-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, YlgUZlxF9Z7exImDGpNscUxoTsLt/4/EQsxt4hzxKY315xz+RE2+k5P0X2i0jxzH wINREMXwzVUgMSFl1r1Nyw== 0000096289-94-000029.txt : 19940404 0000096289-94-000029.hdr.sgml : 19940404 ACCESSION NUMBER: 0000096289-94-000029 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 27 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TANDY CORP /DE/ CENTRAL INDEX KEY: 0000096289 STANDARD INDUSTRIAL CLASSIFICATION: 3571 IRS NUMBER: 751047710 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-05571 FILM NUMBER: 94519303 BUSINESS ADDRESS: STREET 1: 1800 ONE TANDY CNTR STREET 2: P O BOX 17180 CITY: FORT WORTH STATE: TX ZIP: 76102 BUSINESS PHONE: 8173903700 MAIL ADDRESS: STREET 1: P O BOX 17180 CITY: FORTH WORTH STATE: TX ZIP: 76102 FORMER COMPANY: FORMER CONFORMED NAME: TANDY LEATHER CO DATE OF NAME CHANGE: 19681216 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN HIDE & LEATHER CO DATE OF NAME CHANGE: 19660825 10-K 1 1993 10K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended December 31, 1993 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE TRANSITION PERIOD Commission file number 1-5571 TANDY CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 75-1047710 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1800 One Tandy Center, Fort Worth, Texas 76102 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (817) 390-3700 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: Name of each exchange Title of each class on which registered Common Stock, par value $1 per share New York Stock Exchange 10% Subordinated Debentures due 1994 New York Stock Exchange Preferred Share Purchase Rights New York Stock Exchange $2.14 Depositary Shares New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ As of March 22, 1994, the aggregate market value of the voting stock held by non-affiliates of the registrant was $3,001,535,742 based on the New York Stock Exchange closing price. As of March 22, 1994, there were 63,812,277 shares of the registrant's Common Stock outstanding. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ___ Documents Incorporated by Reference Portions of the Proxy Statement for the 1994 Annual Meeting of Stockholders are incorporated by reference into Part III. The Index to Exhibits is on Sequential Page No. 63. Total Pages 422. (This page intentionally left blank.) PART I ITEM 1. BUSINESS. GENERAL The Company engages in the retail sale of consumer electronics including personal computers primarily in the United States. The Company's retail operations include the Radio Shack, McDuff Electronics, VideoConcepts, The Edge in Electronics, Computer City and Incredible Universe store chains as well as some new concepts which it is testing. These new test concepts are Famous Brand Electronics Warehouse, Energy Express Plus and Audio Video & Computers. Radio Shack. Radio Shack is the Company's largest operating division. At December 31, 1993, Radio Shack had 4,553 company-owned stores located throughout the United States. These stores average approximately 2,370 square feet in area and are located in major malls, strip centers and individual store fronts, primarily in metropolitan markets. To provide service to smaller communities, Radio Shack had on the same date a network of 2,002 dealer/franchise stores. The dealers are generally engaged in other retail operations and augment their sales with Radio Shack products. In addition, Radio Shack had 65 international dealers at December 31, 1993. The 4,553 company-owned stores carry a broad assortment of electronic parts and accessories, audio/video equipment, cellular and conventional telephones as well as specialized products such as scanners, electronic toys and personal computers. The personal computers offered through these consumer stores primarily target entry level users seeking computers for home, individual and small business use. Tandy Name Brand Retail Group. The Tandy Name Brand Retail Group is comprised of VideoConcepts, McDuff Electronics and The Edge in Electronics retail outlets. At December 31, 1993, this group operated a total of 322 stores which sell name brand televisions, audio equipment, personal computers and other electronic products and appliances. The Tandy Name Brand Retail Group operates two distinctly different types of store formats -- mall stores and supercenters. The 231 mall stores average 3,100 square feet in size while the 75 supercenters, which are located in stand-alone or strip center locations, average 12,200 square feet. Mall stores sell primarily electronic, audio and video products. The supercenter product offerings also include major appliances. The Company closed approximately 110 Tandy Name Brand Retail Group stores in the first quarter of 1993. See "Management's Discussion and Analysis of Results of Operations and Financial Condition" found in Item 7 and Note 4 of the Notes to Consolidated Financial Statements for more information. "The Edge in Electronics" began operating in 1990. This chain of electronic boutique stores is designed for mall customers interested in fashionable personal and portable name brand electronics. As of December 31, 1993, these 16 stores were located in major malls and averaged approximately 1,100 square feet. Computer City. As of December 31, 1993, the Company had 40 Computer City stores open, three of which were in Europe. The Computer City chain operates as a supercenter format featuring many name brand computers, software and related products, including U. S. Logic, Tandy, IBM, Apple, Sony, Lotus, Borland, Microsoft, Packard-Bell, Compaq, AST and Hewlett-Packard. These stores average about 23,500 square feet and carry more than 5,000 products. The Company has opened two new stores since December 31, 1993 and plans to open an additional 22 stores later in 1994. Incredible Universe. In August 1993 Incredible Universe became a separate division of Tandy. At December 31, 1993, Tandy operated three Incredible Universe stores: one in Portland, Oregon; a second in Arlington, Texas; and a third store located in northeast Dallas, Texas. These 160,000 to 200,000 square foot stores offer a broad selection of consumer electronics and appliances. The Company recently opened its fourth store in Miami, Florida, and announced plans to open stores in Tempe, Arizona; Columbus, Ohio; Sacramento, California and Hollywood, Florida. In addition, more Incredible Universe stores are currently planned for 1994 and 1995. Supporting the retail operations is an extensive infrastructure that includes: A&A International, Inc. - This wholly owned subsidiary of the Company serves the wide-ranging international import/export, sourcing, evaluation, logistics and quality control needs of the Company. InterTAN Inc. is the largest outside customer of the Company. Most of A&A's activity for InterTAN originates from manufacturers in the Far East. For more discussion on InterTAN see Note 21 of the Notes to Consolidated Financial Statements. Tandy Service Centers - The Company maintains a large service and support network in the consumer electronics retail industry. These centers repair name brand and private label products sold through all of the Company's retail distribution channels. Over one million parts are stocked in the Tandy Service division which includes 116 service centers throughout the nation. Regional Distribution Centers - The 14 distribution centers ship over one million cartons each month to both Radio Shack and the Tandy Name Brand Retail Group operations. This group will also be instrumental in supporting the new Radio Shack Gift Express service. Tandy Information Services - TIS collects information from the retail stores nationwide and updates a large database with sales information. This database is a sophisticated marketing tool benefiting every phase of the Company's operations. TIS also processes the inventory, accounting, payroll, telecommunications and operating information for all of the Company's operations. In addition, specialized information is tracked for the Company's distribution and corporate activities. Tandy Credit Corporation - This operation, a wholly owned subsidiary of the Company, helps support sales of the Company's retail operations and provides retail divisions additional marketing flexibility through the utilization of credit promotions. This group maintains and manages Tandy's various private label credit cards. Tandy Transportation, Inc. - A large fleet of tractors and trailers transports much of the merchandise from the ports of entry to the Company's regional distribution centers and local distribution facilities for delivery to Radio Shack and Tandy Name Brand Retail Group stores. Consumer Electronics Manufacturing - The Company also engages in the manufacturing business with 11 manufacturing facilities in the United States and three overseas manufacturing operations in China, Hong Kong and Taiwan. The China operation is a joint venture. These 14 manufacturing facilities cover a total of 1,674,000 square feet and employ over 4,700 workers and professionals as of December 31, 1993, excluding those persons working at facilities included in discontinued operations. The Company continues to manufacture a variety of products for use in its consumer electronics retailing operations. The products include audio, video, telephony, antennas, wire and cable products and a wide variety of hard to find parts for consumer electronic products. Most of the Company's manufacturing output is sold through the Radio Shack store chain. In addition, the Company has previously operated several related marketing businesses that manufacture and sell consumer electronics and computers to retailers and end users, see "Discontinued Operations" below for further information. DISCONTINUED OPERATIONS On June 25, 1993, the Board of Directors of Tandy adopted a formal plan of divestiture under which it would sell its computer manufacturing and marketing businesses, the O'Sullivan Industries, Inc. ready-to-assemble furniture manufacturing and related marketing business, the Memtek Products division and the Lika printed circuit board business. The divestiture plan replaced the Company's plan to spin off all of the Company's manufacturing and marketing businesses as described in Tandy's Transition Report on Form 10-K/A-4 for the six-month period ended December 31, 1992. In connection with the plan of divestiture the Company accounted for the divestiture of these businesses as discontinued operations. Prior year results of operations have been reclassified to reflect the discontinued operations treatment. Computer Manufacturing. In furtherance of the divestiture plan, the Company closed the sale of the computer manufacturing and marketing businesses to AST Research, Inc. ("AST") on July 13, 1993. In accordance with the terms of the definitive agreement between Tandy and AST, Tandy received $15,000,000 upon closing of the sale. The balance of the purchase price of $90,000,000 (as adjusted post-closing based on the results of an audit of the assets and liabilities conveyed) is payable by a promissory note. The promissory note is payable in three years and interest is accrued and paid annually. The interest rate on the promissory note is currently 3.75% per annum and is adjusted annually, not to exceed 5% per annum. The terms of the promissory note stipulate that the outstanding principal balance may be paid at maturity at AST's option in cash or the common stock of AST. However, at Tandy's option not more than 50% of the initial principal balance may be paid in common stock of AST. The promissory note is supported by a standby letter of credit in the amount of the lesser of $100,000,000 or 70% of the outstanding principal amount of the promissory note. At December 31, 1993, the standby letter of credit approximated $67,704,000. Accounts receivable relating to the computer operations, approximating $83,000,000 at June 30, 1993, inured to the benefit of Tandy upon collection. At December 31, 1993, the balance of the remaining accounts receivable, net of allowance for doubtful accounts, was $7,700,000. Tandy also retained certain inventory which it intends to liquidate before June 30, 1994. At December 31, 1993, this inventory amounted to approximately $3,700,000. In October 1993, the Company sold its computer marketing operations in France to AST, together with certain other multimedia assets and additional Swedish inventory, for an aggregate of approximately $6,700,000, which was evidenced by an increase in the amount of the promissory note described above to $96,700,000. The Company has discounted this note by $2,000,000 and the discount will be recognized as interest using the effective interest rate method over the life of the note. Memtek Products. On November 10, 1993, the Company executed a definitive agreement with Hanny Magnetics (B.V.I.) Limited, a British Virgin Islands corporation ("Hanny") to purchase certain assets of the Company's Memtek Products operations, including the license agreement with Memorex Telex, N.V. for the use of the Memorex trademark on licensed consumer electronics products. This sale closed on December 16, 1993. As of December 31, 1993, Tandy has received payments of $62,500,000, recorded a $7,102,000 receivable from Hanny for the remaining purchase price and retained approximately $61,000,000 in accounts receivable and certain other assets for liquidation. Hanny is a subsidiary of Hanny Magnetics (Holdings) Limited, a Bermuda corporation, listed on the Hong Kong Stock Exchange. At December 31, 1993, accounts receivable, net of related allowance for doubtful accounts, retained by Tandy approximated $40,100,000. O'Sullivan Industries. On November 23, 1993, the Company announced that it would sell the common stock of O'Sullivan Industries, Inc. ("O'Sullivan") in an initial public offering. On January 27, 1994 the Company announced that it had reached an agreement with the underwriters to sell O'Sullivan Industries Holdings, Inc., the parent company of O'Sullivan, common stock to the public at $22 per share. The net proceeds realized by Tandy in the initial public offering, together with the $40,000,000 cash dividend from O'Sullivan Industries, Inc., approximated $350,000,000. The initial public offering closed on February 2, 1994. Pursuant to a Tax Sharing and Tax Benefit Reimbursement Agreement between Tandy and O'Sullivan Industries Holdings, Inc. the Company will receive payments from O'Sullivan resulting from an increased tax basis of O'Sullivan's assets thereby increasing tax deductions and accordingly, reducing income taxes payable by O'Sullivan. The amount to be received by the Company each year will approximate the federal tax benefit expected to be realized with respect to the increased tax basis. These payments will be made over a 15-year time period. The Company will recognize these payments as additional sale proceeds and gain in the year in which the payments become due and payable to the Company. Lika. On January 24, 1994, the Company announced that it had signed a definitive agreement to sell its manufacturing facilities which make Lika printed circuit boards. This divestiture is expected to close by June 1994 and is expected to yield approximately $17,000,000 in proceeds, including cash, a note and the liquidation of certain retained assets. In connection with the computer manufacturing sale and the Memtek Products sale, the Company agreed to retain certain liabilities primarily relating to warranty obligations on products sold prior to the sale. Management believes that accrued reserves, as reflected on its December 31, 1993 balance sheet, are adequate to cover estimated future warranty obligations for the products and for any remaining costs to dispose of these operations. With the closing of the Lika transaction, the divestiture program announced in June 1993 will be complete. The proceeds from the divestitures are being used to reduce short-term debt and for the expansion of the Incredible Universe and Computer City store operations. See "Management's Discussion and Analysis of Results of Operations and Financial Condition" and Note 3 of the Notes to Consolidated Financial Statements for further information. SALE OF JOINT VENTURE INTEREST During the quarter ended September 30, 1993, the Company entered into definitive agreements with Nokia Corporation ("Nokia") to sell the Company's interests in two cellular telephone manufacturing joint ventures with Nokia, TMC Company Ltd. located in Masan, Korea, and TNC Company located in Fort Worth, Texas. Pursuant to the terms of the definitive agreements, the Company received an aggregate of approximately $31,700,000 for its interests in these joint ventures. The Company also entered into a three-year Preferred Supplier Agreement pursuant to which it has agreed to purchase from Nokia substantially all of Radio Shack's requirements for cellular telephones at prevailing competitive market prices at the time of the purchase. These operations were not part of the overall divestment plan adopted in June 1993 by the Company's Board of Directors; therefore, the gain from the sale and their results of operations are not included in discontinued operations. SEASONALITY As is the case with other retail businesses, the Company's net sales and other revenues are greater during the Christmas season than during other periods of the year. There is a corresponding pre-seasonal inventory build-up requiring working capital associated with this increased sales volume. For additional information, see Note 22 of the Notes to Consolidated Financial Statements. PATENTS AND TRADEMARKS Tandy owns or is licensed to use many trademarks related to its business in the United States and in foreign countries. Radio Shack, Computer City, Incredible Universe, McDuff Electronics, VideoConcepts, Realistic, Tandy and Optimus are some of the registered marks most widely used by the Company. Tandy believes that the Radio Shack, Computer City and Incredible Universe names and marks are well-recognized and associated with a high-quality service provider by consumers. The Company's products are sold primarily under the Radio Shack, Optimus, Tandy and Realistic trademarks which are registered in the U.S. and many foreign countries. The Company believes that the loss of the Radio Shack name or mark would be material to its business, but does not believe that the loss of any one trademark registration would be material. Tandy also owns, and is in the process of applying for, various patents relating to retail and support functions. SUPPLIERS The Company obtains merchandise from a large number of suppliers from various parts of the world. Alternative sources of supply exist for most merchandise purchased by the Company. As the Company's product line is diverse, the Company would not expect a lack of availability of any single product to have a material impact on its operations. BACKLOG ORDERS The Company has no material backlog of orders for the products it sells. COMPETITION The consumer electronics retail business is highly competitive. The Company competes in the sale of its products with department stores, mail order houses, discount stores, general merchants, home appliance stores and gift stores which sell comparable products manufactured by others. Competitors range in size from local drug and hardware stores to large chains and department stores. Computer store chains and franchise groups as well as independent computer stores and several major retailers compete with the Company in the retail personal computer marketplace. Consumer electronic and computer mail-order companies also compete with the Company. The products which compete with those sold by the Company are manufactured by numerous domestic and foreign manufacturers. Many of these products carry nationally recognized brand names or private labels and are sold in markets common to the Company. Some of the Company's competitors have financial resources equal to or greater than the Company's resources. Management believes that among the factors that are important to its competitive position are price, quality, service and the broad selection of electronic products and computers carried at conveniently located retail outlets. The Company's utilization of trained personnel and its ability to use national and local advertising media are important to the Company's ability to compete in the consumer electronics marketplace. Management of the Company believes it is a strong competitor in each of the factors referenced above. Given the highly competitive nature of the consumer electronics retail business, no assurance can be given that the Company will continue to compete successfully in all of the factors referenced above. However, the Company would be adversely affected if its competitors were to offer their products at significantly lower prices, introduce innovative or technologically superior products not yet available to the Company or if the Company were unable to obtain products in a timely manner for an extended period of time. The Company focuses on various types of store formats to address the marketplace. Each of the Company's retailing formats uses a distinct but complementary path to the marketplace, based on its unique customer appeal, marketing strengths and margin structure. Radio Shack. Radio Shack stores offer the shopping convenience of approximately 6,555 outlets, high-quality private label products, unique selection, knowledgeable personnel and excellent customer service. Radio Shack has strong sales in approximately 3,200 different items in such consumer-demand product categories as speakers, batteries, communications equipment, tape decks, antennas, electronic components and accessories. Computer City. Computer City stores offer approximately 5,000 different name-brand items, competitive prices and excellent customer service on computers, computer software and accessories. Tandy Name Brand Retail Group. This group sells name brand consumer electronics and appliances in three distinctly different types of store formats. VideoConcepts and McDuff Electronics mall stores average approximately 3,100 square feet in size. McDuff SuperCenters average approximately 12,200 square feet and are located in many secondary markets. The Edge in Electronics stores average approximately 1,100 square feet in size, carry approximately 1,000 different name brand personal and portable consumer electronics products and are located in major markets. Incredible Universe. A new concept in the retailing of name brand consumer electronics are 160,000 to 200,000 square foot stores which provide the customer with a "universe" of choices. These stores carry over 85,000 different stock-keeping units. The Company has faced intense competition in its consumer electronics retailing businesses. Competition is driven by technology and product cycles, as well as the economy. In the consumer electronics retailing business, competitive factors include price, product quality, manufacturing and distribution capability and brand reputation. The Company believes that its retailing formats compete effectively in their respective marketplaces. RESEARCH AND DEVELOPMENT Research and development expenditures are not significant. EMPLOYEES As of December 31, 1993, the Company had approximately 42,000 employees, excluding 2,000 full time employees associated with discontinued operations at O'Sullivan and Lika. The number also excludes temporary retail employees remaining from the Christmas selling season. Management of the Company considers the relationship between the Company and its employees to be good. It does not anticipate any work stoppage due to labor difficulties. ITEM 2. PROPERTIES. Information on the Company's properties is in "Management's Discussion and Analysis of Results of Operations and Financial Condition" and the financial statements included in this Form 10-K and is incorporated herein by reference. The following items are discussed further on the following pages: Page Retail Outlets . . . . . . . . . 16 Property, Plant and Equipment. . 43 Leases . . . . . . . . . . . . . 47 The Company leases rather than owns most of its retail facilities. However, the land and buildings of most of the Incredible Universe stores are owned rather than leased. The Radio Shack, Tandy Name Brand Retail Group and Computer City stores are located primarily in major shopping malls, stand-alone buildings or shopping centers owned by other companies. The Company owns most of the property on which its executive offices are located in Fort Worth, Texas as well as five distribution facilities and most of its manufacturing facilities and land located throughout the United States. Existing warehouse and office facilities are deemed adequate to meet the Company's needs in the foreseeable future. ITEM 3. LEGAL PROCEEDINGS. In July 1985, Pan American Electronics, Inc., a Radio Shack dealer in Mission, Texas ("Pan Am"), filed suit against the Company in the 92nd Judicial District Court in Hidalgo County, Texas. The Plaintiff's complaint alleged breach of contract and fraud based upon the allegations that the Company made certain misrepresentations and acted beyond the scope of its authority under the dealer agreement, with the alleged result that the plaintiff was forced out of the computer mail order business in 1984. In November 1993, Pan Am and Tandy resolved the pending litigation and the lawsuit was dismissed in December 1993. Although the terms of the settlement are confidential, the resolution of this legal action did not have a materially adverse impact on the Company's financial position or results of operation. There are various other claims, lawsuits, disputes with third parties, investigations and pending actions involving allegations of negligence, product defects, discrimination, patent infringement, tax deficiencies and breach of contract against the Company and its subsidiaries incident to the operation of its business. The liability, if any, associated with these matters was not determinable at December 31, 1993. While certain of these matters involve substantial amounts, and although occasional adverse settlements or resolutions may occur and negatively impact earnings in the year of settlement, it is the opinion of management that their ultimate resolution will not have a materially adverse effect on Tandy's financial position. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. At the Annual Meeting of Stockholders held October 15, 1993, the Company elected directors to serve for the ensuing year and voted to adopt the Tandy Corporation 1993 Incentive Stock Plan. Out of the 80,915,627 eligible votes, 63,361,775 votes were cast at the meeting either by proxies solicited in accordance with Schedule 14A or by security holders voting in person. There were 9,890,351 broker non-votes which are not included in the following table as they were not treated as being present at the meeting. In the case of directors, abstentions are treated as votes withheld and are included in the table. No other matters were voted on at the meeting. The tabulation of votes for each nominee is set forth below under Item No. 1 and the vote on the Tandy Corporation 1993 Incentive Stock Plan is set forth under Item No. 2 below: Nominees for Directors ______________________ Item No. 1 __________ VOTES VOTES DIRECTORS FOR WITHHELD _________ _____ ________ James I. Cash, Jr. 62,626,072 735,703 Caroline R. Hunt 62,588,534 773,241 Lewis F. Kornfeld, Jr. 62,507,688 854,087 Jack L. Messman 62,848,102 513,673 William G. Morton, Jr. 62,606,784 754,991 Thomas G. Plaskett 62,216,712 1,145,063 John V. Roach 62,391,582 970,193 William T. Smith 62,598,399 763,376 Alfred J. Stein 62,569,000 792,775 William E. Tucker 62,627,905 733,870 Jesse L. Upchurch 62,792,385 569,390 John A. Wilson 62,679,493 682,282 1993 Incentive Stock Plan _________________________ Item No. 2 __________ FOR AGAINST ABSTAIN ___ _______ _______ 52,196,098 10,338,869 826,808 EXECUTIVE OFFICERS OF THE REGISTRANT (SEE ITEM 10 OF PART III). The following is a list of Tandy Corporation's executive officers, their ages, positions and length of service with the Company as of March 30, 1994 Position (Date Elected Years with Name to Current Position) Age Company ____ ____________________ ___ __________ John V. Roach Chairman of the Board, 55 26 Chief Executive Officer and President (July 1982) William C. Bousquette Executive Vice President 57 3 (1) and Chief Financial Officer (January 1994) Herschel C. Winn Senior Vice President and 62 25 Secretary (November 1979) Robert M. McClure Senior Vice President 58 21 (2) (January 1994) Lou Ann Blaylock Vice President - 55 23 (3) Corporate Relations (January 1993) Dwain H. Hughes Vice President and 46 14 (4) Treasurer (June 1991) Ronald L. Parrish Vice President - 51 7 Corporate Development (April 1987) Richard L. Ramsey Vice President and 48 27 Controller (January 1986) Frederick W. Padden Vice President - Law 61 3 (5) and Assistant Secretary (January 1994) Leonard H. Roberts President of Radio Shack 45 (6) (July 1993) David M. Thirion Vice President - 46 17 (7) Retail Services (January 1993-August 1993) James B. Sheets Vice President - Legal 42 17 (8) (January 1993-December 1993) and Assistant Secretary (November 1986-December 1993) Bernie S. Appel Senior Vice President, 61 33 (9) Tandy Corporation and Chairman, Radio Shack Division (January 1992- March 1993) There are no family relationships among the executive officers listed and there are no arrangements or understandings pursuant to which any of them were appointed as executive officers. All executive officers of Tandy Corporation are elected by the Board of Directors annually to serve for the ensuing year, or until their successors are elected. All of the executive officers listed above have served the Company in various capacities over the past five years, except for Mr. Bousquette, Mr. Padden and Mr. Roberts. (1) Mr. Bousquette previously served as Executive Vice President and Chief Financial Officer of the Company from November 1990 until January 1993 when he was elected as Chief Executive Officer of TE Electronics Inc. Prior to joining Tandy, he served as Executive Vice President and Chief Financial Officer of Emerson Electric Company from March 1984 until November 1990. (2) Mr. McClure served as President of the Tandy Electronics Division from August 1987 until January 1993 when he was elected as Chief Operating Officer and President of TE Electronics Inc. (3) Mrs. Blaylock was Director of Corporate Relations from January 1986 until she was elected Vice President - Corporate Relations in January 1993. (4) Mr. Hughes was elected Vice President and Treasurer of the Company in June 1991. From June 1989 until June 1991, Mr. Hughes was Assistant Treasurer of the Company; and, from 1984 until June 1989, he was Director of the Company's Internal Audit Department. (5) Mr. Padden has been Vice President, General Counsel and Secretary of TE Electronics Inc. since January 1993. From January 1991 to January 1993 he was the Deputy General Counsel - Intellectual Property for Tandy Corporation. Prior to joining Tandy he was a General Attorney at AT&T-Bell Laboratories from 1984 to January 1991. (6) Mr. Roberts became President of the Radio Shack Division on July 7, 1993. Prior to joining Tandy he served as the Chairman and Chief Executive Officer of Shoney's Inc. from 1990 to 1993 and as President and Chief Executive Officer of Arby's, Inc. from 1985 to 1990. (7) Mr. Thirion resigned as the Vice President - Retail Services in August 1993 to become the Senior Vice President and General Manager of the Tandy Name Brand Retail Group Division. Mr. Thirion was Vice President of the Radio Shack Division from January 1989 until January 1993. (8) Mr. Sheets served as Assistant Secretary of the Company, a position he was elected to in November 1986. Mr. Sheets also served as Deputy General Counsel - Corporate from November 1986 until he was elected Vice President - Legal in January 1993. Mr. Sheets resigned effective December 31, 1993. (9) Mr. Appel was President of the Radio Shack Division from June 1984 until January 1992. In January 1992 Mr Appel was appointed as the Senior Vice President of Tandy Corporation and Chairman of the Radio Shack division. Mr. Appel resigned as an executive officer of the Company on March 1, 1993 and retired as an employee of Tandy on June 30, 1993. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. MARKET FOR COMMON STOCK The Company's common stock is listed on the New York Stock Exchange and trades under the symbol "TAN". The following table presents the high and low sale prices for the Company's common stock for each quarter of the two and one-half years ended December 31, 1993. Dividends Quarter Ended: High Low Close Declared ____ ___ _____ _________ December 31, 1993 $50 3/4 $35 3/8 $49 1/2 $.15 September 30,1993 37 3/8 28 1/8 36 7/8 .15 June 30, 1993 32 3/8 28 3/8 30 .15 March 31, 1993 32 1/8 24 5/8 29 5/8 .15 December 31, 1992 31 3/4 24 5/8 29 3/4 .15 September 30,1992 27 3/4 22 1/4 27 1/8 .15 June 30, 1992 29 5/8 23 7/8 24 1/2 .15 March 31, 1992 31 1/4 23 7/8 29 3/4 .15 December 31, 1991 30 1/8 24 3/8 28 7/8 .15 September 30, 1991 28 3/4 23 3/8 28 3/8 .15 HOLDERS OF RECORD At March 22, 1994 there were 35,227 holders of record of the Company's common stock. DIVIDENDS The Board of Directors periodically reviews the Company's dividend policy. The quarterly dividend rate is currently $.15. ITEM 6. SELECTED FINANCIAL DATA SELECTED SUPPLEMENTAL FINANCIAL DATA (UNAUDITED) TANDY CORPORATION AND SUBSIDIARIES Six Months (1) (Dollars and shares in Year Ended Ended thousands, except per December 31, December 31, Year Ended June 30, share amounts) ____________ __________________ __________________________________________ 1993 1992 1991 1992 1991 1990 1989 ______________________________________________________________________________________________________________________________ Operations Net sales and operating revenues. . . . . . . . . . . . . . . . $4,102,551 $2,161,149 $2,031,763 $3,649,284 $3,573,699 $3,648,946 $3,559,692 __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ Income before income taxes, discontinued operations and cumulative effect of change in accounting principle. . . . . . . . . . $ 311,155 $ 102,917 $ 201,856 $ 330,498 $ 343,277 $ 445,048 $ 494,576 Provision for income taxes . . . . . . . 115,523 35,236 73,153 119,785 123,342 167,926 190,754 __________ __________ __________ __________ __________ __________ __________ Income from continuing operations . . . 195,632 67,681 128,703 210,713 219,935 277,122 303,822 Income (loss) from discontinued operations . . . . . . . . . . . . . . (111,797) (63,875) (8,060) (26,866) (13,872) 13,225 19,682 __________ __________ __________ __________ __________ __________ __________ Income before cumulative effect of change in accounting principle . . . . 83,835 3,806 120,643 183,847 206,063 290,347 323,504 Cumulative effect on prior years of change in accounting principle, net of taxes (2) 13,014 -- -- -- (10,619) -- -- __________ __________ __________ __________ __________ __________ __________ Net income . . . . . . . . . . . . . . . $ 96,849 $ 3,806 $ 120,643 $ 183,847 $ 195,444 $ 290,347 $ 323,504 __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ Net income per average common and common equivalent share: Income from continuing operations . . . $ 2.48 $ 0.86 $ 1.61 $ 2.60 $ 2.75 $ 3.38 $ 3.42 Income (loss) from discontinued operations. . . . . . . . . . . . . . . (1.47) (0.84) (0.10) (0.34) (0.17) 0.16 0.22 __________ __________ __________ __________ __________ __________ __________ Income before cumulative effect of change in accounting principle . . . . 1.01 0.02 1.51 2.26 2.58 3.54 3.64 Cumulative effect on prior years of change in accounting principle, net of taxes . 0.17 -- -- -- (0.14) -- -- __________ __________ __________ __________ __________ __________ __________ Net income per average common and common equivalent share (3) . . . . . . $ 1.18 $ 0.02 $ 1.51 $ 2.26 $ 2.44 $ 3.54 $ 3.64 __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ __________ Average common and common equivalent shares outstanding (3) . . . . . . . . 76,184 75,559 78,149 79,011 78,258 81,943 88,849 Dividends declared per common share. . . . . . . . . . . . . . $ .60 $ .30 $ .30 $ .60 $ .60 $ .60 $ .60 Ratio of earnings to fixed charges (4) . . . . . . . . . . . . . . 3.89 2.83 N/A 3.95 3.55 4.77 6.06
SELECTED SUPPLEMENTAL FINANCIAL DATA (UNAUDITED) TANDY CORPORATION AND SUBSIDIARIES Six Months (1) (Dollars and shares in Year Ended Ended thousands, except per December 31, December 31, Year Ended June 30, share amounts) ____________ _______________ _______________________________________ 1993 1992 1992 1991 1990 1989 _________________________________________________________________________________________________________________________ Year-End Financial Position Inventories. . . . . . . . . . . . . . . $1,276,302 $1,472,365 $1,391,295 $1,301,854 $1,452,065 $1,285,373 Total assets (5) . . . . . . . . . . . . $3,219,099 $3,381,428 $3,165,164 $3,078,145 $3,239,980 $2,574,310 Working capital. . . . . . . . . . . . . $1,128,343 $1,478,041 $1,556,435 $1,550,848 $1,312,517 $1,373,311 Current ratio. . . . . . . . . . . . . . 2.09 to 1 2.39 to 1 2.99 to 1 3.18 to 1 2.12 to 1 3.41 to 1 Capital structure: Current debt . . . . . . . . . . . . . . $ 387,953 $ 385,706 $ 231,097 $ 179,818 $ 695,871 $ 192,096 Long-term debt . . . . . . . . . . . . . $ 186,638 $ 322,778 $ 357,525 $ 427,867 $ 252,540 $ 141,124 Total debt . . . . . . . . . . . . . . . $ 574,591 $ 708,484 $ 588,622 $ 607,685 $ 948,411 $ 333,220 Total debt, net of cash and short-term investments . . . . . . . . . . . . . . $ 361,356 $ 595,858 $ 482,168 $ 421,392 $ 813,214 $ 274,822 Stockholders' equity (5) . . . . . . . . $1,950,750 $1,888,351 $1,930,740 $1,846,762 $1,723,496 $1,782,838 Total capitalization (5) . . . . . . . . $2,525,341 $2,596,835 $2,519,362 $2,454,447 $2,671,907 $2,116,058 Long-term debt as a % of total capitalization. . . . . . . . . 7.4% 12.4% 14.2% 17.4% 9.5% 6.7% Total debt as a % of total capitalization. . . . . . . . . . . . . 22.8% 27.3% 23.4% 24.8% 35.5% 15.7% Stockholders' equity per common share (6). . . . . . . . . . . . $ 25.24 $ 24.74 $ 25.35 $ 23.48 $ 21.78 $ 20.65 Financial Ratios Return on average stockholders' equity (4) . . . . . . . 10.2% 3.5% 11.2% 12.3% 15.8% 17.9% Percent of sales: Income before income taxes, discontinued operations and cumulative effect of change in accounting principle . . . 7.6% 4.8% 9.0% 9.6% 12.2% 13.9% Income from continuing operations . . . 4.8% 3.2% 5.7% 6.2% 7.6% 8.5%
(1) The Company changed its fiscal year end from a June 30 to a December 31 year end effective with the six month transition period ended December 31, 1992. (2) See Note 2 of the Notes to Consolidated Financial Statements for a discussion of the change in accounting principles. (3) Income (loss) per share amounts and average common and common equivalent share amounts for the six months ending December 31, 1992 and fiscal 1992 have been retroactively restated to reflect the assumption that the Series C PERCS would convert into 12,457,100 common shares in lieu of the previously used conversion amount of 15,000,000 common shares based upon the Company's December 31, 1993 closing price of its common stock of $49.50 per share. See Note 2 of the Notes to Consolidated Financial Statements. (4) Computed using income from continuing operations. (5) Includes investment in discontinued operations. (6) At December 31, 1993, December 31, 1992 and June 30, 1992, computed assuming the Series C PERCS will convertinto 12,457,100 shares of common stock. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION. Tandy Corporation ("Tandy" or the "Company") changed its fiscal year end from June 30 to December 31 effective December 31, 1992. The following Management's Discussion and Analysis of Results of Operations and Financial Condition compares the full calendar year ended December 31, 1993 with the full fiscal years ended June 30, 1992 and 1991. Although these twelve-month periods end at different times, management believes that the seasonality of the retail business relating to Christmas is so significant that it would distort trends and related percentage comparisons to sales for the readers if a full year's results were compared to the six-month transition period ended December 31, 1992. NET SALES AND OPERATING REVENUES For the year ending December 31, 1993, overall sales grew 12% to $4,102,551,000 as compared to $3,649,284,000 for the fiscal year ending June 30, 1992. This increase was primarily due to the opening of three Incredible Universe stores and the expansion of the Computer City chain. On a comparable store basis, Radio Shack's sales increased slightly during the year ended December 31, 1993 as compared to the fiscal year ended June 30, 1992. A moderate increase in sales of Radio Shack's core business (i.e., consumer electronics and accessories) was offset by a decline in sales of personal computers through the Radio Shack division. The decrease in Radio Shack's computer business reflects the impact of sharply lower pricing in response to competitive pressures in the marketplace. The changing dynamics of the personal computer business has had a significant impact on Radio Shack's performance during fiscal years 1993, 1992 and 1991. A combination of shifts in retail distribution to super stores and telemarketing combined with rapidly declining prices has taken the computer category from approximately 17.0% of Radio Shack's sales with a gross profit of 29.0% in the year ended June 30, 1992 to approximately 14.2% of sales and a gross profit of 15.2% for the year ended December 31, 1993. Radio Shack's extensive assortment of electronic parts, accessories and specialty items differentiates it from other consumer electronics retailers in the marketplace. The table below shows the breakdown by major category of Radio Shack sales. RADIO SHACK SALES TO CUSTOMERS Percent of Total Sales ________________________________________________ Year Ended Six Months Ended Year Ended December 31, December 31, June 30, ____________ ________________ ______________ Class of Products 1993 1992 1992 1991 _________________________________________________________________________________ Consumer electronics . . . . . 44.6% 46.1% 43.9% 44.3% Electronic parts, accessories and specialty equipment . . . 36.1 35.4 34.4 33.5 Personal computers, peripherals, software and accessories * . 14.2 14.3 17.0 17.7 Other. . . . . . . . . . . . . 5.1 4.2 4.7 4.5 _____ _____ _____ _____ . . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0% _____ _____ _____ _____ _____ _____ _____ _____ * Excludes Radio Shack Computer Centers closed at June 30, 1991.
The decline in Radio Shack's computer sales has been offset by sales of the Computer City chain. The Computer City chain opened its 40th supercenter in December 1993, approximately two years after its initial launching of eight stores. Computer City's sales increases were the result of 25 additional stores since June 30, 1992 and comparable store sales gains at old stores in excess of 30% for the year ended December 31, 1993. The Name Brand Retail Group experienced a sales decrease in calendar 1993 as compared to the June 1992 fiscal year. This decrease was primarily a result of the closing of 110 McDuff and VideoConcepts stores in February 1993. This decline was offset in part by the addition of three Incredible Universe stores. The first two Incredible Universe stores were opened in the fall of 1992 with the third having been added in the fall of 1993. Shipments to InterTAN Inc. decreased for calendar year 1993 as compared to the fiscal year ended June 30, 1992. See the discussion in the "InterTAN Update" found on page 23. RETAIL OUTLETS Average Store Size Dec. 31, Dec. 31, June 30, Dec. 31, June 30, (Sq. Ft.) 1993 1992 1992 1991 1991 ____________________________________________________________________________________________ Radio Shack Company-owned*. . . . . . . . 2,370 4,553 4,558 4,553 4,604 4,595 Dealer/Franchise. . . . . . . N.A. 2,002 2,122 2,203 2,238 2,241 _____ _____ _____ _____ _____ 6,555 6,680 6,756 6,842 6,836 _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ Tandy Name Brand Retail Group McDuff Supercenters . . . . . 12,198 75 150 151 147 138 McDuff/VideoConcepts Mall Stores. . . . . . . . . 3,081 231 266 266 270 245 The Edge in Electronics . . . 1,107 16 16 16 15 9 Computer City . . . . . . . . 23,487 40 20 15 8 -- Incredible Universe. . . . . . 183,667 3 2 -- -- -- _____ _____ _____ _____ _____ 365 454 448 440 392 _____ _____ _____ _____ _____ Total Stores 6,920 7,134 7,204 7,282 7,228 _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ * Excludes Radio Shack Computer Centers closed at June 30, 1991.
For the six-month period ending December 31, 1992, net sales and operating revenues increased 6.4% to $2,161,149,000. This increase was primarily due to the opening of two Incredible Universe stores and expansion of the Computer City chain. Comparable store sales were essentially even with the six-month period ended December 31, 1991. The change in the Company's sales in the fiscal years ended June 30, 1992 and 1991 reflected a continued adverse product cycle in consumer electronics, a weak economy and widespread price cutting in the personal computer market. Sales through all retail stores increased 3.2% in the fiscal year ended June 30, 1992 as compared with fiscal 1991. The increase in sales in the fiscal year ended June 30, 1992 was primarily due to new store expansions. During fiscal 1992, 15 Computer City stores, 34 McDuff and VideoConcepts stores and seven of The Edge in Electronics stores were opened. On a company-wide basis, comparable store sales declined 1% in fiscal 1992 following a similar decline in the prior year. Comparable store sales increased slightly at Radio Shack in fiscal 1992 due to the continued strengthening of its electronics parts, accessories and specialty items business. This increase more than offset a decline in Radio Shack's computer business which was impacted significantly by extensive price cutting in the marketplace. Comparable store sales of the McDuff and VideoConcepts stores were down 10% in fiscal 1992 as compared to fiscal 1991, reflecting intense competitive pressures in name brand electronics retailing. To address the pricing and distribution shifts in computer retailing, the Computer City chain of super stores was launched in October 1991 (fiscal year ended June 30, 1992). The Computer City format is designed to sell high volumes of well known name brand personal computers and related products at discount prices. Though in operation for only the last seven months of fiscal 1992, Computer City's sales more than offset the decline in the Company's U.S. computer sales through Radio Shack and direct sales. As of June 30, 1992, 15 Computer City stores were in operation, 13 in the U.S. and two in Europe. GROSS PROFIT Gross profit as a percent of sales and operating revenues for the year ended December 31, 1993 was 41.9% as compared to 43.5% for the six months ended December 31, 1992, 47.2% for the fiscal year ended June 30, 1992 and 48.7% for the fiscal year ended June 30, 1991. The decline, in part, reflects the faster growth of new high-volume formats such as Computer City and Incredible Universe with inherently lower gross margins than Radio Shack stores. The Company expects this trend to continue as sales at Incredible Universe and Computer City increase. Combined Computer City and Incredible Universe sales contributed 18.6%, 8.9% and 2.6% to consolidated sales in the fiscal year ended December 31, 1993, the six months ended December 31, 1992 and the fiscal year ended June 30, 1992, respectively. The 5.3% decline in gross profit percent from fiscal 1992 reflects the growth of the newer retail businesses. Management expects the long-term impact of accelerated growth for its new businesses to result in a lower consolidated gross margin as a percent of sales and operating revenues. In addition to the increasing effect of the lower gross margin businesses, Radio Shack's gross margin has trended down during the fiscal years ended December 31, 1993 and June 30, 1992 and 1991 because of a decline in computer margins resulting from more competitive pricing. In the absence of any additional major decreases in computer retail prices in the industry, management believes this decline in Radio Shack's gross margin will diminish during 1994. Partially offsetting the decline were increased sales of high-margin electronic parts, accessories and specialty items sold through Radio Shack. In management's opinion, new concepts which could increase Radio Shack gross margins include introducing the Radio Shack Gift Express program, creating new store formats and the launching of The Repair Shop at Radio Shack, a name brand out-of-warranty repair program. Competitive pressures in name brand electronics retailing decreased McDuff's and VideoConcepts' gross margins in each of the three fiscal years ended December 31, 1993 and June 30, 1992 and 1991. Additionally, gross margins were impacted in the McDuff and VideoConcepts units by the increasing percentage of sales related to the lower margin computer category. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses ("SG&A") as a percent of sales and operating revenues for the year ended December 31, 1993 declined from the year ended June 30, 1992 and declined for the six months ended December 31, 1992 from the six months ended December 31, 1991. The accompanying table summarizes the breakdown of various components of SG&A and their related percentage of sales and operating revenues. The lower SG&A percent reflects the lower costs, relative to net sales and operating revenues associated with the Company's newer retail formats, as well as the lower operating costs achieved through cost reduction programs and the further streamlining of operations in the new retail formats. SG&A expenses as a percent of sales and operating revenues declined in the fiscal year ended June 30, 1992 as compared with fiscal 1991. The benefits of actions taken to streamline operations and reduce costs are reflected in most expense categories in fiscal 1992. Year-to-year comparisons are impacted by the $18,987,000 gain which includes a foreign currency gain of $6,894,000 in fiscal year 1992 from the sale of a Japanese subsidiary, the assets of which were primarily real estate, and the remaining foreign currency gain of $3,748,000 recognized in 1992 as opposed to a foreign currency gain of only $762,000 in 1993. The Company's exposure to foreign currency fluctuations has decreased significantly with the disposal of the Company's computer manufacturing and marketing operations as well as the disposal of Memtek Products. Both of these operations had significant European operations. Advertising costs have decreased in dollars and as a percent of sales and operating revenues in the fiscal year ended December 31, 1993 as compared to the fiscal years ended June 30, 1992 and 1991. Management has focused its efforts on more efficient advertising methods in Radio Shack utilizing the Company's data base of customer activity to reduce costs while maintaining market awareness. Rent expense has declined slightly in dollars and more significantly as a percent of sales during the year ended December 31, 1993 as compared to fiscal 1992. This percentage decrease results primarily from the fact that the Company owns most of the Incredible Universe locations and is additionally impacted by Computer City's low rent to sales ratio. The Company's credit operations have been successful in supporting sales of the retail operations. Private label credit cards represented 34% of credit sales for the year ended December 31, 1993, 36% for the six months ended December 31, 1992, 43% in fiscal 1992 and 44% in fiscal 1991. This decline in the percentage results from increased sales through the Computer City and Incredible Universe stores which have a lower percentage of private label card usage. A decrease in bad debt expense relates to tighter credit controls and a 4% decline from fiscal 1992 in overall private label credit card sales. Expenses associated with the credit card operations which are included in SG&A expense have decreased. SUMMARY OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Year Ended Six Months Ended Year Ended December 31, December 31, June 30, ________________ ________________ ________________ ___________________________________ 1993 1992 1991 1992 1991 % of % of % of % of % of Sales & Sales & Sales & Sales & Sales & (In thousands) Dollars Revenues Dollars Revenues Dollars Revenues Dollars Revenues Dollars Revenues ______________________________________________________________________________________________________________________________ Payroll and commissions $ 554,728 13.5% $288,057 13.3% $282,544 13.9% $ 534,779 14.7% $ 512,823 14.4% Advertising 205,831 5.0 150,374 7.0 154,025 7.6 239,352 6.6 251,903 7.0 Rent 202,401 4.9 105,328 4.9 101,184 5.0 204,673 5.6 191,941 5.4 Other taxes 79,508 1.9 38,198 1.8 36,593 1.8 73,701 2.0 66,427 1.9 Utilities and telephone 62,4371 .5 31,197 1.4 30,990 1.5 61,468 1.7 59,675 1.7 Insurance 45,373 1.1 26,301 1.2 19,936 1.0 44,427 1.2 46,653 1.3 Stock purchase and savings plans 17,562 .4 7,749 .3 6,852 .3 15,396 .4 15,933 .4 Foreign currency transaction gains (762) -- (3,065) (.1) (1,941) (.1) (10,642) (.3) (13,051) (.4) Other 131,684 3.3 78,845 3.6 70,472 3.5 119,893 3.3 163,534 4.6 __________ ____ ________ ____ ________ ____ __________ ____ __________ ____ Subtotal 1,298,762 31.6 722,984 33.4 700,655 34.5 1,283,047 35.2 1,295,838 36.3 Credit operations 55,914 1.4 38,815 1.8 30,089 1.5 59,073 1.6 51,702 1.4 __________ ____ ________ ____ ________ ____ __________ ____ __________ ____ $1,354,676 33.0% $761,799 35.2% $730,744 36.0% $1,342,120 36.8% $1,347,540 37.7% __________ ____ ________ ____ ________ ____ __________ ____ __________ ____ __________ ____ ________ ____ ________ ____ __________ ____ __________ ____
PROVISION FOR BUSINESS RESTRUCTURING The Company adopted a plan resulting in business restructuring charges during the six months ended December 31, 1992 designed to improve the Company's competitiveness and future profitability. The pre-tax charge of $48,000,000 related primarily to the closing of approximately 110 of the 432 Tandy Name Brand Retail Group stores, mainly McDuff Supercenters in major market areas and, to a lesser extent, the elimination of certain product lines. Some product lines were reduced or eliminated after consideration of competitive factors and market trends. In the fourth quarter of fiscal year 1991, the Company recorded a business restructuring charge of $8,531,000. The charge covered anticipated costs associated with Radio Shack computer centers which were being closed, relocated or converted to other store formats or sales offices. These costs included the estimated lease obligations for store closings and relocations as well as estimated fixed asset write-offs for all affected stores. DEPRECIATION AND AMORTIZATION Depreciation and amortization expense as a percentage of sales and operating revenues decreased slightly in the year ended December 31, 1993 as compared with the year ended June 30, 1992. The dollar amount of depreciation and amortization expense for the year ended December 31, 1993 increased 7% over the dollar amount for the year ended June 30, 1992, due to additional capital expenditures related to the three Incredible Universe stores and the addition of 25 new Computer City stores. The dollar amount of depreciation and amortization expense for the year ended June 30, 1992 increased 5% over the prior fiscal year due to increased capital expenditures related to the new Tandy Name Brand Retail Group and Computer City super stores and the remodeling of Radio Shack stores. NET INTEREST (INCOME)/EXPENSE Year Ended Six Months Ended Year Ended December 31, December 31, June 30, ____________ _________________ _________________ (In thousands) 1993 1992 1991 1992 1991 __________________________________________________________________________________________ Interest expense . . . . . . $ 39,707 $ 20,532 $ 23,948 $ 43,154 $ 70,313 Less: Interest income. . . . . . . (8,137) (1,982) (2,606) (5,092) (5,042) Interest income of credit operations (57,401) (31,308) (27,950) (62,307) (93,830) _________ _________ _________ _________ _________ Net interest income. . . . . $(25,831) $(12,758) $ (6,608) $(24,245) $(28,559) _________ _________ _________ _________ _________ _________ _________ _________ _________ _________
Net interest income of $25,831,000 for the year ended December 31, 1993 and $24,245,000 for the fiscal year ended June 30, 1992 was attributable primarily to interest income earned by the credit operations. The decrease in interest income of the credit company in the year ended December 31, 1993 as compared to the fiscal year ended June 30, 1992 resulted from a decrease in the average credit card receivables outstanding during the period. This decline results from increased payments from credit customers reflecting the overall improvement in the economy and a desire by consumers to shift debt to lower interest rate instruments. The increase in interest income of the credit company in the six months ended December 31, 1992 as compared to December 31, 1991 resulted from growth of consumer credit card receivables. The decrease in interest income of the credit company in the fiscal year ended June 30, 1992 as compared with fiscal year 1991 resulted from the securitization of private label receivables in June 1991. Interest income, exclusive of Tandy Credit Corporation's income, represented primarily interest on short-term investments. The increase in interest income for the year ended December 31, 1993 compared to the fiscal year ended June 30, 1992 was due to the increase in short-term investments as proceeds from the divestiture of discontinued operations were received and to the recognition of interest income on the AST and InterTAN notes receivable. Interest income as it relates to InterTAN notes receivable will increase in fiscal 1994 as the Company will commence recording the accretion of discount relating thereto. See further discussion on notes receivable in the "InterTAN Update". The decrease in interest expense for the year ended December 31, 1993 as compared to the year ended June 30, 1992 is due to the decrease of total debt and lower U.S. interest rates. Overall interest expense should decline in fiscal 1994 as the Company receives cash proceeds from the disposal of its discontinued operations and applies a significant portion of such proceeds against short-term debt and toward the retirement of its 10% subordinated debentures. Partially offsetting the decline in expected interest expense in 1994 will be higher interest rates resulting from the Federal Reserve Bank's move to keep inflation low in the overall U.S. economy. The decrease in interest expense in the fiscal year ended June 30, 1992 reflected the reduced debt attributable to the securitization of private label credit card receivables and lower interest rates. PROVISION FOR INCOME TAXES The effective tax rate for the year ended December 31, 1993 was 37.1%. The higher effective tax rate for the year ended December 31, 1993 as compared to 36.2% for the year ended June 30, 1992 and 36.0% for the year ended June 30, 1991 reflects the impact of the increase of the federal tax rate to 35% from 34%. The effective tax rate for the six-month period ended December 31, 1992 was 34.2%. This lower effective rate reflects the successful resolution of certain IRS examinations during the period. The requirements of Financial Accounting Standard No. 109, "Accounting for Income Taxes", which the Company adopted January 1, 1993, are discussed in Note 12 of the Notes to Consolidated Financial Statements. DISCONTINUED OPERATIONS On June 25, 1993, the Board of Directors of Tandy adopted a formal plan of divestiture under which it would sell its computer manufacturing and marketing businesses, the O'Sullivan Industries, Inc. ready-to-assemble furniture manufacturing and related marketing business, the Memtek Products division and the Lika printed circuit board business. The divestiture plan replaced the Company's plan to spin off all of the Company's manufacturing and marketing businesses as described in Tandy's Transition Report on Form 10-K/A-4 for the six-month period ended December 31, 1992. In connection with the plan of divestiture the Company accounted for the divestiture of these businesses as discontinued operations and recognized an after-tax charge of $70,000,000 in its quarter ended June 30, 1993. This charge was subsequently reduced by approximately $15,822,000 in the quarter ended December 31, 1993. The reduction of the reserve previously taken resulted from the better than anticipated sales price received for O'Sullivan Industries Holdings, Inc. partially offset by additional foreign currency translation losses and below plan operating results of the divested companies during the divestment period, net of related income tax adjustments. Prior year results of operations have been reclassified to reflect the discontinued operations treatment. Computer Manufacturing. In furtherance of the divestiture plan, the Company closed the sale of the computer manufacturing and marketing businesses to AST Research, Inc. ("AST") on July 13, 1993. In accordance with the terms of the definitive agreement between Tandy and AST, Tandy received $15,000,000 upon closing of the sale. The balance of the purchase price of $90,000,000 (as adjusted post-closing based on the results of an audit of the assets and liabilities conveyed) is payable by a promissory note. The promissory note is payable in three years and interest is accrued and paid annually. The interest rate on the promissory note is currently 3.75% per annum and is adjusted annually, not to exceed 5% per annum. The terms of the promissory note stipulate that the outstanding principal balance may be paid at maturity at AST's option in cash or the common stock of AST. However, at Tandy's option not more than 50% of the initial principal balance may be paid in common stock of AST. The promissory note is supported by a standby letter of credit in the amount of the lesser of $100,000,000 or 70% of the outstanding principal amount of the promissory note. At December 31, 1993, the standby letter of credit approximated $67,704,000. Accounts receivable relating to the computer operations, approximating $83,000,000 at June 30, 1993, inured to the benefit of Tandy upon collection. At December 31, 1993, the balance of the remaining accounts receivable, net of allowance for doubtful accounts, was $7,700,000. Tandy also retained certain inventory which it intends to liquidate before June 30, 1994. At December 31, 1993, this inventory amounted to approximately $3,700,000. In October 1993, the Company sold its computer marketing operations in France to AST, together with certain other multimedia assets and additional Swedish inventory, for an aggregate of approximately $6,700,000, which was evidenced by an increase in the amount of the promissory note described above to $96,700,000. The Company has discounted this note by $2,000,000 and the discount will be recognized as income using the effective interest rate method over the life of the note. Memtek Products. On November 10, 1993, the Company executed a definitive agreement with Hanny Magnetics (B.V.I.) Limited, a British Virgin Islands corporation ("Hanny") to purchase certain assets of the Company's Memtek Products operations, including the license agreement with Memorex Telex, N.V. for the use of the Memorex trademark on licensed consumer electronics products. This sale closed on December 16, 1993. As of December 31, 1993, Tandy has received payments of $62,500,000, recorded a $7,102,000 receivable from Hanny for the remaining purchase price and retained approximately $61,000,000 in accounts receivable and certain other assets for liquidation. Hanny is a subsidiary of Hanny Magnetics (Holdings) Limited, a Bermuda corporation, listed on the Hong Kong Stock Exchange. At December 31, 1993, accounts receivable, net of related allowance for doubtful accounts, retained by Tandy approximated $40,100,000. O'Sullivan Industries. On November 23, 1993, the Company announced that it would sell the common stock of O'Sullivan Industries, Inc. ("O'Sullivan") in an initial public offering. On January 27, 1994 the Company announced that it had reached an agreement with the underwriters to sell O'Sullivan Industries Holdings, Inc., the parent company of O'Sullivan, common stock to the public at $22 per share. The net proceeds realized by Tandy in the initial public offering, together with the $40,000,000 cash dividend from O'Sullivan, approximated $350,000,000. The initial public offering closed on February 2, 1994. Pursuant to a Tax Sharing and Tax Benefit Reimbursement Agreement between Tandy and O'Sullivan Industries Holdings, Inc., the Company will receive payments from O'Sullivan resulting from an increased tax basis of O'Sullivan's assets thereby increasing tax deductions and accordingly, reducing income taxes payable by O'Sullivan. The amount to be received by the Company each year will approximate the federal tax benefit expected to be realized with respect to the increased tax basis. These payments will be made over a 15-year time period. The Company will recognize these payments as additional sale proceeds and gain in the year in which the payments become due and payable to the Company. Lika. On January 24, 1994, the Company announced that it had signed a definitive agreement to sell its manufacturing facilities which make Lika printed circuit boards. This divestiture is expected to close by June 1994 and is expected to yield approximately $17,000,000 in proceeds, including cash, a note and the liquidation of certain retained assets. In connection with the computer manufacturing sale and the Memtek Products sale, the Company agreed to retain certain liabilities primarily relating to warranty obligations on products sold prior to the sale. Management believes that accrued reserves, as reflected on its December 31, 1993 balance sheet, are adequate to cover estimated future warranty obligations for the products and for any remaining costs to dispose of these operations. With the closing of the Lika transaction, the divestiture program announced in June 1993 will be complete. Proceeds from the formal divestiture plan should total approximately $715,000,000 including net income tax benefits of $16,600,000 and notes receivable of approximately $100,000,000 that mature by the end of 1996. The proceeds from the divestitures are being used to reduce short-term debt and for the expansion of the Incredible Universe and Computer City store operations. CASH FLOW AND LIQUIDITY Year Ended Six Months Ended Year Ended December 31, December 31, June 30, ____________ ________________ ________________________ (In thousands) 1993 1992 1992 1991* _________________________________________________________________________________________ Operating activities . . . . $ 322,294 $ 13,680 $ 146,782 $ 617,353 Investing activities . . . . (52,149) (90,171) (102,190) (140,499) Financing activities . . . . (169,536) 82,663 (124,431) (425,758) *Includes $350 million asset securitization
Tandy's cash flow and liquidity, in management's opinion, remains strong. During the year ended December 31, 1993, cash provided by operations was $322,294,000 as compared to $146,782,000 for the fiscal year ended June 30, 1992. The increased cash flow from operations in calendar 1993 compared to fiscal year ended June 30, 1992 was due partially to receivables which provided $30,133,000 in cash in 1993 but used $121,719,000 in 1992. The decline in accounts receivable in 1993 versus 1992 is due to the liquidation of receivables related to the divested operations and lower consumer receivables related to the Company's private label credit card portfolio. The latter reason reflects consumers' desires to liquidate debt with higher interest rates and the overall improved economy. Inventory required less cash in calendar 1993 than in fiscal 1992. The increase in inventory during 1993 related to new store openings and the expansion of Radio Shack's core product lines. Investing activities involved capital expenditures, net of retirements, primarily for retail expansion of $129,287,000 for the year ended December 31, 1993 compared to $127,495,000 for the fiscal year ended June 30, 1992. Proceeds received from the sale of divested operations totaled $111,988,000 during the year ended December 31, 1993. Investing activities in 1993 also included $31,663,000 for the purchase of InterTAN's bank debt and the extension/funding of a working capital line of credit. See "InterTAN Update" for further information. Short-term debt of $46,885,000 and long-term debt of $62,195,000 were retired during 1993. Future store expansions and refurbishments and other capital expenditures are expected to approximate $150,000,000 to $180,000,000 per year over the next two years and will be funded primarily from available cash, proceeds from divestiture of discontinued operations, cash flow from operations and proceeds from possible sale/leaseback arrangements of Incredible Universe stores. Operating cash flow in the fiscal year ended June 30, 1992 was $146,782,000 compared to $617,353,000 for the fiscal year ended June 30, 1991. This decreased cash flow was partially due to the $89,441,000 increase in inventories for the Tandy Name Brand Retail Group and Computer City store expansions in fiscal 1992 compared to a $151,339,000 decrease in inventories in 1991. Operating cash flow was also higher in 1991 due to the cash proceeds from the securitization of $350,000,000 of credit card receivables. The Company's investing activities were generally for capital expenditures in fiscal 1992 which totaled $127,495,000. The capital expenditures were used principally for Radio Shack's store remodeling program, expansion of the Computer City store chain and initial construction of two Incredible Universe stores. Financing activities in the fiscal year ended June 30, 1992 included the sale of Depositary Shares of PERCS for $430,000,000 and the subsequent purchase of common stock with the proceeds of this preferred stock issue. Long-term and short-term debt of $20,098,000 was retired in the year ended June 30, 1992 compared to fiscal 1991 retirements of $441,577,000. Following are the current credit ratings for Tandy Corporation: Standard Category Moody's and Poor's ________ _______ __________ Senior Unsecured Baa2 A- Subordinated Baa3 BBB Medium Term Notes Baa2 A- Preferred Stock Baa3 BBB ESOP Senior Notes Baa2 A- Commercial Paper P-2 A-2 The above ratings are investment grade ratings. Management does not believe that a downgrade in 1993 by Moody's has had or will have a materially adverse effect on the Company's ability to borrow funds although the borrowings may be slightly more costly. CAPITAL STRUCTURE AND FINANCIAL CONDITION The Company's balance sheet and financial condition continue to be strong. The Company's available borrowing facilities as of December 31, 1993 are detailed in Note 9 of the Notes to Consolidated Financial Statements and are incorporated herein by reference. Proceeds from the sale of divested operations totaled $111,988,000 through December 31, 1993. The net assets associated with discontinued operations remaining to be divested were $405,664,000 at December 31, 1993 and related primarily to O'Sullivan which was disposed of in February 1994 and Lika whose sale is pending. Other information related to discontinued operations are discussed in "Discontinued Operations". In the fiscal year ended June 30, 1992, the Company issued 150,000 PERCS shares and used the proceeds of this offering to purchase $430,000,000 of the Company's common stock for treasury. Each PERCS share has an annual dividend rate of $214.00 and is automatically convertible on April 15, 1995 into 100 shares of common stock, par value $1 per share, subject to possible adjustment based upon the market value of the common stock on the conversion date or the occurrence of certain other events. Based upon the market price of the Company's common stock at December 31, 1993, each PERCS share would have converted into 83 shares. At any time prior to April 15, 1995, the Company may call the PERCS. The PERCS are discussed further in Note 18 of the Notes to Consolidated Financial Statements. The Company's issue of 10% subordinated debentures due June 30, 1994 was called by the Company on February 23, 1994 for redemption on April 1, 1994. The redemption will be at the price of 100% of face value or approximately $32,000,000. In fiscal 1991, the Company filed a shelf registration for $500,000,000, of which $400,000,000 was designated for medium-term notes, and Tandy Credit Corporation increased its medium-term note program by $200,000,000. During fiscal 1991, short-term debt was refinanced by the issuance of $155,500,000 in medium-term notes. In the fourth quarter of fiscal 1991, Tandy Credit Corporation completed an asset securitization to increase financial flexibility. Credit card receivables were sold to the Tandy Master Trust which issued $350,000,000 of participating 8.25% Class A Asset Backed Certificates, Series A. Proceeds were primarily used to retire short-term debt. Tandy established an employee stock ownership plan ("TESOP") in 1990. This plan issued $100,000,000 of debt in July 1990 to purchase preferred stock from the Company for funding of the plan. The Company has guaranteed the repayment of the TESOP notes and, as a result, the indebtedness of the TESOP has been recognized as a long-term obligation on the Company's consolidated balance sheet. Dividend payments and contributions by the Company will be used to repay the indebtedness. The debt-to-capitalization ratio was 22.8%, 27.3%, 23.4% and 24.8% at December 31, 1993, December 31, 1992, June 30, 1992 and June 30, 1991, respectively. This debt-to-capitalization ratio should improve further in fiscal 1994 due to the cash proceeds from divestitures being used to retire debt. The Company's available borrowing facilities as of December 31, 1993 are detailed in Note 9 of the Notes to Consolidated Financial Statements. Management believes that the Company's present borrowing capacity is greater than the established credit lines and long-term debt in place. Management believes that the Company's cash flow from operations, cash and short-term investments, expected proceeds from divestitures and its available borrowing facilities are more than adequate to fund planned store expansion, growth in the Company's private label credit accounts, retirement of the 10% subordinated debentures and to meet debt service and preferred dividend requirements. Inflation has not significantly impacted the Company over the past three years. Management does not expect inflation to have a significant impact on operations in the foreseeable future unless global situations substantially affect the world economy. The American Institute of Certified Public Accountants issued Statement of Position 93-7, "Reporting on Advertising Costs" in December 1993. The statement generally requires all advertising costs to be expensed in the period in which the costs are incurred or the first time the advertising takes place and is effective for years beginning after June 15, 1994. The statement is not anticipated to have any material effect on the results of operation or financial condition of the Company. SALE OF JOINT VENTURE INTEREST During the quarter ended September 30, 1993, the Company entered into definitive agreements with Nokia Corporation ("Nokia") to sell the Company's interests in two cellular telephone manufacturing joint ventures with Nokia, TMC Company Ltd. located in Masan, Korea, and TNC Company located in Fort Worth, Texas. Pursuant to the terms of the definitive agreements, the Company received an aggregate of approximately $31,700,000 for its interests in these joint ventures. The Company also entered into a three-year Preferred Supplier Agreement pursuant to which it has agreed to purchase from Nokia substantially all of Radio Shack's requirements for cellular telephones at prevailing competitive market prices at the time of the purchase. These operations were not part of the overall divestment plan adopted in June 1993 by the Company's Board of Directors; therefore, the gain on the sale and their results of operations are not included in discontinued operations. INTERTAN UPDATE InterTAN Inc. ("InterTAN"), the former foreign retail operations of Tandy, was spun off to Tandy stockholders as a tax-free dividend in fiscal 1987. Under the merchandise purchase terms of the original distribution agreement, InterTAN could purchase on payment terms from Tandy, at negotiated prices, new and replacement models of products that Tandy had in its Radio Shack U.S. catalog or which Tandy may reasonably secure. A&A International ("A&A"), a subsidiary of Tandy, was the exclusive purchasing agent for products originating in the Far East for InterTAN. On July 16, 1993 InterTAN had an account payable to Tandy of approximately $17,000,000 of which $7,600,000 was in default. InterTAN's outstanding purchase orders for merchandise placed under the distribution agreement with Tandy, but not yet shipped, totaled approximately $44,000,000. Because InterTAN had defaulted, on July 16 Tandy terminated the merchandise purchase terms of the distribution agreement and the license agreements. Tandy offered InterTAN interim license agreements which expired July 22, 1993, unless extended. These were extended on July 23, 1993. On July 30, 1993 Trans World Electronics, Inc. ("Trans World"), a subsidiary of Tandy, reached agreement with InterTAN's banking syndicate to buy approximately $42,000,000 of InterTAN's debt at a negotiated, discounted price. The closing of this purchase occurred on August 5, 1993, at which time Tandy resumed limited shipments to InterTAN and granted a series of short-term, interim licenses pending the execution of new license and merchandise agreements. The debt purchased from the banks has been restructured into a seven-year note with interest of 8.64% due semiannually beginning February 25, 1994 and semiannual principal payments beginning February 25, 1995 (the "Series A" note). Trans World also provided approximately $10,000,000 in working capital and trade credit to InterTAN. Interest on the working capital loan (the "Series B" note) of 8.11% is due semiannually beginning February 25, 1994 with the principal due in full on August 25, 1996. Trans World also has received warrants with a five-year term exercisable for approximately 1,450,000 shares of InterTAN common stock at an exercise price of $6.62 per share. As required by an agreement with Trans World, InterTAN filed a registration statement on January 21, 1994 seeking to register the warrants under the Securities Act of 1933. In addition to the bank debt purchased by Trans World and the working capital loan, InterTAN's obligations to Trans World included two additional notes for approximately $23,665,000 (the "Series C" note) and $24,037,000 (the "Series D" note) with interest rates of 7.5% and 8%, respectively. The notes represent the restructuring of InterTAN accounts payable for merchandise already shipped and require monthly interest payments. Also, InterTAN had obligations for purchase orders outstanding for merchandise ordered by A&A for InterTAN but not yet shipped totaling approximately $31,262,000 at December 31, 1993. All principal and interest on the Series C note was paid in full by December 31, 1993. As merchandise under existing outstanding purchase orders is shipped, A&A will invoice InterTAN and amounts owed will be assigned to Trans World and will increase the amount of the Series D note. The balance of the Series D note as of December 31, 1993 was approximately $7,500,000. All of Tandy's debt from InterTAN is secured by a first priority lien on substantially all of InterTAN's assets. A new merchandise agreement was reached with InterTAN in October 1993 which requires future purchase orders be backed by letters of credit posted by InterTAN. New license agreements have been negotiated which provide for a future royalty to Tandy. As required by the various agreements now existing between Tandy and InterTAN, InterTAN has obtained a bank revolving credit facility for Canadian $30,000,000 (U.S. $22,662,000 equivalent at December 31, 1993). Tandy has agreed with InterTAN's new banking agent, that in case of InterTAN's default on the bank credit line, Tandy will, at the option of the bank, purchase InterTAN's inventory and related accounts receivable at 50% of their net book value, up to the amount of outstanding bank loans, but not to exceed Canadian $60,000,000 (U.S. $45,324,000 equivalent at December 31, 1993). In that event, Tandy could foreclose on its first priority lien on InterTAN's assets. If Tandy fails to purchase the inventory and related accounts receivable of InterTAN from the bank, InterTAN's banking agent, upon notice to Tandy and expiration of time, can foreclose upon InterTAN's assets ahead of Tandy. At December 31, 1993, InterTAN had no borrowings under this revolving credit facility. As of December 31,1993 InterTAN owed Tandy an aggregate of $63,511,000. The current portion of the obligation approximates $11,650,000 and the non-current portion approximates $51,861,000. In 1993 Tandy has not recognized any accretion of discount on the note receivable from InterTAN resulting from the purchase of the bank debt at a discounted price but will commence accretion of such discount in 1994 due to InterTAN's financial results and payment history as of December 31, 1993. Accretion of this discount will be based on the effective interest rate method and will approximate $3,856,000 in 1994. During the year ended December 31, 1993, Tandy recognized approximately $93,315,000 of sales to InterTAN and interest income of $3,085,000. Tandy's sales to InterTAN totaled $90,130,000 during the six months ended December 31, 1992, $171,126,000 during fiscal 1992, and $160,024,000 during fiscal 1991. A&A will continue as the exclusive purchasing agent for InterTAN in the Far East on a commission basis. Commencing in March 1994 only the purchasing agent commission and sales by Tandy manufacturing plants to InterTAN will be recorded as sales. InterTAN purchases from third parties through A&A will no longer be recorded as sales reflecting the arrangement under the new merchandise agreement. Accordingly, management expects that reported sales by Tandy to InterTAN in 1994 will be considerably lower than in prior years, however, the earned income relating thereto will not be materially different. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The Index to Consolidated Financial Statements and Financial Statement Schedules is found on page 29. The Company's Financial Statements, Notes to Consolidated Financial Statements and Financial Statement Schedules follow the index. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Tandy will file a definitive proxy statement with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K pursuant to Regulation 14A. The information called for by this Item with respect to directors has been omitted pursuant to General Instruction G(3). This information is incorporated by reference from the Proxy Statement for the 1994 Annual Meeting. For information relating to the Executive Officers of the Company, see Part I of this report. The Section 16(A) reporting information is incorporated by reference from the Proxy Statement for the 1994 Annual Meeting. ITEM 11. EXECUTIVE COMPENSATION Tandy will file a definitive proxy statement with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K pursuant to Regulation 14A. The information called for by this Item with respect to executive compensation has been omitted pursuant to General Instruction G(3). This information is incorporated by reference from the Proxy Statement for the 1994 Annual Meeting. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Tandy will file a definitive proxy statement with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K pursuant to Regulation 14A. The information called for by this Item with respect to security ownership of certain beneficial owners and management has been omitted pursuant to General Instruction G(3). This information is incorporated by reference from the Proxy Statement for the 1994 Annual Meeting. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Tandy will file a definitive proxy statement with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Form 10-K pursuant to Regulation 14A. The information called for by this Item with respect to certain relationships and transactions with management and others has been omitted pursuant to General Instruction G(3). This information is incorporated by reference from the Proxy Statement for the 1994 Annual Meeting. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) Documents filed as part of this report. 1. Financial Statements 2. Financial Statement Schedules The financial statements and financial statement schedules filed as a part of this report are listed in the "Index to Consolidated Financial Statements and Financial Statement Schedules" on page 29. The index, statements and schedules are incorporated herein by reference. 3. Exhibits required by Item 601 of Regulation S-K A list of the exhibits required by Item 601 of Regulation S-K and filed as part of this report is set forth in the Index to Exhibits on page 63, which immediately precedes such exhibits. Certain instruments defining the rights of holders of long-term debt of the Company and its consolidated subsidiaries are not filed as exhibits to this report because the total amount of securities authorized thereunder does not exceed ten percent of the total assets of the Company on a consolidated basis. The Company hereby agrees to furnish the Securities and Exchange Commission copies of such instruments upon request. (b) Reports on Form 8-K. No reports on Form 8-K were filed for the three months ended December 31, 1993. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Tandy Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TANDY CORPORATION March 30, 1994 /s/ John V. Roach ______________________ John V. Roach Chairman of the Board, Chief Executive Officer and President Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Tandy Corporation has duly caused this report to be signed on its behalf by the following persons in the capacities indicated on this 30th day of March, 1994. Signature Title /s/ John V. Roach Chairman of the Board, Chief ___________________________ John V. Roach Executive Officer and President (Chief Executive Officer) /s/ William C. Bousquette Executive Vice President and ___________________________ William C. Bousquette Chief Financial Officer (Principal Financial Officer) /s/ Richard L. Ramsey Vice President and Controller ___________________________ Richard L. Ramsey (Principal Accounting Officer) /s/ James I. Cash, Jr. Director ___________________________ James I. Cash, Jr. /s/ Caroline R. Hunt Director ___________________________ Caroline R. Hunt /s/ Lewis F. Kornfeld, Jr. Director ___________________________ Lewis F. Kornfeld, Jr. /s/ Jack L. Messman Director ___________________________ Jack L. Messman /s/ William G. Morton Director ___________________________ William G. Morton /s/ Thomas G. Plaskett Director ___________________________ Thomas G. Plaskett /s/ William T. Smith Director ___________________________ William T. Smith /s/ Alfred J. Stein Director ___________________________ Alfred J. Stein /s/ William E.Tucker Director ___________________________ William E. Tucker /s/ Jesse L. Upchurch Director ___________________________ Jesse L. Upchurch /s/ John A. Wilson Director ___________________________ John A. Wilson TANDY CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES Page Report of Independent Accountants. . . . . . . . . . 30 Consolidated Statements of Income for the year ended December 31, 1993, the six months ended December 31, 1992 and each of the two years ended June 30, 1992. . . . . . . . . . . . . . . . . . . 31 Consolidated Balance Sheets at December 31, 1993 and December 31, 1992. . . . . . . . . . . . . . . 32 Consolidated Statements of Cash Flows for the year ended December 31, 1993, the six months ended December 31, 1992 and each of the two years ended June 30, 1992. . . . . . . . . . . . . . . . . . . 33 Consolidated Statements of Stockholders' Equity for the year ended December 31, 1993, the six months ended December 31, 1992 and the two years ended June 30, 1992 . . . . . . . . . . . . . . . . . . 34-35 Notes to Consolidated Financial Statements . . . . . 36-60 Financial Statement Schedules: V-Property, Plant and Equipment. . . . . . . . . . 61 VI-Accumulated Depreciation and Amortization of Property, Plant and Equipment . . . . . . . . . . 62 X-Supplementary Income Statement Information . . . 62 Separate financial statements of Tandy Corporation have been omitted because Tandy is primarily an operating company and the amount of restricted net assets of consolidated and unconsolidated subsidiaries and Tandy's equity in undistributed earnings of 50% or less-owned companies accounted for by the equity method are not significant. All subsidiaries of Tandy Corporation are included in the consolidated financial statements. Financial statements of 50% or less-owned companies have been omitted because they do not, considered individually or in the aggregate, constitute a significant subsidiary. The financial statement schedules should be read in conjunction with the consolidated financial statements. All other schedules have been omitted because they are not applicable, not required or the information is included in the consolidated financial statements or notes thereto. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Tandy Corporation In our opinion, the consolidated financial statements listed in the accompanying index on page 29 present fairly, in all material respects, the financial position of Tandy Corporation and its subsidiaries (the "Company") at December 31, 1993 and 1992, and the results of their operations and their cash flows for the year ended December 31, 1993, the six months ended December 31, 1992, and for each of the two years in the period ended June 30, 1992 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for income taxes in 1993 and for extended warranty and service contracts in fiscal 1991. /s/ Price Waterhouse____________________ PRICE WATERHOUSE Fort Worth, Texas February 22, 1994 CONSOLIDATED STATEMENTS OF INCOME Tandy Corporation and Subsidiaries Year Ended Six Months Ended December 31, December 31, Year Ended June 30, __________________ __________________ _______________________________________ 1993 1992 1992 1991 Reclassified for discontinued operations. % of % of % of % of (In thousands, except per share amounts) Dollars Revenues Dollars Revenues Dollars Revenues Dollars Revenues ________________________________________________________________________________________________________________________ Net sales and operating revenues . . . . . . . . . . . . . . $4,102,551 100.0% $2,161,149 100.0% $3,649,284 100.0% $3,573,699 100.0% Cost of products sold. . . . . . . . . 2,382,607 58.1 1,221,231 56.5 1,926,390 52.8 1,831,702 51.3 __________ _____ __________ _____ __________ _____ __________ _____ Gross profit . . . . . . . . . . . . . 1,719,944 41.9 939,918 43.5 1,722,894 47.2 1,741,997 48.7 __________ _____ __________ _____ __________ _____ __________ _____ Expenses: Selling, general and administrative . . . . . . . . . . . 1,354,676 33.0 761,799 35.2 1,342,120 36.8 1,347,540 37.7 Depreciation and amortization . . . . . . . . . . . . 79,944 1.9 39,960 1.9 74,521 2.0 71,208 2.0 Net interest income. . . . . . . . . . (25,831) (0.6) (12,758) (0.6) (24,245) (0.6) (28,559) (0.8) Provision for restructuring costs . . -- -- 48,000 2.2 -- -- 8,531 0.2 __________ _____ __________ _____ __________ _____ __________ _____ 1,408,789 34.3 837,001 38.7 1,392,396 38.2 1,398,720 39.1 __________ _____ __________ _____ __________ _____ __________ _____ Income before income taxes, discontinued operations and cumulative effect of change in accounting principle . . . . . . . . 311,155 7.6 102,917 4.8 330,498 9.0 343,277 9.6 Provision for income taxes . . . . . . 115,523 2.8 35,236 1.6 119,785 3.3 123,342 3.4 __________ _____ __________ _____ __________ _____ __________ _____ Income from continuing operations . . 195,632 4.8 67,681 3.2 210,713 5.7 219,935 6.2 __________ _____ __________ _____ __________ _____ __________ _____ Loss from discontinued operations: Operating loss, net of tax . . . . . (57,619) (1.4) (63,875) (3.0) (26,866) (0.7) (13,872) (0.4) Loss on disposal, net of tax . . . . (54,178) (1.3) -- -- -- -- -- -- __________ _____ __________ _____ __________ _____ __________ _____ (111,797) (2.7) (63,875) (3.0) (26,866) (0.7) (13,872) (0.4) __________ _____ __________ _____ __________ _____ __________ _____ Income before cumulative effect of change in accounting principle . . . . . . . . 83,835 2.1 3,806 0.2 183,847 5.0 206,063 5.8 Cumulative effect on prior years of change in accounting principle, net of taxes . . . . . . . . . . . . 13,014 0.3 -- -- -- -- (10,619) (0.3) __________ _____ __________ _____ __________ _____ __________ _____ Net income . . . . . . . . . . . . . . $ 96,849 2.4% $ 3,806 0.2% $ 183,847 5.0% $ 195,444 5.5% __________ _____ __________ _____ __________ _____ __________ _____ __________ _____ __________ _____ __________ _____ __________ _____ Net income per average common and common equivalent share: Income from continuing operations . . $ 2.48 $ 0.86 $ 2.60 $ 2.75 Loss from discontinued operations . . (1.47) (0.84) (0.34) (0.17) __________ __________ __________ __________ Income before cumulative effect of change in accounting principle . . . 1.01 0.02 2.26 2.58 Cumulative effect on prior years of change in accounting principle, net of taxes . . . . . . . . . . . . 0.17 -- -- (0.14) __________ __________ __________ __________ Net income per average common and common equivalent share . . . . . . $ 1.18 $ 0.02 $ 2.26 $ 2.44 __________ __________ __________ __________ __________ __________ __________ __________ Average common and common equivalent shares outstanding . . . 76,184 75,559 79,011 78,258 __________ __________ __________ __________ __________ __________ __________ __________ The accompanying notes are an integral part of these financial statements.
CONSOLIDATED BALANCE SHEETS Tandy Corporation and Subsidiaries Reclassified for discontinued operations. December 31, (In thousands) ___________________________ 1993 1992 ______________________________________________________________________________________________________ Assets Current assets: Cash and short-term investments. . . . . . . . . . . . . . . . . . . . $ 213,235 $ 112,626 Accounts and notes receivable, less allowance for doubtful accounts. . 582,443 797,748 Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,276,302 1,472,365 Deferred tax and other current assets. . . . . . . . . . . . . . . . . 88,005 162,012 __________ __________ Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 2,159,985 2,544,751 __________ __________ Property, plant and equipment, at cost, less accumulated depreciation. . 463,738 546,585 Investment in discontinued operations. . . . . . . . . . . . . . . . . . 405,664 -- Other assets, net of accumulated amortization . . . . . . . . . . . . . 189,712 290,092 __________ __________ $3,219,099 $3,381,428 __________ __________ __________ __________ Liabilities and Stockholders' Equity Current liabilities: Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 346,164 $ 375,006 Subordinated debentures, net of unamortized bond discount . . . . . . 31,739 -- Current portion of guarantee of TESOP indebtedness . . . . . . . . . . 10,050 10,700 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 279,942 245,966 Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 349,057 421,158 Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . 14,690 13,880 __________ __________ Total current liabilities. . . . . . . . . . . . . . . . . . . . . . 1,031,642 1,066,710 __________ __________ Notes payable, due after one year. . . . . . . . . . . . . . . . . . . . 127,708 223,218 Guarantee of TESOP indebtedness. . . . . . . . . . . . . . . . . . . . . 58,930 68,980 Subordinated debentures, net of unamortized bond discount . . . . . . . -- 30,580 Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . -- 53,984 Other non-current liabilities. . . . . . . . . . . . . . . . . . . . . . 50,069 49,605 __________ __________ Total other liabilities 236,707 426,367 __________ __________ Stockholders' equity: Preferred stock, no par value, 1,000,000 shares authorized Series A junior participating, 100,000 shares authorized and none issued -- -- Series B convertible, 100,000 shares authorized and issued . . . . 100,000 100,000 Series C PERCS, 150,000 shares authorized and issued . . . . . . . . 429,982 429,982 Common stock, $1 par value, 250,000,000 shares authorized with 85,645,000 shares issued. . . . . . . . . . . . . . . . . . . . 85,645 85,645 Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . 85,752 86,414 Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,028,041 2,006,174 Foreign currency translation effects . . . . . . . . . . . . . . . . . 1,003 (11,056) Common stock in treasury, at cost, 21,689,000, and 22,419,000 shares, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . (707,331) (726,861) Unearned deferred compensation related to TESOP . . . . . . . . . . . (72,342) (81,947) __________ __________ Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . 1,950,750 1,888,351 Commitments and contingent liabilities . . __________ __________ $3,219,099 $3,381,428 __________ __________ __________ __________ The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS Tandy Corporation and Subsidiaries Six Months Year Ended Ended Year Ended Reclassified for discontinued operations. December 31, December 31, June 30, (In thousands) ____________ ____________ ________________________ 1993 1992 1992 1991 __________________________________________________________________________________________________________________ Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 96,849 $ 3,806 $ 183,847 $ 195,444 Adjustments to reconcile net income to net cash provided by operating activities: Loss reserve on disposal of discontinued operations . 54,178 -- -- -- Reserve for restructuring. . . . . . . . . . . . . . . -- 87,500 -- 13,753 Cumulative effect on prior years of change in accounting principle, net of taxes . . . . . . . . . (13,014) -- -- 10,619 Depreciation and amortization. . . . . . . . . . . . . 98,571 53,502 103,281 99,698 Deferred income taxes and other items . . . . . . . . 11,552 (29,097) 9,302 (29,633) Provision for credit losses and bad debts . . . . . . 57,491 41,483 67,388 60,643 Gain on sale of subsidiary, assets of which were primarily real estate . . . . . . . . . . . . . -- -- (18,987) -- Changes in operating assets and liabilities: Securitization of customer receivables . . . . . . -- -- -- 350,000 Receivables. . . . . . . . . . . . . . . . . . . . 30,133 (107,295) (121,719) (256,445) Inventories. . . . . . . . . . . . . . . . . . . . (63,965) (81,069) (89,441) 151,339 Other current assets . . . . . . . . . . . . . . . 16,158 (11,882) (2,955) (2,028) Accounts payable, accrued expenses and income taxes 34,341 56,732 16,066 23,963 _________ _________ _________ _________ Net cash provided by operating activities . . . . . . . . 322,294 13,680 146,782 617,353 _________ _________ _________ _________ Investing activities: Additions to property, plant and equipment . . . . . . . . (129,287) (69,661) (127,495) (151,098) Proceeds from sale of divested operations . . . . . . . . 111,988 -- -- -- Proceeds from sale of subsidiary, assets of which were primarily real estate . . . . . . . . . . -- -- 20,293 -- Purchase of InterTAN's bank debt and restructuring of working capital . . . . . . . . . . . . . . . . . . . (31,663) -- -- -- Other investing activities . . . . . . . . . . . . . . . . (3,187) (20,510) 5,012 10,599 _________ _________ _________ _________ Net cash used by investing activities . . . . . . . . . . (52,149) (90,171) (102,190) (140,499) _________ _________ _________ _________ Financing activities: Purchases of treasury stock. . . . . . . . . . . . . . . . (27,650) (24,595) (527,773) (83,086) Sales of treasury stock to employee stock purchase program . . . . . . . . . . . . . . . . . 42,067 25,412 49,590 50,383 Issuance of Series C PERCS . . . . . . . . . . . . . . . . -- -- 429,982 -- Issuance of preferred stock to TESOP . . . . . . . . . . . -- -- -- 100,000 Dividends paid, net of taxes . . . . . . . . . . . . . . . (74,873) (37,443) (56,132) (51,478) Changes in short-term borrowings-net . . . . . . . . . . . (46,885) 186,917 57,533 (598,763) Additions to long-term borrowings. . . . . . . . . . . . . -- 1,043 21,071 210,167 Repayments of long-term borrowings . . . . . . . . . . . . (62,195) (68,671) (98,702) (52,981) _________ _________ _________ _________ Net cash provided (used) by financing activities . . . . . (169,536) 82,663 (124,431) (425,758) _________ _________ _________ _________ Increase (decrease) in cash and short-term investments . . . . . . . . . . . . . . . . . 100,609 6,172 (79,839) 51,096 Cash and short-term investments at the beginning of the year . . . . . . . . . . . . . . 112,626 106,454 186,293 135,197 _________ _________ _________ _________ Cash and short-term investments at the end of the year . . . . . . . . . . . . . . . . . $ 213,235 $ 112,626 $ 106,454 $ 186,293 _________ _________ _________ _________ _________ _________ _________ _________ The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Tandy Corporation and Subsidiaries Common Stock Preferred ___________________ (In thousands) Stock Shares Dollars _________________________________________________________________________________________________ Balance at June 30, 1990 . . . . . . . . . . . . . . . . . $ -- 95,645 $ 95,645 Purchase of treasury stock . . . . . . . . . . . . . . . . -- -- -- Foreign currency translation adjustments, net of taxes . . -- -- -- Sale of treasury stock to SPP. . . . . . . . . . . . . . . -- -- -- Exercise of stock options. . . . . . . . . . . . . . . . . -- -- -- GRiD earn out. . . . . . . . . . . . . . . . . . . . . . . -- -- -- Retirement of treasury stock . . . . . . . . . . . . . . . -- (10,000) (10,000) Issuance of 100,000 shares of Series B convertible shares 100,000 -- -- Series B convertible stock dividends, net of taxes of $2,337,000 . . . . . . . . . . . . . . . . . . . . . . . -- -- -- TESOP deferred compensation earned . . . . . . . . . . . . -- -- -- Common stock dividends declared. . . . . . . . . . . . . . -- -- -- Net income . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- ________ _______ ________ Balance at June 30, 1991 . . . . . . . . . . . . . . . . . 100,000 85,645 85,645 Purchase of treasury stock . . . . . . . . . . . . . . . . -- -- -- Tender offer for common stock. . . . . . . . . . . . . . . -- -- -- Foreign currency translation adjustments, net of taxes . . -- -- -- Sale of treasury stock to SPP. . . . . . . . . . . . . . . -- -- -- Exercise of stock options. . . . . . . . . . . . . . . . . -- -- -- Issuance of 150,000 shares of Series C PERCS . . . . . . . 429,982 -- -- Series B convertible stock dividends, net of taxes of $2,530,000 . . . . . . . . . . . . . . . . . . . . . . . -- -- -- TESOP deferred compensation earned . . . . . . . . . . . . -- -- -- Series C PERCS dividends . . . . . . . . . . . . . . . . . -- -- -- Common stock dividends declared. . . . . . . . . . . . . . -- -- -- Net income . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- ________ _______ ________ Balance at June 30, 1992 . . . . . . . . . . . . . . . . . 529,982 85,645 85,645 Purchase of treasury stock . . . . . . . . . . . . . . . . -- -- -- Foreign currency translation adjustments, net of taxes . . -- -- -- Sale of treasury stock to SPP. . . . . . . . . . . . . . . -- -- -- Exercise of stock options. . . . . . . . . . . . . . . . . -- -- -- Series B convertible stock dividends, net of taxes of $1,246,000 . . . . . . . . . . . . . . . . . . . . . . . -- -- -- TESOP deferred compensation earned . . . . . . . . . . . . -- -- -- Series C PERCS dividends . . . . . . . . . . . . . . . . . -- -- -- Common stock dividends declared. . . . . . . . . . . . . . -- -- -- Net income . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- ________ _______ ________ Balance at December 31, 1992 . . . . . . . . . . . . . . . 529,982 85,645 85,645 Purchase of treasury stock . . . . . . . . . . . . . . . . -- -- -- Foreign currency translation adjustments, net of taxes . . -- -- -- Sale of treasury stock to SPP. . . . . . . . . . . . . . . -- -- -- Exercise of stock options. . . . . . . . . . . . . . . . . -- -- -- Series B convertible stock dividends, net of taxes of $2,497,000 . . . . . . . . . . . . . . . . . . . . . . . -- -- -- TESOP deferred compensation earned . . . . . . . . . . . . -- -- -- Series C PERCS dividends . . . . . . . . . . . . . . . . . -- -- -- Repurchase of preferred stock. . . . . . . . . . . . . . . -- -- -- Common stock dividends declared. . . . . . . . . . . . . . -- -- -- Net income . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- ________ _______ ________ Balance at December 31, 1993 . . . . . . . . . . . . . . . $529,982 85,645 $ 85,645 ________ _______ ________ ________ _______ ________
Foreign Treasury Stock Additional Currency Unearned ___________________ Paid-In Retained Translation Deferred Shares Dollars Capital Earnings Effects Compensation Total ____________________________________________________________________________________________________ (16,513) $(634,739) $132,750 $2,121,405 $ 8,435 $ -- $1,723,496 (2,933) (83,086) -- -- -- -- (83,086) -- -- -- -- (9,633) -- (9,633) 1,667 62,161 (11,778) -- -- -- 50,383 53 1,867 (5) -- -- -- 1,862 476 15,974 (2,167) -- -- -- 13,807 10,000 370,670 (13,150) (347,520) -- -- -- -- -- -- -- -- (100,000) -- -- -- -- (4,538) -- -- (4,538) -- -- -- -- -- 5,967 5,967 -- -- -- (46,940) -- -- (46,940) -- -- -- 195,444 -- -- 195,444 _______ _________ ________ __________ _______ _________ __________ (7,250) (267,153) 105,650 1,917,851 (1,198) (94,033) 1,846,762 (3,521) (96,348) -- -- -- -- (96,348) (13,500) (433,575) -- -- -- -- (433,575) -- -- -- -- 3,477 -- 3,477 1,795 62,256 (12,666) -- -- -- 49,590 20 688 -- -- -- -- 688 -- -- -- -- -- -- 429,982 -- -- -- (4,911) -- -- (4,911) -- -- -- -- -- 8,233 8,233 -- -- -- (12,573) -- -- (12,573) -- -- -- (44,432) -- -- (44,432) -- -- -- 183,847 -- -- 183,847 _______ _________ ________ __________ _______ _________ __________ (22,456) (734,132) 92,984 2,039,782 2,279 (85,800) 1,930,740 (959) (25,000) -- -- -- -- (25,000) -- -- -- -- (13,335) -- (13,335) 987 31,982 (6,570) -- -- -- 25,412 9 289 -- -- -- -- 289 -- -- -- (2,419) -- -- (2,419) -- -- -- -- -- 3,853 3,853 -- -- -- (16,050) -- -- (16,050) -- -- -- (18,945) -- -- (18,945) -- -- -- 3,806 -- -- 3,806 _______ _________ ________ __________ _______ _________ __________ (22,419) (726,861) 86,414 2,006,174 (11,056) (81,947) 1,888,351 (763) (24,749) -- -- -- -- (24,749) -- -- -- -- 12,059 -- 12,059 1,311 42,292 (225) -- -- -- 42,067 182 5,882 (437) -- -- -- 5,445 -- -- -- (4,638) -- -- (4,638) -- -- -- -- -- 9,605 9,605 -- -- -- (32,100) -- -- (32,100) -- (3,895) -- -- -- -- (3,895) -- -- -- (38,244) -- -- (38,244) -- -- -- 96,849 -- -- 96,849 _______ _________ ________ __________ _______ _________ __________ (21,689) $(707,331) $ 85,752 $2,028,041 $ 1,003 $ (72,342) $1,950,750 _______ _________ ________ __________ _______ _________ __________ _______ _________ ________ __________ _______ _________ __________
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Tandy Corporation and Subsidiaries NOTE 1-DESCRIPTION OF BUSINESS Tandy Corporation ("Tandy" or the "Company") is engaged in consumer electronics retailing including the retail sale of personal computers. Radio Shack is the largest of Tandy's retail store systems with company-owned stores and dealer/franchise outlets. The Tandy Name Brand Retail Group includes McDuff Electronics mall stores and Supercenters, VideoConcepts mall stores and The Edge in Electronics stores. Tandy also operates the Computer City and Incredible Universe store chains. Additionally, Tandy continues to operate certain related retail support groups and consumer electronics manufacturing businesses. NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts of Tandy and its wholly owned subsidiaries, including its credit and insurance subsidiaries. Investments in 20% to 50% owned companies are accounted for on the equity method. The manufacturing and marketing operations included in the divestment plan have been accounted for as discontinued operations. See Note 3 for further information relating to discontinued operations. Significant intercompany transactions are eliminated in consolidation. CHANGE IN FISCAL YEAR: On January 10, 1993, the Board of Directors authorized the fiscal year of Tandy to be changed from June 30 to December 31 and as of December 31, 1992 this change was made. The fiscal periods of certain foreign operations end one month earlier than the Company's year end to facilitate their inclusion in the consolidated financial statements. FOREIGN CURRENCY TRANSLATION: In accordance with the Financial Accounting Standards Board (the "FASB") Statement No. 52, "Foreign Currency Translation," balance sheet accounts of the Company's foreign operations are translated from foreign currencies into U.S. dollars at year end or historical rates while income and expenses are translated at the weighted average sales exchange rates for the year. Translation gains or losses related to net assets located outside the United States are shown as a separate component of stockholders' equity. Losses aggregating $19,803,000, net of tax, relating to discontinued operations were transferred from equity and charged to loss on disposal of discontinued operations during 1993. Gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the entity's functional currency) are included in net income. Such foreign currency transaction gains approximated $762,000 for the year ended December 31, 1993, $3,065,000 for the six months ended December 31, 1992 and $10,642,000 and $13,051,000 for fiscal years 1992 and 1991, respectively. CHANGE IN ACCOUNTING PRINCIPLE-PROVISION FOR INCOME TAXES: In January 1993, the Company adopted Statement of Financial Accounting Standards ("FAS") No. 109, "Accounting for Income Taxes" ("FAS 109") and applied the provisions prospectively. The adoption of FAS 109 changes the Company's method of accounting for income taxes from the deferred method ("APB 11") to an asset and liability approach. Previously, the Company deferred the past tax effects of timing differences between financial reporting and taxable income. The asset and liability approach requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The adjustments to the January 1, 1993 balance sheet to adopt FAS 109 totaled $13,014,000. Approximately $9,786,000 of this adjustment related to continuing operations and the remaining $3,228,000 was from discontinued operations. The aggregate amount of $13,014,000 is reflected in the accompanying 1993 Consolidated Statements of Income as the cumulative effect of change in accounting principle. It primarily represents the impact of adjusting deferred taxes to reflect the then current tax rate of 34% as opposed to the higher tax rates that were in effect when the deferred taxes originated. See Note 12 for further discussion of income taxes. CHANGE IN ACCOUNTING PRINCIPLE-EXTENDED WARRANTY AND SERVICE CONTRACTS: Tandy's retail operations offer extended warranty and service contracts on products sold. These contracts generally provide extended warranty coverage for periods of 12 to 48 months. The FASB issued Technical Bulletin No. 90-1, "Accounting for Separately Priced Extended Warranty and Product Maintenance Contracts" in December 1990. This bulletin requires revenues from sales of extended warranty and service contracts to be recognized ratably over the lives of the contracts. Costs directly related to sales of such contracts are to be deferred and charged to expense proportionately as the revenues are recognized. A loss is recognized on extended warranty and service contracts if the sum of the expected costs of providing services under the contracts exceeds related unearned revenue. During the fourth quarter of fiscal 1991, the Company elected to adopt this technical bulletin on a retroactive basis to the beginning of fiscal 1991 by restating the previously reported three quarters. The method of adoption included the application of this accounting change to all existing contracts outstanding at July 1, 1990 and to all contracts entered into during fiscal 1991. Prior to the adoption of this technical bulletin, the Company had recognized a portion of the extended warranty and service contract revenues immediately, deferred the remaining revenues which were recognized ratably over their contract lives and expensed associated costs as incurred. The effect of this change for fiscal 1991 was to decrease income before the cumulative effect of the change in accounting by $3,708,000 ($.05 per share). The cumulative effect of the change on years prior to 1991, net of income taxes of $5,471,000, was to decrease 1991 net income by $10,619,000 ($.14 per share). CASH AND SHORT-TERM INVESTMENTS: Cash on hand in stores, deposits in banks and short-term investments with original maturities of three months or less are considered cash and cash equivalents. Short-term investments are carried at cost, which approximates market value. ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS: CREDIT OPERATIONS-The customer receivables of the credit operations are classified as current assets, including amounts which are contractually due after one year. This is consistent with retail industry practices. Finance charges, late charges and returned check fees arising from the Company's private label credit cards are recognized when earned, as interest income. The Company's policy is to write off accounts after 210 days past the initial billing date without payment of the amount due or whenever deemed uncollectible by management, whichever is sooner. Collection efforts continue subsequent to write-off. The Company is charged a fee by an outside accounts receivable processing service for establishing new accounts. These initial direct costs are capitalized and amortized on a straight-line basis over a period of 84 months, the estimated life over which the account will be used by a customer. These costs are shown in the accompanying consolidated balance sheets as a part of the related accounts receivable. Amortization of these loan origination costs are included as a reduction of interest income in the accompanying consolidated statements of income. Costs to process accounts on an ongoing basis are expensed as incurred. OTHER CUSTOMER RECEIVABLES-An allowance for doubtful accounts is provided when accounts are determined to be uncollectible. Concentrations of credit risk with respect to customer receivables are limited due to the large number of customers comprising the Company's base and their location in many different geographic areas of the country. INVENTORIES: Inventories are stated at the lower of cost (principally based on average cost) or market value. PROPERTY AND EQUIPMENT: For financial reporting purposes, depreciation and amortization are primarily calculated using the straight-line method, which amortizes the cost of the assets over their estimated useful lives. The ranges of estimated useful lives are: _____________________________________________________________ Buildings. . . . . . . . . . . . . . . . . . . .10-40 years Equipment. . . . . . . . . . . . . . . . . . . . 2-15 years Leasehold improvements . . . . . . . . . . . . .the shorter of the life of the improvements or the term of the related lease and certain renewal periods _____________________________________________________________ When depreciable assets are sold or retired, the related cost and accumulated depreciation are removed from the accounts. Any gains or losses are included in selling, general and administrative expenses. Major additions and betterments are capitalized. Maintenance and repairs which do not materially improve or extend the lives of the respective assets are charged to operating expenses as incurred. AMORTIZATION OF EXCESS PURCHASE PRICE OVER NET TANGIBLE ASSETS OF BUSINESSES ACQUIRED: The excess purchase price is generally amortized over a 40-year period using the straight-line method and is classified as a non-current asset. FAIR VALUE OF FINANCIAL INSTRUMENTS: The fair value of financial instruments is determined by reference to various market data and other valuation techniques as appropriate. Unless otherwise disclosed, the fair values of financial instruments approximate their recorded values. REVENUES: Retail sales are recorded on the accrual basis. Credit service charges are recorded monthly on the basis of customer account balances. PRE-STORE OPENING EXPENSES: Direct incremental expenses associated with the openings of new stores are deferred and amortized over a twelve-month period from the date of the store opening. NET INCOME PER AVERAGE COMMON AND COMMON EQUIVALENT SHARE: Net income per average common and common equivalent share is computed by dividing net income less the Series B convertible stock dividends, net of taxes, by the weighted average common and common equivalent shares outstanding during the period. Current year weighted average share calculations include 12,457,000 common shares relating to the Preferred Equity Redemption Convertible Preferred Stock ("PERCS"). Per share amounts and the weighted average number of shares outstanding for the six-month period ended December 31, 1992 and for the fiscal year ended June 30, 1992, have been retroactively restated to reflect the assumption that the PERCS would convert into 12,457,000 common shares in lieu of the maximum number of common shares of 15,000,000. The reduction is based upon Tandy's common stock price at December 31, 1993 being in excess of the conversion strike price thereby reducing the number of common shares that would be issued to PERCS shareholders upon conversion. Earnings per share amounts previously reported by the Company for the six months ended December 31, 1992 and the fiscal year ended June 30, 1992 were $0.84 and $2.58 for income from continuing operations, respectively, and $0.02 and $2.24 for net income, respectively. Fiscal 1991 and 1990 were not effected as the PERCS were not outstanding during these years. The Series B convertible stock dividends, net of taxes, were $7,136,000 for the fiscal year ended December 31, 1993, $2,419,000 for the six months ended December 31, 1992, $4,911,000 in fiscal 1992 and $4,538,000 in fiscal 1991. The taxes netted against these amounts were $0, $1,246,000, $2,530,000 and $2,337,000, respectively. Upon adoption of FAS 109 as of January 1, 1993 and in accordance with EITF 92-3, preferred dividends utilized in the earnings per share calculation can no longer be reduced for associated tax benefits paid on unallocated preferred stock held by an employee stock ownership plan. As the Series C PERCS mandatorily convert into common stock, they are considered outstanding common stock and the dividends are not deducted from net income for purposes of calculating net income per average common and common equivalent share. Dividends on the Series C PERCS, which were issued in February 1992, were $32,100,000 for the year ended December 31, 1993, $16,050,000 for the six months ended December 31, 1992 and $12,573,000 for the year ended June 30, 1992. Fully diluted earnings per common and common equivalent share are not presented since dilution is less than 3%. NOTE 3-DISCONTINUED OPERATIONS On June 25, 1993, the Board of Directors of Tandy adopted a formal plan of divestiture under which it would sell its computer manufacturing and marketing businesses, the O'Sullivan Industries, Inc. ready-to-assemble furniture manufacturing and related marketing business, the Memtek Products division and the Lika printed circuit board business. The divestiture plan replaced the Company's plan to spin off all of the Company's manufacturing and marketing businesses as described in Tandy's Transition Report on Form 10-K/A-4 for the six-month period ended December 31, 1992. In connection with the plan of divestiture the Company accounted for the divestiture of these businesses as discontinued operations and recognized an after-tax charge of $70,000,000 in its quarter ended June 30, 1993. This charge was subsequently reduced by approximately $15,822,000 in the quarter ended December 31, 1993. The reduction of the reserve previously taken resulted from the better than anticipated sales price received for O'Sullivan Industries Holdings, Inc. partially offset by additional foreign currency translation losses and below plan operating results of the divested companies during the divestment period, net of related income tax adjustments. Prior year results of operations have been reclassified to reflect the discontinued operations treatment. Computer Manufacturing. In furtherance of the divestiture plan, the Company closed the sale of the computer manufacturing and marketing businesses to AST Research, Inc. ("AST") on July 13, 1993. In accordance with the terms of the definitive agreement between Tandy and AST, Tandy received $15,000,000 upon closing of the sale. The balance of the purchase price of $90,000,000 (as adjusted post-closing based on the results of an audit of the assets and liabilities conveyed) is payable by a promissory note. The promissory note is payable in three years and interest is accrued and paid annually. The interest rate on the promissory note is currently 3.75% per annum and is adjusted annually, not to exceed 5% per annum. The terms of the promissory note stipulate that the outstanding principal balance may be paid at maturity at AST's option in cash or the common stock of AST. However, at Tandy's option not more than 50% of the initial principal balance may be paid in common stock of AST. The promissory note is supported by a standby letter of credit in the amount of the lesser of $100,000,000 or 70% of the outstanding principal amount of the promissory note. At December 31, 1993, the standby letter of credit approximated $67,704,000. Accounts receivable relating to the computer operations, approximating $83,000,000 at June 30, 1993, inured to the benefit of Tandy upon collection. At December 31, 1993, the balance of the remaining accounts receivable, net of allowance for doubtful accounts, was $7,700,000. Tandy also retained certain inventory which it intends to liquidate before June 30, 1994. At December 31, 1993, this inventory amounted to approximately $3,700,000. In October 1993, the Company sold its computer marketing operations in France to AST, together with certain other multimedia assets and additional Swedish inventory, for an aggregate of approximately $6,700,000, which was evidenced by an increase in the amount of the promissory note described above to $96,700,000. The Company has discounted this note by $2,000,000 and the discount will be recognized as income using the effective interest rate method over the life of the note. Memtek Products. On November 10, 1993, the Company executed a definitive agreement with Hanny Magnetics (B.V.I.) Limited, a British Virgin Islands corporation ("Hanny") to purchase certain assets of the Company's Memtek Products operations, including the license agreement with Memorex Telex, N.V. for the use of the Memorex trademark on licensed consumer electronics products. This sale closed on December 16, 1993. As of December 31, 1993, Tandy has received payments of $62,500,000, recorded a $7,102,000 receivable from Hanny for the remaining purchase price and retained approximately $61,000,000 in accounts receivable and certain other assets for liquidation. Hanny is a subsidiary of Hanny Magnetics (Holdings) Limited, a Bermuda corporation, listed on the Hong Kong Stock Exchange. At December 31, 1993, accounts receivable, net of related allowance for doubtful accounts, retained by Tandy approximated $40,100,000. O'Sullivan Industries. On November 23, 1993, the Company announced that it would sell the common stock of O'Sullivan Industries, Inc. ("O'Sullivan") in an initial public offering. On January 27, 1994 the Company announced that it had reached an agreement with the underwriters to sell O'Sullivan Industries Holdings, Inc., the parent company of O'Sullivan, common stock to the public at $22 per share. The net proceeds realized by Tandy in the initial public offering, together with the $40,000,000 cash dividend from O'Sullivan, approximated $350,000,000. The initial public offering closed on February 2, 1994. Pursuant to a Tax Sharing and Tax Benefit Reimbursement Agreement between Tandy and O'Sullivan Industries Holdings, Inc., the Company will receive payments from O'Sullivan resulting from an increased tax basis of O'Sullivan's assets thereby increasing tax deductions and accordingly, reducing income taxes payable by O'Sullivan. The amount to be received by the Company each year will approximate the federal tax benefit expected to be realized with respect to the increased tax basis. These payments will be made over a 15-year time period. The Company will recognize these payments as additional sale proceeds and gain in the year in which the payments become due and payable to the Company. Lika. On January 24, 1994, the Company announced that it had signed a definitive agreement to sell its manufacturing facilities which make Lika printed circuit boards. This divestiture is expected to close by June 1994 and is expected to yield approximately $17,000,000 in proceeds, including cash, a note and the liquidation of certain retained assets. In connection with the computer manufacturing sale and the Memtek Products sale, the Company agreed to retain certain liabilities primarily relating to warranty obligations on products sold prior to the sale. Management believes that accrued reserves, as reflected on its December 31, 1993 balance sheet, are adequate to cover estimated future warranty obligations for the products and for any remaining costs to dispose of these operations. With the closing of the Lika transaction, the divestiture program announced in June 1993 will be complete. Proceeds from the formal divestiture plan should total approximately $715,000,000 including net income tax benefits of $16,600,000 and notes receivable of approximately $100,000,000 that mature by the end of 1996. The proceeds from the divestitures are being used to reduce short-term debt and for the expansion of the Incredible Universe and Computer City store operations. The losses from discontinued operations prior to the measurement date are outlined in the table below. Year Ended Six Months Ended Year Ended December 31, December 31, June 30, ____________ _________________ __________________ (In thousands) 1993 1992 1992 1991 ______________________________________________________________________________________________ Net sales and operating revenues . . . $ 368,137 $500,861 $940,591 $954,821 _________ ________ ________ ________ _________ ________ ________ ________ Loss from discontinued operations: Operating loss before income tax . . . $ (59,549) $(72,665) $(30,503) $ (4,387) Income tax benefit (provision) . . . . 1,930 8,790 3,637 (9,485) _________ ________ ________ ________ Operating loss . . . . . . . . . . . . (57,619) $(63,875) $(26,866) $(13,872) _________ ________ ________ ________ ________ ________ ________ Estimated loss on disposal . . . . . . (63,778) Estimated operating loss during phase out period . . . . . . . . . . (7,000) Income tax benefit . . . . . . . . . . 16,600 _________ Loss on disposal . . . . . . . . . . . (54,178) _________ Total loss from discontinued operations $(111,797) _________ _________
A loss from the sale of the Company's computer manufacturing operations to AST, inclusive of losses from operations during the phase out period, is offset by the gains from the sale of Memtek Products, O'Sullivan and Lika, also inclusive of results of operations during the phase out period. Interest expense of $4,608,000 allocated through the measurement date of June 30, 1993 and $5,170,000 for the six months ended December 31, 1992, have been allocated to discontinued operations based on the percentage of the net assets of discontinued operations to total net assets. At December 31, 1993 net assets of discontinued operations consist primarily of inventories, accounts receivable and property, plant and equipment, primarily relating to O'Sullivan and Lika operations. NOTE 4-RESTRUCTURING AND OTHER CHARGES The Company adopted a plan resulting in business restructuring charges during the six months ended December 31, 1992 designed to improve the Company's competitiveness and future profitability. The pre-tax charge of $48,000,000 related primarily to the closing of approximately 110 of the 432 Tandy Name Brand Retail Group stores, mainly McDuff Supercenters in major market areas and, to a lesser extent, the elimination of certain product lines. Some product lines were reduced or eliminated after consideration of competitive factors and market trends. Additional restructuring charges of $39,500,000 related to discontinued operations were recognized in the six months ending December 31, 1992 and primarily related to the write-off of goodwill, the rationalization of certain product lines and the closure of certain operations. This restructuring charge is included in the operating loss from discontinued operations. In fiscal 1991 an $8,531,000 charge was incurred for restructuring. The charges consisted principally of costs associated with closings of Radio Shack computer centers. Restructuring charges relating to continuing operations are presented in the accompanying income statements as a separate line item. NOTE 5-SHORT-TERM INVESTMENTS The weighted average interest rate was 3.2% at December 31, 1993 for short-term investments totaling $153,839,000. The weighted average interest rate was 3.5% at December 31, 1992 for short-term investments totaling $40,913,000. NOTE 6-ACCOUNTS AND NOTES RECEIVABLE Accounts and Notes Receivable December 31, __________________ (In thousands) 1993 1992 ________________________________________________________________________________ Gross customer receivable balances of credit operations. . $ 797,550 $834,321 Less securitized customer receivables . . . . . . . . . . (350,000) (350,000) _________ ________ Customer receivable balances of credit operations . . . . 447,550 484,321 Plus initial direct costs, net of amortization of $5,302,000 and $4,018,000, respectively . . . . . . . . 9,202 7,351 _________ ________ Net customer receivable balances of credit operations . . 456,752 491,672 Trade accounts receivable. . . . . . . . . . . . . . . . . 114,143 85,246 Receivable from InterTAN . . . . . . . . . . . . . . . . . 11,650 15,585 Other receivables. . . . . . . . . . . . . . . . . . . . . 22,238 26,257 Less allowance for doubtful accounts . . . . . . . . . . . (22,340) (21,945) _________ ________ Receivables related to continuing operations . . . . . . . 582,443 596,815 Receivables related to discontinued operations, net. . . . -- 200,933 _________ ________ $582,443 $797,748 _________ ________ _________ ________
Allowance for Doubtful Accounts Year Ended Six Months Ended Year Ended December 31, December 31, June 30, ____________ ________________ ________________ (In thousands) 1993 1992 1992 1991 __________________________________________________________________________________________________ Balance at the beginning of the year . . . . $ 21,945 $ 17,203 $ 16,359 $ 16,263 Provision for credit losses and bad debts included in selling, general and administrative expense. . . . . . . . . . . 55,043 38,735 62,509 53,049 Reserve allocated to securitized receivables (1,203) (2,033) (1,136) (12,126) Uncollected receivables written off, net of recoveries. . . . . . . . . . . . . (53,445) (31,960) (60,529) (40,827) ________ ________ ________ ________ Balance at the end of the year related to continuing operations. . . . . . . . . . . 22,340 21,945 17,203 16,359 Balance at the end of the year related to discontinued operations. . . . . . . . . . -- 8,849 8,208 15,604 ________ ________ ________ ________ Balance at the end of the year . . . . . . . $ 22,340 $ 30,794 $ 25,411 $ 31,963 ________ ________ ________ ________ ________ ________ ________ ________
Effective May 1, 1991, the Company transferred $573,500,000 of its customer receivables to a trust which, in turn, on June 18, 1991, sold $350,000,000 of certificates representing undivided interests in the trust in a public offering. Net proceeds from the sale of receivables approximated $346,000,000 and the Company recognized a gain of approximately $3,900,000 related to the transaction. At December 31, 1993 and 1992, all $350,000,000 of the certificates were outstanding and, accordingly, were not reflected in the Company's accounts receivable balances. The fair value of the certificates at December 31, 1993 was approximately $367,815,000. At December 31, 1993, the balance of the receivables in the trust approximated $651,700,000. The Company owns the remaining undivided interest in the trust not represented by the certificates and will continue to service the receivables for the trust. Cash flows generated from the receivables in the trust are dedicated to the payment of interest on the certificates which have an annual fixed interest rate of 8.25%, absorption of defaulted accounts in the trust and payment of servicing fees to the Company with any remaining cash flows remitted to the Company. In the event that such excess cash flows are not sufficient to absorb defaulted accounts, the Company is contingently liable up to a maximum amount of $136,100,000. Under this agreement the trust may issue additional series of certificates from time to time. Terms of any future series will be determined at the time of issuance. NOTE 7-PROPERTY, PLANT AND EQUIPMENT December 31, ____________________ (In thousands) 1993 1992 _____________________________________________________________ Land . . . . . . . . . . . . . . . . . . $ 32,346 $ 20,942 Buildings. . . . . . . . . . . . . . . . 174,126 156,783 Furniture, fixtures and equipment . . . 394,242 393,886 Leasehold improvements . . . . . . . . . 314,424 310,509 ________ ________ 915,138 882,120 Less accumulated depreciation. . . . . . 451,400 437,180 ________ ________ Property, plant and equipment related to continuing operations. . . . . . . . . 463,738 444,940 Property, plant and equipment related to discontinued operations, net . . . . . -- 101,645 ________ ________ $463,738 $546,585 ________ ________ ________ ________ NOTE 8-OTHER ASSETS Other assets includes the excess purchase price over net tangible assets of businesses acquired for continuing operations of $18,207,000 at December 31, 1993 and $18,728,000 at December 31, 1992. These amounts are net of accumulated amortization of $4,485,000, and $3,964,000, respectively. The balance at December 31, 1993 includes long-term receivables relating to InterTAN and AST of $126,384,000, net of discount of $22,198,000. See Notes 3 and 21 for a further description of the terms of the AST and InterTAN notes receivable. The balance at December 31, 1992 includes other assets relating to discontinued operations of approximately $207,864,000. NOTE 9-INDEBTEDNESS AND BORROWING FACILITIES Borrowings payable within one year are summarized in the accompanying short-term debt table on page 45. The short-term debt caption includes primarily domestic seasonal borrowings. The current portion of long-term debt at December 31, 1993 includes $82,701,000 of medium-term notes and other loans compared to $48,696,000 at December 31, 1992. The short-term debt additionally includes $31,739,000 of 10% subordinated debentures due June 30, 1994. This subordinated debenture has been called by the Company for redemption on April 1, 1994. Tandy's short-term credit facilities, including revolving credit lines, are summarized in the accompanying short-term borrowing facilities table found on page 46. A commercial paper program was established during fiscal 1991 for Tandy. The Company has a $400,000,000 committed facility in place for the commercial paper program. This facility is to be used only if maturing commercial paper cannot be repaid due to an inability to sell new paper. This facility is composed of two tranches of $200,000,000 each expiring in June 1994 with annual commitment fees for the tranches of 1/10 of 1% per annum and 3/20 of 1% per annum, respectively, whether used or unused. The commercial paper facility limits the amount of commercial paper that may be outstanding to a maximum of $400,000,000. Long-term debt at December 31, 1993 and December 31, 1992 totaled $186,638,000 and $322,778,000, respectively. Included in both years are $45,000,000 of 8.69% senior notes due January 15, 1995. These senior notes have been outstanding since February 7, 1990. Tandy completed a $500,000,000 shelf registration in January 1991 of which $400,000,000 was designated for medium-term notes. Tandy Credit's $400,000,000 shelf registration was amended in October 1990 to add a $200,000,000 Series B medium-term note program. At December 31, 1993 available borrowing capacity under Tandy's and Tandy Credit's medium-term note programs aggregated $429,200,000. Medium-term notes outstanding at December 31, 1993 totaled $125,479,00 compared 6to $148,900,000 at December 31, 1992. The weighted average coupon rates of medium-term notes outstanding at both of these dates was 8.7%. The Company established an employee stock ownership trust in June 1990. Further information on the trust and its related indebtedness, which is guaranteed by the Company, is detailed in the discussion of the Tandy Employees Stock Ownership Plan in Note 14. Long-term borrowings outstanding at December 31, 1993 mature as follows: (In thousands) _____________________________________________________________ 1994 . . . . . . . . . . . . . . . . . . . $124,490 1995 . . . . . . . . . . . . . . . . . . . 61,008 1996 . . . . . . . . . . . . . . . . . . . 22,678 1997 . . . . . . . . . . . . . . . . . . . 40,921 1998 . . . . . . . . . . . . . . . . . . . 37,331 1999 and thereafter. . . . . . . . . . . . 24,700 _____________________________________________________________ The fair value of the Company's long-term debt of $311,128,000 (including current portion) is approximately $328,516,000 at December 31, 1993. Consolidated interest expense was $39,707,000 for the year ended December 31, 1993, $20,532,000 for the six months ended December 31, 1992 and $43,154,000, and $70,313,000 for the years ended June 30, 1992 and 1991. Interest income, primarily related to the Company's credit card operations, totaled $65,538,000 for the year ended December 31, 1993, $33,290,000 for the six months ended December 31, 1992 and $67,399,000 and $98,872,000 for the years ended June 30, 1992 and 1991. Short-Term Debt December 31, _______________________ (In thousands) 1993 1992 _________________________________________________________________________________ Short-term bank debt . . . . . . . . . . . . . . . . . $ 90,612 $245,692 Current portion of long-term debt. . . . . . . . . . . 82,701 48,696 Commercial paper, less unamortized discount. . . . . . 172,851 63,879 ________ ________ 346,164 358,267 Current portion of guarantee of TESOP indebtedness . . 10,050 10,700 10% subordinated debentures due 1994, less unamortized discount of $692,000 . . . . . . . . . . 31,739 -- ________ ________ Total short-term debt related to continuing operations 387,953 368,967 Total short-term debt related to discontinued operations -- 16,739 ________ ________ Total short-term debt. . . . . . . . . . . . . . . . . $387,953 $385,706 ________ ________ ________ ________
Long-Term Debt December 31, ___________________ (In thousands) 1993 1992 ___________________________________________________________________________________ Notes payable with interest rates at December 31, 1993 ranging from 3.54% to 8.69% . . . . . . . . . . . . $ 84,930 $110,131 Medium-term notes payable with interest rates at December 31, 1993 ranging from 7.25% to 9.67% . . . 125,479 148,900 ________ ________ 210,409 259,031 Less portion due within one year included in current notes payable. . . . . . . . . . . . . . . . . . . . (82,701) (48,696) ________ ________ 127,708 210,335 ________ ________ Guarantee of TESOP indebtedness. . . . . . . . . . . . 68,980 79,680 Less current portion. . . . . . . . . . . . . . . . . (10,050) (10,700) ________ ________ 58,930 68,980 ________ ________ 10% subordinated debentures due 1994, less unamortized discount of $1,851,000 . . . . . . . . . . . . . . . -- 30,580 ________ ________ Total long-term debt related to continuing operations 186,638 309,895 Total long-term debt related to discontinued operations -- 12,883 ________ ________ Total long-term debt . . . . . . . . . . . . . . . . . $186,638 $322,778 ________ ________ ________ ________
Short-Term Borrowing Facilities Six Months Year Ended Ended Year Ended December 31, December 31, June 30, ____________ ____________ ____________________ (In thousands) 1993 1992 1992 1991 _____________________________________________________________________________________________________________ Domestic seasonal bank credit lines and bank money market lines: Lines available at period end . . . . . . . . . . $1,050,000 $1,255,000 $1,398,000 $1,125,000 Loans outstanding at period end . . . . . . . . . $ 90,000 $ 240,500 $ 15,000 $ 1,165 Compensating balance requirements . . . . . . . . None None None None Weighted average interest rate at period end . . . . . . . . . . . . . . . . . 3.6% 3.6% 4.0% 6.3% Weighted average of loans outstanding during period. . . . . . . . . . . . . . . . $ 168,901 $ 75,454 $ 20,394 $ 235,878 Highest month-end borrowings. . . . . . . . . . . $ 253,200 $ 255,000 $ 50,350 $ 526,540 Weighted average interest rate during period . . . . . . . . . . . . . . . . . . . 3.6% 3.6% 5.1% 8.2% Short-term foreign credit lines: Lines available at period end . . . . . . . . . . $ 143,685 $ 186,841 $ 340,704 $ 331,267 Loans outstanding at period end . . . . . . . . . $ 612 $ 21,257 $ 13,774 $ 41,110 Compensating balance requirements . . . . . . . . None None None None Weighted average interest rate at period end . . . . . . . . . . . . . . . . . 6.7% 9.1% 11.1% 9.8% Weighted average of loans outstanding during period. . . . . . . . . . . . . . . . $ 1,956 $ 22,590 $ 42,638 $ 76,610 Highest month-end borrowings. . . . . . . . . . . $ 4,382 $ 29,260 $ 61,637 $ 96,201 Weighted average interest rate during period . . . . . . . . . . . . . . . . . . . 4.0% 9.7% 13.9% 12.1% Letters of credit and banker's acceptance lines of credit: Lines available at period end . . . . . . . $ 526,000 $ 442,785 $ 410,000 $ 475,000 Acceptances outstanding at period end. . . . None None None None Compensating balance requirements. . . . . . None None None None Letters of credit open against outstanding purchase orders at period end . . . . . $ 124,701 $ 128,798 $ 232,791 $ 206,625 Commercial paper credit facilities: Commercial paper outstanding at period end. . . . . . . . . . . . . . . . . . . . . $ 172,851 $ 63,879 $ 109,295 $ 8,554 Weighted average interest rate at period end . . . . . . . . . . . . . . . . . 3.5% 3.8% 3.8% 6.1% Weighted average of commercial paper outstanding during period. . . . . . . . . . $ 174,494 $ 112,000 $ 80,601 $ 247,583 Highest month-end borrowings. . . . . . . . . . . $ 295,500 $ 312,250 $ 201,900 $ 346,782 Weighted average interest rate during period . . . . . . . . . . . . . . . . . . . 3.5% 3.5% 5.0% 7.6%
NOTE 10-LEASES Tandy leases rather than owns most of its facilities. The Radio Shack stores comprise the largest portion of Tandy's leased facilities. The Radio Shack, Tandy Name Brand Retail Group and Computer City stores are located primarily in major shopping malls, shopping centers or freestanding facilities owned by other companies. The Company owns most of the Incredible Universe stores. The store leases are generally based on a minimum rental plus a percentage of the store's sales in excess of a stipulated base figure. Radio Shack store leases average approximately 10 years, generally with renewal options. Tandy also leases distribution centers and office space. Capital leases are not material as the Company's operations are basically structured in a manner that precludes the need for significant financing or capital leases. Future minimum rent commitments at December 31, 1993 for all long-term noncancelable leases (net of immaterial amounts of sublease rent income) are in the following table. (In thousands) ------------------------------------------------------------- 1994 . . . . . . . . . . . . . . . . . . . $144,102 1995 . . . . . . . . . . . . . . . . . . . 140,105 1996 . . . . . . . . . . . . . . . . . . . 126,148 1997 . . . . . . . . . . . . . . . . . . . 109,907 1998 . . . . . . . . . . . . . . . . . . . 93,541 1999 and thereafter. . . . . . . . . . . . 305,763 ------------------------------------------------------------- Rent Expense Year Ended Six Months Ended Year Ended December 31, December 31, June 30, ____________ _________________ _________________ (In thousands) 1993 1992 1992 1991 _________________________________________________________________________________________________ Minimum rents. . . . . $200,183 $102,986 $201,794 $188,868 Contingent rents . . . 2,644 2,456 3,938 4,560 Sublease rent income . (426) (114) (1,059) (1,487) ________ ________ ________ ________ Total rent expense . $202,401 $105,328 $204,673 $191,941 ________ ________ ________ ________ ________ ________ ________ ________
Space Owned and Leased (Unaudited) Approximate Square Footage ____________________________________________________ at December 31, 1993 1992 ________________________ ________________________ (In thousands) Owned Leased Total Owned Leased Total ___________________________________________________________________________________ Retail Radio Shack. . . . . . . . . -- 10,767 10,767 -- 10,766 10,766 Computer City. . . . . . . . -- 940 940 -- 566 566 Name Brand Retail Group. . . 550 1,649 2,199 366 2,553 2,919 Other. . . . . . . . . . . . 275 -- 275 272 162 434 _____ ______ ______ _____ ______ ______ 825 13,356 14,181 638 14,047 14,685 Manufacturing. . . . . . . . 641 212 853 794 212 1,006 Warehouse and office . . . . 3,134 1,957 5,091 3,137 1,915 5,052 _____ ______ ______ _____ ______ ______ 4,600 15,525 20,125 4,569 16,174 20,743 _____ ______ ______ _____ ______ ______ _____ ______ ______ _____ ______ ______ Note: Square footage related to continuing operations only.
NOTE 11-ACCRUED EXPENSES December 31, ___________________ (In thousands) 1993 1992 ___________________________________________________________________________ Payroll and bonuses. . . . . . . . . . . . . . . $ 57,600 $ 38,222 Sales and payroll taxes. . . . . . . . . . . . . 44,790 38,887 Insurance. . . . . . . . . . . . . . . . . . . . 48,609 47,388 Deferred service contract income . . . . . . . . 102,223 97,044 Rent . . . . . . . . . . . . . . . . . . . . . . 22,093 20,117 Advertising. . . . . . . . . . . . . . . . . . . 25,546 27,506 Interest expense . . . . . . . . . . . . . . . . 7,358 8,262 Restructuring reserve. . . . . . . . . . . . . . 6,790 38,320 Other. . . . . . . . . . . . . . . . . . . . . . 34,048 44,591 ________ ________ Accrued expenses related to continuing operations 349,057 360,337 Accrued expenses related to discontinued operations -- 60,821 ________ ________ $349,057 $421,158 ________ ________ ________ ________
NOTE 12-INCOME TAXES The components of the provision for income taxes and a reconciliation of the U.S. statutory tax rate to the Company's effective income tax rate are given in the accompanying tables. Income Tax Expense Year Ended Six Months Ended Year Ended December 31, December 31, June 30, ____________ _________________ _________________ (In thousands) 1993 1992 1992 1991 ____________________________________________________________________________________ Current Federal. . . . . . . . . . $109,543 $ 63,869 $118,552 $132,693 State. . . . . . . . . . . 8,543 1,482 4,822 8,049 Foreign. . . . . . . . . . 1,781 1,003 3,530 9,164 ________ ________ ________ ________ 119,867 66,354 126,904 149,906 ________ ________ ________ ________ Deferred Federal. . . . . . . . . . (4,344) (31,123) (5,619) (24,454) Foreign. . . . . . . . . . -- 5 (1,500) (2,110) ________ ________ ________ ________ (4,344) (31,118) (7,119) (26,564) ________ ________ ________ ________ Total Income tax expense . . $115,523 $ 35,236 $119,785 $123,342 ________ ________ ________ ________ ________ ________ ________ ________
Statutory vs. Effective Tax Rate Year Ended Six Months Ended Year Ended December 31, December 31, June 30, ____________ _________________ __________________ (In thousands) 1993 1992 1992 1991 __________________________________________________________________________________________________________________ Components of pretax income from continuing operations: United States. . . . . . . . . . . . . . . . . . . . . $298,506 $ 97,874 $325,584 $337,576 Foreign. . . . . . . . . . . . . . . . . . . . . . . . 12,649 5,043 4,914 5,701 ________ ________ ________ ________ Income before income taxes . . . . . . . . . . . . . . $311,155 $102,917 $330,498 $343,277 Statutory tax rate . . . . . . . . . . . . . . . . . . x 35% x 34% x 34% x 34% ________ ________ ________ ________ Federal income tax at statutory rate . . . . . . . . . 108,904 34,992 112,369 116,714 State income taxes, less federal income tax benefit . . . . . . . . . . . . . . . . . . . 5,553 978 3,183 5,312 Other, net . . . . . . . . . . . . . . . . . . . . . . 1,066 (734) 4,233 1,316 ________ ________ ________ ________ Total income tax expense . . . . . . . . . . . . . . . $115,523 $ 35,236 $119,785 $123,342 ________ ________ ________ ________ ________ ________ ________ ________ Effective tax rate . . . . . . . . . . . . . . . . . . 37.13% 34.24% 36.24% 35.93% ________ ________ ________ ________ ________ ________ ________ ________
As of December 31, 1993, the Company has tax net operating loss carryforwards of approximately $20,659,000 which are available to offset future taxable income. These carryforwards which are expected to be fully utilized, expire beginning in the year ending December 31, 2006. Accordingly, the Company has recognized a deferred tax asset relating to these carryforwards. In January 1993, the Company adopted FAS No. 109. The adoption of FAS 109 changes the Company's method of accounting for income taxes from the deferred method ("APB 11") to an asset and liability approach. Previously, the Company deferred the past tax effects of timing differences between financial reporting and taxable income. The asset and liability approach requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The adjustments to the January 1, 1993 balance sheet to adopt FAS 109 totaled $13,014,000. Approximately $9,786,000 of this adjustment related to continuing operations and the remaining $3,228,000 was from discontinued operations. The aggregate amount of $13,014,000 is reflected in 1993 net income as the cumulative effect of change in accounting principle. It primarily represents the impact of adjusting deferred taxes to reflect the then current tax rate of 34% as opposed to the higher tax rates that were in effect when the deferred taxes originated. The Company subsequently increased its U.S. deferred tax asset in 1993 as a result of legislation enacted during 1993 which increased the corporate tax rate from 34% to 35%. Deferred tax assets and liabilities as of December 31, 1993 for continuing operations were comprised of the following: Deferred Tax Assets ___________________ (In thousands) December 31, 1993 _________________ Bad debt reserve $14,268 Intercompany profit elimination 6,654 Deferred service contract income 41,290 Restructuring reserves 3,362 Insurance reserves 5,607 Loss carryforwards and carrybacks 7,231 Foreign tax credits 4,396 _______ 82,808 Valuation allowance (4,396) _______ Total deferred tax assets 78,412 _______ Deferred Tax Liabilities ________________________ Inventory adjustments, net 8,445 Depreciation and amortization 8,322 Credit card origination costs 3,221 Deferred taxes on foreign operations 4,275 Other 4,269 _______ Total deferred tax liabilities 28,532 _______ Net Deferred Tax Assets $49,880 _______ _______ NOTE 13-STOCK PURCHASE AND SAVINGS PLANS Stock purchase and savings plans are offered by Tandy Corporation to its employees. These plans are designed to provide employees with a consistent investment program which provides for their retirement and an opportunity to participate in the Company's growth. TANDY CORPORATION STOCK PURCHASE PROGRAM. The Program is available to most employees who have been employed at least six months. Each participant may contribute 1% to 10% of annual compensation, except that the President of the Company may limit the maximum contribution for employees of certain divisions or subsidiaries to a percentage less than 10%. The Company matches 40%, 60% or 80% of the employee's contribution depending on the length of the employee's participation in the program. The Company periodically purchases common stock on the open market and then sells the number of shares required by the program each month at a price equal to the average of the daily closing prices for that month. The stock purchased by each participant is distributed annually after December 31. In the event of a tender offer (other than an issuer tender offer) or a change in control, as defined in the program, all stock credited to participants' accounts will be distributed to the participants. If the Company elects, treasury shares or authorized but unissued shares may be used. Tandy's contributions to the stock purchase program were $18,955,000 for the year ended December 31, 1993 and $8,756,000 for the six months ended December 31, 1992. For fiscal 1992 and 1991 the Company's contributions were $20,253,000 and $19,614,000, respectively. TANDY EMPLOYEES DEFERRED SALARY AND INVESTMENT PLAN. The Plan became effective on July 1, 1982. An eligible employee electing to participate in this plan may defer 5% of annual compensation, subject to certain limitations established by the Tax Reform Act of 1986. The Company pays this amount into the plan as a deferred salary contribution for the account of the employee. The employee's 5% contribution is considered deferred compensation and is not taxed to the employee as long as it remains in the plan. Prior to October 1, 1990, the Company matched 80% of the employee's deferred salary contribution. This matching contribution ceased on September 30, 1990. Beginning October 1990, the Company began making contributions to the newly formed employee stock ownership plan described in Note 14 in lieu of the matching contributions to the deferred salary and investment plan. To participate in the employee stock ownership plan, employees must continue to make deferred salary contributions to the Tandy Employees Deferred Salary and Investment Plan. The plan is available to most employees who have been employed at least one year. The contributions made by the Company until the employee stock ownership plan became effective October 1, 1990 were fully vested upon payment to the trustee. In June 1992, the Company received a determination letter ruling that the Tandy Employees Deferred Salary and Investment Plan is a qualified 401(k) plan. An administrative committee appointed by the Board of Directors invests the plan's assets. A substantial majority of the plan's assets are invested in Tandy securities. The Company's contribution to the investment plan from July 1, 1990 through September 30, 1990 was $3,401,000. NOTE 14-TANDY EMPLOYEES STOCK OWNERSHIP PLAN As a continuation of the Company's programs to encourage employee ownership of Tandy stock, the Company formed the Tandy Employees Stock Ownership Plan and trust (the "TESOP") on June 28, 1990. On July 31, 1990, the TESOP trustee borrowed $100,000,000 at an interest rate of 9.34% with varying semi-annual principal payments through June 30, 2000. Dividend payments and contributions from Tandy will be used to repay the indebtedness. Because Tandy has guaranteed the repayment of these notes, the indebtedness of the TESOP is recognized as a long-term obligation in the accompanying consolidated balance sheet. An offsetting charge has been made in the stockholders' equity section of the accompanying consolidated balance sheet to reflect unearned compensation related to the TESOP. The TESOP trustee used the proceeds from the issuance of the notes to purchase 100,000 shares of Series B TESOP Convertible Preferred Stock (the "TESOP Preferred Stock") from Tandy at a price of $1,000 per share. Each share of such stock is convertible into 21.768 shares of Tandy common stock. The number of shares of Company common stock into which each share of the TESOP Preferred Stock is convertible ("the Conversion Price") is subject to anti-dilution adjustment upon the occurrence of a number of corporate events. The annual cumulative dividend on TESOP Preferred Stock is $75.00 per share, payable semi-annually. This series of stock has certain liquidation preferences and may be redeemed by Tandy after July 1, 1994 at specified premiums. The TESOP Preferred Stock will be held by the trustee until redemption or conversion and may not be sold or distributed outside the TESOP except for resale to Tandy. The TESOP requires that shares of TESOP Preferred Stock not yet allocated to any participant's account, as well as allocated shares for which no voting instructions are received, be voted by the trustee in proportion to the votes cast with respect to allocated shares of TESOP Preferred Stock. Participants in the Tandy Employees Deferred Salary and Investment Plan became eligible to participate in the TESOP effective October 1, 1990. At that time the Company began making payments to the TESOP in lieu of its matching contributions to the Tandy Employees Deferred Salary and Investment Plan. During the term of the TESOP, the TESOP Preferred Stock will be allocated to the participants semi-annually based on the principal payments made on the indebtedness. The allocations to the individual participants' accounts are determined according to the terms of the TESOP. As vested participants withdraw from the TESOP, payments are made in cash or Tandy common stock. The preferred stock has a face value of $1,000 per share and the Company is obligated to redeem the preferred stock at the higher of the appraised value or $1,000 per share in the event of a participant's withdrawal. The Company has the option to redeem the preferred stock in either cash or common stock. Participants in the TESOP that were hired prior to October 1, 1990 became immediately vested in all allocations made to their accounts. Employees hired after September 30, 1990 who become TESOP participants will become vested in amounts allocated to their accounts upon the earlier of three years of participation in the TESOP or the completion of five years of employment with the Company. Forfeited shares are returned to the TESOP and allocated to the accounts of other participants. In June 1992 the Company received a determination letter ruling from the IRS that the TESOP was a qualified employee stock ownership plan. In fiscal 1991 Tandy recorded, as a component of stockholders' equity, $100,000,000 of unearned compensation to reflect the value of the TESOP Preferred Stock sold to the TESOP. As shares of the TESOP Preferred Stock are allocated to the TESOP participants, compensation expense is recorded and unearned compensation is reduced. Interest expense on the TESOP notes is also recognized as a cost of the TESOP. The compensation component of the TESOP expense is reduced by the amount of dividends accrued on the TESOP Preferred Stock with any dividends in excess of the compensation expense reflected as a reduction of interest expense. During the year ended December 31, 1993, the compensation and interest costs related to the TESOP before the reduction for the allocation of dividends were $9,605,000 and $7,195,000, respectively. During the six months ended December 31, 1992, the compensation and interest costs related to the TESOP before the reduction for the allocation of dividends were $4,266,000 and $3,969,000, respectively. Such amounts for fiscal 1992 were $8,233,000 and $8,526,000, respectively. For the fiscal year ended June 30, 1991, these amounts were $5,967,000 and $8,488,000, respectively. Contributions from Tandy to the TESOP for the year ended December 31, 1993 and the six months ended December 31, 1992 totaled $17,895,000 and $9,269,000, respectively, including the $7,135,000 and $3,665,000 of dividends paid on the TESOP Preferred Stock. Contributions for the year ended June 30, 1992 totaled $16,926,000, including the $7,441,000 of dividends paid on the TESOP Preferred Stock. The fiscal 1991 cash contributions were $15,108,000, including $6,875,000 of dividends paid on the TESOP Preferred Stock. At September 30, 1993, 25,620 shares of TESOP Preferred Stock had been released and allocated to participants' accounts in the TESOP (including 6,093 shares which had been withdrawn by participants). During the six months ended December 31, 1993, 5,400 shares of TESOP Preferred Stock were released for allocation to participants at March 31, 1994. At December 31, 1993, 68,980 shares of TESOP Preferred Stock were available for later release and allocation to participants over the remaining life of the TESOP. Under the terms of Tandy's guarantee of the notes, Tandy is obligated to make annual contributions to the TESOP to enable it to pay principal and interest on the debt securities. Tandy has fully and unconditionally guaranteed the TESOP's payment obligations, whether at maturity, upon redemption, upon declaration of acceleration or otherwise. The holders of the notes have no recourse against the assets of the TESOP except in the event that the TESOP defaults on payments due and then only to the extent that the TESOP holds cash payments made by Tandy to the TESOP to enable it to meet its obligations under the notes and any earnings attributable to such contributions. No amounts were in default as of December 31, 1993. The TESOP fiscal year ends on March 31. At March 31, 1993, the TESOP held as assets $97,725,000 of TESOP Preferred Stock and $4,511,000 of receivables and had liabilities comprised of the remaining principal on the notes of $79,680,000 and accrued interest payable on the notes of $1,861,000, resulting in net assets of $20,695,000. NOTE 15-STOCK OPTIONS AND PERFORMANCE AWARDS 1985 Stock Option Plan ______________________ Under the 1985 Stock Option Plan, as amended, options to acquire up to 2,000,000 shares of Tandy's common stock may be granted to officers and key management employees of the Company. The shares authorized for issuance under the Plan upon the exercising of an option have been registered with the Securities and Exchange Commission. The Organization and Compensation Committee (the "Committee") has sole discretion in determining whether to grant options, who shall receive them, the number of options granted to any individual and whether an option will be an incentive stock option or a nonstatutory stock option. The term of incentive stock options may not exceed 10 years and the term of nonstatutory stock options may not exceed a term of 10 years plus one month. No option may be exercised within one year of the date of grant and then may be exercised in specified installments only after stated intervals of time. The maximum amount that may be exercised at the expiration of each of the first through fifth anniversaries of the nonstatutory stock options is 20%. On each of the first three anniversaries of the date of grant of the incentive stock options, one-third of each individual's options become exercisable. Upon termination of employment, the optionee must exercise all currently vested options by the earlier of the option expiration date(s) or three months from the date of termination of employment or forfeit such options, except that upon retirement at age 55 or older the three months is extended to 12 months in the case of nonstatutory stock options only. Notwithstanding the grant of options initially exercisable in installments, upon the termination of employment as a result of death or total disability of an optionee, all options then held shall for a period of 12 months, subject to earlier termination at the fixed expiration date, become immediately exercisable without regard to dates at which the installments are exercisable. Upon the retirement of an optionee at age 55 or older, the Committee may in its discretion accelerate the dates at which remaining installments of options may be exercised to the date of retirement. In the event of a change in control, all outstanding options become immediately exercisable for the full number of shares subject to options. The option price was determined by the Committee at the time the option is granted, but the option price will not be less than 100% of the fair market value of the stock on the date of grant. Since the option prices have been fixed at the market price on the date of grant, no compensation has been charged against earnings by the Company. Authorized and unissued shares or treasury stock may be issued to participants when options are exercised. The 1985 Stock Option Plan provides for adjustments to be made to options outstanding under the plan in order to prevent dilution of options upon the occurrence of a number of events, including the distribution of shares of a subsidiary of the Company to its stockholders. Tandy assumed an option plan which had been created by GRiD prior to its acquisition. All unexercised GRiD options expired June 30, 1993. Under the 1985 Stock Option Plan there were 1,268,205 vested options which could have been exercised for a total price of $44,710,134 at December 31, 1993. Shares available for additional grants under the 1985 Stock Option Plan were 138,599 at December 31, 1993. 1993 Incentive Stock Plan _________________________ During March 1993, the Board adopted the Tandy Corporation 1993 Incentive Stock Plan (the "1993 Plan"). The 1993 Plan was approved by stockholders in October 1993. Certain provisions of the 1993 Plan were amended by the Board on October 15, 1993. The 1993 Plan is administered by the Organization and Compensation Committee (the "Committee") of the Board. A total of 3,000,000 shares of the Company's common stock were reserved for issuance under the 1993 Plan and have been registered with the Securities and Exchange Commission. The 1993 Plan permits the grant of incentive stock options ("ISOs"), nonstatutory stock options (options which are not ISOs) ("NSOs"), stock appreciation rights ("SARs"), restricted stock, performance units or performance shares. Grants of options under the 1993 Plan shall be for terms specified by the Committee, except that the term shall not exceed 10 years (5 years if granted to a 10% or more stockholder of the Company's common stock). Subject to the discretion of the Committee, options become exercisable in such installments and at such times payments for shares issuable upon exercise of an option may be made in cash, common stock, or a combination of both. The amount payable upon exercise of a SAR may be made at the discretion of the Committee either in cash or common stock or in a combination of cash and common stock. Provisions of the 1993 Plan generally provide that in the event of a change in control all options become immediately and fully exercisable and all restrictions lapse on restricted stock. As part of the 1993 Plan, each non-employee director of the Company receives a grant of NSOs for 3,000 shares of the Company's common stock on the first business day of September of each year ("Director Options"). Director Options have an exercise price of 100% of the fair market value of the Company's common stock on the trading day prior to the date of grant, vest as to one-third of the shares annually on the first three anniversary dates of the date of grant and expire 10 years after the date of grant. The first grant of the Director Options was made on September 1, 1993. The exercise price of an option (other than a Director Option) is determined by the Committee, provided that the exercise price shall not be less than 100% of the fair market value of a share of the Company's common stock on the date of grant. At December 31, 1993 there were no vested options which could have been exercised and 2,650,050 shares available for additional grants under the 1993 Plan. The 1993 Plan shall terminate on the tenth anniversary of the day preceding the date of its adoption by the Board and no option or award shall be granted under the 1993 Plan thereafter. Stock option activity from June 30, 1990 through December 31, 1993, including the exercise of GRiD options, is summarized in the accompanying chart. Stock Option Activity Aggregate Number Option Price Exercised (In thousands, except per share amounts) of Shares Per Share Value ___________________________________________________________________________________ June 30, 1990. . . . . . . . . . . . . . . 1,119 $5.94-$47.50 $41,467 Options granted. . . . . . . . . . . . . . 369 $25.06-$32.63 9,333 Options exercised. . . . . . . . . . . . . (53) $5.94-$47.50 (413) Options cancelled. . . . . . . . . . . . . (21) $5.94-$47.50 (736) June 30, 1991. . . . . . . . . . . . . . . 1,414 $5.94-$47.50 49,651 Options granted. . . . . . . . . . . . . . 358 $24.25-$28.19 10,057 Options exercised. . . . . . . . . . . . . (20) $5.94-$17.81 (119) Options cancelled. . . . . . . . . . . . . (45) $5.94-$47.50 (1,574) June 30, 1992. . . . . . . . . . . . . . . 1,707 $5.94-$47.50 58,015 Options granted. . . . . . . . . . . . . . 254 $30.38 7,716 Options exercised. . . . . . . . . . . . . (9) $5.94 (52) Options cancelled. . . . . . . . . . . . . (12) $5.94-$47.50 (353) December 31, 1992. . . . . . . . . . . . . 1,940 $5.94-$47.50 65,326 Options granted. . . . . . . . . . . . . . 368 $30.00-$37.25 13,343 Options exercised. . . . . . . . . . . . . (182) $5.94-$47.50 (5,341) Options cancelled. . . . . . . . . . . . . (162) $5.94-$47.50 (5,533) December 31, 1993. . . . . . . . . . . . . 1,964 $25.06-$46.13 $67,795
NOTE 16-PREFERRED SHARE PURCHASE RIGHTS In August 1986 the Board of Directors adopted a stockholder rights plan and declared a dividend of one right for each outstanding share of Tandy common stock. The Board amended the rights plan in June 1988 and amended and restated the rights plan in June 1990. The rights, which will expire on June 22, 2000, are currently represented by the common stock certificates and when they become exercisable will entitle holders to purchase one one-thousandth of a share of Tandy Series A Junior Participating Preferred Stock for an exercise price of $140 (subject to adjustment). The rights will become exercisable and will trade separately from the common stock only upon the date of public announcement that a person, entity or group ("Person") has acquired 15% or more of Tandy's outstanding common stock without the prior consent or approval of the disinterested directors ("Acquiring Person") or ten days after the commencement or public announcement of a tender or exchange offer which would result in any person becoming an Acquiring Person. In the event that any person becomes an Acquiring Person, the rights will be exercisable for 60 days thereafter for Tandy common stock with a prior market value (as determined under the rights plan) equal to twice the exercise price. In the event that, after any person becomes an Acquiring Person, the Company engages in certain mergers, consolidations, or sales of assets representing 50% or more of its assets or earning power with an Acquiring Person (or persons acting on behalf of or in concert with an Acquiring Person) or in which all holders of common stock are not treated alike, the rights will be exercisable for common stock of the acquiring or surviving company with a prior market value (as determined under the rights plan) equal to twice the exercise price. The rights will not be exercisable by any Acquiring Person. The rights are redeemable at a price of $.05 per right prior to any person becoming an Acquiring Person or, under certain circumstances, after the expiration of the 60-day period described above, but the rights may not be redeemed or the rights plan amended for 180 days following a change in a majority of the members of the Board (or if certain agreements are entered into during such 180-day period). NOTE 17-TERMINATION PROTECTION PLANS In August 1990, the Board of Directors of the Company approved termination protection plans and amendments to various other benefit plans including the stock purchase program and deferred salary and investment plan described in Note 13. These plans provide for defined termination benefits to be paid to eligible employees of the Company who have been terminated, without cause, following a change in control of the Company (as defined). In addition, for a certain period of time following employee termination, the Company, at its expense, must continue to provide on behalf of the terminated employee certain employment benefits. In general, during the twelve months following a change in control, the Company may not terminate or change existing employee benefit plans in any way which will affect accrued benefits or decrease the rate of the Company's contribution to the plans. NOTE 18-ISSUANCE OF SERIES C PERCS AND TENDER OFFER In February 1992, the Company issued 15,000,000 depositary shares of Series C Conversion Preferred Stock ("Series C PERCS") at $29.50 per depositary share (equivalent to $2,950.00 for each Series C PERCS). Each of the depositary shares represents ownership of 1/100th of a share of Series C PERCS. The annual dividend for each depositary share is $2.14 (based on the annual dividend rate for each Series C PERCS of $214.00). On April 15, 1995, each of the depositary shares will automatically convert into (i) one share of Tandy common stock (equivalent to 100 shares for each Series C PERCS) subject to adjustment in certain events and (ii) the right to receive on such date an amount in cash equal to all accrued and unpaid dividends thereon. Conversion of the outstanding depositary shares (and the Series C PERCS) is also required upon certain mergers or consolidations of the Company or in connection with certain other events. The Company has reserved 15,000,000 shares of its common stock for the potential conversion of the Series C PERCS. At any time and from time to time prior to the mandatory conversion date, the Company may call the outstanding Series C PERCS (and thereby the depositary shares), in whole or in part, for redemption. Upon any such redemption, each owner of depositary shares will receive, in exchange for each depositary share so called, shares of Tandy common stock having a market value initially equal to $43.87 (equivalent to $4,387.00 for each Series C PERCS), declining by $.004085 (equivalent to $.408500 for each Series C PERCS) on each day following the date of issue of the Series C PERCS to $39.50 (equivalent to $3,950.00 for each Series C PERCS) on February 15, 1995, and equal to $39.25 (equivalent to $3,925.00 for each Series C PERCS) thereafter, plus an amount in cash equal to all proportionate accrued and unpaid dividends thereon. The liquidation preference for each depositary share is $29.50 (equivalent to $2,950 for each Series C PERCS) plus any accrued and unpaid dividends. The holders of the Series C PERCS have the right, voting together with the common stockholders as one class, to vote in the election of directors and upon such other matters coming before any meeting of the stockholders and are entitled to cast 100 common stock votes for each Series C PERCS (or one common stock vote for each depositary share). Using a substantial portion of the proceeds from the issuance of the Series C PERCS, the Company purchased 13,500,000 shares of its common stock at $32.00 per share in a "Dutch Auction" self tender offer that expired on March 26, 1992. NOTE 19-SUPPLEMENTAL CASH FLOW INFORMATION The effects of changes in foreign exchange rates on cash balances have not been material. Cash flows from operating activities included cash payments as follows: Year Ended Six Months Ended Year Ended December 31, December 31, June 30, ____________ ________________ ________________ (In thousands) 1993 1992 1992 1991 ___________________________________________________________________________________________ Interest paid. . . . . . . . . . . . . $ 47,223 $29,480 $ 59,214 $ 89,321 Income taxes paid. . . . . . . . . . . $105,313 $62,466 $135,736 $142,355
During the fiscal year ended June 30, 1991, the Company incurred non-cash financing activities which included the guarantee of TESOP indebtedness and increase in unearned deferred compensation of $100,000,000 and treasury stock issued under an earn-out program of $13,807,000. NOTE 20-LITIGATION In July 1985, Pan American Electronics, Inc., a Radio Shack dealer in Mission, Texas ("Pan Am"), filed suit against the Company in the 92nd Judicial District Court in Hidalgo County, Texas. The Plaintiff's complaint alleged breach of contract and fraud based upon the allegations that the Company made certain misrepresentations and acted beyond the scope of its authority under the dealer agreement, with the alleged result that the plaintiff was forced out of the computer mail order business in 1984. In November 1993, Pan Am and Tandy resolved the pending litigation and the lawsuit was dismissed in December 1993. Although the terms of the settlement are confidential, the resolution of this legal action did not have a materially adverse impact on the Company's financial position or results of operation. There are various other claims, lawsuits, disputes with third parties, investigations and pending actions involving allegations of negligence, product defects, discrimination, patent infringement, tax deficiencies and breach of contract against the Company and its subsidiaries incident to the operation of its business. The liability, if any, associated with these matters was not determinable at December 31, 1993. While certain of these matters involve substantial amounts, and although occasional adverse settlements or resolutions may occur and negatively impact earnings in the year of settlement, it is the opinion of management that their ultimate resolution will not have a materially adverse effect on Tandy's financial position. NOTE 21-RELATIONS WITH INTERTAN InterTAN Inc. ("InterTAN"), the former foreign retail operations of Tandy, was spun off to Tandy stockholders as a tax-free dividend in fiscal 1987. Under the merchandise purchase terms of the original distribution agreement, InterTAN could purchase on payment terms from Tandy, at negotiated prices, new and replacement models of products that Tandy had in its Radio Shack U.S. catalog or which Tandy may reasonably secure. A&A International ("A&A"), a subsidiary of Tandy, was the exclusive purchasing agent for products originating in the Far East for InterTAN. On July 16, 1993 InterTAN had an account payable to Tandy of approximately $17,000,000 of which $7,600,000 was in default. InterTAN's outstanding purchase orders for merchandise placed under the distribution agreement with Tandy, but not yet shipped, totaled approximately $44,000,000. Because InterTAN had defaulted, on July 16 Tandy terminated the merchandise purchase terms of the distribution agreement and the license agreements. Tandy offered InterTAN interim license agreements which expired July 22, 1993, unless extended. These were extended on July 23, 1993. On July 30, 1993 Trans World Electronics, Inc. ("Trans World"), a subsidiary of Tandy, reached agreement with InterTAN's banking syndicate to buy approximately $42,000,000 of InterTAN's debt at a negotiated, discounted price. The closing of this purchase occurred on August 5, 1993, at which time Tandy resumed limited shipments to InterTAN and granted a series of short-term, interim licenses pending the execution of new license and merchandise agreements. The debt purchased from the banks has been restructured into a seven-year note with interest of 8.64% due semiannually beginning February 25, 1994 and semiannual principal payments beginning February 25, 1995 (the "Series A" note). Trans World has provided approximately $10,000,000 in working capital and trade credit to InterTAN. Interest on the working capital loan (the "Series B" note) of 8.11% is due semiannually beginning February 25, 1994 with the principal due in full on August 25, 1996. Trans World also has received warrants with a five-year term exercisable for approximately 1,450,000 shares of InterTAN common stock at an exercise price of $6.62 per share. As required by an agreement with Trans World, InterTAN filed a registration statement on January 21, 1994 seeking to register the warrants under the Securities Act of 1933. In addition to the bank debt purchased by Trans World and the working capital loan, InterTAN's obligations to Trans World included two additional notes for approximately $23,665,000 (the "Series C" note) and $24,037,000, (the "Series D" note) with interest rates of 7.5% and 8%, respectively. The notes represent the restructuring of InterTAN accounts payable for merchandise already shipped and require monthly interest payments. Also, InterTAN had obligations for purchase orders outstanding for merchandise ordered by A&A for InterTAN but not yet shipped totaling approximately $31,262,000 at December 31, 1993. All principal and interest on the Series C note was paid in full by December 31, 1993. As merchandise under existing outstanding purchase orders is shipped, A&A will invoice InterTAN and amounts owed will be assigned to Trans World and will increase the amount of the Series D note. The balance of the Series D note as of December 31, 1993 was approximately $7,500,000. All of Tandy's debt from InterTAN is secured by a first priority lien on substantially all of InterTAN's assets. A new merchandise agreement was reached with InterTAN in October 1993 which requires future purchase orders be backed by letters of credit posted by InterTAN. New license agreements have been negotiated which provide for a future royalty to Tandy. As required by the various agreements now existing between Tandy and InterTAN, InterTAN has obtained a bank revolving credit facility for Canadian $30,000,000 (U.S. $22,662,000 equivalent at December 31, 1993). Tandy has agreed with InterTAN's new banking agent, that in case of InterTAN's default on the bank credit line, Tandy will, at the option of the bank, purchase InterTAN's inventory and related accounts receivable at 50% of their net book value, up to the amount of outstanding bank loans, but not to exceed Canadian $60,000,000 (U.S. $45,324,000 equivalent at December 31, 1993). In that event, Tandy could foreclose on its first priority lien on InterTAN's assets. If Tandy fails to purchase the inventory and related accounts receivable of InterTAN from the bank, InterTAN's banking agent, upon notice to Tandy and expiration of time, can foreclose upon InterTAN's assets ahead of Tandy. As of December 31,1993 InterTAN owed Tandy an aggregate of $63,511,000. The current portion of the obligation approximates $11,650,000 and the non-current portion approximates $51,861,000. In 1993 Tandy has not recognized any accretion of discount on the note receivable from InterTAN resulting from the purchase of the bank debt at a discounted price but will commence accretion of such discount in 1994 due to InterTAN's financial results and payment history as of December 31, 1993. Accretion of this discount will be based on the effective interest rate method and will approximate $3,856,000 in 1994. During the year ended December 31, 1993, Tandy recognized approximately $93,315,000 of sales to InterTAN and interest income of $3,085,000. Tandy's sales to InterTAN totaled $90,130,000 during the six months ended December 31, 1992, $171,126,000 during fiscal 1992, and $160,024,000 during fiscal 1991. A&A will continue as the exclusive purchasing agent for InterTAN in the Far East on a commission basis. Commencing in March 1994 only the purchasing agent commission and sales by Tandy manufacturing plants to InterTAN will be recorded as sales. InterTAN purchases from third parties through A&A will no longer be recorded as sales reflecting the arrangement under the new merchandise agreement. Accordingly, management expects that reported sales by Tandy to InterTAN in 1994 will be considerably lower than in prior years, however, the earned income relating thereto will not be materially different. NOTE 22-QUARTERLY DATA (UNAUDITED) As the Company's operations are predominantly retail oriented, its business is subject to seasonal fluctuations with the December 31 quarter being the most significant in terms of sales and profits because of the Christmas selling season. During the quarter ended December 31, 1993, the Company recognized a gain, net of tax, from discontinued operations of approximately $15,822,000. This gain partially offsets the after-tax charge of $70,000,000 previously taken in the June 1993 quarter and reduces the loss on disposal of discontinued operations to approximately $54,178,000. The gain resulted from the better than anticipated sales price received for O'Sullivan partially offset by additional foreign currency translation losses and below plan operating results of the divested companies during the divestment period, net of related income tax adjustments. See Note 3 for further information on discontinued operations. During the quarter ended March 31, 1993, the Company adopted FAS 109 which changes the Company's method of accounting for income taxes from the deferred method to an asset and liability approach. The adjustments to the January 1, 1993 balance sheet to adopt FAS 109 totaled $13,014,000. This amount is reflected in 1993 net income as the cumulative effect of a change in accounting principle. See Note 2 for further information on Change in Accounting Principle - Provision for Income Taxes. During the quarter ended December 31, 1992, the Company provided pre-tax reserves of $48,000,000 and $39,500,000 for business restructuring relating to continuing and discontinued operations, respectively. See Note 4 for further information on restructuring and other charges. During the quarter ended June 30, 1992, the Company completed the sale of a Japanese subsidiary, the assets of which were primarily real estate. The pre-tax gain from this sale, including recognition of foreign currency translation adjustments, was $18,987,000. As discussed in detail in Note 2, income per share amounts and the weighted average of common and common equivalent shares outstanding for all quarters commencing with the quarter ending March 31, 1992 (date of issuance) through September 30, 1993 have been retroactively restated for the assumption that the PERCS will convert into 12,457,133 shares in lieu of the previously used 15,000,000 common shares based upon the Company's stock price at December 31, 1993. QUARTERLY DATA (Unaudited) Three Months Ended Reclassified for discontinued operations. ________________________________________________________________ (In thousands, except per share Sept. 30, Dec. 31, Mar. 31, Jun. 30, Sept. 30, Dec. 31, amounts) 1991 1991 1992 1992 1992 1992 ________________________________________________________________________________________________________________ Net sales and operating revenues . . . . . $834,977 $1,196,786 $815,668 $801,853 $875,850 $1,285,299 Cost of products sold. . . . . . . . . . . 430,980 638,490 425,713 431,207 477,065 744,166 ________ __________ ________ ________ ________ __________ Gross profit . . . . . . . . . . . . . . . 403,997 558,296 389,955 370,646 398,785 541,133 ________ __________ ________ ________ ________ __________ Expenses: Selling, general and administrative . . . . . . . . . . . . . 315,939 414,805 318,843 292,533 326,019 435,780 Depreciation and amortization . . . . . . . . . . . . . . 18,256 18,045 18,654 19,566 19,713 20,247 Net interest income. . . . . . . . . . . . (2,743) (3,865) (9,173) (8,464) (6,310) (6,448) Provision for restructuring costs. . . . . . . . . . . . . . . . . . -- -- -- -- -- 48,000 ________ __________ ________ ________ ________ __________ 331,452 428,985 328,324 303,635 339,422 497,579 Income before income taxes, discontinued operations and cumulative effect of change in accounting principle . . . . . . . . . . 72,545 129,311 61,631 67,011 59,363 43,554 Provision for income taxes. . . . . . . . . . . . . . . . . . 26,290 46,863 22,335 24,297 20,326 14,910 ________ __________ ________ ________ ________ __________ Income from continuing operations. . . . . 46,255 82,448 39,296 42,714 39,037 28,644 Income (loss) from discontinued operations (4,422) (3,638) (4,205) (14,601) (6,894) (56,981) ________ __________ ________ ________ ________ __________ Income (loss) before cumulative effect of change in accounting principle. . . . . . . . . 41,833 78,810 35,091 28,113 32,143 (28,337) Cumulative effect on prior years of change in accounting principle. . . . -- -- -- -- -- -- ________ __________ ________ ________ ________ __________ Net income (loss). . . . . . . . . . . . . $ 41,833 $ 78,810 $ 35,091 $ 28,113 $ 32,143 $ (28,337) ________ __________ ________ ________ ________ __________ ________ __________ ________ ________ ________ __________ Net income (loss) per average common and common equivalent share: Income from continuing operations. . . . . $ .57 $ 1.04 $ .46 $ .54 $ .50 $ .36 Loss from discontinued operations. . . . . (0.05) (0.04) (0.05) (0.19) (0.09) (0.75) ________ __________ ________ ________ ________ __________ Income (loss) before cumulative effect of change in accounting principle . . . . . .52 1.00 .41 .35 .41 (0.39) Cumulative effect on prior years of change in accounting principle. . . . -- -- -- -- -- -- ________ __________ ________ ________ ________ __________ Net income (loss) per average common and common equivalent share. . . . . . . $ .52 $ 1.00 $ .41 $ .35 $ .41 $ (0.39) ________ __________ ________ ________ ________ __________ ________ __________ ________ ________ ________ __________ Dividends declared per common share. . . . . . . . . . . . . . . . . . $ .15 $ .15 $ .15 $ .15 $ .15 $ .15 ________ __________ ________ ________ ________ __________ ________ __________ ________ ________ ________ __________ Average common and common equivalent shares outstanding . . . . . . . . . . . 78,434 77,863 82,259 77,387 75,507 75,611 ________ __________ ________ ________ ________ __________ ________ __________ ________ ________ ________ __________
QUARTERLY DATA (Unaudited) (continued) Three Months Ended Reclassified for discontinued operations. __________________________________________ (In thousands, except per share Mar. 31, Jun. 30, Sept. 30, Dec. 31, amounts) 1993 1993 1993 1993 ________________________________________________________________________________________________________ Net sales and operating revenues . . . . . . . . . . $864,712 $ 843,111 $939,897 $1,454,831 Cost of products sold. . . . . . . . . . . . . . . . 474,992 474,245 539,362 894,008 ________ _________ ________ __________ Gross profit . . . . . . . . . . . . . . . . . . . . 389,720 368,866 400,535 560,823 ________ _________ ________ __________ ________ _________ ________ __________ Expenses: Selling, general and administrative . . . . . . . . . . . . . . . . . . 313,190 306,654 317,699 417,133 Depreciation and amortization . . . . . . . . . . . . . . . . . . . 19,965 20,438 20,090 19,451 Net interest income. . . . . . . . . . . . . . . . . (7,488) (8,211) (4,276) (5,856) Provision for restructuring costs. . . . . . . . . . . . . . . . -- -- -- -- ________ _________ ________ __________ 325,667 318,881 333,513 430,728 Income before income taxes, discontinued operations and cumulative effect of change in accounting principle . . . . . . . . . . . . . . . 64,053 49,985 67,022 130,095 Provision for income taxes. . . . . . . . . . . . . . . . . . . . . . . 23,380 18,244 24,463 49,436 _______ _________ ________ __________ Income from continuing operations. . . . . . . . . . 40,673 31,741 42,559 80,659 Income (loss) from discontinued operations . . . . . (18,542) (109,077) -- 15,822 ________ _________ ________ __________ Income (loss) before cumulative effect of change in accounting principle. . . . . . . . . . . . . . 22,131 (77,336) 42,559 96,481 Cumulative effect on prior years of change in accounting principle. . . . . . . . . 13,014 -- -- -- ________ _________ ________ __________ Net income (loss). . . . . . . . . . . . . . . . . . $ 35,145 $ (77,336) $ 42,559 $ 96,481 ________ _________ ________ __________ ________ _________ ________ __________ Net income (loss) per average common and common equivalent share: Income from continuing operations. . . . . . . . . . $ .51 $ .39 $ .53 $ 1.03 Income (loss) from discontinued operations . . . . . (.24) (1.43) -- .21 ________ _________ ________ __________ Income (loss) before cumulative effect of change in accounting principle . . . . . . . . . . .27 (1.04) .53 1.24 Cumulative effect on prior years of change in accounting principle. . . . . . . . . . . . . . .17 -- -- -- ________ _________ ________ __________ Net income (loss) per average common and common equivalent share. . . . . . . . . . . . $ .44 $ (1.04) $ .53 $ 1.24 ________ _________ ________ __________ ________ _________ ________ __________ Dividends declared per common share. . . . . . . . . . . . . . . . . . . . . . . $ .15 $ .15 $ .15 $ .15 ________ _________ ________ __________ ________ _________ ________ __________ Average common and common equivalent shares outstanding . . . . . . . . . . . . . . . . 75,722 76,028 76,307 76,674 ________ _________ ________ __________ ________ _________ ________ __________
Property, Plant and Equipment SCHEDULE V Tandy Corporation and Subsidiaries Reclassification Balance at of Balance at Beginning Additions Retirements Discontinued End of (In thousands) of Period at Cost and Sales Other(1) Operations Period _______________________________________________________________________________________________________________ Year Ended December 31, 1993 Land . . . . . . . . . . . . . . . $ 26,044 $ 8,650 $ (1,126) $ -- $ (1,222) $ 32,346 Buildings. . . . . . . . . . . . . 209,608 18,137 (21,868) (359) (31,392) 174,126 Furniture, fixtures and equipment. 534,316 64,768 (124,665) (527) (79,650) 394,242 Leasehold improvements . . . . . . 319,701 37,732 (42,907) (102) -- 314,424 __________ ________ __________ ________ __________ __________ $1,089,669 $129,287 $(190,566) $ (988) $(112,264) $ 915,138 __________ ________ __________ ________ __________ __________ __________ ________ __________ ________ __________ __________ Six Months Ended December 31, 1992 Land . . . . . . . . . . . . . . . $ 25,802 $ 242 $ -- $ -- $ -- $ 26,044 Buildings. . . . . . . . . . . . . 197,286 12,515 -- (193) -- 209,608 Furniture, fixtures and equipment. 510,310 40,087 (13,742) (2,339) -- 534,316 Leasehold improvements . . . . . . 311,560 16,817 (8,414) (262) -- 319,701 __________ ________ __________ ________ __________ __________ $1,044,958 $ 69,661 $ (22,156) $(2,794) $ -- $1,089,669 __________ ________ __________ ________ __________ __________ __________ ________ __________ ________ __________ __________ Year Ended June 30, 1992 Land . . . . . . . . . . . . . . . $ 18,657 $ 8,458 $ (1,313) $ -- $ -- $ 25,802 Buildings. . . . . . . . . . . . . 186,656 11,334 (1,707) 1,003 -- 197,286 Furniture, fixtures and equipment. 464,341 72,240 (28,953) 2,682 -- 510,310 Leasehold improvements . . . . . . 295,674 35,462 (19,658) 82 -- 311,560 __________ ________ __________ ________ __________ __________ $ 965,328 $127,494 $ (51,631) $ 3,767 $ -- $1,044,958 __________ ________ __________ ________ __________ __________ __________ ________ __________ ________ __________ __________ Year Ended June 30, 1991 Land . . . . . . . . . . . . . . . $ 16,781 $ 2,075 $ (332) $ 133 $ -- $ 18,657 Buildings. . . . . . . . . . . . . 154,282 34,735 (2,279) (82) -- 186,656 Furniture, fixtures and equipment. 451,486 69,111 (56,321) 65 -- 464,341 Leasehold improvements . . . . . . 271,206 45,178 (20,701) (9) -- 295,674 __________ ________ __________ ________ __________ __________ $ 893,755 $151,099 $ (79,633) $ 107 $ 965,328 __________ ________ __________ ________ __________ __________ __________ ________ __________ ________ __________ __________
(1) FAS No. 52, "Foreign Currency Translation," requires that foreign fixed assets and related accumulated depreciation be translated into U.S. dollars at the rates in effect at the date of the balance sheet. The amounts shown in the "Other" column reflect the changes in currency values between the balance sheet dates. Accumulated Depreciation and Amortization SCHEDULE VI of Property, Plant and Equipment Tandy Corporation and Subsidiaries Reclassification Balance at of Balance at Beginning Retirements Discontinued End of (In thousands) of Period Depreciation and Sales Other(1) Operations Period ________________________________________________________________________________________________________________ Year Ended December 31, 1993 Buildings. . . . . . . . . . . . $ 45,814 $ 5,941 $ (4,314) $ (40) $ (7,036) $ 40,365 Furniture, fixtures and equipment 319,969 60,484 (95,872) (108) (46,781) 237,692 Leasehold improvements . . . . . 177,301 27,106 (31,094) 30 -- 173,343 ________ _______ __________ ________ _________ ________ $543,084 $93,531 $(131,280) $ (118) $(53,817) $451,400 ________ _______ __________ ________ _________ ________ ________ _______ __________ ________ _________ ________ Six Months Ended December 31, 1992 Buildings. . . . . . . . . . . . $ 42,874 $ 2,733 $ -- $ 207 $ -- $ 45,814 Furniture, fixtures and equipment 300,000 32,673 (11,193) (1,511) -- 319,969 Leasehold improvements . . . . . 170,984 14,371 (7,941) (113) -- 177,301 ________ _______ __________ ________ _________ ________ $513,858 $49,777 $ (19,134) $(1,417) $ -- $543,084 ________ _______ __________ ________ _________ ________ ________ _______ __________ ________ _________ ________ Year Ended June 30, 1992 Buildings. . . . . . . . . . . . $ 38,641 $ 5,251 $ (1,149) $ 131 $ -- $ 42,874 Furniture, fixtures and equipment 262,508 61,377 (25,622) 1,737 -- 300,000 Leasehold improvements 159,273 29,301 (17,668) 78 -- 170,984 ________ _______ __________ ________ _________ ________ $460,422 $95,929 $ (44,439) $ 1,946 $ -- $513,858 ________ _______ __________ ________ _________ ________ ________ _______ __________ ________ _________ ________ Year Ended June 30, 1991 Buildings. . . . . . . . . . . . $ 35,194 $ 4,225 $ (858) $ 80 $ -- $ 38,641 Furniture, fixtures and equipment 252,545 60,040 (50,308) 231 -- 262,508 Leasehold improvements . . . . . 148,193 28,433 (17,408) 55 -- 159,273 ________ _______ __________ ________ _________ ________ $435,932 $92,698 $ (68,574) $ 366 $ -- $460,422 ________ _______ __________ ________ _________ ________ ________ _______ __________ ________ _________ ________
(1) FAS No. 52, "Foreign Currency Translation," requires that foreign fixed assets and related accumulated depreciation be translated into U.S. dollars at the rates in effect at the date of the balance sheet. The amounts shown in the "Other" column reflect the changes in currency values between the balance sheet dates. SCHEDULE X Charged to Costs and Expenses Tandy Corporation and Subsidiaries Year Ended Six Months Ended December 31, December 31, Year Ended June 30, ____________ ________________ ____________________ (In thousands) 1993 1992 1992 1991 ___________________________________________________________________________________________ Maintenance and repairs. . . . . . . * * * * Depreciation and amortization of intangible assets, preoperating costs and similar deferrals. . . . * * * * Taxes, other than payroll and income taxes . . . . . . . . . . . $ 37,719 $ 18,919 $ 32,225 $ 28,446 Royalties. . . . . . . . . . . . . . * * * * Advertising costs. . . . . . . . . . $205,831 $150,374 $239,352 $251,903 * Less than 1% of sales and operating revenues.
TANDY CORPORATION INDEX TO EXHIBITS Exhibit Number Description 2a Agreement for Purchase and Sale of Assets dated as of June 30, 1993 between AST Research, Inc., as Purchaser and Tandy Corporation, TE Electronics Inc., and GRiD Systems Corporation, as Sellers (without exhibits) (filed as Exhibit 2 to Tandy's July 13, 1993 Form 8-K filed on July 27, 1993, Accession No. 0000096289-93-000004 and incorporated herein be reference). 2b Amended and Restated Stock Exchange Agreement dated February 1, 1994 by and among O'Sullivan Industries Holdings, Inc., and TE Electronics Inc. 2c U.S. Purchase Agreement dated January 26, 1994 by and among O'Sullivan Industries Holdings, Inc., TE Electronics Inc. and the U.S. Underwriters which included Merrill Lynch & Co., Wheat First Butcher & Singer, The Chicago Dearborn Company and Rauscher Pierce Refsnes, Inc. 2d International Purchase Agreement dated January 26, 1994 by and among O'Sullivan Industries Holdings, Inc., TE Electronics Inc. and the U.S. Underwriters which included Merrill Lynch International Limited and UBS Limited. 3a(i) Restated Certificate of Incorporation of Tandy dated December 10, 1982 (filed as Exhibit 4A to Tandy's 1993 Form S-8 for the Tandy Corporation Incentive Stock Plan, Reg. No. 33-51603, filed on November 12, 1993, Accession No. 0000096289-93-000017 and incorporated herein by reference). 3a(ii) Certificate of Amendment of Certificate of Incorporation of Tandy Corporation dated November 13, 1986 (filed as Exhibit 4A to Tandy's 1993 Form S-8 for the Tandy Corporation Incentive Stock Plan, Reg. No. 33-51603, filed on November 12, 1993, Accession No. 0000096289-93-000017 and incorporated herein by reference). 3a(iii) Certificate of Amendment of Certificate of Incorporation, amending and restating the Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock dated June 22, 1990 (filed as Exhibit 4A to Tandy's 1993 Form S-8 for the Tandy Corporation Incentive Stock Plan, Reg. No. 33-51603, filed on November 12, 1993, Accession No. 0000096289-93-000017 and incorporated herein by reference). 3a(iv) Certificate of Designations of Series B TESOP Convertible Preferred dated June 29, 1990 (filed as Exhibit 4A to Tandy's 1993 Form S-8 for the Tandy Corporation Incentive Stock Plan, Reg. No. 33-51603, filed on November 12, 1993, Accession No. 0000096289-93-000017 and incorporated herein by reference). 3a(v) Certificate of Designation, Series C Conversion Preferred Stock dated February 13, 1992 (filed as Exhibit 4A to Tandy's 1993 Form S-8 for the Tandy Corporation Incentive Stock Plan, Reg. No. 33-51603, filed on November 12, 1993, Accession No. 0000096289-93-000017 and incorporated herein by reference). 3b Tandy Corporation Bylaws, restated as of August 4, 1993 (filed as Exhibit 4B to Tandy's Form S-8 for the Tandy Corporation Incentive Stock Plan, Reg. No. 33-51603, filed on November 12, 1993, Accession No. 0000096289-93-000017 and incorporated herein by reference). 4a Indenture, dated June 30, 1974, for 10% Subordinated Debentures due 1994. 4b Amended and restated Rights Agreement with the First National Bank of Boston dated June 22, 1990 for Preferred Share Purchase Rights. 4c(i) Revolving Credit Agreement between Tandy Credit Corporation, Tandy Corporation and Texas Commerce Bank, individually and as Agent for eleven other banks, dated as of June 17, 1991. 4c(ii) First Amendment to Revolving Credit Agreement between Tandy Credit Corporation, Tandy Corporation and Texas Commerce Bank, individually and as agent for eleven other banks, dated June 11, 1992. 4c(iii) Second Amendment to Revolving Credit Agreement between Tandy Credit Corporation, Tandy Corporation and Texas Commerce Bank National Association, individually and as agent for eleven other banks, dated June 8, 1993 (filed as Exhibit 4c(iii) to Tandy's Form 10-Q filed on November 16, 1993, Accession No. 0000096289-93-000018 and incorporated herein by reference). 4d Continuing Guaranty dated June 18, 1991 by Tandy of obligations of the Company in favor of the banks participating in the Revolving Credit Agreement. 4e Continuing Guaranty dated as of June 18, 1991 by Tandy Corporation in favor of holders of indebtedness issued by Tandy Credit Corporation that is or may be publicly traded and is rated by at least one nationally recognized rating agency. 10a* Salary Continuation Plan for Executive Employees of Tandy Corporation and Subsidiaries including amendment dated June 14, 1984 with respect to participation by certain executive employees, as restated October 4, 1990. 10b* Form of Executive Pay Plan Letters 10c* Post Retirement Death Benefit Plan for Selected Executive Employees of Tandy Corporation and Subsidiaries as restated June 10, 1991.10d 10d* Tandy Corporation Officers Deferred Compensation Plan as restated July 10, 1992. 10e* Special Compensation Plan No. 1 for Tandy Corporation Executive Officers, adopted in 1993. 10f* Special Compensation Plan No. 2 for Tandy Corporation Executive Officers, adopted in 1993. 10g* Special Compensation Plan for Directors of Tandy Corporation dated November 13, 1986. 10h* Director Fee Resolution. 10i* Tandy Corporation 1985 Stock Option Plan as restated effective August 1990. 10j* Tandy Corporation 1993 Incentive Stock Plan as restated October 14, 1993 (filed as Exhibit 4B to Tandy's Form S-8 for Tandy Corporation Incentive Stock Plan, Reg. No. 33-51603, filed on November 12, 1993, Accession No. 0000096289-93-000017 and incorporated herein by reference). 10k* Tandy Corporation Officers Life Insurance Plan as amended and restated effective August 22, 1990. 10l* Restated Trust Agreement Tandy Employees Supplemental Stock Program through Amendment No. III dated March 29, 199 (filed as Exhibit 10H to Tandy's Form 10-K/A-4 filed on September 3, 1993, Accession No. 0000096289-93-000011 and incorporated herein by reference). 10m* Forms of Termination Protection Agreements for (i) Corporate Executives, (ii) Division Executives, and iii) Subsidiary Executives. 10n* Tandy Corporation Termination Protection Plans for Executive Employees of Tandy Corporation and its Subsidiaries (i) the Level I and (ii) Level II Plans. 10o* Forms of Bonus Guarantee Letter Agreements with certain Executive Employees of Tandy Corporation and its Subsidiaries i) Formula, ii) Discretionary, and iii) Pay Plan. 10p* Form of Indemnity Agreement with Directors, Corporate Officers and two Division Officers of Tandy Corporation. 11 Statement of Computation of Earnings per Share 12 Statement of Computation of Ratios of Earnings to Fixed Charges 22 Subsidiaries 23 Consent of Independent Accountants _______________________ * Each of these exhibits is a "management contract or compensatory plan, contract, or arrangement". EX-2.(B) 2 1993 10K EXHIBIT 2B Exhibit 2b O'SULLIVAN INDUSTRIES HOLDINGS, INC. AMENDED AND RESTATED STOCK EXCHANGE AGREEMENT This AMENDED AND RESTATED STOCK EXCHANGE AGREEMENT (the "Agreement") is made and entered into as of February 1, 1994, between O'Sullivan Industries Holdings, Inc., a Delaware corporation ("O'Sullivan"), and TE Electronics Inc., a Delaware corporation ("TE"). RECITALS WHEREAS, TE owns 100 shares of common stock, par value $1.00 per share, of O'Sullivan Industries, Inc. (the "Old O'Sullivan Stock"), a Delaware corporation ("Old O'Sullivan"), such stock being all of the issued and outstanding capital stock of Old O'Sullivan; WHEREAS, TE desires to transfer the Old O'Sullivan Stock to O'Sullivan in exchange for the issuance by O'Sullivan to TE of 14,999,900 shares of common stock, par value $1.00 per share, of O'Sullivan together with the Preferred Stock Purchase Rights of O'Sullivan associated with such shares (the "Common Stock"),and O'Sullivan desires to issue the Common Stock to TE in exchange for the Old O'Sullivan Stock; WHEREAS, following such issuance the issued and outstanding capital stock of O'Sullivan will consist of 15,000,000 shares of Common Stock, all of which will be owned by TE; and WHEREAS, all of the shares of O'Sullivan Common Stock issued to TE will be offered for sale in the Offerings pursuant to the U.S. Purchase Agreement and International Purchase Agreement, as such terms are defined in the Prospectus (as amended from time to time, the "Prospectus") constituting a part of the Registration Statement No. 33-72120 on Form S-1 filed by O'Sullivan with the Securities and Exchange Commission on November 24, 1993 (as amended from time to time, the "Registration Statement"). AGREEMENT NOW, THEREFORE, in consideration of the premises and of the mutual agreements, covenants, representations and warranties contained herein, the above parties hereby agree, subject to the terms and conditions hereinafter set forth, as follows: 1. Terms of Purchase and Sale of Shares. 1.01 Purchase and Sale of Shares. At the closing (as defined in Section 1.02): (i) O'Sullivan shall issue to TE 14,999,900 shares of the Common Stock and (ii) TE shall sell, assign, transfer and convey to O'Sullivan (x) the Old O'Sullivan Stock free and clear of all liens, encumbrances, restrictions and claims whatsoever and (y) the right to receive the Adjustment Date Payment Amount (as defined below) if a negative number. As additional purchase price under this Agreement, O'Sullivan shall pay to TE the Tax Benefit Payments (as such term is defined in the Tax Sharing and Tax Benefit Reimbursement Agreement, dated as of January 24, 1994, between Tandy, TE and O'Sullivan the ("Tax Sharing Agreement")) and the right to receive the Adjustment Date Payment Amount, if a positive number. "Adjustment Date Payment Amount" shall have the meaning given to it in the Closing Adjustment Agreement to be entered into by TE and O'Sullivan. 1.02 Closing. The issuance of the Common Stock in exchange for the Old O'Sullivan Stock contemplated by Section 1.01 (the "Closing") shall take place at the offices of TE Electronics Inc., 200 Taylor Street, Suite 700, Fort Worth, Texas 76102 at 12:01 a.m. on the date that the transactions contemplated by the U.S. Purchase Agreement and the International Purchase Agreement (the "Purchase Agreements") close; or such earlier date as TE and O'Sullivan shall mutually agree (the "Closing Date"); provided, however, that the Closing shall not occur earlier than one day after the date (the "Underwriting Date") that TE enters into the Purchase Agreements committing TE to sell 15,000,000 shares of Common Stock. 2. Representations and Warranties of O'Sullivan. O'Sullivan hereby represents and warrants as follows: 2.01 Organization, Standing and Power. O'Sullivan is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware. O'Sullivan has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted prior to or on the Closing Date and to execute, deliver and perform this Agreement and to consummate the transactions hereby contemplated. 2.02 Authority. The execution, delivery and performance by O'Sullivan of this Agreement and the consummation by O'Sullivan of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of the Company (including without limitation; the approval of its Board of Directors and any approval or consent of stockholders required by law or by its Certificate of Incorporation or By-laws). This Agreement is the legal, valid and binding obligation of O'Sullivan, enforceable in accordance with its terms, except to the extent that such enforceability may be limited by bankruptcy, insolvency or other similar laws relating to creditors' rights generally, and is subject to general principles of equity. 2.03 No Conflicts. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by O'Sullivan with any of the provisions hereof, will: (a) conflict with or result in a breach of any provision of O'Sullivan's Certificate of Incorporation or By-laws; or (b) constitute or result in the breach of any term, condition or provision of, or constitute a default under, or give rise to any right of termination, cancellation or acceleration with respect to, or result in the creation of any lien, charge or encumbrance upon any property or asset of O'Sullivan pursuant to, any note, bond, mortgage, indenture, license, agreement or other instrument or obligation to which O'Sullivan is a party or by which O'Sullivan or any of its properties or assets may be bound and which is material to the operations of O'Sullivan except for such conflicts, breaches or defaults as to which written waivers or consents shall have been obtained by O'Sullivan on or prior to the Closing Date; or (c) violate any order, writ, injunction, decree, statute, rule or regulation applicable to O'Sullivan or any of its properties or assets. 2.04 Capital Structure. (a) Upon consummation of the transaction contemplated hereby, the authorized capital stock of O'Sullivan will consist of: (i) 100,000,000 shares of Common Stock, par value $1.00 per share, of which 15,000,000 shares will be validly issued and outstanding; and (ii) 20,000,000 shares of preferred stock, par value $1.00 per share, of which no shares will be validly issued and outstanding. (b) All outstanding shares of O'Sullivan's capital stock will have been duly authorized and validly issued, will be fully paid and non-assessable, and will not have been issued in violation of any pre-emptive rights. (c) Except as set forth on Schedule 2.04, there is outstanding no security, option, warrant, right, call, subscription, agreement, commitment or understanding of any nature whatsoever, fixed or contingent, that directly or indirectly: (i) calls for the issuance, sale, pledge or other disposition of any shares or of any other capital stock of O'Sullivan or any securities convertible into, or other rights to acquire, any such shares or other capital stock of O'Sullivan; or (ii) obligates O'Sullivan to grant, offer or enter into any of the foregoing; or (iii) relates to the voting or control of such shares, capital stock, securities or rights. 2.05 Certificate of Incorporation; By-laws. O'Sullivan's Certificate of Incorporation, as certified by the appropriate official of the State of Delaware, and its By-laws are attached hereto as Exhibit A. Such Certificate and By-laws are complete and correct, and are in full force and effect, and O'Sullivan is not in violation of any of the provisions of either such document. 2.06 Title to Shares. Upon issuance and delivery to TE of the O'Sullivan Common Stock, and subject to the terms of the Purchase Agreements, O'Sullivan will convey to TE legal and valid title to the Common Stock free and clear of all liens, encumbrances and claims whatsoever. 2.07 Consents and Approvals. Except as set forth on Schedule 2.07, no authorization, consent, order or approval of or notice to or filing with, any federal, state or local governmental authority is required in connection with the execution, delivery and performance by O'Sullivan of the transactions contemplated hereby. 2.08 Formation. O'Sullivan has been formed prior to the Closing solely to permit registration of its common stock with the Securities and Exchange Commission and to enable it to acquire all of the Old O'Sullivan stock at the Closing. Except for activities incident to these actions, prior to Closing, O'Sullivan will have engaged in no activities and will have carried on no business. 3. Representations and Warranties of TE. TE hereby represents and warrants as follows: 3.01 Organization, Standing and Power of TE. TE is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware. TE has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted prior to the Closing Date and to execute, deliver and perform this Agreement and to consummate the transactions hereby contemplated. 3.02 Organization of Old O'Sullivan. Old O'Sullivan is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware. 3.03 Authority. The execution, delivery and performance by TE of this Agreement and the consummation by TE of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of TE (including without limitation; the approval of its Board of Directors and the approval or consent of its stockholder). This Agreement is the legal, valid and binding obligation of TE, enforceable in accordance with its terms, except to the extent that such enforceability may be limited by bankruptcy, insolvency or other similar laws relating to creditors' rights generally, and is subject to general principles of equity. 3.04 No Conflicts. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by TE with any of the provisions hereof, will: (a) conflict with or result in a breach of any provision of TE's Certificate of Incorporation or By-laws; or (b) constitute or result in the breach of any term, condition or provision of, or constitute a default under, or give rise to any right of termination, cancellation or acceleration with respect to, or result in the creation of any lien, charge or encumbrance upon any property or asset of TE pursuant to, any note, bond, mortgage, indenture, license, agreement or other instrument or obligation to which TE is a party or by which TE or any of its respective properties or assets may be bound and which is material to the operations of TE except for such conflicts, breaches or defaults as to which written waivers or consents shall have been obtained by TE on or prior to the Closing Date; or (c) violate any order, writ, injunction, decree, statute, rule or regulation applicable to TE or any of its properties or assets. 3.05 Capital Structure of Old O'Sullivan. (a) The authorized capital structure of Old O'Sullivan consists of 100 shares of Common Stock, par value $1.00 per share, of which 100 shares are validly issued and outstanding; and (b) All outstanding shares of Old O'Sullivan's capital stock have been duly authorized and validly issued, are fully paid and non-assessable, and have not been issued in violation of any pre- emptive rights. (c) Except as set forth on Schedule 3.05, there is outstanding no security, option, warrant, right, call, subscription, agreement, commitment or understanding of any nature whatsoever, fixed or contingent, that directly or indirectly: (i) calls for the issuance, sale, pledge or other disposition of any shares or of any other capital stock of Old O'Sullivan or any securities convertible into, or other rights to acquire, any such shares or other capital stock of Old O'Sullivan; or (ii) obligates Old O'Sullivan to grant, offer or enter into any of the foregoing; or (iii) relates to the voting or control of such shares, capital stock, securities or rights. 3.06 Certificate of Incorporation; By-laws. TE's Certificate of Incorporation, as certified by the appropriate official of the State of Delaware, and its By-laws are attached hereto as Exhibit B. Such Certificate and By-laws are complete and correct, and are in full force and effect, and TE is not in violation of any of the provisions of either such document. 3.07 Title to Shares. Upon the sale and delivery to O'Sullivan of the Old O'Sullivan Stock, TE will convey to O'Sullivan legal and valid title to the Old O'Sullivan Stock free and clear of all liens, encumbrances and claims whatsoever. 3.08 Consents and Approvals. Except as set forth on Schedule 3.08, no authorization, consent, order or approval of or notice to or filing with, any federal, state or local governmental authority is required in connection with the execution, delivery and performance by TE of the transactions contemplated hereby. 4. Certain Covenants of the Parties. O'Sullivan and TE hereby covenant to and agree with one another as follows: 4.01 Conduct of Business. O'Sullivan will take such action that is necessary to effect the offering and sale of Common Stock pursuant to the Purchase Agreements. 4.02 Fees and Expenses. TE shall pay all of the fees and expenses incurred by O'Sullivan, Old O'Sullivan or TE in connection with (a) the registration and sale of shares of O'Sullivan Common Stock and (b) the sale of any shares sold by O'Sullivan pursuant to the exercise of the over-allotment options (as such term is defined in the Prospectus). 4.03 Tax Covenants. (a) O'Sullivan agrees that for at least a three (3) year period following the Closing, neither O'Sullivan nor Old O'Sullivan shall cease to remain in existence as separate corporations. (b) No later than two (2) business days after the Closing, TE will sell all of the Common Stock to the U.S. Underwriters and the Managers, as such terms are defined in the Prospectus, pursuant to the Purchase Agreements. 4.04 Sale of Shares. TE acknowledges that all of the shares of O'Sullivan Common Stock may be resold only upon registration under the Securities Act of 1933 or pursuant to an exemption from registration thereunder. 5. Conditions Precedent to Obligations of O'Sullivan. The obligations of O'Sullivan to consummate the transactions contemplated hereby shall be subject to the satisfaction on or prior to the Closing Date of all of the following conditions, except such conditions as O'Sullivan may waive (other than the condition contained in Section 5.03, which condition O'Sullivan shall not be entitled to waive): 5.01 Representations, Warranties and Covenants of TE. TE shall have complied in all material respects with all of its agreements and covenants contained herein required to be complied with at or prior to the Closing Date, and all the representations and warranties of TE contained herein shall be true in all material respects on and as of the Closing Date with the same effect as though made on and as of the Closing Date, except to the extent that such representations and warranties expressly make reference to a specified date and as to such representations and warranties the same shall continue on the Closing Date to have been true in all material respects as of the specified date. O'Sullivan shall have received a certificate executed by or on behalf of TE, and dated as of the Closing Date, (a) certifying as to the fulfillment of the conditions set forth in this Section 5.01 and (b) attaching thereto a certified copy of the resolutions of TE's Board of Directors and sole stockholder approving this Agreement. 5.02 No Governmental or Other Proceeding. No order of any court or governmental or regulatory authority or body which restrains or prohibits the transactions contemplated hereby shall be in effect on the Closing Date and no suit or investigation by any government agency to enjoin the transactions contemplated hereby or seek damages or other relief as a result thereof shall be pending or threatened as of the Closing Date. 5.03 Purchase Agreement. TE and O'Sullivan shall have executed the Purchase Agreements, in substantially the forms thereof attached hereto as Exhibit C, and TE's obligation to sell the Common Stock pursuant to the Purchase Agreements shall be a legal, valid and binding obligation of TE. 5.04 Tax Sharing Agreement. Tandy shall have executed the Tax Sharing Agreement. 6. Conditions Precedent to Obligations of TE. The obligations of TE to consummate the transactions contemplated hereby shall be subject to the satisfaction on or prior to the Closing Date of all of the following conditions, except such conditions as TE may waive (other than the conditions set forth in Section 6.03, which condition may not be waived): 6.01 Warranties, Representations and Covenants of O'Sullivan. O'Sullivan shall have complied in all material respects with all of its agreements and covenants contained herein required to be complied with at or prior to the Closing Date, and all the representations and warranties of O'Sullivan contained herein shall be true in all material respects on and as of the Closing Date with the same effect as though made on and as of the Closing Date, except to the extent that such representations and warranties expressly make reference to a specified date and as to such representations and warranties the same shall continue on the Closing Date to have been true in all material respects as of the specified date. TE shall have received a certificate executed by or on behalf of O'Sullivan, and dated as of the Closing Date, (a) certifying as to the fulfillment of the conditions set forth in this Section 6.01 and (b) attaching thereto a certified copy of the resolutions of O'Sullivan's Board of Directors approving this Agreement. 6.02 No Governmental or Other Proceeding. No order of any court or governmental or regulatory authority or body which restrains or prohibits the transactions contemplated hereby shall be in effect on the Closing Date and no suit or investigation by any government agency to enjoin the transactions contemplated hereby or seek damages or other relief as a result thereof shall be pending or threatened as of the Closing Date. 6.03 Purchase Agreement. TE and O'Sullivan shall have executed the Purchase Agreements, in substantially the forms thereof attached hereto as Exhibit C, and TE's obligation to sell the Common Stock pursuant to the Purchase Agreements shall be a legal, valid and binding obligation of TE. 6.04 Tax Sharing Agreement. O'Sullivan shall have executed the Tax Sharing Agreement. 7. Deliveries at Closing. 7.01 Deliveries by O'Sullivan. At the Closing, O'Sullivan shall deliver, or cause to be delivered, to TE the following: (a) one or more stock certificates representing an aggregate of 14,999,900 shares of O'Sullivan Common Stock, duly executed and indicating TE as holder thereof; (b) the certificate referred to in Section 6.01. 7.02 Deliveries by TE. At the Closing, TE shall deliver, or cause to be delivered, to O'Sullivan thefollowing: (a) stock certificates representing 100 shares of Old O'Sullivan Stock, duly endorsed in blank or accompanied by appropriate stock transfer powers executed by TE; (b) the certificate referred to in Section 5.01. 8. Termination Prior to Closing. 8.01 Termination of Agreement. This Agreement may be terminated prior to the Closing in any of the following ways: (a) By the mutual written consent of O'Sullivan and TE; (b) By termination of the Purchase Agreements; (c) By either party in writing, against the other, if one or the other, as the case may be, shall (i) fail to perform in any material respect its agreements contained herein required to be performed prior to the Closing Date or (ii) materially breach any of its representations, warranties, covenants or agreements contained herein, which failure or breach is not cured within five days after the party seeking to terminate has notified the other party of its intent to terminate this Agreement pursuant to this clause; (d) On the Closing Date by O'Sullivan in writing, if any of the conditions set forth in Article V hereof shall not have been met and, if not so met, has not been waived by O'Sullivan in writing; (e) On the Closing Date by TE in writing, if any of the conditions set forth in Article VI hereof shall not have been met and, if not so met, has not been waived by TE in writing; or (f) By either party in writing if the Closing shall not have occurred on or before February 28, 1994 or such other date to which the Agreement has been extended pursuant to Section 1.02; provided, however, that this Agreement may not be terminated by a party pursuant to this Section 8.01(f) if the failure of the Closing to occur on or before such date is due to the breach by such party of any of its obligations hereunder. 8.02 Automatic Termination. This Agreement shall be terminated if the Purchase Agreements have not been executed on or before February 15, 1994. 9. Miscellaneous. 9.01 Severability. A determination that any provision of this Agreement is unenforceable or invalid shall not affect the enforceability or validity of any other provision and a determination that the application of any provision of this Agreement to any person or circumstance is illegal or unenforceable shall not affect the enforceability or validity of such provision as it may apply to other persons or circumstances. 9.02 Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors of the parties hereto; provided, however, that this Agreement may not be assigned by any party without the prior written consent of the other party hereto; and provided further, that, notwithstanding the prior proviso, TE may, at its election and without the prior written consent of O'Sullivan, assign this Agreement to any direct or indirect wholly-owned subsidiary or any other affiliate of TE so long as the representations and warranties of TE made herein are equally true of such assignee. If this Agreement is assigned with such consent or pursuant to such exception, the terms and conditions hereof shall be binding upon and shall inure to the benefit of the parties hereto and their respective assigns; provided, however, that no assignment of this Agreement or any of the rights or obligations hereof shall relieve any party of its obligations under this Agreement. With the exception of the parties to this Agreement, there shall exist no right of any person to claim a beneficial interest in this Agreement or any rights occurring by virtue of this Agreement. 9.03 Survival. The representations, warranties, covenants and agreements contained herein to be performed or complied with after the Closing shall survive without limitation as to time, unless the covenant or agreement specifies a term, in which case such covenant or agreement shall survive until the expiration of such specified term. 9.04 Notices. Any notice, request, instruction or other document (each, a "notice") to be given hereunder by any party hereto to any other party hereto shall be in writing and shall be deemed to have been duly given if delivered personally, sent by facsimile transmission, or registered or certified mail, postage prepaid, to the parties hereto at the following addresses or to such other addresses as any party hereto shall hereafter specify by notice to the other party or parties hereto: (a) if to O'Sullivan to: O'Sullivan Industries Holdings, Inc. 1900 Gulf Street Lamar, Missouri 64759 Attention: Daniel F. O'Sullivan with a copy to General Counsel (b) if to TE to: TE Electronics Inc. 200 Taylor Street, Suite 700 Fort Worth, TX 76102 Attention: Frederick W. Padden Any such notice, request, instruction or document shall be deemed to have been received on the date of delivery thereof. 9.05 Governing Law. The validity, performance and enforcement of this Agreement and any agreement entered into pursuant hereto, unless expressly provided to the contrary, will be governed by the laws of the State of New York, without giving effect to the principles of conflicts of law thereof. 9.06 Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of any provision of, this Agreement. 9.07 Word Usage. Whenever required by the context and as used in this Agreement, the singular shall include the plural and pronouns and any variation thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identification of the party in question may require. 9.08 Counterparts; Modification. This Agreement (a) may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement and (b) may be amended only by an instrument in writing intended for that purpose executed jointly by an authorized representative of each party hereto. 9.09 Entire Agreement. This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof, and supersedes any and all other prior agreements and understandings among the parties hereto with respect to this subject matter. 9.10 Further Assurances. From and after the Closing Date, each party, at the request of the other party and at the requesting party's expense, will each take all such action and deliver all such documents as shall be reasonably necessary or appropriate to confirm and vest title to the Common Stock in TE and otherwise enable O'Sullivan and TE to enjoy the respective benefits contemplated by this Agreement. 9.11 Public Announcements. Except as required by law or any other provision of this Agreement, O'Sullivan and TE shall consult with each other before issuing any press releases or otherwise making any public statements with respect to this Agreement and the transactions contemplated hereby and shall not issue any such press release or make any public statement prior to such consultation. 9.12 Specific Performance. O'Sullivan and TE each acknowledges that the other will be irreparably harmed and that there will be no adequate remedy at law in the event of a violation by it of any of its covenants or agreements which are contained in this Agreement. It is accordingly agreed that, in addition to any other remedies which may be available upon the breach of such covenants and agreements, O'Sullivan or TE, as the case may be, shall have the right to obtain injunctive relief to restrain any breach or threatened breach of, or otherwise to obtain specific performance of, the other's covenants or agreements contained in thisAgreement. IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its officers thereunto duly authorized, all as of the day and year first above mentioned. O ' SULLIVAN INDUSTRIES HOLDINGS, INC. /s/ Rowland H. Geddie, III Rowland H. Geddie, III Vice President, General Counsel and Secretary TE ELECTRONICS INC. /s/ Frederick W. Padden Frederick W. Padden Vice President-General Counsel and Secretary Schedule 2.04 This Stock Exchange Agreement The U.S. Purchase Agreement and U.S. Pricing Agreement to be entered into among the Company, TE and the Underwriters named therein. The International Purchase Agreement and International Pricing Agreement to be entered into among the Company, TE and the Underwriters named therein. The Management Purchase Agreement to be entered into between the Company and certain members of the management of the Company and their affiliates. The O'Sullivan Incentive Stock Plan. The O'Sullivan Stock Purchase Program The O'Sullivan Stockholder Rights Plan. Schedule 3.05 This Stock Exchange Agreement EX-2.(C) 3 1993 10K EXHIBIT 2C Exhibit 2c _____________________________________________________________ O'SULLIVAN INDUSTRIES HOLDINGS, INC. 11,764,000 Shares Common Stock U.S. PURCHASE AGREEMENT MERRILL LYNCH & CO. WHEAT FIRST BUTCHER & SINGER THE CHICAGO DEARBORN COMPANY RAUSCHER PIERCE REFSNES, INC. _____________________________________________________________ 11,764,000 Shares O'SULLIVAN INDUSTRIES HOLDINGS, INC. (a Delaware corporation) Common Stock (Par Value $1.00 Per Share) U.S. PURCHASE AGREEMENT January 26, 1994 MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated WHEAT FIRST BUTCHER & SINGER Wheat, First Securities, Inc. THE CHICAGO DEARBORN COMPANY RAUSCHER PIERCE REFSNES, INC. as U.S. Representatives of the several U.S. Underwriters c/o MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated World Financial Center North Tower 250 Vesey Street New York, New York 10281 Dear Sirs: O'Sullivan Industries Holdings, Inc., a Delaware corporation (the "Company"), and TE Electronics Inc., a Delaware corporation (the "Selling Stockholder"), confirm their agreement with you and each of the other underwriters named in Schedule A hereto (collectively, the "U.S. Underwriters," which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Wheat, First Securities, Inc., The Chicago Dearborn Company and Rauscher Pierce Refsnes, Inc. are acting as U.S. representatives (in such capacity, Merrill Lynch, Wheat, First Securities, Inc., The Chicago Dearborn Company and Rauscher Pierce Refsnes, Inc. being hereinafter collectively referred to as the "U.S. Representatives"), with respect to (i) the sale by the Selling Stockholder and the purchase by the U.S. Underwriters, acting severally and not jointly, of the respective number of shares of Common Stock, par value $1.00 per share ("Common Stock"), of the Company set forth in Schedule A hereto, together with the Preferred Stock Purchase Rights of the Company (the "Rights") associated with such shares, and (ii) the grant by the Company to the U.S. Underwriters, acting severally and not jointly, of the option described in Section 2(b) hereof to purchase all or any part of the U.S. Underwriters' pro rata portion of up to an additional 1,800,000 shares of Common Stock, together with the Rights associated with such shares, to cover over-allotments, in each case except as may otherwise be provided in the U.S. Pricing Agreement (as hereinafter defined). The 11,764,000 shares of Common Stock, together with the Rights associated with such shares, to be purchased by the U.S. Underwriters from the Selling Stockholder (the "Initial U.S. Securities") and all or any part of the U.S. Underwriters' pro rata portion of the 1,800,000 shares of Common Stock, together with the Rights associated with such shares, subject to the option described in Section 2(b) hereof (the "U.S. Option Securities") are hereinafter collectively referred to as the "U.S. Securities." It is understood that the Company and the Selling Stockholder are concurrently entering into an International Purchase Agreement of even date herewith (the "International Purchase Agreement") with respect to (i) the sale by the Selling Stockholder of 3,000,000 shares of Common Stock, together with the Rights associated with such shares (the "Initial International Securities"), through arrangements with certain managing underwriters outside the United States and Canada (the "Managers"), for whom Merrill Lynch International Limited and UBS Limited are acting as lead managers (the "Lead Managers"), and (ii) the grant by the Company to the Managers of an option to purchase all or any part of the Managers' pro rata portion of up to an additional 1,800,000 shares of Common Stock, together with the Rights associated with such shares (the "International Option Securities"), to cover over-allotments, in each case except as may otherwise be provided in the International Pricing Agreement (as hereinafter defined). The Initial International Securities and the International Option Securities are hereinafter collectively referred to as the "International Securities." It is understood that the U.S. Underwriters are not obligated to purchase any Initial U.S. Securities unless all of the Initial International Securities are contemporaneously purchased by the Managers. The U.S. Underwriters and the Managers are hereinafter collectively referred to as the "Underwriters." The Initial U.S. Securities and the Initial International Securities are hereinafter collectively referred to as the "Initial Securities." The U.S. Option Securities and the International Option Securities are hereinafter collectively referred to as the "Option Securities." The U.S. Securities and the International Securities are hereinafter collectively referred to as the "Securities." Unless the context otherwise requires, all references contained herein to the Initial U.S. Securities, the U.S. Option Securities, the U.S. Securities, the Initial International Securities, the International Option Securities, the International Securities, the Initial Securities, the Option Securities and the Securities shall include the respective numbers of shares of Common Stock set forth above, together with the Rights associated with such shares. The Company and the Selling Stockholder understand that the Underwriters are concurrently entering into an Intersyndicate Agreement of even date herewith providing for the coordination of certain transactions among the Underwriters under the direction of the U.S. Representatives and Lead Managers. Prior to the purchase and public offering of the U.S. Securities by the several U.S. Underwriters, the Company, the Selling Stockholder and the U.S. Representatives, acting on behalf of the several U.S. Underwriters, shall enter into an agreement substantially in the form of Exhibit A hereto (the "U.S. Pricing Agreement"). The U.S. Pricing Agreement may take the form of an exchange of any standard form of written telecommunication among the Company, the Selling Stockholder and the U.S. Representatives and shall specify such applicable information as is indicated in Exhibit A hereto. The offering of the U.S. Securities will be governed by this Agreement, as supplemented by the U.S. Pricing Agreement. From and after the date of the execution and delivery of the U.S. Pricing Agreement, this Agreement shall be deemed to incorporate, and all references to "this Agreement" or "herein" shall be deemed to include, the U.S. Pricing Agreement, unless the context requires otherwise. The initial public offering price and the purchase price with respect to the International Securities shall be set forth in a separate instrument (the "International Pricing Agreement"), the form of which is attached to the International Purchase Agreement. The price per share for the International Securities to be purchased by the Managers pursuant to the International Purchase Agreement shall be identical to the price per share for the U.S. Securities to be purchased by the U.S. Underwriters hereunder. The Company has filed with the United States Securities and Exchange Commission (the "Commission") a registration statement on Form S-1 (Commission File No. 33-72120) to effect the registration of the Securities under the Securities Act of 1933, as amended (the "1933 Act"), has filed such amendments thereto, if any, as may have been required to the date hereof, and will file such additional amendments thereto as may hereafter be required. Such registration statement includes two forms of prospectus for use in connection with the offering and sale of the Securities: the U.S. prospectus, for use in connection with the offering and sale of Securities in the United States and Canada to United States and Canadian persons and the international prospectus, for use in connection with the offering and sale of Securities outside the United States and Canada to persons other than United States and Canadian persons. The U.S. prospectus and international prospectus are identical except that they contain different outside front and outside back cover pages and different sections under the caption "Underwriting" and the international prospectus contains an additional section under the caption "Certain United States Tax Consequences to Non-United States Holders." Such registration statement also includes a third form of prospectus relating to a separate offering of 236,000 shares of Common Stock, together with the Rights associated with such shares, to certain members of the Company's management and their affiliates. Such registration statement (as amended, if applicable) and the prospectuses constituting a part thereof at the time such registration statement becomes effective (including, in each case, the information, if any, deemed to be part thereof pursuant to Rule 430A(b) of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations")), as from time to time amended or supplemented pursuant to the 1933 Act or otherwise, is hereinafter referred to as the "Registration Statement." The U.S. prospectus and the international prospectus in the respective forms included in the Registration Statement are hereinafter referred to as the "U.S. Prospectus" and the "International Prospectus," except that if any revised prospectuses shall be provided to the U.S. Underwriters or the Managers by the Company for use in connection with the offering of the Securities which differ from the prospectuses on file at the Commission at the time the Registration Statement becomes effective (whether or not such revised prospectuses are required to be filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations), the terms "U.S. Prospectus" and "International Prospectus" shall refer to such revised prospectuses from and after the time they are first provided to the U.S. Underwriters or the Managers for such use. The U.S. Prospectus and the International Prospectus are hereinafter referred to collectively as the "Prospectuses" and, each individually, as a "Prospectus." The prospectus relating to the separate offering of 236,000 shares of Common Stock and associated Rights to certain members of the Company's management and their affiliates in the form included in the Registration Statement is hereinafter referred to as the "Management Prospectus." The Company and the Selling Stockholder understand that the U.S. Underwriters propose to make a public offering of the U.S. Securities as soon as the U.S. Representatives deem advisable after the Registration Statement becomes effective and the U.S. Pricing Agreement has been executed and delivered. SECTION 1. Representations and Warranties. (a) The Company and the Selling Stockholder jointly and severally represent and warrant to each of the U.S. Underwriters (except that the Selling Stockholder does not make any representation or warranty with respect to the matters addressed by clauses (xii), (xvi), (xvii), (xviii) and (xxi) below) as of the date hereof and as of the date of the U.S. Pricing Agreement (such latter date being hereinafter referred to as the "U.S. Representation Date") as follows: (i) At the time the Registration Statement becomes effective and at the U.S. Representation Date, the Registration Statement will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectuses, at the U.S. Representation Date (unless the term "Prospectuses" refers to prospectuses which have been provided to the U.S. Underwriters and the Managers by the Company for use in connection with the offering of the Securities which differ from the prospectuses on file at the Commission at the time the Registration Statement becomes effective, in which case at the time such prospectuses are first provided to the U.S. Underwriters and the Managers for such use) and at Closing Time (as hereinafter defined) will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Prospectuses made in reliance upon and in conformity with information furnished to the Company in writing by any Underwriter through Merrill Lynch expressly for use in the Registration Statement or the Prospectuses. (ii) Price Waterhouse, the accountants who reported on the combined financial statements included in the Registration Statement and the Prospectuses are independent public accountants with respect to the Company and its Subsidiaries (as hereinafter defined) as required by the 1933 Act and the 1933 Act Regulations. (iii) The combined financial statements, including the notes thereto, included in the Registration Statement and the Prospectuses present fairly the combined financial position of the Company and its Subsidiaries as at the dates indicated and the combined results of operations and cash flows for the Company and its Subsidiaries for the periods specified; such financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved; there are no supporting schedules required to be included in the Registration Statement pursuant to the 1933 Act or the 1933 Act Regulations (other than schedules which have been ommitted therefrom because the required information is included in the combined financial statements, including the notes thereto, included in the Registration Statement and the Prospectuses). (iv) The pro forma financial information included in the Registration Statement and the Prospectuses has been prepared in all material respects in accordance with the applicable rules and regulations of the Commission with respect to pro forma financial statements, presents fairly the information included therein and has been properly compiled on the pro forma basis described therein; in the opinion of the Company and the Selling Stockholder, the assumptions used in the preparation of such pro forma financial information are reasonable and the adjustments made thereto are appropriate to give effect to the transactions and events referred to therein. (v) Since the respective dates as of which information is given in the Registration Statement and the Prospectuses, except as otherwise stated therein or expressly contemplated thereby, (A) there has been no material adverse change in the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, (B) there have been no transactions entered into by the Company or any of its Subsidiaries, other than the reorganization transactions to be consummated prior to or at Closing Time as described in the Prospectuses under the caption "Certain Transactions --Reorganization Transactions" and other transactions entered into in the ordinary course of business, which are material with respect to the Company and its Subsidiaries considered as one enterprise and (C) except for (1) the dividend in the amount of $40 million to be paid to the Selling Stockholder by Old O'Sullivan (as hereinafter defined) prior to Closing Time as described in the Prospectuses under the caption "Certain Transactions -- Reorganization Transactions, (2) the final adjusting payment, if any, to be made by the Company to Tandy as a result of the accounting of the stockholders' equity of the Company at Closing Time described in the Prospectuses under the caption "Certain Transactions -- The Reorganization" and (3) the dividend of one Right to be issued with respect to each share of Common Stock as described in the Prospectuses under the caption "Description of Capital Stock -- Stockholder Rights Plan," there has been no dividend or distribution of any kind declared, paid or made by the Company or any of its Subsidiaries on any class of their capital stock. (vi) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware and has all necessary corporate power to own, lease and operate its properties and to conduct its business as described in the Prospectuses, and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to have such corporate power or to be so qualified would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (vii) Each Subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and has all necessary corporate power to own, lease and operate its properties and to conduct its business as described in the Prospectuses, and each Subsidiary of the Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to have such corporate power or to be so qualified would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise; all of the issued and outstanding capital stock of each such Subsidiary has been duly authorized and, at Closing Time, will be validly issued, fully paid and nonassessable and will be owned by the Company, directly or indirectly, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity, except any such security interest, mortgage, pledge, lien, encumbrance, claim or equity that is disclosed in the Prospectuses. (viii) At Closing Time, the authorized, issued and outstanding capital stock of the Company will be as set forth in the Prospectuses under the column entitled "As Adjusted" under the caption "Capitalization;" the 100 shares of Common Stock heretofore issued by the Company to the Selling Stockholder have been duly authorized and are validly issued, fully paid and nonassessable; the 14,999,900 shares of Common Stock to be issued by the Company to the Selling Stockholder in accordance with the Stock Exchange Agreement (as hereinafter defined) have been duly authorized and, when issued and delivered by the Company in accordance with said agreement, will be validly issued, fully paid and nonassessable; the Option Securities have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and the International Purchase Agreement and, when issued and delivered by the Company in accordance with this Agreement and the International Purchase Agreement against payment of the consideration set forth herein and therein, will be validly issued, fully paid and nonassessable; the issuance of the Securities is not subject to any preemptive or other similar rights to subscribe for or purchase the same arising by operation of law, under the charter or bylaws of the Company or otherwise; the Common Stock conforms in all material respects to all statements relating thereto contained in the Prospectuses; at Closing Time, the Rights associated with the shares of Common Stock to be sold or issued pursuant to this Agreement and the International Purchase Agreement will have been duly and validly authorized and, when the shares of Common Stock with which they are associated are sold or issued and delivered in accordance with this Agreement and the International Purchase Agreement, will be validly issued in accordance with the terms of the Rights Agreement, dated as of February 1, 1994, between the Company and The First National Bank of Boston, as Rights Agent, as amended; the Rights conform in all material respects to the statements relating thereto contained in the Prospectuses. (ix) This Agreement has been duly authorized, executed and delivered by the Company and, at the U.S. Representation Date, the U.S. Pricing Agreement will be duly authorized, executed and delivered by the Company. (x) Neither the Company nor any of its Subsidiaries is in violation of its charter or bylaws or is in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Company or any of its Subsidiaries is a party or by which any of them is bound or to which any of the property or assets of any of them is subject, except as disclosed in the Prospectuses and except for any such violations or defaults which would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise; the execution, delivery and performance by the Company of this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement and the International Pricing Agreement and the consummation by the Company of the transactions contemplated herein and therein will not conflict with or constitute a breach or violation of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its Subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which any of them is bound or to which any of the property or assets of any of them is subject, nor will such action result in any breach or violation of, or default under, the provisions of the charter or bylaws of the Company or any of its Subsidiaries or of any existing applicable law, administrative regulation or administrative or court decree, except for such conflicts, breaches, violations, defaults, liens, charges or encumbrances that would not affect in any material respect the transactions contemplated by this Agreement or the International Purchase Agreement and would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xi) No authorization, approval or consent of, or registration or filing with, any court or governmental authority or agency is required for the execution, delivery or performance by the Company of this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement or the International Pricing Agreement or the consummation by the Company of the transactions contemplated herein and therein, except such as may be required under the 1933 Act, the 1933 Act Regulations, the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules and regulations of the Commission under the 1934 Act (the "1934 Act Regulations") or under the securities laws of any state or other jurisdiction. (xii) No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent, which could reasonably be expected to result in any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xiii) There is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending or, to the knowledge of the Company or the Selling Stockholder, threatened against or affecting the Company or any of its Subsidiaries, except as disclosed in the Prospectuses, which (A) is required to be disclosed in the Registration Statement and the Prospectuses, (B) might reasonably be expected to result in any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise or to materially and adversely affect their properties or assets or (C) might reasonably be expected to materially and adversely affect the consummation of the transactions contemplated by this Agreement or the International Purchase Agreement; all pending legal or governmental proceedings to which the Company or any of its Subsidiaries is a party or of which any of their respective property or assets is the subject which are not described in the Registration Statement and the Prospectuses, including ordinary routine litigation incidental to their business, are, considered in the aggregate, not material. (xiv) There are no contracts or documents which are required to be described in the Registration Statement or the Prospectuses or to be filed as exhibits to the Registration Statement by the 1933 Act or the 1933 Act Regulations which have not been so described or filed. (xv) Each of the Company and its Subsidiaries has filed all federal, state, local and foreign income and franchise tax returns required to be filed through the date hereof, except insofar as the failure to file any such returns would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, and has paid all taxes due as shown thereon, and except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided, there is no tax deficiency asserted against the Company or any of its Subsidiaries which, if determined adversely to the Company or any of its Subsidiaries, would have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xvi) The Company and its Subsidiaries have good and marketable title to all material properties and assets described in the Prospectuses as owned by them and valid, subsisting and enforceable leases for all of the material properties and assets, real or personal, described in the Prospectuses as leased by them, in each case free and clear of any security interests, mortgages, pledges, liens, encumbrances or charges of any kind, other than those which (A) are described in the Prospectuses or (B) could not materially impair or interfere with the use currently made by the Company or its Subsidiaries of the properties or assets to which it applies or otherwise have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xvii) The Company and its Subsidiaries own or possess, or can acquire on reasonable terms, adequate rights to use the patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names (collectively, "patent and proprietary rights") necessary to conduct the business now conducted by them, and neither the Company nor any of its Subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any patent and proprietary rights, except where such infringement or conflict, if the subject of an unfavorable decision, ruling or finding, would not result in a material adverse change in the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xviii) The Company and its Subsidiaries possess such licenses, permits, consents, orders, certificates or authorizations issued by appropriate federal, state, foreign or local regulatory agencies or bodies as are necessary to conduct the business now operated by them as described in the Prospectuses, except as disclosed in the Prospectuses and except where the failure to possess such licenses, permits, consents, orders, certificates or authorizations would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise; and neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such licenses, permits, consents, orders, certificates or authorizations which, if the subject of an unfavorable decision, ruling or finding, would have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xix) Neither the Company nor any of its Subsidiaries is in violation of any existing applicable law, ordinance, governmental rule or regulation or court decree to which the Company or any of its Subsidiaries or any of their respective properties and assets are subject, except where such violation would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise; without limiting the generality of the foregoing, neither the Company nor any of its subsidiaries has violated (A) any existing applicable foreign, federal, state or local law or regulation relating to the protection of human health and the environment, including, but not limited to, any such law pertaining to hazardous or toxic substances or wastes, pollutants or contaminants (collectively, "Environmental Laws"), (B) the terms of any licenses, permits, consents, orders, certificates or authorizations required of them under applicable Environmental Laws, (C) any federal or state law relating to discrimination in the hiring, promotion or pay of employees or any applicable federal or state wages and hours laws, or (D) any provisions of the Employee Retirement Income Security Act or the rules and regulations promulgated thereunder, except as disclosed in the Prospectus and except for any such violations which would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xx) The Company has reasonably concluded that, except as disclosed in the Prospectus, the costs and liabilities associated with compliance with Environmental Laws are not likely to have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xxi) The Company and its Subsidiaries maintain books and records and internal accounting controls which provide reasonable assurance that (A) transactions are executed in all material respects in accordance with management's general or specific authorization, (B) transactions are recorded in all material respects as necessary to permit preparation of their financial statements and to maintain accountability for their assets and (C) access to assets that are material to the Company or its Subsidiaries is permitted only in accordance with management's general or specific authorization. (xxii) At Closing Time, each of the Reorganization Agreements (as hereinafter defined) to which the Company or any of its Subsidiaries are or are proposed to be parties will be duly authorized, executed and delivered by the Company and each of its Subsidiaries (to the extent that each of them is proposed to be a party thereto). Substantially all of the assets to be transferred by Tandy Marketing Canada (as hereinafter defined) to Old O'Sullivan as described in the Prospectus have been transferred to Old O'Sullivan. (xxiii) The execution, delivery and performance by the Company and each of its Subsidiaries of the Reorganization Agreements to which each of them is a party or is proposed to be a party and the consummation by the Company and each of its Subsidiaries of the transactions contemplated therein will not conflict with or constitute a breach or violation of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its Subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which it or any of them is bound, or to which any of the property or assets of the Company or any of its Subsidiaries is subject, nor will such action result in any breach or violation of, or default under, the provisions of the charter or bylaws of the Company or any of its Subsidiaries or of any existing applicable law, administrative regulation or administrative or court decree, in each case, except as disclosed in the Prospectuses and except for such conflicts, breaches, violations, defaults, liens, charges or encumbrances that would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xxiv) Neither the Company nor any of its Subsidiaries is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (xxv) The Company and its Subsidiaries have complied with all provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing business with the Government of Cuba or any person or affiliate located in Cuba. (b) The Selling Stockholder further represents and warrants to each of the U.S. Underwriters as of the date hereof and as of the U.S. Representation Date as follows: (i) At Closing Time, the Selling Stockholder will be the sole record and beneficial owner of the Initial Securities, and will have valid and marketable title to the Initial Securities, free and clear of any claim, lien, security interest, encumbrance, restriction on transfer or other defect in title; upon delivery of and payment for the Initial Securities pursuant to this Agreement and the International Purchase Agreement, the Underwriters will acquire valid and marketable title to the Initial Securities, free and clear of any claim, lien, security interest, encumbrance, restriction on transfer or other defect in title. (ii) This Agreement has been duly authorized, executed and delivered by the Selling Stockholder and, at the U.S. Representation Date, the U.S. Pricing Agreement will be duly authorized, executed and delivered by the Selling Stockholder. (iii) The execution, delivery and performance of this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement and the International Pricing Agreement by the Selling Stockholder and the consummation by the Selling Stockholder of the transactions contemplated herein and therein will not conflict with or constitute a breach or violation of, or a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Selling Stockholder pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Selling Stockholder is a party or by which it is bound, or to which any of the property or assets of the Selling Stockholder is subject, nor will such action result in any breach or violation of, or default under, the provisions of the charter or bylaws of the Selling Stockholder or of any existing applicable law, administrative regulation or administrative or court decree. (iv) No authorization, approval or consent of, or registration or filing with, any court or governmental authority or agency is required for the execution, delivery or performance by the Selling Stockholder of this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement or the International Pricing Agreement or the consummation by the Selling Stockholder of the transactions contemplated herein and therein, except such as may be required under the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations or under the securities laws of any state or other jurisdiction. (v) At Closing Time, each of the Reorganization Agreements to which the Selling Stockholder is proposed to be a party will be duly authorized, executed and delivered by the Selling Stockholder; at Closing Time, each of the Reorganization Agreements to which the Selling Stockholder is proposed to be a party will constitute a valid and binding obligation of the Selling Stockholder, enforceable against the Selling Stockholder in accordance with its terms (except to the extent that the enforceability thereof is subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and (ii) general principles of equity, whether such principles are considered in a proceeding at law or in equity). (vi) The execution, delivery and performance by the Selling Stockholder of the Reorganization Agreements to which the Selling Stockholder is or is proposed to be a party and the consummation by the Selling Stockholder of the transactions contemplated therein will not conflict with or constitute a breach or violation of, or a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Selling Stockholder pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Selling Stockholder is a party or by which it is bound, or to which any of the property or assets of the Selling Stockholder is subject, nor will such action result in any breach or violation of, or default under, the provisions of the charter or bylaws of the Selling Stockholder or of any existing applicable law, administrative regulation or administrative or court decree, in each case, except as disclosed in the Prospectuses and except for such conflicts, breaches, violations, defaults, liens, charges or encumbrances that would not affect in any material respect the transactions contemplated by this Agreement or the International Purchase Agreement and would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Selling Stockholder and its subsidiaries considered as one enterprise. (c) Any certificate signed by any officer of the Company delivered to the U.S. Representatives or to counsel for the U.S. Underwriters under or in connection with this Agreement or at Closing Time or any Date of Delivery (as hereinafter defined) shall be deemed a representation and warranty by the Company to each U.S. Underwriter as to the matters covered thereby; and any certificate signed by any officer of the Selling Stockholder and delivered to the U.S. Representatives or to counsel for the U.S. Underwriters under or in connection with this Agreement or at Closing Time or any Date of Delivery shall be deemed a representation and warranty by the Selling Stockholder to each U.S. Underwriter as to the matters covered thereby. SECTION 2. Sale and Delivery to U.S. Underwriters; Reorganization Transactions; Closing. (a) On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Selling Stockholder agrees to sell to each U.S. Underwriter, severally and not jointly, and each U.S. Underwriter, severally and not jointly, agrees to purchase from the Selling Stockholder, at the price per share set forth in the U.S. Pricing Agreement, the number of Initial U.S. Securities set forth in Schedule A opposite the name of such U.S. Underwriter (except as otherwise provided in the U.S. Pricing Agreement), plus any additional number of Initial U.S. Securities which such U.S. Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof, subject, in each case, to such adjustments as the U.S. Representatives in their discretion shall make to eliminate any sales or purchases of fractional securities. (i) If the Company has elected not to rely upon Rule 430A of the 1933 Act Regulations, the initial public offering price of the Securities and the purchase price per share to be paid by the several U.S. Underwriters for the U.S. Securities have each been determined and set forth in the U.S. Pricing Agreement, dated the date hereof, and an amendment to the Registration Statement and the Prospectuses will be filed before the Registration Statement becomes effective. (ii) If the Company has elected to rely upon Rule 430A of the 1933 Act Regulations, the purchase price per share to be paid by the several U.S. Underwriters for the U.S. Securities shall be an amount equal to the initial public offering price, less an amount per share to be determined by agreement among the Company, the Selling Stockholder and the U.S. Representatives. The initial public offering price per share of the Securities shall be a fixed price to be determined by agreement among the Company, the Selling Stockholder and the U.S. Representatives and the Selling Stockholder. The initial public offering price per share and the purchase price, when so determined, shall be set forth in the U.S. Pricing Agreement. In the event that such prices have not been agreed upon and the U.S. Pricing Agreement has not been executed and delivered by the parties thereto by the close of business on the fourth business day following the date of this Agreement, this Agreement shall terminate forthwith, without liability of any party to any other party, unless otherwise agreed to by the Company, the Selling Stockholder and the U.S. Representatives. Notwithstanding the foregoing, the provisions of Sections 4(a), 6 and 7 hereof shall remain in effect following any such termination. (b) In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Underwriters, severally and not jointly, to purchase from the Company an aggregate of up to an additional 1,800,000 shares of Common Stock, together with the Rights associated with such shares, at the price per share set forth in the U.S. Pricing Agreement and the International Pricing Agreement, of which 1,440,000 shares and associated Rights shall be the pro rata portion for the U.S. Underwriters and 360,000 shares and associated Rights shall be the pro rata portion for the Managers. The option hereby granted will expire on the 30th day after the date the Registration Statement becomes effective or, if the Company has elected to rely on Rule 430A of the 1933 Act Regulations, the 30th day after the U.S. Representation Date, and may be exercised in whole or in part from time to time only for the purpose of covering over-allotments which may be made in connection with the offering and distribution of the Initial Securities upon notice by the U.S. Representatives and the Lead Managers to the Company setting forth the aggregate number of Option Securities as to which the several Underwriters are then exercising said option and the time and date of payment and delivery for such Option Securities. Any such time and date of delivery for the U.S. Option Securities (a "Date of Delivery") shall be determined by the U.S. Representatives but shall be not earlier than two nor later than seven full business days after the exercise of said option, nor in any event prior to Closing Time, unless otherwise agreed upon by the U.S. Representatives and the Company. If the option is exercised as to all or any portion of the U.S. Option Securities, each of the U.S. Underwriters, acting severally and not jointly, will purchase from the Company that proportion of the number of U.S. Option Securities then being purchased which the number of Initial U.S. Securities set forth in Schedule A opposite the name of such U.S. Underwriter (plus any additional number of Initial U.S. Securities which such U.S. Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof) bears to the total number of Initial U.S. Securities (except as otherwise provided in the U.S. Pricing Agreement), subject, in each case, to such adjustments as the U.S. Representatives in their discretion shall make to eliminate any sales or purchases of fractional securities. For purposes of this Agreement, the term "business day" means a day on which the New York Stock Exchange is open for trading. (c) The Selling Stockholder and the Company agree with the several Underwriters that, immediately prior to Closing Time, (i) the Selling Stockholder will transfer to the Company, in exchange for the issuance by the Company of 14,999,900 shares of Common Stock, together with the Rights associated with such shares (the receipt of which shares and associated Rights shall be subject to the obligations of the Selling Stockholder to sell the Initial Securities to the Underwriters pursuant to this Agreement and the International Purchase Agreement), all the issued and outstanding shares of capital stock of O'Sullivan Industries, Inc., a Delaware corporation and a wholly owned subsidiary of the Selling Stockholder ("Old O'Sullivan"), and (ii) the Company will accept such transfer and will issue such shares of Common Stock and associated Rights to the Selling Stockholder. The foregoing transactions will be effected in accordance with a Stock Exchange Agreement (the "Stock Exchange Agreement") to be entered into between the Selling Stockholder and the Company after the execution and delivery of this Agreement but prior to Closing Time. In addition, (i) Tandy Marketing (Canada) Ltd., an Alberta corporation ("Tandy Marketing Canada"), has transferred to Old O'Sullivan certain assets located in Canada that are used in connection with the business conducted by Old O'Sullivan, (ii) Tandy Corporation, the Selling Stockholder and the Company will enter into a Cross Indemnification Agreement (the "Cross Indemnification Agreement") prior to Closing Time pursuant to which the parties will agree to indemnify each other for certain claims and liabilities as specified therein, (iii) Tandy Corporation, the Selling Stockholder and the Company will enter in to a Tax Sharing and Tax Benefit Reimbursement Agreement (the "Tax Agreement") prior to Closing Time pursuant to which (A) the parties will agree upon the allocation of certain federal, state and local taxes of Old O'Sullivan (including any adjustments to such taxes), (B) Old O'Sullivan and Tandy Corporation will agree to make elections under Sections 338(g) and 338(h)(10) of the Internal Revenue Code of 1986, as amended, and (C) Old O'Sullivan will agree to pay to the Selling Stockholder, as additional purchase price under the Stock Exchange Agreement, amounts approximately equal to certain federal tax benefits related to the increase in the tax basis of Old O'Sullivan's assets resulting from the consummation of the transactions contemplated by the Stock Exchange Agreement and the Sections 338(g) and 338(h)(10) elections. The Stock Exchange Agreement, Cross Indemnification Agreement and Tax Agreement will be substantially in the respective forms filed as exhibits to the Registration Statement. The Stock Exchange Agreement, Cross Indemnification Agreement and Tax Agreement are hereinafter collectively referred to as the "Reorganization Agreements." Old O'Sullivan and each other direct or indirect subsidiary of the Company as of the Closing Time are hereinafter collectively referred to as the "Subsidiaries." (d) Payment of the purchase price for, and delivery of certificates evidencing the Initial U.S. Securities to be purchased by the U.S. Underwriters shall be made at the office of Baker & Botts, L.L.P., 2001 Ross Avenue, Dallas, Texas 75201, or at such other place as shall be agreed upon by the U.S. Representatives, the Company and the Selling Stockholder, at 9:00 a.m., Dallas, Texas time, on the fifth business day (unless postponed in accordance with the provisions of Section 10 hereof) following the date of the execution of the U.S. Pricing Agreement or such other time not later than ten business days after such date as shall be agreed upon by the U.S. Representatives, the Company and the Selling Stockholder (such time and date of payment and delivery being hereinafter referred to as "Closing Time"). In addition, in the event that any or all of the U.S. Option Securities are purchased by the U.S. Underwriters, payment of the purchase price for, and delivery of certificates for, such U.S. Option Securities shall be made at the above-mentioned office of Baker & Botts, L.L.P., or at such other place as shall be mutually agreed upon by the U.S. Representatives and the Company, on each Date of Delivery as specified in the notice from the U.S. Representatives to the Company. Payment shall be made to the Selling Stockholder, with respect to the Initial U.S. Securities, and to the Company, with respect to any U.S. Option Securities, by certified or official bank check or checks drawn in New York Clearing House funds or similar next-day funds payable to the order of the Selling Stockholder or the Company, as the case may be, against delivery to the U.S. Representatives for the respective accounts of the U.S. Underwriters of certificates for the U.S. Securities to be purchased by them. Certificates evidencing the Initial U.S. Securities and the U.S. Option Securities, if any, shall be in such denominations and registered in such names as the U.S. Representatives may request in writing at least two business days before Closing Time or the Date of Delivery, as the case may be. It is understood that each U.S. Underwriter has authorized the U.S. Representatives, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the U.S. Securities which it has agreed to purchase. The U.S. Representatives, individually and not as representatives of the U.S. Underwriters, may (but shall not be obligated to) make payment of the purchase price for the U.S. Securities to be purchased by any U.S. Underwriter whose check has not been received by Closing Time or the Date of Delivery, as the case may be, but such payment shall not relieve such U.S. Underwriter from its obligations hereunder. The certificates evidencing the Initial U.S. Securities and the U.S. Option Securities to be purchased by the U.S. Underwriters will be made available in New York City for examination and packaging by the U.S. Representatives not later than 10:00 a.m. on the last business day prior to Closing Time or the Date of Delivery, as the case may be. SECTION 3. Certain Covenants of the Company. The Company covenants with each of the U.S. Underwriters asfollows: (a) If the Company has elected not to rely upon Rule 430A of the 1933 Act Regulations, the Company will promptly prepare and file with the Commission an amendment to the Registration Statement that sets forth the information specified in Section 2(a)(i) hereof and will make every reasonable effort to cause the Registration Statement to become effective as promptly as practicable. If the Company has elected to rely upon Rule 430A of the 1933 Act Regulations, the Company will promptly prepare and file with the Commission pursuant to Rule 424 of the 1933 Act Regulations Prospectuses that comply in all material respects with the 1933 Act and the 1933 Act Regulations and that set forth the information specified in Section 2(a)(ii) hereof and all other information omitted from the prospectuses included in the Registration Statement as permitted by Rule 430A. (b) The Company will notify the U.S. Representatives immediately, and confirm the notice in writing, (i) of the effectiveness of the Registration Statement and any amendment thereto (including any post-effective amendment), (ii) of the mailing or delivery to the Commission for filing of any revised prospectus which the Company proposes for use by the U.S. Underwriters or the Managers in connection with the offering of the Securities which differs from the prospectuses on file at the Commission at the time the Registration Statement becomes effective, (iii) of the receipt of any comments from the Commission with respect to the Registration Statement or the Prospectuses, (iv) of any request by the staff of the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectuses or for additional information, and (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, the suspension of the registration or qualification of the Securities for offering or sale under the securities laws of any state or jurisdiction or the initiation or threat of any proceedings for any such purpose. The Company will make every reasonable effort to prevent the issuance of any such stop order or of any order suspending such registration or qualification and, if any such order is issued, to obtain the lifting thereof as promptly as practicable. (c) The Company will give the U.S. Representatives notice of its intention to file or prepare any amendment to the Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectuses (including any revised prospectus which the Company proposes for use by the U.S. Underwriters or the Managers in connection with the offering of the Securities which differs from the prospectuses on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the 1933 Act Regulations), will furnish the U.S. Representatives with copies of any such amendment or supplement a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file any such amendment or supplement to which the U.S. Representatives shall reasonably object unless the Company shall have (i) otherwise fully complied with its obligations contained in this subsection (c) and (ii) received a written opinion of counsel to the effect that such amendment or supplement is legally required under the 1933 Act and the 1933 Act Regulations. (d) The Company has delivered or will deliver to the U.S. Representatives five signed copies of the Registration Statement as originally filed and each amendment thereto (including exhibits filed therewith) and has delivered or will deliver to the U.S. Representatives as many conformed copies of the Registration Statement as originally filed and of each amendment thereto (without exhibits) as the U.S. Representatives may reasonably request for delivery to each of the U.S. Underwriters. (e) The Company will furnish to each U.S. Underwriter, from time to time during the period when the U.S. Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such number of copies of the U.S. Prospectus (as amended or supplemented) as such U.S. Underwriter may reasonably request for the purposes contemplated by the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations. (f) If at any time when a prospectus relating to the Securities is required to be delivered, any event shall occur as a result of which it is necessary, in the reasonable judgment of the U.S. Representatives based on the advice of their counsel, to amend or supplement the U.S. Prospectus in order to ensure that the U.S. Prospectus does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to a purchaser, not misleading, the Company will forthwith amend or supplement the U.S. Prospectus (and will provide drafts thereof to the U.S. Underwriters and provide them a reasonable opportunity to review such drafts and provide comments with respect thereto) so that, as so amended or supplemented, the U.S. Prospectus will not contain such an untrue statement or omission, and the Company will furnish to the U.S. Underwriters a reasonable number of copies of any such amendment or supplement to the U.S. Prospectus. (g) The Company will endeavor, in cooperation with the U.S. Underwriters, to qualify the Securities for offering and sale under the applicable securities laws of such states and other jurisdictions of the United States as the U.S. Representatives may designate; provided, however, that the Company shall not be obligated (i) to qualify as a foreign corporation in any jurisdiction in which it is not so qualified, (ii) to take any action that would subject it to income or franchise taxation in any jurisdiction in which would not otherwise be subject to such taxation, (iii) to execute a consent to service of process under the laws of any jurisdiction (except service of process with respect to the offering and sale of the Securities). In each jurisdiction in which the Securities have been qualified as above provided, the Company will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for so long as it may be required to complete the distribution of such Securities. (h) The Company will make generally available to its security holders as soon as practicable, but not later than 90 days after the close of the period covered thereby, an earnings statement (which need not be audited, but in form complying with the provisions of Rule 158 of the 1933 Act Regulations) covering a twelve-month period beginning not later than the first day of the Company's fiscal quarter next following the "effective date" (as defined in said Rule 158) of the Registration Statement. (i) The Company will use the net proceeds, if any, received by it from the sale of the Option Securities in the manner specified in the Prospectus under "Use of Proceeds." (j) The Company will file with the Commission such reports on Form SR as may be required pursuant to Rule 463 of the 1933 Act Regulations. (k) The Company will use every reasonable effort to cause the Securities to be listed on the New York Stock Exchange. SECTION 4. Certain Covenants of the Company and the Selling Stockholder. The Company and the Selling Stockholder covenant with each of the U.S. Underwriters as follows: (a) The Company and Selling Stockholder will be jointly and severally responsible for and will pay all expenses incident to the performance of the obligations of the Company and the Selling Stockholder under this Agreement, including (i) the printing and filing of the Registration Statement as originally filed and of each amendment thereto, (ii) the printing of this Agreement and the U.S. Pricing Agreement, (iii) the preparation, sale or issuance and delivery of the certificates evidencing the U.S. Securities to the U.S. Underwriters, (iv) the reasonable fees and disbursements of the Company's counsel and accountants, (v) the expenses in connection with the qualification of the Securities under state securities laws in accordance with the provisions of Section 3(g) hereof, including filing fees and the fees and disbursements of counsel for the U.S. Underwriters in connection therewith and in connection with the preparation of the Blue Sky Survey, (vi) the printing and delivery to the U.S. Underwriters as provided in this Agreement of copies of the Registration Statement as originally filed and of each amendment thereto, of each of the preliminary prospectuses, and of the Prospectuses and any amendments or supplements thereto, (vii) the printing and delivery to the U.S. Underwriters of copies of the Blue Sky Survey, (viii) the fees and expenses incurred in connection with any filings required to be made by the U.S. Underwriters with the National Association of Securities Dealers, Inc. in connection with the offering and sale of the Securities and (viii) the fees and expenses incurred in connection with the listing of the Securities on the New York Stock Exchange. (b) If this Agreement is terminated by the U.S. Representatives in accordance with the provisions of Section 5 hereof or Section 9(a)(i) hereof, the Company and the Selling Stockholder will be jointly and severally responsible for and will reimburse the U.S. Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the U.S. Underwriters. (c) During the period of 180 days from the date of the U.S. Pricing Agreement, the Company and the Selling Stockholder will not, without the prior written consent of the U.S. Representatives (which consent will not be unreasonably withheld), directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose of any shares of Common Stock or any security convertible into or exchangeable or exercisable for any shares of Common Stock, except for (i) the issuance and sale by the Company to the Selling Stockholder of 14,999,900 shares of Common Stock and associated Rights in accordance with the Stock Exchange Agreement, (ii) the sale by the Selling Stockholder of the Initial Securities to the Underwriters in accordance with this Agreement and the International Underwriting Agreement, (iii) the sale by the Selling Stockholder of 236,000 shares of Common Stock, together with the Rights associated with such shares, to certain members of the Company's management and their affiliates as contemplated by the Management Prospectus, (iv) the issuance by the Company of the Option Securities to the Underwriters in accordance with this Agreement and the International Underwriting Agreement and (v) the grant by the Company of options to purchase shares of Common Stock or the issuance by the Company of shares of Common Stock pursuant to the O'Sullivan Incentive Stock Plan and other benefit plans as disclosed in the Prospectuses. (d) Prior to the time at which the distribution of the Securities is completed, neither the Company nor the Selling Stockholder shall, directly or indirectly, (i) take any action designed to cause or result in, or that constitutes or might reasonably be expected to constitute, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities or (ii) bid for, purchase or pay anyone any compensation for soliciting purchases of, the Securities. SECTION 5. Conditions to Obligations of the U.S. Underwriters. The obligations of the several U.S. Underwriters hereunder are subject to the accuracy of the representations and warranties of the Company and the Selling Stockholder herein contained at the date hereof and at Closing Time, to the performance by the Company and the Selling Stockholder of their respective obligations hereunder required to be performed prior to or at Closing Time, and to the following further conditions: (a) The Registration Statement shall have become effective not later than 5:30 p.m. on the date hereof or at such later time and date as may be approved by the U.S. Representatives; and at Closing Time and any Date of Delivery, as the case may be, no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission. If the Company has elected to rely upon Rule 430A of the 1933 Act Regulations, Prospectuses that set forth the initial public offering price per share of the Securities, the purchase price per share to be paid by the U.S. Underwriters, and any other information previously omitted from the effective Registration Statement pursuant to such Rule 430A shall have been transmitted to the Commission for filing pursuant to Rule 424(b) of the 1933 Act Regulations within the prescribed time period, and prior to Closing Time the Company shall have provided evidence reasonably satisfactory to the U.S. Representatives of such timely filing, or a post-effective amendment providing such information shall have been promptly filed and declared effective in accordance with the requirements of Rule 430A of the 1933 Act Regulations. (b) At Closing Time the U.S. Representatives shall have received: (1) The favorable opinion, dated as of Closing Time, of Fried, Frank, Harris, Shriver & Jacobson, counsel for the Company and the Selling Stockholder, in form and substance reasonably satisfactory to the U.S. Representatives, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware. (ii) The Company has corporate power and authority to own, lease and operate its properties and to conduct its business substantially as described in the Prospectus. (iii) To the knowledge of such counsel, the Company is duly licensed or qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction set forth on Annex A to the opinion of such Counsel. (iv) Each of the Subsidiaries of the Company is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation. (v) The authorized, issued and outstanding capital stock of the Company is as set forth in the Prospectuses under the column entitled "As Adjusted" under the caption "Capitalization." (vi) The 15,000,000 shares of Common Stock heretofore issued by the Company to the Selling Stockholder have been duly authorized and are validly issued, fully paid and nonassessable; the 1,800,000 shares of Common Stock subject to the option granted pursuant to Section 2(b) hereof have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and the International Purchase Agreement and, when issued and delivered by the Company in accordance with this Agreement and the International Purchase Agreement against payment of the consideration set forth herein and therein, will be validly issued, fully paid and nonassessable. (vii) The issuance of the Securities is not subject to any preemptive or other similar rights to subscribe for or purchase the same arising under the DGCL, the Certificate of Incorporation or By-laws of the Company or any of the agreements, contracts or instruments filed as Exhibits 10.1 through 10.14 to the Registration Statement. (viii) Assuming that the Underwriters have taken physical possession of the Initial Securities to be sold by the Selling Stockholder at the Closing Time in good faith without notice of any adverse claim as such term is used in Section 8-302 of the Uniform Commercial Code in effect in the State of New York, upon delivery of such Securities in registered form issued to the Underwriters and payment for such Securities as contemplated in this Agreement and the International Purchase Agreement, the Underwriters will acquire such Securities free and clear of all security interests, liens, encumbrances, equities or other adverse claims. (ix) The Common Stock conforms as to legal matters in all material respects to the statements concerning the Common Stock of the Company contained in the Prospectuses under the caption "Description of Capital Stock Common Stock." The statements contained in the Prospectuses under the caption "Description of Capital Stock," insofar as they purport to summarize certain provisions of the Company's Certificate of Incorporation and By-laws, fairly summarize in all material respects such provisions. (x) The Rights conform as to legal matters in all material respects to the statements concerning the Rights contained in the Prospectuses under the caption "Description of Capital Stock Stockholder Rights Plan." (xi) The Company has all necessary corporate power and authority to execute and deliver this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement and the International Pricing Agreement and to perform its obligations hereunder and thereunder; this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement and the International Pricing Agreement have each been duly authorized, executed and delivered by the Company, and each constitutes a valid and binding agreement of the Company, enforceable in accordance with its terms (except to the extent that enforceability hereof or thereof is subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting creditors' rights generally and (ii) general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing and reasonableness), whether such principles are considered in a proceeding at law or in equity, and except that the rights to indemnification and contribution granted hereunder and thereunder may be limited by applicable federal and state securities laws or the public policy underlying such laws). (xii) The Selling Stockholder has all necessary corporate power and authority to execute and deliver this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement and the International Pricing Agreement and to perform its obligations hereunder and thereunder; this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement and the International Pricing Agreement have each been duly authorized, executed and delivered by the Selling Stockholder, and each constitutes a valid and binding agreement of the Selling Stockholder, enforceable in accordance with its terms (except to the extent that enforceability hereof or thereof is subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting creditors' rights generally and (ii) general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing and reasonableness, whether such principles are considered in a proceeding at law or in equity), and except that the rights to indemnification and contribution granted hereunder and thereunder may be limited by applicable federal and state securities laws or the public policy underlying such laws). (xiii) The execution, delivery and performance by the Company of this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement and the International Pricing Agreement and the consummation by the Company of the transactions herein and therein contemplated (i) will not violate (A) any law or present regulation of any governmental agency or authority of the United States of America or the State of New York or the Delaware General Corporation Law (the "DGCL") or (B) any agreement binding upon the Company or any of its Subsidiaries or their respective properties or any court decree or order binding upon the Company or any of its Subsidiaries (such opinion being limited to the decrees or orders that are set forth on Annex B to the opinion of such counsel and the agreements, contracts and instruments filed as Exhibits 10.1 through 10.14 to the Registration Statement (collectively, the "Covered Decrees, Orders, and Agreements")), (ii) will not result in a breach or violation of the terms or provisions of the Certificate of Incorporation or By-laws of the Company or any of its Subsidiaries, and (iii) will not result in or require the creation or imposition of any security interest or lien upon any of their properties pursuant to the provisions of any agreement binding upon the Company or any of its Subsidiaries or their respective properties (such opinion being limited to the Covered Decrees, Orders and Agreements) (except for purposes of clause (i) and (iii), where such a violation or breach or resulting security interest or lien would not affect in any material respect the transactions contemplated by this Agreement or the International Purchase Agreement or have a material adverse effect on the condition (financial or otherwise), business, properties or results of operation of the Company, Old O'Sullivan and their respective subsidiaries, taken as a whole). (xiv) The execution, delivery and performance by the Selling Stockholder of this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement and the International Pricing Agreement and the consummation by the Selling Stockholder of the transactions herein and therein contemplated (i) will not violate (A) any law or present regulation of any governmental agency or authority of the United States of America or the State of New York or the DGCL or (B) any agreement binding upon the Selling Stockholder or its properties or any court decree or order binding upon the Selling Stockholder (such opinion being limited to (1) the Covered Decrees, Orders, and Agreements and (2) the agreements, contracts and instruments to which the Selling Stockholder or its subsidiaries are parties or by which they are bound set forth on Annex C to the opinion of such counsel), (ii) will not result in a breach or violation of the terms or provisions of the Certificate of Incorporation or By-laws of the Selling Stockholder, and (iii) will not result in or require the creation or imposition of any security interest or lien upon any of its properties pursuant to the provisions of any agreement binding upon the Selling Stockholder or its properties (such opinion being limited to (1) the Covered Decrees, Orders and Agreements and (2) the agreements, contracts and instruments to which the Selling Stockholder or its subsidiaries are parties or by which they are bound set forth on Annex C hereto) (except for purposes of clause (i) and (iii), where such a violation or breach or resulting security interest or lien would not affect in any material respect the transactions contemplated by this Agreement or the International Purchase Agreement or have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations of the Selling Stockholder and its subsidiaries, taken as a whole). (xv) No authorization, approval or consent of, or registration or filing with, any court or governmental authority or agency of the United States or the State of New York or under the DGCL is required for the execution, delivery or performance by the Company of this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement or the International Pricing Agreement or the consummation by the Company of the transactions contemplated herein and therein, except such as have been obtained or made under the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations. (xvi) No authorization, approval or consent of, or registration or filing with, any court or governmental authority or agency of the United States or the State of New York or under the DGCL is required for the execution, delivery or performance by the Selling Stockholder of this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement or the International Pricing Agreement or the consummation by the Selling Stockholder of the transactions contemplated herein and therein, except such as have been obtained or made under the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations. (xvii) The Registration Statement became effective under the 1933 Act on January 26, 1994 and any required filing of the Prospectuses pursuant to Rule 424(b) of the 1933 Act Regulations has been made within the time period required by such Rule. To the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose is pending or threatened by the Commission. (xviii) The Registration Statement and the Prospectuses and any amendments or supplements thereto (except for (i) the financial statements, notes or schedules thereto and (ii) other financial information and statistical information included in the Registration Statement or Prospectuses, as to both of which such counsel need express no opinion) appear on their face to be appropriately responsive as to form in all material respects to the requirements of the 1933 Act and the 1933 Act Regulations. (xix) To the knowledge of such counsel, there are no contracts, indentures, mortgages, loan agreements, notes, leases or other instruments required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described or referred to therein or filed as exhibits thereto as required. (xx) The information set forth in the Prospectuses under the caption "Certain United States Tax Consequences to Non-United States Holders," to the extent that such information constitutes summaries of legal matters or documents, or legal conclusions, is true and correct in all material respects. (xxi) Each of the Company and Old O'Sullivan has all necessary corporate power and authority to execute and deliver each of the Reorganization Agreements to which it is a party and to perform its obligations thereunder. Each of the Reorganization Agreements to which the Company or Old O'Sullivan is a party has been duly authorized, executed and delivered by each of them (to the extent each of them is a party thereto) and constitutes a valid and binding obligation of each of them (to the extent each of them is a party thereto), enforceable in accordance with its terms (except to the extent that enforceability thereof is subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting creditors' rights generally and (ii) general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing and reasonableness), whether such principles are considered in a proceeding at law or in equity). (xxii) The Selling Stockholder has all necessary corporate power and authority to execute and deliver each of the Reorganization Agreements to which it is a party and to perform its obligations thereunder. Each of the Reorganization Agreements to which the Selling Stockholder is a party has been duly authorized, executed and delivered by the Selling Stockholder and constitutes a valid and binding obligation of the Selling Stockholder, enforceable in accordance with its terms (except to the extent that enforceability thereof is subject to (i) appliable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting creditors' rights generally and (ii) general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing and reasonableness), whether such principles are considered in a proceeding at law or in equity). (xxiii) The execution, delivery and performance by the Company and Old O'Sullivan of the Reorganization Agreements to which each of them is a party and the consummation by the Company and Old O'Sullivan of the transactions contemplated therein (i) will not violate (A) any law or present regulation of any governmental agency or authority of the United States of America or the State of New York or the DGCL or (B) any agreement binding upon the Company or Old O'Sullivan or their respective subsidiaries or properties or any court decree or order binding upon the Company or Old O'Sullivan or their respective subsidiaries (such opinion being limited (x) to the Covered Decrees, Orders and Agreements and (y) in that such counsel need not express an opinion with respect to any violation arising under or based upon any cross-default provision insofar as such violation relates to a default under an agreement not filed as an exhibit to the Registration Statement or such violation arises under or is based upon any covenant of a financial or numerical nature or requires mathematic computation), (ii) will not result in a breach or violation of the terms or provisions of the Certificate of Incorporation or By-laws of the Company or Old O'Sullivan or their respective subsidiaries, and (iii) will not result in or require the creation or imposition of any security interest or lien upon any of their properties pursuant to the provisions of any agreement binding upon the Company or Old O'Sullivan or their respective subsidiaries or properties (such opinion being limited to the Covered Decrees, Orders and Agreements) (except for purposes of clauses (i) and (iii), where such a violation or breach or resulting security interest or lien would not have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations of the Company, Old O'Sullivan and their respective subsidiaries, taken as a whole). (xxiv) The execution, delivery and performance by the Selling Stockholder of the Reorganization Agreements to which it is a party and the consummation by the Selling Stockholder of the transactions contemplated therein (i) will not violate (A) any law or present regulation of any governmental agency or authority of the United States of America or the State of New York or the DGCL or (B) any agreement binding upon the Selling Stockholder or its properties or any court decree or order binding upon the Selling Stockholder (such opinion being limited (x) to (1) the Covered Decrees, Orders and Agreements and (2) the agreements, contracts and instruments to which the Selling Stockholder or its subsidiaries are parties or by which they are bound set forth on Annex C to the opinion of such counsel) and (y) in that such counsel need not express an opinion with respect to any violation arising under or based upon any cross-default provision insofar as such violation relates to a default under an agreement not filed as an exhibit to the Registration Statement or such violation arises under or is based upon any covenant of a financial or numerical nature or requires arithmetic computation), (ii) will not result in a breach or violation of the terms or provisions of the Certificate of Incorporation or By-laws of the Selling Stockholder, and (iii) will not result in or require the creation or imposition of any security interest or lien upon any of its properties pursuant to the provisions of any agreement binding upon the Selling Stockholder or its properties (such opinion being limited to (1) the Covered Decrees, Orders and Agreements and (2) the agreements, contracts and instruments to which the Selling Stockholder or its subsidiaries are parties or by which they are bound set forth on Annex C to the opinion of such counsel) (except, for purposes of clauses (i) and (iii), where such a violation or breach or resulting security interest or lien would not affect in any material respect the transactions contemplated by this Agreement or the International Purchase Agreement or have a material adverse effect on the condition (financial or otherwise), business, properties or results of operation of the Selling Stockholder and its subsidiaries, taken as a whole). In addition, such opinion will contain the following statements: In the course of the preparation by the Company and its counsel of the Registration Statement and Prospectuses, such counsel attended conferences with certain of the officers of the Company and the Selling Stockholder and representatives of the independent public accountants for the Company, the Underwriters and counsel to the Underwriters, at which the Registration Statement and the Prospectuses were discussed. In addition, between the date of the effectiveness of the Registration Statement and the time of delivery of this opinion, such counsel attended additional conferences with certain of the officers of the Company and the Selling Stockholder and representatives of the independent public accountants for the Company, at which the contents of the Registration Statement and Prospectuses were discussed to a limited extent. Given the limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process, such counsel is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement and the Prospectuses (other than as set forth in paragraphs (ix), (x) and (xx) above). Subject to the foregoing and on the basis of the information such counsel gained in the performance of the services referred to above, including information obtained from officers and other representatives of the Company and the Selling Stockholder, no facts have come to such counsel's attention that cause such counsel to believe that the Registration Statement, at the time of the Registration Statement was declared effective by the Commission, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statement therein not misleading. Also, subject to the foregoing, no facts have come to such counsel's attention that cause such counsel to believe that the Prospectuses, as of the date thereof, at Closing Time or at any Date of Delivery, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except in each case that such counsel need not express a view or belief with respect to financial statements, notes or schedules thereto or other financial and statistical information included in the Registration Statement or Prospectuses. In rendering the foregoing opinion, such counsel shall be entitled to state that such counsel expresses no opinion regarding the laws of any jurisdiction other than the federal laws of the United States, the laws of the State of New York and the DGCL. In addition, such counsel shall be entitled to state that such counsel expresses no opinion regarding the securities or "blue sky" laws of any state or other non-federal jurisdiction in which the Securities are offered or sold. (2) The favorable opinion, dated as of Closing Time, of Rowland H. Geddie, III, Vice President, General Counsel and Secretary of the Company, in form and substance reasonably satisfactory to the U.S. Representatives, to the effect that: (i) Each of the Subsidiaries of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation. (ii) Each of the Subsidiaries of the Company has all the necessary corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectuses. (iii) Each of the Subsidiaries of the Company is duly licensed or qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction set forth on Annex A to the opinion of such counsel. (iv) All of the issued and outstanding capital stock of each of the Subsidiaries of the Company has been validly issued and is fully paid and nonassessable and is, to the knowledge of such counsel, owned by the Company, directly or indirectly, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (v) To the knowledge of such counsel, there is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending or threatened against the Company or any of its Subsidiaries, which (A) is required to be disclosed in the Registration Statement and the Prospectuses (other than as disclosed therein) or (B) might reasonably be expected to result in any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (vi) To the knowledge of such counsel, the Company is not in violation of its Certificate or By-laws, and no default by the Company or any of its Subsidiaries exists in the due performance or observance of any obligation, agreement, covenant or condition contained in any Covered Decrees, Orders, and Agreements, except for defaults that would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (vii) The execution, delivery and performance by the Company of this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement and the International Pricing Agreement and the consummation by the Company of the transactions herein and therein contemplated (i) will not violate (A) any law or present regulation of any governmental agency or authority of the State of Texas or Missouri or (B) any agreement or court decree or order known to such counsel and binding upon the Company or any of its Subsidiaries or their respective properties (such opinion being limited to the Covered Decrees, Orders, and Agreements), and (ii) will not result in or require the creation or imposition of any security interest or lien upon any of their properties pursuant to the provisions of any agreement known to such counsel and binding upon the Company or any of its Subsidiaries or their respective properties. (viii) The execution, delivery and performance by the Company and Old O'Sullivan of the Reorganization Agreements to which each of them is a party and the consummation by the Company and Old O'Sullivan of the transactions contemplated therein (i) will not violate (A) any law or present regulation of any governmental agency or authority of the State of Texas or Missouri or (B) any agreement or court decree or order known to such counsel and binding upon the Company or Old O'Sullivan or their respective subsidiaries or properties and (ii) will not result in or require the creation or imposition of any security interest or lien upon any of their properties pursuant to the provisions of any agreement known to such counsel and binding upon the Company or Old O'Sullivan or their respective subsidiaries or properties (such opinion being limited to the Covered Decrees, Orders, and Agreements) (except in each case where such a violation or breach or resulting security interest or lien would not have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations of the Company, Old O'Sullivan and their respective subsidiaries, taken as a whole). In rendering the foregoing opinion, such counsel shall be entitled to state that he expresses no opinion regarding the laws of any jurisdiction other than the federal laws of the United States, the laws of the State of Texas and (subject to the qualification set forth in the immediately following sentence) the laws of the State of Missouri. Insofar as the foregoing opinion relates to matters governed by the laws of the State of Missouri, such counsel shall be entitled to state that he has assumed, without investigation, that the laws of the State of Missouri are in all respects identical to the laws of the State of Texas. (3) The favorable opinion, dated as of Closing Time, of Frederick W. Padden, General Counsel of the Selling Stockholder, in form and substance reasonably satisfactory to the U.S. Representatives, to the effect that: (i) The Selling Stockholder is the sole record owner and, to the knowledge of such counsel, beneficial owner of the Initial Securities; to the knowledge of such counsel, the Selling Stockholder has valid and marketable title to the Initial Securities, free and clear of any claim, lien, security interest, encumbrance, restriction on transfer or other defect in title. (ii) To the knowledge of such counsel, there are no contracts, indentures, mortgages, loan agreements, notes, leases or other instruments required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described or referred to therein or filed as exhibits thereto as required. (iii) The information set forth in the Prospectuses under the captions "Management Company Compensation and Benefits" and "Certain Transactions," to the extent that such information constitutes summaries of legal matters, documents or proceedings, fairly summarizes in all material respects such legal matters, documents or proceedings. (iv) The execution, delivery and performance by the Selling Stockholder of this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement and the International Pricing Agreement and the consummation by the Selling Stockholder of the transactions herein and therein contemplated (i) will not violate (A) any law or present regulation of any governmental agency or authority of the State of Texas or (B) any agreement or court decree or order known to such counsel and binding upon the Selling Stockholder or its properties and (ii) will not result in or require the creation or imposition of any security interest or lien upon any of its properties pursuant to the provisions of any agreement known to such counsel and binding upon the Selling Stockholder or its properties. (v) The execution, delivery and performance by the Selling Stockholder of the Reorganization Agreements to which it is a party and the consummation by the Selling Stockholder of the transactions contemplated therein (i) will not violate (A) any law or present regulation of any governmental agency or authority of the State of Texas or (B) any agreement or court decree or order known to such counsel and binding upon the Selling Stockholder or its properties and (ii) will not result in or require the creation or imposition of any security interest or lien upon any of its properties pursuant to the provisions of any agreement known to such counsel and binding upon the Selling Stockholder or its properties (except in each case where such a violation or breach or resulting security interest or lien would not have a material adverse effect on the condition (financial or otherwise), business, properties or results of operation of the Selling Stockholder and its subsidiaries, taken as a whole). In rendering the foregoing opinion, such counsel shall be entitled to state that he expresses no opinion regarding the laws of any jurisdiction other than the federal laws of the United States and the laws of the State of Texas. (4) The favorable opinion, dated as of Closing Time, of Baker & Botts, L.L.P., counsel for the Underwriters, with respect to the matters set forth in clauses (i), (vi), (vii) (solely as to preemptive rights arising by operation of law or under the Certificate of Incorporation and By-laws of the Company), (ix) (solely as to the matters addressed in the first sentence thereof), (xi) (solely as to the due authorization, execution and delivery of the U.S. Purchase Agreement and the International Purchase Agreement), (xii) (solely as to the due authorization, execution and delivery of the U.S. Purchase Agreement and the International Purchase Agreement), (xvii) and (xviii) of subsection (b)(1) of this Section. Such opinion of Baker & Botts, L.L.P. shall further state that nothing has come to the attention of such counsel that causes them to believe that the Registration Statement (other than the financial statements and schedules contained therein, including the notes thereto and the auditors' reports thereon, and the other financial and statistical data contained therein, as to which such counsel need not comment), at the time it became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus (other than the financial statements and schedules contained therein, including the notes thereto and the auditors' reports thereon, and the other financial and statistical data contained therein, as to which such counsel need not comment), at the Representation Date (unless the term "Prospectus" refers to a prospectus which has been provided to the Underwriters by the Company for use in connection with the offering of the Offered Securities which differs from the prospectus on file at the Commission at the Representation Date, in which case at the time it is first provided to the Underwriters for such use), included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) At Closing Time there shall not have been, since the date hereof or since the respective dates as of which information is given in the Prospectuses, any materialadverse change in the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and the U.S. Representatives shall have received a certificate of the President or a Vice President of the Company and of the chief financial or chief accounting officer of the Company, dated as of Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties of the Company contained in Section 1(a) of this Agreement are true and correct with the same force and effect as though expressly made at and as of Closing Time, (iii) the Company has complied with all covenants and agreements and satisfied all conditions on its part to be performed or satisfied at or prior to Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and, to the knowledge of each such officer, no proceedings for that purpose have been initiated or threatened by the Commission. As used in this Section 5(c), the term "Prospectuses" shall mean the Prospectuses in the form first used to confirm sales of the Securities. (d) At Closing Time the U.S. Representatives shall have received a certificate from the President or a Vice President of the Selling Stockholder and of the chief financial officer or chief accounting officer of the Selling Stockholder, dated as of Closing Time, to the effect that (i) the representations and warranties of the Selling Stockholder contained in Sections 1(a) and 1(b) of this Agreement are true and correct with the same force and effect as though expressly made at and as of Closing Time and (ii) the Selling Stockholder has complied with all covenants and agreements and satisfied all conditions on its part to be performed or satisfied at or prior to Closing Time. (e) At the time of the execution of this Agreement, the U.S. Representatives shall have received from Price Waterhouse a letter dated such date, in form and substance satisfactory to the U.S. Representatives, to the effect that: (i) they are independent public accountants with respect to the Company and its Subsidiaries within the meaning of the 1933 Act and the 1933 Act Regulations; (ii) it is their opinion that the audited combined financial statements of the Company and its Subsidiaries included in the Registration Statement and covered by their reports therein comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations with respect to registration statements on Form S-1; (iii) on the basis of procedures (but not an audit in accordance with generally accepted auditing standards) consisting of (A) reading the minutes of meetings of the stockholders, the Board of Directors, and of the Company and its Subsidiaries since the date of the latest audited balance sheet as set forth in the minute books through a specified date not more than five business days prior to the date of this Agreement, (B) performing the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in SAS No. 71, Interim Financial Information, on the unaudited condensed interim financial statements of the Company included in the Registration Statement and reading the unaudited interim financial statements of the Company for the period from December 31, 1993 to the date of latest available interim financial statements, and (C) making inquiries of certain officials of the Company who have responsibility for financial and accounting matters regarding the specific financial statement items referred to below, nothing has come to their attention that causes them to believe that (1) the unaudited condensed combined financial statements of the Company and its Subsidiaries included in the Registration Statement do not comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations or that any material modifications should be made to the unaudited condensed combined interim financial statements, included in the Registration Statement, for them to be in conformity with generally accepted accounting principles, or (2) at a specified date not more than five business days prior to the date of this Agreement, there was any change in the capital stock or any increase in the combined long-term debt of the Company and its Subsidiaries as compared with the amounts shown in the December 31, 1993 combined balance sheet included in the Registration Statement or, during the period from January 1, 1994 to a specified date not more than five business days prior to the date of this Agreement, there were any decreases, as compared with the corresponding period in the preceding year, in the combined net sales, the total or per share amounts of income before cumulative effect of change in accounting principle, or the net income of the Company and its Subsidiaries, except in all instances for changes, increases or decreases which the Registration Statement discloses have occurred or may occur, or except as specifically stated in such letter; (iv) although they are unable to and do not express an opinion on the Pro Forma Combined Statements of Operations and Pro Forma Combined Balance Sheet (collectively, the "Pro Forma Financial Statements") included in the Registration Statement, they have (A) read the Pro Forma Financial Statements, (B) made inquiries of certain officials of the Company who have responsibility for financial and accounting matters about the basis for their determination of the pro forma adjustments to the historical amounts in the Pro Forma Financial Statements and whether the Pro Forma Financial Statements comply in form in all material respects with the applicable accounting requirements of Rule 11-02 of Regulation S-X; and (C) proved the arithmetic accuracy of the application of the pro forma adjustments to the historical amounts in the Pro Forma Statements; on the basis of such procedures, and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that the Pro Forma Financial Statements do not comply in form in all material respects with the applicable requirements of Rule 11-02 of Regulation S-X and that the pro forma adjustments have not been properly applied to the historical amounts in the compilation of such statements; and (v) they have read, with respect to certain amounts, percentages and financial information which are included in the Registration Statement and Prospectuses and which have been specified by the U.S. Representatives, and have found such amounts, percentages and financial information to be in agreement with the relevant accounting and financial records of the Company and its Subsidiaries identified in such letter. (f) At Closing Time the U.S. Representatives shall have received from Price Waterhouse a letter, dated as of Closing Time, to the effect that they confirm the statements made in the letter furnished pursuant to subsection (e) of this Section, except that the "specified date" referred to in such letter shall be a date not more than five days prior to Closing Time and, if the Company has elected to rely on Rule 430A of the 1933 Act Regulations, to the further effect that they have carried out procedures as specified in clause (v) of subsection (e) of this Section with respect to certain amounts, percentages and financial information specified by the U.S. Representatives and deemed to be a part of the Registration Statement pursuant to Rule 430(A)(b) and have found such amounts, percentages and financial information to be in agreement with the relevant accounting and financial records of the Company and its Subsidiaries identified in such letter. (g) At Closing Time the Securities shall have been approved for listing on the New York Stock Exchange, subject only to official notice of issuance. (h) At the time of the execution of this Agreement, the Company shall have furnished to the U.S. Representatives "lock-up" letters (or other agreements or instruments acceptable to the U.S. Representatives), in form and substance reasonably satisfactory to the U.S. Representatives, signed by each of the persons designated in the Prospectuses as an executive officer or director of the Company, pursuant to which each such person shall agree not to sell, offer to sell, grant an option for the sale of, or otherwise dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exchangeable into or exercisable for Common Stock for a period of 180 days from the U.S. Representation Date without the prior written consent of the U.S. Representatives (which consent shall not be unreasonably withheld), except for a bona fide transaction entered into in good faith by such person with a member of such person's family or by the executor of such person's estate, provided that the recipient of such shares (unless such recipient is the executor or administrator of the estate of a deceased transferor) agrees in writing to be bound by the terms of the transferor's lock-up letter. (i) At Closing Time and at each Date of Delivery, if any, counsel for the U.S. Underwriters shall have been furnished with such certificates, documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the sale or issuance of the Securities as herein contemplated and related proceedings, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained. (j) At Closing Time and at each Date of Delivery, if any, all actions, proceedings, instruments, opinions and documents required in connection with the consummation of the transactions contemplated by this Agreement and the International Purchase Agreement at or prior to Closing Time or such Date of Delivery, as the case may be, shall be reasonably satisfactory to the U.S. Representatives. (k) In the event the U.S. Underwriters exercise their option provided in Section 2(b) hereof to purchase all or any part of the U.S. Option Securities and the Date of Delivery specified by the U.S. Underwriters for any such purchase is a date other than the Closing Time, the obligation of the U.S. Underwriters to purchase all or any such portion of the U.S. Option Securities shall be subject, in addition to the foregoing conditions, to the accuracy of the representations and warranties of the Company and the Selling Stockholder herein contained at each Date of Delivery, to the performance by the Company and the Selling Stockholder of its obligations hereunder required to be performed prior to or at each Date of Delivery, and to the receipt by the U.S. Underwriters of the following: (1) A certificate, dated such Date of Delivery, of the President or a Vice President of the Company and of the chief financial or chief accounting officer of the Company confirming that the certificate delivered at Closing Time pursuant to Section 5(c) hereof remains true as of such Date of Delivery. (2) A certificate, dated such Date of Delivery, of the President or a Vice President of the Selling Stockholder and of the chief financial or chief accounting officer of the Selling Stockholder confirming that the certificate delivered at Closing Time pursuant to Section 5(d) hereof remains true as of such Date of Delivery. (3) The favorable opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel for the Company, in form and substance reasonably satisfactory to the U.S. Representatives, dated such Date of Delivery, relatingto the Option Securities and otherwise to the same effect as the opinion required by Section 5(b)(1) hereof. (4) The favorable opinion of Frederick W. Padden, General Counsel of the Selling Stockholder, in form and substance reasonably satisfactory to the U.S. Representatives, dated such Date of Delivery, relating to the Option Securities and otherwise to the same effect as the opinion required by Section 5(b)(2) hereof. (5) The favorable opinion of Rowland H. Geddie, III, Vice President, General Counsel and Secretary of the Company, in form and substance reasonably satisfactory to the U.S. Representatives, dated such Date of Delivery, relating to the Option Securities and otherwise to the same effect as the opinion required by Section 5(b)(3) hereof. (6) The favorable opinion of Baker & Botts, L.L.P., counsel for the U.S. Underwriters, dated such Date of Delivery, relating to the Option Securities and otherwise to the same effect as the opinion required by Section 5(b)(4) hereof. (7) A letter, dated as of such Date of Delivery, from Price Waterhouse, in form and substance reasonably satisfactory to the U.S. Representatives, substantially the same in scope and substance as the letter furnished pursuant to Section 5(f) hereof, except that the "specified date" in such letter shall be a date not more than five days prior to such Date of Delivery. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the U.S. Representatives by notice to the Company and the Selling Stockholder at any time at or prior to Closing Time or (insofar as the provisions hereof relate to the Option Securities) any Date of Delivery and such termination shall be without liability of any party to any other party. Notwithstanding the foregoing, the provisions of Sections 4(a), 4(b), 6 and 7 hereof shall remain in effect following any such termination. SECTION 6. Indemnification. (a) The Company and the Selling Stockholder jointly and severally agree to indemnify and hold harmless each U.S. Underwriter, each officer and director of any U.S. Underwriter and each person, if any, who controls any U.S. Underwriter within the meaning of Section 15 of the 1993 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including the information deemed to be part of the Registration Statement pursuant to Rule 430A(b) of the 1933 Act Regulations, if applicable, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or the Prospectuses (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to theextent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Company and the Selling Stockholder; and (iii) against any and all expense whatsoever, as incurred (including the fees and expenses of counsel chosen by the U.S. Representatives), reasonablyincurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and conformity with written information furnished to the Company by any U.S. Underwriter through Merrill Lynch expressly for use in the Registration Statement (or any amendment thereto) or any preliminary prospectus or the U.S. Prospectus (or any amendment or supplement thereto); and provided, further, that this indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any U.S. Underwriter from whom the person asserting any such losses, liabilities, claims, damages or expenses purchased Securities, any officer or director of such U.S. Underwriter or any person controlling such Underwriter, if a copy of the U.S. Prospectus (as then amended or supplemented if the Company shall have furnished any such amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if such is required by law, at or prior to the written confirmation of the sale of such Securities to such person and if the U.S. Prospectus (as so amended or supplemented) would have corrected the defect giving rise to such loss, liability, claim, damage or expense. (b) Each U.S. Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors and each of its officers who signed the Registration Statement, the Selling Stockholder and each of its officers and directors and each person, if any, who controls the Company or the Selling Stockholder within the meaning of Section 15 of the 1933 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including the information deemed to be part of the Registration Statement pursuant to Rule 430A(b) of the 1933 Act Regulations, if applicable, or any preliminary prospectus or the Prospectuses (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such U.S. Underwriter through Merrill Lynch expressly for use in the Registration Statement (or any amendment thereto) or the Prospectuses (or any amendment or supplement thereto). (c) Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify any indemnifying party shall not relieve such indemnifying party from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. SECTION 7. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 6 hereof is for any reason held to be unenforceable by the indemnified parties although applicable in accordance with its terms, the Company, the Selling Stockholder and the U.S. Underwriters shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company, the Selling Stockholder and one or more of the U.S. Underwriters, as incurred, in such proportions that the U.S. Underwriters are responsible for that portion represented by the percentage that the underwriting discount appearing on the cover page of the Prospectuses bears to the initial public offering price appearing thereon and the Company and the Selling Stockholder will be jointly and severally responsible for the balance; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each person, if any, who controls a U.S. Underwriter within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as such U.S. Underwriter, each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as the Company, and each person who controls the Selling Stockholder within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as the Selling Stockholder. SECTION 8. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties, agreements and indemnities contained in this Agreement and the U.S. Pricing Agreement, or contained in certificates of officers of the Company or the Selling Stockholder submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any U.S. Underwriter or controlling person, or by or on behalf of the Company or the Selling Stockholder, and shall survive delivery of and payment for the U.S. Securities to or by the U.S. Underwriters. SECTION 9. Termination of Agreement. (a) The U.S. Representatives may terminate this Agreement, by notice to the Company and the Selling Stockholder, at any time at or prior to Closing Time (i) if there has been, since the date of this Agreement or since the respective dates as of which information is given in the Prospectuses, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) if there has occurred any material adverse change in the financial markets in the United States or elsewhere or any outbreak of hostilities or escalation thereof or other calamity or crisis, the effect of which is such as to make it, in the reasonable judgment of the U.S. Representatives, impracticable to market the Securities or enforce contracts for the sale of the Securities, or (iii) if trading in the Common Stock has been suspended by the Commission or the New York Stock Exchange, or if trading generally on either the New York Stock Exchange or the American Stock Exchange has been suspended, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required, by either of said exchanges or by order of the Commission or any other governmental authority, or if a banking moratorium has been declared by either federal or New York authorities. As used in this Section 9(a), the term "Prospectuses" means the Prospectuses in the form first used to confirm sales of the Securities. (b) If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party. Notwithstanding the foregoing, the provisions of Sections 4(a), 4(b), 6 and 7 shall remain in effect. (c) This Agreement may also terminate pursuant to the provisions of Section 2(a)(ii) hereof, with the effect stated in such Section. SECTION 10. Default by one or more U.S. Underwriters. If any one or more of the U.S. Underwriters shall fail at Closing Time to purchase and pay for any of the Initial U.S. Securities pursuant to this Agreement and the U.S. Pricing Agreement and such failure to purchase shall constitute a default in the performance of its or their obligations hereunder and thereunder, the U.S. Representatives shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non- defaulting U.S. Underwriters or any other underwriters to purchase all, but not less than all, of the Initial U.S. Securities not so purchased in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the U.S. Underwriters shall not have completed such arrangements within said 24-hour period, then: (a) if the number of Initial U.S. Securities not so purchased does not exceed 10% of the Initial U.S. Securities, the non-defaulting U.S. Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non- defaulting U.S. Underwriters, or (b) if the number of Initial U.S. Securities not so purchased equals or exceeds 10% of the Initial U.S. Securities, this Agreement shall terminate without liability on the part of any non-defaulting U.S. Underwriter. No action taken pursuant to this Section shall relieve any defaulting U.S. Underwriter from any liability it may have hereunder in respect of its default. In the event of any such default which does not result in a termination of this Agreement, the U.S. Representatives shall have the right to postpone Closing Time for such period, not exceeding seven days, as they shall determine, after consultation with the Company, in order that the required changes in the Registration Statement and the Prospectuses or in any other documents or arrangements may be effected. SECTION 11. Information Furnished by U.S. Underwriters. The U.S. Underwriters acknowledge that the statements contained in (i) the last paragraph of text on the outside front cover page of the U.S. Prospectus, (ii) the legend regarding stabilization activities on the inside front cover page of the U.S. Prospectus and (iii) the fourth, sixth, seventh, eighth, tenth and thirteenth paragraphs under the caption "Underwriting" in the U.S. Prospectus were included in the Registration Statement, the preliminary U.S prospectus and the U.S. Prospectus in reliance upon and in conformity with written information furnished to the Company by the U.S. Underwriters through Merrill Lynch expressly for use therein, and the Company and the Selling Stockholder acknowledge and agree that such statements constitute the only information so furnished to the Company by the U.S. Underwriters. SECTION 12. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the U.S. Underwriters shall be directed to the U.S. Representatives in care of Merrill Lynch at World Financial Center, North Tower, 250 Vesey Street, New York, New York 10281, to the attention of the Syndicate Department; notices to the Company shall be directed to it at 1900 Gulf Street, Lamar, Missouri 64759, to the attention of the General Counsel; and notices to the Selling Stockholder shall be directed to it at TE Electronics Technology Center, 200 Taylor Street, Suite 700, Fort Worth, Texas 76102, to the attention of the General Counsel. SECTION 13. Parties. This Agreement and the U.S. Pricing Agreement shall each inure to the benefit of and be binding upon the U.S. Underwriters, the Company and the Selling Stockholder and their respective successors. Nothing expressed or mentioned in this Agreement or the U.S. Pricing Agreement is intended or shall be construed to give any person, firm or corporation, other than the U.S. Underwriters, the Company and the Selling Stockholder and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 hereof and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or the U.S. Pricing Agreement or any provision herein or therein contained. This Agreement and the U.S. Pricing Agreement and all conditions and provisions hereof and thereof are intended to be for the sole and exclusive benefit of the U.S. Underwriters, the Company and the Selling Stockholder and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any U.S. Underwriter shall be deemed to be a successor by reason merely of such purchase. SECTION 14. Certain Actions; Authority of U.S. Representatives. Any action required or permitted to be taken by the U.S. Underwriters under or in connection with this Agreement may be taken by them jointly or by Merrill Lynch. The U.S. Representatives represent that they have been authorized by the other U.S. Underwriters to execute this Agreement and the U.S. Pricing Agreement on behalf of the other U.S. Underwriters. SECTION 15. Governing Law and Time. This Agreement and the U.S. Pricing Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in said state. Except where otherwise provided, specified times of day refer to New York City time. SECTION 16. Counterparts. This Agreement may be executed in one or more counterparts and, when a counterpart has been executed by each party, all such counterparts taken together shall constitute one and the same agreement. If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement among the Company, the Selling Stockholder and each of the U.S. Underwriters. Very truly yours, O'SULLIVAN INDUSTRIES HOLDINGS, INC. By:_______________________________ Name:_____________________________ Title:____________________________ TE ELECTRONICS INC. By:_______________________________ Name:_____________________________ Title:____________________________ CONFIRMED AND ACCEPTED, as of the date first above written: MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated WHEAT FIRST BUTCHER & SINGER Wheat, First Securities, Inc. THE CHICAGO DEARBORN COMPANY RAUSCHER PIERCE REFSNES, INC. By: Merrill Lynch, Pierce, Fenner & Smith Incorporated By:/s/ M. David White M. David White Vice President For themselves and as U.S. Representatives of the several other U.S. Underwriters named in Schedule A hereto. SCHEDULE A Number of Initial U.S. Name of U.S. Underwriter Securities Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . . . . . . . . . . 2,353,500 Wheat, First Securities, Inc . . . . . . . . 1,513,500 The Chicago Dearborn Company . . . . . . . . 1,513,500 Rauscher Pierce Refsnes, Inc . . . . . . . . 763,500 UBS Securities Inc . . . . . . . . . . . . . 190,000 A.G. Edwards & Sons, Inc. . . . . . . . . . 190,000 Morgan Stanley & Co. Incorporated . . . . . 190,000 CS First Boston Corporation . . . . . . . . 190,000 Bear, Stearns & Co. Inc. . . . . . . . . . 190,000 Alex. Brown & Sons Incorporated . . . . . . 190,000 Commerzbank Capital Markets Corporation . . 190,000 Credit Lyonnais Securities (USA) Inc. . . . 190,000 Dean Witter Reynolds Inc. . . . . . . . . . 190,000 Dillon, Read & Co. Inc. . . . . . . . . . . 190,000 Donaldson, Lufkin & Jenrette Securities Corporation . . . . . . . . . . . . . . 190,000 Kidder, Peabody & Co. Incorporated . . . . . 190,000 PaineWebber Incorporated . . . . . . . . . . 190,000 Prudential Securities Incorporated . . . . . 190,000 Salomon Brothers Inc. . . . . . . . . . . . 190,000 Smith Barney Shearson Inc. . . . . . . . . 190,000 Wertheim Schroder & Co. Incorporated . . . . 190,000 Janney Montgomery Scott Inc. . . . . . . . 190,000 The Principal/Eppler, Guerin & Turner, Inc. 190,000 Robert W. Baird & Co. Incorporated . . . . . 110,000 William Blair & Company . . . . . . . . . . 110,000 J.C. Bradford & Co. . . . . . . . . . . . . 110,000 Dain Bosworth Incorporated . . . . . . . . . 110,000 First of Michigan Corporation . . . . . . . 110,000 Interstate/Johnson Lane Corporation . . . . 110,000 Edward D. Jones & Co. . . . . . . . . . . . 110,000 Kemper Securities, Inc. . . . . . . . . . . 110,000 C.J. Lawrence/Deutsche Bank Securities Corporation . . . . . . . . . . . . . . 110,000 Legg Mason Wood Walker, Incorporated . . . . 110,000 McDonald & Company Securities, Inc. . . . . 110,000 Piper Jaffray Inc. . . . . . . . . . . . . . 110,000 Ragen MacKenzie. . . . . . . . . . . . . . . 110,000 Raymond James & Associates, Inc. . . . . . . 110,000 The Robinson-Humphrey Company, Inc. . . . . 110,000 Scott & Stringfellow, Inc. . . . . . . . . . 110,000 Tucker Anthony Incorporated . . . . . . . . 110,000 Gilford Securities Corporation . . . . . . . 30,000 George K. Baum & Company . . . . . . . . . . 30,000 Mesirow Financial, Inc. . . . . . . . . . . 30,000 Rothschild Inc. . . . . . . . . . . . . . . 30,000 Auerbach, Pollack & Richardson, Inc. . . . 20,000 _________ Total . . . . . . . . . . . . . . . . .. 11,764,000 EXHIBIT A 11,764,000 Shares O'SULLIVAN INDUSTRIES HOLDINGS, INC. (a Delaware corporation) Common Stock (Par Value $1.00 Per Share) U.S. PRICING AGREEMENT January __, 1994 MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated WHEAT FIRST BUTCHER & SINGER Wheat, First Securities, Inc. THE CHICAGO DEARBORN COMPANY RAUSCHER PIERCE REFSNES, INC. as U.S. Representatives of the several U.S. Underwriters named in the within mentioned U.S. Purchase Agreement c/o MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated World Financial Center North Tower 250 Vesey Street New York, New York 10281 Dear Sirs: Reference is made to the U.S. Purchase Agreement, dated January __, 1994 (the "U.S. Purchase Agreement"), with respect to (i) the sale by the Selling Stockholder and the purchase by the several U.S. Underwriters named in Schedule A thereto, acting severally and not jointly, of an aggregate of 11,764,000 shares (the "Initial U.S. Securities") of Common Stock, par value $1.00 per share ("Common Stock"), of O'Sullivan Industries Holdings, Inc. (the "Company"), together with the Preferred Stock Purchase Rights of the Company (the "Rights") associated with such shares, and (ii) the grant by the Company to the U.S. Underwriters, acting severally and not jointly, of the option to purchase all or any part of the U.S. Underwriters' pro rata portion of up to an additional 1,800,000 shares of Common Stock, together with the Rights associated with such shares, to cover over- allotments. Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in the U.S. Purchase Agreement. Pursuant to Section 2(a) of the U.S. Purchase Agreement, the Company and the Selling Stockholder agree with each U.S. Underwriter as follows: (a) The initial public offering price per share of the U.S. Securities shall be $_______. (b) The purchase price per share for the U.S. Securities to be paid by the several U.S. Underwriters shall be $______, being an amount equal to the initial public offering price set forth above less $_______ per share. If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement among the Company, the Selling Stockholder and each of the U.S. Underwriters. Very truly yours, O'SULLIVAN INDUSTRIES HOLDINGS, INC. By:_______________________________ Name:_____________________________ Title:____________________________ TE ELECTRONICS, INC. By:_______________________________ Name:_____________________________ Title:____________________________ CONFIRMED AND ACCEPTED, as of the date first above written: MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated WHEAT FIRST BUTCHER & SINGER Wheat, First Securities, Inc. THE CHICAGO DEARBORN COMPANY RAUSCHER PIERCE REFSNES, INC. By: Merrill Lynch, Pierce, Fenner & Smith Incorporated By:/s/ M. David White M. David White Vice President For themselves and as U.S. Representatives of the several other U.S. Underwriters named in Schedule A to the U.S. Underwriting Agreement. EX-2.(D) 4 1993 10K EXHIBIT 2D Exhibit 2d _____________________________________________________________ O'SULLIVAN INDUSTRIES HOLDINGS, INC. 3,000,000 Shares Common Stock INTERNATIONAL PURCHASE AGREEMENT MERRILL LYNCH INTERNATIONAL LIMITED UBS LIMITED _____________________________________________________________ 3,000,000 Shares O'SULLIVAN INDUSTRIES HOLDINGS, INC. (a Delaware corporation) Common Stock (Par Value $1.00 Per Share) INTERNATIONAL PURCHASE AGREEMENT January 26, 1994 MERRILL LYNCH INTERNATIONAL LIMITEDUBS LIMITED as Lead Managers of the several Managers c/o Merrill Lynch International Limited Ropemaker Place 25 Ropemaker Street London EC2Y 9LY ENGLAND Dear Sirs: O'Sullivan Industries Holdings, Inc., a Delaware corporation (the "Company"), and TE Electronics Inc., a Delaware corporation (the "Selling Stockholder"), confirm their agreement with you and each of the other underwriters named in Schedule A hereto (collectively, the "Managers," which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for whom Merrill Lynch International Limited ("MLI") and UBS Limited are acting as representatives (in such capacity, MLI and UBS Limited being hereinafter collectively referred to as the "Lead Managers"), with respect to (i) the sale by the Selling Stockholder and the purchase by the Managers, acting severally and not jointly, of the respective number of shares of Common Stock, par value $1.00 per share ("Common Stock"), of the Company set forth in Schedule A hereto, together with the Preferred Stock Purchase Rights of the Company (the "Rights") associated with such shares, and (ii) the grant by the Company to the Managers, acting severally and not jointly, of the option described in Section 2(b) hereof to purchase all or any part of the Managers' pro rata portion of up to an additional 1,800,000 shares of Common Stock, together with the Rights associated with such shares, to cover over-allotments, in each case except as may otherwise be provided in the International Pricing Agreement (as hereinafter defined). The 3,000,000 shares of Common Stock, together with the Rights associated with such shares, to be purchased by the Managers from the Selling Stockholder (the "Initial International Securities") and all or any part of the Managers' pro rata portion of 1,800,000 shares of Common Stock, together with the Rights associated with such shares, subject to the option described in Section 2(b) hereof (the "International Option Securities") are hereinafter collectively referred to as the "International Securities." It is understood that the Company and the Selling Stockholder are concurrently entering into a U.S. Purchase Agreement of even date herewith (the "U.S. Purchase Agreement") with respect to (i) the sale by the Selling Stockholder of 11,764,000 shares of Common Stock, together with the Rights associated with such shares (the "Initial U.S. Securities"), through arrangements with certain underwriters in the United States and Canada (the "U.S. Underwriters"), for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Wheat, First Securities, Inc., The Chicago Dearborn Company and Rauscher Pierce Refsnes, Inc. are acting as representatives (the "U.S. Representatives"), and (ii) the grant by the Company to the U.S. Underwriters of an option to purchase all or any part of the U.S. Underwriters' pro rata portion of up to an additional 1,800,000 shares of Common Stock, together with the Rights associated with such shares (the "U.S. Option Securities"), to cover over-allotments, in each case except as may otherwise be provided in the U.S. Pricing Agreement (as hereinafter defined). The Initial U.S. Securities and the U.S. Option Securities are hereinafter collectively referred to as the "U.S. Securities." It is understood that the Managers are not obligated to purchase, any Initial International Securities unless all of the Initial U.S. Securities are contemporaneously purchased by the U.S. Underwriters. The Managers and the U.S. Underwriters are hereinafter collectively referred to as the "Underwriters." The Initial International Securities and the Initial U.S. Securities are hereinafter collectively referred to as the "Initial Securities." The International Option Securities and the U.S. Option Securities are hereinafter collectively referred to as the "Option Securities." The International Securities and the U.S. Securities are hereinafter collectively referred to as the "Securities." Unless the context otherwise requires, all references contained herein to the Initial International Securities, the International Option Securities, the International Securities, the Initial U.S. Securities, the U.S. Option Securities, the U.S. Securities, the Initial Securities, the Option Securities and the Securities shall include the respective numbers of shares of Common Stock set forth above, together with the Rights associated with such shares. The Company and the Selling Stockholder understand that the Underwriters are concurrently entering into an Intersyndicate Agreement of even date herewith providing for the coordination of certain transactions among the Underwriters under the direction of the Lead Managers and the U.S. Representatives. Prior to the purchase and public offering of the International Securities by the several Managers, the Company, the Selling Stockholder and the Lead Managers, acting on behalf of the several Managers, shall enter into an agreement substantially in the form of Exhibit A hereto (the "International Pricing Agreement"). The International Pricing Agreement may take the form of an exchange of any standard form of written telecommunication among the Company, the Selling Stockholder and the Lead Managers and shall specify such applicable information as is indicated in Exhibit A hereto. The offering of the International Securities will be governed by this Agreement, as supplemented by the International Pricing Agreement. From and after the date of the execution and delivery of the International Pricing Agreement, this Agreement shall be deemed to incorporate, and all references to "this Agreement" or "herein" shall be deemed to include, the International Pricing Agreement, unless the context requires otherwise. The initial public offering price and the purchase price with respect to the U.S. Securities shall be set forth in a separate instrument (the "U.S. Pricing Agreement"), the form of which is attached to the U.S. Purchase Agreement. The price per share for the U.S. Securities to be purchased by the U.S. Underwriters pursuant to the U.S. Purchase Agreement shall be identical to the price per shares for the International Securities to be purchased by the Managers hereunder. The Company has filed with the United States Securities and Exchange Commission (the "Commission") a registration statement on Form S-1 (Commission File No. 33-72120) to effect the registration of the Securities under the Securities Act of 1933, as amended (the "1933 Act"), has filed such amendments thereto, if any, as may have been required to the date hereof, and will file such additional amendments thereto as may hereafter be required. Such registration statement includes two forms of prospectus for use in connection with the offering and sale of the Securities: the international prospectus, for use in connection with the offering and sale of Securities outside the United States and Canada to persons other than United States and Canadian persons and the U.S. prospectus, for use in connection with the offering and sale of Securities in the United States and Canada to United States and Canadian persons. The international prospectus and U.S. prospectus are identical except that they contain different outside front and outside back cover pages and different sections under the caption "Underwriting" and the international prospectus contains an additional section under the caption "Certain United States Tax Consequences to Non-United States Holders." Such registration statement also includes a third form of prospectus relating to a separate offering of 236,000 shares of Common Stock, together with the Rights associated with such shares, to certain members of the Company's management and their affiliates. Such registration statement (as amended, if applicable) and the prospectuses constituting a part thereof at the time such registration statement becomes effective (including in each case the information, if any, deemed to be part thereof pursuant to Rule 430A(b) of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations")), as from time to time amended or supplemented pursuant to the 1933 Act or otherwise, is hereinafter referred to as the "Registration Statement." The international prospectus and the U.S. prospectus in the respective forms included in the Registration Statement are hereinafter referred to as the "International Prospectus" and the "U.S. Prospectus," except that if any revised prospectuses shall be provided to the Managers or the U.S. Underwriters by the Company for use in connection with the offering of the Securities which differ from the prospectuses on file at the Commission at the time the Registration Statement becomes effective (whether or not such revised prospectuses are required to be filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations), the terms "International Prospectus" and "U.S. Prospectus" shall refer to such revised prospectuses from and after the time they are first provided to the Managers or the U.S. Underwriters for such use. The International Prospectus and the U.S. Prospectus are hereinafter referred to collectively as the "Prospectuses" and, each individually, as a "Prospectus." The prospectus relating to the separate offering of 236,000 shares of Common Stock and associated Rights to certain members of the Company's management and their affiliates in the form included in the Registration Statement is hereinafter referred to as the "Management Prospectus." The Company and the Selling Stockholder understand that the Managers propose to make a public offering of the International Securities as soon as the Lead Managers deem advisable after the Registration Statement becomes effective and the International Pricing Agreement has been executed and delivered. SECTION 1. Representations and Warranties. (a) The Company and the Selling Stockholder jointly and severally represent and warrant to each of the Managers (except that the Selling Stockholder does not make any representation or warranty with respect to the matters addressed by clauses (xii), (xvi), (xvii), (xviii) and (xxi) below) as of the date hereof and as of the date of the International Pricing Agreement (such latter date being hereinafter referred to as the "International Representation Date") as follows: (i) At the time the Registration Statement becomes effective and at the International Representation Date, the Registration Statement will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectuses, at the International Representation Date (unless the term "Prospectuses" refers to prospectuses which have been provided to the Managers and the U.S. Underwriters by the Company for use in connection with the offering of the Securities which differ from the prospectuses on file at the Commission at the time the Registration Statement becomes effective, in which case at the time such prospectuses are first provided to the Managers and the U.S. Underwriters for such use) and at Closing Time (as hereinafter defined) will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Prospectuses made in reliance upon and in conformity with information furnished to the Company in writing by any Manager through Merrill Lynch expressly for use in the Registration Statement or the Prospectuses. (ii) Price Waterhouse, the accountants who reported on the combined financial statements included in the Registration Statement and the Prospectuses are independent public accountants with respect to the Company and its Subsidiaries (as hereinafter defined) as required by the 1933 Act and the 1933 Act Regulations. (iii) The combined financial statements, including the notes thereto, included in the Registration Statement and the Prospectuses present fairly the combined financial position of the Company and its Subsidiaries as at the dates indicated and the combined results of operations and cash flows for the Company and its Subsidiaries for the periods specified; such financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved; there are no supporting schedules required to be included in the Registration Statement pursuant to the 1933 Act or the 1933 Act Regulations (other than schedules which have been omitted therefrom because the required information is included in the combined financial statements, including the notes thereto, included in the Registration Statement and the Prospectuses). (iv) The pro forma financial information included in the Registration Statement and the Prospectuses has been prepared in all material respects in accordance with the applicable rules and regulations of the Commission with respect to pro forma financial statements, presents fairly the information included therein and has been properly compiled on the pro forma basis described therein; in the opinion of the Company and the Selling Stockholder, the assumptions used in the preparation of such pro forma financial information are reasonable and the adjustments made thereto are appropriate to give effect to the transactions and events referred to therein. (v) Since the respective dates as of which information is given in the Registration Statement and the Prospectuses, except as otherwise stated therein, or expressly contemplated thereby, (A) there has been no material adverse change in the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, (B) there have been no transactions entered into by the Company or any of its Subsidiaries, other than the reorganization transactions to be consummated prior to or at Closing Time as described in the Prospectuses under the caption "Certain Transactions Reorganization Transactions" and other transactions entered into in the ordinary course of business, which are material with respect to the Company and its Subsidiaries considered as one enterprise and (C) except for (1) the dividend in the amount of $40 million to be paid to the Selling Stockholder by Old O'Sullivan (as hereinafter defined) prior to Closing Time as described in the Prospectuses under the caption "Certain Transactions Reorganization Transactions," (2) the final adjusting payment, if any, to be made by the Company to Tandy as a result of the accounting of the stockholders' equity of the Company at Closing Time described in the Prospectuses under the caption "Certain Transactions Reorganization Transactions" and (3) the dividend of one Right to be issued with respect to each share of Common Stock as described in the Prospectuses under the caption "Description of Capital Stock Stockholder Rights Plan," there has been no dividend or distribution of any kind declared, paid or made by the Company or any of its Subsidiaries on any class of their capital stock. (vi) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware and has all necessary corporate power to own, lease and operate its properties and to conduct its business as described in the Prospectuses, and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to have such corporate power or to be so qualified would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (vii) Each Subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and has all necessary corporate power to own, lease and operate its properties and to conduct its business as described in the Prospectuses, and each Subsidiary of the Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to have such corporate power or to be so qualified would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise; all of the issued and outstanding capital stock of each such Subsidiary has been duly authorized and, at Closing Time, will be validly issued, fully paid and nonassessable and will be owned by the Company, directly or indirectly, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity, except any such security interest, mortgage, pledge, lien, encumbrance, claim or equity that is disclosed in the Prospectuses. (viii) At Closing Time, the authorized, issued and outstanding capital stock of the Company will be as set forth in the Prospectuses under the column entitled "As Adjusted" under the caption "Capitalization;" the 100 shares of Common Stock heretofore issued by the Company to the Selling Stockholder have been duly authorized and are validly issued, fully paid and nonassessable; the 14,999,900 shares of Common Stock to be issued by the Company to the Selling Stockholder in accordance with the Stock Exchange Agreement (as hereinafter defined) have been duly authorized and, when issued and delivered by the Company in accordance with said agreement, will be validly issued, fully paid and nonassessable; the Option Securities have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and the U.S. Purchase Agreement and, when issued and delivered by the Company in accordance with this Agreement and the U.S. Purchase Agreement against payment of the consideration set forth herein and therein, will be validly issued, fully paid and nonassessable; the issuance of the Securities is not subject to any preemptive or other similar rights to subscribe for or purchase the same arising by operation of law, under the charter or bylaws of the Company or otherwise; the Common Stock conforms in all material respects to all statements relating thereto contained in the Prospectuses; at Closing Time, the Rights associated with the shares of Common Stock to be sold or issued pursuant to this Agreement and the U.S. Purchase Agreement will have been duly and validly authorized and, when the shares of Common Stock with which they are associated are sold or issued and delivered in accordance with this Agreement and the U.S. Purchase Agreement, will be validly issued in accordance with the terms of the Rights Agreement, dated as of February 1, 1994, between the Company and The First National Bank of Boston, as Rights Agent, as amended; the Rights conform in all material respects to the statements relating thereto contained in the Prospectuses. (ix) This Agreement has been duly authorized, executed and delivered by the Company and, at the International Representation Date, the International Pricing Agreement will be duly authorized, executed and delivered by the Company. (x) Neither the Company nor any of its Subsidiaries is in violation of its charter or bylaws or is in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Company or any of its Subsidiaries is a party or by which any of them is bound or to which any of the property or assets of any of them is subject, except as disclosed in the Prospectuses and except for any such violations or defaults which would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise; the execution, delivery and performance by the Company of this Agreement, the U.S. Purchase Agreement, the International Pricing Agreement and the U.S. Pricing Agreement and the consummation by the Company of the transactions contemplated herein and therein will not conflict with or constitute a breach or violation of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its Subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which any of them is bound or to which any of the property or assets of any of them is subject, nor will such action result in any breach or violation of, or default under, the provisions of the charter or bylaws of the Company or any of its Subsidiaries or of any existing applicable law, administrative regulation or administrative or court decree, except for such conflicts, breaches, violations, defaults, liens, charges or encumbrances that would not affect in any material respect the transactions contemplated by this Agreement or the U.S. Purchase Agreement and would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xi) No authorization, approval or consent of, or registration or filing with, any court or governmental authority or agency is required for the execution, delivery or performance by the Company of this Agreement, the U.S. Purchase Agreement, the International Pricing Agreement or the U.S. Pricing Agreement or the consummation by the Company of the transactions contemplated herein and therein, except such as may be required under the 1933 Act, the 1933 Act Regulations, the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules and regulations of the Commission under the 1934 Act (the "1934 Act Regulations") or under the securities laws of any state or other jurisdiction. (xii) No labor dispute with the employees of the Company or any of its Subsidiaries exists or, to the knowledge of the Company, is imminent, which could reasonably be expected to result in any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xiii) There is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending or, to the knowledge of the Company or the Selling Stockholder, threatened against or affecting the Company or any of its Subsidiaries, except as disclosed in the Prospectuses, which (A) is required to be disclosed in the Registration Statement and the Prospectuses, (B) might reasonably be expected to result in any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise or to materially and adversely affect their properties or assets or (C) might reasonably be expected to materially and adversely affect the consummation of the transactions contemplated by this Agreement or the U.S. Purchase Agreement; all pending legal or governmental proceedings to which the Company or any of its Subsidiaries is a party or of which any of their respective property or assets is the subject which are not described in the Registration Statement and the Prospectuses, including ordinary routine litigation incidental to their business, are, considered in the aggregate, not material. (xiv) There are no contracts or documents which are required to be described in the Registration Statement or the Prospectuses or to be filed as exhibits to the Registration Statement by the 1933 Act or the 1933 Act Regulations which have not been so described or filed. (xv) Each of the Company and its Subsidiaries has filed all federal, state, local and foreign income and franchise tax returns required to be filed through the date hereof, except insofar as the failure to file any such returns would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, and has paid all taxes due as shown thereon, and except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided, there is no tax deficiency asserted against the Company or any of its Subsidiaries which, if determined adversely to the Company or any of its Subsidiaries, would have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xvi) The Company and its Subsidiaries have good and marketable title to all material properties and assets described in the Prospectuses as owned by them and valid, subsisting and enforceable leases for all of the material properties and assets, real or personal, described in the Prospectuses as leased by them, in each case free and clear of any security interests, mortgages, pledges, liens, encumbrances or charges of any kind, other than those which (A) are described in the Prospectuses or (B) could not materially impair or interfere with the use currently made by the Company or its Subsidiaries of the properties or assets to which it applies or otherwise have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xvii) The Company and its Subsidiaries own or possess, or can acquire on reasonable terms, adequate rights to use the patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names (collectively, "patent and proprietary rights") necessary to conduct the business now conducted by them, and neither the Company nor any of its Subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any patent and proprietary rights, except where such infringement or conflict, if the subject of an unfavorable decision, ruling or finding, would not result in a material adverse change in the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xviii) The Company and its Subsidiaries possess such licenses, permits, consents, orders, certificates or authorizations issued by appropriate federal, state, foreign or local regulatory agencies or bodies as are necessary to conduct the business now operated by them as described in the Prospectuses, except as disclosed in the Prospectuses and except where the failure to possess such licenses, permits, consents, orders, certificates or authorizations would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise; and neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such licenses, permits, consents, orders, certificates or authorizations which, if the subject of an unfavorable decision, ruling or finding, would have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xix) Neither the Company nor any of its Subsidiaries is in violation of any existing applicable law, ordinance, governmental rule or regulation or court decree to which the Company or any of its Subsidiaries or any of their respective properties and assets are subject, except where such violation would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise; without limiting the generality of the foregoing, neither the Company nor any of its Subsidiaries has violated (A) any existing applicable foreign, federal, state or local law or regulation relating to the protection of human health and the environment, including but not limited to, any such law pertaining to hazardous or toxic substances or wastes, pollutants or contaminants (collectively, "Environmental Laws"), (B) the terms of any licenses, permits, consents, orders, certificates or authorizations required of them under applicable Environmental Laws, (C) any federal or state law relating to discrimination in the hiring, promotion or pay of employees or any applicable federal or state wages and hours laws, or (D) any provisions of the Employee Retirement Income Security Act or the rules and regulations promulgated thereunder, except as disclosed in the Prospectus and except for any such violations which would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xx) The Company has reasonably concluded that, except as disclosed in the Prospectus, the costs and liabilities associated with compliance with Environmental Laws are not likely to have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xxi) The Company and its Subsidiaries maintain books and records and internal accounting controls which provide reasonable assurance that (A) transactions are executed all material respects in accordance with management's general or specific authorization, (B) transactions are recorded in all material respects as necessary to permit preparation of their financial statements and to maintain accountability for their assets and (C) access to assets that are material to the Company or its Subsidiaries is permitted only in accordance with management's general or specific authorization. (xxii) At Closing Time, each of the Reorganization Agreements (as hereinafter defined) to which the Company or any of its Subsidiaries are or are proposed to be parties will be duly authorized, executed and delivered by the Company and each of its Subsidiaries (to the extent that each of them is proposed to be a party thereto). Substantially all of the assets to be transferred by Tandy Marketing Canada (as hereinafter defined) to Old O'Sullivan as described in the Prospectus have been transferred to Old O'Sullivan. (xxiii) The execution, delivery and performance by the Company and each of its Subsidiaries of the Reorganization Agreements to which each of them is a party or is proposed to be a party and the consummation by the Company and each of its Subsidiaries of the transactions contemplated therein will not conflict with or constitute a breach or violation of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its Subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which it or any of them is bound, or to which any of the property or assets of the Company or any of its Subsidiaries is subject, nor will such action result in any breach or violation of, or default under, the provisions of the charter or bylaws of the Company or any of its Subsidiaries or of any existing applicable law, administrative regulation or administrative or court decree, in each case, except as disclosed in the Prospectuses and except for such conflicts, breaches, violations, defaults, liens, charges or encumbrances that would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (xxiv) Neither the Company nor any of its Subsidiaries is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (xxv) The Company and its Subsidiaries have complied with all provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida) relating to doing business with the Government of Cuba or any person or affiliate located in Cuba. (b) The Selling Stockholder further represents and warrants to each of the Managers as of the date hereof and as of the International Representation Date as follows: (i) At Closing Time, the Selling Stockholder will be the sole record and beneficial owner of the Initial Securities, and will have valid and marketable title to the Initial Securities, free and clear of any claim, lien, security interest, encumbrance, restriction on transfer or other defect in title; upon delivery of and payment for the Initial Securities pursuant to this Agreement and the U.S. Purchase Agreement, the Underwriters will acquire valid and marketable title to the Initial Securities, free and clear of any claim, lien, security interest, encumbrance, restriction on transfer or other defect in title. (ii) This Agreement has been duly authorized, executed and delivered by the Selling Stockholder and, at the International Representation Date, the International Pricing Agreement will be duly authorized, executed and delivered by the Selling Stockholder. (iii) The execution, delivery and performance of this Agreement, the U.S. Purchase Agreement, the International Pricing Agreement and the U.S. Pricing Agreement by the Selling Stockholder and the consummation by the Selling Stockholder of the transactions contemplated herein and therein will not conflict with or constitute a breach or violation of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Selling Stockholder pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Selling Stockholder is a party or by which it is bound, or to which any of the property or assets of the Selling Stockholder is subject, nor will such action result in any breach or violation of, or default under, the provisions of the charter or bylaws of the Selling Stockholder or of any existing applicable law, administrative regulation or administrative or court decree. (iv) No authorization, approval or consent of, or registration or filing with, any court or governmental authority or agency is required for the execution, delivery or performance by the Selling Stockholder of this Agreement, the U.S. Purchase Agreement, the International Pricing Agreement or the U.S. Pricing Agreement or the consummation by the Selling Stockholder of the transactions contemplated herein and therein, except such as may be required under the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations or under the securities laws of any state or other jurisdiction. (v) At Closing Time, each of the Reorganization Agreements to which the Selling Stockholder is proposed to be a party will be duly authorized, executed and delivered by the Selling Stockholder; at Closing Time, each of the Reorganization Agreements to which the Selling Stockholder is proposed to be a party will constitute a valid and binding obligation of the Selling Stockholder, enforceable against the Selling Stockholder in accordance with its terms (except to the extent that the enforceability thereof is subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and (ii) general principles of equity, whether such principles are considered in a proceeding at law or in equity). (vi) The execution, delivery and performance by the Selling Stockholder of the Reorganization Agreements to which the Selling Stockholder is or is proposed to be a party and the consummation by the Selling Stockholder of the transactions contemplated therein will not conflict with or constitute a breach or violation of, or a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Selling Stockholder pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Selling Stockholder is a party or by which it is bound, or to which any of the property or assets of the Selling Stockholder is subject, nor will such action result in any breach or violation of, or default under, the provisions of the charter or bylaws of the Selling Stockholder or of any existing applicable law, administrative regulation or administrative or court decree, in each case, except as disclosed in the Prospectuses and except for such conflicts, breaches, violations, defaults, liens, charges or encumbrances that would not affect in any material respect the transactions contemplated by this Agreement or the U.S. Purchase Agreement and would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Selling Stockholder and its subsidiaries considered as one enterprise. (c) Any certificate signed by any officer of the Company delivered to the Lead Managers or to counsel for the Managers under or in connection with this Agreement or at Closing Time or any Date of Delivery (as hereinafter defined) shall be deemed a representation and warranty by the Company to each Manager as to the matters covered thereby; and any certificate signed by any officer of the Selling Stockholder and delivered to the Lead Managers or to counsel for the Managers under or in connection with this Agreement or at Closing Time or any Date of Delivery shall be deemed a representation and warranty by the Selling Stockholder to each Manager as to the matters covered thereby. SECTION 2. Sale and Delivery to Managers; Reorganization Transactions; Closing. (a) On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Selling Stockholder agrees to sell to each Manager, severally and not jointly, and each Manager, severally and not jointly, agrees to purchase from the Selling Stockholder, at the price per share set forth in the International Pricing Agreement, the number of Initial International Securities set forth in Schedule A opposite the name of such Manager (except as otherwise provided in the International Pricing Agreement), plus any additional number of Initial International Securities which such Manager may become obligated to purchase pursuant to the provisions of Section 10 hereof, subject, in each case, to such adjustments as the Lead Managers in their discretion shall make to eliminate any sales or purchases of fractional securities. (i) If the Company has elected not to rely upon Rule 430A of the 1933 Act Regulations, the initial public offering price of the Securities and the purchase price per share to be paid by the several Managers for the International Securities have each been determined and set forth in the International Pricing Agreement, dated the date hereof, and an amendment to the Registration Statement and the Prospectuses will be filed before the Registration Statement becomes effective. (ii) If the Company has elected to rely upon Rule 430A of the 1933 Act Regulations, the purchase price per share to be paid by the several Managers for the International Securities shall be an amount equal to the initial public offering price, less an amount per share to be determined by agreement among the Company, the Selling Stockholder and the Lead Managers. The initial public offering price per share of the Securities shall be a fixed price to be determined by agreement among the Company, the Selling Stockholder and the Lead Managers. The initial public offering price per share and the purchase price, when so determined, shall be set forth in the International Pricing Agreement. In the event that such prices have not been agreed upon and the International Pricing Agreement has not been executed and delivered by the parties thereto by the close of business on the fourth business day following the date of this Agreement, this Agreement shall terminate forthwith, without liability of any party to any other party, unless otherwise agreed to by the Company, the Selling Stockholder and the Lead Managers. Notwithstanding the foregoing, the provisions of Sections 4(a), 6 and 7 hereof shall remain in effect following any such termination. (b) In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Underwriters, severally and not jointly, to purchase from the Company an aggregate of up to an additional 1,800,000 shares of Common Stock, together with the Rights associated with such shares, at the price per share set forth in the International Pricing Agreement and the U.S. Pricing Agreement, of which 360,000 shares and associated Rights shall be the pro rata portion for the Managers and 1,440,000 shares and associated Rights shall be the pro rata portion for the U.S. Underwriters. The option hereby granted will expire on the 30th day after the date the Registration Statement becomes effective or, if the Company has elected to rely on Rule 430A of the 1933 Act Regulations, the 30th day after the International Representation Date, and may be exercised in whole or in part from time to time only for the purpose of covering over-allotments which may be made in connection with the offering and distribution of the Initial Securities upon notice by the Lead Managers and the U.S. Representatives to the Company setting forth the aggregate number of Option Securities as to which the several Underwriters are then exercising said option and the time and date of payment and delivery for such Option Securities. Any such time and date of delivery for the International Option Securities (a "Date of Delivery") shall be determined by the Lead Managers but shall be not earlier than two nor later than seven full business days after the exercise of said option, nor in any event prior to Closing Time, unless otherwise agreed upon by the Lead Managers and the Company. If the option is exercised as to all or any portion of the International Option Securities, each of the Managers, acting severally and not jointly, will purchase from the Company that proportion of the number of International Option Securities then being purchased which the number of Initial International Securities set forth in Schedule A opposite the name of such Manager (plus any additional number of Initial International Securities which such Manager may become obligated to purchase pursuant to the provisions of Section 10 hereof) bears to the total number of Initial International Securities (except as otherwise provided in the International Pricing Agreement), subject, in each case, to such adjustments as the Lead Managers in their discretion shall make to eliminate any sales or purchases of fractional securities. For purposes of this Agreement, the term "business day" means a day on which the New York Stock Exchange is open for trading. (c) The Selling Stockholder and the Company agree with the several Underwriters that, immediately prior to Closing Time, (i) the Selling Stockholder will transfer to the Company, in exchange for the issuance by the Company of 14,999,900 shares of Common Stock, together with the Rights associated with such shares (the receipt of which shares and associated Rights shall be subject to the obligations of the Selling Stockholder to sell the Initial Securities to the Underwriters pursuant to this Agreement and the U.S. Purchase Agreement), all the issued and outstanding shares of capital stock of O'Sullivan Industries, Inc., a Delaware corporation and a wholly owned subsidiary of the Selling Stockholder ("Old O'Sullivan"), and (ii) the Company will accept such transfer and will issue such shares of Common Stock and associated Rights to the Selling Stockholder. The foregoing transactions will be effected in accordance with a Stock Exchange Agreement (the "Stock Exchange Agreement") to be entered into between the Selling Stockholder and the Company after the execution and delivery of this Agreement but prior to Closing Time. In addition, (i) Tandy Marketing (Canada) Ltd., an Alberta corporation ("Tandy Marketing Canada"), has transferred to Old O'Sullivan certain assets located in Canada that are used in connection with the business conducted by Old O'Sullivan, (ii) Tandy Corporation, the Selling Stockholder and the Company will enter into a Cross Indemnification Agreement (the "Cross Indemnification Agreement") prior to Closing Time pursuant to which the parties will agree to indemnify each other for certain claims and liabilities as specified therein, (iii) Tandy Corporation, the Selling Stockholder and the Company will enter into a Tax Sharing and Tax Benefit Reimbursement Agreement (the "Tax Agreement") prior to Closing Time pursuant to which (A) the parties will agree upon the allocation of certain federal, state and local taxes of Old O'Sullivan (including any adjustments to such taxes), (B) Old O'Sullivan and Tandy Corporation will agree to make elections under Sections 338(g) and 338(h)(10) of the Internal Revenue Code of 1986, as amended, and (C) Old O'Sullivan will agree to pay to the Selling Stockholder, as additional purchase price under the Stock Exchange Agreement, amounts approximately equal to certain federal tax benefits related to the increase in the tax basis of Old O'Sullivan's assets resulting from the consummation of the transactions contemplated by the Stock Exchange Agreement and the Sections 338(g) and 338(h)(10) elections. The Stock Exchange Agreement and Tax Agreement will be substantially in the respective forms filed as exhibits to the Registration Statement. The Stock Exchange Agreement, Asset Transfer Agreement, Cross Indemnification Agreement and Tax Agreement are hereinafter collectively referred to as the "Reorganization Agreements." Old O'Sullivan and each other direct or indirect subsidiary of the Company as of the Closing Time are hereinafter collectively referred to as the "Subsidiaries." (d) Payment of the purchase price for, and delivery of certificates evidencing the Initial International Securities to be purchased by the Managers shall be made at the office of Baker & Botts, L.L.P., 2001 Ross Avenue, Dallas, Texas 75201, or at such other place as shall be agreed upon by the Lead Managers, the Company and the Selling Stockholder, at 9:00 a.m., Dallas, Texas time, on the fifth business day (unless postponed in accordance with the provisions of Section 10 hereof) following the date of the execution of the International Pricing Agreement or such other time not later than ten business days after such date as shall be agreed upon by the Lead Managers, the Company and the Selling Stockholder (such time and date of payment and delivery being hereinafter referred to as "Closing Time"). In addition, in the event that any or all of the International Option Securities are purchased by the Managers, payment of the purchase price for, and delivery of certificates for, such International Option Securities shall be made at the above-mentioned office of Baker & Botts, L.L.P., or at such other place as shall be mutually agreed upon by the Lead Managers and the Company, on each Date of Delivery as specified in the notice from the Lead Managers to the Company. Payment shall be made to the Selling Stockholder, with respect to the Initial International Securities, and to the Company, with respect to any International Option Securities, by certified or official bank check or checks drawn in New York Clearing House funds or similar next-day funds payable to the order of the Selling Stockholder or the Company, as the case may be, against delivery to the Lead Managers for the respective accounts of the Managers of certificates for the International Securities to be purchased by them. Certificates evidencing the Initial International Securities and the International Option Securities, if any, shall be in such denominations and registered in such names as the Lead Managers may request in writing at least two business days before Closing Time or the Date of Delivery, as the case may be. It is understood that each Manager has authorized the Lead Managers, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the International Securities which it has agreed to purchase. The Lead Managers, individually and not as representatives of the Managers, may (but shall not be obligated to) make payment of the purchase price for the International Securities to be purchased by any Manager whose check has not been received by Closing Time or the Date of Delivery, as the case may be, but such payment shall not relieve such Manager from its obligations hereunder. The certificates evidencing the Initial International Securities and the International Option Securities to be purchased by the Managers will be made available in New York City for examination and packaging by the Lead Managers not later than 10:00 a.m. on the last business day prior to Closing Time or the Date of Delivery, as the case may be. SECTION 3. Certain Covenants of the Company. The Company covenants with each of the Managers as follows: (a) If the Company has elected not to rely upon Rule 430A of the 1933 Act Regulations, the Company will promptly prepare and file with the Commission an amendment to the Registration Statement that sets forth the information specified in Section 2(a)(i) hereof and will make every reasonable effort to cause the Registration Statement to become effective as promptly as practicable. If the Company has elected to rely upon Rule 430A of the 1933 Act Regulations, the Company will promptly prepare and file with the Commission pursuant to Rule 424 of the 1933 Act Regulations Prospectuses that comply in all material respects with the 1933 Act and the 1933 Act Regulations and that set forth the information specified in Section 2(a)(ii) hereof and all other information omitted from the prospectuses included in the Registration Statement as permitted by Rule 430A. (b) The Company will notify the Lead Managers immediately, and confirm the notice in writing, (i) of the effectiveness of the Registration Statement and any amendment thereto (including any post-effective amendment), (ii) of the mailing or delivery to the Commission for filing of any revised prospectus which the Company proposes for use by the Managers or the U.S. Underwriters in connection with the offering of the Securities which differs from the prospectuses on file at the Commission at the time the Registration Statement becomes effective, (iii) of the receipt of any comments from the Commission with respect to the Registration Statement or the Prospectuses, (iv) of any request by the staff of the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectuses or for additional information, and (v) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, the suspension of the registration or qualification of the Securities for offering or sale under the securities laws of any state or jurisdiction or the initiation or threat of any proceedings for any such purpose. The Company will make every reasonable effort to prevent the issuance of any such stop order or of any order suspending such registration or qualification and, if any such order is issued, to obtain the lifting thereof as promptly as practicable. (c) The Company will give the Lead Managers notice of its intention to file or prepare any amendment to the Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectuses (including any revised prospectus which the Company proposes for use by the Managers or the U.S. Underwriters in connection with the offering of the Securities which differs from the prospectuses on file at the Commission at the time the Registration Statement becomes effective, whether or not such revised prospectus is required to be filed pursuant to Rule 424(b) of the 1933 Act Regulations), will furnish the Lead Managers with copies of any such amendment or supplement a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file any such amendment or supplement to which the Lead Managers shall reasonably object unless the Company shall have (i) otherwise fully complied with its obligations contained in this subsection (c) and (ii) received a written opinion of counsel to the effect that such amendment or supplement is legally required under the 1933 Act and the 1933 Act Regulations. (d) The Company has delivered or will deliver to the Lead Managers five signed copies of the Registration Statement as originally filed and each amendment thereto (including exhibits filed therewith) and has delivered or will deliver to the Lead Managers as many conformed copies of the Registration Statement as originally filed and of each amendment thereto (without exhibits) as the Lead Managers may reasonably request for delivery to each of the Managers. (e) The Company will furnish to each Manager, from time to time during the period when the International Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such number of copies of the International Prospectus (as amended or supplemented) as such Manager may reasonably request for the purposes contemplated by the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act Regulations. (f) If at any time when a prospectus relating to the Securities is required to be delivered, any event shall occur as a result of which it is necessary, in the reasonable judgment of the Lead Managers based on the advice of their counsel, to amend or supplement the International Prospectus in order to ensure that the International Prospectus does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to a purchaser, not misleading, the Company will forthwith amend or supplement the International Prospectus (and will provide drafts thereof to the Managers and provide them a reasonable opportunity to review such drafts and provide comments with respect thereto) so that, as so amended or supplemented, the International Prospectus will not contain such an untrue statement or omission, and the Company will furnish to the Managers a reasonable number of copies of any such amendment or supplement to the International Prospectus. (g) The Company will endeavor, in cooperation with the Managers, to qualify the Securities for offering and sale under the applicable securities laws of such other jurisdictions as the Lead Managers may designate; provided, however, that the Company shall not be obligated (i) to qualify as a foreign corporation in any jurisdiction in which it is not so qualified, (ii) to take any action that would subject it to income or franchise taxation in any jurisdiction in which would not otherwise be subject to such taxation, (iii) to execute a consent to service of process under the laws of any jurisdiction (except service of process with respect to the offering and sale of the Securities). In each jurisdiction in which the Securities have been qualified as above provided, the Company will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for so long as it may be required to complete the distribution of such Securities. (h) The Company will make generally available to its security holders as soon as practicable, but not later than 90 days after the close of the period covered thereby, an earnings statement (which need not be audited, but in form complying with the provisions of Rule 158 of the 1933 Act Regulations) covering a twelve-month period beginning not later than the first day of the Company's fiscal quarter next following the "effective date" (as defined in said Rule 158) of the Registration Statement. (i) The Company will use the net proceeds, if any, received by it from the sale of the Option Securities in the manner specified in the Prospectus under "Use of Proceeds." (j) The Company will file with the Commission such reports on Form SR as may be required pursuant to Rule 463 of the 1933 Act Regulations. (k) The Company will use every reasonable effort to cause the Securities to be listed on the New York Stock Exchange. SECTION 4. Certain Covenants of the Company and the Selling Stockholder. The Company and the Selling Stockholder covenant with each of the Managers as follows: (a) The Company and Selling Stockholder will be jointly and severally responsible for and will pay all expenses incident to the performance of the obligations of the Company and the Selling Stockholder under this Agreement, including (i) the printing and filing of the Registration Statement as originally filed and of each amendment thereto, (ii) the printing of this Agreement and the International Pricing Agreement, (iii) the preparation, sale or issuance and delivery of the certificates evidencing the International Securities to the Managers, (iv) the reasonable fees and disbursements of the Company's counsel and accountants, (v) the expenses in connection with the qualification of the Securities under securities laws in accordance with the provisions of Section 3(g) hereof, including filing fees and the fees and disbursements of counsel for the Managers in connection therewith and in connection with the preparation of the Blue Sky Survey, (vi) the printing and delivery to the Managers as provided in this Agreement of copies of the Registration Statement as originally filed and of each amendment thereto, of each of the preliminary prospectuses, and of the Prospectuses and any amendments or supplements thereto, (vii) the printing and delivery to the Managers of copies of the Blue Sky Survey, (viii) the fees and expenses incurred in connection with any filings required to be made by the Managers with the National Association of Securities Dealers, Inc. in connection with the offering and sale of the Securities and (ix) the fees and expenses incurred in connection with the listing of the Securities on the New York Stock Exchange. (b) If this Agreement is terminated by the Lead Managers in accordance with the provisions of Section 5 hereof or Section 9(a)(i) hereof, the Company and the Selling Stockholder will be jointly and severally responsible for and will reimburse the Managers for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Managers. (c) During the period of 180 days from the date of the International Pricing Agreement, the Company and the Selling Stockholder will not, without the prior written consent of the Lead Managers (which consent will not be unreasonably withheld), directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose of any shares of Common Stock or any security convertible into or exchangeable or exercisable for any shares of Common Stock, except for (i) the issuance and sale by the Company to the Selling Stockholder of 14,999,900 shares of Common Stock and associated Rights in accordance with the Stock Exchange Agreement, (ii) the sale by the Selling Stockholder of the Initial Securities to the Underwriters in accordance with this Agreement and the U.S. Purchase Agreement, (iii) the sale by the Selling Stockholder of 236,000 shares of Common Stock, together with the Rights associated with such shares, to certain members of the Company's management and their affiliates as contemplated by the Management Prospectus, (iv) the issuance by the Company of the Option Securities to the Underwriters in accordance with this Agreement and the U.S. Purchase Agreement and (v) the grant by the Company of options to purchase shares of Common Stock or the issuance by the Company of shares of Common Stock pursuant to the O'Sullivan Incentive Stock Plan and other benefit plans as disclosed in the Prospectuses. (d) Prior to the time at which the distribution of the Securities is completed, neither the Company nor the Selling Stockholder shall, directly or indirectly, (i) take any action designed to cause or result in, or that constitutes or might reasonably be expected to constitute, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities or (ii) bid for, purchase or pay anyone any compensation for soliciting purchases of, the Securities. SECTION 5. Conditions to Obligations of the Managers. The obligations of the several Managers hereunder are subject to the accuracy of the representations and warranties of the Company and the Selling Stockholder herein contained at the date hereof and at Closing Time, to the performance by the Company and the Selling Stockholder of their respective obligations hereunder required to be performed prior to or at Closing Time, and to the following further conditions: (a) The Registration Statement shall have become effective not later than 5:30 p.m. on the date hereof or at such later time and date as may be approved by the Lead Managers; and at Closing Time and any Date of Delivery, as the case may be, no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission. If the Company has elected to rely upon Rule 430A of the 1933 Act Regulations, Prospectuses that set forth the initial public offering price per share of the Securities, the purchase price per share to be paid by the Managers, and any other information previously omitted from the effective Registration Statement pursuant to such Rule 430A shall have been transmitted to the Commission for filing pursuant to Rule 424(b) of the 1933 Act Regulations within the prescribed time period, and prior to Closing Time the Company shall have provided evidence reasonably satisfactory to the Lead Managers of such timely filing, or a post-effective amendment providing such information shall have been promptly filed and declared effective in accordance with the requirements of Rule 430A of the 1933 Act Regulations. (b) At Closing Time the Lead Managers shall have received: (1) The favorable opinion, dated as of Closing Time, of Fried, Frank, Harris, Shriver & Jacobson, counsel for the Company and the Selling Stockholder, in form and substance reasonably satisfactory to the Lead Managers, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware. (ii) The Company has corporate power and authority to own, lease and operate its properties and to conduct its business substantially as described in the Prospectuses. (iii) To the knowledge of such counsel, the Company is duly licensed or qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction set forth on Annex A to the opinion of such counsel. (iv) Each of the Subsidiaries of the Company is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation. (v) The authorized, issued and outstanding capital stock of the Company is as set forth in the Prospectuses under the column entitled "As Adjusted" under the caption "Capitalization." (vi) The 15,000,000 shares of Common Stock heretofore issued by the Company to the Selling Stockholder have been duly authorized and are validly issued, fully paid and nonassessable; the 1,800,000 shares of Common Stock subject to the option granted pursuant to Section 2(b) hereof have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and the U.S. Purchase Agreement and, when issued and deliverd by the Company in accordance with this Agreement and the U.S. Purchase Agreement against payment of the consideration set forth herein and therein, will be validly issued, fully paid and nonassessable. (vii) The issuance of the Securities is not subject to any preemptive or other similar rights to subscribe for or purchase the same arising under the DGCL, the Certificate of Incorporation or By-laws of the Company or any of the agreements, contracts or instruments filed as Exhibits 10.1 through 10.14 to the Registration Statement. (viii) Assuming that the Underwriters have taken physical possession of the Initial Securities to be sold by the Selling Stockholder at the Closing Time in good faith without notice of any adverse claim as such term is used in Section 8-302 of the Uniform Commercial Code in effect in the State of New York, upon delivery of such Securities in registered form issued to the Underwriters and payment for such Securities as contemplated in this Agreement and the U.S. Purchase Agreement, the Underwriters will acquire such Securities free and clear of all security interests, liens, encumbrances, equities or other adverse claims. (ix) The Common Stock conforms as to legal matters in all material respects to the statements concerning the Common Stock of the Company contained in the Prospectuses under the caption "Description of Capital Stock Common Stock." The statements contained in the Prospectuses under the caption "Description of Capital Stock," insofar as they purport to summarize certain provisions of the Company's Certificate of Incorporation and By-laws, fairly summarize in all material respects such provisions. (x) The Rights conform as to legal matters in all material respects to the statements concerning the Rights contained in the Prospectuses under the caption "Description of Capital Stock Stockholder Rights Plan." (xi) The Company has all necessary corporate power and authority to execute and deliver this Agreement, the U.S. Purchase Agreement, the International Pricing Agreement and the U.S. Pricing Agreement and to perform its obligations hereunder and thereunder; this Agreement, the U.S. Purchase Agreement, the International Pricing Agreement and the U.S. Pricing Agreement have each been duly authorized, executed and delivered by the Company, and each constitutes a valid and binding agreement of the Company, enforceable in accordance with its terms (except to the extent that enforceability hereof or thereof is subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafterin effect affecting creditors' rights generally and (ii) general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing and reasonableness), whether such principles are considered in a proceeding at law or in equity, and except that the rights to indemnification and contribution granted hereunder and thereunder may be limited by applicable federal and state securities laws or the public policy underlying such laws). (xii) The Selling Stockholder has all necessary corporate power and authority to execute and deliver this Agreement, the U.S. Purchase Agreement, the International Pricing Agreement and the U.S. Pricing Agreement and to perform its obligations hereunder and thereunder; this Agreement, the U.S. Purchase Agreement, the International Pricing Agreement and the U.S. Pricing Agreement have each been duly authorized, executed and delivered by the Selling Stockholder, and each constitutes a valid and binding agreement of the Selling Stockholder, enforceable in accordance with its terms (except to the extentthat enforceability hereof or thereof is subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting creditors' rights generally and (ii) general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing and reasonableness, whether such principles are considered in a proceeding at law or in equity), and except that the rights to indemnification and contribution granted hereunder and thereunder may be limited by applicable federal and state securities laws or the public policy underlying such laws). (xiii) The execution, delivery and performance by the Company of this Agreement, the U.S. Purchase Agreement, the International Pricing Agreement and the U.S. Pricing Agreement and the consummation by the Company of the transactions herein and therein contemplated (i) will not violate (A) any law or present regulation of any governmental agency or authority of the United States of America or the State of New York or the Delaware General Corporation Law (the "DGCL") or (B) any agreement binding upon the Company or any of its Subsidiaries or their respective properties or any court decree or order binding upon the Company or any of its Subsidiaries (such opinion being limited to the decrees or orders that are set forth on Annex B to the opinion of such counsel and the agreements, contracts and instruments filed as Exhibits 10.1 through 10.14 to the Registration Statement (collectively, the "Covered Decrees, Orders, and Agreements")), (ii) will not result in a breach or violation of the terms or provisions of the Certificate of Incorporation or By-laws of the Company or any of its Subsidiaries, and (iii) will not result in or require the creation or imposition of any security interest or lien upon any of their properties pursuant to the provisions of any agreement binding upon the Company or any of its Subsidiaries or their respective properties (such opinion being limited to the Covered Decrees, Orders and Agreements) (except for purposes of clause (i) and (iii), where such a violation or breach or resulting security interest or lien would not affect in any material respect the transactions contemplated by this Agreement or the International Purchase Agreement or have a material adverse effect on the condition (financial or otherwise), business, properties or results of operation of the Company, Old O'Sullivan and their respective subsidiaries, taken as a whole). (xiv) The execution, delivery and performance by the Selling Stockholder of this Agreement, the International Purchase Agreement, the U.S. Pricing Agreement and the International Pricing Agreement and the consummation by the Selling Stockholder of the transactions herein and therein contemplated (i) will not violate (A) any law or present regulation of any governmental agency or authority of the United States of America or the State of New York or the DGCL or (B) any agreement binding upon the Selling Stockholder or its properties or any court decree or order binding upon the Selling Stockholder (such opinion being limited to (1) the Covered Decrees, Orders, and Agreements and (2) the agreements, contracts and instruments to which the Selling Stockholder or its subsidiaries are parties or by which they are bound set forth on Annex C to the opinion of such counsel), (ii) will not result in a breach or violation of the terms or provisions of the Certificate of Incorporation or By-laws of the Selling Stockholder, and (iii) will not result in or require the creation or imposition of any security interest or lien upon any of itsproperties pursuant to the provisions of any agreement binding upon the Selling Stockholder or its properties(such opinion being limited to (1) the Covered Decrees, Orders and Agreements and (2) the agreements, contracts and instruments to which the Selling Stockholder or its subsidiaries are parties or by which they are bound set forth on Annex C to the opinion of such counsel) (except for purposes of clause (i) and (iii), where such a violation or breach or resulting security interest or lien would not affect in any material respect the transactions contemplated by this Agreement or the U.S. Purchase Agreement or have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations of the Selling Stockholder and its subsidiaries, taken as a whole). (xv) No authorization, approval or consent of, or registration or filing with, any court or governmental authority or agency of the United States or the State of New York or under the DGCL is required for the execution, delivery or performance by the Company of this Agreement, the U.S. Purchase Agreement, the International Pricing Agreement or the U.S. Pricing Agreement or the consummation by the Company of the transactions contemplated herein and therein, except such as have been obtained or made under the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations. (xvi) No authorization, approval or consent of, or registration or filing with, any court or governmental authority or agency of the United States or the State of New York or under the DGCL is required for the execution, delivery or performance by the Selling Stockholder of this Agreement, the U.S. Purchase Agreement, the International Pricing Agreement or the U.S. Pricing Agreement or the consummation by the Selling Stockholder of the transactions contemplated herein and therein, except such as have been obtained or made under the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations. (xvii) The Registration Statement became effective under the 1933 Act on January 26, 1994 and any required filing of the Prospectuses pursuant to Rule 424(b) of the 1933 Act Regulations has been made within the time period required by such Rule. To the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose is pending or threatened by the Commission. (xviii) The Registration Statement and the Prospectuses and any amendments or supplements thereto (except for (i) the financial statements, notes or schedules thereto and (ii) other financial information and statistical information included in the Registration Statement or Prospectuses, as to both of which such counsel need express no opinion) appear on their face to be appropriately responsive as to form in all material respects to the requirements of the 1933 Act and the 1933 Act Regulations. (xix) To the knowledge of such counsel, there are no contracts, indentures, mortgages, loan agreements, notes, leases or other instruments required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described or referred to therein or filed as exhibits thereto as required. (xx) The information set forth in the Prospectuses under the caption "Certain United States Tax Consequences to Non-United States Holders," to the extent that such information constitutes summaries of legal matters or documents, or legal conclusions, is true and correct in all material respects. (xxi) Each of the Company and Old O'Sullivan has all necessary corporate power and authority to execute and deliver each of the Reorganization Agreements to which it is a party and to performits obligations thereunder. Each of the Reorganization Agreements to which the Company or Old O'Sullivan is a party has been duly authorized, executed and delivered by each of them (to the extent each of them is a party thereto) and constitutes a valid and binding obligation of each of them (to the extent each of them is a party thereto), enforceable in accordance with its terms (except to the extent that enforceability thereof is subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting creditors' rights generally and (ii) general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing and reasonableness), whether such principles are considered in a proceeding at law or in equity. (xxii) The Selling Stockholder has all necessary corporate power and authority to execute and deliver each of the Reorganization Agreements to which it is a party and to perform its obligations thereunder. Each of the Reorganization Agreements to which the Selling Stockholder is a party has been duly authorized, executed and delivered by the Selling Stockholder and constitutes a valid and binding obligation of the Selling Stockholder, enforceable in accordance with its terms (except to the extent that enforceability thereof is subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting creditors' rights generally and (ii) general principles of equity (including, without limitation, standards of materiality, good faith, fair dealing and reasonableness), whether such principles are considered in a proceeding at law or in equity). (xxiii) The execution, delivery and performance by the Company and Old O'Sullivan of the Reorganization Agreements to which each of them is a party and the consummation by the Company and Old O'Sullivan of the transactions contemplated therein (i) will not violate (A) any law or present regulation of any governmental agency or authority of the United States of America or the State of New York or the DGCL or (B) any agreement binding upon the Company or Old O'Sullivan or their respective subsidiaries or properties or any court decree or order binding upon the Company or Old O'Sullivan or their respective subsidiaries (such opinion being limited (x) to the Covered Decrees, Orders and Agreements and (y) in that such counsel need not express an opinion with respect to any violation arising under or based upon any cross-default provision insofar as such violation relates to a default under an agreement not filed as an exhibit to the Registration Statement or such violation arises under or is based upon any covenant of a financial or numerical nature or requires mathematic computation), (ii) will not result in a breach or violation of the terms or provisions of the Certificate of Incorporation or By-laws of the Company or Old O'Sullivan or their respective subsidiaries, and (iii) will not result in or require the creation or imposition of any security interest or lien upon any of their properties pursuant to the provisions of any agreement binding upon the Company or Old O'Sullivan or their respective subsidiaries or properties (such opinion being limited to the Covered Decrees, Orders and Agreements) (except for purposes of clauses (i) and (iii), where such a violation or breach or resulting security interest or lien would not have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations of the Company, Old O'Sullivan and their respective subsidiaries, taken as a whole). (xxiv) The execution, delivery and performance by the Selling Stockholder of the Reorganization Agreements to which it is a party and the consummation by the Selling Stockholder of the transactions contemplated therein (i) will not violate (A) any law or present regulation of any governmental agency or authority of the United States of America or the State of New York or the DGCL or (B) any agreement binding upon the Selling Stockholder or its properties or any court decree or order binding upon the Selling Stockholder (such opinion being limited (x) to (1) the Covered Decrees, Orders and Agreements and (2) the agreements, contracts and instruments to which the Selling Stockholder or its subsidiaries are parties or by which they are bound set forth on Annex C to the opinion of such counsel) and (y) in that such counsel need not express an opinion with respect to any violation arising under or based upon any cross-default provision insofar as such violation relates to a default under an agreement not filed as an exhibit to the Registration Statement or such violation arises under or is based upon any covenant of a financial or numerical nature or requires arithmetic computation), (ii) will not result in a breach or violation of the terms or provisions of the Certificate of Incorporation or By-laws of the Selling Stockholder, and (iii) will not result in or require the creation or imposition of any security interest or lien upon any of its properties pursuant to the provisions of any agreement binding upon the Selling Stockholder or its properties (such opinion being limited to (1) the Covered Decrees, Orders and Agreements and (2) the agreements, contracts and instruments to which the Selling Stockholder or its subsidiaries are parties or by which they are bound set forth on Annex C hereto) (except, for purposes of clauses (i) and (iii), where such a violation or breach or resulting security interest or lien would not affect in any material respect the transactions contemplated by this Agreement or the U.S. Purchase Agreement or have a material adverse effect on the condition (financial or otherwise), business, properties or results of operation of the Selling Stockholder and its subsidiaries, taken as a whole). In addition, such opinion will contain the following statements: In the course of the preparation by the Company and its counsel of the Registration Statement and Prospectuses, such counsel attended conferences with certain of the officers of the Company and the Selling Stockholder and representatives of the independent public accountants for the Company, the Underwriters and counsel to the Underwriters, at which the Registration Statement and the Prospectuses were discussed. In addition, between the date of the effectiveness of the Registration Statement and the time of delivery of this opinion, such counsel attended additional conferences with certain of the officers of the Company and the Selling Stockholder and representatives of the independent public accountants for the Company, at which the contents of the Registration Statement and Prospectuses were discussed to a limited extent. Given the limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process, such counsel is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement and the Prospectuses (other than as set forth in paragraphs (ix), (x) and (xx) above). Subject to the foregoing and on the basis of the information such counsel gained in the performance of the services referred to above, including information obtained from officers and other representatives of the Company and the Selling Stockholder, no facts have come to such counsel's attention that cause such counsel to believe that the Registration Statement, at the time of the Registration Statement was declared effective by the Commission, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statement therein not misleading. Also, subject to the foregoing, no facts have come to such counsel's attention that cause such counsel to believe that the Prospectuses, as of the date thereof, at Closing Time or at any Date of Delivery, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except in each case that such counsel need not express a view or belief with respect to financial statements, notes or schedules thereto or other financial and statistical information included in the Registration Statement or Prospectuses. In rendering the foregoing opinion, such counsel shall be entitled to state that such counsel expresses no opinion regarding the laws of any jurisdiction other than the federal laws of the United States, the laws of the State of New York and the DGCL. In addition, such counsel shall be entitled to state that such counsel expresses no opinion regarding the securities or "blue sky" laws of any state or other non-federal jurisdiction in which the Securities are offered or sold. (2) The favorable opinion, dated as of Closing Time, of Rowland H. Geddie, III, Vice President, General Counsel and Secretary of the Company, in form and substance reasonably satisfactory to the Lead Managers, to the effect that: (i) Each of the Subsidiaries of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation. (ii) Each of the Subsidiaries of the Company has all the necessary corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectuses. (iii) Each of the Subsidiaries of the Company is duly licensed or qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction set forth on Annex A to the opinion of such counsel. (iv) All of the issued and outstanding capital stock of each of the Subsidiaries of the Company has been validly issued and is fully paid and nonassessable and is, to the knowledge of such counsel, owned by the Company, directly or indirectly, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (v) To the knowledge of such counsel, there is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending or threatened against the Company or any of its Subsidiaries, which (A) is required to be disclosed in the Registration Statement and the Prospectuses (other than as disclosed therein) or (B) might reasonably be expected to result in any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (vi) To the knowledge of such counsel, the Company is not in violation of its Certificate or By-laws, and no default by the Company or any of its Subsidiaries exists in the due performance or observance of any obligation, agreement, covenant or condition contained in any Covered Decrees, Orders, and Agreements, except for defaults that would not have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise. (vii) The execution, delivery and performance by the Company of this Agreement, the U.S. Purchase Agreement, the International Pricing Agreement and the U.S. Pricing Agreement and the consummation by the Company of the transactions herein and therein contemplated (i) will not violate (A) any law or present regulation of any governmental agency or authority of the State of Texas or Missouri or (B) any agreement or court decree or order known to such counsel and binding upon the Company or any of its Subsidiaries or their respective properties (such opinion being limited to the Covered Decrees, Orders, and Agreements) and (ii) will not result in or require the creation or imposition of any security interest or lien upon any of their properties pursuant to the provisions of any agreement known to such counsel and binding upon the Company or any of its Subsidiaries or their respective properties. (viii) The execution, delivery and performance by the Company and Old O'Sullivan of the Reorganization Agreements to which each of them is a party and the consummation by the Company and Old O'Sullivan of the transactions contemplated therein (i) will not violate (A) any law or present regulation of any governmental agency or authority of the State of Texas or Missouri or (B) any agreement or court decree or order known to such counsel and binding upon the Company or Old O'Sullivan or their respective subsidiaries or properties and (ii) will not result in or require the creation or imposition of any security interest or lien upon any of their properties pursuant to the provisions of any agreement known to such counsel and binding upon the Company or Old O'Sullivan or their respective subsidiaries or properties (such opinion being limited to the Covered Decrees, Orders and Agreements) (except in each case where such a violation or breach or resulting security interest or lien would not have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations of the Company, Old O'Sullivan and their respective subsidiaries, taken as a whole). In rendering the foregoing opinion, such counsel shall be entitled to state that he expresses no opinion regarding the laws of any jurisdiction other than the federal laws of the United States, the laws of the State of Texas and (subject to the qualification set forth in the immediately following sentence) the laws of the State of Missouri. Insofar as the foregoing opinion relates to matters governed by the laws of the State of Missouri, such counsel shall be entitled to state that he has assumed, without investigation, that the laws of the State of Missouri are in all respects identical to the laws of the State of Texas. (3) The favorable opinion, dated as of Closing Time, of Frederick W. Padden, General Counsel of the Selling Stockholder, in form and substance reasonably satisfactory to the Lead Manager, to the effect that: (i) The Selling Stockholder is the sole record owner and, to the knowledge of such counsel, beneficial owner of the Initial Securities; to the knowledge of such counsel, the Selling Stockholder has valid and marketable title to the Initial Securities, free and clear of any claim, lien, security interest, encumbrance, restriction on transfer or other defect in title. (ii) To the knowledge of such counsel, there are no contracts, indentures, mortgages, loan agreements, notes, leases or other instruments required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described or referred to therein or filed as exhibits thereto as required. (iii) The information set forth in the Prospectuses under the captions "Management Company Compensation and Benefits" and "Certain Transactions," to the extent that such information constitutes summaries of legal matters, documents or proceedings, fairly summarizes in all material respects such legal matters, documents or proceedings. (iv) The execution, delivery and performance by the Selling Stockholder of this Agreement, the U.S. Purchase Agreement, the International Pricing Agreement and the U.S. Pricing Agreement and the consummation by the Selling Stockholder of the transactions herein and therein contemplated (i) will not violate (A) any law or present regulation of any governmental agency or authority of the State of Texas or (B) any agreement or court decree or order known to such counsel and binding upon the Selling Stockholder or its properties and (ii) will not result in or require the creation or imposition of any security interest or lien upon any of its properties pursuant to the provisions of any agreement known to such counsel and binding upon the Selling Stockholder or its properties. (v) The execution, delivery and performance by the Selling Stockholder of the Reorganization Agreements to which it is a party and the consummation by the Selling Stockholder of the transactions contemplated therein (i) will not violate (A) any law or present regulation of any governmental agency or authority of the State of Texas or (B) any agreement or court decree or order known to such counsel and binding upon the Selling Stockholder or its properties and (ii) will not result in or require the creation or imposition of any security interest or lien upon any of its properties pursuant to the provisions of any agreement known to such counsel and binding upon the Selling Stockholder or its properties (except in each case where such a violation or breach or resulting security interest or lien would not have a material adverse effect on the condition (financial or otherwise), business, properties or results of operation of the Selling Stockholder and its subsidiaries, taken as a whole). In rendering the foregoing opinion, such counsel shall be entitled to state that he expresses no opinion regarding the laws of any jurisdiction other than the federal laws of the United States and the laws of the State of Texas. (4) The favorable opinion, dated as of Closing Time, of Baker & Botts, L.L.P., counsel for the Underwriters, with respect to the matters set forth in clauses (i), (vi), (vii) (solely as to preemptive rights arising by operation of law or under the Certificate of Incorporation and By-laws of the Company), (ix) (solely as to the matters addressed in the first sentence thereof), (xi) (solely as to the due authorization, execution and delivery of the International Purchase Agreement and the U.S. Purchase Agreement), (xii) (solely as to the due authorization, execution and delivery of the International Purchase Agreement and the U.S. Purchase Agreement), (xvii) and (xviii) of subsection (b)(1) of this Section. Such opinion of Baker & Botts, L.L.P. shall further state that nothing has come to the attention of such counsel that causes them to believe that the Registration Statement (other than the financial statements and schedules contained therein, including the notes thereto and the auditors' reports thereon, and the other financial and statistical data contained therein, as to which such counsel need not comment), at the time it became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus (other than the financial statements and schedules contained therein, including the notes thereto and the auditors' reports thereon, and the other financial and statistical data contained therein, as to which such counsel need not comment), at the Representation Date (unless the term "Prospectus" refers to a prospectus which has been provided to the Underwriters by the Company for use in connection with the offering of the Offered Securities which differs from the prospectus on file at the Commission at the Representation Date, in which case at the time it is first provided to the Underwriters for such use), included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) At Closing Time there shall not have been, since the date hereof or since the respective dates as of which information is given in the Prospectuses, any material adverse change in the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and the Lead Managers shall have received a certificate of the President or a Vice President of the Company and of the chief financial or chief accounting officer of the Company, dated as of Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties of the Company contained in Section 1(a) of this Agreement are true and correct with the same force and effect as though expressly made at and as of Closing Time, (iii) the Company has complied with all covenants and agreements and satisfied all conditions on its part to be performed or satisfied at or prior to Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and, to the knowledge of each such officer, no proceedings for that purpose have been initiated or threatened by the Commission. As used in this Section 5(c), the term "Prospectuses" shall mean the Prospectuses in the form first used to confirm sales of the Securities. (d) At Closing Time the Lead Managers shall have received a certificate from the President or a Vice President of the Selling Stockholder and of the chief financial officer or chief accounting officer of the Selling Stockholder, dated as of Closing Time, to the effect that (i) the representations and warranties of the Selling Stockholder contained in Sections 1(a) and 1(b) of this Agreement are true and correct with the same force and effect as though expressly made at and as of Closing Time and (ii) the Selling Stockholder has complied with all covenants and agreements and satisfied all conditions on its part to be performed or satisfied at or prior to Closing Time. (e) At the time of the execution of this Agreement, the Lead Managers shall have received from Price Waterhouse a letter dated such date, in form and substance satisfactory to the Lead Managers, to the effect that: (i) they are independent public accountants with respect to the Company and its Subsidiaries within the meaning of the 1933 Act and the 1933 Act Regulations; (ii) it is their opinion that the audited combined financial statements of the Company and its Subsidiaries included in the Registration Statement and covered by their reports therein comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations with respect to registration statements on Form S-1; (iii) on the basis of procedures (but not an audit in accordance with generally accepted auditing standards) consisting of (A) reading the minutes of meetings of the stockholders, the Board of Directors, and of the Company and its Subsidiaries since the date of the latest audited balance sheet as set forth in the minute books through a specified date not more than five business days prior to the date of this Agreement, (B) performing the procedures specified by the American Institute of Certified Public Accountants for a review of interim financial information as described in SAS No. 71, Interim Financial Information, on the unaudited condensed interim financial statements of the Company included in the Registration Statement and reading the unaudited interim financial statements of the Company for the period from December 31, 1993 to the date of latest available interim financial statements, and (C) making inquiries of certain officials of the Company who have responsibility for financial and accounting matters regarding the specific financial statement items referred to below, nothing has come to their attention that causes them to believe that (1) the unaudited condensed combined financial statements of the Company and its Subsidiaries included the Registration Statement do not comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations or that any material modifications should be made to the unaudited condensed combined interim financial statements, included in the Registration Statement, for them to be in conformity with generally accepted accounting principles, or (2) at a specified date not more than five business days prior to the date of this Agreement, there was any change in the capital stock or any increase in the combined long-term debt of the Company and its Subsidiaries as compared with the amounts shown in the December 31, 1993 combined balance sheet included in the Registration Statement or, during the period from January 1, 1994 to a specified date not more than five business days prior to the date of this Agreement, there were any decreases, as compared with the corresponding period in the preceding year, in the combined net sales, the total or per share amounts of income before cumulative effect of change in accounting principle, or the net income of the Company and its Subsidiaries, except in all instances for changes, increases or decreases which the Registration Statement discloses have occurred or may occur, or except as specifically stated in such letter; (iv) although they are unable to and do not express an opinion on the Pro Forma Combined Statements of Operations and Pro Forma Combined Balance Sheet (collectively, the "Pro Forma Financial Statements") included in the Registration Statement, they have (A) read the Pro Forma Financial Statements, (B) made inquiries of certain officials of the Company who have responsibility for financial and accounting matters about the basis for their determination of the pro forma adjustments to the historical amounts in the Pro Forma Financial Statements and whether the Pro Forma Financial Statements comply in form in all material respects with the applicable accounting requirements of Rule 11-02 of Regulation S-X; and (C) proved the arithmetic accuracy of the application of the pro forma adjustments to the historical amounts in the Pro Forma Financial Statements; on the basis of such procedures, and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that the Pro Forma Financial Statements do not comply in form in all material respects with the applicable requirements of Rule 11-02 of Regulation S-X and that the pro forma adjustments have not been properly applied to the historical amounts in the compilation of such statements; and (v) they have read, with respect to certain amounts, percentages and financial information which are included in the Registration Statement and Prospectuses and which have been specified by the Lead Managers, and have found such amounts, percentages and financial information to be in agreement with the relevant accounting and financial records of the Company and its Subsidiaries identified in such letter. (f) At Closing Time the Lead Managers shall have received from Price Waterhouse a letter, dated as of Closing Time, to the effect that they confirm the statements made in the letter furnished pursuant to subsection (e) of this Section, except that the "specified date" referred to in such letter shall be a date not more than five days prior to Closing Time and, if the Company has elected to rely on Rule 430A of the 1933 Act Regulations, to the further effect that they have carried out procedures as specified in clause (v) of subsection (e) of this Section with respect to certain amounts, percentages and financial information specified by the Lead Managers and deemed to be a part of the Registration Statement pursuant to Rule 430(A)(b) and have found such amounts, percentages and financial information to be in agreement with the relevant accounting and financial records of the Company and its Subsidiaries identified in such letter. (g) At Closing Time the Securities shall have been approved for listing on the New York Stock Exchange, subject only to official notice of issuance. (h) At the time of the execution of this Agreement, the Company shall have furnished to the Lead Managers "lock-up" letters (or other agreements or instruments acceptable to the Lead Managers), in form and substance reasonably satisfactory to the Lead Managers, signed by each of the persons designated in the Prospectuses as an executive officer or director of the Company, pursuant to which each such person shall agree not to sell, offer to sell, grant an option for the sale of, or otherwise dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exchangeable into or exercisable for Common Stock for a period of 180 days from the International Representation Date without the prior written consent of the Lead Managers (which consent shall not be unreasonably withheld), except for a bona fide transaction entered into in good faith by such person with a member of such person's family or by the executor of such person's estate, provided that the recipient of such shares (unless the recipient is the executor or administrator of the estate of a deceased transferor) agrees in writing to be bound by the terms of the transferor's lock-up letter. (i) At Closing Time and at each Date of Delivery, if any, counsel for the Managers shall have been furnished with such certificates, documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the sale or issuance of the Securities as herein contemplated and related proceedings, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained. (j) At Closing Time and at each Date of Delivery, if any, all actions, proceedings, instruments, opinions and documents required in connection with the consummation of the transactions contemplated by this Agreement and the U.S. Purchase Agreement at or prior to Closing Time or such Date of Delivery, as the case may be, shall be reasonably satisfactory to the Lead Managers. (k) In the event the Managers exercise their option provided in Section 2(b) hereof to purchase all or any part of the International Option Securities and the Date of Delivery specified by the Managers for any such purchase is a date other than the Closing Time, the obligation of the Managers to purchase all or any such portion of the International Option Securities shall be subject, in addition to the foregoing conditions, to the accuracy of the representations and warranties of the Company and the Selling Stockholder herein contained at each Date of Delivery, to the performance by the Company and the Selling Stockholder of its obligations hereunder required to be performed prior to or at each Date of Delivery, and to the receipt by the Managers of the following: (1) A certificate, dated such Date of Delivery, of the President or a Vice President of the Company and of the chief financial or chief accounting officer of the Company confirming that the certificate delivered at Closing Time pursuant to Section 5(c) hereof remains true as of such Date of Delivery. (2) A certificate, dated such Date of Delivery, of the President or a Vice President of the Selling Stockholder and of the chief financial or chief accounting officer of the Selling Stockholder confirming that the certificate delivered at Closing Time pursuant to Section 5(d) hereof remains true as of such Date of Delivery. (3) The favorable opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel for the Company, in form and substance reasonably satisfactory to the Lead Managers, dated such Date of Delivery, relating to the Option Securities and otherwise to the same effect as the opinion required by Section 5(b)(1) hereof. (4) The favorable opinion of Frederick W. Padden, General Counsel of the Selling Stockholder, in form and substance reasonably satisfactory to the Lead Managers, dated such Date of Delivery, relating to the Option Securities and otherwise to the same effect as the opinion required by Section 5(b)(2) hereof. (5) The favorable opinion of Rowland H. Geddie, III, Vice President, General Counsel and Secretary of the Company, in form and substance reasonably satisfactory to the Lead Managers, dated such Date of Delivery, relating to the Option Securities and otherwise to the same effect as the opinion required by Section 5(b)(3) hereof. (6) The favorable opinion of Baker & Botts, L.L.P., counsel for the Managers, dated such Date of Delivery, relating to the Option Securities and otherwise to the same effect as the opinion required by Section 5(b)(4) hereof. (7) A letter, dated as of such Date of Delivery, from Price Waterhouse, in form and substance reasonably satisfactory to the Lead Managers, substantially the same in scope and substance as the letter furnished pursuant to Section 5(f) hereof, except that the "specified date" in such letter shall be a date not more than five days prior to such Date of Delivery. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Lead Managers by notice to the Company and the Selling Stockholder at any time at or prior to Closing Time or (insofar as the provisions hereof relate to the Option Securities) any Date of Delivery and such termination shall be without liability of any party to any other party. Notwithstanding the foregoing, the provisions of Sections 4(a), 4(b), 6 and 7 hereof shall remain in effect following any such termination. SECTION 6. Indemnification. (a) The Company and the Selling Stockholder jointly and severally agree to indemnify and hold harmless each Manager, each officer and director of any Manager and each person, if any, who controls any Manager within the meaning of Section 15 of the 1933 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including the information deemed to be part of the Registration Statement pursuant to Rule 430A(b) of the 1933 Act Regulations, if applicable, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or the Prospectuses (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Company and the Selling Stockholder; and (iii) against any and all expense whatsoever, as incurred (including the fees and expenses of counsel chosen by the Lead Managers), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and conformity with written information furnished to the Company by any Manager through Merrill Lynch expressly for use in the Registration Statement (or any amendment thereto) or any preliminary prospectus or the International Prospectus (or any amendment or supplement thereto); and provided, further, that this indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Manager from whom the person asserting any such losses, liabilities, claims, damages or expenses purchased Securities, any officer or director of such Manager or any person controlling such Manager, if a copy of the International Prospectus (as then amended or supplemented if the Company shall have furnished any such amendments or supplements thereto) was not sent or given by or on behalf of such Manager to such person, if such is required by law, at or prior to the written confirmation of the sale of such Securities to such person and if the International Prospectus (as so amended or supplemented) would have corrected the defect giving rise to such loss, liability, claim, damage or expense. (b) Each Manager agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors and each of its officers who signed the Registration Statement, the Selling Stockholder and each of its officers and directors and each person, if any, who controls the Company or the Selling Stockholder within the meaning of Section 15 of the 1933 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including the information deemed to be part of the Registration Statement pursuant to Rule 430A(b) of the 1933 Act Regulations, if applicable, or any preliminary prospectus or the Prospectuses (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Manager through Merrill Lynch expressly for use in the Registration Statement (or any amendment thereto) or the Prospectuses (or any amendment or supplement thereto). (c) Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify any indemnifying party shall not relieve such indemnifying party from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. SECTION 7. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 6 hereof is for any reason held to be unenforceable by the indemnified parties although applicable in accordance with its terms, the Company, the Selling Stockholder and the Managers shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company, the Selling Stockholder and one or more of the Managers, as incurred, in such proportions that the Managers are responsible for that portion represented by the percentage that the underwriting discount appearing on the cover page of the Prospectuses bears to the initial public offering price appearing thereon and the Company and the Selling Stockholder will be jointly and severally responsible for the balance; provided, however, that no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each person, if any, who controls a Manager within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as such Manager, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as the Company, and each person who controls the Selling Stockholder within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as the Selling Stockholder. SECTION 8. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties, agreements and indemnities contained in this Agreement and the International Pricing Agreement, or contained in certificates of officers of the Company or the Selling Stockholder submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Manager or controlling person, or by or on behalf of the Company or the Selling Stockholder, and shall survive delivery of and payment for the International Securities to or by the Managers. SECTION 9. Termination of Agreement. (a) The Lead Managers may terminate this Agreement, by notice to the Company and the Selling Stockholder, at any time at or prior to Closing Time (i) if there has been, since the date of this Agreement or since the respective dates as of which information is given in the Prospectuses, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its Subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) if there has occurred any material adverse change in the financial markets in the United States or elsewhere or any outbreak of hostilities or escalation thereof or other calamity or crisis, the effect of which is such as to make it, in the reasonable judgment of the Lead Managers, impracticable to market the Securities or enforce contracts for the sale of the Securities, or (iii) if trading in the Common Stock has been suspended by the Commission or the New York Stock Exchange, or if trading generally on either the New York Stock Exchange or the American Stock Exchange has been suspended, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required, by either of said exchanges or by order of the Commission or any other governmental authority, or if a banking moratorium has been declared by either federal or New York authorities. As used in this Section 9(a), the term "Prospectuses" means the Prospectuses in the form first used to confirm sales of the Securities. (b) If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party. Notwithstanding the foregoing, the provisions of Sections 4(a), 4(b), 6 and 7 shall remain in effect. (c) This Agreement may also terminate pursuant to the provisions of Section 2(a)(ii) hereof, with the effect stated in such Section. SECTION 10. Default by one or more Managers. If any one or more of the Managers shall fail at Closing Time to purchase and pay for any of the Initial International Securities pursuant to this Agreement and the International Pricing Agreement and such failure to purchase shall constitute a default in the performance of its or their obligations hereunder and thereunder, the Lead Managers shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Managers or any other underwriters to purchase all, but not less than all, of the Initial International Securities not so purchased in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Managers shall not have completed such arrangements within said 24-hour period, then: (a) if the number of Initial International Securities not so purchased does not exceed 10% of the Initial International Securities, the non-defaulting Managers shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non- defaulting Managers, or (b) if the number of Initial International Securities not so purchased equals or exceeds 10% of the Initial International Securities, this Agreement shall terminate without liability on the part of any non-defaulting Manager. No action taken pursuant to this Section shall relieve any defaulting Manager from any liability it may have hereunder in respect of its default. In the event of any such default which does not result in a termination of this Agreement, the Lead Managers shall have the right to postpone Closing Time for such period, not exceeding seven days, as they shall determine, after consultation with the Company, in order that the required changes in the Registration Statement and the Prospectuses or in any other documents or arrangements may be effected. SECTION 11. Information Furnished by Managers. The Managers acknowledge that the statements contained in (i) the last paragraph of text on the outside front cover page of the International Prospectus, (ii) the legend regarding stabilization activities on the inside front cover page of the International Prospectus and (iii) the fourth, sixth, seventh, eighth, tenth and thirteenth paragraphs under the caption "Underwriting" in the International Prospectus were included in the Registration Statement, the preliminary International prospectus and the international Prospectus in reliance upon and in conformity with written information furnished to the Company by the Managers through Merrill Lynch expressly for use therein, and the Company and the Selling Stockholder acknowledge and agree that such statements constitute the only information so furnished to the Company by the Managers. SECTION 12. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Managers shall be directed to the Lead Managers c/o Merrill Lynch International Limited, Ropemaker Place, 25 Ropemaker Street, London EC2Y 9LY, England, to the attention of the Syndicate Department; notices to the Company shall be directed to it at 1900 Gulf Street, Lamar, Missouri 64759, to the attention of the General Counsel; and notices to the Selling Stockholder shall be directed to it at TE Electronics Technology Center, 200 Taylor Street, Suite 700, Fort Worth, Texas 76102, to the attention of the General Counsel. SECTION 13. Parties. This Agreement and the International Pricing Agreement shall each inure to the benefit of and be binding upon the Managers, the Company and the Selling Stockholder and their respective successors. Nothing expressed or mentioned in this Agreement or the International Pricing Agreement is intended or shall be construed to give any person, firm or corporation, other than the Managers, the Company and the Selling Stockholder and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 hereof and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or the International Pricing Agreement or any provision herein or therein contained. This Agreement and the International Pricing Agreement and all conditions and provisions hereof and thereof are intended to be for the sole and exclusive benefit of the Managers, the Company and the Selling Stockholder and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any Manager shall be deemed to be a successor by reason merely of such purchase. SECTION 14. Certain Actions; Authority of Managers. Any action required or permitted to be taken by the Managers under or in connection with this Agreement may be taken by them jointly or by Merrill Lynch. The Lead Managers represent that they have been authorized by the other Managers to execute this Agreement and the International Pricing Agreement on behalf of the other Managers. SECTION 15. Governing Law and Time. This Agreement and the International Pricing Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in said state. Except where otherwise provided, specified times of day refer to New York City time. SECTION 16. Counterparts. This Agreement may be executed in one or more counterparts and, when a counterpart has been executed by each party, all such counterparts taken together shall constitute one and the same agreement. If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement between the Company and each of the Managers in accordance with its terms. Very truly yours, O'SULLIVAN INDUSTRIES HOLDINGS, INC. By:_________________________________ Name:_______________________________ Title:______________________________ TE ELECTRONICS INC. By:_________________________________ Name:_______________________________ Title:______________________________ CONFIRMED AND ACCEPTED, as of the date first above written: MERRILL LYNCH INTERNATIONAL LIMITED UBS LIMITED By: MERRILL LYNCH INTERNATIONAL LIMITED By:________________________________ Name:______________________________ Title:_____________________________ For themselves and as Lead Managers of the several other Managers named in Schedule A hereto. SCHEDULE A Number of Initial International Name of Manager Securities Merrill Lynch International Limited . . 1,075,000 UBS Limited . . . . . . . . . . . . . . 1,075,000 Wheat First Butcher & Singer. . . . . . 150,000 The Chicago Dearborn Company. . . . . . 150,000 Rauscher Pierce Refsnes, Inc. . . . . . 150,000 Barclays de Zoete Wedd Limited . . . . 80,000 Cazenove & Co. . . . . . . . . . . . . 80,000 Commerzbank Aktiengesellschaft . . . . 80,000 Credit Lyonnais Securities . . . . . . 80,000 Nomura International plc . . . . . . . 80,000 __________ Total . . . . . . . . . . . . . . 3,000,000 __________ __________ EXHIBIT A 3,000,000 Shares O'SULLIVAN INDUSTRIES HOLDINGS, INC. (a Delaware corporation) Common Stock (Par Value $1.00 Per Share) INTERNATIONAL PRICING AGREEMENT January __, 1994 MERRILL LYNCH INTERNATIONAL LIMITEDUBS LIMITED as Lead Managers of the several Managers named in the within- mentioned International Purchase Agreement c/o MERRILL LYNCH INTERNATIONAL LIMITED Ropemaker Place 25 Ropemaker Street London EC2Y 9LY England Dear Sirs: Reference is made to the International Purchase Agreement, dated January __, 1994 (the "International Purchase Agreement"), with respect to (i) the sale by the Selling Stockholder and the purchase by the several Managers named in Schedule A thereto, acting severally and not jointly, of an aggregate of 3,000,000 shares (the "Initial International Securities") of Common Stock, par value $1.00 per share ("Common Stock"), of O'Sullivan Industries Holdings, Inc. (the "Company"), together with the Preferred Stock Purchase Rights of the Company (the "Rights") associated with such shares, and (ii) the grant by the Company to the Managers, acting severally and not jointly, of the option to purchase all or any part of the Managers' pro rata portion of up to an additional 1,800,000 shares of Common Stock, together with the Rights associated with such shares, to cover over-allotments. Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in the International Purchase Agreement. Pursuant to Section 2(a) of the International Purchase Agreement, the Company and the Selling Stockholder agree with each Manager as follows: (i) The initial public offering price per share of the International Securities shall be $_______. (ii) The purchase price per share for the International Securities to be paid by the several Managers shall be $______, being an amount equal to the initial public offering price set forth above less $_______ per share. If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement among the Company, the Selling Stockholder and each of the Managers. Very truly yours, O'SULLIVAN INDUSTRIES HOLDINGS, INC. By:_________________________________ Name:_______________________________ Title:______________________________ TE ELECTRONICS INC. By:_________________________________ Name:_______________________________ Title:______________________________ CONFIRMED AND ACCEPTED, as of the date first above written: MERRILL LYNCH INTERNATIONAL LIMITED UBS LIMITED By: MERRILL LYNCH INTERNATIONAL LIMITED By:___________________________ Name:_________________________ Title:________________________ For themselves and as Lead Managers of the several other Managers named in Schedule A to the International Purchase Agreement. EX-4.(A) 5 1993 10K EXHIBIT 4A Exhibit 4a TANDY CORPORATION AND THE FORT WORTH NATIONAL BANK, TRUSTEE Indenture Dated as of June 30, 1974 $58,000,000 10% Subordinated Debentures Due 1994 TABLE SHOWING REFLECTION IN INDENTURE OF CERTAIN PROVISIONS OF TRUST INDENTURE ACT OF 1939 TIA Reflected in Indenture Section 303(1) .............................. 101(6) (4) .............................. 608(d)(1) (5) .............................. 608(d)(2) (6) .............................. 608(d)(6) (10) .............................. 101 (12) .............................. 608(d)(5), 613(c)(5) (13) .............................. 101 (16) .............................. 608(d)(4), 608(e)(1) 310(a)(1) ........................... 609 (a)(2) ........................... 609 (a)(3) ........................... Not Applicable (a)(4) ........................... Not Applicable (b) .............................. 608 311(a) .............................. 613(a) (b) .............................. 613(b) (b)(2) ........................... 703(a)(2), 703(b) 312(a) .............................. 701, 702(a) (b) .............................. 702(b) (c) .............................. 702(c) 313(a) .............................. 703(a) (b) .............................. 703(b) (c) .............................. 703(a), 703(b) (d) .............................. 703(c) 314(a) .............................. 704 (b) .............................. Not Applicable (c)(1) ........................... 102 (c)(2) ........................... 102 (c)(3) ........................... Not Applicable (d) .............................. Not Applicable (e) .............................. 102 315(a) .............................. 601(a), 601(c) (b) .............................. 602, 703(a)(6) (c) .............................. 601(b) (d) .............................. 601 (d)(1) ........................... 601(a) (d)(2) ........................... 601(c)(2) (d)(3) ........................... 601(c)(3) (e) .............................. 514 316(a) .............................. 101 (a)(1)(A) ........................ 502, 512 (a)(1)(B) ........................ 513 (a)(2) ........................... Not Applicable (b) .............................. 508 317(a)(1) ........................... 503 (a)(2) ........................... 504 (b) .............................. 1003 318(a) .............................. 107 TABLE OF CONTENTS PAGE PARTIES ............................................... 1 RECITALS OF THE COMPANY ............................... 1 ARTICLE 100 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions .............................. 1 Act ...................................... 2 accountant ............................... 2 Affiliate; control ....................... 2 Authenticating Agent ..................... 3 Authorized Newspaper ..................... 3 Board of Directors ....................... 3 Board Resolution ......................... 3 Business Day ............................. 3 Commission ............................... 3 Company .................................. 3 Company Request, Company Order, Company Consent ................................. 4 Corporate Trust Office ................... 4 corporation .............................. 4 Debenture ................................ 4 Debentureholder .......................... 4 Debenture Register; Debenture Registrar .. 4 Defaulted Interest ....................... 4 Event of Default ......................... 4 Holder ................................... 4 indebtedness ............................. 4 Independent .............................. 5 Interest Payment Date .................... 6 long-term indebtedness ................... 6 Maturity ................................. 6 Officers' Certificate .................... 6 Opinion of Counsel ....................... 6 Outstanding .............................. 6 Paying Agent ............................. 7 Person ................................... 7 Place of Payment ......................... 7 Predecessor Debentures ................... 7 Redemption Date .......................... 7 Redemption Price ......................... 8 Regular Record Date ...................... 8 Responsible Officer ...................... 8 Special Record Date ...................... 8 Stated Maturity .......................... 8 Subsidiary ............................... 8 successor; successor corporation ......... 8 Superior Debt ............................ 9 Trustee .................................. 9 Trustee Indenture Act, TIA ............... 9 Vice President ........................... 9 SECTION 102. Compliance Certificates and Opinions ..... 9 SECTION 103. Form of Documents Delivered to Trustee ... 10 SECTION 104. Acts of Debentureholders ................. 11 SECTION 105. Notices, etc., to Trustee and Company .... 12 SECTION 106. Notices to Debentureholders; Waiver ...... 12 SECTION 107. Conflict with Trust Indenture Act ........ 13 SECTION 108. Effect of Headings and Table of Contents . 13 SECTION 109. Successors and Assigns ................... 13 SECTION 110. Separability Clause ...................... 13 SECTION 111. Benefits of Indenture .................... 13 SECTION 112. Governing Law ............................ 14 SECTION 113. Immunity of Incorporators, Stockholders, Directors, and Officers .................. 14 SECTION 114. Payment and Redemption Dates ............. 14 ARTICLE 200 DEBENTURE FORM SECTION 201. Forms Generally .......................... 15 SECTION 202. Form of Debenture ........................ 15 SECTION 203. Form of Trustee's Certificate of Authentication ........................... 20 ARTICLE 300 THE DEBENTURES SECTION 301. Title and Terms .......................... 20 SECTION 302. Denominations ............................ 21 SECTION 303. Execution, Authentication, Delivery and Dating ................................... 21 SECTION 304. Temporary Debentures ..................... 22 SECTION 305. Registration, Transfer and Exchange ...... 22 SECTION 306. Mutilated, Destroyed, Lost and Stolen Debentures ............................... 24 SECTION 307. Payment of Interest; Interest Rights Preserved ................................ 25 SECTION 308. Persons Deemed Owners .................... 27 SECTION 309. Cancellation ............................. 27 SECTION 310. Authentication and Delivery of Original Issue .................................... 27 ARTICLE 400 SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture .. 28 SECTION 402. Application of Trust Money ............... 29 ARTICLE 500 REMEDIES SECTION 501. Events of Default ........................ 29 SECTION 502. Acceleration of Maturity; Rescission and Annulment ................................ 31 SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee ................... 32 SECTION 504. Trustee May File Proofs of Claim ......... 33 SECTION 505. Trustee May Enforce Claims Without Possession of Debentures.................. 34 SECTION 506. Application of Money Collected ........... 34 SECTION 507. Limitation on Suits ...................... 35 SECTION 508. Unconditional Right of Debentureholders to Receive Principal, Premium and Interest ................................. 35 SECTION 509. Restoration of Rights and Remedies ....... 36 SECTION 510. Rights and Remedies Cumulative ........... 36 SECTION 511. Delay or Omission Not Waiver ............. 36 SECTION 512. Control by Debentureholders .............. 37 SECTION 513. Waiver of Past Defaults .................. 37 SECTION 514. Undertaking for Costs .................... 38 SECTION 515. Waiver of Stay or Extension Laws ......... 38 ARTICLE 600 THE TRUSTEE SECTION 601. Certain Duties and Responsibilities ...... 38 SECTION 602. Notice of Defaults ....................... 40 SECTION 603. Certain Rights of Trustee ................ 40 SECTION 604. Not Responsible for Recitals or Issuance of Debentures ............................ 41 SECTION 605. May Hold Debentures ...................... 42 SECTION 606. Money Held in Trust ...................... 42 SECTION 607. Compensation and Reimbursement ........... 42 SECTION 608. Disqualification; Conflicting Interests .. 43 (a) Elimination of Conflicting Interest or Resignation........................ 43 (b) Notice of Failure to Eliminate Conflicting Interest or Resign ....... 43 (c) "Conflicting Interest" Defined ....... 43 (d) Definitions of Certain Terms Used in this Section.......................... 47 (e) Calculation of Percentages of Securities ........................... 48 SECTION 609. Corporate Trustee Required; Eligibility .. 49 SECTION 610. Resignation and Removal; Appointment of Successor ................................ 50 SECTION 611. Acceptance of Appointment by Successor ... 51 SECTION 612. Merger, Conversion, Consolidation or Succession to Business ................... 52 SECTION 613. Preferential Collection of Claims Against Company .................................. 52 (a) Segregation and Apportionment of Certain Collections by Trustee; Certain Exceptions.................... 52 (b) Certain Creditor Relationships Excluded From Segregation and Apportionment ........................ 55 (c) Definitions of Certain Terms Used in this Section ......................... 56 SECTION 614. Appointment of Authenticating Agent ...... 57 ARTICLE 700 DEBENTUREHOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Debentureholders ............ 59 SECTION 702. Preservation of Information; Communications to Debentureholders ....... 59 SECTION 703. Reports by Trustee ....................... 61 SECTION 704. Reports by Company ....................... 63 ARTICLE 800 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company may Consolidate, etc., only on Certain Terms ............................ 64 SECTION 802. Successor Corporation Substituted ........ 64 SECTION 803. Limitation on Lease of Properties as Entirety ................................. 65 ARTICLE 900 SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures Without Consent of Debentureholders ...................... 65 SECTION 902. Supplemental Indentures With Consent of Debentureholders ......................... 66 SECTION 903. Execution of Supplemental Indentures ..... 67 SECTION 904. Effect of Supplemental Indentures ........ 67 SECTION 905. Conformity with Trust Indenture Act ...... 67 SECTION 906. Reference in Debentures to Supplemental Indentures ............................... 68 SECTION 907. Officers' Certificate With Respect to Supplemental Indentures .................. 68 ARTICLE 1000 COVENANTS SECTION 1001. Payment of Principal, Premium and Interest ................................ 68 SECTION 1002. Maintenance of Office or Agency ......... 68 SECTION 1003. Money for Debenture Payments to be Held in Trust ................................ 69 SECTION 1004. Payment of Taxes and Other Claims ....... 70 SECTION 1005. Maintenance of Properties ............... 71 SECTION 1006. Statement as to Compliance .............. 71 SECTION 1007. Corporate Existence ..................... 72 SECTION 1008. Restrictions on Merger, Sale of Assets, etc. .................................... 72 ARTICLE 1100 REDEMPTION OF DEBENTURES SECTION 1101. Right of Redemption ..................... 72 SECTION 1102. Election to Redeem; Notice to Trustee ... 72 SECTION 1103. Selection by Trustee of Debentures to be Redeemed ............................. 73 SECTION 1104. Notice of Redemption .................... 73 SECTION 1105. Deposit of Redemption Price ............. 74 SECTION 1106. Debentures Payable on Redemption Date ... 74 SECTION 1107. Debentures Redeemed in Part ............. 74 ARTICLE 1200 SUBORDINATION OF DEBENTURES SECTION 1201. Debentures Subordinate to Superior Debt . 75 SECTION 1202. Payment Over of Proceeds Upon Dissolution, etc. ....................... 75 SECTION 1203. Trustee to Effectuate Subordination ..... 79 SECTION 1204. Trustee Not Charged with Knowledge of Prohibition ............................. 79 SECTION 1205. Rights of Trustee as Holder of Superior Debt .................................... 80 SECTION 1206. Article Applicable to Paying Agents ..... 80 TESTIMONIUM ........................................... 81 SIGNATURES AND SEALS .................................. 81 ACKNOWLEDGMENTS ....................................... 82 THIS INDENTURE dated as of June 30, 1974, between TANDY CORPORATION, a Delaware corporation (hereinafter called the "Company") having its principal office at 2727 West Seventh Street, Fort Worth, Texas 76107, and THE FORT WORTH NATIONAL BANK, a national banking association duly incorporated under the national banking laws of the United States of America having its principal office at Fort Worth, Texas (hereinafter called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the creation of an issue of its Debentures (hereinafter called the "Debentures") of substantially the tenor and amount hereinafter set forth, and to provide therefor the Company has duly authorized the execution and delivery of this Indenture. All things necessary to make the Debentures, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Debentures by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Debentures, as follows: ARTICLE 100 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental thereto entered into pursuant to the applicable provisions hereof; (2) all references in this Indenture to the designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Indenture as originally executed; (3) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (4) the words "the date hereof" shall mean the date of the execution and delivery of this Indenture; (5) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (6) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (7) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; and (8) all computations provided for herein shall be made in accordance with generally accepted accounting principles, and, subject to the provisions of Section 601, a certificate of an Independent accountant shall be conclusive evidence as to the amount of Consolidated Net Income. Certain terms, used principally in Article 600, are defined in that Article. "Act" when used with respect to any Debentureholder has the meaning specified in Section 104. "accountant" means a Person engaged in the practice of accounting whether or not employed by, or in any way affiliated with, the Company. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Authenticating Agent" has the meaning specified in Section 614. "Authorized Newspaper" means a newspaper of general circulation in the Borough of Manhattan, The City of New York, New York, printed in the English language and customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays. Whenever successive weekly publications in an Authorized Newspaper are required hereunder they may be made (unless otherwise expressly provided herein) on the same or different days of the week and in the same or in different Authorized Newspapers. "Board of Directors" means either the board of directors of the Company or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday, which is not a legal holiday for banking institutions in The City of Fort Worth, Texas nor a day on which such banking institutions are authorized to remain closed. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Company" means Tandy Corporation, the Delaware corporation named in the first paragraph of this Indenture until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, subject to the provisions of Section 802, "Company" shall mean successor corporation. "Company Request", "Company Order" and "Company Consent" mean, respectively, a written request, order or consent signed in the name of the Company by its Chairman of the Board, President or a Vice President, and by its Treasurer, an Assistant Treasurer, Controller, an Assistant Controller, Secretary or an Assistant Secretary, and delivered to the Trustee. "Corporate Trust Office" means the principal office of the Trustee in The City of Fort Worth, Texas, at which at any particular time its corporate trust business shall be administered, which office is at the date of execution of this Indenture located at 500 Throckmorton Street, Fort Worth, Texas. "corporation" means and includes corporations, voluntary associations, joint stock companies, business trusts or other similar organizations. "Debenture" means any of the debentures referred to in the Recitals of the Company and authenticated and delivered hereunder. "Debentureholder" means a Person in whose name a Debenture is registered in the Debenture Register. "Debenture Register" and "Debenture Registrar" have the respective meanings specified in Section 305. "Defaulted Interest" has the meaning specified in Section 307. "Event of Default" has the meaning specified in Section 501. "Holder" when used with respect to any Debenture means a Debentureholder. "indebtedness" means and includes with respect to any corporation (i) all items which would be included on the liability side of a balance sheet of such corporation as of the date on which indebtedness is to be determined, excluding capital stock, surplus, capital and earned surplus reserves which in effect were appropriations of surplus or offsets to asset values (other than reserves in respect of obligations, the amount, applicability or validity of which is at such date being contested by such corporation), deferred credits and any amounts representing capitalization of leases; (ii) guarantees, other than endorsements, and other contingent obligations in respect of, or any obligations to purchase or otherwise acquire, indebtedness of others; (iii) indebtedness secured by any mortgage, pledge, security interest or lien existing on property owned subject to such mortgage, pledge, security interest or lien whether or not the indebtedness secured thereby shall have been assumed; (iv) all proper accruals for Federal and other taxes based on or measured by income or profits and other proper accruals as required by good accounting practice; and (v) all indebtedness guaranteed, directly or indirectly, in any manner by such corporation or in effect guaranteed or supported, directly or indirectly, by such corporation through an agreement, contingent or otherwise (A) to purchase the indebtedness or (B) to purchase, sell, transport or lease (as lessee or lessor) property or to purchase or sell services at prices or in amounts designed to enable the debtor to make payment of the indebtedness or to assure the owner of the indebtedness against loss or (C) to supply funds to or in any other manner invest in the debtor; provided, however, that such term shall not mean and include any indebtedness in respect to which moneys sufficient to pay and discharge the same in full shall be deposited with a depositary, agency or trustee in trust for the payment thereof. "Independent" when used with respect to any specified Person means such a Person who (i) is in fact independent, (ii) does not have any direct financial interest or any material indirect financial interest in the Company or in any other obligor upon the Debentures or in any Affiliate of the Company or of such other obligor, and (iii) is not connected with the Company or such other obligor or any Affiliate of the Company or of such other obligor, as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provide that any Independent Person's opinion or certificate shall be furnished to the Trustee, such Person shall be appointed by a Company Order and not disapproved by the Trustee, and such opinion or certificate shall state that the signer has read this definition and that the signer is independent within the meaning hereof. "Interest Payment Date" means the Stated Maturity of an instalment of interest on the Debentures. "long-term indebtedness" means any indebtedness which by its terms matures more than one year after the date it was incurred. "Maturity" when used with respect to any Debentures means the date on which the principal of such Debenture becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Officers' Certificate" means a certificate signed by the Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. Wherever this Indenture requires that an Officers' Certificate be signed also by an engineer or an accountant or other expert, such engineer, accountant or other expert (except as otherwise expressly provided in this Indenture) may be in the employ of the Company, and shall be acceptable to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may (except as otherwise expressly provided in this Indenture) be counsel for the Company, and shall be acceptable to the Trustee. "Outstanding" when used with respect to Debentures means, as of the date of determination, all Debentures theretofore authenticated and delivered under this Indenture, except: (i) Debentures theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Debentures for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Debentures, provided that, if such Debentures are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and (iii) Debentures in exchange for or in lieu of which other Debentures have been authenticated and delivered pursuant to Section 306 of this Indenture; provided, however, that in determining whether the Holders of the requisite principal amount of Debentures Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Debentures owned by the Company or any other obligor upon the Debentures or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Debentures which the Trustee knows to be so owned shall be so disregarded. Debentures so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Debentures and that the pledgee is not the Company or any other obligor upon the Debentures or any Affiliate of the Company or such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Debentures on behalf of the Company. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment" means a city or any political subdivision thereof designated as such in Section 301. "Predecessor Debentures" of any particular Debenture means every previous Debenture evidencing all or a portion of the same debt as that evidenced by such particular Debenture; and, for the purposes of this definition, any Debenture authenticated and delivered under Section 306 in lieu of a lost, destroyed or stolen Debenture shall be deemed to evidence the same debt as the lost, destroyed or stolen Debenture. "Redemption Date" when used with respect to any Debenture to be redeemed means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price" when used with respect to any Debenture to be redeemed means the price at which it is to be redeemed pursuant to this Indenture. "Regular Record Date" for the interest payable, and punctually paid or duly provided for, on any Interest Payment Date shall be the close of business on the 15th day (whether or not a Business Day) of the calendar month next preceding such Interest Payment Date. "Responsible Officer" when used with respect to the Trustee means the chairman or vice-chairman of the board of directors, the chairman or vice-chairman of the executive committee of the board of directors, the chairman of the trust committee,the president, any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller and any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity" when used with respect to any Debenture or any instalment of interest thereon means the date specified in such Debenture as the fixed date on which the principal of such Debenture or such instalment of interest is due and payable. "Subsidiary" means any corporation of which the Company and/or one or more of its Subsidiaries own more than 50% of the outstanding stock having by its terms ordinary voting power to elect a majority of the board of directors of such corporation, irrespective of whether at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency. "successor," or "successor corporation," when used with respect to a particular corporation, means the corporation successor to such corporation by consolidation or merger or which shall have acquired the property of such corporation as an entirety or substantially as an entirety. "Superior Debt" means any long-term indebtedness of the Company, any indebtedness of the Company evidenced by a bond, debenture, note or similar evidence of indebtedness or incurred under an agreement pursuant to which any such security was issued, and all indebtedness, obligations and liabilities of others in respect of which the Company is liable contingently or otherwise to pay or advance money or property or as guarantor, endorser or otherwise or which the Company has agreed to purchase or otherwise acquire, in any case either outstanding on the date of execution of this Indenture as originally executed, or thereafter created, incurred or assumed, other than (i) indebtedness or liability as to which, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such indebtedness or liability is not superior in right of payment to the Debentures, (ii) the Company's 6-% subordinated debentures due January 1, 1978 (which shall rank on a parity with the Debentures) and (iii) the Debentures. "Trustee" means The Fort Worth National Bank, the national banking association named as the "Trustee" in the first paragraph of this Indenture, until any successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as in force at the date as of which this Indenture was executed except as otherwise specified herein. "Vice President" when used with respect to the Company or the Trustee means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". SECTION 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such Counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such covenant or condition has been complied with. SECTION 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, in so far as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, in so far as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such Counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Debentureholders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Debentureholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Debentureholders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Debentureholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by an officer of a corporation or a member or a partnership, on behalf of such corporation or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The ownership of Debentures shall be proved by the Debenture Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Debenture shall bind the Holder of every Debenture issued upon the transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Debenture. (e) The Trustee may require such additional proof of any matter referred to in this Section as it shall deem necessary. SECTION 105. Notices, etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Debentureholders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Debentureholder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, or (2) the Company by the Trustee or by any Debentureholder shall be sufficient for every purpose hereunder if in writing and, except as provided in Section 501 hereof, mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this Indenture or at any other address previously furnished in writing to the Trustee by the Company. SECTION 106. Notices to Debentureholders; Waiver. Where this Indenture provides for notice to Debentureholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Debentureholder affected by such event, at his address as it appears in the Debenture Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Debentureholders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Debentureholder shall affect the sufficiency of such notice with respect to other Debentureholders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Debentureholders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case, by reason of the suspension of publication of any Authorized Newspaper, or by reason of any other cause, it shall be impossible to make publication of any notice in an Authorized Newspaper or Authorized Newspapers as required by this Indenture, then such method of publication or notification as shall be made with the approval of the Trustee shall constitute a sufficient publication of such notice. SECTION 107. Conflict with Trust Indenture Act. If this Indenture is qualified under TIA and any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Indenture by any of the provisions of TIA, such required provision shall control. SECTION 108. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 110. Separability Clause. In case any provision in this Indenture or in the Debentures shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 111. Benefits of Indenture. Nothing in this Indenture or in the Debentures, expressor implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders of Debentures, any benefit or any legal or equitable right, remedy or claim under this Indenture, except as provided in Article 1200. SECTION 112. Governing Law. This Indenture shall be construed in accordance with and governed by the laws of the State of Texas. SECTION 113. Immunity of Incorporators, Stockholders, Directors and Officers. No recourse under or upon any obligation, covenant or agreement contained in this Indenture or in any Debenture, or because of any indebtedness evidenced thereby, shall be had against any incorporator, or against any past, present or future stockholder, officer or director, as such, of the Company, the Trustee or of any successor corporation, either directly or through the Company or the Trustee, whether by virtue of any constitution or statute or rule of law, or by the enforcement of any assessment or penalty or otherwise. It is expressly understood and agreed that this Indenture and the Debentures are solely corporate obligations, that no personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors of the Company, the Trustee, or of any successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Debentures, or implied therefrom, and that any and all such personal liability of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director, are hereby expressly waived as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Debentures. SECTION 114. Payment and Redemption Dates. In any case where an Interest Payment Date, a Redemption Date or the date of Maturity of principal of any Debenture shall not be a Business Day, then payment of interest or principal (and premium, if any) shall be made on the next succeeding Business Day with the same force and effect as if made on the nominal date and no interest shall accrue for the period after said date. ARTICLE 200 DEBENTURE FORM SECTION 201. Forms Generally. The Debentures and the certificates of authentication thereon shall be in substantially the forms set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange, or as may, consistently herewith, be determined by the officers executing such Debentures, as evidenced by their execution of the Debentures. Any portion of the text of any Debenture may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Debenture. The definitive Debentures shall be printed, lithographed or engraved or produced by any combination of these methods on steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange, all as determined by the officers executing such Debentures, as evidenced by their execution of such Debentures. SECTION 202. Form of Debenture. [FORM OF FACE OF DEBENTURE] TANDY CORPORATION 10% SUBORDINATED DEBENTURE DUE 1994 NO. ............. $............. TANDY CORPORATION, a Delaware corporation (hereinafter called the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the sum of Dollars, on June 30, 1994 and to pay interest thereon from July 1, 1974, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, on January 1, 1975 and semi-annually thereafter on July 1 and January 1 in each year, and at the Stated Maturity of the principal hereof, at the rate of 10% per annum until the principal hereof becomes due and payable, and at the rate of 11% per annum on any overdue principal and premium and (to the extent that the payment of such interest shall be legally enforceable) on any overdue instalment of interest. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in said Indenture, be paid to the Person in whose name this Debenture (or one or more Predecessor Debentures, as defined in said Indenture) is registered at the close of business on the Regular Record Date for such interest, which shall be the 15th day (whether or not a Business Day) of the calendar month next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the registered Holder on such Regular Record Date, and may be paid to the Person in whose name this Debenture (or one or more Predecessor Debentures) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Debentureholders not less than 10 days prior to such Special Record Date, or may be paid, at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debentures may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of (and premium, if any) and interest on this Debenture will be made at the office or agency of the Company in the Borough of Manhattan, The City of New York, New York; provided, however, that payment of interest may be made at the option of the Company (a) by check mailed to the address of the Person entitled thereto as such address shall appear on the Debenture Register or (b) in such other manner acceptable to the Trustee as the Person entitled thereto may have requested. All such payments shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Reference is hereby made to the further provisions of this Debenture set forth on the reverse hereof, and such further provisions shall, for all purposes, have the same effect as if fully set forth in this place. Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Debenture shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this Debenture to be duly executed under its corporate seal. Dated ................. TANDY CORPORATION By........................... Chairman of the Board Attest: ......................... Secretary [FORM OF REVERSE OF DEBENTURE] TANDY CORPORATION This Debenture is one of a duly authorized issue of Debentures of the Company designated as its 10% Subordinated Debentures Due 1994 (herein called the "Debentures"), limited in aggregate principal amount to $58,000,000 issued and to be issued under an Indenture dated as of June 30, 1974 (herein called the "Indenture") between the Company and The Fort Worth National Bank, as Trustee (herein called the "Trustee", which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and duties thereunder of the Company, the Trustee and the Holders of the Debentures, and the terms upon which the Debentures are, and are to be, authenticated and delivered. The Debentures are subject to redemption on not less than 30 nor more than 60 days' prior notice given as provided in the Indenture at any time on or after July 1, 1976 and prior to maturity as a whole or in part, at the option of the Company, at the applicable percentage of the principal amount set forth below: If redeemed during If redeemed during 12 months' period 12 months' period beginning beginning July 1 Percentage July 1 Percentage ___________________ __________ _________________ __________ 1976 ........ 105.00% 1985 ........ 102.75% 1977 ........ 104.75 1986 ........ 102.50 1978 ........ 104.50 1987 ........ 102.25 1979 ........ 104.25 1988 ........ 102.00 1980 ........ 104.00 1989 ........ 101.75 1981 ........ 103.75 1990 ........ 101.50 1982 ........ 103.50 1991 ........ 101.25 1983 ........ 103.25 1992 ........ 101.00 1984 ........ 103.00 1993 ........ 100.00 together in the case of any such redemption with accrued interest to the Redemption Date. The indebtedness evidenced by the Debentures is, to the extent and in the manner set forth in the Indenture, expressly subordinated and subject in right of payment to the prior payment in full of all Superior Debt, and this Debenture is issued subject to such provisions of the Indentures, and each Holder of this Debenture, by accepting the same, agrees to and shall be bound by such provisions and authorizes the Trustee in his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and appoints the Trustee his attorney-in-fact for any and all such purposes. If an Event of Default shall occur, the principal of all the Debentures may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and rights of the Holders of the Debentures under the Indenture at any time by the Company with the consent of the Holders of 66 2/3% in aggregate principal amount of Debentures at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Debentures at the time Outstanding, on behalf of the Holders of all the Debentures, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Debenture shall be conclusive and binding upon such Holder and upon all future Holders of this Debenture and of any Debenture issued upon the transfer hereof or in exchange herefore or in lieu hereof whether or not notation of such consent or waiver is made upon this Debenture. No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Debenture at the times, place, and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, this Debenture is transferable on the Debenture Register of the Company, upon surrender of this Debenture for registration of transfer at the office or agency of the Company in the Borough of Manhattan, The City of New York, New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Debenture Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Debentures, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Debentures are issuable only as registered Debentures without coupons in denominations of $1,000 or such integral multiples, if any, of $1,000 as the company may from time to time authorize. As provided in the Indenture and subject to certain limitations therein set forth, Debentures are exchangeable for a like aggregate principal amount of Debentures of any authorized denomination, as requested by the Holder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Debenture is registered as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes whether or not this Debenture be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. All terms used in this Debenture which are defined in the Indenture shall have the meanings assigned to them in the Indenture. SECTION 203. Form of Trustee's Certificate of Authentication. This is one of the Debentures referred to in the within- mentioned Indenture. THE FORT WORTH NATIONAL BANK, THE CHASE MANHATTAN BANK as Trustee or (National Association) as Authenticating Agent By ....................... for the Trustee Authorized Officer BY ...................... Authorized Officer ARTICLE 300 THE DEBENTURES SECTION 301. Titles and Terms. The aggregate principal amount of Debentures which may be authorized and delivered under this Indenture is limited to $58,000,000 except for Debentures authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of other Debentures as provided herein. The Debentures shall be known and designated as the "10% Subordinated Debentures Due 1994" of the Company. Their Stated Maturity shall be June 30, 1994 and they shall bear interest from July 1, 1974, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable on January 1, 1975 and semi-annually thereafter on July 1 and January 1 in each year and at the Stated Maturity of the principal hereof, at the rate of 10% per annum until the principal hereof becomes due and payable, and at the rate of 11% per annum on any overdue principal and premium and (to the extent that the payment of such interest shall be legally enforceable) on any overdue installment of interest. The principal (and premium, if any) and interest on the Debentures shall be payable at the office or agency of he Company in the Borough of Manhattan, The City of New York, New York provided for in Section 1002 (herein called the "Place of Payment"); provided, however, that payment of interest may be made at the option of the Company (a) by check mailed to the address of the Person entitled thereto at such address as shall appear on the Debenture Register or (b) in such other manner acceptable to the Trustee as the Person entitled thereto may have requested. The Debentures shall be redeemable as provided in Article 1100. The Debentures shall be subordinated in right of payment to Superior Debt as provided in Article 1200. SECTION 302. Denominations. The Debentures may be issued in denominations of $1,000 and any integral multiple of $1,000. SECTION 303. Execution, Authentication, Delivery and Dating. The Debentures shall be executed on behalf of the Company by its Chairman of the Board, its President or one of its Vice Presidents under its corporate seal reproduced thereon and attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Debentures may be manual or facsimile. Debentures bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Debentures or did not hold such offices at the date of such Debentures. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Debentures executed by the Company to the Trustee for authentication; and the Trustee shall authenticate and deliver such Debentures as in this Indenture provided and not otherwise. All Debentures shall be dated the date of their authentication. No Debenture shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Debenture a certificate of authentication substantially in the form provided for herein executed by the Trustee or on behalf of the Trustee by the Authenticating Agency by manual signature, and such certificate upon any Debenture shall be conclusive evidence, and the only evidence, that such Debenture has been duly authenticated and delivered hereunder. SECTION 304. Temporary Debentures. Pending the preparation of definitive Debentures, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Debentures which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any domination, substantially of the tenor of the definitive Debentures in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Debentures may determine, as evidenced by their execution of such Debentures. If temporary Debentures are issued, the Company will cause definitive Debentures to be prepared without unreasonable delay. After the preparation of definitive Debentures, the temporary Debentures shall be exchangeable for definitive Debentures upon surrender of the temporary Debentures at the office or agency of the Company in the Place of Payment, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Debentures, the Company shall execute and the Trustee or the Authenticating Agent shall authenticate and deliver in exchange therefore a like principal amount of definitive Debentures of authorized denominations. Until so exchanged, the temporary Debentures shall in all respects be entitled to the same benefits under this Indenture as definitive Debentures. SECTION 305. Registration, Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (herein sometimes referred to as the "Debenture Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Debentures and the registration of transfers of Debentures. The Trustee is hereby appointed "Debenture Registrar" for the purpose of registering Debentures and transfers of Debentures as herein provided. Upon surrender for registration of transfer of any Debenture at the office or agency of the Company in the Borough of Manhattan, The City of New York, New York, the Company shall execute, and the Trustee or the Authenticating Agent on behalf of the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Debentures of any authorized denominations, of a like aggregate principal amount. At the option of the Holder, Debentures may be exchanged for other Debentures of any authorized denominations, of a like aggregate principal amount, upon surrender of the Debentures to be exchanged at such office or agency. Whenever any Debentures are so surrendered for exchange, the Company shall execute, and the Trustee or the Authenticating Agent shall authenticate and deliver, the Debentures which the Debentureholder making the exchange is entitled to receive. All Debentures issued upon any registration of transfer or exchange of Debentures shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Debentures surrendered upon such registration of transfer or exchange. Every Debenture presented or surrendered for registration of transfer or exchange shall (if so required by the Company or the Trustee or the Authenticating Agent) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Debenture Registrar duly executed by he Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Debentures, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Debentures, other than exchanges pursuant to Section 304 or 906 not involving any transfer. The Company shall not be required (i) to issue, register the transfer of or exchange any Debenture during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Debentures selected for redemption and ending at the close of business on the day of such mailing, or (ii) to register the transfer of or exchange any Debenture so selected for redemption in whole or in part. SECTION 306. Mutilated, Destroyed, Lost and Stolen Debentures. If (i) any mutilated Debenture is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Debenture, and (ii) there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Debenture has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee or the Authenticating Agent shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Debenture, a new Debenture of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Debenture has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Debenture, pay such Debenture without surrender thereof except in the case of a mutilated Debenture, if the applicant for such payment shall furnish to the Company and to the Trustee or the Authenticating Agent such security or indemnity as may be required by them to save each of them harmless and evidence to the satisfaction of the Company and the Trustee of the destruction, loss or theft of such Debenture and of the ownership thereof. Upon the issuance of any new Debenture under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Debenture issued pursuant to this Section in lieu of any destroyed, lost or stolen Debenture shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Debenture shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Debentures duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Debentures. SECTION 307. Payment of Interest; Interest Rights Preserved. Interest on any Debenture which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Debenture (or one or more Predecessor Debentures) is registered at the close of business on the Regular Record Date for such interest; provided, however, if any Debenture or portion thereof is called for redemption and is payable on a date after the close of business on a Regular Record Date next preceding any Interest Payment Date and before the opening of business on such Interest Payment Date, and notice of such redemption has been mailed and funds for such redemption have been duly provided, interest accrued to the date fixed for the redemption of such Debenture or portion so called shall be paid only against surrender of the Debenture. Any interest on any Debenture which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder; and such Defaulted Interest may be paid by the Company, at its option in each case, as provided in Clause (1) or Clause (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Debentures (or their respective Predecessor Debentures) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Debenture and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid i respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each Debentureholder at his address as it appears in the Debenture Register, not less than 10 days prior to such Special Record Date. The Trustee may, in its discretion, in the name and at the expense of the Company, cause a similar notice to be published at least once in an Authorized Newspaper in each Place of Payment, but such publication shall not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefore having been mailed as aforesaid, such Defaulted interest shall be paid to the Persons in whose names the Debentures (or their respective Predecessor Debentures) are registered on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debentures may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Debenture delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Debenture shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Debenture. SECTION 308. Persons Deemed Owners. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Debenture is registered as the owner of such Debenture for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 307) interest on such Debenture and for all other purposes whatsoever, whether or not such Debenture be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 309. Cancellation. All Debentures surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Debentures previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Debentures so delivered shall be promptly cancelled by the Trustee. No Debentures shall be authenticated in lieu of or in exchange for any Debentures cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Debentures held by the Trustee shall be disposed of as directed by a Company Order. SECTION 310. Authentication and Delivery of Original Issue. Forthwith upon the execution and delivery of this Indenture, or from time to time thereafter, Debentures up to the aggregate principal amount of $58,000,000 may be executed by the Company and delivered to the Trustee for authentication upon the original issue, and shall thereupon be authenticated and delivered by the Trustee upon Company Order, without any further action by the Company. ARTICLE 400 SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect (except as to any surviving rights of transfer or exchange of Debentures and as to the application of any funds deposited for the payment of principal (and premium, if any) and interest on the Debentures herein expressly provided for) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Debentures theretofore authenticated and delivered (other than (i) Debentures which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306, and (ii) Debentures for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or (B) all such Debentures not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within 1 year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Debentures not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of Debentures which have become due and payable), or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with; and (4) payment of such monies is not prohibited by the provisions of Section 1204. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 607 shall survive. SECTION 402. Application of Trust Money. Subject to the provisions of Article 1200, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Debentures and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its owns Paying Agent) as the Trustee may determine, to Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law. ARTICLE 500 REMEDIES SECTION 501. Events of Default. "Event of Default", wherever used herein means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment, whether or not prohibited by Article 1200, of any interest upon any Debenture when it becomes due and payable, and continuance of such default for a period of 30 days; or (2) default in the payment, whether or not prohibited by Article 1200, of the principal of (or premium, if any, on) any Debenture at its Maturity, except any Maturity occurring by reason of a call for redemption; or (3) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 10% in principal amount of the Outstanding Debentures, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (4) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under the Federal Bankruptcy Act or any other applicable Federal or State law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (5) the institution by the Company of proceedings to be adjudicated a bankrupt, or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Act or any other applicable Federal or State law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action. SECTION 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Debentures Outstanding may declare the principal of all the Debentures to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Debentureholders), and upon any such declaration such principal shall become immediately due and payable. At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Debentures Outstanding, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue installments of interest on all Debentures, (B) the principal of (and premium, if any, on) any Debentures which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Debentures, (C) to the extent that payment of such interest is lawful, interest upon overdue installments of interest at the rate borne by the Debentures, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default, other than the non-payment of the principal of Debentures which have become due solely by such acceleration, have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if (1) default is made in the payment of any instalment of interest on any Debenture when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (or premium, if any, on) any Debenture at the Maturity thereof, except any Maturity occurring by reason of a call for redemption, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Debentures, the whole amount then due and payable on such Debentures for principal (and premium, if any) and interest, with interest upon the overdue principal (and premium, if any) and, to the extent that payment of such interest shall be legally enforceable, upon overdue instalments of interest, at the rate specified in the Debentures; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amount forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon the Debentures and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Debentures, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Debentureholders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Debentures or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Debentures shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (1) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Debentures and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Debentureholders allowed in such judicial proceeding, and (2) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such judicial proceeding is hereby authorized by each Debentureholder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Debentureholders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Debentureholder any plan or reorganization, arrangement, adjustment or composition affecting the Debentures or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Debentureholder in any such proceeding. SECTION 505. Trustee May Enforce Claims Without Possession of Debentures. All rights of action and claims under this Indenture or the Debentures may be prosecuted and enforced by the Trustee without the possession of any of the Debentures or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Debentures in respect of which such judgment has been recovered. SECTION 506. Application of Money Collected. Subject to the provisions of Article 1200, any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Debentures and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 607; SECOND: To the payment of the amounts then due and unpaid upon the Debentures for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Debentures for principal (and premium, if any) and interest, respectively. SECTION 507. Limitation on Suits. No Holder of any Debentures shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (2) the Holders of not less than 25% in principal amount of the Outstanding Debentures shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs (including reasonable counsel fees), expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60 day period by the Holders of a majority in principal amount of the Outstanding Debentures; it being understood and intended that no one or more Holders of Debentures shall have any rights in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Debentures, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders of Debentures. SECTION 508. Unconditional Right of Debentureholders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Debenture shall have the right which is absolute and unconditional to receive payment of the principal of (and premium, if any) and (subject to Section 307) interest on such Debenture on the respective Stated Maturities expressed in such Debenture (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such rights, and such rights shall not be impaired without the consent of such Holder. SECTION 509. Restoration of Rights and Remedies. If the Trustee or any Debentureholder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Debentureholder, then and in every such case the Company, the Trustee an the Debentureholders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee an the Debentureholders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Trustee or to the Debentureholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Debenture to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Debentureholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Debentureholders, as the case may be. SECTION 512. Control by Debentureholders. The Holders of a majority in principal amount of the Outstanding Debentures shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that (1) such direction shall not be in conflict with any rule of law or with this Indenture, and (2) subject to the provisions of Section 601, the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, determines that the action so directed may not lawfully be taken or may involve the Trustee in personal liability, or if the Trustee in good faith shall determine that the action so directed would be unjustly prejudicial to the Holders of the Debentures not taking part in such direction; and provided, further, that nothing in this Indenture contained shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee which is not inconsistent with such direction by the Holders of Debentures. SECTION 513. Waiver of Past Defaults. The Holders of not less than 66 2/3% in principal amount of the Outstanding Debentures may on behalf of the Holders of all the Debentures waive any past default hereunder and its consequences, except a default (1) in the payment of the principal of (or premium, if any) or interest on any Debenture, or (2) in respect of a covenant or provision hereof which under Article 900 cannot be modified or amended without the consent of the Holder of each Outstanding Debenture affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 514. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Debenture by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any part litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Debentureholder, or group of Debentureholders, holding in the aggregate more than 10% in principal amount of the Outstanding Debentures, or to any suit instituted by any Debentureholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Debenture on or after the respective Stated Maturities expressed in such Debenture (or, in the case of redemption, on or after the Redemption Date). SECTION 515. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 600 THE TRUSTEE SECTION 601. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgement made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Debentures relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 602. Notice of Defaults. Within 90 days after the occurrence of any default hereunder, the Trustee shall transmit by mail to all Debentureholders, as their names and addresses appear in the Debenture Register, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest on any Debenture, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Debentureholders; and provided, further, that in the case of any default of the character specified in Section 501(3) no such notice to Debentureholders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. SECTION 603. Certain Rights of Trustee. Except as otherwise provided in Section 601: (1) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (4) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Debentureholders pursuant to this Indenture, unless such Debentureholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Trustee, in its discretion may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; and (7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. SECTION 604. Not Responsible for Recitals or Issuance of Debentures. The recitals contained herein and in the Debentures, except the certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Debentures. The Trustee shall not be accountable for the use or application by the Company of Debentures or the proceeds thereof. SECTION 605. May Hold Debentures. The Trustee, any Paying Agent, Debenture Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Debentures and, subject to Sections 608 and 613, if operative, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Debenture Registrar or such other agent. SECTION 606. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. SECTION 607. Compensation and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advances as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expenses incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Debentures upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any) or interest on Debentures. SECTION 608. Disqualification; Conflicting Interests. (a) If the Trustee has or shall acquire any conflicting interest, as defined in this Section, it shall, within 90 days after ascertaining that it has such conflicting interest, either eliminate such conflicting interest or resign in the manner and with the effect hereinafter specified in this Article. (b) In the event that the Trustee shall fail to comply with the provisions of Subsection (a) of this Section the Trustee shall, within 10 days after the expiration of such 90-day period, transmit by mail to all Debentureholders, as their names and addresses appear in the Debenture Register, notice of such failure. (c) For the purposes of this Section, the Trustee shall be deemed to have a conflicting interest if (1) the Trustee is trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the Company are outstanding, unless such other indenture is a collateral trust indenture under which the only collateral consists of Debentures issued under this Indenture, provided that there shall be excluded from the operation of this paragraph any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding, if (i) this Indenture and such other indenture or indentures are wholly unsecured and such other indenture or indentures are hereafter qualified under TIA, as then in force, unless the Commission shall have found and declared by order pursuant to Section 305(b) or Section 307(c) of TIA that differences exist between the provisions of this Indenture and the provisions of such other indenture or indentures which are so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture and such other indenture or indentures, or (ii) the Company shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that trusteeship under this Indenture and such other indenture or indentures is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under one of such indentures; (2) the Trustee or any of its directors or executive officers is an obligor upon the Debentures or an underwriter for the Company; (3) the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with the Company or an underwriter for the Company; (4) the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee or representative of the Company, or of an underwriter (other than the Trustee itself) for the Company who is currently engaged in the business of underwriting, except that (i) one individual may be a director or an executive officer, or both, of the Trustee and a director or an executive officer, or both, of the Company but may not be at the same time an executive officer of both the Trustee and the Company; (ii) if and so long as the number of directors of the Trustee in office is more than nine, one additional individual may be a director or an executive officer, or both, of the Trustee and a director of the Company; and (iii) the Trustee may be designated by the Company or by any underwriter for the Company to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent, or depositary, or in any other similar capacity, or, subject to the provisions of paragraph (1) of this Subsection, to act as trustee, whether under an indenture or otherwise; (5) 10% or more of the voting securities of the Trustee is beneficially owned either by the Company or by any director, partner, or executive officer thereof, or 20% or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or 10% or more of the voting securities of the Trustee is beneficially owned either by an underwriter for the Company or by any director, partner or executive officer thereof, or is beneficially owned, collectively, by any two or more such persons; (6) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), (i) 5% or more of the voting securities, or 10% or more of any other class of security of the Company not including the Debentures issued under this Indenture and securities issued under any other indenture under which the Trustee is also trustee, or (ii) 10% or more of any class of security of an underwriter for the Company; (7) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), 5% or more of the voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, the Company; (8) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), 10% or more of any class of security of any person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of the Company; or (9) the Trustee owns, on May 15 in any calendar year, in the capacity of executor, administrator, testamentary or inter vivos trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of 25% or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a specified percentage of which would have constituted a conflicting interest under paragraphs (6), (7) or (8) of this Subsection. As to any such securities of which the Trustee acquired ownership through becoming executor, administrator, or testamentary trustee of an estate which included them, the provisions of the preceding sentence shall not apply, for a period of two years from the date of such acquisition, to the extent that such securities included in such estate do not exceed 25% of such voting securities or 25% of any such class of security. Promptly after May 15 in each calendar year, the Trustee shall make a check of its holdings of such securities in any of the above-mentioned capacities as of such May 15. If the Company fails to make payment in full of the principal of, or the premium , if any, or interest on, any of the Debentures when and as the same becomes due and payable, and such failure continues for 30 days thereafter, the Trustee shall make a prompt check of its holdings of such securities in any of the above-mentioned capacities as of the date of the expiration os such 30 day period, and after such date, notwithstanding the foregoing provisions of this paragraph, all such securities so held by the Trustee, with sole or joint control over such securities vested in it, shall, but only so long as such failure shall continue, be considered as though beneficially owned by the Trustee for the purposes of paragraphs (6), (7) and (8) of this Subsection. The specification of percentages in paragraphs (5) to (9) inclusive, of this Subsection, shall not be construed as indicating that the ownership of such percentages of the securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purposes of paragraph (3) or (7) of this Subsection. For the purposes of paragraphs (6), (7), (8) and (9) of this Subsection only, (i) the terms "security" and "securities" shall include only such securities as are generally known as corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay monies lent to a person by one or more banks, trust companies or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; (ii) an obligation shall be deemed to be "in default" when a default in payment of principal shall have continued for 30 days or more and shall not have been cured; and (iii) the Trustee shall not be deemed to be the owner or holder of (A) any security which it holds as collateral security, as trustee or otherwise, for an obligation which is not in default as defined in clause (ii) above, or (B) any security which it holds as collateral security under this Indenture, irrespective of any default hereunder, or (C) any security which it holds as agent for collection, or as custodian, escrow agent, or depositary, or in any similar representative capacity. (d) For the purposes of this Section: (1) The term "underwriter" when used with reference to the Company means every person who, within three years prior to the time as of which the determination is made, has purchased from the Company with a view to, or has offered or sold for the Company in connection with, the distribution of any security of the Company outstanding at such time, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had a participation in the direct or indirect underwriting of any such undertaking, but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. (2) The term "director" means any director of a corporation, or any individual performing similar functions with respect to any organization whether incorporated or unincorporated. (3) The term "person" means an individual, a corporation, a partnership, an association, a joint-stock company, a trust, an unincorporated organization, or a government or political subdivision thereof. As used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security. (4) The term "voting security" means any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction or management of the affairs of a person. (5) The term "Company" means any obligor upon the Debentures. (6) The term "executive officer" means the president, every vice president, every trust officer, the cashier, the secretary, and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization whether incorporated or unincorporated, but shall not include the chairman of the board of directors. (e) The percentages of voting securities and other securities specified in this Section shall be calculated in accordance with the following provisions: (1) A specified percentage of the voting securities of the Trustee, the Company or any other person referred to in this Section (each of whom is referred to as a "person" in this paragraph) means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person. (2) A specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding. (3) The term "amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to capital shares, and the number of units if relating to any other kind of security. (4) The term "outstanding" means issued and not held by or for the account of the issuer. The following securities shall not be deemed outstanding within the meaning of this definition: (i) securities of an issuer held in a sinking fund relating to securities of the issuer of the same class; (ii) securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise; (iii) securities pledged by the issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; and (iv) securities held in escrow if placed in escrow by the issuer thereof. provided, however, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof. (5) A security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges; provided, however, that, in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes and provided, further, that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture. SECTION 609. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America or of any State, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $5,000,000, subject to supervision or examination by Federal or State authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 610. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a succesor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 611. (b) the Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Debentures, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee, after this Indenture shall have been qualified under TIA, shall fail to comply with Section 608(a) after written request therefor by the Company or by any Debentureholder who has been a bona fide Holder of a Debenture for at least 6 months, or (2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Debentureholder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation. then, in any such case, (i) the Company by a Board Resolution may remove the Trustee, or (ii) subject to Section 514, any Debentureholder who has been a bona fide Holder of a Debenture for at least 6 months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within 1 year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Debentures delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Debentureholders and accepted appointment in the manner hereinafter provided, any Debentureholder who has been a bona fide Holder of a Debenture for at least 6 months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Debentures as their names and addresses appear in the Debenture Register. Each notice shall include the name of the successor Trustee and the address of its principal corporate trust office. SECTION 611. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nevertheless to its lien, if any, provided for in Section 607. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more full and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article, to the extent operative. SECTION 612. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, to the extent operative, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Debentures shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Debentures so authenticated with the same effect as if such successor Trustee had itself authenticated such Debentures. SECTION 613. Preferential Collection of Claims against Company. (a) Subject to Subsection (b) of this Section, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Company within 4 months prior to a default, as defined in Subsection (c) of this Section, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart, and hold in a special account for the benefit of the Trustee individually, the Holders of the Debentures and the holders of other indenture securities (as defined in Subsection (c) of the Section): (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such 4 months period and valid as against the Company and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this Subsection, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Company upon the date of such default; and (2) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such 4 months period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Company and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee (A) to retain for its own account (i) payments made on account of any such claim by any Person (other than the Company) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third person, and (iii) distributions made in cash, securities or other property in respect of claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such 4 months period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such 4 months period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default as defined in Subsection (c) of this Section would occur within 4 months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claims as provided in paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such 4 months period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee hall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned between the Trustee, the Debentureholders and the holders of other indenture securities in such manner that the Trustee, the Debentureholders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Company of the funds and property in such special account and before crediting to the respective claims of the Trustee and the Debentureholders and the holders of other indenture securities dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law, whether such distribution is made in cash, securities, or other property, but shall not include any such distribution with respect to the secure portion, if any, of such claim. The court in which such bankruptcy, receivership or proceedings for reorganization is pending shall have jurisdiction (i) to apportion between the Trustee and the Debentureholders and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee and the Debentureholders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee which has resigned or been removed after the beginning of such 4 months period shall be subject to the provisions of this Subsection as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such 4 months period, it shall be subject to the provisions of this Subsection if and only if the following conditions exist: (i) the receipt of property or reduction of claim, which would have given rise to the obligation to account, if such Trustee had continued as Trustee, occurred after the beginning of such 4 months period; and (ii) such receipt of property or reduction of claim occurred with 4 months after such resignation or removal. (b) There shall be excluded from the operation of Subsection (a) of this Section a creditor relationship arising from (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction, or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advances and of the circumstances surrounding the making thereof is given to the Debenture holders at the time and in the manner provided in this Indenture; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity; (4) an indebtedness created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in Subsection (c) of this Section; (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Company; or (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper as defined in Subsection (c) of this Section. (c) For the purposes of this Section only: (1) The term "default" means any failure to make payment in full of the principal or of interest on any of the Debentures or upon the other indenture securities when and as such principal or interest becomes due and payable. (2) The term "other indenture securities" means securities upon which the Company is an obligor outstanding under any other indenture (i) under which the Trustee is also trustee, (ii) which contains provisions substantially similar to the provisions of this Section, and (iii) under which a default exists at the time of the apportionment of the funds and property held in such special account. (3) The term "cash transaction" means any transaction in which full payment for goods or securities sold is made within 7 days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand. (4) The term "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. (5) The term "Company" means any obligor upon the Debentures. SECTION 614. Appointment of Authenticating Agent. At any time when any of the Debentures remain Outstanding, the Trustee will appoint an Authenticating Agent in the Borough of Manhattan, The City of New York, which shall be authorized to act on behalf of the Trustee to authenticate Debentures issued upon exchange, transfer or partial redemption thereof or pursuant to Section 306, and Debentures so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Debentures by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America or of any State, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $1,500,000 and subject to supervision or examination by Federal or State authorities. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section 614, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 614, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section 614. The Trustee hereby initially appoints The Chase Manhattan Bank (National Association) as its Authenticating Agent in the Borough of Manhattan, The City of New York. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice of termination to such authenticating Agent an to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 614, the Trustee promptly shall appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail notice of such appointment to all Holders, as their names and addresses appear on the Debenture Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an authenticating Agent herein. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section 614. The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 614, and the Trustee shall be entitled to be reimbursed for such payments, subject to the provisions of Section 607. ARTICLE 700 DEBENTUREHOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Debentureholders. The Company will furnish or cause to be furnished to the Trustee (a) semi-annually, not more than 15 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Debentures as of such Regular Record Date, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished. provided, however, so long as the Trustee is the Debenture Registrar, no such list need be furnished. SECTION 702. Preservation of Information; Communications to Debentureholders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Debentures contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders of Debentures received by the Trustee in its capacity as Debenture Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. (b) If 3 or more Holders of Debentures (hereinafter referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Debenture for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders of Debentures with respect to their rights under this Indenture or under the Debentures and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five business days after the receipt of such application, at its election, either (1) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 702(a), or (2) inform such applicants as to the approximate number of Holders of Debentures whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 702(a), and as to the approximate cost of mailing to such Debentureholders the form of proxy or other communication, if any, specified in such application. If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Debentureholder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 702(a), a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders of Debentures or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Debentureholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Every Holder of debentures, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Debentures in accordance with Section 702(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 702(b). SECTION 703. Reports by Trustee. (a) The term "reporting date", as used in this Section, means June 30 in each year commencing with June 30, 1975. Within 60 days after the reporting date in each year, the Trustee shall transmit by mail to all Debentureholders, as their names and addresses appear in the Debenture Register, a brief report dated as of such reporting date with respect to: (1) its eligibility under Section 609 and its qualifications under Section 608, or in lieu thereof, if to the best of its knowledge it has continued to be eligible and qualified under said Sections, a written statement to such effect; (2) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Debentures, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances if such advances so remaining unpaid aggregate not more than - of 1% of the principal amount of the Debentures Outstanding on the date of such report; (3) the amount, interest rate and maturity date of all other indebtedness owing by the Company (or by any other obligor on the Debentures) to the Trustee in its individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except an indebtedness based upon a creditor relationship arising in any manner described in Section 613(b)(2), (3), (4) or (6); (4) the property and funds, if any, physically in the possession of the Trustee as such on the date of such report; (5) any additional issue of Debentures which the Trustee has not previously reported; and (6) any action taken by the Trustee in the performance of its duties hereunder which it has not previously reported and which in its opinion materially affects the Debentures, except action in respect of a default, notice of which has been or is to be withheld by the Trustee in accordance with Section 602. (b) The Trustee shall transmit by mail to all Debentureholders, as their names and addresses appear in the Debenture Register, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding he making hereof) made by the Trustee (as such) since the date of the last report transmitted pursuant to Subsection (a) of this Section (or if no such report has yet been so transmitted, since the date of execution of this instrument) for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Debentures, on property or funds held or collected by it as Trustee, and which it has not previously reported pursuant to this Subsection, except that the Trustee shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate 10% or less of the principal amount of the Debentures Outstanding at such time, such report to be transmitted within 90 days after such time. (c) A copy of each such report shall, at the time of such transmission to Debentureholders, to be filed by the Trustee with each stock exchange upon which the Debentures are listed, and also with the Commission. The Company will notify the Trustee when the Debentures are listed on any stock exchange. SECTION 704. Reports by Company The Company will (1) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it will file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect to a security listed and registered on a National Securities Exchange as may be prescribed from time to time in such rules and regulations; (2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (3) transmit by mail to all Debentureholders, as their names and addresses appear in the Debenture Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. ARTICLE 800 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company May Consolidate, etc., only on Certain Terms. The Company shall not consolidate with or merge into any other corporation or convey or transfer its properties and assets substantially as an entirety to any Person, unless; (1) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America or any state or the District of Columbia, and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest on all the Debentures and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger, conveyance or transfer and such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 802. Successor Corporation Substituted. Upon any consolidation or merger, or any conveyance or transfer of the properties and assets of the Company substantially as an entirety in accordance with Section 801, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein; provided, however, that no such conveyance or transfer shall have the effect of releasing the Person named as the "Company" in the first paragraph of this instrument or any successor corporation which shall theretofore have become such in the manner prescribed in this Article from its liability as obligor and maker on any of the Debentures. SECTION 803. Limitation on Lease of Properties as Entirety. The Company shall not lease its properties and assets substantially as an entirety to any Person. ARTICLE 900 SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures Without Consent of Debentureholders. Without the consent of the Holders of any Debentures, the Company, when authorized by a Board Resolution, and the Trustee, at any time, and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes; (1) to evidence the succession of another corporation to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Debentures contained; or (2) to add to the covenants of the Company, for the benefit of the Holders of the Debentures, or to surrender any right or power herein conferred upon the Company; or (3) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture, provided such action shall not adversely affect the interest of the Holders of the Debentures; or (4) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under TIA, as then in force, or under any similar federal statute hereafter enacted, and to add to this Indenture such other provisions as may be expressly permitted by TIA, excluding however, the provisions referred to in Section 316(a)(2) of TIA or any corresponding provision in any similar federal statute hereafter enacted. SECTION 902. Supplemental Indentures With Consent of Debentureholders. With the consent of the Holders of not less than 66 2/3% in principal amount of the Outstanding Debentures, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of the Debentures under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Debenture affected thereby, (1) change the Stated Maturity of the Principal of, or any instalment of interest on, any Debenture, or reduce the principal amount thereof or the interest thereon or any premium payable upon the redemption thereof, or change any Place of Payment where, or the coin or currency in which, any Debenture or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the State Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or (2) reduce the percentage in principal amount of the Outstanding Debentures, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (3) modify any of the provisions of this Section or Section 513, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Debenture affected thereby. It shall not be necessary for any Act of Debentureholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be full protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not (except to the extent required in the case of a supplemental indenture entered into under Section 901(4) be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Debentures theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of TIA as then in effect if this Indenture shall then be qualified under TIA. SECTION 906. Reference in Debentures to Supplemental Indentures. Debentures authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Debentures so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Debentures. SECTION 907. Officers' Certificate With Respect to Supplemental Indentures. The Trustee shall not be obliged to join in the execution of any supplemental indenture unless it shall receive an Officers' Certificate stating that no consent to the execution thereof is required of any holder of any Superior Debt outstanding at the time. ARTICLE 1000 COVENANTS SECTION 1001. Payment of Principal, Premium and Interest. The Company will duly and punctually pay the principal of (and premium, if any) and interest on the Debentures in accordance with the terms of the Debentures and this Indenture. SECTION 1002. Maintenance of Office or Agency. The Company will maintain an office or agency in the Borough of Manhattan, The City of New York, New York, where Debentures may be presented or surrendered for payment, where Debentures may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Debentures and this Indenture may be served. The Company initially appoints The Chase Manhattan Bank (National Association) as agent for such purposes. The Company will give prompt written notice to the Trustee of the location, and of any change in the location, of such office or agency. If at any time the Company shall fail to maintain such office or agency or shall fail to furnish the Trustee with the address thereof, such presentation, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee its agent to receive all such presentations, surrenders, notices and demands. SECTION 1003. Money for Debenture Payments to be Held in Trust. If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Debentures, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents, it will, prior to each due date of the principal of (and premium, if any) or interest on, any Debentures, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (1) hold all sums held by it for the payment of principal of (and premium, if any) or interest on Debentures in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Debentures) in the making of any such payment of principal (and premium, if any) or interest; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Debenture and remaining unclaimed for 6 years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Debenture shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being require to make any such repayment, may at the expense of the Company cause to be published once, in an Authorized Newspaper in the Place of Payment, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 1004. Payment of Taxes and Other Claims. The Company will, and will cause each Subsidiary to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent; (1) all taxes, assessments and governmental charges levied or imposed upon it or upon its income, profits or property, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon its property; provided, however, that neither the Company nor any Subsidiary be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 1005. Maintenance of Properties. The Company will, and will cause each Subsidiary to, cause all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business and not disadvantageous in any material respect to the Debentureholders. SECTION 1006. Statement as to Compliance. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year commencing with the fiscal year ending June 30, 1975, a written statement signed by the Chairman of the Board or President or a Vice President and by the Treasurer, an Assistant Treasurer, the Controller or an Assistant Controller of the Company, stating, as to each signer thereof, that (1) a review of the activities of the Company during such year and of performance under this Indenture has been made under his supervision and (2) to the best of his knowledge, based on such review, the Company has fulfilled all its obligations under this Indenture throughout such year, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to him and the nature and status thereof. SECTION 1007. Corporate Existence. Subject to Article 800, the Company will, and will cause each Subsidiary to, do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchise; provided, however, that the Company shall not be required to preserve any right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company or such Subsidiary and that the loss thereof is not disadvantageous in any material respect to the Debentureholders. SECTION 1008. Restrictions on Merger, Sale of Assets, etc. The Company will not sell or transfer its property as an entirety or substantially as an entirety, or consolidate with or merge into any other corporation, or permit any other corporation to merge into it, in any manner which is prohibited by Article 800. ARTICLE 1100 REDEMPTION OF DEBENTURES SECTION 1101. Right of Redemption. The Company may, at its option, redeem all or any part of the Debentures at any time on and after July 1, 1976 and prior to Maturity by payment of the applicable percentages of the principal amount thereof set forth in the form of Debenture contained in Section 202 hereof, together with accrued interest to the Redemption Date. SECTION 1102. Election to Redeem; Notice to Trustee. The determination of the Company to exercise its option to redeem any Debentures shall be evidenced by a Board Resolution. In case of any redemption at the option of the Company of less than all of the Debentures, the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Debentures to be redeemed. SECTION 1103. Selection by Trustee of Debentures to be Redeemed. If less than all the Debentures are to be redeemed, the particular Debentures or portions thereof to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Debentures not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions of the principal of Debentures of a denomination larger than $1,000. The portions of the principal of Debentures so selected for partial redemption shall be equal to $1,000 or an integral multiple thereof. The Trustee shall promptly notify the Company in writing of the Debentures selected for redemption and, in the case of any Debenture selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Debentures shall relate, in the case of any Debenture redeemed or to be redeemed only in part, to the portion of the principal of such Debenture which has been or is to be redeemed. SECTION 1104. Notice of Redemption. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Debentures to be redeemed, at his address appearing in the Debenture Register. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all Outstanding Debentures are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Debentures to be redeemed. (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Debenture, together with interest accrued thereon to such date, and that interest thereon shall cease to accrue from and after said date, and (5) the place where such Debentures are to be surrendered for payment of the Redemption Price, which shall be the office or agency of the Company in each Place of Payment. Notice of redemption of Debentures shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. SECTION 1105. Deposit of Redemption Price. Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of and accrued interest, if any, on all the Debentures which are to be redeemed on that date. SECTION 1106. Debentures Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Debentures so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and on and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest, if any) such Debentures shall cease to bear interest. Upon surrender of such Debentures for redemption in accordance with said notice, such Debentures shall be paid by the Company at the Redemption Price. Instalments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Debentures registered as such on the relevant Record Dates according to their terms and the provisions of Section 307. SECTION 1107. Debentures Redeemed in Part. Any Debenture which is to be redeemed only in part shall be surrendered at a Place of Payment (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Debenture, without service charge, a new Debenture or Debentures, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Debenture so surrendered. ARTICLE 1200 SUBORDINATION OF DEBENTURES SECTION 1201. Debentures Subordinate to Superior Debt. The Company, for itself, its successors and assigns, covenants and agrees, and each Holder of Debentures, by his acceptance thereof, likewise covenants and agrees, that the indebtedness evidenced by the Debentures, including the principal thereof (and premium, if any) and interest thereon, shall be subordinated and subject, to the extent and in the manner herein set forth, in right of payment to the prior payment in full of all Superior Debt. The provisions of this Article are made for the benefit of all holders of Superior Debt and any such holder may proceed to enforce such provisions. SECTION 1202. Payment Over of Proceeds Upon Dissolution, etc. In the event of any insolvency or bankruptcy proceedings, and any receivership, liquidation, reorganization or other similar proceedings in connection therewith, relative to the Company or to its creditors, as such, or to its property, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of the Company, whether or not involving insolvency or bankruptcy, then the holders of Superior Debt shall be entitled to receive payment in full of all principal of (and premium, if any) and interest on all Superior Debt before the Holders are entitled to receive any payment on account of principal of (or premium, if any) or interest on the Debentures, and to that end the holders of Superior Debt or the trustee or trustees under any indenture pursuant to which any instrument evidencing any of such Superior Debt may have been issued, as their respective interests may appear, shall be entitled to receive directly from the trustee in bankruptcy, receiver, assignee for benefit or creditors or other liquidating agent or person making such payment or distribution, any payment or distribution of any kind or character, whether in cash or property or securities which may be payable or deliverable in any such proceedings with respect of the Debentures (other than securities which are subordinate and junior in right of payment, at least to the extent provided in this Article with respect to the Debentures, to the payment of all Superior Debt then outstanding, provided that the rights of the holders of Superior Debt are not altered by such proceedings) for the application to the pro rata payment of all Superior Debt remaining unpaid. In the event and during the continuation of any default by the Company in the payment of the principal of (or premium, if any) or interest on any Superior Debt, or any default which with notice or the passage of time, or both, would permit any holder or holders of the Superior Debt to accelerate the maturity thereof, of which such default written notice shall have been given to the Company by any holder of Superior Debt, the Company shall not make any payments on account of the principal of (or premium, if any) or interest on the Debentures. In the event that the Debentures are declared due and payable before their Stated Maturity because of the occurrence of an Event of Default (under circumstances when the provisions of the preceding paragraphs shall not be applicable), the holders of the Superior Debt outstanding at the time the Debentures so become due and payable because of such occurrence of such an Event of Default shall be entitled to receive payment in full of all principal of (and premium, if any) and interest on all Superior Debt before the Holders of the Debentures are entitled to receive any payment on account of the principal of (or premium, if any) or interest on the Debentures. In the event any payment or distribution (other than securities provided for in any proceeding referred to in the first paragraph of this Section, the payment of which are subordinate and junior, at least to the extent provided for in this Article with respect to the Debentures, to the payment of all Superior Debt then outstanding, provided that the rights of the holders of Superior Debt are not altered by such proceeding) prohibited by this Section shall be received by the Trustee or the Holders of Debentures before all Superior Debt is paid in full, such payment and distribution shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of such Superior Debt or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instrument evidencing any of such Superior Debt may have been issued, as their respective interests may appear, for application to the pro rat payment of all Superior Debt remaining unpaid to the extent necessary to pay all such Superior Debt in full after giving effect to any concurrent payment or distribution to the holders of such Superior Debt. The restrictions in this Section on payments on account of the principal of the Debentures shall include, but without limitation, purchases of Debentures by the Company. Subject to the payment in full of all Superior Debt, the Holders of Debentures shall be subrogated (equally and ratably with the holders of all indebtedness of the Company which by its express terms ranks on a parity with the Debentures and is entitled to like rights of subrogation) to the rights of the holders of Superior Debt to receive payments or distributions of assets of the Company applicable to the Superior Debt until the Debentures shall be paid in full, and no payments or distributions on the Superior Debt pursuant to this Section shall, as between the Company, its creditors other than the holders of Superior Debt, and the Holders of the Debentures, be deemed to be a payment by the Company to or on account of the Debentures, it being understood that the provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of the Debentures, on the one hand, and the holders of Superior Debt, on the other hand, and nothing contained in this Article or elsewhere in this Indenture or in the Debentures is intended to or shall impair, as between the Company, its creditors other than the holders of Superior Debt, and the Holders of the Debentures, the obligation of the Company, which is unconditional and absolute, to pay the principal of (and premium, if any) and interest on the Debentures as and when the same shall become due and payable in accordance with their terms, or affect the relative rights of the Holders of the Debentures and creditors of the Company other than the holders of Superior Debt, nor shall anything herein or therein prevent the Trustee or the Holder of any Debenture from exercising all remedies otherwise permitted by applicable law or upon default under this Indenture, subject to the rights, if any, under this Article, of the holders of Superior Debt in respect of cash, property or securities of the Company otherwise payable or delivered to the Trustee or such Holder upon the exercise of any such remedy. The Company shall give prompt written notice to the Trustee of any dissolution, winding-up, liquidation or reorganization of the Company within the meaning of this Article. The Trustee, subject to the provisions of Section 601, shall be entitled to assume that no such event has occurred unless the Company or any one or more holders of Superior Debt or any trustee therefor or representative thereof has given notice thereof to the Trustee at its Corporate Trust Office. Upon any payment or distribution pursuant to this Section, the Trustee shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in this Section are pending, and the Trustee, subject as between the Trustee and the Holders to the provisions of Section 601, shall be entitled to rely upon a certificate of the liquidating trustee or agent or other person making such payment or distribution to the Trustee or to the holders for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Superior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. In the event that the Trustee determines, in good faith, that further evidence is required with respect to the right of any Person as a holder of Superior Debt to participate in any payment or distribution pursuant to this section, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Superior Debt held by such Person, as to the extent to which such Person is entitled to participate in such payment or distribution, and as to other facts pertinent to the rights of such Person under this Article, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The trustee, subject to the provisions of Section 601, shall not be deemed to owe any fiduciary duty to the holders of Superior Debt, and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Holders of Debentures or the Company or any other person, monies or assets to which any holder of Superior Debt shall be entitled by virtue of this Article or otherwise. Nothing in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 607. SECTION 1203. Trustee to Effectuate Subordination. The Holder of each Debenture by his acceptance thereof authorizes the Trustee in his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination as provided in this Article and appoints the Trustee as attorney-in-fact for any and all such purposes. SECTION 1204. Trustee Not Charged with Knowledge of Prohibition. Notwithstanding the provisions of this Article or any other provision of this Indenture, but subject as between the Trustee and the Holders to the provisions of Section 601, the Trustee shall not be charged with knowledge of the existence of any Superior Debt, or of any facts which would prohibit the making of any payment of monies to or by the Trustee unless and until the Trustee shall have received written notice thereof at its Corporate Trust Office from the Company or from one or more holders of Superior Debt or from any trustee therefor or representative thereof who shall have been certified to be such by the Company or who shall have otherwise established to the reasonable satisfaction of the Trustee that he is such a holder, trustee or representative; and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Section 601, shall be entitled in all respect to assume that no such facts exist; provided, that, if on a date not less than three Business Days prior to the date upon which by the terms hereof any such monies may become payable for any purpose (including, without limitation, the payment of either the principal, premium, if any, or interest on any Debenture), or if on a date not less than three Business Days prior to the date of the execution of an instrument pursuant to Section 401 acknowledging satisfaction and discharge of this Indenture, the Trustee shall not have received the notice provided for in this Section, then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received, and, in the case of such instrument, to execute the same, and shall not be affected by any notice to the contrary, which may be received by it on or after such prior date; nor shall the Trustee be charged with knowledge of the curing of any such default or of the elimination of the act or condition preventing any such default or of the elimination of the act or condition preventing any such payment unless and until the Trustee shall have received an Officers' Certificate to such effect. SECTION 1205. Rights of Trustee as Holder of Superior Debt. The Trustee shall be entitled to all the rights set forth in this Article with respect to any Superior Debt which may at any time be held by it in its individual capacity, to the same extent as any other holder of Superior Debt; and nothing in Section 613, or elsewhere in this Indenture, shall deprive the Trustee of any of its rights as such holder. SECTION 1206. Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that Sections 1204 and 1205 shall not apply to the Company or any Affiliate of the Company if it or such Affiliate acts as Paying Agent. * * * * This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Indenture. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed and acknowledged, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. TANDY CORPORATION By /s/ C. D. Tandy Chairman of the Board Attest: /s/ W. H. Michero Secretary THE FORT WORTH NATIONAL BANK By /s/ J. D. Buckman Vice President and Trust Officer Attest: /s/ Assistant Cashier STATE OF TEXAS } SS.: COUNTY OF TARRANT On the 28th day of June, 1974, before me personally came CHARLES D. TANDY, to me known, who, being by me duly sworn, did depose and say that he resides at 1400 Shady Oaks Lane, Fort Worth, Texas; that he is the Chairman of the Board of TANDY CORPORATION, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order. /s/ Janet Small [NOTARIAL SEAL] STATE OF TEXAS } SS.: COUNTY OF TARRANT On the 28th day of June, 1974, before me personally came J. D. Buckman, to me known, who, being by me duly sworn, did depose and say that he resides at 1805 Martel Ave., Fort Worth, Texas; that he is a Vice President and Trust Officer of the FORT WORTH NATIONAL BANK, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order. /s/ Ruth Ragon Mayo [NOTARIAL SEAL] Ruth Ragon Mayo, Notary Public Tarrant County, Texas My Commission Expires June 1, 1975 EX-4.(B) 6 1993 10K EXHIBIT 4B Exhibit 4b AMENDED AND RESTATED RIGHTS AGREEMENT Amended and Restated Rights Agreement, dated as of June 22, 1990 between Tandy Corporation, a Delaware corporation (the "Company"), and The First National Bank of Boston, a national banking association (the "Rights Agent"). Whereas, on August 15, 1986, the Board of Directors of the Company authorized and declared a dividend of one preferred share purchase right (a "Right") for each Common Share (as hereinafter defined) of the Company outstanding as of the close of business on August 29, 1986, each Right representing the right to purchase one one-thousandth of a share of Series A Junior Participating Preferred Stock, without par value, of the Company having the rights and preferences set forth in the form of the Certificate of Designation, Preferences and Rights attached hereto as Exhibit A, upon the terms and subject to the conditions herein set forth, and further authorized the issuance of one Right with respect to each Common Share that shall become outstanding between August 29, 1986 and the earliest of the Distribution Date, the Redemption Date and the Final Expiration Date (as such terms are in defined in Sections 3 and 7 hereof); Whereas, on June 24, 1988, the Board of Directors of the Company resolved to amend this Agreement and such amendments became effective by agreement with the Rights Agent; Whereas, on June 22, 1990, the Board of Directors of the Company resolved further to amend and to restate in its entirety this Agreement, and such amendments became effective by agreement with the Rights Agent (the "Second Amendment Date"). Accordingly, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: (a) "Acquiring Person" shall mean any Person who or which, together with all Affiliates and Associates of such Person, without the prior approval of at least a majority of the Disinterested Directors (as hereinafter defined), shall be the Beneficial Owner of 15% or more of the Common Shares then outstanding (other than as a result of a Permitted Offer (as hereinafter defined)) or was such a Beneficial Owner at any time after the date hereof, whether or not such person continues to be the Beneficial Owner of 15% or more of the then outstanding Common Shares. Notwithstanding the foregoing, (A) the term "Acquiring Person" shall not include (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan of the Company or of any Subsidiary of the Company, or (iv) any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan, and (B) no Person shall be deemed to be an "Acquiring Person" (X) as a result of the acquisition of Common Shares by the Company which, by reducing the number of Common Shares outstanding, increases the proportional number of shares beneficially owned by such Person together with all Affiliates and Associates of such Person, provided, that if (i) a Person would become an Acquiring Person (but for the operation of this sentence) as a result of the acquisition of Common Shares by the Company, and (ii) after such share acquisition by the Company, such Person, or an Affiliate of such Person becomes the Beneficial Owner of any additional Common Shares, then such Person shall be deemed an Acquiring Person, or (Y) if (i) within 8 days after such Person would otherwise have become an Acquiring Person, such Person notifies the Board of Directors that such person did so inadvertently and (ii) within 2 days after such notification, such Person is the Beneficial Owner of less than 15% of the outstanding Common Shares. (b) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on the date of this Agreement. (c) A Person shall be deemed the "Beneficial Owner" of and shall be deemed to "beneficially own" any securities: (i) which such Person or any of such Person's Affiliates or Associates beneficially owns, directly or indirectly; (ii) which such Person or any of such Person's Affiliates or Associates has (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (B) the right to vote pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security if the agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and (2) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) relating to the acquisition, holding, voting (except to the extent permitted by subparagraph (ii)(B) of this paragraph (c)) or disposing of any securities of the Company. Notwithstanding anything in this definition of Beneficial Ownership to the contrary, the phrase "then outstanding," when used with reference to a Person's Beneficial Ownership of securities of the Company, shall mean the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding which such Person would be deemed to own beneficially hereunder. (d) "Business Day" shall mean any day other than a Saturday, Sunday, or Federal holiday. (e) "Close of Business" on any given date shall mean 5:00 P.M., Boston time, on such date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., Boston time, on the next succeeding Business Day. (f) "Common Shares" when used with reference to the Company shall mean shares of Common Stock, par value $1.00 per share, of the Company. "Common Shares" when used with reference to any Person other than the Company shall mean the capital stock (or equity interest) with the greatest voting power of such Person or, if such Person is a Subsidiary of another Person, the Person or Persons which ultimately control such first-mentioned Person. (g) "Disinterested Directors" shall mean the members of the Board of Directors who are not officers of the Company and who are not Acquiring Persons or their Affiliates, Associates or representatives of any of them, or any Person who was directly or indirectly proposed or nominated as a director of the Company by a Transaction Person. (h) "Distribution Date" shall have the meaning set forth in Section 3 hereof. (i) "Final Expiration Date" shall have the meaning set forth in Section 7 hereof. (j) "Interested Stockholder" shall mean any Acquiring Person or any Affiliate or Associate of an Acquiring Person or any other Person in which any such Acquiring Person, Affiliate or Associate has an interest, or any other Person acting directly or indirectly on behalf of or in concert with any such Acquiring Person, Affiliate or Associate. (k) "Permitted Offer" shall mean a tender or exchange offer which is for all outstanding Common Shares at a price and on terms determined, prior to the purchase of shares under such tender or exchange offer, by at least a majority of the Disinterested Directors to be adequate (taking into account all factors that such Disinterested Directors deem relevant including, without limitation, prices that could reasonably be achieved if the Company or its assets were sold on an orderly basis designed to realize maximum value) and otherwise in the best interests of the Company and its stockholders (other than the Person or any Affiliate or Associate thereof on whose behalf the offer is being made) taking into account all factors that such Disinterested Directors may deem relevant. (l) "Person" shall mean any individual, firm, partnership, corporation, trust, association, joint venture or other entity, and shall include any successor (by merger or otherwise) of such entity. (m) "Preferred Shares" shall mean shares of Series A Junior Participating Preferred Stock, without par value, of the Company having the relative rights, preferences and limitations set forth in the Form of Certificate of Amendment attached to this Agreement as Exhibit A. (n) "Redemption Date" shall have the meaning set forth in Section 7 hereof. (o) "Section 11(a)(ii) Event" shall mean any event described in Section 11(a)(ii) hereof. (p) "Section 13 Event" shall mean any event described in clause (i), (ii) or (iii) of Section 13(a) hereof. (q) "Shares Acquisition Date" shall mean the first date of public announcement (which, for purposes of this definition shall include, without limitation, a report filed pursuant to the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such. (r) "Subsidiary" of any Person shall mean any corporation or other entity of which a majority of the voting power of the voting equity securities or equity interests is owned, directly or indirectly, by such Person. (s) "Transaction" shall mean any merger, consolidation or sale of assets described in Section 13(a) hereof or any acquisition of Common Shares of the Company which would result in a Person becoming a Transaction Person. (t) "Transaction Person" with respect to a Transaction shall mean (x) any Person who (i) is or will become an Acquiring Person if the Transaction were to be consummated, and (ii) directly or indirectly proposed or nominated a director of the Company which director is in office at the time of consideration of the Transaction, or (y) an Affiliate or Associate of such a Person. (u) "Triggering Event" shall mean any Section 11(a)(ii) Event or any Section 13 Event. Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date also be the holders of the Common Shares) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such Co-Rights Agents as it may deem necessary or desirable. In the event the Company appoints one or more Co-Rights Agents, the respective duties of the Rights Agent and any Co-Rights Agents shall be as the Company shall determine. Section 3. Issuance of Right Certificates. (a) Until the earlier of (i) the Shares Acquisition Date or (ii) the Close of Business on the tenth day (or such later date as may be determined by action of the Company's Board of Directors), after the date of the commencement by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) of, or of the first public announcement of the intention of any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) to commence (which intention to commence remains in effect for five Business Days after such announcement), a tender or exchange offer the consummation of which would result in any Person becoming an Acquiring Person, the earlier of such dates being herein referred to as the "Distribution Date," (x) the Rights will be evidenced (subject to the provisions of paragraph (b) of this Section 3) by the certificates for Common Shares registered in the names of the holders thereof (which certificates shall also be deemed to be Right Certificates) and not by separate Right Certificates, and (y) the right to receive Right Certificates will be transferable only in connection with the transfer of Common Shares; provided, however, that if a tender offer is terminated prior to the occurrence of a Distribution Date, then no Distribution Date shall occur as a result of such tender offer. As soon as practicable after the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign, and the Company will send or cause to be sent, by first-class, postage-prepaid mail, to each record holder of Common Shares as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company, a Right Certificate substantially in the form of Exhibit B hereto (a "Right Certificate"), evidencing one Right for each Common Share so held. As of and after the Distribution Date, the Rights will be evidenced solely by such Right Certificates. (b) As soon as practicable after the Second Amendment Date, the Company will send a copy of an amended Summary of Rights to Purchase Preferred Shares, in substantially the form attached hereto as Exhibit C (the "Summary of Rights"), by first-class, postage-prepaid mail, to each record holder of Common Shares as of the Close of Business on the Second Amendment Date, at the address of such holder shown on the records of the Company. With respect to certificates for Common Shares outstanding as of the Second Amendment Date, until the Distribution Date, the Rights will be evidenced by such certificates registered in the names of the holders thereof (together with a copy of the Summary of Rights). Until the Distribution Date (or the earlier of the Redemption Date or the Final Expiration Date), the surrender for transfer of any certificates for Common Shares outstanding on the Second Amendment Date, with or without a copy of the Summary of Rights attached thereto, shall also constitute a transfer of the Rights associated with the Common Shares represented thereby. (c) Certificates for Common Shares which become outstanding (including, without limitation, reacquired Common Shares referred to in the last sentence of this paragraph (c)) after the Second Amendment Date but prior to the earliest of the Distribution Date, the Redemption Date or the Final Expiration Date, shall be deemed also to be certificates for Rights, and shall bear the following legend: This certificate also evidences and entitles the holder hereof to certain Rights as set forth in an Amended and Restated Rights Agreement between Tandy Corporation and The First National Bank of Boston, dated as of June 22, 1990 (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of Tandy Corporation Under certain circumstances set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. Tandy Corporation will mail to the holder of this certificate a copy of the Rights Agreement without charge promptly following receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights issued to, or held by, any Person who is, was or becomes an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and certain related persons, whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void. With respect to such certificates containing the foregoing legend, until the Distribution Date, the Rights associated with the Common Shares represented by such certificates shall be evidenced by such certificates alone, and the surrender for transfer of any such certificate shall also constitute the transfer of the Rights associated with the Common Shares represented thereby. In the event that the Company purchases or acquires any Common Shares after the Record Date but prior to the Distribution Date, any Rights associated with such Common Shares shall be deemed canceled and retired so that the Company shall not be entitled to exercise any Rights associated with the Common Shares which are no longer outstanding. Section 4. Form of Right Certificates. (a) The Right Certificates (and the forms of election to purchase and of assignment to be printed on the reverse thereof) shall be substantially in the form set forth in Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage. Subject to the provisions of Sections 11 and 22 hereof, the Rights Certificate shall entitle the holders thereof to purchase such number of one one-thousandths of a Preferred Share as shall be set forth therein at the price per one one-thousandth of a Preferred Share set forth therein (the "Purchase Price"), but the amount and type of securities purchasable upon the exercise of each Right and the Purchase Price thereof shall be subject to adjustment as provided herein. (b) Any Right Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents Rights which are null and void pursuant to Section 7(e) of this Agreement and any Right Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange, replacement or adjustment of any other Right Certificate referred to in this sentence, shall contain (to the extent feasible) the following legend: The Rights represented by this Right Certificate are or were beneficially owned by a Person who was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement). Accordingly, this Right Certificate and the Rights represented hereby are null and void. Provisions of Section 7(e) of this Rights Agreement shall be operative whether or not the foregoing legend is contained on any such Right Certificate. Section 5. Countersignature and Registration. The Right Certificates shall be executed on behalf of the Company by its Chairman of the Board, its President or any Vice President, either manually or by facsimile signatue, and have affixed thereto the Company's seal or a facsimile thereof, and shall be attested by the Secretary, or an Assistant Secretary, of the Company, either manually or by facsimile signature. The Right Certificates shall be countersigned by the Rights Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent, and issued and delivered by the Company with the same force and effect as though the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer. Following the Distribution Date, the Rights Agent will keep or cause to be kept, at the office of the Rights Agent designated for such purposes, books for registration and transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the date and certificate number of each of the Right Certificates. Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject to the provisions of Sections 4(b), 7(e), 11 and 14 hereof, at any time after the Close of Business on the Distribution Date, and at or prior to the Close of Business on the earlier of the Redemption Date or the Final Expiration Date, any Right Certificate or Right Certificates may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates, entitling the registered holder to purchase a like number of one one- thousandths of a Preferred Share (or, following a Triggering Event, other securities, as the case may be) as the Right Certificate or Right Certificates surrendered then entitled such holder (or its transferor in the case of a transfer) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Right Certificate or Right Certificates to be transferred, split-up, combined or exchanged, with the form of assignment and certificate appropriately executed, at the principal office or offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Right Certificate until the registered holder shall have completed and signed the certificate contained in the form of assignment on the reverse side of such Right Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights Agent shall, subject to the provisions of Sections 4(b), 7(e), 11 and 14 hereof, countersign and deliver to the person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested. The Company may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split-up, combination or exchange of Right Certificates. Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the Company's request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will make and deliver a new Right Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a) Subject to Section 7(e) hereof, the registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein) in whole or in part at any time after the Distribution Date upon surrender of the Right Certificate, with the form of election to purchase and the certificate on the reverse side thereof duly executed, to the Rights Agent at the principal office or offices of the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price for the total number of one one-thousandths of a Preferred Share (or other securities as the case may be) as which such surrendered Rights are exercised, at or prior to the earlier of (i) the Close of Business on June 22, 2000 (the "Final Expiration Date"), or (ii) the time at which the Rights are redeemed as provided in Section 23 hereof (the "Redemption Date"). (b) The Purchase Price for each one one-thousandth of a Preferred Share pursuant to the exercise of a Right shall initially be $140, shall be subject to adjustment from time to time as provided in Sections 11 and 13(a) hereof and shall be payable in accordance with paragraph (c) below. Anything in this Agreement to the contrary notwithstanding, in the event that at any time after the date of this Agreement and prior to the Distribution Date, the Company shall (i) declare or pay any dividend on the Common Shares payable in Common Shares or (ii) effect a subdivision, combination or consolidation of the Common Shares (by reclassification or otherwise than by payment of dividends in Common Shares) into a greater or lesser number of Common Shares, then in any such case, the number of Rights shall be similarly adjusted such that each Common Share outstanding thereafter shall carry with it one Right, and the Purchase Price following any such event shall be proportionately adjusted to equal the result obtained by multiplying the Purchase Price immediately prior to such event by a fraction the numerator of which shall be the total number of Common Shares outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of Common Shares outstanding immediately following the occurrence of such event. The adjustment provided for in the preceding sentence shall be made successively whenever such a dividend is declared or paid or such a subdivision, combination or consolidation is effected. (c) Upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase and the certificate duly executed, accompanied by payment of the Purchase Price for the Preferred Shares (or other securities, as the case may be) and an amount equal to any applicable transfer tax required to be paid by the holder of such Right Certificate in accordance with Section 6 and Section 9 hereof by certified check, cashier's check or money order payable to the order of the Company, the Rights Agent shall thereupon promptly (i) (A) requisition from any transfer agent of the Preferred Shares certificates for the number of Preferred Shares to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the Company, in its sole discretion, shall have elected to deposit the Preferred Shares issuable upon exercise of the Rights hereunder into a depositary, requisition from the depositary agent depositary receipts representing such number of one one-thousandths of a Preferred Share as are to be purchased (in which case certificates for the Preferred Shares represented by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company hereby directs the depositary agent to comply with such request, (ii) when appropriate, requisition from the Company the amount of cash to be paid in lieu of issuance of fractional interests in shares in accordance with Section 14 hereof, (iii) promptly after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder and (iv) when appropriate, after receipt thereof, promptly deliver such cash to or upon the order of the registered holder of such Right Certificate. In the event that the Company is obligated to issue other securities (including Common Shares) of the Company pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that such other securities are available for distribution by the Rights Agent, if and when appropriate. In addition, in the case of an exercise of the Rights by a holder pursuant to Section 11(a)(ii), the Rights Agent shall return such Right Certificate to the registered holder thereof after imprinting, stamping or otherwise indicating thereon that the Rights represented by such Right Certificate no longer include the rights provided by Section 11(a)(ii) of the Rights Agreement and if less than all the Rights represented by such Right Certificate were so exercised, the Rights Agent shall indicate on the Right Certificate the number of Rights represented thereby which continue to include the rights provided by Section 11(a)(ii). (d) In case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of such Right Certificate or to his duly authorized assigns, subject to the provisions of Section 14 hereof, or an appropriate notation shall be put on the Right Certificate with respect to those Rights exercised. (e) Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any Affiliate or Associate thereof) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any Affiliate or Associate thereof) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interest in such Acquiring Person or to any Person with whom the Acquiring Person has a continuing agreement, arrangement or understanding regarding the transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding which has as a primary purpose or effect the avoidance of this Section 7(e), shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. The Company shall use all reasonable efforts to insure that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder of Right Certificates or other Person as a result of its failure to make any determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. (f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) completed and signed the certificate contained in the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Section 8. Cancellation and Destruction of Right Certificates. All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in canceled form, or if surrendered to the Rights Agent, shall be canceled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Rights Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all canceled Right Certificates to the Company, or shall, at the written request of the Company, destroy such canceled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Company. Section 9. Reservation and Availability of Preferred Shares. The Company covenants and agrees that it will cause to be reserved and kept available out of its authorized and unissued Preferred Shares, or any authorized and issued Preferred Shares held in its treasury, the number of Preferred Shares that will be sufficient to permit the exercise in full of all outstanding Rights and, after the occurrence of a Section 11(a)(ii) Event, shall to the extent reasonably practicable so reserve and keep available a sufficient number of Common Shares (and/or other securities) which may be required to permit the exercise in full of the Rights pursuant to this Agreement. So long as the Preferred Shares (and, after the occurrence of a Section 11(a)(ii) event, Common Shares or any other securities) issuable upon the exercise of Rights may be listed on any national securities exchange, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares reserved for such issuance to be listed on such exchange upon official notice of issuance upon such exercise. The Company covenants and agrees that it will take all such action as may be necessary to ensure that all Preferred Shares (or Common Shares and/or other securities, as the case may be) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares or other securities (subject to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable shares or securities. The Company further covenants and agrees that it will pay when due and payable any and all U.S. federal and state transfer taxes and charges that may be payable in respect of the issuance or delivery of the Right Certificates or of any Preferred Shares (or Common Shares and/or other securities, as the case may be) upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax that may be payable in respect of any transfer or delivery of Right Certificates to a person other than, or the issuance or delivery of certificates or depositary receipts for the Preferred Shares (or Common Shares and/or other securities, as the case may be) in a name other than that of, the registered holder of the Right Certificate evidencing Rights surrendered for exercise, or to issue or deliver any certificates or depositary receipts for Preferred Shares (or Common Shares and/or other securities as the case may be) upon the exercise of any Rights, until any such tax shall have been paid (any such tax being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company's satisfaction that no such tax is due. The Company shall use its best efforts to (i) file, as soon as practicable following the Shares Acquisition Date, a registration statement under the Securities Act of 1933 (the "Act"), with respect to the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing, and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act and the rules and regulations thereunder) until the date of the expiration of the rights provided by Section 11(a)(ii). The Company will also take such action as may be appropriate under the blue sky laws of the various states. Section 10. Record Date. Each person in whose name any certificate for Preferred Shares (or Common Shares and/or other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the Preferred Shares (or Common Shares and/or other securities, as the case may be) represented thereby on, and such certificate shall be dated the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made; provided, however, that if the date of such surrender and payment is a date upon which the Preferred Shares (or Common Shares and/or other securities, as the case maybe) transfer books of the Company are closed, such person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred Shares (or Common Shares and/or other securities, as the case may be) transfer books of the Company are open. Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights. The Purchase Price, the number and kind of shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11. (a) (i) In the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the outstanding Preferred Shares into a smaller number of Preferred Shares or (D) issue any shares of its capital stock in a reclassification of the Preferred Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of capital stock issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive the aggregate number and kind of shares of capital stock which, if such Right had been exercised immediately prior to such date and at a time when the Preferred Shares transfer books of the Company were open, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right. If an event occurs which would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii). (ii) In the event any Person, alone or together with its Affiliates and Associates, shall become an Acquiring Person, then proper provision shall be made so that each holder of a Right (except as provided below and in Section 7(e) hereof) shall, for a period of 60 days after the later of the occurrence of any such event or the effective date of an appropriate registration statement under the Act pursuant to Section 9 hereof, have a right to receive, upon exercise thereof at a price equal to the then current Purchase Price, in accordance with the terms of this Agreement, such number of Common Shares (or, in the discretion of the Board of Directors, one one-thousandths of a Preferred Share) as shall equal the result obtained by (x) multiplying the then current Purchase Price by the then number of one one-thousandths of a Preferred Share for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event, and dividing that product by (y) 50% of the then current per share market price of the Company's Common Shares (determined pursuant to Section 11(d) hereof) on the date of such first occurrence (such number of shares being referred to as the "Adjustment Shares"); provided, however, that if the transaction that would otherwise give rise to the foregoing adjustment is also subject to the provisions of Section 13 hereof, then only the provisions of Section 13 hereof shall apply and no adjustment shall be made pursuant to this Section 11(a)(ii); (iii) In the event that there shall not be sufficient treasury shares or authorized but unissued (and unreserved) Common Shares to permit the exercise in full of the Rights in accordance with the foregoing subparagraph (ii) and the Rights become so exercisable (and the Board has determined to make the Rights exercisable into fractions of a Preferred Share), notwithstanding any other provision of this Agreement, to the extent necessary and permitted by applicable law, each Right shall thereafter represent the right to receive, upon exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, (x) a number of (or fractions of) Common Shares (up to the maximum number of Common Shares which may permissibly be issued) and (y) a number of (or fractions of) one one-thousandths of a Preferred Share or a number of, or fractions of other equity securities of the Company (or, in the discretion of the Board of Directors, debt) which the Board of Directors of the Company has determined to have the same aggregate current market value (determined pursuant to Section 11(d)(i) and (ii) hereof, to the extent applicable), as one Common Share (such number of, or fractions of, Preferred Shares, debt, or other equity securities or debt of the Company being referred to as a "capital stock equivalent"), equal in the aggregate to the number of Adjustment Shares; provided, however, if sufficient Common Shares and/or capital stock equivalents are unavailable, then the Company shall, to the extent permitted by applicable law, take all such action as may be necessary to authorize additional Common Shares or capital stock equivalents for issuance upon exercise of the Rights, including the calling of a meeting of stockholders; and provided, further, that if the Company is unable to cause sufficient Common Shares and/or capital stock equivalents to be available for issuance upon exercise in full of the Rights, within thirty (30) days following the date of occurrence of the first to occur of the events listed in the foregoing clause (ii) of this Section 11(a) (such date being referred to herein as the "Section 11(a)(ii) Trigger Date"), then the Company (A) shall determine the excess of (1) the value of the Common Shares issuable upon the exercise of a Right pursuant to the foregoing clause (ii) of this Section 11(a) (the "Current Value") over (2) the then current Purchase Price (such excess being referred to herein as the "Spread") and (B) shall be obligated to deliver, upon the surrender for exercise of a Right and without requiring payment of the Purchase Price, Common Shares (to the extent available) and then, if necessary, cash, which shares and/or cash have an aggregate value equal to the Spread. Notwithstanding the immediately preceding sentence, if the Board of Directors of the Company shall determine in good faith that it is likely that sufficient additional Common Shares could be authorized for issuance upon exercise in full of the Rights, the thirty (30) day period set forth above may be extended to the extent necessary, but not to more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek shareholder approval for the authorization of such additional shares (such period, as it may be extended, being referred to herein as the "Substitution Period"). To the extent that the Company determines that some action need be taken pursuant to the first and/or second sentences of this Section 11(a)(iii), the Company (x) shall provide, subject to the foregoing clause (ii) of this Section 11(a), that such action shall apply uniformly to all outstanding Rights (except that, to the extent reasonably necessary to avoid the issuance of fractional Common Shares, such action may provide for the issuance of Common Shares upon the exercise of more than a specified number of Rights, and issuance of other equity or debt securities upon the exercise of such specified number (or any lesser number) of Rights) and (y) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek any authorization of additional shares and/or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. (b) In case the Company shall fix a record date for the issuance of rights (other than the Rights), options or warrants to all holders of Preferred Shares entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Preferred Shares (or shares having the same rights, privileges and preferences as the Preferred Shares ("equivalent preferred shares")) or securities convertible into Preferred Shares or equivalent preferred shares at a price per Preferred Share or equivalent preferred share (or having a conversion price per share, if a security convertible into Preferred Shares or equivalent preferred shares) less than the current per share market price of the Preferred Shares (as defined in Section 11(d)) on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Preferred Shares outstanding on such record date plus the number of Preferred Shares which the aggregate offering price of the total number of Preferred Shares and/or equivalent preferred shares so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current market price and the denominator of which shall be the number of Preferred Shares outstanding on such record date plus the number of additional Preferred Shares and/or equivalent preferred shares to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible); provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right. In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent. Preferred Shares owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such rights, options or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed. (c) In case the Company shall fix a record date for the making of a distribution to all holders of the Preferred Shares (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness or assets (other than a regular quarterly cash dividend or a dividend payable in Preferred Shares) or subscription rights or warrants (excluding those referred to in Section 11(b)), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the then current per share market price (as determined pursuant to Section 11(d)) of the Preferred Shares on such record date, less the fair market value (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent) of the portion of the assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to one Preferred Share and the denominator of which shall be such current per share market price of the Preferred Shares; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company to be issued upon exercise of one Right. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price that would then be in effect if such record date had not been fixed. (d) (i) For the purpose of any computation hereunder, the "current per share market price" of any security (a "Security" for the purpose of this Section 11(d)(i)) on any date shall be deemed to be the average of the daily closing prices per share of such Security for the thirty (30) consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date; provided, however, that in the event that the current per share market price of the Security is determined during a period following the announcement by the issuer of such Security of (1) a dividend or distribution on such Security payable in shares of such Security or securities convertible into such Security, or (2) any subdivision, combination or reclassification of such Security, and prior to the expiration of thirty (30) Trading Days after the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination or reclassification, then, and in each such case, the current per share market price shall be appropriately adjusted to reflect the current market price per share equivalent of such Security. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Security is not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Security is listed or admitted to trading or, if the Security is not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then in use, or, if on any such date the Security is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Security selected by the Board of Directors of the Company. If on any such date no such market maker is making a market in the Security, the fair value of the Security on such date as determined in good faith by the Board of Directors of the Company shall be used. The term "Trading Day" shall mean a day on which the principal national securities exchange on which the Security is listed or admitted to trading is open for the transaction of business or, if the Security is not listed or admitted to trading on any national securities exchange, a Business Day. (ii) For the purpose of any computation hereunder, the "current per share market price" of the Preferred Shares shall be determined in the same manner as set forth in clause (i) of this Section 11(d). If the Preferred Shares are not publicly traded, the "current per share market price" of the Preferred Shares shall be conclusively deemed to be the current per share market price of the Common Shares as determined pursuant to Section 11(d)(i) (appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof), multiplied by one thousand. If neither the Common Shares nor the Preferred Shares are publicly held or so listed or traded, "current per share market price" shall mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent. (e) Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Purchase Price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of a Common Share or other share or one-millionth of a Preferred Share as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three (3) years from the date of the transaction that requires such adjustment or (ii) the Final Expiration Date. (f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock of the Company other than Preferred Shares, thereafter the number of such other shares so receivable upon exercise of any Right shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares contained in Section 11(a) through (c), inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall apply on like terms to any such other shares. (g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of Preferred Shares purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein. (h) The Company may elect on or after the date of any adjustment of the Purchase Price as a result of the calculations made in Section 11(b) and (c) to adjust the number of Rights, in lieu of any adjustment in the number of Preferred Shares purchasable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of one one-thousandths of a Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any date thereafter, but, if the Right Certificates have been issued, shall be at least ten (10) days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(h), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Right Certificates on such record date Right Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement. (i) Irrespective of any adjustment or change in the Purchase Price or the number of one one-thousandths of a Preferred Share issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price and the number of one one-thousandths of Preferred Shares which were expressed in the initial Right Certificates issued hereunder. (j) Before taking any action that would cause an adjustment reducing the Purchase Price below the then par value, if any, of one one-thousandths of Preferred Shares, Common Shares or other securities issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue such number of fully paid and nonassessable one one-thousandths of Preferred Shares, Common Shares or other securities at such adjusted Purchase Price. (k) In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date the Preferred Shares, Common Shares, or other securities of the Company, if any, issuable upon such exercise over and above the Preferred Shares, Common Shares, or other securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares upon the occurrence of the event requiring such adjustment. (l) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that it in its sole discretion shall determine to be advisable in order that (i) any consolidation or subdivision of the Preferred Shares, (ii) issuance wholly for cash of Preferred Shares at less than the current market price, (iii) issuance wholly for cash of Preferred Shares or securities which by their terms are convertible into or exchangeable for Preferred Shares, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Preferred Shares shall not be taxable to suchshareholders. (m) The Company covenants and agrees that it shall not, at any time after the Distribution Date, (i) consolidate with any other Person (other than a Subsidiary of the Company in a transaction which does not violate Section 11(n) hereof), (ii) merge with or into any other Person (other than a Subsidiary of the Company in a transaction which does not violate Section 11(n) hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one transaction, or a series of related transactions, assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which does not violate Section 11(n) hereof), if (x) at the time of or immediately after such consolidation, merger, sale or transfer there are any charter or by-law provisions or any rights, warrants or other instruments or securities outstanding or agreements in effect or other actions taken, which would materially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (y) prior to, simultaneously with or immediately after such consolidation, merger or sale, the stockholders of the Person who constitutes, or would constitute, the "Principal Party" for purposes of Section 13(a) hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates. The Company may not consummate any such consolidation, merger, sale or transfer unless prior thereto the Company and such other Person shall have executed and delivered to the Rights Agent a supplemental agreement evidencing compliance with this Section 11(m). (n) The Company covenants and agrees that, after the Distribution Date, it will not, except as permitted by Section 23 or Section 26 hereof, take (or permit any Subsidiary to take) any action the purpose of which is to, or if at the time such action is taken it is reasonably foreseeable that the effect of such action is to, materially diminish or otherwise eliminate the benefits intended to be afforded by the Rights. (o) The exercise of rights under Section 11(a)(ii) shall only result in the loss of rights under Section11(a)(ii) to the extent so exercised and shall not otherwise affect the rights represented by the Rights under this Rights Agreement, including the rights represented by Section 13. Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the Company shall promptly (a) prepare a certificate setting forth such adjustment, and a brief statement of the facts accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent for the Common Shares and the Preferred Shares a copy of such certificate and (c) mail a brief summary thereof to each holder of a Right Certificate in accordance with Section 25 hereof. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained and shall not be deemed to have knowledge of any adjustment unless and until it shall have received such certificate. Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. (a) In the event that, on or following the Shares Acquisition Date, directly or indirectly, (i) the Company shall consolidate with, or merge with and into, any Interested Stockholder or, if in such merger or consolidation all holders of Common Stock are not treated alike, any other Person, (ii) the Company shall consolidate with, or merge with, any Interested Stockholder or, if in such merger or consolidation all holders of Common Stock are not treated alike, any other Person, and the Company shall be the continuing or surviving corporation of such consolidation or merger (other than, in a case of any transaction described in (i) or (ii), a merger or consolidation which would result in all of the securities generally entitled to vote in the election of directors ("voting securities") of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into securities of the surviving entity) all of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation and the holders of such securities not having changed as a result of such merger or consolidation), or (iii) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one transaction or a series of related transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any Interested Stockholder or Stockholders or, if in such transaction all holders of Common Stock are not treated alike, any other Person (other than the Company or any Subsidiary of the Company in one or more transactions each of which does not violate Section 11(n) hereof), then, and in each such case, proper provision shall be made so that (A) each holder of a Right (except as provided in Section 7(e) hereof), shall thereafter have the right to receive, upon the exercise thereof at a price equal to the then current Purchase Price, in accordance with the terms of this Agreement and in lieu of Preferred Shares, such number of freely tradeable Common Shares of the Principal Party (as hereinafter defined), not subject to any liens, encumbrances, rights of first refusal, or other adverse claims, as shall equal the result obtained by (x) multiplying the then current Purchase Price by the number of one one-thousandths of a Preferred Share for which a Right is then exercisable (without taking into account any adjustment previously made pursuant to Section 11(a)(ii)) and dividing that product by (y) 50% of the current per share market price of the Common Shares of such Principal Party (determined pursuant to Section 11(d) hereof) on the date of consummation of such Section 13 Event; (B) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company pursuant to this Agreement; (C) the term "Company" shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply only to such Principal Party following the first occurrence of a Section 13 Event; and (D) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of its Common Shares) in connection with the consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its Common Shares thereafter deliverable upon the exercise of the Rights. (b) "Principal Party" shall mean (i) in the case of any transaction described in clause (i) or (ii) of the first sentence of Section 13(a), the Person that is the issuer of any securities into which Common Shares of the Company are converted in such merger or consolidation, and if no securities are so issued, the Person that is the other party to such merger or consolidation (including, if applicable, the Company if it is the surviving corporation ); and (ii) in the case of any transaction described in clause (iii) of the first sentence of Section 13(a), the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions; provided, however, that in any of the foregoing cases, (1) if the Common Shares of such Person are not at such time and have not been continuously over the preceding twelve (12) month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another Person the Common Shares of which are and have been so registered, "Principal Party" shall refer to such other Person; (2) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Shares of two or more of which are and have been so registered, "Principal Party" shall refer to whichever of such Persons is the issuer of the Common Shares having the greatest aggregate market value; and (3) in case such Person is owned, directly or indirectly, by a joint venture formed by two or more Persons that are not owned, directly or indirectly, by the same Person, the rules set forth in (1) and (2) above shall apply to each of the chains of ownership having an interest in such joint venture as if such party were a "Subsidiary" of both or all of such joint venturers and the Principal Parties in each such chain shall bear the obligations set forth in this Section 13 in the same ratio as their direct or indirect interests in such Person bear to the total of such interests. (c) The Company shall not consummate any such consolidation, merger, sale or transfer unless the Principal Party shall have a sufficient number of its authorized Common Shares which have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior thereto the Company and such Principal Party shall have executed and delivered to the Right Agent a supplemental agreement providing for the terms set forth in paragraphs (a) and (b) of this Section 13 and further providing that, as soon as practicable after the date of any consolidation, merger, sale or transfer mentioned in paragraph (a) of this Section 13, the Principal Party at its own expense shall: (i) prepare and file a registration statement under the Act with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, and will use its best efforts to cause such registration statement to (A) become effective as soon as practicable after such filing and (B) remain effective (with a prospectus at all times meeting the requirements of the Act) until the Final Expiration Date; (ii) use its best efforts to qualify or register the Rights and the securities purchasable upon exercise of the Rights under the blue sky laws of such jurisdictions as may be necessary or appropriate; and (iii) deliver to holders of the Rights historical financial statements for the Principal Party which comply in all respects with the requirements for registration on Form 10 under the Exchange Act. The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. The rights under this Section 13 shall be in addition to the rights to exercise Rights and adjustments under Section 11(a)(ii) and shall survive any exercise thereof. Section 14. Fractional Rights and Fractional Shares. (a) The Company shall not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange, or, if the Rights are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then is use or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company. If on any such date no such market maker is making a market in the Rights, the fair value of the Rights on such date as determined in good faith by the Board of Directors of the Company shall be used. (b) The Company shall not be required to issue fractions of Preferred Shares (other than fractions that are one one-thousandth or integral multiples of one one-thousandth of a Preferred Share) upon exercise of the Rights or to issue certificates which evidence fractional Preferred Shares (other than fractions that are one one-thousandth or integral multiples of one one-thousandth of a Preferred Share). Fractions of Preferred Shares in integral multiples of one one-thousandth of a Preferred Share may, at the election of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between the Company and a depositary selected by it; provided that such agreement shall provide that the holders of such depositary receipts shall have all the rights, privileges and preferences to which they are entitled as Beneficial Owners of the Preferred Shares represented by such depositary receipts. In lieu of fractional Preferred Shares that are not one one-thousandth or integral multiples of one one-thousandth of a Preferred share, the Company shall pay to the registered holders of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one Preferred Share. For purposes of this Section 14(b), the current market value of a Preferred Share shall be the closing price of a Preferred Share (as determined pursuant to Section 11(d) hereof) for the Trading Day immediately prior to the date of such exercise. (c) Following the occurrence of one of the transactions or events specified in Section 11 giving rise to the right to receive Common Shares, capital stock equivalents (other than Preferred Shares) or other securities upon the exercise of a Right, the Company shall not be required to issue fractions of shares or units of such Common Shares, capital stock equivalents or other securities upon exercise of the Rights or to distribute certificates which evidence fractions of such Common Shares, capital stock equivalents or other securities. In lieu of fractional shares or units of such Common Shares, capital stock equivalents or other securities, the Company may pay to the registered holders of Right Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of a share or unit of such Common Shares, capital stock equivalents or other securities. For purposes of this Section 14(c), the current market value shall be determined in the manner set forth in Section 11(d) hereof for the Trading Day immediately prior to the date of such exercise, and if such capital stock equivalent is not traded, each such capital stock equivalent shall have the value of one one-thousandth of a Preferred Share. (d) The holder of a Right by the acceptance of the Rights expressly waives his right to receive any fractional Rights or any fractional shares upon exercise of a Right (except as provided above). Section 15. Rights of Action. All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under Section 18 hereof, are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the Common Shares); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Shares), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the Common Shares), may in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Right Certificate in the manner provided in such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of the Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of, the obligations of any Person subject to this Agreement. Section 16. Agreement of Right Holders. Every holder of a Right, by accepting the same, consents and agrees with the Company and the Rights Agent and with every other holder of a Right that: (a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Common Shares; (b) after the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office or offices of the Rights Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate form fully executed; (c) Subject to Section 6 and Section 7(f) hereof, the Company and the Rights Agent may deem and treat the person in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Shares certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificates or the associated Common Shares certificate made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the last sentence of Section 7(e) hereof, shall be affected by any notice to the contrary; and (d) Notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or a beneficial interest in a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided, however, the Company must use its best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible. Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the Preferred Shares or any other securities of the Company which may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 24 hereof), or to receive dividends or other distributions or to exercise any preemptive or subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised in accordance with the provisions hereof. Section 18. Concerning the Rights Agent. The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability in the premises. The indemnity provided for herein shall survive the expiratation of the Rights and the termination of this Agreement. The Rights Agent shall be protected and shall incur no liability for, or in respect of, any action taken, suffered or omitted by it in connection with, its administration of this Agreement in reliance upon any Right Certificate or certificate for the Preferred Shares or Common Shares or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons. Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the stock transfer or all or substantially all of the corporate trust business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. In case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name: and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. Section 20. Duties of Rights Agent. The Rights Agent undertakes only those duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound: (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion. (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without limitation, the identity of an Acquiring Person and the determination of the current market price of any Security) be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. (c) The Rights Agent shall be liable hereunder to the Company and any other Person only for its own negligence, bad faith or willful misconduct. (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only. (e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be responsible for any change in the exercisability of the Rights (including the Rights becoming void pursuant to Section 7(e) hereof) or any adjustment required under the provisions of Section 11 or Section 13 hereof or responsible for the manner, method or amount of any such adjustment, or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after receipt of a certificate described in Section 12 hereof); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Preferred Shares or Common Shares to be issued pursuant to this Agreement or any Right Certificate or as to whether any Preferred Shares or Common Shares will, when issued, be validly authorized and issued, fully paid and nonassessable. (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement. (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board, the President, any Vice President, the Secretary or the Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer or for any delay in actions while waiting for those instructions. Any application by the Rights Agent for written instructions from the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be taken or omitted by the Rights Agent with respect to its duties or obligations under this Rights Agreement and the date on or after which such action shall be taken or omission shall be effective. The Rights Agent shall not be liable for any action taken by, or omission of, the Rights Agent in accordance with a proposal included in any such application on or after the date specified therein (which date shall not be less than five Business Days after the date any such officer of the Company actually receives such application, unless any such officer shall have consented in writing to an earlier date) unless, prior to taking such action (or the effective date in the case of an omission), the Rights Agent has received written instructions in response to such application specifying the action to be taken or omitted. (h) The Rights Agent and any shareholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity. (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct, provided reasonable care was exercised in the selection and continued employment thereof. (j) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. (k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, has not been completed, the Rights Agent shall not take any further action with respect to such requested exercise of transfer without first consulting with the Company. Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days' notice in writing mailed to the Company and to each transfer agent of the Common Shares and Preferred Shares by registered or certified mail, and to the holders of the Right Certificates by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Shares and Preferred Shares by registered or certified mail, and to the holders of the Right Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the laws of the United States (or of any state of the United States), in good standing, that is authorized under such laws to exercise stock transfer or corporate trust powers and is subject to supervision or examination by federal or state authority and that has at the time of its appointment as Rights Agent a combined capital and surplus of at least $100 million. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Shares and Preferred Shares, and mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. Section 22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or other securities or property purchasable under the Right Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of Common Shares following the Distribution Date and prior to the earlier of the Redemption Date and the Final Expiration Date, the Company (a) shall with respect to Common Shares so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, or upon the exercise, conversion or exchange of securities, notes or debentures issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board of Directors of the Company, issue Right Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) the Company shall not be obligated to issue any such Right Certificates if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Right Certificate would be issued, and (ii) no Right Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof. Section 23. Redemption and Termination. (a) (i) The Board of Directors of the Company may, at its option, redeem all but not less than all the then outstanding Rights at a redemption price of $.05 per Right, as such amount may be appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the "Redemption Price"), at any time prior to the earlier of (x) the occurrence of a Section 11(a)(ii) Event, or (y) the Final Expiration Date. (ii) In addition, the Board of Directors of the Company may, at its option, at any time following the occurrence of a Section 11(a)(ii) Event and the expiration of any period during which the holder of Rights may exercise the Rights under Section 11(a)(ii) but prior to any Section 13 Event, redeem all but not less than all of the then outstanding Rights at the Redemption Price (aa) in connection with any merger, consolidation, or sale or other transfer (in one transaction or in a series of related transactions) of assets or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole), in which all holders of Common Shares are treated alike and not involving (other than as a holder of Common Shares being treated like all other such holders) an Interested Stockholder or (bb) if and for so long as the Acquiring Person is not thereafter the Beneficial Owner of 15% of the Common Shares, and at the time of redemption there are no other persons who are Acquiring Persons. (b) Notwithstanding the provisions of Section 23(a), in the event that a majority of the Board of Directors of the Company is comprised of (i) persons elected at a meeting of or by written consent of stockholders and who were not nominated by the Board of Directors in office immediately prior to such meeting or action by written consent and/or (ii) successors of such persons elected to the Board of Directors for the purpose of either facilitating a Transaction with a Transaction Person or circumventing directly or indirectly the provisions of this Section 23(b), then (I) the Rights may not be redeemed for a period of 180 days following the effectiveness of such election if such redemption is reasonably likely to have the purpose or effect of facilitating a Transaction with a Transaction Person and (II) the Rights may not be redeemed thereafter if (x) during such 180-day period, the Company enters into any agreement, arrangement or understanding with any Transaction Person which is reasonably likely to have the purpose or effect of facilitating a Transaction with any Transaction Person and (y) such redemption is reasonably likely to have the purpose or effect of facilitating a Transaction with any Transaction Person. (c) In the case of a redemption permitted under Section 23(a)(i), immediately upon the date for redemption set forth (or determined in the manner specified in) in a resolution of the Board of Directors of the Company ordering the redemption of the Rights, evidence of which shall have been filed with the Rights Agent, and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right so held. In the case of a redemption permitted only under Section 23(a)(ii), evidence of which shall have been filed with the Rights Agent, the right to exercise the Rights will terminate and represent only the right to receive the Redemption Price upon the later of ten Business Days following the giving of such notice or the expiration of any period during which the rights under Section 11(a)(ii) may be exercised. The Company shall promptly give public notice of any such redemption; provided, however, that the failure to give, or any defect in, any such notice shall not affect the validity of such redemption. Within ten (10) days after such date for redemption set forth in a resolution of the Board of Directors ordering the redemption of the Rights, the Company shall mail a notice of redemption to all the holders of the then outstanding Rights at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Common Shares. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23 except in connection with the purchase of Common Shares prior to the Distribution Date. (d) The Company may, at its option, discharge all of its obligations with respect to the Rights by (i) issuing a press release announcing the manner of redemption of the Rights in accordance with this Agreement and (ii) mailing payment of the Redemption Price to the registered holders of the Rights at their last addresses as they appear on the registry books of the Rights Agent or, prior the Distribution Date, on the registry books of the Transfer Agent of the Common Shares, and upon such action, all outstanding Rights and Right Certificates shall be null and void without any further action by the Company. Section 24. Notice of Certain Events. (a) In case the Company shall propose (i) to pay any dividend payable in stock of any class to the holders of its Preferred Shares or to make any other distribution to the holders of its Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer to the holders of its Preferred Shares rights or warrants to subscribe for or to purchase any additional Preferred Shares or shares of stock of any class or any other securities, rights or options, (iii) to effect any reclassification of its Preferred Shares (other than a reclassification involving only the subdivision of outstanding Preferred Shares), (iv) to effect any consolidation or merger into or with any Person (other than a Subsidiary of the Company in a transaction which does not violate Section 11(n) hereof), or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which does not violate Section 11(n) hereof), or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to each holder of a Right Certificate, in accordance with Section 25 hereof, a notice of such proposed action to the extent feasible and file a certificate with the Rights Agent to that effect, which shall specify the record date for the purposes of such stock dividend, or distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the Preferred Shares, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least twenty (20) days prior to the record date for determining holders of the Preferred Shares for purposes of such action, and in the case of any such other action, at least twenty (20) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Preferred Shares, whichever shall be the earlier. (b) In case of a Section 11(a)(ii) Event, then (i) the Company shall as soon as practicable thereafter give to each holder of a Right Certificate, in accordance with Section 25 hereof, a notice of the occurrence of such event, which notice shall describe such event and the consequences of such event to holders of rights under Section 11(a)(ii) hereof and (ii) all references in the preceding paragraph (a) to Preferred Shares shall be deemed thereafter to refer also to Common Shares and/or, if appropriate, other securities of the Company. Section 25. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: Tandy Corporation 1800 One Tandy Center Fort Worth, TX 76102 Attention: Secretary Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: The First National Bank of Boston 50 Morrissey Boulevard Dorchester, MA 02125 Attention: Shareholder Services Division Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate or, if prior to the Distribution Date, to the holder of certificates representing Common Shares shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company. Section 26. Supplements and Amendments. The Company and the Rights Agent may from time to time supplement or amend any provision of this Agreement without the approval of any holders of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or (iii) to make any other provisions in regard to matters or questions arising hereunder which the Company and the Rights Agent may deem necessary or desirable, including but not limited to extending the Final Expiration Date and providing that at the time of such amendment there is no Acquiring Person, the period up to which the Rights may be redeemed, and which shall not adversely affect the interests of the holders of the Right Certificates. Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 26, the Rights Agent shall execute such supplement or amendment, provided that such supplement or amendment does not adversely affect the rights or obligations of the Rights Agent under Section 18 or Section 20 of this Agreement. Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Shares. Notwithstanding anything contained in this Rights Agreement to the contrary, in the event that a majority of the Board of Directors of the Company is comprised of (i) persons elected at a meeting of or by written consent of stockholders and who were not nominated by the Board of Directors in office immediately prior to such meeting or action by written consent and/or (ii) successors of such persons elected to the Board of Directors for the purpose of either facilitating a Transaction with a Transaction Person or circumventing directly or indirectly the provisions of this Section 26, then for a period of 180 days following the effectiveness of such action, this Rights Agreement shall not be amended or supplemented in any manner reasonably likely to have the purpose or effect of facilitating a Transaction with a Transaction Person. Section 27. Determination and Actions by the Board of Directors, etc. The Board of Directors of the Company shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board, or the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including, without limitation, a determination to redeem or not redeem the Rights or to amend the Agreement and whether any proposed amendment adversely affects the interests of the holders of Right Certificates). For all purposes of this Agreement, any calculation of the number of Common Shares or other securities outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding Common Shares or any other securities of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement. All such actions, calculations, interpretations and determinations (including, for purposes of clause (y) below, all omissions with respect to the foregoing) which are done or made by the Board in good faith, shall (x) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Right Certificates and all other parties, and (y) not subject the Board to any liability to the holders of the Right Certificates. Section 28. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. Section 29. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any person or corporation other than the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Shares). Section 30. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Section 31. Governing Law. This Agreement, each Right and each Right Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State. Section 32. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Section 33. Descriptive Headings. Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. TANDY CORPORATION Attest: By /s/ HC Winn By /s/ John V. Roach Name: Herschel C. Winn Name: John V. Roach Chairman of the Board, Senior Vice President Chief Executive Officer Title: and Secretary Title: and President THE FIRST NATIONAL BANK OF BOSTON as Rights Agent Attest: By /s/ Craig A. Alie By /s/ Darlene M. DioDato Name: Craig A. Alie Name: Darlene M.n DioDato Title: Account Manager Title: Vice President EX-4.(C)(I) 7 1993 10K EXHIBIT 4C(I) Exhibit 4c(i) REVOLVING CREDIT AGREEMENT REVOLVING CREDIT AGREEMENT dated as of June 17, 1991, among TANDY CORPORATION, a Delaware corporation ("Tandy"), TANDY CREDIT CORPORATION, a Delaware corporation ("TCC" and together with Tandy collectively the "Borrowers"), the Banks listed on the signature pages hereof (the "Banks"), TEXAS COMMERCE BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent for the Banks (in such capacity, the "Administrative Agent"), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Funds Administrator for the Banks (in such capacity, the "Funds Administrator"). ARTICLE I CERTAIN DEFINED TERMS, ACCOUNTING TERMS AND CONSTRUCTION SECTION 1.01 Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings: "Account Debtor" shall mean any Person who is or who may become obligated to TCC under, with respect to, or on account of, an Account purchased by TCC. "Accounts" shall mean any and all rights of Tandy, TCC and the other Subsidiaries of Tandy to payment for goods and services sold or leased, including any such right evidenced by chattel paper, whether due or to become due, whether or not it has been earned by performance, and whether now or hereafter acquired or arising in the future, including accounts receivable from Affiliates. "Adjusted CD Rate" shall mean, with respect to any Borrowing comprised of Certificate of Deposit Loans for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next higher 1/8 of 1%) equal to the sum of (a) a rate per annum equal to the product of (i) the Fixed Certificate of Deposit Rate in effect for such Interest Period and (ii) Statutory Reserves, plus (b) the Assessment Rate. For purposes hereof, the term "Fixed Certificate of Deposit Rate" shall mean the arithmetic average (rounded to the nearest 1/8 of 1% or, if there is no nearest 1/8 of 1%, the next higher 1/8 of 1%) of the prevailing rates per annum bid on or about 10:00 a.m. (New York City time) to the Funds Administrator on the first Business Day of the Interest Period for the Certificate of Deposit Loan by three New York City negotiable certificate of deposit dealers of recognized standing selected by the Funds Administrator for the purchase at face value of negotiable certificates of deposit of major United States money center banks in an amount approximately equal to the principal amount of such Certificate of Deposit Loan and with a maturity comparable to such Interest Period. "Administrative Agent" shall have the meaning assigned such term in the introduction to this Agreement. "Administrative Questionnaire" shall mean an Administrative Questionnaire in the form of Exhibit 1.01-A hereto, which each Bank shall complete and provide to the Funds Administrator. "Affiliate" shall mean any Person (including any member of the immediate family of any such natural person) who directly or indirectly beneficially owns or controls 5% or more of the total voting power of shares of capital stock of either Borrower having the right to vote for directors under ordinary circumstances, any person controlling, controlled by or under common control with any such person (within the meaning of Rule 405 under the Securities Act of 1933) and any director or executive officer of such person. "Agency Fee" shall have the meaning assigned such term in Section 2.06(c). "Agent's Letter" shall have the meaning assigned such term in Section 2.06(c). "Agents" shall mean the Administrative Agent and the Funds Administrator. "Alternate Base Rate" shall mean, for any day, a fluctuating rate per annum (rounded upwards to the next highest 1/8 of 1% if not already an integral multiple of 1/8 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. "Prime Rate" shall mean as of a particular date, the prime rate most recently announced by TCB and thereafter entered in the minutes of TCB's Loan and Discount Committee, automatically fluctuating upward and downward with and at the time specified in each such announcement without notice to either Borrower or any other Person, which prime rate may not necessarily represent the lowest or best rate actually charged to a customer. For purposes of this Agreement any change in the Alternate Base Rate due to a change in the Prime Rate shall be effective on the date such change in the Prime Rate is announced. "Base CD Rate" means the sum of (x) the product of (i) the Three-Month Secondary CD Rate and (ii) the Statutory Reserves and (y) the Assessment Rate. "Three-Month Secondary CD Rate" means, for any day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day (or, if such day is not a Business Day, the next preceding Business Day) by the Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day), or, if such rate shall not be so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 9:00 a.m., Houston, Texas time, on such day ) or, if such day shall not be Business Day, on the next preceding Business Day) by the Funds Administrator from three New York City negotiable certificate of deposit dealers of recognized standing selected by the Funds Administrator. For purposes of this Agreement any change in the Alternate Base Rate due to a change in the Three-Month Secondary CD Rate shall be effective on the effective date of such change in the Three-Month Secondary CD Rate. "Federal Funds Effective Rate" shall mean, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Funds Administrator from three Federal funds brokers of recognized standing selected by it. For purposes of this Agreement any change in the Alternate Base Rate due to a change in the Federal Funds Effective Rate shall be effective on the effective date of such change in the Federal Funds Effective Rate. If for any reason the Funds Administrator shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Funds Administrator to obtain sufficient bids or publications in accordance with the terms thereof, the Alternate Base Rate shall be the Prime Rate until the circumstances giving rise to such inability no longer exist. "Alternate Base Rate Loan" shall mean any Loan with respect to which a Borrower shall have selected an interest rate based on the Alternate Base Rate in accordance with the provisions of Article II. "Assessment Rate" shall mean for any date the annual rate (rounded upwards, if necessary, to the next higher 1/100 of 1%) most recently estimated by the Funds Administrator as the then current net annual assessment rate that will be employed for determining amounts payable by the Funds Administrator to the Federal Deposit Insurance Corporation (or any successor) for insurance by such Corporation (or such successor) of time deposits made in dollars at the Funds Administrator's domestic offices. "Assignment and Acceptance" shall mean an assignment and acceptance entered into by a Bank and an Eligible Assignee, and accepted by the Agents, in the form of Exhibit 1.01-B hereto. "Banks" shall have the meaning assigned such term in the introduction to this Agreement. "Base CD Rate" shall have the meaning assigned such term in the definition of the term Base Rate. "Board" shall mean the Board of Governors of the Federal Reserve System of the United States. "Borrowers" shall have the meaning assigned such term in the introduction to this Agreement. "Borrowing" shall mean a group of Tranche A Loans or Tranche B Loans of a single Type made by the Banks on a single date and as to which a single Interest Period is in effect. "Borrowing Base" shall mean an amount equal to 90% of the aggregate principal amount of all Eligible Accounts Receivable purchased by TCC pursuant to the Operating Agreement and at the date of any determination owned by TCC. "Borrowing Base Certificate" shall mean a certificate in the form of Exhibit 1.01-C hereto, duly completed and executed by the chief financial officer or the chief accounting officer of TCC accompanied by an accounts receivable aging schedule substantially in the form of Exhibit 1.01-D hereto. "Business Day" shall mean a day when the Agents and each Bank are open for business, and if the applicable Business Day relates to any Eurodollar Loan, a day on which dealings are carried on in the London interbank market and commercial banks are open for domestic or international business in London, England, in New York City, New York and in Houston, Texas. "Capital Lease" shall mean any lease required to be accounted for as a capital lease under generally accepted accounting principles. "Certificate of Deposit Loan" shall mean any Loan with respect to which a Borrower shall have selected an interest rate based on the Adjusted CD Rate in accordance with the provisions of Article II. "Change of Control" shall mean any of (i) the acquisition by any Person or two or more Persons (excluding underwriters in the course of their distribution of voting stock in an underwritten public offering) acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission) of 25% or more of the outstanding shares of voting stock of Tandy, (ii) a majority of the members of the Board of Directors of Tandy on any date shall not have been (x) members of the Board of Directors of Tandy on the date 12 months prior to such date or (y) approved by Persons who constitute at least a majority of the members of the Board of Directors of Tandy as constituted on the date 12 months prior to such date, (iii) all or substantially all of the assets of Tandy are sold in a single transaction or series or related transactions to any Person or (iv) Tandy merges or consolidates with or into any other Person, with the effect that immediately after such transaction the stockholders of Tandy immediately prior to such transaction hold less than 100% of the total voting power entitled to vote in the election of directors, managers or trustees of the Person surviving such transaction. "Closing Date" shall mean the date of the first Borrowing under this Agreement. "Closing Fee" shall have the meaning assigned such term in Section 2.06(b). "Code" shall mean the Internal Revenue Code of 1986 and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of the Code shall be construed to also refer to any successor sections. "Commitment Fees" shall mean, with respect to each Bank, such Bank's Tranche A Commitment Fees and the Tranche B Commitment Fees. "Commitments" shall mean, with respect to each Bank, such Bank's Tranche A Commitment and Tranche B Commitment. "Communications" has the meaning assigned such term in Section 9.01. "Confidential Information Memorandum" shall mean the Confidential Information Memorandum dated May 1991 prepared by Chemical Banking Corporation relating to the revolving credit facilities evidenced by this Agreement. "Consolidated Senior Indebtedness" shall mean with respect to Tandy, all Indebtedness of Tandy and its Subsidiaries, other than Subordinated Indebtedness, calculated on a consolidated basis. "Consolidated Tangible Net Worth" shall mean, with respect to Tandy, at any time, the total Stockholders Equity less the total amount of any intangible assets and plus the total amount of any Subordinated Indebtedness unless already included in Stockholders' Equity, with all such amounts being calculated for Tandy and its consolidated Subsidiaries on a consolidated basis in accordance with generally accepted accounting principles applied on a consistent basis. Intangible assets shall include unamortized debt discount and expense, unamortized deferred charges and goodwill. "Default" shall mean any event or condition which, with the lapse of time or giving of notice or both, would constitute an Event of Default. "Eligible Accounts Receivable" shall mean at the time of any determination thereof all Accounts (net of all allowances and reserves for doubtful or uncollectible accounts and exclusive of Accounts arising from transactions between either Borrower or any Affiliate) which met the following criteria for an eligible account at the time of creation and continue to meet the same at the time of such determination: (i) all payments on the Account are due not more than 30 days after the date of the invoice rendered by TCC; (ii) any required payment on the Account is not past due more than 60 days (determined with reference to the date which the invoice rendered to the Account Debtor indicated to be the date on which such payment with respect to the Account is due or, if no such date is specified in such invoice, the date of such invoice); (iii) the Account arose from an outright and lawful sale of goods by or on behalf of a Borrower or one of its Affiliates; (iv) the Account is owned by TCC free and clear of all security interests, liens, charges and encumbrances of any nature whatsoever other than any security interest deemed to be held by TCC; (v) the Account constitutes "accounts" or "chattel paper" within the meaning of the Uniform Commercial Code of the state (other than Louisiana) where the Account is located; (vi) the Account is not subject to any setoff, net-out contract, counterclaim or other defense arising out of the transactions represented by the Accounts or independently thereof and the Account Debtor has not complained as to his liability thereon or returned any of the goods from the sale out of which the Account arose, except complaints made or goods returned in the ordinary course of business for which, in the case of goods returned, goods of equal or greater value have been shipped in return; (vii) the Account arose in the ordinary course of business of a Borrower or one of its Affiliates and no notice of death, bankruptcy or insolvency of the Account Debtor has been received; (viii) the Account complies with the requirements of all applicable laws and regulations, whether federal, state or local (including usury laws and laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy); (ix) the Account is in full force and effect and constitutes a legal, valid and binding obligation of the Account Debtor enforceable in accordance with its terms; (x) the Account is denominated in and provides for payment by the Account Debtor in United States dollars; (xi) the Account has not been charged-off or written-off as uncollectible in accordance with the customary business practice of a Borrower and (xii) the Account neither has been transferred to TRC or to the Tandy Master Trust nor is subject to any pooling or servicing agreement. "Eligible Assignee" shall mean (i) any Bank or any Affiliate of any Bank; (ii) a commercial bank organized under the laws of the United States, or any state thereof, and having total assets in excess of $1,000,000,000 and having deposits that rated in either of the two highest generic letter rating categories (without regard to subcategories) from either Standard & Poor's Corporation or Moody's Investors Service, Inc.; (iii) a commercial bank organized under the laws of any other country which is a member of the OECD, or a political subdivision of any such country, and having total assets in excess of $1,000,000,000, provided that such bank is acting through a branch or agency located in the country in which it is organized or another country which is also a member of the OECD; (iv) the central bank of any country which is a member of the OECD; and (v) any other financial institution approved by the Borrowers, the Administrative Agent and the Funds Administrator. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA shall be construed to also refer to any successor sections. "ERISA Affiliate" shall mean any corporation, trade or business that is, along with Tandy, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in sections 414(b) and 414(c), respectively, of the Code or section 4001 of ERISA. "Eurodollar Loan" shall mean any Loan with respect to which a Borrower shall have selected an interest rate based on the LIBO Rate in accordance with the provisions of Article II. "Event of Default" shall have the meaning assigned such term in Article VII. "Execution Date" shall mean the earliest date upon which all of the following shall have occurred: (i) counterparts of this Agreement shall have been executed by the Borrowers, each Bank, the Administrative Agent and the Funds Administrator and when the Administrative Agent shall have received counterparts hereof which taken together, bear the signature of each Bank and the Funds Administrator, (ii) the Revolving Credit Agreement dated as of June 18, 1987 among TCC, the banks party thereto and Chemical Bank, as agent for such banks, as amended pursuant to a First Amendment to Revolving Credit Agreement dated as of June 18, 1989 and a Second Amendment to Revolving Credit Agreement dated as of April 1, 1991 shall have been terminated, and (iii) the Credit Agreement dated as of May 1, 1989 between Tandy, the banks party thereto and Continental Bank, N.A. as agent for such banks, as modified by a Waiver to Credit Agreement dated as of April 1, 1991 shall have been terminated. "Federal Funds Effective Rate" shall have the meaning assigned such term in the definition of "Alternate Base Rate." "Fixed Certificate of Deposit Rate" shall have the meaning assigned such term in the definition of "Adjusted CD Rate." "Funds Administrator" shall have the meaning assigned such term in the introduction to this Agreement. "Guaranties" by any Person shall mean all obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or, in effect, guaranteeing any Indebtedness, dividend or other obligation, of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including all obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such Indebtedness or obligation or any property or assets constituting security therefor, (b) to advance or supply funds (i) for the purchase or payment of such Indebtedness or obligation, (ii) to maintain working capital or other balance sheet condition or otherwise to advance or make available funds for the purchase or payment of such Indebtedness or obligation, (c) to lease property or to purchase securities or other property or services primarily for the purpose of assuring the owner of such Indebtedness or obligation of the ability of the primary obligor to make payment of the Indebtedness or obligation, or (d) otherwise to assure the owner of the Indebtedness or obligation of the primary obligor against loss in respect thereof. For the purposes of all computations made under this Agreement, a Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be Indebtedness equal to the principal amount of such Indebtedness for borrowed money which has been guaranteed, and a Guaranty in respect of any other obligation or liability or any dividend shall be deemed to be Indebtedness equal to the maximum aggregate amount of such obligation, liability or dividend. "Highest Lawful Rate" shall mean, as to any Bank, at the particular time in question, the maximum nonusurious rate of interest which, under applicable law, such Bank is then permitted to charge the Borrowers on the Loans. If the maximum rate of interest which, under applicable law, the Banks are permitted to charge the Borrowers on the Loans shall change after the date hereof, the Highest Lawful Rate shall be automatically increased or decreased, as the case may be, as of the effective time of such change without notice to the Borrowers. "HLT Classification" shall have the meaning assigned such term in Section 2.19. "Indebtedness" of any Person shall mean, without duplication: (a) any obligation of such Person for borrowed money, including: (i) any obligation of such Person evidenced by bonds, debentures, notes or other similar debt instruments, and (ii) any obligation for borrowed money which is non-recourse to the credit of such Person but which is secured by any asset of such Person, (b) any obligation of such Person on account of deposits or advances, (c) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person, (d) any obligation of such Person for the deferred purchase price of any property or services, except accounts payable arising in the ordinary course of such Person's business, (e) rentals in respect of Capital Leases of such Person, provided, however, except with respect to TCC, rentals of any such Person shall not constitute Indebtedness unless such rentals are in excess in the aggregate of $30,000,000 at any one time outstanding, (f) Guaranties by such Person to the extent required pursuant to the definition thereof, (g) any Indebtedness of another Person secured by a Lien on any asset of such first Person, whether or not such Indebtedness is assumed by such first Person, and (h) any Indirect Indebtedness of such Person. "Indemnitee" shall have the meaning assigned such term in Section 9.04. "Indirect Indebtedness" of a Person shall mean (a) the Indebtedness of a partnership in which such Person is a general partner, and (b) the amount of any liability of such Person created by the Indebtedness of a joint venture in which such Person is a joint venturer. "Insignificant Foreign Subsidiary" shall mean a Subsidiary of Tandy which is not organized under the laws of a state of the United States and which is not a Significant Subsidiary of Tandy. "Interest Payment Date" shall mean, as to any Loan, the last day of the Interest Period applicable to such Loan (and, in addition, in the case of any Interest Period of six months or 180 days duration, the day that would have been the Interest Payment Date of such Interest Period if such Interest Period had been of three months or 90 days duration). "Interest Period" shall mean: (i) as to any Eurodollar Loan, the period commencing on the date of such Eurodollar Loan and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as a Borrower may elect, (ii) as to any Certificate of Deposit Loan, a period of 30, 60, 90 or 180 days duration, as a Borrower may elect, commencing on the date of such Certificate of Deposit Loan and (iii) as to any Alternate Base Rate Loan, a period of 90 days duration, commencing on the date of such Loan; provided, however, that (i) if any Interest Period would end on a day that shall not be a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, with respect to Eurodollar Loans only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (ii) no Interest Period with respect to any Tranche A Loan shall end later than the Tranche A Maturity Date, (iii) no Interest Period with respect to any Tranche B Loan shall end later than the Tranche B Maturity Date and (iv) interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period. "Investment" shall mean any investment, made by a Person in any other Person in cash or by delivery of any kind of property or asset, whether by acquisition of shares of stock or similar interest, Indebtedness or other obligation or security, or by loan, advance or capital contribution, or otherwise. "LIBO Rate" shall mean the rate (rounded to the nearest 1/8 of 1% or, if there is no nearest 1/8 of 1%, the next higher 1/8 of 1%) at which dollar deposits approximately equal in principal amount to the Administrative Agent's portion of such Borrowing and for a maturity equal to the applicable Interest Period are offered in immediately available funds to the principal office of the Funds Administrator in London, England (or if the Funds Administrator does not at the time any such determination is made, maintain an office in London, England, the principal office of any Affiliate of the Funds Administrator in London, England) by leading banks in the London Interbank Market for Eurodollars at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period. "Lien" shall mean any mortgage, pledge, hypothecation, judgment lien or similar legal process, title retention lien, or other lien or security interest, including the interest of a vendor under any conditional sale or other title retention agreement and the interest of a lessor under any Capital Lease. "Loan" shall mean a Tranche A Loan, a Tranche B Loan, an Alternate Base Rate Loan, a Certificate of Deposit Loan or a Eurodollar Loan. "Loan Documents" means this Agreement, the Notes, the Agent's Letter, the Operating Agreement, the Support Agreement and all other documents, instruments executed by a Borrower or any other Person in connection with this Agreement and the Loans including the Tandy Guaranty, if executed and delivered pursuant to Section 7.01(d). "Margin Stock" shall have the meaning assigned such term in Regulation U. "Maximum Permissible Rate" shall have the meaning assigned such term in Section 9.08. "Note" or "Notes" shall mean the Tranche A Notes and the Tranche B Notes or any one thereof. "Notice of Borrowing" shall have the meaning assigned such term in Section 2.02(c). "OECD" shall mean the Organization for Economic Cooperation and Development. "Operating Agreement" shall mean the Operating Agreement, dated as of June 18, 1987, by and between Tandy and TCC. "Other Activities" shall have the meaning assigned such term in Section 8.03. "Other Financings" shall have the meaning assigned such term in Section 8.03. "Other Taxes" shall have the meaning assigned such term in Section 2.18. "PBGC" shall mean the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. "Permitted Indebtedness" shall mean with respect to TCC (i) the Loans, Short-term Indebtedness and commercial paper borrowings in an aggregate principal amount not in excess of $400,000,000 and (ii) unsecured Indebtedness (other than Short-term Indebtedness) and intercompany indebtedness due to Tandy. "Person" shall mean any natural person, corporation, business trust, association, company, joint venture, partnership or government or any agency or political subdivision thereof. "Plan" shall mean a pension plan, as such term is defined in ERISA, established or maintained by Tandy or any ERISA Affiliate or as to which Tandy or any ERISA Affiliate contributes or is a member or otherwise may have any liability. "Prime Rate" shall have the meaning assigned such term in the definition of the term Alternate Base Rate. "Process Agent" shall have the meaning assigned such term in Section 9.13. "Register" shall have the meaning assigned such term in Section 9.03(d). "Regulation G" shall mean Regulation G of the Board, as the same is from time to time in effect, and all official rulings and interpretations thereunder or thereof. "Regulation T" shall mean Regulation T of the Board, as the same is from time to time in effect, and all official rulings and interpretations thereunder or thereof. "Regulation U" shall mean Regulation U of the Board, as the same is from time to time in effect, and all official rulings and interpretations thereunder or thereof. "Regulation X" shall mean Regulation X of the Board, as the same is from time to time in effect, and all official rulings and interpretations thereunder or thereof. "Reportable Event" shall mean a Reportable Event as defined in Section 4043(b) of ERISA. "Required Banks" shall mean at any time Banks holding 66-2/3% of the aggregate principal amount of the Loans at the time outstanding, or if no Loans are outstanding, Banks having 66-2/3% of the Total Commitment. "Short-term Indebtedness" shall mean, at any date, Indebtedness which matures one year or less from such date and which is not directly or indirectly renewable or extendible, at the option of the obligor, by its terms or the terms of any instrument or agreement relating thereto, to a date more than one year from such date. "Significant Subsidiary" shall mean as to either Borrower or any Subsidiary of such Borrower which either (i) has a net worth in excess of 5% of the consolidated net worth of such Borrower and its other Subsidiaries, or (ii) has gross revenues in excess of 5% of the consolidated gross revenues of such Borrower and its other Subsidiaries based, in each case, on the most recent audited financial statements of such Borrower. In all events the Significant Subsidiaries of Tandy shall include O Sullivan Industries Incorporated, a Delaware corporation, GRID Systems Corporation, a California corporation, TCC and TRC, and the Significant Subsidiaries of TCC shall include TRC. "Statutory Reserves" shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency, or supplemental reserves) expressed as a decimal established by the Board and any other banking authority to which any Bank is subject for new negotiable time deposits in dollars of over $100,000 with maturities approximately equal to (a) the applicable Interest Period, in the case of the Adjusted CD Rate, and (b) three months, with respect to the Base CD Rate. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage. "Stockholders Equity" shall mean in respect of either Borrower at any date the sum of (a) its capital stock taken at par value, (b) its capital surplus and (c) its retained earnings less treasury stock, all computed in accordance with generally accepted accounting principles applied on a consistent basis. "Subordinated Indebtedness" shall mean with respect to either Borrower, Indebtedness of such Borrower having maturities and terms, and which is subordinated to payment of the Notes of such Borrower in a manner, approved in writing by the Administrative Agent and the Required Banks. "Subsidiary" shall mean any Person of which or in which any other Person (the "parent") and the other Subsidiaries of the parent own directly or indirectly 50% or more of: (a) the combined voting power of all classes of\ stock having general voting power under ordinary circumstances to elect a majority of the board of directors of such Person, if it is a corporation; (b) the capital interest or profits interest of such Person, if it is a partnership, joint venture or similar entity; or (c) the beneficial interest of such Person, if it is a trust, association or other unincorporated organization. "Support Agreement" shall mean the Amended and Restated Support Agreement, dated as of the date hereof, by and between Tandy and TCC substantially in the form of Exhibit 1.01-E hereto. "Tandy" shall have the meaning assigned such term in the introduction to this Agreement. "Tandy Guaranty" shall have the meaning specified in Section 7.01(d). "Taxes" shall have the meaning assigned such term in Section 2.18. "TCB" shall mean Texas Commerce Bank National Association. "TCB-Dallas" shall mean Texas Commerce Bank, National Association. "TCC" shall have the meaning assigned such term in the introduction to this Agreement. "Three-Month Secondary CD Rate" shall have the meaning assigned such term in the definition of "Alternate Base Rate." "Total Commitment" shall mean at any time the aggregate amount of the Banks' Commitments, as in effect at such time. "Total Tranche A Commitment" shall mean, at any time, the sum of the Tranche A Commitments of each of the Banks. "Total Tranche B Commitment" shall mean, at any time, the sum of the Tranche B Commitments of each of the Banks. "Tranche" shall mean each tranche of Loans determined with reference to the type of Commitments utilized in making same, i.e., Tranche A Loans or Tranche B Loans. "Tranche A Borrowing" shall mean a Borrowing consisting of simultaneous Tranche A Loans from each of the Banks. "Tranche A Commitment" shall mean, with respect to each Bank, the amount set forth opposite such Bank's name on the signature page hereof directly below the column entitled "Tranche A Commitment," as the same may be reduced from time to time pursuant to Section 2.07. "Tranche A Commitment Fee" shall have the meaning provided in Section 2.06(a). "Tranche A Loan" shall have the meaning assigned such term in Section 2.01(a). "Tranche A Maturity Date" shall mean June 12, 1992. "Tranche A Note" shall have the meaning assigned such term in Section 2.04(a). "Tranche B Borrowing" shall mean a Borrowing consisting of simultaneous Tranche B Loans from each of the Banks. "Tranche B Commitment" shall mean, with respect to each Bank, the amount set forth opposite such Bank's name on the signature page hereof below the column entitled "Tranche B Commitment," as the same may be reduced from time to time pursuant to Section 2.07. "Tranche B Commitment Fee" shall have the meaning assigned such term in Section 2.06(b). "Tranche B Loan" shall have the meaning assigned such term in Section 2.01(b). "Tranche B Maturity Date" shall mean June 12, 1994. "Tranche B Note" shall have the meaning assigned such term in Section 2.04(a). "Transferee" shall have the meaning assigned such term in Section 2.18. "TRC" shall mean Tandy Receivables Corporation, a Delaware corporation. "Type" shall mean any type of Loan determined with respect to the interest option applicable thereto, i.e., a Eurodollar Loan, a Certificate of Deposit Loan or an Alternate Base Rate Loan. "Wholly-owned Subsidiary" shall mean any Person of which Tandy or its other Wholly-owned Subsidiaries own directly or indirectly 100% of: (a) the issued and outstanding shares of stock (except shares required as directors' qualifying shares and shares constituting less than 2% of the issued and outstanding shares) and all Indebtedness for borrowed money; (b) the capital interest or profits interest of such Person, if it is a partnership, joint venture or similar entity; or (c) the beneficial interest of such Person, if it is a trust, association or other unincorporated organization. SECTION 1.02. Accounting Terms. Except as otherwise herein specifically provided, each accounting term used herein shall have the meaning given it under generally accepted accounting principles in effect from time to time applied on a consistent basis; provided, however, that each reference in Article VI and in the definition of any term used in Article VI to generally accepted accounting principles shall mean generally accepted accounting principles in effect on the date hereof. SECTION 1.03. Interpretation. (a) In this Agreement, unless a clear contrary intention appears: (i) the singular number includes the plural number and vice versa; (ii) reference to any gender includes each other gender; (iii) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; (iv) reference to any Person includes such Person's successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually, provided that nothing in this clause (iv) is intended to authorize any assignment not otherwise permitted by this Agreement; (v) reference to any agreement, document or instrument means such agreement, document or instrument as amended, supplemented or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof, and reference to any Note includes any note issued pursuant hereto in extension or renewal thereof and in substitution or replacement therefor; (vi) unless the context indicates otherwise, reference to any Article, Section, Schedule or Exhibit means such Article or Section hereof or such Schedule or Exhibit hereto; (vii) the words "including" (and with correlative meaning "include") means including, without limiting the generality of any description preceding such term; (viii) with respect to the determination of any period of time, the word "from" means "from and including" and the word "to" means "to but excluding;" and (ix) reference to any law means such as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time. (b) The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. (c) No provision of this Agreement shall be interpreted or construed against any Person solely because that Person or its legal representative drafted such provision. ARTICLE II THE LOANS SECTION 2.01. Commitments. (a) Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Bank, severally and not jointly, agrees to make revolving credit loans (each a "Tranche A Loan") to the Borrowers at any time and from time to time on and after the date hereof and until the earlier of the Tranche A Maturity Date and the termination of the Tranche A Commitment of such Bank in accordance with the terms hereof. Notwithstanding the foregoing, (i) the aggregate principal amount of all Tranche A Loans of a Bank at any time outstanding shall not exceed such Bank's Tranche A Commitment, (ii) the aggregate principal amount of all Tranche A Loans made by all Banks at any time outstanding shall not exceed the Total Tranche A Commitment of all Banks, (iii) the sum of the aggregate principal amount of all Tranche A Loans plus the aggregate principal amount of all Tranche B Loans made by all Banks at any time outstanding shall not exceed the Total Commitment and (iv) the sum of the aggregate principal amount of all Tranche A Loans plus all Tranche B Loans made by all Banks to TCC at any time outstanding shall not exceed the Borrowing Base. Within the foregoing limits, the Borrowers may borrow, repay, prepay and reborrow Tranche A Loans hereunder on and after the date hereof and prior to the Tranche A Maturity Date. (b) Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Bank, severally and not jointly, agrees to make revolving credit loans (each a "Tranche B Loan") to the Borrowers at any time and from time to time on and after the date hereof and until the earlier of the Tranche B Maturity Date and the termination of the Tranche B Commitment of such Bank in accordance with the terms hereof. Notwithstanding the foregoing, (i) the aggregate principal amount of all Tranche B Loans of a Bank at any time outstanding shall not exceed such Bank's Tranche B Commitment, (ii) the aggregate principal amount of all Tranche B Loans made by all Banks at any time outstanding shall not exceed the Total Tranche B Commitment of all Banks, (iii) the sum of the aggregate principal amount of all Tranche B Loans plus the aggregate principal amount of all Tranche A Loans made by all Banks at any time outstanding shall not exceed the Total Commitment and (iv) the sum of the aggregate principal amount of all Tranche B Loans plus all Tranche A Loans made by all Banks to TCC at any time outstanding shall not exceed the Borrowing Base. Within the foregoing limits, the Borrowers may borrow, repay, prepay and reborrow Tranche B Loans hereunder; on and after the date hereof and prior to the Tranche B Maturity Date. SECTION 2.02. Loans. (a) Each Borrowing made by the Banks to a Borrower on any one date shall be in a minimum aggregate principal amount of $5,000,000 and an integral multiple of $1,000,000, and shall consist of Loans of the same Tranche made ratably by the Banks in accordance with their respective Commitments; provided, however, that the failure of any Bank to make any Loan shall not relieve any other Bank of its obligation to lend hereunder. The first Loan by each Bank to a Borrower shall be made against delivery to such Bank of an appropriate Note, payable to the order of such Bank, executed by such Borrower, as referred to in Section 2.04. (b) Each Borrowing shall be a Tranche A Borrowing or a Tranche B Borrowing and comprised of Alternate Base Rate Loans, Certificate of Deposit Loans or Eurodollar Loans as a Borrower may request pursuant to Section 2.03. Each Bank may fulfill its Commitment with respect to any Eurodollar Loan or Certificate of Deposit Loan by causing, at its option, any domestic or foreign branch or Affiliate of such Bank to make such Loan, provided that the exercise of such option shall not affect the obligation of such Borrower, to repay such Loan in accordance with the terms of the applicable Note. Subject to the provisions of Section 2.03 and Section 2.10, Borrowings of more than one Type may be outstanding at the same time. (c) Subject to Section 2.15, each Bank shall make its portion, as determined under Section 2.15, of each Borrowing to a Borrower hereunder on the proposed date thereof by paying the amount required to the Funds Administrator in Houston, Texas in immediately available funds not later than 1:00 p.m., Houston, Texas time, and, subject to satisfaction of the conditions set forth in Article IV, the Funds Administrator shall promptly and in any event on the same day, credit the amounts so received to the general deposit account of such Borrower with the Funds Administrator, or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Banks. Loans of each Tranche shall be made by the Banks pro rata in accordance with Section 2.14. Unless the Funds Administrator shall have received notice from a Bank prior to the date of any Borrowing that such Bank will not make available to the Funds Administrator such Bank's portion of such Borrowing, the Funds Administrator may assume that such Bank has made such portion available to the Funds Administrator on the date of such Borrowing in accordance with this paragraph (c) and the Funds Administrator may, in reliance upon such assumption, make available to the relevant Borrower on such date a corresponding amount. If and to the extent that such Bank shall not have made such portion available to the Funds Administrator, such Bank and such Borrower severally agree to repay to the Funds Administrator forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to such Borrower until the date such amount is repaid to the Funds Administrator at (i) in the case of such Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Bank, the Federal Funds Effective Rate. If such Bank shall repay to the Funds Administrator such corresponding amount, such amount shall constitute such Bank's Loan as part of such Borrowing for purposes of this Agreement. SECTION 2.03. Notice of Borrowings. (a) In order to effect a Borrowing, a Borrower shall give irrevocable written or telex notice (or irrevocable telephone notice thereof, confirmed as soon as practicable by written notice) to the Funds Administrator (a "Notice of Borrowing") (i) in the case of an Alternate Base Rate Loan, not later than 11:00 a.m., Houston, Texas time, on the day of a proposed Borrowing, (ii) in the case of a Certificate of Deposit Loan, not later than 10:00 a.m., Houston, Texas time, two Business Days before a proposed Borrowing, and (iii) in the case of a Eurodollar Loan, not later than 10:00 a.m., Houston, Texas time, three Business Days before a proposed Borrowing. Each Notice of Borrowing shall be irrevocable and shall in each case refer to this Agreement and specify (i) the name of the Borrower, (ii) whether the Borrowing then being requested is a Tranche A Borrowing or a Tranche B Borrowing, (iii) whether the Borrowing then being requested is to be comprised of Alternate Base Rate Loans, Certificate of Deposit Loans or Eurodollar Loans, (iv) the date of such Borrowing (which shall be a Business Day) and amount thereof (which, in the case of a Borrowing to be comprised of Alternate Base Rate Loans, shall not be less than $5,000,000 and shall be in an integral multiple of $1,000,000, and which, in the case of a Borrowing to be comprised of Certificate of Deposit Loans or Eurodollar Loans, shall not be less than $25,000,000 and shall be in an integral multiple of $5,000,000) and (v) if such Borrowing is to be comprised of Certificate of Deposit Loans or Eurodollar Loans, the Interest Period or Interest Periods with respect thereto. If no election as to the Type of Loan is specified in any such notice by a Borrower, such Loan shall be an Alternate Base Rate Loan. If no Interest Period with respect to any Borrowing comprised of Certificate of Deposit Loans or Eurodollar Loans is specified in any such notice by a Borrower, then in the case of a Borrowing comprised of Certificate of Deposit Loans, a Borrower shall be deemed to have selected an Interest Period of 30 days duration and in the case of a Borrowing comprised of Eurodollar Loans, a Borrower shall be deemed to have selected an Interest Period of one month's duration. The Funds Administrator shall promptly advise the Administrative Agent and the Banks of any notice given by a Borrower pursuant to this Section 2.03(a) and of each Bank's portion of the requested Borrowing. (b) Notwithstanding any provision to the contrary in this Agreement, with respect to either Tranche, more than one Borrowing may occur on the same date. For purposes of the foregoing, Borrowings comprised of Loans having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings. Each Borrowing shall be comprised of Loans of the same Tranche. SECTION 2.04. Notes; Repayment of Loans. (a) The Tranche A Loans made by each Bank to a Borrower shall be evidenced by a note (a "Tranche A Note") duly executed on behalf of such Borrower, dated the Closing Date, in substantially the form attached hereto as Exhibit 2.04-A, payable to such Bank in a principal amount equal to its Tranche A Commitment on such date. The Tranche B Loans made by each Bank to a Borrower shall be evidenced by a note (a "Tranche B Note") duly executed on behalf of such Borrower, dated the Closing Date, in substantially the form attached hereto as Exhibit 2.04-B, payable to such Bank in a principal amount equal to its Tranche B Commitment on such date. The outstanding principal balance of each Tranche A Loan and Tranche B Loan, as evidenced by the relevant Note, shall be payable on the last day of the Interest Period applicable to such Loan or, if earlier, the Tranche A Maturity Date or the Tranche B Maturity Date, as applicable. Each Note shall bear interest from its date on the outstanding principal balance thereof as provided in Section 2.05. (b) Each Bank, the Administrative Agent or the Funds Administrator on its behalf, shall, and is hereby authorized by each Borrower to, endorse on the schedule attached to the relevant Notes delivered to such Bank (or a continuation of such schedule attached to such Notes and made a part thereof), or otherwise record in such Bank's internal records, an appropriate notation evidencing the date and amount of each Tranche A Loan or Tranche B Loan, as applicable from the Bank to a Borrower, as well as the date and amount of each payment and prepayment with respect thereto; provided, however, that the failure of any Bank, the Administrative Agent or the Funds Administrator to make such a notation or any error in such a notation shall not affect the obligation of a Borrower hereunder or under the Notes of such Bank to repay the principal amount of the Loans made by such Bank thereunder to such Bank together with all interest accruing thereon. SECTION 2.05. Interest on Loans. (a) Subject to the provisions of Section 2.08, each Alternate Base Rate Loan shall bear interest at a rate per annum, equal to the lesser of (i) the Highest Lawful Rate and (ii) the Alternate Base Rate (if the Alternate Base Rate is based on the Prime Rate, computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be; if the Alternate Base Rate is based on the Base CD Rate or the Federal Funds Effective Rate, computed on the basis of the actual number of days elapsed over a year of 360 days). Interest on each Alternate Base Rate Loan shall be payable on each applicable Interest Payment Date. (b) Subject to the provisions of Section 2.08, each Certificate of Deposit Loan shall bear interest at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days) equal to the lesser of (i) the Highest Lawful Rate and (ii) the Adjusted CD Rate for the Interest Period in effect for such Loan plus 1/2 of 1%. Interest on each Certificate of Deposit Loan shall be payable on each applicable Interest Payment Date. The applicable Adjusted CD Rate shall be determined by the Funds Administrator, and such determination shall be conclusive absent demonstrable error. The Funds Administrator shall promptly advise the Borrowers and each Bank of such determination. (c) Subject to the provisions of Section 2.08, each Eurodollar Loan shall bear interest at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days) equal to the lesser of (i) the Highest Lawful Rate and (ii) the LIBO Rate for the Interest Period in effect for such Loan plus 3/8 of 1%. Interest on each Eurodollar Loan shall be payable on each applicable Interest Payment Date. The LIBO Rate shall be determined by the Funds Administrator, and such determination shall be conclusive absent demonstrable error. The Funds Administrator shall promptly advise the Borrowers and each Bank of such determination. SECTION 2.06. Fees. (a) Tandy shall pay each Bank, through the Funds Administrator, on the last day of each March, June, September and December, and on the Tranche A Maturity Date, in immediately available funds, a commitment fee (such Bank's "Tranche A Commitment Fee") of 1/10 of 1% per annum on the amount of the Tranche A Commitment of such Bank, whether used or unused, during the quarter (shorter period commencing with the Execution Date or ending with the Tranche A Maturity Date) ending on such date. Tandy shall pay each Bank, through the Funds Administrator, on the last day of each March, June, September and December, and on the Tranche B Maturity Date, in immediately available funds, a commitment fee (such Bank's "Tranche B Commitment Fee") of 3/20 of 1% per annum on the amount of the Tranche B Commitment of such Bank, whether used or unused, during the quarter (shorter period commencing with the Execution Date or ending with the Tranche B Maturity Date) ending on such date. All Commitmet Fees under this Section 2.06(a) shall be computed on the basis of the actual number of days elapsed in a year of 360 days. The Commitment Fee due to each Bank with respect to each Tranche shall cease to accrue on the earlier of the Tranche A Maturity Date or Tranche B Maturity Date, as the case may be, or the termination of the applicable Tranche A Commitment or Tranche B Commitment of such Bank pursuant to Section 2.07. (b) Tandy shall pay to each Bank on the Execution Date a closing fee (the "Closing Fee") in an amount equal to 1/20 of 1% times the sum of the Commitments of such Bank. (c) Tandy shall pay the Administrative Agent, an agency fee (the "Agency Fee") in such amount as may be agreed between the Borrower and the Agent pursuant to that certain letter agreement of even date herewith between Tandy and the Administrative Agent (the "Agent's Letter"). (d) Tandy shall pay to TCB and Chemical Bank, for their own account, on or before the Execution Date all fees due to them pursuant to that certain letter agreement dated April 26, 1991 among Tandy, TCB-Dallas and Chemical Bank. SECTION 2.07. Termination and Reduction of Commitments; Subsequent Increases of Commitments. (a) Upon at least ten Business Days' prior written or telex notice to the Agents, the Borrowers may at any time in whole permanently terminate, or from time to time permanently reduce, the Total Commitment, ratably among the Banks in accordance with their respective Tranche A Commitment and Tranche B Commitment; provided, however, that any partial reduction of the Total Commitment shall be in a minimum aggregate principal amount of $20,000,000. (b) At the time the Commitments of any Bank are terminated or reduced pursuant to Section 2.07(a) or Section 2.10(b) the Borrowers shall pay to the Funds Administrator for the account of each such Bank, the Commitment Fees on the amount of the Commitments so terminated or reduced owed through the date of such termination or reduction. SECTION 2.08. Interest on Overdue Amounts. If either Borrower shall default in the payment of the principal of or interest on any Loan or any other amount due hereunder, by acceleration or otherwise, such Borrower shall on demand from time to time pay interest, to the extent permitted by law, on such defaulted amount up to (but not including) the date of actual payment (after as well as before judgment) at a rate per annum (computed on the basis of the actual number of days elapsed over a period of 360 days) equal to the lesser of (a) the Highest Lawful Rate and (b) the Alternate Base Rate plus 2% per annum. SECTION 2.09. Alternate Rate of Interest. (a) In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Interest Period for a Borrowing to be comprised of Eurodollar Loans, the Funds Administrator shall have determined (which determination shall be conclusive and binding upon the Borrowers) that dollar deposits in the amount of the requested principal amount of such Borrowing are not generally available in the London Interbank Market, or that the rate at which dollar deposits are being offered will not adequately and fairly reflect the cost to any Bank of making or maintaining the principal amount of its Eurodollar Loan comprising such Borrowing during such Interest Period, or reasonable means do not exist for ascertaining the LIBO Rate, the Funds Administrator shall as soon as practicable thereafter give written or telex notice of such determination to the Borrowers, the Administrative Agent and the Banks, and any request by a Borrower for the making of a Borrowing to be comprised of Eurodollar Loans shall, until the circumstances giving rise to such notice no longer exist, be deemed to be a request for a Borrowing to be comprised of Alternate Base Rate Loans or, if such Borrower shall so specify in its notice to the Funds Administrator, a request for a Borrowing to be comprised of Certificate of Deposit Loans so long as the circumstances giving rise to a notice under Section 2.09(b) shall not exist. Each determination of the Funds Administrator hereunder shall be conclusive absent demonstrable error. In the event of such determination, the Borrower requesting such Borrowing shall have the right to withdraw its Notice of Borrowing requesting Eurodollar Loans. (b) In the event, and on each occasion, that on or before the day on which the Adjusted CD Rate for a Borrowing to be comprised of Certificate of Deposit Loans is to be determined, the Funds Administrator shall have determined (which determination shall be conclusive and binding upon the Borrowers absent demonstrable error) that the Adjusted CD Rate for such Loan cannot be ascertained for any reason, including the inability or failure of the Funds Administrator to obtain sufficient bids in accordance with the terms of the definition of Fixed Certificate of Deposit Rate, or the Funds Administrator shall determine that the Adjusted CD Rate for the Certificate of Deposit Loans comprising such Borrowing will not adequately and fairly reflect the cost to any Bank of making or maintaining the principal amount of its Certificate of Deposit Loan during such Interest Period, the Funds Administrator shall, as soon as practicable thereafter, give written or telex notice of such determination to the Borrowers, the Administrative Agent and the Banks, and any request by a Borrower for the making of a Borrowing to be comprised of Certificate of Deposit Loans shall, until the circumstances giving rise to such notice no longer exist, be deemed to be a request for a Borrowing to be comprised of Alternate Base Rate Loans, or, if such Borrower shall so specify in its notice to the Funds Administrator, a request for a Borrowing to be comprised of Eurodollar Loans so long as the circumstances giving rise to a notice under Section 2.09(a) shall not exist. Each determination by the Funds Administrator hereunder shall be conclusive absent demonstrable error. In the event of such determination, the Borrower requesting such Borrowing shall have the right to withdraw its Notice of Borrowing requesting Certificate of Deposit Loans. SECTION 2.10. Prepayment of Loans. (a) Each Borrowing may be prepaid at any time and from time to time, in whole or in part, subject to the requirements of Section 2.13 but otherwise without premium or penalty, upon at least five Business Days' prior written or telex notice to the Funds Administrator; provided, however, that each such partial prepayment shall be in an integral multiple of $1,000,000 and a minimum aggregate principal amount of $5,000,000. (b) On the date of any termination or reduction of the Total Tranche A Commitment or the Total Tranche B Commitment pursuant to Section 2.07(a), each Borrower shall prepay so much of its Loans of such Tranche (up to the amount by which the Tranche A Commitment or the Tranche B Commitment, as the case may be, is so terminated or reduced) as shall be necessary in order that the aggregate principal amount of the Loans of such Tranche outstanding will not exceed the Tranche A Commitment or the Tranche B Commitment, as the case may be, following such termination or reduction. All prepayments under this paragraph shall be subject to Section 2.13. (c) On any date when the aggregate principal amount of the outstanding Loans owed by TCC exceeds the lesser of (i) the Total Commitment and (ii) the then-current Borrowing Base, TCC shall make a mandatory prepayment of the Loans in such amount as may be necessary so that the aggregate amount of outstanding Loans of TCC after giving effect to such prepayment does not exceed the lesser of (i) the Total Commitment and (ii) the then-current Borrowing Base. All prepayments under this paragraph shall be subject to Section 2.13. (d) Each notice of prepayment shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof) to be prepaid, shall specify whether the Borrowing to be prepaid is a Tranche A Borrowing or a Tranche B Borrowing, shall be irrevocable and shall commit the Borrower making such prepayment to prepay such Loan by the amount stated therein on the date stated therein. All prepayments shall be accompanied by accrued interest on the principal amount being prepaid to the date of prepayment. SECTION 2.11. Reserve Requirements; Change in Circumstances. (a) It is understood that the cost of each Bank of making or maintaining any of the Eurodollar Loans may fluctuate as a result of the applicability of reserve requirements imposed by the Board at the ratios provided for in Regulation D on the date hereof. The Borrowers agree to pay to each of the Banks from time to time such amounts as shall be necessary to compensate such Bank for the portion of the cost of making or maintaining Eurodollar Loans resulting from any such reserve requirements provided for in Regulation D as in effect on the date hereof, it being understood that the rates of interest applicable to Eurodollar Loans have been determined on the assumption that no such reserve requirements exist or will exist and that such rates do not reflect costs imposed on the Banks in connection with such reserve requirements. (b) Notwithstanding any other provision herein, if after the date of this Agreement any change in applicable law or regulation or in the interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof (whether or not having the force of law) shall change the basis of taxation of payments to any Bank of the principal of or interest on any Certificate of Deposit Loan or Eurodollar Loan made by such Bank or any other fees or amounts payable hereunder (other than taxes imposed on the overall net income of such Bank by the jurisdiction in which such Bank has its principal office or is located or by any political subdivision or taxing authority therein), or shall impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, such Bank (except any such reserve requirement which is reflected in the Adjusted CD Rate) or shall impose on such Bank or the London Interbank Market any other condition affecting this Agreement or the Certificate of Deposit Loans or Eurodollar Loans made by such Bank and the result of any of the foregoing shall be to increase the cost to such Bank of making or maintaining any Certificate of Deposit Loan or Eurodollar Loan or to reduce the amount of any sum received or receivable by such Bank hereunder (whether of principal, interest or otherwise) in respect thereof, by an amount deemed by such Bank in its sole discretion to be material, then such additional amount or amounts as will compensate such Bank for such additional costs or reduction will be paid to such Bank by each Borrower with respect to its Eurodollar Loans or Certificate of Deposit Loans, as applicable. (c) If any Bank shall have determined that the applicability of any law, rule, regulation or guideline adopted pursuant to or arising out of the July 1988 report of the Basle Committee on Banking Regulations and Supervisory Practices entitled "International Convergence of Capital Measurement and Capital Standards," or the adoption after the date hereof of any other law, rule, regulation or guideline regarding capital adequacy, or any change in any of the foregoing or in the interpretation or administration of any of the foregoing by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or any lending office of such Bank) or any Bank's holding company with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Bank's capital or on the capital of such Bank's holding company, if any, as a consequence of this Agreement or the Loans made by such Bank pursuant hereto to a level below that which such Bank or such Bank's holding company could have achieved but for such adoption, change or compliance (taking into consideration such Bank's policies and the policies of such Bank's holding company with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time Tandy shall pay to such Bank such additional amount or amounts as will compensate such Bank or such Bank's holding company for any such reduction suffered. Without limitation of the foregoing and without prejudicing the rights of any Bank to claim compensation under this Section 2.11(c) with respect to its Tranche B Loans, it is agreed that the interest rates and fees provided for in this Agreement have been determined on the understanding that the Banks will not be required to maintain capital against their Tranche A Commitments under currently applicable laws, regulations and regulatory guidelines, and that the Banks will be entitled to make claims under this paragraph in the event such understanding proves to be incorrect. (d) A certificate of each Bank setting forth such amount or amounts as shall be necessary to compensate such Bank (or participating banks or other entities pursuant to Article IX) as specified in paragraph (a), (b) or (c) above shall be delivered to the Borrower obligated with respect thereto and shall be conclusive absent demonstrable error. Each Borrower shall pay each Bank the amount shown as due from it on any such certificate within 10 days after its receipt of the same. (e) Failure on the part of any Bank to demand compensation for any increased costs or reduction in amounts received or receivable with respect to any Interest Period shall not constitute a waiver of such Bank's rights to demand compensation for any increased costs or reduction in amounts received or receivable in such Interest Period or in any other Interest Period. The protection of this Section 2.11 shall be available to each Bank regardless of any possible contention of the invalidity or inapplicability of any law, regulation or other condition which shall give rise to any demand by such Bank for compensation. (f) Nothing in this Section 2.11 shall entitle any Bank to receive interest at a rate per annum in excess of the Highest Lawful Rate. SECTION 2.12. Change in Legality. (a) Notwithstanding anything to the contrary herein contained, if any change in any law or regulation or in the interpretation thereof by any governmental authority charged with the administration or interpretation thereof shall make it unlawful for any Bank to make or maintain any Eurodollar Loan or to give effect to its obligations as contemplated hereby, then, by written notice to the Borrowers and to the Agents, such Bank may: (i) declare that Eurodollar Loans will not thereafter be made by such Bank hereunder, whereupon any request by a Borrower for a Borrowing to be comprised of Eurodollar Loans shall, as to such Bank only, be deemed a request for an Alternate Base Rate Loan unless such declaration shall be subsequently withdrawn; and (ii) require that all outstanding Eurodollar Loans made by it be converted to Alternate Base Rate Loans, in which event all such Eurodollar Loans shall be automatically converted to Alternate Base Rate Loans as of the effective date of such notice as provided in paragraph (b) below. In the event any Bank shall exercise its rights under (i) or (ii) above, all payments and prepayments of principal which would otherwise have been applied to repay the Eurodollar Loans that would have been made by such Bank or the converted Eurodollar Loans of such Bank shall instead be applied to repay the Alternate Base Rate Loans made by such Bank in lieu of, or resulting from the conversion of, such Eurodollar Loans; provided, however, the Alternate Base Rate Loans resulting from the conversion of such Eurodollar Loans shall be prepayable only at the times the converted Eurodollar Loans would have been prepayable, notwithstanding the provisions of Section 2.10(a). (b) For purposes of Section 2.12(a), a notice to a Borrower by any Bank shall be effective as to each Eurodollar Loan, if lawful, on the last day of the then current Interest Period or, if there are then two or more current Interest Periods, on the last day of each such Interest Period, respectively; otherwise, such notice shall be effective on the date of receipt by such Borrower. SECTION 2.13. Indemnity. (a) Each Borrower shall indemnify each Bank against any loss or expense which such Bank may sustain or incur as a consequence of (a) any failure by such Borrower to fulfill on the date of any Borrowing hereunder the applicable conditions set forth in Article IV, (b) any failure by such Borrower to borrow hereunder after delivery of a Notice of Borrowing or a notice of refinancing or continuation has been given pursuant to Section 2.03, (c) any payment, prepayment or conversion of a Certificate of Deposit Loan or Eurodollar Loan required by any other provision of this Agreement or otherwise made on a date other than the last day of the applicable Interest Period, (d) any default in payment or prepayment of the principal amount of any Loan or any part thereof or interest accrued thereon, as and when due and payable (at the due date thereof, by irrevocable notice of prepayment or otherwise), or (e) the occurrence of any Event of Default, including, but not limited to, any loss or reasonable expense sustained or incurred or to be sustained or incurred in liquidating or employing deposits from third parties acquired to effect or maintain such Loan or any part thereof as a Certificate of Deposit Loan or Eurodollar Loan. Such loss or reasonable expense shall include an amount equal to the excess, if any, as reasonably determined by each Bank of (i) its cost of obtaining the funds for the Loan being paid, prepaid or converted or not borrowed (based on the Adjusted CD Rate or the LIBO Rate applicable thereto) for the period from the date of such payment, prepayment or conversion or failure to borrow to the last day of the Interest Period for such Loan (or, in the case of a failure to borrow, the Interest Period for such Loan which would have commenced on the date of such failure to borrow) over (ii) the amount of interest (as reasonably determined by such Bank) that could be realized by such Bank in reemploying during such period the funds so paid, prepaid or converted or not borrowed. A certificate of each Bank setting forth any amount or amounts which such Bank is entitled to receive pursuant to this Section 2.13 shall be delivered to the Borrowers and shall be conclusive absent demonstrable error. Nothing in this Section 2.13 shall entitle any Bank to receive interest at a rate per annum in excess of the Highest Lawful Rate. (c) The provisions of this Section 2.13 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the invalidity or unenforceability of any term or provision of this Agreement or any Note, or any investigation made by or on behalf of any Bank. All amounts due under this Section 2.13 shall be payable on written demand therefor. SECTION 2.14. Pro Rata Treatment. Except as permitted under Section 2.11, Section 2.12 and Section 2.13, with respect to each Tranche, each Borrowing, each payment or prepayment of principal of the Notes of such Tranche, each payment of interest on such Notes, each other reduction of the principal or interest outstanding under such Notes, however achieved, each payment of the relevant Commitment Fees and each reduction of the relevant Commitments shall be made pro rata among the Banks in the proportions that their respective Tranche A Commitment or Tranche B Commitment bears to the Total Tranche A Commitment or Total Tranche B Commitment. SECTION 2.15. Refinancings. A Borrower may refinance all or any part of any Borrowing with a Borrowing of the same or a different Type made pursuant to Section 2.02, subject to the conditions and limitations set forth herein and elsewhere in this Agreement, including refinancings of Tranche A Borrowings with Tranche B Borrowings and Tranche B Borrowings with Tranche A Borrowings. Any Borrowing or part thereof so refinanced shall be deemed to be repaid in accordance with Section 2.07 with the proceeds of a new Borrowing hereunder and the proceeds of the new Borrowing, to the extent they do not exceed the principal amount of the Borrowing being refinanced, shall not be paid by the Banks to the Funds Administrator or by the Funds Administrator to such Borrower pursuant to Section 2.02(c). SECTION 2.16. Payments. (a) The Borrowers shall make all payments (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder and under any other Loan Document not later than 1:00 p.m., Houston, Texas time, on the date when due in dollars to the Funds Administrator at its offices at 712 Main Street, Houston, Texas, in immediately available funds. (b) Whenever any payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder or under any other Loan Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or Fees, if applicable. SECTION 2.17. Sharing of Setoffs. With respect to each Tranche, each Bank agrees that if it shall, in any manner, including through the exercise of a right of banker's lien, setoff or counterclaim against a Borrower, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Bank under any applicable bankruptcy, insolvency or other similar law or otherwise, obtain payment (voluntary or involuntary) in respect of a Note of such Borrower of such Tranche held by it as a result of which the unpaid principal portion of the Note of such Borrower of such Tranche held by it shall be proportionately less than the unpaid principal portion of the Note of such Borrower of such Tranche held by any other Bank, it shall be deemed to have simultaneously purchased from such other Bank a participation in the Note of such Borrower of such Tranche held by such other Bank, so that the aggregate unpaid principal amount of the Notes of such Borrower and participations in Notes of such Borrower of such Tranche held by each Bank shall be in the same proportion to the aggregate unpaid principal amount of all Notes of such Borrower of such Tranche then outstanding as the principal amount of the Note of such Borrower of such Tranche held by it prior to such exercise of banker's lien, setoff or counterclaim was to the principal amount of all Notes of such Borrower outstanding prior to such exercise of banker's lien, setoff or counterclaim; provided, however, that if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.17 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest. Each Borrower expressly consents to the foregoing arrangements and agrees that any Person holding a participation in a Note deemed to have been so purchased may exercise any and all rights of banker's lien, setoff or counterclaim with respect to any and all moneys owing by each Borrower to such Bank as fully as if such Bank had made a Loan directly to each Borrower in the amount of such participation. SECTION 2.18. Payments Free of Taxes. (a) Any and all payments by a Borrower hereunder shall be made, in accordance with Section 2.02(c), free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on either Agent's or any Bank's (or any transferee's or assignee's, including a participation holder's (any such entity a "Transferee") net income and franchise taxes imposed on either Agent or any Bank (or Transferee) by the United States or any jurisdiction under the laws of which it is organized or any political subdivision thereof (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If a Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to the Banks (or any Transferee or either Agent, (i) the sum payable shall be increased by the amount necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.18) such Bank (or Transferee) or such Agent (as the case may be) shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant taxing authority or other governmental authority in accordance with applicable law. (b) In addition, each Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as "Other Taxes"). (c) Each Borrower will indemnify each Bank (or Transferee) and each Agent for the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.18) paid by such Bank (or Transferee or such Agent, as the case may be, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted by the relevant taxing authority or other governmental authority. Such indemnification shall be made within 30 days after the date any Bank (or Transferee) or either Agent, as the case may be, makes written demand therefor. If a Bank (or Transferee) or an Agent shall become aware that it is entitled to receive a refund in respect of Taxes or Other Taxes, it shall promptly notify the applicable Borrower of the availability of such refund and shall, within 30 days after receipt of a request by such Borrower, apply for such refund at such Borrower's expense. If any Bank (or Transferee) or the Funds Administrator receives a refund in respect of any Taxes or Other Taxes for which such Bank (or Transferee) or the Funds Administrator has received payment from a Borrower hereunder it shall promptly notify such Borrower of such refund and shall, within 30 days after receipt of a request by such Borrower (or promptly upon receipt, if such Borrower has requested application for such refund pursuant hereto), repay such refund to such Borrower, net of all out-of-pocket expenses of such Bank and without interest; provided that such Borrower, upon the request of such Bank (or Transferee) or the Funds Administrator, agrees to return such refund (plus penalties, interest or other charges) to such Bank (or Transferee) or the Funds Administrator in the event such Bank (or Transferee) or the Funds Administrator is required to repay such refund. (d) Within 30 days after the date of any payment of Taxes or Other Taxes withheld by a Borrower in respect of any payment to any Bank (or Transferee) or the Funds Administrator, such Borrower will furnish to the Funds Administrator, at its address referred to in Section 9.01, the original or a certified copy of a receipt evidencing payment thereof. (e) Without prejudice to the survival of any other agreement contained herein, the agreements and obligations contained in this Section 2.18 shall survive the payment in full of the principal of and interest on all Loans made hereunder. (f) Each Bank (or Transferee) which is organized outside the United States shall promptly notify the Borrowers of any changes in its funding office and upon written request of the Borrowers shall, prior to the immediately following due date of any payment by a Borrower hereunder, deliver to the Borrowers such certificates, documents or other evidence, as required by the Code or Treasury Regulations issued pursuant thereto, including Internal Revenue Service Form 1001 or Form 4224 and any other certificate or statement of exemption required by Treasury Regulation Section 1.1441-1(a) or Section 1.1441-6(c) or any subsequent version thereof, properly completed and duly executed by such Bank (or Transferee) establishing that such payment is (i) not subject to withholding under the Code because such payment is effectively connected with the conduct by such Bank (or Transferee) of a trade or business in the United States or (ii) totally exempt from United States tax under a provision of an applicable tax treaty. Unless the Borrowers and the Funds Administrator have received forms or other documents satisfactory to them indicating that payments hereunder or under the Notes are not subject to United States withholding tax or are subject to such tax at a rate reduced by an applicable tax treaty, the Borrowers or the Funds Administrator shall withhold taxes from such payments at the applicable statutory rate in the case of payments to or for any Bank (or Transferee) or assignee organized under the laws of a jurisdiction outside the United States. (g) No Borrower shall be required to pay any additional amounts to any Bank (or Transferee) in respect of United States withholding tax pursuant to paragraph (a) above if the obligation to pay such additional amounts would not have arisen but for a failure by such Bank (or Transferee) to comply with the provisions of paragraph (f) above unless such failure results from (i) a change in applicable law, regulation or official interpretation thereof or (ii) an amendment, modification or revocation of any applicable tax treaty or a change in official position regarding the application or interpretation thereof, in each case after the Closing Date (and, in the case of a Transferee, after the date of assignment or transfer). (h) Any Bank (or Transferee) claiming any additional amounts payable pursuant to this Section 2.18 shall use reasonable efforts (consistent with legal and regulatory restrictions) to file any certificate or document requested by a Borrower or to change the jurisdiction of its applicable lending office if the making of such a filing or change would avoid the need for or reduce the amount of any such additional amounts which may thereafter accrue and would not, in the sole determination of such Bank, be otherwise disadvantageous to such Bank (or Transferee). (i) If any Bank (or Transferee) requests compensation pursuant to this Section 2.18 hereof, the Borrowers may give notice to such Bank (with a copy to the Agents) that it wishes to seek one or more Eligible Assignees (which may be one or more of the Banks) to assume the Commitments of such Bank and to purchase its outstanding Loans and Notes. Each Bank (or Transferee) requesting compensation pursuant to Section 2.18 hereto agrees to sell all of its Commitments, its Loans and its Notes pursuant to Section 9.03 to any such Eligible Assignee for an amount equal to the sum of the outstanding unpaid principal of and accrued interest on such Loans and Notes plus all Commitment Fees and other fees and amounts due such Bank (or Transferee) hereunder calculated, in each case, to the date such Commitments, Loans and Notes are purchased, whereupon such Bank (or Transferee) shall have no further Commitments or other obligation to either Borrower hereunder or under any Note. SECTION 2.19. Classification Downgrade. In the event the facilities available under this Agreement or any Loan or the Notes shall be classified as a "highly leveraged transaction" in accordance with published United States regulations (an "HLT Classification") by (a) either Agent or (b) any United States governmental authority with supervisory responsibility over either Agent or any of the Banks, either Agent or any of the Banks so advised shall forthwith notify the Borrowers and the Administrative Agent (who shall forthwith notify each of the Banks and the other Agent). Upon receipt of such notification, the Borrowers and the Agents shall forthwith commence discussions and in good faith negotiate revisions to this Agreement (including interest rate, fees, term, covenants, representations and any other items deemed relevant) so as to reflect market terms and conditions then offered for facilities reasonably similar in type, term and amount to that under this Agreement and similarly classified. Any such revisions shall be subject to the approval of the Agents and the Required Banks. If the Borrowers and the Required Banks shall fail to agree on such an increase within 90 days after notice of such HLT Classification is given to the Agents and the Banks as provided above, then (i) the Administrative Agent shall, if requested by the Required Banks, by notice to the Borrowers, immediately terminate the Commitments of the Banks, and (ii) upon such termination, the Borrowers shall prepay the Loans outstanding hereunder in full, together with any interest accrued thereon to the date of such prepayment and any amounts payable pursuant to Section 2.13 hereof in connection therewith. The Banks acknowledge that (without prejudice to the preceding sentence) an HLT Classification shall not per se constitute a Default or an Event of Default hereunder. ARTICLE III REPRESENTATIONS AND WARRANTIES Each Borrower represents and warrants as to itself and Tandy represents and warrants as to each of its Subsidiaries that: SECTION 3.01. Organization, Corporate Powers. Each Borrower and each of its Significant Subsidiaries is duly organized, validly existing and in good standing under the laws of the state of its incorporation or organization, has the requisite power and authority to own its property and assets and to carry on its business as now conducted and is qualified to do business in every jurisdiction where such qualification is required, except where the failure so to qualify would not have a material adverse effect on the condition, financial or otherwise, of Tandy or TCC. Each of Tandy and TCC has the corporate power to execute, deliver and perform its obligations under this Agreement and the other Loan Documents to which it is a party, to borrow hereunder, to execute and deliver the Notes to which it is a party and to comply with the terms of the Operating Agreement and the Support Agreement. TCC does not and will not have any Subsidiaries other than TRC. SECTION 3.02. Authorization. The execution, delivery and performance of this Agreement, the Operating Agreement and the Support Agreement, the borrowings hereunder, and the execution and delivery of the Notes by the Borrowers and the Tandy Guaranty by Tandy (a) have been duly authorized by all requisite corporate and, if required, stockholder action on the part of the Borrowers and (b) will not (i) violate (A) any provision of law, statute, rule or regulation or the certificate of incorporation or the bylaws of either Borrower, (B) any order of any court, or any rule, regulation or order of any other agency of government binding upon either Borrower or (C) any provisions of any indenture, agreement or other instrument to which either Borrower is a party, or by which either Borrower or Tandy or any of its properties or assets are or may be bound, (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under any indenture, agreement or other instrument referred to in (b)(i)(C) above or (iii) result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any property or assets of either Borrower. SECTION 3.03. Governmental Approval. No registration with or consent or approval of, or other action by, any federal, state or other governmental agency, authority or regulatory body is or will be required in connection with the execution, delivery and performance of this Agreement, the execution and delivery of the Notes, the Borrowings hereunder or the performance of the Operating Agreement and the Support Agreement by either Borrower. SECTION 3.04. Enforceability. This Agreement, the Operating Agreement and the Support Agreement have been duly executed and delivered by the Borrowers and constitute legal, valid and binding obligations of the Borrowers, and the Notes and the Tandy Guaranty, when duly executed and delivered by the Borrower signatory thereto, will constitute legal, valid and binding obligations of such Borrower, in each case enforceable in accordance with their respective terms (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium and similar laws affecting creditors' rights generally). SECTION 3.05. Financial Statements. (a) The audited consolidated financial statements of Tandy and TCC, in each case, as at June 30, 1990, copies of which have been furnished to the Banks, have been prepared in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding fiscal year, and present fairly the financial conditions of Tandy and its Subsidiaries and TCC, respectively, as at such date and the results of their operations for the period then ended. (b) The Forms 10-Q of Tandy and TCC, in each case, as at each of December 31, 1990 and March 31, 1991, copies of which have been furnished to the Banks, have been prepared in accordance with all applicable rules, regulations and guidelines of the Securities and Exchange Commission and present fairly the financial condition of Tandy and its Subsidiaries and TCC, respectively, as at such dates and the results of their operations for the periods then ended, subject to year-end audit adjustments. SECTION 3.06. No Material Adverse Change. There has been no material adverse change in the businesses, assets, operations, prospects or condition, financial or otherwise, of Tandy or TCC since June 30, 1990. SECTION 3.07. Title to Properties. Each of Tandy and TCC has good and marketable title to, or valid leasehold interests in, all its properties and assets, except for such properties as are no longer used or useful in the conduct of its businesses or as have been disposed of in the ordinary course of business and except for minor defects in title that do not interfere with the ability of Tandy or TCC to conduct its business as now conducted. SECTION 3.08. Litigation; Compliance with Laws; etc. (a) There are not any actions, suits or proceedings at law or in equity or by or before any governmental instrumentality or other agency or regulatory authority now pending or, to the knowledge of Tandy or TCC, threatened against or affecting Tandy or TCC or any other Subsidiary of Tandy or the businesses, assets or rights of Tandy or TCC or any other Subsidiary of Tandy (i) which involve this Agreement, the Operating Agreement or the Support Agreement or any of the transactions contemplated hereby or thereby or (ii) as to which there is a reasonable possibility of an adverse determination and which, if adversely determined, could, individually or in the aggregate, materially impair the ability of Tandy or TCC to conduct business substantially as now conducted, or materially and adversely affect the businesses, assets, operations, prospects or condition, financial or otherwise, of Tandy or TCC, or impair the validity or enforceability of or the ability of Tandy or TCC to perform its obligations under this Agreement, the Operating Agreement, the Support Agreement or any of the Notes or other Loan Documents. (b) Neither Tandy nor TCC is in violation of any law, the breach or consequence of which would materially and adversely affect the ability of Tandy or TCC to carry on its business, or in default under any material order, writ, injunction, award or decree of any court, arbitrator, administrative agency or other governmental authority binding upon it or its assets or any material indenture, mortgage, contract, agreement or other undertaking or instrument to which it is a party or by which any of its properties may be bound, and nothing has occurred which would materially and adversely affect the ability of Tandy or TCC to carry on its business or perform its obligations under any such order, writ, injunction, award or decree or any such material indenture, mortgage, contract, agreement or other undertaking or instrument. SECTION 3.09. Agreements; No Default. (a) Neither Tandy nor TCC is a party to any agreement or instrument or subject to any corporate restriction that has a present material and adverse effect on the business, properties, assets, operations, prospects or condition, financial or otherwise, of Tandy or TCC, respectively. (b) Neither Tandy nor TCC is in default in any manner that would materially and adversely affect the business, properties, assets, operations, prospects or condition, financial or otherwise, of Tandy or TCC or the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any material agreement or instrument to which it is a party. (c) Neither Tandy nor any of its Subsidiaries is in default under any agreement or instrument to which Tandy or any Subsidiary is a party or by which any of their respective properties or assets is bound or affected, which default might materially and adversely affect the financial condition or operations of Tandy and its Subsidiaries taken as a whole. No Event of Default has occurred and is continuing. SECTION 3.10. Federal Reserve Regulations. (a) Neither Tandy nor TCC is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock. (b) No part of the proceeds of the Loans will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, (i) to purchase or carry Margin Stock or to extend credit to others for the purpose of purchasing or carrying Margin Stock or to refund indebtedness originally incurred for such purpose, or (ii) for any purpose which entails a violation of, or which is inconsistent with, the provisions of the Regulations of the Board, including Regulations G, T, U or X; provided, however, Tandy may acquire Margin Stock if, upon the acquisition of such Margin Stock, 25% or less of Tandy's total assets subject to the restrictions set forth in Section 6.01 would then be composed of Margin Stock, and furnish to the Administrative Agent upon its request, a statement in conformity with the requirements of Federal Reserve Form U-1 referred to in Regulation U. SECTION 3.11. Taxes. Each Borrower and each of its Subsidiaries has filed all tax returns which are required to have been filed and has paid, or made adequate provisions for the payment of, all of its taxes which are due and payable, except such taxes, if any, as are being contested in good faith and by appropriate proceedings and as to which such reserves or other appropriate provisions as may be required by generally accepted accounting principles have been maintained. The federal income tax liability of Tandy and its Subsidiaries has been audited by the Internal Revenue Service and has been finally determined and satisfied (or the time for audit has expired) for all tax years up to and including the tax year ended June 30, 1979. Tandy deems the amounts and maximum final judgments from such action to be immaterial to Tandy. Neither Borrower is aware of any proposed assessment against it or any of its Subsidiaries for additional taxes (or any basis for any such assessment) which might be material to either Borrower and its Subsidiaries taken as a whole. SECTION 3.12. Pension and Welfare Plans. Each Plan complies in all material respects with all applicable statutes and governmental rules and regulations, and: (a) no Reportable Event has occurred and is continuing with respect to any Plan, (b) neither Tandy, TCC nor any ERISA Affiliate has withdrawn from any Plan or instituted steps to do so, and (c) except as listed on Exhibit 3.12, no steps have been instituted to terminate any Plan. No condition exists or event or transaction has occurred in connection with any Plan which could result in the incurrence by Tandy, TCC or any ERISA Affiliate of any material liability, fine or penalty. Neither Tandy, TCC nor any ERISA Affiliate is a member of, or contributes to, any multiple employer Plan as described in section 4064 of ERISA. Neither Borrower nor any of its Subsidiaries has any contingent liability with respect to any post-retirement "welfare benefit plans," as such term is defined in ERISA. SECTION 3.13. No Material Misstatements. Neither this Agreement, the other Loan Documents, the Confidential Information Memorandum nor any other document delivered by or on behalf of Tandy or any of its Affiliates (including each Borrower's Annual Report on Form 10-K for 1990 and each Borrower's Quarterly Report on Form 10-Q for the three fiscal quarters ended at March 31, 1991) in connection with any Loan Document or included therein contained or contains any material misstatement of fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. SECTION 3.14. Investment Company Act; Public Utility Holding Company Act. Neither Tandy nor TCC is an "investment company" or a company "controlled" by an investment company as defined in, or subject to regulation under, the Investment Company Act of 1940. Neither Tandy nor TCC is a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. SECTION 3.15. Business; Liabilities of TCC. TCC has conducted no business other than the purchase, service and collection of accounts receivable under the Operating Agreement and, in September 1987, the one time purchase of existing Radio Shack customer accounts created under an agreement with Citibank, N.A. SECTION 3.16. Compliance with Laws. To the best knowledge of each Borrower, after due investigation, each Borrower and its Subsidiaries are in material compliance with all statutes and governmental rules and regulations applicable to them. SECTION 3.17. Maintenance of Insurance. Each Borrower maintains, and causes each of its Subsidiaries to maintain, insurance to such extent and against such hazards and liabilities as is commonly maintained by companies similarly situated. SECTION 3.18. Existing Liens. None of the assets of either Borrower or any of its Subsidiaries is subject to any Lien, except: (a) Liens for current taxes not delinquent or taxes being contested in good faith and by appropriate proceedings and as to which such reserves or other appropriate provisions as may be required by generally accepted accounting principles are being maintained; (b) carriers', warehousemen's, mechanics', materialmen's and other like statutory Liens arising in the ordinary course of business securing obligations which are not overdue for a period of more than 90 days or which are being contested in good faith and by appropriate proceedings and as to which such reserves or other appropriate provisions as may be required by generally accepted accounting principles are being maintained; (c) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation; (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, and other obligations of a like nature incurred in the ordinary course of business, and Liens securing reimbursement obligations created by open letters of credit for the purchase of inventory; (e) Liens granted by a Subsidiary of Tandy (other than TCC and TRC) to secure such Subsidiary's Indebtedness to Tandy or to any other Subsidiary of Tandy; (f) Liens granted by TRC to the Tandy Master Trust to secure TRC's Indebtedness to the Tandy Master Trust; (g) Liens, if any, disclosed in the financial statements referred to in Section 3.05; and (h) Liens listed on Exhibit 3.18. SECTION 3.19. Environmental Matters. Each Borrower and each of its Subsidiaries has complied in all material respects with all federal, state, local and other statutes, ordinances, orders, judgments, rulings and regulations relating to environmental pollution or to environmental regulation or control. Neither Borrower nor any of its Subsidiaries have received notice of any failure so to comply which alone or together with any other such failure could result in a material adverse effect on the business, assets, operations, prospects or condition (financial or otherwise) of such Borrower or such Subsidiary. None of the facilities of either Borrower or any of its Subsidiaries manage any hazardous wastes, hazardous substances, hazardous materials, toxic substances or toxic pollutants, as those terms are used in the Resource Conservation and Recovery Act, the Comprehensive Environmental Response Compensation and Liability Act, the Hazardous Materials Transportation Act, the Toxic Substance Control Act, the Clean Air Act or the Clean Water Act, in violation of any regulations promulgated pursuant thereto or in any other applicable law where such violation could result, individually or together with other violations, in a material adverse effect on the business, assets, operations, prospects or condition (financial or otherwise) of such Borrower or such Subsidiary ARTICLE IV CONDITIONS OF LENDING The obligations of the Banks to make Loans hereunder shall be subject to the following conditions precedent: SECTION 4.01. All Borrowings. On the date of each Borrowing hereunder: (a) The Funds Administrator shall have received a Notice of Borrowing as required by Section 2.03. (b) The representations and warranties set forth in Article III (except, in the case of a Borrowing in which the aggregate principal amount of Loans outstanding is not increased, Sections 3.06 and 3.08(a)) hereof shall be true and correct in all material respects with the same effect as though made on and as of such date. (c) Each Borrower shall be in compliance with the terms and provisions contained herein on its part to be observed or performed, and at the time of and immediately after such Borrowing no Event of Default or Default shall have occurred and be continuing. Each Borrowing hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the matters specified in paragraphs (b) and (c) of this Section 4.01. SECTION 4.02. All Borrowings to TCC. On the date of each Borrowing hereunder to TCC, the Banks shall have received a Borrowing Base Certificate setting forth the Borrowing Base accompanied by an accounts receivable aging schedule in the form of Exhibit 1.01-D hereto. SECTION 4.03. First Borrowing to Either Borrower. The obligations of the Banks to make Loans hereunder on the Closing Date to either Borrower are subject to the following additional conditions precedent: (a) The Banks shall have received a favorable written opinion of Rudolph L. Ennis, Staff Attorney of Tandy, to the effect set forth in Exhibit 4.03 hereto, dated the Closing Date, addressed to the Banks and satisfactory to Andrews & Kurth, special counsel for the Agents; provided, however, it is not a condition precedent to the Loans to be made to Tandy hereunder that such opinion address either the Operating Agreement or the Support Agreement. (b) All legal matters incident to this Agreement, the Notes and the Borrowings hereunder shall be satisfactory to Andrews & Kurth, special counsel for the Agents. (c) The Banks shall have received (i) a copy of the certificate of incorporation, as amended, of each Borrower, certified by the Secretary of State of Delaware and a certificate as to the good standing of and charter documents filed by each Borrower from such Secretary of State; (ii) a copy of the certificate of authority to do business in the State of Texas, certified by the Secretary of State of Texas and a certificate as to the good standing of each Borrower from the Comptroller of the State of Texas; (iii) a certificate of the Secretary or an Assistant Secretary of each Borrower, dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the bylaws of such Borrower as in effect on the date of such certificate and at all times since a date prior to the date of the resolutions described in (B) below, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Borrower authorizing the execution, delivery and performance of this Agreement, the Operating Agreement, the Support Agreement and the Notes to be delivered by such Borrower and the Borrowings by such Borrower hereunder and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the certificate of incorporation of such Borrower has not been amended since the date of the last amendment thereto shown on the good standing certificate furnished pursuant to (i) above, and (D) as to the incumbency and specimen signature of each officer of such Borrower executing this Agreement, the Notes delivered by such Borrower or any other document delivered in connection herewith or therewith; (iii) a certificate of another officer of such Borrower as to the incumbency and specimen signature of the Secretary or such Assistant Secretary of such Borrower; and (iv) such other documents as any Bank or Andrews & Kurth, special counsel for the Agents, may reasonably request. (d) The Banks shall have received a certificate, dated the Closing Date and signed by the chief financial officer of Tandy, confirming compliance with the conditions precedent set forth in paragraphs (b) and (c) of Section 4.01. (e) The Administrative Agent shall have received the Notes duly executed by the Borrowers payable to the order of the respective Banks and otherwise complying with the provisions of Section 2.04. (f) The Administrative Agent shall have received a counterpart of the Agent's Letter duly executed by Tandy. SECTION 4.04. First Borrowing to TCC. The obligations of the Banks to make its initial Loans hereunder to TCC are subject to the following additional conditions precedent: (a) Tandy and TCC shall have duly executed and delivered a certificate certifying that attached thereto is a true and complete copy of the Operating Agreement together with all amendments thereto. (b) Tandy and TCC shall have duly executed and delivered the Support Agreement. (c) The Banks shall have received a favorable written opinion of Rudolph L. Ennis, Staff Attorney of Tandy, the Borrowers, dated on or prior to the date of the initial Loan to TCC, covering those matters set forth in Exhibit 4.03 hereto relating to the Operating Agreement and the Support Agreement, addressed to the Banks and satisfactory to Andrews & Kurth, special counsel for the Agents. (d) All legal matters incident to the Operating Agreement and the Support Agreement shall be satisfactory to Andrews & Kurth, special counsel for the Agents, including evidence that the agencies that have rated the commercial paper of TCC have consented to the Support Agreement. (e) The Banks shall have received a certificate, dated the date of the initial borrowing by TCC and signed by the chief financial officer of TCC, confirming compliance with the conditions precedent set forth in paragraphs (b) and (c) of Section 4.01. ARTICLE V AFFIRMATIVE COVENANTS So long as this Agreement shall remain in effect or the principal of or interest on any Note, any Commitment Fee or any other expense or amount payable hereunder shall be unpaid and until the Commitments of the Banks shall expire or terminate, unless the Required Banks shall otherwise consent in writing, the Borrowers covenant and agree with each Bank that: SECTION 5.01. Existence. Each Borrower will maintain and preserve, and, subject to the provisions of clauses (w), (x) and (y) of Section 6.03, will cause each of its Significant Subsidiaries to maintain and preserve, its respective existence as a corporation or other form of business organization, as the case may be, and all rights, privileges, licenses, patents, patent rights, copyrights, trademarks, trade names, franchises and other authority to the extent material and necessary for the conduct of its respective businesses in the ordinary course as conducted from time to time, including, in the case of Tandy, its good standing and qualification to do business in the State of Texas. TCC is not required to be qualified to do business in the State of Texas as of the Effective Date. SECTION 5.02. Repair. Each Borrower will maintain, preserve and keep, and will cause each of its Significant Subsidiaries to maintain, preserve and keep, all of its properties in good repair, working order and condition, and from time to time make, and each Borrower will make, and will cause each of its Significant Subsidiaries to make, all necessary and proper repairs, renewals, replacements, additions, betterments and improvements thereto so that at all times the efficiency thereof shall be fully preserved and maintained; each Borrower will at all times do or cause to be done all things necessary to preserve, renew and keep in full force and effect, and will cause each of its Significant Subsidiaries to do or cause to be done all things necessary to preserve, renew and keep in full force and effect, the rights, licenses, permits, franchises, patents, copyrights, trademarks and trade names material to the conduct of its businesses; maintain and operate such businesses in substantially the manner in which they are presently conducted and operated (subject to changes in the ordinary course of business); comply in all material respects with all laws and regulations applicable to the operation of such businesses whether now in effect or hereafter enacted and with all other applicable laws and regulations; and take all action which may be required to obtain, preserve, renew and extend all licenses, permits and other authorizations which may be material to the operation of such businesses. SECTION 5.03. Insurance. The Borrowers will maintain, on a consolidated basis, insurance to such extent and against such hazards and liabilities as is commonly maintained by companies similarly situated or as the Agents or the Required Banks may reasonably request from time to time. SECTION 5.04. Obligations and Taxes. Each Borrower will, pay and discharge, and will cause each of its Subsidiaries to pay and discharge, when due, all taxes, assessments and governmental charges or levies imposed upon such Borrower or such Subsidiary, as the case may be, as well as all lawful claims for labor, materials and supplies or otherwise unless and only to the extent that such Borrower or such Subsidiary, as the case may be, is contesting such taxes, assessments and governmental changes, levies or claims in good faith and by appropriate proceedings and such Borrower or such Subsidiary has set aside on its books such reserves or other appropriate provisions therefor as may be required by generally accepted accounting principles. SECTION 5.05. Financial Statements; Reports. Each Borrower will furnish to the Agents and each Bank: (a) Annual Audit Reports. Within 90 days after the end of each fiscal year of each Borrower, a copy of the annual audit report of Tandy and its Subsidiaries prepared on a consolidated basis and of TCC, in each case, in conformity with generally accepted accounting principles consistently applied and certified by Price Waterhouse or another independent certified public accountant of recognized national standing; (b) Quarterly Financial Statements. (i) Within 45 days after the end of each quarter (except the last quarter) of each fiscal year of each Borrower, a copy of the Form 10-Q of Tandy and of TCC, in each case, for such quarter, prepared in accordance with the rules, regulations and guidelines of the Securities and Exchange Commission, subject to normal year end audit adjustments and (ii) within 45 days after the end of each quarter of each fiscal year of TCC, an unaudited unconsolidated balance sheet and statement of cash flows, as at the close of such quarter and for such quarter, together with a certificate of the chief financial officer or the chief accounting officer of TCC certifying that such financial statements were prepared in accordance with generally accepted accounting principles consistently applied and demonstrating in reasonable detail compliance by TCC as at the end of such fiscal quarter with Section 6.05 and setting forth the tangible net worth on an unconsolidated basis of TCC as at the end of such fiscal quarter and the Net Earnings Available for Fixed Charges and the Fixed Charges (as such terms are defined in, and calculated pursuant to, the Support Agreement) of TCC for the twelve-month period ending at the end of such fiscal quarter. (c) Officer's Certificate. Together with the financial statements furnished by the Borrowers under the preceding clauses (a) and (b), a certificate of each Borrower's chief financial officer, dated the date of such annual audit report or such quarterly financial statement, as the case may be, to the effect that no Event of Default or Default, has occurred or is continuing, or if there is any such event, describing it and the steps, if any, being taken to cure it; (d) Borrowing Base Certificate of TCC. Within 20 days after the end of each calendar month, a Borrowing Base Certificate and an accounts receivable aging schedule substantially in the form of Exhibit 1.01-C hereto, provided, however, that if no Loans to TCC are outstanding hereunder, such certificate and schedule shall be provided concurrently with any delivery under clauses (a) and (b) above; (e) SEC and Other Reports. Copies of each filing and report made by either Borrower or any Subsidiary of Tandy with or to any securities exchange or the Securities and Exchange Commission and each communication from either Borrower or any Subsidiary of Tandy to shareholders generally, promptly upon the making thereof; and (f) Requested Information. Promptly, from time to time, such other reports or information as the Agents or any Bank may reasonably request. SECTION 5.06. Litigation and Other Notices. Each Borrower will notify the Agents and the Banks in writing of any of the following immediately upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken by the Person(s) affected with respect thereto: (a) Judgment. The entry of any judgment or decree against TCC if the amount of such judgment or decree exceeds $10,000,000 or against Tandy and its other Subsidiaries, taken as a whole, if the amount of such judgment or decree exceeds $25,000,000, in each case, after deducting the amount with respect to which TCC, Tandy or such other Subsidiaries is insured and with respect to which the insurer has assumed responsibility in writing; (b) Suits and Proceedings. The filing or commencement of any action, suit or proceeding, whether at law or in equity or by or before any court or any federal, state, municipal or other governmental agency or authority as to which there is a reasonable possibility of an adverse determination and which, if adversely determined, could materially impair the right of either Borrower or its Significant Subsidiaries to carry on business substantially as then conducted or materially and adversely affect the business, assets, operations, prospects or condition (financial or otherwise) of either Borrower or any of its Significant Subsidiaries; (c) Default. The occurrence of any Event of Default or Default; (d) Material Adverse Change. The occurrence of a material adverse change in the business, operations or condition (financial or otherwise) of either Borrower and its Significant Subsidiaries, taken as a whole; (e) Pension and Welfare Plans. The occurrence of a Reportable Event with respect to any Plan; the institution of any steps by either Borrower, any of its Subsidiaries or any ERISA Affiliate, the PBGC or any other Person to terminate any Plan; the institution of any steps by either Borrower, or any of its Subsidiaries or any ERISA Affiliate to withdraw from any Plan; or the incurrence of any material increase in the contingent liability of either Borrower or any of its Subsidiaries with respect to any post-retirement welfare benefits; and (f) Other Events. The occurrence of such other events as the Agents or the Required Banks may reasonably from time to time specify. SECTION 5.07. ERISA. Each Borrower will comply, and Tandy will cause each of its other Subsidiaries to comply, in all material respects with the applicable provisions of ERISA. SECTION 5.08. Books, Records and Access. Each Borrower will maintain, and will cause each of its Significant Subsidiaries to maintain, complete and accurate books and records in which full and correct entries in conformity with generally accepted accounting principles shall be made of all dealings and transactions in relation to the business and activities of each Borrower and such Significant Subsidiaries. Each Borrower will permit, and will cause each of its Significant Subsidiaries to permit, reasonable access by the Agents and each Bank, upon reasonable request, to the books and records relating to each Borrower and its Significant Subsidiaries during normal business hours, to permit or cause to be permitted, the Agents and each Bank to make extracts from such books and records and permit, or cause to be permitted, upon reasonable request, any authorized representative designated by any Bank to discuss the affairs, finances and condition of either Borrower or any of its Significant Subsidiaries with such Person's principal financial officers and principal accounting officers and such other officers as either Borrower shall deem appropriate. SECTION 5.09. Use of Proceeds. Tandy will use the proceeds of the Loans only for general corporate purposes including the repayment of its commercial paper maturing from time to time. TCC will use the proceeds of its Loans only to repay its commercial paper maturing from time to time and will use the proceeds of such commercial paper only (i) to finance credit card or installment contract sales of Radio Shack and Tandy Name Brand Divisions and (ii) to repay Permitted Indebtedness. SECTION 5.10. Operating Agreement; Support Agreement. Each Borrower will perform, observe and comply with each of its covenants and agreements in the Operating Agreement and the Support Agreement, do or cause to be done all things necessary to keep the Operating Agreement and the Support Agreement in full force and effect and the rights of the Borrowers thereunder unimpaired. SECTION 5.11. Nature of Business. Each Borrower will engage in, and will cause each of its other Significant Subsidiaries to engage in, substantially the same field of business as they are engaged in on the date hereof. SECTION 5.12. Compliance. Each Borrower will comply, and will cause each of its Subsidiaries to comply, in all material respects with all statutes and governmental rules and regulations applicable to it including all such statutes and government rules and regulations relating to environmental pollution or to environmental regulation and control. ARTICLE VI NEGATIVE COVENANTS So long as this Agreement shall remain in effect or the principal of or interest on any Note, any Commitment Fee or any other expense or amount payable hereunder shall be unpaid and until the Commitments of the Banks shall expire or terminate, unless the Required Banks shall otherwise consent in writing, the Borrowers covenant and agree with each Bank that: SECTION 6.01. Liens. The Borrowers will not, and will not permit any of their respective Subsidiaries to, incur, create, assume or permit to exist any Lien on any of its property or assets, whether owned at the date hereof or hereafter acquired, or assign or convey any rights to or security interests in any future revenues, except: (a) Liens in connection with the acquisition by Tandy or such Subsidiary (other than TCC) of property after the date hereof by way of purchase money, mortgage, conditional sale or other title retention agreement, capitalized lease or other deferred payment contract, and attaching only to the property being acquired, if the Indebtedness secured thereby does not exceed 80% (100% in the case of a capitalized lease) of the fair market value of such property at the time of acquisition thereof nor $100,000,000 in the aggregate for Tandy and all Subsidiaries at any one time outstanding; (b) Liens referred to in Section 3.18; (c) Other Liens securing obligations of Tandy and its Subsidiaries (other than TCC and TRC) not to exceed $50,000,000 in the aggregate and attaching to property of Tandy or such other Subsidiary whose aggregate fair market value does not exceed $50,000,000; and (d) extensions, renewals and replacements of liens referred to in paragraphs (a) through (d) of this Section 6.01; provided, that any such extension, renewal or replacement lien shall be limited to the property or assets covered by the Lien extended, renewed or replaced and that the obligations secured by any such extension, renewal or replacement lien shall be in an amount not greater than the amount of the obligations secured by the Lien extended, renewed or replaced. SECTION 6.02. Sale and Leaseback Transactions. TCC will not enter into any arrangement, directly or indirectly, with any person whereby TCC shall sell or transfer any real or personal property, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property which TCC intends to use for substantially the same purpose or purposes as the property being sold or transferred, without the prior written consent of the Required Banks. SECTION 6.03. Merger, Purchase and Sale. The Borrowers will not, and will not permit any of their respective Subsidiaries, to: (a) be a party to any merger or consolidation; (b) sell, transfer, convey, lease or otherwise dispose of all or any substantial part of its assets; (c) sell or assign, with or without recourse, any accounts receivable or chattel paper; or (d) purchase or otherwise acquire all or substantially all the assets of any Person. Notwithstanding the foregoing: (u) TCC may sell all or substantially all of its Accounts (including "Customer Obligations" as defined in the Operating Agreement) for reasonably equivalent value to TRC; (v) TRC may transfer and assign all of its right, title and interest in its credit card receivables to the Tandy Master Trust pursuant to one or more pooling and servicing agreements; (w) any Subsidiary (other than TCC) may merge into Tandy or into or with any Wholly-owned Subsidiary so long as Tandy or such Wholly-owned Subsidiary, as the case may be, shall be the surviving entity, provided, however, TRC may not merge into TCC; (x) any Subsidiary (other than TCC) may sell, transfer, convey, lease or assign all or a substantial part of its assets to Tandy or any Wholly-owned Subsidiary; (y) any Person (other than TCC) may merge into Tandy and Tandy may acquire all or substantially all the assets of any Person; and (z) Tandy and any of its Subsidiaries (other than TCC) may in the ordinary course of its business sell, transfer, convey, lease or otherwise dispose of all or any substantial part of the assets of Tandy and its Subsidiaries taken as a whole; provided, in each of the cases described in the preceding clauses (u), (v), (w), (x), (y) and (z), that immediately thereafter and after giving effect thereto: (i) no Event of Default or Default shall have occurred and be continuing; (ii) Tandy is a surviving entity; (iii) the surviving officers of Tandy shall be substantially the same; and (iv) Tandy shall at all times own 100% of the issued and outstanding stock of TCC. For purposes of this Section 6.03 only, a sale, transfer, conveyance, lease or other disposition of assets shall be deemed to be a "substantial part" of the assets of Tandy and its Subsidiaries only if the value of such assets, when added to the value of all other assets sold, transferred, conveyed, leased or otherwise disposed of by Tandy and its Subsidiaries (other than (i) pursuant to clauses (x) and (z) of this Section 6.03) during the same fiscal year, exceeds 15% of Tandy's consolidated total assets determined as of the end of the immediately preceding fiscal year. As used in the preceding sentence, the term "value" shall mean, with respect to any asset disposed of, the greater of such asset's book or fair market value as of the date of disposition, with "book value" being the value of such asset as would appear immediately prior to such disposition on a balance sheet of the owner of such asset prepared in accordance with generally accepted accounting principles. SECTION 6.04. Disposition of Accounts. TCC will not sell, transfer, discount or otherwise dispose of any Accounts unless such sale or other disposition shall be without recourse to TCC except (a) to the extent of breaches of customary representations and warranties on sale that do not relate in any way to creditworthiness of any obligor on such receivables or the collectibility or payment thereof, (b) as permitted by the Operating Agreement and (c) as permitted by Section 6.03. SECTION 6.05. Stockholders' Equity of TCC. TCC will not permit (a) its Stockholders' Equity less (b) the sum of (i) all Indebtedness owed by TRC to TCC plus (ii) the value of all Investments of TCC in TRC to be less at any time than 15% of the aggregate principal amount of its Indebtedness. SECTION 6.06. Indebtedness. TCC will not incur, create, assume or permit to exist any Indebtedness other than Permitted Indebtedness. SECTION 6.07. Investments. The Borrowers will not, and will not permit any of their respective Subsidiaries to, make or permit to exist any Investment in any Person, except for: (a) loans or advances constituting Indebtedness of Subsidiaries (other than TCC and TRC) to Tandy and to Wholly-owned Subsidiaries, Permitted Indebtedness of TCC to Tandy; provided, however, TCC may not make any Investment in Tandy or any Subsidiary of Tandy; (b) extensions of credit in the nature of accounts receivable or notes receivable arising from the sale of goods and services in the ordinary course of business; (c) shares of stock, obligations or other securities received in settlement of claims arising in the ordinary course of business; (d) Investments in securities maturing within two years issued or fully guaranteed or insured by the United States of America or any agency thereof; (e) Investments in commercial paper maturing in 270 days or less from the date of issuance rated in the highest or second highest grade by a nationally recognized credit rating agency; (f) Investments in United States dollar denominated time deposits maturing within two years issued by a bank or trust company having capital, surplus and undivided profits aggregating at least 500,000,000; (g) Investments (other than Investments in the nature of loans or advances) outstanding on the date hereof in Subsidiaries by Tandy and its Subsidiaries (other than TCC); (h) other Investments outstanding on the date hereof and listed on Exhibit 6.07; (i) other Investments of Tandy and its Subsidiaries (other than TCC) not exceeding 7.5% of Consolidated Tangible Net Worth at any time; (j) Investments of TCC in Accounts; (k) Investments of TCC in TRC arising from the transfer by TCC of Accounts to TRC pursuant to clause (u) of Section 6.03; (l) Investments of TRC in the Tandy Master Trust pursuant to the transactions permitted by clause (v) of Section 6.03; and (m) endorsements of negotiable instruments for deposit or collection in the ordinary course of business. SECTION 6.08. Capital Stock. TCC will not issue, sell, or otherwise dispose of any shares of its capital stock or any securities convertible into or exchangeable for any such shares, or any warrants, options, or other rights to subscribe for or purchase any such shares, other than the issuance by TCC of additional shares of its capital stock to Tandy pursuant to Section 6.14. SECTION 6.09. Transactions with Affiliates. Neither Borrower will enter into any transaction with any Affiliate except in the ordinary course of business and upon fair and reasonable terms no less favorable than such Borrower could obtain or could become entitled to in an arm s-length transaction with a person or entity which was not an Affiliate; provided, however, this Section 6.09 shall not apply to the purchase of, and payment for, Accounts by TCC pursuant to the terms and conditions of the Operating Agreement. SECTION 6.10. Amendments and Modifications of the Operating Agreement and Support Agreement. Neither Borrower will assign, amend, alter the terms of, or surrender, cancel, or terminate, or permit any such assignment, amendment, alteration, surrender, cancellation or termination, of the Operating Agreement or the Support Agreement without the concurrence of the Required Banks, notwithstanding anything in either the Operating Agreement or the Support Agreement to the contrary. SECTION 6.11. Other Agreements. The Borrowers will not, and will not permit any of their respective Subsidiaries to, enter into any agreement containing any provision which would be violated or breached by such Borrower's performance of its obligations hereunder or under any instrument or document delivered or to be delivered by such Borrower hereunder or in connection herewith. SECTION 6.12. Fiscal Year; Accounting. Neither Borrower will change its fiscal year or method of accounting (other than immaterial changes and methods and changes authorized by generally accepted accounting principles). SECTION 6.13. Credit Standards. Neither Tandy nor TCC will modify in any way the credit standards and procedures, the collection policies or the loss recognition procedures with respect to the creation or collection of Accounts if the modification would have a material adverse effect on the financial condition of TCC or Tandy. SECTION 6.14. Dividends. Neither TCC nor TRC will declare or pay, directly or indirectly, any dividends (other than in shares of its common stock) or make any other distribution, whether in cash, property, securities or a combination thereof, with respect to (whether by reduction of capital or otherwise) any shares of capital stock, or directly or indirectly redeem, purchase, retire or otherwise acquire for consideration, any shares of any class of capital stock, or set apart any sum for the aforesaid purposes, except that TRC may pay cash dividends to TCC and, so long as there shall not have occurred any Event of Default or any Default after giving effect thereto, TCC may pay cash dividends to Tandy. SECTION 6.15 Pension Plans. The Borrowers will not permit, and will not permit any of their respective Subsidiaries to permit, any condition to exist in connection with any Plan which might constitute grounds for the PBGC to institute proceedings to have such Plan terminated or a trustee appointed to administer such Plan, and not engage in, or permit to exist or occur, and will not permit any of their respective Subsidiaries to engage in, or permit to exist or occur, any other condition, event or transaction with respect to any Plan which could result in the incurrence by either Borrower or any such Subsidiary of any material liability, fine or penalty. SECTION 6.16. Senior Indebtedness to Tangible Net Worth Ratio. Tandy will not permit the ratio of its Consolidated Senior Indebtedness to its Consolidated Tangible Net Worth to exceed 1.0 to 1.0. SECTION 6.17. Tangible Net Worth of Tandy. Tandy will not permit its Consolidated Tangible Net Worth to be less than $1,000,000,000. SECTION 6.18. Guaranties. The Borrowers will not, and will not permit any of their respective Subsidiaries to, become or be liable under any Guaranty except Guaranties (a) which (x) in the case of Guaranties of Indebtedness for borrowed money, guarantee Indebtedness with a maximum principal amount, and (y) in all other cases are limited in amount to a stated maximum dollar exposure, (b) which are included in Indebtedness, and (c) which are: (i) Guaranties by Tandy or a Wholly-owned Subsidiary (other than TCC and TRC) of the Indebtedness of a Subsidiary of Tandy; (ii) Guaranties by a Subsidiary of Tandy (other than TCC and TRC) of Indebtedness of Tandy; (iii) Guaranties by Tandy of $100,000,000 9.34% TESOP Notes due June 30, 2000 issued by the plan trustee to fund the Tandy Employee Stock Ownership Plan; or (iv) other Guaranties of Indebtedness not exceeding $50,000,000 in aggregate principal amount at any time outstanding, and, in the case of TCC, which are permitted by Section 6.06. SECTION 6.19. Leases. The Borrowers will not at any time enter into or permit to exist, and will not permit any of their respective Subsidiaries to enter into or permit to exist, any arrangements for the leasing by either Borrower or any of its Subsidiaries, as lessee, of any real or personal property (or any interest therein) under leases (other than capitalized leases); provided, however, the Borrowers and their respective Subsidiaries (other than TCC) may enter into and permit to exist such leases which require the payment by Tandy and such Subsidiaries on a consolidated basis of minimum rental amounts in the aggregate in any one fiscal year not in excess of 25% of Consolidated Tangible Net Worth as of the end of the fiscal year preceding such time. SECTION 6.20. Certificate of Incorporation of TRC. The Borrowers will not permit the Restated Certificate of Incorporation of TRC to be amended without the prior written consent of the Required Banks if the affect of such amendment would materially and adversely affect the Banks; provided, however, so long as the Tandy Guaranty shall be in full force and effect, the Borrowers shall not be required to comply with the provisions of this Section 6.20. ARTICLE VII EVENTS OF DEFAULT SECTION 7.01. Events of Default. In case of the happening of any of the following events (herein called "Events of Default"): (a) any representation or warranty made or deemed made in or in connection with this Agreement, the Operating Agreement, the Support Agreement or the Notes or the Borrowings hereunder or in any report, certificate, financial statement or other instrument furnished in connection with this Agreement, the Operating Agreement, the Support Agreement or the execution and delivery of the Notes or the Borrowings hereunder shall prove to have been false or misleading in any material respect when made or deemed made; (b) default shall be made in the payment of any principal of, or any installment of principal of, any Note when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise; (c) default shall be made in the payment of any interest on any Note or any Commitment Fee or any other amount due under this Agreement, when and as the same shall become due and payable, and such default shall continue unremedied for a period of five days; (d) default shall be made in the due observance or performance of any covenant, condition or agreement contained in Sections 5.01, 5.05 or 5.06 or Article VI; provided, however, that no Event of Default shall be deemed to have occurred by reason of any noncompliance with Section 6.05 if Tandy shall promptly, and in any event within 30 days after the last Business Day of the calendar month most recently elapsed at the time such noncompliance is discovered by the Borrowers furnish to the Administrative Agent in sufficient counterparts for each Bank (i) a guaranty in substantially the form of Exhibit 7.01 (the "Tandy Guaranty") duly executed by Tandy, (ii) a copy of a resolution of the board of directors of Tandy, authorizingthe Tandy Guaranty, which copy shall be certified to be a true and complete copy by the Secretary or Assistant Secretary of Tandy and (iii) an opinion of counsel for Tandy in form and substance satisfactory to the Administrative Agent to the effect that the Tandy Guaranty has been duly authorized, executed and delivered on behalf of Tandy and constitutes the legal, valid and binding obligation of Tandy enforceable against Tandy in accordance with its terms; further provided that so long as the Tandy Guaranty shall be in full force and effect, no Event of Default shall be deemed to have occurred by reason of any noncompliance with Section 6.05; (e) default shall be made in the due observance or performance of any other covenant, condition or agreement to be observed or performed pursuant to this Agreement, the Operating Agreement, the Support Agreement or the Tandy Guaranty, if delivered, and such default shall continue unremedied for 15 days; (f) either Borrower or any of its Subsidiaries (other than an Insignificant Foreign Subsidiary) shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code or any other federal or state bankruptcy, insolvency, liquidation or similar law, (ii) consent to the institution of, or fail to contravene in a timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator or similar official for such Borrower or such Subsidiary or for a substantial part of either such Borrower's or such Subsidiary's property or assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due or (vii) take any corporate or other action for the purpose of effecting any of the foregoing; (g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of either Borrower or any of its Subsidiaries (other than an Insignificant Foreign Subsidiary), or of a substantial part of the property or assets of such Borrower or such Subsidiary, under Title 11 of the United States Code or any other federal or state bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator or similar official for such Borrower or such Subsidiary or for a substantial part of the property of such Borrower or such Subsidiary or (iii) the winding-up or liquidation of such Borrower or such Subsidiary; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall continue unstayed and in effect for 60 days; (h) default or defaults (other than defaults in the payment of principal or interest) shall be made with respect to any Indebtedness of either Borrower, if the total Indebtedness in default exceeds in the aggregate for both Borrowers an amount equal to $50,000,000 and if the effect of such default or defaults shall be to accelerate, or to permit the holder or obligee of any Indebtedness (or any trustee on behalf of such holder or obligee) to accelerate (with or without notice or lapse of time or both), the maturity of any Indebtedness; or any payment of principal or interest, regardless of amount, on any Indebtedness of either Borrower shall not be paid when due, whether at maturity, by acceleration or otherwise (after giving effect to any period of grace as specified in the instrument evidencing or governing such Indebtedness); (i) Tandy shall cease legally and beneficially to own all the issued and outstanding capital stock of TCC; (j) A Change of Control shall occur; (k) a Reportable Event or Reportable Events shall have occurred with respect to any Plan or Plans that reasonably could be expected to result in liability of either Borrower to the PBGC in an aggregate amount in excess of $1,000,000 and within 30 days after the reporting of such Reportable Event or Reportable Events to the Banks the Agents shall have notified such Borrower in writing that (i) it has determined that on the basis of such Reportable Event or Reportable Events there are reasonable grounds for termination of the Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Plan and (ii) as a result of such determination, an Event of Default exists hereunder; or the PBGC shall have instituted proceedings to terminate any Plan or Plans, or a trustee shall have been appointed by a United States District Court to administer any Plan or Plans, with vested unfunded liabilities aggregating in excess of $1,000,000; or (l) there shall be entered against either Borrower or any other Subsidiary of Tandy one or more judgments or decrees in excess of $50,000,000 in the aggregate at any one time outstanding for the Borrowers and all such Subsidiaries and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof, excluding those judgments or decrees for and to the extent which the Borrowers or any such Subsidiary is insured and with respect to which the insurer has assumed responsibility in writing or for and to the extent which the Borrowers or any such Subsidiary is otherwise indemnified if the terms of such indemnification are satisfactory to the Required Banks; then, and in any such event (other than an event with respect to either Borrower described in paragraph (f) or (g) above), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Banks shall, by written or telegraphic notice to the Borrowers, take either or both of the following actions at the same or different times: (i) terminate forthwith the Commitments of the Banks hereunder (if not theretofore terminated) and (ii) declare the Notes then outstanding to be forthwith due and payable, whereupon the principal of the Notes, together with accrued interest thereon and any unpaid accrued Commitment Fees and all other liabilities of the Borrowers accrued hereunder, shall become forthwith due and payable both as to principal and interest, without presentment, demand, protest, notice of protest, notice of intent to accelerate, notice of acceleration or any other notice of any kind, all of which are hereby expressly waived by the Borrowers, anything contained herein or in any Note or other Loan Document to the contrary notwithstanding; and in any event with respect to either Borrower described in paragraph (f) or (g) above, the Commitments of the Banks shall automatically terminate (if not theretofore terminated) and the Notes shall automatically become due and payable, both as to principal and interest, without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other notice of any kind, all of which are hereby expressly waived by the Borrowers, anything contained herein or in any Note to the contrary notwithstanding. ARTICLE VIII THE AGENTS SECTION 8.01. Authorization and Action. In order to expedite the various transactions contemplated by this Agreement, each Bank hereby irrevocably appoints and authorizes TCB-Dallas to act as Administrative Agent and TCB to act as Funds Administrator on its behalf. Each of the Banks, and each subsequent holder of any Note by its acceptance thereof, hereby irrevocably authorizes and directs the Agents to take such action on behalf of such Bank or holder under the terms and provisions of this Agreement and to exercise such powers hereunder as are specifically delegated to or required of the Agents by the terms and provisions hereof, together with such powers as are reasonably incidental thereto. The Agents are hereby expressly authorized on behalf of the Banks, without hereby limiting any implied authority, (a) to receive on behalf of each of the Banks any payment of principal of or interest on the Notes outstanding hereunder and all other amounts accrued hereunder paid to the Agents, and promptly to distribute to each Bank its proper share of all payments so received; (b) to give notice within a reasonable time on behalf of each of the Banks to the Borrowers of any Default or Event of Default specified in this Agreement of which the Agents have actual knowledge as provided in Section 8.08; (c) to distribute to each Bank copies of all notices, agreements and other material as provided for in this Agreement as received by such Agents; and (d) to distribute to the Borrowers any and all requests, demands and approvals received by the Agents or from the Banks. SECTION 8.02. Agent's Reliance, etc. Neither the Administrative Agent, the Funds Administrator nor any of its directors, officers, employees or agents shall be liable as such for any action taken or omitted by any of them hereunder except for its or his own gross negligence or willful misconduct (it being the express intention of the parties that the Administrative Agent and the Funds Administrator and their respective directors, officers, employees and agents shall have no liability for actions and omissions hereunder resulting from their ordinary sole or contributory negligence), or be responsible for any statement, warranty or representation herein or the contents of any document delivered in connection herewith or be required to ascertain or to make any inquiry concerning the performance or observance by the Borrowers of any of the terms, conditions, covenants or agreements of this Agreement or any other Loan Document. Neither Agent shall be responsible to the Banks or the holders of the Notes for the due execution, genuineness, validity, enforceability or effectiveness of this Agreement, the Notes, any other Loan Document or any other instrument to which reference is made herein. The Agents may deem and treat the payee of any Note as the owner thereof for all purposes hereof until it shall have received from the payee of such Note notice, given as provided herein, of the transfer thereof. The Agents shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Required Banks, and, except as otherwise specifically provided herein, such instructions and any action taken or failure to act pursuant thereto shall be binding on all the Banks. The Agents shall, in the absence of knowledge to the contrary, be entitled to rely on any paper or document believed by them in good faith to be genuine and correct and to have been signed or sent by the proper person or persons. Neither Agent nor any of its directors, officers, employees or agents shall have any responsibility to the Borrowers on account of the failure or delay in performance or breach by any Bank of any of its obligations hereunder or to any Bank on account of the failure of or delay in performance or breach by any other Bank or the Borrowers of any of their respective obligations hereunder or in connection herewith. The Agents may execute any and all duties hereunder by or through agents or employees and shall be entitled to advice of legal counsel selected by it with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel. The Banks hereby acknowledge that the Agents shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement unless an Agent shall be requested in writing to do so by the Required Banks. SECTION 8.03. Agent and Affiliates: TCB, TCB-Dallas and Affiliates. Without limiting the right of any other Bank to engage in any business transactions with either Borrower or any of its Affiliates, with respect to their Commitments, the Loans, if any, made by them and the Notes, if any, issued to them, TCB-Dallas and, to the extent it becomes the holder of any Note hereunder, TCB shall have the same rights and powers under this Agreement, any Note or any of the other Loan Documents as any other Bank and may exercise the same as though it were not respectively the Administrative Agent and the Funds Administrator; and the term "Bank" or "Banks" shall, unless otherwise expressly indicated, include TCB-Dallas and, to the extent TCB becomes the holder of any Note, TCB, in its individual capacity. TCB, TCB-Dallas and their respective Affiliates may be engaged in, or may hereafter engage in, one or more loan, letter of credit, leasing or other financing activities not the subject of the Loan Documents (collectively, the "Other Financings") with either Borrower or any of its Affiliates, or may act as trustee on behalf of, or depositary for, or otherwise engage in other business transactions with either Borrower or any of its Affiliates (all Other Financings and other such business transactions being collectively, the "Other Activities") with no responsibility to account therefor to the Banks. Without limiting the rights and remedies of the Banks specifically set forth in the Loan Documents, no other Bank shall have any interest in (a) any Other Activities, (b) any present or future guarantee by or for the account of either Borrower not contemplated or included in the Loan Documents, (c) any present or future offset exercised by either Agent in respect of any such Other Activities, (d) any present or future property taken as security for any such Other Activities or (e) any property now or hereafter in the possession or control of either Agent which may be or become security for the obligations of either Borrower under the Loan Documents by reason of the general description of indebtedness secured, or of property contained in any other agreements, documents or instruments related to such Other Activities; provided, however, that if any payment in respect of such guarantees or such property or the proceeds thereof shall be applied to reduction of the obligations evidenced hereunder and by the Notes, then each Bank shall be entitled to share in such application according to its pro rata portion of such obligations. SECTION 8.04. Agents Indemnity. Each Bank agrees (a) to reimburse the Agents, on demand, in the amount of such Bank's pro rata share (based on its Commitments hereunder) of any expenses incurred for the benefit of the Banks by either Agent, including counsel fees and compensation of agents and employees paid for services rendered on behalf of the Banks, not reimbursed by the Borrowers and (b) to indemnify and hold harmless each Agent and any of its directors, officers, employees or agents, on demand, in the amount of its pro rata share, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, asserted against such Agent in its capacity as an Agent or any of them in any way relating to or arising out of this Agreement or any action taken or omitted by such Agent or any of them under this Agreement, to the extent not reimbursed by the Borrowers; provided, however, that no Bank shall be liable to an Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of such Agent or any of its directors, officers, employees or agents. Each Bank agrees, however, that it expressly intends, under this Section 8.04, to indemnify each Agent as aforesaid for all such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements resulting from such Agent's ordinary sole or contributory negligence. SECTION 8.05. Bank Credit Decision. Each Bank acknowledges that it has, independently and without reliance upon either Agent or any other Bank and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon either Agent or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own decisions in taking or not taking action under or based upon this Agreement, the other Loan Documents, any related agreement or any document furnished hereunder. SECTION 8.06. Successor Administrative Agent. Subject to the appointment and acceptance of a successor Administrative Agent as provided herein, the Administrative Agent may resign at any time by giving written notice thereof to the Funds Administrator, the Banks and the Borrowers. Upon any such resignation, the Required Banks shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Banks, and shall have accepted such appointment, within 30 calendar days after the retiring Administrative Agent's giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Banks, appoint a successor Administrative Agent, which shall be a commercial bank organized or licensed under the laws of the United States or of any state thereof and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder and under the Notes by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement and the Notes. After any retiring Administrative Agent's resignation as Administrative Agent hereunder and under the Notes, the provisions of this Article VIII and Section 9.04 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the Notes. SECTION 8.07. Successor Funds Administrator. Subject to the appointment and acceptance of a successor Funds Administrator as provided herein, the Funds Administrator may resign at any time by giving written notice thereof to the Administrative Agent, the Banks and the Borrowers. Upon any such resignation, the Required Banks shall have the right to appoint a successor Funds Administrator. If no successor Funds Administrator shall have been so appointed by the Required Banks, and shall have accepted such appointment, within 30 calendar days after the retiring Funds Administrator's giving of notice of resignation, then the retiring Funds Administrator may, on behalf of the Banks, appoint a successor Funds Administrator, which shall be a commercial bank organized or licensed under the laws of the United States or of any state thereof and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Funds Administrator hereunder and under the Notes by a successor Funds Administrator, such successor Funds Administrator shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Funds Administrator, and the retiring Funds Administrator shall be discharged from its duties and obligations under this Agreement and the Notes. After any retiring Funds Administrator's resignation as Funds Administrator hereunder and under the Notes, the provisions of this Article VIII and Section 9.04 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Funds Administrator under this Agreement and the Notes. SECTION 8.08. Notice of Default. Neither Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless such Agent shall have received notice from a Bank or a Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default" or "notice of event of default", as applicable. If an Agent receives such a notice, such Agent shall give notice thereof to the Banks and, if such notice is received from a Bank, such Agent shall give notice thereof to the other Agent, the other Banks and the Borrowers. The Agent shall be entitled to take action or refrain from taking action with respect to such Default or Event of Default as provided in Section 8.01 and Section 8.02. ARTICLE IX MISCELLANEOUS SECTION 9.01. Notices. All Notices, consents, requests, approvals, demands and other communications (collectively, "Communications") provided for herein shall be in writing (including telecopy or telegraphic Communications) and shall be delivered by hand or overnight courier service, mailed or sent by telex, graphic scanning or other telegraphic communications equipment addressed: (a) if to Tandy, at 1700 One Tandy Center, Fort Worth, Texas 76102, Attention of Dwain H. Hughes, Assistant Treasurer (Telecopy No. (817) 390-2638); (b) if to TCC, at 1700 One Tandy Center, Fort Worth, Texas 76102, Attention of Dwain H. Hughes, Assistant Treasurer (Telecopy No. (817) 390-2638); (c) if to the Administrative Agent, at One Tandy Center, Fort Worth, Texas 76102, Attention of Richard Barajas, Vice President (Telecopy No. (817) 878-7591); (d) if to the Funds Administrator, at 712 Main Street, Houston, Texas 77002, Attention of Susan Cummins, Investment Officer (Telecopy No. (713) 546-2339); and (e) if to any Bank, at its address set forth on Schedule I attached hereto or in the Assignment and Acceptance pursuant to which such Bank became a party hereto. All Communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telex, telecopy or other telegraphic communications equipment of the sender, or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.01. SECTION 9.02. Survival of Agreement. All covenants, agreements, representations and warranties made by the Borrowers herein and in the other Loan Documents and in the certificates or other instruments prepared or delivered in connection with this Agreement shall be considered to have been relied upon by the Banks and shall survive the making by the Banks of the Loans and the execution and delivery to the Banks of the Notes evidencing such Loans and shall continue in full force and effect as long as the principal of or any accrued interest on any Note or any Commitment Fee or any other fee or amount payable under the Notes or this Agreement is outstanding and unpaid and so long as the Commitments have not been terminated. SECTION 9.03. Successors and Assigns; Participations. (a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrowers, the Agents or the Banks that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns. The Borrowers may not assign or transfer any of their respective rights or obligations hereunder without the prior written consent of all the Banks. (b) Each Bank may assign to one or more Eligible Assignees a portion (but not all) of its interests, rights and obligations under this Agreement (including a portion of its Commitments with respect to both Tranches and the same portion of the Loans of its Tranches at the time owing to it and the Notes held by it); provided, however, that (i) except in the case of an assignment to a Bank or an Affiliate of a Bank, the Borrowers and the Agents must give their prior written consent by countersigning the Assignment and Acceptance (which consent shall not be unreasonably withheld), (ii) each such assignment shall be of a constant, and not a varying, percentage of all the assigning Bank's rights and obligations to this Agreement, (iii) the amount of the Commitments of the assigning Bank of each Tranche subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Funds Administrator) shall in no event be less than $10,000,000 and shall be in an amount which is an integral multiple of $1,000,000, (iv) the parties to each such assignment shall execute and deliver to the Funds Administrator, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Notes subject to such assignment and a processing and recordation fee of $2,000, and (v) the assignee shall deliver to the Agents an Administrative Questionnaire. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five Business Days after the execution thereof, (x) the assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Bank hereunder and (y) the Bank thereunder shall, to the extent provided in such assignment, be released from its obligations under this Agreement. (c) By executing and delivering an Assignment and Acceptance, the assigning Bank thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim, such assigning Bank makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto; (ii) such assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrowers or the performance or observance by the Borrowers of any of their respective obligations under this Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 3.05 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon either Agent, such Bank's assignor or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes each Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to such Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Bank. (d) The Funds Administrator shall maintain at its address referred to in Section 9.01 a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Banks and the Commitments of, and principal amount of the Loans owing to, each Bank from time to time (the "Register"). The entries in the Register shall be conclusive, in the absence of demonstrable error, and the Borrowers, the Administrative Agent and the Banks may treat each Person whose name is recorded in the Register as a Bank hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers, the Administrative Agent or any Bank at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Bank and an Eligible Assignee together with the Notes subject to such assignment, the processing and recordation fee referred to in paragraph (b) above and, if required, the Borrowers written consent to such assignment, the Funds Administrator shall (subject to the consent of the Agents to such assignment, if required), if such Assignment and Acceptance has been completed and is in the form of Exhibit 1.01-B hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrowers, the Banks and the Administrative Agent. Within five Business Days after receipt of notice, the Borrowers, at their own expense, shall execute and deliver to the Funds Administrator in exchange for the surrendered Notes a new Tranche A Note to the order of such Eligible Assignee in an amount equal to the assigning Bank's Tranche A Commitment assumed by it pursuant to such Assignment and Acceptance and a new Tranche B Note to the order of such Eligible Assignee in an amount equal to the assigning Bank's Tranche B Commitment assumed by such Eligible Assignee pursuant to such Assignment and Acceptance, and a new Tranche A Note to the order of the assigning Bank in an amount equal to the portion of its Tranche A Commitment retained by the assigning Bank hereunder and a new Tranche B Note to the order of the assigning Bank in an amount equal to the portion of its Tranche B Commitment retained by the assigning Bank hereunder. Such new Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the respective form of Exhibit 2.04-A or Exhibit 2.04-B hereto, as applicable. Cancelled Notes shall be returned to the Borrower that is the signatory thereto. (f) Each Bank may without the consent of the Borrowers or either Agent sell participations to one or more banks or other entities in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it and the Notes held by it); provided, however, that (i) such Bank's obligations under this Agreement shall remain unchanged, (ii) such Bank shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating banks or other entities shall be entitled to the cost protection provisions contained in Sections 2.11 through 2.13 to the same extent that the Bank from which such participating bank or other entity acquired its participation would be entitled to the benefit of such cost protection provisions and (iv) the Borrowers, the Agents and the other Banks shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement, and such Bank shall retain the sole right to enforce the obligations of the Borrowers relating to the Loans and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers with respect to any fees payable hereunder or the amount of principal of or the rate at which interest is payable on the Loans, or the dates fixed for payments of principal of or interest on the Loans). (g) Any Bank or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.03, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrowers furnished to such Bank by or on behalf of the Borrowers; provided that prior to any such disclosure, each such assignee or participant or proposed assignee or participant shall agree (subject to customary exceptions) to preserve the confidentiality of any confidential information relating to the Borrowers received from such Bank. (h) Anything in this Section 9.03 to the contrary notwithstanding, any Bank may at any time, without the consent of the Borrowers or either Agent, assign and pledge all or any portion of its Commitment and the Loans owing to it to any Federal Reserve Bank (and its transferees) as collateral security pursuant to Regulation A of the Board and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Bank from its obligations hereunder. SECTION 9.04. Expenses of the Banks; Indemnity. (a) Tandy agrees to pay all reasonable out-of-pocket expenses reasonably incurred by the Agents in connection with the preparation of this Agreement, the Notes and the other Loan Documents or with any amendments, modifications or waivers of the provisions hereof (whether or not the transactions hereby contemplated shall be consummated) or reasonably incurred by either Agent or any Bank in connection with the enforcement or protection of their rights in connection with this Agreement or with the Loans made or the Notes issued hereunder, including the reasonable fees and disbursements of Andrews & Kurth, special counsel for the Agents, and, in connection with such enforcement or protection, the reasonable fees and disbursements of other counsel for any Bank, including allocated staff counsel costs. Tandy agrees that it shall indemnify the Banks from and hold them harmless against any documentary taxes, assessments or charges made by any governmental authority by reason of the execution and delivery of this Agreement or any of the Notes. (b) Tandy agrees to indemnify the Agents and the Banks and their directors, officers, employees and agents (each such Person being called an "Indemnitee") against, and to hold the Banks and such Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees and expenses, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution and delivery of this Agreement and the other documents contemplated hereby, the performance by the parties hereto and thereto of their respective obligations hereunder and thereunder (including but not limited to the making of the Commitments of each Bank) and consummation of the transactions contemplated hereby and thereby, (ii) the use of proceeds of the Loans or (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Bank, apply to any such losses, claims, damages, liabilities or related expenses that are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. Tandy agrees, however, that it expressly intends to indemnify each Indemnitee from and hold each of them harmless against any and all losses, liabilities, claims, damages or expenses arising out of the ordinary sole or contributory negligence of such Indemnitee, but not the gross negligence or willful misconduct of such Indemnitee. (c) The provisions of this Section 9.04 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the invalidity or unenforceability of any term or provision of this Agreement or any Note, or any investigation made by or on behalf of any Bank. All amounds due under this Section 9.04 shall be payable on written demand therefor. SECTION 9.05. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Bank is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Bank to or for the credit or the account of either Borrower against any of and all the obligations of the Borrowers now or hereafter existing under this Agreement and the Notes held by such Bank, irrespective of whether or not such Bank shall have made any demand under this Agreement or such Notes and although such obligations may be unmatured. Each Bank agrees promptly to notify such Borrower after any such setoff and application made by such Bank, but the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Bank under this Section 9.05 are in addition to other rights and remedies (including other rights of setoff) which such Bank may have under applicable law. SECTION 9.06. Governing Law. This Agreement, the Notes, the other Loan Documents and all other documents executed in connection herewith, shall be deemed to be contracts and agreements executed by the Borrowers, the Agents and the Banks under the laws of the State of Texas and of the United States of America and for all purposes shall be governed by, and construed and interpreted in accordance with, the laws of said state (without regard to principles of conflicts of law) and of the United States of America. Without limitation of the foregoing, nothing in this Agreement, the Notes or the other Loan Documents shall be deemed to constitute a waiver of any rights which any Bank may have under applicable federal legislation relating to the amount of interest which such Bank may contract for, take, receive, or charge in respect of any Loans, including any right to take, receive, reserve and charge interest at the rate allowed by the law of the state where such Bank is located. The Agents, the Banks and the Borrowers further agree that insofar as the provisions of Article 1.04, Subtitle 1, Title 79, of the Revised Civil Statutes of Texas, 1925, as amended, are at any time applicable to the determination of the Highest Lawful Rate with respect to the Notes, the indicated rate ceiling computed from time to time pursuant to Section (a) of such Article shall apply to the Notes, provided, however, that to the extent permitted by such Article, the Funds Administrator may from time to time by notice from the Funds Administrator to the Borrowers revise the election of such interest rate ceiling as such ceiling affects the then current or future balances of the Loans outstanding hereunder and under the Notes. The provisions of Chapter 15 of Subtitle 3 of the said Title 79 do not apply to this Agreement or any Note issued hereunder. SECTION 9.07. Waivers; Amendments. (a) No failure or delay of any Agent or any Bank in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Agents and the Banks hereunder are cumulative and not exclusive of any rights or remedies which they would otherwise have. No waiver of any provision of this Agreement, the Notes or the other Loan Documents or consent to any departure by the Borrowers therefrom shall in any event be effective unless the same shall be authorized as provided in paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Borrowers in any case shall entitle the Borrowers to any other or further notice or demand in similar or other circumstances. Each holder of any of the Notes shall be bound by any amendment, modification, waiver or consent authorized as provided herein, whether or not such Notes shall have been marked to indicate such amendment, modification, waiver or consent. (b) Except as provided in Section 2.19, neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrowers and the Required Banks; provided, however, that no such agreement shall (i) change the principal amount of, or extend or advance the maturity of or any date for the payment of any principal of or interest on, any Loan, or waive or excuse any such payment or any part thereof, or change the rate of interest on any Loan, without the written consent of each Bank affected thereby, (ii) change the Commitments of any Bank without the written consent of such Bank, or change the Commitment Fees of any Bank without the written consent of each Bank or (iii) amend or modify the provisions of this Section 9.07, Sections 2.08 through 2.15, Section 2.17, Section 2.18, Section 9.03 or the definition of the "Required Banks", without the written consent of each Bank; and provided further that no such agreement shall amend, modify, waive or otherwise affect the rights or duties of the Administrative Agent hereunder without the written consent of the Administrative Agent; and provided, finally, that no such agreement shall amend, modify, waive or otherwise affect the rights or duties of the Funds Administrator hereunder without the written consent of the Funds Administrator. Each Bank and each holder of any Note shall be bound by any modification or amendment authorized by this Section 9.07 regardless of whether its Notes shall be marked to make reference thereto, and any consent by any Bank or holder of a Note pursuant to this Section 9.07 shall bind any Person subsequently acquiring a Note from it, whether or not such Note shall be so marked. SECTION 9.08. Interest. Anything in this Agreement or any Note or any other Loan Document to the contrary notwithstanding, no Borrower shall ever be required to pay unearned interest on any Note of such Borrower and shall never be required to pay interest on such Note at a rate in excess of the Highest Lawful Rate, and if the effective rate of interest which would otherwise be payable under this Agreement, such Note and the other Loan Documents would exceed the Highest Lawful Rate, or if the holder of such Note shall receive any unearned interest or shall receive monies that are deemed to constitute interest which would increase the effective rate of interest payable by such Borrower under this Agreement and such Note to a rate in excess of the Highest Lawful Rate, then (a) the amount of interest which would otherwise be payable by such Borrower under this Agreement and such Note shall be reduced to the amount allowed under applicable law, and (b) any unearned interest paid by such Borrower or any interest paid by such Borrower in excess of the Highest Lawful Rate shall be credited on the principal of such Note (or, if the principal amount of such Note shall have been paid in full, refunded to such Borrower). It is further agreed that, without limitation of the foregoing, all calculations of the rate of interest contracted for, charged or received by any Bank under the Notes held by it, or under this Agreement, are made for the purpose of determining whether such rate exceeds the Highest Lawful Rate applicable to such Bank (such Highest Lawful Rate being such Bank's "Maximum Permissible Rate"), and shall be made, to the extent permitted by usury laws applicable to such Bank (now or hereafter enacted), by amortizing, prorating and spreading in equal parts during the period of the full stated term of the Loans evidenced by said Notes all interest at any time contracted for, charged or received by such Bank in connection therewith. If at any time and from time to time (i) the amount of interest payable to any Bank on any date shall be computed at such Bank's Maximum Permissible Rate pursuant to this Section 9.08 and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to such Bank would be less than the amount of interest payable to such Bank computed at such Bank's Maximum Permissible Rate, then the amount of interest payable to such Bank in respect of such subsequent interest computation period shall continue to be computed at such Bank's Maximum Permissible Rate until the total amount of interest payable to such Bank shall equal the total amount of interest which would have been payable to such Bank if the total amount of interest had been computed without giving effect to this Section 9.08. SECTION 9.09. Severability. In the event any one or more of the provisions contained in this Agreement or in the Notes should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 9.10. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract, and shall become effective as provided in Section 9.11. SECTION 9.11. Binding Effect. This Agreement shall become effective on the Execution Date, and thereafter shall be binding upon and inure to the benefit of the Borrowers, each Agent and each Bank and their respective successors and assigns, except that the Borrowers shall not have the right to assign their rights hereunder or any interest herein except as provided in Section 9.03(a). SECTION 9.12. FINAL AGREEMENT OF THE PARTIES. THIS WRITTEN AGREEMENT (INCLUDING THE EXHIBITS AND SCHEDULES HERETO), THE NOTES, THE OPERATING AGREEMENT, THE SUPPORT AGREEMENT, THE AGENT'S LETTER AND THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 26.02(a) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement. Nothing in this Agreement, expressed or implied, is intended to confer upon any party other than the parties hereto any rights, remedies, obligations or liabilities under or by reason of this Agreement. SECTION 9.13 SUBMISSION TO JURISDICTION. (a) TCC HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY TEXAS STATE OR FEDERAL COURT SITTING IN FORT WORTH, TEXAS OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND TCC IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH TEXAS STATE OR FEDERAL COURT; PROVIDED, HOWEVER, NOTHING IN THIS SECTION 9.13 IS INTENDED TO WAIVE THE RIGHT OF EITHER AGENT OR ANY BANK OR TO REMOVE ANY SUCH ACTION OR PROCEEDING COMMENCED IN ANY SUCH TEXAS STATE COURT TO AN APPROPRIATE TEXAS FEDERAL COURT TO THE EXTENT THE BASIS FOR SUCH REMOVAL EXISTS UNDER APPLICABLE LAW. TCC HEREBY IRREVOCABLY APPOINTS HERSCHEL C. WINN (THE "PROCESS AGENT"), WITH AN OFFICE ON THE DATE HEREOF AT 1800 ONE TANDY CENTER, FORT WORTH, TEXAS 76102, AS ITS AGENT TO RECEIVE ON BEHALF OF IT AND ITS PROPERTIES SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE BY MAILING BY CERTIFIED MAIL A COPY OF SUCH PROCESS TO TCC IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S ABOVE ADDRESS, WITH A COPY TO TCC AT ITS ADDRESS SPECIFIED HEREIN AND TCC HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. AS AN ALTERNATIVE METHOD OF SERVICE, TCC ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING BY CERTIFIED MAIL OF COPIES OF SUCH PROCESS TO IT AT ITS ADDRESS SPECIFIED HEREIN. TCC AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. (b) NOTHING IN THIS SECTION 9.13 SHALL AFFECT THE RIGHT OF THE AGENTS OR ANY BANK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF EITHER AGENT OR ANY BANK TO BRING ANY ACTION OR PROCEEDING AGAINST TCC OR ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS. IN WITNESS HEREOF, the Borrowers, the Banks, the Administrative Agent and the Funds Administrator have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. TANDY CORPORATION By: /s/ William Bousquette Name: William Bousquette Title: Executive Vice President and Chief Financial Officer TANDY CREDIT CORPORATION By: /s/ Dwain H. Hughes Name: Dwain H. Hughes Title: Assistant Treasurer Tranche A Tranche B TEXAS COMMERCE BANK, Commitment Commitment NATIONAL ASSOCIATION, individually $25,000,000 $25,000,000 and as Administrative Agent By: /s/ J. Richard Barajas Name: J. Richard Barajas Title: Vice President TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Funds Administrator By: /s/ Gina Hardwick Name: Gina Hardwick Title: Investment Officer Tranche A Tranche B ALGEMENE BANK NEDERLAND N.V., Commitment Commitment HOUSTON AGENCY $10,000,000 $10,000,000 By: /s/ Charles W. Randall Name: Charles W. Randall Title: Vice President By: /s/ Alan C. Weitzner Name: Alan C. Weitzner Title: Assistant Vice President $20,000,000 $20,000,000 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: /s/ Samir Sidani Name: Samir Sidani Title: Vice President $20,000,000 $20,000,000 THE BANK OF NEW YORK By: /s/ Michael J. Moretti Name: Michael J. Moretti Title: Vice President $15,000,000 $15,000,000 BARCLAYS BANK PLC By: /s/ William C. Collins, II Name: William C. Collins, II Title: Vice President $15,000,000 $15,000,000 CONTINENTAL BANK N.A. By: /s/ Laurens F. Schaad, Jr. Name: Laurens F. Schaad, Jr. Title: Vice President Tranche A Tranche B CREDIT LYONNAIS, CAYMAN ISLAND Commitment Commitment BRANCH $20,000,000 $20,000,000 By: Name: Title: $20,000,000 $20,000,000 NATIONAL WESTMINSTER BANK PLC NEW YORK BRANCH By: /s/ David F. Brealey Name: David F. Brealey Title: Vice President NATIONAL WESTMINSTER BANK PLC NASSAU BRANCH By: /s/ David F. Brealey Name: David F. Brealey Title: Vice President $20,000,000 $20,000,000 NCNB TEXAS NATIONAL BANK By: /s/ Vincent A. Liberio Name: Vincent A. Liberio Title: Senior Vice President Tranch A Tranch B SOCIETE GENERALE, SOUTHWEST Commitment Commitment AGENCY $10,000,000 $10,000,000 By: /s/ Matthew Flanigan Name: Matthew Flanigan Title: Vice President-Manager By: /s/ Louis P. Laville, III Name: Louis P. Laville, III Title: Assistant Treasurer $5,000,000 $5,000,000 THE SUMITOMO BANK, LIMITED HOUSTON AGENCY By: /s/ Hideki Matsui Name: Hideki Matsui Title: General Manager $20,000,000 $20,000,000 WESTPAC BANKING CORPORATION By: /s/ Lawrence Creedon Name: Lawrence Creedon Title: Vice President EX-4.(C)(II) 8 1993 10K EXHIBIT 4C(II) Exhibit 4c(ii) FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (this Amendment ) dated as of June 11, 1992 is among TANDY CORPORATION, a Delaware corporation ( Tandy ), TANDY CREDIT CORPORATION, a Delaware corporation ( TCC and together with Tandy collectively the Borrowers ), the banks listed on the signature pages hereof (the Banks ), TEXAS COMMERCE BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent for the Banks (in such capacity the Administrative Agent ), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association, as funds administrator for the Banks (in such capacity, the Funds Administrator ). PRELIMINARY STATEMENT The Borrowers, the Banks, the Administrative Agent and the Funds Administrator are parties to a Revolving Credit Agreement dated as of June 17, 1991 (the Credit Agreement ). All capitalized terms defined in the Credit Agreement and not otherwise defined herein shall have the same meanings herein as in the Credit Agreement. The Borrowers, the Banks, the Administrative Agent and the Funds Administrator have agreed, upon the terms and conditions specified herein, to amend the Credit Agreement as hereinafter set forth: NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the Borrowers, the Banks, the Administrative Agent and the Funds Administrator hereby agree as follows: SECTION 1. Amendment to Article I of the Credit Agreement. The definition of the term Tranche A Maturity Date is hereby amended in its entirety to read as follows: Tranche A Maturity Date shall mean June 8, 1993. . SECTION 2. Conditions of Effectiveness. This Amendment shall become effective when, and only when the following have occurred: (a) the Administrative Agent shall have (i) executed a counterpart hereof and (ii) shall have received a counterpart hereof executed by the Borrowers, the Funds Administrator and the Banks or, in the case of any such Bank as to which an executed counterpart hereof shall not have been so received, the Administrative Agent shall have received written confirmation by telecopy, telex or other similar writing from such Bank of execution of a counterpart hereof by such Bank; and (b) The Administrative Agent shall have received (i) a certificate as to the good standing of each Borrower from the Secretary of State of the State of Delaware; (ii) a certificate as to the good standing of Tandy from the Comptroller of the State of Texas; and (iii) a certificate of the Secretary or an Assistant Secretary of each Borrower, dated the date hereof and certifying (A) that attached thereto is a true and complete copy of the certificate of incorporation of such Borrower, as amended to on the date of such certificate, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Borrower authorizing the execution, delivery and performance of this Amendment and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (C) that the bylaws of such Borrower have not been amended since the date of the certificate delivered in connection with the Credit Agreement, and (D) as to the incumbency and specimen signature of each officer of such Borrower executing this Amendment or any other document delivered in connection herewith and (iii) a certificate of another officer of such Borrower as to the incumbency and specimen signature of the Secretary or such Assistant Secretary of such Borrower. SECTION 3. Representations and Warranties True; No Default or Event of Default. The Borrowers hereby represent and warrant to the Administrative Agent, the Funds Administrator and the Banks that, after giving effect to the execution and delivery of this Amendment (a) the representations and warranties set forth in the Credit Agreement are true and correct on the date hereof as though made on and as of such date and (b) neither any Default nor Event of Default has occurred and is continuing as of the date hereof. SECTION 4. Reference to the Credit Agreement and Effect on the Notes and other Documents executed pursuant to the Credit Agreement. (a) Upon the effectiveness of this Amendment, each reference in the Credit Agreement to this Agreement, hereunder, herein, hereof or words of like import shall mean and be a reference to the Credit Agreement, as affected and amended hereby. (b) Upon the effectiveness of this Amendment, each reference in the Notes, the Support Agreement and the form of Guaranty attached as Exhibit 7.01 to the Credit Agreement and the other documents and agreements delivered or to be delivered pursuant to the Credit Agreement shall mean and be a reference to the Credit Agreement, as affected and amended hereby. (c) The Credit Agreement, as amended and modified by this Amendment, shall remain in full force and effect and is hereby ratified and confirmed. (d) The Support Agreement, as affected by this Amendment, shall remain in full force and effect and is hereby ratified and confirmed. SECTION 5. 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 instrument. SECTION 6. GOVERNING LAW; BINDING EFFECT. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW AND SHALL BE BINDING UPON THE BORROWERS, THE ADMINISTRATIVE AGENT, THE FUNDS ADMINISTRATOR AND THE BANKS AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. SECTION 7. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. SECTION 8. ENTIRE AGREEMENT. WITH RESPECT TO THE SUBJECT MATTER DESCRIBED THEREIN, THE CREDIT AGREEMENT, AS AMENDED HEREBY, THE NOTES, THE SUPPORT AGREEMENT AND THE AGENT'S LETTER CONSTITUTE A LOAN AGREEMENT FOR PURPOSES OF SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE. THE CREDIT AGREEMENT, AS AMENDED HEREBY, THE NOTES, THE SUPPORT AGREEMENT AND THE AGENT'S LETTER REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed effective as of the date first stated herein, by their respective officers thereunto duly authorized. TANDY CORPORATION By: Name: Title: TANDY CREDIT CORPORATION By: Name: Title: TEXAS COMMERCE BANK, NATIONAL ASSOCIATION, individually and as Administrative Agent By: Name: Title: TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Funds Administrator By: Name: Title: ABN AMRO BANK N.V., HOUSTON AGENCY (formerly Algemene Bank Nederland N.V., Houston Agency) By: Name: Title: By: Name: Title: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: Name: Title: By: Name: Title: THE BANK OF NEW YORK By: Name: Title: BARCLAYS BANK PLC By: Name: Title: CONTINENTAL BANK N.A. By: Name: Title: CREDIT LYONNAIS, CAYMAN ISLAND BRANCH By: Name: Title: NATIONAL WESTMINSTER BANK PLC NEW YORK BRANCH By: Name: Title: NATIONAL WESTMINSTER BANK PLC NASSAU BRANCH By: Name: Title: NATIONS BANK, N.A. (formerly NCNB Texas National Bank) By: Name: Title: SOCIETE GENERALE, SOUTHWEST AGENCY By: Name: Title: THE SUMITOMO BANK, LIMITED HOUSTON AGENCY By: Name: Title: WESTPAC BANKING CORPORATION By: Name: Title: EX-4.(D) 9 1993 10K EXHIBIT 4D EXHIBIT 4d CONTINUING GUARANTY THIS CONTINUING GUARANTY (the "Guaranty") is made by Tandy Corporation, a Delaware corporation (the "Guarantor"), in favor of the Banks (as hereinafter defined), Texas Commerce Bank, National Association, as a Bank and as Administrative Agent for the other Banks and Texas Commerce Bank National Association, as Funds Administrator for the Banks. PRELIMINARY STATEMENTS WHEREAS, this Guaranty is executed and delivered pursuant to Section 7.01(d) of that certain Revolving Credit Agreement dated as of June 17, 1991 (the "Credit Agreement") among the Guarantor, Tandy Credit Corporation, a Delaware corporation ("TCC"), the Banks from time to time party thereto (the "Banks"), Texas Commerce Bank, National Association, as Administrative Agent (the "Administrative Agent"), and Texas Commerce Bank National Association, as Funds Administrator (the "Funds Administrator"); capitalized terms used in this Guaranty which are not defined herein shall have the same meanings as provided in the Credit Agreement; and WHEREAS, the Guarantor has determined that it will receive substantial benefit if Loans are made to TCC pursuant to the Credit Agreement and has agreed to execute and deliver this Guaranty; NOW, THEREFORE, in consideration of the premises, the Guarantor agrees as follows: SECTION 1. Guaranty. The Guarantor hereby absolutely, unconditionally and irrevocably guarantees the punctual payment and performance when due, whether at stated maturity, by acceleration or otherwise, of all obligations and covenants of TCC now or hereafter existing under the Credit Agreement, the Notes and any of the other Loan Documents to which it is a party whether for principal, interest (including, without limitation, interest accruing or becoming owing both prior to and subsequent to the commencement of any proceeding against or with respect to TCC under any chapter of the Bankruptcy Code of 1978, 11 U.S.C. 101 et seq.), fees, commissions, expenses (including reasonable counsel fees, including reasonable allocated costs of any Bank's in-house counsel fees, and expenses) or otherwise, and all reasonable costs and expenses, if any, incurred by the Administrative Agent, the Funds Administrator or any Bank in connection with enforcing any rights under this Guaranty (all such obligations being the "Guaranteed Obligations"), and agrees to pay any and all expenses incurred by each Bank, the Administrative Agent and the Funds Administrator in enforcing this Guaranty. This Guaranty is an absolute, unconditional, present and continuing guaranty of payment and not of collectibility and is in no way conditioned upon any attempt to collect from TCC or any other action, occurrence or circumstance whatsoever. SECTION 2. Continuing Guaranty. The Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of this Guaranty, the Notes and the other Loan Documents. The Guarantor agrees that the Guaranteed Obligations and Loan Documents may be extended or renewed, and Loans repaid and reborrowed in whole or in part, without notice to or assent by the Guarantor, and that it will remain bound upon this Guaranty notwithstanding any extension, renewal or other alteration of any Guaranteed Obligations or Loan Documents, or any repayment and reborrowing of Loans. The obligations of the Guarantor under this Guaranty shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms hereof under any circumstances whatsoever, including: (a) any extension, renewal, modification, settlement, compromise, waiver or release in respect of any Guaranteed Obligations, including any reduction or termination of all or a portion of the Total Commitment or any Commitment of any Bank; (b) any extension, renewal, amendment, modification, rescission, waiver or release in respect of any Loan Documents; (c) any release, exchange, substitution, non-perfection or invalidity of, or failure to exercise rights or remedies with respect to, any direct or indirect security for any Guaranteed Obligations, including the release of the Guarantor or other Person liable on any Guaranteed Obligations; (d) any change in the corporate existence, structure or ownership of TCC, the Guarantor, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting TCC, the Guarantor, any other guarantor or any of their respective assets; (e) the existence of any claim, defense, set-off or other rights or remedies which the Guarantor at any time may have against TCC, or TCC or the Guarantor may have at any time against any Agent, any Bank, any other guarantor or any other Person, whether in connection with this Guaranty, the Loan Documents, the transactions contemplated hereby and thereby or any other transaction; (f) any invalidity or unenforceability for any reason of the Credit Agreement or other Loan Documents, or any provision of law purporting to prohibit the payment or performance by TCC, the Guarantor or any other guarantor of the Guaranteed Obligations or Loan Documents, or of any other obligations to any Agent or any Bank; or (g) any other circumstances or happening whatsoever, whether or not similar to any of the foregoing. SECTION 3. Effect of Debtor Relief Laws. If after receipt of any payment of, or proceeds of any security applied (or intended to be applied) to the payment of all or any part of the Guaranteed Obligations, any Agent or any Bank is for any reason compelled to surrender or voluntarily surrenders, such payment or proceeds to any Person (a) because such payment or application of proceeds is or may be avoided, invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, fraudulent conveyance, fraudulent transfer, impermissible set-off or a diversion of trust funds, or (b) for any other reason, including (i) any judgment, decree or order of any court or administrative body having jurisdiction over such Agent, any Bank or any of their respective properties, or (ii) any settlement or compromise of any such claim effected by such Agent or any Bank with any such claimant (including TCC), then the Guaranteed Obligations or part thereof intended to be satisfied shall be reinstated and continue, and this Guaranty shall continue in full force as if such payment or proceeds have not been received, notwithstanding any revocation thereof or the cancellation of any Note or any other instrument evidencing any Guaranteed Obligations or otherwise; and the Guarantor shall be liable to pay such Agent and the Banks, and hereby does indemnify the Agents and the Banks and holds them harmless for the amount of such payment or proceeds so surrendered and all expenses (including reasonable attorneys' fees, court costs and expenses attributable thereto) incurred by any Agent or any Bank in the defense of any claim made against it that any payment or proceeds received by such Agent or any Bank in respect of all or part of the Guaranteed Obligations must be surrendered. The provisions of this paragraph shall survive the termination of this Guaranty, and any satisfaction and discharge of TCC by virtue of any payment, court order or any federal or state law. SECTION 4. Waiver of Subrogation. Notwithstanding any payment or payments made by the Guarantor hereunder, or any set-off or application by the Agents or any Bank of any security or of any credits or claims, the Guarantor will not assert or exercise any rights of any Agent or any Bank or of the Guarantor against TCC to recover the amount of any payment made by the Guarantor to such Agent or any Bank hereunder by way of subrogation, reimbursement, contribution, indemnity, or otherwise arising by contract or operation of law, and the Guarantor shall not have any right of recourse to or any claim against assets or property of TCC, whether or not the obligations of TCC have been satisfied, all of such rights being herein expressly waived by the Guarantor. The Guarantor agrees not to seek contribution from any other Person until all of the Guaranteed Obligations shall have been paid in full and the Total Commitment is terminated. If any amount shall nevertheless by paid to the Guarantor by TCC prior to payment in full of the Guaranteed Obligations, such amount shall be held in trust for the benefit of the Agents and the Banks and shall forthwith be paid to the Funds Administrator to be credited and applied to the Guaranteed Obligations, whether matured or unmatured. The provisions of this paragraph shall survive the termination of this Guaranty, and any satisfaction and discharge of TCC by virtue of any payment, court order or any law. SECTION 5. Subordination. The Guarantor hereby subordinates all indebtedness owing to it from TCC to all indebtedness of TCC to the Agents and the Banks, and agrees that upon the occurrence and continuance of a Default or an Event of Default, it shall not accept any payment on the same until payment in full of the obligations of TCC under the Credit Agreement, the Notes and all other Loan Documents, and shall in no circumstance whatsoever attempt to set-off or reduce any obligations hereunder because of such indebtedness. If any amount shall nevertheless be paid to the Guarantor by TCC prior to payment in full of the Guaranteed Obligations, such amount shall be held in trust for the benefit of the Agents and the Banks and shall forthwith be paid to the Funds Administrator to be credited and applied to the Guaranteed Obligations, whether matured or unmatured. SECTION 6. Waiver. The Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and waives presentment, protest, demand of payment, notice of intent to accelerate, notice of acceleration, notice of dishonor or nonpayment and any requirement that the Agents or any Bank institute suit, collection proceedings or take any other action to collect the Guaranteed Obligations, including any requirement that the Agents or any Bank protect, secure, perfect or insure any Lien against any property subject thereto or exhaust any right or take any action against TCC or any other Person or any collateral (it being the intention of the Agents, the Banks and the Guarantor that this Guaranty is to be a guaranty of payment and not of collection). It shall not be necessary for the Agents or any Banks, in order to enforce any payment by the Guarantor hereunder, to institute suit or exhaust its rights and remedies against TCC or any other Person, including others liable to pay any Guaranteed Obligations, or to enforce its rights against any security ever given to secure payment thereof. The Guarantor hereby expressly waives each and every right to which it may be entitled by virtue of the suretyship laws of the State of Texas, including, without limitation, any and all rights it may have pursuant to Rule 31, Texas Rules of Civil Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code and Chapter 34 of the Texas Business and Commerce Code. The Guarantor hereby waives marshaling of assets and liabilities, notice by any Agent or any Bank or any indebtedness or liability to which such Bank applies or may apply any amounts received by such Bank and of the creation, advancement, increase, existence, extension, renewal, rearrangement and/or modification of the Guaranteed Obligations. The Guaranty expressly waives, to the extent permitted by applicable law, the benefit of any and all laws providing for exemption of property from execution or for valuation and appraisal upon foreclosure. SECTION 7. Full force and Effect. This Guaranty is a continuing guaranty and shall remain in full force and effect until payment in full of the obligations of TCC under the Credit Agreement, the Notes and all other Loan Documents and all other amounts payable under this Guaranty and until the termination of the Total Commitment. SECTION 8. Independent Obligations. The obligations hereunder are independent of the obligations of TCC, and a separate action or actions may be brought and prosecuted against the Guarantor whether action is brought against TCC or whether TCC is joined in any such action or actions. SECTION 9. Renewals, Security, Etc. The Guarantor authorizes the Banks or any of them, without notice or demand and without affecting the Guarantor's liability hereunder, from time to time, either before or after revocation hereof, to (a) renew, compromise, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of the indebtedness or any part thereof, including increase or decrease of the rate of interest thereon as provided in the Credit Agreement; (b) take and hold security for the payment of this Guaranty or the indebtedness guaranteed, and exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any such security; (c) apply such security and direct the order or manner of sale thereof as each Bank in its discretion may determine; and (d) release or substitute any one or more of the endorsers or guarantors. SECTION 10. Information. The Guarantor acknowledges and agrees that it shall have the sole responsibility for obtaining from TCC such information concerning TCC's financial condition or business operations as the Guarantor may require, and that the Banks have no duty at any time to disclose to the Guarantor any information relating to the business operations or financial condition of TCC. SECTION 11. Set-Off. If an Event of Default shall have occurred and be continuing, each Bank is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Bank to or for the credit or the account of the Guarantor against any of and all the obligations of the Guarantor now or hereafter existing under this Guaranty held by such Bank, irrespective of whether or not such Bank shall have made any demand under this Guaranty and although such obligations may be unmatured. Each Bank agrees promptly to notify the Guarantor after any such set-off and application made by such Bank, but the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Bank under this Section 11 are in addition to other rights and remedies (including other rights of set-off) which such Bank may have under applicable law. SECTION 12. Powers. It is not necessary for the Banks or any of them to inquire into the powers of TCC or of the officers, directors, or agents acting or purporting to act on its behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder. SECTION 13. Authority; Binding Obligation. The Guarantor has all requisite power and authority to deliver and perform its obligations under this Guaranty and all corporate action on the Guarantor's part requisite for the due execution, delivery and performance of this Guaranty has been duly and effectively taken. This Guaranty constitutes the legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms. SECTION 14. Notices. All notices, consents, requests, approvals, demands and other communications (collectively, "Communications") provided for herein shall be in writing (including telecopy or telegraphic Communications) and shall be delivered by hand or overnight courier service, mailed or sent by telex, graphic scanning or other telegraphic communications equipment addressed as provided in the Credit Agreement. All communications given to any party hereto in accordance with the provisions of this Guaranty shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telex, telecopy or other telegraphic communications equipment of the sender, or on the date five Business Days after dispatch or certified or registered mail if mailed, in each case delivered, sent or mailed (property addressed) to such party as provided in this Section 14 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 14. SECTION 15. Governing Law. This Guaranty and all other documents executed in connection herewith, shall be deemed to be contracts and agreements executed by the Guarantor, under the laws of the State of Texas and of the United States of America and for all purposes shall be governed by, and construed and interpreted in accordance with, the laws of said state (without regard to principles of conflicts of law) and of the United States of America. SECTION 16. Waivers; Amendments. (a) No failure or delay of any Agent or any Bank in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Agents and the Banks hereunder are cumulative and not exclusive of any rights or remedies which they would otherwise have. No waive of any provision of this Guaranty or consent to any departure by the Guarantor therefrom shall in any event be effective unless the same shall be authorized as provided in paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Guarantor in any case shall entitle the Guarantor to any other or further notice or demand in similar or other circumstances. (b) Neither this Guaranty nor any provisions hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Guarantor and the Required Banks. SECTION 17. Usury. Notwithstanding any other provisions herein contained, no provision of this Guaranty shall require or permit the collection from the Guarantor of interest in excess of the maximum rate or amount that the Guarantor may be required or permitted to pay pursuant to any applicable law nor prevent the Guarantor from successfully asserting the claim or defense of usury. SECTION 18. Severability. In the event any one or more of the provisions contained in this Guaranty should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 19. Counterparts. This Guaranty may be executed in two or more counterparts, each of which shall constitute an original but all of which when taken together shall constitute but one contract, and shall become effective as provided in Section 20. SECTION 20. Binding Effect. This Guaranty shall become effective on the date it is executed by the Guarantor, and thereafter shall be binding upon and inure to the benefit of each Agent and each Bank and their respective successors and assigns. Without limiting the generality of the foregoing, any Bank may assign or otherwise transfer a portion of its Notes to any other Person in accordance with the Credit Agreement, and such other Person shall thereupon become vested with all the rights in respect thereof granted to the Banks herein or otherwise. SECTION 21. Captions. The captions in this Guaranty have been inserted for convenience only and shall be given no substantive meaning or significance whatever in construing the terms and provisions of this Guaranty. SECTION 22. Further Assurances. The Guarantor hereby agrees to execute and deliver all such instruments and take all such action as any Agent or the Banks may from time to time reasonably request in order to fully effectuate the purpose of this Guaranty. SECTION 23. Support Agreement. Upon the execution and delivery of this Guaranty in accordance with the terms of Section 7.01(d) of the Credit Agreement and so long as this Guaranty remains in full force and effect, the Agents and the Banks shall no longer be entitled to the benefits, and shall not be considered third-party beneficiaries, of the Support Agreement. SECTION 24. FINAL AGREEMENT OF THE PARTIES. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" FOR PURPOSES OF SECTION 26.02(a) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES. Executed as of June 18, 1991. Guarantor: TANDY CORPORATION By:___________________________ Name:_________________________ Title:________________________ EX-4.(E) 10 1993 10K EXHIBIT 4E EXHIBIT 4e CONTINUING GUARANTY THIS CONTINUING GUARANTY (the "Guaranty") is made by Tandy Corporation, a Delaware corporation (the "Guarantor"), in favor of the holders from time to time of commercial paper, medium term notes and other indebtedness issued by Tandy Credit Corporation, a Delaware corporation ("TCC"), that (a) is or may be publicly traded and (b) is rated by at least one nationally recognized rating agency (all such commercial paper, notes and other indebtedness of TCC meeting both such criteria being collectively, the "Public Rated Debt"). WHEREAS, the Guarantor is the owner and the holder of all of the issued and outstanding capital stock of TCC; and WHEREAS, the Guarantor has determined that it will receive substantial benefit if the publicly traded debt of TCC is Publicly Rated Debt; NOW, THEREFORE, in consideration of the premises, the Guarantor agrees as follows: SECTION 1. Guaranty. The Guarantor hereby absolutely, unconditionally and irrevocably guarantees the punctual payment and performance when due, whether at stated maturity, by acceleration or otherwise, of all obligations and covenants of TCC now or hereafter existing under any Publicly Rated Debt issued by TCC for principal, interest (including, without limitation, interest accruing or becoming owing both prior to and subsequent to the commencement of any proceeding against or with respect to TCC under any chapter of the Bankruptcy Code of 1978, 11 U.S.C. 101 et seq.), or otherwise, and all reasonable costs and expenses, if any, incurred by the holders of Publicly Rated Debt (the "Debtholders") in connection with enforcing any rights under this Guaranty (all such obligations being the "Guaranteed Obligations"), and agrees to pay any and all expenses incurred by each Debtholder in enforcing this Guaranty. This Guaranty is an absolute, unconditional, present and continuing guaranty of payment and not of collectibility and is in no way conditioned upon any attempt to collect from TCC or any other action, occurrence or circumstance whatsoever. SECTION 2. Continuing Guaranty. The Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of this Guaranty, and any note or other instrument or document ("Debt Documents") evidencing any Publicly Rated Debt. The Guarantor agrees that the Guaranteed Obligations and Debt Documents may be extended or renewed, and Publicly Rated Debt repaid and reborrowed in whole or in part, without notice to or assent by the Guarantor, and that it will remain bound upon this Guaranty notwithstanding any extension, renewal or other alteration of any Guaranteed Obligations or Debt Documents, or any repayment and reborrowing of Publicly Rated Debt. The obligations of the Guarantor under this Guaranty shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms hereof under any circumstances whatsoever, including: (a) any extension, renewal, modification, settlement, compromise, waiver or release in respect of any Guaranteed Obligations; (b) any extension, renewal, amendment, modification, rescissions, waiver or release in respect of any Debt Documents; (c) any release, exchange, substitution, non-perfection or invalidity of, or failure to exercise rights or remedies with respect to, any direct or indirect security for any Guaranteed Obligations, including the release of the Guarantor or other person liable on any Guaranteed Obligations; (d) any change in the corporate existence, structure or ownership of TCC, the Guarantor, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting TCC, the Guarantor, any other guarantor or any of their respective assets; (e) the existence of any claim, defense, set-off or other rights or remedies which the Guarantor at any time may have against TCC, or TCC or the Guarantor may have at any time against any Debtholder, any other guarantor or any other person, whether in connection with this Guaranty, the Debt Documents or any other transaction; (f) any invalidity or unenforceability for any reason of the Debt Documents, or any provision of law purporting to prohibit the payment or performance by TCC, the Guarantor or any other guarantor of the Guaranteed Obligations or Debt Documents, or of any other obligations to any Debtholder,; or (g) any other circumstances or happening whatsoever, whether or not similar to any of the foregoing. SECTION 3. Effect of Debtor Relief Laws. If after receipt of any payment of, or proceeds of any security applied (or intended to be applied) to the payment of all or any part of the Guaranteed Obligations, any Debtholder is for any reason compelled to surrender or voluntarily surrenders, such payment or proceeds to any person (a) because such payment or application of proceeds is or may be avoided, invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, fraudulent conveyance, fraudulent transfer, impermissible set-off or a diversion of trust funds, or (b) for any other reason, including (i) any judgment, decree or order of any court or administrative body having jurisdiction over such Debtholder or any of their respective properties, or (ii) any settlement or compromise of any such claim effected by such Debtholder with any such claimant (including TCC), then the Guaranteed Obligations or part thereof intended to be satisfied shall be reinstated and continue, and this Guaranty shall continue in full force as if such payment or proceeds have not been received, notwithstanding any revocation thereof or the cancellation of any Debt Document evidencing any Guaranteed Obligations or otherwise; and the Guarantor shall be liable to pay such Debtholder, and hereby does indemnify the Debtholders and holds them harmless for the amount of such payment or proceeds so surrendered and all expenses (including reasonable attorneys' fees, court costs and expenses attributable thereto) incurred by any Debtholder in the defense of any claim made against it that any payment or proceeds received by such Debtholder in respect of all or part of the Guaranteed Obligations must be surrendered. The provisions of this paragraph shall survive the termination of this Guaranty, and any satisfaction and discharge of TCC by virtue of any payment, court order or any federal or state law. SECTION 4. Waiver of Subrogation. Notwithstanding any payment or payments made by the Guarantor hereunder, or any set-off or application by the Debtholders of any security or of any credits or claims, the Guarantor will not assert or exercise any rights of any Debtholder or of the Guarantor against TCC to recover the amount of any payment made by the Guarantor to such Debtholder by way of subrogation, reimbursement, contribution, indemnity, or otherwise arising by contract or operation of law, and the Guarantor shall not have any right of recourse to or any claim against assets or property of TCC, whether or not the obligations of TCC have been satisfied, all of such rights being herein expressly waived by the Guarantor. The Guarantor agrees not to seek contribution from any other person until all of the Guaranteed Obligations shall have been paid in full. If any amount shall nevertheless by paid to the Guarantor by TCC prior to payment in full of the Guaranteed Obligations, such amount shall be held in trust for the benefit of the Debtholders and shall forthwith be paid to the Debtholder or its representative to be credited and applied to the Guaranteed Obligations, whether matured or unmatured. The provisions of this paragraph shall survive the termination of this Guaranty, and any satisfaction and discharge of TCC by virtue of any payment, court order or any law. SECTION 5. Subordination. The Guarantor hereby subordinates all indebtedness owing to it from TCC to all indebtedness of TCC to the Debtholders, and agrees that upon the occurrence and continuance of a default or an event of default under any Debt Document, it shall not accept any payment on the same until payment in full of the Guaranteed Obligations of TCC under any Debt Documents, and shall in no circumstance whatsoever attempt to set-off or reduce any obligations hereunder because of such indebtedness. If any amount shall nevertheless be paid to the Guarantor by TCC prior to payment in full of the Guaranteed Obligations, such amount shall be held in trust for the benefit of the Debtholders and shall forthwith be paid to the Debtholders or their representatives to be credited and applied to the Guaranteed Obligations, whether matured or unmatured. SECTION 6. Waiver. The Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and waives presentment, protest, demand of payment, notice of intent to accelerate, notice of acceleration, notice of dishonor or nonpayment and any requirement that the Debtholders institute suit, collection proceedings or take any other action to collect the Guaranteed Obligations, including any requirement that the Debtholders protect, secure, perfect or insure any Lien against any property subject thereto or exhaust any right or take any action against TCC or any other person or any collateral (it being the intention of the Guarantor that this Guaranty is to be a guaranty of payment and not of collection). It shall not be necessary for the Debtholders, in order to enforce any payment by the Guarantor hereunder, to institute suit or exhaust it rights and remedies against TCC or any other person, including others liable to pay any Guaranteed Obligations, or to enforce its rights against any security ever given to secure payment thereof. The Guarantor hereby expressly waives each and every right to which it may be entitled by virtue of the suretyship laws of any state. The Guarantor hereby waived marshaling of assets and liabilities, notice by any Debtholder or any indebtedness or liability to which such Debtholder applies or may apply any amounts received by such Debtholder, and of the creation, advancement, increase, existence, extension, renewal, rearrangement and/or modification of the Guaranteed Obligations. The Guaranty expressly waives, to the extent permitted by applicable law, the benefit of any and all laws providing for exemption of property from execution or for valuation and appraisal upon foreclosure. SECTION 7. Full Force and Effect. This Guaranty is a continuing guaranty and shall remain in full force and effect until payment in full of the Guaranteed Obligations of TCC and all other amounts payable under this Guaranty. SECTION 8. Independent Obligations. The obligations hereunder are independent of the obligations of TCC, and a separate action or actions may be brought and prosecuted against the Guarantor whether action is brought against TCC or whether TCC is joined in any such action or actions. SECTION 9. Renewals, Security, Etc. The Guarantor authorized the Debtholders or any of them, without notice or demand and without affecting the Guarantor's liability hereunder, from time to time, either before or after revocation hereof, to (a) renew, compromise, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of the Publicly Rated Debt or any part thereof, including increase or decrease of the rate of interest thereon; (b) take and hold security for the payment of this Guaranty or the Publicly Rated Debt guaranteed, and exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any such security; (c) apply such security and direct the order or manner of sale thereof as each Debtholders in its discretion may determine; and (d) release or substitute any one or more of the endorsers or guarantors. SECTION 10. Information. The Guarantor acknowledges and agrees that it shall have the sole responsibility for obtaining from TCC such information concerning TCC's financial condition or business operations as the Guarantor may require, and that the Debtholders have no duty at any time to disclose to the Guarantor any information relating to the business operations or financial condition of TCC. SECTION 11. Powers. It is not necessary for the Debtholders or any of them to inquire into the powers of TCC or of the officers, directors, or agents acting or purporting to act on its behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder. SECTION 12. Authority; Binding Obligation. The Guarantor has all requisite power and authority to deliver and perform its obligations under this Guaranty and all corporate action on the Guarantor's part requisite for the due execution, delivery and performance of this Guaranty has been duly and effectively taken. This Guaranty constitutes the legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms. SECTION 13. Notices. All notices, consents, requests, approvals, demands and other communications (collectively, "Communications") provided for herein shall be in writing (including telecopy or telegraphic Communications) and shall be delivered by hand or overnight courier service, mailed or sent by telex, graphic scanning or other telegraphic communications equipment addressed as provided in any Debt Document. All communications given to any party hereto in accordance with the provisions of this Guaranty shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telex, telecopy or other telegraphic communications equipment of the sender, or on the date five Business Days after dispatch or certified or registered mail if mailed, in each case delivered, sent or mailed (property addressed) to such party as provided in the Section 13 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 13. SECTION 14. Governing Law. This Guaranty shall be deemed to be executed by the Guarantor under the laws of the State of Texas and of the United States of America and for all purposes shall be governed by, and construed and interpreted in accordance with, the laws of said state (without regard to principles of conflicts of law) and of the United States of America. SECTION 15. Waivers; Revocability. (a) No failure or delay of any Debtholder in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Debtholders hereunder are cumulative and not exclusive of any rights or remedies which they would otherwise have. No waiver of any provision of this Guaranty or consent to any departure by the Guarantor therefrom shall in any event be effective unless the same shall be authorized as provided in paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Guarantor in any case shall entitle the Guarantor to any other or further notice or demand in similar or other circumstances. (b) So long as TCC has no Publicly Rated Debt outstanding, this Guaranty may be terminated by the Guarantor, and/or TCC may be dissolved or merged into the Guarantor, upon thirty (30) day written notice to the nationally recognized rating agencies which at such time have a current rating for such Publicly Rated Debt. SECTION 16. Usury. Notwithstanding any other provisions herein contained, no provision of this Guaranty shall require or permit the collection from the Guarantor of interest in excess of the maximum rate or amount that the Guarantor may be required or permitted to pay pursuant to any applicable law nor prevent the Guarantor from successfully asserting the claim or defense of usury. SECTION 17. Severability. In the event any one or more of the provisions contained in this Guaranty should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein or therein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 18. Binding Effect. This Guaranty shall become effective on the date it is executed by the Guarantor, and thereafter shall inure to the benefit of each Debtholder and their respective successors and assigns. SECTION 19. Captions. The captions in this Guaranty have been inserted for convenience only and shall be given no substantive meaning or significance whatever in construing the terms and provisions of this Guaranty. SECTION 20. Further Assurances. The Guarantor hereby agrees to execute and deliver all such instruments and take all such action as any Debtholder may from time to time reasonably request in order to fully effectuate the purpose of this Guaranty. Executed as of June 18, 1991. Guarantor: TANDY CORPORATION By: /s/ R. L. Ramsey Name: Richard L. Ramsey Title:Vice President and Controller EX-10.(A) 11 1993 10K EXHIBIT 10A Exhibit 10a SALARY CONTINUATION PLAN FOR EXECUTIVE EMPLOYEES OF TANDY CORPORATION AND SUBSIDIARIES (RESTATED) ARTICLE ONE PURPOSE Section 1.1 The purpose of the Salary Continuation Plan for Executive Employees of Tandy Corporation and Subsidiaries (the "Plan") is to afford Tandy Corporation ("Tandy") an additional opportunity to secure and retain the services of outstanding key executive employees by providing, subject to the provisions of the Plan, income payments to key executive employees during their lifetimes after retirement and to their beneficiaries following their death. ARTICLE TWO DEFINITIONS Section 2.1 Beneficiary. The recipient(s) designated (in accordance with Article Seven) by a Participant in the Plan to whom benefits are payable following his death. Section 2.2 Committee. The Insurance Committee of Tandy which shall administer the Plan in accordance with Article Nine. Section 2.3 Disability. A physical or mental condition which, in the opinion of the Committee, totally and presumably permanently prevents a Participant from substantially performing duties for which such Participant is suited to perform either by education or training, or if such Participant is on a Leave of Absence when such condition develops, substantially performing duties for which such Participant is suited to perform either by education or training. A determination that Disability exists shall be based upon competent medical evidence satisfactory to the Committee. The date that any person's Disability occurs shall be deemed to be the date such condition is determined to exist by the Committee. Section 2.4 Employee. A regular full-time executive employee of an Employer. Section 2.5 Employer. Tandy Corporation, a Delaware Corporation, and those subsidiary corporations in which Tandy owns at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote. Section 2.6 Leave of Absence. Any period during which: (a) an Employee is absent with the prior consent of his Employer, which consent shall be granted under uniform rules applied to all Employees on a nondiscriminatory basis, but only if such person is an Employee immediately prior to the commencement of such period of authorized absence and resumes employment with Employer not later than the first working day following the expiration of such period of authorized absence; or (b) an Employee is a member of the Armed Forces of the United States and his reemployment rights are guaranteed by law, but only if such person is an Employee immediately prior to becoming a member of such Armed Forces and resumes employment with Employer within the period during which his reemployment rights are guaranteed by law. Section 2.7 Participant. An Employee who has been selected and has accepted a Plan Agreement as provided in Article Three. Section 2.8 Plan Agreement. The agreement between an employer and a Participant, entered into in accordance with Article Three (as such form may be amended from time to time hereunder). Section 2.9 Plan Compensation. An amount determined by the Committee as set forth in the Plan Agreement with each Participant, such amount to be determinative for the purposes hereof regardless of a Participant's total compensation paid by his Employer. Section 2.10 Retirement. The following classifications of Retirement as referred to in this Plan are defined as follows: (a) Early Retirement. The voluntary election, as opposed to involuntary termination by Employer, prior to the Participant's attaining the age of sixty-five (65) years, by a Participant to terminate his employment after attaining the age of fifty-five (55) years. (b) Normal Retirement. The termination of a Participant's service with Employer at the date of attaining age sixty-five (65) years. (c) Late Retirement. The termination of a Participant's service with Employer after the Participant's attaining the age of sixty-five (65) years. ARTICLE THREE SELECTION OF PARTICIPANTS AND AGREEMENT TO PARTICIPATE Section 3.1 Participation in the Plan shall be limited to those Employees of Employer who shall be selected for participation by the Committee, whose decisions in this respect shall be conclusive. Section 3.2 Participation in the Plan by an Employee so selected by the Committee is voluntary and subject to his written acceptance of a Plan Agreement executed by Employer and submitted to him by the Committee. Unless and until a Plan agreement has been so submitted to and accepted by him, he shall not become a Participant. Section 3.3 Subject to Section 8.4 hereof, the Committee reserves the right, at its discretion, and without prejudice or liability, to terminate any Plan Agreement with any Participant of any Employer at any time prior to the Participant's retirement or death. ARTICLE FOUR LIFE INSURANCE Section 4.1 Employer may obtain permanent life insurance insuring the life of any Participant as a means of funding Employer's obligations to his Beneficiary in whole or part. Employer shall be the sole owner and beneficiary of all such policies of insurance so obtained and of all incidents of ownership therein, including without limitation, the rights to all cash and loan values, dividends (if any), death benefits and the right to terminate. No Beneficiary or Participant shall be entitled to any rights, interests or equities in such policies or to any specific asset of Employer of any type, and on the contrary, their rights against Employer under the Plan shall be solely as general creditors. Section 4.2 If as a result of misrepresentations made by a Participant in any application for life insurance upon his life obtained by Employer hereunder, the insurance carrier or carriers or any reinsurance thereof successfully avoid(s) payment to Employer of the proceeds of its or their policy or policies, or such proceeds are not payable because the Participant's death results from suicide within two years of the issuance of such policy or within two years of the issuance to Employer of additional policies obtained by Employer hereunder, then, in any of said events, and notwithstanding any other provisions of the Plan or of the Plan Agreement with such Participant, Employer shall have no obligation to his Beneficiary to provide any of the death benefits otherwise payable under the terms thereof. Section 4.3 Each Participant shall cooperate in the securing of life insurance on his life by furnishing such information as the insurance company may require, taking such physical examinations as may be necessary, and taking any other action which may be requested by the Employer or the insurance company to obtain such insurance coverage. If a Participant refuses to cooperate in the securing of life insurance, or if Employer is unable to secure life insurance at standard rates on a Participant, then, the Plan Agreement shall be of no force and effect as to a Participant unless Employer waives such requirement in writing. ARTICLE FIVE BENEFITS PAYABLE TO PARTICIPANTS AND TO BENEFICIARIES OF PARTICIPANTS Section 5.1 Subject to the terms and conditions of the Plan, upon the Retirement of a Participant, Employer agrees to pay to Participant a Retirement benefit as follows: (a) Normal Retirement. If a Participant retires at the date of Normal Retirement, then Employer agrees to pay to Participant or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Retirement benefits hereunder, all from its general assets, an amount equal to five hundred percent of Plan Compensation, such sum to be paid as set forth in Section 5.3 hereof. (b) Early Retirement. If a Participant retires at a time that constitutes an Early Retirement, then, Employer agrees to pay to Participant or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Early Retirement benefits hereunder, all from its general assets, an amount equal to five hundred percent of Plan Compensation, reduced by five percent per year for each year that Early Retirement precedes the date of Normal Retirement. Such year shall be a fiscal year beginning on the date a Participant attains age fifty-five (55). Any reduction for a part of a year shall be prorated on a daily basis assuming a 365 day year. Such amount shall be paid as set forth in Section 5.3 hereof. (c) Late Retirement. If a Participant retires at a date that constitutes Late Retirement, then, Employer agrees to pay to Participant or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Late Retirement Benefits hereunder, all from its general assets, an amount equal to five hundred percent of Plan Compensation, reduced by a percentage determined as follows: At Date of Late Retirement Percent of Reduction of Attainment of Age 500% of Plan Compensation 66 0% 67 0% 68 0% 69 0% 70 0% 71 20% 72 40% 73 60% 74 80% 75 100% The percent of reduction of five hundred percent of Plan Compensation shall be measured on a fiscal year beginning on the date of a Participant's date of birth and shall commence on the day after the date a Participant attains age 70, and any reduction for a part of a year shall be prorated on a daily basis at the applicable percentage assuming a 365 day year. Such amount shall be paid as set forth in Section 5.3 hereof. Section 5.2 Subject to the terms and conditions of the Plan, upon the death of a Participant, but only if the Participant is an Employee of Employer at his death and is not entitled to Retirement benefits pursuant to a Plan Agreement at such time, Employer agrees to pay to his Beneficiary from its general assets an amount equal to five hundred percent of Plan Compensation as reflected in Employee's Plan Agreement or, as the case may be, in the last amendment to his Plan Agreement. With respect to such benefits, however, it is further provided that: (a) No benefits shall be payable to the Beneficiary of a Participant in those instances covered by Section 4.2; (b) If a Participant dies while an Employee of Employer after the date of his Normal Retirement, then the amount payable to his Beneficiary upon a Participant's death shall be reduced as set forth in Section 5.1(c) hereof. Section 5.3 The aggregate amount payable upon the Normal Retirement, Early Retirement, Late Retirement or death of a Participant to a Participant or his Beneficiary shall be paid in 120 equal monthly installment payments commencing on the first day of the month next following thirty (30) days after Retirement or after the Committee's receipt of a certified death or proof of death certificate verifying the Participant's death. A Participant shall notify Employer of Retirement by hand delivery or by certified or registered mail, return receipt requested, postage prepaid, of a written notice of Retirement specifying the effective date of Retirement, such written notice to be addressed to: Insurance Committee of the Board of Directors, Tandy Corporation, 1800 One Tandy Center, Fort Worth, Texas 76102. Such notice shall be deemed to be received when actually received by said Insurance Committee at said address as may be changed from time to time in the Plan Agreements, as amended. Section 5.4 Until actually paid and delivered to the Participant or to the Beneficiary entitled to same, none of the benefits payable by Employer under any Plan Agreement shall be liable for the debts or liabilities of either the Participant or his Beneficiary, nor shall the same be subject to seizure by any creditor of the Participant or his Beneficiary under any writ or proceeding at law, in equity or in bankruptcy. Further, no Participant or Beneficiary shall have power to sell, assign, transfer, encumber, or in any manner anticipate or dispose of the benefits to which he is entitled or may become entitled under a Plan Agreement. Section 5.5 After Participant has attained the age of fifty-five (55) and is an Employee of Employer, or during the period that Participant is receiving Retirement benefits under a Plan Agreement, and for one year after cessation of employment after attaining the age of fifty-five (55) for any reason or for one year after cessation of payment of Retirement benefits, whichever shall last occur, Participant agrees that he will not, either directly or indirectly, within the United States of America or in any country of the world that Tandy sells, imports, exports, assembles, packages or furnishes its products, articles, parts, supplies, accessories or services or is causing them to be sold, imported, exported, assembled, packaged or furnished through related entities, representatives, agents, or otherwise, own, manage, operate, join, control, be employed by, be a consultant to, be a partner in, be a creditor of, engage in joint operations with, be a stockholder, officer or director of any corporation, sole proprietorship or business entity of any type, or participate in the ownership, management, direction, or control or in any other manner be connected with, any business of manufacturing, designing, programming, servicing, repairing, selling, ceasing, or renting any products, articles, parts, supplies, accessories or services which is at the time of Participant's engaging in such conduct competitive with products, articles, parts, supplies, accessories or services manufactured, sold, imported, exported, assembled, packaged or furnished by Tandy, except as a shareholder owning less than five percent (5%) of the shares of a corporation whose shares are traded on a stock exchange or in the over-the-counter market by a member of the National Association of Securities Dealers. In the event that a Participant takes Retirement and engages in any of the activities described in the immediately preceding sentence, or engaged in any of such activities prior to Retirement, then, without any further notification, and upon determination by the Committee that such a Participant is engaged or has engaged in such activities, such Committee's decision to be conclusive and binding upon all concerned, and notwithstanding any other provisions of the Plan or of the Plan Agreement with such Participant, Employer's obligation to a Participant to pay any Retirement or Death benefits hereunder shall automatically cease and terminate, and Employer shall have no further obligation to such Participant or Beneficiary pursuant to the Plan or the Plan Agreement. Employer may enforce this provision by suit for damages which shall include but not be limited to all sums paid to Participant hereunder, or for injunction, or both. Section 5.6 Employer may liquidate out of the interest of a Participant hereunder, but only as Retirement or death benefits become due and payable hereunder, any outstanding loan or loans or other indebtedness of a Participant. Employer may elect not to distribute Retirement or death benefits to any Participant or to a Beneficiary unless and until all unpaid loans or other indebtedness due to Employer from such Participant, together with interest, have been paid in full. Section 5.7 Subject to termination or amendment of the Plan, Plan Agreement, or both, a Participant's participation in the Plan shall continue during his Disability or his taking a Leave of Absence. A Participant who is Disabled or on Leave of Absence shall notify Employer of his date of Retirement as provided in Section 5.3 hereof. ARTICLE SIX AMENDMENTS OF PLAN AGREEMENTS Section 6.1 The Committee may enter into amendments to the Plan Agreement with any Participant for the purpose of increasing the benefits payable to the Participant or his Beneficiary in view of increases in his compensation following the execution of such Plan Agreement or the last amendment thereto and for the purpose of amending any provision of this Plan as it might apply to a Participant. In such cases, the acceptance of an amendment by a Participant is voluntary and until the amended Plan Agreement has been submitted to and accepted by him, it shall not be effective. ARTICLE SEVEN BENEFICIARIES OF PARTICIPANTS Section 7.1 At the time of his acceptance of a Plan Agreement, a Participant shall be required to designate the Beneficiary to whom benefits under the Plan and his Plan Agreement will be payable upon his death. A Beneficiary may be one or more persons or entities, such as dependents, persons who are natural objects of the Participant's bounty, an inter vivos or testamentary trust, or his estate. Such Beneficiaries may be designated contingently or successively as the Participant may direct. The designation of his Beneficiary shall be made by the Participant on a Beneficiary Designation Form to be furnished by the Committee and filed with it. Section 7.2 A Participant may change his Beneficiary, as he may desire, by filing new and amendatory Beneficiary Designation Forms with the Committee. Section 7.3 In the event a Participant designates more than one Beneficiary to receive benefit payments simultaneously, each such Beneficiary shall be paid such proportion of such benefits as the Participant shall have designated. If no such percentage designation has been made, the Committee shall hold all benefit payments until the Beneficiaries agree as to the distribution of the funds or a judicial determination has been made. Section 7.4 If the designated Beneficiary dies before the Participant in question and no Beneficiary was successively named, or if the designated Beneficiary dies before complete payment of the deceased Participant's benefits have been made and no Beneficiary was successively named, the Committee shall direct that such benefits (or the balance thereof) be paid to those persons who are the deceased Participant's heirs-at-law determined in accordance with the laws of descent and distribution in force at the date hereof in the State of Texas for separate personal property, such determination to be made as though the Participant had died intestate and domiciled in Texas. Section 7.5 Whenever any person entitled to payments under this Plan shall be a minor or under other legal disability or in the sole judgment of the Committee shall otherwise be unable to apply such payments to his own best interest and advantage (as in the case of illness, whether mental or physical, or where the person not under legal disability is unable to preserve his estate for his own best interest), the Committee may in the exercise of its discretion direct all or any portion of such payments to be made in any one or more of the following ways unless claims shall have been made therefor by an existing and duly appointed guardian, conservator, committee or other duly appointed legal representative, in which event payment shall be made to such representative: (1) directly to such person unless such person shall be an infant or shall have been legally adjudicated incompetent at the time of the payment; (2) to the spouse, child, parent or other blood relative to be expended on behalf of the person entitled or on behalf of those dependents as to whom the person entitled has the duty of support; (3) to a recognized charity or governmental institution to be expended for the benefit of the person entitled or for the benefit of those dependents as to whom the person entitled has the duty of support; or (4) to any other institution, approved by the Committee, to be expended for the benefit of the person entitled or for the benefit of those dependents as to whom the person entitled has the duty of support. The decision of the Committee will, in each case, be final and binding upon all persons and the Committee shall not be obliged to see to the proper application or expenditure of any payments so made. Any payment made pursuant to the power herein conferred upon the Committee shall operate as a complete discharge of the obligations of Employer and of the Committee. Section 7.6 If the Committee has any doubt as to the proper Beneficiary to receive payments hereunder, the Committee shall have the right to withhold such payments until the matter is finally adjudicated or, the Committee may direct Employer to bring a suit for interpleader in any appropriate court, pay any amounts due into the court, and Employer and/or Committee shall have the right to recover its reasonable attorney's fees from such proceeds so paid or to be paid. Any payment made by the Committee, in good faith and in accordance with this Plan, shall fully discharge the Committee and Employer from all further obligations with respect to such payments. ARTICLE EIGHT TERMINATION OF PARTICIPATION Section 8.1 Except as provided in Section 8.4 hereof, termination of a Participant's employment by Employer other than by reason of Retirement, Permanent Disability or Leave of Absence, whether by action of Employer or the Participant's resignation, shall terminate the Participant's participation in the Plan. Neither the Plan nor the Plan Agreement shall in any way obligate Employer to continue the employment of a Participant, nor will either limit the right of Employer to terminate a Participant's employment at any time, for any reason, with or without cause. Section 8.2 Except as provided in Section 8.4 hereof, participation in the Plan by a Participant shall also terminate upon the happening of any of the following: (a) The Plan is terminated by Employer in accordance with Article Ten; or (b) His Plan Agreement is terminated by Employer or the Committee in accordance with Section 3.3. Section 8.3 Except as provided in Section 8.4 hereof, upon termination of a Participant's participation in the Plan, all of Employer's obligations to the Participant and his Beneficiary under the Plan and Plan Agreement and each of them, shall terminate and be of no further effect. Section 8.4 If a Participant's participation in the Plan is terminated, by: (a) termination of the Plan; (b) termination of a Plan Agreement; or (c) termination of employment for any reasons other than (i) Death or Retirement, which shall be governed by Article Five, or (ii) dishonest or fraudulent conduct of a Participant or indictment, or the possibility of indictment of a Participant of a felony crime involving moral turpitude, in which event no vesting under this Section 8.4 shall occur, then such Participant shall be entitled, as set forth below, to a percentage of five hundred percent of his Plan Compensation as follows: Age Attained at Date of Event Set Forth in 8.4(a), (b) or (c) % Vested Age 54 or younger 0% Age 55 to age 65 A percent as determined in Section 5.1(b) hereof Age 65 to age 70 100% Age 70 to age 75 A percent as determined in Section 5.1(c) hereto Age 75 and thereafter 0% The amount payable under this Section 8.4 shall be determined as of the date of the event set forth in Section 8.4(a), (b) or (c) hereof and such amount as so determined at that time shall not be altered or changed thereafter except that the provisions of Section 5.5 hereof shall remain fully applicable during the Participant's employment by Employer, during the payment of benefits under this Section 8.4 and for one year after termination of employment or payment of benefits. The amount payable under this Section 8.4 shall be paid as set forth in Section 5.3 hereunder to commence on the first day of the month next following thirty (30) days after cessation of Participant's employment with Employer. ARTICLE NINE ADMINISTRATION OF THE PLAN Section 9.1 The Plan shall be administered by the Insurance Committee of the Board of Directors of Tandy, as it is presently constituted or as it may be changed from time to time by the Board of Directors of Tandy. Section 9.2 In addition to the express powers and authorities accorded the Committee under the Plan, it shall be responsible for: (a) Construing and interpreting the Plan; (b) Computing and certifying to Employer the amount of benefits to be provided in each Plan Agreement for the Participant or the Beneficiary of the Participant; and (c) determining the right of a Participant or a Beneficiary to payments under the Plan and otherwise authorizing disbursements of such payments by Employer; in these and all other respects its decisions shall be conclusive and binding upon all concerned. Section 9.3 Employer agrees to hold harmless and indemnify the members of the Committee against any and all expenses, claims and causes of action by or on behalf of any and all parties whomsoever, and all losses therefrom, including without limitation the cost of defense and attorney's fees, based upon or arising out of any act or omission relating to or in connection with the Plan other than losses resulting from any such Committee member's fraud or willful misconduct. ARTICLE TEN TERMINATION OR AMENDMENT OF THE PLAN Section 10.1 Employer reserves the right to terminate or amend this Plan, in whole or in part, at any time, or from time to time, by resolution of its Board of Directors, provided, only, that no such termination or amendment shall affect those rights and benefits previously vested in a Participant or a Beneficiary under Section 8.4 hereof. ARTICLE ELEVEN MISCELLANEOUS Section 11.1 The Plan and Plan Agreement and each of their provisions shall be construed and their validity determined under the laws of the State of Texas. Section 11.2 The masculine gender, where appearing in the Plan or Plan Agreement, shall be deemed to include the feminine gender. The words "herein", "hereunder" and other similar compounds of the word "here" shall mean and refer to the entire Plan and Plan Agreement, not to any particular provision, section or subsection, and words used in the singular or plural may be construed as though in the plural or singular where they would so apply. Section 11.3 Any suit against Employer or the Committee or any member thereof concerning any provisions hereunder, the construction of the Plan, payment of benefits hereunder, or in any other manner connected with this Plan may only be brought in the appropriate state or federal court located in Tarrant County, Texas, and each Participant agrees not to bring any suit in any other county, state or countries. It is agreed that Employer may bring any suit to enforce the provisions of Section 5.5 hereof in the appropriate state or federal court located in Tarrant County, Texas. Section 11.4 Any person born on February 29 shall be deemed to have been born on the immediately preceding February 28 for all purposes of this Plan. Section 11.5 This Plan shall be binding upon and inure to the benefit of any successor of Employer and any such successor shall be deemed substituted for Employer under the terms of this Plan. As used in this Plan, the term "successor" shall include any person, firm, corporation, or other business entity which at any time, whether by merger, purchase, or otherwise, acquires all or substantially all of the assets or business of Employer. The Salary Continuation Plan for Executive Employees of Tandy Corporation and Subsidiaries (the "Plan") was adopted November 8, 1979. This copy of the Plan has been restated to include amendments to the Plan pursuant to resolution at a special meeting of the Board of Directors of Tandy Corporation on April 27, 1984. EX-10.(B) 12 1993 10K EXHIBIT 10B Exhibit 10b Form of Executive Pay Plan Letters Form 1 is used in the case of seven executive officers. Form 2 is used in the case of one executive officer. Form 3 is used in the case of one executive officer. Form 4 is used in the case of one executive officer. In no case will the maximum bonus amount exceed the amount of the individuals base salary. (Date) Form 1 TO: (Name) FROM: Richard L. Ramsey SUBJECT: Compensation Plan, Fiscal Year 1994 Your compensation plan for fiscal year 1994, as approved by the Organization and Compensation Committee of the Board of Directors, is outlined below. I. FY 1994 Base Salary Your Base Salary for FY94 shall be $_________ II. Your bonus for FY94 shall be determined by multiplying the percent determined in the following TARGET INCENTIVE GOALS times the FACTORS set forth below. The bonus amounts payable are subject to limitations set forth in Paragraph III and IV. TARGET INCENTIVE GOALS: 1. INCOME Each percentage point of positive change that the Tandy Corporation and subsidiaries income from operations (before income taxes) increases from the prior year. 2. EARNINGS PER SHARE Each percentage point of positive change that the Tandy Corporation earnings per share increases from the prior year. 3. STOCK PRICE a. Each percentage point of positive change that the Tandy Corporation stock price increases, based on the average daily closing price for December 1993 ($47.3) and December 1994. b. If the stock performance exceeds the "Peer Group" average and the 5% minimum increase, a bonus will be paid equal to the stock price increase amount. In addition, if Tandy's stock percent increase is in or above the 75th percentile of the "Peer Group", an additional bonus will be paid equal to the stock price increase amount. Percentages shall be calculated to two decimal points. Your factors to be used for each of the calculations above are as follows: 1. Income increase: $_________ 2. Earnings per share increase: $___________ 3. Stock price increase: $_____________ III. Minimum Bonus Minimum Threshold Increase Percent for Each Target Incentive Goal Minimum Increase % 1. Income ___ 2. Earnings per share ___ 3. Stock price ___ Bonus amounts earned from each of the factors which exceed the minimum increase above will be accumulated. No bonus will be paid unless the accumulated bonus exceeds __% of your base salary. Bonus will only be paid on each goal which exceeds the Minimum Increase % set forth above. IV. Maximum Bonus The bonus paid will be limited to an amount not to exceed $_______ V. This compensation plan is not an employment contract, but a method of calculating your total earnings. You forfeit your rights to receive a bonus if you resign before the end of the current fiscal year. If you are terminated by the Company, you forfeit your rights to receive a bonus except at the sole discretion of the Company and in such amount as the Company might decide. If you retire at age 55 or over, provided the Company has given its consent to your early retirement, or die before the end of the then current fiscal year, your bonus for the current year-to-date will be calculated to the nearest end of the month preceding or succeeding such event, using the formula above and adjusting for the partial year. The amount will be paid to you or to the legal representative of your estate. VI. If at any time during your continued employment, your responsibility, duties or title changes, this plan is subject to revision or termination by the Company at the time of the foregoing change. (Date) Form 2 TO: (Name) FROM: Richard L. Ramsey SUBJECT: Compensation Plan, Fiscal Year 1994 Your compensation plan for fiscal year 1994 is outlinedbelow. I. FY 1994 Base Salary Your Base Salary for FY94 shall be $_________ II. Your bonus for FY94 shall be determined by multiplying the percent determined in the following TARGET INCENTIVE GOALS times the FACTORS set forth below. The bonus amounts payable are subject to limitations set forth in Paragraph III and IV. TARGET INCENTIVE GOALS: 1. INCOME Each percentage point of positive change that the Tandy Corporation and subsidiaries income from operations (before income taxes) increases from the prior year. 2. Each percentage point of positive change that the Tandy Service's net income (Pre Tandy Admin) increases from the prior year. Tandy Services, for this calculation, will include TE-US, TE Asia, Tandy Services Consolidation (P&L RS3-8200), and Tandy Transportation. Your factors to be used for each of the calculations above are as follows: 1. Tandy Corporation income increase: $_______ 2. Tandy Services income increase: $_______ III. Minimum Bonus Minimum Threshold Increase Percent for Each Target Incentive Goal Minimum Increase % 1. Tandy Corporation income increase: _______ 2. Tandy Services income increase: _______ Bonus amounts earned from each of the factors which exceed the minimum increase above will be accumulated. No bonus will be paid unless the accumulated bonus exceeds __% of your base salary. Bonus will only be paid on each goal which exceeds the Minimum Increase % set forth above. IV. Maximum Bonus The bonus paid will be limited to an amount not to exceed $_______ V. This compensation plan is not an employment contract, but a method of calculating your total earnings. You forfeit your rights to receive a bonus if you resign before the end of the current fiscal year. If you are terminated by the Company, you forfeit your rights to receive a bonus except at the sole discretion of the Company and in such amount as the Company might decide. If you retire at age 55 or over, provided the Company has given its consent to your early retirement, or die before the end of the then current fiscal year, your bonus for the current year-to-date will be calculated to the nearest end of the month preceding or succeeding such event, using the formula above and adjusting for the partial year. The amount will be paid to you or to the legal representative of your estate. VI. If at any time during your continued employment, your responsibility, duties or title changes, this plan is subject to revision or termination by the Company at the time of the foregoing change. (Date) Form 3 TO: (Name) FROM: Richard L. Ramsey SUBJECT: Compensation Plan, Fiscal Year 1994 Your compensation plan for fiscal year 1994 is outlined below. I. FY 1994 Base Salary Your Base Salary for FY94 shall be $_________ II. Your bonus for FY94 shall be determined by multiplying the percent determined in the following TARGET INCENTIVE GOALS times the FACTORS set forth below. The bonus amounts payable are subject to limitations set forth in Paragraph III and IV. TARGET INCENTIVE GOALS: 1. INCOME Each percentage point of positive change that the Radio Shack division net income (before income taxes) increases from the prior year. 2. SALES Each percentage point of positive change that the Radio Shack division sales increase from the prior year. 3. GROSS PROFIT Each percentage point of positive change that the Radio Shack division gross profit dollars increase from the prior year. Radio Shack results will be adjusted to reflect certain Tandy support operations for 1993 and 1994 and for estimated costs of Tandy Credit promotions for 1993. Percentages shall be calculated to two decimal points. Your factors to be used for each of the calculations above are as follows: 1. Radio Shack income increase: $_______ 2. Radio Shack sales increase: $_______ 3. Radio Shack gross profit dollars increase: $_______ III. Minimum Bonus Minimum Threshold Increase Percent for Each Target Incentive Goal Minimum Increase % 1. Income _______ 2. Sales _______ 3. Gross Profit _______ Bonus amounts earned from each of the factors which exceed the minimum increase above will be accumulated. No bonus will be paid unless the accumulated bonus exceeds __% of your base salary. Bonus will only be paid on each goal which exceeds the Minimum Increase % set forth above. IV. Maximum Bonus The bonus paid will be limited to an amount not to exceed $_______ V. This compensation plan is not an employment contract, but a method of calculating your total earnings. You forfeit your rights to receive a bonus if you resign before the end of the current fiscal year. If you are terminated by the Company, you forfeit your rights to receive a bonus except at the sole discretion of the Company and in such amount as the Company might decide. If you retire at age 55 or over, provided the Company has given its consent to your early retirement, or die before the end of the then current fiscal year, your bonus for the current year-to-date will be calculated to the nearest end of the month preceding or succeeding such event, using the formula above and adjusting for the partial year. The amount will be paid to you or to the legal representative of your estate. VI. If at any time during your continued employment, your responsibility, duties or title changes, this plan is subject to revision or termination by the Company at the time of the foregoing change. (Date) Form 4 TO: (Name) FROM: Richard L. Ramsey SUBJECT: Compensation Plan, Fiscal Year 1994 Your compensation plan for fiscal year 1994 is outlined below. I. FY 1994 Base Salary Your Base Salary for FY94 shall be $_________ II. Your bonus for FY94 shall be determined in the following TARGET INCENTIVE GOALS set forth below. The bonus amounts payable are subject to limitations set forth in Paragraph III and IV. TARGET INCENTIVE GOALS: Tandy Corporation Each percentage point of positive change that the Tandy Corporation and subsidiaries Income from operations (before income taxes) increases from the prior year, times a factor of $1,315. Tandy Credit A. Each percentage point of positive change that the Tandy Corporation accounts receivable purchased increases from the prior year level of $605 million, times a factor of $450. B. You will receive a $5,220 bonus for each percentage point reduction of gross charge-off dollars (includes regular, bankrupt and fraud, excludes reinstatements) from a $70.2M level. EXAMPLE: LOSS BASE 70,200 ACTUAL LOSS 68,300 ______ DIFF 1,900 % Reduction 2.7% X $5,220 = $14,094 Bonus III. Minimum Bonus Minimum Threshold Increase Percent for Each Target Incentive Goal Minimum Increase % 1. Tandy Corporation Income _______ 2. Tandy Credit Receivables, Purchases _______ 3. Tandy Credit Gross Charge-Off Dollars _______ (Decrease%) Bonus amounts earned from each of the factors which exceed the minimum increase above will be accumulated. No bonus will be paid unless the accumulated bonus exceeds __% of your base salary. Bonus will only be paid on each goal which exceeds the Minimum Increase % set forth above. IV. Maximum Bonus The bonus paid will be limited to an amount not to exceed $_______ V. This compensation plan is not an employment contract, but a method of calculating your total earnings. You forfeit your rights to receive a bonus if you resign before the end of the current fiscal year. If you are terminated by the Company, you forfeit your rights to receive a bonus except at the sole discretion of the Company and in such amount as the Company might decide. If you retire at age 55 or over, provided the Company has given its consent to your early retirement, or die before the end of the then current fiscal year, your bonus for the current year-to-date will be calculated to the nearest end of the month preceding or succeeding such event, using the formula above and adjusting for the partial year. The amount will be paid to you or to the legal representative of your estate. VI. If at any time during your continued employment, your responsibility, duties or title changes, this plan is subject to revision or termination by the Company at the time of the foregoing change. EX-10.(C) 13 1993 10K EXHIBIT 10C Exhibit 10c POST RETIREMENT DEATH BENEFIT PLAN FOR SELECTED EXECITOVE EMPLOYEES OF TANDY CORPORATION AND SUBSIDIARIES RE-STATED PLAN BOARD OF DIRECTORS MEETING, JANUARY 26, 1989 ARTICLE ONE PURPOSE Section 1.1 The purpose of the Post Retirement Death Benefit Plan for Selected Executive Employees of Tandy Corporation and Subsidiaries (the "Plan") is to afford Tandy Corporation ("Tandy") an additional opportunity to secure and retain the services of outstanding key executive employees by providing, subject to the provisions of the Plan, income payments to their beneficiaries following the death of the key executive employee. ARTICLE TWO DEFINITIONS Section 2.1 Beneficiary. The recipient(s) designated (in accordance with Article Seven) by a Participant in the Plan to whom benefits are payable following his death. Section 2.2 Committee. The Organization and Compensation Committee of Tandy which shall administer the Plan in accordance with Article Nine. Section 2.3 Disability. A physical or mental condition which, in the opinion of the Committee, totally and presumably permanently prevents a Participant from substantially performing duties for which such Participant is suited to perform either by education or training, or if such Participant is on a Leave of Absence when such condition develops, substantially performing duties for which such Participant is suited to perform either by education or training. A determination that Disability exists shall be based upon competent medical evidence satisfactory to the Committee. The date that any person's Disability occurs shall be deemed to be the date such condition is determined to exist by the Committee. Section 2.4 Employee. A regular full-time executive employee of an Employer. Section 2.5 Employer. Tandy Corporation, a Delaware Corporation, and those subsidiary corporations in which Tandy owns at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote. Section 2.6 Leave of Absence. Any period during which: (a) an Employee is absent with the prior consent of his Employer, which consent shall be granted under uniform rules applied to all Employees, on a non-discriminatory basis, but only if such person is an Employee immediately prior to the commencement of such period of authorized absence and resumes employment with Employer not later than the first working day following the expiration of such period of authorized absence; or (b) an Employee is a member of the Armed Forces of the United States and his re-employment rights are guaranteed by law, but only if such person is an Employee immediately prior to becoming a member of such Armed Forces and resumes employment with Employer within the period during which his re-employment rights are guaranteed by law. Section 2.7 Participant. An Employee who has been selected and has accepted a Plan Agreement as provided in Article Three. Section 2.8 Plan Agreement. The agreement between an Employer and a Participant, entered into in accordance with Article Three (as such form may be amended from time to time hereunder). Section 2.9 Retirement. The following classifications of Retirement as referred to in this Plan are defined as follows: (a) Early Retirement. The voluntary election, as opposed to involuntary termination by Employer, prior to the Participant's attaining the age of sixty-five (65) years, by a Participant to terminate his employment after attaining the age of fifty-five (55) years. (b) Normal Retirement. The termination of a Participant's service with Employer at the date of attaining age sixty-five (65) years. (c) Late Retirement. The termination of a Participant's service with Employer after the Participant's attaining the age of sixty-five (65) years. Section 2.10 Tandy Subsidiary. Any corporation in which Tandy owns at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote. ARTICLE THREE SELECTION OF PARTICIPANTS AND AGREEMENT TO PARTICIPATE Section 3.1 Participation in the Plan shall be limited to those Employees of Employer who shall be selected for participation by the Committee, whose decisions in this respect shall be conclusive. Section 3.2 Participation in the Plan by an Employee so selected by the Committee is voluntary and subject to his written acceptance of a Plan Agreement executed by Employer and submitted to him by the Committee. Unless and until a Plan Agreement has been so submitted to and accepted by him, he shall not become a Participant. ARTICLE FOUR LIFE INSURANCE Section 4.1 Employer may obtain permanent life insurance insuring the life of any Participant as a means of funding Employer's obligations to his Beneficiary in whole or part. Employer shall be the sole owner and beneficiary of all such policies of insurance so obtained and of all incidents of ownership therein, including without limitation, the rights to all cash and loan values, dividends (if any), death benefits and the right to terminate. No Beneficiary or Participant shall be entitled to any rights, interests or equities in such policies or to any specific asset of Employer of any type, and on the contrary, their rights against Employer under the Plan shall be solely as general creditors. Section 4.2 If as a result of misrepresentations made by a Participant in any application for life insurance upon his life obtained by Employer hereunder, the insurance carrier or carriers or any reinsurance thereof successfully avoid(s) payment to Employer of the proceeds of its or their policy or policies, or such proceeds are not payable because the Participant's death results from suicide within two years of the issuance to Employer of additional policies obtained by Employer hereunder, then, in any of said events, and notwithstanding any other provisions of the Plan or of the Plan Agreement with such Participant, Employer shall have no obligation to his Beneficiary to provide any of the death benefits otherwise payable under the terms thereof. Section 4.3 Each Participant shall cooperate in the securing of life insurance on his life by furnishing such information as the insurance company may require, taking such physical examinations as may be necessary, and taking any other action which may be requested by the Employer or the insurance company to obtain such insurance coverage. If a Participant refuses to cooperate in all the securing of life insurance, or if Employer is unable to secure life insurance at standard rates on a Participant, then, the Plan Agreement shall be of no force and effect as to a Participant unless the Employer waives such requirement in writing. Section 4.4 All benefits under the Plan or Plan Agreement represent an unsecured promise to pay by Tandy. The Plan shall be unfunded and the benefits hereunder shall be paid only from the general assets of Tandy resulting in the Participants and Beneficiaries having no greater rights than Tandy's general creditors; provided, however, nothing herein shall prevent or prohibit Tandy from establishing a trust or other arrangement for the purpose of providing for the payment of the benefits payable under the Plan or Plan Agreement. ARTICLE FIVE BENEFITS PAYABLE TO BENEFICIARIES Section 5.1 Subject to the terms and conditions of the Plan, upon the death of a Participant in Retirement, Employer agrees to pay to Beneficiary a retirement benefit as follows: (a) Normal Retirement. If a Participant retires at a time that constitutes Normal Retirement, then, upon the death of such retired Participant, Employer agrees to pay to the designated Beneficiary of such deceased Participant, all from its general assets, a total amount equal to the amount set forth in the Plan Agreement, such amount to be paid as set forth in Section 5.3 hereof. (b) Early Retirement. If a Participant retires at a time that constitutes an Early Retirement, then, upon the death of such retired Participant, Employer agrees to pay to the designated Beneficiary of such deceased Participant a total amount equal to the amount set forth in the Plan Agreement, reduced by five percent per year for each year that Early Retirement precedes the date of Normal Retirement. Such year shall be a fiscal year beginning on the date a Participant attains age fifty-five (55). Any reduction for a part of a year shall be prorated on a daily basis assuming a 365 day year. Such amount shall be paid as set forth in Section 5.3 hereof. (c) Late Retirement. If a Participant retires at a time that constitutes Late Retirement, then, upon the death of such retired Participant, Employer agrees to pay to the designated Beneficiary of such deceased Participant, all from its general assets, a total amount equal to the amount set forth on the Plan Agreement, reduced by a percentage determined as follows: At Date of Late Retirement Attainment of Age Percent of Reduction 66 0% 67 0% 68 0% 69 0% 70 0% 71 20% 72 40% 73 60% 74 80% 75 100% The percent of reduction shall be measured on a fiscal year beginning on the date of a Participant's date of birth and shall commence on the day after the date a Participant attains age 70, and any reduction for a part of a year shall be prorated on a daily basis at the applicable percentage assuming a 365 day year. Such amount shall be paid as set forth in Section 5.3 hereof. Section 5.2 Subject to the terms and conditions of the Plan, upon the death of a Participant in Retirement, Employer agrees to pay to his Beneficiary from its general assets an amount equal to the amount set forth in the Plan Agreement reduced as provided in Section 5.1 or, as the case may be, in the last amendment to his Plan Agreement. With respect to such benefits, however, it is further provided that: No benefits shall be payable to the Beneficiary of a Participant in those instances covered by Section 4.2. Section 5.3 Except as provided in Section 8.5, the aggregate amount payable upon the death of a Participant in Retirement to his Beneficiary shall be paid in 120 equal monthly installment payments commencing on the first day of the month next following thirty (30) days after the Committee's receipt of a certified death or proof of death certificate verifying the retired Participant's death. A Beneficiary shall notify Employer of death by hand delivery or by certified or registered mail, return receipt requested, postage prepaid, of a written notice of death specifying the date of death, such written notice to be addressed to: Organization and Compensation Committee of the Board of Directors, Tandy Corporation, 1800 One Tandy Center, Fort Worth, Texas 76102. Such notice shall be deemed to be received when actually received by said Committee at said address as may be changed from time to time in the Plan Agreements, as amended. Section 5.4 Until actually paid and delivered to the Beneficiary entitled to same, none of the benefits payable by Employer under any Plan Agreement shall be liable for the debts or liabilities of either the Participant or his Beneficiary, nor shall the same be subject to seizure by any creditor of the Participant or his Beneficiary under any writ or proceeding at law, in equity or in bankruptcy. Further, no Participant or Beneficiary shall have power to sell, assign, transfer, encumber, or in any manner anticipate or dispose of the benefits to which he is entitled or may become entitled under a Plan Agreement. Section 5.5 (a) During the period that Participant is in Retirement or vested under Sections 8.5 or 10.2, Participant agrees that he will not, either directly or indirectly, within the United States of America or in any country of the world that Tandy (or Tandy Subsidiary) or one of its dealers or franchisees sells Consumer Electronic Products (as hereinafter defined) at retail, own, manage, operate, join, control, be employed by, be a consultant to, be a partner in, be a creditor of, engage in joint operations with, be a stockholder, officer or director of any corporation, sole proprietorship or business entity of any type, or participate in the ownership, management, direction, or control or in any other manner be connected with, any business selling Consumer Electronic Products at retail which is at the time of Participant's engaging in such conduct competitive with such products sold by Tandy at retail, except as a shareholder owning less than five percent (5%) of the shares of a corporation whose shares are traded on a stock exchange or in the over-the-counter market by a member of the National Association of Securities Dealers. "Consumer Electronic Products" are those types of products sold at the retail level to the ultimate customer as are advertised by Tandy in its most recently published annual catalogs and monthly flyers. Manufacturing of Consumer Electronic Products and sale of Consumer Electronic Products at levels of distribution other than the retail level are not considered a violation of this covenant. (b) In the event that a Participant engages in any of the activities described in Section 5.5(a) Tandy will give notice to the Participant specifying in detail the alleged violation of Section 5.5(a). Participant will be allowed ninety (90) days to cure such default. If the Committee feels there is continuing competition, then, without any further notice or opportunity to cure, and upon determination by the Board of Directors that such a Participant is engaged in such activities, such Board's decision to be conclusive and binding upon all concerned, and notwithstanding any other provisions of the Plan or of the Plan Agreement with such Participant, Employer's obligation to a Participant to pay any benefits hereunder shall automatically cease and terminate, and Employer shall have no further obligation to such Participant or Beneficiary pursuant to the Plan or the Plan Agreement. Employer may also enforce this provision by suit for damages which shall include but not be limited to all sums paid to Participant hereunder, or for injunction, or both. Section 5.6 Employer may liquidate out of the interest of a Participant hereunder, but only as death benefits become due and payable hereunder, any outstanding loan or loans or other indebtedness of a deceased Participant. Employer may elect not to distribute death benefits to a Beneficiary unless and until all unpaid loans or other indebtedness due to Employer from such deceased Participant, together with interest, have been paid in full. Section 5.7 Subject to termination or amendment of the Plan, Plan Agreement, or both, a Participant's participation in the Plan shall continue during his Disability or his taking a Leave of Absence. A Participant who is Disabled or on Leave of Absence shall notify Employer of his date of Retirement by notification in writing to the Committee at the address and as provided in Section 5.3 hereof. ARTICLE SIX AMENDMENTS OF PLAN AGREEMENTS Section 6.1 The Committee may enter into amendments to the Plan Agreement with any Participant for the purpose of increasing the benefits payable to Participant's Beneficiary in view of increases in his compensation following the execution of such Plan Agreement or the last amendment thereto and for the purpose of amending any provision of this Plan as it might apply to a Participant. In such cases, the acceptance of an amendment by a Participant is voluntary and until the amended Plan Agreement has been submitted to and accepted by him, it shall not be effective. ARTICLE SEVEN BENEFICIARIES OF PARTICIPANTS Section 7.1 At the time of his acceptance of a Plan Agreement, a Participant shall be required to designate the Beneficiary to whom benefits under the Plan and his Plan Agreement will be payable upon his death. A Beneficiary may be one or more persons or entities, such as dependents, persons who are natural objects of the Participant's bounty, an inter vivos or testamentary trust, or his estate. Such Beneficiaries may be designated contingently or successively as the Participant may direct. The designation of his Beneficiary shall be made by the Participant on a Beneficiary Designation Form to be furnished by the Committee and filed with it. Section 7.2 A Participant may change his Beneficiary, as he may desire, by filing new and amendatory Beneficiary Designation Forms with the Committee. Section 7.3 In the event a Participant designates more than one Beneficiary to receive benefit payments simultaneously, each such Beneficiary shall be paid such proportion of such benefits as the Participant shall have designated. If no such percentage designation has been made, the Committee shall hold all benefit payments until the Beneficiaries agree as to the distribution of the funds or a judicial determination has been made. Section 7.4 If the designated Beneficiary dies before the Participant in question and no Beneficiary was successively named, or if the designated Beneficiary dies before complete payment of the deceased Participant's benefits have been made and no Beneficiary was successively named, the Committee shall direct that such benefits (or the balance thereof) be paid to those persons who are the deceased Participant's heirs-at-law determined in accordance with the laws of descent and distribution in force at the date hereof in the State of Texas for separate personal property, such determination to be made as though the Participant had died intestate and domiciled in Texas. Section 7.5 Whenever any person entitled to payments under this Plan shall be a minor or under other legal disability or in the sole judgment of the Committee shall otherwise be unable to apply such payments to his own best interest and advantage (as in the case of illness, whether mental or physical, or where the person not under legal disability is unable to preserve his estate for his own best interest), the Committee may in the exercise of its discretion direct all or any portion of such payments to be made in any one or more of the following ways unless claims shall have been made therefor by an existing and duly appointed guardian, conservator, committee or other duly appointed legal representative, in which event payment shall be made to such representative: (a) directly to such person unless such person shall be an infant or shall have been legally adjudicated incompetent at the time of the payment; (b) to the spouse, child, parent or other blood relative to be expended on behalf of the person entitled or on behalf of those dependents as to whom the person entitled has the duty of support; (c) to a recognized charity or governmental institution to be expended for the benefit of the person entitled or for the benefit of those dependents as to whom the person entitled has the duty of support; or (d) to any other institution, approved by the Committee, to be expended for the benefit of the person entitled or for the benefit of those dependents as to whom the person entitled has the duty of support. The decision of the Committee will, in each case, be final and binding upon all persons and the Committee shall not be obliged to see to the proper application or expenditure of any payments so made. Any payment made pursuant to the power herein conferred upon the Committee shall operate as a complete discharge of the obligations of Employer and of the Committee. Section 7.6 If the Committee has any doubt as to the proper Beneficiary to receive payments hereunder, the Committee shall have the right to withhold such payments until the matter is finally adjudicated, or the Committee may direct Employer to bring a suit for interpleader in any appropriate court, pay any amounts due into court, and Employer and/or Committee shall have the right to recover its reasonable attorney's fees from such proceeds so paid or to be paid. Any payment made by the Committee, in good faith and in accordance with this Plan, shall fully discharge the Committee and Employer from all further obligations with respect to such payments. ARTICLE EIGHT TERMINATION OF PARTICIPATION Section 8.1 Except as provided in Sections 8.4, 8.5, 10.1 and 10.2 hereof, termination of a Participant's employment by Employer other than by reason of Retirement, Disability or Leave of Absence, whether by action of Employer or the Participant's resignation, shall terminate the Participant's participation in the Plan. Neither the Plan nor the Plan Agreement shall in any way obligate Employer to continue the employment of a Participant, nor will either limit the right of Employer to terminate a Participant's employment at any time, for any reason, with or without cause. Section 8.2 Except as provided in Sections 8.4, 8.5, 10.1 and 10.2 hereof, participation in the Plan by a Participant shall also terminate if the Plan or his Plan Agreement is terminated by Tandy in accordance with Article Ten. Section 8.3 Except as provided in Sections 8.4, 8.5, 10.1 and 10.2, hereof, upon termination of a Participant's participation in the Plan, all of Employer's obligations to the Participant and his Beneficiary under the Plan and Plan Agreement and each of them, shall terminate and be of no further effect. Section 8.4 Except as provided in Sections 8.5, 10.1 and 10.2, if a Participant's participation in the Plan is terminated by: (a) termination of the Plan; (b) termination of a Plan Agreement; or (c) termination of employment for any reason other than (i) Dishonest or fraudulent conduct, or (ii) Indictment of a Participant for a felony crime involving moral turpitude (in which event no vesting of Section 8.4(a) or (b) or 10.1 shall occur). then upon death after Retirement of the Participant, such ceased Participant's Beneficiary shall be entitled, as set forth below, to a percentage of the amount set forth in the Plan Agreement as follows: Age Attained at Date of Event Set Forth in Section 8.4(a), (b) or (c) % Vested Age 54 or younger 0% Age 55 to age 65 A percent as determined in Section 5.1(b) hereof Age 65 to age 70 100% Age 70 to age 75 A percent as determined in Section 5.1(c) hereof Age 75 and thereafter 0% The amount payable under this Section 8.4 shall be determined as of the date of the event set forth in Section 8.4 (a), (b) or (c) hereof and such amount as so determined at that time shall not be altered or changed thereafter except that the provisions of Section 5.5 hereof shall remain fully applicable. The amount payable under this Section 8.4 shall be paid as set forth in Section 5.3 hereunder. No benefits shall be payable under this Section 8.4 if Participant is employed by employer at the date of his death. Section 8.5 Notwithstanding anything to the contrary in the Plan or Plan Agreement, (a) In the event of a Change in Control, as hereinafter defined, every Participant immediately shall be vested with the full amount set forth in his Plan Agreement without regard to Section 5.1(b) but subject to Section 5.1(c). Such Plan Agreement Amount shall be payable to the Participant's Beneficiary in a lump sum on the first day of the month next following the date on which such Participant dies. Such lump sum payment shall equal the present value of the Participant's Plan Agreement Amount discounted at the Pension Benefit Guaranty Corporation's Immediate Annuity Rate used to value benefits for single-employer plans terminating on the date of the Participant's death, compounded semi-annually. (b) Any Beneficiary who, on the date of the Change in Control, was receiving benefits under the Plan or Plan Agreement shall be entitled to receive a lump sum equal to the present value of the Beneficiary's remaining amount set forth in the Plan Agreement, calculated in a manner consistent with Section 8.5(a). Section 8.6 In the event that a Participant's employment with Employer is involuntarily terminated for any reason other than those reasons set forth in Section 8.4(c)(i) and (ii), and within a one-year period beginning on the date of such termination there occurs a Change in Control, then such Participant's Beneficiary shall be entitled to receive a lump sum equal to the present value of the amount set forth in the Participant's Plan Agreement (calculated in a manner consistent with Section 8.5(a), payable on the first day of the month next following the Participant's death. Section 8.7 For purposes of the Plan, "Change in Control" shall mean any of the following terms: (a) An acquisition (other than directly from Tandy) of any voting securities of Tandy (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of Tandy's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (a) Tandy or (b) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by Tandy (for purposes of this Sectin 8.7, a "Tandy Subsidiary"), (2) Tandy or its Subsidiaries, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined). (b) The individuals who, as of August 22, 1990, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by Tandy's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of the Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) Approval by stockholders of Tandy of: (1) A merger, consolidation or reorganization involving Tandy, unless (i) the stockholders of Tandy, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, (iii) no Person [other than Tandy, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by Tandy, the Surviving Corporation, or any Tandy Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities] has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities, and (iv) a transaction described in clauses (i) through (iii) shall herein be referred to as a "Non-Control Transaction"; (v) A complete liquidation or dissolution of Tandy; or (vi) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Tandy Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Votin Securities by Tandy which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by Tandy, and after such share acquisition by Tandy, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. Section 8.8 Notwithstanding any provision to the contrary in the Plan, upon a Change in Control, the provisions of Sections 5.5 and 5.6 shall lapse and become null and void. ARTICLE NINE ADMINISTRATION OF THE PLAN Section 9.1 The Plan shall be administered by the Organization and Compensation Committee of the Board of Directors of Tandy, as it is presently constituted or as it may be changed from time to time by the Board of Directors. Section 9.2 In addition to the express powers and authorities accorded the Committee under the Plan, it shall be responsible for: (a) Construing and interpreting the Plan; (b) Computing and certifying to Employer the amount of benefits to be provided in each Plan Agreement for the Beneficiary of the Participant; and (c) Determining the right of a Beneficiary to payments under the Plan and otherwise authorizing disbursements of such payments by Employer; in these and all other respects its decisions shall be conclusive and binding upon all concerned. Section 9.3 Employer agrees to hold harmless and indemnify the members of the Committee against any and all expenses, claims, and causes of action by or on behalf of any and all parties whomsoever, and all losses therefrom, including without limitation the cost of defense and attorneys' fees, based upon or arising out of any act or omission relating to or in connection with the Plan other than losses resulting from any such Committee member's fraud or willful misconduct. ARTICLE TEN TERMINATION OR AMENDMENT OF THE PLAN OR PLAN AGREEMENT Section 10.1 Employer reserves the right to terminate or amend this Plan or any Plan Agreement, in whole or in part, at any time, or from time to time, by resolution of the Board of Directors of Tandy, provided, however, no amendment to the Plan or to any Plan Agreement shall alter the vested rights of a Participant or Beneficiary applicable on the effective date of such termination or amendment and, except for increases in Plan compensation as provided in Section 8.5 hereof, such vested rights shall remain unchanged. Rights are deemed to have vested if benefits are actually being paid or if the only condition precedent to the payment of benefits is the death of a Participant (unless his employment was terminated for reasons set forth in Section 8.4(c)(i) and (ii), in which event all benefits are forfeited) with Employer or the giving of notice of Retirement or the occurrence of an event described in Section 8.5(a), (b) or (c). Section 10.2 Notwithstanding anything to the contrary in the Plan or Plan Agreement, (a) Sections 8.5, 8.6, 8.7, 8.8 and this Section 10.2 shall not be amended or terminated at any time. (b) For a period of one year following a Change in Control, the Plan or Plan Agreement shall not be terminated or amended in any way, nor shall the manner in which the Plan is administered be changed in a way that adversely affects the Participants' or Beneficiary's right to existing or future Tandy provided benefits or contributions provided hereunder, including, but not limited to, any change in, or to, the eligibility requirements, benefit formulae and manner and optional forms of payments. (c) Any amendment or termination of the Plan or Plan Agreement prior to a Change in Control which (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in control or (ii) otherwise arose in connection with, or in anticipation of, a Change in Control, shall be null and void and shall have no effect whatsoever. (d) In the event the Plan or any Plan Agreement is terminated or adversely amended to the detriment of any Participant or Beneficiary and within a one-year period from the effective date of any such amendment or termination a Change in Control occurs, then the Beneficiaries of any Participant whose employment with Employer is terminated, voluntarily or involuntarily, within a three-year period from the date of the Change in Control shall be entitled to receive those benefits set forth in Section 8.5 hereof to the same extent and in the same amounts as though such amendment or termination had not occurred. This Section 10.2(e) shall not apply to any Beneficiary of any Participant who, on the date of the Change in Control, has previously retired or has otherwise voluntarily terminated his employment with Employer. ARTICLE ELEVEN MISCELLANEOUS Section 11.1 The Plan and Plan Agreement and each of their provisions shall be construed and their validity determined under the laws of the State of Texas. Section 11.2 The masculine gender, where appearing in the Plan or Plan Agreement, shall be deemed to include the feminine gender. The words "herein," "hereunder" and other similar compounds of the word "here" shall mean and refer to the entire Plan Agreement, not to any particular provision, section or subsection, and words used in the singular or plural may be construed as though in the plural or singular where they would so apply. Section 11.3 Any action brought by a Participant or Beneficiary under the Plan or Plan Agreement may be brought in the appropriate state or federal court for Tarrant County, Texas, or for the county wherein the Participant or Beneficiary maintains his or her residence. Any suit brought by Tandy under the Plan may only be brought in the county wherein the Participant or Beneficiary maintains his or her residence, unless the Participant or Beneficiary consents to suit elsewhere. Section 11.4 Any person born on February 29 shall be deemed to have been born on the immediately preceding February 28 for all purposes of this Plan. Section 11.5 This Plan shall be binding upon and inure to the benefit of any successor of Employer and any such successor shall be deemed substituted for Employer under the terms of this Plan. As used in this Plan, the term "successor" shall include any person, firm, corporation, or other business entity which at any time, whether by merger, purchase, or otherwise, acquires all or substantially all of the assets or business of Employer. DATED: June 10, 1991 The foregoing plan was adopted 11/12/86, and includes amendments adopted on 1/26/89 and on 8/22/90. EX-10.(D) 14 1993 10K EXHIBIT 10D Exhibit 10d TANDY CORPORATION OFFICERS DEFERRED COMPENSATION PLAN (RESTATED) ARTICLE ONE PURPOSE Section 1.1 The purpose of this Tandy Corporation Officers Deferred Compensation Plan ("the Plan") is to enable Tandy Corporation and its subsidiaries to secure and retain the services of outstanding key executive personnel by providing certain death and retirement benefits. ARTICLE TWO DEFINITIONS Section 2.1 Beneficiary. The recipient(s) designated (in accordance with Article Seven) by a Participant in the Plan to whom benefits are payable following his death. Section 2.2 Committee. The Insurance Committee of Tandy which shall administer the Plan in accordance with Article Nine. Section 2.3 Disability. A physical or mental condition which, in the opinion of the Committee, totally and presumably permanently, prevents a Participant from substantially performing duties for which such Participant is suited to perform either by education or training, or if such Participant is on a Leave of Absence when such condition develops, substantially performing duties for which such Participant is suited to perform either by education or training. A determination that Disability exists shall be based upon competent medical evidence satisfactory to the Committee. The date that any person's Disability occurs shall be deemed to be the date such condition is determined to exist by the Committee. Section 2.4 Employee. A regular full-time executive employee of Tandy. Section 2.5 Leave of Absence. Any period during which: (a) an Employee is absent with the prior consent of Tandy, which consent shall be granted under uniform rules applied to all Employees on a nondiscriminatory basis, but only if such person is an Employee immediately prior to the commencement of such period of authorized absence and resumes employment with Tandy not later than the first working day following the expiration of such period of authorized absence; or (b) an Employee is a member of the Armed Forces of the United States and his reemployment rights are guaranteed by law, but only if such person is an Employee immediately prior to becoming a member of such Armed Forces and resumes employment with Tandy within the period during which his reemployment rights are guaranteed by law. Section 2.6 Participant. An Employee who has been selected and has accepted a Plan Agreement as provided in Article Three. Section 2.7 Plan Agreement. The agreement between Tandy and a Participant, entered into in accordance with Article Three, and in the form of attached Exhibit "A" (as such form may be amended from time to time hereunder). Section 2.8 Plan Benefit Amount. Plan Benefit Amount means the dollar amount set forth and so designated in a Participant's Plan Agreement. Section 2.9 Retirement. The following classifications of Retirement as referred to in this Plan are defined as follows: (a) Early Retirement. The voluntary election, as opposed to involuntary termination by Tandy, prior to the Participant's attaining the age of sixty-five (65) years, by a Participant to terminate his employment after attaining the age of fifty-five (55) years. (b) Normal Retirement. The termination of a Participant's service with Tandy at the date of attaining age sixty-five (65) years. (c) Late Retirement. The termination of a Participant's service with Tandy after the Participant's attaining the age of sixty-five (65) years. Section 2.10 Tandy. Tandy Corporation, a Delaware corporation, and those subsidiary corporations in which Tandy owns at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote. Section 2.11 Tandy Subsidiary. Any corporation in which Tandy owns at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote. ARTICLE THREE SELECTION OF PARTICIPANTS AND AGREEMENT TO PARTICIPATE Section 3.1 The Committee, in its sole and exclusive discretion, shall select from among the key executive employees of Tandy, candidates for participation in the Plan. A candidate shall become a Participant only upon his execution of a Plan Agreement and a Beneficiary Designation Form. ARTICLE FOUR LIFE INSURANCE Section 4.1 Tandy may obtain permanent life insurance insuring the life of any Participant as a means of funding Tandy's obligations to his Beneficiary in whole or part. Tandy shall be the sole owner and beneficiary of all such policies of insurance so obtained and of all incidents of ownership therein, including without limitation, the rights to all cash and loan values, dividends (if any), death benefits and the right to terminate. No Beneficiary or Participant shall be entitled to any rights, interests or equities in such policies or to any specific asset of Tandy of any type, and on the contrary, their rights against Tandy under the Plan shall be solely as general creditors. Section 4.2 If as a result of misrepresentations made by a Participant in any application for life insurance upon his life obtained by Tandy hereunder, the insurance carrier or carriers or any reinsurance thereof successfully avoid(s) payment to Tandy of the proceeds of its or their policy or policies, or such proceeds are not payable because the Participant's death results from suicide within two (2) years of the issuance of such policy or within two (2) years of the issuance to Tandy of additional policies obtained by Tandy hereunder, then, in any of said events, notwithstanding any other provisions of the Plan or of the Plan Agreement with such Participant, Tandy shall have no obligation to his Beneficiary to provide any of the death benefits otherwise payable under the terms thereof. Section 4.3 Each Participant shall cooperate in the securing of life insurance on his life by furnishing such information as the insurance company may require, taking such physical examinations as may be necessary, and taking any other action which may be requested by Tandy or the insurance company to obtain such insurance coverage. If a Participant refuses to cooperate in the securing of life insurance, or if Tandy is unable to secure life insurance at standard rates on a Participant, then the Plan Agreement shall be of no force and effect as to a Participant unless Tandy waives such requirement in writing. Section 4.4 All benefits under the Plan or Plan Agreement represent an unsecured promise to pay by Tandy Corporation. The Plan shall be unfunded and the benefits hereunder shall be paid only from the general assets of Tandy Corporation resulting in the Participants having no greater rights than Tandy Corporation's general creditors; provided, however, nothing herein shall prevent or prohibit Tandy Corporation from establishing a trust or other arrangement for the purpose of providing for the payment of the benefits payable under the Plan or Plan Agreement. ARTICLE FIVE BENEFITS PAYABLE TO PARTICIPANTS AND TO BENEFICIARIES OF PARTICIPANTS Section 5.1 Subject to the terms and conditions of the Plan, upon the Retirement of a Participant, Tandy agrees to pay to Participant a Retirement benefit as follows: (a) Normal Retirement. If a Participant retires at the date of Normal Retirement, then Tandy agrees to pay to Participant or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Retirement benefits hereunder, all from its general assets, an amount equal to such Participant's Plan Benefit Amount, such sum to be paid as set forth in Section 5.3 hereof. (b) Early Retirement. If a Participant retires at a time that constitutes an Early Retirement, then Tandy agrees to pay to Participant or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Early Retirement benefits hereunder, all from its general assets, an amount equal to such Participant's Plan Benefit Amount, reduced by five percent (5%) per year for each year that Early Retirement precedes the date of Normal Retirement. Such year shall be a fiscal year beginning on the date a Participant attains age fifty-five (55). Any reduction for a part of a year shall be prorated on a daily basis assuming a 365-day year. Such amount shall be paid as set forth in Section 5.3 hereof. (c) Late Retirement. If a Participant retires at a date that constitutes Late Retirement, then Tandy agrees to pay to Participant or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Late Retirement benefits hereunder, all from its general assets, an amount equal to such Participant's Plan Benefit Amount, reduced by a percentage determined as follows: Age on Date of Percent of Reduction Late Retirement of Plan Benefit Amount 66 0% 67 0% 68 0% 69 0% 70 0% 71 20% 72 40% 73 60% 74 80% 75 100% The percent of reduction of a Participant's Plan Benefit Amount shall be measured on a fiscal year beginning on the date of Participant's date of birth and shall commence on the day after the date a Participant attains age 70, and any reduction for a part of a year shall be prorated on a daily basis at the applicable percentage assuming a 365-day year. Such amount shall be paid as set forth in Section 5.3 hereof. Section 5.2 Subject to the terms and conditions of the Plan, upon the death of a Participant, but only if the Participant is an Employee of Tandy at his death (except as set forth in Section 5.2(c) below) and is not being paid benefits pursuant to a Plan Agreement at such time, Tandy agrees to pay to his Beneficiary from its general assets an amount equal to such Participant's Plan Benefit Amount as reflected in Employee's Plan Agreement or, as the case may be, in the last amendment to his Plan Agreement. With respect to such benefits, however, it is further provided that: (a) no benefits shall be payable to the Beneficiary of a Participant in those instances covered by Section 4.2; (b) if a Participant dies while an Employee of Tandy after the date of his Normal Retirement, then the amount payable to his Beneficiary upon a Participant's death shall be reduced as set forth in Section 5.1(c) hereof. (c) The death of a Participant within the first year after involuntary termination of employment with Tandy as provided in Section 8.6 shall not defeat the right of such Participant's Beneficiary to receive benefits under this Section 5.2 so long as an event described in Section 8.5(a), (b) or (c) occurs within one year of the date of termination of the Participant's employment. Section 5.3 Except as provided in Section 8.5, the aggregate amount payable upon the Normal Retirement, Early Retirement, Late Retirement benefits due and payable under Section 8.5 or 8.6 hereof, or death of a Participant to a Participant or his Beneficiary shall be paid in one hundred twenty (120) equal monthly installments commencing on the first day of the month next following thirty (30) days after Retirement or after the Committee's receipt of a certified death or proof of death certificate verifying the Participant's death, or at the time stated in Section 8.5 or 8.6 hereof. A Participant shall notify Tandy of Retirement by hand delivery or by certified or registered mail, return receipt requested, postage prepaid, of a written notice of Retirement specifying the effective date of Retirement, such written notice to be addressed to: Insurance Committee of the Board of Directors, Tandy Corporation, 1800 One Tandy Center, Fort Worth, Texas 76102. Such notice shall be deemed to be received when actually received by said Insurance Committee at said address as may be changed from time to time in the Plan Agreements, as amended. Section 5.4 Until actually paid and delivered to the Participant or to the Beneficiary entitled to same, none of the benefits payable by Tandy under any Plan Agreement shall be liable for the debts or liabilities of either the Participant or his Beneficiary, nor shall the same be subject to seizure by any creditor of the Participant or his Beneficiary under any writ or proceeding at law, in equity or in Bankruptcy. Further, no Participant or Beneficiary shall have power to sell, assign, transfer, encumber, or in any manner anticipate or dispose of the benefits to which he is entitled or may become entitled under a Plan Agreement. Section 5.5 (a) During the period that Participant is receiving benefits under a Plan Agreement and for one (1) year after cessation of payment of benefits, Participant agrees that he will not, either directly or indirectly, within the United States of America or in any country of the world that Tandy (or a Tandy Subsidiary) or one of its dealers or franchisees sells Consumer Electronic Products (as hereinafter defined) at retail, own, manage, operate, join, control, be employed by, be a consultant to, be a partner in, be a creditor of, engage in joint operations with, be a stockholder, officer or director of any corporation, sole proprietorship or business entity of any type, or participate in the ownership, management, direction, or control or in any other manner be connected with, any business selling Consumer Electronic Products at retail which is at the time of Participant's engaging in such conduct competitive with such products sold by Tandy at retail, except as a stockholder owning less than five percent (5%) of the shares of a corporation whose shares are traded on a stock exchange or in the over-the-counter market by a member of the National Association of Securities Dealers. "Consumer Electronic Products" are those type of products sold at the retail level to the ultimate customer as are advertised by Tandy in its most recently published annual catalogs and monthly flyers. Manufacturing of Consumer Electronic Products and sale of Consumer Electronic Products at levels of distribution other than the retail level are not considered a violation of this covenant. (b) In the event that a Participant engages in any of the activities described in Section 5.5(a) Tandy will give notice to the Participant specifying in detail the alleged violation of Section 5.5(a). Participant will be allowed ninety (90) days to cure such default. If the Committee feels there is continuing competition, then, without any further notice or opportunity to cure, and upon determination by the Board of Directors that such a Participant is engaged in such activities, such Board's decision to be conclusive and binding upon all concerned, and notwithstanding any other provisions of the Plan or of the Plan Agreement with such Participant, Tandy's obligation to a Participant to pay any benefits hereunder shall automatically cease and terminate and Tandy shall have no further obligation to such Participant or Beneficiary pursuant to the Plan or the Plan Agreement. Tandy may also enforce this provision by suit for damages which shall include but not be limited to all sums paid to Participant hereunder, or for injunction, or both. Section 5.6 Tandy may liquidate out of the interest of a Participant hereunder, but only as Retirement or death benefits become due and payable hereunder, any outstanding loan or loans or other indebtedness of a Participant. Tandy may elect not to distribute Retirement or death benefits to any Participant or to a Beneficiary unless and until all unpaid loans or other indebtedness due to Tandy from such Participant, together with interest, have been paid in full. Section 5.7 Subject to termination or amendment of the Plan, Plan Agreement, or both, a Participant's participation in the Plan shall continue during his Disability or his taking a Leave of Absence. A Participant who is Disabled or on Leave of Absence shall notify Tandy of his date of Retirement as provided in Section 5.3 hereof. ARTICLE SIX AMENDMENTS OF PLAN AGREEMENTS Section 6.1 The Committee may enter into amendments to the Plan Agreement with any Participant for the purpose of increasing the benefits payable to the Participant or his Beneficiary in view of increases in his compensation following the execution of such Plan Agreement or the last amendment thereto and for the purpose of amending any provision of this Plan as it might apply to a Participant. In such cases, the acceptance of an amendment by a Participant is voluntary and until the amended Plan Agreement has been submitted to and accepted by him, it shall not be effective. ARTICLE SEVEN BENEFICIARIES OF PARTICIPANTS Section 7.1 At the time of his acceptance of a Plan Agreement, a Participant shall be required to designate the Beneficiary to whom benefits under the Plan and his Plan Agreement will be payable upon his death. A Beneficiary may be one (1) or more persons or entities, such as dependents, persons who are natural objects of the Participant's bounty, an inter vivos or testamentary trust, or his estate. Such Beneficiaries may be designated contingently or successively as the Participant may direct. The designation of his Beneficiary shall be made by the Participant on a Beneficiary Designation Form to be furnished by the Committee and filed with it. Section 7.2 A Participant may change his Beneficiary, as he may desire, by filing new and amendatory Beneficiary Designation Forms with the Committee. Section 7.3 In the event a Participant designates more than one (1) Beneficiary to receive benefit payments simultaneously, each such Beneficiary shall be paid such proportion of such benefits as the Participant shall have designated. If no such percentage designation has been made, the Committee shall hold all benefit payments until the Beneficiaries agree as to the distribution of the funds or a judicial determination has been made. Section 7.4 If the designated Beneficiary dies before the Participant in question and no Beneficiary was successively named, or if the designated Beneficiary dies before complete payment of the deceased Participant's benefits have been made and no Beneficiary was successively named, the Committee shall direct that such benefits (or the balance thereof) be paid to those persons who are the deceased Participant's heirs-at-law determined in accordance with the laws of descent and distribution in force at the date hereof in the State of Texas for separate personal property, such determination to be made as though the Participant had died intestate and domiciled in Texas. Section 7.5 Whenever any person entitled to payments under this Plan shall be a minor or under other legal disability or in the sole judgment of the Committee shall otherwise be unable to apply such payments to his own best interest and advantage (as in the case of illness, whether mental or physical, or where the person not under legal disability is unable to preserve his estate for his own best interest), the Committee may in the exercise of its discretion direct all or any portion of such payments to be made in any one or more of the following ways unless claims shall have been made therefor by an existing and duly appointed guardian, conservator, committee or other duly appointed legal representative, in which event payment shall be made to such representative: (1) directly to such person unless such person shall be an infant or shall have been legally adjudicated incompetent at the time of the payment; (2) to the spouse, child, parent or other blood relative to be expended on behalf of the person entitled or on behalf of those dependents as to whom the person entitled has the duty of support; (3) to a recognized charity or governmental institution to be expended for the benefit of the person entitled or for the benefit of those dependents as to whom the person entitled has the duty of support; or (4) to any other institution, approved by the Committee, to be expended for the benefit of the person entitled or for the benefit of those dependents as to whom the person entitled has the duty of support. The decision of the Committee will, in each case, be final and binding upon all persons and the Committee shall not be obligated to see to the proper application or expenditure of any payments so made. Any payment made pursuant to the power herein conferred upon the Committee shall operate as a complete discharge of the obligations of Tandy and of the Committee. Section 7.6 If the Committee has any doubt as to the proper Beneficiary to receive payments hereunder, the Committee shall have the right to withhold such payments until the matter is finally adjudicated or the Committee may direct Tandy to bring a suit for interpleader in any appropriate court, pay any amounts due into the court, and Tandy shall have the right to recover its reasonable attorney's fees from such proceeds so paid or to be paid. Any payment made by the Committee, in good faith and in accordance with this Plan, shall fully discharge the Committee and Tandy from all further obligations with respect to such payments. ARTICLE EIGHT TERMINATION OF PARTICIPATION Section 8.1 Except as provided in Sections 8.4, 8.5, 8.6, 10.1, and 10.2 hereof, termination of a Participant's employment by Tandy other than by reason of Retirement, Permanent Disability or Leave of Absence, whether by action of Tandy or the Participant's resignation, shall terminate the Participant's participation in the Plan. Neither the Plan nor the Plan Agreement shall in any way obligate Tandy to continue the employment of a Participant, nor will either limit the right of Tandy to terminate a Participant's employment at any time, for any reason, with or without cause. Section 8.2 Except as provided in Sections 8.4, 8.5, 8.6, 10.1 and 10.2 hereof, participation in the Plan by a Participant shall also terminate if the Plan or his Plan Agreement is terminated by Tandy in accordance with Article Ten. Section 8.3 Except as provided in Sections 8.4, 8.5, 8.6, 10.1, and 10.2 hereof, upon termination of a Participant's participation in the Plan, all of Tandy's obligations to the Participant and his Beneficiary under the Plan and Plan Agreement and each of them, shall terminate and be of no further effect. Section 8.4 Except as provided in Sections 8.5, 8.6, 10.1 and 10.2, if a Participant's participation in the Plan is terminated, by: (a) termination of the Plan; (b) termination of a Plan Agreement; or (c) termination of employment for any reasons other than (i) death or Retirement, which shall be governed by Article Five, or (ii) dishonest or fraudulent conduct of a Participant or indictment of a Participant for a felony crime involving moral turpitude, in which event no vesting under Section 8.4, 8.6, 10.1, or 10.2 shall occur, then such Participant shall be entitled, as set forth below, to a percentage of his Plan Benefit Amount as follows: Age Attained at Date of Event Set Forth in Section 8.4(a), (b) or (c) % Vested Age 54 or younger 0% Age 55 to age 65 A percent as determined in 5.1(b) hereof Age 65 to age 70 100% Age 70 to age 75 A percent as determined in 5.1(c) hereto Age 75 and thereafter 0% The amount payable under this Section 8.4 shall be determined as of the date of the event set forth in Section 8.4(a), (b) or (c) hereof and such amount as so determined at that time shall not be altered or changed thereafter except that the provisions of Section 5.5 hereof shall remain fully applicable during the Participant's employment by Tandy, during the payment of benefits under this Section 8.4 and for one (1) year after termination of employment or payment of benefits. The amount payable under this Section 8.4 shall be paid as set forth in Section 5.3 hereunder to commence on the first day of the month next following thirty (30) days after cessation of Participant's employment with Tandy. Section 8.5 Notwithstanding anything to the contrary in the Plan, (a) In the event of a "Change in Control" (as hereinafter defined), every Participant immediately shall be vested with his Plan Benefit Amount determined without regard to Section 5.1(b) but subject to Section 5.1(c). Such retirement benefit shall be payable in a lump sum on the first day of the month next following the date on which such Participant's employment with Tandy Corporation terminates for any reason (the "Termination Date"). Such lump sum payment shall equal the present value of the Participant's Plan Benefit Amount discounted for interest only at the Pension Benefit Guaranty Corporation's Immediate Annuity Rate used to value benefits for single-employer plans terminating on the Termination Date, compounded semi-annually. (b) Any Participant or Beneficiary who on the date of a Change in Control was receiving benefits under the Plan shall be entitled to receive a lump sum equal to the present value of the remaining Plan Benefit Amount, payable on the first day of the month next following the date of the Change in Control, calculated in a manner consistent with Section 8.5(a). Section 8.6 In the event that a Participant's employment with Tandy Corporation is involuntarily terminated for any reason other than those reasons set forth in Section 8.4(c)(ii), and within a one-year period beginning on the date of such termination there occurs a Change in Control, then such Participant, or his Beneficiary if such Participant dies after termination of employment, shall be entitled to receive a lump sum equal to the present value of the Participant's Plan Benefit Amount (determined in a manner consistent with Section 8.5(a)), payable in a lump sum on the first day of the month next following the date of the Change in Control. Section 8.7 For purposes of the Program, "Change in Control" shall mean any of the following events: (a) An acquisition (other than directly from Tandy Corporation) of any voting securities of Tandy Corporation (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of Tandy Corporation's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (a) Tandy Corporation or (b) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by Tandy Corporation (for purposes of this Section 8.7, a "Tandy Subsidiary"), (2) Tandy Corporation or its Tandy Subsidiaries, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined). (b) The individuals who, as of August 22, 1990, are members of the board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by Tandy Corporation's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of the Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) Approval by stockholders of Tandy Corporation of: (1) A merger, consolidation or reorganization involving Tandy Corporation, unless (i) the stockholders of Tandy Corporation, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, (iii) no Person (other than Tandy Corporation, any Tandy Subsidiary, any employee benefit plan (or any trust forming part thereof) maintained by Tandy Corporation, the Surviving Corporation, or any Tandy Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities) has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the combined voting power of the Surviving Corporation's then outstanding voting securities, and (iv) a transaction described in clauses (i) through (iii) shall herein be referred to as a "Non-Control Transaction"; (2) A complete liquidation or dissolution of Tandy Corporation; or (3) An agreement for the sale or other disposition of all or substantially all of the assets of Tandy Corporation to any Person (other than a transfer to a Tandy Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by Tandy Corporation which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by Tandy Corporation, and after such share acquisition by Tandy Corporation, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. Section 8.8 Notwithstanding any provision to the contrary in the Plan, upon a Change in Control, the provisions of Sections 5.5 and 5.6 shall lapse and become null and void. ARTICLE NINE ADMINISTRATION OF THE PLAN Section 9.1 The Plan shall be administered by the Insurance Committee of the Board of Directors of Tandy, as it is presently constituted or as it may be changed from time to time by the Board of Directors of Tandy. Section 9.2 In addition to the express powers and authorities accorded the Committee under the Plan, it shall be responsible for: (a) construing and interpreting the Plan; (b) computing and certifying to Tandy the amount of benefits to be provided in each Plan Agreement for the Participant or the Beneficiary of the Participant; and (c) determining the right of a Participant or a Beneficiary to payments under the Plan and otherwise authorizing disbursements of such payments by Tandy; in these and all other respects its decisions shall be conclusive and binding upon all concerned. Section 9.3 Tandy agrees to hold harmless and indemnify the members of the Committee against any and all expenses, claims and causes of action by or on behalf of any and all parties whomsoever, and all losses therefrom, including without limitation the cost of defense and attorney's fees, based upon or arising out of any act or omission relating to or in connection with the Plan other than losses resulting from any such Committee member's fraud or willful misconduct. ARTICLE TEN TERMINATION OR AMENDMENT OF THE PLAN OR PLAN AGREEMENTS Section 10.1 Tandy reserves the right to terminate or amend this Plan or any Plan Agreement, in whole or in part, at any time, from time to time, by resolution of the Board of Directors of Tandy, provided, however, no amendment to the Plan or to any Plan Agreement shall alter the vested rights of a Participant or Beneficiary applicable on the effective date of such termination or amendment and, except for increases in Plan Compensation as provided in Section 8.5 hereof, such vested rights shall remain unchanged. Rights are deemed to have vested if benefits are actually being paid or if the only condition precedent to the payment of benefits is the termination of employment (unless terminated for reasons set forth in Section 8.4(c)(ii), in which event benefits are forfeited) with Tandy or the giving of notice of Retirement or the occurrence of an event described in Section 8.5(a), (b) or (c). Section 10.2 Notwithstanding anything to the contrary in the Plan, (a) Sections 8.5, 8.6, 8.7, 8.8 and this Section 10.2 shall not be amended or terminated at any time. (b) For a period of one (1) year following a Change in Control, the Plan or Plan Agreement shall not be terminated or amended in any way, nor shall the manner in which the Plan is administered be changed in a way that adversely affects the Participants' right to existing or future Tandy Corporation provided benefits or contributions provided hereunder, including, but not limited to, any change in, or to, the eligibility requirements, benefit formulae and manner and optional forms of payments. (c) Any amendment or termination of the Plan prior to a Change in Control which (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control or (ii) otherwise arose in connection with, or in anticipation of, a Change in Control, shall be null and void and shall have no effect whatsoever. (d) In the event the Plan or any Plan Agreement is terminated or adversely amended to the detriment of any Participant and within a one-year period from the effective date of any such amendment or termination a Change in Control occurs, then any Participant so affected whose employment with Tandy Corporation is terminated, voluntarily or involuntarily, within a three-year period from the date of the Change in Control shall be entitled to receive those benefits set forth in Section 8.5 hereof to the same extent and in the same amounts as though such amendment or termination had not occurred. This Section 10.2(d) shall not apply to any Participant who, on the date of the Change in Control, has previously retired or has otherwise voluntarily terminated his employment with Tandy Corporation. ARTICLE ELEVEN MISCELLANEOUS Section 11.1 The Plan and Plan Agreement and each of their provisions shall be construed and their validity determined under the laws of the State of Texas. Section 11.2 The masculine gender, where appearing in the Plan or Plan Agreement, shall be deemed to include the feminine gender. The words "herein", "hereunder" and other similar compounds of the word "here" shall mean and refer to the entire Plan and Plan Agreement, not to any particular provision, section or subsection, and words used in the singular or plural may be construed as though in the plural or singular where they would so apply. Section 11.3 Any action brought by a Participant under the Plan or Plan Agreement may be brought in the appropriate state or federal court for Tarrant County, Texas, or for the county wherein the Participant maintains his or her residence. Any suit brought by Tandy Corporation under the Plan may only be brought in the county wherein the Participant maintains his or her residence, unless the Participant consents to suit elsewhere. Section 11.4 Any person born on February 29 shall be deemed to have been born on the immediately preceding February 28 for all purposes of this Plan. Section 11.5 This Plan shall be binding upon and inure to the benefit of any successor of Tandy and any such successor shall be deemed substituted for Tandy under the terms of this Plan. As used in this Plan, the term "successor" shall include any person, firm, corporation, or other business entity which at any time, whether by merger, purchase, or otherwise, acquires all or substantially all of the assets or business of Tandy. Section 11.6 A Participant shall not be required to mitigate the amount of any payment provided for in this Plan by seeking other employment or otherwise. Section 11.7 In the event that a Participant institutes any legal action to enforce his rights under, or to recover damages for breach of any of the terms of this Plan or any Plan Agreement, the Participant, if he is the prevailing party, shall be entitled to recover from Tandy all actual expenses incurred in the prosecution of said suit including but not limited to attorneys' fees, court costs, and all other actual expenses. Section 11.8 Notwithstanding all other provisions in the Plan, in the event a Participant is entitled to benefits under two (2) separate sections of the Plan, the maximum a Participant may receive under this Plan is his Plan Benefit Amount, payable in accordance with Section 5.3 hereof. The original Plan was adopted by the Board of Directors on June 27, 1986. This restated plan includes amendments thereto pursuant to resolutions at meetings of the Board of Directors of Tandy Corporation on January 20, 1989 and August 22, 1990. EX-10.(E) 15 1993 10K EXHIBIT 10E Exhibit 10e SPECIAL COMPENSATION PLAN NO. 1 FOR TANDY CORPORATION EXECUTIVE OFFICERS ARTICLE ONE PURPOSE Section 1.1 The purpose of this Tandy Corporation Officers Deferred Compensation Plan ("the Plan") is to enable Tandy Corporation and its subsidiaries to secure and retain the services of outstanding key executive personnel by providing certain death and retirement benefits. ARTICLE TWO DEFINITIONS Section 2.1 Beneficiary. The recipient(s) designated (in accordance with Article Seven) by a Participant in the Plan to whom benefits are payable following his death. Section 2.2 Committee. The Insurance Committee of Tandy which shall administer the Plan in accordance with Article Nine. Section 2.3 Disability. A physical or mental condition which, in the opinion of the Committee, totally and presumably permanently, prevents a Participant from substantially performing duties for which such Participant is suited to perform either by education or training, or if such Participant is on a Leave of Absence when such condition develops, substantially performing duties for which such Participant is suited to perform either by education or training. A determination that Disability exists shall be based upon competent medical evidence satisfactory to the Committee. The date that any person's Disability occurs shall be deemed to be the date such condition is determined to exist by the Committee. Section 2.4 Employee. A regular full-time executive employee of Tandy. Section 2.5 Leave of Absence. Any period during which: (a) an Employee is absent with the prior consent of Tandy, which consent shall be granted under uniform rules applied to all Employees on a nondiscriminatory basis, but only if such person is an Employee immediately prior to the commencement of such period of authorized absence and resumes employment with Tandy not later than the first working day following the expiration of such period of authorized absence; or (b) an Employee is a member of the Armed Forces of the United States and his reemployment rights are guaranteed by law, but only if such person is an Employee immediately prior to becoming a member of such Armed Forces and resumes employment with Tandy within the period during which his reemployment rights are guaranteed by law. Section 2.6 Participant. An Employee who has been selected and has accepted a Plan Agreement as provided in Article Three. Section 2.7 Plan Agreement. The agreement between Tandy and a Participant, entered into in accordance with Article Three, and in the form of attached Exhibit "A" (as such form may be amended from time to time hereunder). Section 2.8 Plan Benefit Amount. Plan Benefit Amount means the dollar amount set forth and so designated in a Participant's Plan Agreement. Section 2.9 Retirement. The following classifications of Retirement as referred to in this Plan are defined as follows: (a) Normal Retirement. The termination of a Participant's service with Tandy at the date of attaining age sixty-five (65) years. (b) Late Retirement. The termination of a Participant's service with Tandy after the Participant's attaining the age of sixty-five (65) years. Section 2.10 Tandy. Tandy Corporation, a Delaware corporation, and those subsidiary corporations in which Tandy owns at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote. Section 2.11 Tandy Subsidiary. Any corporation in which Tandy owns at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote. ARTICLE THREE SELECTION OF PARTICIPANTS AND AGREEMENT TO PARTICIPATE Section 3.1 The Committee, in its sole and exclusive discretion, shall select from among the key executive employees of Tandy, candidates for participation in the Plan. A candidate shall become a Participant only upon his execution of a Plan Agreement and a Beneficiary Designation Form. ARTICLE FOUR LIFE INSURANCE Section 4.1 Tandy may obtain permanent life insurance insuring the life of any Participant as a means of funding Tandy's obligations to his Beneficiary in whole or part. Tandy shall be the sole owner and beneficiary of all such policies of insurance so obtained and of all incidents of ownership therein, including without limitation, the rights to all cash and loan values, dividends (if any), death benefits and the right to terminate. No Beneficiary or Participant shall be entitled to any rights, interests or equities in such policies or to any specific asset of Tandy of any type, and on the contrary, their rights against Tandy under the Plan shall be solely as general creditors. Section 4.2 If as a result of misrepresentations made by a Participant in any application for life insurance upon his life obtained by Tandy hereunder, the insurance carrier or carriers or any reinsurance thereof successfully avoid(s) payment to Tandy of the proceeds of its or their policy or policies, or such proceeds are not payable because the Participant's death results from suicide within two (2) years of the issuance of such policy or within two (2) years of the issuance to Tandy of additional policies obtained by Tandy hereunder, then, in any of said events, notwithstanding any other provisions of the Plan or of the Plan Agreement with such Participant, Tandy shall have no obligation to his Beneficiary to provide any of the death benefits otherwise payable under the terms thereof. Section 4.3 Each Participant shall cooperate in the securing of life insurance on his life by furnishing such information as the insurance company may require, taking such physical examinations as may be necessary, and taking any other action which may be requested by Tandy or the insurance company to obtain such insurance coverage. If a Participant refuses to cooperate in the securing of life insurance, or if Tandy is unable to secure life insurance at standard rates on a Participant, then the Plan Agreement shall be of no force and effect as to a Participant unless Tandy waives such requirement in writing. Section 4.4 All benefits under the Plan or Plan Agreement represent an unsecured promise to pay by Tandy Corporation. The Plan shall be unfunded and the benefits hereunder shall be paid only from the general assets of Tandy Corporation resulting in the Participants having no greater rights than Tandy Corporation's general creditors; provided, however, nothing herein shall prevent or prohibit Tandy Corporation from establishing a trust or other arrangement for the purpose of providing for the payment of the benefits payable under the Plan or Plan Agreement. ARTICLE FIVE BENEFITS PAYABLE TO PARTICIPANTS AND TO BENEFICIARIES OF PARTICIPANTS Section 5.1 Subject to the terms and conditions of the Plan, upon the Retirement of a Participant, Tandy agrees to pay to Participant a Retirement benefit as follows: (a) Normal Retirement. If a Participant retires at the date of Normal Retirement, then Tandy agrees to pay to Participant or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Retirement benefits hereunder, all from its general assets, an amount equal to such Participant's Plan Benefit Amount, such sum to be paid as set forth in Section 5.3 hereof. (b) Late Retirement. If a Participant retires at a date that constitutes Late Retirement, then Tandy agrees to pay to Participant or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Late Retirement benefits hereunder, all from its general assets, an amount equal to such Participant's Plan Benefit Amount, reduced by a percentage determined as follows: Age on Date of Percent of Reduction Late Retirement of Plan Benefit Amount 66 0% 67 0% 68 0% 69 0% 70 0% 71 20% 72 40% 73 60% 74 80% 75 100% The percent of reduction of a Participant's Plan Benefit Amount shall be measured on a fiscal year beginning on the date of Participant's date of birth and shall commence on the day after the date a Participant attains age 70, and any reduction for a part of a year shall be prorated on a daily basis at the applicable percentage assuming a 365-day year. Such amount shall be paid as set forth in Section 5.3 hereof. Section 5.2 Subject to the terms and conditions of the Plan, upon the death of a Participant, but only if the Participant is an Employee of Tandy at his death (except as set forth in Section 5.2(c) below) and is not being paid benefits pursuant to a Plan Agreement at such time, Tandy agrees to pay to his Beneficiary from its general assets an amount equal to such Participant's Plan Benefit Amount as reflected in Employee's Plan Agreement or, as the case may be, in the last amendment to his Plan Agreement. With respect to such benefits, however, it is further provided that: (a) no benefits shall be payable to the Beneficiary of a Participant in those instances covered by Section 4.2; (b) if a Participant dies while an Employee of Tandy after the date of his Normal Retirement, then the amount payable to his Beneficiary upon a Participant's death shall be reduced as set forth in Section 5.1(b) hereof. (c) The death of a Participant within the first year after involuntary termination of employment with Tandy as provided in Section 8.6 shall not defeat the right of such Participant's Beneficiary to receive benefits under this Section 5.2 so long as an event described in Section 8.5(a), (b) or (c) occurs within one year of the date of termination of the Participant's employment. Section 5.3 Except as provided in Section 8.5, the aggregate amount payable to a Participant or his Beneficiary upon (a) Normal Retirement, (b) Late Retirement, (c) benefits due and payable under Section 8.5 or 8.6 hereof, or (d) death of a Participant, shall be paid in one hundred twenty (120) equal monthly installments commencing on the first day of the month next following thirty (30) days after Retirement or after the Committee's receipt of a certified death or proof of death certificate verifying the Participant's death, or at the time stated in Section 8.5 or 8.6 hereof. A Participant shall notify Tandy of Retirement by hand delivery or by certified or registered mail, return receipt requested, postage prepaid, of a written notice of Retirement specifying the effective date of Retirement, such written notice to be addressed to: Insurance Committee of the Board of Directors, Tandy Corporation, 1800 One Tandy Center, Fort Worth, Texas 76102. Such notice shall be deemed to be received when actually received by said Insurance Committee at said address as may be changed from time to time in the Plan Agreements, as amended. Section 5.4 Until actually paid and delivered to the Participant or to the Beneficiary entitled to same, none of the benefits payable by Tandy under any Plan Agreement shall be liable for the debts or liabilities of either the Participant or his Beneficiary, nor shall the same be subject to seizure by any creditor of the Participant or his Beneficiary under any writ or proceeding at law, in equity or in Bankruptcy. Further, no Participant or Beneficiary shall have power to sell, assign, transfer, encumber, or in any manner anticipate or dispose of the benefits to which he is entitled or may become entitled under a Plan Agreement. Section 5.5 (a) During the period that Participant is receiving benefits under a Plan Agreement and for one (1) year after cessation of payment of benefits, Participant agrees that he will not, either directly or indirectly, within the United States of America or in any country of the world that Tandy (or a Tandy Subsidiary) or one of its dealers or franchisees sells Consumer Electronic Products (as hereinafter defined) at retail, own, manage, operate, join, control, be employed by, be a consultant to, be a partner in, be a creditor of, engage in joint operations with, be a stockholder, officer or director of any corporation, sole proprietorship or business entity of any type, or participate in the ownership, management, direction, or control or in any other manner be connected with, any business selling Consumer Electronic Products at retail which is at the time of Participant's engaging in such conduct competitive with such products sold by Tandy at retail, except as a stockholder owning less than five percent (5%) of the shares of a corporation whose shares are traded on a stock exchange or in the over-the-counter market by a member of the National Association of Securities Dealers. "Consumer Electronic Products" are those type of products sold at the retail level to the ultimate customer as are advertised by Tandy in its most recently published annual catalogs and monthly flyers. Manufacturing of Consumer Electronic Products and sale of Consumer Electronic Products at levels of distribution other than the retail level are not considered a violation of this covenant. (b) In the event that a Participant engages in any of the activities described in Section 5.5(a) Tandy will give notice to the Participant specifying in detail the alleged violation of Section 5.5(a). Participant will be allowed ninety (90) days to cure such default. If the Committee feels there is continuing competition, then, without any further notice or opportunity to cure, and upon determination by the Board of Directors that such a Participant is engaged in such activities, such Board's decision to be conclusive and binding upon all concerned, and notwithstanding any other provisions of the Plan or of the Plan Agreement with such Participant, Tandy's obligation to a Participant to pay any benefits hereunder shall automatically cease and terminate and Tandy shall have no further obligation to such Participant or Beneficiary pursuant to the Plan or the Plan Agreement. Tandy may also enforce this provision by suit for damages which shall include but not be limited to all sums paid to Participant hereunder, or for injunction, or both. Section 5.6 Tandy may liquidate out of the interest of a Participant hereunder, but only as Retirement or death benefits become due and payable hereunder, any outstanding loan or loans or other indebtedness of a Participant. Tandy may elect not to distribute Retirement or death benefits to any Participant or to a Beneficiary unless and until all unpaid loans or other indebtedness due to Tandy from such Participant, together with interest, have been paid in full. Section 5.7 Subject to termination or amendment of the Plan, Plan Agreement, or both, a Participant's participation in the Plan shall continue during his Disability or his taking a Leave of Absence. A Participant who is Disabled or on Leave of Absence shall notify Tandy of his date of Retirement as provided in Section 5.3 hereof. ARTICLE SIX AMENDMENTS OF PLAN AGREEMENTS Section 6.1 The Committee may enter into amendments to the Plan Agreement with any Participant for the purpose of increasing the benefits payable to the Participant or his Beneficiary in view of increases in his compensation following the execution of such Plan Agreement or the last amendment thereto and for the purpose of amending any provision of this Plan as it might apply to a Participant. In such cases, the acceptance of an amendment by a Participant is voluntary and until the amended Plan Agreement has been submitted to and accepted by him, it shall not be effective. ARTICLE SEVEN BENEFICIARIES OF PARTICIPANTS Section 7.1 At the time of his acceptance of a Plan Agreement, a Participant shall be required to designate the Beneficiary to whom benefits under the Plan and his Plan Agreement will be payable upon his death. A Beneficiary may be one (1) or more persons or entities, such as dependents, persons who are natural objects of the Participant's bounty, an inter vivos or testamentary trust, or his estate. Such Beneficiaries may be designated contingently or successively as the Participant may direct. The designation of his Beneficiary shall be made by the Participant on a Beneficiary Designation Form to be furnished by the Committee and filed with it. Section 7.2 A Participant may change his Beneficiary, as he may desire, by filing new and amendatory Beneficiary Designation Forms with the Committee. Section 7.3 In the event a Participant designates more than one (1) Beneficiary to receive benefit payments simultaneously, each such Beneficiary shall be paid such proportion of such benefits as the Participant shall have designated. If no such percentage designation has been made, the Committee shall hold all benefit payments until the Beneficiaries agree as to the distribution of the funds or a judicial determination has been made. Section 7.4 If the designated Beneficiary dies before the Participant in question and no Beneficiary was successively named, or if the designated Beneficiary dies before complete payment of the deceased Participant's benefits have been made and no Beneficiary was successively named, the Committee shall direct that such benefits (or the balance thereof) be paid to those persons who are the deceased Participant's heirs-at-law determined in accordance with the laws of descent and distribution in force at the date hereof in the State of Texas for separate personal property, such determination to be made as though the Participant had died intestate and domiciled in Texas. Section 7.5 Whenever any person entitled to payments under this Plan shall be a minor or under other legal disability or in the sole judgment of the Committee shall otherwise be unable to apply such payments to his own best interest and advantage (as in the case of illness, whether mental or physical, or where the person not under legal disability is unable to preserve his estate for his own best interest), the Committee may in the exercise of its discretion direct all or any portion of such payments to be made in any one or more of the following ways unless claims shall have been made therefor by an existing and duly appointed guardian, conservator, committee or other duly appointed legal representative, in which event payment shall be made to such representative: (1) directly to such person unless such person shall be an infant or shall have been legally adjudicated incompetent at the time of the payment; (2) to the spouse, child, parent or other blood relative to be expended on behalf of the person entitled or on behalf of those dependents as to whom the person entitled has the duty of support; (3) to a recognized charity or governmental institution to be expended for the benefit of the person entitled or for the benefit of those dependents as to whom the person entitled has the duty of support; or (4) to any other institution, approved by the Committee, to be expended for the benefit of the person entitled or for the benefit of those dependents as to whom the person entitled has the duty of support. The decision of the Committee will, in each case, be final and binding upon all persons and the Committee shall not be obligated to see to the proper application or expenditure of any payments so made. Any payment made pursuant to the power herein conferred upon the Committee shall operate as a complete discharge of the obligations of Tandy and of the Committee. Section 7.6 If the Committee has any doubt as to the proper Beneficiary to receive payments hereunder, the Committee shall have the right to withhold such payments until the matter is finally adjudicated or the Committee may direct Tandy to bring a suit for interpleader in any appropriate court, pay any amounts due into the court, and Tandy shall have the right to recover its reasonable attorney's fees from such proceeds so paid or to be paid. Any payment made by the Committee, in good faith and in accordance with this Plan, shall fully discharge the Committee and Tandy from all further obligations with respect to such payments. ARTICLE EIGHT TERMINATION OF PARTICIPATION Section 8.1 Except as provided in Sections 8.4, 8.5, 8.6, 10.1, and 10.2 hereof, termination of a Participant's employment by Tandy other than by reason of Retirement, Disability or Leave of Absence, whether by action of Tandy or the Participant's resignation, shall terminate the Participant's participation in the Plan. Neither the Plan nor the Plan Agreement shall in any way obligate Tandy to continue the employment of a Participant, nor will either limit the right of Tandy to terminate a Participant's employment at any time, for any reason, with or without cause. Section 8.2 Except as provided in Sections 8.4, 8.5, 8.6, 10.1 and 10.2 hereof, participation in the Plan by a Participant shall also terminate if the Plan or his Plan Agreement is terminated by Tandy in accordance with Article Ten. Section 8.3 Except as provided in Sections 8.4, 8.5, 8.6, 10.1, and 10.2 hereof, upon termination of a Participant's participation in the Plan, all of Tandy's obligations to the Participant and his Beneficiary under the Plan and Plan Agreement and each of them, shall terminate and be of no further effect. Section 8.4 Except as provided in Sections 8.5, 8.6, 10.1 and 10.2, if a Participant's participation in the Plan is terminated, by: (a) termination of the Plan; (b) termination of a Plan Agreement; or (c) termination of employment for any reasons other than (i) death or Retirement, which shall be governed by Article Five, or (ii) dishonest or fraudulent conduct of a Participant or indictment of a Participant for a felony crime involving moral turpitude, in which event no vesting under Section 8.4, 8.6, 10.1, or 10.2 shall occur, then such Participant shall be entitled, as set forth below, to a percentage of his Plan Benefit Amount as follows: Age Attained at Date of Event Set Forth in Section 8.4(a), (b) or (c) % Vested Any age under 65 years 0% Age 65 to age 70 100% Age 70 to age 75 A percent as determined in 5.1(b) hereto Age 75 and thereafter 0% The amount payable under this Section 8.4 shall be determined as of the date of the event set forth in Section 8.4(a), (b) or (c) hereof and such amount as so determined at that time shall not be altered or changed thereafter except that the provisions of Section 5.5 hereof shall remain fully applicable during the Participant's employment by Tandy, during the payment of benefits under this Section 8.4 and for one (1) year after termination of employment or payment of benefits. The amount payable under this Section 8.4 shall be paid as set forth in Section 5.3 hereunder to commence on the first day of the month next following thirty (30) days after cessation of Participant's employment with Tandy. Section 8.5 Notwithstanding anything to the contrary in the Plan, (a) In the event of a "Change in Control" (as hereinafter defined), every Participant immediately shall be vested with his Plan Benefit Amount, notwithstanding the Participant's age, provided, however, any Participant who has at the time of a Change in Control over the age of 70 years shall suffer a reduction of his Plan Benefit Amount as set forth in Section 5.1(b). Such retirement benefit shall be payable in a lump sum on the first day of the month next following the date on which such Participant's employment with Tandy Corporation terminates for any reason (the "Termination Date"). Such lump sum payment shall equal the present value of the Participant's Plan Benefit Amount discounted for interest only at the Pension Benefit Guaranty Corporation's Immediate Annuity Rate used to value benefits for single-employer plans terminating on the Termination Date, compounded semi-annually. (b) Any Participant or Beneficiary who on the date of a Change in Control was receiving benefits under the Plan shall be entitled to receive a lump sum equal to the present value of the remaining Plan Benefit Amount, payable on the first day of the month next following the date of the Change in Control, calculated in a manner consistent with Section 8.5(a). Section 8.6 In the event that a Participant's employment with Tandy Corporation is involuntarily terminated for any reason other than those reasons set forth in Section 8.4(c)(ii), and within a one-year period beginning on the date of such termination there occurs a Change in Control, then such Participant, or his Beneficiary if such Participant dies after termination of employment, shall be entitled to receive a lump sum equal to the present value of the Participant's Plan Benefit Amount (determined in a manner consistent with Section 8.5(a)), payable in a lump sum on the first day of the month next following the date of the Change in Control. Section 8.7 For purposes of the Program, "Change in Control" shall mean any of the following events: (a) An acquisition (other than directly from Tandy Corporation) of any voting securities of Tandy Corporation (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of Tandy Corporation's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (a) Tandy Corporation or (b) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by Tandy Corporation (for purposes of this Section 8.7, a "Tandy Subsidiary"), (2) Tandy Corporation or its Tandy Subsidiaries, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined). (b) The individuals who, as of August 22, 1990, are members of the board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by Tandy Corporation's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of the Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) Approval by stockholders of Tandy Corporation of: (1) A merger, consolidation or reorganization involving Tandy Corporation, unless (i) the stockholders of Tandy Corporation, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, (iii) no Person (other than Tandy Corporation, any Tandy Subsidiary, any employee benefit plan (or any trust forming part thereof) maintained by Tandy Corporation, the Surviving Corporation, or any Tandy Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities) has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the combined voting power of the Surviving Corporation's then outstanding voting securities, and (iv) a transaction described in clauses (i) through (iii) shall herein be referred to as a "Non-Control Transaction"; (2) A complete liquidation or dissolution of Tandy Corporation; or (3) An agreement for the sale or other disposition of all or substantially all of the assets of Tandy Corporation to any Person (other than a transfer to a Tandy Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by Tandy Corporation which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by Tandy Corporation, and after such share acquisition by Tandy Corporation, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. Section 8.8 Notwithstanding any provision to the contrary in the Plan, upon a Change in Control, the provisions of Sections 5.5 and 5.6 shall lapse and become null and void. ARTICLE NINE ADMINISTRATION OF THE PLAN Section 9.1 The Plan shall be administered by the Insurance Committee of the Board of Directors of Tandy, as it is presently constituted or as it may be changed from time to time by the Board of Directors of Tandy. Section 9.2 In addition to the express powers and authorities accorded the Committee under the Plan, it shall be responsible for: (a) construing and interpreting the Plan; (b) computing and certifying to Tandy the amount of benefits to be provided in each Plan Agreement for the Participant or the Beneficiary of the Participant; and (c) determining the right of a Participant or a Beneficiary to payments under the Plan and otherwise authorizing disbursements of such payments by Tandy; in these and all other respects its decisions shall be conclusive and binding upon all concerned. Section 9.3 Tandy agrees to hold harmless and indemnify the members of the Committee against any and all expenses, claims and causes of action by or on behalf of any and all parties whomsoever, and all losses therefrom, including without limitation the cost of defense and attorney's fees, based upon or arising out of any act or omission relating to or in connection with the Plan other than losses resulting from any such Committee member's fraud or willful misconduct. ARTICLE TEN TERMINATION OR AMENDMENT OF THE PLAN OR PLAN AGREEMENTS Section 10.1 Tandy reserves the right to terminate or amend this Plan or any Plan Agreement, in whole or in part, at any time, from time to time, by resolution of the Board of Directors of Tandy, provided, however, no amendment to the Plan or to any Plan Agreement shall alter the vested rights of a Participant or Beneficiary applicable on the effective date of such termination or amendment and, except for increases in Plan Compensation as provided in Section 8.5 hereof, such vested rights shall remain unchanged. Rights are deemed to have vested if benefits are actually being paid or if the only condition precedent to the payment of benefits is the termination of employment (unless terminated for reasons set forth in Section 8.4(c)(ii), in which event benefits are forfeited) with Tandy or the giving of notice of Retirement or the occurrence of an event described in Section 8.5(a) or (b). Section 10.2 Notwithstanding anything to the contrary in the Plan, (a) Sections 8.5, 8.6, 8.7, 8.8 and this Section 10.2 shall not be amended or terminated at any time. (b) For a period of one (1) year following a Change in Control, the Plan or Plan Agreement shall not be terminated or amended in any way, nor shall the manner in which the Plan is administered be changed in a way that adversely affects the Participants' right to existing or future Tandy Corporation provided benefits or contributions provided hereunder, including, but not limited to, any change in, or to, the eligibility requirements, benefit formulae and manner and optional forms of payments. (c) Any amendment or termination of the Plan prior to a Change in Control which (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control or (ii) otherwise arose in connection with, or in anticipation of, a Change in Control, shall be null and void and shall have no effect whatsoever. (d) In the event the Plan or any Plan Agreement is terminated or adversely amended to the detriment of any Participant and within a one-year period from the effective date of any such amendment or termination a Change in Control occurs, then any Participant so affected whose employment with Tandy Corporation is terminated, voluntarily or involuntarily, within a three-year period from the date of the Change in Control shall be entitled to receive those benefits set forth in Section 8.5 hereof to the same extent and in the same amounts as though such amendment or termination had not occurred. This Section 10.2(d) shall not apply to any Participant who, on the date of the Change in Control, has previously retired or has otherwise voluntarily terminated his employment with Tandy Corporation. ARTICLE ELEVEN MISCELLANEOUS Section 11.1 The Plan and Plan Agreement and each of their provisions shall be construed and their validity determined under the laws of the State of Texas. Section 11.2 The masculine gender, where appearing in the Plan or Plan Agreement, shall be deemed to include the feminine gender. The words "herein", "hereunder" and other similar compounds of the word "here" shall mean and refer to the entire Plan and Plan Agreement, not to any particular provision, section or subsection, and words used in the singular or plural may be construed as though in the plural or singular where they would so apply. Section 11.3 Any action brought by a Participant under the Plan or Plan Agreement may be brought in the appropriate state or federal court for Tarrant County, Texas, or for the county wherein the Participant maintains his or her residence. Any suit brought by Tandy Corporation under the Plan may only be brought in the county wherein the Participant maintains his or her residence, unless the Participant consents to suit elsewhere. Section 11.4 Any person born on February 29 shall be deemed to have been born on the immediately preceding February 28 for all purposes of this Plan. Section 11.5 This Plan shall be binding upon and inure to the benefit of any successor of Tandy and any such successor shall be deemed substituted for Tandy under the terms of this Plan. As used in this Plan, the term "successor" shall include any person, firm, corporation, or other business entity which at any time, whether by merger, purchase, or otherwise, acquires all or substantially all of the assets or business of Tandy. Section 11.6 A Participant shall not be required to mitigate the amount of any payment provided for in this Plan by seeking other employment or otherwise. Section 11.7 In the event that a Participant institutes any legal action to enforce his rights under, or to recover damages for breach of any of the terms of this Plan or any Plan Agreement, the Participant, if he is the prevailing party, shall be entitled to recover from Tandy all actual expenses incurred in the prosecution of said suit including but not limited to attorneys' fees, court costs, and all other actual expenses. Section 11.8 Notwithstanding all other provisions in the Plan, in the event a Participant is entitled to benefits under two (2) separate sections of the Plan, the maximum a Participant may receive under this Plan is his Plan Benefit Amount, payable in accordance with Section 5.3 hereof. EX-10.(F) 16 1993 10K EXHIBIT 10F Exhibit 10f SPECIAL COMPENSATION PLAN NO. 2 FOR TANDY CORPORATION EXECUTIVE OFFICERS ARTICLE ONE PURPOSE Section 1.1 The purpose of this Tandy Corporation Officers Special Deferred Compensation Plan No. 2 ("the Plan") is to enable Tandy Corporation and its subsidiaries to secure and retain the services of outstanding key executive personnel by providing certain death and retirement benefits. ARTICLE TWO DEFINITIONS Section 2.1 Beneficiary. The recipient(s) designated (in accordance with Article Seven) by a Participant in the Plan to whom benefits are payable following his death. Section 2.2 Committee. The Insurance Committee of Tandy which shall administer the Plan in accordance with Article Nine. Section 2.3 Disability. A physical or mental condition which, in the opinion of the Committee, totally and presumably permanently, prevents a Participant from substantially performing duties for which such Participant is suited to perform either by education or training, or if such Participant is on a Leave of Absence when such condition develops, substantially performing duties for which such Participant is suited to perform either by education or training. A determination that Disability exists shall be based upon competent medical evidence satisfactory to the Committee. The date that any person's Disability occurs shall be deemed to be the date such condition is determined to exist by the Committee. Section 2.4 Employee. A regular full-time executive employee of Tandy. Section 2.5 Leave of Absence. Any period during which: (a) an Employee is absent with the prior consent of Tandy, which consent shall be granted under uniform rules applied to all Employees on a nondiscriminatory basis, but only if such person is an Employee immediately prior to the commencement of such period of authorized absence and resumes employment with Tandy not later than the first working day following the expiration of such period of authorized absence; or (b) an Employee is a member of the Armed Forces of the United States and his reemployment rights are guaranteed by law, but only if such person is an Employee immediately prior to becoming a member of such Armed Forces and resumes employment with Tandy within the period during which his reemployment rights are guaranteed by law. Section 2.6 Participant. An Employee who has been selected and has accepted a Plan Agreement as provided in Article Three. Section 2.7 Plan Agreement. The agreement between Tandy and a Participant, entered into in accordance with Article Three, and in the form of attached Exhibit "A" (as such form may be amended from time to time hereunder). Section 2.8 Plan Benefit Amount. Plan Benefit Amount means the dollar amount set forth and so designated in a Participant's Plan Agreement. Section 2.9 Retirement. The following classifications of Retirement as referred to in this Plan are defined as follows: (a) Early Retirement. The voluntary election, as opposed to involuntary termination by Tandy, prior to the Participant's attaining the age of sixty-five (65) years, by a Participant to terminate his employment after attaining the age of sixty (60) years. (b) Normal Retirement. The termination of a Participant's service with Tandy at the date of attaining age sixty-five (65) years. (c) Late Retirement. The termination of a Participant's service with Tandy after the Participant's attaining the age of sixty-five (65) years. Section 2.10 Tandy. Tandy Corporation, a Delaware corporation, and those subsidiary corporations in which Tandy owns at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote. Section 2.11 Tandy Subsidiary. Any corporation in which Tandy owns at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote. ARTICLE THREE SELECTION OF PARTICIPANTS AND AGREEMENT TO PARTICIPATE Section 3.1 The Committee, in its sole and exclusive discretion, shall select from among the key executive employees of Tandy, candidates for participation in the Plan. A candidate shall become a Participant only upon his execution of a Plan Agreement and a Beneficiary Designation Form. ARTICLE FOUR LIFE INSURANCE Section 4.1 Tandy may obtain permanent life insurance insuring the life of any Participant as a means of funding Tandy's obligations to his Beneficiary in whole or part. Tandy shall be the sole owner and beneficiary of all such policies of insurance so obtained and of all incidents of ownership therein, including without limitation, the rights to all cash and loan values, dividends (if any), death benefits and the right to terminate. No Beneficiary or Participant shall be entitled to any rights, interests or equities in such policies or to any specific asset of Tandy of any type, and on the contrary, their rights against Tandy under the Plan shall be solely as general creditors. Section 4.2 If as a result of misrepresentations made by a Participant in any application for life insurance upon his life obtained by Tandy hereunder, the insurance carrier or carriers or any reinsurance thereof successfully avoid(s) payment to Tandy of the proceeds of its or their policy or policies, or such proceeds are not payable because the Participant's death results from suicide within two (2) years of the issuance of such policy or within two (2) years of the issuance to Tandy of additional policies obtained by Tandy hereunder, then, in any of said events, notwithstanding any other provisions of the Plan or of the Plan Agreement with such Participant, Tandy shall have no obligation to his Beneficiary to provide any of the death benefits otherwise payable under the terms thereof. Section 4.3 Each Participant shall cooperate in the securing of life insurance on his life by furnishing such information as the insurance company may require, taking such physical examinations as may be necessary, and taking any other action which may be requested by Tandy or the insurance company to obtain such insurance coverage. If a Participant refuses to cooperate in the securing of life insurance, or if Tandy is unable to secure life insurance at standard rates on a Participant, then the Plan Agreement shall be of no force and effect as to a Participant unless Tandy waives such requirement in writing. Section 4.4 All benefits under the Plan or Plan Agreement represent an unsecured promise to pay by Tandy Corporation. The Plan shall be unfunded and the benefits hereunder shall be paid only from the general assets of Tandy Corporation resulting in the Participants having no greater rights than Tandy Corporation's general creditors; provided, however, nothing herein shall prevent or prohibit Tandy Corporation from establishing a trust or other arrangement for the purpose of providing for the payment of the benefits payable under the Plan or Plan Agreement. ARTICLE FIVE BENEFITS PAYABLE TO PARTICIPANTS AND TO BENEFICIARIES OF PARTICIPANTS Section 5.1 Subject to the terms and conditions of the Plan, upon the Retirement of a Participant, Tandy agrees to pay to Participant a Retirement benefit as follows: (a) Normal Retirement. If a Participant retires at the date of Normal Retirement, then Tandy agrees to pay to Participant or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Retirement benefits hereunder, all from its general assets, an amount equal to such Participant's Plan Benefit Amount, such sum to be paid as set forth in Section 5.3 hereof. (b) Early Retirement. If a Participant retires at a time that constitutes an Early Retirement, then Tandy agrees to pay to Participant or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Early Retirement benefits hereunder, all from its general assets, an amount equal to such Participant's Plan Benefit Amount, reduced by five percent (5%) per year for each year that Early Retirement precedes the date of Normal Retirement. Such year shall be a fiscal year beginning on the date a Participant attains age sixty (60). Any reduction for a part of a year shall be prorated on a daily basis assuming a 365-day year. Such amount shall be paid as set forth in Section 5.3 hereof. (c) Late Retirement. If a Participant retires at a date that constitutes Late Retirement, then Tandy agrees to pay to Participant or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Late Retirement benefits hereunder, all from its general assets, an amount equal to such Participant's Plan Benefit Amount, reduced by a percentage determined as follows: Age on Date of Percent of Reduction Late Retirement of Plan Benefit Amount 66 0% 67 0% 68 0% 69 0% 70 0% 71 20% 72 40% 73 60% 74 80% 75 100% The percent of reduction of a Participant's Plan Benefit Amount shall be measured on a fiscal year beginning on the date of Participant's date of birth and shall commence on the day after the date a Participant attains age 70, and any reduction for a part of a year shall be prorated on a daily basis at the applicable percentage assuming a 365-day year. Such amount shall be paid as set forth in Section 5.3 hereof. Section 5.2 Subject to the terms and conditions of the Plan, upon the death of a Participant, but only if the Participant is an Employee of Tandy at his death (except as set forth in Section 5.2(c) below) and is not being paid benefits pursuant to a Plan Agreement at such time, Tandy agrees to pay to his Beneficiary from its general assets an amount equal to such Participant's Plan Benefit Amount as reflected in Employee's Plan Agreement or, as the case may be, in the last amendment to his Plan Agreement. With respect to such benefits, however, it is further provided that: (a) no benefits shall be payable to the Beneficiary of a Participant in those instances covered by Section 4.2; (b) if a Participant dies while an Employee of Tandy after the date of his Normal Retirement, then the amount payable to his Beneficiary upon a Participant's death shall be reduced as set forth in Section 5.1(c) hereof. (c) The death of a Participant within the first year after involuntary termination of employment with Tandy as provided in Section 8.6 shall not defeat the right of such Participant's Beneficiary to receive benefits under this Section 5.2 so long as an event described in Section 8.5(a), (b) or (c) occurs within one year of the date of termination of the Participant's employment. Section 5.3 Except as provided in Section 8.5, the aggregate amount payable upon the Normal Retirement, Early Retirement, Late Retirement benefits due and payable under Section 8.5 or 8.6 hereof, or death of a Participant to a Participant or his Beneficiary shall be paid in one hundred twenty (120) equal monthly installments commencing on the first day of the month next following thirty (30) days after Retirement or after the Committee's receipt of a certified death or proof of death certificate verifying the Participant's death, or at the time stated in Section 8.5 or 8.6 hereof. A Participant shall notify Tandy of Retirement by hand delivery or by certified or registered mail, return receipt requested, postage prepaid, of a written notice of Retirement specifying the effective date of Retirement, such written notice to be addressed to: Insurance Committee of the Board of Directors, Tandy Corporation, 1800 One Tandy Center, Fort Worth, Texas 76102. Such notice shall be deemed to be received when actually received by said Insurance Committee at said address as may be changed from time to time in the Plan Agreements, as amended. Section 5.4 Until actually paid and delivered to the Participant or to the Beneficiary entitled to same, none of the benefits payable by Tandy under any Plan Agreement shall be liable for the debts or liabilities of either the Participant or his Beneficiary, nor shall the same be subject to seizure by any creditor of the Participant or his Beneficiary under any writ or proceeding at law, in equity or in Bankruptcy. Further, no Participant or Beneficiary shall have power to sell, assign, transfer, encumber, or in any manner anticipate or dispose of the benefits to which he is entitled or may become entitled under a Plan Agreement. Section 5.5 (a) During the period that Participant is receiving benefits under a Plan Agreement and for one (1) year after cessation of payment of benefits, Participant agrees that he will not, either directly or indirectly, within the United States of America or in any country of the world that Tandy (or a Tandy Subsidiary) or one of its dealers or franchisees sells Consumer Electronic Products (as hereinafter defined) at retail, own, manage, operate, join, control, be employed by, be a consultant to, be a partner in, be a creditor of, engage in joint operations with, be a stockholder, officer or director of any corporation, sole proprietorship or business entity of any type, or participate in the ownership, management, direction, or control or in any other manner be connected with, any business selling Consumer Electronic Products at retail which is at the time of Participant's engaging in such conduct competitive with such products sold by Tandy at retail, except as a stockholder owning less than five percent (5%) of the shares of a corporation whose shares are traded on a stock exchange or in the over-the-counter market by a member of the National Association of Securities Dealers. "Consumer Electronic Products" are those type of products sold at the retail level to the ultimate customer as are advertised by Tandy in its most recently published annual catalogs and monthly flyers. Manufacturing of Consumer Electronic Products and sale of Consumer Electronic Products at levels of distribution other than the retail level are not considered a violation of this covenant. (b) In the event that a Participant engages in any of the activities described in Section 5.5(a) Tandy will give notice to the Participant specifying in detail the alleged violation of Section 5.5(a). Participant will be allowed ninety (90) days to cure such default. If the Committee feels there is continuing competition, then, without any further notice or opportunity to cure, and upon determination by the Board of Directors that such a Participant is engaged in such activities, such Board's decision to be conclusive and binding upon all concerned, and notwithstanding any other provisions of the Plan or of the Plan Agreement with such Participant, Tandy's obligation to a Participant to pay any benefits hereunder shall automatically cease and terminate and Tandy shall have no further obligation to such Participant or Beneficiary pursuant to the Plan or the Plan Agreement. Tandy may also enforce this provision by suit for damages which shall include but not be limited to all sums paid to Participant hereunder, or for injunction, or both. Section 5.6 Tandy may liquidate out of the interest of a Participant hereunder, but only as Retirement or death benefits become due and payable hereunder, any outstanding loan or loans or other indebtedness of a Participant. Tandy may elect not to distribute Retirement or death benefits to any Participant or to a Beneficiary unless and until all unpaid loans or other indebtedness due to Tandy from such Participant, together with interest, have been paid in full. Section 5.7 Subject to termination or amendment of the Plan, Plan Agreement, or both, a Participant's participation in the Plan shall continue during his Disability or his taking a Leave of Absence. A Participant who is Disabled or on Leave of Absence shall notify Tandy of his date of Retirement as provided in Section 5.3 hereof. ARTICLE SIX AMENDMENTS OF PLAN AGREEMENTS Section 6.1 The Committee may enter into amendments to the Plan Agreement with any Participant for the purpose of increasing the benefits payable to the Participant or his Beneficiary in view of increases in his compensation following the execution of such Plan Agreement or the last amendment thereto and for the purpose of amending any provision of this Plan as it might apply to a Participant. In such cases, the acceptance of an amendment by a Participant is voluntary and until the amended Plan Agreement has been submitted to and accepted by him, it shall not be effective. ARTICLE SEVEN BENEFICIARIES OF PARTICIPANTS Section 7.1 At the time of his acceptance of a Plan Agreement, a Participant shall be required to designate the Beneficiary to whom benefits under the Plan and his Plan Agreement will be payable upon his death. A Beneficiary may be one (1) or more persons or entities, such as dependents, persons who are natural objects of the Participant's bounty, an inter vivos or testamentary trust, or his estate. Such Beneficiaries may be designated contingently or successively as the Participant may direct. The designation of his Beneficiary shall be made by the Participant on a Beneficiary Designation Form to be furnished by the Committee and filed with it. Section 7.2 A Participant may change his Beneficiary, as he may desire, by filing new and amendatory Beneficiary Designation Forms with the Committee. Section 7.3 In the event a Participant designates more than one (1) Beneficiary to receive benefit payments simultaneously, each such Beneficiary shall be paid such proportion of such benefits as the Participant shall have designated. If no such percentage designation has been made, the Committee shall hold all benefit payments until the Beneficiaries agree as to the distribution of the funds or a judicial determination has been made. Section 7.4 If the designated Beneficiary dies before the Participant in question and no Beneficiary was successively named, or if the designated Beneficiary dies before complete payment of the deceased Participant's benefits have been made and no Beneficiary was successively named, the Committee shall direct that such benefits (or the balance thereof) be paid to those persons who are the deceased Participant's heirs-at-law determined in accordance with the laws of descent and distribution in force at the date hereof in the State of Texas for separate personal property, such determination to be made as though the Participant had died intestate and domiciled in Texas. Section 7.5 Whenever any person entitled to payments under this Plan shall be a minor or under other legal disability or in the sole judgment of the Committee shall otherwise be unable to apply such payments to his own best interest and advantage (as in the case of illness, whether mental or physical, or where the person not under legal disability is unable to preserve his estate for his own best interest), the Committee may in the exercise of its discretion direct all or any portion of such payments to be made in any one or more of the following ways unless claims shall have been made therefor by an existing and duly appointed guardian, conservator, committee or other duly appointed legal representative, in which event payment shall be made to such representative: (1) directly to such person unless such person shall be an infant or shall have been legally adjudicated incompetent at the time of the payment; (2) to the spouse, child, parent or other blood relative to be expended on behalf of the person entitled or on behalf of those dependents as to whom the person entitled has the duty of support; (3) to a recognized charity or governmental institution to be expended for the benefit of the person entitled or for the benefit of those dependents as to whom the personen titled has the duty of support; or (4) to any other institution, approved by the Committee, to be expended for the benefit of the person entitled or for the benefit of those dependents as to whom the person entitled has the duty of support. The decision of the Committee will, in each case, be final and binding upon all persons and the Committee shall not be obligated to see to the proper application or expenditure of any payments so made. Any payment made pursuant to the power herein conferred upon the Committee shall operate as a complete discharge of the obligations of Tandy and of the Committee. Section 7.6 If the Committee has any doubt as to the proper Beneficiary to receive payments hereunder, the Committee shall have the right to withhold such payments until the matter is finally adjudicated or the Committee may direct Tandy to bring a suit for interpleader in any appropriate court, pay any amounts due into the court, and Tandy shall have the right to recover its reasonable attorney's fees from such proceeds so paid or to be paid. Any payment made by the Committee, in good faith and in accordance with this Plan, shall fully discharge the Committee and Tandy from all further obligations with respect to such payments. ARTICLE EIGHT TERMINATION OF PARTICIPATION Section 8.1 Except as provided in Sections 8.4, 8.5, 8.6, 10.1, and 10.2 hereof, termination of a Participant's employment by Tandy other than by reason of Retirement, Disability or Leave of Absence, whether by action of Tandy or the Participant's resignation, shall terminate the Participant's participation in the Plan. Neither the Plan nor the Plan Agreement shall in any way obligate Tandy to continue the employment of a Participant, nor will either limit the right of Tandy to terminate a Participant's employment at any time, for any reason, with or without cause. Section 8.2 Except as provided in Sections 8.4, 8.5, 8.6, 10.1 and 10.2 hereof, participation in the Plan by a Participant shall also terminate if the Plan or his Plan Agreement is terminated by Tandy in accordance with Article Ten. Section 8.3 Except as provided in Sections 8.4, 8.5, 8.6, 10.1, and 10.2 hereof, upon termination of a Participant's participation in the Plan, all of Tandy's obligations to the Participant and his Beneficiary under the Plan and Plan Agreement and each of them, shall terminate and be of no further effect. Section 8.4 Except as provided in Sections 8.5, 8.6, 10.1 and 10.2, if a Participant's participation in the Plan is terminated, by: (a) termination of the Plan; (b) termination of a Plan Agreement; or (c) termination of employment for any reasons other than (i) death or Retirement, which shall be governed by Article Five, or (ii) dishonest or fraudulent conduct of a Participant or indictment of a Participant for a felony crime involving moral turpitude, in which event no vesting under Section 8.4, 8.6, 10.1, or 10.2 shall occur, then such Participant shall be entitled, as set forth below, to a percentage of his Plan Benefit Amount as follows: Age Attained at Date of Event Set Forth in Section 8.4(a), (b) or (c) % Vested Any age under age 60 years 0% Age 60 to age 65 A percent as determined in 5.1(b) hereof Age 65 to age 70 100% Age 70 to age 75 A percent as determined in 5.1(c) hereto Age 75 and thereafter 0% The amount payable under this Section 8.4 shall be determined as of the date of the event set forth in Section 8.4(a), (b) or (c) hereof and such amount as so determined at that time shall not be altered or changed thereafter except that the provisions of Section 5.5 hereof shall remain fully applicable during the Participant's employment by Tandy, during the payment of benefits under this Section 8.4 and for one (1) year after termination of employment or payment of benefits. The amount payable under this Section 8.4 shall be paid as set forth in Section 5.3 hereunder to commence on the first day of the month next following thirty (30) days after cessation of Participant's employment with Tandy. Section 8.5 Notwithstanding anything to the contrary in the Plan, (a) In the event of a "Change in Control" (as hereinafter defined), every Participant immediately shall be vested with his Plan Benefit Amount determined without regard to Section 5.1(b) but subject to Section 5.1(c). Such retirement benefit shall be payable in a lump sum on the first day of the month next following the date on which such Participant's employment with Tandy Corporation terminates for any reason (the "Termination Date"). Such lump sum payment shall equal the present value of the Participant's Plan Benefit Amount discounted for interest only at the Pension Benefit Guaranty Corporation's Immediate Annuity Rate used to value benefits for single-employer plans terminating on the Termination Date, compounded semi-annually. (b) Any Participant or Beneficiary who on the date of a Change in Control was receiving benefits under the Plan shall be entitled to receive a lump sum equal to the present value of the remaining Plan Benefit Amount, payable on the first day of the month next following the date of the Change in Control, calculated in a manner consistent with Section 8.5(a). Section 8.6 In the event that a Participant's employment with Tandy Corporation is involuntarily terminated for any reason other than those reasons set forth in Section 8.4(c)(ii), and within a one-year period beginning on the date of such termination there occurs a Change in Control, then such Participant, or his Beneficiary if such Participant dies after termination of employment, shall be entitled to receive a lump sum equal to the present value of the Participant's Plan Benefit Amount (determined in a manner consistent with Section 8.5(a)), payable in a lump sum on the first day of the month next following the date of the Change in Control. Section 8.7 For purposes of the Program, "Change in Control" shall mean any of the following events: (a) An acquisition (other than directly from Tandy Corporation) of any voting securities of Tandy Corporation (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of Tandy Corporation's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (a) Tandy Corporation or (b) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by Tandy Corporation (for purposes of this Section 8.7, a "Tandy Subsidiary"), (2) Tandy Corporation or its Tandy Subsidiaries, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined). (b) The individuals who, as of August 22, 1990, are members of the board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by Tandy Corporation's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of the Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) Approval by stockholders of Tandy Corporation of: (1) A merger, consolidation or reorganization involving Tandy Corporation, unless (i) the stockholders of Tandy Corporation, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, (iii) no Person (other than Tandy Corporation, any Tandy Subsidiary, any employee benefit plan (or any trust forming part thereof) maintained by Tandy Corporation, the Surviving Corporation, or any Tandy Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities) has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the combined voting power of the Surviving Corporation's then outstanding voting securities, and (iv) a transaction described in clauses (i) through (iii) shall herein be referred to as a "Non-Control Transaction"; (2) A complete liquidation or dissolution of Tandy Corporation; or (3) An agreement for the sale or other disposition of all or substantially all of the assets of Tandy Corporation to any Person (other than a transfer to a Tandy Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by Tandy Corporation which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by Tandy Corporation, and after such share acquisition by Tandy Corporation, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. Section 8.8 Notwithstanding any provision to the contrary in the Plan, upon a Change in Control, the provisions of Sections 5.5 and 5.6 shall lapse and become null and void. ARTICLE NINE ADMINISTRATION OF THE PLAN Section 9.1 The Plan shall be administered by the Insurance Committee of the Board of Directors of Tandy, as it is presently constituted or as it may be changed from time to time by the Board of Directors of Tandy. Section 9.2 In addition to the express powers and authorities accorded the Committee under the Plan, it shall be responsible for: (a) construing and interpreting the Plan; (b) computing and certifying to Tandy the amount of benefits to be provided in each Plan Agreement for the Participant or the Beneficiary of the Participant; and (c) determining the right of a Participant or a Beneficiary to payments under the Plan and otherwise authorizing disbursements of such payments by Tandy; in these and all other respects its decisions shall be conclusive and binding upon all concerned. Section 9.3 Tandy agrees to hold harmless and indemnify the members of the Committee against any and all expenses, claims and causes of action by or on behalf of any and all parties whomsoever, and all losses therefrom, including without limitation the cost of defense and attorney's fees, based upon or arising out of any act or omission relating to or in connection with the Plan other than losses resulting from any such Committee member's fraud or willful misconduct. ARTICLE TEN TERMINATION OR AMENDMENT OF THE PLAN OR PLAN AGREEMENTS Section 10.1 Tandy reserves the right to terminate or amend this Plan or any Plan Agreement, in whole or in part, at any time, from time to time, by resolution of the Board of Directors of Tandy, provided, however, no amendment to the Plan or to any Plan Agreement shall alter the vested rights of a Participant or Beneficiary applicable on the effective date of such termination or amendment and, except for increases in Plan Compensation as provided in Section 8.5 hereof, such vested rights shall remain unchanged. Rights are deemed to have vested if benefits are actually being paid or if the only condition precedent to the payment of benefits is the termination of employment (unless terminated for reasons set forth in Section 8.4(c)(ii), in which event benefits are forfeited) with Tandy or the giving of notice of Retirement or the occurrence of an event described in Section 8.5(a) or (b). Section 10.2 Notwithstanding anything to the contrary in the Plan, (a) Sections 8.5, 8.6, 8.7, 8.8 and this Section 10.2 shall not be amended or terminated at any time. (b) For a period of one (1) year following a Change in Control, the Plan or Plan Agreement shall not be terminated or amended in any way, nor shall the manner in which the Plan is administered be changed in a way that adversely affects the Participants' right to existing or future Tandy Corporation provided benefits or contributions provided hereunder, including, but not limited to, any change in, or to, the eligibility requirements, benefit formulae and manner and optional forms of payments. (c) Any amendment or termination of the Plan prior to a Change in Control which (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control or (ii) otherwise arose in connection with, or in anticipation of, a Change in Control, shall be null and void and shall have no effect whatsoever. (d) In the event the Plan or any Plan Agreement is terminated or adversely amended to the detriment of any Participant and within a one-year period from the effective date of any such amendment or termination a Change in Control occurs, then any Participant so affected whose employment with Tandy Corporation is terminated, voluntarily or involuntarily, within a three-year period from the date of the Change in Control shall be entitled to receive those benefits set forth in Section 8.5 hereof to the same extent and in the same amounts as though such amendment or termination had not occurred. This Section 10.2(d) shall not apply to any Participant who, on the date of the Change in Control, has previously retired or has otherwise voluntarily terminated his employment with Tandy Corporation. ARTICLE ELEVEN MISCELLANEOUS Section 11.1 The Plan and Plan Agreement and each of their provisions shall be construed and their validity determined under the laws of the State of Texas. Section 11.2 The masculine gender, where appearing in the Plan or Plan Agreement, shall be deemed to include the feminine gender. The words "herein", "hereunder" and other similar compounds of the word "here" shall mean and refer to the entire Plan and Plan Agreement, not to any particular provision, section or subsection, and words used in the singular or plural may be construed as though in the plural or singular where they would so apply. Section 11.3 Any action brought by a Participant under the Plan or Plan Agreement may be brought in the appropriate state or federal court for Tarrant County, Texas, or for the county wherein the Participant maintains his or her residence. Any suit brought by Tandy Corporation under the Plan may only be brought in the county wherein the Participant maintains his or her residence, unless the Participant consents to suit elsewhere. Section 11.4 Any person born on February 29 shall be deemed to have been born on the immediately preceding February 28 for all purposes of this Plan. Section 11.5 This Plan shall be binding upon and inure to the benefit of any successor of Tandy and any such successor shall be deemed substituted for Tandy under the terms of this Plan. As used in this Plan, the term "successor" shall include any person, firm, corporation, or other business entity which at any time, whether by merger, purchase, or otherwise, acquires all or substantially all of the assets or business of Tandy. Section 11.6 A Participant shall not be required to mitigate the amount of any payment provided for in this Plan by seeking other employment or otherwise. Section 11.7 In the event that a Participant institutes any legal action to enforce his rights under, or to recover damages for breach of any of the terms of this Plan or any Plan Agreement, the Participant, if he is the prevailing party, shall be entitled to recover from Tandy all actual expenses incurred in the prosecution of said suit including but not limited to attorneys' fees, court costs, and all other actual expenses. Section 11.8 Notwithstanding all other provisions in the Plan, in the event a Participant is entitled to benefits under two (2) separate sections of the Plan, the maximum a Participant may receive under this Plan is his Plan Benefit Amount, payable in accordance with Section 5.3 hereof. EX-10.(G) 17 1993 10K EXHIBIT 10G Exhibit 10g SPECIAL COMPENSATION PLAN FOR DIRECTORS OF TANDY CORPORATION ARTICLE ONE PURPOSE Section 1.1 The purpose of the Special Compensation Plan for Directors of Tandy Corporation ("the Plan") is to afford Tandy Corporation an additional opportunity to secure and retain the services of outstanding Directors by providing, subject to the provisions of the Plan, income payments to Directors during their lifetimes and to their beneficiaries following their death. ARTICLE TWO DEFINITIONS Section 2.1 Tandy. Tandy Corporation, a Delaware corporation. Section 2.2 Beneficiary. The recipient(s) designated (in accordance with Article Seven) by a Participant to whom benefits are payable following his death. Section 2.3 Committee. The Insurance Committee of Tandy which shall administer the Plan in accordance with Article Eight or such other committee that the Board of Directors of Tandy may designate to administer this plan. Section 2.4 Director. A director of Tandy elected in accordance with the corporate charter and bylaws of Tandy. Section 2.5 Disability. A physical or mental condition which, in the opinion of the Committee, totally and presumably permanently prevents a Director from substantially performing duties of a Director. A determination that Disability exists shall be based upon competent medical evidence satisfactory to the Committee. The date that any person's Disability occurs shall be deemed to be the date such condition is determined to exist by the Committee. Section 2.6 Participant. A Director who is not an employee of Tandy or any of its subsidiaries who has served as Director of Tandy for sixty (60) consecutive months, who has attained the age of sixty (60) years and who has accepted a Plan Agreement as provided in Article Three. Section 2.7 Plan Agreement. The agreement between Tandy and a Participant, entered into in accordance with Article Three (as such form may be amended from time to time hereunder). Section 2.8 Plan Compensation. An amount as shown in the Plan Agreement which initially shall be equal to sixty-six and two-thirds percent (66-2/3%) of the basic compensation of nonemployee Tandy Directors (calculated on a calendar year) at the time of Retirement or death of a Participant. The fee for acting as Board Committee Chairman is not included in determining Plan Compensation. Section 2.9 Retirement. The date a Participant ceases to be a Director other than by death. Section 2.10 Former Participant. A person who is not a Director of Tandy and who is receiving benefits under the provisions of this plan. ARTICLE THREE SELECTION OF PARTICIPANTS AND AGREEMENT TO PARTICIPATE Section 3.1 Participation in the Plan by a Director is voluntary and subject to his written acceptance of a Plan Agreement executed by Tandy. Unless and until a Plan Agreement has been so submitted to and accepted by him, he shall not become a Participant. ARTICLE FOUR LIFE INSURANCE Section 4.1 Tandy may obtain permanent life insurance insuring the life of any Participant and others as a means of funding Tandy's obligations to his Beneficiary in whole or part. Tandy shall be the sole owner and beneficiary of all such policies of insurance so obtained and of all incidents of ownership therein, including without limitation, the rights to all cash and loan values, dividends (if any), death benefits and the right to terminate. No Beneficiary or Participant shall be entitled to any rights, interests or equities in such policies or to any specific asset of Tandy of any type, and on the contrary, their rights against Tandy under the Plan shall be solely as general creditors. Section 4.2 If as a result of misrepresentations made by a Participant in any application for life insurance upon his life obtained by Tandy hereunder, the insurance carrier or carriers or any reinsurance thereof successfully avoid(s) payment to Tandy of the proceeds of its or their policy or policies, or such proceeds are not payable because the Participant's death results from suicide within two (2) years of the issuance of such policy or within two (2) years of the issuance to Tandy of additional policies obtained by Tandy hereunder, then, in any of said events, and notwithstanding any other provisions of the Plan or of the Plan Agreement with such Participant, Tandy shall have no obligation to his Beneficiary to provide any of the death benefits otherwise payable under the terms thereof. Section 4.3 Each Participant shall cooperate in the securing of life insurance on his life by furnishing such information as the insurance company may require, taking such physical examinations as may be necessary, and taking any other action which may be requested by Tandy or the insurance company to obtain such insurance coverage. If a Participant refuses to cooperate in the securing of life insurance, then, the Plan Agreement shall be of no force and effect as to a Participant unless Tandy waives such requirement in writing. All nonemployee Directors who become Participants at or after the age of seventy (70) years shall not be subject to the requirements of this Section 4.3. The benefits conferred under this Plan are not contingent upon Tandy's being able to secure life insurance on a Participant, provided the Participant has met his obligations under Article Four. ARTICLE FIVE BENEFITS PAYABLE TO PARTICIPANTS AND TO BENEFICIARIES OF PARTICIPANTS Section 5.1 Subject to the terms and conditions of the Plan, upon Retirement of a Participant, Tandy agrees to pay to Participant a retirement benefit as follows: If a Participant retires at or prior to the age of seventy-two (72) years, excluding the Directors of Tandy were Directors of the Corporation on April 1, 1980, then, Tandy agrees to pay to Participant or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Retirement benefits hereunder, all from its general assets, an amount equal to Plan Compensation times the number of years or a fraction thereof a Participant served as a nonemployee Director, reduced, in the event of the death of a Former Participant, by the amounts already paid hereunder to such Former Participant, such amounts to be paid as set forth in Section 5.3 hereof. If a Participant retires on the day following the date the Participant attains the age of seventy-two (72) years or thereafter, then, Tandy agrees to pay to participant or to the designated Beneficiary of Participant in the event of the death of Participant prior to the termination of payment of Retirement benefits hereunder, all from its general assets, an amount equal to Plan Compensation times the number of years or a fraction thereof a Participant served as a nonemployee Director, reduced in the event of the death of a Former Participant, by the amounts already paid hereunder to such Former Participant, reduced by a percentage determined as follows: At Date of Retirement, Percent of Reduction Attainment of Age of Plan Compensation 73 33-1/3% 74 66-2/3% 75 100% The percent of reduction of Plan Compensation shall be measured on a fiscal year beginning on the date of a Participant's date of birth and shall commence on the day following the date a Participant attains age seventy-two (72), and any reduction for a part of a year shall be prorated on a daily basis at the applicable percentage assuming a 365-day year. Such amount shall be paid as set forth in Section 5.3 hereof. Section 5.2 Subject to the terms and conditions of the Plan, upon the death of a Participant, or a Former Participant, Tandy agrees to pay to his Beneficiary from its general assets an amount set forth in Section 5.1 hereof. Except for the method of payment, the death of a Participant shall be treated as though such Participant retired. (a) No benefits shall be payable to the Beneficiary of a Participant in those instances covered by Section 4.2; (b) The death of a Former Participant shall not defeat the right of such Participant's Beneficiary to receive benefits under this Section 5.2. Section 5.3 The aggregate amount payable upon the Retirement of a Director who was a Participant shall be paid in equal quarterly installments over a period equal to the number of years (or fraction thereof) that the retired Director served as a Director of Tandy or ten (10) years, whichever is the lesser period of time, and shall be paid on the last day of each calendar quarter in arrears, commencing on the last day of the calendar quarter after Retirement or after the Committee's receipt of a certified death or proof of death certificate verifying the Participant's death. In the event of the death of a Participant or a Former Participant, the amount due to the Beneficiary shall be paid to Beneficiary in one (1) lump sum unless Participant has designated otherwise on the beneficiary designation form. A Participant shall notify Tandy of Retirement by hand delivery or by certified or registered mail, return receipt requested, postage prepaid, of a written notice of Retirement specifying the effective date of Retirement, such written notice to be addressed to: Insurance Committee, or its successor or successors, of the Board of Directors, Tandy Corporation, 1800 One Tandy Center, Fort Worth, Texas 76102. Such notice shall be deemed to be received when actually received by said Insurance Committee at said address as may be changed from time to time in the Plan Agreements, as amended. Notwithstanding any other provision hereof to the contrary, if a Former Participant is receiving payments from Tandy under any other salary continuation plan or deferred compensation plan, because of prior employment by Tandy of such Former Participant, then no benefits or payments hereunder shall commence until all benefits under such other plan or plans have been paid in full by Tandy to the participant or beneficiaries of such plan or plans. Section 5.4 Until actually paid and delivered to the Participant or to the Beneficiary entitled to same, none of the benefits payable by Tandy under any Plan Agreement shall be liable for the debts or liabilities of either the Participant or his Beneficiary, nor shall the same be subject to seizure by any creditor of the Participant or his Beneficiary under any writ or proceeding at law, in equity or in bankruptcy. Further, no Participant or Beneficiary shall have power to sell, assign, transfer, encumber, or in any manner anticipate or dispose of the benefits to which he is entitled or may become entitled under a Plan Agreement. Section 5.5 (a) During the period that Participant is a Director of Tandy or is receiving benefits under a Plan Agreement and for one (1) year after cessation of payment of benefits, Participant agrees that he will not, either directly or indirectly, within the United States of America or in any country of the world that Tandy sells, imports, exports, assembles, packages or furnishes its products, articles, parts, supplies, accessories or services or is causing them to be sold, imported, exported, assembled, packaged or furnished through related entities, representatives, agents, or otherwise, own, manage, operate, join, control, be employed by, be a consultant to, be a partner in, be a creditor of, engage in joint operations with, be a stockholder, officer or director of any corporation, sole proprietorship or business entity of any type, or participate in the ownership, management, direction, or control or in any other manner be connected with, any business of manufacturing, designing, programming, servicing, repairing, selling, leasing, or renting any products, articles, parts, supplies, accessories or services which is at the time of Participant's engaging in such conduct competitive with products, articles, parts, supplies, accessories or services manufactured, sold, imported, exported, assembled, packaged or furnished by Tandy, except as a shareholder owning less than five percent (5%) of the shares of a corporation whose shares are traded on a stock exchange or in the over-the-counter market by a member of the National Association of Securities Dealers. In the event that a Participant takes Retirement and engages in any of the activities described in the immediately preceding sentence, or engaged in any of such activities prior to Retirement, then, without any further notification, and upon determination by the Committee that such a Participant is engaged or has engaged in such activities, such Committee's decision to be conclusive and binding upon all concerned, and notwithstanding any other provisions of the Plan or of the Plan Agreement with such Participant, Tandy's obligation to a Participant to pay any Retirement or death benefits hereunder shall automatically cease and terminate, and Tandy shall have no further obligation to such Participant or Beneficiary pursuant to the Plan or the Plan Agreement. Tandy may enforce this provision by suit for damages which shall include but not be limited to all sums paid to Participant hereunder, or for injunction, or both. The foregoing notwithstanding, it shall not be a violation of the foregoing provisions if a Participant's or Former Participant's alleged activities were not a violation at the time he entered into such activity but thereafter became in violation of the Section 5.5(a) because of Tandy's entry into the activity also. (b) (i) Upon written request of the Chairman of the Board of Directors of Tandy, each Former Participant, who is receiving benefits hereunder, shall at all reasonable times and places make himself available for consultation concerning matters of interest to Tandy. In the event that a Former Participant fails to perform the consultation services described in the immediately preceding sentence for a reason other than physical or mental incapacity, then, upon determination by the Committee that such a Former Participant has failed to perform such services, such Committee's decision is to be conclusive and binding upon all concerned, and notwithstanding any other provisions of the Plan or of the Plan Agreement with such Former Participant, Tandy's obligation to pay any retirement or death benefits hereunder shall cease and terminate and Tandy shall have no further obligation to such Former Participant or Beneficiary pursuant to the Plan or the Plan Agreement, unless the Former Participant gives Notice of Appeal to the Board of Directors of Tandy as provided in Section 5.1(b)(ii) below. (ii) A Former Participant shall have 30 days from the date of mailing of a notice of termination of benefits by the Committee to the Former Participant's last known mailing address in which to deliver written Notice of Appeal to the Board of Directors of Tandy to either the Chairman of the Board or the Corporate Secretary of Tandy, such written notice to contain facts why the Committee's decision is factually incorrect. No benefits will be paid under the Plan or Plan Agreement from the time the Committee's decision is made until such time as the Appeal is decided by the Board of Directors of Tandy. Upon receipt of such written Notice of Appeal from a Former Participant, the Chairman of the Board shall have 120 days within which to present the appeal at a regularly or specially called meeting of the Board of Directors. The Board of Directors of Tandy shall make a determination as to whether or not a Former Participant has failed to perform the consultation services required under Section 5.5(b)(i) hereof. Notwithstanding any other provisions of the Plan or the Plan Agreement with such Former Participant, the Board of Directors' decision is to be conclusive and binding upon all concerned. Following a decision by the Board of Directors to uphold the decision of the Committee, Tandy shall have no further obligation to pay such Participant or Beneficiary pursuant to the Plan or the Plan Agreement. Following a Board decision to overturn the decision of the Committee, any unpaid past due benefits will be paid to the Former Participant or his Beneficiary (if applicable), pursuant to the Plan or the Plan Agreement. Section 5.6 Tandy may liquidate out of the interest of a Participant hereunder, but only as Retirement or death benefits become due and payable hereunder, any outstanding loan or loans or other indebtedness of a Participant. Tandy may elect not to distribute Retirement or death benefits to any Participant or to a Beneficiary unless and until all unpaid loans or other indebtedness due to Tandy from such Participant, together with interest, have been paid in full. Section 5.7 Subject to termination or amendment of the Plan, Plan Agreement, or both, a Participant's participation in the Plan shall continue during his Disability. A Participant who is Disabled shall notify Tandy of his date of Retirement as provided in Section 5.3 hereof. ARTICLE SIX BENEFICIARIES OF PARTICIPANTS Section 6.1 At the time of his acceptance of a Plan Agreement, a Participant shall be required to designate the Beneficiary to whom benefits under the Plan and his Plan Agreement will be payable upon his death. A Beneficiary may be one (1) or more persons or entities, such as dependents, persons who are natural objects of the Participant's bounty, an inter vivos or testamentary trust, or his estate. Such Beneficiaries may be designated contingently or successively as the Participant may direct. The designation of his Beneficiary shall be made by the Participant on a beneficiary designation form to be furnished by the Committee and filed with it. Section 6.2 A Participant may change his Beneficiary, as he may desire, by filing new and amendatory beneficiary designation forms with the Committee. Section 6.3 In the event a Participant designates more than one (1) Beneficiary to receive benefit payments simultaneously, each such Beneficiary shall be paid such proportion of such benefits as the Participant shall have designated. If no such percentage designation has been made, the Committee shall hold all benefit payments until the Beneficiaries agree as to the distribution of the funds or a judicial determination has been made. Section 6.4 If the designated Beneficiary dies before the Participant in question and no Beneficiary was successively named, or if the designated Beneficiary dies before complete payment of the deceased Participant's benefits have been made and no Beneficiary was successively named, the Committee shall direct that such benefits (or the balance thereof) be paid to those persons who are the deceased Participant's heirs-at-law determined in accordance with the laws of descent and distribution in force at the date hereof in the State of Texas for separate personal property, such determination to be made as though the Participant had died intestate and domiciled in Texas. Section 6.5 Whenever any person entitled to payments under this Plan shall be a minor or under other legal disability or in the sole judgment of the Committee shall otherwise be unable to apply such payments to his own best interest and advantage (as in the case of illness, whether mental or physical, or where the person not under legal disability is unable to preserve his estate for his own best interest), the Committee may in the exercise of its discretion direct all or any portion of such payments to be made in any one (1) or more of the following ways unless claims shall have been made therefor by an existing and duly appointed guardian, conservator, committee or other duly appointed legal representative, in which event payment shall be made to such representative: (1) directly to such person unless such person shall be an infant or shall have been legally adjudicated incompetent at the time of the payment; (2) to the spouse, child, parent or other blood relative to be expended on behalf of the person entitled or on behalf of those dependents as to whom the person entitled has the duty of support; (3) to a recognized charity or governmental institution to be expended for the benefit of the person entitled or for the benefit of those dependents as to whom the person entitled has the duty of support; or (4) to any other institution, approved by the Committee, to be expended for the benefit of the person entitled or for the benefit of those dependents as to whom the person entitled has the duty of support. The decision of the Committee will, in each case, be final and binding upon all persons and the Committee shall not be obliged to see to the proper application or expenditure of any payments so made. Any payment made pursuant to the power herein conferred upon the Committee shall operate as a complete discharge of the obligations of Tandy and of the Committee. Section 6.6 If the Committee has any doubt as to the proper Beneficiary to receive payments hereunder, the Committee shall have the right to withhold such payments until the matter is finally adjudicated, or the Committee may direct Tandy to bring a suit for interpleader in any appropriate court, pay any amounts due into the court, and Tandy and/or Committee shall have the right to recover its reasonable attorney's fees from such proceeds so paid or to be paid. Any payment made by the Committee, in good faith and in accordance with this Plan, shall fully discharge the Committee and Tandy from all further obligations with respect to such payments. ARTICLE SEVEN TERMINATION OF PARTICIPATION Section 7.1 Except as provided in Sections 7.4 and 9.1 hereof, termination of a Participant's service as a Director, whether by action of Tandy or the Participant's resignation, shall terminate the Participant's participation in the Plan. Neither the Plan nor the Plan Agreement shall in any way obligate Tandy to continue the services of a Participant. Section 7.2 Except as provided in Sections 7.4 and 9.1 hereof, participation in the Plan by a Participant shall also terminate if the Plan or his Plan Agreement is terminated by Tandy in accordance with Article Nine. Section 7.3 Except as provided in Sections 7.4 and 9.1 hereof, upon termination of a Participant's participation in the Plan, all of Tandy's obligations to the Participant and his Beneficiary under the Plan and Plan Agreement and each of them, shall terminate and be of no further effect. Section 7.4 Except as provided in Section 9.1, if a Participant's participation in the Plan is terminated, by: (a) termination of the Plan; (b) termination of a Plan Agreement; or (c) cessation to continue to serve as a Director for reasons other than dishonest or fraudulent conduct of a Participant or indictment of a Participant for a felony crime involving moral turpitude, in which event no vesting under Sections 7.4, 9.1 or Article Five shall occur, then such Participant shall be entitled to his Plan Compensation as set forth in Article Five hereof. The amount payable under this Section 7.4 shall be determined as of the date of the event set forth in Section 7.4(a), (b) or (c) hereof and such amount as so determined at that time shall not be altered or changed thereafter except that the provisions of Section 5.5 hereof shall remain fully applicable during the Participant's engagement as a Director, during the payment of benefits under this Section 7.4 and for one (1) year after termination of service as a Director or payment of benefits. The amount payable under this Section 7.4 shall be paid as set forth in Section 5.3. ARTICLE EIGHT ADMINISTRATION OF THE PLAN Section 8.1 The Plan shall be administered by the Committee of the Board of Directors of Tandy, as it is presently constituted or as it may be changed or substituted from time to time by the Board of Directors of Tandy. Section 8.2 In addition to the express powers and authorities accorded the Committee under the Plan, it shall be responsible for: (a) Construing and interpreting the Plan; (b) Computing and certifying to Tandy the amount of benefits to be provided in each Plan Agreement for the Participant or the Beneficiary of the Participant; and (c) Determining the right of a Participant or a Beneficiary to payments under the Plan and otherwise authorizing disbursements of such payments by Tandy. In these and all other respects its decisions shall be conclusive and binding upon all concerned. Section 8.3 Tandy agrees to hold harmless and indemnify the members of the Committee against any and all expenses, claims and causes of action by or on behalf of any and all parties whomsoever, and all losses therefrom, including without limitation the cost of defense and attorney's fees, based upon or arising out of any act or omission relating to or in connection with the Plan other than losses resulting from any such Committee member's fraud or willful misconduct. ARTICLE NINE TERMINATION OR AMENDMENT OF THE PLAN OR PLAN AGREEMENTS Section 9.1 Tandy reserves the right to terminate or amend this Plan or any Plan Agreement, in whole or in part, at any time, or from time to time, by resolution of the Board of Directors of Tandy, provided, however, no amendment to the Plan or to any Plan Agreement shall alter the vested rights of a Participant or Beneficiary applicable on the effective date of such termination or amendment and such vested rights shall remain unchanged. Rights are deemed to have vested if benefits are actually being paid or if the only condition precedent to the payment of benefits is the termination of Participant's engagement as a Director of Tandy (unless terminated for reasons set forth in Section 7.4(c), in which event all benefits are forfeited) or the giving of notice of Retirement. ARTICLE TEN MISCELLANEOUS Section 10.1 The Plan and Plan Agreement and each of their provisions shall be construed and their validity determined under the laws of the State of Texas. Section 10.2 The masculine gender, where appearing in the Plan or Plan Agreement, shall be deemed to include the feminine gender. The words "herein", "hereunder" or other similar compounds of the word "here" shall mean and refer to the entire Plan and Plan Agreement, not to any particular provision, section or subsection, and words used in the singular or plural may be construed as though in the plural or singular where they would so apply. Section 10.3 Any suit against Tandy or the Committee or any member thereof concerning any provisions hereunder, the construction of the Plan, payment of benefits hereunder, or in any other manner connected with this Plan may only be brought in the appropriate state or federal court located in Tarrant County, Texas, and each Director agrees not to bring any suit in any other county, state or countries. It is agreed that Tandy may bring any suit to enforce the provisions of Section 5.5 hereof in the appropriate state or federal court located in Tarrant County, Texas. Section 10.4 Any person born on February 29 shall be deemed to have been born on the immediately preceding February 28 for all purposes of this Plan. Section 10.5 This Plan shall be binding upon and inure to the benefit of any successor of Tandy and any such successor shall be deemed substituted for Tandy under the terms of this Plan. As used in this Plan, the term "successor" shall include any person, firm, corporation, or other business entity which at any time, whether by merger, purchase, or otherwise, acquires all or substantially all of the assets or business of Tandy. Section 10.6 A Director shall not be required to mitigate the amount of any payment provided for in this Plan by seeking other employment or otherwise. Section 10.7 In the event that a Director institutes any legal action to enforce his rights under, or to recover damages for breach of any of the terms of this Plan or any Plan Agreement, the Director, if he is the prevailing party, shall be entitled to recover from Tandy all actual expenses incurred in the prosecution of said suit including but not limited to attorney's fees, court costs, and all other actual expenses. Section 10.8 Notwithstanding all other provisions in the Plan, in the event a Director is entitled to benefits under two (2) separate sections of the Plan, the maximum a Participant may receive under this Plan is the amount set forth in Article Five, payable in accordance with Section 5.3 hereof. DATED: November 13, 1986 EX-10.(H) 18 1993 10K EXHIBIT 10H Exhibit 10h November 10, 1988 Non-employee directors are paid quarterly in arrears, to the extent applicable, the following fees: (a) annual retainer of $24,000; (b) committee chairman $2,500 annually; (c) Board of Directors per meeting fee of $750 if attended in person and $250 if attended by telephone; (d) committee meeting not held in conjunction with Board of Directors meeting (within 24 hours) $500 if attended in person and $250 if attended by telephone. No additional fee would be paid for written consents in lieu of a meeting. EX-10.(I) 19 1993 10K EXHIBIT 10I Exhibit 10i TANDY CORPORATION 1985 STOCK OPTION PLAN (Restated August, 1990) Section 1. Establishment. Tandy Corporation, a Delaware corporation, ("Company") hereby establishes a stock option plan to be named the Tandy Corporation 1985 Stock Option Plan ("Plan") for officers and key employees of the Company and its subsidiaries. Section 2. Purpose. (a) The purpose of the Plan is to induce officers and key employees of the Company and its subsidiaries, who are in a position to contribute materially to the prosperity thereof, to remain with the Company or its subsidiaries, to offer them incentives and rewards in recognition of their share in the Company's progress, and to encourage them to continue to promote the best interests of the Company and its subsidiaries. The Plan will also aid the Company and its subsidiaries in competing with other enterprises for the services of new key personnel needed to help insure their continued development. (b) Options granted to an optionee shall be either Incentive Stock Options within the meaning of Section 422A of the Internal Revenue Code of 1986, as amended, or nonstatutory stock options. Section 3. Administration. (a) The Plan shall be administered by the Board of Directors (excluding directors who are eligible or have been eligible within the preceding 12 months to receive options, stock or stock appreciation rights under the Plan or any other plan of the Company or any of its affiliates) which shall, acting upon the recommendations of a committee of three or more directors not excluded as aforesaid (the "Committee") appointed or designated by the Board of Directors from time to time, determine the individuals to receive options, the time when they shall receive them, the number of shares to be subject to each option, and shall designate any such option as an Incentive Stock Option or a Nonstatutory Stock Option. (b) The Board of Directors (or the Committee if so authorized by the Board of Directors) shall have the authority (i) to exercise all of the powers granted to it under the Plan, (ii) to construe, interpret and implement the Plan and any Stock Option Agreements executed pursuant to Section 14, (iii) to prescribe, amend and rescind rules and regulations relating to the Plan, (iv) to make all determinations necessary or advisable in administering the Plan, and (v) to correct any defect, supply any omission and reconcile any inconsistency in the Plan. (c) The determination of the Board of Directors (or the Committee if so authorized by the Board of Directors) on all matters relating to the Plan or any Plan agreement shall be conclusive. (d) No member of the Board of Directors or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any award thereunder. Section 4. Total Number of Shares to be Optioned. (a) The number of shares of common stock ($1.00 par value) of the Company which may be issued upon exercise of options under the Plan shall not exceed two million (2,000,000) shares (subject to adjustment as provided in Section 11 hereof). The shares sold under the Plan may be either issued shares reacquired by the Company at any time or authorized but unissued shares, as the Board of Directors from time to time may determine. (b) In the event that any outstanding options under the Plan expire or are terminated for any reason, the shares of common stock of the Company allocable to the unexercised portion of all of such options may again be subject to the grant of options under the Plan. Section 5. Eligibility. (a) Options shall be granted only to officers and key employees of the Company or its subsidiaries who, if eligible, are active participants in the Tandy Corporation Stock Purchase Program. The Committee will, in its discretion, determine the officers and key employees which it recommends to the Board of Directors be granted options, and will also recommend the time or times at which options be granted, the number of shares subject to each option, the manner in which options may be exercised and whether an option shall be designated as an Incentive Stock Option or as a Nonstatutory Stock Option. In making such recommendation, the Committee may take into consideration the value of the services rendered by the respective individuals, their present and potential contributions to the success of the Company and its subsidiaries and such other factors which the Committee may deem relevant in accomplishing the purpose of the Plan. (b) No director of the Company who is not also an employee of the Company or one of its subsidiaries will be eligible for the grant of any options. (c) No option may be granted to any individual who immediately after the option grant owns directly or indirectly stock possessing more than five (5%) percent of the total combined voting power or value of all classes of stock of the Company or any subsidiary. Section 6. Limitation on Incentive Stock Options. (a) General Rule. Solely for federal income tax purposes, to the extent that the aggregate fair market value of stock with respect to which incentive stock options are exercisable for the first time by an individual during any calendar year exceeds $100,000.00, such options shall be treated as options which are not incentive stock options. This rule shall only apply to options granted on or after January 1, 1987. For purposes of this rule, options shall be taken into account in the order in which they were granted. (b) Fair Market Value. Fair market value shall be deemed to be the average of the high and low prices of the common stock of the Company for composite transactions as published by a major newspaper for the date the Incentive Stock Option is granted or, if no sale of the Company's stock shall have been made on that day, the next preceding day on which there was a sale of such stock. Section 7. Terms and Conditions of Options. Each option granted under the Plan shall be evidenced by a Stock Option Agreement in such form not inconsistent with the Plan as the Board of Directors (or the Committee if so authorized by the Board of Directors) shall determine, provided that such Stock Option Agreement clearly and separately identifies Nonstatutory Stock Options and Incentive Stock Options and that the substance of the following terms and conditions be included therein: (a) Option Price. The price at which each share of common stock covered by such option may be purchased shall be determined by the Committee and shall be no less than one hundred percent (100%) of the fair market value of the stock on the date the option is granted. Fair market value shall be deemed to be the average of the high and low prices of the common stock of the Company for composite transactions as published by a major newspaper for the date the option is granted or, if no sale of the Company's stock shall have been made on that day, the next preceding day on which there was a sale of such stock. (b) Nontransferable. The option and any right related thereto shall not be transferable by the optionee otherwise than by will or by the laws of descent and distribution and may be exercised, during the optionee's lifetime, only by the optionee. (c) Exercise of Option. The option and any right related thereto, if exercised by the optionee, may be exercised (subject, however, to the provisions of Section 9) only if the optionee has been an employee of the Company or of any subsidiary thereof at all times during the period beginning with the date of the granting of the option and ending on the day three (3) months before the date of such exercise; provided, however, that in the case of an optionee who becomes permanently and totally disabled or, in the case of Nonstatutory Options only, upon retirement at age 55 years or older, the three (3) months shall be extended to 12 months. Options granted to an employee under the Plan shall not be affected by any change of duties or position so long as the optionee continues to be an employee of the Company or of a subsidiary. Subject to the provisions of Section 9(a), only those options exercisable at the date the optionee's employment is terminated may be exercised during the period following such termination, whether such termination is by retirement or otherwise. (d) Term of Options. An Incentive Stock Option shall not be exercisable after the expiration of ten (10) years from the date the option was granted; a Nonstatutory Stock Option shall not be exercisable after the expiration of ten (10) years and one (1) month from the date the option was granted. (e) Death of Optionee. In the event of the death of an optionee while the optionee is in the employ of the Company or any subsidiary thereof, the outstanding options then held by such person and any rights related thereto shall be exercisable only within the twelve (12) months next succeeding such death, and then only by the executor or administrator of the optionee's estate or by the person or persons to whom the optionee's rights under the option shall pass by the optionee's will or the laws of descent and distribution, provided that in no event shall an Incentive Stock Option be exercisable more than ten (10) years or a Nonstatutory Stock Option more than ten (10) years and one (1) month after the date it was granted. (f) In the event that any optionee shall be dismissed from the employ of the Company or any of its subsidiaries for any reason which in the opinion of the Board of Directors (or the Committee if so authorized by the Board of Directors) shall constitute good cause for dismissal, any option still held by such person at such time shall automatically terminate. The decision of the Board of Directors (or the Committee if so acting) as to what shall constitute good cause for dismissal shall be final and binding upon all concerned. (g) Sequential Exercise of Incentive Stock Options. No Incentive Stock Option granted prior to December 31, 1986, shall be exercisable while there is outstanding any other Incentive Stock Option which was granted to the optionee at an earlier time to purchase stock in the Company or in any corporation which (as the time of the granting of such Incentive Stock Option) is a subsidiary of the Company, or in any predecessor of any of such corporations. Incentive Stock Options granted after December 31, 1986, may be exercised in any order once they become exercisable pursuant to Section 9(a). For the purpose of this Section 7(g), an Incentive Stock Option which has not been exercised in full is outstanding until the expiration of the period during which, under its initial terms, it could have been exercised. The cancellation of an earlier Incentive Stock Option will not enable a subsequent Incentive Stock Option to be exercised any sooner. Section 8. Employment at Will. Nothing contained in the Plan, or in any option granted pursuant to the Plan, nor in any agreement made pursuant to the provisions of this Section 8, shall confer upon any optionee any right with respect to continuance of employment by the Company or its subsidiaries, nor interfere in any way with the right of the Company or its subsidiaries to terminate the optionee's employment at will or change the optionee's compensation at any time. Section 9. Exercise of Options--Purchase of Shares. (a) No option shall be exercisable until the expiration of one year from date of grant and, unless otherwise determined by the Board of Directors (or the Committee if so authorized by the Board of Directors) shall (i) in the case of Incentive Stock Options, be then exercisable as to 33-1/3% of the total number of shares subject thereto, and exercisable as to an additional 33-1/3 on each of the two (2) succeeding anniversaries and (ii) in the case of Nonstatutory Stock Options, be then exercisable as to 20% of the total number of shares subject thereto, and exercisable as to an additional 20% on each of the four (4) succeeding anniversaries. The right to purchase shares with respect to options which become exercisable in installments shall be cumulative. Notwithstanding the grant of options initially exercisable in installments, upon the death or total disability of any optionee, all options then held shall become immediately exercisable without regard to dates at which the installments are exercisable and upon the retirement of any optionee at age 55 or older the Board of Directors (or the Committee if so authorized by the Board of Directors) may in its discretion accelerate the dates at which remaining installments of options may be exercised to the date of retirement. (b) An option shall be exercisable for the purchase of shares only upon payment to the Company of the full purchase price of the shares with respect to which the option is exercised as provided elsewhere herein, provided, however, that the Company shall not be required to issue or deliver any certificates for shares of stock purchased upon the exercise of an option prior to (i) the obtaining of any approval from any governmental agency which the Company shall, in its sole discretion, determine to be necessary or advisable, and (ii) the completion of any registration or other qualification of such shares under any state or federal law or ruling or regulations of any governmental body which the Company shall, in its sole discretion, determine to be necessary or advisable and, in addition, if shares reserved for issuance upon exercise of options shall not then be registered under the Securities Act of 1933 the Company may, upon exercise of an option, require the holder thereof (or a purchaser acting under Section 7(e) hereof) to represent in writing that he is acquiring the shares for investment and not with a view to distribution thereof, and may mark the certificate(s) for the shares with a legend restricting transfer and may issue stop transfer orders relating to such certificate to the transfer agent. (c) Payment for the shares shall be either in United States dollars, payable in cash or by check, or by surrender of stock certificates representing like common stock of the Company having an aggregate fair market value, determined as of the date of exercise, equal to the number of shares with respect to which such option is exercised multiplied by the option price per share, or a combination of cash and common stock; provided that the Board of Directors (or the Committee if so authorized by the Board of Directors) may in the Stock Option Agreements impose whatever restrictions it deems necessary or desirable with respect to the payment for shares by the surrender of stock certificates representing like common stock of the Company. The fair market value of common stock on the date of exercise of an option shall be determined in the same manner as the fair market value of common stock on the date of grant of an option is determined pursuant to Section 7(a). Such payment shall be accompanied by a written request for the shares purchased. An option shall be deemed exercised on the date such payment and written request are received by the Secretary of the Company. Section 10. Acceleration of Exercisability on Change in Control. (a) Notwithstanding anything contained in the Plan or in the Stock Option Agreement evidencing any option to the contrary, in the event of a Change in Control (as hereinafter defined), then each option shall become exercisable on the date of the Change in Control, for the purchase of the full number of shares subject to such option. (b) For purposes of the Plan, Change in Control shall mean any of the following events: (1) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of the Company's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (a) the Company or (b) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by the Company (for purposes of this Section 10, a "Subsidiary"), (2) the Company or its Subsidiaries, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined). (2) The individuals who, as of August 22, 1990, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (3) Approval by stockholders of the Company of: (i) A merger, consolidation or reorganization involving the Company, unless: (I) the stockholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (II) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, (III) no Person (other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation, or any Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities) has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities, and (IV) a transaction described in clauses (I) through (III) shall herein be referred to as a "Non-Control Transaction"; (ii) A complete liquidation or dissolution of the Company; or (iii) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. Section 11. Change in Stock, Adjustments, Etc. (a) In the event that the outstanding shares of common stock of the Company are hereafter increased or decreased or changed into or exchanged for a different number of shares or kind of shares or other securities of the Company or of another corporation, or shares of a subsidiary are distributed to shareholders of the Company, by reason of reorganization, merger, consolidation, recapitalization, reclassification, stock split up, combination of shares, or a dividend payable in common stock, the number and kind of shares for the purchase of which options may be granted under the Plan shall be automatically adjusted to reflect the change. In addition, there shall be an appropriate adjustment in the number and kind of shares as to which outstanding options, or portions thereof then unexercised, shall be exercisable, to the end that the optionee's proportionate interest shall be maintained as before the occurrence of such event, and such adjustment of outstanding options shall be made without change of the total price applicable to the unexercised portion of the option and with a corresponding adjustment in the option price per share; provided, however, that each such adjustment in the number and kind of shares subject to outstanding options, including any adjustment in the option price, shall be made in such manner as not to constitute a modification as defined in Section 425 of the Internal Revenue Code of 1986, as amended. The determination of any adjustment by the Board of Directors (or the Committee if so authorized by the Board of Directors) shall be conclusive. (b) The grant of an option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or any part of its business or assets. Section 12. Duration, Amendment and Termination. (a) The Board of Directors of the Company may at any time terminate the Plan or make such amendments thereof as it shall deem advisable and in the best interests of the Company, without further action on the part of the stockholders of the Company; provided, however, that no such termination or amendment shall, without the consent of the individual to whom any option shall theretofore have been granted, affect or impair the rights of such individual under such option, and provided further, that unless the stockholders of the Company shall have first approved thereof, no amendment of this Plan shall be made whereby (1) the total number of shares which may be optioned under the Plan to all individuals, or any of them, shall be increased, except by operation of the adjustment provisions of Section 11 hereof; (2) the class of employees to whom options may be granted shall be changed; or (3) the benefits accruing to participants under the Plan shall be materially increased. (b) No options shall be granted under the Plan after November 13, 1995, but options granted prior to or as of such date may extend beyond such date in accordance with the provisions hereof. (c) Notwithstanding anything contained in the Plan or in the Stock Option Agreement evidencing any option to the contrary, Section 10 and this Section 12(c) shall not be amended or terminated at any time. Section 13. Effectiveness of Plan. This Plan shall not become effective unless and until the following conditions shall have been met: (a) The Plan shall have been adopted by the affirmative vote of a majority of the outstanding shares of the Company present and entitled to vote at a meeting of the stockholders at which a quorum is present within one (1) year of its approval by the Board of Directors. (b) The Board of Directors shall have been advised by counsel that all other applicable legal requirements incident to the establishment and operation of the Plan have been complied with. Section 14. Date of Granting of Options. The granting of an option pursuant to the Plan shall take place on any date the Board of Directors decides to grant the option, following approval of the Plan by the shareholders of the Company. Within 30 days of the granting of the option, the Company shall notify the optionee of the grant of the option, and submit to the optionee a Stock Option Agreement duly executed by and on behalf of the Company, with the request that the optionee execute and return the agreement within 30 days thereafter. If the optionee shall fail to return the executed Stock Option Agreement within said 30-day period, such person's option shall be automatically terminated. Section 15. Application of Funds. The proceeds received by the Company from the sale of stock subject to option are to be added to the general funds of the Company and used for its corporate purposes as the Board of Directors shall determine. Section 16. No Obligation to Exercise Option. Granting of an option shall impose no obligation on the optionee to exercise such option. Tandy Corporation 1985 Stock Option Plan (the "Plan") was originally adopted by the Board of Directors on August 16, 1985, and approved by the Shareholders of Tandy Corporation on November 14, 1985. This copy of the Plan has been restated to include amendments to the Plan pursuant to resolutions approved by the board of Directors at special meetings held on January 23, 1987; August 27, 1987; January 26, 1990; and August 22, 1990. EX-10.(K) 20 1993 10K EXHIBIT 10K Exhibit 10k OFFICERS LIFE INSURANCE PLAN During employment the Corporation provides group life insurance to its officers at the rate of two times (up to a maximum of $400,000) or three times (up to a maximum of $900,000) total compensation, depending upon the officer's position with the Corporation. The insurance is paid to the officer's beneficiary in a lump sum. The sum payable reduces by 50% at age 70. If an officer's death is by accidental means, the payment to the beneficiary includes an additional amount equal to twice the face amount (up to $100,000) of the policy. The Officers Life Insurance Plan provides that, for one (1) year following the occurrence of a change in control, the plan shall not be terminated or amended in any way, nor shall the manner in which the plan is administered be changed in any way which adversely affects the rights of any employee for which the plan is maintained immediately prior to the change in control, to existing or future benefits or contributions or the computation, amount of, or entitlement to, any benefit provided under the plan. EX-10.(M) 21 1993 10K EXHIBIT 10M Exhibit 10m FORM OF TERMINATION PROTECTION AGREEMENT FOR CORPORATE EXECUTIVES THIS AGREEMENT made as of the _______ day of August, 1990, by and between the "Company" (as hereinafter defined) and ______________ (the "Executive"). WHEREAS, the Board of Directors of the Company (the "Board") recognizes that the possibility of a "Change in Control" (as hereinafter defined) exists and that the threat or the occurrence of a Change in Control can result in significant distractions of its key management personnel because of the uncertainties inherent in such a situation; WHEREAS, the Board has determined that it is essential and in the best interest of the Company and its stockholders to retain the services of the Executive in the event of a threat or occurrence of a Change in Control and to ensure [his or her] continued dedication and efforts in such event without undue concern for [his or her] personal financial and employment security; and WHEREAS, in order to induce the Executive to remain in the employ of the Company and the Employer, particularly in the event of a threat or the occurrence of a Change in Control, the Company desires to enter into this Agreement with the Executive to provide the Executive with certain benefits in the event [his or her] employment is terminated as a result of, or in connection with, a Change in Control and to provide the Executive with the "Gross-Up Payment" (as hereinafter defined) and certain other benefits whether or not the Executive's employment is terminated. NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows: 1. Term of Agreement. This Agreement shall commence as of August 22, 1990 and shall continue in effect until August 22, 1992; provided, however, that commencing on August 22, 1991 and on each August 22 thereafter, the term of this Agreement shall be automatically extended for one (1) year unless either the Company or the Executive shall have given written notice to the other at least ninety (90) days prior thereto that the term of this Agreement shall not be so extended; and provided, further, however, that notwithstanding any such notice by the Company not to extend, the term of this Agreement shall not expire prior to the expiration of twenty-four (24) months after the occurrence of a Change in Control. 2. Definitions. 2.1. Accrued Compensation. For purposes of this Agreement, "Accrued Compensation" shall mean an amount which shall include all amounts earned or accrued through the "Termination Date" (as hereinafter defined) but not paid as of the Termination Date including (i) base salary, and (ii) reimbursement for reasonable and necessary expenses incurred by the Executive on behalf of the Company during the period ending on the Termination Date, (iii) vacation pay, if required by applicable law, and (iv) bonuses and incentive compensation (other than the "Pro Rata Bonus" (as hereinafter defined)). 2.2. Base Amount. For purposes of this Agreement, "Base Amount" shall mean the greater of the Executive's annual base salary (a) at the rate in effect on the Termination Date or (b) at the highest rate in effect at any time during the ninety (90) day period prior to the Change in Control, and shall include all amounts of [his or her] base salary that are deferred under the qualified and non-qualified employee benefit plans of the Company. 2.3. Bonus Amount. For purposes of this Agreement, "Bonus Amount" shall mean the highest annual bonus paid or payable to the Executive for any fiscal year in respect of the three (3) full fiscal years ended prior to the Change in Control. 2.4. Cause. For purposes of this Agreement, a termination of employment is for "Cause" if the Executive has been convicted of a felony or the termination is evidenced by a resolution adopted in good faith by two-thirds of the Board that the Executive (a) intentionally and continually failed substantially to perform [his or her] reasonably assigned duties with the Company (other than a failure resulting from the Executive's incapacity due to physical or mental illness or from the Executive's assignment of duties that would constitute "Good Reason" as hereinafter defined) which failure continued for a period of at least thirty (30) days after a written notice of demand for substantial performance has been delivered to the Executive specifying the manner in which the Executive has failed substantially to perform, or (b) intentionally engaged in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise; provided, however, that no termination of the Executive's employment shall be for Cause as set forth in clause (b) above until (x) there shall have been delivered to the Executive a copy of a written notice setting forth that the Executive was guilty of the conduct set forth in clause (b) and specifying the particulars thereof in detail, and (y) the Executive shall have been provided an opportunity to be heard in person by the Board (with the assistance of the Executive's counsel if the Executive so desires). No act, nor failure to act, on the Executive's part, shall be considered "intentional" unless the Executive has acted, or failed to act, with a lack of good faith and with a lack of reasonable belief that the Executive's action or failure to act was in the best interest of the Company. 2.5. Change in Control. For purposes of this Agreement, a "Change in Control" shall mean any of the following events: (a) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of the Company's then outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (x) the Company or (y) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a "Subsidiary"), (2) the Company or any Subsidiary, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined). (b) The individuals who, as of August 22, 1990, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially asssumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) Approval by stockholders of the Company of: (1) A merger, consolidation or reorganization involving the Company, unless (i) the stockholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, (iii) no Person (other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation or any Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities) has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities, and (iv) a transaction described in clauses (i) through (iii) shall herein be referred to as a "Non-Control Transaction"; (2) A complete liquidation or dissolution of the Company; or (3) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. (d) Notwithstanding anything contained in this Agreement to the contrary, if the Executive's employment is terminated following the Effective Date but within one (1) year prior to a Change in Control and [the Executive reasonably demonstrates that] such termination (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control and who effectuates a Change in Control (a "Third Party") or (ii) otherwise occurred in connection with, or in anticipation of, a Change in Control which actually occurs, then for all purposes of this Agreement, the date of a Change in Control with respect to the Executive shall mean the date immediately prior to the date of such termination of the Executive's employment. 2.6. Company. For purposes of this Agreement, the "Company" shall mean Tandy Corporation and shall include its "Successors and Assigns" (as hereinafter defined). 2.7. Disability. For purposes of this Agreement, "Disability" shall mean a physical or mental infirmity which impairs the Executive's ability to substantially perform [his or her] duties with the Company for a period of one hundred eighty (180) consecutive days and the Executive has not returned to [his or her] full time employment prior to the Termination Date as stated in the "Notice of Termination" (as hereinafter defined). 2.8. (a) Good Reason. For purposes of this Agreement, "Good Reason" shall mean the occurrence after a Change in Control of any of the events or conditions described in Subsections (i) through (ix) hereof: (i) a change in the Executive's status, title, position or responsibilities (including reporting responsibilities) which, in the Executive's reasonable judgment, represents an adverse change in [his or her] status, title, position or responsibilities as in effect at any time within ninety (90) days preceding the date of the Change in Control or at any time thereafter; the assignment to the Executive of any duties or responsibilities which, in the Executive's reasonable judgment, are inconsistent with such status, title, position or responsibilities as in effect at any time within ninety (90) days preceding the date of the Change in Control or at any time thereafter; or any removal of the Executive from or failure to reappoint or reelect [him or her] to any of [his or her] offices or positions, except in connection with the termination of the Executive's employment for Cause, or as a result of [his or her] death, or by the Executive other than for Good Reason; (ii) a reduction in the rate of the Executive's base salary below the Base Amount or any failure to pay the Executive any compensation or benefits to which [he or she] is entitled within fifteen (15) days of the date notice of such failure to pay is given to the Company and, in the case of any annual bonus, within forty-five (45) days following the end of the fiscal year pursuant to which such bonus relates; (iii) a change in the accounting policies or practices as in effect during the ninety (90) days preceding the Change in Control or at any time thereafter which, in the Executive's reasonable judgment, results in a reduction in [his or her] earning potential; (iv) the Company's requiring the Executive to be based at any place outside a 20-mile radius from [his or her] place of employment on the day prior to the Change in Control, except for reasonably required travel on the Company's business which is not materially greater than such travel requirements prior to the Change in Control; (v) the failure by the Company to (A) continue in effect (without reduction in benefit levels, reward opportunities and/or bonus potential for comparable performance) any material compensation or benefit plan in which the Executive was participating at any time within ninety (90) days preceding the Change in Control or at any time thereafter including, but not limited to, the plans listed on Appendix A, unless such plan is replaced with a plan that provides substantially equivalent compensation or benefits to the Executive, or (B) provide the Executive with compensation and benefits, in the aggregate at least equal (in terms of benefit levels and/or reward opportunities) to those provided for under each other employee benefit plan, program and practice in which the Executive was participating at any time within ninety (90) days preceding the Change in Control or at any time thereafter; (vi) the insolvency or the filing (by any party, including the Company) of a petition for bankruptcy, of the Company, which petition is not dismissed within sixty (60) days; (vii) any material breach by the Company of any provision hereof; (viii) any purported termination of the Executive's employment for Cause by the Company which does not comply with the terms of Section 2.4 hereof; and (ix) the failure of the Company to obtain an agreement, satisfactory to the Executive, from any Successor or Assign of the Company, to assume and agree to perform this Agreement, as contemplated in Section 6 hereof. (b) Any event or condition described in this Section 2.8(a)(i) through (ix) which occurs following the Effective Date but within one (1) year prior to a Change in Control but which the Executive reasonably demonstrates (i) was at the request of a Third Party or (ii) otherwise arose in connection with, or in anticipation of, a Change in Control which actually occurs, shall constitute Good Reason for purposes of this Agreement notwithstanding that it occurred prior to the Change in Control. 2.9. Notice of Termination. For purposes of this Agreement, following a Change in Control, "Notice of Termination" shall mean a written notice of termination from the Company of the Executive's employment which indicates the specific termination provision in this Agreement relied upon and which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. 2.10. Pro Rata Bonus. For purposes of this Agreement, "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount multiplied by a fraction the numerator of which is the number of days in the fiscal year through the Termination Date and the denominator of which is 365. 2.11. Successors and Assigns. For purposes of this Agreement, "Successors and Assigns" shall mean a corporation or other entity acquiring all or substantially all the assets and business of the Company (including this Agreement) whether by operation of law or otherwise. 2.12. Termination Date. For purposes of this Agreement, "Termination Date" shall mean in the case of the Executive's death, [his or her] date of death, in the case of Good Reason, the last day of [his or her] employment, and in all other cases, the date specified in the Notice of Termination; provided, however, that if the Executive's employment is terminated by the Company for Cause or due to Disability, the date specified in the Notice of Termination shall be at least 30 days from the date the Notice of Termination is given to the Executive, provided that in the case of Disability the Executive shall not have returned to the full-time performance of [his or her] duties during such period of at least 30 days. 3. Termination of Employment. 3.1. If, during the term of this Agreement, the Executive's employment with the Company shall be terminated within twenty-four (24) months following a Change in Control, the Executive shall be entitled to the following compensation and benefits: (a) If the Executive's employment with the Company shall be terminated (1) by reason of the Executive's death, (2) by the Company for Cause or Disability, or (3) by the Executive other than for Good Reason and other than during the 60-day period commencing on the first anniversary of the date of the occurrence of a Change in Control (the "Window Period"), the Company shall pay to the Executive the Accrued Compensation and, if such termination is other than by the Company for Cause, a Pro Rata Bonus. (b) If the Executive's employment with the Company shall be terminated for any reason other than as specified in Section 3.1(a) or during the Window Period, the Executive shall be entitled to the following: (i) the Company shall pay the Executive all Accrued Compensation and a Pro-Rata Bonus; (ii) the Company shall pay the Executive as termination pay and in lieu of any further compensation for periods subsequent to the Termination Date, in a single payment an amount (the "Termination Amount") in cash equal to two times the sum of (A) the Base Amount and (B) the Bonus Amount; (iii) for twenty-four (24) months from the Termination Date (the "Continuation Period"), the Company shall at its expense continue on behalf of the Executive and [his or her] dependents and beneficiaries the fringe benefits, (excluding those benefit plans numbered 1 through 8 inclusive on Appendix A but including an automobile or automobile allowance and the related expenses of public liability insurance, collision coverage, repairs and maintenance) and the life insurance, disability, medical, dental and hospitalization benefits provided (x) to the Executive at any time during the 90-day period prior to the Change in Control or at any time thereafter or (y) to other similarly situated executives who continue in the employ of the Company during the Continuation Period; provided, however, that with respect to any Executive who was entitled to the use of an automobile provided by the Company within the ninety (90) day period prior to a Change in Control or at any time thereafter, the Executive shall be paid a cash payment equal to the value of the Company provided automobile to the Executive for the Continuation Period. The coverage and benefits (including deductibles and contributions by the Executive, if any) provided in this Section 3.1(b)(iii) during the Continuation Period shall be no less favorable to the Executive and [his or her] dependents and beneficiaries, than the most favorable of such coverages and benefits during any of the periods referred to in clauses (x) and (y) above. The Company's obligation hereunder with respect to the foregoing benefits (except for the automobile or automobile allowance and the related expenses of public liability insurance, collision coverage, repairs and maintenance) shall be limited to the extent that the Executive obtains any such benefits pursuant to a subsequent employer's benefit plans, in which case the Company may reduce the coverage of any benefits it is required to provide the Executive hereunder as long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to the Executive than the coverages and benefits required to be provided hereunder. This Subsection (iii) shall not be interpreted so as to limit any benefits to which the Executive, [his or her] dependents or beneficiaries may be entitled under any of the Company's employee benefit plans, programs or practices following the Executive's termination of employment, including without limitation, retiree medical and life insurance benefits; (iv) the Company shall pay in a single payment an amount equal to eighty percent (80%) of the maximum amount the Executive could have contributed under the Deferred Salary and Investment Plan, Stock Purchase Program and Supplemental Stock Program as in effect on the date immediately prior to the Change in Control during the Continuation Period had [he or she] continued in the employment with the Company during the Continuation Period at the greater of [his or her] annualized gross salary and wages as in effect immediately prior to the Change in Control or at any time thereafter; and (v) (A) the restrictions on any outstanding incentive awards (including restricted stock and granted performance shares or units) granted to the Executive including, but not limited to, awards granted under the Company's 1985 Stock Option Plan, or under any other incentive plan or arrangement shall lapse and such incentive award shall become 100% vested, all stock options and stock appreciation rights granted to the Executive shall become immediately exercisable and shall become 100% vested, and all performance units granted to the Executive shall become 100% vested and (B) the Executive shall have the right to require the Company to purchase, for cash, any shares of unrestricted stock or shares purchased upon exercise of any options, at a price equal to the fair market value of such shares on the date of purchase by the Company. (c) The amounts provided for in Sections 3.1(a) and 3.1(b)(i), (ii), (iii) (only as to the automobile allowance and the related expenses of public liablity insurance, collision coverage, repairs and maintenance) and (iv) shall be paid in a single lump sum cash payment within five (5) days after the Executive's Termination Date (or earlier, if required by applicable law). (d) The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Executive in any subsequent employment except as provided in Section 3.1(b)(iii). 3.2. (a) The termination pay and termination benefits provided for in this Section 3 shall be in lieu of any other severance or termination pay to which the Executive may be entitled under any Company severance or termination plan, program, policy or practice. (b) The Executive's entitlement to any other compensation or benefits (other than the Pro Rata Bonus and other than the termination pay and termination benefits as provided under this Section 3) shall be determined in accordance with the Company's employee benefit plans (including, the plans listed on Appendix A) and other applicable programs, policies and practices then in effect. 4. Notice of Termination. Following a Change in Control, any purported termination of the Executive's employment by the Company and/or the Employer shall be communicated by Notice of Termination to the Executive. For purposes of this Agreement, no such purported termination shall be effective without such Notice of Termination. 5. Excise Tax Payments. (a) In the event that any payment or benefit (within the meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), to the Executive or for [his or her] benefit paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, [his or her] employment with the Company or a change in ownership or effective control of the Company or of a substantial portion of its assets (a "Payment" or "Payments"), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Exeuctive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive will be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties, other than interest and penalties imposed by reason of the Executive's failure to file timely a tax return or pay taxes shown due on [his or her] return, imposed with respect to such taxes and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) An initial determination as to whether a Gross-Up Payment is required pursuant to this Agreement and the amount of such Gross-Up Payment shall be made at the Company's expense by an accounting firm selected by the Company and reasonably acceptable to the Executive which is designated as one of the five largest accounting firms in the United States (the "Accounting Firm"). The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation to the Company and the Executive within five days of the Termination Date if applicable, or such other time as requested by the Company or by the Executive (provided the Executive reasonably believes that any of the Payments may be subject to the Excise Tax) and if the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to a Payment or Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the Determination (the "Dispute"). The Gross-Up Payment, if any, as determined pursuant to this Paragraph 5(b) shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm's determination. The existence of the Dispute shall not in any way affect the Executive's right to receive the Gross-Up Payment in accordance with the Determination. If there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and the Executive subject to the application of Paragraph 5(c) below. (c) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that a Gross-Up Payment (or a portion thereof) will be paid which should not have been paid (an "Excess Payment") or a Gross-Up Payment (or a portion thereof) which should have been paid will not have been paid (an "Underpayment"). An Underpayment shall be deemed to have occurred (i) upon notice (formal or informal) to the Executive from any governmental taxing authority that the Executive's tax liability (whether in respect of the Executive's current taxable year or in respect of any prior taxable year) may be increased by reason of the imposition of the Excise Tax on a Payment or Payments with respect to which the Company has failed to make a sufficient Gross-Up Payment, (ii) upon a determination by a court, (iii) by reason of determination by the Company (which shall include the position taken by the Company, together with its consolidated group, on its federal income tax return) or (iv) upon the resolution of the Dispute to the Executive's satisfaction. If an Underpayment occurs, the Executive shall promptly notify the Company and the Company shall promptly, but in any event, at least five days prior to the date on which the applicable government taxing authority has requested payment, pay to the Executive an additional Gross-Up Payment equal to the amount of the Underpayment plus any interest and penalties (other than interest and penalties imposed by reason of the Executive's failure to file timely a tax return or pay taxes shown due on the Executive's return) imposed on the Underpayment. An Excess Payment shall be deemed to have occurred upon a "Final Determination" (as hereinafter defined) that the Excise Tax shall not be imposed upon a Payment or Payments (or portion thereof) with respect to which the Executive had previously received a Gross-Up Payment. A "Final Determination" shall be deemed to have occurred when the Executive has received from the applicable government taxing authority a refund of taxes or other reduction in the Executive's tax liability by reason of the Excise Payment and upon either (x) the date a determination is made by, or an agreement is entered into with, the applicable governmental taxing authority which finally and conclusively binds the Executive and such taxing authority, or in the event that a claim is brought before a court of competent jurisdiction, the date upon which a final determination has been made by such court and either all appeals have been taken and finally resolved or the time for all appeals has expired or (y) the statute of limitations with respect to the Executive's applicable tax return has expired. If an Excess Payment is determined to have been made, the amount of the Excess Payment shall be treated as a loan by the Company to the Executive and the Executive shall pay to the Company on demand (but not less than 10 days after the determination of such Excess Payment and written notice has been delivered to the Executive) the amount of the Excess Payment plus interest at an annual rate equal to the Applicable Federal Rate provided for in Section 1274(d) of the Code from the date the Gross-Up Payment (to which the Excess Payment relates) was paid to the Executive until the date of repayment to the Company. (d) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Determination, an Excise Tax will be imposed on any Payment or Payments, the Company shall pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that the Company has actually withheld from the Payment or Payments. 6. Successors; Binding Agreement. (a) This Agreement shall be binding upon and shall inure to the benefit of the Company, its Successors and Assigns and the Company shall require any Successor or Assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. (b) Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive, [his or her] beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal personal representative. 7. Fees and Expenses. The Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by the Executive as they become due as a result of (a) the Executive's termination of employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (b) the Executive seeking to obtain or enforce any right or benefit provided by this Agreement (including, but not limited to, any such fees and expenses incurred in connection with (i) the Dispute and (ii) the Gross-Up Payment whether as a result of any applicable government taxing authority proceeding, audit or otherwise) or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits, and (c) the Executive's hearing before the Board as contemplated in Section 2.4 of this Agreement; provided, however, that the circumstances set forth in clauses (a) and (b) (other than as a result of the Executive's termination of employment under circumstances described in Section 2.5(d)) occurred on or after a Change in Control. 8. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company. All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt. 9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company (except for any severance or termination policies, plans, programs or practices) and for which the Executive may qualify, nor shall anything herein limit or reduce such rights as the Executive may have under any other agreements with the Company (except for any severance or termination agreement). Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company shall be payable in accordance with such plan or program, except as explicitly modified by this Agreement. 10. Settlement of Claims. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others. 11. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. 12. Governing Law. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF; PROVIDED, HOWEVER, THAT IN ANY ACTION INVOLVING THE EXECUTIVE AND THE COMPANY WITH RESPECT TO ANY CLAIM OR ASSERTION THAT THE EXECUTIVE'S EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE, THE COMPANY HAS THE BURDEN OF PROVING THAT THE EXECUTIVE'S EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE. 13. Forum. Any suit brought by the Executive under this Agreement may be brought in the appropriate state or federal court for Tarrant County, Texas, or for the county wherein the Executive maintains [his or her] residence. Any suit brought by the Company under this Agreement may only be brought in the county wherein the Executive maintains [his or her] residence unless the Executive consents to suit elsewhere. 14. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 15. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Executive has executed this Agreement as of the day and year first above written. TANDY CORPORATION ATTEST: By:_______________________ Name: Title: _________________________ Secretary By:_______________________ [Executive] APPENDIX A COMPENSATION AND BENEFIT PLANS 1. Deferred Compensation Plan 2. Deferred Salary and Investment Plan 3. Employee Stock Ownership Plan 4. Salary Continuation Plan 5. Stock Purchase Program 6. Supplemental Stock Program 7. Stock Option plan 8. Post Retirement and Death Benefit Plan for Selected Executive Employees FORM OF TERMINATION PROTECTION AGREEMENT FOR DIVISION EXECUTIVES THIS AGREEMENT made as of the day _______ of August, 1990, by and between the "Company" (as hereinafter defined) and ________________ (the "Executive"). WHEREAS, the Board of Directors of the Company (the "Board") recognizes that the possibility of a "Change in Control" (as hereinafter defined) exists and that the threat or the occurrence of a Change in Control can result in significant distractions of its key management personnel because of the uncertainties inherent in such a situation; WHEREAS, the Board has determined that it is essential and in the best interest of the Company and its stockholders to retain the services of the Executive in the event of a threat or occurrence of a Change in Control and to ensure [his or her] continued dedication and efforts in such event without undue concern for [his or her] personal financial and employment security; and WHEREAS, in order to induce the Executive to remain in the employ of the Company, particularly in the event of a threat or the occurrence of a Change in Control, the Company desires to enter into this Agreement with the Executive to provide the Executive with certain benefits in the event [his or her] employment is terminated as a result of, or in connection with, a Change in Control and to provide the Executive with the "Gross-Up Payment" (as hereinafter defined) and certain other benefits whether or not the Executive's employment is terminated. NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows: 1. Term of Agreement. This Agreement shall commence as of August 22, 1990 and shall continue in effect until August 22, 1992; provided, however, that commencing on August 22, 1991 and on each August 22 thereafter, the term of this Agreement shall be automatically extended for one (1) year unless either the Company or the Executive shall have given written notice to the other at least ninety (90) days prior thereto that the term of this Agreement shall not be so extended; and provided, further, however, that notwithstanding any such notice by the Company not to extend, the term of this Agreement shall not expire prior to the expiration of twenty-four (24) months after the occurrence of a Change in Control. 2. Definitions. 2.1. Accrued Compensation. For purposes of this Agreement, "Accrued Compensation" shall mean an amount which shall include all amounts earned or accrued through the "Termination Date" (as hereinafter defined) but not paid as of the Termination Date including (i) base salary, and (ii) reimbursement for reasonable and necessary expenses incurred by the Executive on behalf of the Company during the period ending on the Termination Date, (iii) vacation pay, if required by applicable law and (iv) bonuses and incentive compensation (other than the "Pro Rata Bonus" (as hereinafter defined)). 2.2. Base Amount. For purposes of this Agreement, "Base Amount" shall mean the greater of the Executive's annual base salary (a) at the rate in effect on the Termination Date or (b) at the highest rate in effect at any time during the ninety (90) day period prior to the Change in Control, and shall include all amounts of [his or her] base salary that are deferred under the qualified and non-qualified employee benefit plans of the Company. 2.3. Bonus Amount. For purposes of this Agreement, "Bonus Amount" shall mean the highest annual bonus paid or payable to the Executive for any fiscal year in respect of the three (3) full fiscal years ended prior to the Change in Control. 2.4. Cause. For purposes of this Agreement, a termination of employment is for "Cause" if the Executive has been convicted of a felony or the termination is evidenced by a resolution adopted in good faith by two-thirds of the Board that the Executive (a) intentionally and continually failed substantially to perform [his or her] reasonably assigned duties with the Company (other than a failure resulting from the Executive's incapacity due to physical or mental illness or from the Executive's assignment of duties that would constitute "Good Reason" as hereinafter defined) which failure continued for a period of at least thirty (30) days after a written notice of demand for substantial performance has been delivered to the Executive specifying the manner in which the Executive has failed substantially to perform, or (b) intentionally engaged in conduct which is demonstrably and materially injurious to the Company; provided, however, that no termination of the Executive's employment shall be for Cause as set forth in clause (b) above until (x) there shall have been delivered to the Executive a copy of a written notice setting forth that the Executive was guilty of the conduct set forth in clause (b) and specifying the particulars thereof in detail, and (y) the Executive shall have been provided an opportunity to be heard in person by the Board (with the assistance of the Executive's counsel if the Executive so desires). No act, nor failure to act, on the Executive's part, shall be considered "intentional" unless the Executive has acted, or failed to act, with a lack of good faith and with a lack of reasonable belief that the Executive's action or failure to act was in the best interest of the Company. 2.5. Change in Control. For purposes of this Agreement, a "Change in Control" shall mean any of the following events: (a) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of the Company's then outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (x) the Company or (y) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a "Subsidiary"), (2) the Company or any Subsidiary, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined). (b) The individuals who, as of August 22, 1990, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially asssumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) Approval by stockholders of the Company of: (1) A merger, consolidation or reorganization involving the Company, unless (i) the stockholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the boardof directors of the Surviving Corporation, (iii) no Person (other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation or any Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities) has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities, and (iv) a transaction described in clauses (i) through (iii) shall herein be referred to as a "Non-Control Transaction"; (2) A complete liquidation or dissolution of the Company; or (3) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. (d) Notwithstanding anything contained in this Agreement to the contrary, if the Executive's employment is terminated following the Effective Date but within one (1) year prior to a Change in Control and [the Executive reasonably demonstrates that] such termination (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control and who effectuates a Change in Control (a "Third Party") or (ii) otherwise occurred in connection with, or in anticipation of, a Change in Control which actually occurs, then for all purposes of this Agreement, the date of a Change in Control with respect to the Executive shall mean the date immediately prior to the date of such termination of the Executive's employment. 2.6. Company. For purposes of this Agreement, the "Company" shall mean Tandy Corporation and shall include its "Successors and Assigns" (as hereinafter defined). 2.7. Disability. For purposes of this Agreement, "Disability" shall mean a physical or mental infirmity which impairs the Executive's ability to substantially perform [his or her] duties with the Company for a period of one hundred eighty (180) consecutive days and the Executive has not returned to [his or her] full time employment prior to the Termination Date as stated in the "Notice of Termination" (as hereinafter defined). 2.8. (a) Good Reason. For purposes of this Agreement, "Good Reason" shall mean the occurrence after a Change in Control of any of the events or conditions described in Subsections (i) through (ix) hereof: (i) a change in the Executive's status, title, position or responsibilities (including reporting responsibilities) which, in the Executive's reasonable judgment, represents an adverse change in [his or her] status, title, position or responsibilities as in effect at any time within ninety (90) days preceding the date of the Change in Control or at any time thereafter; the assignment to the Executive of any duties or responsibilities which, in the Executive's reasonable judgment, are inconsistent with such status, title, position or responsibilities as in effect at any time within ninety (90) days preceding the date of the Change in Control or at any time thereafter; or any removal of the Executive from or failure to reappoint or reelect [him or her] to any of [his or her] offices or positions, except in connection with the termination of the Executive's employment for Cause, or as a result of [his or her] death, or by the Executive other than for Good Reason; (ii) a reduction in the rate of the Executive's base salary below the Base Amount or any failure to pay the Executive any compensation or benefits to which [he or she] is entitled within fifteen (15) days of the date notice of such failure is given to the Company and, in the case of any annual bonus, within forty-five (45) days following the end of the fiscal year pursuant to which such bonus relates; (iii) a change in the accounting policies or practices as in effect during the ninety (90) days preceding the Change in Control or at any time thereafter which, in the Executive's reasonable judgment, results in a reduction in [his or her] earning potential; (iv) the Company's requiring the Executive to be based at any place outside a 20-mile radius from [his or her] place of employment on the day prior to the Change in Control, except for reasonably required travel on the Company's business which is not materially greater than such travel requirements prior to the Change in Control; (v) the failure by the Company to (A) continue in effect (without reduction in benefit levels, reward opportunities and/or bonus potential for comparable performance) any material compensation or benefit plan in which the Executive was participating at any time within ninety (90) days preceding the Change in Control or at any time thereafter including, but not limited to, the plans listed on Appendix A, unless such plan is replaced with a plan that provides substantially equivalent compensation or benefits to the Executive, or (B) provide the Executive with compensation and benefits, in the aggregate at least equal (in terms of benefit levels and/or reward opportunities) to those provided for under each other employee benefit plan, program and practice in which the Executive was participating at any time within ninety (90) days preceding the Change in Control or at any time thereafter; (vi) the insolvency or the filing (by any party, including the Company) of a petition for bankruptcy, of the Company, which petition is not dismissed within sixty (60) days; (vii) any material breach by the Company of any provision hereof; (viii) any purported termination of the Executive's employment for Cause by the Company which does not comply with the terms of Section 2.4 hereof; and (ix) the failure of the Company to obtain an agreement, satisfactory to the Executive, from any Successor or Assign of the Company, to assume and agree to perform this Agreement, as contemplated in Section 6 hereof. (b) Any event or condition described in this Section 2.8(a)(i) through (ix) which occurs following the Effective Date but within one (1) year prior to a Change in Control but which the Executive reasonably demonstrates (i) was at the request of a Third Party or (ii) otherwise arose in connection with, or in anticipation of, a Change in Control which actually occurs, shall constitute Good Reason for purposes of this Agreement notwithstanding that it occurred prior to the Change in Control. 2.9. Notice of Termination. For purposes of this Agreement, following a Change in Control, "Notice of Termination" shall mean a written notice of termination from the Company of the Executive's employment which indicates the specific termination provision in this Agreement relied upon and which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. 2.10. Pro Rata Bonus. For purposes of this Agreement, "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount multiplied by a fraction the numerator of which is the number of days in the fiscal year through the Termination Date and the denominator of which is 365. 2.11. Successors and Assigns. For purposes of this Agreement, "Successors and Assigns" shall mean a corporation or other entity acquiring all or substantially all the assets and business of the Company (including this Agreement) whether by operation of law or otherwise. 2.12. Termination Date. For purposes of this Agreement, "Termination Date" shall mean in the case of the Executive's death, [his or her] date of death, in the case of Good Reason, the last day of [his or her] employment, and in all other cases, the date specified in the Notice of Termination; provided, however, that if the Executive's employment is terminated by the Company for Cause or due to Disability, the date specified in the Notice of Termination shall be at least 30 days from the date the Notice of Termination is given to the Executive, provided that in the case of Disability the Executive shall not have returned to the full-time performance of [his or her] duties during such period of at least 30 days. 3. Termination of Employment. 3.1. If, during the term of this Agreement, the Executive's employment with the Company shall be terminated within twenty-four (24) months following a Change in Control, the Executive shall be entitled to the following compensation and benefits: (a) If the Executive's employment with the Company shall be terminated (1) by reason of the Executive's death, (2) by the Company for Cause or Disability, or (3) by the Executive other than for Good Reason and other than during the 60-day period commencing on the first anniversary of the date of the occurrence of a Change in Control (the "Window Period"), the Company shall pay to the Executive the Accrued Compensation and, if such termination is other than by the Company for Cause, a Pro Rata Bonus. (b) If the Executive's employment with the Company shall be terminated for any reason other than as specified in Section 3.1(a) or during the Window Period, the Executive shall be entitled to the following: (i) the Company shall pay the Executive all Accrued Compensation and a Pro-Rata Bonus; (ii) the Company shall pay the Executive as termination pay and in lieu of any further compensation for periods subsequent to the Termination Date, in a single payment an amount (the "Termination Amount") in cash equal to two times the sum of (A) the Base Amount and (B) the Bonus Amount; (iii) for twenty-four (24) months from the Termination Date (the "Continuation Period"), the Company shall at its expense continue on behalf of the Executive and [his or her] dependents and beneficiaries the fringe benefits, (excluding those benefit plans numbered 1 through 8 inclusive on Appendix A but including an automobile or automobile allowance and the related expenses of public liability insurance, collision coverage, repairs and maintenance) and the life insurance, disability, medical, dental and hospitalization benefits provided (x) to the Executive at any time during the 90-day period prior to the Change in Control or at any time thereafter or (y) to other similarly situated executives who continue in the employ of the Company during the Continuation Period; provided, however, that with respect to any Executive who was entitled to the use of an automobile provided by the Company within the ninety (90) day period prior to a Change in Control or at any time thereafter, the Executive shall be paid a cash payment equal to the value of the Company provided automobile to the Executive for the Continuation Period. The coverage and benefits (including deductibles and contributions by the Executive, if any) provided in this Section 3.1(b)(iii) during the Continuation Period shall be no less favorable to the Executive and [his or her] dependents and beneficiaries, than the most favorable of such coverages and benefits during any of the periods referred to in clauses (x) and (y) above. The Company's obligation hereunder with respect to the foregoing benefits (except for the automobile or automobile allowance and the related expenses of public liability insurance, collision coverage, repairs and maintenance) shall be limited to the extent that the Executive obtains any such benefits pursuant to a subsequent employer's benefit plans, in which case the Company may reduce the coverage of any benefits it is required to provide the Executive hereunder as long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to the Executive than the coverages and benefits required to be provided hereunder. This Subsection (iii) shall not be interpreted so as to limit any benefits to which the Executive, [his or her] dependents or beneficiaries may be entitled under any of the Company's employee benefit plans, programs or practices following the Executive's termination of employment, including without limitation, retiree medical and life insurance benefits; (iv) the Company shall pay in a single payment an amount equal to eighty percent (80%) of the maximum amount the Executive could have contributed under the Deferred Salary and Investment Plan, Stock Purchase Program and Supplemental Stock Program as in effect on the date immediately prior to the Change in Control during the Continuation Period had [he or she] continued in the employment with the Company during the Continuation Period the greater of [his or her] annualized gross salary and wages as in effect immediately prior to the Change in Control or at any time thereafter; and (v) (A) the restrictions on any outstanding incentive awards (including restricted stock and granted performance shares or units) granted to the Executive including, but not limited to, awards granted under the Company's 1985 Stock Option Plan, or under any other incentive plan or arrangement shall lapse and such incentive award shall become 100% vested, all stock options and stock appreciation rights granted to the Executive shall become immediately exercisable and shall become 100% vested, and all performance units granted to the Executive shall become 100% vested and (B) the Executive shall have the right to require the Company to purchase, for cash, any shares of unrestricted stock or shares purchased upon exercise of any options, at a price equal to the fair market value of such shares on the date of purchase by the Company. (c) The amounts provided for in Sections 3.1(a) and 3.1(b)(i), (ii), (iii) (only as to the automobile allowance and the related expenses of public liability insurance, collision coverage, repairs and maintenance) and (iv) shall be paid in a single lump sum cash payment within five (5) days after the Executive's Termination Date (or earlier, if required by applicable law). (d) The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Executive in any subsequent employment except as provided in Section 3.1(b)(iii). 3.2. (a) The termination pay and termination benefits provided for in this Section 3 shall be in lieu of any other severance or termination pay to which the Executive may be entitled under any Company severance or termination plan, program, policy or practice. (b) The Executive's entitlement to any other compensation or benefits (other than the Pro Rata Bonus and other than the termination pay and termination benefits as provided under this Section 3) shall be determined in accordance with the Company's employee benefit plans (including, the plans listed on Appendix A) and other applicable programs, policies and practices then in effect. 3.3. Notwithstanding any other provision of this Agreement to the contrary, the termination of the Executive's employment with the Company in connection with the sale, divestiture or other disposition of a "Division" (as hereinafter defined) (or part thereof) shall not be deemed to be a termination of employment of the Executive for purposes of this Agreement provided the Executive is offered employment by the purchaser or acquiror of such Division (or part thereof) and the Company obtains an agreement from such purchaser or acquiror as contemplated in Section 6(c) and the Executive shall not be entitled to benefits from the Company under this Agreement as a result of such sale, divestiture, or other disposition, or as a result of any subsequent termination of employment. "Division" shall mean [name of Division]. 4. Notice of Termination. Following a Change in Control, any purported termination of the Executive's employment by the Company shall be communicated by Notice of Termination to the Executive. For purposes of this Agreement, no such purported termination shall be effective without such Notice of Termination. 5. Excise Tax Payments. (a) In the event that any payment or benefit (within the meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), to the Executive or for [his or her] benefit paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, [his or her] employment with the Company or a change in ownership or effective control of the Company or of a substantial portion of its assets (a "Payment" or "Payments"), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Exeuctive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive will be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties, other than interest and penalties imposed by reason of the Executive's failure to file timely a tax return or pay taxes shown due on [his or her] return, imposed with respect to such taxes and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) An initial determination as to whether a Gross-Up Payment is required pursuant to this Agreement and the amount of such Gross-Up Payment shall be made at the Company's expense by an accounting firm selected by the Company and reasonably acceptable to the Executive which is designated as one of the five largest accounting firms in the United States (the "Accounting Firm"). The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation to the Company and the Executive within five days of the Termination Date if applicable, or such other time as requested by the Company or by the Executive (provided the Executive reasonably believes that any of the Payments may be subject to the Excise Tax) and if the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to a Payment or Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the Determination (the "Dispute"). The Gross-Up Payment, if any, as determined pursuant to this Paragraph 5(b) shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm's determination. The existence of the Dispute shall not in any way affect the Executive's right to receive the Gross-Up Payment in accordance with the Determination. If there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and the Executive subject to the application of Paragraph 5(c) below. (c) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that a Gross-Up Payment (or a portion thereof) will be paid which should not have been paid (an "Excess Payment") or a Gross-Up Payment (or a portion thereof) which should have been paid will not have been paid (an "Underpayment"). An Underpayment shall be deemed to have occurred (i) upon notice (formal or informal) to the Executive from any governmental taxing authority that the Executive's tax liability (whether in respect of the Executive's current taxable year or in respect of any prior taxable year) may be increased by reason of the imposition of the Excise Tax on a Payment or Payments with respect to which the Company has failed to make a sufficient Gross-Up Payment, (ii) upon a determination by a court, (iii) by reason of determination by the Company (which shall include the position taken by the Company, together with its consolidated group, on its federal income tax return) or (iv) upon the resolution of the Dispute to the Executive's satisfaction. If an Underpayment occurs, the Executive shall promptly notify the Company and the Company shall promptly, but in any event, at least five days prior to the date on which the applicable government taxing authority has requested payment, pay to the Executive an additional Gross-Up Payment equal to the amount of the Underpayment plus any interest and penalties (other than interest and penalties imposed by reason of the Executive's failure to file timely a tax return or pay taxes shown due on the Executive's return) imposed on the Underpayment. An Excess Payment shall be deemed to have occurred upon a "Final Determination" (as hereinafter defined) that the Excise Tax shall not be imposed upon a Payment or Payments (or portion thereof) with respect to which the Executive had previously received a Gross-Up Payment. A "Final Determination" shall be deemed to have occurred when the Executive has received from the applicable government taxing authority a refund of taxes or other reduction in the Executive's tax liability by reason of the Excise Payment and upon either (x) the date a determination is made by, or an agreement is entered into with, the applicable governmental taxing authority which finally and conclusively binds the Executive and such taxing authority, or in the event that a claim is brought before a court of competent jurisdiction, the date upon which a final determination has been made by such court and either all appeals have been taken and finally resolved or the time for all appeals has expired or (y) the statute of limitations with respect to the Executive's applicable tax return has expired. If an Excess Payment is determined to have been made, the amount of the Excess Payment shall be treated as a loan by the Company to the Executive and the Executive shall pay to the Company on demand (but not less than 10 days after the determination of such Excess Payment and written notice has been delivered to the Executive) the amount of the Excess Payment plus interest at an annual rate equal to the Applicable Federal Rate provided for in Section 1274(d) of the Code from the date the Gross-Up Payment (to which the Excess Payment relates) was paid to the Executive until the date of repayment to the Company. (d) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Determination, an Excise Tax will be imposed on any Payment or Payments, the Company shall pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that the Company has actually withheld from the Payment or Payments. 6. Successors; Binding Agreement. (a) This Agreement shall be binding upon and shall inure to the benefit of the Company and its Successors and Assigns and the Company shall require any Successor or Assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. (b) Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive, [his or her] beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal personal representative. (c) In the event that the Division (or part thereof) is sold, divested, or otherwise disposed of by the Company subsequent to a Change in Control and the Executive is offered employment by the purchaser or acquiror thereof, the Company shall require such purchaser or acquiror to assume, and agree to perform the Company's obligations under this Agreement, in the same manner, and to the same extent that the Company would be required to perform if no such acquisition or purchase had taken place. 7. Fees and Expenses. The Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by the Executive as they become due as a result of (a) the Executive's termination of employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (b) the Executive seeking to obtain or enforce any right or benefit provided by this Agreement (including, but not limited to, any such fees and expenses incurred in connection with (i) the Dispute and (ii) the Gross-Up Payment whether as a result of any applicable government taxing authority proceeding, audit or otherwise) or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits, and (c) the Executive's hearing before the Board as contemplated in Section 2.4 of this Agreement; provided, however, that the circumstances set forth in clauses (a) and (b) (other than as a result of the Executive's termination of employment under circumstances described in Section 2.5(d)) occurred on or after a Change in Control. 8. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company. All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt. 9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company (except for any severance or termination policies, plans, programs or practices) and for which the Executive may qualify, nor shall anything herein limit or reduce such rights as the Executive may have under any other agreements with the Company (except for any severance or termination agreement). Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company shall be payable in accordance with such plan or program, except as explicitly modified by this Agreement. 10. Settlement of Claims. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others. 11. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. 12. Governing Law. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF; PROVIDED, HOWEVER, THAT IN ANY ACTION INVOLVING THE EXECUTIVE AND THE COMPANY WITH RESPECT TO ANY CLAIM OR ASSERTION THAT THE EXECUTIVE'S EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE, THE COMPANY HAS THE BURDEN OF PROVING THAT THE EXECUTIVE'S EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE. 13. Forum. Any suit brought by the Executive under this Agreement may be brought in the appropriate state or federal court for Tarrant County, Texas, or for the county wherein the Executive maintains [his or her] residence. Any suit brought by the Company under this Agreement may only be brought in the county wherein the Executive maintains [his or her] residence unless the Executive consents to suit elsewhere. 14. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 15. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof. IN WITNESS WHEREOF, the Company caused this Agreement to be executed by its duly authorized officer and the Executive has executed this Agreement as of the day and year first above written. TANDY CORPORATION ATTEST: By:__________________________ Name: Title: _________________________ Secretary By:__________________________ [Executive] APPENDIX A COMPENSATION AND BENEFIT PLANS 1. Deferred Compensation Plan 2. Deferred Salary and Investment Plan 3. Employee Stock Ownership Plan 4. Salary Continuation Plan 5. Stock Purchase Program 6. Supplemental Stock Program 7. Stock Option plan 8. Post Retirement and Death Benefit Plan for Selected Executive Employees FORM OF TERMINATION PROTECTION AGREEMENT FOR SUBSIDIARY EXECUTIVES THIS AGREEMENT made as of the day of August, 1990, by and among the "Company" (as hereinafter defined) the "Employer" (as hereinafter defined) and (the "Executive"). WHEREAS, the Board of Directors of the Company (the "Board") recognizes that the possibility of a "Change in Control" (as hereinafter defined) exists and that the threat or the occurrence of a Change in Control can result in significant distractions of its key management personnel because of the uncertainties inherent in such a situation; WHEREAS, the Board has determined that it is essential and in the best interest of the Company, its stockholders and the Employer to retain the services of the Executive in the event of a threat or occurrence of a Change in Control and to ensure [his or her] continued dedication and efforts in such event without undue concern for [his or her] personal financial and employment security; and WHEREAS, in order to induce the Executive to remain in the employ of the Employer, particularly in the event of a threat or the occurrence of a Change in Control, the Company and the Employer desire to enter into this Agreement with the Executive to provide the Executive with certain benefits in the event [his or her] employment is terminated as a result of, or in connection with, a Change in Control and to provide the Executive with the "Gross-Up Payment" (as hereinafter defined) and certain other benefits whether or not the Executive's employment is terminated. NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows: 1. Term of Agreement. This Agreement shall commence as of August 22, 1990 and shall continue in effect until August 22, 1992; provided, however, that commencing on August 22, 1991 and on each August 22 thereafter, the term of this Agreement shall be automatically extended for one (1) year unless either the Company or the Executive shall have given written notice to the other at least ninety (90) days prior thereto that the term of this Agreement shall not be so extended; and provided, further, however, that notwithstanding any such notice by the Company not to extend, the term of this Agreement shall not expire prior to the expiration of twenty-four (24) months after the occurrence of a Change in Control. 2. Definitions. 2.1. Accrued Compensation. For purposes of this Agreement, "Accrued Compensation" shall mean an amount which shall include all amounts earned or accrued through the "Termination Date" (as hereinafter defined) but not paid as of the Termination Date including (i) base salary, and (ii) reimbursement for reasonable and necessary expenses incurred by the Executive on behalf of the Employer during the period ending on the Termination Date, (iii) vacation pay, if required by applicable law, and (iv) bonuses and incentive compensation (other than the "Pro Rata Bonus" (as hereinafter defined))]. 2.2. Base Amount. For purposes of this Agreement, "Base Amount" shall mean the greater of the Executive's annual base salary (a) at the rate in effect on the Termination Date or (b) at the highest rate in effect at any time during the ninety (90) day period prior to the Change in Control, and shall include all amounts of [his or her] base salary that are deferred under the qualified and non-qualified employee benefit plans of the Company and/or the Employer. 2.3. Bonus Amount. For purposes of this Agreement, "Bonus Amount" shall mean the highest annual bonus paid or payable to the Executive for any fiscal year in respect of the three (3) full fiscal years ended prior to the Change in Control. 2.4. Cause. For purposes of this Agreement, a termination of employment is for "Cause" if the Executive has been convicted of a felony or the termination is evidenced by a resolution adopted in good faith by two-thirds of the Board that the Executive (a) intentionally and continually failed substantially to perform [his or her] reasonably assigned duties with the Employer (other than a failure resulting from the Executive's incapacity due to physical or mental illness or from the Executive's assignment of duties that would constitute "Good Reason" as hereinafter defined) which failure continued for a period of at least thirty (30) days after a written notice of demand for substantial performance has been delivered to the Executive specifying the manner in which the Executive has failed substantially to perform, or (b) intentionally engaged in conduct which is demonstrably and materially injurious to the Company and/or the Employer; provided, however, that no termination of the Executive's employment shall be for Cause as set forth in clause (b) above until (x) there shall have been delivered to the Executive a copy of a written notice setting forth that the Executive was guilty of the conduct set forth in clause (b) and specifying the particulars thereof in detail, and (y) the Executive shall have been provided an opportunity to be heard in person by the Board (with the assistance of the Executive's counsel if the Executive so desires). No act, nor failure to act, on the Executive's part, shall be considered "intentional" unless the Executive has acted, or failed to act, with a lack of good faith and with a lack of reasonable belief that the Executive's action or failure to act was in the best interest of the Company and/or the Employer. 2.5. Change in Control. For purposes of this Agreement, a "Change in Control" shall mean any of the following events: (a) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of the Company's then outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (x) the Company or (y) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a "Subsidiary"), (2) the Company or any Subsidiary, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined). (b) The individuals who, as of August 22, 1990, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially asssumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) Approval by stockholders of the Company of: (1) A merger, consolidation or reorganization involving the Company, unless (i) the stockholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, (iii) no Person (other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation or any Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities) has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities, and (iv) a transaction described in clauses (i) through (iii) shall herein be referred to as a "Non-Control Transaction"; (2) A complete liquidation or dissolution of the Company; or (3) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. (d) Notwithstanding anything contained in this Agreement to the contrary, if the Executive's employment is terminated following the Effective Date but within one (1) year prior to a Change in Control and [the Executive reasonably demonstrates that] such termination (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control and who effectuates a Change in Control (a "Third Party") or (ii) otherwise occurred in connection with, or in anticipation of, a Change in Control which actually occurs, then for all purposes of this Agreement, the date of a Change in Control with respect to the Executive shall mean the date immediately prior to the date of such termination of the Executive's employment. 2.6. Company. For purposes of this Agreement, the "Company" shall mean Tandy Corporation and shall include its "Successors and Assigns" (as hereinafter defined). 2.7. Disability. For purposes of this Agreement, "Disability" shall mean a physical or mental infirmity which impairs the Executive's ability to substantially perform [his or her] duties with the Employer for a period of one hundred eighty (180) consecutive days and the Executive has not returned to [his or her] full time employment prior to the Termination Date as stated in the "Notice of Termination" (as hereinafter defined). 2.8. Employer. For purposes of this Agreement, "Employer" shall mean [name of subsidiary]. 2.9. (a) Good Reason. For purposes of this Agreement, "Good Reason" shall mean the occurrence after a Change in Control of any of the events or conditions described in Subsections (i) through (ix) hereof: (i) a change in the Executive's status, title, position or responsibilities (including reporting responsibilities) which, in the Executive's reasonable judgment, represents an adverse change in [his or her] status, title, position or responsibilities as in effect at any time within ninety (90) days preceding the date of the Change in Control or at any time thereafter; the assignment to the Executive of any duties or responsibilities which, in the Executive's reasonable judgment, are inconsistent with such status, title, position or responsibilities as in effect at any time within ninety (90) days preceding the date of the Change in Control or at any time thereafter; or any removal of the Executive from or failure to reappoint or reelect [him or her] to any of [his or her] offices or positions, except in connection with the termination of the Executive's employment for Cause, or as a result of [his or her] death, or by the Executive other than for Good Reason; (ii) a reduction in the rate of the Executive's base salary below the Base Amount or any failure to pay the Executive any compensation or benefits to which [he or she] is entitled within fifteen (15) days of the date notice of such failure is given to the Employer and, in the case of any annual bonus, within forty-five (45) days following the end of the fiscal year pursuant to which such bonus relates; (iii) a change in the accounting policies or practices as in effect during the ninety (90) days preceding the Change in Control or at any time thereafter which, in the Executive's reasonable judgment, results in a reduction in [his or her] earning potential; (iv) the Employer's requiring the Executive to be based at any place outside a 20-mile radius from [his or her] place of employment on the day prior to the Change in Control, except for reasonably required travel on the Employer's business which is not materially greater than such travel requirements prior to the Change in Control; (v) the failure by the Company and/or the Employer to (A) continue in effect (without reduction in benefit levels, reward opportunities and/or bonus potential for comparable performance) any material compensation or benefit plan in which the Executive was participating at any time within ninety (90) days preceding the Change in Control or at any time thereafter including, but not limited to, the plans listed on Appendix A, unless such plan is replaced with a plan that provides substantially equivalent compensation or benefits to the Executive, or (B) provide the Executive with compensation and benefits, in the aggregate at least equal (in terms of benefit levels and/or reward opportunities) to those provided for under each other employee benefit plan, program and practice in which the Executive was participating at any time within ninety (90) days preceding the Change in Control or at any time thereafter; (vi) the insolvency or the filing (by any party, including the Company) of a petition for bankruptcy, of the Company, which petition is not dismissed within sixty (60) days; (vii) any material breach by the Company and/or the Employer of any provision hereof; (viii) any purported termination of the Executive's employment for Cause by the Company and/or the Employer which does not comply with the terms of Section 2.4 hereof; and (ix) the failure of the Company and the Employer to obtain an agreement, satisfactory to the Executive, from any Successor or Assign of the Company, to assume and agree to perform this Agreement, as contemplated in Section 6 hereof. (b) Any event or condition described in this Section 2.10(a)(i) through (ix) which occurs following the Effective Date but within one (1) year prior to a Change in Control but which the Executive reasonably demonstrates (i) was at the request of a Third Party or (ii) otherwise arose in connection with, or in anticipation of, a Change in Control which actually occurs, shall constitute Good Reason for purposes of this Agreement notwithstanding that it occurred prior to the Change in Control. 2.10. Notice of Termination. For purposes of this Agreement, following a Change in Control, "Notice of Termination" shall mean a written notice of termination from the Employer of the Executive's employment which indicates the specific termination provision in this Agreement relied upon and which sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. 2.11. Pro Rata Bonus. For purposes of this Agreement, "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount multiplied by a fraction the numerator of which is the number of days in the fiscal year through the Termination Date and the denominator of which is 365. 2.12. Successors and Assigns. For purposes of this Agreement, "Successors and Assigns" shall mean a corporation or other entity acquiring all or substantially all the assets and business of the Company (including this Agreement) whether by operation of law or otherwise. 2.13. Termination Date. For purposes of this Agreement, "Termination Date" shall mean in the case of the Executive's death, [his or her] date of death, in the case of Good Reason, the last day of [his or her] employment, and in all other cases, the date specified in the Notice of Termination; provided, however, that if the Executive's employment is terminated by the Employer for Cause or due to Disability, the date specified in the Notice of Termination shall be at least 30 days from the date the Notice of Termination is given to the Executive, provided that in the case of Disability the Executive shall not have returned to the full-time performance of [his or her] duties during such period of at least 30 days. 3. Termination of Employment. 3.1. If, during the term of this Agreement, the Executive's employment with the Employer shall be terminated within twenty-four (24) months following a Change in Control, the Executive shall be entitled to the following compensation and benefits: (a) If the Executive's employment with the Employer shall be terminated (1) by reason of the Executive's death, (2) by the Company for Cause or Disability, or (3) by the Executive other than for Good Reason and other than during the 60-day period commencing on the first anniversary of the date of the occurrence of a Change in Control (the "Window Period"), the Company shall pay to the Executive the Accrued Compensation and, if such termination is other than by the Employer for Cause, a Pro Rata Bonus. (b) If the Executive's employment with the Employer shall be terminated for any reason other than as specified in Section 3.1(a) or during the Window Period, the Executive shall be entitled to the following: (i) the Company shall pay the Executive all Accrued Compensation and a Pro-Rata Bonus; (ii) the Company shall pay the Executive as termination pay and in lieu of any further compensation for periods subsequent to the Termination Date, in a single payment an amount (the "Termination Amount") in cash equal to two times the sum of (A) the Base Amount and (B) the Bonus Amount; (iii) for twenty-four (24) months from the Termination Date (the "Continuation Period"), the Company shall at its expense continue on behalf of the Executive and [his or her] dependents and beneficiaries the fringe benefits, (excluding those benefit plans numbered 1 through 8 inclusive on Appendix A but including an automobile or automobile allowance and the related expenses of public liability insurance, collision coverage, repairs and maintenance) and the life insurance, disability, medical, dental and hospitalization benefits provided (x) to the Executive at any time during the 90-day period prior to the Change in Control or at any time thereafter or (y) to other similarly situated executives who continue in the employ of the Company and/or the Employer during the Continuation Period; provided, however, that with respect to any Executive who was entitled to the use of an automobile provided by the Company and/or the Employer within the ninety (90) day period prior to a Change in Control or at any time thereafter, the Executive shall be paid a cash payment equal to the value of the Company and/or the Employer provided automobile to the Executive for the Continuation Period. The coverage and benefits (including deductibles and contributions by the Executive, if any) provided in this Section 3.1(b)(iii) during the Continuation Period shall be no less favorable to the Executive and [his or her] dependents and beneficiaries, than the most favorable of such coverages and benefits during any of the periods referred to in clauses (x) and (y) above. The Company's and/or the Employer's obligation hereunder with respect to the foregoing benefits (except for the automobile or automobile allowance and the related expenses of public liability insurance, collision coverage, repairs and maintenance) shall be limited to the extent that the Executive obtains any such benefits pursuant to a subsequent employer's benefit plans, in which case the Company and/or the Employer may reduce the coverage of any benefits it is required to provide the Executive hereunder as long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to the Executive than the coverages and benefits required to be provided hereunder. This Subsection (iii) shall not be interpreted so as to limit any benefits to which the Executive, [his or her] dependents or beneficiaries may be entitled under any of the Company's and/or the Employer's employee benefit plans, programs or practices following the Executive's termination of employment, including without limitation, retiree medical and life insurance benefits; (iv) the Company shall pay in a single payment an amount equal to eighty percent (80%) of the maximum amount the Executive could have contributed under the Deferred Salary and Investment Plan, Stock Purchase Program and Supplemental Stock Program as in effect on the date immediately prior to the Change in Control during the Continuation Period had [he or she] continued in the employment with the Employer during the Continuation Period at the greater of [his or her] annualized gross salary and wages as in effect immediately prior to the Change in Control or at any time thereafter; and (v) (A) the restrictions on any outstanding incentive awards (including restricted stock and granted performance shares or units) granted to the Executive including, but not limited to, awards granted under the Company's 1985 Stock Option Plan, or under any other incentive plan or arrangement shall lapse and such incentive award shall become 100% vested, all stock options and stock appreciation rights granted to the Executive shall become immediately exercisable and shall become 100% vested, and all performance units granted to the Executive shall become 100% vested and (B) the Executive shall have the right to require the Company to purchase, for cash, any shares of unrestricted stock or shares purchased upon exercise of any options, at a price equal to the fair market value of such shares on the date of purchase by the Company. (c) The amounts provided for in Sections 3.1(a) and 3.1(b)(i), (ii), (iii) (only as to the automobile allowance and the related expenses of public liability insurance, collision coverage, repairs and maintenance) and (iv) shall be paid in a single lump sum cash payment within five (5) days after the Executive's Termination Date (or earlier, if required by applicable law). (d) The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Executive in any subsequent employment except as provided in Section 3.1(b)(iii). 3.2. (a) The termination pay and termination benefits provided for in this Section 3 shall be in lieu of any other severance or termination pay to which the Executive may be entitled under any Company and/or Employer severance or termination plan, program, policy or practice. (b) The Executive's entitlement to any other compensation benefits (other than the Pro Rata Bonus and other than the termination pay and termination benefits as provided in this Section 3) shall be determined in accordance with the Company's and/or the Employer's employee benefit plans (including, the plans listed on Appendix A) and other applicable programs, policies and practices then in effect. 3.3. Notwithstanding any other provision of this Agreement to the contrary, the termination of the Executive's employment with the Employer in connection with the sale, divestiture or other disposition of the Employer (or part thereof) shall not be deemed to be a termination of employment of the Executive for purposes of this Agreement provided the Executive is offered employment by the purchaser or acquiror of the Employer (or part thereof) and the Company and the Employer obtain an agreement from such purchaser or acquiror as contemplated in Section 6(c) and the Executive shall not be entitled to benefits from the Company under this Agreement as a result of such sale, divestiture, or other disposition, or as a result of any subsequent termination of employment. 4. Notice of Termination. Following a Change in Control, any purported termination of the Executive's employment by the Employer shall be communicated by Notice of Termination to the Executive. For purposes of this Agreement, no such purported termination shall be effective without such Notice of Termination. 5. Excise Tax Payments. (a) In the event that any payment or benefit (within the meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), to the Executive or for [his or her] benefit paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, [his or her] employment with the Employer or a change in ownership or effective control of the Company or of a substantial portion of its assets (a "Payment" or "Payments"), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Exeuctive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive will be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties, other than interest and penalties imposed by reason of the Executive's failure to file timely a tax return or pay taxes shown due on [his or her] return, imposed with respect to such taxes and the Excise Tax), including any Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) An initial determination as to whether a Gross-Up Payment is required pursuant to this Agreement and the amount of such Gross-Up Payment shall be made at the Company's expense by an accounting firm selected by the Company and reasonably acceptable to the Executive which is designated as one of the five largest accounting firms in the United States (the "Accounting Firm"). The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation to the Company and the Executive within five days of the Termination Date if applicable, or such other time as requested by the Company or by the Executive (provided the Executive reasonably believes that any of the Payments may be subject to the Excise Tax) and if the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to a Payment or Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the Determination (the "Dispute"). The Gross-Up Payment, if any, as determined pursuant to this Paragraph 5(b) shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm's determination. The existence of the Dispute shall not in any way affect the Executive's right to receive the Gross-Up Payment in accordance with the Determination. If there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and the Executive subject to the application of Paragraph 5(c) below. (c) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that a Gross-Up Payment (or a portion thereof) will be paid which should not have been paid (an "Excess Payment") or a Gross-Up Payment (or a portion thereof) which should have been paid will not have been paid (an "Underpayment"). An Underpayment shall be deemed to have occurred (i) upon notice (formal or informal) to the Executive from any governmental taxing authority that the Executive's tax liability (whether in respect of the Executive's current taxable year or in respect of any prior taxable year) may be increased by reason of the imposition of the Excise Tax on a Payment or Payments with respect to which the Company has failed to make a sufficient Gross-Up Payment, (ii) upon a determination by a court, (iii) by reason of determination by the Company (which shall include the position taken by the Company, together with its consolidated group, on its federal income tax return) or (iv) upon the resolution of the Dispute to the Executive's satisfaction. If an Underpayment occurs, the Executive shall promptly notify the Company and the Company shall promptly, but in any event, at least five days prior to the date on which the applicable government taxing authority has requested payment, pay to the Executive an additional Gross-Up Payment equal to the amount of the Underpayment plus any interest and penalties (other than interest and penalties imposed by reason of the Executive's failure to file timely a tax return or pay taxes shown due on the Executive's return) imposed on the Underpayment. An Excess Payment shall be deemed to have occurred upon a "Final Determination" (as hereinafter defined) that the Excise Tax shall not be imposed upon a Payment or Payments (or portion thereof) with respect to which the Executive had previously received a Gross-Up Payment. A "Final Determination" shall be deemed to have occurred when the Executive has received from the applicable government taxing authority a refund of taxes or other reduction in the Executive's tax liability by reason of the Excise Payment and upon either (x) the date a determination is made by, or an agreement is entered into with, the applicable governmental taxing authority which finally and conclusively binds the Executive and such taxing authority, or in the event that a claim is brought before a court of competent jurisdiction, the date upon which a final determination has been made by such court and either all appeals have been taken and finally resolved or the time for all appeals has expired or (y) the statute of limitations with respect to the Executive's applicable tax return has expired. If an Excess Payment is determined to have been made, the amount of the Excess Payment shall be treated as a loan by the Company to the Executive and the Executive shall pay to the Company on demand (but not less than 10 days after the determination of such Excess Payment and written notice has been delivered to the Executive) the amount of the Excess Payment plus interest at an annual rate equal to the Applicable Federal Rate provided for in Section 1274(d) of the Code from the date the Gross-Up Payment (to which the Excess Payment relates) was paid to the Executive until the date of repayment to the Company. (d) Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Determination, an Excise Tax will be imposed on any Payment or Payments, the Company shall pay to the applicable government taxing authorities as Excise Tax withholding, the amount of the Excise Tax that the Company has actually withheld from the Payment or Payments. 6. Successors; Binding Agreement. (a) This Agreement shall be binding upon and shall inure to the benefit of the Company, its Successors and Assigns and the Employer and the Company shall require any Successor or Assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company and/or the Employer would be required to perform it if no such succession or assignment had taken place. (b) Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive, [his or her] beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal personal representative. (c) In the event that the Employer (or part thereof) is sold, divested, or otherwise disposed of by the Company subsequent to a Change in Control and the Executive is offered employment by the purchaser or acquiror thereof, the Company shall require such purchaser or acquiror to assume, and agree to perform the Company's and the Employer's obligations under this Agreement, in the same manner, and to the same extent that the Company and the Employer would be required to perform if no such acquisition or purchase had taken place. 7. Fees and Expenses. The Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by the Executive as they become due as a result of (a) the Executive's termination of employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (b) the Executive seeking to obtain or enforce any right or benefit provided by this Agreement (including, but not limited to, any such fees and expenses incurred in connection with (i) the Dispute and (ii) the Gross-Up Payment whether as a result of any applicable government taxing authority proceeding, audit or otherwise) or by any other plan or arrangement maintained by the Company and/or the Employer under which the Executive is or may be entitled to receive benefits, and (c) the Executive's hearing before the Board as contemplated in Section 2.4 of this Agreement; provided, however, that the circumstances set forth in clauses (a) and (b) (other than as a result of the Executive's termination of employment under circumstances described in Section 2.5(d)) occurred on or after a Change in Control. 8. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company and/or the Employer shall be directed to the attention of the Board with a copy to the Secretary of the Company. All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt. 9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company and/or the Employer (except for any severance or termination policies, plans, programs or practices) and for which the Executive may qualify, nor shall anything herein limit or reduce such rights as the Executive may have under any other agreements with the Company and/or the Employer (except for any severance or termination agreement). Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company and/or the Employer shall be payable in accordance with such plan or program, except as explicitly modified by this Agreement. 10. Settlement of Claims. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others. 11. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive, the Company and the Employer. No waiver by any party hereto at any time of any breach by any other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by any other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by any party which are not expressly set forth in this Agreement. 12. Governing Law. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF; PROVIDED, HOWEVER, THAT IN ANY ACTION INVOLVING THE EXECUTIVE, THE COMPANY AND/OR THE EMPLOYER WITH RESPECT TO ANY CLAIM OR ASSERTION THAT THE EXECUTIVE'S EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE, THE COMPANY AND/OR THE EMPLOYER HAS THE BURDEN OF PROVING THAT THE EXECUTIVE'S EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE. 13. Forum. Any suit brought by the Executive under this Agreement may be brought in the appropriate state or federal court for Tarrant County, Texas, or for the county wherein the Executive maintains [his or her] residence. Any suit brought by the Company and/or the Employer under this Agreement may only be brought in the county wherein the Executive maintains [his or her] residence unless the Executive consents to suit elsewhere. 14. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 15. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof. IN WITNESS WHEREOF, the Company and the Employer have caused this Agreement to be executed by its duly authorized officers and the Executive has executed this Agreement as of the day and year first above written. TANDY CORPORATION ATTEST: By:___________________________ Name: Title: __________________________ Secretary [NAME OF SUBSIDIARY] By:_____________________________ Name: Title: By:_____________________________ [Executive] APPENDIX A COMPENSATION AND BENEFIT PLANS 1. Deferred Compensation Plan 2. Deferred Salary and Investment Plan 3. Employee Stock Ownership Plan 4. Salary Continuation Plan 5. Stock Purchase Program 6. Supplemental Stock Program 7. Stock Option plan 8. Post Retirement and Death Benefit Plan for Selected Executive Employees EX-10.(N) 22 1993 10K EXHIBIT 10N Exhibit 10n TANDY CORPORATION TERMINATION PROTECTION PLAN "LEVEL I" WHEREAS, the "Board" of the "Company" (as those terms are hereinafter defined) recognizes that the possibility of a future "Change in Control" (as hereinafter defined) exists and that the threat or occurrence of a Change in Control could result in significant distractions to its employees because of the uncertainties inherent in such a situation; and WHEREAS, the Board has determined that it is essential and in the best interest of the Company, its stockholders and the Employer to retain the services of certain of its employees in the event of a threat or the occurence of a Change in Control of the Company and to ensure their continued dedication and efforts in such event without undue concern for their employment and personal financial security. NOW, THEREFORE, in order to fulfill these purposes, the following is hereby adopted. ARTICLE I ESTABLISHMENT OF PLAN 1.0 As of the Effective Date, the Company hereby establishes the Tandy Corporation Termination Protection Plan Level I (the "Plan") as set forth in this document. ARTICLE II DEFINITIONS As used herein the following words and phrases shall have the following respective meanings for purposes of the Plan unless the context clearly indicates otherwise. 2.1 Accrued Compensation. "Accrued Compensation" shall mean an amount which shall include all amounts earned or accrued through the "Termination Date" (as hereinafter defined) but not paid as of the Termination Date including (i) base salary, (ii) reimbursement for reasonable and necessary expenses incurred by the "Participant" (as hereinafter defined) on behalf of the Employer during the period ending on the Termination Date, (iii) vacation pay as required by law, and (iv) bonuses and incentive compensation (other than the "Pro Rata Bonus" (as hereinafter defined)). 2.2 Base Amount. "Base Amount" shall mean the greater of the Participant's annual base salary (a) at the rate in effect on the Termination Date or (b) at the highest rate in effect at any time during the ninety (90) day period prior to the Change in Control, and shall include all amounts of the Participant's base salary that are deferred under the Employer's qualified and non-qualified employee benefit plans. 2.3 Board. "Board" shall mean the Board of Directors of the Company. 2.4 Bonus Amount. "Bonus Amount" shall mean the highest annual bonus paid or payable to the Participant for any fiscal year in respect of the three (3) full fiscal years ended prior to the Change in Control. 2.5 Cause. The Participant's Employer may terminate the Participant's employment for "Cause" if the Participant (a) has been convicted of a felony, (b) failed substantially to perform his or her reasonably assigned duties with his or her Employer (other than a failure resulting from his or her incapacity due to physical or mental illness), or (c) has intentionally engaged in conduct which is demonstrably and materially injurious to the Company and/or Employer. No act, or failure to act, on the Paricipant's part, shall be considered "intentional" unless the Participant has acted, or failed to act, with a lack of good faith and with a lack of reasonable belief that the Participant's action or failure to act was in the best interest of the Company and/or Employer. 2.6 Change in Control. "Change in Control" shall mean the occurrence during the "Term" (as hereinafter defined) of any of the following events: (a) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of the Company's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (a) the Company or (b) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a "Company Subsidiary"), (2) the Company or any Company Subsidiary, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined). (b) The individuals who, as of August 22, 1990, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of the Program, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) Approval by stockholders of the Company of: (1) A merger, consolidation or reorganization involving the Company, unless (i) the stockholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, (iii) no Person (other than the Company and its Company Subsidiaries, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation or any Company Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities) has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities, and (iv) a transaction described in clauses (i) through (iii) shall herein be referred to as a "Non-Control Transaction"; (2) A complete liquidation or dissolution of the Company; or (3) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Company Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. (d) Notwithstanding anything contained in the Plan to the contrary, if the Participant's employment is terminated during the Term but within one (1) year prior to a Change in Control and the Participant reasonably demonstrates that such termination (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control and who effectuates a Change in Control (a "Third Party") or (ii) otherwise occurred in connection with, or in anticipation of, a Change in Control which actually occurs, then for all purposes of the Plan, the date of a Change in Control with respect to the Participant shall mean the date immediately prior to the date of such termination of the Participant's employment. 2.7 Company. "Company" shall mean Tandy Corporation and shall include its "Successors and Assigns" (as hereinafter defined). 2.8 Disability. "Disability" shall mean a physical or mental infirmity which impairs the Participant's ability to substantially perform his or her duties with his or her Employer for a period of one hundred eighty (180) consecutive days and the Participant has not returned to his or her full time employment prior to the Termination Date as stated in the "Notice of Termination" (as hereinafter defined). 2.9 Effective Date. "Effective Date" shall be August 22, 1990. 2.10 Eligible Employee. "Eligible Employee" shall mean those employees whose names are listed on Schedule A attached hereto. 2.11 Employer. "Employer" shall mean the Company or its divisions or its "Subsidiaries" (as hereinafter defined) with whom the Eligible Employee is employed. 2.12 (a) Good Reason. "Good Reason" shall mean the occurrence after a Change in Control of any of the events or conditions described in Subsections (i) through (iv) hereof: (i) a reduction in the rate of the Participant's base salary below the Base Amount or any failure to pay the Participant any compensation or benefits to which he or she is entitled within fifteen (15) days of the date notice of such failure to pay is given to the Employer and, in the case of any annual bonus, within forty-five (45) days following the end of the fiscal year to which such bonus relates; (ii) the Employer's requiring him or her to be based at any place outside a 20-mile radius from his or her place of employment on the day prior to the Change in Control, except for reasonably required travel on the Employer's business which is not materially greater than such travel requirements prior to the Change in Control; (iii) the failure by the Employer to (A) continue in effect (without reduction in benefit levels, reward opportunities and/or bonus potential for comparable performance) any material compensation or benefit plan in which the Participant was participating at any time within ninety (90) days preceding the Change in Control or at any time thereafter including but not limited to, the plans listed on Schedule B, unless such plan is replaced with a plan that provides substantially equivalent compensation or benefits to the Participant, or (B) provide the Participant with compensation and benefits, in the aggregate at least equal (in terms of benefit levels and/or reward opportunities) to those provided for under each other employee benefit plan, program and practice in which the Participant was participating at any time within ninety (90) days preceding the Change in Control or at any time thereafter; and (iv) the failure of the Company and/or the Employer to obtain an agreement from any Successor or Assign of the Company, to assume and agree to perform the Plan, as contemplated in Section 7.1 hereof. (b) Any event or condition described in this Section 2.12(a)(i) through (iv) which occurs during the Term but within one (1) year prior to a Change in Control but which the Participant reasonably demonstrates (i) was at the request of a Third Party or (ii) otherwise arose in connection with or in anticipation of a Change in Control which actually occurs, shall constitute Good Reason for purposes of the Plan notwithstanding that it occurred prior to the Change in Control. 2.13 Notice of Termination. Following a Change in Control, "Notice of Termination" shall mean a notice of termination of the Participant's employment from the Employer which indicates the specific termination provision in the Plan relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant's employment under the provision so indicated. 2.14 Participant. "Participant" shall mean an Eligible Employee who satisfies the requirements of Section 3.1 and who has not ceased to be a Participant pursuant to Section 3.2. 2.15 Pro-Rata Bonus. "Pro-Rata Bonus" shall mean the Bonus Amount multiplied by a fraction, the numerator of which is the number of days in the Company's fiscal year through and including the Participant's Termination Date and the denominator of which is 365. 2.16 Subsidiary or Subsidiaries. "Subsidiary" or "Subsidiaries" shall mean any corporation in which the Company owns, directly or indirectly, 50% or more of the total voting power of the corporation's outstanding voting securities and any other corporation designated by the Board as a Subsidiary. 2.17 Successors and Assigns. "Successors and Assigns" as used herein shall mean a corporation or other entity acquiring all or substantially all the assets and business of the Company (including the Plan) whether by operation of law or otherwise. 2.18 Term. "Term" shall mean the period of time the Plan remains effective as provided in Section 8.1. 2.19 Termination Date. "Termination Date" shall mean in the case of the Participant's death, his or her date of death, in the case of Good Reason, his or her last day of employment and in all other cases, the date specified in the Notice of Termination; provided, however, if the Participant's employment is terminated by the Employer for Cause or due to Disability, the date specified in the Notice of Termination shall be at least 30 days from the date the Notice of Termination is given to the Participant; provided, further, however, that in the case of Disability the Participant shall not have returned to the full-time performance of his or her duties during such period of at least 30 days. ARTICLE III ELIGIBILITY 3.1 Participation. Each employee shall become a Participant in the Plan immediately upon becoming an Eligible Employee. 3.2 Duration of Participation. A Participant shall cease to be a Participant in the Plan if he or she ceases to be an Eligible Employee of the Employer at any time prior to a Change in Control. A Participant entitled to receive any amounts set forth in this Plan shall remain a Participant in the Plan until all amounts he or she is entitled to have been paid to him or her. ARTICLE IV TERMINATION BENEFITS 4.1 Payment of Accrued Compensation. In the event that a Participant's employment with his or her Employer is terminated following a Change in Control during the Term (a) by reason of the Participant's death, (b) by his or her Employer for Cause or Disability, or (c) by the Participant without Good Reason, the Executive shall be entitled to receive and the Company shall pay, his or her Accrued Compensation and, if such termination is other than by his or her Employer for Cause, a Pro Rata Bonus. 4.2 Payment in Event of Certain Terminations of Employment. In the event that a Participant's employment with his or her Employer is terminated following a Change in Control during the Term by the Participant or by his or her Employer for any reason other than as specified in Section 4.1, the Participant shall be entitled to receive under the Plan: (a) a cash payment equal to the sum of: (i) his or her Accrued Compensation and Pro Rata Bonus, (ii) his or her Base Amount, and (iii) his or her Bonus Amount; (b) for a period of twelve (12) months beginning on the Participant's Termination Date (the "Continuation Period"), the Company shall at its expense continue on behalf of the Participant and his or her dependents and beneficiaries the fringe benefits (excluding those benefit plans numbered 1 through 8 inclusive on Schedule B but including an Employer-provided automobile or automobile allowance and the related expenses of public liability insurance, collision coverage, repairs and maintenance) and life insurance, disability, medical, dental and hospitalization benefits provided (i) to the Participant any time during the 90-day period prior to the Change in Control or at any time thereafter or (ii) to other similarly situated employees who continue in the employ of the Company and/or the Employer during the Continuation Period; provided, however, that with respect to any Participant who was entitled to the use of an automobile provided by his or her Employer within the ninety (90) day period prior to a Change in Control or at anytime thereafter, he or she shall be paid a cash payment equal to the value to him or her for the Continuation Period of the Employer-provided automobile. The coverage and benefits (including deductibles, costs and contributions by the Participant, if any) provided in this Section 4.2(b) during the Continuation Period shall be no less favorable to the Participant and his or her dependants and beneficiaries than the most favorable of such coverages and benefits during any of the periods referred to in clauses (i) and (ii) above. The obligation hereunder with respect to the foregoing benefits (except for the automobile or automobile allowance) shall be limited if the Participant obtains any such benefits pursuant to a subsequent employer's benefit plans, in which case the Employer (or the Company, as the case may be) may reduce the coverage of any benefits it is required to provide the Participant hereunder as long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to the Participant than the coverages and benefits required to be provided hereunder. This Subsection (b) shall not be interpreted so as to limit any benefits to which the Participant, his or her dependents or beneficiaries may be entitled under any of the Company's or the Employer's employee benefit plans, programs or practices following his or her termination of employment, including without limitation, retiree medical and life insurance benefits; (c) the Company shall pay in a single payment an amount equal to eighty percent (80%) of the maximum amount the Participant could have contributed under the Deferred Salary and Investment Plan, Stock Purchase Program and Supplemental Stock Program as in effect on the date immediately prior to the Change in Control during the Continuation Period had he or she continued in employment with the Employer during the restructure period at the greater of his or her annualized gross salary and wages as in effect immediately prior to the Change in Control or at any time thereafter; and (d) The amounts provided for in Sections 4.1, 4.2(a), 4.2(b) (only as to the automobile allowance and the related expenses of public liability insurance, collision coverage, repairs and maintenance) and 4.2(c) shall be paid in a single lump sum cash payment within five (5) days after the Participant's Termination Date (or earlier, if required by applicable law). 4.3 Mitigation. The Participant shall not be required to mitigate the amount of any payment provided for in the Plan by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Participant in any subsequent employment. 4.4 Termination Pay. The payments and benefits provided for in Section 4.2(a)(ii) and (iii) shall reduce the amount of any cash severance or termination pay payable to the Participant under any other Employer severance or termination plan, program, policy or practice. 4.5 Other Benefits. The Participant's entitlement to any other compensation or benefits (other than the Pro Rata Bonus) shall be determined in accordance with the Employer's employee benefit plans (including, the plans listed on Schedule B) and other applicable programs, policies and practices then in effect. ARTICLE V TERMINATION OF EMPLOYMENT 5.1 Notice of Termination Required. Following a Change in Control, any purported termination of the Participant's employment by the Employer shall be communicated by Notice of Termination to the Participant. For purposes of the Plan, no such purported termination shall be effective without such Notice of Termination. ARTICLE VI LIMITATION ON PAYMENTS BY THE COMPANY 6.1 Excise Tax Limitation. (a) Notwithstanding anything contained in the Plan to the contrary, to the extent that the payments and benefits provided under the Plan and benefits provided to, or for the benefit of, the Participant under any other Employer plan or agreement (such payments or benefits are collectively referred to as the "Payments") would be subject to the excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Payments shall be reduced (but not below zero) if and to the extent that a reduction in the Payments would result in the Participant retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Participant received all of the Payments (such reduced amount is hereinafter referred to as the "Limited Payment Amount"). Unless the Participant shall have given prior written notice specifying a different order to the Company to effectuate the Limited Payment Amount, the Company shall reduce or eliminate the Payments, by first reducing or eliminating those payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the "Determination" (as hereinafter defined). Any notice given by the Participant pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Participant's rights and entitlements to any benefits or compensation. (b) An initial determination as to whether the Payments shall be reduced to the Limited Payment Amount pursuant to the Plan and the amount of such Limited Payment Amount shall be made by an accounting firm at the Company's expense selected by the Company which is designated as one of the five (5) largest accounting firms in the United States (the "Accounting Firm"). The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation to the Company and the Participant within five (5) days of the Termination Date if applicable, or such other time as requested by the Company or by the Participant (provided the Participant reasonably believes that any of the Payments may be subject to the Excise Tax) and if the Accounting Firm determines that no Excise Tax is payable by the Participant with respect to a Payment or Payments, it shall furnish the Participant with an opinion reasonably acceptable to the Participant that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten (10) days of the delivery of the Determination to the Participant, the Participant shall have the right to dispute the Determination (the "Dispute"). If there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and the Participant subject to the application of Paragraph 6.1(c) below. (c) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that the Payments to be made to, or provided for the benefit of, the Participant either have been made or will not be made by the Company which, in either case, will be inconsistent with the limitations provided in Section 6(a) (hereinafter referred to as an "Excess Payment" or "Underpayment", respectively). If it is established pursuant to a final determination of a court or an Internal Revenue Service (the "IRS") proceeding which has been finally and conclusively resolved, that an Excess Payment has been made, such Excess Payment shall be deemed for all purposes to be a loan to the Participant made on the date the Participant received the Excess Payment and the Participant shall repay the Excess Payment to the Company on demand (but not less than ten (10) days after written notice is received by the Participant) together with interest on the Excess Payment at the "Applicable Federal Rate" (as defined in Section 1274(d) of the Code) from the date of the Participant's receipt of such Excess Payment until the date of such repayment. In the event that it is determined by (i) the Accounting Firm, the Company (which shall include the position taken by the Company, or together with its consolidated group, on its federal income tax return) or the IRS, (ii) pursuant to a determination by a court, or (iii) upon the resolution to the Participant's satisfaction of the Dispute, that an Underpayment has occurred, the Company shall pay an amount equal to the Underpayment to the Participant within ten (10) days of such determination or resolution together with interest on such amount at the Applicable Federal Rate from the date such amount would have been paid to the Participant until the date of payment. ARTICLE VII SUCCESSORS AND ASSIGNS 7.1 Successors and Assigns. (a) The Plan shall be binding upon and shall inure to the benefit of the Company and the Employer. The Company and the Employer shall require any Successor or Assign to expressly assume and agree to perform the Plan in the same manner and to the same extent that the Company and/or the Employer would be required to perform it if no such succession or assignment had taken place. (b) Neither the Plan nor any right or interest hereunder shall be assignable or transferable by the Participant, his or her beneficiaries or legal representatives, except by will or by the laws of descent and distribution; provided, however, that the Plan shall inure to the benefit of and be enforceable by the Participant's legal personal representative. 7.2 Sale of Business or Assets. Notwithstanding anything contained in the Plan to the contrary, if a Participant's employment with his or her Employer is terminated in connection with the sale, divestiture or other disposition of any Subsidiary or division of the Company (or part thereof) such termination shall not be a termination of employment of the Participant for purposes of the Plan and the Participant shall not be entitled to benefits from the Company under the Plan as a result of such sale, divestiture, or other disposition, or as a result of any subsequent termination of employment, provided that (a) the Participant is offered employment by the purchaser or acquiror of such Subsidiary or division (or part thereof) and (b) the Company obtains an agreement from such purchaser or acquiror to perform the Company's and/or Employer's obligations under the Plan, in the same manner, and to the same extent that the Company and/or the Employer would be required to perform if no such purchase or acquisition had taken place. In such circumstances, the purchaser or acquiror shall be solely responsible for providing any benefits payable under the Plan to any such Participant. ARTICLE VIII TERM, AMENDMENT AND PLAN TERMINATION 8.1 Term. The Plan shall continue in effect for a period of two (2) years commencing on the Effective Date and shall be automatically extended for one (1) year on the first anniversary of the Effective Date and on each anniversary of the Effective Date thereafter unless the Company shall have delivered a written notice to each Participant at least ninety (90) days prior to any extension that the Plan shall not be so extended; provided, however, that if a Change in Control occurs while the Plan is in effect, the Plan shall not end prior to the expiration of two (2) years following the Change in Control. 8.2 Amendment and Termination. Subject to Section 8.1, the Plan may be terminated or amended in any respect by resolution adopted by two-thirds (2/3) of the members of the Incumbent Board and Schedule A may be amended to (x) add Eligible Employees at any time (y) prior to a Change in Control, to eliminate any Eligible Employee by reason of his or her demotion in position by any duly authorized officer of the Company; provided, however, that no such amendment or termination of the Plan or Schedule A during the Term may be made (a) if such amendment or termination would adversely affect any right of an Eligible Employee who became an Eligible Employee (except as provided in clause (y) above) prior to the later of (i) the date of adoption of any such amendment or termination, or (ii) the effective date of any such amendment or termination, (b) at the request of a Third Party, or (c) otherwise in connection with, or in anticipation of, a Change in Control; and provided, further, however, that the Plan no longer shall be subject to amendment, change, substitution, deletion, revocation or termination in any respect whatsoever following a Change in Control. 8.3 Form of Amendment. The form of any amendment or termination of the Plan shall be a written instrument signed by a duly authorized officer or officers of the Company, certifying that the amendment or termination has been approved by the Board in accordance with Section 8.2. ARTICLE IX MISCELLANEOUS 9.1 Contractual Right. Upon and after a Change in Control, each Participant shall have a fully vested, nonforfeitable contractual right, enforceable against the Company, to the benefits provided for under Sections 4.1, 4.2 and 4.3 of the Plan upon satisfaction of the applicable conditions specified in those Sections. 9.2 Employment Status. Prior to a Change in Control, each Eligible Employee shall continue in his or her status as an employee-at-will and the Plan does not constitute a contract of employment or impose on the Employer any obligation to (a) retain the Participant, (b) make any payments upon termination of employment, (c) change the status of the Participant's employment or (d) change any employment policies of the Employer. 9.3 Notice. For the purposes of the Plan, notices and all other communications provided for in the Plan (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company and/or the Employer shall be directed to the attention of the Board with a copy to the Secretary of the Company. All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt. 9.4 Non-exclusivity of Rights. Except as provided in Section 4.4, nothing in the Plan shall prevent or limit the Participant's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company and/or the Employer for which the Participant may qualify, nor shall anything herein limit or reduce such rights as the Participant may have under any other agreements with the Company and/or the Employer. Amounts which are vested benefits or which the Participant is otherwise entitled to receive under any plan or program of the Company and/or the Employer shall be payable in accordance with such plan or program, except as explicitly modified by the Plan. No additional compensation provided under any benefit or compensation plans to the Participant shall be deemed to modify or otherwise affect the terms of the Plan or any of the Participant's entitlements hereunder. 9.5 Settlement of Claims. The Company's obligation to make the payments provided for in the Plan and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company and/or Employer may have against the Participant or others. 9.6 Trust. All benefits under the Plan shall be paid by the Company. The Plan shall be unfunded and the benefits hereunder shall be paid only from the general assets of the Company; provided, however, notwithstanding anything contained in the Plan to the contrary, nothing herein shall prevent or prohibit the Company from establishing a trust or other arrangement for the purpose of providing for the payment of the benefits payable under the Plan. 9.7 Waiver or Discharge. No provision of the Plan may be waived or discharged unless such waiver or discharge is agreed to in writing and signed by the Participant, the Employer and the Company. No waiver by either the Company, the Employer or any Participant at any time of any breach by either the Company, the Employer or any Participant of, or compliance with, any condition or provision of the Plan to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 9.8 Governing Law. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THE PLAN SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF; PROVIDED, HOWEVER, THAT IN ANY ACTION INVOLVING A PARTICIPANT, THE COMPANY AND/OR THE EMPLOYER WITH RESPECT TO ANY CLAIM OR ASSERTION THAT THE PARTICIPANT'S EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE, THE COMPANY AND/OR THE EMPLOYER HAS THE BURDEN OF PROVING THAT THE PARTICIPANT'S EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE. 9.9 Validity and Severability. The invalidity or unenforceability of any provision of the Plan shall not affect the validity or enforceability of any other provision of the Plan, which shall remain in full force and effect, and any prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 9.10 Legal Fees. Following a Change in Control, the Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by the Participant as they become due as a result of (a) the Participant's termination of employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), or (b) the Participant's seeking to obtain or enforce any right or benefit provided by the Plan (including any such fees and expenses incurred in connection with the Dispute) or by any other plan or arrangement maintained by the Company and/or Employer under which the Participant is or may be entitled to receive benefits; provided however, that the circumstances set forth in clauses (a) and (b) (other than as a result of the Participant's termination of employment under circumstances described in Section 2.6(d)) occurred on or after a Change in Control; provided, further, however, in the event a court finally determines that the claim by the Participant for which legal fees were incurred and paid by the Company pursuant to this Section 9.10 was frivilous, the Company shall be reimbursed by the Participant for any legal fees paid under this Section 9.10 in respect of such frivilous claim. 9.11 Forum. Any suit brought by a Participant under the Plan may be brought in the appropriate state or federal court for Tarrant County, Texas, or for the county wherein the Participant maintains his or her residence. Any suit brought by the Company and/or Employer under the Plan may only be brought in the county wherein the Participant maintains his or her residence, unless the Participant consents to suit elsewhere. SCHEDULE A [To come] SCHEDULE B COMPENSATION AND BENEFIT PLANS 1. Deferred Compensation Plan 2. Deferred Salary and Investment Plan 3. Employee Stock Ownership Plan 4. Salary Continuation Plan 5. Stock Purchase Program 6. Supplemental Stock Program 7. Stock Option Plan 8. Post Retirement and Death Benefit Plan for Selected Executive Employees TANDY CORPORATION TERMINATION PROTECTION PLAN "LEVEL II" WHEREAS, the "Board" of the "Company" (as those terms are hereinafter defined) recognizes that the possibility of a future "Change in Control" (as hereinafter defined) exists and that the threat or occurrence of a Change in Control could result in significant distractions to its employees because of the uncertainties inherent in such a situation; and WHEREAS, the Board has determined that it is essential and in the best interest of the Company, its stockholders and the "Employer" (as hereinafter defined) to retain the services of certain of its employees in the event of a threat or the occurence of a Change in Control and to ensure their continued dedication and efforts in such event without undue concern for their employment and personal financial security. NOW, THEREFORE, in order to fulfill these purposes, the following is hereby adopted. ARTICLE I ESTABLISHMENT OF PLAN 1.0 As of the Effective Date, the Company hereby establishes the Tandy Corporation Termination Protection Plan Level II (the "Plan") as set forth in this document. ARTICLE II DEFINITIONS As used herein the following words and phrases shall have the following respective meanings for purposes of the Plan unless the context clearly indicates otherwise. 2.1 Accrued Compensation. "Accrued Compensation" shall mean an amount which shall include all amounts earned or accrued through the "Termination Date" (as hereinafter defined) but not paid as of the Termination Date including (i) base salary, (ii) reimbursement for reasonable and necessary expenses incurred by the "Participant" (as hereinafter defined) on behalf of the Employer during the period ending on the Termination Date, (iii) vacation pay as required by law, and (iv) bonuses and incentive compensation (other than the "Pro Rata Bonus" (as hereinafter defined)). 2.2 Base Amount. "Base Amount" shall mean the greater of the Participant's annual base salary (a) at the rate in effect on the Termination Date or (b) at the highest rate in effect at any time during the ninety (90) day period prior to the Change in Control, and shall include all amounts of the Participant's base salary that are deferred under the Employer's qualified and non-qualified employee benefit plans. 2.3 Board. "Board" shall mean the Board of Directors of the Company. 2.4 Bonus Amount. "Bonus Amount" shall mean the highest annual bonus paid or payable to the Participant for any fiscal year in respect of the three (3) full fiscal years ended prior to the Change in Control. 2.5 Cause. The Participant's Employer may terminate the Participant's employment for "Cause" if the Participant (a) has been convicted of a felony, (b) failed substantially to perform his or her reasonably assigned duties with his or her Employer (other than a failure resulting from his or her incapacity due to physical or mental illness), or (c) has intentionally engaged in conduct which is demonstrably and materially injurious to the Company and/or Employer. No act, or failure to act, on the Participant's part, shall be considered "intentional" unless the Participant has acted, or failed to act, with a lack of good faith and with a lack of reasonable belief that the Participant's act or failure to act was in the best interest of the Company and/or Employer. 2.6 Change in Control. "Change in Control" shall mean the occurrence during the "Term" (as hereinafter defined) of any of the following events: (a) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of the Company's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (a) the Company or (b) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a "Company Subsidiary"), (2) the Company or any Company Subsidiary, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined). (b) The individuals who, as of August 22, 1990, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of the Program, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially asssumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) Approval by stockholders of the Company of: (1) A merger, consolidation or reorganization involving the Company, unless (i) the stockholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, (iii) no Person (other than the Company and its Company Subsidiaries, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation or any Company Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities) has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities, and (iv) a transaction described in clauses (i) through (iii) shall herein be referred to as a "Non-Control Transaction"; (2) A complete liquidation or dissolution of the Company; or (3) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Company Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. (d) Notwithstanding anything contained in the Plan to the contrary, if the Participant's employment is terminated during the Term but within one (1) year prior to a Change in Control and the Participant reasonably demonstrates that such termination (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control and who effectuates a Change in Control (a "Third Party") or (ii) otherwise occurred in connection with, or in anticipation of, a Change in Control which actually occurs, then for all purposes of the Plan, the date of a Change in Control with respect to the Participant shall mean the date immediately prior to the date of such termination of the Participant's employment. 2.7 Company. "Company" shall mean Tandy Corporation and shall include its "Successors and Assigns" (as hereinafter defined). 2.8 Disability. "Disability" shall mean a physical or mental infirmity which impairs the Participant's ability to substantially perform his or her duties with his or her Employer for a period of one hundred eighty (180) consecutive days and the Participant has not returned to his or her full time employment prior to the Termination Date as stated in the "Notice of Termination" (as hereinafter defined). 2.9 Effective Date. "Effective Date" shall be August 22, 1990. 2.10 Eligible Employee. "Eligible Employee" shall mean an individual employed by the Employer whose place of employment is located primarily in the United States in a regular full-time salaried position whose annual compensation (including salary and bonus) is at least $50,000 (other than those positions set forth on Schedule A) and any individual set forth on Schedule B. For purposes of this Section 2.10, an employee's annual compensation shall be determined by his or her annualized rate of salary in effect immediately prior to a Change in Control and the bonus paid to the employee in respect of the fiscal year ended immediately prior to the Change in Control. Notwithstanding the foregoing, those employees who are employed in the categories of positions set forth on Schedule A, any employee covered by a collective bargaining agreement, any employee who is a party to a severance or termination protection agreement, or the Termination Protection Plan Level I, shall not be an "Eligible Employee" for purposes of the Plan. 2.11 Employer. "Employer" shall mean the Company or its divisions or its "Subsidiaries" (as hereinafter defined) with whom the Eligible Employee is employed. 2.12 (a) Good Reason. "Good Reason" shall mean the occurrence after a Change in Control of any of the events or conditions described in Subsections (i) through (iii) hereof: (i) a reduction in the rate of the Participant's base salary below the Base Amount or any failure to pay the Participant any compensation or benefits to which he or she is entitled within fifteen (15) days of the date notice of such failure to pay is given to the Employer and, in the case of any annual bonus, within forty-five (45) days following the end of the fiscal year to which such bonus relates; (ii) the failure by the Employer to (A) continue in effect (without reduction in benefit levels, reward opportunities and/or bonus potential for comparable performance) any material compensation or benefit plan in which the Participant was participating at any time within ninety (90) days preceding the Change in Control or at any time thereafter including but not limited to, the plans listed on Schedule C, unless such plan is replaced with a plan that provides substantially equivalent compensation or benefits to the Participant, or (B) provide the Participant with compensation and benefits, in the aggregate at least equal (in terms of benefit levels and/or reward opportunities) to those provided for under each other employee benefit plan, program and practice in which the Participant was participating at any time within ninety (90) days preceding the Change in Control or at any time thereafter; and (iii) the failure of the Company and/or the Employer to obtain an agreement from any Successor or Assign of the Company, to assume and agree to perform the Plan, as contemplated in Section 7.1 hereof. (b) Any event or condition described in this Section 2.12(a)(i) through (iii) which occurs during the Term but within one (1) year prior to a Change in Control but which the Participant reasonably demonstrates (i) was at the request of a Third Party or (ii) otherwise arose in connection with or in anticipation of a Change in Control which actually occurs, shall constitute Good Reason for purposes of the Plan notwithstanding that it occurred prior to the Change in Control. 2.13 Notice of Termination. Following a Change in Control, "Notice of Termination" shall mean a notice of termination of the Participant's employment from the Employer which indicates the specific termination provision in the Plan relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant's employment under the provision so indicated. 2.14 Participant. "Participant" shall mean an Eligible Employee who satisfies the requirements of Section 3.1 and who has not ceased to be a Participant pursuant to Section 3.2. 2.15 Pro-Rata Bonus. "Pro-Rata Bonus" shall mean the Bonus Amount multiplied by a fraction, the numerator of which is the number of days in the Company's fiscal year through and including the Participant's Termination Date and the denominator of which is 365. 2.16 Subsidiary or Subsidiaries. "Subsidiary" or "Subsidiaries" shall mean any corporation in which the Company owns, directly or indirectly, 50% or more of the total voting power of the corporation's outstanding voting securities and any other corporation designated by the Board as a Subsidiary. 2.17 Successors and Assigns. "Successors and Assigns" as used herein shall mean a corporation or other entity acquiring all or substantially all the assets and business of the Company (including the Plan) whether by operation of law or otherwise. 2.18 Term. "Term" shall mean the period of time the Plan remains effective as provided in Section 8.1. 2.19 Termination Date. "Termination Date" shall mean in the case of the Participant's death, his or her date of death, in the case of Good Reason, his or her last day of employment, and in all other cases, the date specified in the Notice of Termination; provided, however, if the Participant's employment is terminated by the Employer for Cause or due to Disability, the date specified in the Notice of Termination shall be at least 30 days from the date the Notice of Termination is given to the Participant; provided, further, however, that in the case of Disability the Participant shall not have returned to the full-time performance of his or her duties during such period of at least 30 days. ARTICLE III ELIGIBILITY 3.1 Participation. Each employee shall become a Participant in the Plan immediately upon becoming an Eligible Employee. 3.2 Duration of Participation. A Participant shall cease to be a Participant in the Plan if he or she ceases to be an Eligible Employee of the Employer at any time prior to a Change in Control. A Participant entitled to receive any amounts set forth in this Plan shall remain a Participant in the Plan until all amounts he or she is entitled to have been paid to him or her. ARTICLE IV TERMINATION BENEFITS 4.1 Payment of Accrued Compensation. In the event that a Participant's employment with his or her Employer is terminated following a Change in Control during the Term (a) by reason of the Participant's death, (b) by his or her Employer for Cause or Disability, or (c) by the Participant without Good Reason, the Executive shall be entitled to receive and the Company shall pay, his or her Accrued Compensation and if such termination is other than by his or her Employer for Cause, a Pro Rata Bonus. 4.2 Payment in Event of Certain Terminations of Employment. In the event that a Participant's employment is terminated following a Change in Control during the Term by the Participant or by his or her Employer for any reason other than as specified in Section 4.1, the Participant shall be entitled to receive under the Plan: (a) a cash payment equal to the sum of: (i) his or her Accrued Compensation and Pro Rata Bonus, (ii) one-half of his or her Base Amount, and (iii) one-half of his or her Bonus Amount; (b) for a period of six months following the Participant's Termination Date (the "Continuation Period"), the Company shall at its expense continue on behalf of the Participant and his or her dependents and beneficiaries the fringe benefits (excluding those benefit plans numbered 1 through 8 inclusive on Schedule C but including an Employer-provided automobile or automobile allowance and the related expenses of public liability insurance, collision coverage, repairs and maintenance) and life insurance, disability, medical, dental and hospitalization benefits provided (i) to the Participant any time during the 90-day period prior to the Change in Control or at any time thereafter or (ii) to other similarly situated employees who continue in the employ of the Company and/or the Employer during the Continuation Period; provided, however, that with respect to any Participant who was entitled to the use of an automobile provided by the Employer within the ninety (90) day period prior to a Change in Control or at anytime thereafter, he or she shall be paid a cash payment equal to the value to him or her for the Continuation Period of the Employer-provided automobile. The coverage and benefits (including deductibles, costs and contributions by the Participant, if any) provided in this Section 4.2(b) during the Continuation Period shall be no less favorable to the Participant and his or her beneficiaries than the most favorable of such coverages and benefits during any of the periods referred to in clauses (i) and (ii) above. The obligation hereunder with respect to the foregoing benefits (except for the automobile or automobile allowance) shall be limited if the Participant obtains any such benefits pursuant to a subsequent employer's benefit plans, in which case the Employer (or the Company, as the case may be) may reduce the coverage of any benefits it is required to provide the Participant hereunder as long as the aggregate coverages and benefits of the combined benefit plans is no less favorable to the Participant than the coverages and benefits required to be provided hereunder. This Subsection (b) shall not be interpreted so as to limit any benefits to which the Participant, his or her dependents or beneficiaries may be entitled under any of the Employer's employee benefit plans, programs or practices following his or her termination of employment, including without limitation, retiree medical and life insurance benefits; (c) the Company shall pay in a single payment an amount equal to eighty percent (80%) of the maximum amount the Participant could have contributed under the Deferred Salary and Investment Plan, Stock Purchase Program and Supplemental Stock Program as in effect on the date immediately prior to the Change in Control during the Continuation Period had he or she continued in employment with the Employer during the Continuation Period at the greater of his or her annualized gross salary and wages as in effect immediately prior to the Change in Control or at any time thereafter; and (d) The amounts provided for in Sections 4.1, 4.2(a), 4.2(b) (only as to the automobile allowance and the related expenses of public liability insurance, collision coverage, repairs and maintenance) and 4.2(c) shall be paid in a single lump sum cash payment within five (5) days after the Participant's Termination Date (or earlier, if required by applicable law). 4.3 Mitigation. The Participant shall not be required to mitigate the amount of any payment provided for in the Plan by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Participant in any subsequent employment. 4.4 Termination Pay. The payments and benefits provided for in Section 4.2(a)(ii) and (iii) shall reduce the amount of any cash severance or termination pay payable to the Participant under any other Employer severance or termination plan, program, policy or practice. 4.5 Other Benefits. The Participant's entitlement to any other compensation or benefits (other than the Pro Rata Bonus) shall be determined in accordance with the Employer's employee benefit plans (including, the plans listed on Schedule C) and other applicable programs, policies and practices then in effect. ARTICLE V TERMINATION OF EMPLOYMENT 5.1 Notice of Termination Required. Following a Change in Control, any purported termination of the Participant's employment by the Employer shall be communicated by Notice of Termination to the Participant. For purposes of the Plan, no such purported termination shall be effective without such Notice of Termination. ARTICLE VI LIMITATION ON PAYMENTS BY THE COMPANY 6.1 Excise Tax Limitation. (a) Notwithstanding anything contained in the Plan to the contrary, to the extent that the payments and benefits provided under the Plan and benefits provided to, or for the benefit of, the Participant under any other Employer plan or agreement (such payments or benefits are collectively referred to as the "Payments") would be subject to the excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Payments shall be reduced (but not below zero) if and to the extent necessary so that no Payment to be made or benefit to be provided to the Participant shall be subject to the Excise Tax (such reduced amount is hereinafter referred to as the "Limited Payment Amount"). Unless the Participant shall have given prior written notice specifying a different order to the Company to effectuate the Limited Payment Amount, the Company shall reduce or eliminate the Payments, by first reducing or eliminating those payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). Any notice given by the Participant pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Participant's rights and entitlements to any benefits or compensation. (b) An initial determination as to whether the Payments shall be reduced to the Limited Payment Amount pursuant to the Plan and the amount of such Limited Payment Amount shall be made by an accounting firm at the Company's expense selected by the Company which is designated as one of the five largest accounting firms in the United States (the "Accounting Firm"). The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation to the Company and the Participant within five (5) days of the Termination Date ifapplicable, or such other time as requested by the Company or by the Participant (provided the Participant reasonably believes that any of the Payments may be subject to the Excise Tax) and if the Accounting Firm determines that no Excise Tax is payable by the Participant with respect to a Payment or Payments, it shall furnish the Participant with an opinion reasonably acceptable to the Participant that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten (10) days of the delivery of the Determination to the Participant, the Participant shall have the right to dispute the Determination (the "Dispute"). If there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and the Participant subject to the application of Paragraph 6.1(c) below. (c) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that the Payments to be made to, or provided for the benefit of, the Participant either have been made or will not be made by the Company which, in either case, will be inconsistent with the limitations provided in Section 6(a) (hereinafter referred to as an "Excess Payment" or "Underpayment", respectively). If it is established pursuant to a final determination of a court or an Internal Revenue Service (the "IRS") proceeding which has been finally and conclusively resolved, that an Excess Payment has been made, such Excess Payment shall be deemed for all purposes to be a loan to the Participant made on the date the Participant received the Excess Payment and the Participant shall repay the Excess Payment to the Company on demand (but not less than ten (10) days after written notice is received by the Participant) together with interest on the Excess Payment at the "Applicable Federal Rate" (as defined in Section 1274(d) of the Code) from the date of the Participant's receipt of such Excess Payment until the date of such repayment. In the event that it is determined by (i) the Accounting Firm, the Company (which shall include the position taken by the Company, or together with its consolidated group, on its federal income tax return) or the IRS, (ii) pursuant to a determination by a court, or (iii) upon the resolution to the Participant's satisfaction of the Dispute, that an Underpayment has occurred, the Company shall pay an amount equal to the Underpayment to the Participant within ten (10) days of such determination or resolution together with interest on such amount at the Applicable Federal Rate from the date such amount would have been paid to the Participant until the date of payment. ARTICLE VII SUCCESSORS AND ASSIGNS 7.1 Successors and Assigns. (a) The Plan shall be binding upon and shall inure to the benefit of the Company and the Employer. The Company and the Employer shall require any Successor or Assign to expressly assume and agree to perform the Plan in the same manner and to the same extent that the Company and/or the Employer would be required to perform it if no such succession or assignment had taken place. (b) Neither the Plan nor any right or interest hereunder shall be assignable or transferable by the Participant, his or her beneficiaries or legal representatives, except by will or by the laws of descent and distribution; provided, however, that the Plan shall inure to the benefit of and be enforceable by the Participant's legal personal representative. 7.2 Sale of Business or Assets. Notwithstanding anything contained in the Plan to the contrary, if a Participant's employment with his or her Employer is terminated in connection with the sale, divestiture or other disposition of any Subsidiary or division of the Company (or part thereof) such termination shall not be a termination of employment of the Participant for purposes of the Plan and the Participant shall not be entitled to benefits from the Company under the Plan as a result of such sale, divestiture, or other disposition, or as a result of any subsequent termination of employment, provided that (a) the Participant is offered employment by the purchaser or acquiror of such Subsidiary or division (or part thereof) and (b) the Company obtains an agreement from such purchaser or acquiror to perform the Company's and/or the Employer's obligations under the Plan, in the same manner, and to the same extent that the Company and/or the Employer would be required to perform if no such purchase or acquisition had taken place. In such circumstances, the purchaser or acquiror shall be solely responsible for providing any benefits payable under the Plan to any such Participant. ARTICLE VIII TERM, AMENDMENT AND PLAN TERMINATION 8.1 Term. The Plan shall continue in effect for a period of two (2) years commencing on the Effective Date and shall be automatically extended for one (1) year on the first anniversary of the Effective Date and on each anniversary of the Effective Date thereafter unless the Company shall have delivered a written notice to each Participant at least ninety (90) days prior to any extension that the Plan shall not be so extended; provided, however, that if a Change in Control occurs while the Plan is in effect, the Plan shall not end prior to the expiration of two (2) years following the Change in Control. 8.2 Amendment and Termination. Subject to Section 8.1, the Plan may be terminated or amended in any respect by resolution adopted by two-thirds (2/3) of the members of the Incumbent Board and Schedules A and B may be amended to add Eligible Employees at any time by any duly authorized officer of the Company; provided, however, that no such amendment or termination of the Plan during the Term may be made (a) if such amendment or termination would adversely affect any right of an Eligible Employee who became an Eligible Employee prior to the later of (i) the date of adoption of any such amendment or termination, or (ii) the effective date of any such amendment or termination, (b) at the request of a Third Party, or (c) otherwise in connection with, or in anticipation of, a Change in Control; and provided, further, however, that the Plan no longer shall be subject to amendment, change, substitution, deletion, revocation or termination in any respect whatsoever following a Change in Control. 8.3 Form of Amendment. The form of any amendment or termination of the Plan shall be a written instrument signed by a duly authorized officer or officers of the Company, certifying that the amendment or termination has been approved by the Board in accordance with Section 8.2. ARTICLE IX MISCELLANEOUS 9.1 Contractual Right. Upon and after a Change in Control, each Participant shall have a fully vested, nonforfeitable contractual right, enforceable against the Company, to the benefits provided for under Sections 4.1, 4.2 and 4.3 of the Plan upon satisfaction of the applicable conditions specified in those Sections. 9.2 Employment Status. Prior to a Change in Control, each Eligible Employee shall continue in his or her status as an employee-at-will and the Plan does not constitute a contract of employment or impose on the Employer any obligation to (a) retain the Participant, (b) make any payments upon termination of employment, (c) change the status of the Participant's employment or (d) change any employment policies of the Employer. 9.3 Notice. For the purposes of the Plan, notices and all other communications provided for in the Plan (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company and/or the Employer shall be directed to the attention of the Board with a copy to the Secretary of the Company. All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt. 9.4 Non-exclusivity of Rights. Except as provided in Section 4.4, nothing in the Plan shall prevent or limit the Participant's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company and/or the Employer for which the Participant may qualify, nor shall anything herein limit or reduce such rights as the Participant may have under any other agreements with the Company and/or the Employer. Amounts which are vested benefits or which the Participant is otherwise entitled to receive under any plan or program of the Company and/or the Employer shall be payable in accordance with such plan or program, except as explicitly modified by the Plan. No additional compensation provided under any benefit or compensation plans to the Participant shall be deemed to modify or otherwise affect the terms of the Plan or any of the Participant's entitlements hereunder. 9.5 Settlement of Claims. The Company's obligation to make the payments provided for in the Plan and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company and/or the Employer may have against the Participant or others. 9.6 Trust. All benefits under the Plan shall be paid by the Company. The Plan shall be unfunded and the benefits hereunder shall be paid only from the general assets of the Company; provided, however, notwithstanding anything contained in the Plan to the contrary, nothing herein shall prevent or prohibit the Company from establishing a trust or other arrangement for the purpose of providing for the payment of the benefits payable under the Plan. 9.7 Waiver or Discharge. No provision of the Plan may be waived or discharged unless such waiver or discharge is agreed to in writing and signed by the Participant, the Company and the Employer. No waiver by either the Company, the Employer or any Participant at any time of any breach by either the Company, the Employer or any Participant of, or compliance with, any condition or provision of the Plan to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 9.8 Governing Law. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THE PLAN SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF; PROVIDED, HOWEVER, THAT IN ANY ACTION INVOLVING A PARTICIPANT, THE COMPANY AND/OR THE EMPLOYER WITH RESPECT TO ANY CLAIM OR ASSERTION THAT THE PARTICIPANT'S EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE, THE COMPANY AND/OR THE EMPLOYER HAS THE BURDEN OF PROVING THAT THE PARTICIPANT'S EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE. 9.9 Validity and Severability. The invalidity or unenforceability of any provision of the Plan shall not affect the validity or enforceability of any other provision of the Plan, which shall remain in full force and effect, and any prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 9.10 Legal Fees. Following a Change in Control, the Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by the Participant as they become due as a result of (a) the Participant's termination of employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), or (b) the Participant's seeking to obtain or enforce any right or benefit provided by the Plan (including any such fees and expenses incurred in connection with the Dispute) or by any other plan or arrangement maintained by the Company and/or Employer under which the Participant is or may be entitled to receive benefits; provided however, that the circumstances set forth in clauses (a) and (b) (other than as a result of the Participant's termination of employment under circumstances described in Section 2.6(d)) occurred on or after a Change in Control; provided, further, however, in the event a court finally determines that the claim by the Participant for which legal fees were incurred and paid by the Company pursuant to this Section 9.10 was frivilous, the Company shall be reimbursed by the Participant for any legal fees paid under this Section 9.10 in respect of such frivilous claim. 9.11 Forum. Any suit brought by a Participant under the Plan may be brought in the appropriate state or federal court for Tarrant County, Texas, or for the county wherein the Participant maintains his or her residence. Any suit brought by the Company and/or Employer under the Plan may only be brought in the county wherein the Participant maintains his or her residence, unless the Participant consents to suit elsewhere. SCHEDULE A [To come] SCHEDULE B [To come] SCHEDULE C COMPENSATION AND BENEFIT PLANS 1. Deferred Compensation Plan 2. Deferred Salary and Investment Plan 3. Employee Stock Ownership Plan 4. Salary Continuation Plan 5. Stock Purchase Program 6. Supplemental Stock Program 7. Stock Option Plan 8. Post Retirement and Death Benefit Plan for Selected Executive Employees EX-10.(O) 23 1993 10K EXHIBIT 10O Exhibit 10o TO PARTICIPANTS WITH FORMULA BONUS [TANDY CORPORATION LETTERHEAD] Date: [NAME] [Address] Dear [Name]: The Board of Directors (the "Board") of Tandy Corporation (the "Company") believes that the future threat or occurrence of a "Change in Control" (as defined in the Appendix) of the Company may cause you undue concern for your financial security and distract your attention from the operations of our businesses, which would be detrimental to the Company and its shareholders. In recognition of these concerns and notwithstanding anything contained in your Compensation Plan letter to the contrary, the Board has determined that in order to provide you with some measure of security in the event of a Change in Control of the Company, it has authorized the Company to agree as follows: The term of this letter agreement shall commence as of the date hereof and shall continue in effect for a period of at least 24 months; provided, however, that commencing on the first anniversary date hereof and each anniversary date thereafter the term shall be automatically extended for an additional 12 months unless the Company shall have given written notice to you at least 90 days prior thereto that the term of this letter agreement shall not be so extended; provided, further, however, that upon a Change in Control this letter agreement shall in no event be terminated prior to the complete and full satisfaction by the Company (or any successor thereto) of its obligations as set forth herein. For any fiscal year during which you are in the employ of the Company on the date of the occurrence of a Change in Control (the "Change in Control Year"), you hereby are guaranteed an annual bonus for the Change in Control Year (the "Change in Control Bonus") in an amount no less than the highest annual bonus that was paid or payable to you for any fiscal year during the three (3) full fiscal years ended prior to a Change in Control (the "Bonus Amount") provided that you are in the employ of the Company (or its successor) on the last day of the Change in Control Year. The Change in Control Bonus will be paid to you in cash within forty-five (45) business days (or earlier, if required by law) following the last day of the Change in Control Year whether or not you are in the employ of the Company (or its successor) on the date of payment. For the most recently ended fiscal year prior to the occurrence of a Change in Control (the "Prior Fiscal Year") for which your annual bonus has not yet been determined, you hereby are guaranteed an annual bonus for the Prior Fiscal Year equal to the Bonus Amount provided that you are in the employ of the Company on the last day of the Prior Fiscal Year. In the event that your annual bonus for the Prior Fiscal Year has been determined but not yet paid upon the occurrence of a Change in Control, you hereby are guaranteed an annual bonus for the Prior Fiscal Year in the amount determined but unpaid prior to the occurrence of a Change in Control. The payment for the Prior Fiscal Year as set forth in this paragraph will be paid to you in cash within forty-five (45) days of the end of the Prior Fiscal Year but in no event more than thirty (30) days following the date of the occurrence of a Change in Control (or earlier, if required by law), whether or not you are in employ of the Company (or its successor) on the date of payment. Sincerely, [Name] [Title] ATTEST: APPENDIX Change in Control. For purposes of this Letter Agreement, a "Change in Control" shall mean any of the following events: (a) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of the Company's then outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (x) the Company or (y) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a "Subsidiary"), (2) the Company or any Subsidiary, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined). (b) The individuals who, as of August 22, 1990, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Letter Agreement, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially asssumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) Approval by stockholders of the Company of: (1) A merger, consolidation or reorganization involving the Company, unless (i) the stockholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, (iii) no Person (other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation or any Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities) has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities, and (iv) a transaction described in clauses (i) through (iii) shall herein be referred to as a "Non-Control Transaction"; (2) A complete liquidation or dissolution of the Company; or (3) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. (d) Notwithstanding anything contained in this Letter Agreement to the contrary, if your employment is terminated following the date hereof but within one (1) year prior to a Change in Control and you reasonably demonstrate that such termination (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control and who effectuates a Change in Control (a "Third Party") or (ii) otherwise occurred in connection with, or in anticipation of, a Change in Control which actually occurs, then for all purposes of this Letter Agreement, the date of a Change in Control with respect to you shall mean the date immediately prior to the date of such termination of your employment. TO PARTICIPANTS WITH DISCRETIONARY BONUS [TANDY CORPORATION LETTERHEAD] Date: [NAME] [Address] Dear [Name]: The Board of Directors (the "Board") of Tandy Corporation (the "Company") believes that the future threat or occurrence of a "Change in Control" (as defined in the Appendix) of the Company may cause you undue concern for your financial security and distract your attention from the operations of our businesses, which would be detrimental to the Company and its shareholders. In recognition of these concerns and notwithstanding anything contained in your [Compensation Plan letter] to the contrary, the Board has determined that in order to provide you with some measure of security in the event of a Change in Control of the Company, it has authorized the Company to agree as follows: The term of this letter agreement shall commence as of the date hereof and shall continue in effect for a period of at least 24 months; provided, however, that commencing on the first anniversary date hereof and each anniversary date thereafter the term shall be automatically extended for an additional 12 months unless the Company shall have given written notice to you at least 90 days prior thereto that the term of this letter agreement shall not be so extended; provided, further, however, that upon a Change in Control this letter agreement shall in no event be terminated prior to the complete and full satisfaction by the Company (or any successor thereto) of its obligations as set forth herein. For any fiscal year during which you are in the employ of the Company on the date of the occurrence of a Change in Control (the "Change in Control Year"), you hereby are guaranteed an annual bonus for the Change in Control Year (the "Change in Control Bonus") in an amount no less than the annual bonus that was paid or payable to you for the most recently ended fiscal year prior to the occurrence of a Change in Control (the "Prior Fiscal Year") provided that you are in the employ of the Company (or its successor) on the last day of the Change in Control Year. The Change in Control Bonus will be paid to you in cash within forty-five (45) business days (or earlier, if required by law) following the last day of the Change in Control Year whether or not you are in the employ of the Company (or its successor) on the date of payment. For the Prior Fiscal Year, if your annual bonus has not been determined upon the occurence of a Change in Control, you hereby are guaranteed an annual bonus for the Prior Fiscal Year equal to the annual bonus paid or payable to you for the fiscal year which ended before the Prior Fiscal Year, provided that you are in the employ of the Company on the last day of the Prior Fiscal Year. In the event that your annual bonus for the Prior Fiscal Year has been determined but not yet paid upon the occurrence of a Change in Control, you hereby are guaranteed an annual bonus for the Prior Fiscal Year in the amount determined but unpaid prior to the occurrence of a Change in Control. The payment for the Prior Fiscal Year as set forth in this paragraph will be paid to you in cash within forty-five (45) days of the end of the Prior Fiscal Year but in no event more than thirty (30) days following the date of the occurrence of a Change in Control (or earlier, if required by law), whether or not you are in employ of the Company (or its successor) on the date of payment. Sincerely, [Name] [Title] ATTEST: APPENDIX Change in Control. For purposes of this Letter Agreement, a "Change in Control" shall mean any of the following events: (a) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of the Company's then outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (x) the Company or (y) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a "Subsidiary"), (2) the Company or any Subsidiary, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined). (b) The individuals who, as of August 22, 1990, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Letter Agreement, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially asssumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) Approval by stockholders of the Company of: (1) A merger, consolidation or reorganization involving the Company, unless (i) the stockholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, (iii) no Person (other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation or any Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities) has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities, and (iv) a transaction described in clauses (i) through (iii) shall herein be referred to as a "Non-Control Transaction"; (2) A complete liquidation or dissolution of the Company; or (3) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. (d) Notwithstanding anything contained in this Letter Agreement to the contrary, if your employment is terminated following the date hereof but within one (1) year prior to a Change in Control and you reasonably demonstrate that such termination (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control and who effectuates a Change in Control (a "Third Party") or (ii) otherwise occurred in connection with, or in anticipation of, a Change in Control which actually occurs, then for all purposes of this Letter Agreement, the date of a Change in Control with respect to you shall mean the date immediately prior to the date of such termination of your employment. TO PARTICIPANTS IN PAY PLAN [TANDY CORPORATION LETTERHEAD] Date: [NAME] [Address] Dear [Name]: The Board of Directors (the "Board") of Tandy Corporation (the "Company") believes that the future threat or occurrence of a "Change in Control" (as defined in the Appendix) of the Company may cause you undue concern for your financial security and distract your attention from the operations of our businesses, which would be detrimental to the Company and its shareholders. In recognition of these concerns and notwithstanding anything contained in your [Pay Plan letter] to the contrary, the Board has determined that in order to provide you with some measure of security in the event of a Change in Control of the Company, it has authorized the Company to agree as follows: The term of this letter agreement shall commence as of the date hereof and shall continue in effect for a period of at least 24 months; provided, however, that commencing on the first anniversary date hereof and each anniversary date thereafter the term shall be automatically extended for an additional 12 months unless the Company shall have given written notice to you at least 90 days prior thereto that the term of this letter agreement shall not be so extended; provided, further, however, that upon a Change in Control this letter agreement shall in no event be terminated prior to the complete and full satisfaction by the Company (or any successor thereto) of its obligations as set forth herein. For any fiscal year during which you are in the employ of the Company on the date of the occurrence of a Change in Control (the "Change in Control Year"), you hereby are guaranteed an annual bonus for the Change in Control Year (the "Change in Control Bonus") in an amount no less than the bonus that would be payable to you for a full fiscal year under the Pay Plan as in effect on the date of the Change in Control (the "Bonus Amount") provided that you are in the employ of the Company (or its successor) on the last day of the Change in Control Year. The Change in Control Bonus will be paid to you in cash within forty-five (45) business days (or earlier, if required by law) following the last day of the Change in Control Year whether or not you are in the employ of the Company (or its successor) on the date of payment. For the most recently ended fiscal year prior to the occurrence of a Change in Control (the "Prior Fiscal Year") for which your annual bonus has not yet been determined, you hereby are guaranteed an annual bonus for the Prior Fiscal Year equal to the Bonus Amount provided that you are in the employ of the Company on the last day of the Prior Fiscal Year. In the event that your annual bonus for the Prior Fiscal Year has been determined but not yet paid upon the occurrence of a Change in Control, you hereby are guaranteed an annual bonus for the Prior Fiscal Year in the amount determined but unpaid prior to the occurrence of a Change in Control. The payment for the Prior Fiscal Year as set forth in this paragraph will be paid to you in cash within forty-five (45) days of the end of the Prior Fiscal Year but in no event more than thirty (30) days following the date of the occurrence of a Change in Control (or earlier, if required by law), whether or not you are in employ of the Company (or its successor) on the date of payment. Sincerely, [Name] [Title] ATTEST: APPENDIX Change in Control. For purposes of this Letter Agreement, a "Change in Control" shall mean any of the following events: (a) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of the Company's then outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (x) the Company or (y) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a "Subsidiary"), (2) the Company or any Subsidiary, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined). (b) The individuals who, as of August 22, 1990, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Letter Agreement, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially asssumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) Approval by stockholders of the Company of: (1) A merger, consolidation or reorganization involving the Company, unless (i) the stockholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, (iii) no Person (other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation or any Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities) has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities, and (iv) a transaction described in clauses (i) through (iii) shall herein be referred to as a "Non-Control Transaction"; (2) A complete liquidation or dissolution of the Company; or (3) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. (d) Notwithstanding anything contained in this Letter Agreement to the contrary, if your employment is terminated following the date hereof but within one (1) year prior to a Change in Control and you reasonably demonstrate that such termination (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control and who effectuates a Change in Control (a "Third Party") or (ii) otherwise occurred in connection with, or in anticipation of, a Change in Control which actually occurs, then for all purposes of this Letter Agreement, the date of a Change in Control with respect to you shall mean the date immediately prior to the date of such termination of your employment. EX-10.(P) 24 1993 10K EXHIBIT 10P Exhibit 10p INDEMNITY AGREEMENT AGREEMENT, as of ____________ ___, 1991, (the "Agreement"), between Tandy Corporation, a Delaware corporation (the "Company"), and _________________________ (the "Indemnitee"). WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available; WHEREAS, Indemnitee is a director and/or an officer of the Company; WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies in today's environment; WHEREAS, the Bylaws of the Company require the Company to indemnify and advance expenses to its directors and officers to the fullest extent permitted by law, and the Indemnitee has been serving and continues to serve as a director and/or an officer of the Company in part in reliance on such Bylaws; WHEREAS, in recognition of Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner and Indemnitee's reliance on the aforesaid Bylaws, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such Bylaws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such Bylaws or other things, any amendment to or revocation of such Bylaws or any change in the composition of the Company's Board of Directors or acquisition transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies; NOW, THEREFOR, in consideration of the premises and of Indemnitee continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Definitions: (a) Change in Control: For purposes of this Agreement, a "Change in Control" shall mean any of the following events: (i) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by a "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities xchange Act of 1934, as amended (the "1934 Act")) immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of the Company's then outstanding Voting Securities; provided, however, that in determining whether a Change in Control has occurred, Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A "Non-Control Acquisition" shall mean an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (x) the Company or (y) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a "Subsidiary"), (2) the Company or any Subsidiary, or (3) any Person in connection with a "Non-Control Transaction" (as hereinafter defined). (ii) The individuals who, as of August 22, 1991, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least two-thirds of the Board; provided, however, that if the election, or nomination for election by the Company's stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (iii) Approval by stockholders of the Company of: (A) a merger or consolidation involving the Company unless (1) the stockholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (2) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, (3) no Person (other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation or any Subsidiary, or any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities) has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities, and (4) a transaction described in clauses (1) through (3) shall herein be referred to as a "Non-Control Transaction;" (B) A complete liquidation or dissolution of the Company; or (C) An agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. (b) Claim: any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative or other, including, without limitation, an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, whether predicated on foreign, federal, state or local law and whether formal or informal. (c) Expenses: include attorney's fees and all other costs, charges and expenses paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in any Claim relating to any Indemnifiable vent. (d) Indemnifiable vent: any event or occurrence related to the fact that Indemnitee is or was or has agreed to become a director, officer, employee, agent or fiduciary of the Company, or is or was serving or has agreed to serve in any capacity, at the request of the Company, in any other corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, or by reason of anything done or not done by Indemnitee in any such capacity. (e) Potential Change in Control: shall be deemed to have occurred if (i) the Company enters into an agreement or arrangement, the consummation of which would result in the occurrence of a Change in Control; or (ii) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred. (f) Voting Securities: any securities of the Company which vote generally in the election of directors. 2. Basic Indemnification Arrangement: (a) In the event Indemnitee was, is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Claim by reason of (or arising in part out of) an Indemnifiable vent, the Company shall indemnify Indemnitee (without regard to the negligence or other fault of the Indemnitee) to the fullest extent permitted by applicable law, as soon as practicable but in no event later than thirty days after written demand is presented to the Company, against any and all Expenses, judgments, fines, penalties, excise taxes and amounts paid or to be paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, penalties, excise taxes or amounts paid or to be paid in settlement) of such Claim. If Indemnitee makes a request to be indemnified under this Agreement, the Board of Directors (acting by a quorum consisting of directors who are not parties to the Claim with respect to an Indemnifiable Event or, if such a quorum is not obtainable, acting upon an opinion in writing of independent legal counsel ("Board Action") shall, as soon as practicable but in no event later than thirty days after such request, authorize such indemnification. Notwithstanding anything in the Restated Certificate of Incorporation of the Company (the "Certificate of Incorporation"), the Bylaws of the Company or this Agreement to the contrary, following a Change in Control, Indemnitee shall, unless prohibited by law, be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Indemnitee. (b) Notwithstanding anything in the Certificate of Incorporation, the Bylaws or this Agreement to the contrary, if so requested by Indemnitee, the Company shall advance (within two business days of such request) any and all expenses relating to a Claim to Indemnitee (an "xpense Advance"), upon the receipt of a written undertaking by or on behalf of Indemnitee to repay such Expense Advance if a judgment or other final adjudication adverse to Indemnitee (as to which all rights or appeal therefrom have been exhausted or lapsed) establishes that Indemnitee, with respect to such Claim, is not eligible for indemnification. (c) Notwithstanding anything in the Certificate of Incorporation, the Bylaws or in this Agreement to the contrary, if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under this Agreement, the Bylaws of the Company or applicable law, any Board Action or Arbitration (as defined in Section 3) that Indemnitee would not be permitted to be indemnified in accordance with Section 2(a) of this Agreement shall not be binding. If there has been no Board Action or Arbitration, or if Board Action or Arbitration determines that Indemnitee would not be permitted to be indemnified, in any respect, in whole or in part, in accordance with Section 2(a) of this Agreement, Indemnitee shall have the right to commence litigation in the court which is hearing the action or proceeding relating to the Claim for which indemnification is sought or in any court in the States of Delaware or Texas having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such Board Action or Arbitration or any aspect thereof, and the Company thereby consents to service of process and to appear in any such proceeding. Any Board Action not followed by Arbitration or such litigation, and any Arbitration not followed by such litigation, shall be conclusive and binding on the Company and Indemnitee. 3. Change in Control. The Company agrees that if there is a Change in Control, Indemnitee, by giving written notice to the Company and the American Arbitration Association (the "Notice"), may require that any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration (the "Arbitration"), in Fort Worth, Texas, in accordance with the Rules of the American Arbitration Association (the "Rules"). The Arbitration shall be conducted by a panel of three arbitrators selected in accordance with the Rules within thirty days of delivery of the Notice. The decision of the panel shall be made as soon as practicable after the panel has been selected, and the parties agree to use their reasonable efforts to cause the panel to deliver its decision within ninety days of its selection. The Company shall pay all fees and expenses of the Arbitration. The Arbitration shall be conclusive and binding on the Company and Indemnitee and Indemnitee may cause judgment upon the award rendered by the arbitrators to be entered in any court having jurisdiction thereof; provided, however, that any Arbitration shall have no effect on Indemnitee's right to commence litigation pursuant to Section 2(c) of this Agreement, in which case, such Arbitration shall not be conclusive and binding on Indemnitee or the Company. 4. Establishment of Trust. In the event of a Potential Change in Control or a Change in Control, the Company shall, promptly upon written request by Indemnitee, create a Trust for the benefit of Indemnitee and from time to time, upon written request of Indemnitee to the Company, shall fund such Trust in an amount, as set forth in such request, sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for and defending any claim relating to an Indemnifiable Event, and any and all judgments, fines, penalties and settlement amounts of any and all Claims relating to an Indemnifiable vent from time to time actually paid or claimed, reasonably anticipated or proposed to be paid. The terms of the Trust shall provide that upon a Change in Control (i) the Trust shall not be revoked or the principal thereof invaded, without the written consent of Indemnitee; (ii) the Trustee shall advance, within two business days of a request by Indemnitee, any and all Expenses to Indemnitee, not advanced directly by the Company to Indemnitee (and Indemnitee hereby agrees to reimburse the Trust under the circumstances under which Indemnitee would be required to reimburse the Company under Section 2(b) of this Agreement); (iii) the Trust shall continue to be funded by the Company in accordance with the funding obligation set forth above; (iv) the Trustee shall promptly pay to Indemnitee all amounts for which Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise; and (v) all unexpended funds in such Trust shall revert to the Company upon a final determination by Board Action or Arbitration or a court of competent jurisdiction, as the case may be, that Indemnitee has been fully indemnified under the terms of this Agreement. The Trustee shall be chosen by Indemnitee. Nothing in this Section 4 shall relieve the Company of any of its obligations under this Agreement. 5. Indemnification for Additional Expenses. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees) and, if requested by Indemnitee, shall (within two business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted by or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or Company Bylaw now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expense payment or insurance recovery, as the case may be. 6. Partial Indemnity, Etc. If Indemnitee is entitled, under any provisions of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgments, fines, penalties, excise taxes and amounts paid or to be paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including, without limitation, dismissal without prejudice, Indemnitee shall be indemnified against any and all Expenses, judgments, fines, penalties, excise taxes and amounts paid or to be paid in settlement of such Claim. In connection with any determination by Board Action, Arbitration or a court of competent jurisdiction that Indemnitee is not entitled to be indemnified hereunder, the burden of proof shall be on the Company to establish that Indemnitee is not so entitled. 7. No Presumption. For purposes of this Agreement, the termination of any claim, action, suit or proceeding, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law or this Agreement. 8. Contribution. In the event that the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for expenses, in connection with any Claim relating to an Indemnifiable Event, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such action by Board Action or Arbitration or by the court before which such action was brought in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such action; and/or (ii) the relative fault of the Company (and its other directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s). Indemnitee's right to contribution under this Paragraph 8 shall be determined in accordance with, pursuant to and in the same manner as, the provisions in Paragraphs 2 and 3 hereof relating to Indemnitee's right to indemnification under this Agreement. 9. Notice to the Company by Indemnitee. Indemnitee agrees to promptly notify the Company in writing upon being served with or having actual knowledge of any citation, summons, complaint, indictment or any other similar document relating to any action which may result in a claim of indemnification or contribution hereunder. 10. Non-exclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company's Certificate of Incorporation or Bylaws or the Delaware General Corporation Law or otherwise, and nothing herein shall be deemed to diminish or otherwise restrict Indemnitee's right to indemnification under any such other provision. To the extent applicable law or the Certificate of Incorporation or the Bylaws of Company, is in effect on the date hereof or at any time in the future, permit greater indemnification than as provided for in this Agreement, the parties hereto agree that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such law or provision of the Certificate of Incorporation or Bylaws and this Agreement shall be deemed amended without any further action by the Company or Indemnitee to grant such greater benefits. Indemnitee may elect to have Indemnitee's rights hereunder interpreted on the basis of applicable law in effect at the time of execution of this Agreement, at the time of the occurrence of the Indemnifiable Event giving rise to a Claim or at the time indemnification is sought. 11. Liability Insurance. To the extent the Company maintains at any time an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any other Company director or officer under such insurance policy. The purchase and maintenance of such insurance shall not in any way limit or affect the rights and obligations of the parties hereto, and the execution and delivery of this Agreement shall not in any way be construed to limit or affect the rights and obligations of the Company and/or of the other parties under any such insurance policy. 12. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company or its affiliate shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action such shorter period shall govern. 13. Amendments, Etc. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 14. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery with respect to such payment of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable to Company effectively to bring suit to enforce such rights. 15. No-Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, Bylaw or otherwise) of the amounts otherwise indemnifiable hereunder. 16. Binding Effect, tc. This Agreement shall be binding upon and inure to the benefit of and be enforceable against and by the parties hereto and their respective successors, assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), spouses, heirs and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the company would be required to perform if no such succession had taken place. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as a director and/or officer of the Company or of any other enterprise at the Company's request. 17. Severability. The provisions of this Agreement shall be severable in the event that any of the provisions thereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 18. Notices. All notices, requests, demands and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand or when mailed by certified registered mail, return receipt requested, with postage prepaid: A. If to Indemnitee, to: ___________________________________ ___________________________________ ___________________________________ or to such other person or address which Indemnitee shall furnish to the Company in writing pursuant to the above. B. If to the Company, to: Tandy Corporation 1800 One Tandy Center Fort Worth, Texas 76102 or to such person or address as the Company shall furnish to Indemnitee in writing pursuant to the above. 19. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in such State without giving effect to the principles of conflicts of laws. IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the 26th day of August, 1991. TANDY CORPORATION By:/s/ John V. Roach John V. Roach Chairman of the Board and Chief Executive Officer EX-11 25 1993 10K EXHIBITS 11 AND 12 EXHIBIT 11 TANDY CORPORATION STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
Year Ended Six Months Ended December 31, December 31, Year Ended June 30, ____________ ________________ ___________________ (In thousands, except per share amounts) 1993 1992 1992 1991 PRIMARY EARNINGS PER SHARE Reconciliation of net income per statements of income to amounts used in computation of primary earnings per share: Net income, as reported $ 96,849 $ 3,806 $ 183,847 $ 195,444 Less dividends on preferred stock: Series B, net of tax in 1992 (a) (7,136) (2,419) (4,911) (4,538) Series C (32,100) (16,050) (12,573) -- __________ _________ __________ __________ Net income available to common stockholders 57,613 (14,663) 166,363 190,906 Plus dividends on Series C preferred stock 32,100 16,050 12,573 -- __________ _________ __________ __________ Net income for primary earnings per share $ 89,713 $ 1,387 $ 178,936 $ 190,906 __________ _________ __________ __________ __________ _________ __________ __________ Weighted average number of common shares outstanding 63,582 63,072 74,631 78,258 Weighted average number of $2.14 depositary shares, representing Series C preferred stock, treated as common stock due to mandatory conversion (b) 12,457 12,457 4,323 -- Weighted average number of common shares issuable under stock option plans, net of assumed treasury stock repurchases at average market prices 145 30 57 -- __________ _________ __________ __________ Weighted average number of common and common equivalent shares outstanding 76,184 75,559 79,011 78,258 __________ _________ __________ __________ __________ _________ __________ __________ Net income per average common and common equivalent share $ 1.18 $ 0.02 $ 2.26 $ 2.44 __________ _________ __________ __________ __________ _________ __________ __________ FULLY DILUTED EARNINGS PER SHARE (c) Reconciliation of net income per statements of income to amounts used in computation of fully diluted earnings per share: Net income available to common stockholders $ 57,613 $(14,663) $ 166,363 $ 190,906 Plus dividends on Series C preferred stock 32,100 16,050 12,573 -- Adjustments for assumed conversion of Series B preferred stock to common stock as of the later of the beginning of the period or the date of issuance, August 1, 1990: Plus dividends on Series B preferred stock, net of tax (a) (d) (d) 4,911 4,538 Less additional contribution that would have been required for the TESOP if Series B preferred stock had been converted (d) (d) (3,612) (3,232) __________ _________ __________ __________ Net income, as adjusted $ 89,713 $ 1,387 $ 180,235 $ 192,212 __________ _________ __________ __________ __________ _________ __________ __________ Reconciliation of weighted average number of shares outstanding to amount used in computation of fully diluted earnings per share: Weighted average number of shares outstanding 76,184 75,559 79,011 78,258 Adjustment to reflect assumed exercise of stock options as of the beginning of the period 223 35 35 67 Adjustment to reflect assumed conversion of Series B preferred stock to common stock as of the later of the beginning of the period or the date of issuance, August 1, 1990 (d) (d) 2,166 1,992 __________ _________ __________ __________ Weighted average number of common and common equivalent shares outstanding, as adjusted 76,407 75,594 81,212 80,317 __________ _________ __________ __________ __________ _________ __________ __________ Fully diluted net income per average common and common equivalent share $ 1.17 $ 0.02 $ 2.22 $ 2.39 __________ _________ __________ __________ __________ _________ __________ __________ (a) Series B dividends for the year ended December 31, 1993 are not net of income tax benefits associated with unallocated shares in the TESOP in accordance with EITF Issue No. 92-3. (b) Effect of mandatory conversion of Series C preferred stock for the six months ended December 31, 1992 and the year ended June 30, 1992 have been restated to reflect the common shares issuable at the closing market at December 31, 1993 of $49.40. (c) This calculation is submitted in accordance with Regulation S-K, Item 601(b)(11) although not required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%. (d) For the year ended December 31, 1993 and the six months ended December 31, 1992 these items are anti- dilutive and thus are omitted from the calculation.
EXHIBIT 12 TANDY CORPORATION STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS (1)
Year Ended Six Months Ended December 31, December 31, Year Ended June 30, ____________ ________________ ___________________________________________ (In thousands, except per share amounts) 1993 1992 1992 1991 1990 1989 Ratios of Earnings to Fixed Charges: Income from continuing operations $ 195,632 $ 67,681 $ 210,713 $ 219,935 $ 277,122 $ 303,822 Plus provision for income taxes 115,523 35,236 119,785 123,342 167,926 190,754 _________ _________ _________ _________ _________ _________ Income before income taxes 311,155 102,917 330,498 343,277 445,048 494,576 Fixed charges: Interest expense and amortization of debt discount 39,707 20,532 43,154 70,313 58,592 40,583 Amortization of issuance expense 409 591 563 400 325 479 Appropriate portion (33 1/3%) of rentals 67,467 35,109 68,224 63,980 59,123 56,586 _________ _________ _________ _________ _________ _________ Total fixed charges 107,583 56,232 111,941 134,693 118,040 97,648 _________ _________ _________ _________ _________ _________ Earnings before income taxes and fixed charges $ 418,738 $ 159,149 $ 442,439 $ 477,970 $ 563,088 $ 592,224 _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ Ratios of earnings to fixed charges 3.89 2.83 3.95 3.55 4.77 6.06 _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ Ratios of Earnings to Fixed Charges and Preferred Dividends: Total fixed charges, as above 107,583 56,232 111,941 134,693 118,040 97,648 Preferred dividends 36,738 18,469 20,014 6 875 -- -- _________ _________ _________ _________ _________ _________ Total fixed charges and preferred dividends $ 144,321 $ 74,701 $ 131,955 $ 141,568 $ 118,040 $ 97,648 _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ Earnings before income taxes, fixed charges and preferred dividends $ 418,738 $ 159,149 $ 442,439 $ 477,970 $ 563,088 $ 592,224 _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ Ratios of earnings to fixed charges and preferred dividends 2.90 2.13 3.35 3.38 4.77 6.06 _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ (1) The computation of Ratios of Earnings to Fixed Charges and Ratios of Earnings to Fixed Charges and Preferred Dividends excludes results of operations from discontinued operations and fixed charges relating to these same operations.
EX-22 26 1993 10K EXHIBIT 22 Exhibit 22 TANDY CORPORATION SUBSIDIARIES The largest subsidiaries of the Company are: State of Incorporation ______________________ Tandy Credit Corporation Delaware Technology Properties, Inc. Delaware Trans World Electronics, Inc. Texas All of the subsidiaries of Tandy Corporation are included in the Company's consolidated financial statements. All other subsidiaries, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary. EX-23 27 1993 10K EXHIBIT 23 Exhibit 23 TANDY CORPORATION CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 (Registration No. 33-37970) of Tandy Corporation and Form S-3 (Registration No. 33-15624) of Tandy Credit Corporation and to the incorporation by reference in the Registration Statements on Form S-8 (Registration Nos. 33-23178, 33-41523, 33-51019, 33-51599 and 33-51603) of our report dated February 22, 1994, appearing on page 30 in this Annual Report on Form 10-K. /s/ Price Waterhouse PRICE WATERHOUSE Fort Worth, Texas March 30, 1994 -----END PRIVACY-ENHANCED MESSAGE-----