Exhibit 10.18
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
This First Amendment to Loan and Security Agreement ("Amendment") is
made as of the ____ day of July, 1998 by and among Fleet Capital Corporation,
("Lender"), a Rhode Island corporation with an office at 000 Xxxxxxxxxxx Xxxx,
Xxxxxxxxxxx, XX 00000 and The Electronics Boutique, Inc. and Electronic Boutique
of America Inc. (each a "Borrower" and collectively "Borrowers") each having its
chief executive office at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxx Xxxxxxx, XX 00000.
BACKGROUND
A. Borrowers and Lender are parties to a certain Loan and Security
Agreement dated as of March 16, 1998 (as may be modified and amended from time
to time, "Loan Agreement") pursuant to which Borrowers established certain
financing arrangements with Lender. The Loan Agreement and all instruments,
documents and agreements executed in connection therewith, or related thereto
are referred to herein collectively as the "Existing Loan Documents". All
capitalized terms not otherwise defined herein shall have the meaning ascribed
thereto in the Loan Agreement.
B. Borrowers have requested that Lender create a sublimit under the
Total Credit Facility for the issuance of Letters of Credit and/or LC Guaranties
in an aggregate maximum amount not to exceed $5,000,000. Lender has agreed to
create such a sublimit, subject to the terms and conditions set forth below.
NOW, THEREFORE, with the foregoing Background incorporated by reference
and made a part hereof and intending to be legally bound, the parties agree as
follows:
1. Amendments to Loan Agreement.
1.1 Section 1.1 of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
1.1 Revolving Credit Loans. Lender agrees,
for so long as no Event of Default exists, to make
Revolving Credit Loans to Borrowers from time to
time, as requested by Borrowers in the manner set
forth in subsection 3.1.1 hereof, up to a maximum
principal amount at any time outstanding equal to the
lesser of (a) an amount equal to the Maximum
Revolving Credit Amount minus the outstanding balance
of the Supplemental Loan minus the LC Amount, or (b)
the Borrowing Base, which shall be repayable in
accordance with the terms of the Revolving Credit
Note. If the unpaid balance of the Revolving Credit
Loans should exceed the Borrowing Base or any other
limitation set forth in this Agreement, such
Revolving Credit Loans shall
nevertheless constitute Obligations that are due and
payable on demand, secured by the Collateral other
than the Mortgage and entitled to all benefits
thereof.
1.2 Section 1 of the Loan Agreement is hereby
amended by adding the following Section 1.4:
1.4 Letter of Credit; LC Guaranties. Lender
agrees, for so long as no Default or Event of Default
exists and if requested by Borrowers, to (i) issue
its, or cause to be issued by its Affiliate, Letters
of Credit for the account of Borrowers or (ii)
execute LC Guaranties by which Lender or its
Affiliate shall guaranty the payment or performance
by Borrowers of Borrowers' reimbursement obligations
with respect to Letters of Credit and letters of
credit issued for Borrowers' account by other Persons
in support of Borrowers' obligations (other than
obligations for the repayment of Money Borrowed),
provided that the LC Amount at any time shall not
exceed the LC Cap. No stand-by Letter of Credit or LC
Guaranty related thereto may have an expiration date
that is later than the earlier of 365 days after the
date of issuance or 30 days prior to the scheduled
Maturity Date. No documentary Letter of Credit or LC
Guaranty related thereto may have an expiration dated
that is later than the earlier of 120 days after the
date of issuance or 30 days prior to the scheduled
Maturity Date. Any amounts paid by Lender under any
LC Guaranty or in connection with any Letter of
Credit shall be immediately reimbursed by Borrowers
to Lender and any amounts not so immediately
reimbursed shall be treated as Revolving Credit
Loans, shall be secured by all of the Collateral and
shall bear interest and be payable at the same rate
and in the same manner as Revolving Credit Loans.
1.3 Section 2 of the Loan Agreement is hereby
amended by adding the following Section 2.9:
2.9 Letter of Credit and LC Guaranty Fees.
Borrowers shall pay to Lender for Letters of Credit
and LC Guaranties of Letters of Credit, a fee equal
to 1.5% per annum of the aggregate face amount of
such Letters of Credit and LC Guaranties outstanding
from time to time during the term of this Agreement,
based on the actual number of days outstanding, which
fee shall be due and payable on the first Business
Day of
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each month. Borrowers shall also pay all applicable
reasonable and customary fees and charges associated
with the issuance, amendment, drawing, modification,
renewal, transfer or termination thereof, which fees
and charges shall be deemed fully earned and shall be
payable upon issuance, amendment, modification,
renewal, transfer or termination of each such Letter
of Credit or LC Guaranty, and shall not be subject to
rebate or proration upon the termination of this
Agreement for any reason.
1.4 Section 3.1.3 of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
3.1.3 Authorization. Borrowers hereby
irrevocably authorize Lender, in Lender's sole
discretion, to advance to Borrowers and to charge to
either Borrower's Loan Account hereunder as a
Revolving Credit Loan (regardless of whether an
Overadvance is thereby created) a sum sufficient to
pay all interest, when due, accrued on the
Obligations during the immediately preceding month,
all principal when due, all reimbursement obligations
under any Letter of Credit or LC Guaranty, and all
costs, fees and expenses at any time owed by
Borrowers to Lender hereunder.
1.5 Section 4.1 of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
4.1 Term of Agreement. Subject to Lender's
right to cease making Loans to Borrowers and issuing
or procuring Letters of Credit or LC Guaranties, upon
or after the occurrence, and during the continuance,
of any Default or Event of Default, this Agreement
shall be in effect for a period of three (3) years
from March 16, 1998 (the "Original Term") and this
Agreement shall automatically renew itself for
one-year periods thereafter (the "Renewal Terms")
unless terminated as provided in Section 4.2 hereof.
1.6 Section 4.2.2 of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
4.2.2 Termination by Borrowers. Upon at
least 45 days prior written notice to Lender,
Borrowers may, at their option, terminate this
Agreement; provided, however, no such
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termination shall be effective until Borrowers have
paid all of the Obligations in immediately available
funds, including without limitation, depositing with
Lender funds in an amount equal to the LC Amount to
be held by Lender as cash collateral (without
interest accruing to Borrowers) to fund future
payments on such LC Guaranties and future drawings
against such Letters of Credit. At such time as all
LC Guaranties have been paid or terminated and all
Letters of Credit have been drawn upon or expired,
any amounts remaining in such reserve shall be
applied against any outstanding Obligations, or, if
all Obligations have been indefeasibly paid in full,
returned to Borrowers. Any notice of termination
given by Borrowers shall be irrevocable unless Lender
otherwise agrees in writing, and Lender shall have no
obligation to make any Loans or issue or procure any
Letters of Credit or LC Guaranties on or after the
termination date stated in such notice. Subject to
Section 4.2.4 below, Borrowers may elect to terminate
this Agreement in its entirety only and no section of
this Agreement or type of Loan available hereunder
may be terminated singly.
1.7 Section 10 of the Loan Agreement is hereby
amended by adding the following Section 10.3.6:
10.3.6 Lender may, at its option, require
Borrowers to deposit with Lender funds equal to the
sum of the LC Amount and, if Borrowers fail to
promptly make such deposit, Lender may advance such
amount as a Revolving Credit Loan (whether or not an
Overadvance is created thereby). Any such deposit or
advance shall be held by Lender as cash collateral
(without interest accruing in favor of Borrowers), to
fund future payments on such LC Guaranties and future
drawings against such Letters of Credit. At such time
as all LC Guaranties have been paid or terminated and
all Letters of Credit have been drawn upon or
expired, any amounts remaining in such reserve shall
be applied against any outstanding Obligations, or,
if all Obligations have been indefeasibly paid in
full, returned to Borrowers.
2. Amendments to Appendix A - General Definitions.
2.1 The definition of "Availability" is hereby
deleted in its entirety and replaced with the following:
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Availability - the amount of money which
Borrowers are entitled to borrow from time to time as
Revolving Credit Loans, such amount being the
difference derived when the sum of the principal
amount of Revolving Credit Loans then outstanding
(including any amounts which Lender may have paid for
the account of Borrowers pursuant to any of the Loan
Documents and which have not been reimbursed by
Borrowers) is subtracted from the lesser of (i) the
Maximum Revolving Credit Amount (minus the
outstanding balance of the Supplemental Loan and the
LC Amount) or (ii) the Borrowing Base. If the amount
outstanding is equal to or greater than the lesser of
(a) the amount resulting from clause (i) above or (b)
the Borrowing Base, Availability is 0.
2.2 The definition of "Borrowing Base" is hereby
deleted in its entirety and replaced with the following:
Borrowing Base - As at any date of determination
thereof, an amount equal to:
(a) 60% of the value of Eligible Inventory
at such date calculated on the basis of the lower of
cost or market on a first income or first outbasis;
MINUS
(b) The L/C Amount.
MINUS
(c) Such reserves as Lender may have
established from time to time;
2.3 The definition of "Obligations" is hereby
deleted in its entirety and replaced with the following:
Obligations - all Loans and all other advances,
debts, liabilities, obligations, covenants and
duties, together with all interest, fees and other
charges thereon, owing, arising, due or payable from
any Borrower to Lender of any kind or nature, present
or future, whether or not evidenced by any note,
guaranty or other
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instrument, whether arising under the Agreement or
any of the other Loan Documents or otherwise whether
direct or indirect (including those acquired by
assignment), absolute or contingent, primary or
secondary, due or to become due, now existing or
hereafter arising and however acquired (including,
without limitation, reimbursement obligations in
respect of Letters of Credit and LC Guaranties). The
term includes without limitation, all interest,
charges, fees, expenses, attorneys' fees, and any
other sums chargeable to Borrowers, under any of the
Loan Documents.
2.4 Appendix A - General Definitions, is hereby
amended by adding the following definitions:
LC Amount - at any time, the aggregate
undrawn face amount of all Letters of Credit and LC
Guaranties then outstanding plus the aggregate amount
of all unreimbursed draws on all Letters of Credit
and LC Guaranties.
LC Cap - $5,000,000.
LC Guaranty - any guaranty pursuant to which
Lender or any Affiliate of Lender shall guaranty the
payment or performance by Borrowers of their
reimbursement obligation to anyone other than Lender
under any letter of credit.
Letter of Credit - any stand-by or
documentary letter of credit, issued by Lender or any
of Lender's Affiliates for the account of a Borrower
to support non-borrowed obligations of Borrowers
incurred in the ordinary course of business.
3. Confirmation of Indebtedness. Each Borrower hereby
acknowledges and confirms that as of the close of business on July ____, 1998,
it is indebted to Lender, without defense, setoff, claim or counterclaim under
the Loan Documents, in the aggregate principal amount of ______, plus all fees,
costs and expenses (including attorneys' fees) incurred to date in connection
with this Amendment and the Existing Loan Documents.
4. Representations and Warranties.
4.1 Each Borrower represents and warrants that as of
the date hereof, no Default or Event of Default has occurred or is existing
under the Existing Loan Documents.
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4.2 The execution and delivery by Borrowers of this
Amendment and performance by it of the transactions herein contemplated (a) are
and will be within their powers, (b) have been authorized by all necessary
corporate action, and (c) are not and will not be in contravention of any order
of any court or other agency of government, of any law or of any indenture,
agreement or undertaking to which either Borrower is a party or by which the
Property of either Borrower is bound, or be in conflict with, result in a breach
of or constitute (with due notice and/or lapse of time) a default under any such
indenture, agreement or undertaking or result in the imposition of any Lien,
charge or incumbrance of any nature on any of the Properties of either Borrower.
4.3 This Amendment and each other agreement,
instrument or document executed and/or delivered in connection herewith, shall
be valid, binding and enforceable in accordance with its respective terms.
5. Ratification of Existing Loan Documents. Except as
expressly set forth herein, all of the terms and conditions of the Loan
Agreement and Existing Loan Documents are hereby ratified and confirmed and
continue unchanged and in full force and effect. All references to the Loan
Agreement shall mean the Loan Agreement as modified by this Amendment.
6. Collateral. Each Borrower hereby confirms and agrees that
all security interests and Liens granted to Lender continue in full force and
effect and shall continue to secure the Obligations. All Collateral remains free
and clear of any Liens other than Permitted Liens or Liens in favor of Lender.
Nothing herein contained is intended to in any impair or limit the validity,
priority and extent of Lender's existing security interest in and Liens upon the
Collateral.
7. Governing Law. This Amendment shall be governed by,
construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to the principles of conflicts of laws.
8. Counterparts. This Amendment may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original, and such counterparts together shall constitute one and the same
respective agreement.
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IN WITNESS WHEREOF, the parties have executed this First Amendment to
Loan and Security Agreement the day and year first above written.
ATTEST: BORROWERS:
THE ELECTRONICS BOUTIQUE,
INC.
/s/ By: /s/
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Assistant Secretary Title:
ATTEST: ELECTRONICS BOUTIQUE OF
AMERICA INC.
/s/ By: /s/
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Assistant Secretary Title:
LENDER:
FLEET CAPITAL CORPORATION
By: /s/
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Title:
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