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EXHIBIT 10.2
[J. H. HEAFNER COMPANY, INC. LETTERHEAD]
May 20, 1998
BankBoston, N.A.
Boston, Massachusetts
Fleet Capital Corporation
Atlanta, Georgia
First Union National Bank
Charlotte, North Carolina
Amended and Restated
Loan and Security Agreement
dated as of May 20, 1998
Ladies and Gentlemen:
We refer to the captioned agreement (the "1998 Loan Agreement") to
which each of you is a party as a Lender with one or more of us and to the Loan
and Security Agreement dated as of August 4, 1993 (as amended and in effect on
the date hereof, the "Fleet Loan Agreement") to which Fleet Capital Corporation
is a party as the lender with one or more of us. Unless otherwise defined
herein, terms defined in the 1998 Loan Agreement are used herein as therein
defined.
Pursuant to the Fleet Financing, Fleet makes loans and extends other
financial accommodations to ITCO, secured by a security interest in, among other
things, the accounts receivable of ITCO and the proceeds thereof ("ITCO's
Accounts"). Certain of ITCO's Accounts, at least to the extent they constitute
proceeds of ITCO tire inventory, are also subject to security interests in favor
of the tire company vendors to ITCO and its Affiliates listed on Annex A hereto
(each, a "Vendor"). At or about the date of the Fleet Loan Agreement, ITCO
obtained for Fleet's benefit an agreement with each such Vendor to the effect
that such Vendor's security interest in ITCO's tire inventory (or a specified
part thereof) was senior to the security interest of Fleet in such inventory,
while Fleet's interest in ITCO's Accounts was senior to any interest of such
Vendor in ITCO's Accounts (the "Vendor Subordination Agreements"), copies of
which have been furnished to the Lenders and the Agent.
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BankBoston, N.A.
Fleet Capital Corporation
First Union National Bank
May 20, 1998
Page 2
It is not clear that the Vendor Subordination Agreements can
effectively be assigned by Fleet to the Agent for the benefit of the Lenders
under the 1998 Loan Agreement in connection with the repayment of all amounts
outstanding under the Fleet Financing. Heafner is unable to obtain release of
the Vendor's liens or confirmation of the Vendor Subordination Agreements or
new, acceptable subordination agreements in favor of the Agent prior to the date
established as the closing date of the ITCO Merger and the CPW Acquisition. So
long as the Vendors' security interests in ITCO's Accounts are or may be prior
to the Lien in favor of the Agent thereon, ITCO's Accounts cannot be included as
"Eligible Receivables" in the computation of the Borrowing Base under the 1998
Loan Agreement.
Heafner has requested that the Fleet Financing be permitted to remain
in effect in accordance with its terms, but subject to the terms, conditions and
provisions of this letter agreement, until the Vendors' security interests in
ITCO's Accounts are released or Heafner can obtain confirmation of the Vendor
Subordination Agreements or new subordination agreements, in either case in
favor of the Agent for the benefit of the Lenders, and the Agent and the Lenders
and Fleet, in its capacity as the lender under the Fleet Loan Agreement, have
agreed to grant such request, upon and subject to the terms, conditions and
provisions of this letter agreement.
Accordingly, this letter will, upon your execution and delivery
thereof, evidence the agreement of the undersigned Loan Parties and each of you
in your respective capacities as Lenders, Co-Agents and Agent under the 1998
Loan Agreement and, as to Fleet, in its capacity as lender under the Fleet Loan
Agreement as follows (notwithstanding any contrary provision in the 1998 Loan
Agreement or any Loan Document or the Fleet Loan Agreement or related loan
documents):
1. The Fleet Financing may remain in effect in accordance with its terms
until the earlier of
(a) July 15, 1998 and
(b) the date on which Heafner has delivered to the Agent from each
Vendor (i) a confirmation that the Vendor Subordination Agreement to which such
Vendor is a party continues in effect for the benefit of the Agent and the
Lenders under the 1998 Loan Agreement or (ii) a new subordination agreement at
least as favorable to the Agent and the Lenders as the existing Vendor
Subordination Agreement to which such Vendor is a party or (iii) evidence
satisfactory to the Agent of the complete release of the security interest in
favor of such Vendor in the ITCO Accounts, together with appropriate UCC-3s or
other necessary release documents in form and substance satisfactory to the
Agent.
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BankBoston, N.A.
Fleet Capital Corporation
First Union National Bank
May 20, 1998
Page 3
2. On the earlier of July 15, 1998 and the date on which the condition specified
in paragraph 1(b) is satisfied, all amounts outstanding and unpaid under the
Fleet Financing, including any charge for prepayment, shall be paid in full, any
other obligations provided for to Fleet's satisfaction, the Fleet Financing
terminated in writing and Heafner shall obtain and furnish to the Agent signed
UCC-3 termination statements and any other documents necessary to evidence of
record the release of any and all Liens existing in favor of Fleet as security
for the Fleet Financing.
3. During the period from the Effective Date to (but excluding) the date on
which the conditions specified in paragraph 2 are satisfied (the "Exception
Period"), no Collateral of ITCO or any Subsidiary of ITCO shall be included in
computing the Borrowing Base and the aggregate Commitments shall be equal to $50
million (with each Lender's Commitment being proportionately reduced to 50% of
the amount shown on Annex A to the 1998 Loan Agreement).
4. During the Exception Period, Fleet shall continue to administer the Fleet
Financing in accordance with its past practices and its discretion as the lender
thereunder, and neither ITCO nor any of its Subsidiaries shall, nor shall
Heafner cause ITCO or any of its Subsidiaries to, (1) make any dividend payment,
loan, advance or other distribution to any Loan Party other than ITCO or its
Subsidiaries, (2) transfer any assets to any other Person other than in the
ordinary course of business of ITCO or such Subsidiary, consistent with past
practices, or (3) change the location of any of its offices, the location(s) at
which it maintains its books and records or the locations at which Inventory is
located, provided that, notwithstanding any provisions of the Fleet Financing to
the contrary, unless the Lenders and the Agent otherwise agree in writing,
(a) consummation of the ITCO Merger and the execution, delivery and
performance (subject to the provisions of this letter agreement) by ITCO, ITCO
Logistics and ITCO's Subsidiaries of the Loan Documents to which they are
parties shall not constitute a default or event of default under the Fleet
Financing,
(b) any Event of Default under the 1998 Loan Agreement shall constitute
an event of default under the Fleet Loan Agreement, and
(c) Fleet shall not declare any default or event of default under the
Fleet Loan Agreement or accelerate the obligations owing to Fleet under the
Fleet Financing or exercise or attempt to exercise any remedies available to it
in respect of the Fleet Financing on default if no Event of Default under the
1998 Loan Agreement or default under the provisions of this paragraph 4 has
occurred and is continuing.
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BankBoston, N.A.
Fleet Capital Corporation
First Union National Bank
May 20, 1998
Page 4
5. During the Exception Period, none of the existence of the Fleet Financing,
the Liens securing the Fleet Financing, the application of proceeds of
collateral for the Fleet Financing to amounts owing to Fleet thereunder, or any
other aspect of the Fleet Financing shall constitute a Default or Event of
Default under the 1998 Loan Agreement.
6. During the Exception Period, the Borrowers will make no Acquisitions (without
the prior approval of the Agent and the Required Lenders).
7. In addition to any other fees or charges payable on the Effective Date or
thereafter to the Agent or the Lenders under the Loan Agreement, the borrowers
shall pay to the Agent for the ratable benefit of the Lenders, in consideration
of the transactions contemplated by this letter agreement, a fee in the amount
of $150,000.
The parties acknowledge and agree that their intention is to permit
ITCO's Accounts to remain acceptable collateral for loans to ITCO (including by
Fleet in accordance with the terms and subject to the conditions of the Fleet
Financing) without materially increasing the overall amount of Debt that would
have been available to the Borrowers had ITCO's Accounts been Eligible
Receivables from and after the Effective Date and without subjecting either
Fleet under the Fleet Financing or the Agent and the Lenders under the 1998 Loan
Agreement to risks not contemplated by the Fleet Financing or the 1998 Loan
Agreement, as the case may be. The parties agree that they will cooperate
reasonably with each other to give effect to such shared intention and will take
such actions and execute and deliver such additional documents and instruments
as may reasonably be requested by any other party and necessary to give effect
to such shared intention.
By their signatures below, each of the Loan Parties, Fleet and each
Lender, Co-Agent and the Agent, in their various capacities under the Fleet
Financing and the 1998 Loan Agreement, evidence their agreement to the foregoing
and their ratification, as applicable, of the terms of the Fleet Financing, the
1998 Loan Agreement and the other Loan Documents, except to the extent expressly
modified hereby.
Very truly yours,
THE J.H. HEAFNER COMPANY, INC.
By: /s/ WILLIAM H. GAITHER
Name: _________________
Title: __________________
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BankBoston, N.A.
Fleet Capital Corporation
First Union National Bank
May 20, 1998
Page 5
OLIVER & WINSTON, INC.
By: /s/ WILLIAM H. GAITHER
Name: _________________
Title: __________________
THE SPEED MERCHANT, INC.
By: /s/ WILLIAM H. GAITHER
Name: _________________
Title: __________________
ITCO HOLDING COMPANY, INC.
By: /s/ WILLIAM H. GAITHER
Name: _________________
Title: __________________
ITCO TIRE COMPANY
By: /s/ WILLIAM H. GAITHER
Name: _________________
Title: __________________
ITCO TIRE COMPANY OF GEORGIA
By: /s/ WILLIAM H. GAITHER
Name: _________________
Title: __________________
PHOENIX RACING, INC.
By: /s/ WILLIAM H. GAITHER
Name: _________________
Title: __________________
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BankBoston, N.A.
Fleet Capital Corporation
First Union National Bank
May 20, 1998
Page 6
Acknowledged and agreed this 20th day of May 1998:
BANK BOSTON, N.A.
By: /s/ CHRISTIAN B. COLSON
Christian B. Colson
Managing Director
FLEET CAPITAL CORPORATION
By:_________________________
Name:____________________
Title:___________________
FIRST UNION NATIONAL BANK
By:_________________________
Name:____________________
Title:___________________
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BankBoston, N.A.
Fleet Capital Corporation
First Union National Bank
May 20, 1998
Page 6
Acknowledged and agreed this 20th day of May 1998:
BANK BOSTON, N.A.
By:____________________________
Christian B. Colson
Managing Director
FLEET CAPITAL CORPORATION
By: /s/ ELIZABETH L. WALLER
Name: E. L. Waller
Title: V.P.
FIRST UNION NATIONAL BANK
By:____________________________
Name:_______________________
Title:______________________
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BankBoston, N.A.
Fleet Capital Corporation
First Union National Bank
May 20, 1998
Page 6
Acknowledged and agreed this 20th day of May 1998:
BANK BOSTON, N.A.
By:____________________________
Christian B. Colson
Managing Director
FLEET CAPITAL CORPORATION
By:____________________________
Name:_______________________
Title:______________________
FIRST UNION NATIONAL BANK
By: /s/ DOUG BOOTHE
Name: Doug Boothe
Title: Vice President
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ANNEX A
VENDORS
Pirelli Armstrong Tire Corporation
Dayton Tire, Division of Bridgestone/Firestone, Inc.
Michelin Tire Corporation
The Uniroyal Goodrich Tire Company
The Kelly-Springfield Tire Company
TBC Corporation
Lee Tire & Rubber Company
Dunlop Tire Corporation
Bridgestone Tire, a division of Bridgestone/Firestone, Inc.