CONFORMED
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
- ------
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-11579
TBC CORPORATION
---------------
(Exact name of registrant as specified in its charter)
DELAWARE 31-0600670
------------- -------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4770 Hickory Hill Road
Memphis, Tennessee 38141
----------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (901) 363-8030
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
21,182,193 Shares of Common Stock were outstanding as of September 30, 1999.
INDEX TO EXHIBITS at page 13 of this Report
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
September 30, December 31,
1999 1998
---- ----
CURRENT ASSETS: (Unaudited)
Cash and cash equivalents ...................... $ 1,965 $ 1,699
Accounts and notes receivable, less
allowance for doubtful accounts of
$8,621 on September 30, 1999 and
$9,298 on December 31, 1998:
Related parties ........................ 13,810 8,472
Other .................................. 95,225 77,632
-------- --------
Total accounts and notes receivable .... 109,035 86,104
Inventories .................................... 143,150 124,720
Refundable federal and state income taxes ...... 1,068 1,477
Deferred income taxes .......................... 7,821 7,653
Other current assets ........................... 15,166 10,072
-------- --------
Total current assets ................... 278,205 231,725
-------- --------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land and improvements .......................... 9,849 8,453
Buildings and leasehold improvements ........... 32,715 29,954
Furniture and equipment ........................ 38,401 30,821
-------- --------
80,965 69,228
Less accumulated depreciation .................. 30,179 25,146
-------- --------
Total property, plant and equipment .... 50,786 44,082
-------- --------
TRADEMARKS, NET ...................................... 16,550 16,887
-------- --------
GOODWILL, NET ........................................ 20,427 20,747
-------- --------
OTHER ASSETS ......................................... 18,821 20,349
-------- --------
TOTAL ASSETS ......................................... $384,789 $333,790
======== ========
See accompanying notes to consolidated financial statements.
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<PAGE>
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1999 1998
---- ----
CURRENT LIABILITIES: (Unaudited)
Outstanding checks, net ...................... $ 17,282 $ 5,677
Notes payable to banks ....................... 61,883 49,952
Current portion of long-term debt ............ 7,854 7,860
Accounts payable, trade ...................... 64,071 43,731
Other current liabilities .................... 22,601 18,689
-------- --------
Total current liabilities ............ 173,691 125,909
-------- --------
LONG-TERM DEBT, LESS CURRENT PORTION ............... 52,000 59,653
-------- --------
NONCURRENT LIABILITIES ............................. 1,220 2,612
-------- --------
DEFERRED INCOME TAXES .............................. 6,762 7,185
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, $.10 par value,
shares issued and outstanding -
21,182 on September 30, 1999 and
21,172 on December 31, 1998 .................. 2,118 2,117
Additional paid-in capital ................... 9,639 9,540
Retained earnings ............................ 139,359 126,774
-------- --------
Total stockholders' equity ........... 151,116 138,431
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......... $384,789 $333,790
======== ========
See accompanying notes to consolidated financial statements.
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<PAGE>
<TABLE>
TBC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1999 1998 1999 1998
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES * ................................. $ 210,469 $ 177,661 $ 560,335 $ 480,319
--------- --------- --------- ---------
COSTS AND EXPENSES:
Cost of sales ........................... 173,221 150,049 462,153 405,598
Distribution ............................ 12,588 8,738 33,203 24,669
Selling and administrative .............. 12,340 8,591 34,354 25,940
Provision for doubtful accounts and notes 128 165 5,307 479
Interest expense ........................ 1,994 1,313 5,481 4,305
Other (income) expense - net ............ (514) (361) (1,118) (1,114)
--------- --------- --------- ---------
Total costs and expenses ............ 199,757 168,495 539,380 459,877
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES .................. 10,712 9,166 20,955 20,442
PROVISION FOR INCOME TAXES .................. 4,155 3,660 8,282 8,067
--------- --------- --------- ---------
NET INCOME .................................. $ 6,557 $ 5,506 $ 12,673 $ 12,375
========= ========= ========= =========
EARNINGS PER SHARE -
Basic and diluted ....................... $ .31 $ .25 $ .60 $ .54
========= ========= ========= =========
</TABLE>
* Including sales to related parties of $23,141 and $36,042 in the three
months ended September 30, 1999 and 1998, respectively and $59,263 and
$105,842 in the nine months ended September 30, 1999 and 1998,
respectively.
See accompanying notes to consolidated financial statements.
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<PAGE>
<TABLE>
TBC CORPORATION
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
<CAPTION>
Common Stock Additional
Number of Paid-In Retained
Shares Amount Capital Earnings Total
------ ------ ------- -------- -----
<S> <C> <C> <C> <C> <C>
Nine Months Ended
September 30, 1998
----------------------
BALANCE, JANUARY 1, 1998 ........... 23,163 $ 2,316 $ 9,788 $ 122,083 $ 134,187
Net income for period ............ 12,375 12,375
Issuance of common stock under
stock option and incentive plan 84 8 626 -- 634
Repurchase and retirement
of common stock .............. (2,037) (203) (914) (11,970) (13,087)
Tax benefit from exercise of
stock options ................ -- -- 57 -- 57
--------- --------- --------- --------- ---------
BALANCE, SEPTEMBER 30, 1998 ........ 21,210 $ 2,121 $ 9,557 $ 122,488 $ 134,166
========= ========= ========= ========= =========
Nine Months Ended
September 30, 1999
------------------
BALANCE, JANUARY 1, 1999 ........... 21,172 $ 2,117 $ 9,540 $ 126,774 $ 138,431
Net income for period ............ 12,673 12,673
Issuance of common stock under
stock option and incentive plan 23 2 95 -- 97
Repurchase and retirement
of common stock .............. (13) (1) (6) (88) (95)
Tax benefit from exercise of
stock options ................ -- -- 10 -- 10
--------- --------- --------- --------- ---------
BALANCE, SEPTEMBER 30, 1999 ........ 21,182 $ 2,118 $ 9,639 $ 139,359 $ 151,116
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
<TABLE>
TBC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
1999 1998
---- ----
<S> <C> <C>
Operating Activities:
Net income .............................................. $ 12,673 $ 12,375
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation ...................................... 5,271 4,935
Amortization ...................................... 824 730
Provision for doubtful accounts and notes ......... 5,307 479
Deferred income taxes ............................. (591) (133)
Equity in earnings from joint ventures ............ 142 135
Changes in operating assets
and liabilities:
Receivables ................................... (26,423) (18,825)
Inventories ................................... (18,430) (10,208)
Other current assets .......................... (5,094) 1,755
Other assets .................................. (485) 146
Accounts payable, trade ....................... 20,340 38,501
Federal and state income taxes
refundable or payable ...................... 419 1,895
Other current liabilities ..................... 3,912 2,365
Noncurrent liabilities ........................ (1,392) (388)
-------- --------
Net cash provided by (used in) operating activities (3,527) 33,762
-------- --------
Investing Activities:
Purchase of property, plant and equipment ............... (12,306) (8,254)
Investments in joint ventures ........................... (75) (451)
Other ................................................... 325 252
-------- --------
Net cash used in investing activities ............. (12,056) (8,453)
-------- --------
Financing Activities:
Net bank borrowings (repayments) under
short-term borrowing arrangements ................... 11,931 (17,853)
Increase (decrease) in outstanding checks, net .......... 11,605 5,595
Payments on long-term debt .............................. (7,659) (485)
Issuance of common stock under stock option
and incentive plans ................................ 67 318
Repurchase and retirement of common stock ............... (95) (13,087)
-------- --------
Net cash provided by (used in) financing activities 15,849 (25,512)
-------- --------
Change in cash and cash equivalents ........................ 266 (203)
Cash and cash equivalents:
Balance - Beginning of year ............................. 1,699 917
-------- --------
Balance - End of period ................................. $ 1,965 $ 714
======== ========
Supplemental Disclosures of Cash Flow Information:
Cash paid for - Interest ................................ $ 5,464 $ 4,656
- Income Taxes ............................ 8,454 6,305
Supplemental Disclosure of Non-Cash Financing Activity:
Tax benefit from exercise of stock options .............. $ 10 $ 57
Issuance of restricted stock under stock incentive plan . 30 316
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
TBC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Financial Statement Presentation
The December 31, 1998 balance sheet was derived from audited
financial statements. The consolidated balance sheet as of September
30, 1999, and the consolidated statements of income, stockholders'
equity and cash flows for the periods ended September 30, 1999 and
1998, have been prepared by the Company, without audit. It is
Management's opinion that these statements include all adjustments,
consisting only of normal recurring adjustments, necessary to present
fairly the financial position, results of operations and cash flows as
of September 30, 1999 and for all periods presented. The results for
the periods presented are not necessarily indicative of the results
that may be expected for the full year.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these consolidated financial statements be read in conjunction
with the financial statements and notes thereto included in the
Company's 1998 Annual Report.
Certain reclassifications have been made in the statements of
income and statements of cash flows for the periods ended September 30,
1998, to conform to the current presentation, with no effect on
previously reported net income.
2. Earnings Per Share
Basic earnings per share have been computed by dividing net
income by the weighted average number of shares of common stock
outstanding. Diluted earnings per share have been computed by dividing
net income by the weighted average number of common shares and
equivalents outstanding. Common share equivalents represent shares
issuable upon assumed exercise of stock options. The weighted average
number of common shares and equivalents outstanding were as follows (in
thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
1999 1998 1999 1998
------- ------- ------- -------
Weighted average common
shares outstanding 21,178 22,339 21,175 22,843
Common share equivalents 16 8 14 63
------ ------ ------ ------
Weighted average common shares
and equivalents outstanding 21,194 22,347 21,189 22,906
====== ====== ====== ======
The total of earnings per share for each of the first three quarters
of 1998 does not equal earnings per share for the nine months ended
September 30, 1998, due to the distribution of earnings during the period
and the decrease in shares outstanding during 1998.
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<PAGE>
TBC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. Other Assets
Other assets consist of the following (in thousands):
September 30, December 31,
1999 1998
---- ----
Notes receivable $ 7,248 $ 9,063
Investments in joint ventures 7,283 7,436
Other intangible assets, net 634 651
Other 3,656 3,199
--------- --------
$ 18,821 $ 20,349
======== =========
At December 31, 1998, the notes receivable total included a
note for $4,897,000 from a former distributor, Wall Tire Distributors,
Inc. The Company held written guarantees from the distributor's former
owners, Gene and Geraldine Wall and Joe and Helen Wall, and filed suit
in the Chancery Court of Shelby County, Tennessee in 1989 to recover
under the guarantees. The lawsuit was tried and a jury verdict was
reached on July 1, 1999 in favor of the Walls. As a result, the
Company recorded a pre-tax charge to earnings in the second quarter of
1999 of $4,589,000, which equaled the balance of the note less
$308,000 previously received under a related bankruptcy proceeding.
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<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Financial Condition
The Company's financial position and liquidity remain strong. Working
capital totaled $104.5 million at September 30, 1999 compared to $105.8 million
at December 31, 1998. Current accounts and notes receivable increased by $22.9
million and inventories increased by $18.4 million during the first nine months
of 1999, due primarily to seasonal fluctuations. As discussed in Note 3 to the
consolidated financial statements, other assets were lower at September 30, 1999
than at December 31, 1998 due primarily to the write-off of a $4.9 million note
from a former distributor, for which the Company recorded a charge to earnings
during the second quarter. Partially offsetting the effect of this write-off on
other assets was the conversion of amounts due from one customer from an account
receivable to a note receivable, of which $2.9 million was classified as
noncurrent at September 30, 1999.
The net total owed to banks and vendors, consisting of the combined
balances of cash and cash equivalents, outstanding checks, notes payable to
banks and accounts payable, increased by $43.6 million from December 31, 1998 to
September 30, 1999. This increase, together with cash generated from operations,
enabled the Company to fund the previously-noted increases in current
receivables and inventories, as well as capital expenditures totaling $12.3
million during the first nine months of 1999.
Results of Operations
As a result of the Company's acquisition of Carroll's, Inc.
(Carroll's) on November 19, 1998, there are a number of significant changes in
income statement items between the periods ended September 30, 1999 and the
year-earlier periods. Carroll's, a wholesale distributor of tires and automotive
products in the Southeast, was the Company's largest customer and also was
classified as a related party in the consolidated financial statements prior to
the acquisition.
Net sales increased 18.5% during the third quarter and 16.7% during
the first nine months of 1999 compared to the year-earlier levels. Sales of
tires accounted for approximately 94% of total sales during the current quarter
and 93% in the first nine months of 1999 versus 95% in the third quarter and
first nine months of 1998. Unit tire shipments increased approximately 13.7% in
the third quarter and 10.2% in the first nine months, compared to the
year-earlier results. The average tire sales price increased by approximately
2.9% in the current quarter and 4.4% in the year-to-date period, compared to the
levels in the same periods of 1998. Both the increased unit tire volume and
higher average tire sales prices were related largely to the positive impact of
the Carroll's acquisition. Excluding the net impact of the Carroll's acquisition
on 1999 results, net sales increased 7.4% in the current quarter and 3.9% in the
year-to-date period. Unit tire volume, excluding the Carroll's impact, increased
8.1% in the third quarter and 3.7% in the first nine months of 1999, including
gains in shipments to both franchised dealers and other customers. The average
tire sales price, excluding the Carroll's impact, declined 2.2% in the current
quarter and 1.3% in the year-to-date period. Industrywide pricing pressures,
prevalent throughout most of the last three years, have continued into the
current year.
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<PAGE>
Cost of sales as a percentage of net sales decreased from 84.5% in the
third quarter of 1998 to 82.3% in the current quarter. For the year-to-date
period, cost of sales declined from 84.4% in 1998 to 82.5% in 1999. The
reduction was due largely to the positive impact of the Carroll's acquisition.
In addition, an increased percentage of shipments to franchised retail dealers
favorably affected margins and caused cost of sales as a percentage of net
sales, excluding the Carroll's impact, to be lower than in the same periods of
the prior year. Gross margin percentages on sales to franchised retailers are
generally higher than on shipments to the Company's other customers, in support
of the higher costs of servicing the franchised retailers.
Distribution expenses as a percentage of net sales increased from 4.9%
in the third quarter of 1998 to 6.0% in the current quarter, and from 5.1% in
the first nine months of 1998 to 5.9% in the first nine months of 1999. The
increase was largely due to the greater costs for labor and other warehousing
items associated with servicing the customers of Carroll's compared to much of
the Company's other customer base. Excluding the effects of the Carroll's
acquisition, distribution expenses were 5.2% of net sales in the current period
and first nine months of 1999.
Selling and administrative expenses increased $3.7 million in the
third quarter of 1999 and $8.4 million in the first nine months of 1999 compared
to the year-earlier levels, due principally to the effects of the Carroll's
acquisition. Excluding the expenses of Carroll's, which totaled $2.3 million in
the current period and $5.9 million in the first nine months of 1999, selling
and administrative expenses increased compared to the 1998 levels due primarily
to higher compensation-related expenses.
The provision for doubtful accounts and notes in the current quarter
was relatively unchanged from the year-earlier level. For the first nine months
of 1999, the provision was greater than in the year-earlier period, due to a
$4.6 million charge recorded in the second quarter of 1999 in conjunction with a
note receivable from a former distributor. See Note 3 to the consolidated
financial statements.
Interest expense increased $681,000 in the third quarter and $1.2
million in the year-to-date period compared to the year-earlier levels, due
principally to higher short-term borrowing levels which more than offset a
reduction in short-term borrowing rates. Short-term borrowings were used in the
last quarter of 1998 to fund the acquisition of Carroll's for $28.2 million and
investments in joint ventures totaling $4.6 million and were thus higher in the
current quarter and first nine months of 1999 than in the year-earlier periods.
In addition, short-term borrowing levels in the current year were affected by
the previously-mentioned increases in receivable and inventory levels.
The Company's effective tax rate was 38.8% in the current quarter
compared to 39.9% in the third quarter of 1998. For the first nine months, the
effective tax rate was 39.5% in both 1999 and 1998. The decline in the current
quarter was related primarily to a reduction in the effective state income tax
rate compared to the rate for the first half of 1999.
Earnings per share in the first nine months of 1999 included the net
impact of the above-mentioned $4.6 million second quarter charge associated with
a note receivable which had been the subject of litigation since 1989. The net
impact of this charge on year-to-date earnings per share was $0.13. Excluding
the effect of this charge, earnings per share increased 35% in the first nine
months of 1999, compared to the year-earlier level.
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<PAGE>
Year 2000 Readiness
The Company has addressed all significant year 2000 issues, including
its business systems, processes and essential equipment, and believes that all
required work is now essentially complete. The overall costs to prepare the
Company for the year 2000 were not considered material to the Company's
financial position or results of operation.
The Company believes the risk of business disruption presented by
potentially unresolved year 2000 issues is minimal. All internal systems were
subjected to review and those presenting possible year 2000 issues were replaced
or corrected. The Company's customers and significant suppliers have been
contacted and are aware of their obligations to address their own year 2000
issues. The Company believes that both its major customers and suppliers have
adequate resources to properly address their own year 2000 concerns. No
significant impact on customer demand is anticipated, especially considering the
relatively straightforward nature of the business of the Company and its
customers. The Company does not anticipate any difficulty in continuing to
purchase products from its major suppliers in sufficient quantities to meet
customer demand.
The nature of the Company's principal business of wholesale
distribution creates an environment of relatively low transaction volumes that
can be conducted on a temporary basis with manual contingency systems. In the
event of an unforseen internal year 2000 problem, contingency plans currently in
place for temporary computer system problems or outages would be utilized. The
Company's inventories typically include reserve stock that would allow it to
provide product to its customers in the event of a temporary disruption in
product supply. Alternate suppliers exist and could potentially be utilized if
necessary.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not consider its exposure to market risk to be
material.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The information required by this Item 1 is set forth in Note 3 to
the consolidated financial statements and is incorporated herein by this
reference. Such information was also previously reported in Item 1 of the
Company's Form 10-Q for the quarter ended June 30, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See Index to Exhibits
(b) During the quarter ended September 30, 1999, the Company
filed a Current Report on Form 8-K dated July 1, 1999,
providing under Item 5, "Other Events", information
relative to a charge recorded in the second quarter of
1999 associated with litigation involving a note
receivable from a former distributor. See Note 3 of this
Form 10-Q for additional information.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TBC CORPORATION
October 26, 1999 By /s/ Ronald E. McCollough
- ---------------- ------------------------
Ronald E. McCollough
Executive Vice President,
Chief Financial Officer
and Treasurer
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<PAGE>
INDEX TO EXHIBITS
-----------------
Located at
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
(10) MATERIAL CONTRACTS:
Management Contracts and Compensatory Plans
or Arrangements
10.1 Amendment, dated September 28, 1999, to Executive
Employment Agreement between the Company and
Mr. Louis S. DiPasqua . . . . . . . . . . . . . . . . . . . . . 14
10.2 Amendment, dated September 30, 1999, to the Louis S.
DiPasqua Trust Agreement dated as of October 22, 1992
between the Company and First Tennessee Bank
National Association . . . . . . . . . . . . . . . . . . . . . 15
10.3 Executive Employment Agreement between the Company
and Mr. Lawrence C. Day, amended and restated as of
October 1, 1999(without Exhibit A thereto, which is
substantially identical to the Form of Trust Agreement filed
as Exhibit 10.3 to the TBC Corporation Quarterly Report
on Form 10-Q for the quarter ended March 31, 1998) . . . . . . 16
10.4 Amendment, dated August 1, 1999, to Executive
Employment Agreement between the Company and
Mr. Ronald E. McCollough . . . . . . . . . . . . . . . . . . . 25
10.5 Amendment, dated August 1, 1999, to Executive
Employment Agreement between the Company and
Mr. Barry D. Robbins . . . . . . . . . . . . . . . . . . . . . 26
10.6 TBC Corporation Executive Deferred Compensation Plan,
effective August 1, 1999. . . . . . . . . . . . . . . . . . . . 27
-13-
EXHIBIT 10.1
AMENDMENT
TO
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDMENT is being executed as of the 28th day of September, 1999,
by and between TBC CORPORATION (the "Company") and LOUIS S. DiPASQUA (the
"Executive").
THE PARTIES HEREBY AGREE that the Executive Employment Agreement, dated
February 18, 1991, between the Company and the Executive (as thereafter restated
and amended, the "Agreement"), shall be amended as follows:
1. The date in the fifth and eighth lines of Section 1 and in the second
line of Section 6.C. of the Agreement shall be changed to "September 30, 1999".
2. Section 4.D.1. of the Agreement shall be revised to read as follows:
If the Executive's employment with the Company is terminated for
any reason, including his death or disability, the Company shall
pay the Credited Amounts as of the date of termination, in cash,
to the Executive, or in the event of his death, to his
designated beneficiary or beneficiaries or his estate, as the
case may be, in three substantially equal annual installments,
payable on the first business day of each of the first three
calendar years following the year in which such termination
occurred. Interest shall continue to accrue on the unpaid
balance of the Credited Amounts at a rate and in the manner at
which interest is then accruing under the Corporation's
Executive Deferred Compensation Plan and shall be payable at the
time each such annual installment is payable.
THE PARTIES ACKNOWLEDGE that the Agreement, as amended hereby, remains in
full force and effect on the date hereof.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first set forth above.
TBC CORPORATION
By/s/ LAWRENCE C. DAY
Lawrence C. Day,
President and Chief Operating Officer
/s/ LOUIS S. DiPASQUA
LOUIS S. DiPASQUA
-14-
EXHIBIT 10.2
AMENDMENT
TO
LOUIS S. DiPASQUA TRUST AGREEMENT
THIS AMENDMENT is being executed as of the 30th day of September, 1999,
by and between TBC CORPORATION (the "Company") and FIRST TENNESSEE BANK NATIONAL
ASSOCIATION (the "Trustee").
THE PARTIES HEREBY AGREE that the Louis S. DiPasqua Trust Agreement,
dated as of October 22, 1992, between the Company and the Trustee (the
"Agreement") shall be amended by revising Section 13.1 to read as follows:
13.1 Termination. This Trust shall be terminated upon September 30, 1999.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first set forth above.
FIRST TENNESSEE BANK
TBC CORPORATION NATIONAL ASSOCIATION
By/s/ LAWRENCE C. DAY By
Lawrence C. Day, Name:
President and Chief Operating Officer Title:
CONSENT
-------
Pursuant to Section 13.2 of the Agreement described above, the
undersigned, being the Executive for the benefit of whom such Agreement was
executed, does hereby agree to the amendment of Section 13.1 of the Agreement in
the manner set forth above.
IN WITNESS WHEREOF, the undersigned has executed this Consent as of the
30th day of September, 1999.
/s/ LOUIS S. DiPASQUA
LOUIS S. DiPASQUA
-15-
EXHIBIT 10.3
RESTATED
TBC CORPORATION
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT was originally entered into as of February 20, 1998,
between TBC CORPORATION, a Delaware corporation (the "Company"), and LAWRENCE C.
DAY (the "Executive").
The Company and the Executive have agreed (i) to amend this Agreement in
certain respects, effective October 1, 1999; and (ii) for ease of reference, to
restate this Agreement to incorporate the new amendments and to reflect the text
of this Agreement as in effect on October 1, 1999.
NOW, THEREFORE, the Company and the Executive hereby agree that the
following provisions represent the text of the Executive Employment Agreement
between the Company and the Executive, as in effect on October 1, 1999:
Section 1. Term of Employment. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to continue in the employ of the
Company, for a period commencing April 1, 1998 and terminating on the later of
September 30, 2002 (the "Ordinary Course Termination Date"), or two (2) years
after the occurrence of a Change in Control of the Company in the event a Change
in Control of the Company shall have occurred on or prior to the Ordinary Course
Termination Date. The Ordinary Course Termination Date shall be automatically
extended for additional three (3) year periods unless either party shall give
written notice of nonextension to the other party at least 120 days prior to the
then current Ordinary Course Termination Date. Each such extension shall be
effective as of the day prior to the then current Ordinary Course Termination
Date.
Section 2. Position and Duties. A. From and after October 1, 1999, the
Company shall employ the Executive as, and the Executive shall serve as,
President and Chief Executive Officer of the Company or in such other executive
capacity as the Company and the Executive may hereafter mutually agree. Unless
otherwise agreed by the Executive and the Company, the Executive shall be based
at the Company's offices in Memphis, Tennessee.
B. The Executive shall devote his full-time efforts to the business and
affairs of the Company and shall perform his duties as an executive officer, or
in such other executive capacity as the Company and the Executive may hereafter
mutually agree, faithfully, diligently and to the best of his ability and in
conformity with the policies of the Company and under and subject to such
reasonable directions and instructions as the Board of Directors may issue from
time to time.
Section 3. Salary. Effective October 1, 1999, the Company shall pay the
Executive a salary of $400,000 per year in approximately equal installments in
accordance with the normal pay
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schedule for officers of the Company. In the event the Board of Directors of the
Company shall at any time or times thereafter increase the Executive's salary,
then the Executive's salary under this Agreement for any period after any such
increase shall be not less than the last amount to which the Board increased the
salary of the Executive.
Section 4. Deferred Compensation. Beginning October 1, 1999, the
Executive shall be entitled to participate in the TBC Corporation Executive
Deferred Compensation Plan, as the same may be amended from time to time
thereafter.
Section 5. Other Benefits. In addition to the salary and deferred
compensation payable pursuant to Sections 3 and 4, the Executive shall, during
the term of his employment, participate in the TBC Corporation Management
Incentive Compensation Plan, 1989 Stock Incentive Plan, and in any other stock
option or compensation plan or arrangement adopted by the Company in addition
to, or in lieu of, said plans. The Company shall also, during the term of the
Executive's employment, extend to Executive the fringe benefits (including, but
not limited to, medical, disability and life insurance, vacation, personal
leave, automobile and other similar personal benefits) which it establishes from
time to time for its most highly compensated executives. In furtherance and not
in limitation of the foregoing, the Executive shall receive an automobile
allowance of not less than $1,267 per month ($1,730 per month effective October
1, 1999) and membership in a Memphis, Tennessee country club (with initiation
fees and monthly dues paid by the Company). The Executive shall also be eligible
for a minimum of three weeks of paid vacation.
Section 6. Termination of Employment. A. The Executive's employment
shall terminate upon the death of the Executive, but the Company shall continue
to pay each month for twelve (12) months after the death of the Executive an
amount per month equal to the salary per month (inclusive of the amount of
deferred compensation) that was being paid to the Executive at the time of his
death to the person or entity that the Executive shall have last designated in
writing to the Company, or if the Executive shall fail to designate a person or
entity or if the person or entity so designated shall not be in existence at the
time of any payment pursuant to this Section 6.A., then to the Executive's
estate. Nothing in this Section 6.A. shall in any way limit or restrict any
rights or benefits to which the heirs, legatees or successors in interest of the
Executive are entitled under any plans, insurance or other arrangements referred
to in Section 5 hereof in the event of the Executive's death.
B. The Company shall have the right to terminate the Executive's
employment hereunder at any time upon not less than sixty (60) days' advance
written notice to the Executive in the event of such prolonged physical or
mental disability or other condition of the Executive as, in the reasonable
judgment of the Board of Directors, shall render him incapable of performing the
services required of him hereunder; provided, however, that (i) no disability or
condition shall be considered incapacitating unless it has prevented the
Executive from carrying on his duties for a consecutive period of at least three
(3) months; and (ii) the Executive's employment shall not terminate if such
disability is cured within the 60-day notice period provided herein. In addition
to any retirement benefits payable to the Executive under Section 8, in the
event Executive's employment is terminated as the result of disability pursuant
to this Section 6.B., the Company shall continue to pay to the Executive each
month for twelve (12) months after such termination
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an amount equal to his salary per month (inclusive of the amount of deferred
compensation) at the time of such termination.
C. The Company shall have the right to terminate the Executive's
employment hereunder at any time upon not less than sixty (60) days' advance
written notice to the Executive in the event that (i) the Executive engages in
an act or acts of dishonesty constituting a felony and resulting or intended to
result directly or indirectly in personal gain or enrichment at the expense of
the Company; or (ii) the Executive shall deliberately and intentionally refuse
in a material way to observe or comply with any of the material terms or
provisions hereof (except by reason of total or partial incapacity due to
physical or mental disability or otherwise), provided that the Executive's
employment shall not terminate if such refusal is cured or corrected within the
60-day notice period provided herein. In the event that the Company shall
terminate the Executive's employment pursuant to this Section 6.C., the Company
shall have no further obligation or liability under this Agreement, except that
the Company shall pay to the Executive the portion, if any, of the Executive's
salary which remains unpaid for the period up to the date of termination.
D. Provided that no Change in Control of the Company shall have then
occurred or be pending or contemplated, the Company shall have the right to
terminate the Executive's employment, without cause, at any time during the term
of the Executive's employment hereunder immediately upon the giving of written
notice thereof to the Executive. In the event of any such termination without
cause, the Company shall, during each month during the remainder of the period
specified in Section 1 hereof or during the period of eighteen (18) months after
such termination of employment, which ever is longer, pay the Executive (i) the
monthly salary (inclusive of the amount of deferred compensation) that was being
paid to the Executive prior to such termination of employment, plus (ii)
one-twelfth (1/12) of the sum of any benefits which the Executive may have been
awarded under any incentive compensation plans of the Company during the last
two fiscal years preceding the year in which such termination of employment
occurs, divided by two.
E. If a Change in Control of the Company shall occur on or prior to the
then current Ordinary Course Termination Date, and the employment of the
Executive shall terminate during the period of two (2) years following the
Change in Control of the Company, regardless of whether the Executive resigns or
is discharged or otherwise (except for termination pursuant to the provisions of
Sections 6.A., 6.B., or clause (i) of Section 6.C. above), the following shall
be applicable:
1. During the remainder of the period specified in Section 1
hereof or for a period of two (2) years after such termination of employment,
whichever is longer, the Company shall continue to pay to the Executive an
amount equal to his salary determined in accordance with the provisions of
Section 3 and shall credit him with an amount equal to the deferred compensation
determined in accordance with the provisions of Section 4.
2. Beginning on the first day of the month following such
termination of the Executive's employment and on the first day of every month
thereafter during the period of time specified in Section 6.E.1. above, the
Company shall pay to Executive one-twelfth (1/12) of the sum of any benefits
which the Executive may have been awarded under any incentive
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<PAGE>
compensation plans of the Company during the last two fiscal years of the
Company preceding the year in which the termination of the Executive's
employment occurred, divided by two.
3. During the time period specified in Section 6.E.1. above,
the Company shall, at its expense, provide to or for the benefit of the
Executive fringe benefits comparable to those provided prior to the Change in
Control of the Company.
4. Any options or stock appreciation rights which the
Executive holds under the 1989 Stock Incentive Plan of the Company (or under any
other option plan of the Company) on the date of the termination of his
employment may be exercised by the Executive with respect to all shares subject
to any such options or rights at any time within ninety (90) days of the
Executive's termination of employment, regardless of whether such options or
rights were exercisable on the date of termination; or at any time within ninety
(90) days after the termination of the Executive's employment, the Executive
may, in lieu of exercising all or any portion of any such option or right, elect
to be paid by the Company in cash the excess of the fair market value of a
Company share (as defined in the 1989 Stock Incentive Plan of the Company) on
the date the election is made (or, if higher, the highest price per Company
share actually paid in connection with the Change in Control of the Company)
over the option price per share times the number of shares then subject to
unexercised options held by the Executive as to which this election is made,
whether or not such options were exercisable on the date of the termination of
the Executive's employment. Any payment required to be made to the Executive
pursuant to the preceding sentence shall be made within two (2) days of the
Executive's election to be paid in cash.
5. Within forty-five (45) days after the end of the fiscal
year in which termination of the Executive's employment occurs, the Company
shall make pro rata awards to the Executive under any incentive compensation
plans of the Company in which he participated which shall be calculated by
multiplying (i) the fraction of which the numerator is the number of full months
worked during such year and the denominator is twelve (12) and (ii) by the
awards which would have been earned (as determined by the Board of Directors of
the Company) if termination had not occurred during such year.
6. If the Executive dies during the period that he is
receiving compensation or fringe benefits pursuant to the provisions of Section
6.E.1., 2. or 3., the Company shall continue to make such payments to the person
or entity entitled thereto pursuant to Section 6.A. for the period of time
provided in Section 6.E.1., but in no event for a period of more than twelve
(12) months after the Executive's death. If the Executive dies prior to
receiving the payments specified in Section 6.E.5. or prior to exercising his
rights under Section 6.E.4., such payments shall be made at the time they are
required to be made hereunder to the person or entity entitled thereto pursuant
to Section 6.A., and such rights may be exercised during the time the Executive
could have exercised them but for his death by the person or entity entitled
thereto pursuant to Section 6.A.
7. A "Change in Control" of the Company shall, for purposes of
this Agreement, mean any change in control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as the same is construed by the
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<PAGE>
Securities and Exchange Commission on the date of execution of this Agreement or
in accordance with any change made with respect to said Item or construction
thereof deemed more favorable by the Executive; provided that, without
limitation, such a Change in Control shall be deemed to have occurred if (i) any
"person" (as such term is defined in Sections 13(d) and 14(d)(2) of the Exchange
Act), other than the Executive and/or any entity then controlled by the Company
or the Executive is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities; (ii) during any period of two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board cease for any reason to constitute at least a majority thereof unless
the election, or the nomination for election by the Company's stockholders, of
each new director was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of the
period; (iii) the Company merges or consolidates with another corporation and
the Company or an entity controlled by the Company or the Executive immediately
prior to the merger or consolidation is not the surviving entity; or (iv) a
sale, lease, exchange or other disposition of all or substantially all of the
assets of the Company takes place.
Section 7. No Competition. So long as the Executive shall be receiving
payments under Section 6.D. or 6.E.1. above, the Executive shall not engage in
any Competitive Activity. For purpose of this Agreement, "Competitive Activity"
shall mean the Executive's participation, without the written consent of the
Company, in the management of any business operation of any enterprise if such
operation (a "Competitive Operation") engages in substantial and direct
competition with any business operation actively conducted by the Company or its
subsidiaries. "Competitive Activity" shall not include (i) the mere ownership of
securities in any enterprise or (ii) participation in the management of any
enterprise or any business operation thereof, other than in connection with a
Competitive Operation of such enterprise.
Section 8. Retirement Benefits. A. The Executive shall be entitled to
participate in the Company's 401(k) Savings Plan and in any other retirement
plan hereafter adopted by the Company for the benefit of its employees, subject
in each case to the terms of any such plan governing participation therein. In
addition, the Executive shall be entitled to supplemental retirement benefits in
accordance with the terms of the Company's Executive Retirement Plan and shall
be credited with two Years of Service thereunder on his Employment Start Date.
If he is then employed by the Company, the Executive shall, for purposes of the
Company's Executive Retirement Plan, be credited with 1.6 Years of Service for
the twelve month period ending March 31, 2003 and for each full twelve month
period thereafter that he is so employed; provided, however, that Years of
Service credited during the Executive's employment with the Company shall not
exceed 25 for purposes of calculating his benefits under the Executive
Retirement Plan.
B. The Company shall establish and maintain a trust fund to fund the
payment of all benefits to be paid to the Executive pursuant to Sections 6 and 8
under the circumstances described in, and in accordance with the terms of, a
trust agreement substantially in the form attached hereto as Exhibit A. The
Company may add to said trust fund the amounts of Deferred Compensation referred
to in Section 4 in order to fund the payments thereof as provided in said
Section.
Section 9. Compensation from Other Employment. Any compensation payable to
the Executive pursuant to the provisions of Section 6 shall be reduced by any
amounts of
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compensation earned or received by the Executive from any other employer for
services rendered during the period for which such payments by the Company are
to be made thereunder.
Section 10. Limitation on Payments. A. Sections 280G and 4999 of the
Internal Revenue Code (the "Code") impose a 20% excise tax on excessive
compensation received by, and deny a deduction to the Company for the amount of
excess compensation paid to, employees who are officers, shareholders or highly
compensated individuals as a result of a change in the ownership or effective
control of the Company or in the ownership of a substantial portion of the
Company's assets. In general, payments to an individual that are contingent on a
Change in Control will not be treated as excessive if such payments are less
than three (3) times the average annual compensation received by such individual
over the five (5) years preceding the Change in Control. The provisions that
follow are designed to maximize the amounts payable to the Executive under this
Agreement in the event of a Change in Control, taking into consideration the
possible application of the foregoing Code provisions.
B. Notwithstanding anything in this Agreement to the contrary, in the
event that it is determined that any payment by the Company to the Executive or
for the Executive's benefit, whether paid or payable pursuant to the terms of
this Agreement or otherwise, would be taxable because of Section 4999 of the
Code, then the aggregate present value of amounts payable to the Executive or
for the Executive's benefit pursuant to this Agreement shall be reduced to the
Reduced Amount unless C. below applies. For purposes of this subparagraph, the
"Reduced Amount" shall be defined as an amount expressed in present value which
maximizes the amounts payable pursuant to this Agreement without causing any
such payments to be taxable to the Executive because of Section 4999 of the
Code.
C. If the Net After Tax Benefit of all amounts payable to the Executive
pursuant to this Agreement exceeds the Net After Tax Benefit of the Reduced
Amount, then this Section 10 shall not apply to limit any amount payable to the
Executive. "Net After Tax Benefit" means the amount payable to the Executive or
for the Executive's benefit pursuant to this Agreement (whether the Reduced
Amount or the full amounts payable to the Executive under this Agreement), less
the sum of (i) the amount of federal income taxes payable with respect to such
amounts and (ii) the amount of excise taxes payable on such amounts pursuant to
Section 4999 of the Code, if any. For purposes of this clause C., federal income
taxes payable in respect of future payments shall be those prescribed by the
Code at the time the calculation is made for the periods in which the same shall
be payable.
D. An initial determination as to whether any reduction in payments and
benefits is necessary in order to comply with B. above and, if so, the
calculation of the Reduced Amount shall be made by the Company and furnished to
the Executive in writing within seven (7) days following the date of the Change
of Control of the Company. From time to time thereafter as necessary and, in any
event, upon termination of the Executive's employment, the Company shall
re-examine its determination and recalculate the Reduced Amount and promptly
furnish information with respect to the same to the Executive in writing. The
Company's determination and its calculation of the Reduced Amount following the
termination of the Executive's employment will be final and binding upon the
Executive unless the Executive notifies the Company within eight (8) days after
the Executive receives the Company's determination and
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<PAGE>
calculation that the Executive disputes the same. Within ten (10) days after the
Executive so notifies the Company, the Executive shall deliver to the Company a
statement of the basis for the Executive's opinion as to whether any reduction
in payments and benefits is necessary, pursuant to B. above and, if so, the
Executive's calculation of the Reduced Amount. If, within ten (10) days after
the Company receives such statement, the Company and the Executive are unable to
agree as to whether any reduction is necessary or as to the calculation of any
amounts under this Section 10, then the Company and the Executive shall, within
three (3) days thereafter, choose a nationally recognized accounting firm to
resolve any such dispute. Such accounting firm's determination shall be made
promptly and delivered to the Company and the Executive within twenty (20) days
of its appointment and shall be final and binding on the parties. All costs
incurred in connection with the accounting firm's determination shall be borne
by the Company.
E. Within ten (10) days after the date a determination and calculation
of the Reduced Amount becomes final and binding in accordance with D. above, the
Executive may elect which portion of the payments due him under this Agreement
shall be eliminated or reduced to meet such Reduced Amount (including meeting
the Reduced Amount by reducing the present value of any payment and benefits
through deferral of the payment date). If the Executive does not notify the
Company of his election within such ten (10) day period, the Company shall have
the right to decide how the Reduced Amount will be met.
F. Pending a final and binding determination and calculation of the
Reduced Amount in accordance with this Section 10, the Executive shall have the
right to require the Company to pay to the Executive all or any undisputed
portion of the Reduced Amount, as determined and calculated by the Company, that
would be then due and payable to the Executive pursuant to this Agreement. Such
payment shall be made by the Company within two (2) days after the date of
receipt of notice from the Executive requesting such payment.
G. The Company shall pay to the Executive or for the Executive's
benefit that portion of the Reduced Amount which is then due and payable (less
any amount previously paid by the Company pursuant to F. above) within ten (10)
days after receipt of the election by the Executive described in E. above or, in
the absence of such an election, within fifteen (15) days after the date upon
which any determination and calculation of the Reduced Amount becomes final and
binding in accordance with D. above. The balance of the Reduced Amount shall be
paid promptly as the same becomes due and payable under this Agreement.
H. In the event that the Internal Revenue Service or a court of
competent jurisdiction makes a final determination that any payments to the
Executive under this Agreement are taxable to the Executive pursuant to Section
4999 of the Code, and such payments should not have been made under the terms of
Sections 10.B. and C. hereof (such taxable payments and benefits being referred
to hereinafter as an "Overpayment") or in the event that the Code shall be
amended or final regulations thereunder adopted and, as a result thereof,
payments or benefits previously made to the Executive under this Agreement
should not have been made under the terms of Sections 10.B. and C. and are thus
recharacterized as an Overpayment, the amount of such Overpayment shall be
treated for all purposes as a loan to the Executive which shall be repayable by
the Executive within thirty (30) days after demand by the Company, together with
interest at the applicable federal rate specified for a demand loan in Section
7872(f)(2) of the Code, compounded
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semiannually. The foregoing provision relating to Overpayments shall be
applicable notwithstanding previous compliance by the Company and the Executive
with the requirements of this Section 10; provided, however, that no such
Overpayment shall be repaid by the Executive to the Company if and to the extent
that, despite making such repayment, the amount which is subject to taxation
under Section 4999 of the Code would not be reduced.
Section 11. Amendment of Agreement. This Agreement may be amended from
time to time hereafter only with the mutual consent of the Executive and the
Board of Directors of the Company (or any committee thereof to which
responsibility for this Agreement has been delegated). All amendments shall be
in writing, shall reference this Agreement and state that an amendment to this
Agreement is being made in the respects set forth therein, and shall be executed
by the Executive and the Company.
Section 12. Waiver. The failure of either party to insist, in any one
or more instances, upon the performance of any of the terms, covenants or
conditions of this Agreement by the other party hereto, shall not be construed
as a waiver or as a relinquishment of any right granted hereunder to the party
failing to insist on such performance, or as a waiver of the future performance
of any such term, covenant or condition, but the obligations hereunder of both
parties hereto shall remain unimpaired and shall continue in full force and
effect.
Section 13. Successor; Binding Agreement. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company,
by agreement in form and substance reasonably satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of such succession shall be deemed to be a Change in
Control of the Company effective on the date of such succession. As used herein,
"Company" shall mean TBC Corporation and any successor to its business and/or
its assets as aforesaid which executes and delivers the agreement provided for
in this Section 13 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
Section 14. Notices. All notices required or permitted to be given
under this Agreement shall be in writing and shall be mailed (postage prepaid
via either registered or certified mail) or delivered, if to the Company,
addressed to:
TBC Corporation
4770 Hickory Hill Drive
Post Office Box 18342
Memphis, Tennessee 38181-0342
Attention: Chairman of the Board
and if to the Executive, addressed to the Executive at his then current home
address as set forth in the Company's books and records. Either party may change
the address to which notices to it or him are to be directed by giving written
notice of such change to the other party in the manner specified in this
paragraph.
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Section 15. Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in Memphis, Tennessee, in accordance with the Rules of the American
Arbitration Association, and judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof.
Section 16. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
day and year first above written.
TBC CORPORATION
By/s/ LOUIS S. DiPASQUA
Louis S. DiPasqua,
Vice Chairman and Chief Executive
Officer
/s/ LAWRENCE C. DAY
LAWRENCE C. DAY (Executive)
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EXHIBIT 10.4
AMENDMENT
TO
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDMENT is being executed as of the 1st day of August, 1999,
by and between TBC CORPORATION (the "Company" and RONALD E. McCOLLOUGH (the
"Executive").
THE PARTIES HEREBY AGREE that the Executive Employment Agreement,
dated November 1, 1988, between them (as later amended and extended, the
"Agreement"), shall be amended by revising Section 4 to read as follows:
Section 4. Deferred Compensation. Beginning August 1,
1999, the Executive shall be entitled to participate in the TBC
Executive Deferred Compensation Plan, as the same may be amended from
time to time thereafter (the "Deferred Compensation Plan").
Compensation deferred by the Executive prior to August 1, 1999
pursuant to the provisions of this Agreement as previously in effect,
and earnings thereon, shall be credited to the Executive's deferred
compensation account under the Deferred Compensation Plan as of
August 1, 1999 and shall thereafter earn interest and be paid as
provided in the Deferred Compensation Plan.
The parties acknowledge that the Agreement, as amended hereby,
remains in full force and effect on the date hereof.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as
of the date first set forth above.
TBC CORPORATION
By /s/ LOUIS S. DiPASQUA
Louis S. DiPasqua,
Vice Chairman and Chief Executive Officer
/s/ RONALD E. McCOLLOUGH
RONALD E. McCOLLOUGH
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EXHIBIT 10.5
AMENDMENT
TO
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDMENT is being executed as of the 1st day of August, 1999,
by and between TBC CORPORATION (the "Company") and BARRY D. ROBBINS (the
"Executive").
THE PARTIES HEREBY AGREE that the Executive Employment Agreement,
dated June 1, 1996, between the Company and the Executive (as amended and
restated as of August 1, 1997, the "Agreement"), shall be amended as follows:
1. In Section 1 and in Section 6.C. of the Agreement, all references
to the date "May 31, 1999" shall be changed to "October 31, 2000".
2. Section 4 of the Agreement shall be revised to read as follows:
Section 4. Deferred Compensation. Beginning August 1,
1999, the Executive shall be entitled to participate in the TBC
Executive Deferred Compensation Plan, as the same may be amended from
time to time thereafter.
The parties acknowledge that the Agreement, as amended hereby,
remains in full force and effect on the date hereof.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as
of the date first set forth above.
TBC CORPORATION
By /s/ LOUIS S. DiPASQUA
Louis S. DiPasqua,
Vice Chairman and Chief Executive Officer
/s/ BARRY D. ROBBINS
BARRY D. ROBBINS
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EXHIBIT 10.6
TBC CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
1. Definitions. As used herein, the following capitalized terms shall have
the meanings set forth below:
"Company" means TBC Corporation.
"Committee" means the Compensation Committee of the Company's Board of
Directors.
"Compensation" means any salary or incentive compensation or bonus
payable to a Participant in cash for services rendered to the Company or a
subsidiary of the Company; provided, however, that in no event shall
Compensation include any severance or severance-related payments.
"Effective Date" has the meaning set forth in Section 2.
"Participant" means any officer or other key management employee of the
Company or a subsidiary of the Company designated by the Committee to be
eligible to participate in this Plan.
"Plan" means this Executive Deferred Compensation Plan, as the same may
be amended from time to time.
"Plan Year" means the period from the Effective Date until December 31,
1999 and thereafter each twelve month period beginning on January 1 of each
year.
2. Effective Date. The effective date of this Plan (the "Effective Date")
shall be August 1, 1999.
3. Purpose of the Plan. The purpose of this Plan is to provide
Participants with a method to defer the payment of all or any specified part of
the Compensation otherwise payable to them and to have such deferred
Compensation payable to them at a later date.
The Plan is intended to be "unfunded and maintained primarily for the
purpose of providing deferred compensation to management or highly compensated
employees" and, thus, is exempt from parts 2 through 4 of Title I of the
Employee Retirement Income Security Act of 1974, as amended.
4. Election to Defer. (a) A Participant may elect to defer payment of all
or any specified part of any Compensation payable to the Participant by
executing an election in such
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form as may be from time to time prescribed by or acceptable to the Company (the
"Election") and delivering the same to the Secretary of the Company. For amounts
earned during the Plan Year in which an employee first becomes a Participant,
the Election shall be made no later than thirty days after becoming a
Participant. Any other Election shall be effective as of the first day of the
Plan Year following the date of the Election. In either event, an Election shall
apply only to Compensation payable for services rendered on or after the
effective date of the Election. A Participant's Election shall remain in effect
until terminated or changed as provided in this Plan.
(b) Prior to the Effective Date, certain employees of the Company entered
into employment agreements with the Company which, among other things, provide
such employees with the right to elect to defer Compensation until a date
specified in such employment agreements (the "Prior Agreements"). The provisions
of the Prior Agreements shall remain in full force and effect until amended in
accordance with the terms thereof. If the Company and the employee agree to
amend any Prior Agreement to provide that the employee shall be entitled to
defer Compensation pursuant to this Plan, (i) the employee shall automatically
become a Participant as of the date of such amendment of the Prior Agreement;
(ii) the employee's election to defer Compensation pursuant to the Prior
Agreement shall thereafter be effective as an Election under this Plan; and
(iii) deferral of Compensation pursuant to the Prior Agreement shall cease; and
(iv) Compensation deferred pursuant to the terms of the Prior Agreement, as
adjusted for earnings in accordance with the provisions of the Prior Agreement,
will be credited to the employee's deferred Compensation account described in
Section 5 of this Plan and thereafter will earn interest and be paid as provided
in this Plan.
(c) Once it is effective, a Participant's Election to defer Compensation
is irrevocable for the remainder of the then current Plan Year and may be
changed or terminated only effective as of the next succeeding Plan Year. Such
change or termination shall be made by completing a new Election and delivering
it to the Secretary of the Company prior to the beginning of the Plan Year for
which it is effective.
5. Participant's Account. (a) The Company shall establish and maintain a
separate deferred Compensation account on its books for each Participant who has
elected to defer Compensation, and the Participant's deferred Compensation shall
be recorded in such account. The Company shall credit to such deferred
Compensation account, on a daily basis, interest on the amount then credited to
such account (including all previous credits to such account by operation of
this Subsection), computed at an annual rate which is equal to the average yield
for BBB Industrial Bonds, as published in the Standard & Poor's Corporate and
Government Bond Yield Index (or such similar index as the Committee shall from
time to time select) for the month last preceding the beginning of the then
current calendar quarter.
(b) Each Participant's deferred Compensation account shall be solely a
memorandum account, and title to and beneficial ownership of the amounts
credited thereto shall at all times remain in the Company. The effect of any
Election under this Plan or any Prior Agreement is simply to create an unfunded
and unsecured promise to pay deferred Compensation to the
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<PAGE>
Participant or the Participant's beneficiary or estate pursuant to the terms of
this Plan. Nothing contained in this Plan or any Prior Agreement and no deferral
of payment pursuant to this Plan or any Prior Agreement shall by itself create
or be construed to create a trust or fiduciary relationship of any kind between
the Company and any Participant or the Participant's beneficiary or estate or
any other person.
6. Payment of Deferred Compensation. (a) All amounts credited to or held
in the deferred Compensation account of a Participant shall be paid as provided
in this Section 6.
(b) Unless otherwise determined by the Committee in accordance with
Subsection 6(j), no Participant shall be entitled to receive any part of the
amounts from time to time credited to the Participant's deferred Compensation
account until such time as the Participant is no longer employed by either the
Company or any subsidiary of the Company.
(c) If a Participant's employment with the Company or a subsidiary is
terminated for any reason, including death or disability, the Company shall pay
all amounts credited to or held in the Participant's deferred Compensation
account as of the date of such termination ("Credited Amounts") to the
Participant or, in the event of the Participant's death, to the Participant's
beneficiary or beneficiaries designated by the Participant in accordance with
Subsection 6(i) or, in the event the Participant has not so designated a
beneficiary, to the Participant's estate.
(d) Unless a different manner of payment was selected as provided in
Subsection 6(e) below, the Credited Amounts shall be paid in full by the Company
(i) on or before the fourteenth day after the date of termination of the
Participant's employment, if such termination occurs on or prior to August 31 of
the year; or (ii) on the first business day of the calendar year following the
year in which the Participant's employment is terminated, if such employment is
terminated after August 31 of the year. Notwithstanding the foregoing, unless a
different manner of payment is so selected, in the event that a Participant's
employment is terminated after August 31 of the year and the Participant dies
prior to the first business day of the following year, the Credited Amounts
shall be paid in full upon the earlier of (y) fourteen days after the date of
the Participant's death, or (z) the first business day of the calendar year
following the year in which the Participant's employment was terminated.
(e) A Participant may, by giving written notice to the Secretary of the
Company (an "Installment Payment Notice"), elect to receive payment of all or
any part of the Credited Amounts then or thereafter credited to his or her
deferred Compensation account in three substantially equal annual installments,
payable on the first business day of each of the first three calendar years
following the year in which the Participant's employment with the Company or a
subsidiary is terminated. An Installment Payment Notice may accompany any
Election made by a Participant or may be delivered at any time thereafter;
provided, however, that unless otherwise agreed by the Committee, to be
effective, an Installment Payment Notice must be given no later than one year
prior to the date the Participant's employment by the Company or any subsidiary
is terminated.
-29-
<PAGE>
(f) A Participant may change or revoke any Installment Payment Notice
previously given by the Participant by giving written notice of such change or
revocation to the Secretary of the Company; provided, however, that unless
otherwise agreed by the Committee, to be effective, any such change or
revocation must be given no later than one year prior to the date the
Participant's employment by the Company or any subsidiary is terminated.
(g) If a Participant has elected to receive payment of all or any part of
any Credited Amounts in three substantially equal annual installments as
provided in Subsection 6(e), such Credited Amounts shall be so paid by the
Company on the dates indicated in Subsection 6(e). Interest on the unpaid
balance of such Credited Amounts shall continue to accrue at the rate and in the
manner specified in Subsection 5(a) above. All such accrued and unpaid interest
shall be paid annually at the time each annual installment of the Credited
Amounts is paid.
(h) Notwithstanding any Installment Payment Notice then in effect, if at
the time a Participant ceases to be employed by the Company or a subsidiary, the
Credited Amounts total less than $10,000, payment of the same shall be made to
the Participant in full at the time specified in Subsection 6(d).
(i) If all of the payments required under this Section 6 shall not have
been made to a Participant prior to the Participant's death, any remaining
payments shall be made to the beneficiary or beneficiaries designated by the
Participant on the Election delivered to the Secretary of the Company or,
failing such written designation, to the Participant's estate. A Participant
may, by delivery of a revised Election to the Secretary of the Company prior to
the Participant's death, change the Participant's beneficiary or beneficiaries
to whom payments will be made if the Participant is not living at the time such
payments are due. No consent of any prior beneficiary shall be necessary to
effect any such change.
(j) Notwithstanding any other provision of this Plan, the Committee may,
in its sole discretion, make payment to a Participant of all or any portion of
the Participant's deferred Compensation account prior to the date of termination
of the Participant's employment with the Company or any subsidiary if the
Participant requests that the Committee make such payment and the Participant
demonstrates to the Committee that the Participant has incurred a severe
financial hardship resulting from an unexpected illness or accident of the
Participant or of a dependent (as defined in Section 152 (a) of the Internal
Revenue Code) of the Participant, loss of the Participant's property due to
casualty, or similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant.
7. Administration. This Plan shall be administered by the Committee. The
decision of the Committee shall be final and binding with respect to the
interpretation, construction, and application of this Plan. The Committee may
refer to the Board of Directors of the Company the exercise of any power,
authority, or discretion assigned to the Committee in this Plan and, in any such
case, the decision of the Board of Directors shall have the same effect as a
decision of
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<PAGE>
the Committee. The Secretary of the Company may delegate to any Assistant
Secretary of the Company any or all of the functions assigned to the Secretary
in this Plan.
8. Amendment or Termination. The Committee may amend or terminate this
Plan at any time. No amendment or termination of this Plan shall void an
agreement already in effect for the deferral of Compensation for services
rendered during the then current Plan Year or any preceding period, nor
adversely affect the right of any Participant or former Participant to payment
of amounts credited to the Participant's account prior to such amendment or
termination, and interest thereon shall continue to be credited to such account
and paid in accordance with Section 6 notwithstanding any such amendment or
termination.
Notwithstanding the foregoing, no change in the manner of payment of any
Participant's Credited Amounts may be made without the consent of the
Participant, or the Participant's beneficiary or estate, as the case may be, if
the Participant is no longer living.
9. Miscellaneous. (a) This Plan shall not confer upon any Participant the
right to continued employment with the Company or any of its subsidiaries or
affect in any way the right of the Company and its subsidiaries to terminate the
employment of any Participant at any time and for any reason.
(b) Except in accordance with the provisions of Subsection 6(i) hereof,
no right or benefit under this Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to
anticipate, alienate, sell, assign, pledge, encumber, or charge the same shall
be void.
(c) This Plan shall inure to the benefit of and be binding upon each
successor of the Company and its subsidiaries. All right and obligations imposed
upon a Participant and all rights granted to the Company and its subsidiaries
under this Plan shall be binding upon the Participant's heirs, legal
representatives, and successors.
-31-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> (15317)<F1>
<SECURITIES> 0
<RECEIVABLES> 117656
<ALLOWANCES> 8621
<INVENTORY> 143150
<CURRENT-ASSETS> 278205
<PP&E> 80965
<DEPRECIATION> 30179
<TOTAL-ASSETS> 384789
<CURRENT-LIABILITIES> 173691
<BONDS> 52000
0
0
<COMMON> 2118
<OTHER-SE> 148998
<TOTAL-LIABILITY-AND-EQUITY> 384789
<SALES> 560335
<TOTAL-REVENUES> 560335
<CGS> 462153
<TOTAL-COSTS> 462153
<OTHER-EXPENSES> 66439
<LOSS-PROVISION> 5307
<INTEREST-EXPENSE> 5481
<INCOME-PRETAX> 20955
<INCOME-TAX> 8282
<INCOME-CONTINUING> 12673
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12673
<EPS-BASIC> .60<F2>
<EPS-DILUTED> .60
<FN>
<F1>THIS ITEM IS SHOWN NET OF "OUTSTANDING CHECKS, NET" ON THE CONSOLIDATED
BALANCE SHEETS.
<F2>AMOUNT IS "BASIC" EPS AS COMPUTED PER FASB STATEMENT NO. 128.
</FN>
</TABLE>
