CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED COMMISSION FILE NUMBER
SEPTEMBER 30, 1996 0-11579
TBC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 31-0600670
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4770 Hickory Hill Road
Memphis, Tennessee 38141
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (901) 363-8030
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
23,807,914 Shares of Common Stock were outstanding as of September 30,
1996.
INDEX TO EXHIBITS at page 14 of this Report<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
September 30, December 31,
1996 1995
(Unaudited)
CURRENT ASSETS
Accounts and notes receivable, less
allowance for doubtful accounts
of $10,712 on September 30, 1996
and $8,014 on December 31, 1995:
Related parties $ 23,524 $ 17,208
Other 86,762 78,330
Total accounts and notes receivable 110,286 95,538
Inventories 71,184 49,538
Refundable federal and state income taxes - 472
Deferred income taxes 5,561 2,389
Other current assets 6,282 2,252
Total current assets 193,313 150,189
PROPERTY, PLANT AND EQUIPMENT, AT COST
Land and improvements 5,440 2,572
Buildings 21,575 10,985
Equipment 25,286 20,324
Furniture and fixtures 4,366 2,381
Leasehold improvements 822 600
57,489 36,862
Less accumulated depreciation 21,538 17,714
Total property, plant and equipment 35,951 19,148
TRADEMARKS, NET 17,900 -
GOODWILL, NET 14,509 -
OTHER ASSETS 14,003 10,615
TOTAL ASSETS $275,676 $179,952
See accompanying notes to consolidated financial statements.
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TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1996 1995
(Unaudited)
CURRENT LIABILITIES
Outstanding checks, net $ 298 $ 8,120
Notes payable to banks 11,888 50,838
Current portion of long-term debt
and capital lease obligations 1,741 81
Accounts payable, trade 51,768 10,117
Federal and state income taxes payable 613 -
Other current liabilities 13,476 4,433
Total current liabilities 79,784 73,589
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, LESS CURRENT PORTION 69,772 555
NONCURRENT LIABILITIES 2,696 985
DEFERRED INCOME TAXES 7,138 -
STOCKHOLDERS' EQUITY
Common stock, $.10 par value,
shares issued and outstanding -
23,808 on September 30, 1996 and
23,784 on December 31, 1995 2,381 2,378
Additional paid-in capital 9,657 9,543
Retained earnings 104,248 92,902
Total stockholders' equity 116,286 104,823
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $275,676 $179,952
See accompanying notes to consolidated financial statements.
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TBC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
NET SALES* $177,338 $150,410 $438,904 $418,547
COSTS AND EXPENSES:
Cost of sales 153,875 135,253 387,794 373,955
Distribution 7,917 5,196 17,908 14,615
Selling and administrative 6,904 3,502 14,677 10,152
Interest expense 1,562 951 2,681 2,261
Other (income) expense - net (725) (733) (2,632) (2,082)
Total costs and expenses 169,533 144,169 420,428 398,901
INCOME BEFORE INCOME TAXES 7,805 6,241 18,476 19,646
PROVISION FOR INCOME TAXES 3,075 2,371 7,130 7,465
NET INCOME $ 4,730 $ 3,870 $ 11,346 $ 12,181
Earnings per share $ .20 $ .16 $ .48 $ .49
Weighted average number of shares
and equivalents outstanding 23,841 24,177 23,840 24,963
* Including sales to related parties of $36,452 and $30,381 in the
three months ended September 30, 1996 and 1995, respectively, and
$105,152 and $102,504 in the nine months ended September 30, 1996 and
1995, respectively.
See accompanying notes to consolidated financial statements.
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TBC CORPORATION
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
Common Stock Additional
Number of Paid-In Retained
Shares Amount Capital Earnings Total
Nine Months Ended
September 30, 1995
BALANCE, JANUARY 1, 1995 26,282 $2,628 $10,391 $100,964 $113,983
Net income for period 12,181 12,181
Issuance of common stock
under stock option and
incentive plans, net 19 2 132 - 134
Repurchase and retirement
of common stock (2,517) (252) (1,002) (23,311) (24,565)
Tax benefit from exercise
of stock options - - 22 - 22
BALANCE, SEPTEMBER 30, 1995 23,784 $2,378 $ 9,543 $ 89,834 $101,755
Nine Months Ended
September 30, 1996
BALANCE, JANUARY 1, 1996 23,784 $2,378 $ 9,543 $ 92,902 $104,823
Net income for period 11,346 11,346
Issuance of common stock
under stock option and
incentive plans, net 24 3 114 - 117
BALANCE, SEPTEMBER 30, 1996 23,808 $2,381 $ 9,657 $104,248 $116,286
See accompanying notes to consolidated financial statements.
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TBC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months
Ended September 30,
1996 1995
OPERATING ACTIVITIES
Net income $ 11,346 $ 12,181
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 4,338 3,398
Amortization 268 12
Equity in earnings from joint ventures (219) -
Deferred income taxes (726) (444)
Changes in operating assets and liabilities:
Receivables (1,856) (12,893)
Inventories (2,898) (13,922)
Other current assets 177 (156)
Other assets (210) (47)
Outstanding checks, net (8,742) 5,188
Accounts payable, trade 35,526 13,378
Federal and state income taxes
refundable or payable 1,747 507
Other current liabilities 1,064 480
Noncurrent liabilities (42) 200
Net cash provided by (used in)
operating activities 39,773 7,882
INVESTING ACTIVITIES
Acquisition of Big O Tires, Inc. (55,346) -
Purchase of property, plant and equipment (3,972) (7,984)
Investment in joint venture - (1,772)
Other, net 270 -
Net cash used in investing activities (59,048) (9,756)
FINANCING ACTIVITIES
Net bank borrowings (repayments) under
short-term borrowing arrangements (38,950) 25,621
Increase in long-term debt and capital
lease obligations 60,000 697
Payments on long-term debt and capital
lease obligations (1,892) (13)
Repurchase and retirement of common stock - (24,565)
Issuance of common stock under stock option and
incentive plans 117 134
Net cash provided by (used in)
financing activities 19,275 1,874
Increase (decrease) in Cash and Cash Equivalents - -
CASH AND CASH EQUIVALENTS
Balance - Beginning of period - -
Balance - End of period $ - $ -
See accompanying notes to consolidated financial statements.
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TBC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
(Unaudited)
Nine Months
Ended September 30,
1996 1995
Supplemental Disclosures of Cash Flow Information:
Cash paid for - Interest $ 1,950 $ 2,197
- Income taxes 6,110 7,402
Supplemental Disclosure of Non-Cash Financing
Activity:
Tax benefit from exercise of stock options $ - $ 22
Supplemental Disclosure of Non-Cash Investing
and Financing Activities:
On July 10, 1996, the Company completed the
acquisition of Big O Tires, Inc. for a total
purchase price of approximateley $54,646, plus
applicable closing costs. The acquisition was
accounted for under the purchase method, as
follows:
Estimated fair value of assets acquired $59,568
Trademarks and Goodwill 32,502
Cash paid (55,346)
Liabilities assumed $36,724
See accompanying notes to consolidated financial statements.
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TBC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Financial Statement Presentation
The consolidated balance sheet as of September 30, 1996, the
consolidated statements of income for the three months and nine months
ended September 30, 1996 and 1995, and the consolidated statements of
stockholders' equity and cash flows for the nine months ended September
30, 1996 and 1995, have been prepared by the Company, without audit.
It is Management's opinion that these statements include all
adjustments, consisting only of normal recurring adjustments, necessary
to present fairly the financial position, results of operations and cash
flows as of September 30, 1996 and for all periods presented. The
results for the periods presented are not necessarily indicative of the
results that may be expected for the full year.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these consolidated financial statements be read in conjunction
with the financial statements and notes thereto included in the
Company's 1995 Annual Report. Reference should also be made to the
Company's Form 8-K, as amended, dated July 10, 1996, which contains the
1995 financial statements and notes thereto of Big O Tires, Inc. (see
Note 5).
Certain reclassifications have been made in the statements of
income for the periods ended September 30, 1995, to conform to the
current presentation, with no effect on previously reported net income.
2. Earnings Per Share
Earnings per share have been computed by dividing net income by
the weighted average number of common shares and equivalents
outstanding. Common share equivalents included in the computation
represent shares issuable upon assumed exercise of stock options, which
would have a dilutive effect in the respective periods. Fully diluted
earnings per share did not significantly differ from primary earnings
per share in the periods presented.
3. Other Assets
Other assets consist of the following (in thousands):
September 30, December 31,
1996 1995
Notes receivable $ 8,728 $ 7,961
Investments in joint ventures 2,679 1,562
Other intangible assets, net 935 1,058
Other 1,661 34
$14,003 $10,615
The notes receivable totals include a note for $4,897,000 from
a former distributor. The maker of the note was discharged in a
proceeding under Chapter 11 of the Bankruptcy Code in 1991. The Company
received distributions totaling $308,000 from the bankruptcy proceeding.
The Company holds written guarantees of the distributor's account,
absolute and continuing in form, signed by the principal former owners
and officers of the distributor and their wives, upon which the Company
filed suit in 1989. The defendants have pleaded various defenses based
on, among other things, an alleged oral cancellation
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TBC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. Other Assets (continued)
of the guarantees. The defendants have also filed a third party
complaint against the Company's former chief executive officer in which
they claim the right to recover against him for any liability they may
have to the Company. The Company believes, on the basis of applicable
Tennessee law, that those defenses are invalid and that there is no
merit to the third party complaint. In October 1994, the Court granted
the Company's motion to exclude evidence of any oral cancellation of the
guarantees. The Court's order has been appealed and no date for trial
has been scheduled. The Company knows of no reason to believe that the
defendants will be unable to pay any judgment that may be entered
against them in the action.
4. Goodwill, Trademarks and Other Intangible Assets
Goodwill represents the excess of cost over the fair value of
identifiable net assets acquired. Goodwill, trademarks and other
intangible assets are amortized on a straight-line basis over 40 years.
The Company periodically reviews the recoverability of these assets.
Any impairments would be recognized in operating results if a permanent
reduction in value were to occur.
5. Acquisition of Big O Tires, Inc.
On July 10, 1996, the Company completed the acquisition of
Big O Tires, Inc., a franchisor of independent retail tire and
automotive service stores. Under the terms of the merger agreement,
Big O stockholders received $16.47 in cash for each of the 3,317,916
outstanding shares of common stock, a total purchase price of
$54,646,000. The acquisition was accounted for as a purchase.
In order to finance the acquisition, additional long-term
borrowings of $60 million were incurred, with interest at an average
rate of 7.75% per annum. The long-term borrowing agreement contains
certain financial covenants dealing with the Company's working capital
ratio, interest expense coverage and tangible net worth. In addition,
the agreement places certain restrictions on the Company, including
its ability to incur additional debt, transfer or place liens upon
assets, provide guarantees and make loans, advances, investments and
certain expenditures.
The following pro forma unaudited information (adjusted for
interest, estimated amortization of intangible assets, improved sourcing
strength, etc.) has been prepared as if the companies had been combined
as of January 1, 1995. The pro forma information does not purport to
present what actual results of operations would have been if the
acquisition of Big O had occurred on such date or to project results
for any future period. Net sales reflect certain reclassifications
made to present the results of the combined companies on a consistent
basis.
(In millions, except per share data)
Nine Months Ended
September 30,
1996 1995
Net sales $508.0 $521.7
Net income 13.4 14.7
Earnings per share $ .56 $ .59
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TBC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. Credit Facilities
In September, 1996, the Company replaced its previous short-term
borrowing agreements with a one-year committed bank facility and a
three-year committed bank facility. The credit facilities allow the
Company to borrow up to $78,500,000, with interest on the one-year
facility at the federal funds rate plus 1.15% and interest on the three-
year facility based on LIBOR plus a variable rate between 0.45% and
0.875%. The credit facilities also require the payment of certain
commitment and administrative fees. The unused amount under these
facilities at September 30, 1996 was $66 million.
The credit facilities contain certain financial covenants
dealing the the Company's tangible net worth, funded indebtness and
fixed charge coverage ratio. The credit facilities also include
certain restrictions which affect the Company's ability to incur
additional debt, sell or place liens upon assets, provide guarantees
and make loans, advances, investments and certain expenditures.
7. Legal Proceedings
The Company is involved in various legal proceedings which are
routine to the conduct of its business. The Company does not believe
that any pending litigation will have a material adverse effect on its
consolidated financial position, results of operations or cash flows.
-10-<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Financial Condition
On July 10, 1996, the Company completed the acquisition of Big O
Tires, Inc. (see Note 5 to the financial statements). As a result,
additional long-term debt of $60 million was incurred and there were
significant changes in a number of other balance sheet items between
December 31, 1995 and September 30, 1996. However, the Company's
financial position and liquidity remain strong, with working capital
increasing from $76.6 million at December 31, 1995 to $113.5 million
at September 30, 1996.
Current accounts and notes receivable increased by $14.7 million,
due to the Big O acquisition and to seasonal fluctuations. Inventories
increased by $21.6 million, due almost solely to the acquisition of Big O.
The amounts now included on the balance sheet for trademarks and goodwill,
as well as the noncurrent deferred tax liability, are due to the
acquisition of Big O. The net increase in other assets was $3.4 million,
as the impact of acquired other assets of $6.0 million was partially offset
by collections of certain notes receivable since the beginning of 1996.
The composite total owed to banks and vendors, in the form of
outstanding checks, notes payable to banks and accounts payable, decreased
by $5.1 million from December 31, 1995 to September 30, 1996. This was
related in part to the excess of new long-term borrowings over the amount
required to complete the Big O acquisition, as indicated in Note 5 to the
financial statements. Such excess was used to reduce amounts owed to banks
under short-term borrowing arrangements. Cash generated from operations
during the first nine months of 1996 enabled the Company to fund the
seasonal increase in receivables, as well as normally recurring capital
expenditures during the first nine months of 1996.
As indicated in Note 6 to the financial statements, in September 1996,
the Company replaced its previous short-term borrowing agreements with new
committed bank facilities, allowing the Company to borrow up to
$78,500,000.
Results of Operations
Net sales increased 17.9% during the third quarter and 4.9% in the
first nine months, compared to the year-earlier levels, due principally to
the addition of sales by Big O since the July 10, 1996 acquisition date.
Sales of tires accounted for approximately 89% of total sales in the third
quarter of both 1996 and 1995. For the first nine months, tires accounted
for 88% of total sales in 1996 and 89% in 1995.
Excluding the contribution by Big O, net sales decreased 4.5% in the
third quarter and 3.2% during the first nine months. TBC's unit tire
volume increased 1.5% in the current quarter but declined 0.6% during the
first nine months of 1996, compared with the year-earlier results. The
average TBC tire sales price decreased 5.2% in the current quarter and
3.2% in the first nine months compared with the year-earlier levels, due
primarily to the continued effects of industry-wide price discounting.
Cost of sales as a percentage of net sales decreased from 89.9% in
the third quarter of 1995 to 86.8% in the current quarter. For the year-
to-date period, cost of sales decreased from 89.3% of net sales in 1995 to
88.4% in 1996. The fluctuations were due principally to the positive
effects of the Big O acquisition, including the Company's improved overall
sourcing strength.
Distribution expenses increased $2.7 million in the current quarter and
$3.3 million in the first nine months of 1996 compared to the year-earlier
levels. The increases were due primarily to Big O warehousing and product
delivery expenses totaling $2.4 million since the acquisition date. The
period-to-period comparisons were also affected by the addition of certain
facilities in the northeastern United States in September 1995.
-11-<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Selling and administrative expenses increased $3.4 million in the third
quarter and $4.5 million in the first nine months of 1996, compared to the
prior year levels. Expenses for Big O totaled approximately $2.8 million
since the July 10, 1996 acquisition date. Increased selling and
administrative expenses were also attributable to the facilities added in
the northeastern United States in September 1995.
Interest expenses increased $611,000 in the third quarter and $420,000
in the first nine months of 1996, compared to the prior year levels, due to
the additional long-term borrowings required to finance the Big O
acquisition.
Net other income was relatively unchanged in the third quarter compared
to the prior year level. For the first nine months, the increased net
other income was related principally to income from the settlement of a
trademark infringement matter.
The Company's effective tax rate increased from 38.0% in the third
quarter and first nine months of 1995 to 39.4% in the current quarter and
38.6% in the first nine months of 1996. The increased effective rate
reflects the impact of the Big O acquisition, due to the additional goodwill
amortization and greater overall state tax burden.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See Index to Exhibits
(b) During the quarter for which this report is filed, the Company
filed a Current Report on Form 8-K, as amended, dated July 10, 1996
providing under Item 2, "Acquisition or Disposition of Assets",
information relative to the acquisition on July 10, 1996 of
Big O Tires, Inc. and under Item 5, "Other Events", information
relating to the long-term borrowings required to finance the
acquisition.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TBC CORPORATION
November 11, 1996 By /s/ Ronald E. McCollough
Ronald E. McCollough
Senior Vice President Operations
and Treasurer
(principal accounting and
financial officer)
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INDEX TO EXHIBITS
Located at
Sequentially-
Exhibit No. Description Numbered Page
(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT,
LIQUIDATION OR SUCCESSION:
2.1 Agreement and Plan of Merger, dated as of April 30,
1996, by and among TBC Corporation, TBCO
Acquisition, Inc. and Big O Tires, Inc. (filed as
Exhibit 2.1 to TBC's Current Report on Form 8-K,
dated April 30, 1996)................................ *
(3) ARTICLES OF INCORPORATION AND BYLAWS:
3.1 By-Laws of TBC Corporation as amended through July
25, 1996............................................. 16
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS,
INCLUDING DEBENTURES:
4.1 $30,000,000 Long Term Credit Agreement, dated as of
September 25, 1996, among TBC Corporation, the
lending institutions party thereto, First Tennessee
Bank National Association as Administrative Agent,
and NBD Bank as Co-Agent, including as Exhibit A the
form of Note, dated September 25, 1996, issued by
TBC Corporation to each lender pursuant thereto, and
including as Exhibit F the form of Continuing
Guaranty executed by certain subsidiaries of TBC
Corporation in connection therewith.................. 23
4.2 $48,500,000 Short Term Credit Agreement, dated as of
September 25, 1996, among TBC Corporation, the
lending institutions party thereto, First Tennessee
Bank National Association as Administrative Agent,
and NBD Bank as Co-Agent, including as Exhibit A-1
the form of Revolving Note, dated September 25, 1996,
issued by TBC Corporation to each lender pursuant
thereto, and including as Exhibit A-2 the form of
Swing Line Note dated September 25, 1996, issued by
TBC Corporation to First Tennessee Bank National
Association pursuant thereto, and including as
Exhibit F the form of Continuing Guaranty executed by
certain subsidiaries of TBC Corporation in connection
therewith............................................ 126
4.3 Note Purchase and Private Shelf Agreement, dated
July 10, 1996, between TBC Corporation and The
Prudential Insurance Company of America (filed as
Exhibit 4.1 to TBC's Current Report on Form 8-K,
dated July 10, 1996)................................. *
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4.4 Series A, Series B, and Series C Senior Notes, dated
July 10, 1996, issued by TBC Corporation pursuant to
the Note Purchase Agreement referenced in item 4.3
above (filed as Exhibit 4.2 to TBC's Current Report
on Form 8-K, dated July 10, 1996).................... *
4.5 Amendment No. 1, dated September 20, 1996, to the
Note Purchase Agreement referenced in item 4.3 above,
including form of Continuing Guaranty executed by
certain subsidiaries of TBC Corporation in
connection therewith................................. 215
4.6 Other long-term debt instruments..................... #
(10) MATERIAL CONTRACTS:
10.1 Form of Franchise Agreement currently in use by
Big O Tires, Inc..................................... 231
Management Contracts and Compensatory Plans
or Arrangements
10.2 1996 Amendment and Restatement of the TBC Corporation
Executive Supplemental Retirement Plan, as amended
through October 24, 1996............................. 252
10.3 Resolution adopted by the Compensation Committee of
the TBC Corporation Board of Directors, September 26,
1996, relating to interest payable on deferred
compensation of officers and directors of TBC
Corporation.......................................... 258
______________________
"*" Indicates that the Exhibit is incorporated by reference
into this Quarterly report on Form 10-Q from a previous
filing with the Commission.
"#" With respect to all other instruments defining the rights
of holders of long-term debt, the amount of securities
authorized under each of such instruments does not exceed
10% of the total assets of TBC Corporation and its
subsidiaries on a consolidated basis. A copy of each of
such instruments will be furnished to the Commission
upon request.
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EXHIBIT 3.1
BY-LAWS OF TBC CORPORATION
(As amended through July 25, 1996)
ARTICLE I
Offices; Agent
Section 1. Principal Office; Registered Agent. Until changed in the
manner specified by law, the principal office of the Corporation and the
Corporation's registered agent shall be as set forth in the Corporation's
Certificate of Incorporation as the same may be amended from time to time
(hereinafter referred to as the "Certificate of Incorporation").
Section 2. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Delaware as from time
to time the Board of Directors may determine or the business of the
Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. Annual Meeting. The annual meeting of stockholders of the
Corporation for the purpose of electing directors and transacting such other
business as may properly come before the meeting shall be held on the third
Thursday of May of each year or on such other date as may be determined by the
Board of Directors.
Section 2. Special Meetings. Special meetings of stockholders or of
any class of stockholders may be called only by the Board of Directors pursuant
to a resolution adopted by a majority of the then authorized number of
directors.
Section 3. Place of Meetings. Meetings of stockholders shall be held
at the principal office of the Corporation unless the Board of Directors
determines that a meeting shall be held at some other place within or without
the State of Delaware and causes the notice thereof to so state.
Section 4. Notice of Meetings. Unless waived by him, a written notice
of each annual or special meeting, stating the place, date, and hour of the
meeting, and in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be personally delivered or mailed postage
prepaid to each stockholder of record entitled to vote at such meeting, not
more than sixty days nor less than ten days before such meeting. If mailed,
such notice shall be addressed to the stockholder at his address as it appears
upon the records of the Corporation. Unless otherwise required by law, notice
of adjournment of a meeting need not be<PAGE>
given if the time and place to which it is adjourned are announced at such
meeting.
Notice of any meeting of stockholders or class thereof, whether
required by law, the Certificate of Incorporation, or these By-Laws, may be
waived in writing by any stockholder entitled to such notice, either before
or after the holding of such meeting. The attendance of any stockholder at
any meeting without protesting, prior to or at the commencement of the
meeting, the lack of proper notice shall constitute a waiver by him of notice
of such meeting.
Section 5. Quorum. Unless a greater proportion is required by law,
the Certificate of Incorporation, or these By-Laws, and subject to the right
of any class of shares to vote as a class, at any meeting of stockholders (i)
the holders of shares constituting a majority of the shares entitled to vote,
if present in person or by proxy, shall constitute a quorum for all purposes;
and (ii) if a quorum is present, all questions and business which shall come
before the meeting shall be determined by the vote of a majority of the shares
present in person or by proxy and entitled to vote on the subject matter.
At any meeting, whether a quorum is present or not, the holders of a
majority of the shares present in person or by proxy and entitled to vote may
adjourn the meeting to another time or place. At any such adjourned meeting
at which a quorum is present, any business may be transacted which might have
been transacted at the meeting as originally notified or held.
Section 6. Proxies. Each stockholder entitled to vote at a meeting of
stockholders may authorize another person or persons to act for him by proxy.
The instrument appointing a proxy shall be in writing and subscribed by the
person making the appointment. The person so appointed need not be a
stockholder. A vote in accordance with the terms of a proxy shall be valid
notwithstanding the previous death or incapacity of the principal or revocation
of the appointment unless notice in writing of such death, incapacity, or
revocation shall have been given to the Corporation before a vote is taken.
The presence of a stockholder at a meeting shall not operate to revoke a proxy
unless and until notice of such revocation is given to the Corporation in
writing or in open meeting.
Section 7. Advance Notice. At an annual meeting or special meeting
of the stockholders, only such business may be conducted as has been specified
in the notice of meeting, brought before the meeting by or at the direction of
the Board of Directors, otherwise properly brought before the meeting by or at
the director of the Board of Directors, or by a stockholder who has given
timely written notice to the Corporation's corporate secretary (the
"Secretary") of such stockholder's intention to bring such business before the
meeting (the "Business Procedure").
Only persons who are nominated by or at the direction of the Board of
Directors, by a nominating committee or person appointed by the Board of
Directors, or by a stockholder who has given timely written notice to the
Secretary prior to the meeting at which directors are to be elected, will be
eligible for election as directors (the "Nomination Procedure").
-2-<PAGE>
To be timely, notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 75 days nor more
than 90 days prior to the meeting; provided, however, that in the event that
less than 90 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the 15th
day following the day on which such notice of the date of the meeting was
mailed or such public disclosure was made, whichever was first.
A stockholder's notice to the Corporation proposing to nominate a
person for election as a director must contain certain information (i) about
each proposed nominee, including, without limitation, (a) the name, age,
business address and residence address of the nominee, (b) the principal
occupation or employment of the nominee, (c) the class and number of shares
of Common Stock of the Corporation ("Common Stock") which are beneficially
owned by the nominee and (d) any other information relating to the nominee
that is required to be disclosed in solicitations of proxies for election of
directors pursuant to Regulation 14A under the Securities Exchange Act of
1934 and (ii) about the stockholder proposing to nominate such person,
including, without limitation, (a) the name and record address of the
stockholder and (b) the class and number of shares of Common Stock which are
beneficially owned by the stockholder.
A stockholder's notice relating to the conduct of business other than
the nomination of directors at an annual meeting must contain certain
information about such business and about the proposing stockholders
including, without limitation, (a) a brief description of the business
desired to be brought before the meeting and the reasons for conducting such
business at the meeting, (b) the name and record address of the proposing
stockholder, (c) the class and number of shares of Common Stock owned by the
proposing stockholder and (d) a description of any material interest of the
stockholder in such business.
If the chairman of the meeting determines that a person was not
nominated in accordance with the Nomination Procedure, such person will not
be eligible for election as a director and such nomination shall be
disregarded. If such chairman determines that that business was not properly
brought before such meeting in accordance with the Business Procedure, such
business will not be transacted at such meeting.
ARTICLE III
Directors
Section 1. Number and Classification. The number of directors of the
Corporation (exclusive of directors, if any, to be elected by the holders of
any one or more classes of Preferred Stock voting separately as a class or
classes) shall be not less than six nor more than fifteen. Within such minimum
and maximum limitations, the authorized number of directors shall be fixed from
time to time by the Board of Directors pursuant to a resolution adopted by a
majority of the then authorized number of directors. Until otherwise
determined by the Board of Directors, the number of directors shall be fixed at
twelve.
-3-<PAGE>
The Board of Directors shall be divided into three classes, with the
term of office of one class expiring each year. The number of directors in
each class shall be determined by the Board of Directors.
Section 2. Term of Office. At each annual meeting of stockholders,
directors elected to succeed those directors whose terms then expire shall be
elected for a term of office to expire at the third succeeding annual meeting
of stockholders after their election.
Each director shall hold office until the expiration of the term for
which he is elected and until his successor has been elected and qualified or
until his earlier resignation or removal. No reduction in the number of
directors or change in the size of any class shall shorten the term of any
incumbent director.
Section 3. Qualification of Directors. Directors of the Corporation
need not be stockholders of the Corporation. At least two directors shall be
independent directors, that is, persons other than an officer or employee of
the Corporation or its subsidiaries or having a relationship that, in the
opinion of the Board of Directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director.
Section 4. Newly Created Directorships and Vacancies. Subject to
the rights, if any, of the holders of any series of Preferred Stock then
outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from the death, resignation, retirement, disqualification, removal
from office, or other cause may be filled by a majority vote of the directors
then in office, though less than a quorum, and any director so chosen shall
hold office until the next election of the class for which such director shall
have been chosen and until his successor shall be elected and qualified.
Section 5. Removal. Subject to the rights, if any, of the holders
of any series of Preferred Stock then outstanding and notwithstanding the fact
that a lesser percentage may be specified by law, any director or the entire
Board of Directors may be removed from office at any time, but only by the
affirmative vote of the holders of at least 66 % of the shares of the
Corporation then entitled to vote at an election of directors.
ARTICLE IV
Powers and Meetings of the Board of Directors
Section 1. Powers of the Board. Except as otherwise provided by law
or the Certificate of Incorporation, the business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors.
Section 2. Meetings of the Board. An annual meeting of the Board of
Directors shall be held immediately following the adjournment
-4-<PAGE>
of each annual meeting of stockholders, and notice of such meeting need not
be given.
The Board of Directors may, by resolution, provide for other meetings
of the Board. Meetings of the Board of Directors may also be held at any
time upon the call of the Chairman of the Board, the President, or any three
members of the Board.
Meetings of the Board of Directors may be held at any place either
within or without the State of Delaware. Written notice of the time and
place of each meeting of the Board of Directors other than the annual meeting
shall be given by mailing the same to each director at his last-known address
at least three (3) days prior to the date of said meeting, or such notice may
be given to each director, not later than the day preceding the meeting,
personally, or by delivery of a notice addressed to him at said address, or
by sending the same to him at said address by telegraph, telecopier or any
other means. Notice of a meeting to be held by conference telephone or other
communications equipment may be given to each director by telephone or like
means at any time prior to the meeting. Notices need not specify the
purposes of the meeting. Notice of any meeting of directors may be waived in
writing by any director, either before or after the holding of such meeting.
The attendance of any director at any meeting without protesting, prior to or
at the commencement of the meeting, the lack of prior notice shall constitute
a waiver by him of notice of such meeting. Notice of adjournment of a
meeting need not be given if the time and place to which it is adjourned are
announced at such meeting.
Section 3. Quorum. A majority of the then authorized number of
directors shall constitute a quorum for the transaction of business, provided
that whenever less than a quorum is present at any time or place appointed for
a meeting of the Board, a majority of those present may adjourn the meeting
from time to time without notice, other than by announcement at the meeting,
until a quorum shall be present. The vote of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors unless the act of a greater number is required by the
Certificate of Incorporation or these By-Laws.
Section 4. Action by Directors without a Meeting. Any action
required or permitted to be taken at any meeting of the directors may be taken
without a meeting if all directors consent thereto in writing and the writing
or writings are filed with or entered upon the records of the Corporation.
Section 5. Action by Communications Equipment. Directors may
participate in a meeting of the Board or any committee of directors appointed
by the Board as hereinafter provided by means of conference telephone or other
communications equipment if all persons participating can hear each other.
Participation in a meeting pursuant to this Section shall constitute presence
at such meeting.
ARTICLE V
Committees
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The Board of Directors may, by resolution passed by a majority of the
then authorized number of directors, designate one or more committees, each
committee to consist of three or more of the directors of the Corporation.
The Board may designate one or more directors as alternate members of any
committee who may replace any absent or disqualified member at any meeting of
the committee. To the extent provided in the resolution of the Board of
Directors establishing any such committee and except as otherwise prohibited
by law, any committee of the Board may exercise all the powers and authority
of the Board of Directors in the management of the business and affairs of
the Corporation other than the power or authority to declare a dividend or to
authorize the issuance of stock.
Each such committee shall serve at the pleasure of the Board of
Directors and shall be subject to the control and direction of the Board of
Directors.
An act or authorization of an act by any such committee within the
authority delegated to it by the resolution establishing it shall be as
effective for all purposes as the act or authorization of the Board of
Directors.
Any such committee may act by a majority of its members at a meeting or
by a writing or writings signed by all of its members and filed with or
entered upon the records of the Corporation.
The Board of Directors may likewise appoint other members of any
committee who are not members of the Board of Directors; provided, however,
that any such individual shall act only in an advisory capacity and shall
have no vote upon any matter of business before the committee.
The following committees heretofore established by resolutions of the
Board shall be permanent committees of the Board, namely, the Executive
committee, the Audit Committee and the Compensation Committee. A majority of
the members of the Audit Committee shall be independent directors, as defined
in ARTICLE III, Section 3, of these By-Laws.
ARTICLE VI
Officers
Section 1. Officers. The officers of the Corporation shall be a
President, a Secretary, and a Treasurer, and such other officers (including,
without limitation, a Chairman of the Board and one or more Vice Presidents)
and assistant officers as the Board of Directors from time to time may
determine. Any two or more offices may be held by one person, except the
offices of President and Vice President.
Section 2. Election and Term of Office. Each officer of the
Corporation shall be elected by the Board of Directors and shall hold office
until the annual meeting of the Board of Directors following his election and
until his successor is elected and qualified or until his earlier resignation
or removal. The Board of Directors may remove
-6-<PAGE>
any officer at any time, with or without cause. The Board of Directors may
fill any vacancy in any office occurring from whatever cause.
Section 3. Duties of Officers. Each officer and assistant officer
shall have such duties, responsibilities, powers, and authority as may be
prescribed by law or assigned to him by the Board of Directors from time to
time.
ARTICLE VII
Indemnification of Directors and Officers
The Corporation shall indemnify any person who served or serves as a
director or officer of the Corporation and any director or officer of the
Corporation who served or serves at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise, against any and all losses,
liabilities, damages, and expenses, including attorneys' fees, judgments,
fines, and amounts paid in settlement, incurred by such person, in connection
with any claim, action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, including any action by or in the right of
the Corporation, by reason of any act or omission to act as such director,
officer, employee, or agent, to the full extent permitted by Delaware law
including, without limitation, the provisions of Section 145 of the General
Corporation Law of Delaware.
The right to indemnification conferred in this Article VII shall be a
contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such claim, action, suit or proceeding in
advance of its final disposition; provided, however, that if the Delaware
General Corporation Law so requires, such payment shall be made only upon
delivery to the corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately
be determined that such director or officer is not entitled to be indemnified
under this Article or otherwise.
The indemnification provided by this Article VII shall not be deemed
exclusive of any other rights to which any person seeking indemnification may
be entitled under these By-Laws or any agreement, vote of stockholders or
disinterested directors, or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director or
officer of the Corporation and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
ARTICLE VIII
Certificates for Shares of Stock
Section 1. The interest of each stockholder in the Corporation shall
be evidenced by a certificate or certificates for shares in such form as the
Board of Directors from time to time may prescribe. The
-7-<PAGE>
shares of the Corporation shall be transferable on the books of the
Corporation by the holder thereof in person or by his attorney, upon
surrender for cancellation of a certificate or certificates for the same
number of shares, with an assignment and power of transfer endorsed thereon
or attached thereto, duly executed, and with such proof of the authenticity
of the signature as the Corporation or its agent may reasonably require.
Section 2. Certificates for shares of stock shall be signed by the
Chairman of the Board, the President, or a Vice President, and by the Secretary
or Treasurer or an Assistant Secretary or an Assistant Treasurer of the
Corporation and shall be countersigned and registered in such manner, if any,
as the Board of Directors may prescribe. Any or all signatures on the
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall cease to be such officer, transfer agent, or registrar before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer, transfer agent, or registrar at the date of
issue.
Section 3. No certificate for shares of stock shall be delivered in
place of any certificate alleged to have been lost, stolen, or destroyed,
except upon production of such evidence of such loss, theft, or destruction,
and upon delivery to the Corporation of a bond of indemnity in such amount,
upon such terms, and secured by such surety, as the Board of Directors in its
discretion may require.
ARTICLE IX
Seal
The seal of the Corporation shall be circular with the name of the
Corporation and the word "DELAWARE" surrounding the word "SEAL". Failure to
affix the corporate seal shall not affect the validity of any instrument.
ARTICLE X
Amendments
These By-Laws may be amended or repealed only in the manner provided in
the Corporation's Certificate of Incorporation.
-8-<PAGE>
EXHIBIT 4.1
$30,000,000
LONG TERM CREDIT AGREEMENT
among
TBC CORPORATION,
as the Borrower,
THE LENDING INSTITUTIONS PARTY HERETO,
as the Lenders
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
as the Administrative Agent,
and
NBD BANK,
as the Co-Agent
dated as of
September 25, 1996<PAGE>
This Long Term Credit Agreement, dated as of September 25, 1996, is
among TBC Corporation, the Lenders, NBD Bank, as Co-Agent and First Tennessee
Bank National Association as Administrative Agent. The parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which
the Borrower or any of its Subsidiaries (i) acquires any going business or
all or substantially all of the assets of any firm, corporation, partnership,
joint venture, or limited liability company, or division thereof, or any
other entity, whether through purchase of assets, merger or otherwise or (ii)
directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power
for the election of directors (other than securities having such power only
by reason of the happening of a contingency) or a majority (by percentage or
voting power) of the outstanding ownership interests of a partnership or
limited liability company, or joint venture or any other entity.
"Acquisition Agreement" means the acquisition documents entered into
between the Borrower and Big O pursuant to the Big O Acquisition.
"Administrative Agent" means First Tennessee Bank in its capacity as
administrative agent for the Lenders pursuant to Article X, and not in its
individual capacity as a Lender, and any successor Administrative Agent
appointed pursuant to Article X.
"Administrative Agent's Fee Letter" means the letter agreement dated
September 25, 1996 between the Administrative Agent and the Borrower, as
amended, modified, supplemented or replaced from time to time.
"Advance" means a borrowing hereunder (or conversion or continuation
thereof) consisting of the aggregate amount of the several Loans made on the
same Borrowing Date (or date of conversion or continuation) by the Lenders to
the Borrower of the same Type and, in the case of Eurodollar Advances, for
the same Interest Period.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A
Person shall be deemed to control another Person if the controlling Person
owns 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or
otherwise.<PAGE>
"Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders, as reduced from time to time pursuant to the terms hereof.
"Aggregate Outstandings" means, at any date of determination, the
aggregate of the Outstandings of all the Lenders as of such date of
determination.
"Agreement" means this long term credit agreement, as it may be amended
or modified and in effect from time to time.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Corporate Base Rate for such day or (ii) the
sum of Federal Funds Effective Rate for such day plus 1/2% per annum.
"Applicable Percentage" means for any day, the rate per annum set forth
below opposite the applicable ratio of (a) the Funded Indebtedness of the
Borrower at the end of the preceding fiscal quarter then most recently ended
to (b) EBITDA of the Borrower for the preceding four fiscal quarters then
most recently ended, it being understood that the Applicable Percentage for
(i) Floating Rate Advances shall be the percentage set forth under the column
"Floating Rate Advance Margin", (ii) Eurodollar Advances shall be the
percentage set forth under the column "Eurodollar Advance Margin", and (iii)
the Commitment Fee shall be the percentage set forth under the column
"Commitment Fee":
Funded Eurodollar Floating Rate
Indebtedness Advance A d v a n c e Commitment
to EBITDA Margin Margin Fee
<1.5 0.450% 0% 0.175%
>1.5 but< 0.600% 0% 0.200%
2.25
>2.25 but< 0.750% 0% 0.225%
3.00
>3.00 0.875% 0% 0.250%
The Applicable Percentage shall, in each case, be determined and
adjusted quarterly on the first day of the month after the date of delivery
of the quarterly compliance certificate and financial information provided in
accordance with Sections 6.1(ii) and 6.1(iii), as appropriate, provided,
however, that if such compliance certificate and financial information are
not delivered within two Business Days after the date required hereunder
(each an "Interest Determination Date"), the Applicable Percentage shall
increase to the maximum percentage amount set forth in the table above from
the date such compliance certificate and financial statements were required
to be delivered to the Administrative Agent until received by the
Administrative Agent. The Applicable Percentage shall be effective from an
Interest Determination Date until the next such Interest Determination Date.
The Administrative Agent shall determine the appropriate Applicable<PAGE>
Percentages promptly upon receipt of the quarterly or annual financial
information and promptly notify the Borrower and the Lenders of any change
thereof. Such determinations by the Administrative Agent shall be conclusive
absent demonstrable error. The initial Applicable Percentages shall be 0% in
the case of Floating Rate Loans, 0.750% in the case of Eurodollar Loans, and
0.225% in the case of the Commitment Fee, until the first Interest
Determination Date occurring after the Closing Date.
"Arranger" means First Chicago Capital Markets, Inc.
"Arranger's Fee Letter" means the letter agreement dated as of May 24,
1996 between the Arranger and the Borrower.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of the President, Senior Vice President
Operations and Treasurer or Vice President and Controller of the Borrower,
acting singly.
"Big O" means Big O Tires, Inc., a Nevada corporation.
"Big O Acquisition" means the acquisition by the Borrower of all of the
outstanding shares of Big O for a total aggregate purchase price not
exceeding $60,000,000.
"Borrower" means TBC Corporation, a Delaware corporation, and its
successors and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (i) with respect to any borrowing, Facility L/C
issuance, payment or rate selection of Eurodollar Advances, a day (other than
a Saturday or Sunday) on which banks generally are open in Memphis and New
York for the conduct of substantially all of their commercial lending
activities and on which dealings in United States dollars are carried on in
the London interbank market and (ii) for all other purposes, a day (other
than a Saturday or Sunday) on which banks generally are open in Memphis for
the conduct of substantially all of their commercial lending activities.
"Capital Expenditure" means, for any Person and for any period of its
determination, the aggregate of all expenditures and costs (whether paid in
cash or accrued as liabilities during that period and including that portion
of Capital Leases placed in effect during that period which is capitalized on
the balance sheet of such Person) of such Person during such period that, in
conformity with GAAP, are required to be included in or reflected by the
property, plant, or equipment, or any similar fixed asset or long term
capitalized asset accounts reflected in the balance sheet of such Person.
Capital Expenditures does not include amounts attributed to construction or
development of Retail Stores Under Development.<PAGE>
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
"Change in Control" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 20% or more of the outstanding shares of voting
stock of the Borrower.
"Closing Date" means the date on which the conditions set forth in
Section 4.1 shall have been fulfilled.
"Co-Agent" means NBD Bank, a Michigan banking corporation.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commercial L/C Fee Rate" means, at any time, one percent (1.0%) per
annum.
"Commitment" means, for each Lender, the obligation of such Lender to
make Loans and to participate in Facility L/C's as provided herein not
exceeding the amount set forth opposite its signature below or as set forth
in any Notice of Assignment relating to any assignment that has become
effective pursuant to Section 12.3.2, as such amount may be modified from
time to time pursuant to the terms hereof.
"Commitment Fee" is defined in Section 2.4.3.
"Condemnation" is defined in Section 7.8.
"Consolidated Funded Indebtedness" means, at any date, all Funded
Indebtedness of the Borrower and its Subsidiaries at such date, determined on
a consolidated basis.
"Consolidated Net Income" means, for any period, the consolidated net
income or loss of the Borrower and its Subsidiaries for such period,
determined in accordance with GAAP.
"Consolidated Net Worth" means, at any date, the consolidated net worth
of the Borrower and its Subsidiaries at such date, determined in accordance
with GAAP.
"Consolidated Tangible Net Worth" means, at any date, Consolidated Net
Worth after subtracting therefrom the aggregate amount of all intangible
assets of the Borrower and its Subsidiaries, including, without limitation,
goodwill, franchises, licenses, patents, trademarks, trade names, copyrights,
service marks, brand names and operating rights, all determined in accordance
with GAAP.<PAGE>
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes
or is contingently liable upon, the obligation or liability of any other
Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise contractually assures
any creditor of such other Person against loss.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any of its Subsidiaries,
are treated as a single employer under Section 414 of the Code.
"Corporate Base Rate" means a rate per annum equal to the prime rate of
interest announced by NBD from time to time, changing when and as said prime
rate changes.
"Default" means an event described in Article VII.
"EBIT" means, with respect to the Borrower and its Subsidiaries and for
any period of its determination, the Consolidated Net Income of the Borrower
and its Subsidiaries for such period, plus the consolidated interest expense,
and taxes, all determined in accordance with GAAP consistently applied.
"EBITDA" means, with respect to the Borrower and its Subsidiaries and
for any period of determination, EBIT of the Borrower and its Subsidiaries
for such period, plus depreciation and amortization of the Borrower and its
Subsidiaries for such period, all determined in accordance with GAAP.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to (i) the protection of the environment, (ii) the effect of the environment
on human health, (iii) emissions, discharges or releases of pollutants,
contaminants, hazardous substances or wastes into surface water, ground water
or land, or (iv) the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants,
hazardous substances or wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Eurodollar Advance" means an Advance which bears interest at a
Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for
the relevant Interest Period, the rate at which NBD advises the
Administrative Agent to be the rate at which NBD offers to place deposits in
U.S. dollars with first-class banks in the London interbank market at
approximately 11 a.m. (London time) two Business Days prior to the first day
of such Interest Period, in the approximate amount of NBD's relevant<PAGE>
Eurodollar Loan and having a maturity approximately equal to such Interest
Period.
"Eurodollar Loan" means a Loan which bears interest at a Eurodollar
Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Advance for the
relevant Interest Period, a rate per annum equal to the sum of (i) the
quotient of (a) the Eurodollar Base Rate applicable to such Interest Period,
divided by (b) one minus the Reserve Requirement (expressed as a decimal)
applicable to such Interest Period, if any, plus (ii) the Applicable Margin.
The Eurodollar Rate shall be rounded to the next higher multiple of 1/16 of
1% if the rate is not such a multiple.
"Existing Credit Facilities" means each of those credit facilities
described in Sections 4.1(b)(v) and (vi).
"Existing Letters of Credit" means those Letters of Credit issued by the
Issuing Lender and in existence on the Closing Date, all as described on
Schedule "3".
"Facility L/C" means a Letter of Credit issued, or deemed issued under
this Agreement pursuant to Section 2.2.1.
"Facility L/C Commitment" means $5,000,000.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day on page 120 of Telerate
Data Service (or, if such day is not a Business Day, for the immediately
preceding Business Day), or, if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 10
a.m. (Memphis time) on such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by the Administrative Agent in its sole discretion.
"First Tennessee Bank" means First Tennessee Bank National Association,
in its individual capacity, and its successors.
"Fixed Charge Coverage Ratio" means as of the last day of any fiscal
quarter of the Borrower, the ratio of (a) EBIT plus rental payments for the
period of four fiscal quarters ending on the last day of such quarter to (b)
the sum of (i) the Borrower's and its Subsidiaries consolidated interest
expense and rental payments (each as defined under GAAP) for such period.
"Floating Rate" means, for any day, a rate per annum equal to (i) the
Alternate Base Rate for such day, changing when and as the Alternate Base
Rate changes.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.<PAGE>
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
"Funded Indebtedness" of any Person as of any particular date of
computation means, without duplication, the aggregate Indebtedness of such
Person outstanding on the date of computation.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and in the statements and
pronouncements of the Financial Accounting Standards Board or in such other
statement by such other entity as may be the circumstances as of the date of
determination, consistently applied. If at any time any change in GAAP would
affect the computation of any financial ratio or requirement set forth in
this Agreement, the Administrative Agent, the Lenders and the Borrower shall
negotiate in good faith to amend such ratio or requirement to reflect such
change in GAAP (subject to the approval of the Required Lenders), provided
that, until so amended, (i) such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and (ii) the
Borrower shall provide to the Administrative Agent and the Lenders financial
statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between calculations of
such ratio or requirement made before and after giving effect to such change
in GAAP.
"Guaranties" means the guaranties dated the date hereof executed and
delivered by the Guarantors pursuant to Section 4.1, which shall be
substantially in the form of Exhibit "F", as amended, supplemented or
otherwise modified from time to time.
"Guarantors" means each of TBC Sales, Inc., TBC International, Inc. and
Big O Tires, Inc.
"Hazardous Material" means (i) any Hazardous Substance; (ii) any
Hazardous Waste; (iii) any petroleum product; or (iv) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material or substance
within the meaning of any other federal, state or local law, regulation,
ordinance or requirement (including consent decrees and administrative
orders) relating to or imposing liability or standards of conduct concerning
any hazardous, toxic or dangerous waste, substance or material, all as
amended or hereafter amended.
"Hazardous Substance" means any "hazardous substance," as defined by
CERCLA.
"Hazardous Waste" means any "hazardous waste," as defined by the
Resource Conservation and Recovery Act, as amended.
"Indebtedness" means, as to any Person, at a particular time, all items
which constitute, without duplication, (i) indebtedness for borrowed money or
the deferred purchase price of Property (other than trade payables incurred
in the ordinary course of business), (ii) indebtedness evidenced by notes,
bonds, debentures or similar instruments, (iii) obligations with respect to
any conditional sale or title retention agreement, (iv) indebtedness arising<PAGE>
under acceptance facilities and the amount available to be drawn under all
letters of credit (other than Commercial Letters of Credit) issued for the
account of such Person and, without duplication, all drafts drawn thereunder
to the extent such Person shall not have reimbursed the issuer in respect of
the issuer's payment of such drafts, (v) all liabilities secured by any Lien
on any Property owned by such Person even though such Person has not assumed
or otherwise become liable for the payment thereof (other than (A) carriers';
warehousemen's, mechanics', repairmen's or other like non-consensual
statutory Liens arising in the ordinary course of business and (B)
liabilities of Subsidiaries for which recourse may be had by the creditor
only to the Property secured by the Lien), (vi) Capitalized Lease Obligations
and (vii) Contingent Obligations, other than Intercompany Contingent
Obligations and Contingent Obligations permitted pursuant to Section 6.17
(viii) hereof.
"Intercompany Contingent Obligation" means a Contingent Obligation
pursuant to which the Borrower or a Subsidiary is contingently liable solely
with respect to a primary obligation of the Borrower or any Subsidiary and
such primary obligation is included among the liabilities shown on the
Borrower's consolidated balance sheets to be submitted to the Lenders
pursuant to Section 6.1.
"Interest Period" means, with respect to a Eurodollar Advance, a period
of one, two, three, or six months commencing on a Business Day selected by
the Borrower pursuant to this Agreement. Such Interest Period shall end on
the day which corresponds numerically to such date one, two, three, or six
months thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third, or sixth succeeding month,
such Interest Period shall end on the last Business Day of such next, second,
third, or sixth succeeding month. If an Interest Period would otherwise end
on a day which is not a Business Day, such Interest Period shall end on the
next succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable and
trade acceptances arising in the ordinary course of business on terms
customary in the trade) or contribution of capital by such Person; stocks,
bonds, mutual funds, partnership interests, notes, debentures or other
securities owned by such Person; any deposit accounts and certificate of
deposit owned by such Person; and structured notes, derivative financial
instruments and other similar instruments or contracts owned by such
Person.
"Issuing Lender" means First Tennessee Bank.
"L/C Participation Amount" means, for each Lender at any date of
determination, such Lender's Percentage of the aggregate undrawn amount
available (whether or not the conditions which would allow a draw thereunder
have been met) to the beneficiaries thereof under all outstanding Facility
L/C's as of such date of determination.<PAGE>
"Lenders" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the
Administrative Agent, any office, branch, subsidiary or affiliate of such
Lender or the Administrative Agent.
"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way
liable, and shall be either (i) a standby letter of credit issued to support
obligations of the Borrower, contingent or otherwise (a "Standby Letter of
Credit"), or (ii) a commercial letter of credit issued in respect of the
purchase of inventory or other goods or services by the Borrower in the
ordinary course of business (a "Commercial Letter of Credit"). From and
after the Closing Date, the Existing Letters of Credit shall be deemed to be
Letters of Credit issued under this Agreement.
"Letter of Credit Collateral Account" is defined in Section 2.2.8.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind
or nature whatsoever (including, without limitation, the interest of a vendor
or lessor under any conditional sale, Capitalized Lease or other title
retention agreement).
"Loan" means, with respect to a Lender, such Lender's loan made pursuant
to Article II (or any conversion or continuation thereof).
"Loan Documents" means this Agreement, the Notes, the Guaranties and any
applications for Facility L/Cs executed and delivered by the Borrower
pursuant to Section 2.2.2.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of
operations, or prospects of the Borrower or the Borrower and its Subsidiaries
taken as a whole, (ii) the ability of the Borrower to perform its obligations
under the Loan Documents, or (iii) the validity or enforceability of any of
the Loan Documents or the rights or remedies of the Administrative Agent or
the Lenders thereunder.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"NBD" means NBD Bank in its individual capacity, and its successors.
"Note" means a promissory note, in substantially the form of Exhibit "A"
hereto, duly executed by the Borrower and payable to the order of a Lender in
the amount of its Commitment, including any amendment, modification, renewal
or replacement of such promissory note.<PAGE>
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the
Lenders or to any Lender, the Administrative Agent or any indemnified party
hereunder arising under the Loan Documents.
"Outstandings" means, for each Lender at any date of determination, the
sum of (a) the aggregate outstanding principal amount of all Loans made by
such Lender as of the date of determination, plus (b) such Lender's L/C
Participation Amount as of the date of determination, plus (c) such Lender's
Percentage of any Unreimbursed Drawings outstanding as of the date of
determination.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each March, June, September, and
December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Percentage" means, for any Lender, 100% times a fraction (a) the
numerator of which is such Lender's Commitment, and (b) the denominator of
which is the Aggregate Commitment.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or
other entity or organization, or any government or political subdivision or
any agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of
the Code as to which the Borrower or any member of the Controlled Group may
have any liability.
"Private Placement" means the private placement of debt by the Borrower
with the Prudential Insurance Company of America or its affiliates for the
purpose of, among other things, funding the Big O Acquisition, in an amount
not to exceed $75,000,000.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.
"Purchasers" is defined in Section 12.3.1.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of the
Federal Reserve System.<PAGE>
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing or
carrying margin stocks applicable to member banks of the Federal Reserve
System.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a
Plan, excluding, however, such events as to which the PBGC by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified within
30 days of the occurrence of such event, provided, however, that a failure to
meet the minimum funding standard of Section 412 of the Code and of Section
302 of ERISA shall be a Reportable Event regardless of the issuance of any
such waiver of the notice requirement in accordance with either Section
4043(a) of ERISA or Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least 51 %
of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 51 % of the total of
the aggregate unpaid principal amount of the outstanding Advances, L/C
Participation Amounts, and Percentages of Unreimbursed Drawings.
"Reserve Requirement" means the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which is
imposed under Regulation D on Eurocurrency liabilities.
"Retail Stores Under Development" means retail stores under development
or construction by Big O which are shown as such by the Borrower on its
balance sheet.
"Revolving Credit Termination Balance" means the aggregate principal
amount of Advances outstanding on the Termination Date after giving effect to
any Advances made or repaid on such date.
"Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Short Term Credit Agreement" means the short term credit agreement
entered into among the Borrower, the Lenders and the Administrative Agent as
of the Closing Date.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Standby L/C Fee Rate" means a percentage amount per annum equal to the
Applicable Percentage for Eurodollar Advances.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the<PAGE>
time be owned or controlled, directly or indirectly, by such Person or by one
or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, limited liability company,
association, joint venture or similar business organization more than 50% of
the ownership interests having ordinary voting power of which shall at the
time be so owned or controlled. Unless otherwise expressly provided, all
references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower.
"Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (i) represents more than 10% of
the consolidated assets of the Borrower and its Subsidiaries as would be
shown in the consolidated financial statements of the Borrower and its
Subsidiaries as at the beginning of the twelve-month period ending with the
month in which such determination is made, or (ii) is responsible for more
than 10% of the consolidated net sales or of the consolidated net income of
the Borrower and its Subsidiaries as reflected in the financial statements
referred to in clause (i) above.
"Termination Date" means the date which is the third (3rd) anniversary
of the Closing Date, or such earlier date of termination of the Lenders'
obligations pursuant to Section 8.1 upon the occurrence of an Event of
Default.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a Floating Rate
Advance or Eurodollar Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single Employer
Plans exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"Unreimbursed Drawing" is defined in Section 2.2.3(b).
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more
Wholly-Owned Subsidiaries of such Person, or by such Person and one or more
Wholly-Owned Subsidiaries of such Person, or (ii) any partnership, limited
liability company, association, joint venture or similar business
organization 100% of the ownership interests having ordinary voting power of
which shall at the time be so owned or controlled.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.<PAGE>
ARTICLE II
THE CREDITS
2.1. Commitment. From and including the date of this Agreement and
prior to the Termination Date, each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Loans to the Borrower from
time to time in amounts (combined with such Lender's L/C Participation
Amount) not to exceed in the aggregate at any one time outstanding the amount
of its Commitment and provided that, after giving effect to the making of any
Loan, the Aggregate Outstandings do not exceed the Aggregate Commitment. In
furtherance and not in limitation of the foregoing, any unused portion of the
Facility L/C Commitment shall be available for the making of Loans hereunder,
up to the Aggregate Commitment. Subject to the terms of this Agreement, the
Borrower may borrow, repay and reborrow Loans at any time prior to the
Termination Date and may borrow to pay draws under Facility L/C's pursuant to
Section 2.2.5(b) at any time prior to the Termination Date. The Commitments
to lend hereunder shall expire on the Termination Date except as otherwise
provided for draws under Facility L/C's. Any outstanding Advances,
Unreimbursed Drawings, and all other unpaid Obligations shall be paid in full
by the Borrower on the Termination Date.
2.2. Letter of Credit Subfacility.
2.2.1. Obligation to Issue. Subject to the terms and
conditions of this Agreement, from and including the date of this Agreement
and on or before the Termination Date, the Issuing Lender agrees to issue
Facility L/C's for the account of the Borrower from time to time in amounts
such that, after giving effect to the issuance of any Facility L/C (i) the
aggregate undrawn amount available (whether or not the conditions which
would allow a draw thereunder have been met) to the beneficiaries thereof
under all outstanding Facility L/C's does not exceed the Facility L/C
Commitment, and (ii) the Aggregate Outstandings do not exceed the Aggregate
Commitment. Each Facility L/C shall be denominated in U.S. dollars. The
issuance of a Facility L/C shall be deemed to be a utilization of the
Aggregate Commitment for all purposes under this Agreement. No Facility
L/C may have an expiry date occurring after the Termination Date.
Notwithstanding anything in this Agreement to the contrary, the Issuing
Lender shall not be required to issue a Facility L/C supporting an
underwriting, remarketing, or placement by the Issuing Lender or any
Affiliate of the Issuing Lender.
2.2.2. Procedure for Issuance of Facility L/C. (a) The
Borrower shall give the Issuing Lender and the Administrative Agent notice
of any requested issuance of a Facility L/C under this Agreement not later
than 10:00 a.m. (Memphis time) at least two Business Days' prior to the
requested date of issuance, together with such other documents and
materials as the Issuing Lender may require (including, without limitation
and at the Issuing Lender's discretion, a duly executed application, as may
be amended from time to time, for a Letter of Credit on the Issuing
Lender's standard form for such transactions (the "L/C Application" and a
form of which is attached hereto as Exhibit "G")). Such notice shall be
irrevocable and shall specify the stated amount of the Facility L/C
requested, the effective date (which day shall be a Business Day) of
issuance of such requested Facility<PAGE>
L/C, the date on which such requested Facility L/C is to expire (which
date shall be a Business Day occurring on or before the Termination
Date), the purpose for which such Facility L/C is to be issued, and the
Person for whose benefit the requested Facility L/C is to be issued.
At the time such request is made, the Borrower shall also provide the
Issuing Lender and the Administrative Agent with a copy of the form of
the Facility L/C it is requesting be issued, if any, which proposed
Facility L/C shall be reasonably satisfactory to the Issuing Lender as
to form and content. Prior to the close of business on the second
Business Day following the Business Day on which the Administrative Agent
first received such notice, the Administrative Agent shall confirm by
written notice (including via facsimile), or telephone notice confirmed
promptly thereafter in writing, to the Issuing Lender whether the Issuing
Lender is authorized to issue the requested Facility L/C in accordance
with subsection 2.2.2(b) below.
(b) The Administrative Agent shall determine, as of the close of
business on the day it receives a notice from the Borrower pursuant to
subsection 2.2.2(a) above, whether after giving effect to the issuance
of the requested Facility L/C (i) the aggregate undrawn amount available
(whether or not the conditions which would allow a draw thereunder have
been met) to the beneficiaries thereof under all outstanding Facility
L/C's would exceed the Facility L/C Commitment, and (ii) the Aggregate
Outstandings would exceed the Aggregate Commitment. If, and only if,
the stated amount of the requested Facility L/C would not exceed such
limitations, and subject to the terms and conditions of this Section 2.2
and provided that the applicable conditions set forth in Section 4.2
hereof have been satisfied, the Issuing Lender shall, on the requested
date, issue a Facility L/C on behalf of the Borrower in accordance with
the Issuing Lender's usual and customary business practices.
(c) The Issuing Lender shall give the Administrative Agent
written or telex notice, or telephonic notice confirmed promptly
thereafter in writing, of the issuance of a Facility L/C.
(d) The Issuing Lender shall not extend or amend any Facility
L/C unless the requirements of this Section 2.2.2 are met as though a new
Facility L/C was being requested and issued.
2.2.3. Participation in Facility L/C.
(a) Immediately upon the issuance of each and every Facility
L/C, each Lender shall be deemed to have irrevocably and unconditionally
purchased and received from the Issuing Lender, without recourse or
warranty, an undivided interest and participation to the extent of each
Lender's Percentage in each Facility L/C (including, without limitation,
all obligations of the Borrower with respect thereto and any security
therefor other than amounts owing pursuant to the last sentence of Section
2.2.4(c) and any security therefor).
(b) In the event that the Issuing Lender makes any payment
under any Facility L/C and the Borrower shall not have repaid such amount
(an "Unreimbursed Drawing") to the Issuing Lender pursuant to Section
2.2.5 hereof (with the proceeds of an Advance or otherwise), the Issuing
Lender shall promptly notify the Administrative Agent, which shall
promptly notify<PAGE>
each Lender, of such failure (by facsimile, or telephone promptly
confirmed in writing), and each Lender shall promptly and unconditionally
pay to the Administrative Agent for the account of the Issuing Lender the
amount of such Lender's Percentage of such payment in same day funds. If
the Administrative Agent so notifies a Lender prior to noon (Memphis time)
on any Business Day, such Lender shall make available to the
Administrative Agent for the account of the Issuing Lender its Percentage
of the amount of such payment on such Business Day in same day funds. If
and to the extent such Lender shall not have so made its Percentage of the
amount of such payment available to the Administrative Agent for the
account of the Issuing Lender, such Lender agrees to pay to the
Administrative Agent for the account of the Issuing Lender forthwith on
demand such amount together with interest thereon, for each day from the
date such payment was first due until the date such amount is paid to the
Administrative Agent for the account of the Issuing Lender, at the Federal
Funds Effective Rate. The failure of any Lender to make available to the
Administrative Agent for the account of the Issuing Lender its Percentage
of any such payment shall not relieve any other Lender of its obligation
hereunder to make available to the Administrative Agent for the account of
the Issuing Lender its Percentage of any payment on the date such payment
is to be made.
(c) Whenever the Issuing Lender receives a payment on account
of an Unreimbursed Drawing, including any interest thereon, as to which
the Administrative Agent has received payments from the Lenders for the
account of the Issuing Lender pursuant to this Section 2.2.3, it shall
promptly pay to the Administrative Agent and the Administrative Agent
shall promptly pay to each Lender which has funded its participating
interest therein, in the kind of funds so received, an amount equal to
such Lender's Percentage thereof. Each such payment shall be made by
the Issuing Lender on the Business Day on which it receives the funds
paid to it pursuant to the preceding sentence, if received prior to noon
(Memphis time) on such Business Day, and otherwise on the next succeeding
Business Day.
(d) Upon the request of either the Administrative Agent or any
Lender, the Issuing Lender shall furnish to the Administrative Agent or
such Lender copies of any Letter of Credit application to which the
Issuing Lender is a party and such other documentation as may reasonably
be requested by the Administrative Agent or such Lender. Promptly after
the issuance of each Facility L/C, the Issuing Lender shall send a copy
of such Facility L/C to the Administrative Agent and each Lender by
telefacsimile.
(e) The obligations of a Lender to make payments to the
Administrative Agent for the account of the Issuing Lender with respect
to a Facility L/C shall be irrevocable, not subject to any qualification
or exception whatsoever and shall be made in accordance with the terms
and conditions of this Agreement under all circumstances, including,
without limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or
other right which the Borrower may have at any time against a
beneficiary named in a Facility L/C or any transferee of any
Facility L/C (or any Person for whom<PAGE>
any such transferee may be acting), the Administrative Agent,
the Issuing Lender, any Lender, or any other Person, whether
in connection with this Agreement, any Facility L/C, the
transactions contemplated herein or any unrelated transactions
(including any underlying transactions between the Borrower or
any Affiliate of the Borrower and the beneficiary named in any
Facility L/C);
(iii) any draft, certificate of any other document
presented under the Facility L/C proving to be forged,
fraudulent or invalid in any respect, or insufficient in
accordance with the Uniform Customs and Practice for
Documentary Credits (1993 revision), International Chamber of
Commerce, Publication 500, or any statement therein being
untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for
the performance or observance of any of the terms of any of
the Loan Documents; or
(v) the occurrence of any Default or Unmatured
Default;
provided, that the Lenders shall not be required to fund their
participations in a Facility L/C if the corresponding payment made by the
Issuing Lender under such Facility L/C was made as a result of the Issuing
Lender's gross negligence or willful misconduct or failure to negotiate a
draft in accordance with the standard of care required by the Uniform
Customs and Practice for Documentary Credits (1993 revision),
International Chamber of Commerce, Publication 500.
(f) In the event any payment by the Borrower received by the
Issuing Lender with respect to a Facility L/C and distributed by the
Administrative Agent to the Lenders on account of their participations is
thereafter set aside, avoided or recovered from that Issuing Lender in
connection with any receivership, liquidation, reorganization or
bankruptcy proceeding, each Lender which received such distribution shall,
upon demand by that Issuing Lender, contribute such Lender's Percentage of
the amount set aside, avoided or recovered together with interest at the
rate required to be paid by that Issuing Lender upon the amount required
to be repaid by it.
2.2.4. Facility L/C Fee.
(a) The Borrower hereby agrees to pay to the Issuing Lender and
the Lenders a fee (calculated for the actual number of days elapsed on the
basis of a year consisting of 360 days) with respect to each Commercial
Letter of Credit issued under this Agreement with respect to the period
from the date of issuance of such Commercial Letter of Credit to the
expiration or termination date of such Letter of Credit, computed at a
rate per annum equal to the Commercial L/C Fee Rate on the average
aggregate amount available to be drawn under such Commercial Letter of
Credit during the period for which such fee is calculated provided,
however, that no such fee shall be due with respect to the Existing
Letters of Credit.
(b) The Borrower hereby agrees to pay to the Issuing Lender and
the Lenders a fee (calculated for the actual number of days elapsed on the
basis of a year consisting of 360 days) with respect to each Standby
Letter<PAGE>
of Credit issued under this Agreement with respect to the period from the
date of issuance of such Standby Letter of Credit to the expiration or
termination date of such Letter of Credit, computed at a rate equal to the
Standby L/C Fee Rate of the average aggregate amount available to be drawn
under such Standby Letter of Credit during the period for which such fee
is calculated; provided, however, that no such fee shall be due with
respect to the Existing Letters of Credit.
(c) In consideration of its issuance of a Facility L/C, the
Borrower hereby additionally agrees to pay to the Issuing Lender for its
own account a fee for its own account (calculated for the actual number of
days elapsed on the basis of a year consisting of 360 days) on any undrawn
portion of such Facility L/C from time to time outstanding equal to .10%
per annum.
(d) All fees due under this Section 2.2.4 shall be payable in
arrears to the Administrative Agent for the account of the Issuing Lender
and the Lenders at the principal office of the Administrative Agent in
Memphis, Tennessee on each Payment Date, on the Termination Date, and on
the expiration date of each Facility L/C or when such Facility L/C is
fully drawn, whichever first occurs. The Borrower also hereby agrees to
pay directly to the Issuing Lender with respect to each Facility L/C
issued for the Borrower's account the usual and customary administrative
and other charges of the Issuing Lender in connection with any Facility
L/C, including, without limitation, a charge of $100 for the issuance of
any Facility L/C and charges for the negotiation of any draft paid
pursuant to any Facility L/C and any amendments or supplements to any
Facility L/C.
2.2.5. Reimbursement for Draws Under Facility L/C's.
(a) Promptly upon receipt of notice from the Issuing Lender of
any drawing under a Facility L/C, the Borrower hereby agrees to reimburse
the Lenders ratably in accordance with their respective Percentages by
making a payment to the Issuing Lender for the amount of each draft drawn
or purporting to be drawn under any such Facility L/C for the account of
the Borrower which is paid by the Issuing Lender, except to the extent
that any of the foregoing arises solely from the Issuing Lender's gross
negligence, willful misconduct or failure to negotiate the draft in
accordance with the standard of care required by the Uniform Customs and
Practice for Documentary Credits (1993 revision), International Chamber
of Commerce, Publication 500. Unless funded with an Advance made
pursuant to Section 2.2.5(b), amounts which the Borrower has agreed to
reimburse the Lenders pursuant to the preceding sentence shall be due
on demand and shall bear interest until paid at a rate per annum
(calculated for the actual number of days elapsed on the basis of year
consisting of 360 days) equal to the Floating Rate plus 2% per annum.
(b) The payment by the Issuing Lender of a draft drawn under or
purporting to be drawn under any Facility L/C shall be deemed to
constitute a Borrowing Notice for a Floating Rate Advance in the amount
of such draft and, subject to the terms and conditions of this Agreement
(including, without limitation, that (i) the provisions of Section 4.2
shall have been satisfied or waived and (ii) after giving effect to
such Advance, the Aggregate Outstandings will not exceed the Aggregate
Available Commitment), the Lenders shall make such Floating Rate Advance
and the Administrative Agent shall<PAGE>
apply the proceeds thereof to the payment of the Borrower's obligations
under Section 2.2.5(a) with respect to such draft.
(c) The Borrower's obligation to make all payments due under
Section 2.2.5(a) shall be absolute, unconditional and irrevocable, and
such payments shall be made strictly in accordance with the terms of
this Agreement, under all circumstances whatsoever, including, without
limitation, any or all of the following circumstances:
(i) any determination of invalidity
or unenforceability with respect to any Facility L/C after
payment by the Issuing Lender; or
(ii) any lack of validity or enforceability of any or
all or the Loan Documents; or
(iii) any amendment to, waiver of, any consent under
or departure from any or all of the Loan Documents; or
(iv) any exchange, release or nonperfection of any
collateral securing any Facility L/C, or any release or
amendment or waiver of or consent to departure from any
guaranty of any Facility L/C; or
(v) the existence of any claim, set-off, defense
or other right which the Borrower may have at any time
against a beneficiary of any Facility L/C (or any entities
for whom such beneficiary may be acting), the Lenders,
the Issuing Lenders, the Administrative Agent or any other
Person; or
(vi) any statement or any other document presented
under any Facility L/C proving to be forged (unless the
Issuing Lender failed to discover such forging solely as a
result of its own gross negligence or willful misconduct),
fraudulent or invalid in any respect or any statement
therein being untrue or inaccurate in any respect whatsoever.
(d) The Issuing Lender shall use its best efforts to give
prompt notice to the Borrower of the presentation of a draft under a
Facility L/C; provided, that failure to give such notice shall not limit
or otherwise affect the Borrower's obligations under this Agreement
except as explicitly provided herein.
2.2.6. Issuing Lender Reporting Requirements. In addition
to the reports required by Section 2.2.2(c), the Issuing Lender shall, no
later than the tenth Business Day following the last day of each month,
provide to the Administrative Agent a schedule of Facility L/C's issued
by it, in form and substance reasonably satisfactory to the Administrative
Agent, showing the date of issue, account party, amount, expiration date
and the reference number of each Facility L/C issued by it outstanding at
any time during such month and the aggregate amount payable by the
Borrower during the month pursuant. Copies of such reports shall be
provided promptly to the Borrower and each Lender by the Administrative
Agent.
2.2.7. Indemnification; Assumption of Risk.
(a) The Borrower hereby agrees to indemnify and hold harmless
the Administrative Agent, the Issuing Lender and each Lender from and
against<PAGE>
any and all claims, damages, losses, liabilities, costs or expenses of
any kind which any thereof may incur by reason of or in connection with
the execution and delivery, issuance or transfer of, or any payment or
failure to pay under, any Facility L/C; provided, the Borrower shall not
be required to indemnify the Issuing Lender for any claims, damages,
losses, liabilities, costs or expenses to the extent caused by the gross
negligence, willful misconduct, or failure to negotiate the draft in
accordance with the standard of care required by the Uniform Customs and
Practice for Documentary Credits (1993 revision), International Chamber
of Commerce, Publication 500 on the part of the Issuing Lender in making
payment under a Facility L/C.
(b) The Borrower assumes all risks of the acts or omissions of
any beneficiary of any Facility L/C issued for its account with respect
to its use or reliance on any such Facility L/C. Neither the Lenders,
the Issuing Lender, nor the Administrative Agent shall be responsible
for: the validity or genuineness of certificates or other documents
delivered under or with any Facility L/C, even if such certificates or
other documents should in fact prove to be invalid, fraudulent or
forged; errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, wireless or
otherwise, whether or not they are in code; errors in translation or
for errors in interpretation of technical terms; any failure or inability
by any Lender, the Issuing Lender or the Administrative Agent or anyone
else to perform under the foreign laws, customs or regulations or by
reason of any control or restriction rightfully or wrongfully exercised
by any government or group asserting or exercising governmental or
paramount powers; or any other consequences arising from causes beyond
any Lender's, the Issuing Lender's or the Administrative Agent's control;
nor shall any Lender, the Issuing Lender, or the Administrative Agent be
responsible for any error, neglect, or default of any correspondent of
such Person; and none of the above shall affect, impair or prevent the
vesting of any of the rights or powers of any Lender, the Issuing Lender
or the Administrative Agent under any of the Loan Documents. The
Issuing Lender may accept statements, certificates or other documents
that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the
contrary. In furtherance and not in limitation of the foregoing
provisions, the Borrower agrees that any action taken by any Lender,
the Issuing Lender or the Administrative Agent in good faith in
connection with any Facility L/C, or the relevant drafts, certificates
or other documents, shall be binding on the Borrower and shall not result
in any liability of such Lender, the Issuing Lender or the Administrative
Agent to the Borrower except as provided in the parenthetical phrase which
appears in Section 2.2.5(c)(vi) or otherwise resulting solely from the
gross negligence or willful misconduct of the Issuing Lender, the
Administrative Agent or any Lender or the failure of the Issuing Lender to
negotiate a Facility L/C in accordance with the standard of care required
by the Uniform Customs and Practice for Documentary Credits (1993
revision), International Chamber of Commerce, Publication 500; and the
Borrower makes like agreement as to any inaction or omission.
2.2.8 Letter of Credit Collateral Account. From and after the
occurrence and during the continuance of a Default, the Borrower hereby
agrees that it will, until the Termination Date, maintain a special
collateral account (the "Letter of Credit Collateral Account") at the<PAGE>
Administrative Agent's office at the address specified pursuant to
Article XIII, in the name of the Borrower but under the sole dominion
and control of the Administrative Agent, for the benefit of the Lenders,
and in which the Borrower shall have no interest other than as set forth
in Section 8.1. In addition to the foregoing, the Borrower hereby grants
to the Administrative Agent, for the benefit of the Lenders, a security
interest in and to the Letter of Credit Collateral Account and any funds
that may hereafter be on deposit in such account.
2.2.9. Letter of Credit Applications. To the extent that any
provision of any L/C Application related to any Letter of Credit is
inconsistent with this Agreement, the provisions of this Agreement shall
apply.
2.3. Ratable Loans; Types of Advances. Each Advance hereunder shall
consist of Loans made from the several Lenders ratably in proportion to the
ratio that their respective Commitments bear to the Aggregate Commitment.
The Advances may be Floating Rate Advances or Eurodollar Advances, or a
combination thereof, selected by the Borrower in accordance with Sections 2.8
and 2.9.
2.4. Fees.
2.4.1. Arranger's Fee. The Borrower agrees to pay to the
Arranger, for its own account, the fees referred to in the Arranger's Fee
Letter (the "Arranger's Fees").
2.4.2. Administrative Agent's Fee. The Borrower agrees to
pay to the Administrative Agent, for its own account, the administrative
and other fees referred to in the Administrative Agent's Fee Letter (the
"Administrative Agent's Fee").
2.4.3. Commitment Fees. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee in the
amount of the Applicable Percentage on the daily unused portion of such
Lender's Commitment (which unused portion includes the unissued portion of
the Facility L/C Commitment) from the date hereof to and including the
Termination Date, payable in arrears on each Payment Date hereafter and on
the Termination Date (the "Commitment Fee").
2.5. Reductions in Aggregate Commitment. The Borrower may permanently
reduce the Aggregate Commitment in whole, or in part ratably among the
Lenders in a minimum amount of $2,000,000 and in integral multiples of
$1,000,000 in excess thereof, upon at least five Business Days' written
notice to the Administrative Agent, which notice shall specify the amount of
any such reduction, provided, however, that the amount of the Aggregate
Commitment may not be reduced below the aggregate principal amount of the
Aggregate Outstandings. All accrued commitment fees shall be payable on the
effective date of any termination of the obligations of the Lenders to make
Loans hereunder.
2.6. Minimum Amount of Each Advance. Each Eurodollar Advance shall be
in the minimum amount of $1,000,000 (and in integral multiples of $500,000 if
in excess thereof), and each Floating Rate Advance shall be in the minimum<PAGE>
amount of $100,000 (and in multiples of $50,000 if in excess thereof),
provided, however, that any Floating Rate Advance may be in the amount of the
unused Aggregate Commitment.
2.7. Optional Principal Payments. The Borrower may from time to time
pay, without penalty or premium, all outstanding Floating Rate Advances, or,
in a minimum aggregate amount of $2,000,000 or any integral multiple of
$1,000,000 in excess thereof, any portion of the outstanding Floating Rate
Advances. A Eurodollar Advance may be prepaid prior to the last day of the
applicable Interest Period upon three Business Days' prior written notice to
the Administrative Agent, subject to Section 3.4.
2.8. Method of Selecting Types and Interest Periods for New Advances.
The Borrower shall select the Type of Advance and, in the case of each
Eurodollar Advance, the Interest Period applicable to each Advance from time
to time. The Borrower shall give the Administrative Agent irrevocable notice
(a "Borrowing Notice") not later than 11:30 a.m. (Memphis time) on the
Borrowing Date of each Floating Rate Advance and three Business Days before
the Borrowing Date for each Eurodollar Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance, the Interest Period
applicable thereto.
Not later than 2:00 p.m. (Memphis time) on each Borrowing Date, each Lender
shall make available its Loan or Loans, in funds immediately available in
Memphis to the Administrative Agent at its address specified pursuant to
Article XIII. The Administrative Agent will make the funds so received from
the Lenders available to the Borrower at the Administrative Agent's aforesaid
address.
2.9. Conversion and Continuation of Outstanding Advances. Floating
Rate Advances shall continue as Floating Rate Advances unless and until such
Floating Rate Advances are converted into Eurodollar Advances. Each
Eurodollar Advance of any Type shall continue as a Eurodollar Advance of such
Type until the end of the then applicable Interest Period therefor, at which
time such Eurodollar Advance shall be automatically converted into a Floating
Rate Advance unless the Borrower shall have given the Administrative Agent a
Conversion/Continuation Notice requesting that, at the end of such Interest
Period, such Eurodollar Advance either continue as a Eurodollar Advance of
such Type for the same or another Interest Period or be converted into an
Advance of another Type. Subject to the terms of Section 2.6 and Section
3.4, the Borrower may elect from time to time to convert all or any part of
an Advance of any Type into any other Type or Types of Advances. The
Borrower shall give the Administrative Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion of an Advance or
continuation of a Eurodollar Advance not later than 10:00 a.m. (Memphis time)
at least one Business Day, in the case of a conversion into a Floating Rate<PAGE>
Advance or three Business Days, in the case of a conversion into or
continuation of a Eurodollar Advance, prior to the date of the requested
conversion or continuation, specifying:
(i) the requested date which shall be a Business Day, of such
conversion or continuation,
(ii) the aggregate amount and Type of the Advance which is to be
converted or continued, and
(iii) the amount and Type(s) of Advance(s) into which such Advance is
to be converted or continued and, in the case of a conversion into or
continuation of a Eurodollar Advance, the duration of the Interest
Period applicable thereto.
2.10. Changes in Interest Rate, etc. Each Floating Rate Advance shall
bear interest on the outstanding principal amount thereof, for each day from
and including the date such Advance is made or is converted from a Eurodollar
Advance into a Floating Rate Advance pursuant to Section 2.9 to but excluding
the date it becomes due or is converted into a Eurodollar Advance pursuant to
Section 2.9 hereof, at a rate per annum equal to the Floating Rate for such
day. Changes in the rate of interest on that portion of any Advance
maintained as a Floating Rate Advance will take effect simultaneously with
each change in the Alternate Base Rate. Each Eurodollar Advance shall bear
interest on the outstanding principal amount thereof from and including the
first day of the Interest Period applicable thereto to (but not including)
the last day of such Interest Period at the interest rate determined as
applicable to such Eurodollar Advance. No Interest Period may end after the
Termination Date.
2.11. Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.8 or 2.9, during the continuance of a Default
or Unmatured Default the Required Lenders may, at their option, by notice to
the Borrower (which notice may be revoked at the option of the Required
Lenders notwithstanding any provision of Section 8.2 requiring unanimous
consent of the Lenders to changes in interest rates), declare that no Advance
may be made as, converted into or continued as a Eurodollar Advance. During
the continuance of a Default the Required Lenders may, at their option, by
notice to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in interest rates), declare that
(i) each Eurodollar Advance shall bear interest for the remainder of the
applicable Interest Period at the rate otherwise applicable to such Interest
Period plus 2% per annum and (ii) each Floating Rate Advance shall bear
interest at a rate per annum equal to the Floating Rate otherwise applicable
to the Floating Rate Advance plus 2% per annum.
2.12. Method of Payment. All payments of the Obligations hereunder
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Administrative Agent at the Administrative Agent's
address specified pursuant to Article XIII, or at any other Lending
Installation of the Administrative Agent specified in writing by the
Administrative Agent to the Borrower, by noon (local time) on the date when
due and shall be applied ratably by the Administrative Agent among the<PAGE>
Lenders. Each payment delivered to the Administrative Agent for the account
of any Lender shall be delivered promptly by the Administrative Agent to such
Lender in the same type of funds that the Administrative Agent received at
its address specified pursuant to Article XIII or at any Lending Installation
specified in a notice received by the Administrative Agent from such Lender.
The Administrative Agent may charge the account of the Borrower maintained
with the Administrative Agent for each payment of principal, interest and
fees as it becomes due hereunder if so directed by the Borrower from time to
time or, if an Event of Default has occurred and is then continuing, at the
Administrative Agent's discretion.
2.13. Notes; Telephonic Notices. Each Lender is hereby authorized to
record the principal amount of each of its Loans and each repayment on the
schedule attached to its Note, provided, however, that neither the failure to
so record nor any error in such recordation shall affect the Borrower's
obligations under such Note. The Borrower hereby authorizes the Lenders and
the Administrative Agent to extend, convert or continue Advances, effect
selections of Types of Advances and to transfer funds based on telephonic
notices made by any person or persons the Administrative Agent or any Lender
in good faith believes to be acting on behalf of the Borrower. The Borrower
agrees to deliver promptly to the Administrative Agent a written
confirmation, if such confirmation is requested by the Administrative Agent
or any Lender, of each telephonic notice signed by an individual who is
authorized so to act pursuant to the then existing Money Transfer
Instructions of Borrower (see "Exhibit E"). If the written confirmation
differs in any material respect from the action taken by the Administrative
Agent and the Lenders, the records of the Administrative Agent and the
Lenders shall govern absent demonstrable error.
2.14. Interest Payment Dates; Interest and Fee Basis. Interest accrued
on each Floating Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any
date on which the Floating Rate Advance is prepaid, whether due to
acceleration or otherwise, and at maturity. Interest accrued on that portion
of the outstanding principal amount of any Floating Rate Advance converted
into a Eurodollar Advance on a day other than a Payment Date shall be payable
on the date of conversion. Interest accrued on each Eurodollar Advance shall
be payable on the last day of its applicable Interest Period, on any date on
which the Eurodollar Advance is prepaid, whether by acceleration or
otherwise, and at maturity. Interest accrued on each Eurodollar Advance
having an Interest Period longer than three months shall also be payable on
the last day of each three-month interval during such Interest Period.
Interest on Floating Rate Advances shall be calculated for actual days
elapsed on the basis of a 365- or 366-day year, as appropriate. Interest on
Eurodollar Advances and commitment fees shall be calculated for actual days
elapsed on the basis of a 360-day year. Interest shall be payable for the
day an Advance is made but not for the day of any payment on the amount paid
if payment is received prior to noon (local time) at the place of payment.
If any payment of principal of or interest on an Advance shall become due on
a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and, in the case of a principal payment, such
extension of time shall be included in computing interest in connection with
such payment.<PAGE>
2.15. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, the Administrative
Agent will notify each Lender of the contents of each Aggregate Commitment
reduction notice, Borrowing Notice, Conversion/Continuation Notice, and
repayment notice received by it hereunder. The Administrative Agent will
notify each Lender of the interest rate applicable to each Eurodollar Advance
promptly upon determination of such interest rate and will give each Lender
prompt notice of each change in the Alternate Base Rate.
2.16. Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to
any such Lending Installation and the Notes shall be deemed held by each
Lender for the benefit of such Lending Installation. Each Lender may, by
written or telex notice to the Administrative Agent and the Borrower,
designate a Lending Installation through which Loans will be made by it and
for whose account Loan payments are to be made.
2.17. Non-Receipt of Funds by the Administrative Agent. Unless the
Borrower or a Lender, as the case may be, notifies the Administrative Agent
prior to the date on which it is scheduled to make payment to the
Administrative Agent of (i) in the case of a Lender, the proceeds of a Loan
or (ii) in the case of the Borrower, a payment of principal, interest or fees
to the Administrative Agent for the account of the Lenders, that it does not
intend to make such payment, the Administrative Agent may assume that such
payment has been made. The Administrative Agent may, but shall not be
obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption. If such Lender or the Borrower,
as the case may be, has not in fact made such payment to the Administrative
Agent, the recipient of such payment shall, on demand by the Administrative
Agent, repay to the Administrative Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to (i) in the case of payment by a Lender,
the Federal Funds Effective Rate for such day or (ii) in the case of payment
by the Borrower, the interest rate applicable to the relevant Loan.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether
or not having the force of law), or any interpretation thereof, or the
compliance of any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation to
any tax, duty, charge or withholding on or from payments due from the
Borrower (excluding taxation of the overall net income of any Lender
or applicable Lending Installation), or changes the basis of taxation
of payments to any Lender in respect of its Loans or its
participation in Facility L/C's or other amounts due it hereunder, or
<PAGE>
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Installation (other
than reserves and assessments taken into account in determining the
interest rate applicable to Eurodollar Advances), or
(iii) imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation of
making, funding or maintaining Loans or participating in Letters of
Credit or reduces any amount receivable by any Lender or any
applicable Lending Installation in connection with Loans or Letters
of Credit, or requires any Lender or any applicable Lending
Installation to make any payment calculated by reference to the
amount of Loans held, Letters of Credit issued or participated in, or
interest received by it, by an amount deemed material by such Lender,
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an
amount received which such Lender determines is attributable to making,
funding and maintaining its Loans and its Commitment.
3.2. Changes in Capital Adequacy Regulations. If a Lender determines
the amount of capital required or expected to be maintained by such Lender,
any Lending Installation of such Lender or any corporation controlling such
Lender is increased as a result of a Change, then, within 15 days of demand
by such Lender, the Borrower shall pay such Lender the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loans, its obligation to make Loans hereunder, or its issuance
of or participation in Facility L/C's (after taking into account such
Lender's policies as to capital adequacy). "Change" means (i) any change
after the date of this Agreement in the Risk-Based Capital Guidelines or (ii)
any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender or any Lending Installation or any corporation
controlling any Lender. "Risk-Based Capital Guidelines" means (i) the
risk-based capital guidelines in effect in the United States on the date of
this Agreement, including transition rules, and (ii) the corresponding
capital regulations promulgated by regulatory authorities outside the United
States implementing the July 1988 report of the Basle Committee on Banking
Regulation and Supervisory Practices Entitled "International Convergence of
Capital Measurements and Capital Standards," including transition rules, and
any amendments to such regulations adopted prior to the date of this
Agreement.
3.3. Availability of Types of Advances. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (i)
deposits of a type and maturity appropriate to match fund Eurodollar Advances
are not available or (ii) the interest rate applicable to a Type of Advance
does not accurately reflect the cost of making or maintaining such Advance,<PAGE>
then the Administrative Agent shall suspend the availability of the affected
Type of Advance and require any Eurodollar Advances of the affected Type to
be repaid.
3.4. Funding Indemnification. If any payment of a Eurodollar Advance
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment or otherwise, or a Eurodollar
Advance is not made on the date specified by the Borrower for any reason
other than default by the Lenders, the Borrower will indemnify each Lender
for any loss or cost incurred by it resulting therefrom, including, without
limitation, any loss or cost in liquidating or employing deposits acquired to
fund or maintain the Eurodollar Advance.
3.5. Lender Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Loans to reduce any liability of the Borrower to
such Lender under Sections 3.1 and 3.2 or to avoid the unavailability of a
Type of Advance under Section 3.3, so long as such designation is not
disadvantageous to such Lender. Each Lender shall deliver a written
statement of such Lender to the Borrower (with a copy to the Administrative
Agent) as to the amount due, if any, under Section 3.1, 3.2 or 3.4. Such
written statement shall set forth in reasonable detail the calculations upon
which such Lender determined such amount and shall be final, conclusive and
binding on the Borrower in the absence of demonstrable error. Determination
of amounts payable under such Sections in connection with a Eurodollar Loan
shall be calculated as though each Lender funded its Eurodollar Loan through
the purchase of a deposit of the type and maturity corresponding to the
deposit used as a reference in determining the Eurodollar Rate applicable to
such Loan, whether in fact that is the case or not. Unless otherwise
provided herein, the amount specified in the written statement of any Lender
shall be payable on demand after receipt by the Borrower of such written
statement. The obligations of the Borrower under Sections 3.1, 3.2 and 3.4
shall survive payment of the Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT; WITHHOLDING TAX EXEMPTION
4.1. Initial Advance. The Lenders shall not be required to make the
initial Advance and the Issuing Lender shall not be required to issue the
initial Facility L/C hereunder unless (a) the Borrower has furnished to the
Co-Agent and the Administrative Agent, with sufficient copies for the
Lenders:
(i) Copies of the articles of incorporation of the Borrower,
together with all amendments, and a certificate of good standing,
both certified by the appropriate governmental officer in its
jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary of
the Borrower, of its by-laws and of its Board of Directors'
resolutions (and resolutions of other bodies, if any are deemed
necessary by counsel for any Lender) authorizing the execution of
the Loan Documents.<PAGE>
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify by name
and title and bear the signature of the officers of the Borrower
authorized to sign the Loan Documents and to make borrowings
hereunder, upon which certificate the Administrative Agent and the
Lenders shall be entitled to rely until informed of any change in
writing by the Borrower.
(iv) Copies of the articles of incorporation of each Guarantor,
together with all amendments, and a certificate of good standing,
both certified by the appropriate governmental officer in its
jurisdiction of incorporation.
(v) Copies, certified by the Secretary or Assistant Secretary of
each Guarantor, of its by-laws and of its Board of Directors'
resolutions (and resolutions of other bodies, if any are deemed
necessary by counsel for any Lender) authorizing the execution of
the Guaranties.
(vi) An incumbency certificate, executed by the Secretary or
Assistant Secretary of each Guarantor, which shall identify by name
and title and bear the signature of the officers of each Guarantor
authorized to sign the Guaranties.
(vii) A certificate, signed by the treasurer of the Borrower, stating
that on the initial Borrowing Date no Default or Unmatured Default
has occurred and is continuing.
(viii) A written opinion of counsel to the Borrower, addressed to
the Lenders in substantially the form of Exhibit "B" hereto.
(ix) Notes payable to the order of each of the Lenders.
(x) Financial statements of the Borrower, and detailed business
plans and projections for the Borrower satisfactory in form and
substance to the Lenders.
(xi) Written money transfer instructions, in substantially the form
of Exhibit "E" hereto, addressed to the Administrative Agent and
signed by an Authorized Officer, together with such other related
money transfer authorizations as the Administrative Agent may have
reasonably requested.
(xii) The Guaranties dated the date hereof, duly executed by each of
the Guarantors.
(xiii) Such other documents as any Lender or its counsel may have
reasonably requested.
and (b) the following events shall have occurred or conditions shall have
been fulfilled:
(i) The Borrower shall have paid all fees due at the Closing Date
pursuant to this Agreement, the Administrative Agent's Fee Letter and
the Arranger's Fee Letter.<PAGE>
(ii) Completion of the Big O Acquisition, including the granting of
all required regulatory and legal approvals, upon the terms set forth
in the Acquisition Agreement.
(iii) The Private Placement shall contain terms and conditions which
are acceptable to the Lenders.
(iv) The Short Term Credit Agreement shall be effective as of the
Closing Date.
(v) The Administrative Agent shall have received, in form and
substance satisfactory to the Administrative Agent, (A) instructions
to wire to The First National Bank of Chicago that portion of
proceeds from Advances under this Agreement or the Short Term Credit
Agreement to be made on the Closing Date which is necessary to repay
all loans under that certain credit agreement dated as of January 23,
1995 between Big O, and The First National Bank of Chicago, and (B)
evidence that The First National Bank of Chicago will terminate any
liens, encumbrances, mortgages or restrictions in respect of any such
obligations.
(vi) The Administrative Agent shall have received, in form and
substance satisfactory to the Administrative Agent, instructions to
wire to First Tennessee Bank that portion of proceeds from Advances
under this Agreement or the Short Term Credit Agreement to be made on
the Closing Date which is necessary to repay all loans under
Borrower's line of credit with First Tennessee Bank.
4.2. Each Advance. The Lenders shall not be required to make any
Advance (other than an Advance that, after giving effect thereto and to the
application of the proceeds thereof, does not increase the aggregate amount
of outstanding Advances) and the Issuing Lender shall not be required to
issue any Facility L/C, unless on the applicable Borrowing Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V are
true and correct as of such Borrowing Date except to the extent any
such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall
be true and correct on and as of such earlier date.
(iii) All legal matters incident to the making of such Advance shall
be satisfactory to the Lenders and their counsel.
Each Borrowing Notice with respect to each such Advance shall constitute
a representation and warranty by the Borrower that the conditions contained
in Sections 4.2(i) and (ii) have been satisfied.
4.3. Withholding Tax Exemption. At least five Business Days prior to
the first date on which interest or fees are payable hereunder for the
account of any Lender, each Lender that is not incorporated under the laws of
the United States of America, or a state thereof, agrees that it will deliver
to each of the Borrower and the Administrative Agent two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224,
certifying in either case that such Lender is entitled to receive payments<PAGE>
under this Agreement and the Notes without deduction or withholding of any
United States federal income taxes. Each Lender which so delivers a Form
1001 or 4224 further undertakes to deliver to each of the Borrower and the
Administrative Agent two additional copies of such form (or a successor form)
on or before the date that such form expires (currently, three successive
calendar years for Form 1001 and one calendar year for Form 4224) or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent forms so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrower or the
Administrative Agent, in each case certifying that such Lender is entitled to
receive payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent
such Lender from duly completing and delivering any such form with respect to
it and such Lender advises the Borrower and the Administrative Agent that it
is not capable of receiving payments without any deduction or withholding of
United States federal income tax.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. Corporate Existence and Standing. Each of the Borrower and its
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted.
5.2. Authorization and Validity. The Borrower has the corporate power
and authority and legal right to execute and deliver the Loan Documents and
to perform its obligations thereunder. The execution and delivery by the
Borrower of the Loan Documents and the performance of its obligations
thereunder have been duly authorized by proper corporate proceedings, and the
Loan Documents constitute legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
5.3. No Conflict; Government Consent. Neither the execution and
delivery by the Borrower of the Loan Documents, nor the consummation of the
transactions therein contemplated, nor compliance with the provisions thereof
will violate any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on the Borrower or any of its Subsidiaries or the
Borrower's or any Subsidiary's articles of incorporation or by-laws or the
provisions of any indenture, instrument or agreement to which the Borrower or
any of its Subsidiaries is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the Property of
the Borrower or a Subsidiary pursuant to the terms of any such indenture,<PAGE>
instrument or agreement. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with,
or exemption by, or other action in respect of any governmental or public
body or authority, or any subdivision thereof, is required to authorize, or
is required in connection with the execution, delivery and performance of, or
the legality, validity, binding effect or enforceability of, any of the Loan
Documents.
5.4. Financial Statements. The December 31, 1995 consolidated
financial statements of the Borrower and its Subsidiaries heretofore
delivered to the Lenders were prepared in accordance with GAAP in effect on
the date such statements were prepared and fairly present the consolidated
financial condition and operations of the Borrower and its Subsidiaries at
such date and the consolidated results of operations for the period then
ended.
5.5. Material Adverse Change. Since December 31, 1995, there has been
no change in the business, Property, prospects, condition (financial or
otherwise) or results of operations of the Borrower and its Subsidiaries
which could have a Material Adverse Effect, including, but not limited to, a
change in the relationship between Big O and its franchisees which could have
a Material Adverse Effect.
5.6. Taxes. The Borrower and its Subsidiaries have filed all United
States federal tax returns and all other tax returns which are required to be
filed and which the failure to file would have a Material Adverse Effect, and
have paid all taxes due pursuant to said returns or pursuant to any
assessment received by the Borrower or any of its Subsidiaries, except such
taxes, if any, as are being contested in good faith and as to which any
adequate reserves have been provided in accordance with GAAP and as to which
no Lien exists. As of the date of this Agreement, the United States income
tax returns of the Borrower and its Subsidiaries have been audited by the
Internal Revenue Service through the fiscal year ended December 31, 1991.
No tax liens have been filed which could have a Material Adverse Effect and
no claims are being asserted with respect to any such taxes. To the best of
Borrower's knowledge, the charges, accruals and reserves on the books of the
Borrower and its Subsidiaries in respect of any taxes or other governmental
charges are adequate.
5.7. Litigation and Contingent Obligations. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or, to
the knowledge of any of their officers, threatened against or affecting the
Borrower or any of its Subsidiaries which could have a Material Adverse
Effect or which seeks to prevent, enjoin or delay the making of the Loans or
Advances or issuance of Facility L/C's. The Borrower has no material
contingent obligations not provided for or disclosed in the financial
statements for the most recent period for which Borrower has then delivered
financial statements to the Lenders pursuant to this Agreement.
5.8. Subsidiaries. Schedule "1" hereto contains an accurate list of
all Subsidiaries of the Borrower as of the date of this Agreement, setting
forth their respective jurisdictions of incorporation and the percentage of
their respective capital stock owned by the Borrower or other Subsidiaries.
All of the issued and outstanding shares of capital stock of such<PAGE>
Subsidiaries have been duly authorized and issued and are fully paid and
non-assessable.
5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do
not in the aggregate exceed $1,000,000. Neither the Borrower nor any other
member of the Controlled Group has incurred, or is reasonably expected to
incur, any withdrawal liability to Multiemployer Plans in excess of
$1,000,000 in the aggregate. Each Plan complies in all material respects
with all applicable requirements of law and regulations, noncompliance with
which would have a Material Adverse Effect, no Reportable Event has occurred
with respect to any Plan, neither the Borrower nor any other members of the
Controlled Group has withdrawn from any Plan or initiated steps to do so, and
no steps have been taken to reorganize or terminate any Plan, which
withdrawal, reorganization or termination would have a Material Adverse
Effect.
5.10. Accuracy of Information. At the time of its delivery to the
Administrative Agent or any Lender, no information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Administrative
Agent or to any Lender in connection with the negotiation of, or compliance
with, the Loan Documents contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the statements
contained therein not misleading.
5.11. Regulation U. Margin stock (as defined in Regulation U)
constitutes less than 25% of those assets of the Borrower and its
Subsidiaries which are subject to any limitation on sale, pledge, or other
restriction hereunder.
5.12. Material Agreements. Neither the Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction which could have a Material Adverse Effect. Neither
the Borrower nor any Subsidiary is in default in the performance, observance
or fulfillment of any of the obligations, covenants or conditions contained
in (i) any agreement to which it is a party, which default could have a
Material Adverse Effect or (ii) any agreement or instrument evidencing or
governing Indebtedness, which default could have a Material Adverse Effect.
5.13. Compliance With Laws. The Borrower and its Subsidiaries have
complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof, having jurisdiction over the conduct of their businesses or
the ownership of their respective Property, the non-compliance with which
might have a Material Adverse Effect.
5.14. Ownership of Properties. Except as set forth on Schedule "2"
hereto, on the date of this Agreement, the Borrower and its Subsidiaries will
have good title, free of all Liens other than those permitted by Section
6.12, to all of the Property and assets reflected in the financial statements
as owned by it.
5.15. Plan Assets; Prohibited Transactions. The Borrower is not an
entity deemed to hold "plan assets" within the meaning of 29 C.F.R. e
2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA)<PAGE>
which is subject to Title I of ERISA or any plan (within the meaning of
Section 4975 of the Code); and neither the execution of this Agreement and
the making of Loans hereunder give rise to a prohibited transaction within
the meaning of Section 406 of ERISA or Section 4975 of the Code.
5.16. Environmental Matters. Neither the Borrower nor any Subsidiary
has received any notice to the effect that its operations are not in material
compliance with any of the requirements of applicable Environmental Laws or
are the subject of any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any toxic or hazardous
waste or substance into the environment, which non-compliance or remedial
action could reasonably be expected to have a Material Adverse Effect.
5.17. Investment Company Act. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of
1940, as amended.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. Financial Reporting. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Lenders:
(i) Within 90 days after the close of each of its fiscal years, a
copy of the Borrower's Annual Report on Form 10-K filed with the
Securities and Exchange Commission (the "SEC") pursuant to the
Securities Exchange Act of 1934 (the "34 Act") or, if Borrower's
Form 10-K is not available, annual audited financial statements for
itself and its consolidated Subsidiaries, including a balance sheet
as of the end of such period, related profit and loss and
reconciliation of surplus statements, and a statement of cash flows,
which financial statements shall be included within an unqualified
audit report certified by independent certified public accountants
(the identity of such accountants to be acceptable to the Lenders),
which statements shall be prepared in accordance with GAAP on a
consolidated basis.
(ii) Within 45 days after the close of the first three quarterly
periods of each of its fiscal years, a copy of Borrower's Quarterly
Report on Form 10-Q filed with the SEC pursuant to the 34 Act or, if
Borrower's Form 10-Q is not available, for itself and its
consolidated Subsidiaries, a consolidated unaudited balance sheet as
at the close of each such period and consolidated profit and loss
and reconciliation of surplus statements and a statement of cash
flows for the period from the beginning of such fiscal year to the
end of such quarter, all certified by its Vice President - Treasurer,
or his designee.
(iii) Together with the financial statements required hereunder, a
compliance certificate in substantially the form of Exhibit "C"
hereto signed<PAGE>
by its Vice President - Treasurer, or his designee, showing the
calculations necessary to determine compliance with this Agreement
and stating that no Default or Unmatured Default exists, or if any
Default or Unmatured Default exists, stating the nature and status
thereof.
(iv) If there are Unfunded Liabilities relating to any Single
Employer Plan of the Borrower at the close of any fiscal year, a
statement of the Unfunded Liabilities of such Single Employer Plan,
certified as correct by an actuary enrolled under ERISA, within 270
days after the close of such fiscal year.
(v) As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with respect to
any Single Employer Plan, a statement, signed by the Vice President -
Treasurer of the Borrower, or his designee, describing said
Reportable Event and the action which the Borrower proposes to take
with respect thereto.
(vi) As soon as possible and in any event within 10 days after
receipt by the Borrower or any of its Subsidiaries, a copy of (a) any
notice or claim to the effect that the Borrower or such Subsidiary is
or may be liable to any Person as a result of the release by the
Borrower or such Subsidiary or any other Person of any toxic or
hazardous waste or substance into the environment, if such liability
could have a Material Adverse Effect, and (b) any notice alleging any
violation of any federal, state or local environmental, health or
safety law or regulation by the Borrower or any of its Subsidiaries
which could have a Material Adverse Effect.
(vii) Promptly upon the furnishing hereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy
statements so furnished.
(viii) Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly, monthly or other
regular reports or financial statements which the Borrower or any
Subsidiary files with the Securities and Exchange Commission.
(ix) Such other information (including non-financial information) as
the Administrative Agent or any Lender may from time to time
reasonably request, including but not limited to all press releases
concerning the Borrower.
6.2. Use of Proceeds. The Borrower will, and will cause each
Subsidiary to, (i) use the proceeds of the Advances for general corporate
purposes, (ii) refinance and replace the Existing Credit Facilities and (iii)
use the Facility L/C's for ordinary and customary business purposes. The
Borrower will not, nor will it permit any Subsidiary to, use any of the
proceeds of the Advances to purchase or carry any "margin stock" (as defined
in Regulation U).
6.3. Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of the occurrence
of any Default or Unmatured Default and of any other development, financial
or otherwise, which could have a Material Adverse Effect.<PAGE>
6.4. Conduct of Business. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in the same general manner
and in the same general fields of enterprise as it is presently conducted and
to do all things necessary to remain duly incorporated, validly existing and
in good standing as a domestic corporation in its jurisdiction of
incorporation and maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted and in which the failure
to maintain such authority could have a Material Adverse Effect.
6.5. Taxes. The Borrower will, and will cause each Subsidiary to,
timely file complete and correct United States federal and applicable
foreign, state and local tax returns required by law, which the failure to so
file could have a Material Adverse Effect, and pay when due all taxes,
assessments and governmental charges and levies upon it or its income,
profits or Property, which the failure to pay could have a Material Adverse
Effect, except those which are being contested in good faith by appropriate
proceedings and with respect to which any adequate reserves have been set
aside in accordance with GAAP.
6.6. Insurance. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance
on all their Property in such amounts and covering such risks as is
consistent with sound business practice, and the Borrower will furnish to any
Lender upon request full information as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject and
noncompliance with which could have a Material Adverse Effect.
6.8. Environmental Covenant. (a) The Borrower will, and will cause
each of its Subsidiaries to use and operate all of its facilities and
Property in material compliance with all Environmental Laws, noncompliance
with which could have a Material Adverse Effect, keep all necessary permits,
approvals, certificates and licenses in effect and remain in material
compliance therewith, if failure to keep or comply therewith could have a
Material Adverse Effect, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws, noncompliance with which
could have a Material Adverse Effect, and provide such information and
certifications as the Administrative Agent or any Lender may reasonably
request from time to time to insure compliance with this Section 6.8.
6.9. Maintenance of Properties. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and
keep its Property in good repair, working order and condition, normal wear
and tear excepted, and make all necessary and proper repairs, renewals and
replacements so that its business carried on in connection therewith may be
properly conducted at all times.
6.10. Inspection. The Borrower will, and will cause each Subsidiary to,
permit the Administrative Agent and the Lenders, by their respective
representatives and agents, to inspect any of the Property, corporate books
and financial records of the Borrower and each Subsidiary, to examine and
make copies of the books of accounts and other financial records of the<PAGE>
Borrower and each Subsidiary, and to discuss the affairs, finances and
accounts of the Borrower and each Subsidiary with, and to be advised as to
the same by, their respective officers at such reasonable times and intervals
as the Lenders may designate.
6.11. Dividends. The Borrower will not, nor will it permit any
Subsidiary to, redeem, repurchase or otherwise acquire or retire any of its
capital stock, except as provided for in Section 6.23, at any time
outstanding, and the Borrower will not permit any Subsidiary to declare or
pay any dividends except that any Subsidiary may declare and pay dividends to
the Borrower or to a Wholly-Owned Subsidiary.
6.12. Merger. The Borrower will not, nor will it permit any
Subsidiary to, merge or consolidate with or into any other Person, except
that a Subsidiary may merge with the Borrower or a Wholly-Owned Subsidiary,
provided that the Borrower or a Wholly-Owned Subsidiary is the surviving
corporation in any such merger or consolidation.
6.13. Indebtedness. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
(i) The Loans.
(ii) Indebtedness existing under the Short Term Credit
Agreement.
(iii) Indebtedness existing on the date hereof and described in
Schedule "2" hereto.
(iv) Indebtedness incurred with respect to the Private Placement.
(v) Indebtedness not otherwise permitted by this Section 6.13
not exceeding (as to the Borrower and all its Subsidiaries) a
sum equal to 5% of Consolidated Net Worth in aggregate principal
amount at any one time outstanding.
6.14. Sale of Assets. The Borrower will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of its Property, to any other
Person except for (i) sales of inventory in the ordinary course of business
and sale of Big O retail stores to Big O franchisees in the ordinary course
of business, (ii) leases, sales or other dispositions of its Property that,
together will all other Property of the Borrower and its Subsidiaries
previously leased, sold or disposed of (other than inventory or retail stores
in the ordinary course of business) as permitted by this Section during the
twelve-month period ending with the month in which any such lease, sale or
other disposition occurs, do not constitute a Substantial Portion of the
Property of the Borrower and its Subsidiaries, and (iii) the sale of the
assets or stock of Battery Associates, Inc. and Northern States Tire, Inc.
6.15. Liens. The Borrower will not, nor will it permit or suffer
any Subsidiary to, create, incur, or suffer to exist any Lien in, of or on
the property of the Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or
levies on its Property if the same shall not at the time be
delinquent or thereafter<PAGE>
can be paid without penalty, or are being contested in good faith
and by appropriate proceedings and for which any adequate
reserves in accordance with generally accepted principles of
accounting shall have been set aside on its books.
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary
course of business which secure payment of obligations not more
than 60 days past due or which are being contested in good faith
by appropriate proceedings and for which any adequate reserves
shall have been set aside on its books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar
legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real Property as are of a nature
generally existing with respect to properties of a similar
character and which do not in any material way affect the
marketability of the same or interfere with the use thereof in
the business of the Borrower or its Subsidiaries.
(v) Liens on the capital stock, partnership interest, or other
evidence of ownership of any Subsidiary or such Subsidiary's
assets that secure project financing for such Subsidiary.
(vi) Purchase money Liens upon or in Property now owned or
hereafter acquired in the ordinary course of business (consistent
with the Borrower's business practices) to secure (A) the
purchase price of such Property or (B) Indebtedness incurred
solely for the purpose of financing the acquisition,
construction, or improvement of any such Property to be subject
to such Liens, or Liens existing on any such Property at the time
of acquisition, or extensions, renewals, or replacements of any
of the foregoing for the same or a lesser amount; provided that
no such Lien shall extend to or cover any Property other than the
Property being acquired, constructed, or improved and
replacements, modifications, and proceeds of such Property, and
no such extension, renewal, or replacement shall extend to or
cover any Property not theretofore subject to the Lien being
extended, renewed, or replaced, and provided further that the
aggregate amount of new purchase money Liens arising in any
fiscal year of Borrower shall not exceed the principal amount
of $3,000,000.
(vii) Liens existing on the date hereof and described in
Schedule "2" hereto.
6.16. Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Borrower or such Subsidiary than the Borrower or such Subsidiary would
obtain in a comparable arms-length transaction, provided that the foregoing
shall not apply to transactions (i) between the Borrower and any Wholly-Owned
Subsidiary; or (ii) if such transactions occur in the ordinary course of<PAGE>
business consistent with past practices of the Borrower and/or the
Subsidiary, transactions between the Borrower or any Wholly-Owned Subsidiary
and TBC de Mexico or TBC Worldwide or transactions between Big O and any
joint venture established by Big O in the ordinary course of business.
6.17 Contingent Obligations and Investments. The Borrower will not,
and will not permit any Subsidiary to, incur or permit to exist any
Contingent Obligations, or make or permit to exist Investments to or in any
other Person or instrument, except for:
(i) the endorsement, in the ordinary course of collection, of
instruments payable to it or to its order, or employee advances in
the ordinary course of business;
(ii) Contingent Obligations, if after giving effect to the incurrence
of such Contingent Obligations, the aggregate of all such Contingent
Obligations of the Borrower and its Subsidiaries on a consolidated
basis does not exceed 5% of Consolidated Tangible Net Worth, provided
that any Intercompany Contingent Obligation shall be permitted
regardless of the restriction imposed by this Section 6.17 (ii).
(iii) investment grade Investments;
(iv) Investments in an amount which, when computed in an aggregate
amount for the Borrower and its Subsidiaries, shall not exceed 10% of
Consolidated Tangible Net Worth at any one time outstanding;
(v) loans or advances by the Borrower to any Subsidiary, by any
Subsidiary to the Borrower and by any Subsidiary to any other
Subsidiary, and equity interests of the Borrower or any Subsidiary in
any Subsidiary;
(vi) existing Contingent Obligations and Investments listed on
Schedule "4" hereto;
(vii) extended payment terms granted to, and evidenced by notes
payable of, customers of the Borrower or any Subsidiary, provided
that such customers are not Affiliates of the Borrower and that the
aggregate amount of all such Investments permitted pursuant to this
clause (vii) shall not exceed $3,000,000 at any time outstanding.
(viii) nothwithstanding Section 6.17(ii) above, Big O shall be
permitted to incur or permit to exist Contingent Obligations on
behalf of its franchisees, inclusive of those existing Contingent
Obligations of Big O listed on Schedule "4" hereto, in an amount
not to exceed $24,000,000.
6.18. Consolidated Tangible Net Worth. The Borrower will maintain at
all times a Consolidated Tangible Net Worth of not less than the greater of
(i) $65,000,000, or (ii) Consolidated Tangible Net Worth on completion of the
Big O Acquisition, less $3,000,000, but not greater than $70,000,000, plus
50% of the Borrower's Consolidated Net Income (without giving effect to any
losses) for each fiscal year of the Borrower ending on or after December 31,
1996. For the sole purpose of calculating the Consolidated Tangible Net
Worth covenant herein, repurchases by the Borrower of its capital stock shall<PAGE>
not be subtracted from the computation of Consolidated Tangible Net Worth
only to the extent of $5,000,000 in repurchases annually.
6.19 Funded Indebtedness. The Borrower will not permit the ratio of
(i) Consolidated Funded Indebtedness to (ii) EBITDA to be greater than 3.5 to
1.0 at any time (measured at the end of each fiscal quarter for the then-most
recently ended four fiscal quarters). Compliance shall be demonstrated on a
pro forma basis until such time as Big O's results shall have been included
in Borrower's consolidated financial statements for four fiscal quarters.
6.20 Fixed Charge Coverage Ratio. The Borrower will not permit the
Fixed Charge Coverage Ratio (measured at the end of each fiscal quarter for
the then-most recently ended four fiscal quarters) to be less than 2.25 to
1.00. Compliance shall be demonstrated on a pro forma basis until such time
as Big O's results shall have been included in Borrower's consolidated
financial statements for four fiscal quarters.
6.21 Capital Expenditures. The Borrower shall not and shall not permit
any Subsidiary to make any Capital Expenditures that would cause the combined
Capital Expenditures of the Borrower and its Subsidiaries to exceed
$10,000,000 during any fiscal year of the Borrower.
6.22 Retail Stores Under Development. The Borrower shall not at any
time, on a consolidated basis, have in excess of $20,000,000 allocated to
Retail Stores Under Development on its balance sheet.
6.23 Stock Repurchase. The Borrower shall not repurchase its capital
stock during any fiscal year of the Borrower in an aggregate amount in excess
of $5,000,000.
6.24 Employee Benefit Plans. The Borrower will properly conduct, and
cause each Subsidiary to properly conduct, each Single Employer Plan as to
which it may have any liability in compliance with all applicable
requirements of law and regulations, noncompliance with which could have a
Material Adverse Effect.
6.25 Other Agreements. The Borrower will not, and will not permit any
Subsidiary to, enter into any agreement containing any provision which would
be violated or breached by the performance of its obligations hereunder or
under any instrument or document delivered or to be delivered by it hereunder
or in connection with the transactions contemplated hereby.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on behalf
of the Borrower or any of its Subsidiaries to the Lenders or the
Administrative Agent under or in connection with this Agreement, any Loan, or
any certificate or information delivered in connection with this Agreement or<PAGE>
any other Loan Document shall be materially false on the date as of which
made.
7.2. Nonpayment of principal of any Note when due, or nonpayment of
interest upon any Note or of any commitment fee or other obligations under
any of the Loan Documents within five days after the same becomes due.
7.3. Failure of the Borrower or any of its Subsidiaries to perform or
observe any agreement contained in Article VI and either (i) such failure is
not remedied within two Business Days after any Authorized Officer obtains
knowledge thereof or (ii) within such two day period, the Required Lenders
give the Borrower notice that such failure constitutes a Default hereunder.
7.4. The breach by the Borrower (other than a breach which constitutes
a Default under Section 7.1, 7.2 or 7.3) of any of the terms or provisions of
this Agreement which is not remedied within thirty (30) days after the
earlier to occur of (i) the date the Borrower shall have obtained knowledge
thereof and (ii) written notice thereof to the Borrower from the
Administrative Agent or any Lender.
7.5. Failure of the Borrower or any of its Subsidiaries to pay when due
any Indebtedness aggregating in excess of $2,000,000 ("Material
Indebtedness"); or the default by the Borrower or any of its Subsidiaries in
the performance of any term, provision or condition contained in any
agreement under which any such Material Indebtedness was created or is
governed, or any other event shall occur or condition exist, the effect of
which is to cause, or to permit the holder or holders of such Material
Indebtedness to cause, such Material Indebtedness to become due prior to its
stated maturity; or any Material Indebtedness of the Borrower or any of its
Subsidiaries shall be declared to be due and payable or required to be
prepaid or repurchased (other than by a regularly scheduled payment) prior to
the stated maturity thereof; or the Borrower or any of its Subsidiaries shall
not pay, or admit in writing its inability to pay, its debts generally as
they become due.
7.6. The Borrower or any of its Subsidiaries shall (i) have an order
for relief entered with respect to it under the Federal bankruptcy laws as
now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the
appointment of a receiver, custodian, trustee, examiner, liquidator or
similar official for it or any Substantial Portion of its Property, (iv)
institute any proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief
of debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) take any corporate
action to authorize or effect any of the foregoing actions set forth in this
Section 7.6 or (vi) fail to contest in good faith any appointment or
proceeding described in Section 7.7.
7.7. Without the application, approval or consent of the Borrower or
any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar<PAGE>
official shall be appointed for the Borrower or any of its Subsidiaries or
any Substantial Portion of its Property, or a proceeding described in Section
7.6(iv) shall be instituted against the Borrower or any of its Subsidiaries
and such appointment continues undischarged or such proceeding continues
undismissed or unstayed for a period of 30 consecutive days.
7.8. Any court, government or governmental agency shall condemn, seize
or otherwise appropriate, or take custody or control of (each a
"Condemnation"), all or any portion of the Property of the Borrower and its
Subsidiaries which, when taken together with all other Property of the
Borrower and its Subsidiaries so condemned, seized, appropriated, or taken
custody or control of, during the twelve-month period ending with the month
in which any such Condemnation occurs, constitutes a Substantial Portion.
7.9. The Borrower or any of its Subsidiaries shall fail within 30 days
to pay, bond or otherwise discharge any judgment or order for the payment of
money in excess of $3,000,000, which is not stayed on appeal or otherwise
being appropriately contested in good faith.
7.10. The Unfunded Liabilities of all Plans shall exceed in the
aggregate an amount the payment of which could reasonably be expected to have
a Material Adverse Effect or any Reportable Event shall occur in connection
with any Plan.
7.11 The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that it has
incurred withdrawal liability to such Multiemployer Plan in an amount which,
when aggregated with all other amounts required to be paid to Multiemployer
Plans by the Borrower or any other member of the Controlled Group as
withdrawal liability (determined as of the date of such notification),
exceeds an amount, or requires payments exceeding an amount per annum, the
payment of which in either case could reasonably be expected to have a
Material Adverse Effect.
7.12. The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if as a result of such reorganization or
termination the aggregate annual contributions of the Borrower and the other
members of the Controlled Group (taken as a whole) to all Multiemployer Plans
which are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan years of each such Multiemployer Plan immediately preceding
the plan year in which the reorganization or termination occurs by an amount
the payment of which could reasonably be expected to have a Material Adverse
Effect on the business, financial condition, or results of operations of the
Borrower and its Subsidiaries taken as a whole.
7.13. The Borrower or any of its Subsidiaries shall be the subject of
any proceeding or investigation pertaining to the release by the Borrower or
any of its Subsidiaries, or any other Person of any Hazardous Material into
the environment, or any violation of Environmental Law, which, in either
case, could reasonably be expected to have a Material Adverse Effect.<PAGE>
7.14. Any Change in Control shall occur.
7.15. The representations and warranties set forth in "Section 5.15 Plan
Assets; Prohibited Transactions" shall at any time not be true and correct.
7.16 Any of the Guaranties shall fail to remain in full force or effect
or any action shall be taken to discontinue or to assert the invalidity or
unenforceability of the Guaranties.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration. If any Default described in Section 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans and the obligation of the Issuing Lender to issue Facility L/C's
hereunder shall automatically terminate and the Obligations shall immediately
become due and payable without any election or action on the part of the
Administrative Agent or any Lender. If any other Default occurs, and is then
continuing, the Required Lenders (or the Administrative Agent with the
consent of the Required Lenders) may terminate or suspend the obligations of
the Lenders to make Loans and the obligation of the Issuing Lender to issue
Facility L/C's hereunder, or declare the Obligations to be due and payable,
or both, whereupon the Obligations shall become immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which the
Borrower hereby expressly waives. In addition to the foregoing following the
occurrence and during the continuance of a Default, so long as any Facility
Letter of Credit has not been fully drawn and has not been cancelled or
expired by its terms, upon demand by the Administrative Agent the Borrower
shall deposit in the Letter of Credit Collateral Account cash in an amount
equal to the aggregate undrawn face amount of all outstanding Facility
Letters of Credit and all fees and other amounts due or which may become due
with respect thereto. The Borrower shall have no control over funds in the
Letter of Credit Collateral Account, which funds shall be invested by the
Administrative Agent from time to time in its discretion in certificates of
deposit of NBD having a maturity not exceeding thirty days, so long as the
Borrower has provided the Administrative Agent with such documents as the
Administrative Agent shall have requested in order to perfect a security
interest in such certificates of deposit. Such funds shall be promptly
applied by the Administrative Agent to reimburse the Issuing Lender for
drafts drawn from time to time under the Facility Letters of Credit. Such
funds, if any, remaining in the Letter of Credit Collateral Account following
the payment of all Obligations in full shall, unless the Administrative Agent
is otherwise directed by a court of competent jurisdiction, be promptly paid
over to the Borrower.
If, within 14 days after acceleration of the maturity of the Obligations
or termination of the obligations of the Lenders to make Loans and the
obligation of the Issuing Lender to issue Facility L/C's hereunder as a
result of any Default (other than any Default as described in Section 7.6 or
7.7 with respect to the Borrower) and before any judgment or decree for the
payment of the Obligations due shall have been obtained or entered, the
Required Lenders (in their sole discretion) shall so direct, the<PAGE>
Administrative Agent shall, by notice to the Borrower, rescind and annul such
acceleration and/or termination.
8.2. Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Administrative Agent with the consent in writing of
the Required Lenders) and the Borrower may enter into agreements supplemental
hereto for the purpose of adding or modifying any provisions to the Loan
Documents or changing in any manner the rights of the Lenders or the Borrower
hereunder or waiving any Default hereunder; provided, however, that no such
supplemental agreement shall, without the consent of each Lender affected
thereby:
(i) Extend the final maturity of any Loan or Note or the expiration
date of any Facility L/C or the due date of any Unreimbursed Drawing
or forgive all or any portion of the principal amount thereof, or
reduce the rate or extend the time of payment of interest or fees
thereon.
(ii) Reduce the percentage specified in the definition of Required
Lenders.
(iii) Extend the Termination Date, or increase the amount of the
Commitment of any Lender hereunder, or permit the Borrower to assign
its rights under this Agreement.
(iv) Amend this Section 8.2.
(v) Release any Guarantor from its obligations under its Guaranty.
No amendment of any provision of this Agreement relating to the
Administrative Agent shall be effective without the written consent of the
Administrative Agent. The Administrative Agent may waive payment of the fee
required under Section 12.3.2 without obtaining the consent of any other
party to this Agreement.
8.3. Preservation of Rights. No delay or omission of the Lenders or
the Administrative Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Loan or issuance of a Facility L/C
notwithstanding the existence of a Default or the inability of the Borrower
to satisfy the conditions precedent to such Loan shall not constitute any
waiver or acquiescence. Any single or partial exercise of any such right
shall not preclude other or further exercise thereof or the exercise of any
other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Lenders required pursuant to Section 8.2, and
then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and
all shall be available to the Administrative Agent and the Lenders until the
Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS<PAGE>
9.1. Survival of Representations. All representations and warranties
of the Borrower contained in this Agreement shall survive delivery of the
Notes and the making of the Loans and issuance of Facility L/C's herein
contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit
to the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. Taxes. Any taxes (excluding income taxes on the overall net
income of any Lender) or other similar assessments or charges made by any
governmental or revenue authority in respect of the Loan Documents shall be
paid by the Borrower, together with interest and penalties, if any.
9.4. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any
of the provisions of the Loan Documents.
9.5. Entire Agreement. The Loan Documents and the Short Term Credit
Agreement embody the entire agreement and understanding among the Borrower,
the Administrative Agent and the Lenders and supersede all prior agreements
and understandings among the Borrower, the Administrative Agent and the
Lenders relating to the subject matter thereof.
9.6. Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or administrative agent of any other (except to the
extent to which the Administrative Agent is authorized to act as such). The
failure of any Lender to perform any of its obligations hereunder shall not
relieve any other Lender from any of its obligations hereunder. This
Agreement shall not be construed so as to confer any right or benefit upon
any Person other than the parties to this Agreement and their respective
successors and assigns.
9.7. Expenses; Indemnification. The Borrower shall reimburse the
Administrative Agent and the Co-Agent for any costs, and out-of-pocket
expenses (including outside attorneys' fees and time charges of attorneys for
the Co-Agent, which attorneys may be employees of the Co-Agent) paid or
incurred by the Administrative Agent and the Co-Agent in connection with the
preparation, negotiation, execution and delivery, of the Loan Documents, up
to an aggregate amount which, when added to such expenses incurred in
connection with the Short Term Credit Agreement does not exceed $20,000. The
Borrower also agrees to reimburse the Administrative Agent and the Lenders
for any costs, internal charges and out-of-pocket expenses (including
attorneys' fees and time charges of attorneys for the Administrative Agent
and the Lenders, which attorneys may be employees of the Administrative Agent
or the Lenders) paid or incurred by the Administrative Agent or any Lender in
connection with the amendment, modification, administration, collection and
enforcement of the Loan Documents. The Borrower further agrees to indemnify
the Administrative Agent, the Co-Agent, and each Lender, its directors,
officers and employees against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all
expenses of litigation or preparation therefor whether or not the<PAGE>
Administrative Agent, the Co-Agent, or any Lender is a party thereto) which
any of them may pay or incur arising out of or relating to this Agreement,
the other Loan Documents, the transactions contemplated hereby or the direct
or indirect application or proposed application of the proceeds of any Loan
hereunder except to the extent that they are determined by a court of
competent jurisdiction in a final and non-appealable order to have resulted
from the gross negligence or willful misconduct of the party seeking
indemnification and except that the foregoing indemnity shall not extend to
any claim asserted by Borrower against any Lender or the Administrative Agent
for breach of its obligations as allowed under this Agreement. The
obligations of the Borrower under this Section shall survive the termination
of this Agreement.
9.8. Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to
each of the Lenders.
9.9. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.
9.10. Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are
declared to be severable.
9.11. Nonliability of Lenders. The relationship between the Borrower
and the Lenders and the Administrative Agent shall be solely that of borrower
and lender. Neither the Administrative Agent nor any Lender shall have any
fiduciary responsibilities to the Borrower. Neither the Administrative Agent
nor any Lender undertakes any responsibility to the Borrower to review or
inform the Borrower of any matter in connection with any phase of the
Borrower's business or operations. The Borrower agrees that neither the
Administrative Agent nor any Lender shall have liability to the Borrower
(whether sounding in tort, contract or otherwise) for losses suffered by the
Borrower in connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined by a court of competent jurisdiction in a final and
non-appealable order that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the
Administrative Agent nor any Lender shall have any liability with respect to,
and the Borrower hereby waives, releases and agrees not to sue for, any
special, indirect or consequential damages suffered by the Borrower in
connection with, arising out of, or in any way related to the Loan Documents
or the transactions contemplated thereby.
9.12. Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from the Borrower pursuant to this Agreement
in confidence, except for disclosure (i) to its Affiliates and to other<PAGE>
Lenders and their respective Affiliates, (ii) to legal counsel, accountants,
and other professional advisors to that Lender or to a Transferee, (iii) to
regulatory officials, (iv) to any Person as requested pursuant to or as
required by law, regulation, or legal process, (v) to any Person in
connection with any legal proceeding to which that Lender is a party, and
(vi) permitted by Section 12.4.
9.13. Nonreliance. Each Lender hereby represents that it is not relying
on or looking to any margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) for the repayment of the Loans
provided for herein.
ARTICLE X
THE ADMINISTRATIVE AGENT
10.1. Appointment; Nature of Relationship. First Tennessee Bank is
hereby appointed by the Lenders as the Administrative Agent and NBD Bank as
the Co-Agent hereunder and under each other Loan Document, and each of the
Lenders irrevocably authorizes the Administrative Agent and the Co-Agent to
act as the contractual representatives of such Lender with the rights and
duties expressly set forth herein and in the other Loan Documents. The
Administrative Agent and the Co-Agent agree to act as such contractual
representative upon the express conditions contained in this Article X.
Notwithstanding the use of the defined term "Administrative Agent" and
"Co-Agent," it is expressly understood and agreed that the Administrative
Agent and the Co-Agent shall not have any fiduciary responsibilities to any
Lender by reason of this Agreement or any other Loan Document and that the
Administrative Agent and the Co-Agent are merely acting as the
representatives of the Lenders with only those duties as are expressly set
forth in this Agreement and the other Loan Documents. In its capacity as the
Lenders' contractual representative, the Administrative Agent and the
Co-Agent (i) do not hereby assume any fiduciary duties to any of the Lenders,
(ii) are a "representative" of the Lenders within the meaning of Section
9-105 of the Uniform Commercial Code and (iii) are acting as an independent
contractor, the rights and duties of which are limited to those expressly set
forth in this Agreement and the other Loan Documents. Each of the Lenders
hereby agrees to assert no claim against the Administrative Agent and the
Co-Agent on any agency theory or any other theory of liability for breach of
fiduciary duty, all of which claims each Lender hereby waives.
10.2. Powers. The Administrative Agent and the Co-Agent shall have and
may exercise such powers under the Loan Documents as are specifically
delegated to the Administrative Agent and the Co-Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Administrative Agent and the Co-Agent shall have no implied duties to the
Lenders, or any obligation to the Lenders to take any action thereunder
except any action specifically provided by the Loan Documents to be taken by
the Administrative Agent and the Co-Agent.
10.3. General Immunity. Neither the Administrative Agent nor the
Co-Agent nor any of its directors, officers, agents or employees shall be
liable to the Borrower, the Lenders or any Lender for any action taken or
omitted to be taken by it or them hereunder or under any other Loan Document<PAGE>
or in connection herewith or therewith except for its or their own gross
negligence or willful misconduct.
10.4. No Responsibility for Loans, Recitals, etc. Neither the
Administrative Agent nor the Co-Agent nor any of its directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into, or verify (i) any statement, warranty or representation made in
connection with any Loan Document or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of any
obligor under any Loan Document, including, without limitation, any agreement
by an obligor to furnish information directly to each Lender; (iii) the
satisfaction of any condition specified in Article IV, except receipt of
items required to be delivered to the Administrative Agent and the Co-Agent;
(iv) the validity, enforceability, effectiveness, sufficiency or genuineness
of any Loan Document or any other instrument or writing furnished in
connection therewith; or (v) the value, sufficiency, creation, perfection or
priority of any interest in any collateral security. The Administrative
Agent and the Co-Agent shall have no duty to disclose to the Lenders, unless
requested, information that is not required to be furnished by the Borrower
to the Administrative Agent and the Co-Agent at such time, but is voluntarily
furnished by the Borrower to the Administrative Agent, or the Co-Agent
(either in their capacity as Administrative Agent or Co-Agent or in their
individual capacity).
10.5. Action on Instructions of Lenders. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder and under any other Loan Document in accordance with written
instructions signed by the Required Lenders, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of
the Lenders and on all holders of Notes. The Lenders hereby acknowledge that
the Administrative Agent shall be under no duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of this
Agreement or any other Loan Document unless it shall be requested in writing
to do so by the Required Lenders. The Administrative Agent shall be fully
justified in failing or refusing to take any action hereunder and under any
other Loan Document unless it shall first be indemnified to its satisfaction
by the Lenders pro rata against any and all liability, cost and expense that
it may incur by reason of taking or continuing to take any such action.
10.6. Employment of Agents and Counsel. The Administrative Agent and
the Co-Agent may execute any of their duties as Administrative Agent and
Co-Agent hereunder and under any other Loan Document by or through employees,
agents, and attorneys-in-fact and shall not be answerable to the Lenders,
except as to money or securities received by it or its authorized agents, for
the default or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. The Administrative Agent and the Co-Agent shall be
entitled to advice of counsel concerning all matters pertaining to the agency
hereby created and its duties hereunder and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Administrative Agent and the
Co-Agent shall be entitled to rely upon any Note, notice, consent,
certificate, affidavit, letter, telegram, statement, paper or document
believed by it to be genuine and correct and to have been signed or sent by
the proper person or persons, and, in respect to legal matters, upon the<PAGE>
opinion of counsel selected by the Administrative Agent or the Co-Agent,
which counsel may be employees of the Administrative Agent or the Co-Agent.
10.8. Administrative Agent's Reimbursement and Indemnification. The
Lenders agree to reimburse and indemnify the Administrative Agent and the
Co-Agent ratably in proportion to their respective Commitments (or, if the
Commitments have been terminated, in proportion to their Commitments
immediately prior to such termination) (i) for any amounts not reimbursed by
the Borrower for which the Administrative Agent or the Co-Agent is entitled
to reimbursement by the Borrower under the Loan Documents, (ii) for any other
reasonable expenses incurred by the Administrative Agent and the Co-Agent on
behalf of the Lenders, in connection with the preparation, execution,
delivery, administration and enforcement of the Loan Documents and (iii) for
any liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Administrative
Agent and the Co-Agent in any way relating to or arising out of the Loan
Documents or any other document delivered in connection therewith or the
transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents, provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Administrative Agent or the Co-Agent.
The obligations of the Lenders under this Section 10.8 shall survive payment
of the Obligations and termination of this Agreement.
10.9. Notice of Default. The Administrative Agent and the Co-Agent
shall not be deemed to have knowledge or notice of the occurrence of any
Default or Unmatured Default hereunder unless the Administrative Agent or the
Co-Agent has received written notice from a Lender or the Borrower referring
to this Agreement describing such Default or Unmatured Default and stating
that such notice is a "notice of default". In the event that the
Administrative Agent or the Co-Agent receives such a notice, the
Administrative Agent or the Co-Agent shall give prompt notice thereof to the
Lenders.
10.10. Rights as a Lender. In the event the Administrative Agent or
the Co-Agent is a Lender, the Administrative Agent and the Co-Agent shall
have the same rights and powers hereunder and under any other Loan Document
as any Lender and may exercise the same as though it were not the
Administrative Agent or the Co-Agent, and the term "Lender" or "Lenders"
shall, at any time when the Administrative Agent or Co-Agent is a Lender,
unless the context otherwise indicates, include the Administrative Agent and
the Co-Agent in its individual capacity. The Administrative Agent and the
Co-Agent may accept deposits from, lend money to, and generally engage in any
kind of trust, debt, equity or other transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with the Borrower
or any of its Subsidiaries in which the Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person.
10.11. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or the
Co-Agent or any other Lender and based on the financial statements prepared
by the Borrower and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this<PAGE>
Agreement and the other Loan Documents. Each Lender also acknowledges that
it will, independently and without reliance upon the Administrative Agent or
the Co-Agent or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement and the other
Loan Documents.
10.12. Successor Administrative Agent. The Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrower, or be removed by the Required Lenders, such resignation or removal
to be effective upon the appointment of a successor Administrative Agent or,
if no successor Administrative Agent has been appointed, forty-five days
after the retiring or removed Administrative Agent gives notice of its
intention to resign or is removed. Upon any such resignation or removal the
Required Lenders shall have the right to appoint, on behalf of the Borrower
and the Lenders and with the consent of the Borrower (which shall not be
unreasonably withheld), a successor Administrative Agent. If the
Administrative Agent has resigned or been removed and no successor
Administrative Agent has been appointed, the Lenders may perform all the
duties of the Administrative Agent hereunder and the Borrower shall make all
payments in respect of the Obligations to the applicable Lender and for all
other purposes shall deal directly with the Lenders. No successor
Administrative Agent shall be deemed to be appointed hereunder until such
successor Administrative Agent has accepted the appointment. Any such
successor Administrative Agent shall be a commercial bank having capital and
retained earnings of at least $50,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
resigning Administrative Agent. Upon the effectiveness of the resignation of
the Administrative Agent, the resigning Administrative Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation or removal of an
Administrative Agent, the provisions of this Article X shall continue in
effect for the benefit of such Administrative Agent in respect of any actions
taken or omitted to be taken by it while it was acting as the Administrative
Agent hereunder and under the other Loan Documents. <PAGE>
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default occurs, any and all deposits (including all account
balances, whether provisional or final and whether or not collected or
available) and any other Indebtedness at any time held or owing by any Lender
to or for the credit or account of the Borrower may be offset and applied
toward the payment of the Obligations owing to such Lender, whether or not
the Obligations, or any part hereof, shall then be due.
11.2. Ratable Payments. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans or its Percentage of Unreimbursed
Drawings (other than payments received pursuant to Section 3.1, 3.2 or 3.4)
in a greater proportion than that received by any other Lender, such Lender
agrees, promptly upon demand, to purchase a portion of the Loans or
Unreimbursed Drawings, as the case may be, held by the other Lenders so that
after such purchase each Lender will hold its ratable proportion of Loans and
Unreimbursed Drawings. If any Lender, whether in connection with setoff or
amounts which might be subject to setoff or otherwise, receives collateral or
other protection for its Obligations or such amounts which may be subject to
setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral
ratably in proportion to their Loans. In case any such payment is disturbed
by legal process, or otherwise, appropriate further adjustments shall be
made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and
the Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or obligations under
the Loan Documents and (ii) any assignment by any Lender must be made in
compliance with Section 12.3. Notwithstanding clause (ii) of this Section,
any Lender may at any time, without the consent of the Borrower or the
Administrative Agent, assign all or any portion of its rights under this
Agreement and its Notes to a Federal Reserve Bank; provided, however, that no
such assignment to a Federal Reserve Bank shall release the transferor Lender
from its obligations hereunder. The Administrative Agent may treat the payee
of any Note as the owner thereof for all purposes hereof unless and until
such payee complies with Section 12.3 in the case of an assignment thereof
or, in the case of any other transfer, a written notice of the transfer is
filed with the Administrative Agent. Any assignee or transferee of a Note
agrees by acceptance thereof to be bound by all the terms and provisions of
the Loan Documents. Any request, authority or consent of any Person, who at
the time of making such request or giving such authority or consent is the
holder of any Note, shall be conclusive and binding on any subsequent holder,<PAGE>
transferee or assignee of such Note or of any Note or Notes issued in
exchange therefor.
12.2. Participations.
12.2.1. Permitted Participants; Effect. Any Lender may, in
the ordinary course of its business and in accordance with applicable law,
at any time sell to one or more banks or other entities ("Participants")
participating interests in any Loan owing to such Lender, any Note held by
such Lender, any Commitment, or any L/C Participation Amount of such Lender
or any other interest of such Lender under the Loan Documents. In the
event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall
remain the holder of any such Note for all purposes under the Loan
Documents, all amounts payable by the Borrower under this Agreement shall
be determined as if such Lender had not sold such participating interests,
and the Borrower and the Administrative Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole
right to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than
any amendment, modification or waiver with respect to any Loan, Commitment,
or Facility L/C in which such Participant has an interest which forgives
principal, interest or fees or reduces the interest rate or fees payable
with respect to any such Loan, Commitment, or Facility L/C postpones any
date fixed for any regularly-scheduled payment of principal of, or interest
or fees on, any such Loan, Commitment, or Facility L/C releases any
guarantor of any such Loan or releases any substantial portion of
collateral, if any, securing any such Loan or Facility L/C.
12.2.3. Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in Section
11.1 in respect of its participating interest in amounts owing under the
Loan Documents to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under the Loan Documents,
provided that each Lender shall retain the right of setoff provided in
Section 11.1 with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each Participant, and
each Participant, by exercising the right of setoff provided in Section
11.1, agrees to share with each Lender, any amount received pursuant to
the exercise of its right of setoff, such amounts to be shared in
accordance with Section 11.2 as if each Participant were a Lender.
12.3. Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at
any time assign to one or more banks or other entities ("Purchasers") all
or any part of its rights and obligations under the Loan Documents. Such
assignment shall be substantially in the form of Exhibit "D" hereto or in
such other<PAGE>
form as may be agreed to by the parties thereto. The consent of the
Borrower and the Administrative Agent shall be required prior to an
assignment becoming effective with respect to a Purchaser which is not a
Lender or an Affiliate thereof; provided, however, that if a Default has
occurred and is continuing, the consent of the Borrower shall not be
required. Such consent shall not be unreasonably withheld or delayed.
Each such assignment shall be in an amount not less than the lesser of
(i) $5,000,000 or (ii) the remaining amount of the assigning Lender's
Commitment (calculated as at the date of such assignment).
12.3.2. Effect; Effective Date. Upon (i) delivery to the
Administrative Agent of a notice of assignment, substantially in the form
attached as Exhibit "I" to Exhibit "D" hereto (a "Notice of Assignment"),
together with any consents required by Section 12.3.1, (ii) payment of a
$3,000 fee to the Administrative Agent for processing such assignment, and
(iii) notice of such assignment delivered to the Lenders by the
transferring Lender, such assignment shall become effective on the
effective date specified in such Notice of Assignment. The Notice of
Assignment shall contain a representation by the Purchaser to the effect
that none of the consideration used to make the purchase of the Commitment
and Loans under the applicable assignment agreement are "plan assets" as
defined under ERISA and that the rights and interests of the Purchaser in
and under the Loan Documents will not be "plan assets" under ERISA. On
and after the effective date of such assignment, such Purchaser shall for
all purposes be a Lender party to this Agreement and any other Loan
Document executed by the Lenders and shall have all the rights and
obligations of a Lender under the Loan Documents, to the same extent as if
it were an original party hereto, and no further consent or action by the
Borrower, the Lenders or the Administrative Agent shall be required to
release the transferor Lender with respect to the percentage of the
Aggregate Commitment, Loans, and L/C Participation Amounts assigned to
such Purchaser. Upon the consummation of any assignment to a Purchaser
pursuant to this Section 12.3.2, the transferor Lender, the Administrative
Agent and the Borrower shall make appropriate arrangements so that
replacement Notes are issued to such transferor Lender and new Notes or,
as appropriate, replacement Notes, are issued to such Purchaser, in each
case in principal amounts reflecting their Commitment, as adjusted pursuant
to such assignment.
12.4. Dissemination of Information. The Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and
any prospective Transferee any and all information in such Lender's
possession concerning the creditworthiness of the Borrower and its
Subsidiaries, provided that each Transferee and prospective Transferee agrees
to be bound by Section 9.12 of this Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the
transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of Section 4.3.
ARTICLE XIII<PAGE>
NOTICES
13.1. Notices. Except as otherwise permitted by Section 2.13 with
respect to borrowing notices, all notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party: (x) in the
case of the Borrower or the Administrative Agent, at its address or facsimile
number set forth on the signature pages hereof, (y) in the case of any
Lender, at its address or facsimile number set forth below its signature
hereto or (z) in the case of any party, such other address or facsimile
number as such party may hereafter specify for the purpose by notice to the
Administrative Agent and the Borrower. Each such notice, request or other
communication shall be effective (i) if given by facsimile transmission, when
transmitted to the facsimile number specified in this Section and
confirmation of receipt is received, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in this Section; provided that notices to
the Administrative Agent under Article II shall not be effective until
received.
13.2. Change of Address. The Borrower, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice
in writing to the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower, the
Administrative Agent and the Lenders and each party has notified the
Administrative Agent by telex or telephone, that it has taken such action.
ARTICLE XV
CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL
15.1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
TENNESSEE, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
15.2. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR TENNESSEE
STATE COURT SITTING IN TENNESSEE IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW
OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING<PAGE>
HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO
BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE
ADMINISTRATIVE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE ADMINISTRATIVE
AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE
BROUGHT ONLY IN A COURT IN TENNESSEE.
15.3. WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT AND
EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
IN WITNESS WHEREOF, the Borrower, the Lenders and the Administrative
Agent have executed this Agreement as of the date first above written.
[Signatures on Next Page]<PAGE>
TBC CORPORATION
By:/s/ RONALD E. McCOLLOUGH
Print Name:
Title:
Attention: Ronald E. McCollough
Senior Vice President and
Treasurer
TBC Corporation
4770 Hickory Hill Road
Memphis, Tennessee 38115
Telecopier: (901) 541-3752
Commitments
$9,000,000 FIRST TENNESSEE BANK
NATIONAL ASSOCIATION
Individually and as Administrative Agent
By: /s/ JAMES H. MOORE, JR.
Print Name: James H. Moore, Jr.
Title: Vice President
National Department
165 Madison Ave.
Memphis, Tennessee 38103
Attention: James H. Moore, Jr.
Telecopier: (901) 523-4267<PAGE>
$13,500,000 NBD BANK
By: /s/ WILLIAM McCAFFREY
Print Name: William McCaffrey
Title: Vice President
611 Woodward Avenue
Detroit, Michigan 48226
Attention: William McCaffrey
Telecopier: (313) 225-1212
$7,500,000 SUNTRUST BANK,
NASHVILLE, N.A.
By: /s/ ANNELIESE H. TYLER
Print Name: Anneliese H. Tyler
Title: Vice President
6410 Poplar Ave., Suite 320
Memphis, Tennsessee 38119-4836
Attention: Anneliese H. Tyler
Telecopier: (901) 766-7565<PAGE>
EXHIBIT "A"
NOTE
$ September 25, 1996
TBC Corporation, a Delaware corporation (the "Borrower"), promises to
pay to the order of (the "Lender") the
lesser of the principal sum of Dollars or the aggregate unpaid
principal amount of all Loans made by the Lender to the Borrower pursuant to
Article II of the Agreement (as hereinafter defined), in immediately
available funds at the main office of First Tennessee Bank National
Association in Memphis, Tennessee, as Administrative Agent, together with
interest on the unpaid principal amount hereof at the rates and on the dates
set forth in the Agreement. The Borrower shall pay the principal of and
accrued and unpaid interest on the Loans in full on the Termination Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual
practice, the date and amount of each Loan and the date and amount of each
principal payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Long Term Credit Agreement dated as of September 25, 1996
(which, as it may be amended or modified and in effect from time to time, is
herein called the "Agreement"), among the Borrower, the lenders party
thereto, including the Lender, and First Tennessee Bank National Association,
as Administrative Agent, to which Agreement reference is hereby made for a
statement of the terms and conditions governing this Note, including the
terms and conditions under which this Note may be prepaid or its maturity
date accelerated. Capitalized terms used herein and not otherwise defined
herein are used with the meanings attributed to them in the Agreement.
TBC CORPORATION
By:
Print Name:
Title: <PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF TBC CORPORATION
DATED SEPTEMBER 25, 1996
Maturity
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Loan Period Paid Balance<PAGE>
EXHIBIT "B"
FORM OF OPINION
September 25, 1996
The Administrative Agent and the Lenders who are parties to the
Credit Agreement described below.
Gentlemen/Ladies:
We are counsel for TBC Corporation (the "Borrower"), and have
represented the Borrower, and each of its Subsidiariess in connection with
their execution and delivery of a Long Term Credit Agreement dated as of
September 25, 1996 (the "Agreement") among the Borrower, the Lenders named
therein, and First Tennessee Bank National Association as Administrative
Agent, and providing for Advances in an aggregate principal amount not
exceeding $30,000,000 at any one time outstanding. All capitalized terms
used in this opinion and not otherwise defined herein shall have the meanings
attributed to them in the Agreement.
We have examined the Borrower's, and each of its Subsidiaries' articles
of incorporation, by-laws, and resolutions, the Loan Documents, and such
other matters of fact and law which we deem necessary in order to render this
opinion. Based upon the foregoing, it is our opinion that:
l. The Borrower, and each of its Subsidiaries are corporations duly
incorporated, validly existing and in good standing under the laws of their
states of incorporation and have all requisite authority to conduct their
business in each jurisdiction in which their business is conducted.
2. The execution and delivery of the Loan Documents to which they are
a party by the Borrower, and each of its Subsidiaries and the performance by
the Borrower, and each of its Subsidiaries of its obligations thereunder have
been duly authorized by all necessary corporate action and proceedings on the
part of the Borrower, and each of its Subsidiaries and will not:
(a) require any consent of the shareholders of the Borrower or any of
its Subsidiaries;
(b) violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower or any of its
Subsidiaries or its articles of incorporation or by-laws or any indenture,
instrument or agreement binding upon the Borrower or any of its Subsidiaries;
or
(c) result in, or require, the creation or imposition of any Lien
pursuant to the provisions of any indenture, instrument or agreement binding
upon the Borrower or any of its Subsidiaries.
3. The Loan Documents have been duly executed and delivered by the
Borrower and each of its Subsidiaries, and the Guarantors, and constitute
legal, valid and binding obligations of the Borrower, and each of its
Subsidiaries, and the Guarantors, enforceable in accordance with their terms<PAGE>
except to the extent the enforcement thereof may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and subject also to the availability of equitable remedies if
equitable remedies are sought.
4. There is no litigation or proceeding against the Borrower or any
of its Subsidiaries which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.
5. No approval, authorization, consent, adjudication or order of any
governmental authority, which has not been obtained by the Borrower or any of
its Subsidiaries, is required to be obtained by the Borrower or any of its
Subsidiaries in connection with the execution and delivery of the Loan
Documents, the borrowings under the Agreement or in connection with the
payment by the Borrower of the Obligations.
This opinion may be relied upon by the Administrative Agent, the
Co-Agent, the Lenders and their participants, assignees and other
transferees.
Very truly yours,<PAGE>
EXHIBIT "C"
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain Credit
Agreement dated as of September 25, 1996 (as amended, modified, renewed or
extended from time to time, the "Agreement") among TBC Corporation (the
"Borrower"), the lenders party thereto and First Tennessee Bank National
Association as Administrative Agent for the Lenders. Unless otherwise
defined herein, capitalized terms used in this Compliance Certificate have
the meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Borrower and its Subsidiaries during the accounting
period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which
constitutes a Default or Unmatured Default during or at the end of the
accounting period covered by the attached financial statements or as of the
date of this Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain terms of the
Agreement, all of which data and computations are true, complete and correct.
Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it
has existed and the action which the Borrower has taken, is taking, or
proposes to take with respect to each such condition or event:
The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this day of
, 19 .<PAGE>
SCHEDULE I TO COMPLIANCE CERTIFICATE
Compliance as of _________, 199_ with
Provisions of Sections 6.18, 6.19 and 6.20 of
the Agreement
CONSOLIDATED TANGIBLE NET WORTH (Net Worth Less Intangible Assets)
Consolidated Net Worth $
Less Consolidated Tan.
Assets
Consolidated Tan. Net
Worth
Required
Compliance
FUNDED INDEBTEDNESS (Consolidated Funded Indebtedness to EBITDA)
Consolidated Funded $
Indebtedness (CFI)
EBITDA
CFI/EBITDA
Required
Compliance
FIXED CHARGE COVERAGE RATIO
(Earnings before Interest, Taxes and Leases to Interest, Taxes & Leases)
Fixed Charge Coverage
EBITL
Interest (I)
Leases (L)
EBITL/ITL
Required
Compliance<PAGE>
EXHIBIT "D"
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
____________ _______________ (the "Assignor") and ________________ (the
"Assignee") is dated as of _______________, 19 . The parties hereto
agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit
Agreement (which, as it may be amended, modified, renewed or extended from
time to time is herein called the "Credit Agreement") described in Item 1 of
Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and
not otherwise defined herein shall have the meanings attributed to them in
the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, an interest in and to the Assignor's rights and obligations under
the Credit Agreement [(other than rights and obligations of the Assignor in
its capacity as Issuing Lender)] such that after giving effect to such
assignment the Assignee shall have purchased pursuant to this Assignment
Agreement the percentage interest specified in Item 3 of Schedule 1 of all
outstanding rights and obligations under the Credit Agreement relating to the
facilities listed in Item 3 of Schedule 1 and the other Loan Documents. The
aggregate Commitment (or Loans and L/C Participation Amounts, if the
applicable Commitment has been terminated) purchased by the Assignee
hereunder is set forth in Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement
(the "Effective Date") shall be the later of the date specified in Item 5 of
Schedule 1 or two Business Days (or such shorter period agreed to by the
Administrative Agent) after a Notice of Assignment substantially in the form
of Exhibit "I" attached hereto has been delivered to the Administrative
Agent. Such Notice of Assignment must include any consents required to be
delivered to the Administrative Agent by Section 12.3.1 of the Credit
Agreement. In no event will the Effective Date occur if the payments
required to be made by the Assignee to the Assignor on the Effective Date
under Sections 4 and 5 hereof are not made on the proposed Effective Date.
The Assignor will notify the Assignee of the proposed Effective Date no later
than the Business Day prior to the proposed Effective Date. As of the
Effective Date, (i) the Assignee shall have the rights and obligations of a
Lender under the Loan Documents with respect to the rights and obligations
assigned to the Assignee hereunder and (ii) the Assignor shall relinquish its
rights and be released from its corresponding obligations under the Loan
Documents with respect to the rights and obligations assigned to the Assignee
hereunder.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee
shall be entitled to receive from the Administrative Agent all payments of
principal, interest and fees with respect to the interest assigned hereby.
The Assignee shall advance funds directly to the Administrative Agent with
respect to all Loans and reimbursement payments made on or after the<PAGE>
Effective Date with respect to the interest assigned hereby. [In
consideration for the sale and assignment of Loans and L/C Participation
Amounts hereunder, (i) the Assignee shall pay the Assignor, on the Effective
Date, an amount equal to the principal amount of the portion of all Floating
Rate Loans assigned to the Assignee hereunder and (ii) with respect to each
Eurodollar Loan made by the Assignor and assigned to the Assignee hereunder
which is outstanding on the Effective Date, (a) on the last day of the
Interest Period therefor or (b) on such earlier date agreed to by the
Assignor and the Assignee or (c) on the date on which any such Eurodollar
Loan either becomes due (by acceleration or otherwise) or is prepaid (the
date as described in the foregoing clauses (a), (b) or (c) being hereinafter
referred to as the "Payment Date"), the Assignee shall pay the Assignor an
amount equal to the principal amount of the portion of such Eurodollar Loan
assigned to the Assignee which is outstanding on the Payment Date. If the
Assignor and the Assignee agree that the Payment Date for such Eurodollar
Loan shall be the Effective Date, they shall agree to the interest rate
applicable to the portion of such Loan assigned hereunder for the period from
the Effective Date to the end of the existing Interest Period applicable to
such Eurodollar Loan (the "Agreed Interest Rate") and any interest received
by the Assignee in excess of the Agreed Interest Rate shall be remitted to
the Assignor. In the event interest for the period from the Effective Date
to but not including the Payment Date is not paid by the Borrower with
respect to any Eurodollar Loan sold by the Assignor to the Assignee
hereunder, the Assignee shall pay to the Assignor interest for such period on
the portion of such Eurodollar Loan sold by the Assignor to the Assignee
hereunder at the applicable rate provided by the Credit Agreement. In the
event a prepayment of any Eurodollar Loan which is existing on the Payment
Date and assigned by the Assignor to the Assignee hereunder occurs after the
Payment Date but before the end of the Interest Period applicable to such
Eurodollar Loan, the Assignee shall remit to the Assignor the excess of the
prepayment penalty paid with respect to the portion of such Eurodollar Loan
assigned to the Assignee hereunder over the amount which would have been paid
if such prepayment penalty was calculated based on the Agreed Interest Rate.
The Assignee will also promptly remit to the Assignor (i) any principal
payments received from the Administrative Agent with respect to Eurodollar
Loans prior to the Payment Date and (ii) any amounts of interest on Loans and
fees received from the Administrative Agent which relate to the portion of
the Loans assigned to the Assignee hereunder for periods prior to the
Effective Date, in the case of Floating Rate Loans or fees, or the Payment
Date, in the case of Eurodollar Loans, and not previously paid by the
Assignee to the Assignor.]1 In the event that either party hereto receives
any payment to which the other party hereto is entitled under this Assignment
Agreement, then the party receiving such amount shall promptly remit it to
the other party hereto.
5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the
Assignor a fee on each day on which a payment of interest, commitment fees,
or Facility L/C fees is made under the Credit Agreement with respect to the
1
Each Assignor may insert its standard payment provisions in lieu of
the payment terms included in this Exhibit. <PAGE>
amounts assigned to the Assignee hereunder (other than a payment of interest
or fees for the period prior to the Effective Date or, in the case of
Eurodollar Loans, the Payment Date, which the Assignee is obligated to
deliver to the Assignor pursuant to Section 4 hereof). The amount of such
fee shall be the difference between (i) the interest or fee, as applicable,
paid with respect to the amounts assigned to the Assignee hereunder and (ii)
the interest or fee, as applicable, which would have been paid with respect
to the amounts assigned to the Assignee hereunder if each interest rate was
of 1% less than the interest rate paid by the Borrower or if the commitment
fee was of 1% less than the commitment fee paid by the Borrower or if the
Facility L/C fee was ___% of 1% less than the Facility L/C fee paid by the
Borrower, as applicable. In addition, the Assignee agrees to pay % of the
recordation fee required to be paid to the Administrative Agent in connection
with this Assignment Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor. It
is understood and agreed that the assignment and assumption hereunder are
made without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor
nor any of its officers, directors, employees, agents or attorneys shall be
responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectability of any Loan Document, including
without limitation, documents granting the Assignor and the other Lenders a
security interest in assets of the Borrower or any guarantor, (ii) any
representation, warranty or statement made in or in connection with any of
the Loan Documents, (iii) the financial condition or creditworthiness of the
Borrower or any guarantor, (iv) the performance of or compliance with any of
the terms or provisions of any of the Loan Documents, (v) inspecting any of
the Property, books or records of the Borrower, (vi) the validity,
enforceability, perfection, priority, condition, value or sufficiency of any
collateral securing or purporting to secure the Loans or (vii) any mistake,
error of judgment, or action taken or omitted to be taken in connection with
the Loans or the Loan Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that
it has received a copy of the Credit Agreement, together with copies of the
financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (ii) agrees that it will,
independently and without reliance upon the Administrative Agent, the
Assignor or any other Lender and based on such documents and information at
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Documents, (iii)
appoints and authorizes the Administrative Agent to take such action as
administrative agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto, (iv) agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Loan Documents are required to be performed by it
as a Lender, (v) agrees that its payment instructions and notice instructions
are as set forth in the attachment to Schedule 1, (vi) confirms that none of
the funds, monies, assets or other consideration being used to make the<PAGE>
purchase and assumption hereunder are "plan assets" as defined under ERISA
and that its rights, benefits and interests in and under the Loan Documents
will not be "plan assets" under ERISA, [and (vii) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying
that the Assignee is entitled to receive payments under the Loan Documents
without deduction or withholding of any United States federal income taxes].2
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee's
non-performance of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee
shall have the right pursuant to Section 12.3.1 of the Credit Agreement to
assign the rights which are assigned to the Assignee hereunder to any entity
or person, provided that (i) any such subsequent assignment does not violate
any of the terms and conditions of the Loan Documents or any law, rule,
regulation, order, writ, judgment, injunction or decree and that any consent
required under the terms of the Loan Documents has been obtained and (ii)
unless the prior written consent of the Assignor is obtained, the Assignee is
not thereby released from its obligations to the Assignor hereunder, if any
remain unsatisfied, including, without limitation, its obligations under
Sections 4, 5 and 8 hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
Aggregate Commitment occurs between the date of this Assignment Agreement and
the Effective Date, the percentage interest specified in Item 3 of Schedule 1
shall remain the same, but the dollar amount purchased shall be recalculated
based on the reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between
the parties hereto and supersede all prior agreements and understandings
between the parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Tennessee.
13. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall
be the address set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above
written.
2
to be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof. <PAGE>
[NAME OF ASSIGNOR]
By:
Title:
[NAME OF ASSIGNEE]
By:
Title:<PAGE>
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
Credit Agreement dated as of September 25, 1996 by and among TBC
Corporation, First Tennessee Bank National Association, as Administrative
Agent, and the Lenders party thereto.
2. Date of Assignment Agreement: , 19
3. Amounts (As of Date of Item 2 above):
Loan Letter of Credit
Facility Subfacility
a. Total of Commitments
(Loans/Facility L/C's)3
under Credit Agreement $ [$ ]*
b. Assignee's Percentage
of each Facility purchased
under the Assignment
Agreement4* %
c. Amount of Assigned Share in
each Facility purchased under
the Assignment
Agreement $ [$ ]*
4. Assignee's Aggregate (Loan Amount/
L/C Participation Amount)*
Commitment Amount
Purchased Hereunder: $
5. Proposed Effective Date:
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
Title: Title:
3
If a Commitment has been terminated, insert outstanding Loans and
Facility L/C's in place of Commitment
4
Percentage taken to 10 decimal places <PAGE>
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must include notice
address for the Assignor and the Assignee<PAGE>
EXHIBIT "I"
to Assignment Agreement
NOTICE
OF ASSIGNMENT
, 19_
To: TBC CORPORATION
______________________
______________________
Attention:
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
______________________
______________________
Attention:
From [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that Credit Agreement (the "Credit Agreement")
described in Item 1 of Schedule 1 attached hereto ("Schedule 1").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered to
the Borrower and the Administrative Agent pursuant to Section 12.3.2 of the
Credit Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of , 19 (the "Assignment"), pursuant to
which, among other things, the Assignor has sold, assigned, delegated and
transferred to the Assignee, and the Assignee has purchased, accepted and
assumed from the Assignor the percentage interest specified in Item 3 of
Schedule 1 of all outstandings, rights and obligations under the Credit
Agreement relating to the facilities listed in Item 3 of Schedule 1. The
Effective Date of the Assignment shall be the later of the date specified in
Item 5 of Schedule 1 or two Business Days (or such shorter period as agreed
to by the Administrative Agent) after this Notice of Assignment and any
consents and fees required by Sections 12.3.1 and 12.3.2 of the Credit
Agreement have been delivered to the Administrative Agent, provided that the
Effective Date shall not occur if any condition precedent agreed to by the
Assignor and the Assignee has not been satisfied.
4. The Assignor and the Assignee hereby give to the Borrower and the
Administrative Agent notice of the assignment and delegation referred to
herein. The Assignor will confer with the Administrative Agent before the
date specified in Item 5 of Schedule 1 to determine if the Assignment<PAGE>
Agreement will become effective on such date pursuant to Section 3 hereof,
and will confer with the Administrative Agent to determine the Effective Date
pursuant to Section 3 hereof if it occurs thereafter. The Assignor shall
notify the Administrative Agent if the Assignment Agreement does not become
effective on any proposed Effective Date as a result of the failure to
satisfy the conditions precedent agreed to by the Assignor and the Assignee.
At the request of the Administrative Agent, the Assignor will give the
Administrative Agent written confirmation of the satisfaction of the
conditions precedent.
5. The Assignor or the Assignee shall pay to the Administrative Agent
on or before the Effective Date the processing fee of $3,000 required by
Section 12.3.2 of the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor and
the Assignee request and direct that the Administrative Agent prepare and
cause the Borrower to execute and deliver new Notes or, as appropriate,
replacements notes, to the Assignor and the Assignee. The Assignor and, if
applicable, the Assignee each agree to deliver to the Administrative Agent
the original Note received by it from the Borrower upon its receipt of a new
Note in the appropriate amount.
7. The Assignee advises the Administrative Agent that notice and
payment instructions are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the funds,
monies, assets or other consideration being used to make the purchase
pursuant to the Assignment are "plan assets" as defined under ERISA and that
its rights, benefits, and interests in and under the Loan Documents will not
be "plan assets" under ERISA.
9. The Assignee authorizes the Administrative Agent to act as its
administrative agent under the Loan Documents in accordance with the terms
thereof. The Assignee acknowledges that the Administrative Agent has no duty
to supply information with respect to the Borrower or the Loan Documents to
the Assignee until the Assignee becomes a party to the Credit Agreement.5
NAME OF ASSIGNOR NAME OF ASSIGNEE
By: By:
Title: Title:
ACKNOWLEDGED AND CONSENTED TO ACKNOWLEDGED AND CONSENTED TO
BY FIRST TENNESSEE BANK, BY TBC CORPORATION
NATIONAL ASSOCIATION
By: By:
5
May be eliminated if Assignee is a party to the Credit Agreement prior
to the Effective Date.<PAGE>
Title: Title:
[Attach photocopy of Schedule 1 to Assignment]<PAGE>
EXHIBIT "E"
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To First Tennessee Bank National Association
as Administrative Agent (the "Administrative Agent") under the Credit
Agreement Described Below.
Re: Long Term Credit Agreement, dated September 25, 1996, (as the same may
be amended or modified, the "Credit Agreement"), among TBC Corporation
(the "Borrower"), the Lenders named therein and the Administrative Agent.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned thereto in the Credit Agreement.
The Administrative Agent is specifically authorized and directed to act
upon the following standing money transfer instructions with respect to the
proceeds of Advances or other extensions of credit from time to time until
receipt by the Administrative Agent of a specific written revocation of such
instructions by the Borrower, provided, however, that the Administrative
Agent may otherwise transfer funds as hereafter directed in writing by the
Borrower in accordance with Section 13.1 of the Credit Agreement or based on
any telephonic notice made in accordance with Section 2.13 of the Credit
Agreement.
Customer/Account Name: TBC Corporation
Credit Funds to: Account No. 00-0223239
Reference/Attention To: First Tennessee Bank National Association
National Department
Authorized Officer (Customer Representative)
1. Ronald E. McCollough
Senior Vice President Operations and Treasurer
2. Larry D. Coley
Vice President and Controller
3. Deron G. Wisdom
Manager of Credit and Banking
4. Elaine Rook
Manager of Credit and Collections
(Deliver Completed Form to Credit Support Staff For Immediate Processing)<PAGE>
EXHIBIT "F"
CONTINUING GUARANTY
GUARANTY: To induce First Tennessee Bank National Association, as
Administrative Agent, and the Lenders (singularly or collectively referred to
as the "Bank"), pursuant to that certain Short Term Credit Agreement dated
September 25, 1996 and that Long Term Credit Agreement dated September 25,
1996, as the same may be amended or restated from time to time hereafter, to
make loans, extend or continue credit or some other benefit, including
letters of credit and foreign exchange contracts, present or future, direct
and indirect, and whether several, joint or joint and several (referred to
collectively as "Liabilities"), to TBC Corporation, and its successors (the
"Borrower"), and because the undersigned (the "Guarantor") has determined
that executing this Guaranty is in its interest and to its financial benefit,
the Guarantor absolutely and unconditionally guaranties to the Bank, as
primary obligor and not merely as surety, that the Liabilities will be paid
when due, whether by acceleration or otherwise. The Guarantor will not only
pay the Liabilities, but will also reimburse the Bank for accrued and unpaid
interest, and any expenses, including reasonable attorneys' fees, that the
Bank may pay in collecting from the Borrower or the Guarantor, and for
liquidating any collateral.
LIMITATION: The Guarantor's obligation under this Guaranty is
UNLIMITED. Unless otherwise specified below, the Guarantor's obligation
shall be payable in U.S. Dollars.
CONTINUED RELIANCE: The Bank may continue to make loans or extend
credit to the Borrower based on this Guaranty until it receives written
notice of termination from the Guarantor. That notice shall be effective at
the opening of the Bank for business on the day after receipt of the notice.
If terminated, the Guarantor will continue to be liable to the Bank for any
Liabilities created, assumed or committed to at the time the termination
becomes effective, and all subsequent renewals, extensions, modifications and
amendments of the Liabilities.
SETOFF: Upon any Default (as defined in the Obligations), the Bank
shall have the right to setoff against Obligations:
1. All securities and other property of the Guarantor in the custody,
possession or control of the Bank (other than property held by the Bank
solely in a fiduciary capacity);
2. All property or securities declared or acknowledged to constitute
security for any past, present or future liability, direct or indirect, of
the Guarantor to the Bank;
3. All balances of deposit accounts of the Guarantor with the Bank.
The Bank shall have the right at any time to apply its own debt or liability
to the Guarantor in whole or partial payment of this Guaranty or other
present or future liabilities, direct or indirect, without any requirement
for mutual maturity.
If the Guarantor fails to pay any amount owing under this Guaranty, the
Bank shall have all of the rights and remedies provided by law or under any
other agreement to liquidate or foreclose on and sell any collateral,
including but not limited to the rights and remedies of a secured party under<PAGE>
the Uniform Commercial Code. These rights and remedies shall be cumulative
and not exclusive. If the Guarantor is entitled to notice, that requirement
will be met if the Bank sends notice at least seven (7) days prior to the
date of sale, disposition or other event which requires notice. The proceeds
of any sale shall be applied first to costs, then toward payment of the
amount owing under this Guaranty. The Bank is authorized to cause all or
any part of any collateral to be transferred to or registered in its name or
in the name of any other person, firm or corporation, with or without
designation of the capacity of such nominee. For purposes of the following
paragraphs, "any collateral" shall include any collateral securing the
Liabilities.
ACTION REGARDING BORROWER: If any monies become available that the Bank
can apply to the Liabilities (other than monies made available to the Bank by
the Guarantor pursuant to this Guaranty), the Bank may apply them in any
manner it chooses, including but not limited to applying them against
liabilities which are not covered by this Guaranty. The Bank can take any
action against the Borrower, any collateral, or any other person liable for
any of the Liabilities. The Bank can release the Borrower or anyone else
from the Liabilities, either in whole or in part, or release any collateral,
and need not perfect a security interest in any collateral. The Bank does
not have to exercise any rights that it has against the Borrower or anyone
else, or make any effort to realize on any collateral or right of set-off.
If the Borrower requests more credit or any other benefit, the Bank may grant
it and the Bank may grant renewals, extensions, modifications and amendments
of the Liabilities and otherwise deal with the Borrower or any other person
as the Bank sees fit and as if this Guaranty were not in effect. The
Guarantor's obligations under this Guaranty shall not be released or affected
by (a) any act or omission of the Bank, (b) the voluntary or involuntary
liquidation, sale or other disposition of all or substantially all of the
assets of the Borrower, or any receivership, insolvency, bankruptcy,
reorganization, or other similar proceedings affecting the Borrower or any of
its assets, or (c) any change in the composition or structure of the Borrower
or the Guarantor, including a merger or consolidation with any other person
or entity.
NATURE OF GUARANTY: This Guaranty is a guaranty of payment and not of
collection. Therefore, the Bank can insist that the Guarantor pay
immediately, and the Bank is not required to attempt to collect first from
the Borrower, any collateral, or any other person liable for the Liabilities.
The obligation of the Guarantor shall be unconditional and absolute,
regardless of the unenforceability of any provision of any agreement between
the Borrower and the Bank, or the existence of any defense, setoff or
counterclaim which the Borrower may assert.
OTHER GUARANTORS: If there is more than one Guarantor, their
obligations under this Guaranty shall be joint and several. In addition,
each Guarantor shall be jointly and severally liable with any other guarantor
of the Liabilities. If the Bank elects to enforce its rights against less
than all guarantors of the Liabilities, that election shall not release
Guarantor from its obligations under this Guaranty. The compromise or
release of any of the obligations of any of the other guarantors or the
Borrower shall not serve to waive, alter or release the Guarantor's
obligations. This Guaranty is not conditioned on anyone else executing this
or any other guaranty.<PAGE>
RIGHTS OF SUBROGATION: The Guarantor agrees not to enforce any rights
of subrogation, contribution or indemnification that it has against the
Borrower, any entity liable for the Liabilities, or any collateral, until the
Liabilities are fully paid, even if all Liabilities are not covered by this
Guaranty. The Guarantor further agrees that if any payments to the Bank on
the Liabilities are in whole or in part invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy act or code, state or
federal law, common law or equitable doctrine, this Guaranty and the Bank's
interest in any collateral remain in full force and effect (or are reinstated
as the case may be) until payment in full of those amounts, which payment is
due on demand.
WAIVERS: The Guarantor waives any right it may have to receive notice
of the following matters before the Bank enforces any of its rights: (a) the
Bank's acceptance of this Guaranty, (b) any credit that the Bank extends to
the Borrower, (c) the Borrower's default, (d) any demand, (e) any action that
the Bank takes regarding the Borrower, anyone else, any collateral, or any
Liability, which it might be entitled to by law or under any other agreement.
Any waiver shall affect only the specific terms and time period stated in the
waiver. The Bank may waive or delay enforcing any of its rights without
losing them. No modification or waiver of this Guaranty shall be effective
unless it is in writing and signed by the party against whom it is being
enforced.
REPRESENTATIONS BY GUARANTOR: Each Guarantor represents: (a) that the
execution and delivery of this Guaranty and the performance of the
obligations it imposes do not violate any law, conflict with any agreement by
which it is bound, or require the consent or approval of any governmental
authority or any third party; (b) that this Guaranty is a valid and binding
agreement, enforceable according to its terms; and (c) that all balance
sheets, profit and loss statements, and other financial statements furnished
to the Bank are accurate and fairly reflect the financial condition of the
organizations and persons to which they apply on their effective dates,
including contingent liabilities of every type, which financial condition has
not changed materially and adversely since those dates. Each Guarantor,
other than a natural person, further represents: (a) that it is duly
organized, existing and in good standing pursuant to the laws under which it
is organized; and (b) that the execution and delivery of this Guaranty and
the performance of the obligations it imposes (i) are within its powers and
have been duly authorized by all necessary action of its governing body; and
(ii) do not contravene the terms of its articles of incorporation or
organization, its by-laws, or any partnership, operating or other agreement
governing its affairs.
NOTICES: Notice from one party to another relating to this Guaranty
shall be deemed effective if made in writing (including telecommunications)
and delivered to the recipient's address, telex number or facsimile number
set forth under its name by any of the following means: (a) hand delivery,
(b) registered or certified mail, postage prepaid, with return receipt
requested, (c) first class or express mail, postage prepaid, (d) Federal
Express, Purolator Courier or like overnight courier service or (e)
facsimile, telex or other wire transmission with request for assurance of
receipt in a manner typical with respect to communications of that type.
Notice made in accordance with this section shall be deemed delivered on<PAGE>
receipt if delivered by hand or wire transmission, on the third business day
after mailing if mailed by first class, registered or certified mail, or on
the next business day after mailing or deposit with an overnight courier
service if delivered by express mail or overnight courier. Notwithstanding
the foregoing, notice of termination of this Guaranty shall be deemed
received only upon the receipt of actual written notice by the Bank in
accordance with the paragraph above labeled "Continued Reliance."
LAW AND JUDICIAL FORUM THAT APPLY: This agreement is governed by
Tennessee law. The Guarantor agrees that any legal action or proceeding
against it with respect to any of its obligations under this Guaranty may be
brought in any court of the State of Tennessee or of the United States of
America for the Eastern or Western District of Tennessee, as the Bank in its
sole discretion may elect. By the execution and delivery of this Guaranty,
the Guarantor submits to and accepts, with regard to any such action or
proceeding, for itself and in respect of its property, generally and
unconditionally, the jurisdiction of those courts. The Guarantor waives any
claim that the State of Tennessee is not a convenient forum or the proper
venue for any suit, action or proceeding.
MISCELLANEOUS: Subject to the express provisions of any subsequent
guaranty, Guarantor's liability under this Guaranty is independent of its
liability under any other guaranty previously or subsequently executed by the
Guarantor, as to all or any part of the Liabilities, and may be enforced for
the full amount of this Guaranty regardless of the Guarantor's liability
under any other guaranty. This Guaranty is binding on the Guarantor's heirs,
successors and assigns, and will operate to the benefit of the Bank and its
successors and assigns. The use of headings shall not limit the provisions
of this Guaranty.
WAIVER OF JURY TRIAL: The Bank and the Guarantor, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily
and intentionally waive any right either of them may have to a trial by jury
in any litigation based upon or arising out of this Guaranty or any related
instrument or agreement, or any of the transactions contemplated by this
Guaranty, or any course of conduct, dealing, statements (whether oral or
written), or actions of either of them. Neither the Bank nor the Guarantor
shall seek to consolidate, by counterclaim or otherwise, any action in which
a jury trial has been waived with any other action in which a jury trial
cannot be or has not been waived. These provisions shall not be deemed to
have been modified in any respect or relinquished by either the Bank or the
Guarantor except by a written instrument executed by both of them.
Dated: September 25, 1996
GUARANTOR:
ADDRESS: __________________________________
_______________________________ BY:_______________________________
_______________________________ ITS:_______________________________<PAGE>
EXHIBIT G
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
STANDARD FORM APPLICATION
FOR
IRREVOCABLE LETTER OF CREDIT<PAGE>
Long Term Credit Agreement
SCHEDULE "1"
SUBSIDIARIES
(See Section 5.8)
<TABLE>
<CAPTION>
Investment Owned Percent Jurisdiction of
In By Ownership Organization
<S> <C> <C> <C>
Big O Tires, Inc. Borrower 100% Nevada
Big O Retail Big O 100% Colorado
Enterprises, Inc.
Big O Development, Big O 100% Colorado
Inc.
O Advertising, Inc. Big O 100% Colorado
Big O Tire of Idaho, Big O 100% Idaho
Inc.
Apex Tire, Inc. Big O Retail 51% Utah
Enterprises, Inc.
TBC International, Borrower 100% Delaware
Inc.
TBC Sales, Inc. Borrower 100% Delaware
Northern States Borrower 100% Delaware
Tire, Inc.
Battery Associates, Borrower 100% Delaware
Inc.
/TABLE
<PAGE>
9/23/96
SCHEDULE 2
EXISTING INDEBTEDNESS AND LIENS
Existing Indebtedness:
- See attached listing of Big O Indebtedness.
- Indebtedness owing by Northern States Tires, Inc. to Bandag
Incorporated in the approximate principal amount of $104,000.
- Northern States Tire, Inc. is obligated to issue promissory notes in
the aggregate amount of $298,471 in payment of the balance of the
purchase price payable to the sellers of the business and assets it
acquired in September 1995.
- Northern States Tire, Inc. is obligated to credit deferred compensation
equal to 12.7% of its annual net income to a deferred compensation
account established on its books for Lorin Dore (the former owner of
Northern States, who is currently its General Manager) and is permitted
to offset 12.7% of annual losses against such account, through the year
ending December 31, 2005.
- See Schedule 4 for a listing of existing Contingent Obligations.
Existing Liens:
- Bandag, Incorporated holds a security interest in certain tire re-
treading equipment owned by Northern States Tire, Inc.
- See attached listing of liens encumbering Big O assets.
- First National Bank of Chicago has a lien on Big O's inventory and
accounts receivable to secure amounts owing to the Bank under its
existing line of credit with Big O.<PAGE>
05-Jul-96
01:13:04 PM
<TABLE>
BIG O TIRES, INC. AND SUBSIDIARIES
SCHEDULE OF NOTES PAYABLE AND LONG TERM DEBT (INCLUDING CAPITAL LEASE OBLIGATIONS)
YEAR TO DATE JUNE 30, 1996
<CAPTION>
BALANCE BALANCE CURRENT LONG-TERM
12-31-95 ADDITIONS DELETIONS TRANSFERS 06-30-96 MATURITIES PORTION
<S> <C> <C> <C> <C> <C> <C> <C>
N/P FIRSTBANK OF
CHICAGO
LINE OF CREDIT 2,650,000.00 15,300,000.00 (16,700,000.00) 1,250,000.00 1,250,000.00
LIBOR 0.00 0.00 0.00
LIBOR 0.00 0.00 0.00
UNUSED LOC
2726 N/P KELLY
SPRINGFIELD 2,945,338.67 (750,000.00) 2,195,338.67 1,600,000.00 595,338.67
SUBTOTAL CORPORATE 5,595,338.67 15,300,000.00 (17,450,000.00) 0.00 3,445,338.67 1,600,000.00 1,845,338.67
BIG O DEVELOPMENT
GIBSON NOTES
(CHANDLER) 0.00 0.00 0.00
AT&T - L OWSEGO 405,327.00 (3,228.07) 402,098.93 9,763.93 392,335.00
N/P BONDS 0.00 0.00 0.00
N/P - SENIOR DEBT 8,000,000.00 8,000,000.00 0.00 8,000,000.00
N/P - INDIANA
WAREHOUSE 1,366,666.72 (49,999.98) 1,316,666.74 99,999.96 1,216,666.78
N/P CONST.
(RAMONA, CA) 0.00 0.00 0.00 0.00
SUBTOTAL BODI 9,771,993.72 0.00 (53,228.05) 0.00 9,718,765.67 109,763.89 9,609,001.78
TOTALS 15,367,332.39 15,300,000.00 (17,503,228.05) 0.00 13,164,104.34 1,709,763.89 11,454,340.45
LINE OF CREDIT 2,650,000.00 15,300,000.00 (16,700,000.00) 0.00 1,250,000.00 0.00 1,250,000.00
OTHER 12,717,332.39 0.00 (803,228.05) 0.00 11,914,104.34 1,709,763.89 10,204,340.45
TOTALS 15,367,332.39 15,300,000.00 (17,503,228.05) 0.00 13,164,104.34 1,709,763.89 11,454,340.45
BIG O RETAIL ENTERPRISES, INC.:
TIMMERMAN-MESA 53,988.05 (15,282.22) 38,705.83 32,893.01 5,812.82
BIG O DEVELOPMENT
CAP.LSE.
OBLIG.BLDG. 113,431.73 (2,506.95) 110,924.78 6,097.24 104,827.54
TOTALS 199,977.52 0.00 (17,789.17) 0.00 149,630.61 38,990.25 110,640.36
/TABLE
<PAGE>
Big O Liens
<TABLE>
<CAPTION>
Property Address Property Use Status Encumbrances
<S> <C> <C> <C>
875 American Pacific Drive Regional Used for Company Indenture for Senior
Henderson, Nevada Distribution Center Operations Secured Notes
3511 South T.K. Avenue Regional Sales Used for Company Indenture for Senior
Boise, Idaho Service & Operations Secured Notes
Distribution Center
Approximately 3.0 acres Vacant For Sale None
adjoining Boise Regional Sales,
Service & Distribution Center
640 Park Boulevard Regional Sales Used for Company Mortgage for the
New Albany, Indiana Service & Operations benefit of National
Distribution Center City Bank, Kentucky
161 Southgate Drive Big O Tires Vacant Land to be None
Georgetown, KY Retail Store developed for
sale to a
Franchisee
Approximately 5.01 acres Vacant For Sale None
adjoining the former Vacaville
Regional Sales, Service &
Distribution Center, Vacaville,
California
14891 East Colfax Avenue Big O Tires Retail Being Renovated None
Aurora, Colorado Store for Lease or sale
900 East Highway 66 Big O Tires Retail Leased to None
Gallup, New Mexico Store Franchisee
6800 West 120th Unimproved Land For Sale None
Broomfield, Colorado
2510 N. 75th Avenue Big O Tires Retail Vacant Land None
Phoenix, Arizona Store Being Developed
(Westridge Mall) for Sale to
Franchisee
61st & Bell Big O Tires Retail Vacant Land None
Phoenix, Arizona Store Being Developed
for Sale to a
Franchisee.<PAGE>
40420 California Oaks Road Big O Tires Retail Vacant Land None
Murrieta, California Store Being Developed
for Sale to a
Franchisee.
2210 Haines Avenue Big O Tires Retail Vacant Land None
Rapid City, South Dakota Store Being Developed
for Sale to a
Franchisee.
1506 N. College Avenue Big O Tires Retail Vacant Land None
Ft. Collins, Colorado Store Being Developed
for Sale to a
Franchisee.
3405 E. 10th Street Big O Tires Retail Vacant Land None
Sioux Falls, SD Store to be Developed
for Sale to a
Franchisee
5600 West 3400 South Big O Tires Retail Vacant Land None
West Valley, Utah Store to be Developed
for Sale to a
Franchisee
Lot 1, Block 1, Lehi City Plaza Big O Tires Retail Earnest Money N/A
Subdivision, Lehi, Utah Store deposit of
$10,000
104th & Colorado Blvd. Big O Tires Retail Earnest Money N/A
Thorton, Colorado Store deposit of
$10,000
Pad Site on Marcola Way Big O Tires Retail Earnest Money N/A
Springfield, Oregon Store deposit of
$10,000
Outlot LL/01 New Castle Plaza Big O Tires Retail Earnest Money N/A
New Castle, IN Store deposit of
$10,000
Quincy & Wadsworth Training Store Vacant Land None
Denver, Colorado Being Developed
for Big O Tires
Training
Facility - Will
Find Owner to
Purchase the
Facility and
Lease Back to
the Company.
/TABLE
<PAGE>
SCHEDULE 3
EXISTING LETTERS OF CREDIT
Letter of credit issued by First Tennessee Bank to The Travelers Insurance
Company in the amount of $310,000, which will expire on 9/1/97.
Letter of credit issued by First Tennessee Bank to United States Fire
Insurance Company in the amount of $300,000, which will mature on 9/1/97.<PAGE>
9/23/96
SCHEDULE 4
EXISTING CONTINGENT OBLIGATIONS AND INVESTMENTS
Existing Contingent Obligations:
- See attached listing of Big O Guarantees.
- Borrower has guaranteed a $1.5 million line of credit made available to
TBC de Mexico by First Tennessee Bank.
- Borrower has guaranteed all obligations of Northern States Tire, Inc.
to Bandag Incorporated.
- Big O, TBC Sales, Inc., and TBC International, Inc. have guaranteed the
obligations of Borrower under the Private Placement.
- Borrower has guaranteed all obligations of Big O under an Indenture,
Mortgage, Deed of Trust, Security Agreement, and Financing Statement
(Fixture Filing), dated as of April 27, 1994, as amended, and the 8.71%
Senior Secured Notes due 2004 in the aggregate principal amount of
$8,000,000, issued by Big O pursuant thereto.
Existing Investments:
- See Schedule 1 for a listing of all Subsidiaries.
- Borrower owns 40% of the ownership interests in TBC de Mexico, a
Mexican Company.
- Borrower owns 50% of TBC Worldwide, a Delaware limited liability
company.
- See attached listing of Big O Notes Receivable and pending MAP loans.
- See attached listing of Notes Receivable held by Borrower, Battery
Associates, Inc., and Northern States Tire, Inc.
- Big O Joint Ventures:
- Big O Retail Enterprises, Inc. is a 50% partner in Big O/S.A.N.D.S.
Joint Venture, a California partnership.
- Big O Retail Enterprises, Inc. is a 50% partner in Big O/BMT Joint
Venture, a California partnership.
- Big O Development, Inc. is a 50% partner in Intermountain
Development Joint Venture, a Colorado partnership.
- Big O Development, Inc. is a 50% partner in SCB Group Joint Venture,
a California partnership.
- Big O Retail Enterprises, Inc. is a 50% shareholder in Tires
Industries Corporation, a Utah corporation.<PAGE>
Financial Guarantees
<TABLE>
<CAPTION>
Total Total Big O
Big O Outstanding Outstanding Guaranty
Percent Balance Balance Portion
Guaranty 12/31/95 03/31/96 03/31/96
<S> <C> <C> <C> <C>
Sun Trust Credit (formerly
Stephens Franchise Financing):
RBO/Ken Raley 100.00% 430,741.33 405,320.53 405,320.53
Rando, Vannie DePeiro & Roger Case 60.00% 131,729.60 123,980.80 74,388.48
Stone City Tire, Richard Pflanz & Jerry
Thurman 60.00% 105,210.00 99,198.00 59,518.80
Candelario, McKeller, Toscan &
Ballentine 60.00% 117,985.50 92,083.64 55,250.18
594,477.99
ICON Capital Corp.
Star Tire and Service 100.00% 9,205.30 6,137.20 6,137.20
Superior Tire 100.00% 20,607.90 14,425.83 14,425.83
Cuza Corp. 100.00% 26,308.96 17,539.64 17,539.64
H&K Tires 100.00% 24,931.95 15,866.15 15,866.15
Adamson Tire & Brake 100.00% 27,260.80 20,445.85 20,445.85
Aneree Assoc. 100.00% 4,319.17 1,440.39 1,440.39
75,855.06
FBS Leasing
G&H Tire Service, Inc. 100.00% 7,791.62 7,791.62 7,791.82
G&H Tire Service, Inc. 100.00% 12,522.13 8,997.97 8,997.97
16,789.79
AT&T Real Estate Joint Venture Loans:
Intermountain Realty - 001 (Castle
Rock - sold 4/96)** 100.00% 402,514.43 398,870.54 398,870.54
Intermountain Realty - 803 (Frisco, CO) 100.00% 432,168.82 432,661.35 432,661.35
Intermountain Realty - 003 (Montrose, CO) 100.00% 407,927.41 405,162.69 405,162.69
Intermountain Realty - 004 (Aurora,CO-
Smoky Hill-sold 4/96) 100.00% 511,469.01 508,002.66 508,002.66
Intermountain Realty - 005 (Colorado
Springs, CO-Academy) 100.00% 509,635.33 506,291.05 506,291.05
Intermountain Realty - 006 (Parker, CO) 100.00% 492,298.60 489,175.71 489,175.71
Intermountain Realty - 007 (Sioux Falls,
SD) 100.00% 488,522.48 488,522.48 488,522.48
Intermountain Realty - 008 (Northglenn,
CO) 100.00% 501,172.71 498,867.21 498,867.21
Storms Tires (Payson, AZ) 100.00% 328,118.48 326,407.34 326,407.34
4,053,961.03
AT&T Equipment Joint Venture Loans:
Herbert Hawley Joint Venture 100.00% 54,219.42 49,994.04 49,994.04
Big O/CSB Joint Venture 100.00% 52,609.95 46,122.16 46,122.16
Big O/CSB Joint Venture 100.00% 52,624.32 46,136.85 46,136.85
Big O/CSB Joint Venture 100.00% 98,289.22 86,528.20 86,528.20
Big O/CSB Joint Venture 100.00% 66,297.57 62,594.75 62,594.75
Big O/S.A.N.D.S. Joint Venture 100.00% 57,190.93 50,759.18 50,759.18
Big O/CMT Joint Venture 100.00% 79,435.34 76,009.18 76,009.18<PAGE>
418,144.36
The Money Store:
Golden Ventures, LLC, Mr. and Mrs.
Engebretson (18, 2/96-7/97) 100.00% 137,765.00 122,458.08 122,458.08
Brawl, Inc., Bob Joy and Loren Howe
(18, 11/95-10/96) 100.00% 62,046.00 37,227.60 37,227.60
Chandler, AZ Figgins/Judd (18,
7/95-12/96) 100.00% 85,901.00 64,425.42 64,425.43
Rand Rogenes, Brea, CA (12,
8/95 - 7/96) 100.00% 43,642.00 24,938.24 24,938.24
Marine E. Compton and Sandra S.
Kelly Compton (18, 2/96 - 7/97) 100.00% 149,110.00 132,542.24 132,542.24
JSM Tire, Inc.; Stephen L. & Jean M.
Morris (18, 2/96 - 7/97) 100.00% 147,023.00 130,687.52 130,687.52
Mr. Richard Parry (Santa Maria, CA)
(18, 5/96 - 12/97)* 100.00% 141,285.42 141,285.42
Mr. Gale Miller (Albuquerque, NM)
(18, 5/96 - 12/97)* 100.00% 137,638.98 137,638.98
Mr. Joe Williams (Redmond, WA)
(18, 7/96 - 1/98)* 100.00% 55,224.00 55,224.00
846,427.50
Heller First Capital
Woodmore Automotive, Inc. (18 months) 100.00% 144,556.20 144,556.20
144,556.20
Minnequa Bank
Intermountain Realty (Pueblo - 100.00% 382,511.72 382,511.72
scheduled for sale on 7/22/96)
382,511.72
Total Franchisee Financing 6,532,723.65
Notes Receivable Guarantee - CIT 1,391,373.95
Real Estate Lease Guarantees 6,268,603.78
Mortgage Loan Guarantee -Allstate 2,720,226.79
Total Guarantees 16,912,928.17
Additions through 9/16/96:
Heller First Capital
Granada Enterprises Corp. (18 months)
100% guarantee $144,468.00
*Additions after 03/31/96
** Deletions after 03/31/96
/TABLE
<PAGE>
BIG O TIRES, INC.
CONSOLIDATED SCHEDULE OF NOTES RECEIVABLE
YEAR TO DATE JUNE 30,1996
______________________PRINCIPAL BALANCES___________________________
<TABLE>
<CAPTION>
BALANCE BALANCE CURRENT LONG-TERM
DESCRIPTION 12-31-95 ADDITIONS PAYMENTS 06-30-96 MATURITIES PORTION
<S> <C> <C> <C> <C> <C> <C>
OFFICE 1828 N/R - CORP :MISC
BOISE TRUST 29,372.74 (3,707.10) 25,665.64 7,994.09 17,671.55
DENVER TRUST 37,360.79 0.00 37,360.79 11,756.37 25,604.42
FOUNTAIN 296,321.72 (4,666.55) 291,655.17 9,966.13 281,689.04
FOUNTAIN 173,358.71 (13,048.04) 160,310.67 27,866.05 132,444.62
CONSOLIDATED TIRE SPOKANE 15,077.39 0.00 15,077.39 0.00 15,077.39
CHRIS HANNAH 9,052.05 (9,052.05) 0.00 0.00 0.00
PROGRESSIVE 64,192.52 (48,144.36) 16,048.16 16,048.16 0.00
SASHA ATTA 8,226.39 (6,114.05) 2,112.34 2,112.34 0.00
HUNTINGTON BEACH 733.88 (733.88) 0.00 0.00 0.00
MONTROSE HAWLEY 0.00 114,292.00 (5,940.40) 108,351.60 19,083.36 89,268.24
MIRAMAR MOORE 0.00 13,059.83 (1,049.78) 12,010.05 7,098.75 4,911.30
WESTMINSTER, CA 0.00 3,693.95 (729.78) 2,964.17 2,964.17 0.00
COSTA MESA HOLSTINE 0.00 20,000.00 20,000.00 0.00 20,000.00
REDMOND, WA 0.00 51,386.47 (25,000.00) 26,386.47 4,282.61 22,103.86
HAMILTON ST. HELENS 0.00 15,000.00 15,000.00 3,171.03 11,828.97
1828 N/R - CORP.:MISC. 633,696.19 217,432.25 (118,185.99) 732,942.45 112,343.06 620,599.39
29 N/R - CORP.:RELATED PARTIES
ROQUET 20,000.00 (20,000.00) 0.00 0.00 0.00
CSB 590,444.10 (5,143.24) 585,300.86 11,267.22 574,033.64
CSB 0.00 250,000.00 (6,103.67) 243,896.33 15,793.05 228,103.28
610,444.10 250,000.00 (31,246.91) 829,197.19 27,060.27 802,136.92
85 N/R
MINNESALE 470,547.77 (16,470.08) 454,077.69 0.00 454,077.69
40 N/R - KY : A/R TO NOTES
COMMONWEALTH TIRE CO. 45,112.05 (6,664.43) 38,447.62 12,474.34 25,973.28
DENVER RSSC
1830 N/R - COLO.:STORE SALES
FOOTE LOVELAND 339,998.77 0.00 339,998.77 0.00 339,998.77
WILLIAMS - COSTA MESA 17TH 201,260.66 (201,260.66) 0.00 0.00 0.00
N/R - SALEM 37,757.00 (8,653.56) 29,103.44 18,854.31 10,249.13
1830 N/R - COLO.:STORE SALES 579,016.43 0.00 (209,914.22) 369,102.21 18,854.31 350,247.90
1832 N/R - COLO.:A/R TO NOTES
LEBARON 203,962.76 (9,848.71) 194,114.05 21,152.06 172,961.99
CASPER 11,761.38 11,761.38 7,480.24 4,281.14
CASPER 28,899.40 (4,705.49) 24,193.91 14,206.53 9,987.38
WESTAR 24,922.01 452.74 25,374.75 841.69 24,533.06
GILLETTE 33,444.88 (3,321.43) 30,123.45 7,301.88 22,821.57
BRIGHTON 66,657.39 (4,379.65) 62,277.74 13,829.88 48,447.86<PAGE>
______________________PRINCIPAL BALANCES___________________________
BALANCE BALANCE CURRENT LONG-TERM
DESCRIPTION 12-31-95 ADDITIONS PAYMENTS 06-30-96 MATURITIES PORTION
GOLDEN 37,000.00 0.00 37,000.00 7,272.14 29,727.86
LINCOLN, NE 60,044.75 (1,731.92) 58,312.83 10,438.70 47,874.13
ALBQ, NM MILLER 0.00 50,000.00 0.00 50,000.00 2,643.59 47,356.41
PUEBLO KEITH 0.00 13,974.22 (3,493.56) 10,480.66 10,480.66 0.00
GALLUP LELOFF 0.00 139,339.79 (511.47) 138,828.32 14,543.03 124,285.29
1832 N/R - COLO.:A/R TO NOTES 466,692.57 203,314.01 (27,539.49) 642,467.09 110,190.40 532,276.69
__VILLE RSSC
N/R - NO. CAL.:A/R TO NOTES
N/R - STORE 9 NAPA 28,295.34 (4,942.54) 23,352.80 10,699.73 12,653.07
N/R - STORE 38 ROCKLIN 22,596.36 (3,916.14) 18,680.22 8,471.94 10,208.28
N/R - STORE 41 CARMICHAEL 29,263.30 (6,217.54) 23,045.76 11,602.65 11,443.11
N/R - STORE 41 CARMICHAEL 19,320.93 (3,348.48) 15,972.45 7,243.87 8,728.58
N/R - CITRUS HEIGHTS MCKELLAR 33,722.79 (33,191.08) (531.79) 0.00 0.00 0.00
N/R - CITRUS HEIGHTS MCKELLAR 6,000.00 (6,000.00) 0.00 0.00 0.00 0.00
N/R - CITRUS HEIGHTS MCKELLAR 0.00 142,176.96 142,176.96 2,408.64 139,768.32
N/R - STORE 102 SAN RAFAEL 26,848.69 (4,829.87) 22,018.82 10,448.06 11,570.76
N/R - STORE 137 VISALIA 78,782.01 (5,171.80) 73,610.21 11,274.88 62,335.33
N/R - STORE 141 LINCOLN 7,709.26 (4,110.09) 3,599.17 3,599.17 0.00
N/R - STORE 5127 LOS BANOS 27,626.30 (14,728.63) 12,897.67 12,897.67 0.00
1852 N/R - NO. CAL.:A/R TO NOTES 280,164.98 102,985.96 (47,796.88) 335,354.06 78,646.61 256,707.45
N/R - SO.CAL.:A/R TO NOTES
MESA GILBERT RD 18,910.60 (4,055.52) 14,855.08 8,784.10 6,070.98
RIVERSIDE, CA DUDDY 9,385.39 46,282.89 (4,762.31) 50,905.97 8,356.42 42,549.55
CORONA DUDDY 70,016.93 (6,254.73) 63,762.20 13,534.38 50,227.82
SCOTTSDALE GUNNELL 188,070.66 (6,491.66) 181,579.00 14,324.80 167,254.20
BREA ROGENES 30,570.49 (2,812.60) 27,757.89 6,189.27 21,568.62
CHANDLER JUDD 27,992.92 (2,581.12) 25,411.80 5,637.92 19,773.88
SAN MARCOS 51,673.09 (51,673.09) 0.00 0.00 0.00
TUCSON THORNYDALE 34,000.00 0.00 34,000.00 4,776.57 29,223.43
CHANDLER, AZ 0.00 10,767.48 (8,892.05) 1,875.43 1,875.43 0.00
WESTMINSTER, CA 0.00 40,134.00 0.00 40,134.00 2,087.87 38,046.13
EL CENTRO, CA 0.00 40,000.00 (2,076.26) 38,723.74 7,196.73 31,527.01
LAHABRA ALTMAN 0.00 86,390.17 (4,788.59) 81,601.58 14,437.03 67,164.55
REDLANDS ROGERS 0.00 129,418.62 (6,396.87) 123,021.75 28,323.66 94,698.09
MIRAMAR MOORE 0.00 60,745.08 0.00 60,745.08 0.00 60,745.08
LANCASTER FELIX 0.00 27,429.41 (704.45) 26,724.96 4,487.85 22,237.11
1862 N/R - SO. CAL:A/R TO NOTES 430,620.08 441,967.65 (101,489.25) 771,098.48 120,012.03 651,086.45
___
72 N/R - IDAHO:A/R TO NOTES
N/R - OREM 462,560.38 (2,007.95) 460,552.43 4,264.23 456,288.20
N/R - EVANSTON 47,029.13 (4,493.49) 42,535.64 15,744.76 26,790.88
N/R - D AND J 11,098.96 (8,347.27) 2,751.69 2,751.69 0.00
N/R - ROY 40,766.89 (2,344.40) 38,422.49 5,117.69 33,304.80
N/R - SPOKANE 235,244.43 0.00 235,244.43 69,294.64 165,949.79
N/R - SLC (HIGHLAND) 59,160.00 (1,909.73) 57,250.27 10,051.44 47,198.83<PAGE>
______________________PRINCIPAL BALANCES___________________________
BALANCE BALANCE CURRENT LONG-TERM
DESCRIPTION 12-31-95 ADDITIONS PAYMENTS 06-30-96 MATURITIES PORTION
N/R - LAKE OSWEGO 30,000.00 0.00 30,000.00 8,413.91 21,586.09
N/R - EVERETT 0.00 6,782.94 (2,168.25) 4,614.69 4,614.69 0.00
1872 N/R - IDAHO:A/R TO NOTES 885,859.79 6,782.94 (21,271.09) 871,371.64 120,253.05 751,118.59
TOTALS 4,402,153.96 1,222,482.81 (580,578.34) 5,044,058.43 599,834.07 4,444,224.36
BIG O DEVELOPMENT
BESSIE PAULSEN TUFTS 293,539.87 (1,717.28) 291,822.59 3,681.28 288,141.31
GRAND TOTAL 4,695,693.83 1,222,482.81 (582,295.62) 5,335,881.02 603,515.35 4,732,365.67
PER ABOVE 4,695,693.83 1,222,482.81 (582,295.62) 5,335,881.02 603,515.35 4,732,365.67
CLASSIFICATION
NET ASSETS ON STORE SALES (470,547.77) 0.00 16,470.08 (454,077.69) 0.00 (454,077.69)
CSB NOTE REC. ON SALE OF
JOINT VENTURE VENTURE (550,000.00) (550,000.00) (550,000.00)
NOTES RESERVED FOR:
CASPER (11,761.38) 0.00 0.00 (11,761.38) (7,480.24) (4,281.14)
CASPER (28,899.40) 0.00 4,705.49 (24,193.91) (14,206.53) (9,987.38)
OREM (462,560.38) 0.00 2,007.95 (460,552.43) (4,264.23) (456,288.20)
3,171,924.90 1,222,482.81 (559,112.10) 3,835,295.61 577,564.35 3,257,731.26
OTHER 3,111,480.80 972,482.81 (527,865.19) 3,556,098.42 550,504.08 3,005,594.34
RELATED PARTIES 60,444.10 250,000.00 (31,246.91) 279,197.19 27,060.27 252,136.92
3,171,924.90 1,222,482.81 (559,112.10) 3,835,295.61 577,564.35 3,257,731.26
CURRENT CURRENT NET NET TOTAL
OTHER RELATED OTHER RELATED
BALANCES PER BOOKS, JUNE 30, 1996 576,455.08 27,060.27 4,480,228.75 252,136.92 5,335,881.02
ADJUSTMENTS 25,951.00 0.00 1,474,634.41 0.00 1,500,585.41
ADJUSTED BALANCES, JUNE 30, 1996 550,504.08 27,060.27 3,005,594.34 252,136.92 3,835,295.61
POST JUNE 30, 1996 ADDITIONS:
Rapid City Dacar $38,413.10
Sacramento $25,500.00
Murrieta Granada $48,000.00
/TABLE
<PAGE>
PENDING MAP LOANS
APPROVED WAITING FOR FINAL NUMBERS AND FRANCHISEE SIGNATURE
FRANCHISEE APPROXIMATE AMOUNT
Robert Osnes $50,000
Jan Kirk $148,988
TOTAL PENDING MAPS $198,988
MAP LOANS DISCUSSED, NOT YET APPROVED BY BIG O.
FRANCHISEE FRANCHISEE LOCATION
Guido Bertoli Santa Cruz, CA
Steve Wallace Louisville, KY
TOTAL # OF MAP LOANS PENDING = 4<PAGE>
TBC CORPORATION (PARENT)
SCHEDULE OF NOTES AND TRADE
ACCEPTANCES RECEIVABLE
AS OF MAY 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
ORIGINATION ORIGINAL INTEREST TOTAL LONG
PAYOR DATE AMOUNT RATE OWED CURRENT TERM
<S> <C> <C> <C> <C> <C> <C>
NOTES RECEIVABLE
Wall Tire Distributors, Inc. 04/1/89 $4,896,673 10.00% $4,896,673 -- $4,896,673
Payment terms: No payments
have been made. The matter
is now in litigation.
Emery Sales, Inc. 09/10/93 651,236 7.50% 38,191 38,191 --
(Amount shown as due is net
of $194,981, which was
written off in December 1994
and $150,000,which was
written off in December
1995.)
Payment terms: payments of
$12,146.04 per month are
currently being made. A
balloon payment was due
on October 10, 1994.
Interest: no longer is being
applied.
Southwest Tire & Supply 02/15/94 2,500,000 9.25% 276,012 276,011 --
Payment terms: equal monthly
payments of $27,059.00.
Payments are computed using
prime rates in effect on
February 15th of each year.
Interest: included as part
of the monthly payment, at a
rate of prime + 1.00%
Kost Tire Distributors 04/30/96 1,595,607 10.25% 1,468,770 1,468,770 --
Payment terms: equal monthly
payments of $140,464.77
beginning May 15, 1996 and
ending April 15, 1997.
Interest: included as part
of the monthly payment, at
the rate of 10.25% per annum.
Pedro Garcia 08/15/95 60,000 8.75% 46,055 7,770 38,285
Payment terms: equal monthly
payments of $957.75
beginning September 15,
1995 and ending September 15,
2002.
Interest:
included as part of the monthly
payment, at the prime rate.
V.I.P., Inc. 09/06/95 400,000 8.75% 266,666 266,666 --
Payment terms: interest only
for the first six months,
equal principal reduction for
the last six months with
payments ending September 6,
1996.
Interest:
included as part of the monthly
payment, at the prime rate.
Aspen Enterprises, Inc. 10/15/95 1,000,000 8.75% 726,118 503,168 222,950
Payment terms: equal monthly
payments of $45,570.12
beginning November 15,
1995 and ending October 15,
1997.
Interest: included as part
of the monthly payment, at the
present rate of 8.75%, adjusted
annually.
Total Notes Receivable - TBC 7,718,485 2,560,576 5,157,908
/TABLE
<PAGE>
BATTERY ASSOCIATES, INC.
SCHEDULE OF NOTES RECEIVABLE
AS OF MAY 31, 1996 (unaudited)
<TABLE>
<CAPTION>
Original Initiation Monthly Current Long-Term
Name Amount Date Rate Payment Portion Portion Total
<S> <C> <C> <C> <C> <C> <C> <C>
Pennsylvania Battery 39,534 05/01/88 10.50% $ 620 $6,793 $ 2,427 $9,220
Coalinga Battery 59,817 03/01/95 10.50% 1,501 13,961 30,900 44,861
Ohio Battery Warehouse 82,623 05/02/90 10.50% 1,084 8,831 34,913 43,744
Arkansas Battery 101,444 08/25/92 10.25% 1,327 8,669 65,956 74,625
Tri-Cities Battery 97,465 10/05/92 10.50% 1,134 7,267 56,502 63,769
Northern Battery 54,001 03/01/95 10.50% 2,838 30,680 13,808 44,488
TOTAL $76,201 $204,506 $280,707
Notes:
- - The interest rate on the Ohio Battery Warehouse note is based on prime
rate plus 2% to be adjusted annually on January 1st.
- - The interest rate on the Arkansas Battery note is based on federal
discount rate plus 5% to be adjusted semi-annually on January 1st and July
1st.
- - The interest rate on the Tri-Cities Battery, Pennsylvania Battery,
Coalinga Battery and Northern Battery notes are based on prime rate plus
2% to be adjusted semi-annually on January 1st and July 1st.
/TABLE
<PAGE>
NORTHERN STATES TIRE, INC.
Notes Receivable as of August 31, 1996
Pittsfield Tire & Auto Aug 97 12% INT $ 6,544.88
Dracut July 96 12% INT $ 4,926.45
County Tire Mar 00 0% INT $29,000.00
*Wilder Auto Oct 98 0% INT $ 9,800.00
Berry Tire Company July 97 $27,634.53
Strobel's Garage July 97 $ 1,960.55
TBW Automotive July 97 $ 6,622.42
Ledger Balance Agreements
**Bob Aronson Tire _______ 0% INT $15,000.00
Nite Owl Tire Sept 96 0% INT $30,000.00
Pittsfield Tire Sept 96 0% INT $ 5,652.67
County Tire Sept 96 0% INT $10,000.00
$154,778.24
* Will be paid at time of FDIC settlement, should be September 98.
** Pay back only being if inventory turns aren't adequate. Interest rate
on ledger balance is 12% if they don't abide by repayment schedule.<PAGE>
EXHIBIT 4.2
$48,500,000
SHORT TERM CREDIT AGREEMENT
among
TBC CORPORATION,
as the Borrower,
THE LENDING INSTITUTIONS PARTY HERETO,
as the Lenders
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
as the Administrative Agent,
and
NBD BANK,
as the Co-Agent
dated as of
September 25, 1996<PAGE>
This Short Term Credit Agreement, dated as of September 25, 1996, is
among TBC Corporation, the Lenders, NBD Bank, as Co-Agent and First Tennessee
Bank National Association as Administrative Agent. The parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which
the Borrower or any of its Subsidiaries (i) acquires any going business or
all or substantially all of the assets of any firm, corporation,
partnership, joint venture, or limited liability company, or division
thereof, or any other entity, whether through purchase of assets, merger
or otherwise or (ii) directly or indirectly acquires (in one transaction
or as the most recent transaction in a series of transactions) at least a
majority (in number of votes) of the securities of a corporation which
have ordinary voting power for the election of directors (other than
securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the
outstanding ownership interests of a partnership or limited liability
company, or joint venture or any other entity.
"Acquisition Agreement" means the acquisition documents entered into
between the Borrower and Big O pursuant to the Big O Acquisition.
"Administrative Agent" means First Tennessee Bank in its capacity as
administrative agent for the Lenders pursuant to Article X, and not in its
individual capacity as a Lender, and any successor Administrative Agent
appointed pursuant to Article X.
"Advance" means a borrowing hereunder (or conversion or continuation
thereof) consisting of the aggregate amount of the several Loans made on
the same Borrowing Date (or date of conversion or continuation) by the
Lenders to the Borrower of the same Type.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A
Person shall be deemed to control another Person if the controlling Person
owns 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly,
the power to direct or cause the direction of the management or policies
of the controlled Person, whether through ownership of stock, by contract
or otherwise.
"Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders, as reduced from time to time pursuant to the terms hereof.<PAGE>
"Aggregate Outstandings" means, at any date of determination, the
aggregate of the Outstandings of all the Lenders as of such date of
determination.
"Agreement" means this short term credit agreement, as it may be amended
or modified and in effect from time to time.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Corporate Base Rate for such day or (ii)
the sum of Federal Funds Effective Base Rate for such day plus 1/2% per
annum.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any of the President, Senior Vice President
Operations and Treasurer or Vice President and Controller of the Borrower,
acting singly.
"Big O" means Big O Tires, Inc., a Nevada corporation.
"Big O Acquisition" means the acquisition by the Borrower of all of the
outstanding shares of Big O for a total aggregate purchase price not
exceeding $60,000,000.
"Borrower" means TBC Corporation, a Delaware corporation, and its
successors and assigns.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.9.
"Business Day" means (i) with respect to any borrowing, a day (other
than a Saturday or Sunday) on which banks generally are open in Memphis and
New York for the conduct of substantially all of their commercial lending
activities and (ii) for all other purposes, a day (other than a Saturday
or Sunday) on which banks generally are open in Memphis for the conduct of
substantially all of their commercial lending activities.
"Capital Expenditure" means, for any Person and for any period of its
determination, the aggregate of all expenditures and costs (whether paid
in cash or accrued as liabilities during that period and including that
portion of Capital Leases placed in effect during that period which is
capitalized on the balance sheet of such Person) of such Person during
such period that, in conformity with GAAP, are required to be included in
or reflected by the property, plant, or equipment, or any similar fixed
asset or long term capitalized asset accounts reflected in the balance
sheet of such Person. Capital Expenditures does not include amounts
attributed to construction or development of Retail Stores Under
Development.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.<PAGE>
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown
as a liability on a balance sheet of such Person prepared in accordance
with GAAP.
"Change in Control" means the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 20% or more of the outstanding shares of voting
stock of the Borrower.
"Closing Date" means the date on which the conditions set forth in
Section 4.1 shall have been fulfilled.
"Co-Agent" means NBD Bank, a Michigan banking corporation.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means, for each Lender, the obligation of such Lender to
make Loans as provided herein not exceeding the amount set forth opposite
its signature below or as set forth in any Notice of Assignment relating to
any assignment that has become effective pursuant to Section 12.3.2, as
such amount may be modified from time to time pursuant to the terms
hereof.
"Condemnation" is defined in Section 7.8.
"Consolidated Funded Indebtedness" means, at any date, all Funded
Indebtedness of the Borrower and its Subsidiaries at such date, determined
on a consolidated basis.
"Consolidated Net Income" means, for any period, the consolidated net
income or loss of the Borrower and its Subsidiaries for such period,
determined in accordance with GAAP.
"Consolidated Net Worth" means, at any date, the consolidated net worth
of the Borrower and its Subsidiaries at such date, determined in accordance
with GAAP.
"Consolidated Tangible Net Worth" means, at any date, Consolidated Net
Worth after subtracting therefrom the aggregate amount of all intangible
assets of the Borrower and its Subsidiaries, including, without
limitation, goodwill, franchises, licenses, patents, trademarks, trade
names, copyrights, service marks, brand names and operating rights, all
determined in accordance with GAAP.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses,
contingently agrees to purchase or provide funds for the payment of, or
otherwise becomes or is contingently liable upon, the obligation or
liability of any other Person, or agrees to maintain the net worth or
working capital or other financial condition of any other Person, or<PAGE>
otherwise contractually assures any creditor of such other Person against
loss.
"Conversion/Continuation Notice" is defined in Section 2.10.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any of its Subsidiaries,
are treated as a single employer under Section 414 of the Code.
"Corporate Base Rate" means a rate per annum equal to the prime rate of
interest announced by NBD from time to time, changing when and as said
prime rate changes.
"Default" means an event described in Article VII.
"EBIT" means, with respect to the Borrower and its Subsidiaries and for
any period of its determination, the Consolidated Net Income of the
Borrower and its Subsidiaries for such period, plus the consolidated
interest expense and taxes, all determined in accordance with GAAP
consistently applied.
"EBITDA" means, with respect to the Borrower and its Subsidiaries for
any period of determination, EBIT of the Borrower and its Subsidiaries for
such period, plus depreciation and amortization of the Borrower and its
Subsidiaries for such period, all determined in accordance with GAAP.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements and other governmental
restrictions relating to (i) the protection of the environment, (ii) the
effect of the environment on human health, (iii) emissions, discharges or
releases of pollutants, contaminants, hazardous substances or wastes into
surface water, ground water or land, or (iv) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, hazardous substances or wastes or the clean-up
or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Existing Credit Facilities" means each of those credit facilities
described in Sections 4.1(b)(v) and (vi).
"Facility Fee" is defined in Section 2.5.
"Federal Funds Advance" means an Advance which bears interest at the
Federal Funds Effective Rate.
"Federal Funds Effective Base Rate" means, for any day, an interest rate
per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published for the preceding day on<PAGE>
page 120 of Telerate Data Service (or, if such day is not a Business Day,
for the immediately preceding Business Day), or, if such rate is not so
published for any day which is a Business Day, the average of the quotations
at approximately 10 a.m. (Memphis time) on the preceding day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by the Administrative Agent in its
sole discretion.
"Federal Funds Effective Rate" means, with respect to a Federal Funds
Advance, a rate per annum equal to the sum of (a) the Federal Funds
Effective Base Rate, plus (b) 1.15%.
"First Tennessee Bank" means First Tennessee Bank National Association
in its individual capacity, and its successors.
"Fixed Charge Coverage Ratio" means as of the last day of any fiscal
quarter of the Borrower, the ratio of (a) EBIT plus rental payments for
the period of four fiscal quarters ending on the last day of such quarter
to (b) the sum of (i) the Borrower's and its Subsidiaries consolidated
interest expense and rental payments (each as defined under GAAP) for such
period.
"Floating Rate" means, for any day, a rate per annum equal to (i) the
Alternate Base Rate for such day, changing when and as the Alternate Base
Rate changes.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
"Funded Indebtedness" of any Person as of any particular date of
computation means, without duplication, the aggregate Indebtedness of such
Person outstanding on the date of computation.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and in the statements
and pronouncements of the Financial Accounting Standards Board or in such
other statement by such other entity as may be the circumstances as of the
date of determination, consistently applied. If at any time any change in
GAAP would affect the computation of any financial ratio or requirement
set forth in this Agreement, the Administrative Agent, the Lenders and the
Borrower shall negotiate in good faith to amend such ratio or requirement
to reflect such change in GAAP (subject to the approval of the Required
Lenders), provided that, until so amended, (i) such ratio or requirement
shall continue to be computed in accordance with GAAP prior to such change
therein and (ii) the Borrower shall provide to the Administrative Agent
and the Lenders financial statements and other documents required under
this Agreement or as reasonably requested hereunder setting forth a
reconciliation between calculations of such ratio or requirement made
before and after giving effect to such change in GAAP.<PAGE>
"Guaranties" means the guaranties dated the date hereof executed and
delivered by the Guarantors pursuant to Section 4.1, which shall be
substantially in the form of Exhibit "F", as amended, supplemented or
otherwise modified from time to time.
"Guarantors" means each of TBC Sales, Inc., TBC International, Inc. and
Big O Tires, Inc.
"Hazardous Material" means (i) any Hazardous Substance; (ii) any
Hazardous Waste; (iii) any petroleum product; or (iv) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material or substance
within the meaning of any other federal, state or local law, regulation,
ordinance or requirement (including consent decrees and administrative
orders) relating to or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance or material,
all as amended or hereafter amended.
"Hazardous Substance" means any "hazardous substance," as defined by
CERCLA.
"Hazardous Waste" means any "hazardous waste," as defined by the
Resource Conservation and Recovery Act, as amended.
"Indebtedness" means, as to any Person, at a particular time, all items
which constitute, without duplication, (i) indebtedness for borrowed money
or the deferred purchase price of Property (other than trade payables
incurred in the ordinary course of business), (ii) indebtedness evidenced
by notes, bonds, debentures or similar instruments, (iii) obligations with
respect to any conditional sale or title retention agreement, (iv)
indebtedness arising under acceptance facilities and the amount available
to be drawn under all letters of credit (other than trade letters of
credit) issued for the account of such Person and, without duplication,
all drafts drawn thereunder to the extent such Person shall not have
reimbursed the issuer in respect of the issuer's payment of such drafts,
(v) all liabilities secured by any Lien on any Property owned by such
Person even though such Person has not assumed or otherwise become liable
for the payment thereof (other than (A) carriers'; warehousemen's,
mechanics', repairmen's or other like non-consensual statutory Liens
arising in the ordinary course of business and (B) liabilities of
Subsidiaries for which recourse may be had by the creditor only to the
Property secured by the Lien), (vi) Capitalized Lease Obligations and
(vii) Contingent Obligations, other than Intercompany Contingent
Obligations and Contingent Obligations permitted pursuant to Section 6.17
(viii) hereof.
"Intercompany Contingent Obligation" means a Contingent Obligation
pursuant to which the Borrower or a Subsidiary is contingently liable
solely with respect to a primary obligation of the Borrower or any
Subsidiary and such primary obligation is included among the liabilities
shown on the Borrower's consolidated balance sheets to be submitted to the
Lenders pursuant to Section 6.1.
"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary<PAGE>
course of business), extension of credit (other than accounts receivable
and trade acceptances arising in the ordinary course of business on terms
customary in the trade) or contribution of capital by such Person; stocks,
bonds, mutual funds, partnership interests, notes, debentures or other
securities owned by such Person; any deposit accounts and certificate of
deposit owned by such Person; and structured notes, derivative financial
instruments and other similar instruments or contracts owned by such
Person.
"Lenders" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the
Administrative Agent, any office, branch, subsidiary or affiliate of such
Lender or the Administrative Agent.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any
kind or nature whatsoever (including, without limitation, the interest of
a vendor or lessor under any conditional sale, Capitalized Lease or other
title retention agreement).
"Loan" means, with respect to a Lender, such Lender's loan made
pursuant to Article II (or any conversion or continuation thereof).
"Loan Documents" means this Agreement, the Revolving Notes, the Swing
Line Note and the Guaranties.
"Long Term Credit Agreement" means the long term credit agreement
entered into among the Borrower, the Lenders and the Administrative Agent as
of the Closing Date.
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of
operations, or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole, (ii) the ability of the Borrower to perform
its obligations under the Loan Documents, or (iii) the validity or
enforceability of any of the Loan Documents or the rights or remedies of
the Administrative Agent or the Lenders thereunder.
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer
is obligated to make contributions.
"NBD" means NBD Bank in its individual capacity, and its successors.
"Notes" means each of the Revolving Notes and Swing Line Notes.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,<PAGE>
reimbursements, indemnities and other obligations of the Borrower to the
Lenders or to any Lender, the Administrative Agent or any indemnified
party hereunder arising under the Loan Documents.
"Outstandings" means, for each Lender at any date of determination, the
sum of (a) the aggregate outstanding principal amount of all Loans made
pursuant to Section 2.1 by such Lender as of the date of determination,
plus (b) such Lender's outstanding Swing Line Loans.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each March, June, September, and
December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Percentage" means, for any Lender, 100% times a fraction (a) the
numerator of which is such Lender's Commitment, and (b) the denominator of
which is the Aggregate Commitment.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or
other entity or organization, or any government or political subdivision
or any agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of
the Code as to which the Borrower or any member of the Controlled Group
may have any liability.
"Private Placement" means the private placement of debt by the Borrower
with the Prudential Insurance Company of America or its affiliates for the
purpose of, among other things, funding the Big O Acquisition, in an
amount not to exceed $75,000,000.
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.
"Purchasers" is defined in Section 12.3.1.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of the
Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing
or carrying margin stocks applicable to member banks of the Federal Reserve
System.<PAGE>
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a
Plan, excluding, however, such events as to which the PBGC by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified
within 30 days of the occurrence of such event, provided, however, that a
failure to meet the minimum funding standard of Section 412 of the Code
and of Section 302 of ERISA shall be a Reportable Event regardless of the
issuance of any such waiver of the notice requirement in accordance with
either Section 4043(a) of ERISA or Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least 51%
of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 51 % of the total of
the aggregate unpaid principal amount of the outstanding Advances.
"Retail Stores Under Development" means retail stores under development
or construction by Big O which are shown as such by the Borrower on its
balance sheet.
"Revolving Credit Termination Balance" means the aggregate principal
amount of Advances outstanding on the Termination Date after giving effect
to any Advances made or repaid on such date.
"Revolving Note" means a promissory note, in substantially the form of
Exhibit "A-1" hereto, duly executed by the Borrower and payable to the
order of a Lender in the amount of its Commitment, including any
amendment, modification, renewal or replacement of such promissory note.
"Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member
of the Controlled Group.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by
one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, limited liability company,
association, joint venture or similar business organization more than 50%
of the ownership interests having ordinary voting power of which shall at
the time be so owned or controlled. Unless otherwise expressly provided,
all references herein to a "Subsidiary" shall mean a Subsidiary of the
Borrower.
"Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (i) represents more than 10%
of the consolidated assets of the Borrower and its Subsidiaries as would be
shown in the consolidated financial statements of the Borrower and its
Subsidiaries as at the beginning of the twelve-month period ending with<PAGE>
the month in which such determination is made, or (ii) is responsible for
more than 10% of the consolidated net sales or of the consolidated net
income of the Borrower and its Subsidiaries as reflected in the financial
statements referred to in clause (i) above.
"Swing Line Bank" means First Tennessee Bank or any other Lender as a
successor Swing Line Bank.
"Swing Line Commitment" means the obligation of the Swing Line Bank to
make Swing Line Loans up to a maximum of $3,000,000 at any one time
outstanding.
"Swing Line Loan" means a Loan made available to the Borrower by the
Swing Line Bank pursuant to Section 2.2. hereof.
"Swing Line Note" means a promissory note, in substantially the form of
Exhibit "A-2" hereto, duly executed by the Borrower and payable to the
order of the Swing Line Bank in the amount of its Swing Line Commitment,
including any amendment, modification, renewal or replacement of such note
and evidencing such Lender's Swing Line Loans.
"Termination Date" means the date which is 364 days after the Closing
Date, or such earlier date of termination of the Lenders' obligations
pursuant to Section 8.1 upon the occurrence of an Event of Default.
"Transferee" is defined in Section 12.4.
"Type" means, with respect to any Advance, its nature as a Floating Rate
Advance or Federal Funds Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single
Employer Plans exceeds the fair market value of all such Plan assets
allocable to such benefits, all determined as of the then most recent
valuation date for such Plans using PBGC actuarial assumptions for single
employer plan terminations.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more
Wholly-Owned Subsidiaries of such Person, or by such Person and one or
more Wholly-Owned Subsidiaries of such Person, or (ii) any partnership,
limited liability company, association, joint venture or similar business
organization 100% of the ownership interests having ordinary voting power
of which shall at the time be so owned or controlled.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.<PAGE>
ARTICLE II
THE CREDITS
2.1. Commitment. From and including the date of this Agreement and
prior to the Termination Date, each Lender severally agrees, on the terms
and conditions set forth in this Agreement, to make Loans to the Borrower
from time to time in amounts not to exceed in the aggregate at any one time
outstanding the amount of its Commitment and provided that, after giving
effect to the making of any Loan, the Aggregate Outstandings do not exceed
the Aggregate Commitment. Subject to the terms of this Agreement, the
Borrower may borrow, repay and reborrow Loans at any time prior to the
Termination Date. The Commitments to lend hereunder shall expire on the
Termination Date. Any outstanding Advances, and all other unpaid
Obligations shall be paid in full by the Borrower on the Termination Date.
The Advances made under this Section 2.1 shall be evidenced by the
Revolving Notes.
2.2. Swing Line Loans. In addition to Advances pursuant to Section
2.1, but subject to the terms and conditions of this Agreement (including but
not limited to those limitations set forth in Section 2.1), the Swing Line
Bank agrees to make the Swing Line Loans to the Borrower in accordance
with this Section 2.2 up to the amount of the Swing Line Commitment;
provided, however that the aggregate amount of the Swing Line Bank's
ratable Loans made pursuant to Section 2.1 and Swing Line Loans outstanding
(after giving effect to any concurrent repayment of Loans) at such time shall
not exceed the Swing Line Bank's Commitment. Amounts borrowed under this
Section 2.2 may be borrowed, repaid and reborrowed to, but not including,
the Termination Date. All outstanding Swing Line Loans shall be paid in full
on the Termination Date. All outstanding Swing Line Loans shall be made as
Federal Funds Advances.
2.2.1. Swing Line Request. The Borrower may request a Swing
Line Loan from the Swing Line Bank on any Business Day before the
Termination Date by giving the Administrative Agent and the Swing Line
Bank notice by 1:00 p.m. (Memphis time) on such Borrowing Date
specifying the aggregate amount of such Swing Line Loan, which shall
be an amount not less than $50,000.
2.2.2. Making of Swing Line Loans. The Swing Line Bank shall,
on such Borrowing Date, make the funds for such Swing Line Loan
available to the Borrower at the Administrative Agent's address or at
such other place as indicated in written money transfer instructions
from the Borrower delivered pursuant to Section 4.1 (a)(xi) or
otherwise.
2.2.3. Swing Line Notes. The Swing Line Loans shall be
evidenced by the Swing Line Notes and each Swing Line Loan shall be paid
in full by the Borrower on or before the Termination Date.
2.2.4. Repayment of Swing Line Loans. The Borrower may at any
time pay, without penalty or premium, all outstanding Swing Line Loans,
or, in a minimum amount of $50,000 any portion of the outstanding Swing
Line Loans upon notice to the Administrative Agent and the Swing Line
Bank received<PAGE>
by 1:00 p.m. (Memphis time) on such payment date. In addition, the
Administrative Agent: (i) may at any time in its sole discretion or (ii)
shall on the Termination Date , require the Lenders (including the Swing
Line Bank) to make a Federal Funds Advance in an amount equal to such
Lender's Percentage of the unreimbursed Swing Line Loans outstanding on
such date for the purpose of repaying Swing Line Loans (to the extent
that there is availability under the Commitment); provided, however,
that the obligation of each Lender to make any such Advance is subject
to the condition that the Swing Line Bank believed in good faith that
all conditions under Section 4.2 were satisfied at the time the Swing
Line Loan was made. If the Swing Line Bank receives notice from any
Lender that a condition under Section 4.2 has not been satisfied, no
Swing Line Loans shall be made until (a) such notice is withdrawn by
that Lender or (b) the Required Lenders have waived satisfaction of
any such condition. The Lenders shall deliver the proceeds of such
Advance to the Administrative Agent by 2:00 p.m. (Memphis time) on the
applicable Borrowing Date for application to the Swing Line Bank's
outstanding Swing Line Loans. Subject to the proviso contained in the
first sentence of this Section 2.2.4, each Lender's obligation to make
available its Percentage of the Advance referred to in this Section
shall be absolute and unconditional and shall not be affected by any
circumstances, including without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Lender may
have against the Swing Line Bank, or anyone else, (ii) the occurrence
or continuance of a Default or Unmatured Default, (iii) any adverse
change in the condition (financial or otherwise) of the Borrower or
(iv) any other circumstances, happening or event whatsoever. If for
any reason a Lender does not make available its Percentage of the
foregoing Advance, such Lender shall be deemed to have unconditionally
and irrevocably purchased from the Swing Line Bank, without recourse or
warranty, an undivided interest and participation in each Swing Line
Loan then being repaid, equal to its Percentage of all such Swing Line
Loans being repaid, so long as such purchase would not cause such Lender
to exceed its Commitment. If any portion of any amount paid (or deemed
paid) to the Administrative Agent should be recovered by or on behalf of
the Borrower from the Administrative Agent in bankruptcy or otherwise,
the loss of the amount so recovered shall be shared ratably among all
Lenders.
2.3. [Intentionally Omitted]
2.4. Ratable Loans; Types of Advances. Each Advance hereunder shall
consist of Loans made from the several Lenders ratably in proportion to
the ratio that their respective Commitments bear to the Aggregate
Commitment. The Advances may be Floating Rate Advances or Federal Funds
Advances, or a combination thereof, selected by the Borrower in accordance
with Sections 2.9 and 2.10.
2.5. Facility Fee. The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a facility fee in the amount of 10
basis points on the total amount of such Lender's Commitment (whether used
or unused) from the date hereof to and including the Termination Date,
payable in arrears on each Payment Date hereafter and on the Termination
Date (the "Facility Fee").<PAGE>
2.6. Reductions in Aggregate Commitment. The Borrower may permanently
reduce the Aggregate Commitment in whole, or in part ratably among the
Lenders in a minimum amount of $2,000,000 and in integral multiples of
$1,000,000 in excess thereof, upon at least five Business Days' written
notice to the Administrative Agent, which notice shall specify the amount
of any such reduction, provided, however, that the amount of the Aggregate
Commitment may not be reduced below the aggregate principal amount of the
Aggregate Outstandings. All accrued commitment fees shall be payable on
the effective date of any termination of the obligations of the Lenders to
make Loans hereunder.
2.7. Minimum Amount of Each Advance. Each Federal Funds Advance shall
be in the minimum amount of $100,000, and each Floating Rate Advance shall be
in the minimum amount of $100,000, provided, however, that any Floating
Rate Advance may be in the amount of the unused Aggregate Commitment.
2.8. Optional Principal Payments. The Borrower may from time to time
pay, without penalty or premium, all outstanding Floating Rate Advances
and/or Federal Funds Advances, or, in a minimum aggregate amount of $500,000,
any portion of the outstanding Floating Rate Advances and/or Federal Funds
Advances not later than 12:00 noon (Memphis time) on the date of such
payment.
2.9. Method of Selecting Types and Interest Periods for New Advances.
The Borrower shall select the Type of Advance. The Borrower shall give the
Administrative Agent irrevocable notice (a "Borrowing Notice") not later
than 11:30 a.m. (Memphis time) on the Borrowing Date of each Advance,
specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Advance,
(ii) the aggregate amount of such Advance, and
(iii) the Type of Advance selected, and
Not later than 2:00 p.m. (Memphis time) on each Borrowing Date, each
Lender shall make available its Loan or Loans, in funds immediately
available in Memphis to the Administrative Agent at its address specified
pursuant to Article XIII. The Administrative Agent will make the funds so
received from the Lenders available to the Borrower at the Administrative
Agent's aforesaid address.
2.10. Conversion and Continuation of Outstanding Advances. Floating
Rate Advances shall continue as Floating Rate Advances unless and until such
Floating Rate Advances are converted into Federal Funds Advances. Federal
Funds Advances shall continue as Federal Funds Advances unless and until
such Federal Funds Advances are converted into Floating Rate Advances.
Subject to the terms of Section 2.7, the Borrower may elect from time to
time to convert all or any part of an Advance of any Type into any other
Type or Types of Advances. The Borrower shall give the Administrative
Agent irrevocable notice (a "Conversion/Continuation Notice") of each
conversion of an Advance not later than 11:00 a.m. (Memphis time) on the
date of the requested conversion specifying:<PAGE>
(i) the requested date which shall be a Business Day, of such
conversion,
(ii) the aggregate amount and Type of the Advance which is to
be converted, and
(iii) the amount and Type(s) of Advance(s) into which such
Advance is to be converted.
2.11. Changes in Interest Rate, etc. Each Floating Rate Advance and
Federal Funds Advance shall bear interest on the outstanding principal
amount thereof, for each day from and including the date such Advance is
made to but excluding the date it becomes due hereof, at a rate per annum
equal to the Floating Rate or Federal Funds Effective Rate, respectively,
for such day. Changes in the rate of interest on that portion of any
Advance maintained as a Floating Rate Advance will take effect
simultaneously with each change in the Alternate Base Rate. Changes in the
rate of interest on that portion of any Advance maintained as a Federal
Funds Advance will take effect simultaneously with each change in the
Federal Funds Effective Base Rate.
2.12. Rates Applicable After Default. During the continuance of a
Default the Required Lenders may, at their option, by notice to the Borrower
(which notice may be revoked at the option of the Required Lenders
notwithstanding any provision of Section 8.2 requiring unanimous consent
of the Lenders to changes in interest rates), declare that each Floating
Rate Advance and/or each Federal Funds Advance shall bear interest at a
rate per annum equal to the Floating Rate otherwise applicable to the
Floating Rate Advance plus 2% per annum, or equal to the Federal Funds
Effective Rate otherwise applicable to the Federal Funds Advance plus 2%
per annum.
2.13. Method of Payment. All payments of the Obligations hereunder
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Administrative Agent at the Administrative Agent's
address specified pursuant to Article XIII, or at any other Lending
Installation of the Administrative Agent specified in writing by the
Administrative Agent to the Borrower, by noon (local time) on the date
when due and unless the Borrower has directed that such payment be applied
to outstanding Swing Line Loans, such payment shall be applied ratably by
the Administrative Agent among the Lenders. Each payment delivered to the
Administrative Agent for the account of any Lender shall be delivered
promptly by the Administrative Agent to such Lender in the same type of
funds that the Administrative Agent received at its address specified
pursuant to Article XIII or at any Lending Installation specified in a
notice received by the Administrative Agent from such Lender. The
Administrative Agent may charge the account of the Borrower maintained
with the Administrative Agent for each payment of principal, interest and
fees as it becomes due hereunder if so directed by the Borrower from time
to time or, if an Event of Default has occurred and is then continuing, at
the Administrative Agent's discretion.
2.14. Notes; Telephonic Notices. Each Lender is hereby authorized to
record the principal amount of each of its Loans and each repayment on the
schedule attached to its Note, provided, however, that neither the failure<PAGE>
to so record nor any error in such recordation shall affect the Borrower's
obligations under such Note. The Borrower hereby authorizes the Swing Line
Bank to extend Swing Line Loans, the Lenders and the Administrative Agent
to extend, convert or continue Advances, effect selections of Types of
Advances and to transfer funds based on telephonic notices made by any
person or persons the Administrative Agent or any Lender in good faith
believes to be acting on behalf of the Borrower. The Borrower agrees to
deliver promptly to the Administrative Agent a written confirmation, if
such confirmation is requested by the Administrative Agent or any Lender,
of each telephonic notice signed by an individual who is authorized so to
act pursuant to the then existing Money Transfer Instructions of Borrower
(see "Exhibit E"). If the written confirmation differs in any material
respect from the action taken by the Administrative Agent and the Lenders,
the records of the Administrative Agent and the Lenders shall govern
absent demonstrable error.
2.15. Interest Payment Dates; Interest and Fee Basis. Interest accrued
on each Floating Rate Advance and/or Federal Funds Advance shall be payable
on each Payment Date, commencing with the first such date to occur after
the date hereof, on any date on which the Floating Rate Advance and/or
Federal Funds Advance is prepaid, whether due to acceleration or
otherwise, and at maturity. Interest on Floating Rate Advances and/or
Federal Funds Advances shall be calculated for actual days elapsed on the
basis of a 365- or 366-day year, as appropriate. Interest shall be
payable for the day an Advance or Swing Line Loan is made but not for the
day of any payment on the amount paid if payment is received prior to noon
(local time) at the place of payment. If any payment of principal of or
interest on an Advance or a Swing Line Loan shall become due on a day
which is not a Business Day, such payment shall be made on the next
succeeding Business Day and, in the case of a principal payment, such
extension of time shall be included in computing interest in connection
with such payment.
2.16. Notification of Advances, Interest Rates, Prepayments and
Commitment Reductions. Promptly after receipt thereof, the Administrative
Agent will notify each Lender of the contents of each Aggregate Commitment
reduction notice, Borrowing Notice, Conversion/Continuation Notice, and
repayment notice received by it hereunder. The Administrative Agent will
give each Lender prompt notice of each change in the Alternate Base Rate and
Federal Funds Effective Base Rate.
2.17. Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply
to any such Lending Installation and the Notes shall be deemed held by
each Lender for the benefit of such Lending Installation. Each Lender
may, by written or telex notice to the Administrative Agent and the
Borrower, designate a Lending Installation through which Loans will be
made by it and for whose account Loan payments are to be made.
2.18. Non-Receipt of Funds by the Administrative Agent. Unless the
Borrower or a Lender, as the case may be, notifies the Administrative
Agent prior to the date on which it is scheduled to make payment to the
Administrative Agent of (i) in the case of a Lender, the proceeds of a<PAGE>
Loan or (ii) in the case of the Borrower, a payment of principal, interest
or fees to the Administrative Agent for the account of the Lenders, that
it does not intend to make such payment, the Administrative Agent may
assume that such payment has been made. The Administrative Agent may, but
shall not be obligated to, make the amount of such payment available to
the intended recipient in reliance upon such assumption. If such Lender
or the Borrower, as the case may be, has not in fact made such payment to
the Administrative Agent, the recipient of such payment shall, on demand
by the Administrative Agent, repay to the Administrative Agent the amount
so made available together with interest thereon in respect of each day
during the period commencing on the date such amount was so made available
by the Administrative Agent until the date the Administrative Agent
recovers such amount at a rate per annum equal to (i) in the case of
payment by a Lender, the Federal Funds Effective Rate for such day or (ii)
in the case of payment by the Borrower, the interest rate applicable to
the relevant Loan.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law), or any interpretation thereof,
or the compliance of any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation
to any tax, duty, charge or withholding on or from payments due
from the Borrower (excluding taxation of the overall net income of
any Lender or applicable Lending Installation), or changes the
basis of taxation of payments to any Lender in respect of its
Loans or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender or any applicable Lending
Installation, or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending
Installation of making, funding or maintaining Loans or reduces
any amount receivable by any Lender or any applicable Lending
Installation in connection with Loans or requires any Lender or
any applicable Lending Installation to make any payment calculated
by reference to the amount of Loans held, or interest received
by it, by an amount deemed material by such Lender,
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an
amount received which such Lender determines is attributable to making,
funding and maintaining its Loans and its Commitment.
3.2. Changes in Capital Adequacy Regulations. If a Lender determines
the amount of capital required or expected to be maintained by such Lender,
any Lending Installation of such Lender or any corporation controlling
such Lender is increased as a result of a Change, then, within 15 days of<PAGE>
demand by such Lender, the Borrower shall pay such Lender the amount
necessary to compensate for any shortfall in the rate of return on the
portion of such increased capital which such Lender determines is
attributable to this Agreement, its Loans, its obligation to make Loans
hereunder (after taking into account such Lender's policies as to capital
adequacy). "Change" means (i) any change after the date of this Agreement
in the Risk-Based Capital Guidelines or (ii) any adoption of or change in
any other law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the
force of law) after the date of this Agreement which affects the amount of
capital required or expected to be maintained by any Lender or any Lending
Installation or any corporation controlling any Lender. "Risk-Based
Capital Guidelines" means (i) the risk-based capital guidelines in effect
in the United States on the date of this Agreement, including transition
rules, and (ii) the corresponding capital regulations promulgated by
regulatory authorities outside the United States implementing the July
1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT; WITHHOLDING TAX EXEMPTION
4.1. Initial Advance. The Lenders shall not be required to make the
initial Advance pursuant to Section 2.1 and the Swing Line Bank shall not
be obligated to make an initial Swing Line Loan hereunder unless (a) the
Borrower has furnished to the Co-Agent and the Administrative Agent with
sufficient copies for the Lenders:
(i) Copies of the articles of incorporation of the Borrower,
together with all amendments, and a certificate of good standing,
both certified by the appropriate governmental officer in its
jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant Secretary
of the Borrower, of its by-laws and of its Board of Directors'
resolutions (and resolutions of other bodies, if any are deemed
necessary by counsel for any Lender) authorizing the execution
of the Loan Documents.
(iii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall identify by name
and title and bear the signature of the officers of the Borrower
authorized to sign the Loan Documents and to make borrowings
hereunder, upon which certificate the Administrative Agent and
the Lenders shall be entitled to rely until informed of any
change in writing by the Borrower.
(iv) Copies of the articles of incorporation of each Guarantor,
together with all amendments, and a certificate of good standing,
both certified by the appropriate governmental officer in its
jurisdiction of incorporation.<PAGE>
(v) Copies, certified by the Secretary or Assistant Secretary
of each Guarantor, of its by-laws and of its Board of Directors'
resolutions (and resolutions of other bodies, if any are deemed
necessary by counsel for any Lender) authorizing the execution of
the Guaranties.
(vi) An incumbency certificate, executed by the Secretary or
Assistant Secretary of each Guarantor, which shall identify by
name and title and bear the signature of the officers of each
Guarantor authorized to sign the Guaranties.
(vii) A certificate, signed by the treasurer of the Borrower,
stating that on the initial Borrowing Date no Default or
Unmatured Default has occurred and is continuing.
(viii) A written opinion of counsel to the Borrower, addressed
to the Lenders in substantially the form of Exhibit "B" hereto.
(ix) Notes payable to the order of each of the Lenders, and a
Swing Line Note payable to the order of the Swing Line Bank.
(x) Financial statements of the Borrower, and detailed business
plans and projections for the Borrower satisfactory in form and
substance to the Lenders.
(xi) Written money transfer instructions, in substantially the
form of Exhibit "E" hereto, addressed to the Administrative Agent
and signed by an Authorized Officer, together with such other
related money transfer authorizations as the Administrative Agent
may have reasonably requested.
(xii) The Guaranties dated the date hereof, duly executed by each
of the Guarantors.
(xiii) Such other documents as any Lender or its counsel may have
reasonably requested.
and (b) the following events shall have occurred or conditions shall have
been fulfilled:
(i) The Borrower shall have paid all fees due at the Closing
Date pursuant to this Agreement.
(ii) Completion of the Big O Acquisition, including the granting
of all required regulatory and legal approvals, upon the terms set
forth in the Acquisition Agreement.
(iii) The Private Placement shall contain terms and conditions
which are acceptable to the Lenders.
(iv) The Long Term Credit Agreement shall be effective as of the
Closing Date.
(v) The Administrative Agent shall have received in form and
substance satisfactory to the Administrative Agent, (A)
instructions to wire to The First National Bank of Chicago that
portion of proceeds from Advances under this Agreement or the Long
Term Credit Agreement to be made on the<PAGE>
Closing Date which is necessary to repay all loans under that
certain credit agreement dated as of January 23, 1995 between Big
O and The First National Bank of Chicago, and (B) evidence that
The First National Bank of Chicago will terminate any liens,
encumbrances, mortgages or restrictions in respect of any such
obligations.
(vi) The Administrative Agent shall have received, in form and
substance satisfactory to the Administrative Agent, instructions
to wire to First Tennessee Bank that portion of proceeds from
Advances under this Agreement or the Long Term Credit Agreement
to be made on the Closing Date which is necessary to repay all
loans under Borrower's line of credit with First Tennessee Bank.
4.2. Each Advance. The Lenders shall not be required to make any
Advance or Swing Line Loan (other than an Advance or Swing Line Loan that,
after giving effect thereto and to the application of the proceeds thereof,
does not increase the aggregate amount of the sum of outstanding Advances
and Swing Line Loans) unless on the applicable Borrowing Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article V
are true and correct as of such Borrowing Date except to the
extent any such representation or warranty is stated to relate
solely to an earlier date, in which case such representation or
warranty shall be true and correct on and as of such earlier date.
(iii) All legal matters incident to the making of such Advance
shall be satisfactory to the Lenders and their counsel.
Each Borrowing Notice with respect to each such Advance or Swing Line
Loan shall constitute a representation and warranty by the Borrower that the
conditions contained in Sections 4.2(i) and (ii) have been satisfied.
4.3. Withholding Tax Exemption. At least five Business Days prior to
the first date on which interest or fees are payable hereunder for the
account of any Lender, each Lender that is not incorporated under the laws
of the United States of America, or a state thereof, agrees that it will
deliver to each of the Borrower and the Administrative Agent two duly
completed copies of United States Internal Revenue Service Form 1001 or
4224, certifying in either case that such Lender is entitled to receive
payments under this Agreement and the Notes without deduction or withholding
of any United States federal income taxes. Each Lender which so delivers a
Form 1001 or 4224 further undertakes to deliver to each of the Borrower and
the Administrative Agent two additional copies of such form (or a successor
form) on or before the date that such form expires (currently, three
successive calendar years for Form 1001 and one calendar year for Form
4224) or becomes obsolete or after the occurrence of any event requiring a
change in the most recent forms so delivered by it, and such amendments
thereto or extensions or renewals thereof as may be reasonably requested
by the Borrower or the Administrative Agent, in each case certifying that
such Lender is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes, unless an event (including without limitation any change in treaty,<PAGE>
law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender advises the
Borrower and the Administrative Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal
income tax.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. Corporate Existence and Standing. Each of the Borrower and its
Subsidiaries is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has
all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
5.2. Authorization and Validity. The Borrower has the corporate power
and authority and legal right to execute and deliver the Loan Documents and
to perform its obligations thereunder. The execution and delivery by the
Borrower of the Loan Documents and the performance of its obligations
thereunder have been duly authorized by proper corporate proceedings, and
the Loan Documents constitute legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally.
5.3. No Conflict; Government Consent. Neither the execution and
delivery by the Borrower of the Loan Documents, nor the consummation of the
transactions therein contemplated, nor compliance with the provisions
thereof will violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower or any of its
Subsidiaries or the Borrower's or any Subsidiary's articles of
incorporation or by-laws or the provisions of any indenture, instrument or
agreement to which the Borrower or any of its Subsidiaries is a party or
is subject, or by which it, or its Property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or imposition
of any Lien in, of or on the Property of the Borrower or a Subsidiary
pursuant to the terms of any such indenture, instrument or agreement. No
order, consent, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, or other action
in respect of any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in
connection with the execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of, any of the Loan
Documents.
5.4. Financial Statements. The December 31, 1995 consolidated
financial statements of the Borrower and its Subsidiaries heretofore
delivered to the Lenders were prepared in accordance with GAAP in effect
on the date<PAGE>
such statements were prepared and fairly present the consolidated
financial condition and operations of the Borrower and its Subsidiaries at
such date and the consolidated results of operations for the period then
ended.
5.5. Material Adverse Change. Since December 31, 1995, there has been
no change in the business, Property, prospects, condition (financial or
otherwise) or results of operations of the Borrower and its Subsidiaries
which could have a Material Adverse Effect, including, but not limited to,
a change in the relationship between Big O and its franchisees which could
have a Material Adverse Effect.
5.6. Taxes. The Borrower and its Subsidiaries have filed all United
States federal tax returns and all other tax returns which are required to
be filed and which the failure to file would have a Material Adverse Effect,
and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by the Borrower or any of its Subsidiaries, except
such taxes, if any, as are being contested in good faith and as to which
any adequate reserves have been provided in accordance with GAAP and as to
which no Lien exists. As of the date of this Agreement, the United States
income tax returns of the Borrower and its Subsidiaries have been audited
by the Internal Revenue Service through the fiscal year ended December 31,
1991. No tax liens have been filed which could have a Material Adverse
Effect and no claims are being asserted with respect to any such taxes.
To the best of Borrower's knowledge, the charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of any taxes or
other governmental charges are adequate.
5.7. Litigation and Contingent Obligations. There is no litigation,
arbitration, governmental investigation, proceeding or inquiry pending or,
to the knowledge of any of their officers, threatened against or affecting
the Borrower or any of its Subsidiaries which could have a Material
Adverse Effect or which seeks to prevent, enjoin or delay the making of
the Loans or Advances. The Borrower has no material contingent
obligations not provided for or disclosed in the financial statements for
the most recent period for which Borrower has then delivered financial
statements to the Lenders pursuant to this Agreement.
5.8. Subsidiaries. Schedule "1" hereto contains an accurate list of
all Subsidiaries of the Borrower as of the date of this Agreement, setting
forth their respective jurisdictions of incorporation and the percentage
of their respective capital stock owned by the Borrower or other
Subsidiaries. All of the issued and outstanding shares of capital stock
of such Subsidiaries have been duly authorized and issued and are fully
paid and non-assessable.
5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do
not in the aggregate exceed $1,000,000. Neither the Borrower nor any other
member of the Controlled Group has incurred, or is reasonably expected to
incur, any withdrawal liability to Multiemployer Plans in excess of
$1,000,000 in the aggregate. Each Plan complies in all material respects
with all applicable requirements of law and regulations, noncompliance
with which would have a Material Adverse Effect, no Reportable Event has
occurred with respect to any Plan, neither the Borrower nor any other<PAGE>
members of the Controlled Group has withdrawn from any Plan or initiated
steps to do so, and no steps have been taken to reorganize or terminate
any Plan, which withdrawal, reorganization or termination would have a
Material Adverse Effect.
5.10. Accuracy of Information. At the time of its delivery to the
Administrative Agent or any Lender, no information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Administrative
Agent or to any Lender in connection with the negotiation of, or
compliance with, the Loan Documents contained any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statements contained therein not misleading.
5.11. Regulation U. Margin stock (as defined in Regulation U)
constitutes less than 25% of those assets of the Borrower and its
Subsidiaries which are subject to any limitation on sale, pledge, or other
restriction hereunder.
5.12. Material Agreements. Neither the Borrower nor any Subsidiary
is a party to any agreement or instrument or subject to any charter or other
corporate restriction which could have a Material Adverse Effect. Neither
the Borrower nor any Subsidiary is in default in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any agreement to which it is a party, which
default could have a Material Adverse Effect or (ii) any agreement or
instrument evidencing or governing Indebtedness, which default could have
a Material Adverse Effect.
5.13. Compliance With Laws. The Borrower and its Subsidiaries have
complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality
or agency thereof, having jurisdiction over the conduct of their
businesses or the ownership of their respective Property, the
non-compliance with which might have a Material Adverse Effect.
5.14. Ownership of Properties. Except as set forth on Schedule "2"
hereto, on the date of this Agreement, the Borrower and its Subsidiaries will
have good title, free of all Liens other than those permitted by Section
6.12, to all of the Property and assets reflected in the financial statements
as owned by it.
5.15. Plan Assets; Prohibited Transactions. The Borrower is not an
entity deemed to hold "plan assets" within the meaning of 29 C.F.R.
e 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of
ERISA) which is subject to Title I of ERISA or any plan (within the meaning
of Section 4975 of the Code); and neither the execution of this Agreement and
the making of Loans hereunder give rise to a prohibited transaction within
the meaning of Section 406 of ERISA or Section 4975 of the Code.
5.16. Environmental Matters. Neither the Borrower nor any Subsidiary
has received any notice to the effect that its operations are not in material
compliance with any of the requirements of applicable Environmental Laws
or are the subject of any federal or state investigation evaluating
whether any remedial action is needed to respond to a release of any toxic<PAGE>
or hazardous waste or substance into the environment, which non-compliance
or remedial action could reasonably be expected to have a Material Adverse
Effect.
5.17. Investment Company Act. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of
1940, as amended.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. Financial Reporting. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to
the Lenders:
(i) Within 90 days after the close of each of its fiscal years,
a copy of the Borrower's Annual Report on Form 10-K filed with the
Securities and Exchange Commission (the "SEC") pursuant to the
Securities Exchange Act of 1934 (the "34 Act") or, if Borrower's
Form 10-K is not available, annual audited financial statements
for itself and its consolidated Subsidiaries, including a balance
sheet as of the end of such period, related profit and loss and
reconciliation of surplus statements, and a statement of cash
flows, which financial statements shall be included within an
unqualified audit report certified by independent certified public
accountants (the identity of such accountants to be acceptable to
the Lenders), which statements shall be prepared in accordance
with GAAP on a consolidated basis.
(ii) Within 45 days after the close of the first three quarterly
periods of each of its fiscal years, a copy of Borrower's
Quarterly Report on Form 10-Q filed with the SEC pursuant to the
34 Act or, if Borrower's Form 10-Q is not available, for itself
and its consolidated Subsidiaries, a consolidated unaudited
balance sheet as at the close of each such period and consolidated
profit and loss and reconciliation of surplus statements and a
statement of cash flows for the period from the beginning of such
fiscal year to the end of such quarter, all certified by its Vice
President - Treasurer, or his designee.
(iii) Together with the financial statements required hereunder,
a compliance certificate in substantially the form of Exhibit "C"
hereto signed by its Vice President - Treasurer, or his designee,
showing the calculations necessary to determine compliance with
this Agreement and stating that no Default or Unmatured Default
exists, or if any Default or Unmatured Default exists, stating
the nature and status thereof.
(iv) If there are Unfunded Liabilities relating to any Single
Employer Plan of the Borrower at the close of any fiscal year,
a statement of the Unfunded<PAGE>
Liabilities of such Single Employer Plan, certified as correct by
an actuary enrolled under ERISA, within 270 days after the close
of such fiscal year.
(v) As soon as possible and in any event within 10 days after
the Borrower knows that any Reportable Event has occurred with
respect to any Single Employer Plan, a statement, signed by the
Vice President - Treasurer of the Borrower, or his designee,
describing said Reportable Event and the action which the
Borrower proposes to take with respect thereto.
(vi) As soon as possible and in any event within 10 days after
receipt by the Borrower or any of its Subsidiaries, a copy of
(a) any notice or claim to the effect that the Borrower or such
Subsidiary is or may be liable to any Person as a result of the
release by the Borrower or such Subsidiary or any other Person
of any toxic or hazardous waste or substance into the environment,
if such liability could have a Material Adverse Effect, and
(b) any notice alleging any violation of any federal, state or
local environmental, health or safety law or regulation by the
Borrower or any of its Subsidiaries which could have a Material
Adverse Effect.
(vii) Promptly upon the furnishing hereof to the shareholders of
the Borrower, copies of all financial statements, reports and
proxy statements so furnished.
(viii) Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly, monthly or other
regular reports or financial statements which the Borrower or any
Subsidiary files with the Securities and Exchange Commission.
(ix) Such other information (including non-financial
information) as the Administrative Agent or any Lender may from
time to time reasonably request, including but not limited to all
press releases concerning the Borrower.
6.2. Use of Proceeds. The Borrower will, and will cause each
Subsidiary to use the proceeds of the Advances for general corporate purposes
and to refinance and replace the Existing Credit Facilities. The Borrower
will not, nor will it permit any Subsidiary to, use any of the proceeds of
the Advances to purchase or carry any "margin stock" (as defined in
Regulation U).
6.3. Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of the occurrence
of any Default or Unmatured Default and of any other development, financial
or otherwise, which could have a Material Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in the same general
manner and in the same general fields of enterprise as it is presently
conducted and to do all things necessary to remain duly incorporated,
validly existing and in good standing as a domestic corporation in its
jurisdiction of incorporation and maintain all requisite authority to
conduct its business in each jurisdiction in which its business is<PAGE>
conducted and in which the failure to maintain such authority could have a
Material Adverse Effect.
6.5. Taxes. The Borrower will, and will cause each Subsidiary to,
timely file complete and correct United States federal and applicable
foreign, state and local tax returns required by law, which the failure to
so file could have a Material Adverse Effect, and pay when due all taxes,
assessments and governmental charges and levies upon it or its income,
profits or Property, which the failure to pay could have a Material
Adverse Effect, except those which are being contested in good faith by
appropriate proceedings and with respect to which any adequate reserves
have been set aside in accordance with GAAP.
6.6. Insurance. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies
insurance on all their Property in such amounts and covering such risks as
is consistent with sound business practice, and the Borrower will furnish
to any Lender upon request full information as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject and
noncompliance with which could have a Material Adverse Effect.
6.8. Environmental Covenant. (a) The Borrower will, and will cause
each of its Subsidiaries to use and operate all of its facilities and
Property in material compliance with all Environmental Laws, noncompliance
with which could have a Material Adverse Effect, keep all necessary permits,
approvals, certificates and licenses in effect and remain in material
compliance therewith, if failure to keep or comply therewith could have a
Material Adverse Effect, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws, noncompliance with
which could have a Material Adverse Effect, and provide such information
and certifications as the Administrative Agent or any Lender may
reasonably request from time to time to insure compliance with this
Section 6.8.
6.9. Maintenance of Properties. The Borrower will, and will cause
each Subsidiary to, do all things necessary to maintain, preserve, protect
and keep its Property in good repair, working order and condition, normal
wear and tear excepted, and make all necessary and proper repairs, renewals
and replacements so that its business carried on in connection therewith may
be properly conducted at all times.
6.10. Inspection. The Borrower will, and will cause each Subsidiary
to, permit the Administrative Agent and the Lenders, by their respective
representatives and agents, to inspect any of the Property, corporate
books and financial records of the Borrower and each Subsidiary, to
examine and make copies of the books of accounts and other financial
records of the Borrower and each Subsidiary, and to discuss the affairs,
finances and accounts of the Borrower and each Subsidiary with, and to be
advised as to the same by, their respective officers at such reasonable
times and intervals as the Lenders may designate.<PAGE>
6.11. Dividends. The Borrower will not, nor will it permit any
Subsidiary to, redeem, repurchase or otherwise acquire or retire any of its
capital stock, except as provided for in Section 6.23, at any time
outstanding, and the Borrower will not permit any Subsidiary to declare or
pay any dividends, except that any Subsidiary may declare and pay dividends
to the Borrower or to a Wholly-Owned Subsidiary.
6.12. Merger. The Borrower will not, nor will it permit any Subsidiary
to, merge or consolidate with or into any other Person, except that a
Subsidiary may merge with the Borrower or a Wholly-Owned Subsidiary, provided
that the Borrower or a Wholly-Owned Subsidiary is the surviving corporation
in any such merger or consolidation.
6.13. Indebtedness. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:
(i) The Loans.
(ii) Indebtedness existing under the Long Term Credit Agreement.
(iii) Indebtedness existing on the date hereof and described in
Schedule "2" hereto.
(iv) Indebtedness incurred with respect to the Private Placement.
(v) Indebtedness not otherwise permitted by this Section 6.13 not
exceeding (as to the Borrower and all its Subsidiaries) a sum
equal to 5% of Consolidated Net Worth in aggregate principal
amount at any one time outstanding.
6.14. Sale of Assets. The Borrower will not, nor will it permit any
Subsidiary to, lease, sell or otherwise dispose of its Property, to any
other Person except for (i) sales of inventory in the ordinary course of
business, and sale of Big O retail stores to Big O franchisees in the
ordinary course of business, (ii) leases, sales or other dispositions of
its Property that, together will all other Property of the Borrower and
its Subsidiaries previously leased, sold or disposed of (other than
inventory or retail stores in the ordinary course of business) as
permitted by this Section during the twelve-month period ending with the
month in which any such lease, sale or other disposition occurs, do not
constitute a Substantial Portion of the Property of the Borrower and its
Subsidiaries, and (iii) the sale of the assets or stock of Battery
Associates, Inc. and Northern States Tire, Inc.
6.15. Liens. The Borrower will not, nor will it permit or suffer any
Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the
property of the Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or
levies on its Property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings
and for which any adequate reserves in accordance with generally
accepted principles of accounting shall have been set aside
on its books.<PAGE>
(ii) Liens imposed by law, such as carriers', warehousemen's
and mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of
obligations not more than 60 days past due or which are being
contested in good faith by appropriate proceedings and for which
any adequate reserves shall have been set aside on its books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar
legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real Property as are of a
nature generally existing with respect to properties of a similar
character and which do not in any material way affect the
marketability of the same or interfere with the use thereof in the
business of the Borrower or its Subsidiaries.
(v) Liens on the capital stock, partnership interest, or other
evidence of ownership of any Subsidiary or such Subsidiary's
assets that secure project financing for such Subsidiary.
(vi) Purchase money Liens upon or in Property now owned or
hereafter acquired in the ordinary course of business (consistent
with the Borrower's business practices) to secure (A) the purchase
price of such Property or (B) Indebtedness incurred solely for the
purpose of financing the acquisition, construction, or improvement
of any such Property to be subject to such Liens, or Liens
existing on any such Property at the time of acquisition, or
extensions, renewals, or replacements of any of the foregoing for
the same or a lesser amount; provided that no such Lien shall
extend to or cover any Property other than the Property being
acquired, constructed, or improved and replacements,
modifications, and proceeds of such Property, and no such
extension, renewal, or replacement shall extend to or cover any
Property not theretofore subject to the Lien being extended,
renewed, or replaced, and provided further that the aggregate
amount of new purchase money Liens arising in any fiscal year of
Borrower shall not exceed the principal amount of $3,000,000.
(vii) Liens existing on the date hereof and described in Schedule
"2" hereto.
6.16. Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation,
the purchase or sale of any Property or service) with, or make any payment
or transfer to, any Affiliate except in the ordinary course of business
and pursuant to the reasonable requirements of the Borrower's or such
Subsidiary's business and upon fair and reasonable terms no less favorable
to the Borrower or such Subsidiary than the Borrower or such Subsidiary
would obtain in a comparable arms-length transaction, provided that the
foregoing shall not apply to transactions (i) between the Borrower and any
Wholly-Owned Subsidiary; or (ii) if such transactions occur in the
ordinary course of business consistent with past practices of the Borrower
and/or the Subsidiary, transactions between the Borrower or any
Wholly-Owned Subsidiary and TBC de Mexico or TBC Worldwide or transactions<PAGE>
between Big O and any joint venture established by Big O in the ordinary
course of business.
6.17. Contingent Obligations and Investments. The Borrower will not,
and will not permit any Subsidiary to, incur or permit to exist any
Contingent Obligations or make or permit to exist Investments to or in any
other Person or instrument, except for:
(i) the endorsement, in the ordinary course of collection, of
instruments payable to it or to its order, or employee advances
in the ordinary course of business;
(ii) Contingent Obligations, if after giving effect to the
incurrence of such Contingent Obligations, the aggregate of all
such Contingent Obligations of the Borrower and its Subsidiaries
on a consolidated basis does not exceed 5% of Consolidated
Tangible Net Worth, provided that any Intercompany Contingent
Obligation shall be permitted regardless of the restriction
imposed by this Section 6.17 (ii).
(iii) investment grade Investments;
(iv) Investments in an amount which, when computed in an
aggregate amount forthe Borrower and its Subsidiaries, shall
not exceed 10% of Consolidated Tangible Net Worth at any one
time outstanding;
(v) loans or advances by the Borrower to any Subsidiary, by
any Subsidiary to the Borrower and by any Subsidiary to any
other Subsidiary, and equity interests of the Borrower or any
Subsidiary in any Subsidiary;
(vi) existing Contingent Obligations and Investments listed
on Schedule "3" hereto;
(vii) extended payment terms granted to, and evidenced by notes
payable of, customers of the Borrower or any Subsidiary, provided
that such customers are not Affiliates of the Borrower and that
the aggregate of all such Investments permitted pursuant to this
clause (vii) shall not exceed $3,000,000 at any time outstanding.
(viii) nothwithstanding Section 6.17(ii) above, Big O shall be
permitted to incur or permit to exist Contingent Obligations on
behalf of its franchisees, inclusive of those existing Contingent
Obligations of Big O listed on Schedule "4" hereto, in an amount
not to exceed $24,000,000.
6.18. Consolidated Tangible Net Worth. The Borrower will maintain at
all times a Consolidated Tangible Net Worth of not less than the greater of
(i) $65,000,000, or (ii) Consolidated Tangible Net Worth on completion of
the Big O Acquisition, less $3,000,000, but not greater than $70,000,000,
plus 50% of the Borrower's Consolidated Net Income (without giving effect
to any losses) for each fiscal year of the Borrower ending on or after
December 31, 1996. For the sole purpose of calculating the Consolidated
Tangible Net Worth covenant herein, repurchases by the Borrower of its
capital stock shall not be subtracted from the computation of Consolidated
Tangible Net Worth only to the extent of $5,000,000 in repurchases
annually.<PAGE>
6.19. Funded Indebtedness. The Borrower will not permit the ratio of
(i) Consolidated Funded Indebtedness to (ii) EBITDA to be greater than 3.5
to 1.0 at any time (measured at the end of each fiscal quarter for the
then-most recently ended four fiscal quarters). Compliance shall be
demonstrated on a pro forma basis until such time as Big O's results shall
have been included in Borrower's consolidated financial statements for
four fiscal quarters.
6.20. Fixed Charge Coverage Ratio. The Borrower will not permit the
Fixed Charge Coverage Ratio (measured at the end of each fiscal quarter for
the then-most recently ended four fiscal quarters) to be less than 2.25 to
1.00. Compliance shall be demonstrated on a pro forma basis until such
time as Big O's results shall have been included in Borrower's consolidated
financial statements for four fiscal quarters.
6.21. Capital Expenditures. The Borrower shall not and shall not
permit any Subsidiary to make any Capital Expenditures that would cause the
combined Capital Expenditures of the Borrower and its Subsidiaries to exceed
$10,000,000 during any fiscal year of the Borrower.
6.22. Retail Stores Under Development. The Borrower shall not at any
time, on a consolidated basis, have in excess of $20,000,000 allocated to
Retail Stores Under Development on its balance sheet.
6.23. Stock Repurchase. The Borrower shall not repurchase its capital
stock during any fiscal year of the Borrower in an aggregate amount in excess
of $5,000,000.
6.24. Employee Benefit Plans. The Borrower will properly conduct, and
cause each Subsidiary to properly conduct, each Single Employer Plan as to
which it may have any liability in compliance with all applicable
requirements of law and regulations noncompliance with which could have a
Material Adverse Effect.
6.25. Other Agreements. The Borrower will not, and will not permit any
Subsidiary to, enter into any agreement containing any provision which
would be violated or breached by the performance of its obligations
hereunder or under any instrument or document delivered or to be delivered
by it hereunder or in connection with the transactions contemplated
hereby.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made or deemed made by or on behalf
of the Borrower or any of its Subsidiaries to the Lenders or the
Administrative Agent under or in connection with this Agreement, any Loan,
or any certificate or information delivered in connection with this
Agreement or any other Loan Document shall be materially false on the date
as of which made.<PAGE>
7.2. Nonpayment of principal of any Note when due, or nonpayment of
interest upon any Note or of any commitment fee or other obligations under
any of the Loan Documents within five days after the same becomes due.
7.3. Failure of the Borrower or any of its Subsidiaries to perform or
observe any agreement contained in Article VI and either (i) such failure
is not remedied within two Business Days after any Authorized Officer
obtains knowledge thereof or (ii) within such two day period, the Required
Lenders give the Borrower notice that such failure constitutes a Default
hereunder.
7.4. The breach by the Borrower (other than a breach which constitutes
a Default under Section 7.1, 7.2 or 7.3) of any of the terms or provisions
of this Agreement which is not remedied within thirty (30) days after the
earlier to occur of (i) the date the Borrower shall have obtained
knowledge thereof and (ii) written notice thereof to the Borrower from the
Administrative Agent or any Lender.
7.5. Failure of the Borrower or any of its Subsidiaries to pay when due
any Indebtedness aggregating in excess of $2,000,000 ("Material
Indebtedness"); or the default by the Borrower or any of its Subsidiaries
in the performance of any term, provision or condition contained in any
agreement under which any such Material Indebtedness was created or is
governed, or any other event shall occur or condition exist, the effect of
which is to cause, or to permit the holder or holders of such Material
Indebtedness to cause, such Material Indebtedness to become due prior to
its stated maturity; or any Material Indebtedness of the Borrower or any
of its Subsidiaries shall be declared to be due and payable or required to
be prepaid or repurchased (other than by a regularly scheduled payment)
prior to the stated maturity thereof; or the Borrower or any of its
Subsidiaries shall not pay, or admit in writing its inability to pay, its
debts generally as they become due.
7.6. The Borrower or any of its Subsidiaries shall (i) have an order
for relief entered with respect to it under the Federal bankruptcy laws as
now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the
appointment of a receiver, custodian, trustee, examiner, liquidator or
similar official for it or any Substantial Portion of its Property, (iv)
institute any proceeding seeking an order for relief under the Federal
bankruptcy laws as now or hereafter in effect or seeking to adjudicate it
a bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (v) take any
corporate action to authorize or effect any of the foregoing actions set
forth in this Section 7.6 or (vi) fail to contest in good faith any
appointment or proceeding described in Section 7.7.
7.7. Without the application, approval or consent of the Borrower or
any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries or
any Substantial Portion of its Property, or a proceeding described in<PAGE>
Section 7.6(iv) shall be instituted against the Borrower or any of its
Subsidiaries and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of 30
consecutive days.
7.8. Any court, government or governmental agency shall condemn, seize
or otherwise appropriate, or take custody or control of (each a
"Condemnation"), all or any portion of the Property of the Borrower and
its Subsidiaries which, when taken together with all other Property of the
Borrower and its Subsidiaries so condemned, seized, appropriated, or taken
custody or control of, during the twelve-month period ending with the
month in which any such Condemnation occurs, constitutes a Substantial
Portion.
7.9. The Borrower or any of its Subsidiaries shall fail within 30 days
to pay, bond or otherwise discharge any judgment or order for the payment of
money in excess of $3,000,000, which is not stayed on appeal or otherwise
being appropriately contested in good faith.
7.10. The Unfunded Liabilities of all Plans shall exceed in the
aggregate an amount the payment of which could reasonably be expected to have
a Material Adverse Effect or any Reportable Event shall occur in connection
with any Plan.
7.11. The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that it has
incurred withdrawal liability to such Multiemployer Plan in an amount which,
when aggregated with all other amounts required to be paid to Multiemployer
Plans by the Borrower or any other member of the Controlled Group as
withdrawal liability (determined as of the date of such notification),
exceeds an amount, or requires payments exceeding an amount per annum, the
payment of which in either case could reasonably be expected to have a
Material Adverse Effect.
7.12. The Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if as a result of such reorganization or
termination the aggregate annual contributions of the Borrower and the
other members of the Controlled Group (taken as a whole) to all
Multiemployer Plans which are then in reorganization or being terminated
have been or will be increased over the amounts contributed to such
Multiemployer Plans for the respective plan years of each such
Multiemployer Plan immediately preceding the plan year in which the
reorganization or termination occurs by an amount the payment of which
could reasonably be expected to have a Material Adverse Effect on the
business, financial condition, or results of operations of the Borrower
and its Subsidiaries taken as a whole.
7.13. The Borrower or any of its Subsidiaries shall be the subject of
any proceeding or investigation pertaining to the release by the Borrower or
any of its Subsidiaries, or any other Person of any Hazardous Material
into the environment, or any violation of any Environmental Law, which, in<PAGE>
either case, could reasonably be expected to have a Material Adverse
Effect.
7.14. Any Change in Control shall occur.
7.15. The representations and warranties set forth in "Section 5.15
Plan Assets; Prohibited Transactions" shall at any time not be true and
correct.
7.16. Any of the Guaranties shall fail to remain in full force or
effect or any action shall be taken to discontinue or to assert the
invalidity or unenforceability of the Guaranties.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration. If any Default described in Section 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans hereunder shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action on the
part of the Administrative Agent or any Lender. If any other Default
occurs, and is then continuing, the Required Lenders (or the
Administrative Agent with the consent of the Required Lenders) may
terminate or suspend the obligations of the Lenders to make Loans
hereunder, or declare the Obligations to be due and payable, or both,
whereupon the Obligations shall become immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which
the Borrower hereby expressly waives.
If, within 14 days after acceleration of the maturity of the Obligations
or termination of the obligations of the Lenders to make Loans hereunder
as a result of any Default (other than any Default as described in Section
7.6 or 7.7 with respect to the Borrower) and before any judgment or decree
for the payment of the Obligations due shall have been obtained or
entered, the Required Lenders (in their sole discretion) shall so direct,
the Administrative Agent shall, by notice to the Borrower, rescind and
annul such acceleration and/or termination.
8.2. Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Administrative Agent with the consent in writing
of the Required Lenders) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any provisions
to the Loan Documents or changing in any manner the rights of the Lenders
or the Borrower hereunder or waiving any Default hereunder; provided,
however, that no such supplemental agreement shall, without the consent of
each Lender affected thereby:
(i) Extend the final maturity of any Loan or Note or forgive
all or any portion of the principal amount thereof, or reduce
the rate or extend the time of payment of interest or fees
thereon.
(ii) Reduce the percentage specified in the definition of
Required Lenders.<PAGE>
(iii) Extend the Termination Date, or increase the amount of
the Commitment of any Lender hereunder, or permit the Borrower
to assign its rights under this Agreement.
(iv) Amend this Section 8.2.
(v) Release any Guarantor from its obligations under its
Guaranty.
No amendment of any provision of this Agreement relating to the
Administrative Agent shall be effective without the written consent of the
Administrative Agent. The Administrative Agent may waive payment of the
fee required under Section 12.3.2 without obtaining the consent of any
other party to this Agreement.
8.3. Preservation of Rights. No delay or omission of the Lenders or
the Administrative Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Loan notwithstanding the
existence of a Default or the inability of the Borrower to satisfy the
conditions precedent to such Loan shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other
right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Lenders required pursuant to Section 8.2,
and then only to the extent in such writing specifically set forth. All
remedies contained in the Loan Documents or by law afforded shall be
cumulative and all shall be available to the Administrative Agent and the
Lenders until the Obligations have been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and warranties
of the Borrower contained in this Agreement shall survive delivery of the
Notes and the making of the Loans herein contemplated.
9.2. Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit
to the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. Taxes. Any taxes (excluding income taxes on the overall net
income of any Lender) or other similar assessments or charges made by any
governmental or revenue authority in respect of the Loan Documents shall
be paid by the Borrower, together with interest and penalties, if any.
9.4. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of
any of the provisions of the Loan Documents.<PAGE>
9.5. Entire Agreement. The Loan Documents and the Long Term Credit
Agreement embody the entire agreement and understanding among the
Borrower, the Administrative Agent and the Lenders and supersede all prior
agreements and understandings among the Borrower, the Administrative Agent
and the Lenders relating to the subject matter thereof.
9.6. Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no
Lender shall be the partner or administrative agent of any other (except
to the extent to which the Administrative Agent is authorized to act as
such). The failure of any Lender to perform any of its obligations
hereunder shall not relieve any other Lender from any of its obligations
hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement
and their respective successors and assigns.
9.7. Expenses; Indemnification. The Borrower shall reimburse the
Administrative Agent and the Co-Agent for any costs, and out-of-pocket
expenses (including outside attorneys' fees and time charges of attorneys
for the Co-Agent, which attorneys may be employees of the Co-Agent) paid
or incurred by the Administrative Agent and the Co-Agent in connection
with the preparation, negotiation, execution and delivery, of the Loan
Documents, up to an aggregate amount which, when added to such expenses
incurred in connection with the Long Term Credit Agreement does not exceed
$20,000. The Borrower also agrees to reimburse the Administrative Agent
and the Lenders for any costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the
Administrative Agent and the Lenders, which attorneys may be employees of
the Administrative Agent or the Lenders) paid or incurred by the
Administrative Agent or any Lender in connection with the amendment,
modification, administration, collection and enforcement of the Loan
Documents. The Borrower further agrees to indemnify the Administrative
Agent, the Co-Agent, and each Lender, its directors, officers and
employees against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Administrative
Agent, the Co-Agent, or any Lender is a party thereto) which any of them
may pay or incur arising out of or relating to this Agreement, the other
Loan Documents, the transactions contemplated hereby or the direct or
indirect application or proposed application of the proceeds of any Loan
hereunder except to the extent that they are determined by a court of
competent jurisdiction in a final and non-appealable order to have
resulted from the gross negligence or willful misconduct of the party
seeking indemnification and except that the foregoing indemnity shall not
extend to any claim asserted by Borrower against any Lender or the
Administrative Agent for breach of its obligations as allowed under this
Agreement. The obligations of the Borrower under this Section shall
survive the termination of this Agreement.
9.8. Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one
to each of the Lenders.<PAGE>
9.9. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.
9.10. Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are
declared to be severable.
9.11. Nonliability of Lenders. The relationship between the Borrower
and the Lenders and the Administrative Agent shall be solely that of borrower
and lender. Neither the Administrative Agent nor any Lender shall have
any fiduciary responsibilities to the Borrower. Neither the
Administrative Agent nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in connection with
any phase of the Borrower's business or operations. The Borrower agrees
that neither the Administrative Agent nor any Lender shall have liability
to the Borrower (whether sounding in tort, contract or otherwise) for
losses suffered by the Borrower in connection with, arising out of, or in
any way related to, the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission or event occurring
in connection therewith, unless it is determined by a court of competent
jurisdiction in a final and non-appealable order that such losses resulted
from the gross negligence or willful misconduct of the party from which
recovery is sought. Neither the Administrative Agent nor any Lender shall
have any liability with respect to, and the Borrower hereby waives,
releases and agrees not to sue for, any special, indirect or consequential
damages suffered by the Borrower in connection with, arising out of, or in
any way related to the Loan Documents or the transactions contemplated
thereby.
9.12. Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from the Borrower pursuant to this
Agreement in confidence, except for disclosure (i) to its Affiliates and
to other Lenders and their respective Affiliates, (ii) to legal counsel,
accountants, and other professional advisors to that Lender or to a
Transferee, (iii) to regulatory officials, (iv) to any Person as requested
pursuant to or as required by law, regulation, or legal process, (v) to
any Person in connection with any legal proceeding to which that Lender is
a party, and (vi) permitted by Section 12.4.
9.13. Nonreliance. Each Lender hereby represents that it is not
relying on or looking to any margin stock (as defined in Regulation U of
the Board of Governors of the Federal Reserve System) for the repayment of
the Loans provided for herein.<PAGE>
ARTICLE X
THE ADMINISTRATIVE AGENT
10.1. Appointment; Nature of Relationship. First Tennessee Bank is
hereby appointed by the Lenders as the Administrative Agent and NBD Bank as
the Co-Agent hereunder and under each other Loan Document, and each of the
Lenders irrevocably authorizes the Administrative Agent and the Co-Agent
to act as the contractual representatives of such Lender with the rights
and duties expressly set forth herein and in the other Loan Documents.
The Administrative Agent and the Co-Agent agree to act as such contractual
representative upon the express conditions contained in this Article X.
Notwithstanding the use of the defined term "Administrative Agent" and
"Co-Agent," it is expressly understood and agreed that the Administrative
Agent and the Co-Agent shall not have any fiduciary responsibilities to
any Lender by reason of this Agreement or any other Loan Document and that
the Administrative Agent and the Co-Agent are merely acting as the
representatives of the Lenders with only those duties as are expressly set
forth in this Agreement and the other Loan Documents. In its capacity as
the Lenders' contractual representative, the Administrative Agent and the
Co-Agent (i) do not hereby assume any fiduciary duties to any of the
Lenders, (ii) are a "representative" of the Lenders within the meaning of
Section 9-105 of the Uniform Commercial Code and (iii) are acting as an
independent contractor, the rights and duties of which are limited to
those expressly set forth in this Agreement and the other Loan Documents.
Each of the Lenders hereby agrees to assert no claim against the
Administrative Agent and the Co-Agent on any agency theory or any other
theory of liability for breach of fiduciary duty, all of which claims each
Lender hereby waives.
10.2. Powers. The Administrative Agent shall have and may exercise
such powers under the Loan Documents as are specifically delegated to the
Administrative Agent and the Co-Agent by the terms of each thereof,
together with such powers as are reasonably incidental thereto. The
Administrative Agent and the Co-Agent shall have no implied duties to the
Lenders, or any obligation to the Lenders to take any action thereunder
except any action specifically provided by the Loan Documents to be taken
by the Administrative Agent and the Co-Agent.
10.3. General Immunity. Neither the Administrative Agent nor the
Co-Agent nor any of its directors, officers, agents or employees shall be
liable to the Borrower, the Lenders or any Lender for any action taken or
omitted to be taken by it or them hereunder or under any other Loan Document
or in connection herewith or therewith except for its or their own gross
negligence or willful misconduct.
10.4. No Responsibility for Loans, Recitals, etc. Neither the
Administrative Agent nor the Co-Agent nor any of its directors, officers,
agents or employees shall be responsible for or have any duty to
ascertain, inquire into, or verify (i) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to
each Lender; (iii) the satisfaction of any condition specified in Article
IV, except receipt of items required to be delivered to the Administrative
Agent and the Co-Agent; (iv) the validity, enforceability, effectiveness,
sufficiency or genuineness of any Loan Document or any other instrument or<PAGE>
writing furnished in connection therewith; or (v) the value, sufficiency,
creation, perfection or priority of any interest in any collateral
security. The Administrative Agent and the Co-Agent shall have no duty to
disclose to the Lenders, unless requested, information that is not
required to be furnished by the Borrower to the Administrative Agent and
the Co-Agent at such time, but is voluntarily furnished by the Borrower to
the Administrative Agent or the Co-Agent (either in their capacity as
Administrative Agent or Co-Agent or in their individual capacity).
10.5. Action on Instructions of Lenders. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining from
acting, hereunder and under any other Loan Document in accordance with
written instructions signed by the Required Lenders, and such instructions
and any action taken or failure to act pursuant thereto shall be binding on
all of the Lenders and on all holders of Notes. The Lenders hereby
acknowledge that the Administrative Agent shall be under no duty to take
any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement or any other Loan Document unless it shall be
requested in writing to do so by the Required Lenders. The Administrative
Agent shall be fully justified in failing or refusing to take any action
hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and
all liability, cost and expense that it may incur by reason of taking or
continuing to take any such action.
10.6. Employment of Agents and Counsel. The Administrative Agent and
the Co-Agent may execute any of their duties as Administrative Agent and
Co-Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to
the Lenders, except as to money or securities received by it or its
authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Administrative
Agent and the Co-Agent shall be entitled to advice of counsel concerning
all matters pertaining to the agency hereby created and its duties
hereunder and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Administrative Agent and
the Co-Agent shall be entitled to rely upon any Note, notice, consent,
certificate, affidavit, letter, telegram, statement, paper or document
believed by it to be genuine and correct and to have been signed or sent
by the proper person or persons, and, in respect to legal matters, upon
the opinion of counsel selected by the Administrative Agent or the
Co-Agent, which counsel may be employees of the Administrative Agent or
the Co-Agent.
10.8. Administrative Agent's Reimbursement and Indemnification. The
Lenders agree to reimburse and indemnify the Administrative Agent and the
Co-Agent ratably in proportion to their respective Commitments (or, if the
Commitments have been terminated, in proportion to their Commitments
immediately prior to such termination) (i) for any amounts not reimbursed
by the Borrower for which the Administrative Agent or the Co-Agent is
entitled to reimbursement by the Borrower under the Loan Documents, (ii)
for any other reasonable expenses incurred by the Administrative Agent and
the Co-Agent on behalf of the Lenders, in connection with the preparation,<PAGE>
execution, delivery, administration and enforcement of the Loan Documents
and (iii) for any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
and nature whatsoever which may be imposed on, incurred by or asserted
against the Administrative Agent and the Co-Agent in any way relating to
or arising out of the Loan Documents or any other document delivered in
connection therewith or the transactions contemplated thereby, or the
enforcement of any of the terms thereof or of any such other documents,
provided that no Lender shall be liable for any of the foregoing to the
extent they arise from the gross negligence or willful misconduct of the
Administrative Agent or the Co-Agent. The obligations of the Lenders
under this Section 10.8 shall survive payment of the Obligations and
termination of this Agreement.
10.9. Notice of Default. The Administrative Agent and the Co-Agent
shall not be deemed to have knowledge or notice of the occurrence of any
Default or Unmatured Default hereunder unless the Administrative Agent or
the Co-Agent has received written notice from a Lender or the Borrower
referring to this Agreement describing such Default or Unmatured Default
and stating that such notice is a "notice of default". In the event that
the Administrative Agent or the Co-Agent receives such a notice, the
Administrative Agent or the Co-Agent shall give prompt notice thereof to
the Lenders.
10.10. Rights as a Lender. In the event the Administrative Agent or
the Co-Agent is a Lender, the Administrative Agent and the Co-Agent shall
have the same rights and powers hereunder and under any other Loan Document
as any Lender and may exercise the same as though it were not the
Administrative Agent or Co-Agent, and the term "Lender" or "Lenders"
shall, at any time when the Administrative Agent or Co-Agent, is a Lender,
unless the context otherwise indicates, include the Administrative Agent
and the Co-Agent in its individual capacity. The Administrative Agent and
the Co-Agent may accept deposits from, lend money to, and generally engage
in any kind of trust, debt, equity or other transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with the
Borrower or any of its Subsidiaries in which the Borrower or such
Subsidiary is not restricted hereby from engaging with any other Person.
10.11. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or the
Co-Agent or any other Lender and based on the financial statements
prepared by the Borrower and such other documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement and the other Loan Documents. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or the Co-Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents.
10.12. Successor Administrative Agent. The Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrower, or be removed by the Required Lenders, such resignation or
removal to be effective upon the appointment of a successor Administrative<PAGE>
Agent or, if no successor new Administrative Agent has been appointed,
forty-five days after the retiring or removed Administrative Agent gives
notice of its intention to resign or is removed. Upon any such
resignation or removal the Required Lenders shall have the right to
appoint, on behalf of the Borrower and the Lenders and with the consent of
the Borrower (which shall not be unreasonably withheld), a successor
Administrative Agent. If the Administrative Agent has resigned or been
removed and no successor Administrative Agent has been appointed, the
Lenders may perform all the duties of the Administrative Agent hereunder
and the Borrower shall make all payments in respect of the Obligations to
the applicable Lender and for all other purposes shall deal directly with
the Lenders. No successor Administrative Agent shall be deemed to be
appointed hereunder until such successor Administrative Agent has accepted
the appointment. Any such successor Administrative Agent shall be a
commercial bank having capital and retained earnings of at least
$50,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the resigning Administrative
Agent. Upon the effectiveness of the resignation or removal of the
Administrative Agent, the resigning Administrative Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation of an
Administrative Agent, the provisions of this Article X shall continue in
effect for the benefit of such Administrative Agent in respect of any
actions taken or omitted to be taken by it while it was acting as the
Administrative Agent hereunder and under the other Loan Documents.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default occurs, any and all deposits (including all
account balances, whether provisional or final and whether or not
collected or available) and any other Indebtedness at any time held or
owing by any Lender to or for the credit or account of the Borrower may be
offset and applied toward the payment of the Obligations owing to such
Lender, whether or not the Obligations, or any part hereof, shall then be
due.
11.2. Ratable Payments. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant
to Section 3.1, 3.2 or 3.4 and other payments received by the Swing Line
Bank with respect to the Swing Line Loan) in a greater proportion than
that received by any other Lender, such Lender agrees, promptly upon
demand, to purchase a portion of the Loans held by the other Lenders so
that after such purchase each Lender will hold its ratable proportion of
Loans. If any Lender, whether in connection with setoff or amounts which
might be subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be subject to
setoff, such Lender agrees, promptly upon demand, to take such action<PAGE>
necessary such that all Lenders share in the benefits of such collateral
ratably in proportion to their Loans. In case any such payment is
disturbed by legal process, or otherwise, appropriate further adjustments
shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower
and the Lenders and their respective successors and assigns, except that
(i) the Borrower shall not have the right to assign its rights or
obligations under the Loan Documents and (ii) any assignment by any Lender
must be made in compliance with Section 12.3. Notwithstanding clause (ii)
of this Section, any Lender may at any time, without the consent of the
Borrower or the Administrative Agent, assign all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve Bank;
provided, however, that no such assignment to a Federal Reserve Bank shall
release the transferor Lender from its obligations hereunder. The
Administrative Agent may treat the payee of any Note as the owner thereof
for all purposes hereof unless and until such payee complies with Section
12.3 in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with the
Administrative Agent. Any assignee or transferee of a Note agrees by
acceptance thereof to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who at the
time of making such request or giving such authority or consent is the
holder of any Note, shall be conclusive and binding on any subsequent
holder, transferee or assignee of such Note or of any Note or Notes issued
in exchange therefor.
12.2. Participations.
12.2.1. Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law,
at any time sell to one or more banks or other entities ("Participants")
participating interests in any Loan owing to such Lender, any Note held
by such Lender, or any Commitment of such Lender or any other interest
of such Lender under the Loan Documents. In the event of any such sale
by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such
Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, such Lender shall remain the
holder of any such Note for all purposes under the Loan Documents, all
amounts payable by the Borrower under this Agreement shall be
determined as if such Lender had not sold such participating interests,
and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under the Loan Documents.
12.2.2. Voting Rights. Each Lender shall retain the sole right
to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than
any amendment,<PAGE>
modification or waiver with respect to any Loan, or Commitment, in which
such Participant has an interest which forgives principal, interest or
fees or reduces the interest rate or fees payable with respect to any
such Loan, or Commitment, postpones any date fixed for any regularly-
scheduled payment of principal of, or interest or fees on, any such
Loan, or Commitment, releases any guarantor of any such Loan or releases
any substantial portion of collateral, if any, securing any such Loan.
12.2.3. Benefit of Setoff. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in
Section 11.1 in respect of its participating interest in amounts owing
under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the
Loan Documents, provided that each Lender shall retain the right of
setoff provided in Section 11.1 with respect to the amount of
participating interests sold to each Participant. The Lenders agree
to share with each Participant, and each Participant, by exercising
the right of setoff provided in Section 11.1, agrees to share with
each Lender, any amount received pursuant to the exercise of its
right of setoff, such amounts to be shared in accordance with Section
11.2 as if each Participant were a Lender.
12.3. Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the ordinary
ourse of its business and in accordance with applicable law, at any time
assign to one or more banks or other entities ("Purchasers") all or any
part of its rights and obligations under the Loan Documents. Such
assignment shall be substantially in the form of Exhibit "D" hereto or
in such other form as may be agreed to by the parties thereto. The
consent of the Borrower and the Administrative Agent shall be required
prior to an assignment becoming effective with respect to a Purchaser
which is not a Lender or an Affiliate thereof; provided, however, that
if a Default has occurred and is continuing, the consent of the
Borrower shall not be required. Such consent shall not be unreasonably
withheld or delayed. Each such assignment shall be in an amount not
less than the lesser of (i) $5,000,000 or (ii) the remaining amount of
the assigning Lender's Commitment (calculated as at the date of such
assignment).
12.3.2. Effect; Effective Date. Upon (i) delivery to the
Administrative Agent of a notice of assignment, substantially in the
form attached as Exhibit "I" to Exhibit "D" hereto (a "Notice of
Assignment"), together with any consents required by Section 12.3.1,
(ii) payment of a $3,000 fee to the Administrative Agent for
processing such assignment, and (iii) notice of such assignment
delivered to the Lenders by the transferring Lender, such assignment
shall become effective on the effective date specified in such Notice
of Assignment. The Notice of Assignment shall contain a representation
by the Purchaser to the effect that none of the consideration used to
make the purchase of the Commitment and Loans under the applicable
assignment agreement are "plan assets" as defined under ERISA and that
the rights and interests of the Purchaser in and under the Loan
Documents will not be "plan assets" under ERISA. On and after the
effective date of such assignment, such Purchaser shall for all
purposes be a Lender party to this Agreement and any other Loan Document
executed by the Lenders and shall have all the rights and obligations of
a Lender<PAGE>
under the Loan Documents, to the same extent as if it were an original
party hereto, and no further consent or action by the Borrower, the
Lenders or the Administrative Agent shall be required to release the
transferor Lender with respect to the percentage of the Aggregate
Commitment, Loans, and L/C Participation Amounts assigned to such
Purchaser. Upon the consummation of any assignment to a Purchaser
pursuant to this Section 12.3.2, the transferor Lender, the
Administrative Agent and the Borrower shall make appropriate
arrangements so that replacement Notes are issued to such transferor
Lender and new Notes or, as appropriate, replacement Notes, are issued
to such Purchaser, in each case in principal amounts reflecting their
Commitment, as adjusted pursuant to such assignment.
12.4. Dissemination of Information. The Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in such
Lender's possession concerning the creditworthiness of the Borrower and its
Subsidiaries, provided that each Transferee and prospective Transferee
agrees to be bound by Section 9.12 of this Agreement.
12.5. Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the
transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of Section
4.3.
ARTICLE XIII
NOTICES
13.1. Notices. Except as otherwise permitted by Section 2.14 with
respect to borrowing notices, all notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party: (x) in
the case of the Borrower or the Administrative Agent, at its address or
facsimile number set forth on the signature pages hereof, (y) in the case
of any Lender, at its address or facsimile number set forth below its
signature hereto or (z) in the case of any party, such other address or
facsimile number as such party may hereafter specify for the purpose by
notice to the Administrative Agent and the Borrower. Each such notice,
request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified
in this Section and confirmation of receipt is received, (ii) if given by
mail, 72 hours after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (iii) if given by
any other means, when delivered at the address specified in this Section;
provided that notices to the Administrative Agent under Article II shall
not be effective until received.
13.2. Change of Address. The Borrower, the Administrative Agent and
any Lender may each change the address for service of notice upon it by a
notice in writing to the other parties hereto.<PAGE>
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower,
the Administrative Agent and the Lenders and each party has notified the
Administrative Agent by telex or telephone, that it has taken such action.
ARTICLE XV
CHOICE OF LAW, CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL
15.1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING
A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
TENNESSEE, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
15.2. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
TENNESSEE STATE COURT SITTING IN TENNESSEE IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
ADMINISTRATIVE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING
BY THE BORROWER AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER OR ANY
AFFILIATE OF THE ADMINISTRATIVE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN TENNESSEE.
15.3. WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT
AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
IN WITNESS WHEREOF, the Borrower, the Lenders and the Administrative
Agent have executed this Agreement as of the date first above written.<PAGE>
[Signatures on Next Page]<PAGE>
TBC CORPORATION
By:/s/ RONALD E. McCOLLOUGH
Print Name:
Title:
Attention: Ronald E. McCollough
Senior Vice President
and Treasurer
TBC Corporation
4770 Hickory Hill Road
Memphis, Tennessee 38115
Telecopier:(901) 541-3752
Commitments
$14,500,000 FIRST TENNESSEE BANK
NATIONAL ASSOCIATION
Individually and as Administrative Agent
By: JAMES H. MOORE, JR.
Print Name: James H. Moore, Jr.
Title: Vice President
National Department
165 Madison Ave.
Memphis, Tennessee 38103
Attention: James H. Moore, Jr.
Telecopier:(901) 523-4267<PAGE>
$21,500,000 NBD BANK
By: WILLIAM McCAFFREY
Print Name: William McCaffrey
Title: Vice President
611 Woodward Avenue
Detroit, Michigan 48226
Attention: William McCaffrey
Telecopier:(313) 225-1212
$12,500,000 SUNTRUST BANK,
NASHVILLE, N.A.
By: ANNELIESE H. TYLER
Print Name: Anneliese H. Tyler
Title: Vice President
6410 Poplar Ave., Suite 320
Memphis, Tennessee 38119-4836
Attention: Anneliese H. Tyler
Telecopier:(901) 766-7565<PAGE>
EXHIBIT "A-1"
REVOLVING NOTE
$ September 25, 1996
TBC Corporation, a Delaware corporation (the "Borrower"), promises to
pay to the order of (the "Lender") the
lesser of the principal sum of Dollars or the aggregate unpaid principal
amount of all Loans made by the Lender to the Borrower pursuant to Section
2.1 of the Agreement (as hereinafter defined), in immediately available
funds at the main office of First Tennessee Bank National Association in
Memphis, Tennessee, as Administrative Agent, together with interest on the
unpaid principal amount hereof at the rates and on the dates set forth in
the Agreement. The Borrower shall pay the principal of and accrued and
unpaid interest on the Loans in full on the Termination Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual
practice, the date and amount of each Loan and the date and amount of each
principal payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Short Term Credit Agreement dated as of September 25,
1996 (which, as it may be amended or modified and in effect from time to
time, is herein called the "Agreement"), among the Borrower, the lenders
party thereto, including the Lender, and First Tennessee Bank National
Association, as Administrative Agent, to which Agreement reference is
hereby made for a statement of the terms and conditions governing this
Note, including the terms and conditions under which this Note may be
prepaid or its maturity date accelerated. Capitalized terms used herein
and not otherwise defined herein are used with the meanings attributed to
them in the Agreement.
TBC CORPORATION
By:
Print Name:
Title: <PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF TBC CORPORATION
DATED SEPTEMBER 25, 1996
Maturity
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Loan Period Paid Balance<PAGE>
EXHIBIT "A-2"
SWING LINE NOTE
$3,000,000 September 25, 1996
TBC Corporation, a Delaware corporation (the "Borrower"), promises to
pay to the order of First Tennessee Bank National Association (the "Swing
Line Bank") the lesser of the principal sum of $3,000,000 Dollars or the
aggregate unpaid principal amount of all Swing Line Loans made by the
Lender to the Borrower pursuant to Section 2.2 of the Short Term Credit
Agreement (as the same may be amended or modified, the "Agreement")
hereinafter referred to, in immediately available funds at the main office
of First Tennessee Bank National Association in Memphis, Tennessee, as
Administrative Agent, together with interest on the unpaid principal
amount hereof at the rates and on the dates set forth in the Agreement.
The Borrower shall pay the principal of and accrued and unpaid interest on
the Swing Line Loans in full on the Termination Date.
The Swing Line Bank shall, and is hereby authorized to, record on the
schedule attached hereto, or to otherwise record in accordance with its
usual practice, the date and amount of each Swing Line Loan and the date
and amount of each principal payment hereunder.
This Swing Line Note is one of the Notes issued pursuant to, and is
entitled to the benefits of, the Short Term Credit Agreement dated as of
September 25, 1996 among the Borrower, First Tennessee Bank National
Association, individually and as Administrative Agent, and the lenders
named therein, including the Swing Line Bank, to which Agreement, as it
may be amended from time to time, reference is hereby made for a statement
of the terms and conditions governing this Swing Line Note, including the
terms and conditions under which this Swing Line Note may be prepaid or
its maturity date accelerated. Capitalized terms used herein and not
otherwise defined herein are used with the meanings attributed to them in
the Agreement.
TBC CORPORATION
By:
Print Name:
Title: <PAGE>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF TBC CORPORATION
DATED SEPTEMBER 25, 1996
Maturity
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Loan Period Paid Balance<PAGE>
EXHIBIT "B"
FORM OF OPINION
September 25, 1996
The Administrative Agent and the Lenders who are parties to the
Credit Agreement described below.
Gentlemen/Ladies:
We are counsel for TBC Corporation (the "Borrower"), and have
represented the Borrower, and each of its Subsidiaries in connection with
its execution and delivery of a Short Term Credit Agreement dated as of
September 25, 1996 (the "Agreement") among the Borrower, the Lenders named
therein, and First Tennessee Bank National Association, as Administrative
Agent, and providing for Advances in an aggregate principal amount not
exceeding $48,500,000 at any one time outstanding. All capitalized terms
used in this opinion and not otherwise defined herein shall have the
meanings attributed to them in the Agreement.
We have examined the Borrower's and each of its Subsidiaries' articles
of incorporation, by-laws, and resolutions, the Loan Documents, and such
other matters of fact and law which we deem necessary in order to render
this opinion. Based upon the foregoing, it is our opinion that:
l. The Borrower, and each of its Subsidiaries are corporations
duly incorporated, validly existing and in good standing under the laws of
their states of incorporation and have all requisite authority to conduct
their business in each jurisdiction in which their business is conducted.
2. The execution and delivery of the Loan Documents to which they
are a party by the Borrower, and each of its Subsidiaries and the performance
by the Borrower, and each of its Subsidiaries of its obligations thereunder
have been duly authorized by all necessary corporate action and
proceedings on the part of the Borrower, and each of its Subsidiaries and
will not:
(a) require any consent of the shareholders of the Borrower or any
of its Subsidiaries;
(b) violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower or any of its
Subsidiaries or its articles of incorporation or by-laws or any indenture,
instrument or agreement binding upon the Borrower or any of its Subsidiaries;
or
(c) result in, or require, the creation or imposition of any Lien
pursuant to the provisions of any indenture, instrument or agreement binding
upon the Borrower or any of its Subsidiaries.
3. The Loan Documents have been duly executed and delivered by
the Borrower and each of its Subsidiaries, and the Guarantors, and constitute
legal, valid and binding obligations of the Borrower, and each of its<PAGE>
Subsidiaries, and the Guarantors, enforceable in accordance with their terms
except to the extent the enforcement thereof may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and subject also to the availability of equitable remedies if
equitable remedies are sought.
4. Except as disclosed in Schedule "3" to the Agreement, there is
no litigation or proceeding against the Borrower or any of its Subsidiaries
which, if adversely determined, could reasonably be expected to have a
Material Adverse Effect.
5. No approval, authorization, consent, adjudication or order of
any governmental authority, which has not been obtained by the Borrower or
any of its Subsidiaries, is required to be obtained by the Borrower or any
of its Subsidiaries in connection with the execution and delivery of the Loan
Documents, the borrowings under the Agreement or in connection with the
payment by the Borrower of the Obligations.
This opinion may be relied upon by the Administrative Agent, the
Co-Agent, the Lenders and their participants, assignees and other
transferees.
Very truly yours,<PAGE>
EXHIBIT "C"
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain Credit
Agreement dated as of September 25, 1996 (as amended, modified, renewed or
extended from time to time, the "Agreement") among TBC Corporation (the
"Borrower"), the lenders party thereto and First Tennessee Bank National
Association as Administrative Agent for the Lenders. Unless otherwise
defined herein, capitalized terms used in this Compliance Certificate have
the meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the
transactions and conditions of the Borrower and its Subsidiaries during
the accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which
constitutes a Default or Unmatured Default during or at the end of the
accounting period covered by the attached financial statements or as of the
date of this Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain terms of the
Agreement, all of which data and computations are true, complete and correct.
Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it
has existed and the action which the Borrower has taken, is taking, or
proposes to take with respect to each such condition or event:
The foregoing certifications, together with the computations set forth
in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this day of
, 19 .<PAGE>
SCHEDULE I TO COMPLIANCE CERTIFICATE
Compliance as of _________, 199_ with
Provisions of Sections 6.18, 6.19 and 6.20 of
the Agreement
CONSOLIDATED TANGIBLE NET WORTH (Net Worth Less Intangible Assets)
Consolidated Net Worth $
Less Consolidated Tan.
Assets
Consolidated Tan. Net
Worth
Required
Compliance
FUNDED INDEBTEDNESS (Consolidated Funded Indebtedness to EBITDA)
Consolidated funded $
Indebtedness (CFI)
EBITDA
CFI/EBITDA
Required
Compliance
FIXED CHARGE COVERAGE RATIO
(Earnings before Interest, Taxes and Leases to Interest, Taxes & Leases)
Fixed Charge Coverage
EBITL
Interest (I)
Leases (L)
EBITL/ITL
Required
Compliance<PAGE>
EXHIBIT "D"
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
___________________________ (the "Assignor") and ________________ (the
"Assignee") is dated as of _______________, 19 . The parties hereto
agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit
Agreement (which, as it may be amended, modified, renewed or extended from
time to time is herein called the "Credit Agreement") described in Item 1
of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein
and not otherwise defined herein shall have the meanings attributed to
them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, an interest in and to the Assignor's rights and obligations
under the Credit Agreement [(other than rights and obligations of the
Assignor in its capacity as Issuing Lender)] such that after giving effect
to such assignment the Assignee shall have purchased pursuant to this
Assignment Agreement the percentage interest specified in Item 3 of
Schedule 1 of all outstanding rights and obligations under the Credit
Agreement relating to the facilities listed in Item 3 of Schedule 1 and
the other Loan Documents. The aggregate Commitment (or Loans and L/C
Participation Amounts, if the applicable Commitment has been terminated)
purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement
(the "Effective Date") shall be the later of the date specified in Item 5 of
Schedule 1 or two Business Days (or such shorter period agreed to by the
Administrative Agent) after a Notice of Assignment substantially in the
form of Exhibit "I" attached hereto has been delivered to the
Administrative Agent. Such Notice of Assignment must include any consents
required to be delivered to the Administrative Agent by Section 12.3.1 of
the Credit Agreement. In no event will the Effective Date occur if the
payments required to be made by the Assignee to the Assignor on the
Effective Date under Sections 4 and 5 hereof are not made on the proposed
Effective Date. The Assignor will notify the Assignee of the proposed
Effective Date no later than the Business Day prior to the proposed
Effective Date. As of the Effective Date, (i) the Assignee shall have the
rights and obligations of a Lender under the Loan Documents with respect
to the rights and obligations assigned to the Assignee hereunder and (ii)
the Assignor shall relinquish its rights and be released from its
corresponding obligations under the Loan Documents with respect to the
rights and obligations assigned to the Assignee hereunder.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the Assignee
shall be entitled to receive from the Administrative Agent all payments of
principal, interest and fees with respect to the interest assigned hereby.
The Assignee shall advance funds directly to the Administrative Agent with<PAGE>
respect to all Loans and reimbursement payments made on or after the
Effective Date with respect to the interest assigned hereby. [In
consideration for the sale and assignment of Loans and L/C Participation
Amounts hereunder, (i) the Assignee shall pay the Assignor, on the
Effective Date, an amount equal to the principal amount of the portion of
all Floating Rate Loans assigned to the Assignee hereunder and (ii) with
respect to each Eurodollar Loan made by the Assignor and assigned to the
Assignee hereunder which is outstanding on the Effective Date, (a) on the
last day of the Interest Period therefor or (b) on such earlier date
agreed to by the Assignor and the Assignee or (c) on the date on which any
such Eurodollar Loan either becomes due (by acceleration or otherwise) or
is prepaid (the date as described in the foregoing clauses (a), (b) or (c)
being hereinafter referred to as the "Payment Date"), the Assignee shall
pay the Assignor an amount equal to the principal amount of the portion of
such Eurodollar Loan assigned to the Assignee which is outstanding on the
Payment Date. If the Assignor and the Assignee agree that the Payment
Date for such Eurodollar Loan shall be the Effective Date, they shall
agree to the interest rate applicable to the portion of such Loan assigned
hereunder for the period from the Effective Date to the end of the
existing Interest Period applicable to such Eurodollar Loan (the "Agreed
Interest Rate") and any interest received by the Assignee in excess of the
Agreed Interest Rate shall be remitted to the Assignor. In the event
interest for the period from the Effective Date to but not including the
Payment Date is not paid by the Borrower with respect to any Eurodollar
Loan sold by the Assignor to the Assignee hereunder, the Assignee shall
pay to the Assignor interest for such period on the portion of such
Eurodollar Loan sold by the Assignor to the Assignee hereunder at the
applicable rate provided by the Credit Agreement. In the event a
prepayment of any Eurodollar Loan which is existing on the Payment Date
and assigned by the Assignor to the Assignee hereunder occurs after the
Payment Date but before the end of the Interest Period applicable to such
Eurodollar Loan, the Assignee shall remit to the Assignor the excess of
the prepayment penalty paid with respect to the portion of such Eurodollar
Loan assigned to the Assignee hereunder over the amount which would have
been paid if such prepayment penalty was calculated based on the Agreed
Interest Rate. The Assignee will also promptly remit to the Assignor (i)
any principal payments received from the Administrative Agent with respect
to Eurodollar Loans prior to the Payment Date and (ii) any amounts of
interest on Loans and fees received from the Administrative Agent which
relate to the portion of the Loans assigned to the Assignee hereunder for
periods prior to the Effective Date, in the case of Floating Rate Loans or
fees, or the Payment Date, in the case of Eurodollar Loans, and not
previously paid by the Assignee to the Assignor.]1 In the event that
either party hereto receives any payment to which the other party hereto
is entitled under this Assignment Agreement, then the party receiving such
amount shall promptly remit it to the other party hereto.
1
Each Assignor may insert its standard payment provisions in lieu of the
payment terms included in this Exhibit.<PAGE>
5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the
Assignor a fee on each day on which a payment of interest, commitment fees,
or Facility L/C fees is made under the Credit Agreement with respect to the
amounts assigned to the Assignee hereunder (other than a payment of
interest or fees for the period prior to the Effective Date or, in the
case of Eurodollar Loans, the Payment Date, which the Assignee is
obligated to deliver to the Assignor pursuant to Section 4 hereof). The
amount of such fee shall be the difference between (i) the interest or
fee, as applicable, paid with respect to the amounts assigned to the
Assignee hereunder and (ii) the interest or fee, as applicable, which
would have been paid with respect to the amounts assigned to the Assignee
hereunder if each interest rate was of 1% less than the interest rate
paid by the Borrower or if the commitment fee was of 1% less than the
commitment fee paid by the Borrower or if the Facility L/C fee was ___% of
1% less than the Facility L/C fee paid by the Borrower, as applicable. In
addition, the Assignee agrees to pay % of the recordation fee required
to be paid to the Administrative Agent in connection with this Assignment
Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim created by the
Assignor. It is understood and agreed that the assignment and assumption
hereunder are made without recourse to the Assignor and that the Assignor
makes no other representation or warranty of any kind to the Assignee.
Neither the Assignor nor any of its officers, directors, employees, agents
or attorneys shall be responsible for (i) the due execution, legality,
validity, enforceability, genuineness, sufficiency or collectability of
any Loan Document, including without limitation, documents granting the
Assignor and the other Lenders a security interest in assets of the
Borrower or any guarantor, (ii) any representation, warranty or statement
made in or in connection with any of the Loan Documents, (iii) the
financial condition or creditworthiness of the Borrower or any guarantor,
(iv) the performance of or compliance with any of the terms or provisions
of any of the Loan Documents, (v) inspecting any of the Property, books or
records of the Borrower, (vi) the validity, enforceability, perfection,
priority, condition, value or sufficiency of any collateral securing or
purporting to secure the Loans or (vii) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the
Loan Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements requested by the Assignee and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment Agreement, (ii) agrees
that it will, independently and without reliance upon the Administrative
Agent, the Assignor or any other Lender and based on such documents and
information at it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan
Documents, (iii) appoints and authorizes the Administrative Agent to take
such action as administrative agent on its behalf and to exercise such
powers under the Loan Documents as are delegated to the Administrative<PAGE>
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto, (iv) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Loan
Documents are required to be performed by it as a Lender, (v) agrees that
its payment instructions and notice instructions are as set forth in the
attachment to Schedule 1, (vi) confirms that none of the funds, monies,
assets or other consideration being used to make the purchase and
assumption hereunder are "plan assets" as defined under ERISA and that its
rights, benefits and interests in and under the Loan Documents will not be
"plan assets" under ERISA, [and (vii) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying that the Assignee
is entitled to receive payments under the Loan Documents without deduction
or withholding of any United States federal income taxes].2
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including,
without limitation, reasonable attorneys' fees) and liabilities incurred
by the Assignor in connection with or arising in any manner from the
Assignee's non-performance of the obligations assumed under this
Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee
shall have the right pursuant to Section 12.3.1 of the Credit Agreement to
assign the rights which are assigned to the Assignee hereunder to any
entity or person, provided that (i) any such subsequent assignment does
not violate any of the terms and conditions of the Loan Documents or any
law, rule, regulation, order, writ, judgment, injunction or decree and
that any consent required under the terms of the Loan Documents has been
obtained and (ii) unless the prior written consent of the Assignor is
obtained, the Assignee is not thereby released from its obligations to the
Assignor hereunder, if any remain unsatisfied, including, without
limitation, its obligations under Sections 4, 5 and 8 hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
Aggregate Commitment occurs between the date of this Assignment Agreement
and the Effective Date, the percentage interest specified in Item 3 of
Schedule 1 shall remain the same, but the dollar amount purchased shall be
recalculated based on the reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between
the parties hereto and supersede all prior agreements and understandings
between the parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Tennessee.
2
to be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof.<PAGE>
13. NOTICES. Notices shall be given under this Assignment Agreement
in the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered)
shall be the address set forth in the attachment to Schedule 1.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above
written.
[NAME OF ASSIGNOR]
By:
Title:
[NAME OF ASSIGNEE]
By:
Title:<PAGE>
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
Credit Agreement dated as of September 25, 1996 by and among TBC
Corporation, First Tennessee Bank National Association, as
Administrative Agent, and the Lenders party thereto.
2. Date of Assignment Agreement: , 19
3. Amounts (As of Date of Item 2 above):
Loan Letter of Credit
Facility Subfacility
a.Total of Commitments
(Loans/Facility L/C's)3
under Credit Agreement $ [$ ]*
b.Assignee's Percentage
of each Facility purchased
under the Assignment
Agreement4* %
c. Amount of Assigned Share in
each Facility purchased under
the Assignment
Agreement $ [$ ]*
4.Assignee's Aggregate (Loan Amount/
L/C Participation Amount)*
Commitment Amount
Purchased Hereunder: $
5.Proposed Effective Date:
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
Title: Title:
3
If a Commitment has been terminated, insert outstanding Loans and Facility
L/C's in place of Commitment
4
Percentage taken to 10 decimal places<PAGE>
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must include
notice address for the Assignor and the Assignee<PAGE>
EXHIBIT "I"
to Assignment Agreement
NOTICE
OF ASSIGNMENT
, 19
To: TBC CORPORATION
______________________
______________________
Attention:
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
______________________
______________________
Attention:
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that Credit Agreement (the "Credit Agreement")
described in Item 1 of Schedule 1 attached hereto ("Schedule 1").
Capitalized terms used herein and not otherwise defined herein shall have
the meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered
to the Borrower and the Administrative Agent pursuant to Section 12.3.2 of
the Credit Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of , 19 (the "Assignment"), pursuant to
which, among other things, the Assignor has sold, assigned, delegated and
transferred to the Assignee, and the Assignee has purchased, accepted and
assumed from the Assignor the percentage interest specified in Item 3 of
Schedule 1 of all outstandings, rights and obligations under the Credit
Agreement relating to the facilities listed in Item 3 of Schedule 1. The
Effective Date of the Assignment shall be the later of the date specified in
Item 5 of Schedule 1 or two Business Days (or such shorter period as agreed
to by the Administrative Agent) after this Notice of Assignment and any
consents and fees required by Sections 12.3.1 and 12.3.2 of the Credit
Agreement have been delivered to the Administrative Agent, provided that
the Effective Date shall not occur if any condition precedent agreed to by
the Assignor and the Assignee has not been satisfied.
4. The Assignor and the Assignee hereby give to the Borrower and
the Administrative Agent notice of the assignment and delegation referred to
herein. The Assignor will confer with the Administrative Agent before the<PAGE>
date specified in Item 5 of Schedule 1 to determine if the Assignment
Agreement will become effective on such date pursuant to Section 3 hereof,
and will confer with the Administrative Agent to determine the Effective
Date pursuant to Section 3 hereof if it occurs thereafter. The Assignor
shall notify the Administrative Agent if the Assignment Agreement does not
become effective on any proposed Effective Date as a result of the failure
to satisfy the conditions precedent agreed to by the Assignor and the
Assignee. At the request of the Administrative Agent, the Assignor will
give the Administrative Agent written confirmation of the satisfaction of
the conditions precedent.
5. The Assignor or the Assignee shall pay to the Administrative
Agent on or before the Effective Date the processing fee of $3,000 required
by Section 12.3.2 of the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor and
the Assignee request and direct that the Administrative Agent prepare and
cause the Borrower to execute and deliver new Notes or, as appropriate,
replacements notes, to the Assignor and the Assignee. The Assignor and,
if applicable, the Assignee each agree to deliver to the Administrative
Agent the original Note received by it from the Borrower upon its receipt
of a new Note in the appropriate amount.
7. The Assignee advises the Administrative Agent that notice and
payment instructions are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the
funds, monies, assets or other consideration being used to make the purchase
pursuant to the Assignment are "plan assets" as defined under ERISA and
that its rights, benefits, and interests in and under the Loan Documents
will not be "plan assets" under ERISA.
9. The Assignee authorizes the Administrative Agent to act as its
administrative agent under the Loan Documents in accordance with the terms
thereof. The Assignee acknowledges that the Administrative Agent has no
duty to supply information with respect to the Borrower or the Loan
Documents to the Assignee until the Assignee becomes a party to the Credit
Agreement.5
NAME OF ASSIGNOR NAME OF ASSIGNEE
By: By:
Title: Title:
ACKNOWLEDGED AND CONSENTED TO ACKNOWLEDGED AND CONSENTED TO
BY FIRST TENNESSEE BANK, BY TBC CORPORATION
NATIONAL ASSOCIATION
5
May be eliminated if Assignee is a party to the Credit Agreement prior to
the Effective Date.<PAGE>
By: By:
Title: Title:
[Attach photocopy of Schedule 1 to Assignment]<PAGE>
EXHIBIT "E"
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To: First Tennessee Bank National Association
as Administrative Agent (the "Administrative Agent") under the Credit
Agreement Described Below.
Re: Short Term Credit Agreement, dated September 25, 1996, (as the same may
be amended or modified, the "Credit Agreement"), among TBC Corporation
(the "Borrower"), the Lenders named therein and the Administrative
Agent. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned thereto in the Credit Agreement.
The Administrative Agent is specifically authorized and directed to act
upon the following standing money transfer instructions with respect to
the proceeds of Advances or other extensions of credit from time to time
until receipt by the Administrative Agent of a specific written revocation
of such instructions by the Borrower, provided, however, that the
Administrative Agent may otherwise transfer funds as hereafter directed in
writing by the Borrower in accordance with Section 13.1 of the Credit
Agreement or based on any telephonic notice made in accordance with
Section 2.14 of the Credit Agreement.
Customer/Account Name: TBC Corporation
Credit Funds To: Account No. 00-0223239
Reference/Attention To: First Tennessee Bank National Association
National Department
Authorized Officer (Customer Representative)
1. Ronald E. McCollough
Senior Vice President Operations and Treasurer
2. Larry D. Coley
Vice President and Controller
3. Deron G. Wisdom
Manager of Credit and Banking
4. Elaine Rook
Manager of Credit and Collections
(Deliver Completed Form to Credit Support Staff For Immediate Processing)<PAGE>
EXHIBIT "F"
CONTINUING GUARANTY
GUARANTY: To induce First Tennessee Bank National Association, as
Administrative Agent, and the Lenders (singularly or collectively referred
to as the "Bank"), pursuant to that certain Short Term Credit Agreement
dated September 25, 1996 and that Long Term Credit Agreement dated
September 25, 1996, as the same may be amended or restated from time to
time hereafter, to make loans, extend or continue credit or some other
benefit, including letters of credit and foreign exchange contracts,
present or future, direct and indirect, and whether several, joint or
joint and several (referred to collectively as "Liabilities"), to TBC
Corporation, and its successors (the "Borrower"), and because the
undersigned (the "Guarantor") has determined that executing this Guaranty
is in its interest and to its financial benefit, the Guarantor absolutely
and unconditionally guaranties to the Bank, as primary obligor and not
merely as surety, that the Liabilities will be paid when due, whether by
acceleration or otherwise. The Guarantor will not only pay the
Liabilities, but will also reimburse the Bank for accrued and unpaid
interest, and any expenses, including reasonable attorneys' fees, that the
Bank may pay in collecting from the Borrower or the Guarantor, and for
liquidating any collateral.
LIMITATION: The Guarantor's obligation under this Guaranty is
UNLIMITED. Unless otherwise specified below, the Guarantor's obligation
shall be payable in U.S. Dollars.
CONTINUED RELIANCE: The Bank may continue to make loans or extend
credit to the Borrower based on this Guaranty until it receives written
notice of termination from the Guarantor. That notice shall be effective
at the opening of the Bank for business on the day after receipt of the
notice. If terminated, the Guarantor will continue to be liable to the Bank
for any Liabilities created, assumed or committed to at the time the
termination becomes effective, and all subsequent renewals, extensions,
modifications and amendments of the Liabilities.
SETOFF: Upon any Default (as defined in the Obligations), the Bank
shall have the right to setoff against the Obligations:
1. All securities and other property of the Guarantor in the
custody, possession or control of the Bank (other than property held by the
Bank solely in a fiduciary capacity);
2. All property or securities declared or acknowledged to
constitute security for any past, present or future liability, direct or
indirect, of the Guarantor to the Bank;
3. All balances of deposit accounts of the Guarantor with the Bank.
The Bank shall have the right at any time to apply its own debt or
liability to the Guarantor in whole or partial payment of this Guaranty or
other present or future liabilities, direct or indirect, without any
requirement for mutual maturity.<PAGE>
If the Guarantor fails to pay any amount owing under this Guaranty, the
Bank shall have all of the rights and remedies provided by law or under
any other agreement to liquidate or foreclose on and sell any collateral,
including but not limited to the rights and remedies of a secured party
under the Uniform Commercial Code. These rights and remedies shall be
cumulative and not exclusive. If the Guarantor is entitled to notice,
that requirement will be met if the Bank sends notice at least seven (7)
days prior to the date of sale, disposition or other event which requires
notice. The proceeds of any sale shall be applied first to costs, then
toward payment of the amount owing under this Guaranty. The Bank is
authorized to cause all or any part of any collateral to be transferred
to or registered in its name or in the name of any other person, firm or
corporation, with or without designation of the capacity of such nominee.
For purposes of the following paragraphs, "any collateral" shall include
any collateral securing the Liabilities.
ACTION REGARDING BORROWER: If any monies become available that the Bank
can apply to the Liabilities (other than monies made available to the Bank
by the Guarantor pursuant to this Guaranty), the Bank may apply them in
any manner it chooses, including but not limited to applying them against
liabilities which are not covered by this Guaranty. The Bank can take any
action against the Borrower, any collateral, or any other person liable
for any of the Liabilities. The Bank can release the Borrower or anyone
else from the Liabilities, either in whole or in part, or release any
collateral, and need not perfect a security interest in any collateral.
The Bank does not have to exercise any rights that it has against the
Borrower or anyone else, or make any effort to realize on any collateral
or right of set-off. If the Borrower requests more credit or any other
benefit, the Bank may grant it and the Bank may grant renewals,
extensions, modifications and amendments of the Liabilities and otherwise
deal with the Borrower or any other person as the Bank sees fit and as if
this Guaranty were not in effect. The Guarantor's obligations under this
Guaranty shall not be released or affected by (a) any act or omission of
the Bank, (b) the voluntary or involuntary liquidation, sale or other
disposition of all or substantially all of the assets of the Borrower, or
any receivership, insolvency, bankruptcy, reorganization, or other similar
proceedings affecting the Borrower or any of its assets, or (c) any change
in the composition or structure of the Borrower or the Guarantor,
including a merger or consolidation with any other person or entity.
NATURE OF GUARANTY: This Guaranty is a guaranty of payment and not of
collection. Therefore, the Bank can insist that the Guarantor pay
immediately, and the Bank is not required to attempt to collect first from
the Borrower, any collateral, or any other person liable for the
Liabilities. The obligation of the Guarantor shall be unconditional and
absolute, regardless of the unenforceability of any provision of any
agreement between the Borrower and the Bank, or the existence of any
defense, setoff or counterclaim which the Borrower may assert.
OTHER GUARANTORS: If there is more than one Guarantor, their
obligations under this Guaranty shall be joint and several. In addition,
each Guarantor shall be jointly and severally liable with any other
guarantor of the Liabilities. If the Bank elects to enforce its rights
against less than all guarantors of the Liabilities, that election shall
not release Guarantor from its obligations under this Guaranty. The
compromise or<PAGE>
release of any of the obligations of any of the other guarantors or the
Borrower shall not serve to waive, alter or release the Guarantor's
obligations. This Guaranty is not conditioned on anyone else executing
this or any other guaranty.
RIGHTS OF SUBROGATION: The Guarantor agrees not to enforce any rights
of subrogation, contribution or indemnification that it has against the
Borrower, any entity liable for the Liabilities, or any collateral, until
the Liabilities are fully paid, even if all Liabilities are not covered by
this Guaranty. The Guarantor further agrees that if any payments to the
Bank on the Liabilities are in whole or in part invalidated, declared to
be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party under any bankruptcy act or code,
state or federal law, common law or equitable doctrine, this Guaranty and
the Bank's interest in any collateral remain in full force and effect (or
are reinstated as the case may be) until payment in full of those amounts,
which payment is due on demand.
WAIVERS: The Guarantor waives any right it may have to receive notice
of the following matters before the Bank enforces any of its rights: (a) the
Bank's acceptance of this Guaranty, (b) any credit that the Bank extends
to the Borrower, (c) the Borrower's default, (d) any demand, (e) any
action that the Bank takes regarding the Borrower, anyone else, any
collateral, or any Liability, which it might be entitled to by law or
under any other agreement. Any waiver shall affect only the specific
terms and time period stated in the waiver. The Bank may waive or delay
enforcing any of its rights without losing them. No modification or
waiver of this Guaranty shall be effective unless it is in writing and
signed by the party against whom it is being enforced.
REPRESENTATIONS BY GUARANTOR: Each Guarantor represents: (a) that the
execution and delivery of this Guaranty and the performance of the
obligations it imposes do not violate any law, conflict with any agreement
by which it is bound, or require the consent or approval of any
governmental authority or any third party; (b) that this Guaranty is a
valid and binding agreement, enforceable according to its terms; and (c)
that all balance sheets, profit and loss statements, and other financial
statements furnished to the Bank are accurate and fairly reflect the
financial condition of the organizations and persons to which they apply
on their effective dates, including contingent liabilities of every type,
which financial condition has not changed materially and adversely since
those dates. Each Guarantor, other than a natural person, further
represents: (a) that it is duly organized, existing and in good standing
pursuant to the laws under which it is organized; and (b) that the
execution and delivery of this Guaranty and the performance of the
obligations it imposes (i) are within its powers and have been duly
authorized by all necessary action of its governing body; and (ii) do not
contravene the terms of its articles of incorporation or organization, its
by-laws, or any partnership, operating or other agreement governing its
affairs.
NOTICES: Notice from one party to another relating to this Guaranty
shall be deemed effective if made in writing (including telecommunications)
and delivered to the recipient's address, telex number or facsimile number
set forth under its name by any of the following means: (a) hand delivery,<PAGE>
(b) registered or certified mail, postage prepaid, with return receipt
requested, (c) first class or express mail, postage prepaid, (d) Federal
Express, Purolator Courier or like overnight courier service or (e)
facsimile, telex or other wire transmission with request for assurance of
receipt in a manner typical with respect to communications of that type.
Notice made in accordance with this section shall be deemed delivered on
receipt if delivered by hand or wire transmission, on the third business
day after mailing if mailed by first class, registered or certified mail,
or on the next business day after mailing or deposit with an overnight
courier service if delivered by express mail or overnight courier.
Notwithstanding the foregoing, notice of termination of this Guaranty
shall be deemed received only upon the receipt of actual written notice by
the Bank in accordance with the paragraph above labeled "Continued
Reliance."
LAW AND JUDICIAL FORUM THAT APPLY: This agreement is governed by
Tennessee law. The Guarantor agrees that any legal action or proceeding
against it with respect to any of its obligations under this Guaranty may
be brought in any court of the State of Tennessee or of the United States
of America for the Eastern or Western District of Tennessee, as the Bank
in its sole discretion may elect. By the execution and delivery of this
Guaranty, the Guarantor submits to and accepts, with regard to any such
action or proceeding, for itself and in respect of its property, generally
and unconditionally, the jurisdiction of those courts. The Guarantor
waives any claim that the State of Tennessee is not a convenient forum or
the proper venue for any suit, action or proceeding.
MISCELLANEOUS: Subject to the express provisions of any subsequent
guaranty, Guarantor's liability under this Guaranty is independent of its
liability under any other guaranty previously or subsequently executed by
the Guarantor as to all or any part of the Liabilities, and may be
enforced for the full amount of this Guaranty regardless of the
Guarantor's liability under any other guaranty. This Guaranty is binding
on the Guarantor's heirs, successors and assigns, and will operate to the
benefit of the Bank and its successors and assigns. The use of headings
shall not limit the provisions of this Guaranty.
WAIVER OF JURY TRIAL: The Bank and the Guarantor, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily
and intentionally waive any right either of them may have to a trial by
jury in any litigation based upon or arising out of this Guaranty or any
related instrument or agreement, or any of the transactions contemplated
by this Guaranty, or any course of conduct, dealing, statements (whether
oral or written), or actions of either of them. Neither the Bank nor the
Guarantor shall seek to consolidate, by counterclaim or otherwise, any
action in which a jury trial has been waived with any other action in
which a jury trial cannot be or has not been waived. These provisions
shall not be deemed to have been modified in any respect or relinquished
by either the Bank or the Guarantor except by a written instrument
executed by both of them.
Dated: September 25, 1996
GUARANTOR:
ADDRESS :__________________________________ <PAGE>
_______________________________ BY:_______________________________
_______________________________ ITS:______________________________<PAGE>
<TABLE>
Short Term Credit Agreement
SCHEDULE "1"
SUBSIDIARIES
(See Section 5.8)
<CAPTION>
Investment Owned Percent Jurisdiction of
In By Ownership Organization
<S> <C> <C> <C> <C>
Big O Tires, Inc. Borrower 100% Nevada
Big O Retail Big O 100% Colorado
Enterprises, Inc.
Big O Development, Big O 100% Colorado
Inc.
O Advertising, Inc. Big O 100% Colorado
Big O Tire of Idaho, Big O 100% Idaho
Inc.
Apex Tire, Inc. Big O Retail 51% Utah
Enterprises, Inc.
TBC International, Borrower 100% Delaware
Inc.
TBC Sales, Inc. Borrower 100% Delaware
Northern States Borrower 100% Delaware
Tire, Inc.
Battery Associates, Borrower 100% Delaware
Inc.
/TABLE
<PAGE>
9/23/96
SCHEDULE 2
EXISTING INDEBTEDNESS AND LIENS
Existing Indebtedness:
-See attached listing of Big O Indebtedness.
-Indebtedness owing by Northern States Tires, Inc. to Bandag Incorporated
in the approximate principal amount of $104,000.
-Northern States Tire, Inc. is obligated to issue promissory notes in the
aggregate amount of $298,471 in payment of the balance of the purchase
price payable to the sellers of the business and assets it acquired in
September 1995.
-Northern States Tire, Inc. is obligated to credit deferred compensation
equal to 12.7% of its annual net income to a deferred compensation account
established on its books for Lorin Dore (the former owner of Northern
States, who is currently its General Manager) and is permitted to offset
12.7% of annual losses against such account, through the year ending
December 31, 2005.
-See Schedule 3 for a listing of existing Contingent Obligations.
Existing Liens:
-Bandag, Incorporated holds a security interest in certain tire re-
treading equipment owned by Northern States Tire, Inc.
-See attached listing of liens encumbering Big O assets.
-First National Bank of Chicago has a lien on Big O's inventory and
accounts receivable to secure amounts owing to the Bank under its existing
line of credit with Big O.<PAGE>
05-Jul-96
01:13:04 PM
BIG O TIRES, INC. AND SUBSIDIARIES
SCHEDULE OF NOTES PAYABLE AND LONG TERM DEBT (INCLUDING CAPITAL LEASE
OBLIGATIONS)
YEAR TO DATE JUNE 30, 1996
<TABLE>
<CAPTION>
BALANCE BALANCE CURRENT LONG-TERM
12-31-95 ADDITIONS DELETIONS TRANSFERS 06-30-96 MATURITIES PORTION
<S> <C> <C> <C> <C> <C> <C> <C>
N/P FIRSTBANK OF CHICAGO
LINE OF CREDIT 2,650,000.00 15,300,000.00 (16,700,000.00) 1,250,000.00 1,250,000.00
LIBOR 0.00 0.00 0.00
LIBOR 0.00 0.00 0.00
UNUSED LOC
2726 N/P KELLY 2,945,338.67 (750,000.00) 2,195,338.67 1,600,000.00 595,338.67
SPRINGFIELD
SUBTOTAL CORPORATE 5,595,338.67 15,300,000.00 (17,450,000.00) 0.00 3,445,338.67 1,600,000.00 1,845,338.67
BIG O DEVELOPMENT
GIBSON NOTES 0.00 0.00 0.00
(CHANDLER)
AT&T - L OWSEGO 405,327.00 (3,228.07) 402,098.93 9,763.93 392,335.00
N/P BONDS 0.00 0.00 0.00
N/P - SENIOR DEBT 8,000,000.00 8,000,000.00 0.00 8,000,000.00
N/P - INDIANA 1,366,666.72 (49,999.98) 1,316,666.74 99,999.96 1,216,666.78
WAREHOUSE
N/P CONST. (RAMONA, 0.00 0.00 0.00 0.00
CA)
SUBTOTAL BODI 9,771,993.72 0.00 (53,228.05) 0.00 9,718,765.67 109,763.89 9,609,001.78
TOTALS 15,367,332.39 15,300,000.00 (17,503,228.05) 0.00 13,164,104.34 1,709,763.89 11,454,340.45
LINE OF CREDIT 2,650,000.00 15,300,000.00 (16,700,000.00) 0.00 1,250,000.00 0.00 1,250,000.00
OTHER 12,717,332.39 0.00 (803,228.05) 0.00 11,914,104.34 1,709,763.89 10,204,340.45
TOTALS 15,367,332.39 15,300,000.00 (17,503,228.05) 0.00 13,164,104.34 1,709,763.89 11,454,340.45
BIG O RETAIL ENTERPRISES, INC.:
TIMMERMAN-MESA 53,988.05 (15,282.22) 38,705.83 32,893.01 5,812.82
BIG O DEVELOPMENT
CAP.LSE.OBLIG.BLDG. 113,431.73 (2,506.95) 110,924.78 6,097.24 104,827.54
TOTALS 199,977.52 0.00 (17,789.17) 0.00 149,630.61 38,990.25 110,640.36
/TABLE
<PAGE>
<TABLE>
Big O Liens
<CAPTION>
<C> <C> <C> <C>
Property Address Property Use Status Encumbrances
875 American Pacific Drive Regional Used for Company Indenture for Senior
Henderson, Nevada Distribution Center Operations Secured Notes
3511 South T.K. Avenue Regional Sales Used for Company Indenture for Senior
Boise, Idaho Service & Operations Secured Notes
Distribution Center
Approximately 3.0 acres Vacant For Sale None
adjoining Boise Regional Sales,
Service & Distribution Center
640 Park Boulevard Regional Sales Used for Company Mortgage for the
New Albany, Indiana Service & Operations benefit of National
Distribution Center City Bank, Kentucky
161 Southgate Drive Big O Tires Vacant Land to be None
Georgetown, KY Retail Store developed for
sale to a
Franchisee
Approximately 5.01 acres Vacant For Sale None
adjoining the former Vacaville
Regional Sales, Service &
Distribution Center, Vacaville,
California
14891 East Colfax Avenue Big O Tires Retail Being Renovated None
Aurora, Colorado Store for Lease or sale
900 East Highway 66 Big O Tires Retail Leased to None
Gallup, New Mexico Store Franchisee
6800 West 120th Unimproved Land For Sale None
Broomfield, Colorado
2510 N. 75th Avenue Big O Tires Retail Vacant Land None
Phoenix, Arizona Store Being Developed
(Westridge Mall) for Sale to
Franchisee
61st & Bell Big O Tires Retail Vacant Land None
Phoenix, Arizona Store Being Developed
for Sale to a
Franchisee.<PAGE>
40420 California Oaks Road Big O Tires Retail Vacant Land None
Murrieta, California Store Being Developed
for Sale to a
Franchisee.
2210 Haines Avenue Big O Tires Retail Vacant Land None
Rapid City, South Dakota Store Being Developed
for Sale to a
Franchisee.
1506 N. College Avenue Big O Tires Retail Vacant Land None
Ft. Collins, Colorado Store Being Developed
for Sale to a
Franchisee.
3405 E. 10th Street Big O Tires Retail Vacant Land None
Sioux Falls, SD Store to be Developed
for Sale to a
Franchisee
5600 West 3400 South Big O Tires Retail Vacant Land None
West Valley, Utah Store to be Developed
for Sale to a
Franchisee
Lot 1, Block 1, Lehi City Plaza Big O Tires Retail Earnest Money N/A
Subdivision, Lehi, Utah Store deposit of
$10,000
104th & Colorado Blvd. Big O Tires Retail Earnest Money N/A
Thorton, Colorado Store deposit of
$10,000
Pad Site on Marcola Way Big O Tires Retail Earnest Money N/A
Springfield, Oregon Store deposit of
$10,000
Outlot LL/01 New Castle Plaza Big O Tires Retail Earnest Money N/A
New Castle, IN Store deposit of
$10,000
Quincy & Wadsworth Training Store Vacant Land None
Denver, Colorado Being Developed
for Big O Tires
Training
Facility - Will
Find Owner to
Purchase the
Facility and
Lease Back to
the Company.
/TABLE
<PAGE>
SCHEDULE 3
EXISTING CONTINGENT OBLIGATIONS AND INVESTMENTS
Existing Contingent Obligations:
- See attached listing of Big O Guarantees.
- Borrower has guaranteed a $1.5 million line of credit made available to
TBC de Mexico by First Tennessee Bank.
- Borrower has guaranteed all obligations of Northern States Tire, Inc.
to Bandag Incorporated.
- Big O, TBC Sales, Inc., and TBC International, Inc. have guaranteed the
obligations of Borrower under the Private Placement.
- Borrower has guaranteed all obligations of Big O under an Indenture,
Mortgage, Deed of Trust, Security Agreement, and Financing Statement
(Fixture Filing), dated as of April 27, 1994, as amended, and the 8.71%
Senior Secured Notes due 2004 in the aggregate principal amount of
$8,000,000, issued by Big O pursuant thereto.
Existing Investments:
- See Schedule 1 for a listing of all Subsidiaries.
- Borrower owns 40% of the ownership interests in TBC de Mexico, a
Mexican Company.
- Borrower owns 50% of TBC Worldwide, a Delaware limited liability
company.
- See attached listing of Big O Notes Receivable and pending MAP loans.
- See attached listing of Notes Receivable held by Borrower, Battery
Associates, Inc., and Northern States Tire, Inc.
- Big O Joint Ventures:
- Big O Retail Enterprises, Inc. is a 50% partner in Big O/S.A.N.D.S.
Joint Venture, a California partnership.
- Big O Retail Enterprises, Inc. is a 50% partner in Big O/BMT Joint
Venture, a California partnership.
- Big O Development, Inc. is a 50% partner in Intermountain
Development Joint Venture, a Colorado partnership.
- Big O Development, Inc. is a 50% partner in SCB Group Joint Venture,
a California partnership.
- Big O Retail Enterprises, Inc. is a 50% shareholder in Tires
Industries Corporation, a Utah corporation.<PAGE>
Financial Guarantees
<TABLE>
<CAPTION>
Total Total Big O
Big O Outstanding Outstanding Guaranty
Percent Balance Balance Portion
Guaranty 12/31/95 03/31/96 03/31/96
<S> <C> <C> <C> <C>
Sun Trust Credit (formerly
Stephens Franchise Financing):
RBO/Ken Raley 100.00% 430,741.33 405,320.53 405,320.53
Rando, Vannie DePeiro & Roger Case 60.00% 131,729.60 123,980.80 74,388.48
Stone City Tire, Richard Pflanz & Jerry
Thurman 60.00% 105,210.00 99,198.00 59,518.80
Candelario, McKeller, Toscan &
Ballentine 60.00% 117,985.50 92,083.64 55,250.18
594,477.99
ICON Capital Corp.
Star Tire and Service 100.00% 9,205.30 6,137.20 6,137.20
Superior Tire 100.00% 20,607.90 14,425.83 14,425.83
Cuza Corp. 100.00% 26,308.96 17,539.64 17,539.64
H&K Tires 100.00% 24,931.95 15,866.15 15,866.15
Adamson Tire & Brake 100.00% 27,260.80 20,445.85 20,445.85
Aneree Assoc. 100.00% 4,319.17 1,440.39 1,440.39
75,855.06
FBS Leasing
G&H Tire Service, Inc. 100.00% 7,791.62 7,791.62 7,791.82
G&H Tire Service, Inc. 100.00% 12,522.13 8,997.97 8,997.97
16,789.79
AT&T Real Estate Joint Venture Loans:
Intermountain Realty - 001 (Castle
Rock - sold 4/96)** 100.00% 402,514.43 398,870.54 398,870.54
Intermountain Realty - 803 (Frisco, CO) 100.00% 432,168.82 432,661.35 432,661.35
Intermountain Realty - 003 (Montrose, CO) 100.00% 407,927.41 405,162.69 405,162.69
Intermountain Realty - 004 (Aurora,CO-
Smoky Hill-sold 4/96) 100.00% 511,469.01 508,002.66 508,002.66
Intermountain Realty - 005 (Colorado
Springs, CO-Academy) 100.00% 509,635.33 506,291.05 506,291.05
Intermountain Realty - 006 (Parker, CO) 100.00% 492,298.60 489,175.71 489,175.71
Intermountain Realty - 007 (Sioux Falls,
SD) 100.00% 488,522.48 488,522.48 488,522.48
Intermountain Realty - 008 (Northglenn,
CO) 100.00% 501,172.71 498,867.21 498,867.21
Storms Tires (Payson, AZ) 100.00% 328,118.48 326,407.34 326,407.34
4,053,961.03
AT&T Equipment Joint Venture Loans:
Herbert Hawley Joint Venture 100.00% 54,219.42 49,994.04 49,994.04
Big O/CSB Joint Venture 100.00% 52,609.95 46,122.16 46,122.16
Big O/CSB Joint Venture 100.00% 52,624.32 46,136.85 46,136.85
Big O/CSB Joint Venture 100.00% 98,289.22 86,528.20 86,528.20
Big O/CSB Joint Venture 100.00% 66,297.57 62,594.75 62,594.75
Big O/S.A.N.D.S. Joint Venture 100.00% 57,190.93 50,759.18 50,759.18
Big O/CMT Joint Venture 100.00% 79,435.34 76,009.18 76,009.18<PAGE>
418,144.36
The Money Store:
Golden Ventures, LLC, Mr. and Mrs.
Engebretson (18, 2/96-7/97) 100.00% 137,765.00 122,458.08 122,458.08
Brawl, Inc., Bob Joy and Loren Howe
(18, 11/95-10/96) 100.00% 62,046.00 37,227.60 37,227.60
Chandler, AZ Figgins/Judd (18,
7/95-12/96) 100.00% 85,901.00 64,425.42 64,425.43
Rand Rogenes, Brea, CA (12,
8/95 - 7/96) 100.00% 43,642.00 24,938.24 24,938.24
Marine E. Compton and Sandra S.
Kelly Compton (18, 2/96 - 7/97) 100.00% 149,110.00 132,542.24 132,542.24
JSM Tire, Inc.; Stephen L. & Jean M.
Morris (18, 2/96 - 7/97) 100.00% 147,023.00 130,687.52 130,687.52
Mr. Richard Parry (Santa Maria, CA)
(18, 5/96 - 12/97)* 100.00% 141,285.42 141,285.42
Mr. Gale Miller (Albuquerque, NM)
(18, 5/96 - 12/97)* 100.00% 137,638.98 137,638.98
Mr. Joe Williams (Redmond, WA)
(18, 7/96 - 1/98)* 100.00% 55,224.00 55,224.00
846,427.50
Heller First Capital
Woodmore Automotive, Inc. (18 months) 100.00% 144,556.20 144,556.20
144,556.20
Minnequa Bank
Intermountain Realty (Pueblo - 100.00% 382,511.72 382,511.72
scheduled for sale on 7/22/96)
382,511.72
Total Franchisee Financing 6,532,723.65
Notes Receivable Guarantee - CIT 1,391,373.95
Real Estate Lease Guarantees 6,268,603.78
Mortgage Loan Guarantee -Allstate 2,720,226.79
Total Guarantees 16,912,928.17
Additions through 9/16/96:
Heller First Capital
Granada Enterprises Corp. (18 months)
100% guarantee $144,468.00
*Additions after 03/31/96
** Deletions after 03/31/96
/TABLE
<PAGE>
BIG O TIRES, INC.
CONSOLIDATED SCHEDULE OF NOTES RECEIVABLE
YEAR TO DATE JUNE 30,1996
______________________PRINCIPAL BALANCES___________________________
<TABLE>
<CAPTION>
BALANCE BALANCE CURRENT LONG-TERM
DESCRIPTION 12-31-95 ADDITIONS PAYMENTS 06-30-96 MATURITIES PORTION
<S> <C> <C> <C> <C> <C> <C>
OFFICE 1828 N/R - CORP :MISC
BOISE TRUST 29,372.74 (3,707.10) 25,665.64 7,994.09 17,671.55
DENVER TRUST 37,360.79 0.00 37,360.79 11,756.37 25,604.42
FOUNTAIN 296,321.72 (4,666.55) 291,655.17 9,966.13 281,689.04
FOUNTAIN 173,358.71 (13,048.04) 160,310.67 27,866.05 132,444.62
CONSOLIDATED TIRE SPOKANE 15,077.39 0.00 15,077.39 0.00 15,077.39
CHRIS HANNAH 9,052.05 (9,052.05) 0.00 0.00 0.00
PROGRESSIVE 64,192.52 (48,144.36) 16,048.16 16,048.16 0.00
SASHA ATTA 8,226.39 (6,114.05) 2,112.34 2,112.34 0.00
HUNTINGTON BEACH 733.88 (733.88) 0.00 0.00 0.00
MONTROSE HAWLEY 0.00 114,292.00 (5,940.40) 108,351.60 19,083.36 89,268.24
MIRAMAR MOORE 0.00 13,059.83 (1,049.78) 12,010.05 7,098.75 4,911.30
WESTMINSTER, CA 0.00 3,693.95 (729.78) 2,964.17 2,964.17 0.00
COSTA MESA HOLSTINE 0.00 20,000.00 20,000.00 0.00 20,000.00
REDMOND, WA 0.00 51,386.47 (25,000.00) 26,386.47 4,282.61 22,103.86
HAMILTON ST. HELENS 0.00 15,000.00 15,000.00 3,171.03 11,828.97
1828 N/R - CORP.:MISC. 633,696.19 217,432.25 (118,185.99) 732,942.45 112,343.06 620,599.39
29 N/R - CORP.:RELATED PARTIES
ROQUET 20,000.00 (20,000.00) 0.00 0.00 0.00
CSB 590,444.10 (5,143.24) 585,300.86 11,267.22 574,033.64
CSB 0.00 250,000.00 (6,103.67) 243,896.33 15,793.05 228,103.28
610,444.10 250,000.00 (31,246.91) 829,197.19 27,060.27 802,136.92
85 N/R
MINNESALE 470,547.77 (16,470.08) 454,077.69 0.00 454,077.69
40 N/R - KY : A/R TO NOTES
COMMONWEALTH TIRE CO. 45,112.05 (6,664.43) 38,447.62 12,474.34 25,973.28
DENVER RSSC
1830 N/R - COLO.:STORE SALES
FOOTE LOVELAND 339,998.77 0.00 339,998.77 0.00 339,998.77
WILLIAMS - COSTA MESA 17TH 201,260.66 (201,260.66) 0.00 0.00 0.00
N/R - SALEM 37,757.00 (8,653.56) 29,103.44 18,854.31 10,249.13
1830 N/R - COLO.:STORE SALES 579,016.43 0.00 (209,914.22) 369,102.21 18,854.31 350,247.90
1832 N/R - COLO.:A/R TO NOTES
LEBARON 203,962.76 (9,848.71) 194,114.05 21,152.06 172,961.99
CASPER 11,761.38 11,761.38 7,480.24 4,281.14
CASPER 28,899.40 (4,705.49) 24,193.91 14,206.53 9,987.38
WESTAR 24,922.01 452.74 25,374.75 841.69 24,533.06
GILLETTE 33,444.88 (3,321.43) 30,123.45 7,301.88 22,821.57
BRIGHTON 66,657.39 (4,379.65) 62,277.74 13,829.88 48,447.86<PAGE>
______________________PRINCIPAL BALANCES___________________________
BALANCE BALANCE CURRENT LONG-TERM
DESCRIPTION 12-31-95 ADDITIONS PAYMENTS 06-30-96 MATURITIES PORTION
GOLDEN 37,000.00 0.00 37,000.00 7,272.14 29,727.86
LINCOLN, NE 60,044.75 (1,731.92) 58,312.83 10,438.70 47,874.13
ALBQ, NM MILLER 0.00 50,000.00 0.00 50,000.00 2,643.59 47,356.41
PUEBLO KEITH 0.00 13,974.22 (3,493.56) 10,480.66 10,480.66 0.00
GALLUP LELOFF 0.00 139,339.79 (511.47) 138,828.32 14,543.03 124,285.29
1832 N/R - COLO.:A/R TO NOTES 466,692.57 203,314.01 (27,539.49) 642,467.09 110,190.40 532,276.69
__VILLE RSSC
N/R - NO. CAL.:A/R TO NOTES
N/R - STORE 9 NAPA 28,295.34 (4,942.54) 23,352.80 10,699.73 12,653.07
N/R - STORE 38 ROCKLIN 22,596.36 (3,916.14) 18,680.22 8,471.94 10,208.28
N/R - STORE 41 CARMICHAEL 29,263.30 (6,217.54) 23,045.76 11,602.65 11,443.11
N/R - STORE 41 CARMICHAEL 19,320.93 (3,348.48) 15,972.45 7,243.87 8,728.58
N/R - CITRUS HEIGHTS MCKELLAR 33,722.79 (33,191.08) (531.79) 0.00 0.00 0.00
N/R - CITRUS HEIGHTS MCKELLAR 6,000.00 (6,000.00) 0.00 0.00 0.00 0.00
N/R - CITRUS HEIGHTS MCKELLAR 0.00 142,176.96 142,176.96 2,408.64 139,768.32
N/R - STORE 102 SAN RAFAEL 26,848.69 (4,829.87) 22,018.82 10,448.06 11,570.76
N/R - STORE 137 VISALIA 78,782.01 (5,171.80) 73,610.21 11,274.88 62,335.33
N/R - STORE 141 LINCOLN 7,709.26 (4,110.09) 3,599.17 3,599.17 0.00
N/R - STORE 5127 LOS BANOS 27,626.30 (14,728.63) 12,897.67 12,897.67 0.00
1852 N/R - NO. CAL.:A/R TO NOTES 280,164.98 102,985.96 (47,796.88) 335,354.06 78,646.61 256,707.45
N/R - SO.CAL.:A/R TO NOTES
MESA GILBERT RD 18,910.60 (4,055.52) 14,855.08 8,784.10 6,070.98
RIVERSIDE, CA DUDDY 9,385.39 46,282.89 (4,762.31) 50,905.97 8,356.42 42,549.55
CORONA DUDDY 70,016.93 (6,254.73) 63,762.20 13,534.38 50,227.82
SCOTTSDALE GUNNELL 188,070.66 (6,491.66) 181,579.00 14,324.80 167,254.20
BREA ROGENES 30,570.49 (2,812.60) 27,757.89 6,189.27 21,568.62
CHANDLER JUDD 27,992.92 (2,581.12) 25,411.80 5,637.92 19,773.88
SAN MARCOS 51,673.09 (51,673.09) 0.00 0.00 0.00
TUCSON THORNYDALE 34,000.00 0.00 34,000.00 4,776.57 29,223.43
CHANDLER, AZ 0.00 10,767.48 (8,892.05) 1,875.43 1,875.43 0.00
WESTMINSTER, CA 0.00 40,134.00 0.00 40,134.00 2,087.87 38,046.13
EL CENTRO, CA 0.00 40,000.00 (2,076.26) 38,723.74 7,196.73 31,527.01
LAHABRA ALTMAN 0.00 86,390.17 (4,788.59) 81,601.58 14,437.03 67,164.55
REDLANDS ROGERS 0.00 129,418.62 (6,396.87) 123,021.75 28,323.66 94,698.09
MIRAMAR MOORE 0.00 60,745.08 0.00 60,745.08 0.00 60,745.08
LANCASTER FELIX 0.00 27,429.41 (704.45) 26,724.96 4,487.85 22,237.11
1862 N/R - SO. CAL:AR TO NOTES 430,620.08 441,967.65 (101,489.25) 771,098.48 120,012.03 651,086.45
___
72 N/R - IDAHO:A/R TO NOTES
N/R - OREM 462,560.38 (2,007.95) 460,552.43 4,264.23 456,288.20
N/R - EVANSTON 47,029.13 (4,493.49) 42,535.64 15,744.76 26,790.88
N/R - D AND J 11,098.96 (8,347.27) 2,751.69 2,751.69 0.00
N/R - ROY 40,766.89 (2,344.40) 38,422.49 5,117.69 33,304.80
N/R - SPOKANE 235,244.43 0.00 235,244.43 69,294.64 165,949.79
N/R - SLC (HIGHLAND) 59,160.00 (1,909.73) 57,250.27 10,051.44 47,198.83<PAGE>
______________________PRINCIPAL BALANCES___________________________
BALANCE BALANCE CURRENT LONG-TERM
DESCRIPTION 12-31-95 ADDITIONS PAYMENTS 06-30-96 MATURITIES PORTION
N/R - LAKE OSWEGO 30,000.00 0.00 30,000.00 8,413.91 21,586.09
N/R - EVERETT 0.00 6,782.94 (2,168.25) 4,614.69 4,614.69 0.00
1872 N/R - IDAHO:A/R TO NOTES 885,859.79 6,782.94 (21,271.09) 871,371.64 120,253.05 751,118.59
TOTALS 4,402,153.96 1,222,482.81 (580,578.34) 5,044,058.43 599,834.07 4,444,224.36
BIG O DEVELOPMENT
BESSIE PAULSEN TUFTS 293,539.87 (1,717.28) 291,822.59 3,681.28 288,141.31
GRAND TOTAL 4,695,693.83 1,222,482.81 (582,295.62) 5,335,881.02 603,515.35 4,732,365.67
PER ABOVE 4,695,693.83 1,222,482.81 (582,295.62) 5,335,881.02 603,515.35 4,732,365.67
CLASSIFICATION
NET ASSETS ON STORE SALES (470,547.77) 0.00 16,470.08 (454,077.69) 0.00 (454,077.69)
CSB NOTE REC. ON SALE OF
JOINT VENTURE VENTURE (550,000.00) (550,000.00) (550,000.00)
NOTES RESERVED FOR:
CASPER (11,761.38) 0.00 0.00 (11,761.38) (7,480.24) (4,281.14)
CASPER (28,899.40) 0.00 4,705.49 (24,193.91) (14,206.53) (9,987.38)
OREM (462,560.38) 0.00 2,007.95 (460,552.43) (4,264.23) (456,288.20)
3,171,924.90 1,222,482.81 (559,112.10) 3,835,295.61 577,564.35 3,257,731.26
OTHER 3,111,480.80 972,482.81 (527,865.19) 3,556,098.42 550,504.08 3,005,594.34
RELATED PARTIES 60,444.10 250,000.00 (31,246.91) 279,197.19 27,060.27 252,136.92
3,171,924.90 1,222,482.81 (559,112.10) 3,835,295.61 577,564.35 3,257,731.26
CURRENT CURRENT NET NET TOTAL
OTHER RELATED OTHER RELATED
BALANCES PER BOOKS, JUNE 30, 1996 576,455.08 27,060.27 4,480,228.75 252,136.92 5,335,881.02
ADJUSTMENTS 25,951.00 0.00 1,474,634.41 0.00 1,500,585.41
ADJUSTED BALANCES, JUNE 30, 1996 550,504.08 27,060.27 3,005,594.34 252,136.92 3,835,295.61
POST JUNE 30, 1996 ADDITIONS:
Rapid City Dacar $38,413.10
Sacramento $25,500.00
Murrieta Granada $48,000.00
/TABLE
<PAGE>
PENDING MAP LOANS
APPROVED WAITING FOR FINAL NUMBERS AND FRANCHISEE SIGNATURE
FRANCHISEE APPROXIMATE AMOUNT
Robert Osnes $50,000
Jan Kirk $148,988
TOTAL PENDING MAPS $198,988
MAP LOANS DISCUSSED, NOT YET APPROVED BY BIG O.
FRANCHISEE FRANCHISEE LOCATION
Guido Bertoli Santa Cruz, CA
Steve Wallace Louisville, KY
TOTAL # OF MAP LOANS PENDING = 4<PAGE>
TBC CORPORATION (PARENT)
SCHEDULE OF NOTES AND TRADE
ACCEPTANCES RECEIVABLE
AS OF MAY 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
ORIGINATION ORIGINAL INTEREST TOTAL LONG
PAYOR DATE AMOUNT RATE OWED CURRENT TERM
<S> <C> <C> <C> <C> <C> <C>
NOTES RECEIVABLE
Wall Tire Distributors, Inc. 04/1/89 $4,896,673 10.00% $4,896,673 -- $4,896,673
Payment terms: No payments
have been made. The matter
is now in litigation.
Emery Sales, Inc. 09/10/93 651,236 7.50% 38,191 38,191 --
(Amount shown as due is net
of $194,981, which was
written off in December 1994
and $150,000,which was
written off in December
1995.)
Payment terms: payments of
$12,146.04 per month are
currently being made. A
balloon payment was due
on October 10, 1994.
Interest: no longer is being
applied.
Southwest Tire & Supply 02/15/94 2,500,000 9.25% 276,012 276,011 --
Payment terms: equal monthly
payments of $27,059.00.
Payments are computed using
prime rates in effect on
February 15th of each year.
Interest: included as part
of the monthly payment, at a
rate of prime + 1.00%
Kost Tire Distributors 04/30/96 1,595,607 10.25% 1,468,770 1,468,770 --
Payment terms: equal monthly
payments of $140,464.77
beginning May 15, 1996 and
ending April 15, 1997.
Interest: included as part
of the monthly payment, at
the rate of 10.25% per annum.
Pedro Garcia 08/15/95 60,000 8.75% 46,055 7,770 38,285
Payment terms: equal monthly
payments of $957.75
beginning September 15,
1995 and ending September 15,
2002.
Interest:
included as part of the monthly
payment, at the prime rate.
V.I.P., Inc. 09/06/95 400,000 8.75% 266,666 266,666 --
Payment terms: interest only
for the first six months,
equal principal reduction for
the last six months with
payments ending September 6,
1996.
Interest:
included as part of the monthly
payment, at the prime rate.
Aspen Enterprises, Inc. 10/15/95 1,000,000 8.75% 726,118 503,168 222,950
Payment terms: equal monthly
payments of $45,570.12
beginning November 15,
1995 and ending October 15,
1997.
Interest: included as part
of the monthly payment, at the
present rate of 8.75%, adjusted
annually.
Total Notes Receivable - TBC 7,718,485 2,560,576 5,157,908
/TABLE
<PAGE>
BATTERY ASSOCIATES, INC.
SCHEDULE OF NOTES RECEIVABLE
AS OF MAY 31, 1996 (unaudited)
<TABLE>
<CAPTION>
Original Initiation Monthly Current Long-Term
Name Amount Date Rate Payment Portion Portion Total
<S> <C> <C> <C> <C> <C> <C>
Pennsylvania Battery 39,534 05/01/88 10.50% $ 620 $6,793 $ 2,427 $9,220
Coalinga Battery 59,817 03/01/95 10.50% 1,501 13,961 30,900 44,861
Ohio Battery Warehouse 82,623 05/02/90 10.50% 1,084 8,831 34,913 43,744
Arkansas Battery 101,444 08/25/92 10.25% 1,327 8,669 65,956 74,625
Tri-Cities Battery 97,465 10/05/92 10.50% 1,134 7,267 56,502 63,769
Northern Battery 54,001 03/01/95 10.50% 2,838 30,680 13,808 44,488
TOTAL $76,201 $204,506 $280,707
Notes:
- - The interest rate on the Ohio Battery Warehouse note is based on prime
rate plus 2% to be adjusted annually on January 1st.
- - The interest rate on the Arkansas Battery note is based on federal
discount rate plus 5% to be adjusted semi-annually on January 1st and July
1st.
- - The interest rate on the Tri-Cities Battery, Pennsylvania Battery,
Coalinga Battery and Northern Battery notes are based on prime rate plus
2% to be adjusted semi-annually on January 1st and July 1st.
/TABLE
<PAGE>
NORTHERN STATES TIRE, INC.
Notes Receivable as of August 31, 1996
Pittsfield Tire & Auto Aug 97 12% INT $ 6,544.98
Dracut Tire July 96 12% INT $ 4,926.45
County Tire Mar 00 0% INT $29,000.00
*Wilder Auto Oct 98 0% INT $ 9,800.00
Berry Tire Company July 97 $27,634.53
Strobel's Garage July 97 $ 1,960.55
TBW Automotive July 97 $ 6,622.42
Ledger Balance Agreements
**Bob Aronson Tire _______ 0% INT $15,000.00
Nite Owl Tire Sept 96 0% INT $30,000.00
Pittsfield Tire Sept 96 0% INT $ 5,652.67
County Tire Sept 96 0% INT $10,000.00
$154,778.24
* Will be paid at time of FDIC settlement, should be September 98.
** Pay back only being if inventory turns aren't adequate. Interest rate
on ledger balance is 12% if they don't abide by repayment schedule.<PAGE>
EXHIBIT 4.5
AMENDMENT NO. 1
AMENDMENT NO. 1 dated as of September 20, 1996 to the Note Purchase and
Private Shelf Agreement dated as of July 10, 1996 (the "Agreement") between
TBC Corporation (the "Company") and The Prudential Insurance Company of
America ("Prudential"). Capitalized terms used herein have the meanings
ascribed to such terms in the Agreement unless otherwise defined herein.
W I T N E S S E T H:
WHEREAS, Prudential and the Company have executed and delivered the
Agreement and Prudential holds the Notes issued thereunder,
WHEREAS, the Company now desires to enter into the Credit Agreements (as
defined in paragraph 6D of the Agreement) and to cause each of Big O Tires,
Inc., TBC International, Inc. and TBC Sales, Inc. (collectively, the
"Guarantors") to deliver certain guarantees to the Lenders under the Credit
Agreements,
WHEREAS, the Company also desires to guarantee the 8.71% Senior Secured
Notes due 2004 in the aggregate original principal amount of $8,000,000 (the
"Big O Notes") issued pursuant to the Indenture, Mortgage, Deed of Trust,
Security Agreement, and Financing Statement dated as of April 27, 1994 among
Big O Tires, Inc., Big O Development, Inc., Big O Tire of Idaho, Inc., the
Bank of Cherry Creek, N.A., as indenture trustee, and Douglas R. Dix, as
individual trustee,
WHEREAS, the Agreement requires that the Company obtain the consent of
the Required Holders in connection with the Credit Agreements and the
Company's guarantee of the Big O Notes,
WHEREAS, Prudential is willing to consent to the Credit Agreements and
the Company's guarantee of the Big O Notes and the parties hereto wish to
amend certain terms of the Agreement and agree to such other matters, all on
the terms and conditions set forth below.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Amendments to the Agreement. The Agreement shall be amended such
that:
1.1 Clause (iii) of subparagraph 6B(2). Clause (iii) of subparagraph
6B(2) is hereby amended to delete the proviso at the end thereof
and replace it with the following proviso:<PAGE>
"; provided that, with respect to each calculation under this
clause (iii), in the event that the Company guarantees any Funded
Debt of a Subsidiary or any Subsidiary guarantees any Funded Debt
of the Company or another Subsidiary, the Indebtedness in respect
of all such Guarantees (other than Permitted Subsidiary
Guarantees and the Permitted Company Guarantee) shall be included
as separate and additional items of Indebtedness to that of both
(a) the underlying Debt of the primary obligor guaranteed thereby
and (b) any other Guarantee thereof by the Company or another
Subsidiary, as the case may be."
1.2 Clause (iii) of paragraph 7A. Clause (iii) of paragraph 7A is
hereby amended to read in its entirety as follows:
"(iii) the Company or any Subsidiary: (A) defaults (whether as
primary obligor or as guarantor or other surety) in any payment
of principal of or interest on any other obligation for money
borrowed (or any Capitalized Lease Obligation, any obligation
under a conditional sale or other title retention agreement, any
obligation issued or assumed as full or partial payment for
property whether or not secured by a purchase money mortgage or
any obligation under notes payable or drafts accepted
representing extensions of credit) beyond any period of grace
provided with respect thereto, or the Company or any Subsidiary
fails to perform or observe any other agreement, term or
condition contained in any agreement under which any such
obligation is created (or if any other event thereunder or under
any such agreement shall occur and be continuing) and the effect
of such failure or other event is to cause, or to permit the
holder or holders of such obligation (or a trustee on behalf of
such holder or holders) to cause, such obligation to become due
(or to be repurchased by the Company or any Subsidiary) prior to
any stated maturity, provided that the aggregate amount of all
obligations as to which such a payment default shall occur and be
continuing or such a failure or other event causing or permitting
acceleration (or resale to the Company or any Subsidiary) shall
occur and be continuing exceeds $5,000,000; or (B) defaults
(whether as primary obligor or as guarantor or other surety) in
any payment of principal of or interest on the Big O Notes beyond
any period of grace provided with respect thereto, or the Company
or any Subsidiary fails to perform or observe any other
agreement, term or condition contained in any agreement under
which the Big O Notes were created (or if any other event
thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is to
cause, or to permit the holder or holders of the Big O Notes (or
a trustee on behalf of such holder or holders) to cause, the Big
O Notes to become due (or to be repurchased by the Company or any
Subsidiary) prior to their stated maturity, regardless of the
amount of principal of the Big O Notes outstanding at such time,
or"
1.3 Paragraph 10B. Paragraph 10B is hereby amended to add the
following definitions thereto in the correct alphabetical order:<PAGE>
"'Big O Notes' shall mean the 8.71% Senior Secured Notes due 2004
in the aggregate original principal amount of $8,000,000 issued
pursuant to the Indenture, Mortgage, Deed of Trust, Security
Agreement, and Financing Statement dated as of April 27, 1994
among Big O Tires, Inc., Big O Development, Inc., Big O Tire of
Idaho, Inc., the Bank of Cherry Creek, N.A., as indenture
trustee, and Douglas R. Dix, as individual trustee.
'Permitted Company Guarantee' shall mean the Continuing Guaranty
issued by the Company dated September 20, 1996 in respect of the
Big O Notes."
2. Consents.
2.1 For the purposes of the last sentence of subparagraph 6B(3), with
respect to outstanding receivables owed by the Company to any
Subsidiary from time to time as a result of ordinary course of
business cash management procedures between the Company and its
Subsidiaries, Prudential hereby consents to and approves the form
of subordination agreement attached hereto as Exhibit A.
2.2 For the purposes of paragraph 6D, Prudential consents to the
forms of the Credit Agreements, certified copies of which have
been delivered to Prudential.
3. Conditions to Effectiveness. This Amendment No. 1 shall be effective
and the Agreement shall be deemed amended hereby upon Prudential's receipt of
the following:
3.1A fully-executed copy hereof;
3.2A fully-executed Continuing Guaranty (substantially in the form
attached hereto as Exhibit B) in favor of Prudential from each
of the Guarantors;
3.3 The opinion of Thompson, Hine and Flory, special counsel to the
Guarantors, in the form attached hereto as Exhibit C); and
3.4 Such other closing certificates and documents as Prudential may
reasonably request.
4. Company Representations. The Company hereby represents and warrants
that no Default or Event of Default exists or, after giving effect to this
Amendment, will exist.
5. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF PARTIES SHALL BE GOVERNED BY, THE LAWS OF
THE STATE OF NEW YORK.
6. Effect of Agreement. Except as expressly provided herein, the
Agreement shall remain in full force and effect and this Amendment shall not
operate as a waiver of any right, power or remedy of any holder of a Note,
nor constitute a waiver of any provision of the Agreement.<PAGE>
7. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Amendment to produce or account for more
than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers as of the date and year first
above written.
TBC CORPORATION
By:/s/ RONALD E. McCOLLOUGH
Title: Senior Vice President Operations
& Treasurer
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:/s/ Yvonne Guajardo
Vice President<PAGE>
EXHIBIT A
___________, 1996
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
c/o Prudential Capital Group
Texas Commerce Tower
2200 Ross Avenue, Suite 4200E
Dallas, Texas 75201
Attention: Managing Director
Ladies and Gentlemen:
Reference is made to the Note Purchase and Private Shelf Agreement
between TBC Corporation (the "Company") and The Prudential Insurance Company
of America dated as of July 10, 1996 (as amended from time to time, the "Note
Agreement"). All capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Note Agreement. In order to
induce, and in consideration of, your purchase from the Company of the Notes,
the undersigned agrees with you as hereinafter provided:
1. The payment of any and all Subordinated Debt is expressly subordinated
to the extent and in the manner set forth in paragraphs 2 to 6, inclusive,
hereof (a) to Senior Debt and (b) to interest on Senior Debt at the rate
stated in the instrument evidencing Senior Debt from the date of filing of
any Petition under the Bankruptcy Code to the date of payment (herein called
"Post-petition Interest").
2. The term "Subordinated Debt" as used herein shall mean and include the
principal of and interest on all liabilities of the Company to the
undersigned, direct or contingent, joint, several or independent, now or
hereafter existing, due or to become due to, or held or to be held by, the
undersigned, whether created directly or acquired by assignment or otherwise,
including, without limiting the generality of the foregoing, all indebtedness
of the Company to the undersigned represented by receivables or account
balances in favor of the undersigned. The term "Senior Debt" as used herein
shall mean and include the principal of and Yield-Maintenance Amount, if any,
and interest on all liabilities of the Company to you, direct or contingent,
joint, several or independent, now or hereafter existing, due or to become
due to, or held or to be held by, you, whether created directly or acquired
by assignment or otherwise including, without limiting the generality of the
foregoing, all indebtedness of the Company for principal of and interest on
the Initial Notes and the Shelf Notes, if any, as heretofore or hereafter
amended, supplemented or modified from time to time including extensions,
renewals and refundings thereof, whether or not the principal amount is
increased, and any other note or notes issued under the Note Agreement or any
other agreement between the Company and you.
3. If there shall occur an Event of Default or Default specified in
clause (i), (ii), (viii), (ix) or (x) of paragraph 7A of the Note Agreement,<PAGE>
unless and until such Event of Default or Default shall have been cured, or
unless and until Senior Debt shall be paid in full, the undersigned will not
receive or accept any payment from the Company in respect of Subordinated
Debt.
4. In the event that the undersigned shall receive any payment on
Subordinated Debt which it is not entitled to receive under the provisions of
the foregoing paragraph 3, it will hold any amount so received in trust for
you and will forthwith turn over to you in the form received to be applied on
Senior Debt.
5. The undersigned will not commence any action or proceeding against the
Company to recover all or any part of the Subordinated Debt or join with any
creditor, unless you shall also join, in bringing any proceedings against the
Company under any bankruptcy, reorganization, readjustment of debt,
arrangement of debt, receivership, liquidation or insolvency law or statute
of the Federal or any State government unless and until Senior Debt shall be
paid in full, provided that, if the undersigned shall have given you at least
30 days prior written notice of its intention to do so, the undersigned may
bring action to recover any payment on the Subordinated Debt to the extent
not prohibited by paragraph 3.
6. In the event of any liquidation, dissolution or other winding up of
the Company, or in the event of any receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization or arrangement with
creditors, whether or not pursuant to bankruptcy laws, sale of all or
substantially all of the assets or any other marshalling of the assets and
liabilities of the Company, (i) Senior Debt shall first be paid in full
before the undersigned shall be entitled to receive any moneys, dividends or
other assets in any such proceeding, and (ii) the undersigned will at your
request file any claim, proof of claim or other instrument of similar
character necessary to enforce the obligations of the Company in respect of
Subordinated Debt and will hold in trust for you and pay over to you, in the
form received, to be applied on Senior Debt and Post-petition Interest, any
and all moneys, dividends or other assets received in any such proceeding on
account of Subordinated Debt, unless and until Senior Debt and Post-petition
Interest shall be paid in full. In the event that the undersigned shall fail
to take such action requested by you, you may, as attorney-in-fact for the
undersigned take such action on behalf of the undersigned, and the
undersigned hereby appoints you as attorney-in-fact for the undersigned to
demand, sue for, collect and receive any and all such moneys, dividends or
other assets and give acquittance therefor and to file any claim, proof of
claim or other instrument of similar character and to take such other action
(including acceptance or rejection of any plan of reorganization or
arrangement) in your own name or in the name of the undersigned as you may
deem necessary or advisable for the enforcement of the agreement contained in
this letter; and the undersigned will execute and deliver to you such other
and further powers of attorney or other instruments as you may request in
order to accomplish the foregoing.
7. You may, at any time and from time to time, without the consent of or
notice to the undersigned, without incurring responsibility to the
undersigned, and without impairing or releasing any of their rights, or any
of the obligations of the undersigned hereunder:<PAGE>
(a) Change the amount, manner, place or terms of payment or change or
extend the time of payment of or renew or alter Senior Debt or amend the
Note Agreement (including to restrict or further restrict payments of
principal of and interest on Subordinated Debt) in any manner or enter
into or amend in any manner any other agreement relating to Senior Debt
(including provisions restricting or further restricting payments of
principal of and interest on Subordinated Debt);
(b) Sell, exchange, release or otherwise deal with any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, Senior Debt;
(c) Release anyone liable in any manner for the payment or collection
of Senior Debt;
(d) Exercise or refrain from exercising any rights against the Company
and others (including the undersigned); and
(e) Apply any sums by whomsoever paid or however realized to Senior
Debt.
8. Notice of acceptance of the agreement contained herein is hereby
waived.
9. The undersigned will mark its books to show that the Subordinated
Debt is subordinated to Senior Debt in the manner and to the extent herein
set forth.
10. The undersigned represents and warrants that (i) neither the
execution nor delivery of this agreement nor fulfillment nor compliance with
the terms and provisions hereof will conflict with, or result in a breach of
the terms, conditions or provisions of, or constitute a default under, any
agreement or instrument to which the undersigned is now subject and (ii) none
of the Subordinated Debt is or will be subordinated to any debt of the
Company other than Senior Debt.
11. This agreement is being delivered and is intended to be performed in
the State of New York, and shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the law thereof.
Yours very truly,
[Names of Subsidiaries]
By: _____________________________
Title:<PAGE>
EXHIBIT B
CONTINUING GUARANTY
GUARANTY: Pursuant to a Note Purchase and Private Shelf Agreement, dated
as of July 10, 1996 (the "Note Purchase Agreement"), between TBC Corporation
("Borrower") and The Prudential Insurance Company of America ("Purchaser"),
the Borrower issued its Senior Notes in the aggregate original principal
amount of $60,000,000 (collectively, the "Notes") to Purchaser. In order to
permit Borrower to take certain actions requiring Purchaser's consent or
agreement pursuant to the Note Purchase Agreement, and because the
undersigned (the "Guarantor") has determined that executing this Guaranty is
in its interest and to its financial benefit, the Guarantor absolutely and
unconditionally guarantees to the Purchaser, as primary obligor and not
merely as surety, the prompt payment of all amounts now or hereafter owing
under the Notes or any Shelf Notes (as defined in the Note Purchase
Agreement) hereafter issued by Borrower and the prompt payment and
performance of all of the Borrower's other obligations under the Note
Purchase Agreement (collectively with the Notes and any Shelf Notes, the
"Obligations") when due, whether by acceleration or otherwise. The Guarantor
will not only pay the Obligations, but will also reimburse the Purchaser for
accrued and unpaid interest, and any expenses, including reasonable
attorneys' fees, that the Purchaser may pay in collecting from the Borrower
or the Guarantor, and for liquidating any collateral.
LIMITATION: The Guarantor's obligation under this Guaranty is UNLIMITED.
Unless otherwise specified below, the Guarantor's obligation shall be payable
in U.S. Dollars.
CONTINUED RELIANCE: The Purchaser may continue to deal with the Borrower
based on this Guaranty until it receives written notice of termination from
the Guarantor. That notice shall be effective on the first business day
after Purchaser's receipt of the notice. If this Guaranty is terminated, the
Guarantor will continue to be liable to the Purchaser for any Obligations
created, assumed or committed to at the time the termination becomes
effective, and all subsequent renewals, extensions, modifications and
amendments of the Obligations.
RIGHTS UPON DEFAULT: If the Guarantor fails to pay any amount owing
under this Guaranty, the Purchaser shall have all of the rights and remedies
provided by law or under any other agreement to liquidate or foreclose on and
sell any collateral, including but not limited to the rights and remedies of
a secured party under the Uniform Commercial Code. These rights and remedies
shall be cumulative and not exclusive. If the Guarantor is entitled to
notice, that requirement will be met if the Purchaser sends notice at least
seven (7) days prior to the date of sale, disposition or other event which
requires notice. The proceeds of any sale shall be applied first to costs,
then toward payment of the amount owing under this Guaranty. The Purchaser
is authorized to cause all or any part of any collateral to be transferred to
or registered in its name or in the name of any other person, firm or
corporation, with or without designation of the capacity of such nominee. <PAGE>
For purposes of this Guaranty, "any collateral" shall include any collateral
securing the Obligations.
ACTION REGARDING BORROWER: If any monies become available that the
Purchaser can apply to the Obligations (other than monies made available to
the Purchaser by the Guarantor pursuant to this Guaranty), the Purchaser may
apply them in any manner it chooses, including but not limited to applying
them against liabilities which are not covered by this Guaranty. The
Purchaser can take any action against the Borrower, any collateral, or any
other person liable for any of the Obligations. The Purchaser can release
the Borrower or anyone else from the Obligations, either in whole or in part,
or release any collateral, and need not perfect a security interest in any
collateral. The Purchaser does not have to exercise any rights that it has
against the Borrower or anyone else, or make any effort to realize on any
collateral or right of set-off. If the Borrower requests more credit or any
other benefit, the Purchaser may grant it and the Purchaser may grant
renewals, extensions, modifications and amendments of the Obligations and
otherwise deal with the Borrower or any other person as the Purchaser sees
fit and as if this Guaranty were not in effect. The Guarantor's obligations
under this Guaranty shall not be released or affected by (a) any act or
omission of the Purchaser, (b) the voluntary or involuntary liquidation, sale
or other disposition of all or substantially all of the assets of the
Borrower, or any receivership, insolvency, bankruptcy, reorganization, or
other similar proceedings affecting the Borrower or any of its assets, or (c)
any change in the composition or structure of the Borrower or the Guarantor,
including a merger or consolidation with any other person or entity.
NATURE OF GUARANTY: This Guaranty is a guaranty of payment and not of
collection. Therefore, upon default, the Purchaser can insist that the
Guarantor pay immediately, and the Purchaser is not required to attempt to
collect first from the Borrower, any collateral, or any other person liable
for the Obligations. The obligation of the Guarantor shall be unconditional
and absolute, regardless of the unenforceability of any provision of any
agreement between the Borrower and the Purchaser, or the existence of any
defense, setoff or counterclaim which the Borrower may assert.
OTHER GUARANTORS: If there is more than one Guarantor, their obligations
under this Guaranty shall be joint and several. In addition, each Guarantor
shall be jointly and severally liable with any other guarantor of the
Obligations. If the Purchaser elects to enforce its rights against less than
all guarantors of the Obligations, that election shall not release Guarantor
from its obligations under this Guaranty. The compromise or release of any
of the obligations of any of the other guarantors or the Borrower shall not
serve to waive, alter or release the Guarantor's obligations. This Guaranty
is not conditioned on anyone else executing this or any other guaranty.
RIGHTS OF SUBROGATION: The Guarantor agrees not to enforce any rights of
subrogation, contribution or indemnification that it has against the
Borrower, any entity liable for the Obligations, or any collateral. The
Guarantor further agrees that if any payments to the Purchaser on the
Obligations are in whole or in part invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or
-9-<PAGE>
any other party under any bankruptcy act or code, state or federal law,
common law or equitable doctrine, this Guaranty and the Purchaser's interest
in any collateral remain in full force and effect (or are reinstated as the
case may be) until payment in full of those amounts, which payment is due on
demand.
WAIVERS: The Guarantor waives any right it may have to receive notice of
the following matters before the Purchaser enforces any of its rights: (a)
the Purchaser's acceptance of this Guaranty, (b) any credit that the
Purchaser extends to the Borrower, (c) the Borrower's default, (d) any
demand, (e) any action that the Purchaser takes regarding the Borrower,
anyone else, any collateral, or any Obligation, which it may be entitled to
by law or under any other agreement. Any waiver shall affect only the
specific terms and time period stated in the waiver. The Purchaser may waive
or delay enforcing any of its rights without losing them. No modification or
waiver of this Guaranty shall be effective unless it is in writing and signed
by the party against whom it is being enforced.
REPRESENTATIONS BY GUARANTOR: Guarantor represents: (a) that the
execution and delivery of this Guaranty and the performance of the
obligations it imposes do not violate any law, conflict with any agreement by
which it is bound, or require the consent or approval of any governmental
authority or any third party which has not been obtained; (b) that this
Guaranty is a valid and binding agreement, enforceable according to its
terms; and (c) that all balance sheets, profit and loss statements, and other
financial statements furnished to the Purchaser are accurate and fairly
reflect the financial condition of the organizations and persons to which
they apply on their effective dates, including contingent liabilities of
every type, which financial condition has not changed materially and
adversely since those dates. Guarantor further represents: (a) that it is
duly organized, existing and in good standing pursuant to the laws under
which it is organized; and (b) that the execution and delivery of this
Guaranty and the performance of the obligations it imposes (i) are within its
powers and have been duly authorized by all necessary action of its governing
body; and (ii) do not contravene the terms of its articles of incorporation
or organization, its by-laws, or any partnership, operating or other
agreement governing its affairs.
NOTICES: Notice from one party to another relating to this Guaranty
shall be deemed effective if made in writing (including telecommunications)
and delivered to the recipient's address, telex number or facsimile number
set forth below under its name by any of the following means: (a) hand
delivery, (b) registered or certified mail, postage prepaid, with return
receipt requested, (c) first class or express mail, postage prepaid, (d)
Federal Express, Purolator Courier or like overnight courier service or (e)
facsimile, telex or other wire transmission with request for assurance of
receipt in a manner typical with respect to communications of that type.
Notice made in accordance with this section shall be deemed delivered on
receipt if delivered by hand or wire transmission, on the third business day
after mailing if mailed by first class, registered or certified mail, or on
the next business day after mailing or deposit with an overnight courier
service if delivered by express mail or overnight courier. Notwithstanding
-10-<PAGE>
the foregoing, notice of termination of this Guaranty shall be deemed
received only upon the receipt of actual written notice by the Purchaser in
accordance with the paragraph above labeled "Continued Reliance."
If to Guarantor: c/o TBC Corporation
4770 Hickory Hill Road
Memphis, TN 38141
Attention: President
Phone: (901) 363-8030
Fax: (901) 541-3639
If to Purchaser: c/o Prudential Capital Group
Texas Commerce Tower
Suite 4200E
2200 Ross Avenue
Dallas, TX 75201
Attention: Managing Director
Phone: (214) 720-6212
Fax: (214) 720-6299
-11-<PAGE>
LAW AND JUDICIAL FORUM THAT APPLY: This agreement is governed by New
York law. The Guarantor agrees that any legal action or proceeding against
it with respect to any of its obligations under this Guaranty may be brought
in any court of the State of New York or of the United States of America
located in New York, as the Purchaser in its sole discretion may elect. By
the execution and delivery of this Guaranty, the Guarantor submits to and
accepts, with regard to any such action or proceeding, for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
those courts. The Guarantor waives any claim that the State of New York is
not a convenient forum or the proper venue for any suit, action or
proceeding.
MISCELLANEOUS: Subject to the express provisions of any subsequent
guaranty, Guarantor's liability under this Guaranty is independent of its
liability under any other guaranty previously or subsequently executed by the
Guarantor, as to all or any part of the Obligations, and may be enforced for
the full amount of this Guaranty regardless of the Guarantor's liability
under any other guaranty. This Guaranty is binding on the Guarantor's heirs,
successors and assigns, and will operate to the benefit of the Purchaser and
its successors and assigns. The use of headings shall not limit the
provisions of this Guaranty.
Dated: September 20, 1996 GUARANTOR:
_____________________________
By:___________________________
Its:__________________________
-12-<PAGE>
EXHIBIT C
September 20, 1996
The Prudential Insurance Company of America
4900 Renaissance Tower
1201 Elm Street
Dallas, Texas 75250
Ladies and Gentlemen:
We have acted as counsel for TBC Corporation, a Delaware corporation (the
"Company"), in connection with Amendment No. 1, dated as of September 20,
1996 (the "Amendment"), to the Note Purchase and Private Shelf Agreement,
dated as of July 10, 1996 (the "Agreement"), between the Company, on the one
hand, and The Prudential Insurance Company of America ("Prudential"), and
each Prudential Affiliate (as therein defined) which becomes a party thereto,
on the other hand.
We have also acted as counsel to TBC Sales, Inc., a Delaware corporation
("TBC Sales"), TBC International, Inc., a Delaware corporation ("TBCI"), and
Big O Tires, Inc., a Nevada corporation ("Big O"), in connection with the
execution and delivery by each of a Continuing Guaranty, dated as of
September 20, 1996 (collectively, the "Guarantees"), pursuant to the terms of
which TBC Sales, TBCI, and Big O each guaranteed to Prudential the full and
prompt performance of the obligations of the Company under the Agreement.
We have examined the Agreement, the Amendment, and the Guarantees, together
with telecopied facsimiles of the signature pages of the Amendment and the
Guarantees. We have also examined such other documents, certificates of
public officials, and corporate records, and have made investigation of such
other matters, as in our judgment permit us to render an informed opinion on
the matters set forth herein.
In connection with our examination, we have assumed the genuineness of all
signatures (other than those on behalf of the Company, TBC Sales, TBCI, or
Big O), the authenticity of all documents submitted to us as originals, the
conformity with the originals of all documents submitted to us as copies or
telecopied facsimiles, and the authenticity of the originals of such latter
documents. Further, with your consent, we have assumed the legal power of
Prudential to enter into and perform the Amendment and the due authorization,
execution, and delivery of the Amendment by Prudential and we have relied on
all representations or warranties contained in the Amendment or the
Guarantees insofar as they relate to matters of fact not within our
knowledge.
Based upon the foregoing and subject to the last two paragraphs of this
letter, we are of the opinion that:
1. Each of the Company, TBC Sales, TBCI, and Big O is a corporation
duly incorporated, validly existing, and in good standing under the laws
-13-<PAGE>
of its state of incorporation and has all requisite corporate authority
to conduct its business as now being conducted.
2. The execution and delivery of the Amendment by the Company, the
execution and delivery of the Guarantees by TBC Sales, TBCI, and Big O,
and the performance by the Company and each of TBC Sales, TBCI, and Big O
of their respective obligations thereunder, have been duly authorized by
all necessary corporate actions and proceedings and will not violate any
law, rule, regulation, order, writ, judgment, injunction, decree, or
award binding on the Company, TBC Sales, TBCI, or Big O of which we are
aware, the Certificate or Articles of Incorporation or By-Laws of the
Company, TBC Sales, TBCI, or Big O, or any indenture, instrument, or
agreement binding upon the Company, TBC Sales, TBCI, or Big O of which we
are aware.
3. The Amendment has been duly executed and delivered by the Company
and constitutes the legal, valid, and binding obligation of the Company,
and the Guarantees have been duly executed and delivered by TBC Sales,
TBCI, and Big O, as the case may be, and constitute legal, valid, and
binding obligations of TBC Sales, TBCI, and Big O, each enforceable
against the Company, TBC Sales, TBCI, and Big O, as the case may be, in
accordance with their respective terms, except to the extent that the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity,
regardless of whether enforcement is sought at law or in equity.
Notwithstanding the foregoing, no opinion is expressed with respect to
any provision that purports to consent to the jurisdiction of any court,
waive objections to venue, or require payment or reimbursement of
attorneys' fees, court costs, or other expenses of collection or
enforcement.
4. No approval, authorization, consent, adjudication, or order of any
governmental authority, which has not been obtained by the Company, TBC
Sales, TBCI, or Big O, is required to be obtained by any of them in
connection with the execution and delivery of the Amendment or the
Guarantees.
We are members of the bar of the State of Ohio, and we express no opinion as
to matters governed by any laws other than those of the State of Ohio, the
federal laws of the United States, and the corporate laws of the States of
Delaware and Nevada. As to matters involving New York law, we have assumed
with your consent that the laws of the State of New York are the same as the
laws of the State of Ohio; however, for purposes of this opinion, we express
no opinion as to any matter involving choice of law or conflicts of law.
-14-<PAGE>
The opinions that are expressed herein are as of the date hereof, are solely
for your benefit, and may not be relied upon in any manner for any purpose by
any other person or entity, other than your transferees. We disclaim any
undertaking or obligation to advise you of any changes in the conclusions or
other matters covered herein that hereafter may come to our attention.
Very truly yours,
SSN/mjw
-15-<PAGE>
EXHIBIT 10.1
BIG O TIRES, INC. FRANCHISE AGREEMENT
SUMMARY PAGES
These pages summarize the attached Franchise Agreement, the details of
which shall control in the event of any conflict.
1. FRANCHISEE:
2. INITIAL FRANCHISE FEE: Amount Due:
-with Application:
-upon signing Agreement:
Total:
3. ROYALTY FEE Two percent (2%) of Gross Sales
4. LOCAL ADVERTISING CONTRIBUTION: Minimum of four percent (4%) of
Gross Sales
5. NATIONAL ADVERTISING CONTRIBUTION: See sections 15 and 25
6. INITIAL ADVERTISING REQUIREMENT:
7. STORE LOCATION:
Street and Number
City, State and Zip Code
Phone Number
8. Franchisee's Operator:
9. Franchisee's Manager:
10. Franchisee's Agent For Service of Process:
Name:
Address:
11. Big O's Agent for Service of Process:
Name: CT Corporation
Address: 1675 Broadway, Suite 1200
Denver, Colorado 80290
12. Effective Date:
13. Commencement Date:
14. Expiration Date: <PAGE>
15. Franchisee's Advisor:
16. Send Notices to Big O to:
Name: Philip J. Teigen (Legal Department)
Address: Big O Tires, Inc.
11755 E. Peakview Avenue
Englewood, Colorado 80111
17. Send Notices to Franchisee to:
Name: Big O Tires
Address:
18. Business not subject to Section 17 (a)
Name:
Address:
19. Farm Class Franchise:
Yes
No X
20. First Option Holder:
Name: N/A
Address:<PAGE>
BIG O TIRES, INC.
FRANCHISE AGREEMENT
This Franchise Agreement ("Agreement") is made by and between Big O
Tires, Inc. ("Big O"), a Nevada corporation, with its principal place of
business at 11755 East Peakview Avenue, Englewood, Colorado 80111, and
("Franchisee"), a(n) corporation with a place of business at .
1. PARTIES AND RECITALS
1.01 Big O was established to provide franchisees with access to
Products and Services and a System for marketing and servicing such
Products and Services. Since its inception, Big O has added to the
Product and Services and System to enhance the competitive posture of its
franchisees. Big O has developed and owns certain Licensed Marks which
are licensed to franchisees for use in the Big O Stores. Big O has
developed the Big O System relating to the operation of Stores which are
authorized to offer and sell Big O tires as part of the Products and
Services offered to retail customers.
1.02 Franchisee desires, upon the terms and conditions set forth
herein, to obtain a license to operate a Franchised Business and to offer
and sell Big O Products and Services. Franchisee acknowledges that it is
essential to the preservation of the integrity of the Licensed Marks, and
the goodwill of Big O and the Big O System, that each franchisee in the
System maintain and adhere to certain standards, procedures and policies
described hereinafter and in the Manual.
1.03 Big O is willing, upon the terms and conditions set forth herein,
to license Franchisee to operate a Franchised Business which will utilize
the Licensed Marks and the Big O System.
2. GRANT OF FRANCHISE
2.01 Grant of Franchise. Subject to all of the terms and conditions
herein, including but not limited to, the condition that Franchisee or its
Shareholders or some of them, personally guarantee the obligations of
Franchisee to Big O under this Agreement as set forth in Schedule 3 to
this Agreement, Big O grants to Franchisee the non-exclusive license to
use the Licensed Marks and the exclusive right to operate a Franchised
Business solely at the Premises set forth in Schedule 1 to this Agreement.
If, at the time of execution of this Agreement, the Premises cannot be
designated as a specific address because a location has not been selected
by Franchisee and approved by Big O, then Franchisee shall promptly take
steps to choose and acquire a location for its Big O Store within the
following city, county or other geographical area: ("Designated Area").
In such circumstances, Franchisee shall select and submit to Big O for
approval a specific location for the Premises, which shall hereinafter be
set forth in Schedule 1.
2.02 Trade Area. During the term of this Agreement, Big O agrees not
to operate itself or grant to any other person the right to operate any
more than one (1) Store for every fifty thousand (50,000) persons residing
in the Trade Area described on Schedule 1. Big O may, from time to time,<PAGE>
redefine the Trade Area. Absent Franchisee's prior approval, Big O shall
not permit the establishment or operation of another Store within a two
(2) mile radius of Franchisee's Store. Big O shall offer Products and
Services bearing the Licensed Marks at retail only through Big O Stores.
3. FIRST OPTION RIGHTS
3.01 First Option Rights. Subject to the conditions described below,
if Big O or any prospective Big O franchisee should propose to open a
Store within a five (5) mile radius of Franchisee's Store, Franchisee
shall be notified of its First Option to acquire a Franchise for an
additional Store within the five (5) mile radius of its Store. Franchisee
may only exercise the First Option if:
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
to become effective on the date it is executed by the last of Franchisee
or Big O.
FRANCHISEE:
By:
Date:
Home Address:
Home Phone Number:
Office Address:
Office Phone Number:
Attest:
Title:
(Affix Corporate Seal)
FRANCHISEE:
By:
Date:
Home Address: <PAGE>
Home Phone Number:
Office Address:
Office Phone Number:
Attest:
Title:
(Affix Corporate Seal)
FRANCHISOR:
BIG O TIRES, INC.
By:
Ronald H. Lautzenheiser,
Vice President,
Business Development
Date:
Attest:
Philip J. Teigen,
General Counsel &
Secretary
Date:
(Affix Corporate Seal)<PAGE>
SCHEDULE 1
TO
FRANCHISE AGREEMENT
BETWEEN BIG O TIRES, INC. AND
1. The Premises of referred to in Section 2.01 of the Franchise
Agreement shall be:
2. Legal Description of Premises:
3. Names(s) and address(es) of holder(s) of record fee title to
Premises (the landlord):
Name:
Address:
Name:
Address:
Name:
Address:
4. Description of Trade Area:<PAGE>
SCHEDULE 2
OWNERSHIP VERIFICATION
1. Name(s) and address(es) of person(s) owning interest in Franchisee
and percentage of said person(s) interest:
Name:
Address:
Name:
Address:
Name:
Address:
STATE OF )
)
COUNTY OF )
____________________________, being first duly sworn, says that they are
respectively, the ______________________________ and
_______________________________ of, the above-named _________________ ,
and execute this instrument for and in its behalf, by authority of its
and that they have read the foregoing Agreement and all Exhibits attached
thereto.
______________________________
, President
______________________________
, Secretary
Subscribed and sworn to before
me this ______ day of
______________, 19__.
_______________________________
Notary Public
My Commission Expires:
Schedule 2 Franchise Agreement
Page 1<PAGE>
SCHEDULE 3
GUARANTY OF FRANCHISEE'S AGREEMENT
In consideration of, and as an inducement to, the execution of the
foregoing Franchise Agreement by Big O Tires, Inc. ("Big O"), each of the
undersigned hereby guarantees unto Big O that
("Franchisee") will perform during the term of the Franchise Agreement
each and every covenant, payment, agreement and undertaking on the part of
Franchisee contained and set forth in or arising out of such Franchise
Agreement.
Big O, its successors and assigns, may from time to time, without notice
to the undersigned (a) resort to the undersigned for payment of any of the
liabilities of the Franchisee to Big O, whether or not Big O or its
successors have resorted to any property securing any of the liabilities
or proceeded against any of the undersigned or any party primarily or
secondarily liable on any of the liabilities, (b) release or compromise
any liability of the Franchisee or of any of the undersigned hereunder or
any liability of any party or parties primarily or secondarily liable on
any of the liabilities, and (c) extend, renew or credit any of the
liabilities of the Franchisee to Big O for any period (whether or not
longer than the original period); alter, amend or exchange any of the
liabilities; or give any other form of indulgence, whether under the
Franchise Agreement or not.
The undersigned further waives presentment, demand, notice of dishonor,
protest, nonpayment and all other notices whatsoever, including without
limitation: notice of acceptance hereof; notice of all contracts and
commitments; notice of the existence or creation of any liabilities under
the foregoing Franchise Agreement and of the amount and terms thereof;
and notice of all defaults, disputes or controversies between Franchisee
and Big O resulting from such Franchise Agreement or otherwise, and the
settlement, compromise or adjustment thereof.
The undersigned agrees to pay all expenses paid or incurred by Big O in
attempting to enforce the foregoing Franchise Agreement and this Guaranty
against Franchisee and against the undersigned and in attempting to
collect any amounts due thereunder and hereunder, including reasonable
attorneys' fees if such enforcement or collection is by or through an
attorney-at-law. Any waiver, extension of time or other indulgence
granted from time to time by Big O or its agents, successors or assigns,
with respect to the foregoing Franchise Agreement, shall in no way modify
or amend this Guaranty, which shall be continuing, absolute, unconditional
and irrevocable.
If more than one person has executed this Guaranty, the term "the
undersigned," as used herein shall refer to each such person, and the
liability of each of the undersigned hereunder shall be joint and several
and primary as sureties.
Schedule 3 to Franchise Agreement
Page 1<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed this Guaranty
under seal effective as of the date of the foregoing Franchise Agreement.
______________________________
Signature
Date:_________________________
Printed Name:_________________
Home Address:_________________
______________________________
______________________________
Home Telephone:_______________
Business Address:_____________
______________________________
______________________________
Business Telephone:___________
Schedule 3 to Franchise Agreement
Page 2<PAGE>
SCHEDULE 4
LEASE RIDER AND MODIFICATION
THIS AGREEMENT is made effective by and between
("Landlord"), ("Tenant"),
and Big O Tires, Inc., its affiliates, successors and assigns ("Big O").
WHEREAS, Landlord leases or will lease certain premises to Tenant at
("Premises") under that certain lease agreement dated between Landlord
and Tenant ("Lease"); and
WHEREAS, Tenant will operate a Big O Tire Store at such Premises under a
Franchise Agreement ("Franchise Agreement") between Tenant and Big O; and
WHEREAS, the parties hereto desire to provide Big O with certain rights
in the event of default under the Lease, Franchise Agreement, or other
franchise agreements between Tenant and Big O, if any;
NOW, THEREFORE, in consideration of the sum of One ($1.00) Dollar, in
hand paid by Big O to Landlord and to Tenant, and other good and
sufficient consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. No act, failure to act, event, condition, non-payment or other
occurrence ("Event") shall constitute a breach or default under the Lease
so as to allow to Landlord any right of acceleration of obligations
thereunder, termination, cancellation or rescission:
(a) if the Event is the non-payment of rent, unless such Event is not
cured within ten (10) days after Notice of Default (as hereinafter
defined) has been received by Big O;
(b) if the Event is anything other than the non-payment of rent, unless
such Event is not cured within twenty-five (25) days after Notice of
Default (as hereinafter defined) has been received by Big O, provided,
however, if the Event is of such nature that it cannot reasonably be
cured within such twenty-five (25) day period, then, in that case such
twenty-five (25) day period shall be extended to a period of such length
as is reasonably necessary to cure such Event, provided, however, such
period shall be extended only so long as Tenant and/or Big O diligently
pursues the cure of such Event.
2. Landlord agrees to accept from Big O any payment or performance
required under the Lease. Nothing herein shall be construed as requiring
Big O to make any payments or perform any obligation under the Lease.
3. As used herein, Notice of Default means written notice specifying
the Event claimed and specifically describing, in each instance of a
claimed Event, the particular Event and the cure Landlord requires, such
Notice of Default to be mailed to Big O at:
Schedule 4 to Franchise Agreement
Page 1<PAGE>
Big O Tires, Inc.
11755 East Peakview Avenue
Englewood, Colorado 80111
Attention: Vice President of Business Development
4. In the event Landlord claims that an Event has occurred, or in the
event Big O notifies Landlord in writing that Big O is exercising a right
to take over possession of the Premises, then, at Big O's option, Landlord
shall accept Big O as substitute tenant under the Lease and will cooperate
with Big O in turning actual, immediate possession of the Premises over to
Big O. In such case, the Lease shall remain in full force and effect, but
with Big O as the tenant thereunder. Big O's option, hereinabove granted,
may be exercised only if Big O agrees to assume the obligations of the
Tenant to Landlord under the Lease as of the date Franchisor or its
affiliate or successor is given actual possession of the Premises.
5. Landlord agrees that Big O, or its affiliate or successor may sublet
or assign the Premises to a new Big O Franchisee on the same terms and
conditions as are contained in the Lease.
6. Tenant agrees that if Landlord claims that an Event has occurred, or
if any material breach occurs under any Franchise Agreement between Tenant
and Big O (whether for the Premises or not), then, Big O shall have the
right to:
(a) immediate and actual possession of the Premises, and all equipment
and inventory therein, which such possession Tenant agrees to give
peaceably, and which may be otherwise obtained by Big O by warrant,
injunction, temporary restraining order, summary process or such other
immediate legal, summary or equitable proceeding or action as Big O may
choose. Tenant hereby waives any right to a jury in any such proceeding
or action.
(b) become the Tenant under the Lease to the exclusion of the Tenant.
7. Tenant agrees that any default under the Lease shall constitute a
material breach under all Franchise Agreements between Tenant and Big O,
or its affiliates or successors.
8. Tenant and Landlord understand that Big O is entering into or has
entered into a Franchise Agreement with Tenant for a Big O Tire Store at
the Premises in reliance on the agreements of Tenant and Landlord as
herein contained and that Big O, in this instance, would not have
otherwise entered into such Franchise Agreement.
IN WITNESS WHEREOF, the parties hereto have duly execute and delivered
this agreement as of the date first above-listed.
LANDLORD
Schedule 4 to Franchise Agreement
Page 2<PAGE>
By:
Witness:
Attest:
(CORPORATE SEAL)
Schedule 4 to Franchise Agreement
Page 3<PAGE>
TENANT
By:
Unofficial Witness
Attest:
(CORPORATE SEAL)
Notary Public
BIG O TIRES, INC.
By:
Unofficial Witness
(CORPORATE SEAL)
Notary Public
Schedule 4 to Franchise Agreement
Page 4<PAGE>
SCHEDULE 5
FARM CLASS RIDER
Franchisee represents that it reasonably anticipates that at least
twenty-five percent (25%) of its Store's Gross Sales on an annual basis
will be derived directly from the sale of Farm Class Tires. In reliance
on Franchisee's representations, and its consideration for Franchisee to
become or remain a Big O franchisee, Big O has offered Franchisee the
opportunity to execute this Farm Class Rider.
1. So long as at least twenty-five percent (25%) of Franchisee's Gross
Sales on an annual basis are derived directly from Farm Class Tires, Big O
agrees to exercise its best efforts to provide Franchisee with access to a
supply of Farm Class Tires. Franchisee acknowledges that production and
distribution problems occasionally cause supplies to be limited, and that
so long as Big O acts in good faith and in a commercially reasonably and
lawful manner to obtain access to Farm Class Tires that it shall be deemed
in compliance with its obligations hereunder.
2. If Big O fails to comply with its obligations pursuant to Section 1
of this Farm Class Rider and cannot or will not provide Franchisee with
access to Farm Class Tires for sixty (60) days following written notice of
such failure from Franchisee, as its sole and exclusive remedy, Franchisee
shall be relieved of its obligation to pay Big O monthly royalty fees on
that portion of its Gross Sales derived directly from the sale of Farm
Class Tires. Any services provided by Franchisee in connection with the
sale of Farm Class Tires, and any other Products and Services sold by
Franchisee in a transaction involving the sale of Farm Class Tires shall
be included in the portion of Franchisee's Gross Sales upon which monthly
royalty fees are payable. Big O may require Franchisee to provide it with
documentation to support any exclusion claimed by Franchisee.
3. Big O may terminate Franchisee's rights under this Farm Class Rider
without in any way affecting Franchisee's obligations under the Franchise
Agreement if the Store's sales of Farm Class Tires during any twelve (12)
month period have been less than twenty-five percent (25%) of its Gross
Sales.
IN WITNESS WHEREOF, the parties have set forth their signatures below.
FRANCHISEE:
By:
Date:
Home Address:
Schedule 5 to Franchise Agreement
Page 1<PAGE>
Home Phone Number:
Office Address:
Office Phone Number:
Title:
Attest:
Title:
(Affix Corporate Seal)
FRANCHISEE:
By:
Date:
Home Address:
Home Phone Number:
Office Address:
Office Phone Number:
Title:
Attest:
Title:
(Affix Corporate Seal)
Schedule 5 to Franchise Agreement
Page 2<PAGE>
SCHEDULE 6
RIDER FOR EXISTING FRANCHISEES EXECUTING THE
FRANCHISE AGREEMENT PRIOR TO THE EXPIRATION
OF THEIR PRE-EXISTING FRANCHISE AGREEMENT
Franchisee is the owner of a Store which is the subject of a franchise
agreement which has not yet expired.
Franchisee's execution of the attached Franchise Agreement is subject to
the following:
1. Unless otherwise provided herein, the attached Franchise Agreement
shall expire on the tenth anniversary of the Effective Date of Franchisee's
attached Franchise Agreement, to wit:
.
2. Prior to the expiration of the Franchisee's present franchise
agreement, to wit , the monthly continuing services fees (or
their functional equivalent) provided in the present franchise agreement
shall continue to be the only such fees due to Big O. In all other
respects the terms of the attached Franchise Agreement shall be applicable
as of the Effective Date of this Franchise Agreement.
In Witness Whereof, the parties have set forth their signature below.
BIG O TIRES, INC.
By:
Date:
Title:
Attest:
Title:
(Affix Corporate Seal)
FRANCHISEE:
By:
Date:
Home Address:
Home Phone Number:
Schedule 6 to Franchise Agreement
Page 1<PAGE>
Office Address:
Office Phone Number:
Title:
Attest:
Title:
(Affix Corporate Seal)
FRANCHISEE:
By:
Date:
Home Address:
Home Phone Number:
Office Address:
Office Phone Number:
Title:
Attest:
Title:
(Affix Corporate Seal)
Schedule 6 to Franchise Agreement
Page 2<PAGE>
SCHEDULE 7
TRADEMARKS
Big O is the sole and exclusive owner of the following trademarks and
service marks:
Trademark, Service
Mark, Trade Name or Where Registration Registration
Logotype Registered Number Date
Sun Valley Principal 871,318 06/17/69
Golden Sonic Power Principal 962,580 07/03/73
Super S Principal 981,992 04/09/74
Saxon Principal 982,828 04/30/74
Big O Principal 993,415 09/24/74
Big O Principal 994,466 10/01/74
Big Ride Principal 1,009,148 04/22/75
Big Steel Principal 1,012,897 06/10/75
Sonic Sahara Principal 1,013,509 06/17/75
Big Haul Principal 1,018,800 08/26/75
Design of Human
Likeness "Sebastian Principal 1,044,068 07/20/76
Treadmore"
Big Foot 70 Principal 1,102,059 09/12/78
Big Foot 60 Principal 1,102,058 09/12/78
Big Sur Principal 1,219,035 12/07/82
Extra Care and Design Principal 1,417,730 11/18/86
Legacy Principal 1,393,967 05/20/86
Aspen Principal 1,508,041 10/11/88
Exotic Principal 1,511,711 11/08/88
Big O Tires and Design Principal 1,559,725 10/10/89
Sun Valley III Principal 1,588,734 03/27/90
Big O Tires and Design Principal 1,611,160 08/28/90
Optima Principal 74/198,278 Pending
Procomp & Design Principal 74/298,320 Pending
Schedule 7 to Franchise Agreement
Page 1<PAGE>
Trademark, Service
Mark, Trade Name or Where Registration Registration
Logotype Registered Number Date
Vail Principal 74/310,463 Pending
Arapahoe Principal 74/271,501 Pending
Alpine Principal 74/310,467 Pending
Aztec Principal 74/310,465 Pending
Hydro-Trac Principal 74/357,214 Pending
A Reputation You Can Principal 74/360,838 Pending
Ride On
Big Foot Principal 74/389,931 Pending
STATE REGISTRATIONS
Big O Texas 40,967 11/01/82
Big O Texas 40,704 09/02/82
Legacy Colorado T29645 10/28/85
Extra Care Colorado T30670 04/22/86
Schedule 7 to Franchise Agreement
Page 2<PAGE>
SCHEDULE 8
CONVERTER RIDER
AMENDMENT TO BIG O
FRANCHISE AGREEMENT
(CONVERSION)
Big O TIRES, INC. ("Big O") and
("Franchisee") entered into a certain Big O
Franchise Agreement ("Agreement") on _____________, 19_____ and desire to
supplement and amend certain terms and conditions of such Agreement in
consideration of Franchisee's conversion of a currently operating tire
store to a Big O Store. The parties therefore agree as follows:
1. The following paragraph is hereby added to 6.03:
Notwithstanding any provision herein to the contrary, Franchisee's
obligation to comply with Big O's standards and specifications as
are set forth in the Manual shall be phased in for a period of six
months from the Commencement Date of the Agreement in accordance
with Schedule A, attached hereto and by this reference incorporated
herein. Franchisee will be permitted to use Big O's trademarks,
service marks, logos and other identifying symbols or names, in its
signage, advertising and otherwise, in conjunction with any other
previous signage or identifying symbols or names for sixty (60)
days from the Commencement Date of this Agreement, in a manner
which shall be approved by Big O, which approval shall not be
unreasonably withheld. Upon expiration of such sixty day period,
Franchisee must use Big O's signage exclusively and remove all
other previous signage.
2. Section 6.05 is deleted in its entirety and the following is
inserted in its place:
6.05 Commencement of Business. The Big O Store shall be considered
to have commenced operation as of the Commencement Date of this
Agreement. All modifications required to bring the premises into
compliance with the standards and specifications of Big O must be
completed within six (6) months of the Commencement Date.
3. Section 7.01(a) is hereby deleted in its entirety and the following
is inserted in its place:
(a) Franchisee acknowledges that Big O is under no obligation to
provide site selection assistance and Big O does not guarantee the
success or profitability of the Franchisee's current site in any
manner whatsoever. If Franchisee leases the Premises upon which
the Store is to be operated, Franchisee agrees to use its best
efforts to negotiate with its landlord for execution of a
Schedule 8 to Franchise Agreement
Page 1<PAGE>
conditional lease assignment in a form which is the same as or
similar to the one found on Schedule 4.
4. The following language shall be added to Section 7.01(b):
Big O will provide Franchisee with sample blueprints for
modification of the interior and exterior of Franchisee's premises,
if applicable, but makes no representations or guarantees regarding
the suitability of such blueprints for required modification of
Franchisee's premises.
5. Franchisee agrees to convert all other tire stores owned or
controlled by it into Big O Stores, in the manner prescribed in Schedule
B, attached hereto and by this reference incorporated herein.
6. The terms and conditions of this Conversion Amendment are in
addition to or in explanation of the existing terms and conditions of the
Agreement and shall prevail over and supersede any inconsistent terms and
conditions thereof.
Effective this _____ day of ________________, 199___.
FRANCHISEE:
(Print Name)
BIG O TIRES, INC.
By:
Title:
Schedule 8 to Franchise Agreement
Page 2<PAGE>
EXHIBIT 10.2
TBC CORPORATION
1996 AMENDMENT AND RESTATEMENT
of the
TBC CORPORATION
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
(As Amended through October 24, 1996)
10/96<PAGE>
SECTION 1 - GENERAL
1.1 Purpose and Effective Date. The TBC CORPORATION EXECUTIVE
SUPPLEMENTAL RETIREMENT PLAN (the "Plan") previously was established by TBC
Corporation ("TBC"), a Delaware corporation. The following provisions
constitute an amendment and restatement of the Plan, effective July 25, 1996,
and applies only to Participants who terminate employment with TBC on or
after July 25, 1996. The term "Retirement Plan", as it is used in the Plan,
means the Retirement Plan for Employees of TBC Corporation, as amended and
restated, effective November 1, 1989, and as it may be amended from time to
time. The Plan is intended to be unfunded and to provide supplemental
pension benefits ("Supplemental Benefits") to certain highly paid individuals
whose pension benefits payable under the "Retirement Plan" are limited in
amount by reason of the application of Sections 415 and 401(a)(17) of the
Internal Revenue Code of 1986, as amended (the "Code").
1.2 Plan Administration. The Plan shall be administered by the
Compensation Committee of the Board of Directors of TBC (the "Committee").
The Committee, in its sole discretion, shall determine all matters relating
to Plan benefits and to the computation and payment thereof.
1.3 Applicable Laws. The Plan will be construed and administered in
accordance with the laws of the State of Tennessee to the extent that such
laws are not preempted by the laws of the United States of America.
1.4 Gender and Number. For simplicity of expression and where
appropriate to the context, a reference to one gender shall be deemed to
include the other. Also, words in the singular shall include the plural, and
words in the plural shall include the singular.
SECTION 2 - PARTICIPATION
2.1 Eligibility to Participate. Effective as of any date selected by
it, the committee may designate any employee who has met the requirements for
participation in the Retirement Plan to be a Participant in this Plan.
2.2 Participation not Contract of Employment. The Plan does not
constitute a contract of employment, and participation in the Plan will not
give any employee the right to be retained in the employ of TBC nor give any
person any right or claim to any benefit under the terms of the Plan unless
such right or claim has specifically accrued under the terms of the Plan.
SECTION 3 - AMOUNT OF SUPPLEMENTAL BENEFIT
A Participant's Supplemental Benefit as at any date is an amount that
(when expressed as a single life annuity) is equal to:
(a) the Participant's Accrued Benefit in the Retirement Plan,
determined in accordance with the provisions of the Retirement Plan
as in effect on that date, but using the definition of
"Compensation" set forth below in lieu of the definition of
Compensation in the Retirement Plan and, assuming, for purposes of<PAGE>
this computation, that Sections 415 and 401(a)(17) of the Code had
not been enacted;
reduced by
(b) the Participant's Accrued Benefit in the Retirement Plan
actually payable to him under the terms of the Retirement Plan as
in effect on that date.
For purposes of calculating a Participant's Supplemental Benefit, the term
"Compensation" means the aggregate of his compensation by way of salary,
incentive compensation, compensation deferred pursuant to an agreement
between TBC and the Participant, compensation subject to income tax which has
been deferred by virtue of a plan or arrangement made by TBC or the
Participant, grants of restricted stock and grants of stock options (to the
extent of any excess of market value over option price on the date of grant)
without reduction, in the case of restricted stock and stock options, by
reason of any restrictions or limitations upon the availability or
exercisability thereof.
Notwithstanding the above, the amount calculated in subsection (a) above
shall not be less than the Participant's "Floor Benefit". The Participant's
Floor Benefit is determined as follows:
i) If a Participant has completed at least 25 years of service (Vesting
or Credited Service as defined in the Retirement Plan or as provided
in any agreement between the Participant and TBC), the Participant's
Floor Benefit shall be an amount (expressed as a single life
annuity) equal to 60% of the average of the three (3) highest
consecutive calendar years of the Participant's Compensation (as
defined above) within the last ten (10) completed calendar years
during which the Participant received any Compensation, assuming for
purposes of this computation that Sections 415 and 401(a)(17) of the
Code had not been enacted.
ii) If a Participant has not completed at least 25 years of service, the
Participant's Floor Benefit shall be the result derived by
multiplying the amount determined in paragraph (i), above, by a
fraction (not to exceed 1), the numerator of which is the
Participant's years of service and the denominator of which is 25.
iii) Notwithstanding paragraph (ii), above, if a Participant terminates
employment with TBC by reason of becoming totally and permanently
disabled (as defined in the Retirement Plan), the amount of the
Participant's Floor Benefit shall be the benefit described in
paragraph (i), above, multiplied by a fraction (not to exceed 1),
the numerator of which is the yars of service the Participant would
have had if he had continued to be employed by TBC until his Normal
Retirement Date and the denominator of which is 25.
iv) Notwithstanding paragraphs (i), (ii) or (iii), above, if a
Participant begins to receive payment of his benefits under this
Plan before his Normal Retirement Date, the Participant's Floor
Benefit shall be the amount determined under paragraphs (i), (ii) or
-2-<PAGE>
(iii), above, multplied by the applicable Early Retirement Factor in
the table, below.
Early Retirement Factors
Age When Early Age When Early
Benefits Retirement Benefits Retirement
Start Factor Start Factor
55 .500 60 .750
56 .550 61 .800
57 .600 62 .850
58 .650 63 .900
59 .700 64 .950
v) Notwithstanding any other provision of the Plan, the Floor Benefit
of a Participant in the Plan on July 25, 1996 (the "Effective Date")
shall be (a) the greater of his Floor Benefit, calculated in
accordance with the terms of the Plan immediately before the
Effective Date and assuming that the Participant terminated
employment with TBC on the Effective Date, and (b) his Floor Benefit
calculated in accordance with the terms of the Plan immediately
after the Effective Date.
SECTION 4 - FORM AND TIME OF SUPPLEMENTAL BENEFIT PAYMENT
4.1 Form and Timing of Supplemental Benefit Payment.
(a) Unless an alternative form of payment is selected by the
Participant pursuant to Section 4.2, the Participant's Supplemental
Benefit will be paid in the form of a "ten year certain annuity". A
"ten year certain annuity" is an annuity, payable in equal monthly
payments over the lifetime of the Participant and, if the
Participant dies before the expiration of the ten year period,
continued payments to the Participant's designated beneficiary
during the remainder of the specified period certain.
(b) Unless an election is made by the Participant pursuant to
Section 4.2, the Supplemental Benefit shall commence to be paid
within 90 days after the date on which the Participant ceases
employment with TBC.
(c) The conversion of the Supplemental Benefit into
substantially equal monthly payments over a period of ten years or
an alternative method of payment shall be made based on the same
actuarial and present value assumptions used for purposes of the
Retirement Plan.
-3-<PAGE>
4.2 Alternative Manner and Time of Benefit Payment.
(a) In lieu of the form of payment described in Subsection
4.1(a) or the timing of payment described in Subsection 4.1(b), the
Participant may elect to receive the Supplemental Benefit in any
other form of payment provided in the Retirement Plan and at any
time such Participant is entitled to payment of his benefits from
the Retirement Plan.
(b) To be effective, an election pursuant to this Section 4.2
must be made at least 24 months prior to date on which the
Participant terminates employment with TBC. An election may be
revised, but such revision must be made at least 24 months prior to
date on which the Participant terminates employment with TBC. Also,
the Participant may request that the Compensation Committee, in its
absolute discretion, waive the 24 month requirement described in
this Subsection 4.2(b).
(c) Except as provided in the following sentence, the conversion
of the Supplemental Benefit into a qualified joint and survivor
annuity, a life annuity or an alternative method of payment shall be
made based on the same actuarial and present value assumptions used
for purposes of the Retirement Plan. When the Retirement Plan is
amended to determine lump sum payments by using the mortality table
described in Section 417(e)(3)(A)(ii)(I) of the Code and the annual
rate of interest on 30-year Treasury securities, as described in
Code Section 417(e)(3)(A)(ii)(II) (commonly known as the "GATT"
revisions), lump sum payments under this Plan will be calculated on
the basis of the same actuarial and present value assumptions used
for purposes of the Retirement Plan or, if a larger lump sum payment
results, on the basis of the actuarial and present value assumptions
used for purposes of the Retirement Plan immediately before such
amendment.
4.3 Payment to Incapacitated Persons. Notwithstanding any other
provision of the Plan, if the Committee determines that a Participant or
other person entitled to a Supplemental Benefit under the Plan is physically,
mentally or legally incapacitated and unable to manage his financial affairs,
the Committee may, until claim is made by a conservator or other person
legally charged with the care of his person or of his estate, make payment
for the individual's benefit to one or more persons or institutions which, in
the Committee's judgment, are maintaining or have custody of the person
entitled to payment from the Plan. Any payment made in accordance with this
subsection shall fully acquit and discharge the Committee and TBC from all
further liability on account thereof.
4.4 Non-Transferability. The interests of Participants and other
persons in a Supplemental Benefit under the Plan are not subject to the
claims of their creditors and may not be voluntarily or involuntarily
assigned, alienated or encumbered.
4.5 Death. If the Participant dies prior to termination of employment,
in lieu of paying a Supplemental Benefit to the Participant, TBC shall pay an
amount equal to the Participant's Supplemental Benefit to the Participant's
-4-<PAGE>
designated beneficiary or estate in a single, lump sum payment within 90 days
after the Participant's death.
4.6 Beneficiary. The Participant shall file with TBC a notice in
writing designating one or more beneficiaries to whom payments are to be made
upon the Participant's death. The Participant shall have the right to change
the beneficiary or beneficiaries from time to time; provided, however, that
any change shall not become effective until received in writing by TBC. In
the event the Participant fails to deliver such a written designation of
beneficiary, then any such payments shall be made to the Participant's
estate.
SECTION 5 - FINANCING PLAN BENEFITS
The Plan shall be unfunded, and all Supplemental Benefit payments shall
be made from the general assets of TBC.
SECTION 6 - AMENDMENT AND TERMINATION
While the Committee expects and intends to continue the Plan, it must
necessarily reserve, and reserves, the right to amend the Plan from time to
time and to terminate the Plan in its entirety. Notwithstanding the
foregoing, in no event will any amendment to, or the termination of, the Plan
reduce the amount of the Supplemental Benefit that a Participant would have
received had he terminated his employment with TBC on the date of the
amendment.
-5-<PAGE>
EXHIBIT 10.3
TBC CORPORATION
RESOLUTION ADOPTED BY THE
COMPENSATION COMMITTEE
SEPTEMBER 26, 1996
RESOLVED, that the Company shall credit to
each deferred compensation account which it
maintains for the benefit of its executives
and directors, in each calendar quarter,
daily interest on the amount then credited to
such account (including all previous credits
to such account) computed at an annual rate
which is equal to the average yield for BBB
Industrial Bonds, as published in the
Standard & Poor's Corporate and Government
Bond Yield Index (or such similar index as
the Compensation Committee of the Board of
Directors shall select) for the month last
preceding the beginning of such calendar
quarter.<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> (298)<F1>
<SECURITIES> 0
<RECEIVABLES> 120,998
<ALLOWANCES> 10,712
<INVENTORY> 71,184
<CURRENT-ASSETS> 193,313
<PP&E> 57,489
<DEPRECIATION> 21,538
<TOTAL-ASSETS> 275,676
<CURRENT-LIABILITIES> 79,784
<BONDS> 0
0
0
<COMMON> 2,381
<OTHER-SE> 113,905
<TOTAL-LIABILITY-AND-EQUITY> 275,676
<SALES> 438,904
<TOTAL-REVENUES> 438,904
<CGS> 387,794
<TOTAL-COSTS> 387,794
<OTHER-EXPENSES> 32,634
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 2,681
<INCOME-PRETAX> 18,476
<INCOME-TAX> 7,130
<INCOME-CONTINUING> 11,346
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,346
<EPS-PRIMARY> .48
<EPS-DILUTED> 0<F2>
<FN>
<F1>THIS ITEM IS SHOWN UNDER THE CATEGORY "OUTSTANDING CHECKS,NET" ON THE
CONSOLIDATED BALANCE SHEETS.
<F2>THESE ITEMS ARE NOT SEPARATELY REPORTED ON TBC CORPORATION'S FORM 10-Q.
</FN>
</TABLE>
