Exhibit 99.1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE
IN RE: : Jointly Administered
: Case No. 00-4211 (SLR)
PILLOWTEX, INC., :
a Delaware corporation, et al., : Chapter 11
:
Debtors. :
:
(Amoskeag Management Corporation) : (Case No. 00-4212 (SLR))
(Bangor Investment Company) : (Case No. 00-4213 (SLR))
(Beacon Manufacturing Company) : (Case No. 00-4214 (SLR))
(Crestfield Cotton Company) : (Case No. 00-4215 (SLR))
(Downeast Securities Corporation) : (Case No. 00-4216 (SLR))
(Encee, Inc.) : (Case No. 00-4217 (SLR))
(FCC Canada, Inc.) : (Case No. 00-4218 (SLR))
(Fieldcrest Cannon, Inc.) : (Case No. 00-4219 (SLR))
(Fieldcrest Cannon Transportation, Inc.) : (Case No. 00-4220 (SLR))
(Fieldcrest Cannon Financing, Inc.) : (Case No. 00-4221 (SLR))
(Fieldcrest Cannon International, Inc.) : (Case No. 00-4222 (SLR))
(Fieldcrest Cannon Licensing, Inc.) : (Case No. 00-4223 (SLR))
(Fieldcrest Cannon SF, Inc.) : (Case No. 00-4224 (SLR))
(The Leshner Corporation) : (Case No. 00-4225 (SLR))
(Leshner of California, Inc.) : (Case No. 00-4226 (SLR))
(Manetta Home Fashions, Inc.) : (Case No. 00-4227 (SLR))
(Moore's Falls Corporation) : (Case No. 00-4228 (SLR))
(Opelika Industries, Inc.) : (Case No. 00-4229 (SLR))
(Pillowtex Corporation) : (Case No. 00-4230 (SLR))
(Pillowtex Management Services Company) : (Case No. 00-4231 (SLR))
(PTEX Holding Company) : (Case No. 00-4232 (SLR))
(St. Marys, Inc.) : (Case No. 00-4233 (SLR))
(Tennessee Woolen Mills, Inc.) : (Case No. 00-4234 (SLR))
:
: SECOND AMENDED JOINT PLAN
: OF REORGANIZATION OF
: PILLOWTEX CORPORATION
: AND ITS DEBTOR SUBSIDIARIES
---------------------------
William H. Sudell, Jr. (DE 463)
Eric D. Schwartz (DE 3134)
MORRIS, NICHOLS, ARSHT & TUNNELL
1201 North Market Street
P.O. Box 1347
Wilmington, Delaware 19899
(302) 658-9200
- and -
David G. Heiman (OH 0038271)
JONES, DAY, REAVIS & POGUE
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
(216) 586-3939
Gregory M. Gordon (TX 08435300)
Henry L. Gompf (TX 08116400)
Sharon A. Alexander (TX 00998580)
Daniel P. Winikka (TX 00794873)
JONES, DAY, REAVIS & POGUE
2727 North Harwood Street
Dallas, Texas 75201
(214) 220-3939
ATTORNEYS FOR DEBTORS AND DEBTORS
IN POSSESSION
Table of Contents
Page
INTRODUCTION ..................................................................................................1
ARTICLE I. DEFINED TERMS, RULES OF INTERPRETATION AND COMPUTATION OF TIME...........................1
A. Defined Terms................................................................................1
1. "Administrative Claim"..............................................................1
2. "Administrative Trade Claim"........................................................1
3. "Aircraft Lease"....................................................................1
4. "Aircraft Lease Claim"..............................................................1
5. "Alabama Revenue Bonds".............................................................1
6. "Allowed Claim".....................................................................2
7. "Allowed . . . Claim"...............................................................2
8. "Ballot"............................................................................2
9. "Bank Loan Claim"...................................................................2
10. "Bank of America"...................................................................2
11. "Bankruptcy Code"...................................................................2
12. "Bankruptcy Court"..................................................................2
13. "Bankruptcy Rules"..................................................................2
14. "Bar Date"..........................................................................2
15. "Bar Date Order"....................................................................2
16. "Business Day"......................................................................2
17. "Cash Investment Yield".............................................................3
18. "Claim".............................................................................3
19. "Claims Objection Bar Date".........................................................3
20. "Class".............................................................................3
21. "Confirmation"......................................................................3
22. "Confirmation Date".................................................................3
23. "Confirmation Hearing"..............................................................3
24. "Confirmation Order"................................................................3
25. "Constituent Documents".............................................................3
26. "Creditors' Committee"..............................................................3
27. "Cure Amount Claim".................................................................3
28. "Debtors"...........................................................................3
29. "Designated Post-Petition Loans"....................................................3
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30. "DIP Financing Facility"...........................................................3
31. "DIP Lenders"......................................................................4
32. "DIP Order"........................................................................4
33. "Disbursing Agent".................................................................4
34. "Disclosure Statement".............................................................4
35. "Disputed Claim"...................................................................4
36. "Disputed Insured Claim" and "Disputed Uninsured Claim"............................4
37. "Distribution Record Date".........................................................4
38. "Division".........................................................................4
39. "Document Website".................................................................4
40. "Effective Date"...................................................................5
41. "Equity Incentive Plan"............................................................5
42. "ERISA"............................................................................5
43. "Estate"...........................................................................5
44. "Exchange Act".....................................................................5
45. "Executory Contract" or "Unexpired Lease"..........................................5
46. "Exit Financing Revolver Facility".................................................5
47. "Exit Financing Revolver Facility Agent Bank"......................................5
48. "Exit Term Loan"...................................................................5
49. "Exit Term Loan Notes".............................................................5
50. "Face Amount"......................................................................5
51. "Facility A Term Loan Notes".......................................................6
52. "Facility B Term Loan Notes".......................................................6
53. "Fee Claim"........................................................................6
54. "Fee Order"........................................................................6
55. "Fieldcrest Cannon"................................................................6
56. "File," "Filed" or "Filing"........................................................6
57. "Final Order"......................................................................6
58. "Indenture Trustees"...............................................................6
59. "Industrial Revenue Bond Claim"....................................................6
60. "Insured Claim"....................................................................6
61. "Intercompany Claim"...............................................................6
62. "Interest".........................................................................7
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(continued)
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63. "IRS"..............................................................................7
64. "MBFC Revenue Bonds"...............................................................7
65. "MESA".............................................................................7
66. "National Securities Exchange".....................................................7
67. "New Common Stock".................................................................7
68. "New Pillowtex"....................................................................7
69. "New Registration Rights Agreement"................................................7
70. "New Tax Sharing Agreement"........................................................7
71. "New Warrant Agreement"............................................................7
72. "New Warrants".....................................................................7
73. "Old 6% Debenture Claim"...........................................................7
74. "Old 6% Debenture Promissory Note Claim"...........................................7
75. "Old 6% Debenture Promissory Notes"................................................7
76. "Old 6% Debentures"................................................................8
77. "Old 6% Debentures Indenture"......................................................8
78. "Old 6% Debentures Indenture Trustee"..............................................8
79. "Old 9% Notes".....................................................................8
80. "Old 9% Notes Indenture"...........................................................8
81. "Old 9% Notes Indenture Trustee"...................................................8
82. "Old 10% Notes"....................................................................8
83. "Old 10% Notes Indenture"..........................................................8
84. "Old 10% Notes Indenture Trustee"..................................................8
85. "Old Common Stock of . . ."........................................................8
86. "Old Preferred Stock of . . .".....................................................8
87. "Old Senior Subordinated Notes"....................................................8
88. "Old Senior Subordinated Notes Claim"..............................................8
89. "Ordinary Course Professionals Order"..............................................9
90. "Outstanding Industrial Revenue Bonds".............................................9
91. "Overline Facility"................................................................9
92. "Overline Facility Claim"..........................................................9
93. "PBGC".............................................................................9
94. "Petition Date"....................................................................9
95. "Pillowtex"........................................................................9
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(continued)
Page
96. "Pillowtex Entities"...............................................................9
97. "Pillowtex Merger".................................................................9
98. "Pillowtex Pension Plan"...........................................................9
99. "Pillowtex Subsidiary Debtors".....................................................9
100. "Plan".............................................................................9
101. "Plan of Merger"...................................................................9
102. "Prepetition Credit Facility"......................................................9
103. "Prepetition Credit Facility Notes"................................................9
104. "Prepetition Indentures"...........................................................9
105. "Prepetition Revolving Credit Agreement"...........................................9
106. "Prepetition Term Credit Agreement"................................................10
107. "Priority Claim"...................................................................10
108. "Priority Tax Claim"...............................................................10
109. "Professional".....................................................................10
110. "Pro Rata".........................................................................10
111. "Quarterly Distribution Date"......................................................10
112. "Real Property Executory Contract or Unexpired Lease"..............................10
113. "Recovery Action"..................................................................10
114. "Reinstated" or "Reinstatement"....................................................11
115. "Reorganization Case"..............................................................11
116. "Reorganized . . ."................................................................11
117. "Reserved Shares"..................................................................11
118. "Reserved Warrants"................................................................11
119. "Restructuring Transactions".......................................................11
120. "Revolving Credit Notes"...........................................................12
121. "Schedules"........................................................................12
122. "Secondary Liability Claim"........................................................12
123. "Secured Claim"....................................................................12
124. "Securities Act"...................................................................12
125. "State Street Motion"..............................................................12
126. "State Street Settlement"..........................................................12
127. "Stipulation of Amount and Nature of Claim"........................................13
128. "Subordination Reserve Allocation".................................................13
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129. "Tax"..............................................................................13
130. "Third Party Disbursing Agent".....................................................13
131. "Tort Claim".......................................................................13
132. "Trade Claim" .....................................................................13
133. "Uninsured Claim"..................................................................13
134. "Unsecured Claim"..................................................................13
135. "Unsecured Claims Reserve".........................................................13
136. "Voting Deadline"..................................................................13
B. Rules of Interpretation and Computation of Time.............................................13
1. Rules of Interpretation............................................................13
2. Computation of Time................................................................14
ARTICLE II. CLASSES OF CLAIMS AND INTERESTS.........................................................14
A. Unimpaired Classes of Claims and Interests..................................................14
1. Class 1 (Unsecured Priority Claims)................................................14
2. Class 3 (Industrial Revenue Bond Claims)...........................................14
3. Class 4, Divisions 4A, 4B, 4C, 4D, 4E and 4F (Other Secured Claims)................14
4. Class 7 (Intercompany Claims)......................................................15
5. Class 10 (Pillowtex Subsidiary Debtors Old Common Stock Interests).................15
B. Impaired Classes of Claims and Interests....................................................15
1. Class 2 (Convenience Claims).......................................................15
2. Class 4, Division 4G (Other Secured Claims)........................................15
3. Class 5 (Bank Loan Claims).........................................................15
4. Class 6 (Unsecured Claims).........................................................15
5. Class 8 (Pillowtex Old Preferred Stock Interests)..................................15
6. Class 9 (Pillowtex Old Common Stock Interests).....................................15
ARTICLE III. TREATMENT OF CLAIMS AND INTERESTS.......................................................15
A. Unclassified Claims.........................................................................15
1. Payment of Administrative Claims...................................................15
a. Administrative Claims in General..........................................15
b. Statutory Fees............................................................16
c. Ordinary Course Liabilities...............................................16
d. Claims Under DIP Financing Facility and DIP Order.........................16
e. Administrative Claims of Indenture Trustees...............................16
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(continued)
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f. Bar Dates for Administrative Claims.......................................16
2. Payment of Priority Tax Claims.....................................................17
a. Priority Tax Claims.......................................................17
b. Other Provisions Concerning Treatment of Priority Tax Claims..............18
B. Unimpaired Classes of Claims................................................................18
1. Class 1 Claims (Unsecured Priority Claims).........................................18
2. Class 3 Claims (Industrial Revenue Bond Claims)....................................18
3. Class 4, Division 4A, 4B, 4C, 4D, 4E and 4F Claims (Other Secured Claims)..........18
4. Class 7 Claims (Intercompany Claims)...............................................18
5. Class 10 Interests (Pillowtex Subsidiary Debtors Old Common Stock Interests).......18
C. Impaired Classes of Claims and Interests....................................................18
1. Class 2 Claims (Convenience Claims)................................................18
2. Class 4, Division 4G Claims (Other Secured Claims).................................18
3. Class 5 Claims (Bank Loan Claims)..................................................18
4. Class 6 Claims (Unsecured Claims)..................................................19
5. Class 8 Interests (Pillowtex Old Preferred Stock Interests)........................19
6. Class 9 Interests (Pillowtex Old Common Stock Interests)...........................19
D. Special Provisions Regarding the Treatment of Allowed Secondary Liability Claims............19
E. Special Provisions Regarding the Indenture Trustees' Claims.................................19
F. Special Provisions Regarding the State Street Settlement....................................20
ARTICLE IV. MEANS FOR IMPLEMENTATION OF THE PLAN....................................................20
A. Continued Corporate Existence and Vesting of Assets in the Reorganized Debtors..............20
B. Restructuring Transactions..................................................................21
1. Restructuring Transactions Generally...............................................21
2. Obligations of Any Successor Corporation in a Restructuring Transaction............21
3. Pillowtex Merger...................................................................21
C. Corporate Governance, Directors and Officers, Employment-Related Agreements and
Compensation Programs.......................................................................22
1. Certificates of Incorporation and Bylaws...........................................22
a. Reorganized Pillowtex.....................................................22
b. Reorganized Pillowtex Subsidiary Debtors..................................22
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(continued)
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2. Directors and Officers of the Reorganized Debtors..................................23
3. New Employment, Retirement, Indemnification and Other Related Agreements and
Incentive Compensation Programs....................................................23
4. Corporate Action...................................................................23
D. Exit Financing Revolver Facility, Exit Term Loan, Obtaining Cash for Plan
Distributions and Transfers of Funds Among the Debtors......................................24
E. Preservation of Rights of Action; Settlement Agreements and Releases........................24
1. Preservation of Rights of Action by the Debtors and the Reorganized Debtors........24
2. Releases; Indemnification..........................................................24
a. General Releases by Holders of Claims or Interests........................24
b. Releases Related to Bank Loan Claims......................................25
c. Releases Related to Preference Actions....................................25
d. Injunction Related to Releases............................................25
F. Continuation of Certain Employee and Retiree Benefits.......................................25
1. Employee Benefits..................................................................25
2. Retiree Benefits...................................................................26
G. Limitations on Amounts To Be Distributed to Holders of Allowed Insured Claims...............26
H. Cancellation and Surrender of Instruments, Securities and Other Documentation...............26
I. New Registration Rights Agreement...........................................................26
J. New Warrant Agreement.......................................................................27
K. Other Agreements Related to Implementation of the Plan......................................27
L. Release of Liens............................................................................27
M. Effectuating Documents; Further Transactions; Exemption from Certain Transfer Taxes.........27
ARTICLE V. TREATMENT OF EXECUTORY CONTRACTS OR UNEXPIRED LEASES....................................28
A. Executory Contracts or Unexpired Leases To Be Assumed or Assumed and Assigned...............28
1. Assumption and Assignment Generally................................................28
2. Assumptions and Assignments of Real Property Executory Contracts or Unexpired
Leases.............................................................................28
3. Assignments Related to the Restructuring Transactions..............................28
4. Approval of Assumptions and Assignments............................................28
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(continued)
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B. Payments Related to the Assumption of Executory Contracts or Unexpired Leases...............29
C. Executory Contracts or Unexpired Leases To Be Rejected......................................29
D. Bar Date for Rejection Damages..............................................................29
E. Special Executory Contract or Unexpired Lease Issues........................................30
1. Obligations to Indemnify Directors and Officers....................................30
2. Reinstatement of Allowed Secondary Liability Claims Arising From or Related to
Executory Contracts or Unexpired Leases Assumed by the Debtors.....................30
F. Contracts and Leases Entered Into After the Petition Date...................................30
ARTICLE VI. PROVISIONS GOVERNING DISTRIBUTIONS......................................................31
A. Distributions for Claims Allowed as of the Effective Date...................................31
1. Distributions to Be Made on the Effective Date.....................................31
2. Distributions on the Effective Date in Respect of Class 6 Unsecured Claims.........31
3. Distributions in Respect of Old 6% Debentures and Old 6% Debenture Promissory
Notes..............................................................................31
B. Method of Distributions to Holders of Claims................................................31
C. Compensation and Reimbursement for Services Related to Distributions........................32
D. Provisions Governing the Unsecured Claims Reserve...........................................32
1. Funding of the Unsecured Claims Reserve............................................32
2. Property Held in Unsecured Claims Reserve..........................................32
a. Dividends and Distributions...............................................32
b. Recourse..................................................................32
E. Delivery of Distributions and Undeliverable or Unclaimed Distributions......................32
1. Delivery of Distributions..........................................................32
a. Generally.................................................................32
b. Special Provisions for Distributions to Holders of Old Senior
Subordinated Notes Claims, Old 6% Debenture Claims or Old 6%
Debenture Promissory Note Claims..........................................33
2. Undeliverable Distributions Held by Disbursing Agents..............................33
a. Holding and Investment of Undeliverable Distributions; Undelivered
New Common Stock and New Warrants.........................................33
b. After Distributions Become Deliverable....................................33
c. Failure to Claim Undeliverable Distributions..............................34
F. Distribution Record Date....................................................................34
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(continued)
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G. Means of Cash Payments......................................................................34
H. Timing and Calculation of Amounts To Be Distributed.........................................35
1. Allowed Claims in Classes Other Than Class 6.......................................35
2. Allowed Claims in Class 6..........................................................35
a. Initial Distributions.....................................................35
b. Additional Distributions on Account of Previously Allowed Claims..........35
3. Distributions of New Common Stock and New Warrants.................................35
4. De Minimis Distributions...........................................................36
5. Compliance with Tax Requirements...................................................36
I. Setoffs.....................................................................................36
J. Surrender of Canceled Instruments or Securities.............................................37
1. Tender of Old Senior Subordinated Notes, Old 6% Debentures and Old 6%
Debenture Promissory Notes.........................................................37
2. Lost, Stolen, Mutilated or Destroyed Old Senior Subordinated Notes, Old 6%
Debentures and Old 6% Debenture Promissory Notes...................................37
3. Failure to Surrender Old Senior Subordinated Notes, Old 6% Debentures and Old
6% Debenture Promissory Notes......................................................37
4. Prepetition Credit Facility Notes..................................................38
ARTICLE VII. PROCEDURES FOR RESOLVING DISPUTED CLAIMS................................................38
A. Prosecution of Objections to Claims.........................................................38
1. Objections to Claims...............................................................38
2. Authority to Prosecute Objections..................................................38
B. Treatment of Disputed Claims................................................................38
C. Distributions on Account of Disputed Claims Once Allowed....................................38
D. Tax Requirements for Income Generated by Unsecured Claims Reserve...........................39
ARTICLE VIII. SUBSTANTIVE CONSOLIDATION OF THE DEBTORS................................................39
ARTICLE IX. CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN.......................39
A. Conditions to Confirmation..................................................................39
B. Conditions to the Effective Date............................................................40
C. Waiver of Conditions to the Confirmation or Effective Date..................................40
D. Effect of Nonoccurrence of Conditions to the Effective Date.................................40
ARTICLE X. CRAMDOWN................................................................................40
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ARTICLE XI. DISCHARGE, TERMINATION, INJUNCTION AND SUBORDINATION RIGHTS.............................41
A. Discharge of Claims and Termination of Interests............................................41
B. Injunctions.................................................................................41
C. Termination of Subordination Rights and Settlement of Related Claims and Controversies......42
ARTICLE XII. RETENTION OF JURISDICTION...............................................................42
ARTICLE XIII. MISCELLANEOUS PROVISIONS................................................................44
A. Dissolution of the Creditors' Committee.....................................................44
B. Limitation of Liability.....................................................................44
C. Modification of the Plan....................................................................44
D. Revocation of the Plan......................................................................44
E. Severability of Plan Provisions.............................................................44
F. Successors and Assigns......................................................................45
G. Service of Certain Plan Exhibits and Disclosure Statement Exhibits..........................45
H. Service of Documents........................................................................45
1. The Debtors and the Reorganized Debtors............................................45
2. The Creditors' Committee...........................................................46
3. The DIP Lenders....................................................................46
4. The United States Trustee..........................................................47
-x-
TABLE OF EXHIBITS/1/
Exhibit I.A.46 -- Terms of Exit Financing Revolver Facility/2/
Exhibit I.A.48 -- Terms of Exit Term Loan/2/
Exhibit IV.B.3 -- Plan of Merger
Exhibit IV.C.1.a.i -- Certificate of Incorporation of Reorganized Pillowtex/2/
Exhibit IV.C.1.a.ii -- Bylaws of Reorganized Pillowtex/2/
Exhibit IV.C.1.b.i -- Form of Certificate of Incorporation of Reorganized Pillowtex
Subsidiary Debtors/2/
Exhibit IV.C.1.b.ii -- Form of Bylaws of Reorganized Pillowtex Subsidiary Debtors/2/
Exhibit IV.C.2 -- Initial Board of Directors and Officers of Pillowtex Debtors/2/
Exhibit IV.C.3 -- Equity Incentive Plan, Employment Agreements and Other
Employee Benefit Plans
Exhibit IV.I -- New Registration Rights Agreement/2/
Exhibit IV.J -- New Warrant Agreement/2/
Exhibit IV.K.1 -- New Tax Sharing Agreement/2/
Exhibit V.A.1 -- Schedule of Executory Contracts or Unexpired Leases To Be Assumed/2/
Exhibit V.C -- Nonexclusive Schedule of Executory Contracts or Unexpired Leases To Be
Rejected/2/
____________
/1/ Except as otherwise indicated, all Exhibits will be available on the
Document Website once they are Filed. The Debtors reserve the right to
modify, amend, supplement, restate or withdraw any of the Exhibits after
they are Filed. The Debtors will File all modified, amended, supplemented
or restated Exhibits as promptly as possible and will make such Exhibits
available on the Document Website.
/2/ To be Filed and available for review on the Document Website no later than
15 days before the deadline to object to the Confirmation of the Plan.
INTRODUCTION
Pillowtex Corporation and the other above-captioned debtors and
debtors in possession propose the following second amended joint plan of
reorganization (the "Plan") for the resolution of the outstanding claims against
and equity interests in the Debtors. The Debtors are proponents of the Plan
within the meaning of section 1129 of the Bankruptcy Code, 11 U.S.C. ss. 1129.
Reference is made to the Debtors' disclosure statement, filed contemporaneously
with the Plan (the "Disclosure Statement"), for a discussion of the Debtors'
history, businesses, results of operations, historical financial information,
projections and properties, and for a summary and analysis of the Plan. There
also are other agreements and documents, which are or will be Filed with the
Bankruptcy Court (as defined in Article I below), that are referenced in the
Plan or the Disclosure Statement and that will be available for review.
ARTICLE I.
DEFINED TERMS, RULES OF INTERPRETATION
AND COMPUTATION OF TIME
A. Defined Terms
As used in the Plan, capitalized terms have the meanings set forth
below. Any term that is not otherwise defined herein, but that is used in the
Bankruptcy Code or the Bankruptcy Rules, will have the meaning given to that
term in the Bankruptcy Code or the Bankruptcy Rules, as applicable.
1. "Administrative Claim" means a Claim for costs and expenses of
administration allowed under section 503(b), 507(b) or 1114(e)(2) of the
Bankruptcy Code, including: (a) the actual and necessary costs and expenses
incurred after the Petition Date of preserving the respective Estates and
operating the businesses of the Debtors (such as wages, salaries, commissions
for services and payments for inventories, leased equipment and premises),
including Claims under the DIP Financing Facility; (b) compensation for legal,
financial advisory, accounting and other services and reimbursement of expenses
awarded or allowed under section 330(a) or 331 of the Bankruptcy Code, including
Fee Claims; and (c) all fees and charges assessed against the Estates under
chapter 123 of title 28, United States Code, 28 U.S.C. ss.ss. 1911-1930.
2. "Administrative Trade Claim" means an Administrative Claim arising
from or with respect to the sale of goods or rendition of services on or after
the Petition Date in the ordinary course of the applicable Debtor's business,
including Administrative Claims of employees for ordinary course wages, expense
reimbursement and health and welfare benefits.
3. "Aircraft Lease" means the Aircraft Lease (N531JF), dated as of
November 12, 1998, between Fleet National Bank as lessor and Pillowtex, Beacon
Manufacturing Company, Fieldcrest Cannon and The Leshner Corporation as lessees,
which was subsequently secured by all the collateral securing the Prepetition
Credit Facility pursuant to an amendment to the Prepetition Credit Facility and
rejected pursuant to an order of the Bankruptcy Court entered on or about
January 4, 2001.
4. "Aircraft Lease Claim" means a Claim arising under the Aircraft Lease
and any guarantee or other obligation in respect thereof by any Debtor.
5. "Alabama Revenue Bonds" means the Taxable Revenue Bonds (Fieldcrest
Cannon, Inc.) issued by the State Industrial Development Authority pursuant to
the Trust Indenture, dated as of July 1, 1994, between The First National Bank
of Boston, as trustee, and the State Industrial Development Authority.
6. "Allowed Claim" means:
a. a Claim that (i) has been listed by a particular Debtor on its
Schedules as other than disputed, contingent or unliquidated and (ii) is
not otherwise a Disputed Claim;
b. a Claim (i) for which a proof of Claim or request for payment of
Administrative Claim has been Filed by the applicable Bar Date or otherwise
been deemed timely Filed under applicable law and (ii) that is not
otherwise a Disputed Claim; or
c. a Claim that is allowed: (i) in any Stipulation of Amount and
Nature of Claim executed by the applicable Reorganized Debtor and Claim
holder on or after the Effective Date; (ii) in any contract, instrument or
other agreement entered into in connection with the Plan and, if prior to
the Effective Date, approved by the Bankruptcy Court; (iii) in a Final
Order; or (iv) pursuant to the terms of the Plan.
7. "Allowed . . . Claim" means an Allowed Claim in the particular Class
or category specified. Any reference herein to a particular Allowed Claim
includes both the secured and unsecured portions of the Claim.
8. "Ballot" means the form or forms distributed to each holder of an
impaired Claim entitled to vote on the Plan on which the holder indicates
acceptance or rejection of the Plan.
9. "Bank Loan Claim" means a Claim under the Prepetition Credit Facility,
including in respect of the Revolving Credit Notes or the Prepetition Credit
Facility Notes thereunder and any guarantees or other obligations in respect
thereof by any Debtor (taking into account principal payments previously made in
accordance with the DIP Order).
10. "Bank of America" means Bank of America, N.A. (formerly known as
NationsBank, N.A., successor by merger to NationsBank of Texas, N.A.), a
national banking association, in its individual capacity unless specified
otherwise.
11. "Bankruptcy Code" means title 11 of the United States Code, 11
U.S.C. (S)(S) 101-1330, as now in effect or hereafter amended.
12. "Bankruptcy Court" means the United States District Court having
jurisdiction over the Reorganization Cases and, to the extent of any reference
made pursuant to 28 U.S.C. (S) 157, the bankruptcy unit of the District Court.
13. "Bankruptcy Rules" means, collectively, the Federal Rules of
Bankruptcy Procedure and the local rules of the Bankruptcy Court, as now in
effect or hereafter amended.
14. "Bar Date" means the applicable bar date by which a proof of Claim
must be or must have been Filed, as established by an order of the Bankruptcy
Court, including the Bar Date Order and the Confirmation Order.
15. "Bar Date Order" means an order of the Bankruptcy Court establishing
Bar Dates for Filing proofs of Claims in the Reorganization Cases, as the same
may be amended, modified or supplemented.
16. "Business Day" means any day, other than a Saturday, Sunday or "legal
holiday" (as defined in Bankruptcy Rule 9006(a)).
2
17. "Cash Investment Yield" means the net yield earned by the Disbursing
Agent from the investment of cash held pending distribution pursuant to the Plan
(including any dividends and other distributions on account of New Common
Stock), which investment will be in a manner consistent with the Reorganized
Debtors' investment and deposit guidelines.
18. "Claim" means a "claim," as defined in section 101(5) of the
Bankruptcy Code, against any Debtor.
19. "Claims Objection Bar Date" means, for all Claims, other than those
Claims allowed in accordance with Section I.A.6.c, the latest of: (a) 120 days
after the Effective Date; (b) 60 days after the Filing of a proof of Claim for
the Claim; and (c) such other period of limitation as may be specifically fixed
by the Plan, the Confirmation Order, the Bankruptcy Rules or a Final Order for
objecting to the Claim.
20. "Class" means a class of Claims or Interests, as described in Article
II.
21. "Confirmation" means the entry of the Confirmation Order on the docket
of the Bankruptcy Court.
22. "Confirmation Date" means the date on which the Bankruptcy Court
enters the Confirmation Order on its docket, within the meaning of Bankruptcy
Rules 5003 and 9021.
23. "Confirmation Hearing" means the hearing held by the Bankruptcy Court
on Confirmation of the Plan, as the hearing may be continued from time to time.
24. "Confirmation Order" means the order of the Bankruptcy Court
confirming the Plan pursuant to section 1129 of the Bankruptcy Code.
25. "Constituent Documents" means articles or certificates of
incorporation and bylaws of a corporation, or similar constituent documents for
entities that are not corporations, including but not limited to certificates of
formation, limited liability agreements, business trust operating agreements and
similar documents.
26. "Creditors' Committee" means the official committee of unsecured
creditors of the Debtors appointed by the United States Trustee in the
Reorganization Cases pursuant to section 1102 of the Bankruptcy Code.
27. "Cure Amount Claim" means a Claim based upon a Debtor's defaults
pursuant to an Executory Contract or Unexpired Lease at the time the contract or
lease is assumed by that Debtor under section 365 of the Bankruptcy Code.
28. "Debtors" means, collectively, the above-captioned debtors and debtors
in possession identified on the cover page to the Plan, as may be modified as
set forth on Exhibit I to the Disclosure Statement.
29. "Designated Post-Petition Loans" means the cash collateral
constituting proceeds from the prepetition collateral under the Prepetition
Credit Facility that was remitted and re-advanced (or was deemed to have been
remitted and re-advanced) to the Debtors on a postpetition basis under the DIP
Order in an aggregate principal amount of $150 million.
30. "DIP Financing Facility" means, collectively: (a) the Post-Petition
Credit Agreement, dated as of November 14, 2000, as subsequently amended,
modified or extended, among the Debtors (as borrowers), those entities
identified therein as "Lenders" and their respective successors and assigns and
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Bank of America (individually, as an issuing bank and as administrative agent
for the Lenders); and (b) all guaranties, security agreements and instruments
related to thereto.
31. "DIP Lenders" means, collectively: (a) those entities identified as
"Lenders" in the DIP Financing Facility and their respective successors and
assigns and (b) Bank of America (as administrative agent for the Lenders).
32. "DIP Order" means the Final Order Authorizing Debtors in Possession to
Enter Into Post-Petition Financing Agreement and Obtain Post-Petition Financing
Pursuant to Sections 363 and 364 of the Bankruptcy Code and Providing Adequate
Protection and Granting Liens, Security Interests and Superpriority Claims
entered by the Bankruptcy Court on or about December 12, 2000, as such Order has
been or may be subsequently amended, modified or supplemented.
33. "Disbursing Agent" means Reorganized Pillowtex, in its capacity as a
disbursing agent pursuant to Section VI.B, or any Third Party Disbursing Agent.
34. "Disclosure Statement" means the disclosure statement (including all
exhibits and schedules thereto or referenced therein) that relates to the Plan,
as approved by the Bankruptcy Court pursuant to section 1125 of the Bankruptcy
Code, as the same may be subsequently amended, modified or supplemented.
35. "Disputed Claim" means:
a. if no proof of Claim has been Filed by the applicable Bar Date or
has otherwise been deemed timely Filed under applicable law: (i) a Claim
that is listed on a Debtor's Schedules as other than disputed, contingent
or unliquidated, but as to which the applicable Debtor, Reorganized Debtor
or, prior to the Confirmation Date, any other party in interest, has Filed
an objection by the Claims Objection Bar Date and the objection has not
been withdrawn or denied by a Final Order; or (ii) a Claim that is listed
on a Debtor's Schedules as disputed, contingent or unliquidated; or
b. if a proof of Claim or request for payment of an Administrative
Claim has been Filed by the Bar Date or has otherwise been deemed timely
Filed under applicable law: (i) a Claim for which no corresponding Claim is
listed on a Debtor's Schedules; (ii) a Claim for which a corresponding
Claim is listed on a Debtor's Schedules as other than disputed, contingent
or unliquidated, but the nature or amount of the Claim as asserted in the
proof of Claim varies from the nature and amount of such Claim as it is
listed on the Schedules; (iii) a Claim for which a corresponding Claim is
listed on a Debtor's Schedules as disputed, contingent or unliquidated;
(iv) a Claim for which an objection has been Filed by the applicable
Debtor, Reorganized Debtor or, prior to the Confirmation Date, any other
party in interest, by the Claims Objection Bar Date, and the objection has
not been withdrawn or denied by a Final Order; or (v) a Tort Claim.
36. "Disputed Insured Claim" and "Disputed Uninsured Claim" mean,
respectively, an Insured Claim or an Uninsured Claim that is also a Disputed
Claim.
37. "Distribution Record Date" means the Confirmation Date.
38. "Division" means a subclass of Class 4 Claims, as described in Article
II.
39. "Document Website" means the Internet site address www.pillowtex.com at
which all of the exhibits and schedules to the Plan and the Disclosure Statement
will be available to any party in interest and the public.
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40. "Effective Date" means a day, as determined by the Debtors, that is the
Business Day as soon as reasonably practicable after all conditions to the
Effective Date in Section IX.B have been met or waived pursuant to Section IX.C.
41. "Equity Incentive Plan" means the equity incentive plan adopted as of
the Effective Date, on substantially the terms described in Exhibit IV.C.3, for
the benefit of officers, directors and key employees of Reorganized Pillowtex.
42. "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
43. "Estate" means, as to each Debtor, the estate created for that Debtor
in its Reorganization Case pursuant to section 541 of the Bankruptcy Code.
44. "Exchange Act" means the Securities Exchange Act of 1934, 15
U.S.C.ss.ss. 78a-78jj, as now in effect or hereafter amended.
45. "Executory Contract" or "Unexpired Lease" means a contract or lease to
which one or more of the Debtors is a party that is subject to assumption or
rejection under section 365 of the Bankruptcy Code.
46. "Exit Financing Revolver Facility" means a senior secured revolving
credit facility in the anticipated amount of $200 million, including a $60
million letter of credit sub-facility, that will be entered into by the Debtors,
the Exit Financing Revolver Facility Agent Bank and any other participating
lenders on the Effective Date on substantially the terms set forth on Exhibit
I.A.46.
47. "Exit Financing Revolver Facility Agent Bank" means the agent bank for
the participating lenders under the Exit Financing Revolver Facility.
48. "Exit Term Loan" means a secured term loan in the amount of $150
million that will be entered into by the Debtors and the holders of Designated
Post-Petition Loans on the Effective Date on substantially the terms set forth
on Exhibit I.A.48.
49. "Exit Term Loan Notes" means the notes to be issued under the Exit Term
Loan.
50. "Face Amount" means:
a. when used with reference to a Disputed Insured Claim, either (i)
the full stated amount claimed by the holder of the Claim in any proof of
Claim Filed by the Bar Date, or otherwise deemed timely Filed under
applicable law, if the proof of Claim specifies only a liquidated amount;
(ii) if no proof of Claim is Filed by the Bar Date or otherwise deemed
timely Filed under applicable law, the full amount of the Claim listed on
the Debtors' Schedules, provided that the amount is not listed as disputed,
contingent or unliquidated; or (iii) the applicable deductible under the
relevant insurance policy, minus any reimbursement obligations of the
applicable Debtor to the insurance carrier for sums expended by the
insurance carrier on account of the Claim (including defense costs), if the
amount is less than the amount specified in (i) or (ii) above or the proof
of Claim specifies an unliquidated amount; and
b. when used with reference to a Disputed Uninsured Claim, either (i)
the full stated amount claimed by the holder of the Claim in any proof of
Claim Filed by the Bar Date or otherwise deemed timely Filed under
applicable law, if the proof of Claim specifies only a liquidated amount;
or (ii) the amount of the Claim acknowledged by the applicable Debtor or
Reorganized Debtor in any objection Filed to such Claim or in the Schedules
as an undisputed,
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noncontingent and liquidated Claim, estimated by the Bankruptcy Court
pursuant to section 502(c) of the Bankruptcy Code, proposed by the Debtors
or established by the Reorganized Debtors following the Effective Date, if
no proof of Claim has been Filed by the Bar Date or has otherwise been
deemed timely Filed under applicable law or if the proof of Claim specifies
an unliquidated amount.
51. "Facility A Term Loan Notes" means those Facility A Term Loan Notes,
together with any extension, renewal or amendment thereof, or substitution
therefor, issued by Pillowtex under the Prepetition Term Credit Agreement, which
were outstanding on the Petition Date.
52. "Facility B Term Loan Notes" means those Facility B Term Loan Notes,
together with any extension, renewal or amendment thereof, or substitution
therefor, issued by Pillowtex under the Prepetition Term Credit Agreement, which
were outstanding on the Petition Date.
53. "Fee Claim" means a Claim under section 330(a), 331, 503 or 1103 of the
Bankruptcy Code for compensation of a Professional or other entity for services
rendered or expenses incurred in the Reorganization Cases.
54. "Fee Order" means the Administrative Order, Pursuant to Sections 105(A)
and 331 of the Bankruptcy Code, Establishing Procedures for Interim Compensation
and Reimbursement of Expenses of Professionals entered by the Bankruptcy Court
on or about January 19, 2001.
55. "Fieldcrest Cannon" means Fieldcrest Cannon, Inc., a Delaware
corporation.
56. "File," "Filed" or "Filing" means file, filed or filing with the
Bankruptcy Court or its authorized designee in the Reorganization Cases.
57. "Final Order" means an order or judgment of the Bankruptcy Court, or
other court of competent jurisdiction, as entered on the docket in any
Reorganization Case or the docket of any other court of competent jurisdiction,
that has not been reversed, stayed, modified or amended, and as to which the
time to appeal or seek certiorari or move for a new trial, reargument or
rehearing has expired, and no appeal or petition for certiorari or other
proceedings for a new trial, reargument or rehearing has been timely taken, or
as to which any appeal that has been taken or any petition for certiorari that
has been timely filed has been withdrawn or resolved by the highest court to
which the order or judgment was appealed or from which certiorari was sought or
the new trial, reargument or rehearing shall have been denied or resulted in no
modification of the order.
58. "Indenture Trustees" means, individually or collectively, the Old 10%
Notes Indenture Trustee, the Old 9% Notes Indenture Trustee and the Old 6%
Debentures Indenture Trustee.
59. "Industrial Revenue Bond Claim" means a Claim arising under or in
respect of any of the documents or agreements pertaining to the Outstanding
Industrial Revenue Bonds or a loan of proceeds from the Outstanding Industrial
Revenue Bonds to any of the Debtors, including any loan agreements, guaranties,
reimbursement agreements and security agreements.
60. "Insured Claim" means any Claim arising from an incident or occurrence
alleged to have occurred prior to the Effective Date that is covered under an
insurance policy applicable to the Debtors or their businesses.
61. "Intercompany Claim" means any Claim by a Pillowtex Entity against a
Debtor.
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62. "Interest" means the rights of the holder of common or preferred stock
of, or other equity interest in, any Debtor and the rights of any entity to
purchase or demand the issuance of any of the foregoing, including: (a)
redemption, conversion, exchange, voting, participation and dividend rights; (b)
liquidation preferences; and (c) stock options and warrants.
63. "IRS" means the Internal Revenue Service of the United States of
America.
64. "MBFC Revenue Bonds" means the Mississippi Business Finance Corporation
Industrial Development Revenue Bonds, Series 1992, issued by the Mississippi
Business Finance Corporation pursuant to the Indenture of Trust dated June 1,
1992, between Bank of America, N.A. (formerly known as NationsBank of Virginia,
N.A.), as trustee, and the Mississippi Business Finance Corporation.
65. "MESA" means the Master Energy Services Agreement, dated as of June 3,
1998, between Pillowtex and DukeSolutions, Inc.
66. "National Securities Exchange" means any exchange registered pursuant
to section 6(a) of the Exchange Act.
67. "New Common Stock" means the shares of common stock, par value $.01 per
share, of Reorganized Pillowtex, authorized pursuant to the certificate of
incorporation of Reorganized Pillowtex.
68. "New Pillowtex" means Pillowtex Corporation (or such other name as the
Debtors may determine), a Delaware corporation, and the surviving corporation
following completion of the Pillowtex Merger.
69. "New Registration Rights Agreement" means the Registration Rights
Agreement among Reorganized Pillowtex and the holders of at least 10% of the
aggregate shares of New Common Stock issuable pursuant to the Plan named
therein, with respect to the registration of shares of New Common Stock held by
those parties, substantially in the form of Exhibit IV.I.
70. "New Tax Sharing Agreement" means the tax sharing agreement among the
Reorganized Debtors and certain of the other Pillowtex Entities, substantially
in the form of Exhibit IV.K.1.
71. "New Warrant Agreement" means the New Warrant Agreement between
Reorganized Pillowtex and the warrant agent named therein, in substantially the
form of Exhibit IV.J.
72. "New Warrants" means the warrants, if any, to be issued by Reorganized
Pillowtex to holders of Allowed Claims in Class 6 on the terms set forth in the
New Warrant Agreement.
73. "Old 6% Debenture Claim" means a Claim under or evidenced by the Old 6%
Debentures Indenture and any guarantees or other obligations in respect thereof
by any of the Debtors.
74. "Old 6% Debenture Promissory Note Claim" means a Claim under or
evidenced by the Old 6% Debenture Promissory Notes and any guarantees or other
obligations in respect thereof by any of the Debtors.
75. "Old 6% Debenture Promissory Notes" means, collectively, those
Subordinated Promissory Notes Nos. 1-77, dated September 21, 2000, issued by
Fieldcrest Cannon in respect of cash amounts owed to former beneficial holders
of Old 6% Debentures who converted their Old 6% Debentures into a combination of
cash and Old Common Stock of Pillowtex but were not paid the cash portion of the
consideration owed to them.
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76. "Old 6% Debentures" means the convertible debentures issued by
Fieldcrest Cannon pursuant to the Old 6% Debentures Indenture.
77. "Old 6% Debentures Indenture" means the Indenture, dated as of March
15, 1987, between Fieldcrest Cannon and the Old 6% Debentures Indenture Trustee,
concerning the 6% Convertible Subordinated Debentures Due 2012, as the same may
have been subsequently modified, amended or supplemented, together with all
instruments and agreements related thereto.
78. "Old 6% Debentures Indenture Trustee" means State Street Bank and Trust
Company (successor to Wachovia Bank and Trust Company, N.A.), as indenture
trustee under the Old 6% Debentures Indenture, or any successor thereto.
79. "Old 9% Notes" means the 9% senior subordinated notes issued by
Pillowtex pursuant to the Old 9% Notes Indenture.
80. "Old 9% Notes Indenture" means the Indenture, dated as of December 18,
1997, between Pillowtex and the Old 9% Notes Indenture Trustee, concerning the
Series A and Series B 9% Senior Subordinated Notes Due 2007, as the same may
have been subsequently modified, amended or supplemented, together with all
instruments and agreements related thereto.
81. "Old 9% Notes Indenture Trustee" means HSBC Bank, USA (successor to
U.S. Bank Trust, N.A., which was successor to Norwest Bank Minnesota, National
Association), as indenture trustee under the Old 9% Notes Indenture, or any
successor thereto.
82. "Old 10% Notes" means the 10% senior subordinated notes issued by
Pillowtex pursuant to the Old 10% Notes Indenture.
83. "Old 10% Notes Indenture" means the Indenture, dated as of November 12,
1996, between Pillowtex and the Old 10% Notes Indenture Trustee, concerning the
Series A and Series B 10% Senior Subordinated Notes Due 2006, as the same may
have been subsequently modified, amended or supplemented, together with all
instruments, and agreements related thereto.
84. "Old 10% Notes Indenture Trustee" means HSBC Bank, USA (successor to
U.S. Bank Trust, N.A., which was successor to Bank One Columbus, N.A.), as
indenture trustee under the Old 10% Notes Indenture, or any successor thereto.
85. "Old Common Stock of . . ." means, when used with reference to a
particular Debtor or Debtors, the common stock, membership interests or
partnership interests issued by such Debtor or Debtors and outstanding
immediately prior to the Petition Date; provided, however, references to "new
shares of Old Common Stock of Pillowtex" shall also mean the shares of common
stock of Pillowtex to be issued immediately prior to the Pillowtex Merger as
contemplated by Section IV.B.3.
86. "Old Preferred Stock of . . ." means, when used with reference to a
particular Debtor or Debtors, the preferred stock (including without limitation
the Series A Redeemable Convertible Preferred Stock of Pillowtex) issued by such
Debtor or Debtors and outstanding immediately prior to the Petition Date.
87. "Old Senior Subordinated Notes" means the Old 9% Notes and the Old 10%
Notes.
88. "Old Senior Subordinated Notes Claim" means a Claim under or evidenced
by the Old 9% Notes Indenture or the Old 10% Notes Indenture and any guarantees
or other obligations in respect thereof by any Debtor.
8
89. "Ordinary Course Professionals Order" means the Order Authorizing
Debtors and Debtors in Possession to Retain, Employ and Pay Certain
Professionals in the Ordinary Course of Their Businesses entered by the
Bankruptcy Court on or about November 14, 2000.
90. "Outstanding Industrial Revenue Bonds" means the Alabama Revenue Bonds
and MBFC Revenue Bonds.
91. "Overline Facility" means the Promissory Note dated May 4, 1999
between Pillowtex and Bank of America, as subsequently modified, amended or
supplemented, together with all instruments and agreements related thereto.
92. "Overline Facility Claim" means a Claim under or evidenced by the
Overline Facility.
93. "PBGC" means the Pension Benefit Guaranty Corporation.
94. "Petition Date" means November 14, 2000.
95. "Pillowtex" means Pillowtex Corporation, a Texas corporation.
96. "Pillowtex Entities" means Pillowtex and all of Pillowtex's direct or
indirect debtor and nondebtor subsidiaries.
97. "Pillowtex Merger" means the merger of Pillowtex with and into New
Pillowtex as contemplated by Section IV.B.3.
98. "Pillowtex Pension Plan" means, collectively, the Pillowtex
Corporation Retirement Plan for Hourly Employees and the Pillowtex Corporation
Retirement Plan for Salaried Employees.
99. "Pillowtex Subsidiary Debtors" means, individually or collectively, a
Debtor or Debtors other than Pillowtex.
100. "Plan" means this second amended joint plan of reorganization for the
Debtors, to the extent applicable to any Debtor, and all Exhibits attached
hereto or referenced herein, as the same may be further amended, modified or
supplemented.
101. "Plan of Merger" means the plan of merger between Pillowtex and New
Pillowtex with respect to the Pillowtex Merger.
102. "Prepetition Credit Facility" means, collectively, the Prepetition
Revolving Credit Agreement and the Prepetition Term Credit Agreement.
103. "Prepetition Credit Facility Notes" means, collectively, the notes
under the Prepetition Credit Facility, which include the Revolving Credit Notes,
the Facility A Term Loan Notes and the Facility B Term Loan Notes.
104. "Prepetition Indentures" means, individually or collectively, the Old
6% Debentures Indenture, the Old 9% Notes Indenture and the Old 10% Notes
Indenture.
105. "Prepetition Revolving Credit Agreement" means the Amended and
Restated Credit Agreement, dated as of December 19, 1997, among Pillowtex, the
lenders party thereto, and Bank of America (individually, as an issuing bank and
as administrative agent for the lenders), as subsequently modified, amended or
supplemented, together with all instruments and agreements related thereto.
9
106. "Prepetition Term Credit Agreement" means the Term Credit Agreement,
dated as of December 19, 1997, among Pillowtex, the lenders party thereto, and
Bank of America (individually, as an issuing bank and as administrative agent
for the lenders), as subsequently modified, amended or supplemented, together
with all instruments and agreements related thereto.
107. "Priority Claim" means a Claim that is entitled to priority in payment
pursuant to section 507(a) of the Bankruptcy Code that is not an Administrative
Claim or a Priority Tax Claim.
108. "Priority Tax Claim" means a Claim that is entitled to priority in
payment pursuant to section 507(a)(8) of the Bankruptcy Code.
109. "Professional" means any professional employed in the Reorganization
Cases pursuant to section 327 or 1103 of the Bankruptcy Code or any professional
or other entity seeking compensation or reimbursement of expenses in connection
with the Reorganization Cases pursuant to section 503(b)(4) of the Bankruptcy
Code.
110. "Pro Rata" means:
a. when used with reference to a distribution of New Common Stock or
New Warrants to holders of Allowed Claims in Class 5 or 6 pursuant to
Article III, proportionately so that with respect to a particular Allowed
Claim in Class 5 or 6, the ratio of (i)(A) the amount of New Common Stock
or New Warrants distributed on account of the Claim to (B) the amount of
the Claim, is the same as the ratio of (ii)(A) the amount of New Common
Stock or New Warrants distributed on account of all Allowed Claims in the
Class to (B) the amount of all Allowed Claims in the Class; and
b. when used with reference to distributions of cash to holders of
Allowed Claims in Class 6, including the Cash Investment Yield, the portion
of cash allocable to a particular Allowed Claim on the basis of the amount
of cash then being distributed on account of the Claim (including dividends
and other distributions on the New Common Stock being distributed on
account of the Claim). Calculations of the Pro Rata shares of Cash
Investment Yield to be distributed at any particular time will be based on
the Cash Investment Yield generated as of the last day of the month prior
to the month in which such distributions are to be made.
111. "Quarterly Distribution Date" means the last Business Day of the month
following the end of each calendar quarter after the Effective Date; provided,
however, that if the Effective Date is within 45 days of the end of a calendar
quarter, the first Quarterly Distribution Date will be the last Business Day of
the month following the end of the first calendar quarter after the calendar
quarter in which the Effective Date falls.
112. "Real Property Executory Contract or Unexpired Lease" means,
collectively, an Executory Contract or Unexpired Lease relating to a Debtor's
interest in real property and any Executory Contracts and Unexpired Leases
granting rights or interests related to or appurtenant to the applicable real
property, including all easements; licenses; permits; rights; privileges;
immunities; options; rights of first refusal; powers; uses; usufructs;
reciprocal easement or operating agreements; vault, tunnel or bridge agreements
or franchises; development rights; and any other interests in real estate or
rights in rem related to the applicable real property.
113. "Recovery Action" means, collectively and individually, preference
actions, fraudulent conveyance actions, rights of setoff and other claims,
demands, rights or causes of action under sections 502(d), 510, 544, 547, 548,
549, 550 and 553 of the Bankruptcy Code and other applicable bankruptcy and
nonbankruptcy law.
10
114. "Reinstated" or "Reinstatement" means rendering a Claim or Interest
unimpaired within the meaning of section 1124 of the Bankruptcy Code. Unless the
Plan specifies a particular method of Reinstatement, when the Plan provides that
an Allowed Claim or Interest will be Reinstated, the Claim or Interest will be
Reinstated, at the applicable Reorganized Debtor's sole discretion, in
accordance with one of the following:
a. the legal, equitable and contractual rights to which the Claim or
Interest entitles the holder will be unaltered; or
b. notwithstanding any contractual provision or applicable law that
entitles the holder of the Claim or Interest to demand or receive
accelerated payment of the Claim or Interest after the occurrence of a
default:
i. any such default that occurred before or after the
commencement of the applicable Reorganization Case, other than a
default of a kind specified in section 365(b)(2) of the Bankruptcy
Code, will be cured;
ii. the maturity of the Claim or Interest as the maturity existed
before the default will be reinstated;
iii. the holder of the Claim or Interest will be compensated for
any damages incurred as a result of any reasonable reliance by the
holder on the contractual provision or applicable law; and
iv. the legal, equitable or contractual rights to which the Claim
or Interest entitles the holder of the Claim or Interest will not
otherwise be altered.
115. "Reorganization Case" means: (a) when used with reference to a
particular Debtor, the chapter 11 case pending for that Debtor in the Bankruptcy
Court and (b) when used with reference to all Debtors, the chapter 11 cases
pending for the Debtors in the Bankruptcy Court.
116. "Reorganized . . ." means, when used in reference to a particular
Debtor, such Debtor on and after the Effective Date; provided, however, that
from and after the Effective Date, Reorganized Pillowtex shall mean the entity
surviving the Pillowtex Merger.
117. "Reserved Shares" means (a) 600,000 shares of New Common Stock to be
placed in the Unsecured Claims Reserve for distribution to holders of Allowed
Claims in Class 6 if the holders of Allowed Claims in Class 6 accept the Plan or
(b) 200,000 shares of New Common Stock to be placed in the Unsecured Claims
Reserve for distribution to holders of Allowed Claims in Class 6 if the holders
of Allowed Claims in Class 6 do not accept the Plan.
118. "Reserved Warrants" means New Warrants exercisable to purchase up to
an aggregate of 3,529,412 shares of New Common Stock to be placed in the
Unsecured Claims Reserve for distribution to holders of Allowed Claims in Class
6, provided that the holders of Allowed Claims in Class 6 accept the Plan.
119. "Restructuring Transactions" means, collectively, the Pillowtex Merger
and those mergers, consolidations, restructurings, conversions, dispositions,
liquidations or dissolutions that the Debtors or Reorganized Debtors determine
to be necessary or appropriate to effect a corporate restructuring of their
respective businesses or otherwise to simplify the overall corporate structure
of the Reorganized Debtors.
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120. "Revolving Credit Notes" means those Revolving Credit Notes, together
with any extension, renewal or amendment thereof, or substitution therefor,
issued by Pillowtex under the Prepetition Revolving Credit Agreement, which were
outstanding on the Petition Date.
121. "Schedules" means the schedules of assets and liabilities and the
statements of financial affairs Filed by the Debtors, as required by section 521
of the Bankruptcy Code and the Official Bankruptcy Forms, as the same may have
been or may be amended, modified or supplemented.
122. "Secondary Liability Claim" means a Claim that arises from a Debtor
being liable as a guarantor of, or otherwise being jointly, severally or
secondarily liable for, any contractual, tort or other obligation of another
Debtor, including any Claim based on: (a) guaranties of collection, payment or
performance; (b) indemnity bonds, obligations to indemnify or obligations to
hold harmless; (c) performance bonds; (d) contingent liabilities arising out of
contractual obligations or out of undertakings (including any assignment or
other transfer) with respect to leases, operating agreements or other similar
obligations made or given by a Debtor relating to the obligations or performance
of another Debtor; (e) vicarious liability; (f) liabilities arising out of
piercing the corporate veil, alter ego liability or similar legal theories; or
(g) any other joint or several liability that any Debtor may have in respect of
any obligation that is the basis of a Claim.
123. "Secured Claim" means a Claim that is secured by a lien on property in
which an Estate has an interest or that is subject to setoff under section 553
of the Bankruptcy Code, to the extent of the value of the Claim holder's
interest in the applicable Estate's interest in the property or to the extent of
the amount subject to setoff, as applicable, as determined pursuant to sections
506(a) and, if applicable, 1129(b) of the Bankruptcy Code.
124. "Securities Act" means the Securities Act of 1933, 15 U.S.C.Sections.
77a-77aa, as now in effect or hereafter amended.
125. "State Street Motion" means the Motion of State Street Bank and Trust
Company, as Trustee for the Holders of the 6% Convertible Debentures due 2012,
for Leave of Court to, Inter Alia, Prosecute Adversary Proceeding on Behalf of
Fieldcrest Cannon, Inc. and Memorandum of Law in Support Thereof, Filed by State
Street Bank and Trust Company on December 21, 2001.
126. "State Street Settlement" means the settlement of the matters
contemplated by the State Street Motion embodied by the Plan pursuant to which
holders of the Old Senior Subordinated Notes, as of the Effective Date, will be
deemed to have waived their rights to contractual subordination set forth in the
Old 6% Debentures Indenture against holders of the Old 6% Debentures in
consideration of delivery to holders of the Old Senior Subordinated Notes under
the Plan of (a) all of the New Common Stock that otherwise would be
distributable to the holders of Old 6% Debentures under Class 6 in the absence
of contractual subordination and (b) 50% of the New Warrants, if any, otherwise
distributable to the holders of the Old 6% Debentures in the absence of
contractual subordination. Each holder of an Old 6% Debenture will be entitled
to retain its Pro Rata share of 50% of the New Warrants, if any, without further
dilution or turnover by virtue of the subordination provision in the Old 6%
Debentures Indenture. Holders of Old 6% Debenture Promissory Note Claims will
receive their Pro Rata share of New Common Stock and New Warrants based upon
such Claims without any dilution or turnover by virtue of the subordination
provisions of any Old 6% Debenture Promissory Notes. Holders of the Old 6%
Debentures and Old 6% Debenture Promissory Notes will, as of the Effective Date,
be deemed to have waived any claims against the Debtors, holders of Old Senior
Subordinated Notes and the respective Indenture Trustees, and holders of Old
Senior Subordinated Notes will, as of the Effective Date, be deemed to have
waived any claims against the Debtors, holders of Old 6% Debentures, holders of
Old 6% Debenture Promissory Notes and the respective Indenture Trustees.
12
127. "Stipulation of Amount and Nature of Claim" means a stipulation or
other agreement between the applicable Debtor or Reorganized Debtor and a holder
of a Claim or Interest, or an agreed order of the Bankruptcy Court, establishing
the amount and nature of a Claim or Interest.
128. "Subordination Reserve Allocation" means the shares of New Common
Stock and New Warrants, if any, that will be included in the Unsecured Claims
Reserve and distributed to holders of Allowed Old Senior Subordinated Note
Claims in Class 6 instead of holders of Old 6% Debenture Claims pursuant to the
State Street Settlement.
129. "Tax" means (a) any net income, alternative or add-on minimum, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, license, property, environmental or other tax, assessment or
charge of any kind whatsoever (together in each instance with any interest,
penalty, addition to tax or additional amount) imposed by any federal, state,
local or foreign taxing authority; or (b) any liability for payment of any
amounts of the foregoing types as a result of being a member of an affiliated,
consolidated, combined or unitary group, or being a party to any agreement or
arrangement whereby liability for payment of any such amounts is determined by
reference to the liability of any other entity.
130. "Third Party Disbursing Agent" means an entity designated by
Reorganized Pillowtex to act as a Disbursing Agent pursuant to Section VI.B.
131. "Tort Claim" means any Claim that has not been settled, compromised or
otherwise resolved that (a) arises out of allegations of personal injury,
wrongful death, property damage, products liability or similar legal theories of
recovery; or (b) arises under any federal, state or local statute, rule,
regulation or ordinance governing, regulating or relating to health, safety,
hazardous substances or the environment.
132. "Trade Claim" means any Unsecured Claim arising from or with respect
to the sale of goods or rendition of services prior to the Petition Date in the
ordinary course of the applicable Debtor's business, including any Claim of an
employee that is not a Priority Claim.
133. "Uninsured Claim" means any Claim that is not an Insured Claim.
134. "Unsecured Claim" means any Claim that is not an Administrative Claim,
Cure Amount Claim, Priority Claim, Priority Tax Claim or Secured Claim.
135. "Unsecured Claims Reserve" means the reserve of Reserved Shares,
Reserved Warrants and cash, if any, established pursuant to Section VI.D.1 for
Claims in Class 6, which reserve will be maintained in trust for holders of
Allowed Claims in Class 6 and will not constitute property of any of the
Reorganized Debtors.
136. "Voting Deadline" means the deadline for submitting Ballots to accept
or reject the Plan in accordance with section 1126 of the Bankruptcy Code that
is specified in the Disclosure Statement, the Ballots or related solicitation
documents approved by the Bankruptcy Court.
B. Rules of Interpretation and Computation of Time
1. Rules of Interpretation
For purposes of the Plan, unless otherwise provided herein: (a)
whenever from the context it is appropriate, each term, whether stated in the
singular or the plural, will include both the singular and the plural; (b)
unless otherwise provided in the Plan, any reference in the Plan to a contract,
13
instrument, release or other agreement or document being in a particular form or
on particular terms and conditions means that the document will be substantially
in such form or substantially on those terms and conditions; (c) any reference
in the Plan to an existing document or Exhibit Filed or to be Filed means the
document or Exhibit, as it may have been or may be amended, modified or
supplemented pursuant to the Plan or Confirmation Order; (d) any reference to an
entity as a holder of a Claim or Interest includes that entity's successors,
assigns and affiliates; (e) all references in the Plan to Sections, Articles and
Exhibits are references to Sections, Articles and Exhibits of or to the Plan;
(f) the words "herein," "hereunder" and "hereto" refer to the Plan in its
entirety rather than to a particular portion of the Plan; (g) captions and
headings to Articles and Sections are inserted for convenience of reference only
and are not intended to be a part of or to affect the interpretation of the
Plan; (h) subject to the provisions of any contract, Constituent Document,
instrument, release or other agreement or document entered into or delivered in
connection with the Plan, the rights and obligations arising under the Plan will
be governed by, and construed and enforced in accordance with, federal law,
including the Bankruptcy Code and the Bankruptcy Rules; and (i) the rules of
construction set forth in section 102 of the Bankruptcy Code will apply.
2. Computation of Time
In computing any period of time prescribed or allowed by the Plan, the
provisions of Bankruptcy Rule 9006(a) will apply.
ARTICLE II.
CLASSES OF CLAIMS AND INTERESTS
All Claims and Interests, except Administrative Claims and Priority
Tax Claims, are placed in the Classes set forth below. In accordance with
section 1123(a)(1) of the Bankruptcy Code, Administrative Claims (including
claims in respect of Designated Post-Petition Loans under the DIP Order) and
Priority Tax Claims, as described in Section III.A, have not been classified and
thus are excluded from the following Classes. A Claim or Interest is classified
in a particular Class only to the extent that the Claim or Interest qualifies
within the description of that Class and is classified in other Classes to the
extent that any remainder of the Claim or Interest qualifies within the
description of the other Classes.
A. Unimpaired Classes of Claims and Interests
1. Class 1 (Unsecured Priority Claims): Priority Claims against any
Debtor that are entitled to priority under sections 507(a)(3), 507(a)(4),
507(a)(5) or 507(a)(6) of the Bankruptcy Code.
2. Class 3 (Industrial Revenue Bond Claims): Industrial Revenue Bond
Claims against any Debtor.
3. Class 4, Divisions 4A, 4B, 4C, 4D, 4E and 4F (Other Secured Claims):
Secured Claims against any Debtor that are not otherwise classified in this
Article II are included in Class 4, which is divided into seven separate
Divisions. The following six Divisions are unimpaired: (a) Division 4A,
consisting of Secured Claims against any Debtor pertaining to any mechanics'
lien asserted by R. Phillips Construction; (b) Division 4B, consisting of
Secured Claims against any Debtor pertaining to any mechanics' lien asserted by
Smith Gray Electric; (c) Division 4C, consisting of Secured Claims against any
Debtor pertaining to any mechanics' lien asserted by Southern Mechanical
Services; (d) Division 4D, consisting of Secured Claims against any Debtor
pertaining to any mechanics' lien asserted by Adams Electric; (e) Division 4E,
consisting of Secured Claims against any Debtor pertaining to any mechanics'
lien asserted by Sander Brothers; and (f) Division 4F, consisting of Secured
Claims against any Debtor
14
arising under or evidenced by Debtor Opelika Industries, Inc.'s Promissory Note,
dated December 29, 1995, payable to General Electric Capital Corporation.
4. Class 7 (Intercompany Claims): Intercompany Claims.
5. Class 10 (Pillowtex Subsidiary Debtors Old Common Stock Interests):
Interests on account of the Old Common Stock of the Pillowtex Subsidiary
Debtors.
B. Impaired Classes of Claims and Interests
1. Class 2 (Convenience Claims): Unsecured Claims against any Debtor that
otherwise would be classified in Class 6, except that each applicable Claim is
equal to or less than $2,500. For purposes of treatment under Class 2, multiple
Claims of a holder against a particular Debtor arising in a series of similar or
related transactions between the Debtor and the original holder of the Claims
will be treated as a single Claim and no splitting of Claims will be recognized
for purposes of this distribution.
2. Class 4, Division 4G (Other Secured Claims): Secured Claims against
any Debtor that are not otherwise classified in this Article II are included in
Class 4, which is divided into seven separate Divisions. Division 4G is impaired
and consists of Secured Claims, if any, against any Debtor arising under the
MESA.
3. Class 5 (Bank Loan Claims): Secured and Unsecured Bank Loan Claims
against any Debtor.
4. Class 6 (Unsecured Claims): Overline Facility Claims, Aircraft Lease
Claims, Old Senior Subordinated Notes Claims, Old 6% Debenture Claims and Old 6%
Debenture Promissory Note Claims against any Debtor and Unsecured Claims against
any Debtor that are not otherwise classified under this Article II, including
Trade Claims and Tort Claims.
5. Class 8 (Pillowtex Old Preferred Stock Interests): Interests in
Pillowtex on account of the Old Preferred Stock of Pillowtex.
6. Class 9 (Pillowtex Old Common Stock Interests): Interests in Pillowtex
on account of the Old Common Stock of Pillowtex.
ARTICLE III.
TREATMENT OF CLAIMS AND INTERESTS
A. Unclassified Claims
1. Payment of Administrative Claims
a. Administrative Claims in General
Except as specified in this Section III.A.1, and subject to the bar
date provisions herein, unless otherwise agreed by the holder of an
Administrative Claim and the applicable Debtor or Reorganized Debtor, each
holder of an Allowed Administrative Claim will receive, in full satisfaction of
its Administrative Claim, cash equal to the allowed amount of the Administrative
Claim either (i) on the Effective Date or (ii) if the Administrative Claim is
not allowed as of the Effective Date, 30 days after the date on which an order
allowing the Administrative Claim becomes a Final Order or a Stipulation of
Amount and Nature of Claim is executed by the applicable Reorganized Debtor and
the holder of the Administrative Claim.
15
b. Statutory Fees
On or before the Effective Date, Administrative Claims for fees
payable pursuant to 28 U.S.C. ss. 1930, as determined by the Bankruptcy Court at
the Confirmation Hearing, will be paid in cash equal to the amount of the
Administrative Claims. All fees payable pursuant to 28 U.S.C. ss. 1930 will be
paid by the Reorganized Debtors in accordance therewith until the closing of the
Reorganization Cases pursuant to section 350(a) of the Bankruptcy Code.
c. Ordinary Course Liabilities
Allowed Administrative Claims based on liabilities incurred by a
Debtor in the ordinary course of its business (including Administrative Trade
Claims, Administrative Claims of governmental units for Taxes, including Tax
audit Claims related to Tax years commencing after the Petition Date and
Administrative Claims arising from those contracts and leases of the kind
described in Section V.F) will be paid by the applicable Reorganized Debtor
pursuant to the terms and conditions of the particular transaction giving rise
to the Administrative Claims, without any further action by the holders of the
Administrative Claims.
d. Claims Under DIP Financing Facility and DIP Order
Unless otherwise agreed by the DIP Lenders pursuant to the DIP
Financing Facility, Allowed Administrative Claims arising under or evidenced by
the DIP Financing Facility, except for Allowed Administrative Claims in respect
of Designated Post-Petition Loans, will be paid in cash equal to the amount of
such Allowed Administrative Claims on the Effective Date. Each holder of an
Allowed Administrative Claim in respect of the Designated Post-Petition Loans
deemed to have been made under the DIP Order will receive on the Effective Date
an Exit Term Loan Note in an amount equal to the amount of its Allowed
Administrative Claim.
e. Administrative Claims of Indenture Trustees
Allowed Administrative Claims of the Indenture Trustees will be paid
pursuant to the terms of Section III.E.
f. Bar Dates for Administrative Claims
i. General Bar Date Provisions
Except as otherwise provided in Sections III.A.1.f.ii and III.E,
unless previously Filed, requests for payment of Administrative Claims must be
Filed and served on the Reorganized Debtors, pursuant to the procedures
specified in the Confirmation Order and the notice of entry of the Confirmation
Order, no later than 30 days after the Effective Date. Holders of Administrative
Claims that are required to File and serve a request for payment of the
Administrative Claims and that do not File and serve a request by the applicable
Bar Date will be forever barred from asserting those Administrative Claims
against the Debtors, the Reorganized Debtors or their respective property and
those Administrative Claims will be deemed discharged as of the Effective Date.
Objections to such requests must be Filed and served on the Reorganized Debtors
and the requesting party by the later of (A) 120 days after the Effective Date
or (B) 60 days after the Filing of the applicable request for payment of
Administrative Claims.
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ii. Bar Dates for Certain Administrative Claims
(A) Professional Compensation
Professionals or other entities asserting a Fee Claim for services
rendered before the Effective Date must File and serve on the Reorganized
Debtors and any other entities that are designated by the Bankruptcy Rules, the
Confirmation Order, the Fee Order or other order of the Bankruptcy Court an
application for final allowance of such Fee Claim no later than 60 days after
the Effective Date; provided, however, that any Professional who may receive
compensation or reimbursement of expenses pursuant to the Ordinary Course
Professionals Order may continue to receive compensation and reimbursement of
expenses for services rendered before the Effective Date, without further
Bankruptcy Court review or approval, pursuant to the Ordinary Course
Professionals Order. Objections to any Fee Claim must be Filed and served on the
Reorganized Debtors and the requesting party by the later of 90 days after the
Effective Date or 30 days after the Filing of the applicable request for payment
of the Fee Claim. To the extent necessary, the Confirmation Order will amend and
supersede any previously entered order of the Bankruptcy Court, including the
Fee Order, regarding the payment of Fee Claims.
(B) Ordinary Course Liabilities
Holders of Administrative Claims based on liabilities incurred by a
Debtor in the ordinary course of its business, including Administrative Trade
Claims, Administrative Claims of governmental units for Taxes (including Tax
audit Claims arising after the Petition Date) and Administrative Claims arising
from those contracts and leases of the kind described in Section V.F, will not
be required to File or serve any request for payment of the Administrative
Claims. Those Administrative Claims will be satisfied pursuant to Section
III.A.1.c.
(C) Claims Under DIP Financing Facility and DIP Order
Holders of Administrative Claims under or evidenced by the DIP
Financing Facility or the DIP Order will not be required to File or serve any
request for payment of the Claims. Those Administrative Claims will be satisfied
pursuant to Section III.A.1.d.
2. Payment of Priority Tax Claims
a. Priority Tax Claims
Pursuant to section 1129(a)(9)(C) of the Bankruptcy Code, unless
otherwise agreed by the holder of a Priority Tax Claim and the applicable Debtor
or Reorganized Debtor, each holder of an Allowed Priority Tax Claim will
receive, in full satisfaction of its Priority Tax Claim, deferred cash payments
over a period not exceeding six years from the date of assessment of such
Priority Tax Claim. Payments will be made in equal annual installments of
principal, plus simple interest accruing from the Effective Date at 5% per annum
on the unpaid portion of each Allowed Priority Tax Claim (or upon such other
terms determined by the Bankruptcy Court to provide the holders of Priority Tax
Claims with deferred cash payments having a value, as of the Effective Date,
equal to the allowed amount of the Priority Tax Claims). Unless otherwise agreed
by the holder of a Priority Tax Claim and the applicable Debtor or Reorganized
Debtor, the first payment on account of the Priority Tax Claim will be payable
one year after the Effective Date or, if the Priority Tax Claim is not allowed
within one year after the Effective Date, the first Quarterly Distribution Date
after the date on which (i) an order allowing the Priority Tax Claim becomes a
Final Order or (ii) a Stipulation of Amount and Nature of Claim is executed by
the applicable Reorganized Debtor and the holder of the Priority Tax Claim;
provided, however, that the Reorganized Debtors will have the right to pay any
Allowed Priority Tax Claim, or any remaining
17
balance of the Priority Tax Claim, in full at any time on or after the Effective
Date, without premium or penalty.
b. Other Provisions Concerning Treatment of Priority Tax Claims
Notwithstanding the provisions of Section III.A.2.a, the holder of an
Allowed Priority Tax Claim will not be entitled to receive any payment on
account of any penalty arising with respect to or in connection with the Allowed
Priority Tax Claim. Any Claim or demand for any such penalty (i) will be subject
to treatment in Class 6 and (ii) the holder of an Allowed Priority Tax Claim
will not assess or attempt to collect the penalty from the Reorganized Debtors
or their property.
B. Unimpaired Classes of Claims
1. Class 1 Claims (Unsecured Priority Claims) are Unimpaired. On the
Effective Date, each holder of an Allowed Claim in Class 1 will receive cash
equal to the amount of the Allowed Claim.
2. Class 3 Claims (Industrial Revenue Bond Claims) are Unimpaired. On the
Effective Date, Allowed Industrial Revenue Bond Claims will be Reinstated and
any letters of credit issued in respect thereof under the Prepetition Credit
Facility will be replaced, substituted or otherwise satisfied with equivalent
letters of credit under the Exit Financing Revolver Facility.
3. Class 4, Division 4A, 4B, 4C, 4D, 4E and 4F Claims (Other Secured
Claims) are Unimpaired. On the Effective Date, (a) each holder of an Allowed
Claim in Divisions 4A, 4B, 4C, 4D and 4E will receive cash in an amount equal to
the amount of the Allowed Claim and (b) each holder of an Allowed Claim in
Division 4F will receive, in full satisfaction of the Allowed Claim, the
treatment provided for in the Stipulation and Agreed Order Regarding Secured
Claim of General Electric Capital Corporation signed by the Bankruptcy Court on
November 16, 2001.
4. Class 7 Claims (Intercompany Claims) are Unimpaired. On the Effective
Date, Allowed Intercompany Claims will be Reinstated.
5. Class 10 Interests (Pillowtex Subsidiary Debtors Old Common Stock
Interests) are Unimpaired. On the Effective Date, Interests in Class 10 will be
Reinstated.
C. Impaired Classes of Claims and Interests
1. Class 2 Claims (Convenience Claims) are Impaired. On the Effective
Date, each holder of an Allowed Claim in Class 2 will receive cash equal to 10%
of the amount of the Allowed Claim.
2. Class 4, Division 4G Claims (Other Secured Claims) are Impaired. If
the Bankruptcy Court rules that (i) the MESA is a financing arrangement, then on
the later of the Effective Date or the date that the Bankruptcy Court rules,
unless otherwise agreed by a Claim holder and each applicable Debtor, each
holder of an Allowed Claim in Division 4G will receive, in full satisfaction of
its Allowed Claim, cash equal to the value of the collateral securing the
Allowed Claim (but only to the extent the holder has a valid, enforceable lien
on such collateral) and an Unsecured Claim (to be included in Class 6) for the
remainder of the Allowed Claim amount or (ii) the MESA is a true lease, there
will be no Secured Claim with respect to the MESA and the MESA will be treated
as an Unexpired Lease pursuant to Article V.
3. Class 5 Claims (Bank Loan Claims) are Impaired. On the Effective Date,
each holder of an Allowed Bank Loan Claim will receive, in full satisfaction of
the Allowed Claim, (a) if Class 6
18
accepts the Plan, a Pro Rata share of 18,000,000 shares of New Common Stock and
(b) if Class 6 does not accept the Plan, a Pro Rata share of 18,300,000 shares
of New Common Stock.
4. Class 6 Claims (Unsecured Claims) are Impaired. On the Effective Date,
each holder of an Allowed Claim in Class 6 will receive, in full satisfaction of
its Allowed Claim, subject to the State Street Settlement and, if Class 6 does
not accept the Plan, any enforceable subordination rights of holders of Overline
Facility Claims and Aircraft Lease Claims (which are expressly preserved in the
event that Class 6 does not accept the Plan): (a) if Class 6 accepts the Plan, a
Pro Rata share of (i) the number of Reserved Shares that are to be distributed
if Class 6 accepts the Plan and (ii) the Reserved Warrants; or (b) if Class 6
does not accept the Plan, a Pro Rata share of the number of Reserved Shares that
are to be distributed if Class 6 does not accept the Plan and no New Warrants.
5. Class 8 Interests (Pillowtex Old Preferred Stock Interests) are
Impaired. No property will be distributed to or retained by the holders of
Interests in Class 8, and the Interests will be canceled on the Effective Date.
6. Class 9 Interests (Pillowtex Old Common Stock Interests) are Impaired.
No property will be distributed to or retained by the holders of Interests in
Class 9, and the Interests will be canceled on the Effective Date as provided in
Section IV.B.3.
D. Special Provisions Regarding the Treatment of Allowed Secondary Liability
Claims
The classification and treatment of Allowed Claims under the Plan take
into consideration all Allowed Secondary Liability Claims. On the Effective
Date, Allowed Secondary Liability Claims will be treated as follows:
1. The Allowed Secondary Liability Claims arising from or related to any
Debtor's joint or several liability for the obligations under any (a) Allowed
Claim that is being Reinstated under the Plan or (b) Executory Contract or
Unexpired Lease that is being assumed or deemed assumed by another Debtor or
under any Executory Contract or Unexpired Lease that is being assumed by and
assigned to another Debtor or any other entity will be Reinstated.
2. Except as provided in Section III.D.1 or as otherwise specifically
provided herein, holders of Allowed Secondary Liability Claims will be entitled
to only one distribution in respect of the underlying Allowed Claim. No multiple
recovery on account of any Allowed Secondary Liability Claim will be provided or
permitted.
E. Special Provisions Regarding the Indenture Trustees' Claims
1. If Class 6 does not accept the Plan, the provisions of this Section
III.E will be of no force or effect.
2. In full satisfaction of the Claims of each Indenture Trustee for fees
and disbursements, including fees and expenses of Professionals and any Claims
secured by the charging liens of the Indenture Trustees under the Prepetition
Indentures, subject to the provisions of this Section III.E, each Indenture
Trustee will receive from the Reorganized Debtors cash equal to the amount of
the Claims and any charging lien held by the Indenture Trustee will be released
as of the Effective Date. Distributions received by holders of Allowed Claims in
respect of Old Senior Subordinated Notes or Old 6% Debentures pursuant to the
Plan will not be reduced on account of the payment of the applicable Indenture
Trustee's Claims. If Class 6 does not accept the Plan, any payments to the
Indenture Trustees would have to be funded out of distributions, if any, to the
holders of Old Senior Subordinated Notes, Old 6% Debentures or Old 6% Debenture
Promissory Notes.
19
3. Ten days after entry of the Confirmation Order, each Indenture Trustee
will submit to the Reorganized Debtors (to the attention of the Chief Financial
Officer) appropriate documentation in support of the fees and expenses incurred
by that Indenture Trustee in connection with the Reorganization Cases through
that date, whether incurred prior to or subsequent to the Petition Date,
together with a detailed, reasonable estimate of any fees and expenses to be
incurred thereafter. The estimate of fees and expenses may include, without
limitation, projected fees and expenses relating to surrender and cancellation
of notes, distribution of securities and fees and expenses expected to be
incurred in connection with obtaining Bankruptcy Court approval of the fees and
expenses. On the Effective Date or seven Business Days after receiving this
documentation, whichever is later, the Reorganized Debtors will place the amount
of each of the Indenture Trustee's identified fees and expenses (including any
reasonable estimated fees and expenses) in a segregated account for the
exclusive benefit of each Indenture Trustee and will identify each segregated
account to each Indenture Trustee. Each Indenture Trustee's fees and expenses
will be paid from the respective account solely in accordance with the
procedures set forth in this Section III.E.
4. The Confirmation Order will provide that each Indenture Trustee's
charging lien will attach solely to the cash placed in the respective segregated
account established pursuant to Section III.E.3 until the funds in that account
are distributed in accordance with this Section III.E.
5. If the Reorganized Debtors dispute the reasonableness of any Indenture
Trustee's Claim for fees and expenses, the Reorganized Debtors shall notify the
relevant Indenture Trustee within 10 days of receipt of the documentation
referenced to above. If the Reorganized Debtors notify an Indenture Trustee of
such an objection, no later than 30 days after the Effective Date, the relevant
Indenture Trustee shall (a) File a motion with the Bankruptcy Court seeking
approval of its fees and expenses incurred through the Effective Date under the
terms of the applicable Prepetition Indenture and (b) serve such motion on the
Reorganized Debtors and the United States Trustee. The Bankruptcy Court may
approve the fees and expenses requested in such motion to the extent that the
amounts are permitted and appropriate under the terms of the applicable
Prepetition Indenture, which, notwithstanding the cancellation of the
Prepetition Indentures pursuant to Section IV.H, will govern this determination.
Each Indenture Trustee's request for approval of its fees and expenses will not
be subject to the guidelines and rules applicable to a fee application or the
standards contained in sections 330 or 503(b) of the Bankruptcy Code. In the
absence of objection by the Reorganized Debtors or upon approval by the
Bankruptcy Court, each Indenture Trustee's approved fees and expenses for the
period prior to the Effective Date will be treated as Allowed Claims and will be
paid from the respective segregated account established pursuant to Section
III.E.3.
6. Any amounts remaining in a segregated account established pursuant to
Section III.E.3 after each respective Indenture Trustee's fees and expenses have
been paid, will become the sole property of, and upon the consent of the
relevant Indenture Trustee or an order of the Bankruptcy Court, shall be
immediately returned to, the Reorganized Debtors.
F. Special Provisions Regarding the State Street Settlement
The State Street Settlement shall become effective on the Effective Date.
ARTICLE IV.
MEANS FOR IMPLEMENTATION OF THE PLAN
A. Continued Corporate Existence and Vesting of Assets in the Reorganized
Debtors
Except as otherwise provided herein (and subject to the Restructuring
Transaction provisions of Section IV.B), each Debtor will, as a Reorganized
Debtor, continue to exist after the Effective Date as a separate entity, with
all the powers of a corporation, limited liability company or
20
business trust, as applicable, under applicable law and without prejudice to any
right to alter or terminate such existence (whether by merger, dissolution or
otherwise) under applicable state law. Except as otherwise provided herein, as
of the Effective Date, all property of the respective Estates of the Debtors,
and any property acquired by a Debtor or Reorganized Debtor under the Plan, will
vest in the applicable Reorganized Debtor, free and clear of all Claims, liens,
charges, other encumbrances and Interests. On and after the Effective Date, each
Reorganized Debtor may operate its businesses and may use, acquire and dispose
of property and compromise or settle any Claims without supervision or approval
by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or
Bankruptcy Rules, other than those restrictions expressly imposed by the Plan or
the Confirmation Order. Without limiting the foregoing, each Reorganized Debtor
may pay the charges that it incurs on or after the Effective Date for
Professionals' fees, disbursements, expenses or related support services
(including fees relating to the preparation of Professional fee applications)
without application to the Bankruptcy Court.
B. Restructuring Transactions
1. Restructuring Transactions Generally
The applicable Debtors or Reorganized Debtors may enter into the
Restructuring Transactions and may take any actions as may be necessary or
appropriate to effect a corporate restructuring of their respective businesses
or simplify the overall corporate structure of the Reorganized Debtors. The
restructuring may include one or more mergers, consolidations, restructurings,
conversions, dispositions, liquidations or dissolutions, as may be determined by
the Debtors or the Reorganized Debtors to be necessary or appropriate. The
actions to effect these transactions may include: (a) the execution and delivery
of appropriate agreements or other documents of merger, consolidation,
restructuring, conversion, disposition, liquidation or dissolution containing
terms that are consistent with the terms of the Plan and that satisfy the
applicable requirements of applicable state law and any other terms to which the
applicable entities may agree; (b) the execution and delivery of appropriate
instruments of transfer, assignment, assumption or delegation of any asset,
property, right, liability, duty or obligation on terms consistent with the
terms of the Plan and having any other terms to which the applicable entities
may agree; (c) the filing of appropriate certificates or articles of merger,
consolidation, conversion or dissolution pursuant to applicable state law; and
(d) all other actions that the applicable entities determine to be necessary or
appropriate, including making filings or recordings that may be required by
applicable state law in connection with the transactions.
2. Obligations of Any Successor Corporation in a Restructuring
Transaction
The Restructuring Transactions may include one or more mergers,
consolidations, restructurings, conversions, dispositions, liquidations or
dissolutions, as may be determined by the Debtors or Reorganized Debtors to be
necessary or appropriate to result in substantially all of the respective
assets, properties, rights, liabilities, duties and obligations of certain of
the Reorganized Debtors vesting in one or more surviving, resulting or acquiring
corporations. In each case in which the surviving, resulting or acquiring
corporation in any such transaction is a successor to a Reorganized Debtor, the
surviving, resulting or acquiring corporation will perform the obligations of
the applicable Reorganized Debtor pursuant to the Plan to pay or otherwise
satisfy the Allowed Claims against the Reorganized Debtor, except as provided in
any contract, instrument or other agreement or document effecting a disposition
to the surviving, resulting or acquiring corporation, which may provide that
another Reorganized Debtor will perform those obligations.
3. Pillowtex Merger
On the Effective Date, the Pillowtex Merger will be consummated in
accordance with the Plan of Merger described on Exhibit IV.B.3. The sole purpose
of the Pillowtex Merger is to change
21
Pillowtex's domicile from the State of Texas to the State of Delaware. As part
of the Pillowtex Merger and pursuant to Section III.C.5 and Section III.C.6, on
the Effective Date, (a) each share of Old Common Stock of Pillowtex and Old
Preferred Stock of Pillowtex outstanding on the Petition Date and immediately
prior to the Effective Date will be canceled; (b) Pillowtex will issue to the
Disbursing Agents (i) for the benefit of holders of Allowed Claims in Class 5,
if Class 6 accepts the Plan, 18,000,000 new shares of Old Common Stock of
Pillowtex, or, if Class 6 does not accept the Plan, 18,300,000 new shares of Old
Common Stock of Pillowtex, and (ii) for the benefit of holders of Allowed Claims
in Class 6, if Class 6 accepts the Plan, 600,000 new shares of Old Common Stock
of Pillowtex, or, if Class 6 does not accept the Plan, 200,000 new shares of Old
Common Stock of Pillowtex; (c) Pillowtex will merge with and into New Pillowtex,
with New Pillowtex being the surviving corporation in the merger; (d) New
Pillowtex will acquire all of the assets and will assume all of the liabilities
of Pillowtex; and (e) the Disbursing Agent will surrender the new shares of Old
Common Stock of Pillowtex issued for the benefit of the holders of Allowed
Claims in Classes 5 and 6 in exchange for an equal number of shares of New
Common Stock. Thereafter, the Disbursing Agent will disburse to (i) each holder
of an Allowed Claim in Class 5, if Class 6 accepts the Plan, its Pro Rata share
of 18,000,000 shares of New Common Stock or, if Class 6 does not accept the
Plan, its Pro Rata share of 18,300,000 of New Common Stock, and (ii) subject to
the State Street Settlement and, if Class 6 does not accept the Plan, any
enforceable subordination rights of holders of Overline Facility Claims and
Aircraft Lease Claims, each holder of an Allowed Claim in Class 6, if Class 6
accepts the Plan, its Pro Rata share of 600,000 shares of New Common Stock and
New Warrants to purchase 3,529,412 shares of New Common Stock or, if Class 6
does not accept the Plan, its Pro Rata share of 200,000 shares of New Common
Stock and no New Warrants. The only shares of capital stock of Reorganized
Pillowtex to be outstanding following the Effective Date will be the New Common
Stock. Thereafter, Reorganized Pillowtex may issue additional shares of capital
stock in accordance with the Constituent Documents of Reorganized Pillowtex and
applicable law.
C. Corporate Governance, Directors and Officers, Employment-Related
Agreements and Compensation Programs
1. Certificates of Incorporation and Bylaws
a. Reorganized Pillowtex
As of the Effective Date, the certificate of incorporation and the
bylaws of Reorganized Pillowtex will be substantially in the forms of Exhibits
IV.C.1.a.i and IV.C.1.a.ii, respectively. The certificate of incorporation and
bylaws of Reorganized Pillowtex, among other things, will: (i) prohibit the
issuance of nonvoting equity securities to the extent required by section
1123(a) of the Bankruptcy Code; and (ii) effective immediately after the
cancellation of the Old Common Stock of Pillowtex and Old Preferred Stock of
Pillowtex as set forth in Sections III.C.5, III.C.6 and IV.H, authorize the
issuance of New Common Stock in amounts not less than the amounts necessary to
permit the distributions thereof required or contemplated by the Plan. After the
Effective Date, Reorganized Pillowtex may amend its certificate of incorporation
or bylaws as permitted by the General Corporation Law of the State of Delaware,
subject to the terms and conditions of those documents.
b. Reorganized Pillowtex Subsidiary Debtors
As of the Effective Date, the Constituent Documents of each
Reorganized Pillowtex Subsidiary Debtor will be substantially in the forms of
Exhibits IV.C.1.b.i and IV.C.1.b.ii, respectively. The initial Constituent
Documents of each Reorganized Pillowtex Subsidiary Debtor, among other things,
will prohibit the issuance of nonvoting equity securities to the extent required
by section 1123(a) of the Bankruptcy Code. After the Effective Date or the
effective time of any applicable Restructuring Transaction, each entity may
amend its Constituent Documents as permitted by applicable state law, subject to
the terms and conditions of the applicable Constituent Documents.
22
2. Directors and Officers of the Reorganized Debtors
The initial board of directors and officers, or similar positions for
entities other than corporations, of each of the Reorganized Debtors will
consist of the individuals identified on Exhibit IV.C.2. The initial board of
directors of Reorganized Pillowtex will consist of seven members, up to two of
whom will be officers of Reorganized Pillowtex. Each officer and director,
manager or trustee, as applicable, will serve from and after the Effective Date
until his or her successor is duly elected or appointed and qualified or until
his or her earlier death, resignation or removal in accordance with the terms of
the Constituent Documents of the applicable Reorganized Debtor and applicable
state law. Exhibit IV.C.2 identifies the initial term for each director, manager
or trustee, as applicable, in accordance with the provisions of the Reorganized
Debtors' respective Constituent Documents.
3. New Employment, Retirement, Indemnification and Other Related
Agreements and Incentive Compensation Programs
As of the Effective Date, the Reorganized Debtors will have authority
to: (a) maintain, amend or revise existing employment, retirement, welfare,
incentive, severance, indemnification and other agreements with their active
directors, managers, trustees, officers and employees, subject to the terms and
conditions of any such agreement; (b) enter into new employment, retirement,
welfare, incentive, severance, indemnification and other agreements for active
and retired employees; and (c) make the initial grants under the Equity
Incentive Plan as described in Exhibit IV.C.3. Exhibit IV.C.3 provides (a) a
list of the benefit programs, plans and agreements that are to be in effect on
the Effective Date and (b) a list of the initial grants to be made under the
Equity Incentive Plan.
4. Corporate Action
The following will occur and be effective as of the date specified in
the documents effectuating the applicable Restructuring Transactions or as of
the Effective Date, if no other effective date is specified in the documents,
and will be authorized and approved in all respects and for all purposes without
any requirement of further action by stockholders or directors (or similar
positions for Debtors that are not corporations) of any of the Debtors:
. the Restructuring Transactions (including the Pillowtex Merger);
. the adoption of new or amended and restated Constituent Documents
for the Reorganized Debtors;
. the initial selection of directors and officers (and similar
positions for entities other than corporations) for the
Reorganized Debtors;
. the entry into the Exit Financing Revolver Facility and the Exit
Term Loan;
. the distribution of cash pursuant to the Plan;
. the issuance and distribution of New Common Stock and New
Warrants pursuant to the Plan;
. the establishment of the Unsecured Claims Reserve;
. the adoption, execution, delivery and implementation of all
contracts, leases, instruments, releases and other agreements or
documents related to any of the
23
foregoing (including the Plan of Merger, the New Warrant
Agreement and the New Warrants);
. the adoption, execution and implementation of employment,
retirement and indemnification agreements, incentive compensation
programs, retirement income plans, welfare benefit plans and
other employee plans and related agreements, including the Equity
Incentive Plan, the severance arrangements, and the plans and
agreements described on Exhibit IV.C.3;
. the entry into the New Tax Sharing Agreement described in Exhibit
IV.K.1; and
. the other matters provided for under the Plan involving the
corporate or similar structure of any Debtor or Reorganized
Debtor or corporate or similar action to be taken by or required
of any Debtor or Reorganized Debtor.
D. Exit Financing Revolver Facility, Exit Term Loan, Obtaining Cash for Plan
Distributions and Transfers of Funds Among the Debtors
On the Effective Date, the Reorganized Debtors will be authorized to
execute and deliver those documents necessary or appropriate to obtain the Exit
Financing Revolver Facility and Exit Term Loan. All cash necessary for the
Reorganized Debtors to make payments pursuant to the Plan will be obtained from
the Reorganized Debtors' cash balances and operations and/or the Exit Financing
Revolver Facility. Cash payments to be made pursuant to the Plan will be made by
Reorganized Pillowtex; provided, however, that the Debtors and the Reorganized
Debtors will be entitled to transfer funds between and among themselves as they
determine to be necessary or appropriate to enable Reorganized Pillowtex to
satisfy its obligations under the Plan. Any Intercompany Claims resulting from
such transfers will be accounted for and settled in accordance with the Debtors'
historical intercompany account settlement practices.
E. Preservation of Rights of Action; Settlement Agreements and Releases
1. Preservation of Rights of Action by the Debtors and the Reorganized
Debtors
Except as provided in the Plan or in any contract, instrument, release
or other agreement entered into or delivered in connection with the Plan, in
accordance with section 1123(b) of the Bankruptcy Code, the Reorganized Debtors
will retain and may enforce any claims, demands, rights and causes of action
that any Debtor or Estate may hold against any entity, including Recovery
Actions. The Reorganized Debtors or their successors may pursue any retained
claims, demands, rights or causes of action, as appropriate, in accordance with
the best interests of the Reorganized Debtors or their successors holding those
claims, demands, rights or causes of action. Further, the Reorganized Debtors
retain their rights to File and pursue any adversary proceedings against any
trade creditor or vendor related to debit balances or deposits owed to any
Debtor.
2. Releases; Indemnification
a. General Releases by Holders of Claims or Interests
As of the Effective Date, in consideration for the obligations of the
Debtors and the Reorganized Debtors under the Plan and the cash, New Common
Stock, New Warrants and other contracts, instruments, releases, agreements or
documents to be entered into or delivered in connection with the Plan, each
holder of a Claim or Interest that votes in favor of the Plan will be deemed to
forever release, waive and discharge all claims, obligations, suits, judgments,
damages, demands, debts, rights,
24
causes of action and liabilities (other than the right to enforce the Debtors'
or the Reorganized Debtors' obligations under the Plan and the contracts,
instruments, releases, agreements and documents delivered thereunder), whether
liquidated or unliquidated, fixed or contingent, matured or unmatured, known or
unknown, foreseen or unforeseen, then existing or thereafter arising in law,
equity or otherwise, that are based in whole or in part on any act, omission,
transaction or other occurrence taking place on or prior to the Effective Date
in any way relating to a Debtor or other Pillowtex Entity, the Reorganization
Cases or the Plan that the person or entity has, had or may have against any
Debtor or other Pillowtex Entity, the members of the Creditors' Committee and
each of their respective present or former directors, officers, employees,
at1torneys, accountants, advisors and agents, acting in such capacity (which
release will be in addition to the discharge of Claims and termination of
Interests provided herein and under the Confirmation Order and the Bankruptcy
Code).
b. Releases Related to Bank Loan Claims
As of the Effective Date, (i) each Debtor, (ii) each holder of a Claim
in Class 6, and (iii) each holder of a Claim or Interest (other than holders of
Claims in Class 6) that votes in favor of the Plan will be deemed to forever
release, waive and discharge all claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action and liabilities whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or unknown,
foreseen or unforeseen, then existing or thereafter arising in law, equity or
otherwise, that the person or entity has, had or may have against each lender
under the Prepetition Credit Facility, the DIP Financing Facility and each of
the lender's respective present and former directors, officers, attorneys,
accountants, advisors and agents, acting in such capacity, that arose at any
time on or prior to the Effective Date and that were in any manner related to
the conduct of the Reorganization Cases, the Prepetition Credit Facility, any of
the loan or collateral documents in respect to the Prepetition Credit Facility,
the DIP Financing Facility or the enforcement or attempted enforcement of
rights, remedies or recourses related to the Prepetition Credit Facility or the
DIP Financing Facility.
c. Releases Related to Preference Actions
As of the Effective Date, (i) each Debtor, (ii) each holder of a Claim
in Class 6, and (iii) each holder of a Claim or Interest (other than holders of
Claims in Class 6) that votes in favor of the Plan will be deemed to forever
release, waive and discharge all claims, damages, demands, rights and causes of
action against each holder of a Claim in Class 6 that are in any manner related
to any preference action under section 547 of the Bankruptcy Code.
d. Injunction Related to Releases
As further provided in Section XI.B, the Confirmation Order will
permanently enjoin the commencement or prosecution by any entity, whether
directly, derivatively or otherwise, of any claims, obligations, suits,
judgments, damages, demands, debts, rights, causes of action or liabilities
released pursuant to the Plan, including but not limited to the releases set
forth in this Section IV.E.2.
F. Continuation of Certain Employee and Retiree Benefits
1. Employee Benefits
From and after the Effective Date, the Reorganized Debtors intend to
continue (or continue as modified or replaced) their existing employee benefit
policies, plans and agreements identified on Exhibit IV.C.3, including: (a)
medical, dental, life, travel accident and accidental death and dismemberment
insurance; (b) sick pay, short-term disability pay and long-term disability
insurance; (c) vacation and holiday pay; (d) bonus and severance programs; (e)
tuition assistance policies; and (f)
25
qualified deferred compensation plans. The Reorganized Debtors also intend to
continue sponsoring the Pillowtex Pension Plan from and after the Effective Date
and complying with all legal requirements applicable thereto. The PBGC and the
Pillowtex Pension Plan retain the right to seek available remedies under
applicable law against the Pillowtex Entities arising from (a) the failure to
comply with the minimum funding standards of the Internal Revenue Code of 1986,
as amended, and ERISA; (b) the failure to pay required premiums to the PBGC; (c)
any unfunded benefit liabilities in the event of the termination of the
Pillowtex Pension Plan; or (d) any other violation of ERISA.
2. Retiree Benefits
From and after the Effective Date, the Reorganized Debtors will be
obligated to pay retiree benefits (as defined in section 1114(a) of the
Bankruptcy Code) and any similar health, disability or death benefits in
accordance with the terms of the retiree benefit plans or other agreements
governing the payment of those benefits, subject to any rights to amend, modify
or terminate those benefits under the terms of the applicable retiree benefits
plan, other agreement or applicable nonbankruptcy law.
G. Limitations on Amounts To Be Distributed to Holders of Allowed Insured
Claims
Distributions under the Plan to each holder of an Allowed Insured
Claim will be in accordance with the treatment provided under the Plan for the
Class in which the Allowed Insured Claim is classified, but solely to the extent
that the Allowed Insured Claim is not satisfied from proceeds payable to the
holder thereof under any pertinent insurance policies and applicable law.
Nothing in this Section IV.G will constitute a waiver of any claims,
obligations, suits, judgments, damages, demands, debts, rights, causes of action
or liabilities that any entity may hold against any other entity, including the
Debtors' insurance carriers.
H. Cancellation and Surrender of Instruments, Securities and Other
Documentation
Except as provided in any contract, instrument or other agreement or
document entered into or delivered in connection with the Plan, on the Effective
Date and concurrently with the applicable distributions made pursuant to Article
III, the Prepetition Credit Facility, the Prepetition Credit Facility Notes, the
Overline Facility, the Prepetition Indentures, the Old 10% Notes, the Old 9%
Notes, the Old 6% Debentures and the Old 6% Debenture Promissory Notes will be
canceled and of no further force and effect, without any further action on the
part of any Debtor or Reorganized Debtor. The Old Common Stock and Old Preferred
Stock of Pillowtex outstanding immediately prior to the Effective Date shall be
deemed canceled and of no further force and effect on the Effective Date, all as
provided in Section IV.B.3. The holders of or parties to the canceled
instruments, securities and other documentation will have no rights arising from
or relating to those instruments, securities and other documentation or the
cancellation thereof, except the rights provided pursuant to the Plan; provided,
however, that no distribution under the Plan will be made to or on behalf of any
holder of an Allowed Claim evidenced by such canceled instruments or securities
unless and until those instruments or securities are received by the Disbursing
Agent to the extent required in Section VI.J.
I. New Registration Rights Agreement
On the Effective Date, Reorganized Pillowtex and the holders of at
least 10% of the aggregate shares of New Common Stock issuable pursuant to the
Plan that are parties thereto will execute and deliver the New Registration
Rights Agreement substantially in the form of Exhibit IV.I.
26
J. New Warrant Agreement
On the Effective Date, Reorganized Pillowtex and the warrant agent
will execute and deliver the New Warrant Agreement substantially in the form of
Exhibit IV.J.
K. Other Agreements Related to Implementation of the Plan
1. As of the Effective Date, the Reorganized Debtors and certain of the
other Pillowtex Entities will enter into the New Tax Sharing Agreement
substantially in the form of Exhibit IV.K.1, which will, among other things,
allocate among the parties thereto responsibility for any Tax obligations and
rights to any Tax benefits arising from and after the Effective Date.
2. As of the Effective Date, the Equity Incentive Plan, which is included
as part of Exhibit IV.C.3, will become effective pursuant to its terms and will
be deemed authorized and approved in all respects and for all purposes without
any requirements of further action by the stockholders or directors of Pillowtex
or Reorganized Pillowtex.
L. Release of Liens
Except as otherwise provided in the Plan or in any contract,
instrument, release or other agreement or document entered into or delivered in
connection with the Plan, on the Effective Date and concurrently with the
applicable distributions made pursuant to Article III, all mortgages, deeds of
trust, liens or other security interests against the property of any Estate will
be fully released and discharged, and all of the right, title and interest of
any holder of the mortgages, deeds of trust, liens or other security interests,
including any rights to any collateral thereunder, will revert to the applicable
Reorganized Debtor and its successors and assigns. As of the Effective Date, the
Reorganized Debtors shall be authorized to file on behalf of creditors Form
UCC-3s or other forms as may be necessary to implement the provisions of this
Section IV.L.
M. Effectuating Documents; Further Transactions; Exemption from Certain
Transfer Taxes
The Chairman of the Board, Chief Executive Officer (if any),
President, Chief Financial Officer, Chief Operating Officer, any Executive Vice
President, any Senior Vice President or any Vice President of each Debtor or
Reorganized Debtor will be authorized to execute, deliver, file or record such
contracts, instruments, releases and other agreements or documents and take such
actions as may be necessary or appropriate to effectuate and implement the
provisions of the Plan. The Secretary or any Assistant Secretary of each Debtor
or Reorganized Debtor will be authorized to certify or attest to any of the
foregoing actions. Pursuant to section 1146(c) of the Bankruptcy Code, the
following will not be subject to any stamp tax, real estate transfer tax or
similar tax: (1) the issuance, transfer or exchange of New Common Stock or New
Warrants; (2) the creation of any mortgage, deed of trust, lien or other
security interest; (3) the making or assignment of any lease or sublease; (4)
the execution and delivery of the Exit Financing Revolver Facility or the Exit
Term Loan, including any security agreements in respect thereof; (5) any
Restructuring Transaction; or (6) the making or delivery of any deed or other
instrument of transfer under, in furtherance of or in connection with the Plan,
including any merger agreements; agreements of consolidation, restructuring,
disposition, liquidation or dissolution; deeds; bills of sale; or assignments
executed in connection with any Restructuring Transaction pursuant to the Plan.
27
ARTICLE V.
TREATMENT OF EXECUTORY CONTRACTS
OR UNEXPIRED LEASES
A. Executory Contracts or Unexpired Leases To Be Assumed or Assumed and
Assigned
1. Assumption and Assignment Generally
Except as otherwise provided in the Plan or in any contract,
instrument, release 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 applicable Debtor or Debtors will assume or assume and assign, as
indicated, each of the Executory Contracts or Unexpired Leases listed on Exhibit
V.A.1; provided, however, that the Debtors reserve the right, at any time prior
to the Effective Date, to amend Exhibit V.A.1 to: (a) delete any Executory
Contract or Unexpired Lease listed therein, thus providing for its rejection
pursuant to Section V.C or (b) add any Executory Contract or Unexpired Lease
thereto, thus providing for its assumption or assumption and assignment pursuant
to this Section V.A.1. The Debtors will provide notice of any amendments to
Exhibit V.A.1 to the parties to the Executory Contracts or Unexpired Leases
affected thereby and to the parties on the then-applicable service list in the
Reorganization Cases (including counsel to the Creditors' Committee). Each
contract and lease listed on Exhibit V.A.1 will be assumed only to the extent
that the contract or lease constitutes an Executory Contract or Unexpired Lease.
Listing a contract or lease on Exhibit V.A.1 will not constitute an admission by
a Debtor or Reorganized Debtor that the contract or lease (including any related
agreements as described in Sections I.A.112 or V.A.2) is an Executory Contract
or Unexpired Lease or that a Debtor or Reorganized Debtor has any liability
thereunder.
2. Assumptions and Assignments of Real Property Executory Contracts or
Unexpired Leases
Each Real Property Executory Contract or Unexpired Lease listed on
Exhibit V.A.1 will include any modifications, amendments, supplements,
restatements or other agreements made directly or indirectly by any agreement,
instrument or other document that in any manner affects the contract or lease,
irrespective of whether such agreement, instrument or other document is listed
on Exhibit V.A.1, unless any such modification, amendment, supplement,
restatement or other agreement is rejected pursuant to Section V.C and is listed
on Exhibit V.C.
3. Assignments Related to the Restructuring Transactions
As of the effective time of an applicable Restructuring Transaction,
any Executory Contract or Unexpired Lease (including any related agreements as
described in Sections I.A.112 and V.A.2) to be held by any Debtor or another
surviving, resulting or acquiring corporation in an applicable Restructuring
Transaction, will be deemed assigned to the applicable entity, pursuant to
section 365 of the Bankruptcy Code.
4. Approval of Assumptions and Assignments
The Confirmation Order will constitute an order of the Bankruptcy
Court approving the assumptions and assignments described in this Section V.A
and Section V.E, pursuant to section 365 of the Bankruptcy Code, as of the
Effective Date. An order of the Bankruptcy Court entered on or prior to the
Confirmation Date will specify the procedures for providing notice to each party
whose Executory Contract or Unexpired Lease is being assumed or assumed and
assigned pursuant to the Plan of: (a) the contract or lease being assumed or
assumed and assigned; (b) the Cure Amount Claim, if any, that the applicable
Debtor believes it would be obligated to pay in connection with such assumption;
and (c) the
28
procedures for the party to object to the assumption or assumption and
assignment of the applicable contract or lease or the amount of the proposed
Cure Amount Claim.
B. Payments Related to the Assumption of Executory Contracts or Unexpired
Leases
To the extent that the Claims constitute monetary defaults, the Cure
Amount Claims associated with each Executory Contract or Unexpired Lease to be
assumed pursuant to the Plan will be satisfied, pursuant to section 365(b)(1) of
the Bankruptcy Code, at the option of the Debtor assuming the contract or lease
or the assignee of the Debtor, if any: (1) by payment of the Cure Amount Claim
in cash on the Effective Date or (2) on such other terms as are agreed to by the
parties to the Executory Contract or Unexpired Lease. If there is a dispute
regarding: (1) the amount of any Cure Amount Claim, (2) the ability of the
applicable Reorganized Debtor or any assignee 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 (3) any other matter pertaining to
assumption or assumption and assignment of the contract or lease, the payment of
any Cure Amount Claim 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. For assumptions of Executory Contracts or Unexpired Leases
between Debtors, the Reorganized Debtor assuming the contract or lease may cure
any monetary default (1) by treating such amount as either a direct or indirect
contribution to capital or distribution (as appropriate) or (2) through an
intercompany account balance in lieu of payment in cash.
C. Executory Contracts or Unexpired Leases To Be Rejected
On the Effective Date, except for an Executory Contract or Unexpired
Lease that was previously assumed, assumed and assigned or rejected by an order
of the Bankruptcy Court or that is assumed pursuant to Section V.A (including
any related agreements assumed pursuant to Sections I.A.112 and V.A.2), each
Executory Contract or Unexpired Lease entered into by a Debtor prior to the
Petition Date that has not previously expired or terminated pursuant to its own
terms will be rejected pursuant to section 365 of the Bankruptcy Code. The
Executory Contracts or Unexpired Leases to be rejected will include the
Executory Contracts or Unexpired Leases listed on Exhibit V.C. Each contract or
lease listed on Exhibit V.C will be rejected only to the extent that any such
contract or lease constitutes an Executory Contract or Unexpired Lease. Listing
a contract or lease on Exhibit V.C will not constitute an admission by a Debtor
or Reorganized Debtor that the contract or lease (including related agreements
as described in Section I.A.112) is an Executory Contract or Unexpired Lease or
that a Debtor or Reorganized Debtor has any liability thereunder. Any Executory
Contract or Unexpired Lease not listed on Exhibit V.A.1 and not previously
assumed, assumed and assigned or rejected by an order of the Bankruptcy Court
will be rejected irrespective of whether the contract or lease is listed on
Exhibit V.C. The Confirmation Order will constitute an order of the Bankruptcy
Court approving the rejections, pursuant to section 365 of the Bankruptcy Code,
as of the Effective Date.
D. Bar Date for Rejection Damages
Notwithstanding anything in the Bar Date Order to the contrary, if the
rejection of an Executory Contract or Unexpired Lease pursuant to Section V.C
gives rise to a Claim (including any Claims arising from those indemnification
obligations described in Section V.E.1) by the other party or parties to such
contract or lease, the Claim will be forever barred and will not be enforceable
against the Debtors, the Reorganized Debtors, their respective successors or
their respective properties unless a proof of Claim is Filed and served on the
Reorganized Debtors, pursuant to the procedures specified in the Confirmation
Order and the notice of the entry of the Confirmation Order or another order of
the Bankruptcy Court, no later than 30 days after the Effective Date.
29
E. Special Executory Contract or Unexpired Lease Issues
1. Obligations to Indemnify Directors and Officers
a. The obligations of each Debtor or Reorganized Debtor to indemnify
any person serving as one of its directors or officers as of or following
the Petition Date by reason of such person's prior or future service in
such a capacity or as a director, officer or employee of another
corporation, partnership or other legal entity, to the extent provided in
the applicable Constituent Documents, by statutory law or by written
agreement, policies or procedures of or with the Debtor, will be deemed and
treated as executory contracts that are assumed by the applicable Debtor or
Reorganized Debtor pursuant to the Plan and section 365 of the Bankruptcy
Code as of the Effective Date. Accordingly, the indemnification obligations
will survive and be unaffected by entry of the Confirmation Order,
irrespective of whether the indemnification is owed for an act or event
occurring before or after the Petition Date.
b. The obligations of each Debtor or Reorganized Debtor to indemnify
any person who, as of the Petition Date, was no longer serving as a
director, officer or employee of the Debtor or Reorganized Debtor, which
indemnity obligation arose by reason of the person's prior service in any
such capacity or as a director, officer or employee of another corporation,
partnership or other legal entity, whether provided in the applicable
Constituent Documents, by statutory law or by written agreement, policies
or procedures of or with the Debtor, will terminate and be discharged
pursuant to section 502(e) of the Bankruptcy Code or otherwise, as of the
Effective Date; provided, however, that, to the extent that the
indemnification obligations no longer give rise to contingent Claims that
can be disallowed pursuant to section 502(e) of the Bankruptcy Code, the
indemnification obligations will be deemed and treated as executory
contracts that are rejected by the applicable Debtor pursuant to the Plan
and section 365 of the Bankruptcy Code, as of the Effective Date, and any
Claims arising from the indemnification obligations (including any
rejection damage claims) will be subject to the bar date provisions of
Section V.D.
2. Reinstatement of Allowed Secondary Liability Claims Arising From or
Related to Executory Contracts or Unexpired Leases Assumed by the
Debtors
On the Effective Date, in accordance with Section III.D.1, any Allowed
Secondary Liability Claim arising from or related to any Debtor's joint or
several liability for the obligations under or with respect to any of the
following will be Reinstated: (a) any Executory Contract or Unexpired Lease that
is being assumed or deemed assumed pursuant to section 365 of the Bankruptcy
Code by another Debtor; (b) any Executory Contract or Unexpired Lease that is
being assumed by and assigned to another Debtor; or (c) a Reinstated Claim.
Accordingly, the foregoing Allowed Secondary Liability Claims will survive and
be unaffected by entry of the Confirmation Order.
F. Contracts and Leases Entered Into After the Petition Date
Contracts and leases entered into after the Petition Date by any
Debtor, including any Executory Contracts or Unexpired Leases assumed by the
Debtor, will be performed by the Debtor or Reorganized Debtor liable thereunder
in the ordinary course of its business. Accordingly, those contracts and leases
(including any assumed Executory Contracts or Unexpired Leases) will survive and
remain unaffected by entry of the Confirmation Order.
30
ARTICLE VI.
PROVISIONS GOVERNING DISTRIBUTIONS
A. Distributions for Claims Allowed as of the Effective Date
1. Distributions to Be Made on the Effective Date
Except as otherwise provided in this Article VI, distributions of
cash, New Common Stock and New Warrants to be made on the Effective Date to
holders of Claims that are allowed as of the Effective Date will be deemed made
on the Effective Date if made on the Effective Date or as promptly thereafter as
practicable, but in any event no later than: (a) 45 days after the Effective
Date or (b) such later date when the applicable conditions of Section V.B
(regarding cure payments for Executory Contracts or Unexpired Leases being
assumed), Section VI.A.3 (regarding subordination of Old 6% Debentures), Section
VI.E.2 (regarding undeliverable distributions) or Section VI.J (regarding
surrender of canceled instruments and securities) are satisfied. Distributions
on account of Claims that become Allowed Claims after the Effective Date will be
made pursuant to Sections VI.H and VII.C.
2. Distributions on the Effective Date in Respect of Class 6 Unsecured
Claims
From and after the Effective Date, New Common Stock and New Warrants
to be distributed on account of Class 6 Claims (and any cash generated from
dividends or distributions thereon) (a) will be maintained by and in the name of
the applicable Disbursing Agent in the Unsecured Claims Reserve in accordance
with Article VII and held in trust pending distribution by the applicable
Disbursing Agent for the benefit of the holders of the Claims, (b) will be
accounted for separately, and (c) will not constitute property of any of the
Reorganized Debtors. The Disbursing Agent will invest any cash in a manner
consistent with the Reorganized Debtors' investment and deposit guidelines.
Distributions of cash on account of each Allowed Class 6 Claim will include a
Pro Rata share of the Cash Investment Yield from such investment of cash. New
Common Stock and New Warrants, if any, to be issued and distributed on account
of Class 6 Claims will be deemed issued as of the Effective Date, irrespective
of the date on which they actually are distributed.
3. Distributions in Respect of Old 6% Debentures and Old 6% Debenture
Promissory Notes
The shares of New Common Stock and New Warrants, if any, included in
the Subordination Reserve Allocation of the Unsecured Claims Reserve shall be
distributed to the holders of Allowed Old Senior Subordinated Note Claims in
accordance with the State Street Settlement. New Warrants, if any, shall be
distributed to the holders of Allowed Old 6% Debenture Claims and Allowed Old 6%
Debenture Promissory Notes in accordance with the State Street Settlement.
B. Method of Distributions to Holders of Claims
Reorganized Pillowtex, or such Third Party Disbursing Agents as
Reorganized Pillowtex may employ in its sole discretion, will make all
distributions of cash, New Common Stock and New Warrants and other instruments
or documents required under the Plan. Each Disbursing Agent will serve without
bond, and any Disbursing Agent may employ or contract with other entities to
assist in or make the distributions required by the Plan. With respect to Class
5 Claims, Bank of America in its capacity as Administrative Agent shall act as
Disbursing Agent. With respect to Old Senior Subordinated Notes Claims and,
subject to VI.A.3, if applicable, Old 6% Debenture Claims and Old 6% Debenture
Promissory Note Claims, the applicable Indenture Trustee shall act as Disbursing
Agent with respect to its respective series of Old Senior Subordinated Notes or
Old 6% Debentures.
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C. Compensation and Reimbursement for Services Related to Distributions
Each Third Party Disbursing Agent providing services related to
distributions pursuant to the Plan will receive from Reorganized Pillowtex
(other than Bank of America and the Indenture Trustees), without further
Bankruptcy Court approval, reasonable compensation for its services and
reimbursement of reasonable out-of-pocket expenses incurred in connection with
the services. These payments will be made on terms agreed to with Reorganized
Pillowtex and will not be deducted from distributions to be made pursuant to the
Plan to holders of Allowed Claims (including any distributions of Cash
Investment Yield) receiving distributions from a Third Party Disbursing Agent.
D. Provisions Governing the Unsecured Claims Reserve
1. Funding of the Unsecured Claims Reserve
On the Effective Date, Reserved Warrants (if Class 6 accepts the Plan)
and the Reserved Shares will be placed in the Unsecured Claims Reserve for the
benefit of holders of Allowed Claims in Class 6.
2. Property Held in Unsecured Claims Reserve
` a. Dividends and Distributions
Cash dividends and other distributions on account of New Common Stock
and New Warrants held in the Unsecured Claims Reserve will be transferred to the
Unsecured Claims Reserve concurrently with the transfer of such dividends and
other distributions to other holders of New Common Stock and New Warrants. Cash
held in the Unsecured Claims Reserve as a result of such dividends and other
distributions (i) will be deposited in a segregated bank account in the name of
the applicable Disbursing Agent and held in trust pending distribution by the
applicable Disbursing Agent for the benefit of holders of Class 6 Claims, (ii)
will be accounted for separately and (iii) will not constitute property of the
Reorganized Debtors. The applicable Disbursing Agent will invest the cash held
in the Unsecured Claims Reserve in a manner consistent with the Reorganized
Debtors' investment and deposit guidelines. The applicable Disbursing Agent also
will place in the Unsecured Claims Reserve the Cash Investment Yield from such
investment of cash.
b. Recourse
Each holder of an Allowed Claim (or a Disputed Claim that ultimately
becomes an Allowed Claim) in Class 6 will have recourse only to the
undistributed cash, New Common Stock and New Warrants held in the Unsecured
Claims Reserve for satisfaction of the distributions to which holders of Allowed
Class 6 Claims are entitled under the Plan, and not to any Reorganized Debtor,
its property or any assets previously distributed on account of any Allowed
Claim.
E. Delivery of Distributions and Undeliverable or Unclaimed Distributions
1. Delivery of Distributions
a. Generally
Except as provided in Section VI.E.1.b, distributions to holders of
Allowed Claims will be made by a Disbursing Agent (i) at the addresses set forth
on the respective proofs of Claim Filed by holders of the Claims, (ii) at the
addresses set forth in any written certification of address change delivered to
the applicable Disbursing Agent (including pursuant to a letter of transmittal
delivered to a Disbursing Agent) after the date of Filing of any related proof
of Claim or (iii) at the addresses reflected
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in the applicable Debtor's Schedules if no proof of Claim has been Filed and the
applicable Disbursing Agent has not received a written notice of a change of
address.
b. Special Provisions for Distributions to Holders of Old Senior
Subordinated Notes Claims, Old 6% Debenture Claims or Old 6% Debenture
Promissory Note Claims
Subject to the requirements of Section VI.J, distributions to holders
of Allowed Old Senior Subordinated Notes Claims, Allowed Old 6% Debenture Claims
or Old 6% Debenture Promissory Note Claims will be made by the applicable
Disbursing Agent to the record holders of the Old Senior Subordinated Notes and
Old 6% Debentures as of the Distribution Record Date, as identified on a record
holder register prepared by the applicable Indenture Trustee. The record holder
register (i) will provide the name, address and holdings of each respective
registered holder of Old 9% Notes, Old 10% Notes, Old 6% Debentures or Old 6%
Debenture Promissory Notes, as applicable, as of the Distribution Record Date
and (ii) must be consistent with the applicable Indenture Trustee's Allowed
proof of Claim. Each entry on the applicable record holder register will be
treated as an Allowed Class 6 Claim for purposes of distributions made pursuant
to this Article VI.
2. Undeliverable Distributions Held by Disbursing Agents
a. Holding and Investment of Undeliverable Distributions;
Undelivered New Common Stock and New Warrants
i. If any distribution to a holder of an Allowed Claim is
returned to a Disbursing Agent as undeliverable, no further
distributions will be made to the holder unless and until the
applicable Disbursing Agent is notified by written certification of
the holder's then-current address. Subject to Section VI.E.2.c,
undeliverable distributions will remain in the possession of the
applicable Disbursing Agent pursuant to this Section VI.E.2.a.i until
such time as a distribution becomes deliverable. Undeliverable cash
(including dividends or other distributions on account of
undeliverable New Common Stock) will be held in segregated bank
accounts in the name of the applicable Disbursing Agent for the
benefit of the potential claimants of those funds. Any Disbursing
Agent holding undeliverable cash will invest the cash in a manner
consistent with the Reorganized Debtors' investment and deposit
guidelines. Undeliverable New Common Stock and New Warrants will be
held by the applicable Disbursing Agent for the benefit of the
potential claimants of those securities.
ii. Pending the distribution of any New Common Stock, the
Disbursing Agent will cause all of the New Common Stock held by it in
its capacity as Disbursing Agent (i.e., all New Common Stock in the
Unsecured Claims Reserve, whether relating to undeliverable
distributions or simply undelivered distributions) to be (A)
represented in person or by proxy at each meeting of the stockholders
of Reorganized Pillowtex, (B) voted in any election of directors of
Reorganized Pillowtex for the nominees recommended by the board of
directors of Reorganized Pillowtex and (C) voted with respect to any
other matter as recommended by the board of directors of Reorganized
Pillowtex.
b. After Distributions Become Deliverable
On each Quarterly Distribution Date, each Disbursing Agent will make
all distributions that become deliverable to holders of Allowed Claims during
the preceding calendar quarter. Each distribution will include, to the extent
applicable: (i) a Pro Rata share of dividends or other distributions, if any,
that were previously paid to the Disbursing Agent in respect of any New Common
Stock included
33
in the distribution and (ii) a Pro Rata share of the Cash Investment Yield from
the investment of any undeliverable cash (including dividends or other
distributions on undeliverable New Common Stock and New Warrants) from the date
that the distribution would have first been due had it then been deliverable to
the date that the distribution becomes deliverable.
c. Failure to Claim Undeliverable Distributions
Any holder of an Allowed Claim that does not assert a claim pursuant
to the Plan for an undeliverable distribution to be made by a Disbursing Agent
within two years after the later of (i) the Effective Date and (ii) the last
date on which a distribution was deliverable to the holder will have its claim
for the undeliverable distribution discharged and will be forever barred from
asserting such claim against the Reorganized Debtors or their respective
property. In such cases, with respect to Allowed Claims in Class 6, (i)
unclaimed cash, New Common Stock and New Warrants will be retained in the
Unsecured Claims Reserve for Pro Rata redistribution to holders of Allowed
Claims in the Class, pursuant to Section VI.H.2.b and (ii) for purposes of this
redistribution, each Allowed Claim in Class 6 for which the distributions are
undeliverable will be deemed disallowed in its entirety. In such cases with
respect to Allowed Claims in any other Class, (i) unclaimed cash will become
property of Reorganized Pillowtex, free of any restrictions thereon, and any
cash held by a Third Party Disbursing Agent will be returned to Reorganized
Pillowtex and (ii) unclaimed New Common Stock and New Warrants will be returned
to Reorganized Pillowtex for cancellation. Nothing contained in the Plan will
require any Debtor, Reorganized Debtor or Disbursing Agent to attempt to locate
any holder of an Allowed Claim.
F. Distribution Record Date
1. No Disbursing Agent will have any obligation to recognize the transfer
of, or the sale of any participation in, any Allowed Bank Loan Claim that occurs
after the close of business on the Distribution Record Date. Any Disbursing
Agent will be entitled for all purposes herein to recognize and make
distributions only to those holders of Allowed Bank Loan Claims that are holders
of such Claims, or participants therein, as of the close of business on the
Distribution Record Date.
2. As of the close of business on the Distribution Record Date, the
respective transfer registers for the Old Senior Subordinated Notes, the Old 6%
Debentures and the Old 6% Debenture Promissory Notes, as maintained by the
Debtors or the applicable Indenture Trustee, will be closed. The applicable
Disbursing Agent will have no obligation to recognize the transfer or sale of
any Old Senior Subordinated Notes Claim, Old 6% Debenture Claim or Old 6%
Debenture Promissory Note Claim that occurs after the close of business on the
Distribution Record Date and will be entitled for all purposes herein to
recognize and make distributions only to those holders of Old Senior
Subordinated Notes Claims, Old 6% Debenture Claims or Old 6% Debenture
Promissory Note Claims who are holders of those Claims as of the close of
business on the Distribution Record Date.
3. Except as otherwise provided in a Final Order of the Bankruptcy Court,
the transferees of Claims in Class 6 that are transferred pursuant to Bankruptcy
Rule 3001 on or prior to the Distribution Record Date will be treated as the
holders of those Claims for all purposes, notwithstanding that any period
provided by Bankruptcy Rule 3001 for objecting to the transfer has not expired
by the Distribution Record Date.
G. Means of Cash Payments
Except as otherwise specified herein, cash payments made pursuant to
the Plan will be in United States currency by checks drawn on a domestic bank
selected by the applicable Debtor or Reorganized Debtor or, at the option of the
applicable Debtor or Reorganized Debtor, by wire transfer from a domestic bank;
provided, however, that cash payments to foreign holders of Allowed Trade
34
Claims may be made, at the option of the applicable Debtor or Reorganized
Debtor, in such funds and by such means as are necessary or customary in a
particular foreign jurisdiction.
H. Timing and Calculation of Amounts To Be Distributed
1. Allowed Claims in Classes Other Than Class 6
Subject to Section VI.A, on the Effective Date, each holder of an
Allowed Claim in a Class other than Class 6 will receive the full amount of the
distributions that the Plan provides for Allowed Claims in the applicable Class.
On each Quarterly Distribution Date, distributions also will be made, pursuant
to Section VII.C, to holders of Disputed Claims in any such Class that were
allowed during the preceding calendar quarter. Such quarterly distributions also
will be in the full amount that the Plan provides for Allowed Claims in the
applicable Class.
2. Allowed Claims in Class 6
a. Initial Distributions
The amount of distributions to be made on the Effective Date (subject
to Section VI.A) to holders of Allowed Claims in Class 6 on account of those
Claims will be made from the Unsecured Claims Reserve and will be calculated as
if each Disputed Claim in Class 6 were an Allowed Claim in its Face Amount. On
each Quarterly Distribution Date, distributions also will be made, pursuant to
Section VII.C, to holders of Disputed Claims in Class 6 that were allowed during
the preceding calendar quarter. The quarterly distributions also will be
calculated pursuant to the provisions set forth in this Section VI.H.2.a.
b. Additional Distributions on Account of Previously Allowed Claims
On the fourth Quarterly Distribution Date and annually thereafter,
each holder of a Claim previously allowed in Class 6 will receive an additional
distribution from the Unsecured Claims Reserve on account of such Claim in an
amount equal to: (i) the amount of New Common Stock and New Warrants that such
holder would have been entitled to receive pursuant to Section VI.H.2.a as if
the Claim had become an Allowed Claim on the applicable Quarterly Distribution
Date; minus (ii) the aggregate amount of New Common Stock and New Warrants
previously distributed on account of the Claim. Each additional distribution
also will include, on the basis of the amount then being distributed: (i) a Pro
Rata share of any dividends or other distributions made on account of the New
Common Stock and New Warrants held in the Unsecured Claims Reserve; and (ii) a
Pro Rata share of the related Cash Investment Yield from the investment of any
cash dividends and other distributions in the Unsecured Claims Reserve, from the
date the cash was deposited into the Unsecured Claims Reserve to the date that
the distribution is made.
3. Distributions of New Common Stock and New Warrants
Notwithstanding any other provision of the Plan, only whole numbers of
shares of New Common Stock and New Warrants will be issued. When any
distribution on account of an Allowed Claim in Class 5 or 6 would otherwise
result in the issuance of a number of shares of New Common Stock that is not a
whole number or New Warrants exercisable to purchase a number of shares of New
Common Stock that is not a whole number, the number of shares of such stock or
warrants will be rounded to the next higher or lower whole number as follows:
(a) fractions equal to or greater than 1/2 will be rounded to the next higher
whole number; and (b) fractions less than 1/2 will be rounded to the next lower
whole number. The total number of shares of New Common Stock and New Warrants to
be distributed on account of Allowed Claims will be adjusted as necessary to
account for the rounding
35
provided for in this Section VI.H.3. No consideration will be provided in lieu
of fractional shares that are rounded down.
4. De Minimis Distributions
No Disbursing Agent will distribute cash to the holder of an Allowed
Claim in an impaired Class if the amount of cash to be distributed on account of
the Claim is less than $10. Any holder of an Allowed Claim on account of which
the amount of cash to be distributed is less than $10 will have its claim for
such distribution discharged and will be forever barred from asserting any such
claim against the Reorganized Debtors or their respective property. Any cash not
distributed pursuant to this Section VI.H.4 with respect to Claims in a Class
other than Class 6 will be the property of Reorganized Pillowtex, free of any
restrictions thereon, and any such cash held by a Third Party Disbursing Agent
will be returned to Reorganized Pillowtex. Any cash not distributed pursuant to
this Section VI.H.4 with respect to Allowed Claims in Class 6, including
dividends or other distributions made on account of New Common Stock and New
Warrants held in the Unsecured Claims Reserve, will be retained in the Unsecured
Claims Reserve for redistribution Pro Rata to holders of Allowed Claims in Class
6, pursuant to Section VI.H.2.b. For purposes of this redistribution, each
Allowed Claim in Class 6 for which distributions are less than $25 will have its
claim for such distribution discharged and will be forever barred from asserting
any such claim against the Unsecured Claims Reserve or otherwise.
5. Compliance with Tax Requirements
a. In connection with the Plan, to the extent applicable, each
Disbursing Agent will comply with all Tax withholding and reporting
requirements imposed on it by any governmental unit, and all distributions
pursuant to the Plan will be subject to applicable withholding and
reporting requirements. Each Disbursing Agent will be authorized to take
any actions that may be necessary or appropriate to comply with those
withholding and reporting requirements, including but not limited to
requiring recipients to fund the payment of such withholding as a condition
to delivery or entering into arrangements for the sale of a sufficient
number of shares of New Common Stock or New Warrants to generate net
proceeds sufficient to fund the payment of any such withholding.
b. Notwithstanding any other provision of the Plan, each entity
receiving a distribution of cash, New Common Stock or New Warrants pursuant
to the Plan will have sole and exclusive responsibility for the
satisfaction and payment of any Tax obligations imposed on it by any
governmental unit on account of the distribution, including income,
withholding and other Tax obligations.
I. Setoffs
Except with respect to claims of a Debtor or Reorganized Debtor
released pursuant to the Plan or any contract, instrument, release or other
agreement or document entered into or delivered in connection with the Plan, the
Reorganized Debtors or, as instructed by the applicable Reorganized Debtor, a
Third Party Disbursing Agent may, pursuant to section 553 of the Bankruptcy Code
or applicable nonbankruptcy law, set off against any Allowed Claim and the
distributions to be made pursuant to the Plan on account of the Claim (before
any distribution is made on account of the Claim) the claims, rights and causes
of action of any nature that the applicable Debtor or Reorganized Debtor may
hold against the holder of the Allowed Claim; provided that neither the failure
to effect a setoff nor the allowance of any Claim hereunder will constitute a
waiver or release by the applicable Debtor or Reorganized Debtor of any claims,
rights and causes of action that the Debtor or Reorganized Debtor may possess
against the Claim holder.
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J. Surrender of Canceled Instruments or Securities
As a condition precedent to receiving any distribution pursuant to the
Plan on account of an Allowed Claim evidenced by the notes, instruments,
securities or other documentation canceled pursuant to Section IV.H, the holder
of the Claim must tender, as specified in this Section VI.J, the applicable
notes, instruments, securities or other documentation evidencing the Claim to
the applicable Disbursing Agent, together with any letter of transmittal
required by such Disbursing Agent. Pending such surrender, any distributions
pursuant to the Plan on account of any such Claim will be treated as an
undeliverable distribution pursuant to Section VI.E.2.
1. Tender of Old Senior Subordinated Notes, Old 6% Debentures and Old 6%
Debenture Promissory Notes
Except as provided in Section VI.J.2 for lost, stolen, mutilated or
destroyed Old Senior Subordinated Notes, Old 6% Debentures or Old 6% Debenture
Promissory Notes, each holder of an Allowed Old Senior Subordinated Notes Claim,
Allowed Old 6% Debenture Claim or Allowed Old 6% Debenture Promissory Note Claim
must tender the Old Senior Subordinated Notes, the Old 6% Debentures or the Old
6% Debenture Promissory Notes to the applicable Disbursing Agent in accordance
with a letter of transmittal to be provided to the holders by the applicable
Disbursing Agent as promptly as practicable following the Effective Date. The
letter of transmittal will include, among other provisions, customary provisions
with respect to the authority of the holder of the Old Senior Subordinated
Notes, Old 6% Debentures or Old 6% Debenture Promissory Notes to act and the
authenticity of any signatures required thereon. All surrendered Old Senior
Subordinated Notes, Old 6% Debentures and Old 6% Debenture Promissory Notes will
be marked as canceled and delivered to the appropriate Reorganized Debtor.
2. Lost, Stolen, Mutilated or Destroyed Old Senior Subordinated Notes,
Old 6% Debentures and Old 6% Debenture Promissory Notes
Any holder of an Allowed Old Senior Subordinated Notes Claim, Allowed
Old 6% Debenture Claim or Allowed Old 6% Debenture Promissory Note Claim with
respect to which the underlying Old Senior Subordinated Note, Old 6% Debenture
or Old 6% Debenture Promissory Note has been lost, stolen, mutilated or
destroyed must, in lieu of surrendering such Old Senior Subordinated Note, Old
6% Debenture or Old 6% Debenture Promissory Note, deliver to the applicable
Disbursing Agent (a) evidence satisfactory to the Disbursing Agent of the loss,
theft, mutilation or destruction and (b) such security or indemnity as may be
required by the Disbursing Agent to hold the Disbursing Agent and the
Reorganized Debtors, as applicable, harmless from any damages, liabilities or
costs incurred in treating the individual as a holder of an Old Senior
Subordinated Note, Old 6% Debenture or Old 6% Debenture Promissory Note. Upon
compliance with this Section VI.J.2 by a holder of an Allowed Old Senior
Subordinated Notes Claim, Allowed Old 6% Debenture Claim or Allowed Old 6%
Debenture Promissory Note Claim, such holder will, for all purposes under the
Plan, be deemed to have surrendered the Old Senior Subordinated Note, Old 6%
Debenture and Old 6% Debenture Promissory Note.
3. Failure to Surrender Old Senior Subordinated Notes, Old 6% Debentures
and Old 6% Debenture Promissory Notes
Any holder of an Allowed Old Senior Subordinated Notes Claim, Allowed
Old 6% Debenture Claim or Allowed Old 6% Debenture Promissory Note Claim that
fails to surrender or be deemed to have surrendered the Old Senior Subordinated
Notes, Old 6% Debentures or Old 6% Debenture Promissory Notes within two years
after the Effective Date will have its right to distributions pursuant to the
Plan on account of the Old Senior Subordinated Notes Claim, Old 6% Debenture
Claim or Old 6% Debenture Promissory Note Claim discharged and will be forever
barred from asserting any such
37
Claim against the Reorganized Debtors or their respective property. In such
case, any cash, New Common Stock and New Warrants held for distribution on
account of the Old Senior Subordinated Notes Claim, Old 6% Debenture Claim or
Old 6% Debenture Promissory Note Claim will be treated pursuant to the
provisions set forth in Section VI.E.2.c.
4. Prepetition Credit Facility Notes
Holders of Allowed Bank Loan Claims and Overline Facility Claims will
be required to tender any Prepetition Credit Facility Notes or other promissory
notes in respect thereof or, if not evidenced by a note, any other instrument
evidencing their respective Allowed Claims to the applicable Disbursing Agent as
and when the entities receive New Common Stock. If any entity's notes or other
instruments evidencing its Allowed Claims are lost, stolen, mutilated or
destroyed, the entity will be required, in lieu of surrendering the note or
other instrument, to deliver to the applicable Disbursing Agent evidence
satisfactory to the Disbursing Agent of the loss, theft, mutilation or
destruction.
ARTICLE VII.
PROCEDURES FOR RESOLVING DISPUTED CLAIMS
A. Prosecution of Objections to Claims
1. Objections to Claims
All objections to Claims must be Filed and served on the holders of
the Claims by the Claims Objection Bar Date, and, if Filed prior to the
Effective Date, the objections will be served on the parties on the
then-applicable service list in the Reorganization Cases. If an objection has
not been Filed to a proof of Claim or a scheduled Claim by the Claims Objection
Bar Date, the Claim to which the proof of Claim or scheduled Claim relates will
be treated as an Allowed Claim if the Claim has not been allowed earlier. An
objection is deemed to have been timely Filed as to all Tort Claims, thus making
each such Claim a Disputed Claim as of the Claims Objection Bar Date. Each such
Tort Claim will remain a Disputed Claim until it becomes an Allowed Claim in
accordance with Section I.A.6.
2. Authority to Prosecute Objections
After the Confirmation Date, only the Debtors or the Reorganized
Debtors will have the authority to File, settle, compromise, withdraw or
litigate to judgment objections to Claims, including pursuant to any alternative
dispute resolution or similar procedures approved by the Bankruptcy Court. After
the Effective Date, the Reorganized Debtors may settle or compromise any
Disputed Claim without approval of the Bankruptcy Court.
B. Treatment of Disputed Claims
Notwithstanding any other provisions of the Plan, no payments or
distributions will be made on account of a Disputed Claim until such Claim
becomes an Allowed Claim. In lieu of distributions under the Plan to holders of
Disputed Claims in Class 6, if allowed, the Unsecured Claims Reserve will be
established on the Effective Date to hold property for the benefit of these
Claim holders, as well as holders of Allowed Claims in Class 6. Reorganized
Pillowtex will fund the Unsecured Claims Reserve with New Common Stock and New
Warrants, as described in Section VI.D.1.
C. Distributions on Account of Disputed Claims Once Allowed
On each Quarterly Distribution Date, the applicable Disbursing Agent
will make all distributions on account of any Disputed Claim that has become an
Allowed Claim during the preceding
38
calendar quarter. The distributions will be made pursuant to the provisions of
the Plan governing the applicable Class, including the incremental distribution
provisions set forth in Section VI.H.2.
D. Tax Requirements for Income Generated by Unsecured Claims Reserve
The recovery of holders of Allowed Claims in Class 6 consists of the
treatment set forth herein and post-Effective Date interest on the cash portion
of distributions in respect of such Claims, if any, at a rate determined by the
Cash Investment Yield. Therefore, the Reorganized Debtors and the holders of all
Allowed Claims in Class 6 will treat cash distributions of the Cash Investment
Yield as interest for all income Tax purposes, and the applicable Reorganized
Debtor will cause such information returns to be issued to such holders
consistent with this treatment as may be required by any governmental unit. The
applicable Reorganized Debtor will include in its Tax returns all items of
income, deduction and credit of the Unsecured Claims Reserve; provided, however,
that no distribution will be made to the applicable Reorganized Debtor out of
the Unsecured Claims Reserve as a result of this inclusion. The applicable
Disbursing Agent will pay, or cause to be paid, out of the funds held in the
Unsecured Claims Reserve, any Tax imposed on the Unsecured Claims Reserve (as
opposed to the applicable Reorganized Debtor or the holders of Allowed Claims in
Class 6) by any governmental unit with respect to income generated by the funds
and New Common Stock and New Warrants held in the Unsecured Claims Reserve. The
applicable Disbursing Agent also will file or cause to be filed any Tax or
information return related to the applicable Unsecured Claims Reserve that is
required by any governmental unit.
ARTICLE VIII.
SUBSTANTIVE CONSOLIDATION OF THE DEBTORS
The Debtors reserve the right to seek approval of the Bankruptcy Court
for the substantive consolidation of some or all of the Debtors for the purpose
of implementing the Plan, including for purposes of voting, confirmation and
distributions to be made under the Plan.
ARTICLE IX.
CONDITIONS PRECEDENT TO CONFIRMATION
AND CONSUMMATION OF THE PLAN
A. Conditions to Confirmation
The Bankruptcy Court will not enter the Confirmation Order unless and
until the following conditions have been satisfied or duly waived pursuant to
Section IX.C:
1. The Confirmation Order shall be reasonably acceptable in form and
substance to the Debtors and Bank of America as administrative agent to the
lenders under the Prepetition Revolving Credit Agreement and the Prepetition
Term Credit Agreement.
2. The Debtors shall have received a commitment for the Exit Financing
Revolver Facility from the Exit Financing Revolver Facility Agent Bank on terms
and conditions satisfactory to the Debtors.
3. Each holder of a Claim in respect of a Designated Post-Petition Loan
shall have consented to the treatment thereof as contemplated by Section
III.A.1.d.
4. The Plan shall not have been amended, altered or modified from the
Plan dated March 6, 2002, unless such amendment, alteration or modification has
been consented to in accordance with Section XIII.C, and all Exhibits to the
Plan shall be in form and substance reasonably satisfactory to the
39
Debtors and Bank of America as administrative agent to the lenders under the
Prepetition Revolving Credit Agreement and the Prepetition Term Credit
Agreement.
B. Conditions to the Effective Date
The Effective Date will not occur and the Plan will not be consummated
unless and until each of the following conditions have been satisfied or duly
waived pursuant to Section IX.C:
1. The documents effectuating the Exit Financing Revolver Facility shall
have been executed and delivered by the Reorganized Debtors and the Exit
Financing Revolver Facility Agent Bank.
2. The documents effectuating the Exit Term Loan shall have been executed
and delivered by the Reorganized Debtors and each of the holders of Allowed
Administrative Claims under Designated Post-Petition Loans.
3. The Plan shall not have been amended, altered or modified from the
Plan dated March 6, 2002, unless such amendment, alteration or modification has
been consented to in accordance with Section XIII.C, and all Exhibits to the
Plan shall be in form and substance reasonably satisfactory to the Debtors and
Bank of America as administrative agent to the lenders under the Prepetition
Revolving Credit Agreement and the Prepetition Term Credit Agreement.
C. Waiver of Conditions to the Confirmation or Effective Date
The conditions to Confirmation and to the Effective Date may be waived
in whole or in part by the Debtors at any time, without notice or order of the
Bankruptcy Court or any further action other than proceeding to Confirmation and
consummation of the Plan; provided, however, that the conditions set forth in
Section IX.A.4 and Section IX.B.3 may only be waived pursuant to an order of the
Bankruptcy Court after notice and opportunity for a hearing.
D. Effect of Nonoccurrence of Conditions to the Effective Date
If each of the conditions to the Effective Date is not satisfied or
duly waived in accordance with Section IX.C, then upon motion by the Debtors
made before the time that each of the conditions has been satisfied or duly
waived and upon notice to any parties in interest as the Bankruptcy Court may
direct, the Confirmation Order will be vacated by the Bankruptcy Court;
provided, however, that, notwithstanding the Filing of such motion, the
Confirmation Order may not be vacated if each of the conditions to the Effective
Date is either satisfied or duly waived before the Bankruptcy Court enters an
order granting the motion. If the Confirmation Order is vacated pursuant to this
Section IX.D, (1) the Plan will be null and void in all respects, including with
respect to: (a) the discharge of Claims and termination of Interests pursuant to
section 1141 of the Bankruptcy Code; and (b) the assumptions, assignments or
rejections of Executory Contracts or Unexpired Leases pursuant to Sections V.A
and Section V.C; and (2) nothing contained in the Plan will: (a) constitute a
waiver or release of any Claims by or against, or any Interest in, the Debtors;
or (b) prejudice in any manner the rights of the Debtors or any other party in
interest.
ARTICLE X.
CRAMDOWN
The Debtors request Confirmation under section 1129(b) of the
Bankruptcy Code with respect to any impaired Class that does not accept the Plan
pursuant to section 1126 of the Bankruptcy Code. The Debtors reserve the right
to modify the Plan to the extent, if any, that Confirmation pursuant to section
1129(b) of the Bankruptcy Code requires modification.
40
ARTICLE XI.
DISCHARGE, TERMINATION, INJUNCTION
AND SUBORDINATION RIGHTS
A. Discharge of Claims and Termination of Interests
1. Except as provided in the Plan or in the Confirmation Order, the rights
afforded under the Plan and the treatment of Claims and Interests under the Plan
will be in exchange for and in complete satisfaction, discharge and release of
all Claims and termination of all Interests arising on or before the Effective
Date, including any interest accrued on Claims from the Petition Date. Except as
provided in the Plan or in the Confirmation Order, Confirmation will, as of the
Effective Date: (a) discharge the Debtors from all Claims or other debts that
arose on or before the Effective Date, and all debts of the kind specified in
section 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether or not (i) a
proof of Claim based on such debt is Filed or deemed Filed pursuant to section
501 of the Bankruptcy Code, (ii) a Claim based on such debt is allowed pursuant
to section 502 of the Bankruptcy Code or (iii) the holder of a Claim based on
such debt has accepted the Plan; and (b) terminate all Interests and other
rights of equity security holders in the Debtors.
2. In accordance with the foregoing, except as provided in the Plan or the
Confirmation Order, the Confirmation Order will be a judicial determination, as
of the Effective Date, of a discharge of all Claims and other debts and
liabilities against the Debtors and a termination of all Interests and other
rights of equity security holders in the Debtors, pursuant to sections 524 and
1141 of the Bankruptcy Code, and such discharge will void any judgment obtained
against a Debtor at any time, to the extent that such judgment relates to a
discharged Claim or terminated Interest.
B. Injunctions
1. Except as provided in the Plan or the Confirmation Order, as of the
Effective Date, all entities that have held, currently hold or may hold a Claim
or other debt or liability that is discharged or an Interest or other right of
an equity security holder that is terminated pursuant to the terms of the Plan
with respect to any Debtor or Reorganized Debtor will be permanently enjoined
from taking any of the following actions on account of any such discharged
Claims, debts or liabilities or terminated Interests or rights: (a) commencing
or continuing in any manner any action or other proceeding against the Debtors,
the Reorganized Debtors or their respective property, other than to enforce any
right pursuant to the Plan to a distribution; (b) enforcing, attaching,
collecting or recovering in any manner any judgment, award, decree or order
against the Debtors, the Reorganized Debtors or their respective property, other
than as permitted pursuant to (a) above; (c) creating, perfecting or enforcing
any lien or encumbrance against the Debtors, the Reorganized Debtors or their
respective property; (d) asserting a setoff, right of subrogation or recoupment
of any kind against any debt, liability or obligation due to the Debtors or the
Reorganized Debtors; and (e) 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.
2. As of the Effective Date, all entities that have held, currently hold or
may hold any Claims, obligations, suits, judgments, damages, demands, debts,
rights, causes of action or liabilities that are released pursuant to the Plan
with respect to any Debtor or Reorganized Debtor will be permanently enjoined
from taking any of the following actions against any released entity or its
property on account of such released Claims, obligations, suits, judgments,
damages, demands, debts, rights, causes of action or liabilities: (a) commencing
or continuing in any manner any action or other proceeding; (b) enforcing,
attaching, collecting or recovering in any manner any judgment, award, decree or
order; (c) creating, perfecting or enforcing any lien or encumbrance; (d)
asserting a setoff, right of subrogation or recoupment of any kind against any
debt, liability or obligation due to any released entity; and (e) commencing or
41
continuing any action in any manner in any place that does not comply with or is
inconsistent with the provisions of the Plan.
3. By accepting distributions pursuant to the Plan, each holder of an
Allowed Claim receiving distributions pursuant to the Plan will be deemed to
have specifically consented to the injunctions set forth in this Section XI.B.
C. Termination of Subordination Rights and Settlement of Related Claims and
Controversies
1. The classification and manner of satisfying all Claims and Interests
under the Plan take into consideration all subordination rights, whether arising
under general principles of equitable subordination, contract, section 510(c) of
the Bankruptcy Code or otherwise, that a holder of a Claim or Interest may have
against other Claim or Interest holders with respect to any distribution made
pursuant to the Plan. All subordination rights that a holder of a Claim may have
with respect to any distribution to be made pursuant to the Plan will be
discharged and terminated, and all actions related to the enforcement of such
subordination rights will be permanently enjoined. Notwithstanding the
foregoing, if Class 6 does not accept the Plan, any enforceable subordination
rights of holders of Overline Facility Claims and Aircraft Lease Claims will be
preserved. Accordingly, distributions pursuant to the Plan to holders of Allowed
Claims will not be subject to payment to a beneficiary of such terminated
subordination rights or to levy, garnishment, attachment or other legal process
by a beneficiary of such terminated subordination rights.
2. Pursuant to Bankruptcy Rule 9019 and in consideration for the
distributions and other benefits provided under the Plan, the provisions of the
Plan will constitute a good faith compromise and settlement of all Claims or
controversies relating to the subordination rights that a holder of a Claim may
have with respect to any Allowed Claim or any distribution to be made pursuant
to the Plan on account of any Allowed Claim. The entry of the Confirmation Order
will constitute the Bankruptcy Court's approval, as of the Effective Date, of
the compromise or settlement of all such Claims or controversies and the
Bankruptcy Court's finding that the compromise or settlement is in the best
interests of the Debtors, the Reorganized Debtors and their respective property
and Claim and Interest holders and is fair, equitable and reasonable.
ARTICLE XII.
RETENTION OF JURISDICTION
Notwithstanding the entry of the Confirmation Order and the occurrence
of the Effective Date, the Bankruptcy Court will retain such jurisdiction over
the Reorganization Cases after the Effective Date as is legally permissible,
including jurisdiction to:
1. Allow, disallow, determine, liquidate, classify, estimate or establish
the priority or secured or unsecured status of any Claim or Interest, including
the resolution of any request for payment of any Administrative Claim; the
resolution of any objections to the allowance, priority or classification of
Claims or Interests; and the approval of the Indenture Trustee's fees and
expenses pursuant to Section III.E;
2. Grant or deny any applications for allowance of compensation or
reimbursement of expenses authorized pursuant to the Bankruptcy Code or the Plan
for periods ending on or before the Effective Date;
3. Resolve any matters related to the assumption, assumption and
assignment or rejection of any Executory Contract or Unexpired Lease to which
any Debtor is a party or with respect to which any
42
Debtor or Reorganized Debtor may be liable and to hear, determine and, if
necessary, liquidate any Claims arising therefrom, including any Cure Amount
Claims;
4. Ensure that distributions to holders of Allowed Claims are
accomplished pursuant to the provisions of the Plan;
5. Decide or resolve any motions, adversary proceedings, contested or
litigated matters and any other matters, including the Recovery Actions to the
extent not released hereunder, and grant or deny any applications involving the
Debtors that may be pending on the Effective Date or brought thereafter;
6. Enter any orders as may be necessary or appropriate to implement or
consummate the provisions of the Plan and all contracts, instruments, releases
and other agreements or documents entered into or delivered in connection with
the Plan, the Disclosure Statement or the Confirmation Order;
7. Resolve any cases, controversies, suits or disputes that may arise in
connection with the Recovery Actions or the consummation, interpretation or
enforcement of the Plan or any contract, instrument, release or other agreement
or document that is entered into or delivered pursuant to the Plan or any
entity's rights arising from or obligations incurred in connection with the Plan
or such documents;
8. Modify the Plan before or after the Effective Date pursuant to section
1127 of the Bankruptcy Code; modify the Disclosure Statement, the Confirmation
Order or any contract, instrument, release or other agreement or document
entered into or delivered 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, the Plan, the Disclosure Statement,
the Confirmation Order or any contract, instrument, release or other agreement
or document entered into, delivered or created in connection with the Plan, the
Disclosure Statement or the Confirmation Order, in such manner as may be
necessary or appropriate to consummate the Plan;
9. Issue injunctions, enforce the injunctions contained in the Plan and
the Confirmation Order, 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;
10. Enter and implement such orders as are necessary or appropriate if the
Confirmation Order is for any reason or in any respect modified, stayed,
reversed, revoked or vacated or distributions pursuant to the Plan are enjoined
or stayed;
11. Determine any other matters that may arise in connection with or
relate to the Plan, the Disclosure Statement, the Confirmation Order or any
contract, instrument, release or other agreement or document entered into or
delivered in connection with the Plan, the Disclosure Statement or the
Confirmation Order;
12. Enter a final decree closing the Reorganization Cases; and
13. Determine matters concerning state, local and federal Taxes in
accordance with sections 346, 505 and 1146 of the Bankruptcy Code, including any
Disputed Claims for Taxes.
43
ARTICLE XIII.
MISCELLANEOUS PROVISIONS
A. Dissolution of the Creditors' Committee
On the Effective Date, the Creditors' Committee will dissolve and the
members of the Creditors' Committee will be released and discharged from all
duties and obligations arising from or related to the Reorganization Cases. The
Professionals retained by the Creditors' Committee and the members thereof will
not be entitled to assert any Fee Claim for any services rendered or expenses
incurred after the Effective Date, except for services rendered and expenses
incurred in connection with any applications for allowance of compensation and
reimbursement of expenses pending on the Effective Date or Filed and served
after the Effective Date pursuant to Section III.A.1.f.ii.A and in connection
with any appeal of the Confirmation Order.
B. Limitation of Liability
The Debtors, the Reorganized Debtors and their respective directors,
officers, employees and Professionals, acting in such capacity, and the
Creditors' Committee and its members and Professionals, will neither have nor
incur any liability to any entity for any act taken or omitted to be taken in
connection with or related to the formulation, preparation, dissemination,
implementation, Confirmation or consummation of the Plan, the Disclosure
Statement or any contract, instrument, release or other agreement or document
created or entered into, or any other act taken or omitted to be taken, in
connection with the Plan; provided, however, that the foregoing provisions of
this Section XIII.B will have no effect on: (1) the liability of any entity that
would otherwise result from the failure to perform or pay any obligation or
liability under the Plan or any contract, instrument, release or other agreement
or document to be entered into or delivered in connection with the Plan or (2)
the liability of any entity that would otherwise result from any such act or
omission to the extent that such act or omission is determined in a Final Order
to have constituted gross negligence or willful misconduct.
C. Modification of the Plan
Subject to the restrictions on modifications set forth in section 1127
of the Bankruptcy Code, the Debtors or the Reorganized Debtors, as applicable,
reserve the right to alter, amend or modify the Plan before its substantial
consummation.
D. Revocation of the Plan
The Debtors reserve the right to revoke or withdraw the Plan as to any
or all of the Debtors prior to the Confirmation Date. If the Debtors revoke or
withdraw the Plan as to any or all of the Debtors, or if Confirmation as to any
or all of the Debtors does not occur, then, with respect to such Debtors, the
Plan will be null and void in all respects, and nothing contained in the Plan
will: (1) constitute a waiver or release of any Claims by or against, or any
Interests in, such Debtors or (2) prejudice in any manner the rights of any
Debtors or any other party.
E. 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 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 then will be applicable as altered or
interpreted; provided that any such alteration or interpretation must be in form
and substance acceptable to the Debtors and the Creditors' Committee.
44
Notwithstanding any such holding, alteration or interpretation, the remainder of
the terms and provisions of the Plan will remain in full force and effect and
will in no way be affected, impaired or invalidated by such holding, alteration
or interpretation. The Confirmation Order will constitute a judicial
determination and will provide that each term and provision of the Plan, as it
may have been altered or interpreted in accordance with the foregoing, is valid
and enforceable pursuant to its terms.
F. Successors and Assigns
The rights, benefits and obligations of any person or entity named or
referred to in the Plan will be binding on, and will inure to the benefit of,
any heir, executor, administrator, successor or assign of the entity.
G. Service of Certain Plan Exhibits and Disclosure Statement Exhibits
Because the Exhibits to the Plan are voluminous, the Exhibits are not
being served with copies of the Plan and the Disclosure Statement. All of the
Exhibits are or will be available to any party in interest on the Document
Website.
H. Service of Documents
Any pleading, notice or other document required by the Plan or
Confirmation Order to be served on or delivered to the Debtors, the Reorganized
Debtors, the Creditors' Committee or the DIP Lenders must be sent by overnight
delivery service, facsimile transmission, courier service or messenger to:
1. The Debtors and the Reorganized Debtors:
John F. Sterling, Esq., General Counsel
PILLOWTEX CORPORATION
4111 Mint Way
Dallas, Texas 75237
Fax: (214) 467-0823
David G. Heiman, Esq.
JONES, DAY, REAVIS & POGUE
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Fax: (216) 579-0212
Gregory M. Gordon, Esq.
Henry L. Gompf, Esq.
Sharon A. Alexander, Esq.
Daniel P. Winikka, Esq.
JONES, DAY, REAVIS & POGUE
2727 North Harwood Street
Dallas, Texas 75201
Fax: (214) 969-5100
45
William H. Sudell, Jr., Esq.
Eric D. Schwartz, Esq.
MORRIS, NICHOLS, ARSHT & TUNNELL
1201 North Market Street
P.O. Box 1347
Wilmington, Delaware 19899
Fax: (302) 658-3989
(Counsel to the Debtors and Reorganized Debtors)
2. The Creditors' Committee:
Fred S. Hodara, Esq.
AKIN, GUMP, STRAUSS, HAUER & FELD LLP
590 Madison Avenue
New York, New York 10022
Fax: (212) 872-1002
John D. McLaughlin, Esq.
YOUNG, CONAWAY, STARGATT & TAYLOR
1100 North Market Street, 11th Floor
P.O. Box 391
Wilmington, Delaware 19899
Fax: (302) 571-1253
(Counsel to the Creditors' Committee)
3. The DIP Lenders:
Ira Einsohn, Esq.
R. Michael Farquhar, Esq.
Douglas Wingo, Esq.
WINSTEAD, SECHREST & MINICK
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Fax: (214) 745-5390
Berry D. Spears, Esq.
WINSTEAD, SECHREST & MINICK
100 Congress Avenue, Suite 800
Austin, Texas 78701
Fax: (512) 370-2850
Mark D. Collins, Esq.
RICHARDS, LAYTON & FINGER
One Rodney Square, 8th Floor
P.O. Box 551
Wilmington, Delaware 19899
Fax: (302) 658-6548
(Counsel to the DIP Lender and Lenders under the Prepetition Credit
Facility)
46
4. The United States Trustee
Joseph J. McMahon, Jr., Esq.
OFFICE OF THE UNITED STATES TRUSTEE
950 Curtis Center West
Philadelphia, Pennsylvania 19106
Fax: (215) 597-5795
Dated: March 6, 2002 Respectfully submitted,
PILLOWTEX CORPORATION (for itself and on
behalf of the Pillowtex Subsidiary Debtors)
By: /s/ ANTHONY T. WILLIAMS
-----------------------------------------
Anthony T. Williams,
President and Chief Operating Officer
COUNSEL:
WILLIAM H. SUDELL, JR. (DE 463)
ERIC D. SCHWARTZ (DE 3134)
MORRIS, NICHOLS, ARSHT & TUNNELL
1291 North Market Street
P.O. Box 1347
Wilmington, Delaware 19899
(302) 658-9200
DAVID G. HEIMAN (OH 0038271)
JONES, DAY, REAVIS & POGUE
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
(216) 586-3939
- and -
GREGORY M. GORDON (TX 08435300)
HENRY L. GOMPF (TX 08116400)
SHARON A. ALEXANDER (TX 00998580)
DANIEL P. WINIKKA (TX 00794873)
JONES, DAY, REAVIS & POGUE
2727 North Harwood Street
Dallas, Texas 75201
(214) 220-3939
ATTORNEYS FOR DEBTORS AND DEBTORS IN POSSESSION
47
Exhibit I.A.46
--------------
TERMS OF EXIT FINANCING REVOLVER FACILITY
The material terms of the Exit Financing Revolver Facility are
described under "Overview of the Plan -- Exit Financing Revolver Facility and
Other Post-Reorganization Indebtedness" and "Securities To Be Distributed
Pursuant to the Plan; Post-Reorganization Indebtedness -- Exit Financing
Revolver Facility" in the Disclosure Statement. This exhibit will be Filed and
available for review on the Document Website no later than 15 days before the
deadline to object to the Confirmation of the Plan.
Exhibit I.A.48
--------------
TERMS OF EXIT TERM LOAN
The material terms of the Exit Term Loan are described under "Overview
of the Plan -- Summary of Terms of Certain Securities To Be Distributed Pursuant
to the Plan -- Exit Term Loan Notes" and "Securities To Be Distributed Pursuant
to the Plan; Post-Reorganization Indebtedness -- Exit Term Loan" in the
Disclosure Statement. This exhibit will be Filed and available for review on the
Document Website no later than 15 days before the deadline to object to the
Confirmation of the Plan.
Exhibit IV.B.3
--------------
PLAN OF MERGER /1/
The sole purpose of the Pillowtex Merger is to change Pillowtex's domicile
from the State of Texas to the State of Delaware. The following briefly
describes the Pillowtex Merger:
. New Pillowtex will be formed as a wholly owned Delaware subsidiary of
Pillowtex. The certificate of incorporation and bylaws of New
Pillowtex will be in substantially the forms of Exhibits IV.C.1.a.i
and IV.C.1.a.ii, respectively, to the Plan.
. On the Effective Date of the Plan, the following events will occur:
. each share of Old Common Stock of Pillowtex and Old Preferred
Stock of Pillowtex outstanding on the Petition Date and
immediately prior to the Effective Date will be canceled;
. Pillowtex will issue, if Class 6 accepts the Plan, 18,000,000 new
shares of Old Common Stock of Pillowtex, or, if Class 6 does not
accept the Plan, 18,300,000 new shares of Old Common Stock of
Pillowtex, to the Disbursing Agent for the benefit of the holders
of Claims in Class 5;
. Pillowtex will issue, if Class 6 accepts the Plan, 600,000 new
shares of Old Common Stock of Pillowtex, or, if Class 6 does not
accept the Plan, 200,000 new shares of Old Common Stock of
Pillowtex, to the Disbursing Agent for the benefit of the holders
of Claims in Class 6;
. Pillowtex will merge into New Pillowtex, with New Pillowtex as
the surviving corporation;
. each outstanding share of Old Common Stock of Pillowtex held by
the Disbursing Agent will be converted into the right to receive
one share of New Common Stock of the surviving corporation (i.e.,
Reorganized Pillowtex) and each outstanding share of common stock
of New Pillowtex held by Pillowtex will be canceled; and
. the Disbursing Agent will surrender the certificates representing
the new shares of Old Common Stock of Pillowtex and receive in
exchange therefor certificates representing an equivalent number
of shares of New Common Stock.
__________
/1/ All capitalized terms used herein but not defined have the meanings given
to them in the Plan.
Exhibit IV.C.1.a.i
------------------
CERTIFICATE OF INCORPORATION OF REORGANIZED PILLOWTEX
The material terms of the Certificate of Incorporation of Reorganized
Pillowtex are described under "Overview of the Plan -- Summary of Terms of
Certain Securities To Be Distributed Pursuant to the Plan -- Equity Securities,"
"Reorganized Pillowtex -- Management," "Reorganized Pillowtex -- Certain
Corporate Governance Matters," "Reorganized Pillowtex -- Indemnity Arrangements"
and "Securities To Be Distributed Pursuant to the Plan; Post-Reorganization
Indebtedness -- New Common Stock" in the Disclosure Statement. This exhibit will
be Filed and available for review on the Document Website no later than 15 days
before the deadline to object to the Confirmation of the Plan.
Exhibit IV.C.1.a.ii
-------------------
BYLAWS OF REORGANIZED PILLOWTEX
The material terms of the Bylaws of Reorganized Pillowtex are
described under "Overview of the Plan -- Summary of Terms of Certain Securities
To Be Distributed Pursuant to the Plan -- Equity Securities," "Reorganized
Pillowtex -- Management," "Reorganized Pillowtex -- Certain Corporate Governance
Matters" and "Reorganized Pillowtex -- Indemnity Arrangements" in the Disclosure
Statement. This exhibit will be Filed and available for review on the Document
Website no later than 15 days before the deadline to object to the Confirmation
of the Plan.
Exhibit IV.C.1.b.i
------------------
FORM OF CERTIFICATE OF INCORPORATION OF REORGANIZED PILLOWTEX
SUBSIDIARY DEBTORS
This exhibit will be Filed and available for review on the Document
Website no later than 15 days before the deadline to object to the Confirmation
of the Plan.
Exhibit IV.C.1.b.ii
-------------------
FORM OF BYLAWS OF REORGANIZED PILLOWTEX SUBSIDIARY DEBTORS
This exhibit will be Filed and available for review on the Document
Website no later than 15 days before the deadline to object to the Confirmation
of the Plan.
Exhibit IV.C.2
--------------
INITIAL BOARD OF DIRECTORS AND OFFICERS OF PILLOWTEX DEBTORS
The Debtors have engaged the services of the executive search firm of
Russell Reynolds Associates to identify potential directors and a chief
executive officer for Reorganized Pillowtex, as described in "Operations During
the Reorganization Cases -- Case Administration and Related Activities --
Retention of Financial Advisors and Other Consultants," "Reorganized Pillowtex
- -- Management -- Reorganized Pillowtex Executive Officers" and "-- Reorganized
Pillowtex Board of Directors" in the Disclosure Statement. This exhibit will be
Filed and available for review on the Document Website no later than 15 days
before the deadline to object to the Confirmation of the Plan.
EXHIBIT IV.C.3
--------------
EQUITY INCENTIVE PLAN, EMPLOYMENT AGREEMENTS
AND OTHER EMPLOYEE BENEFIT PLANS /1/
A. List of Benefit Plans, Programs and Agreements To Be in Effect on the
Effective Date
Existing Benefit Plans, Programs and Agreements /2/
401(k) Retirement Plans
Retiree Benefits
Health and Welfare Benefits
Executive Medical Expense Reimbursement Plan
Deferred Compensation
Supplemental Executive Retirement Plan
Key Employee Retention Plan
Employment Agreements with: Anthony T. Williams, Michael R. Harmon,
Scott E. Shimizu, A. Allen Oakley, Mr. Richard Grissinger, and
seven other executive officers
New Benefit Plans, Programs and Agreements /2/
Equity Incentive Plan
Severance Arrangements /3/
B. Initial Grants Under Equity Incentive Plan
The initial grants of restricted stock and options under the Equity
Incentive Plan are presently expected to include grants as follows:
No. of Shares of
No. of Shares of New Common Stock Underlying
New Common Stock Option Grant if Class 6 does
No. of Shares Underlying Option Grant if not accept
Recipient of Restricted Stock Class 6 accepts the Plan the Plan
- ------------------- ------------------- -------------------------- ----------------------------
Anthony T. Williams 80,000 123,200 140,000
Scott T. Shimizu 60,000 90,000 100,000
Michael R. Harmon 60,000 90,000 100,000
A. Allen Oakley 60,000 90,000 100,000
The initial grants are also expected to include grants of options to key
employees exercisable to purchase, if Class 6 accepts the Plan, 373,400
shares of New Common Stock in the aggregate or, if Class 6 does not accept
the Plan, 400,000 shares of New Common Stock in the aggregate. The detail
of such grants will be determined by Pillowtex prior to the Confirmation
Date.
__________
/1/ All capitalized terms used herein but not defined have the meanings given
to them in the Plan.
/2/ A description of each of the benefit plans, programs and agreements listed
herein is set forth in the Disclosure Statement and incorporated herein by
reference.
/3/ The terms of the Severance Arrangements and Equity Incentive Plan are not
yet final and will be Filed and available for review on the Document
Website no later than 15 days before the deadline to object to the
Confirmation of the Plan.
Exhibit IV.I
------------
NEW REGISTRATION RIGHTS AGREEMENT
The material terms of the New Registration Rights Agreement are
described under "Applicability of Certain Federal and State Securities Laws --
Registration Rights" in the Disclosure Statement. This exhibit will be Filed and
available for review on the Document Website no later than 15 days before the
deadline to object to the Confirmation of the Plan.
Exhibit IV.J
------------
NEW WARRANT AGREEMENT
The material terms of the New Warrant Agreement are described under
"Securities to be Distributed Pursuant to the Plan; Post-Reorganization
Indebtedness -- New Warrants" in the Disclosure Statement. This exhibit will be
Filed and available for review on the Document Website no later than 15 days
before the deadline to object to the Confirmation of the Plan.
Exhibit IV.K.1
--------------
NEW TAX SHARING AGREEMENT
This exhibit will be Filed and available for review on the Document
Website no later than 15 days before the deadline to object to the Confirmation
of the Plan.
Exhibit V.A.1
-------------
SCHEDULE OF EXECUTORY CONTRACTS OR UNEXPIRED LEASES TO BE ASSUMED
This exhibit will be Filed and available for review on the Document
Website no later than 15 days before the deadline to object to the Confirmation
of the Plan.
Exhibit V.C
-----------
NONEXCLUSIVE SCHEDULE OF EXECUTORY CONTRACTS OR
UNEXPIRED LEASES TO BE REJECTED
This exhibit is to be filed and available for review on the Document
Website no later than 15 days before the deadline to object to the Confirmation
of the Plan.