EXHIBIT (4b)
EXECUTION COPY
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RUSSELL CORPORATION
NOTE AGREEMENT
Dated as of December 7, 1995
$100,000,000
6.78% Senior Notes due November 30, 2008
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TABLE OF CONTENTS
(Not a part of the Agreement)
SECTION HEADING PAGE
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 ........................................................ 5
Section 3.1 Representations of the Company ................................. 5
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 ..................................................... 17
Section 5.14 Repurchase of Notes ............................................ 17
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 ............................... 18
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SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR ................................ 21
Section 6.1 Events of Default .............................................. 21
Section 6.2 Notice to Holders .............................................. 22
Section 6.3 Acceleration of Maturities ..................................... 23
Section 6.4 Rescission of Acceleration ..................................... 23
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS ....................................... 24
Section 7.1 Consent Required ............................................... 24
Section 7.2 Solicitation of Holders ........................................ 24
Section 7.3 Effect of Amendment or Waiver .................................. 24
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS ............................... 25
Section 8.1 Definitions .................................................... 25
Section 8.2 Accounting Principles .......................................... 34
Section 8.3 Directly or Indirectly ......................................... 34
SECTION 9. MISCELLANEOUS .......................................................... 34
Section 9.1 Registered Notes ............................................... 34
Section 9.2 Exchange of Notes .............................................. 34
Section 9.3 Loss, Theft, Etc. of Notes ..................................... 35
Section 9.4 Expenses, Stamp Tax Indemnity .................................. 35
Section 9.5 Powers and Rights Not Waived; Remedies Cumulative .............. 35
Section 9.6 Notices ........................................................ 35
Section 9.7 Reproduction of Documents ...................................... 36
Section 9.8 Successors and Assigns ......................................... 36
Section 9.9 Survival of Covenants and Representations ...................... 36
Section 9.10 Severability ................................................... 36
Section 9.11 Governing Law .................................................. 36
Section 9.12 Captions ....................................................... 37
Signature Page ......................................................................... 37
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ATTACHMENTS TO NOTE AGREEMENT:
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 6.78% Senior Note due November 30, 2008
Exhibit B - Representations and Warranties of the Company
Exhibit C - Description of Closing Opinion of Independent
Counsel for the Company
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RUSSELL CORPORATION
One Lee Street
Alexander City, Alabama 35010
NOTE AGREEMENT
$100,000,000
6.78% Senior Notes due November 30, 2008
Dated as of
December 7, 1995
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 $100,000,000 aggregate principal amount of its 6.78% Senior Notes (the
"Notes") to be dated the date of issue, to bear interest from such date at the
rate of 6.78% per annum, payable semi-annually on May 31st and November 30th in
each year (commencing May 31, 1996) 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 November
30, 2008, 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 Section 2 of this Agreement. The term "Notes" as used herein shall include
each Note delivered pursuant to this Agreement. You are hereinafter
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sometimes referred to as the "Purchaser". The terms which are capitalized herein
shall have the meanings set forth in Section 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, 7-45 Raymond Boulevard West, Newark, N.J. 07102,
against payment therefor in Federal Reserve or other funds current and
immediately available at the principal office of Wachovia Bank of Georgia, N.A.
in the amount of the purchase price on December 7, 1995 (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 November 30th in each of the years 2003
through 2007, 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) $16,666,666.67 or (b) the principal amount of the Notes then
outstanding. The entire remaining principal amount of the Notes shall become
due and payable on November 30, 2008. No premium shall be payable in connection
with any required prepayment made pursuant to this Section 2.1.
In the event that the Company shall prepay less than all of the Notes
pursuant to Section 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 Section 2.1 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 Section 2.1, upon compliance with Section 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.
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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 Section 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 Section 2.3(a) and
the right of the holders of the Notes to require payment on the terms and
conditions provided for in this Section 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 Section 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 Section 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 Section 9.6
hereof written notice of such Noteholder Note to each other holder of the Notes
and, notwithstanding the provisions of Section 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 Section 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 Section 2.3(b) to the extent that such notices
relate to Noteholder Notices made prior to the expiration of the period
specified in Section 2.3(a).
(c) Without limiting the foregoing, if the Company fails to give the
Company Notice required pursuant to Section 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 Section 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 Section 9.6 hereof. Notice of any required
prepayment pursuant to this Section 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
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such holder has 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 Section 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 the 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 Section 2.3:
"Acquiring Person" shall mean a "person" or "group of persons" within the
meaning of Section 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.
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Section 2.4 Notice of Optional Prepayments. The Company will give notice
of any prepayment of the Notes pursuant to Section 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 Section 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 Section 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
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as of the date hereof and are incorporated herein by reference with the same
force and effect as though herein set forth in full.
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 assisted 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, 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) 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 Section 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 Section 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
Section 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 Section 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 Section 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 Section 5.8(h) and, without
duplication, (B) the aggregate amount of all Debt of Subsidiaries
(other than Debt of Subsidiaries permitted by Section 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;
(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
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period of 60 consecutive days during which (1) 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 Section
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 Section 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 to Section 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 Section 5.7.
(c) Any corporation which becomes a Subsidiary after the date hereof
shall for all purposes of this Section 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
Section 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, provided in each case, the
obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate actions or proceedings;
10
(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 Section
5.12(b)(2), and (5) all such Debt shall have been incurred within the
applicable limitations provided in Section 5.7(a)(3) and Section
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 Section
5.8(h) shall have been incurred within the limitations of Section
5.7(a)(3) and Section 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 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.
11
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 Payment payable more than 60 days after the date of
declaration thereof.
(c) For the purposes of this Section 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.
12
(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 to Section 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,
First Alabama Bancshares, Inc., 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 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)
13
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 Section 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 Section 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 Section 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 Section 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 Section 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 Section 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 Section 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 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
14
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 Section 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 Section 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
Section 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 Section 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 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 Section 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
15
(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 Section 5.7(a)(3) to incur at
least $1.00 of additional Funded Debt.
Computations pursuant to this Section 5.12(b) shall include
dispositions made pursuant to Section 5.12(c) and computations
pursuant to Section 5.12(c) shall include dispositions made pursuant
to this Section 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:
(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;
16
(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
arid its other Subsidiaries within the limitations
of Section 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 Section
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
Section 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 Section 5.7(a)(3) to incur at
least $1.00 of additional Funded Debt.
Computations pursuant to this Section 5.12(c) shall include
dispositions made pursuant to Section 5.12(b) and computations
pursuant to Section 5.12(b) shall include dispositions made pursuant
to this Section 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 Section 5.7(a)(3) and Section
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 Section 5.7(a)(3).
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, Section 6.3,
Section 6.4 and Section 7.1.
17
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 1 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 Section 5.17 and
concurred in by the independent public accountants referred to in
Section 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 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
18
(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;
(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
19
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 Section 5.6 through Section 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 Section 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; and
(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,
(i) Requested Information. With reasonable
promptness, such other financial data and information or other
information necessary to demonstrate compliance with the
20
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 Section 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 Section 5.7 through Section 5.13; or
(e) Default shall occur in the observance or performance of any
covenant or agreement contained in Section 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
21
(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
(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 Section 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
22
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 Section 6.1 has happened and is
continuing, any holder of any Note may, by notice in writing sent in the manner
provided in Section 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 Section 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 Section 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), (1) or (m) of Section 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 Section 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 Section 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:
(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 Section 6.3)
shall have been duly paid; and
23
(c) each and every Default and Event of Default shall have been
made good, cured or waived pursuant to Section 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 7.1. 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 Section 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 Section 7 or Section 6 or (e) which will change any of
the provisions of Section 5.14 or Section 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.
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.
24
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 Section 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 contro1 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 paragraph 2.2 or 2.3 or is declared
to be immediately due and payable pursuant to paragraph 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.
"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 Section 2.3(d).
25
"Closing Date" shall have the meaning set forth in Section 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 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).
26
"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 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
27
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 Section 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 Section 9.7.
"GAAP" shall mean United States generally accepted accounting principles
as in effect at the time.
"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
28
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. Section 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. Section 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. Section 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 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
29
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,
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.
30
"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 (1) 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 Section 1.1.
"Overdue Rate" shall mean the lesser of (a) the maximum rate
permitted by applicable law and (b) the greater of (1) 8.78% per annum or (2)
2% plus the rate which Morgan Guaranty Trust Company 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 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
31
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 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.
32
"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 Section 5.11.
"Restricted Payments" shall have the meaning set forth in Section
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 Section 2.3(d).
"Security" shall have the same meaning as in Section 2(1) 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 Section 2.2 or Section 2.3 or is declared to be immediately due and payable
pursuant to Section 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 November 30, 2008, (b) which is not
subject to repayment prior to November 30, 2008 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 November 30, 2008 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.
"Subsidiary Stock" shall have the meaning set forth in Section
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
33
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 ten days' notice to that effect given by the holder of any
Note initially delivered or of any Note substituted therefor pursuant to
Section 9.1, this Section 9.2 or Section 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 S1,000.000 (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.
34
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.
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 One Lee Street,
Alexander City, Alabama 35010, 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
35
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.
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 arid 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 Stare of New Jersey.
36
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.
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: [SIG]
--------------------------
Its: EXECUTIVE V.P. AND C.F.O.
--------------------------
Accepted as of December 7, 1995.
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By: [SIG]
--------------------------
Its: VICE-PRESIDENT
--------------------------
37
PURCHASER SCHEDULE
Aggregate
Principal
Amount of
Notes to be Note
Purchased Denomination(s)
----------- --------------
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA $100,000,000 $100,000,000
(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. 050-54-526
Morgan Guaranty Trust Company of New York
23 Wall Street
New York, New York 10015
(ABA No.: 021-000-238)
Each such wire transfer shall set forth the name
of the Company, a reference to "6.78% Senior Notes
due 2005, Security No. lInv. 5246!, and the due date
and application (as among principal, interest and
Yield-Maintenance 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
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4077
Attention: Manager, Investment Operations Group
SCHEDULE I
(to Note Agreement)
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
4900 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Attention: Managing Director
(4) Recipient of telephone prepayment notices:
Manager, Investment Operations Group
(201) 802-5260
(5) Tax Identification No.: 22-1211670
I-2
DESCRIPTION OF CURRENT DEBT, FUNDED DEBT,
LONG-TERM LEASES, LIENS AND INVESTMENTS
1. Current Debt of the Company and its Subsidiaries outstanding on the
Closing Date is as follows:
DEBT HOLDER AMOUNT
Trust Company Bank(1) $ 34,240,000
Wachovia Bank & Trust 63,300,000
Guaranties(2) 0
Total Current Debt $ 97,540,000
=================
- --------------
(1) $9,240,000 of the amount outstanding represents debt for Russell Corp.
UK., Ltd. which is denominated in Pound Sterling. Pound Sterling
6,000,000 @ 1.54 Pound Sterling/$ = $9,240.000.
(2) Guarantee of overdraft line of credit at the Bank of Scotland for Russell
Corp. UK. Ltd. No amounts are outstanding at this time.
2. Funded Debt (other than Capitalized Rentals) of Company and its
Subsidiaries outstanding on the Closing Date is as follows:
DEBT HOLDER AMOUNT
Prudential Insurance Co. (8.01%) $ 17,500,000
Prudential Insurance Co. (8.83%) 42,900,000
Allstate Life Insurance (6.72%) 30,000,000
Connecticut General Life Insurance (6.72%) 25,000,000
Teachers Insurance & Annuity (6.72%) 20,000,000
Trust Co. Bank 75,000,000
Compass Bank - Desoto Mills (6.95%) 227,399
ECSC Loan (Russell U.K.)(1) 192,500
--------------
Total Funded Debt $ 210,819,899
==============
- --------------
(1) Note is denominated in Pound Sterling 125,000 @ 1.54 Pound Sterling/$ =
$192,500.
SCHEDULE II
(to Note
3. Long-Term Leases of the Company and its Subsidiaries outstanding on the
Closing Date are as follows:
LESSOR DESCRIPTION
Central Plaza Properties Cross Creek Outlet; Mt. Airy, NC
W.C. Bradley Licensed Products Division, Columbus, GA
Stone/Snyder General Partnership Baltimore, MD sales office
Westerville Center Westerville, OH sales office
Dermody Industrial Group Reno, NV warehouses and offices
Trammell Crow Company Lenexa, KS sales office
Q.R.E. Holding Company Anaheim, CA sales office
City of Alexander City Alexander City, AL hangar
Boca Corners, LP Norcross, GA sales office
Mid-Georgia Landholdings, Inc. College Park, GA sales office
Terumo Corporation Canadian office and warehouse
Cellus Holdings, Ltd. London, England sales office
Montgomery Warehouses, LLC Montgomery, AL warehouse
The Equitable Life Assurance Society
of the United States Los Angeles, CA sales office
Parkway Tower Associates, LP Dallas. TX sales office
Provident Life and Accident Insurance
Company, Inc. Dallas, TX sales office
Dallas Market Center Company Dallas, TX sales office
Kingawood Income Properties I, Ltd. Dothan, AL warehouse
Helmsley Spear, Inc. New York, NY sales office
C-M Alabama Invesent Company Greenville, AL sewing plant
Halpern Investment Group, Inc. Atlanta, GA sales office
The Irvine Company Irvine, CA sales office
Pelmad Corporation Miami, FL, sales office
Fiztpatrick Family Partners, Ltd. Montgomery, AL sewing plant
Manhattan East Suite Hotels New York, NY apartment
Aronov Realty Company, Inc. Alexander City, AL warehouse
Prattville Square Shopping, Inc. Prattville, AL knitting plant
Castle Rock Factory Shops Partnership Castle Rock, CO outlet store
Tanger Properties Limited Partnership Commerce, GA outlet store
Pigeon Forge, TN outlet Store
Riverhead, NY outlet store
San Marcos, TX outlet store
Locust Grove, GA outlet store
Branson, MO outlet stores
Dalton Factory Stores Dalton, GA outlet store
Marco Outlet Partners Marco Island, FL outlet store
Myrtle Beach Factory Stores, Inc. Myrtle Beach, SC outlet store
R.R. New Braunfels, Inc. New Braunfels, TX outlet store
Nags Head Outlet Partners Nags Head, NC outlet store
Ohio Factory Shops partnership Jeffersonville, OH outlet store
II-2
Orlando Outlet World, Ltd. Orlando, FL outlet store
R.R. Park City, Inc. Park City, UT outlet store
Benderson 85-1 Trust Sedona, AZ outlet store
Slidell Factory Outlets, Ltd. Slidell, LA outlet store
SOS Associates, Ltd. Sarasota, FL outlet store
New Plan Realty Trust St. Augustine, FL outlet store
Osage Beach, MO outlet store
Manufacturer's Marketplace Traverse City, MI outlet store
Wigwam Outlet Stores, L.L.C. Goodyear, AZ outlet store
R.R. Williamsburg, Inc. Lightfoot, VA outlet store
The Cordish Company Ocean City, MD outlet store
Charter Oaks Valdosta, GA outlet store
Foley, AL outlet store
Columbo Associates Columbus, GA outlet store
Retail Developers, Ltd. Boaz, AL outlet store
New Plan factory Malls, Inc. Branson, MO outlet store
Factory Stores of America, Inc. Nashville, TN outlet score
Williams Investment Company Adel, GA outlet store
Ladyluck Bettendorf L.C. Bettendorf, IA outlet store
4. Capitalized Leases of the Company and its Subsidiaries outstanding on
the Closing Date are as follows:
DEBT HOLDER AMOUNT
Industrial Development Board of Geneva, AL $ 3,000,000
Industrial Development Board of Columbia, AL 3,000,000
Industrial Development Board of Ashland, AL 2,100,000
Industrial Development Board of Niceville, FL 300,000
--------------
Total Capital Leases $ 8,400,000
==============
5. LIENS SECURING INDEBTEDNESS OF THE COMPANY AND ITS SUBSIDIARIES
EXISTING ON THE CLOSING DATE ARE AS FOLLOWS:
DEBT HOLDER AMOUNT
Industrial Development Board of Geneva, AL $ 3,000,000
Industrial Development Board of Columbia, AL 3,000,000
Industrial Development Board of Ashland, AL 2,100,000
Industrial Development Board of Niceville, FL 300,000
--------------
Total Liens $ 8,400,000
==============
II-3
6. Investment of the Company and the Subsidiary outstanding on the Closing
Date are as follows:
INVESTMENTS IN SUBSIDIARIES AMOUNT
Cross Creek Apparel, Inc. $ 40,832,622
Russell Corp. UK, Ltd. 53,215,329
Russell Athletic, Inc. 7,545,200
Russell Development Corporation 3,916,384
Russell Athletic West, Inc. 3,315,937
Habersham Mills 3,325,465
Russell Mill Stores, Inc. 86,634
Alexander City Flying Service, Inc. 62,486
Desoto Mills, Inc. 10,145,438
Russell Mexico, S.A. de C.V. 32,601
Russell CZ s.r.o. 15,238
Russell Foreign Sales, Ltd. 741
Russell Spain, S.L. 4,404
Russell Corp. Australia PTY, LTD. 962,614
------------------
Total Investments $ 123,461,093
==================
Subsidiaries of the Company
Jurisdiction % of Voting
Name of Subsidiary of Incorporation Stock Owned
- ---------------------- -------------------- ---------------
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 Mill Stores, Inc. Delaware 100%
Russell Athletic West, Inc. Nevada 100%
Habersham Mills Georgia 100%
Alexander City Flying Service, Inc. Alabama 100%
Russell Development Corporation Georgia 100%
Desoto Mills, Inc. Alabama 100%
Russell Germany GmbH Germany 100%
Russell France SARL France 100%
Russell Spain, S.L. Spain 100%
Russell Italy Sri Italy 100%
Russell Corp. Canada Limited Canada 100%
Russell CZ s.r.o. Czech Republic 100%
Russell Corp. Far East, Ltd. Hong Kong 100%
II-4
Russell Mexico, S.A. de C.V. Mexico 100%
Russell Corp, Australia PTY, LTD. Australia 100%
Russell Foreign Sales, Ltd. Barbados 100%
II-5
RUSSELL CORPORATION
6.78% Senior Note
Due November 30, 2008
No. R-l December 7, 1995
$100,000,000
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 thirtieth day of November, 2008 the
principal amount of ONE HUNDRED MILLION DOLLARS ($100,000,000) 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
6.78% per annum from the date hereof until maturity, payable semiannually on
November 30th and May 31st in each year (commencing on May 31, 1996) 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) 8.78% per annum or
(2) 2% plus the rate which Morgan Guaranty Trust Company 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 6.78% Senior Notes due November 30, 2008 (the
"Notes") of the Company in the aggregate principal amount of $100,000,000
issued under and pursuant to the terms and provisions of the Note Agreement,
dated as of December 7, 1995 (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 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.
EXHIBIT A
(to Note Agreement)
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:
------------------------------
Its:
-----------------------------
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
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 90% 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 January 2, 1993, January
1, 1994 and December 31, 1994 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 (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 October 1, 1995 and the unaudited statements of
income and cash flows for the 13-week period and the 39-week period ended on
said date prepared by the Company
EXHIBIT B
(to Note Agreement)
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 December 31, 1994, 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 4 hereof, except as
sold or otherwise disposed of in the ordinary course of business and except
for Liens permitted by the Agreement.
B-2
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 will 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
agreements 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 charges upon the
Company or any Subsidiary or upon any of their respective properties, income
B-3
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 Service 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 and "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.
B-4
Neither the Company nor any ERISA 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 employees
and former employees who have completed 20 years of service.
17. Compliance with Law. Neither the Company nor an 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.
B-5
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 Section 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., 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 provisions of the
Articles of Incorporation or By-laws of the Company or any agreement
EXHIBIT C
(to Note 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 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.