THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(this "Third Amendment"), dated effective as of March 27, 1999, is entered
into among CompUSA Inc., a Delaware corporation (the "Borrower"), the banks
listed on the signature pages hereof (collectively, the "Lenders"), and
NationsBank, N.A. (successor by merger to NationsBank of Texas, N.A.), as
Administrative Lender (in said capacity, the "Administrative Lender").
BACKGROUND
A. The Borrower, the Lenders and the Administrative Lender are
parties to that certain Second Amended and Restated Credit Agreement, dated
as of March 12, 1998, as amended by that certain First Amendment to Second
Amended and Restated Credit Agreement, dated as of June 16, 1998, and that
certain Second Amendment to Second Amended and Restated Credit Agreement,
dated as of August 31, 1998 (said Second Amended and Restated Credit
Agreement, as amended, the "Credit Agreement"; the terms defined in the
Credit Agreement and not otherwise defined herein shall be used herein as
defined in the Credit Agreement).
B. The Borrower, the Lenders and the Administrative Lender desire to
make certain amendments to the Credit Agreement.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are all hereby acknowledged,
the Borrower, the Lenders and the Administrative Lender covenant and agree as
follows:
1. AMENDMENTS TO CREDIT AGREEMENT.
(a) The definition of "APPLICABLE MARGIN" set forth in SECTION 1.1 of
the Credit Agreement is hereby amended to read as follows:
"'APPLICABLE MARGIN' means the following per annum percentages,
applicable in the following situations:
LIBOR
Applicability Basis
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(a) The Leverage Ratio is greater than 3.50 to 1 2.250
(b) The Leverage Ratio is greater than 3.00 to 1 but less than 1.750
or equal to 3.50 to 1
(c) The Leverage Ratio is less than or equal to 3.00 to 1 and
(i) The Fixed Charge Coverage Ratio is less 1.250
than 2.00 to 1
(ii) The Fixed Charge Coverage Ratio is greater than or 1.000
equal to 2.00 to 1 but less than 2.25 to 1
(iii) The Fixed Charge Coverage Ratio is greater than or 0.875
equal to 2.25 to 1 but less than 3.00 to 1
(iv) The Fixed Charge Coverage Ratio is greater than or 0.750
equal to 3.00 to 1 but less than 3.75 to 1
(v) The Fixed Charge Coverage Ratio is greater than or 0.625
equal to 3.75 to 1 but less than 4.50 to 1
(vi) The Fixed Charge Coverage Ratio is greater than or 0.500
equal to 4.50 to 1
The Applicable Margin payable by the Borrower on the Advances outstanding
hereunder shall be subject to reduction or increase, as applicable and as
set forth in the table above, on a quarterly basis according to the
performance of the Borrower as tested by using the Leverage Ratio or the
Fixed Charge Coverage Ratio, as applicable, as of the end of the most
recent Fiscal Quarter (calculated for the twelve Fiscal Periods preceding
the date of determination); PROVIDED, that each adjustment in the
Applicable Margin shall be effective with respect to Advances (i) made
following receipt by the Lenders of the financial statements required
pursuant to SECTION 6.1 or 6.2, as applicable, hereof and the Compliance
Certificate required pursuant to SECTION 6.3 hereof, on the date of making
of such Advance and (ii) outstanding on the date of receipt of the
financial statements referred to in clause (i) immediately preceding, on
the date of receipt of such financial statements. If such financial
statements and Compliance Certificate are not received by the Lenders by
the date required, the Applicable Margin shall be determined as if the
Leverage Ratio is greater than 3.50 to 1 until such time as such financial
statements and Compliance Certificate are received. In addition, the
Applicable Margin shall be increased above the per annum percentages set
forth above by 0.750 on each Utilization Premium Date."
(b) The definition of "COMMITMENT" set forth in SECTION 1.1 of the
Credit Agreement is hereby amended to read as follows:
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"'COMMITMENT' means the commitment of the Lenders, subject to the
terms and conditions hereof, to make Advances or to issue or participate in
Letters of Credit up to an aggregate principal amount of $230,000,000, as
such amount may be reduced pursuant to SECTION 2.6 hereof."
(c) The definition of "DEBT FOR BORROWED MONEY" set forth in SECTION 1.1
of the Credit Agreement is hereby amended to read as follows:
"'DEBT FOR BORROWED MONEY' means all indebtedness, direct or
indirect, whether or not represented by bonds, debentures, notes or other
securities, for the repayment of money borrowed or the deferred purchase
price of property or services, and shall include, without duplication,
Securitization Indebtedness. Debt for Borrowed Money does not include,
without limitation, (a) accounts payable or accrued liabilities incurred in
the ordinary course of business, including advances from customers and
trade payables financed through floor plan arrangements, (b) current or
deferred income taxes, and (c) provided that any applicable Restricted
Subsidiary has executed a Subsidiary Guaranty and a Security Agreement,
(i) Indebtedness owed by a Restricted Subsidiary to the Borrower,
(ii) Indebtedness owed by the Borrower to a Restricted Subsidiary, and
(iii) Indebtedness owed by a Subsidiary to a Restricted Subsidiary."
(d) The definition of "EBITDAR" set forth in SECTION 1.1 of the Credit
Agreement is hereby amended to read as follows:
"'EBITDAR' means, for any period, determined in accordance with GAAP
on a consolidated basis for the Borrower and its Subsidiaries, the sum of
(a) EBIT, plus (b) depreciation, amortization and other non-cash charges,
plus (c) lease expense pursuant to Operating Leases, plus (d) without
duplication, the Approved Restructuring Charges; PROVIDED, that, in the
event that an Acquisition for which the Acquisition Consideration is equal
to or exceeds $150,000,000 is consummated during such period, "EBITDAR"
shall be determined on a PRO FORMA basis (as determined by the Borrower,
such determination to be made in good faith based upon such financial
information as is available to the Borrower and using reasonable
assumptions) as if such Acquisition had occurred on the first day of such
period; PROVIDED, FURTHER, HOWEVER, notwithstanding the above, only the
EBITDAR of the business and assets acquired in the Computer City
Acquisition from and after the date of closing of the Computer City
Acquisition shall be included in the calculation of EBITDAR."
(e) The definition of "FIXED CHARGES" set forth in SECTION 1.1 of the
Credit Agreement is hereby amended to read as follows:
"'FIXED CHARGES' means, for any date of calculation, calculated for
the Borrower and its Subsidiaries on a consolidated basis in accordance
with GAAP, the sum of, without duplication, (a) interest expense (including
but not limited to interest expense pursuant to Capitalized Lease
Obligations), plus (b) lease expense under Operating Leases, plus (c) such
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amounts in connection with any Securitization as would constitute interest
expense under GAAP if such Securitization were treated as an on-balance
sheet liability, in each case for the applicable period preceding the date
of calculation, plus (d) Dividends and Treasury Stock Purchases, in each
case for the applicable period immediately preceding the date of
calculation; PROVIDED, that, in the event that an Acquisition for which the
Acquisition Consideration is equal to or exceeds $150,000,000 is
consummated during such period, "FIXED CHARGES" shall be determined on a
PRO FORMA basis (as determined by the Borrower, such determination to be
made in good faith based upon such financial information as is available to
the Borrower and using reasonable assumptions) as if such Acquisition had
occurred on the first day of such period; PROVIDED, FURTHER, HOWEVER,
notwithstanding the above, only the Fixed Charges of Computer City and its
Subsidiaries from and after the date of closing of the Computer City
Acquisition shall be included in the calculation of Fixed Charges."
(f) The definition of "INDEBTEDNESS" set forth in SECTION 1.1 of the
Credit Agreement is hereby amended to read as follows:
"'INDEBTEDNESS' means, with respect to any Person, without
duplication, (a) all items, except accounts payable arising in the normal
course of business, which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance
sheet of such Person, (b) all obligations secured by any Lien other than
Permitted Liens on any property or asset owned by such Person (other than
accounts payable arising in the ordinary course of business), whether or
not the obligation secured thereby shall have been assumed, (c) to the
extent not otherwise included, all Capitalized Lease Obligations, all
Guaranties, all reimbursement obligations in respect of letters of credit,
all obligations under Interest Hedge Agreements, and all Securitization
Indebtedness of such Person, and (d) any "withdrawal liability" of such
Person, as such term is defined under Part I of Subtitle E of Title IV of
ERISA."
(g) The definition of "LOAN DOCUMENTS" set forth in SECTION 1.1 of the
Credit Agreement is hereby amended to read as follows:
"'LOAN DOCUMENTS' means this Agreement, the Notes, the Subsidiary
Guaranty, the Fee Letter, each Collateral Document, any Interest Hedge
Agreement entered into with any Lender or any Lender Affiliate, and any
other document or agreement executed or delivered from time to time by an
officer of the Borrower or any Subsidiary in connection herewith or as
security for the Obligations."
(h) The definition of "NET WORTH" set forth in SECTION 1.1 of the Credit
Agreement is hereby amended to read as follows:
"'NET WORTH' means, for the Borrower and its Subsidiaries, on a
consolidated basis, determined in accordance with GAAP, the sum of:
(a) capital stock taken at stated or par
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value, plus (b) paid in capital plus (c) retained earnings, plus (d) the
aggregate amount of Approved Restructuring Charges taken after March 27,
1999, less (e) treasury stock."
(i) The definition of "OBLIGATIONS" set forth in SECTION 1.1 of the
Credit Agreement is hereby amended to read as follows:
"'OBLIGATIONS' means (a) all obligations of any nature (whether
matured or unmatured, fixed or contingent, including the Reimbursement
Obligations) of the Borrower or any Subsidiary to the Lenders or any Lender
Affiliate under the Loan Documents as they may be amended from time to
time, and (b) all obligations of the Borrower or any Subsidiary for losses,
damages, expenses, expenses or any other liabilities of any kind that any
Lender or any Lender Affiliate may suffer by reason of a breach by the
Borrower or any Subsidiary of any obligation, covenant or undertaking with
respect to any Loan Document."
(j) The definition of "PERMITTED LIENS" set forth in SECTION 1.1 of the
Credit Agreement is hereby amended by amending clause (a) thereof to read as
follows:
"(a) Any Lien in favor of the Administrative Lender for the benefit
of the Lenders and any Lender Affiliate to secure the Obligations;"
(k) The definition of "SUBSIDIARY GUARANTY" set forth in SECTION 1.1 of
the Credit Agreement is hereby amended to read as follows:
"'SUBSIDIARY GUARANTY' means the Subsidiary Guaranty, executed by
each Restricted Subsidiary of the Borrower (other than CompUSA Xxx.xxx),
guarantying payment and performance of the Obligations, substantially in
the form of EXHIBIT B hereto, as such agreement may be amended, modified,
supplemented or restated from time to time."
(l) SECTION 1.1 of the Credit Agreement is hereby amended by adding the
following defined terms thereto in proper alphabetical order:
"ACCOUNT" has the meaning assigned to such term in the UCC.
"APPROVED RESTRUCTURING CHARGES" means those certain restructuring
charges related to potential closing of distribution warehouse and
write-off of related DCC-OE software, potential store closings,
potential write-off of certain training software in connection with the
restructuring of the Borrower's training business, and other
restructuring charges of a similar nature, the cash charges with respect
to all of which may not exceed $5,000,000 in aggregate amount during the
term of this Agreement and the non-cash charges with respect to all of
which may not exceed $20,000,000 in aggregate amount during the term of
this Agreement; PROVIDED, HOWEVER , Approved Restructuring Charges shall
not include the restructuring charges of Comp USA Xxx.xxx and mail order
Subsidiaries in an aggregate amount of $10,000,000.
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"BORROWING BASE" means, at the time in question, an amount equal to
75% of Eligible Accounts.
"BORROWING BASE CERTIFICATE" means that certain certificate, signed
by an Authorized Signatory, in substantially the form of Exhibit G,
appropriately completed.
"CAPITAL EXPENDITURES" means, for any period, cash expenditures made
by the Borrower and its Subsidiaries to acquire or construct fixed assets,
plant and equipment (including renewals, improvements and replacements
during such period) computed in accordance with GAAP.
"COLLATERAL" means any collateral granted by any Person to the
Administrative Lender to secure the Obligations.
"COLLATERAL DOCUMENT" means any document under which Collateral is
granted and any document related thereto.
"COMPUSA XXX.XXX" means CompUSA Xxx.xxx Inc., a Delaware
corporation, of which 100% of the issued and outstanding capital stock will
be owned by the Borrower on March 28, 1999, and which, until otherwise
designated by the Borrower as an Unrestricted Subsidiary as provided
herein, shall be a Restricted Subsidiary.
"ELIGIBLE ACCOUNTS" means at the time of any determination thereof,
each Account as to which the following requirements have been fulfilled to
the reasonable satisfaction of the Administrative Lender:
(a) The Borrower or any Restricted Subsidiary has lawful and
absolute title to such Account;
(b) Such Account is a valid, legally enforceable obligation of
the Person who is obligated under such Account (the "account debtor") for
goods or services delivered or rendered to such Person;
(c) If such Account and other Accounts are owed by a creditor of
the Borrower or any Restricted Subsidiary, the amount of all such Accounts
included as Eligible Accounts shall be the amount by which all such
Accounts exceeds the aggregate accounts payable owed by the Borrower or
such Restricted Subsidiary to such creditor;
(d) There has been excluded from such Account any portion that is
subject to any asserted dispute, offset, discount, counterclaim or other
claim or defense on the part of the account debtor or to any asserted claim
on the part of the account debtor denying liability under such Account;
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(e) The Borrower or any Restricted Subsidiary has full and
unqualified right to assign and grant a security interest in such Account
to the Administrative Lender as security for the Obligations;
(f) Such Account is evidenced by an invoice rendered to the
account debtor (and is not evidenced by chattel paper, promissory note or
other instrument payable to the Borrower or any Restricted Subsidiary) and
is not the result of a conditional sales contract or agreement;
(g) Such Account has not been due and payable for more than 90
days from the invoice date; provided, that no Accounts from an account
debtor shall constitute Eligible Accounts if 50% or more of the aggregate
dollar amount of all Accounts owed to the Borrower or any Restricted
Subsidiary by such account debtor have been due and payable for 30 days or
more from their respective invoice dates;
(h) No account debtor in respect of such Account is (i) primarily
conducting business in and organized under the laws of any jurisdiction
located outside the United States of America, (ii) the subject of a
proceeding under any Debtor Relief Laws or (iii) a federal, state or local
governmental body;
(i) No account debtor in respect of such Account is (i) an
Affiliate of the Borrower or any Restricted Subsidiary or (ii) an employee
of the Borrower or any Restricted Subsidiary; and
(j) Such Account is (i) subject to a fully perfected first
priority security interest in favor of Administrative Lender pursuant to
the Loan Documents, prior to the rights of, and enforceable as such
against, any other Person (including holders of a purchase money security
interest) and (ii) not subject to any Lien in favor of any other Person
other than Permitted Liens.
"INTEREST HEDGE AGREEMENTS" means any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto from
the fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange transactions,
including, but not limited to, dollar-denominated or cross-currency
interest rate exchange agreements, forward currency exchange agreements,
interest rate cap or collar protection agreements, forward rate current or
interest rate options, puts and warrants, as the same may be amended or
modified and in effect from time to time, and any and all cancellations,
buy backs, reversals, terminations or assignments of any of the foregoing.
"LENDER AFFILIATE" means any Person (a) that, directly or
indirectly, Controls or is Controlled By or Under common Control with, any
Lender and (b) that has entered into an Interest Hedge Agreement with the
Borrower or any of its Subsidiaries.
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"NON-STOCK ACQUISITION CONSIDERATION" means any Acquisition
Consideration which is not Stock Acquisition Consideration.
"PERMITTED STOCK SALES" means the sale or sales of capital stock of
CompUSA Xxx.xxx for fair market value (as determined by the Board of
Directors of the Borrower) pursuant to an initial public offering or any
other sale or sales to Persons who are not Affiliates, such that the public
investors and/or such other investors that are not Affiliates would own in
the aggregate up to 30% of the issued and outstanding capital stock of Comp
USA Xxx.xxx.
"SECURITY AGREEMENT" means that certain security agreement executed
by the Borrower and each of its Restricted Subsidiaries, substantially in
the form of EXHIBIT F hereto, as such agreement may be amended, modified,
supplemented or restated from time to time.
"STOCK ACQUISITION CONSIDERATION" means Acquisition Consideration
consisting of capital stock or other equity securities or interests.
"UTILIZATION PREMIUM DATE" means any date (a) on and after which the
Senior Subordinated Notes have been paid in full (other than directly or
indirectly with proceeds of Subordinated Debt) and (b) on which the
Utilization Rate is greater than 4/10.
"UTILIZATION RATE" means, at any date, a fraction (a) the numerator
of which is the aggregate principal amount of all Advances and
Reimbursement Obligations at such date and (b) the denominator of which is
the amount of the Commitment at such date, determined in each case after
giving effect to any transactions at such date.
(m) SECTION 2.4(a) of the Credit Agreement is hereby amended to read as
follows:
"(a) COMMITMENT FEE. Subject to SECTION 11.9 hereof, the Borrower
agrees to pay to the Administrative Lender, for the ratable account of the
Lenders, a commitment fee on the daily average Unused Portion at the
following per annum percentages, applicable in the following situations:
Applicability Percentage
------------- ----------
(a) The Leverage Ratio is greater than 3.00 to 1 0.500
(b) The Leverage Ratio is less than or equal to 3.00 to 1
(i) The Fixed Charge Coverage Ratio is less than 0.350
and 2.00 to 1
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(ii) The Fixed Charge Coverage Ratio is greater than 0.300
or equal to 2.00 to 1 but less than 2.25 to 1
(iii) The Fixed Charge Coverage Ratio is greater than 0.250
or equal to 2.25 to 1 but less than 3.00 to 1
(iv) The Fixed Charge Coverage Ratio is greater than 0.200
or equal to 3.00 to 1 but less than 3.75 to 1
(v) The Fixed Charge Coverage Ratio is greater than 0.175
or equal to 3.75 to 1 but less than 4.50 to 1
(vi) the Fixed Charge Coverage Ratio is greater than 0.150
or equal to 4.50 to 1
Such fee shall accrue beginning on the Agreement Date and shall be
(i) payable in arrears on each Quarterly Date and on the Maturity Date,
fully earned when due and, subject to SECTION 11.9 hereof, nonrefundable
when paid and (ii) subject to SECTION 11.9 hereof, computed on the basis of
a 360-day year, for the actual number of days elapsed. The commitment fee
shall be subject to reduction or increase, as applicable and as set forth
in the table above, on a quarterly basis according to the performance of
the Borrower as tested by using the Leverage Ratio or the Fixed Charge
Coverage Ratio, as applicable, as of the end of the most recent Fiscal
Quarter (calculated for the twelve Fiscal Periods preceding the date of
determination). Any such increase or reduction in such fee shall be
effective on the date of receipt by the Lenders of the financial statements
required pursuant to SECTION 6.1 or 6.2, as applicable, hereof and the
Compliance Certificate required pursuant to SECTION 6.3 hereof. If such
financial statements and Compliance Certificate are not received by the
Lenders on the date required, the fee payable in respect of the Commitment
shall be determined as if the Leverage Ratio is greater than 3.00 to 1
until such time as such financial statements and Compliance Certificate are
received."
(n) SECTION 2.4 of the Credit Agreement is hereby further amended by
adding a new clause (d) thereto to read as follows:
"(d) ADDITIONAL FEE. Subject to SECTION 11.9 hereof, the Borrower
agrees to pay to the Administrative Lender, for the account of each Lender,
on the first date, if any, that the Utilization Rate exceeds 4/10 during
the period from and including the date on which the Senior Subordinated
Notes are paid in full through and including the date 90 days after the
Senior Subordinated Notes are paid in full, a fee in an amount equal to the
product of (a) 0.25% multiplied by (b) each Lender's pro rata part of the
Commitment."
(o) SECTION 2.16(f)(i) of the Credit Agreement is hereby amended to read
as follows:
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"(f) COMPENSATION FOR STANDBY LETTERS OF CREDIT.
(i) CREDIT FEE. Subject to SECTION 11.9 hereof, the
Borrower shall pay to the Administrative Lender for the account of
each Lender a fee (which shall accrue beginning on the Agreement
Date and shall be payable quarterly in arrears on each Quarterly
Date and on the Maturity Date) on the average daily amount available
for drawing under all outstanding Standby Letters of Credit at the
following per annum percentages, applicable in the following
situations:
Applicability Percentage
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(a) The Leverage Ratio is greater than 3.50 to 1 2.250
(b) The Leverage Ratio is greater than 3.00 to 1 but 1.750
less than or equal to 3.50 to 1
(c) The Leverage Ratio is less than or equal to
3.00 to 1 and
(i) The Fixed Charge Coverage Ratio is less 1.250
than 2.00 to 1
(ii) The Fixed Charge Coverage Ratio is greater 1.000
than or equal to 2.00 to 1 but less than
2.25 to 1
(iii) The Fixed Charge Coverage Ratio is greater 0.875
than or equal to 2.25 to 1 but less than
3.00 to 1
(iv) The Fixed Charge Coverage Ratio is greater 0.750
than or equal to 3.00 to 1 but less than
3.75 to 1
(v) The Fixed Charge Coverage Ratio is greater 0.625
than or equal to 3.75 to 1 but less than
4.50 to 1
(vi) The Fixed Charge Coverage Ratio is grater 0.500
than or equal to 4.50 to 1
The fee payable in respect of the Standby Letters of Credit shall be
subject to reduction or increase, as applicable and as set forth in
the table above, on a quarterly basis according to the performance
of the Borrower as tested by using the Leverage Ratio or the Fixed
Charge Coverage Ratio, as applicable, as of the end of the most
recent Fiscal Quarter (calculated for the twelve Fiscal Periods
preceding the date of determination). Any such increase or
reduction in such fee shall be effective on the date of receipt by
the Lenders of the financial statements required pursuant to
SECTION 6.1 or 6.2, as applicable, hereof and the Compliance
Certificate required pursuant to SECTION 6.3 hereof. If such
financial statements and Compliance Certificate are not received by
the date required, the fee payable in respect of the
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Letters of Credit shall be determined as if the Leverage Ratio is
greater than 3.50 to 1 until such time as such financial
statements and Compliance Certificate are received. In addition,
the fee payable in respect of Letters of Credit shall be increased
above the per annum percentages set forth above by 0.750 on each
Utilization Premium Date. Subject to SECTION 11.9 hereof, such
fee shall be computed on the basis of a 360-day year for the
actual number of days elapsed."
(p) SECTION 3.2 of the Credit Agreement is hereby amended by
(i) deleting "and" after clause (c) thereof, (ii) deleting "." at the end of
clause (d) thereof and inserting "; and" in lieu thereof and (iii) adding the
following new clause (e) thereto to read as follows:
"(e) The Administrative Lender shall have received a duly executed
Borrowing Base Certificate evidencing that, after giving effect to the
proposed Advance or Letter of Credit, the aggregate Advances and Letters of
Credit do not exceed the Borrowing Base."
(q) SECTION 5.9 of the Credit Agreement is hereby amended to read as
follows:
"Section 5.9 USE OF PROCEEDS. The Borrower shall use the proceeds
of Advances for general corporate purposes, including, without limitation,
(i) refinancing all outstanding debt (other than in respect of the Existing
Letters of Credit) under the Existing Credit Agreement, (ii) working
capital advances, (iii) capital expenditures, (iv) acquisitions,
(v) funding reimbursements of letter of credit drawings, and
(vi) repurchasing or redeeming the Senior Subordinated Notes in part or in
full after December 31, 1999."
(r) ARTICLE 5 of the Credit Agreement is hereby amended by adding the
following SECTION 5.12 thereto to read as follows:
"Section 5.12 FURTHER ASSURANCES. At any time or from time to
time upon reasonable request by the Administrative Lender, the Borrower or
any of its Subsidiaries shall execute and deliver such further documents
and do such other acts and things as the Administrative Lender may
reasonably request in order to effect fully the purposes of this Agreement
and the other Loan Documents and to provide for payment of the Obligations
in accordance with the terms of this Agreement and the other Loan
Documents. At the time of delivery of the financial statements set forth
in SECTIONS 6.1 and 6.2 hereof, if the information provided therein has
changed since the last delivery thereof, the Borrower agrees to update and
deliver to the Administrative Agent SCHEDULE 4 hereto (with respect to the
identifies, jurisdictions of organizations and ownership of the Borrower's
Subsidiaries). The Borrower further agrees to update the information on
the Schedules to the Security Agreements promptly upon discovery that the
information provided therein is not complete and correct. The Borrower
shall cause each Restricted Subsidiary (other than CompUSA Xxx.xxx) to
execute and deliver a Subsidiary Guaranty and shall cause each Restricted
Subsidiary (other than CompUSA Xxx.xxx) to execute and deliver a Security
Agreement, together with such board
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resolutions, officer's certificates and opinions of counsel as the
Administrative Lender shall reasonably request related thereto."
(s) ARTICLE 6 of the Credit Agreement is hereby amended by adding the
following SECTION 6.7 thereto to read as follows:
"Section 6.7 COLLATERAL. Within 15 days after the end of any
calendar month in which Advances or Letters of Credit were outstanding on
the last day of such month, a Borrowing Base Certificate, together with an
aging of Accounts in form and substance satisfactory to the Administrative
Lender.
(t) SECTION 7.1 of the Credit Agreement is hereby amended by amending
clause (e) thereto to read as follows:
"(e) Indebtedness of (i) a Restricted Subsidiary to the Borrower,
(ii) a Restricted Subsidiary to a Restricted Subsidiary (other than CompUSA
Xxx.xxx), (iii) the Borrower to a Restricted Subsidiary (other than CompUSA
Xxx.xxx), (iv) of CompUSA Xxx.xxx to one of its subsidiaries, or
(v) indebtedness of subsidiaries of CompUSA Xxx.xxx to CompUSA Xxx.xxx;"
(u) SECTION 7.3 of the Credit Agreement is hereby amended by amending
clause (b) thereto to read as follows:
"(b) Investments in, or transfer of any assets to, (i) CompUSA
Xxx.xxx not to exceed the greater of (A) $60,000,000 in aggregate principal
amount calculated on a net basis (excluding the contribution of assets of
PCs Compleat, Inc. to CompUSA Xxx.xxx to be made on March 28, 1999), or
(B) 15% of Net Worth at any time, and provided that if there are any
amounts outstanding under the intercompany loan made by the Borrower to
CompUSA Xxx.xxx (the "INTERCOMPANY LOAN") and CompUSA Xxx.xxx receives cash
from the issuance of equity or from a contribution from a Person which is
not an Affiliate, CompUSA Xxx.xxx must repay the Intercompany Loan in full
to the Borrower if (a) there are Advances outstanding or (b) if there are
no Advances outstanding and the Borrower has less than $12,000,000 in Cash
and Cash Equivalents, (ii) one or more Subsidiaries that (A)(1) are or
immediately become subject to the provisions hereof, and (2) are or
immediately become party to the Subsidiary Guaranty and the Security
Agreement, (iii) have been formed for the sole purpose of engaging in a
securitization permitted by SECTION 7.4(a)(iii) hereof, or
(iv) Unrestricted Subsidiaries; PROVIDED, HOWEVER, the aggregate amount of
Investments in Unrestricted Subsidiaries pursuant to this clause (iv)
(calculated on a net basis by taking into account any proceeds received by
the Borrower or any Restricted Subsidiary on a liquidation or repayment of
any such Investments) shall not exceed, together with other Investments
pursuant to SECTION 7.3(f) hereof and net Investments in CompUSA Xxx.xxx
pursuant to clause (i) above, 15% of Net Worth at any time;"
-12-
(v) SECTION 7.3 of the Credit Agreement is hereby further amended by
amending clause (f) thereto to read as follows:
"(f) Other Investments (calculated on a net basis by taking into
account any proceeds received by the Borrower or any Restricted Subsidiary
on a liquidation or replacement of any such Investment) not to exceed,
together with Investments in Unrestricted Subsidiaries pursuant to
SECTION 7.3(b)(iv) hereof and net Investments in CompUSA Xxx.xxx pursuant
to SECTION 7.3(b)(i) hereof, 15% of Net Worth at any time; and"
(w) SECTION 7.4(a) of the Credit Agreement is hereby amended by
(a) deleting "and" after clause (v) thereof and (b) adding an new clause (vi)
thereto to read as follows:
"(vi) Permitted Stock Sales;"
(x) SECTION 7.4(a) of the Credit Agreement is hereby further amended by
redesignating clause "(vi)" thereof as clause "(vii)" and amending such clause
to read as follows:
"(vii) any other sale, lease, abandonment, transfer or disposition
in any Fiscal Year of assets (other than Collateral) for full and fair
consideration and which assets do not in aggregate amount exceed 5% of Net
Worth as of the end of the immediately preceding Fiscal Year;"
(y) SECTION 7.4(b) of the Credit Agreement is hereby amended to read as
follows:
"(b) enter into any merger or consolidation (i) unless with
respect to a merger or consolidation, the Borrower shall be the surviving
corporation, unless the merger or consolidation involves a Restricted
Subsidiary (other than CompUSA Xxx.xxx) and the Borrower is not merging or
consolidating with another Person, and either (A) such Restricted
Subsidiary shall be the surviving corporation, (B) the survivor of the
merger becomes a Restricted Subsidiary that becomes a party to the
Subsidiary Guaranty and the Security Agreement, (C) the entity formed in
the consolidation becomes a Restricted Subsidiary that becomes a party to
the Subsidiary Guaranty and the Security Agreement, or (i) the survivor is,
or is properly designated as, an Unrestricted Subsidiary, (ii) if such
transaction is being utilized to circumvent compliance with any term or
provision herein and (iii) unless no Default or Event of Default shall then
be in existence or occur as a result of such transaction; or"
(z) SECTION 7.6 of the Credit Agreement is hereby amended to read as
follows:
"Section 7.6 RESTRICTED PAYMENTS. The Borrower shall not, and shall
not permit any Restricted Subsidiary to, directly or indirectly declare,
pay or make any Restricted Payments; provided, however, (a) any Restricted
Subsidiary may declare and pay Dividends to the Borrower or another
Restricted Subsidiary (other than CompUSA Xxx.xxx), (b) the
-13-
Borrower may make loans to directors, officers and employees of Borrower
and its Subsidiaries during any Fiscal Year (calculated net of loan
repayments), together with the Guaranty of Indebtedness of directors,
officers and employees permitted pursuant to SECTION 7.5 hereof during
such Fiscal Year, in an aggregate amount not to exceed $1,000,000, (c)
the Borrower may defease, redeem, repurchase or prepay the Senior
Subordinated Notes in part or in full (but not with proceeds of Advances
prior to January 1, 2000), and (d) provided that the Leverage Ratio was
less than 4.00 to 1 and the Fixed Charge Coverage Ratio was greater than
1.50 to 1 for the two consecutive Fiscal Quarters immediately preceding
any proposed Dividend or Treasury Stock Purchase, the Borrower may pay
Dividends and make Treasury Stock Purchases (net of cash proceeds
received by the Borrower upon the reissuance of any treasury stock) of
its shares of capital stock in an aggregate amount (excluding the amount
of any Treasury Stock Purchases during the Special Repurchase Period)
not to exceed the sum of (i) $50,000,000, plus (ii) 50% of cumulative
Net Income for the period from, but not including, September 27, 1997
through the date of the proposed payment or purchase (but excluding from
the calculation of such cumulative Net Income the effect, if any, of any
Fiscal Quarter (or portion of a Fiscal Quarter not then ended) of the
Borrower for which Net Income was a negative number); provided, however,
the Borrower shall not pay or make any such Restricted Payments set
forth in clause (b), (c) or (d) above unless there shall exist no
Default prior to or after giving effect to any such proposed Restricted
Payment."
(aa) SECTION 7.9 of the Credit Agreement is hereby amended to read as
follows:
"Section 7.9 LEVERAGE RATIO. At the end of each Fiscal Quarter
indicated below, the Borrower shall not permit the Leverage Ratio to be
greater than the ratio set forth below opposite such Fiscal Quarter.
Fiscal Quarter Ratio
-------------- -----
Third Fiscal Quarter of Fiscal Year 1999 4.85 to 1
Fourth Fiscal Quarter of Fiscal Year 1999 4.55 to 1
First Fiscal Quarter of Fiscal Year 2000 5.25 to 1
Second Fiscal Quarter of Fiscal Year 2000 5.75 to 1
Third Fiscal Quarter of Fiscal Year 2000 5.25 to 1
Fourth Fiscal Quarter of Fiscal Year 2000 5.00 to 1
First Fiscal Quarter of Fiscal Year 2001 4.40 to 1
Second Fiscal Quarter of Fiscal Year 2001 4.10 to 1
Third Fiscal quarter of Fiscal Year 2001 4.00 to 1"
-14-
(ab) SECTION 7.10 of the Credit Agreement is hereby amended to read as
follows:
"Section 7.10 FIXED CHARGE COVERAGE RATIO. The Borrower shall
not permit the Fixed Charged Coverage Ratio to be less than the ratio set
forth below opposite such Fiscal Quarter:
Fiscal Quarter Ratio
-------------- -----
Third Fiscal Quarter of Fiscal Year 1999 1.10 to 1
Fourth Fiscal Quarter of Fiscal Year 1999 1.10 to 1
First Fiscal Quarter of Fiscal Year 2000 1.20 to 1
Second Fiscal Quarter of Fiscal Year 2000 1.00 to 1
Third Fiscal Quarter of Fiscal Year 2000 1.20 to 1
Fourth Fiscal Quarter of Fiscal Year 2000 1.25 to 1
Each Fiscal Quarter thereafter 1.50 to 1"
(ac) SECTION 7.11 of the Credit Agreement is hereby amended to read as
follows:
"Section 7.11 NET WORTH. The Borrower shall not permit the Net
Worth to be less than an amount equal to the sum of (i) $390,000,000, plus
(ii) 50% of cumulative Net Income for the period from, but not including,
March 27, 1999 through the date of calculation (but excluding from the
calculation of such cumulative Net Income the effect, if any, of any Fiscal
Quarter (or portion of a Fiscal Quarter not then ended) of the Borrower for
which Net Income was a negative number), plus (iii) an amount equal to 75%
of the net worth of any Person that becomes a Subsidiary of the Borrower or
is merged into or consolidated with the Borrower or any Subsidiary of the
Borrower or substantially all of the assets of which are acquired by the
Borrower or any Subsidiary of the Borrower to the extent the purchase price
paid therefor if paid in equity securities of the Borrower or any of its
Subsidiaries, plus (iv) 75% of the Net Cash Proceeds (but without
duplication to the extent that such Net Cash Proceeds are included in
determining Net Income and accounted for in clause (ii) above) of any
offerings of capital stock or other equity interests of the Borrower or any
of its Subsidiaries or pursuant to the conversion or exchange of any
convertible Subordinated Debt or redeemable preferred stock into capital
stock or other equity interests of the Borrower or any of its Subsidiaries
since March 27, 1999."
(ad) SECTION 7.15 of the Credit Agreement is hereby amended to read as
follows:
"Section 7.15 ACQUISITIONS. The Borrower shall not, and shall not
permit any Restricted Subsidiary to, make any Acquisition; provided,
however, if immediately prior to
-15-
and after giving effect to the proposed Acquisition there shall not
exist a Default or Event of Default, the Borrower or any Restricted
Subsidiary may make an Acquisition so long as (i) such Acquisition shall
not be opposed by the board of the directors of the Person being
acquired, (ii) the Administrative Lender shall have received written
notice of such Acquisition at least 15 calendar days prior to the date
of consummation of such Acquisition, together with a Compliance
Certificate setting forth the covenant calculations after giving effect
to the proposed Acquisition, (iii) the assets, property or business
acquired shall be within the description contained in SECTION 4.1(d)
hereof, (iv) if the Acquisition results in a new Restricted Subsidiary,
(A) such Subsidiary shall execute a Subsidiary Guaranty and a Security
Agreement and (B) the Administrative Lender receives within five (5)
calendar days after the consummation of such Acquisition such board
resolutions, officer's certificates and opinions of counsel as the
Administrative Lender shall reasonably request in connection with such
Acquisition, and (v)(A) the Acquisition Consideration for such
Acquisition consists entirely of Stock Acquisition Consideration or (B)
if the Acquisition Consideration for such Acquisition includes Non-Stock
Acquisition Consideration, the Leverage Ratio was less than 4.00 to 1
and the Fixed Charge Coverage Ratio was greater than 1.50 to 1 for the
two consecutive Fiscal Quarters immediately preceding such proposed
Acquisition."
(ae) ARTICLE 7 of the Credit Agreement is hereby amended by adding a new
SECTION 7.17 thereto to read as follows:
"Section 7.17 CAPITAL EXPENDITURES. The Borrower shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly incur
Capital Expenditures in an aggregate amount in excess of (a) $131,000,000
during Fiscal Year 1999, (b) $95,000,000 during Fiscal Year 2000, and
(c) $42,000,000 during Fiscal Year 2001; PROVIDED, HOWEVER, that the
Borrower and the Restricted Subsidiaries may carry forward the amount of
any Capital Expenditures permitted to be made in any Fiscal Year but not
made in such Fiscal Year to the following Fiscal Year, and, if such
carry-forward is made, Capital Expenditures made in such following Fiscal
Year shall be applied first against amounts for such following Fiscal Year
and then against amounts so carried forward from the previous Fiscal Year,
except that no amount of Capital Expenditures permitted to be carried
forward pursuant to this PROVISO may be carried forward more than one
Fiscal Year."
(af) ARTICLE 7 of the Credit Agreement is hereby further amended by
adding a new SECTION 7.18 thereto to read as follows:
"Section 7.18 BORROWING BASE. The Borrower shall not permit the
sum of the aggregate outstanding Advances and Reimbursement Obligations to
exceed the Borrowing Base at any time."
(ag) SECTION 8.1 of the Credit Agreement is hereby amended by
(i) deleting "or" after clause (m) thereof, (ii) deleting "." after the end of
clause (n) thereof and adding "; or" in lieu thereof and (iii) adding the
following new clause (o) thereto to read as follows:
-16-
"(o) Any Collateral Document shall for any reason cease to create
a valid and perfected first priority Lien in any Collateral subject
thereto, other than as expressly provided or permitted in such Collateral
Document or in this Agreement."
(ah) SECTION 11.11 of the Credit Agreement is hereby amended by
(i) deleting ";" at the end of subclause (vii) of clause (a) thereof and
inserting "," in lieu thereof and (ii) adding a new subclause (viii) to
clause (a) thereof to read as follows:
"(viii) amend the definition of Borrowing Base or Eligible
Receivables or amend SECTION 7.18;"
(ai) EXHIBIT C to the Credit Agreement, the Compliance Certificate, is
hereby amended to be in the form of EXHIBIT C to this Third Amendment.
(aj) EXHIBIT F to the Credit Agreement, the Security Agreement, is hereby
added to the Credit Agreement, to be in the form of EXHIBIT F to this Third
Amendment.
(ak) EXHIBIT G to the Credit Agreement, the Borrowing Base Certificate,
is hereby amended to be in the form of EXHIBIT G to this Third Amendment.
2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its
execution and delivery hereof, the Borrower represents and warrants that, as of
the date hereof and after giving effect to the amendments contemplated by the
foregoing Section 1:
(a) the representations and warranties contained in the Credit Agreement
and the other Loan Documents are true and correct on and as of the date hereof
as made on and as of such date;
(b) no event has occurred and is continuing which constitutes a Default
or an Event of Default;
(c) Borrower has full power and authority to execute and deliver this
Third Amendment, the Collateral Documents, the $49,066,666.68 Promissory Note
payable to the order of NationsBank, N.A., the $23,000,000 Promissory Note
payable to the order of Xxxxx Fargo Bank (Texas), N.A., the $22,233,333.33
Promissory Note payable to the order of Hibernia National Bank, the
$22,233,333.33 Promissory Note payable to the order of Credit Lyonnais New York
Branch, the $22,233,333.33 Promissory Note payable to the order of Credit
Suisse First Boston, the $22,233,333.33 Promissory Note payable to the order of
Fleet National Bank, the $11,500,000 Promissory Note payable to the order of
First Union National Bank, the $11,500,000 Promissory Note payable to the order
of Fifth Third Bank, the $11,500,000 Promissory Note payable to the order of
The Bank of Nova Scotia, the $11,500,000 Promissory Note payable to the order
of Chase Bank of Texas, National Association, the $11,500,000 Promissory Note
payable to the order of The Bank of New York, and the $11,500,000 Promissory
Note payable to the order of Bank One, Texas,
-17-
N.A. (collectively, the "Replacement Notes", a draft form of which is
attached to this Third Amendment as EXHIBIT A), each Subsidiary executing a
Collateral Document has full power and authority to execute and deliver such
Collateral Document, and the Credit Agreement, as amended hereby, the Third
Amendment, the Replacement Notes and the Collateral Documents, constitute the
legal, valid and binding obligations of the Borrower and each Subsidiary, as
applicable, enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable debtor relief laws and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and except as rights to indemnity may be
limited by federal or state securities laws;
(d) neither the execution, delivery and performance of this Third
Amendment, the Replacement Notes, the Collateral Documents or the Credit
Agreement, as amended hereby, nor the consummation of any transactions
contemplated herein or therein, will conflict with any Law, the articles of
incorporation, bylaws or other governance document of the Borrower or any of
its Subsidiaries, or any indenture, agreement or other instrument to which
the Borrower or any of its Subsidiaries or any of their respective property
is subject; and
(e) no authorization, approval, consent, or other action by, notice
to, or filing with, any governmental authority or other Person, is required
for the execution, delivery or performance by the Borrower or any of its
Subsidiaries of this Third Amendment, the Replacement Notes or the Collateral
Documents, as applicable, or the acknowledgment of this Third Amendment by
any Guarantor.
3. CONDITIONS OF EFFECTIVENESS. This Third Amendment shall be
effective as of March 27, 1999 (provided that the reduction of the Commitment
set forth in Section 1(b) of this Third Amendment shall be effective as of
May 5, 1999), subject to the following:
(a) the Administrative Lender shall have received counterparts of this
Third Amendment executed by the Determining Lenders;
(b) the Administrative Lender shall have received counterparts of this
Third Amendment executed by the Borrower and acknowledged by each Guarantor;
(c) the Administrative Lender shall have received from the Borrower,
for the account of each Lender delivering an executed signature page to this
Third Amendment to the Administrative Lender by 5:00 p.m., Dallas time, May
4, 1999, an amount equal to the product of (A) 0.25% multiplied by (B) each
Lender's pro rata part of the Commitment;
(d) the Administrative Lender shall have received for each Lender such
Lender's duly executed Replacement Note;
(e) the Administrative Lender shall have received the duly executed
Security Agreement, together with related UCC financing statements, stock
certificates and stock powers;
-18-
(f) the Administrative Lender shall have received copies of UCC
searches satisfactory to it;
(g) the Administrative Lender shall have received a certified
resolution of the Board of Directors of the Borrower and each Subsidiary
executing a Collateral Document authorizing the execution, delivery and
performance of this Third Amendment, the Collateral Documents and the
Replacement Notes, as applicable;
(h) the Administrative Lender shall have received an opinion of
counsel to the Borrower, in form and substance satisfactory to the
Administrative Lender, with respect to the matters set forth in Section 2(c),
(d) and (e) of this Third Amendment; and
(i) the Administrative Lender shall have received, in form and
substance satisfactory to the Administrative Lender and its counsel, such
other documents, certificates and instruments as the Administrative Lender
shall require.
4. GUARANTOR ACKNOWLEDGMENT. By signing below, each of the
Guarantors (i) acknowledges, consents and agrees to the execution and
delivery of this Third Amendment, (ii) acknowledges and agrees that its
obligations in respect of its Subsidiary Guaranty are not released,
diminished, waived, modified, impaired or affected in any manner by this
Third Amendment or any of the provisions contemplated herein, (iii) ratifies
and confirms its obligations under its Subsidiary Guaranty, and (iv)
acknowledges and agrees that it has no claims or offsets against, or defenses
or counterclaims to, its Subsidiary Guaranty.
5. REFERENCE TO THE CREDIT AGREEMENT.
(a) Upon the effectiveness of this Third Amendment, each reference in
the Credit Agreement to "this Agreement", "hereunder", or words of like
import shall mean and be a reference to the Credit Agreement, as amended by
this Third Amendment.
(b) The Credit Agreement, as amended by this Third Amendment, and all
other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed.
6. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand
all costs and expenses of each Lender in connection with the preparation,
reproduction, execution and delivery of this Third Amendment and the other
instruments and documents to be delivered hereunder (including the reasonable
fees and out-of-pocket expenses of counsel for each Lender with respect
thereto and with respect to advising each Lender as to its rights and
responsibilities under the Credit Agreement, as amended by this Third
Amendment).
7. NO OBLIGATIONS OF COMPUSA XXX.XXX. To the extent that CompUSA
Xxx.xxx assumed obligations of PCs Compleat, Inc. ("COMPLEAT"), Comp USA Xxx.xxx
shall not
-19-
be deemed to have assumed the obligations of Compleat under the Subsidiary
Guaranty. Compleat is to be merged into the Borrower as of March 29, 1999.
8. EXECUTION IN COUNTERPARTS. This Third Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each 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.
9. GOVERNING LAW: BINDING EFFECT. This Third Amendment shall be
governed by and construed in accordance with the laws of the State of Texas
and shall be binding upon the Borrower and each Lender and their respective
successors and assigns.
10. HEADINGS. Section headings in this Third Amendment are included
herein for convenience of reference only and shall not constitute a part of
this Third Amendment for any other purpose.
11. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS THIRD
AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
-------------------------------------------------------------------------------
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REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-20-
IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment
as the date first above written.
COMPUSA INC.
By: s/Xxxxx X. Xxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxx
Executive Vice President
-21-
NATIONSBANK, N.A., as Administrative Lender
and as a Lender
By: s/Xxxxxxxxx X. Xxxx
--------------------------------------
Xxxxxxxxx X. Xxxx
Vice President
-22-
XXXXX FARGO BANK (TEXAS), N.A., as a Co-Agent
and as a Lender
By:
--------------------------------------
Name:
--------------------------------
Title:
--------------------------------
-23-
HIBERNIA NATIONAL BANK, as a Co-Agent and as
a Lender
By: s/Xxxxxx Xxxxxxx
--------------------------------------
Xxxxxx Xxxxxxx
Portfolio Manager
-24-
CREDIT LYONNAIS NEW YORK BRANCH, as a
Co-Agent and as a Lender
By: s/Xxxxxx Xxxxxxxxx
--------------------------------------
Xxxxxx Xxxxxxxxx
Senior Vice President
-25-
CREDIT SUISSE FIRST BOSTON, as a Co-Agent and
as a Lender
By: s/Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx
Vice President
By: s/Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx
Managing Director
-26-
FLEET NATIONAL BANK, as a Co-Agent and as a
Lender
By:
--------------------------------------
Name:
--------------------------------
Title:
--------------------------------
-27-
FIRST UNION NATIONAL BANK
By: s/Xxxxxx X. Southern
--------------------------------------
Xxxxxx X. Southern
Vice President
-28-
FIFTH THIRD BANK
By: s/Xxxx Xxxx
--------------------------------------
Xxxx Xxxx
National Accounts Officer
-00-
XXX XXXX XX XXXX XXXXXX
By: s/F.C.H. Xxxxx
--------------------------------------
F.C.H. Xxxxx
Senior Manager
Loan Operations
-00-
XXXXX XXXX XX XXXXX NATIONAL ASSOCIATION
By: s/Xxxx X. Xxxxxxx
--------------------------------------
Xxxx X. Xxxxxxx
Vice President
-00-
XXX XXXX XX XXX XXXX
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
-00-
XXXX XXX, XXXXX, N.A.
By: s/Xxxxxxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxxxxxx X. Xxxxxxxxx
Officer
-33-
ACKNOWLEDGED AND AGREED:
COMPUSA HOLDINGS II INC.
By: s/Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx
Executive Vice President
COMPUSA HOLDINGS I INC.
By: s/Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx
Executive Vice President
COMPTEAM INC.
By: s/Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx
Executive Vice President
COMPUSA MANAGEMENT COMPANY
By: s/Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx
Executive Vice President
-34-
COMPUSA STORES L.P.
By: COMPUSA INC., its general partner
By: s/Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx
Executive Vice President
COMPUSA HOLDINGS COMPANY
By: s/Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx
Executive Vice President
COMPUTER CITY, INC.
By: s/Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx
Executive Vice President
-00-
XXXXXXX X
XXXXXXXXXX XXXX
Xxxxxx, Xxxxx $_____________ May ___, 1999
CompUSA Inc., a Delaware corporation (the "Borrower"), for value
received, promises to pay to the order of ___________________________________
("Lender"), at the principal office of NationsBank, N.A., in lawful money of
the United States of America, the principal sum of _________________________
__________ DOLLARS ($___________ ), or such lesser sum as shall be due and
payable from time to time hereunder, as hereinafter provided. All terms used
but not defined herein shall have the meanings set forth in the Credit
Agreement described below.
Principal of and interest on the unpaid principal balance of Advances
under this Note from time to time outstanding shall be due and payable as set
forth in the Credit Agreement.
This Note is issued pursuant to and evidences Advances under a Second
Amended and Restated Credit Agreement, dated as of March 12, 1998, among the
Borrower, NationsBank, N.A. (successor by merger to NationsBank of Texas,
N.A.), as Administrative Lender, certain Co-Agents and the lenders parties
thereto (as amended, restated, supplemented, renewed, extended or otherwise
modified from time to time, "Credit Agreement"), to which reference is made
for a statement of the rights and obligations of the Lender and the duties
and obligations of the Borrower in relation thereto; but neither this
reference to the Credit Agreement nor any provision thereof shall affect or
impair the absolute and unconditional obligation of the Borrower to pay the
principal sum of and interest on this Note when due. This Note is a
replacement and modification (but not a novation of the debt evidenced
thereby) of that certain Promissory Note, dated as of ____________, 199___,
payable by the Borrower to the order of the Lender in the principal amount of
$___________.
The Borrower and all endorsers, sureties and guarantors of this Note
(without waiving any notice that any Lender is specifically required to give
pursuant to SECTION 8.1 of the Credit Agreement) hereby severally waive
demand, presentment for payment, protest, notice of protest, notice of
intention to accelerate the maturity of this Note, notice of acceleration of
this Note, diligence in collecting, the bringing of any suit against any
party and any notice of or defense on account of any extensions, renewals,
partial payments or changes in any manner of or in this Note or in any of its
terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
CompUSA Inc.
By:
----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
-2-
EXHIBIT C
COMPLIANCE CERTIFICATE
To: NationsBank, N.A.
From: CompUSA Inc.
Date: _________________, ______
Re: Second Amended and Restated Credit Agreement, dated as of March 12,
1998 ("Credit Agreement"), among CompUSA Inc. ("Borrower"), certain
Lenders, certain Co-Agents and NationsBank, N.A. as administrative
lender
This Compliance Certificate is delivered pursuant to Section 6.3 of the
Credit Agreement. All capitalized terms used herein and defined in the
Credit Agreement shall be used herein as so defined. For purposes hereof,
section references herein related to sections of the Credit Agreement, and
bracketed amounts or ratios refer to the maximum or minimum amounts or ratios
required under the relevant sections of the Credit Agreement.
1. FIXED CHARGE COVERAGE RATIO (calculated for the 12 Fiscal Periods
preceding the date of determination)
a. EBITDAR
(1) Pretax Net Income (excluding therefrom, to the extent $_____
included in determining Pretax Net Income, any items
of extraordinary gain, including net gains on the sale
of assets other than asset sales in the ordinary course
of business, and adding thereto, to the extent included
in determining Pretax Net Income, any items of
extraordinary loss, including net losses on the sale of
assets other than asset sales in the ordinary course of
business)
(2) Interest expense (including but not limited to interest $_____
expense pursuant to Capital Lease Obligations)
(3) Depreciation $_____
(4) Amortization $_____
(5) Lease expense pursuant to Operating Leases $_____
(6) Approved Restructuring Charges $_____
(7) EBITDAR [(1) + (2) + (3) + (4) + (5) + (6)] $_____
b. Fixed Charges, calculated for the Borrower and its Subsidiaries on a
consolidated basis
(1) Interest expense (including but not limited to $_____
interest expense pursuant to Capitalized Lease
Obligations)
(2) Lease expense under Operating Leases $_____
(3) GAAP interest expense related to Securitizations $_____
(4) Dividends and Treasury Stock Purchases $_____
(5) Fixed Charges [(1) + (2) + (3) + (4)] $_____
c. Fixed Charge Coverage Ratio [a to b] ___ to 1
2. COVENANT CALCULATIONS. [To be completed quarterly] Demonstration
of compliance with certain covenants contained in Article 7 of the Credit
Agreement
a. SECTION 7.1(i) Indebtedness under the Senior
Subordinated Notes and other Subordinated Debt
(1) Maximum in aggregate principal amount outstanding
at any time $260,000,000
(2) Actual $___________
(3) Difference [(1) - (2)] $___________
b. SECTION 7.1(j) Other Indebtedness [not otherwise
permitted pursuant to Section 7.1(a) through (i)]
(1) Maximum in aggregate principal amount outstanding
at any time $300,000,000
(2) Actual $___________
(3) Difference [(1) - (2)] $___________
c. SECTION 7.1(j)(A) Senior Debt
(1) Maximum in aggregate principal amount $100,000,000
(2) Actual $___________
(3) Difference [(1) - (2)] $___________
d. SECTION 7.1(j)(B) Senior Debt with an original maturity
date earlier than 180 days after the Maturity Date
(1) Maximum in aggregate principal amount $ 50,000,000
(2) Actual $___________
(3) Difference [(1) - (2)] $___________
2
e. SECTION 7.3(b)(i) Investments in CompUSA Xxx.xxx,
SECTION 7.3(b)(iv) Investments in Unrestricted
Subsidiaries and
SECTION 7.3(f) Other Investments
(1) Net Worth $___________
(2) Maximum in aggregate amount at any time (15%
of Net Worth) $___________
(3) Net Investments in CompUSA Xxx.xxx $___________
(4) Actual Investments in Unrestricted Subsidiaries $___________
(5) Actual other Investments under Section 7.3(f) $___________
(6) Total [(3) + (4) + (5)] $___________
(7) Difference [(2) - (6)] $___________
f. SECTION 7.4(a)(iii) Sales or pledges of Accounts or
interests in Accounts pursuant to Securitizations
(1) Maximum in aggregate amount outstanding at any
time $200,000,000
(2) Actual $___________
(3) Difference [(1) - (2)] $___________
g. SECTION 7.4(a)(vi) Any other sale, lease,
abandonment, transfer or disposition in any Fiscal
Year of assets (other than Collateral) for full and
fair consideration
(1) Maximum in aggregate amount: 5% of Net Worth as of
the immediately preceding Fiscal Year $___________
(2) Actual $___________
(3) Difference [(1) - (2)] $___________
h. SECTION 7.5(d) Guaranty of Indebtedness of directors,
officers and employees of Borrower and its Subsidiaries
(1) Maximum during any Fiscal Year in aggregate amount,
when combined with the loans to officers and employees
permitted pursuant to Section 7.6 of the Credit
Agreement (calculated net of loan repayment) $1,000,000
(2) Actual $___________
(3) Difference [(1) - (2)] $___________
3
i. SECTION 7.6(b) Loans to directors, officers and employees
of Borrower and its Subsidiaries (calculated net of
loan repayments)
(1) Maximum during any Fiscal Year in aggregate amount,
when combined with Guaranty of Indebtedness of
directors, officers and employees permitted pursuant
to Section 7.5 of the Credit Agreement $1,000,000
(2) Actual $___________
(3) Difference [(1) - (2)] $___________
j. SECTION 7.6(d) Dividends paid and Treasury Stock Purchases
(net of cash proceeds received by the Borrower upon the
reissuance of any treasury stock) other than during
Special Repurchase Period
(1) Maximum in aggregate amount
(a) 50% of cumulative Net Income for the period $___________
from, but not including, September 27, 1997
through the date of the proposed payment or
purchase (but excluding from the calculation
of such cumulative Net Income the effect, if
any, of any Fiscal Quarter or portion of a
Fiscal Quarter not then ended for which Net
Income was a negative number)
(b) Maximum [(a) + $50,000,000] $___________
(2) Actual (net of Reissuances) $___________
(3) Difference [(1) - (2)] $___________
k. SECTION 7.9 Leverage Ratio (for the preceding 12
Fiscal Periods)
(1) Maximum
(a) For the third Fiscal Quarter of Fiscal Year 1999 4.85 to 1
(b) For the fourth Fiscal Quarter of Fiscal Year 1999 4.55 to 1
(c) For the first Fiscal Quarter of Fiscal Year 2000 5.25 to 1
(d) For the second Fiscal Quarter of Fiscal Year 2000 5.75 to 1
(e) For the third Fiscal Quarter of Fiscal Year 2000 5.25 to 1
(f) For the fourth Fiscal Quarter of Fiscal Year 2000 5.00 to 1
(g) For the first Fiscal Quarter of Fiscal Year 2001 4.40 to 1
(h) For the second Fiscal Quarter of Fiscal Year 2001 4.10 to 1
(i) For the third fiscal Quarter of Fiscal Year 2001 4.00 to 1
4
(2) Actual
(a) Total Funded Debt as of the date of
determination, calculated for the Borrower
and its Subsidiaries on a consolidated basis
i) Debt for Borrowed Money $____
ii) Capitalized Lease Obligations $____
iii) Total Funded Debt [i) + ii)] $___________
(b) Lease expense pursuant to Operating Leases
for the immediately preceding twelve Fiscal
Periods (multiplied by 6) $___________
(c) EBITDAR (see 1.a.(6) above) $___________
(d) Leverage Ratio [(a) + (b)] to (c) _______ to 1
l. SECTION 7.10 Fixed Charge Coverage Ratio (calculated
for the 12 Fiscal Periods preceding the date of
determination)
(1) Minimum
(a) For the third Fiscal Quarter of Fiscal Year 1999 1.10 to 1
(b) For the fourth Fiscal Quarter of Fiscal Year 1999 1.10 to 1
(c) For the first Fiscal Quarter of Fiscal Year 2000 1.20 to 1
(d) For the second Fiscal Quarter of Fiscal Year 2000 1.00 to 1
(e) For the third Fiscal Quarter of Fiscal Year 2000 1.20 to 1
(f) For the fourth Fiscal Quarter of Fiscal Year 2000 1.25 to 1
(g) Each Fiscal Quarter thereafter 1.50 to 1
(2) Actual (see 1.c. above) _______ to 1
m. SECTION 7.11 Net Worth
(1) Minimum
(a) 50% of cumulative Net Income from, but not $____
including March 27, 1999 through the date
of calculation (excluding the effect, if
any, of any fiscal quarter or portion of
fiscal quarter not then ended for which
Net Income was a negative number)
5
(b) 75% of net worth of Person that becomes a $____
Subsidiary of the Borrower or is merged
into or consolidated with the Borrower or
any Subsidiary of the Borrower or
substantially all of the assets of which
are acquired by the Borrower or any
Subsidiary of the Borrower to the extent
the purchase price paid therefor is paid in
equity securities (including the reissuance
of treasury stock during the Special
Repurchase Period)
(c) 75% of Net Cash Proceeds (but without $____
duplication to the extent that such Net
Cash Proceeds are included within Net Income
and accounted for in (a) above) of any
offerings of capital stock or other equity
interests of the Borrower or any of its
Subsidiaries (including the reissuance of
treasury stock during the Special Repurchase
Period) or pursuant to the conversion or
exchange of any convertible Subordinated Debt
or redeemable preferred stock into capital
stock or other equity interests of the Borrower
or any of its Subsidiaries since Xxxxx 00, 0000
(x) Minimum Tangible Net Worth [(a) + (b) + (c) + $___________
$390,000,000]
(2) Actual
(a) Capital stock taken at stated or par value $____
(b) Paid in capital $____
(c) Retained earnings $____
(d) Approved Restructuring Charges $____
(e) Treasury stock (net of Reissuances) $____
(f) Net Worth [(a) + (b) + (c) + (d) - (e) $____
(3) Difference [(2) - (1)] $___________
n. SECTION 7.16 Unrestricted Subsidiaries
(1) Maximum aggregate amount of EBITDAR of all
Unrestricted Subsidiaries during any period of
twelve consecutive Fiscal Periods: 10% of
EBITDAR of Borrower and all of its Subsidiaries
during any such period $___________
(2) Actual $___________
(3) Difference [(1) - (2)] $___________
6
(4) Maximum aggregate amount of assets of all
Unrestricted Subsidiaries as of the end of any
Fiscal Quarter: 10% of assets of Borrower and
all of its Subsidiaries $___________
(5) Actual $___________
(6) Difference [(1) - (2)] $___________
o. SECTION 7.17 Capital Expenditures
(1) (a) Maximum for Fiscal Year 1999 $131,000,000
(b) Actual for Fiscal Year 1999 $___________
(2) (a) Maximum for Fiscal Year 2000 $95,000,000
(plus any
carry-over
from Fiscal
Year 1999)
(b) Actual for Fiscal Year 2000 $___________
(3) (a) Maximum for Fiscal Year 2001 $42,000,000
(plus any
carry-over
from Fiscal
Year 2000)
(b) Actual for Fiscal Year 2001 $___________
3. Approved Restructuring Charges
(1) (a) Maximum cash charges $5,000,000
(b) Actual cash charges through calculation date $___________
(2) (a) Maximum non-cash charges $20,000,000
(b) Actual non-cash charges through calculation date $___________
4. COMPLIANCE CERTIFICATE. [To be completed
quarterly] The undersigned hereby certifies to you
as follows:
(a) I am the duly elected, qualified and acting _______________________ of
Borrower.
(b) I have reviewed the provisions of the Credit Agreement and the other
Loan Documents, and a review of the activities of Borrower during the
period from ____________, 19___ to ____________, 19___ (the "Reporting
Period") has been made under my supervision with a view toward
determining whether, during the Reporting Period, Borrower has kept,
observed, performed and fulfilled all its obligations under the Credit
Agreement and such Loan Documents.
7
(c) The representations and warranties made in the Loan Documents are true
and correct in all material respects as of the date hereof as though
made at and as of the date hereof, except for such representations and
warranties which relate to a particular date or which fail to be true
and correct as a result of events or occurrences permitted under the
Loan Documents, and no Default or Event of Default has occurred or is
continuing or is imminent.
This Compliance Certificate is executed and delivered on the _____ day
of _____________, 19___.
____________________________
Name:_______________________
Title:______________________
8
EXHIBIT F
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SECURITY AGREEMENT
Among
The Grantors Named Herein
as Grantors
and
NATIONSBANK, N.A.,
as Administrative Lender
Dated Effective as of March 27, 1999
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TABLE OF CONTENTS
PAGE
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ARTICLE 1
GRANT
Section 1.1 ASSIGNMENT AND GRANT OF SECURITY . . . . . . . . . . . . . 2
Section 1.2 DESCRIPTION OF OBLIGATIONS . . . . . . . . . . . . . . . . 3
Section 1.3 GRANTOR REMAINS LIABLE . . . . . . . . . . . . . . . . . . 4
Section 1.4 DELIVERY OF INSTRUMENTS AND SECURITIES COLLATERAL. . . . . 4
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 4
ARTICLE 3
COVENANTS
Section 3.1 FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 PLACE OF PERFECTION; RECORDS; COLLECTION OF RECEIVABLES,
CHATTEL PAPER AND INSTRUMENTS . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.3 TRANSFERS AND OTHER LIENS. . . . . . . . . . . . . . . . . 8
Section 3.4 RIGHTS TO DIVIDENDS AND DISTRIBUTIONS. . . . . . . . . . . 8
Section 3.5 RIGHT OF THE ADMINISTRATIVE LENDER TO NOTIFY ISSUERS . . . 9
Section 3.6 THE ADMINISTRATIVE LENDER APPOINTED ATTORNEY-IN-FACT . . . 9
ARTICLE 4
RIGHTS AND POWERS OF THE ADMINISTRATIVE LENDER
Section 4.1 THE ADMINISTRATIVE LENDER MAY PERFORM. . . . . . . . . . .10
Section 4.2 THE ADMINISTRATIVE LENDER'S DUTIES . . . . . . . . . . . .10
Section 4.3 REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . .10
Section 4.4 INDEMNITY AND EXPENSES . . . . . . . . . . . . . . . . . .13
ARTICLE 5
MISCELLANEOUS
Section 5.1 CUMULATIVE RIGHTS. . . . . . . . . . . . . . . . . . . . .13
Section 5.2 MODIFICATIONS; AMENDMENTS; ETC.. . . . . . . . . . . . . .13
Section 5.3 CONTINUING SECURITY INTEREST . . . . . . . . . . . . . . .13
Section 5.4 GOVERNING LAW; TERMS . . . . . . . . . . . . . . . . . . .14
Section 5.5 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . .14
Section 5.6 THE ADMINISTRATIVE LENDER'S RIGHT TO USE AGENTS. . . . . .14
Section 5.7 WAIVERS OF RIGHTS INHIBITING ENFORCEMENT . . . . . . . . .14
Section 5.8 NOTICES AND DELIVERIES . . . . . . . . . . . . . . . . . .14
Section 5.9 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . .14
Section 5.10 LOAN DOCUMENT. . . . . . . . . . . . . . . . . . . . . . .14
Section 5.11 CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. . . . . . .15
Section 5.12 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . .15
Section 5.13 OBLIGATIONS NOT AFFECTED . . . . . . . . . . . . . . . . .15
Section 5.14 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . .15
Section 5.15 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . .16
Section 5.16 CONFLICTS. . . . . . . . . . . . . . . . . . . . . . . . .16
-ii-
SCHEDULES:
Schedule 0 Xxxxx Xxxxx xx Xxxxxxxx, Xxxxx Executive Office and Location of
Books and Records
Schedule 2 Trade Names
Schedule 3 Restricted Accounts
Schedule 4 Securities Collateral
EXHIBITS:
Exhibit A Instructions for Registration of Pledge of Uncertificated
Securities Collateral
Exhibit B Initial Transaction Statement
Exhibit C Securities Collateral Stop Transfer Letter
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SECURITY AGREEMENT
SECURITY AGREEMENT (this "AGREEMENT"), dated effective as of March 27,
1999, made among each of the signatories party hereto (collectively, the
"GRANTORS" and each a "GRANTOR"), and NationsBank, N.A., a national banking
association, in its capacity as Administrative Lender (the "ADMINISTRATIVE
LENDER") for itself and each lender a party to the Credit Agreement defined
below (the "LENDERS") and each Lender Affiliate (as defined in the Credit
Agreement) (each singularly, a "SECURED PARTY", and collectively, the
"SECURED PARTIES").
BACKGROUND
(1) CompUSA Inc., a Delaware corporation (the "BORROWER"), the
Administrative Lender, the Co-Agents (as defined in the Credit Agreement),
and the Lenders entered into that certain Second Amended and Restated Credit
Agreement, dated as of March 12, 1998, as amended by that certain First
Amendment to Second Amended and Restated Credit Agreement, dated as of June
16, 1998, and that certain Second Amendment to Second Amended and Restated
Credit Agreement, dated as of August 31, 1998 (said Second Amended and
Restated Credit Agreement, as amended, the "CREDIT AGREEMENT"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
given to them in the Credit Agreement.
(2) The Borrower, the Administrative Lender, the Co-Agents and the
Lenders are entering into that certain Third Amendment to Second Amended and
Restated Credit Agreement, dated as of even date herewith (the "THIRD
AMENDMENT").
(3) It is the intention of the parties hereto that this Agreement
create a first priority security interest in certain property of the Grantors
securing the payment of the obligations set forth in SECTION 1.2 hereof,
subject only to Permitted Liens.
(4) It is a condition precedent to the obligation of the Secured
Parties to enter into the Third Amendment and to, among other things,
continue to make the Advances, and issue, or participate in the issuance of,
Letters of Credit under the Credit Agreement that the Grantors shall have
executed and delivered to the Administrative Lender this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and in order to induce the Secured Parties to
enter into the Third Amendment and to, among other things, continue to make
the Advances and issue, or participate in the issuance of, Letters of Credit
under
the Credit Agreement, the Grantors hereby agree with the Administrative
Lender for its benefit and the ratable benefit of the other Secured Parties,
as hereinafter set forth.
ARTICLE 1
GRANT
Section 1.1 ASSIGNMENT AND GRANT OF SECURITY. Each Grantor hereby
assigns, pledges, hypothecates and transfers to the Administrative Lender,
for its benefit and the ratable benefit of the other Secured Parties, and
hereby grants to the Administrative Lender, for its benefit and the ratable
benefit of the other Secured Parties, a security interest in, the entire
right, title and interest of such Grantor, in and to the following assets of
such Grantor, whether now owned or hereafter acquired ("COLLATERAL"):
(a) all accounts, contract rights, chattel paper, documents,
instruments, deposit accounts, general intangibles, and other obligations of
any kind owing to such Grantor, now or hereafter existing, in each case
arising out of or in connection with the sale or lease of goods or the
rendering of services, and all rights now or hereafter existing in and to all
security agreements, leases, and other contracts securing or otherwise
relating to any such accounts, contract rights, chattel paper, documents,
instruments, deposit accounts, general intangibles or obligations (any and
all such accounts, contract rights, chattel paper, documents, instruments,
deposit accounts, general intangibles and obligations being the
"RECEIVABLES");
(b) all right, title and interest of such Grantor in, to and under
each contract and other agreement relating to the lease, sale or other
disposition of Collateral;
(c) all right, title and interest of such Grantor in and to any
equity interests of each Subsidiary of the such Grantor, including, without
limitation, the shares of each class of capital stock in any Person that is a
corporation, each class of partnership interests in any Person that is a
partnership, and each class of membership interests in any Person that is a
limited liability company, together with all dividends, increases, case,
proceeds, profits, instruments, distributions and other property from time to
time distributed in respect thereof and any rights to acquire or convertible
into any such equity interests, whether by purchase, exercise of any type of
options, warrants, conversion of debt or otherwise; provided, however,
notwithstanding anything herein to the contrary, the amount of equity
interests of any direct Foreign Subsidiary pledged by such Grantor hereunder
shall be limited to 65% of the issued and outstanding equity interests of
such direct Foreign Subsidiary ("SECURITIES COLLATERAL");
(d) all insurance policies and bonds and claims and payments under
any Collateral; and
(e) all accessions to, substitutions for and replacements, proceeds
and products of any and all of the foregoing Collateral (including, without
limitation, proceeds which constitute property
-2-
of the types described in this SECTION 1.1) and, to the extent not otherwise
included, all (i) payments under insurance (whether or not the Administrative
Lender is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of
the foregoing Collateral and (ii) cash.
Section 1.2 DESCRIPTION OF OBLIGATIONS. This Agreement creates an
enforceable security interest in the Collateral, subject only to Permitted
Liens, to secure the payment and performance of any and all obligations now
or hereafter existing of the Grantors under the Credit Agreement and the
other Loan Documents, including any extensions, modifications, substitutions,
amendments and renewals thereof, whether for principal, interest, fees,
premium, expenses, reimbursement obligations, indemnification or otherwise
(all such obligations of the Grantors being the "OBLIGATIONS"). Without
limiting the generality of the foregoing, this Agreement secures the payment
of all amounts which constitute part of the Obligations and would be owed by
the Grantors to the Administrative Lender or any other Secured Party under
any Loan Document, but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding under any Debtor Relief Law involving any Grantor (including all
such amounts which would become due or would be secured but for the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding of any Grantor under any Debtor Relief
Law). With respect to each Grantor other than the Borrower, notwithstanding
anything herein to the contrary, in any action or proceeding involving any
state corporate law, or any state or federal bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally if
the Liens granted by any such Grantor herein shall be held void, invalid or
unenforceable, or subordinated to the liens or claims of any other creditors,
on account of the amount of the Obligations secured by such Liens, then, the
amount of the Obligations secured by such Liens shall, without any action by
such Grantor, the Administrative Lender, any other Secured Party or any other
Persons, be automatically limited and reduced to the highest amount that is
valid and enforceable and not subordinated to the claims of other creditors
as determined in such action or proceeding.
Section 1.3 GRANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) the Grantors shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Administrative
Lender of any of the rights hereunder shall not release any Grantor from any
of its duties or obligations under the contracts and agreements included in
the Collateral, and (c) neither the Administrative Lender nor any other
Secured Party shall have any obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
the Administrative Lender or any other Secured Party be obligated to perform
any of the obligations or duties of any Grantor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
Section 1.4 DELIVERY OF INSTRUMENTS AND SECURITIES COLLATERAL. All
certificates or instruments representing or evidencing the Collateral shall
be delivered to and held by or on behalf of the Administrative Lender
pursuant hereto and shall be in suitable form for transfer by delivery,
-3-
or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Administrative Lender. The Administrative Lender shall have the right, as
provided in SECTION 3.4, and during the continuance, of an Event of Default,
but without any requirement for prior written notice to any Grantor, to
transfer to or to register in the name of the Administrative Lender or any of
its nominees any or all of the Securities Collateral. Except as provided in
SECTION 3.6(C), the Grantors maintain the voting rights in the Securities
Collateral.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS AND WARRANTIES. Each Grantor represents
and warrants to the Administrative Lender and each other Secured Party, with
respect to itself and the Collateral, as follows:
(a) The chief place of business and chief executive office of such
Grantor and the office where such Grantor keeps all of its records concerning
the Receivables, are located at the place specified on SCHEDULE 1 hereto.
Collateral consisting of instruments and chattel paper shall be delivered and
pledged to the Administrative Lender duly endorsed and accompanied by such
duly executed instruments of transfer or assignment as are necessary for such
pledge, to be held as pledged Collateral.
(b) Such Grantor is the legal and beneficial owner of the Collateral
pledged by it free and clear of any Lien, except for Permitted Liens. No
effective financing statement or other similar document used to perfect and
preserve a security interest under the laws of any jurisdiction covering all
or any part of the Collateral is on file in any recording office, except such
as may have been filed (i) in favor of the Administrative Lender relating to
this Agreement and (ii) in respect of other Permitted Liens. As of the date
of this Agreement, such Grantor has the trade names set forth on SCHEDULE 2
(and no others). Such Grantor (including any corporate or partnership
predecessor) has not existed or operated under any name other than as stated
on SCHEDULE 2 since the date one year preceding the date of this Agreement.
(c) This Agreement and the pledge of the Collateral pursuant hereto,
together with the filing of financing statements containing the description
of the Collateral in the jurisdictions set forth on SCHEDULE 1, which will be
made immediately following the date of closing, creates a valid and perfected
first priority security interest in the Collateral in which a security
interest can be perfected by filing a UCC financing statement, securing the
payment of the Obligations; PROVIDED that additional actions may be required
with respect to the perfection of proceeds of the Collateral; and FURTHER
PROVIDED that the Administrative Lender retains physical possession of any
Collateral, the possession of which is required for perfection.
-4-
(d) No consent of or registration with any Person is required (i) for
the pledge by such Grantor of the Collateral pledged by it hereunder, for the
grant by such Grantor of the security interest granted hereby or for the
execution, delivery or performance of this Agreement by such Grantor, (ii)
for the perfection or maintenance of the pledge, assignment and security
interest created hereby (including the first priority nature (subject to
Permitted Liens) of such pledge, assignment and security interest as provided
herein) (except for the filing of financing and continuation statements under
the UCC) or (iii) for the exercise by the Administrative Lender of the rights
provided for in this Agreement (except as otherwise required by law,
including pursuant to SECTION 4.3 of this Agreement), except, in each case,
for such Necessary Authorizations that already have been obtained by such
Grantor.
(e) None of the Securities Collateral is subject to any unpaid
capital call or dispute, any buy-sell, voting trust, transfer restriction,
preferential right to purchase or similar agreement or any option, warrant,
put or call or similar agreement or other rights or restrictions in favor of
third Persons. All of the Securities Collateral are duly authorized, validly
issued and non-assessable and were not issued in violation of the rights of
any Person. No Securities Collateral obligates such Grantor to make any
additional capital contributions with respect thereto. SCHEDULE 4 accurately
describes, as of the date of this Agreement, the Securities Collateral owned
by such Grantor, the issuer, the percentage owned by such Grantor, the nature
of equity interest owned, and, if applicable, the number and type of shares
of capital stock owned.
ARTICLE 3
COVENANTS
Section 3.1 FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at the expense of
such Grantor, such Grantor will promptly execute and deliver all further
instruments and documents (including supplements to all schedules), and take
all further action, that may be necessary, and that the Administrative Lender
may reasonably request, in order to perfect and protect any pledge,
assignment or security interest granted or purported to be granted hereby,
and the priority thereof, or to enable the Administrative Lender to exercise
and enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, such Grantor will: (i)
xxxx conspicuously each chattel paper included in Receivables, and each of
its records pertaining to the Collateral with the following legend:
THIS INSTRUMENT IS SUBJECT TO A SECURITY INTEREST AND LIEN PURSUANT TO
A SECURITY AGREEMENT DATED EFFECTIVE AS OF MARCH 27, 1999 (AS THE SAME
HAS BEEN AND MAY HEREAFTER BE AMENDED, MODIFIED OR RESTATED) MADE BY
GRANTOR IN FAVOR
-5-
OF NATIONSBANK, N.A., AS ADMINISTRATIVE LENDER FOR THE BENEFIT OF
THE SECURED PARTIES NAMED THEREIN.
or such other legend, in form and substance reasonably satisfactory to and as
specified by the Administrative Lender, indicating that such chattel paper or
Collateral is subject to the pledge, assignment and security interest granted
hereby; (ii) if any Collateral shall be evidenced by an instrument, deliver
and pledge to the Administrative Lender hereunder each such Instrument duly
indorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance reasonably satisfactory to the
Administrative Lender; (iii) if any Collateral shall be evidenced by chattel
paper, during the continuance of an Event of Default (provided that any
Advances or Letters of Credit are outstanding), deliver to the Administrative
Lender such chattel paper duly endorsed and accompanied by duly executed
instrument of transfer or assignment, all in form and substance reasonably
satisfactory to the Administrative Lender; and (iv) execute and file such
financing or continuation statements, or amendments thereto, and such other
registrations, instruments or notices, as may be necessary, or as the
Administrative Lender may reasonably request, in order to perfect and
preserve the pledge, assignment and security interest granted or purported to
be granted hereby.
(b) In addition to such other information as shall be specifically
provided for herein, the Grantors will furnish to the Administrative Lender
upon the written request of the Administrative Lender statements and
schedules further identifying and describing the Collateral and such other
lists, documents, reports, and product, service and sales documents in
connection with the Collateral as the Administrative Lender may reasonably
request, all in reasonable detail. Subject to the confidentiality provisions
of the Credit Agreement, in connection with its enforcement of the security
interest, the Administrative Lender may use such information or transfer it
to any Assignee permitted under the Credit Agreement for such Assignee's use.
(c) Each Grantor hereby authorizes the Administrative Lender to file
one or more continuation statements and during the continuance of an Event of
Default, financing statements, relating to all or any part of the Collateral
without the signature of such Grantor where permitted by Applicable Law. A
photocopy or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by Applicable Law.
(d) If any Securities Collateral are "uncertificated securities"
within the meaning of the UCC or are otherwise not evidenced by any stock
certificate or similar certificate or instrument, such Grantor agrees to
promptly notify the Administrative Lender and take all actions required to
perfect the security interest of the Administrative Lender under Applicable
Law, including, as applicable, under Article 8 or 9 of the UCC, and, without
limitation of the foregoing, prior to or concurrently with the pledge
hereunder of any Securities Collateral to which this section applies, (i)
where deemed applicable by the Administrative Lender, deliver to the relevant
corporation, partnership, limited liability company, joint venture or other
Person a fully completed and duly executed letter in the form of EXHIBIT A
hereto, and use commercially reasonable efforts to obtain from such
-6-
corporation, partnership, limited liability company, joint venture or other
Person, and deliver to the Administrative Lender, promptly upon registration
of such pledge on the books of the issuer, a fully completed and duly
executed letter in the form of EXHIBIT B hereto, and (ii) where deemed
applicable by the Administrative Lender, deliver to the Administrative Lender
a fully completed and duly executed "Securities Collateral Stop Transfer
Letter" in the form of EXHIBIT C hereto.
Section 3.2 PLACE OF PERFECTION; RECORDS; COLLECTION OF RECEIVABLES,
CHATTEL PAPER AND INSTRUMENTS.
(a) Each Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Receivables, and the originals of all chattel paper and instruments, at the
location therefor specified in SECTION 2.1(A), in each case which may be
changed upon written notice to the Administrative Lender at least 30 days
prior to such change.
(b) Except as otherwise provided in this SECTION 3.2(B), each Grantor
shall continue to collect, at its own expense, all amounts due or to become
due such Grantor under the Receivables. In connection with such collections,
such Grantor may take (and, during the continuance of an Event of Default at
the Administrative Lender's direction, shall take) such action as such
Grantor or, during the continuance of an Event of Default, the Administrative
Lender, may deem reasonably necessary to enforce collection of the
Receivables; PROVIDED, HOWEVER, that the Administrative Lender shall have the
right (during the continuance of an Event of Default and provided that any
Advances or Letters of Credit are outstanding) to notify the account debtors
or obligors under any Receivables of the assignment of such Receivables to
the Administrative Lender and to direct such account debtors or obligors to
make payment of all amounts due or to become due to such Grantor thereunder
directly to the Administrative Lender and, upon such notification at the
expense of such Grantor, to enforce collection of any such Receivables, and
to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as such Grantor might have done or as the
Administrative Lender deems reasonably necessary. During the continuance of
an Event of Default (provided that any Advances or Letters of Credit are
outstanding), all amounts and proceeds (including Instruments) received by
such Grantor in respect of the Receivables shall be received in trust for the
benefit of the Administrative Lender hereunder, shall be segregated from
other funds of such Grantor and, after receipt of written notice from the
Administrative Lender, shall be forthwith paid over to the Administrative
Lender in the same form as so received (with any necessary indorsement).
During the continuation of an Event of Default (provided that any Advances or
Letters of Credit are outstanding), such Grantor shall not adjust, settle or
compromise the amount or payment of any Receivable, release wholly or partly
any account debtor or obligor thereof, or allow any credit or discount
thereon, in each case, other than those made in the ordinary course of
business. To the extent that the Administrative Lender has notified any
account debtor or obligor under any Receivables of an Event of Default and
such Event of Default is cured or otherwise waived, the Administrative Lender
shall promptly notify such account holder or obligor of such fact.
-7-
Section 3.3 TRANSFERS AND OTHER LIENS. No Grantor shall (a) sell,
assign (by operation of Applicable Law or otherwise) or otherwise dispose of,
or grant any option with respect to, any of the Collateral, except as
permitted under the Credit Agreement, or (b) create or permit to exist any
Lien upon any of the Collateral, except Permitted Liens.
Section 3.4 RIGHTS TO DIVIDENDS AND DISTRIBUTIONS. With respect to
any Securities Collateral, the Administrative Lender shall have authority
during the continuance of an Event of Default, either to have the same
registered in the Administrative Lender's name or in the name of a nominee.
If any Grantor shall become entitled to receive or shall receive any
certificate (including, without limitation, any certificate in connection
with any reclassification, increase, reduction of capital, or
reorganization), or any option or rights arising from or relating to any of
the Collateral that is evidenced by a certificate or other instrument or
security, whether as an addition to, in substitution of, as a conversion of,
or in exchange for any of the Collateral, or otherwise, such Grantor agrees
to accept the same as the Administrative Lender's agent and to hold the same
in trust on behalf of and for the benefit of the Administrative Lender, and,
after receipt of written notice from the Administrative Lender, to deliver
the same immediately to the Administrative Lender in the exact form received,
with appropriate undated stock or similar powers, duly executed in blank, to
be held by the Administrative Lender, subject to the terms hereof, as
Collateral. Unless an Event of Default is in existence, such Grantor shall
be entitled to receive all cash Dividends paid in respect of any of the
Collateral. During the continuance of an Event of Default (provided that any
Advances or Letters of Credit are outstanding), the Administrative Lender
shall be entitled to all Dividends, and to any sums paid upon or in respect
of any Collateral, and to any additional securities issued in respect of the
Securities Collateral, upon the liquidation, dissolution, or reorganization
of the issuer thereof, all of which shall be paid to the Administrative
Lender to be held by it as additional Collateral.
Section 3.5 RIGHT OF THE ADMINISTRATIVE LENDER TO NOTIFY ISSUERS. At
any time during the continuance of an Event of Default (provided that any
Advances or Letters of Credit are outstanding), the Administrative Lender may
notify issuers of the Securities Collateral to make payments of all Dividends
directly to the Administrative Lender and the Administrative Lender may take
control of all proceeds of any Securities Collateral. To the extent that the
Administrative Lender has notified any issuer of Securities Collateral of an
Event of Default and such Event of Default is cured or otherwise waived, the
Administrative Lender shall promptly notify such issuer of such fact.
Section 3.6 THE ADMINISTRATIVE LENDER APPOINTED ATTORNEY-IN-FACT.
Each Grantor hereby irrevocably appoints the Administrative Lender such
Grantor's attorney-in-fact (exercisable during the continuance of an Event of
Default), with full authority in the place and stead of such Grantor and in
the name of such Grantor or otherwise to take any action and to execute any
instrument (in accordance with this Agreement, including without limitation,
SECTION 4.2 hereof) which the Administrative Lender may deem reasonably
necessary to accomplish the purposes of this Agreement, including, without
limitation:
-8-
(a) to ask for, demand, collect, xxx for, recover, compromise,
receive and give acquittance and receipts for moneys due or to become due
under or in connection with the Collateral,
(b) to receive, indorse, and collect any drafts or other instruments,
documents and chattel paper in connection with clause (a) above, and
(c) to file any claims or take any action or institute any
proceedings which the Administrative Lender may deem reasonably necessary for
the collection of any of the Collateral or otherwise to enforce compliance
with the terms and conditions of any Collateral or the rights of the
Administrative Lender with respect to any of the Collateral. EACH GRANTOR
HEREBY IRREVOCABLY GRANTS TO THE ADMINISTRATIVE LENDER SUCH GRANTOR'S PROXY
(EXERCISABLE DURING THE CONTINUANCE OF AN EVENT OF DEFAULT) TO VOTE ANY
SECURITIES COLLATERAL AND APPOINTS THE ADMINISTRATIVE LENDER SUCH GRANTOR'S
ATTORNEY-IN-FACT (EXERCISABLE DURING THE CONTINUANCE OF AN EVENT OF DEFAULT)
TO PERFORM ALL OBLIGATIONS OF SUCH GRANTOR UNDER THIS AGREEMENT. THE PROXY
AND EACH POWER OF ATTORNEY HEREIN GRANTED ARE COUPLED WITH AN INTEREST AND
ARE IRREVOCABLE PRIOR TO FINAL PAYMENT IN FULL OF THE OBLIGATIONS.
This appointment as attorney-in-fact and this proxy shall terminate upon
the termination of this Agreement pursuant to SECTION 5.3 hereof.
ARTICLE 4
RIGHTS AND POWERS OF THE ADMINISTRATIVE LENDER
Section 4.1 THE ADMINISTRATIVE LENDER MAY PERFORM. If any Grantor
fails to perform any agreement contained herein, the Administrative Lender
may itself perform, or cause performance of, such agreement, and the
reasonable expenses of the Administrative Lender incurred in connection
therewith shall be payable by such Grantor under SECTION 4.4.
Section 4.2 THE ADMINISTRATIVE LENDER'S DUTIES. The powers conferred
on the Administrative Lender hereunder are solely to protect its interest in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the duty to exercise reasonable care in respect of any
Collateral in its possession and the accounting for moneys actually received
by it hereunder, the Administrative Lender shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Administrative Lender has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against prior parties. The Administrative Lender shall be
deemed to have exercised reasonable care in the custody and preservation of
any Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Administrative Lender accords its own
property. Except as
-9-
provided in this SECTION 4.2 and except to the extent of any gross negligence
or willful misconduct of the Administrative Lender or the other Secured
Parties, the Administrative Lender shall not have any duty or liability to
protect or preserve any Collateral or to preserve rights pertaining thereto.
Nothing contained in this Agreement shall be construed as requiring or
obligating the Administrative Lender, and the Administrative Lender shall not
be required or obligated, to (i) present or file any claim or notice or take
any action, with respect to any Collateral or in connection therewith or (ii)
notify any Grantor of any decline in the value of any Collateral.
Section 4.3 REMEDIES. If any Event of Default shall have occurred
and be continuing (provided that any Advances or Letters of Credit are
outstanding):
(a) The Administrative Lender may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code in effect in the State of Texas at
that time (the "UCC") (whether or not the UCC applies to the affected
Collateral), and also may (i) require any Grantor to, and each Grantor hereby
agrees that it will at its expense and upon request of the Administrative
Lender forthwith, assemble all or part of the Collateral which is capable of
being assembled as directed by the Administrative Lender and make it
available to the Administrative Lender at a place to be designated by the
Administrative Lender which is reasonably convenient to both parties or (ii)
without notice, except as specified below, sell the Collateral or any portion
thereof in one or more parcels at public or private sale, at any of the
Administrative Lender's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Administrative Lender may
reasonably deem commercially reasonable. Each Grantor agrees that, to the
extent notice of sale shall be required by Applicable Law, ten days' written
notice to such Grantor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification, provided that ten days' written notice does not violate any
Applicable Law. The Administrative Lender shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. The
Administrative Lender may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(b) All cash proceeds received by the Administrative Lender upon any
sale of, collection of, or other realization upon, all or any part of the
Collateral shall be applied as follows:
FIRST: To the payment of all reasonable out-of-pocket costs and expenses
incurred in connection with the sale of, collection of or other realization
upon Collateral, including reasonable attorneys' fees and disbursements;
SECOND: To the payment of the Obligations to be distributed pro rata to
each Secured Party based on the percentage that the Obligations owed to
each Secured Party bears to the aggregate outstanding Obligations owed to
all Secured Parties (with such Grantor remaining liable for any
deficiency); and
-10-
THIRD: To the extent of the balance (if any) of such proceeds, to the
payment to such Grantor or other Person legally entitled thereto.
(c) All payments received by such Grantor under or in connection with
any Collateral shall be received in trust for the benefit of the
Administrative Lender, shall be segregated from other funds of such Grantor
and, after receipt of written notice from the Administrative Lender, shall be
forthwith paid over to the Administrative Lender in the same form as so
received (with any necessary indorsement).
(d) Because of the Securities Act of 1933, as amended ("SECURITIES
ACT"), and other Applicable Laws, including without limitation state "blue
sky" laws, or contractual restrictions or agreements, there may be legal
restrictions or limitations affecting the Administrative Lender in any
attempts to dispose of the Collateral and the enforcement of its rights
hereunder. For these reasons, the Administrative Lender is hereby authorized
by each Grantor, but not obligated, during the continuance of any Event of
Default, to sell or otherwise dispose of any of the Collateral at private
sale, subject to an investment letter, or in any other manner which will not
require the Collateral, or any part thereof, to be registered in accordance
with the Securities Act, or the rules and regulations promulgated thereunder,
or any other Applicable Law. Each Grantor clearly understands that the
Administrative Lender may in its discretion approach a restricted number of
potential purchasers and that a sale under such circumstances may yield a
lower price for the Collateral than would otherwise be obtainable if same
were registered and sold in the open market. No sale so made in good faith
by the Administrative Lender shall be deemed to be not "commercially
reasonable" because so made. Each Grantor agrees that in the event the
Administrative Lender shall, during the continuance of an Event of Default,
sell the Collateral or any portion thereof at any private sale or sales, the
Administrative Lender shall have the right to rely upon the advice and
opinion of independent appraisers and other Persons, which appraisers and
other Persons are acceptable to the Administrative Lender, as to the best
price reasonably obtainable upon such a private sale thereof.
(e) If the Administrative Lender shall determine to exercise its
right to sell any or all of the Collateral, and if in the opinion of counsel
for the Administrative Lender it is necessary, or if in the opinion of the
Administrative Lender it is advisable, to have the Collateral or that portion
thereof to be sold, registered under the provisions of the Securities Act,
each Grantor (subject to any restrictions in any agreements with
non-Affiliates of such Grantor regarding the registration thereof) will use
commercially reasonable efforts to cause the issuers of the Collateral
contemplated to be sold to execute and deliver, and cause the directors and
officers of each thereof to execute and deliver, all at such Grantor's
reasonable expense, all such instruments and documents, and to do or cause to
be done all such other acts and things, as may be necessary or, in the
opinion of the Administrative Lender, advisable to register the Collateral or
that portion thereof to be sold, under the provisions of the Securities Act
and to cause the registration statement relating thereto to become effective
and to remain effective for a period of one year from the date of the first
public offering of the Collateral or that portion thereof to be sold, and to
make all amendments thereto and/or to the related prospectus which, in the
opinion of the Administrative Lender, are reasonably necessary, all in
conformity with the requirements of the Securities Act. Each Grantor shall
use commercially
-11-
reasonable efforts to cause each issuer of Collateral to comply with the
provisions of the securities or "blue sky" laws of any jurisdiction which the
Administrative Lender shall designate and to cause each issuer to make
available to its security holders, as soon as practicable, an earnings
statement which will satisfy the provisions of the Securities Act and
applicable "blue sky" laws.
(f) (i) Each Grantor will maintain the accounts listed as restricted
and blocked accounts on SCHEDULE 3 (the "RESTRICTED ACCOUNTS") with the
Administrative Lender, in the name of such Grantor, but such Restricted
Accounts shall be under the sole control and dominion of the Administrative
Lender.
(ii) It shall be a term and condition of each Restricted Account,
notwithstanding any term or condition to the contrary in any other
agreement relating to such Restricted Account (other than the Credit
Agreement), that no amount (including interest and other proceeds of the
cash and other property in the Restricted Account) shall be paid or
released to or for the account of, or withdrawn by or for the account of,
such Grantor or any other Person from such Restricted Account.
(iii) At the request of the Administrative Lender, such Grantor
will promptly instruct each account debtor in respect of Receivables
arising from any sale of Inventory in the ordinary course of business to
make payment to the Restricted Accounts.
Each Grantor understands and acknowledges that the Administrative Lender may
and permits the Administrative Lender to remove amounts from the Restricted
Accounts from time to time and use the amounts to reduce the Obligations.
Section 4.4 INDEMNITY AND EXPENSES. THE GRANTORS JOINTLY AND
SEVERALLY AGREE TO INDEMNIFY THE ADMINISTRATIVE LENDER AND EACH OTHER SECURED
PARTY FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES AND LIABILITIES (INCLUDING
REASONABLE ATTORNEYS' FEES) ARISING OR RESULTING FROM THIS AGREEMENT
(INCLUDING, WITHOUT LIMITATION, ENFORCEMENT OF THIS AGREEMENT), TO THE EXTENT
THE BORROWER IS REQUIRED TO DO SO UNDER SECTION 5.10 OF THE CREDIT AGREEMENT.
ARTICLE 5
MISCELLANEOUS
Section 5.1 CUMULATIVE RIGHTS. All rights of the Administrative
Lender and each other Secured Party under the Loan Documents are cumulative
of each other and of every other right which the Administrative Lender and
each other Secured Party may otherwise have at law or in equity or under any
other contract or other writing for the enforcement of the security interest
herein
-12-
or the collection of the Obligations. The exercise of one or more rights
shall not prejudice or impair the concurrent or subsequent exercise of other
rights.
Section 5.2 MODIFICATIONS; AMENDMENTS; ETC. No amendment or waiver
of any provision of this Agreement, and no consent to any departure by any
Grantor here from, shall in any event be effective unless the same shall be
in writing and signed by the Administrative Lender (and such Grantor, in case
of amendment), and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 5.3 CONTINUING SECURITY INTEREST. This Agreement shall
create a continuing security interest in the Collateral and shall (a) remain
in full force and effect until the Release Date (except to the extent that
the release of any Collateral is otherwise permitted pursuant to the terms of
the Loan Documents), (b) be binding upon each Grantor, its successors and
assigns, and (c) inure to the benefit of, and be enforceable by, the
Administrative Lender and its successors, transferee and assigns. Upon any
such termination, the Administrative Lender will, at such Grantor's expense,
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination. Each Grantor agrees that to
the extent that the Administrative Lender or any other Secured Party receives
any payment or benefit and such payment or benefit, or any part thereof, is
subsequently invalidated, declared to be fraudulent or preferential, set
aside or is required to be repaid to a trustee, receiver, or any other party
under any Debtor Relief Law, then to the extent of such payment or benefit,
the Obligations or part thereof intended to be satisfied shall be revived and
continued in full force and effect as if such payment or benefit had not been
made and, further, any such repayment by the Administrative Lender or any
other Secured Party, to the extent that the Administrative Lender or any
other Secured Party did not directly receive a corresponding cash payment,
shall be added to and be additional Obligations payable upon demand by the
Administrative Lender or any other Secured Party and secured hereby, and, if
the lien and security interest hereof shall have been released, such lien and
security interest shall be reinstated with the same effect and priority as on
the date of execution hereof all as if no release of such lien or security
interest had ever occurred, to the extent not prohibited by Applicable Law.
Section 5.4 GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW) AND THE APPLICABLE FEDERAL LAWS OF
THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF TEXAS.
Section 5.5 WAIVER OF JURY TRIAL. THE ADMINISTRATIVE LENDER, THE
SECURED PARTIES AND EACH GRANTOR HEREBY WAIVE, TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY JUDICIAL
PROCEEDINGS INVOLVING, DIRECTLY OR INDIRECTLY, ANY
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MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 5.6 THE ADMINISTRATIVE LENDER'S RIGHT TO USE AGENTS. The
Administrative Lender may exercise its rights under this Agreement through an
agent or other designee.
Section 5.7 WAIVERS OF RIGHTS INHIBITING ENFORCEMENT. To the extent
not prohibited by Applicable Law, each Grantor waives all rights of
redemption, appraisal, valuation or to the marshaling of assets.
Section 5.8 NOTICES AND DELIVERIES. All notices and other
communications provided for hereunder shall be effectuated in the manner
provided for in SECTION 11.1 of the Credit Agreement, and to the extent that
a notice or communication is sent to a Grantor other than the Borrower, said
notice shall be addressed to such Grantor, in care of the Borrower.
Section 5.9 SUCCESSORS AND ASSIGNS. All of the provisions of this
Agreement shall be binding and inure to the benefit of the parties hereto and
their respective successors and permitted assigns; PROVIDED, HOWEVER, no
Grantor may assign its liabilities and obligations under this Agreement
without the prior written consent of all Secured Parties.
Section 5.10 LOAN DOCUMENT. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
Section 5.11 CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES.
(a) Each Grantor and the Administrative Lender each hereby
irrevocably submits to the non-exclusive jurisdiction of any United States
Federal or Texas State courts sitting in Dallas, Texas in any action or
proceeding arising out of or relating to this Agreement, and each Grantor and
the Administrative Lender each hereby irrevocably waives any objection it may
now or hereafter have as to the venue of any such suit, action or proceeding
brought in such court or that such court is an inconvenient forum.
(b) Nothing in this section shall limit the right of any Grantor, the
Administrative Lender or any other Secured Party to bring any action or
proceeding against any other party or its property in the courts of any other
jurisdictions.
Section 5.12 SEVERABILITY. Any provision of this Agreement which is
for any reason prohibited or found or held invalid or unenforceable by any
court or governmental agency shall be ineffective to the extent of such
prohibition or invalidity or unenforceability, without invalidating the
remaining provisions hereof in such jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
-14-
Section 5.13 OBLIGATIONS NOT AFFECTED. To the fullest extent
permitted by Applicable Law, the obligations of each Grantor under this
Agreement shall remain in full force and effect without regard to, and shall
not be impaired or affected by:
(a) any amendment, modification, addition or supplement to any other
Loan Document, any instrument delivered in connection therewith, or any
assignment or transfer thereof;
(b) any exercise, non-exercise, or waiver by the Administrative
Lender or any other Secured Party of any right, remedy, power or privilege
under or in respect of, or any release of any guaranty, any collateral or the
Collateral or any part thereof provided pursuant to, this Agreement or any
other Loan Document;
(c) any waiver, consent, extension, indulgence or other action or
inaction in respect of this Agreement or any other Loan Document or any
assignment or transfer of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Grantor or any
other Person, whether or not such Grantor shall have notice or knowledge of
any of the foregoing.
Section 5.14 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but
one and the same instrument.
Section 5.15 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH
THE OTHER LOAN DOCUMENTS, 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 AMONG THE PARTIES.
Section 5.16 CONFLICTS. In the event of a conflict between the terms
and conditions of this Agreement and the terms and conditions of the Credit
Agreement, the terms and conditions of the Credit Agreement shall control.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.
GRANTORS:
[GRANTORS]
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
ADMINISTRATIVE LENDER:
NATIONSBANK, N.A.
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
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Schedule 0
Xxxxx Xxxxx xx Xxxxxxxx, Xxxxx Executive Office and
Location of Books and Records
The Chief Place of Business, Chief Executive Office and the Location of Books
and Records for each Grantor is:
00000 Xxxxx Xxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Schedule 2
Trade Names
CompUSA Inc.
(1) CompUSA Direct, (2) CompUSA PC
Computer City, Inc.
(1) CompUSA, (2) US Logic
CompUSA Stores L.P.
CompUSA
Schedule 3
Restricted Accounts
NONE.
Schedule 4
Securities Collateral
Corporate and Business Trust Securities Pledged:
-----------------------------------------------------------------------------------
ISSUER NUMBER OF SHARES HOLDER CERTIFICATE NUMBER
------ ---------------- ------ ------------------
-----------------------------------------------------------------------------------
CompUSA Holdings II Inc. 1,000 CompUSA Inc. 001
-----------------------------------------------------------------------------------
CompUSA Holdings I Inc. 1,000 CompUSA Inc. 001
-----------------------------------------------------------------------------------
CompTeam Inc. 1,000 CompUSA Inc. 001
-----------------------------------------------------------------------------------
CompUSA Management
Company 1,000 CompUSA Inc. A1
-----------------------------------------------------------------------------------
CompUSA Holdings Company 1,000 CompUSA Inc. 1
-----------------------------------------------------------------------------------
Computer City, Inc. 1,000 CompUSA Inc. CS-1
-----------------------------------------------------------------------------------
CompUSA Xxx.xxx Inc. 100 CompUSA Inc. CS-2
-----------------------------------------------------------------------------------
Partnership Interests Pledged:
-----------------------------------------------------------------------------------
NAME PERCENTAGE OWNERSHIP OWNER
---- -------------------- -----
-----------------------------------------------------------------------------------
CompUSA Stores L.P. 1% general partner interest CompUSA Inc.
-----------------------------------------------------------------------------------
CompUSA Stores L.P. 99% limited partner interest CompUSA Holdings Company
-----------------------------------------------------------------------------------
EXHIBIT A
INSTRUCTIONS FOR REGISTRATION OF PLEDGE
OF
UNCERTIFICATED SECURITIES
Date: ___________________
To: [NAME OF CORPORATION, PARTNERSHIP, JOINT VENTURE OR OTHER PERSON]
You are hereby instructed to register the pledge of the following
uncertificated securities to NationsBank, N.A., as Administrative Lender:
(a) A [insert written percentage of interest] (_____%)
[insert description of interest, e.g. General Partnership Interest];
(b) [insert similar description of any other interests].
This being all of the interest of [INSERT NAME OF PLEDGOR] in
[name of corporation, partnership, joint venture or other Person].
Very truly yours,
[GRANTOR]
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
EXHIBIT B
INITIAL TRANSACTION STATEMENT
Date: _______________
To: CompUSA Inc.
NationsBank, N.A., as Administrative Lender
This is to advise you that a pledge to NationsBank, N.A., as
Administrative Lender, of the following uncertificated securities owned by
[INSERT NAME OF PLEDGOR], a [______________] corporation has been registered
on the books of
[name of corporation, partnership, joint venture or other Person]:
(c) A [insert written percentage of interest] (_____%)
[insert description of interest, e.g. General Partnership Interest];
(d) [insert similar description of any other interests].
This being all of the interest of [INSERT NAME OF PLEDGOR] in, as shown
on books and records of,
[name of corporation, partnership, joint venture or other Person].
There are no liens or restrictions of the undersigned, nor any adverse
claims, in each case registered on the books of the undersigned, to which the
interests described hereinabove are subject.
The pledge referred to above was registered on ______________, _____.
THIS STATEMENT IS MERELY A RECORD OF THE REGISTRATION OF THE PLEDGE OF
THE ADDRESSEES AS OF THE TIME OF THE ISSUANCE HEREOF. DELIVERY OF THIS
STATEMENT, IN ITSELF, CONFERS NO RIGHTS ON THE RECIPIENT. THIS STATEMENT IS
NEITHER A NEGOTIABLE INSTRUMENT NOR A SECURITY.
Very truly yours,
[NAME OF CORPORATION, PARTNERSHIP, JOINT
VENTURE OR OTHER PERSON]
[By:____________________________________]
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
EXHIBIT C
__________, 1999
--------------------------------
--------------------------------
--------------------------------
Ladies and Gentlemen:
This is to advise you that CompUSA Inc., a ____________ corporation
("PLEDGOR"), has granted to NationsBank, N.A., as Administrative Lender
("ADMINISTRATIVE LENDER") a security interest in [DESCRIBE AMOUNT AND
DESCRIPTION OF INTEREST, E.G. SHARES OF THE COMMON CAPITAL STOCK]
of _____________________________________________________ (the "COMPANY"),
and all other [REPEAT DESCRIPTION OF INTEREST] of the Company now owned as
well as hereafter acquired by Pledgor (together with any distributions,
interests, stock, liquidating dividends, stock dividends, preemptive rights,
dividends paid in cash or securities, or other properties to which Pledgor
may hereafter be entitled to receive on account of such [REPEAT DESCRIPTION
OF INTEREST]), which [REPEAT DESCRIPTION OF INTEREST] presently constitutes
_____% of the issued and outstanding [REPEAT DESCRIPTION OF INTEREST] of the
Company, any other equity interest or right to acquire any equity interest in
Company now owned as well as hereafter acquired by Pledgor, and all proceeds
and products of the foregoing ("PLEDGED RIGHTS").
Until notified otherwise in writing by an authorized officer of
Administrative Lender, you are hereby directed (and you hereby agree) to
deliver after the date hereof all non-cash dividends and other distributions
and any and all other shares of stock, warrants or other property (other than
cash) in which Administrative Lender has a security interest to
Administrative Lender, NationsBank Plaza, 000 Xxxx Xxxxxx, 00xx Xxxxx,
Xxxxxx, Xxxxx 00000, Attention: Xxx Xxxx. Upon written notice from an
authorized officer of Administrative Lender, you are directed (and you hereby
agree) to deliver after the date of such notice, all dividends, distributions
and other property in the form of cash directly to Administrative Lender at
the address mentioned in the preceding sentence. Unless notified otherwise
in writing by an authorized officer of Administrative Lender, you are hereby
directed (and you hereby agree) to not acknowledge any encumbrance in favor
of any party other than Administrative Lender with respect to the Pledged
Rights, assign any interest in, encumber, subdivide, issue additional or
different certificates for or otherwise transfer any interest in the Pledged
Rights.
Very truly yours,
CompUSA Inc.
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
NATIONSBANK, N.A., as Administrative Lender
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
Accepted and Agreed this ____ day of ________________, ____
---------------------------------------
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
EXHIBIT G
BORROWING BASE CERTIFICATE
TO: NationsBank, N.A., ________, _____
FROM: CompUSA Inc.
Re: Second Amended and Restated Credit Agreement, dated as of March 12,
1998 ('Credit Agreement") among CompUSA Inc. ("Borrower"), certain
Lenders, certain Co-Agents and NationsBank, N.A. as Administrative
Lender
This Borrowing Base Certificate is made as of , . The
undersigned certifies that the calculations set forth herein are true,
accurate, and complete, and are made in accordance with the provisions of the
Credit Agreement. All defined terms used herein but not specifically defined
shall have the meanings set forth in the Credit Agreement.
1. BORROWING BASE. [to be completed for each Advance or Letter of Credit and
monthly if Advances or Letters of Credit are outstanding]
Borrower hereby represents and warrants that the following Borrowing Base
Report is true and correct in all respects as of ___________, _____ (the
"Reporting Date"). The Borrowing Base is determined as follows:
A. ELIGIBLE ACCOUNTS
1. All Accounts $______
2. Less ineligible Accounts (without duplication)
a. Accounts to which Borrower or a Restricted Subsidiary $______
does not have lawful and absolute title
b. Accounts which are not the valid, legally enforceable $______
obligation of the account debtor for goods or services
delivered or rendered to such Person
c. Accounts owed by a creditor of Borrower or a $______
Restricted Subsidiary to the extent that such Account
equals the amount owed to such creditor
d. Portion of Accounts subject to any asserted dispute, $______
offset, discount, counterclaim, or other claim or
defense of account debtor or to any asserted claim on
the part of the account debtor denying liability under
such Account
e. Accounts which Borrower or any Restricted Subsidiary $______
may not assign or grant a security interest to
Administrative Lender
f. Accounts not evidenced by an invoice rendered to the $______
account debtor
g. Accounts evidenced by chattel paper, promissory notes,$______
or other instruments or the result of a conditional
sales agreement
h. Accounts subject to a Lien in favor of any Person $______
other than Administrative Lender other than Permitted
Liens
i. Accounts due and payable for more than 90 days from $______
invoice date
j. Accounts of account debtors primarily conducting $______
business in and organized under a jurisdiction outside
the United States
k. Accounts where the account debtor is a federal, state $______
or local governmental body
l. Accounts where the account debtor is the subject of a $______
proceeding under a Debtor Relief Law
m. Accounts of account debtors who have more than 50% of $______
accounts due and payable for more than 30 days from
invoice date
n. Accounts not subject to a fully perfected first $______
priority security interest in favor of Administrative
Lender
o. Accounts where the account debtor is an Affiliate or $______
employee
Ineligible Accounts $______
3. Eligible Accounts [(1) - (2)] $______
4. Eligible Accounts included in Borrowing Base [75%x(3)] $______
COMPUSA INC.
By:___________________________
Name:____________________
Title:___________________
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