Exhibit 4.1
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AMENDMENT NO. 4
TO NOTE PURCHASE AND PRIVATE SHELF AGREEMENT
This Amendment No. 4 (this "Amendment"), dated as of June 2, 2000, to
the Note Purchase and Private Shelf Agreement dated as of July 10, 1996 (the
"Original Agreement") is entered into between TBC Corporation (the "Company")
and The Prudential Insurance Company of America ("Prudential").
RECITALS
WHEREAS, Prudential and the Company are parties to the Original Agreement;
WHEREAS, the Original Agreement has been amended by Amendment No. 1, dated
as of September 20, 1996, by Letter Amendment No. 2 to Note Purchase and Private
Shelf Agreement, dated October 28, 1998, and by Amendment No. 3 to Note Purchase
and Private Shelf Agreement ("Amendment No. 3"), dated January 21, 2000 (the
Original Agreement, as so amended, being referred to as the "Existing
Agreement");
WHEREAS, the Company plans to acquire all of the capital stock of TKI
Holdings, Inc. and its wholly owned subsidiary Tire Kingdom, Inc. (the
"Acquisition");
WHEREAS, in connection with the Acquisition, the Company desires to
enter into Amendment No. 1 (the "Credit Agreement Amendment") to the Credit
Agreement, (as in effect on the date hereof (except as otherwise specified
herein), the "Existing Credit Agreement"; and as in effect after giving effect
to the Credit Agreement Amendment, the "Credit Agreement"), dated as of January
21, 2000, among the Company, First Tennessee Bank National Association, as
Administrative Agent, and the lenders party thereto;
WHEREAS, the Credit Agreement Amendment provides for, inter alia, an
increase in the amount available to be drawn thereunder and contemplates, inter
alia, a grant of a security interest in certain collateral in favor of the
lenders thereunder and Prudential;
WHEREAS, the Company has requested that Prudential agree to amend
various provisions of the Existing Agreement to enable the Company to consummate
the Acquisition and enter into the Credit Agreement Amendment, and Prudential is
willing to do so on the terms and conditions (including, without limitation, the
amendments to the Existing Agreement) set forth in this Amendment (the Existing
Agreement, as amended by this Amendment, is referred to as the "Agreement"); and
WHEREAS, terms used and not defined herein have the respective meanings
ascribed thereto in the Existing Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
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AGREEMENT
1. Amendments to Existing Agreement. The Existing Agreement is hereby
amended as follows:
1. Paragraph 6A(1). Paragraph 6A(1) is hereby amended and restated in its
entirety to read as follows:
6A(1). WORKING CAPITAL. The ratio of Consolidated Current
Assets to Consolidated Current Liabilities to be less than (i)
at any time up to and including December 31,2000, 1.25 to 1.0,
and (ii) at any time after December 31, 2000, 1.75 to 1.0.
(b) Paragraph 6A(2).Paragraph 6A(2) is hereby amended and
restated in its entirety to read as follows:
6A(2). FIXED CHARGE COVERAGE RATIO. The Fixed Charge
Coverage Ratio (measured at the end of each fiscal quarter for
the then-most recently ended four fiscal quarters) to be less
than (i) at any time up to and including December 31, 2000,
2.00 to 1.0, and (ii) at any time after December 31, 2000,
2.25 to 1.0.
(c) Paragraph 6A(3). Paragraph 6A(3) is hereby amended and
restated in its entirety to read as follows:
6A(3)(i). CONSOLIDATED TANGIBLE NET WORTH. Consolidated
Tangible Net Worth at any time to be less than $120,000,000
plus, on a cumulative basis, the sum of (i) fifty percent
(50%) of positive Consolidated Net Income for each complete
fiscal year ended after June 30, 2000, and (ii) one hundred
percent (100%) of the net proceeds from the issuance and sale
of Qualified Stock after the date hereof, except pursuant to
the Company's 2000 Stock Option Plan and other 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.
6A(3)(ii). TIRE KINGDOM CONSOLIDATED TANGIBLE NET
WORTH. Tire Kingdom Consolidated Tangible Net Worth at any
time to be less than $25,000,000.
(d) Paragraph 6B(1). Subparagraph 6B(1)(v) is hereby amended
and
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restated in its entirety, and a new subparagraph 6B(1)(x) is hereby
added, each to read as follows:
(v) Liens in existence on the date hereof as set forth
on Schedule 6B(1) hereto, Liens on Property of Tire Kingdom
existing on June 2, 2000, and Liens securing the obligations
of the Company and the Subsidiaries in respect of this
Agreement and the Notes and any guaranty thereof.
(x) Liens securing Indebtedness outstanding under the
Credit Agreement so long as the Notes are secured equally and
ratably therewith, and the Intercreditor Agreement is in full
force and effect.
(e) Paragraph 6B(2). Subparagraph 6B(2)(iii) is hereby amended
and restated in its entirety to read as follows:
(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
(1) sixty-five percent (65%) of Consolidated
Capitalization at any time up to and including
December 31, 2000, and (2) fifty-five percent (55%)
of Consolidated Capitalization at any time
thereafter;
(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 (1) fifty-five percent (55%) of Adjusted
Consolidated Capitalization for all periods through
December 31, 2000, and (2) forty-five percent (45%)
of Adjusted Consolidated Capitalization at any time
after December 31, 2000;
(C) [Intentionally Omitted];
(D) the aggregate principal amount of Total
Priority Debt shall not exceed fifteen percent (15%)
of Consolidated Tangible Assets at any time; provided
that, for the purposes of this clause (D), all Debt
incurred under or pursuant to this Agreement or the
Credit Agreement shall not be included in the
calculation of Total Priority Debt; and
(E) [Intentionally Omitted];
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provided that, with respect to each calculation under this
clause (iii), in the event that the Company guarantees any
Funded Debt of a Subsidiary or any Subsidiary guarantees any
Funded Debt of the Company or another Subsidiary, the
Indebtedness in respect of all such Guarantees (other than
Permitted Subsidiary Guarantees and the Permitted Company
Guarantee) shall be included as separate and additional items
of Indebtedness to that of both (a) the underlying Debt of the
primary obligor guaranteed thereby and (b) any other Guarantee
thereof by the Company or another Subsidiary, as the case may
be.
(f) Paragraph 6B(6). Subparagraph 6B(6)(v) is hereby amended
and restated in its entirety to read as follows:
(v) the Company or any Subsidiary may otherwise
Transfer assets, provided that after giving effect to each
such Transfer (A) the sum of (1) the book value of, or, if
higher, the actual sales proceeds received in respect of, each
such asset Transferred 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 ten percent
(10%) of the Consolidated Tangible Assets determined as of the
final day of the fiscal year then most recently ended and (B)
the aggregate book value of, or, if higher, actual sale
proceeds received in respect of, all assets Transferred
pursuant to this clause (v) on or after April 1, 2000, shall
not exceed twenty percent (20%) of Consolidated Tangible
Assets determined as of the final day of the fiscal year then
most recently ended, 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).
(g) Paragraph 6B(7). Paragraph 6B(7) is amended and restated
in its entirety to read as follows:
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 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) if the obligations under such
lease are Capitalized Lease Obligations, such Capitalized Lease
Obligations are incurred in compliance with paragraph 6B(2).
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(h) Paragraph 6F. Paragraph 6F is amended and restated in its
entirety to read as follows:
6F. Maximum Leverage Ratio. The Company will not
permit the Leverage Ratio to be greater than (i) 3.75 to 1 as
of the end of any Fiscal Quarter ending on or before December
31, 2000, and (ii) 3.50 to 1 as of the end of any Fiscal
Quarter ending thereafter. "Leverage Ratio" at any time means
the ratio of the daily average outstanding principal amount of
Consolidated Funded Indebtedness for each of the four most
recent Fiscal Quarters to the aggregate EBITDA for the four
most recent Fiscal Quarters. All defined terms in the
preceding sentence and all defined terms used in the
definitions of such defined terms have the respective meanings
ascribed thereto in the Credit Agreement, all of which are
incorporated herein in their entirety.
(i) Paragraph 6G. A new Paragraph 6G is hereby added to the
Existing Agreement as follows:
6G. Adjusted Debt. The Company will not permit
the ratio of (i) Consolidated Adjusted Debt as of the end of
any Fiscal Quarter to (ii) EBITDA plus Rental Payments (for
the period of four Fiscal Quarters ending with and including
the final day of such Fiscal Quarter) to be greater than 5.25
to 1.0. For the purposes of this paragraph 6G, "Consolidated
Adjusted Debt" shall mean Funded Debt of the Company and its
Subsidiaries (determined on a consolidated basis in accordance
with generally accepted accounting principals) plus eight
times Rental Payments.
(j) Revised Definition. The defined term "Funded Debt" is
hereby amended and restated in its entirety as follows:
"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 any 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; provided, however, that all
Debt outstanding under the Credit Agreement (or any
replacement thereof) and all other Indebtedness owed to any
bank shall herein be considered "Funded Debt" regardless of
when such Indebtedness matures or is otherwise payable.
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(k) New Definitions. The following defined terms are added to
paragraph 10B of the Existing Agreement in their proper alphabetical
order:
"Credit Agreement" means the Credit Agreement dated as of
January 21, 2000, among the Company, First Tennessee Bank
National Association, as Administrative Agent, and the lenders
party thereto, as amended by Amendment No. 1 dated as of June
2, 2000.
"Guarantors" means Tire Kingdom, Inc., Big O Tires, Inc.,
Carroll's Inc., Big O Development, Inc., Big O Retail
Enterprises, Inc., Big O Tire of Idaho, Inc., and TBC
International, Inc.
"Rental Payments" means, with respect to any period, the sum
of the minimum amount of rental and other obligations required
to be paid during such period by the Company or any Subsidiary
as lessee under all leases of real or personal property (other
than leases creating a Capitalized Lease Obligation),
excluding any amounts required to be paid by the lessee
(whether or not therein designated as rental or additional
rental) (a) which are on account of maintenance and repairs,
insurance, taxes, assessments, water rates and similar
charges, or (b) which are based on profits, revenues or sales
realized by the lessee from the leased property or otherwise
based on the performance of the lessee.
"Tire Kingdom" means Tire Kingdom,Inc., a Florida corporation.
"Tire Kingdom Consolidated Tangible Net Worth" means, as at
any time of determination thereof, the consolidated
stockholders' or shareholders' equity of Tire Kingdom 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 of Tire Kingdom.
(l) Defined Term "Credit Agreement". Each reference to the
defined term "New Credit Agreement" in the Existing Agreement is hereby
amended to read "Credit Agreement".
2. Waivers Relating to Sale and Leaseback Provision. Any Default or Event
of Default arising from the Company's failure to comply with paragraph
6B(7) of the Existing Agreement at any time prior to March 31, 2000 is
hereby waived.
3. Subsidiary Guarantees. In connection with the execution of Amendment
No. 3, the Guarantors (other than Tire Kingdom) entered into separate
guarantees, dated on or about January 21, 2000, pursuant to which they
guaranteed the obligations of the Company under the Notes, the Existing
Agreement and the
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Existing Credit Agreement. In connection with the execution of this
Amendment, the Guarantors (other than Tire Kingdom) will reaffirm their
obligations under said guarantees (the "Reaffirmation Agreements"). In
addition, Tire Kingdom shall execute a Guarantee (the "Tire Kingdom
Guarantee"), in form and substance satisfactory to Prudential, whereby
Tire Kingdom shall guarantee the repayment of the debt evidenced by the
Notes and the Agreement.
4. Conditions to Effectiveness. This Amendment shall become effective upon
satisfaction of the following conditions:
(a) Opinion. Prudential shall have received an opinion of
Thompson Hine & Flory LLP, counsel for the Company, dated the date
hereof, regarding:
(i) the due incorporation and valid existence of the
Company and each of TBC International, Inc., Big O Tires,
Inc., and Carroll's, Inc. ( collectively, the "Specified
Subsidiaries");
(ii) the corporate power and authority of the Company to
execute this Amendment and of each of the Specified
Subsidiaries to execute the Tire Kingdom Guaranty or the
Reaffirmation Agreements, as applicable, and the Security
Agreements (as hereinafter defined) to be executed by it;
(iii) the taking of all necessary corporate action by the
Company to authorize the execution and delivery of this
Agreement and the Security Agreement; and the taking of all
necessary corporate action by each Specified Subsidiary to
authorize the execution and delivery of the Tire Kingdom
Guaranty or the Reaffirmation Agreements, as applicable, and
the Security Agreement to be executed by it;
(iv) the absence of any conflicts between (A) this
Amendment, the Agreement, the Tire Kingdom Guaranty and the
Security Agreements and (B) the Credit Agreement or any other
agreement known to such firm for money borrowed to which the
Company or any Specified Subsidiary (other than Tire Kingdom)
is a party, or any guarantee known to such firm issued to the
lenders under the Credit Agreement or any such other
agreement; and
(v) the absence of any requirement to obtain any approval
of, or to make any filing with, any governmental authority in
connection with the execution, delivery and performance of
this Amendment and the Tire Kingdom Guaranty.
(b) Tire Kingdom Guaranty and Reaffirmation Agreements.
Prudential shall have received fully executed counterparts of the Tire
Kingdom Guaranty
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and the Reaffirmation Agreements.
(c) Intercreditor Agreement. Each lending institution party to
the Credit Agreement shall have executed and delivered (in each
capacity in which it is a party to the Credit Agreement) an
intercreditor agreement in the form of Exhibit A hereto.
(d) Credit Agreement Amendment. The Credit Agreement Amendment
shall have been executed and delivered by all parties thereto, and
shall be acceptable to Prudential in all respects.
(e) Security Agreements. Each of the Company, Tire Kingdom,
Big O Tires, Inc., Carroll's Inc., and Big O Tire of Idaho, Inc.,
shall have executed and delivered a Security Agreement (the "Security
Agreement"), in form and substance satisfactory to Prudential,
granting a security interest to Prudential in the Company's and each
Guarantor's accounts and inventory to secure, in the case of the
Company, its obligations under the Agreement and the Notes and, in the
case of each of the Guarantors, its obligations under its respective
Guaranty or the Tire Kingdom Guaranty, as the case may be. Except in
the case of Tire Kingdom, each such Security Agreement shall grant or
assign to Prudential a first secured position with respect to the
collateral covered thereby, subject to no exceptions, Liens or
encumbrances other than those permitted by paragraph 6B(1) of the
Agreement. All filings of Uniform Commercial Code financing statements
and all other filings and actions necessary to perfect the security
interests and Liens granted under, or assigned by, said documents
shall have been filed or taken and confirmation thereof received.
(f) Counsel Fees. The Company shall have paid the fees and
expenses of Prudential's special counsel, Bingham Dana LLP, in
connection with the preparation, negotiation, execution and delivery
of this Amendment.
(g) Transaction Fee. The Company shall have paid to Prudential
a transaction fee in an amount equal to $53,350.
(h) Prepaid Interest Adjustment Fee. The Company shall have
paid to Prudential a prepaid interest adjustment fee in an amount
equal to $194,144.
(i) Acquisition. The Acquisition shall have been consummated.
5. Company Representations. The Company represents and warrants to
Prudential that each of its representations and warranties in the
Credit Agreement Amendment is true and correct as of the date hereof.
In addition, the Company represents and warrants that no Default or
Event of Default exists immediately
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prior to the effectiveness hereof (except as indicated in Section 2
hereof) or will exist immediately after giving effect hereto.
6. Governing Law. This Amendment shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by,
the internal laws of the State of New York.
7. Effect of Amendment. On and after the effective date of this
Amendment, each reference in the Agreement to "this Agreement,"
"hereunder," "hereof," or words of like import, and each reference in
the Notes to "the Agreement," "thereunder," "thereof," or words of
like import, shall mean the Existing Agreement as amended by this
Amendment. Except as expressly provided herein, the Existing Agreement
shall remain in full force and effect and is in all respects ratified
and confirmed. This Amendment shall not operate as a waiver of any
Prudential's rights, powers or remedies, nor constitute a waiver of
any provision of the Agreement. By its execution and delivery of this
Amendment, Prudential consents to the Acquisition.
8. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this Amendment to produce or
account for more than one such counterpart.
[Remainder of page intentionally blank; next page is signature page]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective officers as of the date and year first above
written.
TBC CORPORATION
By: /S/ RONALD E. McCOLLOUGH
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Name: Ronald E. McCollough
Title: Executive Vice President, Chief
Financial Officer and Treasurer
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /S/ ROBERT R. DERRICK
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Name: Robert R. Derrick
Title: Vice President
GUARANTOR REAFFIRMATION
Each of the undersigned is a Guarantor pursuant to a guarantee
dated as of January 21, 2000. The undersigned hereby consent to the
execution and delivery of this Amendment No. 4, and hereby reaffirm
that their guarantees are in full force and effect with respect to the
Agreement (as defined in this Amendment No. 4).
BIG O TIRES, INC.
By: /S/ RONALD E. McCOLLOUGH
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Name: Ronald E. McCollough
Title: Executive Vice President
CARROLL'S, INC.
By: /S/ RONALD E. McCOLLOUGH
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Name: Ronald E. McCollough
Title: Executive Vice President
BIG O DEVELOPMENT, INC.
By: /S/ RONALD E. McCOLLOUGH
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Name: Ronald E. McCollough
Title: Executive Vice President
BIG O RETAIL ENTERPRISES, INC.
By: /S/ RONALD E. McCOLLOUGH
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Name: Ronald E. McCollough
Title: Executive Vice President
BIG O TIRES OF IDAHO, INC.
By: /S/ RONALD E. McCOLLOUGH
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Name: Ronald E. McCollough
Title: Executive Vice President
TBC INTERNATIONAL, INC.
By: /S/ RONALD E. McCOLLOUGH
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Name: Ronald E. McCollough
Title: Executive Vice President
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