EXHIBIT 10.32
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
"Amendment") is entered into as of this 2nd day of July, 2002, among the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), Bank of America, N.A. (in its individual capacity, the "Bank") with
an office at 00 Xxxxx Xxxx Xxxxxx Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000, as
Administrative Agent for the Lenders (in its capacity as Administrative Agent,
the "Administrative Agent"), General Electric Capital Corporation (in its
individual capacity, "GE Capital") with an office at 000 Xxxxx Xxxxxxx Xxxxx
Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, as documentation agent for the
Lenders (in its capacity as documentation agent, the "Documentation Agent"), and
Good Guys California, Inc. (formerly known as The Good Guys - California, Inc.),
a California corporation, with offices at 0000 Xxxxxx Xxx Xxxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000 (the "Borrower"), with respect to that certain Loan and
Security Agreement, dated as of September 30,1999 among the parties hereto, as
amended by that certain First Amendment to Loan and Security Agreement dated as
of August 16, 2001, by those certain letter amendments dated as of March 27,
2002, and May 15, 2002, and as further amended by that certain Second Amendment
to Loan and Security Agreement dated as of May 22, 2001 (collectively, the "Loan
Agreement"), and with reference to the following facts:
RECITALS
A. Pursuant to the Loan Agreement, Lenders agreed to make certain
financial accommodations to or for the benefit of Borrower upon the terms and
conditions contained therein. Unless otherwise defined in this Amendment, (i)
capitalized terms used herein shall have the meanings attributed to them in the
Loan Agreement, and (ii) references to sections shall refer to sections of the
Loan Agreement.
B. Borrower has requested certain changes to the EBITDA covenants
contained in the Loan Agreement, as provided herein.
C. Lenders have agreed to make such changes to the Loan Agreement
on the terms and conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the continued performance
by Borrower of its promises and obligations under the Loan Agreement and the
other Loan Documents, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Borrower and Lenders hereby
agree as follows:
AGREEMENT
1. INCORPORATION OF LOAN AGREEMENT AND OTHER LOAN DOCUMENTS.
Except as expressly modified under this Amendment, all of the terms and
conditions set forth in the Loan Agreement and the other Loan Documents are
incorporated herein by this reference,
and the obligations of Borrower under the Loan Agreement and the other Loan
Documents are hereby acknowledged, confirmed and ratified by Borrower.
2. DEFINITIONS. Unless otherwise defined in this Amendment,
capitalized terms used herein have the meanings given to them in the Loan
Agreement. Unless otherwise indicated, all references to sections, schedules, or
exhibits shall mean sections, schedules, or exhibits of or to the Loan
Agreement.
3. AMENDMENT TO LOAN AGREEMENT. The Loan Agreement shall be
amended as follows:
3.1 NEW DEFINITIONS. New definitions are hereby added in
appropriate alphabetical order to read as follows:
"Third Amendment" shall mean the Third Amendment to Loan and
Security Agreement dated as of July 2, 2002.
"Third Amendment Closing Date" shall mean the date of the
effectiveness of the Third Amendment, as provided in paragraph 6 of the Third
Amendment.
3.2 MINIMUM EBITDA COVENANT. Effective as of
June 25, 2002, Section 9.30(a) is hereby deleted and the following is
substituted therefor:
"(a) Except as provided in Section 9.30(b), Borrower shall
have EBITDA at the end of each calendar month or each fiscal quarter, as
applicable, measured cumulatively for the period of twelve prior calendar months
through and including such calendar month or fiscal quarter, of not less than
the following:
CALENDAR MONTH ENDING EBITDA
--------------------- ------
April 30, 2002 ($ 3,000,000)
May 31, 2002 ($ 400,000)
June 30, 2002 ($ 180,000)
July 31, 2002 $ 890,000
August 31, 2002 $ 1,930,000
September 30, 2002 $ 2,840,000
October 31, 2002 $ 3,460,000
November 30, 2002 $ 4,470,000
December 31, 2002 $ 8,420,000
January 31, 2003 $10,260,000
February 28, 2003 $14,370,000"
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4. ACKNOWLEDGMENTS.
4.1 ACKNOWLEDGMENT OF OBLIGATIONS. Borrower hereby
acknowledges, confirms and agrees that as of the close of business on June 28,
2002, Borrower was indebted to Lenders in respect of the Revolving Loans in the
approximate principal amount of $47,532,594. The Revolving Loans, together with
interest accrued and accruing thereon, and fees, costs, expenses and other
charges now or hereafter payable by Borrower to Lenders, are unconditionally
owing by Borrower to Lenders, without offset, defense or counterclaim of any
kind, nature or description whatsoever.
4.2 ACKNOWLEDGMENT OF SECURITY INTERESTS. Borrower hereby
acknowledges, confirms and agrees that Co-Agents and Lenders have and shall
continue to have valid, enforceable and perfected first-priority liens upon and
security interests in the Collateral heretofore granted to Lenders pursuant to
the Loan Documents or otherwise granted to or held by Co-Agents and Lenders,
subject only to Permitted Liens.
4.3 BINDING EFFECT OF DOCUMENTS. Borrower hereby
acknowledges, confirms and agrees that: (a) each of the Loan Documents to which
it is a party has been duly executed and delivered to Documentation Agent by
Borrower, and each is in full force and effect as of the date hereof, (b) the
agreements and obligations of Borrower contained in such documents and in this
Amendment constitute the legal, valid and binding Obligations of Borrower,
enforceable against it in accordance with their respective terms, and Borrower
has no valid defense to the enforcement of such Obligations, and (c) Co-Agents
and Lenders are and shall be entitled to the rights, remedies and benefits
provided for in the Loan Documents and applicable law.
5. COMMERCIAL TORT CLAIMS. Borrower represents that, as of the
Third Amendment Closing Date, it does not have any Commercial Tort Claims.
6. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective upon satisfaction of each of the following conditions:
(a) Documentation Agent shall have received
copies of this Amendment that bear the signatures of Borrower, GE Capital and
Bank; and
(b) Documentation Agent shall have received a
copy of the accompanying Acknowledgment executed by Parent.
7. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants that the representations and warranties contained in the Loan Agreement
were true and correct in all material respects when made and, except to the
extent (a) that a particular representation or warranty by its terms expressly
applies only to an earlier date, (b) Borrower has previously advised Co-Agents
in writing as contemplated under the Loan Agreement, or (c) amended by this
Amendment, are true and correct in all material respects as of the date hereof.
All representations and warranties contained in the Loan Agreement which
expressly
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applied to the Closing Date, as amended in part by Section 7 of the Second
Amendment, remain true and correct in all material respects as of the Third
Amendment Closing Date. The Loan Agreement shall continue in full force and
effect in accordance with the provisions thereof on the date hereof.
8. ENTIRE AGREEMENT. This Amendment, together with the Loan
Agreement and the other Loan Documents, is the entire agreement between the
parties hereto with respect to the subject matter hereof. This Amendment
supersedes all prior and contemporaneous oral and written agreements and
discussions with respect to the subject matter hereof. Except as otherwise
expressly modified herein, the Loan Documents shall remain in full force and
effect.
9. MISCELLANEOUS.
9.1 COUNTERPARTS. This Amendment may be executed in
identical counterpart copies, each of which shall be an original, but all of
which shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Amendment by facsimile transmission
shall be effective as delivery of a manually executed counterpart of this
Amendment. Any Person delivering this Amendment by facsimile shall send the
original manually executed counterpart of this Amendment to Documentation Agent
promptly after such facsimile transmission.
9.2 HEADINGS. Section headings used herein are for
convenience of reference only, are not part of this Amendment, and are not to be
taken into consideration in interpreting this Amendment.
9.3 RECITALS. The recitals set forth at the beginning of
this Amendment are true and correct, and such recitals are incorporated into and
are a part of this Amendment.
9.4 GOVERNING LAW. This Amendment shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California applicable to contracts made and performed in such state, without
regard to the principles thereof regarding conflict of laws.
9.5 NO WAIVER. Except as specifically set forth in
paragraph 3 of this Amendment, the execution, delivery and effectiveness of this
Amendment shall not (a) limit, impair, constitute a waiver of or otherwise
affect any right, power or remedy by Administrative Agent, Documentation Agent
or any Lender under the Loan Agreement or any other Loan Document, (b)
constitute a waiver of any provision in the Loan Agreement or in any of the
other Loan Documents, or (c) alter, modify, amend or in any way affect any of
the terms, conditions, obligations, covenants or agreements contained in the
Loan Agreement, all of which are ratified and affirmed in all respects and shall
continue in full force and effect.
9.6 CONFLICT OF TERMS. In the event of any inconsistency
between the provisions of this Amendment and any provision of the Loan
Agreement, the terms and provisions of this Amendment shall govern and control.
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IN WITNESS WHEREOF, the parties have entered into this
Amendment on the date first above written.
"Borrower"
GOOD GUYS CALIFORNIA, INC.
By /s/ Xxxxx X. Xxxxxx
-------------------
Xxxxx X. Xxxxxx
Chief Operating Officer
"Administrative Agent"
BANK OF AMERICA, N.A.,
as the Administrative Agent
By /s/ Xxxx X. XxXxxxxx
--------------------
Xxxx X. XxXxxxxx
Vice President
"Documentation Agent"
GENERAL ELECTRIC CAPITAL CORPORATION,
as the Documentation Agent
By /s/ Xxxx Xxxxxxx
-----------------
Xxxx Xxxxxxx
Duly Authorized Signatory
"Lenders"
BANK OF AMERICA, N.A., as a Lender
By /s/ Xxxx X. XxXxxxxx
---------------------
Xxxx X. XxXxxxxx
Vice President
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By /s/ Xxxx Xxxxxxx
-----------------
Xxxx Xxxxxxx
Duly Authorized Signatory
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ACKNOWLEDGMENT
Parent hereby acknowledges that it has received and reviewed a copy of
the Third Amendment. Parent hereby reaffirms each and every one of its
obligations under the Parent Guaranty. Without limiting the generality of the
foregoing, Parent agrees and acknowledges that the Parent Guaranty applies with
full force and effect to the Loan Agreement as amended by the Third Amendment
and as previously amended.
"Parent"
GOOD GUYS, INC.
By /s/ Xxxxx X. Xxxxxx
--------------------
Xxxxx X. Xxxxxx
Chief Operating Officer
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