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SECURITY AGREEMENT
Among
The Grantors Named Herein
as Grantors
and
NATIONSBANK, N.A.,
as Administrative Lender
Dated Effective as of March 27, 1999
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TABLE OF CONTENTS
Page
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ARTICLE 1
GRANT
Section 1.1 ASSIGNMENT AND GRANT OF SECURITY . . . . . . . . . . . . . . 2
Section 1.2 DESCRIPTION OF OBLIGATIONS . . . . . . . . . . . . . . . . . 3
Section 1.3 GRANTOR REMAINS LIABLE . . . . . . . . . . . . . . . . . . . 3
Section 1.4 DELIVERY OF INSTRUMENTS AND SECURITIES COLLATERAL. . . . . . 3
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 4
ARTICLE 3
COVENANTS
Section 3.1 FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . 5
Section 3.2 PLACE OF PERFECTION; RECORDS; COLLECTION OF RECEIVABLES,
CHATTEL PAPER AND INSTRUMENTS. . . . . . . . . . . . . . . . 7
Section 3.3 TRANSFERS AND OTHER LIENS. . . . . . . . . . . . . . . . . . 8
Section 3.4 RIGHTS TO DIVIDENDS AND DISTRIBUTIONS. . . . . . . . . . . . 8
Section 3.5 RIGHT OF THE ADMINISTRATIVE LENDER TO NOTIFY ISSUERS . . . . 8
Section 3.6 THE ADMINISTRATIVE LENDER APPOINTED ATTORNEY-IN-FACT . . . . 8
ARTICLE 4
RIGHTS AND POWERS OF THE ADMINISTRATIVE LENDER
Section 4.1 THE ADMINISTRATIVE LENDER MAY PERFORM. . . . . . . . . . . . 9
Section 4.2 THE ADMINISTRATIVE LENDER'S DUTIES . . . . . . . . . . . . . 9
Section 4.3 REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . .10
Section 4.4 INDEMNITY AND EXPENSES . . . . . . . . . . . . . . . . . . .12
ARTICLE 5
MISCELLANEOUS
Section 5.1 CUMULATIVE RIGHTS. . . . . . . . . . . . . . . . . . . . . .12
Section 5.2 MODIFICATIONS; AMENDMENTS; ETC.. . . . . . . . . . . . . . .13
Section 5.3 CONTINUING SECURITY INTEREST . . . . . . . . . . . . . . . .13
Section 5.4 GOVERNING LAW; TERMS . . . . . . . . . . . . . . . . . . . .13
Section 5.5 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . .13
Section 5.6 THE ADMINISTRATIVE LENDER'S RIGHT TO USE AGENTS. . . . . . .14
Section 5.7 WAIVERS OF RIGHTS INHIBITING ENFORCEMENT . . . . . . . . . .14
Section 5.8 NOTICES AND DELIVERIES . . . . . . . . . . . . . . . . . . .14
Section 5.9 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . .14
Section 5.10 LOAN DOCUMENT. . . . . . . . . . . . . . . . . . . . . . . .14
Section 5.11 CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. . . . . . . .14
Section 5.12 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . .14
Section 5.13 OBLIGATIONS NOT AFFECTED . . . . . . . . . . . . . . . . . .15
Section 5.14 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . .15
Section 5.15 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . .15
Section 5.16 CONFLICTS. . . . . . . . . . . . . . . . . . . . . . . . . .15
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SCHEDULES:
Schedule ▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Executive Office and Location of
Books and Records
Schedule 2 Trade Names
Schedule 3 Restricted Accounts
Schedule 4 Securities Collateral
EXHIBITS:
Exhibit A Instructions for Registration of Pledge of Uncertificated
Securities Collateral
Exhibit B Initial Transaction Statement
Exhibit C Securities Collateral Stop Transfer Letter
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SECURITY AGREEMENT
SECURITY AGREEMENT (this "AGREEMENT"), dated effective as of March 27
1999, made among each of the signatories party hereto (collectively, the
"GRANTORS" and each a "GRANTOR"), and NationsBank, N.A., a national banking
association, in its capacity as Administrative Lender (the "ADMINISTRATIVE
LENDER") for itself and each lender a party to the Credit Agreement defined
below (the "LENDERS") and each Lender Affiliate (as defined in the Credit
Agreement) (each singularly, a "SECURED PARTY", and collectively, the
"SECURED PARTIES").
BACKGROUND
(1) CompUSA Inc., a Delaware corporation (the "BORROWER"), the
Administrative Lender, the Co-Agents (as defined in the Credit Agreement),
and the Lenders entered into that certain Second Amended and Restated Credit
Agreement, dated as of March 12, 1998, as amended by that certain First
Amendment to Second Amended and Restated Credit Agreement, dated as of June
16, 1998, and that certain Second Amendment to Second Amended and Restated
Credit Agreement, dated as of August 31, 1998 (said Second Amended and
Restated Credit Agreement, as amended, the "CREDIT AGREEMENT"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
given to them in the Credit Agreement.
(2) The Borrower, the Administrative Lender, the Co-Agents and the
Lenders are entering into that certain Third Amendment to Second Amended and
Restated Credit Agreement, dated as of even date herewith (the "THIRD
AMENDMENT").
(3) It is the intention of the parties hereto that this Agreement
create a first priority security interest in certain property of the Grantors
securing the payment of the obligations set forth in SECTION 1.2 hereof,
subject only to Permitted Liens.
(4) It is a condition precedent to the obligation of the Secured
Parties to enter into the Third Amendment and to, among other things,
continue to make the Advances, and issue, or participate in the issuance of,
Letters of Credit under the Credit Agreement that the Grantors shall have
executed and delivered to the Administrative Lender this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and in order to induce the Secured Parties to
enter into the Third Amendment and to, among other things, continue to make
the Advances and issue, or participate in the issuance of, Letters of Credit
under
the Credit Agreement, the Grantors hereby agree with the Administrative
Lender for its benefit and the ratable benefit of the other Secured Parties,
as hereinafter set forth.
ARTICLE 1
GRANT
Section 1.1 ASSIGNMENT AND GRANT OF SECURITY. Each Grantor hereby
assigns, pledges, hypothecates and transfers to the Administrative Lender,
for its benefit and the ratable benefit of the other Secured Parties, and
hereby grants to the Administrative Lender, for its benefit and the ratable
benefit of the other Secured Parties, a security interest in, the entire
right, title and interest of such Grantor, in and to the following assets of
such Grantor, whether now owned or hereafter acquired ("COLLATERAL"):
(a) all accounts, contract rights, chattel paper, documents,
instruments, deposit accounts, general intangibles, and other obligations of
any kind owing to such Grantor, now or hereafter existing, in each case
arising out of or in connection with the sale or lease of goods or the
rendering of services, and all rights now or hereafter existing in and to all
security agreements, leases, and other contracts securing or otherwise
relating to any such accounts, contract rights, chattel paper, documents,
instruments, deposit accounts, general intangibles or obligations (any and
all such accounts, contract rights, chattel paper, documents, instruments,
deposit accounts, general intangibles and obligations being the
"RECEIVABLES");
(b) all right, title and interest of such Grantor in, to and under each
contract and other agreement relating to the lease, sale or other disposition
of Collateral;
(c) all right, title and interest of such Grantor in and to any equity
interests of each Subsidiary of the such Grantor, including, without
limitation, the shares of each class of capital stock in any Person that is a
corporation, each class of partnership interests in any Person that is a
partnership, and each class of membership interests in any Person that is a
limited liability company, together with all dividends, increases, case,
proceeds, profits, instruments, distributions and other property from time to
time distributed in respect thereof and any rights to acquire or convertible
into any such equity interests, whether by purchase, exercise of any type of
options, warrants, conversion of debt or otherwise; provided, however,
notwithstanding anything herein to the contrary, the amount of equity
interests of any direct Foreign Subsidiary pledged by such Grantor hereunder
shall be limited to 65% of the issued and outstanding equity interests of
such direct Foreign Subsidiary ("SECURITIES COLLATERAL");
(d) all insurance policies and bonds and claims and payments under any
Collateral; and
(e) all accessions to, substitutions for and replacements, proceeds and
products of any and all of the foregoing Collateral (including, without
limitation, proceeds which constitute property
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of the types described in this SECTION 1.1) and, to the extent not otherwise
included, all (i) payments under insurance (whether or not the Administrative
Lender is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of
the foregoing Collateral and (ii) cash.
Section 1.2 DESCRIPTION OF OBLIGATIONS. This Agreement creates an
enforceable security interest in the Collateral, subject only to Permitted
Liens, to secure the payment and performance of any and all obligations now
or hereafter existing of the Grantors under the Credit Agreement and the
other Loan Documents, including any extensions, modifications, substitutions,
amendments and renewals thereof, whether for principal, interest, fees,
premium, expenses, reimbursement obligations, indemnification or otherwise
(all such obligations of the Grantors being the "OBLIGATIONS"). Without
limiting the generality of the foregoing, this Agreement secures the payment
of all amounts which constitute part of the Obligations and would be owed by
the Grantors to the Administrative Lender or any other Secured Party under
any Loan Document, but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding under any Debtor Relief Law involving any Grantor (including all
such amounts which would become due or would be secured but for the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding of any Grantor under any Debtor Relief
Law). With respect to each Grantor other than the Borrower, notwithstanding
anything herein to the contrary, in any action or proceeding involving any
state corporate law, or any state or federal bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally if
the Liens granted by any such Grantor herein shall be held void, invalid or
unenforceable, or subordinated to the liens or claims of any other creditors,
on account of the amount of the Obligations secured by such Liens, then, the
amount of the Obligations secured by such Liens shall, without any action by
such Grantor, the Administrative Lender, any other Secured Party or any other
Persons, be automatically limited and reduced to the highest amount that is
valid and enforceable and not subordinated to the claims of other creditors
as determined in such action or proceeding.
Section 1.3 GRANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) the Grantors shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Administrative
Lender of any of the rights hereunder shall not release any Grantor from any
of its duties or obligations under the contracts and agreements included in
the Collateral, and (c) neither the Administrative Lender nor any other
Secured Party shall have any obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
the Administrative Lender or any other Secured Party be obligated to perform
any of the obligations or duties of any Grantor thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
Section 1.4 DELIVERY OF INSTRUMENTS AND SECURITIES COLLATERAL. All
certificates or instruments representing or evidencing the Collateral shall
be delivered to and held by or on behalf of the Administrative Lender
pursuant hereto and shall be in suitable form for transfer by delivery,
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or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Administrative Lender. The Administrative Lender shall have the right, as
provided in SECTION 3.4, and during the continuance, of an Event of Default,
but without any requirement for prior written notice to any Grantor, to
transfer to or to register in the name of the Administrative Lender or any of
its nominees any or all of the Securities Collateral. Except as provided in
SECTION 3.6(C), the Grantors maintain the voting rights in the Securities
Collateral.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS AND WARRANTIES. Each Grantor represents
and warrants to the Administrative Lender and each other Secured Party, with
respect to itself and the Collateral, as follows:
(a) The chief place of business and chief executive office of such
Grantor and the office where such Grantor keeps all of its records concerning
the Receivables, are located at the place specified on SCHEDULE 1 hereto.
Collateral consisting of instruments and chattel paper shall be delivered and
pledged to the Administrative Lender duly endorsed and accompanied by such
duly executed instruments of transfer or assignment as are necessary for such
pledge, to be held as pledged Collateral.
(b) Such Grantor is the legal and beneficial owner of the Collateral
pledged by it free and clear of any Lien, except for Permitted Liens. No
effective financing statement or other similar document used to perfect and
preserve a security interest under the laws of any jurisdiction covering all
or any part of the Collateral is on file in any recording office, except such
as may have been filed (i) in favor of the Administrative Lender relating to
this Agreement and (ii) in respect of other Permitted Liens. As of the date
of this Agreement, such Grantor has the trade names set forth on SCHEDULE 2
(and no others). Such Grantor (including any corporate or partnership
predecessor) has not existed or operated under any name other than as stated
on SCHEDULE 2 since the date one year preceding the date of this Agreement.
(c) This Agreement and the pledge of the Collateral pursuant hereto,
together with the filing of financing statements containing the description
of the Collateral in the jurisdictions set forth on SCHEDULE 1, which will be
made immediately following the date of closing, creates a valid and perfected
first priority security interest in the Collateral in which a security
interest can be perfected by filing a UCC financing statement, securing the
payment of the Obligations; PROVIDED that additional actions may be required
with respect to the perfection of proceeds of the Collateral; and FURTHER
PROVIDED that the Administrative Lender retains physical possession of any
Collateral, the possession of which is required for perfection.
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(d) No consent of or registration with any Person is required (i) for
the pledge by such Grantor of the Collateral pledged by it hereunder, for the
grant by such Grantor of the security interest granted hereby or for the
execution, delivery or performance of this Agreement by such Grantor, (ii)
for the perfection or maintenance of the pledge, assignment and security
interest created hereby (including the first priority nature (subject to
Permitted Liens) of such pledge, assignment and security interest as provided
herein) (except for the filing of financing and continuation statements under
the UCC) or (iii) for the exercise by the Administrative Lender of the rights
provided for in this Agreement (except as otherwise required by law,
including pursuant to SECTION 4.3 of this Agreement), except, in each case,
for such Necessary Authorizations that already have been obtained by such
Grantor.
(e) None of the Securities Collateral is subject to any unpaid capital
call or dispute, any buy-sell, voting trust, transfer restriction,
preferential right to purchase or similar agreement or any option, warrant,
put or call or similar agreement or other rights or restrictions in favor of
third Persons. All of the Securities Collateral are duly authorized, validly
issued and non-assessable and were not issued in violation of the rights of
any Person. No Securities Collateral obligates such Grantor to make any
additional capital contributions with respect thereto. SCHEDULE 4 accurately
describes, as of the date of this Agreement, the Securities Collateral owned
by such Grantor, the issuer, the percentage owned by such Grantor, the nature
of equity interest owned, and, if applicable, the number and type of shares
of capital stock owned.
ARTICLE 3
COVENANTS
Section 3.1 FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at the expense of such
Grantor, such Grantor will promptly execute and deliver all further
instruments and documents (including supplements to all schedules), and take
all further action, that may be necessary, and that the Administrative Lender
may reasonably request, in order to perfect and protect any pledge,
assignment or security interest granted or purported to be granted hereby,
and the priority thereof, or to enable the Administrative Lender to exercise
and enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, such Grantor will: (i)
▇▇▇▇ conspicuously each chattel paper included in Receivables, and each of
its records pertaining to the Collateral with the following legend:
THIS INSTRUMENT IS SUBJECT TO A SECURITY INTEREST AND LIEN PURSUANT TO
A SECURITY AGREEMENT DATED EFFECTIVE AS OF MARCH 27, 1999 (AS THE SAME
HAS BEEN AND MAY HEREAFTER BE AMENDED, MODIFIED OR RESTATED) MADE BY
GRANTOR IN FAVOR
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OF NATIONSBANK, N.A., AS ADMINISTRATIVE LENDER FOR THE BENEFIT OF THE
SECURED PARTIES NAMED THEREIN.
or such other legend, in form and substance reasonably satisfactory to and as
specified by the Administrative Lender, indicating that such chattel paper or
Collateral is subject to the pledge, assignment and security interest granted
hereby; (ii) if any Collateral shall be evidenced by an instrument, deliver
and pledge to the Administrative Lender hereunder each such Instrument duly
indorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance reasonably satisfactory to the
Administrative Lender; (iii) if any Collateral shall be evidenced by chattel
paper, during the continuance of an Event of Default (provided that any
Advances or Letters of Credit are outstanding), deliver to the Administrative
Lender such chattel paper duly endorsed and accompanied by duly executed
instrument of transfer or assignment, all in form and substance reasonably
satisfactory to the Administrative Lender; and (iv) execute and file such
financing or continuation statements, or amendments thereto, and such other
registrations, instruments or notices, as may be necessary, or as the
Administrative Lender may reasonably request, in order to perfect and
preserve the pledge, assignment and security interest granted or purported to
be granted hereby.
(b) In addition to such other information as shall be specifically
provided for herein, the Grantors will furnish to the Administrative Lender
upon the written request of the Administrative Lender statements and
schedules further identifying and describing the Collateral and such other
lists, documents, reports, and product, service and sales documents in
connection with the Collateral as the Administrative Lender may reasonably
request, all in reasonable detail. Subject to the confidentiality provisions
of the Credit Agreement, in connection with its enforcement of the security
interest, the Administrative Lender may use such information or transfer it
to any Assignee permitted under the Credit Agreement for such Assignee's use.
(c) Each Grantor hereby authorizes the Administrative Lender to file
one or more continuation statements and during the continuance of an Event of
Default, financing statements, relating to all or any part of the Collateral
without the signature of such Grantor where permitted by Applicable Law. A
photocopy or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by Applicable Law.
(d) If any Securities Collateral are "uncertificated securities" within
the meaning of the UCC or are otherwise not evidenced by any stock
certificate or similar certificate or instrument, such Grantor agrees to
promptly notify the Administrative Lender and take all actions required to
perfect the security interest of the Administrative Lender under Applicable
Law, including, as applicable, under Article 8 or 9 of the UCC, and, without
limitation of the foregoing, prior to or concurrently with the pledge
hereunder of any Securities Collateral to which this section applies, (i)
where deemed applicable by the Administrative Lender, deliver to the relevant
corporation, partnership, limited liability company, joint venture or other
Person a fully completed and duly executed letter in the form of EXHIBIT A
hereto, and use commercially reasonable efforts to obtain from such
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corporation, partnership, limited liability company, joint venture or other
Person, and deliver to the Administrative Lender, promptly upon registration
of such pledge on the books of the issuer, a fully completed and duly
executed letter in the form of EXHIBIT B hereto, and (ii) where deemed
applicable by the Administrative Lender, deliver to the Administrative Lender
a fully completed and duly executed "Securities Collateral Stop Transfer
Letter" in the form of EXHIBIT C hereto.
Section 3.2 PLACE OF PERFECTION; RECORDS; COLLECTION OF RECEIVABLES,
CHATTEL PAPER AND INSTRUMENTS.
(a) Each Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Receivables, and the originals of all chattel paper and instruments, at the
location therefor specified in SECTION 2.1(A), in each case which may be
changed upon written notice to the Administrative Lender at least 30 days
prior to such change.
(b) Except as otherwise provided in this SECTION 3.2(B), each Grantor
shall continue to collect, at its own expense, all amounts due or to become
due such Grantor under the Receivables. In connection with such collections,
such Grantor may take (and, during the continuance of an Event of Default at
the Administrative Lender's direction, shall take) such action as such
Grantor or, during the continuance of an Event of Default, the Administrative
Lender, may deem reasonably necessary to enforce collection of the
Receivables; PROVIDED, HOWEVER, that the Administrative Lender shall have the
right (during the continuance of an Event of Default and provided that any
Advances or Letters of Credit are outstanding) to notify the account debtors
or obligors under any Receivables of the assignment of such Receivables to
the Administrative Lender and to direct such account debtors or obligors to
make payment of all amounts due or to become due to such Grantor thereunder
directly to the Administrative Lender and, upon such notification at the
expense of such Grantor, to enforce collection of any such Receivables, and
to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as such Grantor might have done or as the
Administrative Lender deems reasonably necessary. During the continuance of
an Event of Default (provided that any Advances or Letters of Credit are
outstanding), all amounts and proceeds (including Instruments) received by
such Grantor in respect of the Receivables shall be received in trust for the
benefit of the Administrative Lender hereunder, shall be segregated from
other funds of such Grantor and, after receipt of written notice from the
Administrative Lender, shall be forthwith paid over to the Administrative
Lender in the same form as so received (with any necessary indorsement).
During the continuation of an Event of Default (provided that any Advances or
Letters of Credit are outstanding), such Grantor shall not adjust, settle or
compromise the amount or payment of any Receivable, release wholly or partly
any account debtor or obligor thereof, or allow any credit or discount
thereon, in each case, other than those made in the ordinary course of
business. To the extent that the Administrative Lender has notified any
account debtor or obligor under any Receivables of an Event of Default and
such Event of Default is cured or otherwise waived, the Administrative Lender
shall promptly notify such account holder or obligor of such fact.
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Section 3.3 TRANSFERS AND OTHER LIENS. No Grantor shall (a) sell,
assign (by operation of Applicable Law or otherwise) or otherwise dispose of,
or grant any option with respect to, any of the Collateral, except as
permitted under the Credit Agreement, or (b) create or permit to exist any
Lien upon any of the Collateral, except Permitted Liens.
Section 3.4 RIGHTS TO DIVIDENDS AND DISTRIBUTIONS. With respect to
any Securities Collateral, the Administrative Lender shall have authority
during the continuance of an Event of Default, either to have the same
registered in the Administrative Lender's name or in the name of a nominee.
If any Grantor shall become entitled to receive or shall receive any
certificate (including, without limitation, any certificate in connection
with any reclassification, increase, reduction of capital, or
reorganization), or any option or rights arising from or relating to any of
the Collateral that is evidenced by a certificate or other instrument or
security, whether as an addition to, in substitution of, as a conversion of,
or in exchange for any of the Collateral, or otherwise, such Grantor agrees
to accept the same as the Administrative Lender's agent and to hold the same
in trust on behalf of and for the benefit of the Administrative Lender, and,
after receipt of written notice from the Administrative Lender, to deliver
the same immediately to the Administrative Lender in the exact form received,
with appropriate undated stock or similar powers, duly executed in blank, to
be held by the Administrative Lender, subject to the terms hereof, as
Collateral. Unless an Event of Default is in existence, such Grantor shall
be entitled to receive all cash Dividends paid in respect of any of the
Collateral. During the continuance of an Event of Default (provided that any
Advances or Letters of Credit are outstanding), the Administrative Lender
shall be entitled to all Dividends, and to any sums paid upon or in respect
of any Collateral, and to any additional securities issued in respect of the
Securities Collateral, upon the liquidation, dissolution, or reorganization
of the issuer thereof, all of which shall be paid to the Administrative
Lender to be held by it as additional Collateral.
Section 3.5 RIGHT OF THE ADMINISTRATIVE LENDER TO NOTIFY ISSUERS. At
any time during the continuance of an Event of Default (provided that any
Advances or Letters of Credit are outstanding), the Administrative Lender may
notify issuers of the Securities Collateral to make payments of all Dividends
directly to the Administrative Lender and the Administrative Lender may take
control of all proceeds of any Securities Collateral. To the extent that the
Administrative Lender has notified any issuer of Securities Collateral of an
Event of Default and such Event of Default is cured or otherwise waived, the
Administrative Lender shall promptly notify such issuer of such fact.
Section 3.6 THE ADMINISTRATIVE LENDER APPOINTED ATTORNEY-IN-FACT.
Each Grantor hereby irrevocably appoints the Administrative Lender such
Grantor's attorney-in-fact (exercisable during the continuance of an Event of
Default), with full authority in the place and stead of such Grantor and in
the name of such Grantor or otherwise to take any action and to execute any
instrument (in accordance with this Agreement, including without limitation,
SECTION 4.2 hereof) which the Administrative Lender may deem reasonably
necessary to accomplish the purposes of this Agreement, including, without
limitation:
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(a) to ask for, demand, collect, ▇▇▇ for, recover, compromise, receive
and give acquittance and receipts for moneys due or to become due under or in
connection with the Collateral,
(b) to receive, indorse, and collect any drafts or other instruments,
documents and chattel paper in connection with clause (a) above, and
(c) to file any claims or take any action or institute any proceedings
which the Administrative Lender may deem reasonably necessary for the
collection of any of the Collateral or otherwise to enforce compliance with
the terms and conditions of any Collateral or the rights of the
Administrative Lender with respect to any of the Collateral. EACH GRANTOR
HEREBY IRREVOCABLY GRANTS TO THE ADMINISTRATIVE LENDER SUCH GRANTOR'S PROXY
(EXERCISABLE DURING THE CONTINUANCE OF AN EVENT OF DEFAULT) TO VOTE ANY
SECURITIES COLLATERAL AND APPOINTS THE ADMINISTRATIVE LENDER SUCH GRANTOR'S
ATTORNEY-IN-FACT (EXERCISABLE DURING THE CONTINUANCE OF AN EVENT OF DEFAULT)
TO PERFORM ALL OBLIGATIONS OF SUCH GRANTOR UNDER THIS AGREEMENT. THE PROXY
AND EACH POWER OF ATTORNEY HEREIN GRANTED ARE COUPLED WITH AN INTEREST AND
ARE IRREVOCABLE PRIOR TO FINAL PAYMENT IN FULL OF THE OBLIGATIONS.
This appointment as attorney-in-fact and this proxy shall terminate upon
the termination of this Agreement pursuant to SECTION 5.3 hereof.
ARTICLE 4
RIGHTS AND POWERS OF THE ADMINISTRATIVE LENDER
Section 4.1 THE ADMINISTRATIVE LENDER MAY PERFORM. If any Grantor
fails to perform any agreement contained herein, the Administrative Lender
may itself perform, or cause performance of, such agreement, and the
reasonable expenses of the Administrative Lender incurred in connection
therewith shall be payable by such Grantor under SECTION 4.4.
Section 4.2 THE ADMINISTRATIVE LENDER'S DUTIES. The powers conferred
on the Administrative Lender hereunder are solely to protect its interest in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the duty to exercise reasonable care in respect of any
Collateral in its possession and the accounting for moneys actually received
by it hereunder, the Administrative Lender shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Administrative Lender has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against prior parties. The Administrative Lender shall be
deemed to have exercised reasonable care in the custody and preservation of
any Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Administrative Lender accords its own
property. Except as
-9-
provided in this SECTION 4.2 and except to the extent of any gross negligence
or willful misconduct of the Administrative Lender or the other Secured
Parties, the Administrative Lender shall not have any duty or liability to
protect or preserve any Collateral or to preserve rights pertaining thereto.
Nothing contained in this Agreement shall be construed as requiring or
obligating the Administrative Lender, and the Administrative Lender shall not
be required or obligated, to (i) present or file any claim or notice or take
any action, with respect to any Collateral or in connection therewith or (ii)
notify any Grantor of any decline in the value of any Collateral.
Section 4.3 REMEDIES. If any Event of Default shall have occurred
and be continuing (provided that any Advances or Letters of Credit are
outstanding):
(a) The Administrative Lender may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code in effect in the State of Texas at
that time (the "UCC") (whether or not the UCC applies to the affected
Collateral), and also may (i) require any Grantor to, and each Grantor hereby
agrees that it will at its expense and upon request of the Administrative
Lender forthwith, assemble all or part of the Collateral which is capable of
being assembled as directed by the Administrative Lender and make it
available to the Administrative Lender at a place to be designated by the
Administrative Lender which is reasonably convenient to both parties or (ii)
without notice, except as specified below, sell the Collateral or any portion
thereof in one or more parcels at public or private sale, at any of the
Administrative Lender's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Administrative Lender may
reasonably deem commercially reasonable. Each Grantor agrees that, to the
extent notice of sale shall be required by Applicable Law, ten days' written
notice to such Grantor 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, provided that ten days' written notice does not violate any
Applicable Law. The Administrative Lender shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. The
Administrative Lender 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.
(b) All cash proceeds received by the Administrative Lender upon any
sale of, collection of, or other realization upon, all or any part of the
Collateral shall be applied as follows:
FIRST: To the payment of all reasonable out-of-pocket costs and expenses
incurred in connection with the sale of, collection of or other realization
upon Collateral, including reasonable attorneys' fees and disbursements;
SECOND: To the payment of the Obligations to be distributed pro rata to
each Secured Party based on the percentage that the Obligations owed to
each Secured Party bears to the aggregate outstanding Obligations owed to
all Secured Parties (with such Grantor remaining liable for any
deficiency); and
-10-
THIRD: To the extent of the balance (if any) of such proceeds, to the
payment to such Grantor or other Person legally entitled thereto.
(c) All payments received by such Grantor under or in connection with
any Collateral shall be received in trust for the benefit of the
Administrative Lender, shall be segregated from other funds of such Grantor
and, after receipt of written notice from the Administrative Lender, shall be
forthwith paid over to the Administrative Lender in the same form as so
received (with any necessary indorsement).
(d) Because of the Securities Act of 1933, as amended ("SECURITIES
ACT"), and other Applicable Laws, including without limitation state "blue
sky" laws, or contractual restrictions or agreements, there may be legal
restrictions or limitations affecting the Administrative Lender in any
attempts to dispose of the Collateral and the enforcement of its rights
hereunder. For these reasons, the Administrative Lender is hereby authorized
by each Grantor, but not obligated, during the continuance of any Event of
Default, to sell or otherwise dispose of any of the Collateral at private
sale, subject to an investment letter, or in any other manner which will not
require the Collateral, or any part thereof, to be registered in accordance
with the Securities Act, or the rules and regulations promulgated thereunder,
or any other Applicable Law. Each Grantor clearly understands that the
Administrative Lender may in its discretion approach a restricted number of
potential purchasers and that a sale under such circumstances may yield a
lower price for the Collateral than would otherwise be obtainable if same
were registered and sold in the open market. No sale so made in good faith
by the Administrative Lender shall be deemed to be not "commercially
reasonable" because so made. Each Grantor agrees that in the event the
Administrative Lender shall, during the continuance of an Event of Default,
sell the Collateral or any portion thereof at any private sale or sales, the
Administrative Lender shall have the right to rely upon the advice and
opinion of independent appraisers and other Persons, which appraisers and
other Persons are acceptable to the Administrative Lender, as to the best
price reasonably obtainable upon such a private sale thereof.
(e) If the Administrative Lender shall determine to exercise its right
to sell any or all of the Collateral, and if in the opinion of counsel for
the Administrative Lender it is necessary, or if in the opinion of the
Administrative Lender it is advisable, to have the Collateral or that portion
thereof to be sold, registered under the provisions of the Securities Act,
each Grantor (subject to any restrictions in any agreements with
non-Affiliates of such Grantor regarding the registration thereof) will use
commercially reasonable efforts to cause the issuers of the Collateral
contemplated to be sold to execute and deliver, and cause the directors and
officers of each thereof to execute and deliver, all at such Grantor's
reasonable expense, all such instruments and documents, and to do or cause to
be done all such other acts and things, as may be necessary or, in the
opinion of the Administrative Lender, advisable to register the Collateral or
that portion thereof to be sold, under the provisions of the Securities Act
and to cause the registration statement relating thereto to become effective
and to remain effective for a period of one year from the date of the first
public offering of the Collateral or that portion thereof to be sold, and to
make all amendments thereto and/or to the related prospectus which, in the
opinion of the Administrative Lender, are reasonably necessary, all in
conformity with the requirements of the Securities Act. Each Grantor shall
use commercially
-11-
reasonable efforts to cause each issuer of Collateral to comply with the
provisions of the securities or "blue sky" laws of any jurisdiction which the
Administrative Lender shall designate and to cause each issuer to make
available to its security holders, as soon as practicable, an earnings
statement which will satisfy the provisions of the Securities Act and
applicable "blue sky" laws.
(f) (i) Each Grantor will maintain the accounts listed as restricted and
blocked accounts on SCHEDULE 3 (the "RESTRICTED ACCOUNTS") with the
Administrative Lender, in the name of such Grantor, but such Restricted
Accounts shall be under the sole control and dominion of the Administrative
Lender.
(ii) It shall be a term and condition of each Restricted Account,
notwithstanding any term or condition to the contrary in any other
agreement relating to such Restricted Account (other than the Credit
Agreement), that no amount (including interest and other proceeds of the
cash and other property in the Restricted Account) shall be paid or
released to or for the account of, or withdrawn by or for the account of,
such Grantor or any other Person from such Restricted Account.
(iii) At the request of the Administrative Lender, such Grantor will
promptly instruct each account debtor in respect of Receivables arising
from any sale of Inventory in the ordinary course of business to make
payment to the Restricted Accounts.
Each Grantor understands and acknowledges that the Administrative Lender may
and permits the Administrative Lender to remove amounts from the Restricted
Accounts from time to time and use the amounts to reduce the Obligations.
Section 4.4 INDEMNITY AND EXPENSES. THE GRANTORS JOINTLY AND
SEVERALLY AGREE TO INDEMNIFY THE ADMINISTRATIVE LENDER AND EACH OTHER SECURED
PARTY FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES AND LIABILITIES (INCLUDING
REASONABLE ATTORNEYS' FEES) ARISING OR RESULTING FROM THIS AGREEMENT
(INCLUDING, WITHOUT LIMITATION, ENFORCEMENT OF THIS AGREEMENT), TO THE EXTENT
THE BORROWER IS REQUIRED TO DO SO UNDER SECTION 5.10 OF THE CREDIT AGREEMENT.
ARTICLE 5
MISCELLANEOUS
Section 5.1 CUMULATIVE RIGHTS. All rights of the Administrative
Lender and each other Secured Party under the Loan Documents are cumulative
of each other and of every other right which the Administrative Lender and
each other Secured Party may otherwise have at law or in equity or under any
other contract or other writing for the enforcement of the security interest
herein
-12-
or the collection of the Obligations. The exercise of one or more rights
shall not prejudice or impair the concurrent or subsequent exercise of other
rights.
Section 5.2 MODIFICATIONS; AMENDMENTS; ETC. No amendment or waiver
of any provision of this Agreement, and no consent to any departure by any
Grantor here from, shall in any event be effective unless the same shall be
in writing and signed by the Administrative Lender (and such Grantor, in case
of amendment), and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 5.3 CONTINUING SECURITY INTEREST. This Agreement shall
create a continuing security interest in the Collateral and shall (a) remain
in full force and effect until the Release Date (except to the extent that
the release of any Collateral is otherwise permitted pursuant to the terms of
the Loan Documents), (b) be binding upon each Grantor, its successors and
assigns, and (c) inure to the benefit of, and be enforceable by, the
Administrative Lender and its successors, transferee and assigns. Upon any
such termination, the Administrative Lender will, at such Grantor's expense,
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination. Each Grantor agrees that to
the extent that the Administrative Lender or any other Secured Party receives
any payment or benefit and such payment or benefit, or any part thereof, is
subsequently invalidated, declared to be fraudulent or preferential, set
aside or is required to be repaid to a trustee, receiver, or any other party
under any Debtor Relief Law, then to the extent of such payment or benefit,
the Obligations or part thereof intended to be satisfied shall be revived and
continued in full force and effect as if such payment or benefit had not been
made and, further, any such repayment by the Administrative Lender or any
other Secured Party, to the extent that the Administrative Lender or any
other Secured Party did not directly receive a corresponding cash payment,
shall be added to and be additional Obligations payable upon demand by the
Administrative Lender or any other Secured Party and secured hereby, and, if
the lien and security interest hereof shall have been released, such lien and
security interest shall be reinstated with the same effect and priority as on
the date of execution hereof all as if no release of such lien or security
interest had ever occurred, to the extent not prohibited by Applicable Law.
Section 5.4 GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW) AND THE APPLICABLE FEDERAL LAWS OF
THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF TEXAS.
Section 5.5 WAIVER OF JURY TRIAL. THE ADMINISTRATIVE LENDER, THE
SECURED PARTIES AND EACH GRANTOR HEREBY WAIVE, TO THE MAXIMUM EXTENT
PERMITTED BY APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY JUDICIAL
PROCEEDINGS INVOLVING, DIRECTLY OR INDIRECTLY, ANY
-13-
MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 5.6 THE ADMINISTRATIVE LENDER'S RIGHT TO USE AGENTS. The
Administrative Lender may exercise its rights under this Agreement through an
agent or other designee.
Section 5.7 WAIVERS OF RIGHTS INHIBITING ENFORCEMENT. To the extent
not prohibited by Applicable Law, each Grantor waives all rights of
redemption, appraisal, valuation or to the marshaling of assets.
Section 5.8 NOTICES AND DELIVERIES. All notices and other
communications provided for hereunder shall be effectuated in the manner
provided for in SECTION 11.1 of the Credit Agreement, and to the extent that
a notice or communication is sent to a Grantor other than the Borrower, said
notice shall be addressed to such Grantor, in care of the Borrower.
Section 5.9 SUCCESSORS AND ASSIGNS. All of the provisions of this
Agreement shall be binding and inure to the benefit of the parties hereto and
their respective successors and permitted assigns; PROVIDED, HOWEVER, no
Grantor may assign its liabilities and obligations under this Agreement
without the prior written consent of all Secured Parties.
Section 5.10 LOAN DOCUMENT. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
Section 5.11 CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES.
(a) Each Grantor and the Administrative Lender each hereby irrevocably
submits to the non-exclusive jurisdiction of any United States Federal or
Texas State courts sitting in Dallas, Texas in any action or proceeding
arising out of or relating to this Agreement, and each Grantor and the
Administrative Lender each hereby irrevocably waives any objection it may now
or hereafter have as to the venue of any such suit, action or proceeding
brought in such court or that such court is an inconvenient forum.
(b) Nothing in this section shall limit the right of any Grantor, the
Administrative Lender or any other Secured Party to bring any action or
proceeding against any other party or its property in the courts of any other
jurisdictions.
Section 5.12 SEVERABILITY. Any provision of this Agreement which is
for any reason prohibited or found or held invalid or unenforceable by any
court or governmental agency shall be ineffective to the extent of such
prohibition or invalidity or unenforceability, without invalidating the
remaining provisions hereof in such jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
-14-
Section 5.13 OBLIGATIONS NOT AFFECTED. To the fullest extent
permitted by Applicable Law, the obligations of each Grantor under this
Agreement shall remain in full force and effect without regard to, and shall
not be impaired or affected by:
(a) any amendment, modification, addition or supplement to any other
Loan Document, any instrument delivered in connection therewith, or any
assignment or transfer thereof;
(b) any exercise, non-exercise, or waiver by the Administrative Lender
or any other Secured Party of any right, remedy, power or privilege under or
in respect of, or any release of any guaranty, any collateral or the
Collateral or any part thereof provided pursuant to, this Agreement or any
other Loan Document;
(c) any waiver, consent, extension, indulgence or other action or
inaction in respect of this Agreement or any other Loan Document or any
assignment or transfer of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Grantor or any
other Person, whether or not such Grantor shall have notice or knowledge of
any of the foregoing.
Section 5.14 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but
one and the same instrument.
Section 5.15 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER WITH
THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
Section 5.16 CONFLICTS. In the event of a conflict between the terms
and conditions of this Agreement and the terms and conditions of the Credit
Agreement, the terms and conditions of the Credit Agreement shall control.
===============================================================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
===============================================================================
-15-
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.
GRANTORS:
COMPUSA INC.
By: s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
COMPUSA HOLDINGS II INC.
By: s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
COMPUSA HOLDINGS I INC.
By: s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
COMPTEAM INC.
By: s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
-16-
COMPUSA MANAGEMENT COMPANY
By: s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
COMPUSA STORES L.P.
By: COMPUSA INC., its general partner
By: s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
COMPUSA HOLDINGS COMPANY
By: s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
COMPUTER CITY, INC.
By: s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
-17-
ADMINISTRATIVE LENDER:
NATIONSBANK, N.A.
By: s/▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
-18-
Schedule 1
Chief Place of Business, Chief Executive Office and
Location of Books and Records
The Chief Place of Business, Chief Executive Office and the Location of Books
and Records for each Grantor is:
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Schedule 2
Trade Names
CompUSA Inc.
(1) CompUSA Direct, (2) CompUSA PC
Computer City, Inc.
(1) CompUSA, (2) US Logic
CompUSA Stores L.P.
CompUSA
Schedule 3
Restricted Accounts
NONE.
Schedule 4
Securities Collateral
Corporate and Business Trust Securities Pledged:
-----------------------------------------------------------------------------------
ISSUER NUMBER OF SHARES HOLDER CERTIFICATE NUMBER
------ ---------------- ------ ------------------
-----------------------------------------------------------------------------------
CompUSA Holdings II Inc. 1,000 CompUSA Inc. 001
-----------------------------------------------------------------------------------
CompUSA Holdings I Inc. 1,000 CompUSA Inc. 001
-----------------------------------------------------------------------------------
CompTeam Inc. 1,000 CompUSA Inc. 001
-----------------------------------------------------------------------------------
CompUSA Management
Company 1,000 CompUSA Inc. A1
-----------------------------------------------------------------------------------
CompUSA Holdings Company 1,000 CompUSA Inc. 1
-----------------------------------------------------------------------------------
Computer City, Inc. 1,000 CompUSA Inc. CS-1
-----------------------------------------------------------------------------------
CompUSA ▇▇▇.▇▇▇ Inc. 100 CompUSA Inc. CS-2
-----------------------------------------------------------------------------------
Partnership Interests Pledged:
-----------------------------------------------------------------------------------
NAME PERCENTAGE OWNERSHIP OWNER
---- -------------------- -----
-----------------------------------------------------------------------------------
CompUSA Stores L.P. 1% general partner interest CompUSA Inc.
-----------------------------------------------------------------------------------
CompUSA Stores L.P. 99% limited partner interest CompUSA Holdings Company
-----------------------------------------------------------------------------------
EXHIBIT A
INSTRUCTIONS FOR REGISTRATION OF PLEDGE
OF
UNCERTIFICATED SECURITIES
Date: ___________________
To: [NAME OF CORPORATION, PARTNERSHIP, JOINT VENTURE OR OTHER PERSON]
You are hereby instructed to register the pledge of the following
uncertificated securities to NationsBank, N.A., as Administrative Lender:
(a) A [insert written percentage of interest] (_____%) [insert
description of interest, e.g. General Partnership Interest];
(b) [insert similar description of any other interests].
This being all of the interest of [INSERT NAME OF PLEDGOR] in
[name of corporation, partnership, joint venture or other Person].
Very truly yours,
[GRANTOR]
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
EXHIBIT B
INITIAL TRANSACTION STATEMENT
Date: _______________
To: CompUSA Inc.
NationsBank, N.A., as Administrative Lender
This is to advise you that a pledge to NationsBank, N.A., as
Administrative Lender, of the following uncertificated securities owned by
[INSERT NAME OF PLEDGOR], a [______________] corporation has been registered
on the books of [name of corporation, partnership, joint venture or other
Person]:
(c) A [insert written percentage of interest] (_____%)
[insert description of interest, e.g. General Partnership Interest];
(d) [insert similar description of any other interests].
This being all of the interest of [INSERT NAME OF PLEDGOR] in, as shown
on books and records of, [name of corporation, partnership, joint venture or
other Person].
There are no liens or restrictions of the undersigned, nor any adverse
claims, in each case registered on the books of the undersigned, to which the
interests described hereinabove are subject.
The pledge referred to above was registered on ______________, _____.
THIS STATEMENT IS MERELY A RECORD OF THE REGISTRATION OF THE PLEDGE OF
THE ADDRESSEES AS OF THE TIME OF THE ISSUANCE HEREOF. DELIVERY OF THIS
STATEMENT, IN ITSELF, CONFERS NO RIGHTS ON THE RECIPIENT. THIS STATEMENT IS
NEITHER A NEGOTIABLE INSTRUMENT NOR A SECURITY.
Very truly yours,
[NAME OF CORPORATION, PARTNERSHIP, JOINT VENTURE
OR OTHER PERSON]
[By:___________________________________________]
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
EXHIBIT C
__________, 1999
--------------------------
--------------------------
--------------------------
Ladies and Gentlemen:
This is to advise you that CompUSA Inc., a ____________ corporation
("PLEDGOR"), has granted to NationsBank, N.A., as Administrative Lender
("ADMINISTRATIVE LENDER") a security interest in [DESCRIBE AMOUNT AND
DESCRIPTION OF INTEREST, E.G. SHARES OF THE COMMON CAPITAL STOCK]
of _____________________________________________________ (the "COMPANY"),
and all other [REPEAT DESCRIPTION OF INTEREST] of the Company now owned as
well as hereafter acquired by Pledgor (together with any distributions,
interests, stock, liquidating dividends, stock dividends, preemptive rights,
dividends paid in cash or securities, or other properties to which Pledgor
may hereafter be entitled to receive on account of such [REPEAT DESCRIPTION
OF INTEREST]), which [REPEAT DESCRIPTION OF INTEREST] presently constitutes
_____% of the issued and outstanding [REPEAT DESCRIPTION OF INTEREST] of the
Company, any other equity interest or right to acquire any equity interest in
Company now owned as well as hereafter acquired by Pledgor, and all proceeds
and products of the foregoing ("PLEDGED RIGHTS").
Until notified otherwise in writing by an authorized officer of
Administrative Lender, you are hereby directed (and you hereby agree) to
deliver after the date hereof all non-cash dividends and other distributions
and any and all other shares of stock, warrants or other property (other than
cash) in which Administrative Lender has a security interest to
Administrative Lender, NationsBank Plaza, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇. Upon written notice from an
authorized officer of Administrative Lender, you are directed (and you hereby
agree) to deliver after the date of such notice, all dividends, distributions
and other property in the form of cash directly to Administrative Lender at
the address mentioned in the preceding sentence. Unless notified otherwise
in writing by an authorized officer of Administrative Lender, you are hereby
directed (and you hereby agree) to not acknowledge any encumbrance in favor
of any party other than Administrative Lender with respect to the Pledged
Rights, assign any interest in, encumber, subdivide, issue additional or
different certificates for or otherwise transfer any interest in the Pledged
Rights.
Very truly yours,
CompUSA Inc.
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
NATIONSBANK, N.A., as Administrative Lender
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
Accepted and Agreed this ____ day of ________________, ____
---------------------------------------
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------