EXHIBIT 10.38
INTERCREDITOR AND SUBORDINATION AGREEMENT
INTERCREDITOR AND SUBORDINATION AGREEMENT, dated as of
September 29, 2003 by and among CompUSA Inc., a Delaware corporation (the
"Subordinated Lender"; collectively, together with any other holders from time
to time of the Subordinated Obligations, the "Subordinated Lenders"), Good Guys
California, Inc., a California corporation (together with its successors and
assigns, the "Borrower"), Good Guys, Inc., a Delaware corporation, (together
with its successors and assigns, "Holdings") (Borrower, Holdings and the other
Credit Parties to the Senior Credit Agreement identified below may be referred
to herein collectively as the "Credit Parties" and individually as a "Credit
Party") and BANK OF AMERICA, N.A., a national banking association, as
administrative agent for the Lenders (the "Senior Lenders") from time to time
party to the Senior Credit Agreement (together with its successors and assigns,
the "Senior Agent").
The parties hereto hereby agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, terms defined in the
Senior Credit Agreement and used herein shall have the meanings given to them in
the Senior Credit Agreement.
(b) The following terms shall have the following
meanings:
"Agreement": this Intercreditor and Subordination Agreement,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Blockage Notice": a written notice from the Senior Agent to
the Subordinated Lenders that (a) an Other Event of Default has occurred and is
continuing or (b) an Other Event of Default would occur if a scheduled interest
or principal payment were made under the Subordinated Note in accordance with
the terms thereof.
"Blockage Period": any period commencing on the date a
Blockage Notice is given and ending on the earlier to occur of: (a) the date
when (1) the Event of Default that was the basis for such notice has been cured
or waived or (2) the conditions shall have ceased to exist which would cause an
Event of Default to occur if a scheduled interest or principal payment were made
under the Subordinated Note in accordance with the terms thereof; and (b) 180
days after the date such Blockage Notice is given.
"Collateral": the collective reference to any and all property
from time to time subject to security interests to secure payment or performance
of the Senior Obligations or the Subordinated Obligations.
"Collateral Enforcement Action": shall mean any action by any
Subordinated Lender to (a) exercise or seek to exercise any rights or exercise
any remedies with respect to any Collateral, (b) institute any action or
proceeding with respect to such rights or remedies, including without
limitation, any action of foreclosure or (c) contest, protest or object to any
foreclosure proceeding, postpetition financing, use of
cash collateral or action brought by the Senior Agent or any Senior Lender or to
any other exercise by the Senior Agent or any Senior Lender of any rights and
remedies under any Senior Loan Documents.
"Collection Action": shall mean (a) to demand, ▇▇▇ for, take
or receive from or on behalf of any Credit Party or any guarantor of the
Subordinated Obligations, by set-off or in any other manner, the whole or any
part of any moneys which may now or hereafter be owing by any Credit Party with
respect to the Subordinated Obligations, (b) to initiate or participate with
others in any suit, action or proceeding against any Credit Party to (i) enforce
payment of or to collect the whole or any part of the Subordinated Obligations
or (ii) commence judicial enforcement of any of the rights and remedies under
the Subordinated Loan Documents or applicable law with respect to the
Subordinated Obligations or the Subordinated Loan Documents, including
initiating, participating in or commencing a case or proceeding referred to in
the definition of Insolvency Event, (c) to accelerate any Subordinated
Obligations, or (d) to exercise any put option or to cause any Credit Party to
honor any redemption or mandatory prepayment obligation under any Subordinated
Loan Document.
"Insolvency Event": (a) any Credit Party or any of its
Subsidiaries commencing any case, proceeding or other action (1) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, conservatorship or relief of debtors,
seeking to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to it or its debts, or (2) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all or
any substantial part of its assets, or any Credit Party or any of its
Subsidiaries making a general assignment for the benefit of its creditors; or
(b) there being commenced against any Credit Party or any of its Subsidiaries
any case, proceeding or other action of a nature referred to in clause (a) above
which (1) results in the entry of an order for relief or any such adjudication
or appointment or (2) remains undismissed, undischarged or unbonded for a period
of 60 days; or (c) there being commenced against any Credit Party or any of its
Subsidiaries any case, proceeding or other action seeking issuance of a warrant
of attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (d) any Credit Party or
any of its Subsidiaries taking any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(a), (b) or (c) above; or (e) any Credit Party or any of its Subsidiaries
generally not paying, or being unable to pay, or admitting in writing its
inability to pay, its debts as they become due.
"Other Event of Default": any Event of Default (other than a
Payment Event of Default) under the Senior Credit Agreement or any of the Senior
Loan Documents or any event the occurrence of which entitles the Senior Agent or
Senior Lenders to accelerate the maturity of any of the Senior Obligations.
"Net Sale Proceeds": the sum of cash proceeds received from
any sale of all or any portion of the Collateral, net of all commissions and
other fees and all other out-of-pocket costs and expenses whatsoever incurred by
the Credit Parties, the Senior Lenders and/or the Senior Agent in connection
with such sale, including without limitation, legal fees and appraisal costs.
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"Payment Event of Default": any default in the payment of the
Senior Obligations (whether upon maturity, mandatory prepayment, acceleration or
otherwise) beyond any applicable grace period with respect thereto.
"Permitted Securities": securities of any Credit Party or
other Person, the payment of which is subordinated, at least to the extent and
substantially on the terms set forth in this Agreement, to the prior payment in
full of all then outstanding Senior Obligations and to any securities issued in
respect of any Senior Obligations under any plan of partial or complete
liquidation, reorganization, readjustment, arrangement, composition or
extension.
"Senior Credit Agreement": the Loan and Security Agreement
dated as of September 30, 1999, as amended by that certain First Amendment to
Loan and Security Agreement dated as of August 16, 2001, by those certain letter
amendments dated as of March 27, 2002, and May 15, 2002, and as further amended
by that certain Second Amendment to Loan and Security Agreement dated as of May
22, 2001, that certain Third Amendment to Loan and Security Agreement dated as
of July 2, 2002, and that certain Fourth Amendment to Loan and Security
Agreement dated as of July 8, 2003, among the Borrower, the other Credit
Parties, the Senior Lenders, General Electric Capital Corporation as
documentation agent, and the Senior Agent, as the same may be further amended,
modified or supplemented from time to time, including, without limitation,
amendments, modifications, supplements and restatements thereof giving effect to
increases in the Senior Loans (including increases in the Borrowing Base or
other measurements of availability of the Senior Loans), renewals, extensions,
refundings, deferrals, restructurings, replacements or refinancings of, or
additions to, the arrangements provided in such Credit Agreement (whether
provided by the original Senior Agent or a successor Senior Agent or other
Lenders).
"Senior Loans": the loans made by the Senior Lenders to the
Borrower pursuant to the Senior Credit Agreement.
"Senior Loan Documents": the collective reference to the
Senior Credit Agreement, the Senior Notes, the Senior Security Documents and all
other documents that from time to time evidence the Senior Obligations or secure
payment or performance thereof, as modified from time to time.
"Senior Notes": the promissory notes of the Borrower
outstanding from time to time under the Senior Credit Agreement.
"Senior Obligations": the collective reference to the unpaid
principal of and interest on the Senior Notes and all other obligations and
liabilities of the Credit Parties to the Senior Lenders or the Senior Agent of
whatever kind or nature pursuant to, under or in connection with the Senior Loan
Documents (including, without limitation, indemnity obligations with respect to
claims asserted or threatened by third parties, interest accruing at the then
applicable rate provided in the Senior Credit Agreement after the maturity of
the Senior Loans and interest accruing at the then applicable rate provided in
the Senior Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, whether
arising under, out of, or in connection with, the Senior Credit Agreement, the
Senior Notes, this Agreement, the other Senior Loan
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Documents or any other document made, delivered or given by any Credit Party, in
each case whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Senior Agent that are required to
be paid by Credit Parties pursuant to the terms of the Senior Credit Agreement
or this Agreement or any other Senior Loan Document).
"Senior Security Documents": the collective reference to all
documents and instruments, now existing or hereafter arising, which create or
purport to create a security interest in property to secure payment or
performance of the Senior Obligations.
"Subordinated Loan Documents: the collective reference to the
Subordinated Note and any other documents or instruments that from time to time
evidence the Subordinated Obligations or secure or support payment or
performance thereof.
"Subordinated Loan": the loans made by the Subordinated
Lenders pursuant to the Subordinated Loan Documents.
"Subordinated Note": the Unsecured Subordinated Convertible
Promissory Note, dated September 29, 2003, from the Borrower to Subordinated
Lender, in the original principal amount of $5,000,000.
"Subordinated Obligations": the collective reference to the
unpaid principal and interest on the Subordinated Note and all other obligations
and liabilities of any of the Credit Parties to the Subordinated Lenders
(including, without limitation, interest accruing at the then applicable rate
provided in the Subordinated Loan Documents after the maturity of the
Subordinated Loan and interest accruing at the then applicable rate provided in
the Subordinated Loan Documents after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, the
Subordinated Loan Documents, the Subordinated Note, this Agreement, or any other
Subordinated Loan Document, in each case whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of counsel
to the Subordinated Lenders that are required to be paid by any Credit Party
pursuant to the terms of this Agreement or any other Subordinated Loan
Document).
"Uniform Commercial Code": the Uniform Commercial Code as the
same may, from time to time, be enacted and in effect in the State of
California; provided, that to the extent that the Uniform Commercial Code is
used to define any term herein or in any Loan Document and such term is defined
differently in different Articles or Divisions of the Uniform Commercial Code,
the definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of, or remedies with
respect to, Senior Lenders' Lien on any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other than the State
of California, the term "Uniform Commercial Code" shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction solely for
purposes of the provisions thereof relating to such attachment, perfection,
priority or remedies and for
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purposes of definitions related to such provisions.
(c) The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
section and paragraph references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. Subordination.
(a) Each Credit Party and each of the Subordinated
Lenders agrees, for itself and each future holder of the Subordinated
Obligations, that the Subordinated Obligations are expressly "subordinate and
junior in right of payment" (as that phrase is defined in paragraph 2(b)) to all
Senior Obligations.
(b) "Subordinate and junior in right of payment" means
that: (1) no part of the Subordinated Obligations shall have any claim to the
assets of any Credit Party on a parity with or prior to the claim of the Senior
Obligations; and (2) without the express prior written consent of the Senior
Agent, no Subordinated Lender will take, demand or receive from any Credit
Party, and no Credit Party will make, give or permit, directly or indirectly, by
set-off, redemption, purchase or in any other manner, any payment of (of
whatever kind or nature, whether in cash, property, securities (other than
Permitted Securities) or otherwise) the Subordinated Obligations, including,
without limitation, any letter of credit or similar credit support facility to
support payment of the Subordinated Obligations, unless and until the Senior
Obligations have been paid in full and the obligation of Senior Agent and Senior
Lenders to extend credit to Borrower under the Senior Loan Documents shall have
been irrevocably terminated; provided, however, that at any time, except during
a Blockage Period or when a Payment Event of Default has occurred and is
continuing, the Borrower may make, and the Subordinated Lenders may receive,
regularly scheduled payments (not prepayments) on account of interest on the
Subordinated Note in accordance with the terms thereof determined on a
non-accelerated basis (without giving effect to any default rate of interest
thereunder) and principal payments when due (but no sooner than September 29,
2005) upon the "Maturity Date" of the Subordinated Note (as such term is defined
in the Subordinated Note). Notwithstanding clause (2), the Subordinated Lender
shall be entitled to accept and receive payment in full of the Subordinated
Obligations as a result of the refinancing of the Subordinated Obligations if
(i) such refinancing does not shorten the maturity date, increase the interest
rate or fees payable, or increase the principal amount applicable to the
Subordinated Obligations and (ii) the provider of such refinancing debt subjects
such debt to the terms of this Intercreditor and Subordination Agreement.
(c) Upon the termination of any Blockage Period or if any
Payment Event of Default has been cured or waived or shall have ceased to exist,
the Subordinated Lenders' right to receive payments as provided in clause
2(b)(2) shall be reinstated and, subject to the limitations of clause 2(b)(2),
the Borrower may resume making such payments to the Subordinated Lenders
including any payments that were deferred as a result thereof.
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(d) The expressions "prior payment in full," "payment in
full," "paid in full" and any other similar terms or phrases when used herein
with respect to the Senior Obligations shall mean the payment in full, in
immediately available funds, of all of the Senior Obligations.
3. Additional Provisions Concerning Subordination.
(a) The Subordinated Lenders and each Credit Party agree
that upon the occurrence of any Insolvency Event:
(1) all Senior Obligations shall be paid in full
before any payment or distribution of whatever kind or nature is made with
respect to the Subordinated Obligations; provided, however, that Subordinated
Lenders may receive and retain any distributions on account of Subordinated
Obligations to the extent such distributions consist solely of Permitted
Securities; and
(2) any payment or distribution of assets of any
Credit Party, whether in cash, property or securities (other than Permitted
Securities), to which any Subordinated Lender would be entitled except for the
provisions hereof, shall be paid or delivered by such Credit Party, or any
receiver, trustee in bankruptcy, liquidating trustee, disbursing agent or other
Person making such payment or distribution, directly to the Senior Agent, to the
extent necessary to pay in full all Senior Obligations, before any payment or
distribution of any kind or nature shall be made to any Subordinated Lender.
(b) Upon the occurrence of any "Insolvency Event":
(1) each Subordinated Lender irrevocably
authorizes and empowers the Senior Agent (A) to demand, ▇▇▇ for, collect and
receive every payment or distribution on account of the Subordinated Obligations
payable or deliverable in connection with such event or proceeding and give
acquittance therefor, (B) to file claims and proofs of claim in any statutory or
non-statutory proceeding and (C) to take such other actions, in its own name as
Senior Agent, or in the name of the Subordinated Lenders or otherwise, as the
Senior Agent may deem necessary or advisable for the enforcement of the
provisions of this Agreement; provided, however, that the foregoing
authorization and empowerment imposes no obligation on the Senior Agent to take
any such action;
(2) each Subordinated Lender shall take such
action, duly and promptly, as the Senior Agent may request from time to time (A)
to collect the Subordinated Obligations for the account of the Senior Agent and
(B) to file appropriate proofs of claim in respect of the Subordinated
Obligations; and
(3) each Subordinated Lender shall execute and
deliver such powers of attorney, assignments or proofs of claim or other
instruments as the Senior Agent may request to enable the Senior Agent to
enforce any and all claims in respect of the Subordinated Obligations and to
collect and receive any and all payments and distributions which may be payable
or deliverable at any time upon or in respect of the Subordinated Obligations.
(c) If any payment or distribution, whether consisting of
money, property or securities (other than Permitted Securities), shall be
collected or received by any Subordinated Lender in respect of
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the Subordinated Obligations or the Collateral, except payments permitted to be
made at the time of payment or pursuant to a refinancing as provided in
paragraph 2(b), such Subordinated Lender shall forthwith deliver the same to the
Senior Agent, in the form received, duly endorsed to the Senior Agent, if
required, to be applied to the payment or prepayment of the Senior Obligations
until the Senior Obligations are paid in full. Until so delivered, such payment
or distribution shall be held in trust by such Subordinated Lender as the
property of the Senior Agent, segregated from other funds and property held by
such Subordinated Lender.
(d) Until the Senior Obligations are paid in full in
cash, the Subordinated Lenders shall not take any Collection Action or
Collateral Enforcement Action with respect to the Subordinated Obligations,
except for a Collection Action as permitted in the following sentence. Upon the
earlier to occur of (A) acceleration of the Senior Obligations or (B) the
passage of 180 days from the delivery of notice to Senior Agent that a default
has occurred with respect to the Subordinated Obligations and such default shall
not have been cured or waived within such period, the Subordinated Lenders may,
upon five days' prior written notice to Senior Agent, accelerate the
Subordinated Obligations or take any other Collection Action (but not a
Collateral Enforcement Action) which is not in contravention of the provisions
of this Agreement; provided, however, that if following the acceleration of the
Senior Debt as described in clause (A) above, such acceleration is rescinded,
then all Collection Actions taken by the Subordinated Lenders shall likewise be
rescinded if such Collection Action is based solely on clause (A) above.
Notwithstanding the foregoing, until the Senior Obligations are paid in full in
cash and all lending commitments under the Senior Credit Agreement have been
terminated, the Subordinated Lenders shall not (nor shall any agent on their
behalf), without the prior written consent of the Senior Agent and the Senior
Lenders, take any Collateral Enforcement Action.
4. Rights in Collateral.
(a) Notwithstanding anything to the contrary contained in
the Senior Credit Agreement, any Senior Security Document, any other Senior Loan
Document or any Subordinated Security Document or other Subordinated Loan
Document and irrespective of:
(1) the time, order or method of attachment or
perfection of the security interests created by any Senior Security Document or
any Subordinated Security Document;
(2) the time or order of filing or recording of
financing statements or other documents filed or recorded to perfect security
interests in any Collateral;
(3) anything contained in any filing or
agreement to which the Senior Agent or any Subordinated Lender now or hereafter
may be a party; and
(4) the rules for determining perfection or
priority under the Uniform Commercial Code or any other law governing the
relative priorities of secured creditors, any security interest in any
Collateral pursuant to any Senior Security Document has and shall have priority,
to the extent of any unpaid Senior Obligations, over any security interest in
such Collateral pursuant to any Subordinated Security Document.
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(b) So long as the Senior Obligations have not been paid
in full and any Senior Security Document remains in effect, whether or not any
Insolvency Event has occurred,
(1) no Subordinated Lender will take any
Collateral Enforcement Action; and
(2) the Senior Agent and any Senior Lender shall
have the exclusive right to enforce rights and exercise remedies with respect to
the Collateral and Senior Agent shall not be required to marshal any Collateral.
(c) In exercising rights and remedies with respect to the
Collateral, the Senior Agent and Senior Lenders may enforce the provisions of
the Senior Security Documents and exercise remedies thereunder and under any
other Senior Loan Documents, all in such order and in such manner as it or they
may determine in the exercise of its or their sole business judgment. Such
exercise and enforcement shall include, without limitation, the rights to sell
or otherwise dispose of Collateral, to incur expenses in connection with such
sale or disposition and to exercise all the rights and remedies of a secured
lender under the Uniform Commercial Code of any applicable jurisdiction. In
conducting any public or private sale under the Uniform Commercial Code, the
Senior Agent shall give the Subordinated Lenders such notice of such sale as may
be required by the applicable Uniform Commercial Code; provided, however, that
10 days' notice shall be deemed to be commercially reasonable notice.
(d) Any money, property or securities realized upon the
sale, disposition or other realization by the Senior Agent upon all or any part
of the Collateral, shall be applied by the Senior Agent in the following order:
(1) First, to the payment in full of all costs
and expenses (including, without limitation, attorneys' fees and disbursements)
paid or incurred by the Senior Agent or the Senior Lenders in connection with
such realization on the Collateral or the protection of their rights and
interests therein;
(2) Second, to the payment in full of all Senior
Obligations in such order as the Senior Agent may elect in its sole discretion;
(3) Third, to the payment in full of all
Subordinated Obligations then due and which are secured by such Collateral,
which shall be paid to Subordinated Lender, for itself and as agent for any
other Subordinated Lenders; and
(4) Fourth, to pay to the Borrower, or its
representative or as a court of competent jurisdiction may direct, any surplus
then remaining.
(e) The Senior Agent's rights with respect to the
Collateral include the right to release any or all of the Collateral from the
Lien under any Senior Security Document or Subordinated Security Document in
connection with any sale of all or any portion of the Collateral. The
Subordinated Lenders are hereby deemed to have consented to such sale(s) under
the Subordinated Loan Documents. Concurrently with the execution of this
Agreement, and from time to time thereafter, the Subordinated Lenders shall
deliver to the Senior Agent such duly executed and undated Uniform Commercial
Code and, as applicable, intellectual property terminations, satisfactions and
discharges of mortgages (the term
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"mortgage" being deemed to include mortgage deeds, deeds of trust and other
similar instruments creating a lien on real property), termination statements
and partial release statements (in blank as to the assets being released), as
the Senior Agent may request with respect to the Subordinated Lenders' liens on
the Credit Parties' assets. If the Senior Agent shall determine, in connection
with any sale of Collateral, that the termination, satisfaction, discharge or
partial release of the Lien on all or any portion of the Collateral under any
Subordinated Security Document in connection with such sale is necessary or
advisable, the Senior Agent may deliver to the applicable purchaser at such sale
(or, upon the request of such purchaser, file) such previously delivered
termination, satisfaction, discharge or partial release documents, which partial
release documents the Senior Agent is hereby authorized to complete (whether one
or more and from time to time)) by inserting the description of the assets to be
released. The Subordinated Lenders shall execute such other release,
satisfaction, discharge and termination documents and instruments and shall take
such further actions as the Senior Agent shall request. Each Subordinated Lender
hereby irrevocably constitutes and appoints the Senior Agent and any officer or
Senior Agent, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Subordinated Lender and in the name of such Subordinated Lender or
in the Senior Agent's own name, from time to time in the Senior Agent's
discretion, for the purpose of carrying out the terms of this paragraph, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this paragraph, including, without limitation, any terminations of financing
statements, partial lien releases, mortgage satisfactions and discharges,
endorsements, assignments or other instruments of transfer, termination or
release, and, in addition, to take any and all other appropriate and
commercially reasonably action for the purpose of carrying out the terms of this
paragraph. Each Subordinated Lender hereby ratifies all that said attorneys
shall lawfully do or cause to be done pursuant to the power of attorney granted
in this paragraph. No person to whom this power of attorney is presented, as
authority for Senior Agent to take any action or actions contemplated hereby,
shall be required to inquire into or seek confirmation from any Subordinated
Lender as to the authority of Senior Agent to take any action described herein,
or as to the existence of or fulfillment of any condition to this power of
attorney, which is intended to grant to Senior Agent unconditionally the
authority to take and perform the actions contemplated herein. Each Subordinated
Lender irrevocably waives any right to commence any suit or action, in law or
equity, against any person or entity which acts in reliance upon or acknowledges
the authority granted under this power of attorney.
(f) Notwithstanding anything contained herein, until all
Senior Obligations have been paid in full and the Senior Security Documents are
no longer are in effect, no Subordinated Lenders shall, without the prior
written consent of Senior Agent, permit to exist any security interest, charge,
encumbrance or other Lien on any Collateral or other property or assets of any
Credit Party to secure or provide for payment or performance of the Subordinated
Obligations, or exercise any right of set off or counterclaim which the
Subordinated Lenders may have with respect to any amounts payable or to be paid
by the Subordinated Lenders to any Credit Party.
5. Consent of Subordinated Lenders.
(a) Each Subordinated Lender consents that, without the
necessity of any reservation of rights against any Subordinated Lender, and
without notice to or further assent by any Subordinated Lender:
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(1) any demand for payment of any Senior
Obligations made by the Senior Agent or any Senior Lender may be rescinded in
whole or in part by the Senior Agent or such Senior Lender, and any Senior
Obligation may be continued, and the Senior Obligations, or the liability of any
Credit Party or any other party upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, or any
obligation or liability of any Credit Party or any other party under the Senior
Credit Agreement or any other agreement, may, from time to time, in whole or in
part, be renewed, extended, modified, accelerated, compromised, waived,
surrendered, or released by the Senior Agent; and
(2) the Senior Credit Agreement, the Senior
Notes and any other Senior Loan Document may be amended, modified, extended,
supplemented, restated, refinanced, refunded, restructured or terminated, in
whole or in part, as the Senior Agent and Senior Lenders may deem advisable from
time to time, and any collateral security at any time held by the Senior Agent
or any Senior Lender for the payment of any of the Senior Obligations may be
sold, exchanged, waived, surrendered or released; in each case all without
notice to or further assent by any Subordinated Lender, which will remain bound
under this Agreement, and all without impairing, abridging, releasing or
affecting the subordination provided for herein.
(b) Each Subordinated Lender waives any and all notice of
the creation, renewal, extension or accrual of any of the Senior Obligations and
notice of or proof of reliance by the Senior Agent upon this Agreement. The
Senior Obligations, and any of them, shall be deemed conclusively to have been
created, contracted or incurred in reliance upon this Agreement, and all
dealings between any Credit Party, on one hand, and the Senior Agent or any
Senior Lender, on the other hand, shall be deemed to have been consummated in
reliance upon this Agreement. Each Subordinated Lender acknowledges and agrees
that the Senior Lenders and the Senior Agent have relied upon the subordination
provided for herein in entering into the Senior Credit Agreement and in making
funds available to the Borrower thereunder. Each Subordinated Lender waives
notice of or proof of reliance on this Agreement and protest, demand for payment
and notice of default.
6. Negative Covenants of the Subordinated Lenders. So
long as any of the Senior Obligations shall remain outstanding or the obligation
of Senior Agent or any Senior Lender to extend credit to Borrower remains in
effect, no Subordinated Lender shall, without the prior written consent of the
Senior Agent:
(a) sell, assign, or otherwise transfer, in whole or in
part, the Subordinated Obligations or any interest therein to any other Person
(a "Transferee") or create, incur or suffer to exist any security interest,
lien, charge or other encumbrance whatsoever upon the Subordinated Obligations
in favor of any Transferee unless (1) such action is made expressly subject to
this Agreement and (2) the Transferee expressly acknowledges to the Senior
Agent, by a writing in form and substance reasonably satisfactory to the Senior
Agent, the subordination provided for herein and agrees to be bound by all of
the terms hereof; or
10
(b) permit any of the Subordinated Loan Documents to be
amended, modified or otherwise supplemented (including by way of changes to
definitions) in any manner which would have the effect of (A) increasing the
maximum principal amount of the Subordinated Obligations or rate of interest on
any of the Subordinated Obligations or fees payable in respect thereof, (B)
changing or adding or tightening any event of default or any covenant with
respect to the Subordinated Obligations, (C) changing any redemption or
prepayment provisions of the Subordinated Obligations, (D) altering the
subordination provisions with respect to the Subordinated Obligations,
including, without limitation, subordinating the Subordinated Obligations to any
other debt, (E) shortening the dates upon which payments of principal or
interest are due on any of the Subordinated Obligations, or (F) changing or
amending any other term of the Subordinated Loan Documents if such change or
amendment would increase the obligations of any Credit Party or confer
additional rights on the Subordinated Lenders or any other holder of the
Subordinated Obligations in a manner adverse (in the reasonable judgment of the
Senior Agent) to the Senior Agent or the Senior Lenders, and the parties hereto
agree that any such amendment shall be null and void ab initio and without legal
force and effect.
7. Senior Obligations Unconditional. All rights and
interests of the Senior Agent hereunder, and all agreements and obligations of
the Subordinated Lenders and the Credit Parties hereunder, shall remain in full
force and effect irrespective of:
(a) any lack of validity or enforceability of any Senior
Security Documents or any other Senior Loan Documents;
(b) subject to paragraph 5(a), any change in the time,
manner or place of payment of, or in any other term of, all or any of the Senior
Obligations, or any amendment or waiver or other modification, whether by course
of conduct or otherwise, of the terms of the Senior Credit Agreement or any
other Senior Security Document;
(c) subject to paragraph 5(a), any exchange, release or
non-perfection of any security interest in any Collateral, or any release,
amendment, waiver or other modification, whether in writing or by course of
conduct or otherwise, of all or any of the Senior Obligations or any guarantee
thereof; or
(d) any other circumstances which otherwise might
constitute a defense available to, or a discharge of, any Credit Party in
respect of the Senior Obligations, or of any Subordinated Lender or any Credit
Party in respect of this Agreement.
8. Representations and Warranties. Each Subordinated
Lender represents and warrants to the Senior Agent that:
(a) its Subordinated Note (1) have been issued to it for
good and valuable consideration, (2) are owned by such Subordinated Lender free
and clear of any security interests, liens, charges or encumbrances whatsoever
arising from, through or under such Subordinated Lender, other than the interest
of the Senior Agent under this Agreement, (3) are payable solely and exclusively
to such Subordinated Lender and to no other Person and are payable without
deduction for any defense, offset or counterclaim, and (4) constitute the only
evidence of the obligations evidenced thereby;
11
(b) such Subordinated Lender has the corporate power and
authority and the legal right to execute and deliver and to perform its
obligations under this Agreement and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Agreement;
(c) this Agreement constitutes a legal, valid and binding
obligation of such Subordinated Lender;
(d) the execution, delivery and performance of this
Agreement will not violate any provision of any requirement of law or
contractual obligation of such Subordinated Lender and will not result in the
creation or imposition of any Lien on any of the properties or revenues of such
Subordinated Lender pursuant to any requirement of law affecting or any
contractual obligation of such Subordinated Lender, except the interest of the
Senior Agent under this Agreement; and
(e) no consent or authorization of, filing with, or other
act by or in respect of, any arbitrator or Governmental Authority and no consent
of any other Person (including, without limitation, any stockholder or creditor
of such Subordinated Lender), is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement, except for
any such consent, authorization, filing or other act that has been obtained or
made.
9. Representation by Senior Agent. The Senior Lenders
and the Senior Agent have not made and do not hereby or otherwise make to the
Subordinated Lenders, any representations or warranties, express, or implied
other than the following: (a) the Senior Agent has the corporate power and
authority and the legal right to execute and deliver and to perform its
obligations under this Agreement and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Agreement; and (b)
this Agreement constitutes a legal, valid and binding obligation of the Senior
Agent. Neither the Senior Lenders nor the Senior Agent assume any liability to
any Subordinated Lender with respect to: (a) the financial or other condition of
obligors under any instruments of guarantee with respect to the Senior
Obligations, (b) the enforceability, validity, value or collectibility of the
Senior Obligations or the Subordinated Obligations, any collateral therefor, or
any guarantee or security which may have been granted in connection with any of
the Senior Obligations or the Subordinated Obligations or (c) any Credit Party's
title or right to transfer any collateral or security.
10. Waiver of Claims. To the maximum extent permitted by
law, each Subordinated Lender waives any claim it might have against the Senior
Agent with respect to, or arising out of, any action or failure to act or any
error of judgment, negligence, or mistake or oversight whatsoever on the part of
the Senior Agent or any Senior Lenders or their respective directors, officers,
employees or agents with respect to any exercise of rights or remedies under the
Senior Loan Documents or any transaction relating to the Collateral. Neither the
Senior Agent nor any Senior Lender, nor any of their respective directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Credit Party or any Subordinated Lender or any other Person or to
take any other action whatsoever with regard to the Collateral or any part
thereof.
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11. Provisions Applicable After Bankruptcy. The
provisions of this Agreement shall continue in full force and effect
notwithstanding the occurrence of any Insolvency Event. To the extent that any
Subordinated Lender has or acquires any rights under Section 362, 363 or 364 of
the Bankruptcy Code with respect to the Collateral, such Subordinated Lender
hereby agrees not to assert such rights without the prior written consent of the
Senior Agent; provided that, if requested by the Senior Agent, such Subordinated
Lender shall seek to exercise such rights in the manner requested by the Senior
Agent, including the rights in payments in respect of such rights. Without
limiting the generality of the foregoing sentence, to the extent that Senior
Agent or Senior Lenders consent to any Credit Party's use of cash collateral
under Section 363 of the Bankruptcy Code or Senior Agent or any Senior Lender
agrees to provide financing to Borrower under Section 364 of the Bankruptcy
Code, each Subordinated Lender hereby agrees not to impede, object to (on
grounds of lack of adequate protection, or otherwise), or otherwise interfere
with such use of cash collateral or financing. Each Subordinated Lender
specifically agrees that the Senior Agent and the Senior Lenders may consent to
any Credit Party's use of cash collateral or provide financing to any Credit
Party on such terms and conditions and in such amounts as the Senior Agent and
the Senior Lenders, in their sole discretion, may decide and that, in connection
with such cash collateral usage or such financing, any Credit Party (or a
trustee appointed for the estate of such Credit Party) may grant to the Senior
Agent and/or Senior Lenders liens and security interests upon all or any part of
the assets of the Borrower or other Credit Party, which liens and security
interests: (i) shall secure payments of all Senior Obligations (whether such
Senior Obligations arose prior to the filing of the bankruptcy petition or
thereafter); and (ii) shall be superior in priority to the liens on and security
interests in the assets of Borrower or other Credit Party held by the
Subordinated Lenders. Each Subordinated Lender (both in its capacity as a
Subordinated Lender and in its capacity (if any) as a party which may be
obligated to any Credit Party or any Credit Party's Affiliates with respect to
contracts which are part of the Senior Agent's or any Senior Lender's
Collateral) agrees not to initiate or prosecute or encourage any other Person to
initiate or prosecute any claim, action, objection or other proceeding (A)
challenging the enforceability of the claim of Senior Agent or any Senior
Lender, (B) challenging the enforceability of any liens or security interests in
any assets securing the Senior Obligations, or (C) asserting any claims which
any Credit Party may hold with respect to Senior Agent or any Senior Lender. All
allocations of payments among the Senior Agent, Senior Lenders and the
Subordinated Lender shall, subject to any court order, continue to be made after
the filing of a petition under the United States Bankruptcy Code, as amended
(the "Bankruptcy Code"), or any similar proceeding, on the same basis that the
payments were to be allocated prior to the date of such filing. Each
Subordinated Lender agrees that it will not object to or oppose a sale or other
disposition of any assets securing the Senior Obligations (or any portion
thereof) free and clear of its security interests, liens or other claims under
Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code
if the Senior Agent or Senior Lenders have consented to such sale or disposition
of such assets. Each Subordinated Lender agrees not to assert any right it may
have to "adequate protection" of its interest in the Collateral in any
bankruptcy proceeding and agrees that it will not seek to have the automatic
stay lifted with respect to such security, without the prior written consent of
the Senior Agent and Senior Lenders. Each Subordinated Lender waives any claim
it may now or hereafter have against the Senior Agent or any Senior Lender
arising out of the election of Senior Agent or any Senior Lender, in any case
instituted under the Bankruptcy Code, of the application of Section 1111(b)(2)
of the Bankruptcy Code, and/or out of any cash collateral arrangement, or
financing arrangement, or out of any grant of a security interest, under Section
363 or 364 of the Bankruptcy Code, with or by any Credit Party, as debtor in
possession (or with or by any trustee for any Credit Party). Each Subordinated
Lender agrees that it will not, in its capacity as a secured creditor: (a)
propose, vote to
13
accept, or otherwise support confirmation of, a plan of reorganization opposed
by the Senior Agent or Senior Lenders, or (b) vote to reject, object to
confirmation of, or otherwise oppose confirmation of, a plan of reorganization
supported by the Senior Agent. The subordination and other provisions of this
Agreement shall be enforceable under Section 510(a) of the Bankruptcy Code.
12. Further Assurances. The Subordinated Lenders and the
Borrower, at Borrower's expense and at any time from time to time, upon the
written request of the Senior Agent, will promptly and duly execute and deliver
such further instruments and documents and take such further actions as the
Senior Agent reasonably may request for the purposes of obtaining or preserving
the full benefits of this Agreement and of the rights and powers herein granted.
13. Expenses.
(a) Each Credit Party will pay or reimburse the Senior
Agent and the Senior Lenders and the Subordinated Lenders, upon demand, for all
of their respective costs and expenses in connection with the enforcement or
preservation of any rights under this Agreement, including, without limitation,
fees and disbursements of counsel to the Senior Agent, Senior Lenders and
Subordinated Lenders.
(b) Each Credit Party will pay, indemnify, and hold the
Senior Agent and the Senior Lenders and the Subordinated Lenders harmless from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions (whether sounding in contract, tort or on any other ground),
judgments, suits, costs, expenses and disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of, or in any other way arising out of or relating to this
Agreement or any action taken or omitted to be taken by the Senior Agent, any
Senior Lender or Subordinated Lender with respect to any of the foregoing.
14. Provisions Define Relative Rights. This Agreement is
intended solely for the purpose of defining the relative rights of the Senior
Agent on the one hand and the Subordinated Lenders on the other, and no other
Person shall have any right, benefit or other interest under this Agreement.
Except as expressly set forth in this Agreement, nothing herein shall: (a)
impair, as between any Credit Party and the Senior Lenders and any Credit Party
and any Subordinated Lender, the obligation of such Credit Party, which is
absolute and unconditional, to pay principal of, interest on and all other
portions of the Senior Obligations, on the one hand, and the Subordinated
Obligations and all other obligations of such Credit Party, if any, to any
Subordinated Lender, on the other hand, in each case in accordance with their
respective terms; or (b) affect the relative rights of the Senior Lenders or
Subordinated Lenders with respect to any other creditors of any Credit Party.
15. Subrogation. Subject to the indefeasible payment in
full of all Senior Obligations and the termination of all commitments to lend by
the Senior Lenders under the Senior Credit Agreement, the Subordinated Lenders
shall be subrogated to the rights of the Senior Lenders to receive payments or
distributions of assets of any Credit Party applicable to the Senior Obligations
until the principal of, and interest and premium, if any, on, and all other
amounts payable in respect of the Subordinated Obligations shall be paid in
full. For purposes of such subrogation, no payment or distribution to the Senior
Lenders under the provisions hereof to which the Subordinated Lenders would have
been entitled but for the provisions of this Agreement, and no payment pursuant
to the provisions of this Agreement to the Senior
14
Lenders by the Subordinated Lenders, as among any Credit Party and its creditors
other than the Senior Lenders, shall be deemed to be a payment by such Credit
Party to or on account of the Senior Obligations.
16. Legend. Each Subordinated Lender and each Credit
Party will cause each of the Subordinated Note and each Subordinated Security
Document to bear upon its face a legend referring to this Agreement and
indicating that such documents are subordinated as provided herein, all in form
and substance satisfactory to the Senior Agent.
17. Powers Coupled With An Interest. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until the Senior Obligations are paid in full and
the obligation of the Senior Lenders to extend credit under the Senior Loan
Documents is irrevocably terminated.
18. Notices. All notices, requests and demands to or upon
the Senior Agent or any Credit Party or any Subordinated Lender to be effective
shall be in writing (or by telex, fax or similar electronic transfer confirmed
in writing) and shall be deemed to have been duly given or made (1) when
delivered by hand or (2) if given by mail, when deposited in the mails by
certified mail, return receipt requested, or (3) if by telex, fax or similar
electronic transfer, when sent and receipt has been confirmed, addressed as
follows:
If to the Senior Agent:
Bank of America, N.A.
▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy Number: ▇▇▇-▇▇▇-▇▇▇▇
with copies to:
General Electric Capital Corporation
Corporate Financial Services
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Account Manager (Good Guys)
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Winston & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Hill ▇▇▇▇▇▇▇▇, III, Esq.
Telecopy No.: 415-591-1400
and
15
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Counsel
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
If to the Subordinated Lenders:
Grupo Sansborns, S.A. de C.V.
▇/▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ Col. Lomas de Chapultepec
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Acra
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇. ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Borrower:
Good Guys California, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇, Rice Nemerovski, Canady, ▇▇▇▇ & ▇▇▇▇▇▇,
A Professional Corporation
Three ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
16
The Senior Agent, the Credit Parties and any Subordinated
Lender may change their respective addresses and transmission numbers for
notices by notice in the manner provided in this paragraph.
19. Default Notices. The Subordinated Lenders shall
provide the Senior Agent with written notice of any event of default with
respect to, or acceleration of, all or any part of the Subordinated Obligations
concurrently with the sending thereof to any Credit Party and promptly shall
notify the Senior Agent in the event a default which is the subject of such a
notice is cured or waived.
20. Counterparts. This Agreement may be executed by one
or more of the parties on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the counterparts of this Agreement signed by all the
parties shall be lodged with the Senior Agent.
21. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
22. Integration. This Agreement represents the agreement
of the Senior Agent and the Subordinated Lenders with respect to the subject
matter hereof and there are no promises or representations by the Senior Agent
or any Subordinated Lender relative to the subject matter hereof not reflected
herein.
23. Amendments in Writing; No Waiver: Cumulative
Remedies.
(a) None of the terms or provisions of this Agreement may
be waived, amended, supplemented or otherwise modified except by a written
instrument executed by the Senior Agent, each Credit Party and each Subordinated
Lender; provided that any provision of this Agreement may be waived by the
Senior Agent in a letter or agreement executed by the Senior Agent or by telex
or facsimile transmission from the Senior Agent.
(b) No failure to exercise, nor any delay in exercising,
on the part of the Senior Agent or any Senior Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
(c) The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
24. Section Headings. The section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
17
25. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure
to the benefit of the Senior Agent, each Senior Lender, each Subordinated
Lender, each Credit Party and each of their respective heirs, administrators,
executors, successors and assigns.
(b) Upon a successor Senior Agent becoming the Senior
Agent under the Senior Loan Documents or upon another lender (a "Refinancing
Lender") refinancing all, or with the prior written consent of the then existing
Senior Agent and Senior Lenders, any portion, of the Senior Obligations, such
successor Senior Agent or Refinancing Lender shall automatically be entitled to
all the rights and powers of the Senior Agent and the Senior Lenders hereunder
without the need for any further action on the part of any party hereto. In
further confirmation of the foregoing, each Subordinated Lender agrees that it
will, at the request of Senior Agent or any Senior Lender, enter into an
agreement, in the form of this Agreement, mutatis mutandis, to subordinate the
Subordinated Obligations and any security interests or liens it now or hereafter
has in or upon the Collateral, to the same extent as provided herein, to the
party refinancing all or a portion of the Senior Obligations.
26. Invalidated Payments. To the extent that the Senior
Agent receives payments on, or proceeds of Collateral for, the Senior
Obligations which are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to any Credit Party, 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 Senior Obligations, or part thereof, intended to be
satisfied shall be revived and continue in full force and effect as if such
payments or proceeds had not been received by the Senior Agent.
27. Specific Performance. The Senior Agent is hereby
authorized to demand specific performance of this Agreement at any time when any
Subordinated Lender shall have failed to comply with any of the provisions of
this Agreement applicable to such Subordinated Lender whether or not the Credit
Parties shall have complied with any of the provisions hereof applicable to any
Credit Party, and the Subordinated Lender hereby irrevocably waives any defense
based on the adequacy of a remedy at law which might be asserted as a bar to
such remedy of specific performance.
28. GOVERNING LAW: CONSENT TO JURISDICTION AND VENUE.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL
RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS
AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER 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, AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. EACH OF THE CREDIT PARTIES, THE
SUBORDINATED LENDERS AND THE SENIOR AGENT HEREBY CONSENTS AND AGREES THAT THE
STATE OR FEDERAL COURTS LOCATED IN california SHALL HAVE EXCLUSIVE JURISDICTION
TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES AMONG THE CREDIT PARTIES, THE
SUBORDINATED LENDERS AND THE SENIOR AGENT PERTAINING TO THIS AGREEMENT OR TO ANY
MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE SENIOR LOAN
DOCUMENTS,
18
PROVIDED, THAT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF CALIFORNIA AND, PROVIDED,
FURTHER THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE
THE SENIOR AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SENIOR
OBLIGATIONS, OR TO ENFORCE A JUDGEMENT OR OTHER COURT ORDER IN FAVOR OF THE
SENIOR AGENT. EACH OF THE CREDIT PARTIES AND THE SUBORDINATED LENDERS EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH OF THE CREDIT PARTIES AND THE SUBORDINATED
LENDERS HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. EACH OF THE
CREDIT PARTIES AND THE SUBORDINATED LENDERS HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINTS AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO IT AT THE ADDRESS SET FORTH IN THE
SENIOR CREDIT AGREEMENT OR BENEATH ITS SIGNATURE LINE BELOW, AS THE CASE MAY BE,
AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ANY
CREDIT PARTY'S OR ANY SUBORDINATED LENDER'S ACTUAL RECEIPT THEREOF OR THREE (3)
DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
29. MUTUAL WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE
PARTIES ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY
OF THE SENIOR LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
30. Termination. Subject to the provisions of paragraphs
25(b) and 26, this Agreement shall terminate upon the indefeasible payment in
full of the Senior Obligations and the termination of all commitments to lend by
the Senior Lenders on a revolving basis under the Senior Credit Agreement.
31. No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
32. Conversion. Nothing in this Agreement shall prevent
the Subordinated Lender from exercising at any time its rights under the
Subordinated Note to convert outstanding principal and accrued interest (or any
portion thereof) on the Subordinated Note into shares of common stock of
Holdings.
19
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
BANK OF AMERICA, N.A.,
as Senior Agent
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
GOOD GUYS CALIFORNIA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Chief Financial Officer
GOOD GUYS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Chief Financial Officer
COMPUSA INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Executive Vice President/ Chief
Financial Officer
APPROVED BY:
GENERAL ELECTRIC CAPITAL CORPORATION
as Documentation Agent and a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Duly Authorized Signatory
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ACKNOWLEDGMENT
STATE OF
COUNTY OF ss.:
On _________ before me, the undersigned, personally appeared _________
_____________________________________________________________________________
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual(s) whose name(s) is (are) subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
capacity(ies), and that by his/her/their signature(s) on the instrument, the
individual(s), or the person on behalf of which the individual(s) acted,
executed the instrument, and that such individual made such appearance before
the undersigned in
(insert city or political subdivision and state or county or other place
acknowledgment taken).
_________________________________________________________
(signature and office of individual taking acknowledgment)
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