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EXHIBIT 99.1
AMENDMENT NUMBER FOUR TO LOAN AND SECURITY AGREEMENT
This Amendment Number Four to Loan and Security Agreement (this
"Amendment") is entered into as of November 4, 1996, by and among NEOSTAR
RETAIL GROUP, INC., operating as a debtor-in-possession, BABBAGE'S, INC.,
operating as a debtor-in-possession, and SOFTWARE ETC. STORES, INC., operating
as a debtor-in-possession (jointly, "Borrowers"), on the one hand, and the
financial institutions listed on the signature pages hereof (jointly,
"Lenders"), and FOOTHILL CAPITAL CORPORATION, as Agent for the Lenders
("Agent"), on the other hand.
RECITALS
A. Borrowers, Lenders and Agent have previously entered into that
certain Loan and Security Agreement, dated as of September 16, 1996 (as amended
by that certain Interim Amendment to Loan and Security Agreement, dated
September 16, 1996, as further amended by Amendment Number Two to Loan and
Security Agreement, dated October 2, 1996, and as further amended by Amendment
Number Three to Loan and Security Agreement, dated October 18, 1996 (as
amended, the "Agreement"). All initially capitalized terms used in this
Amendment shall have the meanings given to them in the Agreement unless
specifically defined herein.
B. Certain Events of Default have occurred under the Agreement by
reason of the following acts or omissions:
(1) Borrowers breached Section 6.11(d) of the Agreement in that
they failed to obtain the minimum amount of trade credit by
November 2, 1996; and
(2) a Material Adverse Change has occurred to the business,
prospects and operations of Borrowers in that the availability
of unsecured credit from Borrowers' suppliers and vendors is
materially less than that Borrowers are required to achieve
under the terms of the Agreement.
As of the date hereof, these Events of Default (the "Specific Events of
Default") remain uncured.
C. Borrowers acknowledge the existence of the Specific Events of
Default and further acknowledge that the Specific Events of Default remain
uncured.
D. Borrowers acknowledge that pursuant to Section 9.1 of the
Agreement, Agent and Lenders are authorized to exercise various rights and
remedies including, but not limited to, terminating the obligation to advance
any additional monies or create any letter of credit obligations to or for the
benefit of the Borrowers and/or declaring all Obligations due and payable.
AMENDMENT NUMBER FOUR
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E. As a result of the Specific Events of Default, Agent and
Lenders have terminated their obligations to advance any further monies as
provided in Section 9.1(b) of the Agreement.
F. Borrowers, Agent and Lenders desire to provide for terms and
conditions upon which Lenders, at their option, may choose to continue to
advance money and extend additional credit to Borrowers.
AGREEMENTS
NOW, THEREFORE, Borrowers, Lenders and Agent hereby amend the
Agreement as follows:
1. DEFINITIONS.
"Approved Budget" means an Operating Budget that has been
approved, in whole or in part, by the Required Lenders.
"Operating Budget" means a budget forecast of the necessary
and essential expenses and expected cash flows for the Borrowers' consolidated
operations for the two-week period beginning on Monday of each week through and
including Friday of the second following week (i.e., 12 days later). The
initial Operating Budget for the period from November 4, 1996 through November
15, 1996, is attached to the Fourth Amendment as Exhibit A.
2. AMENDMENTS.
(d) Section 6.18 is hereby added to the Agreement to
read in its entirety as follows:
6.18 WEEKLY REPORTING REQUIREMENTS. Deliver to
Agent: (i) every Friday of each week beginning November 5,
1996, an Operating Budget prepared by Debtor, assisted by
Debtors' financial advisors, Price Waterhouse LLP, and (ii)
the actual results for the period then ended covered by the
then most recently delivered Operating Budget.
3. ACKNOWLEDGMENTS OF BORROWERS.
(a) Borrowers hereby acknowledge the accuracy of all
Recitals included in this Amendment.
(b) Borrowers acknowledge that the Agent's and Lenders'
obligation to make Advances, issue L/C's, issue L/C Guaranties or extend further
credit to or for the benefit of the Borrower has been terminated and that any
Advances that the Lenders choose to make or L/C's or L/C Guaranties that the
Lenders choose to issue will be made strictly at the option of the Lenders.
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(c) Borrowers acknowledge that any Advances that the
Lenders choose to make in the future, either as direct Advances or pursuant to
L/C's or L/C Guaranties, will be Obligations under the Agreement and subject to
all the terms and conditions in the Agreement.
(d) Borrowers acknowledge that no delay on the part of
Agent or Lenders in exercising any right, power or privilege hereunder, shall
operate as a waiver thereof, nor shall any waiver of any right, power or
privilege hereunder operate as a waiver of any other right, power or privilege
hereunder, nor shall any waiver of any right, power or privilege hereunder
operate as any indication that Agent or Lenders would waive any right, power or
privilege in the future, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof, or
the exercise of any other right, power or privilege hereunder.
4. AGREEMENTS OF AGENT AND LENDERS.
(a) Subject to the terms and conditions set forth in this
Amendment and Borrower's acknowledgments set forth in Section 3, above, and
expressly conditioned upon the absence of any additional Events of Default and
satisfaction and fulfillment of each of the condition precedent set forth in
Section 7, below, Agent and Lenders agree to forbear from demanding payment in
full of the Obligations and to forbear from exercising their rights and
remedies under Section 9.1 of the Agreement as a result of the Specific Events
of Default for a period beginning on the date of this Agreement and ending on
the earliest to occur of the following:
(1) at 5:00 p.m., November 8, 1996;
(2) the occurrence of any Material Adverse Change to the
lending proposal of Xxxxxxx Xxxxxx pertaining to an additional
$10,000,000 junior subordinated credit facility and a $10,000,000
junior subordinated letter of credit facility; and
(3) any occurrence of an Event of Default other than the
Specific Events of Default;
provided, however, that Agent and Lenders do not forbear from exercising their
right under Section 9.1(b) to terminate their obligation to extend any further
credit from and after the occurrence of the Specific Events of Default.
Borrowers acknowledge that nothing in this Fourth Amendment shall be construed
as creating any obligation whatsoever on the part of Agent or Lenders to make
any further Advances; it being acknowledged that, as a result of the Specific
Events of Default, any further Advances are made solely at the option of Agent
and the Lenders.
(b) The Agent and Lenders agree, solely as among
themselves, that unless an objection is made to an Approved Budget and
communicated as such to Agent, then each Lender will make the amount of such
Lender's Pro Rata Share of advances under an Approved Budget, as indicated on
the line item styled "Foothill Advances."
AMENDMENT NUMBER FOUR
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(c) Agent and Lenders approve the initial Operating
Budget attached hereto as Exhibit A as an Approved Budget, but only for the
period from Monday, November 4, 1996 through Friday, November 8, 1996,
excluding the period from Monday, November 11, 1996 and thereafter.
5. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby affirms
to the Agent and Lenders that, except for Specific Events of Default, all of
such Borrower's representations and warranties set forth in the Agreement are
true, complete and accurate in all respects as of the date hereof.
6. NO FURTHER DEFAULTS. Borrowers hereby affirm to the Agent and
Lenders that no Event of Default, other than the Specific Events of Default,
has occurred and is continuing as of the date hereof.
7. CONDITIONS PRECEDENT. The effectiveness of this Amendment is
expressly conditioned upon the receipt by Agent and Lenders of a copy of this
Amendment executed by Borrowers, Agent and Lenders.
8. COSTS AND EXPENSES. Borrowers shall pay to Agent all of
Agent's out-of-pocket costs and expenses (including, without limitation, the
fees and expenses of its counsel, which counsel may include any local counsel
deemed necessary) arising in connection with the preparation, execution, and
delivery of this Amendment and all related documents.
9. LIMITED EFFECT. In the event of a conflict between the terms
and provisions of this Amendment and the terms and provisions of the Agreement,
the terms and provisions of this Amendment shall govern. In all other respects,
the Agreement, as amended and supplemented hereby, shall remain in full force
and effect.
10. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed
in any number of counterparts and by different parties on separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original. All such counterparts, taken together, shall constitute but
one and the same Amendment. This Amendment shall become effective upon the
execution of a counterpart of this Amendment by each of the parties hereto.
11. SUCCESSORS AND ASSIGNS. This Amendment will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
12. SEVERABILITY. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall
not impair or invalidate the remainder of this Amendment, and the effect
thereof shall be confined to the provision so held to be invalid or
unenforceable.
13. WAIVER; MODIFICATION. NO PROVISION OF THIS AMENDMENT MAY BE
WAIVED, CHANGED OR MODIFIED, OR THE DISCHARGE THEREOF
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ACKNOWLEDGED, ORALLY, BUT ONLY BY AN AGREEMENT IN WRITING SIGNED BY THE PARTY
AGAINST WHOM THE ENFORCEMENT OF ANY WAIVER, CHANGE, MODIFICATION OR DISCHARGE
IS SOUGHT.
14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except for the
Specific Events of Default, all representations and warranties made in the
Agreement or any other Loan Document including, without limitation, any
document furnished in connection with this Amendment, shall survive the
execution and delivery of this Amendment, and no investigation by Lenders or
the Agent or any closing shall affect the representations and warranties or the
right of Lenders and the Agent to rely upon them.
15. FINAL AGREEMENT. THIS AMENDMENT REPRESENTS THE ENTIRE
EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE
THIS AMENDMENT IS EXECUTED. THIS AMENDMENT MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first set forth above.
NEOSTAR RETAIL GROUP, INC.,
a Delaware corporation
By: /s/ XXXX XXXXXXX
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Title: Vice President
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BABBAGE'S, INC.,
a Texas corporation
By: /s/ XXXX XXXXXXX
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Title: Vice President
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SOFTWARE ETC. STORES, INC.
a Delaware corporation
By: /s/ XXXX XXXXXXX
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Title: Vice President
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AMENDMENT NUMBER FOUR
TO LOAN AND SECURITY AGREEMENT - Page 5
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FOOTHILL CAPITAL CORPORATION,
a California corporation,
as Agent and a Lender
By: /s/ XXXX XXXXXXX
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Title: Assistant Vice President
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NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION,
a national banking association
By: /s/ XXXXXXX X. XXXXXXXXXXX XX
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Title: Senior Vice President
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BANKERS TRUST COMPANY,
a New York banking corporation
By: /s/ XXXXXXX XXXXXX
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Title: Vice President
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GUARANTY FEDERAL BANK F.S.B.,
a federal savings bank
By: /s/ XXXXXXX XXXXXXX
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Title: Vice President
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BANQUE FRANCAISE DU COMMERCE EXTERIEUR,
A French banking corporation
By: /s/ XXXX X. XXXXXXXXXX
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Title: Vice President and Regional Manager
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By: /s/ XXXX X. XXXXXX
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Title: Assistant Treasurer
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Exhibit
A - Initial Operating Budget
AMENDMENT NUMBER FOUR
TO LOAN AND SECURITY AGREEMENT - Page 6
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Each of the undersigned has executed a Continuing Guaranty in favor of
the Lender Group respecting the obligations of the Borrowers owing to the
Lender Group. Each of the undersigned acknowledges the terms of the above
Amendment and reaffirms and agrees that: (a) its Continuing Guaranty remains in
full force and effect; (b) nothing in such Continuing Guaranty obligates the
Lender Group to notify the undersigned of any changes in the financial
accommodations made available to the Borrowers or to seek reaffirmations of the
Continuing Guaranty; and (c) no requirement to so notify the undersigned or to
seek reaffirmations in the future shall be implied by the execution of this
reaffirmation.
CHASADA
By: /s/ XXXX XXXXXXX
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Title: Chairman
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AUGUSTA ENTERPRISES, INC.
By: /s/ XXXX XXXXXXX
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Title: Chairman
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AMENDMENT NUMBER FOUR
TO LOAN AND SECURITY AGREEMENT - Page 7