EXHIBIT 10.37
FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
"Amendment") is entered into as of this 29th day of September, 2003, among the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), Bank of America, N.A. (in its individual capacity, the "Bank") with
an office at 00 Xxxxx Xxxx Xxxxxx Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000, as
Administrative Agent for the Lenders (in its capacity as Administrative Agent,
the "Administrative Agent"), General Electric Capital Corporation (in its
individual capacity, "GE Capital") with an office at 000 Xxxxx Xxxxxxx Xxxxx
Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, as documentation agent for the
Lenders (in its capacity as documentation agent, the "Documentation Agent"),
Good Guys California, Inc. (formerly known as The Good Guys - California, Inc.),
a California corporation, with offices at 0000 Xxxxxx Xxx Xxxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000 (the "Borrower"), and (for purposes of paragraphs 7, 8 and 10)
Good Guys, Inc., a Delaware corporation ("Parent"), with respect to that certain
Loan and Security Agreement, dated as of September 30, 1999 among the parties
hereto, as amended by that certain First Amendment to Loan and Security
Agreement dated as of August 16, 2001, by those certain letter amendments dated
as of March 27, 2002, and May 15, 2002, and as further amended by that certain
Second Amendment to Loan and Security Agreement dated as of May 22, 2001, that
certain Third Amendment to Loan and Security Agreement dated as of July 2, 2002,
and that certain Fourth Amendment to Loan and Security Agreement dated as of
July 8, 2003 (collectively, the "Loan Agreement"), and with reference to the
following facts:
RECITALS
A. Pursuant to the Loan Agreement, Lenders agreed to make certain
financial accommodations to or for the benefit of Borrower upon the terms and
conditions contained therein. Unless otherwise defined in this Amendment, (i)
capitalized terms used herein shall have the meanings attributed to them in the
Loan Agreement, and (ii) references to sections shall refer to sections of the
Loan Agreement.
B. Borrower has requested Lenders' consent to Borrower's
obtaining up to five million dollars ($5 million) in unsecured subordinated debt
financing.
C. Lenders have agreed to consent to such subordinated financing
on the terms and conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the continued performance
by Borrower of its promises and obligations under the Loan Agreement and the
other Loan Documents, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Borrower and Lenders hereby
agree as follows:
AGREEMENT
1. ACKNOWLEDGMENT OF LOAN AGREEMENT AND OTHER LOAN DOCUMENTS.
Except as expressly modified by this Amendment, the obligations of Borrower
under the Loan Agreement and the other Loan Documents are hereby acknowledged,
confirmed and ratified by Borrower.
2. DEFINITIONS. Unless otherwise defined in this Amendment,
capitalized terms used herein have the meanings given to them in the Loan
Agreement. Unless otherwise indicated, all references to sections, schedules, or
exhibits shall mean sections, schedules, or exhibits of or to the Loan
Agreement.
3. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement shall be
amended as follows:
3.1 NEW DEFINITIONS. New definitions are hereby added in
appropriate alphabetical order to read as follows:
"CompUSA" shall mean CompUSA Inc., a Delaware corporation.
"Fifth Amendment" shall mean the Fifth Amendment to Loan and
Security Agreement dated as of September 29, 2003.
"Fifth Amendment Closing Date" shall mean the date of the
effectiveness of the Fifth Amendment, as provided in paragraph 9 of the Fifth
Amendment.
"Intercreditor and Subordination Agreement" shall mean that
certain Intercreditor and Subordination Agreement dated as of September 29,
2003, between Administrative Agent and CompUSA.
"Merger Agreement" shall mean that certain Agreement and Plan
of Merger between Parent and CompUSA, dated as of September 29, 2003, in the
form delivered to Administrative Agent on or before the date of the Fifth
Amendment.
"Subordinated Debt" shall mean Debt owing by Borrower with
respect to the Subordinated Debt Documents.
"Subordinated Debt Documents" shall mean the Subordinated Note
and any other documents or instruments that from time to time evidence the
Subordinated Debt or secure or support payment or performance thereof.
"Subordinated Note" shall mean the Unsecured Subordinated
Convertible Promissory Note, dated September 29, 2003, from the Borrower to
CompUSA in the original principal amount of $5,000,000, in the form delivered to
Administrative Agent on or before the date of the Fifth Amendment.
3.2 CROSS-DEFAULT (SECTION 11.1(e)). Section 11.1(e)
shall be amended by deleting the initial phrase "default shall occur with
respect to any Funded Debt (other than the Obligations)" and substituting the
following in lieu thereof:
"any default shall occur:
(i) under the Subordinated Debt Documents or
the Intercreditor and Subordination Agreement, or
otherwise with respect to the Subordinated Debt; or
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(ii) with respect to any Funded Debt (other
than the Obligations or the Subordinated Debt)"
3.3 DEFAULT REGARDING MATURITY OF SUBORDINATED DEBT (NEW
SECTION 11.1(s)). Section 11.1 shall be amended by inserting the following as a
new Section 11.1(s):
"(s) Borrower has not, by or before thirty (30) calendar days
prior to the then-applicable "Maturity Date" of the
Subordinated Note (as such term is defined in the Subordinated
Note, including any extensions thereof) caused such Maturity
Date to be extended or further extended, as applicable, to a
date that is at least ninety (90) calendar days after the
Stated Maturity Date; provided that the failure to obtain an
extension of the Maturity Date shall not be an Event of
Default if (i) payment by the Borrower of the Subordinated
Note on such Maturity Date would not cause a Default or an
Event of Default to occur, (ii) Borrower's Availability for
each day during the two months preceding the thirtieth
calendar day prior to the Maturity Date was at least
$25,000,000, and (iii) Borrower's Availability for each of the
thirty calendar days prior to the Maturity Date is at least
$25,000,000 (in both (ii) and (iii), with trade payables being
paid currently, and expenses and liabilities being paid in the
ordinary course of business without acceleration of sales)."
4. CONSENT TO SUBORDINATED DEBT. Subject to all other provisions
of the Loan Agreement, upon the effectiveness of the Intercreditor and
Subordination Agreement and satisfaction of all of the other conditions of the
effectiveness of the Fifth Amendment, Co-Agents and Lenders consent, pursuant to
clause (e) of Section 9.13 of the Loan Agreement, to the terms and conditions of
the Subordinated Debt Documents and to Borrower's incurring the unsecured
indebtedness contemplated therein, and waive any Default or Event of Default
that may have occurred solely by reason of Borrower's negotiation of the
Subordinated Debt Documents; provided that Borrower shall use the proceeds of
such subordinated indebtedness to reduce the Revolving Loans and for working
capital in the ordinary course of its business. Co-Agents' and Lenders' do not
hereby consent to the granting of any Lien as security for the Subordinated
Debt.
5. CONSENT TO ENTRY INTO MERGER AGREEMENT. Subject to all other
provisions of the Loan Agreement and the other Loan Documents, upon the
effectiveness of the Fifth Amendment, Co-Agents and Lenders consent to Parent's
entry into the Merger Agreement, and waive any Default or Event of Default that
may have occurred solely by reason of Parent's negotiation of the Merger
Agreement; provided that Co-Agents and Lenders do not hereby waive the Event of
Default that would occur under Section 11.1(r) of the Loan Agreement upon the
occurrence of the Change of Control that would result from the transactions
contemplated by the Merger Agreement.
6. ACKNOWLEDGMENTS OF BORROWER.
6.1 ACKNOWLEDGMENT OF OBLIGATIONS. Borrower hereby
acknowledges, confirms and agrees that as of the close of business on September
24, 2003, Borrower was indebted to Lenders in respect of the Revolving Loans in
the approximate principal amount of $40,432,610. The Revolving Loans, together
with interest accrued and accruing thereon, and fees, costs, expenses and other
charges now or hereafter payable by Borrower to Lenders, are
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unconditionally owing by Borrower to Lenders, without offset, defense or
counterclaim of any kind, nature or description whatsoever.
6.2 ACKNOWLEDGMENT OF SECURITY INTERESTS. Borrower hereby
acknowledges, confirms and agrees that Co-Agents and Lenders have and shall
continue to have valid, enforceable and perfected first-priority liens upon and
security interests in the Collateral heretofore granted to Lenders pursuant to
the Loan Documents or otherwise granted to or held by Co-Agents and Lenders,
subject only to Permitted Liens.
6.3 BINDING EFFECT OF DOCUMENTS. Borrower hereby
acknowledges, confirms and agrees that: (a) each of the Loan Documents to which
it is a party has been duly executed and delivered to Documentation Agent by
Borrower, and each is in full force and effect as of the date hereof, (b) the
agreements and obligations of Borrower contained in such documents and in this
Amendment constitute the legal, valid and binding Obligations of Borrower,
enforceable against it in accordance with their respective terms, and Borrower
has no valid defense to the enforcement of such Obligations, and (c) Co-Agents
and Lenders are and shall be entitled to the rights, remedies and benefits
provided for in the Loan Documents and applicable law.
7. ACKNOWLEDGMENT AND REAFFIRMATION OF PARENT. Parent hereby
acknowledges that it has received and reviewed a copy of the Fifth Amendment and
consents to the terms and conditions of the Fifth Amendment. Parent hereby
ratifies and reaffirms each and every one of its obligations under the Parent
Guaranty, and confirms that such obligations are, and shall continue to be, in
full force and effect to the full extent provided therein without any defense,
claim, counterclaim, right of offset, recoupment or other defense to payment or
performance whatsoever, each of which is hereby expressly waived. Without
limiting the generality of the foregoing, Parent agrees and acknowledges that
the Parent Guaranty applies with full force and effect to the Loan Agreement as
amended by the Fifth Amendment and as previously amended.
8. COMMERCIAL TORT CLAIMS. Each of Borrower and Parent represents
that, as of the Fifth Amendment Closing Date, it does not have any Commercial
Tort Claims.
9. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective upon satisfaction of each of the following conditions:
(a) Documentation Agent shall have received
copies of this Amendment that bear the signatures of Borrower, Parent, GE
Capital and Bank;
(b) Documentation Agent shall have received each
of the documents listed on the Fourth Addendum to Schedule of Documents attached
hereto as Schedule A that bears the signatures of the respective parties
thereto, each of which shall be in form and substance satisfactory to Lenders.
10. RELEASE.
10.1 In consideration of the agreements of Co-Agents and
Lenders contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each of Borrower and
Parent, on behalf of itself and its successors, assigns, and other legal
representatives, effective as of the Fifth Amendment Closing Date, hereby
absolutely, unconditionally and irrevocably waives and releases any claim,
defense,
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demand, action or suit of any kind or nature whatsoever, known or unknown,
suspected or unsuspected, against the Co-Agents and Lenders, or any of them, or
their respective successors, assigns, or other legal representatives, arising on
or prior to the Fifth Amendment Closing Date in connection with the Loan
Agreement or any of the other Loan Documents, or any of the transactions
contemplated thereunder.
10.2 Each of Borrower and Parent understands, acknowledges
and agrees (i) that no fact, event, circumstance, evidence or transaction which
could now be asserted or which may hereafter be discovered shall affect in any
manner the final, absolute and unconditional nature of the release set forth
above, and (ii) that it is familiar with, and has been advised by its counsel
concerning, the provisions of Section 1542 of the California Civil Code, which
provides as follows:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected
his settlement with the debtor.
Each of Borrower and Parent expressly waives any and all rights under Section
1542 of the California Civil Code, and under any federal or state statute or law
of similar effect.
11. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants that the representations and warranties contained in the Loan Agreement
were true and correct in all material respects when made and, except to the
extent (a) that a particular representation or warranty by its terms expressly
applies only to an earlier date, (b) Borrower has previously advised Co-Agents
in writing as contemplated under the Loan Agreement, or (c) amended by this
Amendment, are true and correct in all material respects as of the date hereof.
All representations and warranties contained in the Loan Agreement which
expressly applied to the Closing Date, as amended in part by Section 7 of the
Second Amendment, remain true and correct in all material respects as of the
Fifth Amendment Closing Date. The Loan Agreement shall continue in full force
and effect in accordance with the provisions thereof on the date hereof.
12. AMENDMENT FEE. In order to induce Agents and Lenders to enter
into this Amendment, and in consideration of the accommodations provided to
Borrower herein, Borrower shall pay to Administrative Agent, for the ratable
benefit of Lenders, the sum of $75,000 for this Amendment (the "Fifth Amendment
Fee") (which Fifth Amendment Fee will have been fully earned by Agents on the
Fifth Amendment Closing Date and shall not be in lieu of, but shall be in
addition to Agents' entitlement under the Loan Agreement to reimbursement of
fees, costs and expenses in connection with this Amendment, including the
reasonable fees, costs and expenses of counsel). Administrative Agent may
receive the Fifth Amendment Fee on behalf of Lenders by making one or more
Revolving Credit Advances in the aggregate amount thereof on or after the Fifth
Amendment Closing Date.
13. ENTIRE AGREEMENT. This Amendment, together with the Loan
Agreement and the other Loan Documents, is the entire agreement between the
parties hereto with respect to the subject matter hereof. This Amendment
supersedes all prior and contemporaneous oral and written agreements and
discussions with respect to the subject matter hereof. Except as otherwise
expressly modified herein, the Loan Documents shall remain in full force and
effect.
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14. MISCELLANEOUS.
14.1 COUNTERPARTS. This 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 to this Amendment by facsimile transmission
shall be effective as delivery of a manually executed counterpart of this
Amendment. Any Person delivering this Amendment by facsimile shall send the
original manually executed counterpart of this Amendment to Documentation Agent
promptly after such facsimile transmission.
14.2 HEADINGS. Section headings used herein are for
convenience of reference only, are not part of this Amendment, and are not to be
taken into consideration in interpreting this Amendment.
14.3 RECITALS. The recitals set forth at the beginning of
this Amendment are true and correct, and such recitals are incorporated into and
are a part of this Amendment.
14.4 GOVERNING LAW. This Amendment shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California applicable to contracts made and performed in such state, without
regard to the principles thereof regarding conflict of laws.
14.5 NO WAIVER. Except as specifically set forth in
paragraphs 3, 4 and 5 of this Amendment, the execution, delivery and
effectiveness of this Amendment shall not (a) limit, impair, constitute a waiver
of or otherwise affect any right, power or remedy by Administrative Agent,
Documentation Agent or any Lender under the Loan Agreement or any other Loan
Document, (b) constitute a waiver of any provision in the Loan Agreement or in
any of the other Loan Documents, or (c) alter, modify, amend or in any way
affect any of the terms, conditions, obligations, covenants or agreements
contained in the Loan Agreement, all of which are ratified and affirmed in all
respects and shall continue in full force and effect.
14.6 CONFLICT OF TERMS. In the event of any inconsistency
between the provisions of this Amendment and any provision of the Loan
Agreement, the terms and provisions of this Amendment shall govern and control.
IN WITNESS WHEREOF, the parties have entered into this
Amendment on the date first above written.
"Borrower"
GOOD GUYS CALIFORNIA, INC.
By /s/ Xxxxx X. Xxxxxx
-------------------------
Xxxxx X. Xxxxxx
Chief Financial Officer
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"Parent"
GOOD GUYS, INC.
(executing for purposes of paragraphs 7, 8 and 10 only)
By /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx
Chief Financial Officer
"Administrative Agent"
BANK OF AMERICA, N.A.,
as the Administrative Agent
By /s/ Xxxxx X. Xxxxx
-----------------------------------------
Xxxxx X. Xxxxx
Senior Vice President
"Documentation Agent"
GENERAL ELECTRIC CAPITAL CORPORATION,
as the Documentation Agent
By /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxx
Duly Authorized Signatory
"Lenders"
BANK OF AMERICA, N.A., as a Lender
By /s/ Xxxxx X. Xxxxx
-----------------------------------------
Xxxxx X. Xxxxx
Senior Vice President
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By /s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxx
Duly Authorized Signatory
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