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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 10, 1996
-----------------------
TBC Corporation
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(Exact name of registrant as specified in its charter)
Delaware 0-11579 31-0600670
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
4770 Hickory Hill Road, Memphis, Tennessee 38141
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (901) 363-8030
-----------------------------
Not Applicable
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On July 10, 1996, TBC Corporation ("TBC") acquired Big O Tires, Inc.,
a Nevada corporation ("Big O"), by means of a merger of TBCO Acquisition, Inc.,
a Nevada corporation and wholly-owned subsidiary of TBC, with and into Big O.
The total cash consideration payable by TBC in connection with the merger was
$54,646,076.52.
Articles of Merger effecting the merger were filed with the Nevada
Secretary of State on July 10, 1996, immediately following a Special Meeting of
Stockholders of Big O at which the merger was approved by the requisite vote of
Big O stockholders.
Pursuant to an Agreement and Plan of Merger, dated as of April 30,
1996 (the "Merger Agreement"), the holders of the 3,317,916 issued and
outstanding shares of Big O Common Stock, par value $.10 per share, will
receive $16.47 in exchange for each share owned by them. The merger
consideration was determined in arms length negotiations conducted by TBC with
the Big O Board of Directors and its Investment Committee.
Prior to the merger, Big O's Common Stock was registered under the
Securities Exchange Act of 1934 and traded on The Nasdaq National Market
System. On March 13, 1996, the last trading day prior to the announcement of
the execution of a letter of intent between TBC and Big O relating to the
proposed merger, the closing price of Big O Common Stock was $13.81, and on May
2, 1996, the last trading day prior to the announcement of the execution of the
Merger Agreement, the closing price of Big O Common Stock was $15.25.
Big O is engaged primarily in the business of franchising Big O Tire
retail stores and supplying such retail stores with tires and related
automotive products for sale. On a limited basis, Big O also owns and operates
retail stores and engages in site selection and real estate development for
retail stores. Big O's retail stores are located principally in the central
and western United States. At June 30, 1996, Big O had 383 franchised retail
stores and four company-owned retail stores. Big O is headquartered in
Englewood, Colorado.
Big O retail stores sell, among other things, an exclusive line of
premium private label Big O brand passenger, light truck, recreational, and
high performance tires manufactured for Big O principally by The
Kelly-Springfield Tire Company (a division of The Goodyear Tire & Rubber
Company).
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At March 31, 1996, Big O had consolidated total assets of $66,262,000,
approximately $16,150,000 of which consisted of property, plant, and equipment,
$35,337,000 of which consisted of current assets, and $14,775,000 of which was
represented by intangibles, notes receivable, and other assets. Stockholders'
equity totalled approximately $38,269,000. At the present time, it is expected
that the business of Big O, which is now a wholly-owned subsidiary of TBC, will
be conducted substantially as it was prior to the acquisition, including the
utilization of its physical assets. However, TBC reserves the right to make
changes in the business operations of Big O or the utilization of its physical
assets from time to time as TBC deems the same to be necessary or appropriate.
The funds used to purchase Big O were made available to TBC through
the Note Purchase and Private Shelf Agreement described in Item 5 below.
Item 5. Other Events.
In order to finance its acquisition of Big O described in Item 2
above, TBC entered into a Note Purchase and Private Shelf Agreement, dated July
10, 1996 (the "Note Agreement"), with The Prudential Insurance Company of
America ("Prudential"). Pursuant to the Note Agreement, on July 10, 1996, TBC
issued to Prudential a Series A Senior Note in the principal amount of
$32,500,000 (the "Series A Note"), a Series B Senior Note in the principal
amount of $11,000,000 (the "Series B Note"), and a Series C Senior Note in the
principal amount of $16,500,000 (the "Series C Note" and, collectively with the
Series A Note and the Series B Note, the "Notes").
The Series A Note bears interest at the rate of 7.55% per annum, which
is payable quarterly, and requires principal payments of $6,500,000 on July 10
in each of the years from 1999 through and including 2002, with a final
principal payment of $6,500,000 being due on July 10, 2003.
The Series B Note bears interest at the rate of 7.87% per annum, which
is payable quarterly, and requires a principal payment of $5,500,000 on July
10, 2004, with a final principal payment of $5,500,000 being due on July 10,
2005.
The Series C Note bears interest at the rate of 8.06% per annum, which
is payable quarterly, and requires principal payments of $5,500,000 on July 10
in each of the years 2006 and 2007, with a final principal payment of
$5,500,000 being due on July 10, 2008.
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The Notes, which are unsecured, may be prepaid in whole or in part;
however, depending upon certain then current market interest rates and the then
current remaining average life of the Note, payment of a yield maintenance
amount calculated in accordance with the Note Agreement could be required.
The Note Agreement contains representations, warranties, and covenants
by TBC which are typical in such financing transactions, including financial
covenants dealing with TBC's consolidated working capital ratio, interest
expense coverage, and tangible net worth, and which restrict the ability of TBC
and its subsidiaries to, among other things, incur additional debt, place liens
upon assets, provide guarantees and make loans, advances, and investments, and
transfer assets.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.*
Consolidated Balance Sheets of Big O Tires, Inc. at December
31, 1994 and 1995.
Consolidated Statements of Income of Big O Tires, Inc. for the
years ended December 31, 1994 and 1995.
Consolidated Statements of Cash Flows of Big O Tires, Inc. for
the years ended December 31, 1994 and 1995.
Notes to Consolidated Financial Statements of Big O Tires,
Inc. at and for the years ended December 31, 1994 and 1995.
Report of Deloitte & Touche LLP on Consolidated Financial
Statements of Big O Tires, Inc. at and for the years ended
December 31, 1994 and 1995.
Unaudited Consolidated Balance Sheet of Big O Tires, Inc. at
March 31, 1996.
Unaudited Consolidated Statements of Income of Big O Tires,
Inc. for the three months ended March 31, 1995 and 1996.
Notes to Unaudited Consolidated Financial Statements of Big O
Tires, Inc. at March 31, 1996 and for the three months ended
March 31, 1995 and 1996.
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(b) Pro forma financial information.*
Unaudited pro forma condensed consolidated balance sheet of
TBC Corporation and Big O Tires, Inc. as of March 31, 1996.
Unaudited pro forma condensed consolidated statements of
income of TBC Corporation and Big O Tires, Inc. for the year
ended December 31, 1995 and the three months ended March 31,
1996.
Notes to unaudited pro forma condensed consolidated financial
statements.
* The above listed financial statements and pro forma financial information
are not included in this report because of the impracticability of providing
such items at the time that this report is being filed. TBC intends to file
such financial statements and pro forma information promptly, but in no
event later than September 23, 1996.
(c) Exhibits.
See Exhibit Index.
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 hereunto duly authorized.
TBC CORPORATION
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(Registrant)
July 25, 1996 By:/s/Ronald E. McCollough
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(Date) Ronald E. McCollough,
Senior Vice President,
Operations and Treasurer
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EXHIBIT INDEX
Exhibit No. and Description:
(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, and incorporated herein by
reference.)
(4) Instruments defining the rights of security holders, including
indentures.
4.1 Note Purchase and Private Shelf Agreement, dated July 10,
1996, between TBC Corporation and The Prudential Insurance
Company of America.
4.2 Series A, Series B, and Series C Senior Notes, dated July 10,
1996, issued by TBC Corporation pursuant to the Note Purchase
Agreement being filed as Exhibit 4.1.
(23) Consents of experts and counsel.
23.1 The consent of Deloitte & Touche LLP to the inclusion in this
Report on Form 8-K, and to the incorporation into certain S-8
registration statements of TBC Corporation, of Deloitte &
Touche LLP's report on the consolidated financial statements
of Big O Tires, Inc. at and for the years ended December 31,
1994 and 1995, will be filed by amendment at the time such
consolidated financial statements are filed.
(27) Financial Data Schedule.
To be filed by amendment.
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EXHIBIT 4.1
EXECUTION COPY
TBC CORPORATION
NOTE PURCHASE AND PRIVATE SHELF AGREEMENT
$32,500,000
7.55% Series A Senior Notes Due July 10, 2003
$11,000,000
7.87% Series B Senior Notes Due July 10, 2005
$16,500,000
8.06% Series C Senior Notes Due July 10, 2008
$25,000,000
Private Shelf Facility
Dated as of July 10, 1996
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TABLE OF CONTENTS
(not part of agreement)
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
1. AUTHORIZATION OF ISSUE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
1A. AUTHORIZATION OF ISSUE OF INITIAL NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . - 1 -
1B. AUTHORIZATION OF ISSUE OF SHELF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
2. PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
2A. PURCHASE AND SALE OF INITIAL NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
2B. PURCHASE AND SALE OF SHELF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
2B(1). FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2 -
2B(2). ISSUANCE PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
2B(3). REQUEST FOR PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
2B(4). RATE QUOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
2B(5). ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4 -
2B(6). MARKET DISRUPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4 -
2B(7). FACILITY CLOSINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4 -
2B(8). FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
2B(8)(i). FACILITY FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
2B(8)(ii). ISSUANCE FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
2B(8)(iii). DELAYED DELIVERY FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 5 -
2B(8)(iv). CANCELLATION FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
3. CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
3A. CERTAIN DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
3B. OPINION OF PURCHASER'S SPECIAL COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . - 7 -
3D. PURCHASE PERMITTED BY APPLICABLE LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
3E. PAYMENT OF FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
3F. CLOSING OF ACQUISITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
4. PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
4A. REQUIRED PREPAYMENTS OF INITIAL NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
4A(1). SERIES A NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
4A(2). SERIES B NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 8 -
4A(3). SERIES C NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
4B. REQUIRED PREPAYMENTS OF SHELF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
4C. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT . . . . . . . . . . . . . . . . . . . . . - 9 -
4D. NOTICE OF OPTIONAL PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
4E. APPLICATION OF REQUIRED PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
4F. APPLICATION OF OPTIONAL PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9 -
4G. NO ACQUISITION OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 10 -
</TABLE>
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<TABLE>
<S> <C> <C>
5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 10 -
5A. FINANCIAL STATEMENTS; NOTICE OF DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . - 10 -
5B. INFORMATION REQUIRED BY RULE 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 11 -
5C. INSPECTION OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 11 -
5D. COVENANT TO SECURE NOTES EQUALLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -
5E. COVENANT REGARDING GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -
5F. MAINTENANCE OF INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 12 -
5G. MAINTENANCE OF PROPERTIES; COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . - 12 -
5H. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 13 -
5I. ENVIRONMENTAL AND SAFETY LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 13 -
5J. CORPORATE EXISTENCE, ETC.; BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 13 -
5K. PAYMENT OF TAXES AND CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
5L. PARI PASSU RANKING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
6A. FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
6A(1). WORKING CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
6A(2). INTEREST EXPENSE COVERAGE . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
6A(3). CONSOLIDATED TANGIBLE NET WORTH . . . . . . . . . . . . . . . . . . . . . . - 14 -
6B. LIEN, DEBT AND OTHER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
6B(1). LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14 -
6B(2). DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 16 -
6B(3). LOANS, ADVANCES, INVESTMENTS AND
CONTINGENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . - 17 -
6B(4). SALE OF STOCK AND DEBT OF SUBSIDIARIES . . . . . . . . . . . . . . . . . . . - 18 -
6B(5). MERGER AND CONSOLIDATION . . . . . . . . . . . . . . . . . . . . . . . . . . - 18 -
6B(6). TRANSFER OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 19 -
6B(7) SALE AND LEASE-BACK . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 19 -
6C. RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -
6D. NEW BANK FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -
6E. SUBSIDIARY GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 20 -
7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 21 -
7A. ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 21 -
7B. RESCISSION OF ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 23 -
7C. NOTICE OF ACCELERATION OR RESCISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
7D. OTHER REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
8. REPRESENTATIONS, COVENANTS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
8A. ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
8B. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 24 -
8C. ACTIONS PENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 25 -
8D. OUTSTANDING DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 25 -
8E. TITLE TO PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 25 -
</TABLE>
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<TABLE>
<S> <C> <C>
8F. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 25 -
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . - 26 -
8H. OFFERING OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 26 -
8I. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 26 -
8J. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 27 -
8K. GOVERNMENTAL CONSENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 27 -
8L. ENVIRONMENTAL COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 27 -
8M. DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
8N. HOSTILE TENDER OFFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
9. REPRESENTATIONS OF THE PURCHASERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
9A. NATURE OF PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
9B. SOURCE OF FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
10. DEFINITIONS; ACCOUNTING MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
10A. YIELD-MAINTENANCE TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 28 -
10B. OTHER TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 30 -
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS . . . . . . . . . . . . . . . . . . . . . . - 39 -
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 39 -
11A. NOTE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 39 -
11B. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 40 -
11C. CONSENT TO AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 40 -
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES;
LOST NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 41 -
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . - 41 -
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 42 -
11G. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 42 -
11H. INDEPENDENCE OF COVENANTS; SEVERABILITY; DESCRIPTIVE HEADINGS . . . . . . . . . . . . . . . - 42 -
11I. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 42 -
11J. PAYMENTS DUE ON NON-BUSINESS DAYS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 43 -
11K. MAXIMUM INTEREST PAYABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 43 -
11L. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES . . . . . . . . . . . . . . . . . . . . . . - 43 -
11M. SATISFACTION REQUIREMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 44 -
11N. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 44 -
11O. SEVERALTY OF OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 44 -
11P. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 44 -
11Q. BINDING AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 45 -
</TABLE>
- iii -
<PAGE> 5
Exhibits and Schedules
Purchaser Schedule
Information Schedule
Exhibit A-1 -- Form of Series A Note
Exhibit A-2 -- Form of Shelf Note
Exhibit B -- Form of Request for Purchase
Exhibit C -- Form of Confirmation of Acceptance
Exhibit D-1 -- Form of Opinion of Company Counsel, Initial Notes Closing
Exhibit D-2 -- Form of Opinion of Company Counsel, Shelf Note Closing
Exhibit E -- Form of Sharing Agreement
Exhibit F -- Wire Instructions
Schedule 6B(1) -- Existing Liens
Schedule 6B(2) -- Permitted Subsidiary Debt
Schedule 6B(3) -- Existing Loans and Investments
Schedule 6(C) -- Existing Stock Incentive Plans
Schedule 8D -- Existing Guarantees
Schedule 8G -- Agreements Restricting Debt
- iv -
<PAGE> 6
TBC CORPORATION
4770 HICKORY HILL ROAD
MEMPHIS, TENNESSEE 38141
As of July 10, 1996
The Prudential Insurance Company
of America ("PRUDENTIAL")
Each Prudential Affiliate (as hereinafter
defined) which becomes bound by certain
provisions of this Agreement as hereinafter
provided (together with Prudential,
the "PURCHASERS")
c/o Prudential Capital Group
4900 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Ladies and Gentlemen:
The undersigned, TBC CORPORATION (herein called the
"COMPANY"), hereby agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES.
1A. AUTHORIZATION OF ISSUE OF INITIAL NOTES. The Company
will authorize the issue of its senior promissory notes in the aggregate
principal amount of:
(i) $32,500,000, to be dated the date of issue thereof, to
mature July 10, 2003 to bear interest on the unpaid balance thereof
from the date thereof until the principal thereof shall have become
due and payable at the rate of 7.55% per annum and on overdue
principal, Yield-Maintenance Amount and interest at the rate specified
therein (the "SERIES A NOTES"),
(ii) $11,000,000, to be dated the date of issue thereof, to
mature July 10, 2005 to bear interest on the unpaid balance thereof
from the date thereof until the principal thereof shall have become
due and payable at the rate of 7.87% per annum and on overdue
principal, Yield-Maintenance Amount and interest at the rate specified
therein (the "SERIES B NOTES"),
(iii) $16,500,000, to be dated the date of issue thereof, to
mature July 10, 2008 to bear interest on the unpaid balance thereof
from the date thereof until the principal thereof shall have become
due and payable at the rate of 8.06% per annum and on overdue
principal, Yield-Maintenance Amount and interest at the rate specified
therein (the "SERIES C NOTES"),
<PAGE> 7
and, in each case, to be substantially in the form of Exhibit A-1 attached
hereto. The terms "INITIAL NOTE" and "INITIAL NOTES" as used herein shall
include each Initial Note delivered pursuant to any provision of this Agreement
and each Initial Note delivered in substitution or exchange for any such
Initial Note pursuant to any such provision.
1B. AUTHORIZATION OF ISSUE OF SHELF NOTES. The Company will
authorize the issue of its additional senior promissory notes (the "SHELF
NOTES") in the aggregate principal amount of $25,000,000, to be dated the date
of issue thereof, to mature, in the case of each Shelf Note so issued, no more
than 12 years after the date of original issuance thereof, to have an average
life, in the case of each Shelf Note so issued, of no more than 11 years after
the date of original issuance thereof, to bear interest on the unpaid balance
thereof from the date thereof at the rate per annum, and to have such other
particular terms, as shall be set forth, in the case of each Shelf Note so
issued, in the Confirmation of Acceptance with respect to such Shelf Note
delivered pursuant to paragraph 2B(5), and to be substantially in the form of
Exhibit A-2 attached hereto. The terms "SHELF NOTE" and "SHELF NOTES" as used
herein shall include each Shelf Note delivered pursuant to any provision of
this Agreement and each Shelf Note delivered in substitution or exchange for
any such Shelf Note pursuant to any such provision. The terms "NOTE" and
"NOTES" as used herein shall include each Initial Note and each Shelf Note
delivered pursuant to any provision of this Agreement and each Note delivered
in substitution or exchange for any such Note pursuant to any such provision.
Notes which have (i) the same final maturity, (ii) the same principal
prepayment dates, (iii) the same principal prepayment amounts (as a percentage
of the original principal amount of each Note), (iv) the same interest rate,
(v) the same interest payment periods and (vi) the same date of issuance
(which, in the case of a Note issued in exchange for another Note, shall be
deemed for these purposes the date on which such Note's ultimate predecessor
Note was issued), are herein called a "SERIES" of Notes.
2. PURCHASE AND SALE OF NOTES.
2A. PURCHASE AND SALE OF INITIAL NOTES. The Company hereby
agrees to sell to Prudential and, subject to the terms and conditions herein
set forth, Prudential agrees to purchase from the Company (i) $32,500,000
aggregate principal amount of Series A Notes, (ii) $11,000,000 aggregate
principal amount of Series B Notes, and (iii) $16,500,000 aggregate principal
amount of Series C Notes, each at 100% of such aggregate principal amount. On
July 10, 1996 or any other date prior to August 12, 1996 upon which the Company
and Prudential may agree (herein called the "INITIAL CLOSING DAY"), the Company
will deliver to Prudential at the offices of Prudential Capital Group, One
Gateway Center, 11th Floor, 7-45 Raymond Boulevard West, Newark, New Jersey
07102 one or more Series A Notes, Series B Notes and Series C Notes registered
in its name, evidencing the respective aggregate principal amounts of Series A
Notes, Series B Notes and Series C Notes to be purchased by Prudential, and in
the denomination or denominations specified with respect to Prudential in the
Purchaser Schedule attached hereto, against payment of the purchase price
thereof by transfer of immediately available funds for credit to the escrow
account established at State Street Bank and Trust Company, Boston, MA, in
connection with the Company's acquisition of Big O, as set forth on Exhibit F
attached hereto.
2B. PURCHASE AND SALE OF SHELF NOTES.
2B(1). FACILITY. Prudential is willing to consider, in its
sole discretion and within limits which may be authorized for purchase by
Prudential and Prudential Affiliates from time
2
<PAGE> 8
to time, the purchase of Shelf Notes pursuant to this Agreement. The
willingness of Prudential to consider such purchase of Shelf Notes is herein
called the "FACILITY". At any time, the aggregate principal amount of Shelf
Notes stated in paragraph 1B, minus the aggregate principal amount of Shelf
Notes purchased and sold pursuant to this Agreement prior to such time, minus
the aggregate principal amount of Accepted Notes (as hereinafter defined) which
have not yet been purchased and sold hereunder prior to such time, is herein
called the "AVAILABLE FACILITY AMOUNT" at such time. NOTWITHSTANDING THE
WILLINGNESS OF PRUDENTIAL TO CONSIDER PURCHASES OF SHELF NOTES, THIS AGREEMENT
IS ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY
PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE
SHELF NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC
PURCHASES OF SHELF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A
COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.
2B(2). ISSUANCE PERIOD. Shelf Notes may be issued and sold
pursuant to this Agreement until the earlier of (i) the second anniversary of
the date of this Agreement and (ii) the thirtieth day after Prudential shall
have given to the Company, or the Company shall have given to Prudential, a
notice stating that it elects to terminate the issuance and sale of Shelf Notes
pursuant to this Agreement (or if such thirtieth day is not a Business Day, the
Business Day next preceding such thirtieth day). The period during which Shelf
Notes may be issued and sold pursuant to this Agreement is herein called the
"ISSUANCE PERIOD".
2B(3). REQUEST FOR PURCHASE. The Company may from time to
time during the Issuance Period make requests for purchases of Shelf Notes
(each such request being herein called a "REQUEST FOR PURCHASE"). Each Request
for Purchase shall be made to Prudential by telecopier or overnight delivery
service, and shall (i) specify the aggregate principal amount of Shelf Notes
covered thereby, which shall not be less than $5,000,000 (or the then remaining
Available Facility Amount, if lesser) and not be greater than the Available
Facility Amount at the time such Request for Purchase is made, (ii) specify the
principal amounts, final maturities, principal prepayment dates and amounts and
interest payment periods (quarterly or semi-annual in arrears) of the Shelf
Notes covered thereby, (iii) specify the use of proceeds of such Shelf Notes,
(iv) specify the proposed day for the closing of the purchase and sale of such
Shelf Notes, which shall be a Business Day during the Issuance Period not less
than 10 days and not more than 25 days after the making of such Request for
Purchase, (v) specify the number of the account and the name and address of the
depository institution to which the purchase prices of such Shelf Notes are to
be transferred on the Closing Day for such purchase and sale, (vi) certify that
the representations and warranties contained in paragraph 8 are true on and as
of the date of such Request for Purchase and that there exists on the date of
such Request for Purchase no Event of Default or Default, (vii) specify whether
the fee to be due pursuant to paragraph 2B(8)(ii) should be included in the
rate quotes Prudential may provide pursuant to paragraph 2B(4) or will be paid
separately by the Company on the Closing Day for such purchase and sale, (viii)
specify the Designated Spread for such Shelf Notes and (ix) be substantially in
the form of Exhibit B attached hereto. Each Request for Purchase shall be in
writing and shall be deemed made when received by Prudential.
2B(4). RATE QUOTES. Not later than five Business Days after
the Company shall have given Prudential a Request for Purchase pursuant to
paragraph 2B(3), Prudential may, but shall be under no obligation to, provide
to the Company by telephone or telecopier, in each case
3
<PAGE> 9
between 9:30 A.M. and 1:30 P.M. New York City local time (or such later time as
Prudential may elect) interest rate quotes for the several principal amounts,
maturities, principal prepayment schedules, and interest payment periods of
Shelf Notes specified in such Request for Purchase. Each quote shall represent
the interest rate per annum payable on the outstanding principal balance of
such Shelf Notes at which Prudential or a Prudential Affiliate would be willing
to purchase such Shelf Notes at 100% of the principal amount thereof.
2B(5). ACCEPTANCE. Within 30 minutes after Prudential shall
have provided any interest rate quotes pursuant to paragraph 2B(4) or such
shorter period as Prudential may specify to the Company (such period herein
called the "ACCEPTANCE WINDOW"), the Company may, subject to paragraph 2B(6),
elect to accept such interest rate quotes as to not less than $5,000,000 (or
the then remaining Available Facility Amount, if lesser) aggregate principal
amount of the Shelf Notes specified in the related Request for Purchase. Such
election shall be made by an Authorized Officer of the Company notifying
Prudential by telephone or telecopier within the Acceptance Window that the
Company elects to accept such interest rate quotes, specifying the Shelf Notes
(each such Shelf Note being herein called an "ACCEPTED NOTE") as to which such
acceptance (herein called an "ACCEPTANCE") relates. The day the Company
notifies an Acceptance with respect to any Accepted Notes is herein called the
"ACCEPTANCE DAY" for such Accepted Notes. Any interest rate quotes as to which
Prudential does not receive an Acceptance within the Acceptance Window shall
expire, and no purchase or sale of Shelf Notes hereunder shall be made based on
such expired interest rate quotes. Subject to paragraph 2B(6) and the other
terms and conditions hereof, the Company agrees to sell to Prudential or a
Prudential Affiliate, and Prudential agrees to purchase, or to cause the
purchase by a Prudential Affiliate of, the Accepted Notes at 100% of the
principal amount of such Notes. As soon as practicable following the Acceptance
Day, the Company, Prudential and each Prudential Affiliate which is to purchase
any such Accepted Notes will execute a confirmation of such Acceptance
substantially in the form of Exhibit C attached hereto (herein called a
"CONFIRMATION OF ACCEPTANCE"). If the Company should fail to execute and
return to Prudential within three Business Days following receipt thereof a
Confirmation of Acceptance with respect to any Accepted Notes, Prudential may
at its election at any time prior to its receipt thereof cancel the closing
with respect to such Accepted Notes by so notifying the Company in writing.
2B(6). MARKET DISRUPTION. Notwithstanding the provisions of
paragraph 2B(5), if Prudential shall have provided interest rate quotes
pursuant to paragraph 2B(4) and thereafter prior to the time an Acceptance with
respect to such quotes shall have been notified to Prudential in accordance
with paragraph 2B(5) the domestic market for U.S. Treasury securities or
derivatives shall have closed or there shall have occurred a general
suspension, material limitation, or significant disruption of trading in
securities generally on the New York Stock Exchange or in the domestic market
for U.S. Treasury securities or derivatives, then such interest rate quotes
shall expire, and no purchase or sale of Shelf Notes hereunder shall be made
based on such expired interest rate quotes. If the Company thereafter notifies
Prudential of the Acceptance of any such interest rate quotes, such Acceptance
shall be ineffective for all purposes of this Agreement, and Prudential shall
promptly notify the Company that the provisions of this paragraph 2B(6) are
applicable with respect to such Acceptance.
2B(7). FACILITY CLOSINGS. Not later than 11:30 A.M. (New
York City local time) on the Closing Day for any Accepted Notes, the Company
will deliver to each Purchaser listed in the Confirmation of Acceptance
relating thereto at the offices of the Prudential Capital Group, 4900
Renaissance Tower, 1201 Elm Street, Dallas, Texas 75270 the Accepted Notes to
be
4
<PAGE> 10
purchased by such Purchaser in the form of one or more Notes in authorized
denominations as such Purchaser may request for each Series of Accepted Notes
to be purchased on the Closing Day, dated the Closing Day and registered in
such Purchaser's name (or in the name of its nominee), against payment of the
purchase price thereof by transfer of immediately available funds for credit to
the Company's account specified in the Request for Purchase of such Notes. If
the Company fails to tender to any Purchaser the Accepted Notes to be purchased
by such Purchaser on the scheduled Closing Day for such Accepted Notes as
provided above in this paragraph 2B(7), or any of the conditions specified in
paragraph 3 shall not have been fulfilled by the time required on such
scheduled Closing Day, the Company shall, prior to 1:00 P.M., New York City
local time, on such scheduled Closing Day notify Prudential (which notification
shall be deemed received by each Purchaser) in writing whether (i) such closing
is to be rescheduled (such rescheduled date to be a Business Day during the
Issuance Period not less than one Business Day and not more than 10 Business
Days after such scheduled Closing Day (the "RESCHEDULED CLOSING DAY") and
certify to Prudential (which certification shall be for the benefit of each
Purchaser) that the Company reasonably believes that it will be able to comply
with the conditions set forth in paragraph 3 on such Rescheduled Closing Day
and that the Company will pay the Delayed Delivery Fee in accordance with
paragraph 2B(8)(iii) or (ii) such closing is to be canceled. In the event that
the Company shall fail to give such notice referred to in the preceding
sentence, Prudential (on behalf of each Purchaser) may at its election, at any
time after 1:00 P.M., New York City local time, on such scheduled Closing Day,
notify the Company in writing that such closing is to be canceled.
Notwithstanding anything to the contrary appearing in this Agreement, the
Company may elect to reschedule a closing with respect to any given Accepted
Notes on not more than one occasion, unless Prudential shall have otherwise
consented in writing.
2B(8). FEES.
2B(8)(i). FACILITY FEE. In consideration for the time,
effort and expense involved in the preparation, negotiation and execution of
this Agreement, at the time of the execution and delivery of this Agreement by
the Company and Prudential, the Company will pay to Prudential in immediately
available funds a fee (herein called the "FACILITY FEE") in the amount of
$150,000.
2B(8)(ii). ISSUANCE FEE. The Company will pay to Prudential
in immediately available funds a fee (herein called the "ISSUANCE FEE") on each
Closing Day (other than the Initial Closing Day) in an amount equal to 0.15% of
the aggregate principal amount of Notes sold on such Closing Day, unless the
Company shall have requested pursuant to the applicable Request for Purchase
that such fee be included in the rate quotes Prudential may provide pursuant to
paragraph 2B(4).
2B(8)(iii). DELAYED DELIVERY FEE. If the closing of the
purchase and sale of any Accepted Note is delayed for any reason beyond the
original Closing Day for such Accepted Note, the Company will pay to Prudential
(a) on the Cancellation Date or actual closing date of such purchase and sale
and (b) if earlier, the next Business Day following 90 days after the
Acceptance Day for such Accepted Note and on each Business Day following 90
days after the prior payment hereunder, a fee (herein called the "DELAYED
DELIVERY FEE") calculated as follows:
(BEY - MMY) X DTS/360 X PA
5
<PAGE> 11
where "BEY" means Bond Equivalent Yield, i.e., the bond equivalent yield per
annum of such Accepted Note, "MMY" means Money Market Yield, i.e., the yield
per annum on a commercial paper investment of the highest quality selected by
Prudential on the date Prudential receives notice of the delay in the closing
for such Accepted Note having a maturity date or dates the same as, or closest
to, the Rescheduled Closing Day or Rescheduled Closing Days (a new alternative
investment being selected by Prudential each time such closing is delayed);
"DTS" means Days to Settlement, i.e., the number of actual days elapsed from
and including the original Closing Day with respect to such Accepted Note (in
the case of the first such payment with respect to such Accepted Note) or from
and including the date of the next preceding payment (in the case of any
subsequent delayed delivery fee payment with respect to such Accepted Note) to
but excluding the date of such payment; and "PA" means Principal Amount, i.e.,
the principal amount of the Accepted Note for which such calculation is being
made. In no case shall the Delayed Delivery Fee be less than zero. Nothing
contained herein shall obligate any Purchaser to purchase any Accepted Note on
any day other than the Closing Day for such Accepted Note, as the same may be
rescheduled from time to time in compliance with paragraph 2B(7).
2B(8)(iv). CANCELLATION FEE. If the Company at any time
notifies Prudential in writing that the Company is canceling the closing of the
purchase and sale of any Accepted Note, or if Prudential notifies the Company
in writing under the circumstances set forth in the last sentence of paragraph
2B(5) or the penultimate sentence of paragraph 2B(7) that the closing of the
purchase and sale of such Accepted Note is to be canceled, or if the closing of
the purchase and sale of such Accepted Note is not consummated on or prior to
the last day of the Issuance Period (the date of any such notification, or the
last day of the Issuance Period, as the case may be, being herein called the
"CANCELLATION DATE"), the Company will pay the Purchasers in immediately
available funds an amount (the "CANCELLATION FEE") calculated as follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as determined by
Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the bid
price (as determined by Prudential) of the Hedge Treasury Notes(s) on the
Acceptance Day for such Accepted Note by (b) such bid price; and "PA" has the
meaning ascribed to it in paragraph 2B(8)(iii). The foregoing bid and ask
prices shall be as reported by Telerate Systems, Inc. (or, if such data for any
reason ceases to be available through Telerate Systems, Inc., any publicly
available source of similar market data). Each price shall be based on a U.S.
Treasury security having a par value of $100.00 and shall be rounded to the
second decimal place. In no case shall the Cancellation Fee be less than zero.
3. CONDITIONS OF CLOSING. The obligation of any Purchaser to
purchase and pay for any Notes is subject to the satisfaction, on or before the
Closing Day for such Notes, of the following conditions:
3A. CERTAIN DOCUMENTS. Such Purchaser shall have received
the following, each dated the date of the applicable Closing Day:
(i) The Note(s) to be purchased by such Purchaser.
6
<PAGE> 12
(ii) Certified copies of the resolutions of the Board of
Directors of the Company authorizing the execution and delivery of
this Agreement and the issuance of the Notes, and of all documents
evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement and the Notes.
(iii) A certificate of the Secretary or an Assistant
Secretary and one other officer of the Company certifying the names
and true signatures of the officers of the Company authorized to sign
this Agreement and the Notes and the other documents to be delivered
hereunder.
(iv) Certified copies of the Certificate of Incorporation
and By-laws of the Company.
(v) A favorable opinion of Thompson Hine & Flory L.L.P.,
counsel to the Company (or such other counsel designated by the Company
and acceptable to the Purchaser(s)) satisfactory to such Purchaser and
substantially in the form of Exhibit D-1 (in the case of the Initial
Notes) or D-2 (in the case of any Shelf Notes) attached hereto and as
to such other matters as such Purchaser may reasonably request. The
Company hereby directs each such counsel to deliver such opinion,
agrees that the issuance and sale of any Notes will constitute a
reconfirmation of such direction, and understands and agrees that each
Purchaser receiving such an opinion will and is hereby authorized to
rely on such opinion.
(vi) A good standing certificate for the Company from the
Secretary of State of Delaware dated of a recent date and such other
evidence of the status of the Company as such Purchaser may reasonably
request.
(vii) Certified copies of Requests for Information or Copies
(Form UCC-11) or equivalent reports listing all effective financing
statements which name the Company or any Subsidiary (under its present
name and previous names) as debtor and which are filed in the office
of the Secretary of State of Tennessee and, in the case of Big O, in
the offices of the Secretaries of State of Colorado, Idaho and Indiana
together with copies of such financing statements.
(viii) Additional documents or certificates with respect to
legal matters or corporate or other proceedings related to the
transactions contemplated hereby as may be reasonably requested by
such Purchaser.
3B. OPINION OF PURCHASER'S SPECIAL COUNSEL. Such Purchaser
shall have received from Sabrina M. Coughlin, Assistant General Counsel of
Prudential or such other counsel who is acting as special counsel for it in
connection with this transaction, a favorable opinion satisfactory to such
Purchaser as to such matters incident to the matters herein contemplated as it
may reasonably request.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The
representations and warranties contained in paragraph 8 shall be true on and as
of such Closing Day, except to the extent of changes caused by the transactions
herein contemplated; there shall exist on such
7
<PAGE> 13
Closing Day no Event of Default or Default; and the Company shall have
delivered to such Purchaser an Officer's Certificate, dated such Closing Day,
to both such effects.
3D. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of
and payment for the Notes to be purchased by such Purchaser on the terms and
conditions herein provided (including the use of the proceeds of such Notes by
the Company) shall not violate any applicable law or governmental regulation
(including, without limitation, Section 5 of the Securities Act or Regulation
G, T or X of the Board of Governors of the Federal Reserve System) and shall
not subject such Purchaser to any tax, penalty, liability or other onerous
condition under or pursuant to any applicable law or governmental regulation,
and such Purchaser shall have received such certificates or other evidence as
it may request to establish compliance with this condition.
3E. PAYMENT OF FEES. The Company shall have paid to
Prudential any fees due it pursuant to or in connection with this Agreement,
including any Facility Fee due pursuant to paragraph 2B(8)(i), any Issuance Fee
due pursuant to paragraph 2B(8)(ii) and any Delayed Delivery Fee due pursuant
to paragraph 2B(8)(iii).
3F. CLOSING OF ACQUISITION. With respect to the Initial
Closing only, Prudential shall have received (i) a fully-executed copy of the
Acquisition Agreement and a copy of each other document related thereto which
Prudential shall have requested, in each case certified as true and correct by
the Secretary or an Assistant Secretary of the Company, and (ii) evidence
satisfactory to it that the acquisition by the Company of Big O has been
consummated pursuant to the terms of the Acquisition Agreement.
4. PREPAYMENTS. The Initial Notes and any Shelf Notes shall
be subject to required prepayment as and to the extent provided in paragraphs
4A and 4B, respectively. The Initial Notes and any Shelf Notes shall also be
subject to prepayment under the circumstances set forth in paragraph 4C. Any
prepayment made by the Company pursuant to any other provision of this
paragraph 4 shall not reduce or otherwise affect its obligation to make any
required prepayment as specified in paragraph 4A or 4B.
4A. REQUIRED PREPAYMENTS OF INITIAL NOTES.
4A(1) SERIES A NOTES. Until the Series A Notes shall be
paid in full, the Company shall apply to the prepayment of the Series A Notes,
without Yield-Maintenance Amount, the sum of $6,500,000 on July 10 in each of
the years 1999 through and including 2002, and such principal amounts of the
Series A Notes, together with interest thereon to the payment dates, shall
become due on such payment dates. The remaining unpaid principal amount of the
Series A Notes, together with interest accrued thereon, shall become due on the
maturity date of the Series A Notes.
4A(2) SERIES B NOTES. Until the Series B Notes shall be
paid in full, the Company shall apply to the prepayment of the Series B Notes,
without Yield-Maintenance Amount, the sum of $5,500,000 on July 10, 2004, and
such principal amount of the Series B Notes, together with interest thereon to
the payment dates, shall become due on such payment
8
<PAGE> 14
dates. The remaining unpaid principal amount of the Series B Notes, together
with interest accrued thereon, shall become due on the maturity date of the
Series B Notes.
4A(3) SERIES C NOTES. Until the Series C Notes shall be
paid in full, the Company shall apply to the prepayment of the Series C Notes,
without Yield-Maintenance Amount, the sum of $5,500,000 on July 10 in each of
the years 2006 and 2007, such principal amounts of the Series C Notes, together
with interest thereon to the payment dates, shall become due on such payment
dates. The remaining unpaid principal amount of the Series C Notes, together
with interest accrued thereon, shall become due on the maturity date of the
Series C Notes.
4B. REQUIRED PREPAYMENTS OF SHELF NOTES. Each Series of
Shelf Notes shall be subject to required prepayments, if any, set forth in the
Notes of such Series.
4C. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The
Notes shall be subject to prepayment, in whole at any time or from time to time
in part (in integral multiples of $100,000 and in a minimum amount of
$1,000,000), at the option of the Company, at 100% of the principal amount so
prepaid plus interest thereon to the prepayment date and the Yield-Maintenance
Amount, if any, with respect to each such Note. Any partial prepayment of the
Notes pursuant to this paragraph 4C shall be applied in satisfaction of
required payments of principal in inverse order of their scheduled due dates.
4D. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give
the holder of each Note to be prepaid pursuant to paragraph 4C irrevocable
written notice of such prepayment not less than 10 Business Days prior to the
prepayment date, specifying such prepayment date, the aggregate principal
amount of the Notes to be prepaid on such date, the principal amount of the
Notes held by such holder to be prepaid on that date and that such prepayment
is to be made pursuant to paragraph 4C. Notice of prepayment having been given
as aforesaid, the principal amount of the Notes specified in such notice,
together with interest thereon to the prepayment date and together with the
Yield-Maintenance Amount, if any, herein provided, shall become due and payable
on such prepayment date. The Company shall, on or before the day on which it
gives written notice of any prepayment pursuant to paragraph 4C, give
telephonic notice of the principal amount of the Notes to be prepaid and the
prepayment date to each Significant Holder which shall have designated a
recipient for such notices in the Purchaser Schedule attached hereto or the
applicable Confirmation of Acceptance or by notice in writing to the Company.
4E. APPLICATION OF REQUIRED PREPAYMENTS. In the case of
each prepayment of less than the entire unpaid principal amount of all
outstanding Notes of any Series pursuant to paragraphs 4A or 4B, the amount to
be prepaid shall be applied pro rata to all outstanding Notes of such Series
(including, for the purpose of this paragraph 4E only, all Notes prepaid or
otherwise retired or purchased or otherwise acquired by the Company or any of
its Subsidiaries or Affiliates other than by prepayment pursuant to paragraph
4A, 4B or 4C) according to the respective unpaid principal amounts thereof.
4F. APPLICATION OF OPTIONAL PREPAYMENTS. In the case of
each prepayment pursuant to paragraph 4C of less than the entire unpaid
principal amount of all outstanding Notes, the amount to be prepaid shall be
applied pro rata to all outstanding Notes of all Series
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<PAGE> 15
(including, for the purpose of this paragraph 4F only, all Notes prepaid or
otherwise retired or purchased or otherwise acquired by the Company or any of
its Subsidiaries or Affiliates other than by prepayment pursuant to paragraph
4A, 4B or 4C) according to the respective unpaid principal amounts thereof.
4G. NO ACQUISITION OF NOTES. The Company shall not, and
shall not permit any of its Subsidiaries or Affiliates to, prepay or otherwise
retire in whole or in part prior to their stated final maturity (other than by
prepayment pursuant to paragraphs 4A, 4B or 4C or upon acceleration of such
final maturity pursuant to paragraph 7A), or purchase or otherwise acquire,
directly or indirectly, Notes held by any holder.
5. AFFIRMATIVE COVENANTS. During the Issuance Period and so
long thereafter as any Note is outstanding and unpaid, the Company covenants as
follows:
5A. FINANCIAL STATEMENTS; NOTICE OF DEFAULTS. The Company
covenants that it will deliver to each holder of any Notes in duplicate:
(i) as soon as practicable and in any event within 45 days
after the end of each quarterly period (other than the last quarterly
period) in each fiscal year, consolidating and consolidated statements
of income and cash flows and a consolidated statement of shareholders'
equity of the Company and its Subsidiaries for the period from the
beginning of the current fiscal year to the end of such quarterly
period, and a consolidating and consolidated balance sheet of the
Company and its Subsidiaries as at the end of such quarterly period,
setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable
detail and certified by an authorized financial officer of the
Company, subject to changes resulting from year-end adjustments;
provided, however, that delivery pursuant to clause (iii) below of
copies of the Quarterly Report on Form 10-Q of the Company for such
quarterly period filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements of this clause (i) with
respect to consolidated statements;
(ii) as soon as practicable and in any event within 90 days
after the end of each fiscal year, consolidating and consolidated
statements of income and cash flows and a consolidated statement of
shareholders' equity of the Company and its Subsidiaries for such year,
and a consolidating and consolidated balance sheet of the Company and
its Subsidiaries as at the end of such year, setting forth in each case
in comparative form corresponding consolidated figures from the
preceding annual audit, all in reasonable detail and satisfactory in
form to the Required Holder(s) and, as to the consolidated statements,
reported on by independent public accountants of recognized national
standing selected by the Company whose report shall be without
limitation as to scope of the audit and satisfactory in substance to
the Required Holder(s) and, as to the consolidating statements,
certified by an authorized financial officer of the Company; provided,
however, that delivery pursuant to clause (iii) below of copies of the
Annual Report on Form 10-K of the Company for such fiscal year filed
with the Securities and Exchange Commission shall be deemed to satisfy
the requirements of this clause (ii) with respect to consolidated
statements;
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(iii) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it
shall send to its public stockholders and copies of all registration
statements (without exhibits) and all reports which it files with the
Securities and Exchange Commission (or any governmental body or agency
succeeding to the functions of the Securities and Exchange
Commission);
(iv) promptly upon receipt thereof, a copy of each other
report submitted to the Company or any Subsidiary by independent
accountants in connection with any annual, interim or special audit
made by them of the books of the Company or any Subsidiary; and
(v) with reasonable promptness, such other financial data as
such holder may reasonably request.
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Company will deliver to each holder of any Notes an Officer's
Certificate demonstrating (with computations in reasonable detail) compliance
by the Company and its Subsidiaries with the provisions of paragraphs 6A,
6B(1), 6B(2), 6B(3) and 6B(6) and stating that there exists no Event of Default
or Default, or, if any Event of Default or Default exists, specifying the
nature and period of existence thereof and what action the Company proposes to
take with respect thereto. Together with each delivery of financial statements
required by clause (ii) above, the Company will deliver to each holder of any
Notes a certificate of such accountants stating that, in making the audit
necessary for their report on such financial statements, they have obtained no
knowledge of any Event of Default or Default, or, if they have obtained
knowledge of any Event of Default or Default, specifying the nature and period
of existence thereof. Such accountants, however, shall not be liable to anyone
by reason of their failure to obtain knowledge of any Event of Default or
Default which would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards.
The Company also covenants that as soon as practicable and in
any event no later than the Business Day immediately following any day on which
any Responsible Officer obtains knowledge of an Event of Default or Default, it
will deliver to each holder of any Notes an Officer's Certificate specifying
the nature and period of existence thereof and what action the Company proposes
to take with respect thereto.
5B. INFORMATION REQUIRED BY RULE 144A. The Company
covenants that it will, upon the request of the holder of any Note, provide
such holder, and any qualified institutional buyer designated by such holder,
such financial and other information as such holder may reasonably determine to
be necessary in order to permit compliance with the information requirements of
Rule 144A under the Securities Act in connection with the resale of Notes,
except at such times as the Company is subject to and in compliance with the
reporting requirements of section 13 or 15(d) of the Exchange Act. For the
purpose of this paragraph 5B, the term "QUALIFIED INSTITUTIONAL BUYER" shall
have the meaning specified in Rule 144A under the Securities Act.
5C. INSPECTION OF PROPERTY. The Company covenants that it
will permit any Person designated by any Significant Holder in writing, at such
Significant Holder's expense, to
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visit and inspect any of the properties of the Company and its Subsidiaries, to
examine the corporate books and financial records of the Company and its
Subsidiaries and make copies thereof or extracts therefrom and to discuss the
affairs, finances and accounts of any of such corporations with the principal
officers of the Company and its independent public accountants, all at such
reasonable times and as often as such Significant Holder may reasonably
request.
5D. COVENANT TO SECURE NOTES EQUALLY. The Company covenants
that, if it or any Subsidiary shall create or assume any Lien upon any of its
property or assets, whether now owned or hereafter acquired, other than Liens
permitted by the provisions of paragraph 6B (unless prior written consent to
the creation or assumption thereof shall have been obtained pursuant to
paragraph 11C), it will make or cause to be made effective provision whereby
the Notes will be secured by such Lien equally and ratably with any and all
other Debt thereby secured so long as any such other Debt shall be so secured.
5E. COVENANT REGARDING GUARANTEES. The Company covenants
that if any Person (other than a Subsidiary) provides a Guarantee of any Debt
of the Company, it will cause such Person to Guarantee the Notes equally and
ratably with such other Debt for so long as such other Debt is guaranteed;
provided, that the provision of any such Guarantee with respect to the Notes
shall not in any way limit or modify the rights of the holders of the Notes to
enforce the provisions of paragraph 6B(2); it being understood that any
Guarantee by a Subsidiary of any Debt of the Company must comply with the
provisions of paragraph 6B(2).
5F. MAINTENANCE OF INSURANCE. The Company covenants that it
and each of its Subsidiaries will maintain, with responsible insurers,
insurance with respect to its properties and business against such casualties,
liabilities, risks, contingencies and hazards (including, but not limited to,
product liability, public liability and business interruption) and in such
amounts as is customary in the case of similarly situated corporations engaged
in the same or similar businesses and together with each delivery of financial
statements under clause (ii) of paragraph 5A, it will deliver an Officers'
Certificate specifying the details of such insurance in effect. Insurance
required by this paragraph 5F shall be with insurers rated A or better by A.M.
Best Company (or accorded a similar rating by another nationally or
internationally recognized insurance rating agency of similar standing if A.M.
Best Company is not then in the business of rating insurers or rating foreign
insurers) or such other insurers as may from time to time be reasonably
acceptable to the Required Holders.
5G. MAINTENANCE OF PROPERTIES; COMPLIANCE WITH LAWS. The
Company covenants that it and each Subsidiary will (i) (A) maintain or cause to
be maintained in good repair, working order and condition, reasonable wear and
tear excepted, all properties necessary at that time in its business, and (B)
from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof and; and (ii) comply with all applicable (A)
laws (including Environmental and Safety Laws) rules, regulations, decrees and
orders of all Federal, state, local or foreign courts or governmental agencies,
authorities, instrumentalities or regulatory bodies and (B) rules, regulations
and requirements necessary to maintain its operating and business licenses,
authorizations and permits, noncompliance with which could reasonably be
expected to result in a Material Adverse Effect.
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5H. ERISA. In the event it or any Subsidiary has
participated, now participates or will participate in any Plan or Multiemployer
Plan, the Company covenants that it and any such Subsidiary will deliver to
each holder of any Note: (i) promptly and in any event within 10 days after it
knows or has reason to know of the occurrence of a reportable event (as defined
in section 4043(b) of ERISA and the regulations thereunder) with respect to a
Plan, a copy of any materials required to be filed with the PBGC with respect
to such reportable event, together with a statement of the chief financial
officer of the Company setting forth details as to such reportable event and
the action which the Company proposes to take with respect thereto; (ii) at
least 10 days prior to the filing by any plan administrator of a Plan which is
a defined benefit plan subject to Title IV of ERISA of a notice of intent to
terminate such Plan, a copy of such notice; (iii) promptly upon the reasonable
request of a Significant Holder, and in no event more than 10 days after such
request, copies of each annual report on Form 5500 that is filed with the
Internal Revenue Service, together with certified financial statements for the
Plan (if any) as of the end of such year and actuarial statements on Schedule B
to such Form 5500; (iv) promptly and in any event within 10 days after it knows
or has reason to know of any event or condition which might constitute grounds
under section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, a statement of the chief financial officer of
the Company describing such event or condition; (v) promptly and in no event
more than 10 days after its or any ERISA Affiliate's receipt thereof, the
notice concerning the imposition of any withdrawal liability under section 4202
of ERISA; and (vi) promptly after receipt thereof, a copy of any notice the
Company or any ERISA Affiliate may receive from the PBGC or the Internal
Revenue Service with respect to any Plan or Multiemployer Plan; provided,
however, that this paragraph 5H shall not apply to notices of general
application promulgated by the PBGC or the Internal Revenue Service.
5I. ENVIRONMENTAL AND SAFETY LAWS. The Company covenants
that it will, and will cause each Subsidiary to, deliver promptly to you any
notice of (i) any material enforcement, cleanup, removal or other material
governmental or regulatory actions instituted, completed or, to the Company's
best knowledge, threatened pursuant to any Environmental and Safety Laws; (ii)
all material Environmental Costs and Liabilities against or in respect of the
Company, any Subsidiary or any real property of the Company or its
Subsidiaries; and (iii) the Company's or any Subsidiary's discovery of any
occurrence or condition on any real property adjoining or in the vicinity of
any real property of the Company or its Subsidiaries that such Company or
Subsidiary has reason to believe could cause the Company's or a Subsidiary's
property or any material part thereof to be subject to any material
restrictions on its ownership, occupancy, transferability or use under any
Environmental and Safety Laws which restrictions could have a Material Adverse
Effect.
5J. CORPORATE EXISTENCE, ETC.; BUSINESS. The Company
covenants that it will, and will cause all its Subsidiaries to, preserve and
keep in full force and effect at all times its corporate existence, and
permits, licenses, franchises and other rights material to its business, except
that the corporate existence of any Subsidiary may be terminated if, in the
good faith judgment of the Board of Directors of the Company, such termination
is in the best interest of the Company and is not disadvantageous to the
holders of the Notes. The Company covenants that it will not, and will not
permit any Subsidiary to, engage in any business which, in the aggregate with
all other unrelated businesses, is material to the Company and its Subsidiaries
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<PAGE> 19
taken as a whole, other than the businesses conducted by the Company and its
Subsidiaries (including Big O) on the date hereof and any other business
substantially related thereto.
5K. PAYMENT OF TAXES AND CLAIMS. The Company covenants that
it will, and will cause each Subsidiary to, pay (i) all taxes, assessments and
other governmental charges imposed upon it or any of its properties or assets
or in respect of any of its franchises, business, income or profits before any
penalty or interest accrues thereon, and (ii) all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums that
have become due and payable and (a) which by law have or might become a Lien
upon any of its properties or assets or (b) where the failure to pay could have
a Material Adverse Effect; provided, that with respect to all of the above no
such charge or claim need be paid if subject to a Good Faith Contest.
5L. PARI PASSU RANKING. The Notes shall at all times rank
pari passu, without preference or priority, with all other outstanding,
unsecured, unsubordinated obligations of the Company, present and future, that
have not been accorded by law preferential rights.
6. NEGATIVE COVENANTS. During the Issuance Period and so
long thereafter as any Note or other amount due hereunder is outstanding and
unpaid, the Company covenants as follows:
6A. FINANCIAL COVENANTS. The Company will not permit:
6A(1). WORKING CAPITAL. The ratio of Consolidated Current
Assets to Consolidated Current Liabilities to be less than 1.75 to 1.0 at any
time.
6A(2). INTEREST EXPENSE COVERAGE. The ratio of EBITDA to
Interest Expense to be less than 3.50 to 1.0 at any time, in each case for the
most recent four fiscal quarter period then ended.
6A(3). CONSOLIDATED TANGIBLE NET WORTH. Consolidated
Tangible Net Worth at any time to be less than $65,000,000 plus, on a
cumulative basis, the sum of (i) 50% of positive Consolidated Net Income in
each fiscal year commencing with the fiscal year ended December 31, 1996, and
(ii) 100% of the net proceeds from the issuance and sale of Qualified Stock
after the date hereof, except pursuant to employee stock option, stock
appreciation and similar stock- based incentive plans applicable to directors
and employees of the Company existing on the date hereof and listed on Schedule
6C hereof. For further clarification, in no event will the minimum
Consolidated Tangible Net Worth required to be maintained in the previous
sentence be reduced by the amount of any net loss or deficit in any fiscal
quarter.
6B. LIEN, DEBT, AND OTHER RESTRICTIONS. The Company will
not and will not permit any Subsidiary to:
6B(1). LIENS. Create, assume or suffer to exist any Lien
upon any of its properties or assets, whether now owned or hereafter acquired,
or any income, participation,
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royalty or profits therefrom (whether or not provision is made for the equal
and ratable securing of the Notes in accordance with the provisions of
paragraph 5C), except:
(i) Liens for taxes, assessments or other governmental levies
or charges not yet due or which are subject to a Good Faith Contest;
(ii) statutory Liens of landlords and Liens of carriers,
contractors, warehousemen, mechanics and materialmen incurred in the
ordinary course of business for sums not yet due or which are subject
to a Good Faith Contest;
(iii) Liens on property or assets of a Subsidiary to secure
obligations of such Subsidiary to the Company or a wholly-owned
Subsidiary,
(iv) Liens (other than any Lien imposed by ERISA) incurred, or
deposits made, in the ordinary course of business (A) in connection
with workers' compensation, unemployment insurance, old age benefit
and other types of social security, (B) to secure (or to obtain
letters of credit that secure) the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, performance bonds,
purchase, construction, government or sales contracts and other
similar obligations or (C) otherwise to satisfy statutory or legal
obligations; provided, that in each such case such Liens (1) were not
incurred or made in connection with the incurrence or maintenance of
Indebtedness, the borrowing of money, the obtaining of advances or
credit, and (2) do not in the aggregate materially detract from the
value of the property or assets so encumbered or materially impair the
use thereof in the operation of its business;
(v) Liens in existence on the date hereof as set forth on
Schedule 6B(1) hereto;
(vi) any Lien renewing, extending or refunding any Lien
permitted by clause (v) above, provided that the amount secured is not
increased over the amount of such Debt outstanding immediately prior
to such renewal, extension or refunding, and such Lien is not extended
to any other property or assets and immediately after such renewal,
extension or refunding no Default or Event of Default shall exist;
(vii) minor survey exceptions or minor encumbrances, easements
or reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to use of
real property, that are necessary for the conduct of the operations of
the Company and its Subsidiaries or that customarily exist on
properties of corporations engaged in similar businesses and are
similarly situated and that do not in any event materially impair
their use in the operations of the Company and its Subsidiaries;
(viii) Liens that constitute rights of set-off of a customary
nature in accounts maintained with, or cash collateral accounts in
respect of letter of credit facilities established by, any bank which
is a party to a Sharing Agreement, which Sharing Agreement expressly
covers such rights of set-off and cash collateral accounts and shares
such Liens with the holders of the Notes pursuant to the terms of such
Sharing Agreement; and
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(ix) Liens on properties or assets of the Company or any
Subsidiary other than those described in clauses (i) - (viii) above
that secure Debt permitted by paragraph 6B(2); provided that (A) after
giving effect to such Liens, the Company and the Subsidiaries are in
compliance with the provisions of clauses (C), (D) and (E) of paragraph
6B(2)(iii), (B) in no event shall the Company permit any Lien to exist
at any time on any of its current assets, and (C) no Default or Event
of Default shall exist.
6B(2). DEBT. Create, incur, assume or suffer to exist any
Debt, except
(i) Debt of any Subsidiary to the Company or a wholly-owned
Subsidiary,
(ii) notwithstanding any restriction contained in clause
(iii)(D) or (E) below, Permitted Subsidiary Debt (it being understood
that any renewal, extension, replacement or refunding of such
Permitted Subsidiary Debt must comply with the provisions of clauses
(iii)(D) and (E) below),
(iii) other Funded Debt of the Company (other than Debt to
any Subsidiary) and Subsidiaries, provided that
(A) the aggregate principal amount of all Funded Debt of
the Company (including the Notes) and Subsidiaries on a
consolidated basis shall not exceed 55% of Consolidated
Capitalization at any time;
(B) the aggregate principal amount of all Adjusted Funded
Debt of the Company (including the Notes) and Subsidiaries on
a consolidated basis shall not exceed 45% of Adjusted
Consolidated Capitalization at any time;
(C) the aggregate principal amount of all Company Secured
Debt shall not exceed 5% of Consolidated Tangible Net Worth at
any time;
(D) the aggregate principal amount of all Total Priority
Debt less the amount of all Permitted Subsidiary Guarantees
shall not exceed 15% of Consolidated Tangible Assets at any
time; and
(E) the aggregate principal amount of all Adjusted
Subsidiary Debt less Excluded Subsidiary Debt plus the amount
of all Restricted Subsidiary Guarantees shall not exceed 5% of
Consolidated Tangible Net Worth at any time;
; 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) 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.
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(iv) Current Debt of the Company and Subsidiaries; provided
that the Company will not guarantee any Current Debt of a Subsidiary.
6B(3). LOANS, ADVANCES, INVESTMENTS AND CONTINGENT
LIABILITIES. Make or permit to remain outstanding any loan or advance to, or
extend credit other than credit extended in the normal course of business to
any Person who is not an Affiliate of the Company to, or Guarantee, directly or
indirectly, in connection with the stock or dividends of, or own, purchase or
acquire any stock, or equity securities of, or any other interest in, or make
any capital contribution to, any Person (all of the foregoing collectively
being "INVESTMENTS"), except:
(i) loans or advances to any wholly-owned Subsidiary,
(ii) stock, obligations or other securities of a wholly-owned
Subsidiary or a corporation which immediately after the purchase or
acquisition of such stock, obligations or other securities will be a
wholly-owned Subsidiary,
(iii) obligations backed by the full faith and credit of the
United States Government (whether issued by the United States
Government or an agency thereof), and obligations guaranteed by the
United States Government, in each case which mature within one year
from the date acquired;
(iv) (A) demand and time deposits with, Eurodollar deposits
with or certificates of deposit issued by or (B) bankers' acceptances
eligible for rediscount under requirements of The Board of Governors
of the Federal Reserve System that are accepted by, any commercial
bank or trust company (1) organized under the laws of the United
States or any of its states or having branch offices therein, (2)
having equity capital in excess of $250,000,000 and (3) who issues
either (x) senior debt securities rated A or better by S&P or A2 or
better by Moody's or (y) commercial paper rated A-1 by S&P or Prime-1
by Moody's (or, in either case if such commercial paper is not rated
by S&P or Moody's, an equivalent rating from another nationally
recognized credit rating agency), in each case payable in the United
States in United States dollars, in each case which mature within 270
days from the date acquired;
(v) the loans, investments and advances existing as of the
date hereof and listed on Schedule 6B(3) hereto;
(vi) extended payment terms granted to, and evidenced by notes
payable of, customers of the Company or any Subsidiary, provided that
such customers are not Affiliates of the Company and that the
aggregate amount of all such Investments permitted pursuant to this
clause (vi) shall not exceed $3,000,000 at any time outstanding;
(vii) repurchase agreements for terms of less than 30 days
with any commercial bank (1) organized under the laws of the United
States or any of its states or having branch offices therein, (2)
having equity capital in excess of $250,000,000 and (3) who issues
either (x) senior debt securities rated A or better by S&P or A2 or
better by Moody's or (y) commercial paper rated A-1 by S&P or Prime-1
by Moody's (or, in either case if such commercial paper is not rated
by S&P or Moody's, an equivalent rating from
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<PAGE> 23
another nationally recognized credit rating agency), provided that
such repurchase agreements are secured and collateralized by
obligations backed by the full faith and credit of the United States
Government in aggregate face amount equal to or greater than the
obligations so secured; and
(viii) Investments other than those set forth in the
preceding clauses (i) - (vii) of this definition; provided that the
aggregate amount of such Investments, valued at the greater of the
original cost or fair market value thereof, shall not exceed 10% of
Consolidated Tangible Net Worth at any time.
Notwithstanding the foregoing, no Subsidiary shall make any
loan or advance to, or acquire any stock, obligations or securities
of, the Company, except, with respect to loans or advances, pursuant
to a subordination agreement in form and substance satisfactory to the
Required Holders.
6B(4). SALE OF STOCK AND DEBT OF SUBSIDIARIES. Sell or
otherwise dispose of, or part with control of, any shares of stock or Debt of
any Subsidiary and no Subsidiary shall issue or sell stock or Debt, except (i)
to the Company or a wholly-owned Subsidiary, (ii) Debt of a Subsidiary
permitted by paragraph 6B(2) and (iii) that all shares of stock and Debt of any
Subsidiary at the time owned by or owed to the Company and all Subsidiaries may
be sold as an entirety for a cash consideration which represents the fair value
(as determined in good faith by the Board of Directors of the Company) at the
time of sale of the shares of stock and Debt so sold; provided that (i) such
sale or other disposition is treated as a transfer of assets of such Subsidiary
and is permitted by paragraph 6B(6) and (ii) at the time of such sale, such
Subsidiary shall not own, directly or indirectly, any shares of stock or Debt
of any other Subsidiary (unless all of the shares of stock and Debt of such
other Subsidiary owned, directly or indirectly, by the Company and all
Subsidiaries are simultaneously being sold as permitted by this Paragraph
6C(4)) or any Debt of the Company or any other Subsidiary;
6B(5). MERGER AND CONSOLIDATION. Merge or consolidate with
or into any other Person, except that:
(i) any wholly-owned Subsidiary may merge or consolidate
with or into the Company; provided that the Company is the
continuing or surviving corporation,
(ii) any Subsidiary may merge or consolidate with or into
a wholly-owned Subsidiary; provided that such wholly-owned
Subsidiary is the continuing or surviving corporation,
(iii) any Subsidiary may merge or consolidate with any
other solvent corporation, provided that, immediately after
giving effect to such merger or consolidation (a) a Subsidiary
shall be the continuing or surviving corporation and (b) no
Default or Event of Default exists or would exist after giving
effect to such merger or consolidation, and
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(iv) the Company may merge or consolidate with any other
solvent corporation, provided that (a) (1) the Company shall
be the continuing or surviving corporation or (2) the
continuing or surviving corporation is a corporation duly
organized and existing under the laws of any state of the
United States of America, the District of Columbia, Canada or
a province thereof, with substantially all of its assets
located and substantially all of its operations conducted
within the United States of America or Canada, and such
continuing or surviving corporation expressly assumes, by a
written agreement satisfactory in form and substance to the
Required Holders (which agreement may require, in connection
with such assumption, the delivery of such opinions of counsel
as the Required Holders may require), the obligations of the
Company under this Agreement and the Notes, and (b) no Default
or Event of Default exists or would exist immediately after
giving effect to such merger.
6B(6). TRANSFER OF ASSETS. Transfer any of its assets
except that:
(i) any Subsidiary may Transfer assets to the Company or
a wholly-owned Subsidiary,
(ii) the Company or any Subsidiary may sell inventory in
the ordinary course of business,
(iii) the Company may sell as an entirety 100% of the
stock or substantially all of the assets of Battery
Associates, Inc. and Northern States Tire, Inc. to any Person
for a purchase price approved in each case by the Board of
Directors of the Company,
(iv) the Company or Big O may, in the ordinary course of
its franchising business, sell Big O retail tire and auto
service stores to Big O's franchisees, and
(v) the Company or any Subsidiary may otherwise Transfer
assets, provided that after giving effect thereto (A) the sum
of (1) the book value of, or, if higher, the actual sales
proceeds received in respect of, each such asset plus (2) the
book value of, or, if higher, actual sales proceeds received
in respect of, all other assets Transferred pursuant to this
clause (v) during the then current fiscal year, shall not
exceed 5% of the Consolidated Tangible Assets of the Company
and (B) the aggregate book value of, or, if higher, actual
sales proceeds received in respect of, all assets Transferred
pursuant to this clause (v) since the date hereof, shall not
exceed 20% of Consolidated Tangible Assets; provided, however,
that the aggregate amount of any actual sales proceeds in
excess of book value shall be added to Consolidated Tangible
Assets for purposes of the calculations required in this
clause (v).
6B(7). SALE AND LEASE-BACK. Enter into any arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by the Company or any Subsidiary of real or personal property
which has been or is to be sold or transferred by the Company or any Subsidiary
to such lender or investor or to any Person to whom funds have
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been or are to be advanced by such lender or investor on the security of such
property or rental obligations of the Company or any Subsidiary unless (A) the
Transfer of such assets complies with paragraph 6B(6) and (B) such lease
obligations are capitalized and are treated as Debt under, and comply with,
paragraph 6B(2).
6C. RELATED PARTY TRANSACTIONS. The Company will not and
will not permit any Subsidiary to, directly or indirectly, purchase, acquire or
lease any property from, or sell, transfer or lease any property to, or
otherwise deal with, in the ordinary course of business or otherwise any
Related Party except in the ordinary course of business and upon terms that are
no less favorable to the Company or such Subsidiary, as the case may be, than
those that could be obtained in an arm's-length transaction with an unrelated
third party; provided that the foregoing shall not apply to (A) any transaction
between the Company and any wholly-owned Subsidiary or between wholly-owned
Subsidiaries, (B) sales to, or purchases from, any such Related Party of shares
of Qualified Stock (provided that, except pursuant to employee stock option,
stock appreciation and similar stock-based incentive plans applicable to
directors and employees of the Company existing on the date hereof and listed
on Schedule 6C hereof, the consideration shall equal the fair market value
thereof), (C) any transaction between the Company or any wholly-owned
Subsidiary and TBC de Mexico, a Mexican variable capital corporation, or TBC
Worldwide, a Delaware limited liability company, and (D) transactions between
Big O and any joint venture established by Big O in the ordinary course of
business.
6D. NEW BANK FACILITIES. The Company covenants that, after
the date hereof, it will not enter into the proposed $30,000,000 long term
credit agreement and the $48,500,000 revolving credit facility (collectively,
for the purposes of this paragraph 6D, the "Credit Agreements"), each between
the Company, First Tennessee Bank, National Association, as administrative
agent and lender, NBD Bank, as co-agent and lender, and each of the other
lending institutions party thereto (collectively, for the purposes of this
paragraph 6D, the "Lenders") or, in the event that the Company does not enter
into the Credit Agreements with the Lenders, any long term or revolving credit
facility in replacement of the Credit Agreements, unless the form of the Credit
Agreements governing such bank facilities or the agreements relating to any
such replacement facilities, as the case may be, and all instruments evidencing
the Indebtedness incurred thereunder are in form and substance satisfactory to
the Required Holders. In addition to the restriction contained in the
immediately preceding sentence, the Company further covenants that the Company
will cause (a) each Subsidiary, if any, which guarantees the Debt of the
Company under the Credit Agreements to execute and deliver to Prudential a
Subsidiary Guarantee, together with such officers' certificates, good standing
certificates and opinions of counsel as the Required Holders may reasonably
request, and (b) the Lenders to execute and deliver to Prudential a
fully-executed Sharing Agreement between Prudential and the Lenders.
6E. SUBSIDIARY GUARANTEES. The Company will not permit any
Subsidiary to guarantee any Debt of the Company unless (a) after giving effect
to such Guarantee, the Company is in compliance with each of clauses (D) and
(E) of paragraph 6B(2)(iii) or (b) the guaranteeing Subsidiary executes and
delivers to each holder of Notes a Subsidiary Guarantee together with such
officers' certificates, good standing certificates and opinions of counsel as
the Required Holders may reasonably request and the beneficiaries of such
Guarantee execute and deliver to each holder of Notes a fully-executed Sharing
Agreement.
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7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall
occur and be continuing for any reason whatsoever (and whether such occurrence
shall be voluntary or involuntary or come about or be effected by operation of
law or otherwise):
(i) the Company defaults in the payment of any principal of,
or Yield-Maintenance Amount payable with respect to, any Note when
the same shall become due, either by the terms thereof or otherwise as
herein provided; or
(ii) the Company defaults in the payment of any interest on
any Note for more than 5 days after the date due; or
(iii) the Company or any Subsidiary 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
(iv) any representation or warranty made by the Company
herein or by the Company or any of its officers in any writing
furnished in connection with or pursuant to this Agreement shall be
false in any material respect on the date as of which made; or
(v) the Company fails to perform or observe any agreement
contained in paragraph 6 and either (a) such failure is not remedied
within 2 days after any Responsible Officer obtains knowledge thereof
or (b) within such 2 day period, a holder of any Note gives the
Company a notice that such failure constitutes an Event of Default
hereunder; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure shall
not be remedied within 30 days after any Responsible Officer obtains
actual knowledge thereof; or
(vii) the Company or any Subsidiary makes an assignment for
the benefit of creditors or is generally not paying its debts as such
debts become due; or
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(viii) any decree or order for relief in respect of the
Company or any Subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law, whether now or
hereafter in effect (herein called the "BANKRUPTCY LAW"), of any
jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies to
any tribunal for, or consents to, the appointment of, or taking
possession by, a trustee, receiver, custodian, liquidator or similar
official of the Company or any Subsidiary, or of any substantial part
of the assets of the Company or any Subsidiary, or commences a
voluntary case under the Bankruptcy Law of the United States or any
proceedings (other than proceedings for the voluntary liquidation and
dissolution of a Subsidiary) relating to the Company or any Subsidiary
under the Bankruptcy Law of any other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary and
the Company or such Subsidiary by any act indicates its approval
thereof, consent thereto or acquiescence therein, or an order,
judgment or decree is entered appointing any such trustee, receiver,
custodian, liquidator or similar official, or approving the petition
in any such proceedings, and such order, judgment or decree remains
unstayed and in effect for more than 30 days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed and in
effect for more than 60 days: or
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary decreeing a split-up
of the Company or such Subsidiary which requires the divestiture of
assets representing a substantial part, or the divestiture of the
stock of a Subsidiary whose assets represent a substantial part, of
the consolidated assets of the Company and its Subsidiaries
(determined in accordance with generally accepted accounting
principles) or which requires the divestiture of assets, or stock of a
Subsidiary, which shall have contributed a substantial part of the
consolidated net income of the Company and its Subsidiaries
(determined in accordance with generally accepted accounting
principles) for any of the three fiscal years then most recently
ended, and such order, judgment or decree remains unstayed and in
effect for more than 60 days; or
(xiii) one or more final judgments in an aggregate amount in
excess of $5,000,000 is rendered against the Company or any Subsidiary
and, within 60 days after entry thereof, any such judgment is not
discharged or execution thereof stayed pending appeal, or within 60
days after the expiration of any such stay, such judgment is not
discharged; or
(xiv) (A) the Company or any ERISA Affiliate, in its capacity
as an employer under a Multiemployer Plan, makes a complete or partial
withdrawal from such Multiemployer Plan resulting in the incurrence by
such withdrawing employer of a withdrawal liability in an amount
exceeding $5,000,000; (B) any Plan shall fail to satisfy the minimum
funding standards of ERISA or the Code for any plan year or part
thereof or a waiver of such standards or extension of any amortization
period is sought or granted
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under section 412 of the Code; (C) a notice of intent to terminate
any Plan shall have been or is reasonably expected to be filed with
the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan
or the PBGC shall have notified the Company or any ERISA Affiliate
that a Plan may become a subject of such proceedings; (D) the
aggregate "amount of unfunded benefit liabilities" (within the meaning
of section 4001(a)(18) of ERISA) under all Plans, determined in
accordance with Title IV of ERISA, shall exceed $5,000,000; (E) the
Company or any ERISA Affiliate shall have incurred or is reasonably
expected to incur any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee
benefit plans; (F) the Company or any ERISA Affiliate withdraws from
any Multiemployer Plan; or (G) the Company or any Subsidiary
establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder; and any such
event or events described in clauses (B) through (G) above, either
individually or together with any other such event or events, could
reasonably be expected to have a Material Adverse Effect; or
(xv) after the date on which any Subsidiary issues a
Subsidiary Guarantee, such Subsidiary Guarantee 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 any such Subsidiary
Guarantee.
then (a) if such event is an Event of Default specified in clause (i) or (ii)
of this paragraph 7A, any holder of any Note may at its option during the
continuance of such Event of Default, by notice in writing to the Company,
declare all of the Notes held by such holder to be, and all of the Notes held
by such holder shall thereupon be and become, immediately due and payable at
par together with interest accrued thereon, without presentment, demand,
protest or notice of any kind, all of which are hereby waived by the Company,
(b) if such event is an Event of Default specified in clause (viii), (ix) or
(x) of this paragraph 7A with respect to the Company, all of the Notes at the
time outstanding shall automatically become immediately due and payable
together with interest accrued thereon and together with the Yield-Maintenance
Amount, if any, with respect to each Note, without presentment, demand, protest
or notice of any kind, all of which are hereby waived by the Company, and (c)
with respect to any event constituting an Event of Default, the Required
Holder(s) of the Notes of any Series may at its or their option during the
continuance of such Event of Default, by notice in writing to the Company,
declare all of the Notes of such Series to be, and all of the Notes of such
Series shall thereupon be and become, immediately due and payable together with
interest accrued thereon and together with the Yield-Maintenance Amount, if
any, with respect to each Note of such Series, without presentment, demand,
protest or notice of any kind, all of which are hereby waived by the Company.
7B. RESCISSION OF ACCELERATION. At any time after any or
all of the Notes of any Series shall have been declared immediately due and
payable pursuant to paragraph 7A, the Required Holder(s) of the Notes of such
Series may, by notice in writing to the Company, rescind and annul such
declaration and its consequences if (i) the Company shall have paid all overdue
interest on the Notes of such Series, the principal of and Yield-Maintenance
Amount, if any, payable with respect to any Notes of such Series which have
become due otherwise than by reason of such declaration, and interest on such
overdue interest and overdue principal and Yield-
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Maintenance Amount at the rate specified in the Notes of such Series, (ii) the
Company shall not have paid any amounts which have become due solely by reason
of such declaration, (iii) all Events of Default and Defaults, other than non-
payment of amounts which have become due solely by reason of such declaration,
shall have been cured or waived pursuant to paragraph 11C, and (iv) no judgment
or decree shall have been entered for the payment of any amounts due pursuant
to the Notes of such Series or this Agreement. No such rescission or annulment
shall extend to or affect any subsequent Event of Default or Default or impair
any right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note
shall be declared immediately due and payable pursuant to paragraph 7A or any
such declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
of each Series at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default
shall occur and be continuing, the holder of any Note may proceed to protect
and enforce its rights under this Agreement and such Note by exercising such
remedies as are available to such holder in respect thereof under applicable
law, either by suit in equity or by action at law, or both, whether for
specific performance of any covenant or other agreement contained in this
Agreement or in aid of the exercise of any power granted in this Agreement. No
remedy conferred in this Agreement upon the holder of any Note is intended to
be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy conferred herein or
now or hereafter existing at law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company
represents, covenants and warrants as follows (all references to "Subsidiary"
and "Subsidiaries" in this paragraph 8 shall be deemed omitted if the Company
has no Subsidiaries at the time the representations herein are made or
repeated) as of the date hereof and as of each Closing Day:
8A. ORGANIZATION. The Company is a corporation duly
organized and existing in good standing under the laws of the State of
Delaware, each Subsidiary (including Big O) is duly organized and existing in
good standing under the laws of the jurisdiction in which it is incorporated,
and the Company has and each Subsidiary has the corporate power to own its
respective property and to carry on its respective business as now being
conducted.
8B. FINANCIAL STATEMENTS. The Company has furnished each
Purchaser of any Notes with the following financial statements (other than
consolidating information referred to below for any period prior to June 30,
1996), identified by a principal financial officer of the Company: (i)
consolidating and consolidated balance sheets of the Company and its
Subsidiaries as at December 31 in each of the three fiscal years of the Company
most recently completed prior to the date as of which this representation is
made or repeated to such Purchaser (other than fiscal years completed within 90
days prior to such date for which audited financial statements have not been
released) and consolidating and consolidated statements of income and cash
flows and a consolidated statement of shareholders' equity of the Company and
its Subsidiaries for each such year, all consolidated statements being reported
on by Coopers & Lybrand and (ii) consolidating and consolidated balance sheets
of the Company and its Subsidiaries as at the end
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of the quarterly period (if any) most recently completed prior to such date and
after the end of such fiscal year (other than quarterly periods completed
within 60 days prior to such date for which financial statements have not been
released) and the comparable quarterly period in the preceding fiscal year and
consolidating and consolidated statements of income and cash flows and a
consolidated statement of shareholders' equity for the periods from the
beginning of the fiscal years in which such quarterly periods are included to
the end of such quarterly periods, prepared by the Company. Such financial
statements (including any related schedules and/or notes) are true and correct
in all material respects (subject, as to interim statements, to changes
resulting from audits and year-end adjustments), have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods involved and show all liabilities, direct and
contingent, of the Company and its Subsidiaries required to be shown in
accordance with such principles. The balance sheets fairly present the
condition of the Company and its Subsidiaries as at the dates thereof, and the
statements of income, stockholders' equity and cash flows fairly present the
results of the operations of the Company and its Subsidiaries and their cash
flows for the periods indicated. There has been no material adverse change in
the business, property or assets, condition (financial or otherwise),
operations or prospects of the Company and its Subsidiaries taken as a whole
since the end of the most recent fiscal year for which such audited financial
statements have been furnished.
8C. ACTIONS PENDING. There is no action, suit,
investigation or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, or any properties or
rights of the Company or any of its Subsidiaries, by or before any court,
arbitrator or administrative or governmental body which might result in any
material adverse change in the business, property or assets, condition
(financial or otherwise) or operations of the Company and its Subsidiaries
taken as a whole.
8D. OUTSTANDING DEBT. Neither the Company nor any of its
Subsidiaries has outstanding any Debt except as permitted by paragraph 6B(2).
There exists no default under the provisions of any instrument evidencing such
Debt or of any agreement relating thereto. Attached hereto as Schedule 8D is a
list of all Guarantees of the Company and each Subsidiary (as such Schedule 8D
may have been modified from time to time by written supplements thereto
delivered by the Company to Prudential).
8E. TITLE TO PROPERTIES. The Company has and each of its
Subsidiaries has good and indefeasible title to its respective real properties
(other than properties which it leases) and good title to all of its other
respective properties and assets, including the properties and assets reflected
in the most recent audited balance sheet referred to in paragraph 8B (other
than properties and assets disposed of in the ordinary course of business),
subject to no Lien of any kind except Liens permitted by paragraph 6B(1). All
leases necessary in any material respect for the conduct of the respective
businesses of the Company and its Subsidiaries are valid and subsisting and are
in full force and effect.
8F. TAXES. The Company has and each of its Subsidiaries
(other than Big O for periods prior to July 10, 1996) has filed all federal,
state and other income tax returns which, to the best knowledge of the officers
of the Company and its Subsidiaries, are required to be filed, and each has
paid all taxes as shown on such returns and on all assessments received by it
to the extent that such taxes have become due, except such taxes as are being
contested in good faith
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by appropriate proceedings for which adequate reserves have been established in
accordance with generally accepted accounting principles. For the periods
prior to July 10, 1996, Big O has and each of its Subsidiaries has filed all
federal, state and other income tax returns which, to the best knowledge of the
officers of the Company and its Subsidiaries, are required to be filed and
which the failure to file could have a Material Adverse Effect, and each has
paid all taxes as shown on such returns and on all assessments received by it
to the extent that such taxes have become due, except such taxes as are being
contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with generally accepted accounting
principles or which the failure to pay could not have a Material Adverse
Effect.
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the
Company nor any of its Subsidiaries is a party to any contract or agreement or
subject to any charter or other corporate restriction which materially and
adversely affects the business, property or assets, condition (financial or
otherwise) or operations of the Company and its Subsidiaries taken as a whole.
Neither the execution nor delivery of this Agreement or the Notes, nor the
offering, issuance and sale of the Notes, nor fulfillment of nor compliance
with the terms and provisions hereof and of the Notes will conflict with, or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the creation of any
Lien upon any of the properties or assets of the Company or any of its
Subsidiaries pursuant to, the charter or by-laws of the Company or any of its
Subsidiaries, any award of any arbitrator or any agreement (including any
agreement with stockholders), instrument, order, judgment, decree, statute,
law, rule or regulation to which the Company or any of its Subsidiaries is
subject. Neither the Company nor any of its Subsidiaries is a party to, or
otherwise subject to any provision contained in, any instrument evidencing
Indebtedness of the Company or such Subsidiary, any agreement relating thereto
or any other contract or agreement (including its charter) which limits the
amount of, or otherwise imposes restrictions on the incurring of, Debt of the
Company of the type to be evidenced by the Notes except as set forth in the
agreements listed in Schedule 8G attached hereto (as such Schedule 8G may have
been modified from time to time by written supplements thereto delivered by the
Company to Prudential).
8H. OFFERING OF NOTES. Neither the Company nor any agent
acting on its behalf has, directly or indirectly, offered the Notes or any
similar security of the Company for sale to, or solicited any offers to buy the
Notes or any similar security of the Company from, or otherwise approached or
negotiated with respect thereto with, any Person other than institutional
investors, and neither the Company nor any agent acting on its behalf has taken
or will take any action which would subject the issuance or sale of the Notes
to the provisions of Section 5 of the Securities Act or to the provisions of
any securities or Blue Sky law of any applicable jurisdiction.
8I. USE OF PROCEEDS. The proceeds of the Initial Notes will
be used to fund the acquisition of Big O pursuant to the Acquisition Agreement
through the purchase of outstanding public common stock, and to fund the
refinancing of certain existing Indebtedness of Big O. None of the proceeds of
the sale of any Notes will be used, directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of purchasing or carrying any
"margin stock" as defined in Regulation G (12 CFR Part 207) of the Board of
Governors of the Federal Reserve System (herein called "MARGIN STOCK") or for
the purpose of maintaining, reducing or retiring any
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<PAGE> 32
Indebtedness which was originally incurred to purchase or carry any stock that
is then currently a margin stock or for any other purpose which might
constitute the purchase of such Notes a "purpose credit" within the meaning of
such Regulation G, unless the Company shall have delivered to the Purchaser
which is purchasing such Notes, on the Closing Day for such Notes, an opinion
of counsel satisfactory to such Purchaser stating that the purchase of such
Notes does not constitute a violation of such Regulation G. Neither the
Company nor any agent acting on its behalf has taken or will take any action
which might cause this Agreement or the Notes to violate Regulation G,
Regulation T or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act, in each case as in effect now or
as the same may hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or not waived,
exists with respect to any Plan (other than a Multiemployer Plan). No
liability to the Pension Benefit Guaranty Corporation has been or is expected
by the Company or any ERISA Affiliate to be incurred with respect to any Plan
(other than a Multiemployer Plan) by the Company, any Subsidiary or any ERISA
Affiliate which is or would be materially adverse to the business, property or
assets, condition (financial or otherwise) or operations of the Company and its
Subsidiaries taken as a whole. Neither the Company, any Subsidiary nor any
ERISA Affiliate has incurred or presently expects to incur any withdrawal
liability under Title IV of ERISA with respect to any Multiemployer Plan which
is or would be materially adverse to the business, property or assets,
condition (financial or otherwise) or operations of the Company and its
Subsidiaries taken as a whole. The execution and delivery of this Agreement
and the issuance and sale of the Notes will be exempt from or will not involve
any transaction which is subject to the prohibitions of section 406 of ERISA
and will not involve any transaction in connection with which a penalty could
be imposed under section 502(i) of ERISA or a tax could be imposed pursuant to
section 4975 of the Code. The representation by the Company in the next
preceding sentence is made in reliance upon and subject to the accuracy of the
representation of each Purchaser in paragraph 9B as to the source of funds to
be used by it to purchase any Notes.
8K. GOVERNMENTAL CONSENT. Neither the nature of the Company
or of any Subsidiary, nor any of their respective businesses or properties, nor
any relationship between the Company or any Subsidiary and any other Person,
nor any circumstance in connection with the offering, issuance, sale or
delivery of the Notes is such as to require any authorization, consent,
approval, exemption or any action by or notice to or filing with any court or
administrative or governmental body (other than routine filings after the
Closing Day for any Notes with the Securities and Exchange Commission and/or
state Blue Sky authorities) in connection with the execution and delivery of
this Agreement, the offering, issuance, sale or delivery of the Notes or
fulfillment of or compliance with the terms and provisions hereof or of the
Notes.
8L. ENVIRONMENTAL COMPLIANCE. The Company and its
Subsidiaries and all of their respective properties and facilities have
complied at all times and in all respects with all foreign, federal, state,
local and regional statutes, laws, ordinances and judicial or administrative
orders, judgments, rulings and regulations relating to protection of the
environment except, in any such case, where failure to comply would not result
in a Material Adverse Effect.
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8M. DISCLOSURE. Neither this Agreement nor any other
document, certificate or statement furnished to any Purchaser by or on behalf
of the Company in connection herewith contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact
peculiar to the Company or any of its Subsidiaries which materially adversely
affects or in the future may (so far as the Company can now foresee) materially
adversely affect the business, property or assets, condition (financial or
otherwise) or operations of the Company or any of its Subsidiaries and which
has not been set forth in this Agreement.
8N. HOSTILE TENDER OFFERS. None of the proceeds of the sale
of any Notes will be used to finance a Hostile Tender Offer.
9. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser represents as follows:
9A. NATURE OF PURCHASE. Such Purchaser is not acquiring the
Notes purchased by it hereunder with a view to or for sale in connection with
any distribution thereof within the meaning of the Securities Act, provided
that the disposition of such Purchaser's property shall at all times be and
remain within its control.
9B. SOURCE OF FUNDS. No part of the funds used by such
Purchaser to pay the purchase price of the Notes purchased by such Purchaser
hereunder constitutes assets allocated to any separate account maintained by
such Purchaser in which any employee benefit plan, other than employee benefit
plans identified on a list which has been furnished by such Purchaser to the
Company, participates to the extent of 10% or more. For the purpose of this
paragraph 9B, the terms "SEPARATE ACCOUNT" and "EMPLOYEE BENEFIT PLAN" shall
have the respective meanings specified in section 3 of ERISA.
10. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of
this Agreement, the terms defined in paragraphs 10A and 10B (or within the text
of any other paragraph) shall have the respective meanings specified therein
and all accounting matters shall be subject to determination as provided in
paragraph 10C.
10A. YIELD-MAINTENANCE TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to paragraph 4C or is
declared to be immediately due and payable pursuant to paragraph 7A, as the
context requires.
"DESIGNATED SPREAD" shall mean .50% in the case of each
Initial Note and 0% in the case of each Note of any other Series unless the
Confirmation of Acceptance with respect to the Notes of such Series specifies a
different Designated Spread in which case it shall mean, with respect to each
Note of such Series, the Designated Spread so specified.
"DISCOUNTED VALUE" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such
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<PAGE> 34
Called Principal from their respective scheduled due dates to the Settlement
Date with respect to such Called Principal, in accordance with accepted
financial practice and at a discount factor (as converted to reflect the
periodic basis on which interest on such Note is payable, if payable other than
on a semi-annual basis) equal to the Reinvestment Yield with respect to such
Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called
Principal of any Note, the Designated Spread over the yield to maturity implied
by (i) the yields reported, as of 10:00 A.M. (New York City local time) on the
Business Day next preceding the Settlement Date with respect to such Called
Principal, on the display designated as "Page 678" on the Telerate Service (or
such other display as may replace page 678 on the Telerate Service) for
actively traded U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date, or
if such yields shall not be reported as of such time or the yields reported as
of such time shall not be ascertainable, (ii) the Treasury Constant Maturity
Series yields reported, for the latest day for which such yields shall have
been so reported as of the Business Day next preceding the Settlement Date with
respect to such Called Principal, in Federal Reserve Statistical Release H.15
(519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied yield
shall be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between yields reported for various
maturities.
"REMAINING AVERAGE LIFE" shall mean, with respect to the
Called Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each Remaining Scheduled
Payment of such Called Principal (but not of interest thereon) by (b) the
number of years (calculated to the nearest one-twelfth year) which will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due on or after the Settlement Date with respect
to such Called Principal if no payment of such Called Principal were made prior
to its scheduled due date.
"SETTLEMENT DATE" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to be prepaid
pursuant to paragraph 4A or is declared to be immediately due and payable
pursuant to paragraph 7A, as the context requires.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any
Note, an amount equal to the excess, if any, of the Discounted Value of the
Called Principal of such Note over the sum of (i) such Called Principal plus
(ii) interest accrued thereon as of (including interest due on) the Settlement
Date with respect to such Called Principal. The Yield-Maintenance Amount shall
in no event be less than zero.
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10B. OTHER TERMS.
"ACCEPTANCE" shall have the meaning specified in paragraph
2B(5).
"ACCEPTANCE DAY" shall have the meaning specified in paragraph
2B(5).
"ACCEPTANCE WINDOW" shall have the meaning specified in
paragraph 2B(5).
"ACCEPTED NOTE" shall have the meaning specified in paragraph
2B(5).
"ACQUISITION AGREEMENT" shall mean the Agreement and Plan of
Merger, dated as of April 30, 1996, among the Company, Big O and TBCO
Acquisition, Inc.
"ADJUSTED CONSOLIDATED CAPITALIZATION" shall mean, as at any
time of determination thereof, the sum of (i) shareholder's or stockholders'
equity and (ii) the aggregate Debt of the Company and Subsidiaries other than
Guarantees described in clause (vii) of the definition of Indebtedness.
"ADJUSTED FUNDED DEBT" shall mean all Funded Debt other than
Guarantees described in clause (vii) of the definition of Indebtedness.
"ADJUSTED SUBSIDIARY DEBT" shall mean all Funded Debt (whether
secured or unsecured) of any Subsidiary less Guarantees issued by any
Subsidiary described in clause (vii) of the definition of Indebtedness.
"AFFILIATE" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with,
the Company, except a Subsidiary. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract or
otherwise.
"AUTHORIZED OFFICER" shall mean (i) in the case of the
Company, its chief executive officer, its chief financial officer, any vice
president of the Company designated as an "Authorized Officer" of the Company
in the Information Schedule attached hereto or any vice president of the
Company designated as an "Authorized Officer" of the Company for the purpose of
this Agreement in an Officer's Certificate executed by the Company's chief
executive officer or chief financial officer and delivered to Prudential, and
(ii) in the case of Prudential, any officer of Prudential designated as its
"Authorized Officer" in the Information Schedule or any officer of Prudential
designated as its "Authorized Officer" for the purpose of this Agreement in a
certificate executed by one of its Authorized Officers. Any action taken under
this Agreement on behalf of the Company by any individual who on or after the
date of this Agreement shall have been an Authorized Officer of the Company and
whom Prudential in good faith believes to be an Authorized Officer of the
Company at the time of such action shall be binding on the Company even though
such individual shall have ceased to be an Authorized Officer of the Company,
and any action taken under this Agreement on behalf of Prudential by any
individual who on or after the date of this Agreement shall have been an
Authorized Officer of Prudential and whom the Company in good faith believes to
be an Authorized Officer of Prudential at the
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time of such action shall be binding on Prudential even though such individual
shall have ceased to be an Authorized Officer of Prudential.
"AVAILABLE FACILITY AMOUNT" shall have the meaning specified
in paragraph 2B(1).
"BANKRUPTCY LAW" shall have the meaning specified in clause
(viii) of paragraph 7A.
"BIG O" shall mean Big O Tires, Inc., a Nevada corporation.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or
a Sunday, (ii) a day on which commercial banks in New York City are required or
authorized to be closed and (iii) for purposes of paragraph 2B(3) hereof only,
a day on which The Prudential Insurance Company of America is not open for
business.
"CANCELLATION DATE" shall have the meaning specified in
paragraph 2B(8)(iv).
"CANCELLATION FEE" shall have the meaning specified in
paragraph 2B(8)(iv).
"CAPITALIZED LEASE OBLIGATION" shall mean any rental
obligation which, under generally accepted accounting principles, is or will be
required to be capitalized on the books of the Company or any Subsidiary, taken
at the amount thereof accounted for as indebtedness (net of interest expenses)
in accordance with such principles.
"CLOSING DAY" shall mean, with respect to the Initial Notes,
the Initial Closing Day and, with respect to any Accepted Note, the Business
Day specified for the closing of the purchase and sale of such Accepted Note in
the Request for Purchase of such Accepted Note, provided that (i) if the
Company and the Purchaser which is obligated to purchase such Accepted Note
agree on an earlier Business Day for such closing, the "CLOSING DAY" for such
Accepted Note shall be such earlier Business Day, and (ii) if the closing of
the purchase and sale of such Accepted Note is rescheduled pursuant to
paragraph 2B(7), the Closing Day for such Accepted Note, for all purposes of
this Agreement except references to "original Closing Day" in paragraph
2B(8)(iii), shall mean the Rescheduled Closing Day with respect to such
Accepted Note.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"COMPANY SECURED DEBT" shall mean, without duplication and as
at any time of determination thereof, Debt of the Company secured by Liens
(other than as described in clauses (i), (ii), (iv), (vii) and (viii) of
paragraph 6B(1)).
"CONFIRMATION OF ACCEPTANCE" shall have the meaning specified
in paragraph 2B(5).
"CONSOLIDATED CAPITALIZATION" shall mean, as at any time of
determination thereof, the sum of (i) shareholder's or stockholders' equity and
(ii) the aggregate Debt of the Company and Subsidiaries.
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<PAGE> 37
"CONSOLIDATED NET INCOME" shall mean, as to any period,
consolidated gross revenues of the Company and its Subsidiaries less all
operating and non-operating expenses of the Company and its Subsidiaries for
such period, including all charges of a proper character (including current and
deferred taxes on income, provision for taxes on unremitted foreign earnings
which are included in gross revenues, and current additions to reserves), but
not including in gross revenues the following:
(i) any gains (net of expenses and taxes applicable thereto)
in excess of losses resulting from the Transfer of capital
assets (i.e., assets other than current assets)(other than
property, plant and equipment that, in the good faith judgment
of the Company, has no remaining productive capacity or Big O
retail stores);
(ii) any gains resulting from the write-up of assets;
(iii) any equity of the Company or any Subsidiary in the
undistributed earnings (but not losses) of any corporation
which is not a Subsidiary;
(iv) undistributed earnings of any Subsidiary to the extent
that such Subsidiary is not at the time permitted to (A) make
or pay dividends to any Subsidiary parent thereof or the
Company, (B) repay intercompany loans or advances to any
Subsidiary parent thereof or the Company, (C) convert such
earnings into U.S. dollars or repatriate earnings to any
Subsidiary parent thereof or the Company or (D) otherwise
Transfer property or other assets to any Subsidiary parent
thereof or the Company, whether by the terms of its charter or
any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to such
Subsidiary;
(v) any earnings or losses of any Person acquired by the
Company or any Subsidiary through purchase, merger,
consolidation or otherwise for any fiscal period prior to the
fiscal period in which the acquisition occurs;
(vi) any deferred credit representing the excess of equity in
any Subsidiary at the date of acquisition over the cost of the
investment in such Subsidiary;
(vii) gains or losses from the acquisition of securities or
the retirement or extinguishment of Debt;
(viii) gains on collections from insurance policies or
settlements;
(ix) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made
out of income accrued during such period;
(x) any income or gain during such period from any change in
accounting principles, from any discontinued operations or the
disposition thereof, from any extraordinary items or from any
prior period adjustments,
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<PAGE> 38
(xi) in the case of a successor to the Company by
consolidation or merger or as a transferee of its assets, any
earnings of the successor corporation prior to such
consolidation, merger or transfer of assets;
all determined in accordance with generally accepted accounting principles. If
the preceding calculation results in a number less than zero, such amount shall
be considered a Consolidated net loss.
"CONSOLIDATED TANGIBLE ASSETS" shall mean, as at any time of
determination thereof, the consolidated assets of the Company and its
Subsidiaries less (i) the book value of all intangibles, (ii) any net gains or
losses attributable to cumulative translation adjustments and (iii) minority
interests held by any third party in any Subsidiary.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean, as at any time
of determination thereof, the consolidated stockholders' or shareholders'
equity of the Company and its Subsidiaries, less (i) the book value of all
intangibles, (ii) any net gains or losses attributable to cumulative
translation adjustments and (iii) minority interests held by any third party in
any Subsidiary.
"CURRENT ASSETS" shall mean, as at any time of determination
thereof, the aggregate amount carried as current assets on the books of the
Company and its Subsidiaries, on a consolidated basis and after eliminating all
inter-company items, in accordance with generally accepted accounting
principles.
"CURRENT DEBT" shall mean, with respect to any Person, (i) all
Indebtedness of such Person for borrowed money which by its terms or by the
terms of any instrument or agreement relating thereto matures on demand or
within one year from the date of the creation thereof, provided that
Indebtedness for borrowed money outstanding under a revolving credit or similar
agreement which obligates the lender or lenders to extend credit over a period
of more than one year shall constitute Funded Debt and not Current Debt, even
though such Indebtedness by its terms matures on demand or within one year from
the date of the creation thereof and (ii) in the case of the Company only, the
amount, not to exceed an aggregate of $30,000,000, of outstanding Indebtedness
under any portion of the Company's revolving credit facility which by its terms
or by the terms of any instrument or agreement relating thereto matures more
than one year, and not more than three years, from the date of the creation
thereof.
"CURRENT LIABILITIES" shall mean the aggregate amount carried
as current liabilities on the books of the Company and its Subsidiaries, on a
consolidated basis and after eliminating all inter-company items, in accordance
with generally accepted accounting principles, plus the amount, not to exceed
an aggregate of $30,000,000, of outstanding Indebtedness under any portion of
the Company's revolving credit facility which by its terms or by the terms of
any instrument or agreement relating thereto matures more than one year, and
not more than three years, from the date of the creation thereof.
"DEBT" shall mean Current Debt and/or Funded Debt.
"DELAYED DELIVERY FEE" shall have the meaning specified in
paragraph 2B(8)(iii).
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"EBITDA" shall mean, as to any period, the sum of (i)
Consolidated Net Income, plus (ii) allowances for consolidated depreciation and
amortization plus (iii) income taxes, plus (iv) consolidated interest expense;
provided that, with respect to (ii), (iii) and (iv), any amounts attributable
to minority interests in Subsidiaries shall be excluded.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"ERISA AFFILIATE" shall mean any corporation which is a member
of the same controlled group of corporations as the Company within the meaning
of section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in
paragraph 7A, provided that there has been satisfied any requirement in
connection with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act, and "DEFAULT" shall mean
any of such events, whether or not any such requirement has been satisfied.
"ENVIRONMENTAL AND SAFETY LAWS" shall mean all laws relating
to pollution, the release or other discharge, handling, disposition or
treatment of Hazardous Materials and other substances or the protection of the
environment or of employee health and safety, including without limitation,
CERCLA, the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et.
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 7401 et.
seq.), the Clean Air Act (42 U.S.C. Section 401 et. seq.), the Toxic Substances
Control Act (15 U.S.C. Section 2601 et. seq.), the Occupational Safety and
Health Act (29 U.S.C. Section 651 et. seq.) and the Emergency Planning and
Community Right-To-Know Act (42 U.S.C. Section 11001 et. seq.), each as the
same may be amended and supplemented.
"ENVIRONMENTAL COSTS AND LIABILITIES" shall mean, as to any
Person, all liabilities, obligations, responsibilities, remedial actions,
losses, damages, punitive damages, consequential damages, treble damages,
contribution, cost recovery, costs and expenses (including all fees,
disbursements and expenses of counsel, expert and consulting fees, and costs of
investigation and feasibility studies), fines, penalties, sanctions and
interest incurred as a result of any claim or demand, by any Person, whether
based in contract, tort, implied or express warranty, strict liability,
criminal or civil statute, permit, order or agreement with any Federal, state
or local governmental authority or other Person, arising from environmental,
health or safety conditions, or the release or threatened release of a
contaminant, pollutant or Hazardous Material into the environment, resulting
from the operations of such Person or its subsidiaries, or breach of any
Environmental and Safety Law or for which such Person or its subsidiaries is
otherwise liable or responsible.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"EXCLUDED SUBSIDIARY DEBT" shall mean the amount of Permitted
Subsidiary Debt which exceeds 5% of Consolidated Tangible Net Worth.
"FACILITY" shall have the meaning specified in paragraph
2B(1).
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"FACILITY FEE" shall have the meaning specified in paragraph
2B(8)(i).
"FUNDED DEBT" shall mean with respect to any Person, all
Indebtedness of such Person which by its terms or by the terms of any
instrument or agreement relating thereto matures, or which is otherwise payable
or unpaid, more than one year from, or is directly or indirectly renewable or
extendible at the option of the debtor to a date more than one year (including
an option of the debtor under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of more than
one year) from, the date of the creation thereof, less the amount, not to
exceed an aggregate of $30,000,000, of outstanding Indebtedness under any
portion of the Company's revolving credit facility which by its terms or by the
terms of any instrument or agreement relating thereto matures more than one
year, and not more than three years, from the date of the creation thereof.
"GOOD FAITH CONTEST" shall mean, with respect to any tax,
assessment, Lien, obligation, claim, liability, judgment, injunction, award,
decree, order, law, regulation, statute or similar item, any challenge or
contest thereof by appropriate proceedings timely initiated in good faith by
the Company or any Subsidiary for which adequate reserves therefor have been
taken in accordance with generally accepted accounting principles.
"GUARANTEE" shall mean, with respect to any Person, any direct
or indirect liability, contingent or otherwise, of such Person with respect to
any indebtedness, lease, dividend or other obligation of another, including,
without limitation, any such obligation directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the ordinary course of
business) or discounted or sold with recourse by such Person, or in respect of
which such Person is otherwise directly or indirectly liable, including,
without limitation, any such obligation in effect guaranteed by such Person
through any agreement (contingent or otherwise) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
the solvency or any balance sheet or other financial condition of the obligor
of such obligation, or to make payment for any products, materials or supplies
or for any transportation or service, regardless of the non-delivery or
non-furnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected against loss in respect
thereof. The amount of any Guarantee shall be equal to the outstanding
principal amount of the obligation guaranteed or such lesser amount to which
the maximum exposure of the guarantor shall have been specifically limited.
"HEDGE TREASURY NOTE(S)" shall mean, with respect to any
Accepted Note, the United States Treasury Note or Notes whose duration (as
determined by Prudential) most closely matches the duration of such Accepted
Note.
"HOSTILE TENDER OFFER" shall mean, with respect to the use of
proceeds of any Note, any offer to purchase, or any purchase of, shares of
capital stock of any corporation or equity interests in any other entity, or
securities convertible into or representing the beneficial ownership of, or
rights to acquire, any such shares or equity interests, if such shares, equity
interests, securities or rights are of a class which is publicly traded on any
securities exchange
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<PAGE> 41
or in any over-the-counter market, other than purchases of such shares, equity
interests, securities or rights representing less than 5% of the equity
interests or beneficial ownership of such corporation or other entity for
portfolio investment purposes, and such offer or purchase has not been duly
approved by the board of directors of such corporation or the equivalent
governing body of such other entity prior to the date on which the Company
makes the Request for Purchase of such Note.
"INCLUDING" shall mean, unless the context clearly requires
otherwise, "including without limitation".
"INDEBTEDNESS" shall mean, with respect to any Person and
without duplication, (i) its liabilities for borrowed money, including
redemption obligations in respect of mandatorily redeemable preferred stock;
(ii) its liabilities for the deferred purchase price of property acquired by
such Person, (iii) all of its Capitalized Lease Obligations; (iv) all
liabilities secured by any Lien with respect to any property owned by such
Person (whether or not it has assumed or otherwise become liable for such
liabilities); (v) its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its account by
banks and other financial institutions (whether or not representing obligations
for borrowed money); (vi) all its payment obligations with respect to interest
rate swaps, currency swaps and similar obligations requiring such Person to
make payments, whether periodically or upon the happening of a contingency (the
amount of the obligation under any such swap shall be the amount determined in
respect thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such swap had terminated at the end
of such fiscal quarter, and in making such determination, if any agreement
relating to such swap provides for the netting of amounts payable by and to
such Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the amount of
such obligation shall be the net amount so determined) and (vii) all its
Guarantees with respect to liabilities of a type described in any of clauses
(i) through (vi); it being understood that Indebtedness does not include
accounts payable created in the normal course of business.
"INITIAL CLOSING DAY" shall have the meaning specified in
paragraph 2A.
"INITIAL NOTE(S)" shall have the meaning specified in
paragraph 1A.
"INTEREST EXPENSE" shall mean, for any period, for the Company
and its Subsidiaries on a consolidated basis, all interest expense, including,
without limitation, all commissions, discounts or related amortization and
other fees and charges with respect to letters of credit and bankers'
acceptance financing and the net costs associated with interest swap
obligations, amortization of debt expense and original issue discount, and the
interest portion of any deferred payment obligation, calculated in accordance
with the effective interest method.
"ISSUANCE PERIOD" shall have the meaning specified in
paragraph 2B(2).
"LIEN" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or otherwise) or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, or any lease in the nature
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<PAGE> 42
thereof) or any other type of preferential arrangement for the purpose, or
having the effect, of protecting a creditor against loss or securing the
payment or performance of an obligation.
"MATERIAL ADVERSE EFFECT" shall mean (i) a material adverse
effect on the business, assets, liabilities, operations, prospects or
condition, financial or otherwise, of the Company and its Subsidiaries, taken
as a whole, (ii) material impairment of the Company to perform any of their
respective obligations under the Agreement and the Notes or (iii) material
impairment of the validity or enforceability or the rights of, or the benefits
available to, the holders of any of the Notes under this Agreement or the
Notes.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a
"multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA.
"NOTES" shall have the meaning specified in paragraph 1B.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the
name of the Company by an Authorized Officer of the Company.
"PERMITTED SUBSIDIARY DEBT" shall mean the Debt of
Subsidiaries existing on the date hereof and listed on Schedule 6B(2) hereto,
in the amounts and subject to the Liens listed on such Schedule and pursuant to
the terms of the indentures, notes, agreements, instruments and other documents
related thereto as listed on such Schedule, all as they exist on the date
hereof, but shall not include any renewal, extension, replacement or refunding
of such Debt.
"PERMITTED SUBSIDIARY GUARANTEES" shall mean the aggregate
amount of each Guarantee issued by a Subsidiary guaranteeing Debt of the
Company with respect to which (a) such Subsidiary is a Subsidiary Guarantor and
(b) the beneficiary of such Guarantee has executed a Sharing Agreement.
"PERSON" shall mean and include an individual, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"PLAN" shall mean any employee pension benefit plan (as such
term is defined in section 3 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by the Company or
any ERISA Affiliate.
"PRUDENTIAL" shall mean The Prudential Insurance Company of
America.
"PRUDENTIAL AFFILIATE" shall mean any corporation or other
entity all of the Voting Stock (or equivalent voting securities or interests)
of which is owned by Prudential either directly or through Prudential
Affiliates.
"PURCHASERS" shall mean Prudential with respect to the Initial
Notes and, with respect to any Accepted Notes, Prudential and/or the Prudential
Affiliate(s), which are purchasing such Accepted Notes.
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"QUALIFIED STOCK" shall mean the Company's common stock or any
other class of Company capital stock that does not have any of the following
rights or features: (i) mandatory or scheduled dividends, (ii) redemption or
repurchase (or establishment of a sinking fund for such purpose) of such
capital stock prior to the final maturity of the Notes, whether mandatory,
scheduled or at the option of the holder thereof or (iii) being convertible
into or exchangeable for, or having rights, warrants or options to acquire,
Debt or any similar obligation.
"RELATED PARTY" shall mean (i) any shareholder owning in
excess of 1% of the Company's stock, (ii) any executive officer, director,
agent, or employee of the Company, (iii) all Persons to whom such Persons are
related by blood, adoption or marriage and (iv) all Affiliates of the foregoing
Persons.
"REQUEST FOR PURCHASE" shall have the meaning specified in
paragraph 2B(3).
"REQUIRED HOLDER(S)" shall mean the holder or holders of at
least 51% of the aggregate principal amount of the Notes or of a Series of
Notes, as the context may require, from time to time outstanding.
"RESCHEDULED CLOSING DAY" shall have the meaning specified in
paragraph 2B(7).
"RESPONSIBLE OFFICER" shall mean the chief executive officer,
chief operating officer, chief financial officer or chief accounting officer of
the Company, general counsel of the Company or any other officer of the Company
involved principally in its financial administration or its controllership
function.
"RESTRICTED SUBSIDIARY GUARANTEE" shall mean the aggregate
amount of each Guarantee of a Subsidiary guaranteeing Debt of the Company with
respect to which (a) such Subsidiary is not a Subsidiary Guarantor or (b) the
beneficiary of such Guarantee has not executed a Sharing Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SERIES" shall have the meaning specified in paragraph 1B.
"SHARING AGREEMENT" shall mean any sharing agreement entered
into with the holders of the Notes substantially in the form of Exhibit E
attached hereto.
"SIGNIFICANT HOLDER" shall mean (i) Prudential, so long as
Prudential or any Prudential Affiliate shall hold (or be committed under this
Agreement to purchase) any Note, or (ii) any other holder of at least 5% of the
aggregate principal amount of the Notes of any Series from time to time
outstanding.
"SUBSIDIARY" shall mean any corporation organized under the
laws of any state of the United States of America, Canada, or any province of
Canada, which conducts the major portion of its business in and makes the major
portion of its sales to Persons located in the United States of America or
Canada, and at least 80% of the total combined voting power of all classes
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of Voting Stock of which shall, at the time as of which any determination is
being made, be owned by the Company either directly or through Subsidiaries.
"SUBSIDIARY GUARANTEE" shall mean a Guarantee of the Notes
issued by a Subsidiary in form and substance satisfactory to the Required
Holders.
"SUBSIDIARY GUARANTOR" shall mean any Subsidiary which
delivers to each of the holders of Notes a Subsidiary Guarantee pursuant to
paragraph 6D or 6E hereof, for so long as such Subsidiary Guarantee is in full
force and effect.
"TOTAL PRIORITY DEBT" shall mean, without duplication and as
at any time of determination thereof, the sum of the following items: (a)
Company Secured Debt; and (b) Debt (including, without limitation, any
Guarantees) or preferred stock of any Subsidiary to any Person other than the
Company or a wholly-owned Subsidiary other than Excluded Subsidiary Debt.
"TRANSFER" shall mean, with respect to any item, the sale,
exchange, conveyance, lease, transfer or other disposition of such item.
"TRANSFEREE" shall mean any direct or indirect transferee of
all or any part of any Note purchased by any Purchaser under this Agreement.
"VOTING STOCK" shall mean, with respect to any corporation,
any shares of stock of such corporation whose holders are entitled under
ordinary circumstances to vote for the election of directors of such
corporation (irrespective of whether at the time stock of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency).
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All
references in this Agreement to "generally accepted accounting principles"
shall be deemed to refer to generally accepted accounting principles in effect
in the United States at the time of application thereof. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all unaudited financial statements and certificates and reports as to financial
matters required to be furnished hereunder shall be prepared, in accordance
with generally accepted accounting principles applied on a basis consistent
with the most recent audited financial statements delivered pursuant to clause
(ii) of paragraph 5A or, if no such statements have been so delivered, the most
recent audited financial statements referred to in clause (i) of paragraph 8B.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that, so long as any
Purchaser shall hold any Note, it will make payments of principal of, interest
on, and any Yield-Maintenance Amount payable with respect to, such Note, which
comply with the terms of this Agreement, by wire transfer of immediately
available funds for credit (not later than 12:00 noon, New York City local
time, on the date due) to (i) the account or accounts of such Purchaser
specified in the Purchaser Schedule attached hereto in the case of any Initial
Note, (ii) the account or accounts of such Purchaser specified in the
Confirmation of Acceptance with respect to such Note in the
39
<PAGE> 45
case of any Shelf Note or (iii) such other account or accounts in the United
States as such Purchaser may from time to time designate in writing,
notwithstanding any contrary provision herein or in any Note with respect to
the place of payment. Each Purchaser agrees that, before disposing of any
Note, it will make a notation thereon (or on a schedule attached thereto) of
all principal payments previously made thereon and of the date to which
interest thereon has been paid. The Company agrees to afford the benefits of
this paragraph 11A to any Transferee which shall have made the same agreement
as the Purchasers have made in this paragraph 11A.
11B. EXPENSES. The Company agrees to pay, and save
Prudential, each Purchaser and any Transferee harmless against liability for
the payment of (i) all document production and duplication charges and the fees
and expenses of any special counsel engaged by the Purchasers or any Transferee
in connection with any subsequent proposed modification of, or proposed consent
under, this Agreement, whether or not such proposed modification shall be
effected or proposed consent granted, and (ii) the costs and expenses,
including attorneys' fees, incurred by any Purchaser or any Transferee in
enforcing (or determining whether or how to enforce) any rights under this
Agreement or the Notes or in responding to any subpoena or other legal process
or informal investigative demand involving the Company, any Subsidiary or any
Affiliate of any thereof issued in connection with this Agreement or the
transactions contemplated hereby or by reason of any Purchaser's or any
Transferee's having acquired any Note, including without limitation costs and
expenses incurred in any bankruptcy case involving the Company, any Subsidiary
or any Affiliate of any thereof. The obligations of the Company under this
paragraph 11B shall survive the transfer of any Note or portion thereof or
interest therein by any Purchaser or any Transferee and the payment of any
Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended,
and the Company may take any action herein prohibited, or omit to perform any
act herein required to be performed by it, if the Company shall obtain the
written consent to such amendment, action or omission to act, of the Required
Holder(s) of the Notes of each Series except that, (i) with the written consent
of the holders of all Notes of a particular Series, and if an Event of Default
shall have occurred and be continuing, of the holders of all Notes of all
Series, at the time outstanding (and not without such written consents), the
Notes of such Series may be amended or the provisions thereof waived to change
the maturity thereof, to change or affect the principal thereof, or to change
or affect the rate or time of payment of interest on or any Yield-Maintenance
Amount payable with respect to the Notes of such Series, (ii) without the
written consent of the holder or holders of all Notes at the time outstanding,
no amendment to or waiver of the provisions of this Agreement shall change or
affect the provisions of paragraph 7A or this paragraph 11C insofar as such
provisions relate to proportions of the principal amount of the Notes of any
Series, or the rights of any individual holder of Notes, required with respect
to any declaration of Notes to be due and payable or with respect to any
consent, amendment, waiver or declaration, (iii) with the written consent of
Prudential (and not without the written consent of Prudential) the provisions
of paragraph 2B may be amended or waived (except insofar as any such amendment
or waiver would affect any rights or obligations with respect to the purchase
and sale of Notes which shall have become Accepted Notes prior to such
amendment or waiver), and (iv) with the written consent of all of the
Purchasers which shall have become obligated to purchase Accepted Notes of any
Series (and not without the written consent of all such Purchasers), any of the
provisions of paragraphs 2B and 3 may be amended or waived insofar as such
amendment or waiver would affect only rights or obligations with respect to the
purchase
40
<PAGE> 46
and sale of the Accepted Notes of such Series or the terms and provisions of
such Accepted Notes. Each holder of any Note at the time or thereafter
outstanding shall be bound by any consent authorized by this paragraph 11C,
whether or not such Note shall have been marked to indicate such consent, but
any Notes issued thereafter may bear a notation referring to any such consent.
No course of dealing between the Company and the holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall operate as a
waiver of any rights of any holder of such Note. As used herein and in the
Notes, the term "THIS AGREEMENT" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES;
LOST NOTES. The Notes are issuable as registered notes without coupons in
denominations of at least $1,000,000, except as may be necessary to reflect any
principal amount not evenly divisible by $1,000,000. The Company shall keep at
its principal office a register in which the Company shall provide for the
registration of Notes and of transfers of Notes. Upon surrender for
registration of transfer of any Note at the principal office of the Company,
the Company shall, at its expense, execute and deliver one or more new Notes of
like tenor and of a like aggregate principal amount, registered in the name of
such transferee or transferees. At the option of the holder of any Note, such
Note may be exchanged for other Notes of like tenor and of any authorized
denominations, of a like aggregate principal amount, upon surrender of the Note
to be exchanged at the principal office of the Company. Whenever any Notes are
so surrendered for exchange, the Company shall, at its expense, execute and
deliver the Notes which the holder making the exchange is entitled to receive.
Each installment of principal payable on each installment date upon each new
Note issued upon any such transfer or exchange shall be in the same proportion
to the unpaid principal amount of such new Note as the installment of principal
payable on such date on the Note surrendered for registration of transfer or
exchange bore to the unpaid principal amount of such Note. No reference need
be made in any such new Note to any installment or installments of principal
previously due and paid upon the Note surrendered for registration of transfer
or exchange. Every Note surrendered for registration of transfer or exchange
shall be duly endorsed, or be accompanied by a written instrument of transfer
duly executed, by the holder of such Note or such holder's attorney duly
authorized in writing. Any Note or Notes issued in exchange for any Note or
upon transfer thereof shall carry the rights to unpaid interest and interest to
accrue which were carried by the Note so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such transfer or
exchange. Upon receipt of written notice from the holder of any Note of the
loss, theft, destruction or mutilation of such Note and, in the case of any
such loss, theft or destruction, upon receipt of such holder's unsecured
indemnity agreement, or in the case of any such mutilation upon surrender and
cancellation of such Note, the Company will make and deliver a new Note, of
like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due
presentment for registration of transfer, the Company may treat the Person in
whose name any Note is registered as the owner and holder of such Note for the
purpose of receiving payment of principal of and interest on, and any
Yield-Maintenance Amount payable with respect to, such Note and for all other
purposes whatsoever, whether or not such Note shall be overdue, and the Company
shall not be affected by notice to the contrary. Subject to the preceding
sentence, the holder of any Note may from time to time grant participations in
all or any part of such Note to any Person on
41
<PAGE> 47
such terms and conditions as may be determined by such holder in its sole and
absolute discretion.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT. All representations and warranties contained herein or made in
writing by or on behalf of the Company in connection herewith shall survive the
execution and delivery of this Agreement and the Notes, the transfer by any
Purchaser of any Note or portion thereof or interest therein and the payment of
any Note, and may be relied upon by any Transferee, regardless of any
investigation made at any time by or on behalf of any Purchaser or any
Transferee. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings relating to such subject matter.
11G. SUCCESSORS AND ASSIGNS. All covenants and other
agreements in this Agreement contained by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto (including, without limitation, any Transferee)
whether so expressed or not.
11H. INDEPENDENCE OF COVENANTS; SEVERABILITY; DESCRIPTIVE
HEADINGS. All covenants hereunder shall be given independent effect so that if
a particular action or condition is prohibited by any one of such covenants,
the fact that it would be permitted by an exception to, or otherwise be in
compliance within the limitations of, another covenant shall not avoid the
occurrence of a Default or Event of Default if such action is taken or such
condition exists. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. The descriptive
headings of the several paragraphs of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
11I. NOTICES. All written communications provided for
hereunder (other than communications provided for under paragraph 2) shall be
sent by first class mail or nationwide overnight delivery service (with charges
prepaid) and (i) if to any Purchaser, addressed as specified for such
communications in the Purchaser Schedule attached hereto (in the case of the
Initial Notes) or the Purchaser Schedule attached to the applicable
Confirmation of Acceptance (in the case of any Shelf Notes) or at such other
address as any such Purchaser shall have specified to the Company in writing,
(ii) if to any other holder of any Note, addressed to it at such address as it
shall have specified in writing to the Company or, if any such holder shall not
have so specified an address, then addressed to such holder in care of the last
holder of such Note which shall have so specified an address to the Company and
(iii) if to the Company, addressed to it at 4770 Hickory Hill Road, Memphis,
Tennessee 38141, Attention: Senior Vice President and Treasurer, provided,
however, that any such communication to the Company may also, at the option of
the Person sending such communication, be delivered by any other means either
to the Company at its address specified above or to any Authorized Officer of
the Company. Any communication pursuant to paragraph 2 shall be made by the
method specified for such communication in paragraph 2, and shall be effective
to create any rights or obligations under this Agreement only if, in the case
of a telephone communication, an Authorized Officer of the party
42
<PAGE> 48
conveying the information and of the party receiving the information are
parties to the telephone call, and in the case of a telecopier communication,
the communication is signed by an Authorized Officer of the party conveying the
information, addressed to the attention of an Authorized Officer of the party
receiving the information, and in fact received at the telecopier terminal the
number of which is listed for the party receiving the communication in the
Information Schedule or at such other telecopier terminal as the party
receiving the information shall have specified in writing to the party sending
such information.
11J. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or interest on, or Yield-Maintenance Amount payable with respect
to, any Note that is due on a date other than a Business Day shall be made on
the next succeeding Business Day, without including the additional days elapsed
in the computation of the interest payable on such next succeeding Business
Day.
11K. MINIMUM INTEREST PAYABLE. The Company and all holders
of the Notes specifically intend and agree to limit contractually the amount of
interest payable under this Agreement, the Notes and all other instruments and
agreements related hereto and thereto to the maximum amount of interest
lawfully permitted to be charged under applicable law. Therefore, none of the
terms of this Agreement, the Notes or any instrument pertaining to or relating
to this Agreement or the Notes shall ever be construed to create a contract to
pay interest at a rate in excess of the maximum rate permitted to be charged
under applicable law, and neither the Company, any guarantor nor any other
party liable or to become liable hereunder, under the Notes, any guaranty or
under any other instruments and agreements related hereto and thereto shall
ever be liable for interest in excess of the amount determined at such maximum
rate, and the provisions of this paragraph 11K shall control over all other
provisions of the Agreement, any Notes, any Subsidiary Guarantee or any other
guaranty or any other instrument pertaining to or relating to the transactions
herein contemplated. If any amount of interest taken or received by any holder
of a Note shall be in excess of said maximum amount of interest which, under
applicable law, could lawfully have been collected by such holder incident to
such transactions, then such excess shall be deemed to have been the result of
a mathematical error by all parties hereto and shall be refunded promptly by
the Person receiving such amount to the party paying such amount, or, at the
option of the recipient, credited ratably against the unpaid principal amount
of the Note or Notes held by such holder. All amounts paid or agreed to be
paid in connection with such transactions which would under applicable law be
deemed "interest" shall, to the extent permitted by such applicable law, be
amortized, prorated, allocated and spread throughout the stated term of this
Agreement and the Notes. "APPLICABLE LAW" as used in this paragraph means that
law in effect from time to time which permits the charging and collection of
the highest permissible lawful, nonusurious rate of interest on the
transactions herein contemplated including laws of the State of Tennessee and
of the United States of America, and "MAXIMUM RATE" as used in this paragraph
means, with respect to each of the Notes, the maximum lawful, nonusurious rates
of interest (if any) which under applicable law may be charged to the Company
from time to time with respect to such Notes.
11L. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. The
Company hereby irrevocably submits to the jurisdiction of any New York state or
Federal court sitting in New York in any action or proceeding arising out of or
relating to this Agreement, and the Company
43
<PAGE> 49
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in New York state or Federal court. The
Company hereby irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of such action or
proceeding. The Company agrees and irrevocably consents to the service of any
and all process in any such action or proceeding by the mailing, by registered
or certified U.S. mail, or by any other means or mail that requires a signed
receipt, of copies of such process to CT Corporation System at 1633 Broadway,
New York, New York 10019. The Company agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this paragraph 11L shall affect the right of any Noteholder to serve
legal process in any other manner permitted by law or affect the right of any
Noteholder to bring any action or proceeding against the Company or its
property in the courts of any other jurisdiction. To the extent that the
Company has or hereafter may acquire immunity from jurisdiction of any court or
from any legal process (whether through service of notice, attachment prior to
judgement, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, the Company hereby irrevocably waives such immunity
in respect of its obligations under this agreement.
11M. SATISFACTION REQUIREMENT. If any agreement,
certificate or other writing, or any action taken or to be taken, is by the
terms of this Agreement required to be satisfactory to any Purchaser, to any
holder of Notes or to the Required Holder(s), the determination of such
satisfaction shall be made by such Purchaser, such holder or the Required
Holder(s), as the case may be, in the sole and exclusive judgment (exercised in
good faith) of the Person or Persons making such determination.
11N. GOVERNING LAW. IN ACCORDANCE WITH THE PROVISIONS OF
Section 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE INTERNAL LAW OF THE STATE OF NEW YORK.
11O. SEVERALTY OF OBLIGATIONS. The sales of Notes to the
Purchasers are to be several sales, and the obligations of Prudential and the
Purchasers under this Agreement are several obligations. No failure by
Prudential or any Purchaser to perform its obligations under this Agreement
shall relieve any other Purchaser or the Company of any of its obligations
hereunder, and neither Prudential nor any Purchaser shall be responsible for
the obligations of, or any action taken or omitted by, any other such Person
hereunder.
11P. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
[SIGNATURES APPEAR ON THE NEXT PAGE.]
44
<PAGE> 50
11Q. BINDING AGREEMENT. When this Agreement is executed and
delivered by the Company, and Prudential, it shall become a binding agreement
between the Company, and Prudential. This Agreement shall also inure to the
benefit of each Purchaser which shall have executed and delivered a
Confirmation of Acceptance, and each such Purchaser shall be bound by this
Agreement to the extent provided in such Confirmation of Acceptance.
Very truly yours,
TBC CORPORATION
By: /s/ Ronald E. McCollough
---------------------------
Name: Ronald E. McCollough
Title: Senior Vice President
Operations and Treasurer
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Yvonne Guajardo
----------------------------
Vice President
45
<PAGE> 51
PURCHASER SCHEDULE
INITIAL NOTES
TBC CORPORATION
<TABLE>
<CAPTION>
Aggregate
Principal
Amount of
Notes to be Note Denom-
Purchased ination(s)
----------- ------------
<S> <C> <C>
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
Series A:
$32,500,000 $32,500,000
Series B:
$11,000,000 $11,000,000
Series C:
$16,500,000 $16,500,000
</TABLE>
(1) All payments on account of Notes held by such purchaser shall be made
by wire transfer of immediately available funds for credit to:
Account No. 050-54-526
Morgan Guaranty Trust Company of New York
23 Wall Street
New York, New York 10015
(ABA No.: 021-000-238)
Each such wire transfer shall set forth (a) the name of the Company,
(b) a reference to (i) "7.55% Series A Senior Notes due July 10,
2003", (ii) "7.87% Series B Senior Notes due July 10, 2005, and/or
(iii) "8.06% Series C Senior Notes due July 10, 2008", as the case may
be, (d) "Security No. !INV_____!", (e) the due date and (f) the
application (as among principal, interest and Yield-Maintenance
Amount) of the payment being made.
Purchaser Schedule - 1
<PAGE> 52
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Gateway Center Three
100 Mulberry Street
Newark, New Jersey 07102
Attention: Manager, Investment Operations Group
Telephone: (201) 802-5260
Telecopy: (201) 802-8055
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Texas Commerce Tower
2200 Ross Avenue, Suite 4200 E
Dallas, Texas 75201
Attention: Managing Director
Telecopy: (214) 720-6299
(4) Recipient of telephonic prepayment notices:
Manager, Investment Structure and Pricing
Telephone: (201) 802-6660
Telecopy: (201) 802-9425
(5) Tax Identification No.: 22-1211670
Purchaser Schedule - 2
<PAGE> 53
INFORMATION SCHEDULE
Authorized Officers for Prudential
<TABLE>
<S> <C>
R. A. Walker, Managing Director Thomas Cecka, Managing Director
(214) 720-6238
Four Gateway Center, 7th Floor
Stephen D. Arnold, Vice President 100 Mulberry Street
(214) 720-6228 Newark, New Jersey 07102
Robert G. Gwin, Vice President phone: (201) 802-8286
(214) 720-6212 fax: (201) 802-2662
Randall M. Kob, Vice President
(214) 720-6210
Paul L. Meiring, Vice President
(214) 720-6230
Texas Commerce Tower
2200 Ross Avenue, Suite 4200 E
Dallas, Texas 75201
phone: (214) 720-6200
fax: (214) 720-6299
Authorized Officers for the Company
Louis S. DePasqua
President and Chief Executive Officer
fax: (901) 541-3639
Ronald E. McCollough
Senior Vice President Operations and
Treasurer
fax: (901) 541-3752
TBC Corporation
4770 Hickory Hill Road
Memphis, Tennessee 38141
phone: (901) 363-8030
</TABLE>
Information Schedule - 1
<PAGE> 54
EXHIBIT A-1
[FORM OF INITIAL NOTE]
TBC CORPORATION
[7.55%/7.87%/8.06%] SERIES [A/B/C] SENIOR NOTE DUE JULY 10, [2003/2005/2008]
No. _____ [Date]
$________
FOR VALUE RECEIVED, the undersigned, TBC CORPORATION (herein called
the "Company"), a corporation organized and existing under the laws of the
State of Delaware, hereby promises to pay to
___________________________________, or registered assigns, the principal sum
of ____________________ DOLLARS on __________________, with interest (computed
on the basis of a 360-day year--30-day month) (a) on the unpaid balance thereof
at the rate of [7.55%/7.87%/8.06%] per annum from the date hereof, payable
quarterly on the 10th day of January, April, July and October in each year,
commencing with the January, April, July or October next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b)
on any overdue payment (including any overdue prepayment) of principal, any
overdue payment of Yield-Maintenance Amount and any overdue payment of
interest, payable quarterly as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate per annum from time to time equal to the
greater of (i) [9.55%/7.87%/10.06%] or (ii) 2% over the rate of interest
publicly announced by Morgan Guaranty Trust Company of New York from time to
time in New York City as its Prime Rate.
Payments of principal, Yield-Maintenance Amount, if any, and interest
are to be made at the main office of Morgan Guaranty Trust Company of New York
in New York City or at such other place as the holder hereof shall designate to
the Company in writing, in lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Purchase and Private Shelf Agreement, dated
as of July 10, 1996 (herein called the "Agreement"), between the Company, on
the one hand, and The Prudential Insurance Company of America each Prudential
Affiliate which becomes party thereto, on the other hand, and is entitled to
the benefits thereof. As provided in the Agreement, this Note is subject to
prepayment, in whole or from time to time in part, with the Yield-Maintenance
Amount specified in the Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the
registered holder hereof or such holder's attorney duly authorized
A - 1 - 1
<PAGE> 55
in writing, a new Note for the then outstanding principal amount will be issued
to, and registered in the name of, the transferee. Prior to due presentment
for registration of transfer, the Company may treat the person in whose name
this Note is registered as the owner hereof for the purpose of receiving
payment and for all other purposes, and the Company shall not be affected by
any notice to the contrary.
The Company agrees to make prepayments of principal of this Note on
the dates and in the amounts specified in the Agreement.
In case an Event of Default shall occur and be continuing, the
principal of this Note may be declared or otherwise become due and payable in
the manner and with the effect provided in the Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meanings (if any) provided in the Agreement.
This Note is intended to be performed in the State of New York and
shall be construed and enforced in accordance with the internal law of such
State.
TBC CORPORATION
By: ____________________
Title:__________________
A - 1 - 2
<PAGE> 56
EXHIBIT A-2
[FORM OF SHELF NOTE]
TBC CORPORATION
SERIES ___ SENIOR NOTE
No. ____
ORIGINAL PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE:
INTEREST RATE:
INTEREST PAYMENT DATES:
FINAL MATURITY DATE:
PRINCIPAL PREPAYMENT DATES AND AMOUNTS:
FOR VALUE RECEIVED, the undersigned, TBC CORPORATION (herein called
the "Company"), a corporation organized and existing under the laws of the
State of __________, hereby promises to pay to ________________________, or
registered assigns, the principal sum of
__________________________________________ DOLLARS [on the Final Maturity Date
specified above] [, payable on the Principal Prepayment Dates and in the
amounts specified above, and on the Final Maturity Date specified above in an
amount equal to the unpaid balance of the principal hereof,] with interest
(computed on the basis of a 360-day year--30-day month) (a) on the unpaid
balance thereof at the Interest Rate per annum specified above, payable on each
Interest Payment Date specified above and on the Final Maturity Date specified
above, commencing with the Interest Payment Date next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b)
on any overdue payment (including any overdue prepayment) of principal, any
overdue payment of Yield-Maintenance Amount and any overdue payment of
interest, payable on each Interest Payment Date as aforesaid (or, at the option
of the registered holder hereof, on demand), at a rate per annum from time to
time equal to the greater of (i) 2% over the Interest Rate specified above or
(ii) 2% over the rate of interest publicly announced by Morgan Guaranty Trust
Company of New York from time to time in New York City as its Prime Rate.
Payments of principal, Yield-Maintenance Amount, if any, and interest
are to be made at the main office of Morgan Guaranty Trust Company of New York
in New York City or at such other place as the holder hereof shall designate to
the Company in writing, in lawful money of the United States of America.
A - 2 - 1
<PAGE> 57
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Purchase and Private Shelf Agreement, dated
as of July 10, 1996 (herein called the "Agreement"), between the Company, on
the one hand, and The Prudential Insurance Company of America and each
Prudential Affiliate (as defined in the Agreement) which becomes party thereto,
on the other hand, and is entitled to the benefits thereof.
This Note is subject to optional prepayment, in whole or from time to
time in part, on the terms specified in the Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the
registered holder hereof or such holder's attorney duly authorized in writing,
a new Note for the then outstanding principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company shall not be affected by any notice to
the contrary.
In case an Event of Default shall occur and be continuing, the
principal of this Note may be declared or otherwise become due and payable in
the manner and with the effect provided in the Agreement.
Capitalized terms used and not otherwise defined herein shall have
the meanings (if any) provided in the Agreement.
This Note is intended to be performed in the State of New York and
shall be construed and enforced in accordance with the internal law of such
State.
TBC CORPORATION
By: ______________________________
Title: ___________________________
A - 2 - 2
<PAGE> 58
EXHIBIT B
[FORM OF REQUEST FOR PURCHASE]
TBC CORPORATION
Reference is made to the Note Purchase and Private Shelf Agreement
(the "Agreement"), dated as of July 10, 1996 between TBC CORPORATION (the
"Company"), on the one hand, and The Prudential Insurance Company of America
("Prudential") and each Prudential Affiliate which becomes party thereto, on
the other hand. Capitalized terms used and not otherwise defined herein shall
have the respective meanings specified in the Agreement.
Pursuant to Paragraph 2B(3) of the Agreement, the Company hereby makes
the following Request for Purchase:
1. Aggregate principal amount of
the Notes covered hereby
(the "Notes") ................... $________________
2. Individual specifications of the Notes:
<TABLE>
Principal
Final Prepayment Interest
Principal Maturity Dates and Payment
Amount(1) Date Amounts Period(2)
- --------- -------- ----------- --------
<S> <C> <C> <S>
</TABLE>
3. Use of proceeds of the Notes:
4. Proposed day for the closing of the purchase and sale of the
Notes:
____________________
(1) Minimum principal amount of $5,000,000.
(2) Specify quarterly or semi-annually.
B - 1
<PAGE> 59
5. The purchase price of the Notes is to be transferred to:
<TABLE>
<CAPTION>
Name, Address
and ABA Routing Number of
Number of Bank Account
--------------- ---------
<S> <C>
</TABLE>
6. The Company certifies (a) that the representations and
warranties contained in paragraph 8 of the Agreement are true
on and as of the date of this Request for Purchase except to
the extent of changes caused by the transactions contemplated
in the Agreement and (b) that there exists on the date of this
Request for Purchase no Event of Default or Default.
7. The Issuance Fee to be paid pursuant to the Agreement [should
be included in the rate quotes which may be provided by
Prudential] [will be paid by the Company on the closing date].
8. In connection with any rate quotes it may provide, Prudential
should assume a Designated Spread of _____%.
Dated: TBC CORPORATION
By: ____________________
Authorized Officer
B - 2
<PAGE> 60
EXHIBIT C
[FORM OF CONFIRMATION OF ACCEPTANCE]
TBC CORPORATION
Reference is made to the Note Purchase and Private Shelf Agreement
(the "Agreement"), dated as of July 10, 1996 between TBC CORPORATION (the
"Company"), on the one hand, and The Prudential Insurance Company of America
("Prudential") and each Prudential Affiliate which becomes party thereto, on
the other hand. All terms used herein that are defined in the Agreement have
the respective meanings specified in the Agreement.
Prudential or the Prudential Affiliate which is named below as a
Purchaser of Notes hereby confirms the representations as to such Notes set
forth in paragraph 9 of the Agreement, and agrees to be bound by the provisions
of paragraphs 2B(5) and 2B(7) of the Agreement relating to the purchase and
sale of such Notes and by the provisions of the penultimate sentence of
paragraph 11A of the Agreement.
Pursuant to paragraph 2B(5) of the Agreement, an Acceptance with
respect to the following Accepted Notes is hereby confirmed:
I. Accepted Notes: Aggregate principal
amount $__________________
(A) (a) Name of Purchaser:
(b) Principal amount:
(c) Final maturity date:
(d) Principal prepayment dates and amounts:
(e) Interest rate:
(f) Interest payment period:
(g) Payment and notice instructions: As set
forth on attached Purchaser Schedule
(h) Designated Spread: ___%
(B) (a) Name of Purchaser:
(b) Principal amount:
(c) Final maturity date:
(d) Principal prepayment dates and amounts:
(e) Interest rate:
(f) Interest payment period:
(g) Payment and notice instructions: As set
forth on attached Purchaser Schedule
(h) Designated Spread: ___%
[(C), (D)..... same information as above.]
C - 1
<PAGE> 61
II. Closing Day:
Dated: TBC CORPORATION
By:
----------------------------------
Title:
-------------------------------
[THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA]
By:
----------------------------------
Vice President
[PRUDENTIAL AFFILIATE]
By:
----------------------------------
Vice President
C - 2
<PAGE> 62
EXHIBIT D-1
[FORM OF OPINION OF COMPANY'S COUNSEL]
[Letterhead of ________________]
[Date of Closing]
The Prudential Insurance Company of America
4900 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Ladies and Gentlemen:
We have acted as counsel for TBC CORPORATION (the "Company") in
connection with 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 and each Prudential Affiliate which
becomes a party thereto, on the other hand, pursuant to which the Company has
issued to you today its Series A Senior Notes in the aggregate principal amount
of $32,500,000 (the "Series A Notes"), Series B Senior Notes in the aggregate
principal amount of $11,000,000 (the "Series B Notes") and Series C Senior
Notes in the aggregate principal amount of $16,500,000 (the "Series C Notes";
collectively with the Series A Notes and the Series B Notes, the "Initial
Notes"). Capitalized terms used and not otherwise defined herein shall have
the meanings provided in the Agreement. This letter is being delivered to you
in satisfaction of the condition set forth in paragraph 3A(v) of the Agreement
and with the understanding you are purchasing the Notes in reliance on the
opinions expressed herein.
In this connection, we have examined such certificates of public
officials, certificates of officers of the Company and of Big O (as defined
below) and copies certified to our satisfaction of corporate documents and
records of the Company and Big O and of other papers, and have made such other
investigations, as we have deemed relevant and necessary as a basis for our
opinion hereinafter set forth. We have relied upon such certificates of public
officials and of officers of the Company with respect to the accuracy of
material factual matters contained therein which were not independently
established. With respect to the opinion expressed in paragraph 3 below, we
have also relied upon the representation made by you in paragraph 9A of the
Agreement. As used here the term "Big O" shall mean Big O Tires, Inc., a
Nevada corporation, after giving effect to consummation of the merger
contemplated by, and pursuant to the terms of, the Acquisition Agreement and
Plan of Merger, dated as of April 30, 1996, among the Company, Big O Tires,
Inc. and TBCO Acquistion, Inc.
Based on the foregoing, it is our opinion that:
1. The Company is a corporation duly organized and validly existing
in good standing under the laws of the State of Delaware. Big O is a
corporation duly organized and validly
D - 1 - 1
<PAGE> 63
existing in good standing under the laws of the State of Nevada. Each other
Subsidiary of the Company is a corporation duly organized and validly existing
in good standing under the laws of its jurisdiction of incorporation. Each of
the Company, Big O and the Company's other Subsidiaries has the corporate power
to carry on their respective businesses as now being conducted.
2. The Agreement and the Initial Notes have been duly authorized by
all requisite corporate action and duly executed and delivered by authorized
officers of the Company, and are valid obligations of the Company, legally
binding upon and enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
3. It is not necessary in connection with the offering, issuance,
sale and delivery of the Notes under the circumstances contemplated by the
Agreement to register the Notes under the Securities Act or to qualify an
indenture in respect of the Notes under the Trust Indenture Act of 1939, as
amended.
4. The extension, arranging and obtaining of the credit represented
by the Notes do not result in any violation of regulation G, T or X of the
Board of Governors of the Federal Reserve System.
5. The execution and delivery of the Agreement and the Notes, the
offering, issuance and sale of the Notes and fulfillment of and compliance with
the respective provisions of the Agreement and the Notes do not conflict with,
or result in a breach of the terms, conditions or provisions of, or constitute
a default under, or result in any violation of, or result in the creation of
any Lien upon any of the properties or assets of the Company, Big O or any of
the Company's other Subsidiaries pursuant to, or require any authorization,
consent, approval, exemption, or other action by or notice to or filing with
any court, administrative or governmental body or other Person (other than
routine filings after the date hereof with the Securities and Exchange
Commission and/or state Blue Sky authorities) pursuant to, the charter or
by-laws of the Company, Big O or any of the Company's other Subsidiaries, any
applicable law (including any securities or Blue Sky law), statute, rule or
regulation or (insofar as is known to us after having made due inquiry with
respect thereto) any agreement (including, without limitation, any agreement
listed in Schedule 8G to the Agreement), instrument, order, judgment or decree
to which the Company, Big O or any of the Company's other Subsidiaries is a
party or otherwise subject.
Very truly yours,
D - 1 - 2
<PAGE> 64
EXHIBIT D-2
[FORM OF OPINION OF COMPANY'S COUNSEL]
[Letterhead of _______________]
[Date of Closing]
[Name(s) and address(es) of
purchaser(s)]
Ladies and Gentlemen:
We have acted as counsel for TBC CORPORATION (the "Company") in
connection with 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 and each Prudential Affiliate which
becomes a party thereto, on the other hand, pursuant to which the Company has
issued to you today Senior Series ___ Notes of the Company in the aggregate
principal amount of $____________ (the "Notes"). Capitalized terms used and
not otherwise defined herein shall have the meanings provided in the Agreement.
This letter is being delivered to you in satisfaction of the condition set
forth in paragraph 3A(v) of the Agreement and with the understanding that you
are purchasing the Notes in reliance on the opinions expressed herein.
In this connection, we have examined such certificates of public
officials, certificates of officers of the Company and copies certified to our
satisfaction of corporate documents and records of the Company and of other
papers, and have made such other investigations, as we have deemed relevant
and necessary as a basis for our opinion hereinafter set forth. We have relied
upon such certificates of public officials and of officers of the Company with
respect to the accuracy of material factual matters contained therein which
were not independently established. With respect to the opinion expressed in
paragraph 3 below, we have also relied upon the representation made by [each
of] you in paragraph 9A of the Agreement.
Based on the foregoing, it is our opinion that:
1. The Company is a corporation duly organized and validly existing
in good standing under the laws of the State of __________________. [Each
Subsidiary is a corporation duly organized and validly existing in good
standing under the laws of its jurisdiction of incorporation.] The Company
[and its Subsidiaries] has [have] the corporate power to carry on its [their
respective] business[es] as now being conducted. [The Company has no
Subsidiaries.]
2. The Agreement and the Notes have been duly authorized by all
requisite corporate action and duly executed and delivered by authorized
officers of the Company, and are valid obligations of the Company, legally
binding upon and enforceable against the Company in
D - 2 - 1
<PAGE> 65
accordance with their respective terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
3. It is not necessary in connection with the offering, issuance,
sale and delivery of the Notes under the circumstances contemplated by the
Agreement to register the Notes under the Securities Act or to qualify an
indenture in respect of the Notes under the Trust Indenture Act of 1939, as
amended.
4. The extension, arranging and obtaining of the credit represented
by the Notes do not result in any violation of regulation G, T or X of the
Board of Governors of the Federal Reserve System.
5. The execution and delivery of the Agreement and the Notes, the
offering, issuance and sale of the Notes and fulfillment of and compliance with
the respective provisions of the Agreement and the Notes do not conflict with,
or result in a breach of the terms, conditions or provisions of, or constitute
a default under, or result in any violation of, or result in the creation of
any Lien upon any of the properties or assets of the Company [or any of its
Subsidiaries] pursuant to, or require any authorization, consent, approval,
exemption, or other action by or notice to or filing with any court,
administrative or governmental body or other Person (other than routine filings
after the date hereof with the Securities and Exchange Commission and/or state
Blue Sky authorities) pursuant to, the charter or by-laws of the Company [or
any of its Subsidiaries], any applicable law (including any securities or Blue
Sky law), statute, rule or regulation or (insofar as is known to us after
having made due inquiry with respect thereto) any agreement (including, without
limitation, any agreement listed in Schedule 8G to the Agreement), instrument,
order, judgment or decree to which the Company [or any of its Subsidiaries] is
a party or otherwise subject.
Very truly yours,
D - 2 - 2
<PAGE> 66
EXHIBIT E
SHARING AGREEMENT
This SHARING AGREEMENT, dated as of _________ (this "AGREEMENT"),
is entered into by and between _________________________________ [List
all/agent banks] [and the other lenders that become parties to
the______________ Agreement] referred to below (herein sometimes called the
"BANKS"and individually a "BANK"), and THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA ("PRUDENTIAL" or the "NOTEHOLDER"; the Banks and the Noteholder being
herein sometimes collectively called the "LENDERS" and individually called a
"LENDER").
W I T N E S S E T H:
WHEREAS, TBC CORPORATION, a Delaware corporation (the
"COMPANY"), and the Banks are entering into a ________________ Credit
Agreement, to be dated as of ________________ ([together,] as amended from time
to time, being referred to as the "BANK AGREEMENT[S]"), pursuant to which,
among other things, the Banks have agreed to make certain loans to the Company
[and to issue certain letters of credit for the benefit of the Company].
[WHEREAS, payment of certain obligations of the Company to the
Banks arising under or in connection with the Bank Agreement[s] from time to
time may be guaranteed by one or more Subsidiaries (as defined in the Note
Agreement referred to below) of the Company (herein sometimes collectively
called the "GUARANTORS" and individually called a "GUARANTOR") pursuant to one
or more guaranty agreements in favor of the Banks (collectively the "BANK
GUARANTIES");]
WHEREAS, under applicable law and the terms of the Bank
Agreement[s], the Banks are entitled to set-off, appropriate and apply any
deposits (general or special (except trust and escrow accounts), time or
demand, including without limitation indebtedness evidenced by certificates of
deposit, in each case whether matured or unmatured) and any other indebtedness
at any time held or owing by a Bank to or for the credit or account of the
Company, against and on account of liabilities of the Company under the Bank
Agreement[s], pursuant to law and the terms of the Bank Agreement[s]
(collectively, the "COMPANY SET-OFF RIGHTS");
[WHEREAS, under applicable law and the terms of the Bank
Guaranties, the Banks may be entitled to set-off, appropriate and apply any
deposits (general or special (except trust and escrow accounts), time or
demand, including without limitation indebtedness evidenced by certificates of
deposit, in each case whether matured or unmatured) and any other indebtedness
at any time held or owing by a Bank to or for the credit or account of the
<PAGE> 67
Guarantors, against and on account of liabilities of the Guarantors under the
Bank Guaranties (collectively, the "GUARANTOR SET-OFF RIGHTS"; the Company
Set-Off Rights and the Guarantor Set-Off Rights including any right to receive
a lien on amounts previously subject to the Company Set-Off Rights or the
Guarantor Set-Off Rights, and to recover such amounts, after the commencement
of any action under a Bankruptcy Law (as defined in the Note Agreement) are
collectively referred to herein as the "SET-OFF RIGHTS");]
[WHEREAS, under the Bank Agreement[s], the Company is required
to pledge cash collateral to the Banks (the "CASH COLLATERAL") in an amount
equal to the outstanding face amount of any letters of credit issued pursuant
to the Bank Agreement[s] after an Event of Default (as defined in the Bank
Agreement[s]) and the Banks have agreed to share such cash collateral with the
Noteholder;]
WHEREAS, the Company has entered into a Note Agreement dated
as of July 10, 1995 with Prudential (the "NOTE AGREEMENT") for the issuance by
the Company and the purchase by Prudential of the Company's 7.55% Series A
Senior Notes due July 10, 2003, 7.87% Series B Senior Notes due July 10, 2005
and 8.06% Series C Senior Notes due July 10, 2008 (the "SENIOR NOTES"; the Bank
Agreement[s], the Note Agreement and the Senior Notes are collectively referred
to herein as the "COMPANY LOAN DOCUMENTS");
[WHEREAS, payment of the obligations of the Company to the
Noteholder arising under or in connection with the Note Agreement and the
Senior Notes from time to time may be guaranteed by the Guarantors pursuant to
one or more guaranty agreements (as amended or modified and in effect from time
to time, the "NOTEHOLDER GUARANTIES"; the Bank Guaranties and the Noteholder
Guaranties being herein collectively called the "SUBJECT GUARANTIES" and
individually called a "SUBJECT GUARANTY");]
WHEREAS, the obligations of the Company under the Note
Agreement and the Senior Notes are intended to be pari passu with obligations
of the Company under the Bank Agreement[s]; and
WHEREAS, the Lenders have agreed, to enter into this Agreement
so as to evidence the agreement between the Lenders with respect to certain
payments that may be received [by the Banks pursuant to Set-Off Rights or from
the Cash Collateral and][by the Lenders under or in connection with the Subject
Guaranties];
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Lenders hereby agree as follows:
1. If any Lender shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of its Subject
E - 2
<PAGE> 68
Guaranty or Subject Guaranties in excess of its Proportionate Share (as defined
below) of payments then or thereafter obtained by all Lenders with respect to
the Subject Guaranties, such Lender shall purchase from the other Lenders such
participation(s) in the indebtedness of the Company held by such other Lenders
pursuant to the Company Loan Documents as shall be necessary to cause such
purchasing Lender to share such payment or other recovery ratably, based on
Proportionate Shares, with such selling Lenders; provided, however, that if all
or any portion of such payment or other recovery is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded, and each selling
Lender shall repay to the purchasing Lender the purchase price, to the ratable
extent of such recovery in proportion to the amount received by such selling
Lender, together with an amount equal to such selling Lender's ratable share
(according to the proportion of (x) the amount of such selling Lender's
required repayment to the purchasing Lender to (y) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The term "PROPORTIONATE SHARE", as used herein, shall mean at
any time for each Lender a fraction (a) the numerator of which is the aggregate
principal amount of the indebtedness of the Company held by such Lender at such
time pursuant to the Company Loan Documents and (b) the denominator of which is
the aggregate principal amount of the indebtedness of the Company held by all
Lenders at such time pursuant to the Company Loan Documents.
2. If any Bank shall obtain any payment or other
recovery pursuant to Set-Off Rights in excess of its Proportionate Share of
payments then or thereafter obtained by all Lenders with respect to any Set-Off
Rights, such Lender shall purchase from the other Lenders such participation(s)
in the indebtedness of the Company held by such other Lenders pursuant to the
Company Loan Documents as shall be necessary to cause such purchasing Lender to
share such payment or other recovery ratably, based on Proportionate Shares,
with such selling Lenders; provided, however, that if all or any portion of
such payment or other recovery is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded, and each selling Lender shall repay to
the purchasing Lender the purchase price, to the ratable extent of such
recovery in proportion to the amount received by such selling Lender, together
with an amount equal to such selling Lender's ratable share (according to the
proportion of (x) the amount of such selling Lender's required repayment to the
purchasing Lender to (y) the total amount so recovered from the purchasing
Lender) of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount so recovered.
[3. If any Bank shall obtain any payment or other
recovery from the Cash Collateral in excess of its Proportionate Share of
payments then or thereafter obtained by all Lenders with respect to any Cash
Collateral, such Bank shall purchase from the other Lenders such
participation(s) in the indebtedness of the Company held by such other Lenders
pursuant
E - 3
<PAGE> 69
to the Company Loan Documents as shall be necessary to cause such purchasing
Lender to share such payment or other recovery ratably, based on Proportionate
Shares, with such selling Lenders; provided, however, that if all or any
portion of such payment or other recovery is thereafter recovered from such
purchasing Lender, the purchase shall be rescinded, and each selling Lender
shall repay to the purchasing Lender the purchase price, to the ratable extent
of such recovery in proportion to the amount received by such selling Lender,
together with an amount equal to such selling Lender's ratable share (according
to the proportion of (x) the amount of such selling Lender's required repayment
to the purchasing Lender to (y) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered.]
[4.] Each of the Company and each Guarantor, by signing a
copy of this Agreement, agrees that each Lender so purchasing a participation
from another Lender pursuant to Sections 1 [or 2][, 2 or 3] hereof may, to the
fullest extent permitted by law, exercise all its rights of payment (including
rights of setoff) with respect to such participation as fully as if such Lender
were the direct creditor of the Company and such Guarantor in the amount of
such participation. The Company agrees to cause each Subsidiary that issues a
Subject Guaranty to execute a counterpart of the Consent to this Agreement.
[5.] If under any applicable bankruptcy, insolvency or
other similar law, any Lender possesses a secured claim, or receives a secured
claim in lieu of a setoff to which Sections 1, 2 [or 3][, 3 or 4] hereof
applies, such Lender shall exercise its rights in respect of such secured claim
in a manner consistent with the rights of the other Lenders in accordance with
Sections 1[and 2][, 2 and 3] hereof.
[6.] This Agreement shall in all respects be a continuing,
absolute, unconditional and irrevocable agreement, and shall remain in full
force and effect until all obligations of the Company and the Guarantors to the
Lenders shall have been satisfied in full and all obligations of all Lenders to
the other Lenders hereunder shall have been satisfied in full. Each Lender
agrees that this Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time any payment (in whole or in part) of any of the
obligations of the Company or any of the Guarantors is rescinded or must
otherwise be restored by any Lender, upon the insolvency, bankruptcy or
reorganization of the Company or any of the Company and the Guarantors or
otherwise, as though such payment had not been made.
[7.] This Agreement shall be binding upon, and inure to
the benefit of and be enforceable by, the Lenders, each of their respective
successors, transferees and assigns and each person or entity that purchases a
participation in the indebtedness of the Company or any Guarantor held by a
Lender. Without limiting the generality of the foregoing sentence, any Lender
may assign or otherwise transfer (in whole or in part) to any other person or
entity the
E - 4
<PAGE> 70
obligations of the Company or any of the Guarantors to such Lender under any of
the Company Loan Documents, and such other person or entity shall thereupon
become vested with all rights and benefits, and become subject to all the
obligations, in respect thereof granted to or imposed upon such Lender under
this Agreement.
[8.] None of the provisions of this Agreement shall inure
to the benefit of the Company, any of the Guarantors or, except as provided in
Section 7 hereof, any other person other than the Lenders; consequently, the
Company, the Guarantors and any and all other persons shall not be entitled to
rely upon, or to raise as a defense, in any manner whatsoever, the provisions
of this Agreement or the failure of any Lender to comply with such provisions.
[9.] No amendment to or waiver of any provision of this
Agreement, nor consent to any departure by any Lender herefrom, shall in any
event be effective unless the same shall be in writing and signed by all the
Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
[10.] All notices and other communications provided to any
Lender under this Agreement shall be in writing or by facsimile and addressed,
delivered or transmitted to such Lender at its address or facsimile number set
forth below its signature hereto or at such other address or facsimile number
as may be designated by such Lender in a notice to the other Lenders. Any
notice, if mailed and properly addressed with postage prepaid or if properly
addressed and sent by pre-paid courier service, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted if actually received, and the burden of proving receipt shall be on
the transmitting Lender.
[11.] No failure or delay on the part of any Lender in
exercising any power or right under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
[12.] Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by
or invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
[13.] THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. THIS AGREEMENT
CONSTITUTES THE ENTIRE UNDERSTANDING
E - 5
<PAGE> 71
BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
SUPERSEDES ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
[14.] This Agreement may be separately executed in
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same
Agreement.
[Signatures appear on the next page.]
E - 6
<PAGE> 72
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written by their duly
authorized officers.
[SIGNATURE BLOCK FOR EACH
BANK]
By:___________________________
Title:
Address:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:___________________________
Vice President
Address:
c/o Prudential Capital Group
Texas Commerce Tower
2200 Ross Avenue, Suite 4200 E
Dallas, Texas 75201
Attention: R. A. Walker
Managing Director
(214) 720-6200 phone
(214) 720-6299 fax
E - 7
<PAGE> 73
CONSENT AND AGREEMENT
Each of the undersigned hereby consents to the provisions of
the foregoing Agreement and the transactions contemplated thereby and
specifically agrees to the provisions of Section [4] of the Agreement
(including the provisions regarding the right of setoff). Each of the
undersigned agrees to notify each Lender promptly of any payment to, or setoff
or obtaining of a secured claim by, the other Lenders contemplated by the
foregoing Agreement.
Dated: ____________
TBC CORPORATION
By:__________________________
Title:
[Signature block for each Guarantor]
By:__________________________
Title:
E - 8
<PAGE> 74
EXHIBIT F
STATE STREET BANK AND TRUST COMPANY
WIRE INSTRUCTIONS
State Street Bank and Trust Company
Boston, Mass.
ABA #011-0000-28
A/C#9903-943-0
Attn.: Terry Thomas
Ref. TBC/BIG O TIRES ESCROW
ADDRESSES
US MAIL:
State Street Bank and Trust Company
PO Box 778; Fourth Floor, Corporate Trust Department
Boston, Mass. 02102
Attn. Laura L. Morse
COURIER OR OVERNIGHT MAIL:
State Street Bank and Trust Company
2 International Place, Fourth Floor, Corporate Trust Department
Boston, Mass. 02110
Attn. Laura L. Morse
<PAGE> 75
7/8/96
SCHEDULE 6B(1)
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> 76
Big O Liens
<TABLE>
<CAPTION>
Property Address Property Use Status Encumbrances
<S> <C> <C> <C>
875 American Pacific Drive Regional Distribution Used for Company Indenture for Senior
Henderson, Nevada Center Operations Secured Notes
3511 South T.K. Avenue Regional Sales, Service Used for Company Indenture for Senior
Boise, Idaho & Distribution Center Operations Secured Notes
Approximately 6.24 acres adjoining Vacant For Sale None
Boise Regional Sales, Service &
Distribution Center
640 Park Boulevard Regional Sales, Service Used for Company Mortgage for the
New Albany, Indiana & Distribution Center Operations benefit of National
City Bank, Kentucky
544 North State Street Big O Tires Retail Leased to Deed of Trust for the
Lake Oswego, Oregon Store Franchisee benefit of AT&T Capital
Corporation
Approximately 5.01 acres adjoining Vacant For Sale None
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 Vacant For Sale None
Broomfield, Colorado
2510 N. 75th Avenue Big O Tires Retail Vacant Land Being None
Phoenix, Arizona Store Developed for Sale
(Westridge Mall) to Franchisee.
61st & Bell Big O Tires Retail Vacant Land Being None
Phoenix, Arizona Store Developed for Sale
to Franchisee.
40420 California Oaks Road Big O Tires Retail Vacant Land Being None
Murrieta, California Store Developed for Sale
to Franchisee.
2210 Haines Avenue Big O Tires Retail Vacant Land Being None
Rapid City, South Dakota Store Developed for Sale
to Franchisee.
Quincy & Wadsworth Training Store Vacant Land Being None
Denver, Colorado Developed for Big
O Tires Training
Facility - Will
Find Owner to
Purchase the
Facility and Lease
Back to the
Company.
</TABLE>
<PAGE> 77
SCHEDULE 6B(2)
PERMITTED SUBSIDIARY DEBT
- See attached listing of certain 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 6B(1) for a list of the Liens relating to the
above Indebtedness.
<PAGE> 78
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
12-31-95 ADDITIONS DELETIONS TRANSFERS
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
N/P FIRSTBANK OF CHICAGO
LINE OF CREDIT 2,650,000.00 15,300,000.00 (16,700,000.00)
LIBOR 0.00
LIBOR 0.00
UNUSED LOC
2726 N/P KELLY SPRINGFIELD 2,945,338.67 (750,000.00)
------------------------------------------------------------------------
SUBTOTAL CORPORATE 5,595,338.67 15,300,000.00 (17,450,000.00) 0.00
------------------------------------------------------------------------
BIG O DEVELOPMENT
GIBSON NOTES (CHANDLER) 0.00
AT&T - L OWSEGO 405,327.00 (3,228.07)
N/P BONDS 0.00
N/P - SENIOR DEBT 8,000,000.00
N/P - INDIANA WAREHOUSE 1,366,666.72 (49,999.98)
N/P CONST. (RAMONA, CA) 0.00
------------------------------------------------------------------------
SUBTOTAL BODI 9,771,993.72 0.00 (53,228.05) 0.00
------------------------------------------------------------------------
TOTALS 15,367,332.39 15,300,000.00 (17,503,228.05) 0.00
========================================================================
LINE OF CREDIT 2,650,000.00 15,300,000.00 (16,700,000.00) 0.00
OTHER 12,717,332.39 0.00 (803,228.05) 0.00
------------------------------------------------------------------------
TOTALS 15,367,332.39 15,300,000.00 (17,503,228.05) 0.00
========================================================================
BIG O RETAIL ENTERPRISES, INC.:
TIMMERMAN-MESA 53,988.05 (15,282.22)
------------------------------------------------------------------------
BIG O DEVELOPMENT
CAP.LSE.OBLIG.BLDG. 113,431.73 (2,506.95)
------------------------------------------------------------------------
TOTALS 199,977.52 0.00 (17,789.17) 0.00
========================================================================
<CAPTION>
BALANCE CURRENT LONG-TERM
06-30-96 MATURITIES PORTION
--------------------------------------------------
<S> <C> <C> <C>
N/P FIRSTBANK OF CHICAGO
LINE OF CREDIT 1,250,000.00 1,250,000.00
LIBOR 0.00 0.00
LIBOR 0.00 0.00
UNUSED LOC
2726 N/P KELLY SPRINGFIELD 2,195,338.67 1,600,000.00 595,338.67
--------------------------------------------------
SUBTOTAL CORPORATE 3,445,338.67 1,600,000.00 1,845,338.67
--------------------------------------------------
BIG O DEVELOPMENT
GIBSON NOTES (CHANDLER) 0.00 0.00
AT&T - L OWSEGO 402,098.93 9,763.93 392,335.00
N/P BONDS 0.00 0.00
N/P - SENIOR DEBT 8,000,000.00 0.00 8,000,000.00
N/P - INDIANA WAREHOUSE 1,316,666.74 99,999.96 1,216,666.78
N/P CONST. (RAMONA, CA) 0.00 0.00 0.00
--------------------------------------------------
SUBTOTAL BODI 9,718,765.67 109,763.89 9,609,001.78
--------------------------------------------------
TOTALS 13,164,104.34 1,709,763.89 11,454,340.45
==================================================
LINE OF CREDIT 1,250,000.00 0.00 1,250,000.00
OTHER 11,914,104.34 1,709,763.89 10,204,340.45
--------------------------------------------------
TOTALS 13,164,104.34 1,709,763.89 11,454,340.45
==================================================
BIG O RETAIL ENTERPRISES, INC.:
TIMMERMAN-MESA 38,705.83 32,893.01 5,812.82
--------------------------------------------------
BIG O DEVELOPMENT
CAP.LSE.OBLIG.BLDG. 110,924.78 6,097.24 104,827.54
--------------------------------------------------
TOTALS 149,630.61 38,990.25 110,640.36
==================================================
</TABLE>
<PAGE> 79
SCHEDULE 6B(3)
EXISTING LOANS AND INVESTMENTS
- See Schedule 1 for a listing of all Subsidiaries.
- The Company owns 40% of the ownership interests in TBC de
Mexico, a Mexican company.
- The Company owns 50% of TBC Worldwide, a Delaware limited
liability company.
- Big O Retail Enterprises, Inc. owns 51% of the stock of Apex
Tire, Inc., a Utah corporation.
- Big O Retail Enterprises, Inc. is a 50% shareholder in Tires
Industries Corporation, a Utah corporation.
- See attached listing of Big O notes receivable and pending MAP
loans.
- See attached listing of notes receivable held by the Company,
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/CMT 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.
<PAGE> 80
SCHEDULE 1
SUBSIDIARIES
<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 Enterprises, Inc. Big O 100% Colorado
Big O Development, Inc. Big O 100% Colorado
O Advertising, Inc. Big O 100% Colorado
Big O Tire of Idaho, Inc. Big O 100% Idaho
TBC International, Inc. Borrower 100% Delaware
TBC Sales, Inc. Borrower 100% Delaware
Northern States Tire, Inc. Borrower 100% Delaware
Battery Associates, Inc. Borrower 100% Delaware
</TABLE>
<PAGE> 81
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
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
</TABLE>
<PAGE> 82
--------------------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>
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
DORONA 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
</TABLE>
<PAGE> 83
<TABLE>
<CAPTION>
PRINCIPAL BALANCES
-------------------------------------------------------------------
BALANCE BALANCE CURRENT LONG-TERM
DESCRIPTION 12-31-95 ADDITIONS PAYMENTS 06-30-96 MATURITIES PORTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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 (550,000.00) (550,000.00) (550,000.00)
VENTURE
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
===============================================================================================
</TABLE>
<TABLE>
<CAPTION>
CURRENT CURRENT NET NET TOTAL
OTHER RELATED OTHER RELATED
<S> <C> <C> <C> <C> <C>
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
</TABLE>
<PAGE> 84
PENDING MAP LOANS
APPROVED WAITING FOR FINAL NUMBERS AND FRANCHISEE SIGNATURE
<TABLE>
<S> <C>
FRANCHISEE APPROXIMATE AMOUNT
Paul McKellar $148,000
Thomas J. Duddy $ 60,000
--------
TOTAL $208,000
========
BIG O HAS SIGNED LETTER OF INTENT, BUT NO FINAL APPROVAL
FRANCHISEE APPROXIMATE AMOUNT
Frans Voorstad $ 50,000
Russ Crowell $ 50,000
Jan Kirk $145,000
--------
TOTAL $245,000
========
TOTAL PENDING MAPS $453,000
MAP LOANS DISCUSSED, NOT YET APPROVED BY BIG O.
FRANCHISEE FRANCHISEE LOCATION
Ed and Kathy Doran West Oakland, CA
Guido Bertoli Santa Cruz, CA
Steve Wallace Louisville, KY
Sharon Smith Portland, OR
TOTAL # OF MAP LOANS PENDING = 9
</TABLE>
<PAGE> 85
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>
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> 86
NORTHERN STATES TIRE, INC. July 5, 1996
Deron Wisdom
TBC CORPORATION
Via: FAX
Dear Deron the following is our Note Receivable as of June 30, 1996:
<TABLE>
<S> <C> <C> <C>
Wakefield Tire Center July 96 12% INT $ 4,023.56
Pittsfield Tire & Auto Aug 97 12% INT $ 7,489.98
Dracut Tire July 96 12% INT $ 4,926.45
Nite Owl Tire Dec 96 12% INT $12,563.29
County Tire Mar 00 0% INT $29,000.00
*Wilder Auto Oct 98 0% INT $ 9,800.00
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 $11,000.00
County Tire Sept 96 0% INT $10,000.00
$133,803.28
</TABLE>
* Will be paid at time of FDIC settlement, should be September 98.
** Pay back only beings if inventory turns aren't adequate. Interest
rate on ledger balance is 12% if they don't abide by repayment
schedule.
Please call if you have any questions.
Jim Dore
<PAGE> 87
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 82,623 05/02/90 10.50% 1,084 8,831 34,913 43,744
Warehouse
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
=================================
</TABLE>
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.
<PAGE> 88
SCHEDULE 6C
EMPLOYEE STOCK INCENTIVE PLANS
- TBC Corporation Amended and Restated 1989 Stock Incentive
Plan.
- TBC Corporation 1983 Stock Option Plan, as amended.
<PAGE> 89
SCHEDULE 8D
EXISTING GUARANTEES
- See attached listing of Big O Guarantees.
- The Company has guaranteed a $1.5 million line of credit made
available to TBC de Mexico by First Tennessee Bank.
- The Company has guaranteed all obligations of Northern States
Tire, Inc. to Bandag Incorporated.
<PAGE> 90
<TABLE>
<CAPTION>
Financial Guarantees
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 7,791.82 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
============
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 64,425.42
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
------------
</TABLE>
<PAGE> 91
<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>
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
-------------
Anticipated additions the week of July 8,
1996:
18-Months SBA Loan Guarantees
Schlittenhart Enterprises, Dennis
Schlittenhart*** 153,216.00
Granada Enterprises Corp., Frank 297,684.00
==============
Granada*** 144,468.00
Total Guarantees 17,210,612.17
--------------
</TABLE>
*Additions after 03/31/96
** Deletions after 03/31/96
*** The amount listed is an estimate as final numbers are not available until
closing.
<PAGE> 92
SCHEDULE 8G
AGREEMENTS RESTRICTING DEBT
- Note Purchase Agreement, dated April 27, 1994, between Big O
and USG Annuity & Life Company and Republic Western Insurance
Company.
<PAGE> 1
EXHIBIT 4.2
TBC CORPORATION
7.55% SERIES A SENIOR NOTE DUE JULY 10, 2003
No. R-A1 July 10, 1996
$32,500,000
FOR VALUE RECEIVED, the undersigned, TBC CORPORATION (herein called
the "Company"), a corporation organized and existing under the laws of the
State of Delaware, hereby promises to pay to The Prudential Insurance Company
of America, or registered assigns, the principal sum of THIRTY-TWO MILLION FIVE
HUNDRED THOUSAND DOLLARS on July 10, 2003, with interest (computed on the basis
of a 360-day year--30-day month) (a) on the unpaid balance thereof at the rate
of 7.55% per annum from the date hereof, payable quarterly on the 10th day of
January, April, July and October in each year, commencing with the January,
April, July or October next succeeding the date hereof, until the principal
hereof shall have become due and payable, and (b) on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of
Yield-Maintenance Amount and any overdue payment of interest, payable quarterly
as aforesaid (or, at the option of the registered holder hereof, on demand), at
a rate per annum from time to time equal to the greater of (i) 9.55% or (ii) 2%
over the rate of interest publicly announced by Morgan Guaranty Trust Company
of New York from time to time in New York City as its Prime Rate.
Payments of principal, Yield-Maintenance Amount, if any, and interest
are to be made at the main office of Morgan Guaranty Trust Company of New York
in New York City or at such other place as the holder hereof shall designate to
the Company in writing, in lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Purchase and Private Shelf Agreement, dated
as of July 10, 1996 (herein called the "Agreement"), between the Company, on
the one hand, and The Prudential Insurance Company of America and each
Prudential Affiliate which becomes party thereto, on the other hand, and is
entitled to the benefits thereof. As provided in the Agreement, this Note is
subject to prepayment, in whole or from time to time in part, with the
Yield-Maintenance Amount specified in the Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the
registered holder hereof or such holder's attorney duly authorized in writing,
a new Note for the then outstanding principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the
A - 1 - 1
<PAGE> 2
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
The Company agrees to make prepayments of principal of this Note on
the dates and in the amounts specified in the Agreement.
In case an Event of Default shall occur and be continuing, the
principal of this Note may be declared or otherwise become due and payable in
the manner and with the effect provided in the Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meanings (if any) provided in the Agreement.
This Note is intended to be performed in the State of New York and
shall be construed and enforced in accordance with the internal law of such
State.
TBC CORPORATION
By: /s/ Ronald E. McCollough
--------------------
Ronald E. McCollough
Title: Senior Vice President
Operations and Treasurer
A - 1 - 2
<PAGE> 3
TBC CORPORATION
7.87% SERIES B SENIOR NOTE DUE JULY 10, 2005
No. R-B1 July 10, 1996
$11,000,000
FOR VALUE RECEIVED, the undersigned, TBC CORPORATION (herein called
the "Company"), a corporation organized and existing under the laws of the
State of Delaware, hereby promises to pay to The Prudential Insurance Company
of America, or registered assigns, the principal sum of ELEVEN MILLION DOLLARS
on July 10, 2005, with interest (computed on the basis of a 360-day
year--30-day month) (a) on the unpaid balance thereof at the rate of 7.87% per
annum from the date hereof, payable quarterly on the 10th day of January,
April, July and October in each year, commencing with the January, April, July
or October next succeeding the date hereof, until the principal hereof shall
have become due and payable, and (b) on any overdue payment (including any
overdue prepayment) of principal, any overdue payment of Yield-Maintenance
Amount and any overdue payment of interest, payable quarterly as aforesaid (or,
at the option of the registered holder hereof, on demand), at a rate per annum
from time to time equal to the greater of (i) 9.87% or (ii) 2% over the rate of
interest publicly announced by Morgan Guaranty Trust Company of New York from
time to time in New York City as its Prime Rate.
Payments of principal, Yield-Maintenance Amount, if any, and interest
are to be made at the main office of Morgan Guaranty Trust Company of New York
in New York City or at such other place as the holder hereof shall designate to
the Company in writing, in lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Purchase and Private Shelf Agreement, dated
as of July 10, 1996 (herein called the "Agreement"), between the Company, on
the one hand, and The Prudential Insurance Company of America and each
Prudential Affiliate which becomes party thereto, on the other hand, and is
entitled to the benefits thereof. As provided in the Agreement, this Note is
subject to prepayment, in whole or from time to time in part, with the
Yield-Maintenance Amount specified in the Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the
registered holder hereof or such holder's attorney duly authorized in writing,
a new Note for the then outstanding principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the
A - 1 - 1
<PAGE> 4
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
The Company agrees to make prepayments of principal of this Note on
the dates and in the amounts specified in the Agreement.
In case an Event of Default shall occur and be continuing, the
principal of this Note may be declared or otherwise become due and payable in
the manner and with the effect provided in the Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meanings (if any) provided in the Agreement.
This Note is intended to be performed in the State of New York and
shall be construed and enforced in accordance with the internal law of such
State.
TBC CORPORATION
By: /s/ Ronald E. McCollough
--------------------
Ronald E. McCollough
Title: Senior Vice President
Operations and Treasurer
A - 1 - 2
<PAGE> 5
TBC CORPORATION
8.06% SERIES C SENIOR NOTE DUE JULY 10, 2008
No. R-C1 July 10, 1996
$16,500,000
FOR VALUE RECEIVED, the undersigned, TBC CORPORATION (herein called
the "Company"), a corporation organized and existing under the laws of the
State of Delaware, hereby promises to pay to The Prudential Insurance Company
of America, or registered assigns, the principal sum of SIXTEEN MILLION FIVE
HUNDRED THOUSAND DOLLARS on July 10, 2008, with interest (computed on the basis
of a 360-day year--30-day month) (a) on the unpaid balance thereof at the rate
of 8.06% per annum from the date hereof, payable quarterly on the 10th day of
January, April, July and October in each year, commencing with the January,
April, July or October next succeeding the date hereof, until the principal
hereof shall have become due and payable, and (b) on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of
Yield-Maintenance Amount and any overdue payment of interest, payable quarterly
as aforesaid (or, at the option of the registered holder hereof, on demand), at
a rate per annum from time to time equal to the greater of (i) 10.06% or (ii)
2% over the rate of interest publicly announced by Morgan Guaranty Trust
Company of New York from time to time in New York City as its Prime Rate.
Payments of principal, Yield-Maintenance Amount, if any, and interest
are to be made at the main office of Morgan Guaranty Trust Company of New York
in New York City or at such other place as the holder hereof shall designate to
the Company in writing, in lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Purchase and Private Shelf Agreement, dated
as of July 10, 1996 (herein called the "Agreement"), between the Company, on
the one hand, and The Prudential Insurance Company of America and each
Prudential Affiliate which becomes party thereto, on the other hand, and is
entitled to the benefits thereof. As provided in the Agreement, this Note is
subject to prepayment, in whole or from time to time in part, with the
Yield-Maintenance Amount specified in the Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the
registered holder hereof or such holder's attorney duly authorized in writing,
a new Note for the then outstanding principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the
A - 1 - 1
<PAGE> 6
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
The Company agrees to make prepayments of principal of this Note on
the dates and in the amounts specified in the Agreement.
In case an Event of Default shall occur and be continuing, the
principal of this Note may be declared or otherwise become due and payable in
the manner and with the effect provided in the Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meanings (if any) provided in the Agreement.
This Note is intended to be performed in the State of New York and
shall be construed and enforced in accordance with the internal law of such
State.
TBC CORPORATION
By: /s/ Ronald E. McCollough
--------------------
Ronald E. McCollough
Title: Senior Vice President
Operations and Treasurer
A - 1 - 2
