<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 1, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _________________
Commission file number 0-1790
RUSSELL CORPORATION
(Exact name of registrant as specified in its charter)
Alabama 63-0180720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
755 Lee Street
Alexander City, Alabama 35011-0272
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (256)500-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
--------------------- -------------------
Common Stock, $.01 par value New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of Common Stock, par value $.01, held by
non-affiliates of the registrant, as of March 24, 2000, was approximately
$354,248,593.
As of March 24, 2000, there were 32,540,533 shares of Common Stock,
$.01 par value outstanding (excluding treasury shares).
-Continued-
<PAGE> 2
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Shareholders Report for the year ended January
1, 2000 are incorporated by reference into Parts I, II and IV.
Portions of the Proxy Statement for the Annual Meeting of Shareholders
to be held on April 19, 2000 are incorporated by reference into Part III.
<PAGE> 3
PART I
ITEM 1. Business
GENERAL
Russell Corporation is an international branded apparel company
specializing in activewear, casualwear and athletic uniforms. Its major brands
include Russell Athletic(R), JERZEES(R) and Cross Creek(R). The Company designs
and merchandises a variety of leisure and sports apparel marketed to sporting
goods dealers, department and specialty stores, mass merchandisers, golf pro
shops, college bookstores, screen printers and embroiderers, distributors, mail
order houses and other apparel manufacturers. Products are derived from a
combination of internally produced products, contractors and third-party
sources.
On July 22, 1998, the Company announced the Board of Directors had
approved a three-year restructuring and reorganization plan to improve the
Company's global competitiveness.
The restructuring charges in 1999 relate primarily to plant closings
with the shift of apparel assembly operations to lower cost geographic areas and
the reconfiguration of distribution facilities. There were no significant
revenue losses related to the restructuring charges that were announced in 1999,
as the Company continued to move sewing operations to a combination of owned and
contractor locations in Central America and Mexico. The Company closed 14
domestic apparel operations and announced the closure of two in Scotland as
mentioned below. The Company also closed two yarn manufacturing facilities and
one cloth fabrication facility. Reconfiguration of the distribution facilities
continued throughout the year and is nearing completion as planned.
Approximately 2,200 employees of facilities for which closure plans were
announced in 1999 were notified of their termination and received detailed
information on their individual severance packages when the facility closings
were announced.
On October 15, 1999, the Company announced that it would be closing its
Scottish manufacturing plants in Bo'ness and Livingston by the end of the year
2000. This decision is part of the Company's continued efforts associated with a
strategic multi-year restructuring and reorganization plan. Due to the ongoing
impact of increased competition within the European marketplace and the fact
that many of the Company's competitors now source their product requirements
from developing countries, the economics of maintaining a manufacturing base in
Scotland are no longer viable. The Company plans to source 100% of its European
product requirements from contractors or joint ventures.
In total, approximately 4,200 employees company-wide had been notified
of their termination and separation and had received the details of their
individual severance packages as of year-end.
Of the Company's total revenues, more than 95% was derived from the
sale of completed apparel, with the balance from woven fabrics. During each of
the two previous fiscal years ending January 2, 1999 and January 3, 1998,
completed apparel also accounted for more than 95% of total revenues. Foreign
and export sales for 1999 were 12.2%. In each of the immediately preceding two
years, foreign and export sales were 10.7% and 11.0%, respectively. One
customer, Wal-Mart Stores, Inc. and affiliates, accounted for 19.4% of total
revenues in 1999, 19.0% in 1998 and 18.8% in 1997.
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The Company produces athletic uniforms for most sports activities and
for players of all ages and sizes. These products are marketed to professional,
collegiate, high school, and other teams as well as to individuals. Activewear
and casual apparel, such as t-shirts, fleece sweatshirts and sweatpants,
pullovers, jackets, and other knitted apparel products, are produced for the
general consumer market. Product lines also include placket shirts, turtlenecks
and golf apparel. The Company also produces sports and casual socks, including
tube, quarter anklet and crew socks for men, women and children. Woven fabrics
are produced and sold to other apparel manufacturers.
The Company's principal textile manufacturing facilities are located in
and around Alexander City, Alabama. It also operates textile and apparel plants
in other communities in Alabama, North Carolina and Virginia. The Company owns
apparel assembly facilities in Mexico and Honduras. Warehousing and shipping is
conducted in Alexander City, Ft. Payne and Montgomery, Alabama and Mt. Airy,
North Carolina. The primary manufacturing and distribution facilities for the
International Division are at Russell Europe Limited, located in and around
Livingston, Scotland. The Company also maintains warehouses in Mexico and
Australia.
As a vertically integrated operation, the Company converts raw fibers
into finished apparel and fabrics utilizing company-owned facilities, as well as
contractors and general suppliers for spinning, knitting and weaving, dyeing and
finishing, and cutting and sewing operations. Generally, the Company produces
most of the yarns, other than textured and filament yarns, used in the Company's
manufacturing processes. As a result of its integrated production process, all
functions required to produce finished apparel and fabrics can be performed by
the Company without reliance upon outside contractors. The Company is not,
however, solely reliant on owned facilities and operations, particularly in
apparel assembly. Approximately 70% of its products for domestic consumption
were assembled offshore at contractors, owned offshore operations or purchased
from other vendors at year end 1999.
The Company benefits from flexibility in its production scheduling
capability, permitting it to shift product emphasis as markets improve, change
or temporarily decline for particular products. This ability to respond quickly
to market changes has enabled the Company to manage the utilization of its
manufacturing capacity.
The Company's revenues and income are subject to seasonal variations.
However, due to the time which may elapse between the acceptance of customers'
orders and shipment of goods, prices may or may not immediately reflect changes
in the Company's cost of raw materials and other costs. Working capital needs
may change with the increase or decrease in inventories or accounts receivable
as a result of a variety of credit terms and time between production and
shipments. Production schedules are based upon current orders, the history of
customer orders, market research, and similar factors. The Company has no
meaningful backlog figures.
The Company does not hold any significant patents, franchises or
concessions in any of its segments. The Company's ability to manufacture and
sell certain licensed apparel products is dependent upon licenses held by the
Company to utilize various trademarks and tradenames on such apparel. The
licenses are subject to periodic renewal and negotiation and certain minimum
payments.
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SEGMENTS
The Company has two reportable segments: Activewear and International.
These segments offer similar products and operate in multiple locations. The
reportable segments are each managed separately because they manufacture and
distribute products into different geographical areas. The segment information
found in Note 11 on pages 40 and 41 of the 1999 Annual Report to Shareholders is
hereby incorporated by reference.
Activewear - The Company's Activewear segment consists of three brands
that sell to sporting goods dealers, department and specialty stores, mass
merchants, wholesale clubs, college bookstores, screen printers, distributors,
golf pro shops, and mail order catalogs. The Company's activewear apparel
products include t-shirts, fleece products, such as sweat shirts and pants,
athletic uniforms, knit shirts, and other activewear casual apparel.
The Activewear segment consists of the primary operations of the
Company's JERZEES(R), Russell Athletic(R) and Cross Creek(R) brands. Activewear
is sold by a combination of a salaried, company-employed sales force and
commission agents.
The Activewear segment utilizes company-owned manufacturing facilities
to produce product, as well as contractors or other vendors for components in
the manufacturing process or for the procurement of finished product. Generally,
company-owned and operated manufacturing facilities for Activewear consist of
fabrication, dyeing and finishing, cutting, and sewing.
Russell Yarn consists of the spinning of yarns, the process by which
fibers of raw cotton or blends of cotton and synthetic fibers are converted into
continuous strands. Yarn uniformity and strength are the principal
characteristics which materially affect the efficiency of subsequent
manufacturing processes and the quality of the finished fabrics or apparel. This
unit manufactures a variety of yarn sizes primarily for use in the balance of
the Company's manufacturing processes.
Russell Yarn purchases synthetic fibers from one principal supplier.
There are approximately four major producers of such fibers in the United
States. The Company purchases cotton from various merchants.
This unit has experienced no material difficulty in purchasing adequate
supplies and does not presently anticipate difficulties in the future. Russell
Yarn has no long-term contracts for the supply of raw materials and is,
therefore, subject to market price fluctuations.
Fabrication is the process of converting yarn, provided by the
Company's yarn unit or purchased from a third party, into cloth or fabrics. This
is done through the process of single knitting, supplemented by smaller
operations of double knitting and warp knitting. These operations are conducted
in four plant locations in Alexander City with additional locations in Wetumpka
and Sylacauga, Alabama and Mt. Airy, North Carolina.
These fabrics are then dyed and finished in company-owned facilities in
Alexander City, Wetumpka and Sylacauga, Alabama and Mt. Airy, North Carolina or
by contractors. The dyeing and finishing processes impart and affect the
appearances, the hand (feel), color fastness, uniformity, shade, and stability
(retention and form) of the fabric.
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Cutting and sewing operations for Activewear are currently located in
plants in the United States, Mexico, Honduras, and various contractors in
Central and South America.
International - The International strategic business unit manufactures
and distributes activewear products under the JERZEES(R), Russell Athletic(R)
and Cross Creek(R) brands throughout various countries outside the United States
and Canada. This segment's major market is Europe, where the Company engages in
both manufacturing and marketing of activewear similar to the processes
described above for the Activewear segment.
All Other - Other segments that do not meet the quantitative thresholds
for determining reportable segments manufacture and sell fabrics to other
apparel manufacturers and manufacture and sell socks.
Russell Fabrics designs, manufactures and markets quality woven fabrics
of cotton, polyester and cotton/polyester blends in a variety of patterns,
colors and constructions to other apparel manufacturers, primarily for the
manufacture of school and industrial uniforms.
DeSoto Mills is a manufacturer of popularly priced socks for men, women
and children under the Company's JERZEES(R) and Russell Athletic(R) brands,
through a company-employed sales force principally to discount retailers and
wholesale clubs markets.
COMPETITION
The textile-apparel industry in all of the Company's business segments
is keenly competitive, and the Company has many domestic and foreign
competitors, both large textile-apparel companies and smaller concerns. While
the sales of a number of manufacturers are substantially greater than those of
the Company, no single manufacturer dominates the industry.
EMPLOYEES
As of January 1, 2000, the Company had 16,645 employees in total, as
follows:
<TABLE>
<S> <C>
Activewear 14,873
International 678
All Other 730
Shared 364
</TABLE>
The Company has never had a strike or work stoppage and considers its
relationship with its employees to be good.
REGULATION
The Company is subject to federal, state and local laws and regulations
affecting its business, including those promulgated under the Occupational
Safety and Health Act (OSHA), the Consumer Product Safety Act (CPSA), the
Flammable Fabrics Act, the Textile Fiber Product Identification Act, and the
rules and regulations of the Consumer Products Safety Commission (CPSC). The
Company believes that it is in compliance with all applicable governmental
regulations under these statutes. The Company believes it is in compliance with
all current environmental requirements and expects no major additional
expenditures in this area in the foreseeable future.
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FORWARD-LOOKING INFORMATION
With the exception of historical information, the matters and
statements discussed, made or incorporated by reference in this Annual Report on
Form 10-K constitute forward-looking statements and are discussed, made or
incorporated by reference, as the case may be, pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Wherever
possible, the Company has identified these "forward-looking" statements (as
defined in Section 21E of the Securities and Exchange Act of 1934) by words such
as "anticipates," "believes," "intends," "estimates," "expects" and similar
phrases. In addition, the Company and its representatives may from time to time
make other oral or written statements that are also forward-looking statements.
Some forward-looking statements concern anticipated sales levels, cost
estimates and resulting earnings that are not necessarily indicative of
subsequent periods due to the mix of future orders, at once orders and product
mix changes, which may vary significantly from year to year or quarter to
quarter, and the timing and effect of the Company's restructuring and
reorganization plan. These forward-looking statements are based upon assumptions
the Company believes are reasonable; however, such statements are subject to
risks and uncertainties which could cause the Company's actual results,
performance and achievements to differ materially from those expressed in, or
implied or contemplated by, these statements. These risks and uncertainties
include, but are not limited to, the overall level of consumer spending for
apparel; the financial strength of the retail industry; actions by competitors
that may impact the Company's business (including in particular changes in
pricing); the existence of excess capacity in the Company's industry; changes in
prices of raw materials used in the Company's manufacturing processes; the
ability of the Company to reduce cost in more labor-intensive segments of the
manufacturing process; the success of planned advertising, marketing and
promotional campaigns and international activities; changes in customer
relationships; the impact of economic changes in the markets where the Company
competes, such as changes in interest rates, currency exchange rates, inflation
rates, recession, and other external economic and political factors over which
the Company has no control; and other risks and uncertainties discussed or
indicated in other documents filed by the Company with the Securities and
Exchange Commission from time to time. The Company assumes no obligation to
update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
ITEM 2. Properties
The Company's principal executive offices are located in Atlanta,
Georgia and Alexander City, Alabama, manufacturing plants and research
facilities are located in Alexander City, Alabama, with additional plants in
Alabama, North Carolina, Virginia, Mexico, Honduras, and Scotland. The Company
has no material mortgages on any of its real property or manufacturing machinery
except for capitalized lease obligations (see Note 2 of Notes to Consolidated
Financial Statements), and believes that all of its properties are well
maintained and suitable for its operations and are currently fully utilized for
such purposes, excluding plants that are held for resale as a result of
restructuring.
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The Company utilizes an aggregate of approximately 8,762,000 square
feet of manufacturing, warehousing and office facilities. The following table
summarizes the approximate areas of such facilities:
<TABLE>
<CAPTION>
Total
Primary Use Activewear International All Other Shared Square Feet
----------- ---------- ------------- --------- ------ -----------
<S> <C> <C> <C> <C> <C>
Spinning 939,000 939,000
Knitting and Weaving 736,000 138,000 874,000
Dyeing and Finishing 810,000 151,000 961,000
Cutting and Sewing 964,000 964,000
Warehousing and Shipping 2,761,000 517,000 3,278,000
Retail/Outlet Stores 12,000 12,000
Executive Offices,
Maintenance Shops and
Research and Development
Facilities 624,000 624,000
Scotland 364,000 364,000
Mexico 382,000 142,000 524,000
Honduras 222,000 222,000
</TABLE>
All presently utilized facilities in the U.S. are owned, except the
regional sales offices and the Company's headquarters in Atlanta, Georgia (see
Notes 2 and 9 of Notes to Consolidated Financial Statements).
ITEM 3. Legal Proceedings
In November 1998, a jury in Jefferson County, Alabama returned a
verdict in Sullivan, et al. v. Russell Corporation, et al. Five plaintiff
families were awarded a total of $155,200 in compensatory damages for property
damage and $52,398,000 in punitive damages from the three defendants, Russell
Corporation, Avondale Mills, Inc. and Alabama Power Company. Allegations in the
case were that textile discharges of two of the defendants, including Russell
Corporation, which were treated at a wastewater treatment plant of the City of
Alexander City, Alabama and thereafter discharged into Lake Martin, constituted
a nuisance and indirect trespass. Alabama Power Company, the third defendant,
was alleged to have allowed the nuisance and trespass to continue as the owner
of the land under the lake. The plaintiffs alleged mental anguish but no damages
were granted for this claim. No allegation of personal injury was made in the
case.
The Company believes that the verdict is contrary to the evidence
presented in the case, and under applicable law, no damages should have been
awarded. The Company's appeal is pending before the Alabama Supreme Court. If
such appeal proves to be unsuccessful, damages associated with this matter could
have a significant adverse effect on the Company's future results from
operations and its ability to comply with certain debt covenant requirements.
As management believes that the amount of the final verdict should be
overturned on appeal or the amount of the final verdict should be significantly
reduced, no immediate assessment can be made of the impact on the Company's
consolidated financial statements, liquidity or on the Company's ability to
comply with its loan agreements. Accordingly, no accrual for this contingency
has been recorded as of January 1, 2000.
On February 23, 1999, a similar lawsuit was filed in Jefferson County,
Alabama by two former residents of the same residential subdivision, and on
January 13, 2000, another lawsuit was filed in Jefferson County, Alabama by 15
families owning property adjacent to Lake Martin. The suits seek unspecified
damages for alleged nuisance and trespass. The Company plans to vigorously
defend these suits which have been consolidated.
By letter dated January 13, 2000, the Company was notified by the
United States Department of Justice (DOJ) that the DOJ intended to institute
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legal proceedings against the Company and certain other parties alleging
violations by those parties of the Clean Water Act in connection with the
treatment and discharge of waste at a water treatment facility operated by the
City of Alexander City, Alabama. Preliminary discussions are being held with the
DOJ with regard to the proposed suit by the DOJ. The Company believes it is in
compliance with the Clean Water Act and will vigorously oppose the imposition of
any monetary penalties or injunctive relief in any lawsuit that may be filed.
The Company is a party to various other lawsuits arising out
of the conduct of its business, the majority of which, if adversely determined,
would not have a material adverse effect upon the Company.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
EXECUTIVE OFFICERS OF THE COMPANY
"Election of Directors" on pages one through four of the Proxy
Statement for the Annual Meeting of Shareholders to be held April 19, 2000 is
incorporated herein by reference.
Additional executive officers who are not directors are as follows:
<TABLE>
<CAPTION>
Officer
Name Age Since Position
--- -------- --------
<S> <C> <C> <C>
Harry de Boer 54 1999 Senior Vice President/
President and Chief
Executive Officer,
International
Steve R. Forehand 44 1987 Assistant General Counsel
and Assistant Secretary
Michael W. Hager 56 1998 Senior Vice President,
Human Resources
Floyd G. Hoffman 57 1999 Senior Vice President,
Corporate Development,
General Counsel and
Secretary
K. Roger Holliday 41 1988 Vice President, Investor
Relations and Treasurer
Thomas R. Johnson, Jr. 57 1989 Senior Vice President/
President and Chief
Executive Officer,
Yarn
Jonathan Letzler 43 1998 Executive Vice President/
President and Chief
Executive Officer,
JERZEES
W. J. Spires, Jr. 54 1988 Vice President/President
and Chief Executive
Officer, Cross Creek
</TABLE>
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<TABLE>
<CAPTION>
Officer
Name Age Since Position
---- --- -------- --------
<S> <C> <C> <C>
JT Taunton, Jr. 57 1983 Senior Vice President/
President and Chief
Executive Officer,
Fabrics and Services
D. W. Wachtel 61 1991 Senior Vice President/
President and Chief
Executive Officer,
Russell Athletic
Larry E. Workman 56 1987 Controller
Nancy N. Young 51 1998 Vice President,
Communications and
Community Relations
</TABLE>
Mr. de Boer was employed by the Company in 1999 in his current
position. Prior to joining the Company, he was an independent consultant since
1997. He was President and CEO of Nordica USA from 1996 to 1997. Prior to that,
he was President and CEO of Avia Group International from 1990 to 1995.
Mr. Forehand, employed by the Company in 1985 as Director of Taxes,
served as Assistant Secretary from 1987 to 1988 and Secretary from 1989 to 1998.
Mr. Hager was employed by the Company in 1998 in his current position.
Prior to joining the Company, he was with Banc One Corporation, most recently as
Senior Vice President from 1993 to 1998.
Mr. Hoffman was employed by the Company in 1999 in his current
position. Prior to joining the Company, he was most recently Vice
President-General Counsel and Secretary for OSI Industries, Inc. from 1996 to
1999. Prior to that, he was Vice President-Deputy General Counsel and Assistant
Secretary for Sara Lee Corporation.
Mr. Holliday, employed by the Company since 1986, was named Vice
President, Investor Relations in 1998, and Treasurer in 1996. He served as
President of the Licensed Products Division from 1994 to 1996, President of the
Knit Apparel Division from 1991 to 1994 and Assistant Treasurer from 1988 to
1991.
Mr. Johnson, employed by the Company since 1989, most recently served
as Executive Vice President, Manufacturing. Prior to that, he was Vice
President, Greige Manufacturing.
Mr. Letzler was employed by the Company in 1998, and most recently
served as Senior Vice President and Chief Executive Officer of JERZEES. Prior to
joining the Company, he was with Sara Lee Corporation, from 1980 to 1998, most
recently as President of Hanes Hosiery and prior to that he was President of the
Hanes Printables Division.
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Mr. Spires, employed by the Company in 1969, was elected President,
Cross Creek Apparel, Inc. in 1993. Prior to that, he served from 1988 to 1993 as
Vice President, Services, where he directed the Company's Distribution,
Transportation and Information Services activities. Prior to 1988, Mr. Spires
held several management positions with Russell in both sales and operations.
Mr. Taunton, employed by the Company since 1973, most recently served
as Executive Vice President, Sales and Marketing. Prior to that, he served as
President of the Fabrics Division from 1988 to 1993.
Mr. Wachtel, employed by the Company in 1976, was most recently
President of the Athletic Division since 1991. He formed the Mid-South Regional
Office in 1980 and formed the Mid-Southeast Sales Office in 1986. He was General
Manager of Russell Athletic, Inc. in Snellville, Georgia from 1989 to 1990 and
Vice President, Sales in the Athletic Division from 1990 to 1991.
Mr. Workman, employed by the Company since 1969 as an accountant,
served as Manager, Cost Accounting from 1970 to 1987.
Ms. Young was employed by the Company in 1998 in her current role.
Prior to joining the Company, she was with Sara Lee Corporation from 1984 to
1998, most recently as Director, Corporate Affairs and Community Relations.
All executive officers and all other officers of the Company are
elected by the Board of Directors and serve at the pleasure of the Board of
Directors.
PART II
ITEM 5. Market for the Registrant's Common
Equity and Related Stockholder Matters
"Dividend and Market Information" on the inside back cover and in Note
2 to Consolidated Financial Statements on page 30 of the Annual Shareholders
Report for the year ended January 1, 2000 are incorporated herein by reference.
The approximate number of holders of the Company's common stock at
March 24, 2000 was 8,000.
ITEM 6. Selected Financial Data
"Ten Year Selected Financial Data" on pages 18 and 19 of the Annual
Shareholders Report for the year ended January 1, 2000, is incorporated herein
by reference with respect to fiscal years 1999, 1998, 1997, 1996 and 1995.
ITEM 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 20 through 23 of the Annual Shareholders Report
for the year ended January 1, 2000, is incorporated herein by reference.
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ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 20 through 23 of the Annual Shareholders Report
for the year ended January 1, 2000, is incorporated herein by reference.
ITEM 8. Financial Statements and Supplementary Data
The following consolidated financial statements of the registrant and
its subsidiaries included in the Annual Shareholders Report for the year ended
January 1, 2000, are incorporated herein by reference:
...Consolidated Balance Sheets - January 1, 2000 and January 2, 1999
...Consolidated Statements of Operations - Years ended
January 1, 2000, January 2, 1999 and January 3, 1998
...Consolidated Statements of Cash Flows - Years ended
January 1, 2000, January 2, 1999 and January 3, 1998
...Consolidated Statements of Stockholders' Equity - Years ended
January 1, 2000, January 2, 1999 and January 3, 1998
...Notes to Consolidated Financial Statements - Years ended
January 1, 2000, January 2, 1999 and January 3, 1998
...Report of Independent Auditors
ITEM 9. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
None.
II-2
<PAGE> 13
PART III
ITEM 10. Directors and Executive Officers of the Registrant
"Election of Directors" on pages 1 through 6 of the Proxy Statement for
the Annual Meeting of Shareholders to be held April 19, 2000 is incorporated
herein by reference.
"Executive Officers of the Company" on pages I-7 and I-8 of this report
is incorporated herein by reference.
"Section 16(a) Beneficial Ownership Reporting Compliance" on page 6 of
the Proxy Statement for the Annual Meeting of Shareholders to be held April 19,
2000 is incorporated herein by reference.
ITEM 11. Executive Compensation
"Executive Compensation" on pages 10 through 14 of the Proxy Statement
for the Annual Meeting of Shareholders to be held April 19, 2000 is incorporated
herein by reference. "Management Development and Compensation Committee Report
on Executive Compensation" and "Comparative Five-Year Cumulative Total Returns
Through 12/31/99" on pages 6 through 9 of the Proxy Statement for the Annual
Meeting of Shareholders to be held April 19, 2000 are incorporated herein by
reference, but pursuant to Instruction (9) to Item 402 (a)(3) of Regulation S-K
shall not deemed to be filed with the Commission or subject to the liabilities
of Section 18 of the Securities Exchange Act of 1934.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
(a) "Principal Shareholders" on pages 4 and 5 of the Proxy Statement
for the Annual Meeting of Shareholders to be held April 19, 2000 is incorporated
herein by reference.
(b) Information concerning security ownership of management set forth
in the Proxy Statement for the Annual Meeting of Shareholders to be held April
19, 2000 under the captions "Security Ownership of Executive Officers and
Directors" on page 3 is incorporated herein by reference.
(c) There are no arrangements known to the registrant the operation of
which may at a subsequent date result in a change in control of the registrant.
ITEM 13. Certain Relationships and Related Transactions
"Transactions with Management and Others" on page 6 of the Proxy
Statement for the Annual Meeting of Shareholders to be held April 19, 2000 is
incorporated herein by reference.
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PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) List of Documents filed as part of this Report:
(1) Financial Statements
All financial statements of the registrant
as set forth under Item 8 of this Report on
Form 10-K
(2) Financial Statement Schedule
<TABLE>
<CAPTION>
Schedule Page
Number Description Number
<S> <C> <C>
II Valuation and Qualifying IV-5 and 6
Accounts
</TABLE>
All other financial statements and schedules not listed have been
omitted since the required information is included in the consolidated financial
statements or the notes thereto, or is not applicable or required.
(3) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
<TABLE>
<CAPTION>
Page Number or
Exhibit Incorporation
Numbers Description by Reference to
------- ----------- ----------------
<S> <C> <C>
(3a) Restated Articles of Exhibit (3a) to
Incorporation Annual Report
on Form 10-K
for year ended
December 30, 1995
(3b) Certificate of Adoption Exhibit 4.2 to
of Resolutions by Board Current Report
of Directors of Russell on Form 8-K filed
Corporation dated September 17, 1999
October 25, 1989
(3c) Bylaws Exhibit (3c) to
Annual Report
on Form 10-K
for year ended
December 30, 1995
(4a) Rights Agreement dated Exhibit 4.1 to
as of September 15, 1999 Current Report on
between the Company and Form 8-K filed on
SunTrust Bank, Atlanta, September 17, 1999
Georgia
</TABLE>
IV-1
<PAGE> 15
<TABLE>
<CAPTION>
Page Number or
Exhibit Incorporation
Numbers Description by Reference to
------- ----------- ----------------
<S> <C> <C>
(4b) Note Agreement dated as IV-9
of August 28, 1997
relating to the Company's
6.65% Senior Notes due
August 28, 2007
(4c) Credit Agreement dated IV-10
as of October 15, 1999
relating to the Company's
$250,000,000 Revolving
Loan Facility
(10a) Form of Deferred Exhibit (10a) to Annual
Compensation Agreement Report on Form 10-K for
with certain officers year ended December 30,
1995
(10b) Fuel supply contract Exhibit 13(c) to
with Russell Lands, Registration Statement
Incorporated dated No. 2-56574
May 21, 1975
(10c) 1987 Stock Option Plan Exhibit 1 to Registration
Statement No. 33-24898
(10d) 1993 Executive Long-Term Exhibit 4(c) to
Incentive Plan Registration Statement
No. 33-69679
(10e) 1996 Amendment to the 1993 Exhibit (10g) to Annual
Executive Long-Term Report on Form 10-K for
Incentive Plan year ended January 3, 1998
(10f) Russell Corporation 1997 Exhibit (10f) to Annual
Non-Employee Directors' Report on Form 10-K for
Stock Grant, Stock Option year ended January 2, 1999
and Deferred Compensation
Plan
(10g) 1998 Amendment to the 1993 Pages 4 through 11, Proxy
Executive Long-Term Statement dated March 19,
Incentive Plan 1998, filed as Exhibit
IV-13 to Annual Report on
Form 10-K for year ended
January 3, 1998
(10h) Russell Corporation Exhibit 4(k) to
Flexible Deferral Plan Registration Statement
No. 333-89765
(10i) Russell Corporation Exhibit 4(k) to
2000 Stock Option Plan Registration Statement
No. 333-30238
</TABLE>
IV-2
<PAGE> 16
<TABLE>
<S> <C> <C>
(10j) Russell Corporation Exhibit 4(k) to
Employee Stock Purchase Registration Statement
Plan No. 333-30236
(10k) Employment Agreement, Exhibit 10.1 to Quarterly
dated March 31, 1998, by Report on Form 10-Q/A for
and Between the Company quarter ended April 5,
and John F. Ward 1998 as filed with the
Securities and Exchange
Commission on August 24, 1998
(10l) Executive Deferred Exhibit 10.2 to Quarterly
Compensation and Buyout Report on Form 10-Q/A for
Plan dated March 31, 1998, quarter ended April 5,
by and between the Company 1998 as filed with the
and John F. Ward Securities and Exchange
Commission on August 24, 1998
(10m) Amendment to Employment IV-11
Agreement, dated November
1, 1999, by and between
the Company and John F.
Ward
(10n) Employment Agreement IV-12
dated November 20, 1998
by and between the Company
and Jonathan Letzler
(11) Computations of Income/ IV-13
(Loss) per Common Share
(13) 1999 Annual Report to IV-14
Shareholders
(21) List of Significant IV-15
Subsidiaries
(23) Consent of Ernst & Young LLP, IV-16
Independent Auditors
(27) Financial Data Schedule (for SEC use only) IV-18
</TABLE>
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, upon request of the
Commission, the registrant will furnish copies to the Commission of any
agreement which defines the rights of holders of long-term debt of the
registrant for which the total amount of securities authorized thereunder does
not exceed 10% of the total assets of the registrant and its subsidiaries on a
consolidated basis and which have not heretofore been filed with the Commission.
(b) Reports on Form 8-K
No reports on form 8-K were filed during the fourth quarter of
the year ended January 1, 2000.
IV-3
<PAGE> 17
For the purpose of complying with the amendments to the rules governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the
undersigned registrant hereby undertakes as follows, which undertaking shall be
incorporated by reference into the undertakings contained in Part II of the
registrant's registration statement on Form S-8 number 33-24898:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection
with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
IV-4
<PAGE> 18
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
RUSSELL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE AT ADDITIONS BALANCE
BEGINNING CHARGED TO COSTS AT END
DESCRIPTION OF PERIOD AND EXPENSES ACQUISITION DEDUCTIONS OF PERIOD
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JANUARY 1, 2000
Allowance for doubtful accounts $ 5,363,868 $ 412,214 $ -0- $ 1,255,516 (1) $ 4,520,566
Reserve for discounts and returns 3,198,242 1,984,423 -0- 1,791,464 (2) 3,391,201
----------- ----------- ---------- ----------- -----------
TOTALS $ 8,562,110 $ 2,396,637 $ -0- $ 3,046,980 $ 7,911,767
=========== =========== ========== =========== ===========
YEAR ENDED JANUARY 2, 1999
Allowance for doubtful accounts $ 7,350,437 $13,927,466 $ -0- $15,914,035 (1) $ 5,363,868
Reserve for discounts and returns 3,182,594 8,692,248 -0- 8,676,600 (2) 3,198,242
----------- ----------- ---------- ----------- -----------
TOTALS $10,533,031 $22,619,714 -0- $24,590,635 $ 8,562,110
=========== =========== ========== =========== ===========
YEAR ENDED JANUARY 3, 1998
Allowance for doubtful accounts $ 8,646,733 $ 3,494,827 $ -0- $ 4,791,123 (1) $ 7,350,437
Reserve for discounts and returns 1,563,436 10,068,224 -0- 8,449,066 (2) 3,182,594
----------- ----------- ---------- ----------- -----------
TOTALS $10,210,169 $13,563,051 $ -0- $13,240,189 $10,533,031
=========== =========== ========== =========== ===========
</TABLE>
(1) Uncollectible accounts written off, net of recoveries.
(2) Discounts and returns allowed customers during the year.
IV-5
<PAGE> 19
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
RUSSELL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT ADDITIONS BALANCE
BEGINNING CHARGED TO COSTS AT END
DESCRIPTION OF PERIOD AND EXPENSES ACQUISITION DEDUCTIONS OF PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESTRUCTURING AND REORGANIZATION RESERVES
YEAR ENDED JANUARY 1, 2000
Asset impairment and $ 3,951,000 $28,459,000 -0- $17,778,000(4)(5) $14,632,000
accelerated depreciation
Employee termination charges 4,567,000 17,542,000 -0- 17,339,000(3) 4,770,000
Inventory write-downs 1,964,000 4,988,000 -0- 3,701,000(5) 3,251,000
Termination of certain
licenses and contracts 1,223,000 -0- -0- -0- 1,223,000
Exit cost related to facilities 534,000 11,743,000 -0- 11,743,000(3) 534,000
Other -0- 7,989,000 -0- 7,989,000(3) -0-
----------- ----------- ----------- ----------- -----------
TOTALS $12,239,000 $70,721,000 -0- $58,550,000 $24,410,000
=========== =========== =========== =========== ===========
YEAR ENDED JANUARY 2, 1999
Asset impairment and -0- $30,085,000 -0- $26,134,000(3)(4) $ 3,951,000
accelerated depreciation
Employee termination charges -0- 8,088,000 -0- 3,521,000(3) 4,567,000
Inventory write-downs -0- 16,109,000 -0- 14,145,000 1,964,000
Termination of certain
licenses and contracts -0- 7,258,000 -0- 6,035,000(3) 1,223,000
Exit cost related to facilities -0- 1,816,000 -0- 1,282,000(5) 534,000
Other -0- 8,531,000 -0- 8,531,000 -0-
----------- ----------- ----------- ----------- -----------
TOTALS -0- $71,887,000 -0- $59,648,000 $12,239,000
=========== =========== =========== =========== ===========
</TABLE>
(3) Represents cash paid
(4) Represents assets write-off
(5) Represents assets sold after write-down
IV-6
<PAGE> 20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunder duly authorized.
RUSSELL CORPORATION
(Registrant)
Date 3/24/00 By /s/ John F. Ward
------- ---------------------------------------
John F. Ward
Chairman, President and CEO
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report is signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ John F. Ward Chairman, President and CEO 3/24/00
---------------------------- -------
John F. Ward Date
Executive Vice President and
Chief Financial Officer, and
Director (Principal Financial
/s/ Eric N. Hoyle Officer) 3/24/00
---------------------------- -------
Eric N. Hoyle Date
/s/ Herschel M. Bloom Director 3/24/00
---------------------------- -------
Herschel M. Bloom Date
Director
---------------------------- -------
Ronald G. Bruno Date
/s/ Timothy A. Lewis Director 3/28/00
---------------------------- -------
Timothy A. Lewis Date
/s/ C. V. Nalley III Director 3/24/00
---------------------------- -------
C. V. Nalley III Date
</TABLE>
IV-7
<PAGE> 21
<TABLE>
<S> <C> <C>
/s/ Margaret M. Porter Director 3/28/00
---------------------------- -------
Margaret M. Porter Date
/s/ Benjamin Russell Director 3/28/00
---------------------------- -------
Benjamin Russell Date
Director
---------------------------- -------
John R. Thomas Date
Director
---------------------------- -------
John A. White Date
/s/ Larry E. Workman Controller 3/23/00
---------------------------- -------
Larry E. Workman (Principal Accounting Officer) Date
</TABLE>
IV-8
<PAGE> 1
EXHIBIT (4b)
NOTE AGREEMENT DATED AS OF AUGUST 28, 1997 RELATING TO THE
COMPANY'S 6.6% SENIOR NOTES DUE AUGUST 28, 2007
IV-9
<PAGE> 2
================================================================================
RUSSELL CORPORATION
NOTE AGREEMENT
Dated as of August 28, 1997
$125,000,000
6.65% Senior Notes due August 28, 2007
================================================================================
<PAGE> 3
TABLE OF CONTENTS
(Not a part of the Agreement)
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C>
Section 1. DESCRIPTION OF NOTES AND COMMITMENT............................................................1
Section 1.1 Description of Notes........................................................................1
Section 1.2 Commitment, Closing Date....................................................................2
Section 2. PREPAYMENT OF NOTES............................................................................2
Section 2.1 Required Prepayments........................................................................2
Section 2.2 Optional Prepayment with Premium............................................................2
Section 2.3 Prepayment of Notes upon a Change of Control................................................3
Section 2.4 Notice of Optional Prepayments..............................................................5
Section 2.5 Application of Prepayments..................................................................5
Section 2.6 Direct Payment..............................................................................5
Section 3. REPRESENTATIONS................................................................................6
Section 3.1 Representations of the Company..............................................................6
Section 3.2 Representations of the Purchaser............................................................6
Section 4. CLOSING CONDITIONS.............................................................................7
Section 4.1 Conditions..................................................................................7
Section 4.2 Waiver of Conditions........................................................................8
Section 5. COMPANY COVENANTS..............................................................................8
Section 5.1 Corporate Existence, Etc....................................................................8
Section 5.2 Insurance...................................................................................8
Section 5.3 Taxes, Claims for Labor and Materials; Compliance with Laws.................................8
Section 5.4 Maintenance, Etc............................................................................9
Section 5.5 Nature of Business..........................................................................9
Section 5.6 Interest Charges Coverage Ratio.............................................................9
Section 5.7 Limitations on Debt.........................................................................9
Section 5.8 Limitation on Liens........................................................................10
Section 5.9 Limitation on Long-Term Leases.............................................................12
Section 5.10 Restricted Payments........................................................................12
Section 5.11 Investments................................................................................13
Section 5.12 Mergers, Consolidations and Sales of Assets................................................14
Section 5.13 Guaranties.................................................................................18
Section 5.14 Repurchase of Notes........................................................................18
Section 5.15 Transactions with Affiliates...............................................................18
Section 5.16 Multiemployer Plan Liability and Termination of Pension Plans..............................18
Section 5.17 Reports and Rights of Inspection...........................................................19
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.......................................................22
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C>
Section 6.1 Events of Default..........................................................................22
Section 6.2 Notice to Holders..........................................................................23
Section 6.3 Acceleration of Maturities.................................................................23
Section 6.4 Rescission of Acceleration.................................................................24
Section 7. AMENDMENTS, WAIVERS AND CONSENTS..............................................................24
Section 7.1 Consent Required...........................................................................24
Section 7.2 Solicitation of Holders....................................................................25
Section 7.3 Effect of Amendment or Waiver..............................................................25
Section 8. INTERPRETATION OF AGREEMENT; DEFINITIONS......................................................25
Section 8.1 Definitions................................................................................25
Section 8.2 Accounting Principles......................................................................35
Section 8.3 Directly or Indirectly.....................................................................35
Section 9. MISCELLANEOUS 35
Section 9.1 Registered Notes...........................................................................35
Section 9.2 Exchange of Notes..........................................................................35
Section 9.3 Loss, Theft, Etc. of Notes.................................................................36
Section 9.4 Expenses, Stamp Tax Indemnity..............................................................36
Section 9.5 Powers and Rights Not Waived; Remedies Cumulative..........................................36
Section 9.6 Notices....................................................................................36
Section 9.7 Reproduction of Documents..................................................................37
Section 9.8 Successors and Assigns.....................................................................37
Section 9.9 Survival of Covenants and Representations..................................................37
Section 9.10 Severability...............................................................................37
Section 9.11 Governing Law..............................................................................38
Section 9.12 Captions...................................................................................38
Signature Page...............................................................................................37
</TABLE>
ii
<PAGE> 5
ATTACHMENTS TO NOTE AGREEMENT:
<TABLE>
<S> <C> <C>
Schedule I - Purchaser Schedule
Schedule II - Description of Current Debt, Funded Debt, Long-Term Leases, Liens and
Investments
Schedule III - Subsidiaries of the Company
Exhibit A - Form of 6.65% Senior Note due August 28, 2007
Exhibit B - Representations and Warranties of the Company
Exhibit C - Description of Closing Opinion of Independent Counsel for the Company
</TABLE>
iii
<PAGE> 6
RUSSELL CORPORATION
One Lee Street
Alexander City, Alabama 35010
NOTE AGREEMENT
$125,000,000
6.65% Senior Notes due August 28, 2007
Dated as of
August 28, 1997
To the Purchaser named in Schedule I
hereto which is a signatory of this
Agreement
Ladies and Gentlemen:
The undersigned, RUSSELL CORPORATION, an Alabama corporation (the
"Company"), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1 Description of Notes. The Company will authorize the
issue and sale of $125,000,000 aggregate principal amount of its 6.65% Senior
Notes (the "Notes") to be dated the date of issue, to bear interest from such
date at the rate of 6.65% per annum, payable quarterly on November 28, February
28, May 28 and August 28 in each year (commencing November 28, 1997) and at
maturity and to bear interest on overdue principal (including any overdue
required or optional prepayment of principal) and premium, if any, and (to the
extent legally enforceable) on any overdue installment of interest at the
Overdue Rate after the date due, whether by acceleration or otherwise, until
paid, to be expressed to mature on August 28, 2007, and to be substantially in
the form attached hereto as Exhibit A. Interest on the Notes shall be computed
on the basis of a 360-day year of twelve 30-day months. If any amount of
principal, premium, if any, or interest on or in respect of any Note becomes due
and payable on any date which is not a Business Day, such amount shall be
payable on the next succeeding Business Day and the period of extension shall be
included in the computation of interest payable on such Business Day. The Notes
are not subject to prepayment or redemption at the option of the Company prior
to their expressed maturity dates except on the terms and conditions and in the
amounts and with the premium, if any, set forth in ss. 2 of this Agreement. The
term "Notes" as used herein shall include each Note delivered pursuant to this
Agreement. You are hereinafter sometimes referred to as the
1
<PAGE> 7
"Purchaser". The terms which are capitalized herein shall have the meanings set
forth in ss. 8.1 unless the context shall otherwise require.
Section 1.2 Commitment, Closing Date. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you, and you
agree to purchase from the Company, Notes in the principal amount set forth
opposite your name on Schedule I hereto at a price of 100% of the principal
amount thereof on the Closing Date hereafter mentioned.
Delivery of the Notes will be made at the offices of Prudential
Capital Group, One Gateway Center, 11th Floor, Newark, N.J. 07102-5311 against
payment therefor in Federal Reserve or other funds current and immediately
available at the principal office of Aliant Bank, Alexander City, AL in the
amount of the purchase price on August 28, 1997 (the "Closing Date"). The Notes
delivered to you on the Closing Date will be delivered to you in the form of a
single registered Note for the full amount of your purchase (unless different
denominations (of not less than $1,000,000) are specified by you), registered in
your name or in the name of such nominee, as may be specified in Schedule I
attached hereto and in substantially the form attached hereto as Exhibit A.
SECTION 2. PREPAYMENT OF NOTES.
No prepayment of the Notes may be made except to the extent and
in the manner expressly provided in this Agreement.
Section 2.1 Required Prepayments. In addition to paying the
entire outstanding principal amount and the interest due on the Notes on the
maturity date thereof, the Company agrees that on August 28th in each of the
years 2001 through 2006, inclusive, it will prepay and apply and there shall
become due and payable on the principal indebtedness evidenced by the Notes an
amount equal to the lesser of (a) $17,857,143.00 or (b) the principal amount of
the Notes then outstanding. The entire remaining principal amount of the Notes
shall become due and payable on August 28, 2007. No premium shall be payable in
connection with any required prepayment made pursuant to this ss. 2.1.
In the event that the Company shall prepay less than all of the
Notes pursuant to ss. 2.2 hereof, such payments shall be credited in each case
first, against the final maturities of the Notes being prepaid and then, against
the amounts of the prepayments required by this ss. 2.l on such Notes in the
inverse order of the maturities thereof.
Section 2.2 Optional Prepayment with Premium. In addition to the
payments required by ss. 2.1, upon compliance with ss. 2.4 the Company shall
have the privilege, at any time and from time to time, of prepaying the
outstanding Notes, either in whole or in part (but if in part then in a minimum
principal amount of $1,000,000) by payment of the principal amount of the Notes,
or portion thereof to be prepaid, and accrued interest thereon to the date of
such prepayment, together with a premium equal to the Make-Whole Amount.
2
<PAGE> 8
Section 2.3 Prepayment of Notes upon a Change of Control. (a) In
the event that any Change of Control shall occur or the Company shall have
actual knowledge of any proposed Change of Control, the Company will give
written notice (the "Company Notice") of such fact by overnight courier in the
manner provided in ss. 9.6 hereof to the holders of the Notes. The Company
Notice shall be sent promptly upon receipt of such knowledge by the Company and
in any event no later than three days following the occurrence of a Change of
Control. The Company Notice shall (1) describe the facts and circumstances of
such Change of Control in reasonable detail, (2) make reference to this ss.
2.3(a) and the right of the holders of the Notes to require payment on the terms
and conditions provided for in this ss. 2.3(a), (3) offer in writing to prepay
the outstanding Notes, together with accrued interest to the date of prepayment
and a premium equal to the then applicable Make-Whole Amount, and (4) specify a
date for such prepayment (the "Change of Control Prepayment Date") which Change
of Control Prepayment Date shall be the later of (i) the date of such Change of
Control or (ii) a date not more than 60 days nor less than 30 days following the
date of such Company Notice. Each holder of the then outstanding Notes shall
have the right to accept such offer and require prepayment of the Notes held by
such holder by written notice to the Company (a "Noteholder Notice") sent by
overnight courier in the manner provided in ss. 9.6 hereof not later than 25
days after the date of the Company Notice. The Company shall on the Change of
Control Prepayment Date prepay all, but not less than all, Notes held by holders
which have so accepted such offer of prepayment. The prepayment price of the
Notes payable upon the occurrence of a Change of Control shall be an amount
equal to 100% of the outstanding principal amount of the Notes so to be prepaid
and accrued interest thereon to the date of such prepayment, together with a
premium equal to the then applicable Make-Whole Amount determined as of the
Change of Control Prepayment Date.
(b) In the event that the holder of any Note shall have delivered
to the Company a Noteholder Notice pursuant to ss. 2.3(a), then the Company
shall promptly, and in any event within five days after receipt of such
Noteholder Notice, deliver by overnight courier in the manner provided in ss.
9.6 hereof written notice of such Noteholder Notice to each other holder of the
Notes and, notwithstanding the provisions of ss. 2.3(a), the right of each such
other holder to accept the offer of prepayment and require prepayment of the
Notes shall remain in effect until the later to occur of (1) 30 days after the
date of the Company Notice and (2) 15 days after the date of the notice required
to be delivered pursuant to this ss. 2.3(b); provided, however, that the
provisions of this clause (2) shall only apply with respect to notices required
to be delivered pursuant to this ss. 2.3(b) to the extent that such notices
relate to Noteholder Notices made prior to the expiration of the period
specified in ss. 2.3(a).
(c) Without limiting the foregoing, if the Company fails to give
the Company Notice required pursuant to ss. 2.3(a) as a result of the occurrence
of a Change of Control, each holder of the Notes shall have the right to require
the Company to prepay, and the Company will prepay, such holder's Notes in full,
together with accrued interest thereon to the date of prepayment and a premium
equal to the then applicable Make-Whole Amount; provided that each holder of the
Notes shall so notify the Company of its election to require the Company to
prepay its Notes in accordance with this ss. 2.3(c) within 365 days after such
holder has actual knowledge of any such Change of Control by overnight courier
in the manner provided in ss. 9.6 hereof. Notice of any required prepayment
pursuant to this ss. 2.3(c) shall be delivered by a holder of the Notes which
was entitled to, but did not receive, such Company Notice to the Company after
such holder has
3
<PAGE> 9
actual knowledge of such Change of Control. On the date (the "Change of Control
Delayed Prepayment Date") designated in such holder's notice (which shall be not
more than 60 days nor less than 30 days following the date of such holder's
notice), the Company shall prepay in full all the Notes held by such holder,
together with accrued interest thereon to the date of prepayment and a premium
equal to the then applicable Make-Whole Amount. If the holder of any Note gives
any notice pursuant to this ss. 2.3(c), the Company shall give a Company Notice
within three days of receipt of such notice and identify the Change of Control
Delayed Prepayment Date to all other holders of the Notes and each of such
holders shall then and thereupon have the right to accept the Company's offer to
prepay the Notes held by such holder and require prepayment of such Notes by
delivery of a Noteholder Notice within 21 days of the date of such Company
Notice; provided only that any date for prepayment of such Notes shall be the
Change of Control Delayed Prepayment Date. On the Change of Control Delayed
Prepayment Date, the Company shall prepay in full the Notes of each holder
thereof which has accepted such offer of prepayment at a prepayment price of
100% of the outstanding principal amount of the Notes so to be prepaid and
accrued interest thereon to the date of such prepayment, together with a premium
equal to the applicable Make-Whole Amount determined as of the Change of Control
Delayed Prepayment Date.
(d) For purposes of this ss. 2.3:
"Acquiring Person" shall mean a "person" or "group of persons"
within the meaning of Sections 13(d) and 14(d) of the Securities and Exchange
Act of 1934, as amended.
"Change of Control" of the Company shall mean that an Acquiring
Person (other than the Russell Family) directly or indirectly becomes the
beneficial owner of more than 50% of the total voting power of the Voting Stock
of the Company then outstanding.
"Russell Family" shall mean, collectively:
(a) the lineal descendants (including Persons who
have been legally adopted by a lineal descendant) and the spouses
of lineal descendants of Benjamin Russell (founder of the
Company), and
(b) the Benjamin and Roberta Russell Foundation,
Incorporated, and
(c) any trust directly or indirectly controlled by,
or for the benefit of, one or more of such Persons described in
clause (a) above or directly or indirectly controlled by any
corporation or partnership described in clause (d) below, and
(d) any corporation or partnership in which voting
control as to such entity is held, directly or indirectly, by
any one or more of the Persons described in clause (a) above
or by such trusts described in clause (c) above, and
(e) any Person acting as the executor or
administrator of the estate or other legal representative of
any Person described in clause (a) above.
4
<PAGE> 10
Section 2.4 Notice of Optional Prepayments. The Company will give
notice of any prepayment of the Notes pursuant to ss. 2.2 to each holder thereof
not less than 30 days nor more than 60 days before the date fixed for such
optional prepayment specifying (a) such date, (b) the principal amount of the
holder's Notes to be prepaid on such date, (c) that a premium may be payable,
(d) the date when such premium will be calculated, (e) the estimated premium,
and (f) the accrued interest applicable to the prepayment. Such notice of
prepayment shall also certify compliance with all requirements, if any, which
are conditions precedent to any such prepayment. Notice of prepayment having
been so given, the aggregate principal amount of the Notes specified in such
notice, together with accrued interest thereon and the premium, if any, payable
with respect thereto shall become due and payable on the prepayment date
specified in said notice. Two Business Days prior to the prepayment date
specified in such notice, the Company shall provide each holder of a Note
written notice of the premium, if any, payable in connection with such
prepayment and, whether or not any premium is payable, a reasonably detailed
computation of the Make-Whole Amount.
Section 2.5 Application of Prepayments. All partial
prepayments shall be applied on all outstanding Notes ratably in accordance with
the unpaid principal amounts thereof.
Section 2.6 Direct Payment. Notwithstanding anything to the
contrary contained in this Agreement or the Notes, in the case of any Note owned
by you or your nominee or owned by any subsequent Institutional Holder which has
given written notice to the Company requesting that the provisions of this ss.
2.6 shall apply, the Company will punctually pay, and in any event not later
than 12:00 p.m. New York, New York time, when due the principal thereof,
interest thereon and premium, if any, due with respect to said principal,
without any presentment thereof, directly to you, to your nominee or to such
subsequent Institutional Holder at your address or your nominee's address set
forth in Schedule I hereto or such other address as you, your nominee or such
subsequent Institutional Holder may from time to time designate in writing to
the Company or, if a bank account with a United States bank is designated for
you or your nominee on Schedule I hereto or in any written notice to the Company
from you, from your nominee or from any such subsequent Institutional Holder,
the Company will make such payments in immediately available funds to such bank
account, marked for attention as indicated, or in such other manner or to such
other account in any United States bank as you, your nominee or any such
subsequent Institutional Holder may from time to time direct in writing. In the
event any payment is received after 12:00 p.m. New York, New York time on any
payment date, such payment shall be deemed to have been received on the Business
Day next succeeding the date of such payment.
Upon the payment in full of any Note held by you, your nominee or
any subsequent Institutional Holder; you, your nominee or any such subsequent
Institutional Holder hereby agrees to use your or its reasonable best efforts to
return said Note to the Company at the address set forth in ss. 9.6 hereof.
SECTION 3. REPRESENTATIONS.
Section 3.1 Representations of the Company. The Company
represents and warrants that all representations and warranties set forth in
Exhibit B attached hereto are true and correct as of the date hereof and are
incorporated herein by reference with the same force and effect as though herein
set forth in full.
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Section 3.2 Representations of the Purchaser. (a) You represent
as of the Closing Date, and in entering into this Agreement the Company
understands, that you are acquiring the Notes for the purpose of investment and
not with a view to the distribution thereof, and that you have no present
intention of selling, negotiating or otherwise disposing of the Notes; it being
understood, however, that the disposition of your Property shall at all times be
and remain within your control.
(b) You further represent, as of the Closing Date, at least
one of the following statements is an accurate representation as to each source
of funds (a "Source") to be used to pay the purchase price of the Notes to be
purchased hereunder:
(i) if an insurance company, the Source does not
include assets allocated to any separate account maintained by it
in which any employee benefit plan (or its related trust) has any
interest, other than a separate account that is maintained solely
in connection with its fixed contractual obligations under which
the amounts payable, or credited, to such plan and to any
participant or beneficiary of such plan (including any annuitant)
are not affected in any manner by the investment performance of
the separate account; or
(ii) the Source is either (x) an insurance company
pooled separate account, within the meaning of Prohibited
Transaction Exemption ("PTE") 90-1 (issued January 29, 1990), (y)
a bank collective investment fund, within the meaning of the PTE
91-38 (issued July 12, 1991) and, except as such Purchaser shall
have disclosed to the Company in writing pursuant to this clause
(b), no employee benefit plan or group of plans maintained by the
same employee organization beneficially owns more than 10% of all
assets allocated to such pooled separate account or collective
investment fund or (z) the Source is an insurance company general
account of which the assets are such that if any of them are, or
are deemed to be, assets of any Plan, the acquisition of the
Notes by such Purchaser pursuant hereto is eligible for and
satisfies the requirements of PTE 95-60 (issued July 12, 1995);
or
(iii) the Source constitutes assets of an
"investment fund" (within the meaning of Part V of PTE 84-14
managed by a "qualified professional asset manager" or "QPAM"
(within the meaning of Part V of PTE 84-14), no employee benefit
plan's assets that are included in such investment fund, when
combined with the assets of all other employee benefit plans
established or maintained by the same employer or by an affiliate
(within the meaning of Section V(c)(1) of PTE 84-14) of such
employer or by the same employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total
client assets managed by such QPAM, the conditions of Part I(c)
and (g) of PTE 84-14 are satisfied, neither the QPAM nor a person
controlling or controlled by the QPAM (applying the definition of
"control" in Section V(e) of the PTE 84-14) owns a 5% or more
interest in the Company and (x) the identity of such QPAM and (y)
the names of all employee benefit plans whose assets are included
in such investment fund have been disclosed to the Company in
writing pursuant to this paragraph (iii); or
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(iv) the Source is a governmental plan;
or
(v) the Source is one or more employee
benefit plans, or a separate account or trust fund comprised of
one or more employee benefit plans, each of which has been
identified to the Company in writing pursuant to this paragraph
(v); or
(vi) the Source does not include assets
of any employee benefit plan, other than a plan exempt from the
coverage of ERISA.
As used in this paragraph, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
SECTION 4. CLOSING CONDITIONS.
Section 4.1 Conditions. Your obligation to purchase the Notes on
the Closing Date shall be subject to the performance by the Company of its
agreements hereunder which by the terms hereof are to be performed at or prior
to the time of delivery of the Notes and to the following further conditions
precedent:
(a) Closing Certificate. You shall have received a
certificate dated the Closing Date, signed by the President or a
Vice President of the Company, the truth and accuracy of which
shall be a condition to your obligation to purchase the Notes
proposed to be sold to you and to the effect that (1) the
representations and warranties of the Company set forth in
Exhibit B attached hereto are true and correct on and with
respect to the Closing Date, (2) the Company has performed all of
its obligations hereunder which are to be performed on or prior
to the Closing Date, and (3) no Default or Event of Default has
occurred and is continuing.
(b) Legal Opinions. You shall have received from
Bradley Arant Rose & White LLP independent counsel for the
Company, an opinion dated the Closing Date, in form and substance
satisfactory to you, and covering the matters set forth in
Exhibit C , attached hereto.
(c) Company's Existence and Authority. On or prior
to the Closing Date, you shall have received, in form and
substance reasonably satisfactory to you, such documents and
evidence with respect to the Company as you may reasonably
request in order to establish the existence and good standing of
the Company and the authorization of the transactions
contemplated by this Agreement.
(d) Legality of Investment. The Notes to be
purchased by you shall be a legal investment for you under the
laws of each jurisdiction to which you may be subject (without
resort to any so-called "basket provisions" to such laws).
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(e) Structuring Fee. The Company shall have
paid you by wire transfer to such account as you designate on
or prior to the Closing Date a structuring fee of $25,000.
(f) Satisfactory Proceedings. All proceedings taken
in connection with the transactions contemplated by this
Agreement, and all documents necessary to the consummation
thereof, shall be satisfactory in form and substance to you, and
you shall have received a copy (executed or certified as may be
appropriate) of all legal documents or proceedings taken in
connection with the consummation of said transactions.
Section 4.2 Waiver of Conditions. If on the Closing Date the
Company fails to tender to you the Notes to be issued to you on such date or if
the conditions specified in ss. 4.1 have not been fulfilled, you may thereupon
elect to be relieved of all further obligations under this Agreement. Without
limiting the foregoing, if the conditions specified in ss. 4.1 have not been
fulfilled, you may waive compliance by the Company with any such condition to
such extent as you may in your sole discretion determine. Nothing in this ss.
4.2 shall operate to relieve the Company of any of its obligations hereunder or
to waive any of your rights against the Company.
SECTION 5. COMPANY COVENANTS.
From and after the Closing Date and continuing so long as any
amount remains unpaid on any Note:
Section 5.1 Corporate Existence, Etc. The Company will preserve
and keep in full force and effect, and will cause each Subsidiary to preserve
and keep in full force and effect, its corporate existence and all licenses and
permits which, individually or in the aggregate, are material to the proper
conduct of its business, provided that the foregoing shall not prevent any
transaction permitted by ss. 5.12.
Section 5.2 Insurance. The Company will maintain, and will cause
each Subsidiary to maintain, insurance coverage by financially sound and
reputable insurers and in such forms and amounts and against such risks as are
customary for corporations of established reputation engaged in the same or a
similar business and owning and operating similar properties.
Section 5.3 Taxes, Claims for Labor and Materials; Compliance
with Laws. (a) The Company will promptly pay and discharge, and will cause each
Subsidiary promptly to pay and discharge, all lawful taxes, assessments and
governmental charges or levies imposed upon the Company or such Subsidiary,
respectively, or upon or in respect of all or any part of the Property or
business of the Company or such Subsidiary, all trade accounts payable in
accordance with usual and customary business terms, and all claims for work,
labor or materials, which if unpaid might become a Lien upon any Property of the
Company or such Subsidiary; provided the Company or such Subsidiary shall not be
required to pay any such tax, assessment, charge, levy, account payable or claim
if (1) the validity, applicability or amount thereof is being contested in good
faith by appropriate actions or proceedings which will prevent the forfeiture or
sale of any Property of the Company or such Subsidiary or any material
interference with the use thereof by the Company or such Subsidiary, and (2) the
Company or such Subsidiary shall set aside on its books, reserves deemed by it
to be adequate with respect thereto.
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(b) The Company will promptly comply and will cause each
Subsidiary to comply with all laws, ordinances or governmental rules and
regulations to which it is subject including, without limitation, the
Occupational Safety and Health Act of 1970, as amended, ERISA and all
Environmental Laws, the violation of which could materially and adversely affect
the properties, business, prospects, profits or condition (financial or
otherwise) of the Company and its Subsidiaries or would result in any Lien not
permitted under ss. 5.8.
Section 5.4 Maintenance, Etc. The Company will maintain, preserve
and keep, and will cause each Subsidiary to maintain, preserve and keep, its
properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order and from
time to time will make all necessary repairs, replacements, renewals and
additions so that at all times the efficiency thereof shall be maintained.
Section 5.5 Nature of Business. Neither the Company nor any
Subsidiary will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
the Company and its Subsidiaries would be changed from the general nature of the
business engaged in by the Company and its Subsidiaries on the date of this
Agreement.
Section 5.6 Interest Charges Coverage Ratio. The Company will
keep and maintain at all times the ratio of Net Income Available for Interest
Charges to Consolidated Interest Charges at not less than 2.0 to 1.0 for each
elapsed Rolling Four Quarters Period.
Section 5.7 Limitations on Debt. (a) The Company will not, and
will not permit any Subsidiary to, create, assume, guarantee or otherwise incur
or in any manner be or become liable in respect of any Debt, except:
(1) Funded Debt evidenced by the Notes;
(2) Funded Debt of the Company and its
Subsidiaries outstanding as of the Closing Date and described on
Schedule II attached hereto;
(3) additional Funded Debt of the Company and Debt
of its Subsidiaries, provided that at the time of creation,
issuance, assumption, guarantee or incurrence thereof and after
giving effect thereto and to the application of the proceeds
thereof:
(i) Consolidated Funded Debt would not
exceed 50% of Consolidated Total Capitalization,
and
(ii) the sum of (A) Debt secured by Liens
permitted and incurred within the limitations of
ss. 5.8(h) and, without duplication, (B) the
aggregate amount of all Debt of Subsidiaries (other
than Debt of Subsidiaries permitted by ss.
5.7(a)(5)) and (C) the aggregate amount of
Attributable Debt of the Company and its
Subsidiaries, would not exceed 15% of Consolidated
Net Worth;
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(4) Current Debt of the Company, provided that
during the twelve-month period immediately preceding the date of
any determination hereunder, there shall have been a period of 60
consecutive days during which (i) the Company shall have been
free of all Current Debt or (ii) the largest aggregate principal
amount of all Current Debt outstanding on each day of such 60-day
period did not exceed the amount of additional Funded Debt which
could have been issued or incurred by the Company within the
limitations of ss. 5.7(a)(3) on each day of such period and which
Current Debt shall during each day of such 60-day period be
deemed to constitute outstanding Funded Debt for purposes of any
determination of additional Funded Debt to be issued or incurred
within the limitations of said ss. 5.7(a)(3); and
(5) Debt of a Subsidiary to the Company or to a
Wholly-owned Subsidiary which is the parent corporation of such
Subsidiary.
(b) The renewal, extension or refunding of any Funded
Debt, issued, incurred or outstanding pursuant toss. 5.7(a) shall
constitute the issuance of additional Funded Debt which is, in turn,
subject to the limitations of the applicable provisions of this ss.
5.7.
(c) Any corporation which becomes a Subsidiary after
the date hereof shall for all purposes of this ss. 5.7 be deemed to
have created, assumed or incurred at the time it becomes a Subsidiary
all Debt of such corporation existing immediately after it becomes a
Subsidiary.
Section 5.8 Limitation on Liens. The Company will not, and will
not permit any Subsidiary to, create or incur, or suffer to be incurred or to
exist, any Lien on its or their Property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
Property for the purpose of subjecting the same to the payment of obligations in
priority to the payment of its or their general creditors, or acquire or agree
to acquire, or permit any Subsidiary to acquire, any Property or assets upon
conditional sales agreements or other title retention devices, except:
(a) Liens for Property taxes and assessments or
governmental charges or levies and Liens securing claims or
demands of mechanics and materialmen, provided that payment
thereof is not at the time required by ss. 5.3;
(b) Liens of or resulting from any judgment or
award not to exceed $10,000,000 in the aggregate, the time for
the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Company or a Subsidiary shall
at any time in good faith be prosecuting an appeal or proceeding
for a review and in respect of which a stay of execution pending
such appeal or proceeding for review shall have been secured;
(c) Liens incidental to the conduct of business or
the ownership of properties and assets (including Liens in
connection with worker's compensation, unemployment insurance and
other like laws, warehousemen's and attorneys' liens and
statutory landlords' liens) and Liens to secure the performance
of bids, tenders or trade contracts, or to secure statutory
obligations, surety or appeal bonds or other Liens of like
general nature incurred in the ordinary course of business and
not in connection with the borrowing of money,
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provided in each case, the obligation secured is not overdue or,
if overdue, is being contested in good faith by appropriate
actions or proceedings;
(d) minor survey exceptions or minor encumbrances,
easements or reservations, or rights of others for rights-of-way,
utilities and other similar purposes, or zoning or other
restrictions as to the use of real properties, which are
necessary for the conduct of the activities of the Company and
its Subsidiaries or which customarily exist on properties of
corporations engaged in similar activities and similarly situated
and which do not in any event materially impair their use in the
operation of the business of the Company and its Subsidiaries;
(e) Liens securing Indebtedness of a Subsidiary to
the Company or to a Wholly-owned Subsidiary which is the parent
corporation of such Subsidiary;
(f) Liens existing as of the Closing Date and
described on Schedule II attached hereto;
(g) Liens created or incurred after the Closing
Date given to secure the payment of the purchase price incurred
in connection with the acquisition or construction of fixed
assets useful and intended to be used in carrying on the business
of the Company or a Subsidiary, including Liens existing on such
fixed assets at the time of acquisition thereof or at the time of
acquisition by the Company or a Subsidiary of any business entity
then owning such fixed assets, whether or not such existing Liens
were given to secure the payment of the purchase price of the
fixed assets to which they attach so long as they were not
incurred, extended or renewed in contemplation of such
acquisition, provided that (1) the Lien shall attach solely to
the fixed assets acquired or constructed, (2) such Lien shall
have been created or incurred within twelve months of the date of
acquisition or the date of completion of construction, (3) at the
time of acquisition or construction of such fixed assets, the
aggregate amount remaining unpaid on all Indebtedness secured by
Liens on such fixed assets whether or not assumed by the Company
or a Subsidiary shall not exceed an amount equal to the lesser of
the total acquisition price or fair market value at the time of
acquisition or construction of such fixed assets (as determined
in good faith by the Board of Directors of the Company), (4) in
the case of the creation or incurrence of any Capitalized Lease,
the fixed asset which is the subject thereof if previously owned
by the Company shall have been sold or otherwise disposed of
within the limitations provided in ss. 5.12(b)(2), and (5) all
such Debt shall have been incurred within the applicable
limitations provided in ss. 5.7(a)(3) and ss. 5.7(a)(4);
(h) Liens created or incurred after the Closing
Date given to secure Debt of the Company or any Subsidiary in
addition to Liens permitted by the preceding clauses (a) through
(g), inclusive, hereof, provided that all Debt secured by Liens
incurred pursuant to this ss. 5.8(h) shall have been incurred
within the limitations of ss. 5.7(a)(3) and ss. 5.7(a)(4); and
(i) any extension, renewal or replacement of any
Lien permitted by the preceding clause (f) hereof in respect of
the same Property theretofore subject to such Lien in
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connection with the extension, renewal or refunding of the
Indebtedness secured thereby; provided that (1) such Lien shall
attach solely to the same such Property, and (2) such extension,
renewal or refunding of such Indebtedness shall be without
increase in the principal remaining unpaid as of the date of such
extension, renewal or refunding.
Section 5.9 Limitation on Long-Term Leases. The Company will not,
and will not permit any Subsidiary to, become obligated, as lessee, under any
Long-Term Lease if, at the time of entering into such Long-Term Lease and after
giving effect thereto, the maximum aggregate Rentals payable by the Company and
all of its Subsidiaries on a consolidated basis in any fiscal year thereafter
under all Long-Term Leases then outstanding would exceed 1% of Consolidated Net
Worth for the immediately preceding fiscal year.
Section 5.10 Restricted Payments. (a) The Company will not,
except as hereinafter provided:
(1) Declare or pay any dividends, either in cash or
Property, on any shares of its capital stock of any class (except
dividends or other distributions resulting from stock splits or
dividends payable solely in shares of common stock of the
Company);
(2) Directly or indirectly, or through any
Subsidiary, purchase, redeem or retire any shares of its capital
stock of any class or any warrants, rights or options to purchase
or acquire any shares of its capital stock;
(3) Make any other payment or distribution, either
directly or indirectly or through any Subsidiary, in respect of
its capital stock; or
(4) Make any payment of or in respect of the
principal amount (including, without limitation, any prepayment
premium) of any Subordinated Funded Debt of the Company or any
Subsidiary, except a payment at final maturity, payments of
required sinking fund or required periodic prepayments, all as
established by the original terms of such Subordinated Funded
Debt;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options and all such other
payments, prepayments, redemptions, purchases or distributions being herein
collectively called "Restricted Payments"), if after giving effect thereto the
sum of (i) the aggregate amount of Restricted Payments made during the period
from and after July 4, 1992 to and including the date of the making of the
Restricted Payment in question, plus (ii) the aggregate amount of all Restricted
Investments made by the Company or any Subsidiary during said period would
exceed the sum of (A) $150,000,000 plus (B) 50% of Consolidated Net Income for
each of the elapsed fiscal quarters computed on a cumulative basis for said
entire period (or if Consolidated Net Income for any such fiscal quarter is a
deficit figure, then minus 100% of such deficit) plus (C) the aggregate net cash
proceeds received by the Company from the issuance and sale of shares of capital
stock of the Company, whether original issuances or from treasury, during such
period.
(b) The Company will not declare any dividend which constitutes a
Restricted
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Payment payable more than 60 days after the date of declaration thereof.
(c) For the purposes of this ss. 5.10, the amount of any
Restricted Payment declared, paid or distributed in Property shall be deemed to
be the greater of the book value or fair market value (as determined in good
faith by the Board of Directors of the Company) of such Property at the time of
the making of the Restricted Payment in question.
(d) The Company will not authorize or make a Restricted Payment
if after giving effect to the proposed Restricted Payment: (1) a Default or
Event of Default would exist or (2) the Company could not incur at least $1.00
of additional Funded Debt pursuant toss. 5.7(a)(3).
Section 5.11 Investments. The Company will not, and will not
permit any Subsidiary to, make any Investments, other than:
(a) Investments by the Company and its
Subsidiaries existing as of the Closing Date and described on
Schedule II attached hereto;
(b) Investments by the Company and its Subsidiaries
in and to Subsidiaries 80% or more (by number of votes) of the
Voting Stock of which is beneficially owned, directly or
indirectly, by the Company, including any Investment in a
corporation which, after giving effect to such Investment, will
become a Subsidiary 80% or more (by number of votes) of the
Voting Stock of which is beneficially owned, directly or
indirectly, by the Company;
(c) Investments in commercial paper maturing in 270
days or less from the date of issuance which, at the time of
acquisition by the Company or any Subsidiary, is rated not lower
than "A-1" by Standard & Poor's Corporation and not lower than
"P-1" by Moody's Investors Service, Inc.;
(d) Investments in direct obligations of the United
States of America or any agency or instrumentality of the United
States of America, the payment or guarantee of which constitutes
a full faith and credit obligation of the United States of
America, in either case, maturing in twelve months or less from
the date of acquisition thereof;
(e) Investments in certificates of deposit maturing
within one year from the date of issuance thereof, issued by (1)
a bank or trust company organized under the laws of the United
States or any state thereof, having, at the time of acquisition
thereof by the Company or a Subsidiary, capital, surplus and
undivided profits aggregating at least $100,000,000 and whose
long-term certificates of deposit are, at the time of acquisition
thereof by the Company or a Subsidiary, rated AA or better by
Standard & Poor's Corporation and Aa or better by Moody's
Investors Service, Inc. or (2) any banking subsidiary of Wachovia
Corporation, AmSouth Bancorporation, SunTrust Banks, Inc.,
SouthTrust Corporation, Regions Financial Corporation, The Chase
Manhattan Bank, Synovus Financial Corporation, and Aliant
National Corporation or any Person who succeeds to all, or
substantially all, of the assets and business of any thereof;
(f) Investments in variable rate demand bonds
maturing or with optional puts
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within one year or less from the date of acquisition thereof,
which, at the time of acquisition by the Company or any
Subsidiary, are rated not lower than "A" or "A-1" by Standard &
Poor's Corporation and not lower than "A2" or "P-1" by Moody's
Investors Service, Inc.;
(g) loans or advances in the usual and ordinary
course of business to officers, directors and employees for
expenses (including moving expenses related to a transfer)
incidental to carrying on the business of the Company or any
Subsidiary; provided that the amount of all such loans or
advances permitted pursuant to this ss. 5.11(g) shall not at any
one time exceed $3,000,000 in the aggregate; and
(h) other Investments (in addition to those
permitted by the foregoing provisions of this ss. 5.11), provided
that (1) all such other Investments shall have been made out of
funds available for Restricted Payments which the Company or any
Subsidiary would then be permitted to make in accordance with the
provisions of ss. 5.10, (2) after giving effect to such other
Investments, no Default or Event of Default would exist and (3)
the Company would be permitted by the provisions of ss. 5.7(a)(3)
to incur at least $1.00 of additional Funded Debt.
In valuing any Investments for the purpose of applying the
limitations set forth in this ss. 5.11, such Investments shall be taken at the
original cost thereof, without allowance for any subsequent write-offs or
appreciation or depreciation therein, but less any amount repaid, recovered or
received on account of capital or principal.
For purposes of this ss. 5.11, at any time when a corporation
becomes a Subsidiary, all Investments of such corporation at such time shall be
deemed to have been made by such corporation, as a Subsidiary, at such time.
Section 5.12 Mergers, Consolidations and Sales of Assets. (a) The
Company will not, and will not permit any Subsidiary to, consolidate with or be
a party to a merger with any other corporation, or sell, lease or otherwise
dispose of all or substantially all of its assets; provided that:
(1) any Subsidiary may merge or consolidate with or
into, or sell, lease or otherwise dispose of all or substantially
all of its assets to, the Company or any other Subsidiary the
percentage ownership by the Company of which shall be greater
than or equal to the percentage ownership by the Company of the
Subsidiary being merged or consolidated or all or substantially
all of the assets of which are being sold, leased or otherwise
disposed of, so long as (i) in any merger or consolidation
involving the Company, the Company shall be the surviving or
continuing corporation and (ii) in any sale, lease or other
disposition, after giving effect to such sale, lease or other
disposition, (A) no Default or Event of Default would exist and
(B) the Company would be permitted by the provisions of ss.
5.7(a)(3) to incur at least $1.00 of additional Funded Debt;
(2) the Company may consolidate with or merge into
any other corporation if (i) the Company is the surviving
corporation or (ii)(A) the corporation which results from such
consolidation or merger (the "surviving corporation") is
organized under the laws of
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any State of the United States or the District of Columbia and
(B) the due and punctual payment of the principal of and premium,
if any, and interest on all of the Notes, according to their
tenor, and the due and punctual performance and observation of
all of the covenants in the Notes and this Agreement to be
performed or observed by the Company are expressly assumed in
writing by the surviving corporation and the surviving
corporation shall furnish the holders of the Notes an opinion of
counsel satisfactory to the holders of at least 66-2/3% in
aggregate principal amount of the Notes then outstanding to the
effect that the instrument of assumption has been duly
authorized, executed and delivered and constitutes the legal,
valid and binding contract and agreement of the surviving
corporation enforceable in accordance with its terms and which
opinion may contain exceptions and qualifications as are
customary in similar transactions and (iii) at the time of such
consolidation or merger and immediately after giving effect
thereto, (A) no Default or Event of Default would exist and (B)
the surviving corporation would be permitted by the provisions of
ss. 5.7(a)(3) to incur at least $1.00 of additional Funded Debt;
(3) any corporation may merge into the Company if
at the time of such merger and immediately after giving effect
thereto, (i) no Default or Event of Default would exist and (ii)
the Company would be permitted by the provisions of ss. 5.7(a)(3)
to incur at least $1.00 of additional Funded Debt; and
(4) the Company may sell or otherwise dispose of
all or substantially all of its assets (other than stock and
Indebtedness of a Subsidiary, which may only be sold or otherwise
disposed of pursuant to ss. 5.12(c)) to any Person for
consideration which represents the fair market value (as
determined in good faith by the Board of Directors of the
Company, a copy of which determination certified by the Secretary
or an Assistant Secretary of the Company shall have been
furnished to the holders of the Notes) at the time of such sale
or other disposition if (i) the acquiring Person is a corporation
organized under the laws of any State of the United States or
District of Columbia, (ii) the due and punctual payment of the
principal of and premium, if any, and interest on all the Notes,
according to their tenor, and the due and punctual performance
and observance of all of the covenants in the Notes and in this
Agreement to be performed or observed by the Company are
expressly assumed in writing by the acquiring corporation and the
acquiring corporation shall furnish the holders of the Notes an
opinion of counsel satisfactory to the holders of at least
66-2/3% in aggregate principal amount of the Notes then
outstanding to the effect that the instrument of assumption has
been duly authorized, executed and delivered and constitutes the
legal, valid and binding contract and agreement of such acquiring
corporation enforceable in accordance with its terms and which
opinion may contain exceptions and qualifications as are
customary in similar transactions, and (iii) at the time of such
sale or disposition and immediately after giving effect thereto,
(A) no Default or Event of Default would exist and (B) the
acquiring corporation would be permitted by the provisions of ss.
5.7(a)(3) to incur at least $1.00 of additional Funded Debt.
(b) The Company will not, and will not permit any Subsidiary to,
sell, lease, transfer, abandon or
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otherwise dispose of, assets (except assets sold, leased, transferred, abandoned
or otherwise disposed of in the ordinary course of business and, except with
respect to inventory sold in the ordinary course of business, for fair market
value or as provided in ss. 5.12(a)(4)); provided that the foregoing
restrictions do not apply to:
(1) the sale, lease, transfer or other disposition
of assets of a Subsidiary to the Company or a Wholly-owned
Subsidiary; or
(2) the sale, lease, transfer or other disposition
of such assets for cash or other Property to a Person or Persons
other than an Affiliate (which Affiliate is not a Subsidiary) if
all of the following conditions are met:
(i) such assets (valued at the greater of
fair market value or net book value) do not,
together with all other assets of the Company and
its Subsidiaries previously disposed of during the
same fiscal year, exceed 10% of Consolidated Total
Assets;
(ii) the determination to sell, lease,
transfer or otherwise dispose of such assets was
made in accordance with policies approved by the
Board of Directors of the Company or such
Subsidiary; and
(iii) immediately after the consummation
of the transaction and after giving effect thereto,
(A) no Default or Event of Default would exist, and
(B) the Company would be permitted by the
provisions of ss. 5.7(a)(3) to incur at least $1.00
of additional Funded Debt.
Computations pursuant to this ss. 5.12(b) shall include
dispositions made pursuant to ss. 5.12(c) and computations pursuant to
ss. 5.12(c) shall include dispositions made pursuant to this ss. 5.12(b).
(c) The Company will not, and will not permit any Subsidiary to,
sell, pledge or otherwise dispose of any shares of the stock (including as
"stock" for the purposes of this Section any options or warrants to purchase
stock or other Securities exchangeable for or convertible into stock) of a
Subsidiary (said stock, options, warrants and other Securities herein called
"Subsidiary Stock") or sell, pledge or otherwise dispose of any Indebtedness of
any Subsidiary, nor will any Subsidiary issue, sell, pledge or otherwise dispose
of any shares of its own Subsidiary Stock, provided that the foregoing
restrictions do not apply to:
(1) the issue of directors qualifying shares; or
(2) the issue of Subsidiary Stock to the Company
or a Wholly-owned Subsidiary; and
(3) the sale or other disposition to a Person
(other than directly or indirectly to an Affiliate) of any shares
of Subsidiary Stock or Indebtedness of any Subsidiary if all of
the following conditions are met:
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(i) such assets (valued at the greater of
fair market value or net book value) of the
Subsidiary do not, together with all other assets
of the Company and its Subsidiaries previously
disposed of during the same fiscal year (other than
in the ordinary course of business), exceed 10% of
Consolidated Total Assets;
(ii) the determination to sell or
otherwise dispose of such assets was made in
accordance with policies approved by the Board of
Directors of the Company or such Subsidiaries;
(iii) in the case of a sale of any
Subsidiary Stock of a Wholly-owned Subsidiary to a
Person other than the Company or another
Wholly-owned Subsidiary, immediately after the
consummation of the transaction and after giving
effect thereto, all Debt of any other Subsidiary
(of which such previously Wholly-owned Subsidiary
is the parent corporation) then held by such
previously Wholly-owned Subsidiary shall be deemed
to be Debt to be created or incurred by the Company
and its other Subsidiaries within the limitations
of ss. 5.7(a)(3);
(iv) in the case of a sale of any
Indebtedness of any Subsidiary, immediately after
the consummation of the transaction and after
giving effect thereto, all Debt of such Subsidiary
then held by Persons other than the Company or any
Wholly-owned Subsidiary which is the parent
corporation of such Subsidiary shall be deemed to
be Debt to be created or incurred by such
Subsidiary within the limitations of ss. 5.7(a)(3);
(v) in the case of a sale of Indebtedness
or other Investments in a Subsidiary, immediately
after the consummation of the transaction and after
giving effect thereto, all Indebtedness and other
Investments in such Subsidiary held by the Company
and its other Subsidiaries shall be deemed to be
Investments to be made or created within the
limitations of ss. 5.11; and
(vi) immediately after the consummation of
the transaction and after giving effect thereto,
(A) no Default or Event of Default would exist, and
(B) the Company would be permitted by the
provisions of ss. 5.7(a)(3) to incur at least $1.00
of additional Funded Debt.
Computations pursuant to this ss. 5.12(c) shall include
dispositions made pursuant to ss. 5.12(b) and computations pursuant to
ss. 5.12(b) shall include dispositions made pursuant to this ss. 5.12(c).
Section 5.13 Guaranties. The Company will not, and will not
permit any Subsidiary to, become or be liable in respect of any Guaranty except
Guaranties by the Company or any Subsidiary incurred in compliance with the
provisions ss. 5.7(a)(3) and ss. 5.7(a)(4) which are limited in amount to a
stated maximum dollar exposure or Guaranties by the Company which constitute
Guaranties of obligations incurred by any Subsidiary in compliance with the
provisions of ss. 5.7(a)(3).
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Section 5.14 Repurchase of Notes. Neither the Company nor any
Subsidiary or Affiliate, directly or indirectly, may repurchase or make any
offer to repurchase any Notes unless an offer has been made to repurchase Notes,
pro rata, from all holders of the Notes at the same time and upon the same
terms. In case the Company or any Subsidiary or Affiliate repurchases or
otherwise acquires any Notes, such Notes shall immediately thereafter be
cancelled and no Notes shall be issued in substitution therefor. Without
limiting the foregoing, upon the purchase or other acquisition of any Notes by
the Company, any Subsidiary or any Affiliate, such Notes shall no longer be
outstanding for purposes of any section of this Agreement relating to the taking
by the holders of the Notes of any actions with respect hereto, including,
without limitation, ss. 6.3, ss. 6.4 and ss. 7.1.
Section 5.15 Transactions with Affiliates. The Company will not,
and will not permit any Subsidiary to, enter into or be a party to any
transaction or arrangement with any Affiliate (including, without limitation,
the purchase from, sale to or exchange of Property with, or the rendering of any
service by or for, any Affiliate) which transaction or arrangement is material
to the Company or such Subsidiary, except in the ordinary course of and pursuant
to the reasonable requirements of the Company's or such Subsidiary's business
and upon fair and reasonable terms no less favorable to the Company or such
Subsidiary than would obtain in a comparable arm's-length transaction with a
Person other than an Affiliate.
Section 5.16 Multiemployer Plan Liability and Termination of
Pension Plans. The Company will not and will not permit any ERISA Affiliate to
withdraw from any Multiemployer Plan if such withdrawal could result in
withdrawal liability (as described in Part l of Subtitle E of Title W of ERISA)
which could materially and adversely affect the properties, business, prospects,
profits or condition (financial or otherwise) of the Company. The Company and
any ERISA Affiliate will not permit any employee benefit plan maintained by it
to be terminated if such termination could result in the imposition of a Lien on
any property of the Company or any ERISA Affiliate pursuant to Section 4068 of
ERISA.
Section 5.17 Reports and Rights of Inspection. The Company will
keep, and will cause each Subsidiary to keep, proper books of record and account
in which full and correct entries will be made of all dealings or transactions
of, or in relation to, the business and affairs of the Company or such
Subsidiary, in accordance with GAAP consistently applied (except for changes
disclosed in the financial statements furnished to you pursuant to this ss. 5.17
and concurred in by the independent public accountants referred to in ss.
5.17(b) hereof), and will furnish to you so long as you are the holder of any
Note and to each other Institutional Holder of the then outstanding Notes (in
duplicate if so specified below or otherwise requested):
(a) Quarterly Statements. As soon as available and
in any event within 45 days after the end of each quarterly
fiscal period (except the last) of each fiscal year, copies of:
(1) a consolidated balance sheet of the
Company and its Subsidiaries as of the close of
such quarterly fiscal period, setting forth in
comparative form the consolidated figures for the
corresponding period of the preceding fiscal year,
(2) a consolidated statement of income of
the Company and its
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Subsidiaries for such quarterly fiscal period and
for the portion of the fiscal year ending with
such quarterly fiscal period, in each case setting
forth in comparative form the consolidated figures
for the corresponding periods of the preceding
fiscal year,
(3) a consolidated statement of cash flows
of the Company and its Subsidiaries for the portion
of the fiscal year ending with such quarterly
fiscal period, setting forth in comparative form
the consolidated figures for the corresponding
period of the preceding fiscal year, and
(4) a consolidated statement of
stockholders' equity of the Company and its
Subsidiaries for the portion of the fiscal year
ending with such quarterly fiscal period, setting
forth in comparative form the consolidated figures
for the corresponding period of the preceding
fiscal year,
all in reasonable detail and certified as complete and correct by an authorized
financial officer of the Company;
(b) Annual Statements. As soon as available and in any event
within 90 days after the close of each fiscal year of the Company, copies of:
(1) a consolidated balance sheet of the
Company and its Subsidiaries as of the close of such fiscal year,
(2) a consolidated statement of income of
the Company and its Subsidiaries for such fiscal year,
(3) a consolidated statement of cash
flows of the Company and its Subsidiaries for such fiscal year,
and
(4) a consolidated statement of
stockholders' equity of the Company and its Subsidiaries for such
fiscal year,
in each case setting forth in comparative form the consolidated
figures for the preceding fiscal year, all in reasonable detail
and accompanied by a report thereon of a firm of independent
public accountants of recognized national standing selected by
the Company, containing an opinion unqualified as to scope
limitations imposed by the Company, unqualified as to the Company
being a going concern and otherwise without qualification except
as therein noted, to the effect that the consolidated financial
statements present fairly, in all material respects, the
consolidated financial position of the Company and its
Subsidiaries as of the end of the fiscal year being reported on
and the consolidated results of the operations and cash flows for
said year in conformity with GAAP and that the examination of
such accountants in connection with such financial statements has
been conducted in accordance with generally accepted auditing
standards and included such tests of the accounting records and
such other auditing procedures as said accountants deemed
necessary in the circumstances;
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(c) Audit Reports. Promptly upon receipt thereof,
one copy of each interim or special audit made by independent
accountants of the books of the Company or any Subsidiary and any
management letter received from such accountants in connection
with such interim or special audits;
(d) SEC and Other Reports. Promptly upon their
becoming available, one copy of each financial statement, report,
notice or proxy statement sent by the Company to stockholders
generally and of each regular or periodic report, and any
registration statement or prospectus filed by the Company or any
Subsidiary with any securities exchange or the Securities and
Exchange Commission or any successor agency (other than
Registration Statements on Form S-8 relating to employee benefit
plans);
(e) ERISA Reports. Promptly upon the occurrence
thereof, written notice of (1) a Reportable Event with respect to
any Plan; (2) the institution of any steps by the Company, any
ERISA Affiliate, the PBGC or any other Person to terminate any
Plan; (3) the institution of any steps by the Company or any
ERISA Affiliate to withdraw from any Plan; (4) a non-exempt
"prohibited transaction" within the meaning of Section 406 of
ERISA in connection with any Plan; (5) any material increase in
the contingent liability of the Company or any Subsidiary with
respect to any post-retirement welfare liability; or (6) the
taking of any action by, or the threatening of the taking of any
action by, the Internal Revenue Service, the Department of Labor
or the PBGC with respect to any of the foregoing;
(f) Officer's Certificates. Within the periods
provided in paragraphs (a) and (b) above, a certificate of the
chief financial officer of the Company stating that such officer
has reviewed the provisions of this Agreement and setting forth:
(1) the information and computations (in sufficient detail)
required in order to establish whether the Company was in
compliance with the requirements of ss. 5.6 through ss. 5.13 at
the end of the period covered by the financial statements then
being furnished, and (2) whether there existed as of the date of
such financial statements and whether, to the best of such
officer's knowledge, there exists on the date of the certificate
or existed at any time during the period covered by such
financial statements any Default or Event of Default and, if any
such condition or event exists on the date of the certificate,
specifying the nature and period of existence thereof and the
action the Company is taking and proposes to take with respect
thereto;
(g) Accountant's Certificates. Within the period
provided in paragraph (b) above, a certificate of the accountants
who render an opinion with respect to such financial statements,
stating that they have reviewed this Agreement, stating that they
have reviewed the computations made by the Company in connection
with the requirements of ss. 5.17(f) and whether or not they
concur with the results of such computations, and stating further
whether, in making their audit, such accountants have become
aware of any Default or Event of Default under any of the terms
or provisions of this Agreement insofar as any such terms or
provisions pertain to or involve accounting matters or
determinations, and if any such condition or event then exists,
specifying the nature and period of existence thereof;
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<PAGE> 26
(h) Material Litigation. Promptly after the Company
shall have knowledge thereof, written notice of any proceedings
pending against the Company or any Subsidiary in any court or
before any governmental authority or arbitration board or
tribunal which involve the possibility of materially affecting
adversely the properties, business, prospects, profits or
condition (financial or otherwise) of the Company and its
Subsidiaries; and
(i) Requested Information. With reasonable
promptness, such other financial data and information or other
information necessary to demonstrate compliance with the terms
and provisions of this Agreement as you or any such Institutional
Holder may reasonably request.
Without limiting the foregoing, the Company will permit you, so long as you are
the holder of any Note, and each Institutional Holder of the then outstanding
Notes (or such Persons as either you or such Institutional Holder may
designate), to visit and inspect, under the Company's guidance, any of the
properties of the Company or any Subsidiary, to examine all of their books of
account, records, reports and other papers, to make copies and extracts
therefrom and to discuss their respective affairs, finances and accounts with
their respective officers, employees, and independent public accountants (and by
this provision the Company authorizes said accountants to discuss with you the
finances and affairs of the Company and its Subsidiaries) all at such reasonable
times and as often as may be reasonably requested. Any visitation shall be at
the sole expense of you or such Institutional Holder unless a Default or Event
of Default shall have occurred and be continuing, or if the holder of any Note
or of any other evidence of Indebtedness of the Company or any Subsidiary gives
any written notice or takes any other action with respect to a claimed default,
in which case, any such visitation or inspection shall be at the sole expense of
the Company.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
Section 6.1 Events of Default. Any one or more of the
following shall constitute an "Event of Default" as such term is used herein:
(a) Default shall occur in the payment of interest
on any Note when the same shall have become due and such default
shall continue for more than five days; or
(b) Default shall occur in the making of any
required prepayment on any of the Notes as provided in ss. 2.1;
or
(c) Default shall occur in the making of any other
payment of the principal of any Note or premium, if any, thereon
at the expressed or any accelerated maturity date or at any date
fixed for prepayment; or
(d) Default shall occur in the observance or
performance of any covenant or agreement contained in ss. 5.7
through ss. 5.13; or
(e) Default shall occur in the observance or
performance of any covenant or
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agreement contained in ss. 5.6 and such default shall continue
for more than ten days; or
(f) Default shall occur in the observance or
performance of any other provision of this Agreement which is not
remedied within 30 days after the earlier of (1) the day on which
a Responsible Officer of the Company first obtains knowledge of
such default, or (2) the day on which written notice thereof is
given to the Company by the holder of any Note; or
(g) Default shall be made in the payment when due
(whether by lapse of time, by declaration, by call for redemption
or otherwise) of the principal of or interest on any Indebtedness
for borrowed money (other than the Notes) of the Company or any
Subsidiary aggregating $10,000,000 or more or of any amount due
pursuant to any Interest Rate Protection Agreement the
termination amount of which is equal to $3,000,000 or more and
such default shall continue beyond the period of grace, if any,
allowed with respect thereto; or
(h) Default or the happening of any event shall
occur under any indenture, agreement or other instrument under
which any Indebtedness for borrowed money (other than the Notes)
of the Company or any Subsidiary aggregating $10,000,000 or more
may be issued or under any Interest Rate Protection Agreement the
termination amount of which is equal to $3,000,000 or more and
such default or event shall continue for a period of time
sufficient to permit the acceleration of the maturity of any
Indebtedness for borrowed money of the Company or any Subsidiary
outstanding thereunder; or
(i) Any representation or warranty made by the
Company herein, or made by the Company in any statement or
certificate furnished by the Company in connection with the
consummation of the issuance and delivery of the Notes or
furnished by the Company pursuant hereto, is untrue in any
material respect as of the date of the issuance or making
thereof; or
(j) Final judgment or judgments for the payment of
money aggregating in excess of $10,000,000 is or are outstanding
against the Company or any Subsidiary or against any Property or
assets of either and any one of such judgments has remained
unpaid, unvacated, unbonded or unstayed for a period of 10 days
from the expiration of all appeals; or
(k) A custodian, liquidator, trustee or receiver
is appointed for the Company or any Subsidiary or for the major
part of the Property of either and is not discharged within 60
days after such appointment; or
(l) The Company or any Subsidiary becomes insolvent
or bankrupt, is generally not paying its debts as they become due
or makes an assignment for the benefit of creditors, or the
Company or any Subsidiary applies for or consents to the
appointment of a custodian, liquidator, trustee or receiver for
the Company or such Subsidiary or for the major part of the
Property of either; or
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(m) Bankruptcy, reorganization, arrangement or
insolvency proceedings, or other proceedings for relief under any
bankruptcy or similar law or laws for the relief of debtors, are
instituted by or against the Company or any Subsidiary and, if
instituted against the Company or any Subsidiary, are consented
to or are not dismissed within 60 days after such institution.
Section 6.2 Notice to Holders. When any Event of Default
described in the foregoing ss. 6.1 has occurred, or if the holder of any Note or
of any other evidence of indebtedness for borrowed money of the Company gives
any notice or takes any other action with respect to a claimed default, the
Company agrees to give notice within three Business Days of such event to all
holders of the Notes then outstanding.
Section 6.3 Acceleration of Maturities. When any Event of Default
described in paragraph (a), (b) or (c) of ss. 6.1 has happened and is
continuing, any holder of any Note may, by notice in writing sent in the manner
provided in ss. 9.6 hereof to the Company, declare the entire principal and all
interest accrued on such Note to be, and such Note shall thereupon become
forthwith due and payable, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived. When any Event of
Default described in paragraphs (a) through (j), inclusive, of said ss. 6.1 has
happened and is continuing, the holder or holders of more than 50% of the
principal amount of Notes at the time outstanding may, by notice in writing in
the manner provided in ss. 9.6 to the Company, declare the entire principal and
all interest accrued on all Notes to be, and all Notes shall thereupon become,
forthwith due and payable, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived. When any Event of
Default described in paragraph (k), (l) or (m) of ss. 6.1 has occurred, then all
outstanding Notes shall immediately become due and payable without presentment,
demand or notice of any kind. Upon the Notes becoming due and payable as a
result of any Event of Default as aforesaid, the Company will forthwith pay to
the holders of the Notes the entire principal and interest accrued on the Notes
and, to the extent not prohibited by applicable law, an amount as liquidated
damages for the loss of the bargain evidenced hereby (and not as a penalty)
equal to the Make-Whole Amount, determined as of the date on which the Notes
shall so become due and payable. No course of dealing on the part of the holder
or holders of any Notes nor any delay or failure on the part of any holder of
Notes to exercise any right shall operate as a waiver of such right or otherwise
prejudice such holder's rights, powers and remedies. The Company further agrees,
to the extent permitted by law, to pay to the holder or holders of the Notes all
costs and expenses incurred by them in the collection of any Notes upon any
Default hereunder or thereon, including reasonable compensation to such holder's
or holders' attorneys for all services rendered in connection therewith.
Section 6.4 Rescission of Acceleration. The provisions of ss. 6.3
are subject to the condition that if the principal of and accrued interest on
all or any outstanding Notes have been declared immediately due and payable by
reason of the occurrence of any Event of Default described in paragraphs (a)
through (l), inclusive, of ss. 6.1, the holders of 66-2/3% in aggregate
principal amount of the Notes then outstanding may, by written instrument filed
with the Company, rescind and annul such declaration and the consequences
thereof, provided that at the time such declaration is annulled and rescinded:
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(a) no judgment or decree has been entered for the
payment of any monies due pursuant to the Notes or this
Agreement;
(b) all arrears of interest upon all the Notes and
all other sums payable under the Notes and under this Agreement
(except any principal, interest or Make-Whole Amount on the Notes
which has become due and payable solely by reason of such
declaration under ss. 6.3) shall have been duly paid; and
(c) each and every Default and Event of Default
shall have been made good, cured or waived pursuant to ss. 7.1;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
Section 7.1 Consent Required. Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company shall have obtained
the consent in writing of the holders of at least 66-2/3% in aggregate principal
amount of the Notes then outstanding; provided that without the written consent
of the holders of all of the Notes then outstanding, no such amendment or waiver
shall be effective (a) which will change the time of payment (including any
prepayment required by ss. 2.1) of the principal of or the interest on any Note
or change the principal amount thereof or change the rate of interest thereon,
or (b) which will change the time of payment or method of calculation of the
premium, if any, on any Note, or (c) which will change any of the provisions
with respect to optional prepayments, or (d) which will change the percentage of
holders of the Notes required to consent to any such amendment or waiver of any
of the provisions of this ss. 7 or ss. 6 or (e) which will change any of the
provisions of ss. 5.14 or ss. 7.2.
Section 7.2 Solicitation of Holders. So long as there are any
Notes outstanding, the Company will not solicit, request or negotiate for or
with respect to any proposed waiver or amendment of any of the provisions of
this Agreement or the Notes unless each holder of Notes (irrespective of the
amount of Notes then owned by it) shall be informed thereof by the Company and
shall be afforded the opportunity of considering the same and shall be supplied
by the Company with such information as the Company reasonably believes would be
necessary to enable each holder to make an informed decision with respect
thereto. The Company will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any holder of Notes as consideration for or as an inducement to
entering into by any holder of Notes of any waiver or amendment of any of the
terms and provisions of this Agreement or the Notes unless such remuneration is
concurrently offered, on the same terms, ratably to the holders of all Notes
then outstanding. Promptly and in any event within 30 days of the date of
execution and delivery of any such waiver or amendment, the Company shall
provide a true, correct and complete copy thereof to each of the holders of the
Notes.
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Section 7.3 Effect of Amendment or Waiver. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 8.1 Definitions. Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the following
meanings and the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined:
"Acquiring Person" shall have the meaning set forth in ss.
2.3(d).
"Affiliate" shall mean (a) the executive officers and directors
of the Company and (b) any Person (other than a Wholly-owned Subsidiary) (1)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (2) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company or (3) 5% or more of the Voting Stock (or in the case of a Person which
is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Attributable Debt" shall mean the face amount of accounts or
notes receivable sold, pledged or otherwise transferred by the Company or any
Subsidiary in respect of any Receivables Financing.
"Board of Directors" of any Person shall mean the board of
directors of such Person and any executive committee of such board to the
extent, but only to the extent, such executive committee shall be authorized by
the board of directors of such Person to take any action in lieu of such board.
"Business Day" shall mean any day other than a Saturday, Sunday
or other day on which banks in Birmingham, Alabama or New York, New York are
required by law to close.
"Called Principal" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to ss. 2.2 or ss. 2.3 or
is declared to be immediately due and payable pursuant to ss. 6.3, as the
context requires.
"Capitalized Lease" shall mean any lease the obligation for
Rentals with respect to which is required to be capitalized on a consolidated
balance sheet of the lessee and its subsidiaries in accordance with GAAP or, if
not so capitalized, for which the amounts of the asset and liability (had such
lease been capitalized) would at such time be so required to be disclosed in a
note to such a balance sheet.
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"Capitalized Rentals" of any Person shall mean as of the date of
any determination thereof the amount at which the aggregate Rentals due and to
become due under all Capitalized Leases under which such Person is a lessee
would be reflected as a liability on a consolidated balance sheet or disclosed
in a note to such consolidated balance sheet of such Person.
"Change of Control" shall have the meaning set forth in ss.
2.3(d).
"Closing Date" shall have the meaning set forth in ss. 1.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
and the regulations from time to time promulgated thereunder.
"Company" shall mean Russell Corporation, an Alabama corporation,
and any Person who succeeds to all, or substantially all, of the assets and
business of Russell Corporation.
"Competitor" shall mean the Sara Lee Corporation, or any
subsidiary or affiliate thereof, or a corporation or entity primarily engaged in
the textile or apparel manufacturing business or which is a member of an
affiliated group that derives more than 20% of its total revenues from the
textile or apparel manufacturing business or any Plan of any thereof.
"Consolidated Funded Debt" shall mean as of the date of any
determination thereof all Funded Debt of the Company and its Subsidiaries,
determined on a consolidated basis after eliminating intercompany items.
"Consolidated Interest Charges" shall mean all Interest Charges
on all Indebtedness of the Company and its Subsidiaries, determined on a
consolidated basis after eliminating intercompany items.
"Consolidated Net Income" for any period shall mean the gross
revenues of the Company and its Subsidiaries for such period less all expenses
and other proper charges (including taxes on income), determined on a
consolidated basis after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(a) net earnings and losses of any Subsidiary
accrued prior to the date it became a Subsidiary;
(b) net earnings and losses of any corporation
(other than a Subsidiary), substantially all the assets of which
have been acquired in any manner by the Company or any
Subsidiary, realized by such corporation prior to the date of
such acquisition;
(c) net earnings and losses of any corporation
(other than a Subsidiary) with which the Company or a Subsidiary
shall have consolidated or which shall have merged into or with
the Company or a Subsidiary prior to the date of such
consolidation or merger;
(d) net earnings of any business entity (other than
a Subsidiary) in which the
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Company or any Subsidiary has an ownership interest unless such
net earnings shall have actually been received by the Company or
such Subsidiary in the form of cash distributions;
(e) any portion of the net earnings of any
Subsidiary which for any reason is unavailable for payment of
dividends to the Company or any other Subsidiary; and
(f) any other extraordinary gain (net of the
related tax expense).
"Consolidated Net Worth" shall mean as of the date of any
determination thereof the amount of the capital stock accounts (net of treasury
stock at cost and Redeemable Preferred Stock) plus (or minus, in the case of a
deficit) the surplus and retained earnings of the Company and its Subsidiaries,
consolidated in accordance with GAAP and after deducting any Minority Interests
in such Subsidiaries.
"Consolidated Total Assets" shall mean as of the date of any
determination thereof the total amount of all assets of the Company and its
Subsidiaries consolidated in accordance with GAAP and after deducting any
Minority Interests in such Subsidiaries.
"Consolidated Total Capitalization" shall mean as of the date of
any determination thereof the sum of (a) Consolidated Funded Debt and (b)
Consolidated Net Worth.
"Current Debt" of any Person shall mean as of the date of any
determination thereof (a) all Indebtedness of such Person for borrowed money
other than Funded Debt of such Person and (b) Guaranties by such Person of
Current Debt of others.
"Debt" of any Person shall mean as of the date of any
determination thereof the sum of all (a) Current Debt and (b) Funded Debt of
such Person.
"Default" shall mean any event or condition the occurrence of
which would, with the lapse of time or the giving of notice, or both, constitute
an Event of Default.
"Discounted Value" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a discount
factor (as converted to reflect the periodic basis on which interest on such
Note is payable, if payable other than on a semi-annual basis) equal to the
Reinvestment Yield with respect to such Called Principal.
"Environmental Law" shall mean any international, Federal, state
or local statute, law, regulation, order, consent decree, judgment, permit,
license, code, covenant, deed restriction, common law, treaty, convention,
ordinance or other requirement relating to public health, safety or the
environment, including, without limitation, those relating to releases,
discharges or emissions to air, water, land or groundwater, to the withdrawal or
use of groundwater, to the use and handling of polychlorinated biphenyls or
asbestos, to the disposal, treatment, storage or
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management of hazardous or solid waste, or Hazardous Substances or crude oil, or
any fraction thereof, or to exposure to toxic or hazardous materials, to the
handling, transportation, discharge or release of gaseous or liquid Hazardous
Substances and any regulation, order, notice or demand issued pursuant to such
law, statute or ordinance, in each case applicable to the Property of the
Company and its Subsidiaries or the operation, construction or modification of
any thereof, including without limitation the following: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976
and the Hazardous and Solid Waste Amendments of 1984, the Hazardous Materials
Transportation Act, as amended, the Federal Water Pollution Control Act, as
amended by the Clean Water Act of 1976, the Safe Drinking Water Control Act, the
Clean Air Act of 1966, as amended, the Toxic Substances Control Act of 1976, the
Occupational Safety and Health Act of 1977, as amended, the Emergency Planning
and Community Right-to-Know Act of 1986, the National Environmental Policy Act
of 1975, the Oil Pollution Act of 1990 and any similar or implementing state
law, and any state statute and any further amendments to these laws providing
for financial responsibility for cleanup or other actions with respect to the
release or threatened release of Hazardous Substances or crude oil, or any
fraction thereof and all rules, regulations, guidance documents and publications
promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business
that is, along with the Company, a member of a controlled group of corporations
or a controlled group of trades or businesses, as described in section 414(b)
and 414(c), respectively, of the Code or Section 4001 of ERISA.
"Event of Default" shall have the meaning set forth in ss. 6.1.
"Funded Debt" of any Person shall mean, without duplication, (a)
all Indebtedness of such Person for borrowed money or which has been incurred in
connection with the acquisition of assets in each case having a final maturity
of one or more than one year from the date of origin thereof (or which is
renewable or extendible at the option of the obligor for a period or periods
more than one year from the date of origin), including all payments in respect
thereof that are required to be made within one year from the date of any
determination of Funded Debt, whether or not the obligation to make such
payments shall constitute a current liability of the obligor under GAAP, (b) all
Capitalized Rentals of such Person, (c) all Guaranties by such Person of Funded
Debt of others and (d) all Redeemable Preferred Stock of such Person.
"Funding Subsidiary" shall have the meaning set forth in ss. 9.7.
"GAAP" shall mean United States generally accepted accounting
principles as in effect at the time.
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"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (a) to purchase such Indebtedness or obligation or
any Property or assets constituting security therefor, (b) to advance or supply
funds (1) for the purchase or payment of such Indebtedness or obligation, (2) to
maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, (c) to lease Property or to purchase Securities or other Property
or services primarily for the purpose of assuring the owner of such Indebtedness
or obligation of the ability of the primary obligor to make payment of the
Indebtedness or obligation, or (d) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and in Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"Hazardous Substance" shall mean any hazardous or toxic material,
substance or waste, pollutant or contaminant which is regulated under any
statute, law, ordinance, rule or regulation of any local, state, regional or
Federal authority having jurisdiction over the Property of the Company and its
Subsidiaries or its use, including but not limited to any material, substance or
waste which is: (a) defined as a hazardous substance under Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. ss. 1317) as amended; (b)
regulated as a hazardous waste under Section 1004 or Section 3001 of the Federal
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act (42 U.S.C. ss. 6901 et seq.), as amended; (c) defined as a hazardous
substance under Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. ss. 9601 et seq.), as amended, or (d)
defined or regulated as a hazardous substance or hazardous waste under any rules
or regulations promulgated under any of the foregoing statutes.
"Indebtedness" of any Person shall mean and include all
obligations of such Person which in accordance with GAAP shall be classified
upon a balance sheet of such Person as liabilities of such Person, and in any
event shall include, without limitation, all (a) obligations of such Person for
borrowed money or which has been incurred in connection with the acquisition of
Property or assets, (b) obligations secured by any Lien upon Property or assets
owned by such Person, even though such Person has not assumed or become liable
for the payment of such obligations, (c) obligations created or arising under
any conditional sale or other title retention agreement with respect to Property
acquired by such Person, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of such Property, (d) Capitalized Rentals, (e)
Guaranties of obligations of others of the character referred to in this
definition and (f) Redeemable Preferred Stock.
"Institutional Holder" shall mean any of the following Persons:
(a) any bank, savings and
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loan association, savings institution, trust company or national banking
association, acting for its own account or in a fiduciary capacity, (b) any
charitable foundation, (c) any insurance company, (d) any fraternal benefit
society, (e) any pension, retirement or profit sharing trust or fund within the
meaning of Title I of ERISA or for which any bank, trust company, national
banking association or investment adviser registered under the Investment
Advisers Act of 1940, as amended, is acting as trustee or agent, (f) any
investment company or business development company, as defined in the Investment
Company Act of 1940, as amended, (g) any small business investment company
licensed under the Small Business Investment Act of 1958, as amended, (h) any
broker or dealer registered under the Securities Exchange Act of 1934, as
amended, or any investment adviser registered under the Investment Adviser Act
of 1940, as amended, (i) any government, any public employees' pension or
retirement system, or any other government agency supervising the investment of
public funds, (j) any other entity all of the equity owners of which are
Institutional Holders or (k) any other Person which may be within the definition
of "qualified institutional buyer" as such term is used in Rule 144A, as from
time to time in effect, promulgated under the Securities Act of 1933, as
amended.
"Interest Charges" for any period shall mean all interest and all
amortization of debt discount and expense on any particular Indebtedness for
which such calculations are being made (including, without limitation,
payment-in-kind, zero coupon and other like Securities and the interest
component of Rentals on Capitalized Leases).
"Investments" shall mean all investments, in cash or by delivery
of Property made, directly or indirectly in any Person, whether by acquisition
of shares of capital stock, Indebtedness or other obligations or Securities or
by loan, advance, capital contribution or otherwise; provided that "Investments"
shall not mean or include (a) routine investments in Property to be used or
consumed in the ordinary course of business or (b) receivables arising from the
sale of goods and services in the ordinary course of business.
"Interest Rate Protection Agreement" shall mean any agreement,
device or arrangement designed to protect at least one of the parties thereto
from the fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange transactions,
including, without limitation, dollar-denominated or cross-currency interest
rate exchange agreements, forward currency exchange agreements, dollar
protection agreements, interest rate cap agreements, interest rate collar
agreements, forward rate currency or interest rate options, puts or warrants.
"Lien" shall mean any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the Property, whether
such interest is based on the common law, statute or contract, and including but
not limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting property. For the purposes of this
Agreement, the Company or a Subsidiary shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement,
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Capitalized Lease or other arrangement pursuant to which title to the Property
has been retained by or vested in some other Person for security purposes and
such retention or vesting shall constitute a Lien.
"Long-Term Lease" shall mean any lease of real or personal
Property (other than a lease relating to data processing equipment not to exceed
$5,000,000 in aggregate total cost and a Capitalized Lease) having an original
term, including any period for which the lease may be renewed or extended at the
option of the lessor, of more than three years.
"Make-Whole Amount" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Make-Whole Amount shall in no event
be less than zero.
"Minority Interests" shall mean any shares of stock of any class
of a Subsidiary (other than directors' qualifying shares as required by law)
that are not owned by the Company and/or one or more of its Subsidiaries.
Minority Interests shall be valued by valuing Minority Interests constituting
preferred stock at the voluntary or involuntary liquidating value of such
preferred stock, whichever is greater, and by valuing Minority Interests
constituting common stock at the book value of capital and surplus applicable
thereto adjusted, if necessary, to reflect any changes from the book value of
such common stock required by the foregoing method of valuing Minority Interests
in preferred stock.
"Multiemployer Plan" shall have the same meaning as in ERISA.
"Net Income Available for Interest Charges" for any period shall
mean the sum of (a) Consolidated Net Income during such period plus (to the
extent deducted in determining Consolidated Net Income), (b) all provisions for
any Federal, state or other income taxes made by the Company and its
Subsidiaries during such period and (c) Consolidated Interest Charges during
such period.
"Notes" shall have the meaning set forth in ss. 1.1.
"Overdue Rate" shall mean the lesser of (a) the maximum rate
permitted by applicable law and (b) the greater of (1) 8.65% per annum or (2) 2%
plus the rate which The Bank of New York, New York, New York announces from time
to time as its prime lending rate, as in effect from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, and a government or agency or political
subdivision thereof.
"Plan" shall mean a "pension plan," as such term is defined in
ERISA, established or
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maintained by the Company or any ERISA Affiliate or as to which the Company or
any ERISA Affiliate contributed or is a member or otherwise may have any
liability.
"Property" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Receivables Financing" shall mean any transaction pursuant to
which funds are advanced to the Company or any Subsidiary in exchange for which
the Company or any of its Subsidiaries sell, pledge or otherwise dispose of any
notes or accounts receivable other than such a transaction (i) between the
Company and a Subsidiary pursuant to which funds are advanced to the Subsidiary
by the Company or (ii) between a Subsidiary and a Wholly-owned Subsidiary which
is the parent of such Subsidiary pursuant to which funds are advanced to the
Subsidiary by such parent.
"Redeemable Preferred Stock" shall mean any class or series of
capital stock of a Person which class or series of capital stock is entitled to
preference or priority over other classes or series of capital stock of such
Person in respect of voting rights, the payment of dividends or the distribution
of assets upon liquidation and which preferred stock is redeemable by such
Person.
"Reinvestment Yield" shall mean, with respect to the Called
Principal of any Note, the yield to maturity implied by (i) the yields reported,
as of 10:00 A.M. (New York City local time) on the Business Day next preceding
the Settlement Date with respect to such Called Principal, on the display
designated as "Page 678" on the Telerate Service (or such other display as may
replace page 678 on the Telerate Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or if such yields shall not be reported as
of such time or the yields reported as of such time shall not be ascertainable,
(ii) the Treasury Constant Maturity Series yields reported, for the latest day
for which such yields shall have been so reported as of the Business Day next
preceding the Settlement Date with respect to such Called Principal, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor publication)
for actively traded U.S. Treasury securities having a constant maturity equal to
the Remaining Average Life of such Called Principal as of such Settlement Date.
Such implied yield shall be determined, if necessary, by (a) converting U.S.
Treasury bill quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between yields reported for
various maturities.
"Remaining Average Life" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled Payment
of such Called Principal (but not of interest thereon) by (b) the number of
years (calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were
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made prior to its scheduled due date.
"Rentals" shall mean and include as of the date of any
determination thereof all fixed payments (including as such all payments which
the lessee is obligated to make to the lessor on termination of the lease or
surrender of the Property) payable by the Company or a Subsidiary, as lessee or
sublessee under a lease of Property, but shall be exclusive of any amounts
required to be paid by the Company or a Subsidiary (whether or not designated as
rents or additional rents) on account of maintenance, repairs, insurance, taxes
and similar charges. Fixed rents under any so-called "percentage leases" shall
be computed solely on the basis of the minimum rents, if any, required to be
paid by the lessee regardless of sales volume or gross revenues.
"Reportable Event" shall have the same meaning as in ERISA.
"Responsible Officer" shall mean the Chief Executive Officer,
the Chief Financial Officer, the Chief Operating Officer, if any, the President
or the Treasurer of the Company.
"Restricted Investments" shall mean all Investments, other than
Investments described in clauses (a) through (h) of ss. 5.11.
"Restricted Payments" shall have the meaning set forth in ss.
5.10.
"Rolling Four Quarters Period" shall mean a period of four
consecutive fiscal quarters treated as a single accounting period.
"Russell Family" shall have the meaning set forth in ss. 2.3(d).
"Security" shall have the same meaning as in Section 2(l) of the
Securities Act of 1933, as amended.
"Settlement Date" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to be prepaid
pursuant to ss. 2.2 or ss. 2.3 or is declared to be immediately due and payable
pursuant to ss. 6.3, as the context requires.
"Subordinated Funded Debt" shall mean all Funded Debt of the
Company (a) which has a final maturity later than August 28, 2007, (b) which is
not subject to repayment prior to August 28, 2007 whether by means of a sinking
fund, periodic maturities, required prepayments or other analogous payments or
otherwise, (c) which by its express terms prohibits optional prepayments in
whole and in part on or prior to August 28, 2007 and (d) which is at all times
evidenced by a written instrument or instruments containing subordination
provisions acceptable to the holders of 66-2/3% in aggregate principal amount of
the Notes then outstanding, providing for the subordination thereof to other
Funded Debt of the Company, including, without limitation, to the Notes.
The term "subsidiary" shall mean as to any particular parent
corporation any corporation of which more than 50% (by number of votes) of the
Voting Stock shall be beneficially owned, directly or indirectly, by such parent
corporation. The term "Subsidiary" shall mean a subsidiary of the Company.
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"Subsidiary Stock" shall have the meaning set forth in ss.
5.12(c).
"Voting Stock" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"Wholly-owned" when used in connection with any Subsidiary shall
mean a Subsidiary of which all of the issued and outstanding shares of stock
(including as "stock" for purposes of this definition any options or warrants to
purchase stock or other Securities exchangeable for or convertible into stock)
(except shares required as directors' qualifying shares) shall be owned by the
Company and/or one or more of its Wholly-owned Subsidiaries.
Section 8.2 Accounting Principles. Where the character or amount
of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in accordance
with GAAP, to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.
Section 8.3 Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.
SECTION 9. MISCELLANEOUS.
Section 9.1 Registered Notes. The Company shall cause to be kept
at its principal office a register for the registration and transfer of the
Notes, and the Company will register or transfer or cause to be registered or
transferred, as hereinafter provided any Note issued pursuant to this Agreement
At any time and from time to time the holder of any Note which
has been duly registered as hereinabove provided may transfer such Note to any
Person other than a Competitor upon surrender thereof at the principal office of
the Company duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of such Note or its attorney duly
authorized in writing and containing a notation on such Note of the date to
which interest has been paid thereon and of the amount of any prepayments made
on account of the principal thereof.
The Person in whose name any Note shall be registered shall be
deemed and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or on account of the principal, premium, if any, and
interest on any Note shall be made to or upon the written order of such
registered holder.
Section 9.2 Exchange of Notes. At any time and from time to time,
upon not less than
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ten days' notice to that effect given by the holder of any Note initially
delivered or of any Note substituted therefor pursuant to ss. 9.1, this ss. 9.2
or ss. 9.3, and, upon surrender of such Note at its office, the Company will
deliver in exchange therefor, without expense to such holder, except as set
forth below, a Note for the same aggregate principal amount as the then unpaid
principal amount of the Note so surrendered, or Notes in the minimum
denomination of $1,000,000 (or such lesser amount as shall constitute 100% of
the Notes of such holder) or any amount in excess thereof as such holder shall
specify, dated as of the date to which interest has been paid on the Note so
surrendered or, if such surrender is prior to the payment of any interest
thereon, then dated as of the date of issue, registered in the name of such
Person or Persons as may be designated by such holder, and otherwise of the same
form and tenor as the Notes so surrendered for exchange. The Company may require
the payment of a sum sufficient to cover any stamp tax or governmental charge
imposed upon such exchange or transfer.
Section 9.3 Loss, Theft, Etc. of Notes. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft or destruction upon delivery of a
bond of indemnity in such form and amount as shall be reasonably satisfactory to
the Company, or in the event of such mutilation upon surrender and cancellation
of the Note, the Company will make and deliver without expense to the holder
thereof, a new Note, of like tenor, in lieu of such lost, stolen, destroyed or
mutilated Note. If the Purchaser or any subsequent Institutional Holder having a
net worth of $50,000,000 or more is the owner of any such lost, stolen or
destroyed Note, then the affidavit of an authorized officer of such owner,
setting forth the fact of loss, theft or destruction and of its ownership of
such Note at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Note other than the written
agreement of such owner to indemnify the Company.
Section 9.4 Expenses, Stamp Tax Indemnity. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to pay
directly all of your out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement and the transactions contemplated
hereby, and all such expenses relating to any amendment, waivers or consents
pursuant to the provisions hereof (whether or not the same are actually executed
and delivered), including, without limitation, any amendments, waivers, or
consents resulting from any work-out, renegotiation or restructuring relating to
the performance by the Company of its obligations under this Agreement and the
Notes. The Company also agrees that it will pay and save you harmless against
any and all liability with respect to stamp and other taxes, if any, which may
be payable or which may be determined to be payable in connection with the
execution and delivery of this Agreement or the Notes, whether or not any Notes
are then outstanding. The Company agrees to protect and indemnify you against
any liability for any and all brokerage fees and commissions payable or claimed
to be payable to any Person authorized by the Company in connection with the
transactions contemplated by this Agreement.
Section 9.5 Powers and Rights Not Waived; Remedies Cumulative. No
delay or failure on the part of the holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to, and are not exclusive of, any rights or
remedies any such holder would otherwise have.
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Section 9.6 Notices. All communications provided for hereunder
shall be in writing and, if to you, delivered or mailed prepaid by registered or
certified mail or overnight air courier, or by facsimile communication, in each
case addressed to you at your address appearing on Schedule I to this Agreement
or such other address as you or the subsequent holder of any Note initially
issued to you may designate to the Company in writing, and if to the Company,
delivered or mailed by registered or certified mail or overnight air courier, or
by facsimile communication, to the Company at 755 Lee Street, P.O. Box 272,
Alexander City, Alabama 35011-0272, Attention: Chief Financial Officer or to
such other address as the Company may in writing designate to you or to a
subsequent holder of the Note initially issued to you; provided, however, that a
notice to you by overnight air courier shall only be effective if delivered to
you at a street address designated for such purpose in Schedule I, and a notice
to you by facsimile communication shall only be effective if made by confirmed
transmission to you at a telephone number designated for such purpose in
Schedule I and a copy of such facsimile communication is delivered to you by
overnight air courier on the next succeeding Business Day, or, in either case,
as you or a subsequent holder of any Note initially issued to you may designate
to the Company in writing.
Section 9.7 Reproduction of Documents. This Agreement and all
documents relating hereto, including, without limitation, (a) consents, waivers,
and modifications which may hereafter be executed, (b) documents received by you
at the closing of your purchase of the Notes (except the Notes themselves), and
(c) financial statements, certificates and other information previously or
hereafter furnished to you, may be reproduced by you by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process and you may destroy any original documents so reproduced. The Company
agrees and stipulates that any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such reproduction was made
by you in the regular course of business) and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
Section 9.8 Successors and Assigns. This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to your
benefit and to the benefit of your successors and assigns, including each
successive holder or holders of any Notes and this Agreement shall be binding
upon you and your successors and assigns and it shall inure to the benefit of
the Company and its successors and assigns.
Section 9.9 Survival of Covenants and Representations. All
covenants, representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the closing and the delivery of this Agreement and
the Notes and all representations and warranties made by you herein shall
survive the Closing Date and delivery of this Agreement and the Notes.
All covenants, representations and warranties made by the Company
in connection herewith shall be deemed to have been relied upon by you
notwithstanding any investigation heretofore or hereafter made by you or on your
behalf.
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Section 9.10 Severability. Should any part of this Agreement for
any reason be declared invalid or unenforceable, such decision shall not affect
the validity or enforceability of any remaining portion, which remaining portion
shall remain in force and effect as if this Agreement had been executed with the
invalid or unenforceable portion thereof eliminated and it is hereby declared
the intention of the parties hereto that they would have executed the remaining
portion of this Agreement without including therein any such part, parts or
portion which may, for any reason, be hereafter declared invalid or
unenforceable.
Section 9.11 Governing Law. This Agreement and the Notes issued
and sold hereunder shall be governed by and construed in accordance with the
laws of the State of New Jersey.
Section 9.12 Captions. The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
[Signature Page Follows]
37
<PAGE> 43
The execution hereof by you shall constitute a contract between
us for the uses and purposes hereinabove set forth, and this Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together only one agreement.
RUSSELL CORPORATION
By:
----------------------------------
Its:
----------------------------------
Accepted as of August 28, 1997.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:
----------------------------------
Vice President
38
<PAGE> 44
SCHEDULE I
PURCHASER SCHEDULE
<TABLE>
<CAPTION>
Aggregate
Principal
Amount of
Notes to be Note
Purchased Denomination(s)
------------ ---------------
<S> <C> <C>
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA $125,000,000 $125,000,000
</TABLE>
(1) All payments on account of Notes held by such purchaser shall be made
by wire transfer of immediately available funds for credit to:
Account No. 890-0304-391
The Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall set forth the name of the Company, a
reference to "6.65% Senior Notes due 2007, Security No. !Inv. 5705!,
and the due date and application (as among principal, interest and
Make-Whole Amount) of the payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Three Gateway Center, 12th Floor
100 Mulberry Street
Newark, New Jersey 07102-4077
Attention: Manager, Investment Operations Group
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
4200 Ross Ave, Suite 4200E
Dallas, Texas 75201
Attention: Managing Director
<PAGE> 45
SCHEDULE I
(to Note Agreement)
(4) Recipient of telephone prepayment notices:
Manager, Investment Structure and Pricing
(201) 802-7398
(201) 802-6432 (facsimile)
(5) Tax Identification No.: 22-1211670
I-2
<PAGE> 46
DESCRIPTION OF CURRENT DEBT, FUNDED DEBT,
LONG-TERM LEASES, LIENS AND INVESTMENTS
1. Current Debt of the Company and its Subsidiaries outstanding as of
July 6, 1997 is as follows:
<TABLE>
<CAPTION>
DEBT HOLDER AMOUNT
<S> <C>
AmSouth Bank $ 44,700,000
Aliant Bank 4,150,000
Wachovia Bank & Trust 75,000,000
SunTrust Bank, Atlanta(1) 45,283,600
Chase Manhattan Bank 49,300,000
------------
Total Current Debt $218,433,600
============
</TABLE>
(1) $20,283,600 of the amount outstanding represents debt for Russell Corp.
U.K., Ltd. which is denominated in (pound) (pound) 12,000,000 @ 1.6903
(pound)/$ = $20,283,600.
2. Funded Debt (other than Capitalized Rentals) of the Company and its
Subsidiaries outstanding on the Closing Date is as follows:
<TABLE>
<CAPTION>
DEBT HOLDER AMOUNT
<S> <C>
Prudential Insurance Co. (6.78%) $100,000,000
Prudential Insurance Co. (8.83%) 32,200,000
Allstate Life Insurance (6.72%) 25,714,285
Connecticut General Life Insurance (6.72%) 21,428,571
Teachers Insurance & Annuity (6.72%) 17,142,858
Trust Company Bank 75,000,000
Compass Bank - DeSoto Mills (6.95%) 103,886
------------
Total Funded Debt $271,589,600
============
</TABLE>
SCHEDULE II
(to Note Agreement)
<PAGE> 47
3. Long-Term Leases of the Company and its Subsidiaries outstanding on the
Closing Date are as follows:
<TABLE>
<CAPTION>
LESSOR DESCRIPTION
<S> <C>
Central Plaza Properties Cross Creek Outlet, Mt. Airy, NC
Clyde E. Turner Cross Creek Hillsville, VA plant
The Venture Properties Development, Inc. Cross Creek North Wilkesboro, VA plant
Stone/Snyder General Partnership Baltimore, MD sales office
Westerville Center Westerville, OH sales office
Certified, Inc. Snellville, GA sales office
Dermody Industrial Group Sparks, NV warehouse*
The Rebiero Corporation Reno, NV sales office
Ben Chen Santa Ana, CA sales office
City of Alexander City Alexander City, AL hangar
Mid-Georgia Landholdings, Inc. Atlanta, GA sourcing office
Montgomery Warehouses, LLC Montgomery, AL warehouse
Parkway Tower Associates Dallas, TX sales office
Prentiss Properties Acquisition Partners, L.P. Dallas, TX sales office
Helmsley-Spear, Inc. New York, NY sales office
Emerald Real Estate Investments, LLC Atlanta, GA sales office
The Irvine Company Irvine, CA sales office*
Pelmad Corporation Miami, FL sales office and warehouse
Fitzpatrick Family Partners, Ltd. Montgomery, AL plant
155th East 50th Company New York, NY apartment
L.A.W. (Ladd Engineering) Ft. Payne, AL warehouse
Irby C. Harris Ft. Payne, AL warehouse
SH & S Partnership Bentonville, AR sales office
Town of Columbia Columbia, AL plant
Town of Slocomb Slocomb, AL plant
Charter Oaks Valdosta, GA outlet store
Foley, AL outlet store
Horizon Outlet Center Traverse City, MI outlet store
R.R. Park City, Inc. Park City, UT outlet store
Marco Island Partners Marco Island, FL outlet store
SOS Associates, Ltd. Sarasota, FL outlet store
Castle Rock Factory Shops
Limited Partnership Castle Rock, CO outlet store
Colonial Realty Limited Partnership Columbus, GA outlet store
Dalton Factory Stores Dalton, GA outlet store
Wigwam Outlet Stores, L.L.C Goodyear, AZ outlet store
Retail Developers Ltd. Boaz, AL outlet store
Slidell Factory Outlets, Ltd. Slidell, LA outlet store
Ohio Factory Shops Partnership Jeffersonville, OH outlet store
New Plan Factory Malls, Inc. Branson, MO outlet store
</TABLE>
II-2
<PAGE> 48
<TABLE>
<S> <C>
Tanger Properties Limited Partnership Pigeon Forge, TN outlet store
Riverhead, NY outlet store
Locust Grove, GA outlet store
Branson MO outlet store
Commerce, GA outlet store
San Marcos, TX outlet store
Orlando Outlet World, Ltd. Orlando, FL outlet store
New Plan Realty Trust St. Augustine, FL outlet store
Osage Beach, MO outlet store
Benderson 85-1 Trust Sedona, AZ outlet store
Nags Head Associates Limited Partnership Nags Head, NC outlet store
Waccamaw Factory Stores Myrtle Beach SC outlet store
Factory Stores of America, Inc. Nashville, TN outlet store
Williams Investment Company Adel, GA outlet store
The Cordish Company Ocean City, MD outlet store
Flatwoods Factory Outlet Stores, Inc. Flatwoods, WV outlet store
USA Factory Stores, Inc. Opelika, AL outlet store
Inmobiliaria Hondurena
del Valle, S.A. de C.V Choloma, Honduras plant
Dica Comercio Adminsitacao
e Empreendimentos Ltda. Sao Paulo, Brazil sales office
Maria da Graca Nogueira Barone Sao Paulo, Brazil apartment
Jet Forward Development Limited Kowloon, Hong Kong sales office
Dazooby Investments Pty. Ltd. Melbourne, Australia sales office and warehouse
David Smith Packaging West Lothian, Scotland warehouse
West Lothian Council West Lothian, Scotland warehouse
Urbanizadora Alicante, Spain sales office
Denical, S.A Alicante, Spain apartment
Novotel Corporation Krefeld, Germany sales office
Eurobail Company Paris, France sales office
Elettomeccanica Lampredi Srl Scandicci, Italy sales office
MS-Medox Prague, Czech Republic sales office
Europaint Ternat, Belgium sales office and warehouse#
London, England sales office*
Orbit Investments Wilmslow, England sales office#
Nestle Company Richmond-Surrey, England sales office#
Inmobiliaria Mirabel Sa De Mexico City, Mexico sales office
Mrs. Luba Clement San Juan del Rio, Mexico distribution center
Arrendadora Valle de Oro San Juan del Rio, Mexico warehouse
Mrs. Graciela Garcia Galva San Juan del Rio, Mexico warehouse
Mr. Mauricio Perez Hagg San Juan del Rio, Mexico warehouse
</TABLE>
* Property subleased to third party.
# Currently negotiating termination.
4. Capitalized Leases of the Company and its Subsidiaries outstanding on
the Closing Date are
II-3
<PAGE> 49
as follows:
<TABLE>
<CAPTION>
DEBT HOLDER AMOUNT
<S> <C>
Industrial Development Board of Geneva, AL $2,575,000
Industrial Development Board of Columbia, AL 2,575,000
Industrial Development Board of Ashland, AL 1,800,000
----------
Total Capital Leases $6,950,000
==========
</TABLE>
5. Liens securing Indebtedness of the Company and its Subsidiaries
existing on the Closing Date are as follows:
<TABLE>
<CAPTION>
DEBT HOLDER AMOUNT
<S> <C>
Industrial Development Board of Geneva, AL $2,575,000
Industrial Development Board of Columbia, AL 2,575,000
Industrial Development Board of Ashland, AL 1,800,000
----------
Total Liens $6,950,000
==========
</TABLE>
II-4
<PAGE> 50
6. Investments of the Company in the Subsidiaries outstanding on the
Closing Date are as follows:
<TABLE>
<CAPTION>
INVESTMENTS IN SUBSIDIARIES: AMOUNT
<S> <C>
Cross Creek Apparel, Inc. $ 40,832,622.20
Russell Corp, U.K., Ltd. 53,215,329.02
Russell Athletic, Inc. 7,545,200.06
Russell Development Corporation 3,916,384.06
Russell Athletic West 3,315,936.77
Habersham Mills 3,325,465.00
Russell Mill Stores, Inc. 86,634.33
Alexander City Flying Service, Inc. 62,486.28
DeSoto Mills, Inc. 10,145,437.99
Russell Mexico S.A. de C.V 5,039,011.22
Russell CZ s.r.o 15,237.50
Russell Foreign Sales, Ltd. -0-
Russell Spain, S.L 4,404.24
Russell Corp. Australia PTY.LTD 4,997,066.39
Russell Germany 17,717.93
Russell Far East 1,294.00
Russell Brazil 1,939,000.00
Russell Honduras 5,101.00
Russell Japan 95,075.12
---------------
Total Investments $134,559,402.80
===============
</TABLE>
II-5
<PAGE> 51
SCHEDULE III
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING
STOCK OWNED BY COMPANY
JURISDICTION OF AND EACH OTHER
NAME OF SUBSIDIARY INCORPORATION SUBSIDIARY
-------------------- --------------- ----------------------
<S> <C> <C>
Cross Creek Apparel, Inc. North Carolina 100%
Eagle R Holdings Limited United Kingdom 100%
Russell Corp. UK, Ltd. United Kingdom 100%
Citygate Textiles Limited United Kingdom 100%
Russell Athletic, Inc. Georgia 100%
Russell Mills Stores, Inc. Delaware 100%
Russell Athletic West, Inc. Nevada 100%
Habersham Mills Georgia 100%
Alexander City Flying Alabama 100%
Service, Inc.
Russell Development Georgia 100%
Corporation
DeSoto Mills, Inc. Georgia 100%
Russell Germany, GmbH Germany 100%
Russell France SARL France 100%
Russell Spain, S.L. Spain 100%
Russell Italy Srl Italy 100%
Russell Corp. Canada Ltd. Canada 100%
Russell CZ s.r.o Czech Republic 100%
Russell Corp. Far East, Ltd. Hong Kong 100%
</TABLE>
SCHEDULE III
(to Note Agreement)
<PAGE> 52
<TABLE>
<S> <C> <C>
Russell Mexico, S.A. de C.V. Mexico 100%
Russell Corp. Australia PTY. LTD. Australia 100%
Russell Foreign Sales, Ltd. Barbados 100%
Russell Corp. Bangladesh Limited Bangladesh 100%
Russell de Honduras S.A. de C.V. Honduras 100%
Russell do Brasil Ltda. Brazil 100%
Russell Yucatan S.A. de C.V.*. Mexico 100%
</TABLE>
* Incorporation in process.
SCHEDULE III
(to Note Agreement)
<PAGE> 53
EXHIBIT A
RUSSELL CORPORATION
6.65% Senior Note
Due August 28, 2007
No. R-1 August 28, 1997
PPN 782352\A
INV !5705!
$125,000,000
RUSSELL CORPORATION, an Alabama corporation (the "Company"), for value
received, hereby promises to pay to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
or registered assigns on the twenty-eighth day of August, 2007 the principal
amount of ONE HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000) and to pay
interest (computed on the basis of a 360-day year of twelve 30-day months) on
the principal amount from time to time remaining unpaid hereon at the rate of
6.65% per annum from the date hereof until maturity, payable quarterly on
November 28, February 28, May 28, and August 28 in each year (commencing on
November 28, 1997) and at maturity. The Company agrees to pay interest on
overdue principal (including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest, at the Overdue Rate after the due date, whether
by acceleration or otherwise, until paid. "Overdue Rate" shall mean the lesser
of (a) the maximum rate permitted by applicable law and (b) the greater of (1)
8.65% per annum or (2) 2% plus the rate which The Bank of New York, New York,
New York announces from time to time as its prime lending rate, as in effect
from time to time.
Both the principal hereof and interest hereon are payable at the home
office of the registered holder of this Note in coin or currency of the United
States of America which at the time of payment shall be legal tender for the
payment of public and private debts. If any amount of principal, premium, if
any, or interest on or in respect of this Note becomes due and payable on any
date which is not a Business Day, such amount shall be payable on the next
succeeding Business Day and the period of extension shall be included in the
computation of interest payable on such Business Day. "Business Day" means any
day other than a Saturday, Sunday or other day on which banks in Birmingham,
Alabama or New York, New York are required by law to close.
This Note is one of the 6.65% Senior Notes Due August 28, 2007 (the
"Notes") of the Company in the aggregate principal amount of $125,000,000 issued
under and pursuant to the terms and provisions of the Note Agreement, dated as
of August 28, 1997 (the "Note Agreement"), entered into by the Company with the
original Purchaser therein referred to and this Note and the holder hereof are
entitled equally and ratably with the holders of all other Notes
<PAGE> 54
outstanding under the Note Agreement to all the benefits provided for thereby or
referred to therein. Reference is hereby made to the Note Agreement for a
statement of such rights and benefits.
This Note and the other Notes outstanding under the Note Agreement may
be declared due prior to their expressed maturity dates and certain prepayments
are required to be made thereon, all in the events, on the terms and in the
manner and amounts as provided in the Note Agreement.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreement.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
THIS NOTE AND SAID NOTE AGREEMENT ARE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY.
RUSSELL CORPORATION
By:
-------------------------
Title
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE LAWS OF ANY STATE AND MAY BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF ONLY IF REGISTERED OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT AVAILABLE UNDER SUCH ACT AND APPLICABLE STATE LAW.
2
<PAGE> 55
EXHIBIT B
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to you as follows:
1. Subsidiaries. (a) Schedule III attached to the Agreements states the
name of each of the Company's Subsidiaries, its jurisdiction of incorporation
and the percentage of its Voting Stock owned by the Company and/or its
Subsidiaries. The Company and each Subsidiary has good and marketable title to
all of the shares it purports to own of the stock of each Subsidiary, free and
clear in each case of any Lien. All such shares have been duly issued and are
fully paid and non-assessable.
(b) The Company, Cross Creek Apparel, Inc., Habersham Mills,
DeSoto Mills, Inc. and Alexander City Flying Service, Inc. when consolidated in
accordance with GAAP constitute 89% or more of the consolidated assets, earnings
and revenues of the Company and its Subsidiaries.
2. Corporate Organization and Authority. The Company, and each
Subsidiary,
(a) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all
necessary licenses and permits to own and operate its properties and to
carry on its business as now conducted and as presently proposed to be
conducted; and
(c) is duly licensed or qualified and is in good standing
as a foreign corporation in each jurisdiction wherein the nature of the
business transacted by it or the nature of the Property owned or leased
by it makes such licensing or qualification necessary except where the
failure to be so licensed or qualified would not materially affect
adversely the properties, business, prospects, profits or condition
(financial or otherwise) of the Company and its Subsidiaries.
3. Financial Statements. (a) The consolidated balance sheets of
the Company and its consolidated Subsidiaries as of December 31, 1994, December
30, 1995, and January 4, 1997 and the statements of income, stockholders' equity
and cash flows for the fiscal years ended on said dates, each accompanied by a
report thereon containing an opinion unqualified as to scope limitations imposed
by the Company and otherwise without qualification except as therein noted, by
Ernst & Young LLP (or their appropriate predecessor), have been prepared in
accordance with GAAP consistently applied except as therein noted, are correct
and complete and present fairly, in all material respects, the financial
position of the Company and its Subsidiaries as of such dates and the results of
their operations and changes in their cash flows for such periods. The unaudited
consolidated balance sheets of the Company and its consolidated Subsidiaries as
of July 6, 1997
<PAGE> 56
and the unaudited statements of income and cash flows for the 13-week period and
the 26-week period ended on said date prepared by the Company have been prepared
in accordance with GAAP consistently applied, are correct and complete and
present fairly, in all material respects, the financial position of the Company
and its consolidated Subsidiaries as of said date and the results of their
operations and changes in their financial position or cash flows for such period
subject to year-end audit adjustments.
(b) Since January 4, 1997, there has been no change in the
condition, financial or otherwise, of the Company and its consolidated
Subsidiaries as shown on the consolidated balance sheet as of such date except
changes in the ordinary course of business, none of which individually or in the
aggregate has been materially adverse.
4. Indebtedness. (a) Schedule II attached to the Agreement
correctly describes all Current Debt, Funded Debt, Capitalized Leases, Long-Term
Leases, Liens securing Indebtedness and Investments of the Company and its
Subsidiaries outstanding on the Closing Date.
(b) The Company has furnished to the Purchaser true, correct and
complete copies of each instrument under which any Indebtedness of the Company
is or will be issued or by which it is or may be secured and any other
instrument in respect of Indebtedness of the Company if such instrument contains
covenants or other provisions that have or could have the effect of (1)
restricting the types of provisions that any other agreement to which the
Company may become a party, may contain or (2) restricting the conduct of the
Company's business or the incurrence by the Company of Indebtedness.
5. Full Disclosure. Neither the financial statements referred to
in paragraph 4 hereof nor the Agreements, or any other written statement
furnished by or on behalf of the Company to you in connection with the
negotiation of the sale of the Notes, contains any untrue statement of a
material fact or omits a material fact necessary to make the statements
contained therein or herein not misleading. There is no fact peculiar to the
Company or its Subsidiaries which the Company has not disclosed to you in
writing which materially affects adversely nor, so far as the Company can now
foresee, will materially affect adversely the properties, business, prospects,
profits or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole.
6. Pending Litigation. There are no proceedings pending or, to
the knowledge of the Company, threatened against or affecting the Company or any
Subsidiary in any court or before any governmental authority or arbitration
board or tribunal which involve the possibility of materially affecting
adversely the properties, business, prospects, profits or condition (financial
or otherwise) of the Company and its Subsidiaries.
7. Title to Properties. The Company and each Subsidiary has good
and marketable title in fee simple (or its equivalent under applicable law) to
all material parcels of real Property and has good title to all the other
material items of Property it purports to own, including that reflected in the
most recent balance sheet referred to in paragraph 3 hereof, except as sold or
otherwise disposed of in the ordinary course of business and except for Liens
permitted by the Agreement.
<PAGE> 57
8. Leases. The Company and each Subsidiary has complied with all
obligations under all leases to which it is a party except where the failure to
comply with such leases would not materially affect adversely the properties,
business, prospects, profits or condition (financial or otherwise) of the
Company and its Subsidiaries.
9. Patents and Trademarks. The Company and each Subsidiary owns
or possesses all the patents, trademarks, trade names, service marks,
copyrights, licenses and rights with respect to the foregoing necessary for the
present and planned future conduct of its business, without any known conflict
with the rights of others.
10. Sale is Legal and Authorized. The sale of the Notes and
compliance by the Company with all of the provisions of the Agreement and the
Notes;
(a) are within the corporate powers of the Company;
(b) will not violate any provisions of any law or any
order of any court or governmental authority or agency and will not
conflict with or result in any breach of any of the terms, conditions
or provisions of, or constitute a default under the Articles of
Incorporation or By-laws of the Company or any indenture or other
agreement or instrument to which the Company is a party or by which it
may be bound or result in the imposition of any Liens or encumbrances
on any property of the Company; and
(c) have been duly authorized by proper corporate action
on the part of the Company and its stockholders, executed and delivered
by the Company and the Agreement and the Notes constitute the legal,
valid and binding obligations, contracts and agreements of the Company
enforceable in accordance with their respective terms.
The obligations of the Company under the Agreement and the Notes rank
at least pari passu in right of payment with all other unsecured Indebtedness
(actual or contingent) of the Company.
11. No Defaults. No Default or Event of Default has occurred and
is continuing. The Company is not in default in the payment of principal,
premium, if any, or interest on any Indebtedness for borrowed money and is not
in default under any instrument or instruments or agreements under and subject
to which any Indebtedness for borrowed money has been issued and no event has
occurred and is continuing under the provisions of any such instrument or
agreement which with the lapse of time or the giving of notice, or both, would
constitute an event of default thereunder.
12. Governmental Consent. No approval, consent or withholding of
objection on the part of any regulatory body, state, Federal or local, is
necessary in connection with the execution and delivery by the Company of the
Agreement or the Notes or compliance by the Company with any of the provisions
of the Agreement or the Notes.
13. Taxes. All tax returns required to be filed by the Company or
any Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees and other governmental
<PAGE> 58
charges upon the Company or any Subsidiary or upon any of their respective
properties, income or franchises, which are shown to be due and payable in such
returns have been paid. For all taxable years ending on or before January 4,
1992, the Federal income tax liability of the Company and its Subsidiaries has
been satisfied and either the period of limitations on assessment of additional
Federal income tax has expired or the Company and its Subsidiaries have entered
into an agreement with the Internal Revenue Service closing conclusively the
total tax liability for the taxable year. The Company does not know of any
proposed additional tax assessment against it for which adequate provision has
not been made on its accounts, and no material controversy in respect of
additional Federal or state income taxes due since said date is pending or to
the knowledge of the Company threatened. The provisions for taxes on the books
of the Company and each Subsidiary are adequate for all open years, and for its
current fiscal period.
14. Use of Proceeds. The net proceeds from the sale of the Notes
will be used to refinance short-term debt and for other corporate purposes. None
of the transactions contemplated in the Agreements (including, without
limitation thereof, the use of proceeds from the issuance of the Notes) will
violate or result in a violation of Section 7 of the Securities Exchange Act of
1934, as amended, or any regulation issued pursuant thereto, including, without
limitation, Regulations G, T and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II. None of the proceeds from the sale of the
Notes will be used to purchase, or refinance any borrowing the proceeds of which
were used to purchase, any "security" within the meaning of the Securities
Exchange Act of 1934, as amended.
15. Private Offering. Neither the Company, directly or indirectly,
nor any agent on its behalf has offered or will offer the Notes or any similar
Security or has solicited or will solicit an offer to acquire the Notes or any
similar Security from or has otherwise approached or negotiated or will approach
or negotiate in respect of the Notes or any similar Security with any Person
other than the Purchasers. Neither the Company, directly or indirectly, nor any
agent on its behalf has offered or will offer the Notes or any similar Security
or has solicited or will solicit an offer to acquire the Notes or any similar
Security from any Person so as to bring the issuance and sale of the Notes
within the provisions of Section 5 of the Securities Act of 1933, as amended.
16. ERISA. The consummation of the transactions provided for in
the Agreements and compliance by the Company with the provisions thereof and the
Notes issued thereunder will not involve any prohibited transaction within the
meaning of ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended. Each Plan complies in all material respects with all applicable
statutes and governmental rules and regulations, and (a) no Reportable Event
(other than a merger of Plans of the Company) has occurred and is continuing
with respect to any Plan, (b) neither the Company nor any ERISA Affiliate has
withdrawn from any Plan or Multiemployer Plan that is subject to Title IV of
ERISA or instituted steps to do so, and (c) no steps have been instituted to
terminate any Plan that is subject to Title IV or ERISA. No condition exists or
event or transaction has occurred in connection with any Plan which could result
in the incurrence by the Company or any ERISA Affiliate of any material
liability, fine or penalty. No Plan maintained by the Company or any ERISA
Affiliate, nor any trust created thereunder, has incurred any "accumulated
funding deficiency" as defined in Section 302 of ERISA nor does the present
value of all benefits vested under all Plans exceed, as of the last annual
valuation date, the value of the assets of the Plans allocable to such vested
benefits. Neither the Company nor any ERISA
<PAGE> 59
Affiliate has any contingent liability with respect to any post-retirement
"welfare benefit plan" (as such term is defined in ERISA) except as follows: (i)
retirees and covered dependents may be entitled to continuation coverage under
the Company's medical benefits plans as required by Part 6 of Subtitle B of
Title I of ERISA and (ii) the Company maintains a plan under which a death
benefit of $2,000 is payable with respect to (A) employees and (B) retired
employees who have completed 20 years of continuous service as of the date of
their retirement.
17. Compliance with Law. Neither the Company nor any Subsidiary
(a) is in violation of any law, ordinance, franchise, governmental rule or
regulation to which it is subject (including, without limitation, any
Environmental Law) or (b) has failed to obtain any license, permit, franchise or
other governmental authorization necessary to the ownership of its property or
to the conduct of its business; which violation or failure to obtain would
materially affect adversely the business, prospects, profits, properties or
condition (financial or otherwise) of the Company and its Subsidiaries, taken as
a whole, or materially impair the ability of the Company to perform its
obligations contained in the Agreements or the Notes. Neither the Company nor
any Subsidiary is in default with respect to any order of any court or
governmental authority or arbitration board or tribunal.
18. Investment Company Act Status. Neither the Company nor any
Subsidiary is an "investment company," or a company "controlled" by an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended.
19. No Violation. Neither the Company nor any Subsidiary is in
violation of (a) its charter documents or By-laws or (b) any provision of any
agreement, indenture or other instrument to which the Company or any such
Subsidiary is a party or by which it may be bound, except where such violation
would not materially affect adversely the properties, business, profits,
prospects or condition (financial or otherwise) of the Company and its
Subsidiaries, and neither the Company nor any Subsidiary is a party to, or bound
by, any agreement, indenture or other instrument whereby performance in
accordance with the terms and provisions thereof could materially affect
adversely the business, prospects, profits or condition (financial or otherwise)
of the Company and its Subsidiaries.
<PAGE> 60
EXHIBIT C
DESCRIPTION OF CLOSING OPINION OF
INDEPENDENT COUNSEL TO THE COMPANY
The closing opinion of Bradley, Arant, Rose & White, independent
counsel for the Company, which is called for by ss. 4.1 of the Agreements, shall
be dated the Closing Date and addressed to the Purchaser, shall bE satisfactory
in scope and form to the Purchaser and shall be to the effect that:
1. The Company is a corporation, duly incorporated, validly
existing and in good standing under the laws of the State of Alabama,
has the corporate power and the corporate authority to execute and
perform the Agreements and to issue the Notes and has the full
corporate power and the corporate authority to conduct the activities
in which it is now engaged.
2. Each of Alexander City Flying Service, Inc., DeSoto Mills,
Inc., Habersham Mills and Cross Creek Apparel, Inc. (collectively, the
"Specified Subsidiaries") is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and all of the issued and outstanding shares of capital
stock of each Specified Subsidiary have been duly issued, are fully
paid and non-assessable and are owned by the Company.
3. The Agreement has been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed
and delivered by the Company and constitutes the legal, valid and
binding contract of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
4. The Notes have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed
and delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
5. No approval, consent or withholding of objection on the
part of, or filing, registration or qualification with, any
governmental body, Federal or state, is necessary in connection with
the execution and delivery of the Agreement or the Notes.
6. The issuance and sale of the Notes and the execution,
delivery and performance by the Company of the Agreement do not
conflict with or result in any breach of any of the provisions of or
constitute a default under or result in the creation or imposition of
any Lien upon any of the Property of the Company pursuant to the
<PAGE> 61
provisions of the Articles of Incorporation or By-laws of the Company
or any agreement or other instrument known to such counsel to which the
Company is a party or by which the Company may be bound.
7. There are no proceedings pending, or to the knowledge of
such counsel threatened against the Company or any Subsidiary, in any
court or before any arbitration board or tribunal which could
materially affect adversely the properties, business, prospects,
profits or condition (financial or otherwise) of the Company and its
Subsidiaries.
8. The issuance of the Notes and the use of the proceeds of
the sale of the Notes in accordance with the provisions of and as
contemplated by the Agreement does not violate or conflict with
regulations, G, T or X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Chapter II.
9. The courts of the State of Alabama will give effect to
those provisions of the Agreement and the Notes which stipulate that
such documents shall be governed by, and construed in accordance with,
the laws of the State of New Jersey.
10. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Agreement does not, under existing
law, require the registration of the Notes under the Securities Act of
1933, as amended, or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
The opinion of Bradley, Arant, Rose & White shall cover such other
matters relating to the sale of the Notes as the Purchaser may reasonably
request With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and officers of the Company. The opinion of Bradley, Arant, Rose &
White, independent counsel for the Company, shall state that it may be relied
upon by permitted successors and assigns of the Purchaser.
<PAGE> 1
EXHIBIT (4c)
CREDIT AGREEMENT DATED AS OF OCTOBER 15, 1999 RELATING TO THE
COMPANY'S $250,000,000 REVOLVING LOAN FACILITY
IV-10
<PAGE> 2
$250,000,000
CREDIT AGREEMENT
DATED AS OF
OCTOBER 15, 1999
AMONG
RUSSELL CORPORATION,
RUSSELL EUROPE LIMITED,
THE BANKS LISTED HEREIN
WACHOVIA BANK, N.A.,
AS ADMINISTRATIVE AGENT
SUNTRUST BANK, ATLANTA,
AS SYNDICATION AGENT
FIRST UNION NATIONAL BANK,
AS DOCUMENTATION AGENT
AND
WACHOVIA SECURITIES, INC.,
AS LEAD ARRANGER
<PAGE> 3
TABLE OF CONTENTS
CREDIT AGREEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I. DEFINITIONS............................................................................................1
SECTION 1.01. DEFINITIONS......................................................................1
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS.............................................21
SECTION 1.03. REFERENCES......................................................................21
SECTION 1.04. USE OF DEFINED TERMS............................................................22
SECTION 1.05. TERMINOLOGY.....................................................................22
ARTICLE II. THE CREDITS..........................................................................................22
SECTION 2.01. COMMITMENTS TO LEND SYNDICATED LOANS............................................22
SECTION 2.02. METHOD OF BORROWING SYNDICATED LOANS AND SWING LOANS............................25
SECTION 2.03. MONEY MARKET LOANS..............................................................27
SECTION 2.04. CONTINUATION AND CONVERSION ELECTIONS...........................................31
SECTION 2.05. NOTES...........................................................................32
SECTION 2.06. MATURITY OF LOANS...............................................................32
SECTION 2.07. INTEREST RATES..................................................................32
SECTION 2.08. FEES............................................................................35
SECTION 2.09. OPTIONAL TERMINATION OR REDUCTION OF COMMITMENTS................................36
SECTION 2.10. MANDATORY REDUCTION AND TERMINATION OF COMMITMENTS..............................36
SECTION 2.11. OPTIONAL PREPAYMENTS............................................................36
SECTION 2.12. MANDATORY PREPAYMENTS...........................................................37
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 2.13. GENERAL PROVISIONS AS TO PAYMENTS...............................................38
SECTION 2.14. COMPUTATION OF INTEREST AND FEES................................................39
ARTICLE III. CONDITIONS TO BORROWINGS............................................................................40
SECTION 3.01. CONDITIONS TO FIRST BORROWING...................................................40
SECTION 3.02. CONDITIONS TO ALL BORROWINGS....................................................41
ARTICLE IV. REPRESENTATIONS AND WARRANTIES.......................................................................42
SECTION 4.01. CORPORATE EXISTENCE AND POWER...................................................42
SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO CONTRAVENTION......................42
SECTION 4.03. BINDING EFFECT..................................................................42
SECTION 4.04. FINANCIAL INFORMATION...........................................................43
SECTION 4.05. NO LITIGATION...................................................................43
SECTION 4.06. COMPLIANCE WITH ERISA...........................................................43
SECTION 4.07. COMPLIANCE WITH LAWS; PAYMENT OF TAXES..........................................43
SECTION 4.08. SUBSIDIARIES....................................................................44
SECTION 4.09. INVESTMENT COMPANY ACT..........................................................44
SECTION 4.10. PUBLIC UTILITY HOLDING COMPANY ACT..............................................44
SECTION 4.11. OWNERSHIP OF PROPERTY; LIENS....................................................44
SECTION 4.12. NO DEFAULT......................................................................44
SECTION 4.13. FULL DISCLOSURE.................................................................45
SECTION 4.14. ENVIRONMENTAL MATTERS...........................................................45
SECTION 4.15. CAPITAL STOCK...................................................................45
SECTION 4.16. MARGIN STOCK....................................................................46
SECTION 4.17. INSOLVENCY......................................................................46
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 4.18. INSURANCE.......................................................................46
SECTION 4.19. Y2K PLAN........................................................................46
ARTICLE V. COVENANTS.............................................................................................47
SECTION 5.01. INFORMATION.....................................................................47
SECTION 5.02. INSPECTION OF PROPERTY, BOOKS AND RECORDS.......................................48
SECTION 5.03. MAINTENANCE OF EXISTENCE........................................................49
SECTION 5.04. DISSOLUTION.....................................................................49
SECTION 5.05. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS.....................................49
SECTION 5.06. USE OF PROCEEDS.................................................................49
SECTION 5.07. COMPLIANCE WITH LAWS; PAYMENT OF TAXES..........................................50
SECTION 5.08. INSURANCE.......................................................................50
SECTION 5.09. CHANGE IN FISCAL YEAR...........................................................50
SECTION 5.10. MAINTENANCE OF PROPERTY.........................................................50
SECTION 5.11. ENVIRONMENTAL NOTICES...........................................................50
SECTION 5.12. ENVIRONMENTAL MATTERS...........................................................51
SECTION 5.13. ENVIRONMENTAL RELEASE...........................................................51
SECTION 5.14. TRANSACTIONS WITH AFFILIATES....................................................51
SECTION 5.15. RESTRICTED PAYMENTS.............................................................51
SECTION 5.16. INVESTMENTS.....................................................................51
SECTION 5.17. PRIORITY DEBT...................................................................52
SECTION 5.18. RESTRICTIONS ON ABILITY OF SUBSIDIARIES TO PAY DIVIDENDS........................53
SECTION 5.19. LIMITATION ON FUNDED DEBT OF BORROWER...........................................53
SECTION 5.20. DEBT/EBITDA RATIO...............................................................54
</TABLE>
iii
<PAGE> 6
<TABLE>
<S> <C> <C>
SECTION 5.21. MINIMUM CONSOLIDATED TANGIBLE NET WORTH.........................................54
SECTION 5.22. RATIO OF CONSOLIDATED EBIT TO CONSOLIDATED INTEREST EXPENSE.....................54
SECTION 5.23. Y2K COMPLIANCE..................................................................54
ARTICLE VI. DEFAULTS.............................................................................................54
SECTION 6.01. EVENTS OF DEFAULT...............................................................54
SECTION 6.02. NOTICE OF DEFAULT...............................................................57
ARTICLE VII. THE ADMINISTRATIVE AGENT............................................................................57
SECTION 7.01. APPOINTMENT; POWERS AND IMMUNITIES..............................................57
SECTION 7.02. RELIANCE BY ADMINISTRATIVE AGENT................................................58
SECTION 7.03. DEFAULTS........................................................................58
SECTION 7.04. RIGHTS OF ADMINISTRATIVE AGENT AND ITS AFFILIATES AS A BANK.....................59
SECTION 7.05. INDEMNIFICATION.................................................................59
SECTION 7.06. CONSEQUENTIAL DAMAGES...........................................................59
SECTION 7.07. PAYEE OF NOTE TREATED AS OWNER..................................................60
SECTION 7.08. NONRELIANCE ON ADMINISTRATIVE AGENT AND OTHER BANKS.............................60
SECTION 7.09. FAILURE TO ACT..................................................................60
SECTION 7.10. RESIGNATION OR REMOVAL OF ADMINISTRATIVE AGENT..................................60
ARTICLE VIII. CHANGE IN CIRCUMSTANCES; COMPENSATION..............................................................61
SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR........................61
SECTION 8.02. ILLEGALITY......................................................................62
</TABLE>
iv
<PAGE> 7
<TABLE>
<S> <C> <C>
SECTION 8.03. INCREASED COST AND REDUCED RETURN...............................................62
SECTION 8.04. BASE RATE LOANS OR OTHER FIXED RATE LOANS SUBSTITUTED FOR AFFECTED
FIXED RATE LOANS................................................................63
SECTION 8.05. COMPENSATION....................................................................64
SECTION 8.06. FAILURE TO PAY IN FOREIGN CURRENCY..............................................65
SECTION 8.07. JUDGMENT CURRENCY...............................................................65
SECTION 8.08. REPLACEMENT OF BANKS............................................................65
ARTICLE IX. MISCELLANEOUS........................................................................................66
SECTION 9.01. NOTICES.........................................................................66
SECTION 9.02. NO WAIVERS......................................................................66
SECTION 9.03. EXPENSES; DOCUMENTARY TAXES.....................................................66
SECTION 9.04. INDEMNIFICATION.................................................................67
SECTION 9.05. SETOFF; SHARING OF SETOFFS......................................................67
SECTION 9.06. AMENDMENTS AND WAIVERS..........................................................68
SECTION 9.07. NO MARGIN STOCK COLLATERAL......................................................69
SECTION 9.08. SUCCESSORS AND ASSIGNS..........................................................69
SECTION 9.09. CONFIDENTIALITY.................................................................73
SECTION 9.10. REPRESENTATION BY BANKS.........................................................73
SECTION 9.11. OBLIGATIONS SEVERAL.............................................................73
SECTION 9.12. GEORGIA LAW.....................................................................74
SECTION 9.13. SEVERABILITY....................................................................74
SECTION 9.14. INTEREST........................................................................74
SECTION 9.15. INTERPRETATION..................................................................75
SECTION 9.16. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION...................................75
</TABLE>
v
<PAGE> 8
<TABLE>
<S> <C> <C>
SECTION 9.17. COUNTERPARTS....................................................................75
SECTION 9.18. SOURCE OF FUNDS -- ERISA........................................................75
SECTION 9.19. EUROPEAN ECONOMIC AND MONETARY UNION............................................75
SECTION 9.20. NO BANKRUPTCY PROCEEDINGS.......................................................78
EXHIBIT A-1 Form of Syndicated Dollar Loan Note
EXHIBIT A-2 Form of Swing Loan Note
EXHIBIT A-3 Form of Money Market Loan Note
EXHIBIT A-4 Form of Foreign Currency Loan Note for Russell Corporation
EXHIBIT A-5 Form of Foreign Currency Loan Note for Russell Europe Limited
EXHIBIT B Form of Opinion of Special Counsel for the Borrower
EXHIBIT C Form of Opinion of Special Counsel for the Administrative Agent
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E-1 Form of Notice of Borrowing
EXHIBIT E-2 Form of Notice of Continuation or Conversion
EXHIBIT F Form of Compliance Certificate
EXHIBIT G Form of Closing Certificate
EXHIBIT H Form of Officer's Certificate
EXHIBIT I Form of Money Market Quote Request
EXHIBIT J Form of Money Market Quote
EXHIBIT K Form of Designation Agreement
EXHIBIT L Form of Guaranty
Schedule 4.08 Subsidiaries
</TABLE>
vi
<PAGE> 9
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of October 15, 1999, among RUSSELL
CORPORATION, RUSSELL EUROPE LIMITED, the BANKS listed on the signature pages
hereof, WACHOVIA BANK, N.A., as Administrative Agent, SUNTRUST BANK, ATLANTA,
as Syndication Agent and FIRST UNION NATIONAL BANK, as Documentation Agent.
The parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01. DEFINITIONS.
The terms as defined in this Section 1.01 shall, for all
purposes of this Agreement and any amendment hereto (except as herein otherwise
expressly provided or unless the context otherwise requires), have the meanings
set forth herein:
"Adjusted IBOR Rate" has the meaning set forth in Section
2.07(e).
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.07(c).
"Administrative Agent" means Wachovia Bank, N.A., a national
banking association organized under the laws of the United States of America,
in its capacity as agent for the Banks hereunder, and its successors and
permitted assigns in such capacity.
"Affiliate" of any relevant Person means (i) any Person that
directly, or indirectly through one or more intermediaries, controls the
relevant Person (a "Controlling Person"), (ii) any Person (other than the
relevant Person or a Subsidiary of the relevant Person) which is controlled by
or is under common control with a Controlling Person, or (iii) any Person
(other than a Subsidiary of the relevant Person) of which the relevant Person
owns, directly or indirectly, 20% or more of the common stock or equivalent
equity interests. As used herein, the term "control" means possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Aggregate Commitments" means at any time the aggregate
amount of the Commitments of all Banks at such time.
"Agreement" means this Credit Agreement, together with all
amendments and supplements hereto.
"Applicable Margin" has the meaning set forth in Section
2.07(a).
<PAGE> 10
"Arranger's Letter Agreement" means that certain letter
agreement, dated as of August 27, 1999, between the Borrower and Wachovia
Securities, Inc., as Lead Arranger, relating to the structure of the Loans, and
certain fees from time to time payable by the Borrower to Wachovia Securities,
Inc., as arranger, and to the Administrative Agent, together with all
amendments and supplements thereto.
"Assignee" has the meaning set forth in Section 9.08(c).
"Assignment and Acceptance" means an Assignment and
Acceptance executed in accordance with Section 9.08(c) in the form attached
hereto as Exhibit D.
"Authority" has the meaning set forth in Section 8.02.
"Bank" means each bank listed on the signature pages hereof
as having a Commitment, and its successors and permitted assigns and the
Designated Banks, if any; provided, however, that the term "Bank" shall exclude
each Designated Bank when used in reference to a Syndicated Loan, the
Commitments or terms relating to the Syndicated Loans (except as noted above)
and the Commitments.
"Base Rate" means for any Base Rate Loan for any day, the
rate per annum equal to the higher as of such day of (i) the Prime Rate, or
(ii) one-half of one percent above the Federal Funds Rate. For purposes of
determining the Base Rate for any day, changes in the Prime Rate or the Federal
Funds Rate shall be effective on the date of each such change.
"Base Rate Loan" means a Loan which bears or is to bear
interest at a rate based upon the Base Rate, and is to be made as a Base Rate
Loan pursuant to the applicable Notice of Borrowing, Notice of Continuation or
Conversion, Section 2.02(f), or Article VIII, as applicable.
"Borrower" means (i) Russell Corporation, an Alabama
corporation, and its successors and its permitted assigns and, (ii) only in
connection with Foreign Currency Borrowings and Foreign Currency Loans, means
either or both, as the context shall require, of Russell Corporation and
Russell Europe Limited (or, after the completion of the European Reorganization
and the assignment by Russell Europe Limited to the New European Headquarters
Subsidiary pursuant to Section 9.08(a) in connection therewith, the New
European Headquarters Subsidiary), it being understood and agreed that either
Russell Corporation or Russell Europe Limited (or the New European Headquarters
Subsidiary, as applicable), or a both of them (as to different Foreign Currency
Borrowings), may borrow Foreign Currency Loans within the limits set forth in
Section 2.01(a), but Russell Europe Limited (or the New European Headquarters
Subsidiary, as applicable) shall have liability only for Foreign Currency Loans
borrowed by it, and shall have no liability on any Foreign Currency Loans,
Syndicated Dollar Loans or Swing Loans made to Russell Corporation.
"Borrowing" means a borrowing hereunder consisting of Loans
made to the Borrower (i) at the same time by all of the Banks, in the case of a
Syndicated Borrowing, or (ii) separately by one or more Banks, in the case of a
Money Market Borrowing, in each case
2
<PAGE> 11
pursuant to Article II or (iii) by Wachovia, for Swing Loans. A Borrowing is a
"Money Market Borrowing" if such Loans are made pursuant to Section 2.03, a
"Syndicated Borrowing" if such Loans are made pursuant to Section 2.01(a), or a
"Swing Loan Borrowing" if such Loan is made pursuant to Section 2.01(b). A
Borrowing is a "Euro-Dollar Borrowing" if such Loans are Euro-Dollar Loans, or
a "Base Rate Borrowing" if such Loans are Base Rate Loans, or a "Transaction
Rate Borrowing" if such Loans are Transaction Rate Loans.. A Borrowing is a
"Dollar Borrowing" if such Loans are Base Rate Loans, Euro-Dollar Loans or
Money Market Loans. A Borrowing is a "Foreign Currency Borrowing" if such Loans
are Foreign Currency Loans.
"Capital Stock" means any nonredeemable capital stock of the
Borrower or any Consolidated Subsidiary (to the extent issued to a Person other
than the Borrower), whether common or preferred.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. ss. 9601 et. seq. and its
implementing regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Inventory System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in Section
8.02.
"Closing Certificate" has the meaning set forth in Section
3.01(e).
"Closing Date" means October 15, 1999.
"Code" means the Internal Revenue Code of 1986, as amended,
or any successor Federal tax code.
"Commitment" means, with respect to each Bank, (i) the amount
set forth opposite the name of such Bank on the signature pages hereof, and
(ii)as to any Bank which enters into any Assignment and Acceptance (whether as
transferor Bank or as Assignee thereunder), the amount of such Bank's
Commitment after giving effect to such Assignment and Acceptance, in each case
as such amount may be reduced from time to time pursuant to Sections 2.09 and
2.10.
"Compliance Certificate" has the meaning set forth in Section
5.01(c).
"Consolidated EBIT" means at any time the sum of the
following, determined on a consolidated basis for the Borrower and its
Consolidated Subsidiaries, at the end of each Fiscal Quarter, for the Fiscal
Quarter just ended and the 3 immediately preceding Fiscal Quarters: (i)
Consolidated Net Income; plus (ii) Consolidated Net Interest Expense; plus
(iii) taxes on income; and (iv) all Restructuring Charges.
"Consolidated EBITDA" means at any time the sum of the
following, determined on a consolidated basis for the Borrower and its
Consolidated Subsidiaries, at the end of each Fiscal Quarter, for the Fiscal
Quarter just ended and the 3 immediately preceding Fiscal Quarters
3
<PAGE> 12
(and with respect to any acquisition which is made during such 4 Fiscal Quarter
Period, the Consolidated Subsidiary acquired in such acquisition shall be
included as if it had been a Consolidated Subsidiary prior to the commencement
of such 4 Fiscal Quarter Period): (i) Consolidated EBIT; plus (ii)
depreciation; plus (iii) amortization; plus (iv) other non-cash charges without
duplication of Restructuring Charges.
"Consolidated Interest Expense" for any period means (i)
interest, whether expensed or capitalized (but in the case of capitalization,
limited to the portion of capitalized interest allocable to such period), in
respect of Debt of the Borrower or any of its Consolidated Subsidiaries
outstanding during such period and (ii) all program expenses payable under a
Receivables Securitization Program.
"Consolidated Net Income" means, for any period, the Net
Income of the Borrower and its Consolidated Subsidiaries determined on a
consolidated basis, but excluding (i) extraordinary items and (ii) any equity
interests of the Borrower or any Consolidated Subsidiary in the unremitted
earnings or losses of any Person that is not a Consolidated Subsidiary during
such period.
"Consolidated Operating Profits" means, for any period, the
Operating Profits of the Borrower and its Consolidated Subsidiaries.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which, in accordance with GAAP, would be
consolidated with those of the Borrower in its consolidated financial
statements as of such date.
"Consolidated Tangible Net Worth" means, at any time,
Stockholders' Equity, less the sum of the value, as set forth or reflected on
the most recent consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries, prepared in accordance with GAAP, of:
(a) Any surplus resulting from any write-up of assets
subsequent to July 4, 1999;
(b) All assets which would be treated as intangible
assets for balance sheet presentation purposes under GAAP, including
without limitation goodwill (whether representing the excess of cost
over book value of assets acquired, or otherwise), trademarks,
tradenames, copyrights, patents and technologies, and unamortized debt
discount and expense;
(c) To the extent not included in (b) of this
definition, any amount at which shares of Capital Stock of the
Borrower appear as an asset on the balance sheet of the Borrower and
its Consolidated Subsidiaries; and
(d) Loans or advances to stockholders, directors,
officers or employees, except (1) for relocation expenses in
connection with the Restructuring Program and (2) for other purposes
not exceeding $3,000,000 in the aggregate principal amount
4
<PAGE> 13
outstanding at any time, in each case made in the ordinary course of
business in accordance with historical practices existing on the
Closing Date.
"Consolidated Total Assets" means, at any time, the total
assets of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis, as set forth or reflected on the most recent consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries, prepared in
accordance with GAAP.
"Consolidated Total Debt" means at any date, without
duplication, the sum of the following, determined on a consolidated basis for
the Borrower and its Consolidated Subsidiaries: (i) all Debt of the types
described in clauses (i), (ii), (iii), (iv), (vi) and (x) of the definition of
Debt, and (ii) all Debt of the type described in clause (xi) of the definition
of Debt, insofar as it relates to Debt of the types included in clause (i) of
this definition.
"Contributed Receivables" means Receivables which are
contributed to the Receivables Subsidiary as equity Investments therein
pursuant to a Receivables Securitization Program.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money (including, without
limitation the principal balance outstanding under any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar off-balance
financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease in
accordance with GAAP), (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or services, except trade
accounts payable arising in the ordinary course of business, (iv) all
obligations of such Person as lessee under capital leases, (v) all obligations
of such Person to reimburse any bank or other Person in respect of amounts
payable under a banker's acceptance, (vi) all Redeemable Preferred Stock of
such Person (in the event such Person is a corporation), (vii) all obligations
of such Person to reimburse any bank or other Person in respect of amounts paid
or to be paid under a letter of credit or similar instrument, (viii) all Debt
of others secured by a Lien on any asset of such Person, whether or not such
Debt is assumed by such Person, (ix) all net obligations of such Person with
respect to interest rate protection agreements, foreign currency exchange
agreements or other hedging arrangements (valued as the termination value
thereof computed in accordance with a method approved by the International Swap
Dealers Association and agreed to by such Person in the applicable hedging
agreement, if any), (x) all principal amounts outstanding and owed to parties
other than the Borrower or any Subsidiary under the items described in clause
(a) of the definition of Receivables Program Obligations, (xi) all Debt of
others Guaranteed by such Person (including, without limitation, the Debt of
any partnership or unincorporated joint venture in which such Person is a
general partner or a joint venturer, other than non-recourse Debt of such
partnership or unincorporated joint venture).
5
<PAGE> 14
"Debt/EBITDA Ratio" means at any time the ratio of (i)
Consolidated Total Debt to (ii) Consolidated EBITDA.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Default Rate" means, with respect to any Loan, on any day,
the sum of 2% plus the then highest interest rate (including the Applicable
Margin) which may be applicable to any Loans hereunder (irrespective of whether
any such type of Loans are actually outstanding hereunder).
"Designated Bank" means a special purpose corporation owned
and controlled by its Designating Bank that is identified as such on the
signature pages hereto next to the caption "Designated Bank" as well as each
special purpose corporation owned and controlled by its Designating Bank that
(i) shall have become a party to this Agreement pursuant to Section 9.08(g),
and (ii) is not otherwise a Bank.
"Designated Bank Note" means a Money Market Loan Note,
evidencing the obligation of the Borrower to repay Money Market Loans made by a
Designated Bank, and "Designated Bank Notes" means any all such Money Market
Loan Notes to Designated Banks issued hereunder.
"Designating Bank" shall mean each Bank that is identified as
such on the signature pages hereto next to the caption "Designating Bank" and
immediately below the signature of its Designated Bank as well as each Bank
that shall designate a Designated Bank pursuant to Section 9.08(g).
"Designation Agreement" means a designation agreement in
substantially the form of Exhibit K attached hereto, entered into by a Bank and
a Designated Bank and acknowledged by the Borrower and the Administrative
Agent.
"Dollars" or "$" means dollars in lawful currency of the
United States of America.
"Dollar Equivalent" means the Dollar equivalent of the amount
of a Foreign Currency Loan, determined by the Administrative Agent on the basis
of its spot rate for the purchase of the appropriate Foreign Currency with
Dollars.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in Georgia are authorized by law
to close.
"Environmental Authority" means any foreign, federal, state,
local or regional government that exercises any form of jurisdiction or
authority under any Environmental Requirement.
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<PAGE> 15
"Environmental Authorizations" means all licenses, permits,
orders, approvals, notices, registrations or other legal prerequisites for
conducting the business of the Borrower or any Subsidiary required by any
Environmental Requirement.
"Environmental Judgments and Orders" means all judgments,
decrees or orders arising from any Environmental Requirements, whether or not
entered upon consent, or written agreements with an Environmental Authority or
other entity arising from or in any way associated with any Environmental
Requirement, whether or not incorporated in a judgment, decree or order.
"Environmental Liabilities" means any liabilities, whether
accrued, contingent or otherwise, arising from and in any way associated with
any Environmental Requirements.
"Environmental Notices" means notice from any Environmental
Authority or by any other person or entity, of possible or alleged
noncompliance with or liability under any Environmental Requirement, including
without limitation any complaints, citations, demands or requests from any
Environmental Authority or from any other person or entity for correction of
any violation of any Environmental Requirement or any investigations concerning
any violation of any Environmental Requirement.
"Environmental Proceedings" means any judicial or
administrative proceedings arising from or in any way associated with any
Environmental Requirement.
"Environmental Releases" means releases as defined in CERCLA
or under any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement
relating to health, safety or the environment and applicable to the Borrower,
any Subsidiary or the Properties under CERCLA or similar state legislation and
all federal, state and local laws, ordinances, regulations, orders, writs,
decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor law. Any reference to any
provision of ERISA shall also be deemed to be a reference to any successor
provision or provisions thereof.
"Euro" has the meaning set forth in Section 9.19.
"Euro-Dollar Business Day" means any Domestic Business Day on
which dealings in Dollar deposits are carried out in the London interbank
market.
"Euro-Dollar Loan" means a Loan which bears or is to bear
interest at a rate based upon the Adjusted London Interbank Offered Rate, and
to be made as a Euro-Dollar Loan pursuant to the applicable Notice of Borrowing
or Notice of Continuation or Conversion.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.07(c).
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<PAGE> 16
"European Reorganization" means the reorganization of
European Subsidiaries of Russell Corporation, currently contemplated to be
publically announced in October, 1999, which is anticipated to consist of the
following: (i) the formation by Russell Corporation, for a minimal
capitalization, of new European based Subsidiaries (it is currently
contemplated that there may be 3 new such Subsidiaries, one to serve as the
European headquarters for the European operations (the "New European
Headquarters Subsidiary"), one to be the service company for the European
operations and one to own the intellectual property pertaining to the European
operations, but the exact number and specific locations in Europe of such
Subsidiaries have not yet been determined); (ii) the transfer by Russell
Corporation and certain existing European Subsidiaries of certain of their
assets pertaining to the European operations to the new European Subsidiaries,
as appropriate, consistent with their intended purpose and function; and (iii)
the assignment by Russell Europe Limited to the New European Headquarters
Subsidiary, and the assumption by the New European Headquarters Subsidiary, of
all rights and obligations of Russell European Limited under this Agreement and
the Notes and other Loan Documents executed by Russell Europe Limited, as more
specifically authorized in Section 9.08(a).
"Excluded Receivables" means all Receivables other than
Purchased Receivables and Contributed Receivables.
"Excluded Receivables Assets" means (i) all goods of the
Borrower and each of the Subsidiaries held for sale or lease or to be furnished
under a contract of service (including raw materials, work in process, finished
goods and materials used or consumed in the manufacture or production thereof),
goods that are returned to or repossessed, and all accessions thereto and
products thereof and documents therefor (collectively, "Inventory"), other than
returned goods, if any, relating to the sale that gave rise to any Receivables
which are included in the Receivables Program Related Assets ("Related Returned
Goods"); (ii) Excluded Receivables; and (iii) any Receivables or other proceeds
of Inventory created or arising (x) after an Event of Default specified in (g)
or (h) of Section 6.01 (other than proceeds of Related Returned Goods), or (y)
after termination of purchases under the Receivables Securitization Program
Agreement.
"Event of Default" has the meaning set forth in Section 6.01.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the next higher 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if the day for which
such rate is to be determined is not a Domestic Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Domestic Business Day as so published on the next succeeding Domestic Business
Day, and (ii) if such rate is not so published for any day, the Federal Funds
Rate for such day shall be the average rate charged to the Administrative Agent
on such day on such transactions, as reasonably determined by the
Administrative Agent.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
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<PAGE> 17
"Fiscal Year" means any fiscal year of the Borrower.
"Fixed Rate Borrowing" means a Euro-Dollar Borrowing, a Money
Market Borrowing, a Foreign Currency Borrowing or a Transaction Rate Borrowing,
or any one, or more, or all of them, as the context shall require.
"Fixed Rate Loans" means Euro-Dollar Loans, Money Market
Loans, Foreign Currency Loans or Transaction Rate Loans, or any one, or more,
or all of them, as the context shall require.
"Foreign Currencies" means, individually and collectively, as
the context shall require, each of the following, if offered and subject to
availability, and subject to the provisions of Section 9.19 (i) euros (which,
during the transitional period, may be in an amount determined by reference to
a national currency unit of a participating member state), (ii) British pounds
sterling and (iii) at the option of the Banks, any other currency which is
freely transferable and convertible into Dollars; provided, however, that no
such other currency under this clause (iii) shall be included as a Foreign
Currency hereunder, or included in a Notice of Borrowing, unless (x) a Borrower
has first submitted a request to the Administrative Agent and the Banks that it
be so included, and (y) the Administrative Agent and the Banks, in their sole
discretion, have agreed to such request.
"Foreign Currency Borrowing" has the meaning set forth in the
definition of "Borrowing."
"Foreign Currency Business Day" shall mean any Domestic
Business Day, excluding one on which trading is not carried on by and between
banks in deposits of the applicable Foreign Currency in the applicable
interbank market for such Foreign Currency.
"Foreign Currency Loan" means a Loan to be made as a Foreign
Currency Loan pursuant to the applicable Notice of Borrowing, and such term
shall include, individually and collectively, as the context shall require,
such Loans to Russell Corporation and to Russell Europe Limited (or, after the
completion of the European Reorganization and the assignment by Russell Europe
Limited to the New European Headquarters Subsidiary pursuant to Section 9.08(a)
in connection therewith, the New European Headquarters Subsidiary).
"Foreign Currency Loan Notes" means promissory notes of the
Borrower, substantially in the form of Exhibit A-4, as to Russell Corporation,
and Exhibit A-5, as to Russell Europe Limited (or, after the completion of the
European Reorganization and the assignment by Russell Europe Limited to the New
European Headquarters Subsidiary pursuant to Section 9.08(a) in connection
therewith, the New European Headquarters Subsidiary), evidencing the obligation
of the Borrower to repay the Foreign Currency Loans, together with all
amendments, consolidations, modifications, renewals and supplements thereto.
"Funded Debt" has the meaning set forth in Section 5.19.
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<PAGE> 18
"GAAP" means generally accepted accounting principles applied
on a basis consistent with those which, in accordance with Section 1.02, are to
be used in making the calculations for purposes of determining compliance with
the terms of this Agreement.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay, or advance or supply funds for the
purchase or payment of, such Debt or other obligation, whether arising by
virtue of partnership arrangements (including, without limitation, arising
solely by virtue of the status of being a general partner in a partnership or
participating as a joint venturer in a joint venture), by agreement to
keep-well, to purchase assets, goods, securities or services, to provide
collateral security, to take-or-pay, or to maintain financial statement
conditions or otherwise, or (ii) entered into for the purpose of assuring in
any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guaranty" means the Guaranty Agreement in substantially the
form of Exhibit L to be executed by Russell Corporation pursuant to Section
3.01, unconditionally Guaranteeing payment of the Foreign Currency Loans made
to and the Foreign Currency Loan Note made by Russell Europe Limited (or, after
the completion of the European Reorganization and the assignment by Russell
Europe Limited to the New European Headquarters Subsidiary pursuant to Section
9.08(a) in connection therewith, the New European Headquarters Subsidiary).
"Hazardous Materials" includes, without limitation, (a) solid
or hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. ss. 6901 et seq. and its implementing regulations and
amendments, or in any applicable state or local law or regulation, (b)
"hazardous substance", "pollutant", or "contaminant" as defined in CERCLA, or
in any applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including, crude oil or any fraction thereof,
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976,
or in any applicable state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"IBOR" has the meaning set forth in Section 2.05(e).
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing and Foreign Currency Borrowing, the period commencing on the date of
such Borrowing and ending on the numerically corresponding day in the first,
second, third or sixth month thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a) any Interest Period (subject to paragraph (c) below)
which would otherwise end on a day which is not a Euro-Dollar Business
Day or Foreign Currency
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<PAGE> 19
Business Day shall be extended to the next succeeding Euro-Dollar
Business Day or Foreign Currency Business Day, as the case may be,
unless such Euro-Dollar Business Day or Foreign Currency Business Day,
as the case may be, falls in another calendar month, in which case
such Interest Period shall end on the next preceding Euro-Dollar
Business Day or Foreign Currency Business Day, as the case may be;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the appropriate subsequent
calendar month) shall, subject to paragraph (c) below, end on the last
Euro-Dollar Business Day of the appropriate subsequent calendar month;
and
(c) no Interest Period may be selected which begins
before the Termination Date and would otherwise end after the
Termination Date;
(2) with respect to each Money Market Borrowing, the period
commencing on the date of such Borrowing and ending on the Stated Maturity Date
or such other date or dates as may be specified in the applicable Money Market
Quote; provided that:
(a) any Interest Period (subject to clause (b) below)
which would otherwise end on a day which is not a Domestic Business
Day shall be extended to the next succeeding Domestic Business Day;
and
(b) no Interest Period may be selected which begins
before the Termination Date and would otherwise end after the
Termination Date; and
(3) with respect to each Transaction Rate Borrowing, any period
up to 14 days mutually agreeable to the Borrower and Wachovia which ends on or
prior to the Termination Date.
"Investment" means any investment in any Person, whether by
means of (i) purchase or acquisition of all or substantially all of the assets
of such Person (or of a division or line of business of such Person),
including, without limitation, any Permitted Acquisition, (ii) purchase or
acquisition of obligations or securities of such Person, including, without
limitation, any Permitted Acquisition, (iii) capital contribution to such
Person, (iv) loan or advance to such Person, (v) making of a time deposit with
such Person, (vi) Guarantee or assumption of any obligation of such Person or
(vii) by any other means, but excluding (x) trade advances in the ordinary
course of the Borrower's business in accordance with historical practices
existing on the Closing Date and (y) special extensions or renewals of credit
made in accordance with the Borrower's credit policies to customers in troubled
financial condition in order to maximize the Borrower's anticipated recovery or
to protect a strategic source of supply or market.
"Lending Office" means, as to each Bank, its office located
at its address set forth on the signature pages hereof (or identified on the
signature pages hereof as its Lending Office) or such other office as such Bank
may hereafter designate as its Lending Office by notice to the Borrower and the
Administrative Agent. Each Bank may designate a Lending Office for Syndicated
Dollar Loans and a different Lending Office for Foreign Currency Loans, and the
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<PAGE> 20
term "Lending Office" shall in such case mean either such Lending Office, as
the context shall require.
"Lien" means, with respect to any asset, any mortgage, deed
to secure debt, deed of trust, lien, pledge, charge, security interest,
security title, preferential arrangement which has the practical effect of
constituting a security interest or encumbrance, or encumbrance or servitude of
any kind in respect of such asset to secure or assure payment of a Debt or a
Guarantee, whether by consensual agreement or by operation of statute or other
law, or by any agreement, contingent or otherwise, to provide any of the
foregoing. For the purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.
"Liquidity Bank" means for any Designated Bank, at any date
of determination, the collective reference to the financial institutions which
at such date are providing liquidity or credit support facilities to or for the
account of such Designated Bank to fund such Designated Bank's obligations
hereunder or to support the securities, if any, issued by such Designated Bank
to fund such obligations.
"Loan" means a Base Rate Loan, Euro-Dollar Loan, Syndicated
Dollar Loan, Foreign Currency Loan, Swing Loan, Transaction Rate Loan or Money
Market Loan, and "Loans" means Base Rate Loans, Euro-Dollar Loans, Syndicated
Dollar Loans, Foreign Currency Loans, Swing Loans, Transaction Rate Loans,
Money Market Loans, or any or all of them, as the context shall require.
"Loan Documents" means this Agreement, the Notes, the
Guaranty, any other document evidencing, relating to or securing the Loans
delivered by or on behalf of the Borrower, and any other document or instrument
delivered by or on behalf of the Borrower from time to time in connection with
this Agreement, the Notes or the Loans, as such documents and instruments may
be amended or supplemented from time to time.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.07(c).
"Margin Stock" means "margin stock" as defined in Regulations
T, U or X.
"Material Adverse Effect" means, with respect to any event,
act, condition, occurrence, cost or expenses of whatever nature (including any
adverse determination in any litigation, arbitration, or governmental
investigation or proceeding, but not including any event, act, condition,
occurrence, cost or expense arising out of or relating to (i) the case styled
Sullivan, et al. v. Russell Corporation, et al., including, without limitation,
the jury verdict rendered against the Borrower and other defendants and related
awards to the plaintiffs for compensatory and punitive damages in such case on
November 17, 1998 or (ii) the Restructuring Program or the Restructuring
Charges), whether singly or in conjunction with any other event or events, act
or acts, condition or conditions, occurrence, occurrences, costs or expenses,
whether or not related, a material adverse change in, or a material adverse
effect upon, any of (a) the financial condition, operations, business,
properties or prospects of the Borrower and its
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<PAGE> 21
Consolidated Subsidiaries taken as a whole, (b) the rights and remedies of the
Administrative Agent or the Banks against the Borrower under the Loan
Documents, or the ability of the Borrower to perform its obligations under the
Loan Documents to which it is a party, as applicable, or (c) the legality,
validity or enforceability of any Loan Document against the Borrower.
"Mission Critical Systems and Equipment" means the Borrower's
and its Subsidiaries' hardware and software systems, and equipment relating to
the operation of its business and its general business plan, including, without
limitation, equipment in addition to computers, and with respect to which, the
failure to properly function would have a Material Adverse Effect.
"Money Market Borrowing Date" has the meaning specified in
Section 2.03(c)(i).
"Money Market Loan Notes" means the promissory notes of the
Borrower, substantially in the form of Exhibit A-3, evidencing the obligation
of the Borrower to repay the Money Market Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
"Money Market Quote" has the meaning specified in Section
2.03.
"Money Market Quote Request" has the meaning specified in
Section 2.03(b).
"Money Market Rate" has the meaning specified in Section
2.03(c)(ii)(C).
"Moody's" means Moody's Investor Service, Inc.
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"National Currency Unit" has the meaning set forth in Section
9.19.
"Net Income" means, as applied to any Person for any period,
the aggregate amount of net income of such Person, after taxes, for such
period, as determined in accordance with GAAP.
"New European Headquarters Subsidiary" has the meaning
specified in the definition of "European Reorganization".
"Notes" means each of the Syndicated Dollar Loan Notes ,
Swing Loan Note or Money Market Loan Notes, or any or all of them, as the
context shall require.
"Notice of Borrowing" has the meaning set forth in Section
2.02(a).
"Notice of Continuation or Conversion" has the meaning set
forth in Section 2.04.
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"Officer's Certificate" has the meaning set forth in Section
3.01(f).
"Operating Profits" means, as applied to any Person for any
period, the operating income of such Person for such period, as determined in
accordance with GAAP.
"Participant" has the meaning set forth in Section 9.08(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Performance Pricing Determination Date" has the meaning set
forth in Section 2.07(a).
"Permitted Acquisition" means the purchase or acquisition of
all or substantially all of the assets of such Person (or of a division or line
of business of such Person), or purchase or acquisition of all or substantially
all of the obligations or securities of such Person, if such acquisition is (i)
non-hostile; (ii) of a Person engaged in, or assets used in, the design,
manufacture, distribution or marketing of textiles or apparel; (iii) in
pro-forma compliance with all terms of this Agreement, after giving effect to
such acquisition; and (iv) limited in any Fiscal Year as to consideration
payable in cash and/or debt (but with no limit as to Capital Stock issued as
consideration) to 10% of Consolidated Tangible Net Worth as of the end of the
most recently completed Fiscal Year as of the time of the acquisition.
"Person" means an individual, a corporation, a partnership, a
limited liability company, an unincorporated association, a trust or any other
entity or organization, including, but not limited to, a government or
political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is either (i) maintained by a
member of the Controlled Group for employees of any member of the Controlled
Group or (ii) maintained pursuant to a collective bargaining agreement or any
other arrangement under which more than one employer makes contributions and to
which a member of the Controlled Group is then making or accruing an obligation
to make contributions or has within the preceding 5 plan years made
contributions.
"Prime Rate" refers to that interest rate so denominated, set
and published by Wachovia from time to time as an interest rate basis for
borrowings. The Prime Rate is but one of several interest rate bases used by
Wachovia. Wachovia lends at interest rates above and below the Prime Rate.
"Properties" means all real property owned, leased or
otherwise used or occupied by the Borrower or any Subsidiary, wherever located.
"Purchase Money Note" means a promissory note evidencing the
obligation of the Receivables Subsidiary to pay to the Borrower or any of its
Subsidiaries the purchase price for Purchased Receivables in connection with
the Receivables Securitization Program, which note
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<PAGE> 23
shall be repaid from cash available to the Receivables Subsidiary, other than
cash required to be held as reserves pursuant to Receivables Program Documents,
amounts paid in respect of interest, principal and other amounts owing under
Receivables Program Documents and amounts paid in connection with the purchase
of additional Receivables.
"Purchased Receivables" means Receivables which are actually
purchased pursuant to the Receivables Program Documents, for a purchase price
determined pursuant thereto.
"Quarterly Payment Date" means each March 31, June 30,
September 30 and December 31, or, if any such day is not a Domestic Business
Day, the next succeeding Domestic Business Day.
"Receivables" means all rights of the Borrower or its
Subsidiaries to payment, whether constituting an account, chattel paper,
instrument, general intangible or otherwise, arising from the sale of goods or
services (including rights under bill and hold arrangements) by the Borrower or
its Subsidiary (and including the right to payment of any interest or finance
charges and other obligations with respect thereto).
"Receivables Program Assets" means (a) all Purchased
Receivables and Contributed Receivables transferred by the Borrower or its
Subsidiaries (including the Receivables Subsidiary) pursuant to the Receivables
Program Documents; provided, however, that the term "Receivables Program
Assets" shall not include any Excluded Receivables Assets, (b) all Receivables
Program Related Assets, and (c) all collections (including recoveries) and
other proceeds of the assets described in the foregoing clauses (a) and (b).
"Receivables Program Documents" means (a) a receivables
purchase agreement, pooling and servicing agreement, credit agreement,
agreements to acquire undivided interests or other agreement to transfer, or
create a security interest in, Receivables Program Assets, in each case as
amended, modified, supplemented or restated and in effect from time to time
entered into by the Borrower and/or its Subsidiaries (including the Receivables
Subsidiary), and (b) each other instrument, agreement and other document
entered into by the Borrower or its Subsidiaries (including the Receivables
Subsidiary) relating to the transactions contemplated by the items referred to
in clause (a) above, in each case as amended, modified, supplemented or
restated and in effect from time to time.
"Receivables Program Obligations" means (a) notes, trust
certificates, undivided interests, partnership interests or other interests
representing the right to be paid a specified principal amount from the
Receivables Program Assets, and (b) related obligations of the Borrower and/or
its Subsidiaries (including, without limitation, rights in respect of interest
or yield, breach of warranty claims and expense reimbursement and indemnity
provisions) and other Standard Securitization Undertakings.
"Receivables Program Related Assets" means, with respect to
Purchased Receivables and Contributed Receivables (but not Excluded
Receivables), (i) rights of the seller or contributor thereof under the
documentation governing or relating to such Receivables,
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<PAGE> 24
including all contracts pursuant to which any account party or other party is
obligated to make payment on any such Receivable, and all related purchase
orders, invoices and other agreements, documents, books, records and other
media for the storage of information (including tapes, disks, punch cards,
computer programs and databases and related property), (ii) all of the right,
title and interest of the seller or contributor thereof in the goods, if any,
relating to the sale that gave rise to such Receivable, all other security
interests or liens and property subject thereto from time to time purporting to
secure payment of such Receivable, whether pursuant to the contract described
in clause (i) or otherwise, and all letters of credit, guarantees and other
agreements or arrangements of whatever character from time to time supporting
or securing payment of such Receivable, whether pursuant to the contract
described in clause (i) or otherwise and (iii) all proceeds of all of the
foregoing, including all funds received by any Person in payment of any amounts
owed (including invoice prices, finance charges, interest and all other
charges, if any) in respect thereof or otherwise applied to repay or discharge
any such Receivable (including insurance payments applied in the ordinary
course of business to amounts owed in respect of such Receivable and net
proceeds of any sale or other disposition of repossessed goods that were the
subject of any such Receivable) or other collateral or property of the account
party or other party directly or indirectly liable for payment of such
Receivables, and any lockboxes or accounts in which such proceeds are
deposited, (iv) all spread accounts and other similar accounts (and any amount
on deposit therein) established in connection with the Receivables
Securitization Program and (v) any warranty, indemnity, dilution and other
intercompany claim arising out of Receivables Program Documents.
"Receivables Securitization Program" means any transaction or
series of transactions that may be entered into by the Borrower and its
Subsidiaries pursuant to which the Borrower and/or its Subsidiaries may sell,
convey or otherwise transfer to the Receivables Subsidiary and (in the case of
a transfer by the Receivables Subsidiary) any other Person, or may grant a
security interest in, any Receivables Program Assets (whether now existing or
arising in the future); provided that:
(a) no portion of the indebtedness or any other
obligations (contingent or otherwise) of a Receivables Subsidiary or
Special Purpose Vehicle (i) is guaranteed by the Borrower or its
Subsidiaries (other than the Receivables Subsidiary and excluding
guarantees of obligations pursuant to Standard Securitization
Undertakings), (ii) is recourse to or obligates the Borrower or its
Subsidiaries (other than the Receivables Subsidiary) for payment other
than pursuant to Standard Securitization Undertakings or (iii)
subjects any property or asset of the Borrower or its Subsidiaries
(other than the Receivables Subsidiary), directly or indirectly,
contingently or otherwise, to the satisfaction of obligations incurred
in such transactions, other than pursuant to Standard Securitization
Undertakings;
(b) the Borrower and its Subsidiaries (other than the
Receivables Subsidiary) do not have any obligation to maintain or
preserve the financial condition of a Receivables Subsidiary or a
Special Purpose Vehicle or cause such entity to achieve certain levels
of operating results;
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(c) the net purchase price payable to the Borrower or
Subsidiary with respect to Purchased Receivables thereunder (net of
all reserves, discounts, fees and charges) is not less than 75% of the
face amount of the Purchased Receivables; and
(d) the scheduled maturity of any Receivables Program
Obligations of the type described in clause (a) of the definition of
"Receivables Program Obligations" is no earlier than the scheduled
Termination Date.
"Receivables Subsidiary" means a special purpose corporation
that is a direct or indirect wholly owned subsidiary of the Borrower, created
for the sole purpose of, and whose only business shall be, acquisition of the
Receivables Program Assets pursuant to the Receivables Securitization Program
and those activities incidental to the Receivables Securitization Program.
"Redeemable Preferred Stock" of any Person means any
preferred stock issued by such Person which is at any time prior to the
Termination Date either (i) mandatorily redeemable (by sinking fund or similar
payments or otherwise) or (ii) redeemable at the option of the holder thereof.
"Refunding Loan" means a new Syndicated Loan made on the day
on which an outstanding Syndicated Loan is maturing or a Base Rate Borrowing is
being converted to a Fixed Rate Borrowing, if and to the extent that the
proceeds thereof are used for the purpose of paying such maturing Loan or Loan
being converted, excluding any difference between the amount of such maturing
Loan or Loan being converted and any greater amount being borrowed on such day
and actually either being made available to the Borrower pursuant to Section
2.02(c) or remitted to the Administrative Agent as provided in Section 2.13, in
each case as contemplated in Section 2.02(d).
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System, as in effect from time to time, together with
all official rulings and interpretations issued thereunder.
"Regulation T" means Regulation T of the Board of Governors
of the Federal Reserve System, as in effect from time to time, together with
all official rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System, as in effect from time to time, together with
all official rulings and interpretations issued thereunder.
"Regulation X" means Regulation X of the Board of Governors
of the Federal Reserve System, as in effect from time to time, together with
all official rulings and interpretations issued thereunder.
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"Related Fund" means, with respect to any Bank that is a fund
that invests in bank loans, any other fund that invests in bank loans and is
advised or managed by the same investment advisor as such Bank.
"Reported Net Income" means, for any period, the Net Income
of the Borrower and its Consolidated Subsidiaries determined on a consolidated
basis.
"Required Banks" means at any time Banks having at least 51%
of the aggregate amount of the Commitments or, if the Commitments are no longer
in effect, Banks holding at least 51% of the aggregate outstanding principal
amount of the sum of the (i) Syndicated Loans and (ii) Money Market Loans.
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the Borrower's Capital Stock (except dividends
payable in shares of its Capital Stock) or (ii) any payment on account of the
purchase, redemption, retirement or acquisition by the Borrower of (a) any
shares of the Borrower's Capital Stock (except shares acquired upon the
conversion thereof into other shares of its Capital Stock) or (b) any option,
warrant or other right to acquire shares of the Borrower's Capital Stock.
"Restructuring Charges" means any and all restructuring,
relocation and other unusual charges incurred in connection with the
Restructuring Program in Fiscal Years 1998 through 2001, not exceeding, on a
pre-tax basis, (i) $61,078,000 in the third Fiscal Quarter of Fiscal Year 1998,
(ii) $13,929,000 in the fourth Fiscal Quarter of Fiscal Year 1998, (iii)
$26,900,800 in the first Fiscal Quarter of Fiscal Year 1999, (iv) $4,374,500 in
the second Fiscal Quarter of Fiscal Year 1999 and (v) an aggregate of
$102,026,000 in the period from and including the third Fiscal Quarter of
Fiscal Year 1999 through the end of Fiscal Year 2001; and in any event the
aggregate of all such charges on an after-tax basis shall not exceed
$125,000,000.
"Restructuring Program" means the restructuring program and
related plans, including the establishment of a dual corporate headquarters,
publicly announced by the Borrower on July 22, 1998.
"Reuters Screen" shall mean, when used in connection with any
designated page and the London Interbank Offered Rate or IBOR, the display page
so designated on the Reuters Monitor Money Rates Service (or such other page as
may replace that page on that service for the purpose of displaying rates
comparable to the London Interbank Offered Rate or IBOR).
"Russell Family" means, collectively,
(a) the lineal descendants (including Persons who have
been legally adopted by a lineal descendant) and the spouses of lineal
descendants of Benjamin Russell (founder of the Borrower); and
(b) the Benjamin and Roberta Russell Foundation,
Incorporated; and
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(c) any trust directly or indirectly controlled by, or
for the benefit of, one or more of such Persons described in clause (a) above
or directly or indirectly controlled by any corporation or partnership
described in clause (d) below; and
(d) any corporation or partnership in which voting
control as to such entity is held, directly or indirectly, by any one or more
of the Persons described in clause (a) above or by such trusts described in
clause (c) above; and
(e) any Person acting as the executor or administrator
of the estate or other legal representative of any Person described in clause
(a) above.
"S&P" means Standard & Poor's Rating Group, a division of
McGraw-Hill, Inc.
"Special Purpose Vehicle" means a trust, partnership or other
special purpose Person established by the Borrower to implement the Receivables
Securitization Program.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Borrower or its
Subsidiaries (other than the Receivables Subsidiary) that are reasonably
customary in accounts receivable securitization transactions, as reasonably
determined in good faith by the Administrative Agent.
"Stated Maturity Date" means, with respect to any Money
Market Loan, the Stated Maturity Date therefor specified by the Bank in the
applicable Money Market Quote.
"Stockholders' Equity" means, at any time, the shareholders'
equity of the Borrower and its Consolidated Subsidiaries, as set forth or
reflected on the most recent consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries prepared in accordance with GAAP, but excluding any
Redeemable Preferred Stock of the Borrower or any of its Consolidated
Subsidiaries. Shareholders' equity generally would include, but not be limited
to (i) the par or stated value of all outstanding Capital Stock, (ii) capital
surplus, (iii) retained earnings, and (iv) various deductions such as (A)
purchases of treasury stock, (B) valuation allowances, (C) receivables due from
an employee stock ownership plan, (D) employee stock ownership plan debt
guarantees, and (E) translation adjustments for foreign currency transactions.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Borrower.
"Swing Loan" means a Loan made by Wachovia pursuant to
Section 2.01(b), which must be a Base Rate Loan or a Transaction Rate Loan.
"Swing Loan Note" means the promissory note of the Borrower,
substantially in the form of Exhibit A-2, evidencing the obligation of the
Borrower to repay the Swing Loans, together with all amendments,
consolidations, modifications, renewals, and supplements thereto.
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"Syndicated Dollar Loan Notes" means the promissory notes of
the Borrower, substantially in the form of Exhibit A-1, evidencing the
obligation of the Borrower to repay the Syndicated Dollar Loans, together with
all amendments, consolidations, modifications, renewals and supplements
thereto.
"Syndicated Dollar Loans" means Base Rate Loans or
Euro-Dollar Loans made pursuant to the terms and conditions set forth in
Section 2.01.
"Syndicated Loans" means Syndicated Dollar Loans and Foreign
Currency Loans.
"Taxes" has the meaning set forth in Section 2.13(d).
"Termination Date" means whichever is applicable of (i)
October 15, 2004 (ii) the date the Commitments are terminated pursuant to
Section 6.01 following the occurrence of an Event of Default, or (iii) the date
the Borrower terminates the Commitments entirely pursuant to Section 2.09.
"Telerate" means, when used in connection with any designated
page and IBOR, the display page so designated on the Telerate service screen
(or such other page as may replace that page on that service for the purpose of
displaying rates comparable to IBOR).
"Third Parties" means all lessees, sublessees, licensees and
other users of the Properties, excluding those users of the Properties in the
ordinary course of the Borrower's business and on a temporary basis.
"Transferee" has the meaning set forth in Section 9.08(d).
"Transaction Rate" has the meaning set forth in Section
2.01(b)(ii).
"Transaction Rate Loan" means a Swing Loan to be made as a
Transaction Rate Loan pursuant to Section 2.01(b).
"Transaction Rate Request" has the meaning set forth in
Section 2.01(b)(ii).
"Unfunded Vested Liabilities" means, with respect to any Plan
at any time, the amount (if any) by which (i) the present value of all vested
nonforfeitable benefits under such Plan exceeds (ii) the fair market value of
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the Controlled Group to the
PBGC or the Plan under Title IV of ERISA.
"Unused Commitment" means at any date, with respect to any
Bank, an amount equal to its Commitment less the aggregate outstanding
principal amount of its Syndicated Dollar Loans and Foreign Currency Loans (but
not its Money Market Loans, and not the Swing Loans).
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"Wachovia" means Wachovia Bank, N.A., a national banking
association, and its successors.
"Wholly Owned Subsidiary" means any Subsidiary all of the
shares of capital stock or other ownership interests of which (except
directors' qualifying shares) are at the time directly or indirectly owned by
the Borrower.
"Y2K Plan" has the meaning set forth in Section 4.19.
"Year 2000 Compliant and Ready" means that (a) the Borrower's
and its Subsidiaries hardware and software systems with respect to the
operation of its business will, in all material respects: (i) handle date
information involving any and all dates before, during and after January 1,
2000, including accepting input, providing output and performing date
calculations in whole or in part; (ii) operate, accurately without interruption
on and in respect of any and all dates before, during and after January 1, 2000
and without any change in performance; and (iii) store and provide date input
information without creating any ambiguity as to the century; and (b) the
Borrower has developed alternative plans to ensure business continuity in the
event of the failure of any or all of items (i) through (iii) in clause (a)
above in this definition.
SECTION 1.02. ACCOUNTING TERMS AND DETERMINATIONS.
Unless otherwise specified herein, all terms of an accounting
character used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered
hereunder shall be prepared, in accordance with GAAP, applied on a basis
consistent (except for changes concurred in by the Borrower's independent
public accountants or otherwise required by a change in GAAP) with the most
recent audited consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Banks unless with respect to any
such change concurred in by the Borrower's independent public accountants or
required by GAAP, in determining compliance with any of the provisions of this
Agreement or any of the other Loan Documents: (i) the Borrower shall have
objected to determining such compliance on such basis at the time of delivery
of such financial statements, or (ii) the Required Banks shall so object in
writing within 30 days after the delivery of such financial statements, in
either of which events such calculations shall be made on a basis consistent
with those used in the preparation of the latest financial statements as to
which such objection shall not have been made (which, if objection is made in
respect of the first financial statements delivered under Section 5.01 hereof,
shall mean the financial statements referred to in Section 4.04).
SECTION 1.03. REFERENCES
Unless otherwise indicated, references in this Agreement to
"Articles", "Exhibits", "Schedules", "Sections" and other Subdivisions are
references to articles, exhibits, schedules, sections and other subdivisions
hereof.
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SECTION 1.04. USE OF DEFINED TERMS.
All terms defined in this Agreement shall have the same
defined meanings when used in any of the other Loan Documents, unless otherwise
defined therein or unless the context shall require otherwise.
SECTION 1.05. TERMINOLOGY.
All personal pronouns used in this Agreement, whether used in
the masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and the plural shall include the singular.
Titles of Articles and Sections in this Agreement are for convenience only, and
neither limit nor amplify the provisions of this Agreement.
ARTICLE II.
THE CREDITS
SECTION 2.01. COMMITMENTS TO LEND SYNDICATED LOANS.
(a) Each Bank (except as to Aliant Bank, with respect to
Foreign Currency Loans, as set forth in the last two sentences of this
paragraph (a)) severally agrees, on the terms and conditions set forth herein,
to make Syndicated Loans (which may be, at the option of the Borrower and
subject to the terms and conditions hereof, Foreign Currency Loans or
Syndicated Dollar Loans, and Syndicated Dollar Loans may be Base Rate Loans or
Euro-Dollar Loans) to the Borrower (and with respect to Foreign Currency Loans,
such Borrower may be either Russell Corporation or Russell Europe Limited) from
time to time before the Termination Date; provided that,
(i) immediately after each such Syndicated Loan
is made, the sum of the aggregate outstanding principal
amount of the Syndicated Dollar Loans and the Dollar
Equivalent of the Foreign Currency Loans by such Bank shall
not exceed the amount of its Commitment, and
(ii) (x) the aggregate outstanding principal
amount of all Syndicated Dollar Loans, Swing Loans and Money
Market Loans of all Banks and the Dollar Equivalent of the
Foreign Currency Loans of all Banks shall not exceed the
lesser of (1) the aggregate amount of the Commitments and (2)
the limitations, if any, on borrowings contained in any
agreement or other instrument binding upon the Borrower or
any of its Subsidiaries; and (y) the Dollar Equivalent of the
aggregate outstanding principal amount of all Foreign
Currency Loans shall not exceed $25,000,000.
The Dollar Equivalent of each Foreign Currency Loan on the date each Foreign
Currency Loan is disbursed pursuant hereto shall be deemed to be the amount of
such Foreign Currency Loan
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outstanding for the purpose of calculating the aggregate outstanding principal
amount of the Foreign Currency Loans for purposes of clause (ii) of Section
2.01(a) and clause (ii) of Section 2.03(a); provided, however, that if at the
time of receipt of any Notice of Borrowing or Money Market Quote Request, the
aggregate outstanding principal amount of all Syndicated Dollar Loans and Money
Market Loans of all Banks and the Dollar Equivalent of the aggregate principal
amount of the Foreign Currency Loans of all Banks is equal to or greater than
75% of the aggregate amount of all of the Commitments, then the Dollar
Equivalent of each Foreign Currency Loan shall be calculated as of such date,
rather than as of the date such Foreign Currency Loans were disbursed, and in
the event that, as a result of such calculation, the aggregate outstanding
principal amount of all Syndicated Dollar Loans and Money Market Loans of all
Banks and the Dollar Equivalent of the aggregate principal amount of the
Foreign Currency Loans of all Banks exceeds the aggregate amount of all of the
Commitments, then (1) no additional Borrowings shall be permitted until the
payment required by clause (2) below has been made and (2) the Foreign Currency
Loans shall be subject to mandatory repayment pursuant to the provisions of
Section 2.12(b). Each Syndicated Borrowing under this Section shall be in an
aggregate principal amount of (x) $1,000,000 or any larger integral multiple of
$500,000, in the case of Base Rate Loans, and (y) $5,000,000 (or the Dollar
Equivalent thereof in any Foreign Currency) or any larger integral multiple of
$1,000,000 (or the Dollar Equivalent thereof in any Foreign Currency) in the
case of Fixed Rate Loans (except in any case that any such Syndicated Borrowing
may be in the aggregate amount of the Unused Commitments) and shall be made
from the several Banks ratably in proportion to their respective Commitments.
Within the foregoing limits, the Borrower may borrow under this Section, repay
or, to the extent permitted by Section 2.11, prepay Syndicated Loans and
reborrow under this Section at any time before the Termination Date.
Notwithstanding the foregoing, if there shall occur on or prior to the date of
any Foreign Currency Loan any change in national or international financial,
political or economic conditions or currency exchange rates or exchange
controls which would in the opinion of the Administrative Agent make it
impracticable to make such Foreign Currency Loan, then the Administrative Agent
shall forthwith give notice thereof to the Borrower and the Banks, and such
Foreign Currency Loan shall be made on such date as Base Rate Loans, unless the
Borrower notifies the Administrative Agent at least two Domestic Business Days
before such date that it elects not to borrow on such date. Aliant Bank has
indicated that it is unable to fund Foreign Currency Loans, and Wachovia and
Aliant Bank have agreed that: (i) Wachovia will fund Aliant Bank's ratable
share of any Foreign Currency Loan (such share of any Foreign Currency Loan
made by Wachovia being the "Aliant Foreign Currency Share"), and Wachovia's
Foreign Currency Loan Note shall also evidence such Foreign Currency Loans made
on behalf of Aliant Bank; (ii) immediately upon the making of any Foreign
Currency Loan by Wachovia, Aliant Bank shall be deemed to have irrevocably and
unconditionally purchased and received from Wachovia, without recourse or
warranty, a 100% undivided risk participation in such Foreign Currency Loan in
the amount of the Aliant Foreign Currency Share; (iii) in the event that the
applicable Borrower shall not have repaid any Foreign Currency Loan made by
Wachovia as and when it becomes due pursuant hereto, Wachovia shall promptly
notify Aliant Bank of such failure, and Aliant Bank shall promptly and
unconditionally pay to Wachovia, in Dollars and in same day funds, the Dollar
Equivalent of the Aliant Foreign Currency Share of such Foreign Currency Loan,
and (iv) if such payment is not promptly made, hold Wachovia harmless and
indemnify it as to any loss incurred by Wachovia arising from any change in the
value of Dollars in relation to such Foreign Currency between the date such
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payment became due and the date of payment thereof, and pay to Wachovia
interest for such period on the amount of such payment at the Base Rate for the
first 3 days and thereafter at the Default Rate.
(b) Swing Loans.
(i) In addition to the foregoing, Wachovia shall from
time to time, upon the request of the Borrower, if the applicable
conditions precedent in Article III have been satisfied, make Swing
Loans to the Borrower in an aggregate principal amount at any time
outstanding not exceeding $15,000,000; provided that, immediately
after such Swing Loan is made, the conditions set forth in clause (ii)
of Section 2.01(a) shall have been satisfied. Each Swing Loan
Borrowing under this Section 2.01(b) shall be in an aggregate
principal amount of $100,000 or any larger multiple of $25,000. Within
the foregoing limits, the Borrower may borrow under this Section
2.01(b), prepay and reborrow under this Section 2.01(b) at any time
before the Termination Date. Swing Loans shall not be considered a
utilization of the Commitment of Wachovia or any other Bank hereunder.
All Swing Loans shall be made as Base Rate Loans or, subject to the
provisions of clause (ii) below, Transaction Rate Loans.
(ii) Swing Loans may be Transaction Rate Loans, if the
Administrative Agent shall have determined that such Transaction Rate
Loan, including the principal amount thereof, the Interest Period and
the Transaction Rate applicable thereto, has been expressly agreed to
by the Borrower and Wachovia (such agreement may be obtained by
telephone, confirmed promptly to the Administrative Agent in writing)
pursuant to the following procedures. If the Borrower desires a
Transaction Rate Loan, (a) the Borrower shall provide Wachovia, with a
copy to the Administrative Agent, with notice of a request (a
"Transaction Rate Request") for a quote for a Transaction Rate
Borrowing prior to 1:00 p.m. (Atlanta, Georgia time) on the date
(which shall be a Domestic Business Day) of the proposed Transaction
Rate Borrowing, which Transaction Rate Request shall include the
principal amount and proposed Interest Period of the relevant
Transaction Rate Borrowing, (b) prior to 1:30 p.m. (Atlanta, Georgia
time) on such date, Wachovia shall furnish the Borrower, with a copy
to the Administrative Agent, with its rate quote (a "Transaction Rate
Quote") via facsimile transmission, (c) the Borrower shall immediately
inform Wachovia and the Administrative Agent of its decision as to
whether to request a Transaction Rate Borrowing at the Transaction
Rate specified in such Transaction Rate Quote (a "Transaction Rate")
(which may be done by telephone and promptly confirmed in writing, and
which decision shall be irrevocable), and (d) if the Borrower has so
informed Wachovia and the Administrative Agent that it does desire a
Transaction Rate Borrowing at the Transaction Rate specified in such
Transaction Rate Quote, then by 2:00 p.m. (Atlanta, Georgia time) on
the date of such decision, Wachovia shall make such Transaction Rate
Borrowing, with interest accruing thereon at such Transaction Rate,
available to the Administrative Agent in accordance with the
procedures set forth herein. The Administrative Agent shall notify the
Banks of any Transaction Rate Borrowing pursuant hereto.
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(iii) At any time, upon the request of Wachovia, each Bank
other than Wachovia shall, on the third Domestic Business Day after
such request is made, purchase a participating interest in Swing Loans
in an amount equal to its ratable share (based upon its respective
Commitment) of such Swing Loans. On such third Domestic Business Day,
each Bank will immediately transfer to Wachovia, in immediately
available funds, the amount of its participation. Whenever, at any
time after Wachovia has received from any such Bank its participating
interest in a Swing Loan, the Administrative Agent receives any
payment on account thereof, the Administrative Agent will distribute
to such Bank its participating interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period of
time during which such Bank's participating interest was outstanding
and funded); provided, however, that in the event that such payment
received by the Administrative Agent is required to be returned, such
Bank will return to the Administrative Agent any portion thereof
previously distributed by the Administrative Agent to it. Each Bank's
obligation to purchase such participating interests shall be absolute
and unconditional and shall not be affected by any circumstance,
including, without limitation: (i) any set-off, counterclaim,
recoupment, defense or other right which such Bank or any other Person
may have against Wachovia requesting such purchase or any other Person
for any reason whatsoever; (ii) the occurrence or continuance of a
Default or an Event of Default or the termination of the Commitments;
(iii) any adverse change in the condition (financial or otherwise) of
the Borrower, the Parent or any other Person; (iv) any breach of this
Agreement by the Borrower or any other Bank; or (v) any other
circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing.
SECTION 2.02. METHOD OF BORROWING SYNDICATED LOANS AND SWING
LOANS.
(a) For all Loans other than Transaction Rate Loans and
Money Market Loans, the Borrower shall give the Administrative Agent notice (a
"Notice of Borrowing"), which shall be substantially in the form of Exhibit E-1
(and for Foreign Currency Borrowings, Russell Europe Limited hereby authorizes
Russell Corporation to execute and deliver a Notice of Borrowing and a Notice
of Continuation or Conversion, as the case may be, in its name, as its agent),
prior to (i) 9:30 A.M. (Atlanta, Georgia time) for Base Rate Borrowings which
are Syndicated Borrowings, and 1:00 P.M. (Atlanta, Georgia time) for Base Rate
Borrowings which are Swing Loan Borrowings, in each case on the same Domestic
Business Day of each Base Rate Borrowing, and (ii) 11:00 A.M. (Atlanta, Georgia
time) for all Syndicated Borrowings at least 3 Euro-Dollar Business Days before
each Euro-Dollar Borrowing and at least 3 Foreign Currency Business Days before
each Foreign Currency Borrowing, specifying:
(i) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Base Borrowing, a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing and a Foreign
Currency Business Day in the case of a Foreign Currency Borrowing
(ii) the aggregate amount of such Borrowing,
(iii) whether the Syndicated Loans comprising such
Borrowing are to be Base Rate Loans, Euro-Dollar Loans or Foreign
Currency Loans, or stating that such
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Borrowing is to be a Swing Loan Borrowing, and if such Loans are to be
Foreign Currency Loans, specifying the Foreign Currency, and
(iv) in the case of a Fixed Rate Borrowing, the duration
of the Interest Period applicable thereto, subject to the provisions
of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the
Administrative Agent shall promptly notify each Bank of the contents thereof
and (unless such Borrowing is a Swing Loan Borrowing) of such Bank's ratable
share of such Syndicated Borrowing and such Notice of Borrowing, once received
by the Administrative Agent, shall not thereafter be revocable by the Borrower.
(c) Not later than 11:00 A.M. (Atlanta, Georgia time) on
the date of each Syndicated Borrowing, each Bank shall (except as provided in
paragraph (d) of this Section) make available its ratable share of such
Syndicated Borrowing, in Federal or other funds immediately available in
Atlanta, Georgia, to the Administrative Agent at its address determined
pursuant to Section 9.01 (or, with respect to Foreign Currency Borrowings, to
the Administrative Agent's designated foreign correspondent bank at the address
specified by the Administrative Agent), which funds shall be in Dollars, if
such Borrowing is a Dollar Borrowing, and in the applicable Foreign Currency,
if such Borrowing is a Foreign Currency Borrowing. Unless the Administrative
Agent determines that any applicable condition specified in Article III has not
been satisfied, the Administrative Agent will make the funds so received from
the Banks available to the Borrower at the Administrative Agent's aforesaid
address. Unless the Administrative Agent receives notice from a Bank, at the
Administrative Agent's address referred to in or specified pursuant to Section
9.01, no later than 4:00 P.M. (local time at such address) on the Domestic
Business Day before the date of a Syndicated Borrowing stating that such Bank
will not make a Syndicated Loan in connection with such Syndicated Borrowing,
the Administrative Agent shall be entitled to assume that such Bank will make a
Syndicated Loan in connection with such Syndicated Borrowing and, in reliance
on such assumption, the Administrative Agent may (but shall not be obligated
to) make available such Bank's ratable share of such Syndicated Borrowing to
the Borrower for the account of such Bank. If the Administrative Agent makes
such Bank's ratable share available to the Borrower and such Bank does not in
fact make its ratable share of such Syndicated Borrowing available on such
date, the Administrative Agent shall be entitled to recover such Bank's ratable
share from such Bank or the Borrower (and for such purpose shall be entitled to
charge such amount to any account of the Borrower maintained with the
Administrative Agent after giving the Borrower 2 Domestic Business Days' prior
notice thereof), together with interest thereon for each day during the period
from the date of such Syndicated Borrowing until such sum shall be paid in full
at a rate per annum equal to the rate at which the Administrative Agent
determines that it obtained (or could have obtained) overnight Federal funds to
cover such amount for each such day during such period, provided that (i) any
such payment by the Borrower of such Bank's ratable share and interest thereon
shall be without prejudice to any rights that the Borrower may have against
such Bank and (ii) until such Bank has paid its ratable share of such
Syndicated Borrowing, together with interest pursuant to the foregoing, it will
have no interest in or rights with respect to such Syndicated Borrowing for any
purpose hereunder. If the Administrative Agent does not exercise its option to
advance funds for the account of such Bank, it shall forthwith notify the
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Borrower of such decision. Unless the Administrative Agent determines that any
applicable condition specified in Article III has not been satisfied, Wachovia
will make available to the Borrower at Wachovia's Lending Office the amount of
any such Borrowing which is a Swing Loan Borrowing.
(d) If any Bank makes a new Syndicated Loan hereunder on
a day on which the Borrower is to repay all or any part of an outstanding
Syndicated Loan from such Bank, such Bank shall apply the proceeds of its new
Syndicated Loan to make such repayment as a Refunding Loan and only an amount
equal to the difference (if any) between the amount being borrowed and the
amount of such Refunding Loan shall be made available by such Bank to the
Administrative Agent as provided in paragraph (c) of this Section, or remitted
by the Borrower to the Administrative Agent as provided in Section 2.13, as the
case may be; provided, however, that if the Syndicated Loan which is to be
repaid is a Foreign Currency Loan, the foregoing provisions shall apply only if
the new Syndicated Loan is to be made in the same Foreign Currency.
(e) Notwithstanding anything to the contrary contained
in this Agreement, no Fixed Rate Borrowing may be made if there shall have
occurred a Default or an Event of Default, which Default or Event of Default
shall not have been cured or waived, and in such event, all Refunding Loans
shall be made as Base Rate Loans (but shall bear interest at the Default Rate,
if applicable).
(f) In the event that a Notice of Borrowing fails to
specify whether the Syndicated Loans comprising such Syndicated Borrowing are
to be Base Rate Loans, Euro-Dollar Loans or Foreign Currency Loans, such
Syndicated Loans shall be made as Base Rate Loans. If the Borrower is otherwise
entitled under this Agreement to repay any Syndicated Loans maturing at the end
of an Interest Period applicable thereto with the proceeds of a new Syndicated
Borrowing, and the Borrower fails to repay such Syndicated Loans using its own
moneys and fails to give a Notice of Borrowing in connection with such new
Syndicated Borrowing, a new Syndicated Borrowing shall be deemed to be made on
the date such Syndicated Loans mature in an amount equal to the principal
amount of the Syndicated Loans so maturing, and the Syndicated Loans comprising
such new Syndicated Borrowing shall be Base Rate Loans, which shall be in the
Dollar Equivalent of such maturing Loans, if such maturing Loans were Foreign
Currency Loans.
(g) Notwithstanding anything to the contrary contained
herein, there shall not be more than 8 Interest Periods (other than for
Transaction Rate Loans, which shall not be limited in number) outstanding at
any given time.
SECTION 2.03. MONEY MARKET LOANS
(a) In addition to making Syndicated Borrowings, the
Borrower may, as set forth in this Section 2.03, at any time that its
Debt/EBITDA Ratio is less than 3.0 to 1.0, request the Banks to make offers to
make Money Market Borrowings available to the Borrower. The Banks may, but
shall have no obligation to, make such offers and the Borrower may, but shall
have no obligation to, accept any such offers in the manner set forth in this
Section 2.03, provided that:
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<PAGE> 36
(i) the number of interest rates applicable to Money
Market Loans which may be outstanding at any given time is subject to
the provisions of Section 2.02(g);
(ii) the conditions set forth in clause (ii) of Section
2.01(a) shall be satisfied;
(iii) the aggregate principal amount of all Money Market
Loans outstanding at any one time shall not exceed 50% of the amount
of the Aggregate Commitments as of such time; and
(iv) the Money Market Loans of any Bank will be deemed to
be usage of the Commitments for the purpose of calculating
availability pursuant to Section 2.01(a)(ii), 2.01(b)(i) and
2.03(a)(ii), but will not reduce such Bank's obligation to lend its
pro rata share of the remaining Unused Commitment.
(b) When the Borrower wishes to request offers to make
Money Market Loans, it shall give the Administrative Agent (which shall
promptly notify the Banks) notice substantially in the form of Exhibit I hereto
(a "Money Market Quote Request") so as to be received no later than 10:00 A.M.
(Atlanta, Georgia time) at least 2 Domestic Business Days prior to the date of
the Money Market Borrowing proposed therein (or such other time and date as the
Borrower and the Administrative Agent, with the consent of the Required Banks,
may agree), specifying:
(i) the proposed date of such Money Market Borrowing,
which shall be a Euro-Dollar Business Day (the "Money Market Borrowing
Date");
(ii) the maturity date (or dates) (each a "Stated
Maturity Date") for repayment of each Money Market Loan to be made as
part of such Money Market Borrowing (which Stated Maturity Date shall
be that date occurring not less than 7 days but not more than 180 days
from the date of such Money Market Borrowing); provided that the
Stated Maturity Date for any Money Market Loan may not extend beyond
the Termination Date (as in effect on the date of such Money Market
Quote Request); and
(iii) the aggregate amount of principal to be requested by
the Borrower as a result of such Money Market Borrowing, which shall
be at least $5,000,000 (and in larger integral multiples of
$1,000,000) but shall not cause the limits specified in Section
2.03(a) to be violated.
The Borrower may request offers to make Money Market Loans having up to 2
different Stated Maturity Dates in a single Money Market Quote Request;
provided that the request for each separate Stated Maturity Date shall be
deemed to be a separate Money Market Quote Request for a separate Money Market
Borrowing. Except as otherwise provided in the immediately preceding sentence,
after the first Money Market Quote Request has been given hereunder, no Money
Market Quote Request shall be given until at least 5 Domestic Business Days
after all prior Money Market Quote Requests have been fully processed by the
Administrative Agent, the Banks and the Borrower pursuant to this Section 2.03.
28
<PAGE> 37
(c) (i) Each Bank may, but shall have no obligation
to, submit a response containing an offer to make a Money Market Loan
substantially in the form of Exhibit J hereto (a "Money Market Quote") in
response to any Money Market Quote Request; provided that, if the Borrower's
request under Section 2.03(b) specified more than 1 Stated Maturity Date, such
Bank may, but shall have no obligation to, make a single submission containing
a separate offer for each such Stated Maturity Date and each such separate
offer shall be deemed to be a separate Money Market Quote. Each Money Market
Quote must be submitted to the Administrative Agent not later than 10:00 A.M.
(Atlanta, Georgia time) on the Money Market Borrowing Date; provided that any
Money Market Quote submitted by Wachovia may be submitted, and may only be
submitted, if Wachovia notifies the Borrower of the terms of the offer
contained therein not later than 9:45 A.M. (Atlanta, Georgia time) on the Money
Market Borrowing Date (or 15 minutes prior to the time that the other Banks are
required to have submitted their respective Money Market Quotes). Subject to
Section 6.01, any Money Market Quote so made shall be irrevocable except with
the written consent of the Administrative Agent given on the instructions of
the Borrower.
(ii) Each Money Market Quote shall specify:
(A) the proposed Money Market Borrowing Date
and the Stated Maturity Date therefor;
(B) the principal amounts of the Money Market
Loan which the quoting Bank is willing to make for the
applicable Money Market Quote, which principal amounts (x)
may be greater than or less than the Commitment of the
quoting Bank, (y) shall be at least $5,000,000 or a larger
integral multiple of $500,000, and (z) may not exceed the
principal amount of the Money Market Borrowing for which
offers were requested;
(C) the rate of interest per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%) offered
for each such Money Market Loan (such amounts being
hereinafter referred to as the "Money Market Rate"); and
(D) the identity of the quoting Bank.
Unless otherwise agreed by the Administrative Agent and the Borrower, no Money
Market Quote shall contain qualifying, conditional or similar language or
propose terms other than or in addition to those set forth in the applicable
Money Market Quote Request (other than setting forth the principal amounts of
the Money Market Loan which the quoting Bank is willing to make for the
applicable Interest Period) and, in particular, no Money Market Quote may be
conditioned upon acceptance by the Borrower of all (or some specified minimum)
of the principal amount of the Money Market Loan for which such Money Market
Quote is being made.
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<PAGE> 38
(d) The Administrative Agent shall as promptly as
practicable after the Money Market Quote is submitted (but in any event not
later than 10:30 A.M. (Atlanta, Georgia time)) on the Money Market Borrowing
Date, notify the Borrower of the terms (i) of any Money Market Quote submitted
by a Bank that is in accordance with Section 2.03(c) and (ii) of any Money
Market Quote that amends, modifies or is otherwise inconsistent with a previous
Money Market Quote submitted by such Bank with respect to the same Money Market
Quote Request. Any such subsequent Money Market Quote shall be disregarded by
the Administrative Agent unless such subsequent Money Market Quote is submitted
solely to correct a manifest error in such former Money Market Quote. The
Administrative Agent's notice to the Borrower shall specify (A) the principal
amounts of the Money Market Borrowing for which offers have been received and
(B) the respective principal amounts and Money Market Rates so offered by each
Bank (identifying the Bank that made each Money Market Quote).
(e) Not later than 11:00 A.M. (Atlanta, Georgia time) on
the Money Market Borrowing Date, the Borrower shall notify the Administrative
Agent of its acceptance or nonacceptance of the offers so notified to it
pursuant to Section 2.03(d) and the Administrative Agent shall promptly notify
each Bank which submitted an offer. In the case of acceptance, such notice
shall specify the aggregate principal amount of offers (for each Stated
Maturity Date) that are accepted. The Borrower may accept any Money Market
Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the
related Money Market Quote Request;
(ii) the aggregate principal amount of each Money Market
Loan comprising a Money Market Borrowing shall be at least $5,000,000
(and in larger integral multiples of $1,000,000) but shall not cause
the limits specified in Section 2.03(a) to be violated;
(iii) acceptance of offers may only be made in ascending
order of Money Market Rates; and
(iv) the Borrower may not accept any offer where the
Administrative Agent has advised the Borrower that such offer fails to
comply with Section 2.03(c)(ii) or otherwise fails to comply with the
requirements of this Agreement (including without limitation, Section
2.03(a)).
If offers are made by 2 or more Banks with the same Money Market Rates for a
greater aggregate principal amount than the amount in respect of which offers
are accepted for the related Stated Maturity Date, the principal amount of
Money Market Loans in respect of which such offers are accepted shall be
allocated by the Borrower among such Banks as nearly as possible in proportion
to the aggregate principal amount of such offers. Determinations by the
Borrower of the amounts of Money Market Loans shall be conclusive in the
absence of manifest error.
(f) Any Bank whose offer to make any Money Market Loan
has been accepted shall, not later than 12:00 P.M. (Atlanta, Georgia time) on
the Money Market
30
<PAGE> 39
Borrowing Date, make the amount of such Money Market Loan allocated to it
available to the Administrative Agent at its address referred to in Section
9.01 in immediately available funds. The amount so received by the
Administrative Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower on such date by depositing the
same, in immediately available funds, not later than 4:00 P.M. (Atlanta,
Georgia time), in an account of such Borrower maintained with Wachovia.
(g) After any Money Market Loan has been funded, the
Administrative Agent shall notify the Banks of the aggregate principal amount
of the Money Market Quotes received and the highest and lowest rates included
in such Money Market Quotes.
(h) Money Market Loans by Designated Banks. For any Bank
which is a Designating Bank, any Money Market Loan to be made by such Bank may
from time to time be made by its Designated Bank in such Designated Bank's sole
discretion, and nothing herein shall constitute a commitment to make Money
Market Loans by such Designated Bank; provided, that if any Designated Bank
elects not to, or fails to, make any such Money Market Loan that has been
accepted by the Borrower in accordance with the foregoing, its Designating Bank
hereby agrees that it shall make such Money Market Loan pursuant to the terms
hereof.
SECTION 2.04. CONTINUATION AND CONVERSION ELECTIONS.
By delivering a notice (a "Notice of Continuation or
Conversion"), which shall be substantially in the form of Exhibit E-2, to the
Administrative Agent on or before 12:00 P.M., Atlanta, Georgia time, on a
Domestic Business Day (or Euro-Dollar Business Day, in the case of Euro-Dollar
Loans outstanding, or Foreign Currency Business Day, in the case of Foreign
Currency Loans outstanding), the Borrower may from time to time irrevocably
elect, by notice on the same Domestic Business Day, in the case of Base Rate
Loans, or 3 Euro-Dollar Business Days, in the case of Euro-Dollar Loans, or 3
Foreign Currency Business Days, in the case of Foreign Currency Loans, that
all, or any portion be, (i) in the case of Base Rate Loans, converted into
Euro-Dollar Loans or Foreign Currency Loans in an aggregate principal amount of
$5,000,000 or any larger integral multiple of $1,000,000 or, (ii) in the case
of Euro-Dollar Loans, converted into Base Rate Loans or Foreign Currency Loans
in an aggregate principal amount of $5,000,000 or any larger integral multiple
of $1,000,000 (or the Dollar Equivalent thereof, in the case of Foreign
Currency Loans) or continued as Euro-Dollar Loans in an aggregate principal
amount of $5,000,000 or any larger integral multiple of $1,000,000, or (iii) in
the case of Foreign Currency Loans, continued as Foreign Currency Loans in the
same Foreign Currency (in the absence of delivery of a Notice of Continuation
or Conversion with respect to any Euro-Dollar Loan at least 3 Euro-Dollar
Business Days before the last day of the then current Interest Period with
respect thereto, such Euro-Dollar Loan shall, on such last day, automatically
convert to a Base Rate Loan); provided, however, that (x) each such conversion
or continuation shall be pro rated among the applicable outstanding Loans of
all Lenders that have made such Loans, and (y) no portion of the outstanding
principal amount of any Loans may be continued as, or be converted into, any
Fixed Rate Loan when any Event of Default has occurred and is continuing.
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<PAGE> 40
SECTION 2.05. NOTES
(a) The Syndicated Loans of each Bank shall be evidenced
by a single Syndicated Dollar Loan Note payable to the order of such Bank for
the account of its Lending Office in an amount equal to the original principal
amount of such Bank's Commitment and a single Foreign Currency Loan Note from
each of Russell Corporation and Russell Europe Limited, each payable to the
order of such Bank for the account of its Lending Office. The Swing Loans shall
be evidenced by a single Swing Loan Note payable to the order of Wachovia in
the original principal amount of $15,000,000.
(b) The Money Market Loans made by any Bank to the
Borrower shall be evidenced by a single Money Market Loan Note payable to the
order of such Bank for the account of its Lending Office in an amount equal to
50% of the original principal amount of the Aggregate Commitments.
(c) Upon receipt of each Bank's Notes pursuant to
Section 3.01, the Administrative Agent shall deliver such Notes to such Bank.
Each Bank shall record, and prior to any transfer of its Notes shall endorse on
the schedules forming a part thereof appropriate notations to evidence, the
date, amount and maturity of, and effective interest rate for, each Loan made
by it, the date and amount of each payment of principal made by the Borrower
with respect thereto, whether such Loan is a Base Rate Loan, Euro-Dollar Loan
or Foreign Currency Loan, and if a Foreign Currency Loan, a specification of
the Foreign Currency, and such schedules of each such Bank's Notes shall
constitute rebuttable presumptive evidence of the respective principal amounts
owing and unpaid on such Bank's Notes; provided that the failure of any Bank to
make, or any error in making, any such recordation or endorsement shall not
affect the obligation of the Borrower hereunder or under the Notes or the
ability of any Bank to assign its Notes. Each Bank is hereby irrevocably
authorized by the Borrower so to endorse its Notes and to attach to and make a
part of any Note a continuation of any such schedule as and when required.
SECTION 2.06. MATURITY OF LOANS
(a) Each Fixed Rate Loan included in any Borrowing shall
mature, and the principal amount thereof shall be due and payable, on the last
day of the Interest Period applicable to such Borrowing.
(b) Notwithstanding the foregoing, the outstanding
principal amount of the Loans, if any, together with all accrued but unpaid
interest thereon, if any, shall be due and payable on the Termination Date.
SECTION 2.07. INTEREST RATES
(a) "Applicable Margin" means:
(i) for the period commencing on the Closing Date to and
including the first Performance Pricing Determination Date after the
Fiscal Quarter ending January 1, 2000,
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<PAGE> 41
(x) for any Base Rate Loan, 0%, and (y) for any Euro-Dollar Loan or
Foreign Currency Loan, 0.65%; and
(ii) from and after the first Performance Pricing
Determination Date after the Fiscal Quarter ending January 1, 2000,
(x) for any Base Rate Loan, 0.00% and (y) for each Euro-Dollar Loan
and Foreign Currency Loan, the percentage determined on each
Performance Pricing Determination Date by reference to the table set
forth below as to such type of Loan and the Debt/EBITDA Ratio,
determined as of the end of the quarterly or annual period ending
immediately prior to such Performance Pricing Determination Date.
<TABLE>
<CAPTION>
Debt/EBITDA
Ratio Applicable Margin
----- -----------------
<S> <C>
< 2.0 to 1.0 0.45%
> 2.0 to 1.0 but
-
< 2.5 to 1.0 0.55%
> 2.5 to 1.0 but
-
< 3.0 to 1.0 0.65%
> 3.0 to 1.0 0.90%
-
</TABLE>
In determining interest for purposes of this Section 2.07 and fees for purposes
of Section 2.08, the Borrower and the Banks shall refer to the Borrower's most
recent consolidated quarterly and annual (as the case may be) financial
statements delivered pursuant to Section 5.01(a) or (b), as the case may be. If
such financial statements require a change in interest pursuant to this Section
2.07 or fees pursuant to Section 2.08, the Borrower shall deliver to the
Administrative Agent, along with such financial statements, a notice to that
effect, which notice shall set forth in reasonable detail the calculations
supporting the required change. The "Performance Pricing Determination Date" is
the date which is 45 days after the end of each Fiscal Quarter. Any such
required change in interest and fees shall become effective on such Performance
Pricing Determination Date, and shall be in effect until the next Performance
Pricing Determination Date, provided that: (i) for Fixed Rate Loans, changes in
interest shall only be effective for Interest Periods commencing on or after
the Performance Pricing Determination Date; and (ii) no fees or interest shall
be decreased pursuant to this Section 2.07 or Section 2.08 if a Default is in
existence on the Performance Pricing Determination Date.
(b) Each Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such Loan is
made until it becomes due, at a rate per annum equal to the Base Rate for such
day plus the Applicable Margin. Such interest shall be payable on each
Quarterly Payment Date while such Base Rate Loan is outstanding and on the date
such Base Rate Loan is converted to a Fixed Rate Loan. Any overdue principal of
and, to the extent permitted by applicable law, overdue interest on any Base
Rate Loan shall bear
33
<PAGE> 42
interest, payable on demand, for each day until paid at a rate per annum equal
to the Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin plus the
applicable Adjusted London Interbank Offered Rate for such Interest Period.
Such interest shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than 3 months, at intervals of 3 months
after the first day thereof. Any overdue principal of and, to the extent
permitted by law, overdue interest on any Euro-Dollar Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the
Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to
any Interest Period means a rate per annum equal to the quotient obtained
(rounded upwards, if necessary, to the next higher 1/100th of 1%) by dividing
(i) the applicable London Interbank Offered Rate for such Interest Period by
(ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any
Euro-Dollar Loan means for the Interest Period of such Euro-Dollar Loan, the
rate per annum determined on the basis of the offered rate for deposits in
Dollars of amounts equal or comparable to the principal amount of such
Euro-Dollar Loan offered for a term comparable to such Interest Period, which
rates appear on Telerate Page 3750 effective as of 11:00 A.M., London time, 2
Euro-Dollar Business Days prior to the first day of such Interest Period,
provided that if no such offered rates appear on such page, the "London
Interbank Offered Rate" for such Interest Period will be the arithmetic average
(rounded upward, if necessary, to the next higher 1/100th of 1%) of rates
quoted by not less than 2 major banks in New York City, selected by the
Administrative Agent, at approximately 10:00 A.M., New York City time, 2
Euro-Dollar Business Days prior to the first day of such Interest Period, for
deposits in Dollars offered by leading European banks for a period comparable
to such Interest Period in an amount comparable to the principal amount of such
Euro-Dollar Loan.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in respect of "Eurocurrency liabilities" (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents). The Adjusted
London Interbank Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve Percentage.
(d) Each Money Market Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such Money
Market Loan is made until it becomes due, at a rate per annum equal to the
applicable Money Market Rate set forth in the relevant Money Market Quote. Such
interest shall be payable on the Stated Maturity Date thereof, and, if the
Stated Maturity Date occurs more than 90 days after the date of the relevant
Money Market
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<PAGE> 43
Loan, at intervals of 90 days after the first day thereof. Any overdue
principal of and, to the extent permitted by law, overdue interest on any Money
Market Loan shall bear interest, payable on demand, for each day until paid at
a rate per annum equal to the Default Rate.
(e) Each Foreign Currency Loan shall bear interest on
the outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin plus the
applicable Adjusted IBOR Rate for such Interest Period. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than 3 months, at intervals of 3 months after the first day
thereof. Any overdue principal of and, to the extent permitted by law, overdue
interest on any Foreign Currency Loan shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to the Default Rate.
"Adjusted IBOR Rate" means, with respect to each Interest
Period for a Foreign Currency Loan, the sum of (i) the rate obtained by
dividing (A) IBOR for such Interest Period by (B) a percentage equal to 1 minus
the then stated maximum rate (stated as a decimal) of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves) applicable to any member bank of the Federal Reserve System
as defined in Regulation D (or against any successor category of liabilities as
defined in Regulation D), plus (ii) if the relevant Foreign Currency Loan is in
British pounds sterling, a percentage sufficient to compensate the Banks for
the cost of complying with any reserves, liquidity and/or special deposit
requirements of the Bank of England directly or indirectly affecting the
maintenance or funding of such Foreign Currency Loan.
"IBOR" means, for any Interest Period, with respect to
Foreign Currency Loans, the offered rate for deposits in the applicable Foreign
Currency, for a period comparable to the Interest Period and in an amount
comparable to the amount of such Foreign Currency Loan appearing on Telerate
Page 3750, or, if Telerate is unavailable the Reuters Screen Page FRBD, FRBE,
FRBF or FRBG, as applicable, or, if it is unavailable on either Telerate or the
Reuters Screen, then such rate shall be determined by the Administrative Agent
from any other interest rate reporting service of recognized standing
designated in writing by the Administrative Agent to the Borrower as of 11:00
A.M. (London, England time) on the day that is two Business Days prior to the
first day of the Interest Period.
(f) The Administrative Agent shall determine each
interest rate applicable to the Loans hereunder. The Administrative Agent shall
give prompt notice to the Borrower and the Banks by telecopier of each rate of
interest so determined, and its determination thereof shall be conclusive in
the absence of manifest error.
(g) After the occurrence and during the continuance of
an Event of Default, the principal amount of the Loans (and, to the extent
permitted by applicable law, all accrued interest thereon) may, at the election
of the Required Banks, bear interest at the Default Rate.
SECTION 2.08. FEES
(a) The Borrower shall pay to the Administrative Agent,
for the ratable account of each Bank, a facility fee, calculated in the manner
provided in the last paragraph of
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<PAGE> 44
Section 2.07(a)(ii), on the aggregate amount of such Bank's Commitment (without
taking into account the amount of the outstanding Loans made by such Bank), at
a rate per annum equal to: (i) for the period commencing on the Closing Date to
and including the first Performance Pricing Determination Date after the Fiscal
Quarter ending January 1, 2000, 0.25%; and (ii) from and after the first
Performance Pricing Determination Date after the Fiscal Quarter ending January
1,2000, the percentage determined on each Performance Pricing Determination
Date by reference to the table set forth below and the Debt/EBITDA Ratio,
determined as of the end of the quarterly or annual period ending immediately
prior to such Performance Pricing Determination Date:
<TABLE>
<CAPTION>
Debt/EBITDA
Ratio Facility Fee
----- ------------
<S> <C>
< 2.0 to 1.0 0.15%
> 2.0 to 1.0 but
-
< 2.5 to 1.0 0.20%
> 2.5 to 1.0 but
-
< 3.0 to 1.0 0.25%
> 3.0 to 1.0 0.30%
-
</TABLE>
Such facility fees shall accrue from and including the
Closing Date to (but excluding the Termination Date) and shall be payable on
each Quarterly Payment Date and on the Termination Date.
SECTION 2.09. OPTIONAL TERMINATION OR REDUCTION OF
COMMITMENTS.
The Borrower may, upon at least 3 Domestic Business Days'
notice to the Administrative Agent, terminate at any time, or proportionately
reduce the Unused Commitments from time to time by an aggregate amount of at
least $5,000,000 or any larger integral multiple of $1,000,000. If the
Commitments are terminated in their entirety, all accrued fees (as provided
under Section 2.08) shall be due and payable on the effective date of such
termination.
SECTION 2.10. MANDATORY REDUCTION AND TERMINATION OF
COMMITMENTS.
The Commitments shall terminate on the Termination Date and
any Loans then outstanding (together with accrued interest thereon) shall be
due and payable on such date.
SECTION 2.11. OPTIONAL PREPAYMENTS
(a) The Borrower may, upon at least 1 Domestic Business
Days' notice to the Administrative Agent, prepay, without premium or penalty,
any Base Rate Borrowing in whole at any time, or from time to time in part in
amounts aggregating at least $1,000,000 with
36
<PAGE> 45
additional increments of $500,000 (or any lesser amount equal to the
outstanding balance of such Loan), or $100,000 as to Swing Loans, by paying the
principal amount to be prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall be applied to prepay
ratably the Base Rate Loans of the several Banks or of Wachovia, in the case of
Swing Loans included in such Base Rate Borrowing.
(b) Subject to any payments required pursuant to the
terms of Article VIII for such Fixed Rate Loan, upon 3 Domestic Business Day's
prior written notice, the Borrower may prepay in minimum amounts of $5,000,000
with additional increments of $1,000,000 (or any lesser amount equal to the
outstanding balance of such Loan) all or any portion of the principal amount of
any Fixed Rate Loan prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to
this Section 2.11, the Administrative Agent shall promptly notify each Bank of
the contents thereof and of such Bank's ratable share of such prepayment and
such notice, once received by the Administrative Agent, shall not thereafter be
revocable by the Borrower.
SECTION 2.12. MANDATORY PREPAYMENTS
(a) On each date on which the conditions set forth in
clauses (i) or (ii) of Section 2.01(a), clause (i) of Section 2.01(b) or of
clause (iii) of Section 2.03(a), are not satisfied (including, without
limitation, by reason of the reduction of the Commitments pursuant to Section
2.09 or Section 2.10), the Borrower shall repay or prepay such principal amount
of the outstanding Loans, if any (together with interest accrued thereon and
any amount due under Section 8.05(a)), as may be necessary so that after such
payment (1) the aggregate unpaid principal amount of the Loans does not exceed
the Aggregate Commitments as then in effect, and (2) the aggregate amount of
Money Market Loans does not exceed 50% of the Aggregate Commitments as then in
effect. Except where such prepayment must be applied to the Money Market Loans
in order to satisfy clause (2) above, each such payment or prepayment shall be
applied first to any Swing Loans outstanding which are Base Rate Loans, then to
any Swing Loans outstanding which are Transaction Rate Loans, and then ratably
to the Loans of the Banks outstanding on the date of payment or prepayment in
the following order of priority:(i) first, to Base Rate Loans; (ii) secondly,
to Euro-Dollar Loans; and (iii) lastly, to Money Market Loans.
(b) If the Administrative Agent determines at any time
(either on its own initiative or at the instance of any Bank) that the
aggregate principal amount of the Foreign Currency Loans outstanding (after
converting each Foreign Currency Loan to its Dollar Equivalent on the date of
calculation) at any time exceeds either (i) a Dollar Equivalent of $25,000,000
or (ii) 105% of the aggregate amount of all of the Commitments less the
outstanding aggregate amount of all Syndicated Dollar Loans, then upon 5
Foreign Currency Business Days' written notice from the Administrative Agent,
the Borrower shall prepay an aggregate principal amount of Foreign Currency
Loans sufficient to bring the aggregate of the Foreign Currency Loans
outstanding to no more than a Dollar Equivalent of $25,000,000 and within the
aggregate amount of all of the Commitments less the outstanding aggregate
amount of all Syndicated Dollar Loans. Nothing in the foregoing shall require
the Administrative Agent to make any such calculation unless expressly
requested to do so by the Required Banks.
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SECTION 2.13. GENERAL PROVISIONS AS TO PAYMENTS
(a) The Borrower shall make each payment of principal
of, and interest on, the Loans and of fees hereunder, without any setoff,
counterclaim or any deduction whatsoever, not later than 11:00 A.M. (Atlanta,
Georgia time) on the date when due, in Federal or other funds (subject to
paragraph (c) below, with respect to Foreign Currency Loans) immediately
available in Atlanta, Georgia, to the Administrative Agent at its address
referred to in Section 9.01. The Administrative Agent will promptly distribute
to Wachovia each such payment received on account of the Swing Loans and to
each Bank its ratable share of each such payment received by the Administrative
Agent for the account of the Banks.
(b) Whenever any payment of principal of, or interest
on, the Base Rate Loans, Money Market Loans or of fees hereunder shall be due
on a day which is not a Domestic Business Day, the date for payment thereof
shall be extended to the next succeeding Domestic Business Day. Whenever any
payment of principal of or interest on, the Euro-Dollar Loans or the Foreign
Currency Loans shall be due on a day which is not a Euro-Dollar Business Day or
Foreign Currency Business Day, as the case may be, the date for payment thereof
shall be extended to the next succeeding Euro-Dollar Business Day or Foreign
Currency Business Day, as the case may be, unless such Euro-Dollar Business Day
or Foreign Currency Business Day, as the case may be, falls in another calendar
month, in which case the date for payment thereof shall be the next preceding
Euro-Dollar Business Day or Foreign Currency Business Day, as the case may be.
(c) All payments of principal and interest with respect
to Foreign Currency Loans shall be made in the Foreign Currency in which the
related Foreign Currency Loan was made.
(d) All payments of principal, interest and fees and all
other amounts to be made by the Borrower pursuant to this Agreement with
respect to any Loan or fee relating thereto shall be paid without deduction
for, and free from, any tax, imposts, levies, duties, deductions, or
withholdings of any nature now or at anytime hereafter imposed by any
governmental authority or by any taxing authority thereof or therein excluding
in the case of each Bank, taxes imposed on or measured by its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which such
Bank is organized or any political subdivision thereof and, in the case of each
Bank, taxes imposed on its net income, and franchise taxes imposed on it, by
the jurisdiction of such Bank's applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, imposts, levies, duties,
deductions or withholdings of any nature being "Taxes"). In the event that the
Borrower is required by applicable law to make any such withholding or
deduction of Taxes with respect to any Loan or fee or other amount, the
Borrower shall pay such deduction or withholding to the applicable taxing
authority, shall promptly furnish to any Bank in respect of which such
deduction or withholding is made all receipts and other documents evidencing
such payment and shall pay to such Bank additional amounts as may be necessary
in order that the amount received by such Bank after the required withholding
or other payment shall equal the amount such Bank would have received had no
such withholding or other payment been made.
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Each Bank (x) as to Russell Corporation, which is not
organized under the laws of the United States or any state thereof and (y) as
to Russell Europe Limited (or, after the completion of the European
Reorganization and the assignment by Russell Europe Limited to the New European
Headquarters Subsidiary pursuant to Section 9.08(a) in connection therewith,
the New European Headquarters Subsidiary), which is organized under the laws of
the United States or any state thereof, agrees, as soon as practicable after
receipt by it of a request by the Borrower to do so, to file all appropriate
forms and take other appropriate action to obtain a certificate or other
appropriate document from the appropriate governmental authority in the
jurisdiction imposing the relevant Taxes, establishing that it is entitled to
receive payments of principal and interest under this Agreement and the Notes
without deduction and free from withholding of any Taxes imposed by such
jurisdiction; provided that if it is unable, for any reason, to establish such
exemption, or to file such forms and, in any event, during such period of time
as such request for exemption is pending, the Borrower shall nonetheless remain
obligated under the terms of the immediately preceding paragraph.
In the event any Bank receives a refund of any Taxes paid by
the Borrower pursuant to this Section 2.13(d), it will pay to the Borrower the
amount of such refund promptly upon receipt thereof; provided that if at any
time thereafter it is required to return such refund, the Borrower shall
promptly repay to it the amount of such refund.
Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower and the
Banks contained in this Section 2.13(d) shall be applicable with respect to any
Participant, Assignee or other Transferee, and any calculations required by
such provisions (i) shall be made based upon the circumstances of such
Participant, Assignee or other Transferee, and (ii) constitute a continuing
agreement and shall survive the termination of this Agreement and the payment
in full or cancellation of the Notes.
SECTION 2.14. COMPUTATION OF INTEREST AND FEES.
Interest on Base Rate Loans shall be computed on the basis of
a year of 365 or 366 days, as applicable, and paid for the actual number of
days elapsed (including the first day but excluding the last day). Interest on
Euro-Dollar Loans, Money Market Loans, Transaction Rate Loans and Foreign
Currency Loans shall be computed on the basis of a year of 360 days (except for
any Foreign Currency Loans outstanding in British pounds sterling, or, if
selected as a Foreign Currency pursuant to clause (iii) of the definition of
"Foreign Currency," in Australian dollars, Belgian francs, Canadian dollars,
Irish punts or New Zealand dollars, which shall be computed on the basis of a
year of 365 or 366 days, as the case may be) and paid for the actual number of
days elapsed, calculated as to each Interest Period from and including the
first day thereof to but excluding the last day thereof. Facility fees and any
other fees payable hereunder shall be computed on the basis of a year of 360
days and paid for the actual number of days elapsed (including the first day
but excluding the last day).
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ARTICLE III.
CONDITIONS TO BORROWINGS
SECTION 3.01. CONDITIONS TO FIRST BORROWING.
The obligation of each Bank to make a Loan on the occasion of
the first Borrowing is subject to the satisfaction of the conditions set forth
in Section 3.02 and receipt by the Administrative Agent of the following (as to
the documents described in paragraphs (a),(c), (d)and (e) below, in sufficient
number of counterparts for delivery of a counterpart to each Bank and retention
of one counterpart by the Administrative Agent):
(a) from each of the parties hereto of either (i) a duly
executed counterpart of this Agreement signed by such party or (ii) a
facsimile transmission of such executed counterpart, with the original
to be sent to the Administrative Agent by overnight courier);
(b) a duly executed Syndicated Dollar Loan Note, a duly
executed Foreign Currency Loan Note (from each of Russell Corporation
and Russell Europe Limited) and a duly executed Money Market Loan Note
for the account of each Bank, a duly executed Swing Loan Note for the
account of Wachovia, in each case complying with the provisions of
Section 2.05, and a Guaranty from Russell Corporation;
(c) an opinion letter of Bradley Arant Rose & White LLP,
special counsel for the Borrower, substantially in the form of Exhibit
B dated as of the Closing Date;
(d) an opinion of Jones, Day, Reavis & Pogue, special
counsel for the Administrative Agent, dated as of the Closing Date,
substantially in the form of Exhibit C;
(e) a certificate (the "Closing Certificate")
substantially in the form of Exhibit G), dated as of the Closing Date,
signed by a principal financial officer of the Borrower, to the effect
that (i) no Default has occurred and is continuing on the date of the
first Borrowing and (ii) the representations and warranties of the
Borrower contained in Article IV are true on and as of the date of the
first Borrowing hereunder;
(f) all documents which the Administrative Agent or any
Bank may reasonably request relating to the existence of the Borrower,
the corporate authority for and the validity of this Agreement and the
Notes, and any other matters relevant hereto, all in form and
substance satisfactory to the Administrative Agent, including, without
limitation, a certificate of the Borrower substantially in the form of
Exhibit H (the "Officer's Certificate"), signed by the Secretary or an
Assistant Secretary of the Borrower, certifying as to the names, true
signatures and incumbency of the officer or officers of the Borrower
authorized to execute and deliver the Loan Documents, and certified
copies of the following items: (i) the Borrower's Charter, (ii) the
Borrower's Bylaws, (iii) a certificate of the Secretary of State of
the State of Alabama as to the existence of the Borrower as an Alabama
corporation and a certificate from the Alabama
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Department of Revenue as to the good standing of the Borrower, and
(iv) the action taken by the Board of Directors of the Borrower
authorizing the Borrower's execution, delivery and performance of this
Agreement, the Notes and the other Loan Documents to which the
Borrower is a party (and similar documents, to the extent reasonably
available, from Russell Europe Limited);
(g) a Notice of Borrowing, or acceptance of a Transaction
Rate Quote or notification pursuant to Section 2.03(e) of acceptance
of one or more Money Market Quotes, as applicable; and
(h) receipt of the fees payable on the Closing Date
pursuant to the Arranger's Letter Agreement.
In addition, if the Borrower desires funding of a Euro-Dollar
Loan on the Closing Date, the Administrative Agent shall have received, 3
Euro-Dollar Business Days prior to the Closing Date, a funding indemnification
letter satisfactory to it, pursuant to which (i) the Administrative Agent and
the Borrower shall have agreed upon the interest rate, amount of Borrowing and
Interest Period for such Euro-Dollar Loan, and (ii) the Borrower shall
indemnify the Banks from any loss or expense arising from the failure to close
on the anticipated Closing Date identified in such letter or the failure to
borrow such Euro-Dollar Loan on such date.
SECTION 3.02. CONDITIONS TO ALL BORROWINGS.
The obligation of each Bank to make a Syndicated Loan or
Money Market Loan on the occasion of each Borrowing or of Wachovia to make a
Swing Loan is subject to the satisfaction of the following conditions:
(a) receipt by the Administrative Agent of a Notice of
Borrowing or notification pursuant to Section 2.03(e) of acceptance of
one or more Money Market Quotes, as applicable.
(b) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of
the Borrower contained in Article IV of this Agreement shall be true
on and as of the date of such Borrowing (except to the extent any such
representation or warranty is expressly made as of a prior date); and
(d) the fact that, immediately after such Borrowing, the
conditions set forth in clauses (i) and (ii) of Section 2.01(a), and in clause
(iii) of Section 2.03(a), shall have been satisfied.
Each Syndicated Borrowing, each Money Market Borrowing and
each Notice of Continuation or Conversion hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of such Borrowing as to
the truth and accuracy of the facts specified in paragraphs (b), (c) and (d) of
this Section; provided, that if such Borrowing is a Syndicated
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Borrowing which consists solely of a Refunding Loan then, (i) if such Borrowing
is a Fixed Rate Borrowing or such Notice of Continuation or Conversion is to a
Fixed Rate Loan, such Borrowing or Notice of Continuation or Conversion shall
be deemed to be such a representation and warranty by the Borrower only as to
the matters set forth in paragraphs (b) and (d) above, and (ii) if such
Borrowing is a Base Rate Borrowing, or such Notice of Continuation or
Conversions is to a Base Rate Loan, such Borrowing or Notice of Continuation or
Conversion shall be deemed to be a representation and warranty by the Borrower
only as to the matters set forth in paragraph (d) above.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. CORPORATE EXISTENCE AND POWER.
The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Alabama, is duly
qualified to transact business in every jurisdiction where, by the nature of
its business, such qualification is necessary, and has all corporate powers and
all governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted, except where the failure to qualify or
have any such powers, licenses, authorizations, consent or approvals does not
have and could not reasonably be expected to cause a Material Adverse Effect.
SECTION 4.02. CORPORATE AND GOVERNMENTAL AUTHORIZATION;
NO CONTRAVENTION.
The execution, delivery and performance by the Borrower of
this Agreement, the Notes and the other Loan Documents (i) are within the
Borrower's corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) require no action by or in respect of or filing with,
any governmental body, agency or official, (iv) do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the charter or bylaws of the Borrower or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or any
of its Subsidiaries, provided that the aggregate outstanding Borrowings under
this Agreement do not exceed the limitations thereon contained in any such
other agreements or instruments and (v) do not result in the creation or
imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.
SECTION 4.03. BINDING EFFECT.
This Agreement constitutes a valid and binding agreement of
the Borrower enforceable in accordance with its terms, and the Notes and the
other Loan Documents, when executed and delivered in accordance with this
Agreement, will constitute valid and binding obligations of the Borrower
enforceable in accordance with their respective terms, provided that
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the enforceability hereof and thereof is subject in each case to general
principles of equity and to bankruptcy, insolvency and similar laws affecting
the enforcement of creditors' rights generally.
SECTION 4.04. FINANCIAL INFORMATION
(a) The consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of January 2, 1999 and the related
consolidated statements of income, shareholders' equity and cash flows for the
Fiscal Year then ended, reported on by Ernst & Young LLP, copies of which have
been delivered to each of the Banks, and the unaudited consolidated financial
statements of the Borrower for the interim period ended July 4, 1999 copies of
which have been delivered to each of the Banks, fairly present, in conformity
with GAAP, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such dates and their consolidated results of
operations and cash flows for such periods stated.
(b) Since January 2, 1999, except for any matters which
have been disclosed in the filings by the Borrower under the Securities
Exchange Act of 1934 made prior to the Closing Date and made available to the
Banks, there has been no event, act, condition or occurrence having a Material
Adverse Effect.
SECTION 4.05. NO LITIGATION.
There is no action, suit or proceeding pending, or to the
knowledge of the Borrower threatened, against or affecting the Borrower or any
of its Subsidiaries before any court or arbitrator or any governmental body,
agency or official which could reasonably be expected to have a Material
Adverse Effect or which in any manner draws into question the validity of, or
would restrict the Borrower from performing its obligations under, this
Agreement, the Notes or any of the other Loan Documents.
SECTION 4.06. COMPLIANCE WITH ERISA
(a) The Borrower and each member of the Controlled Group
have fulfilled their obligations under the minimum funding standards of ERISA
and the Code with respect to each Plan and are in compliance in all material
respects with the presently applicable provisions of ERISA and the Code, and
have not incurred any liability to the PBGC or a Plan under Title IV of ERISA,
except where the failure to comply does not have and could not reasonably be
expected to cause a Material Adverse Effect.
(b) Neither the Borrower nor any member of the Controlled
Group is or ever has been obligated to contribute to any Multiemployer Plan.
SECTION 4.07. COMPLIANCE WITH LAWS; PAYMENT OF TAXES.
The Borrower and its Subsidiaries are in compliance with all
applicable laws, regulations and similar requirements of governmental
authorities, except where such compliance is being contested in good faith
through appropriate proceedings, and except where the failure to comply does
not have and could not reasonably be expected to cause a Material Adverse
Effect. There have been filed on behalf of the Borrower and its Subsidiaries
all Federal, state and
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material local income, excise, property and other tax returns which are
required to be filed by them and all taxes shown as being due pursuant to such
returns or pursuant to any assessment received by or on behalf of the Borrower
or any Subsidiary have been paid, except taxes being contested in good faith
and against which, if requested by the Administrative Agent, the Borrower will
set up reserves in accordance with GAAP. The charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate. United
States income tax returns of the Borrower and its Subsidiaries have been
examined and closed through the Fiscal Year ended January 1, 1994.
SECTION 4.08. SUBSIDIARIES
Each of the Borrower's Subsidiaries is an entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of formation, is duly qualified to transact business in every
jurisdiction where, by the nature of its business, such qualification is
necessary, and has all entity powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, except where the failure to qualify does not have and could not
reasonably be expected to cause a Material Adverse Effect. The Borrower has no
Subsidiaries except for those Subsidiaries listed on Schedule 4.08, which
accurately sets forth each such Subsidiary's complete name and jurisdiction of
incorporation.
SECTION 4.09. INVESTMENT COMPANY ACT.
Neither the Borrower nor any of its Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.10. PUBLIC UTILITY HOLDING COMPANY ACT
Neither the Borrower nor any of its Subsidiaries is a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act
of 1935, as amended.
SECTION 4.11. OWNERSHIP OF PROPERTY; LIENS
Each of the Borrower and its Consolidated Subsidiaries has
title to its properties sufficient for the conduct of its business, and none of
such property is subject to any Lien except as permitted in Section 5.17.
SECTION 4.12. NO DEFAULT
Neither the Borrower nor any of its Consolidated Subsidiaries
is in default under or with respect to any agreement, instrument or undertaking
to which it is a party or by which it or any of its property is bound which
could have or could reasonably be expected to cause a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
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SECTION 4.13. FULL DISCLOSURE
All information heretofore furnished by the Borrower to the
Administrative Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information
hereafter furnished by the Borrower to the Administrative Agent or any Bank
will be, true, accurate and complete in every material respect or based on
reasonable estimates on the date as of which such information is stated or
certified. The Borrower has disclosed to the Banks in writing any and all facts
known to the Borrower which could have or could reasonably be expected to cause
a Material Adverse Effect.
SECTION 4.14. ENVIRONMENTAL MATTERS
(a) Neither the Borrower nor any Subsidiary is subject to
any Environmental Liability which could have or could reasonably be expected to
cause a Material Adverse Effect and neither the Borrower nor any Subsidiary has
been designated as a potentially responsible party under CERCLA or under any
state statute similar to CERCLA. To the best of the Borrower's knowledge, none
of the Properties has been identified on any current or proposed (i) National
Priorities List under 40 C.F.R. ss. 300, (ii) CERCLIS list or (iii) any list
arising from a state statute similar to CERCLA.
(b) No Hazardous Materials have been or are being used,
produced, manufactured, processed, treated, recycled, generated, stored,
disposed of, managed or otherwise handled at, or shipped or transported to or
from the Properties by the Borrower or its agents, or to the best of the
Borrower's knowledge, any Third Parties or are otherwise present at, on, in or
under the Properties, or, to the best of the Borrower's knowledge, at or from
any adjacent site or facility, except for Hazardous Materials used, produced,
manufactured, processed, treated, recycled, generated, stored, disposed of,
managed, or otherwise handled in the ordinary course of business in compliance
with all applicable Environmental Requirements, and except where the failure to
comply does not have and could not reasonably be expected to cause a Material
Adverse Effect.
(c) The Borrower, and each of its Subsidiaries and
Affiliates, has procured all Environmental Authorizations necessary for the
conduct of its business, and is in compliance with all Environmental
Requirements in connection with the operation of the Properties and the
Borrower's, and each of its Subsidiary's and Affiliate's, respective
businesses, except where the failure to comply does not have and could not
reasonably be expected to cause a Material Adverse Effect.
SECTION 4.15. CAPITAL STOCK
All Capital Stock, debentures, bonds, notes and all other
securities of the Borrower and its Subsidiaries presently issued and
outstanding are validly and properly issued in accordance with all applicable
laws, including, but not limited to, the "Blue Sky" laws of all applicable
states and the federal securities laws. The issued shares of Capital Stock of
the Borrower's Wholly Owned Subsidiaries are owned directly or indirectly by
the Borrower free and clear of any Lien or adverse claim. At least a majority
of the issued shares of capital stock
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of each of the Borrower's other Subsidiaries (other than Wholly Owned
Subsidiaries) is owned by the Borrower free and clear of any Lien or adverse
claim.
SECTION 4.16. MARGIN STOCK
Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of
purchasing or carrying any Margin Stock, and no part of the proceeds of any
Loan will be used to purchase or carry any Margin Stock, except for Permitted
Acquisitions and purchases of treasury stock or to extend credit to others for
the purpose of purchasing or carrying any Margin Stock, or be used for any
purpose which violates, or which is inconsistent with, the provisions of
Regulation T, U or X.
SECTION 4.17. INSOLVENCY
After giving effect to the execution and delivery of the Loan
Documents and the making of the Loans under this Agreement: (i) the Borrower
will not (x) be "insolvent," within the meaning of such term as used in
O.C.G.A. ss. 18-2-22 or as defined in ss. 101 of the "Bankruptcy Code", or
Section 2 of either the "UFTA" or the "UFCA", or as defined or used in any
"Other Applicable Law" (as those terms are defined below), or (y) be unable to
pay its debts generally as such debts become due within the meaning of Section
548 of the Bankruptcy Code, Section 4 of the UFTA or Section 6 of the UFCA, or
(z) have an unreasonably small capital to engage in any business or
transaction, whether current or contemplated, within the meaning of Section 548
of the Bankruptcy Code, Section 4 of the UFTA or Section 5 of the UFCA; and
(ii) the obligations of the Borrower under the Loan Documents and with respect
to the Loans will not be rendered avoidable under any Other Applicable Law. For
purposes of this Section 4.17, "Bankruptcy Code" means Title 11 of the United
States Code, "UFTA" means the Uniform Fraudulent Transfer Act, "UFCA" means the
Uniform Fraudulent Conveyance Act, and "Other Applicable Law" means any other
applicable law pertaining to fraudulent transfers or acts voidable by
creditors, in each case as such law may be amended from time to time.
SECTION 4.18. INSURANCE
The Borrower and each of its Subsidiaries has (either in the
name of the Borrower or in such Subsidiary's own name), with financially sound
and reputable insurance companies, insurance in at least such amounts and
against at least such risks (including on all its property, and public
liability and worker's compensation) as are usually insured against in the same
general area by companies of established repute engaged in the same or similar
business.
SECTION 4.19. Y2K PLAN
The Borrower has developed and has delivered to the
Administrative Agent and the Banks its plan (the "Y2K Plan") for making the
Mission Critical Systems and Equipment Year 2000 Compliant and Ready. The
Borrower and its Subsidiaries' have met the Y2K Plan milestones such that the
Borrower reasonably believes, after due diligence, that all Mission Critical
Systems and Equipment will be Year 2000 Compliant and Ready in accordance with
the Y2K Plan.
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ARTICLE V.
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable hereunder or under any Note remains
unpaid:
SECTION 5.01. INFORMATION
The Borrower will deliver to each of the Banks:
(a) as soon as available and in any event within 90 days
after the end of each Fiscal Year, a consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of the end of such Fiscal Year and the
related consolidated statements of income, shareholders' equity and cash flows
for such Fiscal Year, setting forth in each case in comparative form the
figures for the previous fiscal year, all certified by Ernst & Young LLP or
other independent public accountants of nationally recognized standing, with
such certification to be free of exceptions and qualifications not acceptable
to the Required Banks;
(b) as soon as available and in any event within 45 days
after the end of each of the first 3 Fiscal Quarters of each Fiscal Year,
commencing with the Fiscal Year beginning on January 2, 2000, a consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of the end
of such Fiscal Quarter and the related statement of income and statement of
cash flows for such Fiscal Quarter and for the portion of the Fiscal Year ended
at the end of such Fiscal Quarter, setting forth in each case in comparative
form the figures for the corresponding Fiscal Quarter and the corresponding
portion of the previous Fiscal Year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, GAAP and consistency by the chief
financial officer or the chief accounting officer of the Borrower;
(c) simultaneously with the delivery of each set of
financial statements referred to in paragraphs (a) and (b) above, a
certificate, substantially in the form of Exhibit F (a "Compliance
Certificate"), of the chief financial officer or the chief accounting officer
of the Borrower (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Sections 5.05, 5.16, 5.17, and 5.19 through 5.22, inclusive, on
the date of such financial statements and (ii) stating whether any Default
exists on the date of such certificate and, if any Default then exists, setting
forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of
annual financial statements referred to in paragraph (a) above, a statement of
the firm of independent public accountants which reported on such statements to
the effect that nothing has come to their attention to cause them to believe
that any Default existed on the date of such financial statements;
(e) within 5 Domestic Business Days after the Borrower
becomes aware of the occurrence of any Default, a certificate of the chief
financial officer or the chief accounting
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officer of the Borrower setting forth the details thereof and the action which
the Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders
of the Borrower generally, copies of all financial statements, reports and
proxy statements so mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and annual, quarterly or monthly
reports which the Borrower shall have filed with the Securities and Exchange
Commission;
(h) if and when any member of the Controlled Group (i)
gives or is required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA, a copy of
such notice; or (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate or appoint a trustee to administer any Plan, a copy of
such notice;
(i) at any time prior to January 1, 2000, within 5
Domestic Business Days after the Borrower becomes aware of any deviations from
the Y2K Plan which would cause compliance with the Y2K Plan to be delayed or
not achieved, a statement of the Chief Executive Officer, Chief Financial
Officer, or Chief Technology Officer setting forth the details thereof and the
action which the Borrower is taking or proposes to take with respect thereto;
(j) promptly upon the receipt thereof at any time prior
to January 1, 2000, a copy of any third party assessments of the Borrower's Y2K
Plan together with any recommendations made by such third party with respect to
Year 2000 compliance; and
(k) from time to time such additional information
regarding the financial position or business of the Borrower and its
Subsidiaries as the Administrative Agent, at the request of any Bank, may
reasonably request.
SECTION 5.02. INSPECTION OF PROPERTY, BOOKS AND RECORDS
The Borrower will (i) keep, and cause each Subsidiary to
keep, proper books of record and account in which full, true and correct
entries in conformity with GAAP shall be made of all dealings and transactions
in relation to its business and activities; and (ii) permit, and cause each
Subsidiary to permit, representatives of any Bank at such Bank's expense prior
to the occurrence of a Default and at the Borrower's expense during the
existence of a Default to visit and inspect any of their respective properties,
to examine and make abstracts from any of their respective books and records
and to discuss their respective affairs, finances and accounts with their
respective officers, employees and independent public accountants. The Borrower
agrees to cooperate and assist in such visits and inspections, in each case
upon reasonable notice and at such reasonable times and as often as may
reasonably be desired.
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SECTION 5.03. MAINTENANCE OF EXISTENCE
The Borrower shall, and shall cause each Subsidiary to,
maintain its corporate existence and carry on its business in substantially the
same manner and in substantially the same fields as such business is now
carried on and maintained, except as permitted by Section 5.05.
SECTION 5.04. DISSOLUTION
Neither the Borrower nor any of its Subsidiaries shall suffer
or permit dissolution or liquidation either in whole or in part, except as
permitted by Section 5.05.
SECTION 5.05. CONSOLIDATIONS, MERGERS AND SALES OF ASSETS
The Borrower will not, nor will it permit any Subsidiary to,
consolidate or merge with or into, or sell, lease or otherwise transfer all or
any substantial part of its assets to, any other Person, or discontinue or
eliminate any business line or segment, or liquidate or dissolve, provided that
(a) the Borrower may merge with another Person if (i) such Person was organized
under the laws of the United States of America or one of its states, (ii) the
Borrower is the corporation surviving such merger and (iii) immediately after
giving effect to such merger, no Default shall have occurred and be continuing,
(b) Subsidiaries of the Borrower may merge with one another, and (c) the
foregoing limitation on the sale, lease or other transfer of assets, on the
discontinuation or elimination of a business line or segment, and on
liquidation and dissolution, shall not prohibit (1) the sale of Receivables
pursuant to the Receivables Securitization Program, (2) transfers of assets by
Russell Corporation and by European Subsidiaries which existed on the Closing
Date to new European Subsidiaries as part of the European Reorganization or (3)
during any Fiscal Quarter, a transfer of assets or the discontinuance or
elimination of a business line or segment (in a single transaction or in a
series of related transactions), or any liquidation or dissolution of a
Subsidiary, unless the aggregate assets to be so transferred or utilized in a
business line or segment to be so discontinued or Subsidiary to be liquidated
or dissolved, when combined with all other assets transferred, and all other
assets utilized in all other business lines or segments discontinued or
Subsidiaries to be liquidated or dissolved, during such Fiscal Quarter and the
immediately preceding 3 Fiscal Quarters, either (x) constituted more than 10%
of Consolidated Total Assets at the end of the most recent Fiscal Year
immediately preceding such Fiscal Quarter, or (y) contributed more than 10% of
Consolidated Operating Profits during the 4 Fiscal Quarters immediately
preceding such Fiscal Quarter, or (3) the liquidation or dissolution of any
inactive Subsidiary, or (4) any such action in connection with the
Restructuring Program.
SECTION 5.06. USE OF PROCEEDS
The proceeds of the Loans may be used for general corporate
purposes including, without limitation, refinancing other Debt, working
capital, capital expenditures, and Permitted Acquisitions; provided, that no
portion of the proceeds of the Loans will be used by the Borrower or any
Subsidiary (i) in connection with, whether directly or indirectly, any tender
offer for, or other acquisition of, stock of any corporation with a view
towards obtaining control of such other corporation, unless such tender offer
or other acquisition is to be made on a
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negotiated basis with the approval of the Board of Directors of the Person to
be acquired, and the provisions of Section 5.16 would not be violated, (ii)
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock, other than with respect
to Permitted Acquisitions and purchases of treasury stock or (iii) for any
purpose in violation of any applicable law or regulation.
SECTION 5.07. COMPLIANCE WITH LAWS; PAYMENT OF TAXES
The Borrower will, and will cause each of its Subsidiaries
and each member of the Controlled Group to, comply with applicable laws
(including but not limited to ERISA), regulations and similar requirements of
governmental authorities (including but not limited to PBGC), except where the
necessity of such compliance is being contested in good faith through
appropriate proceedings diligently pursued. The Borrower will, and will cause
each of its Subsidiaries to, pay promptly when due all taxes, assessments,
governmental charges, claims for labor, supplies, rent and other obligations
which, if unpaid, might become a lien against the property of the Borrower or
any Subsidiary, except liabilities being contested in good faith and against
which, if requested by the Administrative Agent, the Borrower will set up
reserves in accordance with GAAP.
SECTION 5.08. INSURANCE
The Borrower will maintain, and will cause each of its
Subsidiaries to maintain (either in the name of the Borrower or in such
Subsidiary's own name), with financially sound and reputable insurance
companies, insurance on all its property in at least such amounts and against
at least such risks (including on all its property, and public liability and
worker's compensation) as are usually insured against in the same general area
by companies of established repute engaged in the same or similar business.
SECTION 5.09. CHANGE IN FISCAL YEAR
The Borrower will not change its Fiscal Year without the
consent of the Required Banks.
SECTION 5.10. MAINTENANCE OF PROPERTY
Except as permitted by Section 5.05 or in connection with the
Restructuring Program, the Borrower shall, and shall cause each Subsidiary to,
maintain all of its properties and assets in good condition, repair and working
order, ordinary wear and tear excepted.
SECTION 5.11. ENVIRONMENTAL NOTICES
The Borrower shall furnish to the Banks and the Administrative
Agent prompt written notice of all material Environmental Liabilities of which
the Borrower has notice, pending, threatened or anticipated Environmental
Proceedings of which the Borrower has notice, Environmental Notices,
Environmental Judgments and Orders, and Environmental Releases at, on, in,
under or in any way affecting the Properties or any adjacent property, and all
facts, events, or conditions that could lead to any of the foregoing.
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SECTION 5.12. ENVIRONMENTAL MATTERS
The Borrower and its Subsidiaries will not, and will not
permit any Third Party to, use, produce, manufacture, process, treat, recycle,
generate, store, dispose of, manage at, or otherwise handle, or ship or
transport to or from the Properties any Hazardous Materials except for
Hazardous Materials used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed, managed, or otherwise handled in the ordinary
course of business in material compliance with all applicable Environmental
Requirements.
SECTION 5.13. ENVIRONMENTAL RELEASE
The Borrower agrees that upon the occurrence of a material
Environmental Release at or on any of the Properties it will act immediately to
investigate the extent of, and to take appropriate remedial action to
eliminate, such Environmental Release, whether or not ordered or otherwise
directed to do so by any Environmental Authority.
SECTION 5.14. TRANSACTIONS WITH AFFILIATES
Neither the Borrower nor any of its Subsidiaries shall enter
into, or be a party to, any transaction with any Affiliate of the Borrower or
such Subsidiary (which Affiliate is not the Borrower or a Wholly Owned
Subsidiary), except as permitted by law and in the ordinary course of business
and pursuant to reasonable terms which are no less favorable to Borrower or
such Subsidiary than would be obtained in a comparable arm's length transaction
with a Person which is not an Affiliate, and except for Investments permitted
by Section 5.16.
SECTION 5.15. RESTRICTED PAYMENTS
The Borrower may not declare or make any Restricted Payment,
if after giving effect to the payment of any such Restricted Payment, an Event
of Default shall be in existence or be created thereby.
SECTION 5.16. INVESTMENTS
From and after the Closing Date, neither the Borrower nor any
of its Subsidiaries shall make Investments in any Person except (i) loans or
advances to officers, directors and employees (1) for relocation expenses in
connection with the Restructuring Program and (2) for other purposes not
exceeding $3,000,000 in the aggregate principal amount outstanding at any time,
in each case made in the ordinary course of business in accordance with
historical practices existing on the Closing Date; (ii) Investments by the
Borrower in a Receivables Subsidiary; (iii) Investments by the Receivables
Subsidiary in a Special Purpose Vehicle, consistent with Standard
Securitization Undertakings, (iv) loans and advances to a Receivables
Subsidiary evidenced by a Purchase Money Note; (v) deposits required by
government agencies or public utilities (including pertaining to taxes and
other similar charges), (vi) Investments in direct obligations of the United
States Government or any agency thereof maturing within one year after the date
of Investment, (vii) Investments in certificates of deposit issued by a
commercial bank whose credit is satisfactory to the Administrative Agent and in
certificates of deposit issued
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by any banking subsidiary of Wachovia Corporation, AmSouth Bancorporation,
SunTrust Banks, Inc., SouthTrust Corporation, Regions Financial Corporation,
Synovus Financial Corporation and Aliant National Corporation or any Person who
succeeds to all, or substantially all, of the assets or business of any
thereof, (viii) Investments in commercial paper rated A1 or the equivalent
thereof by S&P or P1 or the equivalent thereof by Moody's and in either case
maturing within 270 days after the date of acquisition, (ix) Investments in
tender bonds the payment of the principal of and interest on which is fully
supported by a letter of credit issued by a United States bank whose long-term
certificates of deposit are rated at least AA or the equivalent thereof by S&P
and Aa or the equivalent thereof by Moody's, (x) Investments in variable rate
demand bonds maturing or with optional puts within one year or less from the
date of acquisition thereof, which, at the time of acquisition by the Borrower
or Subsidiary, are rated not lower than A or A-1 by S&P and not lower than A2
or P-1 by Moody's, (xi) Permitted Acquisitions, (xii) minimal capitalization by
Russell Corporation of new European Subsidiaries as part of the European
Reorganization and (xiii) other Investments made on a cumulative basis since
the Closing Date which do not at any time exceed an aggregate amount
outstanding equal to 5% of Consolidated Tangible Net Worth as of the end of the
Fiscal Quarter ended immediately prior to the date of measurement; provided,
however, immediately after giving effect to the making of any Investment, no
Default shall have occurred and be continuing.
SECTION 5.17. PRIORITY DEBT
Neither the Borrower nor any Consolidated Subsidiary will
create, assume or suffer to exist any Lien on any asset now owned or hereafter
acquired by it, and the Borrower shall not permit any Subsidiary which is not a
Borrower or a Guarantor to incur any Debt, except:
(a) Liens existing on the date of this Agreement securing
Debt outstanding on the date of this Agreement in an aggregate principal amount
not exceeding $25,000,000;
(b) any Lien existing on any specific fixed asset of any
corporation at the time such corporation becomes a Consolidated Subsidiary and
not created in contemplation of such event;
(c) any Lien on any specific fixed asset securing Debt
incurred or assumed for the purpose of financing all or any part of the cost of
acquiring, constructing or improving such asset, provided that such Lien
attaches to such asset concurrently with or within 18 months after the
acquisition, completion, construction or improvement thereof;
(d) any Lien on any specific fixed asset of any
corporation existing at the time such corporation is merged or consolidated
with or into the Borrower or a Consolidated Subsidiary and not created in
contemplation of such event;
(e) any Lien existing on any specific fixed asset prior
to the acquisition thereof by the Borrower or a Consolidated Subsidiary and not
created in contemplation of such acquisition;
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(f) Liens securing Debt owing by any Subsidiary to the
Borrower or to any Wholly Owned Subsidiary;
(g) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any of the
foregoing paragraphs of this Section, provided that (i) such Debt is not
secured by any additional assets, and (ii) the amount of such Debt secured by
any such Lien is not increased;
(h) Liens incidental to the conduct of its business or
the ownership of its assets which (i) do not secure Debt and (ii) do not in the
aggregate materially detract from the value of its assets or materially impair
the use thereof in the operation of its business;
(i) any Lien on Margin Stock;
(j) Debt owing to the Borrower or another Subsidiary;
(k) Liens on Receivables Program Assets pursuant to a
Receivables Securitization Program;
(l) Receivables Program Obligations;
(m) Liens granted pursuant to or arising under this
Agreement; and
(n) Liens not otherwise permitted by the foregoing
paragraphs of this Section securing Debt (other than indebtedness represented
by the Notes), and Debt of Subsidiaries not otherwise permitted by paragraph
(j), in an aggregate principal amount at any time outstanding not to exceed 15%
of Consolidated Tangible Net Worth.
SECTION 5.18. RESTRICTIONS ON ABILITY OF SUBSIDIARIES TO
PAY DIVIDENDS
Except as required by applicable law and except as to
covenants in existence on the Closing Date (if any), the Borrower shall not
permit any Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any non-governmental contractual covenant
restricting the ability of any such Subsidiary to (i) pay any dividends or make
any other distributions on its Capital Stock or any other interest or (ii) make
or repay any loans or advances to the Borrower or the parent of such
Subsidiary.
SECTION 5.19. LIMITATION ON FUNDED DEBT OF BORROWER
The Borrower will not create, incur, assume or suffer to
exist any Debt having a maturity of one year or more from the date of issuance
("Funded Debt"), except (i) Debt incurred under this Agreement; (ii) Debt in an
aggregate amount equal to that in existence on the Closing Date (as it may be
refunded, refinanced or replaced, with no increase in principal amount); (iii)
Funded Debt which is rated BBB or Baa2 or better by S&P or Moody's and (iv)
other Funded Debt in an aggregate amount not exceeding $100,000,000.
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SECTION 5.20. DEBT/EBITDA RATIO
The Debt/EBITDA Ratio will at all times be less than 3.25 to
1.00.
SECTION 5.21. MINIMUM CONSOLIDATED TANGIBLE NET WORTH
Consolidated Tangible Net Worth will at no time be less than
$445,000,000 plus the sum of (i) 50% of the cumulative Reported Net Income of
the Borrower and its Consolidated Subsidiaries during any period after the end
of any Fiscal Quarter following the Closing Date (taken as one accounting
period), calculated quarterly at the end of each Fiscal Quarter but excluding
from such calculations of Reported Net Income for purposes of this clause (i),
any Fiscal Quarter in which the Reported Net Income of the Borrower and its
Consolidated Subsidiaries is negative, and (ii) 100% of the cumulative Net
Proceeds of Capital Stock received during any period after the Closing Date,
calculated quarterly at the end of each Fiscal Quarter.
SECTION 5.22. RATIO OF CONSOLIDATED EBIT TO CONSOLIDATED
INTEREST EXPENSE
The ratio of Consolidated EBIT to Consolidated Interest
Expense for the Fiscal Quarter just ended and the immediately preceding 3
Fiscal Quarters will at no time be less than 2.5 to 1.0.
SECTION 5.23. Y2K COMPLIANCE
The Borrower will meet the milestones as to all Mission
Critical Systems and Equipment contained in the Y2K Plan (other than testing)
on or before October 15, 1999, and will have all Mission Critical Systems and
Equipment Year 2000 Compliant and Ready (including all internal and external
testing), on or before November 1, 1999.
ARTICLE VI.
DEFAULTS
SECTION 6.01. EVENTS OF DEFAULT
If one or more of the following events ("Events of Default")
shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal
of any Loan or shall fail to pay any interest on any Loan within 5 Domestic
Business Days after such interest shall become due, or shall fail to pay any
fee or other amount payable hereunder within 5 Domestic Business Days after
such fee or other amount becomes due; or
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 5.01(e), 5.01(i), 5.01(j), 5.02(ii),
5.03 through 5.06, inclusive, Section 5.15 or Sections 5.20 through
5.23, inclusive; or
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(c) the Borrower shall fail to observe or perform any
covenant or agreement contained or incorporated by reference in this
Agreement (other than those covered by paragraph (a) or (b) above) and
such failure shall not have been cured within (1) 10 days, in the case
of Sections 5.16 and 5.18, and (2) 30 days, in any other case, after
the earlier to occur of (i) written notice thereof has been given to
the Borrower by the Administrative Agent at the request of any Bank or
(ii) the Borrower otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or
statement made by the Borrower in Article IV of this Agreement or in
any certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been incorrect or
misleading in any material respect when made (or deemed made); or
(e) the Borrower or any Subsidiary shall fail to make any
payment in respect of Debt outstanding in an aggregate principal amount
in excess of $10,000,000 (other than the Notes) when due or within any
applicable grace period; or
(f) any event or condition shall occur which results in
the acceleration of the maturity of Debt outstanding in an aggregate
principal amount in excess of $10,000,000 of the Borrower or any
Subsidiary (including, without limitation, any required mandatory
prepayment or "put" of such Debt to the Borrower or any Subsidiary) or
enables (or, with the giving of notice or lapse of time or both, would
enable) the holders of such Debt or commitment or any Person acting on
such holders' behalf to accelerate the maturity thereof or terminate
any such commitment (including, without limitation, any required
mandatory prepayment or "put" of such Debt to the Borrower or any
Subsidiary); or
(g) the Borrower or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment
of or taking possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally, or
shall admit in writing its inability, to pay its debts as they become
due, or shall take any corporate action to authorize any of the
foregoing; or
(h) an involuntary case or other proceeding shall be
commenced against the Borrower or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order
for relief shall be entered against the Borrower or any Subsidiary
under the federal bankruptcy laws as now or hereafter in effect; or
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(i) the Borrower or any member of the Controlled Group
shall fail to pay when due any amount which it shall have become liable
to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of
intent to terminate a Plan or Plans shall be filed under Title IV of
ERISA by the Borrower, any member of the Controlled Group, any plan
administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause
a trustee to be appointed to administer any such Plan or Plans or a
proceeding shall be instituted by a fiduciary of any such Plan or Plans
to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall
not have been dismissed within 30 days thereafter; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any such Plan or Plans must be terminated; or the
Borrower or any other member of the Controlled Group shall enter into,
contribute or be obligated to contribute to, terminate or incur any
withdrawal liability with respect to, a Multiemployer Plan; provided,
in any of the foregoing cases, the amount required to be paid, or the
Unfunded Vested Liabilities under any such Plan, is in excess of
$10,000,000; or
(j) one or more judgments or orders for the payment of
money in an aggregate amount in excess of $10,000,000 shall be rendered
against the Borrower or any Subsidiary and such judgment or order shall
continue unsatisfied and unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against the
Borrower or any Subsidiary under Section 6323 of the Code or a lien of
the PBGC shall be filed against the Borrower or any Subsidiary under
Section 4068 of ERISA and in either case such lien is for an amount in
excess of $10,000,000 and shall remain undischarged for a period of 25
days after the date of filing; or
(i) 30 days after any Person or two or more Persons acting in
concert (other than the Russell Family)shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of 30%
or more of the outstanding shares of the voting stock of the Borrower;
or (ii) as of any date a majority of the Board of Directors of the
Borrower consists of individuals who were not either (A) directors of
the Borrower as of the corresponding date of the previous year, (B)
selected or nominated to become directors by the Board of Directors of
the Borrower of which a majority consisted of individuals described in
clause (A), or (C) selected or nominated to become directors by the
Board of Directors of the Borrower of which a majority consisted of
individuals described in clause (A) and individuals described in clause
(B).
then, and in every such event, (i) the Administrative Agent
shall, if requested by the Required Banks, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, (ii) any
Bank may terminate its obligation to fund a Money Market Loan in
connection with any relevant Money Market Quote, and (iii) the
Administrative Agent shall, if requested by the Required Banks, by
notice to the Borrower declare the Notes (together with accrued
interest thereon), and all other amounts payable hereunder and under
the other Loan Documents, to be, and the Notes, including the Swing
Loan
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Note (together with accrued interest thereon), and all other amounts
payable hereunder and under the other Loan Documents shall thereupon
become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
the Borrower together with interest at the Default Rate accruing on the
principal amount thereof from and after the date of such Event of
Default; provided that if any Event of Default specified in paragraph
(g) or (h) above occurs with respect to the Borrower, without any
notice to the Borrower or any other act by the Agent or the Banks, the
Commitments shall thereupon terminate and the Notes (together with
accrued interest thereon) and all other amounts payable hereunder and
under the other Loan Documents shall automatically and without notice
become immediately due and payable without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the
Borrower together with interest thereon at the Default Rate accruing on
the principal amount thereof from and after the date of such Event of
Default. Notwithstanding the foregoing, the Agent shall have available
to it all other remedies at law or equity, and shall exercise any one
or all of them at the request of the Required Banks.
SECTION 6.02. NOTICE OF DEFAULT
The Administrative Agent shall give notice to the Borrower of
any Default under Section 6.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII.
THE ADMINISTRATIVE AGENT
SECTION 7.01. APPOINTMENT; POWERS AND IMMUNITIES
Each Bank hereby irrevocably appoints and authorizes the
Administrative Agent to act as its agent hereunder and under the other Loan
Documents with such powers as are specifically delegated to the Administrative
Agent by the terms hereof and thereof, together with such other powers as are
reasonably incidental thereto. The Administrative Agent: (a) shall have no
duties or responsibilities except as expressly set forth in this Agreement and
the other Loan Documents, and shall not by reason of this Agreement or any
other Loan Document be a trustee for any Bank; (b) shall not be responsible to
the Banks for any recitals, statements, representations or warranties contained
in this Agreement or any other Loan Document, or in any certificate or other
document referred to or provided for in, or received by any Bank under, this
Agreement or any other Loan Document, or for the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or any other document referred to or provided for herein or therein or
for any failure by the Borrower to perform any of its obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder or under any other Loan Document except to the
extent requested by the Required Banks, and then only on terms and conditions
satisfactory to the Administrative Agent, and (d) shall not be responsible for
any action taken or omitted to be taken by it hereunder or under any other Loan
Document or any other document or
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instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful
misconduct. The Administrative Agent may employ agents and attorneys-in-fact
and shall not be responsible for the negligence or misconduct of any such
agents or attorneys-in-fact selected by it with reasonable care. The provisions
of this Article VII are solely for the benefit of the Administrative Agent and
the Banks, and the Borrower shall not have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement and under the other Loan Documents, the
Administrative Agent shall act solely as agent of the Banks and does not assume
and shall not be deemed to have assumed any obligation towards or relationship
of agency or trust with or for the Borrower. The duties of the Administrative
Agent shall be ministerial and administrative in nature, and the Administrative
Agent shall not have by reason of this Agreement or any other Loan Document a
fiduciary relationship in respect of any Bank.
[(b) Each Bank hereby designates SunTrust Bank, Atlanta as
the Syndication Agent and First Union National Bank as the Documentation Agent.
The Syndication Agent and the Documentation Agent, in such capacity, shall have
no duties or obligations whatsoever under this Agreement or any other Loan
Document or any other document or any matter related hereto and thereto, but
shall nevertheless be entitled to all the indemnities and other protection
afforded to the Administrative Agent under this Article VII.
SECTION 7.02. RELIANCE BY ADMINISTRATIVE AGENT
The Administrative Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopier, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants or other experts selected by the Administrative Agent. As to any
matters not expressly provided for by this Agreement or any other Loan
Document, the Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder and thereunder in accordance
with instructions signed by the Required Banks, and such instructions of the
Required Banks in any action taken or failure to act pursuant thereto shall be
binding on all of the Banks.
SECTION 7.03. DEFAULTS
The Administrative Agent shall not be deemed to have
knowledge of the occurrence of a Default or an Event of Default (other than the
nonpayment of principal of or interest on the Loans) unless the Administrative
Agent has received notice from a Bank or the Borrower specifying such Default
or Event of Default and stating that such notice is a "Notice of Default". In
the event that the Administrative Agent receives such a notice of the
occurrence of a Default or an Event of Default, the Administrative Agent shall
give prompt notice thereof to the Banks. The Administrative Agent shall give
each Bank prompt notice of each nonpayment of principal of or interest on the
Loans whether or not it has received any notice of the occurrence of such
nonpayment. The Administrative Agent shall (subject to Section 9.06) take such
action hereunder with respect to such Default or Event of Default as shall be
directed by the Required Banks, provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or
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refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Banks.
SECTION 7.04. RIGHTS OF ADMINISTRATIVE AGENT AND ITS
AFFILIATES AS A BANK
With respect to the Loans made by the Administrative Agent
and any Affiliate of the Administrative Agent, Wachovia in its capacity as a
Bank hereunder and any Affiliate of the Administrative Agent or such Affiliate
in its capacity as a Bank hereunder shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though Wachovia were
not acting as the Administrative Agent, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include Wachovia in its individual
capacity and any Affiliate of the Administrative Agent in its individual
capacity. The Administrative Agent and any Affiliate of the Administrative
Agent may (without having to account therefor to any Bank) accept deposits
from, lend money to and generally engage in any kind of banking, trust or other
business with the Borrower (and any of the Borrower's Affiliates) as if
Wachovia were not acting as the Administrative Agent, and the Administrative
Agent and any Affiliate of the Administrative Agent may accept fees and other
consideration from the Borrower (in addition to any agency fees and arrangement
fees heretofore agreed to between the Borrower and the Administrative Agent)
for services in connection with this Agreement or any other Loan Document or
otherwise without having to account for the same to the Banks.
SECTION 7.05. INDEMNIFICATION
Each Bank severally agrees to indemnify the Administrative
Agent, to the extent the Administrative Agent shall not have been reimbursed by
the Borrower, ratably in accordance with its Commitment, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including, without limitation, counsel fees and
disbursements) or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or any other Loan Document or any
other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (excluding, unless an Event of
Default has occurred and is continuing, the normal administrative costs and
expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or any such other documents;
provided that no Bank shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the
Administrative Agent; and provided further that no Designated Bank shall be
liable for any payment under this Section 7.05 so long as, and to the extent
that, its Designating Bank makes such payments. If any indemnity furnished to
the Administrative Agent for any purpose shall, in the opinion of the
Administrative Agent, be insufficient or become impaired, the Administrative
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
SECTION 7.06. CONSEQUENTIAL DAMAGES
THE ADMINISTRATIVE AGENT SHALL NOT BE RESPONSIBLE OR LIABLE
TO ANY BANK, THE BORROWER OR ANY OTHER PERSON OR ENTITY FOR ANY PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
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ALLEGED AS A RESULT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 7.07. PAYEE OF NOTE TREATED AS OWNER
The Administrative Agent may deem and treat the payee of any
Note as the owner thereof for all purposes hereof unless and until a written
notice of the assignment or transfer thereof shall have been filed with the
Administrative Agent and the provisions of Section 9.08(c) have been satisfied.
Any requests, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of that
Note or of any Note or Notes issued in exchange therefor or replacement
thereof.
SECTION 7.08. NONRELIANCE ON ADMINISTRATIVE AGENT AND
OTHER BANKS
Each Bank agrees that it has, independently and without
reliance on the Administrative Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis of the Borrower and decision to enter into this Agreement and that it
will, independently and without reliance upon the Administrative Agent or any
other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents. The Administrative Agent shall not be required to keep itself (or
any Bank) informed as to the performance or observance by the Borrower of this
Agreement or any of the other Loan Documents or any other document referred to
or provided for herein or therein or to inspect the properties or books of the
Borrower or any other Person. Except for notices, reports and other documents
and information expressly required to be furnished to the Banks by the
Administrative Agent hereunder or under the other Loan Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition or business of the Borrower or any other Person (or any of their
Affiliates) which may come into the possession of the Administrative Agent.
SECTION 7.09. FAILURE TO ACT
Except for action expressly required of the Administrative
Agent hereunder or under the other Loan Documents, the Administrative Agent
shall in all cases be fully justified in failing or refusing to act hereunder
and thereunder unless it shall receive further assurances to its satisfaction
by the Banks of their indemnification obligations under Section 7.05 against
any and all liability and expense which may be incurred by the Administrative
Agent by reason of taking, continuing to take, or failing to take any such
action.
SECTION 7.10. RESIGNATION OR REMOVAL OF ADMINISTRATIVE
AGENT.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative Agent may resign at
any time by giving notice thereof to the Banks and the Borrower and the
Administrative Agent may be removed at any time with or without cause by the
Required Banks. Upon any such resignation or removal, the Required
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Banks shall have the right to appoint a successor Administrative Agent, subject
to the approval of the Borrower, so long as no Default is in existence, which
approval shall not be unreasonably withheld or delayed. If no successor
Administrative Agent shall have been so appointed by the Required Banks and
shall have accepted such appointment within 30 days after the retiring
Administrative Agent's notice of resignation or the Required Banks' removal of
the retiring Administrative Agent, then the retiring Administrative Agent may,
on behalf of the Banks, appoint a successor Administrative Agent, subject to
the approval of the Borrower, so long as no Default is in existence, which
approval shall not be unreasonably withheld or delayed. Any successor
Administrative Agent shall be a bank which has a combined capital and surplus
of at least $500,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation or removal hereunder as Administrative Agent, the
provisions of this Article VII shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as the Administrative Agent hereunder.
ARTICLE VIII.
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. BASIS FOR DETERMINING INTEREST RATE
INADEQUATE OR UNFAIR
If on or prior to the first day of any Interest Period:
(a) the Administrative Agent determines that deposits in
Dollars (in the applicable amounts) are not being offered in the
relevant market for such Interest Period, or
(b) the Required Banks advise the Administrative Agent
that the London Interbank Offered Rate or IBOR, as determined by the
Administrative Agent will not adequately and fairly reflect the cost to
such Banks of funding its Fixed Rate Loans for such Interest Period,
the Administrative Agent shall forthwith give notice thereof to the Borrower
and the Banks, whereupon until the Administrative Agent notifies the Borrower
that the circumstances giving rise to such suspension no longer exist, the
obligations of the Banks to make such type of Fixed Rate Loans, or to permit
continuations or conversions into such type of Fixed Rate Loans, shall be
suspended. Unless the Borrower notifies the Administrative Agent at least 2
Domestic Business Days before the date of any Borrowing of such type of Fixed
Rate Loans for which a Notice of Borrowing has previously been given, or
continuation or conversion into such type of Fixed Rate Loans for which a
Notice of Continuation or Conversion has previously been given, that it elects
not to borrow or so continue or convert on such date, such Borrowing shall
instead be made as a Base Rate Borrowing, or such Fixed Rate Loan shall be
converted to a Base Rate Loan.
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SECTION 8.02. ILLEGALITY
If, after the date hereof, the adoption of any applicable
law, rule or regulation, or any change therein or any existing or future law,
rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof (any such agency
being referred to as an "Authority" and any such event being referred to as a
"Change of Law"), or compliance by any Bank (or its Lending Office) with any
request or directive (whether or not having the force of law) of any Authority
shall make it unlawful or impossible for any Bank (or its Lending Office) to
make, maintain or fund its Euro-Dollar Loans or Foreign Currency Loans and such
Bank shall so notify the Administrative Agent, the Administrative Agent shall
forthwith give notice thereof to the other Banks and the Borrower, whereupon
until such Bank notifies the Borrower and the Administrative Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to make or permit continuations or conversions of Euro-Dollar Loans
or Foreign Currency Loans, as the case may be, shall be suspended. Before
giving any notice to the Administrative Agent pursuant to this Section, such
Bank shall designate a different Lending Office if such designation will avoid
the need for giving such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. If such Bank shall determine that it
may not lawfully continue to maintain and fund any of its outstanding
Euro-Dollar Loans or Foreign Currency Loans, as the case may be, to maturity,
and shall so specify in such notice, the Borrower shall immediately prepay in
full the then outstanding principal amount of each Euro-Dollar Loan or Foreign
Currency Loan, as the case may be, of such Bank, together with accrued interest
thereon and any amount due such Bank pursuant to Section 8.05(a). Concurrently
with prepaying each such Euro-Dollar Loan or Foreign Currency Loan, as the case
may be, the Borrower shall borrow a Base Rate Loan in an equal principal amount
from such Bank (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans or Foreign Currency Loan,
as the case may be, of the other Banks), and such Bank shall make such a Base
Rate Loan.
SECTION 8.03. INCREASED COST AND REDUCED RETURN
(a) If after the date hereof, a Change of Law or
compliance by any Bank (or its Lending Office) with any request or directive
(whether or not having the force of law) of any Authority:
(i) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement, including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding (A) with respect to any Euro-Dollar Loan
any such requirement included in an applicable Euro-Dollar Reserve
Percentage and (B) with respect to any Foreign Currency Loan any such
requirement included in the applicable Adjusted LIBOR Rate) against
assets of, deposits with or for the account of, or credit extended by,
any Bank (or its Lending Office); or
(ii) shall impose on any Bank (or its Lending Office) or
on the United States market for certificates of deposit or the London
interbank market any other condition affecting its Fixed Rate Loans,
its Notes or its obligation to make Fixed Rate Loans;
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and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, by an
amount reasonably deemed by such Bank to be material, then, within 15 days
after demand by such Bank (with a copy to the Administrative Agent) pursuant
and subject to paragraph (c) below, the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction.
(b) If any Bank shall have determined that after the date
hereof the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof, or compliance by any Bank (or its Lending Office) with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any Authority, has or would have the effect of reducing the
rate of return on such Bank's capital as a consequence of its obligations
hereunder to a level below that which such Bank could have achieved but for
such adoption, change or compliance (taking into consideration such Bank's
policies with respect to capital adequacy) by an amount reasonably deemed by
such Bank to be material, then from time to time, within 15 days after demand
by such Bank pursuant and subject to paragraph (c) below, the Borrower shall
pay to such Bank such additional amount or amounts as will compensate such Bank
for such reduction.
(c) Each Bank will promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge, occurring after
the date hereof, which will entitle such Bank to compensation pursuant to this
Section and will designate a different Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation and will not, in
the reasonable judgment of such Bank, be otherwise materially disadvantageous
to such Bank. A certificate of any Bank claiming compensation under this
Section and setting forth the additional amount or amounts to be paid to it
hereunder, and including the calculations thereof in reasonable detail, shall
be conclusive in the absence of manifest error, provided that such
determination is made on a reasonable basis. In determining such amount, such
Bank may use any reasonable averaging and attribution methods.
(d) The provisions of this Section 8.03 (i) shall be
applicable with respect to any Participant, Assignee or other Transferee, and
any calculations required by such provisions shall be made based upon the
circumstances of such Participant, Assignee or other Transferee and (ii) shall
constitute a continuing agreement and shall survive the termination of this
Agreement and the payment in full or cancellation of the Notes.
SECTION 8.04. BASE RATE LOANS OR OTHER FIXED RATE LOANS
SUBSTITUTED FOR AFFECTED FIXED RATE LOANS
If (i) the obligation of any Bank to make or maintain any
type of Fixed Rate Loans has been suspended pursuant to Section 8.02 or (ii)
any Bank has demanded compensation under Section 8.03, and the Borrower shall,
by at least 5 Euro-Dollar Business Days' or Foreign Currency Business Days, as
applicable, prior notice to such Bank through the Administrative Agent, have
elected that the provisions of this Section shall apply to such Bank, then,
unless and
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until such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank
as, or permitted to be continued as or converted into, Euro-Dollar
Loans or Foreign Currency Loans, as the case may be, shall be instead
be made as or converted into (A) Base Rate Loans, (B) if such
suspension or demand for compensation relates to Euro-Dollar Loans,
but not Foreign Currency Loans, as Foreign Currency Loans, and (C) if
such demand for compensation relates to Foreign Currency Loans, but
not Euro-Dollar Loans, as Euro-Dollar Loans, as the Borrower may elect
in the notice to such Bank through the Administrative Agent referred
to hereinabove (in all cases interest and principal on such Loans
shall be payable contemporaneously with the related Fixed Rate Loans
of the other Banks), and
(b) after each of its Euro-Dollar Loans or Foreign
Currency Loans, as the case may be, has been repaid, all payments of
principal which would otherwise be applied to repay such Fixed Rate
Loans shall be applied to repay its Base Rate Loans instead.
SECTION 8.05. COMPENSATION
Upon the request of any Bank, delivered to the Borrower and
the Administrative Agent, the Borrower shall pay to such Bank such amount or
amounts as shall compensate such Bank for any loss, cost or expense incurred by
such Bank as a result of:
(a) any payment or prepayment (pursuant to Section 2.11,
2.13, 6.01, 8.02 or otherwise) of a Fixed Rate Loan on a date other
than the last day of an Interest Period for such Loan; or
(b) any failure by the Borrower to prepay a Fixed Rate
Loan on the date for such prepayment specified in the relevant notice
of prepayment hereunder; or
(c) any failure by the Borrower to borrow a Fixed Rate
Loan on the date for the Fixed Rate Borrowing of which such Fixed Rate
Loan is a part specified in the applicable Notice of Borrowing
delivered pursuant to Section 2.02 or notification of acceptance of a
Transaction Rate Quote pursuant to Section 2.01(b)(ii) or Money Market
Quotes pursuant to Section 2.03(e); or
(d) any failure by the Borrower to pay a Foreign Currency
Loan in the applicable Foreign Currency;
such compensation to include, without limitation, as applicable, (A) an amount
equal to the excess, if any, of (x) the amount of interest which would have
accrued on the amount so paid or prepaid or not prepaid or borrowed for the
period from the date of such payment, prepayment or failure to prepay or borrow
to the last day of the then current Interest Period for such Fixed Rate Loan
(or, in the case of a failure to prepay or borrow, the Interest Period for such
Fixed Rate Loan which would have commenced on the date of such failure to
prepay or borrow) at the applicable rate of interest for such Fixed Rate Loan
provided for herein over (y) the amount of
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interest (as reasonably determined by such Bank) such Bank would have paid on
(i) deposits in Dollars of comparable amounts having terms comparable to such
period placed with it by leading banks in the London interbank market (if such
Loan is a Euro-Dollar Loan) or (ii) any deposit in a Foreign Currency of
comparable amounts having terms comparable to such period placed with it by
lending banks in the applicable interbank market for such Foreign Currency (if
such Fixed Rate Loan is a Foreign Currency Loan); or (B) any such loss, cost or
expense incurred by such Bank in liquidating or closing out any foreign
currency contract undertaken by such Bank in funding or maintaining such Fixed
Rate Loan (if such Fixed Rate Loan is a Foreign Currency Loan).
SECTION 8.06. FAILURE TO PAY IN FOREIGN CURRENCY. If any
Borrower is unable for any reason to effect payment in a Foreign Currency as
required by this Agreement or if any Borrower shall default in the Foreign
Currency, each Bank may, through the Administrative Agent, require such payment
to be made in Dollars in the Dollar Equivalent amount of such payment. In any
case in which any Borrower shall make such payment in Dollars, the Borrower
agrees to hold the Banks harmless from any loss incurred by the Banks arising
from any change in the value of Dollars in relation to such Foreign Currency
between the date such payment became due and the date of payment thereof.
SECTION 8.07. JUDGMENT CURRENCY. If for the purpose of
obtaining judgment in any court or enforcing any such judgment it is necessary
to convert any amount due in any Foreign Currency into any other currency, the
rate of exchange used shall be the Administrative Agent's spot rate of exchange
for the purchase of the Foreign Currency with such other currency at the close
of business on the Foreign Currency Business Day preceding the date on which
judgment is given or any order for payment is made. The obligation of the
Borrower in respect of any amount due from it hereunder shall, notwithstanding
any judgment or order for a liquidated sum or sums in respect of amounts due
hereunder or under any judgment or order in any other currency or otherwise be
discharged only to the extent that on the Foreign Currency Business Day
following receipt by the Administrative Agent of any payment in a currency
other than the relevant Foreign Currency the Administrative Agent is able (in
accordance with normal banking procedures) to purchase the relevant Foreign
Currency with such other currency. If the amount of the relevant Foreign
Currency that the Administrative Agent is able to purchase with such other
currency is less than the amount due in the relevant Foreign Currency,
notwithstanding any judgment or order, the Borrower shall indemnify the Banks
for the shortfall.
SECTION 8.08. REPLACEMENT OF BANKS
If any Bank (a "Notice Bank") makes demand for amounts owed
under Section 8.03 (other than due to any change in the Eurodollar Reserve
Percentage), or gives notice under Section 8.02 that it can no longer
participate in Euro-Dollar Loans, then in each case the Borrower shall have the
right, if no Default or Event of Default exists, and subject to the terms and
conditions set forth in Section 9.08(c), to designate an assignee (a
"Replacement Bank") to purchase the Notice Bank's share of outstanding
Syndicated Loans, Money Market Loans and all other obligations hereunder and to
assume the Notice Bank's obligations to the Borrower under this Agreement;
provided, that, any Replacement Bank must be reasonably acceptable to the
Administrative Agent and the Required Banks (and, in any event, may not be an
Affiliate of the
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Borrower). Subject to the foregoing, the Notice Bank agrees to
assign without recourse to the Replacement Bank its share of outstanding
Syndicated Loans and Money Market Loans and its Commitment, and to delegate to
the Replacement Bank its obligations to the Borrower under this Agreement and
its future obligations to the Administrative Agent under this Agreement. Upon
such sale and delegation by the Notice Bank and the purchase and assumption by
the Replacement Bank, and compliance with the provisions of Section 9.08(c),
the Notice Bank shall cease to be a "Bank" hereunder and the Replacement Bank
shall become a "Bank" under this Agreement; provided, however, that any Notice
Bank shall continue to be entitled to the indemnification provisions contained
elsewhere herein.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01. NOTICES
All notices, requests and other communications to any party
hereunder shall be in writing (including telecopier or similar writing) and
shall be given to such party at its address or telecopier number set forth on
the signature pages hereof or such other address or telecopier number as such
party may hereafter specify for the purpose by notice to each other party. Each
such notice, request or other communication shall be effective (i) if given by
telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and the confirmation is received, (ii) if given by
mail, 3 Domestic Business Days after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid or (iii) if
given by any other means, when delivered at the address specified in this
Section; provided that notices to the Administrative Agent under Article II or
Article VIII shall not be effective until received.
SECTION 9.02. NO WAIVERS
No failure or delay by the Administrative Agent or any Bank
in exercising any right, power or privilege hereunder or under any Note or
other Loan Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.03. EXPENSES; DOCUMENTARY TAXES
The Borrower shall pay (i) all out-of-pocket expenses of the
Administrative Agent, including reasonable fees and disbursements of special
counsel for the Banks and the Administrative Agent, in connection with the
preparation of this Agreement and the other Loan Documents, any waiver or
consent hereunder or thereunder or any amendment hereof or thereof or any
Default or alleged Default hereunder or thereunder and (ii) if a Default
occurs, all out-of-pocket expenses incurred by the Administrative Agent and the
Banks, including reasonable fees and disbursements of counsel, in connection
with such Default and collection and other enforcement proceedings resulting
therefrom, including out-of-pocket expenses
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incurred in enforcing this Agreement and the other Loan Documents against the
Borrower. The Borrower shall indemnify the Administrative Agent and each Bank
against any transfer taxes, documentary taxes, assessments or charges made by
any Authority by reason of the execution and delivery of this Agreement or the
other Loan Documents by the Borrower.
SECTION 9.04. INDEMNIFICATION
The Borrower shall indemnify the Administrative Agent, the
Banks and each Affiliate thereof and their respective directors, officers,
employees and agents from, and hold each of them harmless against, any and all
losses, liabilities, claims or damages to which any of them may become subject,
insofar as such losses, liabilities, claims or damages arise out of or result
from any actual or proposed use by the Borrower of the proceeds of any
extension of credit by any Bank hereunder or breach by the Borrower of this
Agreement or any other Loan Document or from any investigation, litigation
(including, without limitation, any actions taken by the Administrative Agent
or any of the Banks to enforce this Agreement or any of the other Loan
Documents) or other proceeding (including, without limitation, any threatened
investigation or proceeding) relating to the foregoing, and the Borrower shall
reimburse the Administrative Agent and each Bank, and each Affiliate thereof
and their respective directors, officers, employees and agents, upon demand for
any expenses (including, without limitation, legal fees) incurred in connection
with any such investigation or proceeding; but excluding any such losses,
liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified. If any cause
of action, suit, proceeding or claim arising from any of the foregoing is
brought against any Indemnified Person, whether such action, proceeding, suit
or claim shall be actual or threatened, or in preparation therefor, the
Borrower will have the right, at its expense, to assume the resistance and
defense of such cause of action, suit, proceeding or claim or cause the same to
be resisted and defended; provided that such Indemnified Person shall be
entitled (but not obligated) to participate jointly in such defense, in which
case such Indemnified Person will be responsible for its own legal fees or
other expenses, if any, related to such defense incurred subsequent to the
joint participation by such party in such defense. Notwithstanding the
foregoing, if any Indemnified Person shall have been advised by counsel chosen
by it that there may be one or more legal defenses available to such
Indemnified Person that are materially different from or additional to those
available to the Borrowers, the Indemnified Person may assume the defense of
such action with respect to such different or additional defenses and the
Borrower agrees to reimburse such Indemnified Person for the reasonable fees
and expenses of any counsel retained by the Indemnified Person.
SECTION 9.05. SETOFF; SHARING OF SETOFFS
(a) The Borrower hereby grants to the Administrative
Agent and each Bank and to Wachovia as to the Swing Loan Note, a lien for all
indebtedness and obligations owing to them from the Borrower upon all deposits
or deposit accounts, of any kind (other than trust and escrow accounts not
established for the benefit of the Administrative Agent and the Banks), or any
interest in any deposits or deposit accounts thereof, now or hereafter pledged,
mortgaged, transferred or assigned to the Administrative Agent or any such Bank
or otherwise in the possession or control of the Administrative Agent or any
such Bank for any purpose for the account or benefit of the Borrower and
including any balance of any deposit account or of any credit of the Borrower
with the Administrative Agent or any such Bank, whether now existing or
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hereafter established hereby authorizing the Administrative Agent and each Bank
at any time or times (upon at least 2 Domestic Business Days' prior notice, if
no Event of Default is in existence) to apply such balances or any part thereof
to such of the indebtedness and obligations owing by the Borrower to the Banks
and/or the Administrative Agent then past due and in such amounts as they may
elect, and whether or not the collateral, if any, or the responsibility of
other Persons primarily, secondarily or otherwise liable may be deemed
adequate. For the purposes of this paragraph, all remittances and property
shall be deemed to be in the possession of the Administrative Agent or any such
Bank as soon as the same may be put in transit to it by mail or carrier or by
other bailee.
(b) Each Bank agrees that if it shall, by exercising any
right of setoff or counterclaim or resort to collateral security or otherwise,
receive payment of a proportion of the aggregate amount of principal and
interest owing with respect to the Note held by it which is greater than the
proportion received by any other Bank in respect of the aggregate amount of all
principal and interest owing with respect to the Note held by such other Bank,
the Bank receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks owing to such other Banks,
and such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Notes held by the Banks
owing to such other Banks shall be shared by the Banks pro rata; provided that
(i) nothing in this Section shall impair the right of any Bank to exercise any
right of setoff or counterclaim it may have and to apply the amount subject to
such exercise to the payment of indebtedness of the Borrower other than its
indebtedness under the Notes, and (ii) if all or any portion of such payment
received by the purchasing Bank is thereafter recovered from such purchasing
Bank, such purchase from each other Bank shall be rescinded and such other Bank
shall repay to the purchasing Bank the purchase price of such participation to
the extent of such recovery together with an amount equal to such other Bank's
ratable share (according to the proportion of (x) the amount of such other
Bank's required repayment to (y) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower
agrees, to the fullest extent it may effectively do so under applicable law,
that any holder of a participation in a Note, whether or not acquired pursuant
to the foregoing arrangements, may exercise rights of setoff or counterclaim
and other rights with respect to such participation as fully as if such holder
of a participation were a direct creditor of the Borrower in the amount of such
participation.
SECTION 9.06. AMENDMENTS AND WAIVERS
(a) Any provision of this Agreement, the Notes or any
other Loan Documents may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Administrative Agent are affected thereby,
by the Administrative Agent); provided that, no such amendment or waiver shall,
unless signed by all Banks, (i) change the Commitment of any Bank or subject
any Bank to any additional obligation, (ii) reduce the principal of or the rate
of interest on any Loan or any fees (other than fees payable to the
Administrative Agent) hereunder, (iii) change the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder, (iv) reduce the
amount of principal, interest or fees due on any date fixed for the payment
thereof, (v) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes, or the percentage of Banks, which shall
be required for the Banks or any of them to take any action
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under this Section or any other provision of this Agreement, (vi) change the
manner of application of any payments made under this Agreement or the Notes,
(vii) release or substitute all or any substantial part of the collateral (if
any) held as security for the Loans, or (viii) release any Guarantee given to
support payment of the Loans.
(b) The Borrower will not solicit, request or negotiate
for or with respect to any proposed waiver or amendment of any of the
provisions of this Agreement other than through the Administrative Agent,
unless each Bank shall be informed thereof by the Borrower and shall be
afforded an opportunity of considering the same and shall be supplied by the
Borrower with sufficient information to enable it to make an informed decision
with respect thereto. Executed or true and correct copies of any waiver or
consent effected pursuant to the provisions of this Agreement shall be
delivered by the Administrative Agent to each Bank forthwith following the date
on which the same shall have been executed and delivered by the requisite
percentage of Banks. The Borrower will not, directly or indirectly, pay or
cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any Bank (in its capacity as such) as
consideration for or as an inducement to the entering into by such Bank of any
waiver or amendment of any of the terms and provisions of this Agreement unless
such remuneration is concurrently paid, on the same terms, ratably to all such
Banks.
(c) The Designated Bank hereby appoints Designating Bank
as Designated Bank's agent and attorney in fact and grants to the Designating
Bank an irrevocable power of attorney, coupled with an interest, to receive
payments made for the benefit of the Designated Bank under this Agreement, to
deliver and receive all communications and notices under this Agreement and
other Loan Documents and to exercise on the Designated Bank's behalf all rights
to vote and to grant and make approvals, waivers, consent of amendments to or
under this Agreement or other Loan Documents. Any document executed by such
agent on the Designated Bank's behalf in connection with this Agreement or
other Loan Documents shall be binding on the Designated Bank. The Borrower, the
Administrative Agent and each of the Banks may rely on and are beneficiaries of
the preceding provisions.
SECTION 9.07. NO MARGIN STOCK COLLATERAL
Each of the Banks represents to the Administrative Agent and
each of the other Banks that it in good faith is not, directly or indirectly
(by negative pledge or otherwise), relying upon any Margin Stock as collateral
in the extension or maintenance of the credit provided for in this Agreement.
SECTION 9.08. SUCCESSORS AND ASSIGNS
(a) The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that the Borrower may not assign or otherwise
transfer any of its rights under this Agreement, except that in connection with
the European Reorganization, so long as no Default or Event of Default is in
existence, Russell Europe Limited may assign to the New European Headquarters
Subsidiary all of its rights and obligations under this Agreement and the Notes
and Loan Documents executed by it, and automatically upon satisfaction of each
of the following be released from such obligations, by delivering or causing to
be delivered to the Administrative Agent: (i) an
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assignment and assumption agreement pertaining to the foregoing, with a consent
and reaffirmation of guaranty at the end thereof, executed by Russell
Corporation and pertaining to the Guaranty, in each case in form and substance
satisfactory to the Administrative Agent, (ii) such corporate and
organizational documents pertaining to the New European Headquarters Subsidiary
of the types described in Section 3.01(f) relative to Russell Europe Limited as
the Administrative Agent may reasonably request and (iii) a new Foreign
Currency Note in favor of each Bank, executed by the New European Headquarters
Subsidiary (which will be distributed to the Banks by the Administrative Agent,
whereupon the Banks will deliver to Russell Corporation for cancellation the
Notes executed by Russell Europe Limited).
(b) Any Bank may at any time sell to one or more Persons
(each a "Participant") participating interests in any Loan owing to such Bank,
any Note held by such Bank, any Commitment hereunder or any other interest of
such Bank hereunder. In the event of any such sale by a Bank of a participating
interest to a Participant, such Bank's obligations under this Agreement shall
remain unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Note for all purposes
under this Agreement, and the Borrower and the Administrative Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement. In no event shall a Bank
that sells a participation be obligated to the Participant to take or refrain
from taking any action hereunder except that such Bank may agree that it will
not (except as provided below), without the consent of the Participant, agree
to (i) the change of any date fixed for the payment of principal of or interest
on the related loan or loans, (ii) the change of the amount of any principal,
interest or fees due on any date fixed for the payment thereof with respect to
the related loan or loans, (iii) the change of the principal of the related
loan or loans, (iv) any change in the rate at which either interest is payable
thereon or (if the Participant is entitled to any part thereof) fee is payable
hereunder from the rate at which the Participant is entitled to receive
interest or fee (as the case may be) in respect of such participation, (v) the
release or substitution of all or any substantial part of the collateral (if
any) held as security for the Loans, or (vi) the release of any Guarantee given
to support payment of the Loans. Each Bank selling a participating interest in
any Loan, Note, Commitment or other interest under this Agreement, other than a
Money Market Loan or Money Market Loan Note or participating interest therein,
shall, within 10 Domestic Business Days of such sale, provide the Borrower and
the Administrative Agent with written notification stating that such sale has
occurred and identifying the Participant and the interest purchased by such
Participant. The Borrower agrees that each Participant shall be entitled to the
benefits of Article VIII with respect to its participation in Loans outstanding
from time to time.
(c) Any Bank may at any time assign to one or more banks
or financial institutions (each an "Assignee") all or, in the case of its
Syndicated Loans and Commitments, a proportionate part of all its Syndicated
Loans and Commitments, and of its rights and obligations under this Agreement,
the Notes and the other Loan Documents, and such Assignee shall assume all such
rights and obligations, pursuant to an Assignment and Acceptance, executed by
such Assignee, such transferor Bank and the Administrative Agent (and, in the
case of an Assignee that is not then a Bank or an Affiliate or Related Fund of
a Bank), subject to clause (iii) below, by the Borrower; provided that (i) no
interest may be sold by a Bank pursuant to this paragraph (c) unless the
Assignee shall agree to assume ratably equivalent portions of the transferor
Bank's
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Commitment, (ii) if a Bank is assigning only a portion of its Commitment, then,
the amount of the Commitment being assigned (determined as of the effective
date of the assignment) shall be in an amount not less than $5,000,000 (except
that there shall be no such minimum if the assignment is to any Bank or any
Affiliate or Related Fund of any Bank), and (iii) except during the continuance
of a Default, no interest may be sold by a Bank pursuant to this paragraph (c)
to any Assignee that is not then a Bank or an Affiliate or Related Fund of a
Bank without the consent of the Borrower and the Administrative Agent, which
consent shall not be unreasonably withheld. Upon (A) execution of the
Assignment and Acceptance by such transferor Bank, such Assignee, the
Administrative Agent and (if applicable) the Borrower, (B) delivery of an
executed copy of the Assignment and Acceptance to the Borrower and the
Administrative Agent, (C) payment by such Assignee to such transferor Bank of
an amount equal to the purchase price agreed between such transferor Bank and
such Assignee, and (D) payment of a processing and recordation fee to the
Administrative Agent of (1) if such Assignee is a Bank or an Affiliate or
Related Fund of a Bank, $1,000, and (2) for any other Assignee, $3,500, such
Assignee shall for all purposes be a Bank party to this Agreement and shall
have all the rights and obligations of a Bank under this Agreement to the same
extent as if it were an original party hereto with a Commitment as set forth in
such instrument of assumption, and the transferor Bank shall be released from
its obligations hereunder to a corresponding extent, and no further consent or
action by the Borrower, the Banks or the Administrative Agent shall be
required. Upon the consummation of any transfer to an Assignee pursuant to this
paragraph (c), the transferor Bank, the Administrative Agent and the Borrower
shall make appropriate arrangements so that, if required, a new Note is issued
to each of such Assignee and such transferor Bank.
(d) Subject to the provisions of Section 9.09, the
Borrower authorizes each Bank to disclose to any Participant, Assignee or other
transferee (each a "Transferee") and any prospective Transferee any and all
financial information in such Bank's possession concerning the Borrower which
has been delivered to such Bank by the Borrower pursuant to this Agreement or
which has been delivered to such Bank by the Borrower in connection with such
Bank's credit evaluation prior to entering into this Agreement.
(e) No Transferee shall be entitled to receive any
greater payment under Section 2.13(d) or Section 8.03 than the transferor Bank
would have been entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrower's prior written consent or by
reason of the provisions of Section 8.02 or 8.03 requiring such Bank to
designate a different Lending Office under certain circumstances or at a time
when the circumstances giving rise to such greater payment did not exist.
(f) Anything in this Section 9.08 to the contrary
notwithstanding, any Bank may assign and pledge all or any portion of the Loans
and/or obligations owing to it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank, provided that any payment in respect of such
assigned Loans and/or obligations made by the Borrower to the assigning and/or
pledging Bank in accordance with the terms of this Agreement shall satisfy the
Borrower's obligations hereunder in respect of such assigned Loans and/or
obligations to the extent of such payment. No such assignment shall release the
assigning and/or pledging Bank from its obligations hereunder.
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(g) Any Bank may at any time designate not more than one
Designated Bank to fund Money Market Loans on behalf of such Designating Bank
subject to the terms of Section 9.08(c), and the provisions of Section 9.08(c)
shall not apply to such designation. No Bank may have more than one Designated
Bank at any time. Such designation may occur either by the execution of the
signature pages hereof by such Bank and Designated Bank next to the appropriate
"Designating Bank" and "Designated Bank" captions, or by execution by such
parties of a Designation Agreement subsequent to the date hereof; provided,
that any Bank and its Designated Bank executing the signatures pages hereof as
"Designating Bank" and "Designated Bank", respectively, on the date hereof
shall be deemed to have executed a Designation Agreement, and shall be bound by
the respective representations, warranties and covenants contained therein, and
such designation shall be conclusively deemed to be acknowledged by the
Borrower and the Administrative Agent. The parties to each such designation
occurring subsequent to the execution date hereof shall execute and deliver to
the Administrative Agent and the Borrower for their acknowledgment a
Designation Agreement. Upon such receipt of an appropriately completed
Designation Agreement executed by a Designating Bank and a designee
representing that it is a Designated Bank and acknowledged by the Borrower, the
Administrative Agent will acknowledge such Designation Agreement and will give
prompt notice thereof to the Borrower and the other Banks, whereupon, (i) the
Borrower shall execute and deliver to the Designating Bank a Designated Bank
Note payable to the order of the Designated Bank, (ii) from and after the
effective date specified in the Designation Agreement, the Designated Bank
shall become a party to this Agreement with a right to make Money Market Loans
on behalf of its Designating Bank pursuant to Section 2.03(h), and (iii) the
Designated Bank shall not be required to make payments with respect to any
obligations in this Agreement except to the extent of excess cash flow of such
Designated Bank which is not otherwise required to repay obligations of such
Designated Bank which are then due and payable; provided, however, that
regardless of such designation and assumption by the Designated Bank, the
Designating Bank shall be and remain obligated to the Borrower, the
Administrative Agent and the Banks for each and every obligation of the
Designating Bank and its related Designated Bank with respect to this
Agreement, including, without limitation, any indemnification obligations under
Section 7.05 and any sums otherwise payable to the Borrower by the Designated
Bank. Each Designating Bank, or a specified branch or affiliate thereof, shall
serve as the administrative agent of its Designated Bank and shall on behalf of
its Designated Bank: (i) receive any and all payments made for the benefit of
such Designated Bank and (ii) give and received all communications and notices
and take all actions hereunder, including, without limitation, votes,
approvals, waivers, consents and amendments under or relating to this Agreement
and the other Loan Documents. Any such notice, communication, vote, approval,
waiver, consent or amendment shall be signed by a Designating Bank, or
specified branch or affiliate thereof, as administrative agent for its
Designated Bank and need not be signed by such Designated Bank on its own
behalf. The Borrower, the Administrative Agent and the Banks may rely thereon
without any requirement that the Designated Bank sign or acknowledge the same.
No Designated Bank may assign or transfer all or any portion of its interest
hereunder or under any other Loan Document, other than via an assignment to its
Designating Bank or Liquidity Bank (but any assignment to a Liquidity Bank
shall not curtail or affect the appointment or rights of the Designating Bank
pursuant to Section 9.06(c) or Section 4 of the Designation Agreement, which
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appointment and rights are irrevocable), if any, or otherwise in accordance
with the provisions of Section 2.03(h).
SECTION 9.09. CONFIDENTIALITY
Each Bank agrees to exercise commercially reasonable efforts
to keep any financial information pertaining to the Borrower and its Affiliates
and any other information delivered or made available by the Borrower to it
which is clearly indicated to be confidential information, confidential from
anyone other than persons employed or retained by such Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided that nothing herein shall prevent any Bank
from disclosing such information (i) to any other Bank, (ii) upon the order of
any court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over such Bank, (iv) which
has been publicly disclosed, (v) to the extent reasonably required in
connection with any litigation to which the Administrative Agent, any Bank or
their respective Affiliates may be a party, (vi) to the extent reasonably
required in connection with the exercise of any remedy hereunder, (vii) to such
Bank's legal counsel and independent auditors, (viii) to any actual or proposed
Participant, Assignee or other Transferee of all or part of its rights
hereunder which has agreed in writing to be bound by the provisions of this
Section 9.09 and (ix) by any Designated Bank to any rating agency, commercial
paper dealer, or provider of a surety, guaranty or credit or liquidity
enhancement to such Designated Bank which has agreed in writing to be bound by
the provisions of this Section 9.09; provided that should disclosure of any
such confidential information be required by virtue of clause (ii) of the
immediately preceding sentence, to the extent permitted by law, any relevant
Bank shall promptly notify the Borrower of same so as to allow the Borrower to
seek a protective order or to take any other appropriate action; provided,
further, that, no Bank shall be required to delay compliance with any directive
to disclose any such information so as to allow the Borrower to effect any such
action.
SECTION 9.10. REPRESENTATION BY BANKS
Each Bank hereby represents that it is a commercial lender or
financial institution which makes loans in the ordinary course of its business
and that it will make its Loans hereunder for its own account in the ordinary
course of such business; provided that, subject to Section 9.08, the
disposition of the Note or Notes held by that Bank shall at all times be within
its exclusive control.
SECTION 9.11. OBLIGATIONS SEVERAL
The obligations of each Bank hereunder are several, and no
Bank shall be responsible for the obligations or commitment of any other Bank
hereunder. Nothing contained in this Agreement and no action taken by the Banks
pursuant hereto shall be deemed to constitute the Banks to be a partnership, an
association, a joint venture or any other kind of entity. The amounts payable
at any time hereunder to each Bank shall be a separate and independent debt,
and each Bank shall be entitled to protect and enforce its rights arising out
of this Agreement or any other Loan Document and it shall not be necessary for
any other Bank to be joined as an additional party in any proceeding for such
purpose.
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SECTION 9.12. GEORGIA LAW
This Agreement and each Note shall be construed in accordance
with and governed by the law of the State of Georgia.
SECTION 9.13. SEVERABILITY
In case any one or more of the provisions contained in this
Agreement, the Notes or any of the other Loan Documents should be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby and shall be enforced to the
greatest extent permitted by law.
SECTION 9.14. INTEREST
In no event shall the amount of interest, and all charges,
amounts or fees contracted for, charged or collected pursuant to this
Agreement, the Notes or the other Loan Documents and deemed to be interest
under applicable law (collectively, "Interest") exceed the highest rate of
interest allowed by applicable law (the "Maximum Rate"), and in the event any
such payment is inadvertently received by any Bank, then the excess sum (the
"Excess") shall be credited as a payment of principal, unless the Borrower
shall notify such Bank in writing that it elects to have the Excess returned
forthwith. It is the express intent hereof that the Borrower not pay and the
Banks not receive, directly or indirectly in any manner whatsoever, interest in
excess of that which may legally be paid by the Borrower under applicable law.
The right to accelerate maturity of any of the Loans does not include the right
to accelerate any interest that has not otherwise accrued on the date of such
acceleration, and the Administrative Agent and the Banks do not intend to
collect any unearned interest in the event of any such acceleration. All monies
paid to the Administrative Agent or the Banks hereunder or under any of the
Notes or the other Loan Documents, whether at maturity or by prepayment, shall
be subject to rebate of unearned interest as and to the extent required by
applicable law. By the execution of this Agreement, the Borrower covenants, to
the fullest extent permitted by law, that (i) the credit or return of any
Excess shall constitute the acceptance by the Borrower of such Excess, and (ii)
the Borrower shall not seek or pursue any other remedy, legal or equitable ,
against the Administrative Agent or any Bank, based in whole or in part upon
contracting for charging or receiving any Interest in excess of the Maximum
Rate. For the purpose of determining whether or not any Excess has been
contracted for, charged or received by the Administrative Agent or any Bank,
all interest at any time contracted for, charged or received from the Borrower
in connection with this Agreement, the Notes or any of the other Loan Documents
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread in equal parts throughout the full term of the
Commitments. The Borrower, the Administrative Agent and each Bank shall, to the
maximum extent permitted under applicable law, (i) characterize any
non-principal payment as an expense, fee or premium rather than as Interest and
(ii) exclude voluntary prepayments and the effects thereof. The provisions of
this Section shall be deemed to be incorporated into each Note and each of the
other Loan Documents (whether or not any provision of this Section is referred
to therein). All such Loan Documents and communications relating to any
Interest owed by the Borrower and all figures set forth therein shall, for the
sole purpose of computing the extent of obligations hereunder and under the
Notes and the other Loan Documents be
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automatically recomputed by the Borrower, and by any court considering the
same, to give effect to the adjustments or credits required by this Section.
SECTION 9.15. INTERPRETATION
No provision of this Agreement or any of the other Loan
Documents shall be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or dictated such
provision.
SECTION 9.16. WAIVER OF JURY TRIAL; CONSENT TO
JURISDICTION
To the fullest extent permitted by law, the Borrower (a) and
each of the Banks and the Administrative Agent irrevocably waives any and all
right to trial by jury in any legal proceeding arising out of this Agreement,
any of the other Loan Documents, or any of the transactions contemplated hereby
or thereby, (b) submits to the nonexclusive personal jurisdiction in the State
of Georgia, the courts thereof and the United States District Courts sitting
therein, for the enforcement of this Agreement, the Notes and the other Loan
Documents, (c) waives any and all personal rights under the law of any
jurisdiction to object on any basis (including, without limitation,
inconvenience of forum) to jurisdiction or venue within the State of Georgia
for the purpose of litigation to enforce this Agreement, the Notes or the other
Loan Documents, and (d) agrees that service of process may be made upon it in
the manner prescribed in Section 9.01 for the giving of notice to the Borrower.
Nothing herein contained, however, shall prevent the Administrative Agent from
bringing any action or exercising any rights against any security and against
the Borrower personally, and against any assets of the Borrower, within any
other state or jurisdiction.
SECTION 9.17. COUNTERPARTS
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
SECTION 9.18. SOURCE OF FUNDS -- ERISA
Each of the Banks hereby severally (and not jointly)
represents to the Borrower that no part of the funds to be used by such Bank to
fund the Loans hereunder from time to time constitutes (i) assets allocated to
any separate account maintained by such Bank in which any employee benefit plan
(or its related trust) has any interest nor (ii) any other assets of any
employee benefit plan. As used in this Section, the terms "employee benefit
plan" and "separate account" shall have the respective meanings assigned to
such terms in Section 3 of ERISA.
SECTION 9.19. EUROPEAN ECONOMIC AND MONETARY UNION. (a)
In this Section 9.19 and in each other provision of this Agreement to which
reference is made in this Section 9.19 expressly or impliedly, the following
terms have the meanings given to them in this Section 9.19
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"commencement of the third stage of EMU" means January 1,
1999.
"EMU" means economic and monetary union as contemplated in the
Treaty on European Union.
"EMU legislation" means legislative measures of the European
Council for the introduction of, changeover to or operation of the euro.
"euro" means the single currency of the participating member
states as of the date, for each such participating member state, such
participating member state's national currency unit shall be substituted by the
euro.
"euro unit" means the currency unit of the euro.
"national currency unit" means the unit of currency of a
participating member state, as defined on the day before the commencement of
the third stage of EMU.
"participating member state" means each state so described in
any EMU legislation, and in particular, as of the commencement of the third
stage of EMU, Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg,
Netherlands, Austria, Portugal and Finland.
"Treaty on European Union" means the Treaty of Rome of March
25, 1957, as amended by the Single European Act 1986 and the Maastricht Treaty
(which was signed at Maastricht on February 7, 1992, and came into force on
November 1, 1993), as amended from time to time.
"Transitional period" means the period beginning on January 1,
1999 and ending on December 31, 2001.
(b) The provisions of paragraphs (c) to (j) below
(inclusive) shall be effective at and from the commencement of the third stage
of EMU, provided, that if and to the extent that any such provision relates to
any state (or the currency of such state) that is not a participating member
state on the commencement of the third stage of EMU, such provisions shall
become effective in relation to such state (and the currency of such state) at
and from the date on which such state becomes a participating member state.
(c) Each obligation under this Agreement of a party to
this Agreement which has been denominated in the national currency unit of a
participating member state shall be redenominated into the euro unit in
accordance with EMU legislation, provided, that during the transitional period
an amount denominated either in the euro or in the national currency unit of a
participating member state and payable within that participating member state
by crediting an account of the creditor can be paid by the debtor either in the
euro unit or in the national currency unit, each party to this Agreement shall
be entitled to pay or repay any such amount either in the euro unit or in such
national currency unit.
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(d) Any Foreign Currency Loan in the currency of a
participating member state shall be made in the euro unit, or, during the
transitional period, in a national currency unit requested by the Borrower.
(e) With respect to any amount denominated or to be
denominated in the euro or a national currency unit, any reference to a
"Foreign Currency Business Day" shall be construed as a reference to a day
(other than a Saturday or Sunday) on which banks are generally open for
business in
(i) Atlanta, Georgia, London and New York City; and
(ii) Frankfurt am Main, Germany or any other financial
center relating to the relevant national currency unit (or such principal
financial center or centers in such participating member state or states as the
Administrative Agent may from time to time nominate for this purpose).
(f) Sections 2.02(c) and 2.12(a) shall be construed so
that, in relation to the payment of any amount of euro units or national
currency units, such amount shall be made available to the Administrative Agent
in immediately, freely transferable, cleared funds to such account with such
bank in Frankfurt am Main, Germany (or such other principal financial center in
such participating member state as the Administrative Agent may from time to
time nominate for this purpose) as the Administrative Agent shall from time to
time nominate for this purpose.
(g) Any amount payable by the Administrative Agent to the
Banks under this Agreement in the currency of a participating member state
shall be paid in the euro unit, or, during the transitional period, in a
national currency unit in which borrowed.
(h) With respect to the payment of any amount denominated
in the euro or in a national currency unit, the Administrative Agent shall not
be liable to the Borrower or any of the Banks in any way whatsoever for any
delay, or the consequences of any delay, in the crediting to any account of any
amount required by this Agreement to be paid by the Administrative Agent if the
Administrative Agent shall have taken all relevant steps to achieve, on the
date required by this Agreement, the payment of such amount in immediately
available, freely transferable, cleared funds (in the euro unit or, as the case
may be, in a national currency unit) to the account with the bank in the
principal financial center in the participating member state which the Borrower
or, as the case may be, any Bank shall have specified for such purpose. In this
paragraph (h), "all relevant steps" means all such steps as may be prescribed
from time to time by the regulations or operating procedures of such clearing
or settlement system as the Administrative Agent may from time to time
determine for the purpose of clearing or settling payments of the euro.
(i) If the basis of accrual of interest or fees expressed in
this Agreement with respect to the currency of any state that becomes a
participating member state shall be inconsistent with any convention or
practice in the London interbank market for the basis of accrual of interest or
fees in respect of the euro, such convention or practice shall replace such
expressed basis effective as of and from the date on which such state becomes a
participating
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member state; provided, that if any Foreign Currency Loan in the currency of
such state is outstanding immediately prior to such date, such replacement
shall take effect, with respect to such Foreign Currency Loan, at the end of
the then current Interest Period.
(j) Without prejudice and in addition to any method of
conversion or rounding prescribed by any EMU legislation and without prejudice
to the respective liabilities for indebtedness of the Borrower to the Banks and
the Banks to the Borrower under or pursuant to this Agreement.
(i) each reference in this Agreement to a minimum amount
(or an integral multiple thereof) in a national currency unit to be
paid to or by the Administrative Agent shall be replaced by a
reference to such reasonably comparable and convenient amount (or an
integral multiple thereof) in the euro unit as the Administrative
Agent may from time to time specify; and
(ii) except as expressly provided in this Section 9.19,
each provision of this Agreement shall be subject to such reasonable
changes of construction as the Administrative Agent may from time to
time specify to be necessary or appropriate to reflect the
introduction of or changeover to the euro in participating member
states.
(k) The Borrower shall from time to time, at the request
of the Administrative Agent, pay to the Administrative Agent for the account of
each Bank the amount of any cost or increased cost incurred by, or of any
reduction in amount payable to or in the effective return on its capital to, or
of interest or other return forgone by, such Bank or any holding company of
such Bank as a result of the introduction of, changeover to or operation of the
euro in any participating member state.
SECTION 9.20. NO BANKRUPTCY PROCEEDINGS.
Each of the Borrower, the Banks and the Administrative Agent
agrees that it will not institute against any Designated Bank or join any other
Person in instituting against any Designated Bank any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding under any
federal or state bankruptcy or similar law, for one year and one day after the
payment in full of the latest maturing commercial paper note issued by such
Designated Bank.
[Signatures are contained on the following pages.]
78
<PAGE> 87
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, under seal, by their respective authorized
officers as of the day and year first above written.
RUSSELL CORPORATION (SEAL)
By: ____________________________________________
Eric N. Hoyle
Executive Vice President and Chief Financial
Officer
Russell Corporation
3350 Riverwood Parkway
Suite 1600
Atlanta, Georgia 30339
Attention: Chief Financial Officer
Telecopier number: 678-742-8995
Confirmation number: 678-742-8100
79
<PAGE> 88
RUSSELL EUROPE LIMITED (SEAL)
By: ____________________________________________
Name:
Title:
Russell Europe Limited
c/o Russell Corporation
3350 Riverwood Parkway
Suite 1600
Atlanta, Georgia 30339
Attention: Chief Financial Officer
Telecopier number: 678-742-8995
Confirmation number: 678-742-8100
80
<PAGE> 89
COMMITMENTS WACHOVIA BANK, N.A.,
as Administrative Agent and as a Bank (SEAL)
$76,200,000(1) By: ____________________________________________
Title:
Lending Office
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Syndications Group
Telecopier number: 404-332-1394
Confirmation number: 404-332-6971
- ---------------
(1) Plus the commitment to fund 100% of the Foreign Currency Loans which
otherwise would be allocated to Aliant Bank, as provided in Section
2.01(a).
81
<PAGE> 90
SUNTRUST BANK, ATLANTA,
As Syndication Agent and as a Bank (SEAL)
$48,000,000 By: ____________________________________________
Title:
Lending Office
SunTrust Bank, Atlanta
303 Peachtree Street, 3rd Floor
Atlanta, Georgia 30303
Attention: David Penter
Telecopier number: 404-575-2594
Confirmation number: 404-588-8658
82
<PAGE> 91
$48,000,000 FIRST UNION NATIONAL BANK,
as Documentation Agent and as a Bank (SEAL)
By: ____________________________________________
Title:
Lending Office
First Union National Bank
301 South College Street
Charlotte, North Carolina 28288
Attention: Gary Burkhart
Telecopier number: 704-383-7999
Confirmation number: 704-374-6613
83
<PAGE> 92
$48,000,000 AMSOUTH BANK, as a Bank (SEAL)
By: ____________________________________________
Title:
Lending Office
AmSouth Bank
1900 5th Avenue North
Birmingham, Alabama 35203
Attention: David Simmons
Telecopier number: 205-801-0157
Confirmation number: 205-326-5924
84
<PAGE> 93
$25,000,000 THE CHASE MANHATTAN BANK,
as a Bank (SEAL)
By: ____________________________________________
Title:
Lending Office
The Chase Manhattan Bank
111 West 40th Street, 10th Floor
New York, New York 10018
Attention: Carrie Tio
Telecopier number: 212-403-5060
Confirmation number: 212-403-5052
85
<PAGE> 94
$4,800,000 ALIANT BANK (SEAL)
By: ____________________________________________
Title:
Lending Office
Aliant Bank
200 Aliant Parkway
Alexander City, Alabama 35010
Attention: John J. Thomas
Telecopier number: 205-408-2002
Confirmation number: 205-408-2003
TOTAL COMMITMENTS
$250,000,000
86
<PAGE> 95
EXHIBIT A-1
SYNDICATED DOLLAR LOAN NOTE
Atlanta, Georgia
October 15, 1999
For value received, RUSSELL CORPORATION, an Alabama
corporation (the "Borrower"), promises to pay to the order of
___________________________________________________________, a
____________________ (the "Bank"), for the account of its Lending Office, the
principal sum of ___________________________________ AND NO/100 DOLLARS
($__________), or such lesser amount as shall equal the aggregate unpaid
principal amount of all Syndicated Dollar Loans made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below, on the dates and
in the amounts provided for Syndicated Dollar Loans in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of this
Syndicated Dollar Loan Note on the dates and at the rate or rates provided for
in the Credit Agreement. Interest on any overdue principal of and, to the
extent permitted by law, overdue interest on the principal amount hereof shall
bear interest at the Default Rate, as provided for in the Credit Agreement. All
such payments of principal and interest shall be made in lawful money of the
United States in Federal or other immediately available funds at the office of
Wachovia Bank, N.A., 191 Peachtree Street, N.E., Atlanta, Georgia 30303-1757,
or such other address as may be specified from time to time pursuant to the
Credit Agreement.
All Syndicated Dollar Loans made by the Bank, the respective
maturities thereof, the interest rates from time to time applicable thereto,
and all repayments of the principal thereof shall be recorded by the Bank and,
prior to any transfer hereof, endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This Syndicated Dollar Loan Note is one of the Syndicated
Dollar Loan Notes referred to in the Credit Agreement dated as of October 15,
1999 among Russell Corporation, Russell Europe Limited, the Banks listed on the
signature pages thereof, Wachovia Bank, N.A., as Administrative Agent, Suntrust
Bank, Atlanta, as Syndication Agent and First Union National Bank, as
Documentation Agent (as the same may be amended and modified from time to time,
the "Credit Agreement"). Terms defined in the Credit Agreement are used herein
with the same meanings. Reference is made to the Credit Agreement for
provisions for the optional and mandatory prepayment and the repayment hereof
and the acceleration of the maturity hereof, as well as the obligation of the
Borrower to pay all costs of collection, including reasonable attorneys fees,
in the event this Syndicated Dollar Loan Note is collected by law or through an
attorney at law.
87
<PAGE> 96
The Borrower hereby waives presentment, demand, protest,
notice of demand, protest and nonpayment and any other notice required by law
relative hereto, except to the extent as otherwise may be expressly provided
for in the Credit Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Syndicated
Dollar Loan Note to be duly executed, under seal, by its duly authorized
officer as of the day and year first above written.
RUSSELL CORPORATION (SEAL)
By:
---------------------------------------------
Eric N. Hoyle
Executive Vice President and Chief Financial
Officer
88
<PAGE> 97
Syndicated Dollar Loan Note (cont'd)
<TABLE>
<CAPTION>
SYNDICATED LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------------------------
BASE RATE OR AMOUNT OF
EURO AMOUNT PRINCIPAL MATURITY NOTATION
DATE DOLLAR LOAN OF LOAN REPAID DATE MADE BY
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
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</TABLE>
89
<PAGE> 98
EXHIBIT A-2
MONEY MARKET LOAN NOTE
As of October 15, 1999
For value received, RUSSELL CORPORATION, an Alabama
corporation (the "Borrower"), promises to pay to the order of
______________________________________, a _______________ (the "Bank"), for the
account of its Lending Office, the principal sum of ONE HUNDRED TWENTY-FIVE
MILLION AND NO/100 DOLLARS ($125,000,000), or such lesser amount as shall equal
the aggregate unpaid principal amount of all Money Market Loans made by the
Bank to the Borrower pursuant to the Credit Agreement referred to below, on the
dates and in the amounts provided in the Credit Agreement. The Borrower
promises to pay interest on the unpaid principal amount of this Money Market
Loan Note on the dates and at the rate or rates provided for in the Credit
Agreement referred to below. Interest on any overdue principal of and, to the
extent permitted by law, overdue interest on the principal amount hereof shall
bear interest at the Default Rate, as provided for in the Credit Agreement. All
such payments of principal and interest shall be made in lawful money of the
United States in Federal or other immediately available funds at the office of
Wachovia Bank, N.A., 191 Peachtree Street, N.E., Atlanta, Georgia 30303-1757,
or such other address as may be specified from time to time pursuant to the
Credit Agreement.
All Money Market Loans made by the Bank, the respective
maturities thereof, the interest rates from time to time applicable thereto,
and all repayments of the principal thereof shall be recorded by the Bank and,
prior to any transfer hereof, endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This Money Market Loan Note is one of the Money Market Loan
Notes referred to in the Credit Agreement dated as of October 15, 1999 among
Russell Corporation, Russell Europe Limited, the Banks listed on the signature
pages thereof, Wachovia Bank, N.A., as Administrative Agent, Suntrust Bank,
Atlanta, as Syndication Agent and First Union National Bank, as Documentation
Agent (as the same may be amended and modified from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the
same meanings. Reference is made to the Credit Agreement for provisions for the
optional and mandatory prepayment and the repayment hereof and the acceleration
of the maturity hereof, as well as the obligation of the Borrower to pay all
costs of collection, including reasonable attorneys fees, in the event this
Money Market Loan Note is collected by law or through an attorney at law.
The Borrower hereby waives presentment, demand, protest,
notice of demand, protest and nonpayment and any other notice required by law
relative hereto, except to the extent as otherwise may be expressly provided
for in the Credit Agreement.
90
<PAGE> 99
IN WITNESS WHEREOF, the Borrower has caused this Money Market
Loan Note to be duly executed, under seal, by its duly authorized officer as of
the day and year first above written.
RUSSELL CORPORATION (SEAL)
By:
---------------------------------------------
Eric N. Hoyle
Executive Vice President and Chief Financial
Officer
91
<PAGE> 100
Money Market Loan Note (cont'd)
MONEY MARKET LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
MONEY MARKET LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------------------------
AMOUNT OF STATED
INTEREST AMOUNT PRINCIPAL MATURITY NOTATION
DATE RATE OF LOAN REPAID DATE MADE BY
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
92
<PAGE> 101
EXHIBIT A-3
SWING LOAN NOTE
Atlanta, Georgia
October 15, 1999
For value received, RUSSELL CORPORATION, an Alabama
corporation (the "Borrower"), promises to pay to the order of WACHOVIA BANK,
N.A., a national banking association (the "Bank"), for the account of its
Lending Office, the principal sum of Fifteen Million and No/100 Dollars
($15,000,000), or such lesser amount as shall equal the aggregate unpaid
principal amount of all Swing Loan made by the Bank to the Borrower pursuant to
the Credit Agreement referred to below, on the dates and in the amounts
provided in the Credit Agreement. The Borrower promises to pay interest on the
unpaid principal amount of this Swing Loan Note at the rate or rates provided
for Base Rate Loans or Transaction Rate Loans, as the case may be, on the dates
provided for in the Credit Agreement. Interest on any overdue principal of and,
to the extent permitted by law, overdue interest on the principal amount hereof
shall bear interest at the Default Rate, as provided for in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of Wachovia Bank of Georgia, N.A., 191 Peachtree Street, N.E.,
Atlanta, Georgia 30303-1757, or such other address as may be specified from
time to time pursuant to the Credit Agreement.
All Swing Loans made by the Bank, the respective maturities
thereof, and all repayments of the principal thereof shall be recorded by the
Bank and, prior to any transfer hereof, endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; provided that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.
This Swing Loan Note is the Swing Loan Note referred to in
the Credit Agreement dated as of even date herewith among Russell Corporation,
Russell Europe Limited, the Banks listed on the signature pages thereof,
Wachovia Bank, N.A., as Administrative Agent, Suntrust Bank, Atlanta, as
Syndication Agent and First Union National Bank, as Documentation Agent (as the
same may be amended and modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the optional and
mandatory prepayment and the repayment hereof and the acceleration of the
maturity hereof.
93
<PAGE> 102
IN WITNESS WHEREOF, the Borrower has caused this Swing Loan
Note to be duly executed, under seal, by its duly authorized officer as of the
day and year first above written.
RUSSELL CORPORATION (SEAL)
By:
---------------------------------------------
Eric N. Hoyle
Executive Vice President and Chief Financial
Officer
94
<PAGE> 103
Swing Loan Note (cont'd)
<TABLE>
<CAPTION>
LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------------
AMOUNT OF
AMOUNT OF PRINCIPAL MATURITY NOTATION
DATE LOAN REPAID DATE MADE BY
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
95
<PAGE> 104
EXHIBIT A-4
FOREIGN CURRENCY LOAN NOTE
Atlanta, Georgia
October 15, 1999
For value received, RUSSELL CORPORATION, an Alabama
corporation (the "Borrower"), promises to pay to the order of
____________________________________, a ____________________ (the "Bank"), for
the account of its Lending Office, the aggregate unpaid principal amount of all
Foreign Currency Loans made by the Bank to the Borrower pursuant to the Credit
Agreement referred to below, on the dates and in the amounts provided in the
Credit Agreement. The Borrower promises to pay interest on the unpaid principal
amount of this Note on the dates and at the rate or rates provided for Foreign
Currency Loans in the Credit Agreement. Interest on any overdue principal of
and, to the extent permitted by law, overdue interest on the principal amount
hereof shall bear interest at the Default Rate, as provided for in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the applicable Foreign Currency in immediately available funds at the
office of Wachovia Bank, N.A., 191 Peachtree Street, N.E., Atlanta, Georgia
30303-1757, or such other address as may be specified from time to time
pursuant to the Credit Agreement.
All Foreign Currency Loans made by the Bank, the respective
maturities thereof, the interest rates from time to time applicable thereto,
and all repayments of the principal thereof shall be recorded by the Bank and,
prior to any transfer hereof, endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This Note is one of the Foreign Currency Loan Notes referred
to in the Credit Agreement dated as of October 15, 1999 among Russell
Corporation, Russell Europe Limited, the Banks listed on the signature pages
thereof, Wachovia Bank, N.A., as Administrative Agent, Suntrust Bank, Atlanta,
as Syndication Agent and First Union National Bank, as Documentation Agent (as
the same may be amended and modified from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the
same meanings. Reference is made to the Credit Agreement for provisions for the
optional and mandatory prepayment and the repayment hereof and the acceleration
of the maturity hereof, as well as the obligation of the Borrower to pay all
costs of collection, including reasonable attorneys fees, in the event this
Foreign Currency Loan Note is collected by law or through an attorney at law.
The Borrower hereby waives presentment, demand, protest,
notice of demand, protest and nonpayment and any other notice required by law
relative hereto, except to the extent as otherwise may be expressly provided
for in the Credit Agreement.
96
<PAGE> 105
IN WITNESS WHEREOF, the Borrower has caused this Foreign
Currency Loan Note to be duly executed, under seal, by its duly authorized
officer as of the day and year first above written.
RUSSELL CORPORATION (SEAL)
By:
---------------------------------------------
Eric N. Hoyle
Executive Vice President and Chief Financial
Officer
97
<PAGE> 106
FOREIGN CURRENCY LOAN NOTE (CONT'D)
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF ____________
DATED OCTOBER 15, 1999
<TABLE>
<CAPTION>
PRINCIPAL MATURITY OF
AMOUNT OF LOAN INTEREST PRINCIPAL UNPAID
DATE AND CURRENCY PERIOD AMOUNT PAID BALANCE
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
98
<PAGE> 107
EXHIBIT A-5
FOREIGN CURRENCY LOAN NOTE
Atlanta, Georgia
October 15, 1999
For value received, RUSSELL EUROPE LIMITED, a United Kingdom
corporation (the "Borrower"), promises to pay to the order of
____________________________________, a ____________________ (the "Bank"), for
the account of its Lending Office, the aggregate unpaid principal amount of all
Foreign Currency Loans made by the Bank to the Borrower pursuant to the Credit
Agreement referred to below, on the dates and in the amounts provided in the
Credit Agreement. The Borrower promises to pay interest on the unpaid principal
amount of this Note on the dates and at the rate or rates provided for Foreign
Currency Loans in the Credit Agreement. Interest on any overdue principal of
and, to the extent permitted by law, overdue interest on the principal amount
hereof shall bear interest at the Default Rate, as provided for in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the applicable Foreign Currency in immediately available funds at the
office of Wachovia Bank, N.A., 191 Peachtree Street, N.E., Atlanta, Georgia
30303-1757, or such other address as may be specified from time to time
pursuant to the Credit Agreement.
All Foreign Currency Loans made by the Bank, the respective
maturities thereof, the interest rates from time to time applicable thereto,
and all repayments of the principal thereof shall be recorded by the Bank and,
prior to any transfer hereof, endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This Note is one of the Foreign Currency Loan Notes referred
to in the Credit Agreement dated as of October 15, 1999 among Russell
Corporation, Russell Europe Limited, the Banks listed on the signature pages
thereof, Wachovia Bank, N.A., as Administrative Agent, Suntrust Bank, Atlanta,
as Syndication Agent and First Union National Bank. as Documentation Agent (as
the same may be amended and modified from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the
same meanings. Reference is made to the Credit Agreement for provisions for the
optional and mandatory prepayment and the repayment hereof and the acceleration
of the maturity hereof, as well as the obligation of the Borrower to pay all
costs of collection, including reasonable attorneys fees, in the event this
Foreign Currency Loan Note is collected by law or through an attorney at law.
The Borrower hereby waives presentment, demand, protest,
notice of demand, protest and nonpayment and any other notice required by law
relative hereto, except to the extent as otherwise may be expressly provided
for in the Credit Agreement.
99
<PAGE> 108
IN WITNESS WHEREOF, the Borrower has caused this Foreign
Currency Loan Note to be duly executed, under seal, by its duly authorized
officer as of the day and year first above written.
RUSSELL EUROPE LIMITED (SEAL)
By:
---------------------------------------------
Title
100
<PAGE> 109
FOREIGN CURRENCY LOAN NOTE (CONT'D)
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF__________________________
DATED OCTOBER 15, 1999
<TABLE>
<CAPTION>
PRINCIPAL MATURITY OF
AMOUNT OF LOAN INTEREST PRINCIPAL UNPAID
DATE AND CURRENCY PERIOD AMOUNT PAID BALANCE
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
101
<PAGE> 110
EXHIBIT B
OPINION OF
Special Counsel of the Borrower
October 15, 1999]
To the Banks and the Administrative Agent
Referred to Below
c/o Wachovia Bank, N.A.
as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attn: Syndications Group
Re: [$250,000,000.00] Credit Facility to Russell Corporation
Ladies and Gentlemen:
We have acted as special counsel to Russell Corporation, an
Alabama corporation (the "Borrower"), in connection with the Credit Agreement
(the "Credit Agreement") dated as of October 15, 1999, among Russell
Corporation, Russell Europe Limited, the banks listed on the signature pages
thereof (the "Banks"), Wachovia Bank, N.A., as Administrative Agent (the
"Administrative Agent"), Suntrust Bank, Atlanta, as Syndication Agent (the
"Syndication Agent"), and First Union National Bank, as Documentation Agent
(the "Documentation Agent", and together with the Administrative Agent and the
Syndication Agent, the "Agents"). Capitalized terms used herein without
definition have the respective meanings attributed thereto in the Credit
Agreement.
In so acting, we have participated in the preparation of the
Credit Agreement and the Notes being delivered to you today. We have also
examined and relied upon the accuracy of the representations and warranties as
to factual matters contained in and made pursuant to the Credit Agreement and
have examined and relied upon the originals, or copies certified or otherwise
identified to our satisfaction, of such records, documents, certificates and
other instruments as in our judgment are necessary or appropriate to enable us
to render the opinions expressed below. As to certain matters with respect to
our opinion, we have examined, and relied upon the accuracy of, certificates
from officers of the Borrower or its Subsidiaries. In all such examinations, we
have assumed the authenticity of all documents submitted to us as originals,
the genuineness of all signatures on original documents and the conformity to
such original documents of all copies submitted to us as certified, conformed,
photographic or telecopied copies, and as to certificates, telegraphic and
telephonic confirmations given by public officials,
102
<PAGE> 111
we have assumed the same to have been properly given and to be accurate. In
addition and without limiting the foregoing, we have, with your permission and
without any independent investigation, assumed the following in connection with
the opinions rendered below:
(a) the genuineness of all signatures on the Credit Agreement
(other than the signature of the Borrower) and the authority of each of the
persons signing the Credit Agreement on behalf of such persons;
(b) that the Credit Agreement (i) has been duly authorized,
executed and delivered by all parties thereto (other than the Borrower), and
(ii) is valid, binding and enforceable against all parties thereto (other than
the Borrower) in accordance with its respective terms;
(c) that the Credit Agreement and the Guaranty and the
transactions reflected therein or contemplated thereby have been negotiated
either entirely outside the State of Alabama or through telephone conversations
between the Borrower, located in the State of Alabama, and employees and agents
of the Agents and the Banks located outside the State of Alabama; that the
Credit Agreement and the transactions reflected therein or contemplated thereby
have been executed and delivered, the proceeds of the Notes will be disbursed,
and the Notes and the Guaranty will be repaid or otherwise performed, entirely
outside the State of Alabama, and with respect to execution only, that the
Credit Agreement and the Notes will be signed first by the Borrower outside the
State of Alabama and then delivered by the Borrower in the State of Georgia for
acceptance and execution by the Banks in the State of Georgia; and that no
employee, officer, director or agent of the Agents or the Banks has visited the
State of Alabama for the purpose of negotiating, executing or delivering the
Credit Agreement although such persons may have visited the State of Alabama
for the sole purpose of investigating the business of the Borrower; and
(d) that each of the Agents and the Banks is duly qualified
to transact business in Alabama or is not required by applicable law to be so
qualified as a result of their activities in the State of Alabama other than
those actions described in clause (c) above.
Whenever opinions set forth herein are based on "our
knowledge" or are expressed "to our knowledge", the words "our knowledge" and
"to our knowledge" signify that, in the course of our representation of the
Borrower, no information has come to the attention of any attorney with this
firm who has devoted substantial attention to the transactions contemplated by
the Loan Documents which would give such attorney actual knowledge that any
such opinions or other matters are not accurate in any material respect.
However, we have not undertaken any investigation to determine the existence or
absence of such facts, and no inference as to our knowledge thereof shall be
drawn from the fact of our representation of any party or otherwise. Further,
as used in this opinion, the words "our knowledge" and "to our knowledge" and
similar language are intended to be limited to the actual knowledge of the
attorneys within our firm who have been directly involved in representing the
Borrower in connection with the transactions contemplated by the Loan
Documents.
103
<PAGE> 112
Based upon the foregoing and subject to the qualifications,
limitations and exceptions set forth herein, we are of the following opinions:
1. The Borrower is a corporation, duly incorporated, validly
existing and in good standing under the laws of the State of Alabama and has
all corporate powers required to carry on its business as now conducted.
2. The execution, delivery and performance by the Borrower of
the Credit Agreement, the Notes and the Guaranty (i) are within the Borrower's
corporate powers, (ii) have been duly authorized by all necessary corporate
action, (iii) require no action by or in respect of, or filing with, any
governmental body, agency or official, (iv) do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the Restated
Articles of Incorporation or Bylaws of the Borrower, or of any agreement,
judgment, injunction, order, decree or other instrument which to our knowledge
is binding upon the Borrower, provided that the aggregate outstanding
Borrowings under the Credit Agreement do not exceed the limitations thereon
contained in any such other agreements or instruments, and (v) to our
knowledge, except as provided in the Credit Agreement, do not result in the
creation or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries.
3. The Credit Agreement, the Notes and the Guaranty being
delivered to the Banks today have been duly executed and delivered by duly
authorized officers of the Borrower, and, if the substantive laws of the State
of Alabama were to be applied in any suit for the enforcement of the rights,
powers or remedies under the Credit Agreement, the Notes or the Guaranty, the
Credit Agreement, the Notes and the Guaranty would constitute the valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms, except as otherwise stated herein and
except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws from time to time in effect affecting the enforcement of creditors' rights
and remedies generally; (ii) general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in
equity or at law), and the availability of the remedies of specific
performance, injunctive relief or other equitable remedies limited by statute
or subject to the discretion of the court before which such proceedings
therefor may be brought, (iii) the effect of federal or state securities laws
on the enforceability of provisions relating to indemnification or
contribution, (iv) standards of good faith, fair dealing and reasonableness
which may be applied by a court to the exercise of certain rights and remedies,
and (v) certain laws and judicial decisions of the State of Alabama which may
limit the enforceability of certain rights and remedies provided by the Credit
Agreement, the Notes or the Guaranty, none of which laws or judicial decisions
will render inadequate the rights and remedies to enforce the practical
benefits and security provided by such documents.
4. Each of Alexander City Flying Service, Inc. and Cross
Creek Apparel, Inc. (together, the "Specified Subsidiaries") is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation. DeSoto Mills, Inc. ("DeSoto") is a corporation
validly existing and in good standing under the laws of its jurisdiction of
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<PAGE> 113
incorporation. Each of the Specified Subsidiaries and DeSoto has all corporate
powers required to carry on its business as now conducted and is qualified and
in good standing as a foreign corporation in each jurisdiction (other than the
jurisdiction of its incorporation) in which the nature of its activities or the
properties owned or leased by it make such qualification necessary, except
where the failure to be so qualified does not have and could not reasonably be
expected to cause a Material Adverse Effect.
5. To our knowledge, except for the suits disclosed in the
filings by the Borrower under the Securities Exchange Act of 1934 made prior to
the date hereof, there is no action, suit or proceeding pending, or threatened,
against or affecting the Borrower or any of its Subsidiaries before any court
or arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could have a Material
Adverse Effect.
6. We believe that an Alabama court or a federal court
sitting in Alabama as the forum state and applying Alabama conflict of laws
rules (in either case an "Alabama Court") would give effect to the designation
by the parties of Georgia law as the governing law with respect to the Credit
Agreement, the Notes and the Guaranty, provided that the Agents and the Banks
carry the burden of proving that the particular provisions of the substantive
law of the State of Georgia sought to be applied in such action are the
substantive law of the State of Georgia and that the particular law sought to
be applied is not contrary to the public policy of the State of Alabama. We are
aware of no Alabama statute or case law that indicates that giving effect to
the provision of the Credit Agreement, the Notes and the Guaranty designating
Georgia law would be against Alabama law or public policy.
7. Neither the Borrower nor any of its Subsidiaries in an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
8. Neither the Borrower nor any of its Subsidiaries is a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act
of 1935, as amended.
The foregoing opinions are subject to the following
qualifications, limitations and exceptions:
(a) We express no opinion concerning the title of any party
to any real or personal property or the creation, perfection or priority of any
lien or security interest granted pursuant to any of the Loan Documents.
(b) We have not considered and express no opinion regarding
any federal or state securities or blue sky laws or regulations.
105
<PAGE> 114
(c) No opinions are expressed herein regarding any provision
of the Loan Documents relating to waivers or which are in the nature of
waivers, including, without limitation, (a) any purported waiver under the Loan
Documents, or any purported consent thereunder, relating to the rights of any
party (including, without limitation, marshaling of assets, choice of or
consent to venue, forum or jurisdiction, reinstatement, rights of subrogation,
contribution and/or indemnity, right to trial by jury, statutes of limitations
and rights of redemption), or duties owing to it, existing as a matter of law
or equity, and (b) any provision which purports to waive any right or claim of
offset, or any right to assert any defense or counterclaim, or any provision
which provides for the transfer of a document or instrument free and clear from
all offsets, counterclaims and defenses against the assignor.
(d) No opinions are expressed herein regarding any provision
of the Loan Documents (i) relating to powers of attorney, releases from
liability or exculpation, (ii) which purports to establish evidentiary
standards (including provisions regarding the conclusive or presumptive
correctness of a person's determination) or to determine rights or obligations
on the basis of a person's satisfaction or lack of satisfaction, or discretion,
or which provides for resolution of conflicts among two or more provisions of a
single document, or two or more documents, (iii) which permits, or purports to
permit, a party to select or enforce inconsistent remedies, or (iv) which
constitutes, in form or in substance, an agreement, contract or stipulation to
confess judgment.
(e) In addition, and without limiting the foregoing, we point
out that Alabama law may in certain circumstances permit oral amendments,
consents and waivers to written contracts despite contractual provisions to the
contrary. Finally, we render no opinion as to the legality, validity, binding
nature or enforceability of any provision of the Credit Agreement, the Notes or
the Guaranty that provides for interest on interest, charges or fees or is in
the nature of a penalty; however, while we are aware of no Alabama statute or
case law which addresses the issue, we are of the judgment that, were the issue
to be presented to an Alabama Court under Alabama law, the existence of any
such provisions would not impair the enforceability of the Borrower's
obligations to pay the principal of and interest on the Notes or to pay its
obligations under the Guaranty.
(f) We express no opinion regarding due authorization by,
existence of, or validity, binding effect or enforceability as to Russell
Europe Limited.
The opinions expressed herein are limited to the matters
stated herein and no opinion may be implied or inferred beyond the matters
expressly stated herein. The opinions expressed herein are as of the date
hereof, and we assume no obligation to update or supplement these opinions to
reflect any facts or circumstances which may hereafter come to our attention or
any changes in the law which may hereafter occur. The opinions expressed herein
are further limited in all respects to federal law of the United States and the
laws of the State of Alabama, and, with respect to the opinion set forth in
paragraph 4 above, the general business corporation law of the State of North
Carolina, and no opinion is expressed herein with respect to the laws of any
other jurisdiction or to the local laws, ordinances or rules of any
municipality, county or political subdivision of the State of Alabama. For
purposes of the opinion contained in
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<PAGE> 115
paragraph 3 above, we have assumed that the laws of the State of Georgia are
the same as those of the State of Alabama. We have made no independent
investigation of the laws of any other jurisdiction.
This opinion is furnished to you for your benefit and the
benefit of any permitted Assignee, Participant or other Transferee under the
Credit Agreement only, and no other person or entity shall be entitled to rely
on this opinion without our express written consent in each instance, except
that the law firm of Jones, Day, Reavis & Pogue, in rendering to you its
opinion dated of even date herewith concerning the Credit Agreement and the
Notes, may rely hereon. Subject to the foregoing, this opinion letter is not to
be quoted in whole or in part or otherwise referred to, nor is it to be filed
with or disclosed to any governmental agency or other person, without our prior
written consent except as required otherwise by applicable law, rule,
regulation or order of any court or regulatory authority.
Yours very truly,
107
<PAGE> 116
EXHIBIT C
OPINION OF
JONES, DAY, REAVIS & POGUE, SPECIAL COUNSEL
FOR THE ADMINISTRATIVE AGENT
October 15, 1999]
To the Banks and the Administrative Agent
Referred to Below
c/o Wachovia Bank, N.A.,
as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attn: Syndications Group
Dear Sirs:
We have participated in the preparation of the Credit
Agreement (the "Credit Agreement") dated as of October 15, 1999, among Russell
Corporation, an Alabama corporation (the "Borrower"), Russell Europe Limited,
the banks listed on the signature pages thereof (the "Banks"), Wachovia Bank,
N.A., as Administrative Agent (the "Administrative Agent"), Suntrust Bank,
Atlanta, as Syndication Agent and First Union National Bank, as Documentation
Agent, and have acted as special counsel for the Administrative Agent for the
purpose of rendering this opinion pursuant to Section 3.01(d) of the Credit
Agreement. Terms defined in the Credit Agreement are used herein as therein
defined.
This opinion letter is limited by, and is in accordance with,
the January 1, 1992 edition of the Interpretive Standards applicable to Legal
Opinions to Third Parties in Corporate Transactions adopted by the Legal
Opinion Committee of the Corporate and Banking Law Section of the State Bar of
Georgia which Interpretive Standards are incorporated herein by this reference.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, and assuming the due
authorization, execution and delivery of the Credit Agreement, each of the
Notes and the Guaranty by or on behalf of the Borrower, we are of the opinion
that the Credit Agreement constitutes a valid and binding agreement of the
Borrower and each Note and the Guaranty constitutes valid and binding
obligations of the Borrower, in each case enforceable in accordance with its
terms except as: (i)
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<PAGE> 117
the enforceability thereof may be affected by bankruptcy, insolvency,
reorganization, fraudulent conveyance, voidable preference, moratorium or
similar laws applicable to creditors' rights or the collection of debtors'
obligations generally; (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability; and (iii) the enforceability of certain of the remedial, waiver
and other provisions of the Credit Agreement, the Notes and the Guaranty may be
further limited by the laws of the State of Georgia; provided that such
additional laws do not, in our opinion, substantially interfere with the
practical realization of the benefits expressed in the Credit Agreement, the
Notes or the Guaranty, except for the economic consequences of any procedural
delay which may result from such laws.
In giving the foregoing opinion, we express no opinion as to
the effect (if any) of any law of any jurisdiction except the State of Georgia.
We express no opinion as to the effect of the compliance or noncompliance of
the Administrative Agent or any of the Banks with any state or federal laws or
regulations applicable to the Administrative Agent or any of the Banks by
reason of the legal or regulatory status or the nature of the business of the
Administrative Agent or any of the Banks.
This opinion is delivered to you in connection with the
transaction referenced above and may only be relied upon by you and any
Assignee, Participant or other Transferee under the Credit Agreement without
our prior written consent.
Very truly yours,
109
<PAGE> 118
EXHIBIT D
ASSIGNMENT AND ACCEPTANCE
Dated ________________ ___, 19____
Reference is made to the Credit Agreement dated as of October
15, 1999 (together with all amendments and modifications thereto, the "Credit
Agreement") among Russell Corporation, an Alabama corporation (the "Borrower"),
Russell Europe Limited, the Banks (as defined in the Credit Agreement),
Wachovia Bank, N.A., as Administrative Agent (the "Administrative Agent"),
Suntrust Bank, Atlanta, as Syndication Agent and First Union National Bank, as
Documentation Agent). Terms defined in the Credit Agreement are used herein
with the same meaning.
__________________________ (the "Assignor") and
_________________________________________(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, without
recourse to the Assignor, and the Assignee hereby purchases and assumes from
the Assignor, a _______% interest in and to all of the Assignor's rights and
obligations under the Credit Agreement as of the Effective Date (as defined
below) (including, without limitation, a _______% interest (which on the
Effective Date hereof is $__________) in the Assignor's Commitment and a
________ interest (which on the Effective Date hereof is $___________________)
in the Syndicated Loans and Money Market Loans [and Swing Loans] owing to the
Assignor and a ____% interest in the Notes held by the Assignor (which on the
Effective Date hereof is $__________).
2. The Assignor (i) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto, other than that it is the legal and beneficial owner of the
interest being assigned by it hereunder, that such interest is free and clear
of any adverse claim and that as of the date hereof its Commitment (without
giving effect to assignments thereof which have not yet become effective) is
$__________ and the aggregate outstanding principal amount of Syndicated Loans
and Money Market Loans [and Swing Loans] owing to it (without giving effect to
assignments thereof which have not yet become effective) is
$___________________; (ii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant
thereto; and (iii) attaches the Notes referred to in paragraph 1 above and
requests that the Administrative Agent exchange such Notes for new Notes as
follows each dated the Effective Date: [a Syndicated Dollar Loan Note in the
principal amount of $________________ and a new Foreign Currency Loan Note,
each payable to the order of the Assignor,] a Syndicated Dollar Loan Note in
the principal amount of $_______________ and a new Foreign Currency Loan Note,
each payable to the order of the Assignee, [a Money Market Loan Note payable to
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<PAGE> 119
the order of the Assignor,] and a Money Market Loan Note payable to the order
of the Assignee [and a Swing Loan Note payable to the order of the Assignee].
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.04(a) thereof (or any more recent financial statements of the
Borrower delivered pursuant to Section 5.01(a) or (b) thereof) and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon the Administrative Agent,
the Assignor or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Agreement; (iii)
confirms that it is a bank or financial institution; (iv) appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under the Credit Agreement as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Bank; (vi) specifies as its
Lending Office (and address for notices) the office set forth beneath its name
on the signature pages hereof, (vii) represents and warrants that the
execution, delivery and performance of this Assignment and Acceptance are
within its corporate powers and have been duly authorized by all necessary
corporate action, (viii) makes the representation and warranty contained in
Section 9.18 of the Credit Agreement[, and (ix) attaches the forms prescribed
by the Internal Revenue Service of the United States certifying as to the
Assignee's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the Assignee under
the Credit Agreement and the Notes or such other documents as are necessary to
indicate that all such payments are subject to such taxes at a rate reduced by
an applicable tax treaty].
4. The Effective Date for this Assignment and Acceptance shall be
_______________, _____(the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent for
execution and acceptance by the Administrative Agent and to the Borrower for
execution by the Borrower.
5. Upon such execution and acceptance by the Administrative Agent
[and execution by the Borrower] [IF REQUIRED BY THE CREDIT AGREEMENT], from and
after the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent rights and obligations have been transferred to it
by this Assignment and Acceptance, have the rights and obligations of a Bank
thereunder and (ii) the Assignor shall, to the extent its rights and
obligations have been transferred to the Assignee by this Assignment and
Acceptance, relinquish its rights (other than under Sections 8.03, 9.03 and
9.04 of the Credit Agreement) and be released from its obligations under the
Credit Agreement.
6. Upon such execution and acceptance by the Administrative Agent
[and execution by the Borrower] [IF REQUIRED BY THE CREDIT AGREEMENT], from and
after the Effective Date, the Administrative Agent shall make all payments in
respect of the interest assigned hereby to the Assignee. The Assignor and
Assignee shall make all appropriate
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<PAGE> 120
adjustments in payments for periods prior to such acceptance by the
Administrative Agent directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Georgia.
[NAME OF ASSIGNOR]
By:
--------------------------------------
Title:
[NAME OF ASSIGNEE]
By:
--------------------------------------
Title:
Lending Office:
[Address]
WACHOVIA BANK, N.A.,
As Administrative Agent
By:
--------------------------------------
Title:
RUSSELL CORPORATION
IF REQUIRED BY THE CREDIT AGREEMENT
BY:
--------------------------------------
TITLE:
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<PAGE> 121
EXHIBIT E-1
NOTICE OF BORROWING
----------------- ----, -----
Wachovia Bank, N.A., as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Syndications Group
Re: Credit Agreement (as amended and modified from time to time,
the "Credit Agreement") dated as of October 15, 1999 by and
among Russell Corporation and Russell Europe Limited, as
Borrower, the Banks from time to time parties thereto,
Wachovia Bank, N.A., as Administrative Agent, Suntrust Bank,
Atlanta, as Syndication Agent and First Union National Bank,
as Documentation Agent.
Gentlemen:
Unless otherwise defined herein, capitalized terms used
herein shall have the meanings attributable thereto in the Credit Agreement.
This Notice of Borrowing is delivered to you pursuant to
Section 2.02 of the Credit Agreement.
[The Borrower] [Russell Europe Limited], as the Borrower with
respect to Foreign Currency Borrowings]] hereby requests a [Euro-Dollar
Borrowing] [Base Rate Borrowing] [Foreign Currency Borrowing] [Swing Loan
Borrowing] in the aggregate principal amount of [the Dollar Equivalent of]
$__________ to be made on ______________, ______, and for interest to accrue
thereon at the rate established by the Credit Agreement for [Euro-Dollar Loans]
[Base Rate Loans] [Foreign Currency Loans]. [The duration of the Interest
Period with respect thereto shall be [1 month] [2 months] [3 months] [6
months]].
The Borrower has caused this Notice of Borrowing to be executed and
delivered by its duly authorized officer this _________ day of ______________,
______.
RUSSELL CORPORATION
[AS AGENT FOR RUSSELL EUROPE LIMITED] [ADD IF
APPROPRIATE]
By: _________________________________________
Title:
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<PAGE> 122
EXHIBIT E-2
NOTICE OF CONTINUATION OR CONVERSION
---------------------, ------
Wachovia Bank, N.A., as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Syndications Group
Re: Credit Agreement (as amended and modified from time to time,
the "Credit Agreement") dated as of October 15, 1999, by and
among Russell Corporation, Russell Europe Limited, the Banks
from time to time parties thereto, Wachovia Bank, N.A., as
Administrative Agent, Suntrust Bank, Atlanta, as Syndication
Agent and First Union National Bank, as Documentation Agent.
Gentlemen:
Unless otherwise defined herein, capitalized terms used
herein shall have the meanings attributable thereto in the Credit Agreement.
This Notice of Continuation or Conversion is delivered to you
pursuant to Section 2.04 of the Credit Agreement.
With respect to the [Euro-Dollar Loans] [Foreign Currency
Loans denominated in [specify Foreign Currency]] in the aggregate amount of
[the Dollar Equivalent of] $___________ which has an Interest Period ending on
_____________, [the Borrower] [Russell Europe Limited, as the Borrower with
respect to Foreign Currency Borrowings]] hereby requests that such loan be
[converted to a] [Base Rate Loan] [Euro-Dollar Loan] [continued as a]
[Euro-Dollar Loan] [Foreign Currency Loan in the same Foreign Currency]2 in the
aggregate principal amount of [the Dollar Equivalent of] $__________ to be made
on such date, and for interest to accrue thereon at the rate established by the
Credit Agreement for [Base Rate Loans] [Euro-Dollar Loans] [Foreign Currency
Loans]. [The duration of the Interest Period with respect thereto shall be [1
month] [2 months] [3 months] [6 months]].
- ---------------
1 Note: Foreign Currency Loans may only be continued in the same Foreign
Currency, and may not be converted to any other type of Loan.
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<PAGE> 123
The Borrower has caused this Notice of Continuation or
Conversion to be executed and delivered by its duly authorized officer this
______ day of ____________, _____.
RUSSELL CORPORATION
[AS AGENT FOR RUSSELL EUROPE LIMITED] [ADD
IF APPROPRIATE]
By: ---------------------------------------
Title:
115
<PAGE> 124
EXHIBIT F
COMPLIANCE CERTIFICATE
Reference is made to the Credit Agreement dated as of October
15, 1999 (as modified and supplemented and in effect from time to time, the
"Credit Agreement") among Russell Corporation, Russell Europe Limited, the
Banks from time to time parties thereto, Wachovia Bank, N.A., as Administrative
Agent, Suntrust Bank, Atlanta, as Syndication Agent and First Union National
Bank, as Documentation Agent. Capitalized terms used herein shall have the
meanings ascribed thereto in the Credit Agreement.
Pursuant to Section 5.01(c) of the Credit Agreement,
_____________________, the duly authorized [Chief Financial Officer/Chief
Accounting Officer] of the Borrower, hereby (i) certifies to the Administrative
Agent and the Banks that the information contained in the Compliance Check List
attached hereto is true, accurate and complete as of ____________________,
______, and that no Default is in existence on and as of the date hereof and
(ii) restates and reaffirms that the representations and warranties contained
in Article IV of the Credit Agreement are true on and as of the date hereof as
though restated on and as of this date.
RUSSELL CORPORATION (SEAL)
By:
------------------------------------
Name and title of [Chief Financial
Officer/Chief Accounting Officer]
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<PAGE> 125
1. Consolidations, Mergers and Sales of Assets (Section 5.05)
The Borrower will not, nor will it permit any Subsidiary to . . . sell,
lease or otherwise transfer all or any substantial part of its assets
to, any other Person, or discontinue or eliminate any business line or
segment or liquidate or dissolve, provided that
(a) . . .
(b) . . ., and
(c) the foregoing limitation on the sale, lease or other
transfer of assets, on the discontinuation or elimination of a
business line or segment, and on liquidation and dissolution, shall
not prohibit (1) the sale of Receivables pursuant to the Receivables
Securitization Program, (2) transfers of assets by European
Subsidiaries which existed on the Closing Date to new European
Subsidiaries as part of the European Reorganization or (3) during any
Fiscal Quarter, a transfer of assets or the discontinuance or
elimination of a business line or segment (in a single transaction or
in a series of related transactions), or any liquidation or
dissolution of a Subsidiary, unless the aggregate assets to be so
transferred or utilized in a business line or segment to be so
discontinued or Subsidiary to be liquidated or dissolved, when
combined with all other assets transferred, and all other assets
utilized in all other business lines or segments discontinued or
Subsidiaries to be liquidated or dissolved, during such Fiscal Quarter
and the immediately preceding 3 Fiscal Quarters, either (x)
constituted more than 10% of Consolidated Total Assets at the end of
the most recent Fiscal Year immediately preceding such Fiscal Quarter,
or (y) contributed more than 10% of Consolidated Operating Profits
during the 4 Fiscal Quarters immediately preceding such Fiscal
Quarter, or (3) the liquidation or dissolution of any inactive
Subsidiary, or (4) any such action in connection with the
Restructuring Program.
<TABLE>
<S> <C>
Aggregate assets to be transferred or aggregate assets used in business $
line or segment to be discontinued or Subsidiary to be liquidated or ------------
dissolved
Assets transferred and all other assets utilized in all other business
$ lines or segments discontinued or Subsidiary to be
------------
liquidated or dissolved during current Fiscal Quarter and the
immediately preceding 3 Fiscal Quarters
Sum of (a) and (b) $
------------
Consolidated Total Assets for most recent Fiscal Year immediately
preceding $ current Fiscal Quarter
------------
10% of (d) $
------------
Limitation: (c) may not exceed (e)
</TABLE>
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<PAGE> 126
COMPLIANCE CHECK LIST
Russell Corporation
------------------------
--------------, -----
<TABLE>
<S> <C>
Consolidated Operating Profits during the 4 Fiscal Quarters immediately $
preceding current Fiscal Quarter ------------
10% of (f) $
------------
</TABLE>
Limitation: (c) may not exceed (g)
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<PAGE> 127
COMPLIANCE CHECK LIST
Russell Corporation
------------------------
--------------, -----
2. Investments (Section 5.16)
From and after the Closing Date, neither the Borrower nor any
of its Subsidiaries shall make Investments in any Person
except (i) loans or advances to officers, directors and
employees (1) for relocation expenses in connection with the
Restructuring Program and (2) for other purposes not
exceeding $3,000,000 in the aggregate principal amount
outstanding at any time, in each case made in the ordinary
course of business in accordance with historical practices
existing on the Closing Date; (ii) Investments by the
Borrower in a Receivables Subsidiary; (iii) Investments by
the Receivables Subsidiary in a Special Purpose Vehicle,
consistent with Standard Securitization Undertakings, (iv)
loans and advances to a Receivables Subsidiary evidenced by a
Purchase Money Note; (v) deposits required by government
agencies or public utilities (including pertaining to taxes
and other similar charges), (vi) Investments in direct
obligations of the United States Government or any agency
thereof maturing within one year after the date of
Investment, (vii) Investments in certificates of deposit
issued by a commercial bank whose credit is satisfactory to
the Administrative Agent and in certificates of deposit
issued by any banking subsidiary of Wachovia Corporation,
AmSouth Bancorporation, SunTrust Banks, Inc., SouthTrust
Corporation, Regions Financial Corporation, Synovus Financial
Corporation and Aliant National Corporation or any Person who
succeeds to all, or substantially all, of the assets or
business of any thereof, (viii) Investments in commercial
paper rated A1 or the equivalent thereof by S&P or P1 or the
equivalent thereof by Moody's and in either case maturing
within 270 days after the date of acquisition, (ix)
Investments in tender bonds the payment of the principal of
and interest on which is fully supported by a letter of
credit issued by a United States bank whose long-term
certificates of deposit are rated at least AA or the
equivalent thereof by S&P and Aa or the equivalent thereof by
Moody's, (x) Investments in variable rate demand bonds
maturing or with optional puts within one year or less from
the date of acquisition thereof, which, at the time of
acquisition by the Borrower or Subsidiary, are rated not
lower than A or A-1 by S&P and not lower than A2 or P-1 by
Moody's, (xi) Permitted Acquisitions, (xii) minimal
capitalization by Russell Corporation of new European
Subsidiaries in connection with the European Reorganization
and (xiii) other Investments made on a cumulative basis since
the Closing Date which do not at any time exceed an aggregate
amount outstanding equal to 5% of Consolidated Tangible Net
Worth as of the end of the Fiscal Quarter ended immediately
prior to the date of measurement; provided, however,
immediately after giving effect to the making of any
Investment, no Default shall have occurred and be continuing.
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<PAGE> 128
COMPLIANCE CHECK LIST
Russell Corporation
------------------------
--------------, -----
Aggregate principal amount outstanding of loans or $
---------
advances to officers, directors and employees (other
than for relocation expenses in connection with the
Restructuring Program) in the ordinary course
of business in accordance with historical practices
existing on the Closing Date
<TABLE>
<S> <C>
Limitation $3,000,000
Other aggregate Investments since the Closing Date $
not permitted by clauses (ii) through (x), ---------
inclusive
Consolidated Tangible Net Worth
Schedule 3
5% of (c) $
---------
Limitation (b) may not exceed (d) $
---------
</TABLE>
3. Priority Debt (Section 5.17)
Neither the Borrower nor any Consolidated Subsidiary will
create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, and the Borrower shall not
permit any Subsidiary which is not a Borrower or a Guarantor
to incur any Debt, except . . . Liens not otherwise permitted
by the foregoing paragraphs of this Section securing Debt
(other than indebtedness represented by the Notes), and Debt
of Subsidiaries not otherwise permitted by paragraph (j), in
an aggregate principal amount at any time outstanding not to
exceed 15% of Consolidated Tangible Net Worth.
Liens not permitted by paragraphs (a) through (i) and (k)
through (n) are described below:
<TABLE>
<CAPTION>
Description of Lien and Property Amount of
subject to same Debt Secured
--------------- ------------
<S> <C>
a. $
----------------------------- -----------
b. $
----------------------------- -----------
</TABLE>
120
<PAGE> 129
COMPLIANCE CHECK LIST
Russell Corporation
------------------------
--------------, -----
<TABLE>
<S> <C>
c. $
------------------------------------- ------------
d. $
------------------------------------- ------------
e. $
------------------------------------- ------------
f. $
------------------------------------- ------------
Total $
------------
(b) Aggregate amount of Debt not permitted by paragraph $
(j) ------------
(c) Sum of (a) and (b) $
------------
(d) Consolidated Tangible Net Worth $
------------
Schedule 3
(e) 15% of (d) $
------------
</TABLE>
Limitation: (c) may not exceed (e)
4. Limitation on Funded Debt of Borrower. (Section 5.19)
The Borrower will not create, incur, assume or suffer to exist any
Debt having a maturity of one year or more from the date of issuance
("Funded Debt"), except (i) Debt incurred under this Agreement; (ii)
Debt in an aggregate amount equal to that in existence on the Closing
Date (as it may be refunded, refinanced or replaced, with no increase
in principal amount); (iii) Funded Debt which is rated BBB or Baa2 or
better by S&P or Moody's and (iv) other Funded Debt in an aggregate
amount not exceeding $100,000,000.
121
<PAGE> 130
COMPLIANCE CHECK LIST
Russell Corporation
------------------------
--------------, -----
<TABLE>
<S> <C>
(a) Funded Debt not permitted by clauses (i), (ii) or (iii) $
----------
Limitation (a) may not exceed $100,000,000
</TABLE>
5. Debt/EBITDA Ratio (Section 5.20)
The Debt/EBITDA Ratio will at all times be less than 3.25 to
1.00.
<TABLE>
<S> <C>
Consolidated Total Debt $
Schedule 2 ----------
Consolidated EBITDA $
Schedule 1 ----------
Ratio of (a) to (b) to 1.00
-----
Maximum ratio 3.25 to 1.00
</TABLE>
6. Minimum Consolidated Tangible Net Worth (Section 5.21)
Consolidated Tangible Net Worth will at no time be less than
$445,000,000 plus the sum of (i) 50% of the cumulative
Reported Net Income of the Borrower and its Consolidated
Subsidiaries during any period after the end of any Fiscal
Quarter following the Closing Date (taken as one accounting
period), calculated quarterly at the end of each Fiscal
Quarter but excluding from such calculations of Reported Net
Income for purposes of this clause (i), any Fiscal Quarter in
which the Reported Net Income of the Borrower and its
Consolidated Subsidiaries is negative, and (ii) 100% of the
cumulative Net Proceeds of Capital Stock received during any
period after the Closing Date, calculated quarterly at the
end of each Fiscal Quarter.
122
<PAGE> 131
<TABLE>
<S> <C>
(a) Consolidated Tangible Net Worth Schedule $
----------
(b) Cumulative Reported Net Income(1) of the
Borrower and its Consolidated Subsidiaries $
----------
(c) 50% of (b) $
----------
(d) cumulative Net Proceeds of Capital Stock
received after the Closing Date $
----------
(e) Sum of $445,000,000, (c) and (d) $
----------
</TABLE>
Limitation: (a) may not be less than (e)
7. Ratio of Consolidated EBIT to Consolidated Interest Expense (Section
5.22)
The ratio of Consolidated EBIT to Consolidated Interest Expense for
the Fiscal Quarter just ended and the immediately preceding 3 Fiscal
Quarters will at no time be less than 2.5 to 1.0.
<TABLE>
<S> <C>
(a) Consolidated EBIT
Schedule 1
--------------------------------------------------- $
-------------
(b) Consolidated Interest Expense
Schedule 4 $
--------------------------------------------------- -------------
(c) Actual Ratio of (a) to (b) to 1.0
--------------------------------------------------- ---
Limitation (c) must be less than 2.5 to 1.0
---------------------------------------------------
</TABLE>
- --------------
(1) For the purposes of this section the calculation of Reported Net Income
excludes any Fiscal Quarter in which the Reported Net Income of the Borrower is
its Consolidated Subsidiaries is negative and 100% of the cumulative Net
Proceeds of Capital Stock received during any period after the Closing Date.
123
<PAGE> 132
COMPLIANCE CHECK LIST
Russell Corporation
------------------------
--------------, -----
Schedule - 1
Consolidated EBITDA(1)
<TABLE>
<S> <C> <C>
(a) Consolidated Net Income for:
quarter $
--- --- -------------
quarter $
--- --- -------------
quarter $
--- --- -------------
quarter $
--- --- -------------
Total $
-------------
(b) Consolidated Net Interest Expense for:
quarter $
--- --- -------------
quarter $
--- --- -------------
quarter $
--- --- -------------
quarter $
--- --- -------------
Total $
-------------
(c) Taxes on income for:
quarter $
--- --- -------------
quarter $
--- --- -------------
</TABLE>
- ---------------
(1) For the purposes of this section the calculation of Reported Net Income
excludes any Fiscal Quarter in which the Reported Net Income of the Borrower is
its Consolidated Subsidiaries is negative and 100% of the cumulative Net
Proceeds of Capital Stock received during any period after the Closing Date.
124
<PAGE> 133
COMPLIANCE CHECK LIST
Russell Corporation
------------------------
--------------, -----
<TABLE>
<S> <C> <C>
quarter $
--- --- -------------
quarter $
--- --- -------------
Total $
-------------
(d) restructuring, relocation and other
unusual charges incurred in connection
with the Restructuring Program in Fiscal
Years 1998 through 2001, not exceeding,
on a pre-tax basis, (i) $61,078,000 in
the third Fiscal Quarter of Fiscal Year
1998, (ii) $13,929,000 in the fourth
Fiscal Quarter of Fiscal Year 1998,
(iii) $26,900,800 in the first Fiscal
Quarter of Fiscal Year 1999, (iv)
$4,374,500 in the second Fiscal Quarter
of Fiscal Year 1999 and (v) an aggregate
of $102,026,000 in the period from and
including the third Fiscal Quarter of
Fiscal Year 1999 through the end of
Fiscal Year 2001; and in any event the
aggregate of all such charges on an
after-tax basis shall not exceed
$125,000,000
(e) Depreciation expense for:
quarter $
--- --- -------------
quarter $
--- --- -------------
quarter $
--- --- -------------
quarter $
--- --- -------------
Total $
-------------
(f) Amortization expense for:
quarter $
--- --- -------------
quarter $
--- --- -------------
</TABLE>
125
<PAGE> 134
COMPLIANCE CHECK LIST
Russell Corporation
------------------------
--------------, -----
<TABLE>
<S> <C> <C>
quarter $
--- --- -------------
quarter $
--- --- -------------
Total $
-------------
(g) Other non-cash charges for:
quarter $
--- --- -------------
quarter $
--- --- -------------
quarter $
--- --- -------------
quarter $
--- --- -------------
Total $
-------------
TOTAL CONSOLIDATED EBITDA (sum of
(a) through (g)) $
-------------
</TABLE>
126
<PAGE> 135
COMPLIANCE CHECK LIST
Russell Corporation
------------------------
--------------, -----
Schedule 2
CONSOLIDATED TOTAL DEBT
<TABLE>
<S> <C> <C>
(1) obligations for borrowed money(1) $
--------------
(2) obligations of such Person evidenced by bonds, $
debentures, notes or other similar instruments --------------
(3) obligations of such Person to pay the deferred $
purchase price of property or services, except --------------
trade accounts payable arising in the
ordinary course of business
(4) obligations as lessee under capital leases $
--------------
(5) Redeemable Preferred Stock of such Person (in the $
event such Person is a corporation) --------------
(6) principal amounts outstanding and owed to parties other $
than the Borrower or any Subsidiary under the items --------------
described in clause (a) of the definition of Receivables
Program Obligations
(7) other Debts of the types described in (1) through (6) $
above of Persons other than the Borrower or a Consolidated --------------
Subsidiary which are Guaranteed by the Borrowers or any
Consolidated Subsidiary(2)
</TABLE>
- ---------------
(1) Include the principal balance outstanding under any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-balance
financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease in
accordance with GAAP.
(2) Include such Debt of any partnership or unincorporated joint venture
in which such Person is a general partner or a joint venturer, other than
non-recourse Debt of such partnership or unincorporated joint venture.
127
<PAGE> 136
COMPLIANCE CHECK LIST
Russell Corporation
------------------------
--------------, -----
Schedule 3
CONSOLIDATED TANGIBLE NET WORTH
<TABLE>
<S> <C> <C>
(a) Stockholders' Equity $
-------------
(b) Value as set forth or reflected on the most recent
consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries, prepared in accordance with
GAAP, of the following:
(1) Any surplus resulting from any write-up $
of assets subsequent to July 4, 1999; -------------
(2) All assets which would be treated as intangible $
assets for balance sheet presentation purposes -------------
under GAAP, including without limitation
goodwill (whether representing the excess of
cost over book value of assets acquired, or
otherwise), trademarks, tradenames, copyrights,
patents and technologies, and unamortized debt $
discount and expense -------------
(3) To the extent not included in (2), any amount at $
which shares of Capital Stock of the Borrower -------------
appear as an asset on the balance sheet of the
Borrower and its Consolidated Subsidiaries
(4) Loans or advances to stockholders, directors, $
officers or employees, except(1) for relocation -------------
expenses in connection with the Restructuring
Program and (2) for other purposes not
exceeding $3,000,000 in the aggregate principal
amount outstanding at any time, in each case
made in the ordinary course of business in
accordance with historical practices existing on
the Closing Date
</TABLE>
128
<PAGE> 137
COMPLIANCE CHECK LIST
Russell Corporation
------------------------
--------------, -----
<TABLE>
<S> <C> <C>
Total of (1) through (4) $
-------------
TOTAL CONSOLIDATED TANGIBLE NET WORTH
(difference of (a) less (b) $
-------------
</TABLE>
129
<PAGE> 138
COMPLIANCE CHECK LIST
Russell Corporation
------------------------
--------------, -----
Schedule - 4
Consolidated Interest Expense
Consolidated Net Interest Expense for:
<TABLE>
<S> <C> <C>
quarter $
--- --- -------------
quarter $
--- --- -------------
quarter $
--- --- -------------
quarter $
--- --- -------------
Total $
-------------
</TABLE>
130
<PAGE> 139
EXHIBIT G
RUSSELL CORPORATION
CLOSING CERTIFICATE
Reference is made to the Credit Agreement (the "Credit
Agreement") dated as of October 15, 1999, among Russell Corporation and Russell
Europe Limited, as Borrower, the Banks listed therein, Wachovia Bank, N.A., as
Administrative Agent, Suntrust Bank, Atlanta, as Syndication Agent and First
Union National Bank, as Documentation Agent. Capitalized terms used herein have
the meanings ascribed thereto in the Credit Agreement.
Pursuant to Section 3.01(e) of the Credit Agreement,
______________________________, the duly authorized ____________ of the
Borrower hereby certifies to the Administrative Agent and the Banks that (i) no
Default has occurred and is continuing as of the date hereof, and (ii) the
representations and warranties contained in Article IV of the Credit Agreement
are true on and as of the date hereof.
Certified as of October 15, 1999.
By:
-----------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
131
<PAGE> 140
EXHIBIT H
RUSSELL CORPORATION
SECRETARY'S CERTIFICATE
The undersigned, __________________________________,
______________________, Secretary of Russell Corporation, an Alabama corporation
(the "Borrower"), hereby certifies that [s]he has been duly elected, qualified
and is acting in such capacity and that, as such, [s]he is familiar with the
facts herein certified and is duly authorized to certify the same, and hereby
further certifies, in connection with the Credit Agreement dated as of October
15, 1999 among the Borrower, Wachovia Bank, N.A., as Administrative Agent,
Suntrust Bank, Atlanta, as Syndication Agent and First Union National Bank, as
Documentation Agent, and the Banks listed on the signature pages thereof, that:
1. Attached hereto as Exhibit A is a complete and correct
copy of the Certificate of Incorporation of the Borrower as in full
force and effect on the date hereof as certified by the Secretary of
State of the State of Alabama, the Borrower's state of incorporation.
2. Attached hereto as Exhibit B is a complete and correct
copy of the Bylaws of the Borrower as in full force and effect on the
date hereof.
3. Attached hereto as Exhibit C is a complete and correct
copy of the resolutions duly adopted by the Board of Directors of the
Borrower on ____________ ___, 19___ authorizing the execution and
delivery of, the Credit Agreement, the Notes and the other Loan
Documents (as such terms are defined in the Credit Agreement) to which
the Borrower is a party. Such resolutions have not been repealed or
amended and are in full force and effect, and no other resolutions or
consents have been adopted by the Board of Directors of the Borrower
in connection therewith.
4. __________________, who is ______________________ of the
Borrower signed the Credit Agreement, the Notes and the other Loan
Documents to which the Borrower is a party, was duly elected,
qualified and acting as such at the time [s]he signed the Credit
Agreement, the Notes and other Loan Documents to which the Borrower is
a party, and [his/her] signature appearing on the Credit Agreement,
the Notes and the other Loan Documents to which the Borrower is a
party is [his/her] genuine signature.
132
<PAGE> 141
IN WITNESS WHEREOF, the undersigned has hereunto set
[his/her] hand as of October 15, 1999.
[SIMILAR CERTIFICATE TO BE PROVIDED AS TO RUSSELL EUROPE LIMITED,
TO THE EXTENT REASONABLY AVAILABLE].
------------------------------------------------
133
<PAGE> 142
EXHIBIT I
MONEY MARKET QUOTE REQUEST
Wachovia Bank, N.A., as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Syndications Group
Re: Money Market Quote Request
This Money Market Quote Request is given in accordance with
Section 2.03 of the Credit Agreement (as amended or modified from time to time,
the "Credit Agreement") dated as of October 15, 1999, among Russell Corporation
and Russell Europe Limited, as Borrower, the Banks from time to time parties
thereto, Wachovia Bank, N.A., as Administrative Agent, Suntrust Bank, Atlanta,
as Syndication Agent and First Union National Bank, as Documentation Agent.
Terms defined in the Credit Agreement are used herein as defined therein.
The Borrower hereby requests that the Administrative Agent
obtain quotes for a Money Market Borrowing based upon the following:
1. The proposed date of the Money Market Borrowing shall
be ______________, 19_____ (the "Money Market Borrowing Date").(1)
2. The aggregate amount of the Money Market Borrowing shall
be $______________.(2)
3. The Stated Maturity Date(s) applicable to the Money
Market Borrowing shall be _____ days.(3)
* All numbered footnotes appear on the last page of this Exhibit I.
Very truly yours,
RUSSELL CORPORATION
By:
-------------------------
Title:
- ---------------
(1) The date must be a Euro-Dollar Business Day
(2) The amount of the Money Market Borrowing is subject to Section
2.03(a) and (b).
(3) The Stated Maturity Dates are subject to Section 2.03(b)(iii). The
Borrower may request that up to 2 different Stated Maturity Dates be
applicable to any Money Market Borrowing, provided that (i) each such
Stated Maturity Date shall be deemed to be a separate Money Market
Quote Request and (ii) the Borrower shall specify the amounts of such
Money Market Borrowing to be subject to each such different Stated
Maturity Date.
134
<PAGE> 143
EXHIBIT J
MONEY MARKET QUOTE
Wachovia Bank, N.A., as Administrative Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Syndications Group
Re: Money Market Quote to
This Money Market Quote is given in accordance with Section
2.03(c)(ii) of the Credit Agreement (as amended or modified from time to time,
the "Credit Agreement") dated as of October 15, 1999, among Russell Corporation
and Russell Europe Limited, as Borrower, the Banks from time to time parties
thereto, Wachovia Bank, N.A., as Administrative Agent, Suntrust Bank, Atlanta,
as Syndication Agent and First Union National Bank, as Documentation Agent.
Terms defined in the Credit Agreement are used herein as defined therein.
In response to the Borrower's Money Market Quote Request
dated ________________, 19___, we hereby make the following Money Market Quote
on the following terms:
1. Quoting Bank:
2. Person to contact
at Quoting Bank:
3._________________________ Date of Money Market Borrowing:(1)
4. We hereby offer to make Money Market Loan(s) in the
following maximum principal amounts for the following
Interest Periods and at the following rates:
<TABLE>
<CAPTION>
MAXIMUM STATED
PRINCIPAL MATURITY RATE
AMOUNT(2) DATE(3) PER ANNUM(4)
---------- -------- ------------
<S> <C> <C>
</TABLE>
We understand and agree that the offer(s) set forth above,
subject to the satisfaction of the applicable conditions set forth in the
Credit Agreement, irrevocably obligate(s) us to make the Money Market Loan(s)
for which any offer(s) [is] [are] accepted, in whole or in part (subject to the
last sentence of Section 2.03(c)(i) of the Credit Agreement).
Very truly yours,
[Name of Bank]
By:
----------------------------
Authorized Officer
Dated:
---------
- ---------------
(1) As specified in the related Money Market Quote Request
(2) The principal amount bid for each Stated Maturity Date may not
exceed the principal amount requested. Money Market Quotes
must be made for at least [$5,000,000] or a larger integral
multiple of [$1,000,000].
(3) The Stated Maturity Dates are subject to Section 2.03(b)(iii).
(4) Subject to Section 2.03(c)(ii)(C).
135
<PAGE> 144
EXHIBIT K
Form of Designation Agreement
Dated __________________, _______
Reference is made to that certain Credit Agreement dated as
of October 15, 1999 (as amended prior to the date hereof and as it may
hereafter be amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") by and among Russell Corporation and Russell Europe
Limited, as the Borrower, the Banks parties thereto, Wachovia Bank, N.A., as
Administrative Agent, Suntrust Bank, Atlanta, as Syndication Agent and First
Union National Bank, as Documentation Agent. Terms defined in the Credit
Agreement are used herein with the same meaning.
[NAME OF DESIGNATING BANK] (the "Designating Bank") and [NAME
OF DESIGNEE] (the "Designee") agree as follows:
1. Pursuant to Section 9.08(h) of the Credit Agreement, the
Designating Bank hereby designates the Designee, and the Designee
hereby accepts such designation, to have a right to make Money Market
Loans pursuant to Section 2.03(h) of the Credit Agreement. Any
assignment by Designating Bank to Designee of its rights to make a
Money Market Loan pursuant to such Section 2.03(h) shall be effective
at the time of the funding of such Money Market Loan and not before
such time.
2. Except as set forth in Section 7, below, the Designating
Bank makes no representation or warranty and assumes no responsibility
pursuant to this Designation Agreement with respect to (a) any
statements, warranties or representations made in or in connection
with any Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document
or any other instrument and document furnished pursuant thereto and
(b) the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under any Loan
Document or any other instrument or document furnished pursuant
thereto.
3. The Designee (a) confirms that it has received a copy of
each Loan Document, together with copies of the financial statements
referred to in Sections 4.04 and 5.01(a) and (b) (for periods for
which such financial statements are available) of the Credit Agreement
and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this
Designation Agreement; (b) agrees that it will independently and
without reliance upon the Administrative Agent, the Designating Bank
or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under any Loan Document; (c)
confirms that it is a Designated Bank; (d) appoints and authorizes the
Administrative Agent to take such action as the Administrative Agent
on its behalf and to exercise such powers and discretion under any
Loan Document as are delegated to the Administrative Agent by the
terms thereof, together with such powers and discretion as are
reasonably
136
<PAGE> 145
incidental thereto; and (e) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of any Loan
Document are required to be performed by it as a Bank.
4. The Designee hereby appoints the Designating Bank as
Designee's agent and attorney in fact and grants to the Designating
Bank an irrevocable power of attorney, coupled with an interest, to
receive payments made for the benefit of Designee under the Credit
Agreement, to deliver and receive all communications and notices under
the Credit Agreement and other Loan Documents and to exercise on
Designee's behalf all rights to vote and to grant and make approvals,
waivers, consent of amendments to or under the Credit Agreement or
other Loan Documents. Any document executed by such agent on the
Designee's behalf in connection with the Credit Agreement or other
Loan Documents shall be binding on the Designee. The Borrower, the
Administrative Agent and each of the Banks may rely on and are
beneficiaries of the preceding provisions.
5. Following the execution of this Designation Agreement by
the Designating Bank and its Designee, it will be delivered to the
Borrower for acknowledgment and to the Administrative Agent for
acknowledgment and recording by the Administrative Agent. The
effective date for this Designation Agreement (the "Effective Date")
shall be the date of acknowledgment hereof by the Administrative
Agent, unless otherwise specified on the signature page thereto.
6. The Designating Bank and, by execution of their respective
acknowledgments below, the Borrower and the Administrative Agent, each
hereby (i) acknowledges that the Designee is relying on the
non-petition provisions of Section 9.20 of the Credit Agreement as
agreed to by all signatories thereto and (ii) reaffirms that it will
not institute against the Designee or join any other Person in
instituting against the Designee any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any federal
or state bankruptcy or similar law for one year and one day after the
payment in full of the latest maturing commercial paper note issued by
the Designee.
7. The Designating Bank unconditionally agrees to pay or
reimburse the Designee and save the Designee harmless against all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
mature whatsoever which may be imposed or asserted by any of the
parties to the Loan Documents against the Designee, in its capacity as
such, in any way relating to or arising out of this Agreement or any
other Loan Documents or any action taken or omitted by the Designee
hereunder or thereunder, provided that the Designating Bank shall not
be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements if the same results from the Designee's gross negligence
or willful misconduct.
8. Upon such acceptance and recording by the Administrative
Agent, as of the Effective Date, the Designee shall be a party to the
Credit Agreement with a right to make Money Market Loans as a
Designated Bank pursuant to Section 2.03(h) of the
137
<PAGE> 146
Credit Agreement and the rights and obligations of a Designated Bank
related thereto; provided, however, that the Designee shall not be
required to make payments with respect to such obligations except to
the extent of excess cash flow of the Designee which is not otherwise
required to repay obligations of the Designee Bank which is not
otherwise required to repay obligations of the Designee Bank which re
then due and payable. Notwithstanding the foregoing, the Designating
Bank shall be and remain obligated to the Borrower, the Administrative
Agent and the Banks for each and every of the obligations of the
Designee and the Designating Bank with respect to the Credit
Agreement, including, without limitation, any indemnification
obligations under Section 7.05 of the Credit Agreement and any sums
otherwise payable to the Borrower by the Designee.
9. This Designation Agreement shall be governed by and
construed in accordance with the laws of the State of [GEORGIA][NEW
YORK][OTHER JURISDICTION CHOSEN BY DESIGNATING BANK AND DESIGNATED
BANK].
10. This Designation Agreement may be executed in any number
of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
same agreement. Delivery of an executed counterpart of a signature
page to this Designation Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart of this
Designation Agreement.
138
<PAGE> 147
IN WITNESS WHEREOF, the Designating Bank and the Designee
intending to be legally bound, have caused this Designation Agreement to be
executed by their officers thereunto duly authorized as of the date first above
written.
[NAME OF DESIGNATING BANK]
as Designating Bank
By:
--------------------------------
Title:
[NAME OF DESIGNEE], as Designee
By:
--------------------------------
Title:
Lending Office (and for notices):
-----------------------------------
-----------------------------------
-----------------------------------
Acknowledged this ____ day Acknowledged this ____ day
of ______________ ____, ____ of ______________ __, ____
(the Effective Date)
WACHOVIA BANK, NA
-----------------------------------
As the Administrative Agent as the Borrower
By: By:
-------------------------------- --------------------------------
Title Title:
139
<PAGE> 148
EXHIBIT L
GUARANTY
THIS GUARANTY (this "Guaranty") is made as of October 15,
1999, by RUSSELL CORPORATION, an Alabama corporation (the "Guarantor) in favor
of the Administrative Agent, for the ratable benefit of the Banks, under the
Credit Agreement referred to below;
W I T N E S S E T H :
WHEREAS, Russell Corporation (the Guarantor") and Russell
Europe Limited, as a Borrower only with respect to Foreign Currencies (the
Foreign Currency Borrower"), Wachovia Bank, N.A., as Administrative Agent (the
"Administrative Agent"), SunTrust Bank, Atlanta, as Syndication Agent, First
Union National Bank., as Documentation Agent and certain other Banks from time
to time party thereto have entered into a certain Credit Agreement dated as
October 15, 1999 (as amended as of the date hereof and as it may be amended or
modified further from time to time, the "Credit Agreement"), providing, subject
to the terms and conditions thereof, for extensions of credit to be made by the
Banks to the Foreign Currency Borrower which will the benefit the Guarantor;
WHEREAS, it is required under Section 3.01 of the Credit
Agreement that the Guarantor execute and deliver this Guaranty whereby it shall
guarantee the payment when due of all principal, interest and other amounts
that shall be at any time payable by the Foreign Currency Borrower under the
Credit Agreement, the Foreign Currency Loan Notes and the other Loan Documents
executed by it; and
WHEREAS, in consideration of the ownership of the Foreign
Currency Borrower by the Guarantor, and in order to induce the Banks and the
Administrative Agent to enter into and maintain the credit facilities under the
Credit Agreement, the Guarantor is willing to guarantee the obligations of the
Foreign Currency Borrower under the Credit Agreement, the Notes and the other
Loan Documents executed by it;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement
and not otherwise defined herein have, as used herein, the respective meanings
provided for therein.
SECTION 2. THE GUARANTY. The Guarantor hereby unconditionally
guarantees (i) the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest on each Foreign
Currency Loan Note issued by the Foreign Currency Borrower pursuant to the
Credit Agreement, and the full and punctual payment of all other amounts payable
by the Foreign Currency Borrower under the Credit Agreement, including,
140
<PAGE> 149
without limitation, all Foreign Currency Loans made to the Foreign Currency
Borrower and interest thereon, and (ii) the timely performance of all other
obligations of the Foreign Currency Borrower under the Credit Agreement and the
other Loan Documents executed by it (all of the foregoing obligations being
referred to collectively as the "Guaranteed Obligations"). Upon failure by the
Foreign Currency Borrower to pay punctually any such amount or perform such
obligations, the Guarantor agrees that it shall forthwith on demand pay the
amount not so paid at the place and in the manner specified in the Credit
Agreement, the relevant Note or the relevant Loan Document, as the case may be,
or perform such obligation in accordance with the terms and conditions therefor
specified in the Credit Agreement or the other Loan Documents, and pay all
costs of collection, including reasonable attorneys fees; provided that,
notwithstanding the provisions of O.C.G.A. ss. 13-1-11(a)(2) to the contrary,
the Guarantor shall not be obligated to pay more than the attorneys fees
actually incurred in connection with such collection.
SECTION 3. GUARANTY UNCONDITIONAL. The obligations of the
Guarantor hereunder shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement,
compromise, waiver or release in respect of any obligation of the
Foreign Currency Borrower under the Credit Agreement, any Note, or any
other Loan Document, by operation of law or otherwise or any
obligation of any other guarantor of any of the Guaranteed
Obligations;
(ii) any modification or amendment of or
supplement to the Credit Agreement, any Note, or any other Loan
Document;
(iii) any release, nonperfection or invalidity of
any direct or indirect security, if any, for any obligation of the
Foreign Currency Borrower under the Credit Agreement, any Note, any
Loan Document, or any obligations of any other guarantor of any of the
Guaranteed Obligations;
(iv) any change in the partnership structure or
ownership of the Foreign Currency Borrower or corporate structure or
ownership of any other guarantor of any of the Guaranteed Obligations,
or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Foreign Currency Borrower, or any other
guarantor of the Guaranteed Obligations, or its assets or any
resulting release or discharge of any obligation of the Foreign
Currency Borrower, or any other guarantor of any of the Guaranteed
Obligations;
(v) the existence of any claim, setoff or other
rights which the Guarantor may have at any time against the Foreign
Currency Borrower, any other guarantor of any of the Guaranteed
Obligations, the Administrative Agent, any Bank or any other Person,
whether in connection herewith or any unrelated transactions, provided
that nothing herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim
(vi) any invalidity or unenforceability relating
to or against the Foreign Currency Borrower, or any other guarantor of
any of the Guaranteed Obligations, for any
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<PAGE> 150
reason related to the Credit Agreement, any other Loan Document, or
any other Guarantee, or the lack of legal existence of the Foreign
Currency Borrower, or any provision of applicable law or regulation
purporting to prohibit or make illegal the payment by the Foreign
Currency Borrower, or any other guarantor of the Guaranteed
Obligations, of the principal of or interest on any Note or any other
amount payable by the Foreign Currency Borrower under the Credit
Agreement, the Notes, or any other Loan Document, or the performance
of any other obligation or undertaking of the Foreign Currency
Borrower under the Credit Agreement, any other Loan Document, or any
other Guarantee or otherwise making any of the Guaranteed Obligations
irrecoverable from the Foreign Currency Borrower for any reason; or
(vii) any law, regulation, order, decree or
directive (whether or not having the force of law) or any
interpretation thereof, now or hereafter in effect in any
jurisdiction, that purports to modify any of the terms of or rights of
any Bank with respect to any Guaranteed Obligation or under the Credit
Agreement or any other Loan Document or this Guaranty, including
without limitation any law, regulation, order, decree or directive or
interpretation thereof that purports to require or permit the
satisfaction of any Guaranteed Obligation other than strictly in
accordance with the terms of the Credit Agreement or any other Loan
Document (such as by the tender of a currency other than the relevant
Foreign Currency) or that restricts the procurement of the Foreign
Currency by the Foreign Currency Borrower or the Guarantor, or any
agreement, whether or not signed by or on behalf of any Bank, in
connection with the restructuring or rescheduling of public or private
obligations in any Borrower's country, whether or not such agreement
is stated to cause or permit the discharge of the Guaranteed
Obligations prior to the final payment in full of the Guaranteed
Obligations in the relevant Foreign Currency in strict accordance with
the Credit Agreement or other Loan Documents
(viii) any other act or omission to act or delay
of any kind by the Foreign Currency Borrower, any other guarantor of
the Guaranteed Obligations, the Administrative Agent, any Bank or any
other Person or any other circumstance whatsoever which might, but for
the provisions of this paragraph, constitute a legal or equitable
discharge of any Guarantor's obligations hereunder.
SECTION 4. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT
IN CERTAIN CIRCUMSTANCES. The Guarantor's obligations hereunder shall remain in
full force and effect until all Guaranteed Obligations shall have been paid in
full and the Commitments under the Credit Agreement shall have terminated or
expired. If at any time any payment of the principal of or interest on any Note
or any other amount payable by the Foreign Currency Borrower under the Credit
Agreement or any other Loan Document is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of the Foreign
Currency Borrower or otherwise, the Guarantor's obligations hereunder with
respect to such payment shall be reinstated as though such payment had been due
but not made at such time.
SECTION 5. WAIVER OF NOTICE BY THE GUARANTOR. The Guarantor
irrevocably waives acceptance hereof, presentment, demand, protest and, to the
fullest extent permitted by law, any notice not provided for herein, as well as
any requirement that at any time any action be
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taken by any Person against the Foreign Currency Borrower, any other guarantor
of the Guaranteed Obligations, or any other Person.
SECTION 6. STAY OF ACCELERATION. If acceleration of the time
for payment of any amount payable by the Foreign Currency Borrower under the
Credit Agreement, any Note or any other Loan Document is stayed upon the
insolvency, bankruptcy or reorganization of the Foreign Currency Borrower, all
such amounts otherwise subject to acceleration under the terms of the Credit
Agreement, any Note or any other Loan Document shall nonetheless be payable by
the Guarantor hereunder forthwith on demand by the Administrative Agent made at
the request of the Required Banks.
SECTION 7. NOTICES. All notices, requests and other
communications to any party hereunder shall be given or made by telecopier or
other writing and telecopied or mailed or delivered to the intended recipient
at its address or telecopier number set forth on the signature pages hereof or
such other address or telecopy number as such party may hereafter specify for
such purpose by notice to the Administrative Agent in accordance with the
provisions of Section 9.01 of the Credit Agreement. Except as otherwise
provided in this Guaranty, all such communications shall be deemed to have been
duly given when transmitted by telecopier, or personally delivered or, in the
case of a mailed notice, 3 Domestic Business Days after such communication is
deposited in the mails with first class postage prepaid, in each case given or
addressed as aforesaid.
SECTION 8. NO WAIVERS. No failure or delay by the
Administrative Agent or any Banks in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided in
this Guaranty, the Credit Agreement, the Notes, and the other Loan Documents
shall be cumulative and not exclusive of any rights or remedies provided by
law.
SECTION 9. SUCCESSORS AND ASSIGNS. This Guaranty is for the
benefit of the Administrative Agent and the Banks and their respective
successors and assigns and in the event of an assignment of any amounts payable
under the Credit Agreement, the Notes, or the other Loan Documents, the rights
hereunder, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Guaranty may not be assigned by the
Guarantor without the prior written consent of the Administrative Agent and the
Required Banks, and shall be binding upon the Guarantor and its successors and
permitted assigns.
SECTION 10. CHANGES IN WRITING. Neither this Guaranty nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Guarantor and the Administrative Agent, with the
consent of the Required Banks.
SECTION 11. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER
OF JURY TRIAL. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF GEORGIA. EACH OF THE GUARANTOR AND THE
ADMINISTRATIVE AGENT HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT
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<PAGE> 152
FOR THE NORTHERN DISTRICT OF GEORGIA AND OF ANY GEORGIA STATE COURT SITTING IN
ATLANTA, GEORGIA AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE
GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE GUARANTOR AND THE ADMINISTRATIVE AGENT HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 12. TAXES, ETC. All payments required to be made by
the Guarantor hereunder shall be made without setoff or counterclaim and free
and clear of and without deduction or withholding for or on account of, any
present or future taxes, levies, imposts, duties or other charges of whatsoever
nature imposed by any government or any political or taxing authority pursuant
and subject to the provisions of Section 2.13(c) of the Credit Agreement, the
terms of which are incorporated herein by reference as to the Guarantor as
fully as if set forth herein, and for such purposes, the rights and obligations
of the Foreign Currency Borrower under such Section shall devolve to the
Guarantor as to payments required to be made by the Guarantor hereunder.
SECTION 13. FAILURE TO PAY IN FOREIGN CURRENCY. If the
Guarantor is unable for any reason to effect payment in a relevant Foreign
Currency as required by this Guaranty or if the Guarantor shall default in the
Foreign Currency, each Bank may, through the Administrative Agent, require such
payment to be made in Dollars in the Dollar Equivalent amount of such payment.
In any case in which the Guarantor shall make such payment in Dollars, the
Guarantor agrees to hold the Banks harmless from any loss incurred by the Banks
arising from any change in the value of Dollars in relation to such Foreign
Currency between the date such payment became due and the date of payment
thereof.
SECTION 14. JUDGMENT CURRENCY. If for the purpose of
obtaining judgment in any court or enforcing any such judgment it is necessary
to convert any amount due in any Foreign Currency into any other currency, the
rate of exchange used shall be the Administrative Agent's spot rate of exchange
for the purchase of the Foreign Currency with such other currency at the close
of business on the Foreign Currency Business Day preceding the date on which
judgment is given or any order for payment is made. The obligation of the
Guarantor in respect of any amount due from it hereunder shall, notwithstanding
any judgment or order for a liquidated sum or sums in respect of amounts due
hereunder or under any judgment or order in any other currency or otherwise be
discharged only to the extent that on the Foreign Currency Business Day
following receipt by the Administrative Agent of any payment in a currency
other than the relevant Foreign Currency the Agent is able (in accordance with
normal banking procedures) to purchase the relevant Foreign Currency with such
other currency. If the amount of the relevant Foreign Currency that the
Administrative Agent is able to purchase with such
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<PAGE> 153
other currency is less than the amount due in the relevant Foreign Currency,
notwithstanding any judgment or order, the Guarantor shall indemnify the Banks
for the shortfall.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be duly executed, under seal, by its authorized officer as of the date first
above written.
RUSSELL CORPORATION
By:
--------------------------------------------
Eric N. Hoyle
Executive Vice President and Chief Financial
Officer
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<PAGE> 154
SCHEDULE 4.08
SUBSIDIARIES OF RUSSELL CORPORATION
<TABLE>
<CAPTION>
JURISDICTION OF
INCORPORATION
NAME OF SUBSIDIARY OR FORMATION
- ------------------ ------------
<S> <C>
Cross Creek Holdings, Inc. Delaware
Cross Creek Apparel, Inc. North Carolina
Eagle R Holdings Limited United Kingdom
Russell Europe Limited United Kingdom
Citygate Textiles Limited United Kingdom
Russell Athletic, Inc. Georgia
Russell Athletic West, Inc. Nevada
Alexander City Flying Service, Inc. Alabama
Russell Servicing Co., Inc. Alabama
Russell Development Corporation Georgia
Russell Apparel LLC Alabama
DeSoto Mills, Inc. Alabama
Russell Germany GmbH Germany
Russell France SARL France
Russell Spain, S.L. Spain
Russell Italy Srl Italy
Russell Corp. Canada Ltd. Canada
Russell CZ s.r.o. Czech Republic
Russell Corp. Far East, Ltd. Hong Kong
Russell Mexico S.A. de C.V. Mexico
Russell Corp. Australia Pty. Ltd. Australia
Russell Foreign Sales, Ltd. Barbados
Russell Corp. Bangladesh Limited Bangladesh
Jerzees de Honduras S.A. de C.V. Honduras
Russell do Brasil Ltda. Brazil
Jerzees Yucatan S.A. de C.V. Mexico
Russell Financial Services, Inc. Tennessee
Russell Asset Management Inc. Delaware
RINTEL Properties, Inc. Delaware
Servicios Russell S.A. de C.V. Mexico
Jerzees Campeche S.A. de C.V. Mexico
RU Servicios S.A. de C.V. Honduras
Cross Creek de Honduras S.A. de C.V. Honduras
Russell Japan KK Japan
</TABLE>
146
<PAGE> 1
EXHIBIT (10m)
AMENDMENT TO EMPLOYMENT AGREEMENT BETWEEN JOHN F. WARD
AND THE COMPANY DATED AS OF NOVEMBER 1, 1999
IV-11
<PAGE> 2
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment, made and effective on the 1st day of November, 1999, by
and between RUSSELL CORPORATION, and Alabama corporation (the "Company"), and
JOHN F. WARD (the "Executive").
R E C I T A L S:
WHEREAS, the Company and the Executive entered into that certain
Employment Agreement dated as of March 31, 1998, whereby the Executive was
employed as the President, Chief Executive Officer and Chairman of the Board of
the Company (the "Agreement"); and
WHEREAS, the Company and the Executive desire to amend the Agreement as set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Executive agree as follows:
1. Article 3.4 of the agreement shall be amended to read as follows:
"Retirement. Any termination of employment by either the Company or
the Executive, after April 1, 2001, shall be treated as retirement of
the Executive for the purpose of all Russell plans and benefits to
which Executive is entitled to participate at the time of such
termination."
2. Article 5 of the Agreement shall be amended by deleting the third
(3rd) sentence thereof in its entirety and replacing it with the following
language:
"Such options granted pursuant to Option Agreements dated on or after
February 24, 1999 shall have a term of ten years and one-fourth of the
total options given in any year shall vest in each of the four years
following the grant of the options, but options granted pursuant to
Option Agreements dated prior to such date shall have the term and
vesting schedule specified in such Option Agreements."
3. Except as specifically amended herein, this Amendment shall not be
interpreted to amend or modify the Agreement in any way, and the Company and
the Executive hereby ratify and affirm all provisions of the Agreement as of
the date hereof.
[SIGNATURE PAGE FOLLOWS]
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
RUSSELL CORPORATION
By: /s/ Eric N. Hoyle
------------------------------
Its: Executive Vice President/CFO
Attest:
/s/ Floyd G. Hoffman
--------------------------
Secretary
EXECUTIVE
/s/ John F. Ward
--------------------------------------
John F. Ward
Witness:
/s/ Joyce I Knox
----------------------
<PAGE> 1
EXHIBIT (10n)
EMPLOYMENT AGREEMENT BY AND BETWEEN THE COMPANY AND
JONATHAN LETZLER DATED NOVEMBER 20, 1998
IV-12
<PAGE> 2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement"), by and between
RUSSELL CORPORATION, an Alabama corporation (the "Company"), and Jonathan
Letzler (the "Executive") is made and entered into on 11/20/98 to become
effective on the date the Executive (as hereinafter defined) actually commences
employment with the Company (as hereinafter defined) which shall be not later
than December 15, 1998 (the date such employment actually commences sometimes
referred to herein as the "Effective Date").
R E C I T A L S :
The Company and its affiliates are engaged in the casual wear
and athletic activewear industries. The Company desires to employ the Executive
as President and Chief Executive Officer of the Company's Jerzees Division, and
the Executive desires to be employed by the Company in that capacity.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations herein and the compensation the Company agrees herein to pay the
Executive, and of other good and valuable consideration, the receipt of which
is hereby acknowledged, the Company and the Executive agree as follows:
ARTICLE 1. EMPLOYMENT OF EXECUTIVE
Subject to the terms and conditions set forth in this Agreement, the
Company hereby employs the Executive and the Executive hereby accepts such
employment for the period stated in ARTICLE 3 of this Agreement.
ARTICLE 2. POSITION, RESPONSIBILITY AND DUTIES
2.1 Position and Responsibilities. During the Term (as defined in
Section 3.1), the Executive shall serve as President and Chief Executive
Officer of the Company's Jerzees Division on the conditions herein provided.
The Executive shall provide such executive services in the management of the
Company?s business not inconsistent with his position and the provisions of
Section 2.2 as shall be assigned to him from time to time.
2.2 Duties. During the Term and except for illness and reasonable
vacation periods, the Executive shall devote his full business time, attention,
skill, energies and efforts to the faithful performance of his duties hereunder
and to the business and affairs of the Company and any subsidiary or affiliate
of the Company, such duties being those customary to executives at the same
level in companies of similar size.
ARTICLE 3. TERM
1
<PAGE> 3
3.1 Term of Employment. The term of the Executive's employment
under this Agreement shall commence on the Effective Date and shall continue
until the earliest to occur of the following dates (the "Termination Date"):
(i) the date of termination of Executive's employment by the Company other than
For Cause (as defined in Section 3.2); (ii) the date of death of the Executive;
(iii) the date coinciding with the end of one hundred eighty (180) days of the
disability of the Executive (as defined in the Company's disability benefit
plan applicable to the Executive); (iv) the date of termination For Cause (as
defined in Section 3.2); (v) the date the Executive terminates his employment
for Good Reason (as defined in Section 3.3) determined pursuant to Section 3.4;
(vi) the date the Executive terminates his employment other than for Good
Reason or (vii) the date which is four years from the Effective Date.
3.2 Termination for Cause; Automatic Termination. The Company
shall at all times have the right to discharge the Executive For Cause. For
purposes of this Agreement, "For Cause" shall be limited to: (i) conviction of
a felony other than those felonies involving the use of an automobile in
violation of any vehicle statute; (ii) a material breach of a provision of this
Agreement by the Executive, which breach is not cured within thirty (30) days
after notice has been give by the Company to the Executive, as provided in
Section 3.4; or (iii) the Final Determination of any action the effect of which
is to permanently enjoin the Executive from fulfilling his duties under this
Agreement. "Final Determination" as used herein shall mean the exhaustion of
all available remedies and appeals by the Executive or the Executive's refusal
to pursue such remedies and appeals.
3.3 Good Reason. Subject to the requirements of Section 3.4 of
this Agreement, the Executive may terminate his employment at any time for Good
Reason (as defined in this Section 3.3). If the Executive desires to terminate
his employment for Good Reason, he shall give notice to the Company as provided
in Section 3.4. For purposes of this Section 3.3, "Good Reason" shall mean the
Executive's resignation from the Company's employment for any of the following
reasons:
(a) A material reduction of the duties, functions and
responsibilities of the Executive without Executive's consent given within six
(6) months prior to such reduction;
(b) The Executive's resignation from employment by the
Company during the term of this Agreement if at any time John F. Ward ceases to
be employed by the Company for any reason other than Mr. Ward's death or
disability (as defined in Mr. Ward's employment agreement with the Company);
provided, that the Executive may terminate his employment pursuant to this
Section 3.3(b) only during the one-year period following Mr. Ward's ceasing to
be an employee of the Company;
(c) The Executive's resignation from the employment by
the Company on account of any material breach of a provision of this Agreement
by the Company, which breach is not cured within thirty (30) days after notice
has been given to the Company by the Executive as provided in Section 3.4.
Without limiting the generality of the foregoing sentence, the Company shall be
in material breach of its obligations hereunder if, for example, the Company
shall not permit the Executive to exercise such responsibilities as are
consistent with the Executive's position as set forth in Section 2.1 herein and
are of such a nature as are usually associated with officers holding similar
positions, or the Executive shall at any time be required to report to anyone
other than directly to the Chief Executive Officer of the Company or required to
move without his consent from Atlanta,
2
<PAGE> 4
Georgia metropolitan area, or the Company shall fail to make a payment when due
to the Executive. Notwithstanding the foregoing, if the Executive desires to
terminate his employment for Good Reason as defined in this Section 3.3(c), he
shall give notice to the Company as provided in 3.4 and the Company shall have
thirty (30) days after notice has been given to it in which to cure the reason
for the Executive's desire to terminate his employment for Good Reason. If the
reason for the Executive's desire to terminate his employment for Good Reason
as defined in this Section 3.3(c) is timely cured by the Company, the
Executive's notice shall become null and void.
3.4 Notice of Termination. Any termination by the Executive for
Good Reason or by the Company, either For Cause or other than For Cause, shall
be communicated by Notice of Termination to the Company or the Executive, as
the case may be. For purposes hereof, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision relied upon in
this Agreement, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, if required, and (iii) sets forth
the Termination Date. If the Executive's employment is terminated by reason of
one of the events described in Section 3.2 (other than 3.2(i)), 3.3(b) or
3.3(c), the Termination Date shall be not less than thirty (30) days nor more
than forty-five (45) days after the receipt of the Notice of Termination by the
Company. If the Executive's employment is terminated for any other reason,
other for reason of events described in Section 3.1(ii) or 3.1(iii), the
Termination Date shall be not more than fifteen (15) days after the receipt of
the Notice of Termination by the Company.
ARTICLE 4. COMPENSATION
4.1 Base Salary. For all services rendered by the Executive during
the Term, the Company shall pay the Executive as compensation a base annual
salary (the "Base Salary"), payable in appropriate installments to conform with
regular payroll dates for salaried personnel of the Company. On the Effective
Date, the annual rate of the Executive's Base Salary shall be $265,000 (the
"Annual Base Salary Rate"). The Executive's Annual Base Salary Rate shall be
increased annually by the Chief Executive Officer in his sole discretion but
with the concurrence of the Board of Directors of the Company (the "Board").
The timing of the annual increase shall coincide with increases of other top
executives, in accordance with Company policy.
4.2 Bonus. In addition to the Base Salary provided for in Section
4.1 and the other benefits provided for in this Agreement, the Executive shall
(i) be paid a signing bonus of $65,000 as promptly as
practicable following commencement of his employment hereunder, and
(ii) be eligible, upon the achievement of certain goals
established by the Board, to receive an annual bonus of up to 100% of his base
salary (with a midpoint/target of 50% of his base salary as described in the
Company's executive bonus plan) for the year for which the bonus is to be paid,
provided that the bonus for the portion of calendar year 1998 beginning on the
Effective Date shall be at least 50% of the Annual Base Salary Rate for 1998
and the bonus for calendar year 1999 shall be at least 50% of the Executive's
Base Salary for 1999, each such bonus to be paid within 90 days after the end
of the applicable year.
3
<PAGE> 5
ARTICLE 5. STOCK OPTIONS AND RESTRICTED SHARES
In addition to the Base Salary and bonus provided to the Executive
pursuant to Article 4, the Executive shall receive a minimum of the following
options for the purchase of the following number of shares of Russell
Corporation common stock during the term of this Agreement (the number of such
options to be adjusted for any stock splits or recombinations or stock
dividends occurring after the Effective Date), which amount may be increased at
the Board's discretion based on the Executive's performance: (i) options to
purchase 125,000 shares to be granted on the Effective Date upon employment of
the Executive pursuant to this Agreement and (ii) options to purchase 25,000
shares to be granted in February 1999. The exercise price for these options
shall equal the average of the high and low of the stock price on the day the
grant is made. Such options shall have a term of ten years and the options
given in any year shall vest and become exercisable over a four-year period
from the date of grant, with 25% of the options granted vesting and becoming
exercisable on each anniversary of the date of grant of such options. If the
Executive's employment is terminated by reason of the provisions of Sections
3.1(ii) and 3.1(iii), by the Company for any reason other than For Cause or by
the Executive for Good Reason, all options granted under this Article 5 shall
immediately become vested and shall be exercisable at the Executive's option
for a period of three (3) years from the date of termination; if the
Executive's employment is terminated by the Company For Cause or by the
Executive other than for Good Reason, all options granted under this Article 5
that are not vested as of the Termination Date shall lapse and be forfeited to
the Company. The Executive shall also be granted 50,000 shares of restricted
common stock of the Company on the Effective Date with the restrictions lapsing
as to one-third of such shares at the end of each year of employment by the
Executive with the Company. If the Executive's employment is terminated by
reason of the provisions of Sections 3.1(ii) and 3.1(iii), by the Company for
any reason other than For Cause or by the Executive for Good Reason, all
restrictions on such restricted shares shall immediately lapse; if the
Executive's employment is terminated by the Company For Cause or by the
Executive other than for Good Reason, all shares of restricted common stock
granted under this Article 5 as to which the restrictions have not lapsed as of
the Termination Date shall be forfeited to the Company.
ARTICLE 6. OTHER EMPLOYEE BENEFITS
The Executive shall be entitled to participate in any and all
retirement, health, disability, life insurance, long-term disability insurance,
long-term incentive plans, nonqualified deferred compensation and tax-qualified
retirement plans or any other plans or benefits offered by the Company to its
executives generally, if and to the extent the Executive is eligible to
participate in accordance with the terms and provisions of any such plan or
benefit program. Notwithstanding the foregoing, all vesting periods under all
Russell benefit plans shall be waived (except where waiving such period would
violate ERISA) and the Executive, upon termination of employment for any reason
before the age of retirement under those plans, shall be considered to have
attained the minimum retirement age provided in those plans. Nothing in this
ARTICLE 6 is intended, or shall be construed, to require the Company to
institute any particular plan, program or benefit. If the Executive is
prohibited from participating in, or accruing benefits under, any such plan or
policy, the Company shall provide the Executive comparable benefits outside
such plan or policy.
4
<PAGE> 6
ARTICLE 7. VACATION
The Executive shall be entitled to a minimum four (4) weeks of paid
vacation during each Employment Year.
ARTICLE 8. TERMINATION COMPENSATION
8.1 Monthly Compensation. Upon the expiration of the Term for any
reason, the Executive shall be entitled to continue to receive his Base Salary
through the last day of the month in which the Termination Date occurs (the
"Termination Month").
8.2 Compensation Continuance. In addition to the compensation
provided for in Section 8.1, upon the termination of the Executive's employment
by the Executive for Good Reason or by the Company other than For Cause, the
Executive (or in the event of his subsequent death, his designated beneficiary)
shall receive the bonus for which he was eligible in the year of termination,
prorated for the portion of such year for which Executive was employed (such
period to be deemed to end on the Termination Date) at the rate such bonus was
earned but in no event less than 50% of the Executive's Base Salary for such
period and he shall continue to receive (i) from the last day of the
Termination Month through the end of the twelfth calendar month following the
Termination Month (the "Compensation Continuance Period") the Base Salary that
he would have received pursuant to Section 4.1 during the Compensation
Continuance Period as if the Term had not expired and (ii) a bonus with respect
to the Compensation Continuance Period paid at a rate of 50% of the Base Salary
of the Executive during the Compensation Continuance Period to be paid at such
times as bonus payments are normally paid to other executives of the Company.
ARTICLE 9. RELOCATION
The Company shall
(i) pay all relocation expenses, including any necessary
tax gross up, for any relocation to the Atlanta, Georgia metropolitan area (or
such other area as may be mutually agreed by the Company and the Executive)
made by the Executive within nine months from the date of employment,
(ii) pay temporary living expenses in Alexander City,
Alabama or Atlanta, Georgia, as appropriate, during such nine month period, and
(iii) purchase, or cause its agent to purchase, his
principal residence in accordance with the terms of the Company's relocation
policy which will be applicable to specified employee transfers, and which is
expected to be announced shortly after the execution of this Agreement, in the
event the Executive is unable to sell such principal residence within the time
period specified in such policy.
ARTICLE 10. REIMBURSEMENT OF CERTAIN EXPENSES
The Company shall reimburse the Executive for all legal costs and
expenses, including
5
<PAGE> 7
attorneys' fees, reasonably incurred by the Executive in connection with any
dispute or disputes arising out of alleged violations of agreements between the
Executive and his prior employer provided that
(i) the Company is notified of each such agreement or
agreements prior to the execution of this Agreement;
(ii) the alleged violations of such agreement or
agreements arise from the Executive's acceptance of employment with and
employment by the Company; and
(iii) the Executive is not in fact in violation of any
provision which is the subject of such a dispute.
ARTICLE 11. POST-TERMINATION OBLIGATIONS
All payments and benefits to the Executive under this Agreement shall
be subject to the Executive's compliance with the following provisions during
the Term and following the termination of the Executive's employment:
11.1 Assistance in Litigation. The Executive shall, upon reasonable
notice, furnish such information and assistance to the Company as may
reasonably be required by the Company in connection with any litigation in
which it is, or may become, a party, and which arises out of facts and
circumstances known to the Executive. The Company shall promptly reimburse the
Executive for his out-of-pocket expenses incurred in connection with the
fulfillment of his obligations under this Section 11.1
11.2 Confidential Information. The Executive shall not disclose or
reveal to any unauthorized person any trade secret or other confidential
information relating to the Company, its subsidiaries or affiliates, or to any
businesses operated by them, and the Executive confirms that such information
constitutes the exclusive property of the Company; provided, however, that the
foregoing shall not prohibit the Executive from disclosing such information to
the extent necessary or desirable in connection with obtaining financing for
the Company (or furnishing such information under any agreements, documents or
instruments under which such financing may have been obtained) or otherwise
disclosing such information to third parties or governmental agencies in
furtherance of the interests of the Company, or as may be required by law.
11.3 Noncompetition. The Executive shall not: (i) during the
Compensation Continuation Period, without the prior written consent of the
Company, engage directly or indirectly, as a licensee, owner, manager,
consultant, officer, employee, director, investor or otherwise, in any business
in material competition with the Company; or (ii) usurp for his own benefit any
corporate opportunity under consideration by the Company during his employment,
unless the Company shall have finally decided not to take advantage of such
corporate opportunity. The restrictions of part (i) of this Section 11.3 shall
not apply to a passive investment by the Executive constituting ownership of
less than five percent (5%) of the equity of any entity engaged in any business
described in part (i) of this Section 11.3. The Executive acknowledges that the
possible restrictions on his activities which may occur as a result of his
performance of his obligations under this Section 11.3 are required for the
6
<PAGE> 8
reasonable protection of the Company.
11.4 Failure to Comply. In the event that the Executive shall fail
to comply with any provision of this ARTICLE 11, and such failure shall
continue for thirty (30) days following delivery of notice thereof by the
Company to the Executive, all rights hereunder of the Executive and any person
claiming under or through him shall thereupon terminate and no person shall be
entitled thereafter to receive any payments or benefits hereunder (except for
benefits under employee benefit plans or programs as provided in ARTICLE 6
which have been earned or otherwise fixed or determined to be payable prior to
such termination).
ARTICLE 12. BENEFICIARY
The Executive shall name one or more primary beneficiaries and one or
more contingent beneficiaries, who shall be entitled to receive any amounts
payable following the death of the Executive under ARTICLE 8, which beneficiary
or beneficiaries shall be subject to change from time to time by notice in
writing to the Board. A beneficiary may be a trust, an individual or the
Executive's estate. If the Executive fails to designate a beneficiary, primary
or contingent, then and in such event, such benefit shall be paid to the
surviving spouse of the Executive or, if he shall leave no surviving spouse,
then to the Executive's estate. If a named beneficiary entitled to receive any
death benefit is not living or in existence at the death of the Executive or
dies prior to asserting a written claim for any such death benefit, then an in
any such event, such death benefit shall be paid to the other primary
beneficiary or beneficiaries named by the Executive who shall be living or in
existence, if any, otherwise to the contingent beneficiary or beneficiaries
named by the Executive who shall then be living or in existence, if any; but if
there are no primary or contingent beneficiaries then living or in existence,
such benefit shall be paid to the surviving spouse of the Executive or, if he
shall leave no surviving spouse, then to the Executive's estate. If a named
beneficiary is receiving or is entitled to receive payments of any such death
benefits and dies before receiving all of the payments due him, any remaining
benefits shall be paid to the other primary beneficiary or beneficiaries named
by the Executive who shall then be living or in existence, if any, otherwise to
the contingent beneficiary or beneficiaries named by the Executive who shall
then be living or in existence, if any but if there are not primary or
contingent beneficiaries then living or in existence, the balance shall be paid
to the estate of the beneficiary who was last receiving the payments.
ARTICLE 13. SEVERABILITY
All agreements and covenants contained herein are severable, and in
the event any of them shall be held to be invalid by an competent court, this
Agreement shall be interpreted as if such invalid agreements or covenants were
not contained herein.
7
<PAGE> 9
ARTICLE 14. ASSIGNMENT PROHIBITED
This Agreement is personal to each of the parties hereto, and neither
party may assign nor delegate any of his or its rights or obligations hereunder
without first obtaining the written consent of the other party; provided,
however, that nothing in this ARTICLE 14 shall preclude (i) the Executive from
designating a beneficiary to receive any benefit payable under this Agreement
upon his death or (ii) the executors, administrators, or other legal
representatives of the Executive or his estate from assigning any rights under
this Agreement to the person or persons entitled thereto.
ARTICLE 15. NO ATTACHMENT
Except as otherwise provided in this Agreement or required by
applicable law, no right to receive payments under this Agreement shall be
subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge or hypothecation or to execution, attachment, levy,
or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to effect any such action shall be null, void and of
no effect.
ARTICLE 16. HEADINGS
The headings of articles, paragraphs and sections herein are included
solely for convenience of references and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
ARTICLE 17. GOVERNING LAW
The parties intend that this Agreement and the performance hereunder
and all suits and special proceedings hereunder shall be construed in
accordance with and under and pursuant to the laws of the State of Alabama and
that in any action, special proceeding or other proceeding that may be brought
arising out of, in connection with, or by reason of this Agreement, the laws of
the State of Alabama shall be applicable and shall govern to the exclusion of
the law or any other forum, without regard to the jurisdiction in which any
action or special proceeding may be instituted.
ARTICLE 18. BINDING EFFECT
This Agreement shall be binding upon, and inure to the benefit of, the
Executive and his heirs, executors, administrators and legal representatives
and the Company and its permitted successors and assigns.
ARTICLE 19. COUNTERPARTS
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8
<PAGE> 10
ARTICLE 20. NOTICES
All notices, request and other communications to any party under this
Agreement shall be in writing (including telefacsimile transmission or similar
writing) and shall be given to such party at its address or telefacsimile
number set forth below or such other address or telefacsimile number as such
party may hereafter specify for the purpose by notice to the other party:
(a) If to the Executive:
Jonathan Letzler
Russell Corporation
755 Lee Street
Post Office Box 272
Alexander City, Alabama 35011
(b) If to the Company:
Russell Corporation
755 Lee Street
Post Office Box 272
Alexander City, Alabama 35011
Attn: Chief Executive Officer
Each such notice, request or other communication shall be effective (i) if
given by mail, 72 hours after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (ii) if given by any
other means, when delivered at the address specified in this ARTICLE 20.
ARTICLE 21. MODIFICATION OF AGREEMENT
No waiver or modification of this Agreement or of any covenant,
condition, or limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith. No evidence of any waiver
or modification shall be offered or received in evidence at any proceeding,
arbitration, or litigation between the parties hereto arising out of or
affecting this Agreement, or the rights or obligations of the parties
hereunder, unless such waiver or modification is in writing, duly executed as
aforesaid. The parties further agree that the provisions of this ARTICLE 21 may
not be waived except as herein set forth.
ARTICLE 22. TAXES
To the extent required by applicable law, the Company shall deduct and
withhold all necessary Social Security taxes and all necessary federal and
state withholding taxes and any other similar sums required by law to be
withheld from any payments made pursuant to the terms of this Agreement.
ARTICLE 23. RECITALS
The Recitals to this Agreement are incorporated herein and shall
constitute an integral part
9
<PAGE> 11
of this Agreement.
ARTICLE 24. EFFECT OF PRIOR AGREEMENTS
This Agreement supersedes and replaces any prior employment agreement,
understanding or arrangement (whether written or oral) between the Company and
the Executive. Each of the parties hereto has relied on his or its own judgment
in entering into this Agreement.
[Remainder of page intentionally left blank]
10
<PAGE> 12
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
EXECUTIVE
By: /s/ Jonathan Letzler
------------------------------------(SEAL)
Jonathan Letzler
WITNESS:
- ----------------------------
RUSSELL CORPORATION
By: /s/ K. Roger Holliday
-----------------------------------------
K. Roger Holliday
Treasurer
11
<PAGE> 1
Exhibit (11)
COMPUTATIONS OF INCOME/(LOSS) PER COMMON SHARE
RUSSELL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Year Ended
------------------------------------------
January 1, January 2, January 3,
2000 1999 1998
----------- ------------- -----------
<S> <C> <C> <C>
Basic:
Net Income (Loss) $8,388,000 $(10,379,000) $54,448,000
========== ============ ===========
Weighted Average Common
Shares Outstanding 33,842,751 36,216,571 36,879,901
========== ============ ===========
Income (Loss)
per Share-Basic $ .25 $ (.29) $ 1.48
========== ============ ===========
Diluted:
Net Income (Loss) $8,388,000 $(10,379,000) $54,448,000
========== ============ ===========
Weighted Average Common
Shares Outstanding 33,842,751 36,216,571 36,879,901
Net Effect of Dilutive
Stock Options 23,750 -0- 167,532
---------- ------------ -----------
Total 33,866,501 36,216,571 37,047,433
========== ============ ===========
Income (Loss)
Per Share-Diluted $ .25 $ (.29) $ 1.47
========== ============ ===========
</TABLE>
IV-13
<PAGE> 1
EXHIBIT (13)
1999 ANNUAL REPORT TO SHAREHOLDERS
IV-14
<PAGE> 2
Ten-Year Selected Financial Highlights
RUSSELL CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
(Dollars in thousands, except share data) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Operations
Net sales $1,142,234 $ 1,180,118 $1,228,198 $1,244,204 $1,152,633
Cost of goods sold 844,961 878,106 857,531 846,166 816,834
Interest expense 28,060 27,824 28,165 25,738 21,698
Income (loss) before
income taxes(a) 20,330 (10,265) 88,352 129,545 87,733
Income taxes(a) 11,942 114 33,904 47,969 33,616
Net income (loss) applicable to common shares(a) 8,388 (10,379) 54,448 81,576 54,117
Financial Data
Depreciation and amortization $ 63,891 $ 74,368 $ 74,421 $ 72,226 $ 68,010
Net income plus depreciation and amortization 72,279 63,989 128,869 153,802 122,127
Capital expenditures 53,376 72,864 72,926 114,031 86,556
Working capital 460,041 435,819 501,431 412,591 438,070
Long-term debt and redeemable preferred stock 377,865 323,043 360,607 255,935 287,878
Stockholders' equity 549,342 614,771 665,602 679,823 632,558
Capital employed 927,207 937,814 1,026,209 935,758 920,436
Total assets 1,153,131 1,153,564 1,247,962 1,195,180 1,118,164
Common Stock Data
Net income (loss) assuming dilution(a) $ .25 $ (.29) $ 1.47 $ 2.11 $ 1.38
Dividends .56 .56 .53 .50 .48
Book value 16.74 17.31 18.25 17.87 16.34
Price Range:
High 25.12 33.88 38.38 33.75 31.25
Low 12.13 18.00 25.00 23.13 22.00
Financial Statistics
Net sales times:
Receivables(b) 6.2 5.6 5.3 5.5 5.3
Inventories(b) 3.0 3.2 3.4 3.7 3.8
Capital employed(b) 1.2 1.2 1.3 1.3 1.4
Interest coverage(a) 1.7 .6 4.1 6.0 5.0
Income (loss) before income taxes as a percent of net sales(a) 1.8% (.9)% 7.2% 10.4% 7.6%
Net income (loss) as a percent of net sales(a) .7% (.9)% 4.4% 6.6% 4.7%
Net income (loss) as a percent of stockholders' equity(a)(b) 1.4% (1.6)% 8.2% 12.4% 8.6%
Other Data
Net common shares outstanding (000s omitted) 32,814 35,519 36,463 38,049 38,715
Approximate number of common shareholders 8,000 8,000 10,100 12,300 12,300
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Operations
Net sales $1,098,259 $ 930,787 $899,136 $804,585 $713,812
Cost of goods sold 739,700 613,325 592,837 553,160 461,281
Interest expense 19,434 16,948 15,841 18,097 18,885
Income (loss) before
income taxes(a) 127,585 80,717 129,507 90,866 109,672
Income taxes(a) 48,759 31,619 47,269 34,027 41,725
Net income (loss) applicable to common shares(a) 78,826 49,080 81,945 56,279 67,378
Financial Data
Depreciation and amortization $ 67,042 $ 66,226 $ 60,444 $ 56,594 $ 52,539
Net income plus depreciation and amortization 145,868 115,306 142,389 112,873 119,917
Capital expenditures 38,562 83,979 109,161 89,532 113,617
Working capital 310,330 277,993 285,469 255,392 249,683
Long-term debt and redeemable preferred stock 144,163 163,334 186,122 185,923 196,857
Stockholders' equity 628,662 587,651 570,003 502,501 456,352
Capital employed 772,825 750,985 756,125 688,424 653,209
Total assets 1,046,577 1,017,044 964,933 818,220 794,521
Common Stock Data
Net income (loss) assuming dilution(a) $ 1.96 $ 1.19 $ 1.99 $ 1.38 $ 1.65
Dividends .42 .39 .34 .32 .32
Book value 15.84 14.54 13.97 12.39 11.29
Price Range:
High 32.63 36.87 40.37 36.25 31.00
Low 24.00 26.00 27.75 19.75 16.00
Financial Statistics
Net sales times:
Receivables(b) 5.6 5.3 5.8 5.9 5.3
Inventories(b) 3.9 3.7 4.6 4.8 5.1
Capital employed(b) 1.4 1.2 1.2 1.2 1.1
Interest coverage(a) 7.6 5.8 9.2 6.0 6.8
Income (loss) before income taxes as a percent of net sales(a) 11.6% 8.7% 14.4% 11.3% 15.4%
Net income (loss) as a percent of net sales(a) 7.2% 5.3% 9.1% 7.0% 9.4%
Net income (loss) as a percent of stockholders' equity(a)(b) 13.0% 8.5% 15.3% 11.7% 15.7%
Other Data
Net common shares outstanding (000s omitted) 39,689 40,405 40,810 40,569 40,407
Approximate number of common shareholders 13,000 13,000 13,000 18,000 18,000
</TABLE>
(a) Fiscal 1993 includes a noncash, pre-tax charge of $34,583,080 associated
with the write-down of certain fixed assets and goodwill. The after-tax impact
of this write-down on 1993 earnings was $.56 per common share. Fiscal 1998 and
1999 include pre-tax charges of $83,007,000 and $70,721,000, respectively
associated with restructuring, asset impairment and other unusual charges as
described in Note 10 to the Consolidated Financial Statements. The after-tax
impact of these charges on 1998 and 1999 earnings was ($1.46) and ($1.38),
respectively, per common share.
(b) Average of amounts at beginning and end of each fiscal year.
Management's discussion and Analysis
RUSSELL CORPORATION AND SUBSIDIARIES
1999 vs 1998
Net Sales Net sales decreased 3.2%, or $37,884,000, to $1,142,234,000 for
fiscal 1999 from $1,180,118,000 for fiscal 1998. The decrease consisted
primarily of declines of 3.4%, or $30,754,000 and 2.1%, or $2,631,000 within the
Company's Activewear and International segments, respectively. The majority of
the sales decline within the Activewear segment was due to price declines and
the discontinuance of certain lines of businesses in fiscal 1998 as part of the
restructuring and reorganization plan described below.
Gross Margin Percentage The Company's overall gross margin percentage increased
to 26.0% for fiscal 1999 versus 25.6% in fiscal 1998. Excluding the impact of
restructuring, asset impairment and other unusual charges (special charges), as
described in Note 10 to the Consolidated Financial Statements, of $32,039,000
and $22,227,000 for fiscal 1999 and fiscal 1998, respectively, the gross margin
percentage increased to 28.8% for fiscal 1999 from 27.5% for fiscal 1998. Gross
margins were positively impacted by the reduction in manufacturing cost as a
result of the Company's aggressive move to assemble garments in low cost
geographic locations versus prior fiscal year. However, the positive impact
experienced as a result of the above was partially offset by lower selling
prices.
Selling, General and Administrative (SG&A) SG&A as a percent of net sales
decreased to 19.0% for fiscal 1999 from 20.9% in fiscal 1998. Excluding the
impact of special charges of $6,088,000 and $21,318,000 for the fiscal years
1999 and 1998, respectively, SG&A as a percent of net sales decreased to 18.5%
for fiscal 1999 from 19.1% in fiscal 1998, primarily due to lower distribution
costs which were partially offset with increases in advertising and marketing
expenses.
<PAGE> 3
Earnings Before Interest and Taxes (EBIT) The Company's overall EBIT as a
percent of net sales increased to 10.4% for fiscal 1999 from 8.5% in fiscal 1998
when calculated exclusive of special charges of $70,721,000 and $83,007,000 for
fiscal 1999 and 1998, respectively. The Activewear segment EBIT, exclusive of
special charges, as a percent of net sales is 13.0% for fiscal 1999 up from
11.2% for fiscal 1998. This improvement is attributed to reduced manufacturing
cost associated with the move of much of the Company's apparel assembly
operations offshore. The International segment EBIT, exclusive of special
charges, as a percent of net sales increased to 7.4% for fiscal 1999 up from a
negative 3.6% for fiscal 1998. This significant turnaround is due primarily to
the elimination of certain unprofitable product lines and businesses as part of
the Company's restructuring and reorganization plan.
1998 vs 1997
Net Sales Net sales decreased 3.9%, or $48,080,000, to $1,180,118,000 for
fiscal 1998 from $1,228,198,000 for fiscal 1997. The overall net decrease
consisted of a 6.2% decline, or $60,466,000 within the Company's Activewear
segment; a 1.1% decline, or $1,420,000 within the Company's International
segment and a 10.5% increase, or $13,806,000, for all other segments. The
Activewear decrease was primarily attributable to weak sales during the fourth
quarter of the year. Domestic Activewear sales were significantly impacted by
unseasonably warm weather, softness in retail apparel sales and further
industry-wide price reductions, particularly in the artwear market. The
Company's JERZEES brand of activewear was the most significantly impacted by
these factors. The Russell Athletic brand of activewear had slight decreases in
sales for the year, generally in line with expectations, while Cross Creek
Apparel, Inc. experienced moderate growth for the year. The International
segment sales were down due to overall softness in apparel sales at retail
locations. Approximately 47%, or $6,465,000, of the increase in net sales for
all other segments was attributable to an increase in sock sales to Wal-Mart.
Gross Margin Percentage The Company's overall gross margin percentage decreased
to 25.6% for fiscal 1998 versus 30.2% for fiscal 1997. Excluding the impact of
special charges of $22,227,000 for fiscal 1998, the overall gross margin
percentage decreased to 27.5% for fiscal 1998 from 30.2% for fiscal 1997. Gross
margins were negatively impacted by the previously mentioned sales activities,
which primarily involved a reduction in selling prices.
Selling, General and Administrative (SG&A) SG&A as a percent of net sales
increased slightly to 20.9% for fiscal 1998 from 20.6% for fiscal 1997.
Excluding the impact of special charges of $21,318,000 for fiscal 1998, SG&A as
a percent of net sales decreased to 19.1% for fiscal 1998 from 20.6% for fiscal
1997.
Earnings Before Interest and Taxes (EBIT) The Company's overall EBIT as a
percent of net sales decreased to 8.5% for fiscal 1998 from 9.5% for fiscal 1997
when calculated exclusive of special charges of $83,007,000 for fiscal 1998. The
overall decrease is due largely to the previously mentioned reduced gross
margins.
For information concerning income tax provisions for fiscal years 1999, 1998 and
1997, as well as information regarding differences between effective tax rates
and statutory tax rates, see Note 6 to the Consolidated Financial Statements.
MUlTI-YEAR RESTRUCTURING
AND REORGANIZATION PLAN
On July 22, 1998, the Company announced its intention to undertake a major
restructuring and reorganization to improve the Company's global
competitiveness. Elements of the multi-year strategic plan included: the closing
of approximately 25 of the Company's 90 worldwide facilities over the next three
years, including selected manufacturing plants, distribution centers and
offices; expanding production outside the United States; consolidating and
downsizing the licensed products businesses; disposing of owned shopping center
real estate; reorganizing the corporate structure; establishing dual
headquarters in the metropolitan Atlanta area; as well as other cost savings
activities. It was anticipated that the three-year plan would ultimately reduce
costs by approximately $80 million pre-tax annually and would result in the
elimination of approximately 4,000 domestic positions.
The Company announced it would incur charges over three years for restructuring,
asset impairment and other associated unusual charges as a result of the
restructuring and reorganization plan. These charges would relate to the closing
of facilities, including plants, distribution centers and offices; consolidation
and/or exiting certain product lines and brands and disposing of owned shopping
center real estate; and would be reflected in the Company's consolidated
financial statements over the next three years beginning in the third quarter of
1998. The recognition of these charges would depend, in large part, on expansion
of production capabilities outside the United States.
For information concerning restructuring, asset impairment and other unusual
charges associated with the multi-year restructuring and reorganization plan for
fiscal 1999 and 1998, see Note 10 to the Consolidated Financial Statements.
As of January 1, 2000, the Company was unable to determine quantitatively if
actual savings from the restructuring and reorganization plan are in line with
anticipated savings. However, the Company expects to enjoy significant cost
savings from the restructuring and reorganization plan for years to come.
LIQUIDITY AND CAPITAL RESOURCES
The balance sheet continues to reflect the conservative financial nature of the
Company and its strong financial condition. At the end of fiscal 1999, long-term
debt to total capitalization increased to 40.8% versus 34.4% at the end of
fiscal 1998. The increase is primarily the result of the Company purchasing
<PAGE> 4
approximately 2.7 million of its outstanding common shares for approximately $53
million, which was funded through the credit facility (long-term debt). Current
ratios were 4.0 and 3.9, respectively, for year-end 1999 and 1998.
Operations provided approximately $85 million and increased borrowings provided
$63 million of the cash requirements in fiscal 1999. This cash was used for
capital expenditures, payments on long-term debt, dividends and treasury stock
repurchases. Capital expenditures during fiscal 1999 were approximately $53
million. Approximately 92%, or $49 million, of the fiscal 1999 expenditures were
within the Activewear segment.
Operations provided the majority of the cash requirements in 1998. This cash was
used for capital expenditures, payments on long-term and short-term debt,
dividends and treasury stock repurchases. Capital expenditures for the year were
approximately $73 million.
The Company anticipates that fiscal 2000 capital expenditures will be
approximately $60 million. The majority of the fiscal 2000 capital expenditures
will be for further enhancements of the Company's manufacturing and distribution
capabilities. At January 1, 2000, the Company had accrued liabilities of
approximately $6.5 million related to employee severance and costs to exit
certain facilities, licenses and contracts. The Company anticipates that it
could incur additional cash charges of approximately $20 million in fiscal 2000
related to the continued execution of its restructuring and reorganization plan.
In December 1999, the Board of Directors adjusted the stock repurchase
authorization upward to 5,000,000 shares. Purchases of the Company's Common
Stock totaled $53,370,000 in 1999, representing 2,705,361 shares, compared to
$22,355,000 representing 1,041,800 shares in 1998. At January 1, 2000, the
Company had 4,873,400 shares that it could repurchase.
In prior years, the Company was dependent on informal uncommitted lines of
credit to finance its working capital requirements. During the fourth quarter of
1999, the Company entered into a five-year, $250 million unsecured revolving
credit facility which assures the Company availability of funds at market-based
rates. (See Note 2 to the Consolidated Financial Statements for additional
details related to the Company's new credit facility).
At year-end, the Company maintained approximately $44 million of informal lines
of credit with two banks. The Company believes that the combination of the new
credit facility and the two informal lines of credit will be sufficient for its
working capital requirements during fiscal year 2000 and does not anticipate
issuing any additional long-term debt or equity securities in fiscal 2000.
The Company utilizes two interest rate swap agreements in the management of its
interest rate exposure on long-term debt. These agreements effectively convert a
portion of the Company's interest rate exposure from a fixed to a floating rate
basis and from a floating rate to a fixed basis. The effect of these agreements
was to lower the effective interest rate on the Company's long-term debt from
6.67% to 6.34%, from 6.74% to 6.47% and from 6.83% to 6.64% in 1999, 1998 and
1997, respectively.
For information concerning ongoing litigation of the Company, see Note 9 to the
Consolidated Financial Statements.
IMPACT OF RECENTLY ISSUED
ACCOUNTING STANDARDS
For information concerning the impact of recently issued accounting standards,
see Note 1 to the Consolidated Financial Statements.
IMPACT OF YEAR 2000
In prior years, the Company discussed the nature and progress of its plans to
become Year 2000 ready. During 1999, the Company completed all phases of its
Year 2000 readiness plan. As a result of those planning and implementation
efforts, the Company experienced no significant problems related to Year 2000.
The Company expensed approximately $425,000 during 1999 in connection with
remediating its systems. The Company is not aware of any material problems
resulting from Year 2000 issues, either with its products, its internal systems
or the products and services of third parties. The Company believes that
continued exposure to the Year 2000 problem does not exist and no further
expenditures are expected to be incurred in the future. The Company will
continue to monitor its own computer applications and those of its suppliers and
vendors throughout the year to ensure that any Year 2000 matters that arise are
addressed promptly.
Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risks relating to fluctuations in interest
rates, currency exchange rates and commodity prices. The objective of financial
risk management at the Company is to minimize the negative impact of interest
rate, foreign exchange rate and commodity price fluctuations on the Company's
earnings, cash flows and equity. To manage these risks, the Company uses various
derivative financial instruments, including interest rate swap agreements,
forward currency exchange contracts and commodity futures contracts. The Company
only uses commonly traded instruments. These contracts are entered into with
major financial institutions, thereby minimizing the risk of credit loss. Also,
refer to Notes 1 and 4 to the Consolidated Financial Statements for a more
complete description of the Company's accounting policies and use of such
instruments.
The following analyses present the sensitivity of the market value, earnings and
cash flows of the Company's financial instruments to hypothetical changes in
interest rates, exchange rates and commodity prices as if these changes occurred
at January 1, 2000. The range of changes chosen for these analyses reflect the
<PAGE> 5
Company's view of changes which are reasonably possible over a one-year period.
Market values are the present values of projected future cash flows based on the
interest rate assumptions or quoted market prices where available. These
forward-looking disclosures are selective in nature and only address the
potential impacts from financial instruments. They do not include other
potential effects, which could impact the Company's business as a result of
these changes in interest rates, exchange rates and commodity prices.
Interest Rate and Debt
Sensitivity Analysis
At January 1, 2000, the Company has debt totaling $399,279,000 and two interest
rate swap agreements with notional values totaling $91,000,000. Interest rate
swaps are entered into as a hedge of underlying debt instruments to effectively
change the characteristic of the interest rate without altering the debt
instrument. At January 1, 2000, the interest rate swap agreements converted
$59,000,000 of outstanding variable rate debt to fixed rate debt for a period of
time and converted $32,000,000 of outstanding fixed rate debt to variable rate
debt for a period of time. For fixed rate debt, interest rate changes affect the
fair market value but do not impact earnings or cash flows. Conversely for
variable rate debt, interest rate changes generally do not affect the fair
market value but do impact future earnings and cash flows, assuming other
factors are held constant.
At January 1, 2000, after adjusting for the effect of interest rate swap
agreements, the Company has fixed rate debt of $283,950,000 and variable rate
debt of $115,329,000. Assuming all other variables remain constant, a one
percentage point increase in interest rates would decrease the fair market value
of the fixed rate debt by approximately $12,659,000. At January 1, 2000, the
annual pre-tax earnings and cash flow impact resulting from a one percentage
point increase in interest rates would be negatively impacted by approximately
$1,038,000, holding other variables constant.
Currency Rate Exchange Sensitivity
Foreign currency exposures arising from transactions include firm commitments
and anticipated transactions denominated in a currency other than an entity's
functional currency. The Company and its subsidiaries generally enter into
transactions denominated in their respective functional currencies. Therefore,
foreign currency exposures arising from transactions are not material to the
Company. The Company's primary foreign currency exposure arises from foreign
denominated revenues and profits translated into U.S. dollars.
The primary currencies to which the Company is exposed are the Mexican peso,
British pound and other European currencies.
The Company generally views as long-term its investments in foreign subsidiaries
with a functional currency other than the U.S. dollar. As a result, the Company
does not generally hedge these net investments, and at year end there were no
significant hedges.
Commodity Price Sensitivity
The availability and price of cotton is subject to wide fluctuations due to
unpredictable factors such as weather conditions, governmental regulations,
economic climate or other unforeseen circumstances. To reduce price risk caused
by market fluctuations, the Company enters into futures contracts to hedge
prices on varying proportions of its cotton needs, thereby minimizing the risk
of decreased margins from cotton price increases. A sensitivity analysis has
been prepared to estimate the Company's exposure to market risk from its cotton
position, excluding inventory on hand and fixed price contracts. The fair value
of the Company's position is the fair value calculated by valuing its net
position at quoted futures prices. Market risk is estimated as the potential
loss in fair value resulting from a hypothetical 10% adverse change in such
prices. The potential loss in fair value of the Company's cotton futures
position at January 1, 2000 from a hypothetical 10% decrease in cotton prices
was $450,000.
FORWARD LOOKING INFORMATION
This annual report, including management's discussion and analysis, contains
certain statements that describe the Company's beliefs concerning future
business conditions and prospects, growth opportunities, new product lines,
offshore apparel assembly and related cost savings and the outlook for the
Company based upon currently available information. Wherever possible, the
Company has identified these "forward looking" statements (as defined in Section
21E of the Securities and Exchange Act of 1934) by words such as "anticipates,"
"believes," "intends," "estimates," "expects," "projects" and similar phrases.
These forward looking statements are based upon assumptions the Company believes
are reasonable. Such forward looking statements are subject to risks and
uncertainties which could cause the Company's actual results, performance and
achievements to differ materially from those expressed in, or implied by, these
statements, including among other matters, significant competitive activity,
including promotional and price competition, changes in customer demand for the
Company's products, inherent risks in the marketplace associated with new
products and new product lines, including uncertainties about trade and consumer
acceptance and other risk factors listed from time to time in the Company's SEC
reports and announcements. These risks and uncertainties include, but are not
limited to, the matters discussed under the caption "Forward Looking
Information" in the Company's Annual Report on Form 10-K for the year ended
January 1, 2000, which will be filed by March 31, 2000. The Company assumes no
obligation to update publicly any forward looking statements whether as a result
of new information, future events or otherwise.
<PAGE> 6
Consolidated Balance Sheets
RUSSELL CORPORATION AND SUBSIDIARIES
January 1, 2000 and January 2, 1999
<TABLE>
<CAPTION>
(In thousands, except share data) 1999 1998
<S> <C> <C>
Assets
Current assets:
Cash $ 9,123 $ 13,852
Trade accounts receivable, less allowances of $7,912 in 1999 and $8,562 in 1998 191,803 179,307
Inventories 387,841 371,579
Prepaid expenses and other current assets 14,874 11,091
Future income tax benefits 11,481 8,885
Total current assets 615,122 584,714
Property, plant and equipment:
Land 11,207 10,405
Buildings 329,439 331,663
Machinery and equipment 877,312 876,597
Construction-in-progress 11,985 5,577
1,229,943 1,224,242
Less allowances for depreciation and amortization (747,343) (704,255)
482,600 519,987
Other assets 55,409 48,863
$ 1,153,131 $ 1,153,564
liabilities and stockholders' equity
Current liabilities:
Short-term debt $ -- $ 12,908
Accounts payable and accrued expenses:
Trade accounts 72,972 49,688
Employee compensation 32,627 31,590
Other 27,242 20,506
132,841 101,784
Income taxes 826 1,989
Current maturities of long-term debt 21,414 32,214
Total current liabilities 155,081 148,895
Long-term debt, less current maturities 377,865 323,043
Deferred liabilities:
Income taxes 38,741 34,121
Pension and other 32,102 32,734
70,843 66,855
Commitments and contingencies -- --
Stockholders' equity:
Common stock, par value $.01 per share; authorized 150,000,000 shares,
issued 41,419,958 shares 414 414
Paid-in capital 48,294 48,294
Retained earnings 720,111 730,723
Treasury stock (1999 - 8,605,925 and 1998 - 5,900,564 shares) (213,461) (160,093)
Accumulated other comprehensive loss (6,016) (4,567)
549,342 614,771
$ 1,153,131 $ 1,153,564
</TABLE>
See notes to consolidated financial statements.
<PAGE> 7
Consolidated Statements of Operations
Russell Corporation AND SUBSIDIARIES
Years ended January 1, 2000, January 2, 1999 and January 3, 1998
<TABLE>
<CAPTION>
(In thousands, except share and per share data) 1999 1998 1997
<S> <C> <C> <C>
Net sales $ 1,142,234 $ 1,180,118 $ 1,228,198
Costs and expenses:
Cost of goods sold 844,961 878,106 857,531
Selling, general and administrative expenses 217,571 246,518 252,387
Other - net 31,312 37,935 1,763
Interest expense 28,060 27,824 28,165
1,121,904 1,190,383 1,139,846
Income (loss) before income taxes 20,330 (10,265) 88,352
Provision for income taxes 11,942 114 33,904
Net income (loss) $ 8,388 $ (10,379) $ 54,448
Net income (loss) per common share:
Basic $ .25 $ (.29) $ 1.48
Diluted $ .25 $ (.29) $ 1.47
Weighted-average shares outstanding:
Basic 33,842,751 36,216,571 36,879,901
Diluted 33,866,501 36,216,571 37,047,433
</TABLE>
See notes to consolidated financial statements.
Consolidated Statements of Cash Flows
Russell Corporation AND SUBSIDIARIES
Years ended January 1, 2000, January 2, 1999 and January 3, 1998
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
<S> <C> <C> <C>
Operating activities
Net income (loss) $ 8,388 $ (10,379) $ 54,448
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 63,891 74,368 74,421
Deferred income taxes 2,024 (19,568) 6,216
Loss (gain) on sale of property, plant and equipment 573 (111) (438)
Non-cash restructuring, asset impairment and
other unusual charges 26,440 55,742 --
Changes in operating assets and liabilities:
Trade accounts receivable (12,625) 52,038 (19,532)
Inventories (22,496) (18,192) (25,087)
Prepaid expenses and other current assets (2,926) (583) 1,705
Other assets (6,127) 1,189 (9,918)
Accounts payable and accrued expenses 29,438 16,299 3,942
Income taxes (932) 12,372 (20,113)
Pension and other deferred liabilities (569) 6,216 2,050
Net cash provided by operating activities 85,079 169,391 67,694
Investing activities
Purchase of property, plant and equipment (53,376) (72,864) (72,926)
Proceeds from sale of property, plant and equipment 4,572 2,224 2,380
Net cash used in investing activities (48,804) (70,640) (70,546)
Financing activities
Borrowings on credit facility - net 76,383 -- --
Payments on short-term debt (12,908) (26,416) (23,736)
Payments on notes payable (32,214) (26,828) (30,793)
Note payable borrowings -- -- 125,000
Dividends on common stock (19,000) (20,326) (19,512)
Distribution of treasury stock -- 2,072 4,979
Cost of common stock for treasury (53,368) (22,355) (51,638)
Net cash (used in) provided by financing activities (41,107) (93,853) 4,300
Effect of exchange rate changes on cash 103 345 (194)
Net (decrease) increase in cash (4,729) 5,243 1,254
Cash balance at beginning of year 13,852 8,609 7,355
Cash balance at end of year $ 9,123 $ 13,852 $ 8,609
</TABLE>
See notes to consolidated financial statements.
<PAGE> 8
Consolidated Statements of Stockholders' Equity
Russell Corporation AND SUBSIDIARIES
Years ended January 1, 2000, January 2, 1999 and January 3, 1998
<TABLE>
<CAPTION>
Accumulated
Other
Common Paid-in Treasury Retained Comprehensive
(In thousands, except share data) Stock Capital Stock Earnings Income (Loss) Total
<S> <C> <C> <C> <C> <C> <C>
Balance at January 4, 1997 $ 414 $ 50,200 $ (95,057) $ 726,492 $ (2,226) $ 679,823
Comprehensive income:
Net income -- -- -- 54,448 -- 54,448
Foreign currency translation adjustments -- -- -- -- (2,498) (2,498)
Comprehensive income 51,950
Exercise of stock options -- (1,546) -- -- -- (1,546)
Treasury stock acquired (1,821,201 shares) -- -- (51,638) -- -- (51,638)
Treasury stock distributed (234,750 shares) -- -- 6,525 -- -- 6,525
Cash dividends ($.53 per share) -- -- -- (19,512) -- (19,512)
Balance at January 3, 1998 414 48,654 (140,170) 761,428 (4,724) 665,602
Comprehensive loss:
Net loss- -- -- -- (10,379) -- (10,379)
Foreign currency translation adjustments -- -- -- -- 157 157
Comprehensive loss (10,222)
Exercise of stock options -- (360) -- -- -- (360)
Treasury stock acquired (1,041,800 shares) -- -- (22,355) -- -- (22,355)
Treasury stock distributed (98,572 shares) -- -- 2,432 -- -- 2,432
Cash dividends ($.56 per share) -- -- -- (20,326) -- (20,326)
Balance at January 2, 1999 414 48,294 (160,093) 730,723 (4,567) 614,771
Comprehensive income:
Net income -- -- -- 8,388 -- 8,388
Foreign currency translation adjustments -- -- -- -- (1,449) (1,449)
Comprehensive income 6,939
Treasury stock acquired (2,705,361 shares) -- -- (53,368) -- -- (53,368)
Cash dividends ($.56 per share) -- -- -- (19,000) -- (19,000)
Balance at January 1, 2000 $ 414 $ 48,294 $(213,461) $ 720,111 $ (6,016) $ 549,342
</TABLE>
See notes to consolidated financial statements
<PAGE> 9
Notes to Consolidated Statements
RUSSELL CORPORATION AND SUBSIDIARIES
Note 1
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Russell Corporation is an international branded apparel company specializing in
activewear, casualwear and athletic uniforms. Its major brands include Russell
Athletic, JERZEES and Cross Creek. The Company designs and merchandises a
variety of leisure and sports apparel marketed to sporting goods dealers,
department and specialty stores, mass merchandisers, golf pro shops, college
bookstores, screen printers and embroiderers, distributors, mail order houses
and other apparel manufacturers. Products are derived from a combination of
internally produced products, contractors and third-party sources.
Revenue Recognition
The Company records revenues when products are shipped to customers.
Principles of Consolidation
The consolidated financial statements include the accounts of Russell
Corporation and its subsidiaries after the elimination of intercompany accounts
and transactions.
Use of Estimates
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
Inventories
Inventories of finished goods, work-in-process and raw materials are carried at
the lower of cost or market, with cost for a substantial portion of inventories
determined under the Last-In, First-Out (LIFO) method. Certain inventories are
carried under the First-In, First-Out (FIFO) method, or the average cost method,
and were valued at approximately $67,450,000 in 1999 and $59,000,000 in 1998.
Inventories are summarized as follows:
<TABLE>
<CAPTION>
(In thousands) 1999 1998
<S> <C> <C>
Finished goods $ 279,212 $ 288,465
Work-in-process 68,297 58,182
Raw materials and supplies 45,288 54,943
392,797 401,590
Less LIFO reserve (4,956) (30,011)
$ 387,841 $ 371,579
</TABLE>
Property, Plant and Equipment
Provision for depreciation of the principal items of property, plant and
equipment (recorded at cost), including those items held under capital lease
agreements, has been computed generally on the straight-line method at rates
based upon their estimated useful lives. Initial estimated useful lives range
from 25 to 37 years for buildings and from 3 to 12 years for machinery and
equipment. When events and circumstances indicate that the useful lives or
salvage values may have changed, the Company records accelerated depreciation
over the shortened useful life after giving consideration to the revised salvage
values. In 1999, the Company revised the remaining estimated useful lives and
salvage values of plants that were scheduled for closing in connection with the
move to lower cost manufacturing areas, resulting in an increase in depreciation
expense of $7,149,000. (See Note 10.)
Other Assets
Included in other assets is goodwill of approximately $11,672,000 and
$12,610,000, which is net of accumulated amortization of $7,923,000 and
$6,985,000 at January 1, 2000 and January 2, 1999, respectively. Goodwill is
being amortized over 15 to 25 years on a straight-line basis. The carrying value
of goodwill is reviewed if the facts and circumstances suggest that it may be
impaired. If this review indicates that goodwill will not be recoverable based
upon the undiscounted cash flows of the entity acquired over the remaining
amortization period, the Company's carrying value of the goodwill is reduced by
the excess of the carrying value over the fair value of the entity acquired.
During 1998, the Company recorded impairment charges of $22,240,000 related to
goodwill and other intangible assets. (See Note 10.)
Long-Lived Assets
The Company records impairment losses on long-lived assets under the provisions
of Financial Accounting Standards Board (FASB) Statement No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of." When events and circumstances indicate that assets may be impaired, and the
undiscounted cash flows estimated to be generated from those assets are less
than the carrying value of such assets, the Company records an impairment loss
equal to the excess of the carrying value over the asset's fair value. Asset
impairment charges related to the closing of certain facilities and retail store
locations and for the anticipated sale of the Company's interest in shopping
center real estate are described in Note 10. There were no material impairment
losses recorded in 1997.
<PAGE> 10
Income Taxes
The Company accounts for income taxes under the provisions of FASB Statement No.
109, "Accounting for Income Taxes." Under Statement No. 109, deferred tax assets
and liabilities are determined based upon differences between financial
reporting and tax bases of assets and liabilities and are measured at the
enacted tax rates that will be in effect when the taxes are expected to be paid.
Advertising, Marketing and Promotions Expense
The cost of advertising, marketing and promotions is expensed as incurred. The
Company incurred $45,522,000, $37,236,000 and $41,099,000 in such costs during
1999, 1998 and 1997, respectively.
Stock-Based Compensation
The Company issues awards under its incentive compensation plans as described in
Note 7. These stock options and awards are accounted for in accordance with
Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued
to Employees."
Concentrations of Credit Risk and Financial Instruments
Financial instruments which subject the Company to credit risk are primarily
trade accounts receivable. Concentrations of credit risk with respect to trade
accounts receivable are limited due to the large number and diversity of
customers comprising the Company's customer base. Management believes that any
risk associated with trade accounts receivable is adequately provided for in the
allowance for doubtful accounts.
Wal-Mart represented 25.4% and 25.8% of the Company's net accounts receivable at
January 1, 2000 and January 2, 1999, respectively.
HEDGING ACTIVITIES
The Company periodically enters into futures contracts as hedges for its
purchases of cotton inventory. Gains and losses on these hedges are deferred and
reflected in cost of sales as such inventory is sold. (Deferred gains and losses
on such contracts were insignificant at both January 1, 2000 and January 2,
1999.) The Company also utilizes forward purchase contracts in its international
operations to limit the currency risks associated with purchase obligations
relating to inventory. The effects of movements in currency exchange rates on
these instruments are recognized in the period in which the purchase obligations
are satisfied. At January 1, 2000, the Company had no foreign currency exchange
contracts outstanding. (There were no deferred gains or losses associated with
such contracts at January 1, 2000 or January 2, 1999.)
The Company uses interest rate swap agreements to manage interest rate exposure
on long-term debt. The differential to be received, or paid, under the
agreements is accrued as interest rates change and recorded as an adjustment to
interest expense. The related amount payable to, or receivable from, the
counterparties to the agreements is included in other liabilities or assets. The
Company believes that the possibility of credit losses associated with
third-party non-performance is remote. (See Note 4.)
Earnings Per Common Share
The Company reports earnings per share in accordance with FASB Statement No.
128, "Earnings Per Share." Basic earnings per share is computed by using the
weighted-average number of common shares outstanding during the period without
consideration of common stock equivalents. Diluted earnings per share is
computed by using the weighted-average number of common shares outstanding plus
common stock equivalents (employee stock options) unless such stock options are
anti-dilutive. At year end for fiscal years 1999, 1998 and 1997, substantially
all outstanding stock options were anti-dilutive in that their exercise price
was greater than the then current market price.
Fiscal Year
The Company's fiscal year ends on the Saturday nearest to January 1, which
periodically results in a fiscal year of 53 weeks. Fiscal years 1999, 1998 and
1997 ended on January 1, 2000, January 2, 1999 and January 3, 1998,
respectively, and each contained 52 weeks.
New Accounting Pronouncement
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (Statement No. 133). In 1999, the FASB
delayed the effective date of Statement No. 133 until years beginning after June
15, 2000. The Company expects to adopt Statement No. 133 effective after fiscal
2000. Statement No. 133 will require the Company to recognize all derivatives on
the balance sheet at fair value. Derivatives that are not hedges must be
adjusted to fair value through income. If a derivative is a hedge, depending on
the nature of the hedge, changes in the fair value of the derivative will either
be offset against the change in fair value of the hedged asset, liability or
firm commitment through earnings, or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
The Company has not yet completed its analysis of the impact that Statement No.
133 will have on its financial statements.
<PAGE> 11
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to fiscal 1999
presentation. These changes had no impact on previously reported results of
operations or stockholders' equity.
FOREIGN CURRENCIES
Assets and liabilities recorded in foreign currencies on the books of foreign
subsidiaries are translated at the exchange rate on the balance sheet date.
Translation adjustments resulting from this process are charged or credited to
stockholders' equity. Revenues, costs and expenses are translated at average
rates of exchange prevailing during the year. Gains and losses on foreign
currency transactions are included in other expenses.
Note 2
LONG-TERM DEBT
Long-term debt includes the following:
<TABLE>
<CAPTION>
(In thousands) 1999 1998
<S> <C> <C>
Revolving credit facility due
October 15, 2004 $ 76,236 $ --
Notes payable to financial institutions:
6.72% notes due annually through 2002 32,143 42,857
8.83% notes due annually through 1999 -- 10,800
6.65% notes due annually
2001 through 2007 125,000 125,000
6.78% notes due annually
2003 through 2008 100,000 100,000
Variable rate (6.29% at January 1, 2000)
note due semi-annually through 2005 58,950 69,650
Capital lease obligations (variable rate
of 5.65% at January 1, 2000) due 2017 6,950 6,950
399,279 355,257
Less current maturities (21,414) (32,214)
$ 377,865 $ 323,043
</TABLE>
On October 15, 1999, the Company entered into a five-year, $250 million
unsecured revolving credit facility with a group of six banks. The credit
facility assures the Company availability of funds at market-based rates,
provided the Company continues to meet the various covenants set forth in the
credit agreement. Prior to entering into this new credit facility, the Company
was dependent on informal uncommitted lines of credit to finance its working
capital requirements. (See Note 3.) Five of the six participating banks
previously had a relationship with the Company.
The new credit facility consists of a swing line of credit bearing interest at
the banks' current market rate and revolving loans which bear interest at LIBOR
plus a margin ranging from .45% to .90% based on the Company's leverage ratio,
as defined in the credit agreement, at the time of the borrowing. At January 1,
2000, the Company was able to borrow at LIBOR plus .65%. The credit facility
also calls for a facility fee payable quarterly, in arrears, at a rate of .15%
to .30% on the total available facility of $250 million. The facility fee at
January 1, 2000 was .25%.
As of January 1, 2000, the Company had $5,045,000 outstanding under the swing
line of credit at a rate of 5.75%. The remaining $71,191,000 outstanding under
this facility related to three revolving loans. At January 1, 2000, the Company
had $50,000,000, $10,000,000 and $11,191,000 outstanding under these loans at
interest rates of 6.74%, 6.85% and 4.21% which reprice on April 17, 2000,
February 29, 2000 and January 14, 2000, respectively. At January 1, 2000, the
total balance outstanding under this credit facility was $76,236,000 and
$173,764,000 was available for borrowing. The weighted-average interest rates of
borrowings under the new credit facility during 1999 was 6.17%. The
weighted-average interest rate of borrowings outstanding at January 1, 2000 was
6.32%.
The Company's new credit facility contains certain restrictive covenants that
require the maintenance of minimum consolidated tangible net worth; total debt
to earnings before income tax, interest, depreciation and amortization (EBITDA)
ratio; consolidated earnings before income tax and interest (EBIT) to
consolidated interest ratio; and places limitation on dividends and other
borrowings.
The notes payable to financial institutions are unsecured and contain
restrictions on the payment of dividends; incurrence of indebtedness; liens or
leases; acquisition of investments; retirement of capital stock; and the
maintenance of working capital. At January 1, 2000, $38,931,000 of retained
earnings was unrestricted for payment of dividends.
The capital lease obligations relate to land, buildings and machinery and
equipment financed primarily by industrial revenue bonds. The carrying value of
property capitalized under the capital lease obligations amounted to $4,051,000
and $4,241,000 at January 1, 2000 and January 2, 1999, respectively.
<PAGE> 12
Aggregate maturities of long-term debt at January 1, 2000 are as follows for
fiscal years:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
2000 $ 21,414
2001 39,271
2002 39,271
2003 45,224
2004 121,460
Thereafter 132,639
$ 399,279
</TABLE>
Note 3
SHORT-TERM DEBT
Prior to October 15, 1999, the Company could borrow up to approximately $287
million under informal line of credit arrangements with six banks, on such terms
as the Company and the banks mutually agreed. Generally, the arrangements could
be canceled by either party at any time. After the Company entered into its new
credit facility mentioned in Note 2, the Company reduced the number of informal
line of credit agreements from six to two with a maximum availability of
approximately $44 million as of January 1, 2000. There were no outstanding
borrowings under the two remaining informal line of credit agreements at January
1, 2000. At January 2, 1999, amounts outstanding under the line of credit
arrangements totaled $12.9 million. The weighted-average interest rates of bank
borrowings during 1999, 1998 and 1997 were 5.3%, 6.3% and 6.0%, respectively.
The weighted-average interest rate of bank borrowings outstanding at January 2,
1999 was 6.8%.
Note 4
FINANCIAL INSTRUMENTS
Cotton Futures
The Company utilizes commodity futures contracts in connection with estimating
product sales prices in advance of the selling seasons. These transactions
effectively limit the Company's risk associated with future cotton price
increases as well as the benefits of future price decreases. At January 1, 2000,
the Company had outstanding futures contracts that represented only
approximately 2% of its anticipated fiscal year 2000 cotton requirements.
Interest Rate Swap Agreements
The Company utilizes two interest rate swap agreements in the management of
interest rate exposure on long-term debt. The Company entered into a fixed to
floating rate swap agreement in 1992. Under this agreement, which expires August
31, 2002, the Company receives a fixed rate payment of 6.14% on the outstanding
balance of the related debt (approximately $32 million and $43 million at
January 1, 2000 and January 2, 1999, respectively) and pays a floating rate
based upon LIBOR, as determined at six month intervals.
In 1995, the Company entered into a floating to fixed rate swap agreement. Under
this agreement, which expires June 30, 2005, the Company receives a variable
rate based upon LIBOR plus .29%, as determined quarterly, and pays a fixed rate
of 6.67% on the outstanding balance of the related debt (approximately $59
million and $70 million at January 1, 2000 and January 2, 1999, respectively).
These agreements, when combined, effectively lowered the weighted-average
interest rate on the Company's long-term debt from 6.67% to 6.34%, 6.74% to
6.47% and 6.83% to 6.64% in 1999, 1998 and 1997, respectively. The Company
believes that future changes in interest rates will not have a material impact
on the Company's consolidated financial position or results of operations. The
fair value of the swap agreements, as indicated below, is the estimated
termination value of the agreements at the balance sheet date and may not be
indicative of the current termination values. Any gain or loss on the agreements
will be recognized when realized.
Other Financial Instruments
At January 1, 2000 and January 2, 1999, the carrying value of financial
instruments such as cash, trade accounts receivable and payables approximated
their fair values, based on the short-term maturities of these instruments. The
fair value of the Company's long-term debt is estimated using discounted cash
flow analyses, based upon the Company's current incremental borrowing rates for
similar types of borrowing arrangements. The following table summarizes fair
value information for the Company's long-term debt and interest rate swap
agreements:
<TABLE>
<CAPTION>
1999 1998
Carrying Fair Carrying Fair
(In thousands) Value Value Value Value
<S> <C> <C> <C> <C>
Long-term debt $399,279 $405,281 $355,257 $354,503
Interest-rate swap
agreement terminating
August 31, 2002 5,551 5,188 4,407 7,084
Interest-rate swap
agreement terminating
June 30, 2005 -- 574 -- (2,478)
</TABLE>
<PAGE> 13
Note 5
EMPLOYEE RETIREMENT BENEFITS
The Company has a qualified, noncontributory, defined benefit pension plan
(Retirement Plan) covering substantially all of its United States employees and
a savings plan that is qualified under Section 401 (k) of the Internal Revenue
Code (Savings Plan).
Benefits for the Retirement Plan are based upon years of service and the
employee's highest consecutive five years of compensation during the last ten
years of employment. The Company's funding policy for the Retirement Plan is to
contribute annually the maximum amount that can be deducted for federal income
tax purposes. Contributions are intended to provide not only for benefits
attributed to service to date, but also for those expected to be earned in the
future. Net pension cost of the Retirement Plan included the following
components:
<TABLE>
<CAPTION>
(In thousands) 1999 1998
<S> <C> <C>
Change in benefit obligation
Benefit obligation at beginning of year $ 138,968 $ 114,966
Service cost 6,419 5,807
Interest cost 9,195 8,142
Actuarial (gain) loss (12,625) 16,165
Benefits paid (7,105) (6,112)
Curtailment benefit (2,603) --
Benefit obligation at end of year 132,249 138,968
Change in plan assets
Fair value of plan assets at
beginning of year 125,721 118,063
Actual return on plan assets 14,113 12,028
Company contributions 1,072 1,742
Benefits paid (7,105) (6,112)
Fair value of plan assets at end of year 133,801 125,721
Funded status of the plan
overfunded (underfunded) 1,552 (13,246)
Unrecognized prior service cost 2,364 3,394
Unrecognized net actuarial gain (22,072) (5,780)
Unrecognized transition asset (3,021) (3,699)
Accrued benefit cost $ (21,177) $ (19,331)
<CAPTION>
Weighted-average assumptions
as of December 31 1999 1998
<S> <C> <C>
Discount rate 7.50% 6.75%
Expected return on plan assets 9.00% 9.00%
Rate of compensation increase 4.00% 3.75%
</TABLE>
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
<S> <C> <C> <C>
Components of net
periodic benefit cost
Service cost $ 6,419 $ 5,807 $ 5,916
Interest cost 9,195 8,142 7,800
Expected return on plan assets (10,446) (9,851) (9,229)
Net amortization and deferral (315) (429) (315)
Effect of curtailment (1,935) -- --
Net pension cost $ 2,918 $ 3,669 $ 4,172
</TABLE>
The primary impact of benefit obligations, the actuarial gain, was affected by a
change in assumptions in the discount rate (from 6.75% to 7.50% in 1999)
resulting in a decreased benefit obligation of approximately $15.7 million.
Other changes (rate of compensation increase assumptions) were all updated to
better reflect anticipated experience resulting in increased obligations of $3.1
million. A curtailment resulting from reductions in employment with the move of
apparel assembly offshore is reflected as reduced service costs.
<PAGE> 14
Plan assets at January 1, 2000 include 600,960 shares of the Company's common
stock having a market value of $10,066,000. Dividends paid to the plan by the
Company were $337,000 for 1999 and 1998, respectively.
The Company's Savings Plan allows substantially all United States employees to
defer portions of their annual compensation and to participate in Company
matching and discretionary contributions. Compensation expense associated with
this plan was $1,213,000, $1,426,000 and $1,286,000 in 1999, 1998 and 1997,
respectively.
Note 6
INCOME TAXES
Foreign operations contributed approximately $5,367,000, $(7,060,000) and
$(1,989,000) to the Company's income (loss) before income taxes in 1999, 1998
and 1997, respectively.
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
Currently Currently Currently
(In thousands) Payable Deferred Payable Deferred Payable Deferred
<S> <C> <C> <C> <C> <C> <C>
Federal $8,731 $ 252 $16,142 $(15,105) $24,136 $ 6,160
State 791 (2,514) 3,391 (2,210) 3,233 825
Foreign 396 4,286 149 (2,253) 319 (769)
Totals $9,918 $ 2,024 $19,682 $(19,568) $27,688 $ 6,216
</TABLE>
The reconciliation of income tax computed by applying the statutory federal
income tax rate of 35% to income before income taxes to total income tax expense
is as follows:
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
<S> <C> <C> <C>
Taxes (benefit) at statutory rate on
income before income taxes $ 7,115 $ (3,593) $ 30,923
State income taxes, net of
federal income tax benefit (1,120) 1,174 2,637
Goodwill 328 1,622 425
Change in valuation allowance on
foreign NOLs 3,948 -- --
Other - net 1,671 911 (81)
$ 11,942 $ 114 $ 33,904
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets as of January 1, 2000 and
January 2, 1999 are as follows:
<TABLE>
<CAPTION>
(In thousands) 1999 1998
<S> <C> <C>
Deferred tax liabilities:
Property, plant and equipment $ 50,756 $ 52,366
Inventories 3,846 2,691
Accounts receivable 503 429
Other 697 --
Total deferred tax liabilities 55,802 55,486
Deferred tax assets:
Pension and postemployment obligations 11,048 10,176
Inventories 3,996 6,849
Net operating losses 9,180 5,843
Employee benefits 4,372 3,809
Capital loss and credit carryforwards -- 233
Other 4,127 3,573
Total deferred tax assets 32,723 30,483
Valuation allowance for deferred tax assets (4,181) (233)
Net deferred tax assets 28,542 30,250
Net deferred tax liabilities $ 27,260 $ 25,236
</TABLE>
<PAGE> 15
Net operating loss carryforwards (NOLs) are available to offset future earnings
within the time periods specified by law. At January 1, 2000, the Company had
U.S. state NOLs of approximately $72,000,000 expiring in 2013 - 2014.
International NOLs total approximately $17,000,000. The International NOLs
pertain primarily to the Company's United Kingdom and Australian operations.
NOLs can be carried forward indefinitely in the United Kingdom and Australia.
In the fourth quarter of fiscal year 1999, the Company announced a restructuring
of its European operations (See Note 10). As a result of the restructuring, the
Company increased its valuation allowance related to these NOL carryforwards to
$4,181,000 because, under the current global tax structure, these NOLs will most
likely generate no global tax savings.
Note 7
STOCK RIGHTS PLAN AND EXECUTION LONG-TERM INCENTIVE PLAN
On September 15, 1999, the Board of Directors declared a dividend, which was
issued on October 25, 1999, of one Right for each share of common stock
outstanding, which, when exercisable, entitles the holder to purchase a unit of
one one-hundredth share of Series A Junior Participating Preferred Stock, par
value $.01, at a purchase price of $85. Upon certain events relating to the
acquisition of, or right to acquire, beneficial ownership of 15% or more of the
Company's outstanding common stock by a third party, or a change in control of
the Company, the Rights entitle the holder to acquire, after the Rights are no
longer redeemable by the Company, shares of common stock for each Right held at
a significant discount to market. The Rights will expire on October 25, 2009,
unless redeemed earlier by the Company at $.01 per Right under certain
circumstances. The Rights were issued to replace rights previously issued to
purchase Series A Junior Participating Preferred Stock which rights expired on
October 25, 1999.
During 1993, the Company's shareholders approved the 1993 Executive Long-Term
Incentive Plan (1993 Plan). Persons eligible to participate in the 1993 Plan
include all officers and key employees of the Company and its subsidiaries. The
1993 Plan permits the issuance of awards in several forms including restricted
stock, incentive stock options, non-qualified stock options, stock appreciation
rights (SARs) and performance shares and performance unit awards. Under the 1993
Plan and predecessor stock option plans, a total of 4,253,210 and 4,257,710
shares of common stock were reserved for issuance at January 1, 2000 and January
2, 1999, respectively. The options are granted at a price equal to the stock's
fair market value at the date of grant. All options, except the ones granted in
1999, are exercisable two years after the date of grant and expire 10 years
after the date of grant. The stock options that were granted during 1999 are
exercisable equally over four years and expire 10 years after the date of grant.
The following table summarizes the status of options under the 1993 Plan and
predecessor plans:
<TABLE>
<CAPTION>
1999 1998 1997
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of year 2,394,416 $ 27.02 1,414,950 $ 28.21 1,452,550 $ 26.55
Granted at fair value 935,650 $ 19.82 999,766 $ 25.34 277,700 $ 30.88
Exercised -- -- 20,300 $ 27.74 237,650 $ 21.20
Expired 4,500 $ 22.06 -- -- -- --
Forfeited 346,300 $ 26.24 -- -- 77,650 $ 28.20
Outstanding at
end of year 2,979,266 $ 25.06 2,394,416 $ 27.02 1,414,950 $ 28.21
Exercisable at
end of year 1,142,750 $ 28.20 1,133,350 $ 27.60 891,250 $ 27.71
</TABLE>
At January 1, 2000, options outstanding were exercisable at prices which ranged
from $26.38 to $30.88 per share and had a weighted-average remaining contractual
life of 4.4 years. Performance units which have been awarded to officers and
management of the Company amount to 1,644,500 and 2,454,500 shares at January 1,
2000 and January 2, 1999, respectively. No compensation expense with respect to
these units was earned during 1999, 1998 or 1997. SARs are also available for
grants to officers and management. To date, none have been granted. SARs carry
an award of $1 each and permit the optionee to surrender an exercisable option
for a cash or Company stock award equal to the difference between the market
price and option price when the right is exercised, provided certain performance
measures are achieved.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," (Statement No. 123) provides an alternative to APB Opinion No. 25
in accounting for stock-based compensation issued to employees. The statement
allows for a fair value based method of accounting for employee stock options
and similar equity instruments. However, for companies that continue to follow
the accounting provisions of APB Opinion No. 25, Statement No. 123 requires
disclosure of the pro forma effect on net income and earnings per share as if
the accounting provisions of the fair value method of Statement No. 123 had been
employed. For the purposes of this disclosure, the fair value of the Company's
employee stock options was estimated at the date of grant using an option
<PAGE> 16
pricing model. The fair values derived for options granted during fiscal years
1999, 1998 and 1997 and weighted-average assumptions used to determine these
values were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Risk-free interest rate 5.5% 5.2% 5.4%
Dividend yield 3.0% 2.2% 1.8%
Volatility factor .229 .198 .186
Weighted-average expected
life of options 10 years 10 years 10 years
Estimated fair value per option $6.01 $7.40 $9.69
</TABLE>
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information follows:
<TABLE>
<CAPTION>
(In thousands,
except per share data) 1999 1998 1997
<S> <C> <C> <C>
Pro forma net income (loss) $ 4,430 $ (12,798) $ 52,790
Pro forma income (loss) per share:
Basic $ .13 $ (.35) $ 1.43
Diluted $ .13 $ (.35) $ 1.42
</TABLE>
Under the Russell Corporation 1997 Non-Employee Directors' Stock Grant, Stock
Option and Deferred Compensation Plan (the "Directors' Plan"), which was adopted
by the Board of Directors on July 23, 1997, each non-employee director of the
Company (an "Eligible Director") receives annually (i) shares of common stock
having a value of $5,000, based on the market value of the common stock on the
date of grant and (ii) an option to purchase shares of common stock, exercisable
for 10 years at a price equal to the market value of the common stock on the
date of grant, having, based on the number of shares subject thereto, an
economic value of $5,000. Under the Directors' Plan, 1,936 and 1,456 shares of
stock grants were issued in 1999 and 1998 and options to purchase an aggregate
of 4,768 and 3,768 shares of common stock at a price of $20.81 and $28.84 per
share for 1999 and 1998, respectively, were granted. Options to purchase an
aggregate of 4,768 and 3,768 shares of common stock at a price of $20.81 and
$28.84 for 1999 and 1998, respectively, are presently outstanding under the
Directors' Plan. Of the 200,000 shares of common stock originally authorized to
be issued under the Directors' Plan, 195,240 shares remain available for
issuance.
Note 8
SUPPLEMENTAL CASH FLOW INFORMATION
Net cash provided by operating activities in the consolidated statements of cash
flows reflects cash payments for interest and income taxes as follows:
<TABLE>
<CAPTION>
(In thousands) 1999 1998 1997
<S> <C> <C> <C>
Interest $28,849 $28,929 $29,114
Income taxes - net of refunds 11,081 9,177 49,699
</TABLE>
Note 9
COMMITMENTS AND CONTINGENCIES
At January 1, 2000, the Company had commitments for the acquisition of property
and equipment totaling $7,234,000 and was committed under noncancelable
operating leases with initial or remaining terms of one year or more to minimum
rental payments by fiscal years as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
2000 $ 6,849
2001 4,109
2002 2,870
2003 1,911
2004 1,567
Thereafter 4,632
$21,938
</TABLE>
The Company had $11,230,000 and $26,738,000 outstanding under letters of credit
for the purchase of inventories at January 1, 2000 and January 2, 1999,
respectively.
Lease and rental expense for fiscal years 1999, 1998 and 1997 was $8,962,000,
$9,943,000 and $10,740,000, respectively.
<PAGE> 17
In November 1998, a jury in Jefferson County, Alabama returned a verdict in
Sullivan, et al. V. Russell Corporation, et al. Five plaintiff families were
awarded a total of $155,200 in compensatory damages for property damage and
$52,398,000 in punitive damages from the three defendants, Russell Corporation,
Avondale Mills, Inc. and Alabama Power Company. Allegations in the case were
that textile discharges of two of the defendants, including Russell Corporation,
which were treated at a wastewater treatment plant of the City of Alexander
City, Alabama and thereafter discharged into Lake Martin, constituted a nuisance
and indirect trespass. Alabama Power Company, the third defendant, was alleged
to have allowed the nuisance and trespass to continue as the owner of the land
under the lake. The plaintiffs alleged mental anguish but no damages were
granted for this claim. No allegation of personal injury was made in the case.
The Company believes that the verdict is contrary to the evidence presented in
the case and, under applicable law, no damages should have been awarded. The
Company's appeal is pending before the Alabama Supreme Court. If such appeal
proves to be unsuccessful, damages associated with this matter could have a
significant adverse effect on the Company's future results from operations and
its ability to comply with certain debt covenant requirements.
As management believes that the amount of the final verdict should be overturned
on appeal or the amount of the final verdict should be significantly reduced, no
immediate assessment can be made of the impact on the Company's consolidated
financial statements, liquidity or the Company's ability to comply with its loan
agreements. Accordingly, no accrual for this contingency has been recorded as of
January 1, 2000.
On February 23, 1999, a similar law suit was filed in Jefferson County, Alabama
by two former residents of the same residential subdivision, and on January 13,
2000, another lawsuit was filed in Jefferson County, Alabama by 15 families
owning property adjacent to Lake Martin. The suits seek unspecified damages for
alleged nuisance and trespass. The Company plans to vigorously defend these
suits.
By letter dated January 13, 2000, the Company was notified by the United States
Department of Justice (DOJ) that the DOJ intended to institute legal proceedings
against the Company and certain other parties alleging violations by those
parties of the Clean Water Act in connection with the treatment and discharge of
waste at a water treatment facility operated by the City of Alexander City,
Alabama. Preliminary discussions are being held with the DOJ with regard to the
proposed suit by the DOJ. The Company believes it is in compliance with the
Clean Water Act and will vigorously oppose the imposition of any monetary
penalties or injunctive relief in any lawsuit that may be filed.
Note 10
RESTRUCTURING, ASSET IMPAIRMENT AND OTHER UNUSUAL CHARGES
On July 22, 1998, the Company announced the Board of Directors had approved a
three-year restructuring and reorganization plan to improve the Company's global
competitiveness.
The charges reflected in the statements of operations are as follows:
<TABLE>
<CAPTION>
(In thousands) 1999 1998
<S> <C> <C>
Restructuring Charges:
Employee termination charges $17,542 $ 8,088
Exit costs related to facilities 11,743 4,480
Termination of certain licenses and contracts -- 7,257
$29,285 $19,825
Asset Impairment Charges:
Impairment of facilities used in operations $13,389 $ 1,553
Impairment of facilities and equipment
held for disposal 7,921 3,628
Impairment of intangible assets -- 22,240
$21,310 $27,421
Other Unusual Charges:
Inventory losses including
shipping and warehousing costs $ 4,988 $16,109
Disposition of receivables -- 11,120
Accelerated depreciation on facilities
and equipment to be taken out of service 7,149 --
Expenses associated with the establishment
of dual headquarters 6,088 --
Charges related to retirement and subsequent
replacement of CEO(1) -- 8,000
Other 1,901 532
$20,126 $35,761
TOTALS BEFORE TAX $70,721 $83,007
TOTALS AFTER TAX $46,632 $52,957
</TABLE>
(1) These charges were not an element of the restructuring and reorganization
plan previously described.
<PAGE> 18
These charges have been classified in the statements of operations as follows:
<TABLE>
<CAPTION>
(In thousands) 1999 1998
<S> <C> <C>
Cost of goods sold $32,039 $22,227
Selling, general and administrative expenses 6,088 21,318
Other - net 32,594 39,462
$70,721 $83,007
</TABLE>
Charges recorded by segments were recorded as follows:
<TABLE>
<CAPTION>
1999
Asset Other
Restructuring Impairment Unusual
(In thousands) Charges Charges Charges
<S> <C> <C> <C>
Activewear $23,544 $16,612 $ 8,174
International 2,879 2,751 5,864
All Other 2,862 1,947 6,088
$29,285 $21,310 $20,126
</TABLE>
<TABLE>
<CAPTION>
1998
Asset Other
Restructuring Impairment Unusual
(In thousands) Charges Charges Charges
<S> <C> <C> <C>
Activewear $19,311 $25,755 $24,860
International 514 622 2,901
All Other - 1,044 8,000
$19,825 $27,421 $35,761
</TABLE>
A summary of the activity related to the restructuring and asset impairment
charges is as follows:
<TABLE>
<CAPTION>
Liability Liability
1998 1998 At 1999 1999 At
Expense Amount January 2, Expense Amount January 1,
(In thousands) Incurred Paid 1999 Incurred Paid 2000
<S> <C> <C> <C> <C> <C> <C>
Cash Related:
Exit costs related
to facilities $ 1,816 $ 1,282 $ 534 $11,743 $11,743 $ 534
Employee termination
charges 8,088 3,521 4,567 17,542 17,339 4,770
Other 7,258 6,035 1,223 - - 1,223
$17,162 $10,838 $6,324 $29,285 $29,082 $6,527
(In thousands) 1999 1998
Non-Cash Related:
Impairment of facilities $21,310 $ 5,180
Impairment of intangible assets - 22,240
Other - 2,664
$21,310 $30,084
</TABLE>
The restructuring charges in 1999 relate primarily to plant closings in the move
to lower cost geographic areas and the reconfiguration of distribution
facilities. There were no significant revenue losses related to the 1999
restructuring changes.
Revenues and operating losses for 1998 related to exited activities with
separately identifiable operations totaled $46,366,000 and $(21,032,000).
Restructuring Charges
In 1999, the Company continued to move sewing operations to a combination of
owned and contractor locations in Central America and Mexico. The Company
closed 14 domestic apparel operations and announced the closure of two in
Scotland as mentioned below. The Company also closed two yarn manufacturing
facilities and one cloth fabrication facility. Reconfiguration of the
distribution facilities continued throughout the year and is nearing
completion as planned. In 1999, approximately 2,200 employees were notified of
their termination and received detailed information on their individual
severance packages when the facility closings were announced. The Company
expensed approximately $17.5 million in fiscal year 1999 related to severance
charges from employee terminations, of which, approximately $3.0 million
related to health insurance costs from prior year employee terminations where
the estimated costs were lower than actual costs.
Also during 1999, the Company incurred approximately $4.1 million associated
with the removal of equipment from a distribution facility and approximately
$7.7 million associated with ongoing maintenance costs of facilities that were
being held for sale during the year. On October 15, 1999, the Company announced
that it would be closing its Scottish manufacturing plants in Bo'ness and
Livingston by the end of the year 2000. This decision comes as part of the
Company's continued efforts associated with a strategic multi-year restructuring
plan announced a year ago on July 22, 1998. Due to the ongoing impact of
increased competition within the European marketplace and the fact that many of
the Company's competitors now source their product requirements from developing
countries, the economics of maintaining a manufacturing base in Scotland are no
longer viable. The Company plans to source 100% of its European product
requirements from contractors or joint ventures.
<PAGE> 19
During 1998, the Company moved substantial sewing operations to a combination of
owned and contractor locations in Central America and Mexico as part of its
restructuring and reorganization plan to improve global competitiveness by
reducing costs. The Company closed four domestic sewing facilities and
reconfigured two others in 1998. In order to further control costs, the plan
realigned and consolidated certain manufacturing and distribution functions and
facilities to accommodate a more orderly and efficient product flow of goods
throughout the manufacturing and distribution processes. The restructuring and
reorganization plan determined the Company should exit 34 Company operated
retail or outlet stores in 13 states. In total, approximately 2,000 employees of
the facilities closed during 1998 were notified of their termination and
received detailed information on their individual severance packages when the
related facility closings were announced. Restructuring charges were recorded as
a result of the plan to reduce the domestic production capacity and increase the
offshore assembly capacity. The facilities closed included manufacturing plants,
distribution centers and offices and retail stores. Also, as part of the plan,
the Company discontinued certain licensed products in 1998 and recorded charges
for the termination of the related agreements.
Asset Impairment Charges
In 1999, the Company recorded asset impairment charges of $13.4 million related
to the reconfiguration of distribution facilities. The reconfiguration continued
throughout the year and is nearing completion.
Assets held for disposal at January 1, 2000, are carried at $42.9 million and
are expected to be disposed of during fiscal year 2000. Charges for impairment
of assets held for disposal of $7.9 million and $3.6 million were recorded in
1999 and 1998, respectively, when the facility or equipment was removed from
operations. These assets have been written down to their fair values less the
cost to sell them and depreciation was suspended as of the date they were first
classified as held for disposal. Fair values used in recording asset impairment
charges were determined by reference to discounted cash flow projections,
third-party appraisals or prices of comparable facilities. Net gains and losses
recorded during 1999 associated with the selling of facilities and equipment
that were being held for disposal at the beginning of fiscal year 1999 were not
material.
In 1998, the Company recorded asset impairment charges of approximately $1.6
million related to shopping center real estate which was being held for
disposal. The carrying value of certain of these assets exceeded the fair value
of the assets. Fair values were determined by utilizing cash flow projections,
estimated disposal proceeds or third-party appraisals.
Asset impairment charges of $22.2 million also were recorded for intangible
assets related to the discontinued use of previously purchased trademarks and
goodwill recorded as a result of business combinations. All facilities and
products acquired in these business combinations were sold, closed or held for
disposal at January 1, 2000. For goodwill associated with property and
equipment, the projected future cash flow from the sale of the facilities
indicated that the goodwill had no value. For other intangibles, such as
trademarks related to certain products, the projected cash flow was
substantially reduced as a result of the restructuring and reorganization plan
eliminating those products from operations thus reducing the fair value of such
intangibles to a nominal amount.
Other Unusual Charges
As a result of exiting certain product lines, primarily in Europe, the Company
recorded special charges of $5.0 million during fiscal year 1999 to reduce the
carrying value of discontinued inventories to their estimated net realizable
value. As plans were finalized in 1999 to close plants, the Company recorded
accelerated depreciation of $7.1 million recognizing the estimated lower salvage
values over the remaining operating lives on the facilities that had not been
announced. In addition, the Company incurred $6.1 million of costs associated
with the move to Atlanta for the establishment of its dual headquarters.
As a result of exiting certain products, brands and trademarks, the Company
recorded special charges in the third and fourth quarters of fiscal 1998 to
reduce the carrying value of discontinued inventory to its estimated net
realizable value. The inventory consisted primarily of headwear products under a
discontinued brand, items held at retail locations and inventory produced to
satisfy the terms of certain licensing agreements which the Company terminated.
<PAGE> 20
During fiscal year 1998, management implemented more stringent credit and
collection policies that significantly restrict shipments to slow paying
customers and intensify and accelerate collection efforts through agencies and
other means. In connection with implementation of the new policies, the Company
recorded a charge of approximately $11.1 million to write off affected customer
accounts.
The Company also recorded charges of approximately $8 million during fiscal year
1998 related to the retirement and subsequent replacement of the Chairman,
President and Chief Executive Officer of the Company which was not an element of
the restructuring and reorganization plan previously described. These charges
are included in selling, general and administrative expenses.
Note 11
SEGMENT INFORMATION
Description of the Types of Products from Which Each Reportable Segment
Derives its Revenues
Russell Corporation has two reportable segments: activewear and international
operations. The Company's activewear segment consists of three strategic
business units that sell the following products to sporting goods dealers,
department and specialty stores, mass merchants, wholesale clubs, college
bookstores, screen printers, distributors, golf pro shops and mail order
catalogs: T-shirts, fleece products (such as sweatshirts and pants), athletic
uniforms and knit shirts. The international strategic business unit manufactures
and distributes activewear products to international locations in approximately
50 countries. Other segments that do not meet the quantitative thresholds for
determining reportable segments sell fabrics to other apparel manufacturers, and
manufacture and sell socks to mass merchants. These are included in the "All
Other" data presented herein.
Measurement of Segment Profit or Loss and Segment Assets
The Company evaluates performance and allocates resources based on profit or
loss from operations before interest, income taxes, restructuring,
reorganization and other unusual charges described in Note 10 (Segment EBIT).
The accounting policies of the reportable segments are the same as those
described in the summary of significant accounting policies except that
inventories are valued on a First-In, First-Out (FIFO) basis at the segment
level, where a substantial portion of inventories are valued on a Last-In,
First-Out (LIFO) basis in the consolidated financial statements. Intersegment
transfers are recorded at the Company's cost; there is no intercompany profit or
loss on intersegment transfers. During fiscal years 1998 and 1997, the Company
did not allocate assets to segments but did allocate depreciation for the
purpose of determining each segment's earnings before interest, depreciation and
income taxes. Accordingly, segment asset data is not available for fiscal years
1998 and 1997.
Factors Management Used
to Identify the Enterprise's Reportable Segments
The Company's reportable segments offer various similar products and/or operate
in various locations. The reportable segments are each managed separately
because of the geographic locations they serve.
Segment Financial Information for the Year ended January 1, 2000
<TABLE>
<CAPTION>
(In thousands) Activewear International All Other Total
<S> <C> <C> <C> <C>
Net sales $878,072 $123,701 $140,461 $1,142,234
Depreciation and
amortization
expense 49,251 2,680 4,811 56,742
Segment EBIT 114,084 9,154 19,426 142,664
Total Assets 947,401 114,013 91,717 1,153,131
1999 purchases of
long-lived assets 49,368 1,616 2,392 53,376
</TABLE>
Segment Financial Information for the Year ended January 2, 1999
<TABLE>
<CAPTION>
(In thousands) Activewear International All Other Total
<S> <C> <C> <C> <C>
Net sales $908,826 $ 126,332 $144,960 $1,180,118
Depreciation and
amortization
expense 66,445 3,199 4,724 74,368
Segment EBIT (loss) 101,518 (4,603) 19,640 116,555
</TABLE>
<PAGE> 21
Segment Financial Information for the Year ended January 3, 1998
<TABLE>
<CAPTION>
(In thousands) Activewear International All Other Total
<S> <C> <C> <C> <C>
Net sales $ 969,292 $ 127,752 $ 131,154 $1,228,198
Depreciation and
amortization
expense 66,377 3,199 4,845 74,421
Segment EBIT (loss) 99,880 (1,665) 16,700 114,915
</TABLE>
<TABLE>
<CAPTION>
Profit or Loss
(In thousands) 1999 1998 1997
<S> <C> <C> <C>
Total segment EBIT $ 142,664 $ 116,555 $ 114,915
Restructuring, asset
impairment and other
unusual charges (70,721) (83,007) --
Other loss -- -- (1,056)
Unallocated amounts:
Corporate expenses (23,182) (16,605) --
LIFO reserves (371) 616 2,658
Interest expense (28,060) (27,824) (28,165)
Income (loss) before
income taxes $ 20,330 $ (10,265) $ 88,352
</TABLE>
<TABLE>
<CAPTION>
Geographic Information
(In thousands) 1999 1998 1997
<S> <C> <C> <C>
net sales:
United States $ 1,018,533 $ 1,053,786 $ 1,100,446
Europe 101,496 104,341 97,355
Other foreign countries 22,205 21,991 30,397
Consolidated total $ 1,142,234 $ 1,180,118 $ 1,228,198
</TABLE>
<TABLE>
<CAPTION>
(In thousands) 1999 1998
<S> <C> <C>
Long-Lived Assets:
United States $464,953 $496,393
Europe 17,046 18,339
Other foreign countries 601 5,255
Consolidated total $482,600 $519,987
</TABLE>
Revenues are attributed to countries based on the location of customers.
Major Customer
Net sales to Wal-Mart represent approximately 19.4%, 19.0% and 18.8% of the
Company's consolidated net sales for the years ended January 1, 2000, January 2,
1999 and January 3, 1998, respectively.
The following is a summary of unaudited quarterly results of operations (in
thousands, except per share data):
<TABLE>
<CAPTION>
Quarter ended
Year ended January 1, 2000 April 4 July 4 October 3 January 1
<S> <C> <C> <C> <C>
Net sales $ 233,177 $260,449 $344,915 $303,693
Gross profit 56,382 60,673 103,429 76,789
Net income (loss) (14,351) 1,443 19,937 1,359
Net income (loss) per common share:
(basic and diluted) $ (.41) $ .04 $ .60 $ .04
Restructuring, asset
impairment and other
unusual charges,
described in Note 10,
on an after-tax basis
which are included
in the above net
income (loss) $ 17,941 $ 4,570 $ 3,964 $ 20,157
</TABLE>
<PAGE> 22
<TABLE>
<CAPTION>
Quarter ended
Year ended January 2, 1999 April 5 July 5 October 4 January 2
<S> <C> <C> <C> <C>
Net sales $256,229 $271,824 $ 377,208 $ 274,857
Gross profit 72,430 73,236 96,351 59,995
Net income (loss) 1,849 6,560 (14,156) (4,632)
Net income (loss)
per common share:
(basic and diluted) $ .05 $ .18 $ (.39) $ (.13)
Restructuring, asset
impairment and other
unusual charges,
described in Note 10,
on an after-tax basis
which are included
in the above net
income (loss) $ 4,960 $ -- $ 39,407 $ 8,590
</TABLE>
<PAGE> 23
Report of Ernst & Young LLP,
Independent Auditors
RUSSELL CORPORATION AND SUBSIDIARIES
THE BOARD OF DIRECTORS
AND SHAREHOLDERS
RUSSELL CORPORATION
We have audited the accompanying consolidated balance sheets of Russell
Corporation and Subsidiaries as of January 1, 2000, and January 2, 1999, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three fiscal years in the period ended January 1, 2000.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Russell
Corporation and Subsidiaries at January 1, 2000, and January 2, 1999, and the
consolidated results of their operations and their cash flows for each of the
three fiscal years in the period ended January 1, 2000, in conformity with
accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
February 4, 2000
Birmingham, Alabama
<PAGE> 1
EXHIBIT (21)
LIST OF SIGNIFICANT SUBSIDIARIES
Cross Creek Apparel, Inc. (incorporated in North Carolina)
DeSoto Mills, Inc. (incorporated in Alabama)
Russell Europe Limited (organized under the laws of the United Kingdom)
IV-15
<PAGE> 1
EXHIBIT (23)
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Russell Corporation of our report dated February 4, 2000, included in the
1999 Annual Report to Shareholders of Russell Corporation.
Our audit also included the financial statement schedule of Russell Corporation
listed in Item 14(a). This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration
Statements of Russell Corporation listed below of our report dated February 4,
2000, with respect to the consolidated financial statements incorporated herein
by reference, and our report included in the preceding paragraph with respect
to the financial statement schedule included in this Annual Report (Form 10-K)
of Russell Corporation.
Form S-8 Registration Statement No. 33-24898
Form S-3 Registration Statement No. 33-47906
Form S-3 Registration Statement No. 33-54361
Form S-8 Registration Statement No. 33-69679
Form S-8 Registration Statement No. 333-89765
Form S-8 Registration Statement No. 333-30236
Form S-8 Registration Statement No. 333-30238
/s/ Ernst & Young LLP
Birmingham, Alabama
March 29, 2000
IV-16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RUSSELL
CORPORATION, INC. CONSOLIDATED BALANCED SHEET AND INCOME STATEMENT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-END> JAN-01-2000
<CASH> 9,123
<SECURITIES> 715
<RECEIVABLES> 199,715
<ALLOWANCES> 7,912
<INVENTORY> 387,841
<CURRENT-ASSETS> 615,122
<PP&E> 1,229,943
<DEPRECIATION> 747,343
<TOTAL-ASSETS> 1,153,131
<CURRENT-LIABILITIES> 155,081
<BONDS> 377,865
0
0
<COMMON> 414
<OTHER-SE> 548,928
<TOTAL-LIABILITY-AND-EQUITY> 1,153,131
<SALES> 1,142,234
<TOTAL-REVENUES> 1,142,234
<CGS> 844,961
<TOTAL-COSTS> 217,571
<OTHER-EXPENSES> 31,312
<LOSS-PROVISION> 412
<INTEREST-EXPENSE> 28,060
<INCOME-PRETAX> 20,330
<INCOME-TAX> 11,942
<INCOME-CONTINUING> 8,388
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,388
<EPS-BASIC> .25
<EPS-DILUTED> .25
</TABLE>
<PAGE> 1
PROXY STATEMENT FOR APRIL 19, 2000
ANNUAL SHAREHOLDERS' MEETING
IV-17
<PAGE> 2
[RUSSELL LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
RUSSELL CORPORATION
To the Shareholders of Russell Corporation:
Notice is hereby given that the Annual Meeting of the Shareholders of
Russell Corporation will be held on Wednesday, April 19, 2000, at 11:00 a.m.,
Central Daylight Time, at the general offices of the Company in Alexander
City, Alabama, for the following purposes:
(1) To elect four directors to the Board of Directors for three year
terms;
(2) To vote on the Russell Corporation 2000 Employee Stock Purchase
Plan;
(3) To vote on the amended and restated Russell Corporation 1993
Executive Long-Term Incentive Plan; and
(4) To transact such other business as may properly come before the
meeting.
Holders of the Common Stock of the Company at the close of business on
March 1, 2000, are entitled to notice of and to vote upon all matters at the
Annual Meeting.
You are cordially invited to attend the Annual Meeting so that we may
have the opportunity to meet with you and discuss the affairs of the Company.
WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY SO THAT THE COMPANY MAY BE ASSURED OF THE PRESENCE OF A QUORUM
AT THE ANNUAL MEETING. A stamped, addressed envelope is enclosed for your
convenience in returning your proxy.
BY ORDER OF THE BOARD OF DIRECTORS
FLOYD G. HOFFMAN
Senior Vice President,
General Counsel and Secretary
Alexander City, Alabama
March 16, 2000
<PAGE> 3
RUSSELL CORPORATION
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD APRIL 19, 2000
This Proxy Statement is furnished by and the accompanying proxy is
solicited on behalf of the Board of Directors of Russell Corporation, an
Alabama corporation (the "Company"), for use at its Annual Meeting of
Shareholders to be held at the general offices of the Company in Alexander
City, Alabama, on Wednesday, April 19, 2000, at 11:00 a.m., Central Daylight
Time, and at any adjournment thereof (the "Annual Meeting"). The Proxy
Statement and accompanying proxy will initially be mailed to shareholders on
or about March 16, 2000.
Shares represented by a properly executed proxy on the accompanying
form will be voted at the Annual Meeting and, when instructions have been
given by the shareholder, will be voted in accordance with those instructions.
In the absence of contrary instructions, the proxies received by the Board of
Directors will be voted FOR the election of all nominees for director of the
Company listed below, FOR the adoption of the Russell Corporation 2000
Employee Stock Purchase Plan, and FOR the proposed amendment and restatement
of the Russell Corporation 1993 Executive Long-Term Incentive Plan. A
shareholder who has given a proxy may revoke it at any time prior to its
exercise by giving written notice of such revocation to the Secretary of the
Company, by executing and delivering to the Company a later dated proxy
reflecting contrary instructions or by appearing at the Annual Meeting and
taking appropriate steps to vote in person.
ELECTION OF DIRECTORS
Directors of the Company are divided into three classes, with
approximately one-third of the directors being elected at each annual meeting
for three-year terms. The terms of John F. Ward, Margaret M. Porter, Benjamin
Russell and Eric N. Hoyle, will expire at the Annual Meeting, and each has
been nominated for reelection at the Annual Meeting to serve until the Annual
Meeting of Shareholders in 2003, and until their successors have been duly
elected and qualified. Proxies cannot be voted for more than four persons, and
in the absence of contrary instructions, shares represented by the Board of
Directors' proxies will be voted for the election of these nominees. Should
any nominee be unable or unwilling to accept election, it is expected that the
proxies will vote for the election of such other person for director as the
Board of Directors then recommends. The Board of Directors has no reason to
believe that any of the nominees will be unable to serve or will decline to
serve if elected.
NOMINEES FOR TERMS EXPIRING IN 2003:
[PHOTO]
JOHN F. WARD
Atlanta, Georgia
Director since 1998
Age 56
Mr. Ward was elected President and Chief Executive Officer of the Company
effective April 1, 1998, and Chairman of the Board effective April 22, 1998.
Prior to his elections to such positions, Mr. Ward was President of J. F. Ward
Group, Inc., a consulting firm specializing in domestic and international
apparel and textile industries from 1996 to 1998. Prior to that time, Mr. Ward
was Chief Executive Officer of the Hanes Group and Senior Vice President of
Sara Lee Corporation. Mr. Ward is a director of Lanier Worldwide, Inc.
Mr. Ward is chairman of the Executive Committee and a member of the Corporate
Responsibility and Nominating Committees of the Board of Directors.
[PHOTO]
MARGARET M. PORTER
Birmingham, Alabama
Director since 1997
Age 49
Ms. Porter presently serves on the boards of the University of Alabama Health
Services Foundation, Alabama Eye Institute, Inc. and The Children's Hospital
of Alabama. Ms. Porter formerly served as Mayor of Mountain Brook, Alabama,
and from 1992 to 1997, as founding Chairman of McWane Center in Birmingham,
Alabama. McWane Center is a non-profit organization which promotes public
understanding of service, technology and the environment and serves as a
statewide resource for Alabama schools.
Ms. Porter is Chairman of the Corporate Responsibility Committee and a member
of the Audit Committee of the Board of Directors.
- 1 -
<PAGE> 4
[PHOTO]
BENJAMIN RUSSELL
Alexander City, Alabama
Director since 1963
Age 62
Mr. Russell is Chairman and Chief Executive Officer of Russell Lands,
Incorporated, a land and timber company, and has held these positions for more
than the past five years.
Mr. Russell is a member of the Finance Committee of the Board of Directors.
[PHOTO]
ERIC N. HOYLE
Atlanta, Georgia
Director since 1998
Age 52
Mr. Hoyle was elected Executive Vice President and Chief Financial Officer and
a Director effective August 11, 1998. Mr. Hoyle was Chief Financial Officer of
Ithaca Industries, Inc. from 1994 to 1998. During the time Mr. Hoyle served as
its Chief Financial Officer, Ithaca Industries, Inc., filed a petition in
bankruptcy under Chapter 11 of the Bankruptcy Code. Prior to that time, he
served as Vice President, Finance and Administration and Chief Financial
Officer of the Bali Company, a division of Sara Lee Corporation, and Sara Lee
Intimates group from 1983 to 1994.
Mr. Hoyle is a member of the Executive and Finance Committees of the Board of
Directors.
DIRECTORS WHOSE TERMS EXPIRE IN 2001:
[PHOTO]
TIM LEWIS
Birmingham, Alabama
Director since 1995
Age 44
Mr. Lewis is President of T.A. Lewis & Associates, Inc., a telecommunications
consulting firm, and has held this position for more than five years.
Mr. Lewis is a member of the Audit and Corporate Responsibility Committees of
the Board of Directors.
[PHOTO]
C.V. NALLEY III
Atlanta, Georgia
Director since 1989
Age 57
Mr. Nalley is Chief Executive Officer of The Nalley Companies, which are
automobile and truck leasing companies, and has held this position for more
than five years.
Mr. Nalley is Chairman of the Management Development and Compensation
Committee and a member of the Nominating Committee of the Board of Directors.
[PHOTO]
JOHN R. THOMAS
Alexander City, Alabama
Director since 1966
Age 63
Mr. Thomas is Chairman, President and Chief Executive Officer of Aliant
Financial Corporation, a bank holding company, and has held these positions
for more than five years. He is a director of Alfa Corporation.
Mr. Thomas is a member of the Audit and Finance Committees of the Board of
Directors.
[PHOTO]
JOHN A. WHITE
Fayetteville, Arkansas
Director since 1992
Age 60
Dr. White has been Chancellor of the University of Arkansas since July 1997.
He served as Dean of Engineering of the Georgia Institute of Technology from
1991 to June 1997. He is a director of Motorola, Inc., Logility, Inc., Eastman
Chemical Company and J.B. Hunt Transport Services, Inc.
Dr. White is Chairman of the Audit Committee of the Board of Directors.
- 2 -
<PAGE> 5
DIRECTORS WHOSE TERMS EXPIRE IN 2002:
[PHOTO]
HERSCHEL M. BLOOM
Atlanta, Georgia
Director since 1986
Age 56
Mr. Bloom has been a partner in the law firm of King & Spalding for more than
five years. He is a director of Post Properties, Inc.
Mr. Bloom is Chairman of the Nominating Committee and a member of the
Management Development and Compensation Committee of the Board of Directors.
[PHOTO]
RONALD G. BRUNO
Birmingham, Alabama
Director since 1992
Age 48
Mr. Bruno has been President of Bruno Capital Management Corporation, an
investment company, since September 1995. From December 1991 to August 1995 he
was Chairman and Chief Executive Officer of Bruno's, Inc., a retail food store
chain. He is a director of Bruno's, Inc., and SouthTrust Bank, N.A.
Mr. Bruno is Chairman of the Finance Committee and a member of the Management
Development and Compensation Committee of the Board of Directors.
SECURITY OWNERSHIP OF EXECUTIVE OFFICER AND DIRECTORS
The following table sets forth information regarding beneficial ownership
of the Company's Common Stock by each director, the Company's five most highly
compensated executive officers and the directors and executive officers of the
Company as a group, all as of March 1, 2000:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
--------------------------------------------------------------------------------
SOLE VOTING OPTIONS
AND EXERCISABLE OTHER TOTAL PERCENT
INVESTMENT WITHIN BENEFICIAL BENEFICIAL OF
INDIVIDUAL OR GROUP POWER 60 DAYS OWNERSHIP OWNERSHIP CLASS
- ----------------------- ---------- ----------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
John F. Ward 65,231 427,906 615,960 (1)(2) 1,109,091 3.36
Eric N. Hoyle 13,000 10,000 600,960 (2) 623,960 1.92
Tim Lewis 776 471 0 1,247 (*)
Herschel M. Bloom 7,827 471 0 8,298 (*)
C.V. Nalley III 12,185 471 0 12,656 (*)
Ronald G. Bruno 14,141 471 0 14,612 (*)
John A. White 3,296 471 0 3,767 (*)
John R. Thomas 109,349 471 490,121 (3) 599,941 1.84
Benjamin Russell 991,423 471 4,905,320 (4) 5,897,214 18.11
Margaret M. Porter 2,195 471 0 2,666 (*)
JTTaunton, Jr. 11,097 41,200 0 52,297 (*)
Jonathan R. Letzler 45,000 37,500 0 82,500 (*)
Thomas R. Johnson, Jr. 4,050 39,200 0 43,250 (*)
All Executive Officers and
Directors as a group (23 persons) 1,802,584 699,893 6,011,401 8,513,878 25.60
</TABLE>
(*)Represents less than one percent (1%).
(1) Includes 15,000 shares owned by Mr. Ward's spouse.
(2) Includes 600,960 shares held by the Company's pension plan, of which
Messrs. Ward and Hoyle are two of the trustees and with respect to
which they share voting rights. Messrs. Ward and Hoyle disclaim
beneficial ownership with respect to such shares.
(3) Includes (i) 32,372 shares held by a trust of which Mr. Thomas is one
of three trustees, (ii) 454,249 shares owned indirectly by Mr. Thomas
as a general and limited partner in two limited partnerships and (iii)
3,500 shares owned by Mr. Thomas' spouse.
(4) Includes (i) 731,296 shares held by the Benjamin and Roberta Russell
Foundation, Incorporated, a charitable corporation of which Mr. Russell
is one of nine directors, (ii) 3,945,024 shares held by a trust created
under the will of Benjamin C. Russell, of which Mr. Russell is one of
four trustees, (iii) 225,000 shares held by the Adelia Russell
Charitable Foundation, of which Mr. Russell is one of three trustees,
and (iv) 4,000 shares held by a profit sharing plan of which Mr.
Russell is one of two trustees.
- 3 -
<PAGE> 6
PRINCIPAL SHAREHOLDERS
The following table sets forth each person who, to the Company's
knowledge, had sole or shared voting or investment power over more than five
percent of the outstanding shares of Common Stock of the Company as of March
1, 2000:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ------------------------------------ -------------------- --------
<S> <C> <C>
Benjamin Russell 5,897,214 shares (1) 18.11
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Roberta A. Baumgardner 5,868,774 shares (2) 18.02
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Edith L. Russell 4,686,320 shares (3) 14.39
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Nancy R. Gwaltney 4,677,642 shares (4) 14.37
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Merrill Lynch Asset Management Group 2,662,702 shares (5) 8.18
World Financial Center, North Tower
250 Vesey Street
New York, NY 10381
Helen Alison 1,909,380 shares (6) 5.86
755 Lee Street
P.O. Box 272
Alexander City, Alabama 35011-0272
Barclays Global Investors, N.A. 1,794,353 shares (7) 5.51
45 Fremont Street
San Francisco, CA 94105
</TABLE>
(1) Includes 991,423 shares as to which Mr. Russell has sole voting and
investment power, presently exercisable options to acquire 471 shares
and 4,905,320 shares as to which he has shared voting and investment
power. See Note (4) on page 3.
(2) Includes 1,192,454 shares as to which Mrs. Baumgardner has sole voting
and investment power and 4,676,320 shares as to which she has shared
voting and investment power, consisting of 731,296 shares held by the
Benjamin and Roberta Russell Foundation, Incorporated, a charitable
corporation of which Mrs. Baumgardner is one of nine directors; and
3,945,024 shares held by a trust created under the will of Benjamin C.
Russell of which Mrs. Baumgardner is one of four trustees.
(3) Includes 10,000 shares as to which Mrs. Russell has sole voting and
investment power, and 4,676,320 shares as to which she has shared
voting and investment power, consisting of 731,296 shares held by the
Benjamin and Roberta Russell Foundation, Incorporated, a charitable
corporation of which Mrs. Russell is one of nine directors, and
3,945,024 shares held by a trust created under the will of Benjamin C.
Russell of which Mrs. Russell is one of four trustees.
- 4 -
<PAGE> 7
(4) Includes 731,296 shares held by the Benjamin and Roberta Russell
Foundation, Incorporated, a charitable corporation of which Mrs.
Gwaltney is one of nine directors; 3,945,024 shares held by a trust
created under the will of Benjamin C. Russell of which Mrs. Gwaltney is
one of four trustees; and 1,322 shares as to which Mrs. Gwaltney has
sole voting and investment power.
(5) From Schedule 13G filed with the Company on February 10, 2000, which
states that Merrill Lynch Asset Management Group has sole voting power
with respect to no shares, sole dispositive power with respect to no
shares and shared voting and dispositive power with respect to
2,622,702 shares.
(6) From Schedule 13G filed with the Company on March 1, 2000 on behalf of
Helen Alison and National Bank of Commerce in Birmingham, Alabama.
Includes 1,909,380 shares held by trusts created under the will of J.
C. Alison, of which Mrs. Alison is one of two co-trustees and with
respect to which Mrs. Alison has shared voting and investment power.
(7) From Schedule 13G filed with the Company on February 10, 2000, which
states that Barclays Global Investors, N.A. and four other affiliated
companies have sole voting power with respect to 1,641,187 shares, sole
dispositive power with respect to 1,794,353 shares and shared voting
and dispositive power with respect to no shares.
COMMITTEES OF THE BOARD OF DIRECTORS; MEETINGS
The Board of Directors has standing executive, management development
and compensation, audit, finance, nominating and corporate responsibility
committees. The members of each committee are indicated on pages 1 through 3
of this Proxy Statement.
The Executive Committee is authorized to act in place of the Board of
Directors between meetings of the Board. The Executive Committee held ten
meetings during 1999.
The Management Development and Compensation Committee supervises the
Company's general compensation strategies, including incentive compensation,
stock options and benefit programs. The Management Development and
Compensation Committee held three meetings during 1999.
The Audit Committee recommends to the Board of Directors the
appointment of the Company's independent accountants and reviews the audit
plan, financial statements and audit results. The Audit Committee held two
meetings during 1999.
The Finance Committee reviews the Company's capital structure and
financing activities. The Finance Committee held one meeting during 1999.
The Nominating Committee recommends candidates for election to the
Company's Board of Directors. The Nominating Committee held no meetings during
1999.
The Corporate Responsibility Committee provides oversight and guidance
concerning the Company's obligations to its employees and the communities in
which it operates. The Corporate Responsibility Committee held one meeting in
1999.
During the year ended January 1, 2000, the Board of Directors held five
regular meetings. Each member of the Board attended at least 75% of the
meetings of the Board and the committees of which they are members.
COMPENSATION OF DIRECTORS
Each non-employee director receives a quarterly retainer of $3,750 and
a fee of $1,000 for each Board meeting attended. Members of committees of the
Board who are not employees of the Company receive $650 per quarter per
committee (except chairmen, who receive $1,300 per quarter). In addition,
under the Russell Corporation 1997 Non-Employee Directors' Stock Grant, Stock
Option and Deferred Compensation Plan, each non-employee director receives
annually (i) shares of Common Stock having a value of $5,000, based upon the
- 5 -
<PAGE> 8
market value of the Common Stock on the date of grant, and (ii) an option to
purchase shares of Common Stock, exercisable for ten years at a price equal to
the market value of the Common Stock on the date of grant, having, based upon
the number of shares subject thereto, an economic value of $5,000. In
addition, the plan allows a non-employee Director to defer the payment of fees
to such director at a fixed rate of interest and to defer the receipt of
Common Stock granted pursuant to the plan. Two hundred thousand (200,000)
shares of Common Stock are presently authorized to be issued under the plan
and 188,134 shares remain available for issuance.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon review of Forms 3, 4 and 5 and amendments thereto
related to the Company's most recent fiscal year, and written representations
from certain reporting persons that no Form 5 was required, the Company
believes that Thomas R. Johnson, Jr. had one late Form 4 filing for 1999
relating to one transaction.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company entered into a fuel supply contract with Russell Lands,
Incorporated ("Lands") on May 21, 1975, under which Lands provides sawdust,
bark, shavings, chips, and other wood materials for use in the Company's wood
chip boilers. The initial term of the contract was four years, and may be
renewed by agreement of the parties from year-to-year thereafter. In addition,
the contract may be cancelled by either party during any renewal period upon
30 days notice following the occurrence of certain specified conditions.
Benjamin Russell is Chairman, Chief Executive Officer and a director of Lands,
and owns beneficially approximately 70% of the equity interest in such
company. Management believes this contract is in the best interest of the
Company's shareholders. During the fiscal year ended January 1, 2000, the
Company paid Lands approximately $975,000 for wood materials to operate these
boilers.
The Company purchased miscellaneous building materials and supplies
from Russell Do-It Center, a building supply retailer. The Company also
purchased concrete for various construction and repair projects from Area
Concrete, Inc. Russell Do-It Center is a division of and Area Concrete, Inc.
is a wholly owned subsidiary of Lands. Management believes these purchases to
be in the best interest of the Company's shareholders. During the fiscal year
ended January 1, 2000, the Company paid Russell Do-It Center and Area
Concrete, Inc. approximately $94,000 and $16,000, respectively, for the
purchases described above.
The Company engaged EOD Strategies, Inc. ("EOD") to provide various
consulting services relating to enhancements to its minority vendors programs.
Tim Lewis owns 100% of the equity interest in EOD. Management believes the
engagement of EOD is in the best interest of the Company's shareholders.
During the fiscal year ended January 1, 2000, the Company paid EOD
approximately $145,000 for consulting services.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
THE COMMITTEE
The Management Development and Compensation Committee of the Board of
Directors (the "Committee") is responsible for establishing the compensation
policy and administering the compensation programs for the Company's executive
officers and other key employees. The Committee is comprised solely of
directors who are not current or former employees of the Company.
COMPENSATION PHILOSOPHY
The compensation program for executive officers is designed to attract,
motivate and retain talented executives who will strive to attain the
Company's strategic and financial objectives and thereby increase shareholder
value. The main elements of the program are:
- annual compensation (base salary and annual bonus) and
- long-term incentives (stock options).
- 6 -
<PAGE> 9
The Company's philosophy is to provide total compensation at a level
that is consistent with its size and performance relative to other leading
branded consumer apparel companies. These companies include many of those in
the Value Line Apparel Index used in the performance graph on page 9. The
Committee periodically reviews the reasonableness of total compensation levels
using public information from comparable company proxy statements and annual
reports as well as survey information from third-party industry surveys.
In carrying out its duties, the Committee intends to make all
reasonable efforts to comply with the requirements to exempt executive
compensation from the $1 million deduction limitation under Section 162(m) of
the Internal Revenue Code by establishing "performance-based" compensation
programs, unless the Committee determines that such compliance in given
circumstances would not be in the best interests of the Company and its
shareholders.
ANNUAL COMPENSATION
Base Salary. The Committee annually reviews and approves base salaries
for the Company's executive officers, considering the responsibilities of
their positions, their individual performance and their competitive position
relative to comparable companies and industry surveys. Salary ranges are
targeted at the median of the competitive market place. Salary increases,
including increases due to promotions, for the most recent fiscal year are
based upon these criteria.
Annual Incentive Bonus. Executive officers are eligible to receive
annual cash incentive awards under provisions of the Russell Corporation 1993
Executive Long-Term Incentive Plan. Under this plan, the Committee established
Earnings Growth and Return on Investment goals for the Company and each
operating unit. The maximum incentive opportunity is established and
communicated to each participant, along with the performance scale under which
incentive awards are earned. Threshold performance levels are also established
for each goal, below which no incentive is paid. Individual standards of
performance that are agreed upon at the beginning of each year provide each
participant the opportunity to earn incentive awards based upon the
accomplishment of strategic and tactical objectives. Award opportunities for
the Chief Executive Officer and Chief Financial Officer are tied solely to the
accomplishment of financial goals approved in advance by the Committee.
LONG-TERM COMPENSATION
The Committee believes stock options to be one of the most effective
ways of linking executives with the interests of the shareholders since no
gain is realized by the executive unless the stock price increases. For the
foreseeable future, stock options will be the only form of long-term
compensation at the Company.
Stock option grant guidelines have been established to meet the median
competitive practice of the marketplace. The Company grants stock options
annually during the first quarter, although special grants may be made
throughout the year in unique circumstances such as recruiting situations.
Options are granted with an exercise price equal to the market value on the
date of grant. Options granted become exercisable pro-rata on the first four
anniversaries of the grant to reinforce retention and further align
executives' compensation with shareholder returns. Options expire ten years
from the date of grant.
STOCK OWNERSHIP GUIDELINES
The Committee believes that stock ownership by the management team is
essential to a strong linkage between management and the shareholders. Thus
the Committee has approved Stock Ownership Guidelines that outline the minimum
stock ownership expectations for the officer group. The guidelines range from
shares valued at five times salary midpoint for the Chief Executive Officer to
one times salary midpoint for Vice Presidents. Each officer is expected to be
in compliance with the guidelines within five years of becoming covered by the
guideline.
- 7 -
<PAGE> 10
CHIEF EXECUTIVE OFFICER
Effective April 1, 1998, the Board of Directors elected John F. Ward
President and Chief Executive Officer, and on April 22, 1998, Mr. Ward was
elected Chairman. His compensation principally consists of base salary, annual
bonus and stock option awards. During 1999, the Committee made the following
decisions regarding Mr. Ward's compensation:
- Annual Compensation
Base Salary. The Committee increased Mr. Ward's annual salary to
$675,000 ($25,000 or 3.9%), based upon an assessment of
competitive compensation practices and in recognition of his
leadership in significantly restructuring both the Company's
operations as well as the management team.
Annual Incentive. The Committee awarded Mr. Ward an annual
incentive payment for 1999 equal to $474,279, or 70.7% of salary
earned in 1999. This incentive award was directly related to the
Company's performance relative to the goals for EPS Growth
(weighted 60%) and Return on Investment (weighted (40%) that it
approved at the beginning of 1999. The Company reported EPS of
$1.62, which was a 37% increase over 1998 (before non-recurring
items) and which resulted in an award slightly above target for
that component. The Company's ROI of 11.6% was slightly below
the target established by the Committee and resulted in an
incentive slightly below target for that component.
- Long-term compensation
Stock Options. In February, 1999, the Committee approved a stock
option grant of 250,000 shares to Mr. Ward. 125,000 of these
options have an exercise price of $19.3438, which was 100%of the
fair market value on the grant date. The additional 125,000
options have an exercise price of $27.1563, which was 40%higher
than that market price on the grant date. The terms and
conditions that apply to Mr. Ward's stock option grants are
described in the notes to the Stock Option Grant Table on page
11.
- Other benefits.
Mr. Ward participates in the same benefit programs as all other
executives of the Company. In addition, the Company has an
employment agreement with Mr. Ward which provides certain other
benefits and payments in connection with Mr. Ward's continued
service. These are described in the Summary Compensation Table
and the notes thereto on page 10. Additional provisions of Mr.
Ward's agreements are described on pages 13 and 14.
CONCLUSION
The Committee believes that the executive compensation programs directly link
the pay opportunities of the Company's executives to the financial and
shareholder returns of the Company. These programs reinforce the linkage
between pay and performance, and between executive compensation and
shareholder return, and allow the Company to attract and retain the caliber of
executives required in the highly competitive global environment in which
executives of the Company must perform.
MANAGEMENT DEVELOPMENT AND
COMPENSATION COMMITTEE
C.V. NALLEY III
HERSCHEL M. BLOOM
RONALD G. BRUNO
- 8 -
<PAGE> 11
COMPARATIVE FIVE-YEAR CUMULATIVE TOTAL RETURNS THROUGH 12/31/99
[GRAPH]
VALUE OF $100 INVESTED ON 12/31/94 AT FISCAL YEAR-END:
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Russell Corporation $100.00 $ 89.97 $ 98.11 $ 89.19 $ 69.68 $ 59.22
S&P 500 100.00 137.50 169.47 226.03 290.22 394.08
Value Line Apparel Index 100.00 109.68 150.21 175.23 216.78 235.49
- ---------------------------------------------------------------------------------------------------
</TABLE>
NOTES
1) Assumes that the value of the investment in the Company's Common Stock and
in each index was $100 on the last trading day preceding the first day of the
fifth preceding fiscal year and that all dividends were reinvested.
2) The Value Line Apparel Index presently includes: Fruit of the Loom, Inc.;
Hartmarx Corporation; Jones Apparel Group; Kellwood Company; Liz Claiborne,
Inc.; Nautica Enterprises, Inc.; Oshkosh B'Gosh, Inc.; Oxford Industries,
Inc.; Phillips-Van Heusen Corporation; Polo-Ralph Lauren; Tommy Hilfiger
Corp.; VF Corporation; Warnaco Group, Inc.; and the Company.
- 9 -
<PAGE> 12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following information is furnished for the fiscal years ended
January 1, 2000, January 2, 1999 and January 3, 1998 with respect to the
Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company during 1999 whose salary and
bonus exceeded $100,000 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
---------------------------------- -----------------------------------
AWARDS PAYOUTS
------------------------ -------
NAME AND OTHER RESTRICTED ALL
PRINCIPAL FISCAL ANNUAL STOCK OPTIONS/ LTIP OTHER
POSITION YEAR SALARY BONUS(1) COMPENSATION AWARDS SAR'S PAYOUTS COMPENSATION
--------------------- ------ -------- -------- ------------ ---------- ----------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John F. Ward 1999 $670,833 $474,279 $30,668(2) 250,00 $3,496,031(6)
Chairman, 1998 490,000 350,000 44,375(3) $325,913(4) 407,066(5)
President 1997
and C.E.O
JT Taunton, Jr. 1999 306,900 216,750 12,000
Sr. V.P., President & 1998 300,000 38,500 8,000
C.E.O. Fabrics 1997 290,000 0 6,100
and Services
Jonathan R. Letzler 1999 265,000 200,764 14,169(2) 25,000
Executive V.P. & 1998 17,809 65,000 3,515(3) 1,079,690(7)
C.E.O. JERZEES 1997
Eric N. Hoyle 1999 305,833 154,293 15,961(2) 40,000
Executive V.P. & 1998 116,935 52,621 13,710(3) 25,000
C.F.O 1997
Thomas R. Johnson, Jr. 1999 245,520 124,224 12,000
Sr. V.P., President & 1998 240,000 0 5,200
C.E.O. Russell Yarn 1997 235,000 0 4,900
</TABLE>
(1) Bonus payments are reported for the year in which related services were
performed.
(2) Pursuant to Mr. Ward's employment agreement, includes personal use of
Company aircraft, club dues and Company provided automobile. For Messrs.
Letzler and Hoyle, includes personal use of Company aircraft.
(3) Pursuant to Mr. Ward's employment agreement, includes personal use of
Company aircraft, personal office closure expenses, temporary housing,
club dues and Company provided automobile. For Messrs. Letzler and Hoyle,
includes personal use of Company aircraft, Company provided automobiles
and temporary housing.
(4) Pursuant to Mr. Ward's employment agreement, one-third of this amount
vested on April 1, 1998, with the remainder vesting ratably over the next
two succeeding years. As of January 1, 2000, Mr. Ward's restricted shares
consisted of 4,043 shares, or one-third of the original grant of 12,127
shares, with a value of $67,709.
(5) Pursuant to Mr. Ward's employment agreement, 125,000 options vest ratably
in each of the three years following April 1, 1998, the date of the grant.
The exercise price of these options is $27.1563, the fair market value on
the date of grant, and the options are exercisable until April 1, 2008.
Pursuant to the Executive Deferred Compensation and Buyout Plan, 282,066
vested options were issued to Mr. Ward at an exercise price of $27.1563,
the fair market value on the date of grant, and are exercisable until
October 1, 2002.
(6) Amounts either paid to Mr. Ward or deposited into a deferred compensation
trust for his benefit to replace benefits and opportunities Mr. Ward
forfeited pursuant to agreements with his former employer as a result of
accepting employment with the Company.
(7) Pursuant to Mr. Letzler's employment agreement, one-third of this amount
vested on December 15, 1999, with the remainder vesting ratably over the
next two succeeding years. As of January 1, 2000, Mr. Letzler's restricted
shares consisted of 33,333 shares, or two-thirds of the original grant of
50,000 shares, with a value of $555,328.
- 10 -
<PAGE> 13
OPTION/SAR GRANTS IN FISCAL 1999
The following table sets forth grants of incentive stock options to
the Named Executives Officers for the year ended January 1, 2000. No SAR grants
were made during such fiscal year.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
----------------------------------------------------- POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES %OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS/SARS FOR OPTION TERM
OPTIONS/SARS GRANTED EXERCISE -------------------------
GRANTED TO EMPLOYEES PRICE EXPIRATION
NAME IN 1999 IN 1999 PER SHARE DATE 5% 10%
- --------------------- ------------ ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
John F. Ward 125,000(2) 13.12 $19.3438 2/24/09 $1,520,125 $3,853,100
125,000(2) 13.12 27.1563 2/24/09 2,134,813 5,409,963
JT Taunton, Jr. 12,000 1.26 19.3438 2/24/09 145,982 369,948
Jonathan R. Letzler 25,000 2.62 19.3438 2/24/09 304,130 770,725
Eric N. Hoyle 40,000 4.20 19.3438 2/24/09 486,608 1,233,160
Thomas R. Johnson, Jr. 12,000 1.26 19.3438 2/24/09 145,982 369,948
</TABLE>
(1) The stock options were granted at an exercise price equal to the fair
market value of the Company's Common Stock on the date of the grant. The
stock options become exercisable ratably over four years beginning on the
first anniversary of the grant. No other instruments were granted in
tandem with the options, nor do they carry tax reimbursement features.
(2) See "MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION - Chief Executive Officer."
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1999 AND YEAR-END VALUE TABLE
The following table sets forth information concerning the exercise of
stock options for the Named Executive Officers for the fiscal year ended
January 1, 2000:
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
SHARES AT JANUARY 1, 2000 AT JANUARY 1, 2000(2)
ACQUIRED VALUE --------------------------- ----------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John F. Ward 0 $ 0 427,900 229,165 $ 0 $ 0
JT Taunton, Jr. 0 0 41,200 9,000 0 0
Jonathan R. Letzler 0 0 37,500 112,500 0 0
Eric N. Hoyle 0 0 10,000 55,000 0 0
Thomas R. Johnson, Jr. 0 0 39,200 9,000 0 0
</TABLE>
(1) This amount represents the aggregate of the market value of the Company's
Common Stock at the time each option was exercised less the exercise price
for such option.
(2) This amount represents the aggregate of the number of options multiplied
by the difference between the closing price of the Company's Common Stock
on the last trading day prior to January 1, 2000, and the exercise price
for such option.
LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL 1999
The Russell Corporation 1993 Executive Long-Term Incentive Plan (the
"1993 Plan") provides for the award of long-term incentives to officers of the
Company. The Company has not granted long-term incentive awards subsequent to
January 28, 1998 and has no present plans to grant such awards in the future.
- 11 -
<PAGE> 14
PENSION PLAN
The officers of the Company participate in the Russell Corporation
Revised Pension Plan (the "Pension Plan"), a defined benefit plan covering all
employees of the Company. The amount of contributions made by the Company to
the Pension Plan is not reflected in the cash compensation table above, since
the amount of the contribution with respect to a specified person is not and
cannot readily be separately or individually calculated by the regular
actuaries for the Pension Plan.
Benefits under the Pension Plan are based upon years of credited
service at retirement and upon "Final Average Earnings," which is the average
base compensation for the highest 60 consecutive months out of the final 120
months of employment. This compensation consists only of salary and excludes
any bonus and any form of contribution to other benefit plans or any other form
of compensation. Normal or delayed retirement benefits are payable upon
retirement on the first day of any month following attainment of age 65 and
continue for the life of the employee (and his spouse, if any) or in accordance
with other elections permitted by the Pension Plan.
On January 26, 1994, the Board of Directors adopted a supplemental
retirement plan covering any participant's compensation in excess of the
limitation amount specified in Section 401 et seq., of the Internal Revenue
Code. This plan is a non-qualified plan, thereby rendering any benefits subject
to claims of general creditors and not deductible until paid.
The following table presents estimated annual benefits payable from
the Pension Plan and the supplemental retirement plan mentioned above upon
normal or delayed retirement to participants in specified remuneration and
years-of-credited service classifications. The amounts shown assume the current
maximum social security benefit and that the participant has elected for
benefits to be payable for a single life only.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
5 YEAR AVERAGE ----------------------------------------------------------
REMUNERATION 15 20 25 30 35 40
-------------- --------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 31,862 $ 42,483 $ 53,104 $ 63,725 $ 74,346 $ 79,846
250,000 40,112 53,483 66,854 80,225 93,596 100,471
300,000 48,362 64,483 80,604 96,725 112,846 121,096
350,000 56,612 75,483 94,354 113,225 132,096 141,721
400,000 64,862 86,483 108,104 129,725 151,346 162,346
450,000 73,112 97,483 121,854 146,225 170,596 182,971
500,000 81,362 108,483 135,604 162,725 189,846 203,596
600,000 97,862 130,483 163,104 195,725 228,346 244,846
700,000 114,362 152,483 190,604 228,725 266,846 286,096
800,000 130,862 174,483 218,104 261,725 305,346 327,346
900,000 147,362 196,483 245,604 294,725 343,846 368,598
</TABLE>
Years of service at January 1, 2000 credited under the Pension Plan
for individuals shown in the Summary Compensation Table on page 10 are as
follows: Mr. Ward, 1 year; Mr. Taunton, 24 years; Mr. Letzler, 1 year; Mr.
Hoyle, 1 year; and Mr. Johnson, 10 years.
- 12 -
<PAGE> 15
STOCK OPTION PLANS
The Company has previously adopted the 1987 Stock Option Plan pursuant
to which the Company granted to key employees of the Company either incentive
stock options or nonqualified stock options. The terms of the options did not
exceed ten years from the dates of grant, and the option prices equaled fair
market value of the shares covered at the times of grant. There presently
remain outstanding under the 1987 Stock Option Plan options to acquire 272,050
shares of Common Stock. No further options can be granted under such plan;
however, if Proposal 3 to amend and restate the 1993 Plan is approved, any
shares of Common Stock subject to outstanding options under the 1987 Stock
Option Plan which are not issued pursuant to such options will be added to the
shares of Common Stock available for issuance under the amended and restated
1993 Plan.
The Company also has adopted the 1993 Plan which is described in
Proposal 3 above, and which will be modified in the manner described under
Proposal 3 if such proposal to amend and restate the 1993 Plan is approved.
On January 18, 2000, the Board of Directors adopted the Russell
Corporation 2000 Stock Option Plan (the "2000 Option Plan"). The 2000 Option
Plan is an incentive compensation plan that gives the Committee broad
discretion to grant awards, and fashion the terms of such awards, to any
employee, including officers, of the Company or any majority-owned subsidiary
of the Company, and any person performing services for the Company or any
majority-owned subsidiary in the capacity of a consultant, in order to provide
such employees and consultants with stock based incentives as the Committee
deems appropriate. The 2000 Option Plan permits the issuance of awards in a
variety of forms, including: (a) incentive stock options; (b) non-qualified
stock options; (c) reload stock options; (d) restricted shares; (e) bonus
shares; (f) deferred shares; (g) freestanding stock appreciation rights; (h)
tandem stock appreciation rights; (i) performance units; and (j) performance
shares. 1,500,000 shares of the Company's Common Stock are reserved for
issuance under the 2000 Option Plan, subject to adjustment by the Committee in
the event of a stock dividend, stock split, recapitalization or other similar
event. Because only treasury shares may be issued under the 2000 Option Plan,
shareholder approval of the 2000 Option Plan is not required.
The number of options to purchase shares of Common Stock granted under
the 1993 Plan by the Board of Directors to the Named Executive Officers during
the 1999 fiscal year is shown in the Summary Compensation Table. During the
1999 fiscal year, the Board of Directors granted options under the 1993 Plan to
purchase 1,072,000 shares to the executive officers as a group (15 persons). No
options were granted under the 1993 to current directors or nominees who were
not executive officers or to employees who were not executive officers.
None of the executive officers, current directors, or nominees for
director have received grants of options under the 2000 Option Plan.
EMPLOYMENT AGREEMENTS
As noted above, John F. Ward was employed as the President and Chief
Executive Officer of the Company, effective April 1, 1998. The Company entered
into an agreement with Mr. Ward providing for the employment of Mr. Ward until
March 31, 2001, at an annual base salary of $650,000, subject to increase(s) in
the discretion of the Board of Directors and a bonus of $350,000 for 1998.
After 1998, Mr. Ward is entitled to receive annual bonuses under the Company's
regular compensation plans, with bonus potential of not less than 100% of base
salary, subject to any increase determined appropriate by the Board of
Directors. The employment agreement provides that the Company will offer health
care and certain other supplemental benefits to Mr. Ward. As noted in the
Summary Compensation Table, Mr. Ward was also entitled to receive certain
payments for reimbursement of expenses in connection with his relocation and
employment with the Company. The agreement also provides that any termination
of employment of Mr. Ward after April 1, 2001 shall be treated as retirement
for purpose of the Company's various plans and benefits. Pursuant to such
agreement, Mr. Ward was also granted options in 1998 to purchase 125,000 shares
of the Company's Common Stock at the market price on the date of grant of
$27.1563 and is to be granted options to purchase a minimum of 75,000 shares
each year thereafter at the market price at the time of grant.
- 13 -
<PAGE> 16
Also as noted above, to compensate Mr. Ward for the forfeiture of
certain benefits from his former employer, the Company agreed to make a cash
payment to him of approximately $1,028,000, to put into a trust for his benefit
approximately $2,467,000, to issue him 12,127 shares of Common Stock of the
Company, and to grant him options to purchase 282,066 shares of the Company's
Common Stock at $27.1563, the market price on March 31, 1998. The amounts
placed in trust will be paid to Mr. Ward after April 1, 2001 unless his
employment is terminated by the Company for cause or is terminated by Mr. Ward
for any reason other than death, total disability or certain other reasons set
forth in the agreements. In the event of such termination prior to April 1,
2001, Mr. Ward will be entitled to receive a prorated amount from the trust
based upon the ratio that the time he has been employed by the Company bears to
three years. Similarly, the options granted to him will be forfeited on the
same basis as the amounts in trust based upon time employed with the Company.
Effective December 7, 1998, Jonathan H. Letzler was employed as the
President and Chief Executive Officer of the Company's JERZEES Division
pursuant to an agreement providing for his employment in such position until
December 7, 2002, at an annual base salary of $265,000 (subject to annual
increases in the discretion of the Chief Executive Officer of the Company and
with the concurrence of the Board of Directors). Mr. Letzler received a signing
bonus of $65,000 and is entitled to receive annual bonuses with a bonus
potential of at least 100% of his base salary, provided that his bonuses for
each of the 1998 and 1999 calendar years was to be at least 50%of his base
salary. Under the agreement, Mr. Letzler may participate in any benefit plan
offered by the Company to its executives generally. The agreement provides that
in the event of any termination of employment of Mr. Letzler, all vesting
periods under the Company's benefit plans shall be waived and Mr. Letzler will
be deemed to have reached the minimum age for retirement under all such plans.
Mr. Letzler was also entitled to receive certain payments for reimbursement of
expenses in connection with his relocation and employment with the Company.
Pursuant to the agreement, Mr. Letzler was granted an option on December 7,
1998 to purchase 125,000 shares of Common Stock at the market price of $21.5938
per share, and an option on February 24, 1999 to purchase 25,000 shares of
Common Stock at the market price of $19.3438 per share. Each option vests in
equal annual installments over a four-year period from the date of grant. Mr.
Letzler was also granted 50,000 restricted shares of Common Stock on December
7, 1998, with the restrictions lapsing as to one-third of such shares at the
end of each year of his employment with the Company.
PROPOSAL TO APPROVE THE ADOPTION OF THE RUSSELL CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL 2)
On January 18, 2000, the Board of Directors adopted, subject to
shareholder approval at the Annual Meeting, the Russell Corporation 2000
Employee Stock Purchase Plan (the "ESP Plan"). The plan became effective March
1, 2000, but if it is not approved by shareholders at the Annual Meeting, it
will terminate, all contributions will cease, and any cash balances credited to
participants' accounts will be distributed to them. A summary of the ESP Plan is
set forth below. The summary is qualified in its entirety by reference to the
complete text of the ESP Plan which is attached to this Proxy Statement as
Appendix A.
GENERAL
The ESP Plan's purpose is to enhance the proprietary interest of the
employees of the Company and its subsidiaries. The plan will be administered by
the Management Development and Compensation Committee of the Board of Directors
(the "Committee"). The Committee has authority to interpret and construe the
provisions of the plan, to adopt rules and regulations for its administration,
and to make all other determinations necessary or advisable for its
administration, including selecting an administrator to operate, perform
day-to-day administration, and maintain records of the plan.
SHARES SUBJECT TO THE ESP PLAN
A maximum of 800,000 shares of Common Stock are available for purchase
under the ESP Plan, subject to appropriate adjustment for stock dividends, stock
splits or combinations of shares, recapitalization or other changes in the
Company's capitalization.
- 14 -
<PAGE> 17
ELIGIBILITY; GRANT AND EXERCISE OF OPTIONS
All employees of the Company or its participating subsidiaries who are
regularly scheduled to work at least 20 hours each week and at least five
months each calendar year may participate in the ESP Plan. As of March 2, 2000,
approximately 10,043 persons were eligible to participate in the ESP Plan.
On the first day of each three-month offering period each eligible
employee is granted an option to purchase on the last day of the offering
period (the "Purchase Date") at the price described below (the "Purchase
Price") the number of full shares of Common Stock that the cash credited to the
participant's account on the Purchase Date will purchase at the Purchase Price.
An employee may not be granted an option if immediately after the grant, he or
she would own five percent or more of the total combined voting power or value
of all classes of stock of the Company or any of its subsidiaries. A
participant cannot receive options that, in combination with options under
other plans qualified under Section 423 of the Internal Revenue Code of 1986,
as amended (the "Code"), would result in the employee purchasing more than
$25,000 in aggregate fair market value of shares during any calendar year. An
employee may not purchase more than 1,000 shares during any offering period. A
participant's combined payroll deductions and lump sum cash contributions
cannot exceed ten percent of his or her compensation paid during the offering
period and during any prior offering period in the same calendar year.
A participant's payroll deductions and lump sum contributions will be
credited to a separate book entry account until these amounts are either
withdrawn, distributed or used to purchase Common Stock. No interest will be
credited on these amounts. Whole shares of Common Stock will be held in the
participant's account until distributed.
The Purchase Price will be the lesser of 85% of the fair market value
of the Common Stock on (i) the first trading day of the offering period or (ii)
the last trading day of the offering period.
Options granted under the ESP Plan are not transferable by the
participant other than by will or by the laws of descent and distribution and
are exercisable only by the participant during his or her lifetime.
TERMINATION OF EMPLOYMENT
If a participant terminates employment, the balance in the
participant's account will be returned to the participant (or his or her
beneficiary in the case of the participant's death) in cash, without interest,
and certificates for the shares of Common Stock credited to the participant's
account will be distributed to the participant.
AMENDMENT AND TERMINATION OF THE ESP PLAN
The Committee may amend the ESP Plan at any time. However, no
amendment may (a) affect any right or obligation with respect to any grant
previously made, unless required by law, or (b) unless previously approved by
the shareholders of the Company, where such approval is necessary to satisfy
the Code, the rule of any stock exchange on which the Common Stock is listed,
or the requirements necessary to meet any exemption from the application of
federal securities laws, (i) materially affect the eligibility requirements,
(ii) increase the number of shares of Common Stock eligible for purchase under
the ESP Plan, or (iii) materially increase the benefits to participants. The ESP
Plan may be terminated by the Committee at any time, in which event the
administrator will terminate all contributions to the ESP Plan. Cash balances
then credited to participants' accounts will be distributed as soon as
practicable, without interest.
FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND TO PARTICIPANTS
The ESP Plan is designed to qualify as an employee stock purchase plan
under Section 423 of the Code. Neither the grant nor the exercise of options
under the ESP Plan will have a Federal income tax impact on the participant or
the Company. If a participant disposes of the Common Stock acquired upon the
exercise of his option after at least two years from the date of grant and one
year from the date of exercise, then the participant must treat as ordinary
income the amount by which the lesser of (a) the fair market value of the
- 15 -
<PAGE> 18
Common Stock at the time of disposition, or (b) the fair market value of the
Common Stock at the date of grant, exceeds the Purchase Price. Any gain in
addition to this amount will be treated as a capital gain. If a participant
holds Common Stock at the time of his or her death, the holding period
requirements are automatically deemed to have been satisfied and he or she will
realize ordinary income in the amount by which the lesser of (i) the fair
market value of the Common Stock at the time of death, or (ii) the fair market
value of the Common Stock at the date of grant, exceeds the Purchase Price. The
Company will not be allowed a deduction if the holding period requirements are
satisfied. If a participant disposes of Common Stock before expiration of two
years from the date of grant and one year from the date of exercise, then the
participant must treat as ordinary income the excess of the fair market value
of the Common Stock on the date of exercise of the option over the Purchase
Price. Any additional gain will be treated as long-term or short-term capital
gain or loss, as the case may be. The Company will be allowed a deduction equal
to the amount of ordinary income recognized by the participant.
BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS
Participation in the ESP Plan is voluntary. Consequently, it is not
presently possible to determine either the benefits or amounts that will be
received by any person or group pursuant to the ESP Plan, or that would have
been received if the ESP Plan had been in effect during the last fiscal year.
VOTE REQUIRED; RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding
shares of the Company's Common Stock represented in person or by proxy at the
Annual Meeting is necessary to approve the adoption of the ESP Plan. The Board
of Directors recommends that shareholders vote FOR the approval of the ESP Plan.
PROPOSAL TO APPROVE THE AMENDMENT AND RESTATEMENT OF THE
RUSSELL CORPORATION 1993 EXECUTIVE LONG-TERM INCENTIVE PLAN
(PROPOSAL 3)
On January 18, 2000, the Board of Directors adopted the Russell
Corporation 2000 Stock Option Plan (the "2000 Option Plan"), which is described
in this Proxy Statement under the caption "EXECUTIVE COMPENSATION - Stock
Option Plans" on page 13. In order to conform the Russell Corporation 1993
Executive Long-Term Incentive Plan (the "1993 Plan") to the provisions of the
2000 Option Plan and to align the 1993 Plan with the Company's objectives for
its executive compensation plans, the Board of Directors has unanimously
approved, subject to and effective upon shareholder approval, the amendment and
restatement of the 1993 Plan (the "Amended 1993 Plan"), including the
redesignation of such plan as the Russell Corporation Executive Incentive Plan.
A summary of the Amended 1993 Plan and the material amendments to the 1993 Plan
is set forth below. This summary is qualified in its entirety by reference to
the complete text of the Amended 1993 Plan which is attached to this Proxy
Statement as Appendix B.
DESCRIPTION OF AMENDED 1993 PLAN
GENERAL
The plan's purpose is to assist the Company in attracting and
retaining employees and increasing their commitment to the Company's success
through equity ownership. All employees and, under appropriate circumstances,
consultants of the Company and its subsidiaries are eligible to receive awards.
The Management Development and Compensation Committee of the Board of Directors
(the "Committee") presently administers the plan and has broad discretion to
fashion the terms and, subject to limitations specified in the plan, the size
of awards in order to provide appropriate incentives. Awards may be issued in a
variety of forms, including: (a) restricted, deferred and bonus shares; (b)
incentive, non-qualified and accelerated stock ownership ("ASO" or "reload")
options (incentive, non-qualified and ASO options are referred to collectively
as "options"); (c) freestanding and tandem stock appreciation rights; and (d)
performance shares, performance units and cash- based awards. In addition to
the conditions and restrictions required under the plan with respect to each
type of award, the Committee may impose additional conditions and restrictions
with respect to the exercise or receipt of benefits under any award.
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TYPES OF AWARDS
Stock Options. Options provide for purchase of Common Stock at not
less than 100% of its fair market value on the date of grant (or, in case of
incentive stock options ("ISOs") any higher percentage of fair market value
required to qualify the option as an ISO). No option is exercisable more than
the ten years after its grant (or in the case of ISOs, for any shorter period
required to qualify them as ISOs). Options are exercisable at such times as the
Committee approves. The Committee may, either in connection with an option
grant or thereafter, provide that a participant who is still an eligible
participant when an option (the "Related Option") is exercised and pays the
option price or required tax withholding with shares of Common Stock (including
shares deemed delivered as payment) is automatically granted an ASO Option for
the number of shares tendered or deemed tendered to exercise the Related Option
plus (if provided in the award) the number of shares retained by the Company to
satisfy tax withholding requirements. ASO Options are deemed granted on the
date the Related Option is exercised, may be exercised only during the term of
the Related Option, and have the same terms as the Related Option, except that,
generally its option price is 100% of the fair market value of a share of
Common Stock on its grant date.
Stock Appreciation Rights. Stock appreciation rights ("SARs") are
either freestanding SARs (independent of any stock option) or tandem SARs
(granted in conjunction with a related option). Either the related option or
the tandem SAR will be adjusted for exercise of the other. All SARs must have a
grant price at least equal to the fair market value of a share of Common Stock
or the exercise price of the related option on the date of grant. Upon
exercise, a participant receives the difference between the fair market value
of a share of Common Stock on the exercise date and the grant price multiplied
by the number of shares for which the SAR is exercised. Payment may be made in
a combination of cash or Common Stock, as determined by the Committee.
Restricted Shares, Bonus Shares and Deferred Shares. Restricted shares
of Common Stock ("Restricted Shares") may be granted subject to such
restrictions (which may include satisfaction of performance goals) as the
Committee shall determine. Subject to the applicable restrictions, the grantee
has the rights of a shareholder with respect to the Restricted Shares,
including the right to vote and to receive dividends with respect to such
shares. Restricted Shares may not be disposed of until the conditions specified
by the Committee are satisfied. The Committee may also grant bonus shares
("Bonus Shares") and deferred shares ("Deferred Shares"). The Committee may
cause the Company to establish a grantor trust to hold shares subject to
Deferred Share awards.
Performance Shares, Performance Units and Cash-Based Awards. The
Committee may grant performance shares ("Performance Shares"), performance
units ("Performance Units"), and cash-based awards ("Cash-Based Awards"). At
the close of the applicable performance period, the participant is paid the
value earned with respect to an award in a combination of cash or Common Stock
determined by the Committee to have an aggregate fair market value equal to the
value of the earned award.
FEDERAL INCOME TAX CONSEQUENCES OF AWARDS
GENERAL
There are generally no Federal income tax consequences to either the
participant or the Company upon the grant of an option. On exercise of an ISO,
a participant generally will not recognize any income, and the Company will not
be entitled to a deduction for tax purposes. If a participant disposes of
shares acquired upon exercise of an ISO within two years of the grant date or
one year of the exercise date, the option will cease to be treated as an ISO,
the participant will recognize compensation income, and the Company will be
entitled to a deduction equal to the excess of the fair market value of the
shares on the exercise date over the exercise price. Otherwise, the Company
will not be entitled to any deduction upon disposition of such shares, and the
entire gain for the participant will be treated as a capital gain. On exercise
of a non-qualified stock option, the amount by which the fair market value of
the shares on the exercise date exceeds the exercise price is generally taxable
to the participant as compensation income and will generally be deductible by
the Company. The disposition of shares acquired through exercise of a
non-qualified stock option generally results in a capital gain or loss for the
participant, but will have no tax consequences for the Company.
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<PAGE> 20
The grant of a SAR, Performance Share, Performance Unit or Cash-Based
Award will not result in income to a participant or a tax deduction for the
Company. Upon payment of such a right or award, a participant will recognize
ordinary income equal to the fair market value of any shares of Common Stock
and cash received, and the Company will be entitled to a tax deduction in the
same amount. An award of Restricted Shares will not result in income to a
participant or a tax deduction for the Company until the shares are no longer
subject to forfeiture, unless the participant, if permitted by the Company,
elects under Section 83(b) of the Code to have the amount of income to the
participant (and deduction to the Company) determined at the grant date. At
that time, the participant generally will recognize ordinary income equal to
the fair market value of the shares less any amount paid for them, and the
Company will be entitled to a tax deduction in the same amount. Dividends paid
on forfeitable Restricted Shares are treated as compensation for Federal income
tax purposes, unless the participant has made a Section 83(b) election.
PERFORMANCE MEASURES
Under Section 162(m) of the Code, in order for awards to certain
specified persons (generally the person serving as Chief Executive Officer at
the end of the Company's fiscal year and the four other most highly compensated
officers at such time (each, a "Covered Employee")) under the Amended 1993
Plan, to be fully deductible in the event the total compensation paid during a
fiscal year to a Covered Employee exceeds $1 million dollars, awards to such
Covered Employees (other than stock options the value of which is based solely
upon the increase in the value of the stock after the grant date) must be paid
solely on account of attaining one or more pre-established, objective
performance goals. Under the Amended 1993 Plan, awards granted to Covered
Employees designed to qualify for the performance-based exception under Section
162(m)(the "Performance-Based Exception") shall be based upon one or more of
the following performance measures selected by the Committee: (a) earnings
(either in the aggregate or on a per-share basis); (b) net income; (c)
operating income; (d) return measures (including return on assets, investments,
equity, or gross sales); (e) shareholder returns (including growth measures and
stockholder return or attainment of a specified share value for a specified
period of time), share price or share price appreciation; (f) cash flow; (g)
earnings before or after either, or any combination of, taxes, interest or
depreciation and amortization; (h) gross revenues; (i) reductions in expense
levels in each case, where applicable, determined either on a Company-wide
basis or in respect of any one or more business units; (j) net economic value;
or (k) market share with respect to specific designated products or product
groups. The performance measures described in (a) through (f) above may be
measured on either a pre-tax or post-tax basis and an award may provide that it
includes or excludes items to measure specific objectives, such as losses from
discontinued operations, extraordinary gains or losses, the cumulative effect
of accounting changes, acquisitions or divestitures, foreign exchange impacts
and any unusual, nonrecurring gain or loss.
DESCRIPTION OF THE MATERIAL CHANGES TO THE 1993 PLAN
The following discussion summarizes the material changes in the 1993
Plan effected by the Amended 1993 Plan.
INCREASE IN NUMBER OF SHARES ISSUABLE UNDER PLAN
The aggregate number of shares of Common Stock authorized for issuance
under the 1993 Plan is increased from 4,000,000 shares to the sum of (a)
1,500,000 shares, (b) the 4,000,000 shares currently reserved for issuance
under the 1993 Plan reduced by the number of shares issued pursuant to awards
under the 1993 Plan, and (c) shares reserved for issuance under awards still
outstanding under the Company's 1987 Stock Option Plan to the extent such
awards are forfeited, terminated or settled without issuance of the reserved
shares. Any shares of Common Stock (whether subject to or received pursuant to
an award under any Company plan) withheld or applied to pay the exercise price
or related required tax withholding reduce the number of shares treated as
issued under the Amended 1993 Plan and thereby increase the aggregate number of
shares available for issuance. Both the 1993 Plan and the Amended 1993 Plan
provide for the adjustment of these limitations for stock splits, stock
dividends, recapitalizations and other similar events. The Amended 1993 Plan
also eliminates the restriction on issuing more than 750,000 shares as
Restricted Shares. 16,900 shares of Common Stock have previously been issued
under the 1993 Plan, and 2,836,416 additional shares of Common Stock are
reserved for issuance under presently outstanding awards under the 1993 Plan.
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<PAGE> 21
CHANGES IN INDIVIDUAL AWARD LIMITS
For awards paid to Covered Employees to qualify for the
Performance-Based Exception and be fully tax deductible, the plan must limit
the size or amount of awards which may be made to a participant during
specified time periods. The 1993 Plan presently provides that a participant may
not be awarded during any fiscal year: (a) SARs with respect to more than
500,000 shares of Common Stock; (b) options to acquire more than 500,000 shares
of Common Stock; (c) more than 200,000 Restricted Shares; and (d) Performance
Shares, Performance Units or Cash-Based Awards having a maximum aggregate
payout, measured at the time such awards are granted, in excess of the value of
200,000 shares of Common Stock on the award date.
The Amended 1993 Plan limits awards granted to a participant in any
calendar year to the following: (a) awards (other than ASO Options, Performance
Units and Cash-Based Awards) for no more than 2,000,000 shares (including as
shares the number of SARs granted), (b) ASO Options for no more that 4,000,000
shares, and (c) Performance Units and Cash-Based Awards not exceeding 300% of a
participant's salary (as in effect on the award date). The Amended 1993 Plan,
as does the 1993 Plan, provides that these limitations are to be appropriately
adjusted for recapitalizations, stock dividends, stock splits, or other similar
events if the Committee determines that such an adjustment is appropriate in
order to prevent diminution or enlargement of benefits.
CHANGES IN TERMS AND CONDITIONS OF AWARDS
Additional Performance Measures. The 1993 Plan presently provides that
awards to Covered Employees designed to qualify for the Performance-Based
Exception must be based upon one or more of the following performance measures:
(a) return on equity; (b) return on assets employed; (c) earnings per share;
(d) operating cash flow; (e) income before taxes; (f) net income; (g) return on
revenue; (h) total shareholder return; and (i) stock price appreciation of the
Common Stock. The Amended 1993 Plan changes the performance measures to those
described above under the caption "Federal Income Tax Consequences of Awards
PERFORMANCE MEASURES" on page 18.
Changes Regarding Restricted Shares. The Amended 1993 Plan authorizes
the Committee to determine the amount, if any, that a participant must pay for
Restricted Shares and prescribes the time for making such payment. The Amended
1993 Plan also provides that if the participant forfeits for any reason any
Restricted Shares for which the participant was required to pay (including
through the exercise of an option) the participant is deemed to have resold
such Restricted Shares to the Company at a price equal to the lesser of the
amount paid by the participant for the Restricted Shares or their fair market
value on the date of forfeiture.
Payment Upon Exercise of Options. The 1993 Plan presently permits a
participant to pay the exercise price of an option (a) in cash, (b) by tendering
previously acquired Common Stock held by the participant for at least six
months or (c) by effecting a cashless exercise of options under Federal Reserve
Board Regulation T. The Amended 1993 Plan also permits a participant to tender
(i) shares which the participant has purchased on the open market, whether or
not held for six months, valued at their fair market value on the exercise
date; and (ii) Restricted Shares that the participant has held for at least six
months, valued at their fair market value on the exercise date. The Amended
1993 Plan provides that if Restricted Shares are used to pay the option price,
a number of shares acquired on exercise of the option equal to the number of
Restricted Shares tendered shall become subject to the same restrictions as the
Restricted Shares tendered.
EFFECT OF TERMINATION OF EMPLOYMENT ON AWARDS
Definition of "Cause." Under the 1993 Plan, "cause" means willful and
gross misconduct that is materially and demonstrably detrimental to the Company
or the commission of one or more acts constituting an indictable crime. Under
the Amended 1993 Plan, "cause" means a participant's (a) conviction of a felony
or other crime involving fraud, dishonesty or moral turpitude, (b) willful or
reckless material misconduct in the performance of the participant's duties, or
(c) habitual neglect of duties, and a resignation in lieu of termination for
cause is treated as a termination for cause.
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<PAGE> 22
Options, SARs and Restricted Shares
Death or Disability. Under the 1993 Plan if a participant's employment
terminates due to death or "disability" (as defined in the plan), all
outstanding options and SARs fully vest immediately, and remain exercisable at
any time prior to their expiration date, or for one year after the date of
death or termination for disability, whichever is shorter. The Amended 1993
Plan provides for terminations due to death or disability that any outstanding
options and SARs fully vest and may be exercised until their expiration date.
The Amended 1993 Plan (as does the 1993 Plan) provides for terminations due to
death or disability that all Restricted Shares become nonforfeitable.
Retirement. The 1993 Plan presently provides that if a participant
retires, all outstanding options and SARs become fully vested and remain
exercisable for the lesser of the remaining exercise period or three years
after retirement, and all outstanding Restricted Shares become nonforfeitable.
The Amended 1993 Plan treats retirement as a termination for "any other
reason". Accordingly, upon retirement, any unexercised option or SAR, to the
extent exercisable immediately before retirement, remains exercisable for the
lesser of the remaining exercise period or three months after retirement, and
any Restricted Shares are forfeited.
Death Following Termination Due to Disability or Retirement. The
Amended 1993 Plan eliminates an existing provision permitting outstanding
options and SARs to be exercised for the greater of one year or the remaining
portion of the exercise period originally triggered by the termination when a
participant dies following retirement or termination due to disability and
prior to the expiration of the normal permitted exercise period following such
events.
Termination for Cause. The Amended 1993 Plan continues the provisions
that if employment is terminated for cause, all outstanding options and SARs
are forfeited without an opportunity to exercise them, and all Restricted
Shares are forfeited.
Termination for "Any Other Reason" than Death, Disability, Retirement
or Cause. The 1993 Plan presently provides that if a participant's employment
terminates for any other reason than death, disability, retirement or cause,
all unvested options and SARs are forfeited, subject to the Committee's right
to immediately vest all or any portion of the options or SARs, and vested
options and SARs may be exercised by the participant during the three month
period after termination. Under the Amended 1993 Plan, if employment terminates
for any other reason than death, disability or cause, then any vested option or
SAR remains exercisable for the shorter of the remaining exercise period or
three months after such termination. The Amended 1993 Plan (as does the 1993
Plan) provides that if a participant's employment terminates for any other
reason than death, disability or cause, then any Restricted Shares still
subject to restrictions are forfeited.
Performance Units, Performance Shares and Cash-Based Awards.
Termination other than for Cause. The 1993 Plan provides that if
employment terminates due to death, disability, retirement or any other reason
than for cause during the measurement period for the performance goals (a
"Performance Period"), the participant is entitled to receive a prorated payout
of the Performance Units, Performance Shares or Cash-Based Awards, as
determined by the Committee for the portion of the Performance Period completed
and the achievement of the performance goal.
Under the Amended 1993 Plan, retirement is treated as a termination for
"any other reason," and, therefore, any Performance Units, Performance Shares
or Cash-Based Awards with respect to which the Performance Period has not
ended, terminate upon retirement. Under the Amended 1993 Plan, if employment
terminates due to death or disability, the amount payable with respect to any
Performance Share, Performance Unit or Cash-Based Award for which the
Performance Period has not ended is prorated according to a fixed formula based
upon the number of months during the Performance Period that the award was held
and an estimate of the level of achievement of the performance goals at the end
of the Performance Period based on the rate of achievement through the
termination date, or, if the Committee elects to compute the benefit after the
end of the Performance Period, the actual performance goal attained during the
Performance Period (the "Proration Formula").
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<PAGE> 23
Termination for Cause. The Amended 1993 Plan continues in effect the
provision that if employment terminates for cause, all outstanding Performance
Units, Performance Shares and Cash-Based Awards are forfeited.
Deferred Shares. If employment terminates due to death or disability,
all Deferred Shares that were forfeitable become nonforfeitable. If employment
terminates for any reason other than death or disability, Deferred Shares that
remained forfeitable at the time of termination are forfeited.
OTHER CHANGES
Eligible Participants. The Amended 1993 Plan adds consultants as
persons eligible to receive awards.
Expanded Committee Powers. The authority of the Committee is expanded
under the Amended 1993 Plan to allow the Committee to: (a) cancel, with the
participant's consent, outstanding awards under the plan and grant new awards
in substitution therefor; (b) accelerate the exercisability of, and accelerate
or waive terms and conditions applicable to, any awards or group of awards for
any reason and at any time; (c) extend the time during which any award or group
of awards may be exercised; and (d) make adjustments or modifications to awards
to participants who are working outside of the United States to fulfill the
purposes of the plan or to comply with applicable local law.
The Amended 1993 Plan also allows the Committee to authorize the Chief
Executive Officer of the Company to grant options and Restricted Shares to
categories of eligible participants designated by the Committee (other than to
persons subject to the short-swing profit restrictions of Section 16 of the
Securities Exchange Act of 1934) in amounts and on terms specified by the
Committee.
Extension of 1993 Plan Term. The 1993 Plan provides that no awards may
be granted under the plan on or after January 1, 2003. The Amended 1993 Plan
will remain in effect, subject to the right of the Board of Directors to amend
or terminate the plan at any time, until all shares of Common Stock subject to
it have been purchased or acquired according to the plan's provisions;
provided, that no ISO may be granted under the plan after January 18, 2010.
Types of Awards. The Amended 1993 Plan eliminates the ability to award
Affiliated SARs and authorizes the award of ASO Options, Bonus Shares and
Deferred Shares.
Grant of Options or Deferred Shares in Lieu of Compensation. The Amended
1993 Plan authorizes the Committee to grant participants, or allow any
participants to elect to receive, options or Deferred Shares instead of other
compensation such participants may be eligible to receive.
Transferability of Awards. Under the Amended 1993 Plan, the Committee
may permit a participant to transfer awards (other than ISOs) to certain
specified family members or trusts for the primary benefit of, or entities such
as corporations or partnerships which are wholly-owned by, the participant or
such family members.
Definition and Effect of "Change of Control". The Amended 1993 Plan
changes the definition of "Change of Control" in the following principal
respects:
(i) it decreases the threshold percentage for an acquisition of
beneficial ownership of Common Stock by a "person" or "group" (as such terms
are defined under the Securities Exchange Act of 1934) to constitute a Change
of Control from 30%to 20%;
(ii) it adds a provision that the acquisition of 20%or more of the
Common Stock by certain corporations, at least 70% of the common stock and
aggregate voting power of which are owned by persons who also own the Common
Stock and voting power of the securities of the Company in substantially the
same proportion, will not constitute a Change of Control; and
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<PAGE> 24
(iii) it increases from 50%to more than 70%the percentage of voting
securities (and adds a requirement that such test must also be met with respect
to common stock) of the surviving corporation which must be owned following a
merger, consolidation or similar transaction involving the Company by persons
who were shareholders of the Company immediately prior to the transaction for
such transaction to not constitute a Change of Control.
The Amended 1993 Plan also changes the effect of a Change of Control
on outstanding awards, principally with respect to Performance Units,
Performance Shares and Cash-Based Awards. Under the 1993 Plan, the target value
attainable under all Performance Units, Performance Shares and Cash-Based
Awards is deemed to have been fully earned for the entire Performance Period as
of the effective date of any Change of Control. Under the Amended 1993 Plan,
rather than the awards being deemed fully earned, the participant will receive
a prorated payment based on the Proration Formula.
Pooling of Interests Accounting. Under the Amended 1993 Plan, if the
Committee determines that the grant or exercise of some or all outstanding
options or SARs would preclude the use of pooling of interests accounting in a
proposed sale or merger of the Company, which preclusion is reasonably expected
to have a material adverse effect on either the terms or likelihood of closing
such transaction, then the Committee may make adjustments to either the terms
or method of paying such awards so as to permit pooling, or under specified
circumstances, cancel all such awards without the participants' consent.
Awards in Connection with Certain Corporate Transactions. The Amended
1993 Plan provides that in connection with the Company's acquisition of another
business, the Committee may grant awards associated with outstanding options or
other equity interests in such business to preserve the economic value of such
interests to their holders.
Adjustments for Unusual or Nonrecurring Events. The Amended 1993 Plan
allows the Committee to adjust the terms and conditions of awards for unusual
or nonrecurring events affecting the Company or its financial statements or for
changes in applicable laws, regulations, or accounting principles, to prevent
dilution or enlargement of the benefits intended by such awards unless such
adjustment would affect compliance with the requirements of the
Performance-Based Exception.
AMENDMENT, MODIFICATION OR TERMINATION
The Committee may amend, modify or terminate the Amended 1993 Plan,
subject to approval by the Board of Directors. The requirement of the 1993 Plan
that, without shareholder approval, no such amendment, modification or
termination may (a) with limited exceptions, materially increase the total
number of shares which may be issued, (b) materially modify the eligibility
requirements for participation, or (c) materially increase the benefits
accruing to participants, has been eliminated. The Amended 1993 Plan (as does
the 1993 Plan) provides that, without a participant's consent, no amendment,
modification or termination may materially adversely affect any award granted
prior thereto.
VOTE REQUIRED; RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding
shares of the Company's Common Stock represented in person or by proxy at the
Annual Meeting is necessary to approve the amendment and restatement of the
1993 Plan by adoption of the Amended 1993 Plan. The Board of Directors
recommends that shareholders vote FOR the approval of the Amended 1993 Plan.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does
not intend to present, and has not been informed that any other person intends
to present, any matter for action at the Annual Meeting other than those
matters stated in the Notice of the Annual Meeting. Accordingly, if other
matters should properly come before the Annual Meeting, it is intended that the
holders of the proxies will act in respect thereto in accordance with their
best judgment.
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AUDITORS
Ernst & Young LLP, independent accountants, served as the Company's
auditors for 1999 after having previously served in the same capacity since
1930. Representatives of Ernst & Young will be in attendance at the Annual
Meeting and will be given the opportunity to make a statement and to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
The next annual meeting of shareholders is scheduled to be held on
April 25, 2001, and shareholders of the Company may submit proposals for
consideration for inclusion in the proxy statement of the Company relating to
such annual meeting of shareholders. However, in order for such proposals to be
considered for inclusion in the proxy statement of the Company relating to such
annual meeting, such proposals must be received by the Company not later than
November 16, 2000.
If a shareholder fails to notify the Company on or before January 30,
2001 of a proposal which such shareholder intends to present at the Company's
April 25, 2001 Annual Meeting by a means other than inclusion of such proposal
in the Company's proxy materials for that meeting, then if the proposal is
presented at such annual meeting, the holders of the Board of Director's
proxies at such meeting may use their discretionary voting authority with
respect to such proposal, regardless of whether the proposal was discussed in
the Company's proxy statement for such meeting.
GENERAL INFORMATION
The Board of Directors of the Company has fixed the close of business
on March 1, 2000, as the record date for determining the holders of the Common
Stock of the Company entitled to notice of and to vote at the Annual Meeting.
As of such date, the Company had issued and outstanding and entitled to vote at
the Annual Meeting an aggregate of 32,562,433 shares of Common Stock, each
share of which is entitled to one (1) vote on all matters to be considered at
the Annual Meeting.
Pursuant to Section 10-2B-7.25 of the Code of Alabama 1975, as
amended, and the Company's Bylaws, a majority of the shares of Common Stock
entitled to vote, represented in person or by proxy, will constitute a quorum
at a meeting of the shareholders. Section 10-2B-7.28 of the Code of Alabama
1975, as amended, requires that each of the nominees to be elected to the Board
of Directors receive the affirmative vote of a majority of the votes cast by
the holders of shares of Common Stock represented at the Annual Meeting as part
of the quorum. The vote for election of directors does not include shares which
abstain from voting on a matter or which are not voted on such matter by a
nominee because such nominee is not permitted to exercise discretionary voting
authority and the nominee has not received voting instructions from the
beneficial owner of such shares. Section 10-2B-7.25 of the Code of Alabama
1975, as amended, and the Company's Bylaws require, for the approval of the
adoption of the ESP Plan and the amendment and restatement of the 1993 Plan in
the form of the Amended 1993 Plan, the affirmative vote of the holders of a
majority of the outstanding shares of the Company's Common Stock represented in
person or by proxy at a meeting of shareholders at which a quorum is present
and entitled to vote with respect to such proposals. Generally, brokers who act
as nominees will be permitted to exercise discretionary voting authority where
they have received no instructions in uncontested elections for directors and
on certain other matters which are not contested (not including, however,
approval of the adoption of the ESP Plan or the amendment and restatement of the
1993 Plan in the form of the Amended 1993 Plan) where the brokers have complied
with Rule 451 concerning the delivery of proxy materials to beneficial owners
of the Company's Common Stock held by such brokers.
The Annual Meeting may be adjourned from time to time without notice
other than announcement at the Annual Meeting, or at any adjournment thereof,
and any business for which notice was given in the accompanying Notice of
Annual Meeting of Shareholders may be transacted at any such adjournment.
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In addition to the use of the mails, proxies may be solicited by
personal interview or by telephone or telegraph. The cost of solicitation of
proxies will be borne by the Company. The Company may request brokerage houses,
nominees, custodians, and fiduciaries to forward soliciting material to the
beneficial owners of the stock held of record and will reimburse such persons
for any reasonable expense incurred in forwarding the material.
Copies of the Company's Annual Report on Form 10-K for the year ended
January 1, 2000, in form as filed with the Securities and Exchange Commission,
may be obtained from Floyd G. Hoffman, the Senior Vice President, General
Counsel and Secretary of the Company, without charge, by persons who were
shareholders beneficially or of record as of March 1, 2000.
By Order of the Board of Directors
FLOYD G. HOFFMAN
Senior Vice President,
General Counsel and Secretary
Alexander City, Alabama
March 16, 2000
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<PAGE> 27
RUSSELL CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
<PAGE> 28
RUSSELL CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - BACKGROUND ............................................................................ 1
1.1 Establishment of the Plan ......................................................... 1
1.2 Applicability of the Plan ......................................................... 1
1.3 Purpose ........................................................................... 1
ARTICLE II - DEFINITIONS........................................................................... 1
2.1 Administrator...................................................................... 1
2.2 Board.............................................................................. 1
2.3 Code............................................................................... 1
2.4 Committee.......................................................................... 1
2.5 Common Stock....................................................................... 2
2.6 Compensation....................................................................... 2
2.7 Contribution Account............................................................... 2
2.8 Corporation........................................................................ 2
2.9 Direct Registration System......................................................... 2
2.10 Effective Date..................................................................... 2
2.11 Eligible Employee.................................................................. 2
2.12 Employee........................................................................... 2
2.13 Employer........................................................................... 3
2.14 Fair Market Value.................................................................. 3
2.15 Offering Date...................................................................... 3
2.16 Offering Period.................................................................... 3
2.17 Option............................................................................. 3
2.18 Participant........................................................................ 3
2.19 Plan............................................................................... 3
2.20 Purchase Date...................................................................... 3
2.21 Purchase Price..................................................................... 3
2.22 Request Form....................................................................... 3
2.23 Stock Account...................................................................... 3
2.24 Subsidiary......................................................................... 4
2.25 Trading Date....................................................................... 4
ARTICLE III - ELIGIBILITY AND PARTICIPATION........................................................ 4
3.1 Eligibility........................................................................ 4
3.2 Initial Participation.............................................................. 4
3.3 Leave of Absence................................................................... 5
ARTICLE IV - STOCK AVAILABLE....................................................................... 5
4.1 In General......................................................................... 5
4.2 Adjustment in Event of Changes in Capitalization................................... 5
4.3 Dissolution, Liquidation, or Reorganization........................................ 6
</TABLE>
<PAGE> 29
<TABLE>
<S> <C>
ARTICLE V. - OPTION PROVISIONS..................................................................... 6
5.1 Purchase Price....................................................................... 6
5.2 Calendar Year $25,000 Limit.......................................................... 6
5.3 Offering Period Limit................................................................ 6
ARTICLE VI - PURCHASING COMMON STOCK............................................................... 7
6.1 Participant's Contribution Account................................................... 7
6.2 Payroll Deductions, Lump Sum Cash Payments; Dividends................................ 7
6.3 Discontinuance....................................................................... 8
6.4 Leave of Absence; Transfer to Ineligible Status...................................... 8
6.5 Automatic Exercise................................................................... 9
6.6 Listing, Registration, and Qualification of Shares................................... 9
6.7 Restrictions on Transfer............................................................. 9
ARTICLE VII - WITHDRAWALS, DISTRIBUTIONS........................................................... 9
7.1 Discontinuance of Deductions; Leave of Absence; Transfer to Ineligible Status........ 9
7.2 In-Service Withdrawals............................................................... 10
7.3 Termination of Employment for Reasons Other Than Death............................... 10
7.4 Death................................................................................ 10
7.5 Registration......................................................................... 11
ARTICLE VIII - AMENDMENT AND TERMINATION........................................................... 11
8.1 Amendment............................................................................ 11
8.2 Termination.......................................................................... 11
ARTICLE IX - MISCELLANEOUS......................................................................... 12
9.1 Shareholder Approval................................................................. 12
9.1 No Employment Rights................................................................. 12
9.2 Tax Withholding...................................................................... 12
9.3 Rights Not Transferable.............................................................. 12
9.4 No Repurchase of Stock by Corporation................................................ 12
9.5 Governing Law........................................................................ 12
9.6 Shareholder Approval; Registration................................................... 12
</TABLE>
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<PAGE> 30
RUSSELL CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
BACKGROUND
1.1 ESTABLISHMENT OF THE PLAN. Russell Corporation (the
"Corporation") hereby establishes a stock purchase plan to be known as the
"Russell Corporation 2000 Employee Stock Purchase Plan" (the "Plan"), as set
forth in this document. The Plan is intended to be a qualified employee stock
purchase plan within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended, and the regulations and rulings thereunder.
1.2 APPLICABILITY OF THE PLAN. The provisions of this Plan are
applicable only to certain individuals who, on or after February 1, 2000, are
employees of the Corporation and its subsidiaries participating in the Plan.
The Committee shall indicate from time to time which of its subsidiaries, if
any, are participating in the Plan.
1.3 PURPOSE. The purpose of the Plan is to enhance the
proprietary interest among the employees of the Corporation and its
participating subsidiaries through ownership of Common Stock of the
Corporation.
ARTICLE II
DEFINITIONS
Whenever capitalized in this document, the following terms shall have
the respective meanings set forth below.
2.1 ADMINISTRATOR. Administrator shall mean the person or persons
(who may be officers or employees of the Corporation) selected by the Committee
to operate the Plan, perform day-to-day administration of the Plan, and
maintain records of the Plan.
2.2 BOARD. Board shall mean the Board of Directors of the
Corporation.
2.3 CODE. Code shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations thereunder.
2.4 COMMITTEE. Committee shall mean a committee which consists of
members of the Board and which has been designated by the Board to have the
general responsibility for the administration of the Plan. Unless otherwise
designated by the Board, the Management Development and Compensation Committee
of the Board of Directors of the Corporation shall serve as the Committee
administering the Plan. Subject to the express provisions of the Plan, the
Committee shall have plenary authority in its sole and absolute discretion to
interpret and construe any and all provisions of the Plan, to adopt rules and
regulations for administering the Plan, and to make all other determinations
necessary or advisable for administering the Plan. The Committee's
determinations on the foregoing matters shall be conclusive and binding upon
all persons.
2.5 COMMON STOCK. Common Stock shall mean the common stock, par
value $.01, of the Corporation.
2.6 COMPENSATION. Compensation shall mean, for any Participant,
for any Offering Period, the Participant's gross base wages for the respective
period, subject to appropriate adjustments that would
<PAGE> 31
exclude items such as bonuses, overtime pay, non-cash compensation and
reimbursement of moving, travel, trade or business expenses.
2.7 CONTRIBUTION ACCOUNT. Contribution Account shall mean the
bookkeeping account established by the Administrator on behalf of each
Participant, which shall be credited with the amounts deducted from the
Participant's Compensation or lump sum cash payments made pursuant to Article
VI. The Administrator shall establish a separate Contribution Account for each
Participant for each Offering Period.
2.8 CORPORATION. Corporation shall mean Russell Corporation, an
Alabama corporation.
2.9 DIRECT REGISTRATION SYSTEM. Direct Registration System shall
mean a direct registration system approved by the Securities and Exchange
Commission and by the New York Stock Exchange, Inc. or any securities exchange
on which the Common Stock is then listed, whereby shares of Common Stock may be
registered in the holder's name in book-entry form on the books of the
Corporation.
2.10 EFFECTIVE DATE. Effective Date shall mean the effective date
of the Plan, which shall be the later of (i) March 1, 2000, or (ii) the
effective date of the Corporation's registration statement on Form S-8 filed
under the Securities Act of 1933, as amended, covering the shares to be issued
under the Plan.
2.11 ELIGIBLE EMPLOYEE. An Employee eligible to participate in the
Plan pursuant to Section 3.1.
2.12 EMPLOYEE. Employee shall mean an individual employed by an
employer who meets the employment relationship described in Treasury Regulation
Sections 1.423-2(b) and Section 1.421-7(h).
2.13 EMPLOYER. Employer shall mean the Corporation and any
Subsidiary designated by the Committee as an employer participating in the
Plan.
2.14 FAIR MARKET VALUE. Fair Market Value of a share of Common
Stock, as of any designated date, shall mean the closing sales price of the
Common Stock on the New York Stock Exchange on such date or on the last
previous date on which such stock was traded.
2.15 OFFERING DATE. Offering Date shall mean the first Trading
Date of each Offering Period.
2.16 OFFERING PERIOD. Offering Period shall mean the quarterly
periods beginning January 1, April 1, July 1 and October 1, respectively, of
each year during which offers to purchase Common Stock are outstanding under
the Plan; provided, however, that the initial Offering Period shall be the
period beginning on the Effective Date and ending on June 30, 2000. No payroll
deductions shall be taken until the Effective Date.
2.17 OPTION. Option shall mean the option to purchase Common Stock
granted under the Plan on each Offering Date.
2.18 PARTICIPANT. Participant shall mean any Eligible Employee who
has elected to participate in the Plan under Section 3.2.
2.19 PLAN. Plan shall mean the Russell Corporation 2000 Employee
Stock Purchase Plan, as amended and in effect from time to time.
2.20 PURCHASE DATE. Purchase Date shall mean the last Trading Date
of each Offering Period.
2.21 PURCHASE PRICE. Purchase Price shall mean the purchase price
of Common Stock determined under Section 5.1.
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<PAGE> 32
2.22 REQUEST FORM. Request Form shall mean an Employee's
authorization either in writing on a form approved by the Administrator or
through electronic communication approved by the Administrator which specifies
the Employee's payroll deduction or lump sum cash payments in accordance with
Section 6.2, and contains such other terms and provisions as may be required by
the Administrator.
2.23 STOCK ACCOUNT. Stock Account shall mean the account
established by the Administrator on behalf of each Participant, which shall be
credited with shares of Common Stock purchased pursuant to the Plan and
dividends thereon until distributed in accordance with the terms of the Plan.
2.24 SUBSIDIARY. Subsidiary shall mean any present or future
corporation which is a "subsidiary corporation" of the Corporation as defined
in Code Section 424(f).
2.25 TRADING DATE. Trading Date shall mean a date on which shares
of Common Stock are traded on a national securities exchange (such as the New
York Stock Exchange), the Nasdaq National Market or in the over-the-counter
market.
Except when otherwise indicated by the context, the definition of any
term herein in the singular may also include the plural.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY. Each Employee who is an Employee regularly
scheduled to work at least 20 hours each week and at least five months each
calendar year shall be eligible to participate in the Plan as of the later of:
(a) the Offering Date immediately following the Employee's last
date of hire by an Employer; or
(b) the Effective Date.
On each Offering Date, Options will automatically be granted to all
Employees then eligible to participate in the Plan; provided, however, that no
Employee shall be granted an Option for an Offering Period if, immediately
after the grant, the Employee would own stock, and/or hold outstanding options
to purchase stock, possessing five percent or more of the total combined voting
power or value of all classes of stock of the Corporation or any Subsidiary.
For purposes of this Section, the attribution rules of Code Section 424(d)
shall apply in determining stock ownership of any Employee. If an Employee is
granted an Option for an Offering Period and such Employee does not participate
in the Plan for such Offering Period, such Option will be deemed never to have
been granted for purposes of applying the $25,000 annual limitation described
in Section 5.2.
3.2 INITIAL PARTICIPATION. An Eligible Employee having been
granted an Option under Section 3.1 may submit a Request Form to the
Administrator to participate in the Plan for an Offering Period. The Request
Form shall authorize a regular payroll deduction from the Employee's
Compensation for the Offering Period, or shall notify the Administrator that
the Participant shall make a lump sum cash payment (including personal or
certified checks) for the Offering Period, or shall both authorize a payroll
deduction and notify the Administrator of a lump sum cash payment for the
Offering Period, subject to the limits and procedures described in Article VI.
A Participant's Request Form authorizing a regular payroll deduction shall
remain effective from Offering Period to Offering Period until amended or
canceled under Section 6.3. A Participant's Request Form authorizing a lump sum
cash payment shall be valid only for the Offering Period to which it relates.
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<PAGE> 33
3.3 LEAVE OF ABSENCE. For purposes of Section 3.1, an individual
on a leave of absence from an Employer shall be deemed to be an Employee for
the first 90 days of such leave. For purposes of this Plan, such individual's
employment with the Employer shall be deemed to terminate at the close of
business on the 90th day of the leave, unless the individual has returned to
regular employment with an Employer before the close of business on such 90th
day. Termination of any individual's leave of absence by an Employer, other
than on account of a return to employment with an Employer, shall be deemed to
terminate an individual's employment with the Employer for all purposes of the
Plan.
ARTICLE IV
STOCK AVAILABLE
4.1 IN GENERAL. Subject to the adjustments in Sections 4.2 and
4.3, an aggregate of 800,000 shares of Common Stock shall be available for
purchase by Participants pursuant to the provisions of the Plan. These shares
may be authorized and unissued shares or may be shares issued and subsequently
acquired by the Corporation. If an Option under the Plan expires or terminates
for any reason without having been exercised in whole or part, the shares
subject to such Option that are not purchased shall again be available for
subsequent Option grants under the Plan. If the total number of shares of
Common Stock for which Options are exercised on any Purchase Date exceeds the
maximum number of shares then available under the Plan, the Committee shall
make a pro rata allocation of the shares available in as nearly a uniform
manner as shall be practicable and as it shall determine to be equitable; and
the balance of the cash credited to Participants' Contribution Accounts shall
be distributed to the Participants as soon as practicable.
4.2 ADJUSTMENT IN EVENT OF CHANGES IN CAPITALIZATION. In the
event of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Corporation's capitalization, or other
distribution with respect to holders of the Corporation's Common Stock other
than normal cash dividends, an automatic adjustment shall be made in the number
and kind of shares as to which outstanding Options or portions thereof then
unexercised shall be exercisable and in the available shares set forth in
Section 4.1, so that the proportionate interest of the Participants shall be
maintained as before the occurrence of such event. This adjustment in
outstanding Options shall be made without change in the total price applicable
to the unexercised portion of such Options and with a corresponding adjustment
in the Purchase Price per share; provided, however, that in no event shall any
adjustment be made that would cause any Option to fail to qualify as an option
pursuant to an employee stock purchase plan within the meaning of Section 423
of the Code.
4.3 DISSOLUTION, LIQUIDATION, OR REORGANIZATION. Upon the
dissolution or liquidation of the Corporation, or upon a reorganization,
merger, or consolidation of the Corporation with one or more corporations in
which the Corporation is not the surviving corporation, or upon a sale of
substantially all of the property or stock of the Corporation to another
corporation, the holder of each Option then outstanding under the Plan shall be
entitled to receive at the next Purchase Date upon the exercise of such Option
for each share as to which such Option shall be exercised, as nearly as
reasonably may be determined, the cash, securities, or property which a holder
of one share of the Common Stock was entitled to receive upon and at the time
of such transaction. The Committee shall take such steps in connection with
these transactions as the Committee deems necessary or appropriate to assure
that the provisions of this Section shall thereafter be applicable, as nearly
as reasonably may be determined, in relation to the cash, securities, or
property which the holder of the Option may thereafter be entitled to receive.
In lieu of the foregoing, the Committee may terminate the Plan in accordance
with Section 8.2.
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<PAGE> 34
ARTICLE V
OPTION PROVISIONS
5.1 PURCHASE PRICE. The Purchase Price of a share of Common Stock
purchased for a Participant pursuant to each exercise of an Option shall be the
lesser of:
(a) 85 percent of the Fair Market Value of a share of Common
Stock on the Offering Date; or
(b) 85 percent of the Fair Market Value of a share of Common
Stock on the Purchase Date.
5.2 CALENDAR YEAR $25,000 LIMIT. Notwithstanding anything else
contained herein, no Employee may be granted an Option for any Offering Period
which permits such Employee's rights to purchase Common Stock under this Plan
and any other qualified employee stock purchase plan (within the meaning of
Code Section 423) of the Corporation and its Subsidiaries to accrue at a rate
which exceeds $25,000 of Fair Market Value of such Common Stock for each
calendar year in which an Option is outstanding at any time. For purposes of
this Section, Fair Market Value shall be determined as of the Offering Date.
5.3 OFFERING PERIOD LIMIT. Notwithstanding anything else
contained herein, the maximum number of shares of Common Stock that an Eligible
Employee may purchase in any Offering Period is 1,000 shares.
ARTICLE VI
PURCHASING COMMON STOCK
6.1 PARTICIPANT'S CONTRIBUTION ACCOUNT. The Administrator shall
establish a book account in the name of each Participant for each Offering
Period. As discussed in Section 6.2 below, a Participant's payroll deductions
and his or her lump sum cash payments shall be credited to the Participant's
Contribution Account, without interest, until such cash is withdrawn,
distributed, or used to purchase Common Stock as described below.
During such time, if any, as the Corporation participates in a Direct
Registration System, shares of Common Stock acquired upon exercise of an Option
shall be directly registered in the name of the Participant. If the Corporation
does not participate in a Direct Registration System, then until distribution
is requested by a Participant pursuant to Article VII, stock certificates
evidencing the Participant's shares of Common Stock acquired upon exercise of
an Option shall be held by the Corporation as the nominee for the Participant.
These shares shall be credited to the Participant's Stock Account. Certificates
shall be held by the Corporation as nominee for Participants solely as a matter
of convenience. A Participant shall have all ownership rights as to the shares
credited to his or her Stock Account, and the Corporation shall have no
ownership or other rights of any kind with respect to any such certificates or
the shares represented thereby.
All cash received or held by the Corporation under the Plan may be
used by the Corporation for any corporate purpose. The Corporation shall not be
obligated to segregate any assets held under the Plan.
6.2 PAYROLL DEDUCTIONS, LUMP SUM CASH PAYMENTS; DIVIDENDS.
(a) Payroll Deductions. By submitting a Request Form at any time
before an Offering Period in accordance with rules adopted by the Committee, an
Eligible Employee may authorize a payroll deduction to purchase Common Stock
under the Plan for the Offering Period. The payroll deduction shall be
effective on the first pay period during the Offering Period commencing after
receipt of the Request Form by the Administrator. The payroll deduction shall
be in any whole percentage up to a maximum of ten percent (10%) of such
Employee's Compensation payable each pay period, and at any other time an
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<PAGE> 35
element of Compensation is payable. A Participant's payroll deduction shall not
be less than one percent (1%) of such Employee's Compensation payable each
payroll period.
(b) Lump Sum Cash Payments. In lieu of, or in addition to, the
payroll deductions in subsection (a), an Employee eligible to participate in
the Plan under Section 3.1 may, by submitting a Request Form no later than the
last day of the calendar week ending before the applicable Purchase Date in
accordance with rules adopted by the Administrator, notify the Administrator
that the Participant shall make a lump sum cash payment to purchase Common
Stock under the Plan for the Offering Period. In no event shall the combined
total payroll deductions and lump sum cash payments exceed 10 percent (10%) of
the Participant's Compensation paid during the Offering Period and during any
prior Offering Period in the same calendar year. Any lump sum cash payments
under this subsection must be received by the Administrator by the last day of
the calendar week ending before the applicable Purchase Date. If the
Participant fails to remit the lump sum cash payment by the applicable date,
the Participant's Request Form with respect to such lump sum cash payment shall
be void. A Participant may submit a Request Form to make a lump sum cash
payment only once each Offering Period.
(c) Dividends. Cash dividends paid on Common Stock which is
credited to a Participant's Stock Account as of the dividend payment date shall
be credited to the Participant's Stock Account and paid to the Participant as
soon as practicable.
6.3 DISCONTINUANCE. A Participant may discontinue his or her
payroll deductions for an Offering Period by filing a new Request Form with the
Administrator. This discontinuance shall be effective on the first pay period
commencing at least 30 days after receipt of the Request Form by the
Administrator. A Participant who discontinues his or her payroll deductions for
an Offering Period may not make a subsequent lump sum contribution during such
Offering Period or resume participation in the Plan until the following
Offering Period.
Any amount held in the Participant's Contribution Account for an
Offering Period after the effective date of the discontinuance of his or her
payroll deductions will either be refunded or used to purchase Common Stock in
accordance with Section 7.1.
6.4 LEAVE OF ABSENCE; TRANSFER TO INELIGIBLE STATUS. If a
Participant either begins a leave of absence, is transferred to employment with
a Subsidiary not participating in the Plan, or remains employed with an
Employer but is no longer eligible to participate in the Plan, the Participant
shall cease to be eligible for payroll deductions or lump sum cash payments to
his or her Contribution Account pursuant to Section 6.2. The cash standing to
the credit of the Participant's Contribution Account shall become subject to
the provisions of Section 7.1.
If the Participant returns from the leave of absence before being
deemed to have ceased employment with the Employer under Section 3.3, or again
becomes eligible to participate in the Plan, the Request Form, if any, in
effect immediately before the leave of absence or disqualifying change in
employment status shall be deemed void and the Participant must again complete
a new Request Form to resume participation in the Plan.
6.5 AUTOMATIC EXERCISE. Unless the cash credited to a
Participant's Contribution Account is withdrawn or distributed as provided in
Article VII, his or her Option shall be deemed to have been exercised
automatically on each Purchase Date, for the purchase of the number of full
shares of Common Stock which the cash credited to his or her Contribution
Account at that time will purchase at the Purchase Price. If there is a cash
balance remaining in the Participant's Contribution Account at the end of an
Offering Period representing the exercise price for a fractional share of
Common Stock, such balance may be retained in the Participant's Contribution
Account for the next Offering Period, unless the Participant requests that it
be refunded, without interest. Any other cash balance remaining in the
Participant's Contribution Account at the end of an Offering Period shall be
refunded to the Participant, without interest.
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<PAGE> 36
The amount of cash that may be used to purchase shares of Common Stock may not
exceed the Compensation restrictions set forth in Section 6.2.
Except as provided in the preceding paragraph, if the cash credited to
a Participant's Contribution Account on the Purchase Date exceeds the
applicable Compensation restrictions of Section 6.2 or exceeds the amount
necessary to purchase the maximum number of shares of Common Stock available
during the Offering Period, such excess cash shall be refunded to the
Participant. Except as provided in the preceding paragraph, the excess cash may
not be used to purchase shares of Common Stock nor retained in the
Participant's Contribution Account for a future Offering Period.
Each Participant shall receive a statement on an annual basis
indicating the number of shares credited to his or her Stock Account, if any,
under the Plan.
6.6 LISTING, REGISTRATION, AND QUALIFICATION OF SHARES. The
granting of Options for, and the sale and delivery of, Common Stock under the
Plan shall be subject to the effecting by the Corporation of any listing,
registration, or qualification of the shares subject to that Option upon any
securities exchange or under any federal or state law, or the obtaining of the
consent or approval of any governmental regulatory body deemed necessary or
desirable for the issuance or purchase of the shares covered.
6.7 RESTRICTIONS ON TRANSFER. By participating in the Plan, each
participant hereby agrees that he or she will not sell or otherwise transfer
(other than by will or the laws of descent and distribution) any shares of
Common Stock acquired under the Plan for a period of 12 months following the
Purchase Date on which such shares were acquired.
ARTICLE VII
WITHDRAWALS; DISTRIBUTIONS
7.1 DISCONTINUANCE OF DEDUCTIONS; LEAVE OF ABSENCE; TRANSFER TO
INELIGIBLE STATUS. In the event of a Participant's complete discontinuance of
payroll deductions under Section 6.3 or a Participant's leave of absence or
transfer to an ineligible status under Section 6.4, the cash balance then
standing to the credit of the Participant's Contribution Account shall be--
(a) returned to the Participant, in cash, without interest, as
soon as practicable, upon the Participant's written request received by the
Administrator at least 30 days before the next Purchase Date; or
(b) held under the Plan and used to purchase Common Stock for the
Participant under the automatic exercise provisions of Section 6.5.
7.2 IN-SERVICE WITHDRAWALS. During such time, if any, as the
Corporation participates in a Direct Registration System, shares of Common
Stock acquired upon exercise of an Option shall be directly registered in the
name of the Participant and the Participant may withdraw certificates in
accordance with the applicable terms and conditions of such Direct Registration
System. If the Corporation does not participate in a Direct Registration
System, (i) a Participant may, while an Employee of the Corporation or any
Subsidiary, withdraw certificates for some or all of the shares of Common Stock
credited to his or her Stock Account at any time, upon 30 days' written notice
to the Administrator, and (ii) each Participant shall be permitted only one
withdrawal under this Section during each Offering Period. If a Participant
requests a distribution of only a portion of the shares of Common Stock
credited to his or her Stock Account, the Administrator will distribute the
oldest securities held in the Participant's Stock Account first, using a first
in-first out methodology. The Administrator may at any time distribute
certificates for some or all of the shares of Common Stock credited to a
Participant's Stock Account, whether or not the Participant so requests.
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<PAGE> 37
7.3 TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN DEATH. If a
Participant terminates employment with the Corporation and the Subsidiaries for
reasons other than death, the cash balance in the Participant's Contribution
Account shall be returned to the Participant in cash, without interest, as soon
as practicable. Certificates for the shares of Common Stock credited to his or
her Stock Account shall be distributed to the Participant as soon as
practicable, unless the Corporation then participates in a Direct Registration
System, in which case, the Participant shall be entitled to evidence of
ownership of such shares in such form as the terms and conditions of such
Direct Registration System permit.
7.4 DEATH. In the event a Participant dies, the cash balance in
his or her Contribution Account shall be distributed to the Participant's
estate, in cash, without interest, as soon as practicable. Certificates for the
shares of Common Stock credited to the Participant's Stock Account shall be
distributed to the estate as soon as practicable, unless the Corporation then
participates in a Direct Registration System, in which case, the estate shall
be entitled to evidence of ownership of such shares in such form as the terms
and conditions of such Direct Registration System permit.
7.5 REGISTRATION. Whether represented in certificate form or by
direct registration pursuant to a Direct Registration System, shares of Common
Stock acquired upon exercise of an Option shall be directly registered in the
name of the Participant or, if the Participant so indicates on the Request
Form, (a) in the Participant's name jointly with a member of the Participant's
family, with the right of survivorship, (b) in the name of a custodian for the
Participant (in the event the Participant is under a legal disability to have
stock issued in the Participant's name), or (c) in a manner giving effect to
the status of such shares as community property. No other names may be included
in the Common Stock registration. The Corporation shall pay all issue or
transfer taxes with respect to the issuance or transfer of shares of such
Common Stock, as well as all fees and expenses necessarily incurred by the
Corporation in connection with such issuance or transfer.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 AMENDMENT. The Committee shall have the right to amend or
modify the Plan, in full or in part, at any time and from time to time;
provided, however, that no amendment or modification shall:
(a) affect any right or obligation with respect to any grant
previously made, unless required by law, or
(b) unless previously approved by the stockholders of the
Corporation, where such approval is necessary to satisfy the Code, the rules of
any stock exchange on which the Corporation's Common Stock is listed, or the
requirements necessary to meet any exemption from the application of federal
securities laws:
(1) in any manner materially affect the eligibility
requirements set forth in Sections 3.1 and 3.3, or change the
definition of Employer as set forth in Section 2.13,
(2) increase the number of shares of Common Stock
subject to any options issued to Participants (except as provided in
Sections 4.2 and 4.3), or
(3) materially increase the benefits to Participants
under the Plan.
8.2 TERMINATION. The Committee may terminate the Plan at any time
in its sole and absolute discretion. The Plan shall be terminated by the
Committee if at any time the number of shares of Common
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<PAGE> 38
Stock authorized for purposes of the Plan is not sufficient to meet all
purchase requirements, except as specified in Section 4.1.
Upon termination of the Plan, the Administrator shall give notice
thereof to Participants, shall terminate all payroll deductions and shall no
longer accept additional lump sum cash payments from Participants. Cash
balances then credited to Participants' Contribution Accounts shall be
distributed as soon as practicable, without interest.
ARTICLE IX
MISCELLANEOUS
9.1 SHAREHOLDER APPROVAL. The Plan shall be approved and ratified
by the stockholders of the Corporation, not later than 12 months after adoption
of the Plan by the Board of Directors of the Corporation, pursuant to Treasury
regulation Section 1.423-2(c). If for any reason such approval is not given by
such date, the Plan shall be null and void, and all payroll deductions to the
Plan shall cease. The cash balances and Common Stock credited to Participants'
accounts shall be promptly distributed to them; and any Common Stock
certificates issued and delivered to Participants prior to such date shall
remain the property of the Participants.
9.2 NO EMPLOYMENT RIGHTS. Neither the establishment of the Plan,
nor the grant of any Options thereunder, nor the exercise thereof shall be
deemed to give to any Employee the right to be retained in the employ of the
Corporation or any Subsidiary or to interfere with the right of the Corporation
or any Subsidiary to discharge any Employee or otherwise modify the employment
relationship at any time.
9.3 TAX WITHHOLDING. The Administrator may make appropriate
provisions for withholding of federal, state, and local income taxes, and any
other taxes, from a Participant's Compensation to the extent the Administrator
deems such withholding to be legally required.
9.4 RIGHTS NOT TRANSFERABLE. Rights and Options granted under
this Plan are not transferable by the Participant other than by will or by the
laws of descent and distribution and are exercisable only by the Participant
during his or her lifetime.
9.5 NO REPURCHASE OF STOCK BY CORPORATION. The Corporation is
under no obligation to repurchase from any Participant any shares of Common
Stock acquired under the Plan.
9.6 GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of Alabama except to the extent such laws
are preempted by the laws of the United States.
9.7 SHAREHOLDER APPROVAL; REGISTRATION. The Plan was adopted by
the Board of Directors of the Corporation on January 18, 2000 to be effective
as of the Effective Date, provided that no payroll deductions may begin until a
registration statement on Form S-8 filed under the Securities Act of 1933, as
amended, covering the shares to be issued under the Plan, has become effective.
The Plan is subject to approval by the stockholders of the Corporation within
12 months of approval by the Board of Directors.
* * * * * * * * * * * * * *
The foregoing is hereby acknowledged as being the Russell Corporation 2000
Employee Stock Purchase Plan as adopted by the Board of Directors of the
Corporation on January 18, 2000.
RUSSELL CORPORATION
By:
------------------------------------------
Its:
-----------------------------------------
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RUSSELL CORPORATION
EXECUTIVE INCENTIVE PLAN
<PAGE> 40
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1. ESTABLISHMENT, OBJECTIVES AND DURATION.................................................................1
1.1. Establishment of the Plan................................................................................1
1.2. Objectives of the Plan...................................................................................1
1.3. Duration of the Plan.....................................................................................1
ARTICLE 2. DEFINITIONS............................................................................................1
ARTICLE 3. ADMINISTRATION.........................................................................................7
3.1. Committee................................................................................................7
3.2. Powers of Committee......................................................................................8
ARTICLE 4. SHARES SUBJECT TO THE PLAN.............................................................................9
4.1. Number of Shares Available...............................................................................9
4.2. Adjustments in Authorized Shares.........................................................................9
4.3. Performance Measures....................................................................................10
4.4. Compliance with Section 162(m) of the Code..............................................................11
ARTICLE 5. ELIGIBILITY AND GENERAL CONDITIONS OF AWARDS..........................................................12
5.1. Eligibility.............................................................................................12
5.2. Grant Date..............................................................................................12
5.3. Maximum Term............................................................................................12
5.4. Award Agreement.........................................................................................12
5.5. Restrictions on Share Transferability...................................................................12
5.6. Termination of Affiliation..............................................................................12
5.7. Nontransferability of Awards............................................................................14
ARTICLE 6. STOCK OPTIONS.........................................................................................15
6.1. Grant of Options........................................................................................15
6.2. Award Agreement.........................................................................................15
6.3. Option Price............................................................................................15
6.4. Grant of Incentive Stock Options........................................................................15
6.5. Grant of ASO Options....................................................................................16
6.6. Conditions on ASO Options...............................................................................16
6.7. Payment.................................................................................................17
ARTICLE 7. STOCK APPRECIATION RIGHTS.............................................................................17
7.1. Grant of SARs...........................................................................................17
7.2. Exercise of Tandem SARs.................................................................................17
7.3. Payment of SAR Amount...................................................................................17
ARTICLE 8. RESTRICTED SHARES.....................................................................................18
8.1. Grant of Restricted Shares..............................................................................18
8.2. Award Agreement.........................................................................................18
8.3. Consideration...........................................................................................18
8.4. Effect of Forfeiture....................................................................................18
8.5. Escrow; Legends.........................................................................................18
</TABLE>
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<PAGE> 41
<TABLE>
<S> <C> <C>
ARTICLE 9. PERFORMANCE UNITS AND PERFORMANCE SHARES..............................................................19
9.1. Grant of Performance Units and Performance Shares.......................................................19
9.2. Value/Performance Goals.................................................................................19
9.3. Earning of Performance Units and Performance Shares.....................................................19
9.4. Form and Timing of Payment of Performance Units and Performance Shares..................................19
ARTICLE 10. BONUS SHARES AND DEFERRED SHARES.....................................................................20
10.1. Bonus Shares............................................................................................20
10.2. Deferred Shares.........................................................................................20
ARTICLE 11. BENEFICIARY DESIGNATION..............................................................................20
ARTICLE 12. DEFERRALS............................................................................................20
ARTICLE 13. RIGHTS OF EMPLOYEES AND CONSULTANTS..................................................................20
13.1. Employment..............................................................................................20
13.2. Participation...........................................................................................20
ARTICLE 14. CHANGE OF CONTROL AND CERTAIN CORPORATE TRANSACTIONS.................................................21
14.1. Change of Control.......................................................................................21
14.2. Pooling of Interests Accounting.........................................................................21
14.3. Substituting Awards in Certain Corporate Transactions...................................................22
ARTICLE 15. AMENDMENT, MODIFICATION, AND TERMINATION.............................................................22
15.1. Amendment, Modification, and Termination................................................................22
15.2. Adjustments Upon Certain Unusual or Nonrecurring Events.................................................22
15.3. Awards Previously Granted...............................................................................23
ARTICLE 16. WITHHOLDING..........................................................................................23
16.1. Withholding.............................................................................................23
16.2. Notification under Code Section 83(b)...................................................................24
ARTICLE 17. ADDITIONAL PROVISIONS................................................................................24
17.1. Successors..............................................................................................24
17.2. Gender and Number.......................................................................................24
17.3. Severability............................................................................................24
17.4. Requirements of Law.....................................................................................24
17.5. Securities Law Compliance...............................................................................24
17.6. No Rights as a Stockholder..............................................................................25
17.7. Nature of Payments......................................................................................25
17.8. Governing Law...........................................................................................25
</TABLE>
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<PAGE> 42
RUSSELL CORPORATION
EXECUTIVE INCENTIVE PLAN
ARTICLE 1. ESTABLISHMENT, OBJECTIVES AND DURATION
1.1. Establishment of the Plan. Russell Corporation, an Alabama
corporation (the "Company"), established an incentive compensation plan known as
the Russell Corporation 1993 Executive Long-Term Incentive Plan (the "Plan")
effective January 1, 1993 which was duly adopted by the Board of Directors of
the Company (the "Board") and approved by shareholders. The Company is hereby
amending, restating and renaming the Plan as set forth herein effective ,
2000 (the "Effective Date"), subject to shareholder approval.
1.2. Objectives of the Plan. The Plan is intended to allow
employees and consultants of the Company and its Subsidiaries to acquire or
increase equity ownership in the Company, thereby strengthening their commitment
to the success of the Company and stimulating their efforts on behalf of the
Company, and to assist the Company and its Subsidiaries in attracting new
employees and consultants and retaining existing employees and consultants. The
Plan is also intended to optimize the profitability and growth of the Company
through incentives which are consistent with the Company's goals; to provide
incentives for excellence in individual performance; and to promote teamwork.
1.3. Duration of the Plan. The Plan shall commence on the Effective
Date and shall remain in effect, subject to the right of the Board to amend or
terminate the Plan at any time pursuant to Article 15 hereof, until all Shares
subject to it shall have been purchased or acquired according to the Plan's
provisions; provided, however, that in no event may any Incentive Stock Option
be granted under the Plan more than 10 years from the Effective Date.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the meanings
set forth below:
2.1. "Article" means an Article of the Plan.
2.2. "ASO Option" or "Accelerated Stock Ownership Option" have the
meaning set forth in Section 6.5.
2.3. "Award" means Options (including Incentive Stock Options and
ASO Options), Restricted Shares, Bonus Shares, Deferred Shares, stock
appreciation rights (SARs), Performance Units, Performance Shares or Cash-Based
Awards granted under the Plan.
2.4. "Award Agreement" means a written agreement by which an Award
is evidenced.
2.5. "Beneficial Owner" has the meaning specified in Rule 13d-3 of
the SEC under the Exchange Act.
2.6. "Board" has the meaning set forth in Section 1.1.
2.7. "Bonus Shares" means Shares that are awarded to a Grantee
without cost and without restrictions in recognition of past performance
(whether determined by reference to another employee benefit plan of the Company
or otherwise), as an incentive to become an employee or consultant of the
Company or a Subsidiary or otherwise.
2.8. "Cash-Based Award" has the meaning set forth in Article 9.
2.9. "Cause" means, unless otherwise defined in an Award Agreement,
<PAGE> 43
(i) a Grantee's conviction of a felony or other crime
involving fraud, dishonesty or moral turpitude;
(ii) a Grantee's willful or reckless material misconduct
in the performance of the Grantee's duties; or
(iii) a Grantee's habitual neglect of duties;
provided, however, that for purposes of clauses (ii) and (iii), Cause shall not
include any one or more of the following: bad judgment, negligence or any act or
omission believed by the Grantee in good faith to have been in or not opposed to
the interest of the Company (without intent of the Grantee to gain, directly or
indirectly, a profit to which the Grantee was not legally entitled). A Grantee
who agrees to resign his affiliation with the Company or a Subsidiary in lieu of
being terminated for Cause may be deemed to have been terminated for Cause for
purposes of this Plan.
2.10. "Change of Control" means, unless otherwise defined in an
Award Agreement, any one or more of the following:
(a) any person (as such term is used in Rule 13d-5 of the SEC
under the Exchange Act) or group (as such term is defined in Sections
3(a)(9) and 13(d)(3) of the Exchange Act), other than a Subsidiary, any
employee benefit plan (or any related trust) of the Company or any of
its Subsidiaries or any Excluded Person, becomes the Beneficial Owner
of 20% or more of the common stock of the Company or of Voting
Securities representing 20% or more of the combined voting power of the
Company (such a person or group, a "20% Owner"), except that (i) no
Change of Control shall be deemed to have occurred solely by reason of
such beneficial ownership by a corporation with respect to which both
more than 70% of the common stock of such corporation and Voting
Securities representing more than 70% of the aggregate voting power of
such corporation are then owned, directly or indirectly, by the persons
who were the direct or indirect owners of the common stock and Voting
Securities of the Company immediately before such acquisition in
substantially the same proportions as their ownership, immediately
before such acquisition, of the common stock and Voting Securities of
the Company, as the case may be and (ii) such corporation shall not be
deemed a 20% Owner; or
(b) the Incumbent Directors (determined using the Effective
Date as the baseline date) cease for any reason to constitute at least
two-thirds of the directors of the Company then serving; or
(c) approval by the stockholders of the Company of a merger,
reorganization, consolidation, or similar transaction, or a plan or
agreement for the sale or other disposition of all or substantially all
of the consolidated assets of the Company or a plan of liquidation of
the Company (any of the foregoing transactions, a "Reorganization
Transaction") which, based on information included in the proxy and
other written materials distributed to the Company's stockholders in
connection with the solicitation by the Company of such stockholder
approval, is not expected to qualify as an Exempt Reorganization
Transaction; or
(d) the consummation by the Company of a Reorganization
Transaction that for any reason fails to qualify as an Exempt
Reorganization Transaction as of the date of such consummation,
notwithstanding the fact that such Reorganization Transaction was
expected to so qualify as of the date of such stockholder approval.
Notwithstanding the occurrence of any of the foregoing events, a Change of
Control shall not occur with respect to a Grantee if, in advance of such event,
the Grantee agrees in writing that such event shall not constitute a Change of
Control.
2.11. "Change of Control Value" means the Fair Market Value of a
Share on the date of a Change of Control.
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<PAGE> 44
2.12. "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and regulations and rulings thereunder. References to a
particular section of the Code include references to successor provisions of the
Code or any successor statute.
2.13. "Committee" has the meaning set forth in Article 3.
2.14. "Common Stock" means the common stock, $0.01 par value, of the
Company.
2.15. "Company" has the meaning set forth in Section 1.1.
2.16. "Covered Employee" means a Grantee who, as of the date that
the value of an Award is recognizable as taxable income, is one of the group of
"covered employees" within the meaning of Code Section 162(m).
2.17. "Deferred Shares" means Shares that are awarded to a Grantee
on a deferred basis pursuant to Section 10.2.
2.18. "Disability" means a permanent and total disability, within
the meaning of Code Section 22(e)(3), as determined by the Committee in good
faith, upon receipt of medical advice from one or more individuals, selected by
the Committee, who are qualified to give professional medical advice.
2.19. "Disqualifying Disposition" has the meaning set forth in
Section 6.4.
2.20. "Effective Date" has the meaning set forth in Section 1.1.
2.21. "Eligible Person" means (i) any employee (including any
officer) of the Company or any Subsidiary, including any such employee who is on
an approved leave of absence, layoff, or has been subject to a disability which
does not qualify as a Disability and (ii) any person performing services for the
Company or a Subsidiary in the capacity of a consultant.
2.22. "Exchange Act" means the Securities Exchange Act of 1934, as
amended. References to a particular section of the Exchange Act include
references to successor provisions.
2.23. "Excluded Person" means any Person who, along with such
Person's Affiliates and Associates (as such terms are defined in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act) is the Beneficial
Owner of 15% or more of the Shares outstanding as of the Effective Date,
provided that such Person, including such Person's Affiliates and Associates,
does not acquire, after the Effective Date hereof, additional Shares in excess
of 1% of the then outstanding Shares, exclusive of (i) Shares acquired by such
Person and such Person's Affiliates and Associates as a result of stock
dividends, stock splits, recapitalizations or similar transactions in which the
Company did not receive any consideration for issuing the Shares in question or
as a result of repurchases of stock by the Company; (ii) Shares acquired by such
Person and such Person's Affiliates and Associates as a result of gifts,
devises, bequests and intestate succession; and (iii) Shares acquired by such
Person and such Person's Affiliates and Associates as a result of participation
by such Person and such Person's Affiliates and Associates in any dividend
reinvestment plan, stock option plan or other similar plan or arrangement of the
Company.
2.24. "Exempt Reorganization Transaction" means a Reorganization
Transaction which results in the Persons who were the direct or indirect owners
of the outstanding common stock and Voting Securities of the Company immediately
before such Reorganization Transaction becoming, immediately after the
consummation of such Reorganization Transaction, the direct or indirect owners
of both more than 70% of the then-outstanding common stock of the Surviving
Corporation and Voting Securities representing more than 70% of the aggregate
voting power of the Surviving Corporation, in substantially the same respective
proportions as such Persons' ownership of the common stock and Voting Securities
of the Company immediately before such Reorganization Transaction.
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<PAGE> 45
2.25. "Fair Market Value" means (A) with respect to any property
other than Shares, the fair market value of such property determined by such
methods or procedures as shall be established from time to time by the
Committee, and (B) with respect to Shares, as of any date, (i) the average of
the high and low trading prices on such date on the New York Stock Exchange
Composite Transactions Tape (or, if no sale of Shares was reported for such
date, on the next preceding date on which a sale of Shares was reported), (ii)
if the Shares are not listed on the New York Stock Exchange, the average of the
high and low trading prices of the Shares on such other national exchange on
which the Shares are principally traded or as reported by the NASDAQ Stock
Market, or similar organization, or if no such quotations are available, the
average of the high bid and low asked quotations in the over-the-counter market;
or (iii) in the event that there shall be no public market for the Shares, the
fair market value of the Shares as determined by the Committee.
2.26. "Freestanding SAR" means an SAR that is granted independently
of any other Award.
2.27. "Grant Date" has the meaning set forth in Section 5.2.
2.28. "Grantee" means an individual who has been granted an Award.
2.29. "Incentive Stock Option" or "ISO" means an option granted
under Section 6.4 of the Plan that is intended to meet the requirements of Code
Section 422 or any successor provision thereto.
2.30. "including" or "includes" mean "including, without
limitation," or "includes, without limitation", respectively.
2.31. "Incumbent Directors" means, as of any specified baseline
date, individuals then serving as members of the Board who were members of the
Board as of the date immediately preceding such baseline date; provided that any
subsequently-appointed or elected member of the Board whose election, or
nomination for election by stockholders of the Company or the Surviving
Corporation, as applicable, was approved by a vote or written consent of at
least two-thirds of the directors then comprising the Incumbent Directors shall
also thereafter be considered an Incumbent Director, unless the initial
assumption of office of such subsequently-elected or appointed director was in
connection with (i) an actual or threatened election contest, including a
consent solicitation, relating to the election or removal of one or more members
of the Board, (ii) a "tender offer" (as such term is used in Section 14(d) of
the Exchange Act), (iii) a proposed Reorganization Transaction, or (iv) a
request, nomination or suggestion of any Beneficial Owner of Voting Securities
representing 15% or more of the aggregate voting power of the Voting Securities
of the Company or the Surviving Corporation, as applicable.
2.32. "Mature Shares" means Shares for which the holder thereof has
good title, free and clear of all liens and encumbrances, and which such holder
either (i) has held for at least six months or (ii) has purchased on the open
market.
2.33. "1987 Plan" means the Company's 1987 Stock Option Plan.
2.34. "Option" means an option granted under Article 6 of the Plan.
2.35. "Option Price" means the price at which a Share may be
purchased by a Grantee pursuant to an Option.
2.36. "Option Term" means the period beginning on the Grant Date of
an Option and ending on the expiration date of such Option, as specified in the
Award Agreement for such Option and as may, consistent with the provisions of
the Plan, be extended from time to time by the Committee prior to the expiration
date of such Option then in effect.
2.37. "Performance-Based Exception" means the performance-based
exception from the tax deductibility limitations of Code Section 162(m).
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2.38. "Performance Period" has the meaning set forth in Section 9.2.
2.39. "Performance Share" or "Performance Unit" has the meaning set
forth in Article 9.
2.40. "Period of Restriction" means the period during which the
transfer of Restricted Shares is limited in some way (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Committee) or the Shares are subject to a
substantial risk of forfeiture, as provided in Article 8.
2.41. "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.
2.42. "Plan" has the meaning set forth in Section 1.1.
2.43. "Pre-Amendment Plan" shall have the meaning set forth in
Section 4.1 hereof.
2.44. "Reload Option" has the meaning set forth in Section 6.5.
2.45. "Reorganization Transaction" has the meaning set forth in
Section 2.10(c).
2.46. "Required Withholding" has the meaning set forth in Article
16.
2.47. "Restricted Shares" means Shares that are subject to transfer
restrictions and are subject to forfeiture if conditions specified in the Award
Agreement applicable to such Shares are not satisfied.
2.48. "Rule 16b-3" means Rule 16b-3 promulgated by the SEC under the
Exchange Act, together with any successor rule, as in effect from time to time.
2.49. "SAR" means a stock appreciation right.
2.50. "SEC" means the United States Securities and Exchange
Commission, or any successor thereto.
2.51. "Section" means, unless the context otherwise requires, a
Section of the Plan.
2.52. "Section 16 Person" means a person who is subject to
obligations under Section 16 of the Exchange Act with respect to transactions
involving equity securities of the Company.
2.53. "Share" means a share of Common Stock.
2.54. "Strike Price" of any SAR shall equal, for any Tandem SAR
(whether granted at the same time as or after the grant of the related Option),
the Option Price of such Option, or for any other SAR, 100% of the Fair Market
Value of a Share on the Grant Date of such SAR; provided that the Committee may
specify a higher Strike Price in the Award Agreement; provided further that any
SAR granted as a Substitute Award pursuant to Section 14.3 may be granted at
such Strike Price as the Committee determines to be necessary to achieve
preservation of economic value as provided in Section 14.3.
2.55. "Subsidiary" means, for purposes of grants of Incentive Stock
Options, a corporation as defined in Section 424(f) of the Code (with the
Company being treated as the employer corporation for purposes of this
definition and for all other purposes), with respect to any Person (a) any
corporation of which more than 50% of the Voting Securities are at the time,
directly or indirectly, owned by such Person, and (b) any partnership or limited
liability company in which such Person has a direct or indirect interest
(whether in the form of voting power or participation in profits or capital
contribution) of more than 50%.
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2.56. "Substitute Award" has the meaning set forth in Section 6.3.
2.57. "Surviving Corporation" means the corporation resulting from a
Reorganization Transaction or, if Voting Securities representing at least 50% of
the aggregate voting power of such resulting corporation are directly or
indirectly owned by another corporation, such other corporation.
2.58. "Tandem SAR" means an SAR that is granted in connection with a
related Option, the exercise of which shall require cancellation of the right to
purchase a Share under the related Option (and when a Share is purchased under
the related Option, the Tandem SAR shall similarly be canceled).
2.59. "10% Owner" means a person who owns capital stock (including
stock treated as owned under Code Section 424(d)) possessing more than 10% of
the total combined voting power of all classes of capital stock of the Company
or any Subsidiary.
2.60. "Termination of Affiliation" occurs on the first day on which
an individual is for any reason no longer providing services to the Company or
any Subsidiary in the capacity of an employee or consultant, or with respect to
an individual who is an employee of, or consultant to, a Person which is a
Subsidiary, the first day on which such Person ceases to be a Subsidiary.
2.61. "Voting Securities" of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors,
but not including any other class of securities of such corporation that may
have voting power by reason of the occurrence of a contingency.
ARTICLE 3. ADMINISTRATION
3.1. Committee. Subject to Article 15, and to Section 3.2, the Plan
shall be administered by the Board, or a committee of the Board appointed by the
Board to administer the Plan ("Plan Committee"). To the extent the Board
considers it desirable for transactions relating to Awards to qualify for an
exemption under Rule 16b-3 or meet the Performance-Based Exception, the Plan
Committee shall consist of two or more directors of the Company, all of whom
qualify as "outside directors" as defined for purposes of the regulations under
Code Section 162(m) or as "non-employee directors" within the meaning of Rule
16b-3, as applicable. The number of members of the Plan Committee shall from
time to time be increased or decreased, and shall be subject to such conditions,
in each case as the Board deems appropriate to permit transactions in Shares
pursuant to the Plan to satisfy such conditions of Rule 16b-3 or Code Section
162(m) as then in effect. Any references herein to "Committee" are references to
the Board or the Plan Committee, as applicable.
3.2. Powers of Committee. Subject to the express provisions of the
Plan, the Committee has full and final authority and sole discretion as follows:
(a) to determine when, to whom and in what types and amounts
Awards should be granted and the terms and conditions applicable to
each Award, including the Option Price, the Option Term, the benefit
payable under any SAR, Performance Unit, or Performance Share or
Cash-Based Award, and whether or not specific Awards shall be granted
in connection with other specific Awards, and if so whether they shall
be exercisable cumulatively with, or alternatively to, such other
specific Awards;
(b) to determine the amount, if any, that a Grantee shall pay
for Restricted Shares, whether and on what terms to permit or require
the payment of cash dividends thereon to be deferred, when Restricted
Shares (including Restricted Shares acquired upon the exercise of an
Option) shall be forfeited and whether such shares shall be held in
escrow;
(c) to construe and interpret the Plan and to make all
determinations necessary or advisable for the administration of the
Plan;
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<PAGE> 48
(d) to make, amend, and rescind rules relating to the Plan,
including rules with respect to the exercisability and
nonforfeitability of Awards upon the Termination of Affiliation of a
Grantee;
(e) to determine the terms and conditions of all Award
Agreements (which need not be identical) and, with the consent of the
Grantee, to amend any such Award Agreement at any time, among other
things, to permit transfers of such Awards to the extent permitted by
the Plan; provided that the consent of the Grantee shall not be
required for any amendment which (i) does not adversely affect the
rights of the Grantee, or (ii) is necessary or advisable (as determined
by the Committee) to carry out the purpose of the Award as a result of
any new or change in existing applicable law;
(f) to cancel, with the consent of the Grantee, outstanding
Awards and to grant new Awards in substitution therefor;
(g) to accelerate the exercisability (including exercisability
within a period of less than six months after the Grant Date) of, and
to accelerate or waive any or all of the terms and conditions
applicable to, any Award or any group of Awards for any reason and at
any time, including in connection with a Termination of Affiliation;
(h) subject to Sections 1.3, 5.3 and 6.4, to extend the time
during which any Award or group of Awards may be exercised;
(i) to make such adjustments or modifications to Awards to
Grantees who are working outside the United States as are advisable to
fulfill the purposes of the Plan or to comply with applicable local
law;
(j) to delegate to the Chief Executive Officer of the Company
the power to grant Options and Restricted Shares from time to time to
specified categories of Eligible Persons in amounts and on terms to be
specified by the Committee; provided that no such grants shall be made
to individuals who are then Section 16 Persons;
(k) to delegate to officers, employees or independent
contractors of the Company matters involving the routine administration
of the Plan and which are not specifically required by any provision of
this Plan to be performed by the Committee;
(l) to impose such additional terms and conditions upon the
grant, exercise or retention of Awards as the Committee may, before or
concurrently with the grant thereof, deem appropriate, including
limiting the percentage of Awards which may from time to time be
exercised by a Grantee; and
(m) to take any other action with respect to any matters
relating to the Plan for which it is responsible.
All determinations on any matter relating to the Plan or any Award
Agreement may be made in the sole and absolute discretion of the Committee, and
all such determinations of the Committee shall be final, conclusive and binding
on all Persons. No member of the Committee shall be liable for any action or
determination made with respect to the Plan or any Award.
ARTICLE 4. SHARES SUBJECT TO THE PLAN
4.1. Number of Shares Available. Subject to Section 4.3 and to
adjustment as provided in Section 4.2, the number of Shares hereby reserved for
delivery under the Plan is the sum of (a) one and one-half million (1,500,000)
Shares, (b) the four million (4,000,000) Shares previously reserved for delivery
under this Plan immediately prior to this Amendment (the "Pre-Amendment Plan")
reduced by the number of Shares issued pursuant to Awards under such
Pre-Amendment Plan, and (c) Shares reserved for delivery and subject to
outstanding Awards under the 1987 Plan to the extent such Awards are forfeited,
terminated or settled without issuance of all of the Shares subject to issuance
under such Award; provided that if any Shares (whether subject to or received
pursuant to an Award granted under this or any other Plan, purchased on the
open-market or otherwise obtained) are
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withheld or applied as payment by the Company in connection with the exercise of
an Award hereunder, or the withholding of taxes related thereto, such Shares
shall reduce the number of Shares treated as issued under this Plan. The
Committee may from time to time determine the appropriate methodology for
calculating the number of Shares issued pursuant to the Plan.
4.2. Adjustments in Authorized Shares. In the event that the
Committee determines that any dividend or other distribution (whether in the
form of cash, Shares, other securities, or other property), recapitalization,
stock split, reverse stock split, subdivision, consolidation or reduction of
capital, reorganization, merger, scheme of arrangement, split-up, spin-off or
combination involving the Company or repurchase or exchange of Shares or other
rights to purchase Shares or other securities of the Company, or other similar
corporate transaction or event that occurs at any time after the Effective Date
affects the Shares such that any adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and type of Shares (or other securities or property of the
Company or any Person that is a party to a Reorganization Transaction with the
Company) with respect to which Awards may be granted, (ii) the number and type
of Shares (or other securities or property of the Company or any Person that is
a party to a Reorganization Transaction with the Company) subject to outstanding
Awards, and (iii) the grant or exercise price with respect to any Award or, if
deemed appropriate, make provision for a cash payment to the holder of an
outstanding Award or the substitution of other property for Shares subject to an
outstanding Award; provided, in each case that with respect to Awards of
Incentive Stock Options no such adjustment shall be authorized to the extent
that such adjustment would cause the Plan to violate Section 422(b)(1) of the
Code or any successor provision thereto; and provided, further, that the number
of Shares subject to any Award denominated in Shares shall always be a whole
number.
4.3. Performance Measures. Unless and until the Committee proposes
for shareholder vote and the shareholders of the Company approve a change in the
general performance measures set forth in this Section 4.3 the attainment of
which may determine the degree of payout and/or vesting with respect to Awards
granted to Covered Employees which are designed to qualify for the
Performance-Based Exception, the performance measure(s) to be used for purposes
of such grants shall be chosen from among the following:
(a) Earnings (either in the aggregate or on a per-share
basis);
(b) Net income;
(c) Operating income;
(d) Return measures (including return on assets, investments,
equity, or gross sales);
(e) Shareholder returns (including growth measures and
stockholder return or attainment by the Shares of a specified value for
a specified period of time), share price or share price appreciation;
(f) Cash flow;
(g) Earnings before or after either, or any combination of,
taxes, interest or depreciation and amortization;
(h) Gross revenues;
(i) Reductions in expense levels in each case, where
applicable, determined either on a Company-wide basis or in respect of
any one or more business units;
(j) Net economic value; or
(k) Market share with respect to specific designated products
or product groups;
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provided that Sections (a)-(f) may be measured on a pre- or post-tax basis and
provided further, that the Committee may, on the Grant Date of an Award intended
to comply with the requirements of Section 162(m) of the Code and, in the case
of other grants, at any time, provide that the formula for any Award may include
or exclude items to measure specific objectives, such as losses from
discontinued operations, extraordinary gains or losses, the cumulative effect of
accounting changes, acquisitions or divestitures, foreign exchange impacts and
any unusual, nonrecurring gain or loss. The Committee shall have the discretion
to adjust the determinations of the degree of attainment of the pre-established
performance goals; provided, however, the Awards which are designed to qualify
for the Performance-Based Exception, and which are held by Covered Employees,
may not be adjusted upward (the Committee, however, shall retain the discretion
to adjust such Awards to Covered Employees downward.
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing performance measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval. In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Section
162(m) of the Code.
4.4. Compliance with Section 162(m) of the Code.
(a) Section 162(m) Compliance. At all times when Section 162(m) of the
Code is applicable, all Awards granted under this Plan shall to the extent
provided by the Committee comply with the requirements of Section 162(m) of the
Code; provided, however, that in the event the Committee determines that such
compliance is not desired with respect to any Award or Awards available for
grant under the plan, then compliance with Section 162(m) of the Code will not
be required; provided further that to the extent Section 162 (m) or the
regulations thereunder require periodic shareholder approval of such performance
measures such approval shall not be required for the continuation of the Plan or
as a condition to grant any Award hereunder after such approval is required. In
addition, in the event that changes are made to Section 162(m) of the Code to
permit flexibility with respect to the Award or Awards available under the Plan,
the Committee may, subject to this Section 4.4, make any adjustments to such
Awards or otherwise it deems appropriate.
(b) Section 162(m) Maximum Individual Limits. Subject to adjustment as
provided in Section 4.2, the maximum number of Shares (including as Shares, a
number of Shares equal to the number of SARs granted) for which Awards (other
than ASO Options, Performance Units and Cash-Based Awards) may be granted to any
Grantee in any calendar year shall not exceed 2,000,000 and the number of Shares
for which ASO Options may be granted to any Grantee in any calendar year shall
not exceed 4,000,000. The maximum value of Performance Units and Cash-Based
Awards granted to any Grantee hereunder in any calendar year shall not exceed
300% of such Grantee's salary in effect as of the date of the grant or the
establishment of the Award. Maximum Limits under this Section 4.4(b) shall be
calculated in accordance with Treasury Regulation ss.1.162-27(e)(2)(vi)(B).
ARTICLE 5. ELIGIBILITY AND GENERAL CONDITIONS OF AWARDS
5.1. Eligibility. The Committee may grant Awards to any Eligible
Person, whether or not he or she has previously received an Award.
5.2. Grant Date. The Grant Date of an Award shall be the date on
which the Committee grants the Award or such later date as specified by the
Committee in the Award Agreement.
5.3. Maximum Term. Subject to the following proviso, the Option
Term or other period during which an Award may be outstanding shall not extend
more than 10 years after the Grant Date, and shall be subject to earlier
termination as herein specified; provided, that any deferral of a cash payment
or of the delivery of Shares that is permitted or required by the Committee
pursuant to Article 12 may, if so permitted or required by the Committee, extend
more than 10 years after the Grant Date of the Award to which the deferral
relates.
5.4. Award Agreement. To the extent not set forth in the Plan, the
terms and conditions of each Award (which need not be the same for each grant or
for each Grantee) shall be set forth in an Award Agreement.
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5.5. Restrictions on Share Transferability. The Committee may
include in the Award Agreement such restrictions on any Shares acquired pursuant
to the exercise or vesting of an Award as it may deem advisable, including
restrictions under applicable federal securities laws.
5.6. Termination of Affiliation. Except as otherwise provided in an
Award Agreement (including an Award Agreement as amended by the Committee
pursuant to Section 3.2), and subject to the provisions of Section 14.1, the
extent to which the Grantee shall have the right to exercise, vest in, or
receive payment in respect of an Award following Termination of Affiliation
shall be determined in accordance with the following provisions of this Section
5.6.
(a) For Cause. If a Grantee has a Termination of Affiliation
for Cause:
(i) the Grantee's Restricted Shares and Deferred
Shares that are forfeitable immediately before such
Termination of Affiliation shall automatically be forfeited on
such date, subject in the case of Restricted Shares to the
provisions of Section 8.4 regarding repayment of certain
amounts to the Grantee;
(ii) the Grantee's Deferred Shares that were vested
immediately before such Termination of Affiliation shall
promptly be settled by delivery to such Grantee of a number of
unrestricted Shares equal to the aggregate number of such
vested Deferred Shares, and
(iii) any unexercised Option, ISO or SAR, and any
Performance Share, Performance Unit or Cash-Based Award with
respect to which the Performance Period has not ended
immediately before such Termination of Affiliation, shall
terminate effective immediately upon such Termination of
Affiliation.
(b) On Account of Death or Disability. If a Grantee has a
Termination of Affiliation on account of death or Disability:
(i) the Grantee's Restricted Shares that were
forfeitable immediately before such Termination of Affiliation
shall thereupon become nonforfeitable;
(ii) the Grantee's Deferred Shares that were
forfeitable immediately before such Termination of Affiliation
shall thereupon become nonforfeitable and the Company shall,
unless otherwise provided in an Award Agreement, promptly
settle all Deferred Shares, whether or not forfeitable, by
delivery to the Grantee (or, after his or her death, to his or
her personal representative or beneficiary designated in
accordance with Article 11) of a number of unrestricted Shares
equal to the aggregate number of the Grantee's Deferred
Shares;
(iii) any unexercised Option, ISO or SAR, whether or
not exercisable immediately before such Termination of
Affiliation, may be exercised, in whole or in part, at any
time after such Termination of Affiliation (but in either case
only during the Option Term) by the Grantee or, after his or
her death, by (A) his or her personal representative or the
person to whom the Option, ISO or SAR, as applicable, is
transferred by will or the applicable laws of descent and
distribution, or (B) the Grantee's beneficiary designated in
accordance with Article 11; and
(iv) the benefit payable with respect to any
Performance Share, Performance Unit or Cash-Based Awards with
respect to which the Performance Period has not ended
immediately before such Termination of Affiliation on account
of death or Disability shall be equal to the product of the
Fair Market Value of a Share as of the date of such
Termination of Affiliation or the value of the Performance
Unit specified in the Award Agreement (determined as of the
date of such Termination of Affiliation), as applicable,
multiplied successively by each of the following:
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(1) a fraction, the numerator of which is
the number of months (including as a whole month any
partial month) that have elapsed since the beginning
of such Performance Period until the date of such
Termination of Affiliation and the denominator of
which is the number of months (including as a whole
month any partial month) in the Performance Period;
and
(2) a percentage determined by the Committee
that would be earned under the terms of the
applicable Award Agreement assuming that the rate at
which the performance goals have been achieved as of
the date of such Termination of Affiliation would
continue until the end of the Performance Period, or,
if the Committee elects to compute the benefit after
the end of the Performance Period, the Performance
Percentage, as determined by the Committee, attained
during the Performance Period.
(c) Any Other Reason. If a Grantee has a Termination of
Affiliation for any reason other than for Cause, death or Disability,
then:
(i) the Grantee's Restricted Shares and Deferred
Shares, to the extent forfeitable immediately before such
Termination of Affiliation, shall thereupon automatically be
forfeited, subject in the case of Restricted Shares to the
provisions of Section 8.4 regarding repayment of certain
amounts to the Grantee;
(ii) the Grantee's Deferred Shares that were not
forfeitable immediately before such Termination of Affiliation
shall, unless otherwise provided in an Award Agreement,
promptly be settled by delivery to the Grantee of a number of
unrestricted Shares equal to the aggregate number of the
Grantee's vested Deferred Shares;
(iii) any unexercised Option, ISO or SAR, to the
extent exercisable immediately before such Termination of
Affiliation, shall remain exercisable in whole or in part for
three months after such Termination of Affiliation (but only
during the Option Term) by the Grantee or, after his or her
death, by (A) his or her personal representative or the person
to whom the Option, ISO or SAR, as applicable, is transferred
by will or the applicable laws of descent and distribution, or
(B) the Grantee's beneficiary designated in accordance with
Article 11; and
(iv) any Performance Shares, Performance Units or
Cash-Based Award with respect to which the Performance Period
has not ended as of the date of such Termination of
Affiliation shall terminate immediately upon such Termination
of Affiliation.
5.7. Nontransferability of Awards.
(a) Except as provided in Section 5.7(c) below, each Award,
and each right under any Award, shall be exercisable only by the
Grantee during the Grantee's lifetime, or, if permissible under
applicable law, by the Grantee's guardian or legal representative or by
a transferee receiving such Award pursuant to a qualified domestic
relations order (a "QDRO") as defined in the Code or Title I of the
Employee Retirement Income Security Act of 1974 or the rules
thereunder.
(b) Except as provided in Section 5.7(c) below, no Award
(prior to the time, if applicable, Shares are issued in respect of such
Award), and no right under any Award, may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a
Grantee otherwise than by will or by the laws of descent and
distribution (or in the case of Restricted Shares, to the Company) or
pursuant to a QDRO, and any such purported assignment, alienation,
pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any Subsidiary; provided, that the
designation of a beneficiary shall not constitute an assignment,
alienation, pledge, attachment, sale, transfer or encumbrance.
(c) To the extent and in the manner permitted by the
Committee, and subject to such terms and conditions as may be
prescribed by the Committee, a Grantee may transfer an Award (other
than an Incentive
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Stock Option) to (i) a spouse, sibling, parent or lineal descendant
(including a lineal descendant by adoption) (any of the foregoing, an
"Immediate Family Member") of the Grantee; (ii) a trust, the primary
beneficiaries of which consist exclusively of the Grantee or Immediate
Family Members, or (iii) a corporation, partnership or similar entity,
the owners of which consist exclusively of the Grantee or Immediate
Family Members of the Grantee.
ARTICLE 6. STOCK OPTIONS
6.1. Grant of Options. Subject to the terms and provisions of the
Plan, Options may be granted to any Eligible Person in such number, and upon
such terms, and at any time and from time to time as shall be determined by the
Committee. Without limiting the generality of the foregoing, the Committee may
grant to any Eligible Person, or permit any Eligible Person to elect to receive,
an Option in lieu of or in substitution for any other compensation (whether
payable currently or on a deferred basis, and whether payable under this Plan or
otherwise) which such Eligible Person may be eligible to receive from the
Company or a Subsidiary, which Option may have a value (as determined by the
Committee under Black-Scholes or any other option valuation method) that is
equal to or greater than the amount of such other compensation.
6.2. Award Agreement. Each Option grant shall be evidenced by an
Award Agreement that shall specify the Option Price, the Option Term, the number
of shares to which the Option pertains, the time or times at which such Option
shall be exercisable and such other provisions as the Committee shall determine.
6.3. Option Price. The Option Price of an Option under this Plan
shall be determined by the Committee, and shall be no less than 100% of the Fair
Market Value of a Share on the Grant Date; provided, however, that any Option
granted as a Substitute Award pursuant to Section 14.3 may be granted at such
Option Price as the Committee determines to be necessary to achieve preservation
of economic value as provided in Section 14.3.
6.4. Grant of Incentive Stock Options. At the time of the grant of
any Option, the Committee may designate that such Option shall be as an
"incentive stock option" under the requirements of Section 422 of the Code. Any
Option designated as an Incentive Stock Option or ISO shall, to the extent
required by Section 422 of the Code:
(a) if granted to a 10% Owner, have an Option Price not less
than 110% of the Fair Market Value of a Share on its Grant Date;
(b) be exercisable for a period of not more than 10 years
(five years in the case of an Incentive Stock Option granted to a 10%
Owner) from its Grant Date, and be subject to earlier termination as
provided herein or in the applicable Award Agreement;
(c) not have an aggregate Fair Market Value (as of the Grant
Date of each Incentive Stock Option) of the Shares with respect to
which Incentive Stock Options (whether granted under the Plan or any
other stock option plan of the Grantee's employer or any parent or
Subsidiary thereof ("Other Plans")) are exercisable for the first time
by such Grantee during any calendar year, determined in accordance with
the provisions of Section 422 of the Code, which exceeds $100,000 (the
"$100,000 Limit") and to the extent any Grant is in excess of such
$100,000 Limit, a portion of such Grant equal to the $100,000 Limit
shall be designated as an ISO and the remainder shall, notwithstanding
its prior designation as an ISO, be regarded as an Option that is not
an ISO.
(d) be granted within 10 years from the earlier of the date
the Plan is adopted or the date the Plan is approved by the
stockholders of the Company; and
(e) by its terms not be assignable or transferable other than
by will or the laws of descent and distribution and may be exercised,
during the Grantee's lifetime, only by the Grantee; provided, however,
that the Grantee may, in any manner permitted by the Plan and specified
by the Committee, designate in writing a beneficiary to exercise his or
her Incentive Stock Option after the Grantee's death.
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Any Option designated as an Incentive Stock Option shall also require
the Grantee to notify the Committee of any disposition of any Shares issued
pursuant to the exercise of the Incentive Stock Option under the circumstances
described in Section 421(b) of the Code (relating to certain disqualifying
dispositions) (any such circumstance, a "Disqualifying Disposition"), within 10
days of such Disqualifying Disposition.
Notwithstanding the foregoing and Section 3.2, the Committee may,
without the consent of the Grantee, at any time before the exercise of an Option
(whether or not an Incentive Stock Option), take any action necessary to prevent
such Option from being treated as an Incentive Stock Option.
6.5. Grant of ASO Options. The Committee may in connection with the
grant of an Option or thereafter provide that a Grantee who (i) is an Eligible
Person when he or she exercises an Option ("Exercised Option") and (ii)
satisfies the Option Price or Required Withholding applicable thereto with
Shares (including Shares that are deemed to have been delivered as payment for
all or any portion of the Option Price of an Exercised Option by attestation or
otherwise) shall automatically be granted, subject to Article 4, an additional
option (an "ASO Option" or a "Reload Option") in an amount equal to the sum
("Reload Number") of the number of Shares tendered (including Shares that are
deemed to have been tendered) to exercise the Exercised Option plus, if so
provided by the Committee, the number of Shares, if any, retained by the Company
in connection with the exercise of the Exercised Option to satisfy any federal,
state, local or foreign tax withholding requirements.
6.6. Conditions on ASO Options. ASO Options shall be subject to the
following terms and conditions:
(a) the Grant Date for each ASO Option shall be the date of
exercise of the Exercised Option to which it relates;
(b) subject to Section 6.6(c), the ASO Option may be exercised
at any time during the Option Term of the Exercised Option (subject to
earlier termination thereof as provided in the Plan or in the
applicable Award Agreement); and
(c) the terms of the ASO Option shall be the same as the terms
of the Exercised Option to which it relates, except that, unless
otherwise provided in the Award Agreement, the Option Price for the ASO
Option shall be 100% of the Fair Market Value of a Share on the Grant
Date of the ASO Option.
6.7. Payment. Options granted under this Article 6 shall be
exercised by the delivery of a written notice of exercise to the Company,
setting forth the number of Shares with respect to which the Option is to be
exercised, accompanied by full payment for the Shares made by cash, personal
check or wire transfer or, subject to the approval of the Committee, any one or
more of the following means:
(a) Mature Shares, valued at their Fair Market Value on the
date of exercise;
(b) Restricted Shares held by the Grantee for at least six
months prior to the exercise of the Option, each such share valued at
the Fair Market Value of a Share on the date of exercise; or
(c) pursuant to procedures approved by the Committee, through
the sale of the Shares acquired on exercise of the Option through a
broker-dealer to whom the Grantee has submitted an irrevocable notice
of exercise and irrevocable instructions to deliver promptly to the
Company the amount of sale or loan proceeds sufficient to pay for such
Shares, together with, if requested by the Company, the amount of
federal, state, local or foreign withholding taxes payable by Grantee
by reason of such exercise.
If any Restricted Shares ("Tendered Restricted Shares") are used to pay the
Option Price, a number of Shares acquired on exercise of the Option equal to the
number of Tendered Restricted Shares shall be subject to the same restrictions
as the Tendered Restricted Shares, determined as of the date of exercise of the
Option.
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ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1. Grant of SARs. Subject to the terms and conditions of the
Plan, SARs may be granted to any Eligible Person at any time and from time to
time as shall be determined by the Committee. The Committee may grant
Freestanding SARs, Tandem SARs, or any combination thereof. The Committee shall
determine the number of SARs granted to each Grantee (subject to Article 4), the
Strike Price thereof, and, consistent with Section 7.2 and the other provisions
of the Plan, the other terms and conditions pertaining to such SARs.
7.2. Exercise of Tandem SARs. Tandem SARs may be exercised for all
or part of the Shares subject to the related Option upon the surrender of the
right to exercise the equivalent portion of the related Option. A Tandem SAR may
be exercised only with respect to the Shares for which its related Option is
then exercisable.
Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR, (i) the Tandem SAR will expire no later than the
expiration of the underlying Option; (ii) the value of the payout with respect
to the Tandem SAR may be for no more than 100% of the difference between the
Option Price of the underlying Option and the Fair Market Value of the Shares
subject to the underlying Option at the time the Tandem SAR is exercised; and
(iii) the Tandem SAR may be exercised only when the Fair Market Value of the
Shares subject to the Option exceeds the Option Price of the Option.
7.3. Payment of SAR Amount. Upon exercise of an SAR, the Grantee
shall be entitled to receive payment from the Company in an amount determined by
multiplying:
(a) the excess of the Fair Market Value of a Share on the date
of exercise over the Strike Price;
by
(b) the number of Shares with respect to which the SAR is
exercised;
provided that the Committee may provide in the Award Agreement that the benefit
payable on exercise of an SAR shall not exceed such percentage of the Fair
Market Value of a Share on the Grant Date as the Committee shall specify. As
determined by the Committee, the payment upon SAR exercise may be in cash, in
Shares which have an aggregate Fair Market Value (as of the date of exercise of
the SAR) equal to the amount of the payment, or in some combination thereof, as
set forth in the Award Agreement.
ARTICLE 8. RESTRICTED SHARES
8.1. Grant of Restricted Shares. Subject to the terms and
provisions of the Plan, the Committee, at any time and from time to time, may
grant Restricted Shares to any Eligible Person in such amounts as the Committee
shall determine.
8.2. Award Agreement. Each grant of Restricted Shares shall be
evidenced by an Award Agreement that shall specify the Period(s) of Restriction,
the number of Restricted Shares granted, and such other provisions as the
Committee shall determine. The Committee may impose such conditions or
restrictions on any Restricted Shares as it may deem advisable, including
restrictions based upon the achievement of specific performance goals
(Company-wide, divisional, Subsidiary or individual), time-based restrictions on
vesting or restrictions under applicable securities laws.
8.3. Consideration. The Committee shall determine the amount, if
any, that a Grantee shall pay for Restricted Shares. Such payment shall be made
in full by the Grantee before the delivery of the shares and in any event no
later than 10 business days after the Grant Date for such shares.
8.4. Effect of Forfeiture. If Restricted Shares are forfeited, and
if the Grantee was required to pay for such shares or acquired such Restricted
Shares upon the exercise of an Option, the Grantee shall be deemed to have
resold such Restricted Shares to the Company at a price equal to the lesser of
(i) the amount paid by the Grantee for
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such Restricted Shares, or (ii) the Fair Market Value of a Share on the date of
such forfeiture. The Company shall pay to the Grantee the required amount as
soon as is administratively practical. Such Restricted Shares shall cease to be
outstanding, and shall no longer confer on the Grantee thereof any rights as a
stockholder of the Company, from and after the date of the event causing the
forfeiture, whether or not the Grantee accepts the Company's tender of payment
for such Restricted Shares.
8.5. Escrow; Legends. The Committee may provide that the
certificates for any Restricted Shares (i) shall be held (together with a stock
power executed in blank by the Grantee) in escrow by the Secretary of the
Company until such Restricted Shares become nonforfeitable or are forfeited or
(ii) shall bear an appropriate legend restricting the transfer of such
Restricted Shares. If any Restricted Shares become nonforfeitable, the Company
shall cause certificates for such shares to be issued without such legend.
ARTICLE 9. PERFORMANCE UNITS, PERFORMANCE SHARES AND CASH-BASED AWARDS
9.1. Grant of Performance Units and Performance Shares. Subject to
the terms of the Plan, Performance Units, Performance Shares or Cash-Based
Awards may be granted to any Eligible Person in such amounts and upon such
terms, and at any time and from time to time, as shall be determined by the
Committee.
9.2. Value/Performance Goals. Each Performance Unit shall have an
initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. Each Cash-Based Award shall have a value as
determined by the Committee. The Committee shall set performance goals which,
depending on the extent to which they are met, will determine the number or
value of Performance Units, Performance Shares or Cash-Based Awards that will be
paid out to the Grantee. For purposes of this Article 9, the time period during
which the performance goals must be met shall be called a "Performance Period."
9.3. Earning of Performance Units, Performance Shares and
Cash-Based Awards. Subject to the terms of this Plan, after the applicable
Performance Period has ended, the holder of Performance Units, Performance
Shares or Cash-Based Awards shall be entitled to receive a payout based on the
number and value of Performance Units, Performance Shares or Cash-Based Awards
earned by the Grantee over the Performance Period, to be determined as a
function of the extent to which the corresponding performance goals have been
achieved.
If a Grantee is promoted, demoted or transferred to a different
business unit of the Company during a Performance Period, then, to the extent
the Committee determines appropriate, the Committee may adjust, change or
eliminate the performance goals or the applicable Performance Period as it deems
appropriate in order to make them appropriate and comparable to the initial
performance goals or Performance Period.
9.4. Form and Timing of Payment of Performance Units, Performance
Shares and Cash-Based Awards. Payment of earned Performance Units, Performance
Shares or Cash-Based Awards shall be made in a lump sum following the close of
the applicable Performance Period. The Committee may pay earned Performance
Units, Performance Shares or Cash-Based Awards in cash or in Shares (or in a
combination thereof) which have an aggregate Fair Market Value equal to the
value of the earned Performance Units, Performance Shares or Cash-Based Awards
at the close of the applicable Performance Period. Such Shares may be granted
subject to any restrictions deemed appropriate by the Committee. The form of
payout of such Awards shall be set forth in the Award Agreement pertaining to
the grant of the Award.
As determined by the Committee, a Grantee may be entitled to receive any
dividends declared with respect to Shares which have been earned in connection
with grants of Performance Units or Performance Shares but not yet distributed
to the Grantee. In addition, a Grantee may, as determined by the Committee, be
entitled to exercise his or her voting rights with respect to such Shares.
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ARTICLE 10. BONUS SHARES AND DEFERRED SHARES
10.1. Bonus Shares. Subject to the terms of the Plan, the Committee
may grant Bonus Shares to any Eligible Person, in such amount and upon such
terms and at any time and from time to time as shall be determined by the
Committee.
10.2. Deferred Shares. Subject to the terms and provisions of the
Plan, Deferred Shares may be granted to any Eligible Person in such amounts and
upon such terms, and at any time and from time to time, as shall be determined
by the Committee. The Committee may impose such conditions or restrictions on
any Deferred Shares as it may deem advisable, including time-vesting
restrictions and deferred payment features. The Committee may cause the Company
to establish a grantor trust to hold Shares subject to Deferred Share Awards.
Without limiting the generality of the foregoing, the Committee may grant to any
Eligible Person, or permit any Eligible Person to elect to receive, Deferred
Shares in lieu of or in substitution for any other compensation (whether payable
currently or on a deferred basis, and whether payable under this Plan or
otherwise) which such Eligible Person may be eligible to receive from the
Company or a Subsidiary.
ARTICLE 11. BENEFICIARY DESIGNATION
Each Grantee under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Grantee, shall be in a form prescribed by the
Company, and will be effective only when filed by the Grantee in writing with
the Company during the Grantee's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Grantee's death shall be paid to
the Grantee's estate.
ARTICLE 12. DEFERRALS
The Committee may permit or require a Grantee to defer receipt of the
payment of cash or the delivery of Shares that would otherwise be due by virtue
of the exercise of an Option or SAR, the lapse or waiver of restrictions with
respect to Restricted Shares, the satisfaction of any requirements or goals with
respect to Performance Units, Performance Shares or Cash-Based Awards, the grant
of Bonus Shares or the expiration of the deferral period for Deferred Shares. If
any such deferral is required or permitted, the Committee shall establish rules
and procedures for such deferrals.
ARTICLE 13. RIGHTS OF EMPLOYEES AND CONSULTANTS
13.1. No Right to Employment. Nothing in the Plan shall interfere
with or limit in any way the right of the Company to terminate any Grantee's
employment or consultancy at any time, nor confer upon any Grantee the right to
continue in the employ or as consultant of the Company.
13.2. No Right to Participation. No employee or consultant shall
have the right to be selected to receive an Award, or, having been so selected,
to be selected to receive a future Award.
ARTICLE 14. CHANGE OF CONTROL AND CERTAIN CORPORATE TRANSACTIONS
14.1. Change of Control. Except as otherwise provided in a Grantee's
Award Agreement, if a Change of Control occurs, then:
(a) the Grantee's Restricted Shares that were forfeitable
shall thereupon become nonforfeitable;
(b) the Grantee's Deferred Shares that were forfeitable shall
thereupon become nonforfeitable and the Company shall immediately
settle all Deferred Shares, whether or not forfeitable, by delivery to
such Grantee of a number of unrestricted Shares equal to the aggregate
number of the Grantee's Deferred Shares;
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(c) any unexercised Option, ISO or SAR, whether or not
exercisable on the date of such Change of Control, shall thereupon be
fully exercisable and may be exercised, in whole or in part; and
(d) the Company shall immediately pay to the Grantee, with
respect to any Performance Share, Performance Unit or Cash-Based Award
with respect to which the Performance Period has not ended as of the
date of such Change of Control, a cash payment equal to the product of
(A) in the case of a Performance Share, the Change of Control Value,
(B) in the case of a Performance Unit, the value of the Performance
Unit specified in the Award Agreement, or (c) in the case of a
Cash-Based Award, the value of the Cash-Based Award or the value of the
Performance Unit specified in the Award Agreement as applicable,
multiplied successively by each of the following:
(i) a fraction, the numerator of which is the number
of whole and partial months that have elapsed between the
beginning of such Performance Period and the date of such
Change of Control and the denominator of which is the number
of whole and partial months in the Performance Period; and
(ii) a percentage equal to a greater of (x) the
target percentage, if any, specified in the applicable Award
Agreement or (y) the maximum percentage, if any, that would be
earned under the terms of the applicable Award Agreement
assuming that the rate at which the performance goals have
been achieved as of the date of such Change of Control would
continue until the end of the Performance Period.
14.2. Pooling of Interests Accounting. If the Committee determines:
(a) that the consummation of a sale or merger of the Company
(a "Closing") is reasonably likely to occur but for the circumstances
described in this Section;
(b) that, based on the advice of the Company's independent
accountants and such other factors that the Committee deems relevant,
the grant of any Award or exercise of some or all outstanding Options
or SARs would preclude the use of pooling of interests accounting
("pooling") after the Closing; and
(c) the preclusion of pooling can reasonably be expected to
have a material adverse effect on the terms of such sale or merger or
on the likelihood of a Closing (a "Pooling Material Adverse Effect"),
then the Committee may:
(i) make adjustments to such Options, ISOs, SARs or
other Awards (including the substitution, effective upon such
Closing, of Options, ISOs, SARs or other Awards denominated in
shares or other equity securities of another party to such
proposed sale or merger transaction) prior to the Closing so
as to permit pooling after the Closing,
(ii) cause the Company to pay the benefits
attributable to such Options, ISOs, SARs or other Awards
(including for this purpose not only the spread between the
then Fair Market Value of the Shares subject to such Options,
ISOs or SARs and the Option Price or Strike Price applicable
thereto, but also the additional value of such Options, ISOs
or SARs in excess of such spread, as determined by the
Committee) in the form of Shares if such payment would not
cause the transaction to remain or become ineligible for
pooling; or
(iii) provided that the Committee has determined,
based on the advice of the Company's independent accountants
and such other factors that the Committee deems relevant, that
no reasonable alternative is available to the Company to
prevent such a Pooling Material Adverse Effect, cancel any or
all such Options, ISOs, SARs or other Awards without the
consent of any affected Grantee.
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14.3. Substituting Awards in Certain Corporate Transactions. In
connection with the Company's acquisition, however effected, of another
corporation or entity (the "Acquired Entity") or the assets thereof, the
Committee may, at its discretion, grant Awards ("Substitute Awards") associated
with the stock or other equity interest in such Acquired Entity ("Acquired
Entity Award") held by such Grantee immediately prior to such Acquisition in
order to preserve for Grantee the economic value of all or a portion of such
Acquired Entity Award at such price as the Committee determines necessary to
achieve preservation of economic value.
ARTICLE 15. AMENDMENT, MODIFICATION, AND TERMINATION
15.1. Amendment, Modification, and Termination. Subject to the terms
of the Plan, the Board may at any time and from time to time, alter, amend,
suspend or terminate the Plan in whole or in part without the approval of the
Company's stockholders.
15.2. Adjustments Upon Certain Unusual or Nonrecurring Events. The
Committee may make adjustments in the terms and conditions of Awards in
recognition of unusual or nonrecurring events (including the events described in
Section 4.2) affecting the Company or the financial statements of the Company or
of changes in applicable laws, regulations, or accounting principles, whenever
the Committee determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan; provided that no such adjustment shall be
authorized to the extent that such authority would be inconsistent with the
Plan's meeting the requirements of the Performance-Based Exception.
15.3. Awards Previously Granted. Notwithstanding any other provision
of the Plan to the contrary, no termination, amendment or modification of the
Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the written consent of the Grantee of such Award,
provided that to the extent any Award shall be adversely affected by any
amendment or restatement to the Plan, the provisions of the Plan in effect as of
the date of Grant of such Award shall prevail.
ARTICLE 16. WITHHOLDING
16.1. Withholding
(a) Mandatory Tax Withholding.
(i) Whenever under the Plan, Shares are to be
delivered upon exercise or payment of an Award or upon
Restricted Shares becoming nonforfeitable, or any other event
with respect to rights and benefits hereunder, the Company
shall be entitled to require (x) that the Grantee remit an
amount in cash, or if determined by the Committee, Mature
Shares, sufficient to satisfy all federal, state, local and
foreign tax withholding requirements related thereto
("Required Withholding"), (y) the withholding of such Required
Withholding from compensation otherwise due to the Grantee or
from any Shares or other payment due to the Grantee under the
Plan or (z) any combination of the foregoing.
(ii) Any Grantee who makes a Disqualifying
Disposition or an election under Section 83(b) of the Code
shall remit to the Company an amount sufficient to satisfy all
resulting Required Withholding; provided that, in lieu of or
in addition to the foregoing, the Company shall have the right
to withhold such Required Withholding from compensation
otherwise due to the Grantee or from any Shares or other
payment due to the Grantee under the Plan.
(b) Elective Share Withholding.
(i) Subject to subsection 16.1(b)(ii), a Grantee may
elect the withholding ("Share Withholding") by the Company of
a portion of the Shares subject to an Award upon the exercise
of such Award or upon Restricted Shares becoming
non-forfeitable or upon making an election under Section 83(b)
of the Code (each, a "Taxable Event") having a Fair Market
Value equal to (x) the minimum amount necessary to satisfy
Required Withholding liability attributable to the Taxable
Event; or (y) with the
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Committee's prior approval, a greater amount, not to exceed
the estimated total amount of such Grantee's tax liability
with respect to the Taxable Event.
(ii) Each Share Withholding election shall be subject
to the following conditions:
(1) any Grantee's election shall be subject
to the Committee's discretion to revoke the Grantee's
right to elect Share Withholding at any time before
the Grantee's election if the Committee has reserved
the right to do so in the Award Agreement;
(2) the Grantee's election must be made on
or before the date (the "Tax Date") on which the
amount of tax to be withheld is determined; and
(3) the Grantee's election shall be
irrevocable.
16.2. Notification under Code Section 83(b). If the Grantee, in
connection with the exercise of any Option, or the grant of Restricted Shares,
makes the election permitted under Section 83(b) of the Code to include in such
Grantee's gross income in the year of transfer the amounts specified in Section
83(b) of the Code, then such Grantee shall notify the Company of such election
within 10 days of filing the notice of the election with the Internal Revenue
Service, in addition to any filing and notification required pursuant to
regulations issued under Section 83(b) of the Code. The Committee may, in
connection with the grant of an Award or at any time thereafter prior to such an
election being made, prohibit a Grantee from making the election described
above.
ARTICLE 17. ADDITIONAL PROVISIONS
17.1. Successors. All obligations of the Company under the Plan with
respect to Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise of all or substantially
all of the business or assets of the Company.
17.2. Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
17.3. Severability. If any part of the Plan is declared by any court
or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any other part of the Plan. Any Section or part
of a Section so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will give effect to the terms of such Section or
part of a Section to the fullest extent possible while remaining lawful and
valid.
17.4. Requirements of Law. The granting of Awards and the issuance
of Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or stock
exchanges as may be required. Notwithstanding any provision of the Plan or any
Award, Grantees shall not be entitled to exercise, or receive benefits under,
any Award, and the Company shall not be obligated to deliver any Shares or other
benefits to a Grantee, if such exercise or delivery would constitute a violation
by the Grantee or the Company of any applicable law or regulation.
17.5. Securities Law Compliance.
(a) If the Committee deems it necessary to comply with any
applicable securities law, or the requirements of any stock exchange
upon which Shares may be listed, the Committee may impose any
restriction on Shares acquired pursuant to Awards under the Plan as it
may deem advisable. All certificates for Shares delivered under the
Plan pursuant to any Award or the exercise thereof shall be subject to
such stop transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations and other requirements of
the SEC, any stock exchange upon which Shares are then listed, any
applicable securities law, and the Committee may cause a legend or
legends to be placed on any such certificates to refer to such
restrictions. If so requested by the Company, the Grantee shall
represent to the Company in writing that he or
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<PAGE> 61
she will not sell or offer to sell any Shares unless a registration
statement shall be in effect with respect to such Shares under the
Securities Act of 1933 or unless he or she shall have furnished to the
Company evidence satisfactory to the Company that such registration is
not required.
(b) If the Committee determines that the exercise of, or
delivery of benefits pursuant to, any Award would violate any
applicable provision of securities laws or the listing requirements of
any stock exchange upon which any of the Company's equity securities
are then listed, then the Committee may postpone any such exercise or
delivery, as applicable, but the Company shall use all reasonable
efforts to cause such exercise or delivery to comply with all such
provisions at the earliest practicable date.
17.6. No Rights as a Stockholder. A Grantee shall not have any
rights as a stockholder with respect to the Shares (other than Restricted
Shares) which may be deliverable upon exercise or payment of such Award until
such shares have been delivered to him or her. Restricted Shares, whether held
by a Grantee or in escrow by the Secretary of the Company, shall confer on the
Grantee all rights of a stockholder of the Company, except as otherwise provided
in the Plan or Award Agreement. Unless otherwise determined by the Committee at
the time of a grant of Restricted Shares, any cash dividends that become payable
on Restricted Shares shall be deferred and, if the Committee so determines,
reinvested in additional Restricted Shares. Except as otherwise provided in an
Award Agreement, any stock dividends and deferred cash dividends issued with
respect to Restricted Shares shall be subject to the same restrictions and other
terms as apply to the Restricted Shares with respect to which such dividends are
issued. The Committee may provide for payment of interest on deferred cash
dividends.
17.7. Nature of Payments. Awards (other than Cash-Based Awards)
shall be special incentive payments to the Grantee and shall not be taken into
account in computing the amount of salary or compensation of the Grantee for
purposes of determining any pension, retirement, death or other benefit under
(a) any pension, retirement, profit-sharing, bonus, insurance or other employee
benefit plan of the Company or any Subsidiary or (b) any agreement between (i)
the Company or any Subsidiary and (ii) the Grantee, except as such plan or
agreement shall otherwise expressly provide.
17.8. Governing Law. The Plan shall be construed in accordance with
and governed by the laws of the State of Alabama other than its laws respecting
choice of law.
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RUSSELL CORPORATION
Alexander City, Alabama
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - April 19, 2000
(This Proxy is solicited by the Board of Directors of the Company)
The undersigned shareholder of Russell Corporation (the "Company")
hereby appoints C.V. Nalley III and John A. White, and each of them, with full
power of substitution, proxies to vote the shares of stock which the
undersigned could vote if personally present at the Annual Meeting of
Shareholders of Russell Corporation to be held at the general offices of the
Company in Alexander City, Alabama, on April 19, 2000 at 11:00 a.m., Central
Daylight Time, or any adjournment thereof:
1. ELECTION OF DIRECTORS - For terms expiring with the Annual Meeting of
Shareholders in 2003: John F. Ward, Eric N. Hoyle, Benjamin Russell,
Margaret M. Porter
[ ] FOR all nominees above (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees above
INSTRUCTION: To withhold authority to vote for an individual nominee,
write the nominee's name in the space provided below.
2. PROPOSAL TO APPROVE THE RUSSELL CORPORATION 2000 EMPLOYEE STOCK PURCHASE
PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN WITH RESPECT TO
proposal to approve the Russell Corporation 2000 Employee Stock Purchase
Plan as described in the Proxy Statement of the Company dated March 16,
2000.
3. PROPOSAL TO APPROVE THE AMENDED AND RESTATED 1993 EXECUTIVE LONG-TERM
INCENTIVE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN WITH RESPECT TO
proposal to approve the amended and restated 1993 Executive Long-Term
Incentive Plan as described in the Proxy Statement of the Company dated
March 16, 2000.
(over)
<PAGE> 63
4. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ELECTION OF THE
PERSONS NOMINATED BY THE BOARD OF DIRECTORS AS DIRECTORS, FOR THE PROPOSAL TO
---
APPROVE THE RUSSELL CORPORATION 2000 EMPLOYEE STOCK PURCHASE PLAN AND FOR THE
---
PROPOSAL TO APPROVE THE AMENDED AND RESTATED 1993 EXECUTIVE LONG-TERM INCENTIVE
PLAN.
PLEASE DATE AND SIGN EXACTLY AS NAME
APPEARS ON THIS PROXY. IF SHARES ARE HELD
JOINTLY, EACH SHAREHOLDER SHOULD SIGN.
EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC.
SHOULD USE FULL TITLE AND, IF MORE THAN ONE,
ALL SHOULD SIGN. IF THE SHAREHOLDER IS A
CORPORATION, PLEASE SIGN FULL CORPORATE
NAME BY AN AUTHORIZED OFFICER.
---------------------------------------------
SIGNATURE(S) OF SHAREHOLDER(S)
---------------------------------------------
DATED , 2000
---------------------------------
