priority status
during this proceeding by specific order of the Court.
e) "Unsecured Claims" shall mean all claims against the Debtors other than
Secured Claims, Priority and Administrative Claims, or Claims of Interest.
17. "Class of Claims" shall mean all types of Claims or interests (i.e.,
secured, priority, unsecured or interests) which are substantially identical in
kind or nature and are grouped together without any unfair discrimination or
treatment for payment by this Plan.
a) "Impaired Class" shall mean a class of Claims whose legal, equitable, or
contractual rights are modified or compromised by the Plan.
b) "Unimpaired Class" shall mean a class of Claims whose rights are not
affected by this Plan, or which receives under this Plan full payment of their
filed or allowed Claims on the Effective Date. Unimpaired classes are deemed to
have accepted this Plan by specific provision of the Bankruptcy Code and
solicitation of acceptances with respect to such class from the holders of
Claims or interest of such class is not required.
18. "Closing" has the meaning set forth in Section 2(b) of the DS&P
Agreement and Plan of Merger.
19. "Closing Basis" has the meaning set forth in Section 7(b)(x) of the
DS&P Agreement and Plan of Merger.
20. "Closing Date" has the meaning set forth in Section 2(b) of the DS&P
Agreement and Plan of Merger.
21. "Code" means the Internal Revenue Code of 1986, as amended.
22. "Competing Transaction" has the meaning set forth in Section 5(g) of
the DS&P Agreement and Plan of Merger, as modified by this Plan.
23. "Confirmation" of this Plan means when the signed Order Confirming Plan
is filed by the Court to implement the proposed Plan, after the Court has found
that the Plan: (1) has been accepted by the requisite number of creditors and
parties in interest eligible to vote therefor, (2) is feasible, (3) is fair and
equitable, (4) does not unfairly discriminate, and (5) meets all of the other
requirements of 11 U.S.C. Section 1123, Section 1126 and Section 1129, and the
Order Confirming Plan is entered.
24. "Confirmation Order" means that certain entered Final Order which
confirms the Plan. The Confirmation Order shall be entered at or after the
Confirmation Hearing which shall be and mean the hearing at which the Plan is
actually confirmed.
25. "Debtors" shall mean Martin Color-Fi, Inc. and Star Fibers Corp.
26. "Designated Professionals" means those attorneys, accountants,
financial advisors, investment banker, and any other professional employed by
the Debtors and appointed by the Bankruptcy Court.
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27. "Dimeling Terms" means those terms used in the DS&P Agreement and Plan
of Merger and defined in paragraph 1 therein.
28. "Disclosure Schedule" has the meaning set forth in Section 4 of the
DS&P Agreement and Plan of Merger and is not to be confused with the Disclosure
Statement on file with the Bankruptcy Court in these Chapter 11 cases.
29. "DS&P" has the same meaning set forth in the preface of the DS&P
Agreement and Plan of Merger.
30. "DS&P Agreement and Plan of Merger" shall refer to that agreement by
and between Dimeling, Schreiber & Park and MCF Acquisition, Inc. and Martin
which is attached as an Exhibit to the Disclosure Statement and incorporated by
reference into this Plan.
31. "Effective Date" shall be the Closing Date or the date of closing of
any Competing Transaction approved by the Bankruptcy Court.
32. "Effective Time" has the meaning set forth in Section 2(d)(i) of the
DS&P Agreement and Plan of Merger.
33. "Executory Contracts" shall mean all contracts or agreements not
completed and to be performed or satisfied by the parties in the future.
a) Realty Leases shall mean all valid, enforceable leases of real estate
between the Debtors and other parties.
b) Personalty Leases shall mean all leases between the Debtors and third
parties for the use of any and all personal property.
34. "Exhibit" shall refer to those exhibits attached to the Disclosure
Statement and this Plan.
35. "Final Closing Date Availability" has the meaning set forth in Section
2(e)(iii) of the DS&P Agreement and Plan of Merger.
36. "Final Consummation" shall refer to the date and time at which the
execution of all provisions of the Plan, appropriate requirements of the
Bankruptcy Code, and applicable supplemental orders issued by the Bankruptcy
Court have been fully complied with and accomplished.
37. "Final Order" means any entered Order that is not subject to a stay by
a court of competent jurisdiction and for which the period to appeal has
elapsed.
38. "Final Purchase Price" means an amount equal to the sum of (a) the
Capital Contribution and (b) the Final Closing Date Availability less the
Availability Reserve.
39. "Financial Statement" has the meaning set forth in Section 4(g) of the
DS&P Agreement and Plan of Merger.
40. "GAAP" means the United States generally accepted accounting principles
as in effect from time to time.
41. "GECC" means General Electric Capital Corporation.
42. "Initial Overbid" has the meaning set forth in Article II, page 26, of
this Plan.
43. "Lender" means the lender under the New Debt Financing.
44. "Liquidating Trust" means that certain trust set up pursuant to the
Plan where certain assets and liabilities of the Debtors are transferred prior
to the Merger. This Trust may be separated into Liquidating Trust A and B after
written notice by a beneficiary at or prior to the Effective Date.
45. "Litigating Trust" means that certain trust set up pursuant to the Plan
where certain causes of action of the Debtors are transferred prior to the
merger.
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46. "MCF Acquisition, Inc." shall have the meaning set forth in the preface
of the DS&P Agreement and Plan of Merger, c.f. "Acquisition" as a defined term.
47. "Martin" has the meaning set forth in the preface of the DS&P Agreement
and Plan of Merger.
48. "Martin Share" means any equity interest in Martin including but not
limited to any share of the common stock of Martin, no par value, or any
preferred stock, or any options or warrants.
49. "Merger" has the meaning set forth in Section 2(a) of the DS&P
Agreement and Plan of Merger.
50. "New Debt Financing" has the meaning set forth in Section 2(e)(i) of
the DS&P Agreement and Plan of Merger.
51. "Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
52. "OUCC" shall mean the Official Unsecured Creditors' Committee in Case
No. 98-10145-W, as appointed by the United States Trustee, and as modified by
the United States Trustee from time to time.
53. "Parties" has the meaning set forth in the preface of the DS&P
Agreement and Plan of Merger.
54. "Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
55. "Plan" shall mean this Plan of Reorganization of the Debtors under
Chapter 11, filed with the Court on March 24, 2000, and any amendments filed
prior to or at the confirmation hearing.
56. "Plan Administrator" means the person appointed by the Bankruptcy Court
to oversee the distribution of the Preliminary Purchase Price, the Final
Purchase Price and the Tax Liability Reserve pursuant to the Plan.
57. "Preliminary Purchase Price" has the meaning set forth in Section
2(e)(iii) of the DS&P Agreement and Plan of Merger.
58. "Purchase Price Adjustment Reserve" shall be that $2,500,000 sum as
shown in paragraph 2(f)(ii) of the DS&P Agreement and Plan of Merger.
59. "Qualified Bidder" shall mean any party who has made a Competing
Transaction that meets the requirements of the Bidding Procedures of the Consent
Order Regarding Debtors' Motion For Order Approving Bidding Procedures And
Reimbursement Fee.
60. "Reimbursement Fee" has the meaning set forth in Section 5(g) of the
DS&P Agreement and Plan of Merger.
61. "Reorganized Debtor" or "Surviving Corporation" shall have the same
meaning as "Surviving Corporation", see definition no. 65 below.
62. "Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest of any kind.
63. "Subsidiary" shall mean Star Fibers Corp. and Buchanan Industries, Inc.
64. "Substantial Consummation" shall be after the Effective Date and shall
refer to that date and time on which the transfer of all or substantially all of
the property proposed by the Plan to be transferred has been achieved; the
assumption by the Surviving Corporation under the Plan of the business or of the
management of all or substantially all of the property dealt with by the Plan
has been achieved; and, finally, the commencement of the distribution of some
payments under the Plan has begun.
65. "Surviving Corporation" has the meaning set forth in Section 2(a) of
the DS&P Agreement and Plan of Merger.
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66. "Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
67. "Tax Liability" has the meaning set forth in Section 7(b)(x) of the
DS&P Agreement and Plan of Merger.
68. "Tax Liability Reserve" means (a) $1,000,000, or (b) if on or prior to
Closing, an audit is commenced by any taxing authority, a Tax or adjustment is
asserted by any taxing authority, or an error is discovered relating to any Tax
Return that was or should have been filed by Martin for which the statute of
limitations is not closed (other than the sales tax liability assessed against
Buchanan Industries, Inc. in Florida and Nevada, in the specific amount
disclosed on Section 4(k) of the Disclosure Schedules to the DS&P Agreement and
Plan of Merger), or the Closing Basis is less than $32,188,276, the Tax
Liability Reserve shall be increased from $1,000,000 by the sum of (i) the
maximum of Tax that Surviving Corporation could owe as a result thereof, and
(ii) Forty (40%) percent of the amount by which $32,188,276 exceeds Closing
Basis, provided that the amount of the increase shall be capped at $750,000, so
that the Tax Liability Reserve shall never exceed $1,750,000.
69. "Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
70. "Trust Assets" has the meaning set forth in Section 5(i) of the DS&P
Agreement and Plan of Merger.
71. "401(K) Plan" means the Martin Color-Fi, Inc. 401(K) Profit Sharing
Plan and Trust.
NOTE: The defining of the various parties in interest and claimants against
this estate in no way imputes any relative priority among them nor is it to be
construed to validate or approve any of their claims.
B. Rules of Interpretation.
For purposes of the Plan: (a) whenever it appears appropriate from the
context, each term, whether stated in the singular or the plural, shall include
both the singular and the plural; (b) any reference in the Plan to a contract,
instrument, release or other agreement or documents being in a particular form
or on particular terms and conditions means that such document shall be
substantially in such form or substantially on such terms and conditions;
provided, however, that any change to such form, terms, or conditions which is
material to a party or third party beneficiaries to such document shall not be
made without such party's or third party beneficiaries' consent; (c) any
reference in the Plan to an existing document or exhibit filed or to be filed
means such document or exhibit, as it may have been or (to the extent otherwise
permitted, hereafter) may be amended, modified or supplemented from time to
time; (d) unless otherwise specified in a particular reference, all references
in the Plan to paragraphs, sections, articles and Exhibits are references to
paragraphs, sections, articles and Exhibits of or to the Plan; (e) the words
"herein", "hereof", "hereto", "hereunder" and others of similar import refer to
the Plan in its entirety rather than to only a particular portion of the Plan;
(f) captions and headings to Articles and paragraphs are inserted for
convenience of reference only and are not intended to be a part of or to affect
the interpretations of the Plan; (g) the rules of construction set forth in
Section 102 of the Bankruptcy Code shall apply; and (h) all exhibits to the Plan
and Disclosure Statement are incorporated into the Plan, and shall be deemed to
be included in the Plan, provided that they are filed no later than the date of
the hearing at which the Bankruptcy Court considers confirmation of the Plan.
C. Time Periods.
In computing any period of time prescribed or allowed by the Plan, the
provisions of Bankruptcy Rule 9006 shall apply.
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ARTICLE II
General Provisions For Treatment of Claims And Interests
A. Classification of Claims.
1. Administrative Claims.
a. General.
Subject to certain additional requirements for professionals and certain
other entities set forth below, the Plan Administrator shall pay to each holder
of an Allowed Priority and Administrative Claim that are not Assumed
Liabilities, on account of its Priority and Administrative Claim and in full
satisfaction thereof, cash equal to the amount of such Allowed Priority and
Administrative Claim, unless the holder and the Debtors or Surviving Corporation
agree or shall have agreed to other treatment of such Claim, or an order of the
Bankruptcy Court provides for other terms.
b. Payment of Statutory Fees.
On or before the Effective Date, all fees payable to the United States
Trustee pursuant to 28 U.S.C. ss.1930, as determined by the Bankruptcy Court at
the confirmation hearing, shall be paid, by the Debtors. After the Effective
Date, such fees will be paid by the Surviving Corporation for the balance of
2000. Debtor shall move to close the case before the end of December 2000. Any
U. S. Trustee fees for any quarter other than fourth quarter of 2000 shall be
paid by the Plan Administrator.
c. Treatment of Priority Tax Claims.
Unless otherwise agreed to by the Debtors and a Holder of a Priority Tax
Claim, each Holder of an Allowed Priority Tax Claim shall receive (i) Cash equal
to the unpaid portion of such Allowed Priority Tax Claim on the later of (a) the
Effective Date and (b) the date on which such Claim becomes an Allowed Priority
Tax Claim; or (ii) payment at such time as specified under applicable laws.
d. Bar Date for All Claims.
(1) General Provisions.
On April 20, 2000, the Court entered its Order Reopening and Establishing
Bar Date on all Claims, a copy of which is attached to the Disclosure Statement.
Except as provided below, all Claims, including pre-petition Unsecured Claims
and Priority and Administrative Claims must be filed with the Bankruptcy Court
and served on counsel for the Debtors and Surviving Corporation no later than
May 20, 2000. Creditors that do not file Claims on or before May 20, 2000 shall
be forever barred from asserting such Claims against the Debtors or Surviving
Corporation, or any of their respective properties.
(2) Professionals.
All professionals or other Persons requesting compensation or reimbursement
of expenses pursuant to any of Sections 327, 328, 330, 331, 503(b) and 1103 of
the Bankruptcy Code for services rendered on or before the Effective Date
(including, without limitation, any compensation requested by any professional
or any other Person for making a substantial contribution in the Cases) shall
file with the Bankruptcy Court and serve on Surviving Corporation, counsel for
Surviving Corporation, counsel for Bank, OUCC, and the U. S. Trustee, an
application for final allowance of compensation and reimbursement of expenses no
later than forty-five (45) days after the Effective Date.
(3) Ordinary Course Liabilities.
Holders of Priority and Administrative Claims which are not Assumed
Liabilities shall file a request for payment of such Claims. Such Priority and
Administrative Claims shall be assumed and paid by the Plan Administrator
pursuant to the terms and conditions of the particular transaction giving rise
to such Priority and Administrative Claim. The Plan Administrator and other
parties shall have the right to object to such Claims. If an objection is filed,
the Bankruptcy Court shall determine the amount and validity of the Claim.
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(4) Tax Claims.
All requests for payment of post-petition Tax Claims, for which no bar date
has otherwise been previously established, must be filed upon the later of
fifteen days before the Confirmation Hearing; and 120 days following the filing
of the Tax Return for such Taxes for such tax year or period with the applicable
governmental unit. Any holder of any post-petition Tax Claim that is required to
file a request for payment of such taxes and that does not file such a Claim by
the applicable bar date shall be forever barred from asserting any such
post-petition Tax Claim against any of the Debtors, Surviving Corporation, Plan
Administrator, or any of their respective properties.
B. Voting Instructions.
Each holder of an Allowed Claim or an Allowed Interest entitled to vote on
the Plan will receive a Ballot. The Ballot contains two boxes, one indicating
acceptance of the Plan and the other indicating rejection of the Plan. Holders
of Allowed Claims or Allowed Interests who elect to vote on the Plan must mark
one or the other box pursuant to the instructions contained on the Ballot. Any
executed Ballot that does not indicate acceptance or rejection of the Plan will
be considered a non-vote and will not be counted as an acceptance or rejection
of the Plan.
C. Voting Deadline and Extensions.
Ballots must be filed with the Court and received by the Debtors at their
address set forth on the applicable Ballot on or before , 2000 (the "Voting
Deadline"). To be counted for purposes of voting on the Plan, all of the
information requested on the applicable Ballot must be provided. The Debtors
reserve the right, in their sole discretion to seek to extend the Voting
Deadline, in which case the term "Voting Deadline" shall mean the latest date on
which a Ballot will be accepted.
D. Confirmability of Plan and Cramdown. In the event at least one Impaired
Class of Claims votes to accept the Plan (and at least one Impaired Class either
votes to reject the Plan or is deemed to have rejected the Plan), the Debtors
reserve the right to petition the Bankruptcy Court to confirm the Plan under the
cramdown provisions of Section 1129 the Bankruptcy Code.
E. General Outline of Plan of Reorganization.
On November 16, 1998, Martin filed its Chapter 11 petition. On that same
date, the wholly owned subsidiaries of Martin, namely Buchanan Industries, Inc.
("Buchanan") and Star, each filed its own petition for Chapter 11 relief. A
description of the reasons for the filing of the bankruptcies and a history of
the Debtors is set forth in the Disclosure Statement, along with schedules
showing a fuller description of the assets of the Debtors.
A brief summary of the assets of Martin follows:
1. Certain improved and unimproved real property, with structures thereon,
as set forth in the Disclosure Statement, including plants in Sumter, Laurens
and Trenton, South Carolina, unimproved tracts of 18 and 34 acres in Trenton,
South Carolina and a condominium on Edisto Island, South Carolina.
2. Certain equipment as set forth in the Disclosure Statement, including
manufacturing and other equipment in Dalton, Georgia and Sumter, Laurens, and
Trenton, South Carolina, and office equipment in Sumter, Laurens and Edgefield,
South Carolina.
3. Certain inventory located in buildings owned by Martin or leased as set
forth in the Disclosure Statement, and located in or near the plants in Sumter,
Laurens, and Trenton, South Carolina and in Dalton, Georgia.
4. Certain rights as lessor or lessee as shown in the Disclosure Statement.
5. Accounts receivable owed to Martin.
6. Cash on Hand.
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7. Causes of action for preferences or fraudulent conveyances.
8. Stock in Star and Buchanan.
The assets of Star are as follows:
The real property and equipment set forth in the Disclosure Statement at
217 Star Road in Edgefield, South Carolina.
All assets of Star will be transferred to the Liquidating Trust, described
below.
All assets of Buchanan have been conveyed via previously approved orders
approving sale and an Order Confirming Plan of Reorganization in the Buchanan
case. The stock of Buchanan and Star will be transferred to Liquidating Trust,
described below.
Debtors have determined that certain of their assets are essential for the
continued operation of the Debtors' business. Certain assets are believed by the
Debtors to be less essential to the continued operation of the Debtors' core
operations. The Disclosure Statement contains a fuller description of Debtors'
reasons for this bifurcation of assets. The non-essential assets in which Bank
has a first priority perfected secured claim, are being transferred to a
Liquidating Trust, where Bank will retain its secured lien position.
The liabilities of Martin consist of a secured claim owed to Bank on all
Martin assets, Priority and Administrative Claims owed to Designated
Professionals and counsel for the OUCC, and to tax authorities, potential lease
rejection Claims, Unsecured Claims owed to Martin creditors, certain Unsecured
Claims filed by Buchanan creditors in the Martin case, potential causes of
action against Martin, and an undersecured claim owed to Bank. More detailed
information on claims treatment is shown below in Article III of this Plan.
Bank has a lien on all of Star's assets.
Bank had a lien on all assets of Buchanan, all of which have been sold
pursuant to Bankruptcy Court order in the Buchanan case. Bank has received the
bulk of the proceeds from the Buchanan sales, and other payments have been made
pursuant to Bankruptcy Court order in the Buchanan case.
Certain creditors of Buchanan have filed proofs of claim in the Martin
case. Martin has filed objections. A copy of the Objection to Claim is attached
to the Disclosure Statement. For notice purposes, all known creditors of Martin,
Star, and Buchanan will receive notice of the Plan in the Martin and Star cases,
and it is Martin's and Star's intent to dispose of all claims, actual and
potential, against Martin and Star through this Plan.
THE LIQUIDATING TRUST
Debtors have determined that certain of their assets are not essential for
the future operations of the Surviving Corporation. Inventory which is difficult
to sell and real property and an equipment line which is not essential to
continued operations are those assets which will be conveyed pursuant to this
Plan to the Liquidating Trust. A copy of the Liquidating Trust Agreement is
attached to the Disclosure Statement. A comprehensive list of the assets placed
in the Liquidating Trust is attached as a schedule to the Liquidating Trust
itself. Because of their length, a copy of those schedules is not served as part
of the Plan, but is available to any interested party upon written request and
at its expense. In general, the Liquidating Trust assets consist of land and a
building located at 217 Star Road, Edgefield, South Carolina, which is an asset
of Star; machinery and equipment located at 217 Star Road, Edgefield, South
Carolina, which are assets of Star; and inventory located in warehouse numbers
109, 209, 409, 809, and C09, which are assets of Martin; and finished goods in
warehouse 350, which are assets of Martin. These assets have a book value of
$8,813,882, although Debtors believe the fair market value to be substantially
less. The Liquidating Trust will also receive the stock of Buchanan and Star
which is owned by Martin. Under the terms of the Liquidating Trust and this
Plan, the conveyance to the Liquidating Trust conveys all right, title and
ownership of those assets to the Liquidating Trust subject only to the secured
claims of Bank, all expenses involved in disposing of those assets shall be paid
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by the Liquidating Trustee; and the Debtors and the Surviving Corporation shall
have no further liability after transfer of those assets to the Liquidating
Trustee. All assets transferred to the Liquidating Trust shall be transferred
subject to the secured claims of the Bank and the Bank's claims shall remain
perfected and first in priority. The beneficiary of the Liquidating Trust may
elect to have the Liquidating Trust separated into Liquidating Trust A and
Liquidating Trust B prior to or after the Effective Date and the division of the
assets between the Trusts shall be at the sole discretion of the beneficiary of
the Liquidating Trust. In the event of a division of the Liquidating Trust into
separate trusts, all references in the Plan to the Liquidating Trust shall be
deemed to be references to Liquidating Trust A and Liquidating Trust B. The
assets transferred to the Liquidating Trust or Trusts shall not revert to the
Surviving Corporation.
The Liquidating Trust shall be established immediately after Confirmation
and prior to the Closing and, after its establishment, it will be responsible
for all fees, costs and expenses of storing, securing, moving or handling the
Trust Assets, and will indemnify and hold harmless the Surviving Corporation
from all fees, costs and expenses for storing, securing, moving or handling such
Trust Assets, including without limitation, the cost of reasonable rent and
reimbursement of expenses to be paid to Surviving Corporation for the use of any
location or warehouse of Surviving Corporation to store, secure, move or handle
any of the Trust Assets following the Closing, provided Surviving Corporation
has been asked to perform such services and has agreed to do so. The Surviving
Corporation shall only be liable for any damages caused to such Trust Assets by
the Surviving Corporation's gross negligence, and only to the extent not covered
by customary insurance to be maintained by the Liquidating Trust for such Trust
Assets. Any expenses charged by the Surviving Corporation to the Liquidating
Trust shall not be in excess of the actual costs incurred by Surviving
Corporation.
THE LITIGATING TRUST
All causes of action based on alleged preference claims, fraudulent
conveyance and all other causes of action upon confirmation of this Plan, shall
be vested in a Litigating Trust, the beneficiaries of which shall be the OUCC
allowed unsecured claims in Class 7 and Bank. The net proceeds from collection
of these causes of action shall be paid 66.67% to Bank and 33.33% to the Allowed
Claims in Class 7 (excluding the Bank's Class 7 Claim). Prior to confirmation,
upon written request of the beneficiaries of the Litigating Trust and at the
expense of the Litigating Trust, counsel for the Debtors, may commence actions
to prosecute the causes of action. Immediately upon entry of the Confirmation
Order, and prior to the Closing, the Debtors will convey all alleged preference
claims, fraudulent conveyance claims, and all other causes of action, whether or
not litigation has been commenced, to the Litigating Trust. In the event that
the beneficiaries of the Litigating Trust do not ask counsel for the Debtors to
commence prosecution of these claims before the confirmation hearing, the
potential causes of action will be transferred to the Litigating Trust. Upon
entry of the Confirmation Order, any litigation, or unfiled causes of action
shall be assigned to the Trustee of the Litigating Trust. The Litigating Trust
documents will be drafted by the Debtors and the beneficiaries of the Trust, and
will be filed as an addendum to the Disclosure Statement.
THE DS&P AGREEMENT AND PLAN OF MERGER
The disposition of the balance of the Debtors' assets as shown in the
Debtors' Disclosure Statement, and as outlined above, shall be determined in
accordance with the terms of the DS&P Agreement and Plan of Merger. A copy of
the DS&P Agreement and Plan of Merger is attached to the Disclosure Statement
and incorporated into this Plan by reference. The DS&P Agreement and Plan of
Merger is a complex and complicated document.
Debtors seek Bankruptcy Court approval of the DS&P Agreement and Plan of
Merger and creditors and interest holders are directed to the DS&P Agreement and
Plan of Merger to review its precise terms. The following is only an
illustrative summary of the DS&P Agreement and Plan of Merger. Where the summary
herein differs from the terms of the DS&P Agreement and Plan of Merger, the
language of the DS&P Agreement and Plan of Merger controls. All remaining assets
of the Debtors not conveyed to the Litigating Trust and Liquidating Trust will
be dealt with as shown below.
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Martin has executed the DS&P Agreement and Plan of Merger with Acquisition.
Pursuant to the DS&P Agreement and Plan of Merger, on the Closing Date DS&P
shall capitalize Acquisition with $10,000,000 and the Debtors shall have
arranged for a revolving line of credit and term loan satisfactory to DS&P and
Acquisition. DS&P will acquire all of the stock of Surviving Corporation for
cash through a reverse subsidiary merger of Acquisition with and into Martin.
The separate corporate existence of Acquisition shall then cease and Surviving
Corporation shall be the corporation surviving the Merger. GECC has given the
Debtors a non-binding commitment letter to provide the requisite revolving line
of credit and term loan facility in the amount of approximately $14,000,000.
The DS&P Agreement and Plan of Merger and this Plan contemplate that the
Merger described above shall make available, for creditor recoveries, the
$10,000,000 which is the DS&P Capital Contribution to Acquisition together with
approximately $14,000,000 New Debt Financing contemplated through the GECC
credit facilities and Cash on Hand in Martin on the Effective Date. From this
the following should be subtracted:
- Availability Reserve which is the sum of $2,400,000 plus the Assumed
Liabilities which are estimated for purposes of this Plan at
$3,200,000. This sum therefore is estimated to aggregate approximately
to $5,600,000
- Tax Liability Reserve of up to $1,750,000 in the aggregate
- Purchase Price Adjustment Reserve of $2,500,000
- Monies, if any, needed to pay James Martin and the Trustee of the
401(K) Plan pursuant to Section 2(f)(ii) of the DS&P Agreement and
Plan of Merger.
Subject to certain conditions, some or all of the Tax Liability Reserves
and Purchase Price Adjustment Reserves may be retained by the Plan Administrator
and available for distribution to creditors. Bank retains its liens on the Tax
Liability Reserve and the Purchase Price Adjustment Reserve, subject to the
obligations of the Plan Administrator to make payments from such reserves
pursuant to the Plan Administrator Agreement, in which case the Bank lien shall
be automatically released.
Terms of the GECC commitment letter include:
- Secured by all assets of Surviving Corporation (i.e., cash, accounts
receivable, inventory and fixed assets)
- Interest rates:
- Line of Credit: LIBOR plus 2.25% (or Prime plus 0.75%)
- Term Loan: LIBOR plus 3.00% (or Prime plus 1.50%)
- Term: 3 years
- Amortization: term loan only - five years
The Debtors estimate that, through the aggregation of the DS&P Capital
Contribution and the contemplated GECC New Debt Financing, the funds available
to the Debtors will be approximately $24 million. Together with anticipated Cash
on Hand of $1 million, the Debtors estimate that there would then be
approximately $25 million of aggregate cash sources to fund the Plan at
confirmation, and there is anticipated to be a range of approximately $15 to $18
million available for pre-petition creditor payments under the Plan.
The DS&P Agreement and Plan of Merger and this Plan of Reorganization
contemplate that a portion of the Final Purchase Price not otherwise reserved in
the Tax Liability Reserve and/or set aside to pay costs and fees of the Plan
Administrator shall be used by the Plan Administrator in satisfaction of all
claims against the Debtors, and that Surviving Corporation shall have no
liability whatsoever, post-confirmation, for any claims other than the Assumed
Liabilities and the fourth quarter U. S. Trustee fees. Bank retains its liens on
the assets in the Liquidating and Litigating Trusts, and the $1,750,000 Tax
Liability Reserve and the $2,500,000 Purchase Price Adjustment Reserve, while in
the possession of the Plan Administrator until distributions from those reserves
are made.
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DS&P has not made any downpayment on the Capital Contribution, and there is
no "break-up" fee owed to DS&P in the event of an overbid or the transaction
otherwise failing to close. DS&P may be entitled to up to $500,000 in reimbursed
expenses.
Concurrently with payment to the Bank of the Preliminary Purchase Price at
the Closing, Bank will release its liens on the assets of the Debtors and
Surviving Corporation.
DS&P has imposed certain conditions to consummation, or pre-closing
covenants, which include:
- No Material Adverse Change, as shown on page 5 of the DS&P Agreement
and Plan of Merger;
- Receipt of New Debt Financing acceptable to DS&P;
- The Confirmation Order shall become a Final Order;
- Employment contracts with certain senior operating managers be reached
with Martin, which will include equity incentives. Management of the
Debtor will continue to receive salaries at the approximate amounts
paid during the bankruptcy and will be entitled to certain potential
bonuses if the Surviving Corporation achieves certain targets after
the Effective Date.
- If prior to Closing, (i) an audit is commenced by any taxing
authority, a Tax or adjustment is asserted by any taxing authority, or
an error is discovered relating to any Tax Return that was or should
have been filed by Martin for which the statute of limitations is not
closed and the maximum amount of Tax that Debtors or the Surviving
Corporation could owe as a result thereof is less than $750,000 or
(ii) the Closing Basis is $28,000,000 or more, then the
representations and warranties in Section 4(k) of the DS&P Agreement
and Plan of Merger shall be deemed not to have been breached, and the
Tax Liability Reserve will be increased as provided in the DS&P
Agreement and Plan of Merger.
The funds available for distributions are as shown above. Deductions shall
be made from the total infused DS&P Capital Contribution and New Debt Financing
for a) Tax Liability Reserves, b) certain incremental tax liability reserves, c)
certain purchase price adjustment reserves of $2,500,000, and held by the Plan
Administrator pending resolution of those adjustments, d) reserves to pay the
Plan Administrator in the amount of $25,000, and e) amounts, if any, needed to
pay James F. Martin and the Trustee of the 401(K) Plan pursuant to Section
2(f)(ii) of the DS&P Agreement and Plan of Merger. These funds shall be held in
an interest bearing account by a Plan Administrator to be appointed under the
terms of this Plan by the Bankruptcy Court. The initial Plan Administrator shall
be proposed by Debtors to the Court on or before the hearing to approve the
Disclosure Statement in these Cases. The compensation to be paid to the Plan
Administrator shall be approved by the Bankruptcy Court and paid from the
Preliminary Purchase Price and the Final Purchase Price.
The Plan Administrator shall distribute the Preliminary Purchase Price in
accordance with the Plan and the DS&P Agreement and Plan of Merger. The Plan
Administrator shall not have the authority to engage in active trade or
business. The Plan Administrator may retain such personnel or professionals
(including, without limitation, legal counsel, financial advisors or other
agents) as it deems necessary and compensate such professionals from the
Preliminary Purchase Price. The Surviving Corporation, Debtors, Bank, OUCC, and
the Plan Administrator shall enter into a Plan Administrator Agreement which
shall be approved by the Bankruptcy Court. The Plan Administrator shall have the
powers and duties specified in the Plan Administrator Agreement, which shall
fully incorporate all the terms and conditions relating to distributions made by
the Plan Administrator set forth in the DS&P Agreement and Plan of Merger and be
approved by the Bankruptcy Court and be satisfactory to DS&P. In addition, the
Availability Reserve in the amount of $2,400,000 and the Assumed Liabilities
will be set aside to be held in the Surviving Corporation, and not held by the
Plan Administrator.
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Payments for claims shall be made by the Plan Administrator pursuant to the
terms of this Plan, particularly Article III herein, and the Confirmation Order.
The Plan Administrator shall create a Tax Liability Reserve out of the
Preliminary Purchase Price and shall hold the funds in the Tax Liability Reserve
until all payments required to be made thereunder are made in accordance with
this Paragraph and DS&P Agreement & Plan of Merger. The following items must be
paid out of the Tax Liability Reserve: (A) all reasonable fees and expenses
associated with the determination of any Tax, including, but not limited to,
costs of preparation of any Tax Returns, determining any Tax liability or item
on a Tax Return, or defending any position taken on a Tax Return, (B) any unpaid
Tax liabilities shown on any Tax Return for all periods ending on or prior to
the Closing, (C) any other Taxes owed by the Surviving Corporation attributable
to actions of Martin or its subsidiaries on or prior to the Closing (including,
without limitation, any Taxes attributable to the transfer of the Trust Assets),
(D) any Taxes owed by the Surviving Corporation for any period after Closing as
a result of a breach of the representations in Sections 4(k) or 4(dd) of the
DS&P Agreement and Plan of Merger, and (E) any amounts owed to the Surviving
Corporation under Section 5(o)(ii) of the DS&P Agreement and Plan of Merger
(sub-Sections (A)-(E) collectively shall be referred to as the "Tax Liability").
Upon the final determination of any Tax for any period ending on or prior to
Closing, the Plan Administrator shall pay over to the Surviving Corporation (i)
the amount of such finally determined Tax (and the expenses incurred in
connection therewith) to enable the Surviving Corporation to pay such Tax within
5 business days of Surviving Corporation's request therefore and (ii) within 5
business days of such request an amount equal to the amount described in
5(o)(ii) of the DS&P Agreement and Plan of Merger. Within 30 days of the later
of (y) the period referred to in the preceding sentence or (z) 60 days after the
expiration of the 3 year statute of limitations (plus any extension of the
statute of limitations agreed to by Martin or the Surviving Corporation), the
Surviving Corporation shall make a final determination with respect to (A) any
breaches of Sections 4(k) or 4(dd) of the DS&P Agreement and Plan of Merger or
(B) any payment due under Section 5(o)(ii) of the DS&P Agreement and Plan of
Merger as a result of any basis reduction that would result from any such breach
and notify the Plan Administrator of such findings. The Plan Administrator shall
promptly pay to the Surviving Corporation the amount determined by the Surviving
Corporation sufficient to reimburse the Surviving Corporation for breaches of
Sections 4(k) or 4(dd) of the DS&P Agreement and Plan of Merger or payment due
under Section 5(o)(ii) of the DS&P Agreement and Plan of Merger. Anytime before
60 days after filing the Surviving Corporation's Tax Return for the year ending
December 31, 2000, the Surviving Corporation may notify the Plan Administrator
that its Closing Basis for its assets for Federal income tax purposes is less
than $32,188,276, and within 5 business days of receiving such notice, the Plan
Administrator shall pay to the Surviving Corporation any amounts owed under
Section 5(o)(ii) of the DS&P Agreement and Plan of Merger. If the Plan
Administrator disputes the findings of the Surviving Corporation, then the
dispute shall be resolved in accordance with the same procedures set forth in
Sections 2(e)(iii) and (iv) of the DS&P Agreement and Plan of Merger.
The DS&P Agreement and Plan of Merger, as well as the Bankruptcy Code
itself, contemplate the capacity of other parties to engage in bidding for the
Debtors-in-Possession. The Debtors have moved for and the Bankruptcy Court has
entered a Consent Order Approving Bidding Procedures and Reimbursement Fee. A
copy is attached hereto. Other creditors or parties may have the opportunity to
enter into a Competing Transaction with Debtors. A Competing Transaction must
meet the criteria shown in the attached Order.
DS&P is entitled to a reimbursement fee as outlined in Section 5(g)(ii) of
the DS&P Agreement and Plan of Merger, which reimbursement shall not exceed
$500,000. Such reimbursement fee shall be paid in accordance with the provisions
of the Order Approving Bidding Procedures and the reimbursement of fees entered
by the Bankruptcy Court.
A separate motion to approve bidding procedures and reimbursement fee has
been filed and a copy of such motion and Order is attached to the Disclosure
Statement. A separate motion to approve the GECC commitment letter and fees
associated therewith has been filed and a copy of such motion and Order is
attached to the Disclosure Statement.
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Prior to Confirmation, Debtors shall negotiate employment agreements with
certain key employees as shown in paragraph 5(k) of the DS&P Agreement and Plan
of Merger. Certain employees may be entitled to participate in the 2000 Phantom
Stock Plan.
No payments will be made prior to the Closing Date. The determination of
Administrative Claims and Tax adjustments shall be made at the earliest
practical time.
After the Closing, the Plan Administrator shall file, as soon as proper and
appropriate, a final report showing substantial consummation has occurred and
close the bankruptcy case. No liabilities for Claims shall remain with the
Surviving Corporation after the Closing and after emergence from bankruptcy,
except for Assumed Liabilities and Tax Liabilities and fourth quarter 2000 U. S.
Trustee fees. The Surviving Corporation shall provide information necessary to
supplement the reports filed by the Plan Administrator.
ARTICLE III
Classification of Creditors And Parties in Interest and the Provisions of
Treatment of Each Class of Creditor and Party in Interest Dealt With by the Plan
Class 1 - Bank of America: The Bank's claims are impaired and secured. The
Bank timely filed four claims (the "Bank Claims") as follows:
Claim No. 285 in the amount of $21,005,773.93 filed March 10, 1999.
This claim is an Allowed Claim and is evidenced by the Third
Amended and Restated Term Loan Promissory Note dated June 2, 1998
in the principal amount of $20,471,030.25 (the "Term Loan").
Claim No. 277 in the amount of $ 29,755,683.12 filed March 10,
1999. This claim is an Allowed Claim and is evidenced by the Fourth
Amended and Restated Revolving Credit Promissory Note dated June 2,
1998 in the principal amount of $30,000,000 (the "Revolver Loan").
Claim No. 328 in the amount of $4,489,112.20 filed March 10, 1999.
This claim is an Allowed Claim and is evidenced by the Amended and
Restated 1997 Term Loan Promissory Note dated June 2, 1998 in the
principal amount of $4,461,111.12 (the "1997 Term Loan").
Claim No. 329 in the amount of $ 2,606,803.05 filed March 10, 1999.
This claim is an Allowed Claim and is evidenced by the Renewal
Overline Promissory Note dated June 2, 1998 in the principal amount
of $4,000,000 (the "Overline Loan") (the Term Loan, the Revolver
Loan, the 1997 Term Loan, and the Overline Loan are together the
"Loans" and total $57,857,372.30 as filed).
The Loans are secured in part by the following security documents granting
the Bank first priority perfected liens on the collateral described therein: (a)
the Mortgage and Security Agreement dated July 14, 1994 and recorded in the
Edgefield County Register of Deeds in Book 473 at Page 135; (b) the Mortgage and
Security Agreement dated July 14, 1994 and recorded in the Edgefield County
Register of Deeds in Book 473 at Page 136; (c) the Mortgage and Security
Agreement dated July 14, 1994 and recorded in the Sumter County Register of
Deeds in Book 605 at Page 1329; (d) the Mortgage and Security Agreement dated
July 14, 1994 and recorded in the Laurens County Register of Deeds in Book 426
at Page 1; (e) the Mortgage and Security Agreement dated July 14, 1994 and
recorded in Elkhart County, Indiana in location 94-018451; (f) the Security
Deed, Security Agreement and Assignment of Leases dated July 14, 1994 and
recorded in Whitfield County, Georgia in Book 2530 at Page 62; (g) the
Assignment of Leases dated July 14, 1994 and recorded in the Edgefield County
Register of Deeds in Book 395 at Page 149; (h) the Assignment of Contracts dated
July 14, 1994; and (i) the Security Agreements dated July 14, 1994 (together
with the Note which evidences the Loan and all other related documents, the
"Loan Documents").
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The Loans held by the Bank are secured by a valid, first priority perfected
security interest in all machinery, equipment, furniture, inventory, accounts
receivable, work in process, general intangibles, and such fixtures and real
property as described in the Loan Documents, together with the proceeds thereof.
The Bank also was granted a post-petition replacement lien on all pre-petition
and post-petition assets of the Debtor as part of the adequate protection in the
Cash Collateral Orders described in the Disclosure Statement.
As of March 24, 2000, the Bank has received from the Debtors adequate
protection payments under the Cash Collateral Orders described in the Disclosure
Statement. In addition, the Bank received $6,000,000 from the sale of the assets
in the Buchanan case. The Debtors shall make weekly payments as provided in the
Cash Collateral Order to the Bank on Wednesday of each week through the Closing
or the closing on any Competing Transaction. It is estimated that the Bank's
total claim as of June 30, 2000 (assuming all adequate protection payments are
made) will be approximately $48,000,000.
The Bank will receive from the Final Purchase Price (which Final Purchase
Price shall be increased by Cash on Hand and 100% of the amount by which the
Competing Transaction or overbid ultimately approved by the Bankruptcy Court, if
any, exceeds the Final Purchase Price) the following: the Final Purchase Price,
less (A) the amount paid out of the Tax Liability Reserve by the Plan
Administrator (if applicable); (B) all claims under paragraph 2 (f) (ii) of the
DS&P Agreement and Plan of Merger (if applicable), (C) Professional Fees set
forth in Class 2, (D) Administrative Claims in Class 3 which are not Assumed
Liabilities, (E) the amount paid out of the Purchase Price Adjustment Reserve of
$2,500,000 by the Plan Administrator to the Surviving Corporation (if
applicable), (F) Unsecured Creditors Net Proceeds (as defined hereinbelow) paid
to the unsecured creditors as set forth in Class 7, which funds would otherwise
be paid to the Bank (the "Bank Claim Payment"), and (G) Fees and costs of the
Plan Administrator in the amount of $25,000 from the Preliminary Purchase Price.
The Surviving Corporation shall not be responsible for the fees and
expenses of the Plan Administrator.
The Bank Claim Payment shall be disbursed on the Effective Date from the
Preliminary Purchase Price directly at Closing and as set forth herein. The Bank
is obligated to release its liens on the assets of Surviving Corporation on the
Closing Date. The Bank shall retain its first priority perfected lien on the
proceeds of the Closing distributed to the Plan Administrator, subject to the
obligations of the Plan Administrator to distribute those funds pursuant to this
Plan. In order to provide the Bank and OUCC with as much information as possible
on June 19, 2000, the Debtors have agreed to provide the Bank and OUCC with the
following information available as of May 31, 2000.
1. Cash on Hand;
2. Eligible Accounts Receivable (as defined in the draft GECC Loan
Agreement or other draft GECC loan document ("the GECC document") that sets
forth the description of those accounts receivable on which the Surviving
Corporation will be eligible to borrow against at the Closing);
3. Eligible Inventory (as defined in the GECC document that sets forth the
description of the inventory that the Surviving Corporation will be eligible to
borrow against at the Closing);
4. The total amount of Assumed Liabilities as of that date;
5. Estimated Closing Basis as of that date;
6. Estimated Tax Liability as of that date;
7. Estimated payments due to Class 2, Class 3 and Class 6 Claimants under
the Plan; and
8. Estimated payments to the Plan Administrator.
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Upon receipt of this information, the Bank and the Debtor shall agree to
the Final Purchase Price and the Preliminary Purchase Price assuming that the
Closing occurred on that date (the "Hypothetical Final Purchase Price" and the
"Hypothetical Preliminary Purchase Price") for the purpose of assisting the Bank
in determining whether to vote for the Plan. The Bank may file its ballot at the
Confirmation Hearing.
The balance of the Bank Claim Payment shall be immediately paid to the Bank
after the payment of all allowed Administrative Claims in Class 3 and all
allowed Professional Fees in Class 2 have been paid. The remaining portion of
the Bank Claim Payment, consisting of the undisbursed portion of the $1,750,000
Tax Liability Reserve and the $2,500,000 Purchase Price Adjustment Reserve,
shall be paid to the Bank upon the release of these reserves as set forth herein
and in the DS&P Agreement and Plan of Merger. The Bank's first priority
perfected lien on the assets of the Debtors shall continue in the assets until
the Closing and in the proceeds from the Closing until the liens are released by
the Bank, and shall continue to be a first priority perfected lien on all monies
held in both the $1,750,000 Tax Liability Reserve and the $2,500,000 Purchase
Price Adjustment Reserve by the Plan Administrator, subject to the Plan
Administrator's obligation to pay the Surviving Corporation, at which time the
Bank's lien on the Tax Liability Reserve and Purchase Price Adjustment Reserve
shall automatically be released and the Bank shall execute the necessary
releases.
In addition to the foregoing, the Bank shall retain its first priority lien
on all the assets transferred to the Liquidating Trust which assets shall be
transferred to the Liquidating Trust subject only to the Bank's Lien. The Bank
shall receive 100% of the net proceeds of the Liquidating Trust until such time
as the Bank has received a total of $2,250,000 in proceeds net of expenses from
the Liquidating Trust. After such time as the Bank has received a total of
$2,250,000 in net proceeds from the Liquidating Trust, the balance of the net
proceeds from the Liquidating Trust shall be distributed as follows: 66.7% shall
be paid to the Bank and 33.33% shall be paid to the Plan Administrator for the
benefit of and for distribution to the unsecured creditors in Class 7.
The Bank shall receive 66.67% of the net proceeds of the Litigating Trust
and the unsecured creditors of Class 7 shall receive 33.33% of the net proceeds
of the Litigating Trust. The unsecured creditors in Class 7 and the Bank shall
be the only beneficiaries of the Litigating Trust and shall be entitled to
distributions therefrom as set forth hereinabove, but the unsecured creditors in
Class 7 shall not be entitled to any control over the Litigating Trust assets.
The Bank shall have all rights set forth in the Litigating Trust document
and the Liquidating Trust document, which documents shall be subject to the
review and approval of the Bank. The Trustees, subject to the review and
approval of the Bank, shall be entitled to make all decisions regarding
strategy, settlement, liquidation process, sales price and other such matters.
All proceeds due to the unsecured creditors in Class 7, whether the Net
Proceeds, or proceeds from the Litigating Trust or the Liquidating Trust, will
be distributed to the unsecured members of Class 7 by the Plan Administrator or
its agent or other party responsible for distribution to the unsecured creditors
of Class 7, and in no event shall the Bank be responsible for disbursement of
any funds to any unsecured creditors of Class 7.
Upon the Effective Date, the Bank's unsecured Class 7 claim shall be
subordinated to the timely filed and properly scheduled allowed claims in Class
7, solely for the purposes of the distribution of proceeds under Class 7. The
Bank's Class 7 claim shall not be subordinate to any late filed unsecured
claims. The Bank retains its right to vote its entire unsecured claim on par
with all other unsecured creditors. For voting purposes only, it shall be
assumed that the Bank will have an unsecured Class 7 claim in the amount of
$24,000,000. This number was calculated based on the estimated proceeds from the
Closing, the estimated unused balance of the Tax Liability Reserve and the
$2,500,000.00 Purchase Price Adjustment Reserve, the estimated proceeds of the
Liquidating Trust and the Litigating Trust and the estimated Net Proceeds.
"Unsecured Creditors Net Proceeds" as used herein, shall be the amount paid
to the Plan Administrator for the benefit of the Class 7 unsecured creditors,
under the following formula:
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(a) From the first $15,000,000.00 net proceeds received by the Bank from
the Closing, the unsecured creditors in Class 7 shall receive -0-;
(b) From the net proceeds to be received by the Bank from the Closing in
the amount in excess of $15,000,001.00 up to a maximum of $15,500,000.00, the
unsecured creditors in Class 7 shall receive 100% of such proceeds;
(c) From the net proceeds to be received by the Bank from the Closing in
the amount in excess of $15,500,001.00 up to a maximum of $20,000,00.00, the
unsecured creditors in Class 7 shall receive 7.5% of the proceeds and the Bank
shall receive 92.5% of the proceeds;
(d) From the net proceeds to be received by the Bank from the Closing in
the amount in excess of $20,000,001.00 up to a maximum of $25,000,00.00, the
unsecured creditors in Class 7 shall receive 15.00% of the proceeds and the Bank
shall receive 85.00% of the proceeds;
(e) From the net proceeds to be received by the Bank from the Closing in
the amount in excess of $25,000,001.00 up to a maximum of $30,000,000.00, the
unsecured creditors in Class 7 shall receive 20.00% of the proceeds and the Bank
shall receive 80.00% of the proceeds.
(f) From the net proceeds to be received by the Bank from the Closing in
the amount in excess of $30,000,001.00, the unsecured creditors of Class 7 shall
receive 25.00% of the proceeds and the Bank shall receive 75.00% of the
proceeds.
The Unsecured Creditors Net Proceeds is also shown as follows:
<TABLE>
<CAPTION>
Total Net Proceeds Amt. Retained Percent Total Retained Amt. Released Percent Total
from Merger ` By Bank By Bank to Class 7 Released
(In US Dollars) to Class 7
by Bank
<S> <C> <C> <C> <C> <C> <C>
15,000,000 .................... 15,000,000 100% 15,000,000 -0- -0- -0-
15,000,000-15,500000 .......... -0- -0- 15,000,000 500,000 100% 500,000
15,500,000-20,000,000 ......... 4,162,500 92.50% 19,162,500 337,500 7.5% 837,500
20,000,000-25,000,000 ......... 4,250,000 85% 23,412,500 750,000 15% 1,587,500
25,000,000-30,000,000 ......... 4,000,000 80% 27,412,500 1,000,000 20% 2,587,500
30,000,000+ ................... 75% 27,412,500+ 25% 2,587,500+
</TABLE>
In consideration for the Bank's agreement to release the Unsecured Creditors Net
Proceeds from funds that would otherwise be paid to the Bank, the OUCC hereby
unconditionally and irrevocably releases, waives, discharges and acquits the
Bank, its participants, respective subsidiaries, and affiliates, and its
respective past and present officers, directors, shareholders, agents, insurers,
attorneys and employees of and from any and all claims or causes of action of
any king whatsoever which the OUCC has or might have, known or unknown, now
existing or that may hereafter arise, directly, indirectly, derivatively, on
behalf of the Class 7 unsecured creditors or which is otherwise attributable to
or in any way related to any transaction under or contemplated by the loan
documents between the Debtors and the Released Parties (the "Loan Documents"),
including but not limited to any act or omission of any Released Party in the
administration of any loan from Bank to the Debtors. [Bank releases and waives
all claims against the Debtors and its employees, agents and Designated
Professionals, and the Surviving Corporation and its employees and agents as of
the Effective Date, as set forth in Article VIII of this Plan.]
Class 2 - Fees for Designated Professionals for the Debtors: This class is
unsecured and unimpaired. This class consists of the Designated Professionals,
who are the various professionals retained by the Debtors and approved by the
Bankruptcy Court. Their fees up through the Closing Date shall be paid, only
after notice to creditors and entry of an Order Approving Fees by the Bankruptcy
Court. The Designated Professionals retained by the Debtors are as follows:
Robinson, Barton, McCarthy & Calloway, P.A. as bankruptcy counsel for the
18
<PAGE>
Debtors; Sinkler & Boyd, P.A. as securities and transactional counsel for the
Debtors; Nexsen, Pruet, Jacobs & Pollard, LLP as ERISA counsel for the Debtors;
Elliott Davis & Company as tax accountants for the Debtors; Ouzts, Ouzts & Varn
as bankruptcy accountants for the Debtors; and Gordian Group, L.P. as investment
banker for the Debtors. All of these professionals have previously filed fee
applications in the case and have been paid pursuant to Orders of the Bankruptcy
Court. The Debtors estimate that additional fees will be owed by the Debtors to
these professionals, which will be paid only after entry of Orders approving
said fees by the Court.
Class 3 - Administrative Claims to Various Taxing Authorities: This class
is unimpaired and holds an administrative priority. Debtors will pay this class
out of the Capital Contribution and New Debt Financing made under the DS&P
Agreement and Plan of Merger or any overbid approved by the Bankruptcy Court. As
of this date, the claims in this class are unknown. The Debtors estimate that
the claims in this class will be paid out of the Availability Reserve
established under the Plan.
Class 4 - Lease Assumption Claims: This class is unimpaired and unsecured.
As of the filing of this Plan and the prospective date of Confirmation. Debtors
are parties to certain leases and Executory Contracts. These leases, some on
real property and some on personal property, are in a current status. Under the
Debtors' Plan, all leases will be rejected unless explicitly assumed. Where a
lease or Executory Contract is assumed, regular continuing payments as provided
for in the leases or contracts will be made. Debtors will assume those leases
shown in the Disclosure Statement. The Debtors estimate that there are potential
damage rejection claims in the amount of $-0-. These Claims, if any, will be
treated as Class 7 unsecured claims. Any arrearage due on assumed contracts will
be paid at or prior to Closing as an Administrative Claim.
Class 5 - United States Trustee Fees: As described elsewhere in this Plan,
this class is unimpaired and entitled to an administrative priority and its
claims through the Closing Date are an Assumed Liability. Debtors have made all
payments to date, and will continue to pay all payments as due under 28 U.S.C.
ss.1930 through the end of the quarter during which the Effective Date occurs.
The Surviving Corporation shall pay the fourth quarter 2000 quarterly fees. The
Plan Administrator will move to close the case by the end of the fourth quarter
2000.
Class 6 - Fees for Counsel for the OUCC: This class is unsecured and
unimpaired. This class consists of counsel for the OUCC. This class will be paid
only after entry of Orders approving fees for which application has been made
after notice to creditors.
Class 7 - General Unsecured Claims: This class is impaired and unsecured.
This class consists of approximately 831 creditors plus any rejection claims.
This number is derived from adding all creditors who were shown on the Debtors'
original schedules, the Debtors' revised schedules, or those who filed proofs of
claim in the case. Some of the claims are duplicates, and some of the claims are
from creditors to whom the Debtors believe they owe no money. Approximately
$11,000,000 in unsecured proofs of claim were filed in this case. The Debtors
scheduled a lower amount. The claims objection which is attached as an exhibit
to the Disclosure Statement and which has been separately filed proposes that
unsecured creditors' claims be allowed in the approximate amount of $8,885,000.
The Debtors anticipate that most of the claims objections will be resolved
before the confirmation hearing. In any event, the allowed claims for unsecured
creditors will be between the ranges shown. The Debtors propose to pay this
class from three different sources as set forth below.
First, this class will receive from the Final Purchase Price (which Final
Purchase Price shall be increased by Cash on Hand and 100% of the amount by
which the Competing Transaction or overbid ultimately approved by the Bankruptcy
Court, if any, exceeds the Final Purchase Price) the following (the "Unsecured
Creditors Net Proceeds"):
(a) From the first $15,000,000.00 net proceeds received by the Bank from
the Closing, this class shall receive -0-;
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<PAGE>
(b) From the net proceeds to be received by the Bank from the Closing in
the amount in excess of $15,000,001.00 up to a maximum of $15,500,000.00, this
class shall receive 100% of such proceeds;
(c) From the net proceeds to be received by the Bank from the Closing in
the amount in excess of $15,500,001.00 up to a maximum of $20,000,00.00, this
class shall receive 7.5% of the proceeds;
(d) From the net proceeds to be received by the Bank from the Closing in
the amount in excess of $20,000,001.00 up to a maximum of $25,000,00.00, this
class shall receive 15.00% of the proceeds;
(e) From the net proceeds to be received by the Bank from the Closing in
the amount in excess of $25,000,001.00 up to a maximum of $30,000,000.00, this
class shall receive 20.00% of the proceeds;
(f) From the net proceeds to be received by the Bank from the Closing in
the amount in excess of $30,000,001.00, this class shall receive 25.00% of the
proceeds.
The Unsecured Creditors Net Proceeds can also be shown as follows:
<TABLE>
<CAPTION>
Total Net Proceeds Amt. Retained Percent Total Retained Amt. Released Percent Total
from Merger By Bank By Bank to Class 7 Released
(In US Dollars) to Class 7
by Bank
<S> <C> <C> <C> <C> <C> <C>
15,000,000 .................... 15,000,000 100% 15,000,000 -0- -0- -0-
15,000,000-15,500000 .......... -0- -0- 15,000,000 500,000 100% 500,000
15,500,000-20,000,000 ......... 4,162,500 92.50% 19,162,500 337,500 7.5% 837,500
20,000,000-25,000,000 ......... 4,250,000 85% 23,412,500 750,000 15% 1,587,500
25,000,000-30,000,000 ......... 4,000,000 80% 27,412,500 1,000,000 20% 2,587,500
30,000,000+ ................... 75% 27,412,500+ 25% 2,587,500+
</TABLE>
The Unsecured Creditors Net Proceeds as calculated hereunder shall include
reimbursements to the Bank out of the Tax Liability Reserve or the $2,500,000
Purchase Price Adjustment Reserve under the DS&P Agreement and Plan of Merger.
Second, this class will receive 33.33% of the net proceeds distributed from
the Liquidating Trust after the Bank has received the first $2,250,000 in net
proceeds from the Liquidating Trust.
Third, this class will receive 33.33% of the net proceeds of the Litigating
Trust. The unsecured creditors in Class 7 and the Bank shall be the only named
beneficiaries of the Litigating Trust and shall be entitled to distributions
therefrom as set forth hereinabove, but the unsecured creditors in Class 7 shall
not be entitled to any control over the Litigating Trust assets.
The Bank shall have all rights set forth in the Litigating Trust document
and the Liquidating Trust document, which documents shall be subject to the
review and approval of the Bank. The Trustees, subject to the review and
approval of the Bank, shall be entitled to make all decisions regarding
strategy, settlement, liquidation process, sales price and other such matters.
All proceeds due to the unsecured creditors in Class 7, whether the
Unsecured Creditors Net Proceeds, or proceeds from the Litigating Trust or the
Liquidating Trust, will be distributed either by the Plan Administrator or such
other party responsible for distribution to the unsecured creditors in Class 7,
and in no event shall the Bank be responsible for disbursement of any funds to
any unsecured creditors in Class 7.
20
<PAGE>
Upon the Effective Date, the Bank's unsecured Class 7 claim shall be
subordinated to the timely filed and properly scheduled allowed claims in Class
7, solely for the purposes of the distribution of proceeds under Class 7. The
Bank's Class 7 claim shall not be subordinate to any late filed unsecured
claims. The Bank retains its right to vote its entire unsecured claim on par
with all other unsecured creditors. For voting purposes only, it shall be
assumed that the Bank will have an unsecured Class 7 claim in the amount of
$24,000,000. This number was calculated based on the estimated proceeds from the
Closing, the estimated unused balance of the Tax Liability Reserve and the
$2,500,000 Purchase Price Adjustment Reserve, the estimated proceeds of the
Liquidating Trust and the Litigating Trust and the estimated Net Proceeds.
The Bank and Debtors shall also receive a full release and waiver of all
claims against the Bank and Debtors by the OUCC, in a form satisfactory to Bank
and Debtors.
In the event that all of Debtors' objections to claim are successful, the
sources of payment set forth hereinabove are expected to result in less than 10%
of the total dollar amount of the unsecured claims being paid, and in the event
that none of Debtors' objections to claim are successful, it will result in
approximately 5% of the total dollar amount of the unsecured claims being paid.
These three types of payments will be treated as payment in full to this class.
In the event that Bank is paid in full as a Class 1 creditor, it will not
participate in distributions for Class 7.
Class 8 - Claims of Interest of the Debtors, Including holders of Options,
Warrants, Common Stock, Preferred Stock, Stock Appreciation Rights, or Rights to
Acquire Martin Shares Prior to the Effective Time : This class is not a class of
creditors, but is a class of interests. The interests of this class will be
extinguished upon the Effective Date.
Class 9 - All Creditors in the Buchanan Case Who Have Not Filed Proofs of
Claim in the Martin Case: This class is impaired and unsecured. Martin does not
believe that it has any obligation to the creditors in the Buchanan case.
Approximately 79 of the 225 creditors in that case have filed proofs of claim in
the Martin case. Total claims in the Buchanan case are in the approximate amount
of $3,700,000. All of the creditors in the Buchanan case have received notice of
the Martin Plan. The Martin Plan proposes $-0- in payments to this class. Any
claim by Buchanan creditors against Martin or Buchanan or Star is extinguished
under this Plan.
Class 10 - Employee Claims: The Surviving Corporation shall assume and pay
for all claims for wages and vacation which were incurred after November 16,
1998. These claims, if any, are included in the Assumed Liabilities. All other
Employee Claims not otherwise classified and provided for in this Plan shall be
extinguished.
ARTICLE IV
Feasibility of Plan of Reorganization
The Debtors' Plan is clearly feasible in that all funds necessary to fund
the Plan will be infused by Confirmation or be available for distribution at
Closing and from payments from the Liquidating and Litigating Trusts following
Closing. The result of the Debtors' Plan, upon Confirmation, will be to transfer
those certain assets enumerated in this Plan to the Liquidating Trust, to
transfer those assets shown under this Plan to the Litigating Trust, and to
retain all other assets in the Debtors, which, after the DS&P Agreement and Plan
of Merger is consummated, will hold those assets free and clear of all claims,
encumbrances and liabilities presently owed by Martin Color-Fi, Inc. or Star
Fibers Corp. or Buchanan Industries, Inc. Funds lent under the New Debt
Financing and Capital Contribution under the DS&P Agreement and Plan of Merger
are sufficient to pay the claims as shown under the Plan, and feasibility is
therefore demonstrated.
21
<PAGE>
ARTICLE V
Status of the Debtors After Confirmation
After Confirmation of this Plan, the assets of Surviving Corporation,
including any and all lease rights and contract rights shall consist of
substantially the same assets as exist on the date of this Plan, except for
those specific assets that are conveyed by this Plan to creditors or the
Liquidating Trust or Litigating Trust and those leases and contracts which are
rejected, and will include those assets shown in the DS&P Agreement and Plan of
Merger, and described in the Debtors' Disclosure Statement.
From and after confirmation of this Plan, the Surviving Corporation shall
not be liable for and shall be exonerated from any and all claims, including
those not filed by a creditor or claimant of interest against the Debtors prior
to the Bar Date set by this Court. The Debtors and the Surviving Corporation
shall pay to the Plan Administrator the Final Purchase Price to pay only those
liabilities and obligations set forth in Article III of this Plan, and only
those that have been allowed or modified pursuant to this Plan, or pursuant to
claims objections filed and determined subsequent to confirmation of this Plan.
As noted hereinabove, the Debtors, Bank, OUCC, and the Plan Administrator retain
the right to object to claims subsequent to confirmation, except for the Bank's
claim.
Any defaults whatsoever, with respect to any indebtedness or obligations,
which are or may be based on events, facts or occurrences taking place on or
before the date of Confirmation, shall be deemed to have been waived and shall
not thereafter be a basis for the exercise by any person for any right or remedy
whatsoever, as a creditor or claimant against the Debtors or the Surviving
Corporation.
ARTICLE VI
Treatment of Executory Contracts and Unexpired Leases
A. Assumptions.
Except as otherwise provided herein, or in any contract, instrument,
release, indenture or other agreement or document entered into in connection
with this Plan, on the Effective Date, pursuant to Section 365 of the Bankruptcy
Code, the Debtors will reject each executory contract and unexpired lease
entered into by the Debtors prior to the Petition Date that has not previously
(a) expired or terminated pursuant to its own terms or (b) been assumed or
rejected pursuant to Section 365 of the Bankruptcy Code, and as shown in
Exhibits to the Disclosure Statement. The Confirmation Order will constitute an
Order of the Bankruptcy Court approving the assumptions described in this
Section, pursuant to Section 365 of the Bankruptcy Code, as of the Effective
Date.
B. Cure of Defaults in Connection with Assumption.
Any monetary amounts by which each contract and unexpired lease to be
assumed pursuant to the Plan is in default will be satisfied, pursuant to
Section 365(b)(1) of the Bankruptcy Code, at the option of the Debtors or
Surviving Corporation: (a) by payment of the default amount in Cash on the
Effective Date or as soon as practicable thereafter or (b) on such other terms
as are agreed to by the parties to such executory contract or unexpired lease.
If there is a dispute regarding:
22
<PAGE>
(i) the amount of any cure payments; (ii) the ability of Surviving
Corporation to provide "adequate assurance of future performance" (within the
meaning of Section 365 of the Bankruptcy Code) under the contract or lease to be
assumed; or (iii) any other matter pertaining to assumption, the cure payments
required by Section 365(b)(1) of the Bankruptcy Code will be made following the
entry of a final order resolving the dispute and approving the assumption.
C. Rejections.
Except as otherwise provided herein or in any contract, instrument,
release, indenture or other agreement or document entered into in connection
with the Plan, on the Effective Date, pursuant to Section 365 of the Bankruptcy
Code, the Debtors will reject each and every Executory Contract and unexpired
lease not listed on the "Assumption Schedule" to the Disclosure Statement, or
not listed in the Assumption Schedule; provided, however, that the Debtors
reserve the right, at any time prior to the Confirmation Hearing, to amend such
schedule to delete or add any executory contract or unexpired lease listed
therein, thus providing for its rejection or assumption, as the case may be.
Each rejected contract and lease not listed on the Assumption Schedule to the
Disclosure Statement will be rejected only to the extent that any such contract
or lease constitutes an executory contract or unexpired lease. The Confirmation
Order shall constitute an Order of the Bankruptcy Court approving such
rejections, pursuant to Section 365 of the Bankruptcy Code, as of the Effective
Date.
D. Bar Date for Rejection Damages.
If the rejection of an executory contract or unexpired lease pursuant to
the preceding Section gives rise to a Claim by the other party or parties to
such contract or lease, such Claim shall be forever barred and shall not be
enforceable against the Debtors, Surviving Corporation, their successors or
properties unless (a) a Stipulation of Amount and Nature of Claim has been
entered into with respect to the rejection of such executory contract or
unexpired lease or (b) a proof of claim is filed and served on the Debtors and
counsel for Debtors thirty days after the Confirmation Hearing or such earlier
date as established by the Bankruptcy Court.
ARTICLE VII
Jurisdiction
7.1 Retention of Jurisdiction. The Court shall retain exclusive
jurisdiction over the Surviving Corporation, its property, and all other parties
appearing in the Case as provided by this Plan or by Order of the Court. The
Court may authorize the Debtors to examine, copy and produce the Debtors' books,
records and papers for the purposes of (i) determining all claims that have been
asserted against the Debtors, or the Debtors' estate; and (ii) carrying out and
giving effect to any and all provisions of the Plan and the Order Confirming
Plan; and the Court shall retain jurisdiction as provided in the Bankruptcy Code
until entry of the final decree discharging the Debtors in the Case.
7.2 Prosecution and Defense of Claims. The Litigating Trust shall retain
full power after the Effective Date to prosecute any causes of action or
proceedings, which are assigned to the Litigating Trust by the Plan. The
Litigating Trust may use the services of an attorney and accountants in the
prosecution of such claims, and shall have full power, subject to the approval
of the Court, to employ, retain and replace special counsel to represent it in
the prosecution of any action, and to discontinue, compromise, or settle any
action or proceeding, or adjust any claim. The net proceeds received from any
such litigation by the Litigating Trustee shall be distributed 66.67% to Bank
and 33.33% to Class 7 claimants (excluding the Bank as the holder of the
unsecured claim).
7.3 Retention of Bankruptcy Court Jurisdiction. Notwithstanding the entry
of the Confirmation Order and the occurrence of the Effective Date, the
Bankruptcy Court will retain exclusive jurisdiction over the Cases after the
Effective Date, including, without limitation, jurisdiction to:
23
<PAGE>
(i) Allow, disallow, determine, liquidate, classify, estimate or establish
the priority or secured or unsecured status of any claim of creditors or claim
of interest, including the resolution of any request for payment of any
administrative claim, the resolution of any objections to the allowance or
priority of claims and the resolution of any dispute as to the treatment
necessary to reinstate a claim pursuant to the Plan;
(ii) Grant or deny any applications for allowance of compensation or
reimbursement of expenses authorized pursuant to the Bankruptcy Code or the
Plan;
(iii) Resolve any matters related to the assumption or rejection of any
executory contract or unexpired lease to which either of the Debtors is a party
or with respect to which either of the Debtors may be liable, and to hear,
determine and, if necessary, liquidate any claims arising therefrom;
(iv) Ensure that distributions to holders of allowed claims or allowed
interests are accomplished pursuant to the provisions of the Plan;
(v) Decide or resolve any motions, adversary proceedings, contested or
liquidated matters and any other matters and grant or deny any applications
involving the Debtors or Surviving Corporation that may be pending on the
Effective Date;
(vi) Enter such Orders as may be necessary or appropriate to implement or
consummate the provisions of the Plan and all contracts, instruments, releases,
indentures and other agreements or documents created in connection with the
Plan, the Disclosure Statement or the Confirmation Order, except as otherwise
provided herein;
(vii) Resolve any cases, controversies, suits or disputes that may arise in
connection with the consummation, interpretation or enforcement of the Plan or
the Confirmation Order, or the resolution of any litigation either filed by the
Debtors or by the Litigating Trustee after assignment to the Litigating Trust
under the Plan, or any disputes or controversies arising in connection with the
Liquidating Trust or the Litigating Trust, including the release and injunction
provisions as set forth in and contemplated by the Plan and the Confirmation
Order, or any entity's rights arising under or obligations incurred in
connection with this Plan or the Confirmation Order.
(viii) Subject to any restrictions or modifications provided in any
contract, instrument, release, indenture or other agreement or document created
in connection with the Plan, modify this Plan before or after Effective Date
pursuant to Section 1127 of the Bankruptcy Code or modify the Disclosure
Statement, the Confirmation Order or any contract, instrument, release,
indenture or other agreement or document created in connection with the Plan,
the Disclosure Statement or the Confirmation Order; or remedy any defect or
omission or reconcile any inconsistency in any Bankruptcy Court Order, this
Plan, the Disclosure Statement, the Confirmation Order or any contract,
instrument, release, indenture or other agreement or document created in
connection with the Plan, the Disclosure Statement or the Confirmation Order, in
such manner as may be necessary or appropriate to consummate this Plan, to the
extent authorized by the Bankruptcy Code.
(ix) Issue injunctions, enter and implement other Orders or take such other
actions as may be necessary or appropriate to restrain interference by any
entity with consummation, implementation or enforcement of the Plan or the
Confirmation Order;
(x) Enter and implement such Orders as are necessary or appropriate if the
Confirmation Order is for any reason modified, stayed, reversed, revoked or
vacated;
24
<PAGE>
(xi) Determine any other matters that may arise in connection with or
relating to the Plan, the Disclosure Statement, the Confirmation Order or any
contract, instrument, release, indenture or other agreement or document created
in connection with this Plan, the Disclosure Statement or the Confirmation
Order, specifically including the Liquidating Trust and the Litigation Trust,
except as otherwise provided in this Plan; and
(xii) Enter an Order Closing the Cases.
7.4 Objections to Claims and Authority to Prosecute Objections; Claims
Resolution.
Except as otherwise provided herein and except as otherwise ordered by the
Bankruptcy Court after notice and a hearing, objections to Claims, including
without limitation Priority and Administrative Claims, shall be filed and served
upon the holder of such Claim or Priority and Administrative Claim no later than
the later of (a) 60 days after the Effective Date, and (b) 60 days after a proof
of claim or request for payment of such Claim is filed, unless this period is
extended by the Bankruptcy Court; such extension may be granted on an ex parte
basis without notice or hearing. From and after the Confirmation Hearing but
prior to Closing, the Debtors may settle or compromise any disputed Claim of a
Creditor without approval of the Bankruptcy Court. From and after the Effective
Date, the Plan Administrator may settle or compromise any disputed Claim of a
Creditor without approval of the Bankruptcy Court.
ARTICLE VIII
Effects of Plan Confirmation
A. Discharge of Debtors and Injunction.
The effects of the Plan as it relates to all Creditors shall include the
following:
(i) all Martin Shares issued and outstanding or authorized, all options,
warrants, stock appreciation rights, or rights to acquire Martin Shares prior to
the Effective Time (other than the right of Acquisition to convert its shares of
the Surviving Corporation) shall be canceled;
(ii) the Final Purchase Price shall be used to fully satisfy creditors of
the Debtors including without limitation all pre-petition liabilities, all
administrative and post-petition claims, liabilities or expenses such as any
fees owed to Gordian Group, attorneys fees for Martin and its Subsidiaries and
the creditors' committee, any other professional fees such as those of
accountants, auditors, investment bankers and any similar fees, any fees for
substantial contribution to the case, unless any such amount is expressly
included in the calculation of Assumed Liabilities;
(iii) a Plan Administrator shall be appointed to distribute funds as
provided for in this Plan and the DS&P Agreement and Plan of Merger.
(iv) distributions to creditors of Martin and its Subsidiaries shall be
restricted in the manner set forth in Section 2(f) of the DS&P Agreement and
Plan of Merger until all Administrative Claims are filed and resolved and Tax
Liabilities are finally determined;
(v) other than the Assumed Liabilities and U. S. Trustee fees for the
fourth quarter 2000, all liabilities and indebtedness of Martin and its
Subsidiaries to the fullest extent permitted by law will be discharged by the
Bankruptcy Court as against Martin and its Subsidiaries and the Surviving
Corporation including, but not limited to, any penalties, fines, claims, or
liabilities of any kind assertable or asserted against Martin or its
Subsidiaries as a direct or indirect result of either:
(A) any operations by or business conducted by Martin or its Subsidiaries,
or any interest of Martin or its Subsidiaries, directly or indirectly, in any
real property previously owned or operated by Martin or its Subsidiaries,
including, without limitation, those properties situated, or any business
conducted, at any of the following locations: 217 Star Road, Edgefield,
Edgefield County, South Carolina; 3358 Carpet Capital Drive, Dalton, Georgia;
52948 Glenview Drive, Elkhart, Indiana; Pensacola, Florida; and any location
other than a location to be owned or operated by the Surviving Corporation; or
25
<PAGE>
(B) any failure of Martin or its Subsidiaries, before the date of this
order, to obtain or maintain any permit or license necessary under any
environmental law, to make any governmental filing required by any environmental
law (including, without limitation, any filing required by any law concerning
emergency planning), or to comply with any environmental law.
(vi) all assets of Martin included on the Most Recent Balance Sheet (that
have not been assigned to the Liquidating Trust or the Litigating Trust or used
or sold in the Ordinary Course of Business) will be vested in the Surviving
Corporation free and clear of all claims, liens, pledges or encumbrances of any
nature whatsoever, to the fullest extent possible under Chapter 11 of the United
States Bankruptcy Code;
(vii) the commencement or continuation of any action, the employment of any
process, or any act to collect from or offset against the Surviving Corporation
or any of its Subsidiaries on account of any claim, interest or lien arising
from actions occurring prior to the Closing and which are attributable to the
Debtors, other than the Assumed Liabilities, shall be permanently and enjoined
and all claims against Martin and its Subsidiaries arising from acts or
omissions occurring prior to the Closing and all Administrative Claims
(including without limitation, attorneys fees for Martin and the OUCC, any other
professional fees such as those of accountants, auditors, investment bankers and
any similar fees, any fees for substantial contribution to the case) shall be
paid by the Plan Administrator or as provided herein.
(viii) a provision creating a Tax Liability Reserve out of the Preliminary
Purchase Price to be held by the Plan Administrator until all payments required
to be made thereunder are made in accordance with this Section and the following
items must be paid out of the Tax Liability Reserve: (A) all fees and expenses
associated with the determination of any Tax, including, but not limited to,
costs of preparation of any Tax Returns, determining any Tax liability or item
on a Tax Return, or defending any position taken on a Tax Return, (B) any unpaid
Tax liabilities shown on any Tax Return for all periods ending on or prior to
the Closing, (C) any other Taxes owed by the Surviving Corporation attributable
to actions of Martin or its subsidiaries on or prior to the Closing (including,
without limitation, any Taxes attributable to the transfer of the Trust Assets),
(D) any Taxes owed by the Surviving Corporation for any period after Closing as
a result of a breach of the representations in Sections 4(k) or 4(dd), and (E)
any amounts owed to the Surviving Corporation under Section 5(o)(ii)
(sub-Sections (A)-(E) collectively shall be referred to as the "Tax Liability").
Upon the final determination of any Tax for any period ending on or prior to
Closing, the Plan Administrator shall pay over to the Surviving Corporation (i)
the amount of such finally determined Tax (and the expenses incurred in
connection therewith) to enable the Surviving Corporation to pay such Tax within
5 business days of Surviving Corporation's request therefore and (ii) within 5
business days of such request an amount equal to the amount described in
5(o)(ii). Within 30 days of the later of (y) the period referred to in the
preceding sentence or (z) sixty (60) days after the expiration of the three (3)
year statute of limitations (plus any extension of the statute of limitations
agreed to by Martin or the Surviving Corporation), the Surviving Corporation
shall make a final determination with respect to (A) any breaches of Sections
4(k) or 4(dd) or (B) any payment due under Section 5(o)(ii) as a result of any
basis reduction that would result from any such breach and notify the Plan
Administrator of such findings. The Plan Administrator shall promptly pay to the
Surviving Corporation the amount determined by the Surviving Corporation
sufficient to reimburse the Surviving Corporation for breaches of Sections 4(k)
or 4(dd) or payment due under Section 5(o)(ii). Anytime before 60 days after
filing its tax return for the year ending December 31, 2000, the Surviving
Corporation may notify the Plan Administrator that its Closing Basis (as defined
in the next sentence) for its assets for Federal income tax purposes is less
than $32,188,276, and within 5 business days of receiving such notice, the Plan
Administrator shall pay to the Surviving Corporation any amounts owed under
Section 5(o)(ii). Closing Basis shall mean the sum of (i) Martin's basis for its
assets as of the close of business on December 31, 1999 and (ii) net operating
loss carryforwards as of January 1, 2000 (each (i) and (ii) as adjusted for the
transactions contemplated herein (including without limitation cancellation of
indebtedness income and transfers to the Liquidating Trust)). If the Plan
Administrator disputes the findings of the Surviving Corporation, then the
dispute shall be resolved in accordance with the same procedures set forth in
Sections 2(e)(iii) and (iv);
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(ix) any balance remaining in the Tax Liability Reserve, after all payments
finally determined and made to Surviving Corporation pursuant to Section 7(b)(x)
of the DS&P Agreement and Plan of Merger shall be distributed by the Plan
Administrator to creditors in accordance with the Plan;
(x) all claims of shareholders of Martin, including but not limited to,
federal and state securities law violations, if any, will be discharged; and
(xi) the Surviving Corporation shall be relieved of all liabilities
associated with the 401(K) Plan arising from any act or omission occurring on or
prior to the Closing, including but not limited to, (a) the 401(K) Plan's
purchase or sale of Martin Shares and (b) any other liabilities of Martin in
connection with any Martin matching contributions to the 401(K) Plan or
investment options involving Martin Shares under the 401(K) Plan and (c) any
401(K) Plan operational defects.
Except as otherwise provided in the Plan or the Confirmation Order: (i) on
the Effective Date, the Debtors shall be deemed discharged and released to the
fullest extent permitted by Section 1141 of the Bankruptcy Code from all Claims
and Interests, including, but not limited to, demands, liabilities, Claims and
Interests that arose before the Confirmation Date and all debts of the kind
specified in Sections 502(b), 502(h) or 502(i) of the Bankruptcy Code, whether
or not: (A) a proof of claim or proof of interest based on such debt or interest
is filed or deemed filed pursuant to Section 501 of the Bankruptcy Code, (B) a
claim or interest based on such debt or interest is allowed pursuant to Section
502 of the Bankruptcy Code or (C) the holder of a claim or interest based on
such debt or interest has accepted the Plan; and (ii) all persons shall be
precluded from asserting against Surviving Corporation, its successors, or its
assets or properties any other or further claims or interests based upon any act
or omission, transaction, or other activity of any kind or nature that occurred
prior to the Effective Date and which are attributable to Debtors. Except as
otherwise provided in the Plan or the Confirmation Order, the Confirmation Order
shall act as a discharge of any and all claims against and all debts and
liabilities of the Debtors, as provided in Sections 524 and 1141 of the
Bankruptcy Code, and such discharge shall void any judgment against the Debtors
at any time obtained to the extent that it relates to a Claim discharged.
Except as otherwise provided in the Plan or the Confirmation Order, on and
after the Effective Date, all Persons who have held, currently hold or may hold
a debt, Claim or Interest discharged pursuant to the terms of the Plan are
permanently enjoined from taking any of the following actions on account of any
such discharged debt, claim or interest: (i) commencing or continuing in any
manner any action or other proceeding against the Debtors or Surviving
Corporation or their successors or their respective properties; (ii) enforcing,
attaching, collecting or recovering in any manner any judgment, award, decree or
order against the Debtors or Surviving Corporation, or their successors or their
respective properties; (iii) creating, perfecting or enforcing any lien or
encumbrance against the Debtors or Surviving Corporation, or their successors or
their respective properties; and (iv) commencing or continuing any action, in
any manner, in any place that does not comply with or is inconsistent with the
provisions of the Plan or the Confirmation Order. Any person injured by any
willful violation of such injunction shall recover actual damages, including
costs and attorney's fees, and, in appropriate circumstances, may recover
punitive damages, from the willful violator.
B. Limitation of Liability.
Neither the Debtors nor Surviving Corporation, Bank, and the OUCC, nor any
of their respective post-petition date participants, employees, officers,
directors, Designated Professionals, agents, or representatives, or any
professional persons employed by any of them (including without limitation their
respective professionals appointed by order of the Bankruptcy Court), shall have
any responsibility, or have or incur any liability, to any Person whatsoever,
(i) for any matter expressly approved or directed by the Confirmation Order or
(ii) under any theory of liability, for any act taken or omission made in good
faith directly related to formulating, implementing, confirming, or consummating
the Plan, the Disclosure Statement, or any contract, instrument, release, or
other agreement or document created in connection with the Plan, provided that
nothing in this paragraph shall limit the liability of any Person for breach of
any express obligation it has under the terms of this Plan or under any
agreement or other document entered into by such Person either post-petition or
in accordance with the terms of this Plan (except to the extent expressly
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provided in the Confirmation Order) or for any breach of a duty or care owed to
any other Person occurring on or after the Effective Date.
C. Releases.
On the Effective Date, the Debtors and Debtors-in-Possession, and Surviving
Corporation will release unconditionally, and hereby are deemed to release
unconditionally (i) each of the Debtors and the Surviving Corporation's
officers, directors, shareholders, employees, Designated Professionals,
consultants, attorneys, accountants, financial advisors, investment banker, and
other representatives (including without limitation their respective
professionals appointed by order of the Bankruptcy Court), (ii) the OUCC and,
solely in their capacity as members or representatives of the OUCC, each member,
consultant, attorney, accountant or other representative of the OUCC (including
without limitation their respective professionals appointed by order of the
Bankruptcy Court), (iii) the Bank and its participants, solely in their capacity
as members or representatives of Bank or them, 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 on whole or in part 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 Releases, the Debtors,
its trust indentures, the Cases or the Plan, and any and all transactions
between the releasing party and the released party.
On the Effective Date, all creditors, including Bank will release
unconditionally, and hereby are deemed to release unconditionally (i) each of
the Debtors and the Surviving Corporation's officers, directors, shareholders,
employees, Designated Professionals, consultants, attorneys, accountants,
financial advisors, investment banker, and other representatives (including
without limitation their respective professionals appointed by order of the
Bankruptcy Court), (ii) the OUCC and, solely in their capacity as members or
representatives of the OUCC, each member, consultant, attorney, accountant or
other representative of the OUCC (including without limitation their respective
professionals appointed by order of the Bankruptcy Court), (iii) the Bank and
its participants, solely in their capacity as members or representatives of Bank
or them, 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 on whole or in part 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 Releases, the Debtors, its trust indentures, the Cases or
the Plan.
On the Effective Date, each holder of a Claim or Interest shall be deemed
to have unconditionally released those parties and persons released herein, 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 Debtors, the Cases or the Plan.
The Debtors have entered into a separate agreement to release James F.
Martin. A copy of that agreement and release are attached to the Disclosure
Statement. Separate court approval will be sought for the release, but
confirmation of this Plan will operate independently as a release of James F.
Martin.
D. Vesting of Assets.
Except as otherwise provided in any provision of the Plan, on the Closing
Date, all property of the bankruptcy estates shall vest in Surviving
Corporation, all free and clear of all Claims, liens, encumbrances and interests
of holders of claims of old securities and old stock rights. From and after the
Effective Date, Surviving Corporation may operate its business and use, acquire,
and dispose of property and settle and compromise claims or interests arising
post-confirmation without supervision by the Bankruptcy Court and free of any
restrictions of the Bankruptcy Code, the Bankruptcy Rules or the Local
Bankruptcy Rules, other than those restrictions expressly imposed by the Plan
and the Confirmation Order.
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E. Preservation of Causes of Action.
Except as otherwise provided herein, or in any contract, instrument,
release, or other agreement entered into in connection with the Plan, in
accordance with Section 1123(b) of the Bankruptcy Code, Surviving Corporation
and the Litigating Trust shall retain (and may enforce) any claims, rights, and
causes of action that the Debtors or the Estates may hold against any person,
including, inter alia, any claims, rights or causes of action under Sections 544
through 550 of the Bankruptcy Code or any similar provisions of state law, or
any other statute or legal theory.
F. Committees.
On the Effective Date, the OUCC, if any, shall be dissolved and the members
of OUCC and their professionals shall be released and discharged from all
further rights and duties arising from or related to the Cases. The
Professionals retained by OUCC and the members thereof shall be entitled to
compensation or reimbursement of expenses incurred for services rendered prior
to the Effective Date. The members of the Committee will reconstitute themselves
into a new Unofficial Committee after Confirmation and continue their activities
as described in the Plan.
ARTICLE IX
Post-Confirmation Acts
9.1 The Debtors, and their agents, and the Plan Administrator shall perform
all acts necessary to complete and consummate this Plan, to include:
a. Prosecution of all claims by transfer to the Litigating Trust against
third parties and claims challenges filed against the Debtors by third parties;
b. Execution and filing of all legal documents required; and
c. Performing any and all functions required by the Code.
9.2 Within forty-five (45) days prior to Final Consummation, the Plan
Administrator shall cause to be filed with the Court an itemized list of all any
receipts of and disbursements by the Plan Administrator after confirmation. Such
report must be approved by the Court before the final decree is issued
discharging the Debtors in this reorganization proceeding.
MEANS FOR EXECUTION AND IMPLEMENTATION OF THE PLAN
A. Implementation.
The Debtors shall be authorized to take all necessary steps, and perform
all necessary acts, to consummate the terms and conditions of the Plan. On or
before the Effective Date, the Debtors may file with the Bankruptcy Court such
agreements and other documents as may be necessary or appropriate to effectuate
or further evidence the terms and conditions of this Plan and the other
agreements referred to herein.
B. Other Documents and Actions.
The Debtors and Surviving Corporation may, and shall, execute such
documents and take such other actions as are necessary to effectuate the
transactions provided for in the Plan.
C. Payment of Statutory Fees.
All fees payable pursuant to 28 U.S.C. ss.1930 (U.S. Trustee Fees) as
determined by the Bankruptcy Court at the confirmation hearing shall be paid by
the Debtors on or before the Effective Date.
D. Term of Injunctions or Stays.
Unless otherwise provided, all injunctions or stays imposed in the Cases
pursuant to Sections 105 and 362 of the Bankruptcy code or otherwise and in
effect on the Confirmation Date shall remain in full force and effect until the
Effective Date.
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E. No Interest.
Except as expressly provided herein, no Holder of an Allowed Class or
Allowed Interest shall receive interest on the distribution to which such Holder
is entitled hereunder, regardless of whether such distribution is made on the
Effective Date or thereafter.
F. Transfers.
All transfers into the Liquidating Trust and the Litigating Trust and the
initial transfers out of said Trusts are exempt from transfer taxes under
Section 1146 of the Bankruptcy Code.
ARTICLE X
"Cram Down" for Impaired Creditors
Not Accepting the Plan
In respect to any class of creditors impaired but not accepting the Plan by
the requisite majority in number and two-thirds in amount, the proponent of this
Plan requests the Court to find that the Plan does not discriminate unfairly and
is fair and equitable with respect to each class of claims or interest that is
impaired under the Plan and that the Court confirm the Plan without such
acceptances by the said impaired classes.
ARTICLE XI
Miscellaneous Provisions
A. Final Order.
Any requirement in this Plan that an Order be a Final Order may be waived
by the Debtors, provided that nothing contained herein or elsewhere in this Plan
shall prejudice the right of any party in interest to seek a stay pending appeal
with respect to such Order.
B. Modification of the Plan.
The Debtors reserve the right to amend or modify the Plan at any time prior
to the Confirmation Date in the manner provided for by Section 1127 of the
Bankruptcy Code or as otherwise permitted by law without additional disclosure
pursuant to Section 1125 of the Bankruptcy Code, except as the Bankruptcy Court
may otherwise order. If any of the terms of the Plan are amended in a manner
determined by the Debtors to constitute a material adverse change, the Debtors
will promptly disclose any such amendment in a manner reasonably calculated to
inform creditors and equity holders of such amendment and the Debtors will
extend the solicitation period for acceptances of this Plan for a period which
the Debtors, in their sole discretion, deem appropriate, depending upon the
significance of the amendment and the manner of disclosure if the solicitation
period would otherwise expire during such period.
The Debtors reserve the right to amend the terms of the Plan. The Debtors
will give all Holders of Claims and Interests notice of such amendments or
waivers as may be required by applicable law and the Bankruptcy Court. If, after
receiving sufficient acceptances but prior to Confirmation of the Plan, the
Debtors seek to modify the Plan, the Debtors can only use such previously
solicited acceptances to the extent permitted by applicable law.
C. Revocation of the Plan.
The Debtors reserve the right to revoke or withdraw the Plan prior to the
Confirmation Date. If the Debtors revoke or withdraw the Plan, or if
Confirmation does not occur, then the Plan shall be null and void, and nothing
contained in the Plan shall: (i) constitute a waiver or release of any Claims by
or against, or any interests in, the Debtors; or (ii) prejudice in any manner
the rights of the Debtors in any further proceedings involving the Debtors.
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D. Severability of Plan Provisions.
If, prior to Confirmation, any term or provision of the Plan is held by the
Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court will
have the power, upon the request of the Debtors, to alter and interpret such
term or provision to make it valid or enforceable to the maximum extent
practicable, consistent with the original purpose of the term or provision held
to be invalid, void or unenforceable, and such term or provision will then be
applicable as altered or interpreted.
E. Successors and Assigns.
The rights, benefits and obligations of any Person named or referred to in
the Plan shall be binding on, and shall inure to the benefit of, any heir,
executor, trustee, administrator, successor or assign of such Person.
F. 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.
G. Post-Effective Date Effect of Evidences of Claims or Interests.
Notes, bonds, stock certificates and other evidences of Claims against
claims of or Interests in the Debtors, and all Instruments of the Debtors (in
either case, other than those executed and delivered as contemplated hereby in
connection of the Plan), shall, effective upon the Effective Date, represent
only the right to participate in the distributions contemplated by the Plan.
H. Headings.
The headings used in the Plan are inserted for convenience only and neither
constitute a portion of the Plan nor in any manner affect the provisions of the
Plan.
I. Governing Laws.
Unless a rule of law or procedure is supplied by (i) federal law (including
the Bankruptcy Code, the Bankruptcy Rules or the Local Bankruptcy Rules), (ii)
an express choice of law provision in any agreement, contract, instrument, or
document provided for, or executed in connection with, the Plan, or (iii)
applicable non-bankruptcy law, the rights and obligations arising under the Plan
and any agreements, contracts, documents, and instruments executed in connection
with the Plan shall be governed by, and construed and enforced in accordance
with, the laws of the State of South Carolina without giving effect to the
principles of conflict of laws thereof.
J. No Liability for Solicitation or Participation.
As specified in Section 1125(e) of the Bankruptcy Code, persons that
solicit acceptances or rejections of the Plan and/or that participate in the
offer, issuance, sale, or purchase of securities offered or sold under the Plan,
in good faith and in compliance with the application provisions of the
Bankruptcy Code, shall not be liable, on account of such solicitation or
participation, for violation of any applicable law, rule, or regulation
governing the solicitation of acceptances or rejections of the Plan or the
offer, issuance, sale, or purchase of securities.
K. No Admissions or Waiver of Objections.
Notwithstanding anything herein to the contrary, nothing in the Plan shall
be deemed as an admission by the Debtors or any other party with respect to any
matter set forth herein including, without limitation, liability on any Claim or
the propriety of any claims classification. The Debtors are not bound by any
statements or in the Disclosure Statement as judicial admissions.
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ARTICLE XII
Discharge of the Debtors
The entry of an Order Confirming Plan acts as a discharge of any and all
liabilities of the Debtors that are dischargeable under Section 1141 of the
Bankruptcy Code.
RESPECTFULLY SUBMITTED on this the 17th day of May, 2000, at Columbia,
South Carolina.
ROBINSON, BARTON, MCCARTHY
& CALLOWAY, P.A.
BY:s/G. William McCarthy, Jr.
------------------------------------
G. William McCarthy, Jr.
District Court I.D. #2762
Attorney for Martin Color-Fi, Inc. and
Star Fibers Corp.
1715 Pickens Street
Post Office Box 12287
Columbia, South Carolina 29211
Tele: (803) 256-6400
32
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF SOUTH CAROLINA
In re: )
)
MARTIN COLOR-FI INC, ) Chapter 11 Case
a South Carolina corporation ) Case No. 98-10145-W
)
Debtor. )
)
)
In re: )
)
Star Fibers Corp. ) Chapter 11 Case
a South Carolina corporation ) Case No. 98-10144-W
)
Debtor. )
)
DEBTORS' FIRST AMENDMENT TO AMENDED PLAN OF REORGANIZATION
Debtors hereby submit their First Amendment to Amended Plan of
Reorganization (the "Amendment"), to amend the terms of the Amended Plan of
Reorganization filed on May 17, 2000 (the "Plan"). The Amendment reflects the
terms of an agreement reached between the Debtors, the Bank, the OUCC, and DS&P.
Pursuant to the agreement, the Bank will receive $16,000,000 at the Closing,
less an amount to pay claims in Class 2, 3, and 6. All reserves for taxes and
purchase price adjustments will be eliminated. The creditors of Class 7,
excluding the Bank's unsecured claim, will receive $200,000 from the Sale
Proceeds, all inventory assets transferred to Liquidating Trust C, a portion of
the proceeds from Liquidating Trust A (if any) and their original share of the
proceeds from the Litigating Trust. The remaining terms of the DS&P Agreement
and Plan of Merger and the GECC loan remain essentially the same. This paragraph
is not intended to be an amendment to the Plan, but a summary of the changes set
forth below.
The Debtors' hereby submit this First Amendment, and the Plan is hereby
amended as follows:
ARTICLE I.
A. The following definitions are deleted from the Plan, set forth by number
in Article I of the Plan:
10. Capital Contribution;
35. Final Closing Date Availability;
38. Final Purchase Price;
57. Preliminary Purchase Price;
58. Purchase Price Adjustment Reserve;
68. Tax Liability Reserve
B. The following definitions, as set forth by number in Article I shall
hereby be amended or added as set forth herein:
3. "Assumed Liabilities" means trade payables incurred after filing of the
Cases in the Ordinary Course of Business and accrued as of the Closing Date,
severance obligations that are due and payable on or prior to the Closing Date
under Martin's Severance Policy for Salaried Employees and any severance
obligations under those certain Executive Severance Agreements that become due
and payable to Stephen A. Zagorski, Greg W. Anderson, Wiley H. Turner, Curtis R.
Wright, Scott Shipes, Jennifer P. Summer or Wilbur L. Ballard, cure payments
under assumed contracts in the amounts set forth on Exhibit C to the DS&P
Agreement and Plan of Merger, employee's salaries and commissions (and all
associated Tax obligations associated therewith) incurred in the Ordinary Course
of Business and accrued as of the Closing Date, unpaid fees and expenses
associated with the New Debt Financing owed by Martin, including, without
limitation all legal fees of the Lender's counsel, the fees and expenses of DS&P
and Acquisition (which fees and expenses of DS&P and Acquisition shall not
exceed $500,000), including without limitation legal fees incurred in connection
with the transactions contemplated in the DS&P Agreement and Plan of Merger,
accrued Tax Liabilities up to the Closing, and those taxes set forth on Sections
4(h), 4(i), and 4(k) of the Disclosure Schedule of the DS&P Agreement and Plan
of Merger (to the extent not discharged by the bankruptcy), and any liabilities
arising from the 401(K) Plan as described in Section 7(b)(xiii) of the DS&P
Agreement and Plan of Merger, if any (to the extent not discharged by the
bankruptcy).
<PAGE>
30. "DS&P Agreement and Plan of Merger" shall refer to that agreement by
and between Dimeling, Schreiber & Park and MCF Acquisition, Inc. and Martin
which is attached as an Exhibit to the Disclosure Statement and incorporated by
reference into this Plan, as such agreement is modified by the First Amendment
to Agreement and Plan of Merger dated June 25, 2000 which amendment is attached
hereto as Exhibit A-1.
44. "Liquidating Trust" or "Liquidating Trusts" means the three trusts
established pursuant to the Plan and pursuant to which certain assets and
liabilities of the Debtors are transferred prior to the Merger. Liquidating
Trust A, Liquidating Trust B, and Liquidating Trust C and may be referred to
individually or collectively.
45. "Plan Administrator" means Ouzts, Ouzts, and Varn CPA's, P.C., as
appointed by the Bankruptcy Court to oversee the distribution of the Purchase
Price pursuant to the Plan and the Plan Administrator Agreement .
67. "Tax Liability" has the meaning set forth in Section 1 of the DS&P
Agreement and Plan of Merger.
72. "Purchase Price" shall mean "Sales Proceeds" in the amount of Sixteen
Million Dollars in cash. As additional consideration, the Surviving Corporation
shall assume all of the Assumed Liabilities. The term "Purchase Price" shall be
substituted for Final Purchase Price wherever it appears.
ARTICLE II
A. Article II, Section A.1.a. shall be amended to add the following at the
end of the paragraph:
The Bank and the OUCC shall have the right to object to any administrative
or priority claims prior to payment by the Plan Administrator.
B. Article II, Section E, shall be amended as follows:
1. On page 17, the 5th full paragraph from the end of the page shall be
amended by adding the following at the end of the paragraph:
The Bank will relinquish its lien on all assets transferred into
Liquidating Trust B and C.
2. On page 18, the section entitled "The Liquidating Trust" shall be
amended by deleting the section in its entirety and replacing it with the
following:
THE LIQUIDATING TRUST
Debtors have determined that certain of their assets are not essential for
the future operations of the Surviving Corporation. Inventory which is difficult
to sell and real property and an equipment line which are not essential to
continued operations are those assets which will be conveyed pursuant to this
Plan to the Liquidating Trust. A copy of the Liquidating Trust Agreements is
attached to the Disclosure Statement. A comprehensive list of the assets placed
in the Liquidating Trusts is attached as a schedule to the Liquidating Trust
Agreement. Because of their length, a copy of those schedules is not served as
part of the Plan, but is available to any interested party upon written request
and at its expense. In general, the Liquidating Trust assets consist of land and
a building located at 217 Star Road, Edgefield, South Carolina, which is an
asset of Star; machinery and equipment located at 217 Star Road, Edgefield,
South Carolina, which are assets of Martin and inventory located in warehouse
numbers 109, 209, 409, 809, 510 and C09, which are assets of Martin; and
finished goods in warehouse 350, which are assets of Martin. These assets have a
book value of approximately $9,100,000, although Debtors believe the fair market
value to be substantially less. Liquidating Trust A shall receive the land,
building, machinery and equipment located at 217 Star Road, Edgefield, South
Carolina. Liquidating Trust B will receive the capital stock of Buchanan and
Star which is owned by Martin. Liquidating Trust C shall receive all the
inventory and finished goods owned by Martin and identified as Trust Assets in
the Exhibit to the Disclosure Statement. Under the terms of the Liquidating
Trust and this Plan, the conveyance to Liquidating Trust A conveys all right,
title and ownership of those assets to the Liquidating Trust subject only to the
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secured claims of Bank. Under the terms of the Liquidating Trust C and this
Plan, the conveyance to Liquidating Trust B and C conveys all right, title and
ownership of those assets to Liquidating Trust B and C respectively, free and
clear of any lien of the Bank. All expenses involved in disposing of those
assets shall be paid by the respective Liquidating Trustee from the respective
Trust Assets proceeds; and the Debtors and the Surviving Corporation shall have
no further liability after transfer of those assets to the Liquidating Trusts.
All assets transferred to the Liquidating Trust A shall be transferred subject
to the secured claims of the Bank and the Bank's claims shall remain perfected
and first in priority. The assets transferred to the Liquidating Trust or Trusts
shall not revert to the Surviving Corporation.
The Liquidating Trusts shall be established immediately after Confirmation
and prior to the Closing and, after its establishment, each Liquidating Trust
will be responsible for its own fees, costs and expenses of storing, securing,
moving or handling its particular Trust Assets, and each Liquidating Trust will
indemnify and hold harmless the Surviving Corporation from all fees, costs and
expenses for storing, securing, moving or handling its Trust Assets, including
without limitation, the cost of reasonable rent and reimbursement of expenses to
be paid to Surviving Corporation for the use of any location or warehouse of
Surviving Corporation to store, secure, move or handle any of the Trust Assets
following the Closing, provided Surviving Corporation has been asked to perform
such services and has agreed in writing to do so. The Surviving Corporation
shall only be liable for any damages caused to any Trust Assets by the Surviving
Corporation's gross negligence, and only to the extent not covered by customary
insurance to be maintained by any Liquidating Trust for any such Trust Assets.
Any expenses charged by the Surviving Corporation to any Liquidating Trust shall
not be in excess of the actual costs incurred by Surviving Corporation.
The Trust Assets shall be those assets as set forth in the Exhibits to the
Disclosure Statement and no additional assets of the Debtors may be transferred
to any Liquidating Trust without the prior written consent of the Trustee for
that Liquidating Trust.
3. On page 20, the third line of the last paragraph is amended to delete
the phrase "with $10,000,000."
4. On page 21, the first two lines on the top of the page are amended to
delete the phrase "in the amount of approximately $14,000,000."
5. On page 21, the first two full paragraphs are deleted in their entirety
and replaced with the following:
The DS&P Agreement and Plan of Merger and this Plan contemplate that the
Merger described above shall make available a sum of money for creditor
recoveries. Sixteen Million Dollars ($16,000,000) shall be available for
distribution to the Debtors' creditors. From this $16,000,000 the following
shall be paid the amounts set forth in Article III of the Plan:
- the payments to the Class 7 creditors (excluding the Bank's unsecured
claim);
- the Bank's secured claim;
- all administrative professional claims in Class 2;
- all fees for counsel for the OUCC in Class 6;
- Plan Administrator fees of $25,000.
6. On page 22, the first two full paragraphs shall be deleted in their
entirety and replaced with the following:
The Debtors estimate that, through the aggregation of the DS&P
capitalization and the contemplated GECC New Debt Financing, the Debtors
will have sufficient funds available to fund the Plan. The Surviving
Corporation shall pay the Assumed Liabilities in the ordinary course and
shall retain all rights to the anticipated federal income tax refund
related to the amended 1996 corporate tax return in the approximate amount
of $1,022,272 (the "Tax Refund"), regardless of when the Tax Refund is
received. Together with all Cash on Hand of the Debtors, which shall be
retained by the Debtors after the Closing, the Debtors estimate they will
have sufficient cash resources to fund the Plan at confirmation as follows:
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- Payment of $16,000,000 for payment to creditors in Classes 1, 2, 6 and
7;
- Assumption and Payment of the Assumed Liabilities;
- Availability Reserve under the GECC credit facility; and
- Payments of the U.S. Trustee's fees accrued through December 31, 2000
as the Class 5 creditor
The DS&P Agreement and Plan of Merger and this Plan contemplate that
the Purchase Price shall be used by the Plan Administrator in satisfaction
of the claims against the Debtors as set forth in Class 1, Class 2, Class
6, and Class 7 and that Surviving Corporation shall have no liability
whatsoever, post-confirmation, for any claims other than the Assumed
Liabilities and the U.S. Trustee's fees accrued through December 31, 2000
as a Class 5 creditor. The Bank shall retain its liens on the assets in
Liquidating Trust A, and the Litigating Trust and release its lien and
waive any claim to the proceeds of Liquidating Trust B and C.
7. The fourth full paragraph on page 22 shall be deleted in its entirety as
follows and replaced with the following:
Concurrently with payment to the Bank of the Purchase Price at the Closing,
Bank will release its liens on the assets of the Debtors and the Surviving
Corporation.
8. The last two lines in the fifth paragraph on page 22 shall be amended to
read as follows: "-No Material Adverse Change, as shown on page 5, of the DS&P
Agreement and Plan of Merger (excluding subsection (i)(a) of that definition in
the DS&P Agreement and Plan of Merger)."
9. Page 23 shall be amended to delete in its entirety the subsection
beginning with "-If prior to Closing," and ending with "Plan of Merger" and
replace it with the following:
- If, prior to Closing, the Closing Basis is estimated to be $28,000,000
or more, then the representations and warranties in Section 4 (k) of
the DS&P Agreement and Plan of Merger shall be deemed not to have been
breached.
10. The final paragraph of page 23 shall be deleted in its entirety and
replaced with the following:
Fifteen million dollars ($15,000,000) from the Sale Proceeds shall be
distributed directly to the Bank at Closing and the remaining $1,000,000 shall
be distributed to the Plan Administrator to pay the claims of creditors in
Classes 2, 6, and 7, and the Plan Administrator fees of up to $25,000. These
deducted funds shall be held in an interest bearing account by Ouzts, Ouzts, and
Varn CPA's, P.C., the Plan Administrator to be appointed under the terms of the
Plan by the Bankruptcy Court. The compensation to be paid to the Plan
Administrator shall be approved by the Bankruptcy Court and paid from the Sale
Proceeds.
11. The first full paragraph of Page 24 shall be deleted in its entirety
and replaced with the following:
The Plan Administrator shall distribute the Purchase Price in accordance
with the Plan and the DS&P Agreement and Plan of Merger. The Plan Administrator
shall not have the authority to engage in active trade or business. The Plan
Administrator may retain such personnel or professionals (including, without
limitation, legal counsel, financial advisors or other agents) as it deems
necessary and compensate such professionals from the Purchase Price. The Bank,
the Debtors, OUCC, and the Plan Administrator shall enter into a Plan
Administrator Agreement which shall be approved by the Bankruptcy Court. The
Plan Administrator shall have the powers and duties specified in the Plan
Administrator Agreement and be approved by the Bankruptcy Court.
12. Page 24 shall be amended to delete the last paragraph on that page
beginning with the sentence "The Plan Administrator shall create." Page 25 shall
be deleted in its entirety. The first three lines of page 26 are hereby deleted
in its entirety.
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13. The last full paragraph on page 26 beginning with the phrase "No
payments will be made," shall be deleted in its entirety and replaced with the
following:
No payments will be made prior to the Closing Date. The determination of
Administrative and Priority Claims in Class 2, 3, 6, and 7 shall be made at the
earliest practical time.
14. The last sentence on page 26, beginning with the phase "No liabilities
for Claims," shall be deleted in its entirety and replaced with the following:
No liabilities for Claims shall remain with the Surviving Corporation after
Closing and emergence from bankruptcy except for the Assumed Liabilities and the
U.S. Trustee's Fees as a Class 5 creditor accrued through December 31, 2000. The
Surviving Corporation shall provide information necessary to supplement the
reports filed by the Plan Administrator.
ARTICLE III
A. The treatment of Class 1 - Bank of America, N.A. shall be amended by
deleting the last paragraph on page 28 beginning with the phrase "The Bank will
receive," and deleting all of pages 29, 30, 31, and 32 and replacing it with the
following:
The Bank will receive $15,000,000 directly at Closing from the Purchase
Price. In addition, the residual after payment of the following claims by the
Plan Administrator shall be remitted to the Bank by the Plan Administrator:
(A) Professional Fees set forth in Class 2,
(C) Fees for the OUCC Counsel in Class 6;
(D) Unsecured Creditors Claims in Class 7, as set forth therein; and
(E) Fees and costs of the Plan Administrator in the amount of
$25,000.
The Surviving Corporation shall not be responsible for the fees and
expenses of the Plan Administrator.
The Bank is obligated to release its liens on the assets of Surviving
Corporation on the Closing Date simultaneously with the receipt of the Purchase
Price by the Bank and the Plan Administrator. The Bank shall retain its first
priority perfected lien on the proceeds of the Closing distributed to the Plan
Administrator, subject to the obligations of the Plan Administrator to
distribute those funds pursuant to this Plan. The fund sufficient to pay the
Reductions shall be disbursed to the Plan Administrator to distribute pursuant
to this Plan. Any funds from the Purchase Price remaining with the Plan
Administrator after final resolution of all applicable claims shall be paid to
the Bank on its Class 1 claim.
The Bank may file its ballot at the Confirmation Hearing.
In addition to the foregoing, the Bank shall retain its first priority lien
on all the assets transferred to Liquidating Trust A which assets shall be
transferred to the Liquidating Trusts A subject only to the Bank's Lien. The
Bank shall receive 100% of the net proceeds of the Liquidating Trust A until
such time as the Bank has received a total of $2,000,000 in proceeds net of
expenses from Liquidating Trust A. After such time as the Bank has received a
total of $2,000,000 in net proceeds from Liquidating Trust A, the balance of the
net proceeds from the Liquidating Trust A shall be distributed as follows:
66.67% shall be paid to the Bank and 33.33% shall be paid to the Plan
Administrator for the benefit of and for distribution to the unsecured creditors
in Class 7, excluding the Bank's unsecured claim.
The Bank shall receive 66.67% of the net proceeds of the Litigating Trust
and the unsecured creditors of Class 7 shall receive 33.33% of the net proceeds
of the Litigating Trust. The unsecured creditors in Class 7 and the Bank shall
be the only beneficiaries of the Litigating Trust and shall be entitled to
distributions therefrom as set forth hereinabove, but the unsecured creditors in
Class 7 shall not be entitled to any control over the Litigating Trust assets.
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The Bank shall have all rights set forth in the Litigating Trust document
and the Liquidating Trust A and Liquidating Trust B documents, which documents
shall be subject to the review and approval of the Bank. The Trustee of each
Trust, subject to the review and approval of the Bank, shall be entitled to make
all decisions regarding strategy, settlement, liquidation process, sales price
and other such matters.
All proceeds due to the unsecured creditors in Class 7, whether the cash
from the Purchase Price, or proceeds from the Litigating Trust or the
Liquidating Trust A will be distributed to the unsecured members of Class 7 by
the Plan Administrator or its agent or other party responsible for distribution
to the unsecured creditors of Class 7, and in no event shall the Bank be
responsible for disbursement of any funds to any unsecured creditors of Class 7.
Upon the Effective Date, the Bank's unsecured Class 7 claim shall be
subordinated to the timely filed and properly scheduled allowed claims in Class
7, solely for the purposes of the distribution of proceeds under Class 7. The
Bank's Class 7 claim shall not be subordinate to any late filed unsecured
claims. The Bank retains its right to vote its entire unsecured claim on par
with all other unsecured creditors. For voting purposes only, it shall be
assumed that the Bank will have an unsecured Class 7 claim in the amount of
$24,000,000. This number was calculated based on the estimated proceeds from the
Closing and the estimated proceeds of the Liquidating Trust and the Litigating
Trust.
In consideration for the Bank's agreement to release funds to the Class 7
creditors from the Purchase Price, funds that would otherwise be paid to the
Bank, the OUCC hereby unconditionally and irrevocably releases, waives,
discharges and acquits the Bank, its participants, respective subsidiaries, and
affiliates, and its respective past and present officers, directors,
shareholders, agents, insurers, attorneys and employees of and from any and all
claims or causes of action of any kind whatsoever which the OUCC has or might
have, known or unknown, now existing or that may hereafter arise, directly,
indirectly, derivatively, on behalf of the Class 7 unsecured creditors or which
is otherwise attributable to or in any way related to any transaction under or
contemplated by the loan documents between the Debtors and the Released Parties
(the "Loan Documents"), including but not limited to any act or omission of any
Released Party in the administration of any loan from Bank to the Debtors. Bank
releases and waives all claims against the Debtors and its employees, agents and
Designated Professionals, and the Surviving Corporation and its employees and
agents as of the Effective Date, as set forth in Article VIII of this Plan.
B. The treatment of Class 2-Fees for Designated Professionals for the
Debtors shall be amended by adding the following at the end of the section:
"This class will be paid out of the Purchase Price.
C. The treatment of Class 3 - Administrative Claims to Various Taxing
Authorities shall be amended by deleting the last sentence of that section
beginning with "The Debtors estimate" and replacing it with the following: "This
class will be an Assumed Liability."
D. The treatment of Class 4 - Lease Assumption Claims shall be amended by
deleting the last sentence of that section beginning with "Any arrearage" and
replacing it with the following: "Any arrearage due on assumed contracts will be
paid at or prior to the Closing as an Assumed Liability."
E. The treatment of Class 6 - Fees for Counsel for the OUCC shall be
amended by adding the following at the end of the section: "This class will be
paid from the retainer in approximate amount of $42,000 held by the claimant
Buist, Moore, Smythe & McGee, P.A. Any remaining balance in this account after
satisfaction of this class shall be remitted to the Plan Administrator to be
distributed to the Class 7 claimants pursuant to this Plan."
F. The treatment of Class 7 - General Unsecured Claims shall be amended by
deleting that section in its entirety and replacing it with the following:
Class 7 - General Unsecured Claims: This class is impaired and unsecured.
This class consists of approximately 831 creditors plus any rejection claims.
This number is derived from adding all creditors who were shown on the Debtors'
original schedules, the Debtors' revised schedules, or those who filed proofs of
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claim in the case. Some of the claims are duplicates, and some of the claims are
from creditors to whom the Debtors believe they owe no money. Approximately
$11,000,000 in unsecured proofs of claim were filed in this case. The Debtors
scheduled a lower amount. The claims objection which is attached as an exhibit
to the Disclosure Statement and which has been separately filed proposes that
unsecured creditors' claims be allowed in the approximate amount of $8,885,000.
The Debtors anticipate that most of the claims objections will be resolved
before the confirmation hearing. In any event, the allowed claims for unsecured
creditors will be between the ranges shown. The Debtors propose to pay this
class from five different sources as set forth below.
First, this class will receive $200,000 from the Purchase Price.
Second, this class will receive 33.33% of the net proceeds distributed from
Liquidating Trust A after the Bank has received the first $2,000,000 in net
proceeds from Liquidating Trust A.
Third, this class will receive 100% of the net proceeds of Liquidating
Trust C.
Fourth, this class will receive the residual from the retainer account of
its counsel, Buist, Moore, Smythe & McGee, P.A., after payment of the Class 6
claims and any post-confirmation fees and expenses of counsel for the OUCC.
Fourth, this class will receive 33.33% of the net proceeds of the
Litigating Trust. The unsecured creditors in Class 7 and the Bank shall be the
only named beneficiaries of the Litigating Trust and shall be entitled to
distributions therefrom as set forth hereinabove, but the unsecured creditors in
Class 7 shall not be entitled to any control over the Litigating Trust assets.
The Bank shall have all rights set forth in the Litigating Trust document
and the Liquidating Trust A document and Litigating Trust B document, which
documents shall be subject to the review and approval of the Bank. The unsecured
creditors shall have all rights set forth in the Liquidating Trust C document,
which document shall be subject to review and approval of the OUCC. The Trustee
of each Trust, subject to the review and approval of the Bank (as to the
Litigating Trust and Liquidating Trust A and B), shall be entitled to make all
decisions regarding strategy, settlement, liquidation process, sales price and
other such matters.
All proceeds due to the unsecured creditors in Class 7, whether cash from
the Purchase Price, or proceeds from the Litigating Trust or the Liquidating
Trust A or Liquidating Trust C, will be distributed either by the Plan
Administrator or such other party responsible for distribution to the unsecured
creditors in Class 7, and in no event shall the Bank be responsible for
disbursement of any funds to any unsecured creditors in Class 7. Upon the
Effective Date, the Bank's unsecured Class 7 claim shall be subordinated to the
timely filed and properly scheduled allowed claims in Class 7, solely for the
purposes of the distribution of proceeds under Class 7. The Bank's Class 7 claim
shall not be subordinate to any late filed unsecured claims. The Bank retains
its right to vote its entire unsecured claim on par with all other unsecured
creditors. For voting purposes only, it shall be assumed that the Bank will have
an unsecured Class 7 claim in the amount of $24,000,000. This number was
calculated based on the estimated proceeds from the Closing and the estimated
proceeds of the Liquidating Trust and the Litigating Trust.
The Bank and Debtors shall also receive a full release and waiver of all
claims against the Bank and Debtors by the OUCC, in a form satisfactory to Bank
and Debtors.
In the event that all of Debtors' objections to claim are successful, the
sources of payment set forth hereinabove are expected to result in less than 10%
of the total dollar amount of the unsecured claims being paid, and in the event
that none of Debtors' objections to claim are successful, it will result in
approximately 5% of the total dollar amount of the unsecured claims being paid.
These five types of payments will be treated as payment in full to this class.
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ARTICLE VIII
A. Page 46, section A(iv) shall be deleted in its entirety and replaced by
the following:
(iv) distributions to creditors shall be made pursuant to Article III
herein.
B. Page 47, 48, and 49 shall be amended to delete section A(viii) and A(ix)
in their entirety.
C. Page 52, Section C, the second full paragraph is deleted in its entirety
and replaced with the following:
On the Effective Date, each Holder of a Claim or Interest shall be deemed
to have released unconditionally, and hereby is deemed to release
unconditionally on such date, those parties and persons released herein, 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 Reorganized Martin Color-Fi, the other
Reorganized Debtors, the Chapter 11 Cases or the Plan, except that no party or
person released herein shall be released from acts or omissions which are the
result of fraud, gross negligence, willful misconduct or willful violation of
the securities laws or the Internal Revenue Code. The releases provided for
herein shall not preclude police, federal tax, or regulatory agencies from
fulfilling their statutory duties. Subject to the discharge of Sections 524 and
1141 of the Bankruptcy Code, the releases provided for herein shall not preclude
police, Federal tax, or regulatory agencies from fulfilling their statutory
duties. Notwithstanding anything to the contrary in the Plan or the Confirmation
Order, the releases provided for herein shall not apply to the claims, if any,
of the United States as to the parties released herein.
D. Page 52, Section C, the third full paragraph is deleted in its entirety
and replaced with the following:
The Debtors have entered into a separate agreement dated February 29, 2000
(the "Release") a copy of which is attached hereto as Exhibit A-2, pursuant to
which the Debtors and Martin mutually release each other. Upon entry of an order
confirming the Plan the Release shall be deemed approved by the Court and the
Release shall be effective according to its terms as of the Effective Date of
the Plan.
E. Page 53, Section F, is revised to add a new concluding sentence to read
as follows:
Given that the OUCC will reconstitute itself as shown above, the OUCC as
redesignated and its professionals will continue until either the date of final
consummation or any earlier date on which the OUCC determines that no further
involvement on its part is needed.
In the event of any conflict between the DS&P Agreement and Plan of Merger,
and the Plan, as amended by this First Amendment to Amended and Restated Plan of
Reorganization, the terms of the Plan shall control.
ROBINSON, BARTON, MCCARTHY
& CALLOWAY, P.A.
6/26/00 s/G. William McCarthy, Jr.
Date:----------------- By:-------------------------------------
G. William McCarthy, Jr.
District Court I.D. #2762
Attorney for Debtors
P.O. Box 12287
Columbia, SC 29211
(803) 256-6400
EXHIBITS OMITTED
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