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EXHIBIT 10.37
LOAN AGREEMENT
DATED AS OF JUNE 30, 1998
AMONG
TRACTOR SUPPLY COMPANY
AND
SUNTRUST BANK, NASHVILLE, N.A.
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EXHIBIT 10.37
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS...........................................................4
Section 1.1 Definitions......................................................4
Section 1.2 General.........................................................12
ARTICLE 2 THE LOAN.............................................................12
Section 2.1 The Loan.......................................................12
Section 2.2 Disbursement of the Loan.......................................12
ARTICLE 3 GENERAL LOAN PROVISIONS..............................................12
Section 3.1 Default Rates..................................................12
Section 3.2 Non-Usurious...................................................13
Section 3.3 General........................................................13
ARTICLE 4 CONDITIONS PRECEDENT.................................................13
Section 4.1 Conditions Precedent to Effectiveness of Agreement.............13
Section 4.2 Conditions of Loan.............................................14
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BORROWER...........................15
Section 5.1 Representations and Warranties.................................15
(a) Organization; Power; Qualification...............................15
(b) Subsidiaries and Capital Structure...............................15
(c) Authorization of Agreement, Note and Borrowing...................15
(d) Compliance of Agreement Note and Borrowing with Applicable
Laws. etc........................................................15
(e) Business.........................................................16
(f) Compliance with Applicable Law; Governmental Approvals...........16
(g) Titles to Properties.............................................16
(h) Liens............................................................16
(i) Indebtedness and Guarantees......................................16
(j) Litigation.......................................................16
(k) Tax Returns and Payments.........................................17
(l) Financial Statements.............................................17
(m) Leases...........................................................17
(n) ERISA............................................................17
(o) Absence of Defaults..............................................17
(p) Accuracy and Completeness of Information.........................18
(q) Solvency.........................................................18
(r) Corporate Names..................................................18
Section 5.2 Survival of Representations and Warranties, etc................18
ARTICLE 6 AFFIRMATIVE COVENANTS................................................19
Section 6.1 Preservation of Corporate Existence and Similar Matters.........19
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Section 6.2 Compliance with Applicable Law..................................19
Section 6.3 Maintenance of Property.........................................19
Section 6.4 Conduct of Business.............................................19
Section 6.5 Insurance.......................................................19
Section 6.6 Payment of Taxes and Claims.....................................19
Section 6.7 Accounting Methods and Financial Records........................19
Section 6.8 Visits and Inspections..........................................20
Section 6.9 Use of Proceeds.................................................20
Section 6.10 Mortgage and Lease Payments....................................20
Section 6.11 Management.....................................................20
ARTICLE 7 INFORMATION.........................................................20
Section 7.1 Quarterly Financial Statements..................................21
Section 7.2 Audited Year-End Statements.....................................21
Section 7.3 Accountants' Certificate........................................21
Section 7.4 Officer Certificates............................................21
Section 7.5 Update of Schedules and Information.............................21
Section 7.6 Copies of Other Reports.........................................21
Section 7.7 Notice of Litigation and Other Matters..........................22
Section 7.8 Accuracy of Information.........................................22
Section 7.9 Subsidiaries....................................................23
ARTICLE 8 NEGATIVE COVENANTS...................................................23
Section 8.1 Financial Ratios................................................23
(a) Minimum Net Worth................................................23
(b) Ratio of Total Liabilities to Net Worth..........................23
(c) Minimum Working Capital..........................................23
(d) Minimum Interest Coverage Ratio..................................23
(e) Minimum Current Ratio............................................23
Section 8.2 Additional Indebtedness.........................................23
Section 8.3 Employee Loans..................................................24
Section 8.4 Business Operations.............................................24
Section 8.5 Guarantees......................................................24
Section 8.6 Investments.....................................................24
Section 8.7 Merger, Consolidation and Sale of Assets........................24
Section 8.8 Transactions with Subsidiaries or Affiliates....................24
Section 8.9 Liens...........................................................24
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ARTICLE 9 DEFAULT..............................................................24
Section 9.1 Events of Default...............................................24
(a) Default in Payment.................................................25
(b) Misrepresentation..................................................25
(c) Default in Performance.............................................25
(d) Indebtedness Cross-Default.........................................25
(e) Other Cross-Defaults...............................................25
(f) Voluntary Bankruptcy Proceeding....................................25
(g) Involuntary Bankruptcy Proceeding..................................26
(h) Judgment...........................................................26
(i) Attachment.........................................................26
(j) ERISA..............................................................26
Section 9.2 Remedies........................................................27
(a) Automatic Acceleration and Termination of Facilities...............27
(b) Other Remedies.....................................................27
Section 9.3 Miscellaneous Provisions Concerning Remedies....................27
(a) Rights Cumulative..................................................27
(b) Waiver of Marshalling..............................................27
(c) Limitation of Liability............................................27
ARTICLE 10 MISCELLANEOUS.......................................................28
Section 10.1 Notices........................................................28
(a) Method of Communication............................................28
(b) Addresses for Notices..............................................28
Section 10.2 Expenses.......................................................28
Section 10.3 Setoff.........................................................29
Section 10.4 Accounting Matters.............................................29
Section 10.5 Assignment.....................................................29
Section 10.6 Enforcement and Waiver by the Lender...........................29
Section 10.7 Performance of Borrower's Duties...............................30
Section 10.8 Indemnification................................................30
Section 10.9 All Powers Coupled with Interest...............................30
Section 10.10 Survival......................................................30
Section 10.11 Titles and Captions...........................................30
Section 10.12 Severability of Provisions....................................30
Section 10.13 Governing Law.................................................30
Section 10.14 Counterparts..................................................31
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LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of this 30th day of
June, 1998, by and between TRACTOR SUPPLY COMPANY, a Delaware corporation (the
"Borrower") and SUNTRUST BANK, NASHVILLE, N.A. (the "Lender")
RECITALS
1. WHEREAS, Borrower desires that Lender extend it credit; and
2. WHEREAS, Lender is willing to extend credit to Borrower pursuant to
the terms of this Loan Agreement;
NOW, THEREFORE, in consideration of the premises, and for other
good and valuable consideration, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
shall have the following meanings, unless the context expressly otherwise
requires:
"ACQUIRE" or "ACQUISITION", as applied to any Investment, means the
acquiring or acquisition of such Investment by purchase, exchange, issuance of
stock or other securities, merger, reorganization or any other method.
"AFFILIATE" means, with respect to a Person, any other Person (other
than a Subsidiary) (a) that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such Person, (b) that, directly or indirectly, beneficially owns or holds ten
percent (10%) or more of any class of voting stock of such Person or any
Subsidiary of such Person, or (c) ten percent (10%) or more of the voting stock
of which is directly or indirectly beneficially owned or held by such Person or
a Subsidiary of such Person. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership of voting securities, by
contract or otherwise.
"AGREEMENT" means this Loan Agreement and all amendments, restatements,
modifications and supplements thereto and includes the Exhibits and Schedules
hereto and thereto.
"AGREEMENT DATE" means the date of this Agreement.
"APPLICABLE LAW" means, with respect to a Person, all provisions of
statutes, rules, regulations and orders of all governmental bodies, and all
orders and decrees of all courts and arbitrators, applicable to and binding upon
such Person on the applicable date.
"BASE RATE" means that rate of interest announced from time to time by
Lender as its base rate, such rate being used as an index for calculating
interest rates on loans.
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"BORROWER" means Tractor Supply Company, a Delaware corporation, and
its successors and assigns.
"BUSINESS DAY" means any day other than a Saturday, Sunday, or other
day on which commercial banks in Nashville, Tennessee are authorized to close
under the laws of the State of Tennessee.
"CAPITAL EXPENDITURES" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets which
are not, in accordance with GAAP, treated as expense items for such Person in
the year made or incurred or as a prepaid expense applicable to a future year or
years.
"CAPITALIZED LEASE OBLIGATION" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"CLOSING" means the execution of the Loan Documents at Xxxxxx, Xxxxxxxx
& Xxxxxxx, PLC on Tuesday, June 30, 1998.
"CURRENT ASSETS" means, with respect to any Person, the aggregate
amount of assets of such Person which should properly be classified as current
assets on a balance sheet of such Person prepared in accordance with GAAP.
"CURRENT LIABILITIES" means, with respect to any Person, the aggregate
amount of all liabilities of such Person which should properly be classified as
current liabilities on a balance sheet of such Person prepared in accordance
with GAAP.
"CURRENT RATIO" means, with respect to any Person, the ratio of such
Person's Current Assets to Current Liabilities.
"DEFAULT" means any of the events specified in SECTION 9.1 with which
the passage of time or giving of notice or both (but after the expiration of all
applicable grace and cure periods) would constitute an Event of Default.
"DEFAULT RATE" has the meaning given it in SECTION 3.1 hereof.
"EBIT" means, with respect to any Person, earnings calculated on a FIFO
basis before all interest expense, net, and taxes, each as reflected on the
statement of income of such Person prepared in accordance with GAAP.
"EFFECTIVE DATE" means the Agreement Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
from time to time amended and in effect.
"EVENT OF DEFAULT" means any of the events specified in SECTION 9.1,
provided that any requirement for notice or lapse of time or any other condition
has been satisfied and that any applicable grace or cure period has expired.
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"EXISTING INDEBTEDNESS" means Indebtedness issued and outstanding on
the Agreement Date to the extent set forth on SCHEDULE 5.1(I) and any renewals,
extensions, refundings, refinancings, replacements or substitutions thereof, but
not any increases in the aggregate principal amounts thereof outstanding on the
Agreement Date.
"GAAP" means generally accepted accounting principles.
"GOVERNMENTAL APPROVALS" means, with respect to any Person, all
authorizations, consents, approvals, licenses and exemptions of, registrations
and filing with, and reports to, all governmental bodies, whether federal, state
or local, and all agencies thereof, that are applicable to and binding upon such
Person on the applicable date.
"GUARANTY", "GUARANTEED" or to "GUARANTEE", as applied to any
obligation of another Person, means, if it constitutes Indebtedness,
(a) a guaranty (other than by endorsement of negotiable
instruments for collection or deposit in the ordinary course of
business), directly or indirectly, in any manner, of any part or all
of such obligation of such other Person; and
(b) an agreement, direct or indirect, contingent or otherwise,
and whether or not constituting a guaranty, the practical effect of
which is to assure the payment or performance (or payment of damages
in the event of nonperformance) of any part or all of such obligation
of such other Person whether by
(1) the purchase of such obligations;
(2) the purchase, sale or lease (as lessee or lessor) of
property or the purchase or sale of services for the purpose
of enabling the obligor with respect to such obligation to
make any payment or performance (or payment of damages in
the event of nonperformance) of or on account of any part or
all of such obligation, or to assure the owner of such
obligation against loss in respect thereof, or
(3) the supplying of funds for the payment or discharge of
such obligation, or indemnifying or holding harmless, in any
way, the obligor against any part or all of such obligation.
"INDEBTEDNESS" as applied to a Person means, without duplication:
(a) all indebtedness for borrowed money which is required under
GAAP to be characterized as long-term debt (including the
short-term portion thereof) on the balance sheet of such Person
prepared in accordance with GAAP;
(b) Capitalized Lease Obligations (including the short-term
portion thereof;
(c) all obligations of other Persons which such Person has
Guaranteed, including, but not limited to, all obligations of
such Person consisting of recourse liability with respect to
accounts receivable sold or otherwise disposed of by such Person;
and
(d) in the case of the Borrower (without duplication), the Loan.
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"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended.
"INTEREST COVERAGE RATIO" means, with respect to any Person, the ratio
of EBIT to all interest expense, net, as reflected on the statement of income of
such Person prepared in accordance with GAAP, measured on a quarterly basis.
"INVESTMENT" means, with respect to any Person:
(a) any share of capital stock, evidence of Indebtedness or other
security issued by any other Person;
(b) any loan, advance or extension of credit to, or contribution
to the capital of, any other Person;
(c) any Guaranty; and
(d) any other investment in any other Person.
"LENDER" means SunTrust Bank, Nashville, N.A., a national banking
association, and its successors and assigns.
"LIEN" as applied to the property of any Person means:
(a) any mortgage, deed to secure debt, deed of trust, lien,
pledge, charge, lease constituting a Capitalized Lease Obligation,
conditional sale or other title retention agreement, or other security
interest, security title or encumbrance of any kind in respect of any
property of such Person; and
(b) the filing of, or any agreement to file, any financing
statement under the Uniform Commercial Code or its equivalent in any
jurisdiction, except for financing statements filed or intended to be
filed for notice purposes only or any agreement or instrument relating
thereto.
"LOAN" means the credit facility by the Lender to the Borrower
contemplated by this Agreement and SECTION 2.1.
"MATERIAL ADVERSE EFFECT" means, with respect to any Person, a material
adverse effect upon such Person's business, assets, liabilities, financial
conditions or results of operations, in each case, as determined by the Lender
in its reasonable judgment.
"MONEY BORROWED" means, as applied to Indebtedness, Indebtedness for
money borrowed.
"NET INCOME" means, with respect to any Person, the net income (or net
loss) of such Person for the period in question, as reflected on the statement
of income of such Person prepared in accordance with GAAP.
"NET WORTH" means, with respect to any Person, such Person's total
stockholder's equity, as reflected on a balance sheet of such Person prepared in
accordance with GAAP.
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"NOTE" means the Term Note of the Borrower, in the form of Exhibit A,
payable to the order of the Lender and evidencing the Loan, as amended and
supplemented from time to time, and any replacement thereof or substitution
therefor.
"OBLIGATIONS" means the obligation of the Borrower:
(a) To pay the principal of and interest on the Note in
accordance with the terms thereof and to satisfy all of its other
liabilities to the Lender hereunder, whether now existing or hereafter
incurred, matured or unmatured, direct or contingent, including any
extensions, modifications, and renewals thereof and substitutions
therefor;
(b) To repay to the Lender all amounts advanced by the Lender
hereunder or otherwise on behalf of the Borrower;
(c) To reimburse the Lender, on demand, for all of the Lender's
reasonable expenses and costs, including the reasonable fees and
expenses of its counsel, in connection with the enforcement of this
Agreement and the documents required hereunder, including, without
limitation, any proceeding brought to enforce payment of any of the
Obligations referred to in the foregoing paragraphs (a) and (b); and
(d) To reimburse the Lender for all reasonable legal costs and
expenses incurred by the Lender in connection with the preparation of
this Agreement and the Note and the consummation of the transaction
contemplated hereby.
"OPERATING LEASE" means any lease (other than a lease constituting a
Capitalized Lease Obligation) of real or personal property.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
agency.
"PERMITTED INVESTMENTS" means:
(a) marketable direct obligations issued or unconditionally
guaranteed by the United States of America (or any State or
municipality thereof, provided such obligations have a rating of A or
better by a nationally recognized rating agency) and maturing within
three years from the date of acquisition thereof by the Borrower;
(b) time deposits or certificates of deposit of any Lender doing
business in the United States and having a capital surplus and
undivided profits of at least $100,000,000, provided that the
aggregate amount of such deposits shall not exceed $15,000,000 at any
one time;
(c) commercial paper of a domestic issuer rated either Al or
better by Standard & Poor's Corporation or P1 or better by Xxxxx'x
Investors Service, Inc. and maturing within 365 days from the date of
acquisition thereof by the Borrower;
(d) repurchase agreements entered into with (i) any Lender doing
business in the United States and having a capital surplus and
undivided profits of at least $100,000,000, or (ii) any securities
brokerage company doing business in the United States, provided the
aggregate amount of repurchase agreements at any one time outstanding
with such brokerage companies shall not exceed $15,000,000;
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(e) shares or other interests in any investment company which
invests only in investments of the type specified in clauses (a)
through (d) above, provided that the aggregate amount included in this
clause (e) when combined with the amounts included in clause (b),
shall not at any one time exceed $30,000,000;
(f) any loan, advance or Guaranty not otherwise prohibited under
this Agreement;
(g) any share of capital stock, evidence of Indebtedness or other
indebtedness or other security issued by, any Guaranty of the
obligations of, any loan, advance or extension of credit to, or any
contribution to the capital of, any Subsidiary or any Person which
becomes a Subsidiary in connection therewith;
(h) any Investment of a Subsidiary or of any Person which becomes
a Subsidiary contemporaneously with the acquisition of such Investment
by the Borrower; and
(i) any commitment, option or agreement to make a Permitted
Investment.
"PERMITTED LIENS" means:
(a) Purchase Money Liens;
(b) Liens for taxes, assessments or other governmental charges,
levies or claims, provided that the payment thereof is not delinquent
or the payment or amount thereof is being contested in good faith by
appropriate proceedings;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, repairmen, materialmen and other similar
Liens incurred in the ordinary course of business;
(d) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance, social security or other similar laws and regulations or in
connection with leases or trade contracts;
(e) any attachment or judgment Lien, unless the judgment it
secures shall not, within 30 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not
have been discharged within 30 days after the expiration of any such
stay;
(f) any Lien created to secure all or any part of the purchase
price, or to secure Indebtedness incurred or assumed to pay all or any
part of the purchase price, of property acquired (by purchase, by
lease or otherwise) by the Borrower or any Subsidiary after the date
hereof, and any Lien existing on property acquired by the Borrower or
any Subsidiary at the time such property is so acquired, provided that
(i) any such Liens shall be confined solely to the item or items of
property so acquired (and in the case of any such Lien created to
secure any industrial revenue bond or pollution control financing, to
the project or facility being so financed) and, if required by the
terms of the instrument originally creating such Lien, other property
which is an improvement to or is acquired for use in connection with
such acquired property, and (ii) any such Lien shall be created within
12 months after the acquisition of such property;
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(g) any Lien created upon the extension, renewal, refunding,
refinancing, replacement or substitution of any Indebtedness secured
by a Permitted Lien;
(h) Liens existing on the date hereof and securing the Existing
Indebtedness of the Borrower to the extent set forth in Schedule
5.1(i); and
(i) Liens which, individually and in the aggregate, are
incidental to, and do not materially interfere with, the ordinary
conduct of the business of the Borrower.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" means Purchase Money
Indebtedness of the Borrower incurred after the Agreement Date which is secured
by a Purchase Money Lien.
"PERSON" means an individual, corporation, partnership, association,
trust or unincorporated organization, or a government or any agency or political
subdivision thereof.
"PLAN" means an employee benefit plan maintained for employees of the
Borrower that is covered by Title IV of ERISA, including such plans as may be
established after the Agreement Date.
"PREPAYMENT FEE" means the following amounts for the following time
periods:
(a) three percent (3%) multiplied by the principal amount prepaid
if the prepayment occurs any time on or prior to December 31, 1999;
(b) two percent (2%) multiplied by the principal amount prepaid
if the prepayment occurs at any time from January 1, 2000 through and
including December 31, 2001; and
(c) one percent (1%) multiplied by the principal amount prepaid
if the prepayment occurs at any time from January 1, 2002 through and
including December 31, 2002.
No Prepayment Fee shall be due in connection with any prepayment
on or after January 1, 2003.
"PURCHASE MONEY INDEBTEDNESS" means:
(a) Indebtedness created to secure the payment of all or any part
of the purchase price of or lease payments on any property;
(b) any Indebtedness incurred at the time of or within 10 days
prior to or after the acquisition (by purchase, lease or otherwise) of
any property for the purpose of financing all or any part of the
purchase price thereof or lease payments with respect thereto; and
(c) any renewals, extensions, replacements, substitutions or
refinancings thereof, but not any increases in the original principal
amounts thereof.
"PURCHASE MONEY LIEN" means a Lien securing Permitted Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
property the purchase price of which, or lease payments in respect of, were
financed through the incurrence of the Purchase Money Indebtedness secured by
such Lien.
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"REGISTRATION STATEMENT" means the Registration Statement of the
Borrower on Form S-1 (Registration No. 33-73028) under the Securities Act of
1933, as amended, relating to the public offering of 3,283,000 shares of the
common stock, par value $.008 per share, of the Borrower, declared effective by
the Securities and Exchange Commission on February 17, 1994.
"REPORTABLE EVENT" has the meaning set forth in Section 4043(b) of
ERISA, but shall not include a Reportable Event as to which the provision for 30
days' notice to the PBGC is waived under applicable regulations.
"SUBSIDIARY":
(a) when used to determine the relationship of a Person to
another Person, means a Person of which an aggregate of 50% or more of
the stock of any class or classes or 50% or more of other ownership
interests is owned of record or beneficially by such other Person, or
by one or more Subsidiaries of such other Person, or by such other
Person and one or more Subsidiaries of such Person,
(1) if the holders of such stock, or other ownership
interests, (i) are ordinarily, in the absence of
contingencies, entitled to vote for the election of a
majority of the directors (or other individuals performing
similar functions) of such Person, even though the right to
so vote has been suspended by the happening of such a
contingency, or (ii) are entitled, as such holders, to vote
for the election of a majority of the directors (or other
individuals performing similar functions) of such Person,
whether or not the right so to vote exists by reason of the
happening of a contingency; or
(2) in the case of such other ownership interests, if such
ownership interests constitute a majority voting interest;
and
(b) when used with respect to a Plan, ERISA or a provision of the
Internal Revenue Code pertaining to employee benefit plans, also means
any corporation, trade or business (whether or not incorporated) which
is under common control with the Borrower and is treated as a single
employer with the Borrower under Section 414(b) or (c) of the Internal
Revenue Code and the regulations thereunder.
"TERMINATION DATE" means June 30, 2005 and is the date upon which the
Note shall be due and payable without demand or the occurrence of any Default or
Event of Default.
"TERMINATION EVENT" means:
(a) a Reportable Event;
(b) the filing of a notice of intent to terminate a Plan under
Section 4041(c) of ERISA or the treatment of a Plan amendment as a
termination under Section 4041(e) of ERISA; or
(c) the institution of proceedings by the PBGC to terminate a
Plan under Section 4042 of ERISA or to appoint a trustee to administer
any Plan under Section 4062 of ERISA.
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"TOTAL LIABILITIES" means, with respect to any Person, all items
(except items of stockholders equity, general contingencies and deferred tax
reserves) which would be included in determining total liabilities as shown on
the liability side of a balance sheet of such Person prepared in accordance with
GAAP.
"UNFUNDED VESTED ACCRUED BENEFITS" means, with respect to any time, the
amount (if any) by which the present value of all vested nonforfeitable benefits
under such Plan exceeds the fair market value of all Plan assets allocable to
such benefits, all determined as of the then most recent valuation date for such
Plan.
"WORKING CAPITAL" means, with respect to any Person, the amount by
which the Current Assets of such Person exceed the Current Liabilities of such
Person at the time of determination thereof.
Section 1.2 General. All terms of an accounting nature not specifically
defined herein shall have the meaning ascribed thereto by GAAP. Unless otherwise
specified, a reference in this Agreement to a particular section or subsection
is a reference to that section or subsection of this Agreement. Wherever from
the context it appears appropriate, each term stated in either the singular or
plural shall include the singular and plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, the feminine
and the neuter.
ARTICLE 2
THE LOAN
Section 2.1 The Loan.
(a) Subject to the terms and conditions of and relying on the
representations, warranties and covenants contained in this Agreement,
the Lender agrees to make available to the Borrower a term loan of
Fifteen Million and no/100 Dollars U.S. ($15,000,000).
(b) The Loan shall be evidenced by the Note and shall be payable
in accordance with its terms. The Loan and the Note may not be
prepaid, unless the Borrower pays to Lender the Prepayment Fee.
Section 2.2 Disbursement of the Loan.
The Lender shall fund the Loan at Closing.
ARTICLE 3
GENERAL LOAN PROVISIONS
Section 3.1 Default Rates. If an Event of Default occurs hereunder and
on that date next following the expiration of any applicable cure periods
without the Event of Default having been cured, the outstanding balance of the
Loan shall no longer bear interest in accordance with the terms of the Note, but
the outstanding balance of the Loan shall bear interest for each day from such
date until paid in full at a rate per annum equal to the greater of two percent
(2%) per annum above the Base Rate or two percent (2%) per annum above the rate
charged on the Note (the "Default Rate").
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Section 3.2 Non-Usurious. Nothing contained in this Agreement or the
Note shall be deemed to establish or require the payment of a rate of interest
in excess of the maximum rate permitted by Applicable Law. In the event that any
rate of interest required under this Agreement or the Note exceeds the maximum
rate permitted by Applicable Law, such rate shall automatically be reduced to
the maximum rate permitted by such Applicable Law and any excess amount
collected shall be promptly credited to principal.
Section 3.3 General. If any payment under this Agreement or the Note
shall be specified to be made on a day which is not a Business Day, it shall be
made on the next succeeding day which is a Business Day and such extension of
time shall in such case be included in computing interest, if any, in accordance
with such payment.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Agreement.
Notwithstanding any other provision of this Agreement, this Agreement shall not
be effective until the satisfaction (or waiver by the Lender or the Borrower, as
applicable) of each of the following conditions:
(a) The Lender shall have received each of the following
documents, all of which shall be satisfactory in form and substance to
the Lender and its counsel:
(1) certified copies of the certificate of incorporation and
by-laws of the Borrower as in effect on the Effective Date;
(2) certified copies of all corporate action taken by the
Borrower to authorize the execution, delivery and
performance of this Agreement and the Note and the
borrowings under this Agreement;
(3) a certificate of incumbency and specimen signatures with
respect to each of the officers of the Borrower who are
authorized to execute and deliver this Agreement and the
Note;
(4) a certificate evidencing the good standing of the
Borrower in Delaware, such certificate to be dated no
earlier than thirty (30) days prior to the Agreement Date;
(5) certificates evidencing the authority of the Borrower to
transact business in each jurisdiction in which the Borrower
is qualified to transact business (to be provided within
sixty (60) days of the Effective Date);
(6) copies of the most recently available financial
statements referred to in SECTION 7.1 and meeting the
requirements thereof;
(7) a certificate of the Chief Executive Officer, President,
Chief Financial Officer, or Controller of the Borrower
stating that, to the best of his knowledge and based on an
examination sufficient to enable him to make an informed
statement,
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(i) all of the representations and warranties made under this
Agreement are true and correct in all material respects as of the
Effective Date; and
(ii) no Default or Event of Default exists on the Effective Date;
(8) such other documents and instruments as the Lender may reasonably
request.
(b) This Agreement shall have been duly executed, and the Lender shall have
received the Note;
(c) No action, proceeding, investigation, regulation or legislation shall
have been instituted, threatened or proposed before any court, governmental
agency or legislative body to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect of, or which is related to or arises out of, this
Agreement or the consummation of the transactions contemplated hereby, or which,
in the Lender's reasonable discretion, would make it inadvisable to consummate
the transactions contemplated by this Agreement; and
Section 4.2 Conditions of Loan.
(a) The making of the Loan shall be conditioned on the
satisfaction (or waiver by the Lender, in writing) of each of the
following:
(1) all of the representations and warranties made under
this Agreement shall be deemed to be reaffirmed and made
again at such time both with and without giving effect to
the Loan to be made at such time and the application of the
proceeds thereof, except where the failure of any such
representation or warranty to be true and correct shall be
due to the passage of time or other events, occurrences or
circumstances which would not have a Material Adverse Effect
on the Borrower;
(2) the corporate actions of the Borrower referred to in
SECTION 4.1(A)(2) shall remain in full force and effect in
all material respects; and
(3) if previously requested by the Lender, the Lender shall
have received a compliance certificate from Borrower's chief
executive officer, chief financial officer, or controller,
in the form set forth in Exhibit B attached hereto.
(b) The Lender may, without waiving either of the conditions
specified in subsections (a)(1) or (2) above, consider such conditions
to be satisfied and a representation by the Borrower to such effect
made, if no written notice to the contrary is received by the Lender
prior to the making of the Loan then to be made.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 5.1 Representations and Warranties. The Borrower represents and
warrants to the Lender as follows:
(a) Organization; Power; Qualification. The Borrower is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, has the power and
authority to own or lease its properties and to carry on its business
as now being conducted and is duly qualified and authorized to do
business in each jurisdiction in which the character of its properties
or the nature of its business requires such qualification or
authorization, except where the failure of the Borrower to be so
qualified or authorized would not have a Material Adverse Effect on
the Borrower;
(b) Subsidiaries and Capital Structure. The Borrower does not
have any Subsidiaries. The outstanding capital stock of the Borrower
has been duly and validly issued and is fully paid and nonassessable;
(c) Authorization of Agreement, Note and Borrowing. The Borrower
has the power and authority, and has taken all necessary corporate
action to authorize, execute, deliver and perform its obligations
under this Agreement and the Note in accordance with their respective
terms. This Agreement has been duly executed and delivered by the duly
authorized officers of the Borrower and is, and the Note when executed
and delivered in accordance with this Agreement will be, a legal,
valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, except (i) as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(d) Compliance of Agreement Note and Borrowing with Applicable
Laws. etc. To the knowledge of the Borrower, the execution, delivery
and performance by the Borrower of this Agreement and the Note in
accordance with their respective terms and the borrowings hereunder do
not, by the passage of time, the giving of notice or otherwise,
(1) require any Governmental Approval (except where the
failure to obtain or make the same would not have a Material
Adverse Effect on the Borrower) or violate any Applicable
Law applicable to and binding upon the Borrower except for
such violations which would not have a Material Adverse
Effect on the Borrower;
(2) conflict with, result in a breach of or constitute a
default under the certificate of incorporation or bylaws of
the Borrower, any material indenture, agreement or other
instrument to which the Borrower is a party or by which it
or any of its property is bound or any Governmental Approval
applicable to and binding upon the Borrower, except for such
conflicts, breaches and defaults which would not have a
Material Adverse Effect on the Borrower; or
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(3) result in or require the creation or imposition of any
Lien (other than Permitted Liens) upon or with respect to
any property owned by the Borrower;
(e) Business.
(1) The Borrower is presently engaged principally in the
business of the ownership, leasing and operation of retail
stores; and
(2) The Borrower is not presently engaged principally in,
nor has as one of its principal activities, the business of
extending credit for the purpose of purchasing or carrying
any margin stock (within the meaning of Regulation G of the
Board of Governors of the Federal Reserve System);
(f) Compliance with Applicable Law; Governmental Approvals. To
the knowledge of the Borrower, the Borrower has all Governmental Approvals
required by any Applicable Law applicable to and binding upon the Borrower
for it to conduct its business, each of which is in full force and effect,
and the Borrower is in compliance in all material respects with each such
Governmental Approval, except where the failure to have any such
Governmental Approval or for any such Governmental Approval to be in full
force and effect would not, or where such non-compliance would not, have a
Material Adverse Effect on the Borrower;
(g) Titles to Properties. To the knowledge of the Borrower, the
Borrower, in all material respects, has good title to, or a valid leasehold
interest in, its real properties and good title to, or a valid leasehold
interest in, its personal property and assets, including but not limited
to, those reflected on the balance sheet of the Borrower as of March 28,
1998, delivered pursuant to SECTION 7.1, except (i) those properties and
assets which have been disposed of by the Borrower subsequent to such date
in the ordinary course of business, (ii) Permitted Liens and (iii) where
the failure to have such good title or valid leasehold interest would not
have a Material Adverse Effect on the Borrower;
(h) Liens. To the knowledge of Borrower, none of the properties
and assets of the Borrower is, as of the Agreement Date, subject to any
Lien, except Permitted Liens;
(i) Indebtedness and Guarantees. SCHEDULE 5.1(I) is a complete
and correct listing of all (i) Indebtedness for Money Borrowed and (ii)
Guarantees of the Borrower as of the Agreement Date. The Borrower has
performed in all material respects and is in compliance in all material
respects with all of the material terms of such Indebtedness and Guarantees
and all of the material terms of the material instruments and agreements
executed and delivered by the Borrower in connection therewith, and no
material default or event of default, or event or condition which with
notice or lapse of time or both would constitute such a default or event of
default, exists on the Agreement Date with respect to any such Indebtedness
or Guaranty, except for those, if any, which would not have a Material
Adverse Effect on the Borrower;
(j) Litigation. Except as referred to in the financial statements
(or the notes thereto) of the Borrower delivered to the Lender pursuant to
SECTIONS 7.1 OR 7.2 hereof, there are no material actions, suits or
proceedings pending (nor, to the knowledge of the Borrower,
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are there any material actions, suits or proceedings threatened, nor is
there any basis therefor) against or in any other way relating adversely to
or adversely affecting the Borrower or any of its property or by any
governmental body except actions, suits or proceedings (i) of the character
normally incident to the kind of business conducted by the Borrower, or
(ii) which if adversely determined would not singly or in the aggregate
have a Material Adverse Effect on the Borrower, and there are no strikes or
walkouts in progress relating to any labor contracts to which the Borrower
is a party;
(k) Tax Returns and Payments. Except as referred to in the
Registration Statement or in the financial statements (or notes, thereto)
of the Borrower delivered to the Lender pursuant to SECTIONS 7.1 OR 7.2
hereof, all federal, state and other tax returns of the Borrower required
by law to be filed have been duly filed, and all federal, state and other
taxes, assessments and other governmental charges or levies upon the
Borrower and its property, income, profits and assets which are due and
payable have been paid, except any such nonpayment which is at the time
permitted under SECTION 6.6. The charges, accruals and reserves on the
books of the Borrower in respect of federal and state taxes for all open
fiscal years and portions thereof are in the judgment of the Borrower
adequate in all material respects, and except as referred to in the
Registration Statement or in the financial statements (or notes thereto) of
the Borrower delivered to the Lender pursuant to SECTIONS 7.1 OR 7.2
hereof, the Borrower knows of no reason to anticipate any additional
assessments for any of such years which, singly or in the aggregate, would
have a Material Adverse Effect on the Borrower;
(l) Financial Statements. The audited financial statements of
the Borrower dated as of December 27, 1997, and the interim financial
statements of the Borrower dated as of March 28, 1998, copies of all of
which have been delivered by the Borrower to the Lender, are true and
correct and contain no material misstatement or omission, and fairly
present the financial position, assets and liabilities of the Borrower as
of the dates thereof, and the results of its operations for the periods
then ended. Since the date of such financial statements, except as
otherwise disclosed or referred to herein or therein, there has been no
event or occurrence the result of which has been a Material Adverse Effect
on the Borrower, other than Indebtedness arising in the ordinary course of
the Borrower's business;
(m) Leases. The Borrower has performed in all material respects
and is in compliance in all material respects with all the material terms
of the Capitalized Lease Obligations and Operating Leases to which it is a
party on the Agreement Date, and no material default or event of default,
or event or condition which with notice or lapse of time or both would
constitute such a default or event of default, exists on the Agreement Date
with respect to any such Capitalized Lease Obligation or Operating Lease,
except for those, if any, which would not have a Material Adverse Effect on
the Borrower;
(n) ERISA. To the knowledge of the Borrower, each Plan is in
compliance with ERISA in all material respects and no material liability to
the PBGC has been, or is expected by the Borrower to be, incurred by the
Borrower;
(o) Absence of Defaults. The Borrower is not in default on the
Agreement Date under its certificate of incorporation or by-laws as in
effect on the Agreement Date, and to the knowledge of the Borrower, no
event has occurred which has not been remedied, cured or waived,
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(1) which constitutes a Default or an Event of Default on the
Agreement Date; or
(2) which constitutes, or which with the passage of time or
giving of notice or both would constitute, a material default or
material event of default on the Agreement Date by the Borrower
under any material agreement (other than this Agreement) or
judgment, decree or order to which the Borrower is a party on the
Agreement Date or by which the Borrower or any of its properties
are bound on the Agreement Date, which event would have a
Material Adverse Effect on the Borrower, except, in the case only
of any such agreement, for alleged defaults or events of default
which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been
established on the books of the Borrower;
(p) Accuracy and Completeness of Information. All written information,
reports and other papers and data produced by the Borrower and furnished to
the Lender in connection with the negotiation, preparation or execution of
this Agreement were, at the time the same were so furnished, complete (if
and to the extent applicable) and correct in all material respects. No
document furnished or written statement made by the Borrower to the Lender
in connection with the negotiation, preparation or execution of this
Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein not misleading;
(q) Solvency. In each case after giving effect to the Indebtedness
represented by the Loan outstanding and to be incurred and the transactions
contemplated by this Agreement, the Borrower is solvent, having assets of a
fair salable value which exceeds the amount required to pay its debts. The
Borrower is able to and anticipates that it will be able to meet its debts
as they mature and has adequate capital to conduct the business in which it
is or proposes to be engaged;
(r) Corporate Names. During the five (5) years preceding the Agreement
Date, the Borrower has not had any corporate name other than its current
corporate name, except TSC Industries, Inc.
Section 5.2 Survival of Representations and Warranties, etc. All
representations and warranties set forth in this ARTICLE 5, and all statements
contained in any certificate, financial statement, or other instrument delivered
by the Borrower pursuant to or in connection with this Agreement (including but
not limited to any such made in or in connection with any amendment hereto)
shall constitute representations and warranties made under this Agreement. All
representations and warranties made under this Agreement shall be made or deemed
to be made at and as of the Agreement Date and at and as of the date of making
the Loan, except where the failure of any such representations or warranties to
be true and correct shall be due to the passage of time or other events,
occurrences or circumstances which would not have a Material Adverse Effect on
the Borrower.
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ARTICLE 6
AFFIRMATIVE COVENANTS
Until the Loan has been paid in full, unless the Lender shall otherwise
consent in the manner provided for in SECTION 10.6, the Borrower will:
Section 6.1 Preservation of Corporate Existence and Similar Matters.
Preserve and maintain its corporate existence in the jurisdiction of its
incorporation and qualify and remain qualified as a foreign corporation and
authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification or
authorization, except where the failure to be so qualified or authorized would
not have a Material Adverse Effect on the Borrower.
Section 6.2 Compliance with Applicable Law. Comply in all material
respects with all material Applicable Laws applicable to and binding upon the
Borrower.
Section 6.3 Maintenance of Property. Protect and preserve in all
material respects all properties which are then material to its business, and
maintain in good repair, working order and condition in all material respects
all tangible properties which are then material to its business.
Section 6.4 Conduct of Business. At all times engage only in businesses
in substantially the same industries as the business conducted on the Agreement
Date.
Section 6.5 Insurance. At all times maintain insurance with responsible
insurance companies against such risks and in such amounts as is customarily
maintained by similar businesses or as may be required by material Applicable
Law applicable to and binding upon the Borrower, and from time to time deliver
to the Lender upon its reasonable request a detailed list of the insurance then
in effect, stating the names of the insurance companies, the amounts and rates
of the insurance, the dates of the expiration thereof and the properties and
risks covered thereby.
Section 6.6 Payment of Taxes and Claims. Except as referred to in the
Registration Statement or in the financial statements (or notes thereto) of the
Borrower delivered to the Lender pursuant to SECTION 7.2 hereof, pay or
discharge before they become delinquent:
(a) all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or upon any properties
belonging to it; and
(b) all lawful claims of materialmen, mechanics, carriers,
warehousemen and landlords for labor, materials, supplies and rentals
which, if unpaid, would become a Lien (other than a Permitted Lien) on
any properties of the Borrower and would have a Material Adverse Effect
on the Borrower;
except that this SECTION 6.6 shall not require the payment or discharge of any
such tax, assessment, charge, levy or claim which is being contested in good
faith by appropriate proceedings and for which adequate reserves have been
established on the books of the Borrower.
Section 6.7 Accounting Methods and Financial Records. Maintain such a
system of accounting, and keep such books, records and accounts (which shall be
true and complete), as shall
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be required or as shall be necessary for the preparation of consolidated
financial statements in accordance with GAAP.
Section 6.8 Visits and Inspections. Permit a reasonable number of
representatives of the Lender, from time to time, as often as may be reasonably
requested, but only during normal business hours and upon reasonable prior
notice, to
(a) visit and inspect the properties of the Borrower;
(b) inspect and make extracts from its relevant books and
records, including but not limited to, management letters prepared by
independent accountants; and
(c) discuss with its principal officers, and its independent
accountants, its business, assets, liabilities, financial condition,
results of operations, and business plan.
Section 6.9 Use of Proceeds.
(a) Use the proceeds of the Loan for general business
purposes; and
(b) not use any part of such proceeds to purchase or carry, or
to reduce retire or refinance any credit incurred to purchase or carry,
any margin stock (within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System) or for any other purpose which
would involve a violation of such Regulation G or Regulation U or X of
such Board of Governors, or for any other purpose prohibited by any
material Applicable Law applicable to and binding upon the Borrower or
by the terms and conditions of this Agreement.
Section 6.10 Mortgage and Lease Payments. Pay before they become
delinquent or contest in good faith by appropriate proceedings all principal and
interest payments due under mortgages, and rental payments due under leases,
with respect to any of the properties of the Borrower, which, if unpaid, would
have a Material Adverse Effect on the Borrower.
Section 6.11 Management. Retain Borrower's current senior management
(as defined below), except to the extent the Borrower, with the prior written
consent of the Lender, which consent shall not be unreasonably withheld or
delayed, replaces an individual member of senior management with an individual
reasonably acceptable to the Lender; provided, however, that it shall not be a
violation of this covenant for the Borrower to replace (or not to replace) an
individual member of senior management without the consent of the Lender, so
long as at least two (2) members of the senior management remain involved in a
senior management position with the Borrower. For purposes of this Agreement,
senior management shall mean Xxxxxx Xxxxxxxx, Xx.; Xxxxxx X. Xxxxx; Xxxxxxx X.
Xxxxx; and Xxxxxx X. Xxxxx.
ARTICLE 7
INFORMATION
Until the Loan has been paid in full, unless the Lender shall otherwise
consent in the manner set forth in SECTION 10.6, the Borrower shall furnish to
the Lender:
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Section 7.1 Quarterly Financial Statements. Within forty-five (45) days
after the end of each fiscal quarter of the Borrower, the consolidated balance
sheets of the Borrower as at the end of such fiscal quarter and the related
consolidated statements of income of the Borrower for such fiscal quarter and
the fiscal period then ended and a consolidated statement of cash flows for the
period then ended, and setting forth in comparative form the figures for the
corresponding periods of the previous fiscal year, all of which shall present
fairly, in accordance with GAAP for the presentation of interim financial
statements consistently applied throughout the period involved, subject to audit
and year-end adjustments, the consolidated financial position of the Borrower as
of such date and the operations and cash flows of the Borrower for the periods
then ended.
Section 7.2 Audited Year-End Statements. Within 90 days after the end
of each fiscal year of the Borrower, the consolidated balance sheets of the
Borrower as at the end of such fiscal year and the related consolidated
statements of income, consolidated statement of changes in stockholders equity
and consolidated statement of cash flows for such fiscal year, in each case
setting forth in comparative form the figures as at the end of and for the
previous fiscal year, certified by Price Waterhouse LLP or other independent
certified public accountants of recognized national standing.
Section 7.3 Accountants' Certificate. Together with the financial
statements referred to in SECTION 7.2, a certificate of such accountants
addressed to the Lender:
(a) stating that in making the examination necessary for the
certification of such financial statements, nothing has come to their
attention to lead them to believe that any Default or Event of Default
exists on the date of such certificate and, in particular, that they
have no knowledge of the existence of any Default or Event of Default
on the date of such certificate or, if such is not the case, specifying
such Default or Event of Default and its nature; and
(b) having attached the calculations, prepared by the Borrower
and reviewed by such accountants, required to establish whether or not
the Borrower is in compliance with the covenants contained in SECTION
8.1, as at the date of such financial statements.
Section 7.4 Officer Certificates. At the time the financial statements
are furnished to the Lender, pursuant to SECTION 7.1 AND 7.2, a certificate of
its chief executive officer, president, chief financial officer or controller
(i) setting forth as at the end of such fiscal quarter, the information
necessary to calculate the Financial Ratios set forth in Section 8.1 as at the
end of such fiscal quarter, and (ii) stating that, based on an examination
sufficient to enable him to make an informed statement, no Default or Event of
Default exists on the date of such certificate, or, if such is not the case,
specifying such Default or Event of Default and its nature, when it occurred,
whether it is continuing and the steps being taken by the Borrower with respect
to such event or failure.
Section 7.5 Update of Schedules and Information. On an annual basis, at
the same time Borrower furnishes annual financial statements to the Lender
pursuant to SECTION 7.2 hereof, the Borrower shall furnish to the Lender (i) an
update of Schedule 5.1(i), and (ii) an updated listing of all Capitalized Lease
Obligations and all Operating Leases (a) covering stores operated by the
Borrower, or (b) not covering stores which call for total lease payments, over
the full term of each such non-store Operating Lease, in excess of $1,000,000.
Section 7.6 Copies of Other Reports.
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(a) Promptly upon receipt thereof, copies of all management
reports, if any, submitted to the Borrower or its Board of Directors by
its independent public accountants;
(b) From time to time upon each reasonable request of the
Lender, such data, certificates, reports, statements, opinions of
counsel, documents or further information regarding the business,
assets, liabilities, financial condition or results of operations of
the Borrower as the Lender may reasonably request and that the Borrower
has or without unreasonable expense can obtain. The rights of the
Lender under this SECTION 7.6(B) are in addition to and not in
derogation of its rights under any other provision of this Agreement;
(c) If reasonably requested by the Lender, such statements in
conformity with the requirements of Federal Reserve Form G-1 referred
to in Regulation G of the Board of Governors of the Federal Reserve
System;
(d) At the same time the annual financial statements are
delivered to Lender, as required by SECTION 7.2, the Borrower's annual
business plan, together with quarterly projections, including a
schedule of projected Capital Expenditures for the Borrower's next
succeeding fiscal year; and
(e) As soon as practicable after the sending or making
available, or filing of the same, copies of all reports, proxy
statements, annual reports, and financial statements that the Borrower
sends or makes available to its stockholders generally, and all
registration statements and reports the Borrower files with the
Securities and Exchange Commission or any successor commission.
Section 7.7 Notice of Litigation and Other Matters. Prompt notice of:
(a) to the extent the Borrower is aware of the same, the
commencement of all proceedings and investigations by or before any
governmental or nongovernmental body, and all actions and proceedings
in any court or before any arbitrator, against or in any other way
relating adversely to, or adversely affecting, the Borrower or any of
its property, assets or businesses, which, if adversely determined,
would, singly or in the aggregate, constitute a Default or an Event of
Default or have a Material Adverse Effect on the Borrower;
(b) any amendment of the certificate of incorporation or
by-laws of the Borrower;
(c) any change in the business, assets, liabilities, financial
condition or results of operations of the Borrower which has had or
would have a Material Adverse Effect on the Borrower and any change in
the chief executive officer of the Borrower; and
(d) any default or event of default by the Borrower, or any
event which constitutes or which with the passage of time or giving of
notice or both would constitute a default or event of default by the
Borrower, under any material agreement other than this Agreement to
which the Borrower is a party or by which the Borrower or any of its
properties is bound, which default, event of default or event would
have a Material Adverse Effect on the Borrower.
Section 7.8 Accuracy of Information. All written information, reports,
statements and other papers and data furnished by the Borrower to the Lender,
whether pursuant to this ARTICLE 7 or
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any other provision of this Agreement, shall be, at the time the same is so
furnished, complete (to the extent applicable) and correct in all material
respects.
Section 7.9 Subsidiaries. In the event the Borrower creates, owns, or
acquires any Subsidiary, it shall cause such Subsidiary to guaranty the Loan and
Note pursuant to a guaranty in form and substance reasonably satisfactory to
Lender.
ARTICLE 8
NEGATIVE COVENANTS
Until the Loan has been repaid in full, unless the Lender shall
otherwise consent in the manner set forth in SECTION 10.6, the Borrower will not
directly or indirectly:
Section 8.1 Financial Ratios.
Permit:
(a) Minimum Net Worth. The Net Worth of the Borrower:
(1) to be less than $50,000,000 at December 31, 1994.
(2) to be less than $50,000,000, plus an amount equal to
50% of the Borrower's Net Income for fiscal year 1994, at
December 31, 1995.
(3) to be less than the Net Worth of the Borrower for the
preceding fiscal year of the Borrower plus an amount equal
to 50% of the Borrower's Net Income for the preceding
fiscal year, as of the end of each succeeding fiscal year;
(b) Ratio of Total Liabilities to Net Worth. The ratio of
Total Liabilities to Net Worth of the Borrower as of the end of each
fiscal quarter of the Borrower, to be more than 2.5 to 1;
(c) Minimum Working Capital. The Working Capital of the
Borrower to be less than $35,000,000 as of the end of each fiscal
quarter of the Borrower;
(d) Minimum Interest Coverage Ratio. The Interest Coverage
Ratio of the Borrower, measured as of the end of each fiscal quarter of
the Borrower and calculated on a rolling four quarter basis, to be less
than 2.50 to 1;
(e) Minimum Current Ratio. The Current Ratio of the Borrower,
measured as of the end of each fiscal quarter of the Borrower, to be
less than 1.25 to 1.
Section 8.2 Additional Indebtedness. Incur, create, assume or permit to
exist any Indebtedness except (i) the Loan, (ii) the Existing Indebtedness,
(iii) Indebtedness of another Person assumed or paid off in connection with the
acquisition of the assets or capital stock of such Person, (iv) intercompany
Indebtedness, (v) Indebtedness and Guarantees not otherwise prohibited under
this Agreement, and (vi) Purchase Money Indebtedness incurred in the ordinary
course of business.
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Section 8.3 Employee Loans. Make any loan or advance to any officer,
stockholder, director, or employee of the Borrower, except for temporary
advances in the ordinary course of business and loans and advances made in
connection with the moving or relocation of employees which do not exceed an
aggregate of $250,000 at any one time outstanding.
Section 8.4 Business Operations. Materially alter its current business
operations or engage in a material manner in a new field of business which is
materially incompatible with the Borrower's current business operations if such
alteration or engagement would have a Material Adverse Effect on the Borrower.
Section 8.5 Guarantees. Become or remain liable with respect to any
Guaranty of any obligation of any other Person, except for (a) Guarantees
existing on the Agreement Date and set forth on SCHEDULE 5.1(I) hereto, (b) any
Guaranty of another Person assumed or discharged in connection with the
acquisition of the assets or capital stock of such Person, and (c) any Guaranty
in favor of any holder or lender of (i) indebtedness which does not constitute
Indebtedness under this Agreement, or (ii) any Indebtedness permitted under
SECTION 8.2.
Section 8.6 Investments. Acquire, after the Agreement Date, any
Investment other than Permitted Investments, provided that if a Subsidiary is
involved, the Borrower shall comply with SECTION 7.9 hereof.
Section 8.7 Merger, Consolidation and Sale of Assets. Merge or
consolidate with any other Person, unless the surviving or resulting Person
thereof is the Borrower, or sell, lease or transfer or otherwise dispose of all
or substantially all of its assets to any Person other than a Subsidiary.
Section 8.8 Transactions with Subsidiaries. Except for (a) loans and
advances permitted by SECTION 8.3 hereof, (b) inter-company loans and advances,
(c) loans, advances and other transactions not otherwise prohibited under this
Agreement, (d) compensation, stock options and capital stock paid, granted or
issued to employees, directors or stockholders of the Borrower or any Subsidiary
thereof and any agreements relating thereto and (e) transactions referred to
under the caption "Certain Transactions" in the Registration Statement, effect
any transaction with any Subsidiary on a basis less favorable to the Borrower
than would be the case if such transaction had been effected with a Person not a
Subsidiary.
Section 8.9 Liens. Create, assume or permit or suffer to exist or to be
created or assumed any Lien on any of the property or assets of the Borrower,
real, personal or mixed, tangible or intangible, other than Permitted Liens.
ARTICLE 9
DEFAULT
Section 9.1 Events of Default. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or nongovernmental body:
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(a) Default in Payment. (i) The Borrower shall default in any
payment of principal of the Loan or the Note within ten (10) days of
when the same shall become due and payable (whether upon demand, at
the Termination Date, by reason of acceleration or otherwise); or (ii)
the Borrower shall default in any payment of interest on the Loan or
the Note when the same shall become due and payable (whether upon
demand, at the Termination Date, by reason of acceleration or
otherwise) and such default shall continue for a period of ten (10)
days after written notice thereof has been received by the Borrower
from the Lender;
(b) Misrepresentation. Any representation or warranty made by the
Borrower under this Agreement or any amendment hereto shall at any
time prove to have been incorrect or misleading in any material
respect when made;
(c) Default in Performance. The Borrower shall default in the
performance or observance of any term, covenant, condition or
agreement contained in this Agreement (other than a default in
performance or observance which is dealt with specifically elsewhere
in this SECTION 9.1) and such default shall continue for a period of
30 days after written notice thereof has been received by the Borrower
from the Lender;
(d) Indebtedness Cross-Default. The Borrower shall fail to pay
when due and payable (after the expiration of all grace and cure
periods) the principal of or interest on any Indebtedness for Money
Borrowed (other than the Loan or Note) which at that time has an
aggregate outstanding principal balance in excess of $250,000 and, as
a result thereof, the maturity of such Indebtedness shall have been
accelerated in accordance with the provisions of any indenture,
contract or instrument providing for the creation of or concerning
such Indebtedness, unless (i) such failure is cured by the Borrower or
waived by the Person or Persons entitled to such payment or (ii) such
payment or acceleration is being contested by the Borrower in good
faith by appropriate proceedings and adequate reserves therefor shall
have been established on the books of the Borrower;
(e) Other Cross-Defaults. The Borrower shall default in the
payment when due and payable (after the expiration of applicable grace and cure
periods), or in the performance or observance when due (after the expiration of
all grace and cure periods), of any material obligation or condition of any
material contract or lease (other than one relating to Indebtedness for Money
Borrowed) which default shall constitute an event of default thereunder and
shall have a Material Adverse Effect on the Borrower, unless, but only as long
as, the existence of any such default is being contested by the Borrower in good
faith by appropriate proceedings and adequate reserves in respect thereof have
been established on the books of the Borrower, or unless such default is cured
by the Borrower or waived by the Person or Persons entitled to such payment,
performance or observance;
(f) Voluntary Bankruptcy Proceeding. The Borrower shall:
(1) commence a voluntary case under the federal bankruptcy
laws (as now or hereafter in effect);
(2) file a petition seeking to take advantage of any other
laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition for
adjustment of debts;
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(3) consent to or fail to contest in a timely and
appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws;
(4) apply for or consent to, or fail to contest in a timely
and appropriate manner, the appointment of, or the taking of
possession by, a receiver, custodian, trustee, or liquidator
of itself or of a substantial part of its property, domestic
or foreign;
(5) admit in writing its inability to generally pay its
debts as they become due;
(6) make a general assignment for the benefit of creditors;
or
(7) take any formal corporate action for the purpose of
effecting any of the foregoing;
(g) Involuntary Bankruptcy Proceeding. A case or other proceeding
shall be commenced against the Borrower in any court of competent
jurisdiction seeking
(1) relief under the federal bankruptcy laws (as now or
hereafter in effect) or under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization,
winding up or adjustment of debts; or
(2) the appointment of a trustee, receiver, custodian,
liquidator or other official with similar powers of the
Borrower or of all or any substantial part of the assets,
domestic or foreign, of the Borrower;
and such case or proceeding shall continue undismissed or
unstayed for a period of 60 consecutive calendar days, or an
order granting the relief requested in such case or proceeding
against the Borrower (including, but not limited to, an order for
relief under such federal bankruptcy laws) shall be entered;
(h) Judgment. A final judgment or order for the payment of money
shall be entered against the Borrower by any court which exceeds
$1,000,000 in amount and such judgment order shall continue
undischarged or unstayed for 30 days;
(i) Attachment. A warrant or writ of attachment or execution or
similar process shall be issued against any property of the Borrower
which exceeds $1,000,000 in value and such warrant or process shall
continue undischarged or unstayed for 30 days; and
(j) ERISA. As a result of any of the following, the Borrower
shall incur a liability to a Plan, a participant thereof or the PBGC
that shall have a Material Adverse Effect on the Borrower:
(1) Any Termination Event with respect to a Plan shall occur
that results in an Unfunded Vested Accrued Benefit; or
(2) any Plan shall incur an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 or
ERISA) for which a waiver has
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not been obtained in accordance with the applicable
provisions of the Code and ERISA; or
(3) the Borrower shall be in "default" (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to a
multi-employer Plan resulting from the Borrower's complete
or partial withdrawal (under Sections 4203 or 4205 of ERISA)
from such Plan.
Section 9.2 Remedies.
(a) Automatic Acceleration and Termination of Facilities. Upon
the occurrence and continuation of an Event of Default specified in
SECTION 9.1(F) or (G), (i) the unpaid principal of and the unpaid
accrued interest on the Loan and the Note at the time outstanding, and
all other amounts owed by the Borrower to the Lender under this
Agreement or the Note shall thereupon become due and payable without
presentment, demand, protest, or other notice of any kind, all of
which are expressly waived, anything in this Agreement or the Note to
the contrary notwithstanding; and (ii) the Loan and the right of the
Borrower to request borrowings hereunder shall immediately terminate;
(b) Other Remedies. If any Event of Default shall have occurred
and be continuing, during the continuance of any such Event of
Default, the Lender, in its sole and absolute discretion, may do any
or all of the following:
(1) declare the unpaid principal of and unpaid accrued
interest on the Loan and the Note at the time outstanding,
and all other amounts owed by the Borrower to Lender under
this Agreement or the Note, to be forthwith due and payable,
whereupon the same shall immediately become due and payable
without presentment, demand, protest or other notice of any
kind, all of which are expressly waived, anything in this
Agreement and any Note to the contrary notwithstanding;
(2) terminate the Loan and any other right of the Borrower
to request borrowings hereunder; and
(3) exercise any and all of its rights under this Agreement.
Section 9.3 Miscellaneous Provisions Concerning Remedies.
(a) Rights Cumulative. The rights and remedies of the Lender
under this Agreement and the Note shall be cumulative and not
exclusive of any rights or remedies which it would otherwise have. In
exercising its rights and remedies the Lender may be selective and no
failure or delay by the Lender in exercising any right shall operate
as a waiver of it, nor shall any single or partial exercise of any
power or right preclude its other or further exercise or the exercise
of any other power or right.
(b) Waiver of Marshalling. The Borrower hereby waives any right
to require any marshalling of assets.
(c) Limitation of Liability. Except as required by Applicable
Law, nothing contained in this ARTICLE 9 or elsewhere in this
Agreement or in any Note shall be construed
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as requiring or obligating the Lender to make any demand, or to make
any inquiry as to the nature or sufficiency of any payment received by
it, or to present or file any claim or notice or take any action, with
respect to the monies due or to become due hereunder or in connection
herewith, or to take any steps necessary to preserve any rights
against prior parties, and the Lender shall not have any liability to
the Borrower for actions taken pursuant to this ARTICLE 9, any other
provision of this Agreement or any Note so long as the Lender shall
act reasonably and in good faith and in accordance with Applicable
Law.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Notices.
(a) Method of Communication. Except as specifically provided in
this Agreement, all notices and communications hereunder shall be in
writing or by telephone, subsequently confirmed in writing. Notices in
writing shall be delivered personally or sent by certified or
registered mail postage prepaid, by a nationally-recognized overnight
courier service with courier fees paid by the sender, by facsimile or
by telegraph or telex and shall be deemed received, in the case of
personal delivery or confirmed facsimile, when delivered, in the case
of mailing, on the third Business Day after mailing, in the case of
overnight courier service, two Business Days following the date when
couriered, in the case of telegraph, on the first Business Day after
the date of delivery to the telegraph office and in the case of telex,
upon transmittal. A telephonic notice to the Lender, as understood by
the Lender, will be deemed to be the controlling and proper notice in
the event of a discrepancy with, or failure to receive, a confirming
written notice.
(b) Addresses for Notices. Notices to the parties shall be sent
to them at the following addresses, or any other address of which all
the other parties are notified in writing:
If to the Borrower: 000 Xxxx Xxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
If to the Lender: 000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Section 10.2 Expenses. The Borrower will pay all reasonable
out-of-pocket expenses of the Lender in connection with:
(a) the preparation, execution and delivery of this Agreement,
the Note, and any other documents or instruments executed and
delivered in connection herewith or therewith, including taxes (if
any);
(b) the preparation, execution and delivery of any waiver,
amendment or consent by the Lender relating to this Agreement or the
Note, including the reasonable fees and disbursements of counsel for
the Lender; and
(c) upon the occurrence and continuation of an Event of Default,
consulting with one or more Persons, including appraisers, accountants
and lawyers, concerning or related to
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the nature, scope or value of any right or remedy of the Lender
hereunder or under the Note, including any review of factual matters
in connection therewith, which expenses shall include the reasonable
fees and disbursements of such Persons.
Section 10.3 Setoff. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon the occurrence and continuation of any Event of Default, the Lender is
hereby authorized by the Borrower at any time or from time to time during the
continuation of such Event of Default, without notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured) and any other
indebtedness at any time held or owing by the Lender or any Affiliate of the
Lender, to or for the credit or the account of the Borrower against and on
account of the outstanding balance of the Obligations irrespective or whether or
not:
(a) the Lender shall have made any demand under this Agreement or
the Note; or
(b) the Lender shall have declared any or all of the Obligations
to be due and payable as permitted by SECTION 9.2.
Section 10.4 Accounting Matters. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by the
Borrower in complying with any covenant contained herein, shall be made in
accordance with GAAP.
Section 10.5 Assignment. All the provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or duties under this Agreement without the prior written consent
of the Lender. Lender may assign or transfer any of its rights or duties under
this Agreement.
Section 10.6 Enforcement and Waiver by the Lender. The Lender shall
have the sole and exclusive right to administer, amend, waive or modify this
Agreement and the Note (provided, however, that no such amendment or
modification shall be effective or enforceable unless made pursuant to an
instrument in writing signed by the Borrower). The Lender shall have the right
at all times to enforce the provisions of this Agreement and the Note in strict
accordance with the terms thereof, notwithstanding any conduct or custom (except
waivers or consents granted pursuant to the terms hereof or thereof) on the part
of the Lender in refraining from so doing at any time or times. The failure of
the Lender at any time or times to enforce its rights under such provisions,
strictly in accordance with the same, shall not be construed as having created a
custom in any way or manner contrary to specific provisions of this Agreement or
the Note or as having in any way or manner modified or waived as same. All
rights and remedies of the Lender are cumulative and concurrent and the exercise
of one right or remedy shall not be deemed a waiver or release of any other
right or remedy.
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Section 10.7 Performance of Borrower's Duties.
(a) The Borrower's obligations under this Agreement and the
Note shall be performed by the Borrower at its sole cost and expense.
(b) If the Borrower shall fail to do any act or thing which it
has covenanted to do under this Agreement and such failure results in
the occurrence and continuation of an Event of Default, the Lender may
(but shall not be obligated to) do the same or cause it to be done
either in the name of the Lender or in the name and on behalf of the
Borrower and the Borrower hereby irrevocably authorizes the Lender so
to act.
Section 10.8 Indemnification. The Borrower agrees to reimburse the
Lender for all costs and expenses, including reasonable counsel fees and
disbursements, incurred by, and to indemnify and hold the Lender harmless from
and against all losses suffered by, the Lender in connection with:
(a) the exercise by the Lender of any right or remedy granted
to it under this Agreement or the Note; and
(b) the collection or enforcement of the Obligations pursuant
to and in accordance with this Agreement and Applicable Law.
Section 10.9 All Powers Coupled with Interest. All powers of attorney
and other authorizations granted to the Lender and any Persons designated by the
Lender pursuant to any provisions of this Agreement shall be deemed coupled with
an interest and shall be irrevocable so long as any of the Obligations remain
unpaid or unsatisfied, unless waived by the party or parties entitled thereto.
Section 10.10 Survival. Notwithstanding any termination of this
Agreement,
(a) until all Obligations have been paid in full or otherwise
satisfied, the Lender shall retain all rights under this Agreement as
though this Agreement had not been terminated; and
(b) the indemnities to which the Lender is entitled under the
provisions of this ARTICLE 10 and any other provision of this Agreement
shall continue in full force and effect and shall protect the Lender
against events arising after such termination as well as before.
Section 10.11 Titles and Captions. The Table of Contents and the titles
and captions of Articles, Sections and subsections in this Agreement are for
convenience only, and neither limit nor amplify the provisions of this
Agreement.
Section 10.12 Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating the remainder of such provision or the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 10.13 Governing Law. This Agreement and the Note shall be
construed in accordance with and governed by the law of the State of Tennessee.
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Section 10.14 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
BORROWER:
TRACTOR SUPPLY COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Title: Vice-President
--------------------------------
LENDER:
SUNTRUST BANK, NASHVILLE, N.A.
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Title: AVP
--------------------------------
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