EXHIBIT 10.29
March 27, 2002
Good Guys California Inc.
0000 Xxxxxx Xxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Chief Financial Officer
Re: HDL Inventory Amendment of Loan and Security Agreement
Ladies and Gentlemen:
We refer to that certain Loan and Security Agreement dated as of
September 30, 1999, as amended by that certain First Amendment to Loan and
Security Agreement dated as of August 16, 2001 (including all exhibits and
schedules thereto, and as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement"), by and among Good
Guys California, Inc. ("Borrower"), the lenders signatory thereto (collectively,
the "Lenders") Bank of America, N.A., as administrative agent for Lenders
("Administrative Agent"), and General Electric Capital Corporation, as
documentation agent for Lenders ("Documentation Agent," Administrative Agent and
Documentation Agent being collectively referred to as "Co-Agents"). Capitalized
terms or matters of construction defined or established in the Loan Agreement
shall be applied herein as defined or established therein.
In order to enable Borrower to obtain Revolving Loans against
home delivery location Inventory, on the terms and conditions set forth in the
Loan Agreement and this letter agreement, Borrower and Co-Agents hereby agree as
follows:
1. Amendment of Loan Agreement. The Loan Agreement is hereby
amended as follows:
Good Guys California Inc.
March 27, 2002
Page 2
a. Definitions. The following definitions are hereby added
to Section 1.1 in appropriate alphabetical order:
"HDL Inventory" means Inventory consisting of finished
goods merchandise that is (i) designated as "HDL Inventory" on the
Borrower's books and records (including Inventory designated for home
delivery to specific customers), and (ii) stored by Borrower at its
existing HDL locations at (v) 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx Xxxx,
Xxxxxxxxxx 00000 (# 0089), (w) 0000 Xxxxx Xxxxxx, Xxxxx X, Xxx Xxxxx (#
0087), (x) 0000X Xxxxxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxxxx 00000 (# 0151),
(y) 00000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxx 00000 (# 0088), and (z)
00000 00xx Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxx 00000 (# 0081).
b. Borrowing Availability. Clause (a) of the definition of
Borrowing Base in Section 1.1 is hereby amended and restated as follows:
(a) the lowest of (i) the Maximum Revolver Amount, or (ii) the
sum of (A) one hundred percent (100%) of the manufacturer's invoice
price of Eligible Vendor Financed Inventory up to an aggregate amount of
$30,000,000, plus (B) eighty-five percent (85%) of the Recovery Value of
Eligible Vendor Financed Inventory for that portion of Eligible Vendor
Financed Inventory, if any, with a manufacturer's invoice price in
excess of $30,000,000, plus (C) eighty-five percent (85%) of the
Recovery Value of Eligible Inventory not constituting Eligible Vendor
Financed Inventory or HDL Inventory, plus (D) eighty-five percent (85%)
of fifty percent (50%) of the Recovery Value of HDL Inventory (or 85% of
such other percentage of such Recovery Value as Administrative Agent
may, in its reasonable credit judgment, after consultation among
Co-Agents, determine as an estimate of the portion of HDL Inventory that
has not been designated by Borrower for home delivery to specific
customers), or (iii) the sum of (A) seventy percent (70%) of the gross
inventory (at the lower of cost (determined on a FIFO basis) or market
as determined from time to time by Administrative Agent, after
consultation among Co-Agents, in the exercise of their reasonable credit
judgment) of all Eligible Inventory (including HDL Inventory), minus (B)
the General Ledger Variance Reserve, and minus (C) the Shrinkage and
Obsolescence Reserve; minus
c. Eligible Inventory. The definition of Eligible
Inventory is hereby amended to delete clause (e) therefrom.
Good Guys California Inc.
March 27, 2002
Page 3
d. Covenants Regarding HDL Inventory.
i. Section 6.7 is hereby amended by adding in
clause (b) the the following new subclause (ix) in appropriate numerical order:
(ix) an HDL Inventory report, listing, by Category, the units of HDL
Inventory on hand during the preceding month, and, from and after the
modification of Borrower's management information systems described in
Section 9.29, the portion of HDL Inventory on hand that is designated
for home delivery to specific customers.
ii. Article 9 is hereby amended by adding after
Section 9.28 the following new Section 9.29:
9.29 HDL Inventory. Borrower shall modify its management
information systems as quickly as reasonably practical after March 27,
2002, to identify, on a daily basis, the portion or portions of HDL
Inventory that is designated for home delivery to specific customers. In
addition to all other access provided to Administrative Agent pursuant
to this Agreement, Borrower shall provide access to Administrative
Agent, at any time on the terms set forth in Section 6.6(a), to conduct
monthly test counts of any or all of the HDL Inventory on hand and the
portions thereof designated for home delivery to specific customers.
2. Miscellaneous. This letter amendment may be executed in
identical counterpart copies, each of which shall be an original, but all of
which shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page by facsimile transmission shall be effective as
delivery of a manually executed counterpart of this Amendment, and any person
delivering this letter amendment by facsimile shall send the original manually
executed counterpart to Documentation Agent promptly after such facsimile
transmission. The terms of this letter amendment may be incorporated in a
amendment to the Loan Agreement or an amended and restated loan and security
agreement at any time upon the request of Co-Agents. Except as specifically
provided in Section 1 above, all of the provisions of the Loan Agreement and the
Loan Documents remain in full force and effect.
Good Guys California Inc.
March 27, 2002
Page 4
Please indicate your acceptance of and agreement to the foregoing
by executing a copy of this letter where indicated below and returning it to the
undersigned.
Very truly yours,
BANK OF AMERICA, N.A., as Administrative
Agent
By: /s/ XXXX X. XXXXXXXX
-----------------------------------
Xxxx X. XxXxxxxx
Vice President
GENERAL ELECTRIC CAPITAL CORPORATION, as
Documentation Agent
By: /s/ XXXX X. XXXXXXX
-----------------------------------
Xxxx X. Xxxxxxx
Duly Authorized Signatory
ACCEPTED AND AGREED this 27th day of March 2002.
GOOD GUYS CALIFORNIA, INC.
By: /s/ XXXXX X. XXXXXX
-----------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: COO
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cc: Xxxxxx Xxxx Nemerovski Xxxxxx Xxxx & Rabkin
Attention: Xxxxx X. Nexon, Esq.
