EXHIBIT (4c)
[EXECUTION COPY]
AMENDMENT NO. 1
to
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 1 dated as of March 11, 2003, is made by and among
RUSSELL CORPORATION, an Alabama corporation, certain of its subsidiaries, the
financial institutions party thereto from time to time as the Lenders, JP
MORGAN CHASE BANK and SUNTRUST BANK, as Co-Syndication Agents, THE CIT
GROUP/BUSINESS CREDIT, INC. and BANK OF AMERICA, N.A., as Co-Documentation
Agents, WACHOVIA BANK, NATIONAL ASSOCIATION and GENERAL ELECTRIC CAPITAL
CORPORATION, as Co-Agents, and FLEET CAPITAL CORPORATION, a Rhode Island
corporation, as Administrative Agent for the Lenders.
Preliminary Statement
The Borrowers, the Lenders, the Co-Syndication Agents, the
Documentation Agents, the Co-Agents and the Administrative Agent are parties to
a Loan and Security Agreement dated as of April 18, 2002 (the "Loan Agreement";
terms defined in the Loan Agreement, and not otherwise defined herein, are used
in this Amendment as defined in the Loan Agreement).
The Borrowers have requested that the Lenders amend the Loan Agreement
in certain respects and the Lenders have agreed to do so, upon and subject to
the terms, conditions and provisions of this Amendment.
Statement of Agreement
In consideration of the Loan Agreement, the Loans made by the Lenders
and outstanding thereunder, the mutual promises hereinafter set forth and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Amendments to Loan Agreement. Effective as provided in
SECTION 2, the Loan Agreement is hereby amended as follows:
(a) by amending Section 1.1 Definitions by inserting therein in
appropriate alphabetical order, the following new
definitions:
"Acquired Business" means all or any portion of a Business
Unit or Investment consisting of Equity Interests acquired by one or
more Borrowers after the Closing Date.
"Average Availability" means the average daily Availability
computed for the 120-day period ending on the date on which Average
Availability is to be determined.
"Bike Amount" means the cash portion of the purchase price of
the Acquisition of the assets of Bike Athletic Company.
"Cash Purchase Price", when used in connection with an
Acquisition, means the cash portion of the purchase price paid or
agreed to be paid (whether in a single installment or in multiple
installments over time and whether fixed or contingent) in connection
with such Acquisition in the Fiscal Year in which the Acquisition is
closed, minus the Deferred Cash Portion with respect to such
Acquisition not paid during such Fiscal Year.
"Daily LIBOR Rate" means the rate per annum determined on a
weekly basis by the Swingline Lender on the basis of the offered rate
for deposits in Dollars in the London interbank borrowing market of
amounts equal or comparable to the amount of the Swingline Facility
for a term of seven (7) days, which appears on the Telerate LIBOR
Screen Page 3875 as of 11:00 a.m. (London time) two Business Days
prior to the first Business Day of each calendar week (provided that
if more than one such offered rate appears on such page, "Daily LIBOR
Rate" shall be the arithmetic average rounded upward, if necessary, to
the next higher 1/100 of 1%) of such offered rates, divided by an
amount equal to one minus the Reserve Percentage.
"Deferred Cash Portion", when used in connection with an
Acquisition, means the portion of the purchase price of an Acquisition
which is payable in cash but the payment of which is wholly contingent
upon the occurrence of specified events or circumstances in the
future, including without limitation the achievement of certain
financial results, the occurrence of which is uncertain at the time of
the closing of the Acquisition. For purposes of this Agreement, the
amount of "Deferred Cash Portion" outstanding or payable at any given
time shall equal (i) the amount reasonably projected by the Borrowers
to be actually payable and/or (ii) if the amount of the Deferred Cash
Portion is a sum certain by reason of the subsequent removal of any
contingency or a final calculation agreed to by the buyer and seller,
such final amount.
"Excluded Acquisition" means any Acquisition which does not
involve a total cash consideration and Secured Debt permitted under
SECTION 12.2(K) in excess of $10,000,000 and does not, when added to
other Excluded Acquisitions during the same Fiscal Year, in the
aggregate cause total cash consideration and amounts of Secured Debt
permitted under SECTION 12.2(K) in all such Acquisitions to exceed
$30,000,000.
"Factor Collateral" means (a) all of the RFS accounts arising
from a Borrower's sales of merchandise or rendition of services to
customers which RFS acquires from such Borrower pursuant to its
Receivables Purchase Agreement and sells and assigns to factor
pursuant to the factoring agreement (all of the foregoing, the
"Factoring Accounts" and, individually, a "Factored Account"); (b) all
Related Security (as hereinafter defined) with respect to each
Factored Account; (c) all sums standing to the credit of RFS with the
factor; (d) any property of RFS coming into the factor's possession in
the ordinary course of its factoring of the Factored Accounts; and (e)
all proceeds of the foregoing. "Related Security" means, with respect
to any Factored Account, the following: (i) all security interests or
liens and property subject thereto from time to time purporting to
secure payment of such Factored Account, whether pursuant to the
contract related to such Factored Account or otherwise, including all
rights of stoppage in transit, replevin, reclamation, supporting
obligations and letter of credit rights (as such terms are defined in
the UCC), and all claims of lien filed or held by a Borrower or RFS on
personal property; (ii) all rights to any goods whose sale gave rise
to such Factored Account,
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including returned or repossessed goods, which are segregated from
each Borrower's and RFS' other goods; (iii) all instruments,
documents, chattel paper and general intangibles (each as defined in
the UCC) arising from, related to or evidencing such Factored Account;
(iv) all Uniform Commercial Code financing statements covering any
collateral securing payment of such Factored Account; (v) all
guaranties and other agreements or arrangements of whatever character
from time to time supporting or securing payment of such Factored
Account whether pursuant to the contract related to such Factored
Account or otherwise; (vi) all records of any nature evidencing or
related to the Factored Accounts, including contracts, invoices,
charge slips, credit memoranda, notes and other instruments and other
documents, books, records and other information (including, without
limitation, computer data); and (vii) all proceeds and amounts
received or receivable arising from any of the foregoing.
"Guaranty Reserve" means (i) at any time that no Default or
Event of Default exists, all or any portion of the amount in excess of
$3,000,000 of total obligations that are guaranteed by a Loan Party
pursuant to SECTION 12.3(iii) that the Administrative Agent, in its
sole discretion, determines should constitute the Guaranty Reserve,
and (ii) at any time that a Default or Event of Default exists, all or
any portion of the total obligations that are guaranteed by a Loan
Party pursuant to SECTION 12.3(iii) that the Administrative Agent, in
its sole discretion, determines should constitute the Guaranty
Reserve.
"Permitted Factor Lien" means a security interest in an
Account of a Borrower in favor of a factor who is a party to a
factoring arrangement with such Borrower permitted under SECTION 12.7.
"Permitted Repurchase" means any (i) purchase by Russell or a
Subsidiary, in open market transactions, of its Senior Notes and
Common Stock or (ii) any redemption of Senior Notes pursuant to the
terms of the Senior Notes Indenture, in each case following at least
48 hours advance notice to the Administrative Agent (which notice may
be waived by the Administrative Agent in its discretion), which, when
added to all prior such purchases during the same Fiscal Year, does
not exceed, in the aggregate for all such purchases and redemptions,
$75,000,000, plus the Rollover Amount, minus the sum of the cash
purchase prices of Section 12.4 Investments and the Cash Purchase
Price of the Permitted Acquisitions made during such Fiscal Year and
the Deferred Cash Portion of Permitted Acquisitions paid or to be paid
during such Fiscal Year.
"Rollover Amount" means, for each Fiscal Year, the amount, if
any, by which $75,000,000 exceeds the sum of the Cash Purchase Price
of all Permitted Acquisitions, and the Deferred Cash Portions of
Permitted Acquisitions paid, and the cash portion of the purchase
prices of all Section 12.4 Investments and Permitted Repurchases
during the immediately preceding Fiscal Year, up to a maximum of
$15,000,000.
"Swingline Rate" means the sum of the following (1) the Daily
LIBOR Rate, plus (ii) the Applicable Margin then in effect for LIBOR
Revolving Credit Loans, plus (iii) .375%.
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(b) by amending the definition of "Eligible Account" in Section
1.1 Definitions by amending clause (p) in its entirety, changing clause (q) to
clause (r) and inserting a new clause (q), to read as follows:
(p) such Account is subject to the Security Interest,
which is perfected as to such Account, and is subject to no other Lien
whatsoever other than a Permitted Lien arising by operation of law and
a Permitted Factor Lien and the goods giving rise to such Account were
not, at the time of the sale thereof, subject to any Lien other than
the Security Interest or other Permitted Lien arising by operation of
law;
(q) such Account is not owing by an Account Debtor whose
Accounts are subject to any arrangement with any factor unless such
factor has entered into an intercreditor agreement in form and
substance satisfactory to the Administrative Agent in its sole
discretion; and
(c) by further amending Section 1.1 Definitions by amending the
following definitions in their entireties to read as follows:
"Applicable Margin" means as to each Type of Loan under each
Facility, the Tier II rate per annum set forth under the appropriate
caption on the pricing matrix attached hereto as ANNEX B, subject to
quarterly adjustment as follows: From and after the delivery of the
consolidated quarterly financial statements of Russell and its
Consolidated Subsidiaries for each Fiscal Quarter and the related
officer's certificate in accordance with the respective provisions of
SECTIONS 11.1(b) and 11.3, the foregoing percentages will be adjusted
effective January 5, 2003 and as of the first day of each succeeding
Fiscal Quarter thereafter, that begins at least 10 days after delivery
of quarterly financial statements and the related officer's
certificate for the previous Fiscal Quarter (each, a "Margin
Adjustment Date"), to the percentages set forth in ANNEX B that
correspond to the Fixed Charge Coverage Ratio covenant calculation
reflected in such financial statements and the related certificate;
PROVIDED, that if and for so long as a Default or Event of Default
exists, no downward adjustment in the Applicable Margin otherwise
indicated shall be effected.
"Borrowing Base" means at any time an amount equal to the lesser of:
(a) the Revolving Credit Facility, minus the Letter of Credit
Reserve and the Guaranty Reserve, and
(b) an amount equal to
(i) 85% of the face value of Eligible Accounts and
Eligible Amounts Due from Factor due and owing at such time,
plus
(ii) the lesser of: (A) the sum of 50% as to raw
materials and work in process and 60% as to finished goods,
in each case of the value of Eligible Inventory consisting of
such items, determined on the basis of the lesser of FIFO
cost and market value and (B) 85% of the Appraised Value of
Eligible Inventory, plus
(iii) the L/C Inventory Amount, plus
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(iv) during the period April 15 through August 31 of each
Fiscal Year, the Seasonal Increase, minus
(v) the Letter of Credit Reserve, minus
(vi) the Dilution Reserve, minus
(vii) the Environmental Compliance Reserve (which on the
Effective Date is zero), minus
(viii) the Royalty Reserve, minus
(ix) the Guaranty Reserve;
where "Seasonal Increase" means 10% of the value of Eligible
Inventory, determined on the basis of the lesser of FIFO cost and
market value.
"Cash Equivalents" means
(a) Dollars;
(b) securities issued or directly and fully guaranteed
or insured by the United States government or any agency or
instrumentality thereof or any state having maturities of not more
than one year after the date of acquisition;
(c) certificates of deposit and Eurodollar time deposits
with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any Lender or any domestic
commercial bank or U.S. branch of a foreign commercial bank having
capital and surplus in excess of $250 million and a Thompson Bank
Watch Rating of "B" or better;
(d) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in CLAUSES
(b) and (c) above entered into with any financial institution meeting
the qualifications specified in said CLAUSE (c);
(e) commercial paper having the highest rating
obtainable from Moody's or S&P and in each case maturing within 270
days after the date of acquisition; and
(f) investments in funds which invest primarily in
assets described in (a) through (e) above.
"Eligible Amounts Due from Factor" means the amount payable
from time to time to the Borrowers by factors with respect to Accounts
which have been sold or transferred in accordance with the provisions
of SECTION 12.7(e), or otherwise pursuant to consent by the Required
Lenders, as to which factors (x) have assumed the risk of loss
resulting from an Account Debtor's failure to pay such Accounts at
maturity because of its financial inability and (y) otherwise have no
rights of offset against collections not approved by the
Administrative Agent, net of the sum of all discounts, returns,
allowances, deductions, fees, commissions, and other charges, charge
backs and
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obligations due to factors and net of all reserves taken by factors,
including, without limitation, (a) any customer deductions, (b) any
factor risk account receivables which are not paid in full because of
a dispute (real or alleged), (c) any account receivable with respect
to which the client or a seller has breached any of the warranties or
representations set forth in the agreement with factor, (d) any early
payment anticipation deducted by a customer on any account receivable,
(e) any client risk account receivable, and (f) payments received by
factor on client risk accounts receivable which factor is required at
any time or for any reason to turnover or return (including, without
limitation, payments made by factor in connection with preference
claims asserted in a bankruptcy or other insolvency proceeding), which
amount is determined based upon statements provided by factors or, in
the absence of such current statements, as determined by the
Administrative Agent in its reasonable discretion.
"Fixed Charge Coverage Ratio" means, for any specified
accounting period, the ratio of EBITDA of Russell and its Consolidated
Subsidiaries for such period, less the sum of cash income taxes paid,
Restricted Payments and Restricted Distributions (excluding Permitted
Repurchases), Capital Expenditures (other than Financed Capex) and
Previously Reserved Cash Payments made, on a consolidated basis by
Russell and its Consolidated Subsidiaries during such period, to the
sum of (i) interest expense for such period plus (ii) current
maturities of long-term Debt as of the date of determination, in each
case determined in accordance with GAAP on a consolidated basis for
Russell and its Consolidated Subsidiaries; PROVIDED, that (x) for any
specified accounting period of less than four consecutive Fiscal
Quarters, current maturities of long-term Debt as of the date of
determination shall be multiplied by a fraction, the numerator of
which is the number of Fiscal Quarters included in such specified
accounting period and the denominator of which is four and (y) for
purposes of calculating current maturities of long-term Debt for the
last four Fiscal Quarters during which this Agreement is in effect,
the principal amount of all Revolving Credit Loans that are due and
payable on the Termination Date shall be excluded.
"Permitted Investments" means Investments of any Loan Party
or Subsidiary in:
(a) (i) At any time Revolving Credit Loans are
outstanding, Cash Equivalents of up to $30,000,000, and (ii)
at any time there are no Revolving Credit Loans outstanding,
all Cash Equivalents, in each case so long as the
requirements of SECTION 5.16 are met to the extent necessary
to assure that such Cash Equivalents are subject to the
Security Interest.
(b) sales of inventory on credit in the ordinary course
of business,
(c) in any Loan Party (including any Permitted
Acquisition that involves an Investment in Equity Interests
of a Person that thereby becomes a Loan Party),
(d) any Subsidiary that is not a Loan Party to the
extent that such Investment is outstanding on the Effective
Date,
(e) shares of capital stock, evidence of Indebtedness or
other security acquired in consideration for or as evidence
of past-due or restructured Accounts,
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(f) non-cash consideration received in connection with
any Asset Disposition otherwise permitted hereby,
(g) Guaranties permitted pursuant to SECTION 12.3,
(h) those items described on SCHEDULE 1.1B - PERMITTED
INVESTMENTS,
(i) loans and advances (i) to officers, directors and
employees of any Loan Party or its Subsidiaries in the
ordinary course of business or (ii) to officers, directors
and employees and to independent sales representatives of any
Loan Party or its Subsidiaries secured by the pledge of
shares of Russell capital stock made to finance the purchase
by such officers, directors, employees or representatives of
such stock or made to finance tax liabilities of any such
Person resulting from the exercise of stock options or the
sale of capital stock of Russell by such Person, in each case
consistent with past practices of such Loan Party or
Subsidiary and consistent with Applicable Law, and
(j) at any time no Default or Event of Default exists,
up to $10,000,000 of Investments during any Fiscal Year, so
long as they are subject to the Security Interest, provided
that no more than 66 2/3% of the Equity Interests of any
Foreign Subsidiary shall be required to be subject to the
Security Interest.
"Permitted Pro Forma Adjustments" as applied to any Person or
Business Unit Acquired after the Effective Date means, as of any date
of determination, the actual results of operations of such Person or
Business Unit for the period of 12 months ended nearest to the date of
determination, as if such Person or Business Unit had been Acquired
(and any related Debt had been incurred) on the first day of such
12-month period, as adjusted with the approval of the Administrative
Agent to reflect verifiable, adequately documented severance payments
and reductions in officer and employee compensation, insurance
expenses, interest expense, rental expense, and other overhead
expense, and, for all Acquisitions during any Fiscal Year, up to an
aggregate amount of $15,000,000 of transaction expenses and other
quantifiable expenses which are not anticipated to be incurred on an
ongoing basis following completion of such Acquisitions.
"Swingline Facility" means an amount equal to (i) $30,000,000
during any period of 60 consecutive days falling between October 1 and
December 31 of each year chosen by the Borrowers' Representative and
(ii) $20,000,000 at all other times.
(d) by amending Section 5.1(a)(ii) by adding at the end thereof
the following proviso: "; provided, however, that in the event the Borrowers
have selected an Interest Period of three months or less, the Borrowers shall
be required to pay accrued interest only on the last day of such Interest
Period.
(e) by amending Section 5.1(b) Swingline Loans in its entirety to
read as follows:
(b) Swingline Loans. Subject to the provisions of SECTION 5.1(d),
the Borrowers will pay interest on the unpaid principal amount of each
Swingline Loan for each day from the day such Loan is made, until such
Loan is paid (whether at maturity, by reason of
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acceleration, or otherwise), at a rate per annum equal to the
Swingline Rate, payable monthly in arrears as it accrues on the first
day of each month.
(f) by amending Section 5.10(g) Voluntary Prepayment of Term Loan
by substituting a ";" for "." at the end thereof and adding to the end thereof
the following:
provided that the Borrowers may prepay in its entirety the Term Loan
installment due December 31 of each year prior to such date but on or
after September 30 of such year.
(g) by amending Section 5.10(h) Mandatory Prepayments by deleting
Section 5.10(h)(i)(A) in its entirety and substituting in lieu thereof the
following:
(A) Asset Disposition. Upon receipt by the Borrowers or
any Subsidiary of the Net Proceeds of any Asset Dispositions
in excess of $5,000,000 in the aggregate in any Fiscal Year,
the Borrowers shall apply such Net Proceeds to prepay the
Loans as provided in SECTION 5.10(i). Subject to the last
paragraph of SECTION 5.10(i) below, prepayments pursuant to
this paragraph (A) shall be effected quarterly on the date
that is ten Business Days following the earlier of the date
on which Russell's Form 10-Q or Form 10-K, as applicable, is
filed with the SEC or the date on which such forms are due to
be filed under Applicable Law.
(h) by amending Section 5.10(i)(C) Other Amounts in its entirety
to read as follows:
(C) Other Amounts. Any prepayment amounts (other than
those described in the foregoing SECTIONS 5.10(i)(A) and (B) and in
the proviso at the end of SECTION 5.10(g)) shall be applied first to
the outstanding principal amount of the Term Loans ratably as to the
remaining installments thereof to the extent of such Loans. After all
Term Loans have been repaid, any such other amounts, and any amounts
under SECTION 5.10(h)(i)(C), shall be applied to repay outstanding
Swingline Loans and then to outstanding Revolving Credit Loans, but
without any reduction in Commitments.
(i) by amending Section 5.11 Payments Not at End of Interest
Period; Failure to Borrow to read in its entirety as follows:
Section 5.11 Payments Not at End of Interest Period; Failure
to Borrow. If for any reason any payment of principal with respect to
any LIBOR Loan is made on any day prior to the last day of the
Interest Period applicable to such LIBOR Loan or, after having given a
Notice of Borrowing with respect to any LIBOR Revolving Credit Loan or
a Notice of Conversion or Continuation with respect to any Loan to be
continued as or converted into a LIBOR Loan, such Loan is not made or
is not continued as or converted into a LIBOR Loan due to the
Borrowers' failure to borrow or to fulfill the applicable conditions
set forth in ARTICLE 6, the Borrowers shall pay to each Lender (i) a
fee in the amount of $250.00 and (ii) an amount computed pursuant to
the following formula:
L = (R - T) x P x D
---------------
360
L = amount payable to the Lender
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R = LIBOR
T = effective interest rate per annum at which any readily
marketable bond or other obligation of the United States,
selected at the Lender's sole discretion, maturing on or
near the last day of the Interest Period applicable to
such Loans and in approximately the same amount as such
Loans of or to have been made by the Lender can be
purchased by the Lender on the day of such payment of
principal or failure to borrow or convert or continue
P = the amount of principal prepaid or the amount of the
requested Loans of or to have been made by the Lender
D = the number of days remaining in the applicable Interest
Period as of the date of such payment or the number of
days of the requested Interest Period
The Borrowers shall pay the fee on demand by the Administrative Agent
and shall pay such other amounts upon presentation by the
Administrative Agent of a statement setting forth the amount and the
applicable Lender's calculation thereof in reasonable detail, which
statement shall be deemed true and correct absent manifest error.
(j) by amending Section 5.13(d) to read in its entirety as
follows:
(d) In no event shall there be more than ten LIBOR Loans
outstanding hereunder at any time. For the purposes of this
SUBSECTION (d), each LIBOR Loan having a distinct Interest
Period shall be deemed to be a separate Loan hereunder.
(k) by amending Section 7.1(f) Business to read in its entirety
as follows:
(f) Business. The Borrowers are engaged principally in
the business of designing, manufacturing, marketing and
distributing sports uniforms, athletic and other apparel and
sports equipment.
(l) by amending Section 9.12(c) Borrowing Base Certificate to
read in its entirety as follows:
(c) Borrowing Base Certificate. The Borrowers shall deliver to
the Administrative Agent as soon as available but in any event not
later than the first Business Day following the 19th day following the
last day of each accounting month of the Borrowers, which day shall
have been identified by the Borrowers to the Administrative Agent and
approved by the Administrative Agent not later than the first such
accounting month-end in each Fiscal Year of the Borrowers, a Borrowing
Base Certificate prepared as of the close of the last Business Day of
such accounting month most recently ended.
The Borrowers may, at their option at any time, submit a Borrowing
Base Certificate supported by a Schedule of Inventory and a Schedule
of Accounts, which shall, for purposes of calculating Availability
hereunder, supersede the next preceding Schedule of Accounts, Schedule
of Inventory and Borrowing Base Certificate delivered hereunder.
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(m) by amending Section 11.1(b) Monthly Financial Statements in
its entirety to read as follows:
(b) Monthly Financial Statements. As soon as available after the
end of each month, but in any event within 30 days after the end of
each accounting month (or within 45 days after the end of each
accounting month that is the last month in a Fiscal Quarter), copies
of the unaudited consolidated balance sheets of Russell and its
Consolidated Subsidiaries as at the end of such month and the related
unaudited consolidated statements of income and (if such month is the
last month of a Fiscal Quarter) cash flows for Russell and its
Consolidated Subsidiaries for such month, for the Fiscal Quarter then
ended (if such month is the last month of a Fiscal Quarter) and for
the portion of the Fiscal Year through such month, certified by the
Financial Officer as presenting fairly the financial condition and
results of operations of Russell and its Consolidated Subsidiaries
(subject to normal year-end audit adjustments) for the applicable
period(s), together with statements of depreciation, amortization and
Capital Expenditures for such month and for the year to date period
ending at the end of such month and, if requested by the
Administrative Agent, with respect to any Fiscal Quarter end,
consolidating balance sheets, statements of income and cash flows by
Business Unit on the same basis prepared by the Borrowers for internal
use;
(n) by amending Section 11.1(c) Forecast in its entirety to read
as follows:
(c) Forecast. As soon as available, but in any event not later
than 30 days after the first day of each Fiscal Year beginning after
the Effective Date, forecasted income statement and statement of cash
flow and beginning and ending balance sheets for Russell and, if
requested by the Administrative Agent, each of its Business Units (on
a consolidated and consolidating basis on the same basis prepared by
the Borrowers for internal use) for such Fiscal Year.
(o) by amending Section 12.3 Guaranties in its entirety to read
as follows:
Section 12.3 Guaranties. Become or remain liable with respect
to any Guaranty of any obligation of any other Person, except that
this SECTION 12.3 shall not apply to (i) any Loan Party's Guaranty of
obligations permitted hereunder of another Loan Party (including
Guarantees of the Senior Notes by the Loan Parties (other than
Russell)) or to Borrowers' or Subsidiary's obligation to indemnify its
officers and directors to the fullest extent permitted by the
corporation or other Applicable Law of the jurisdiction of such
Person's organization, (ii) Guaranties by Loan Parties which
constitute Investments permitted hereunder, or (iii) Guaranties by
Loan Parties of up to $10,000,000 of aggregate obligations of
Subsidiaries which are not a Loan Party.
(p) by amending Section 12.4(a)(ii)(B) to read in its entirety as
follows:
(B) (x) The cash portion of the purchase price for the
Investment, when added to the cash portions of the purchase prices of
any other Section 12.4 Investments and the amounts of the Cash
Purchase Price of any Permitted Acquisitions closed in the same Fiscal
Year and the amount of any Permitted Repurchases during such Fiscal
Year, does not exceed $75,000,000 plus the Rollover Amount, if any,
and (y) Availability and Average Availability immediately after giving
effect to such Investment, will not be less
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than the sum of (I) $50,000,000 and $30,000,000, respectively, plus
(II) in each case the aggregate amount of the Deferred Cash Portion of
any Permitted Acquisitions closed during such Fiscal Year and the
amount of any Deferred Cash Portion of any Permitted Acquisition
closed in any previous Fiscal Year to be payable in such Fiscal Year;
(q) by amending Section 12.4(b) in its entirety to read as
follows:
(b) Acquisitions as to which each of the following
conditions is satisfied:
(i) at least 14 days prior to the closing
date for the proposed Acquisition, the Borrowers
shall provide to the Administrative Agent and the
Lenders notice of such proposed Acquisition together
with an information package containing a written
description of the Acquisition, which shall include
such information as the Administrative Agent shall
reasonably request, including, without limitation,
the matters set forth in SCHEDULE 12.4(b), and, at
least 3 Business Days prior to the proposed closing
date, the Borrowers shall provide to the
Administrative Agent and its counsel the purchase
agreement and all other material documents and
agreements relating to such proposed Acquisition, in
substantially final form;
(ii) (x) the Cash Purchase Price of the
Acquisition, when added to the Cash Purchase Price
of any other Permitted Acquisitions closed in the
same Fiscal Year, and the amount of any Deferred
Cash Portion paid or reasonably projected by the
Borrowers to be payable during such Fiscal Year, and
the total amount invested in Section 12.4
Investments in such Fiscal Year, and the cash
portion of Permitted Repurchases during such Fiscal
Year does not exceed the sum of (A) for Fiscal Year
2003, $85,000,000, excluding the Bike Amount, and
(B) for all other Fiscal Years, the sum of (I)
$75,000,000, plus (II) up to 100% of the net
proceeds of any issuance of Equity Interests of
Russell after the date hereof, if such issuance was
intended by Russell to finance, in part, such
purchase price as disclosed in advance by Russell to
the Lenders, plus (III) the Rollover Amount, if any,
and (y) Availability and Average Availability,
immediately after giving effect to such Acquisition,
computed on a pro forma basis satisfactory to the
Administrative Agent giving effect to such
Acquisition and to the payment of the Cash Purchase
Price and any Deferred Cash Portion of such
Acquisition and any Deferred Cash Portion of any
previous Permitted Acquisition payable during such
Fiscal Year and the inclusion in the Borrowing Base
on a pro forma basis of the Eligible Accounts and
Eligible Inventory acquired in connection with the
Acquisition, will be not less than $50,000,000 and
$30,000,000, respectively;
(iii) the proposed Acquisition is an arm's
length transaction whereby a Borrower will (A) own
directly or indirectly at least 51% of the Equity
Interests in such Acquisition Target and will
control the governance of such Acquisition Target or
(B) acquire a Business Unit;
11
(iv) at the time of the proposed Acquisition,
the Acquisition Target shall be engaged in a
business which is the same as or related, ancillary
or complementary to any of the businesses of the
Borrowers that are being conducted on the Agreement
Date, and a majority of the board of directors or
managers or comparable governing body of the
Acquisition Target shall have approved the
transaction;
(v) at least 5 Business Days prior to the
consummation of the proposed Acquisition, the
Borrowers shall have demonstrated, in a manner
satisfactory to the Administrative Agent in its
reasonable judgment, (A) positive trailing 12-month
pro forma net income before provision for income
taxes, interest expense, depreciation, or
amortization of the Acquisition Target after giving
effect to Permitted Pro Forma Adjustments ("Target
EBITDA") and (B) compliance by Russell and its
Consolidated Subsidiaries with the terms and
provisions of this Agreement on a pro forma basis
after giving effect to Permitted Pro Forma
Adjustments for the Acquisition Target;
(vi) the Administrative Agent shall have
reviewed the Accounts and received such appraisals
of Inventory to be acquired and included in the
Borrowing Base as the Administrative Agent in the
exercise of its reasonable credit judgment deems
material and environmental site assessments, in form
and substance satisfactory to the Administrative
Agent and the Lenders, with respect to any real
property owned by the Acquisition Target or operated
by the Acquisition Target;
(vii) no Debt shall be incurred or assumed by
any Borrower or the Acquisition Target in connection
with or as a result of such proposed Acquisition
other than in compliance with the provisions of
SECTION 12.2;
(viii) the Administrative Agent shall have
received such additional instruments, certificates
and other documents, including opinions of counsel,
as may be usual or customary in connection with
similar acquisitions and as the Administrative Agent
may reasonably request;
12
(ix) in the case of an Acquisition of Equity
Interests, the Acquisition Target shall be merged
with and into a Borrower or the Acquisition Target
(other than any Acquisition Target that becomes a
Foreign Subsidiary) shall have executed and
delivered the Subsidiary Guaranty (or an effective
joinder agreement with respect thereto) and a
Guarantor Security Agreement unless the Borrowers
and the Administrative Agent have agreed that the
Acquisition Target is to become an additional
Borrower, in which case the Acquisition Target and
the other Borrowers shall have duly executed and
delivered such acknowledgment or amendment to this
Agreement and such additions to or replacements of
outstanding Notes as the Administrative Agent may
require evidencing the Acquisition Target's joint
and several liability for the Secured Obligations as
a Borrower under this Agreement;
(x) the Administrative Agent, for itself and
on behalf of the Lenders, shall have obtained, or be
in the position to promptly obtain, a first priority
Lien (subject only to Permitted Liens) on the assets
of the Acquisition Target (other than any
Acquisition Target that becomes a Foreign
Subsidiary) or otherwise acquired in connection with
such Acquisition (other than any such Lien as to
which the Administrative Agent determines in writing
that the benefit thereof is not sufficient to
justify the cost of obtaining and perfecting such
Lien);
(xi) at the time of and after giving effect
to the proposed Acquisition, no Default or Event of
Default shall exist;
(xii) not later than the day of the closing of
the Acquisition a certificate of an officer of the
Borrowers' Representatives to the effect that the
conditions set forth in this SECTION 12.4(b) have
been satisfied on the closing date for such proposed
Acquisition; and
(xiii) notwithstanding anything contained in
this Agreement to the contrary, with respect to
Excluded Acquisitions and related Permitted
Investments, the Administrative Agent may waive on
behalf of all the Lenders any of the requirements
set forth in this SECTION 12.4(b) in its sole and
absolute discretion.
(r) by amending Section 12.5 Capital Expenditures in its entirety
to read as follows:
Section 12.5 Capital Expenditures. Make or incur any Capital
Expenditures (excluding Financed Cap Ex) in any Fiscal Year
set forth in the table below in an amount greater than the
amount set forth opposite such Fiscal Year, provided that any
unused portion of such allowance up to $30,000,000 may be
carried over but only to the succeeding Fiscal Year. All
Capital Expenditures shall be applied first to reduce the
allowance set forth below and not the amount carried over.
13
Fiscal Year Allowance
----------- ---------
2003 $55,000,000
2004 $60,000,000
2005 $65,000,000
2006 $75,000,000
(s) by amending Section 12.6 Restricted Distributions and
Payments, Etc. in its entirety to read as follows:
Section 12.6 Restricted Distributions and Payments, Etc.
Declare or make any Restricted Distribution or Restricted
Payment, except that this SECTION 12.6 shall not apply to (a)
any Permitted Investment or (b) any Permitted Repurchases or
(c) cash dividends on its capital stock declared and paid by
Russell during any Fiscal Year in an amount not to exceed the
sum of (i) $5,750,000 and (ii) an amount equal to the lesser
of (A) 25% of Excess Cash Flow for such Fiscal Year and (b)
$19,250,000, PROVIDED that, after giving effect on a pro
forma basis to any such payment described in CLAUSES (a), (b)
OR (c) above, no Default or Event of Default shall exist.
(t) by amending Section 12.7 Merger, Consolidation and Sale of
Assets in its entirety to read as follows:
Section 12.7 Merger, Consolidation and Sale of Assets. Merge
or consolidate with any other Person or sell, lease or
transfer or otherwise dispose of any material assets to any
Person other than (i) sales of Accounts to Russell Financial
Services, Inc. or other finance Subsidiary that is a Loan
Party, (ii) sales of Inventory in the ordinary course of
business, or dispositions as permitted pursuant to SECTION
9.7, except that this SECTION 12.7 shall not apply to (a) the
merger of any Loan Party or Subsidiary into a Loan Party,
PROVIDED that, Russell shall be the surviving corporation of
any merger to which it is a party and a Loan Party shall be
the surviving entity of any merger with a Subsidiary that is
not a Loan Party, (b) any transfer of assets to a Loan Party,
(c) so long as no Event of Default exists at the time, the
sale, lease, transfer or other disposition by a Borrower of
any Assets Held For Sale, (d) the sale, lease, transfer or
other disposition of any Equipment or Real Estate for at
least the fair market value thereof at the time of such sale,
lease, transfer or other disposition and for consideration at
least 75% of which is paid in cash at closing, (e) as to
accounts receivable in an aggregate amount not exceeding
$50,000,000 at any one time outstanding, (1) the sale on a
non-recourse basis as to all Loan Parties, of any account
receivable or (2) the sale, transfer or other disposition of
accounts receivable to not more than three factors in total
pursuant to factoring agreements on terms and conditions
satisfactory to the Administrative Agent, and agreements
between the factors and the Administrative Agent, in form and
substance satisfactory to the Administrative Agent in the
exercise of its reasonable credit judgment, providing for,
among other things, direct remittance by such factors to an
account specified by the Administrative Agent of amounts due
from such factors from time to time, subordination of any
claims such factors may otherwise have against the
14
applicable Loan Party arising out of obligations of such Loan
Party to other customers of such factors ("ledger debt"), and
the agreement of such factors to make no loans or advances to
any Loan Party, (f) transfers of assets in connection with
any Investment permitted hereunder, (g) sales and
dispositions of assets (including capital stock of
Subsidiaries) not to exceed $5,000,000 in any Fiscal Year,
subject to compliance with SECTION 5.10(h)(i)(A), or (h)
provided that the Borrowers are in compliance with the
provisions hereof immediately prior to such transaction and,
after giving effect to such transaction, the Borrowers shall
(i) be in compliance with the provisions hereof on a pro
forma basis and (ii) have Availability and Average
Availability on a pro forma basis of not less than
$50,000,000 and $30,000,000, respectively, subject to
compliance with SECTION 5.10(h)(i)(A), sales or divestitures
of Acquired Businesses within twelve (12) months following
the Acquisition thereof or within fifteen (15) months
following the Acquisition thereof so long as a letter of
intent, commitment letter or other contract confirming the
intent to complete the transaction is entered into within
twelve (12) months following the Acquisition thereof.
(u) by amending Section 12.9 Liens in its entirety to read as
follows:
Section 12.9 Liens. Create, assume or permit or
suffer to exist or to be created or assumed any Lien on any
of the Collateral or its other assets, other than (i)
Permitted Liens, (ii) Liens affecting exclusively raw
materials Inventory with an aggregate value at any time not
to exceed $2,000,000 in favor of the suppliers of such
Inventory, (iii) Liens securing Debt permitted by SECTION
12.2(K), which Liens affect solely capital or fixed assets
(and not Accounts or Inventory or proceeds thereof) of the
Business Unit or Person Acquired, existing on the date of the
related Acquisition and not created in contemplation thereof,
and (iv) Liens filed on Factored Collateral in connection
with factoring arrangements permitted pursuant to the
provisions of SECTION 12.7.
(v) amending Article 12 Negative Covenants by adding a new
Section 12.11 at the end thereof to read as follows:
Section 12.11 Maximum Deferred Cash Portion. Incur
any obligation that would constitute a Deferred Cash Portion
of any Permitted Acquisition, if the amount of such Deferred
Cash Portion, when added to the aggregate amounts of the
unpaid Deferred Cash Portions of all other Permitted
Acquisitions would exceed $25,000,000.
(w) by amending Section 13.1(o) Change of Control by adding the
following proviso at the end thereof: "; provided, however, that the sale of
100% of the capital stock of a Subsidiary of Russell shall not constitute a
Change of Control, so long as such sale is permitted hereunder and the proceeds
of such sale are applied in accordance with SECTION 5.10(h)(i)(A) hereof."
(x) by amending ANNEX B in its entirety by substituting the ANNEX
B attached hereto therefor.
15
(y) by amending SCHEDULE 1.1 A by adding the following property:
1992 Cessna Citation III (650); Serial Number 650-0190; U.S. Registration No.
N350CD; two Garrett TFE 13I-3C engines, serial numbers 87506 and 87486.
(z) by amending SCHEDULE 1.1D by deleting all references therein
to Kmart Corporation, and substituting therefor the following: Kmart
Corporation, but only if (i) such Accounts are post-petition Accounts on which
Kmart Corporation is the Account Debtor and (ii) the Administrative Agent in
its sole discretion determines that Kmart Corporation shall be a Designated
Account Debtor.
Section 2. Effectiveness of Amendment. This Amendment shall become
effective on the first date (the "Amendment Effective Date") on which the
Administrative Agent has received each of the following, each in form and
substance satisfactory to the Administrative Agent and in a number of copies
sufficient for each Lender:
(a) 18 copies of this Amendment duly executed and
delivered by each Borrower and the Required Lenders; and
(b) payment to the Administrative Agent for the ratable
benefit of the Lenders of an amendment fee in the amount of $400,000;
and
(c) such other agreements, certificates, instruments and
other documents as the Administrative Agent may reasonably request in
connection with the transactions contemplated hereby.
Section 3. Representations and Warranties. Each Loan Party hereby
represents and warrants to the Administrative Agent and the Lenders that it has
the corporate or other power and has taken all actions necessary to authorize
it to execute and deliver this Amendment and the other documents contemplated
to be delivered by it pursuant to this Amendment and to perform its obligations
under the Loan Agreement as amended by this Amendment and under such other
documents; that this Amendment has been and each such other document when
executed and delivered by such Loan Party will have been, duly executed and
delivered by such Loan Party; and that the Loan Agreement as amended hereby and
each such other document, constitute the legal, valid and binding obligations
of such Loan Party, enforceable against such Loan Party in accordance with
their respective terms.
Section 4. Effect of Amendment. From and after the effectiveness of
this Amendment, all references in the Loan Agreement and in any other Loan
Document to "this Agreement," "the Loan Agreement," "hereunder," "hereof" and
words of like import referring to the Loan Agreement, shall mean and be
references to the Loan Agreement as amended by this Amendment. Except as
expressly amended hereby, the Loan Agreement and all terms, conditions and
provisions thereof remain in full force and effect and are hereby ratified and
confirmed. The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender or the Administrative Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
16
Section 5. Counterpart Execution; Governing Law; Costs and Expenses.
(a) Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and the
same agreement. Receipt by the Administrative Agent or its counsel by telecopy
of any executed signature page to this Amendment shall constitute effective
execution hereof and delivery of such signature page
(b) Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Georgia.
(c) Expenses. In furtherance and not in limitation of the
provisions of the Loan Agreement, the Borrowers will pay or reimburse the
Administrative Agent and the Lenders for their costs and expenses, including
reasonable fees and disbursements of counsel actually incurred, in connection
with the preparation and delivery of this Amendment.
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers in several counterparts all as of
the day and year first written above.
BORROWERS:
Attest: RUSSELL CORPORATION
By: By:
----------------------------- ---------------------------------------
Steve R. Forehand Robert D. Martin
Assistant Secretary Senior Vice President and Chief Financial
Officer
[Corporate Seal]
Attest: CROSS CREEK HOLDINGS, INC.
By: By:
----------------------------- ---------------------------------------
Steve R. Forehand Christopher M. Champion
Secretary Vice President
[Corporate Seal]
CROSS CREEK APPAREL, LLC
Attest:
By:
---------------------------------------
By: Steve R. Forehand
----------------------------- Vice President
Christopher M. Champion
Secretary
[Corporate Seal]
Attest: JERZEES APPAREL, LLC
By: By:
----------------------------- ---------------------------------------
Christopher M. Champion Steve R. Forehand
Manager Manager
[Corporate Seal]
18
Attest: MOSSY OAK APPAREL COMPANY
By: By:
----------------------------- ----------------------------------------
Christopher M. Champion Steve R. Forehand
Secretary Vice President
[Corporate Seal]
Attest: RUSSELL FINANCIAL SERVICES, INC.
By: By:
----------------------------- ----------------------------------------
Christopher M. Champion Robert D. Martin
Secretary Vice President
[Corporate Seal]
Attest: DESOTO MILLS, INC.
By: By:
----------------------------- ----------------------------------------
Christopher M. Champion Steve R. Forehand
Secretary Vice President
[Corporate Seal]
Attest: RUSSELL ASSET MANAGEMENT, INC.
By: By:
----------------------------- ----------------------------------------
Christopher M. Champion Steve R. Forehand
Assistant Secretary President
[Corporate Seal]
Attest: RUSSELL APPAREL LLC
By: By:
----------------------------- ----------------------------------------
Christopher M. Champion Steve R. Forehand
Manager Manager
[Corporate Seal]
19
Attest: RINTEL PROPERTIES, INC.
By: By:
----------------------------- ----------------------------------------
Christopher M. Champion Floyd G. Hoffman
Assistant Secretary Vice President
[Corporate Seal]
Attest: RUSSELL YARN, LLC
By: By:
----------------------------- ----------------------------------------
Christopher M. Champion Floyd G. Hoffman
Secretary Senior Vice President, Russell Corporation
[Corporate Seal]
[Lenders' signatures on following pages]
20
ADMINISTRATIVE AGENT AND LENDER:
FLEET CAPITAL CORPORATION
By:
----------------------------------------
H. Glenn Little
Senior Vice President
21
SYNDICATION AGENT AND LENDER:
JPMORGAN CHASE BANK
By:
----------------------------------------
Name:
Title:
22
SYNDICATION AGENT AND LENDER:
SUNTRUST BANK
By:
----------------------------------------
Name:
Title:
23
DOCUMENTATION AGENT AND
LENDER:
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
----------------------------------------
Name:
Title:
24
DOCUMENTATION AGENT AND
LENDER:
BANK OF AMERICA, N.A.
By:
----------------------------------------
Name:
Title:
25
AGENT AND LENDER:
WACHOVIA BANK, NATIONAL
ASSOCIATION
By:
----------------------------------------
Name:
Title:
26
AGENT AND LENDER:
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
----------------------------------------
Name:
Title:
27
FOOTHILL CAPITAL CORPORATION
By:
----------------------------------------
Name:
Title:
28
GMAC COMMERCIAL FINANCE, LLC
By:
----------------------------------------
Name:
Title:
29
TRANSAMERICA BUSINESS CAPITAL
CORP.
By:
----------------------------------------
Name:
Title:
30
AMSOUTH BANK
By:
----------------------------------------
Name:
Title:
31
COMERICA BANK
By:
----------------------------------------
Name:
Title:
32
THE PROVIDENT BANK
By:
----------------------------------------
Name:
Title:
33
ALIANT BANK
By:
----------------------------------------
Name:
Title:
34
ANNEX B
PRICING MATRIX
- --------------------------------------------------------------------------------------------------------------------
REVOLVING CREDIT LOANS TERM LOANS
- --------------------------------------------------------------------------------------------------------------------
UNUSED
TIER FIXED CHARGE COMMITMENT
COVERAGE RATIO LIBOR BASE RATE LIBOR BASE RATE FEE
- --------------------------------------------------------------------------------------------------------------------
Tier VI >3.00:1 1.50% 0.00% 2.00% 0.50% .375%
- --------------------------------------------------------------------------------------------------------------------
>2.50:1 AND
Tier V = 3:00:1 1.75% 0.25% 2.25% .75% .375%
- --------------------------------------------------------------------------------------------------------------------
>2.00:1 AND
Tier IV <=2.50:1 2.00% 0.50% 2.50% 1.00% .375%
- --------------------------------------------------------------------------------------------------------------------
>1.50:1 AND
Tier III <2.00:1 2.25% 0.75% 2.75% 1.25% .375%
-
- --------------------------------------------------------------------------------------------------------------------
>1.25:1 AND
Tier II <1.50:1 2.50% 1.00% 3.00% 1.50% .500%
-
- --------------------------------------------------------------------------------------------------------------------
Tier I <1.25:1 2.75% 1.25% 3.25% 1.75% .500%
-
- --------------------------------------------------------------------------------------------------------------------
SCHEDULE 12.4(B)
ACQUISITION DESCRIPTION
Description of Acquisition:
1) Asset Acquisition or Equity Acquisition
2) Description of business of target
3) Approximate Total Consideration
- Cash
- Liabilities Assumed
4) Section 12.2(k) secured Debt to be assumed and description of
collateral therefor
5) Current aging of accounts receivable included in Acquisition
6) Approximate value and location of inventory included in Acquisition
7) Approximate value and location of machinery and equipment included in
Acquisition
8) Description of real estate (owned or leased) included in Acquisition
and location thereof
9) Identification of lessors, warehousemen, etc. where inventory,
machinery and equipment is located
10) Jurisdiction in which seller is organized
11) Lien search summary
12) Description of patents, trademarks and copyrights included in
Acquisition
13) Proposed closing date
14) Material conditions to closing