BANK OF AMERICA
BANK OF AMERICA BUSINESS CREDIT
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LOAN AND SECURITY AGREEMENT
among
COMPUSA STORES L.P.
THE OTHER LOAN PARTIES FROM TIME TO TIME PARTY HERETO
NATIONSBANK, N.A.
as
ADMINISTRATIVE AGENT
and a Lender
and
CONGRESS FINANCIAL CORPORATION
as
DOCUMENTATION AGENT
and
THE CHASE MANHATTAN BANK
and
FOOTHILL CAPITAL CORPORATION
AS CO-AGENTS
and
THE OTHER LENDERS, IF ANY, FROM TIME TO TIME PARTY HERETO
Dated as of June 30, 1999
NATIONSBANK, N.A.
LEAD ARRANGER AND SOLE BOOK RUNNER
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS..........................................................................1
Section 1.1 DEFINITIONS...........................................................1
Section 1.2 GENERAL..............................................................43
Section 1.3 EXHIBITS AND SCHEDULES...............................................44
ARTICLE 2 - REVOLVING CREDIT FACILITY...........................................................44
Section 2.1 REVOLVING CREDIT LOANS...............................................44
Section 2.2 MANNER OF BORROWING REVOLVING CREDIT LOANS...........................44
Section 2.3 REPAYMENT OF REVOLVING CREDIT LOANS..................................46
Section 2.4 REVOLVING CREDIT NOTE................................................46
Section 2.5 BORROWING BASE.......................................................46
Section 2.6 EXTENSION OF REVOLVING CREDIT FACILITY...............................47
ARTICLE 3 - LETTER OF CREDIT FACILITY...........................................................47
Section 3.1 AGREEMENT TO ISSUE...................................................47
Section 3.2 AMOUNTS..............................................................47
Section 3.3 CONDITIONS...........................................................47
Section 3.4 ISSUANCE OF LETTERS OF CREDIT........................................48
Section 3.5 DUTIES OF L/C ISSUER.................................................49
Section 3.6 PAYMENT OF REIMBURSEMENT OBLIGATIONS.................................49
Section 3.7 PARTICIPATIONS.......................................................50
Section 3.8 INDEMNIFICATION, EXONERATION.........................................51
Section 3.9 L/C CASH COLLATERAL ACCOUNT..........................................53
Section 3.10 SUPPORTING LETTER OF CREDIT..........................................55
Section 3.11 EXISTING LETTERS OF CREDIT...........................................55
ARTICLE 4 - RESERVED............................................................................55
ARTICLE 5 - GENERAL LOAN PROVISIONS.............................................................55
Section 5.1 PROCEDURE FOR BORROWING AND DISBURSEMENT OF LOANS....................55
Section 5.2 INTEREST.............................................................56
Section 5.3 INTEREST RATE OPTION.................................................57
Section 5.4 CERTAIN FEES.........................................................58
Section 5.5 MANNER OF PAYMENT....................................................59
Section 5.6 GENERAL..............................................................59
Section 5.7 LOAN ACCOUNTS; STATEMENTS OF ACCOUNT.................................59
Section 5.8 TERMINATION OF AGREEMENT.............................................60
Section 5.9 MAKING OF LOANS......................................................60
Section 5.10 SETTLEMENT AMONG LENDERS.............................................62
Section 5.11 MANDATORY PREPAYMENTS................................................65
Section 5.12 PREPAYMENT AND TERMINATION...........................................65
i
ARTICLE 6 - CHANGE OF CIRCUMSTANCES.............................................................66
Section 6.1 INCREASED COST AND REDUCED RETURN....................................66
Section 6.2 LIMITATION ON TYPES OF LOANS.........................................67
Section 6.3 ILLEGALITY...........................................................68
Section 6.4 TREATMENT OF AFFECTED LOANS..........................................68
Section 6.5 COMPENSATION.........................................................69
Section 6.6 TAXES................................................................69
ARTICLE 7 - CONDITIONS PRECEDENT................................................................71
Section 7.1 CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT..................71
Section 7.2 ALL LOANS; ISSUANCE OF LETTERS OF CREDIT.............................75
ARTICLE 8 - REPRESENTATIONS AND WARRANTIES......................................................76
Section 8.1 REPRESENTATIONS AND WARRANTIES.......................................76
Section 8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC......................87
ARTICLE 9 - SECURITY............................................................................88
Section 9.1 SECURITY INTEREST....................................................88
Section 9.2 PERFECTION AND CONTINUED PRIORITY OF SECURITY INTEREST...............89
Section 9.3 GUARANTIES; LOAN PARTY JOINDER.......................................90
Section 9.4 LIMITATION IN RESPECT OF CERTAIN LOAN PARTIES........................90
ARTICLE 10 - COLLATERAL COVENANTS...............................................................91
Section 10.1 COLLECTION OF RECEIVABLES............................................91
Section 10.2 VERIFICATION AND NOTIFICATION........................................92
Section 10.3 DISPUTES, RETURNS AND ADJUSTMENTS....................................92
Section 10.4 INVOICES.............................................................92
Section 10.5 DELIVERY OF INSTRUMENTS..............................................93
Section 10.6 SALES OF INVENTORY...................................................93
Section 10.7 OWNERSHIP AND DEFENSE OF TITLE.......................................93
Section 10.8 INSURANCE............................................................93
Section 10.9 LOCATION OF OFFICES AND COLLATERAL...................................94
Section 10.10 RECORDS RELATING TO COLLATERAL.......................................94
Section 10.11 INSPECTION; APPRAISALS...............................................95
Section 10.12 INFORMATION AND REPORTS..............................................96
Section 10.13 POWER OF ATTORNEY....................................................97
Section 10.14 ADDITIONAL REAL ESTATE AND LEASES....................................98
Section 10.15 ASSIGNMENT OF CLAIMS ACT.............................................98
Section 10.16 VOTING RIGHTS, DISTRIBUTIONS, ETC., IN RESPECT OF
INVESTMENT PROPERTY.................................................................98
ARTICLE 11 - AFFIRMATIVE COVENANTS..............................................................99
Section 11.1 PRESERVATION OF EXISTENCE AND SIMILAR MATTERS.......................99
Section 11.2 COMPLIANCE WITH APPLICABLE LAW.....................................100
ii
Section 11.3 MAINTENANCE OF PROPERTY.............................................100
Section 11.4 CONDUCT OF BUSINESS.................................................100
Section 11.5 INSURANCE...........................................................100
Section 11.6 PAYMENT OF TAXES AND CLAIMS.........................................100
Section 11.7 ACCOUNTING METHODS AND FINANCIAL RECORDS............................101
Section 11.8 USE OF PROCEEDS.....................................................101
Section 11.9 HAZARDOUS WASTE AND SUBSTANCES; ENVIRONMENTAL REQUIREMENTS..........101
ARTICLE 12 - INFORMATION.......................................................................102
Section 12.1 FINANCIAL STATEMENTS................................................102
Section 12.2 RESERVED............................................................103
Section 12.3 OFFICER'S CERTIFICATE...............................................103
Section 12.4 COPIES OF OTHER REPORTS.............................................104
Section 12.5 NOTICE OF LITIGATION AND OTHER MATTERS..............................104
Section 12.6 ERISA...............................................................105
Section 12.7 ACCURACY OF INFORMATION.............................................106
Section 12.8 REVISIONS OR UPDATES TO SCHEDULES...................................106
Section 12.9 YEAR 2000 COMPLIANCE................................................106
Section 12.10 ANNUAL PROJECTIONS..................................................106
ARTICLE 13 - NEGATIVE COVENANTS................................................................106
Section 13.1 FIXED CHARGE COVERAGE RATIO. ......................................107
Section 13.2 INDEBTEDNESS........................................................107
Section 13.3 GUARANTIES..........................................................108
Section 13.4 INVESTMENTS.........................................................108
Section 13.5 RESTRICTED DIVIDEND PAYMENTS, RESTRICTED PAYMENTS AND RESTRICTED
PURCHASES..........................................................................108
Section 13.6 LIQUIDATION, DISPOSITION OR ACQUISITION OF ASSETS, MERGER, NEW
SUBSIDIARIES.......................................................................108
Section 13.7 TRANSACTIONS WITH AFFILIATES........................................110
Section 13.8 LIENS...............................................................110
Section 13.9 CAPITAL EXPENDITURES. .............................................110
Section 13.10 PLANS...............................................................110
Section 13.11 SALES AND LEASEBACKS................................................111
ARTICLE 14 - DEFAULT...........................................................................112
Section 14.1 EVENTS OF DEFAULT...................................................112
Section 14.2 REMEDIES............................................................115
Section 14.3 APPLICATION OF PROCEEDS.............................................118
Section 14.4 POWER OF ATTORNEY...................................................118
Section 14.5 MISCELLANEOUS PROVISIONS CONCERNING REMEDIES........................119
Section 14.6 REGISTRATION RIGHTS; PRIVATE SALES; ETC.............................120
ARTICLE 15 - ASSIGNMENTS.......................................................................122
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Section 15.1 ASSIGNMENTS AND PARTICIPATIONS......................................122
Section 15.2 REPRESENTATION OF LENDERS...........................................123
ARTICLE 16 - AGREEMENTS AMONG CREDIT PARTIES...................................................124
Section 16.1 APPOINTMENT, POWERS, AND IMMUNITIES.................................124
Section 16.2 RELIANCE BY AGENT...................................................125
Section 16.3 DEFAULTS............................................................125
Section 16.4 RIGHTS AS LENDER....................................................125
Section 16.5 LIMITATION OF LIABILITY; INDEMNIFICATION............................126
Section 16.7 LENDER CREDIT DECISION; NON-RELIANCE ON AGENT AND OTHER LENDERS.....127
Section 16.8 RESIGNATION OF AGENT................................................127
ARTICLE 17 - MISCELLANEOUS.....................................................................128
Section 17.1 NOTICES.............................................................128
Section 17.2 EXPENSES............................................................128
Section 17.3 STAMP AND OTHER TAXES...............................................130
Section 17.4 RIGHT OF SET-OFF; ADJUSTMENTS.......................................130
Section 17.5 LITIGATION; WAIVER OF TRIAL BY JURY.................................131
Section 17.6 CONSENT TO ADVERTISING AND PUBLICITY................................131
Section 17.7 REVERSAL OF PAYMENTS................................................132
Section 17.8 INJUNCTIVE RELIEF...................................................132
Section 17.9 ACCOUNTING MATTERS..................................................132
Section 17.10 AMENDMENTS; WAIVERS.................................................132
Section 17.11 ASSIGNMENT..........................................................134
Section 17.12 PERFORMANCE OF DUTIES...............................................134
Section 17.13 INDEMNIFICATION.....................................................134
Section 17.14 ALL POWERS COUPLED WITH INTEREST....................................135
Section 17.15 SURVIVAL............................................................135
Section 17.16 TITLES AND CAPTIONS.................................................136
Section 17.17 SEVERABILITY OF PROVISIONS..........................................136
Section 17.18 GOVERNING LAW.......................................................136
Section 17.19 COUNTERPARTS........................................................136
Section 17.20 REPRODUCTION OF DOCUMENTS...........................................136
Section 17.21 TERM OF AGREEMENT...................................................137
Section 17.22 PRO-RATA PARTICIPATION..............................................137
Section 17.23 INTEREST LIMITATION.................................................138
Section 17.24 MUTUAL BENEFIT......................................................138
Section 17.25 EXPRESS WAIVERS BY LOAN PARTIES IN RESPECT OF CROSS GUARANTIES AND
CROSS COLLATERALIZATION............................................................139
Section 17.26 DETERMINATION BY THE LENDERS CONCLUSIVE AND BINDING.................140
Section 17.27 EXCEPTION TO COVENANTS..............................................141
Section 17.28 JUDGMENT CURRENCY...................................................141
Section 17.29 REPLACEMENT/RESTATEMENT OF EXISTING CREDIT AGREEMENT................141
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EXHIBITS
EXHIBIT "A" Form of Revolving Credit Note
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EXHIBIT "B" Reserved
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EXHIBIT "C" Form of Borrowing Base Certificate
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EXHIBIT "D" Form of Assignment and Acceptance
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EXHIBIT "E" Form of Notice of Borrowing, Conversion or Continuation
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EXHIBIT "F" Form of Compliance Certificate
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EXHIBIT "G" Form of Joinder Agreement
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SCHEDULES
Schedule 1.1A Existing Letters of Credit
Schedule 1.1B Parent's Investment Policy
Schedule 1.1C Permitted Investments
Schedule 1.1D Permitted Liens
Schedule 8.1(a) Organization, Qualifications
Schedule 8.1(d) Subsidiaries; Ownership of Stock
Schedule 8.1(f) No Conflicts
Schedule 8.1(h) Governmental Approvals; Applicable Law
Schedule 8.1(i) Title to Properties
Schedule 8.1(k) Indebtedness for Money Borrowed and Guaranties
Schedule 8.1(l) Litigation
Schedule 8.1(m) Tax Returns and Payments
Schedule 8.1(o) Material Liabilities
Schedule 8.1(q) ERISA
Schedule 8.1(u) FIT No.; Location of Chief Executive Office; Records
Schedule 8.1(v) Location of Inventory
Schedule 8.1(y) Corporate Name
Schedule 8.1(bb) Employee Relations
Schedule 8.1(cc) Proprietary Rights
Schedule 8.1(dd) Trade Names
Schedule 8.1(gg) Existing Store Locations
Schedule 8.1(hh) Deposit Accounts and Merchant Account Agreements
Schedule 9.2 Purchase Money Liens
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("AGREEMENT"), dated as of June 30,
1999 is executed and entered into by and among COMPUSA STORES L.P., a Texas
limited partnership ("BORROWER"), COMPUSA INC., a Delaware corporation
("PARENT") and each of the other Loan Parties (as defined hereinbelow) from
time to time party hereto (Borrower, Parent and each such other Loan Party,
individually a "LOAN PARTY" and collectively the "LOAN PARTIES"), each of the
lending institutions which is a party hereto or any permitted successor or
assignee thereof permitted pursuant to SECTION 15.1 (individually, a "LENDER"
and collectively, the "LENDERS"), the L/C Issuer (as such term is defined
herein) and NATIONSBANK, N.A., a national banking association, as
administrative agent for itself and the other Lenders (in such capacity,
together with its successors and assigns in such capacity, "AGENT").
RECITALS:
A. Borrower has requested that the Lenders extend a credit
facility to Borrower for revolving loans and letters of credit.
B. The Lenders have agreed to provide such loan facilities
upon and subject to the terms and conditions set forth in this Agreement and
the other Loan Documents (as defined below).
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Agreement, the following
terms have the following meanings:
"ACCOUNTS" means, with respect to a Person, all of such Person's now
owned and hereafter acquired rights to payment for goods sold or leased or
for services rendered which is not evidenced by an instrument or chattel
paper, whether or not it has been earned by performance, and any other
property or interest in property that is classified as an account pursuant to
the UCC.
"ACCOUNT DEBTOR" means a Person who is obligated on a Receivable.
"ACQUIRE" or "ACQUISITION", as to a Loan Party or Restricted
Subsidiary, means any transaction pursuant to which such Loan Party or
Restricted Subsidiary, (a) whether by means of a capital contribution or
purchase or other acquisition of Capital Stock, (i) acquires (or after giving
effect to such transaction owns) more than 50% of the Capital Stock in any
other Person pursuant to a solicitation by such Loan Party or Restricted
Subsidiary of tenders of equity securities of such
LOAN AND SECURITY AGREEMENT - Page 1
Person, or through one or more negotiated block, market, private or other
transactions (other than formation and capitalization of a new Wholly-Owned
Subsidiary of such Loan Party or Restricted Subsidiary), or a combination of
any of the foregoing, or (ii) makes any Person a Subsidiary of such Loan
Party or Restricted Subsidiary, or causes any Person, other than a Loan Party
or Restricted Subsidiary, to be merged into such Loan Party or Restricted
Subsidiary (or agrees to be merged into any other Person other than a Loan
Party), or (b) purchases in one transaction or a series of related
transactions all or any part of the business or assets of any Person.
"ACQUISITION CONSIDERATION" means the consideration given by a Loan
Party for an Acquisition, including but not limited to the sum of (without
duplication) (a) the fair market value of any cash, property (including
capital stock or other equity securities or interests) or services given,
PLUS (b) consideration paid with proceeds of Indebtedness permitted pursuant
to this Agreement, PLUS (c) the amount of any Indebtedness and Operating
Leases (calculated to be the product of annual rentals multiplied by six)
assumed, incurred or guaranteed in connection with such Acquisition by a
Person that is a Loan Party prior to such Acquisition.
"ADJUSTED EURODOLLAR RATE" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) determined by Agent to be equal to the quotient
obtained by dividing (a) the Eurodollar Rate for such Eurodollar Loan for
such Interest Period by (b) one (1) minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period.
"AFFECTED LOANS" has the meaning set forth in SECTION 6.4 of this
Agreement
"AFFECTED TYPE" has the meaning set forth in SECTION 6.4 of this
Agreement.
"AFFILIATE" means, with respect to any Person, (a) any shareholder
or partner (if record or beneficial owner of more than twenty percent (20.0%)
of the outstanding Capital Stock of such Person), officer, director, employee
or managing agent of such Person, (b) any Subsidiary of such Person, (c) any
other Person (other than a Subsidiary) that, (i) directly or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, such Person, (ii) directly or indirectly beneficially
owns or holds twenty percent (20.0%) or more of any class of Voting Stock of
such Person or any Subsidiary of such Person, or (iii) twenty percent (20.0%)
or more of the Voting Stock of which is directly or indirectly beneficially
owned or held by such Person or a Subsidiary of such Person and (d) without
limiting the foregoing, with respect to a Loan Party also includes each other
Loan Party. The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies
of a Person, whether through ownership of Voting Stock, by contract or
otherwise.
"AGENCY ACCOUNT" means an account of Parent for itself and the other
Loan Parties maintained by it with a Clearing Bank pursuant to an Agency
Account Agreement.
"AGENCY ACCOUNT AGREEMENT" means any agreement (required pursuant to
SECTION 10.1) among the Loan Parties, Agent and a Clearing Bank, in form and
substance satisfactory to Agent,
LOAN AND SECURITY AGREEMENT - Page 2
which designates an Agency Account for the deposit of checks and items
constituting proceeds of Receivables or any other Collateral, and establishes
the terms for transferring balances therein to Agent.
"AGENT" means NationsBank in its capacity as administrative agent
for the Credit Parties as provided by this Agreement, or any successor in
such capacity.
"AGREEMENT" means and includes this Agreement and all exhibits,
schedules, addenda and other attachments hereto, and any renewal, extension,
amendment, modification, restatement or supplement hereof.
"AGREEMENT DATE" means the date as of which this Agreement is dated
in the preamble.
"APPLICABLE LAW" means, with respect to any Person, all provisions
of constitutions, statutes, rules, regulations and orders of any Governmental
Authority applicable to such Person or its property, including, without
limitation, all orders and decrees of all courts and arbitrators in
proceedings or actions to which such Person is a party. In respect of
contracts relating to interest or finance charges that are made or performed
in the State of Texas, "Applicable Law" shall mean the laws of the U.S.,
including without limitation 12 USC Sections 85 and 86(a), as amended from
time to time, and any other statute of the U.S. now or at any time hereafter
prescribing the maximum rates of interest on loans and extensions of credit,
and the laws of the State of Texas, including, without limitation, Art. 1H,
if applicable, and if Art. 1H is not applicable, Art. 1D, and any other
statute of the State of Texas now or at any time hereafter prescribing
maximum rates of interest on loans and extensions of credit; provided that
the parties hereto agree pursuant to Texas Finance Code Section 346.004 that
the provisions of Chapter 346 of the Texas Finance Code shall not apply to
Loans, this Agreement, the Notes or any other Loan Documents. As used herein,
"ART. 1D" means Article 5069-1D, Title 79, Revised Civil Statutes of Texas,
as amended, and "ART. 1H" means Article 5069-1H, Title 79, Revised Civil
Statutes of Texas, as amended.
"APPLICABLE LENDING OFFICE" means, for each Lender and for each Type
of Loan, the "Lending Office" of such Lender (or of an Affiliate of such
Lender) designated for such Type of Loan on the signature pages hereof or
such other office of such Lender (or an Affiliate of such Lender) as such
Lender may from time to time specify to Agent and Borrower by written notice
in accordance with the terms hereof as the office by which its Loans of such
Type are to be made and maintained.
"APPLICABLE MARGIN" means, as of the Agreement Date, two percent
(2.00%) with respect to Eurodollar Loans and zero percent (0%) with respect
to Base Rate Loans, subject to adjustment in the case of Eurodollar Loans
from time to time thereafter to the percentage specified corresponding to the
Leverage Ratio as set forth below, respectively:
======================================================================
Leverage Ratio Eurodollar Loans
======================================================================
Greater than 4.0 to 1.0 2.50%
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LOAN AND SECURITY AGREEMENT - Page 3
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Leverage Ratio Eurodollar Loans
======================================================================
Less than or equal to 4.0 to 1.0 but 2.25%
greater than 3.0 to 1.0
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Less than or equal to 3.0 to 1.0 but 2.00%
greater than 2.5 to 1.0
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Less than or equal to 2.5 to 1.0 but 1.75%
greater than 2.1 to 1.0
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Less than or equal 2.1 to 1.0 but 1.50%
greater than 1.7 to 1.0
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Less than or equal to 1.7 1.25%
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For the purpose of determining the Applicable Margin, the Leverage Ratio
shall be determined based upon Parent's Consolidated financial statements for
each respective Fiscal Quarter delivered to Agent as required by SECTION
12.1, and any resulting change, if any, in the Applicable Margin for
Eurodollar Loans shall become effective as of the date (on or after the first
day of the calendar month following the calendar month in which such
financial statements are delivered to Agent) when any such Eurodollar Loan is
made, Continued or Converted, as the case may be.
"APPLICABLE RATE" means, at any time, (i) the Base Rate PLUS the
Applicable Margin with respect to Base Rate Loans, and (ii) the Adjusted
Eurodollar Rate PLUS the Applicable Margin with respect to Eurodollar Loans,
as the case may be, in effect at any time pursuant to a Notice of Borrowing
or otherwise pursuant to the terms of this Agreement.
"APPRAISED GOB VALUE" means, with respect to Eligible Inventory, the
net liquidation value thereof determined on an orderly going-out-of-business-
sale basis, net of all commissions, associated costs, fees and expenses
associated with such liquidation, as determined by a credentialed appraiser
satisfactory to Agent.
"AR ADVANCE RATE" means a percentage, subject to SECTION 2.5, equal
to eighty five percent (85.0%).
"ASSET DISPOSITION" means, with respect to any Person, the
disposition of any asset of such Person other than (i) sales of Inventory in
the ordinary course of business, (ii) Permitted Investments listed in CLAUSES
(a) AND (b) of the definition of Permitted Investments in SECTION 1.1 and
(iii) disposition of assets by a Loan Party to another Loan Party.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance
Agreement in the form attached hereto as EXHIBIT "D" assigning all or a
portion of a Lender's interests, rights and obligations under this Agreement
to an Eligible Assignee pursuant to SECTION 15.1.
LOAN AND SECURITY AGREEMENT - Page 4
"AUTHORIZED SIGNATORY" means, with respect to any Loan Party or
General Partner, its chief executive officer, senior vice president-finance,
vice president-finance, chief financial officer or senior vice president-
general counsel, and in any event with respect to any Loan Party or
General Partner, such other Person as may be duly authorized and designated
in writing by such Loan Party or General Partner to act on its behalf
pursuant to the Loan Documents.
"AVAILABILITY" means, as of the date of any determination thereof,
(a) the Borrowing Base at such time, MINUS (b) the aggregate outstanding
principal balance of all Revolving Credit Loans as of such date.
"BASE RATE" means, for any day, the rate per annum equal to the
higher of (a) the Federal Funds Rate for such day plus one-half of one
percent (0.5%) or (b) the Prime Rate for such day. Any change in the Base
Rate due to a change in the Federal Funds Rate or the Prime Rate shall be
effective on the effective date of such change in the Federal Funds Rate or
the Prime Rate; PROVIDED that, changes, if any, in the Applicable Rate
resulting from any change in the Base Rate shall become effective as provided
in SECTION 5.2(d).
"BASE RATE LOAN" means any Loan that bears interest at a rate based
on the Base Rate.
"BENEFIT PLAN" means, with respect to any Person, an "employee
pension benefit plan" as defined in Section 3(2) of ERISA (other than a
Multiemployer Plan) in respect of which such Person or any ERISA Affiliate
is, or within the immediately preceding six (6) years was, an "employer" as
defined in Section 3(5) of ERISA, including, without limitation, such plans
as may be established after the Agreement Date.
"BENEFITTED LENDER" has the meaning set forth in SECTION 17.4(b).
"BORROWER" means CompUSA Stores L.P., a Texas limited partnership
(federal tax identification number ▇▇-▇▇▇▇▇▇▇) with its chief executive
office and principal place of business located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and its successors and permitted assigns.
"BORROWING BASE" means, at any time, an amount equal to the lesser of:
(a) Five Hundred Million Dollars ($500,000,000), MINUS
the Letter of Credit Reserve and an amount
determined by Agent in its reasonable discretion
in respect of all obligations owing by any Loan
Party to any Lender in respect of Interest Rate
Protection Agreements
or
(b) an amount equal to the sum of
LOAN AND SECURITY AGREEMENT - Page 5
(i) an amount determined by multiplying the
AR Advance Rate by the face value of
Eligible Receivables due and owing at
such time LESS, at any time when the
aggregate outstanding balance of all
Revolving Credit Loans plus the Letter
of Credit Reserve exceeds the Threshold
Usage Amount, the Reserve, if any, in
respect of Eligible Receivables, PLUS
(ii) the lesser of
(x) the lesser of (A) an amount
determined by multiplying the
INV Advance Rate by the lower of
the cost or market value of
Eligible Inventory, as
determined by the accounting
methods of Parent and its
Consolidated Subsidiaries all in
accordance with GAAP or (B) 85%
of Appraised GOB Value of
Eligible Inventory; LESS, in
either such case, at any time
when the aggregate outstanding
balance of all Revolving Credit
Loans plus the Letter of Credit
Reserve exceeds the Threshold
Usage Amount, the Reserve, if
any, in respect of Eligible
Inventory, or
(y) $400,000,000, MINUS
(iii) the Letter of Credit Reserve and an
amount determined by Agent in its reasonable
discretion in respect of all obligations owing by
any Loan Party to any Lender in respect of
Interest Rate Protection Agreements
(PROVIDED, that no more than 10% of the Borrowing
Base may result from calculations with respect to
Eligible Receivables or Eligible Inventory owned
by CompUSA PC).
"BORROWING BASE CERTIFICATE" means a certificate, signed by an
authorized representative of Borrower, in substantially the form attached
hereto as EXHIBIT "C".
"BORROWING BASE PARTY" means Borrower, Parent and CompUSA PC
(provided that it is a Wholly-Owned Subsidiary of Parent).
"BROKER" means any "broker," as such term is defined in Chapter 8
(or Article 8) of the UCC, and in any event shall include, but not be limited
to, any Person defined as a broker or dealer under the federal securities
laws, but without excluding a bank acting in that capacity.
"BUSINESS DAY" means (a) any calendar day other than Saturday,
Sunday or other day on which banks in Dallas, Texas are authorized to close,
and (b) with respect to all Loans, payments, Conversions, Continuations,
Interest Periods and notices in connection with any Eurodollar Loan,
LOAN AND SECURITY AGREEMENT - Page 6
any day which is a Business Day described in CLAUSE (a) above and which is
also a day on which dealings in Dollar deposits are carried out in the London
interbank Eurodollar market.
"CAPITAL EXPENDITURES" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets
(other than assets which constitute an Acquisition of all or substantially
all of the assets constituting the business, or an operating unit thereof, of
any Person) which are not, in accordance with GAAP, treated as expense items
for such Person in the year made or incurred or as a prepaid expense
applicable to a future year or years.
"CAPITAL STOCK" means corporate stock and any and all shares,
partnership interests, limited partnership interests, membership interests,
equity interests, rights, securities or other equivalent evidences of
ownership (however designated) issued by any entity (whether a corporation,
partnership, limited liability company, limited partnership, business trust
or other type of entity).
"CAPITALIZED LEASE" means a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATION" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"CASH COLLATERAL" means Collateral consisting of cash or Cash
Equivalents.
"CASH EQUIVALENTS" means marketable direct obligations issued or
unconditionally guaranteed by the U.S. or issued by any agency thereof and
backed by the full faith and credit of the U.S., commercial paper having a
rating of at least A-1 from Standard & Poor's Corporation or at least P-1
from ▇▇▇▇▇'▇ Investors Service, Inc., certificates of deposit or bankers'
acceptances issued in Dollar denominations issued by any commercial bank
organized under the laws of the U.S. or any state thereof or the District of
Columbia, and any other such item the liquidity and transferability of which
is generally regarded and accepted in common practice as equivalent to cash.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(a) the adoption of a plan relating to the liquidation or dissolution of
Parent or Borrower, (b) the acquisition by any Person or group (as such term
is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) of a direct or indirect majority in interest (more than 50%) of the
voting power of the voting stock of Parent by way of merger or consolidation
or otherwise, (c) the first day on which a majority of the members of the
Board of Directors of Parent or Borrower are not Continuing Directors, (d)
Borrower shall cease to be a Wholly-Owned Subsidiary of Parent or (e) Parent
or a Wholly-Owned Subsidiary of Parent shall cease to be the sole general
partner of Borrower.
"CHATTEL PAPER" means, with respect to a Person, all writing or
writings now owned and hereafter acquired by such Person which evidence both
a monetary obligation and a security interest in or a lease of specific
goods, and any other property or interest in property classified as chattel
paper pursuant to the UCC.
LOAN AND SECURITY AGREEMENT - Page 7
"CLEARING BANK" means any banking institution with which an Agency
Account has been established pursuant to an Agency Account Agreement.
"COLLATERAL" means and includes all of each respective Loan Party's
right, title and interest in and to each of the following, wherever located
and whether now or hereafter existing or now owned or hereafter acquired or
arising:
(a) all Receivables;
(b) all Inventory;
(c) all Instruments;
(d) all Documents;
(e) all Deposit Accounts;
(f) all General Intangibles;
(g) all Investment Property, EXCLUDING (i) Capital
Stock issued by CompUSA ▇▇▇.▇▇▇ and (ii) Capital
Stock issued by InfoSource, Inc.; PROVIDED, that
with respect to any direct Foreign Subsidiary
owned by a Loan Party, the amount of Capital Stock
of such Foreign Subsidiary included in the
Collateral shall be limited to 65% of the issued
and outstanding Capital Stock of such Foreign
Subsidiary;
(h) all goods and other property, whether or not
delivered,
(i) the sale or lease of which gives or
purports to give rise to any Receivable, including, but not
limited to, all merchandise returned or rejected by or
repossessed from customers, or
(ii) securing any Receivable,
including, without limitation, all rights as an unpaid vendor or
lienor (including, without limitation, stoppage in transit, replevin
and reclamation) with respect to such goods and other property;
(k) all mortgages, deeds to secure debt and deeds of
trust on real or personal property, guaranties, leases, security
agreements and other agreements and property which secure any
Receivable or other obligation included in the Collateral, or are
acquired for the purpose of securing and enforcing same;
LOAN AND SECURITY AGREEMENT - Page 8
(l) all files, correspondence, computer programs,
tapes, discs and related data processing software which contain
information identifying or pertaining to any Receivables or any
Account Debtor, or showing the amounts thereof or payments thereon
or otherwise necessary or helpful in the realization thereon or the
collection thereof;
(m) all Money and Cash Equivalents;
(n) all Receivables Guaranties;
(o) all Receivables L/C's; and
(p) any and all proceeds or products of any of the
foregoing (including, but not limited to, any claim to any item
referred to in this definition, and any claim against any Person for
loss of, damage to or destruction of any or all of, the Collateral
or for proceeds payable under, or unearned premiums with respect to,
policies of insurance) in whatever form;
PROVIDED, that notwithstanding the foregoing (but subject to the further
proviso following and without impairing SECTION 13.8), "Collateral" does not
include any General Intangible or Proprietary Right to the extent the grant
by any Loan Party of the Security Interest therein is prohibited by any
agreement or restriction pursuant to any grant from, or agreement with, any
Person evidencing such Loan Party's interest therein for so long as (but only
for so long as) the consent of such Person to such grant has not been
obtained, PROVIDED FURTHER, however, that the foregoing limitation shall not
in any event apply to, affect, limit, restrict or otherwise impair the grant
by any Loan Party of the Security Interest in any (i) Accounts; (ii)
Inventory; (iii) Proprietary Rights specifically scheduled in a Patent
Security Agreement, Trademark Security Agreement or Copyright Security
Agreement; (iv) Money due or to become due to a Loan Party (and proceeds
thereof) under any Merchant Account or Merchant Account Agreement; or (v) any
other Receivables, any General Intangibles or any other Proprietary Rights to
the extent any purported prohibition affecting property identified in this
CLAUSE (v) is unenforceable pursuant to Section 9.318(d) of the UCC or other
Applicable Law.
"COMMITMENT" means, as to each Lender, the amount set forth opposite
such Lender's name on the signature pages hereof representing such Lender's
obligation, upon and subject to the terms and conditions of this Agreement,
to make Revolving Credit Loans and to purchase participations in Letters of
Credit or, from and after the date hereof, in the Register representing such
Lender's obligation to make Revolving Credit Loans and to purchase
participations in Letters of Credit.
"COMMITMENT PERCENTAGE" means, as to any Lender, the percentage
obtained by dividing such Lender's Commitment by the Total Commitment.
"COMPLIANCE CERTIFICATE" means a certificate of an Authorized
Signatory of Parent, in substantially the form of EXHIBIT "F", containing the
information required by SECTION 12.3.
LOAN AND SECURITY AGREEMENT - Page 9
"COMPUSA ▇▇▇.▇▇▇" means CompUSA ▇▇▇.▇▇▇ Inc., a Delaware corporation
and, as of the Agreement Date, a Wholly-Owned Subsidiary of Parent.
"COMPUSA PC" means CompUSA PC Operating Company, a Delaware business
trust, and as of the Agreement Date, an indirect Wholly-Owned Subsidiary of
Parent.
"CONSOLIDATED", when used in connection with any accounting term
with reference to a Person, means such accounting term determined with
reference to such Person and its Subsidiaries, as consolidated according to
GAAP (and, in the case of Net Income, after appropriate deductions for any
minority interests in any Subsidiaries).
"CONSOLIDATED SUBSIDIARIES" means, as to a Person, the Subsidiaries
of such Person whose accounts are at the time in question, in accordance with
GAAP, consolidated with those of such Person.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste as may
be controlled or regulated by Applicable Law.
"CONTINUE", "CONTINUATION" and "CONTINUED" mean the continuation
pursuant to SECTION 5.3(b) of a Eurodollar Loan as a Eurodollar Loan from one
Interest Period to the next Interest Period.
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of Parent or Borrower who (a) was a member
of such Board of Directors on the Agreement Date or (b) was nominated for
election or elected to such Board of Directors with the affirmative vote of a
majority of the Continuing Directors who were members of such Board at the
time of such nomination or election.
"CONTRACT RIGHTS" means any rights under contracts not yet earned by
performance and not evidenced by an instrument or chattel paper, whether now
existing or hereafter arising, to the extent that such rights may be lawfully
assigned.
"CONTRIBUTED ASSETS" means the sum (without duplication) of the
aggregate net book value, as reflected on the books of a Loan Party or
Restricted Subsidiary, as the case may be, of assets (whether of Capital
Stock or other property, services or Money, including the proceeds of Loans
or other Indebtedness incurred by such Loan Party or Restricted Subsidiary)
contributed on and after the Agreement Date by a Loan Party or any Restricted
Subsidiary to or for the benefit of CompUSA ▇▇▇.▇▇▇.
"CONTRIBUTED INDEBTEDNESS " means, at any time, the aggregate amount
of Indebtedness owing by CompUSA ▇▇▇.▇▇▇ to any and all of the Loan Parties
or any Restricted Subsidiary.
LOAN AND SECURITY AGREEMENT - Page 10
"CONVERT", "CONVERSION" and "CONVERTED" mean a conversion pursuant
to SECTION 5.3(c), or ARTICLE 6 of one Type of Loan into another Type of Loan.
"COPYRIGHT SECURITY AGREEMENT" means a Copyright Security Agreement
executed by one or more of the Loan Parties in favor of Agent, for the
benefit of the Credit Parties, as such agreement may be amended, modified,
restated or supplemented from time to time.
"COPYRIGHTS" means and includes, with respect to any Person, all of
such Person's right, title and interest in and to the following, in each case
whether now existing or hereafter arising:
(a) all copyrights, rights and interests in
copyrights, works protectable by copyright, copyright registrations
and copyright applications;
(b) all renewals of any of the foregoing;
(c) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing, including,
without limitation, damages or payments for past or future
infringements of any of the foregoing;
(d) the right to ▇▇▇ for past, present and future
infringements of any of the foregoing; and
(e) all rights corresponding to any of the foregoing
under Applicable Law.
"CREDIT PARTY" means each of Agent, L/C Issuer and the Lenders, and
"Credit Parties" means all of such Persons, collectively.
"DEFAULT" means any of the events specified in SECTION 14.1 which
with the passage of time or giving of notice or both would constitute an
Event of Default.
"DEFAULT MARGIN" means three percent (3%).
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account maintained with a bank, savings and loan association, credit union or
like organization, other than an account evidenced by a certificate of
deposit, and includes, without limitation any L/C Cash Collateral Account.
"DISBURSEMENT ACCOUNT" means one or more accounts maintained by and
in the name of Borrower with a Disbursing Bank for the purposes of depositing
Revolving Credit Loan proceeds pursuant to this Agreement.
"DISBURSING BANK" means any commercial bank with which a
Disbursement Account is maintained after the Agreement Date.
LOAN AND SECURITY AGREEMENT - Page 11
"DIVIDENDS" means, as to any Person, any declaration or payment of
any dividend or the making of any distribution, loan, advance or investment
on or with respect to any shares of a Person's Capital Stock (other than
dividends or distributions payable solely in shares or other evidence of
ownership of such Person's Capital Stock).
"DOCUMENTS" means, with respect to a Person, all of such Person's
now owned and hereafter acquired documents of title issued by or addressed to
a bailee which purport to cover goods in the bailee's possession which are
either identified or are fungible portions of an identified mass, including
without limitation a ▇▇▇▇ of lading, dock warrant, dock receipt, warehouse
receipt or order for the delivery of goods, or other document, and which in
the regular course of business or financing is treated as adequately
evidencing that a Person in possession of it is entitled to receive, hold and
dispose of the document and the goods it covers, and any other property or
interest in property classified as a document pursuant to the UCC.
"DOLLAR" and "$" each means freely transferable U.S. dollars.
"DOMESTIC SUBSIDIARY" means each direct or indirect Subsidiary of
Parent formed under the laws of the U.S. or any state thereof.
"EBITDA" means Net Income, PLUS, for each Fiscal Period to the
extent deducted in the determination of Net Income, each of the following:
(i) Interest Expense; (ii) income taxes; (iii) depreciation and amortization
expense, (iv) other non-cash charges and (v) restructuring charges relating
to Management's Restructuring Plan.
"EFFECTIVE DATE" means the later of:
(a) the Agreement Date; or
(b) the first date on which all of the conditions set
forth in SECTION 7.1 and SECTION 7.2 shall have been fulfilled or
waived in accordance with the provisions of SECTION 17.10.
"EFFECTIVE INTEREST RATE" means the rate of interest per annum on
the Revolving Credit Loans in effect from time to time pursuant to the
provisions of SECTIONS 5.2(a), (b) and (c).
"ELIGIBLE ASSIGNEE" means (i) a Lender, (ii) any Affiliate of a
Lender, and (iii) any other Person approved by Agent and, unless an Event of
Default has occurred and is continuing at the time any assignment is effected
in accordance with SECTION 15.1, Borrower, such approval not to be
unreasonably withheld or delayed by Borrower and such approval to be deemed
given by Borrower if no objection from Borrower is received by the assigning
Lender and Agent within four (4) Business Days after notice of such proposed
assignment has been provided to Borrower by Agent or the assigning Lender;
PROVIDED, HOWEVER, that neither Borrower nor an Affiliate of Borrower shall
qualify as an Eligible Assignee.
LOAN AND SECURITY AGREEMENT - Page 12
"ELIGIBLE INVENTORY" means Inventory of a Borrowing Base Party which
Agent, in its reasonable discretion determines to meet all of the following
requirements:
(a) such Inventory is owned by such Borrowing Base Party,
has been received and is stored at a location listed on SCHEDULE 8.1(v)
("Location of Inventory") or is in such Borrowing Base Party's control
and is in transit from any of such locations to another of such
locations, is subject to the Security Interest which is perfected as to
such Inventory and is subject to no other Lien other than a Permitted
Landlords Lien or Permitted Warehouseman's Lien;
(b) such Inventory consists of finished goods and not
work-in-process or supplies;
(c) such Inventory is in good condition and meets all
standards imposed by any Governmental Authority having regulatory
authority over such goods, their use or sale;
(d) such Inventory is currently either usable or salable,
at prices approximating at least the cost of such Inventory, in the
normal course of such Borrowing Base Party's business and is not slow
moving or stale;
(e) such Inventory is not obsolete or returned, repossessed
or used goods taken in trade;
(f) such Inventory is located within the U.S.;
(g) such Inventory is in the possession and control of
such Borrowing Base Party and not any third party, or if such Inventory
is held by a third party bailee and a negotiable instrument has not
been issued with respect thereto and the aggregate outstanding balance
of all Revolving Credit Loans plus the Letter of Credit Reserve exceeds
the Threshold Usage Amount, Agent shall have established a reasonable
amount in the Reserve (not exceeding an amount equal to the aggregate
amount payable to such bailee for a period of sixty (60) days) in
respect of the warehouse agreement or other agreement under which such
bailee is in possession of such Inventory, unless a waiver and access
agreement, in form and substance satisfactory to Agent, shall have been
executed and delivered to Agent by such bailee and such Borrowing Base
Party and such other steps shall have been taken as Agent may
reasonably require in order to establish and preserve the priority of
the Security Interest in such Inventory;
(h) unless such Borrowing Base Party shall have delivered
to Agent landlord's or mortgagee's waiver and consent agreements, in
form and substance satisfactory to Agent and duly executed on behalf of
the landlord or mortgagee, as the case may be, of Real Estate or other
real property on which any such Inventory is located in any state in
which Applicable Law provides for a statutory Lien for the benefit of
lessors of real property which,
LOAN AND SECURITY AGREEMENT - Page 13
under such Applicable Law, has or may have priority over the
Security Interest, at any time when the aggregate outstanding
balance of all Revolving Credit Loans plus the Letter of Credit
Reserve exceeds the Threshold Usage Amount, Agent shall have
established a reasonable amount in the Reserve (not exceeding an
amount equal to the aggregate amount payable to such landlord or
mortgagee for a period of sixty (60) days) in respect of the lease
or other agreement under which such Borrowing Base Party occupies
such Real Estate; and
(i) such Inventory is not determined by Agent, on behalf
of the Lenders, in its reasonable discretion in the exercise of
reasonable credit judgment to be ineligible for any other reason.
"ELIGIBLE RECEIVABLE" means a Receivable of a Borrowing Base Party that
consists of the unpaid portion of the obligation stated on the invoice issued to
an Account Debtor with respect to Inventory sold and shipped to or services
performed for such Account Debtor in the ordinary course of such Borrowing Base
Party's business, net of any credits or rebates owed by such Borrowing Base
Party to such Account Debtor and net of any commissions payable by such
Borrowing Base Party to third parties and that Agent, in its reasonable
discretion determines to meet all of the following requirements:
(a) such Receivable is owned by such Borrowing Base Party
and represents a complete bona fide transaction which requires no
further act under any circumstances on the part of such Borrowing Base
Party to make such Receivable payable by the Account Debtor;
(b) such Receivable is not more than ninety (90) days past
due from the stated due date of the original invoice;
(c) not more than one hundred twenty (120) days have
elapsed from the date of the original invoice;
(d) the goods the sale of which gave rise to such Receivable
were shipped or delivered to the Account Debtor on an absolute sale
basis and not on a ▇▇▇▇ and hold sale basis, a consignment sale
basis, a guaranteed sale basis, a sale or return basis or on the
basis of any other similar understanding, and no material part of
such goods has been returned or rejected;
(e) such Receivable is not evidenced by chattel paper or
an instrument of any kind unless such chattel paper or instrument has
been collaterally assigned to Agent, for the benefit of the Credit
Parties, pursuant to an assignment in form and substance satisfactory
to Agent and is in the possession of Agent;
(f) the Account Debtor with respect to such Receivable is
not insolvent or the subject of any bankruptcy or insolvency
proceedings of any kind or of any other proceeding or action,
threatened or pending, which might, in Agent's reasonable judgment,
have a
LOAN AND SECURITY AGREEMENT - Page 14
material adverse effect on such Account Debtor, and is not, in the
reasonable discretion of Agent, deemed ineligible for credit or
other reasons;
(g) such Receivable is not owing by an Account Debtor
having fifty percent (50.0%) or more in face value of its then existing
aggregate total accounts owing to all Loan Parties, in the aggregate,
which do not meet the requirements of CLAUSE (b) or CLAUSE (c) above;
(h) such Receivable is not owing by an Account Debtor
whose then existing accounts owing to all Loan Parties, in the
aggregate, exceed in face amount fifteen percent (15%) of all Loan
Parties' total Eligible Receivables;
(i) if such Receivable arises from the performance of
services, such services have been fully rendered and do not relate to
any warranty claim or obligation;
(j) such Receivable is not owing by an Account Debtor
that is located outside of the U.S.;
(k) such Receivable is a valid, legally enforceable
obligation of the Account Debtor with respect thereto and is not
subject to any present or contingent (and no facts exist which are the
basis for any future) offset, deduction or counterclaim, dispute or
other defense on the part of such Account Debtor, unless any such
offset, deduction or counterclaim, dispute or other defense is noted in
the Borrowing Base Certificate and a reasonable amount satisfactory to
Agent has been deducted from such Receivable in respect thereof;
(l) such Receivable is subject to the Security Interest,
which is perfected as to such Receivable in form and substance
satisfactory to Agent, and is subject to no other Lien whatsoever;
(m) such Receivable is evidenced by an invoice or other
documentation in form acceptable to Agent;
(n) if such Receivable is subject to the Assignment of
Claims Act of 1940, as amended from time to time, or any Applicable Law
now or hereafter existing similar in effect thereto, or to any other
prohibition (under Applicable Law, by contract or otherwise) against
its assignment or requiring notice of or consent to such assignment, if
requested by Agent all such required notices have been given, all such
required consents have been received and all other procedures have been
complied with such that such Receivable shall have been duly and
validly assigned to Agent, for the benefit of the Credit Parties, in
form satisfactory to Agent;
(o) the goods giving rise to such Receivable were not, at
the time of the sale thereof, subject to any Lien, except the Security
Interest and Permitted Liens which do not attach to such Receivable as
proceeds thereof;
LOAN AND SECURITY AGREEMENT - Page 15
(p) Such Borrowing Base Party is not in breach of any
express or implied representation or warranty with respect to the goods
the sale of which gave rise to such Receivable nor in breach of any
representation or warranty, covenant or other agreement contained in
the Loan Documents with respect to such Receivable;
(q) such Receivable does not arise out of any transaction
with a Borrowing Base Party or any other Affiliate, creditor, tenant,
lessor or supplier of a Borrowing Base Party, PROVIDED, that with
respect to any such Receivable that arose out of a transaction with any
such creditor, tenant, lessor or supplier that is not a Loan Party or
an Affiliate of a Loan Party (i) the amount of such Receivable
excludable under this SUBPARAGRAPH (q) shall not exceed the aggregate
amount, if any, owing from time to time to such Person by such
Borrowing Base Party and (ii) such Receivable will not be excluded
under this SUBPARAGRAPH (q) if such Person has executed and
delivered to such Borrowing Base Party and Agent, for the benefit of
the Credit Parties, an agreement, in form and substance satisfactory
to Agent, pursuant to which such Person agrees that it will not
setoff against such Receivable, or assert as a defense to payment
thereof, any claim or other amount at any time owing to such Person
by such Borrowing Base Party;
(r) Such Borrowing Base Party is not the beneficiary of
any letter of credit, nor has any bond or other undertaking by a
guarantor or surety been obtained, supporting such Receivable and the
Account Debtor's obligations in respect thereof unless any such letter
of credit, bond or undertaking, together with such Receivable, is
specifically identified in each Borrowing Base Certificate which
includes any such Receivable and, if required by Agent (i) is issued by
a Person satisfactory to Agent, in form satisfactory to Agent and by
its terms does not prohibit transfer or assignment to Agent of the
rights to enforce payment thereunder, (ii) is irrevocable with respect
to such Receivable and otherwise is in form and substance satisfactory
to Agent, (iii) to Agent's satisfaction, is subject to a first
priority, perfected security interest, lien and collateral assignment
in favor of Agent, for the benefit of the Credit Parties (iv) if
requested by Agent, written notice of such security interest, lien and
collateral assignment, duly executed by Agent and such Borrowing Base
Party, shall have been given to and acknowledged in writing by the
Person obligated on such letter of credit, bond or undertaking, in form
and substance satisfactory to Agent, and (v) Agent shall have received
all documentation as Agent may reasonably request in connection with
the foregoing;
(s) such Receivable does not arise out of finance or
similar charges or other fees for the time value of Money;
(t) the Account Debtor with respect to such Receivable is
not located in any other state denying creditors access to its courts
in the absence of qualification to transact business in such state or
the filing of a notice of business activities report or other similar
filing, unless (i) such Borrowing Base Party has either qualified as a
foreign corporation authorized to transact business in such state or
has filed any such notice or similar filing with the applicable
Governmental Authority for the then current year, or (ii) such
Borrowing Base
LOAN AND SECURITY AGREEMENT - Page 16
Party is not required to be so qualified as a condition to allowing
its creditors access to such courts; and
(u) neither the Account Debtor with respect to such
Receivable, nor such Receivable, is determined by Agent in its
reasonable discretion in the exercise of reasonable credit judgment to
be ineligible for any other reason.
"ENTITLEMENT HOLDER" means any Person identified in the records of a
Securities Intermediary as the Person having a Security Entitlement against the
Securities Intermediary.
"ENVIRONMENTAL COMPLIANCE RESERVES" means reserves for the cost of
Remedial Action, as determined by Agent from time to time in its reasonable
discretion based upon the reports delivered pursuant to SECTION 11.9(b) and such
other advice, analysis and engineering studies as it reasonably deems
appropriate.
"ENVIRONMENTAL LAWS" means all federal, state, local and foreign laws
now or hereafter in effect relating to pollution or protection of the
environment, including laws relating to emissions, discharges, Releases or
threatened Releases of pollutants, Contaminants, chemicals or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, removal, transport or handling of pollutants, Contaminants, chemicals
or industrial, toxic or hazardous substances or wastes, and any and all
regulations, notices or demand letters issued, entered, promulgated or approved
thereunder, including, but not limited to, the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 ET SEQ., as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 6901
ET SEQ., as amended, the Toxic Substances Control Act, 15 U.S.C. Section 2601
ET SEQ., as amended, the Clean Air Act, 46 U.S.C. Section 7401 ET SEQ., as
amended, and state and federal lien and environmental cleanup programs.
"ENVIRONMENTAL LIEN" means a Lien in favor of any Governmental
Authority for (a) any liability under Environmental Laws or (b) damages arising
from, or costs incurred by such Governmental Authority in response to, a Release
or threatened Release of Contaminant into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974 (as
amended), as in effect from time to time, any regulation promulgated thereunder
and any successor statute.
"ERISA AFFILIATE" means, with respect to any Person, any (i)
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Internal Revenue Code) as any such
Person or any of its Subsidiaries, (ii) partnership or other trade or business
(whether or not incorporated) under common control (within the meaning of
Section 414(c) of the Internal Revenue Code) with any such Person or any of its
Subsidiaries, or (iii) member of the same affiliated service group (within the
meaning of Section 414(m) of the Internal Revenue Code)
LOAN AND SECURITY AGREEMENT - Page 17
as any such Person or any of its Subsidiaries, any corporation described in
CLAUSE (i) above or any partnership, trade or business described in CLAUSE
(ii) above.
"EURODOLLAR BUSINESS DAY" means a Business Day on which dealings in
Dollars are carried out in the London interbank Eurodollar market.
"EURODOLLAR LOANS" means Loans that bear interest at rates based upon
the Adjusted Eurodollar Rate.
"EURODOLLAR RATE" means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two (2) Eurodollar Business Days prior to the first day of
such Interest Period for a term comparable to such Interest Period. If for any
reason such rate is not available, the term "Eurodollar Rate" shall mean, for
any Eurodollar Loan for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Eurodollar Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period; PROVIDED, HOWEVER, if more than one rate is specified on Reuters Screen
LIBO Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%).
"EVENT OF DEFAULT" means any of the events specified in SECTION 14.1,
PROVIDED that any requirement for notice or lapse of time as required by this
Agreement or any of the other Loan Documents has been satisfied.
"EXISTING CREDIT AGREEMENT" means the certain Second Amended and
Restated Credit Agreement dated March 12, 1998 among Parent, NationsBank, N.A.,
as Administrative Lender, certain co-agents and the "Lenders" (as defined
therein) party thereto, as amended, modified or supplemented from time to time
through the Agreement Date.
"EXISTING LETTERS OF CREDIT" means those "Letters of Credit" (as
defined by the Existing Agreement) issued pursuant to the Existing Credit
Agreement and outstanding on the Agreement Date, as listed in SCHEDULE 1.1A
("Existing Letters of Credit").
"EXISTING LOAN DOCUMENTS" means the "Loan Documents" as defined by the
Existing Credit Agreement.
"EXISTING STORE LOCATIONS" means the store locations owned by Borrower
or, if specifically identified therein, by any other Loan Party, on the
Agreement Date and described on SCHEDULE 8.1(gg).
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds
LOAN AND SECURITY AGREEMENT - Page 18
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day; PROVIDED that (a) if such
day is not a Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Business Day as so published
on the next succeeding Business Day, and (b) if no such rate is so published
on such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate charged to Agent (in its individual capacity) on
such day on such transactions as determined by Agent.
"FINANCIAL ASSET" means any financial asset, and in any event shall
include, but not be limited to, any (i) Security, (ii) obligation of a Person or
a share, participation or other interest in a Person or in property or an
enterprise of a Person, which is, or is of a type, dealt in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment, (iii) any property that is held by a
Securities Intermediary for another Person in a Securities Account if the
Securities Intermediary has expressly agreed with the other Person that the
property is to be treated as a Financial Asset under Chapter 8 (or Article 8) of
the UCC and (iv) any other property or interest in property, or means by which a
Persons claim to any such property or interest in property is evidenced, which
is classified as a "financial asset" pursuant to Chapter 8 (or Article 8) of the
UCC.
"FINANCING STATEMENTS" means any and all UCC financing statements, as
requested by and in form and substance satisfactory to Agent, executed and
delivered by a Loan Party to Agent, naming Agent as secured party and such Loan
Party as debtor, in connection with this Agreement.
"FISCAL PERIOD" means one of the three fiscal periods in a Fiscal
Quarter, the first of such periods comprised of five weeks and the second and
third of such periods comprised of four weeks, with each of the weeks in a
Fiscal Quarter ending on the close of business on a Saturday. There are twelve
Fiscal Periods in a Fiscal Year.
"FISCAL QUARTER" means one of four thirteen week quarters in a Fiscal
Year, with the first of such quarters beginning on the first day of a Fiscal
Year and ending on the Saturday of the thirteenth week in such quarter.
"FISCAL YEAR" means the fiscal year beginning on the Sunday following
the last Saturday in June of each year and ending on the last Saturday in June
of the following year.
"FIXED CHARGE COVERAGE RATIO" means the ratio of (i) EBITDA MINUS
Unfunded Capital Expenditures MINUS Non-Stock Acquisition Consideration MINUS
Treasury Stock Purchases MINUS income taxes actually paid in cash to (ii) the
aggregate amount of Interest Expense PLUS principal amount paid in respect of
Money Borrowed (other than the Revolving Loans) PLUS Dividends paid, in each
case determined for Parent and its Consolidated Subsidiaries (excluding CompUSA
▇▇▇.▇▇▇) as of the end of any Fiscal Period as required by this Agreement (x)
with respect to the end of each of the first eleven Fiscal Periods ending after
the Agreement Date, for the period from the Agreement Date through the end of
such Fiscal Period and (y) with respect to the end of all other Fiscal Periods,
for the preceding twelve (12) Fiscal Periods.
LOAN AND SECURITY AGREEMENT - Page 19
"FIXED CHARGE RATIO COVENANT TEST DATE" means, in relation to any date
on which Availability is less than the Minimum Availability Requirement, the
last day of the preceding Fiscal Period for which financial statements are
required to have been delivered pursuant to SECTION 12.1.
"FOREIGN SUBSIDIARY" means each direct or indirect Subsidiary of Parent
that is not a Domestic Subsidiary.
"GAAP" means generally accepted accounting principles (existing as of
the Agreement Date as promulgated by opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements of the
Financial Accounting Standards Board, including without limitation, principles
of purchase accounting) consistently applied and maintained throughout the
period indicated and, when used with reference to Borrower or any other Loan
Party, consistent with the prior financial practice of Borrower or such Loan
Party, as reflected on the financial statements referred to in SECTION 8.1(o);
PROVIDED, that for purposes of (i) the definition of "Applicable Margin" in
SECTION 1.1, (ii) the definition of "Unused Commitment Fee Percentage" in
SECTION 1.1 and (iii) SECTION 13.1, in the event that, after the Agreement Date,
changes shall be mandated by the Financial Accounting Standards Board or any
similar accounting authority of comparable standing, or shall be recommended by
Borrower's or any Loan Party's independent public accountants, the Loan Parties
and Agent agree to enter into negotiations with the desired objective that
such provisions be adjusted or otherwise modified to fairly take into account
any such change, PROVIDED FURTHER, that any such negotiated changes shall be
effective, for purposes of such provisions, only from and after such date as
the Loan Parties, the Required Lenders and Agent shall have amended this
Agreement in accordance with SECTION 17.10, to the extent necessary to
reflect any such negotiated changes.
"GENERAL INTANGIBLES" means, with respect to a Person, all general
intangibles, choses in action and causes of action, whether arising in contract,
tort or otherwise and whether or not the subject of litigation, and all
judgments in favor of such Person, including without limitation each of the
following, in any case both now owned and hereafter acquired: (a) all rights to
payment or other forms of consideration and all other personal property, other
than goods, of every kind and nature (and not otherwise included in Receivables,
Chattel Paper, Documents, Instruments or Investment Property), including,
without limitation, all rights under Merchant Accounts and Merchant Account
Agreements, Proprietary Rights, corporate or other business records, inventions,
designs, blueprints, plans, specifications, goodwill, computer software,
customer lists, registrations, licenses, franchises, tax refunds and tax refund
claims, reversions or any rights thereto and any other amounts payable to such
Person from any Plan or other employee benefit plan, rights and claims against
carriers and shippers, rights and claims under warranties, rights to
indemnification, rights under contracts of insurance or surety, including
without limitation business interruption, property, casualty, liability and
other insurance and proceeds thereof, any letter of credit and the right to
claim and receive payment thereunder, rights to payment under any and each
Receivables Guaranty, Receivables L/C and each other Guaranty, security and Lien
for payment of any Receivables, and drafts, acceptances and other debts,
obligations and liabilities owing to such Person; and (b) any other property or
interest in property classified as a "general intangible" pursuant to the UCC.
LOAN AND SECURITY AGREEMENT - Page 20
"GENERAL PARTNER" means CompUSA GP, acting in its capacity as the sole
general partner of Borrower, and its successors and permitted assigns.
"GOVERNMENT ACTS" has the meaning set forth in SECTION 3.8(a)(ii).
"GOVERNMENTAL APPROVALS" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, any
Governmental Authority, whether federal, state, local or foreign national or
provincial.
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state, county, municipal, parish, provincial or other political subdivision
thereof and any department, commission, board, court, agency or other
instrumentality or entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"GUARANTOR" means each Person that executes and delivers to Agent a
Guaranty Agreement pursuant to this Agreement or becomes a party to a Guaranty
Agreement by executing and delivering to Agent a Joinder Agreement pursuant to
SECTION 9.3.
"GUARANTY", "GUARANTEED" or to "GUARANTEE" as applied to any obligation
of another Person shall mean and include:
(a) any guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business),
directly or indirectly, in any manner, of any part or all of such
obligation of such other Person; and
(b) any agreement, direct or indirect, contingent or
otherwise, and whether or not constituting a guaranty, the practical
effect of which is to assure the payment or performance (or payment of
damages in the event of nonperformance) of any part or all of such
obligation of such other Person whether by
(i) the purchase of securities or obligations,
(ii) the purchase, sale or lease (as lessee or
lessor) of property or the purchase or sale of services
primarily for the purpose of enabling the obligor with respect
to such obligation to make any payment or performance (or
payment of damages in the event of nonperformance) of or on
account of any part or all of such obligation, or to assure
the owner of such obligation against loss,
(iii) the supplying of funds to or in any other
manner investing in the obligor with respect to such
obligation,
(iv) repayment of amounts drawn down by beneficiaries
of letters of credit, or
LOAN AND SECURITY AGREEMENT - Page 21
(v) the supplying of funds to or investing in a
Person on account of all or any part of such Person's
obligation under a Guaranty of any obligation or indemnifying
or holding harmless, in any way, such Person against any part
or all of such obligation.
"GUARANTY AGREEMENT" means the Parent Guaranty or the Subsidiary
Guaranty, as the case may be, in each case as may be renewed, extended, amended,
modified, restated or supplemented from time to time.
"IRS" means the Internal Revenue Service.
"INDEBTEDNESS" of any Person means, without duplication, all
Liabilities of such Person, and to the extent not otherwise included in
Liabilities, the following:
(a) all obligations for Money Borrowed or for the
deferred purchase price of property or services;
(b) all obligations (including, during the noncancellable
term of any lease in the nature of a title retention agreement, all
future payment obligations under such lease discounted to their present
value in accordance with GAAP) secured by any Lien to which any
property or asset owned or held by such Person is subject, whether or
not the obligation secured thereby shall have been incurred or assumed
by such Person;
(c) all obligations of other Persons which such Person
has Guaranteed, including, but not limited to, all obligations of such
Person consisting of recourse liability with respect to accounts
receivable sold or otherwise disposed of by such Person;
(d) all obligations of such Person in respect of Interest
Rate Protection Agreements; and
(e) in the case of Borrower (without duplication) all
obligations under the Revolving Credit Loans.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 17.13.
"INDENTURE" means the certain Indenture dated as of June 17, 1993
between Parent and U.S. Trust Company of Texas, N.A., as Trustee pursuant to
which the Senior Subordinated Notes are issued, as the same may be amended,
supplemented or otherwise modified.
"INSTRUMENTS" means, with respect to a Person, all of such Person's now
owned and hereafter acquired negotiable instruments (as defined by Section 3.104
(or Article 3-104) of the UCC) and any other writing which evidences a right to
the payment of Money and is not itself a security agreement or lease and is of a
type which is in the ordinary course of business transferred by delivery with
any
LOAN AND SECURITY AGREEMENT - Page 22
necessary indorsement or assignment, excluding Investment Property, and any
other property or interest in property classified as an instrument pursuant
to the UCC.
"INTEREST EXPENSE" means, for any period, the interest expense of
Parent and its Consolidated Subsidiaries for such period (including, without
limitation, interest on Indebtedness and the interest portion of payments under
Capital Lease Obligations), determined on a consolidated basis in accordance
with GAAP.
"INTEREST PAYMENT DATE" means, after the Agreement Date with respect to
Base Rate Loans, the Business Day following the last day of each calendar month,
and with respect to Eurodollar Loans, the last day of each corresponding
Interest Period (and in the case of an Interest Period of greater than three (3)
months, at three-month intervals after the first day of such Interest Period),
continuing until the Secured Obligations have been irrevocably paid in full.
"INTEREST PERIOD" means the period beginning on the day any Eurodollar
Loan is established, Continued or Converted and ending one (1), two (2), three
(3) or six (6) months thereafter (as Borrower may designate pursuant to a Notice
of Borrowing); PROVIDED, HOWEVER:
(a) if any Interest Period would otherwise end on a day
which is not a Eurodollar Business Day, such Interest Period shall be
extended to the next succeeding Eurodollar Business Day, unless the
result of such extension would be to extend such Interest Period into
another calendar month, in which event such Interest Period shall end
on the immediately preceding Eurodollar Business Day;
(b) any Interest Period with respect to a Eurodollar Loan
that begins on the last Eurodollar Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the
last Eurodollar Business Day of such calendar month; and
(c) Borrower may not select any Interest Period which ends
after the date of a scheduled principal payment on the Loans unless,
after giving effect to such selection, the aggregate unpaid principal
amount of the Eurodollar Loans for which Interest Periods end after
such scheduled principal payment shall be equal to or less than the
principal amount to which the Loans are required to be reduced after
such scheduled principal payment is made.
"INTEREST RATE PROTECTION AGREEMENT" means an agreement between a
Person and any Lender, or any Affiliate of such Lender, now existing or
hereafter entered into and with respect to which notice thereof has been given
to Agent, which provides for an interest rate swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross-currency rate swap, currency
option or any combination of, or option with respect to, any such or similar
transactions, for the purpose of hedging such Person's exposure to fluctuations
in interest rates or currency valuations.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
LOAN AND SECURITY AGREEMENT - Page 23
"INV ADVANCE RATE" means a percentage, subject to SECTION 2.5, equal to
(i) sixty five percent (65.0%).
"INVENTORY" means, with respect to a Person, all of such Person's
inventory and shall include, without limitation:
(a) all goods held or intended for sale or lease, or for
display or demonstration, or furnished or to be furnished under
contracts of service;
(b) all work-in-process;
(c) all raw materials;
(d) all other materials and supplies of every nature and
description used or which might be used in connection with the
manufacture, packing, shipping, advertising, selling, leasing or
furnishing of such goods or otherwise used or consumed in such Person's
business;
(e) all documents evidencing and general intangibles relating
to any of the foregoing; and
(f) all other goods that are classified as "inventory"
pursuant to the UCC.
"INVESTMENT" means, with respect to any Person:
(a) the acquisition or ownership by such Person of any
share of Capital Stock, evidence of Indebtedness or other security
issued by any other Person;
(b) any loan, advance or extension of credit to, or
contribution to the capital of, any other Person, excluding advances to
employees in the ordinary course of business for business expenses;
(c) any Guaranty of the obligations of any other Person; and
(d) any other investment (other than an Acquisition) in any
other Person.
"INVESTMENT PROPERTY" means any investment property, now owned or
hereafter acquired, and, in any event, shall include, without limitation, each
of the following: (a) any Security, whether certificated or uncertificated, (b)
any Security Entitlement, (c) any Securities Account, (d) any commodity contract
or commodity account and (e) any other property or interest in property that is
classified as "investment property" pursuant to the UCC.
"IRS" means the Internal Revenue Service.
LOAN AND SECURITY AGREEMENT - Page 24
"ISSUER" means any "issuer," as such term is defined in Chapter 8 (or
Article 8) of the UCC, and in any event shall include, without limitation, any
Person that (i) places or authorizes the placing of its name on a Security
Certificate, other than as authenticating trustee, registrar, transfer agent or
the like, to evidence a share, participation or other interest in its property
or in an enterprise, or to evidence its duty to perform an obligation
represented by the certificate, (ii) creates a share, participation or other
interest in its property or in an enterprise, or undertakes an obligation, that
is an Uncertificated Security; (iii) directly or indirectly creates a fractional
interest in its rights or property, if the fractional interest is represented by
a Security Certificate, or (iv) becomes responsible for, or in the place of,
another Issuer.
"JOINDER AGREEMENT" means a Joinder Agreement in form as appears in
EXHIBIT "G", or otherwise in form satisfactory to Agent, by which a Person
becomes a Loan Party and a Guarantor pursuant to SECTION 9.3.
"L/C CASH COLLATERAL ACCOUNT" means a Deposit Account established
pursuant to SECTION 3.9(a) or (b).
"L/C ISSUER" means NationsBank and any Affiliate of NationsBank that
issues any Letter of Credit pursuant to this Agreement.
"LENDER" means, at any time, any financial institution party to this
Agreement at such time, including any Person a party hereto pursuant to the
provisions of ARTICLE 15, and in each case its successors and assigns, and
"LENDERS" means, at any time, all such Persons and their successors and assigns.
"LETTER OF CREDIT" means (i) any letter of credit issued by L/C Issuer
at the request of Borrower pursuant to ARTICLE 3, (ii) the Existing Letters of
Credit and (iii) any renewal, extension, modification, amendment, restatement or
replacement of any thereof.
"LETTER OF CREDIT AMOUNT" means, with respect to any Letter of Credit,
the aggregate maximum amount at any time available for drawing under such Letter
of Credit.
"LETTER OF CREDIT FACILITY" means the facility provided under ARTICLE 3
of this Agreement for maintenance or issuance of Letters of Credit in an
aggregate face amount not to exceed $100,000,000 at any time.
"LETTER OF CREDIT OBLIGATIONS" means, at any time, the sum of (a) the
Reimbursement Obligations at such time, PLUS (b) the aggregate of all Letter of
Credit Amounts outstanding at such time, PLUS (c) the aggregate of all Letter of
Credit Amounts of Letters of Credit the issuance of which has been authorized by
L/C Issuer pursuant to SECTION 3.4(b) but that have not yet been issued, in each
case as determined by Agent.
LOAN AND SECURITY AGREEMENT - Page 25
"LETTER OF CREDIT RESERVE" means, at any time, an amount equal to the
Letter of Credit Obligations at such time, other than Letter of Credit
Obligations that are fully secured by Cash Collateral.
"LEVERAGE RATIO" means the ratio determined for Parent and its
Consolidated Subsidiaries (excluding CompUSA ▇▇▇.▇▇▇) as of the end of any
Fiscal Period of (i) Indebtedness for Money Borrowed to (ii) EBITDA for the
preceding twelve (12) Fiscal Periods.
"LIABILITIES" means, with respect to any Person, all items (excluding
Capital Stock, additional paid-in capital, retained earnings and general
contingency items and deferred tax reserves) which in accordance with GAAP would
be included in determining total liabilities as shown on a balance sheet of such
Person as at the date for which Liabilities are to be determined.
"LICENSES" means and includes, with respect to any Person, in each case
whether now existing or hereinafter arising, all of such Person's right, title
and interest in and to (a) any and all licensing agreements or similar
arrangements in and to any Patents, Copyrights or Trademarks; (b) all income,
royalties, damages, claims and payments now or hereafter due and/or payable
under and with respect thereto, including, without limitation, damages and
payments for past and future breaches thereof; and (c) all rights to ▇▇▇ for
past, present and future breaches thereof.
"LIEN" means, with respect to any property, any mortgage, lien, pledge,
collateral assignment, hypothecation, charge, security interest, title retention
agreement, levy, execution, seizure, attachment, garnishment, lease constituting
a Capitalized Lease Obligation or other encumbrance of any kind in respect of
such property, whether or not ▇▇▇▇▇▇, vested or perfected.
"LOAN" means any Revolving Credit Loan, as well as all such loans
collectively, as the context requires, and in any case includes, without
limitation, any and all renewals, extensions, modifications or replacements
thereof.
"LOAN ACCOUNT" and "LOAN ACCOUNTS" shall have the meanings ascribed
thereto in SECTION 5.7.
"LOAN DOCUMENTS" means collectively this Agreement, each Joinder
Agreement, if any, each Reimbursement Agreement, the Notes, the Security
Documents, the Postclosing Agreement, if any, and each other instrument,
agreement, certificate or document executed by any Loan Party in connection with
this Agreement whether prior to, on or after the Agreement Date and each other
instrument, agreement, certificate or document referred to herein or
contemplated hereby, and any and all renewals, extensions, amendments,
modifications or restatements of any of the foregoing.
"LOAN PARTY" means each of the following, respectively: Borrower,
Parent, CompUSA GP Holdings Company, a Delaware business trust, CompUSA Holdings
Company, a Delaware business trust, CompUSA Holdings I Inc., a Delaware
corporation, CompUSA Holdings II Inc., a Delaware corporation, CompTeam, Inc., a
Delaware corporation, CompUSA PC Inc., a Delaware corporation, CompUSA PC
Operating Company, a Delaware business trust, CompUSA Management Co., a Delaware
business trust, and each Person that becomes a party to this Agreement pursuant
to SECTION
LOAN AND SECURITY AGREEMENT - Page 26
9.3 after the Agreement Date by execution and delivery of a Joinder
Agreement, and their respective successors and assigns, and "LOAN PARTIES"
means all of such Persons, collectively.
"LOAN YEAR" means each annual period commencing on the last day of a
Fiscal Year (in the case of Loan Year 1, being June 26, 1999) and ending on the
day preceding the last day of the next Fiscal Year.
"LOCKBOX" means a U.S. post office box specified in, or pursuant to, an
Agency Account Agreement or a Lockbox Agreement.
"LOCKBOX AGREEMENT" means any agreement established between Agent, a
Loan Party and a Clearing Bank concerning the establishment of a Lockbox for the
receipt and collection of checks and other items constituting proceeds of
Receivables.
"MANAGEMENT'S RESTRUCTURING PLAN" means management's restructuring plan
for Parent and its Consolidated Subsidiaries developed as of the end of Parent's
Fiscal Year ending June 26, 1999, as detailed in the notes or management's
discussion and analysis to the financial statements referenced in SECTION 8.1(o)
or as otherwise disclosed to Agent in writing prior to the Agreement Date.
"MARGIN STOCK" means margin stock as defined in Section 221.1(h) of
Regulation U.
"MATERIALLY ADVERSE EFFECT" means a materially adverse effect upon the
business, assets, liabilities, financial condition or results of operations, of
Borrower, Parent or of the Loan Parties taken as a whole, or upon the ability of
Borrower, Parent or of the Loan Parties taken as a whole to perform its
respective obligations under any Loan Document to which it is a party, or upon
the enforceability of such obligations against Borrower or Parent or against the
Loan Parties taken as a whole.
"MAXIMUM RATE" means, at any time, the maximum rate of interest Lenders
may lawfully contract for, charge or receive in respect of the Secured
Obligations as allowed by Applicable Law. For purposes of determining the
Maximum Rate under the Applicable Law of the State of Texas, the applicable rate
ceiling shall be (a) the weekly rate ceiling described in and computed in
accordance with the provisions of Art. 1D.003, Title 79, Revised Civil Statutes
of Texas, as amended or (b) if the parties subsequently contract as allowed by
Applicable Law, the quarterly ceiling or the annualized ceiling computed
pursuant to Art. 1D.008, Title 79, Revised Civil Statutes of Texas, as amended;
provided, however, that at any time the weekly rate ceiling, the quarterly
ceiling or the annualized ceiling shall be less than 18% per annum or more than
24% per annum, the provisions of Art. 1D.009(a) or Art. 1D.009(b), Title 79,
Revised Civil Statutes of Texas, as amended, shall control for purposes of such
determination, as applicable.
"MERCHANT ACCOUNT" means, in respect of a Loan Party, any account,
agreement or arrangement between such Loan Party and another Person pursuant to
which such other Person
LOAN AND SECURITY AGREEMENT - Page 27
gives or makes available credit to such Loan Party in respect of credit card
transactions generated by such Loan Party.
"MERCHANT ACCOUNT AGREEMENT" means an agreement evidencing a Merchant
Account, and any renewal, extension, modification, amendment or restatement
thereof.
"MINIMUM AVAILABILITY REQUIREMENT" means at any time $75,000,000.
"MONEY" means any medium of exchange authorized or adopted by a
domestic or foreign government and any other property or interest in property
classified as money pursuant to the UCC.
"MONEY BORROWED" means, as applied to Indebtedness:
(a) Indebtedness for Money borrowed;
(b) Subordinated Indebtedness
(c) Indebtedness, whether or not in any such case the
same was for Money borrowed,
(i) represented by notes payable, or drafts
accepted, that represent extensions of credit, including
without limitation Indebtedness which is convertible into
Capital Stock or Indebtedness for the deferred purchase price
of property,
(ii) constituting obligations evidenced by bonds,
debentures, notes or similar instruments, or
(iii) upon which interest charges are customarily
paid or that was issued, incurred or assumed as full or
partial payment for property (other than trade credit that is
incurred in the ordinary course of business);
(d) Indebtedness that constitutes a Capitalized Lease
Obligation, and
(e) Indebtedness described by CLAUSE (c) of the
definition of "Indebtedness" in this SECTION 1.1, but only to the
extent that the obligations Guaranteed are obligations that would
constitute Indebtedness for Money borrowed;
PROVIDED, that Money Borrowed does not include (a) accounts payable (or notes in
exchange thereof) or accrued liabilities incurred in the ordinary course of
business, including without limitation advances from customers and trade
payables financed through floor plan arrangements in the ordinary course of
business or (b) current or deferred income taxes.
LOAN AND SECURITY AGREEMENT - Page 28
"MULTIEMPLOYER PLAN" means, with respect to any Person, a
"multiemployer plan" as defined in Section 3(37) or Section 4001(a)(3) of ERISA
to which such Person or any ERISA Affiliate is required to contribute or has
contributed within the immediately preceding six (6) years.
"NATIONSBANK" means NationsBank, N.A., a national banking association
with an office located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
and whose principal office is located in Charlotte, North Carolina, and each of
its successors and assigns.
"NEGATIVE PLEDGE" means any agreement, contract or other arrangement
whereby any Loan Party or any Restricted Subsidiary is prohibited from, or would
otherwise be in default as a result of, creating, assuming, incurring or
suffering to exist, directly or indirectly, any Lien on any of its assets in
favor of Agent for the benefit of the Credit Parties under this Agreement.
"NET INCOME" means, as applied to any Person, the net income (or net
loss) of such Person for the period in question after giving effect to deduction
of or provision for all operating expenses, all taxes and reserves (including
without limitation, reserves for deferred taxes) and all other proper
deductions, all determined in accordance with GAAP, PROVIDED that there shall be
excluded:
(a) the net income (or net loss) of any Person accrued
prior to the date it becomes a Subsidiary of, or is merged into or
Consolidated with, the Person whose Net Income is being determined or a
Consolidated Subsidiary of such Person;
(b) any net gains or losses on the sale or other
disposition, not in the ordinary course of business, of Investments and
other capital assets, PROVIDED that there shall also be excluded any
related charges for taxes thereon;
(c) any net gain arising from the collection of the
proceeds of any insurance policy;
(d) any write-up or write-down of any asset; and
(e) any other extraordinary item as defined by GAAP.
"NET OUTSTANDINGS" of any Lender means, at any time, the sum of (a) all
principal amounts made available by such Lender to Agent in respect of Revolving
Credit Loans funded under this Agreement, MINUS (b) all amounts which are
received by Agent and which, pursuant to this Agreement, are paid over to such
Lender for application in reduction of the outstanding principal balance of such
Revolving Credit Loans.
"NET PROCEEDS" means proceeds received by any Loan Party or Restricted
Subsidiary from any Asset Disposition (including, without limitation, payments
under notes or other debt securities received in connection with any Asset
Disposition), net of: (a) the transaction costs of such Asset Disposition; (b)
any tax liability arising from such Asset Disposition; and (c) amounts applied
to
LOAN AND SECURITY AGREEMENT - Page 29
repayment of Indebtedness (other than the Secured Obligations) secured by a
Lien on the asset or property disposed of.
"NET WORTH" means, for Parent and its Consolidated Subsidiaries,
determined in accordance with GAAP, the sum of: (a) Capital Stock taken at
stated or par value, plus (b) paid in capital plus (c) retained earnings, less
(d) treasury stock.
"NON-RATABLE LOAN" means a Revolving Credit Loan made by NationsBank in
accordance with the provisions of SECTION 5.10(B)(II).
"NON-STOCK ACQUISITION CONSIDERATION" means Acquisition Consideration
other than Capital Stock.
"NOTE" means any of the Revolving Credit Notes, and "NOTES" means more
than one such Note or all of such Notes, collectively, as the context may
indicate.
"NOTICE OF BORROWING" means a Notice of Borrowing, Prepayment,
Conversion or Continuation, signed by an Authorized Signatory of Borrower, in
substantially the form attached hereto as EXHIBIT "E".
"OPERATING LEASE" means any lease of real or personal property,
excluding any lease constituting a Capitalized Lease Obligation.
"OTHER TAXES" shall have the meaning set forth in SECTION 6.6(b).
"PARENT" means CompUSA Inc., a Delaware corporation (federal tax
identification number ▇▇-▇▇▇▇▇▇▇) with its chief executive office and principal
place of business located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
and its successors and assigns.
"PARENT GUARANTY" means a Guaranty Agreement dated as of the Agreement
Date executed by Parent, General Partner and CompUSA Holdings Company, pursuant
to this Agreement.
"PATENT SECURITY AGREEMENT" means a Patent Security Agreement executed
by one or more of the Loan Parties in favor of Agent, for the benefit of the
Credit Parties, as such agreement may be amended, modified, restated or
supplemented from time to time.
"PATENTS" means and includes, with respect to any Person, all of such
Person's right, title and interest in and to the following, in each case whether
now existing or hereafter arising:
(a) any and all patents and patent applications;
(b) all inventions and improvements described and claimed
therein;
LOAN AND SECURITY AGREEMENT - Page 30
(c) all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof;
(d) all income, royalties, damages, claims and payments
now or hereafter due and/or payable under and with respect thereto,
including, without limitation, damages and payments for past and future
infringements thereof;
(e) all rights to ▇▇▇ for past, present and future
infringements thereof; and
(f) all rights corresponding to any of the foregoing
under Applicable Law.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED CASH EQUIVALENTS" means, with respect to a Loan Party,
Investments permitted to be made pursuant to the Investment Policy of Parent
which is attached as SCHEDULE 1.1B ("Parent's Investment Policy").
"PERMITTED INVESTMENTS" means Investments of a Loan Party in:
(a) Permitted Cash Equivalents;
(b) Investments in CompUSA ▇▇▇.▇▇▇ to the extent not
prohibited by SECTION 13.12, PROVIDED that no Default or Event of
Default is in existence at the time of making such Investment or would
result therefrom;
(c) Investments in a Person that is a Loan Party on the
Agreement Date or that is a Wholly-Owned Subsidiary of a Loan Party
formed by such Loan Party after the Agreement Date;
(d) Receivables arising in the ordinary course of
business and payable on standard terms;
(e) Investments described on SCHEDULE 1.1C ("Permitted
Investments") on the Agreement Date;
(f) loans to directors, officers and employees of any
Loan Party during any Fiscal Year (calculated net of repayments
thereon) which, together with Guaranties of Indebtedness of such
directors, officers and employees permitted under SECTION 13.3
during such Fiscal Year, do not exceed $1,000,000 in the aggregate,
PROVIDED that no Default or Event of Default is in existence at the
time of making any such Investment or would result therefrom;
LOAN AND SECURITY AGREEMENT - Page 31
(g) shares of Capital Stock, evidence of Indebtedness or
other security acquired in consideration for or as evidence of past due
or restructured Receivables in an aggregate face amount of such
Receivables at any time not to exceed $5,000,000;
(h) Acquisitions permitted by SECTION 13.14; and
(i) Investments (calculated on a net basis by taking into
account any proceeds received by a Loan Party in liquidation or
replacement of any such Investment) not otherwise described in CLAUSES
(A) through (H) above and not otherwise prohibited by this Agreement,
the net aggregate amount of which does not at any time exceed 15% of
Net Worth in the aggregate for all such Investments under this CLAUSE
(i), PROVIDED, that no Default or Event of Default is in existence at
the time of making such Investment or would result therefrom and
Availability shall equal or exceed the Minimum Availability Requirement
at the time of making any such Investment and after giving effect
thereto.
"PERMITTED LANDLORDS LIEN" means (i) a Lien provided by statute under
Applicable Law of any state for the benefit of a lessor of Real Property
occupied by a Loan Party or (ii) a contractual Lien created pursuant to, and
securing amounts due under, the lease or other agreement under which such Loan
Party occupies such Real Estate, PROVIDED that (x) such Loan Party is not in
breach or default under the lease or other agreement under which such Loan Party
occupies such Real Estate and (y) any such contractual Lien described in CLAUSE
(ii) preceding remains unperfected and is subordinated to the Security Interest
in form and substance satisfactory to Agent.
"PERMITTED LIEN" means, as applied to any Person:
(a) The Security Interest;
(b) (i) Liens created by lease agreements or statute,
rule or regulation to secure the payments of rental amounts and other
sums not yet due or that are being diligently contested in good faith
by appropriate proceedings and for which adequate reserves shall have
been set aside on such Person's books, but only so long as no
foreclosure, restraint, sale or similar proceedings have been commenced
with respect thereto (PROVIDED that such Liens shall at all times be
confined to the assets located on any such leased premises), (ii) Liens
on leasehold interests created by the lessor (other than a Loan Party
or Restricted Subsidiary) in favor of any mortgagee of the leased
premises, and (iii) Liens for taxes, assessments, governmental charges,
levies or claims (excluding Environmental Liens or Liens imposed
pursuant to ERISA) but only if payment shall not at the time be
required to be made in accordance with SECTION 11.6 and no foreclosure,
restraint, sale or similar proceedings have been commenced with respect
thereto;
(c) Liens of carriers, warehousemen, mechanics, laborers
and materialmen and other similar Liens incurred in the ordinary course
of business but only if payment shall not at the time be required to be
made in accordance with SECTION 11.6;
LOAN AND SECURITY AGREEMENT - Page 32
(d) Liens incurred in the ordinary course of business in
connection with workers' compensation, unemployment insurance or
similar legislation;
(e) Easements, right-of-way, restrictions, title
imperfections, leases to others and other encumbrances on the use of
real property which do not interfere with the ordinary conduct of the
business of such Person;
(f) (A) Purchase Money Liens securing Purchase Money
Indebtedness permitted by SECTION 13.2 and incurred for (i) the
purchase of Inventory, PROVIDED that such Lien expressly excludes all
proceeds of such Inventory other than insurance proceeds for theft or
casualty thereof and proceeds received upon disposition of such
property upon foreclosure pursuant to such Lien, and Agent received
prior written notice thereof, (ii) the purchase of equipment or leased
equipment used or acquired for use in the ordinary course of business
or (iii) the purchase and/or construction of new store locations
acquired and/or constructed for use in the ordinary course of business,
(B) Liens on Existing Store Locations which are identified in Schedule
8.1(gg) as owned by a Loan Party, securing Indebtedness which in each
case does not exceed the unpaid balance of the original cost of
acquiring and/or constructing such Existing Store Location and (C)
Liens constituting leases which are Capitalized Lease Obligations.
(g) Liens in respect of judgments or awards for which
appeals or proceedings for review are being prosecuted and in respect
of which a stay of execution upon any such appeal or proceeding for
review shall have been secured, PROVIDED that (i) such Person shall
have established adequate reserves for such judgments or awards, (ii)
such judgments or awards shall be fully insured and the insurer shall
not have denied coverage, or (iii) such judgments or awards shall have
been bonded to the satisfaction of the Required Lenders;
(h) Liens, if any, which are described on SCHEDULE 1.1D
("Permitted Liens") on the Agreement Date and Liens resulting from the
refinancing of the related Indebtedness, PROVIDED that such refinancing
is on the same or substantially similar terms, the Indebtedness secured
thereby shall not be increased and the Liens shall not cover additional
assets;
(i) Liens to secure performance or payment bonds,
performance of bids, construction, supply of materials or similar
contracts, statutory obligations, and other similar obligations, in
each case arising in the ordinary course of business and not made in
connection with Money Borrowed or the deferred purchase price of goods
or services;
(j) inchoate Liens in respect of pending proceedings or
claims not yet due and payable and for which reserves have been
established in accordance with GAAP; and
(k) bank setoff rights arising by operation of law,
LOAN AND SECURITY AGREEMENT - Page 33
PROVIDED, that unless otherwise expressly provided elsewhere in this Agreement
the characterization of any Lien as a "Permitted Lien" shall not impair or waive
any provision of the Loan Documents in respect of priority of the Security
Interest.
"PERMITTED WAREHOUSEMAN'S LIEN" means (i) a Lien provided by statute
under Applicable Law of any state for the benefit of a Person who is in the
business of storing goods for hire or (ii) a contractual Lien created pursuant
to, and securing amounts due under, a warehouse agreement or other agreement
under which goods of a Loan Party are stored with a Person who is in the
business of storing goods for hire, PROVIDED that (x) such Loan Party is not in
breach or default under the warehouse agreement or other agreement under which
such goods are stored with such Person and (y) any such contractual Lien
described in CLAUSE (ii) preceding remains unperfected and is subordinated to
the Security Interest in form and substance satisfactory to Agent.
"PERSON" means any individual, corporation, limited liability company,
joint venture, general partnership, limited partnership, association, trust,
business trust, unincorporated organization or Governmental Authority, or other
similar entity.
"PLAN" means, with respect to any Person, any employee benefit plan as
defined in Section 3(3) of ERISA in respect of which such Person or any ERISA
Affiliate is, or within the immediately preceding six (6) years was, an
"employer" as defined in Section 3(5) of ERISA, including without limitation, a
Multiemployer Plan and a Benefit Plan.
"POSTCLOSING AGREEMENT" means a Postclosing Agreement (if any), dated
as of the Agreement Date, among the Loan Parties, Agent and the Lenders on the
Agreement Date, as modified, amended, restated or supplemented from time to
time.
"PRIME RATE" means the per annum rate of interest established from time
to time by NationsBank as its "prime rate", which rate may not be the lowest
rate of interest charged by NationsBank to its customers.
"PRINCIPAL OFFICE" means the office of Agent specified in or determined
in accordance with the provisions of SECTION 17.1.
"PROPRIETARY RIGHTS" means, with respect to any Person, all of such
Person's now owned and hereafter arising or acquired: Patents, Copyrights,
Trademarks and Licenses and all other rights under any of the foregoing, all
extensions, renewals, reissues, divisions, continuations and
continuations-in-part of any of the foregoing, and all rights to ▇▇▇ for past,
present and future infringement of any of the foregoing.
"PURCHASE MONEY INDEBTEDNESS" means:
(a) Indebtedness created solely in consideration of all
or any part of (i) the purchase price of Inventory, including without
limitation in respect of Indebtedness to manufacturers, vendors and
floor plan financiers of such Inventory, or equipment or (ii) the
LOAN AND SECURITY AGREEMENT - Page 34
acquisition and/or construction of new store locations, in each case
purchased, acquired and/or constructed for use in the ordinary course
of business; and
(b) Indebtedness incurred solely for the purpose of
financing all or any part of the purchase price of Inventory or
equipment acquired for use in the ordinary course of business which is
incurred at the time of or within thirty (30) days prior to or after
such acquisition;
in each case the aggregate principal amount of which does not exceed an
amount equal to 100% of the lesser of (i) the purchase price or
acquisition and/or construction cost of the property acquired in
consideration of such Indebtedness or (ii) the fair value of such
property at the time of its acquisition, and
(c) any renewals, extensions or refinancings of any of the
foregoing (but not any increases) in the principal amounts thereof
outstanding at the time of any such renewal, extension or refinancing.
"PURCHASE MONEY LIEN" means a Lien securing Purchase Money
Indebtedness, but only if such Lien at all times is confined solely to the
property the purchase price or acquisition and/or construction of which was
financed through the incurrence of the Purchase Money Indebtedness secured by
such Lien and, in the case of Inventory, other Inventory supplied on credit by
the same manufacturer or vendor or by a floor plan financier in respect of
Inventory of an identified manufacturer or vendor, PROVIDED that any such other
Inventory bears the name, trademark or service ▇▇▇▇ of such manufacturer or
vendor or is otherwise clearly identified as having been supplied by such
manufacturer or vendor (plus, proceeds thereof, and in the case of real
property, any fixtures thereon, PROVIDED, however, that with respect to
Inventory, any Lien in such proceeds expressly excludes all proceeds of such
Inventory other than insurance proceeds for theft or casualty thereof and
proceeds received upon disposition of such property upon foreclosure pursuant to
such Lien).
"REAL ESTATE" means, with respect to a Person, all of such Person's now
or hereafter owned or leased estates in real property, including, without
limitation, all fees, leaseholds and future interests, together with all of such
Person's now or hereafter owned or leased interests in the improvements and
emblements thereon, the fixtures attached thereto and the easements appurtenant
thereto.
"RECEIVABLES" means, with respect to a Person, all of the following,
now owned and hereafter acquired:
(a) all Accounts, Chattel Paper and Contract Rights of
such Person;
(b) any and all other rights to the payment of Money or
other forms of consideration of any kind owing to such Person (to the
extent, if any, not otherwise included in Instruments, General
Intangibles or Investment Property);
LOAN AND SECURITY AGREEMENT - Page 35
(c) all goods, whether now owned or hereafter acquired,
and whether sold, delivered, undelivered, in transit or returned, which
may be represented by, or the sale or lease of which may have given
rise to, any Receivables; and
(d) all proceeds of any of the foregoing.
"RECEIVABLES GUARANTY" means a Guaranty or indemnity agreement issued
by a Person guaranteeing the prompt payment and performance of a Receivable, or
indemnifying against loss by reason of nonpayment thereof, together with and
including all rights of such Loan Party to payment thereunder and all proceeds
thereof.
"RECEIVABLES L/C" means a letter of credit issued by a Person as
support for payment and performance of any Receivable(s), together with and
including all rights to payment thereunder and all proceeds thereof.
"REGISTER" has the meaning set forth in SECTION 15.1(b).
"REGULATION D" means Regulation D as promulgated by the Board of
Governors of the Federal Reserve System (or any successor Governmental
Authority), as the same may be amended or supplemented from time to time.
"REGULATION U" means Regulation U as promulgated by the Board of
Governors of the Federal Reserve System (or any successor Governmental
Authority), as the same may be amended or supplemented from time to time.
"REIMBURSEMENT AGREEMENT" means, with respect to a Letter of Credit,
such form of application and form of reimbursement agreement therefor (whether
in a single or separate documents) as L/C Issuer may employ in the ordinary
course of business for its own account, with such modifications thereto as may
be agreed upon by L/C Issuer and, in addition, each letter of credit
reimbursement agreement in respect of the Existing Letters of Credit.
"REIMBURSEMENT OBLIGATIONS" means the reimbursement or repayment
obligations of Borrower to the Credit Parties pursuant to SECTION 3.6 or
pursuant to a Reimbursement Agreement with respect to amounts that have been
drawn under Letters of Credit.
"RELATED COMPANY" means, with respect to the Borrower or any
Subsidiary, any (i) corporation which is a member of the same controlled group
of corporations (within the meaning of Section 414(b) of the Internal Revenue
Code) as the Borrower or any of its Subsidiaries, (ii) partnership or other
trade or business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with the Borrower or any
of its Subsidiaries, or (iii) member of the same affiliated service group
(within the meaning of Section 414(m) of the Internal Revenue Code) as the
Borrower or any of its Subsidiaries, any corporation described in CLAUSE (i)
above or any partnership, trade or business described in CLAUSE (ii) above.
LOAN AND SECURITY AGREEMENT - Page 36
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including,
without limitation, the movement of Contaminants through or in the air, soil,
surface water or groundwater.
"REMEDIAL ACTION" means actions required to (i) clean up, remove, treat
or in any other way address Contaminants in the indoor or outdoor environment,
(ii) prevent the Release or threat of Release or minimize the further Release of
Contaminants so they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment, or (iii) perform
pre-remedial studies and investigations and post-remedial monitoring and care.
"REPORTABLE EVENT" has the meaning set forth in Section 4043(b) of
ERISA, but shall not include a Reportable Event as to which the provision for
thirty (30) days' notice to the PBGC is waived under applicable regulations.
"REQUIRED LENDERS" means, at any time, any combination of Lenders whose
Commitment Percentages at such time equals or exceeds, in the aggregate, fifty
one percent (51%).
"RESERVE" at any time means the sum of (i) amounts established by Agent
pursuant to SECTION 2.5 as a reserve in respect of costs, expenses, liens,
risks, claims, contingencies or other potential factors which, in the event they
should occur, could adversely affect or otherwise reduce the anticipated net
amount which could be timely realized upon liquidation of Eligible Receivables
or Eligible Inventory for application to the Secured Obligations, (ii) any
reserve established as specifically provided by this Agreement, including
without limitation pursuant to PARAGRAPHS (g) or (h) of the definition of
Eligible Inventory in SECTION 1.1 and (ii) any Environmental Compliance Reserve.
"RESERVE REQUIREMENT" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against, in the case of
Eurodollar Loans, "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks with
respect to (i) any category of liabilities which includes deposits by reference
to which the Adjusted Eurodollar Rate is to be determined, or (ii) any category
of extensions of credit or other assets which include Eurodollar Loans. The
Adjusted Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"RESTRICTED DIVIDEND PAYMENT" means any Dividend, excluding any
Dividend by a Loan Party to another Loan Party or by any Subsidiary of a Loan
Party to such Loan Party.
"RESTRICTED PAYMENT" means (a) any redemption, payment or prepayment or
other retirement, prior to the stated maturity thereof or prior to the due date
of any regularly scheduled payment,
LOAN AND SECURITY AGREEMENT - Page 37
installment or amortization of, or any defeasance, redemption, purchase,
repurchase or other acquisition or retirement for value, in whole or in part,
of, any Indebtedness for Money Borrowed (other than Secured Obligations) or
of any Indebtedness that is junior and subordinate in right of payment to the
Secured Obligations, or any payment thereon which is prohibited by the terms
thereof or by any provision of this Agreement, (b) the payment by any Person
of the principal amount of or interest on any Indebtedness (other than
current amounts owing on trade debt incurred in the ordinary course of
business or other Indebtedness allowed by SECTION 13.2 and, to the extent
applicable, incurred in accordance with SECTION 13.7) owing to a shareholder,
partner or equity holder of such Person or to any Affiliate (other than a
Loan Party) of any such shareholder, partner or equity holder and (c) payment
of any management, consulting or similar fee by any Person to any Affiliate
(other than a Loan Party) of such Person.
"RESTRICTED PURCHASE" means any payment on account of the purchase,
redemption or other acquisition or retirement by a Person of any (a) shares of
such Person's Capital Stock (except shares acquired on the conversion or
exchange thereof into or for other shares of Capital Stock of such Person).
"RESTRICTED SUBSIDIARY" means any Subsidiary, other than a Loan Party
and CompUSA ▇▇▇.▇▇▇, of any Loan Party that (notwithstanding the requirements of
SECTION 9.3, but without impairing or waiving such requirements) has not yet
become a Loan Party, and "RESTRICTED SUBSIDIARIES" means all of such Persons.
"REVOLVING CREDIT FACILITY" means the facility provided by ARTICLE 2 of
this Agreement for Revolving Credit Loans up to the maximum principal sum of
Five Hundred Million Dollars ($500,000,000).
"REVOLVING CREDIT LOANS" means the Loans made to Borrower pursuant to
SECTION 2.1, and each of such Loans, respectively, as the context requires.
"REVOLVING CREDIT NOTE" means a Revolving Credit Note made by Borrower
payable to the order of a Lender evidencing the obligation of Borrower to pay
the aggregate unpaid principal amount of the Revolving Credit Loans made to it
by such Lender (and any promissory note or notes that may be issued from time to
time in substitution, renewal, extension, replacement or exchange therefor
whether payable to such Lender or to a different Lender in connection with a
Person becoming a Lender after the Agreement Date or otherwise) substantially in
the form of EXHIBIT "A" hereto, with all blanks properly completed, either as
originally executed or as may be renewed, extended, modified, amended,
supplemented or restated from time to time.
"SCHEDULE OF INVENTORY" means a schedule delivered by Borrower to Agent
pursuant to SECTION 10.12(b).
"SCHEDULE OF RECEIVABLES" means a schedule delivered by Borrower to
Agent pursuant to SECTION 10.12(a).
LOAN AND SECURITY AGREEMENT - Page 38
"SECURED OBLIGATIONS" means, in each case whether now in existence or
hereafter arising:
(a) the principal of, and interest and premium, if any,
on, the Loans;
(b) the Reimbursement Obligations and all other
obligations owing to L/C Issuer or any other Credit Party arising in
connection with any Letter of Credit;
(c) all obligations of any Loan Party under any Interest
Rate Protection Agreement;
(d) all obligations of any Loan Party for losses,
damages, expenses or any other liabilities of any kind that any Credit
Party may suffer by reason of a breach by such Loan Party of any
obligation, covenant or undertaking with respect to any Loan Document;
and
(e) all indebtedness, liabilities, obligations, covenants
and duties of any Loan Party to the Credit Parties, or any of them, of
every kind, nature and description arising under or in respect of this
Agreement, the Notes or any of the other Loan Documents, whether direct
or indirect, absolute or contingent, due or not due, contractual or
tortious, liquidated or unliquidated, and whether or not evidenced by
any note, and whether or not for the payment of Money, including,
without limitation, fees required to be paid under ARTICLE 5 and
expenses required to be paid or reimbursed pursuant to SECTION 17.2.
"SECURITIES ACCOUNT" means any account to which a Financial Asset is or
may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise the rights that comprise the Financial Asset.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"SECURITIES INTERMEDIARY" means any (i) clearing corporation, as such
term is defined in Chapter 8 (or Article 8) of the UCC, or (ii) Person,
including a bank or Broker, that in the ordinary course of its business
maintains Securities Accounts for others and is acting in that capacity.
"SECURITY" means any "security," as such term is defined in Chapter 8
(or Article 8) of the UCC and, in any event, shall include, but not be limited
to, any obligation of an Issuer or a share, participation or other interest in
an Issuer or in property or an enterprise of an Issuer: (i) which is represented
by a Security Certificate in bearer or registered form, or the transfer of which
may be registered upon books maintained for that purpose by or on behalf of the
Issuer; (ii) which is one of a class or series or by its terms is divisible into
a class or series of shares, participations, interests or obligations; and (iii)
which (a) is, or is of a type, dealt in or traded on securities exchanges or
securities markets or (b) is a medium for investment and by its terms expressly
provides that it is a security governed by Chapter 8 (or Article 8) of the UCC.
"SECURITY CERTIFICATE" means any certificate representing a Security.
LOAN AND SECURITY AGREEMENT - Page 39
"SECURITY DOCUMENTS" means each of the following:
(a) each Financing Statement;
(b) any Patent Security Agreement;
(c) any Trademark Security Agreement;
(d) any Copyright Security Agreement;
(e) each Guaranty Agreement;
(f) each other writing executed and delivered by any Loan
Party or any other Person securing or Guaranteeing
the Secured Obligations, or any part thereof; and
(g) any and all renewals, extensions, modifications,
amendments, supplements or restatements of any of the
foregoing.
"SECURITY ENTITLEMENT" means any of the rights and property interests
of an Entitlement Holder with respect to a Financial Asset.
"SECURITY INTEREST" means the Liens of Agent, for the benefit of the
Credit Parties, on and in the Collateral pursuant to this Agreement and the
Security Documents or any other Loan Document.
"SENIOR SUBORDINATED NOTES" means Parent's $110,000,000 9-1/2% Senior
Subordinated Notes due 2000.
"SETTLEMENT DATE" means each Business Day after the Effective Date
selected by Agent pursuant to SECTION 5.10(b)(i) as of which a Settlement Report
is delivered by Agent and on which settlement is to be made among the Lenders in
accordance with the provisions of SECTION 5.10.
"SETTLEMENT REPORT" means each report, in form satisfactory to and
prepared by Agent and delivered to each Lender, setting forth, among other
things, as of the Settlement Date indicated thereon and as of the next preceding
Settlement Date, the aggregate principal balance of all Revolving Credit Loans
outstanding, each Lender's Commitment Percentage thereof, each Lender's Net
Outstandings and all Non-Ratable Loans made, and all payments of principal,
interest and fees received by Agent from Borrower during the period beginning on
such next preceding Settlement Date and ending on such Settlement Date.
"SOLVENT" means, as to a Person, as of any date, that on and as of such
date (both before and after effecting the transactions contemplated by this
Agreement and making any Loans or taking any actions permitted by this Agreement
proposed to be taken as of such date) (a) the sum of such
LOAN AND SECURITY AGREEMENT - Page 40
Person's debts is not greater than all of such Person's property, at a fair
valuation, (b) the sum of such Person's debts is not greater than all of such
Person's assets, at a fair valuation, (c) such Person is generally paying its
debts as they become due, (d) such person is not engaged or about to engage
in any business or any transaction for which (i) its property is an
unreasonably small capital or (ii) the remaining assets of such Person are
unreasonably small in relation to any such business or transaction, (e) such
Person does not intend to incur, and does not believe that it will incur,
debts that are or would be beyond its ability to pay as such debts mature or
become due, and (f) such Person does not intend to hinder, delay or defraud
any creditor of such Person. For this purpose (i) "debts" includes anything
included within the definition of "debt" as used in Section 548 of the United
States Bankruptcy Code or as defined or used by Section 24.002 or Section
24.003 of the Texas Uniform Fraudulent Transfer Act, and "assets" has the
meaning defined or used by Section 24.002 of the Texas Uniform Fraudulent
Transfer Act. Contingent, unliquidated or disputed obligations or liabilities
(if any) are valued at the amount which, in light of all relevant facts and
circumstances, is reasonably expected to become absolute, liquidated or
mature.
"SPOT RATE" means, as of any date of determination with respect to the
conversion of an amount denominated in one currency (the "ORIGINAL CURRENCY") to
another currency (the "OTHER CURRENCY"), the rate of exchange at which, in
accordance with customary banking procedures and at such time and in such
foreign exchange market as Agent shall determine consistent with such
procedures, Agent on such date could purchase such amount of the Original
Currency with such Other Currency.
"SUBORDINATED INDEBTEDNESS" means (i) the Senior Subordinated Notes,
(ii) the certain subordinated promissory note dated August 31, 1998 executed by
Parent payable to Tandy Corporation and (iii) other Indebtedness of any Loan
Party or any Restricted Subsidiary of a Loan Party which has maturities and
terms, and which is subordinated to payment of the Secured Obligations in a
manner, approved in writing by the Required Lenders, and in each such case any
renewals, modifications or amendments thereof which are approved in writing by
Agent and the Required Lenders.
"SUBSIDIARY" shall
(a) when used to determine the relationship of a Person
to another Person, mean a Person of which an aggregate of more than
fifty percent (50%) of the Capital Stock is owned of record or
beneficially by such other Person, or by one or more Subsidiaries of
such other Person, or by such other Person and one or more Subsidiaries
of such Person,
(i) if the holders of such Capital Stock (A) are
ordinarily, in the absence of contingencies, entitled to vote
for the election of a majority of the directors (or other
individuals performing similar functions) of such Person, even
though the right so to vote has been suspended by the
happening of such a contingency, or (B) are entitled, as such
holders, to vote for the election of a majority of the
directors (or individuals performing similar functions) of
such Person, whether or not the right so to vote exists by
reason of the happening of a contingency, or
LOAN AND SECURITY AGREEMENT - Page 41
(ii) in the case of Capital Stock which is not
issued by a corporation, if such ownership interests
constitute a majority voting interest, and
(b) when used with respect to a Plan, ERISA or a
provision of the Internal Revenue Code pertaining to employee benefit
plans, also mean any corporation, trade or business (whether or not
incorporated) which is under common control with Borrower and is
treated as a single employer with Borrower under Section 414(b) or (c)
of the Internal Revenue Code and the regulations thereunder.
"SUBSIDIARY GUARANTY" means a Guaranty Agreement dated as of the
Agreement Date executed by each Loan Party other than Borrower, Parent, General
Partner and CompUSA Holdings Company.
"SUPPORTING LETTER OF CREDIT" shall have the meaning set forth in
SECTION 3.10.
"TAXES" shall have the meaning set forth in SECTION 6.6(a).
"TERMINATION DATE" means (i) the day that is the third anniversary of
the Agreement Date or such later date as to which such date may be extended
pursuant to the provisions of SECTION 2.6, or (ii) or such earlier date as of
when all Secured Obligations shall have been irrevocably paid in full and the
Commitments and the Revolving Credit Facility shall have been terminated.
"TERMINATION EVENT" means
(a) a Reportable Event, or
(b) the filing of a notice of intent to terminate a Plan,
or the treatment of a Plan amendment as a termination, under Section
4041 of ERISA, or
(c) the institution of proceedings to terminate a Plan by
the PBGC under Section 4042 of ERISA, or the appointment of a trustee
to administer any Plan under Section 4042 of ERISA.
"THRESHOLD USAGE AMOUNT" means an amount equal to fifty percent (50%)
of the Borrowing Base as calculated under the definition of "Borrowing Base" in
SECTION 1.1 but without making any deductions therefrom in respect of the
Reserve or the Letter of Credit Reserve.
"TOTAL COMMITMENT" means the sum of the Commitments.
"TRADEMARK SECURITY AGREEMENT" means a Trademark Security Agreement
executed by one or more of the Loan Parties in favor of Agent, for the benefit
of the Credit Parties, as may be amended, modified, restated or supplemented
from time to time.
LOAN AND SECURITY AGREEMENT - Page 42
"TRADEMARKS" means and includes, with respect to any Person, all of
such Person's right, title and interest in and to the following, in each case
whether now existing or hereafter arising:
(a) all trademarks (including service marks), trade names and
trade styles and the registrations and applications (excluding "intent
to use" applications") for registration thereof and the goodwill of the
business symbolized by such trademarks;
(b) all licenses of the foregoing, whether as licensee or
licensor;
(c) all renewals of the foregoing;
(d) all income, royalties, damages and payments now or
hereafter due and/or payable with respect thereto, including, without
limitation, damages, claims and payments for past and future
infringements thereof;
(e) all rights to ▇▇▇ for past, present and future
infringements of the foregoing, including the right to settle suits
involving claims and demands for royalties owing; and
(f) all rights corresponding to any of the foregoing
under Applicable Law.
"TREASURY STOCK PURCHASE" means, with respect to any Person, any
purchase, redemption, or other acquisition for value by such Person of any
shares of the Capital Stock of such Person as treasury stock.
"TYPE" means any type of Loan (i.e., Base Rate Loan or a Eurodollar
Loan).
"UCC" means (i) the Uniform Commercial Code as in effect from time to
time in the State of Texas, as amended from time to time, and (ii) the Uniform
Commercial Code as in effect from time to time in such other states as any
Collateral may be located, as and to the extent applicable.
"U.S." means the United States of America.
"UNCERTIFICATED SECURITY" means any "uncertificated security," as such
term is defined in Chapter 8 (or Article 8) of the UCC, and in any event shall
include, but not be limited to, any Security that is not represented by a
certificate.
"UNFUNDED CAPITAL EXPENDITURES" means Capital Expenditures which are
paid for by a Person (i) with proceeds of Revolving Credit Loans, or (ii)
otherwise, from sources other than Indebtedness for Money Borrowed.
"UNFUNDED VESTED ACCRUED BENEFITS" means with respect to any Plan at
any time, the amount (if any) by which (a) the present value of all vested
nonforfeitable benefits under such Plan exceeds, (b) the fair market value of
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan.
LOAN AND SECURITY AGREEMENT - Page 43
"UNUSED COMMITMENT FEE PERCENTAGE" means, as of the Agreement Date,
three-eighths percent (0.375%), subject to adjustment thereafter from time to
time to the percentage specified corresponding to the Leverage Ratio as set
forth below, respectively:
==================================================================
Leverage Ratio Percentage
==================================================================
Greater than 4.0 to 1.0 0.500%
------------------------------------------------------------------
Less than or equal to 4.0 to 1.0 but 0.500%
greater than 3.0 to 1.0
------------------------------------------------------------------
Less than or equal to 3.0 to 1.0 but 0.375%
greater than 2.5 to 1.0
------------------------------------------------------------------
Less than or equal to 2.5 to 1.0 but 0.375%
greater than 2.1 to 1.0
------------------------------------------------------------------
Less than or equal 2.1 to 1.0 but 0.250%
greater than 1.7 to 1.0
------------------------------------------------------------------
Less than or equal to 1.7 0.250%
==================================================================
For the purpose of determining the Unused Commitment Percentage the Leverage
Ratio shall be determined based upon Parent's Consolidated financial statements
for its respective Fiscal Quarters delivered to Agent as required by SECTION
12.1, and any resulting change, if any, in the Unused Commitment Percentage
shall become effective as of the first day of the calendar month following the
month in which such financial statements are delivered to Agent.
"VOTING STOCK" means Capital Stock of a Person having ordinary voting
power for the election of a majority of the members of its board of directors or
other governing body (not including shares having such power only in the event
of a contingency).
"WHOLLY-OWNED SUBSIDIARY" when used to determine the relationship of a
Subsidiary to a Person, means a Subsidiary all of the issued and outstanding
Capital Stock (other than directors' qualifying shares) of which shall at the
time be owned by such Person or one or more of such Person's Wholly-Owned
Subsidiaries or by such Person and one or more of such Person's Wholly-Owned
Subsidiaries.
"YEAR 2000 COMPLIANT" has the meaning set forth in SECTION 8.1(ff).
"YEAR 2000 PROBLEM" has the meaning set forth in SECTION 8.1(ff).
LOAN AND SECURITY AGREEMENT - Page 44
Section 1.2 GENERAL. All terms of an accounting nature not
specifically defined herein shall have the meaning ascribed thereto by GAAP.
The generic terms accounts, chattel paper, documents, equipment, instruments,
general intangibles, inventory and investment property, as and when used in
this Agreement or the Security Documents, shall have the meanings given those
terms in the UCC. Unless otherwise specified, a reference in this Agreement
to a particular section, subsection, Schedule or Exhibit is a reference to
that section, subsection, Schedule or Exhibit of this Agreement, and the
words "hereof," "herein," "hereunder" and words of similar import, when used
in this Agreement, refer to this Agreement as a whole and not to any
particular provision, section or subsection of this Agreement. Wherever from
the context it appears appropriate, each term stated in either the singular
or plural shall include the singular and plural, and pronouns stated in the
masculine, feminine or neuter gender shall include the masculine, the
feminine and the neuter. Words denoting individuals include corporations,
limited liability companies, partnerships, joint ventures and other business
entities and vice versa. References to any legislation or statute or code, or
to any provisions of any legislation or statute or code, shall include any
modification or reenactment of, or any legislative, statutory or code
provision substituted for, such legislation, statute or code or provision
thereof. References to any document or agreement (including this Agreement)
shall include references to such document or agreement as amended, restated,
novated, supplemented, modified or replaced from time to time, so long as and
to the extent that such amendment, restatement, novation, supplement,
modification or replacement is either not prohibited by the terms of this
Agreement or is consented to by the Required Lenders and Agent. References to
any Person include its successor or permitted substitutes and assigns.
Standards of "reasonableness," or requirements of similar import, and the
conduct of any Credit Party or any Loan Party in connection with the Loan
Documents shall be measured according to applicable standards prescribed by
the UCC. Where used in this Agreement, the phrase "in its reasonable
discretion in the exercise of reasonable credit judgment", in reference to
Agent, shall be measured according to that discretion that would be exercised
by a reasonably prudent Person that is a lender in the asset based lending
industry and is acting in its capacity as administrative agent in the same or
substantially similar circumstances.
Section 1.3 EXHIBITS AND SCHEDULES. All Exhibits and Schedules attached
hereto are incorporated fully herein by reference thereto.
ARTICLE 2
REVOLVING CREDIT FACILITY
Section 2.1 REVOLVING CREDIT LOANS. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, each Lender agrees, severally, but not jointly, to make
Revolving Credit Loans to Borrower from time to time from the Effective Date to
but not including the Termination Date, as requested or deemed requested by
Borrower in accordance with the terms of SECTION 2.2, in amounts equal to such
Lender's Commitment Percentage of each such Loan requested or deemed requested
hereunder up to an aggregate amount at any one time outstanding equal to such
Lender's Commitment Percentage of the Borrowing Base; PROVIDED, HOWEVER, that
(i) the aggregate principal amount of all outstanding
LOAN AND SECURITY AGREEMENT - Page 45
Revolving Credit Loans (after giving effect to the Loans requested) shall not
exceed the Borrowing Base and (ii) the aggregate amount of Revolving Credit
Loans plus the aggregate amount of Reimbursement Obligations plus an amount
determined by Agent in its reasonable discretion in respect of all
obligations owing by any Loan Party to any Lender in respect of Interest Rate
Protection Agreements shall not exceed $500,000,000. It is expressly
understood and agreed that the Lenders may and at present intend to use the
Borrowing Base as a maximum ceiling on Revolving Credit Loans to Borrower;
PROVIDED, HOWEVER, that it is agreed that should the Revolving Credit Loans
exceed the ceiling so determined or any other limitation set forth in this
Agreement such Revolving Credit Loans shall nevertheless constitute Secured
Obligations and, as such, shall be entitled to all benefits thereof and
security therefor. The principal amount of any Revolving Credit Loan which is
repaid pursuant to SECTION 2.3(c) may be reborrowed by Borrower, subject to
the terms and conditions of this Agreement, in accordance with the terms of
this SECTION 2.1. Agent's and each Lender's books and records reflecting the
date and the amount of each Revolving Credit Loan and each repayment of
principal thereof shall constitute prima facie evidence of the accuracy of
the information contained therein, subject to the provisions of SECTION 5.10.
Section 2.2 MANNER OF BORROWING REVOLVING CREDIT LOANS. Borrowings
under the Revolving Credit Facility shall be made as follows:
(a) REQUESTS FOR BORROWING. A request for a borrowing
shall be made, or shall be deemed to be made, in the following manner:
(i) requests for a Revolving Credit Loan shall
be made in the manner prescribed by ARTICLE 5;
(ii) whenever a check or other item is presented
to a Disbursing Bank for payment against a Disbursement
Account in an amount greater than the then available balance
in such account then, unless payment is otherwise timely made
within three (3) Business Days, such Disbursing Bank shall,
and is hereby irrevocably authorized by Borrower to, give
Agent notice thereof, which notice shall be deemed to be a
request for a Revolving Credit Loan on the date of such notice
in an amount equal to the excess of such check or other item
over such available balance;
(iii) unless payment is otherwise timely made
within three (3) Business Days, the becoming due of any amount
required to be paid under this Agreement or any of the Notes
as interest shall be deemed to be a request for a Revolving
Credit Loan on the due date in the amount required to pay such
interest;
(iv) unless payment is otherwise timely made
within three (3) Business Days, the becoming due of any other
Secured Obligation shall be deemed to be a request for a
Revolving Credit Loan on the due date in the amount then so
due, and such request shall be irrevocable; and
LOAN AND SECURITY AGREEMENT - Page 46
(v) the receipt by Agent of notification from
L/C Issuer to the effect that a drawing has been made under a
Letter of Credit and that Borrower has failed to reimburse L/C
Issuer therefor in accordance with the terms of the applicable
Reimbursement Agreement and ARTICLE 3 shall be deemed to be a
request for a Revolving Credit Loan on the date such
notification is received in the amount of such drawing which
is so unreimbursed.
(b) DISBURSEMENT OF LOANS. Borrower hereby irrevocably
authorizes Agent to disburse the proceeds of each borrowing requested,
or deemed to be requested, pursuant to this SECTION 2.2 as follows:
(i) the proceeds of each borrowing requested
under SECTION 2.2(a)(i) shall be disbursed by Agent in Dollars
in immediately available funds, (a) in the case of the initial
borrowing under the Revolving Credit Facility, in accordance
with the terms of the certificate from Borrower to Agent
referred to in SECTION 7.1(a)(xi), and (b) in the case of each
subsequent borrowing, by wire transfer to a Disbursement
Account or, in the absence of a Disbursement Account, by wire
transfer to such other account as may be agreed upon by
Borrower and Agent from time to time;
(ii) the proceeds of each borrowing deemed
requested under SECTION 2.2(a)(ii), (iii) or (iv) shall be
disbursed by Agent by way of direct payment of the relevant
amount, interest or Secured Obligation referenced therein, as
the case may be, PROVIDED that Agent and the Lenders shall
have no obligation to make any such Loan; and
(iii) the proceeds of each borrowing deemed
requested under SECTION 2.2(a)(v) shall be disbursed by Agent
directly to L/C Issuer in payment of the Reimbursement
Obligations referenced therein.
Section 2.3 REPAYMENT OF REVOLVING CREDIT LOANS. Borrower hereby agrees
to pay the Revolving Credit Loans as follows:
(a) Whether or not any Default or Event of Default has
occurred, the outstanding principal amount of all the Revolving Credit
Loans is due and payable, and shall be repaid by Borrower in full, on
the Termination Date;
(b) If at any time the aggregate outstanding unpaid
principal amount of the Revolving Credit Loans exceeds the Borrowing
Base in effect at such time, Borrower shall repay the Revolving Credit
Loans in an amount sufficient to reduce the aggregate unpaid principal
amount of such Revolving Credit Loans by an amount equal to such
excess, together with accrued and unpaid interest on the amount so
repaid to the date of repayment; and
LOAN AND SECURITY AGREEMENT - Page 47
(c) Borrower hereby instructs Agent to repay the
Revolving Credit Loans outstanding on any day in an amount equal to the
amount received by Agent on such day pursuant to SECTION 10.1(b).
Section 2.4 REVOLVING CREDIT NOTE. Each Lender's Revolving Credit Loans
and the obligation of Borrower to repay such Revolving Credit Loans shall be
evidenced by a Revolving Credit Note payable to the order of such Lender. Each
Revolving Credit Note shall be dated the Agreement Date, or with respect to any
Lender which is a party to an Assignment and Acceptance the date of such
Assignment and Acceptance, and be duly and validly executed and delivered by
Borrower.
Section 2.5 BORROWING BASE. At any time after the occurrence, and
during the continuance, of an Event of Default, the percentages specified in
this Agreement for determination of the Borrowing Base may be adjusted from time
to time based upon such considerations as Agent may deem appropriate in its
reasonable discretion (PROVIDED, that any such reduction shall be eliminated,
and such percentages shall be restored, at such time, if any, as any such Event
of Default is cured or waived in accordance with SECTION 17.10). Percentages
used from time to time in calculating the Borrowing Base are for the sole
purpose of determining the maximum amount of Revolving Credit Loans that may be
outstanding from time to time under this Agreement and shall not be evidentiary
of or binding upon the Credit Parties with respect to the market value or
liquidation value of any Collateral. Agent shall have the right in its
reasonable discretion in the exercise of reasonable credit judgment to establish
a Reserve at any time when the aggregate outstanding balance of all Revolving
Credit Loans plus the Letter of Credit Reserve exceeds the Threshold Usage
Amount. Funding of Revolving Credit Loans hereunder shall at all times remain
subject to confirmation of Eligible Receivables, Eligible Inventory and the
Borrowing Base, in Agent's discretion. Any request for a Revolving Credit Loan
which, if funded, would result in the unpaid balance of the Revolving Credit
Loans being in excess of the amount allowed by this Agreement may be declined by
Agent in its sole discretion without prior notice.
Section 2.6 EXTENSION OF REVOLVING CREDIT FACILITY. Borrower may notify
Agent in writing by May 1 of each year while this Agreements in effect,
commencing May 1, 2000, of its desire to extend the Termination Date for an
additional 12 months beyond the then present Termination Date. If such notice is
given by Borrower, Agent by the immediately following June 15 of such year will
notify Borrower in writing if the Credit Parties agree to such extension.
Extension of the Termination Date shall be at the sole option and discretion of
the Credit Parties, and the decision to extend the Termination Date shall
require the consent of all Credit Parties. If either Borrower or the Agent fails
to give such notice within the time prescribed above, then the Termination Date
shall not be extended and shall remain as the then present Termination Date. An
extension of the Termination Date pursuant to this SECTION 2.6 shall not require
any renewal Note or amendment of or supplement to this Agreement or any other
Loan Document unless otherwise required by Agent.
LOAN AND SECURITY AGREEMENT - Page 48
ARTICLE 3
LETTER OF CREDIT FACILITY
Section 3.1 AGREEMENT TO ISSUE. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, L/C Issuer agrees to issue for the account of Borrower
or, at the request of Borrower, any other Loan Party, one or more Letters of
Credit in accordance with this ARTICLE 3, from time to time during the period
commencing on the Effective Date and ending on the Termination Date.
Section 3.2 AMOUNTS. L/C Issuer shall not have any obligation to issue
any Letter of Credit at any time:
(a) if, after giving effect to the issuance of the
requested Letter of Credit, (i) the aggregate Letter of Credit
Obligations would exceed the maximum amount of the Letter of Credit
Facility then in effect or (ii) the aggregate principal amount of the
Revolving Credit Loans outstanding would exceed the Borrowing Base
(after reduction for the Letter of Credit Reserve in respect of such
Letter of Credit) or (iii) the aggregate amount of the Revolving
Credit Loans outstanding plus the aggregate amount of Reimbursement
Obligations plus an amount determined by Agent in its reasonable
discretion in respect of all obligations owing by any Loan Party to any
Lender in respect of Interest Rate Protection Agreements would exceed
$500,000,000; or
(b) which has a term longer than two (2) calendar years
or an expiration date after the last Business Day that is more than
thirty (30) days prior to the Termination Date.
Section 3.3 CONDITIONS. The obligation of L/C Issuer to issue any
Letter of Credit is subject to the satisfaction of (i) the conditions precedent
contained in ARTICLE 7 and (ii) the following additional conditions precedent in
a manner satisfactory to Agent and L/C Issuer:
(a) Borrower shall have delivered to L/C Issuer and
Agent, at such times and in such manner as L/C Issuer or Agent may
prescribe, an application in form and substance satisfactory to L/C
Issuer and Agent for the issuance of the proposed Letter of Credit, a
Reimbursement Agreement and such other documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed
Letter of Credit shall be satisfactory to L/C Issuer and Agent
(PROVIDED, that in the event any terms of such Reimbursement Agreement
or other documents are inconsistent with the terms of this Agreement,
then the terms of this Agreement shall control); and
(b) as of the date of issuance, no order of any court,
arbitrator or other Governmental Authority having jurisdiction or
authority over L/C Issuer shall purport by its terms to enjoin or
restrain banks generally from issuing letters of credit of the type and
in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to banks generally and no request or directive
(whether or not having the force of law) from any
LOAN AND SECURITY AGREEMENT - Page 49
Governmental Authority with jurisdiction over banks generally shall
prohibit or request that L/C Issuer refrain from the issuance of
letters of credit generally or the issuance of such Letter of Credit.
(c) L/C Issuer shall have received from Agent
authorization to issue the requested Letter of Credit.
Section 3.4 ISSUANCE OF LETTERS OF CREDIT.
(a) REQUEST FOR ISSUANCE. Borrower shall give L/C Issuer
and Agent written notice of each request for the issuance of a Letter
of Credit no later than three (3) Business Days prior to the proposed
date of issuance of the Letter of Credit. Such notice shall be
irrevocable and shall specify the original face amount of the Letter of
Credit requested, the effective date (which date shall be a Business
Day) of issuance of such requested Letter of Credit, whether such
Letter of Credit may be drawn in a single or in multiple draws, the
date on which such requested Letter of Credit is to expire (which date
shall be a Business Day that is more than thirty (30) days prior to the
Termination Date), the purpose for which such Letter of Credit is to be
issued and the beneficiary of the requested Letter of Credit. Borrower
shall attach to such notice the form of the Letter of Credit that
Borrower requests to be issued.
(b) RESPONSIBILITIES OF AGENT; ISSUANCE. Agent shall
determine, as of the Business Day immediately preceding the requested
effective date of issuance of the Letter of Credit set forth in the
notice from Borrower pursuant to SECTION 3.4(a), the amount of the
unused portion of the Letter of Credit Facility and the Borrowing Base.
If (i) the form of the Letter of Credit delivered by Borrower to Agent
is acceptable to L/C Issuer and Agent, (ii) the undrawn face amount of
the requested Letter of Credit is less than or equal to the lesser of
(A) the amount of the unused portion of the Letter of Credit Facility
and (B) the unused Borrowing Base, and (iii) Agent has received a
certificate from Borrower stating that the applicable conditions set
forth in ARTICLE 7 have been satisfied, then, subject to the terms of
this Agreement, L/C Issuer will cause the Letter of Credit to be
issued. NationsBank in its discretion may cause any Affiliate of
NationsBank to issue any requested Letter of Credit, whereupon such
Affiliate shall be L/C Issuer with respect to such Letter of Credit and
shall have all of the rights, benefits and interests of L/C Issuer as
are specified by the Loan Documents in connection therewith. Each such
Affiliate, if any, shall be a third party beneficiary of the Loan
Documents and shall be entitled to rely upon all representations,
warranties and covenants contained herein and therein. The Loan Parties
hereby authorize NationsBank and Agent to deliver or otherwise disclose
to L/C Issuer copies of any of the Loan Documents and any other
information from time to time in NationsBank's or Agent's possession
concerning any of the Loan Parties or the transactions contemplated by
the Loan Documents.
(c) NOTICE OF ISSUANCE. Promptly after the issuance of
any Letter of Credit, L/C Issuer shall give Agent written or facsimile
notice, or telephonic notice confirmed promptly
LOAN AND SECURITY AGREEMENT - Page 50
thereafter in writing, of the issuance of such Letter of Credit, and
Agent shall give each Lender written or facsimile notice, or telephonic
notice confirmed promptly thereafter in writing, of the issuance of
such Letter of Credit; PROVIDED that any failure or delay in giving or
confirming any such notice shall not impair the obligations of L/C
Issuer, any Lender or Borrower with respect to any such Letter of
Credit.
(d) NO EXTENSION OR AMENDMENT. No Letter of Credit shall
be extended or amended unless the requirements of this SECTION 3.4 are
met as though a new Letter of Credit were being requested and issued.
Section 3.5 DUTIES OF L/C ISSUER. Any action taken or omitted to be
taken by L/C Issuer under or in connection with any Letter of Credit, if
taken or omitted in the absence of gross negligence or willful misconduct,
shall not result in any liability of L/C Issuer to any Lender or relieve any
Lender of its obligations hereunder to L/C Issuer. In determining whether to
pay under any Letter of Credit, L/C Issuer shall have no obligation to any
Lender other than to confirm that any documents required to be delivered
under such Letter of Credit in connection with such drawing have been
presented and appear on their face to comply with the requirements of such
Letter of Credit.
Section 3.6 PAYMENT OF REIMBURSEMENT OBLIGATIONS.
(a) PAYMENT TO ISSUER. Borrower agrees to reimburse L/C
Issuer for any drawings (whether partial or full) under each Letter of
Credit and agrees to pay to L/C Issuer the amount of all other
Reimbursement Obligations and other amounts payable to L/C Issuer under
or in connection with such Letter of Credit immediately when due,
irrespective of any claim, set-off, defense or other right which
Borrower may have at any time against L/C Issuer or any other Person.
(b) RECOVERY OR AVOIDANCE OF PAYMENTS. In the event any
payment by or on behalf of any Loan Party with respect to any Letter of
Credit or any Reimbursement Obligation relating thereto received by L/C
Issuer, or by Agent, and distributed by Agent to the Lenders on account
of their respective participations therein, is thereafter set aside,
avoided or recovered from L/C Issuer or Agent in connection with any
receivership, liquidation or bankruptcy proceeding, the Lenders shall,
upon demand by Agent pay to Agent, for the account of Agent or L/C
Issuer, their respective Commitment Percentages of such amount set
aside, avoided or recovered together with interest at the rate required
to be paid by L/C Issuer, or by Agent, upon the amount required to be
repaid by it.
(c) EXISTING LETTERS OF CREDIT. All Reimbursement
Obligations or other obligations of any Loan Party under any
Reimbursement Agreement in respect of the Existing Letters of Credit
are hereby reaffirmed and continued in full force and effect. All
obligations of any Loan Party for payment in respect of Reimbursement
Obligations or other obligations in respect of the Existing Letters of
Credit, as provided by the Existing Credit
LOAN AND SECURITY AGREEMENT - Page 51
Agreement or the "Loan Documents" as defined therein, are hereby
renewed, continued, and reaffirmed under the terms of this
Agreement and the other Loan Documents.
Section 3.7 PARTICIPATIONS.
(a) PURCHASE OF PARTICIPATIONS. On the Agreement Date
with respect to the Existing Letters of Credit and Immediately upon
issuance by L/C Issuer of any other Letter of Credit, each Lender shall
be deemed to have irrevocably and unconditionally purchased and
received without recourse or warranty, an undivided interest and
participation in such Letter of Credit, equal to such Lender's
Commitment Percentage of the face amount thereof (including, without
limitation, all obligations of Borrower with respect thereto).
(b) SHARING OF LETTER OF CREDIT PAYMENTS. In the event
that L/C Issuer makes a payment under any Letter of Credit and L/C
Issuer shall not have been repaid such amount pursuant to SECTION 3.6,
then NationsBank may, in its discretion without obligation to do so,
make such repayment to L/C Issuer and thereupon be deemed to have made
a Non-Ratable Loan in the amount of such repayment, and notwithstanding
the occurrence or continuance of a Default or Event of Default at the
time of such repayment, such Non-Ratable Loan shall be subject to the
provisions of SECTION 5.10(c) and the absolute obligations of the
Lenders to pay for their respective participation interests therein.
(c) SHARING OF REIMBURSEMENT OBLIGATION PAYMENTS.
Whenever L/C Issuer receives a payment from or on behalf of Borrower on
account of a Reimbursement Obligation as to which Agent has previously
received for the account of L/C Issuer payment from a Lender pursuant
to this SECTION 3.7, L/C Issuer shall promptly pay to Agent, for the
benefit of such Lender, such Lender's Commitment Percentage of the
amount of such payment from Borrower in Dollars. Each such payment
shall be made by L/C Issuer on the Business Day on which L/C Issuer
receives immediately available funds pursuant to the immediately
preceding sentence, if received prior to 11:00 a.m. (Dallas, Texas
time) on such Business Day and otherwise on the next succeeding
Business Day.
(d) DOCUMENTATION. Upon the request of any Lender, Agent
shall furnish to such Lender copies of any Letter of Credit,
Reimbursement Agreement or application for any Letter of Credit and
such other documentation as may reasonably be requested by such Lender.
(e) OBLIGATIONS IRREVOCABLE. The obligations of each
Lender to make payments to Agent with respect to any Letter of Credit
and their participations therein pursuant to this Agreement and the
obligations of Borrower to make payments to L/C Issuer or to Agent, for
the account of the Lenders, pursuant to SECTION 3.6 or otherwise, in
each case shall be irrevocable and not subject to any qualification or
exception whatsoever, and shall be made in accordance with the terms
and conditions of this Agreement (assuming, in the case of the
obligations of the Lenders to make such payments, that the Letter of
Credit has been issued
LOAN AND SECURITY AGREEMENT - Page 52
in accordance with SECTION 3.4), including, without limitation, any of
the following circumstances:
(i) Any lack of validity or enforceability of
this Agreement or any of the other Loan Documents;
(ii) The existence of any claim, set-off, defense
or other right which Borrower may have at any time against a
beneficiary named in a Letter of Credit or any transferee of
any Letter of Credit (or any Person for whom any such
transferee may be acting), any Lender, Agent, L/C Issuer or
any other Person, whether in connection with this Agreement,
any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying
transactions between Borrower or any other Person and the
beneficiary named in any Letter of Credit);
(iii) Any draft, certificate or any other document
presented under the Letter of Credit upon which payment has
been made according to its terms proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) The surrender or impairment of any
Collateral or any other security for the Secured Obligations
or the performance or observance of any of the terms of any of
the Loan Documents;
(v) The occurrence of any Default or Event of
Default; or
(vi) Agent's failure to deliver to the Lenders
the notice provided for in SECTION 3.4(c).
Section 3.8 INDEMNIFICATION, EXONERATION.
(a) INDEMNIFICATION BY BORROWER. WITHOUT LIMITING SECTION
17.13 AND IN ADDITION TO AMOUNTS PAYABLE AS ELSEWHERE PROVIDED IN THIS
ARTICLE 3, BORROWER JOINTLY AND SEVERALLY AGREES TO PROTECT, INDEMNIFY,
PAY AND SAVE EACH OF THE CREDIT PARTIES HARMLESS FROM AND AGAINST ANY
AND ALL CLAIMS, DEMANDS, LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES
AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) WHICH ANY CREDIT
PARTY MAY INCUR OR BE SUBJECT TO AS A CONSEQUENCE, DIRECTLY OR
INDIRECTLY, OF ANY OF THE FOLLOWING: (i) THE ISSUANCE OF ANY LETTER OF
CREDIT, OTHER THAN AS A RESULT OF ITS GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, AS DETERMINED BY A COURT OF COMPETENT JURISDICTION, OR (ii)
THE FAILURE OF L/C ISSUER TO HONOR A DRAWING UNDER ANY LETTER OF CREDIT
AS A RESULT OF ANY ACT OR OMISSION, WHETHER RIGHTFUL OR WRONGFUL, OF
ANY
LOAN AND SECURITY AGREEMENT - Page 53
PRESENT OR FUTURE DE JURE OR DE FACTO GOVERNMENTAL AUTHORITY (ALL SUCH
ACTS OR OMISSIONS BEING HEREINAFTER REFERRED TO COLLECTIVELY AS
"GOVERNMENT ACTS").
(b) ASSUMPTION OF RISK BY LOAN PARTIES. As among the Loan
Parties and the Credit Parties, the Loan Parties assume all risks of
the acts and omissions of, or misuse of any of the Letters of Credit
by, the respective beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, subject to the
provisions of the applications for the issuance of Letters of Credit,
the Credit Parties shall not be responsible for:
(i) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any
Person in connection with the application for and issuance of
and presentation of drafts with respect to any of the Letters
of Credit, even if it should prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or
forged;
(ii) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer
or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason;
(iii) errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in
cipher;
(iv) errors in interpretation of technical terms;
(v) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof;
(vi) the misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under such
Letter of Credit; or
(vii) any consequences arising from causes beyond
the control of any Credit Party, including, without
limitation, any Government Acts.
None of the foregoing shall affect, impair or prevent the vesting of
any rights or powers of any of any Credit Party under this SECTION 3.8.
(c) EXONERATION. In furtherance and extension, and not in
limitation, of the specific provisions set forth above, any action
taken or omitted by the Credit Parties under or in connection with any
of the Letters of Credit or any related certificates, if taken or
LOAN AND SECURITY AGREEMENT - Page 54
omitted in good faith, shall not result in any liability of any Credit
Party to any Loan Party or relieve any Loan Party of any of its
obligations hereunder to any such Person.
(d) INDEMNIFICATION BY LENDERS. WITHOUT LIMITING SECTION
16.5, THE LENDERS AGREE TO INDEMNIFY L/C ISSUER (TO THE EXTENT NOT
REIMBURSED UNDER SECTION 17.2, BUT WITHOUT LIMITING THE OBLIGATIONS OF
BORROWER UNDER SUCH SECTION) RATABLY IN ACCORDANCE WITH THEIR
RESPECTIVE COMMITMENTS, FOR ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES
(INCLUDING ATTORNEYS' FEES) OR DISBURSEMENTS OF ANY KIND AND NATURE
WHATSOEVER THAT MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST L/C
ISSUER (INCLUDING BY ANY LENDER) IN ANY WAY RELATING TO OR ARISING OUT
OF ANY LETTER OF CREDIT OR THE TRANSACTIONS CONTEMPLATED THEREBY OR ANY
ACTION TAKEN OR OMITTED BY L/C ISSUER UNDER ANY LETTER OF CREDIT OR ANY
LOAN DOCUMENT IN CONNECTION THEREWITH (INCLUDING ANY OF THE FOREGOING
ARISING FROM THE NEGLIGENCE OF L/C ISSUER); PROVIDED THAT NO LENDER
SHALL BE LIABLE FOR ANY OF THE FOREGOING TO THE EXTENT IT ARISES FROM
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE
INDEMNIFIED. WITHOUT LIMITATION OF THE FOREGOING, EACH LENDER AGREES TO
REIMBURSE L/C ISSUER PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE OF ANY
COSTS OR EXPENSES PAYABLE BY BORROWER TO L/C ISSUER UNDER SECTION 17.2,
TO THE EXTENT THAT L/C ISSUER IS NOT PROMPTLY REIMBURSED FOR SUCH COSTS
AND EXPENSES BY BORROWER. THE AGREEMENTS CONTAINED IN THIS SECTION
SHALL SURVIVE PAYMENT IN FULL OF ALL SECURED OBLIGATIONS.
Section 3.9 L/C CASH COLLATERAL ACCOUNT.
(a) Upon the occurrence and during the continuance of an
Event of Default and demand by the Agent pursuant to SECTION 14.2(c)
(but in the case of an Event of Default pursuant to SECTION 14.1(g) or
SECTION 14.1(h), without any demand or the taking of any other action
by Agent or any Lender), Borrower will promptly pay to Agent in
immediately available funds an amount equal to the maximum amount then
available to be drawn under all Letters of Credit then outstanding.
(b) If, notwithstanding the provisions of SECTION 3.2(b),
any Letter of Credit is outstanding on the Termination Date then,
unless an L/C Cash Collateral Account has already been established for
such Letter of Credit under SECTION 3.9(a), on or prior to such
Termination Date Borrower shall, promptly on demand by Agent, pay to
Agent in immediately available funds an amount equal to the maximum
amount then available to be drawn under such Letters of Credit.
LOAN AND SECURITY AGREEMENT - Page 55
(c) Amounts paid to Agent pursuant to SECTION 3.9(a) or
SECTION 3.9(b) shall be deposited by Agent to a cash collateral account
("the L/C CASH COLLATERAL ACCOUNT") which shall be included in the
Collateral. The L/C Cash Collateral Account shall be under the sole
dominion and control of Agent, and the Loan Parties shall have no right
to withdraw or to cause Agent to withdraw any funds deposited in the
L/C Cash Collateral Account.
(d) Agent shall (A) apply any funds in the L/C Cash
Collateral Account on account of Reimbursement Obligations as and when
they become due and payable if and to the extent that Borrower shall
fail to timely pay such Reimbursement Obligations as required by this
Agreement and (B) on or after the Termination Date, apply any proceeds
remaining in the L/C Cash Collateral Account first to pay any unpaid
Secured Obligations then outstanding hereunder and then to refund any
remaining amount to Borrower.
(e) At Borrower's request and direction (no more than
once per calendar month), but subject to Agent's reasonable approval,
Agent shall cause the Cash Collateral in the L/C Cash Collateral
Account to be invested in Permitted Cash Equivalents. Any commissions,
expenses and penalties incurred by Agent in connection with any
investment and redemption of such Cash Collateral shall be Secured
Obligations hereunder secured by the Collateral, shall bear interest
pursuant to SECTION 5.2(c) and shall be charged to Borrower's Loan
Accounts or, at Agent's option, shall be paid out of the proceeds of
any earnings received by Agent from the investment of such Cash
Collateral as provided herein or out of such cash itself. Agent makes
no representation or warranty as to, and shall not be responsible for,
the rate of return, if any, earned on any Cash Collateral. Any earnings
on Cash Collateral shall be held as additional Cash Collateral subject
to this Agreement. Borrower recognizes that any losses or taxes with
respect to such investments shall be borne solely by Borrower, and
Borrower agrees to hold the Credit Parties harmless from any and all
such losses and taxes. Agent may liquidate any investment held in the
L/C Cash Collateral Account in order to apply the proceeds of such
investment on account of the Reimbursement Obligations (or on account
of any other Secured Obligation then due and payable, as the case may
be) without regard to whether such investment has matured and without
liability for any penalty or other fee incurred (with respect to which
Borrower hereby agrees to reimburse Agent) as a result of such
application.
(f) After establishment of the L/C Cash Collateral
Account pursuant to SECTIONS 3.9(a) or 3.9(b) Borrower shall pay to
Agent the reasonable and customary fees with respect to the maintenance
of accounts similar to the L/C Cash Collateral Account.
(g) At such time, if any, that the amount of the L/C Cash
Collateral Account exceeds the aggregate amount of the outstanding
Reimbursement Obligations and any other Secured Obligations due and
payable, Agent shall promptly distribute to Borrower funds from the L/C
Cash Collateral Account in an amount equal to such excess.
LOAN AND SECURITY AGREEMENT - Page 56
Section 3.10 SUPPORTING LETTER OF CREDIT. With respect to any Letter of
Credit referenced in SECTION 3.9(b), Borrower may propose to Agent that Borrower
shall deposit with Agent, for the ratable benefit of the Credit Parties, with
respect to each such Letter of Credit, a standby letter of credit (a "SUPPORTING
LETTER OF CREDIT") in form and substance satisfactory to Agent, issued by an
issuer reasonably satisfactory to Agent in an amount equal to the greatest
amount for which such Letter of Credit may be drawn, under which Supporting
Letter of Credit Agent is entitled to draw amounts necessary to reimburse the
Credit Parties for payments made by the Credit Parties resulting from any
drawing under such Letter of Credit or under any reimbursement or guaranty
agreement with respect thereto. Agent in its discretion may accept such
Supporting Letter of Credit in lieu of the L/C Cash Collateral Account required
by SECTION 3.9(b), PROVIDED that Agent shall not be obligated to do so. Any such
Supporting Letter of Credit shall be held by Agent for the benefit of the Credit
Parties, as security for, and to provide for the payment of, the Reimbursement
Obligations in respect of the Letter of Credit which is the subject of such
Supporting Letter of Credit.
Section 3.11 EXISTING LETTERS OF CREDIT. On and after the Agreement
Date the Existing Letters of Credit and related Reimbursement Agreements (i)
shall be deemed to have been issued under, and the Reimbursement Obligations in
respect thereof shall be governed by and have the benefits of, this Agreement
and other Loan Documents, PROVIDED, that in the event any provision of such
Reimbursement Agreements in respect of Existing Letters of Credit are
inconsistent with this Agreement, the provisions of this Agreement shall control
and (ii) shall be deemed included as a part of the Letter of Credit Facility
(including without limitation each Lender's Commitment in respect thereof).
ARTICLE 4
RESERVED
ARTICLE 5
GENERAL LOAN PROVISIONS
Section 5.1 PROCEDURE FOR BORROWING AND DISBURSEMENT OF LOANS.
(a) In order to receive any Loan, Borrower shall notify
Agent of a request for a Loan by means of a Notice of Borrowing or
other notice on behalf of Borrower acceptable to Agent, therein
designating the amount of the Loan requested and the date on which
funding is requested. Each request for a Loan shall be delivered to
Agent not later than 11:00 a.m. (Dallas, Texas time) (i) in the case of
a Base Rate Loan on the Business Day on which funding of such Loan is
requested and (ii) in the case of a Eurodollar Loan, at least two (2)
Eurodollar Business Days prior to the Business Day on which funding of
such Loan is requested. Such notice may be made in any manner
prescribed by SECTION 17.1, PROVIDED that for this purpose each Loan
Party irrevocably authorizes Agent to rely upon any Person whom Agent
believes to be an authorized officer of Borrower and for purposes of
this
LOAN AND SECURITY AGREEMENT - Page 57
Agreement any such officer shall be deemed to be authorized to request
any such Loan on behalf of Borrower. Any such notice shall be
irrevocable upon receipt by Agent. Without limiting the other terms and
conditions of this Agreement, at the time of each borrowing hereunder,
Borrower must be current in the delivery of all Compliance Certificates
and Borrowing Base Certificates required to be delivered to Agent and
the Lenders pursuant to this Agreement.
(b) Unless Agent has elected periodic settlements
pursuant to SECTION 5.10, Agent shall promptly notify the Lenders of
any Notice of Borrowing given or deemed given pursuant to this
Agreement. Not later than 2:00 p.m. (Dallas, Texas time) on the
proposed borrowing date, each Lender will make available to Agent, for
the account of Borrower, at Agent's Principal Office in funds
immediately available to Agent, an amount equal to such Lender's
Commitment Percentage of the Revolving Credit Loans to be made on such
date.
Section 5.2 INTEREST.
(a) Subject to the provisions of SECTION 5.2(b), Borrower
agrees to pay interest on the unpaid principal amount of the Loans, for
each day from the day each such Loan was made until such Loan is due
(whether upon demand, at maturity, by reason of acceleration or
otherwise) at a rate per annum equal to the lesser of the Applicable
Rate or the Maximum Rate. Interest shall be payable monthly in arrears
as it accrues on each Interest Payment Date.
(b) If Borrower shall fail to pay when due (whether upon
demand, at maturity, by reason of acceleration or otherwise) all or any
portion of the principal amount of any Loan or if there shall occur any
other Event of Default, at Agent's election the balance of the Loans
shall no longer bear interest in accordance with the terms of SECTION
5.2(a), but rather shall bear interest for each day from the date of
such failure to pay or other Event of Default, as the case may be,
until such failure to pay or other Event of Default shall have been
cured or waived in compliance with the terms of this Agreement, at a
rate per annum equal to the lesser of (i) the sum of (1) the Default
Margin and (2) the Applicable Rate, or (ii) the Maximum Rate, payable
on demand. The interest rate provided for in the preceding sentence
shall, to the extent permitted by Applicable Law, apply to and accrue
on the amount of any judgment entered with respect to any Secured
Obligation and shall continue to accrue at such rate during any
proceeding described in SECTION 14.1(g) or SECTION 14.1(h).
(c) Borrower agrees, to the extent permitted by
Applicable Law, to pay interest on the unpaid principal amount of any
Secured Obligation that is due and payable other than the Loans in
accordance with SECTION 5.2(a) or SECTION 5.2(b), as applicable, as if
such Secured Obligation were a Loan.
(d) Subject to SECTION 5.2(e) and SECTION 17.23, the
interest rates provided for in SECTIONS 5.2(a), 5.2(b) and 5.2(c) shall
be computed on the basis of a year of 360 days and the actual number of
days elapsed. With respect to any Base Rate Loan, any change in the
LOAN AND SECURITY AGREEMENT - Page 58
Applicable Rate resulting from a change in the Base Rate shall be
adjusted automatically as of the effective date of such change in the
Base Rate. Any change in the Applicable Rate resulting from any change
in the Maximum Rate shall be effective as of the effective date of any
such change in the Maximum Rate.
(e) It is not intended by the Lenders, and nothing
contained in this Agreement or the Notes shall be deemed, to establish
or require the payment of a rate of interest in excess of the Maximum
Rate . If, in any month, the Effective Interest Rate, absent such
limitation, would have exceeded the Maximum Rate, then the Effective
Interest Rate for that month shall be the Maximum Rate, and if in
future months the Effective Interest Rate would otherwise be less than
the Maximum Rate, then the Effective Interest Rate shall remain at the
Maximum Rate until such time as the amount of interest paid hereunder
equals the amount of interest which would have been paid if the same
had not been limited by the Maximum Rate. In the event, upon payment in
full of the Secured Obligations, the total amount of interest paid or
accrued under the terms of this Agreement is less than the total amount
of interest which would have been paid or accrued if the Effective
Interest Rate had at all times been in effect, then Borrower shall, to
the extent permitted by Applicable Law, pay to the Lenders an amount
equal to the excess, if any, of (i) the lesser of (A) the amount of
interest which would have been charged if the Maximum Rate had, at all
times, been in effect and (B) the amount of interest which would have
accrued had the Effective Interest Rate, at all times, been in effect,
and (ii) the amount of interest actually paid or accrued under this
Agreement. In the event the Lenders receive, collect or apply as
interest any sum in excess of the Maximum Rate, such excess amount
shall be applied to the reduction of the principal balance of the
Secured Obligations, and if no such principal is then outstanding, such
excess or part thereof remaining, shall be paid to Borrower.
Section 5.3 INTEREST RATE OPTION. Subject to the provisions hereof,
Borrower shall have the option to have designated portions of the Loans bear
interest at an Applicable Rate determined according to the Base Rate or the
Adjusted Eurodollar Rate; PROVIDED, HOWEVER, that any portion of the Loans
designated to bear interest at an Applicable Rate determined according to the
Adjusted Eurodollar Rate for any particular Interest Period shall not be for
less than $1,000,000 of unpaid principal or an integral multiple of $100,000 in
excess thereof, and no more than ten (10) Interest Periods shall be allowed to
exist at any one time. Any such option shall be exercised in the manner provided
below:
(a) AT TIME OF BORROWING. Contemporaneously with each
request for a Loan, Borrower shall give Agent a Notice of Borrowing
indicating the interest rate option selected with respect to the
principal balance of such Loan. If the required Notice of Borrowing
shall not have been timely received by Agent, Borrower shall be deemed
to have designated the Base Rate and to have given Agent notice of such
designation. Notwithstanding the foregoing, any request for a Revolving
Credit Loan made pursuant to CLAUSES (ii), (iii), (iv) or (v) of
SECTION 2.2(a) shall be deemed to be a request for a Base Rate Loan.
LOAN AND SECURITY AGREEMENT - Page 59
(b) AT EXPIRATION OF INTEREST PERIODS. Not less than two
(2) Eurodollar Business Days prior to the termination of any Interest
Period for any Eurodollar Loan, Borrower shall give Agent a Notice of
Borrowing indicating the interest rate option to be applicable to such
Eurodollar Loan upon the expiration of such Interest Period if Borrower
elects to have such Loan Continued as a Eurodollar Loan. If the
required Notice of Borrowing shall not have been timely received by
Agent prior to the expiration of such Interest Period, Borrower shall
be deemed to have selected a rate based upon the Base Rate to be
applicable to such Eurodollar Loan upon the expiration of such Interest
Period and to have given Agent notice of such selection.
(c) CONVERSION FROM BASE RATE. Subject to the other
provisions of this Agreement, during any period in which any Base Rate
Loan is in existence, Borrower shall have the right, on any Eurodollar
Business Day, to Convert all or a portion thereof to a Eurodollar Loan
by giving Agent a Notice of Borrowing of such Conversion not less than
two (2) Eurodollar Business Days prior to the date of such Conversion.
Agent, at its option, may accept telephonic instructions as a Notice of
Borrowing (PROVIDED that without limiting the validity of any such notice by
telephonic instruction, Borrower agrees that any such telephonic request shall
promptly be confirmed to Agent by Borrower delivering a written Notice of
Borrowing to Agent) and Agent hereby is authorized and directed, at Agent's
option, to honor any or all such telephonic or other oral notices from any
Person whom Agent believes to be an authorized officer of Borrower, and for
purposes of this Agreement, any such officer shall be deemed to be authorized to
make any such notice on behalf of Borrower. Borrower agrees to indemnify and
hold Agent and the Lenders harmless from any loss or liability incurred by any
of them in connection with honoring any telephonic or other oral notices. All
written Notices of Borrowing are effective only upon receipt by Agent. Each
Notice of Borrowing, whether written or oral, shall be irrevocable and binding
upon Borrower.
LOAN AND SECURITY AGREEMENT - Page 60
Section 5.4 CERTAIN FEES.
(a) UNUSED COMMITMENT FEE. Subject to SECTION 17.23, in
connection with and as consideration for the holding available for the
use of Borrower hereunder the full amount of the Revolving Credit
Facility, Borrower will pay a fee to Agent, for the ratable benefit of
the Lenders, for each day on and after the Agreement Date, in an amount
equal to the product of the Unused Commitment Fee Percentage multiplied
by the unused portion of the Revolving Credit Facility for such day.
Such fee shall be payable monthly in arrears on each Interest Payment
Date for Base Rate Loans and on the date of any permanent reduction in
the Revolving Credit Facility and, subject to SECTION 17.23, shall be
fully earned when due and payable and shall not be subject to refund or
rebate. Such fee is not, and shall not be deemed to be, interest or a
charge for the use, forbearance or detention of Money.
(b) LETTER OF CREDIT FEES.
LOAN AND SECURITY AGREEMENT - Page 61
(i) Borrower agrees to pay to Agent for the
ratable benefit of the Lenders Letter of Credit fees equal to
the Applicable Margin with respect to Eurodollar Loans as in
effect at the time of issuance, renewal or extension of any
Letter of Credit, based on the average daily aggregate Letter
of Credit Amount of all Letters of Credit from time to time
outstanding during the term of this Agreement. Such fees shall
be payable to Agent, for the ratable benefit of the Lenders in
accordance with their respective Commitment Percentages,
monthly in arrears on the first Business Day of each calendar
month, and shall be calculated according to the average daily
Letter of Credit Amount outstanding based on a year of 360
days and for the actual number of days elapsed, subject to
SECTION 17.23.
(ii) Borrower agrees to pay to Agent, for the
account of L/C Issuer, on the same days and calculated on the
same basis as the fees provided by CLAUSE (i) above, a
fronting fee equal to one-eighth percent (0.125%) per annum
PLUS the standard fees and charges of L/C Issuer for issuing,
administering, amending, renewing, paying and canceling
Letters of Credit, as and when assessed.
(c) OTHER FEES. Subject to SECTION 17.23, Borrower agrees
to pay all other fees and expenses set forth in the certain letter
agreement, dated as of the Agreement Date among Agent, Borrower and the
other Loan Parties.
Section 5.5 MANNER OF PAYMENT.
(a) Except as provided in SECTION 10.1(b), each payment
(including prepayments) by Borrower on account of the principal of or
interest on the Loans or of any other amounts payable under this
Agreement, any Note or any other Loan Document shall be made not later
than 12:00 noon (Dallas, Texas time) on the date specified for payment
under this Agreement to Agent, for the account of the Lenders, at
Agent's Principal Office, in Dollars, in immediately available funds
and shall be made without any set-off, counterclaim or deduction
whatsoever. Any payment received after such time but before 1:00 p.m.
(Dallas, Texas time) on such day shall be deemed a payment on such date
for the purposes of SECTION 14.1, but for all other purposes shall be
deemed to have been made on the next succeeding Business Day.
(b) Borrower hereby irrevocably authorizes each Lender
and each Affiliate of such Lender and each participant herein to charge
any account of Borrower maintained with such Lender or such Affiliate
or participant with such amounts as may be necessary from time to time
to pay any Secured Obligations (whether or not owed to such Lender,
Affiliate or participant) which are not paid (i) when due in the case
of Secured Obligations described in SUBPARAGRAPHS (a), (b) and (c) of
the definition thereof in SECTION 1.1 and (ii) when due if an Event of
Default has occurred or otherwise within five (5) Business Days after
they become due, in the case of any other Secured Obligations.
LOAN AND SECURITY AGREEMENT - Page 62
Section 5.6 GENERAL. If any payment under this Agreement or any Note
shall be specified to be made upon a day which is not a Business Day, it shall
be made on the next succeeding day which is a Business Day and such extension of
time shall in such case be included in computing interest and fees, if any, as
applicable, in accordance with such payment.
Section 5.7 LOAN ACCOUNTS; STATEMENTS OF ACCOUNT.
(a) Each Lender shall open and maintain on its books a
loan account in Borrower's name (each, a "LOAN ACCOUNT" and
collectively, the "LOAN ACCOUNTS"). Each such Loan Account shall show
as debits thereto each Loan made under this Agreement by such Lender to
Borrower and as credits thereto all payments received by such Lender
and applied to principal of such Loan, so that the balance of the Loan
Account at all times reflects the principal amount due such Lender from
Borrower.
(b) Agent shall maintain on its books a control account
for Borrower in which shall be recorded (i) the amount of each
disbursement made hereunder, (ii) the amount of any principal or
interest due or to become due from Borrower hereunder, and (iii) the
amount of any sum received by Agent hereunder from Borrower and each
Lender's ratable share therein.
(c) The entries made in the accounts pursuant to
SUBSECTIONS (a) and (b) preceding shall be prima facie evidence, in the
absence of manifest error, of the existence and amounts of the
obligations of Borrower therein recorded and in case of discrepancy
between such accounts, in the absence of manifest error, the accounts
maintained pursuant to SUBSECTION (b) shall be controlling.
(d) Agent will account separately to Borrower monthly
with a statement of Loans, charges and payments made to and by Borrower
pursuant to this Agreement, and such accounts rendered by Agent shall
be deemed final, binding and conclusive, save for manifest error,
unless Agent is notified by Borrower in writing to the contrary within
thirty (30) days of the date the account to Borrower was so rendered.
Such notice by Borrower shall be deemed an objection to only those
items specifically objected to therein. Failure of Agent to render such
account shall in no way affect the rights of Agent or of the Lenders
hereunder.
Section 5.8 TERMINATION OF AGREEMENT. Borrower shall have the right, at
any time, to terminate this Agreement upon not less than thirty (30) Business
Days' prior written notice of its intention to terminate this Agreement, which
notice shall specify the effective date of such termination. Upon receipt of
such notice, Agent shall promptly notify each Lender thereof. On the date
specified in such notice, such termination shall be effected, PROVIDED, that
Borrower shall, on or prior to such date, pay to Agent, for the account of the
Lenders, in same day funds, an amount equal to all Secured Obligations then
outstanding, including, without limitation, all (i) accrued interest thereon,
(ii) all accrued fees provided for hereunder, and (iii) any amounts payable to
the Lenders pursuant to SECTIONS 17.2, 17.3 and 17.14, and, in addition thereto,
shall deliver to Agent, in respect of each outstanding Letter of Credit, either
a Supporting Letter of Credit or the Cash
LOAN AND SECURITY AGREEMENT - Page 63
Collateral as provided in SECTION 3.9. Following the date specified in a
notice of termination as provided for in this SECTION 5.8 and upon payment in
full of the amounts specified in this SECTION 5.8, this Agreement shall be
terminated and the Credit Parties and Borrower shall have no further
obligations to any other party hereto except for the obligations to Agent and
the Lenders pursuant to SECTION 3.8 and SECTION 17.13.
Section 5.9 MAKING OF LOANS.
(a) NATURE OF OBLIGATIONS OF LENDERS TO MAKE LOANS. The
obligations of the Lenders under this Agreement to make the Loans are
several and are not joint or joint and several.
(b) ASSUMPTION BY AGENT. Subject to the provisions of
SECTION 5.10 and notwithstanding the occurrence or continuance of a
Default or Event of Default or other failure of any condition to the
making of Revolving Credit Loans hereunder subsequent to the Revolving
Credit Loans to be made on the Effective Date, unless Agent shall have
received notice from a Lender in accordance with the provisions of
SECTION 5.9(c) prior to a proposed borrowing date that such Lender will
not make available to Agent such Lender's ratable portion of the amount
to be borrowed on such date, Agent may assume that such Lender will
make such portion available to Agent in accordance with SECTION 2.2(a),
and Agent may, in reliance upon such assumption, make available to
Borrower on such date a corresponding amount. If and to the extent such
Lender shall not make such ratable portion available to Agent, such
Lender and Borrower severally agree to repay to Agent forthwith on
demand such corresponding amount, together with interest thereon for
each day from the date such amount is made available to Borrower until
the date such amount is repaid to Agent at a rate equal to the lesser
of the Effective Interest Rate or the Maximum Rate. If such Lender
shall repay to Agent such corresponding amount, the amount so repaid
shall constitute such Lender's Commitment Percentage of the Loan made
on such borrowing date for purposes of this Agreement. The failure of
any Lender to make its Commitment Percentage of any Loan available
shall not (without regard to whether Borrower shall have returned the
amount thereof to Agent in accordance with this SECTION 5.9) relieve it
or any other Lender of its obligation, if any, hereunder to make its
Commitment Percentage of such Loan available on such borrowing date,
but no Lender shall be responsible for the failure of any other Lender
to make its Commitment Percentage of such Loan available on the
borrowing date.
(c) DELEGATION OF AUTHORITY TO AGENT. Without limiting
the generality of SECTION 16.1, each Lender expressly authorizes Agent
to determine on behalf of such Lender (i) any reduction or increase of
advance rates applicable to the Borrowing Base, so long as such advance
rates do not at any time exceed the rates set forth in the Borrowing
Base definition, (ii) the creation or elimination of any amount of the
Reserve, (iii) whether or not Inventory or Receivables shall be deemed
to constitute Eligible Inventory or Eligible Receivables and (iv)
whether to grant or withhold consent, or to take or refrain from taking
any action, in the exercise of its discretion as allowed by the Loan
Documents. Unless and
LOAN AND SECURITY AGREEMENT - Page 64
until Agent shall have received three (3) Business Days prior written
notice from the Required Lenders as to the existence of a Default, an
Event of Default or any other circumstance which would relieve the
Lenders of their respective obligations to make Loans hereunder, which
notice shall be in writing and shall be signed by the Required Lenders
and shall expressly state that the Required Lenders do not intend to
make available to Agent such Lenders' ratable share of Loans made after
the effective date of such notice, Agent shall be entitled to continue
to make the assumptions described in SECTION 5.9(b) and may in reliance
upon such assumption, but without obligation to do so, make Loans
available to Borrower. Without limiting the foregoing, Agent shall not
be required to make any Loan as to which it shall have received notice
by a Lender of such Lender's intention not to make its ratable portion
of such Loan available to Agent. No such notice shall affect the
validity of any Loans made prior to the expiration of three (3)
Business Days after Agent's receipt thereof.
Section 5.10 SETTLEMENT AMONG LENDERS.
(a) REVOLVING CREDIT LOANS. It is agreed that each
Lender's Net Outstandings are intended by the Lenders to be equal at
all times to such Lender's Commitment Percentage of the aggregate
principal amount of all Revolving Credit Loans outstanding.
Notwithstanding such agreement, the several and not joint obligation of
each Lender to fund Revolving Credit Loans ratably in accordance with
such Lender's Commitment Percentage and each Lender's right to receive
its ratable share of principal payments on Revolving Credit Loans in
accordance with its Commitment Percentage, the Lenders agree that in
order to facilitate the administration of this Agreement and the Loan
Documents, settlement among them may take place on a periodic basis in
accordance with the provisions of this SECTION 5.10.
(b) SETTLEMENT PROCEDURES AS TO REVOLVING CREDIT LOANS.
To the extent and in the manner hereinafter provided in this SECTION
5.10, settlement among the Lenders as to Revolving Credit Loans may
occur periodically on Settlement Dates determined from time to time by
Agent, which may occur before or after the occurrence or during the
continuance of a Default or Event of Default and whether or not all of
the conditions set forth in SECTIONS 7.1 and 7.2 have been met. On each
Settlement Date payments shall be made by or to the Lenders in the
manner provided in this SECTION 5.10 in accordance with the Settlement
Report delivered by Agent pursuant to the provisions of this SECTION
5.10 in respect of such Settlement Date so that as of each Settlement
Date, and after giving effect to the transactions to take place on such
Settlement Date, each Lender's Net Outstandings shall equal such
Lender's Commitment Percentage of the Revolving Credit Loans
outstanding.
(i) SELECTION OF SETTLEMENT DATES. If Agent
elects, in its discretion, but subject to the consent of
NationsBank, to settle accounts among the Lenders with respect
to principal amounts of Revolving Credit Loans less frequently
than each Business Day, then Agent shall designate periodic
Settlement Dates which may occur on any Business Day after the
Effective Date; PROVIDED, HOWEVER, that Agent shall designate
as a Settlement Date any Business Day which is an Interest
Payment Date;
LOAN AND SECURITY AGREEMENT - Page 65
and PROVIDED FURTHER, that a Settlement Date shall occur at
least once during each seven day period. Agent shall designate
a Settlement Date by delivering to each Lender a Settlement
Report not later than 12:00 noon (Dallas, Texas time) on the
proposed Settlement Date, which Settlement Report will be with
respect to the period beginning on the preceding Settlement
Date and ending on such designated Settlement Date.
(ii) NON-RATABLE LOANS AND PAYMENTS. Between
Settlement Dates, Agent shall request and NationsBank may (but
shall not be obligated to) advance to Borrower out of
NationsBank's own funds, the entire principal amount of any
Revolving Credit Loan requested or deemed requested pursuant
to SECTION 2.2(a) (any such Revolving Credit Loan being
referred to as a "NON-RATABLE LOAN"). The making of each
Non-Ratable Loan by NationsBank shall be deemed to be a
purchase by NationsBank of a 100% participation in each other
Lender's Commitment Percentage of the amount of such
Non-Ratable Loan. All payments of principal, interest and any
other amount with respect to such Non-Ratable Loan shall be
payable to and received by Agent for the account of
NationsBank. Upon demand by NationsBank, with notice thereof
to Agent, each other Lender shall pay to NationsBank, as the
repurchase of such participation, an amount equal to one
hundred percent (100%) of such Lender's Commitment Percentage
of the principal amount of such Non-Ratable Loan. Any payments
received by Agent between Settlement Dates which in accordance
with the terms of this Agreement are to be applied to the
reduction of the outstanding principal balance of Revolving
Credit Loans, shall be paid over to and retained by
NationsBank for such application, and such payment to and
retention by NationsBank shall be deemed, to the extent of
each other Lender's Commitment Percentage of such payment, to
be a purchase by each such other Lender of a participation in
the Non-Ratable Loans held by NationsBank. Upon demand by
another Lender, with notice thereof to Agent, NationsBank
shall pay to Agent, for the account of such other Lender, as a
repurchase of such participation, an amount equal to such
other Lender's Commitment Percentage of any such amounts
(after application thereof to the repurchase of any
participations of NationsBank in such other Lender's
Commitment Percentage of any Non-Ratable Loans) paid only to
NationsBank by Agent.
(iii) NET DECREASE IN OUTSTANDINGS. If on any
Settlement Date the increase, if any, in the amount of any
Lender's Net Outstandings which is required to comply with the
first sentence of SECTION 5.10(b) is less than such Lender's
Commitment Percentage of amounts received by Agent but paid
only to NationsBank since the next preceding Settlement Date,
such Lender and Agent, in their respective records, shall
apply such Lender's Commitment Percentage of such amounts to
the increase in such Lender's Net Outstandings, and
NationsBank shall pay to Agent, for the account of such
Lender, the excess allocable to such Lender.
LOAN AND SECURITY AGREEMENT - Page 66
(iv) NET INCREASE IN OUTSTANDINGS. If on any
Settlement Date the increase, if any, in the amount of any
Lender's Net Outstandings which is required to comply with the
first sentence of SECTION 5.10(b) exceeds such Lender's
Commitment Percentage of amounts received by Agent but paid
only to NationsBank since the next preceding Settlement Date,
such Lender and Agent, in their respective records, shall
apply such Lender's Commitment Percentage of such amounts to
the increase in such Lender's Net Outstandings, and such
Lender shall pay to Agent, for the account of NationsBank, any
excess.
(v) NO CHANGE IN OUTSTANDINGS. If a Settlement
Report indicates that no Revolving Credit Loans have been made
during the period since the next preceding Settlement Date,
then such Lender's Commitment Percentage of any amounts
received by Agent but paid only to NationsBank shall be paid
by NationsBank to Agent, for the account of such Lender. If a
Settlement Report indicates that the increase in the amount of
a Lender's Net Outstandings which is required to comply with
the first sentence of SECTION 5.10(b) is exactly equal to such
Lender's Commitment Percentage of amounts received by Agent
but paid only to NationsBank since the next preceding
Settlement Date, such Lender and Agent, in their respective
records, shall apply such Lender's Commitment Percentage of
such amounts to the increase in such Lender's Net
Outstandings.
(vi) RETURN OF PAYMENTS. If any amounts received
by NationsBank in respect of the Secured Obligations are later
required to be returned or repaid by NationsBank to Borrower
or any other obligor or their respective representatives or
successors in interest, whether by court order, settlement or
otherwise, in excess of NationsBank's Commitment Percentage of
all such amounts required to be returned by all Lenders, each
other Lender shall, upon demand by NationsBank with notice to
Agent, pay to Agent for the account of NationsBank, an amount
equal to the excess of such Lender's Commitment Percentage of
all such amounts required to be returned by all Lenders over
the amount, if any, returned directly by such Lender.
(vii) PAYMENTS TO AGENT, LENDERS.
(A) Payment by any Lender to Agent
shall be made not later than 2:00 p.m. (Dallas, Texas
time) on the Business Day such payment is due,
PROVIDED that if such payment is due on demand by
another Lender, such demand is made on the paying
Lender not later than 10:00 a.m. (Dallas, Texas time)
on such Business Day. Payment by Agent to any Lender
shall be made by wire transfer, promptly following
Agent's receipt of funds for the account of such
Lender and in the type of funds received by Agent,
PROVIDED that if Agent receives such funds at or
prior to 1:00 p.m. (Dallas, Texas time), Agent shall
pay such funds to such Lender by 2:00 p.m. (Dallas,
Texas time) on such Business Day. If a demand for
payment is made after the applicable
LOAN AND SECURITY AGREEMENT - Page 67
time set forth above, the payment due shall be made
by 2:00 p.m. (Dallas, Texas time) on the first
Business Day following the date of such demand.
(B) If a Lender shall, at any time,
fail to make any payment to Agent required hereunder,
Agent may, but shall not be required to, retain
payments that would otherwise be made to such Lender
hereunder and apply such payments to such Lender's
defaulted obligations hereunder, at such time, and in
such order, as Agent may elect in its sole
discretion.
(C) With respect to the payment of any
funds under this SECTION 5.10(b), whether from Agent
to a Lender or from a Lender to Agent, the party
failing to make full payment when due pursuant to the
terms hereof shall, upon demand by the other party,
pay such amount together with interest on such amount
at the Federal Funds Rate.
(c) SETTLEMENT OF OTHER SECURED OBLIGATIONS. All other
amounts received by Agent on account of, or applied by Agent to the
payment of, any Secured Obligation that are received by Agent on or
prior to 1:00 p.m. (Dallas, Texas time) on a Business Day will be paid
by Agent to each Lender on the same Business Day, and any such amounts
that are received by Agent after 1:00 p.m. (Dallas, Texas time) will be
paid by Agent to each Lender on the following Business Day. Unless
otherwise stated herein, Agent shall distribute fees payable to the
Lenders pursuant to SECTIONS 5.4(a) and (b) ratably to the Lenders
based on each Lender's Commitment Percentage and shall distribute
proceeds from the sale of, or other realization upon, all or any part
of the Collateral following an Event of Default ratably to the Lenders
based on the amount of the Secured Obligations owing to each Lender as
of the time of such distribution.
Section 5.11 MANDATORY PREPAYMENTS. At any time when (i) any Loans are
outstanding and (ii) Availability is less than the Minimum Availability
Requirement, then to the extent required to cause Availability to equal or
exceed the Minimum Availability Requirement:
(a) PREPAYMENTS FROM ASSET DISPOSITIONS. Immediately upon
receipt by Borrower or any of its Restricted Subsidiaries of the Net
Proceeds of any Asset Disposition, Borrower shall apply, or caused to
be applied, such Net Proceeds in prepayment of the Loans as provided in
SECTION 5.11(c); PROVIDED, that Borrower shall not be required to make
such prepayment to the extent that the Net Proceeds from Asset
Dispositions during any Fiscal Year of Borrower do not exceed, in the
aggregate, $10,000,000. Concurrently with the making of any such
payment, Borrower shall deliver to Agent a certificate of an Authorized
Signatory of the applicable Loan Party demonstrating the calculations
of the amount required to be paid.
(b) PREPAYMENTS FROM EQUITY OFFERINGS. In the event that
at any time after the Agreement Date, Borrower issues Capital Stock or
other securities or receives an additional capital contribution in
respect of existing Capital Stock or other securities, no later than
the
LOAN AND SECURITY AGREEMENT - Page 68
third Business Day following the date of receipt of the proceeds from
such issuance, Borrower shall apply such proceeds, net of
underwriting discounts and commissions and other reasonable costs
associated therewith, in prepayment of the Loans as provided in SECTION
5.11(c).
(c) APPLICATION OF PROCEEDS OF PREPAYMENTS. All
prepayments pursuant to this SECTION 5.11 shall be accompanied by an
appropriate Notice of Borrowing and, except as provided otherwise by
SECTION 5.11(a), shall be applied first to the outstanding Revolving
Credit Loans to the extent thereof, with any excess to be deposited
with Agent to be held as Cash Collateral for the Secured Obligations
and applied by Agent from time to time to outstanding Revolving Credit
Loans promptly upon the making of such Revolving Credit Loans or other
Secured Obligations in such manner as Agent shall determine in its
discretion.
Section 5.12 PREPAYMENT AND TERMINATION. Subject to the provisions of
SECTION 17.23, if Borrower prepays the Loans in whole and terminates this
Agreement prior to the Termination Date, for any reason other than refinancing
of the Loans with NationsBank or any of its Affiliates, Borrower shall pay to
Agent, for the ratable benefit of the Lenders, on the date of such prepayment,
as liquidated damages and compensation for the costs of making funds available
to Borrower under this Agreement, and not as a penalty, an amount equal to the
percentage amount specified below for the Loan Year in which such prepayment is
made multiplied by $500,000,000:
Loan Year Percent
--------- -------
1 0.50%
2 0.25%
any Loan Year thereafter 0.00%
ARTICLE 6
CHANGE OF CIRCUMSTANCES
Section 6.1 INCREASED COST AND REDUCED RETURN.
(a) If, after the date hereof, the adoption of any
Applicable Law or any change in any Applicable Law or any change in the
interpretation or administration thereof by any Governmental Authority
(including, without limitation, any central bank or comparable agency)
charged with the interpretation or administration thereof, or
compliance by any Lender (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any
such Governmental Authority:
(i) shall subject such Lender (or its Applicable
Lending Office) to any tax, duty or other charge with respect
to any Eurodollar Loans, its Notes, or its obligation to make
Eurodollar Loans, or change the basis of taxation of any
amounts payable to such Lender (or its Applicable Lending
Office) under this Agreement or its Note in respect of any
Eurodollar Loans (other than taxes imposed on the overall
LOAN AND SECURITY AGREEMENT - Page 69
net income of such Lender by the jurisdiction in which such
Lender has its principal office or such Applicable Lending
Office);
(ii) shall impose, modify or deem applicable any
reserve, special deposit, assessment, compulsory loan or
similar requirement (other than the Reserve Requirement
utilized in the determination of the Adjusted Eurodollar Rate)
relating to any extensions of credit or other assets of, or
any deposits with or other liabilities or commitments of, such
Lender (or its Applicable Lending Office), including the
Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its
Applicable Lending Office) or on the London interbank market
any other condition affecting this Agreement or its Notes or
any of such extensions of credit or liabilities or
commitments;
and the result of any of the foregoing is to increase the cost to such
Lender (or its Applicable Lending Office) of making, Converting into,
Continuing or maintaining any Eurodollar Loans or to reduce any sum
received or receivable by such Lender (or its Applicable Lending
Office) under this Agreement or its Notes with respect to any
Eurodollar Loans, then Borrower shall pay to such Lender on demand such
amount or amounts as will compensate such Lender for such increased
cost or reduction. If any Lender requests compensation by Borrower
under this SECTION 6.1(a), Borrower may, by notice to such Lender (with
a copy to Agent), suspend the obligation of such Lender to make or
Continue Loans of the Type with respect to which such compensation is
requested, or to Convert Loans of any other Type into Loans of such
Type, until the event or condition giving rise to such request ceases
to be in effect, in which case the provisions of SECTION 6.4 shall be
applicable; PROVIDED that such suspension shall not affect the right of
such Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have
determined that the adoption of any Applicable Law, rule or regulation
regarding capital adequacy or any change therein or in the
interpretation or administration thereof by any Governmental Authority
(including, without limitation, any central bank or comparable agency)
charged with the interpretation or administration thereof, or any
request or directive regarding capital adequacy (whether or not having
the force of law) of any such Governmental Authority has or would have
the effect of reducing the rate of return on the capital of such Lender
or any corporation controlling such Lender as a consequence of such
Lender's obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change,
request or directive (taking into consideration its policies with
respect to capital adequacy), then, from time to time upon demand,
Borrower shall pay to such Lender such additional amount or amounts as
will compensate such Lender for such reduction, to the extent that such
Lender reasonably determines in good faith that such increase in
capital is allocable to the existence of such Lender's Commitment, but
only to the extent that such Lender has not been compensated therefor
by any increase in the Adjusted Eurodollar Rate.
LOAN AND SECURITY AGREEMENT - Page 70
(c) Each Lender shall promptly notify Borrower and Agent
of any event of which it has knowledge, occurring after the date
hereof, which will entitle such Lender to compensation pursuant to this
Section and will designate a different Applicable Lending Office if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of such Lender, be otherwise
disadvantageous to it. Any Lender claiming compensation under this
Section shall furnish to Borrower and Agent a statement setting forth
the additional amount or amounts to be paid to it hereunder which shall
be conclusive in the absence of manifest error. In determining such
amount, such Lender may use any reasonable averaging and attribution
methods.
Section 6.2 LIMITATION ON TYPES OF LOANS. If on or prior to the first
day of any Interest Period for any Eurodollar Loan:
(a) Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the London
interbank Eurodollar market, adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Interest Period; or
(b) the Required Lenders determine (which determination
shall be conclusive) and notify Agent that the Adjusted Eurodollar Rate
will not adequately and fairly reflect the cost to the Lenders of
funding Eurodollar Loans for such Interest Period;
then Agent shall give Borrower prompt notice thereof specifying the relevant
Type of Loans and the relevant amounts or periods, and so long as such condition
remains in effect, the Lenders shall be under no obligation to make additional
Loans of such Type, Continue Loans of such Type, or to Convert Loans of any
other Type into Loans of such Type and Borrower shall, on the last day(s) of the
then current Interest Period(s) for the outstanding Loans of the affected Type,
either prepay such Loans or Convert such Loans into another Type of Loan in
accordance with the terms of this Agreement.
Section 6.3 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain or fund Eurodollar Loans hereunder,
then such Lender shall promptly notify Borrower thereof and such Lender's
obligation to make or Continue Eurodollar Loans, and to Convert other Types of
Loans into Eurodollar Loans, shall be suspended until such time as such Lender
may again make, maintain and fund Eurodollar Loans (in which case the provisions
of SECTION 6.4 shall be applicable).
Section 6.4 TREATMENT OF AFFECTED LOANS. If the obligation of any
Lender to make Loans of a particular Type, or to Continue or Convert Loans of
any other Type into Loans of a particular Type, shall be suspended pursuant
to SECTION 6.1 or SECTION 6.3 (Loans of such Type being herein called
"AFFECTED LOANS" and such Type being herein called the "AFFECTED TYPE"), such
Lender's Affected Loans shall be automatically Converted into Base Rate Loans
on the last day(s) of the then current Interest Period(s) for the Affected
Loans (or, in the case of a Conversion required by SECTION 6.3, on such
earlier date as such Lender may specify to Borrower with a copy to Agent)
and,
LOAN AND SECURITY AGREEMENT - Page 71
unless and until such Lender gives notice as provided below that the
circumstances specified in SECTION 6.1 or SECTION 6.3 that gave rise to such
Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have
been so Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Affected Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued
by such Lender as Loans of the Affected Type shall be made or Continued
instead as Base Rate Loans, and all Loans of such Lender that would
otherwise be Converted into Loans of the Affected Type shall be
Converted instead into (or shall remain as) Base Rate Loans.
If such Lender gives notice to Borrower (with a copy to Agent) that the
circumstances specified in SECTION 6.1 or SECTION 6.3 that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this SECTION 6.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types and Interest Periods) in accordance with their respective Commitments.
Section 6.5 COMPENSATION. Upon the request of any Lender (with a copy
to Agent), Borrower shall pay to such Lender such amount or amounts as shall be
sufficient (in the reasonable opinion of such Lender) to compensate it for any
loss, cost or expense (including loss of anticipated profits) incurred by it as
a result of:
(a) any payment, prepayment or Conversion of a Eurodollar
Loan for any reason (including, without limitation, the acceleration of
the Loans pursuant to SECTION 14.2) on a date other than the last day
of the Interest Period for such Loan; or
(b) any failure by Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in
ARTICLE 7 to be satisfied) to borrow, Convert, Continue or prepay a
Eurodollar Loan on the date for such borrowing, Conversion,
Continuation or prepayment specified in the relevant Notice of
Borrowing under this Agreement.
Such Lender's good faith determination of the amount of such losses or
out-of-pocket expenses, calculated in its usual fashion, absent manifest
error, shall be controlling. Such losses shall include, without limiting the
generality of the foregoing, reasonable expenses incurred by such Lender in
connection with the re-employment of funds prepaid, repaid prior to the end
of the applicable Interest Period, Converted and not borrowed, or Converted
and paid prior to the end of the applicable Interest Period, as the case may
be, but shall not include lost profits. Upon request of Borrower,
LOAN AND SECURITY AGREEMENT - Page 72
such Lender shall provide a certificate setting forth the amount to be paid
to it by Borrower hereunder and calculations therefor.
Section 6.6 TAXES.
(a) Any and all payments by Borrower to or for the
account of any Credit Party hereunder or under any other Loan Document
shall be made free and clear of, and without deduction for, any and all
present or future taxes, duties, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, EXCLUDING,
in the case of each Credit Party, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of
which any such Lender (or its Applicable Lending Office), L/C Issuer or
Agent, as the case may be, is organized or any political subdivision
thereof (all such non- excluded taxes, duties, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter
referred to as "TAXES"). If Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable under this Agreement or
any other Loan Document to any Credit Party, (i) the sum payable shall
be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
SECTION 6.6) such Credit Party receives an amount equal to the sum it
would have received had no such deductions been made, (ii) Borrower
shall make such deductions, (iii) Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with Applicable Law, and (iv) Borrower shall furnish to
Agent, at its address referred to in SECTION 17.1, the original or a
certified copy of a receipt evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other excise or
property taxes or charges or similar levies which arise from any
payment made under this Agreement or any other Loan Document or from
the execution or delivery of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "OTHER
TAXES").
(c) BORROWER AGREES TO INDEMNIFY EACH CREDIT PARTY FOR
THE FULL AMOUNT OF TAXES AND OTHER TAXES (INCLUDING, WITHOUT
LIMITATION, ANY TAXES OR OTHER TAXES IMPOSED OR ASSERTED BY ANY
JURISDICTION ON AMOUNTS PAYABLE UNDER THIS SECTION 6.6) PAID BY SUCH
CREDIT PARTY (AS THE CASE MAY BE) AND ANY LIABILITY (INCLUDING
PENALTIES, INTEREST AND EXPENSES) ARISING THEREFROM OR WITH RESPECT
THERETO.
(d) Each Lender organized under the laws of a
jurisdiction outside the U.S., on or prior to the date of its execution
and delivery of this Agreement in the case of each Lender listed on the
signature pages hereof and on or prior to the date on which it becomes
a Lender in the case of each other Lender, and from time to time
thereafter if requested in writing by Borrower or Agent (but only so
long as such Lender remains lawfully able to do so), shall provide
Borrower and Agent with (i) IRS Form 1001 or 4224, as appropriate, or
any
LOAN AND SECURITY AGREEMENT - Page 73
successor form prescribed by the IRS, certifying that such Lender is
entitled to benefits under an income tax treaty to which the U.S. is a
party which reduces the rate of withholding tax on payments of interest
or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the
U.S., (ii) IRS Form W-8 or W-9, as appropriate, or any successor form
prescribed by the IRS, and (iii) any other form or certificate required
by any taxing authority (including any certificate required by Sections
871(h) and 881(c) of the Internal Revenue Code), certifying that such
Lender is entitled to an exemption from or a reduced rate of tax on
payments pursuant to this Agreement or any of the other Loan Documents.
(e) For any period with respect to which a Lender has
failed to provide Borrower and Agent with the appropriate form pursuant
to SECTION 6.6(d) (unless such failure is due to a change in treaty,
law or regulation occurring subsequent to the date on which a form
originally was required to be provided), such Lender shall not be
entitled to indemnification under SECTION 6.6(a) or 6.6(b) with respect
to Taxes or Other Taxes imposed by the U.S.; PROVIDED, HOWEVER, that
should a Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax, become subject to Taxes or Other Taxes because
of its failure to deliver a form required hereunder, Borrower shall
take such steps as such Lender shall reasonably request to assist such
Lender to recover such Taxes or Other Taxes.
(f) If Borrower is required to pay additional amounts to
or for the account of any Lender pursuant to this SECTION 6.6, then
such Lender will agree to use reasonable efforts to change the
jurisdiction of its Applicable Lending Office or take other reasonable
steps, if available, so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the judgment of
such Lender, is not otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment
of Taxes or Other Taxes, Borrower shall furnish to Agent the original
or a certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements and obligations of
Borrower contained in this SECTION 6.6 shall survive the termination of
the Commitments and the payment in full of the Notes.
Section 6.7 REPLACEMENT OF AFFECTED LENDER. Within thirty (30) days
after receipt by Borrower of written notice and demand from any Lender for any
payment under the terms of SECTION 6.1 or SECTION 6.6, or within thirty (30)
days of Borrower becoming aware that a Lender has become insolvent, or its
assets subject to a receiver, liquidator, trustee, custodian or other similar
Person or it or its assets are otherwise subject to insolvency proceedings, or
if a Lender fails to make Loans required to be made hereunder, then, subject to
this SECTION 6.7, Borrower may, at its option notify Agent and such Lender (the
"AFFECTED LENDER") of its intention to obtain, at Borrower's expense, a
replacement Lender ("REPLACEMENT LENDER") to purchase the Affected Lender's
Loans and its obligations under the Loan Documents. Subject to this SECTION 6.7,
Borrower shall,
LOAN AND SECURITY AGREEMENT - Page 74
within thirty (30) days following the delivery of such notice from Borrower
cause the Replacement Lender to purchase (and the Affected Lender hereby
agrees to sell and convey to such Replacement Lender) the Loans of the
Affected Lender and assume the Affected Lender's Commitment and obligations
hereunder in accordance with the terms of an Assignment and Acceptance for
cash in an aggregate amount equal to the aggregate unpaid principal of the
Loans held by such Affected Lender, all unpaid interest and fees accrued
thereon or with respect thereto, and all other Secured Obligations owed to
such Affected Lender including amounts owed under SECTION 6.1 or SECTION 6.6
(but excluding any amount pursuant to SECTION 5.12). Notwithstanding the
foregoing, (i) Borrower shall continue to be obligated to pay to the Affected
Lender in full all amounts then demanded and due under SECTION 6.1 or SECTION
6.6 in accordance with the terms thereof, (ii) neither Agent nor any Lender
shall have any obligation to find a Replacement Lender, (iii) the Replacement
Lender must be acceptable to Agent in its reasonable discretion and (iv)
NationsBank, N.A. may not be replaced under this SECTION 6.7 without its
consent.
ARTICLE 7
CONDITIONS PRECEDENT
Section 7.1 CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT.
Notwithstanding any other provision of this Agreement, no Credit Party shall
have any obligation to make the initial Loan or to issue the initial Letter of
Credit, as the case may be, until the fulfillment of each of the following
conditions, and with respect to any reports, appraisals, reviews or similar
items, Agent's and each Lender's satisfaction with the contents thereof, prior
to or contemporaneously with the making of such Loan or issuance of such Letter
of Credit, PROVIDED, that the conditions listed in CLAUSES (i) through (vii) and
CLAUSES (xii) through (xvii) of SECTION 7.1(a) and in SECTIONS 7.1(d), (e), (f)
and (g) (in the case of SECTIONS 7.1(e) and (g), to the extent applicable on the
Agreement Date) shall be fulfilled on the Agreement Date.
(a) CLOSING DOCUMENTS. Agent shall have received each of
the following documents, all of which shall be satisfactory in form and
substance to Agent and the Lenders:
(i) each of the following:
(A) a copy of the certificate of
limited partnership of Borrower with all amendments,
if any, certified by the appropriate Governmental
Authority and a true and complete copy of the limited
partnership agreement of Borrower with all
amendments, if any, in each case certified by the
General Partner as true and correct and in effect on
the Agreement Date;
(B) copies of the certificate of
incorporation or comparable organizational document
of each of General Partner, Parent and each of the
other Loan Parties (other than Borrower) with all
amendments, if any, certified by the appropriate
Governmental Authority and the bylaws of each
LOAN AND SECURITY AGREEMENT - Page 75
of such Person, in each case certified by the
corporate secretary or comparable authorized
representative of each such Person, respectively,
as true and correct and in effect on the
Agreement Date;
(ii) certificates of incumbency and specimen
signatures with respect to each of the officers of (i) General
Partner, authorized to execute and deliver this Agreement and
the other Loan Documents and to request Loans on behalf of
Borrower, (ii) Parent and each other Loan Party (other than
Borrower) authorized to execute and deliver this Agreement and
the other Loan Documents on behalf of each such Loan Party,
respectively, and (iii) each other Person executing any
document, certificate or instrument to be delivered in
connection with this Agreement and the other Loan Documents;
(iii) a certificate evidencing the existence of
General Partner and each Loan Party, and certificates
evidencing good standing of General Partner and each Loan
Party in the jurisdiction of its incorporation or organization
and in each other jurisdiction in which it is required to be
qualified as a foreign business entity to transact its
business as presently conducted (PROVIDED, that without
impairing SECTION 8.1(a) a certificate of existence for
CompUSA PC Inc., a newly formed Wholly-Owned Subsidiary of
Parent, and certificates of good standing for any Loan Party
in any state (other than its state of organization), to the
extent not provided on the Agreement Date may be provided
after the Agreement Date);
(iv) certified copies of all action taken by
General Partner and each Loan Party to authorize the
execution, delivery and performance of this Agreement, the
other Loan Documents and the borrowings under this Agreement;
(v) each of the items referred to in SECTION
8.1(o) and meeting the requirements thereof;
(vi) certificates or binders of insurance
relating to policies of insurance with loss payable clauses as
required by SECTION 10.8;
(vii) a certificate of each Loan Party signed by
an Authorized Signatory on its behalf stating that:
(A) all of the representations and
warranties made or deemed to be made under this
Agreement are true and correct as of the Agreement
Date, after giving effect to the Loans to be made at
such time and the application of the proceeds
thereof,
(B) no Default or Event of Default
exists, and
LOAN AND SECURITY AGREEMENT - Page 76
(C) as to such other factual matters as
may be reasonably requested by Agent;
(viii) a Borrowing Base Certificate (predicated
upon an appraisal of Inventory reflecting the Appraised GOB
Value thereof, prepared by a credentialed appraiser acceptable
to Agent within six (6) months preceding the date of making
such Loan or issuing such Letter of Credit) and a Schedule of
Receivables and a Schedule of Inventory, in each case prepared
as of the Business Day preceding the day on which any such
requested Loan is to be funded or any such requested Letter of
Credit is to be issued;
(ix) RESERVED
(x) each Agency Account Agreement duly executed
by a Loan Party and the Clearing Bank party thereto;
(xi) (A) a certificate from Borrower to Agent
requesting the initial Loans or the issuance of a Letter of
Credit and, in the case of the initial Loans, specifying the
method of disbursement pursuant to SECTION 11.8 (and if the
proceeds of such Loan are to be used to discharge the Senior
Subordinated Notes, directing Agent to disburse such proceeds
directly to the trustee under the Indenture), (B) a
certificate signed by an Authorized Signatory of Borrower and
Parent stating that the incurrence of "Indebtedness" as
defined by the Indenture resulting from such initial Loans or
such Letter of Credit is permitted by the Indenture, or
alternatively, stating either that all obligations under the
Indenture have been (or, upon application of the proceeds of
such initial Loan as directed in CLAUSE (A) preceding, will
be) discharged pursuant to the terms thereof or that all
covenants under the Indenture have been defeased pursuant to
the terms thereof and (C) a certificate of each Loan Party
signed by an Authorized Signatory on its behalf stating that,
as of the date thereof, all of the representations and
warranties made or deemed to be made under this Agreement are
true and correct after giving effect to any such Loans to be
made, or any such Letter of Credit to be issued, and the
application of the proceeds of any such Loans, and that no
Default or Event of Default is in existence as of such date;
(xii) a Revolving Credit Note payable to the order
of each Lender, duly executed and delivered by Borrower,
complying with the requirements of SECTION 2.4;
(xiii) each of the Security Documents to be
executed by any of the Loan Parties, as follows:
(A) Financing Statements with respect
to all Collateral as may be requested by Agent, duly
executed by each Person a party thereto as required
by this Agreement and the Security Documents, and
acknowledgment copies
LOAN AND SECURITY AGREEMENT - Page 77
evidencing the filing of such Financing Statements
in each jurisdiction where such filing may be
necessary or appropriate to perfect the Security
Interest;
(B) a Patent Security Agreement, a
Trademark Security Agreement and a Copyright Security
Agreement, each duly executed by each Loan Party, as
applicable, with respect to all Proprietary Rights,
if any, owned by each such Loan Party which must
be registered to protect its use by such Loan Party;
(C) a Guaranty Agreement, duly executed
and delivered by each Person required pursuant to
SECTION 9.3;
(xiv) With respect to all Investment Property
subject to the Security Interest (i) stock certificates and
stock powers (duly executed in blank) for all Capital Stock
(to the extent certificated) in each Loan Party other than
Parent, together with acknowledgments executed by the
respective issuers thereof, in form and substance satisfactory
to Agent and (ii) "control" agreements (pursuant to the UCC),
each duly executed, as Agent may request with respect to any
Investment Property listed in Schedule 8.1(ee);
(xv) A copy of all Merchant Account Agreements;
(xvi) counterparts of each of the other Security
Documents and other Loan Documents required by Agent, duly
executed by the parties thereto, together with evidence
satisfactory to Agent of the due authorization and binding
effect of each such Loan Document on such party;
(xvii) signed opinions of counsel for the Loan
Parties, opining as to such matters in connection with the
transactions contemplated by this Agreement as Agent may
reasonably request, in each case in form and substance
satisfactory to Agent; and
(xviii) such other documents and instruments as
Agent or any Lender may reasonably request.
(b) SECURITY INTERESTS. Agent shall have received
satisfactory evidence that Agent (for the benefit of the Credit
Parties) has a valid, exclusive and perfected first priority (subject
to SECTION 9.2(a)(i)) security interest, lien, collateral assignment
and pledge as of such date in all Collateral and other property, if
any, covered by the Security Interest.
(c) RELEASE OF SECURITY INTERESTS. Agent shall have
received evidence satisfactory to it of the release and termination of
all Liens other than Permitted Liens.
LOAN AND SECURITY AGREEMENT - Page 78
(d) AVAILABILITY. Agent shall be provided with evidence
satisfactory to it confirmed by a certificate of an
Authorized Signatory of Borrower that as of the Agreement Date the
Availability, after giving effect to the reasonably expected amount of
the Letter of Credit Reserve in effect 60 days after the Agreement
Date, is equal to or greater than $75,000,000.
(e) FEES. All of the fees and expenses payable under the
Loan Documents on the Agreement Date and as of the date of funding such
Loan or issuing such Letter of Credit shall have been paid.
(f) NO INJUNCTIONS, ETC. No action, proceeding,
investigation, regulation or legislation shall have been instituted,
threatened or proposed by or before any Governmental Authority to
enjoin, restrain or prohibit, or to obtain damages in respect of, or
which is related to or arises out of this Agreement or the consummation
of the transactions contemplated by this Agreement or which, in Agent's
or the Lenders' reasonable discretion, would make it inadvisable to
consummate the transactions contemplated by this Agreement.
(g) MATERIAL ADVERSE CHANGE. Except as disclosed in
writing to Agent and the Lenders on or before the Agreement Date, as of
the Agreement Date and as of the date of funding such Loan or issuing
such Letter of Credit, there shall not have occurred any change which
is materially adverse to the assets, liabilities, businesses,
operations or financial condition of Borrower and the other Loan
Parties in comparison to such conditions as presented by the financial
statements referenced in SECTION 8.1(o), previously delivered to Agent
and the Lenders, and no Materially Adverse Effect shall have occurred.
Section 7.2 ALL LOANS; ISSUANCE OF LETTERS OF CREDIT. At the time of
making of each Loan, including the initial Loans and all subsequent Loans, and
the issuance of each Letter of Credit (in addition to all other requirements of
SECTION 7.1):
(a) no Default or Event of Default shall be in existence
and all of the representations and warranties made or deemed to be made
under this Agreement shall be true and correct at such time, in the
case of the initial Loan if the proceeds thereof are to be used to
discharge the Senior Subordinated Notes, upon application of the
proceeds of such Loan and, in the case of each other Loan, both with
and without giving effect to the Loan to be made at such time and the
application of the proceeds thereof;
(b) the actions referred to in SECTION 7.1(a)(iv) shall
remain in full force and effect and the incumbency of officers shall be
as stated in the certificates of incumbency delivered pursuant to
SECTION 7.1(a)(ii) or as subsequently modified and reflected in a
certificate of incumbency delivered to Agent; and
(c) each request or deemed request for any borrowing or
the issuance of any Letter of Credit hereunder shall be deemed to be a
certification by the Loan Parties to the Credit Parties as to the
matters set forth in SECTION 7.2(a) and (b) and Agent may, without
LOAN AND SECURITY AGREEMENT - Page 79
waiving either condition, consider the conditions specified in SECTIONS
7.2(a) and (b) fulfilled and a representation by the Loan Parties to
such effect made, if no written notice to the contrary is received by
Agent prior to the making of the Loan, or the issuance of the Letter of
Credit then requested.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
Section 8.1 REPRESENTATIONS AND WARRANTIES. Each Loan Party, as
applicable represents and warrants to each of the Credit Parties as follows:
(a) ORGANIZATION; POWER; QUALIFICATION. Borrower is a
Texas limited partnership, Parent is a Delaware corporation and each
other Loan Party is an entity of the type and is organized under
Applicable Laws of the jurisdiction as specified in SCHEDULE 8.1(a), in
each case duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, having the power and
authority to own its properties and to carry on its business as now
being and hereafter proposed to be conducted, and is duly qualified and
authorized to do business in each jurisdiction in which the character
of its properties or the nature of its business requires such
qualification or authorization except where the failure to be so
qualified or authorized would not have a Materially Adverse Effect. The
jurisdictions in which each Loan Party is organized and qualified to do
business as a foreign business enterprise are listed on SCHEDULE
8.1(a). As of the Agreement Date, (i) each of General Partner, CompUSA
Holdings Company, CompUSA PC and CompUSA Management Company is a
Delaware business trust and has full power and authority to contract in
the State of Texas, (ii) General Partner is the sole general partner of
Borrower and CompUSA Holdings Company is the sole limited partner of
Borrower, and no Person other than General Partner and CompUSA Holdings
Company has any equity interest or management power in Borrower, (iii)
neither Borrower, General Partner, CompUSA Holdings Company or any
former general partner or limited partner of Borrower has taken any
action, voluntarily or involuntarily, to cause (or that has caused) the
dissolution of Borrower and (iv) neither the shareholders nor the
regular managers of General Partner or of CompUSA Holdings Company has
taken any action to cause (or that has caused) the dissolution of
General Partner or of CompUSA Holdings Company, respectively.
(b) RESERVED
(c) RESERVED
(d) SUBSIDIARIES. SCHEDULE 8.1(d) correctly sets forth
the name of each Subsidiary of each Loan Party, its jurisdiction of
incorporation, the name of its immediate parent or parents, and the
percentage of its issued and outstanding Capital Stock owned by such
Loan Party or any other Subsidiary of such Loan Party and indicating
whether such Subsidiary is a Consolidated Subsidiary. Except as set
forth on SCHEDULE 8.1(d),
LOAN AND SECURITY AGREEMENT - Page 80
(i) no such Subsidiary has issued any securities
convertible into shares or other evidence of ownership of such
Subsidiary's Capital Stock or any options, warrants or other
rights to acquire any shares or other evidence of ownership or
securities convertible into such Capital Stock,
(ii) the outstanding Capital Stock and other
securities of each such Subsidiary are owned by a Loan Party
or a Wholly-Owned Subsidiary of a Loan Party or by a Loan
Party and one or more of its Wholly-Owned Subsidiaries, free
and clear of all Liens, warrants, options and rights of others
of any kind whatsoever, and
(iii) The Loan Parties have no other Subsidiaries.
The outstanding Capital Stock of each Subsidiary of a Loan Party has
been duly and validly issued and is fully paid and nonassessable by the
issuer, and the number and owners of the shares or other evidence of
ownership of such Capital Stock are set forth on SCHEDULE 8.1(d).
(e) AUTHORIZATION OF AGREEMENT, NOTES, LOAN DOCUMENTS AND
BORROWING. Each Loan Party has the right and power, and has taken all
necessary action to authorize it, to execute, deliver and perform this
Agreement and each of the other Loan Documents in accordance with their
respective terms. This Agreement and each of the other Loan Documents
have been duly executed and delivered by the duly authorized officers
of the Loan Party that is party thereto and each is, or each when
executed and delivered in accordance with this Agreement will be, a
legal, valid and binding obligation of each such Loan Party,
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency and similar laws of general application.
(f) NO CONFLICTS. Except as set forth on SCHEDULE 8.1(f),
the execution, delivery and performance of this Agreement and each of
the other Loan Documents in accordance with their respective terms and
the borrowings hereunder do not and will not, by the passage of time,
the giving of notice or otherwise,
(i) require any Governmental Approval or violate
any Applicable Law relating to any Loan Party or of any of its
Subsidiaries,
(ii) conflict with, result in a breach of or
constitute a default under the articles or certificate of
incorporation or bylaws, or other constituent documents, of
any Loan Party or of any of its Subsidiaries,
(iii) conflict with, result in a breach of or
constitute a default under any material provisions of any
indenture (including without limitation, the Indenture),
agreement or other instrument to which any Loan Party or of
any of its Subsidiaries is a party or by which any Loan Party
or of any of its Subsidiaries or its respective
LOAN AND SECURITY AGREEMENT - Page 81
property may be bound or any Governmental Approval relating
to any Loan Party or any of its Subsidiaries, or
(iv) result in or require the creation or
imposition of any Lien upon or with respect to any property
now owned or hereafter acquired by any Loan Party or of any of
its Restricted Subsidiaries other than the Security Interest.
(g) BUSINESS. The Loan Parties, respectively, are engaged
principally in the sale, manufacture, assembly, repair and distribution
of computer hardware, computer accessories and software products,
consumer electronic products, general office business equipment and
related telecommunications and multi-media electronics products and
equipment, and other products, training and services that are related
to or complementary to all or any of the foregoing.
(h) COMPLIANCE WITH LAW; GOVERNMENTAL APPROVALS.
(i) Except as set forth in SCHEDULE 8.1(h), each
Loan Party and each of its Subsidiaries:
(A) has all Governmental Approvals,
including permits relating to federal, state and
local Environmental Laws, ordinances and regulations,
required by any Applicable Law for it to conduct its
business, each of which is in full force and effect,
is final and not subject to review on appeal and, to
the knowledge of any Loan Party, is not the subject
of any pending or threatened claim by any
Governmental Authority relating to its business or
properties, and
(B) is in compliance with each
Governmental Approval applicable to it and in
compliance with all other Applicable Laws relating to
it, including, without being limited to, all
Environmental Laws and all occupational health and
safety laws applicable to any Loan Party or of any of
its Subsidiaries or their respective properties,
except for instances of noncompliance which would not, singly
or in the aggregate, cause a Default or Event of Default or
have a Materially Adverse Effect and in respect of which
reserves in respect of reasonably anticipated liability
therefor have been established in accordance with GAAP.
(ii) Each Loan Party has notified Agent of the
receipt by it or by any of its Subsidiaries of any notice of a
material violation of any Environmental Laws and occupational
health and safety laws applicable to such Loan Party, any of
its Subsidiaries or any of their respective properties, to the
extent, in any such case, that any such notice relates to a
violation that could cause a Material Adverse Effect.
LOAN AND SECURITY AGREEMENT - Page 82
(i) TITLE TO PROPERTIES. Except as set forth in SCHEDULE
8.1(i), each Loan Party and each of its Subsidiaries has valid and
legal title to or leasehold interest in all personal property
(including, without limitation, with respect to each Borrowing Base
Party, all Eligible Receivables and Eligible Inventory included in each
Borrowing Base Certificate), Real Estate owned and other assets used in
and which are material to the operation of its business.
(j) LIENS. None of the properties and assets of any Loan
Party or any of its Restricted Subsidiaries is subject to any Lien,
except Permitted Liens. Other than the Financing Statements or with
respect to Permitted Liens or precautionary financing statements
covering equipment leased to a Loan Party (and not owned by a Loan
Party) under an Operating Lease, no financing statement under the UCC
or other instrument evidencing a Lien which names any Loan Party or any
of its Restricted Subsidiaries as debtor has been filed (and has not
been terminated) with any Governmental Authority and no Loan Party or
any of its Restricted Subsidiaries has signed any such financing
statement or other instrument or any security agreement authorizing any
secured party thereunder to file any such financing statement or
instrument.
(k) INDEBTEDNESS AND GUARANTIES. SCHEDULE 8.1(k) is a
complete and correct listing, for each Loan Party and Restricted
Subsidiary, of all Indebtedness for Money Borrowed and Guaranties. As
of the Agreement Date, each Loan Party has performed and is in
compliance with all of the terms of such Indebtedness and Guaranties
and all instruments and agreements relating thereto, and no default or
event of default, or event or condition which with notice or lapse of
time or both would constitute such a default or event of default,
exists with respect to any such Indebtedness or Guaranty.
(l) LITIGATION. Except as set forth on SCHEDULE 8.1(l)
(it being agreed that such disclosure shall not constitute a disclosure
or limitation for purposes of the condition set forth in SECTION
7.1(g)), there are no actions, suits or proceedings pending (nor, to
the current actual knowledge of any Loan Party, are there any actions,
suits or proceedings threatened, nor are there any material unasserted
possible claims which would require disclosure in a financial statement
according to GAAP) against or in any other way directly and adversely
relating to or affecting any Loan Party or any of its Subsidiaries or
any of their respective properties in any court or before any
arbitrator of any kind or before or by any Governmental Authority,
except actions, suits or proceedings which would not singly or in the
aggregate have a Materially Adverse Effect, and there are no strikes or
walkouts in progress, pending or contemplated relating to any labor
contracts to which any Loan Party or any of its Subsidiaries is a
party, relating to any labor contracts being negotiated, or otherwise.
(m) TAX RETURNS AND PAYMENTS. Except as set forth on
SCHEDULE 8.1(m), all U.S. federal, state and local as well as foreign
national, provincial and local and other tax returns of each Loan Party
and each of its Subsidiaries required by Applicable Law to be filed
have been duly filed, or extensions have been timely filed, and all
U.S. federal, state and local and foreign national, provincial and
local and other taxes, assessments and other governmental
LOAN AND SECURITY AGREEMENT - Page 83
charges or levies upon each Loan Party and each of its Subsidiaries
and each Loan Party's and any of its Subsidiaries' property, income,
profits and assets which are due and payable have been paid, except
any such nonpayment which is at the time permitted under SECTION 11.6.
The charges, accruals and reserves on the books of each Loan Party and
each of its Subsidiaries in respect of U.S. federal, state and local
and foreign national, provincial and local taxes for all Fiscal Years
and portions thereof since the organization of such Loan Party or any
such Subsidiary are in the judgment of Parent adequate, and no Loan
Party knows of any reason to anticipate any additional assessments for
any of such years which, singly or in the aggregate, is reasonably
expected to have a Materially Adverse Effect.
(n) BURDENSOME PROVISIONS. No Loan Party nor any of its
Subsidiaries is a party to any indenture, agreement, lease or other
instrument, or subject to any charter or corporate restriction,
Governmental Approval or Applicable Law compliance with the terms of
which would reasonably be expected to have a Materially Adverse Effect.
(o) FINANCIAL STATEMENTS.
(i) Parent has delivered to Agent the audited
financial statements for Parent and its Consolidated
Subsidiaries as of, and for its Fiscal Year ending June 26,
1998, and the interim financial statements for Parent and its
Consolidated Subsidiaries for the interim Fiscal Period ending
March 27, 1999. All such financial statements have been
prepared in accordance with GAAP, and present fairly, the
consolidated financial condition of Parent and its
Consolidated Subsidiaries, as of the respective dates
indicated therein and the results of operations for the
respective periods indicated therein, subject to normal
period-end adjustments in the case of such interim financial
statements. Neither Parent nor any of the Consolidated
Subsidiaries has any material contingent liabilities,
liabilities for taxes, unusual forward or long-term
commitments, or unrealized or anticipated losses from any
unfavorable commitments except as referred to or reflected in
such financial statements. As of the Agreement Date, Parent
and its Subsidiaries taken as a whole have no material
liabilities, contingent or otherwise, liabilities for taxes,
unusual forward or long-term commitments, or unrealized or
anticipated losses nor material losses, except as (i) set
forth in the June 28, 1998 audited Fiscal Year financial
statements and March 27, 1999 unaudited Fiscal Period
financial statements, and Borrower's Form 10-K and 10-Q for
such respective periods, and (ii) shown on SCHEDULE 8.1(o).
(ii) Parent has furnished to Agent and the
Lenders copies of Management's Restructuring Plan.
Management's Restructuring Plan has been be prepared in light
of the past and anticipated operations of the business of
Parent and its Subsidiaries and represents as of the date
thereof the good faith opinion of Parent and its senior
management concerning the restructuring plan described
therein.
LOAN AND SECURITY AGREEMENT - Page 84
(p) ADVERSE CHANGE. Except with respect to restructuring
charges relating to Management's Restructuring Plan or as disclosed
pursuant to SECTION 12.5, since the date of the last financial
statements delivered to Agent pursuant to SECTION 8.1(o)(i),
(i) no material adverse change has occurred in
the business, assets, liabilities, financial condition or
results of operations of any Loan Party, and
(ii) no event has occurred or failed to occur
which has had (or, as of the Agreement Date, may have), singly
or in the aggregate, a Materially Adverse Effect.
(q) ERISA. Except as described in SCHEDULE 8.1(q):
(i) Neither Borrower nor any Related Company
maintains or contributes to any Benefit Plan covered under or
in any manner subject to either (i) Title IV of ERISA or (ii)
Section 302 of ERISA or Section 412 of the Internal Revenue
Code, other than those listed in SCHEDULE 8.1(q).
(ii) Except in compliance with Applicable Law,
(i) no Benefit Plan of Borrower or any Related Company has
been terminated or partially terminated, (ii) no Multiemployer
Plan listed in SCHEDULE 8.1(q) is insolvent or in
reorganization, and (iii) no proceedings have been instituted
to terminate any Benefit Plan or to reorganize any
Multiemployer Plan.
(iii) Neither Borrower nor any Related Company has
withdrawn from any Benefit Plan or Multiemployer Plan pursuant
to Title IV of ERISA, nor has a condition occurred which if
continued would result in any such withdrawal.
(iv) Neither Borrower nor any Related Company has
incurred any withdrawal liability, including contingent
withdrawal liability, to any Multiemployer Plan pursuant to
Title IV of ERISA.
(v) Neither Borrower nor any Related Company has
incurred any liability to the PBGC other than for required
insurance premiums which have been paid when due.
(vi) No Reportable Event has occurred with
respect to a Plan of Borrower or any Related Company.
(vii) No Benefit Plan listed in SCHEDULE 8.1(q)
subject to the provisions of Section 302 of ERISA or Section
412 of the Internal Revenue Code has an "accumulated funding
deficiency" (whether or not waived) as defined in Section 302
of ERISA or in Section 412 of the Internal Revenue Code.
LOAN AND SECURITY AGREEMENT - Page 85
(viii) Each Plan of Borrower or any Related Company
is in substantial compliance with ERISA, the Internal Revenue
Code and all Applicable Law, and neither Borrower nor any
Related Company has received any communication from a
Governmental Authority asserting that a Plan is not in
compliance with ERISA, the Internal Revenue Code and all
Applicable Law.
(ix) Each Plan of Borrower or any Related Company
which is intended to be a qualified Plan has been determined
by the IRS to be qualified under Section 401(a) of the
Internal Revenue Code as currently in effect or will be
submitted to the IRS for such determination prior to the end
of the remedial amendment period under Section 401(b) of the
Internal Revenue Code and the regulations promulgated
thereunder and neither Borrower nor any Related Company knows
or has reason to know why each such Plan should not continue
to be so qualified, and each trust related to such Plan that
has been submitted to the IRS for determination of exempt
status has been determined to be exempt from federal income
tax under Section 501(a) of the Internal Revenue Code or will
be submitted to the IRS for a determination of exempt status.
(x) Neither Borrower nor any Related Company
maintains or contributes to any employee welfare benefit plan
within the meaning of Section 3(l) of ERISA which provides
benefits to employees after termination of employment other
than as required by Section 601 of ERISA.
(xi) The Schedule B to the most recent annual
report filed with the IRS with respect to each Benefit Plan
listed in SCHEDULE 8.1(q), to the extent that such Schedule B
is required to be filed by the IRS, is complete and accurate.
Since the date of each such Schedule B, there has been no
adverse change in funding status or financial condition of the
Benefit Plan relating to such Schedule B.
(xii) Neither Borrower nor any Related Company has
failed to make a required installment under Subsection (m) of
Section 412 of the Internal Revenue Code or any other payment
required under Section 412 of the Internal Revenue Code on or
before the due date for such installment or other payment.
(xiii) Neither Borrower nor any Related Company is
required to provide security to a Benefit Plan under Section
401(a)(29) of the Internal Revenue Code due to a Benefit Plan
amendment that results in an increase in current liability for
the plan year.
(xiv) Neither Borrower, nor any Related Company,
nor any other "party-in-interest" or "disqualified person" has
engaged in a nonexempt "prohibited transaction," as such terms
are defined in Section 4975 of the Internal Revenue Code and
Section 406 of ERISA, in connection with any Plan which would
subject
LOAN AND SECURITY AGREEMENT - Page 86
Borrower or any Related Company to any material liability, or
has taken or failed to take any action which would constitute
or result in a Termination Event.
(xv) Neither Borrower nor any Related Company has
failed to comply with the health care continuation coverage
requirements of Section 4980B of the Internal Revenue Code in
respect of employees and former employees of such Borrower or
such Related Company and their dependents and beneficiaries
which alone or in the aggregate would subject Borrower, any
Loan Party or any of their respective Subsidiaries to any
material liability.
(xvi) Neither Borrower nor any Related Company has
(i) failed to make a required contribution or payment to a
Multiemployer Plan or (ii) made a complete or partial
withdrawal under Sections 4203 or 4205 of ERISA from a
Multiemployer Plan. Except as provided on SCHEDULE 8.1(q),
to the best knowledge of Borrower after due inquiry, neither
Borrower nor any Related Company shall have any obligation to
(A) make contributions to any Multiemployer Plan on or after
the Effective Date, or (B) pay withdrawal liability to any
Multiemployer Plan in an amount in excess of a "de minimis
amount" as such term is defined in Section 4209 of ERISA.
(r) ABSENCE OF DEFAULTS. No Loan Party nor any of its
Subsidiaries is in default under its articles or certificate of
incorporation or bylaws or other governing instruments and no event has
occurred, which has not been remedied, cured or waived,
(i) which constitutes a Default or an Event of
Default, or
(ii) as of the Agreement Date, which constitutes,
or which with the passage of time or giving of notice or both
would constitute, a default or event of default by any Loan
Party or any of its Subsidiaries under any material agreement
(other than this Agreement) or judgment, decree or order to
any Loan Party or any of its Subsidiaries is a party or by
which any Loan Party or any of its Subsidiaries or any of its
respective Subsidiaries' properties may be bound or which
would require any Loan Party or any of its Subsidiaries to
make any payment under any such agreement prior to the
scheduled maturity date therefor, except, in the case only of
any such agreement, for alleged defaults which are being
contested in good faith by appropriate proceedings and with
respect to which reserves in respect of such Loan Party's or
such Subsidiary's reasonably anticipated liability have been
established on its books.
(s) ACCURACY AND COMPLETENESS OF INFORMATION.
(i) All written information, reports and other
papers and data produced by or on behalf of any Loan Party and
furnished to any Credit Party were, at the time the same were
so furnished, complete and correct in all material respects,
to the
LOAN AND SECURITY AGREEMENT - Page 87
extent necessary to give the recipient a true and accurate
knowledge of the subject matter. As of the Agreement Date no
fact is known to any Loan Party which has had, or may in the
future have (so far as any such Person can foresee), a
Materially Adverse Effect which has not been set forth in the
financial statements or disclosure delivered prior to the
Effective Date, in each case referred to in SECTION 8.1(o), or
in such written information, reports or other papers or data
or otherwise disclosed in writing to Agent and the Lenders
prior to the Agreement Date.
(ii) No document furnished or written statement
made to any Credit Party by any Loan Party in connection with
the negotiation, preparation or execution of this Agreement or
any of the Loan Documents contains or will contain any untrue
statement of a fact material to the creditworthiness of any
Loan Party or omits or will omit to state a material fact
necessary in order to make the statements contained therein
not misleading.
(t) SOLVENCY. In each case after giving effect to the
Indebtedness represented by the Loans outstanding and to be incurred
and the transactions contemplated by this Agreement (i) each of the
Borrowing Base Parties, respectively, is Solvent and (ii) the Loan
Parties on a Consolidated Basis are Solvent.
(u) RECEIVABLES.
(i) STATUS.
(A) Each Receivable reflected in the
computations included in any Borrowing Base
Certificate meets the criteria enumerated in CLAUSES
(a) through (t) of the definition of Eligible
Receivables, EXCEPT as disclosed in such Borrowing
Base Certificate or as disclosed in a timely manner
in a subsequent Borrowing Base Certificate or
otherwise in writing to Agent.
(B) The Borrowing Base Parties have no
knowledge of any fact or circumstance not disclosed
to Agent in a Borrowing Base Certificate or otherwise
in writing which would impair the validity or
collectibility of any Account of $5,000,000 or more
or of Accounts which (regardless of the individual
amount thereof) aggregate $10,000,000 or more.
(ii) CHIEF EXECUTIVE OFFICE; TAX IDENTIFICATION
NUMBER. The Federal tax identification number of each Loan
Party is as specified for such Loan Party in SCHEDULE 8.1(u).
The chief executive office of each Loan Party and the books
and records relating to its Receivables are located at the
address or addresses set forth on SCHEDULE 8.1(u) or as
disclosed pursuant to SECTION 12.8. No Loan Party has
maintained its chief executive office or books and records
relating to any of its Receivables at any other address at any
time during the five years immediately preceding the Agreement
Date except as disclosed on SCHEDULE 8.1(u).
LOAN AND SECURITY AGREEMENT - Page 88
(v) INVENTORY.
(i) SCHEDULE OF INVENTORY. All Inventory
included in any Schedule of Inventory or Borrowing Base
Certificate delivered to Agent pursuant to SECTION 10.12 meets
the criteria enumerated in CLAUSES (a) through (h) of the
definition of Eligible Inventory, EXCEPT as disclosed in such
Schedule of Inventory or Borrowing Base Certificate or in a
subsequent Schedule of Inventory or Borrowing Base
Certificate, or as otherwise specifically disclosed in writing
to Agent.
(ii) CONDITION. All Inventory included in any
Schedule of Inventory or Borrowing Base Certificate delivered
to Agent pursuant to SECTION 10.12 is in good condition, meets
all standards imposed by any Governmental Authority having
regulatory authority over such goods, their use or sale, and
is currently either usable or salable in the normal course of
business, EXCEPT to the extent reserved against in
the financial statements referred to in SECTION 8.1(o) or
delivered pursuant to ARTICLE 12 or as disclosed on a Schedule
of Inventory delivered to Agent pursuant to SECTION 10.12(b).
(iii) LOCATION. All Inventory of any Loan Party
included within the Collateral is located on the premises set
forth for such Loan Party on SCHEDULE 8.1(v) or is Inventory
in transit to one of such locations, except as otherwise
disclosed in writing to Agent. During the previous twelve (12)
months, no such Inventory has been located at premises other
than those set forth on SCHEDULE 8.1(v).
(w) RESERVED
(x) REAL PROPERTY. Each Loan Party owns no Real Estate
and leases no Real Estate other than that described on SCHEDULE 8.1(x)
and other than Real Estate acquired or leased after the Agreement Date
for which Borrower has complied with the requirements of SECTION 10.14.
(y) CORPORATE NAME. Except as otherwise disclosed on
SCHEDULE 8.1(y), during the five (5) year period preceding the
Agreement Date, no Loan Party nor any predecessor thereof has been
known as or used any name other than its corporate name on the
Agreement Date as provided for such Loan Party in ARTICLE 1 or a trade
name listed in SCHEDULE 8.1(dd).
(z) FEDERAL RESERVE REGULATIONS. No Loan Party nor any of
its Subsidiaries is engaged and none will engage, principally or as one
of its important activities, in the business of extending credit for
the purpose of "purchasing" or "carrying" any "margin stock" (as each
of the quoted terms is defined or used in Regulation U of the Board of
Governors of the Federal Reserve System). No part of the proceeds of
any of the Loans will be used for so purchasing or carrying margin
stock or, in any event, for any purpose which
LOAN AND SECURITY AGREEMENT - Page 89
violates, or which would be inconsistent with, the provisions of
Regulation T, U or X of such Board of Governors. If requested by
Agent or any Lender, any such Loan Party will furnish to Agent and
the Lenders a statement or statements in conformity with the
requirements of said Regulation T, U or X to the foregoing effect.
(aa) INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING
COMPANY ACT. No Loan Party nor any of its Subsidiaries is an
"investment company" or a company "controlled" by an "investment
company" (as each of the quoted terms is defined or used in the
Investment Company Act of 1940, as amended). No Loan Party nor any
of its Subsidiaries is a "holding company" or a "subsidiary company"
of a "holding company" or an "affiliate" of a "holding company" or a
"public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(bb) EMPLOYEE RELATIONS. Each Loan Party and each of
its Subsidiaries has a stable work force in place and is not, except
as set forth on SCHEDULE 8.1(bb), party to any collective bargaining
agreement nor has any labor union been recognized as the
representative of any Loan Party's or any of its Subsidiaries'
employees, and no Loan Party knows of any pending, threatened or
contemplated strikes, work stoppage or other labor disputes
involving any Loan Party's or any of its Subsidiaries' employees.
(cc) PROPRIETARY RIGHTS. SCHEDULE 8.1(cc) sets forth a
correct and complete list of all Proprietary Rights owned by each
Loan Party which must be registered in order to protect its use by
such Loan Party. None of such Proprietary Rights is subject to any
licensing agreement or similar arrangement except as set forth on
SCHEDULE 8.1(cc) or as entered into in the sale or distribution of
Inventory or rendering of services in the ordinary course of
business. To the best knowledge of the Loan Parties, none of such
Proprietary Rights infringes on or conflicts with any other Person's
property and, except matters which could not cause a Materially
Adverse Effect, no other Person's property infringes on or conflicts
with such Proprietary Rights. The Proprietary Rights described on
SCHEDULE 8.1(cc) constitute all of the property of such type
necessary to the current and anticipated future conduct of business
of the Loan Parties and which must be registered in order to protect
its use by any such Loan Party.
(dd) TRADE NAMES. All trade names or styles under which
Borrower sells Inventory or creates Receivables, or to which
instruments in payment of Receivables are made payable, or under
which any other Loan Party conducts any material portion of its
business, are listed on SCHEDULE 8.1(dd).
(ee) INVESTMENT PROPERTY. SCHEDULE 8.1(ee) sets forth a
correct and complete list of all Investment Property owned by each
Loan Party. Each such Loan Party is the legal and beneficial owner
of such Investment Property, as so reflected, free and clear of any
Lien (other than Permitted Liens), and has not sold, granted any
option with respect to, assigned or transferred or otherwise
disposed of any of its rights or interest therein.
LOAN AND SECURITY AGREEMENT - Page 90
(ff) YEAR 2000 COMPLIANCE. Parent has (i) undertaken a
detailed review and assessment of all areas within the business and
operations of it and its Subsidiaries that could be adversely
affected by the "YEAR 2000 PROBLEM" (that is, the risk that computer
applications used by the Loan Parties may be unable to recognize and
perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (ii) developed a
detailed plan and timeline for addressing the Year 2000 Problem on a
timely basis, and (iii) to date, implemented that plan substantially
in accordance with that timetable. Each of the Loan Parties
reasonably anticipates that all computer applications that are
material to the business and operations of it and its Subsidiaries
will on a timely basis be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000 (that is,
be "YEAR 2000 COMPLIANT") and would not cause a Materially Adverse
Effect. Parent is currently making inquiry of each of the key
suppliers, vendors and customers of it and its Subsidiaries as to
whether such Persons will on a timely basis be Year 2000 Compliant
in all material respects and, on the basis of that inquiry, believes
that all such Persons will be so compliant and would not cause a
Materially Adverse Effect. For purposes hereof, "key suppliers,
vendors and customers" refers to those suppliers, vendors and
customers of Parent and its Subsidiaries the business failure of
which would with reasonable probability be expected to have a
Material Adverse Effect.
(gg) EXISTING STORE LOCATIONS. All locations at which a
Loan Party operates retail stores on the Agreement Date are listed
in SCHEDULE 8.1(gg).
(hh) DEPOSIT ACCOUNTS; MERCHANT ACCOUNT AGREEMENTS. All
Deposit Accounts and Merchant Account Agreements, respectively,
maintained by a Loan Party are listed in SCHEDULE 8.1(hh).
(ii) COMMON ENTERPRISE. The successful operation and
condition of Borrower is dependent on the continued successful
performance of the functions of the group as a whole and the
successful operation of each Loan Party other than Borrower is
dependent on the successful performance and operation of Borrower.
Borrower expects to derive benefit (and its board of directors has
determined that it may reasonably be expected to derive benefit),
directly and indirectly, from successful operations of Parent and
its Subsidiaries. Each Loan Party (other than Borrower) and its
Subsidiaries expect to derive benefit (and the boards of directors
or other governing body of each such Loan Party have determined that
it may reasonably be expected to derive benefit), directly and
indirectly, from the credit extended by Lenders hereunder, both in
their separate capacities and as members of the group of companies.
Each Loan Party has determined that execution, delivery and
performance of this Agreement and any other Loan Documents to be
executed by such Loan Party is within its corporate purpose, will be
of direct and indirect benefit to such Loan Party and is in its best
interest.
LOAN AND SECURITY AGREEMENT - Page 91
Section 8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations and warranties set forth in this ARTICLE 8 and all statements
contained in any certificate, financial statement, or other instrument,
delivered by or on behalf of any Loan Party pursuant to or in connection with
this Agreement or any of the other Loan Documents (including, but not limited
to, any such representation, warranty or statement made in or in connection
with any amendment thereto) shall constitute representations and warranties
made under this Agreement. All representations and warranties made under this
Agreement shall be made or deemed to be made at and as of the Agreement Date,
the Effective Date, the effective date of each Borrowing Base Certificate and
at and as of the date of each Loan, except that representations and
warranties which, by their terms are applicable only to one such date shall
be deemed to be made only at and as of such date. All representations and
warranties made or deemed to be made under this Agreement shall survive and
not be waived by the execution and delivery of this Agreement, any
investigation made by or on behalf of the Credit Parties or any borrowing
hereunder.
ARTICLE 9
SECURITY
Section 9.1 SECURITY INTEREST.
(a) To secure the payment, observance and performance
of the Secured Obligations, each Loan Party, respectively, hereby
mortgages, pledges and assigns all of its right, title and interest
in the Collateral to Agent, for the benefit of the Credit Parties,
and grants to Agent, for the benefit of the Credit Parties, a
continuing security interest and collateral assignment in, and a
continuing Lien upon, the Collateral.
(b) As additional security for all of the Secured
Obligations, each Loan Party, respectively, grants to Agent, for the
benefit of the Credit Parties, a security interest and collateral
assignment in, and assigns to Agent, for the benefit of itself as
Agent and the other Credit Parties, all of its right, title and
interest in and to, any deposits or other sums at any time credited
by or due from each Credit Party and each Affiliate of any Credit
Party to such Loan Party or credited by or due from any participant
of any Credit Party to such Loan Party, with the same rights therein
as if the deposits or other sums were credited by or due from such
Credit Party, but specifically excluding any controlled disbursement
payroll account or tax, trust or other special deposit accounts
which are segregated and designated as such and into which no
deposits have been made other than for the specific purposes so
designated. Borrower hereby authorizes each Credit Party and each
Affiliate of such Credit Party and each participant to pay or
deliver to Agent, for the account of the Credit Parties, without any
necessity on Agent's or any Credit Party part to resort to other
security or sources of reimbursement for the Secured Obligations, at
any time during the continuation of any Event of Default with
respect to any Secured Obligations which are due and payable, or on
and after the sending of any notice of intention to accelerate or
notice of acceleration under SECTION 14.2 with respect to any other
Secured Obligations, in each case without further notice (such
notice being expressly waived), any of the aforesaid deposits or
other
LOAN AND SECURITY AGREEMENT - Page 92
sums for application to any Secured Obligation, irrespective
of whether any demand has been made or whether such Secured
Obligation is mature, and the rights given the Credit Parties, their
Affiliates and participants hereunder are cumulative with such
Person's other rights and remedies, including other rights of
set-off. Agent may give notice of the above grant of a security
interest in and assignment of the aforesaid deposits and other sums,
and authorization, to, and make any suitable arrangements with, any
Credit Party, any such Affiliate of any Credit Party or participant
for effectuation thereof, and each Loan Party hereby irrevocably
appoints Agent as its attorney to collect any and all such deposits
or other sums to the extent any such payment is not made to Agent or
any Credit Party by such Credit Party, Affiliate or participant.
Section 9.2 PERFECTION AND CONTINUED PRIORITY OF SECURITY INTEREST.
(a) The Security Interest granted by each Loan Party
shall at all times, be valid, perfected and enforceable against such
Loan Party and all third parties in accordance with the terms of
this Agreement, as security for the Secured Obligations, and the
Collateral shall not at any time be subject to (i) any Liens that
are prior to the Security Interest, other than (x) Purchase Money
Liens and any renewals or extensions thereof described in CLAUSE
(f)(a)(i) of the definition of "Permitted Liens" in SECTION 1.1 and
which are listed in SCHEDULE 9.2 ("Purchase Money Liens") on the
Agreement Date or (y) Liens of the type described under the
definitions of Permitted Landlords Liens and Permitted
Warehouseman's Liens in SECTION 1.1 (but without limiting the
requirements for inclusion of Inventory as Eligible Inventory or the
obligations of the Loan Parties under SECTION 9.2(b)(ii)), PROVIDED,
that any financing statement (if any) in respect of any such Lien is
terminated within five (5) Business Days after notice by Agent and
the effect of excluding any Inventory from Eligible Inventory as a
result of any such Lien does not cause Availability to be less than
the Minimum Availability Requirement), or (ii) any Liens that are on
a parity with or junior to the Security Interest, other than
Permitted Liens.
(b) Each Loan Party shall, at its sole cost and
expense, take all action that Agent may reasonably request (such
action to be promptly commenced upon written request by Agent and
pursued with reasonable diligence), so as at all times to maintain
the validity, perfection, enforceability and rank of the Security
Interest in the Collateral in conformity with the requirements of
SECTION 9.2(a), or to enable Agent and the other Credit Parties to
exercise or enforce their rights hereunder, including, but not
limited to:
(i) paying all taxes, assessments and other
claims lawfully levied or assessed on any of the Collateral,
except to the extent that such taxes, assessments and other
claims constitute Permitted Liens or that non-payment is
permitted under SECTION 11.6;
(ii) using its best commercially reasonable
efforts to obtain and deliver to Agent third party consents,
landlords', bailee's, mortgagees' and mechanic's and
materialmen's releases, subordinations or waivers (it being
understood that to the
LOAN AND SECURITY AGREEMENT - Page 93
extent that each such Loan Party, after using its best
commercially reasonable efforts, shall be unable to obtain
and deliver to Agent any such third party consents, land
lords', bailee's, mortgagees' and mechanic's and
materialmen's releases, subordinations or waivers, as the
case may be, such inability to obtain and deliver any such
item shall not constitute an Event of Default);
(iii) delivering to Agent, for the benefit of the
Credit Parties, endorsed or accompanied by such instruments
of assignment as Agent may specify, and stamping or marking,
in such manner as Agent may specify, any and all chattel
paper, instruments, letters and advices of guaranty and
documents evidencing or forming a part of the Collateral; and
(iv) executing and delivering any additional
Security Documents, notices and assignments in each case in
form and substance satisfactory to Agent required for the
creation, validity, perfection, maintenance or continuation
of the Security Interest under the UCC or other Applicable
Law.
(c) Agent is hereby irrevocably authorized to file one
or more financing or continuation statements or amendments thereto
without the signature of or in the name of any Loan Party for any
purpose described in SECTION 9.2(b). A carbon, photographic,
xerographic or other reproduction of this Agreement or of any of the
Security Documents filed in connection with this Agreement is
sufficient as a financing statement.
(d) Each Loan Party shall ▇▇▇▇ its books and records
as may be necessary or appropriate to evidence, protect and perfect
the Security Interest.
(e) On or after the Termination Date and upon full and
final, indefeasible payment of all of the Secured Obligations and
termination of all of the obligations of Agent, L/C Issuer and any
Lender under this Agreement and all other Loan Documents, Agent
shall, upon the written request of and at the sole expense of
Borrower, execute such releases and terminations of the Security
Interest as Borrower may reasonably request.
Section 9.3 GUARANTIES; LOAN PARTY JOINDER. Each Loan Party other
than Borrower shall guarantee payment and performance of the Secured
Obligations pursuant to a Guaranty Agreement, duly executed by each such
Person and dated as of the Agreement Date. Promptly upon creation or
acquisition of any Domestic Subsidiary of a Loan Party such Loan Party shall
and shall cause each of its Subsidiaries, as applicable, to cause each such
newly created or acquired Subsidiary to become a Loan Party and a Guarantor
by executing and delivering to Agent a Joinder Agreement. Upon execution and
delivery of a Joinder Agreement any such newly created or acquired Subsidiary
shall automatically become a Loan Party and a Guarantor and thereupon shall
have all of the rights, benefits, duties and obligations of a Loan Party and
a Guarantor under the Loan Documents.
LOAN AND SECURITY AGREEMENT - Page 94
Section 9.4 LIMITATION IN RESPECT OF CERTAIN LOAN PARTIES.
Notwithstanding anything in this Agreement or any of the other Loan
Documents, the liability of each Loan Party other than Borrower, Parent,
General Partner and CompUSA Holdings Company under this Agreement and the
other Loan Documents shall be limited to a maximum aggregate amount equal to
the largest amount that would not render its obligations hereunder and
thereunder subject to avoidance as a fraudulent transfer or conveyance under
any Applicable Law, in each case after giving effect to all other liabilities
of each such Person, contingent or otherwise, that are relevant under such
laws, and after giving effect to the value, as assets (as determined under
the applicable provisions of such laws) of any rights of each such Person to
subrogation or contribution from any other Loan Party or other Person
pursuant to Applicable Law or any agreement providing for an equitable
allocation among such Person and any such other Loan Party or other Person of
their respective obligations hereunder and thereunder. This SECTION 9.4 shall
not apply to limit the liability under the Loan Documents of Borrower,
Parent, General Partner and CompUSA Holdings Company.
ARTICLE 10
COLLATERAL COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been paid in full, unless the Required Lenders shall
otherwise consent in the manner provided in SECTION 17.10:
Section 10.1 COLLECTION OF RECEIVABLES.
(a) Each Loan Party will cause all monies, checks,
notes, drafts and other payments relating to or constituting
proceeds of trade accounts receivable to be forwarded to a Lockbox
for deposit in an Agency Account in accordance with the procedures
set out in the corresponding Agency Account Agreement. Each Loan
Party will promptly cause all monies, checks, notes, drafts and
other payments relating to or constituting proceeds of other
Receivables, of any other Collateral and of any trade accounts
receivable that are not forwarded to a Lockbox, to be transferred to
or deposited in an Agency Account. In particular, each Loan Party
will:
(i) advise each Account Debtor on trade
accounts receivable to address all remittances with respect
to amounts payable on account thereof to a specified Lockbox;
(ii) advise each other Account Debtor that
makes payment to such Loan Party by wire transfer, automated
clearinghouse transfer or similar means to make payment
directly to an Agency Account; and
(iii) stamp or otherwise ▇▇▇▇ all invoices
relating to trade accounts receivable with a legend
satisfactory to Agent indicating that payment is to be made
to such Loan Party via a specified Lockbox.
LOAN AND SECURITY AGREEMENT - Page 95
(b) For so long as no Event of Default shall have
occurred and remain in existence and Availability shall equal or
exceed the Minimum Availability Requirement, all collected balances
in each Agency Account may be transmitted daily by wire transfer,
depository transfer check or other means in accordance with the
procedures set forth in the corresponding Agency Account Agreement,
directly to the Loan Parties for use in the ordinary course of
business, subject to the terms of this Agreement. At any time when
any Event of Default is existence or at any time when Availability
is less than the Minimum Availability Requirement, Agent in its
discretion may notify the Loan Parties and each Clearing Bank and
instruct such Clearing Bank, effective upon its receipt of such
notice, to cause all balances in each Agency Account to be
transmitted daily to Agent by wire transfer, depository transfer
check or other means in accordance with the procedures set forth in
the corresponding Agency Account Agreement, to Agent at its
Principal Office for application as provided in SECTION 2.3(c),
SECTION 14.2, and SECTION 14.3, such credits to be entered as of the
Business Day they are received if they are received prior to 1:30
p.m. (Dallas, Texas time) and to be conditioned upon final payment
in cash or solvent credits of the items giving rise to them.
(c) Any monies, checks, notes, drafts or other
payments referred to in SUBSECTION (a) of this SECTION 10.1 which,
notwithstanding the terms of such subsection, are received by or on
behalf of any Loan Party will be held in trust for Agent and will be
delivered to Agent or a Clearing Bank, as promptly as possible, in
the exact form received, together with any necessary endorsements
for application by Agent directly to the Secured Obligations or, if
applicable, for deposit in the Agency Account maintained with a
Clearing Bank and processing in accordance with the terms of this
Agreement and the corresponding Agency Account Agreement.
Section 10.2 VERIFICATION AND NOTIFICATION. Agent shall have the
right at any time and from time to time,
(a) in the name of Agent, the Lenders or in the name
of the Loan Parties, or any of them, to verify the validity, amount
or any other matter relating to any Receivables by mail, telephone,
telegraph or otherwise,
(b) to review, audit and make extracts from all
records and files related to any of the Receivables, and
(c) at any time when any Event of Default is in
existence, to notify the Account Debtors or obligors under any
Receivables of the assignment of such Receivables to Agent, for the
benefit of the Credit Parties.
LOAN AND SECURITY AGREEMENT - Page 96
Section 10.3 DISPUTES, RETURNS AND ADJUSTMENTS. A Loan Party may, in
the ordinary course of business and consistent with past business practices,
unless an Event of Default has occurred and is continuing, grant any
extension of time for payment of any Receivable or compromise, compound or
settle the same for less than the full amount thereof, or release wholly or
partly any Person liable for the payment thereof, or allow any credit or
discount whatsoever therein; PROVIDED that at any time when Availability is
less than the Minimum Availability Requirement, (i) no such action results in
the reduction of more than $7,500,000 in the amount payable with respect to
any Account (in each case, excluding the allowance of credits or discounts
generally available to Account Debtors in the ordinary course of business and
appropriate adjustments to the accounts of Account Debtors in the ordinary
course of business), and (ii) Agent is notified of the amount of such
adjustments and the Receivable(s) affected thereby, (x) promptly if the
amount of such adjustment equals or exceeds $2,500,000 or (y) otherwise on
the next succeeding Schedule of Receivables or Borrowing Base Certificate, as
the case may be, in the case of any adjustment of a smaller amount.
Section 10.4 INVOICES. Upon the request of Agent, the Loan Parties
shall deliver to Agent, at their expense, copies of customers' invoices or
the equivalent, original shipping and delivery receipts or other proof of
delivery, customers' statements (if any), customer address lists, the
original copy of all documents, including, without limitation, repayment
histories and present status reports, relating to Receivables and such other
documents and information relating to the Receivables as Agent shall specify,
any of such items to be delivered, if no Event of Default is in existence, as
promptly as reasonably possible and in any event within three (3) Business
Days after any such request, or if any Event of Default is in existence, upon
Agent's request.
Section 10.5 DELIVERY OF INSTRUMENTS. Each Loan Party will promptly
notify Agent in the event any of its Receivables in excess of $1,000,000 is
at any time evidenced by a promissory note, trade acceptance or any other
instrument for the payment of Money, and upon request by Agent, such Loan
Party will promptly thereafter deliver such instrument to Agent,
appropriately endorsed to Agent, for the benefit of the Credit Parties.
Section 10.6 SALES OF INVENTORY. All sales of Inventory will be made
in compliance with all requirements of Applicable Law except for instances of
noncompliance that do not give rise to a Lien on such Inventory or result in
a material diminution in the value thereof or impair Agent's access thereto
or cause a Materially Adverse Effect.
Section 10.7 OWNERSHIP AND DEFENSE OF TITLE.
(a) Except for Permitted Liens, the Loan Parties,
respectively, shall at all times be the sole owner of each and every
item of Collateral and shall not create any Lien on, or sell, lease,
exchange, assign, transfer, pledge, hypothecate, grant a security
interest or security title in, grant a license in or otherwise
dispose of, any of the Collateral or any interest therein, except
for sales of Inventory in the ordinary course of business, for cash
or on open account or on terms of payment ordinarily extended to its
customers, and except for dispositions that are otherwise expressly
permitted under this Agreement (including without limitation,
SECTION 13.6). The inclusion of "proceeds" of the Collateral under
the Security
LOAN AND SECURITY AGREEMENT - Page 97
Interest shall not be deemed a consent by Agent or the Lenders to
any other sale or other disposition of any part or all of the
Collateral.
(b) The Loan Parties will promptly notify Agent of,
and at Agent's request shall defend its interest in and to and the
Security Interest in the Collateral against, any claims or demands
of any Person other than the Credit Parties.
Section 10.8 INSURANCE.
(a) The Loan Parties shall at all times maintain
insurance on its Inventory against loss or damage by fire, theft,
burglary, pilferage, loss in transit and such other hazards as Agent
shall reasonably specify, in amounts not to exceed those obtainable
at commercially reasonable rates and under policies issued by
insurers as is customarily maintained by similar businesses or as
may be required by Applicable Law. All premiums on such insurance
shall be paid by the Loan Parties and, if requested by Agent, copies
of the policies shall be delivered to Agent. The Loan Parties will
not use or permit the Inventory to be used in any manner which might
render inapplicable any insurance coverage.
(b) All insurance policies required under SECTION
10.8(a) covering any Collateral shall name Agent, for the benefit of
the Credit Parties, as an additional insured and shall contain loss
payable clauses in form and substance satisfactory to Agent, naming
Agent, for the benefit of the Credit Parties, as loss payee, as its
interests may appear, and providing that:
(i) all proceeds thereunder shall be payable
to Agent, for the benefit of the Credit Parties;
(ii) no such insurance shall be affected by any
act or neglect of the insured or owner of the property
described in such policy; and
(iii) such policy and loss payable clauses may
be canceled, amended or terminated only upon at least ten
(10) days' prior written notice given to Agent.
(c) Any proceeds of insurance referred to in this
SECTION 10.8 shall be paid to Agent for application to the Secured
Obligations (i) to the extent, if any, required to cause
Availability to equal or exceed the Minimum Availability Requirement
and (ii) in full at any time when any Default or Event of Default is
in existence, or if Availability exceeds the Minimum Availability
Requirement and no Default or Event of Default is in existence,
disbursed to Borrower for the Loan Parties.
Section 10.9 LOCATION OF OFFICES AND COLLATERAL.
(a) No Loan Party will change the location of its
chief executive office or the place where it keeps its books and
records relating to the Collateral or change its name, identity or
entity structure without giving Agent thirty (30) days' prior
written notice thereof.
LOAN AND SECURITY AGREEMENT - Page 98
(b) All Inventory, other than Inventory in transit,
will at all times be kept (i) as to Borrower and Parent, only at the
locations for Borrower or Parent as reflected in such SCHEDULE
8.1(v) and (ii) as to any other Loan Party, only at the locations,
if any, reflected for each such Loan party in such SCHEDULE 8.1(v),
and shall not, without the prior written consent of Agent, be
removed therefrom except pursuant to sales of Inventory permitted
under SECTION 10.7(a), PROVIDED, that SCHEDULE 8.1(v) may not be
amended or supplemented without giving at least thirty (30) days
prior written notice to Agent.
(c) If any Inventory is in the possession or control
of any agent or processor, the applicable Loan Party shall notify
each such agent or processor of the Security Interest (and shall
promptly provide copies of any such notice to Agent and the Lenders)
and, upon the occurrence of an Event of Default, shall instruct them
(and cause them to acknowledge such instruction) to hold all such
Inventory for the account of the Credit Parties, subject to the
instructions of Agent.
Section 10.10 RECORDS RELATING TO COLLATERAL.
(a) Each Loan Party will at all times:
(i) keep complete and accurate records of its
Inventory on a basis consistent with past practices so as to
permit comparison of Inventory records relating to different
time periods, itemizing and describing the kind, type and
quantity of Inventory, cost therefor and a current price
list for such Inventory; and
(ii) keep complete and accurate records of all
other Collateral.
(b) Each Loan Party will prepare a physical listing of
all Inventory, wherever located, at least annually and provide a copy
thereof to Agent.
Section 10.11 INSPECTION; APPRAISALS. Agent and, with the consent of
and accompanied by Agent, any Lender (by any of their officers, employees or
agents) shall have the right, to the extent that the exercise of such right
shall be within the control of any Loan Party, at any time or times to:
(a) visit the properties of each Loan Party, inspect the
Collateral and the other assets of each Loan Party and inspect and
make extracts from its books and records, including, but not limited
to, management letters prepared by independent accountants, all during
customary business hours at such premises;
(b) discuss any Loan Party's business, assets,
liabilities, financial condition, results of operations and business
prospects, insofar as the same are reasonably related to the rights
of Agent or the Lenders hereunder or under any of the other Loan
Documents, with any Loan Party's principal officers, independent
accountants and any other Person (except
LOAN AND SECURITY AGREEMENT - Page 99
that any such discussion with any third parties shall be conducted
only in accordance with Agent's or such Lender's standard operating
procedures relating to confidentiality);
(c) verify the amount, quantity, value and condition
of, or any other matter relating to, any of the Collateral and in
this connection to review, audit and make extracts from all records
and files related to any of the Collateral.
At Agent's request, each Loan Party will deliver to Agent, for the benefit of
the Lenders, any instrument necessary for it to obtain records from any
service bureau maintaining records on behalf of such Loan Party. At Agent's
request Borrower will furnish to Agent an appraisal or updated appraisal of
any Collateral, prepared by a credentialed appraiser acceptable to Agent, or
Agent may obtain any such appraisal at any time, in each case at Borrower's
expense as provided by SECTION 17.2. Without limiting the foregoing, Borrower
will deliver to Agent an appraisal of Inventory, prepared by a credentialed
appraiser acceptable to Agent, reflecting the Appraised GOB Value thereof at
any time at Agent's request, or otherwise (i) at least once during each
twelve (12) calendar months for so long as no Loans are outstanding in
respect of amounts calculated under CLAUSE (b)(ii) of the definition of
Borrowing Base in SECTION 1.1 or (ii) at least once during each six (6)
calendar months during any time when any Loans are outstanding in respect of
amounts calculated under such CLAUSE (b)(ii).
Section 10.12 INFORMATION AND REPORTS.
(a) SCHEDULE OF RECEIVABLES. Except as provided in
Section (e) below, Borrower shall deliver to Agent, on or before the
Agreement Date and not later than the twentieth (20th) day of each
Fiscal Period thereafter, and at any other time as may be requested by
Agent, a Schedule of Receivables which
(i) shall be as of the last Business Day of
the immediately preceding Fiscal Period,
(ii) except with respect to the Schedule of
Receivables delivered on the Agreement Date, shall be
reconciled to the Borrowing Base Certificate as of such last
Business Day, and
(iii) shall set forth (i) a summary aged trial
balance for the first two Fiscal Periods of a Fiscal Quarter
and (ii) a detailed aged trial balance for the last Fiscal
Period of a Fiscal Quarter, in each such case of all then
existing Receivables of each Loan Party, specifying the
names and balance due for each Account Debtor obligated on a
Receivable so listed.
(b) SCHEDULE OF INVENTORY. Except as provided in
Section (e) below, Borrower shall deliver to Agent on or before the
Agreement Date and not later than the twentieth day of each Fiscal
Period, and at any other time as may be requested by Agent, a
Schedule of Inventory as of the last Business Day of the immediately
preceding Fiscal Period itemizing
LOAN AND SECURITY AGREEMENT - Page 100
and describing the kind, type and quantity of all Inventory of each
Loan Party, the cost thereof and the location thereof.
(c) BORROWING BASE CERTIFICATE. Except as provided in
Section (e) below, Borrower shall deliver to Agent Borrowing Base
Certificates, as follows:
(A) With respect to (and prior to) each
funding of any Loan or each issuance of any Letter of Credit
at any time when Availability is, at the time of making such
Loan or issuing such Letter of Credit or after giving effect
thereto, less than the Minimum Availability Requirement,
Borrower shall, at a minimum, deliver to Agent a Borrowing
Base Certificate prepared as of the close of business on the
Business Day preceding the Business Day on which such
Borrowing Base Certificate is delivered to Agent;
(B) At any time when the aggregate outstanding
balance of all Revolving Credit Loans plus the Letter of
Credit Reserve exceeds the Threshold Usage Amount, Borrower
shall, at a minimum, deliver to Agent a Borrowing Base
Certificate on the Wednesday of each calendar week prepared
as of the close of business on the Business Day preceding
the Business Day on which such Borrowing Base Certificate is
delivered to Agent;
(C) At any time when the aggregate outstanding
balance of all Revolving Credit Loans plus the Letter of
Credit Reserve is less than the Threshold Usage Amount,
Borrower shall, at a minimum, deliver to Agent a Borrowing
Base Certificate on the twentieth (20th) day of each Fiscal
Period prepared as of the close of business on the last day
of the preceding Fiscal Period;
PROVIDED, that unless otherwise requested by Agent no Borrowing Base
Certificate shall be required by the foregoing at any time when the
sum of Loans outstanding and the Letter of Credit Reserve
outstanding is less than $50,000,000. Each such Borrowing Base
Certificate shall include a schedule of "ineligibles" (I.E.,
Receivables other than Eligible Receivables and Inventory other than
Eligible Inventory) prepared as of the effective date of each such
Borrowing Base Certificate (unless Agent shall request that such
schedule be prepared as of a more recent date, in which case such
schedule will be prepared as of the date so requested).
(d) NOTICE OF DIMINUTION OF VALUE. At the time of
delivery of each Compliance Certificate under SECTION 12.3 or, if
earlier, with reasonable promptness, the Loan Parties shall notify
Agent if any such Loan Party has knowledge of any matter or event
which has resulted in, or may result in, the diminution in excess of
$10,000,000 in the value of any of the Collateral, except for any
such diminution in the value of any Receivables or Inventory in the
ordinary course of business which has been appropriately reserved
against, as reflected in financial statements previously delivered
to Agent and the Lenders pursuant to ARTICLE 12.
LOAN AND SECURITY AGREEMENT - Page 101
(e) ADDITIONAL INFORMATION. Agent may in its
discretion from time to time request that Borrower deliver any
Schedule of Receivables, Schedule of Inventory or Borrowing Base
Certificate described in SECTIONS 10.12(a), (b) and (c) more or less
often and on different schedules than specified in such Sections and
Borrower will comply with such requests. The Loan Parties will
furnish to Agent such other information with respect to the
Collateral as Agent may from time to time reasonably request.
Section 10.13 POWER OF ATTORNEY. Each Loan Party hereby appoints
Agent as its attorney, with power to
(a) endorse its name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or
security that may come into Agent's or any Credit Party's
possession, and
(b) sign its name on any invoice or ▇▇▇▇ of lading
relating to any Receivable, Inventory or other Collateral, on any
drafts against customers related to letters of credit, on notices of
assignment, financing statements and other public records relating
to the perfection or priority of the Security Interest,
verifications of account and notices to or from customers.
Section 10.14 ADDITIONAL REAL ESTATE AND LEASES. At the time of
delivery of each Compliance Certificate for the end of a Fiscal Quarter under
SECTION 12.3 the Loan Parties shall notify Agent in writing of the
acquisition of any interest (including a leasehold interest) in any Real
Estate, therein specifying the address and location of such Real Estate and
the nature of any such interest.
Section 10.15 ASSIGNMENT OF CLAIMS ACT. Upon each request of Agent,
each Loan Party shall promptly execute any documents or instruments and shall
take such steps or actions reasonably required by Agent so that all monies
due or to become due under any contract with the U.S., the District of
Columbia or any other Governmental Authority, will be assigned to Agent, for
the benefit the Credit Parties, and notice given thereof in accordance with
the requirements of the Assignment of Claims Act of 1940, as amended, or any
other laws, rules or regulations relating to the assignment of any such
contract and monies due to or to become due.
Section 10.16 VOTING RIGHTS, DISTRIBUTIONS, ETC., IN RESPECT OF
INVESTMENT PROPERTY.
(a) So long as no Event of Default shall have occurred
and be continuing (i) each Loan Party shall be entitled to exercise
any and all voting and other consensual rights (including, without
limitation, the right to give consents, waivers and notifications in
respect of any Security) pertaining to its Investment Property or
any part thereof; PROVIDED, HOWEVER, that without the prior written
consent of Agent and Required Lenders, no vote shall be cast or
consent, waiver or ratification given or action taken which would
(A) be inconsistent with or violate any provision of this Agreement
or any other Loan Document or (B) amend, modify or waive any
material term, provision or condition of the certificate of
incorporation,
LOAN AND SECURITY AGREEMENT - Page 102
bylaws, certificate of formation or other charter document or other
agreement relating to, evidencing, providing for the issuance of or
securing any such Investment Property, in any manner that would
impair such Investment Property, the transferability thereof or the
Security Interest therein, or, and (ii) each Loan Party shall be
entitled to receive and retain any and all dividends and interest
paid in respect of any of such Investment Property (unless otherwise
required by this Agreement).
(b) Upon the occurrence and during the continuance of
an Event of Default, (i) Agent may, without notice to any Loan
Party, transfer or register in the name of Agent or any of its
nominees, for the ratable benefit of the Credit Parties, any or all
of the Collateral consisting of Investment Property, the proceeds
thereof (in cash or otherwise) and all liens, security, rights,
remedies and claims of any Loan Party with respect thereto (as used
in this Section collectively, the "PLEDGED COLLATERAL") held by
Agent hereunder, and Agent or its nominee may thereafter, after
delivery of notice to the applicable Loan Party, exercise all voting
and corporate rights at any meeting of any corporation, partnership
or other business entity issuing any of the Pledged Collateral and
any and all rights of conversion, exchange, subscription or any
other rights, privileges or options pertaining to any of the Pledged
Collateral as if it were the absolute owner thereof, including,
without limitation, the right to exchange at its discretion any and
all of the Pledged Collateral upon the merger, consolidation,
reorganization, recapitalization or other readjustment of any
corporation, partnership or other business entity issuing any of
such Pledged Collateral or upon the exercise by any such issuer or
Agent of any right, privilege or option pertaining to any of the
Pledged Collateral, and in connection therewith, to deposit and
deliver any and all of the Pledged Collateral with any committee,
depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as it may determine, all without
liability except to account for property actually received by it,
but Agent shall have no duty to exercise any of the aforesaid
rights, privileges or options, and Agent shall not be responsible
for any failure to do so or delay in so doing, (ii) after Agent's
giving of the notice specified in CLAUSE (i) of this SECTION
10.16(b), all rights of Borrower to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to SECTION 10.16(a)(i) and to receive the dividends,
interest and other distributions which it would otherwise be
authorized to receive and retain thereunder shall be suspended until
such Event of Default shall no longer exist, and all such rights
shall, until such Event of Default shall no longer exist, thereupon
become vested in Agent which shall thereupon have the sole right to
exercise such voting and other consensual rights and to receive and
hold as Pledged Collateral such dividends, interest and other
distributions, (iii) all dividends, interest and other distributions
which are received by any Loan Party contrary to the provisions of
this SECTION 10.16(b) shall be received in trust for the benefit of
Agent, shall be segregated from other funds of such Loan Party and
shall be forthwith paid over to Agent as Collateral in the same form
as so received (with any necessary endorsement), and (iv) each Loan
Party shall execute and deliver (or cause to be executed and
delivered) to Agent all such proxies and other instruments as Agent
may reasonably request for the purpose of enabling Agent to exercise
the voting and other rights which it is entitled to exercise
pursuant to this SECTION 10.16(b) and to receive the dividends,
interest and other distributions which it is
LOAN AND SECURITY AGREEMENT - Page 103
entitled to receive and retain pursuant to this SECTION 10.16(b).
The foregoing shall not in any way limit Agent's power and authority
granted pursuant to SECTION 10.13.
ARTICLE 11
AFFIRMATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been paid in full, unless the Required Lenders shall
otherwise consent in the manner provided for in SECTION 17.10, each Loan
Party will keep the following covenants.
Section 11.1 PRESERVATION OF EXISTENCE AND SIMILAR MATTERS. Each
Loan Party will, and will cause each of its Subsidiaries to (i) preserve and
maintain its existence, rights, franchises, licenses and privileges in the
jurisdiction of its incorporation, organization or formation (as applicable),
except as otherwise may be allowed pursuant to SECTION 13.6 and (ii) except
for instances of any noncompliance which could not reasonably be expected to
have a Materially Adverse Effect, qualify and remain qualified as a foreign
business enterprise and authorized to do business in each jurisdiction in
which the character of its properties or the nature of its business requires
such qualification or authorization.
Section 11.2 COMPLIANCE WITH APPLICABLE LAW. Each Loan Party will,
and will cause each of its Subsidiaries to, comply with all Applicable Laws
relating to it except instances of any noncompliance which could not
reasonably be expected to have a Materially Adverse Effect and with respect
to which reserves in respect of reasonably anticipated liability therefor has
been appropriately established.
Section 11.3 MAINTENANCE OF PROPERTY. In addition to, and not in
derogation of, the requirements of SECTION 10.7 and of the Security
Documents, each Loan Party will:
(a) protect and preserve all property and interests in
property material to its business and maintain in good repair,
working order and condition in all material respects, with
reasonable allowance for wear and tear, all tangible properties used
in or otherwise material to its business, and
(b) from time to time make or cause to be made all
needed and appropriate repairs, renewals, replacements and additions
to such properties necessary for the conduct of its business, so
that the business carried on in connection therewith may be properly
conducted at all times, except for instances of any noncompliance
which could not reasonably be expected to have a Materially Adverse
Effect.
LOAN AND SECURITY AGREEMENT - Page 104
Section 11.4 CONDUCT OF BUSINESS. Borrower and the other Loan
Parties will engage only the business described in SECTION 8.1(g) and any
other business which is incidental to, or results from, the conduct of any
such business.
Section 11.5 INSURANCE. Each Loan Party will maintain, in addition
to the coverage required by SECTION 10.8 and the Security Documents,
insurance with responsible insurance companies against such risks (including
without limitation, business interruption insurance) and in such amounts as
is customarily maintained by similar businesses or as may be required by
Applicable Law, and from time to time deliver to Agent upon its request a
detailed list of the insurance then in effect, stating the names of the
insurance companies, the amounts and rates of the insurance, the dates of the
expiration thereof and the properties and risks covered thereby.
Section 11.6 PAYMENT OF TAXES AND CLAIMS. Each Loan Party will, and
will cause each of its Subsidiaries to, pay or discharge when due
(a) all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or upon any
properties belonging to it, except that real property ad valorem
taxes shall be deemed to have been so paid or discharged if the same
are paid before they become delinquent, and
(b) all lawful claims of materialmen, mechanics,
carriers, warehousemen and landlords for labor, materials, supplies
and rentals and other claims which, if unpaid, might become a Lien
on any properties of any Loan Party or any Subsidiary of any Loan
Party;
EXCEPT that this SECTION 11.6 shall not require the payment or discharge of
any such tax, assessment, charge, levy or claim which is being contested in
good faith by appropriate proceedings and with respect to which no Lien or
notice of Lien has been filed which would cause an Event of Default and with
respect to which reserves in respect of the reasonably anticipated liability
therefor have been appropriately established.
Section 11.7 ACCOUNTING METHODS AND FINANCIAL RECORDS. Each Loan
Party will, and will cause each of its Subsidiaries to, maintain a system of
accounting, and keep such books, records and accounts (which shall be true
and complete), as may be required or as may be necessary to permit the
preparation of financial statements in accordance with GAAP.
Section 11.8 USE OF PROCEEDS.
(a) Borrower will use the proceeds of Loans for
general business purposes, including without limitation (i) working
capital, (ii) funding of Reimbursement Obligations, (iii)
repurchasing or redeeming the Senior Subordinated Notes, (iv)
Capital Expenditures and (v) Acquisitions, in each case subject to
the terms of this Agreement, and for no other purpose.
LOAN AND SECURITY AGREEMENT - Page 105
(b) Borrower will not use any part of such proceeds to
purchase or, to carry or reduce or retire or refinance any credit
incurred to purchase or carry, any "margin stock" (within the meaning
of Regulation U of the Board of Governors of the Federal Reserve
System) or, in any event, for any purpose which in either case would
involve a violation of such Regulation U or of Regulation T or X of
such Board of Governors, or for any purpose prohibited by law or by the
terms and conditions of this Agreement.
Section 11.9 HAZARDOUS WASTE AND SUBSTANCES; ENVIRONMENTAL
REQUIREMENTS.
(a) In addition to, and not in derogation of, the
requirements of SECTION 11.2 and of the Security Documents, each Loan
Party will, and will cause each of its Subsidiaries to, (i) comply with
all Environmental Laws and all Applicable Laws relating to occupational
health and safety (except for instances of noncompliance that would not
reasonably be expected to have a Materially Adverse Effect and that are
being contested in good faith by appropriate proceedings if reserves in
respect of reasonably anticipated liability therefor have been
appropriately established), (ii) promptly notify Agent of its receipt
of any notice of a violation of any such Environmental Laws or such
other Applicable Laws that would reasonably be expected to have a
Materially Adverse Effect and (iii) indemnify and hold each Credit
Party harmless from all loss, cost, damage, liability, claim and
expense incurred by or imposed upon any Credit Party on account of
failure to perform its obligations under this SECTION 11.9.
(b) Whenever any Loan Party or any of its Subsidiaries
gives notice to Agent pursuant to SECTION 11.9(a)(ii) with respect to
any matter that reasonably could be expected to result in liability to
any Loan Party in excess of $10,000,000 in the aggregate, such Loan
Party will, or will cause such Subsidiary to, at Agent's request and at
such Loan Party's or such Subsidiary's expense, (i) cause an
independent credentialed environmental engineer acceptable to Agent to
conduct an assessment meeting all requirements of Agent and Applicable
Law, including tests where necessary, feasible and appropriate of the
site where the noncompliance or alleged noncompliance with
Environmental Law has occurred and prepare and deliver to Agent a
report setting forth the results of such assessment, a proposed plan to
bring such Loan Party into compliance with such Environmental Law (if
such assessment indicates noncompliance) and an estimate of the costs
thereof, and (iii) provide to Agent a supplemental report of such
engineer whenever the scope of the noncompliance, or the response
thereto or the estimated costs thereof, shall materially adversely
change.
ARTICLE 12
INFORMATION
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been paid in full, unless the Required Lenders shall
otherwise consent in the manner set forth in SECTION 17.10, the Loan Parties
will provide the following information to Agent and to each Lender
LOAN AND SECURITY AGREEMENT - Page 106
at the offices then designated for such notices pursuant to SECTION 17.1 and
keep the other covenants contained in this ARTICLE 12.
Section 12.1 FINANCIAL STATEMENTS.
(a) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the
end of each Fiscal Year, a copy of (i) the consolidated balance sheets
of Parent and its Consolidated Subsidiaries, as of the end of the
current and prior Fiscal Years and (ii) the consolidated statements of
operations and consolidated statements of stockholders' equity, and
consolidated statements of changes in cash flows as of and through the
end of such Fiscal Year, all of which are prepared in accordance with
GAAP applied consistently throughout the periods reflected therein, and
certified by independent certified public accountants acceptable to
Agent and the Lenders, whose opinion shall be in scope and substance in
accordance with generally accepted auditing standards and shall be
unqualified.
(b) FISCAL QUARTER FINANCIAL STATEMENTS AND INFORMATION.
Within 45 days after the end of each Fiscal Quarter (except the last
Fiscal Quarter) of each Fiscal Year, a consolidated balance sheet of
Parent and its Consolidated Subsidiaries as at the end of such Fiscal
Period and the related consolidated statement of operations for such
Fiscal Quarter and for the elapsed portion of the year ended with the
last day of such Fiscal Quarter, and a consolidated statement of cash
flows for the elapsed portion of the year ended with the last day of
such Fiscal Quarter, all of which shall be certified by the president,
chief financial officer, senior vice president-finance, vice president-
finance or vice president-controller of Parent, to be, in his or her
opinion acting solely in his or her capacity as an officer of
Parent, complete and correct in all material respects and to present
fairly, in accordance with GAAP applied consistently throughout the
periods reflected therein, the financial position and results of
operations of Parent and its Consolidated Subsidiaries as at the end
of and for such Fiscal Quarter, and for the elapsed portion of the
year ended with the last day of such Fiscal Quarter, subject only to
normal year-end adjustments.
(c) FISCAL PERIOD FINANCIAL STATEMENTS AND INFORMATION.
Within 20 days after the end of each Fiscal Period of each Fiscal Year
(except for any Fiscal Period that is the last Fiscal Period of a
Fiscal Quarter), an internally prepared consolidated balance sheet of
Parent and its Consolidated Subsidiaries as at the end of such Fiscal
Period and the related consolidated statement of operations for such
Fiscal Period for the elapsed portion of the year ended with the last
day of such Fiscal Period, and a consolidated statement of cash flows
for the elapsed portion of the year ended with the last day of such
Fiscal Period, all of which shall be certified by the president,
chief financial officer, senior vice president-finance, vice president-
finance or vice president-controller of Parent, to be a true copy of
Parent's routine internally prepared financial statements prepared for
Parent's management in the ordinary course of business for such Fiscal
Period.
(d) CONSOLIDATING FINANCIAL STATEMENTS. Together with
each of the financial statements required to be delivered under SECTION
12.1(a), (b) and (c), the associated
LOAN AND SECURITY AGREEMENT - Page 107
consolidating financial statements for CompUSA ▇▇▇.▇▇▇, which in each
case shall be included within the respective certifications required to
be delivered under such Sections.
Section 12.2 RESERVED
Section 12.3 OFFICER'S CERTIFICATE. At the time that Parent provides
the financial statements pursuant to SECTION 12.1 for any Fiscal Period, Parent
shall also provide a Compliance Certificate which:
(a) sets forth as at the end of such Fiscal Period, (i) a
listing of Investments made pursuant to SUBPARAGRAPH (i) of the
definition of "Permitted Investments" and (ii) the calculations
required to establish compliance with the requirements of SECTIONS
13.1, 13.9 and 13.12 as at the end of each respective period,
(b) if any Loan Party has made any payment or payments of
principal of, or interest or premium on, any Subordinated Indebtedness
since the last preceding date as of which a Compliance Certificate was
required to be delivered hereunder, sets forth a statement (i)
identifying the Subordinated Indebtedness which was the subject of such
payment, (ii) specifying the amount of each such payment, and whether
such payments were in respect of principal, interest or premium and
(iii) certifying that no Default or Event of Default was in existence
as of the time of making, or after giving effect to, each such payment,
(c) states that the information on the schedules to this
Agreement is complete and accurate as of the date of such certificate
or, if such is not the case, attaches to such certificate updated
schedules, and
(d) states that, based on a reasonably diligent
examination, no Default or Event of Default has occurred or exists, or,
if such is not the case, specifies such Default or Event of Default and
its nature, when it occurred, whether it is continuing and the steps
taken or being taken by the Loan Parties with respect to such Default
or Event of Default.
Section 12.4 COPIES OF OTHER REPORTS. The Loan Parties will provide
Agent and the Lenders the following:
(a) Promptly upon receipt thereof, copies of all reports,
if any, submitted to any Loan Party or its Board of Directors by its
independent public accountants, including, without limitation, any
management report;
(b) As soon as practicable, copies of all financial
statements and reports that any Loan Party sends to its shareholders
generally and of all registration statements and all regular or
periodic reports which any Loan Party files with the Securities and
Exchange Commission or any successor commission;
LOAN AND SECURITY AGREEMENT - Page 108
(c) From time to time and as soon as reasonably
practicable following each request, such forecasts, data, certificates,
reports, statements, opinions of counsel, documents or further
information regarding the business, assets, liabilities, financial
condition or results of operations of any Loan Party or any of its
Subsidiaries as Agent or any Lender may reasonably request and that any
such Loan Party has or (except in the case of legal opinions relating
to the perfection or priority of the Security Interest) without
unreasonable expense can obtain; PROVIDED, HOWEVER, that the Lenders
shall, to the extent reasonably practicable, coordinate examinations of
the Loan Parties' records by their respective internal auditors; and
PROVIDED FURTHER, that no such opinion of counsel shall be required to
be so provided to the extent such counsel has determined (and has so
advised Agent in writing) that matters that would be required to be
disclosed in any such opinion would waive an attorney-client privilege
or attorney work product privilege of a Loan Party as to significant
privileged information of such Loan Party.
(d) If requested by Agent or any Lender, Borrower will
provide to Agent and the Lenders statements in conformity with the
requirements of Federal Reserve Form U-1 referred to in Regulation U of
the Board of Governors of the Federal Reserve System.
The rights of Agent and the Lenders under this SECTION 12.4 are in addition to
and not in derogation of their rights under any other provision of this
Agreement or of any other Loan Document.
Section 12.5 NOTICE OF LITIGATION AND OTHER MATTERS. Each Loan Party
will provide Agent and the Lenders prompt notice of each of the following:
(a) promptly upon receipt thereof, (i) notices (and
information with respect thereto and copies thereof) any received from
any Governmental Authority that relates to a breach of or noncompliance
with any Applicable Law, or might result in the liability or obligation
of any Loan Party or any of its Subsidiaries in an amount of
$10,000,000 or more in the aggregate, or otherwise have a Materially
Adverse Effect, or result in the loss or suspension of any Governmental
Approval which is necessary for operation of a significant portion of
its business and (ii) promptly becoming aware thereof, the commencement
of any proceeding or investigation by or before any Governmental
Authority or any action or proceeding before any Governmental Authority
against or in any other way relating to or affecting any Loan Party or
any of its Subsidiaries or any of such Loan Party's or Subsidiary's
properties, assets or businesses, which might, singly or in the
aggregate, result in the occurrence of a Default or an Event of
Default, or have a Materially Adverse Effect;
(b) any amendment of the articles of incorporation or
bylaws of any Loan Party or any of its Subsidiaries;
(c) any change (i) in the business, assets, liabilities,
financial condition or results of operations of any Loan Party or any
of its Subsidiaries which has had or may have, singly or in the
aggregate, a Materially Adverse Effect; and
LOAN AND SECURITY AGREEMENT - Page 109
(d) promptly upon becoming aware thereof, that (i) the
holder(s) of any note(s) or other evidence of Indebtedness or other
security of any Loan Party in excess of $10,000,000 in the aggregate
has given notice or taken any action with respect to a breach, failure
to perform, claimed default or event of default thereunder, (ii) any
party to any Capitalized Lease Obligation in excess of $10,000,000 or
any party to any obligations in respect of any Operating Lease, the
termination or default with respect to which could reasonably be
expected to have a Materially Adverse Effect, has given notice or taken
any action with respect to a breach, failure to perform, claimed
default or event of default thereunder, (iii) any occurrence or
non-occurrence of any event which constitutes or which with the passage
of time or giving of notice or both could constitute a breach by any
Loan Party under any agreement or instrument other than this Agreement
to which such Loan Party is a party or by which any of its properties
may be bound, if any such event could reasonably be expected to have a
Materially Adverse Effect, or (iv) any event, circumstance or condition
which could reasonably be expected to cause a Material Adverse Effect
with respect to any Loan Party, such notice to specify the details
thereof (or the nature of any claimed default or event of default) and
what action is being taken or is proposed to be taken with respect
thereto.
Section 12.6 ERISA. As soon as possible and in any event within thirty
(30) days after any Loan Party knows, or has reason to know, that
(a) any Termination Event with respect to a Plan listed
in SCHEDULE 8.1(q) has occurred or will occur, or
(b) the aggregate present value of the Unfunded Vested
Accrued Benefits under all Plans listed in SCHEDULE 8.1(q) subject to
either Title IV of ERISA or the provisions of Section 302 of ERISA or
Section 412 of the Internal Revenue Code is equal to an amount in
excess of $0, or
(c) Any Loan Party or any of its Subsidiaries is in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to
payments to a Multiemployer Plan required by reason of such Loan
Party's or Subsidiary's complete or partial withdrawal (as described in
Section 4203 or 4205 of ERISA) from such Multiemployer Plan,
such Loan Party will provide Agent and the Lenders a certificate of its
Authorized Signatory setting forth the details of such event and the action
which is proposed to be taken with respect thereto, together with any notice or
filing which may be required by the PBGC or other Governmental Authority with
respect to such event.
Section 12.7 ACCURACY OF INFORMATION. All written information, reports,
statements and other papers and data provided to Agent or any Lender, whether
pursuant to this ARTICLE 12 or any other provision of this Agreement or of any
other Loan Document, shall be, at the time the same is so provided, complete and
correct in all material respects to the extent necessary to give Agent and the
Lenders true and accurate knowledge of the subject matter.
LOAN AND SECURITY AGREEMENT - Page 110
Section 12.8 REVISIONS OR UPDATES TO SCHEDULES. Should any of the
information or disclosures provided on any of the Schedules originally attached
hereto become outdated or incorrect in any material respect, the Loan Parties
shall deliver to Agent and the Lenders as part of the officer's certificate
required pursuant to SECTION 12.3(b) such revisions or updates to such
Schedule(s) as may be necessary or appropriate to update or correct such
Schedule(s), PROVIDED that no such revisions or updates to SCHEDULES 1.1B, 1.1C,
8.1(f), 8.1(h), 8.1(i), 8.1(l), 8.1(m), 8.1(o), 8.1(y), 8.1(bb), 8.1(gg) or 9.2
shall be deemed to have amended, modified or superseded any such Schedules as
originally attached hereto, or to have cured any breach of warranty or
representation resulting from the inaccuracy or incompleteness of any such
Schedules, unless and until the Required Lenders shall have accepted in writing
such revisions or updates to any such Schedules.
Section 12.9 YEAR 2000 COMPLIANCE. The Loan Parties will promptly
notify the Agent in the event Borrower discovers or determines that any computer
application (including those of its suppliers and vendors) that is material to
its or any of its Subsidiaries' business and operations will not be Year 2000
Compliant on a timely basis, except to the extent that such failure could not
reasonably be expected to have a Material Adverse Effect on Borrower or the Loan
Parties.
Section 12.10 ANNUAL PROJECTIONS. As soon as available, but in any
event within 90 days following the end of each Fiscal Year, Parent shall deliver
to Agent and the Lenders a copy of the annual consolidated operating budget of
Parent and its Subsidiaries for the succeeding Fiscal Year.
ARTICLE 13
NEGATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been paid in full, unless the Required Lenders shall
otherwise consent in the manner set forth in SECTION 17.11:
Section 13.1 FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage
Ratio calculated as of any Fixed Charge Coverage Ratio Test Date shall not be
less than 1.0 to 1.0.
Section 13.2 INDEBTEDNESS. No Loan Party will, nor will it permit any
Restricted Subsidiary to, directly or indirectly, create, assume or otherwise
become or remain obligated in respect of, or permit or suffer to exist or to be
created, assumed or incurred or to be outstanding any Indebtedness, except that
this SECTION 13.2 shall not apply to:
(a) Indebtedness under the Loan Documents;
(b) Purchase Money Indebtedness incurred for the purchase
of Inventory in the ordinary course of business, and accounts payable
and accrued liabilities incurred in the ordinary course of business and
not otherwise expressly prohibited by this Agreement;
LOAN AND SECURITY AGREEMENT - Page 111
(c) Guaranties to the extent permitted under SECTION
13.3;
(d) (i) Indebtedness for the purpose of acquiring and/or
constructing new store locations, PROVIDED that no Default or Event of
Default shall be in existence and Availability shall exceed the Minimum
Availability Requirement, in each case at the time of incurring and
after giving effect to such Indebtedness, (ii) Indebtedness secured by
Existing Store Locations and which does not exceed the original cost of
acquiring and/or constructing such Existing Store Locations and (iii)
refinancings (but not increases) of Indebtedness described in CLAUSES
(i) and (ii) of this SECTION 13.2(d) on terms not materially different
than those existing on the date such Indebtedness was incurred in the
case of CLAUSE (i) or on the Agreement Date in the case of Indebtedness
described in CLAUSE (ii);
(e) Indebtedness of a Loan Party or a Restricted
Subsidiary to a Loan Party;
(f) Indebtedness which is described on SCHEDULE 8.1(k) on
the Agreement Date, including renewals and refinancings (but no
increases) thereof on terms not materially different than those
existing on the Agreement Date;
(g) Subordinated Indebtedness, including renewals and
refinancings thereof which constitute Subordinated Indebtedness, not
exceeding $250,000,000 in the aggregate at any time outstanding;
(h) Indebtedness in respect of deferred income taxes,
deferred revenues, commitments, contingencies and reserves, in each
case to the extent set forth on the balance sheet of Parent and its
Subsidiaries in accordance with GAAP; and
(i) Indebtedness not otherwise permitted pursuant to
CLAUSES (a) through (h) above, not to exceed $150,000,000 in the
aggregate, PROVIDED that no Default or Event of Default shall be in
existence at the time of incurring and after giving effect to such
Indebtedness; and
Section 13.3 GUARANTIES. The Loan Parties shall not, and shall not
permit any Restricted Subsidiary to, at any time make or issue any Guaranty, or
assume, be obligated with respect to, or permit to be outstanding any Guaranty
of any obligation of any other Person except (a) under a Guaranty Agreement
pursuant to the Loan Documents, (b) a Guaranty of obligations of a Loan Party
that are not prohibited by this Agreement, (c) endorsement in the ordinary
course of business of negotiable instruments for deposit or collection, (d)
Guaranty of any Indebtedness permitted by SECTION 13.2, (e) a Guaranty that is a
Permitted Investment under CLAUSE (i) of the definition of Permitted Investments
in SECTION 1.1 and (f) the Guaranty of Indebtedness of directors, officers and
employees of a Loan Party or a Subsidiary of a Loan Party during any Fiscal Year
not to exceed, together with the loans to officers and employees permitted
pursuant to SECTION 13.4 (calculated net of loan repayments) for such Fiscal
Year, $1,000,000 in aggregate amount, PROVIDED that no Default or Event of
Default shall be in existence at the time of incurring and after giving effect
to such Guaranty under this CLAUSE (f).
LOAN AND SECURITY AGREEMENT - Page 112
Section 13.4 INVESTMENTS. No Loan Party will, nor will it permit any of
its Restricted Subsidiaries to, directly or indirectly, acquire or maintain any
Investment other than Permitted Investments and Guaranties permitted by SECTION
13.3.
Section 13.5 RESTRICTED DIVIDEND PAYMENTS, RESTRICTED PAYMENTS AND
RESTRICTED PURCHASES. No Loan Party will, nor will it permit any Restricted
Subsidiary to, directly or indirectly, declare or make any Restricted Dividend
Payment, Restricted Payment or Restricted Purchase, PROVIDED, that for so long
as no Default or Event of Default has occurred and is continuing or would exist
after giving effect thereto, (i) a Loan Party or a Restricted Subsidiary may
declare and pay Dividends to a Loan Party, (ii) Parent may defease, redeem,
repurchase or repay the Senior Subordinated Notes in part or in full, (iii)
Parent may prepay the certain subordinated promissory note dated August 31, 1998
executed by Parent payable to Tandy Corporation, PROVIDED that such prepayment
is made with proceeds of Subordinated Indebtedness or of newly issued Capital
Stock, or of the sale of treasury Capital Stock, of Parent, (iv) Parent may make
Treasury Stock Purchases if Availability both at the time of any such Treasury
Stock Purchase and after giving effect thereto equals or exceeds an amount equal
to the sum of the Minimum Availability Requirement at such time, PROVIDED that
such Treasury Stock Purchases shall not exceed $100,000,000 (net of cash
proceeds received by Parent upon any resales thereof) in the aggregate during
any Fiscal Year of Parent and (v) Restricted Payments on Indebtedness, excluding
Subordinated Indebtedness, allowed under SECTION 13.2.
Section 13.6 LIQUIDATION, DISPOSITION OR ACQUISITION OF ASSETS, MERGER,
NEW SUBSIDIARIES. The Loan Parties shall not, and shall not permit any
Restricted Subsidiary to, at any time:
(a) liquidate or dissolve itself (or suffer any
liquidation or dissolution) or otherwise wind up; or sell, lease,
abandon, transfer or otherwise dispose of all or any part of its
assets, properties or business other than (i) inventory and other
assets sold in the ordinary course of business (ii) sales or closures
of stores or distribution centers in the normal course of business, and
disposition of Inventory located at such locations on reasonable terms
consistent with such Loan Party's usual practice in connection with
such sales or closures (PROVIDED that disposition of other Collateral
at any such store or distribution center shall otherwise be subject to
this SECTION 13.6), (iii) transfers of assets from a Loan Party to a
Loan Party or from a Subsidiary to a Loan Party (PROVIDED, that a
Borrowing Base Party may not transfer Inventory to a Loan Party that is
not a Borrowing Base party without the prior consent of Agent, unless a
Financing Statement reflecting the transferee Loan Party as debtor and
Agent as secured party has been signed by the transferee Loan Party and
has been filed with the appropriate Governmental Authority in each
jurisdiction in which such Inventory is located and Agent shall have
received acknowledgment of such filing from such Governmental
Authority), (iv) liquidation, sale or other disposition of Permitted
Investments described in CLAUSE (a) and (b) of the definition of
Permitted Investments in SECTION 1.1, (v) any transaction permitted by
SECTION 13.11, (vi) sales of Capital Stock in CompUSA ▇▇▇.▇▇▇, (vii)
transfer of assets to CompUSA ▇▇▇.▇▇▇ to the extent not prohibited by
SECTION 13.12, (viii) liquidation or dissolution of a Loan Party into
another Loan Party, (ix) any sale, lease, abandonment, transfer or
disposition of assets not otherwise allowed by
LOAN AND SECURITY AGREEMENT - Page 113
CLAUSES (i) through (viii) hereof, in any Fiscal Year (other than
Receivables, Inventory or Proprietary Rights listed in a Schedule to a
Trademark Security Agreement, Copyright Security Agreement or Patent
Security Agreement, or Capital Stock of a Loan Party whose Receivables
or Inventory are included in the most recent Borrowing Base Certificate
delivered to Agent) 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 (in the case of Capital Stock of a
Restricted Subsidiary, measured by the net worth (determined according
to GAAP) thereof, and in the case of any other assets, measured by the
fair value thereof net of any associated liabilities assumed by the
purchaser thereof), in each of the foregoing cases subject to SECTION
5.11(a) to the extent applicable;
(b) enter into any merger or consolidation (i) unless
with respect to a merger or consolidation, Parent or Borrower shall be
the surviving corporation, unless the merger or consolidation involves
a Loan Party or Restricted Subsidiary and neither Parent nor Borrower
is merging or consolidating with another Person, and either (A) such
Restricted Subsidiary shall be the surviving corporation and is or
becomes a Loan Party, (B) the survivor of the merger becomes a Loan
Party or (C) the entity formed in the consolidation becomes a Loan
Party, (ii) if such transaction is being utilized to circumvent
compliance with any term or provision herein, (iii) unless no Default
or Event of Default shall be then in existence or shall occur as a
result of such transaction, (iv) unless Availability shall be equal or
greater than the Minimum Availability Requirement at the time of such
transaction and after giving effect thereto, except in the case of a
merger or consolidation of a Loan Party or a Subsidiary of a Loan Party
with and into a Loan Party, and (v) unless Agent shall have received a
certificate signed by an Authorized Signatory of Borrower certifying
that no Default or Event of Default is in existence or would result
from such merger or consolidation, together with confirmation of
Availability referenced in CLAUSE (iv) preceding in form and substance
satisfactory to Agent; or
(c) create or acquire any Subsidiary except as permitted
by SECTION 13.14.
Section 13.7 TRANSACTIONS WITH AFFILIATES. Except for this Agreement or
a Guaranty Agreement a Loan Party shall not, and shall not permit any Restricted
Subsidiary to, at any time engage in any transaction with an Affiliate (other
than a Loan Party), nor make an assignment or other transfer of any of its
assets or properties to any Affiliate (other than a Loan Party) other than
Investments permitted to be made pursuant to SECTION 13.4, on terms materially
less advantageous to such Loan Party than would be the case if such transaction
had been effected with a non-Affiliate (other than advances to employees in the
ordinary course of business). Notwithstanding the foregoing, Borrower may loan
the proceeds of a Loan to another Loan Party or Subsidiary of a Loan Party so
long as (a) such proposed loan, or the transfer to such Loan Party of the
proceeds of such Loan, is not otherwise prohibited by this Agreement and there
shall exist no Default or Event of Default prior to or after giving effect to
any such proposed loan and (b) such loan is a bona fide loan evidenced by
appropriate documentation and entries in the financial records of Borrower and
such borrowing Loan Party or Subsidiary are made to accurately reflect such
loans and repayments thereof.
LOAN AND SECURITY AGREEMENT - Page 114
Section 13.8 LIENS. No Loan Party will, nor will it permit any of its
Restricted Subsidiaries to, create, assume or permit or suffer to exist or to be
created or assumed any Lien on any of its assets or property, other than in
favor of Agent, for the benefit of the Credit Parties, or Permitted Liens. No
Loan Party or Restricted Subsidiary will enter into or become subject to any
Negative Pledge (other than as described in the proviso following the definition
of Collateral in SECTION 1.1).
Section 13.9 CAPITAL EXPENDITURES. The Loan Parties will not, and will
not permit any Restricted Subsidiary to, directly or indirectly, make or incur
any Capital Expenditures in the aggregate (for all Loan Parties and any such
Restricted Subsidiary) in excess of the amount set forth below for the Fiscal
Year of Parent set forth opposite such amount:
Fiscal Years Amount
------------ ------
2000 $175,000,000
2001 $125,000,000
2002 $150,000,000
PROVIDED, that to the extent Capital Expenditures paid during any Fiscal Year
are less than the amount allowed for such Fiscal Year as provided above, then an
amount equal to the difference between the amount so allowed and the actual
amount so paid may be carried forward and added to the amount allowed for the
next succeeding Fiscal Year as provided above, PROVIDED FURTHER that (i) no such
amount may be carried forward beyond such next succeeding Fiscal Year and (ii)
Capital Expenditures paid during such next succeeding Fiscal Year shall be
deemed to apply first in reduction of amounts allowed for such Fiscal Year and
then against amounts so carried forwarded from such previous Fiscal Year.
Section 13.10 PLANS. No Loan Party will, nor will it permit any of its
Subsidiaries to, (i) permit any condition to exist in connection with any Plan
listed in SCHEDULE 8.1(q) which might constitute grounds for the PBGC to
institute proceedings to have such Plan terminated or for the PBGC to have a
trustee appointed to administer such Plan, or (ii) permit to exist any other
condition, event or transaction with respect to any Plan listed in SCHEDULE
8.1(q) which could result in the incurrence by any Loan Party or any of its
Subsidiaries of either (A) any material liability which is not satisfied in full
or which remains outstanding after the date payment for such liability is due
and owing or (B) any other material fine or penalty.
Section 13.11 SALES AND LEASEBACKS. If a Default or Event of Default
shall occur and be continuing, a Loan Party shall not, and shall not permit any
Restricted Subsidiary to, enter into any arrangement whereby it sells or
transfers any of its assets, and thereafter rents or leases such assets.
LOAN AND SECURITY AGREEMENT - Page 115
Section 13.12 CONTRIBUTED ASSETS AND CONTRIBUTED INDEBTEDNESS. The sum
of Contributed Assets and Contributed Indebtedness shall not at any time exceed
the aggregate amount of $60,000,000.
Section 13.13 AMENDMENT AND MODIFICATION OF SUBORDINATED DEBT
DOCUMENTS. Parent shall not, and shall not permit any other Loan Party or any
Restricted Subsidiary to, directly or indirectly, amend, modify, supplement,
waive compliance with, or assent to noncompliance with, any term, provision or
condition of any of the documents governing or evidencing any Subordinated Debt
which (i) the Required Lenders deem material (including, without limitation,
provisions relating to events of default, acceleration rights, interest rates,
maturity date, redemption price, subordination, payment dates, guaranties,
collateral, covenants and the definitions with respect thereto (including,
without limitation, the definition of "Change of Control")) or (ii) places any
further restrictions on any Loan Party or Restricted Subsidiary or increases the
obligations of a Loan Party or any Restricted Subsidiary thereunder or confers
on the holders thereof any additional rights.
Section 13.14 ACQUISITIONS. A Loan Party shall not, and shall not
permit any Restricted Subsidiary to, make any Acquisition; PROVIDED, HOWEVER, if
immediately prior to and after giving effect to the proposed Acquisition there
shall not exist a Default or Event of Default, a Loan Party may make
Acquisitions so long as (i) such Acquisition shall not be opposed by the board
of the directors of the Person being acquired, (ii) the Non-Stock Acquisition
Consideration for such Acquisition does not exceed $150,000,000, (iii) the
assets, property or business acquired shall be within the description contained
in SECTION 8.1(g), (iv) if the Acquisition results in a new Restricted
Subsidiary, (A) at the time of such Acquisition such Subsidiary shall become a
Loan Party and a Guarantor by executing and delivering a Joinder Agreement
pursuant to SECTION 9.3 and (B) the Agent receives within five (5) calendar days
after the consummation of such Acquisition such board resolutions, officer's
certificates and opinions of counsel as Agent shall reasonably request in
connection with such Acquisition, (v) Availability shall equal or exceed the
Minimum Availability Requirement at the time of such Acquisition and after
giving effect thereto and (vi) Agent shall have received a certificate signed by
an Authorized Signatory of Borrower certifying that no Default or Event of
Default is in existence or would result from such Acquisition, together with
confirmation of Availability referenced in CLAUSE (v) preceding in form and
substance satisfactory to Agent.
ARTICLE 14
DEFAULT
Section 14.1 EVENTS OF DEFAULT. Each of the following shall constitute
an Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority or nongovernmental body:
(a) DEFAULT IN PAYMENT. Borrower shall default in any
payment of principal of or interest on any Loan or any Note when and as
due (whether at maturity, by reason of acceleration or otherwise).
LOAN AND SECURITY AGREEMENT - Page 116
(b) OTHER PAYMENT DEFAULT. Borrower or any other Loan
Party shall default in the payment, as and when due, of principal of or
interest on, any other Secured Obligation, and such default shall
continue for a period of ten (10) days after written notice thereof has
been given to Borrower or such Loan Party by Agent.
(c) MISREPRESENTATION. Any representation or warranty
made or deemed to be made by any Loan Party under this Agreement or any
other Loan Document, or any amendment hereto or thereto, shall at any
time prove to have been incorrect or misleading in any material respect
when made.
(d) DEFAULT IN PERFORMANCE. Any Loan Party shall default
in the performance or observance of any term, covenant, condition or
agreement to be performed by it, contained in
(i) ARTICLES 9, 10, 12 or 13, or SECTION 11.1
(insofar as it requires the preservation of the corporate
existence of the Loan Parties), or SECTION 11.8, and Agent
shall have delivered to Borrower written notice of such
default, PROVIDED, that with respect to any such default under
SECTIONS 10.14, or 12.5(b), thirty (30) days shall have
expired since the date of occurrence thereof, or
(ii) this Agreement or any other Loan Document
(other than as specifically provided for otherwise in this
SECTION 14.1) and such default shall continue for a period of
thirty (30) days after written notice thereof has been given
to Borrower by Agent.
(e) INDEBTEDNESS CROSS-DEFAULT.
(i) Any Loan Party shall fail to pay when due
and payable the principal of or interest on any Indebtedness
for Money Borrowed (other than the Loans) in an amount in
excess of $10,000,000, PROVIDED that failure to make a payment
of the principal of or interest on Subordinated Indebtedness
solely on account of the operation of the subordination
provisions thereof shall not be an Event of Default, or
(ii) the maturity of any such Indebtedness shall
have (A) been accelerated in accordance with the provisions of
any indenture, contract or instrument providing for the
creation of or concerning such Indebtedness, or (B) been
required to be prepaid prior to the stated maturity thereof,
or
(iii) any event shall have occurred and be
continuing which would permit any holder or holders of such
Indebtedness, any trustee or agent acting on behalf of such
holder or holders or any other Person so to accelerate such
maturity, and the
LOAN AND SECURITY AGREEMENT - Page 117
Loan Parties shall have failed to cure such default prior to
the expiration of any applicable cure or grace period.
(f) OTHER CROSS-DEFAULTS. Any Loan Party or any of its
Restricted Subsidiaries shall default in the payment when due, or in
the performance or observance, of any obligation or condition of any
agreement, contract or lease (other than this Agreement, the Security
Documents or any such agreement, contract or lease relating to
Indebtedness for Money Borrowed) (and the Loan Parties shall have
failed to cure such default prior to the expiration of any applicable
cure period) if the existence of any such defaults, singly or in the
aggregate would, during any period of twelve (12) months, result in
losses which would exceed an amount equal to 15% of Net Worth
(excluding, for these purposes, CompUSA ▇▇▇.▇▇▇) as reflected on the
most recent financial statements delivered under SECTION 12.1.
(g) VOLUNTARY BANKRUPTCY PROCEEDING. Any Loan Party or
any of its Restricted Subsidiaries shall
(i) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect),
(ii) file a petition seeking to take advantage of
any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition for
adjustment of debts,
(iii) consent to or fail to contest in a timely
and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws,
(iv) apply for or consent to, or fail to contest
in a timely and appropriate manner, the appointment of, or the
taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of a substantial part of its property,
domestic or foreign,
(v) admit in writing its inability to pay its
debts as they become due,
(vi) make a general assignment for the benefit of
creditors, or
(vii) take any corporate action for the purpose of
authorizing any of the foregoing.
(h) INVOLUNTARY BANKRUPTCY PROCEEDING. A case or other
proceeding shall be commenced against any Loan Party or any of its
Restricted Subsidiaries in any court of competent jurisdiction seeking
LOAN AND SECURITY AGREEMENT - Page 118
(i) relief under the federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic
or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of debts,
(ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of any Loan Party or any of
its Subsidiaries or of all or any substantial part of the
assets, domestic or foreign, of any Loan Party or any of its
Subsidiaries,
and such case or proceeding shall continue undismissed or unstayed for
a period of sixty (60) consecutive calendar days, or an order granting
the relief requested in such case or proceeding (including, but not
limited to, an order for relief under such federal bankruptcy laws)
shall be entered.
(i) FAILURE OF AGREEMENTS. Any Loan Party shall challenge
the validity and binding effect of any provision of any Loan Document
after delivery thereof hereunder or shall state in writing its
intention to make such a challenge, or any Security Document, after
delivery thereof hereunder, shall for any reason (except to the extent
permitted by the terms thereof) cease to create a valid, exclusive
(except for Permitted Liens) and perfected first priority (except as
otherwise allowed under SECTION 9.2(a)(i)) Lien on, or security
interest in, the Collateral.
(j) JUDGMENT. A final, unappealable judgment or order for
the payment of Money in an amount that exceeds the uncontested
insurance available therefor by an amount equal to or exceeding 15% of
Net Worth (excluding, for these purposes, CompUSA ▇▇▇.▇▇▇) as reflected
on the most recent financial statements delivered under SECTION 12.1
shall be entered against any Loan Party by any court or other
Governmental Authority and such judgment or order shall continue
undischarged or unstayed for thirty (30) days.
(k) ATTACHMENT. A warrant or writ of attachment or
execution or similar process which equals or exceeds an amount equal to
15% of Net Worth (excluding, for these purposes, CompUSA ▇▇▇.▇▇▇) as
reflected on the most recent financial statements delivered under
SECTION 12.1 shall be issued against any property of any Loan Party or
any of its Subsidiaries and such warrant or process shall continue
undischarged or unstayed for thirty (30) days.
(l) ERISA.
(i) Any Termination Event with respect to a Plan
listed in Schedule 8.1(q) shall occur that, after taking into
account the excess, if any, of (A) the fair market value of
the assets of any other Plan with respect to which a
Termination Event occurs on the same day (but only to the
extent that such excess is the property of Borrower) over (B)
the present value on such day of all vested nonforfeitable
benefits under such other Plan listed in Schedule 8.1(q),
results in an Unfunded Vested Accrued Benefit in excess of $0,
or
LOAN AND SECURITY AGREEMENT - Page 119
(ii) any Plan listed in Schedule 8.1(q) subject
to the provisions of Section 302 of ERISA or Section 412 of
the Internal Revenue Code shall incur an "accumulated funding
deficiency" (as defined in Section 412 of the Internal Revenue
Code or Section 302 of ERISA) for which a waiver has not been
obtained in accordance with the applicable provisions of the
Internal Revenue Code and ERISA, or
(iii) any Loan Party is in "default" (as defined
in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from such Loan Party's complete
or partial withdrawal (as described in Section 4203 or 4205 of
ERISA) from such Multiemployer Plan.
(m) CHANGE IN CONTROL. The occurrence of a Change of
Control.
(n) INDENTURE. An event of default (as defined in the
Indenture) shall occur under the Indenture prior to the discharge
thereof.
Section 14.2 REMEDIES.
(a) AUTOMATIC ACCELERATION AND TERMINATION OF
COMMITMENTS. Upon the occurrence of an Event of Default specified in
SECTION 14.1(g) or (h), (i) the principal of and the interest on the
Loans and any Note at the time outstanding, and all other amounts owed
to Agent or the Lenders under this Agreement or any of the other Loan
Documents and all other Secured Obligations, shall thereupon become due
and payable without presentment, demand, protest or other notice of any
kind, all of which are expressly waived, anything in this Agreement or
any of the other Loan Documents to the contrary notwithstanding, and
(ii) the Commitments, and the Revolving Credit Facility and the right
of Borrower to request borrowings and Letters of Credit under this
Agreement, shall immediately terminate.
(b) OTHER REMEDIES. If any Event of Default shall have
occurred, and during the continuance of any such Event of Default,
Agent may, and at the direction of the Required Lenders in their sole
and absolute discretion shall, do any of the following:
(i) declare the principal of and interest on the
Loans and any Note at the time outstanding, and all other
amounts owed to Agent or the Lenders under this Agreement or
any of the other Loan Documents and all other Secured
Obligations, to be forthwith due and payable, whereupon the
same shall immediately become due and payable without
presentment, demand, protest or other notice of any kind, all
of which are expressly waived, anything in this Agreement or
the other Loan Documents to the contrary notwithstanding;
(ii) terminate the Revolving Credit Facility and
any other right of Borrower to request borrowings thereunder;
LOAN AND SECURITY AGREEMENT - Page 120
(iii) notify, or request any Loan Party to notify,
in writing or otherwise, any Account Debtor or obligor with
respect to any one or more of the Receivables to make payment
to Agent, for the benefit of the Lenders, or any agent or
designee of Agent, at such address as may be specified by
Agent and if, notwithstanding the giving of any notice, any
Account Debtor or other such obligor shall make payments to
any Loan Party, such Loan Party shall hold all such payments
it receives in trust for Agent, for the account of the
Lenders, without commingling the same with other funds or
property of, or held by, such Loan Party and shall deliver the
same to Agent or any such agent or designee of Agent
immediately upon receipt by such Loan Party in the identical
form received, together with any necessary endorsements;
(iv) settle or adjust disputes and claims
directly with Account Debtors and other obligors on
Receivables for amounts and on terms which Agent considers
advisable and in all such cases only the net amounts received
by Agent, for the account of the Lenders, in payment of such
amounts, after deductions of costs and attorneys' fees, shall
constitute Collateral and the Loan Parties shall have no
further right to make any such settlements or adjustments or
to accept any returns of merchandise;
(v) enter upon any premises in which any
Collateral may be located and, without resistance or
interference by Borrower, take physical possession of any or
all thereof and maintain such possession on such premises or
move the same or any part thereof to such other place or
places as Agent shall choose, without being liable to any Loan
Party on account of any loss, damage or depreciation that may
occur as a result thereof, so long as Agent shall act
reasonably and in good faith;
(vi) require the Loan Parties to and the Loan
Parties shall, without charge to Agent or any Lender, assemble
the tangible Collateral and maintain or deliver it into the
possession of Agent or any agent or representative of Agent at
such place or places as Agent may designate and as are
reasonably convenient to both Agent and the Loan Parties;
(vii) without notice, demand or other process, and
without payment of any rent or any other charge, enter any of
Loan Party's premises and, without breach of the peace, until
Agent, on behalf of the Lenders, completes the enforcement of
its rights in the Collateral, take possession of such premises
or place custodians in exclusive control thereof, remain on
such premises and use the same and any of Loan Party's
equipment, for the purpose of (A) completing any work in
process, preparing any Inventory for disposition and disposing
thereof, and (B) collecting any Receivable, and Agent, for the
benefit of the Lenders, is hereby granted a license or
sublicense and all other rights as may be necessary,
appropriate or desirable to use the Proprietary Rights in
connection with the foregoing, and the rights of the Loan
Parties under all licenses, sublicenses and franchise
agreements shall inure to Agent,
LOAN AND SECURITY AGREEMENT - Page 121
for the benefit of the Lenders (PROVIDED, HOWEVER, that any
use of any federally registered trademarks as to any goods
shall be subject to the control as to the quality of such
goods of the owner of such trademarks and the goodwill of the
business symbolized thereby);
(viii) exercise any and all of its rights under any
and all of the Security Documents;
(ix) apply any Collateral consisting of cash to
the payment of the Secured Obligations in any order in which
Agent, on behalf of the Lenders, may elect or use such cash in
connection with the exercise of any of its other rights
hereunder or under any of the Security Documents;
(x) establish or cause to be established one or
more Lockboxes or other arrangement for the deposit of
proceeds of Receivables, and, in such case, each Loan Party
shall cause to be forwarded to Agent at its Principal Office,
on a daily basis, copies of all checks and other items of
payment and deposit slips related thereto deposited in such
Lockboxes, together with collection reports in form and
substance satisfactory to Agent; and
(xi) exercise all of the rights and remedies of a
secured party under the UCC and under any other Applicable
Law, including, without limitation, the right, without notice
except as specified below and with or without taking the
possession thereof, to sell the Collateral or any part thereof
in one or more parcels at public or private sale, at any
location chosen by Agent, for cash, on credit or for future
delivery, and at such price or prices and upon such other
terms as Agent may deem commercially reasonable. Each Loan
Party agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days' notice 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, but notice given in any other reasonable manner
or at any other reasonable time shall constitute reasonable
notification. Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given.
Agent 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.
(c) L/C CASH COLLATERAL ACCOUNT. Without limitation of,
and in addition to, any of the foregoing remedies, if any Letter of
Credit shall be then outstanding, Agent may make demand upon Borrower
to, and forthwith upon such demand (but in the case of an Event of
Default specified in SECTION 14.1(g) or (h) hereof, without any demand
or taking of any other action by Agent or any Lender), Borrower shall,
pay to Agent in same day funds at the office of Agent for deposit in an
L/C Cash Collateral Account, an amount equal to the maximum amount
available to be drawn under the Letters of Credit then outstanding.
LOAN AND SECURITY AGREEMENT - Page 122
Section 14.3 APPLICATION OF PROCEEDS. All proceeds from each sale of,
or other realization upon, all or any part of the Collateral following an Event
of Default shall be applied or paid over as follows:
(a) FIRST: to the payment of all costs and expenses incurred
in connection with such sale or other realization, including reasonable
attorneys' fees;
(b) SECOND: to the payment of the Secured Obligations
(with Borrower remaining liable for any deficiency) as Agent may elect;
and
(c) THIRD: the balance (if any) of such proceeds shall be
paid to Borrower, subject to any duty imposed by law, or otherwise to
whomsoever shall be entitled thereto.
BORROWER SHALL REMAIN LIABLE AND WILL PAY, ON DEMAND, ANY DEFICIENCY REMAINING
IN RESPECT OF THE SECURED OBLIGATIONS, TOGETHER WITH INTEREST THEREON AT A RATE
PER ANNUM EQUAL TO THE HIGHEST RATE THEN PAYABLE HEREUNDER ON SUCH SECURED
OBLIGATIONS, WHICH INTEREST SHALL CONSTITUTE PART OF THE SECURED OBLIGATIONS.
Section 14.4 POWER OF ATTORNEY. In addition to the authorizations
granted to Agent under SECTION 10.13, SECTION 10.16 or under any other provision
of this Agreement or of any other Loan Document, during the continuance of an
Event of Default, each Loan Party hereby irrevocably designates, makes,
constitutes and appoints Agent (and all Persons designated by Agent from time to
time) as such Loan Party's true and lawful attorney, and agent in fact, and
Agent, or any such Person, may, without notice to any Loan Party, and at such
time or times as Agent, or any such Person in its sole discretion may determine,
in the name of such Loan Party, Agent or the Lenders,
(i) demand payment of the Loan Parties'
Receivables,
(ii) enforce payment of the Loan Parties'
Receivables by legal proceedings or otherwise,
(iii) exercise all of the Loan Parties' rights and
remedies with respect to the collection of Receivables,
(iv) settle, adjust, compromise, extend or renew
any or all of the Loan Parties' Receivables,
(v) settle adjust or compromise any legal
proceedings brought to collect the Loan Parties' Receivables,
(vi) discharge and release the Loan Parties'
Receivables or any of them,
LOAN AND SECURITY AGREEMENT - Page 123
(vii) prepare, file and sign the name of any Loan
Party on any proof of claim in bankruptcy or any similar
document against any Account Debtor,
(viii) prepare, file and sign the name of any Loan
Party on any notice of Lien, assignment or satisfaction of
Lien, or similar document in connection with any of the
Collateral,
(ix) endorse the name of any Loan Party upon any
chattel paper, document, instrument, notice, freight ▇▇▇▇,
▇▇▇▇ of lading or similar document or agreement relating such
Loan Parties' Receivables or any other Collateral,
(x) use the stationery of any Loan Party and
sign the name of such Loan Party to verifications of such Loan
Party's Receivables and on any notice to the Account Debtors,
(xi) open any Loan Party's mail,
(xii) notify the post office authorities to change
the address for delivery of any Loan Party's mail to an
address designated by Agent, and
(xiii) use the information recorded on or contained
in any data processing equipment and computer hardware and
software relating to any Loan Party's Receivables or other
Collateral to which such Loan Party has access.
Section 14.5 MISCELLANEOUS PROVISIONS CONCERNING REMEDIES.
(a) RIGHTS CUMULATIVE. The rights and remedies of the
Credit Parties under this Agreement, the Notes and each of the other
Loan Documents shall be cumulative and not exclusive of any rights or
remedies which it or they would otherwise have. In exercising such
rights and remedies the Credit Parties may be selective and no failure
or delay by the Credit Parties in exercising any right shall operate as
a waiver of it, nor shall any single or partial exercise of any power
or right preclude its other or further exercise or the exercise of any
other power or right.
(b) WAIVER OF MARSHALING. Each Loan Party hereby waives
any right to require any marshaling of assets and any similar right.
(c) LIMITATION OF LIABILITY. Nothing contained in this
Article or elsewhere in this Agreement or in any of the other Loan
Documents shall be construed as requiring or obligating any Credit
Party or any agent or designee of any Credit Party to make any demand
or to make any inquiry as to the nature or sufficiency of any payment
received by it, or to present or file any claim or notice or take any
action, with respect to any Receivable or any other Collateral or the
monies due or to become due thereunder or in connection therewith, or
to take any steps necessary to preserve any rights against prior
parties, and the Credit
LOAN AND SECURITY AGREEMENT - Page 124
Parties and their agents or designees shall have no liability to any
Loan Party for actions taken pursuant to this Article, any other
provision of this Agreement or any of the other Loan Documents so long
as such Credit Party shall act reasonably and in good faith.
(d) APPOINTMENT OF RECEIVER. In any action under this
Article, Agent shall be entitled during the continuance of an Event of
Default to the appointment of a receiver, without notice of any kind
whatsoever, to take possession of all or any portion of the Collateral
and to exercise such power as the court shall confer upon such receiver
in accordance with Applicable Law.
Section 14.6 REGISTRATION RIGHTS; PRIVATE SALES; ETC.
(a) Each Loan Party recognizes that Agent may be unable
to effect a public sale of any or all of the Collateral or other
property to be sold by reason of certain prohibitions contained in the
laws of any jurisdiction outside the U.S. or in the Securities Act and
applicable state securities laws but may be compelled to resort to one
or more private sales thereof to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such
Collateral or other property to be sold for their own account for
investment and not with a view to the distribution or resale thereof.
Each Loan Party acknowledges and agrees that any such private sale may
result in prices and other terms less favorable to the seller than if
such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall, to the extent permitted by
law, be deemed to have been made in a commercially reasonable manner.
Unless required by Applicable Law, Agent shall not be under any
obligation to delay a sale of any of the Collateral or other property
to be sold for the period of time necessary to permit the Issuer of
such securities to register such securities under the laws of any
jurisdiction outside the U.S., under the Securities Act or under any
applicable state securities laws, even if such Issuer would agree to do
so.
(b) Each Loan Party further agrees to do or cause to be
done, to the extent that such Loan Party may do so under Applicable
Law, all such other acts and things as may be necessary to make such
sales or resales under SECTION 14.6(a) of any portion or all of the
Collateral or other property to be sold valid and binding and in
compliance with any and all Applicable Laws of any and all Governmental
Authorities having jurisdiction over any such sale or sales, all at the
Loan Parties' expense. Each Loan Party further agrees that a breach of
any of the covenants contained in this SECTION 14.6 will cause
irreparable injury to the Credit Parties and that the Credit Parties
have no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this
SECTION 14.6 shall be specifically enforceable against such Loan Party
and such Loan Party hereby waives and agrees, to the fullest extent
permitted by law, not to assert as a defense against an action for
specific performance of such covenants that (i) such Loan Party's
failure to perform such covenants will not cause irreparable injury to
the Credit Parties or (ii) the Credit Parties have an adequate remedy
at law in respect of such breach. Each Loan Party further acknowledges
the impossibility of ascertaining the amount of damages which would
be suffered by the Credit Parties by reason of a breach of any of
the covenants contained in
LOAN AND SECURITY AGREEMENT - Page 125
this SECTION 14.6 and, consequently, agrees that, if such Loan Party
shall breach any of such covenants and the Credit Parties shall ▇▇▇ for
damages for such breach, such Loan Party shall pay to the Credit
Parties, as liquidated damages and not as a penalty, an aggregate
amount equal to the value of the Collateral or other property to be
sold on the date Agent shall demand compliance with this SECTION 14.6.
(c) EACH LOAN PARTY HEREBY AGREES TO INDEMNIFY, PROTECT
AND SAVE HARMLESS THE CREDIT PARTIES AND ANY CONTROLLING PERSONS
THEREOF WITHIN THE MEANING OF THE SECURITIES ACT FROM AND AGAINST ANY
AND ALL LIABILITIES, SUITS, CLAIMS, COSTS AND EXPENSES (INCLUDING
COUNSEL FEES AND DISBURSEMENTS) ARISING UNDER THE SECURITIES ACT, THE
SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED, ANY APPLICABLE STATE
SECURITIES STATUTE, OR AT COMMON LAW, OR PURSUANT TO ANY OTHER
APPLICABLE LAW IN CONNECTION WITH THE ABOVE REFERENCED DISPOSITION
UNDER SECTION 14.6(a), INSOFAR AS SUCH LIABILITIES, SUITS, CLAIMS,
COSTS AND EXPENSES ARISE OUT OF, OR ARE BASED UPON, ANY UNTRUE
STATEMENT OR ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT CONTAINED IN
ANY STATEMENT MADE BY A LOAN PARTY RELATING TO ANY PART OF THE
COLLATERAL OR OTHER PROPERTY TO BE SOLD, OR ARISES OUT OF, OR IS BASED
UPON, THE OMISSION OR ALLEGED OMISSION TO STATE THEREIN A MATERIAL FACT
REQUIRED TO BE STATED THEREIN OR NECESSARY TO MAKE THE STATEMENTS
THEREIN NOT MISLEADING; PROVIDED, THAT SUCH LOAN PARTY SHALL NOT BE
LIABLE IN ANY SUCH CASE TO THE EXTENT THAT ANY SUCH LIABILITIES, SUITS,
CLAIMS, COSTS AND EXPENSES ARISE OUT OF, OR ARE BASED UPON, ANY UNTRUE
STATEMENT OR ALLEGED UNTRUE STATEMENT OR OMISSION OR ALLEGED OMISSION
MADE IN RELIANCE UPON AND IN CONFORMITY WITH WRITTEN INFORMATION
FURNISHED TO SUCH LOAN PARTY BY ANY CREDIT PARTY SPECIFICALLY FOR
INCLUSION THEREIN. THE FOREGOING INDEMNITY AGREEMENT IS IN ADDITION TO
ANY INDEBTEDNESS, LIABILITY OR OBLIGATION THAT SUCH LOAN PARTY MAY
OTHERWISE HAVE TO ANY CREDIT PARTY OR ANY SUCH CONTROLLING PERSON.
LOAN AND SECURITY AGREEMENT - Page 126
ARTICLE 15
ASSIGNMENTS
Section 15.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Lender may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its
Loans, its Notes and its Commitment); PROVIDED, HOWEVER, that:
(i) each such assignment shall be to an Eligible
Assignee;
(ii) except in the case of an assignment to
another Lender or an assignment of all of a Lender's rights
and obligations under this Agreement, any such partial
assignment shall be in an amount at least equal to $15,000,000
or an integral multiple of $5,000,000 in excess thereof;
PROVIDED that no such assignment may result in a reduction of
such Lender's Commitment to less than $15,000,000;
(iii) each such assignment by a Lender shall be of
a constant, and not varying, percentage of all of its rights
and obligations under this Agreement and the Notes;
(iv) the parties to such assignment shall execute
and deliver to Agent for its acceptance an Assignment and
Acceptance in the form of EXHIBIT "C" hereto, together with
any Notes subject to such assignment and a processing fee of
$3,500; and
(v) the prior written consent of Agent (such
consent to not be unreasonably withheld) shall be required.
Upon execution, delivery and acceptance of an Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the
extent of such assignment, have the obligations, rights and benefits of
a Lender hereunder and the assigning Lender shall, to the extent of
such assignment, relinquish its rights and be released from its
obligations under this Agreement. Upon the consummation of any
assignment pursuant to this Section, the assignor, Agent and Borrower
shall make appropriate arrangements so that, if required, new Notes are
issued to the assignor and the assignee. If the assignee is not
incorporated under the laws of the U.S., or a state thereof, it shall
deliver to Borrower and Agent certification as to exemption from
deduction or withholding of Taxes in accordance with SECTION 6.6.
(b) Agent shall maintain at its address referred to in
SECTION 17.1 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of
LOAN AND SECURITY AGREEMENT - Page 127
the Loans owing to, each Lender from time to time (the "REGISTER").
The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and Borrower, Agent and the Lenders
may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance
executed by the parties thereto, together with any Note subject to such
Assignment and Acceptance and payment of the processing fee, Agent
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of EXHIBIT "D" hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the
parties thereto.
(d) Each Lender may sell participations to one or more
Persons in all or a portion of its rights, obligations or rights and
obligations under this Agreement (including all or a portion of its
Commitment or its Loans); PROVIDED, HOWEVER, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) the participant shall be
entitled to the benefit of the yield protection provisions contained in
ARTICLE 6 and the right of set-off contained in SECTION 17.4, and (iv)
the Loan Parties shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under
this Agreement, and such Lender shall retain the sole right to enforce
the obligations of Borrower relating to its Loans and its Notes and to
approve any amendment, modification or waiver of any provision of this
Agreement (other than amendments, modifications or waivers decreasing
the amount of principal of or the rate at which interest is payable on
such Loans or Notes, extending any scheduled principal payment date or
date fixed for the payment of interest on such Loans or Notes, or
extending its Commitment).
(e) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or any
portion of its Loans and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank. No such assignment shall release
the assigning Lender from its obligations hereunder.
(f) Any Lender may furnish any information concerning any
Loan Party in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and
participants).
LOAN AND SECURITY AGREEMENT - Page 128
Section 15.2 REPRESENTATION OF LENDERS. Each Lender hereby represents
that it will make each Loan hereunder as a commercial loan for its own account
in the ordinary course of its business; PROVIDED, HOWEVER, that subject to
SECTION 15.1, the disposition of the Notes or other evidence of the Secured
Obligations held by any Lender shall at all times be within its exclusive
control.
ARTICLE 16
AGREEMENTS AMONG CREDIT PARTIES
Section 16.1 APPOINTMENT, POWERS, AND IMMUNITIES. Each Lender and L/C
Issuer hereby irrevocably appoints and authorizes Agent to act as its nominee as
administrative agent under this Agreement and the other Loan Documents with such
powers and discretion as are specifically delegated to Agent by the terms of
this Agreement and the other Loan Documents, together with such other powers as
are reasonably incidental thereto, including without limitation, to receive all
documents and items to be furnished hereunder; to act as nominee for and on
behalf of all Lenders under the Loan Documents; to, except as otherwise
expressly set forth herein, take such action as may be requested by the Required
Lenders, PROVIDED that, unless and until Agent shall have received any such
request, Agent Lender may take such administrative action, or refrain from
taking such administrative action, as it may deem advisable; to arrange the
means whereby the proceeds of amounts made available by the Lenders to Agent for
Loans are to be made available to Borrower; and to deliver to Borrower requests,
demands, approvals and consents received from the Lenders. The duties of Agent
under this Agreement and the other Loan Documents are mechanical and
administrative in nature and Agent shall have no fiduciary relationship in
respect of any Lender by reason of this Agreement or any other Loan Document.
Agent (which term as used in this sentence and in SECTION 16.5 and the first
sentence of SECTION 16.6 shall include its Affiliates and Subsidiaries, and its
own and its Affiliates' and Subsidiaries', officers, directors, employees and
agents):
(a) shall not have any duties or responsibilities except
those expressly set forth in this Agreement and shall not be a trustee
or fiduciary for any Lender or L/C Issuer;
(b) shall not be responsible to the Lenders or L/C Issuer
for any recital, statement, representation or warranty (whether written
or oral) made in or in connection with any Loan Document or any
certificate or other document referred to or provided for in, or
received by any of them under, any Loan Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
any Loan Document, or any other document referred to or provided for
therein or for any failure by any Loan Party or any other Person to
perform any of its obligations thereunder;
(c) shall not be responsible for or have any duty to
ascertain, inquire into or verify the performance or observance of any
covenants or agreements by any Loan Party or the satisfaction of any
condition or to inspect the property (including the books and records)
of any Loan Party or any of its Subsidiaries or Affiliates;
LOAN AND SECURITY AGREEMENT - Page 129
(d) except in accordance with SECTION 16.2, shall not be
required to initiate or conduct any litigation or collection
proceedings under any Loan Document; and
(e) shall not be responsible for any action taken or
omitted to be taken by it under or in connection with any Loan
Document, except for its own gross negligence or willful misconduct.
Agent may perform its duties by or through officers, directors, employees,
attorneys or agents, and shall be entitled to (and shall be protected in relying
upon) advice of counsel concerning all matters pertaining to its duties
hereunder. Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
Section 16.2 RELIANCE BY AGENT. Agent and its officers, directors,
employees, attorneys and agents shall be entitled to rely upon and shall be
fully protected in relying on any writing, instrument, resolution, notice,
consent, certificate, affidavit, letter, electronic mail, cablegram, telegram,
telex or teletype message, statement, order, or other document, conversation
(including without limitation conversations by telephone) or communication
reasonably believed by it or them to be genuine and correct and to have been
signed or made by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel for any Loan Party),
independent accountants and other experts selected by Agent. Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until Agent receives and accepts an Assignment and Acceptance executed in
accordance with SECTION 15.1. As to any matters not expressly provided for by
this Agreement, Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding on all of the
Lenders; PROVIDED, HOWEVER, that Agent shall not be required to take any action
that exposes Agent to personal liability or that is contrary to any Loan
Document or Applicable Law or unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking any such action.
Section 16.3 DEFAULTS. Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless Agent has
received written notice from a Lender or a Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default." In the
event that Agent receives such a notice of the occurrence of a Default or Event
of Default, Agent shall give prompt notice thereof to the Lenders. Agent shall
(subject to SECTION 16.2) take such action with respect to such Default or Event
of Default as shall reasonably be directed by the Required Lenders, PROVIDED
that, unless and until Agent shall have received such directions, Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interest of the Credit Parties.
LOAN AND SECURITY AGREEMENT - Page 130
Section 16.4 RIGHTS AS LENDER. With respect to its Commitment and the
Loans made by it, NationsBank (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include Agent in its individual capacity. NationsBank (and any
successor acting as Agent) and its Affiliates or Subsidiaries may (without
having to account therefor to any Lender) accept deposits from, lend money to,
make investments in, provide services to and generally engage in any kind of
lending, trust or other business with any Loan Party or any of its Affiliates or
Subsidiaries as if it were not acting as Agent, and NationsBank (and any
successor acting as Agent) and its Affiliates or Subsidiaries may accept fees
and other consideration from any Loan Party or any of its Affiliates or
Subsidiaries for services in connection with this Agreement or otherwise
without having to account for the same to the other Lenders.
Section 16.5 LIMITATION OF LIABILITY; INDEMNIFICATION. Neither Agent
nor any of its officers, directors, employees, attorneys, agents or Affiliates
shall be liable for any action taken or omitted to be taken by it or them
hereunder in good faith and believed by it or them to be within the discretion
or power conferred to it or them by the Loan Documents or be responsible for the
consequences of any error of judgment, except for its or their own gross
negligence or willful misconduct. Agent shall not be compelled to do any act
hereunder or to take any action towards the execution or enforcement of the
powers hereby created or to prosecute or defend any suit in respect hereof,
unless indemnified to its satisfaction against loss, cost, liability and
expense. Agent shall not be responsible in any manner to any Lender for the
effectiveness, enforceability, genuineness, validity or due execution of any of
the Loan Documents, or for any representation, warranty, document, certificate,
report or statement made herein or furnished in connection with any Loan
Documents, or be under any obligation to any Lender to ascertain or to inquire
as to the performance or observation of any of the terms, covenants or
conditions of any Loan Documents on the part of the Borrower. THE LENDERS AGREE
TO INDEMNIFY AGENT (TO THE EXTENT NOT REIMBURSED UNDER SECTION 17.2, BUT WITHOUT
LIMITING THE OBLIGATIONS OF THE LOAN PARTIES UNDER SUCH SECTION) RATABLY IN
ACCORDANCE WITH THEIR RESPECTIVE COMMITMENTS, FOR ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES) OR DISBURSEMENTS OF
ANY KIND AND NATURE WHATSOEVER THAT MAY BE IMPOSED ON, INCURRED BY OR ASSERTED
AGAINST AGENT (INCLUDING BY ANY LENDER) IN ANY WAY RELATING TO OR ARISING OUT OF
ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY OR ANY ACTION TAKEN
OR OMITTED BY AGENT UNDER ANY LOAN DOCUMENT (INCLUDING ANY OF THE FOREGOING
ARISING FROM THE NEGLIGENCE OF AGENT); PROVIDED THAT NO LENDER SHALL BE LIABLE
FOR ANY OF THE FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED. WITHOUT LIMITATION OF THE
FOREGOING, EACH LENDER AGREES TO REIMBURSE AGENT PROMPTLY UPON DEMAND FOR ITS
RATABLE SHARE OF ANY COSTS OR EXPENSES PAYABLE BY THE LOAN PARTIES UNDER SECTION
17.2, TO THE EXTENT THAT AGENT IS NOT PROMPTLY
LOAN AND SECURITY AGREEMENT - Page 131
REIMBURSED FOR SUCH COSTS AND EXPENSES BY ANY LOAN PARTY. THE AGREEMENTS
CONTAINED IN THIS SECTION SHALL SURVIVE PAYMENT IN FULL OF THE LOANS AND ALL
OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT.
Section 16.6 EXPENSES. Each Lender shall pay its pro rata share, based
on its Commitment Percentage, of any expenses paid by Agent in connection with
performance of its duties hereunder if Agent does not receive reimbursement
therefor from other sources within 60 days after the date incurred. Any amount
so paid by the Lenders to Agent shall be returned by Agent pro rata to each
paying Lender to the extent later paid to Agent by a Loan Party or any other
Person on a Loan Party's behalf, or received by Agent as proceeds of Collateral
pursuant to this Agreement.
Section 16.7 LENDER CREDIT DECISION; NON-RELIANCE ON AGENT AND OTHER
LENDERS. Each Credit Party agrees that it has, independently and without
reliance on any other Credit Party, and based on such documents and information
as it has deemed appropriate, made its own credit analysis of the Loan Parties
and decision to enter into this Agreement and that it will, independently and
without reliance upon any other Credit Party, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under the Loan Documents.
Except for notices, reports and other documents and information expressly
required to be furnished to the Credit Parties by Agent hereunder, Agent shall
not have any duty or responsibility to provide any Credit Party with any credit
or other information concerning the affairs, financial condition or business of
any Loan Party or any of its Affiliates or Subsidiaries that may come into the
possession of Agent or any of its Affiliates or Subsidiaries.
Section 16.8 RESIGNATION OF AGENT. Agent may resign at any time by
giving notice thereof to the Lenders and Borrower. Upon any such resignation,
the Required Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the other Credit Parties, appoint a successor Agent which shall be a
commercial bank organized under the laws of the U.S. having combined capital and
surplus of at least $100,000,000. Any such appointment of a successor Agent
shall require consent of Borrower unless a Default or Event of Default has
occurred and is continuing at the time any such appointment is effected, such
approval not to be unreasonably withheld or delayed by Borrower and such
approval to be deemed given by Borrower if no objection from Borrower is
received by the resigning Agent or such Required Lenders, as the case may be,
within two (2) Business Days after notice of such proposed appointment has been
provided to Borrower by Agent or such Required Lenders, as the case may be. Upon
the acceptance of any appointment as Agent hereunder by a successor, such
successor shall thereupon succeed to and become vested with all the rights,
powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Agent.
LOAN AND SECURITY AGREEMENT - Page 132
Section 16.9 ENFORCEMENT. Each of the Lenders and L/C Issuer agrees
that it shall not take any legal action, nor institute any actions or
proceedings, in respect of the Secured Obligations or against or with respect to
any Collateral without the prior written consent of Agent. Without limiting the
generality of the foregoing, no Lender may accelerate or otherwise enforce its
portion of the Secured Obligations, or terminate its Commitment except in
accordance with SECTION 14.2(b) or a set-off permitted under SECTION 17.4.
Section 16.10 BENEFITS OF ARTICLE 16. None of the provisions of this
ARTICLE 16 shall inure to the benefit of any Person other than the Credit
Parties. No Person shall be entitled to rely upon, or to raise as a defense, in
any manner whatsoever, the failure of any Credit Party to comply with any of
such provisions.
ARTICLE 17
MISCELLANEOUS
Section 17.1 NOTICES.
(a) METHOD OF COMMUNICATION. Except as specifically
provided in this Agreement or in any of the other Loan Documents, all
notices and the communications hereunder and thereunder shall be in
writing or by telephone, subsequently confirmed in writing. Notices in
writing shall be delivered personally or sent by certified or
registered mail, postage prepaid, or by overnight courier, telex or
facsimile transmission and shall be deemed received in the case of
personal delivery, when delivered, in the case of mailing, when
receipted for, in the case of overnight delivery, on the next Business
Day after delivery to the courier, and in the case of telex and
facsimile transmission, upon transmittal, PROVIDED that in the case of
notices to Agent, notice shall be deemed to have been given only when
such notice is actually received by Agent. A telephonic notice to
Agent, as understood by Agent, will be deemed to be the controlling and
proper notice in the event of a discrepancy with or failure to receive
a confirming written notice.
(b) ADDRESSES FOR NOTICES. Notices to any party shall be
sent to it at the address of such party set forth on the signature
pages hereof, in any Assignment and Acceptance or any other address of
which all the other parties are notified in writing.
(c) PRINCIPAL OFFICE. Agent hereby designates its office
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or any
subsequent office which shall have been specified for such purpose by
written notice to Borrower, as the office to which payments due are to
be made and at which Loans will be disbursed.
LOAN AND SECURITY AGREEMENT - Page 133
Section 17.2 EXPENSES. Borrower agrees to pay or reimburse on demand
all costs and expenses incurred ((i) with respect to SUBSECTION (a) below, by
Agent or L/C Issuer at any time, (ii) with respect to SUBSECTIONS (b) through
(f) below, by Agent or L/C Issuer at any time and by any other Credit Party at
any time when any Default or Event of Default is in existence and (iii) with
respect to SUBSECTIONS (g) and (h), by any Credit Party at any time), in
connection with the following:
(a) the negotiation, preparation, execution, delivery,
administration, enforcement and termination of this Agreement and each
of the other Loan Documents, whenever the same shall be executed and
delivered, including, without limitation, the following:
(i) the out-of-pocket costs and expenses
incurred in connection with the administration and
interpretation of this Agreement and the other Loan Documents;
(ii) the costs and expenses of appraisals of the
Collateral;
(iii) the costs and expenses of lien and title
searches; and
(iv) taxes, fees and other charges for filing the
Financing Statements and continuations and the costs and
expenses of taking other actions to perfect, protect and
continue the Security Interests;
(b) the preparation, execution and delivery of any
waiver, amendment, supplement or consent by Agent and the Lenders
relating to this Agreement or any of the other Loan Documents;
(c) sums paid or incurred to pay any amount or take any
action required of the Loan Parties under the Loan Documents that the
Loan Parties fail to pay or take;
(d) costs of inspections and verifications of the
Collateral, including, without limitation, standard per diem fees
charged by Agent, travel, lodging and meals (all of such travel,
lodging and meals to be charged in conformity with NationsBank's
internal policies and procedures) for inspections of the Collateral and
the Loan Parties' operations and books and records by Agent's agents up
to four (4) times per year and whenever an Event of Default exists;
(e) costs and expenses of forwarding loan proceeds,
collecting checks and other items of payment, and establishing and
maintaining each Disbursement Account, Agency Account and Lockbox;
(f) costs and expenses of preserving and protecting the
Collateral;
(g) consulting, after the occurrence of a Default, with
one or more Persons, including appraisers, accountants and lawyers,
concerning the value of any Collateral for the Secured Obligations or
related to the nature, scope or value of any right or remedy of Agent
LOAN AND SECURITY AGREEMENT - Page 134
or any Lender hereunder or under any of the Loan Documents, including
any review of factual matters in connection therewith, which expenses
shall include the fees and disbursements of such Persons;
(h) reasonable costs and expenses paid or incurred to
obtain payment of the Secured Obligations, enforce the Security
Interests, sell or otherwise realize upon the Collateral, and otherwise
enforce the provisions of the Loan Documents, or to prosecute or defend
any claim in any way arising out of, related to or connected with this
Agreement or any of the other Loan Documents, which expenses shall
include the reasonable fees and disbursements of counsel and of experts
and other consultants retained by Agent or any Lender; and
in each such case, all reasonable attorney's fees and expenses (including,
without limitation, the cost of internal counsel) incurred in connection with
any of the foregoing other than attorneys' fees and expenses incurred by a
Person in becoming a Lender hereunder not covered pursuant to SECTION 17.2(a).
The foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by Borrower. Borrower hereby
authorizes Agent to debit Borrower's Loan Accounts (by increasing the principal
amount of the Revolving Credit Loan) in the amount of any such costs and
expenses owed by Borrower when due, unless such costs and expenses are otherwise
timely made. Without prejudice to the survival of any other agreement hereunder,
the agreements and obligations contained in this SECTION 17.2 shall survive
the payment in full of the Loans and all other amounts payable under this
Agreement.
Section 17.3 STAMP AND OTHER TAXES. Borrower will pay any and all
stamp, registration, recordation and similar taxes, fees or charges and shall
indemnify the Credit Parties against any and all liabilities with respect to or
resulting from any delay in the payment or omission to pay any such taxes, fees
or charges, which may be payable or determined to be payable in connection with
the execution, delivery, performance or enforcement of this Agreement and any of
the other Loan Documents or the perfection of any rights or security interest
thereunder, including, without limitation, the Security Interest.
Section 17.4 RIGHT OF SET-OFF; ADJUSTMENTS.
(a) Upon the occurrence and during the continuance of any
Event of Default, each Lender (and each of its Affiliates and
Subsidiaries) is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set-off and apply any and
all deposits (general or special, time or demand, provisional or final)
at any time held and other Indebtedness at any time owing by such
Lender (or any of its Affiliates or Subsidiaries) to or for the credit
or the account of any Loan Party against any and all of the obligations
of Borrower now or hereafter existing under this Agreement and the
Notes held by such Lender, irrespective of whether Agent or such Lender
shall have made any demand under this Agreement or such Notes and
although such obligations may be unmatured. The rights of each Lender
under this SECTION 17.4 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that such
Lender may have.
LOAN AND SECURITY AGREEMENT - Page 135
(b) If any Lender (a "BENEFITTED LENDER") shall at any
time receive any payment of all or part of the Loans owing to it, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off or otherwise), in a greater
proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans owing to it, or
interest thereon, such Benefitted Lender shall purchase for cash from
the other Lenders a participating interest in such portion of each such
other Lender's Loans owing to it, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefitted Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of
the Lenders; PROVIDED, HOWEVER, that if all or any portion of such
excess payment or benefit is thereafter recovered from such Benefitted
Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without
interest. Borrower agrees that any Lender so purchasing a participation
from a Lender pursuant to this SECTION 17.4 may, to the fullest extent
permitted by law, exercise all of its rights of payment (including the
right of set-off) with respect to such participation as fully as if
such Person were the direct creditor of Borrower in the amount of such
participation.
Section 17.5 LITIGATION; WAIVER OF TRIAL BY JURY. EACH LOAN PARTY AND
CREDIT PARTY HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST ANY LOAN PARTY OR CREDIT PARTY ARISING OUT
OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, THE COLLATERAL OR ANY
ASSIGNMENT THEREOF OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN
OR AMONG ANY LOAN PARTY OR CREDIT PARTY OF ANY KIND OR NATURE. EACH SUCH PARTY
ACKNOWLEDGES THAT SUCH WAIVER IS MADE WITH FULL KNOWLEDGE AND UNDERSTANDING OF
THE NATURE OF THE RIGHTS AND BENEFITS WAIVED HEREBY AND WITH THE BENEFIT OF
ADVICE OF COUNSEL OF ITS CHOOSING. EACH LOAN PARTY AND CREDIT PARTY HEREBY
AGREES THAT THE FEDERAL COURT OF THE NORTHERN DISTRICT OF TEXAS AND THE FEDERAL
COURTS IN ANY OTHER JURISDICTION WHERE A MATERIAL AMOUNT OF THE COLLATERAL IS
LOCATED SHALL HAVE NONEXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN OR AMONG ANY OF THE LOAN PARTIES AND THE CREDIT PARTIES,
PERTAINING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS
OR TO ANY MATTER ARISING THEREFROM. EACH OF THE LOAN PARTIES EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING
COMMENCED IN SUCH COURTS. WITHOUT LIMITING THE APPLICABILITY OF ANY LAW
PROVIDING FOR SERVICE OF PROCESS UPON A STATUTORY AGENT AND NOTIFICATION THEREOF
BY MAIL, EACH LOAN PARTY HEREBY WAIVES (TO THE FULLEST EXTENT ALLOWED BY LAW)
PERSONAL SERVICE OF THE SUMMONS AND
LOAN AND SECURITY AGREEMENT - Page 136
COMPLAINT OR OTHER PROCESS OR PAPERS ISSUED THEREIN AND AGREES (TO THE
FULLEST EXTENT ALLOWED BY LAW) THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR
OTHER PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED
TO SUCH LOAN PARTY AT THE ADDRESS OF SUCH LOAN PARTY SET FORTH ON THE
SIGNATURE PAGES HEREOF. THE NONEXCLUSIVE CHOICE OF FORUM SET FORTH IN THIS
SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE THE SAME IN ANY APPROPRIATE JURISDICTION.
Section 17.6 CONSENT TO ADVERTISING AND PUBLICITY. With the prior
written consent of Borrower, which consent shall not be unreasonably withheld,
Agent, on behalf of the Credit Parties, may issue and disseminate to the public
information describing the credit accommodation entered into pursuant to this
Agreement, including the name and address of the Loan Parties, the amount,
interest rate, maturity, collateral and a general description of Loan Parties'
business.
Section 17.7 REVERSAL OF PAYMENTS. Agent and each Lender shall have the
continuing and exclusive right to apply, reverse and re-apply any and all
payments to any portion of the Secured Obligations in a manner consistent with
the terms of this Agreement. To the extent Borrower makes a payment or payments
to Agent, for the account of the Credit Parties, or any Credit Party receives
any payment or proceeds of the Collateral for Borrower's benefit, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the Secured Obligations or part thereof intended
to be satisfied shall be revived and continued in full force and effect, as if
such payment or proceeds had not been received by Agent or such other Credit
Party.
Section 17.8 INJUNCTIVE RELIEF. Each of the Loan Parties expressly
acknowledges and agrees that an action for damages for any breach of the
requirements of SECTION 10.1 shall not be an adequate remedy at law. In the
event of any such breach, each of the Loan Parties agrees to the fullest extent
allowed by law that Agent shall be entitled to injunctive relief to restrain
such breach and require compliance with such requirements.
Section 17.9 ACCOUNTING MATTERS. All financial and accounting
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized to
determine compliance with any covenant contained herein, shall, unless this
Agreement otherwise provides or unless Required Lenders shall otherwise consent
in writing, be performed in accordance with GAAP.
LOAN AND SECURITY AGREEMENT - Page 137
Section 17.10 AMENDMENTS; WAIVERS.
(a) Except as set forth in SUBSECTIONS (b) and (c) below, any
term, covenant, agreement or condition of this Agreement or any of the
other Loan Documents may be amended or waived, and any departure
therefrom may be consented to by the Required Lenders, if, but only if,
such amendment, waiver or consent is in writing signed by the Required
Lenders and, in the case of an amendment (other than an amendment
described in SECTION 17.10(e)), by each of the Loan Parties, and in any
such event, the failure to observe, perform or discharge any such term,
covenant, agreement or condition (whether such amendment is executed or
such waiver or consent is given before or after such failure) shall not
be construed as a breach of such term, covenant, agreement or condition
or as a Default or an Event of Default. Unless otherwise specified in
such waiver or consent, a waiver or consent given hereunder shall be
effective only in the specific instance and for the specific purpose
for which given. In the event that any such waiver or amendment is
requested by Borrower, Agent and the Lenders may require and charge a
fee in connection therewith and consideration thereof in such amount as
shall be determined by Agent and the Required Lenders in their
discretion.
(b) Except as otherwise set forth in this Agreement,
(i) without the prior unanimous written consent
of the Lenders,
(A) no amendment, consent or waiver
shall affect the amount or extend the time of the
obligation of the Lenders to make Loans or extend the
originally scheduled time or times of payment of the
principal of any Loan or alter the time or times of
payment of interest on any Loan or the amount of the
principal thereof or the rate of interest thereon or
the amount of any commitment fee payable hereunder,
or other fees payable ratably to the Lenders
hereunder, or permit any subordination of the
principal or interest on such Loan, permit the
subordination of the Security Interests in any
material Collateral (except with respect to Purchase
Money Liens described in CLAUSE (f)(a)(i) of the
definition of "Permitted Liens" in SECTION 1.1, which
shall be governed by SECTION 17.10(a)) or amend the
provisions of ARTICLE 14 or of this SECTION 17.10(b)
or (c),
(B) the definition of "Borrowing Base",
"AR Advance Rate", "INV Advance Rate" and "Minimum
Availability Requirement", respectively, shall not be
amended,
(C) no material Collateral shall be
released by Agent other than as specifically
permitted in this Agreement (including, without
limitation, SECTION 17.10(c)), PROVIDED that no
consent of a Credit Party other than Agent shall be
required in order to release Collateral which is
transferred by a Loan
LOAN AND SECURITY AGREEMENT - Page 138
Party in a transaction which is specifically allowed
by this Agreement (including, without limitation,
SECTION 13.6 and SECTION 17.10(c)),
(D) no Loan Party shall be released of
its obligations under this Agreement or any other
Loan Document; PROVIDED that no consent of a Credit
Party other than Agent shall be required in order to
release the obligations of a Loan Party all of whose
Capital Stock is sold to a Person who is not a Loan
Party in a transaction permitted under SECTION
13.6(a)(ix);
(E) the definition of "Required
Lenders" shall not be amended; and
(F) the Termination Date may not be
amended;
PROVIDED, HOWEVER, that anything herein to the contrary
notwithstanding, Required Lenders shall have the right to waive any
Default or Event of Default and the consequences hereunder of such
Default or Event of Default and shall have the right to enter into an
agreement with any Loan Party providing for the forbearance from the
exercise of any remedies provided hereunder or under the other Loan
Documents without waiving any Default or Event of Default.
(c) Notwithstanding any provision of this Agreement or
the other Loan Documents to the contrary, Agent in its sole discretion
(i) without requirement of consent by any other Credit Party, may
release any Collateral, the aggregate value of which (determined by
Agent on any reasonable valuation basis and not including Collateral
disposed of in a disposition allowed by CLAUSES (i) through (viii)
of SECTION 13.6(a)) does not exceed $25,000,000 and (ii) with the
prior written consent of any combination of Lenders whose Commitment
Percentages at such time equals or exceeds, in the aggregate,
seventy-five percent (75%), may release any Collateral, the
aggregate value of which, together with any Collateral previously
released by Agent pursuant to CLAUSE (i) preceding (determined by
Agent on any reasonable valuation basis and not including Collateral
disposed of in a disposition allowed by CLAUSES (i) through (viii)
of SECTION 13.6(a)) does not exceed $100,000,000.
(d) The making of Loans hereunder by the Lenders, or the
issuance of any Letter of Credit by L/C Issuer, during the existence of
a Default or Event of Default shall not be deemed to constitute a
waiver of such Default or Event of Default.
(e) Notwithstanding any provision of this Agreement or
the other Loan Documents to the contrary, no consent, written or
otherwise, of any Loan Party shall be necessary or required in
connection with any amendment to ARTICLE 16 or SECTION 5.10, and any
amendment to such provisions shall be effected solely by and among
Agent and the Lenders, PROVIDED that no such amendment shall impose any
obligation on Borrower.
LOAN AND SECURITY AGREEMENT - Page 139
Section 17.11 ASSIGNMENT. All the provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Loan Parties may not assign or transfer
any of their rights under this Agreement.
Section 17.12 PERFORMANCE OF DUTIES.
(a) The Loan Parties obligations under this Agreement and
each of the Loan Documents shall be performed by the Loan Parties at
their sole cost and expense.
(b) If any Loan Party shall fail to do any act or thing
which it has covenanted to do under this Agreement or any of the other
Loan Documents, Agent, on behalf of the Credit Parties, may (but shall
not be obligated to) do the same or cause it to be done either in the
name of Agent or the other Credit Parties or in the name and on behalf
of any Loan Party, and each Loan Party hereby irrevocably authorizes
Agent so to act.
Section 17.13 INDEMNIFICATION.
(a) EACH LOAN PARTY AGREES TO INDEMNIFY AND HOLD HARMLESS
AGENT AND EACH OTHER CREDIT PARTY AND EACH OF THEIR AFFILIATES AND
SUBSIDIARIES AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS AND ADVISORS (EACH, AN "INDEMNIFIED PARTY") FROM AND AGAINST ANY
AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS AND EXPENSES
(INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES AND
EXPENSES) THAT MAY BE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY
INDEMNIFIED PARTY, IN EACH CASE ARISING OUT OF OR IN CONNECTION WITH
OR BY REASON OF (INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH
ANY INVESTIGATION, LITIGATION OR PROCEEDING OR PREPARATION OF
DEFENSE IN CONNECTION THEREWITH) THE LOAN DOCUMENTS, ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF
THE PROCEEDS OF THE LOANS (INCLUDING ANY OF THE FOREGOING ARISING
FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY), EXCEPT TO THE EXTENT
SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST OR EXPENSE IS FOUND IN A
FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION
TO HAVE RESULTED FROM SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. IN THE CASE OF AN INVESTIGATION, LITIGATION OR
OTHER PROCEEDING TO WHICH THE INDEMNITY IN THIS SECTION 17.13
APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT SUCH
INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY ANY LOAN
PARTY, ITS DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED
PARTY OR ANY OTHER PERSON OR ANY INDEMNIFIED PARTY IS OTHERWISE A
PARTY THERETO AND WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED
HEREBY ARE
LOAN AND SECURITY AGREEMENT - Page 140
CONSUMMATED. EACH LOAN PARTY AGREES NOT TO ASSERT ANY CLAIM AGAINST
AGENT, ANY OTHER CREDIT PARTY, ANY OF THEIR AFFILIATES OR
SUBSIDIARIES OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, ATTORNEYS, AGENTS AND ADVISERS, ON ANY THEORY OF
LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES
ARISING OUT OF OR OTHERWISE RELATING TO THE LOAN DOCUMENTS, ANY OF
THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE
OF THE PROCEEDS OF THE LOANS.
(b) WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER
AGREEMENT OF THE LOAN PARTIES HEREUNDER, THE AGREEMENTS AND OBLIGATIONS
OF THE LOAN PARTIES CONTAINED IN THIS SECTION 17.13 SHALL SURVIVE THE
PAYMENT IN FULL OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE UNDER THIS
AGREEMENT.
Section 17.14 ALL POWERS COUPLED WITH INTEREST. All powers of attorney
and other authorizations granted to Agent and the other Credit Parties and any
Persons designated by Agent or the other Credit Parties pursuant to any
provisions of this Agreement or any of the other Loan Documents shall be deemed
coupled with an interest and shall be irrevocable so long as any of the Secured
Obligations remain unpaid or unsatisfied.
Section 17.15 SURVIVAL. Notwithstanding any termination of this
Agreement,
(a) until all Secured Obligations have been irrevocably
paid in full or otherwise satisfied, Agent, for the benefit of the
Credit Parties, shall retain its Security Interest and shall retain all
rights under this Agreement and each of the Security Documents with
respect to such Collateral as fully as though this Agreement had not
been terminated,
(b) the indemnities to which Agent and the other Credit
Parties are entitled under the provisions of this ARTICLE 17 and any
other provision of this Agreement and the other Loan Documents shall
continue in full force and effect and shall protect Agent and the other
Credit Parties against events arising after such termination as well as
before, and
(c) in connection with the termination of this Agreement
and the release and termination of the Security Interests, Agent, on
behalf of itself as agent and the other Credit Parties, may require
such assurances and indemnities as it shall reasonably deem necessary
or appropriate to protect Agent and the other Credit Parties against
loss on account of such release and termination, including, without
limitation, with respect to credits previously applied to the Secured
Obligations that may subsequently be reversed or revoked.
LOAN AND SECURITY AGREEMENT - Page 141
Section 17.16 TITLES AND CAPTIONS. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
Section 17.17 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement or any Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 17.18 GOVERNING LAW. THIS AGREEMENT AND ALL OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS, PROVIDED THAT TO THE EXTENT FEDERAL LAW WOULD ALLOW A HIGHER
RATE OF INTEREST THAN WOULD BE ALLOWED BY THE LAWS OF THE STATE OF TEXAS, THEN
WITH RESPECT TO THE PROVISIONS OF ANY LAWS WHICH PURPORT TO LIMIT THE AMOUNT OF
INTEREST THAT MAY BE CONTRACTED FOR, CHARGED OR RECEIVED IN CONNECTION WITH ANY
OF THE SECURED OBLIGATIONS, SUCH FEDERAL LAW SHALL APPLY.
Section 17.19 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
Section 17.20 REPRODUCTION OF DOCUMENTS. This Agreement, each of the
other Loan Documents and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by Agent or any other Credit Party, and (c)
financial statements, certificates and other information previously or hereafter
furnished to Agent or any other Credit Party, may be reproduced by Agent or such
other Credit Party by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and such Person may destroy any
original document so produced. Each party hereto stipulates that, to the extent
permitted by Applicable Law, any such reproduction shall be as admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original shall be in existence and whether or not such
reproduction was made by Agent or such other Credit Party in the regular course
of business), and any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
Section 17.21 TERM OF AGREEMENT. This Agreement shall remain in effect
from the Agreement Date through the Termination Date and thereafter until all
Secured Obligations shall have been irrevocably paid and satisfied in full. No
termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination.
LOAN AND SECURITY AGREEMENT - Page 142
Section 17.22 PRO-RATA PARTICIPATION.
(a) Each Lender agrees that
(i) if it or any of its Affiliates or
Subsidiaries shall exercise any right of counterclaim,
set-off, banker's lien or similar right, or if under any
applicable bankruptcy, insolvency or other similar law it
receives a secured claim the security for which is a debt owed
by it to any Loan Party, it shall apportion the amount
thereof, on a pro rata basis, between (A) amounts at the time
owed to it by Borrower under this Agreement, and (B) amounts
otherwise owed to it by any Loan Party, and
(ii) if, as a result of the exercise of a right
or the receipt of a secured claim and the apportionment
thereof described in CLAUSE (i) of this SECTION 17.21(a) or
otherwise, it shall receive payment of a proportion of the
aggregate amount of principal and interest due with respect to
the Secured Obligations owed to it under this Agreement
greater than the proportion of such amounts then received by
any other Lender, such Lender shall purchase a participation
(which it shall be deemed to have purchased simultaneously
upon the receipt of such payment) in the Secured Obligations
then held by the other Lenders so that all such recoveries of
principal and interest with respect to all Secured Obligations
owed to each Lender shall be pro rata on the basis of its
respective amount of the Secured Obligations owed to all
Lenders, PROVIDED that if all or part of such proportionately
greater payment received by such purchasing Lender is
thereafter recovered by or on behalf of any Borrower from such
Lender, such purchase shall be rescinded and the purchase
price paid for such participation shall be returned to such
Lender to the extent of such recovery, but without interest.
(b) Each Lender which receives such a secured claim shall
exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this SECTION
17.21 to share in the benefits of any recovery on such secured claim.
(c) Each Loan Party expressly consents to the foregoing
arrangements and agrees that any holder of a participation in any
Secured Obligation so purchased or otherwise acquired may exercise any
and all rights of banker's lien, set-off or counterclaim with respect
to any and all monies owing by any Loan Party to such holder as fully
as if such holder were a holder of such Secured Obligation in the
amount of the participation held by such holder.
Section 17.23 INTEREST LIMITATION. In no contingency or event
whatsoever shall the amount of interest under the Loan Documents paid by
Borrower, received by the Lenders, agreed to be paid by Borrower, or requested
or demanded to be paid by the Lenders, exceed the Maximum Rate. In the event any
such sums paid to the Lenders by Borrower would exceed the Maximum Rate, the
Lenders shall automatically apply such excess to any unpaid amount of the
Secured Obligations or, if the amount of such excess exceeds said unpaid amount,
such excess shall be paid to Borrower, as applicable. All sums paid, or agreed
to be paid, by Borrower which are or hereafter may be
LOAN AND SECURITY AGREEMENT - Page 143
construed to be compensation for the use, forbearance or detention of money
shall be amortized, prorated, spread and allocated in respect of the Secured
Obligations throughout the full term of this Agreement until the Secured
Obligations are paid in full. Notwithstanding any provisions contained in the
Loan Documents, or in any Notes or other related documents executed pursuant
hereto, the Lenders shall never be entitled to receive, collect or apply as
interest any amount in excess of the Maximum Rate and, in the event any
Lender ever receives, collects or applies any amount in respect of Borrower
that otherwise would be in excess of the Maximum Rate, such amount shall
automatically be deemed to be applied in reduction of the unpaid principal
balance of the Secured Obligations and, if such principal balance is paid in
full, any remaining excess shall forthwith be paid to Borrower, as
applicable. In determining whether or not the interest paid or payable under
any specific contingency exceeds the Maximum Rate, Borrower and the Lenders
shall, to the maximum extent permitted under Applicable Law, (i) characterize
any non-principal payment as a standby fee, commitment fee, prepayment
charge, delinquency charge or reimbursement for a third-party expense rather
than as interest, (ii) exclude voluntary prepayments and the effect thereof,
and (iii) amortize, prorate, allocate and spread in equal parts throughout
the entire period during which the Secured Obligations were outstanding the
total amount of interest at any time contracted for, charged or received.
Nothing herein contained shall be construed or so operate as to require
Borrower to pay any interest, fees, costs or charges greater than is
permitted by Applicable Law. Subject to the foregoing, Borrower hereby agrees
that the actual effective rate of interest from time to time existing with
respect to Loans made by the Lenders to Borrower, including all amounts
agreed to by Borrower or charged or received by the Lenders, which may be
deemed to be interest under Applicable Law, shall be deemed to be a rate
which is agreed to and stipulated by Borrower and the Lenders in accordance
with Applicable Law.
Section 17.24 MUTUAL BENEFIT. Each of the Loan Parties is part of a
combined enterprise the success and prosperity of which is dependent, in part,
on the operations of each Loan Party. Each Loan Party has determined that
entering into this Agreement is necessary or convenient to the conduct,
promotion or attainment of the business of such Loan Party, and that executing
and entering into this Agreement and the other Loan Documents is within its
corporate purpose, will be of direct and indirect benefit to, will result in a
reasonably equivalent value to, such Loan Party and is in its best interest.
Section 17.25 EXPRESS WAIVERS BY LOAN PARTIES IN RESPECT OF CROSS
GUARANTIES AND CROSS COLLATERALIZATION. Each Loan Party agrees as follows:
(a) Each Loan Party hereby waives: (1) notice of
acceptance of this Agreement; (2) notice of the making of any Loans,
the issuance of any Letter of Credit or any other financial
accommodations made or extended under the Loan Documents or the
creation or existence of any Secured Obligations; (3) notice of the
amount of the Secured Obligations, subject, however, to such Loan
Party's right to make inquiry of Agent to ascertain the amount of the
Secured Obligations at any reasonable time; (4) notice of any adverse
change in the financial condition of any other Loan Party or of any
other fact that might increase such Loan Party's risk with respect to
such other Loan Party under this Agreement;
LOAN AND SECURITY AGREEMENT - Page 144
(5) notice of presentment for payment, demand, protest and notice
thereof as to any promissory notes or other instruments among the
Loan Documents; and (7) all other notices (except if such notice is
specifically required to be given to such Loan Party hereunder or
under any of the other Loan Documents to which such Loan Party is a
party) and demands to which such Loan Party might otherwise be
entitled.
(b) Each Loan Party hereby waives the right by statute or
otherwise to require any Credit Party to institute suit against any
other Loan Party or to exhaust any rights and remedies which such
Credit Party has or may have against any other Loan Party. Each Loan
Party further waives any defense arising by reason of any disability or
other defense of any other Loan Party (other than the defense that the
Secured Obligations shall have been fully and finally performed and
indefeasibly paid) or by reason of the cessation from any cause
whatsoever of the liability of any such Loan Party in respect thereof.
(c) Each Loan Party hereby waives and agrees not to
assert against any Credit Party: (i) any defense (legal or equitable),
set-off, counterclaim or claim which such Loan Party may now or at any
time hereafter have against any other Loan Party or any other party
liable to the Credit Parties; (ii) any defense, set-off, counterclaim
or claim of any kind or nature available to any other Loan Party
against any Credit Party, arising directly or indirectly from the
present or future lack of perfection, sufficiency, validity or
enforceability of the Secured Obligations or any security therefor;
(iii) any right or defense arising by reason of any claim or defense
based upon an election of remedies by any Credit Party under any
applicable law; (iv) the benefit of any statute of limitations
affecting any other Loan Party's liability hereunder.
(d) In addition to the foregoing waivers, each Loan Party
hereby waives outright and absolutely, any right of subrogation such
Loan Party has or may have against any other Loan Party with respect to
the Secured Obligations. In addition, each Loan Party hereby waives any
right to proceed against any other Loan Party, now or hereafter, for
contribution, indemnity, reimbursement and any other suretyship rights
and claims, whether direct or indirect, liquidated or contingent,
whether arising under express or implied contract or by operation of
law, which such Loan Party may now have or hereafter have as against
any such other Loan Party with respect to the Secured Obligations. Each
Loan Party also hereby waives any rights of recourse to or with respect
to any asset of any other Loan Party. Each Loan Party agrees that in
light of the immediately foregoing waivers, the execution of this
Agreement shall not be deemed to make such Loan Party a "creditor" of
any other Borrower, and that for purposes of Sections 547 and 550 of
the Bankruptcy Code such Loan Party shall not be deemed a "creditor" of
any other Loan Party.
(e) Each Loan Party consents and agrees that, without
notice to or by such Loan Party and without affecting or impairing the
obligations of such Loan Party hereunder, the Credit Parties may, by
action or inaction: (a) compromise, settle, extend the duration or the
time for the payment of, or discharge the performance of, or may refuse
to or otherwise not
LOAN AND SECURITY AGREEMENT - Page 145
enforce the Loan Documents; (b) release all or any one or more
parties to any one or more of the Loan Documents or grant other
indulgences to any other Loan Party in respect thereof; (c) amend or
modify in any manner and at any time (or from time to time) any of
the Loan Documents; or (d) release or substitute any Guarantor or
other Person liable for payment of the Secured Obligations, if any,
or enforce, exchange, release or waive any security for the Secured
Obligations or any Guaranty of the Secured Obligations.
(f) The Credit Parties shall have the right to seek
recourse against any Loan Party to the fullest extent provided for
herein, and no election by any Credit Party to proceed in one form of
action or proceeding, or against any party, or on any obligation, shall
constitute a waiver of such Credit Party's right to proceed in any
other form of action or proceeding or against other parties unless such
Credit Party has expressly waived such right in writing. Specifically,
but without limiting the generality of the foregoing, no action or
proceeding by any Credit Party under any document or instrument
evidencing the Secured Obligations shall serve to diminish the
liability of any Loan Party under this Agreement or any other Loan
Document except to the extent that the Credit Parties finally and
unconditionally shall have realized indefeasible payment by such action
or proceeding.
(g) Each Loan Party represents and warrants to the Credit
Parties that such Loan Party is currently informed of the financial
condition of all other Loan Parties (including, without limitation, all
other Guarantors) of all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the Secured
Obligations. Each Loan Party further represents and warrants to the
Credit Parties that such Loan Party has read and understands the terms
and conditions of the Loan Documents. Each Loan Party hereby covenants
that such Loan Party will continue to keep informed of the financial
condition of all other Loan Parties, and of all other circumstances
which bear upon the risk of nonpayment or nonperformance of the
Secured Obligations.
Section 17.26 DETERMINATION BY THE LENDERS CONCLUSIVE AND BINDING. Any
calculation or material determination required or expressly permitted to be made
by any Credit Party under this Agreement shall be made in its reasonable
judgment and in good faith, and shall when made, absent manifest error, be
controlling.
Section 17.27 EXCEPTION TO COVENANTS. No Loan Party nor any Subsidiary
shall be deemed to be permitted to take any action or fail to take any action
which is permitted as an exception to any of the covenants contained herein or
which is within the permissible limits of any of the covenants contained herein
if such action or omission would result in the breach of any other covenant
contained herein.
LOAN AND SECURITY AGREEMENT - Page 146
Section 17.28 JUDGMENT CURRENCY. The payment obligations of any Loan
Party under this Agreement or any of the other Loan Documents shall not be
discharged by an amount paid in any currency other than Dollars, or in any other
place than required by this Agreement or any such Loan Documents, to the extent
that the amount so paid on conversion to Dollars and transferred to Agent in
Dallas, Dallas County, Texas, U.S., under normal banking procedures does not
yield the amount of Dollars due under this Agreement or any such other Loan
Document. If for the purpose of obtaining judgment in any court it is necessary
to convert a sum due under this Agreement or any of the other Loan Documents in
any currency to another currency (the "OTHER CURRENCY"), then the rate of
exchange which shall be applied shall be the Spot Rate, determined as of the
Business Day preceding the date on which such judgment is signed by the judge or
other Person acting on behalf of such court. The payment obligations of any Loan
Party in respect of any such amount due by it to any Credit Party pursuant to
such judgment, notwithstanding the rate of exchange actually applied in
rendering such judgment, shall be discharged only to the extent that on the
Business Day following receipt by such Credit Party of any such sum in the Other
Currency pursuant to such judgment, such Credit Party in accordance with normal
banking procedures may purchase and transfer to Dallas, Dallas County, U.S.,
Dollars with the amount of the Other Currency so received.
Section 17.29 REPLACEMENT/RESTATEMENT OF EXISTING CREDIT AGREEMENT.
This Agreement and the other Loan Documents amends and restates in its
entirety the Existing Credit Agreement and the Existing Loan Documents. All
rights, benefits, indebtedness, interest, liabilities, and obligations of the
parties to the Existing Loan Documents are hereby amended, restated, and
superseded in their entirety according to the terms and provisions set forth
in this Agreement and in the other Loan Documents. All "Obligations" as
defined by the Existing Credit Agreement and all "Notes" as defined by the
Existing Credit Agreement are hereby replaced and renewed in their entirety
by this Agreement, the Notes, and the other Loan Documents and shall, from
and after the Agreement Date, be included in the Secured Obligations and
governed by this Agreement and the other Loan Documents. The existing liens
and security interests in all "Collateral" as defined by the Existing Credit
Agreement and the Existing Loan Documents are hereby expressly renewed and
continued by, and as a part of, the Security Interest and shall remain in
full force and effect, hereafter governed by this Agreement and the other
Loan Documents and as security for the Secured Obligations. Each Loan Party
represents and warrants that as of the date hereof there are no claims or
offsets against, or defenses or counterclaims to, its obligations under the
Existing Agreement or any of the Existing Loan Documents, as amended and
restated by this Agreement and the other Loan Documents. To induce the Credit
Parties to enter into this Agreement, each Loan Party waives any and all such
claims, offsets, defenses, or counterclaims, whether known or unknown,
arising prior to the date hereof and relating to the Existing Credit
Agreement or the Existing Loan Documents. As of the Agreement Date (i) no
"Advances" as defined by the Existing Credit Agreement are outstanding
thereunder and (ii) no "Letters of Credit" as defined by the Existing Credit
Agreement are outstanding thereunder other than the Existing Letters of
Credit.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
LOAN AND SECURITY AGREEMENT - Page 147
AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL
AGREEMENTS BETWEEN THE PARTIES.
Remainder of Page Blank Signatures Follow
LOAN AND SECURITY AGREEMENT - Page 148
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers in several
counterparts all as of the day and year first written above.
COMPUSA STORES L.P.
By: CompUSA GP Holdings Company
Its sole General Partner
Address for Notice: By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ----------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President
COMPUSA INC.
Address for Notice: By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ --------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Vice President
COMPUSA GP HOLDINGS COMPANY
Address for Notice: By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ --------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President
COMPUSA HOLDINGS COMPANY
Address for Notice: By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ --------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President
LOAN AND SECURITY AGREEMENT - Page 149
COMPUSA HOLDINGS I INC.
Address for Notice: By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ --------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President
COMPUSA HOLDINGS II INC.
Address for Notice: By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ --------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President
COMPUSA PC INC.
Address for Notice: By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ --------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President
COMPUSA PC OPERATING COMPANY
Address for Notice: By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ --------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President
COMPTEAM INC.
Address for Notice: By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ --------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President
LOAN AND SECURITY AGREEMENT - Page 150
COMPUSA MANAGEMENT COMPANY
Address for Notice: By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ---------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President
LOAN AND SECURITY AGREEMENT - Page 151
AGENT:
NATIONSBANK, N.A.
In its capacity as administrative agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
Address:
NationsBank, N.A.
Bank of America Plaza, 6th Floor
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Bank of America Business Credit
URGENT: Division Manager
LOAN AND SECURITY AGREEMENT - Page 152
LENDERS:
Commitment NATIONSBANK, N.A.
Amount: $230,555,556
ADDRESS: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Attn: Bank of America ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Business Credit Vice President
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
APPLICABLE LENDING OFFICE FOR BASE RATE LOANS:
NationsBank, N.A.
Bank of America Plaza, 6th Floor
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
APPLICABLE LENDING OFFICE FOR EURODOLLAR LOANS:
NationsBank, N.A.
Bank of America Plaza, 6th Floor
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
LOAN AND SECURITY AGREEMENT - Page 153
Commitment CONGRESS FINANCIAL CORPORATION
Amount: $69,444,444
ADDRESS: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ M. Galovicor
P.O. Box 50728 -------------------------------
Attn: ▇▇▇▇ Galovick M. Galovicor
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇ Vice President
APPLICABLE LENDING OFFICE FOR BASE RATE LOANS:
Congress Financial Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ Galovick
APPLICABLE LENDING OFFICE FOR EURODOLLAR LOANS:
Congress Financial Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ Galovick
Commitment THE CHASE MANHATTAN BANK
Amount: $50,000,000
ADDRESS: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ -------------------------------
Attn: Credit Deputy Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Asset Based Lending -----------------------------
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇ Title: Vice President
----------------------------
APPLICABLE LENDING OFFICE FOR BASE RATE LOANS:
The Chase Manhattan Bank
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▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
APPLICABLE LENDING OFFICE FOR EURODOLLAR LOANS:
The Chase Manhattan Bank
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▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
LOAN AND SECURITY AGREEMENT
Commitment FOOTHILL CAPITAL CORPORATION
Amount: $50,000,000
ADDRESS: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Suite 1500 -----------------------------
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Senior Vice President
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
APPLICABLE LENDING OFFICE FOR BASE RATE LOANS:
Foothill Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
APPLICABLE LENDING OFFICE FOR EURODOLLAR LOANS:
Foothill Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
LOAN AND SECURITY AGREEMENT
Commitment ▇▇▇▇▇▇ FINANCIAL, INC.
Amount: $35,000,000
ADDRESS: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ -------------------------------
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇ Vice President
APPLICABLE LENDING OFFICE FOR BASE RATE LOANS:
▇▇▇▇▇▇ Financial, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
APPLICABLE LENDING OFFICE FOR EURODOLLAR LOANS:
▇▇▇▇▇▇ Financial, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
LOAN AND SECURITY AGREEMENT
Commitment PNC BANK NATIONAL ASSOCIATION
Amount: $25,000,000
ADDRESS: Two PNC Plaza, 18th Floor By: /s/ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ -------------------------------
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇ Vice President
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
APPLICABLE LENDING OFFICE FOR BASE RATE LOANS:
PNC Business Credit
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
APPLICABLE LENDING OFFICE FOR EURODOLLAR LOANS:
PNC Business Credit
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
LOAN AND SECURITY AGREEMENT
Commitment AMSOUTH BANK
Amount: $20,000,000
ADDRESS: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ -------------------------------
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇ Attorney-in-Fact
APPLICABLE LENDING OFFICE FOR BASE RATE LOANS:
AmSouth Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
APPLICABLE LENDING OFFICE FOR EURODOLLAR LOANS:
AmSouth Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
LOAN AND SECURITY AGREEMENT
Commitment IBJ WHITEHALL BUSINESS CREDIT
Amount: $20,000,000 CORPORATION
ADDRESS: One State Street By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ -------------------------------
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇ Senior Vice President
APPLICABLE LENDING OFFICE FOR BASE RATE LOANS:
IBJ Whitehall Business Credit Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
APPLICABLE LENDING OFFICE FOR EURODOLLAR LOANS:
IBJ Whitehall Business Credit Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
LOAN AND SECURITY AGREEMENT
EXHIBIT "A"
to
LOAN AND SECURITY AGREEMENT
FORM OF REVOLVING CREDIT NOTE
EXHIBIT "A", Cover Page
REVOLVING CREDIT NOTE
$_______ Dated as of ______
For value received, COMPUSA STORES L.P., a Texas limited partnership
("BORROWER"), hereby promises to pay to the order of __________________, a
____________________, with its principal office located at______________________
("PAYEE") the principal amount of ____________ DOLLARS ($________) or such
lesser amount as may from time to time be advanced and remain unpaid and
outstanding hereunder, together with accrued interest as provided hereinbelow.
This promissory note ("NOTE") is executed and delivered by Borrower
pursuant to the certain Loan and Security Agreement dated as of _________ among
Borrower, the other Loan Parties from time to time party thereto, NationsBank,
N.A., as administrative agent for the Lenders as provided therein, and each of
the Lenders (including, without limitation, Payee) from time to time party
thereto (as such agreement may be renewed, extended, modified, amended,
supplemented or restated from time to time, the "LOAN AND SECURITY AGREEMENT"),
and is a Revolving Credit Note as defined therein. Unless otherwise defined
herein, capitalized terms used in this Note which are defined in the Loan and
Security Agreement, wherever used herein, shall have the same meanings as are
prescribed by the Loan and Security Agreement.
All Loans from time to time requested by Borrower, and from time to
time made and outstanding hereunder, are subject to the terms and provisions of
the Loan and Security Agreement. Reference hereby is made to the Loan and
Security Agreement for a statement of the obligations of Borrower and the rights
of Payee in relation thereto, PROVIDED that nothing shall impair the absolute
and unconditional obligation of Borrower to pay the outstanding principal and
unpaid accrued interest on this Note when due.
The unpaid principal from day to day outstanding under this Note shall
bear interest at the applicable rate prescribed for Revolving Credit Loans as
provided by the Loan and Security Agreement. Agent's and Payee's books and
records shall be prima facie evidence of Revolving Credit Loans, interest
accruals and payments hereunder.
Borrower promises to pay all principal of and accrued interest on the
Revolving Credit Loans from time to time outstanding under this Note as
prescribed by the Loan and Security Agreement. On or after each Interest Payment
Date, to the extent that any accrued interest hereunder is not paid as specified
by the Loan and Security Agreement, Agent may at its option (but with no
obligation to do so) add the amount of such accrued interest to the Revolving
Credit Facility, in which event such accrued interest will be deemed paid and
the aggregate amount thereof shall be treated as a Revolving Credit Loan to
Borrower by Payee under the Revolving Credit Facility and outstanding under this
Note.
REVOLVING CREDIT NOTE - Page 1
Any Event of Default shall be a default under this Note. All rights and
remedies of Payee, and of Agent for the benefit of Payee, with respect to this
Note (including, without limitation, Agent's right, at its option or at the
direction of the Required Lenders, to accelerate the entire unpaid principal
balance and unpaid accrued interest hereunder to be immediately due and payable)
as provided by the Loan and Security Agreement are incorporated herein by
reference. All obligations and indebtedness from time to time evidenced by this
Note are secured by the Security Interest as provided by the Loan and Security
Agreement and the other Security Documents.
No delay or omission by Payee or Agent in exercising of any power,
right, or remedy hereunder shall operate as a waiver or impair Payee's powers,
rights, and remedies under this Note or the other Loan Documents. Except as
specifically provided in the Loan and Security Agreement, Borrower and each
other party ever liable hereunder severally hereby expressly waives presentment,
demand, notice of intention to accelerate, notice of acceleration, protest,
notice of protest, and any other notice of any kind, and agrees that its
liability hereunder shall not be affected by any renewals, extensions, or
modifications, from time to time, of the time or manner of payment hereof, or by
any release or modification of or with respect to the Security Interest or any
other party liable hereunder.
Borrower hereby promises to pay to Agent, for the benefit of Agent and
Payee, all fees, costs, and expenses incurred by Agent or Payee in enforcement
and collection of any amounts under this Note, including, without limitation,
reasonable attorneys' fees and expenses.
In no contingency or event whatsoever shall the amount of interest
under this Note paid by Borrower, received by Payee, agreed to be paid by
Borrower, or requested or demanded to be paid by Payee, exceed the Maximum Rate.
In the event any such sums paid to Payee by Borrower would exceed the Maximum
Rate, Payee shall automatically apply such excess to any unpaid amount of the
Secured Obligations or, if the amount of such excess exceeds said unpaid amount,
such excess shall be paid to Borrower. All sums paid, or agreed to be paid, by
Borrower which are or hereafter may be construed to be compensation for the use,
forbearance, or detention of money shall be amortized, prorated, spread, and
allocated in respect of the Secured Obligations throughout the full term of this
Note until the Secured Obligations are paid in full. Notwithstanding any
provisions contained in this Note or any other Loan Document or other related
documents executed pursuant to the Loan and Security Agreement, Payee shall
never be entitled to receive, collect, or apply as interest any amount in excess
of the Maximum Rate and, in the event Payee ever receives, collects, or applies
any amount in respect of Borrower that otherwise would be in excess of the
Maximum Rate, such amount shall automatically be deemed to be applied in
reduction of the unpaid principal balance of the Secured Obligations and, if
such principal balance is paid in full, any remaining excess shall forthwith be
paid to Borrower. In determining whether or not the interest paid or payable
under any specific contingency exceeds the Maximum Rate, Borrower and Payee
shall, to the maximum extent permitted under Applicable Law, (i) characterize
any non-principal payment as a standby fee, commitment fee, prepayment charge,
delinquency charge, or reimbursement for a third-party expense rather than as
interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii)
amortize, prorate, allocate, and spread in equal parts throughout the entire
period during which the Secured Obligations were outstanding the total amount of
interest at any time contracted for, charged, or received. Nothing herein
contained shall be construed or so operate as to require Borrower to pay any
interest, fees, costs, or charges greater than is permitted by Applicable Law.
REVOLVING CREDIT NOTE - Page 2
Subject to the foregoing, Borrower hereby agrees that the actual effective rate
of interest from time to time existing with respect to Loans made by Payee to
Borrower, including all amounts agreed to by Borrower or charged or received by
Payee, which may be deemed to be interest under Applicable Law, shall be deemed
to be a rate which is agreed to and stipulated by Borrower and Payee in
accordance with Applicable Law.
This Note may not be changed, amended, or modified except in writing
executed by Payee and Borrower in the manner prescribed by the Loan and Security
Agreement.
[This Note is in renewal of and is issued in amendment and restatement
of (but, not in extinguishment of) part of the indebtedness evidenced by that
certain Revolving Credit Note dated ________, ____ previously executed and
delivered by Borrower payable to the order of ____________________, in the face
amount of $__________, and the portion of such indebtedness represented hereby
shall hereafter be governed by and payable in accordance with the terms hereof.]
(Insert language, modified as appropriate into Notes issued after the Closing
Date.)
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF TEXAS, PROVIDED, THAT TO THE EXTENT FEDERAL LAW WOULD ALLOW
A HIGHER RATE OF INTEREST THAN WOULD BE ALLOWED BY THE LAWS OF THE STATE OF
TEXAS, THEN WITH RESPECT TO THE PROVISIONS OF ANY LAW WHICH PURPORTS TO LIMIT
THE AMOUNT OF INTEREST THAT MAY BE CONTRACTED FOR, CHARGED, OR RECEIVED IN
CONNECTION WITH THIS NOTE, SUCH FEDERAL LAW SHALL APPLY.
This Note shall be binding upon Borrower and its successors and
assigns.
EXECUTED as of the date first written above.
COMPUSA STORES L.P.
By: CompUSA GP Holdings Company, a
Delaware business trust, General Partner
By:_____________________________________
Name:___________________________________
Title:__________________________________
REVOLVING CREDIT NOTE - Page 3