EXHIBIT 10.2
EXECUTION VERSION
AMENDMENT NO. 9
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 9 is entered into as of September 25, 2002, by and
among AMERICAN TIRE DISTRIBUTORS, INC., a Delaware corporation, THE SPEED
MERCHANT, INC., a California corporation (collectively, the "Borrowers"), the
financial institutions party from time to time to the Loan Agreement (as
hereinafter defined) (the "Lenders"), and FLEET CAPITAL CORPORATION, a Rhode
Island corporation, as administrative agent (the "Administrative Agent") for the
Lenders.
PRELIMINARY STATEMENT
The Borrowers, the Lenders and the Administrative Agent are parties to
the Second Amended and Restated Loan and Security Agreement dated as of March 6,
2000, as amended by Amendment No. 1 dated as of July 20, 2000, Amendment No. 2
dated as of February 2, 2001, Amendment No. 3 dated as of February 14, 2001,
Amendment No. 4 dated as of March 30, 2001, Amendment No. 5 dated as of August
10, 2001, Amendment No. 6 dated as of November 13, 2001, Amendment No. 7 dated
as of March 27, 2002, and Waiver and Amendment No. 8 dated as of August 22, 2002
(as at any time amended, the "Loan Agreement"; terms defined therein, unless
otherwise defined herein, being used herein as therein defined).
The Borrowers have requested that the Lenders permit "Firestone"
branded inventory to become "Eligible B/F Inventory," amend the definition of
"Borrowing Base" in certain respects and amend certain of the financial
covenants set forth in the Loan Agreement.
The Lenders are willing to amend the Loan Agreement, subject to the
terms and conditions contained herein.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the Loan Agreement, the Loans
outstanding thereunder, the mutual covenants set forth therein and herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. AMENDMENTS TO LOAN AGREEMENT (PHASE I). Subject to
the provisions of SECTION 4(A) of this Amendment, the Loan Agreement is hereby
amended as follows:
(a) By adding the following new definition to Section 1.1 of the
Loan Agreement, in proper alphabetical sequence:
"American Tire" means American Tire Distributors,
Inc., a Delaware corporation, formerly known as Heafner Tire
Group, Inc., successor by merger to The J.H. Heafner Company,
Inc., a North Carolina corporation.
(b) By amending the following definition in Section 1.1 of the
Loan Agreement in its entirety to read as follows:
"Bridgestone/Firestone" means Bridgestone/Firestone
North American Tire, LLC, a Delaware limited liability company
and successor by merger to Bridgestone/Firestone, Inc., an
Ohio corporation.
(c) By deleting the definition of "Heafner" that is contained in
Section 1.1 of the Loan Agreement in its entirety.
(d) By deleting the defined term "Heafner" wherever it appears in
the Loan Agreement and by substituting therefor the defined term "American Tire"
in lieu thereof in each instance.
(e) By deleting Schedules 11.1 (a) and 11.1 (b) thereto in their
entireties and by substituting therefor Schedules 11.1 (a) and 11.l(b) in the
respective forms OF ANNEXES 1 and 2 attached to this Amendment in lieu thereof.
SECTION 2. AMENDMENTS TO LOAN AGREEMENT (PHASE II). Subject to
the provisions of SECTION 4(B) of this Amendment, the Loan Agreement is hereby
further amended as follows:
(a) By deleting the reference to "$90,000,000" that is contained
in clause (b)(ii)(B) of the definition of "Borrowing Base" and by substituting
in lieu thereof, a reference to "$100,000,000."
(b) By deleting the reference to "$35,000,000" that is contained
in clause (b)(iii)(B) of the definition of "Borrowing Base" and by substituting
in lieu thereof a reference to "$25,000,000."
(c) By amending the following definition in Section 1.1 of the
Loan Agreement in its entirety to read as follows:
"Eligible B/F Inventory" means items of Inventory (a)
that would be Eligible Inventory but for the fact that they
are subject to a Subordinated Vendor Lien in favor of
Bridgestone/Firestone (or a division or Subsidiary thereof),
(b) to the extent the Subordinated Vendor Lien on such
Inventory has been subordinated to the Security Interest on
terms and conditions satisfactory to the Administrative Agent
and the Lenders, and (c) bearing a brand other than a
"Firestone" brand (or any brand incorporating the word
"Firestone").
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SECTION 3. AMENDMENTS TO LOAN AGREEMENT (PHASE III). Subject to
the provisions of SECTION 4(C) of this Amendment, the Loan Agreement is hereby
further amended as follows:
(a) By adding the following new definition to Section 1.1 of the
Loan Agreement, in proper alphabetical sequence:
"B/F Subordination Agreement" means (i) the Amended
and Restated Subordination Agreement among
Bridgestone/Firestone, the Administrative Agent, the Borrowers
and the Subsidiary Guarantors, which amends and restates that
certain Subordination Agreement dated August 14, 2001, and
(ii) any replacements, substitutions or modifications of any
of the foregoing.
(b) By amending the following definitions in Section 1.1 of the
Loan Agreement in their entireties to read as follows:
"B/F Transaction Documents" means, collectively, the
Note Issuance and Security Agreement dated as of March 1,
2002, between Bridgestone/Firestone and American Tire, and the
Note, Security Agreement, and Warrant referred to therein, the
B/F Subordination Agreement and any certificates, instruments,
opinions and other documents delivered in connection with the
consummation of the transactions contemplated by said Note
Issuance and Security Agreement, as in effect on the date
hereof, or if not then in effect, then in form and substance
substantially identical to the drafts delivered to and
approved in writing by the Administrative Agent and the
Lenders, or otherwise satisfactory to the Administrative Agent
and the Lenders.
"Borrowing Base" means at any time an amount equal to
the lesser of:
(a) the aggregate Commitments, MINUS the sum of
(i) the Letter of Credit Reserve, PLUS
(ii) the Rent Reserve, PLUS
(iii) any Additional Reserves, and
(b) an amount equal to
(i) 85% (or such lesser percentage as
the Administrative Agent may in its reasonable credit
judgment determine from time to
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time) of the face value of Eligible Receivables due
and owing at such time, PLUS
(ii) the lesser of:
(A) the sum of (1) 65% (or
such lesser percentage as the Administrative
Agent may in its reasonable credit judgment
determine from time to time) of the lesser
of cost determined on a FIFO (or
first-in-first-out) accounting basis and
fair market value of Eligible Inventory
consisting of tires at such time, PLUS (2)
the lesser of (x) 60% (or such lesser
percentage as the Administrative Agent may
in its reasonable credit judgment determine
from time to time) of the lesser of cost
determined on a FIFO (or first-in-first-out)
accounting basis and fair market value of
Eligible B/F Inventory consisting of tires
at such time, and (y) $18,000,000, PLUS (3)
65% (or such lesser percentage as the
Administrative Agent may in its reasonable
credit judgment determine from time to time)
of the lesser of cost determined on a FIFO
(or first-in-first-out) accounting basis and
fair market value of Eligible Goodyear
Inventory consisting of tires at such time,
and
(B) $100,000,000, PLUS
(iii) the lesser of:
(A) 50% (or such lesser
percentage as the Administrative Agent may
in its reasonable credit judgment determine
from time to time) of the lesser of cost
determined on a FIFO (or first-in-
first-out) accounting basis and fair market
value of Eligible Inventory other than
tires, at such time, and
(B) $25,000,000, MINUS
(iv) the sum of
(A) the Letter of Credit
Reserve, PLUS
(B) the Rent Reserve, PLUS
(C) the Dilution Reserve, PLUS
(D) the Minimum Availability
Reserve, PLUS
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(E) any Additional Reserves.
"Eligible B/F Inventory" means items of Inventory (a)
that would be Eligible Inventory but for the fact that they
are subject to a Subordinated Vendor Lien in favor of
Bridgestone/Firestone (or a division or Subsidiary thereof),
and (b) to the extent the Subordinated Vendor Lien on such
Inventory has been subordinated to the Security Interest on
terms and conditions satisfactory to the Administrative Agent
and the Lenders.
SECTION 4. EFFECTIVENESS OF AMENDMENT.
(a) The provisions of SECTION 1 of this Amendment shall become
effective on the date (the "Amendment (Phase I) Effective Date") on which the
Administrative Agent shall have received (1) an amendment fee in the amount of
$200,000, for the Ratable account of the Lenders, and (2) the following
documents, each of which shall be satisfactory in form and substance to the
Administrative Agent and in sufficient copies for each Lender (terms defined in
the Loan Agreement, as amended by this Amendment, being used in this SECTION 4
as so defined):
(i) this Amendment duly executed by the Administrative
Agent, the Borrowers, the Subsidiary Guarantors and the Required
Lenders;
(ii) a certificate of the president or chief financial
officer of American Tire stating that, to the best of his knowledge and
based on an examination sufficient to enable him to make an informed
statement, after giving effect to the Amendment,
(A) all of the representations and warranties
made or deemed to be made under the Loan Agreement are true
and correct in all material respects on and as of the
Amendment (Phase I) Effective Date, and
(B) no Default or Event of Default exists;
and the Administrative Agent shall be satisfied as to the
truth and accuracy thereof; and
(iii) such other documents and instruments as the
Administrative Agent may reasonably request.
(b) The provisions of Section 2 of this Amendment shall become
effective on the date (the "Amendment (Phase II) Effective Date") on which the
Administrative Agent shall have received the following documents, each of which
shall be satisfactory in form and substance to the Administrative Agent and in
sufficient copies for each Lender:
(i) this Amendment duly executed by the Administrative
Agent, the Borrowers, the Subsidiary Guarantors and all Lenders;
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(ii) a certificate of the president or chief financial
officer of American Tire stating that, to the best of his knowledge and
based on an examination sufficient to enable him to make an informed
statement, after giving effect to the Amendment,
(A) all of the representations and warranties
made or deemed to be made under the Loan Agreement are true
and correct in all material respects on and as of the
Amendment (Phase II) Effective Date, and
(B) no Default or Event of Default exists;
and the Administrative Agent shall be satisfied as to the
truth and accuracy thereof; and
(iii) such other documents and instruments as the
Administrative Agent may reasonably request.
(c) The provisions of SECTION 3 of this Amendment shall become
effective on the date (the "Amendment (Phase III) Effective Date") on which the
Administrative Agent shall have received the following documents, each of which
shall be satisfactory in form and substance to the Administrative Agent and in
sufficient copies for each Lender:
(i) this Amendment duly executed by the Administrative
Agent, the Borrowers, the Subsidiary Guarantors and all Lenders;
(ii) a certificate of the president or chief financial
officer of American Tire stating that, to the best of his knowledge and
based on an examination sufficient to enable him to make an informed
statement, after giving effect to the Amendment,
(A) all of the representations and warranties
made or deemed to be made under the Loan Agreement are true
and correct in all material respects on and as of the
Amendment (Phase III) Effective Date, and
(B) no Default or Event of Default exists;
and the Administrative Agent shall be satisfied as to the
truth and accuracy thereof; and
(iii) on or before October 28, 2002, the B/F Subordination
Agreement, duly executed by the Administrative Agent, the Borrowers,
the Subsidiary Guarantors and Bridgestone/Firestone and in form and
substance satisfactory in all respects to the Administrative Agent and
the Lenders; and
(iv) such other documents and instruments as the
Administrative Agent may reasonably request.
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On the Amendment (Phase III) Effective Date, the definition of
"Eligible B/F Inventory" that is contained in SECTION 3 of this Amendment shall
be the operative definition and shall supercede the definition of "Eligible B/F
Inventory" that is contained in SECTION 2 of this Amendment.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Each Loan Party
hereby makes the following representations and warranties to the Administrative
Agent and the Lenders, which representations and warranties shall survive the
delivery of this Amendment and the making of additional Loans under the Loan
Agreement as amended hereby:
(a) Authorization of Agreements. Each Loan Party has the
right and power, and has taken all necessary action to authorize it, to
execute, deliver and perform this Amendment and each other agreement
contemplated hereby to which it is a party in accordance with their
respective terms. This Amendment and each other such agreement
contemplated hereby to which it is a party has been duly executed and
delivered by the duly authorized officers of such Loan Party and each
is, or each when executed and delivered in accordance with this
Amendment will be, a legal, valid and binding obligation of such
Borrower, enforceable in accordance with its terms.
(b) Compliance of Agreements with Laws. The execution,
delivery and performance of this Amendment in accordance with their
respective terms do not and will not, by the passage of time, the
giving of notice or otherwise,
(i) require any Governmental Approval (that has
not been obtained) or violate any Applicable Law relating to
such Loan Party or any of its Subsidiaries,
(ii) conflict with, result in a breach of or
constitute a default under the articles or certificate of
incorporation or by-laws or any shareholders' agreement of
such Loan Party or any of its Subsidiaries, any material
provisions of any indenture, agreement or other instrument to
which such Loan Party, any of its Subsidiaries or any of such
Loan Party's or such Subsidiaries' property may be bound or
any Governmental Approval relating to such Loan Party or any
of its Subsidiaries, or
(iii) result in or require the creation or
imposition of any Lien upon or with respect to any property
now owned or hereafter acquired by such Loan Party other than
the Security Interest.
SECTION 6. EFFECT OF AMENDMENT. From and after the Amendment
(Phase I) Effective Date, all references in the Loan Agreement and in any other
Loan Document to "this Agreement," "the Loan Agreement," "hereunder," "hereof"
and words of like import referring to the Loan Agreement, shall mean and be
references to the Loan Agreement as amended by this Amendment. Except as
expressly amended hereby, the Loan Agreement and all terms, conditions and
provisions thereof remain in full force and effect and are hereby ratified and
confirmed. The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Administrative Agent and the Lenders under any of the
Loan Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
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SECTION 7. COUNTERPART EXECUTION; GOVERNING LAW.
(a) Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement. Delivery of an executed signature page of any party
hereto by facsimile transmission shall be as effective as delivery of a manually
delivered counterpart thereof.
(b) Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York without
giving effect to conflicts of law principles thereof.
[Signatures will commence on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.
BORROWERS:
AMERICAN TIRE DISTRIBUTORS, INC.
[Corporate Seal]
Attest: By: /s/ William E. Berry
-------------------------------------
Name: William E. Berry
-------------------------------
/s/ J. Michael Gaither Title: Executive Vice President & CFO
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[Assistant] Secretary
THE SPEED MERCHANT, INC.
[Corporate Seal]
Attest: By: /s/ William E. Berry
-------------------------------------
Name: William E. Berry
-------------------------------
/s/ J. Michael Gaither Title: Vice President
- ------------------------ ------------------------------
[Assistant] Secretary
SUBSIDIARY GUARANTORS:
Acknowledged and consented to this
18th day of September 2002:
T.O. HAAS TIRE COMPANY, INC.
By: /s/ William E. Berry
-------------------------------------
Name: William E. Berry
-------------------------------
Title: Vice President
------------------------------
T.O. HAAS HOLDING CO., INC.
By: /s/ William E. Berry
-------------------------------------
Name: William E. Berry
-------------------------------
Title: Vice President
------------------------------
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FLEET CAPITAL CORPORATION, as
Administrative Agent and as a Lender
By: /s/ Stephen Y. McGehee
-------------------------------------
Stephen Y. McGehee
Senior Vice President
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WACHOVIA BANK, NATIONAL
ASSOCIATION, formerly known as FIRST
UNION NATIONAL BANK, as Documentation
Agent and as a Lender
By: /s/ John T. Trainor
-------------------------------------
Name: John T. Trainor
-------------------------------
Title: Director
------------------------------
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TRANSAMERICA BUSINESS CAPITAL
CORPORATION, as a Lender
By: /s/ Dennis Snyder
-------------------------------------
Name: Dennis Snyder
-------------------------------
Title: Sr. Vice President
------------------------------
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STANDARD FEDERAL BANK NATIONAL
ASSOCIATION, formerly known as MICHIGAN
NATIONAL BANK, as successor in interest
to Mellon Bank, N.A., as a Lender
BY: LASALLE BUSINESS CREDIT, INC., ITS
agent
By: /s/ Roger D. Attix
--------------------------------
Name: Roger D. Attix
--------------------------
Title: VP
-------------------------
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THE CIT GROUP/BUSINESS CREDIT, INC., as
a Lender
By: /s/ Nick Malatestinic
-------------------------------------
Name: Nick Malatestinic
-------------------------------
Title: VP Team Leader
------------------------------
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ANNEX 1
to Amendment No. 9
SCHEDULE 11.1(A)
EBITDA - HEAFNER GROUP
The period of four consecutive
Fiscal Quarters ending with: EBITDA - Heafner Group
- ------------------------------ --------------------------------------------------
The last day of the third Fiscal Quarter
of Fiscal Year 2002 $33,000,000
The last day of the fourth Fiscal Quarter of
Fiscal Year 2002 $36,000,000
The last day of each Fiscal Quarter thereafter $36,000,000, as increased (on a cumulative
basis) (a) by $2,000,000 on the last day of
the second Fiscal Quarter of Fiscal Year 2003,
(b) by $1,500,000 on the last day of the fourth
Fiscal Quarter of Fiscal Year 2003, and (c) by
$1,500,000 on the last day of each of the second
and the fourth Fiscal Quarters of each Fiscal
Year thereafter, up to a cap of $42,500,000
ANNEX 2
to Amendment No. 9
SCHEDULE 11.1(B)
MINIMUM FIXED CHARGE COVERAGE RATIO
Period Ratio
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The period of two consecutive
Fiscal Quarters ending on the last day of
the third Fiscal Quarter of Fiscal Year 2002 1.50 to 1
The period of three consecutive
Fiscal Quarters ending on the last day of
the fourth Fiscal Quarter of Fiscal Year 2002 1.40 to 1
The period of four consecutive Fiscal Quarters
ending on the last day of the first Fiscal Quarter
of Fiscal Year 2003 and on the last day of each
Fiscal Quarter thereafter 1.20 to 1