EXHIBIT 10.5
AGREEMENT AND ADOPTION OF SUBSIDIARY GUARANTY
THIS AGREEMENT AND ADOPTION OF SUBSIDIARY GUARANTY (this "Agreement"),
dated as of August 31, 1998, is executed by Computer City, Inc., a Delaware
corporation ("Computer City"), in favor of the Administrative Lender and the
Lenders (each as defined in the Credit Agreement referred to below).
BACKGROUND
1. CompUSA, Inc., a Delaware corporation (the "Borrower"), the
Administrative Lender and the Lenders have entered into a Second Amended and
Restated Credit Agreement, dated as of March 12, 1998, amended by a First
Amendment to Second Amended and Restated Credit Agreement, dated as of June 16,
1998 and a Second Amendment to Amended and Restated Credit Agreement, dated as
of August 31, 1998 (said credit agreement, as amended or otherwise modified from
time to time, being the "Credit Agreement"). The capitalized terms not
otherwise defined herein shall have the meanings specified in the Credit
Agreement.
2. CompUSA Holdings II Inc., a Delaware corporation, PCs Compleat, Inc.,
a Delaware corporation, CompUSA Holdings I Inc., a Delaware corporation,
CompTeam Inc., a Delaware corporation, CompUSA Management Company, a Delaware
business trust, CompUSA Stores L.P., a Texas limited partnership, and CompUSA
Holdings Company, a Delaware business trust, entered into that certain
Subsidiary Guaranty, dated as of March 12, 1998 (the "Subsidiary Guaranty", such
entities being collectively the "Existing Guarantors").
3. On August 31, 1998, Computer City became a Subsidiary of the Borrower.
4. Sections 7.3(b) and 7.4(b) of the Credit Agreement require that
Computer City immediately become a party to the Subsidiary Guaranty.
5. The Board of Directors of Computer City has determined that the
execution, delivery and performance of this Agreement is necessary and
convenient to the conduct, promotion and attainment of Computer City's business.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained hereinafter and contained in the Credit Agreement and the other Loan
Documents, Computer City agrees as follows:
1. AGREEMENT. Computer City hereby unconditionally agrees to be a
Guarantor (as defined in the Subsidiary Guaranty) and agrees to be bound by the
Subsidiary Guaranty and to
undertake the duties, liabilities and obligations of a Guarantor to the same
extent as if originally named as a Guarantor in the Subsidiary Guaranty.
2. REPRESENTATIONS AND WARRANTIES. By its execution and delivery hereof,
Computer City represents and warrants to the Lenders as follows:
(a) The execution, delivery and performance by Computer City of this
Agreement and each other document and instrument to be delivered hereunder:
(i) are within Computer City's power as a corporation;
(ii) have been duly authorized by all necessary action by the
board of directors;
(iii) will not (A) contravene its articles of incorporation or
bylaws, or (B) conflict with or result in a breach of, or constitute a
default under, or result in or permit the termination or acceleration
of, any agreement or other contractual obligation of Computer City;
and
(iv) do not require the consent, authorization by, or approval
of, or notice to, or filing or registration with, any governmental
authority or any other Person, other than those which have been
obtained and copies of which have been delivered to the Administrative
Lender, each of which is in full force and effect.
(b) This Agreement has been duly executed and delivered by Computer
City.
(c) This Agreement is the legal, valid and binding obligation of
Computer City, enforceable against Computer City in accordance with its
terms, except as enforceability may be limited by applicable Debtor Relief
Laws and general principles of equity.
3. CONDITIONS OF EFFECTIVENESS. This Agreement shall be effective as of
the date first above written, subject to the following:
(a) The Administrative Lender shall have received counterparts of
this Agreement executed by Computer City and acknowledged by the Existing
Guarantors;
(b) The Administrative Lender shall have received an Officer's
Certificate of Computer City, containing (i) a copy of the certified
articles of incorporation of Computer City, (ii) a copy of the bylaws of
Computer City, (iii) a copy of resolutions of the board of directors of
Computer City authorizing Computer City to enter into this Agreement and
the documents, transactions and matters contemplated hereby, and (iv) the
names and true signatures of the officers of Computer City authorized to
execute and deliver this Agreement on behalf of Computer City.
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4. REFERENCE TO THE SUBSIDIARY GUARANTY.
(a) Upon the effectiveness of this Agreement, each reference in the
Subsidiary Guaranty to this "Guaranty", "hereunder", or words of like
import shall mean and be a reference to the Subsidiary Guaranty, as
affected hereby.
(b) The Subsidiary Guaranty, as affected hereby, shall remain in full
force and effect and is hereby ratified and confirmed.
5. COSTS, EXPENSES AND TAXES. Computer City agrees to pay on demand all
reasonable costs and expenses of Administrative Lender in connection with the
preparation, reproduction, execution and delivery of this Agreement and the
other instruments and documents to be delivered hereunder (including the
reasonable fees and out-of-pocket expenses of counsel for the Administrative
Lender with respect thereto).
6. EXECUTION IN 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 and delivered shall be deemed to be an original
and all of which when taken together shall constitute but one and the same
instrument.
7. GOVERNING LAW; BINDING EFFECT. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas and shall be
binding upon Computer City and each Lender and their respective successors and
assigns.
8. HEADINGS. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
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IN WITNESS WHEREOF, Computer City has caused this Agreement to be duly
executed and delivered by its duly authorized officer on the date first above
written.
COMPUTER CITY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President-Finance
Address for Computer City, Inc..:
c/o CompUSA Inc.
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
The undersigned Existing Guarantors hereby
acknowledge this Agreement and confirm that
their obligations in respect of the Subsidiary
Guaranty remain in full force and effect:
COMPUSA HOLDINGS II INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President-Finance
COMPUSA HOLDINGS I INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President-Finance
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PCs COMPLEAT, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President-Finance
COMPTEAM INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President-Finance
COMPUSA MANAGEMENT COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President-Finance
COMPUSA STORES L.P.
By: COMPUSA, INC., its general partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President-Finance
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COMPUSA HOLDINGS COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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J. ▇▇▇▇▇▇ ▇▇▇▇
Vice President-Finance
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