<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: April 17, 1996
MERISEL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-17156 95-4172359
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File No.) Identification No.)
200 Continental Boulevard, El Segundo, California 90245-0948
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (310) 615-3080
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N/A
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(Former name or former address, if changed since last report)
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Item 7. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Financial statements of businesses acquired: None
(b) Pro forma financial information: None
(c) Exhibits:
10.43 Third Amendment and Waiver to Amended and Restated Senior
Note Purchase Agreement by and among each of the
purchasers named therein and Merisel Americas, Inc.,
dated as of April 12, 1996
10.44 Revolving Credit Agreement among Merisel Americas, Inc.,
Merisel Europe, Inc., Merisel, Inc., the lender parties
thereto, Citicorp USA, Inc., as agent, and Citibank,
N.A. as designated issuer, as amended and restated as of
April 12, 1996
10.45 Amendment Number One and Waiver to Receivables Purchase
and Servicing Agreement among Merisel Capital Funding,
Inc., Redwood Receivables Corporation, Merisel Americas,
Inc., and General Electric Capital Corporation, dated as
of April 12, 1996
10.46 Form of Second Amendement and Waiver to Amended and
Restated Subordinated Note Purchase Agreement among the
Noteholders named therein and Merisel Americas, Inc.
dated as of April 12, 1996
2
<PAGE>
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MERISEL, INC.
Registrant
By: /s/ James L. Brill
-------------------------
James L. Brill
Senior Vice President, Finance
Date: April 17, 1996 Chief Financial Officer and Secretary
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EXHIBIT 10.43
THIRD AMENDMENT AND WAIVER TO
AMENDED AND RESTATED SENIOR NOTE PURCHASE AGREEMENT
This THIRD AMENDMENT AND WAIVER TO AMENDED AND RESTATED SENIOR NOTE
PURCHASE AGREEMENT (this "Amendment"), dated as of April 12, 1996, is entered
into by and among MERISEL AMERICAS, INC., a Delaware corporation (the
"Company"), MERISEL, INC., a Delaware corporation ("Merisel, Inc.") and each of
the Noteholders identified on the signatures pages hereof (collectively, the
"Noteholders"), and amends that certain Amended and Restated Senior Note
Purchase Agreement dated as of December 23, 1993 by and among the Company and
the original Purchasers of the Notes therein referred to (as amended by that
certain First Amendment to Amended and Restated Senior Note Purchase Agreement
dated as of September 30, 1994 and that certain Second Amendment to Amended and
Restated Senior Note Purchase Agreement dated as of June 23, 1995, the "Existing
Note Purchase Agreement", and as amended hereby, the "Note Purchase Agreement").
Capitalized terms used and not otherwise defined in this Amendment shall have
the same meanings in this Amendment as set forth in the Existing Note Purchase
Agreement, and the rules of interpretation set forth in Section 2.3 of the
Existing Note Purchase Agreement shall be applicable to this Amendment.
RECITAL
The parties hereto have agreed to amend the Existing Note Purchase
Agreement as hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth below and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree and
amend the Existing Note Purchase Agreement as follows:
SECTION 1. Amendments. On the terms of this Amendment and subject to the
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satisfaction of the conditions precedent set forth below in Section 3, the
Existing Note Purchase Agreement shall be amended as follows:
(a) Section 1.1 of the Existing Note Purchase Agreement is
amended to read in its entirety as follows:
"1.1 DESCRIPTION OF NOTES. The Company has authorized the
issuance for exchange of $100,000,000 aggregate principal amount of its
Amended and Restated 9.58% Senior Notes (the "Notes") to be dated the date
of issue, to bear interest on the unpaid principal amount from and after
April 15, 1996 to maturity at the rate of (a) if no Event of Default has
occurred and is continuing, 9.58% per annum (the "Coupon Rate"), or (b) if
an Event of Default has occurred and is continuing, the Overdue Rate, and
on any overdue
<PAGE>
Make-Whole Premium and (to the extent legally enforceable) any overdue
installment of interest at the Overdue Rate, to mature on the Final
Maturity Date, and to be substantially in the form attached hereto as
Exhibit A (Revised as of April 12, 1996). The Company will pay interest
monthly in arrears on the fifth day of each month (beginning May 5, 1996).
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Notes are subject to certain mandatory prepayments by the
Company prior to their expressed maturity dates as set forth in Section 3.4
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of this Agreement. The term "Notes" as used herein shall include each Note
delivered pursuant to this Agreement."
(b) Section 1.2 of the Existing Note Purchase Agreement is
deleted in its entirety and the following is substituted in lieu thereof:
"1.2 EXCHANGE OF NOTES. Delivery of the Notes will be made by
the Company to each Noteholder (or such Noteholder's designee) on April 15,
1996, or such later date as the Company and the Noteholders shall agree to,
at the offices of Skadden, Arps, Slate, Meagher & Flom, 300 South Grand
Avenue, Los Angeles, California 90071. Each Note will be delivered in the
form of a single registered Note for the full amount of such Noteholder's
Pro Rata Share of $100,000,000, registered in such Noteholder's name (or in
the name of a nominee of such Noteholder) and in substantially the form
attached hereto as Exhibit A (Revised as of April 12, 1996). Each
---------
Noteholder agrees to promptly return to the Company the 8.58% note due June
30, 1997 it currently holds."
(c) The following definitions set forth in Section 2.1 of the
Existing Note Purchase Agreement are amended to read in their entirety as
follows:
i. "`Agreement' shall mean this Amended and Restated
Senior Note Purchase Agreement and all exhibits and schedules hereto, as
the same may be amended or modified from time to time.
ii. "`Canada Guaranty' shall mean that certain Limited
Amount Continuing Guarantee dated as of December 23, 1993, issued by
Merisel Canada in favor the Noteholders, as amended by the Amendment,
Reaffirmation and Consent of Guarantor dated as of April 12, 1996."
iii. "`Consolidated Debt' shall mean Debt (other than
intercompany Debt) of the Company or Merisel, Inc. (as indicated by the
context) and its Subsidiaries, on a consolidated basis."
iv. "`Consolidated Net Income' shall mean, for any period,
the net income of the Company or Merisel, Inc. (as indicated by the
context) and its Subsidiaries, on
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a consolidated basis, for such period, after (i) eliminating all
intercompany items and (ii) deducting portions of income properly
attributable to minority interests, if any, in the stock and surplus of
such Subsidiaries; provided that there shall be excluded (a) the income of
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any Person accrued prior to the date it became a Subsidiary of the Company
or Merisel, Inc., as the case may be, or was merged into or consolidated
with the Company or Merisel, Inc., as the case may be, or any of its
Subsidiaries or such Person's Assets were acquired by the Company or
Merisel, Inc., as the case may be, or any of its Subsidiaries, (b) any
gains or losses on the sale or other disposition of Permitted Investments
or fixed or capital Assets, and any taxes on such excluded gains and any
tax deductions or credits on account of any such excluded losses, (c) the
proceeds of any life insurance policy, (d) earnings resulting from any
reappraisal, revaluation or write-up of Assets, (e) any deferred or other
credit representing any excess of the equity in any Subsidiary of the
Company or Merisel, Inc., as the case may be, at the date of acquisition
thereof over the amount invested in such Subsidiary, (f) any gain arising
from the acquisition of any Securities of the Company or Merisel, Inc., as
the case may be, or any Subsidiary of the Company or Merisel, Inc., as the
case may be, and (g) any reversal of any contingency reserve, except to the
extent that provision for such contingency reserve shall have been made
from income arising during the most recently audited fiscal year."
v. "`Consolidated Tangible Net Worth' shall mean, as of any
date of determination, the Consolidated Net Worth of the Company or
Merisel, Inc. (as indicated by the context) without taking into
consideration the effect of (i) Additional Restructuring Fees and (ii) any
write-downs in connection with (A) any sale of any Subsidiaries of Merisel,
Inc. or any restructuring in connection with such sale, or (B) with respect
to the first quarter of 1996 only, accounts payable to the extent (but only
to the extent) such write-downs exceed $7,000,000 less goodwill, patents,
----
trademarks, organizational expenses, deferred research and development
costs, deferred marketing expenses and other intangible assets of the
Company or Merisel, Inc., as the case may be, and its Subsidiaries, all of
the foregoing determined on a consolidated basis in accordance with GAAP."
vi. "`Europe Guaranty' shall mean that certain General
Continuing Guarantee dated as of December 23, 1993, issued by Merisel
Europe in favor the Noteholders, as amended by the Amendment, Reaffirmation
and Consent of Guarantor dated as of April 12, 1996."
vii. "`Restricted Payment Compliance Condition' shall mean
the delivery by the Company to each Noteholder, at least ten (10) days
prior to declaring, paying, making, or setting apart any funds or Assets
for any
3
<PAGE>
Restricted Payment, of a certificate of the Chief Financial Officer or
Treasurer of the Company stating that (A) such officer has reviewed the
provisions of the Agreement, (B) before and after giving effect to such
Restricted Payment, the Company is, and in good faith believes it will
remain, in compliance with the requirements of Section 6.6 through Section
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6.15 and Section 6.25, as such sections existed on October 15, 1994, and
---- ------------
providing detailed computations of the Company's compliance with Sections
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6.6, 6.7, 6.9, 6.11 and 6.25, as such sections existed on October 15, 1994
----------------------------
and, if applicable, Sections 6.8, 6.10, 6.12, 6.13, 6.14, and 6.15, as such
----------------------------------------------
sections existed on October 15, 1994 and (C) there exists no Event of
Default or Default. Notwithstanding the foregoing, the Restricted Payment
Compliance Condition shall be deemed to be satisfied for the sole purpose
of permitting the Company and its Subsidiaries to make dividends, or loans
or advances to, or investments in, Merisel, Inc. in an amount not exceeding
the Current Debt Service Amount, provided that (a) Merisel, Inc. shall use
--------
the proceeds of such dividends, loans, advances or investments solely to
pay interest on the Parent Notes no earlier than on or after the date such
payments are due, provided further that, with respect to the December 30,
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1996 interest payment on the Parent Notes, such payment shall be made no
earlier than the later of (i) January 25, 1997 and (ii) the date on which
all prepayments under Section 3.4(a)(i) have been made, and (b) immediately
-----------------
after giving effect to such dividend, loan, advance or investment, no event
shall occur and be continuing which constitutes an Event of Default or
Default."
(d) The definition of "Debt" set forth in Section 2.1 of the
Existing Note Purchase Agreement is amended in the following respects:
(1) The term "Debt" as defined in the New Revolving Credit Agreement
is incorporated into such definition (without duplication).
(2) The phrase therein which reads "Approved Securitization
Transaction" is deleted each place where it appears and the
phrase "Existing Receivables Programs or Receivables Programs" is
substituted in lieu thereof.
(e) The definition of "Permitted Liens" in Section 2.1 of the
Exiting Note Purchase Agreement is amended in the following respects:
(1) Clause (i) is amended to read in its entirety as follows:
"(i) Liens permitted under that certain letter dated as of April
15, 1996 among the Company
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and the Noteholders, as amended from time to time (the
"April 15 Letter");"
(2) Clause (j) is amended to read in its entirety as follows:
"(j) Liens (i) in connection with Sale and Leaseback Transactions
permitted under Section 6.14, (ii) in connection with
------------
Permitted Debt on commercially reasonable terms, or (iii)
under the agreements set forth on Schedule 6.7;"
------------
(3) Clause (k) is amended to delete the phrase therein which reads
"Approved Securitization Transaction" and substitute the phrase
"Existing Receivables Programs or Receivables Programs" in lieu
thereof.
(f) Section 2.1 of the Existing Note Purchase Agreement is
amended to add in alphabetical order the definitions set forth on Schedule 1
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hereto.
(g) Section 3 of the Existing Note Purchase Agreement is amended
in the following respects:
(1) Section 3.1 is amended by deleting the parenthetical phrase
therein which reads "(but if in part then in a minimum principal
amount of $10,000,000)".
(2) Section 3.2 is amended to read in its entirety as follows:
"3.2 NOTICE OF PREPAYMENTS. The Company will give notice of any
prepayment of the Notes pursuant to Section 3.1 or 3.4(a)(ii)-(v) to each
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Noteholder on, or to the extent possible prior to, the date of such
prepayment (the "Prepayment Date") specifying (i) the Prepayment Date, (ii)
the principal amount of the Noteholder's Note to be prepaid on such
Prepayment Date, (iii) whether a Market Make-Whole Premium is payable, (iv)
if a Market Make-Whole Payment is payable, a reasonably detailed
calculation of such Market Make-Whole Premium, and (v) the accrued interest
applicable to the prepayment."
(3) Section 3.3 is amended to read in full as follows:
"3.3 ALLOCATION OF PREPAYMENTS. All partial prepayments
pursuant to Section 3.1 and 3.4 shall be applied to prepay Debt outstanding
----------- ---
in respect of all Notes ratably in accordance with the unpaid principal
amounts thereof in the following manner: first, to accrued and unpaid
-----
interest, second, to any Market Make-Whole Premium due and owing, and
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third, to reduce outstanding principal."
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5
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(4) A new Section 3.4 is added to read in its entirety as follows:
"3.4 MANDATORY PREPAYMENTS. (a)(i) The outstanding Notes shall
be prepaid by the Company on the dates and in the amounts set forth below:
<TABLE>
<CAPTION>
Prepayment Date: Prepayment Amount:
--------------- -----------------
<S> <C>
April 15, 1996 $4,000,000.00
May 5, 1996 $2,000,000.00
June 5, 1996 $2,000,000.00
July 5, 1996 $2,000,000.00
August 5, 1996 $2,000,000.00
September 5, 1996 $2,000,000.00
January 15, 1997 $26,000,000.00
</TABLE>
(ii) No later than the first Business Day following the date of
receipt by Merisel, Inc., the Company or any of their respective
Subsidiaries of any Net Asset Sale Proceeds in respect of any Asset Sale,
the Company shall prepay the outstanding Notes in an aggregate amount equal
to: (x) until all Revolving Credit Commitments have been terminated and
all Debt outstanding under the New Revolving Credit Agreement has been
repaid in full, 40% of the amount of such Net Asset Sale Proceeds and (y)
upon termination of all Revolving Credit Commitments and repayment in full
of all Debt outstanding under the New Revolving Credit Agreement, the
amount of such Net Asset Sale Proceeds; provided that no prepayment shall
--------
be required under this Section 3.4(a)(ii) until the date on which the
------------------
aggregate amount of the Net Asset Sale Proceeds to be applied to the
prepayment of the Notes is equal to or greater than $400,000; provided
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further that no prepayment of the Notes shall be required under this
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Section 3.4(a)(ii) upon the receipt by Merisel FAB of Net Asset Sale
------------------
Proceeds in respect of any Asset Sale of Merisel FAB if such Net Asset Sale
Proceeds are used by Merisel FAB as provided in Section 6.33;
------------
(iii) On the date of receipt by Merisel, Inc., the Company or any
of their respective Subsidiaries of any Net Securities Proceeds from the
issuance of any equity Securities of Merisel, Inc., the Company or any of
their respective Subsidiaries, the Company shall prepay the outstanding
Notes in an aggregate amount equal to: (x) until all Revolving Credit
Commitments have been terminated and all Debt outstanding under the New
Revolving Credit Agreement has been repaid in full, 40% of the amount of
such Net Securities Proceeds and (y) upon termination of all Revolving
Credit Commitments and repayment in full of all Debt outstanding under the
New Revolving Credit Agreement, the amount of such Net Securities Proceeds;
provided that no prepayment of the Notes shall be required under this
--------
Section 3.4(a)(iii) upon receipt by Merisel FAB of Net Securities
-------------------
6
<PAGE>
Proceeds from the issuance of any equity Securities of Merisel FAB if such
Net Securities Proceeds are used by Merisel FAB as provided in Section
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6.33; provided further that no prepayment of the Notes shall be required
---- -------- -------
under this Section 3.4(a)(iii) in connection with the issuance of any
-------------------
equity Securities of Merisel, Inc., the Company or any of their respective
Subsidiaries to Merisel, Inc. or its Subsidiaries;
(iv) On each New Receivables Program Availability Date, the
Company shall prepay the outstanding Notes in an amount equal to: (x)
until all Revolving Credit Commitments have been terminated and all Debt
outstanding under the New Revolving Credit Agreement has been repaid in
full, 40% of the amount of such Net Receivables Program Proceeds and (y)
upon termination of all Revolving Credit Commitments and repayment in full
of all Debt outstanding under the New Revolving Credit Agreement, the
amount of such Net Receivables Program Proceeds; provided that no
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prepayment of Notes shall be required under this Section 3.4(a)(iv) in
------------------
connection with a Receivables Program of Merisel FAB or a Receivables
Program involving the sale or transfer of receivables between Merisel, Inc.
and its Subsidiaries or between Subsidiaries of Merisel, Inc.; and
(v) On each New Debt Availability Date, the Company shall prepay
the outstanding Notes in an aggregate amount equal to: (x) until all
Revolving Credit Commitments have been terminated and all Debt outstanding
under the New Revolving Credit Agreement has been repaid in full, 40% of
the amount of such Net Debt Proceeds and (y) upon termination of all
Revolving Credit Commitments and repayment in full of all Debt outstanding
under the New Revolving Credit Agreement, the amount of such Net Debt
Proceeds; provided that no prepayment of Notes shall be required under this
--------
Section 3.4(a)(v) in connection with a New Debt Availability Date relating
-----------------
to intercompany Debt.
(b) Notwithstanding anything to the contrary in this Agreement, no
Market Make-Whole Premium shall be payable with respect to the prepayments
required pursuant to Section 3.4(a)(i) (or any prepayment required pursuant
-----------------
to Section 3.4(a)(ii)-(v) to the extent any such prepayment is applied
----------------------
(pursuant to Section 3.4(c)) to the prepayments required pursuant to
--------------
Section 3.4(a)(i)) so long as such prepayments are made on or prior to
-----------------
their scheduled prepayment dates set forth in Section 3.4(a)(i). Except as
-----------------
provided in the preceding sentence, all prepayments of the Notes,
including, without limitation, those made pursuant to Section 3.4(a)(ii)-
-------------------
(v) shall be accompanied by the Market Make-Whole Premium.
(c) Any mandatory prepayment of the Notes pursuant to Section
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3.4(a)(ii)-(v) shall be applied to reduce the scheduled payments of the
--------------
Notes set forth in Section
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3.4(a)(i) as follows: first, to the scheduled payments due on January 15,
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1997, second, to the scheduled payments due in 1996, in inverse order of
maturity and third, to reduce the final payment of the Notes due on the
-----
Final Maturity Date. Any voluntary prepayments of the Notes shall be
applied to reduce the scheduled payments of the Notes set forth in Section
3.4(a)(i) as follows: first, to reduce the next scheduled payment of the
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Notes set forth in Section 3.4(a)(i), second, to the scheduled payment due
---------------- ------
on January 15, 1997, third, to the scheduled payments due in 1996, in
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inverse order of maturity and fourth, to reduce the final payment of the
------
Notes due on the Final Maturity Date."
(d) Any mandatory prepayment required pursuant to this Section 3.4
shall be accompanied by accrued interest thereon to the date of such
prepayment.
(e) Concurrently with any prepayment of the outstanding Notes
pursuant to Section 3.4(a)(ii)-(v), the Company shall deliver to each of
----------------------
the Noteholders an officer's certificate (in such form and including such
substance as may be reasonably requested by the Required Noteholders)
demonstrating calculation of the amount (the "Net Proceeds Amount") of the
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applicable Net Asset Sales Proceeds, Net Receivables Program Proceeds, Net
Debt Proceeds or Net Securities Proceeds that gave rise to such prepayment.
In the event that the Company shall subsequently determine that the actual
Net Proceeds Amount was greater than the amount set forth in such officer's
certificate, the Company shall promptly make an additional prepayment of
the outstanding Notes in an amount equal to 40% (or 100% if clause (y) is
applicable in any of Sections 3.4(a)(ii)-(v)) of the amount of such excess
-----------------------
plus accrued interest thereon and any Market Make-Whole Premium, and the
Company shall concurrently therewith deliver to the Noteholders an
officer's certificate (in such form and including such substance as may be
reasonably requested by the Required Noteholders) demonstrating the
derivation of the additional Net Proceeds Amount resulting in such excess."
(h) The term "Company" as set forth in Section 6.1 through
Section 6.5, Section 6.8, Section 6.18, Section 6.19 and Section 6.24 of the
Existing Note Purchase Agreement shall be deemed to refer to each of the Company
and Merisel, Inc., collectively.
(i) Section 6.6 of the Existing Note Purchase Agreement is
deleted in its entirety and the following is substituted in lieu thereof:
"6.6 MINIMUM CONSOLIDATED ADJUSTED TANGIBLE NET WORTH OF
MERISEL, INC. Merisel, Inc. and its Subsidiaries, on a consolidated basis,
shall have and maintain at all times during each period indicated below,
Consolidated
8
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Adjusted Tangible Net Worth of not less than the amount set forth below
opposite such period:
<TABLE>
<CAPTION>
Consolidated Adjusted
Period Tangible Net Worth
------ ---------------------
<S> <C>
1st Quarter of 1996 $25,000,000.00
2nd Quarter of 1996 $12,000,000.00
3rd Quarter of 1996 $8,000,000.00
4th Quarter of 1996 $14,000,000.00
1st Quarter of 1997 $15,000,000.00"
</TABLE>
(j) Section 6.7 of the Existing Note Purchase Agreement is
amended to read in its entirety as follows:
"6.7 LIMITATION ON DEBT. The Company and Merisel, Inc. shall
not, and shall not permit their respective Subsidiaries to, incur, create,
assume or guarantee any Debt not in existence as of April 15, 1996 as set
forth on Schedule 6.7, except:
------------ ------
(a) refinancings of Debt otherwise permitted under this Section 6.7;
-----------
provided that (i) the terms of such refinanced Debt shall not either (1)
--------
increase materially and adversely the obligations of the obligor or (2)
confer additional rights on the holder of such Debt which in the aggregate
could be materially adverse to Merisel, Inc., Merisel Europe or the
Noteholders, (ii) the proceeds from the refinancing of Debt of any Person
shall not be applied to repay or reduce Debt of any other Person (other
than Debt of the Company or Merisel Europe) and any proceeds from such
refinancing in excess of the amount of the Debt being refinanced shall be
applied to prepay the Notes in accordance with Section 3.4(a)(v) and
-----------------
Section 3.4(c) and reduce the Revolving Credit Commitments as provided in
--------------
the New Revolving Credit Agreement, (iii) no Subordinated Debt or Debt
outstanding under the Indenture shall be refinanced prior to a complete
refinancing of the Notes, (iv) in the event any Debt outstanding under the
New Revolving Credit Agreement is refinanced, the Notes shall be refinanced
in a corresponding pro rata amount, and (v) after giving effect to such
refinancing, no event shall occur and be continuing which constitutes an
Event of Default or Default;
(b) Debt otherwise permitted under (i) Section 7.02(h) and 7.02(c)
(to the extent such permitted Contingent Obligations constitute Debt) of
the New Revolving Credit Agreement, as incorporated herein, and (ii)
Section 6.13; and
------------
(c) Debt (other than Debt permitted by clauses (a) and (b)), 100% of
the Net Debt Proceeds of which shall be applied to prepay the Notes in
accordance with Section 3.4(a)(v) and Section 3.4(c) and reduce the
----------------- --------------
9
<PAGE>
Revolving Credit Commitments as provided in the New Revolving Credit
Agreement."
(k) Section 6.10 of the Existing Note Purchase Agreement is
amended to read in its entirety as follows:
"6.10 LIMITATION ON MERGERS, CONSOLIDATIONS AND SALES OF
SUBSTANTIALLY ALL ASSETS. The Company and Merisel, Inc. shall not, and
shall not permit their respective Subsidiaries to, merge with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its assets
(whether now owned or hereafter acquired) to, or acquire all or
substantially all of the assets of, any Person, except that (a) any wholly-
------
owned Subsidiary of the Company may merge or amalgamate with, or transfer
all or substantially all of its assets to, any Domestic Subsidiary of the
Company (so long as the Domestic Subsidiary is the surviving entity) and
any wholly-owned Subsidiary of Merisel Europe may merge or amalgamate with,
or transfer all or substantially all of its assets to, any other wholly-
owned Subsidiary of Merisel Europe, and (b) any Subsidiary of the Company
may merge into, amalgamate with, or transfer all or substantially all of
its assets to, the Company (so long as the Company is the surviving entity)
and any Subsidiary of Merisel Europe may merge into, amalgamate with, or
transfer all or substantially all of its assets to, Merisel Europe (so long
as Merisel Europe is the surviving entity); provided in any case in this
--------
Section 6.10 that, immediately after giving effect thereto, no event shall
------------
occur and be continuing which constitutes an Event of Default or Default."
(l) Section 6.11 of the Existing Note Purchase Agreement is
amended to read in its entirety as follows:
"6.11 LIMITATION ON OPERATING LEASES. The Company and Merisel,
Inc. shall not, and shall not permit their respective Subsidiaries to,
incur, create, assume or guarantee any obligations under Operating Leases,
unless, after giving effect thereto, the aggregate amount of minimum annual
rentals under all Operating Leases of Merisel, Inc. and its Subsidiaries,
on a consolidated basis, does not exceed $35,000,000."
(m) Section 6.12 of the Existing Note Purchase Agreement is
amended to read in its entirety as follows:
"6.12 INTENTIONALLY OMITTED."
(n) Section 6.13 of the Existing Note Purchase Agreement is
deleted in its entirety and the following is substituted in lieu thereof:
10
<PAGE>
"6.13 LIMITATION ON SALES OF ACCOUNTS RECEIVABLE. The Company
and Merisel, Inc. shall not, and shall not permit their respective
Subsidiaries to, sell, transfer or dispose of (with or without recourse) or
otherwise finance, accounts receivable, except:
------
(a) the Company, Merisel U.K. and Merisel Canada may sell accounts
receivable pursuant to the securitization programs listed on Schedule 6.13
-------------
(collectively, the "Existing Receivables Programs");
(b) any amendment, renewal, replacement or refinancing of any
Existing Receivables Program; provided that (i) any such amendment,
--------
renewal, replacement or refinancing shall not be on terms more adverse to
the Company, Merisel U.K. and Merisel Canada, as the case may be, than the
terms of the Existing Receivables Program being so amended, renewed,
replaced or refinanced (it being agreed that an increase in the interest
rate is not an adverse change for this purpose) and (ii) any proceeds from
such amendment, renewal, replacement or refinancing which are in excess of
the amount of the Existing Receivables Program being so amended, renewed,
replaced or refinanced shall be applied to prepay the Notes in accordance
with Section 3.4(a)(iv) and Section 3.4(c) and reduce the Revolving Credit
------------------ --------------
Commitments as provided in the New Revolving Credit Agreement;
(c) Merisel, Inc. and Merisel FAB may sell or transfer accounts
receivables to each other; provided that the outstanding Net FAB Debt shall
--------
not at any time exceed $10,000,000 and shall not be greater than $0 on the
last day of each month;
(d) The Company, Merisel Europe and their respective wholly-owned
Subsidiaries may sell or transfer accounts receivable to each other;
provided that the aggregate value of such accounts receivable sold or
--------
transferred by the Company and its wholly-owned Subsidiaries under this
Section 6.13(d) to Persons other than the Company and its wholly-owned
---------------
Subsidiaries shall not exceed $0; and
(e) Merisel, Inc. and the Company may, and may permit their
respective Subsidiaries to, enter into one or more transactions (other than
those referred to in clauses (c) and (d) above) (each such transaction
being referred to herein as a "Receivables Program") involving the sale or
-------------------
other financing by Merisel, Inc., the Company or any of their respective
Subsidiaries of accounts receivable arising in the ordinary course of
business of such Person; provided that 100% of the Net Receivables Program
--------
Proceeds of such Receivables Programs (other than the Receivables Programs
of Merisel FAB) shall be applied to prepay the outstanding Notes in
accordance with Section 3.4(a)(iv) and Section 3.4(c) and reduce the
------------------ --------------
Revolving Credit Commitments as provided in the New Revolving Credit
Agreement."
11
<PAGE>
(o) Section 6.14 of the Existing Note Purchase Agreement is
amended to read in its entirety as follows:
"6.14 LIMITATION ON SALES OF ASSETS. The Company and Merisel,
Inc. shall not, and shall not permit their respective Subsidiaries to, sell
or otherwise dispose of, or suffer the disposition of, any of its Assets
(including, without limitation, any stock of any Subsidiary of Merisel,
Inc.), or enter into any Sale and Leaseback Transactions, except:
------
(a) sales or other dispositions of inventory in the ordinary course
of business (including intercompany sales other than sales or other
dispositions to Merisel FAB, Merisel, Inc., Merisel Information Services,
Inc., Merisel Licensing, Inc. and Merisel Properties, Inc.) provided that
the consideration received therefor adequately reflects the fair value of
the property disposed of;
(b) sale of Assets; provided that the aggregate value of such assets
--------
sold in any single transaction or related series of transactions is equal
to or less than $100,000;
(c) sales or transfers of inventory or fixed-assets by the Company,
Merisel Europe or their respective wholly-owned Subsidiaries to the
Company, Merisel, Inc. or their respective wholly-owned Subsidiaries and
Sale and Lease Back Transactions among the Company, Merisel, Inc. or their
respective wholly-owned Subsidiaries; provided that (i) the aggregate value
--------
of such assets sold or transferred and such Sale and Leaseback Transactions
entered into by the Company and its wholly-owned Subsidiaries to or with
Persons other than the Company and its wholly-owned Subsidiaries shall not
exceed $10,000,000, (ii) with respect to each of Merisel FAB, Merisel
Information Services, Inc., Merisel Licensing, Inc. and Merisel Properties,
Inc., the aggregate value of inventory sold or transferred by the Company
and its wholly-owned Subsidiaries to each such Person shall not exceed $0,
(iii) with respect to Merisel, Inc., the aggregate value of inventory sold
or transferred by the Company and its wholly-owned Subsidiaries to such
Person shall not exceed $1,000,000, (iv) with respect to Merisel, Inc. and
Merisel FAB, the aggregate value of fixed-assets sold or transferred by the
Company and its wholly-owned Subsidiaries to each such Person shall not
exceed $1,000,000 and (v) with respect to Merisel Information Services,
Inc., Merisel Licensing, Inc. and Merisel Properties, Inc., collectively,
the aggregate value of fixed-assets sold or transferred by the Company and
its wholly-owned Subsidiaries shall not exceed $1,000,000;
(d) dispositions of obsolete assets in the ordinary course of
business for nominal consideration;
12
<PAGE>
(e) sales or other dispositions of Assets otherwise permitted under
(i) Section 7.02(g) of the New Revolving Credit Agreement, as incorporated
herein, and (ii) Sections 6.10 and 6.13; and
----------------------
(f) any other sale, transfer, or disposition of assets or Sale and
Lease Back Transaction entered into after April 15, 1996, provided that (i)
--------
the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof, (ii) the sale consideration
received in excess of liabilities assumed shall be (A) in cash or (B) in a
combination of cash for at least 90% of the sale consideration and notes
payable within 12 months for the balance, and (iii) 100% of the Net Asset
Sale Proceeds of such sale, transfer, disposition or Sale and Leaseback
Transaction shall be applied to prepay the Notes in accordance with Section
-------
3.4(a)(ii) and Section 3.4(c) and reduce the Revolving Credit Commitments
---------- --------------
as provided in the New Revolving Credit Agreement."
(p) Section 6.16 of the Existing Note Purchase Agreement is
amended by deleting the parenthetical phrase therein which reads "(including
pursuant to the requirements of Sections 6.13 and 6.14)".
----------------------
(q) Section 6.17 of the Existing Note Purchase Agreement is
amended in the following respects:
(1) Clauses (a) and (b) are amended to read in their entirety as
follows:
"(A) QUARTERLY STATEMENTS. As soon as available and in any
event within 45 days after the end of each of the first three fiscal
quarters in each fiscal year of Merisel, Inc., unaudited consolidated and
consolidating balance sheets of Merisel, Inc. and its Subsidiaries as of
the end of such fiscal quarter and consolidated and consolidating
statements of income and retained earnings of Merisel, Inc. and its
Subsidiaries for such fiscal quarter and for the period commencing at the
end of the previous fiscal year and ending with the end of such fiscal
quarter, and setting forth in comparative form the corresponding figures
for the corresponding periods of the previous fiscal year, all in
reasonable detail and duly certified (subject to year-end audit adjustments
and the absence of footnotes) by the Chief Financial Officer or Treasurer
of Merisel, Inc. as having been prepared in accordance with GAAP
consistently applied, together with a schedule in form and substance
satisfactory to the Required Noteholders, substantially in the form of
Exhibit J hereto, of the computations used in determining, as of the end of
---------
such fiscal quarter, compliance with the covenants contained in Sections
--------
6.6, 6.8, 6.11, 6.13, 6.14, 6.28, 6.29, 6.30, 6.31, 6.32, 6.37 and
6.38 of this Agreement and Sections 7.02(d) and 7.02(h)(v), of the New
Revolving Credit Agreement, as incorporated herein.
13
<PAGE>
(B) ANNUAL STATEMENTS. As soon as available and in any event
within 90 days after the end of each fiscal year of Merisel, Inc., a copy
of the annual audit report for such year for Merisel, Inc. and its
Subsidiaries, on a consolidated basis, including therein a consolidated
balance sheet of Merisel, Inc. and its Subsidiaries as of the end of such
fiscal year and consolidated statements of income and retained earnings and
of source and application of funds of Merisel, Inc. and its Subsidiaries
for such fiscal year, together with a consolidating balance sheet of
Merisel, Inc. and its Subsidiaries as of the end of such fiscal year and
consolidating statements of income and retained earnings and of source and
application of funds of Merisel, Inc. and its Subsidiaries for such fiscal
year, which consolidated balance sheets and financial statements are
certified by independent public accountants of recognized standing
acceptable to the Purchasers, together with (A) a certificate of such
accounting firm to the Agent stating that in connection with their audit
examination, nothing has come to their attention that caused them to
believe that Merisel Inc. or its Subsidiaries failed to comply with the
terms, covenants, provisions of conditions of Sections 6.3 (as to income or
--------
profits), 6.6, 6.9, 6.11, 6.14(c), 6.25, 6.28, 6.29, 6.30, 6.31, 6.32,
6.33, 6.37 and 6.38 inclusive of this Agreement and Sections 7.02(d),
7.02(h)(v) and 7.02(q) of the New Revolving Credit Agreement, as
incorporated herein, insofar as they relate to financial and accounting
matters (which such certificate may state that such audit examination was
not directed primarily toward obtaining knowledge of non-compliance with
such sections); and (B) a schedule in form and substance satisfactory to
the Required Noteholders, substantially in the form of Exhibit J hereto, of
---------
the computations used in determining, as of the end of such fiscal year,
compliance with the covenants contained in Sections 6.6, 6.8, 6.11, 6.13,
--------
6.14, 6.28, 6.29, 6.30, 6.31, 6.32, 6.37 and 6.38 of this Agreement and
Sections 7.02(d) and 7.02(h)(v), of the New Revolving Credit Agreement, as
incorporated herein."
(2) Clauses (d), (e) and (f) are amended to read in their entirety as
follows:
"(D) OFFICER'S CERTIFICATES. Within the periods provided in
clauses (a) and (b) above, a certificate of the Chief Financial Officer or
-------------------
Treasurer of the Company and Merisel, Inc., as applicable, stating that
such officer has reviewed the provisions of this Agreement, setting forth
the information and computations (in sufficient detail) required in order
to establish compliance with the requirements of Section 6.6 through
-----------
Section 6.15 and Section 6.26 through Section 6.40 at the end of the period
------------ ------------ ------------
covered by the financial statements then being furnished, and stating that
there exists no Event of Default or Default, or if any Event of Default or
Default exists, specifying the nature and period of existence thereof and
the action the Company or
14
<PAGE>
Merisel, Inc., as the case may be, is taking and proposes to take with
respect thereto.
(E) NOTICE OF DEFAULT. Promptly, and in any event within five
days, after any Responsible Officer of the Company or Merisel, Inc. obtains
knowledge of the occurrence of an Event of Default or Default, a
certificate of a Responsible Officer of the Company or Merisel, Inc., as
the case may be, setting forth details of such Event of Default or Default
and the period of existence thereof and the action which the Company or
Merisel, Inc., as the case may be, proposes to take with respect thereto.
(F) NOTICE OF LITIGATION. Promptly after the institution of any
suit, action, or proceeding against Merisel, Inc. or any of its
Subsidiaries which, if adversely determined, could reasonably be expected
to have a materially adverse effect on the Assets, business, profits, or
condition (financial or otherwise) of Merisel, Inc. or any of its
Subsidiaries, taken as a whole, written notice of such suit, action, or
proceeding."
(3) New clauses (i), (j), (k) and (l) are added to read in their
entirety as follows:
"(I) MONTHLY REPORTS. As soon as available, and in any event
within 20 days after the end of each month, a written report substantially
in the form of Exhibit H setting forth (a) with respect to each of Merisel,
---------
Inc., the Company, Merisel Europe, Merisel Canada and Merisel FAB, the
amount of sales for such month and accounts receivable, inventory, accounts
payable (which shall be determined from the Company's internal financial
records), intercompany loans as at the last day of such month, and
Consolidated Debt Equivalents of Merisel, Inc. as at the last day of such
month, (b) a listing of all amendments and waivers in respect of (i) the
Parent Notes, (ii) the New Revolving Credit Agreement, (iii) the
Subordinated Note Purchase Agreement, (iv) the Subordinated Notes, (v) the
Existing Receivables Programs or any Receivables Program and (vi)
instruments evidencing Debt of Merisel, Inc., the Company or any of their
respective Subsidiaries in excess of $5,000,000 during such month, (c) a
listing of Receivables Programs and instruments evidencing Debt of Merisel,
Inc., the Company or any of their respective Subsidiaries in excess of
$5,000,000 entered into during such month and (d) the amount of Net Europe
Debt and Net FAB Debt, in each case, as of the last day of such month. The
Company and Merisel, Inc. jointly and severally represent and warrant that
the information described in clauses (a), (b)(vi) and (d) set forth in such
report shall be prepared in good faith and in reliance on the best
information available at the time so prepared; the Noteholders acknowledge
that the information described in clauses (a), (b)(vi) and (d) set forth in
such report shall be preliminary information subject to adjustment and may
be
15
<PAGE>
materially different from the information contained in the reports and
statements to be provided under Sections 6.17(a) and 6.17(b), and none of
----------------------------
the Company, Merisel, Inc. nor their respective Subsidiaries in any way
certifies or warrants that such reports reflect accurately any information
relevant to the performance or financial condition of any of them.
(J) AUDITOR'S COMMENT LETTERS AND RESPONSES. Within 5 Business
days of completion of the response of Merisel, Inc., the Company or any of
their respective Subsidiaries to any comment letter submitted by
independent certified public accountants to Merisel, Inc., the Company, any
of their respective Subsidiaries or management in connection with their
annual audit of the financial statements of Merisel, Inc. and its
Subsidiaries or the Company and its Subsidiaries, Merisel, Inc. or the
Company, as the case may be, shall deliver a copy of such comment letter
together with copies of all responses of Merisel, Inc., the Company or any
of their respective Subsidiaries to such comment letter.
(K) DATA REQUESTS OF FINANCIAL ADVISORS. Such other requests for
data as Houlihan, Lokey, Howard & Zukin, Inc. or such other financial
advisor to the Noteholders shall reasonably request.
(L) STATEMENT OF CASH AND CASH EQUIVALENTS. On the first
Business Day of each week, a written report specifying the cash balances of
Merisel, Inc. and the location of such cash balances (by bank and account
number) and the consolidated cash balances of the U.S. Subsidiaries of
Merisel, Inc. (excluding Merisel Latin America, Inc.), in each case as of
the prior Business Day, and, on a monthly basis, a written report delivered
within 10 days of Merisel, Inc. receiving such information from its
Subsidiaries, specifying the cash balances (in accordance with GAAP and
company prepared monthly reporting practices) of Merisel, Inc., the
Company, Merisel Europe and their respective Subsidiaries."
(4) All financial statements, certificates and reports required to be
delivered from time to time by the Company or Merisel, Inc. under
Section 7.01(m) of the New Revolving Credit Agreement shall
concurrently be delivered by the Company or Merisel, Inc., as the
case may be, to each Noteholder (without duplication).
(r) Section 6.23 of the Existing Note Purchase Agreement is
amended to read in its entirety as follows:
"6.23 AMENDMENTS OR WAIVERS OF CERTAIN DOCUMENTS. The Company
and Merisel, Inc. shall not, and shall not permit their respective
Subsidiaries to, amend, waive or
16
<PAGE>
otherwise change the terms of (i) the Indenture, dated as of October 15,
1994, between Merisel, Inc. and The Bank of New York, as Trustee (as
successor to NationsBank of Texas, N.A., as Trustee) of the 12.50% Senior
Notes due 2004 issued pursuant thereto (the "Indenture") or (ii) any
----------
Subordinated Debt, if the effect of such amendment or change is to increase
the interest rate on such Debt, change the dates upon which payments of
principal or interest are due thereon, change any event of default or
condition to an event of default with respect to such Debt, change the
redemption provisions thereof, or change the subordination provisions
thereof, if any, (or any guaranty thereof), or which, together with all
other amendments or changes made, increase materially the obligations of
the obligor or confer additional rights on the holder of such Debt which
could be adverse to the Company, Merisel, Inc., any of their respective
Subsidiaries or the Noteholders. The Company and Merisel, Inc. shall not,
and shall not permit their respective Subsidiaries to, amend any of the
documents relative to, or otherwise change the terms of, any Existing
Receivables Program except as provided in Section 6.13(a)."
---------------
(s) Section 6.25 of the Existing Note Purchase Agreement is
deleted in its entirety and the following is substituted in lieu thereof:
"6.25 MINIMUM RATIO OF CONSOLIDATED EBITSDA TO INTEREST CHARGES
OF MERISEL, INC. Merisel, Inc. and its Subsidiaries, on a consolidated
basis, shall have and maintain for each period indicated below, a ratio of
(1) Consolidated EBITSDA to (2) Consolidated Interest Charges of not less
than the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
1st Quarter of 1996 0.50:1.00
2nd Quarter of 1996 0.40:1.00
3rd Quarter of 1996 0.80:1.00
4th Quarter of 1996 1.45:1.00
1st Quarter of 1997 0.60:1.00"
</TABLE>
(t) Section 6.26 of the Existing Note Purchase Agreement is
deleted in its entirety and the following is substituted in lieu thereof:
"6.26 LIMITATION ON RECEIPT OF PAYMENTS BY MERISEL, INC.
Merisel, Inc. shall not under any circumstance accept any payment, in cash,
property or otherwise, whether by dividend, loan, advance, investment or
other transfer (a "(S)6.26 Payment"), from any of its Subsidiaries, except:
--------------- ------
(a) Merisel, Inc. may accept (S)6.26 Payments from time to time from
Merisel FAB; provided that such (S)6.26 Payments
--------
17
<PAGE>
are invested in, lent or otherwise transferred to, the Company on the day
they are accepted by Merisel, Inc. in accordance with Section 6.36;
------------
provided further that Merisel, Inc. may deduct from such (S)6.26 Payments
-------- -------
operating expenses incurred and paid in the ordinary course of business in
respect of Merisel FAB as set forth on Schedule 6.26;
-------------
(b) Merisel, Inc. may accept (S)6.26 Payments from time to time from
the Company, Merisel Europe and their respective Subsidiaries for (i)
operating expenses incurred and paid in the ordinary course of business in
respect of the Company, Merisel Europe and their respective Subsidiaries as
set forth on Schedule 6.26, and (ii) purposes of relending such payments to
-------------
Merisel FAB in the ordinary course of business and consistent with prior
practice; provided that the outstanding Net FAB Debt shall not at any time
--------
exceed $10,000,000 and shall not be greater than $0 on the last day of each
month; and
(c) Merisel, Inc. may accept (S)6.26 Payments from time to time from
any of its Subsidiaries for the purpose of making interest payments on the
Parent Notes; provided that (i) such (S)6.26 Payments are accepted on or
--------
after the date such interest on the Parent Notes is due and (ii) such
interest on the Parent Notes is in fact paid by Merisel, Inc. from such
(S)6.26 Payments on such date."
(u) A new Section 6.27 shall be added to the Existing Note
Purchase Agreement to read in its entirety as follows:
"6.27 EXCESS CASH AND EXCESS CASH EQUIVALENTS. The Company and
Merisel, Inc. shall, and shall cause their respective Subsidiaries to,
deposit and maintain all Excess Cash and Excess Cash Equivalents (a) solely
in the name of the Company and (b) prior to execution and delivery by each
Noteholder and each Revolving Credit Lender of an executed counterpart to
the Intercreditor Agreement, with a deposit institution other than a
Revolving Credit Lender or an Affiliate of a Revolving Credit Lender."
(v) A new Section 6.28 shall be added to the Existing Note
Purchase Agreement to read in its entirety as follows:
"6.28 MAXIMUM RATIO OF CONSOLIDATED DEBT EQUIVALENTS TO
CONSOLIDATED ADJUSTED TANGIBLE NET WORTH OF MERISEL, INC. Merisel Inc. and
its Subsidiaries, on a consolidated basis, shall have and maintain at all
times during each period indicated below, a ratio of (1) Consolidated Debt
Equivalents to (2) Consolidated Adjusted Tangible Net Worth of not more
than the ratio set forth below opposite such period:
18
<PAGE>
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
1st Quarter of 1996 30:1.00
2nd Quarter of 1996 50:1.00
3rd Quarter of 1996 80:1.00
4th Quarter of 1996 50:1.00
1st Quarter of 1997 50:1.00"
</TABLE>
(w) A new Section 6.29 shall be added to the Existing Note
Purchase Agreement to read in its entirety as follows:
"6.29 MINIMUM CONSOLIDATED EBITSDA OF MERISEL, INC. Merisel,
Inc. and its Subsidiaries, on a consolidated basis, shall have and maintain
as of the last day of each period indicated below, Consolidated EBITSDA of
not less than the amount set forth below opposite such period:
<TABLE>
<CAPTION>
Period Consolidated EBITSDA
------ --------------------
<S> <C>
1st Quarter of 1996 $8,500,000
2nd Quarter of 1996 $6,250,000
3rd Quarter of 1996 $13,000,000
4th Quarter of 1996 $23,000,000
1st Quarter of 1997 $10,000,000"
</TABLE>
(x) A new Section 6.30 shall be added to the Existing Note
Purchase Agreement to read in its entirety as follows:
"6.30 MINIMUM INVENTORY TURNOVER RATIO OF MERISEL, INC. Merisel,
Inc. and its Subsidiaries, on a consolidated basis, shall have and maintain
for each period indicated below, a ratio of (1) the aggregate cost of sales
at the end of such period multiplied by four to (2) Average Consolidated
-------------
Net Inventory of not less than the amount set forth below opposite such
period:
<TABLE>
<CAPTION>
Period Inventory Turnover
------ ------------------
<S> <C>
1st Quarter of 1996 10.00
2nd Quarter of 1996 10.25
3rd Quarter of 1996 10.50
4th Quarter of 1996 10.75
1st Quarter of 1997 10.75"
</TABLE>
(y) A new Section 6.31 is added to the Existing Note Purchase
Agreement to read in its entirety as follows:
"6.31 MINIMUM RATIO OF ACCOUNTS PAYABLE TO INVENTORY OF MERISEL,
INC. Merisel, Inc. and its Subsidiaries, on a consolidated basis, shall
have and maintain for each period indicated below, a ratio of (1) the
aggregate amount of accounts payable on the last day of such period to (2)
the aggregate amount of inventory on the last
19
<PAGE>
day of such period of not less than the ratio set forth below opposite such
period (the "Merisel, Inc. A/P Inventory Ratio"):
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
1st Quarter of 1996 0.90:1.00
2nd Quarter of 1996 0.90:1.00
3rd Quarter of 1996 0.90:1.00
4th Quarter of 1996 0.90:1.00
1st Quarter of 1997 0.90:1.00
</TABLE>
; provided that the Merisel, Inc. A/P Inventory Ratio shall be equal to or
--------
greater than 1.00:1.00 for one out of each two consecutive periods
indicated above."
(z) A new Section 6.32 shall be added to the Existing Note
Purchase Agreement to read in its entirety as follows:
"6.32 MAXIMUM CONSOLIDATED CAPITAL EXPENDITURES OF MERISEL, INC.
The Company and Merisel, Inc. shall not, and shall not permit their
respective Subsidiaries to, make or incur Consolidated Capital Expenditures
during each period indicated below in an aggregate amount exceeding the
amount set forth below opposite such period:
<TABLE>
<CAPTION>
Consolidated
Period Capital Expenditures
------ --------------------
<S> <C>
First Quarter of 1996 $5,772,000
First Two Quarters of 1996 $5,772,000
First Three Quarters of 1996 $9,817,000
Fiscal Year of 1996 $12,885,000
First Quarter of 1997 $3,200,000"
</TABLE>
(aa) A new Section 6.33 is added to the Existing Note Purchase
Agreement to read in its entirety as follows:
"6.33 USE OF PROCEEDS OF ASSET SALES, ETC. BY MERISEL FAB.
Merisel, Inc. shall cause Merisel FAB to apply all Net Asset Sale Proceeds
of any Asset Sale of Merisel FAB and all Net Securities Proceeds from the
issuance of equity Securities of Merisel FAB to acquire or construct
property or assets used in lines of business of Merisel, Inc. and its
Subsidiaries on October 24, 1994; provided that if any Net Asset Sale
--------
Proceeds are not so applied, Merisel, Inc. shall cause Merisel FAB to
retain such Net Asset Sale Proceeds for 360 days after the related Asset
Sale."
(ab) A new Section 6.34 is added to the Existing Note Purchase
Agreement to read in its entirety as follows:
"6.34 COVENANTS REGARDING NEW REVOLVING CREDIT AGREEMENT. The
Company and Merisel, Inc. shall not, and
20
<PAGE>
shall not permit their respective Subsidiaries to, without the consent of
the Required Noteholders, (a) amend, waive or otherwise change the terms of
the New Revolving Credit Agreement in any respect, (b) prior to execution
and delivery by each Noteholder and each Revolving Credit Lender of an
executed counterpart of the Intercreditor Agreement, (i) reduce Debt
outstanding under the New Revolving Credit Agreement below $150,000,000
(whether by payment, prepayment, acquisition or otherwise) and without
regard to whether there is any right to reborrow thereunder without a
corresponding pro rata reduction of the outstanding Notes, or (ii) effect
any reduction in the Revolving Credit Commitments without a corresponding
pro rata reduction of the outstanding Notes and (c) cause the terms,
covenants or conditions in the New Revolving Credit Agreement to be more
restrictive than those in this Agreement."
(ac) A new Section 6.35 is added to the Existing Note Purchase
Agreement to read in its entirety as follows:
"6.35 NEW RECEIVABLES PROGRAMS. The Company and Merisel, Inc.
agree to use, and to cause their respective Subsidiaries to use, reasonable
best efforts to enter into Receivables Programs."
(ad) A new Section 6.36 is added to the Existing Note Purchase
Agreement to read in its entirety as follows:
"6.36 MAINTAIN CASH IN NAME OF COMPANY. Merisel, Inc. shall
deposit and maintain all of its cash and cash equivalents solely in the
name of the Company, except for cash and cash equivalents in an amount not
------
to exceed $100,000 in the aggregate at any given time."
(ae) A new Section 6.37 is added to the Existing Note Purchase
Agreement to read in its entirety as follows:
"6.37 MINIMUM ACCOUNTS PAYABLE OF MERISEL, INC. Merisel, Inc.
and its Subsidiaries, on a consolidated basis, shall have and maintain on
the last day of each period indicated below, an aggregate amount of
accounts payable of not less than the amount set forth below opposite such
period:
<TABLE>
<CAPTION>
Period Accounts Payable
------ ----------------
<S> <C>
1st Quarter of 1996 $475,000,000
2nd Quarter of 1996 $475,000,000
3rd Quarter of 1996 $475,000,000
4th Quarter of 1996 $575,000,000
1st Quarter of 1997 $575,000,000"
</TABLE>
(af) A new Section 6.38 is added to the Existing Note Purchase
Agreement to read in its entirety as follows:
21
<PAGE>
"6.38 MAXIMUM NET EUROPE DEBT OF MERISEL EUROPE. Merisel, Inc.
shall cause Merisel Europe to have and maintain on each date indicated
below, Net Europe Debt in an amount not exceeding the amount set forth
below opposite such date:
<TABLE>
<CAPTION>
Date Net Europe Debt
---- ---------------
<S> <C>
March 31, 1996 $102,500,000
April 30, 1996 $101,000,000
May 31, 1996 $100,100,000
June 30, 1996 $87,800,000
July 31, 1996 $100,800,000
August 31, 1996 $95,000,000
September 30, 1996 $93,100,000
October 31, 1996 $100,000,000
November 30, 1996 $108,000,000
December 31, 1996 $112,600,000"
</TABLE>
(ag) A new Section 6.39 is added to the Existing Note Purchase
Agreement to read in its entirety as follows:
"6.39 NO JOINT ACCOUNTS WITH MERISEL, INC. Merisel, Inc. shall
not maintain any account jointly with any of its Subsidiaries (other than
Merisel FAB)."
(ah) A new Section 6.40 is added to the Existing Note Purchase
Agreement to read in its entirety as follows:
"6.40 INCORPORATION OF CERTAIN COVENANTS. The covenants and
definitions set forth on Schedule 6.40 are hereby incorporated by reference
-------------
into this Agreement as if set forth herein in full."
(ai) A new Section 6.41 is added to the Existing Note Purchase
Agreement to read in its entirety as follows:
"6.41 COMPLIANCE WITH LETTER AGREEMENT. The Company and
Merisel, Inc. shall, and shall cause their respective Subsidiaries to,
comply with all terms and conditions of that certain letter agreement,
dated as of April 11, 1996, among the Company, Merisel, Inc. and each of
the Noteholders (the "April 11 Letter")."
(aj) Section 7 of the Existing Note Purchase Agreement is amended
in the following respects:
(1) Clauses (d) and (e) of Section 7.1 are amended to read in
their entirety as follows:
"(D) Default shall occur in the observance or performance of any
covenant or agreement or any other provision of this Agreement which, in
any case, is not remedied within ten (10) days after receipt by the Company
of written notice of such default from any Noteholder;
22
<PAGE>
provided that if the Company or Merisel, Inc., as the case may be, shall
--------
fail to timely provide notice of the occurrence of any such default as
required under Section 6.17(e), such default shall immediately become an
------- -------
Event of Default; or
(E) Any representation or warranty made by the Company or
Merisel, Inc. herein or under the Third Amendment and Waiver to Note
Purchase Agreement dated as of April 12, 1996 (the "Third Amendment") among
the Company, Merisel, Inc. and the Noteholders, or made by the Company or
Merisel, Inc. in any statement or certificate furnished by the Company or
Merisel, Inc., as the case may be, in connection with the consummation of
the issuance of the Notes or otherwise pursuant to this Agreement or the
Third Amendment, is untrue in any material respect as of the date of the
issuance or making thereof; or"
(2) The term "Company" as set forth in clauses (g), (k), (l) and
(m) of Section 7.1 shall be deemed to refer to each of the
Company and Merisel, Inc., collectively.
(3) Section 7.1 is amended to add new subsections (n), (o), (p),
(q), (r), (s) and (t) to read in their entirety as follows:
"(N) Failure of the Company to maintain at least once each week
an availability amount under the GECC Receivables Program of less than
$5,000,000.
(O) Default shall occur under any agreement or instrument
relating to the Existing Receivables Programs or any Receivables Programs,
or any other event shall occur and shall continue after the expiration of
any applicable grace periods, if the effect of such default or event is to
terminate or unwind such Existing Receivables Program or Receivables
Program or related document or instrument or substantially reduce the
advance rate provided for therein.
(P) Failure of the Company to pay, within three Business Days of
the due date for such payment, (i) their deposit obligations with Orrick,
Herrington & Sutcliffe as set forth in that certain letter agreement dated
March 25, 1996 (as such letter agreement may be amended, supplemented or
modified from time to time, the "OH&S Fee Agreement"), and (ii) the fees
and expenses of Houlihan, Lokey, Howard & Zukin, Inc. as set forth in that
certain letter agreement dated March 21, 1996 (effective as of March 8,
1996) (as such letter agreement may be amended, supplemented or modified
from time to time, the "Houlihan Fee Agreement").
(Q) Notice is given by the Company to terminate its payment
obligations under the Houlihan Fee Agreement.
23
<PAGE>
(R) Failure of Merisel, Inc. to have received from Deloitte &
Touche on or before each of April 15, 1996 and April 15, 1997 a report on
its consolidated financial statements for the year ended December 30, 1995
or December 30, 1996, as applicable, which report is unqualified, does not
express doubts about the ability of Merisel, Inc. and its Subsidiaries to
continue as a going concern and states that such consolidated financial
statements fairly present, in all material respects, the financial position
of Merisel, Inc. and its Subsidiaries, on a consolidated basis, as at the
date indicated and the results of their operations and their cash flows for
the periods indicated in conformity with GAAP applied on a basis consistent
with prior years (except as otherwise disclosed in such financial
statements) and that the examination by such accountants in connection with
such consolidated financial statements was made in accordance with
generally accepted auditing standards, or such report shall have been
modified or withdrawn after April 15, 1996 or April 15, 1997, as
applicable.
(S) Any person or any two or more Persons acting in concert
acquire beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Exchange Act), directly or
indirectly, of Securities of Merisel, Inc. (or other Securities convertible
into such Securities) representing 50% or more of the combined voting power
of all Securities of Merisel, Inc. entitled to vote in the election of
directors, other than Securities having such power only by reason of the
happening of a contingency.
(T) Except as set forth in written information provided to the
Noteholders prior to April 15, 1996, since December 31, 1995, a material
adverse change in the Assets, business, profits, or condition (financial or
otherwise) of the Company, Merisel, Inc. and its Subsidiaries, taken as a
whole, shall have occurred."
(3) Section 7.3 is amended to add a new paragraph at the end of
such Section to read in its entirety as follows:
"When any Event of Default described in paragraphs (c) through
----------------------
(j), inclusive, and paragraphs (n) through (s), inclusive, of Section 7.1
--- -------------------------- -----------
has happened and is continuing, in addition to all other rights and
remedies of the Noteholders hereunder, Noteholders holding 51% or more of
the principal amount of the Notes at the time outstanding may, by notice in
writing to each Creditor (as defined in the Intercreditor Agreement),
declare that a Significant Event under and as defined in the Intercreditor
Agreement has occurred."
(ak) The first sentence of Section 9.5 of the Existing Note
Purchase Agreement is deleted in its entirety and the following is substituted
in lieu thereof:
24
<PAGE>
"The Company agrees to pay directly all of the Noteholders' out-of pocket
expenses in connection with the preparation, execution and delivery of this
Agreement and the transactions contemplated hereby and all such expenses
relating to any amendments, waivers or consents pursuant to the provisions
hereof, including any amendments, waivers, or consents resulting from any
workout, renegotiation or restructuring relating to the performance by the
Company of its obligations under this Agreement and the Notes whether any
of the foregoing are actually executed and delivered, including, without
limitation, (i) the reasonable fees, expenses and disbursements of Orrick,
Herrington & Sutcliffe, special counsel to the Noteholders, and (ii) the
reasonable agreed upon fees, expenses and disbursements of Houlihan, Lokey,
Howard & Zukin, Inc., financial advisor to the Noteholders."
(al) A new Section 9.19 is added to the Existing Note Purchase
Agreement to read in its entirety as follows:
"9.19. SHARING OF PAYMENTS. If, other than as expressly
provided elsewhere herein, any Noteholder shall obtain on account of the
Notes any payment (whether voluntary, involuntary, or otherwise) in excess
of its Pro Rata Share, such Noteholder shall immediately purchase from the
other Noteholders such participations in the Notes held by such other
Noteholders as shall be necessary to cause such purchasing Noteholder to
share the excess payment pro rata with each of them; provided, however,
-------- -------
that if all or any portion of such excess payment is thereafter recovered
from the purchasing Noteholder, such purchase shall to that extent be
rescinded and each other Noteholder shall repay to the purchasing
Noteholder the purchase price paid therefor, together with an amount equal
to such paying Noteholder's ratable share (according to the proportion of
(i) the amount of such paying Noteholder's required repayment to (ii) the
total amount so recovered from the purchasing Noteholder) of any interest
or other amount paid or payable by the purchasing Noteholder in respect of
the total amount so recovered."
(am) A new Section 9.20 is added to the Existing Note Purchase
Agreement to read in its entirety as follows:
"9.20 COMPLIANCE WITH INDENTURE. (a) For purposes of this
Section 9.20 only, capitalized terms used in this Section 9.20 (other than
------------ ------------
the definition of "Agreement") shall have the meanings assigned to such
terms in the Indenture.
(b) If any provision of this Agreement would, directly or
indirectly, cause or create any consensual encumbrance or restriction of
any kind on the ability of any Subsidiary of the Company to (i) pay
dividends, in cash or otherwise, or make any other distributions on its
Capital
25
<PAGE>
Stock or any other interest or participation in, or measured by, its
profits owned by the Company or a Subsidiary of the Company, (ii) make any
loans or advances to, or pay any Indebtedness owed to, the Company or any
Subsidiary of the Company or (iii) transfer any of its properties or assets
to the Company or to any Subsidiary of the Company, then such provision or
provisions of this Agreement which cause or create such encumbrances or
restrictions shall be void ab initio and unenforceable to the extent, but
only to the extent, that the terms and conditions of any such restriction
are materially less favorable in the aggregate to the Holders of the
Securities than those under or pursuant to this Agreement as in effect on
the Issue Date.
(c) To the extent, but only to the extent that any encumbrance
or restriction is unenforceable pursuant to clause (b) of this Section 9.20
------------
such encumbrance or restriction shall be deemed to be amended to conform
with the provision or provisions of this Agreement as in effect on the
Issue Date, if any, which encumbers or restricts the same transaction."
(an) A new Section 10 is added to the Existing Note Purchase
Agreement to read in its entirety as follows:
"SECTION 10. PARENT GUARANTY.
10.1 INCORPORATION OF PARENT GUARANTY. The Parent Guaranty is
incorporated by reference into this Section 10.1.
10.2 AMENDMENT TO PARENT GUARANTY. The definition of "Senior
Notes" set forth in Section 1 of the Parent Guaranty is deleted in its
entirety and the following is substituted in lieu thereof:
"Senior Notes" shall mean the Amended and Restated 9.58%
------------
Notes due May 31, 1997, issued by the Debtor pursuant to the
Guaranteed Agreement, as the same may from time to time be amended,
restated, modified, supplemented or replaced.
10.3 REAFFIRMATION OF PARENT GUARANTY AND AGREEMENT TO BE BOUND.
Merisel, Inc., by its signature below, (i) acknowledges and reaffirms its
obligations owing under the Parent Guaranty and agrees that, except as
amended by Section 10.2, the Parent Guaranty is and shall remain in full
------------
force and effect, and (ii) agrees to be bound by the covenants applicable
to it in the Agreement.
10.4 SUBORDINATION. Without limiting or affecting Section 12 of
----------
the Parent Guaranty, Merisel, Inc. hereby agrees that any and all present
and future indebtedness of the Company, Merisel Europe and any of their
respective Subsidiaries owing to Merisel, Inc. is postponed
26
<PAGE>
in favor of and subordinated to payment, in full, in cash, of the Notes and
all other obligations owing to the Noteholders under this Agreement."
(ao) Schedule 4.1(b) to the Existing Note Purchase Agreement is
amended to read in its entirety as set forth on Schedule 4.1(b) (Revised as of
April 12, 1996) attached hereto.
(ap) A new Schedule 6.7 is added to the Existing Note Purchase
Agreement to read in its entirety as set forth on Schedule 6.7 attached hereto.
(aq) A new Schedule 6.13 is added to the Existing Note Purchase
Agreement to read in its entirety as set forth on Schedule 6.13 attached hereto.
(ar) A new Schedule 6.26 is added to the Existing Note Purchase
Agreement to read in its entirety as set forth on Schedule 6.26 attached hereto.
(as) A new Schedule 6.40 is added to the Existing Note Purchase
Agreement to read in its entirety as set forth on Schedule 6.40 attached hereto.
(at) Exhibit A to the Existing Note Purchase Agreement is amended
to read in its entirety as set forth on Exhibit A (Revised as of April 12, 1996)
attached hereto.
(au) A new Exhibit H is added to the Existing Note Purchase
Agreement to read in its entirety as set forth on Exhibit H attached hereto.
(av) A new Exhibit I is added to the Existing Note Purchase
Agreement to read in its entirety as set forth on Exhibit I attached hereto.
(aw) A new Exhibit J is added to the Existing Note Purchase
Agreement to read in its entirety as set forth on Exhibit J attached hereto.
SECTION 2. Waiver of Certain Defaults. On the terms of this Amendment,
--------------------------
and subject to the satisfaction of the conditions precedent set forth in Section
3, each of the Noteholders (i) hereby waives all Events of Default existing on
or prior to December 30, 1995 and (ii) hereby agrees that all of Section 6 of
the Existing Note Purchase Agreement shall be deemed amended as set forth in
this Amendment as of December 31, 1995.
(a) The foregoing waiver is a one-time waiver and not a
continuing waiver, and shall apply only to the matters specifically set forth in
this Section 2. Without limiting the generality of the foregoing, this waiver
shall not apply to any future failure by the Company to comply with any
provision of the Note Purchase Agreement at any time.
27
<PAGE>
(b) Each of the Noteholders reserves all of its respective
rights and remedies with respect to all other obligations of the Company under
the Note Purchase Agreement and the Notes.
SECTION 3. Conditions to Effectiveness. The amendments set forth in
---------------------------
Section 1 and the waiver set forth in Section 2 of this Amendment shall become
effective on April 15, 1996 only upon the satisfaction of all of the following
conditions precedent on or prior to such date (such date being referred to as
the "Amendment Effective Date"):
(a) On or before the Amendment Effective Date, the Company shall
deliver to each of the Noteholders the following described documents (each of
which shall be reasonably satisfactory in form and substance to the Noteholders
and their counsel):
(i) This Amendment duly executed by the Company and
Merisel, Inc.;
(ii) The Notes, duly executed by the Company, in
substantially the form of Exhibit A (Revised as of April 12, 1996), in
---------
favor of each Noteholder, and the existing Amended and Restated
8.58% Senior Notes due June 30, 1997 (the "Prior Notes") held by such
Noteholder shall, on the Amendment Effective Date, be deemed to have been
cancelled and superseded by the respective Notes delivered to it on the
Amendment Effective Date (each such Noteholder agreeing to promptly return
to the Company its Prior Note);
(iii) Amendment, Reaffirmation and Consent of Guarantor, duly
executed by Merisel Europe, in substantially the form attached hereto as
Exhibit B (the "Europe Guaranty Amendment").
---------
(iv) Reaffirmation and Consent of Guarantor, duly executed
by Merisel Canada, in substantially the form attached hereto as Exhibit C
---------
(the "Canada Guaranty Amendment").
(v) The certificate of incorporation certified as of a
recent date by the Secretary of State of the State of Delaware and the
bylaws of each of the Company, Merisel, Inc. and Merisel Europe, in each
case as in effect on the Amendment Effective Date and certified by its
respective Secretary or Assistant Secretary as of the Amendment Effective
Date;
(vi) The certificate of articles of amalgamation certified
as of a recent date and the bylaws of Merisel Canada as in effect on the
Amendment Effective Date and certified by the Secretary or an Assistant
Secretary of Merisel Canada as of the Amendment Effective Date;
28
<PAGE>
(vii) Copies of resolutions of the board of directors of each
of the Company and Merisel, Inc. authorizing the transactions contemplated
by this Amendment, certified as of the Amendment Effective Date by its
respective Secretary or Assistant Secretary;
(viii) Copies of resolutions of the board of directors of
Merisel Europe authorizing the transactions contemplated by the Europe
Guaranty, as amended by the Europe Guaranty Amendment, certified as of the
Amendment Effective Date by the Secretary or an Assistant Secretary of
Merisel Europe;
(ix) Copies of resolutions of the sole shareholder of
Merisel Canada authorizing the transactions contemplated by the Canada
Guaranty, as amended by the Canada Guaranty Amendment, certified as of the
Amendment Effective Date by the Secretary or an Assistant Secretary of
Merisel Canada;
(x) A certificate of the Secretary or Assistant Secretary
of each of the Company and Merisel, Inc. certifying the names and true
signatures of the officers of the Company or Merisel, Inc., as the case may
be, authorized to execute, deliver and perform, as applicable, on behalf of
the Company or Merisel, Inc., as the case may be, this Amendment, the Note
Purchase Agreement, the Notes and the Parent Guaranty;
(xi) A certificate of the Secretary or Assistant Secretary
of Merisel Europe certifying the names and true signatures of the officers
of Merisel Europe authorized to execute, deliver and perform, as
applicable, on behalf of Merisel Europe the Europe Guaranty Amendment and
the Europe Guaranty;
(xii) A certificate of the Secretary or Assistant Secretary
of Merisel Canada certifying the names and true signatures of the officers
of Merisel Canada authorized to execute, deliver and perform, as
applicable, on behalf of Merisel Canada the Canada Guaranty Amendment and
the Canada Guaranty;
(xiii) A good standing and tax good standing certificate dated
as of a recent date for each of the Company, Merisel, Inc. and Merisel
Europe from the Secretary of State of the States of Delaware and California
together with bringdown certificates by facsimile, dated the Amendment
Effective Date;
(xiv) A good standing certificate for Merisel Canada dated as
of a recent date from the Ontario Ministry of Consumer and Commercial
Relations together with a bringdown certificate by facsimile, dated the
Amendment Effective Date;
29
<PAGE>
(xv) A favorable opinion of (1) Skadden, Arps, Slate,
Meagher & Flom special counsel for the Company and Merisel, Inc.,
substantially in the form of Exhibit D-1, and (2) McCarthy & Tetrault,
special counsel for Merisel Canada, substantially in the form of Exhibit D-
2, and in each case as to such other matters as any Noteholder may
reasonably request; and
(xvi) Such other documents, instruments, approvals or
opinions as the Noteholders or counsel to the Noteholders may reasonably
request.
(b) On or before the Amendment Effective Date, the New Revolving
Credit Agreement shall have been amended in a manner satisfactory to each
Noteholder and its counsel and such amendment shall be in full force and effect.
(c) On or before the Amendment Effective Date, the Subordinated
Note Purchase Agreement shall have been amended in a manner satisfactory to each
Noteholder and its counsel and such amendment shall be in full force and effect.
(d) On or before the Amendment Effective Date, the Company shall
have paid to each Noteholder the fee required by the letter agreement, dated as
of April 12, 1996, among the Company and the Noteholders (the "April 12
Letter").
(e) On or before the Amendment Effective Date, the Company shall
have paid to each Noteholder its Pro Rata Share of interest accruing on the
Prior Notes at the rate of 8.58% per annum from and including March 10, 1996 to
but excluding April 15, 1996.
(f) On or before the Amendment Effective Date, each of the
Noteholders and their counsel shall have received satisfactory evidence that (i)
the anticipated approximately $25 million tax refund will be received by
Merisel, Inc. on or prior to June 30, 1996 and (ii) approximately $3 million of
the anticipated $5 million tax refund will be received by Merisel Canada, Inc.
on or prior to June 30, 1996.
(g) On or before the Amendment Effective Date, the Company shall
have paid all costs, fees and expenses required under Section 9.5 of the Note
Purchase Agreement which were incurred up to the Amendment Effective Date and
evidenced by invoice delivered to the Company.
(h) On or before the Amendment Effective Date, all corporate and
other proceedings taken or to be taken in connection with the transactions
contemplated by this Amendment and all documents incidental to such
transactions, shall be reasonably satisfactory in form and substance to the
Noteholders and their counsel, and the Noteholders and such counsel shall have
received all such counterpart originals or certified copies
30
<PAGE>
of such documents, opinions, certificates and evidence as they may reasonably
request.
(i) Satisfactory evidence that all Excess Cash and Excess Cash
Equivalents of Merisel, Inc. and its Subsidiaries are held solely in the name of
the Company.
(j) All governmental actions or filings necessary for the
execution, delivery and performance of this Amendment shall have been made,
taken or obtained, and no order, statutory rule, regulation, executive order,
decree, judgment or injunction shall have been enacted, entered, issued,
promulgated or enforced by any court or other governmental entity which
prohibits or restricts the transactions contemplated by this Amendment, nor
shall any action have been commenced or threatened seeking any injunction or any
restraining or other order to prohibit, restrain, invalidate or set aside the
transactions contemplated by this Amendment.
(k) The representations and warranties set forth in this
Amendment shall be true and correct in all material respects as of the Amendment
Effective Date.
(l) The Debt evidenced by the Notes shall be "Senior Debt" and
"Designated Senior Debt" (as such terms are defined in the Subordinated Note
Purchase Agreement) for all purposes under the Subordinated Note Purchase
Agreement, and the Company shall have delivered a written notice to the holders
of the Subordinated Notes specifying that the Debt evidenced by the Notes is
"Designated Senior Debt."
SECTION 4. Representations and Warranties. In order to induce the
------------------------------
Noteholders to enter into this Amendment, amend the Existing Note Purchase
Agreement in the manner provided in this Amendment, and waive certain defaults
under the Existing Note Purchase Agreement as set forth above, each of the
Company and Merisel, Inc. represents and warrants to each Noteholder as of the
Amendment Effective Date as follows:
(a) Corporate Existence and Power. Each of the Company,
-----------------------------
Merisel, Inc., Merisel Europe and Merisel Canada:
(i) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its formation;
(ii) has the power and authority and all governmental
licenses, authorizations, consents and approvals to own its assets and
carry on its business and to execute, deliver, and perform its obligations
under, and carry out the transactions contemplated by, as applicable, the
Amendment, the Note Purchase Agreement, the Notes, the Parent Guaranty, the
Europe Guaranty Amendment, the Europe Guaranty, the Canada Guaranty
Amendment and the Canada Guaranty;
31
<PAGE>
(iii) is duly qualified as a foreign corporation and is
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license or where the failure so to qualify
would not have a material adverse effect on the condition (financial or
otherwise), business or prospects of Merisel, Inc. and its Subsidiaries
taken as a whole; and
(iv) is in compliance with all material requirements of law.
(b) Corporate Authorization; No Contravention. The execution
-----------------------------------------
and delivery of this Amendment and the Notes, and performance of the Note
Purchase Agreement, the Notes and the Parent Guaranty, by the Company and
Merisel, Inc., as applicable, and the execution and delivery of the Europe
Guaranty Amendment and the Canada Guaranty Amendment, and performance of the
Europe Guaranty and the Canada Guaranty, by Merisel Europe and Merisel Canada,
as applicable, have been duly authorized by all necessary corporate action on
behalf of such Person and do not and will not:
(i) contravene the terms of any of such Person's
certificate of incorporation or bylaws;
(ii) conflict with or result in any breach or contravention
of, or the creation of any Lien under, any document evidencing any
Contractual Obligation to which such Person is a party or any order,
injunction, writ or decree of any federal, state or other governmental
authority or regulatory body to which such Person or its property is
subject where such conflict, breach, contravention or Lien could reasonably
be expected to have a material adverse effect on the condition (financial
or otherwise), business or prospects of Merisel, Inc. and its Subsidiaries
taken as a whole; or
(iii) violate any material requirement of law.
(c) Governmental Authorization. No approval, consent,
--------------------------
exemption, authorization, or other action by, or notice to, or filing with, any
federal, state or other governmental authority or regulatory body or other
Person is necessary or required in connection with (i) the execution and
delivery of this Amendment and the Notes, and performance of the Note Purchase
Agreement, the Notes and the Parent Guaranty, by the Company and Merisel, Inc.,
as applicable, and the execution and delivery of the Europe Guaranty Amendment
and the Canada Guaranty Amendment, and performance of the Europe Guaranty and
the Canada Guaranty, by Merisel Europe and Merisel Canada, as applicable, or
(ii) the continued operation of Merisel, Inc.'s or any of its Subsidiaries'
business as contemplated to be conducted after the date hereof by the Note
Purchase Agreement, except in each case
32
<PAGE>
such approvals, consents, exemptions, authorizations or other actions, notices
or filings (A) as have been obtained, (B) as may be required under state
securities or Blue Sky laws, (C) as are of a routine or administrative nature
and are either (x) not customarily obtained or made prior to the consummation of
transactions such as the transactions described in clauses (i) or (ii) or (y)
expected in the judgment of any such Person to be obtained in the ordinary
course of business subsequent to the consummation of the transactions described
in clauses (i) or (ii), or (D) that, if not obtained, could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), business or prospects of Merisel, Inc. and its Subsidiaries taken as
a whole.
(d) Binding Effect. The Note Purchase Agreement and the Notes
--------------
constitute the legal, valid and binding obligation of the Company, the Note
Purchase Agreement and the Parent Guaranty constitute the legal, valid and
binding obligation of Merisel, Inc. and the Europe Guaranty and the Canada
Guaranty constitute the legal, valid and binding obligations of Merisel Europe
and Merisel Canada, respectively, in each case, in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
(e) Litigation. Except as set forth on Schedule 2 attached
----------
hereto, there are no actions, suits, proceedings, claims or disputes pending, or
to the best knowledge of the Company or Merisel, Inc., threatened or
contemplated, at law, in equity, in arbitration or before any federal, state or
other governmental authority or regulatory body, against the Company, Merisel,
Inc., Merisel Europe or Merisel Canada which:
(i) purport to affect or pertain to this Amendment, the
Note Purchase Agreement the Notes or any of the transactions contemplated
hereby or thereby; or
(ii) if determined adversely to the Company, Merisel, Inc.,
Merisel Europe or Merisel Canada, would reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), business
or prospects of Merisel, Inc. and its Subsidiaries taken as a whole. No
injunction, writ, temporary restraining order or any order of any nature
has been issued by any court or other governmental authority purporting to
enjoin or restrain the execution, delivery or performance, as applicable,
of this Amendment, the Note Purchase Agreement or the Notes, or directing
that the transactions provided for herein or therein not be consummated as
herein or therein provided.
(f) No Default. No Default or Event of Default exists as of the
----------
Amendment Effective Date or would result from the transactions contemplated by
this Amendment. As of the
33
<PAGE>
Amendment Effective Date and giving effect to any waiver received by Merisel,
Inc. or any of its Subsidiaries on the Amendment Effective Date, neither the
Company, Merisel, Inc. nor any Affiliate of the Company or Merisel, Inc. is in
default under or with respect to any Contractual Obligation in any respect
which, individually or together with all such defaults, could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), business or prospects of Merisel, Inc. and its Subsidiaries taken as
a whole, or that would, if such default had occurred after the Amendment
Effective Date, create an Event of Default under subsection 7.1(c) of the Note
Purchase Agreement.
(g) Financial Statements. (i) The Noteholders have been
--------------------
furnished with an audited consolidated balance sheet of Merisel, Inc. as of
December 31, 1995, and related audited consolidated statements of income, cash
flow and changes in stockholders' equity for the fiscal year ended on said date.
Such financial statements have been prepared in accordance with GAAP
consistently applied, present fairly the consolidated financial position of the
Company as of such date, and the consolidated results of operations and changes
in cash flows and stockholders' equity for such period.
(ii) Except as set forth in written information provided to the
Noteholders prior to April 15, 1996, since December 31, 1995, there has been no
material adverse change in the Assets, business, profits, or condition
(financial or otherwise) of Merisel, Inc. or its Subsidiaries, taken as a whole,
as shown on the financial statements referenced above.
(h) Debt. Schedule 6.7 attached hereto lists all Debt of
---- ------------
Merisel, Inc. and its Subsidiaries outstanding as of the Amendment Effective
Date.
(i) Representations and Warranties in the Existing Note Purchase
------------------------------------------------------------
Agreement. The Company confirms that as of the Amendment Effective Date the
- ---------
representations and warranties contained in Sections 4.1(a), 4.1(b), 4.1(f),
4.1(h), 4.1(i), 4.1(j), 4.1(n), 4.1(q), 4.1(r), 4.1(s), 4.1(t), 4.1(v) and
4.1(x) remain (before and after giving effect to this Amendment) true and
correct in all material respects.
(j) No Undisclosed Defaults. Except with respect to the
-----------------------
covenants set forth in Section 6 of the Existing Note Purchase Agreement which
are modified in this Amendment, to the best knowledge of the Company and
Merisel, Inc., no Event of Default or Default existed on or prior to December
30, 1995.
34
<PAGE>
SECTION 5. Miscellaneous.
-------------
(a) Reference to and Effect on the Existing Note Purchase
-----------------------------------------------------
Agreement.
- ---------
(i) Except as specifically amended by this Amendment, and
the documents executed and delivered in connection therewith, the Existing
Note Purchase Agreement shall remain in full force and effect and is hereby
ratified and confirmed.
(ii) The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a
waiver of any provision of, or operate as a waiver of any right, power or
remedy of the Noteholders under, the Existing Note Purchase Agreement.
(iii) Upon the conditions precedent set forth herein being
satisfied, this Amendment shall be construed as one with the Existing Note
Purchase Agreement, and the Existing Note Purchase Agreement shall, where
the context requires, be read and construed throughout so as to incorporate
this Amendment.
(b) Consent to Sharing of Information. The Company acknowledges
---------------------------------
that the Intercreditor Agreement contemplates that under certain circumstances
the Noteholders and the Revolving Credit Lenders will share information with
each other relating to Merisel, Inc. and its Subsidiaries, and the Company
hereby consents to such sharing of information from and after the date the
Intercreditor Agreement becomes effective.
(c) Fees and Expenses. The Company acknowledges that all costs,
-----------------
fees and expenses incurred in connection with this Amendment will be paid in
accordance with Section 9.5 of the Existing Note Purchase Agreement.
(d) Headings. Section and subsection headings in this Amendment
--------
are included for convenience of reference only and shall not constitute a part
of this Amendment for any other purpose or be given any substantive effect.
(e) Counterparts. This Amendment may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(f) Complete Agreement. The Note Purchase Agreement, together
------------------
with the exhibits and schedules thereto, the Notes, the Parent Guaranty, the
Canada Guaranty, the Europe Guaranty, the April 11 Letter, the April 12 Letter,
the April 14 Letter and the April 15 Letter, the Orrick, Herrington & Sutcliffe
Fee Agreement, the Houlihan Fee Agreement and the other agreements referred to
herein or therein, is intended by the parties as a final expression of their
agreement and is intended
35
<PAGE>
as a complete statement of the terms and conditions of their agreement.
(g) Governing Law. This Amendment shall be governed by and
-------------
construed according to the laws of the State of California.
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
"Company"
MERISEL AMERICAS, INC.,
a Delaware corporation
By: /s/ Timothy N. Jenson
--------------------------------
Name: Timothy N. Jenson
Title: Vice President and Treasurer
"Merisel, Inc."
MERISEL, INC.,
a Delaware corporation
By: /s/ Timothy N. Jenson
-------------------------------
Name: Timothy N. Jenson
Title: Vice President and Treasurer
"Noteholders"
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY,
a Massachusetts corporation
By: /s/ Andrew Dickey
-----------------------------
Name: Andrew Dickey
Title: Managing Director
CM LIFE INSURANCE COMPANY,
a Connecticut corporation
By: /s/ Mary Ann McCarthy
------------------------------
Name: Mary Ann McCarthy
Title: Managing Director
37
<PAGE>
PRINCIPAL MUTUAL LIFE
INSURANCE COMPANY,
an Iowa corporation
By: /s/ Stephen G. Skrivanek
-----------------------------------
Name: Stephen G. Skrivanek
Title: Counsel
By: Christopher J. Henderson
-----------------------------------
Name: Christopher J. Henderson
Title: Counsel
FIRST AUSA LIFE INSURANCE COMPANY
By: /s/ Gregory W. Theobald
-----------------------------------
Name: Gregory W. Theobald
Title: Vice President & Asst. Secretary
PFL LIFE INSURANCE COMPANY
By: /s/ Gregory W. Theobald
-----------------------------------
Name: Gregory W. Theobald
Title: Vice President & Asst. Secretary
LIFE INVESTORS INSURANCE COMPANY
OF AMERICA
By: /s/ Gregory W. Theobald
-----------------------------------
Name: Gregory W. Theobald
Title: Vice President & Asst. Secretary
BANKERS UNITED LIFE ASSURANCE
COMPANY
By: /s/ Gregory W. Theobald
-----------------------------------
Name: Gregory W. Theobald
Title: Vice President & Asst. Secretary
38
<PAGE>
INTERNATIONAL LIFE INVESTORS
INSURANCE COMPANY
By: /s/ Gregory W. Theobald
-----------------------------------
Name: Gregory W. Theobald
Title: Vice President & Asst. Secretary
AMERITAS LIFE INSURANCE CORP.
By: Ameritas Investment Advisors, Inc.,
as Agent
By: /s/ Patrick J. Henry
------------------------------------------
Name: Patrick J. Henry
Title: Vice President - Fixed Income Securities
THE CANADA LIFE ASSURANCE COMPANY
By: /s/ Avon Socpe
-----------------------------------
Name: Avon Socpe
Title:
CANADA LIFE INSURANCE COMPANY OF
AMERICA
By: /s/ Wilfredo Cuevas
-----------------------------------
Name: Wilfredo Cuevas
Title: Vice President
PROVIDENT MUTUAL LIFE INSURANCE
COMPANY OF PHILADELPHIA
By: /s/ Stanley R. Ruben
-----------------------------------
Name: Stanley R. Ruben
Title:
39
<PAGE>
PROVIDENT MUTUAL LIFE AND ANNUITY
COMPANY OF AMERICA
By: /s/ Stanley R. Ruben
-----------------------------------
Name: Stanley R. Ruben
Title:
GUARANTEE LIFE INSURANCE COMPANY
By: /s/ Robert M. Jergovic
-----------------------------------
Name: Robert M. Jergovic, CFA
Title: Vice President-Private Placements
GOLDMAN SACHS
By: /s/ Keith Alexis Malas
-----------------------------------
Name: Keith Alexis Malas
Title: Authorized Signatory
40
<PAGE>
SCHEDULE 1
----------
Additional Definitions
"Additional Restructuring Fees" shall mean all fees directly or
indirectly related to the restructuring, amending or monitoring of Debt in
existence as of April 15, 1996 of Merisel, Inc. or any of its Subsidiaries,
including, without limitation, amendment fees, legal fees, consultant fees,
financial advisor fees and other related fees, in excess of the amount
contemplated by Merisel, Inc. and its Subsidiaries in the Bank Plan dated March
29, 1996 as further set forth in that certain letter dated as of April 14, 1996
from Merisel, Inc. to the Noteholders (the "April 14 Letter").
"Amount of New Debt" shall mean, with respect to each New Debt
Availability Date, an amount equal to the Permitted Debt Availability Amount on
such New Debt Availability Date minus the Permitted Debt Availability Amount on
-----
the immediately preceding day. In calculating the Permitted Debt Availability
Amount for such preceding date, if the Debt available on such New Debt
Availability Date replaces or refinances Debt, the existing Debt so refinanced
shall be included in the Permitted Debt Availability Amount for such preceding
date.
"Amount of New Receivables Program" shall mean, with respect to each
New Receivables Program Availability Date, an amount equal to the Receivables
Program Availability Amount on such New Receivables Program Availability Date
minus the Receivables Program Availability Amount on the immediately preceding
- -----
day. In calculating the Receivables Program Availability Amount for such
preceding date, if the Receivables Program available on such New Receivables
Program Availability Date replaces or refinances a Receivables Program or
Existing Receivables Program, the existing Receivables Program so refinanced
shall be included in the Receivables Program Availability Amount for such
preceding date.
"Asset Sale" shall mean any sale, transfer or disposition of assets or
Sale and Lease Back Transactions permitted under Section 6.14(f).
---------------
"Average Consolidated Net Inventory" shall mean, for any fiscal
quarter, with respect to Merisel Inc. and its Subsidiaries, on a consolidated
basis, (i) the sum of (A) the amount of inventory on the first day of such
fiscal quarter plus (B) the amount of inventory on the last day of the first
----
month of such fiscal quarter plus (C) the amount of inventory on the last day of
----
the second month of such fiscal quarter plus (D) the amount of inventory on the
----
last day of such fiscal quarter divided by (ii) four.
----------
"CAT Holding" shall mean CAT Russia Holding Limited, a Cayman Island
corporation.
S-1-1
<PAGE>
"Consolidated Adjusted Tangible Net Worth" shall mean Consolidated
Tangible Net Worth without giving effect to any foreign currency translation
adjustments.
"Consolidated Capital Expenditures" shall mean, for any period, with
respect to any Person, the expenditures with respect to capital Assets (whether
paid in cash or other consideration or accrued as a liability and including that
portion of Capital Leases which is capitalized on the consolidated balance sheet
of such Person and its Subsidiaries) by such Person and its Subsidiaries during
that period that in conformity with GAAP are included in "capital expenditures".
"Consolidated Debt Equivalents" shall mean, as of any date of
determination, the aggregate of Consolidated Debt plus, with respect to the
----
Company or Merisel, Inc. (as indicated by the context) and its Subsidiaries, on
a consolidated basis, the aggregate amount of liability assumed or net cash
proceeds received in an accounts receivable securitization, transfer or sale
(without duplication).
"Consolidated EBITSDA" shall mean, for any period, with respect to
Merisel Inc. and its Subsidiaries, on a consolidated basis, the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) provisions for
taxes based on income, (iii) Consolidated Interest Charges, (iv) total
depreciation expense and (v) total amortization expense less other non-cash
----
items increasing Consolidated Net Income, without taking into consideration the
effects of (A) Additional Restructuring Fees, and (B) any write-downs in
connection with (x) any sale of any Subsidiaries of Merisel, Inc. or any
restructuring in connection with such sale, or (y) with respect to the first
quarter of 1996 only, accounts payable to the extent (but only to the extent)
such write-downs exceed $7,000,000, all of the foregoing determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Charges" shall mean, for any period, the sum of
(i) total interest expense during such period of Merisel Inc. and its
Subsidiaries, on a consolidated basis, with respect to all Debt (including,
without limitation, the interest component of Capital Leases), plus (ii) the
----
discount expense on sales of commercial paper and fees associated with the sale
of accounts receivables permitted under Section 6.13, all determined in
------------
accordance with GAAP.
"Consolidated Net Worth" shall mean, as of any date of determination,
total assets of the Company or Merisel, Inc. (as indicated by the context) and
its Subsidiaries, on a consolidated basis, minus total liabilities of the
-----
Company or Merisel, Inc., as the case may be, and its Subsidiaries, on a
consolidated basis, such assets and liabilities each to be determined in
accordance with GAAP, including in the determination of total consolidated
---------
liabilities Subordinated Debt.
S-1-2
<PAGE>
"Current Debt Service Amount" shall mean, as of any date of
determination, the amount of regularly scheduled interest due and payable on the
Parent Notes on the next regularly scheduled payment date for the Parent Notes
to occur after such date of determination.
"Excess Cash and Excess Cash Equivalents" shall mean, with respect to
any Person, all cash and cash equivalents in excess of what is required for the
normal operation of the business of such Person consistent with past practice.
"Existing Receivables Programs" shall have the meaning set forth in
Section 6.13.
- ------------
"Final Maturity Date" shall mean May 31, 1997.
"GECC Receivables Program" shall mean the Existing Receivables Program
evidenced by (a) that certain Receivables Transfer Agreement dated as of October
2, 1995 between the Company and Merisel Capital Funding, Inc., a Delaware
corporation ("MCF") and (b) that certain Receivables Transfer and Servicing
Agreement dated as of October 2, 1995 by and among MCF, Redwood Receivables
Corporation, General Electric Capital Corporation, as Operating Agent and
Collateral Agent and the Company, as Servicer, as each of clause (a) and/or (b)
may be amended, renewed, replaced or refinanced from time to time in accordance
with Section 6.13(a).
---------------
"Indenture" shall have the meaning set forth in Section 6.23.
------------
"Intercreditor Agreement" shall mean, the intercreditor agreement (if
executed and delivered), substantially in the form of Exhibit I, dated as of
---------
April 12, 1996, executed and delivered by each Noteholder and each Revolving
Credit Lender, as it may be amended, restated or otherwise modified from time to
time. Such Intercreditor Agreement shall be deemed to be substantially in the
form of Exhibit I regardless of (a) when such agreement provides that the
Revolving Credit Lenders shall purchase a participation interest in the
outstanding Notes in an amount equal to the Noteholders' Proportionate Share (as
defined in the Intercreditor Agreement) of the Revolving Participation Amount
(as defined in the Intercreditor Agreement) and (b) the conditions to the
release of liability of any Assignor Creditor.
"Merisel FAB" shall mean Merisel FAB, Inc., a Delaware corporation,
and its successors and assigns.
"Merisel U.K." shall mean Merisel (UK) Ltd, a United Kingdom limited
company.
"Net Asset Sale Proceeds" shall mean, with respect to any Asset Sale,
cash payments (including any cash received by way of repayment of intercompany
debt or deferred payment
S-1-3
<PAGE>
pursuant to, or by monetization of, a note receivable or otherwise, but only as
and when so received ) received from such Asset Sale, net of any reasonable
costs and expenses incurred in connection with such Asset Sale, including
without limitation (i) reasonable legal fees and expenses, (ii) taxes reasonably
estimated to be actually payable within one year of the date of such Asset Sale,
including income taxes as a result of any gain recognized in connection with
such Asset Sale, (iii) payment of the outstanding principal amount of, premium
or penalty, if any, and interest on any Debt to parties other than Merisel, Inc.
or any of its Subsidiaries (other than the outstanding Notes and Debt
outstanding under the New Revolving Credit Agreement) that is secured by a Lien
on the stock or assets in question and that is required to be repaid under the
terms thereof as a result of such Asset Sale and (iv) amounts reserved in
accordance with GAAP for (1) liabilities due and payable within twelve months
from the date of such Asset Sale retained by the seller in connection with such
Asset Sale and (2) indemnities provided by the seller relating to inventory
and/or accounts receivable in connection with such Asset Sale in an aggregate
amount not to exceed 5% of the purchase price payable in cash with respect to
such Asset Sale; provided that in the case of any Asset Sale by a foreign
--------
Subsidiary of Merisel, Inc. or the Company, Net Asset Sale Proceeds shall not
include cash proceeds applied to the repayment to parties other than Merisel,
Inc. or any of its Subsidiaries of local lines of credit of such Subsidiary; and
provided further that Net Asset Sale Proceeds shall include all amounts in
- -------- -------
respect of payment forgiveness, cancellation or reduction of intercompany Debt
in connection with or arising out of such Asset Sale.
"Net Debt Proceeds" shall mean, with respect to a New Debt
Availability Date, an amount equal to the Amount of New Debt net of any
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including without limitation reasonable legal fees and
expenses; provided that with respect to the incurrence or issuance of Debt by a
--------
foreign Subsidiary of Merisel, Inc. or the Company, Net Debt Proceeds shall not
include cash proceeds applied to the repayment of local lines of credit of such
subsidiary.
"Net Europe Debt" shall mean, on any date of determination, (i) an
amount equal to the aggregate amount of Debt outstanding under the New Revolving
Credit Agreement attributable to borrowings by Merisel Europe minus (ii) the
-----
aggregate amount of all intercompany loans and advances made by Merisel Europe
and its Subsidiaries to Merisel, Inc. and its Subsidiaries other than Merisel
Europe and its Subsidiaries plus (iii) the sum of (A) the aggregate amount of
----
proceeds received or liability assumed with respect to sales or transfers of
accounts receivable by Merisel Europe and its Subsidiaries to Merisel, Inc., the
Company and Subsidiaries of the Company and (B) the aggregate amount of all
intercompany loans and advances made by Merisel, Inc. and its Subsidiaries other
than Merisel
S-1-4
<PAGE>
Europe and its Subsidiaries to Merisel Europe and its Subsidiaries outstanding
on such date.
"Net FAB Debt" shall mean, on any date of determination, (i) the
aggregate amount of all intercompany loans and advances from Merisel, Inc. and
its Subsidiaries (other than Merisel FAB) to Merisel FAB outstanding on such
date of determination plus (ii) the aggregate amount of all investments made by
Merisel, Inc. and its Subsidiaries (other than Merisel FAB) in Merisel FAB since
October 24, 1994 (whether by purchase or acquisition of capital stock,
obligations or other securities of Merisel FAB, by the making of capital
contributions, or otherwise) plus (iii) the aggregate amount of proceeds
received or liability assumed by Merisel FAB with respect to sales or transfers
of accounts receivable by Merisel FAB to Merisel, Inc. and its Subsidiaries
(other than Merisel FAB).
"Net Proceeds Amount" shall have the meaning set forth in Section
-------
3.4(e).
- ------
"Net Receivables Program Proceeds" shall mean, with respect to a New
Receivables Availability Date, an amount equal to the Amount of New Receivables
Program net of reasonable costs and expenses of implementing the related
Receivables Program including without limitation reasonable legal fees and
expenses; provided that in the case of any Receivables Program of a foreign
--------
Subsidiary of Merisel, Inc. or the Company, Net Receivables Program Proceeds
shall not include proceeds applied to the repayment of local lines of credit of
such Subsidiary.
"Net Securities Proceeds" shall mean the cash proceeds net of
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including without limitation, reasonable legal fees and
expenses received from the issuance of any equity Securities of Merisel, Inc.,
the Company or any of their respective Subsidiaries.
"New Debt Availability Date" shall mean, with respect to Permitted
Debt of a Person, the date on which such Person is first entitled to receive
proceeds of such Permitted Debt under the terms of such Permitted Debt whether
or not proceeds of such Permitted Debt are actually received by such Person.
"New Receivables Program Availability Date" shall mean, with respect
to a Receivables Program of a Person, (i) the date on which such Person is first
entitled to receive proceeds of such Receivables Program and (ii) thereafter,
each date on which the Receivable Program Availability Amount increases (in the
case of each of clause (i) and (ii), whether or not such proceeds of such
Receivables Program are actually received by such Person).
S-1-5
<PAGE>
"Permitted Debt" shall mean Debt of Merisel, Inc., the Company or any
of their respective Subsidiaries permitted under Section 6.7(c).
--------------
"Permitted Debt Availability Amount" shall mean, on any date of
determination with respect to Permitted Debt of a Person, the maximum amount of
proceeds such Person is entitled to receive under the terms of such Permitted
Debt on such date.
"Prepayment Date" shall have the meaning set forth in Section 3.2.
-----------
"Pro Rata Share" shall mean, as to any Noteholder at any time, a
fraction (expressed as a percentage) the numerator of which shall equal the
principal amount of such Noteholder's Note outstanding at such time and the
denominator of which shall equal the principal amount of all the Notes
outstanding at such time.
"Receivables Program" shall have the meaning set forth in Section
-------
6.13(e).
- -------
"Receivables Program Availability Amount" shall mean, on any date of
determination with respect to any Receivables Program or Existing Receivables
Program of any Person, the maximum amount of proceeds such Person is entitled to
receive under the terms of such Receivables Program or Existing Receivables
Program on such date based on the maximum amount of receivables permitted to be
included in such Receivables Program or Existing Receivables Program on such
date and the "advance rate" for such Receivables Program or Existing Receivables
Program.
"Revolving Credit Commitment" shall mean, as to each Revolving Credit
Lender, such Person's Revolving Facility Commitment under and as defined in the
New Revolving Credit Agreement.
"Revolving Credit Lenders" shall mean the financial institutions from
time to time parties to the New Revolving Credit Agreement.
"(S)6.26 Payments" shall have the meaning set forth in Section 6.26.
------------
"Securities" shall mean any stock, shares, partnership interests,
limited liability company interests, voting trust certificates, certificates of
interest or participation in any profit-sharing agreement or arrangement,
options, warrants, bonds, debentures, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interests,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or
S-1-6
<PAGE>
any right to subscribe to, purchase or acquire, any of the foregoing.
<PAGE>
SCHEDULE 2
----------
Litigation
<PAGE>
SCHEDULE 4.1(b) (Revised as of April 12, 1996)
---------------
Subsidiaries
<PAGE>
SCHEDULE 6.7
------------
Debt Outstanding as of April 15, 1996
<PAGE>
SCHEDULE 6.13
-------------
Existing Receivables Programs
GECC ASSET SECURITIZATION
Receivables Transfer Agreement dated as of October 2, 1995 between the Company
and Merisel Capital Funding, Inc., a Delaware corporation ("MCF").
Receivables Transfer and Servicing Agreement dated as of October 2, 1995 by and
among MCF, Redwood Receivables Corporation, General Electric Capital
Corporation, as Operating Agent and Collateral Agent and the Company, as
Servicer.
MERISEL CANADA ASSET SECURITIZATION
Receivables Purchase Agreement dated as of December 15, 1995 between Merisel
Canada, Inc. and Canadian Master Trust.
MERISEL UK LTD. ASSET SECURITIZATION
Deutsche Financial Services (UK) Limited and Merisel (UK) Limited Standard
Conditions for Purchase of Debts dated as of October 16, 1995.
<PAGE>
SCHEDULE 6.26
-------------
Intercompany Operating Expenses
[As per Company's 1996 Business Plan]
<PAGE>
SCHEDULE 6.40
-------------
Incorporated Covenants
The following covenants set forth in Section 7.02 of the New Revolving
Credit Agreement, as the same may be amended from time to time, are incorporated
by reference into Section 6.40 as if set forth therein in full, except that (a)
------------
each covenant so incorporated (i) shall be in effect so long as any Note remains
outstanding, and (ii) shall be applicable to the Company, Merisel, Inc., and
their respective Subsidiaries (except that Section 7.02(g) shall not apply to
Merisel, Inc. or Merisel FAB), and (b) the term "Majority Lenders" set forth in
the introductory paragraph of Section 7.02 of the New Revolving Credit Agreement
shall be deemed to refer to the Required Noteholders:
<TABLE>
<CAPTION>
Covenant: Section Reference:
-------- -----------------
<S> <C>
Contingent Obligations (S)7.02(c)
Dividends, Etc. (S)7.02(d)
Intercompany Transaction (S)7.02(g)
Investments in other Persons (S)7.02(h)
Material Agreements (S)7.02(p)
Mifinco, Inc. (S)7.02(q)
Interest Rate Agreements (S)7.02(r)
Change in Business (S)7.02(s)
Fiscal Year (S)7.02(t)
</TABLE>
For purposes hereof, all definitions set forth in Section 1.01 of the
New Revolving Credit Agreement, as the same may be amended from time to time,
necessary to the construction or understanding of any covenant set forth on this
Schedule 6.40 are also incorporated by reference into Section 6.40.
- ------------- ------------
<PAGE>
EXHIBIT 10.44
REVOLVING CREDIT AGREEMENT
Dated as of December 23, 1993
As Amended and Restated as of April 12, 1996
Among
MERISEL AMERICAS, INC.
and
MERISEL EUROPE, INC.
as Borrowers,
------------
and
MERISEL, INC.
as Guarantor,
------------
THE LENDERS PARTIES HERETO
as Lenders,
----------
CITICORP USA, INC.
as Agent,
--------
NATIONSBANK OF TEXAS, N.A.
as Co-Agent,
-----------
and
CITIBANK, N.A.
as Designated Issuer
--------------------
<PAGE>
MERISEL AMERICAS, INC.
AND
MERISEL EUROPE, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms........................... 2
SECTION 1.02. Computation of Time Periods..................... 23
SECTION 1.03. Accounting Terms................................ 23
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Revolving Facility Advances................. 23
SECTION 2.02. The Swing Line Advances......................... 25
SECTION 2.03. Repayment....................................... 29
SECTION 2.04. Interest on Revolving Facility Advances and
Swing Line Advances............................. 29
SECTION 2.05. Interest Rate Determination..................... 30
SECTION 2.06. Prepayments..................................... 31
SECTION 2.07. Reduction of Commitments........................ 32
SECTION 2.08. Increased Capital............................... 34
SECTION 2.09. Increased Costs................................. 34
SECTION 2.10. Illegality...................................... 35
SECTION 2.11. Removal of a Lender............................. 35
SECTION 2.12. Use of Proceeds................................. 36
ARTICLE III
AMOUNTS AND TERMS OF THE LETTERS OF CREDIT
SECTION 3.01. The Letters of Credit........................... 36
SECTION 3.02. Issuing the Letters of Credit................... 37
SECTION 3.03. Reimbursement Obligations....................... 38
SECTION 3.04. Indemnification; Nature of Designated Issuer's
Duties.......................................... 39
SECTION 3.05. Increased Costs................................. 41
ARTICLE IV
TERMS OF PAYMENTS AND FEES
SECTION 4.01. Payments and Computations....................... 42
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 4.02. Evidence of Debt................................ 45
SECTION 4.03. Taxes........................................... 46
SECTION 4.04. Sharing of Payments, Etc........................ 47
SECTION 4.05. Fees and Expenses............................... 48
ARTICLE V
CONDITIONS OF LENDING
SECTION 5.01. Initial Conditions Precedent.................... 49
SECTION 5.02. Conditions Precedent to Each Borrowing
and Each Issuance............................... 51
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties.................. 52
ARTICLE VII
COVENANTS OF THE BORROWERS AND MERISEL PARENT
SECTION 7.01. Affirmative Covenants........................... 58
SECTION 7.02. Negative Covenants.............................. 69
SECTION 7.03. Incorporation of Certain Covenants.............. 81
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default............................... 82
ARTICLE IX
JOINT OBLIGATIONS AND MERISEL
PARENT GUARANTY
SECTION 9.01. Nature of Obligations of the Borrowers.......... 87
SECTION 9.02. Merisel Parent Guaranty of the Borrowers'
Obligations..................................... 89
ARTICLE X
THE AGENT AND CO-AGENT
SECTION 10.01. Powers......................................... 92
SECTION 10.02. Agent and Co-Agent in its Capacity as a Lender. 93
SECTION 10.03. Independent Credit Analysis.................... 94
SECTION 10.04. General Immunity............................... 94
SECTION 10.05. Right to Indemnity............................. 95
SECTION 10.06. Agent's and Co-Agent's Resignation............. 95
ARTICLE XI
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
MISCELLANEOUS
SECTION 11.01. Amendments, Etc................................ 96
SECTION 11.02. No Waiver; Remedies............................ 96
SECTION 11.03. Costs and Expenses............................. 97
SECTION 11.04. Right of Set-off............................... 98
SECTION 11.05. Binding Effect; Governing Law.................. 98
SECTION 11.06. Independence of Covenants...................... 98
SECTION 11.07. Severability................................... 99
SECTION 11.08. Entire Agreement............................... 99
SECTION 11.09. Notices........................................ 99
SECTION 11.10. Change in Accounting Principles................ 99
SECTION 11.11. Assignments and Participations................. 100
SECTION 11.12. Execution in Counterparts...................... 103
SECTION 11.13. WAIVER OF JURY TRIAL........................... 103
SECTION 11.14. Judgment....................................... 103
SECTION 11.15. Submission to Jurisdiction..................... 104
SECTION 11.16. Indemnification................................ 104
SECTION 11.17. Survival of Warranties and Certain Agreements.. 105
SECTION 11.18. Compliance with Indenture...................... 105
SECTION 11.19. Headings....................................... 106
</TABLE>
iii
<PAGE>
EXHIBITS
EXHIBIT A-1 Form of Revolving Facility Advance Note
EXHIBIT A-2 Form of Swing Line Note
EXHIBIT B Form of Notice of Revolving Facility Borrowing
EXHIBIT C Form of Notice of Swing Line Borrowing
EXHIBIT D Form of Power of Attorney (Letters of Credit)
EXHIBIT E Form of Letter of Credit Application
EXHIBIT F Form of Letter of Credit
EXHIBIT G-1 Form of Opinion of Skadden, Arps, Slate, Meagher & Flom,
special counsel for the Borrowers and Merisel Parent
EXHIBIT G-2 Form of Opinion of McCarthy Tetrault, special counsel for
Merisel Canada
EXHIBIT H Form of Monthly Report
EXHIBIT I Form of Compliance Certificate
EXHIBIT J Form of Merisel Canada Guaranty
EXHIBIT K Form of Assignment and Acceptance
EXHIBIT L Form of Acknowledgement of Merisel Canada
iv
<PAGE>
SCHEDULES
SCHEDULE I Certain Liabilities (Section 6.01(e))
SCHEDULE II Pending Litigation (Section 6.01(g))
SCHEDULE III Subsidiaries and Jurisdictions of Incorporation (Section
6.01(k)
SCHEDULE IV Existing Debt (Section 7.02(b))
SCHEDULE V Existing Guaranties (Section 7.02(c))
SCHEDULE VI Operating Expenses Payable By Borrowers (Section 7.02(g))
SCHEDULE VII Existing Receivables Programs (Section 7.02(k))
SCHEDULE VIII Addresses for Notices and Domestic and Eurodollar Lending
Offices
v
<PAGE>
REVOLVING CREDIT AGREEMENT
Dated as of December 23, 1993
As Amended and Restated As of April 12, 1996
This REVOLVING CREDIT AGREEMENT (as it may be amended, restated or
otherwise modified from time to time, this "Agreement") is dated as of December
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23, 1993 and is AMENDED AND RESTATED as of April 12, 1996 and is entered into by
and among MERISEL AMERICAS, INC., a Delaware corporation ("Merisel Americas"),
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and MERISEL EUROPE, INC., a Delaware corporation ("Merisel Europe") (Merisel
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Americas and Merisel Europe each sometimes also being referred to individually
as a "Borrower" and collectively as the "Borrowers"), MERISEL, INC., a Delaware
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corporation ("Merisel Parent"), as guarantor, THE FINANCIAL INSTITUTIONS LISTED
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ON THE SIGNATURE PAGES HEREOF (the "Financial Institutions"), CITICORP USA, INC.
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("CUSA") as agent for the Lenders (as defined below), NATIONSBANK OF TEXAS, N.A.
----
("Nationsbank"), as Co-Agent for the Lenders, and CITIBANK, N.A. as Designated
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Issuer (as defined below).
RECITALS
WHEREAS, Merisel Parent, certain banks and CUSA, as agent, entered
into that certain Revolving Credit Agreement dated as of June 30, 1992 (as
amended to December 23, 1993, the "Prior Credit Agreement"), the proceeds of
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which were used to meet the working capital and general corporate purposes of
Merisel Parent and its Subsidiaries (including entities which were the direct
and indirect Subsidiaries of the Borrowers after giving effect to the
restructuring described below);
WHEREAS, Merisel Parent and its related group companies undertook a
corporate restructuring, as part of which Merisel Parent contributed
substantially all of its operating assets to the Borrowers;
WHEREAS, in connection with and to facilitate that restructuring,
Merisel Parent and the Borrowers replaced the Prior Credit Agreement and the
Borrowers assumed the obligations of Merisel Parent with respect to any undrawn
letters of credit issued under the Prior Credit Agreement and used indebtedness
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incurred under that certain Credit Agreement, dated as of December 23, 1993,
among the Borrowers, Merisel Parent, as guarantor, the lenders party thereto,
CUSA, as agent, Nationsbank, as Co-Agent, and Citibank, N.A., as Designated
Issuer (the "Credit Agreement"), to refund and/or refinance indebtedness under
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the Prior Credit Agreement and to meet the working capital and general corporate
purposes of the Borrowers and their respective Subsidiaries;
WHEREAS, (i) it was a condition precedent to the effectiveness of the
Credit Agreement that each Borrower be a co-obligor of the obligations
thereunder of the other Borrower and (ii) in addition, both Merisel Parent and
Merisel Canada (which was a guarantor of obligations under the Prior Credit
Agreement and was a direct Subsidiary of Merisel Americas after the
restructuring) guaranteed the Obligations under the Credit Agreement;
WHEREAS, the indebtedness and obligations incurred under the Credit
Agreement constitute "Designated Senior Debt" under the Subordinated Notes (as
defined below) and are pari passu in right of payment with indebtedness
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evidenced by the Senior Notes (as defined below);
WHEREAS, the Credit Agreement has been amended by (i) that certain
First Amendment, dated as of September 29, 1994, (ii) that certain Second
Amendment, dated as of December 1, 1994, and (iii) that certain Third Amendment,
dated as of February 27, 1995; and
WHEREAS, the parties hereto desire to amend and restate the Credit
Agreement, as amended to the date hereof.
NOW, THEREFORE, in consideration for the premises and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Borrowers, Merisel Parent, the Financial Institutions, CUSA
and the Designated Issuer agree as follows;
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
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following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Additional Restructuring Fees" shall mean all fees directly or indirectly
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related to the restructuring, amending or monitoring of Debt in existence as of
April 15, 1996 of Merisel Parent or any of its Subsidiaries, including, without
limitation, amendment fees, legal fees, consultant fees, financial advisor fees
and other related fees, in excess of the amount contemplated by Merisel Parent
and its Subsidiaries in the Bank Plan dated March 29, 1996 as further set forth
in that certain letter dated as of April 14, 1996 from Merisel Parent to the
Agent.
"Advance" means a Revolving Facility Advance or a Swing Line Advance.
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"Adverse Development" has the meaning specified in Section 7.01(m)(i).
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"Affiliate" means, as applied to any Person, any other Person controlling,
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controlled by or under common control with such Person.
"Agent" means CUSA, in its capacity as agent hereunder and under the other
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Loan Documents until a successor is appointed under Section 10.06, and
thereafter shall mean such successor.
"Agreement" has the meaning specified in the introductory paragraph hereto.
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"Amendment Effective Date" means the date on which all of the conditions in
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Section 5.01 are satisfied, which shall occur on or before April 15, 1996.
"Amount of New Debt" means, with respect to each New Debt Availability
------------------
Date, an amount equal to the Permitted Debt Availability Amount on such New Debt
Availability Date minus the Permitted Debt Availability Amount on the
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immediately preceding day. In calculating the Permitted Debt Availability
Amount for
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such preceding date, if the Debt available on such New Debt Availability Date
replaces or refinances Debt, the existing Debt so refinanced shall be included
in the Permitted Debt Availability Amount for such preceding date.
"Amount of New Receivables Program" means, with respect to each New
---------------------------------
Receivables Program Availability Date, an amount equal to the Receivables
Program Availability Amount on such New Receivables Program Availability Date
minus the Receivables Program Availability Amount on the immediately preceding
- -----
day. In calculating the Receivables Program Availability Amount for such
preceding date, if the Receivables Program on such New Receivables Program
Availability Date replaces or refinances a Receivables Program or Existing
Receivables Program, the existing Receivables Program so refinanced shall be
included in the Receivables Program Availability Amount for such preceding date.
"Applicable Lending Office" means, with respect to each Lender, such
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Lender's Domestic Lending Office in the case of a Base Rate Advance and such
Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
"Application" has the meaning specified in Section 3.02.
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"Applied Amount" has the meaning specified in Section 4.01(i).
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"Asset Sale" means any sale, transfer or disposition of assets or Sale and
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Lease-Back Transaction permitted under Section 7.02(f)(vi).
"Assignment and Acceptance" means an assignment and acceptance in
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substantially the form of Exhibit K hereto, entered into by a Lender and an
assignee and accepted by the Agent pursuant to Section 11.11.
"Average Consolidated Net Inventory" means, for any fiscal quarter (i) the
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Consolidated amount of inventory of Merisel Parent on the first day of such
period plus the Consolidated amount of inventory of Merisel Parent on the last
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day of the first month of such fiscal quarter plus the Consolidated amount of
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inventory of Merisel Parent on the last day of the second month of such fiscal
quarter plus the Consolidated amount of
----
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inventory of Merisel Parent on the last day of such fiscal quarter divided by
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(ii) four.
"Base Rate" means, for any period, a fluctuating interest rate per annum as
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shall be in effect from time to time which rate per annum shall at all times be
equal to the highest of:
(i) the rate of interest announced publicly by the Reference Bank in
New York, New York, from time to time, as the Reference Bank's base rate; or
(ii) 1/2 of 1% per annum above the latest three-week moving average of
secondary market morning offering rates in the United States for one-month
certificates of deposit of major United States money market banks, such three-
week moving average being determined weekly on each Monday (or, if any such day
is not a Business Day, on the next succeeding Business Day) for the three-week
period ending on the previous Friday by the Reference Bank on the basis of such
rates reported by certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by the Reference
Bank from three New York certificate of deposit dealers of recognized standing
selected by the Reference Bank, in either case adjusted to the nearest 1/4 of 1%
or, if there is no nearest 1/4 of 1%, to the next higher 1/4 of 1%; or
(iii) for any day, 1/2 of 1% per annum above the Federal Funds Rate.
"Base Rate Advance" means a Revolving Facility Advance or a Swing Line
-----------------
Advance denominated in Dollars which bears interest with reference to the Base
Rate.
"Borrower" and "Borrowers" each has the meaning specified in the
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Introduction to this Agreement.
"Borrowing" means a Revolving Facility Borrowing or a Swing Line Borrowing.
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"Business Day" means a day of the year on which banks in New York City or
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the City of Los Angeles are not authorized or required to close and, if the
applicable Business Day relates to
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any Eurodollar Rate Advances, on which dealings are carried on in the London
interbank market.
"Capital Lease" means a lease of property (whether real, personal or mixed)
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which should, in accordance with GAAP, be recorded as a capital lease.
"Cash Equivalents" means readily marketable short term direct obligations
----------------
of the United States of America and certificates of deposit issued by commercial
banks of recognized standing operating in the United States of America rated A
or higher and prime commercial paper.
"CAT Holding" means CAT Russia Holding Limited, a Cayman Island
-----------
corporation.
"Closing Date" means December 23, 1993.
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"Co-Agent" means NationsBank, in its capacity as co-agent hereunder and
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under the other Loan Documents.
"Commercial Letter of Credit" means any letter of credit issued for the
---------------------------
account of a Borrower for the purpose of providing the principal payment
mechanism in connection with the purchase of goods by that Borrower in the
ordinary course of business.
"Commitment" means, for any Lender, its Revolving Facility Commitment, and,
----------
in the case of the Swing Line Lender, its Swing Line Commitment.
"Commitment Fee" means, with respect to the commitment fee payable under
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Section 4.05(a), 0.50% per annum.
"ComputerLand Acquisition" means the acquisition by Merisel Parent (acting
------------------------
through Merisel FAB) of the assets comprising the franchise and distribution
division of ComputerLand Corporation, a Delaware corporation.
"Consolidated" or "consolidated" shall be a reference to a particular
------------ ------------
Borrower or Merisel Parent, as indicated by the context, and that entity's
Subsidiaries as if, in the case of either Merisel Americas or Merisel Europe, it
were the ultimate parent or holding company for that group.
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"Consolidated Adjusted Tangible Net Worth" means Consolidated Tangible Net
----------------------------------------
Worth calculated without giving effect to any foreign currency translation
adjustments.
"Consolidated Capital Expenditures" means, for any period, with respect to
---------------------------------
any Person, the expenditures with respect to capital assets (whether paid in
cash or other consideration or accrued as a liability and including that portion
of Capital Leases which is capitalized on the consolidated balance sheet of such
Person and its Subsidiaries) by such Person and its Subsidiaries during that
period that in conformity with GAAP are included in "capital expenditures".
"Consolidated Debt" means Debt (other than intercompany Debt) of a
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particular Borrower or Merisel Parent (as indicated by the context) and its
consolidated Subsidiaries.
"Consolidated Debt Equivalents" means, as of any date of determination, the
-----------------------------
aggregate of Consolidated Debt plus, with respect to a particular Borrower or
----
Merisel Parent (as indicated by the context) and its consolidated Subsidiaries,
the aggregate amount of liability assumed or net cash proceeds received in an
accounts receivable securitization, transfer or sale (without duplication).
"Consolidated EBITSDA" means, for any period, with respect to Merisel
--------------------
Parent and its consolidated Subsidiaries, the sum of the amounts for such period
of (i) Consolidated Net Income, (ii) provisions for taxes based on income, (iii)
Consolidated Interest Charges, (iv) total depreciation expense and (v) total
amortization expense less other non-cash items increasing Consolidated Net
----
Income, without taking into consideration the effects of (A) Additional
Restructuring Fees, and (B) any write-downs in connection with (x) any sale of
any Subsidiaries of Merisel Parent or any restructuring in connection with such
sale, or (y) with respect to the first quarter of 1996 only, accounts payable to
the extent (but only to the extent) such write-downs exceed $7,000,000, all of
the foregoing as determined in accordance with GAAP.
"Consolidated Interest Charges" means, for any period, the sum of (i) total
-----------------------------
interest expense during such period of Merisel Parent and its consolidated
Subsidiaries with respect to all Debt (including, without limitation, the
interest component of Capital
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Leases), plus (ii) the discount expense on sales of commercial paper and fees
----
associated with the sales of accounts receivable permitted under Section
7.02(k), all determined in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income of a
-----------------------
particular Borrower or Merisel Parent (as indicated by the context) and its
consolidated Subsidiaries for such period, after (i) eliminating all
intercompany items and (ii) deducting portions of income properly attributable
to minority interests, if any, in the stock and surplus of such Subsidiaries,
provided that there shall be excluded (a) the income of any Person accrued prior
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to the date it became a Subsidiary of that Borrower or Merisel Parent (as the
case may be) or was merged into or consolidated with that Borrower or Merisel
Parent (as the case may be) or any of its Subsidiaries or such Person's assets
were acquired by that Borrower or Merisel Parent (as the case may be) or any of
its Subsidiaries, (b) any gains or losses on the sale or other disposition of
investments permitted by Section 7.02(h) hereof or fixed or capital assets, and
any taxes on such excluded gains and any tax deductions or credits on account of
any such excluded losses, (c) the proceeds of any life insurance policy, (d)
earnings resulting from any reappraisal, revaluation or write-up of assets, (e)
any deferred or other credit representing any excess of the equity in any
Subsidiary of that Borrower or Merisel Parent (as the case may be) at the date
of acquisition thereof over the amount invested in such Subsidiary, (f) any gain
arising from the acquisition of any securities of that Borrower or Merisel
Parent (as the case may be) or any Subsidiary of that Borrower or Merisel Parent
(as the case may be) and (g) any reversal of any contingency reserve, except to
the extent that provisions for such contingency reserve shall have been made
from income arising during the most recently audited fiscal year.
"Consolidated Net Worth" means, as of any date of determination, total
----------------------
consolidated assets of a particular Borrower or Merisel Parent (as indicated by
the context) and its consolidated Subsidiaries minus total consolidated
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liabilities of that Borrower or Merisel Parent and its consolidated
Subsidiaries, such assets and liabilities each to be determined in accordance
with GAAP, including in the determination of total consolidated liabilities
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Subordinated Debt.
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"Consolidated Rental Payments" means, for any period, the aggregate amount
----------------------------
of all rents paid and payable by Merisel Parent and its Subsidiaries on a
consolidated basis during that period under all Operating Leases.
"Consolidated Tangible Net Worth" means, as of any date of determination,
-------------------------------
the Consolidated Net Worth of a particular Borrower or Merisel Parent (as
indicated by the context) without taking into consideration the effects of (i)
Additional Restructuring Fees, and (ii) any write-downs in connection with (A)
any sale of any Subsidiaries of Merisel Parent or any restructuring in
connection with such sale or (B) with respect to the first quarter of 1996 only,
accounts payable to the extent (but only to the extent) such write-downs exceed
$7,000,000 less goodwill, patents, trademarks, organizational expense, deferred
----
research and development costs, deferred marketing expenses and other intangible
assets of such Borrower or Merisel Parent and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Total Assets" means, for any Person, the total amount of
-------------------------
assets that under GAAP would appear on the consolidated balance sheet of such
Person as determined in accordance with GAAP.
"Contingent Obligation" means, as applied to any Person, any direct or
---------------------
indirect liability, contingent or otherwise, of that Person with respect to any
Debt, lease, dividend, letter of credit or other obligation of another Person,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), co-made, or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable, including, without limitation, any such obligation for which that Person
is in effect liable through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise),
or to maintain the solvency or any balance sheet, income or other financial
condition of the obligor of such obligation, or to make payment for any
products, materials or supplies or for any transportation, services or lease
regardless of the non-delivery
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or non-furnishing thereof, in any case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected (in whole or in part)
against loss in respect thereof. The amount of any Contingent Obligation shall
be equal to the amount of the obligation so guaranteed or otherwise supported.
"Credit Agreement" has the meaning specified in the Recitals to this
----------------
Agreement.
"Current Debt Service Amount" means, as of any date of determination, the
---------------------------
amount of regularly scheduled interest due and payable on the Merisel Parent
Debt on the next regularly scheduled payment date for the Merisel Parent Debt to
occur after such date of determination.
"CUSA" has the meaning specified in the Introduction to this Agreement.
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"Debt" means (i) indebtedness for borrowed money; (ii) obligations
----
evidenced by bonds, debentures, notes or other similar instruments; (iii)
obligations to pay the deferred purchase price of property or services (it being
understood that Debt shall not include obligations both (a) classified as
accounts payable, accrued liabilities or income taxes payable under GAAP and (b)
incurred in the ordinary course of business); (iv) principal obligations as
lessee under Capital Leases; (v) reimbursement obligations under letters of
credit; (vi) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (v) above;
(vii) liabilities in respect of unfunded vested benefits under plans covered by
Title IV of ERISA, and (viii) "Debt" as such term is defined in the Senior Note
Purchase Agreement; provided that no obligation included in Debt shall be
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included in more than one of clauses (i) through (viii); provided further that
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Debt shall not include any obligation under or resulting from any agreement for
the sale, transfer or securitization of accounts receivable permitted by Section
7.02(k) and Section 7.02(a)(vi).
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"Default Rate" means, with respect to an Advance, amounts owed after a draw
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on a Letter of Credit, or other fees or amounts owed under this Agreement, a
rate per annum equal at all times to 2% per annum in excess of the rate
otherwise applicable for that particular Advance or other amount or fee.
"Defaulting Lender" means, at any time, any of the Lenders who (i) fails to
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pay to the Agent any amount payable by such Lender to the Agent with respect to
its participation in any Swing Line Advance, (ii) fails to make any Revolving
Facility Advance to a Borrower required to be made by such Lender hereunder, or
(iii) fails to Issue any Letter of Credit required to be Issued hereunder;
provided, however, that a Lender shall not be considered a Defaulting Lender if
- -------- -------
such Lender's failure to make funds available under clauses (i) through (iii) of
this paragraph resulted from a good faith dispute regarding whether payment of
such funds was required under this Agreement.
"Designated Issuer" means Citibank, N.A. or such other financial
-----------------
institution that has been designated by CUSA for purposes of issuing Letters of
Credit on its behalf.
"Dollars" and the sign "$" each means the lawful money of the United
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States.
"Domestic Lending Office" means, with respect to any Lender, the office of
-----------------------
such Lender specified as its "Domestic Lending Office" opposite its name on
Schedule VIII of this Agreement, or such other office of such Lender as such
Lender may from time to time specify to the Borrowers and the Agent.
"Employee Benefit Plan" means any Pension Plan, any employee welfare
---------------------
benefit plan, or any other employee benefit plan which is described in Section
3(3) of ERISA and which is maintained for employees of Merisel Parent or any
ERISA Affiliate of Merisel Parent and that is not exempted from ERISA pursuant
to regulations promulgated thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time and any successor statute.
"ERISA Affiliate" means, as applied to any Person, any trade or business
---------------
(whether or not incorporated) which is a member of a group of which that Person
is a member and which is under common
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control within the meaning of Section 414(b) and (c) of the Internal Revenue
Code or Section 4001 of ERISA; provided, however, that no Foreign Subsidiary
shall be considered an ERISA Affiliate unless at least one of such Subsidiary's
employee benefit plans are subject to ERISA.
"Eurocurrency Liabilities" has the meaning assigned to that term in
------------------------
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the office
-------------------------
of such Lender specified as its "Eurodollar Lending Office" opposite its name on
Schedule VIII of this Agreement (or, if no such office is specified, its
Domestic Lending Office), or such other office of such Lender as such Lender may
from time to time specify to the Borrowers and the Agent.
"Eurodollar Rate" means, for any Interest Period for each Eurodollar Rate
---------------
Advance comprising part of the same Revolving Facility Borrowing, an interest
rate per annum equal to the rate obtained by dividing (i) the rate per annum at
which deposits in Dollars are offered by the principal office of the Reference
Bank in London, England to prime banks in the London interbank market at 11:00
A.M. (London time) in an amount equal to the Reference Bank's Eurodollar Rate
Advance two Business Days before the first day of such Interest Period by (ii) a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such
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Interest Period.
"Eurodollar Rate Advance" means a Revolving Facility Advance which bears
-----------------------
interest at a rate per annum determined on the basis of the Eurodollar Rate, as
provided in Section 2.05(b).
"Eurodollar Rate Reserve Percentage" for the Interest Period for any
----------------------------------
Eurodollar Rate Advance means the reserve percentage applicable two Business
Days before the first day of such Interest Period under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities which includes
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deposits by reference to which the interest rate on Eurodollar Rate Advances is
determined) having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 8.01.
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"Excess Cash and Excess Cash Equivalents" means with respect to any Person,
---------------------------------------
all cash and Cash Equivalents in excess of what is required for the normal
operation of the business of such Person.
"Existing Receivables Program" has the meaning specified in Section
----------------------------
7.02(k).
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
------------------
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Financial Institutions" has the meaning specified in the Introduction to
----------------------
this Agreement.
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Hazardous Materials" means (i) any oil, flammable substances, explosives,
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radioactive materials, hazardous wastes or substances, toxic wastes or
substances or any other materials or pollutants which (a) pose a hazard to any
property of Merisel Parent or any of its Subsidiaries or to Persons on or about
such property or (b) cause such property to be in violation of any
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Hazardous Materials Laws; (ii) asbestos in any form which is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment
which contain dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty parts per million; (iii) any chemical, material or substance
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous waste," "restricted
hazardous waste," or "toxic substances" or words of similar import under any
applicable provincial, local, state or federal law or under the regulations
adopted or publications promulgated pursuant thereto, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. Sec. 9601, et seq.; the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Sec. 1801, et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Sec. 6901, et seq.; the
Federal Water Pollution Control Act, as amended, 33 U.S.C. Sec. 1251, et seq.;
applicable state statutes and (iv) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority or may or could pose a hazard to the health and safety of the
occupants of any of the properties of Merisel Parent or any of its Subsidiaries
or the owners and/or occupants of property adjacent to or surrounding any such
property.
"Hazardous Materials Claims" means any and all enforcement, clean-up,
--------------------------
removal or other governmental or regulatory actions or orders threatened,
instituted or completed pursuant to any Hazardous Materials Laws, together with
all claims made or threatened by any third party against Merisel Parent or any
of its Subsidiaries or any of their respective properties relating to damage,
contribution, cost recovery compensation, loss or injury resulting from any
Hazardous Materials.
"Hazardous Materials Laws" means any federal, state, provincial or local
------------------------
laws, ordinances, regulations, or policies now or hereafter existing or enacted
relating to the environment, health and safety, any Hazardous Materials
(including, without limitation, the use, handling, transportation, production,
disposal, discharge or storage thereof) or to industrial hygiene or the
environmental conditions on, under or about any of the property of Merisel
Parent or any of its Subsidiaries, including, without limitation, soil and
groundwater conditions.
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"Incipient Default" means an event which would constitute an Event of
-----------------
Default but for the requirement that notice be given or time elapse or both.
"Indenture" means the Indenture, dated as of October 15, 1994, between
---------
Merisel, Inc. and The Bank of New York, as trustee (as successor to NationsBank
of Texas, N.A., as trustee).
"Interest Period" means, for each Advance comprising part of the same
---------------
Borrowing, the period commencing on the date of such Advance and ending on the
date occurring one month from the date of such Advance and, thereafter, each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the date occurring one month from such date;
provided, however, that:
- -------- -------
(i) no Interest Period shall end after the Termination Date;
(ii) Interest Periods commencing on the same date for Revolving
Facility Advances comprising part of the same Borrowing shall be of the
same duration; and
(iii) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business Day,
provided that, in the case of any Interest Period for a Eurodollar Rate
Advance, if such extension would cause the last day of such Interest Period
to occur in the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business Day.
"Interest Rate Agreement" means any interest rate swap agreement, interest
-----------------------
rate cap agreement, interest rate collar agreement or other similar agreement.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
---------------------
from time to time, and any successor statute.
"Issue" means, with respect to any Letter of Credit, either issue, or
-----
extend the expiry of, or increase the amount of, such Letter of Credit, and the
terms "Issued" and "Issuance" shall have corresponding meanings.
------ --------
15
<PAGE>
"Issuing Lenders" means, with respect to the Letters of Credit, each of the
---------------
Lenders (except CUSA) and the Designated Issuer acting on behalf of CUSA, acting
severally and not jointly, pursuant to the procedures and on the terms and
conditions described in Article III.
"L/C Liability" means, as of any date of determination, all then existing
-------------
liabilities of the Borrowers to the Issuing Lenders in respect of all Letters of
Credit Issued hereunder, whether or not such liability is contingent, and shall
consist of the sum of (i) the maximum amount available to be drawn under the
Letters of Credit (assuming compliance with all conditions for drawing) and (ii)
the aggregate amount which has been paid by, and not reimbursed to, the Issuing
Lenders in respect of any Letters of Credit, plus all interest and fees thereon.
"Lenders" means the Financial Institutions and each Eligible Assignee
-------
becoming a party hereto pursuant to Section 11.11.
"Letter of Credit" means each Standby Letter of Credit and Commercial
----------------
Letter of Credit issued by the Issuing Lenders for the account of a Borrower
pursuant to Article III.
"Lien" means any lien, mortgage, deed of trust, assignment, pledge,
----
security interest or other charge or encumbrance, or any preferential
arrangement which has the practical effect of constituting a lien or security
interest; provided, however, that any restrictions contained in any software
-------- -------
license or any vendor repurchase right, territorial distribution or export
restriction, authorized dealer requirement or any other restriction imposed by
Merisel Parent's or its Subsidiaries' vendors to control the distribution
channel for their products shall not constitute a "Lien" as defined herein.
"Loan Documents" means this Agreement (including, without limitation, the
--------------
guaranty of Merisel Parent in Article IX), the Notes, the Applications, the
Letters of Credit, the Merisel Canada Guaranty and all other writings relating
to this Agreement heretofore, now or hereafter executed by or on behalf of any
Loan Party and delivered to the Agent or any Lender, together with all
agreements, instruments or documents referred to therein or contemplated
thereby.
16
<PAGE>
"Loan Parties" means the Borrowers, Merisel Parent and Merisel Canada.
------------
"Majority Lenders" means, at any time, Lenders whose respective Total
----------------
Outstanding Pro Rata Shares are, in the aggregate, at least 60%; provided that
--------
any Defaulting Lender shall have no right to vote hereunder until all amounts
payable by such Defaulting Lender to the Agent have been paid, all Revolving
Facility Advances required to be made by such Defaulting Lender to the Borrowers
have been made and the Total Outstanding Pro Rata Shares of the remaining
Lenders shall be recalculated for purposes of any vote taken prior to such time
on the basis of the aggregate principal amount of the Revolving Facility
Advances then outstanding to each such Lender as a percentage of the total
Revolving Facility Advances then outstanding to all of the Lenders other than
the Defaulting Lender.
"Merisel Americas" has the meaning specified in the Introduction to this
----------------
Agreement.
"Merisel Canada" means Merisel Canada, Inc., a corporation organized under
--------------
the laws of Ontario, Canada.
"Merisel Canada Guaranty" means a guaranty, substantially in the form of
-----------------------
Exhibit J hereto, executed and delivered by Merisel Canada, as it may hereafter
be amended, restated or otherwise modified from time to time.
"Merisel Europe" has the meaning specified in the Introduction to this
--------------
Agreement.
"Merisel FAB" means Merisel FAB, Inc., a Delaware corporation, a wholly-
-----------
owned Subsidiary of Merisel Parent created to hold assets acquired in the
ComputerLand Acquisition.
"Merisel Parent" has the meaning specified in the Introduction to this
--------------
Agreement.
"Merisel Parent Debt" means the 12.50% Senior Notes due 2004 of Merisel
-------------------
Parent.
17
<PAGE>
"Merisel Parent Guaranty" has the meaning specified in Section 9.02(a).
-----------------------
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
------------------
4001(a)(3) of ERISA and which is maintained for employees of Merisel Parent or
any ERISA Affiliate of Merisel Parent.
"Nationsbank" has the meaning specified in the Introduction to this
-----------
Agreement.
"Net Asset Sale Proceeds" means, with respect to any Asset Sale, cash
-----------------------
payments (including any cash received by way of repayment of intercompany Debt
or deferred payment pursuant to, or by monetization of, a note receivable or
otherwise, but only as and when so received) received from such Asset Sale, net
of any reasonable costs and expenses incurred in connection with such Asset
Sale, including without limitation (i) reasonable legal fees and expenses, (ii)
taxes reasonably estimated to be actually payable within one year of the date of
such Asset Sale, including income taxes as a result of any gain recognized in
connection with such Asset Sale, (iii) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Debt to parties other
than Merisel Parent or any of its Subsidiaries (other than the Advances) that is
secured by a Lien on the stock or assets in question and that is required to be
repaid under the terms thereof as a result of such Asset Sale and (iv) amounts
reserved in accordance with GAAP for (1) liabilities due and payable within
twelve months from the date of such Asset Sale retained by the seller in
connection with such Asset Sale and (2) indemnities provided by the Seller
relating to inventory and/or accounts receivable in connection with such Asset
Sale, in an aggregate amount not to exceed 5% of the purchase price payable in
cash with respect to such Asset Sale; provided that in the case of any Asset
--------
Sale by a foreign Subsidiary of Merisel Parent or a Borrower, Net Asset Sale
Proceeds shall not include cash proceeds applied to the repayment to parties
other than Merisel Parent or any of its Subsidiaries of local lines of credit of
such Subsidiary; and provided further that Net Asset Sale Proceeds shall include
-------- -------
all amounts in respect of payment, forgiveness, cancellation or reduction of
intercompany Debt in connection with or arising out of such Asset Sale.
18
<PAGE>
"Net Debt Proceeds" means, with respect to a New Debt Availability Date, an
-----------------
amount equal to the Amount of New Debt net of any underwriting discounts and
commissions and other reasonable costs and expenses associated therewith,
including without limitation reasonable legal fees and expenses; provided that
--------
with respect to the incurrence or issuance of Debt by a foreign Subsidiary of
Merisel Parent or a Borrower, Net Debt Proceeds shall not include cash proceeds
applied to the repayment of local lines of credit of such Subsidiary.
"Net Europe Debt" means, on any date of determination, (i) an amount equal
---------------
to the Revolving Facility Total RCA Liability attributable to borrowings by
Merisel Europe minus (ii) the aggregate amount of all intercompany loans and
-----
advances made by Merisel Europe and its Subsidiaries to Merisel Parent and its
Subsidiaries other than Merisel Europe and its Subsidiaries; plus (iii) the sum
----
of (A) the aggregate amount of proceeds received or liability assumed with
respect to sales or transfers of accounts receivable by Merisel Europe and its
Subsidiaries to Merisel Parent, Merisel Americas and Subsidiaries of Merisel
Americas and (B) the aggregate amount of all intercompany loans and advances
made by Merisel Parent and its Subsidiaries other than Merisel Europe and its
Subsidiaries to Merisel Europe and its Subsidiaries outstanding on such date.
"Net FAB Debt" means, on any date of determination, (i) the aggregate
------------
amount of all intercompany loans and advances from Merisel Parent and its
Subsidiaries (other than Merisel FAB) to Merisel FAB outstanding on such date of
determination plus (ii) the aggregate amount of all investments made by Merisel
----
Parent and its Subsidiaries (other than Merisel FAB) in Merisel FAB since
October 24, 1994 (whether by purchase or acquisition of capital stock,
obligations or other securities of Merisel FAB, by the making of capital
contributions, or otherwise) plus (iii) the aggregate amount of proceeds
----
received or liability assumed by Merisel FAB with respect to sales or transfers
of accounts receivable by Merisel FAB to Merisel Parent and its Subsidiaries
(other than FAB).
"Net Proceeds Amount" has the meaning specified in Section 4.01(h).
-------------------
"Net Receivables Program Proceeds" means, with respect to any New
--------------------------------
Receivables Program Availability Date, an amount equal to
19
<PAGE>
the Amount of New Receivables Program net of reasonable costs and expenses of
implementing the related Receivables Program including without limitation
reasonable legal fees and expenses; provided that in the case of any Receivables
--------
Program of a foreign Subsidiary of Merisel Parent or a Borrower, Net Receivables
Program Proceeds shall not include proceeds applied to the repayment of local
lines of credit of such Subsidiary.
"Net Securities Proceeds" means the cash proceeds net of underwriting
-----------------------
discounts and commissions and other reasonable costs and expenses associated
therewith, including without limitation reasonable legal fees and expenses)
received from the issuance of any equity Securities of Merisel Parent, any
Borrower or any of their respective Subsidiaries.
"New Debt Availability Date" means, with respect to Permitted Debt of a
--------------------------
Person, the date on which such Person is first entitled to receive proceeds of
such Permitted Debt under the terms of such Permitted Debt whether or not
proceeds of such Permitted Debt are actually received by such Person.
"New Receivables Program Availability Date" means, with respect to a
-----------------------------------------
Receivables Program of a Person, (i) the date on which such Person is first
entitled to receive proceeds of such Receivables Program and (ii) thereafter,
each date on which the Receivables Program Availability Amount increases due to
a change in the terms of the Receivables Program which either increases the
"advance rate" or increases the aggregate amount of receivables permitted to be
included in such Receivables Program (in the case of each of clause (i) and
(ii), whether or not proceeds of such Receivables Program are actually received
by such Person).
"Notes" means the Revolving Facility Advance Notes and the Swing Line
-----
Notes.
"Notice of Borrowing" means a Notice of Revolving Facility Borrowing or a
-------------------
Notice of Swing Line Borrowing, as the case may be.
"Notice of Revolving Facility Borrowing" has the meaning specified in
--------------------------------------
Section 2.01(b).
20
<PAGE>
"Notice of Swing Line Borrowing" has the meaning specified in Section
------------------------------
2.02(b).
"Obligations" means all loans, advances, debts, liabilities, obligations,
-----------
covenants and duties owing by the Loan Parties to any Lender, the Agent, the
Syndication Agent, the Designated Issuer, any Affiliate of any Lender, the
Agent, the Syndication Agent or the Designated Issuer, or any Person entitled to
indemnification pursuant to Section 11.03, of any kind or nature, present or
future, whether or not evidenced by any note, guaranty or other instrument,
arising under this Agreement or under any other Loan Document, whether or not
for the payment of money, whether arising by reason of an extension of credit,
issuance or amendment of a Letter of Credit or payment of any draft drawn
thereunder, loan, guaranty, indemnification, or in any other manner, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired. The term includes, without limitation, all interest, charges,
expenses, fees, attorneys' fees and disbursements and any other sum chargeable
to the Loan Parties under this Agreement or any other Loan Document. Subject to
the provisions of Section 9.01 but otherwise notwithstanding anything to the
contrary in this Agreement or any other Loan Document, each Borrower shall be
jointly and severally liable for the Obligations of the other Borrower.
"Operating Lease" means, as applied to any Person, any lease (including,
---------------
without limitation, leases that may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"Other Taxes" has the meaning specified in Section 4.05.
-----------
"Payment Office" means the principal office of the Reference Bank in New
--------------
York City, located on the date hereof at 399 Park Avenue, New York, New York
10043 at which office accounts have been opened in the name of the Agent and the
Borrowers.
"Pension Plan" means any employee plan which is subject to Section 412 of
------------
the Internal Revenue Code and which is maintained for employees of Merisel
Parent or any ERISA Affiliate of Merisel Parent, other than a Multiemployer
Plan.
21
<PAGE>
"Permitted Debt" means Debt of Merisel Parent, any Borrower or any of their
--------------
respective Subsidiaries permitted under Section 7.02(b)(iii).
"Permitted Debt Availability Amount" means, on any date of determination
----------------------------------
with respect to Permitted Debt of a Person, the maximum amount of proceeds such
Person is entitled to receive under the terms of such Permitted Debt on such
date.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Prior Credit Agreement" has the meaning specified in the Recitals to this
----------------------
Agreement.
"Receivables Program" has the meaning specified in Section 7.02(k).
-------------------
"Receivables Program Availability Amount" means, on any date of
---------------------------------------
determination with respect to any Receivables Program or Existing Receivables
Program, the maximum amount of proceeds such Person is entitled to receive under
the terms of such Receivables Program or Existing Receivables Program on such
date based on the maximum amount of receivables permitted to be included in such
Receivables Program on such date and the "advance rate" for such Receivables
Program.
"Reference Bank" means Citibank, N.A.
--------------
"Register" has the meaning specified in Section 11.11.
--------
"Revolving Facility Advance" means an Advance by a Lender pursuant to
--------------------------
Section 2.01.
"Revolving Facility Advance Note" means a promissory note of the Borrowers
-------------------------------
payable to a Lender, in substantially the form of Exhibit A-1 hereto, evidencing
the indebtedness of the Borrowers to such Lender resulting from the Revolving
Facility Advances owing to such Lender.
22
<PAGE>
"Revolving Facility Borrowing" means a borrowing consisting of Revolving
----------------------------
Facility Advances of the same Type made on the same day by the Lenders.
"Revolving Facility Commitment" means, as to each of the Financial
-----------------------------
Institutions, the amount set forth opposite its name under the heading
"Revolving Facility Commitment" on the signature pages of this Agreement and as
to each other Lender the amount set forth in the Register as its "Revolving
Facility Commitment", as such amount may be reduced pursuant to Section 2.07.
On the Amendment Effective Date, the aggregate of the Revolving Facility
Commitments of all the Lenders is $150,000,000.
"Revolving Facility Pro Rata Share" means, as to each Lender, such Lender's
---------------------------------
Revolving Facility Commitment divided by the aggregate of the Revolving Facility
----------
Commitments of all the Lenders, expressed as a percentage.
"Revolving Facility Total RCA Liability" means, as of any date of
--------------------------------------
determination, the outstanding aggregate amount of all Revolving Facility
Advances and L/C Liability.
"Revolving Lender" means each Lender having a Revolving Facility
----------------
Commitment.
"Sale and Leaseback Transaction" means, with respect to any Person, any
------------------------------
transaction in which such Person, directly or indirectly, becomes or remains
liable as lessee or as a guarantor or other surety with respect to any lease,
whether an Operating Lease or a Capital Lease, of any property (whether real,
personal or mixed), whether then owned or thereafter acquired, (i) which such
Person has sold or transferred or is to sell or transfer to any other Person or
(ii) which such Person intends to use for substantially the same purpose as any
other property which has been or is to be sold or transferred by such Person to
any other Person in connection with such lease.
"Securities" means any stock, shares, partnership interests, limited
----------
liability company interests, voting trust certificates, certificates of interest
or participation in any profit-sharing agreement or arrangement, options,
warrants, bonds, debentures, notes, or other evidences of indebtedness, secured
or unsecured, convertible, subordinated or otherwise, or in general any
23
<PAGE>
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"Senior Account" has the meaning specified in Section 2.01(b).
--------------
"Senior Note Purchase Agreement" means that certain Amended and Restated
------------------------------
Senior Note Purchase Agreement dated as of December 23, 1993 between Merisel
Americas and the purchasers which are signatories thereto, as such Note Purchase
Agreement may be amended, supplemented or otherwise modified from time to time
to the extent permitted by this Agreement.
"Senior Notes" means the 8.58% Notes Due June 30, 1997 in the aggregate
------------
principal amount of $100,000,000 issued by Merisel Americas pursuant to the
Senior Note Purchase Agreement, as such Notes may be amended, supplemented or
otherwise modified from time to time to the extent permitted under this
Agreement.
"Solvent", as applied to any Person, means, as at the date of
-------
determination, that (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including Contingent
Obligations) of such Person and (z) greater than the amount that will be
required to pay the probable liabilities of such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person, (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction and (iii) such Person does not intend to
incur, or does not believe or should not reasonably believe that it will incur,
debts beyond its ability to pay such debts as they become due.
"Standby Fee" means, with respect to a Standby Letter of Credit, 3.00% per
-----------
annum.
"Standby Letter of Credit" means a letter of credit which is not a
------------------------
Commercial Letter of Credit.
"Subordinated Debt" means the Subordinated Notes and all other Debt of the
-----------------
Borrowers subordinated in right of payment to
24
<PAGE>
the Obligations pursuant to documents containing maturities, amortization
schedules, covenants, defaults, remedies, subordination provisions and other
material terms in form and substance satisfactory to the Majority Lenders (or as
set out in Section 7.02(b)).
"Subordinated Note Purchase Agreement" means that certain Amended and
------------------------------------
Restated Subordinated Note Purchase Agreement dated as of December 23, 1993
among Merisel Americas and the purchasers listed on the signature pages thereof,
as such Subordinated Note Purchase Agreement may be amended, supplemented or
otherwise modified from time to time to the extent permitted under this
Agreement.
"Subordinated Notes" means the 11.28% Subordinated Notes Due March 10, 2000
------------------
in the aggregate principal amount of $22,000,000 issued by Merisel Americas
pursuant to the Subordinated Note Purchase Agreement, as such Subordinated Notes
may be amended, supplemented or otherwise modified from time to time to the
extent permitted under this Agreement.
"Subsidiary" means, as applied to any Person, any corporation of which 50%
----------
or more of the outstanding voting securities of such corporation shall at the
time be owned or controlled, directly or indirectly, by such Person or by one or
more Subsidiaries of such Person or by such Person and one or more of its
Subsidiaries, or any similar business organization which is so owned or
controlled.
"Swing Line Advance" means an Advance by the Swing Line Lender pursuant to
------------------
Section 2.02.
"Swing Line Borrowing" means a Borrowing consisting of a Swing Line Advance
--------------------
made by the Swing Line Lender.
"Swing Line Commitment" means the amount set forth opposite the Swing Line
---------------------
Lender's name on the signature pages hereof as its "Swing Line Commitment".
"Swing Line Lender" means CUSA, in its individual capacity and not as Agent
-----------------
hereunder.
"Swing Line Note" means a promissory note of the Borrowers payable to the
---------------
order of the Swing Line Lender, in substantially
25
<PAGE>
the form of Exhibit A-2 hereto, evidencing the indebtedness of the Borrowers
resulting from the Swing Line Advances.
"Syndication Agent" means Citicorp Securities, Inc. in its capacity as
-----------------
arranger of the syndicate of Lenders.
"Taxes" has the meaning specified in Section 4.05.
-----
"Termination Date" means the earlier of (i) May 31, 1997 or (ii) the date
----------------
of termination in whole of the Revolving Facility Commitments pursuant to
Section 8.01.
"Termination Event" means (i) a "Reportable Event" described in Section
-----------------
4043 of ERISA and the regulations issued thereunder (other than a "Reportable
Event" not subject to the provision for 30-day notice to the Pension Benefit
Guaranty Corporation under such regulations), or (ii) the withdrawal of Merisel
Parent or any of its ERISA Affiliates from a Pension Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) or
4068(f) of ERISA, or (iii) the filing of a notice of intent to terminate a
Pension Plan or the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA, or (iv) the institution of proceedings to terminate a
Pension Plan by the Pension Benefit Guaranty Corporation, or (v) any other event
or condition which might constitute grounds under ERISA for the termination of,
or the appointment of a trustee to administer, any Pension Plan, or (vi) the
imposition of a Lien pursuant to Section 412(n) of the Internal Revenue Code.
"Total Capitalization" means with respect to the Borrowers or either one of
--------------------
them, as the context requires, the aggregate of its or their Consolidated Debt
Equivalents plus minority interests plus its or their Consolidated Net Worth, as
---- ----
set forth in each Borrower's consolidated balance sheet (but specifically
including any letters of credit in the calculation of Consolidated Debt even if
not shown on such balance sheet unless such letters of credit secure payment of
an obligation which is already included in the calculation of Consolidated
Debt), as determined in accordance with GAAP.
"Total Outstanding Pro Rata Share" means, as to each Lender, the quotient
--------------------------------
obtained by dividing (i) the sum of the Revolving Facility Advances and L/C
--------
Liability then owing to such Lender
26
<PAGE>
plus, in the case of a Lender other than the Swing Line Lender, such Lender's
- ----
participation in all Swing Line Advances then outstanding or, in the case of the
Swing Line Lender, the Swing Line Advances then outstanding (net of any
participations therein purchased by other Lenders), by (ii) the sum of the
--
Revolving Facility Advances and L/C Liability then owing to all of the Lenders
plus the outstanding Swing Line Advances, expressed as a percentage; provided
- ---- --------
that at any time when no Revolving Facility Advances, Swing Line Advances or
Letters of Credit are outstanding, the Total Outstanding Pro Rata Share of each
Lender shall be equal to its Revolving Facility Pro Rata Share.
"Total RCA Liability" means as at any date of determination the sum of (i)
-------------------
the aggregate principal amount of all Revolving Facility Advances outstanding at
such date plus (ii) the aggregate principal amount of all Swing Line Advances
----
outstanding at such date plus (iii) the L/C Liability determined as of such
----
date.
"Type" means, with reference to an Advance, a Base Rate Advance or a
----
Eurodollar Rate Advance.
"UCC" means the Uniform Commercial Code as in effect from time to time in
---
the State of California.
"United States" and "U.S." each means United States of America.
------------- ----
SECTION 1.02. Computation of Time Periods. In this Agreement in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with GAAP.
27
<PAGE>
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Revolving Facility Advances.
-------------------------------
(a) The Revolving Facility Commitments. Each Lender severally agrees, on
----------------------------------
the terms and conditions hereinafter set forth, to make Revolving Facility
Advances to the Borrowers from time to time on any Business Day during the
period from the date hereof until the Termination Date in an aggregate amount
(determined in Dollars) not to exceed at any time outstanding such Lender's
Revolving Facility Commitment less such Lender's Revolving Facility Pro Rata
----
Share of the aggregate amount of the Total RCA Liability then outstanding. Each
Revolving Facility Borrowing shall consist of Revolving Facility Advances of the
same Type made in the same currency on the same day by the Lenders ratably
according to their respective Revolving Facility Commitments. Each Revolving
Facility Borrowing consisting of Base Rate Advances shall be in an aggregate
amount not less than $500,000 and in integral multiples of $100,000 in excess
thereof and each Revolving Facility Borrowing consisting of Eurodollar Rate
Advances shall be in an aggregate amount not less than $1,000,000 and in
integral multiples of $100,000 in excess thereof. Within the limits of each
Lender's Revolving Facility Commitment, the Borrowers may borrow, repay pursuant
to Section 2.03, prepay pursuant to Section 2.06 and reborrow under this Section
2.01.
(b) Notice of Revolving Facility Borrowing. Except as provided in Section
--------------------------------------
2.01(g), each Revolving Facility Borrowing shall be made on notice received by
the Agent from the Borrowers not later than (i) 9:00 A.M. (Los Angeles time) on
the date of the proposed Borrowing in the case of a Base Rate Advance, and (ii)
9:00 A.M. (Los Angeles time) on the third Business Day before the requested date
of the proposed Borrowing in the case of a Eurodollar Rate Advance. Each such
notice of such a Borrowing (a "Notice of Revolving Facility Borrowing") shall be
--------------------------------------
by telex, cable, telecopy or telephone, confirmed immediately in writing, signed
by the Chief Financial Officer or Treasurer of the applicable Borrower, in
substantially the form of Exhibit B hereto, specifying therein (i) the requested
date of such Borrowing, (ii) the Type of Advances comprising such Borrowing and
(iii) the aggregate amount of such Borrowing. The Agent shall give prompt notice
of such Notice of Revolving Facility
28
<PAGE>
Borrowing to each Lender and shall notify each Lender of the applicable interest
rate under Section 2.04(a) or (b). Not later than 11:30 A.M. (Los Angeles time)
on the date of each Revolving Facility Borrowing, each Lender shall make
available for the account of its Applicable Lending Office to the Agent at the
Payment Office, such Lender's Revolving Facility Pro Rata Share of such
Borrowing in Dollars and in same day funds. After the Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article V,
the Agent will make such funds available to the Borrowers at the aforesaid
Payment Office by depositing such funds into the Borrowers' designated account
at the Payment Office (the "Senior Account").
--------------
(c) No Liability of Agent. The Agent shall incur no liability to any
---------------------
Borrower in acting upon any telephonic notice referred to above that the Agent
believes in good faith to have been given by a duly authorized officer or other
Person authorized to act on behalf of a Borrower or for otherwise acting in good
faith under this Section 2.01.
(d) Notice of Revolving Facility Borrowing Irrevocable. Each Notice of
--------------------------------------------------
Revolving Facility Borrowing shall be irrevocable and binding on the Borrowers.
In the case of any Revolving Facility Borrowing which the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate Advances, the
Borrowers shall indemnify each Lender against any loss, cost or expense incurred
by such Lender as a result of any failure to fulfill on or before the date
specified in such Notice of Revolving Facility Borrowing for such Revolving
Facility Borrowing the applicable conditions set forth in Article V, including,
without limitation, any loss (including loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund the Revolving Facility Advance to be
made by such Lender as part of such Revolving Facility Borrowing when such
Revolving Facility Advance, as a result of such failure, is not made on such
date.
(e) Reimbursement of Agent. Unless the Agent shall have received notice
----------------------
from a Lender, prior to the date of any Borrowing that such Lender is obligated
to make, that such Lender will not make available to the Agent such Lender's
Revolving Facility Pro Rata Share of such Revolving Facility Borrowing, the
Agent may assume that such Lender has made such portion available to the
29
<PAGE>
Agent on the date of such Borrowing in accordance with Section 2.01(b) and the
Agent may, in reliance upon such assumption, make available on such date to the
Borrowers a corresponding amount. If and to the extent that any Lender shall not
have made available to the Agent, on the date of any Revolving Facility
Borrowing referred to in Section 2.01(a), such Lender's Revolving Facility Pro
Rata Share of such Revolving Facility Borrowing, such Lender and the Borrowers
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the Borrowers until the date such amount is repaid to the
Agent, at (i) in the case of the Borrowers, the interest rate applicable at the
time to the Revolving Facility Advances comprising such Revolving Facility
Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such
Lender shall repay to the Agent such corresponding amount, such amount so repaid
shall constitute such Lender's Revolving Facility Advance as part of such
Revolving Facility Borrowing for purposes of this Agreement.
(f) No Liability for Other Lenders. The failure of any Lender to make the
------------------------------
Revolving Facility Advance to be made by it as part of any Revolving Facility
Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Revolving Facility Advance on the date of such Revolving
Facility Borrowing, but no Lender shall be responsible for the failure of any
other Lender to make the Revolving Facility Advance to be made by such other
Lender on the date of any Revolving Facility Borrowing.
(g) Roll-Over Revolving Facility Advances. If, on or before the last day
-------------------------------------
of any Interest Period of the Revolving Facility Advances comprising any
Borrowing, the Borrowers shall fail to notify the Agent in writing that they
intend to repay the principal amount of such Revolving Facility Advances (the
"Roll-Over Revolving Facility Advances") on the last day of such Interest
-------------------------------------
Period, the Borrowers shall be deemed to have issued a Notice of Revolving
Facility Borrowing pursuant to Section 2.01(b), which Notice of Revolving
Facility Borrowing shall be deemed to specify (i) that the requested date of the
Borrowing shall be the last day of the Interest Period of the Roll-Over
Revolving Facility Advances, (ii) that such Borrowing shall be comprised of Base
Rate Advances, (iii) that such Borrowing shall be in an aggregate principal
amount equal to the aggregate
30
<PAGE>
principal amount of the Roll-Over Revolving Facility Advances and (iv) that the
Interest Period for such Revolving Facility Advances shall be one month;
provided, however, that such Advances will not be made if the conditions set
- -------- -------
forth in Section 5.02 are not satisfied.
SECTION 2.02. The Swing Line Advances.
-----------------------
(a) The Swing Line Commitment. The Swing Line Lender agrees, on the terms
-------------------------
and conditions hereinafter set forth, to make Swing Line Advances to the
Borrowers from time to time on any Business Day during the period from the date
hereof until the Termination Date in an aggregate amount not to exceed the
lesser of (i) its Swing Line Commitment or (ii) the excess of the aggregate
amount of the Revolving Facility Commitments of the Lenders less the aggregate
----
amount of the Total RCA Liability then outstanding. Each Swing Line Borrowing
shall be of Base Rate Advances and shall be in an aggregate amount not less than
$50,000 or more than $5,000,000 and in integral multiples of $50,000. Within the
limits set forth in this Section 2.02(a), the Borrowers may borrow, repay
pursuant to Section 2.03, prepay pursuant to Section 2.06 and reborrow under
this Section 2.02(a).
Notwithstanding the foregoing, the Swing Line Lender's obligation to
make Swing Line Loans will be subject to the following limitation: for at least
one point in time in each calendar month there shall be no Swing Line Advances
outstanding (with nothing in this sentence preventing the Borrowers from
repaying and reborrowing all outstanding Swing Line Advances on the same day).
(b) Notice of Swing Line Borrowing. Except as provided in Section
------------------------------
2.02(d), each Swing Line Borrowing shall be made on notice received by the Agent
from the Borrowers not later than 12:00 noon (Los Angeles time) on the date of
the proposed Borrowing. Each such notice of such a Borrowing (a "Notice of Swing
---------------
Line Borrowing") shall be by telex, cable, telecopy or telephone, confirmed
- --------------
immediately in writing, signed by the Chief Financial Officer or Treasurer of
the applicable Borrower, in substantially the form of Exhibit C hereto,
specifying therein the requested date and aggregate amount of such Borrowing.
The Agent shall give prompt notice of such Notice of Swing Line Borrowing to the
Swing Line Lender and shall notify the Swing Line Lender of the applicable
interest rate under Section
31
<PAGE>
2.04(a). Upon fulfillment of the applicable conditions set forth in Article V,
the Swing Line Lender will make the amount of such Borrowing available to the
Borrowers at the Payment Office by depositing such funds into the Senior
Account.
(c) No Liability of Agent. The Agent shall incur no liability to any
---------------------
Borrower in acting upon any telephonic notice referred to above that the Agent
believes in good faith to have been given by a duly authorized officer or other
Person authorized to act on behalf of a Borrower or for otherwise acting in good
faith under this Section 2.02.
(d) Roll-Over Swing Line Advances. If, on or before the last day of any
-----------------------------
Interest Period for any Swing Line Advance, the Borrowers shall fail to notify
the Agent in writing that they intend to repay the principal amount of such
Swing Line Advance (the "Roll-Over Swing Line Advance") on the last day of such
----------------------------
Interest Period, the Borrowers shall be deemed to have issued a Notice of Swing
Line Borrowing pursuant to Section 2.02(b), which Notice of Swing Line Borrowing
shall be deemed to specify that the requested date of the Borrowing shall be the
last day of the Interest Period of the Roll-Over Swing Line Advance, and that
such Borrowing shall be in a principal amount equal to the principal amount of
the Roll-Over Swing Line Advance; provided, however, that such Advance will not
-------- -------
be made if the conditions set forth in Section 5.02 or the requirements of the
second paragraph of Section 2.02(a) are not satisfied.
(e) Participation in Swing Line Advances. Immediately upon the making of
------------------------------------
each Swing Line Advance, the Swing Line Lender shall be deemed to have sold and
transferred to each Revolving Lender, and each Revolving Lender shall be deemed
to have purchased and received from such Swing Line Lender, in each case
irrevocably and without any further action by any party, an undivided interest
and participation in such Swing Line Advance and the obligations of the
Borrowers with respect thereto in an amount equal to such Revolving Lender's
Revolving Facility Pro Rata Share; provided, however, that (i) no Revolving
-------- -------
Lender shall be required to fund its participation in any such Swing Line
Advance until demand therefor is made by the Swing Line Lender pursuant to
Section 2.02(f)(ii) hereof, and (ii) no Revolving Lender shall be entitled to
share in any payments of principal or interest in respect of its participation
in any such Swing Line Advance except to the extent set forth in Section 2.02
(f) (ii)
32
<PAGE>
hereof with respect to any such participation which has been funded by such
Revolving Lender as provided therein.
(f) Settlement of Swing Line Advances.
---------------------------------
(i) At any time when any Swing Line Advances are outstanding, upon
request by the Swing Line Lender, the Agent may give to the Revolving Lenders a
Notice of Borrowing for Revolving Facility Advances which are Base Rate Advances
on behalf of a Borrower, in each case in an amount equal to the aggregate amount
of Swing Line Advances then outstanding (or such lesser amount as the Swing Line
Lender shall specify). Upon receipt of any such Notice of Borrowing, each
Revolving Lender shall, on or before the time specified by the Agent (which in
no event shall be earlier than 8:00 A.M. nor later than 1:00 P.M. (Los Angeles
time) on the Business Day following the date on which such Notice of Borrowing
is given), make available to the Agent for the account of its Applicable Lending
Office such Revolving Lender's ratable portion of such Borrowing by depositing
same day funds in the Payment Office. The proceeds of any such Borrowing shall
be distributed by the Agent to the Swing Line Lender (subject to the provisions
of Section 2.02(f)(iv) below) as a prepayment of all or a portion of the Swing
Line Advances then outstanding.
(ii) In addition to the right of the Swing Line Lender to require a
Borrowing under Section 2.02(f)(i), the Swing Line Lender may at any time and
from time to time make demand on each Revolving Lender for payment of its
participation in each Swing Line Advance then outstanding, and upon receipt of
any such demand each Revolving Lender shall (subject to Section 2.02(f)(iv)
below) promptly fund such participation by paying to the Agent at the Payment
Office, for the account of the Swing Line Lender, the amount of such
participation in same day funds. With respect to each such participation in any
Swing Line Advance
which is funded by any Revolving Lender, the Swing Line Lender shall promptly
pay to the Agent, and the Agent shall promptly pay to such Revolving Lender, in
lawful money of the United States and in the kind of funds so received, an
amount equal to such Revolving Lender's ratable share of all payments received
by the Swing Line Lender in respect of (A) the principal of such Swing Line
Advance, and (B) interest on such Swing Line Advance for the period from and
after the date on which such participation was funded. If any payment received
by the Swing Line Lender on account of any Swing Line Advance and distributed to
any
33
<PAGE>
Revolving Lender as a participant under the preceding sentence is thereafter
recovered from the Swing Line Lender in connection with any bankruptcy or
insolvency proceeding relating to a Borrower or otherwise, each Revolving Lender
which received such distribution shall, upon demand by the Swing Line Lender
through the Agent, repay to the Swing Line Lender such Revolving Lender's
ratable share of the amount so recovered together with such Revolving Lender's
ratable share (according to the proportion of (l) the amount of such Revolving
Lender's required prepayment to (2) the total amount so recovered) of any
interest or other amount paid or payable by the Swing Line Lender in respect of
the total amount so recovered. Each Borrower agrees that any Revolving Lender
purchasing a participation in any Swing Line Advance hereunder may, to the
fullest extent permitted by law, exercise all its rights of payment with respect
to such participation as fully as if such Lender were the direct creditor of
that Borrower or any other Borrower in the amount of such participation.
(iii) Anything contained herein to the contrary notwithstanding (but
subject to Section 2.02(f)(iv) below), the obligation of each Revolving Lender
to make any Revolving Advance pursuant to Section 2.02(f)(i) or to fund its
participation in any Swing Line Advances pursuant to Section 2.02(f)(ii) shall
be absolute and unconditional and shall not be subject to any conditions set
forth in Article V hereof or otherwise affected by any circumstance including,
without limitation, (A) any set-off, counterclaim, recoupment, defense or other
right which such Lender may have against the Swing Line Lender or any Loan
Party; (B) the occurrence or continuance of an Incipient Default or Event of
Default; (C) any adverse change in the business, condition (financial or
otherwise), operations, performance, properties or prospects of any Loan Party;
(D) any breach of this Agreement by any Borrower, Merisel Parent or any other
Lender; or (E) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing.
(iv) Notwithstanding Section 2.02(f)(iii) above, if at the time that
any Revolving Lender is required to make any Revolving Advance or fund any
participation pursuant to Section 2.02(f)(i) or (ii) above, a Borrower would not
otherwise be entitled to obtain a Borrowing as a result of the failure of any of
the conditions set forth in Article V hereof, the obligation of each Revolving
Lender to make any such Revolving Advance or to
34
<PAGE>
fund any such participation with respect to any Swing Line Advance shall be
subject to the condition that at least one of the following is true: (A) the
Swing Line Lender shall have believed in good faith that all conditions under
Article V to the making of such Swing Line Advance were satisfied at the time
such Swing Line Advance was made, or (B) such Revolving Lender shall have had
actual knowledge, by receipt of the statements required pursuant to Section 7.01
or otherwise, that any such condition had not been satisfied and failed to
notify the Agent in writing that such Revolving Lender had no obligation to make
Revolving Advances until such condition was satisfied (which notice shall be
effective as of the date of receipt by the Agent), or (C) the satisfaction of
any such condition not satisfied shall have been waived by all Lenders prior to
or at the time such Swing Line Advance was made. Anything contained in this
Section 2.02(f) to the contrary notwithstanding, the amount to be distributed by
the Agent to the Swing Line Lender under this Section 2.02(f) shall be reduced
to the extent that any Revolving Lender shall refuse to fund its portion of any
Revolving Advance or participation with respect to the Swing Line Lender as a
result of the failure of the conditions set forth above.
(v) Each Borrower irrevocably authorizes (A) the Swing Line Lender to
request and the Agent to give any Notice of Borrowing pursuant to Section
2.02(f)(i), (B) the Revolving Lenders to make the Revolving Advances pursuant to
such Notice of Borrowing, and (C) the Agent to distribute the proceeds thereof
as provided herein.
(vi) If and to the extent that any Revolving Lender shall not have
funded any Revolving Advance or its participation in any Swing Line Advance when
required pursuant to Section 2.02(f)(i) or (ii), such Revolving Lender agrees to
pay to the Agent forthwith on demand, for the account of the Swing Line Lender,
in addition to the amount required to fund such Revolving Advance or
participation, as the case may be, an amount equal to interest thereon at the
Federal Funds Rate for each day from the date such amount became due until paid
in full.
SECTION 2.03. Repayment. Subject to Section 2.01(g) and 2.02(d), each
---------
Borrower shall, in accordance with Article IV, repay to each Lender the
principal amount of each Revolving Facility Advance and each Swing Line Advance
made to it by such Lender on the last day of the Interest Period for such
Advance.
35
<PAGE>
All Revolving Facility Advances, all Swing Line Advances and all other amounts
then owed hereunder shall be paid in full no later than the Termination Date.
SECTION 2.04. Interest on Revolving Facility Advances and Swing Line
------------------------------------------------------
Advances. The Borrowers shall pay interest on the unpaid principal amount of
- --------
each Revolving Facility Advance and each Swing Line Advance made by each Lender
from the date of such Advance until such principal amount shall be paid in full,
at the following rates per annum:
(a) If a Base Rate Advance, then at a rate per annum equal at all times
during the Interest Period for such Revolving Facility Advance or Swing Line
Advance to the sum of the Base Rate in effect from time to time plus 1.00%,
----
payable in arrears on the fifth day of each month and on the date such Base Rate
Advance shall be paid in full and on the Termination Date; and
(b) If a Eurodollar Rate Advance, then at a rate per annum equal at all
times during the Interest Period for such Revolving Facility Advance to the sum
of the Eurodollar Rate for such Interest Period plus 3.00%, payable (i) in
----
arrears on the last day of such Interest Period and (ii) on the Termination
Date;
provided, however, that after the occurrence and during the continuation of any
- -------- -------
Event of Default, the Revolving Facility Advances or the Swing Line Advances
shall, to the extent permitted by law, bear interest (including post-petition
interest in any proceeding under applicable bankruptcy laws), from the date on
which such Event of Default shall have occurred until such amount is paid in
full, payable on demand, at the Default Rate. For the purpose of the Interest
Act (Canada), the interest rate applicable to Eurodollar Rate Advances expressed
as an annual rate is equivalent to the rate specified herein multiplied by the
actual number of days in the calendar year in which the same is to be
ascertained and divided by 360. Notwithstanding the payment of such late charge
or additional interest or the obligation to pay such late charge or additional
interest, the failure of any Borrower to pay any interest due on the unpaid
principal amount of any Revolving Facility Advance or any Swing Line Advance on
the date due shall be, subject to the grace periods provided in Article VIII, an
Event of Default.
36
<PAGE>
SECTION 2.05. Interest Rate Determination.
---------------------------
(a) The Agent shall give prompt notice to the relevant Borrower and the
Lenders of the applicable interest rate determined by the Agent for purposes of
Section 2.04(a) and the applicable rate furnished by the Reference Bank for the
purpose of determining the applicable interest rate under Section 2.04(b).
(b) If, with respect to any Eurodollar Rate Advances, the Agent or the
Majority Lenders shall determine, each in their respective sole discretion, that
the Eurodollar Rate, for any Interest Period for such Revolving Facility
Advances, will not adequately reflect the cost to the Lenders of making, funding
or maintaining their Eurodollar Rate Advances for such Interest Period, the
Agent shall forthwith so notify the Borrowers and the Lenders, whereupon the
obligation of the Lenders to make Eurodollar Rate Advances shall be suspended
until the Agent shall notify the Borrowers and the Lenders that the
circumstances causing such suspension no longer exist.
SECTION 2.06. Prepayments.
-----------
(a) Mandatory Prepayments.
---------------------
(i) if any Revolving Lender shall for any reason fail to pay any amount
payable by it for the account of the Swing Line Lender (including the funding of
any participation in any Swing Line Advance) or shall fail to make any Revolving
Advance to be made by it pursuant to Section 2.02(f), the Borrowers shall, on
demand by the Swing Line Lender through the Agent, prepay the outstanding Swing
Line Advances in an amount equal to the amount not paid by such Revolving
Lender; and
(ii) the Borrowers shall prepay Advances at such times and in such
amount as necessary (1) so that the Total RCA Liability shall not at any time
exceed the aggregate Revolving Facility Commitments then in effect and (2) to
give effect to the limitations set forth in Sections 2.01(a) and 2.02(a);
provided that, if any such prepayment would result in payment of principal of a
- --------
Eurodollar Rate Advance other than on the last day of the Interest Period for
such Advance, the Borrowers shall be deemed to have received a demand under
Section 11.03(b) for the
37
<PAGE>
costs and expenses described therein, and they shall be paid together with the
prepayment of the Advance.
(b) Voluntary Prepayments. The Borrowers may, upon notice to the Agent
---------------------
stating the proposed date (which, in the case of Eurodollar Rate Advances, shall
be at least three Business Days after the date of the notice, but in any other
case may be the date of the proposed prepayment) and aggregate principal amount
of the prepayment, and if such notice is given the Borrowers shall, prepay the
outstanding principal amount of any Revolving Facility Advances or Swing Line
Advances comprising part of the same Borrowing in whole or in part, and with
accrued interest to the date of such prepayment on the principal amount prepaid
(except in the case of Base Rate Advances, when accrued interest shall be paid
on the dates specified in Section 2.04(a) unless the Agent elects to have such
accrued interest paid on the date of such prepayment); provided, however, that
-------- -------
if any such prepayment would result in payment of principal of a Eurodollar Rate
Advance other than on the last day of the Interest Period for such Advance, the
Borrowers shall be deemed to have received a demand under Section 11.03(b) for
the costs and expenses described therein, and they shall be paid together with
the prepayment of the Advance; provided further, that (i) each partial
-------- -------
prepayment of Swing Line Advances shall be in an aggregate principal amount of
not less than $50,000 and (ii) each partial prepayment of Revolving Facility
Advances shall be in an aggregate principal amount of not less than $500,000 in
the case of Base Rate Advances (or if the outstanding principal is less than
$500,000, the Borrowers may prepay in full such amount) or $1,000,000 in the
case of Eurodollar Rate Advances (or if the outstanding principal is less than
$1,000,000, the Borrowers may prepay in full such amount), and shall be applied
in accordance with Section 4.01.
(c) The Borrowers may reborrow any amounts prepaid under this Section
2.06, provided that such borrowing is otherwise in accordance with Article II
--------
hereof.
SECTION 2.07. Reduction of Commitments.
------------------------
(a) The Revolving Facility Commitments of the Lenders shall be permanently
reduced on the dates and in the amounts set forth below (such amount the
"Scheduled Reduction Amount"):
--------------------------
38
<PAGE>
<TABLE>
<CAPTION>
Scheduled Reduction
of Revolving Facility
Date Commitments
- ---- ---------------------
<S> <C>
Amendment Effective Date $6,000,000
May 5, 1996 $3,000,000
June 5, 1996 $3,000,000
July 5, 1996 $3,000,000
August 5, 1996 $3,000,000
September 5, 1996 $3,000,000
January 15, 1997 $39,000,000
</TABLE>
; provided that the scheduled reductions of the Revolving Facility Commitments
--------
set forth above shall be reduced in connection with any mandatory or voluntary
reductions of the Revolving Facility Commitments in accordance with Section
4.01(i); provided further that, (1) the Majority Lenders may at any time consent
-------- -------
to an increase in any Scheduled Reduction Amount or a change in a date set for
the reduction of Revolving Facility Commitments to an earlier date and (2)
Lenders whose respective Total Outstanding Pro Rata Shares are in the aggregate
at least 85% may consent to a decrease in any Scheduled Reduction Amount or a
change in a date set for reduction of Revolving Facility Commitments to a later
date.
(b) No later than the first Business Day following the date of receipt
by Merisel Parent, the Borrowers or any of their respective Subsidiaries of any
Net Asset Sale Proceeds in respect of any Asset Sale, the Revolving Facility
Commitments shall be permanently reduced in an aggregate amount equal to 60% of
the amount of such Net Asset Sale Proceeds; provided that no reduction of the
--------
Revolving Facility Commitments shall be required under this Section 2.07(b)
until the date on which the amount of the Net Asset Sale Proceeds by which the
Revolving Facility Commitments are to be reduced is equal to or greater than
$600,000; provided further that no reduction of Revolving Facility Commitments
-------- -------
shall be required pursuant to this Section 2.07(b) upon receipt by Merisel FAB
of Net Asset Sale Proceeds in respect of any Asset Sale by Merisel FAB if such
Net Asset Sale Proceeds are used by Merisel FAB as provided in Section 7.01(q).
(c) On the date of receipt by Merisel Parent, any Borrower or any of
their respective Subsidiaries of Net Securities Proceeds from the issuance of
any equity Securities of Merisel
39
<PAGE>
Parent, any Borrower or any of their respective Subsidiaries, the Revolving
Facility Commitments shall be permanently reduced in an aggregate amount equal
to 60% of the amount of such Net Securities Proceeds; provided that no reduction
--------
of Revolving Facility Commitments shall be required pursuant to this Section
2.07(c) upon the receipt by Merisel FAB of Net Securities Proceeds from the
issuance of any equity Securities of Merisel FAB if such Net Securities Proceeds
are used by Merisel FAB as provided in Section 7.01(q); provided further that no
-------- -------
reduction of Revolving Facility Commitments shall be required pursuant to this
Section 2.07(c) in connection with the issuance of any equity Securities of
Merisel Parent, the Borrowers or their respective Subsidiaries to Merisel Parent
or its Subsidiaries.
(d) On each New Receivables Program Availability Date, the Revolving
Facility Commitments shall be permanently reduced in an aggregate amount equal
to 60% of the amount of the Net Receivables Program Proceeds associated
therewith; provided that no reduction of Revolving Facility Commitments shall be
--------
required under this Section 2.07(d) in connection with a Receivables Program of
Merisel FAB or a Receivables Program involving the sale or transfer of
receivables between Merisel Parent and its Subsidiaries or between Subsidiaries
of Merisel Parent.
(e) On each New Debt Availability Date, the Revolving Facility Commitments
shall be permanently reduced in an aggregate amount equal to 60% of the amount
of the Net Debt Proceeds associated therewith; provided that no reduction of
--------
Revolving Facility Commitments shall be required pursuant to this Section
2.07(e) in connection with a New Debt Availability Date relating to intercompany
Debt.
(f) The Borrowers shall have the right, upon at least three Business Days'
notice to the Agent, to reduce ratably in part or in full the unused portion of
the Revolving Facility Commitments of the Lenders; provided, however, that (i)
-------- -------
each partial reduction shall be in the aggregate amount of $1,000,000 or an
integral multiple of $100,000 in excess thereof, (ii) the aggregate of the
Revolving Facility Commitments shall not be reduced to an amount which is less
than the Total RCA Liability, and (iii) any reduction of the aggregate of the
Revolving Facility Commitments to an amount which is less than the amount of the
Swing Line Commitment then in effect shall result in an automatic corresponding
reduction of the amount of the Swing Line
40
<PAGE>
Commitment to the aggregate amount of the Revolving Facility Commitments as so
reduced.
(g) With the consent of the Agent, which consent shall not be unreasonably
withheld, the Borrowers shall have the right, upon at least three Business Days'
notice to the Agent, to reduce ratably in part or in full the unused portion of
the Swing Line Commitment; provided, however, that each partial reduction shall
-------- -------
be in the aggregate amount of $500,000 or an integral multiple of $100,000 in
excess thereof.
SECTION 2.08. Increased Capital. If any Lender determines that the
-----------------
introduction of or any change, at any time after the date hereof, in or in the
interpretation of any law or regulation or any guideline or any request made
after the date hereof from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by such Lender or any corporation
controlling such Lender and that the amount of such capital is increased by or
based upon the existence of such Lender's Commitments hereunder and other
commitments of this type, then, upon demand by such Lender (with a copy of such
demand to the Agent), the Borrowers shall immediately pay to the Agent for the
account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's
Commitments. A certificate as to such amounts, showing in reasonable detail the
basis for the calculation thereof, submitted to the Borrowers by such Lender,
shall be conclusive and binding for all purposes, absent manifest error. Such
Lender may use any reasonable basis and may make any reasonable assumptions
(including, without limitation, assumptions regarding the method of funding of
any Advances) for the calculation of such amounts.
SECTION 2.09. Increased Costs. If, due to either (a) the
---------------
introduction of or any change (other than any change by way of imposition or
increase of reserve requirements, in the case of Eurodollar Rate Advances,
included in the Eurodollar Rate Reserve Percentage), at any time after the date
hereof, in or in the interpretation of any law or regulation or (b) the
compliance with any guideline or request issued after the date hereof from
41
<PAGE>
any central bank or other governmental authority (whether or not having the
force of law), there shall be any increase in the cost to any Lender of agreeing
to make or making, funding or maintaining Eurodollar Rate Advances, then the
Borrowers shall from time to time, upon demand by such Lender (with a copy of
such demand to the Agent), pay to the Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such increased cost.
A certificate as to the amount of such increased cost, showing in reasonable
detail the basis for calculation thereof, submitted to the Borrowers and the
Agent by such Lender, shall be conclusive and binding for all purposes, absent
manifest error. Such Lender may use any reasonable basis and may make any
reasonable assumptions (including, without limitation, assumptions regarding the
method of funding of Revolving Facility Advances) for the calculation of such
amounts.
SECTION 2.10. Illegality. Notwithstanding any other provision of this
----------
Agreement, if any Lender shall notify the Agent that the introduction of or any
change, at any time after the date hereof, in or in the interpretation of any
law or regulation makes it unlawful, or, at any time after the date hereof, any
central bank or other governmental authority asserts that it is unlawful, for
any Lender or its Eurodollar Lending Office to perform its obligations hereunder
to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate
Advances, (a) the obligation of the Lenders to make Eurodollar Rate Advances
shall be suspended until the Agent shall notify the Borrowers and the Lenders
that the circumstances causing such suspension no longer exist and (b) the
Borrowers shall forthwith prepay in full all Eurodollar Rate Advances of all
Lenders then outstanding, together with interest accrued thereon.
SECTION 2.11. Removal of a Lender. In the event that any Lender (an
-------------------
"Affected Lender") shall give notice to the Borrowers that such Lender is
---------------
entitled to compensation under Section 2.08, Section 2.09 or Section 3.05 and
unless the change or circumstance giving rise to such compensation is no longer
in effect, the Borrowers may elect (upon 30 days' prior written notice to the
Agent and such Affected Lender, but, in any event such election shall be made no
more than 90 days after receipt by the Borrowers of the notice from the Affected
Lender) either:
(a) to terminate the Commitment of such Affected Lender and prepay on
the date of such termination (i) any outstanding
42
<PAGE>
Revolving Facility Advances made by such Affected Lender, together with accrued
interest on any such Revolving Facility Advances, (ii) a portion of any
outstanding Swing Line Advances equal to such Affected Lender's participation
interest therein, and (iii) any amounts payable pursuant to Article II or
Section 3.05 or otherwise hereunder; provided that if there are Advances of such
Affected Lender outstanding or Letters of Credit Issued by such Affected Lender
at the time of such termination, the written consent of the Agent, the
Designated Issuer and the Majority Lenders, which consent shall not be
unreasonably withheld, shall be required in order for the Borrowers to make the
foregoing election; or
(b) to cause such Affected Lender to assign its Advances and Commitment in
full to an assignee bank (so long as such Lender receives payment in full of the
principal amount of all of its Advances outstanding, together with all interest
on such Advances and other amounts payable to such Affected Lender hereunder to
the date of such assignment (including, without limitation, any amounts owed
under Article II or Section 3.05), and such assignee bank agrees pursuant to
Section 11.11 to assume all of the obligations of such Affected Lender hereunder
and to release such Affected Lender from all such obligations); provided that
--------
(i) the assignee bank shall be either a Lender or reasonably satisfactory
to the Majority Lenders, the Agent and the Designated Issuer and (ii) all
Letters of Credit Issued by the Affected Lender shall have expired or been
terminated.
SECTION 2.12. Use of Proceeds.
---------------
(a) The proceeds of any Borrowing of Advances made to the Borrowers
shall be used by the Borrowers solely for their own respective working capital
and general corporate purposes (including for payments of allocated expenses as
set forth on Schedule VI; provided that no portion of the proceeds of any
--------
Borrowing under this Agreement shall be used by the Borrowers or any Subsidiary
of a Borrower to purchase assets from Merisel Parent or any wholly-owned
Subsidiary of Merisel Parent that is not also a Borrower or a wholly-owned
Subsidiary of a Borrower.
(b) The Letters of Credit shall be issued to the Borrowers solely for
the purposes specified in the definition of Commercial Letter of Credit and/or
in Section 3.01(a)(ii) with respect to a Standby Letter of Credit.
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(c) No portion of the proceeds of any Borrowing under this Agreement
shall be used by any Borrower in any manner which might cause the Borrowing or
the application of such proceeds to violate Regulation G, Regulation U,
Regulation T, or Regulation X of the Board of Governors of the Federal Reserve
System or any other regulation of the Board of Governors of the Federal Reserve
System or to violate the Securities Exchange Act of 1934, as amended, in each
case as in effect on the date or dates of such Borrowing and such use of
proceeds.
ARTICLE III
AMOUNTS AND TERMS OF THE LETTERS OF CREDIT
SECTION 3.01. The Letters of Credit.
---------------------
(a) The Issuing Lenders agree, on the terms and conditions hereinafter
set forth and subject to the satisfaction of such policy standards and
conditions as may be generally established by any Issuing Lender from time to
time, to Issue for the account of the Borrowers from time to time on any
Business Day during the period from the date hereof until the date which occurs
30 days before the Termination Date either Commercial Letters of Credit or
Standby Letters of Credit (each a "Letter of Credit") in an aggregate face
----------------
amount not to exceed $5,000,000 at any one time outstanding, each such Letter of
Credit to expire on or before the earlier of (i) the date which occurs one year
from its Issuance and (ii) the date which occurs 30 days before the Termination
Date; provided, however, that no Issuing Lender shall have any obligation:
-------- -------
(i) to Issue any Letter of Credit if after giving effect to the
Issuance of such Letter of Credit, such Lender's Revolving Facility Pro Rata
Share of the aggregate amount of the Total RCA Liability then outstanding would
exceed its Revolving Facility Commitment; or
(ii) to Issue any Standby Letter of Credit if such Standby Letter of
Credit is not issued for the purpose of (A) supporting a trade related
transaction, (B) obtaining bonds in the ordinary course of business, or (C)
maintaining credit of the Borrowers or their Subsidiaries with local lenders; or
44
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(iii) to Issue any Letter of Credit if, after giving effect to the
Issuance of such Letter of Credit, the L/C Liability in respect of all Letters
of Credit in the aggregate shall exceed $5,000,000.
Within the limits of the obligations of the Issuing Lenders set forth above, the
Borrowers may request the Issuing Lenders to Issue one or more Letters of
Credit, reimburse the Issuing Lenders for payments made thereunder pursuant to
Section 3.03, and request the Issuing Lenders to Issue one or more other Letters
of Credit under this Section 3.01.
(b) The obligation of the Issuing Lenders to issue each Letter of Credit
shall be several and not joint and the failure by any Issuing Lender to issue
such Letter of Credit shall not relieve the other Issuing Lenders from their
obligations to issue such Letters of Credit.
(c) In order to facilitate the prompt issuance of all Letters of Credit,
each Issuing Lender shall deliver to the Agent on the Closing Date a power of
attorney in substantially the form of Exhibit D hereto irrevocably appointing
the Agent and its Designated Issuer as attorney-in-fact for such Issuing Lender
with power to execute Letters of Credit as provided Section 3.02 in accordance
with this Agreement in the name and on behalf of such Lender.
SECTION 3.02. Issuing the Letters of Credit.
-----------------------------
(a) Each Letter of Credit shall be Issued on notice received by the
Agent from the Borrowers not later than 10:00 A.M. (Los Angeles time) on the
second Business Day prior to the date of the proposed Issuance. Each such notice
of a requested Letter of Credit shall be in writing, signed by the Chief
Financial Officer or Treasurer of the applicable Borrower, and consist of an
application (an "Application") for Issuance in substantially the form attached
-----------
hereto as Exhibit E or such other standard form as may hereafter be in use by
the Designated Issuer; provided, however, that the Majority Lenders shall have
-------- -------
approved any material change to such standard form. The Agent shall promptly
notify the Issuing Lenders of the Borrowers' request. The form of each such
Letter of Credit shall be as specified in such Application, provided that (i)
--------
such form shall be in form and substance satisfactory to the Agent in its sole
45
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and absolute discretion and (ii) unless otherwise agreed by the Agent and the
Designated Issuer, such Letter of Credit shall contain the terms set forth in
Exhibit F hereto.
(b) Upon receipt by the Agent of such notice and such other documents
from the Borrowers requesting the issuance of a Letter of Credit, if the request
for the Letters of Credit satisfy the requirements set forth above, the Agent
shall authorize the Issuing Lenders to issue the Letters of Credit. If any of
the Issuing Lenders, in its sole discretion, elects not to issue such Letter of
Credit because issuance of such Letter of Credit may violate any applicable laws
or any applicable policies of the Issuing Lender relating to the issuance of
Letters of Credit, such Issuing Lender shall promptly, and in any event within
one Business Day after its receipt of the request for a Letter of Credit, so
notify the Borrowers and the Agent and no Letter of Credit will be issued. If
no Issuing Lender notifies the Agent of its inability to issue the Letter of
Credit, the Agent shall cause the Designated Issuer to prepare the requested
Letter of Credit with signature pages prepared for the Designated Issuer to
execute the Letter of Credit as attorney-in-fact for each Issuing Lender.
Following such authorization, but subject in any event to the terms and
conditions of this Article III and the applicable conditions of Article V, the
requested Letter of Credit shall be executed by the Designated Issuer on behalf
of the Issuing Lenders and shall be delivered to the Borrowers (or their
designee) by the Designated Issuer on the date of issuance specified by the
Borrowers, which Letter of Credit shall have been issued by each Issuing Lender,
severally and ratably, in accordance with its Revolving Facility Pro Rata Share.
SECTION 3.03. Reimbursement Obligations.
-------------------------
In the event of any request for drawing under any Letter of Credit by the
beneficiary thereof, the Agent shall immediately notify the Borrowers and the
Issuing Lenders, and the Borrowers shall pay to the Agent, for account of the
Issuing Lenders, an amount equal to the amount necessary to reimburse the
Issuing Lenders on the earlier of (i) the time specified therefore on any letter
of credit reimbursement agreement applicable to such Letter of Credit or (ii)
the date which occurs two Business Days after written demand (which may be by
telecopy) for reimbursement by the Designated Issuer in an amount in same day
funds equal to the amount which the Issuing Lenders paid as a result of such
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drawing. If the Borrowers shall fail to reimburse the Issuing Lenders on the
date of any drawing under a Letter of Credit in an amount equal to the amount of
such drawing paid by such Issuing Lenders, (i) the Borrowers shall be deemed to
have given a Notice of Borrowing to the Agent requesting the Lenders to make
Revolving Facility Advances that are Base Rate Advances on the date on which
such drawing is honored in an amount equal to the amount of such drawing, and
(ii) subject to satisfaction or waiver of the applicable conditions specified in
Article V, the Lenders shall, on the Business Day next following the date of
such drawing, make Revolving Facility Advances that are Base Rate Advances in
the amount of such drawing together with accrued interest thereon at the
interest rate set forth in Section 2.04(a) from the date of drawing to the date
of such Advances, the proceeds of which shall be applied directly by the Agent
to reimburse the Issuing Lenders for the amount of such drawing together with
such accrued interest thereon; provided that, if for any reason (other than the
--------
wrongful failure of the Lenders to make Advances) proceeds of Advances are not
received by any Issuing Lender on such date in an amount equal to the amount of
such drawing paid by such Issuing Lender, together with accrued interest
thereon, the Borrowers shall reimburse such Issuing Lender, within three
Business Days of the date of such drawing, in an amount in same day funds equal
to the excess of the amount of such drawing over the amount of such Advances, if
any, that are so received, plus accrued interest thereon. Interest on all
----
amounts not reimbursed to the Issuing Lenders on the date of such drawing shall
accrue at the Default Rate.
SECTION 3.04. Indemnification; Nature of Designated Issuer's Duties.
-----------------------------------------------------
(a) The Borrowers agree to protect, indemnify, pay and save harmless
the Designated Issuer, the Issuing Lenders, the Agent and each Lender from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees) which the Designated
Issuer, the Issuing Lenders, the Agent or such Lender may incur or be subject to
as a consequence, direct or indirect, of (i) the Issuance of any Letter of
Credit, other than as a result of the gross negligence or willful misconduct of
such Person as determined in a final determination by a court of competent
jurisdiction or (ii) the failure of the Designated Issuer or any Issuing Lender
to honor a drawing under such Letter of Credit as
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a result of any act or omission of any present or future de jure or de facto
government or governmental authority, whether rightful or wrongful.
(b) As between the Borrowers on the one hand, and the Designated Issuer
and the Issuing Lenders on the other, the Borrowers assume all risks of the acts
and omissions of, or misuse of the Letters of Credit by, the respective
beneficiaries of the Letters of Credit. In furtherance and not in limitation of
the foregoing, the Designated Issuer and the Issuing Lenders shall not be
responsible for, and the obligations of the Borrowers under this Agreement shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity, effectiveness, or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part;
(ii) any failure of the beneficiary of a Letter of Credit to comply
with the conditions required in order to draw upon any Letter of Credit;
(iii) any error, omission, interruption or delay in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not it is in cipher;
(iv) any error in interpretation of technical terms;
(v) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit or of
the proceeds thereof;
(vi) any misapplication by the beneficiary of any Letter of Credit of
the proceeds of any drawing under such Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or not
similar to the foregoing;
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<PAGE>
provided that neither the Designated Issuer nor any Issuing Lender shall be
- --------
relieved of any liability it may otherwise have as a result of its gross
negligence or willful misconduct.
(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Designated
Issuer or any Issuing Lender under or in connection with the Letters of Credit
or the related Applications, agreements or certificates, if taken or omitted in
good faith, shall not put the Designated Issuer under any resulting liability to
the Borrowers, unless such action constitutes gross negligence or willful
misconduct.
(d) The Designated Issuer, on behalf of the Issuing Lenders, shall be
responsible only to determine that the documents and certificates required to be
delivered under each Letter of Credit have been delivered and that they comply
on their face with the requirements of that Letter of Credit. The Designated
Issuer shall be fully protected for its actions hereunder to the same extent as
the Issuing Lenders and shall have all of the benefits and immunities provided
to an Issuing Lender hereunder and to the Agent in Article X with respect to any
acts taken or omissions suffered in connection with this Article III, and for
such purposes the Designated Issuer shall be deemed to be the "Agent" in Article
X.
SECTION 3.05. Increased Costs.
---------------
(a) Change in Law Generally. If, at any time after the date hereof,
-----------------------
any change in any law or regulation or in the interpretation thereof by any
court or administrative or governmental authority charged with the
administration thereof shall either (i) impose, modify or deem applicable any
reserve, special deposit or similar requirement against letters of credit Issued
by, or assets held by, or deposits in or for the account of, the Designated
Issuer, any Issuing Lender or any Lender or (ii) impose on the Designated
Issuer, any Issuing Lender or any Lender any other condition regarding this
Agreement or Letters of Credit or, in the case of any Lender, its participation
hereunder in Letters of Credit, and the result of any event referred to in the
preceding clause (i) or (ii) shall be to increase the cost to the Designated
Issuer or any Issuing Lender of Issuing or maintaining or, in the case of any
Lender, having a participation in, Letters of Credit (which increase in cost
shall be determined
49
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by the Designated Issuer's or such Issuing Lender's or Lender's reasonable
allocation of the aggregate of such cost increases resulting from such event),
then, upon demand by the Designated Issuer, such Issuing Lender or such Lender
(with a copy to the Agent), the Borrowers shall immediately pay to the
Designated Issuer, such Issuing Lender or such Lender from time to time as
specified by the Designated Issuer, such Issuing Lender or such Lender (with a
copy to the Agent), additional amounts which shall be sufficient to compensate
the Designated Issuer, such Issuing Lender or such Lender for such increased
cost. A certificate as to such increased cost, and amount thereof, incurred by
the Designated Issuer, such Issuing Lender or any Lender as a result of any
event mentioned in clause (i) or (ii) above, showing in reasonable detail the
basis for the calculation thereof, submitted by the Designated Issuer, such
Issuing Lender or such Lender to the Borrowers, shall, in the absence of
manifest error, be conclusive and binding for all purposes. The Designated
Issuer, such Issuing Lender or such Lender may use any reasonable basis and may
make any reasonable assumptions (including, without limitation, assumptions
regarding the method of funding of Revolving Facility Advances) for the
calculation of such amounts.
(b) Capital Requirements. If the Designated Issuer, any Issuing Lender or
--------------------
any Lender determines that the introduction of or any change, at any time after
the date hereof, in or in the interpretation of any law or regulation or any
guideline or any request made after the date hereof from any central bank or
other governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by the
Designated Issuer, such Issuing Lender or such Lender or any corporation
controlling the Designated Issuer, such Issuing Lender or such Lender and that
the amount of such capital is increased by or based upon the existence of
letters of credit (or similar contingent obligations), then, upon demand by the
Designated Issuer, such Issuing Lender or such Lender, the Borrowers shall
immediately pay to the Designated Issuer, such Issuing Lender or such Lender,
from time to time as specified by the Designated Issuer, such Issuing Lender or
such Lender, additional amounts sufficient to compensate the Designated Issuer,
such Issuing Lender or such Lender in the light of such circumstances, to the
extent that the Designated Issuer, such Issuing Lender or such Lender reasonably
determines such increase in capital to be allocable to the issuance or
maintenance of the Letters of Credit or, in the case
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<PAGE>
of such Lender, its participation therein. A certificate as to such amounts,
showing in reasonable detail the basis for calculation thereof, submitted to the
Borrowers by the Designated Issuer, such Issuing Lender or such Lender, shall,
in the absence of manifest error, be conclusive and binding for all purposes.
The Designated Issuer, such Issuing Lender or such Lender may use any reasonable
basis and may make any reasonable assumptions (including, without limitation,
assumptions regarding the method of funding of Revolving Facility Advances) for
the calculation of such amounts.
ARTICLE IV
TERMS OF PAYMENTS AND FEES
SECTION 4.01. Payments and Computations.
-------------------------
(a) The Borrowers shall make each payment hereunder and under each other
Loan Document not later than 12:00 Noon (Los Angeles time) on the day when due
in Dollars to the Agent in same day funds by deposit of such funds to the
Agent's account maintained at the Payment Office for Dollars in New York City.
The Agent will promptly thereafter cause to be distributed like funds relating
to the payment of principal of any Advances, reimbursement obligations under
Section 3.03, interest, including interest payable at the Default Rate and
interest on interest payable under Section 2.04, or fees (other than amounts
payable under Sections 2.08, 2.09, 2.11, 3.05, the processing fee referred to in
Sections 4.05(b)(ii), 4.05(c) and 11.03) ratably to the Lenders, for the account
of their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any Lender to such Lender for the account
of its Applicable Lending Office, with such payments being apportioned as set
forth in Sections 4.01(f) and 4.01(g).
(b) If and to the extent payment owed to any Lender is not made when due
under any Loan Document (after giving effect to any applicable grace period),
the Borrowers hereby authorize such Lender or any bank affiliate of such Lender
to charge from time to time against any account of any Borrower with such Lender
or such affiliate any amount so due. The Borrowers hereby authorize the Agent or
any bank affiliate of the Agent to charge against the account of any Borrower
with the Agent or such affiliate all interest payments when due hereunder (after
giving effect to any
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applicable grace period), and the Agent shall notify the Borrowers of such
charge by written confirmation thereof.
(c) All computations of interest based on the Base Rate shall be made by
the Agent on the basis of a year of 365 or 366 days, as the case may be, and all
computations of interest based on the Eurodollar Rate and of commitment fees and
the Standby Fee shall be made by the Agent on the basis of a year of 360 days,
in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or
commitment fees are payable. Each determination by the Agent of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(d) Whenever any payment hereunder or under any of the other Loan
Documents shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of interest or
commitment fees, as the case may be; provided, however, if such extension would
-------- -------
cause payment of interest on or principal of Eurodollar Rate Advances to be made
in the next following calendar month, such payment shall be made on the next
preceding Business Day.
(e) Except as otherwise provided in Sections 2.01(g) and 2.02(d) hereof,
unless the Agent shall have received notice from the Borrowers prior to the date
on which any payment is due to any of the Lenders or the Issuing Lenders (each a
"Receiving Lender") hereunder that the Borrowers will not make such payment in
----------------
full, the Agent may assume that the Borrower has made such payment in full to
the Agent on such date and the Agent may, in reliance upon such assumption,
cause to be distributed to each Receiving Lender on such due date an amount
equal to the amount then due such Receiving Lender. If and to the extent the
Borrowers shall not have so made such payment in full to the Agent, each
Receiving Lender shall repay to the Agent forthwith on demand such amount
distributed to such Receiving Lender together with interest thereon, for each
day from the date such amount is distributed to such Receiving Lender until the
date such Receiving Lender repays such amount to the Agent, at the Federal Funds
Rate.
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(f) (i) Subject to Section 4.01(f)(ii), any amount received by the
Agent for application to the principal of any Revolving Facility Advances or
Swing Line Advances shall be applied, first to the payment of the outstanding
-----
Swing Line Advances, second to the ratable payment of the outstanding Revolving
------
Facility Advances which are Base Rate Advances, and third to the ratable payment
-----
of the outstanding Revolving Facility Advances which are Eurodollar Rate
Advances, together with, in the case of any payment of Eurodollar Rate Advances,
any additional amount for which the Borrowers shall be obligated in respect of
the payment of such Advances pursuant to Section 11.03(b). Payments relating to
interest on the Revolving Facility Advances or the Swing Line Advances shall be
applied, first to interest owing to the Swing Line Lender in respect of Swing
-----
Line Advances and second to interest owing to the Revolving Lenders on a ratable
------
basis. Notwithstanding the foregoing, the Agent may, in its discretion, apply
any amounts received for application to the payment of the principal of the
Revolving Facility Advances to the ratable payment of the outstanding Revolving
Facility Advances (in the order set forth above) prior to the ratable payment of
the Swing Line Advances.
(ii) Anything contained in this Agreement to the contrary
notwithstanding (other than as set forth in Section 4.01(g)), upon the
occurrence and during the continuance of any Event of Default specified in
Section 8.01 or after the acceleration of the maturity of the Advances and the
other amounts referred to in Article VIII or termination of the Commitments, all
payments relating to the Advances and the other Obligations shall be made to the
Agent for the account of the Lenders and all amounts received by the Agent which
are to be applied to the payment of the Obligations shall be distributed first
-----
to payment of outstanding Swing Line Advances and thereafter to the Lenders in
----------
such a manner that each Lender receives its proportionate share of such amounts
based on the outstanding principal amounts of all other Advances then
outstanding and the amount of all other Obligations then payable.
(g) Notwithstanding anything to the contrary herein, any Defaulting
Lender's Revolving Facility Pro Rata Share of any payments of principal by the
Borrowers and any other funds distributed to the Lenders with respect to
principal shall be applied (i) first, to all Lenders other than the Defaulting
-----
Lender in accordance with their respective Revolving Facility Pro
53
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Rata Shares until the aggregate principal amount of all Revolving Facility
Advances then outstanding to each Lender and all Letters of Credit Issued by
each Issuing Lender as a percentage of the Total RCA Liability is, in each case,
equal to such Lender's Revolving Facility Pro Rata Share and (ii) second, to
------
such Defaulting Lender.
(h) Concurrently with any reduction of the Revolving Facility Commitments
pursuant to Sections 2.07(b)-(e), the Borrowers shall deliver to the Agent an
officers' certificate (in such form and including such substance as may be
requested by the Agent) demonstrating calculation of the amount (the "Net
---
Proceeds Amount") of the applicable Net Asset Sale Proceeds, Net Receivables
- ---------------
Program Proceeds, Net Debt Proceeds or Net Securities Proceeds that gave rise to
such reduction. In the event that the Borrowers shall subsequently determine
that the actual Net Proceeds Amount was greater than the amount set forth in
such officers' certificate, the Revolving Facility Commitments shall be
permanently reduced in an amount equal to the amount of such excess, and the
Borrowers shall concurrently therewith deliver to the Agent an officers'
certificate (in such form and including such substance as may be requested by
the Agent) demonstrating the derivation of the additional Net Proceeds Amount
resulting in such excess.
(i) Any mandatory reduction of the Revolving Facility Commitments pursuant
to Section 2.07 shall be applied to reduce the scheduled reductions of the
Revolving Facility Commitments set forth in Section 2.07(a), first, to the
-----
scheduled reduction on January 15, 1997, second, to the scheduled reductions to
------
be made in 1996, in inverse order of maturity, and third, to the reduction on
-----
the Termination Date. Any voluntary reduction of Revolving Facility Commitments
shall be applied to reduce the scheduled reductions of Revolving Facility
Commitments set forth in Section 2.07(a) in chronological order.
SECTION 4.02. Evidence of Debt.
----------------
(a) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrowers to such
Lender resulting from each Advance owing to such Lender from time to time,
including the amounts of principal and interest payable and paid to such Lender
from time to time hereunder.
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(b) The Register maintained by the Agent pursuant to Section 11.11 shall
include a control account, and a subsidiary account for each Lender, in which
accounts (taken together) shall be recorded (i) the date and amount of each
Borrowing made hereunder, the Advances comprising each Borrowing and any
Interest Period applicable thereto, (ii) the Letters of Credit Issued by each
Issuing Lender, (iii) the terms of each Assignment and Acceptance delivered to
and accepted by it, (iv) the amount of any principal or interest due and payable
or to become due and payable from the Borrowers to each Lender hereunder, and
(v) the amount of any sum received by the Agent from the Borrowers hereunder and
each Lender's share thereof. The entries made in the Register shall be
conclusive and binding for all purposes, absent manifest error.
(c) The Borrowers agree that if, in the opinion of any Lender, a
promissory note or other evidence of debt is required, appropriate or desirable
to reflect or enforce the indebtedness of the Borrowers resulting from the
Revolving Facility Advances or Swing Line Advances made, or to be made, by such
Lender, th en upon request of such Lender the Borrowers shall promptly execute
and deliver to such Lender a promissory note substantially in the form of
Exhibit A-1 for Revolving Facility Advances and Exhibit A-2 for Swing Line
Advances, each payable to the order of such Lender in an amount equal to the
maximum amount of Revolving Facility Advances or Swing Line Advances, as the
case may be, payable or to be payable to such Lender from time to time
hereunder.
SECTION 4.03. Taxes.
-----
(a) Any and all payments by the Borrowers hereunder shall be made, in
accordance with Section 4.01, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
---------
of each Lender, the Issuing Lenders, the Designated Issuer and the Agent (each a
"Taxpayer"), taxes imposed on its income, and franchise taxes imposed on it, by
--------
the jurisdiction under the laws of which such Taxpayer is organized or any
political subdivision thereof and, in the case of each Taxpayer other than the
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction of such Taxpayer's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes,
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levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrowers shall be required by law
-----
to deduct any Taxes from or in respect of any sum payable hereunder to any
Taxpayer, (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 4.03) such Taxpayer receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrowers shall make such deductions and (iii) the Borrowers shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.
(b) In addition, the Borrowers agree to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made by the Borrowers hereunder or under any
of the other Loan Documents or from the execution or delivery by the Borrowers
of, or the registration of, or otherwise with respect to, this Agreement or the
other Loan Documents (hereinafter referred to as "Other Taxes").
-----------
(c) The Borrowers will indemnify each Lender, each Issuing Lender, the
Designated Issuer and the Agent for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 4.03) paid by such Person (as
the case may be) that relate to any payment made by the Borrowers, the execution
or delivery of this Agreement by the Borrowers or the registration of or
otherwise with respect to this Agreement or the other Loan Documents and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the
date such Person (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrowers will furnish to the Agent, at its address set forth under its name on
the signature pages hereof, the original or a certified copy of a receipt
evidencing payment thereof. The Agent shall, upon request of the Designated
Issuer or any Lender or Issuing Lender, promptly deliver a copy of such receipt
to such Person. If no Taxes are payable in respect of any payment
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hereunder or under the other Loan Documents, the Borrowers will furnish to the
Agent, at such address, a certificate from each appropriate taxing authority, or
an opinion of counsel acceptable to the Agent, in either case stating that such
payment is exempt from or not subject to Taxes.
(e) Without prejudice to the survival of any other agreement of any
Borrower hereunder, the agreements and obligations of the Borrowers contained in
this Section 4.03 shall survive the payment in full of principal and interest
hereunder and under the other Loan Documents.
SECTION 4.04. Sharing of Payments, Etc. If any Lender or Issuing
------------------------
Lender (a "Benefitted Lender") shall obtain any payment (whether voluntary,
-----------------
involuntary, through the exercise of any right of set-off, or otherwise) on
account of any Revolving Facility Advances made by it, Letters of Credit Issued
by it or its participation in any Swing Line Advance, in each case in excess of
its Revolving Facility Pro Rata Share of payments on account of such Advances or
Letters of Credit obtained by all the Lenders or Issuing Lenders, as the case
may be, such Benefitted Lender shall forthwith purchase from the other Lenders
such participations in the Obligations as shall be necessary to cause such
Benefitted Lender to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
- -------- -------
thereafter recovered from such Benefitted Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the Benefitted Lender the
purchase price to the extent of such recovery together with an amount equal to
such Lender's Revolving Facility Pro Rata Share (according to the proportion of
(i) the amount of such Lender's required repayment to (ii) the total amount so
recovered from the Benefitted Lender) of any interest or other amount paid or
payable by the Benefitted Lender in respect of the total amount so recovered.
The Borrowers agree that any Lender so purchasing a participation from another
Lender pursuant to this Section 4.04 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of any Borrower in the amount of such participation.
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SECTION 4.05. Fees and Expenses.
-----------------
(a) Revolving Facility Commitment Fee. The Borrowers agree to pay to the
---------------------------------
Agent for the account of each Lender a commitment fee on the average daily
portion of such Lender's Revolving Facility Commitment minus the sum of (i) all
-----
outstanding Advances owing to such Lender plus (ii) the L/C Liability owing to
----
such Lender at a rate per annum equal to the Commitment Fee, payable, from the
date hereof until the Termination Date, on the fifth day after the end of each
calendar quarter during the term of such Lender's Revolving Facility Commitment,
commencing with the first calendar quarter of calendar year 1996 and ending on
the Termination Date, and on the Termination Date.
In the event that any Lender assigns all or a portion of its rights and
obligations under this Agreement, it shall pay to the assignee thereof a pro
rata portion of any commitment, amendment, waiver or other fee received by such
Lender in respect of any period during which such Lender will not have a
Revolving Facility Commitment under this Agreement as a result of the
assignment.
(b) Letter of Credit Fees.
---------------------
(i) The Borrowers agree to pay to the Agent for the account of each
Issuing Lender (and allocated among the Issuing Lenders based on their
respective Revolving Facility Pro Rata Shares) the following fees with respect
to each Commercial Letter of Credit issued or increased in amount pursuant to
Article III: (A) a nonrefundable issuance fee in an aggregate amount equal to
0.125% (but, in any event, a minimum amount equal to at least $1,000) of the
face amount of such Letter of Credit (in the case of an issuance) or of the
increase in such face amount (in the case of an increase), payable on or before
the date of such issuance or increase and (B) a nonrefundable negotiation fee in
an aggregate amount equal to 0.125% of each amount drawn under such Letter of
Credit, payable on the date of presentation of the applicable draft for payment
of such amount under such Letter of Credit.
(ii) The Borrowers agree to pay to the Agent for the account of each
Issuing Lender (and allocated among the Issuing Lenders based on their
respective Revolving Facility Pro Rata Shares) a nonrefundable fee equal to, for
each Issuance of each
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Standby Letter of Credit, an aggregate amount equal to the Standby Fee on the
face amount of such Standby Letter of Credit for the period from such Issuance
to its expiration date, plus a processing fee of $100 (which shall be for the
----
account of the Agent only), payable quarterly in advance.
(c) Agency Fees. The Borrowers agree to pay to the Agent, for its sole
-----------
account and benefit, agency and documentation fees as separately agreed between
the Borrowers or Merisel Parent and the Agent.
ARTICLE V
CONDITIONS OF LENDING
SECTION 5.01. Initial Conditions Precedent. The effectiveness of this
----------------------------
Agreement is subject to the conditions precedent that:
(a) The Borrowers shall have paid all fees and other amounts payable by
the Borrowers on the Amendment Effective Date, including, without limitation,
the following: (i) the fees referred to in Section 4.05(c); (ii) all reasonable
out-of-pocket costs and expenses (including costs and expenses of travel),
printing and other costs of the Agent, the Co-Agent and the Lenders (other than
fees and expenses of legal counsel other than O'Melveny & Myers and financial
advisors (other than Price Waterhouse LLP)) (incurred in connection with the
negotiation, preparation, documentation and closing of this Agreement; (iii) the
reasonable fees and expenses of O'Melveny & Myers, counsel to the Agent; and
(iv) all amounts payable under that certain letter, dated April 13, 1996 between
the Borrowers, the Agent and the Co-Agent;
(b) The Agent shall have received the following, each dated the Amendment
Effective Date, in form and substance satisfactory to the Agent, and in
sufficient copies for each Lender:
(i) executed originals of this Agreement (executed by each
Borrower, Merisel Parent and the Majority Lenders);
(ii) for each Borrower and Merisel Parent, certified copies of the
Certificate of Incorporation of that Borrower and Merisel Parent, good
standing certificates from the Secretary of State of the States of Delaware
and California,
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and copies of that Borrower's and Merisel Parent's bylaws certified by its
respective Secretary or an Assistant Secretary;
(iii) for each Borrower and Merisel Parent, copies of the resolutions
of the Board of Directors of that Borrower and Merisel Parent approving
each Loan Document executed by that Borrower or Merisel Parent, as the case
may be, and of all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to each such Loan
Document, in each case certified by its respective Secretary or an
Assistant Secretary;
(iv) for each Borrower and Merisel Parent, a certificate of the
Secretary or an Assistant Secretary of that Borrower and Merisel Parent
certifying the names and true signatures of the officers of that Borrower
or Merisel Parent, as the case may be, authorized to sign each Loan
Document executed by that Borrower or Merisel Parent and the other
documents to be delivered by it hereunder;
(v) a favorable opinion of (1) Skadden, Arps, Slate, Meagher & Flom
special counsel for the Borrowers and Merisel Parent, in substantially the
form of Exhibit G-1 hereto and (2) McCarthy Tetrault, special counsel for
Merisel Canada, in substantially the form of Exhibit G-2 hereto, and in
each case as to such other matters as any Lender through the Agent may
reasonably request;
(vi) executed originals of an acknowledgement of Merisel Canada in
substantially the form of Exhibit L;
(vii) for Merisel Canada, certified copies of its charter documents;
(viii) for Merisel Canada, copies of the resolutions of its Board of
Directors approving the acknowledgement referred to in clause (vi) above,
and of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to such acknowledgement, in
each case certified by its Secretary or an Assistant Secretary;
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(ix) for Merisel Canada, a certificate of its Secretary or an
Assistant Secretary certifying the names and true signatures of its
officers authorized to sign the acknowledgement referred to in clause (vi)
above, and the other documents to be delivered by it hereunder; and
(x) evidence that all Excess Cash and Excess Cash Equivalents of
Merisel Parent and its Subsidiaries is held in the name of Merisel
Americas; and
(c) All of the representations and warranties of Merisel Parent contained
in Section 6.01 of this Agreement shall be true and correct;
(d) Merisel Parent, each Borrower, and Merisel Canada shall have received
all necessary consents and approvals for the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated herein,
and the Agent shall have received evidence satisfactory to it of the receipt of
such consents and approvals;
(e) The Senior Note Agreement shall have been amended in a manner
satisfactory to the Majority Lenders and counsel to the Agent and such
amendments shall be in full force and effect;
(f) The Subordinated Note Agreement shall have been amended in a manner
satisfactory to the Majority Lenders and counsel to the Agent and such amendment
shall be in full force and effect;
(g) The Borrowers shall have prepaid the Advances such that the Total RCA
Liability on the Amendment Effective Date shall not exceed $144,000,000 after
giving effect to the reduction of Commitments to take place on the Amendment
Effective Date; and
(h) The Agent shall have received such other approvals, opinions or
documents as any Lender (through the Agent) or the Agent's counsel may
reasonably request.
SECTION 5.02. Conditions Precedent to Each Borrowing and Each Issuance.
--------------------------------------------------------
The obligation of each Lender to make a Revolving Facility Advance or Swing Line
Advance on the occasion of each Borrowing or any Issuing Lender to Issue any
Letter of Credit shall be subject to the further conditions precedent that:
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(a) On the date of such Borrowing or such Issuance, the following
statements shall be true (and the giving of a Notice of Revolving Facility
Borrowing or Notice of Swing Line Borrowing and a Borrower's acceptance of the
proceeds of such Borrowing or the delivery to the Agent of an Application or
other request for Issuance of a Letter of Credit and the Issuing Lenders'
Issuance thereof (as the case may be) shall constitute a representation and
warranty by the Borrowers and Merisel Parent that on the date of such Borrowing
or such Issuance such statements are true):
(i) the representations and warranties of the Borrowers and Merisel
Parent contained in Article VI of this Agreement and the representations
and warranties in the Merisel Canada Guaranty are correct on and as of the
date of such Borrowing or such Issuance before and after giving effect to
such Borrowing or such Issuance as though made on and as of such date;
provided, however, that the representations and warranties which by their
-------- -------
terms speak as of an earlier date shall be correct on and as of such
earlier date;
(ii) no event has occurred and is continuing, or would result from
such Borrowing or the application of the proceeds therefrom or such
Issuance, which constitutes an Event of Default or an Incipient Default;
(iii) no event has occurred and is continuing, or would result from
such Borrowing or the application of the proceeds therefrom or such
Issuance, which constitutes a default under the Subordinated Note Purchase
Agreement or the Senior Note Purchase Agreement; and
(iv) such Borrowing does or the Obligations arising in connection
with such Issuance do or will, constitute Designated Senior Debt (as
defined in the Subordinated Note Purchase Agreement) under the Subordinated
Note Purchase Agreement.
(b) In the case of Letters of Credit, (i) no order, judgment or decree of
any court, arbitrator or governmental authority shall purport by its terms to
enjoin or restrain any Issuing Lender from issuing such Letter of Credit or any
law, rule or regulation applicable to any Issuing Lender or any request or
directive (whether or not having the force of law)
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from any governmental authority with jurisdiction over any Issuing Lender shall
prohibit or request that such Issuing Lender refrain from the issuance of
letters of credit generally or such Letter of Credit and (ii) each of the
conditions to Issuance of such Letter of Credit set forth in Section 3.02 shall
have been satisfied; and
(c) The Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties. Each Borrower and Merisel
------------------------------
Parent represents and warrants as follows (which representations and warranties
made by a Borrower shall be limited to such Borrower and its Subsidiaries and
other facts and circumstances known to such Borrower and such Subsidiaries):
(a) Each of Borrower, Merisel Parent and Merisel Canada is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted and is duly
licensed or qualified and in good standing as a foreign corporation in each
other jurisdiction in which its properties are located or the nature of its
activities makes such qualification necessary, except in jurisdictions where the
failure to obtain such authority or to qualify could not have a material adverse
impact on the business or financial condition of that Borrower, Merisel Parent
or Merisel Canada, as the case may be.
(b) The execution, delivery and performance by each Borrower, Merisel
Parent and Merisel Canada of the Loan Documents are within their respective
corporate powers, have been duly authorized by all necessary corporate action
and do not (i) violate any provision of their respective charters or by-laws,
(ii) violate any provision of any law or any order, judgment or decree of any
court or other governmental agency binding on or affecting any Borrower, Merisel
Parent or Merisel Canada, (iii) conflict with, result in a breach of or
constitute
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(with due notice or lapse of time or both) a default under any contractual
obligation of any Borrower, Merisel Parent or Merisel Canada where such
conflict, breach or default could have a material adverse impact on any
Borrower, Merisel Parent or Merisel Canada or on the ability of any Borrower,
Merisel Parent or Merisel Canada to perform its Obligations hereunder or under
any Loan Document to which it is a party, (iv) result in or require the creation
of any Lien upon or with respect to any of the properties of any Borrower,
Merisel Parent or Merisel Canada or (v) require any approval of stockholders or
any approval or consent of any Person under any contractual obligation of any
Borrower, Merisel Parent or Merisel Canada or of any trustee or creditor of or
any investor in any Borrower, Merisel Parent or Merisel Canada, other than
approvals or consents that have been previously obtained and disclosed in
writing to the Agent.
(c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by any Borrower, Merisel Parent or
Merisel Canada of any Loan Document to which it is or will be a party.
(d) This Agreement is, and each other Loan Document when delivered
hereunder to which the Borrower, Merisel Parent or Merisel Canada is a party,
will be, legal, valid and binding obligations of that Borrower, Merisel Parent
or Merisel Canada, enforceable against that Borrower, Merisel Parent or Merisel
Canada, in accordance with their respective terms.
(e) The consolidated balance sheet of Merisel Parent and its consolidated
Subsidiaries as at December 31, 1995, and the related consolidated statement of
income and retained earnings of Merisel Parent and its consolidated Subsidiaries
for the fiscal year then ended, copies of which have been furnished to each
Lender, fairly present the financial condition of Merisel Parent and its
consolidated Subsidiaries as at such dates and the results of the operations of
Merisel Parent and its consolidated Subsidiaries for the periods ended on such
dates, all in accordance with generally accepted accounting principles
consistently applied. Except as set forth in Schedule I, on the date hereof,
neither Borrower or Merisel Parent nor any of their respective Subsidiaries has
any material contingent obligation, contingent liability or liability for any
lease, long-term lease or forward or long-term commitment out of the ordinary
course of
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business that is not reflected in the foregoing statements or the notes thereto.
(f) Except as set forth in written information provided to the Lenders
prior to April 15, 1996, since December 31, 1995, there has been no material
adverse change in the business, earnings, prospects, properties, condition
(financial or otherwise) or operations of any Borrower, Merisel Parent or
Merisel Canada.
(g) Other than as set forth on Schedule II hereto, there is no pending or,
to the knowledge of any of the officers of any Borrower, Merisel Parent or
Merisel Canada, threatened action or proceeding affecting any Borrower, Merisel
Parent or Merisel Canada before any court, governmental agency or arbitrator,
which may materially adversely affect the financial condition or operations of
any Borrower, Merisel Parent or Merisel Canada or the ability of any Borrower to
make payment of or perform the Obligations or the ability of Merisel Parent or
Merisel Canada to perform its obligations under any Loan Document to which it is
a party. None of the Borrowers, Merisel Parent or Merisel Canada is in default
with respect to any order, writ, injunction, judgment or decree of any court or
other governmental or public authority or agency or arbitration or arbitration
panel binding on such Person where such default could have a material adverse
impact on any Borrower, Merisel Parent or Merisel Canada or on the ability of
any Borrower to perform its Obligations hereunder or the ability of any
Borrower, Merisel Parent or Merisel Canada to perform its Obligations under any
Loan Document to which it is a party.
(h) No proceeds of any Advance will be used to acquire any security in any
transaction which is subject to Sections 13 and 14 of the Securities Exchange
Act of 1934.
(i) None of the Borrowers or their respective Subsidiaries is principally
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and none of the Borrowers or their
respective Subsidiaries owns any margin stock. Margin stock owned by Merisel
Parent represents less than 25% in value of the total value of all assets owned
by Merisel Parent.
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(j) Each Borrower and Merisel Parent and their respective Subsidiaries
have filed all United States federal tax returns and all other tax returns which
are required to be filed and have paid all taxes due pursuant to said returns or
pursuant to any assessment received by that Borrower, Merisel Parent or any such
Subsidiary, except such taxes, if any, as are being contested in good faith and
as to which reasonably adequate reserves have been provided. The charges,
accruals and reserves on the books of each Borrower and Merisel Parent and their
respective Subsidiaries in respect of any taxes or other governmental charges
are reasonably adequate.
(k) Set forth on Schedule III hereto is a complete and accurate list of
all of Merisel Parent's and each Borrower's Subsidiaries, showing as of the date
hereof (as to each Subsidiary) the jurisdiction of its incorporation, the number
of shares of each class of capital stock authorized, and the number outstanding,
and the percentage of each class of capital stock owned by Merisel Parent, that
Borrower or any other Subsidiary, which capital stock is owned free and clear of
all Liens; all of the issued and outstanding shares of capital stock of the
Borrowers and such Subsidiaries have been duly authorized and validly issued and
are fully paid and non-assessable.
(l) None of the Borrowers, Merisel Parent or Merisel Canada is a party to
or is subject to any contracts, long term commitments, or other agreements or
any charter or other restriction that materially and adversely affects the
business, earnings, prospects, properties, financial condition or operations of
any Borrower, Merisel Parent or Merisel Canada and no event of default or any
event that with notice or the passage of time could become an event of default
has occurred and is continuing under any agreement to which any Borrower,
Merisel Parent or Merisel Canada is subject or is a party or by which any of
their respective assets are bound where such default could have a material
adverse impact on any Borrower, Merisel Parent or Merisel Canada or on the
ability of any Borrower to perform its Obligations hereunder or the ability of
Merisel Parent or any such Subsidiary to perform its obligations under any Loan
Document to which it is a party.
(m) No information, exhibit or report furnished by any Borrower, Merisel
Parent or Merisel Canada to the Agent or to any Lender in connection with the
negotiation of the Loan Documents
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contained as of the time delivered any material misstatement of fact or omitted
to state a material fact or any fact necessary to make the statements contained
therein not misleading. With respect to all projections furnished by or on
behalf of any Borrower, Merisel Parent or Merisel Canada and made available to
the Agent or any Lender relating to the business, prospects, properties,
financial condition or operations of any Borrower, Merisel Parent or Merisel
Canada: (i) all facts stated as such therein were true and complete in all
material respects as of the date of such projections, (ii) all facts upon which
the projections therein contained are based were true and complete in all
material respects as of the date of such projections and no material fact was
omitted from that basis, and (iii) all estimates and assumptions made on that
basis are made in good faith and believed to be reasonable at the time made, it
being recognized by the Lenders that such projections as to future events are
not to be viewed as facts and that actual results during the period or periods
covered thereby may differ from such projections.
(n) Each Borrower, Merisel Parent and Merisel Canada has good and
marketable title to their respective material properties and all property
reflected in the most recent balance sheet referred to in Section 6.01(e) (other
than assets disposed of in the ordinary course of business since the date of
such balance sheet) or, in the case of material property in which any Borrower,
Merisel Parent or Merisel Canada has a right pursuant to a license or other
agreement, the Borrower, Merisel Parent or Merisel Canada has the ability to
distribute such property, subject only to customary restrictions, and in each
case the same are not subject to any Liens (including Liens of conditional
vendors) of any nature whatsoever other than the Liens as permitted by this
Agreement. Each Borrower, Merisel Parent and Merisel Canada has the right to,
and does, enjoy peaceful and undisturbed possession under all material leases
under which it is leasing property. All such material leases are valid,
subsisting and in full force and effect. None of the Borrower, Merisel Parent
or Merisel Canada has material personal property stored in a self-service
storage facility.
(o) Each Borrower, Merisel Parent and Merisel Canada possess all necessary
trademarks, tradenames, service marks, franchises copyrights, patents, patent
rights, permits and licenses to conduct their respective businesses as now
operated,
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without any burdensome restrictions or any known conflict with the rights of
others except where the failure to do so could not have a material adverse
impact on the business or financial condition of any Borrower, Merisel Parent or
Merisel Canada.
(p) At the date of this Agreement, there are no outstanding letters of
credit for which any Borrower or any of its Subsidiaries is the account party.
(q) (i) Merisel Parent and each of its ERISA Affiliates is in compliance
in all material respects with any applicable provisions of ERISA and the
regulations and published interpretations thereunder with respect to all
Employee Benefit Plans.
(ii) No Termination Event has occurred or is reasonably expected to
occur with respect to any Pension Plan.
(iii) The excess of the actuarial present value of all benefit
liabilities under all Pension Plans (excluding in such computation Pension Plans
with assets greater than benefit liabilities) over the fair market value of the
assets allocable to such benefit liabilities are not greater than $250,000. For
purposes of the preceding sentence, the terms "actuarial present value" and
"benefit liabilities" shall have the meanings specified in Section 4001 of
ERISA.
(r) Each Borrower, Merisel Parent and each of their respective
Subsidiaries is in compliance with all statutes, laws and ordinances and
governmental rules and regulations to which it is subject, the violation of
which, either individually or in the aggregate, could materially adversely
affect the business, earnings, prospects, properties or condition (financial or
otherwise) of any Borrower, Merisel Parent or Merisel Canada.
(s) Each Borrower, Merisel Parent and Merisel Canada has insurance, with
financially sound and reputable insurers, against such casualties and
contingencies of such types and in such amounts as is customary in the case of
corporations engaged in the same or a similar business or having similar
properties similarly situated.
(t) None of the Borrowers or Merisel Parent or any of their respective
Subsidiaries has received any written notice from any
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governmental authority or any third party regarding the violation of any
Hazardous Materials Laws which could reasonably be expected to have a material
adverse effect on the business, earnings, prospects, properties or condition
(financial or otherwise) of any Borrower, Merisel Parent or Merisel Canada. To
the best of each Borrower's and Merisel Parent's respective knowledge, none of
the properties of any Borrower or Merisel Parent or any of their respective
Subsidiaries is in violation of any Hazardous Materials Laws, where such
violation could reasonably be expected to have a material adverse effect on the
business, earnings, prospects, properties or condition (financial or otherwise)
of any Borrower, Merisel Parent or Merisel Canada. To the best of each
Borrower's and Merisel Parent's respective knowledge, there is no emission,
discharge, release or threatened release, generation, storage, transportation,
disposal, or presence of Hazardous Materials on any property owned or leased by
any Borrower, Merisel Parent or any such Subsidiary which is reasonably likely
to materially adversely affect the business or credit of any Borrower or its
ability to perform under the Loan Documents or the ability of Merisel Parent or
Merisel Canada to perform its obligations under any Loan Document to which it is
a party.
(u) None of the Borrowers, Merisel Parent or Merisel Canada is a "public
utility company" or a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended; or a "public utility" within the meaning of the
Federal Power Act, as amended. None of the Borrowers, Merisel Parent or Merisel
Canada is an "investment company" or an "affiliated person" of an "investment
company" or a company "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended. None of the
Borrowers, Merisel Parent or Merisel Canada is an "investment adviser" or an
"affiliated person" of an "investment adviser" as such terms are defined in the
Investment Advisers Act of 1940, as amended. None of the Borrowers, Merisel
Parent or Merisel Canada is subject to any statute, law or ordinance or
governmental rule or regulation which prohibits or otherwise limits its ability
to incur Debt or guarantee the payment of Debt incurred by other Persons.
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(v) All amounts outstanding under this Agreement constitute "Designated
Senior Debt" for purposes of the Subordinated Note Purchase Agreement.
(w) Each Borrower and each of their respective Subsidiaries is Solvent.
ARTICLE VII
COVENANTS OF THE BORROWERS AND MERISEL PARENT
SECTION 7.01. Affirmative Covenants. So long as any Advance or L/C
---------------------
Liability shall remain unpaid or any Lender shall have any Commitment hereunder,
each of the Borrowers and Merisel Parent will (in the case of the Borrowers, so
far as such covenants are within the control and discretion of or apply to that
particular Borrower), unless the Majority Lenders shall otherwise consent in
writing:
(a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries
-------------------------
to comply with all applicable laws, rules, regulations and orders (including,
without limitation, any Hazardous Materials Laws) noncompliance with which could
materially adversely affect the business or credit of any Borrower or Merisel
Parent or its ability to perform under the Loan Documents or the ability of any
of such Subsidiaries to perform its obligations under any Loan Document to which
it is a party.
(b) Corporate Existence. Take and fulfill, and cause each of its
-------------------
Subsidiaries to take and fulfill, all actions and conditions necessary to
preserve and keep in full force and effect its existence, rights and privileges
as a corporation and will not liquidate or dissolve (except as permitted in
Section 7.02(e)), and will take and fulfill, and cause each of its Subsidiaries
to take and fulfill, all actions and conditions necessary to qualify to do
business as a foreign corporation in each jurisdiction in which the conduct of
its business or the ownership or leasing of its properties requires such
qualification except where failure to do so could not have a material adverse
effect on any Borrower or Merisel Parent or any such Subsidiary or on any
Borrower's, Merisel Parent's or any such Subsidiary's ability to perform its
obligations under any Loan Document to which it is a party.
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(c) General Maintenance of Properties and Business, etc. Maintain and
----------------------------------------------------
cause each of its Subsidiaries to maintain its property in good condition
(ordinary wear and tear excepted) and make all reasonable and necessary
renewals, replacements, additions and improvements thereof and thereto, so that
the business carried on in connection therewith may be conducted properly at all
times; and maintain and cause each of its Subsidiaries to maintain, with
financially sound insurers of nationally recognized stature and responsibility,
insurance with respect to its property and business of such a nature, with such
terms and in such amounts, as is customary in the case of corporations engaged
in the same or similar businesses similarly situated against loss or damage of
the kinds and in the amounts customarily insured against and for by such
corporations, and carry or cause to be carried, with such insurers in customary
amounts, such other insurance, including public liability insurance, as is
usually carried by such corporations.
(d) Inspection. Permit any Lender, by its representatives, agents or
----------
attorneys, (i) to examine books of account, records, reports and other papers of
any Borrower or Merisel Parent or their respective Subsidiaries, to make copies
and take extracts from any thereof, (ii) with the consent of, in the case of the
Borrowers or their Subsidiaries, the Borrowers and, in the case of Merisel
Parent and any of its Subsidiaries other than the Borrowers and their
Subsidiaries, Merisel Parent, not to be unreasonably withheld, to discuss the
affairs, finances and accounts of the Borrowers and Merisel Parent and their
respective Subsidiaries with its independent certified public accountants (and
by this provision the Borrowers and Merisel Parent each hereby authorizes said
accountants to discuss with any such Lender the finances and accounts of the
Borrowers and Merisel Parent and their respective Subsidiaries) and (iii) to
visit and inspect, all upon reasonable notice, at reasonable times during normal
business hours the properties of the Borrowers and Merisel Parent or any
Subsidiary. Each such inspection shall be at the expense of the Person making
the inspection, unless such inspection shall be made during the continuance of
an Event of Default (in which event, the expense of such inspection shall be
borne by the Borrowers). Notwithstanding the foregoing sentence, it is
understood and agreed by the Borrowers that all expenses incurred by any
Borrower or Merisel Parent or any of their respective Subsidiaries, any officers
and employees thereof and the independent certified public accountants thereof
in
71
<PAGE>
connection with any such inspection shall be expenses payable by the Borrowers
and shall not be expenses of the Person making the inspection.
(e) Keeping of Books, Separate Records, etc. (i) Keep, and cause each of
----------------------------------------
its Subsidiaries to keep, proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of each Borrower or Merisel Parent and each of its respective
Subsidiaries in accordance with generally accepted accounting principles
consistently applied and consistent with prudent business practices; provided,
--------
however, that (y) each Borrower and its respective Subsidiaries shall maintain
- -------
its assets and transactions separately from those of both Merisel Parent and its
other Subsidiaries (including, without limitation, Merisel FAB) and the other
Borrower and its Subsidiaries (collectively, the "Other Corporations") and shall
------------------
reflect such assets and transactions in financial statements separate and
distinct from those of the Other Corporations and shall evidence such assets and
transactions by appropriate entries in books and records separate and distinct
from those of the Other Corporations; and (z) except as otherwise expressly
permitted by this Agreement, each Borrower and its respective Subsidiaries shall
at all times provide for their own operating expenses and liabilities from their
own funds other than certain expenses and liabilities relating to basic
corporate overhead which may be allocated between the Borrowers and their
Subsidiaries and the Other Corporations; and (ii) except as permitted by Section
7.02(k), collect its accounts receivable and sell its inventory only in the
ordinary course of its business.
(f) Maintenance of Merisel Parent's Debt Equivalents/ Tangible Net Worth
--------------------------------------------------------------------
Ratio. Maintain a ratio of (i) Consolidated Debt Equivalents of Merisel Parent
- -----
to (ii) Consolidated Adjusted Tangible Net Worth of Merisel Parent at any time
during the periods indicated below of not more than the correlative amounts
indicated below.
72
<PAGE>
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
1st Quarter of 1996 30 : 1.00
2nd Quarter of 1996 50 : 1.00
3rd Quarter of 1996 80 : 1.00
4th Quarter of 1996 50 : 1.00
1st Quarter of 1997 50 : 1.00
</TABLE>
(g) Maintenance of Merisel Parent's Consolidated Adjusted Tangible Net
------------------------------------------------------------------
Worth. Maintain Consolidated Adjusted Tangible Net Worth of Merisel Parent at
- -----
all times during the periods indicated below of not less than the correlative
amounts indicated below:
<TABLE>
<CAPTION>
Consolidated Adjusted
Period Tangible Net Worth
------ ------------------
<S> <C>
1st Quarter of 1996 $25,000,000
2nd Quarter of 1996 $12,000,000
3rd Quarter of 1996 $ 8,000,000
4th Quarter of 1996 $14,000,000
1st Quarter of 1997 $15,000,000
</TABLE>
(h) Minimum Consolidated EBITSDA of Merisel Parent. The aggregate
----------------------------------------------
Consolidated EBITSDA of Merisel Parent as of the last date of the periods
indicated below shall not be less than the correlative amounts indicated below:
<TABLE>
<CAPTION>
Period Consolidated EBITSDA
------ --------------------
<S> <C>
1st Quarter of 1996 $ 8,500,000
2nd Quarter of 1996 $ 6,250,000
3rd Quarter of 1996 $13,000,000
4th Quarter of 1996 $23,000,000
1st Quarter of 1997 $10,000,000
</TABLE>
(i) Maintenance of Merisel Parent's Fixed Charge Coverage Ratio.
-----------------------------------------------------------
Maintain, for each period indicated below, a ratio of (i) Consolidated EBITSDA
of Merisel Parent to (ii) Consolidated Interest Charges of Merisel Parent, of
not less than the correlative amount indicated below:
73
<PAGE>
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
First Quarter of 1996 0.50 : 1.00
Second Quarter of 1996 0.40 : 1.00
Third Quarter of 1996 0.80 : 1.00
Fourth Quarter of 1996 1.45 : 1.00
First Quarter of 1997 0.60 : 1.00
</TABLE>
(j) Maintenance of Inventory Turnover Ratio. Maintain, for each period
---------------------------------------
indicated below, a ratio of (i) the Consolidated aggregate cost of sales of
Merisel Parent at the end of such period multiplied by four to (ii) the Average
-------------
Consolidated Net Inventory of Merisel Parent, of not less than the correlative
amount indicated below:
<TABLE>
<CAPTION>
Minimum Permitted
Period Inventory Turnover
------ ------------------
<S> <C>
First Quarter of 1996 10.00
Second Quarter of 1996 10.25
Third Quarter of 1996 10.50
Fourth Quarter of 1996 10.75
First Quarter of 1997 10.75
</TABLE>
(k) Minimum Ratio of Accounts Payable to Inventory. Maintain, for each
----------------------------------------------
period indicated below, a ratio of the Consolidated amount of accounts payable
of Merisel Parent on the last day of such period to the Consolidated amount of
inventory of Merisel Parent on the last day of such period, of not less than the
correlative ratio indicated below (the "A/P Inventory Ratio")
-------------------
<TABLE>
<CAPTION>
Minimum
Period Permitted Ratio
------ ---------------
<S> <C>
First Quarter of 1996 0.90:1.00
Second Quarter of 1996 0.90:1.00
Third Quarter of 1996 0.90:1.00
Fourth Quarter of 1996 0.90:1.00
First Quarter of 1997 0.90:1.00
</TABLE>
74
<PAGE>
; provided that Merisel Parent shall maintain an A/P Inventory Ratio equal to or
--------
greater than 1.00:1.00 for one out of each two consecutive periods indicated
above.
(l) Minimum Accounts Payable.
------------------------
Maintain, on the last day of each period indicated below, the
Consolidated amount of accounts payable of Merisel Parent of not less than the
correlative amount indicated below:
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
First Quarter of 1996 $ 475,000,000
Second Quarter of 1996 $ 475,000,000
Third Quarter of 1996 $ 475,000,000
Fourth Quarter of 1996 $ 575,000,000
First Quarter of 1997 $ 575,000,000
</TABLE>
(m) Reporting Requirements. Furnish to each Lender the following:
----------------------
(i) promptly after (Y) the occurrence of each Event of Default or
Incipient Default or any development (an "Adverse Development"), financial or
-------------------
otherwise, including, without limitation, litigation, arbitration proceedings
and regulatory proceedings, which could reasonably be expected to materially
adversely affect the business, properties or affairs of any Borrower, Merisel
Parent or Merisel Canada or the ability of any Borrower, Merisel Parent or
Merisel Canada to make payment of or perform its obligations under the Loan
Documents, or (Z) any change by any rating agency (including any insurance
rating agency) in the rating of any publicly-held long-term Debt of Merisel
Parent or either Borrower, a statement of the Treasurer(s) of Merisel Parent and
the Borrowers setting forth details of such Event of Default or Incipient
Default or Adverse Development and, in the case of clause (Y), the action which
the Borrowers or Merisel Parent proposes to take with respect thereto;
(ii) as soon as available and in any event within 20 days after the
end of each month a written report in substantially the form of Exhibit H
setting forth (W) with respect to each of Merisel Parent, Merisel Canada,
Merisel FAB and each Borrower, the amount of sales for such month and
75
<PAGE>
accounts receivable, inventory, accounts payable (which shall be determined from
the Company's internal financial records) and intercompany loans as at the last
day of such month, and Consolidated Debt Equivalents of Merisel Parent as at the
last day of such month, (X) a listing of all amendments and waivers of the
Merisel Parent Debt, the Senior Note Purchase Agreement, the Senior Notes, the
Subordinated Note Purchase Agreement, the Subordinated Notes, the Existing
Receivables Programs and instruments evidencing Debt of Merisel Parent, the
Borrowers and their Subsidiaries in excess of $5,000,000, during such month and
(Y) a listing of Receivables Programs and instruments evidencing Debt of Merisel
Parent, the Borrowers or their Subsidiaries in excess of $5,000,000 entered into
during such month and (Z) the amount of Net Europe Debt and Net FAB Debt, in
each case as of the last day of such month. The Borrowers and Merisel Parent
represent and warrant that the information described in clause (X) set forth in
such report shall be prepared in good faith and in reliance on the best
information available at the time so prepared. The Lenders acknowledge that the
information described in clauses (W), (X) (with respect to the listing of
instruments evidencing Debt in excess of $5,000,000) and (Y) shall be
preliminary information subject to adjustment and may be materially different
from the information contained in the reports and statements to be provided
under Sections 7.01(m)(iii) and 7.01 (m)(iv) hereof, and none of Merisel Parent,
the Borrowers nor their respective Subsidiaries in any way certifies or warrants
that such reports reflect accurately any information relevant to the performance
or financial condition of any of them.
(iii) as soon as available and in any event within 50 days after
the end of each of the first three fiscal quarters in each fiscal year, (A)
consolidated and consolidating balance sheets of Merisel Parent and its
consolidated Subsidiaries as of the end of such fiscal quarter and consolidated
and consolidating statements of income and retained earnings of Merisel Parent
and its consolidated Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such fiscal quarter, and (B)
consolidated balance sheets of each Borrower and its respective Subsidiaries as
of the end of such fiscal quarter and consolidated statements of income and
retained earnings of that Borrower and its Subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the end of
such fiscal quarter, in the case of clauses (A) and
76
<PAGE>
(B), all in reasonable detail and duly certified (subject to year-end audit
adjustments) by the Treasurer(s) of Merisel Parent and the Borrowers as having
been prepared in accordance with generally accepted accounting principles
consistently applied (other than the absence of footnotes), together with (X) a
certificate of each such officer stating that no Event of Default or Incipient
Default or Adverse Development has occurred and is continuing or, if an Event of
Default or Incipient Default or Adverse Development has occurred and is
continuing, a statement as to the nature thereof and the action which Merisel
Parent or the Borrowers propose to take with respect thereto; and (Y) a schedule
in form and substance satisfactory to the Agent, substantially in the form of
Exhibit I hereto, of the computations used in determining, as of the end of such
fiscal quarter, compliance with the covenants contained in Sections 7.01(f),
(g), (h), (i), (j), (k) and (l) and Sections 7.02(b) (as to Net Europe Debt),
(d), (f)(iii), (h)(v), (i) and (j) of this Agreement;
(iv) as soon as available and in any event within 95 days after the
end of each fiscal year of Merisel Parent, a copy of the annual audit report for
such year for Merisel Parent and its consolidated Subsidiaries, including
therein consolidated balance sheets of Merisel Parent and its consolidated
Subsidiaries as of the end of such fiscal year and consolidated statements of
income and retained earnings and of source and application of funds of Merisel
Parent and its consolidated Subsidiaries for such fiscal year, together with a
consolidating balance sheet of Merisel Parent and its Subsidiaries as of the end
of such fiscal year and consolidating statements of income and retained earnings
and of source and application of funds of Merisel Parent and its Subsidiaries
for such fiscal year, which consolidated balance sheets and financial statements
are certified in a manner acceptable to the Majority Lenders by independent
public accountants of recognized standing acceptable to the Majority Lenders and
which consolidating balance sheets and financial statements are certified in a
manner acceptable to the Majority Lenders by the Treasurer of Merisel Parent,
together with (A) a certificate of such accounting firm to the Agent stating
that in connection with their audit examination, nothing has come to their
attention that caused them to believe that Merisel Parent or its Subsidiaries
failed to comply with the terms, covenants, provisions or conditions of Sections
7.01(f), 7.01(g), 7.01(h), 7.01(i), 7.01(j), 7.01(k), 7.01(l), 7.01(n) (as
<PAGE>
to income or profits), 7.01(q), 7.02(b) (as to Net Europe Debt), 7.02(d),
7.02(f)(iii), 7.02(h)(v), 7.02(i), 7.02(j) and 7.02(q) inclusive of this
Agreement insofar as they relate to financial and accounting matters (which
certificate may state that such audit examination was not directed primarily
toward obtaining knowledge of non-compliance with such sections); and (B) a
schedule in form and substance satisfactory to the Agent, substantially in the
form of Exhibit I hereto, of the computations used in determining, as of the end
of such fiscal year, compliance with the covenants contained in Sections
7.01(f), (g), (h), (i), (j), (k) and (l) and Sections 7.02(b) (as to Net Europe
Debt), (d), (f)(iii), (h)(v), (i) and (j) of this Agreement;
(v) as soon as available and in any event within 95 days after the
end of each fiscal year of each Borrower, consolidated balance sheets of that
Borrower and its respective Subsidiaries as of the end of such fiscal year and
consolidated statements of income and retained earnings and of source and
application of funds of that Borrower and its Subsidiaries for such fiscal year,
which consolidated balance sheets and financial statements are certified in a
manner acceptable to the Majority Lenders by the Treasurer of that Borrower;
provided, however, that if any of the foregoing have been the subject of an
- -------- -------
audit separate to the audit described in Section 7.01(m)(iv) by independent
public accountants (provided that such accountants shall be the same accounting
--------
firm as referred to in Section 7.01(m)(iv), unless otherwise agreed by the
Majority Lenders), then the same shall be delivered with a certification of such
accountants in a manner acceptable to the Majority Lenders;
(vi) within 180 days after the close of each fiscal year, a statement
of the unfunded liabilities of each Pension Plan, if any, certified as correct
by an actuary enrolled under ERISA;
(vii) promptly after the filing or receiving thereof, copies of
all reports and notices with respect to any "Reportable Event" as defined in
Title IV of ERISA which Merisel Parent or any of its Subsidiaries files under
ERISA with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which Merisel Parent or any of
its Subsidiaries receives from such Corporation;
78
<PAGE>
(viii) as soon as practicable, copies of all financial statements,
reports, notices and proxy statements sent or made available generally by any
Borrower or Merisel Parent to its public security holders or by any Subsidiary
of any Borrower or Merisel Parent to its public security holders, of all regular
and periodic reports and all registration statements, proxy statements and
prospectuses, if any, filed by any Borrower or Merisel Parent or any of their
respective Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental authority succeeding to any of its
functions; and of all press releases and other statements made available
generally by any Borrower or Merisel Parent or any such Subsidiary to the public
concerning material developments in the business of any Borrower or Merisel
Parent or any such Subsidiary;
(ix) promptly upon becoming aware of the occurrence of or forthcoming
occurrence of any (a) Termination Event, or (b) "prohibited transaction," as
such term is defined in Section 4975 of the Internal Revenue Code or Section 406
of ERISA, in connection with any Employee Benefit Plan or any trust created
thereunder, a written notice specifying the nature thereof, what action Merisel
Parent or any Borrower has taken, is taking or proposes to take with respect
thereto, and, when known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor, or the Pension Benefit Guaranty Corporation
with respect thereto;
(x) with reasonable promptness copies of (a) all notices received by
Merisel Parent or any of its ERISA Affiliates of the Pension Benefit Guaranty
Corporation's intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan; (b) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by Merisel Parent or
any of its ERISA Affiliates with the Internal Revenue Service with respect to
each Pension Plan; and (c) all notices received by Merisel Parent or any of its
ERISA Affiliates from a Multiemployer Plan sponsor concerning the imposition or
amount of withdrawal liability pursuant to Section 4202 of ERISA;
(xi) with reasonable promptness, notice to the Agent in writing of (a)
any release, spill, discharge or emission by any Borrower or Merisel Parent or
any of their respective Subsidiaries or on or from its properties of any
Hazardous
79
<PAGE>
Materials into the environment that must be reported to any federal, state,
provincial or local government or regulatory agency under any applicable
Hazardous Materials Laws, (b) any remedial action taken by any Borrower or
Merisel Parent or their respective Subsidiaries in response to (x) the presence
of Hazardous Materials on, under or about any of its properties that could be
reasonably likely to materially adversely affect the business or credit of any
Borrower or Merisel Parent or the ability of any Borrower or Merisel Parent or
any of their respective Subsidiaries to perform under the Loan Documents or (y)
Hazardous Materials Claims, and (c) the discovery by any Borrower or Merisel
Parent or any of their respective Subsidiaries of any occurrence or condition on
any real property adjoining or in the vicinity of property owned or leased by
any Borrower or Merisel Parent or such Subsidiaries that could reasonably be
expected to cause such property or any part thereof to be classified as "border
zone property", or to otherwise be subject to any restrictions on the ownership,
occupancy, transferability or use thereof under any Hazardous Materials Laws;
(xii) with reasonable promptness, copies of all material communications
to or from any Borrower or Merisel Parent or any of their respective
Subsidiaries with federal, state and local governments or agencies relating to
Hazardous Materials Laws and all communications to or from any Borrower or
Merisel Parent or any of their respective Subsidiaries relating to Hazardous
Materials Claims;
(xiii) within 60 days after the beginning of each fiscal year,
projected consolidated balance sheets, consolidated statements of income and
consolidated cash flows from operations for each Borrower and its respective
Subsidiaries, for such fiscal year on a fiscal quarter by fiscal quarter basis;
(xiv) promptly upon any officer of any Borrower or Merisel Parent
obtaining knowledge that any Person has given any notice to any Borrower or
Merisel Parent or any of their respective Subsidiaries or taken any other action
with respect to a claimed default or event or condition of the type referred to
in Section 8.01(e), a written notice specifying the notice given or action taken
by such Person and the nature and period of existence of such claimed default,
event or condition, and what
80
<PAGE>
action the Borrower or Merisel Parent has taken, is taking and proposes to take
with respect thereto;
(xv) not less than three Business Days prior to the delivery to any
holder of a Subordinated Note by Merisel Americas or any of its Subsidiaries of
any notice, communication or other information pursuant to Section 7.03, 10 or
11.03 of the Subordinated Note Purchase Agreement or of any other material
notice or communication under the Subordinated Note Purchase Agreement, copies
of such notice, communication or other information, and contemporaneously with
the delivery to any holder of a Senior Note by Merisel Americas or any of its
Subsidiaries of any notice, communication or other information pursuant to
Sections 6.17 or 7.2 of the Senior Note Purchase Agreement, or any other
material notice of communication made under the Senior Note Purchase Agreement,
copies of such notice, communication or other information;
(xvi) immediately upon receipt by Merisel Americas or any of its
Subsidiaries of any notice or communication from any holder of a Subordinated
Note pursuant to Section 7.01(b), 11.01 or 11.04 of the Subordinated Note
Purchase Agreement or from any holder of a Senior Note pursuant to Sections 7.3
or 7.4 of the Senior Note Purchase Agreement, or of any other material notice or
communication from any holder of a Subordinated Note or from any holder of
Senior Note or any trustee therefor, copies of such notice or communication, or
if such notice or communication was made orally, a written notice describing
such oral notice or communication;
(xvii) immediately upon delivery by any Borrower or Merisel Parent
or any of their respective Subsidiaries of any written notice or communication
to any holder of a Subordinated Note, or to any holder of a Senior Note, copies
of such communication;
(xviii) immediately upon receipt by any Borrower or Merisel Parent
or any of their respective Subsidiaries of any notice or communication relating
to a default or termination of any material real property lease with respect to
which the landlord has not agreed in writing to provide the Agent with notice of
any such default or termination, copies of such communication, or if such notice
or communication was made
81
<PAGE>
orally, a written notice describing such oral notice or communication;
(xix) within 5 Business Days of completion of the response of
Merisel Parent and the Borrowers to any comment letter submitted by independent
certified public accountants to Merisel Parent, the Borrowers or management in
connection with their annual audit of the financial statements of Merisel Parent
and its Subsidiaries or a Borrower and its Subsidiaries, a copy of such comment
letter together with copies of all responses of Merisel Parent and the Borrowers
to such comment letter;
(xx) on the first Business Day of each week, a written report
specifying the cash balances of Merisel Parent and the location of such cash
balances (by bank and account number) and the consolidated cash balances of the
U.S. Subsidiaries of Merisel Parent (excluding Merisel Latin America, Inc.), in
each case as of the prior Business Day, and, on a monthly basis, a written
report delivered within 10 days of Merisel Parent receiving such information
from its Subsidiaries, specifying the cash balances (in accordance with GAAP and
company prepared monthly reporting practices) of Merisel Parent, each Borrower
and their respective Subsidiaries;
(xxi) such other requests for data as Price Waterhouse LLP or such
other financial advisor to the Agent (or the Agent's counsel) shall reasonably
request; and
(xxii) such other information respecting the business, properties or the
condition or operations, financial or otherwise, of any Borrower or Merisel
Parent or any of their respective Subsidiaries as any Lender through the Agent
may from time to time reasonably request.
(n) Payment of Taxes. Pay and discharge, and cause its respective
----------------
Subsidiaries to pay and discharge, promptly when due all taxes, assessments and
governmental charges and levies payable by it which are imposed upon it, its
income or profits or any of its properties, before the same shall become
delinquent; provided, however, that none of the foregoing need be paid while the
-------- -------
same is being contested in good faith by appropriate proceedings diligently
conducted so long as adequate reserves shall have been established in accordance
with generally accepted accounting principles with respect thereto, title of the
Borrower
82
<PAGE>
or Merisel Parent or its Subsidiary, as the case may be, to the particular
property shall not be divested thereby and its right to use the particular
property shall not be materially adversely affected thereby.
(o) Receivables Programs. Use, and cause its respective Subsidiaries to
--------------------
use, reasonable best efforts to enter into Receivables Programs.
(p) Maintain Cash in Name of Merisel Americas. Deposit and maintain, and
-----------------------------------------
cause its respective Subsidiaries to deposit and maintain, all Excess Cash and
Excess Cash Equivalents in the name of Merisel Americas.
(q) Use of Proceeds of Asset Sales, etc. by Merisel FAB. Cause Merisel
---------------------------------------------------
FAB to apply all Net Asset Sale Proceeds of any Asset Sale of Merisel FAB and
all Net Securities Proceeds from the issuance of equity Securities of Merisel
FAB to acquire or construct property or assets in lines of business of Merisel
Parent and its Subsidiaries on October 24, 1994; provided that if any Net Asset
Sale Proceeds are not so applied, Merisel Parent shall cause Merisel FAB to
retain such Net Asset Sale Proceeds for 360 days after the related Asset Sale.
(r) Compliance with Letter Agreement. Comply with the provisions
--------------------------------
contained in that certain letter, dated April 14, 1996, from the Borrowers to
the Agent.
(s) Further Assurances. At any time or from time to time upon the request
------------------
of the Agent, execute and deliver such further documents and do such other acts
and things as the Agent may reasonably request in order to effect fully the
purposes of this Agreement and the other Loan Documents and to provide for
payment of the Revolving Facility Advances made hereunder and other Obligations
and interest thereon in accordance with the terms of this Agreement.
The Lenders hereby waive compliance with Section 7.01(f), Section 7.01(g),
Section 7.01(h), Section 7.01(i), Section 7.01(j), Section 7.01(k) and Section
7.01(l) of the Prior Credit Agreement for the period from October 1, 1995
through December 30, 1995 and hereby agree that all Sections of 7.01 and 7.02 of
the Prior Credit Agreement shall be deemed amended as set forth in this
Agreement as of December 31, 1995.
83
<PAGE>
SECTION 7.02. Negative Covenants. So long as any Advance or L/C Liability
------------------
shall remain unpaid or any Lender shall have any Commitment hereunder, each of
the Borrowers will not (so far as such covenants are within the control and
discretion of or apply to that particular Borrower) and, in the case of Sections
7.02 (a), (b), (c), (d), (e), (f), (h), (i), (j), (k), (l), (m), (n), (o), (q),
(s) and (t), Merisel Parent will not, without the written consent of the
Majority Lenders:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or permit any
-----------
of its Subsidiaries to create, incur, assume or suffer to exist, any Lien
(including the Lien of a conditional vendor) of any kind upon or with respect to
any of its properties of any character whether now owned or hereafter acquired,
or sign or file, or permit any of its Subsidiaries to sign or file, under the
Uniform Commercial Code or similar law of any jurisdiction a financing statement
or other registration (other than a precautionary filing of a financing
statement solely for notice purposes) which names Merisel Parent, either
Borrower or any of their respective Subsidiaries as debtor, or sign, or permit
any of their respective Subsidiaries to sign, any security agreement authorizing
any secured party thereunder to file such financing statement or other
registration, or assign, or permit any Subsidiary to assign, any accounts
receivable, or enter into or permit any Subsidiary to enter into any agreement
prohibiting the creation or assumption of any Lien upon its respective
properties or assets, whether now owned or hereafter acquired, excluding,
---------
however, from the operation of the foregoing restrictions the following:
- -------
(i) Liens for taxes, assessments or governmental charges or levies to
the extent not required to be paid by Section 7.01(n);
(ii) Liens imposed by law such as materialmen's, mechanics',
carriers', workmen's, and repairmen's liens and other similar liens arising
in the ordinary course of business securing obligations which are not
overdue for a period of more than 60 days;
(iii) pledges or deposits to secure obligations under workmen's
compensation laws or similar legislation or to secure public or statutory
obligations of Merisel Parent, the Borrowers or any of their respective
Subsidiaries;
84
<PAGE>
(iv) utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not
in any material way affect the marketability of the same or interfere with
the use thereof in the business of the Borrowers or Merisel Parent or any
of their respective Subsidiaries;
(v) Liens caused by any judgment if such judgment has not resulted in
an Event of Default pursuant to Section 8.01(g);
(vi) Liens in favor of the Agent, for the benefit of the Lenders, in
connection with Debt of the Borrowers incurred hereunder and Liens
consisting of security interests in accounts receivable (and in property
securing or otherwise supporting accounts receivable) in connection with
agreements for sales, transfers or securitizations of accounts receivable
(or interests therein) referred to in Section 7.02(k);
(vii) Liens in favor of a Borrower on the assets of any of the
Borrowers' respective Subsidiaries;
(viii) Liens in favor of customs and revenue authorities arising by
operation of law to secure payment of customs duties in connection with the
importation of goods which are not overdue for a period of more than 60
days;
(ix) Liens in connection with Debt of Merisel Parent, the Borrowers or
any of their Subsidiaries permitted under Section 7.02(b)(iii) or under the
agreements set forth on Schedule IV;
(x) Liens in connection with Sale and Leaseback Transactions
permitted under Section 7.02(f); and
(xi) Liens permitted under that certain letter dated as of April 15,
1996 between the Borrowers and the Majority Lenders, as amended from time
to time.
(b) Debt. Create or suffer to exist, or permit any of its Subsidiaries to
----
create or suffer to exist, any Debt not in existence on the Amendment Effective
Date as set forth on
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<PAGE>
Schedule IV except (i) refinancings of Debt otherwise permitted under this
------
Section 7.02(b); provided that (v) the terms of such refinanced Debt shall not
--------
either (1) increase materially the obligations of the obligor or (2) confer
additional rights on the holder of such Debt which in the aggregate could be
materially adverse to Merisel Parent, any Borrower or the Lenders, (w) the
proceeds from the refinancing of Debt of any Person shall not be applied to
repay or reduce Debt of any other Person (other than Debt of the Borrowers) and
any proceeds from such refinancing in excess of the amount of the Debt being
refinanced shall be applied to permanently reduce the Revolving Facility
Commitments as provided in Section 2.07(e), (x) no Subordinated Debt or Debt
outstanding under the Indenture shall be refinanced prior to a complete
refinancing of this Agreement, (y) in the event the Senior Notes are refinanced,
this Agreement shall be refinanced in a corresponding pro rata amount and (z)
after giving effect to such refinancing, there would not result an Incipient
Default or Event of Default; (ii) Debt otherwise permitted under Section
7.02(h), Section 7.02(k) and Section 7.02(c) (to the extent such permitted
Contingent Obligations constitute Debt); and (iii) Debt (other than Debt
permitted by clauses (i) and (ii), 100% of the Net Debt Proceeds of which are
applied to permanently reduce the Revolving Facility Commitments as provided in
Section 2.07(e). Notwithstanding anything to the contrary in this Section 7.02,
Merisel Europe shall not permit its Net Europe Debt on the dates indicated below
to be greater than the correlative amounts indicated below:
<TABLE>
<CAPTION>
Maximum Permitted
Date Net Europe Debt
---- ---------------
<S> <C>
March 31, 1996 $102,500,000
April 30, 1996 $101,000,000
May 31, 1996 $100,100,000
June 30, 1996 $ 87,800,000
July 31, 1996 $100,800,000
August 31, 1996 $ 95,000,000
September 30, 1996 $ 93,100,000
October 31, 1996 $100,000,000
November 30, 1996 $108,000,000
December 31, 1996 $112,600,000
</TABLE>
(c) Contingent Obligations. Create, incur, assume or suffer to exist, or
----------------------
permit any of its Subsidiaries to create
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<PAGE>
incur, assume or suffer to exist, any Contingent Obligations, except:
(i) by reason of indorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(ii) the Merisel Canada Guaranty and guaranties by Merisel Canada and
Merisel Europe of obligations arising under the Senior Notes;
(iii) guaranties by Merisel Parent and the Borrowers, in an aggregate
amount not exceeding $15,000,000, of accounts payable incurred in the
ordinary course of business of CAT Holding or of leases entered into by CAT
Holding, in each case in the ordinary course of business, or in connection
with credit extended to CAT Holding (all of which such guaranties known to
Merisel Parent or either of the Borrowers to be in existence on the
Amendment Effective Date are set forth on Schedule V hereto, which Schedule
shall be updated if Merisel Parent or either of the Borrowers obtains
knowledge of any such other guaranties);
(iv) guaranties by the Borrowers in existence on the Amendment
Effective Date (all of which such guaranties known to Merisel Parent or
either of the Borrowers are set forth on Schedule V hereto, which Schedule
shall be updated if Merisel Parent or either of the Borrowers obtains
knowledge of any such other guaranties) in connection with credit extended
to any of the Borrowers' respective wholly-owned Subsidiaries and
guaranties by the Borrowers in connection with any Debt of the Borrowers'
respective Subsidiaries incurred pursuant to Section 7.02(b)(iii);
(v) guaranties by the Borrowers, of accounts payable incurred in the
ordinary course of business of any of their respective wholly-owned
Subsidiaries or of leases entered into by such wholly-owned Subsidiaries in
each case in the ordinary course of business, in each case consistent with
such Borrower's past practice;
(vi) guaranties by Merisel Parent in connection with obligations of
its Subsidiaries;
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<PAGE>
(vii) obligations of the Borrowers or their respective wholly-owned
Subsidiaries under flooring arrangements, under their return policies, or
under arrangements providing for rebates to purchasers of inventory or
other arrangements of a similar nature, in each case in the ordinary course
of business and consistent with such Borrower's past practice;
(viii) Contingent Obligations relating to letters of credit issued
for the account of Merisel Parent, the Borrowers or wholly-owned
Subsidiaries of the Borrowers; and
(ix) Contingent Obligations relating to transactions permitted under
Section 7.02(k).
(d) Dividends, Etc. Declare or pay any dividends, purchase, redeem,
---------------
retire, or otherwise acquire for value any of its capital stock now or hereafter
outstanding, return any capital to its stockholders as such, or make any
distribution of assets to its stockholders as such, or permit any of its
Subsidiaries to purchase, redeem, retire or otherwise acquire for value any
stock of a Borrower, except that:
------
(i) any Borrower may declare and deliver dividends and distributions
payable only in common stock of that Borrower;
(ii) wholly-owned Subsidiaries of the Borrowers may declare and
deliver dividends and distributions payable in cash, common stock or other
assets to their respective parent Borrower;
(iii) the Borrowers may declare and deliver dividends and other
distributions payable in cash and make intercompany Debt payments to
Merisel Parent equal to or less than the Current Debt Service Amount,
provided that (x) Merisel Parent shall use such cash to pay interest on the
--------
Merisel Parent Debt, (y) immediately after giving effect to such
distributions of cash, no event shall occur and be continuing which
constitutes an Event of Default or Incipient Default and (z) to the extent
possible, any such distributions of cash shall be made so as to reduce
intercompany debt payable by the Borrowers or their Subsidiaries to Merisel
Parent;
88
<PAGE>
(iv) the Borrowers may declare and deliver dividends and other
distributions payable in cash or other assets to Merisel Parent, provided
--------
that (w) the sum of the cumulative aggregate amount of such dividends and
distributions and payments on intercompany Debt between the Borrowers and
Merisel Parent by the Borrowers plus the Current Debt Service Amount, in
----
each case from and including December 23, 1993 to and including any date of
determination shall not exceed an amount equal to 25% of the Consolidated
Net Income of Merisel Americas plus 25% of the Consolidated Net Income of
----
Merisel Europe for that same period of time, (x) the sum of the cumulative
aggregate amount of such dividends and distributions and payments on
intercompany Debt between the Borrowers and Merisel Parent made during any
fiscal quarter plus the Current Debt Service Amount for such fiscal quarter
shall not exceed the aggregate Consolidated Net Income of both of the
Borrowers for that fiscal quarter, (y) such dividends, distributions and
payments on intercompany Debt between the Borrowers and Merisel Parent
shall be paid only from net income of the Borrowers and (z) immediately
after giving effect to any such declaration or deliverance, no event shall
occur and be continuing which constitutes an Event of Default or an
Incipient Default;
(v) Merisel FAB may declare and deliver dividends and other
distributions payable in cash, common stock or other assets to Merisel
Parent; and
(vi) the Borrowers may make distributions permitted under Section
7.02(g).
(e) Mergers, Etc. Merge with or into or consolidate with or into, or
-------------
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, or acquire all or substantially all of the
assets of, any Person, or permit any Subsidiary to do so, except that (i) any
------
wholly-owned Subsidiary of a Borrower may merge or amalgamate or consolidate
with, or transfer all or substantially all of its assets to, any other wholly-
owned Subsidiary of that Borrower and (ii) any Subsidiary of a Borrower may
merge into, amalgamate with, or transfer all or substantially all of its assets
to, that Borrower (so long as that Borrower is the surviving entity); provided
--------
in either case in this Section
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<PAGE>
7.02(e) that, immediately after giving effect thereto, no event shall occur and
be continuing which constitutes an Event of Default or an Incipient Default.
(f) Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose of,
---------------------
or permit any of its Subsidiaries to sell, lease, transfer or otherwise dispose
of, any of its assets (whether tangible or intangible, and including, without
limitation, any stock of any Subsidiary of Merisel Parent), or enter into any
Sale and Lease-Back Transaction, or permit any of its Subsidiaries to enter into
any Sale and Lease-Back Transaction, except for:
------
(i) sales of inventory sold in the ordinary course of business
(including intercompany sales other than sales to Merisel FAB, Merisel
Information Services, Inc., Merisel Licensing, Inc. and Merisel Properties,
Inc.) provided the consideration therefor adequately reflects the fair
value of the property disposed of;
(ii) sales of assets (whether tangible or intangible); provided that
--------
the aggregate value of such assets sold in any single transaction or
related series of transitions is equal to or less than $100,000;
(iii) sales or transfers of inventory or fixed assets by the
Borrowers or their respective wholly-owned Subsidiaries to the Borrowers or
their respective wholly-owned Subsidiaries and Sale and Leaseback
Transactions among the Borrowers and their respective wholly-owned
Subsidiaries; provided that (i) the aggregate value of such assets sold or
--------
transferred and such Sale and Leaseback Transactions entered into by
Merisel Americas and its wholly-owned Subsidiaries to or with Persons other
than Merisel Americas and its wholly-owned Subsidiaries shall not exceed
$10,000,000, (ii) with respect to each of Merisel FAB, Merisel Information
Services, Inc., Merisel Licensing, Inc. and Merisel Properties, Inc., the
aggregate value of inventory sold or transferred by the Borrowers and their
respective wholly-owned Subsidiaries to each such Person shall not exceed
$0, (iii) the aggregate value of inventory sold or transferred by the
Borrowers and their respective wholly-owned Subsidiaries to each Merisel
Parent shall not exceed $1,000,000 in any calendar year, (iv) with respect
to
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<PAGE>
Merisel Parent and Merisel FAB, the aggregate value of fixed assets sold or
transferred by the Borrowers and their respective wholly-owned Subsidiaries
to each such Person shall not exceed $1,000,000 in any calendar year and
(v) with respect to each of Merisel Information Services, Inc., Merisel
Licensing, Inc. and Merisel Properties, Inc., collectively, the aggregate
value of fixed assets sold or transferred by the Borrowers and their
respective wholly-owned Subsidiaries to each such Person shall not exceed
$1,000,000 in any calendar year;
(iv) dispositions of obsolete assets in the ordinary course of
business for nominal consideration;
(v) transfers of assets permitted under Section 7.02(e), Section
7.02(g) and Section 7.02(k); and
(vi) any other sale, transfer or disposition of assets or Sale and
Lease-Back Transaction, provided that (x) the consideration received for
--------
such assets shall be in an amount at least equal to the fair market value
thereof, (y) the sale consideration received in excess of liabilities
assumed shall be (I) in cash or (II) in a combination of cash for at least
90% of the sale consideration and notes payable within 12 months for the
balance, and (z) the aggregate Revolving Facility Commitments shall be
reduced by an amount equal to 60% of the Net Asset Sale Proceeds of such
sale, transfer, disposition or Sale and Lease-Back Transaction as required
by Section 2.07(b).
(g) Intercompany Transactions. Make any payment to or enter into or
-------------------------
permit to exist any transaction, or permit any of its Subsidiaries to make any
payment to (including payment of principal or interest on intercompany payables)
or enter into or permit to exist any transaction, with Merisel Parent or any
Subsidiary of Merisel Parent that would result in funds leaving the Borrowers
and their Subsidiaries taken as a whole, except (i) the Borrowers and their
respective Subsidiaries may make payments for operating expenses incurred in the
ordinary course of business in accordance with the provisions set forth in
Schedule VI, (ii) the Borrowers and Subsidiaries of the Borrowers may make
payments of principal and interest on intercompany payables, provided that
--------
immediately after giving effect to such payments no event shall occur and be
continuing which constitutes
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<PAGE>
an Event of Default or Incipient Default and (iii) the Borrowers may make
payments and enter into or permit to exist any transaction, and permit their
respective Subsidiaries to make payments and enter into and permit to exist
transactions, otherwise permitted by this Section 7.02.
(h) Investments in Other Persons. Make, or permit any of its Subsidiaries
----------------------------
to make, any loan or advance to any Person, or purchase or otherwise acquire, or
permit any of its Subsidiaries to purchase or otherwise acquire, any capital
stock, obligations or other securities of, make any capital contribution to, or
otherwise invest in, any Person, except:
------
(i) Cash Equivalents;
(ii) loans and advances by the Borrowers to each other and to wholly-
owned Subsidiaries of the Borrowers, provided that such loans and advances
--------
by a Borrower to its wholly-owned Subsidiaries may be converted to equity
Securities of such Subsidiaries if required to satisfy local legal or
regulatory requirements relating to the capitalization of such Subsidiary;
(iii) loans, advances and investments by any Subsidiary of Merisel
Parent to Merisel Parent and its Subsidiaries, provided that (x) the
--------
aggregate amount of such loans, advances and investments made in all such
Persons at any time outstanding shall not exceed one percent of the
aggregate Consolidated Total Assets of the Borrowers, (y) neither of the
Borrowers nor any wholly-owned Subsidiary of a Borrower shall make any
loan, advance or investment to or in Merisel Parent, Merisel FAB or any
Subsidiary of Merisel Parent that is not a Borrower or a wholly-owned
Subsidiary of either Borrower, and (z) any loan or advance by Merisel
Parent to any of its Subsidiaries shall be subordinated as provided in
clause (vi) below;
(iv) investments consisting of mergers, consolidations and
acquisitions permitted by Section 7.02(e);
(v) Merisel FAB and Merisel Parent may make loans, advances and
investments to each other without restriction; provided that the
outstanding Net FAB Debt shall not at any
92
<PAGE>
time exceed $10,000,000 and shall not be greater than $0 on the last day of
each month;
(vi) loans and advances by Merisel Parent to any of its direct and
indirect Subsidiaries (other than Merisel FAB), provided that such loans
--------
and advances shall be subordinated (both as to payment and remedies) to the
Obligations in form and substance satisfactory to the Agent;
(vii) loans and advances by either Borrower, Merisel Parent or their
respective Subsidiaries to Merisel Information Services, Inc.;
(viii) loans, advances and investments to or in a Subsidiary in
connection with a sale, transfer or securitization of accounts receivable
permitted by Section 7.02(k); and
(ix) loans, advances and investments permitted by Section 7.02(b),
Section 7.02(e) and Section 7.02(g).
The amount of any loan, advance or investment shall be determined in
accordance with GAAP.
(i) Consolidated Capital Expenditures. Make or incur or permit any of its
---------------------------------
Subsidiaries to make or incur Consolidated Capital Expenditures in the periods
set forth below in an aggregate amount not exceeding the correlative amounts
indicated below:
<TABLE>
<CAPTION>
Maximum Permitted
Period Consolidated Capital Expenditure
------ --------------------------------
<S> <C>
First Quarter of 1996 $ 5,772,000
First Two Quarters of 1996 $ 5,772,000
First Three Quarters of 1996 $ 9,817,000
Fiscal Year of 1996 $12,885,000
First Quarter of 1997 $ 3,200,000
</TABLE>
(j) Operating Leases. Become liable, or permit any of its Subsidiaries to
----------------
become liable, in any way, whether directly or by assignment or as a guarantor
or other surety, for the obligations of the lessee under any Operating Lease,
unless, immediately
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<PAGE>
after giving effect to the incurrence of liability with respect to such lease,
the Consolidated Rental Payments for Merisel Parent and its Subsidiaries at any
time in effect during the then current fiscal year shall not exceed $35,000,000.
(k) Sales of Accounts Receivable. Sell, transfer or dispose of (with or
----------------------------
without recourse) or otherwise finance, or permit any of its Subsidiaries to
sell, transfer or dispose of (with or without recourse) or otherwise finance,
accounts receivable except (i) Merisel Canada, Merisel U.K. and Merisel Americas
------
may sell accounts receivable pursuant to the securitization programs identified
on Schedule VII hereto (the "Existing Receivables Programs"); provided that any
----------------------------- --------
renewal, amendment, replacement or refinancing of any Existing Receivables
Program shall not be on terms more adverse to Merisel Canada, Merisel U.K. or
Merisel Americas, as the case may be, than the terms of the Existing Receivables
Program being so renewed, amended, replaced or refinanced (it being agreed that
an increase in the interest rate is not an adverse change); (ii) Merisel Parent
and Merisel FAB may sell or transfer accounts receivables to each other;
provided that the outstanding Net FAB Debt shall not at any time exceed
$10,000,000 and shall not be greater than $0 on the last day of each month;
(iii) the Borrowers and their respective wholly-owned Subsidiaries may sell or
transfer accounts receivables to the Borrowers and wholly-owned Subsidiaries of
the Borrowers; provided that the aggregate value of such accounts receivable
--------
sold or transferred by Merisel Americas and its wholly-owned Subsidiaries under
this Section 7.02(k)(iii) to Persons other than Merisel Americas and its wholly-
owned Subsidiaries shall not exceed $0; and (iv) Merisel Parent and any Borrower
may, and may permit their respective Subsidiaries to, enter into one or more
transactions (other than those referred to in clause (ii) and clause (iii)
above) (each such transaction being referred to herein as a "Receivables
-----------
Program") involving the sale or other financing by Merisel Parent, the Borrowers
- -------
or their respective Subsidiaries, of accounts receivable arising in the ordinary
course of business of Merisel Parent, the Borrowers or their respective
Subsidiaries; and provided further that the aggregate Revolving Facility
-------- -------
Commitments shall be reduced by an amount equal to 60% of the proceeds of all
such Receivables Programs (other than the Receivables Programs of FAB) shall be
applied as required by Section 2.07(d).
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<PAGE>
(l) Subordinated Note Payments. Order, pay, make or set apart, or
--------------------------
permit any Subsidiary to, directly or indirectly, order, pay, make or set apart,
any sum for any payment or prepayment of principal of, premium, if any, or
interest on, or redemption, purchase, retirement, defeasance, sinking fund or
similar payment with respect to any Subordinated Debt, except that Merisel
Americas may make scheduled interest and principal payments in respect of the
Subordinated Notes in accordance with the terms of, and only to the extent
required by, and subject to the subordination provisions contained in, the
Subordinated Note Purchase Agreement; provided that no Event of Default or
--------
Incipient Default has occurred and is continuing or would occur as a result of
such payment; provided further that no prepayment of the principal amount of the
-------- -------
Subordinated Notes (other than the regularly scheduled payments sometimes
described as "prepayments" in Section 7.1(a) of the Subordinated Note Purchase
Agreement which are otherwise permitted by this Section 7.02(l)) or any
redemption, purchase, retirement, defeasance, sinking fund or similar payment
with respect to the Subordinated Notes shall be permitted at any time prior to
the indefeasible payment in full of the Obligations and the termination of the
Revolving Facility Commitments.
(m) Amendments or Waivers of Certain Documents; Prepayments of Certain
------------------------------------------------------------------
Debt. (i) Amend, waive or otherwise change the terms of, or permit any
Subsidiary to amend, waive or otherwise change the terms of, the Indenture or
the 12.5% Senior Notes issued pursuant thereto (other than in connection with a
refinancing permitted under Section 7.02(b)(i)), any Subordinated Debt or the
Senior Notes or the Senior Note Purchase Agreement, or make any payment
consistent with an amendment or change thereto, if the effect of such amendment
or change is to increase the interest rate on such Debt, change the dates upon
which payments of principal or interest are due thereon, change any event of
default or condition to an event of default with respect to such Debt, change
the redemption provisions thereof or change the subordination provisions thereof
(or any guaranty thereof) or which, together with all other amendments or
changes made, increase materially the obligations of the obligor or confers
additional rights on the holder of such Debt which could be adverse to any
Borrower or the Lenders; or (ii) defease, or make any payments the effect of
which is to defease, or permit any Subsidiary to, directly or indirectly,
defease, or make any payments the effect of which is to defease, any
Subordinated Debt
95
<PAGE>
or Senior Notes in whole or in part (whether pursuant to the defeasance
provisions of such Subordinated Debt or otherwise) or otherwise make, or permit
any Subsidiary, directly or indirectly, to make any payments with respect to the
Senior Notes prior to any scheduled maturity or scheduled repayment, except for
payments of Senior Notes required by Section 3.4(a) of the Senior Note Agreement
or (iii) defease, or make any payments the effect of which is to defease, or
permit any Subsidiary to, directly or indirectly, defease, or make any payments
the effect of which is to defease any of the 12.50% Senior Notes of Merisel
Parent issued under the Indenture or otherwise make, or permit any Subsidiary,
directly or indirectly, to make any payments with respect thereto prior to any
scheduled maturity or scheduled repayment, except for payments pursuant to
Section 4.13(c) of the Indenture (but only after the time periods in Section
7.01(q) of this Agreement shall have expired) and Section 4.15 of the Indenture
or (iv) designate any Person other than the holders of the Senior Notes as being
a holder of Designated Senior Debt (as defined in the Subordinated Note Purchase
Agreement) under the Subordinated Note Purchase Agreement.
(n) Compliance with Law, etc. (i) Violate any laws, ordinances,
------------------------
governmental rules or regulations to which it is or may become subject or (ii)
fail to obtain or maintain any patents, trademarks, service marks, trade names,
copyrights, design patents, licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its property or the conduct of its
business, in either case where such failure would have a material adverse effect
on any Borrower, Merisel Parent or Merisel Canada or on the ability of any
Borrower, Merisel Parent or Merisel Canada to perform its obligations under any
of the Loan Documents.
(o) Transactions with Shareholders and Affiliates. (i) In the case of
---------------------------------------------
Merisel Parent, enter into or permit to exist any transaction (including,
without limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with any holder of 5% or more of any class of equity
securities of Merisel Parent, or with any Affiliate of Merisel Parent (excluding
the Borrowers and any other Subsidiaries of Merisel Parent) or any such holder,
on terms that are not fair and reasonable in the circumstances or that are less
favorable to Merisel Parent than those which might be obtained at the time from
Persons who are not such a holder or Affiliate;
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<PAGE>
(ii) in the case of the Borrowers, enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with Merisel Parent or
any other holder of 5% or more of any class of equity securities of any
Borrower, or with any Affiliate of any Borrower (excluding any Subsidiaries of
any Borrower, but not excluding Merisel FAB or any other Subsidiary of Merisel
---
Parent which is not a wholly-owned Subsidiary of a Borrower) or any such holder,
on terms that are not fair and reasonable in the circumstances or that are less
favorable to that Borrower or that Subsidiary, as the case may be, than those
which might be obtained at the time from Persons who are not such a holder or
Affiliate; and
(iii) in the case of the Borrowers, purchase assets, or permit any
Subsidiary of a Borrower to purchase assets, from Merisel Parent or any
Subsidiary of Merisel Parent that is not also a Borrower or a wholly-owned
Subsidiary of a Borrower, unless such assets are purchased at fair market value
(1) as determined in good faith by the Board of Directors of Merisel Parent in
the case of a purchase of assets (or purchases of assets in a series of related
transactions) having a fair market value equal to or less than $1,000,000 and
(2) as determined in good faith by the Board of Directors of Merisel Parent
after having received an appraisal conducted by an independent appraiser
satisfactory to the Agent, in the case of a purchase of assets having a fair
market value greater than $1,000,000.
(p) Material Agreements. Permit any Subsidiary to enter into any material
-------------------
contractual obligation without its particular parent Borrower's consent.
(q) Mifinco, Inc. Permit Mifinco, Inc., a Delaware corporation and
------------
wholly-owned Subsidiary of Merisel Europe, to incur any Debt other than
intercompany Debt permitted under Section 7.02(b) or to take or be the subject
of any action or proceeding of the type described in Section 8.01(f).
(r) Interest Rate Agreements. Enter into or permit any of its
------------------------
Subsidiaries to enter into any Interest Rate Agreements except those entered
into for non-speculative purposes to protect any Borrower or Merisel Parent or
any of their respective Subsidiaries against fluctuations in interest rates.
97
<PAGE>
(s) Change in Business. Engage, or permit any Subsidiary to engage, in
------------------
any business other than the business engaged in by each such particular Person
at the Closing Date or other businesses directly related to the distribution or
marketing of computer products, services and information (it being acknowledged
that, in the case of Merisel Parent, such business is limited to the owning of
stock in its Subsidiaries and activities necessarily incidental thereto).
(t) Fiscal Year. Change its fiscal year end from the Saturday closest to
-----------
December 31 and, unless otherwise agreed by the Majority Lenders, the fiscal
year end date shall be the same for each of the Borrowers and Merisel Parent.
SECTION 7.03. Incorporation of Certain Covenants.
----------------------------------
The covenants set forth in Section 6 of the Senior Note Purchase Agreement,
as the same may be amended from time to time, are hereby incorporated by
reference into this Agreement as if set forth herein in full except that
references to any Noteholder (as defined in the Senior Note Purchase Agreement)
in such Section 6 shall be construed as references to any Lender. For purposes
of this Section 7.03, all definitions set forth in the Senior Note Purchase
Agreement, as the same may be amended from time to time, necessary to the
construction or understanding of any covenant set forth in Section 6 of the
Senior Note Purchase Agreement incorporated herein by reference pursuant to the
preceding sentence are also hereby incorporated by reference.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default. If any of the following events ("Events
----------------- ------
of Default") shall occur and be continuing:
- ----------
(a) Any Borrower shall fail to pay any installment of principal when due
or shall fail to pay any interest or fee due hereunder or to make any payment or
prepayment pursuant to Section 2.06(a) within three days after such interest or
fee or such payment or prepayment pursuant to Section 2.06(a) shall become due
or any Borrower shall fail to pay when due any amount payable in reimbursement
of any drawing under any Letter of Credit issued for its account, or any
Borrower shall fail to pay
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<PAGE>
any other amount due under this Agreement or any Loan Document within three days
after the date due; or
(b) Any representation or warranty or certification made by any Borrower,
Merisel Parent or Merisel Canada (or any of their respective officers) under or
in connection with any Loan Document shall prove to have been incorrect in any
material respect when made; or
(c) Any Borrower or Merisel Parent shall fail to perform or observe any of
the covenants found in Section 2.12 or Section 7.01(b), (f), (g), (h), (i), (j),
(k), (l), (m), (p) or (r) or Section 7.02 (excluding Section 7.02(n)) or Section
7.03 applicable to it; or
(d) Any Borrower or Merisel Parent or Merisel Canada shall fail to perform
or observe any other term, covenant or agreement contained in any Loan Document
on its part to be performed or observed and such default shall not have been
remedied within 10 days of notice from the Agent or any Lender of any such
default; or
(e) Any Borrower or Merisel Parent or any of their respective Subsidiaries
(including, without limitation, Merisel Canada) shall fail to pay any Debt
outstanding under the Senior Notes or the Subordinated Notes or any other Debt
(excluding Debt incurred hereunder) of that Borrower, Merisel Parent or such
Subsidiary (as the case may be) exceeding in the aggregate $5,000,000, or any
interest or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to the Senior Notes, the Subordinated Notes or such other
Debt; or any other default under any agreement or instrument relating to the
Senior Notes, the Subordinated Notes or any such other Debt, or any other event,
shall occur and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such default or
event is to accelerate, or to permit the acceleration of, the maturity of the
Senior Notes, the Subordinated Notes or such other Debt; or the Senior Notes,
the Subordinated Notes or any such other Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or
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any default under any agreement or instrument relating to the Existing
Receivables Programs or any Receivables Program, or any other event, shall occur
and shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such default or event is to terminate,
or unwind such Existing Receivables Program or Receivables Program or related
document or instrument or substantially reduce the advance rate provided for
therein; or
(f) Any Borrower or Merisel Parent or any of their respective Subsidiaries
shall generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against any Borrower or Merisel Parent or any of such Subsidiaries seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of 30 days or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against it or the appointment of a receiver, trustee, custodian or
other similar official for it or any substantial part of its property) shall
occur; or any Borrower or Merisel Parent or any of such Subsidiaries shall take
any corporate action to authorize any of the actions set forth above in this
Section 8.01(f); or
(g) Any judgment or judgments or orders or order of money aggregating in
excess of $5,000,000 shall be rendered against any Borrower or Merisel Parent or
any of their respective Subsidiaries and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment or order in excess
of $5,000,000 or judgements or orders aggregating in excess of $5,000,000 and
shall not have been stayed or (ii) there shall be any period of 10 consecutive
days during which a stay of enforcement of such judgment or order in excess of
$5,000,000 or judgments or orders aggregating in excess of $5,000,000, by
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reason of a pending appeal or otherwise, shall not be in effect; or
(h) Any guaranty of or subordination with respect to the Debt of any
Borrower to the Lenders (including, without limitation, the guaranty of Merisel
Parent in Article IX and the Merisel Canada Guaranty) or the Subordinated Notes,
at any time after the execution and delivery thereof and for any reason other
than satisfaction in full of all Debt incurred hereunder, ceases to be in full
force and effect or is declared to be null and void; or any guarantor
(including, without limitation, Merisel Parent) or subordinator denies that it
has any further liability or obligation, including, without limitation, with
respect to any future advance by the Lenders, under such subordination agreement
or guaranty or gives notice to such effect or any such guarantor fails to make a
payment when due under its guaranty; or
(i) (A) Merisel Parent or any of its ERISA Affiliates fails to make
full payment when due of all amounts which, under the provisions of any Pension
Plan or Section 412 of the Internal Revenue Code, Merisel Parent or any of its
ERISA Affiliates is required to pay as contributions thereto;
(B) Any accumulated funding deficiency occurs or exists, whether or
not waived, with respect to any Pension Plan;
(C) The excess of the actuarial present value of all benefit
liabilities under all Pension Plans over the fair market value of the assets of
such Pension Plans (excluding in such computation Pension Plans with assets
greater than benefit liabilities) allocable to such benefit liabilities are
greater than $250,000;
(D) Merisel Parent or any of its ERISA Affiliates enters into any
transaction which has as its principal purpose the evasion of liability under
Subtitle D of Title IV of ERISA;
(E) (i) Any Pension Plan shall be terminated within the meaning of
Title IV of ERISA, or (ii) a trustee shall be appointed by an appropriate United
States district court to administer any Pension Plan, or (iii) the Pension
Benefit Guaranty Corporation (or any successor thereto) shall institute
proceedings to terminate any Pension Plan or to appoint a trustee to administer
any Pension Plan, or (iv) Merisel Parent or any of
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its ERISA Affiliates shall withdraw (under Section 4063 of ERISA) from a Pension
Plan, if as of the date of the event listed in subclauses (i)-(iv) above or any
subsequent date, either Merisel Parent or its ERISA Affiliates has any liability
(such liability to include, without limitation, any liability to the Pension
Benefit Guaranty Corporation, or any successor thereto, or to any other party
under Section 4062, 4063 or 4064 of ERISA or any other provision of law)
resulting from or otherwise associated with the events listed in subclauses (i)-
(iv) above;
As used in this Section 8.01(i) the term "accumulated funding deficiency" has
the meaning specified in Section 412 of the Internal Revenue Code, and the terms
"actuarial present value" and "benefit liabilities" have the meanings specified
in Section 4001 of ERISA; or
(j) The emission, discharge, release or threatened release, generation,
storage, transportation, disposal or presence of Hazardous Materials on any
property owned or leased by any Borrower or Merisel Parent or any of their
respective Subsidiaries which is reasonably likely to materially adversely
affect the business or credit of any Borrower or Merisel Parent or its ability,
or the ability of any such Subsidiary, to perform under the Loan Documents; or
(k) (i) Either Borrower ceases to be a wholly-owned Subsidiary of Merisel
Parent; or
(ii) any Person or any two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Exchange Act), directly or
indirectly, of Securities of Merisel Parent (or other Securities convertible
into such Securities) representing 50% or more of the combined voting power of
all Securities of Merisel Parent entitled to vote in the election of directors,
other than Securities having such power only by reason of the happening of a
contingency; or
(l) Except as set forth in written information provided to the Lenders
prior to April 12, 1996, since December 30, 1995, a material adverse change in
the business, earnings, properties, condition (financial or otherwise) or
operations of any Borrower, Merisel Parent or Merisel Canada shall have
occurred; or
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(m) The Borrowers shall not pay, on the date due for such payment, (i)
their deposit obligations with O'Melveny & Myers as set forth in that certain
letter dated March 19, 1996 (as such letter agreement may be amended,
supplemented or otherwise modified from time to time) or (ii) the fees and
expenses of Price Waterhouse LLP as set forth in that certain letter agreement
(the "PW Letter") dated March 7, 1996, (as such letter agreement may be amended,
supplemented, or otherwise modified from time to time); or
(n) On or before each of the Amendment Effective Date and April 15, 1997,
Merisel Parent shall not have received from Deloitte & Touche a report on its
Consolidated financial statements for the year ended December 30, 1995 or
December 30, 1996, as applicable, which report is unqualified, does not express
doubts about the ability of Merisel Parent and its Subsidiaries to continue as a
going concern and states that such Consolidated financial statements fairly
present, in all material respects, the Consolidated financial position of
Merisel Parent and its Subsidiaries as at the date indicated and the results of
their operations and their cash flows for the periods indicated in conformity
with GAAP and that the examination by such accountants in connection with such
Consolidated financial statements was conducted in accordance with generally
accepted auditing standards; or such report shall have been modified or
withdrawn after the Amendment Effective Date or April 15, 1997, as applicable;
or
(o) Failure of Merisel Americas to maintain once a week an availability
amount under all Receivables Programs and Existing Receivables Programs (and any
renewals, amendments, replacements or refinancings thereof) maintained in the
United States of less than $5,000,000.
THEN, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrowers, declare the
obligation of each Lender to make Revolving Facility Advances, the obligation of
the Swing Line Lender to make Swing Line Advances and the obligation of each
Issuing Lender to Issue Letters of Credit to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrowers, declare (x) the
Notes and the unpaid principal amount of and accrued interest on the Advances,
(y) an
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amount equal to the maximum amount which may at any time be drawn under
all Letters of Credit then outstanding (whether or not any beneficiary under any
Letter of Credit shall have presented, or shall be entitled at such time to
present, the drafts and other documents required to draw under such Letter of
Credit), and (z) all other Obligations, all interest thereon and all other
amounts payable under this Agreement to be forthwith due and payable, whereupon
the Obligations, all such interest and all such amounts and the reimbursement
obligations with respect to the Letters of Credit shall become and be forthwith
due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrowers; provided,
--------
however, that in the event of an actual or deemed entry of an order for relief
- -------
with respect to any Borrower or any of its Subsidiaries under the Federal
Bankruptcy Code or similar applicable laws in other jurisdictions, (A) the
obligation of each Lender to make Revolving Facility Advances, the obligation of
the Swing Line Lender to make Swing Line Advances and the obligation of the
Issuing Lenders to Issue Letters of Credit shall automatically be terminated and
(B) an amount equal to the amounts described in clauses (x), (y) and (z) above
shall automatically become and be due and payable, together with accrued
interest thereon without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrowers; and provided further
-------- -------
so long as any Letter of Credit shall remain outstanding, any amounts described
in clause (y) above with respect to Letters of Credit, when received by the
Agent, shall be held in a cash collateral account to be established by the
Borrowers with the Agent as cash collateral for the obligation of the Borrowers
to reimburse the Issuing Lenders in the event of any drawing under such Letters
of Credit, and so much of such funds shall at all times remain on deposit as
cash collateral as aforesaid as shall equal the maximum amount available at any
time for drawing under all Letters of Credit (the "Maximum Available Amount");
------------------------
provided that in the event of cancellation or expiration of any Letter of Credit
- --------
or any reduction in the Maximum Available Amount, the Agent shall apply the
difference between the Maximum Available Amount immediately prior to such
cancellation, expiration or reduction and the Maximum Available Amount
immediately after such cancellation, expiration or reduction, first to the
-----
payment of any outstanding Obligations and second to whomsoever shall be
------
lawfully entitled to receive such funds.
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Notwithstanding anything contained in the foregoing paragraph, if at any
time within 60 days after acceleration of the maturity of the Obligations, the
Borrowers shall pay all arrears of interest and all payments on account of the
principal which shall have become due otherwise than by acceleration (with
interest on principal and, to the extent permitted by law, on overdue interest,
at the rates specified in this Agreement) and all Events of Default and
Incipient Defaults (other than non-payment of principal of and accrued interest
on the Advances and payments of amounts referred to in clause (y) above, in each
case which is due and payable solely by virtue of acceleration) shall be
remedied or waived pursuant to Section 10.01, then the Majority Lenders, by
written notice to the Borrowers, may at their option rescind and annul the
acceleration and its consequences and the Agent shall return to the Borrowers
any amounts held as cash collateral in respect of amounts described in clause
(y) above; but such action shall not affect any subsequent Event of Default or
Incipient Default or impair any right consequent thereon.
ARTICLE IX
JOINT OBLIGATIONS AND MERISEL
PARENT GUARANTY
SECTION 9.01. Nature of Obligations of the Borrowers.
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(a) Obligations Joint and Several. Anything herein to the contrary
-----------------------------
notwithstanding, each Borrower hereby agrees and acknowledges that the
obligation of each Borrower for payment of the Obligations shall be joint and
several with the obligations of the other Borrower hereunder regardless of which
Borrower actually receives the proceeds of any Borrowing. Each Borrower hereby
agrees and acknowledges that it has received substantial benefits from the loans
and credit facilities made available to Merisel Parent under the Prior Credit
Agreement.
Each Borrower agrees that its joint and several obligation to pay all
Obligations hereunder is irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than the indefeasible payment
in full of the Obligations, and the liability of each Borrower with respect to
the Obligations shall not be affected, reduced or
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impaired by (i) consideration of the amount of proceeds of the Advances received
by any Borrower relative to the aggregate amount of the Advances, (ii)
consideration of the face amount of Letters of Credit issued for the account of
any Borrower relative to the aggregate face amount of all Letters of Credit
issued hereunder, (iii) the dissolution or termination of or any increase,
decrease or change in personnel of, the other Borrower, (iv) the insolvency or
business failure of, or any assignment for the benefit of creditors by, or the
commencement of any bankruptcy, reorganization, arrangement, moratorium or other
debtor relief proceedings by or against the other Borrower or (v) the
appointment of a receiver for, or the attachment, restraint of or making or
levying of any order of court or legal process affecting, the property of the
other Borrower. Each Borrower agrees that a separate action or actions may be
brought and prosecuted against such Borrower whether or not action is brought
against the other Borrower and whether or not the other Borrower is joined in
any such action or actions. Any Borrower's payment of a portion, but not all, of
the Obligations shall in no way limit, affect, modify or abridge such Borrower's
liability for that portion of the Obligations which is not paid.
Each Borrower hereby waives any right to require the Agent or any Lender,
as a condition of payment or performance of the Obligations by such Borrower, to
proceed against the other Borrower or any other Person, to exhaust any security
held from any Borrower, or pursue any other remedy in the power of the Agent or
any Lender. Each Borrower hereby waives any defense arising by reason of
incapacity, lack of authority or any disability or other defense that may be
available to the other Borrower and any defenses or benefits that may be derived
or afforded by law which would limit the liability of or exonerate any guarantor
or surety with respect to the Obligations, or which may conflict with the terms
and provisions of this Agreement.
Any indebtedness of a Borrower now or hereafter held by the other Borrower
is hereby subordinated in right of payment to the Obligations, and any such
indebtedness of a Borrower to the other Borrower collected or received by such
other Borrower after an Event of Default has occurred and is continuing shall be
held in trust for the Agent on behalf of the Lenders and shall forthwith be paid
over to the Agent for the benefit of the Lenders to be credited and applied
against the Obligations but without
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affecting, impairing or limiting in any manner the liability of such other
Borrower under any other provisions of this Agreement.
(b) Contribution Among the Borrowers. In order to provide for just and
--------------------------------
equitable contribution among the Borrowers, each Borrower hereby agrees that if
any Borrower shall make payments on the Obligations in an amount in excess of
the net value of the benefits received by such Borrower and its Subsidiaries
from extensions of credit hereunder (including receipt of the proceeds of Loans
and any Letters of Credit), it shall have a right of contribution against the
other Borrower for such excess; provided, however, that such right of
-------- -------
contribution shall be subordinate to the Lenders' right to receive indefeasible
payment in full of the Obligations. The parties hereto acknowledge that the
right to contribution hereunder shall constitute an asset of the Borrower to
which such contribution is owing.
For the purposes of this Section 9.01(b), the "net value of the benefits"
received by any Borrower from extensions of credit hereunder shall include
benefits of funds constituting proceeds of Advances advanced by the Lenders to
such Borrower or its Subsidiaries and benefits consisting of any drawings under
Letters of Credit issued for the account or benefit of such Borrower or its
Subsidiaries.
Nothing in this Section 9.01(b) shall impair the absolute and unconditional
obligation of the Borrowers jointly and severally to pay all Obligations when
the same shall become due in accordance with the terms of this Agreement.
(c) Financial Condition of the Borrowers. Neither the Agent nor any
------------------------------------
Lender shall have any obligation to any Borrower to disclose or discuss with
such Borrower the Agent's or any Lender's assessment of the financial condition
of any Borrower, and each Borrower hereby waives any obligation of the Agent or
any Lender to disclose any matter, fact or thing relating to the business,
operations or conditions of any Borrower now or hereafter known by the Agent or
any Lender. Each Borrower assumes the responsibility for being and keeping
informed of the financial condition of each other Borrower and of all
circumstances bearing upon the risk of nonpayment of the Obligations by any
other Borrower. Neither the Agent nor any Lender shall have any obligation to
any Borrower arising from the Agent's or any Lender's assessment of, or failure
to assess, any
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Borrower's financial condition in connection with the making of any Advances or
other extensions of credit hereunder.
SECTION 9.02. Merisel Parent Guaranty of the Borrowers' Obligations.
-----------------------------------------------------
In order to induce Lenders to enter into this Agreement and to make the Advances
to the Borrowers hereunder and to issue Letters of Credit for the account of the
Borrowers hereunder, Merisel Parent agrees as follows:
(a) Guaranty. As consideration for the Lenders agreeing to enter into
--------
this Agreement and extend the Revolving Facility Commitments hereunder, Merisel
Parent hereby unconditionally and irrevocably guaranties, as primary obligor and
not merely as a surety, the due and punctual payment when due (whether by
required prepayment, declaration, demand or otherwise) (including amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. (S)362(a)) of all Obligations of the
Borrowers (including, without limitation, interest which, but for the filing of
a petition in bankruptcy with respect to the Borrowers would accrue on such
Obligations). For purposes of this Article IX, the obligations of Merisel Parent
under this Article IX are referred to as this "Merisel Parent Guaranty."
-----------------------
(b) Terms of Merisel Parent Guaranty. Merisel Parent agrees that the
--------------------------------
Obligations of the Borrowers may be extended or renewed, and the Advances repaid
and reborrowed in whole or in part, without notice or further assent from it,
and that it will remain bound upon this Merisel Parent Guaranty notwithstanding
any extension, renewal or other alteration of any such Obligation or repayment
and reborrowing of the Advances.
Merisel Parent waives presentation of, demand of, payment from and
protest of any Obligation of the Borrowers and also waives notice of protest for
nonpayment. The obligations of Merisel Parent under this Merisel Parent
Guaranty shall not be affected by, and Merisel Parent hereby waives its rights
(to the extent permitted by law) in connection with:
(i) the failure of the Agent or any Lender to assert any claim or
demand or to enforce any right or remedy against the Borrowers or Merisel
Parent under the provisions of this Agreement or any other agreement or
otherwise,
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(ii) any extension or renewal of any provision thereof,
(iii) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Agreement or any instrument executed pursuant
hereto,
(iv) the release of any security held by the Agent or any Lender for
the Obligations of the Borrowers,
(v) the failure of the Agent, or any Lender to exercise any right or
remedy against any other guarantor of the Obligations of the Borrowers,
(vi) the Agent or any Lender taking and holding security or collateral
for the payment of this Merisel Parent Guaranty, any other guaranties of
the Obligations or other liabilities of the Borrowers and the Obligations
guarantied hereby, and exchanging, enforcing, waiving and releasing any
such security or collateral,
(vii) the Agent or any Lender applying any such security or
collateral and directing the order or manner of sale thereof as the Agent
or such Lender in its discretion may determine, or
(viii) the Agent or any Lender settling, releasing, compromising,
collecting or otherwise liquidating the Obligations and any security or
collateral therefor in any manner determined by the Agent or such Lender.
Merisel Parent further agrees that this Merisel Parent Guaranty constitutes
a guaranty of payment when due and not of collection and waives any right to
require that any resort be had by any Lender or the Agent or any other Person to
any security held for payment of the Obligations of the Borrowers or to any
balance of any deposit or account or credit on the books of any Lender or the
Agent or any other Person in favor of the Borrowers or any other Person.
The obligations of Merisel Parent under this Merisel Parent Guaranty shall
not be subject to any reduction, limitation, impairment or termination for any
reason, including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or setoff,
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counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Obligations, discharge of the Borrowers
from the Obligations in a bankruptcy or similar proceeding or otherwise.
Without limiting the generality of the foregoing, the obligations of Merisel
Parent under this Merisel Parent Guaranty shall not be discharged or impaired or
otherwise affected by the failure of the Agent or any Lender to assert any claim
or demand or to enforce any remedy under this Agreement, any Loan Document or
any other agreement, by any waiver or modification of any provision thereof, by
any default, failure or delay, willful or otherwise, in the performance of the
Obligations of the Borrowers, or by any other act of thing or omission or delay
to do any other act or thing that may or might in any manner or to any extent
vary the risk of Merisel Parent or would otherwise operate as a discharge of
Merisel Parent as a matter of law or equity.
The Agent and any Lender may, at their election, foreclose on any security
held by the Agent or such Lender by one or more judicial or nonjudicial sales,
or exercise any other right or remedy the Agent or any Lender may have against
the Borrowers or any security without affecting or impairing in any way the
liability of Merisel Parent hereunder except to the extent the Obligations have
been indefeasibly paid. Merisel Parent waives any defense arising out of such
election by the Agent or any Lender, even though such election operates to
impair or extinguish any right of reimbursement or subrogation or other right or
remedy of Merisel Parent against the Borrowers or any security, so long as the
Agent, or such Lender act in a commercially reasonably manner.
Merisel Parent further agrees that this Merisel Parent Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
payments, or any part thereof, of principal of or interest on any Obligation of
the Borrowers is rescinded or must otherwise be restored by the Agent or any
Lender upon the bankruptcy or reorganization of the Borrowers or otherwise.
Merisel Parent further agrees, in furtherance of the foregoing and not in
limitation of any other right that the Agent or any Lender may have at law or in
equity against Merisel Parent by virtue hereof, upon the failure of the
Borrowers to pay any of its Obligations when and as the same shall become due
(whether by
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required prepayment, declaration, demand or otherwise), Merisel Parent will
forthwith pay, or cause to be paid, in cash, to the Agent an amount equal to the
sum of the unpaid principal amount of such Obligations, accrued and unpaid
interest on such Obligations and all other unpaid Obligations of the Borrowers
to the Agent or any Lender.
Merisel Parent hereby irrevocably waives any right of subrogation,
contribution, indemnity or otherwise against the Borrowers that may arise out of
or be caused by this Merisel Parent Guaranty, all rights and/or claims against
the Borrowers which may arise against the Borrowers by reason of this Merisel
Parent Guaranty, any right to enforce any remedy that the Agent or any Lender
now has or may hereafter have against the Borrowers and any benefit of, and any
right to participate in, any security now or hereafter held by the Agent or any
Lender.
Any Debt of the Borrowers now or hereafter held by Merisel Parent is hereby
subordinated in right of payment to the Obligations and shall otherwise be
subordinated as described in Section 7.02(b), and any such Debt of the Borrowers
owed to Merisel Parent collected or received by Merisel Parent after an Event of
Default has occurred and is continuing shall be held in trust for the Agent on
behalf of the Lenders and shall forthwith be paid over to the Agent for the
benefit of the Lenders to be credited and applied to the Obligations but without
affecting, impairing or limiting in any manner the liability of Merisel Parent
under any provision of this Merisel Parent Guaranty.
This Merisel Parent Guaranty shall rank pari passu with the guarantee
---- -----
by Merisel Parent of the Senior Notes given pursuant to the Senior Note Purchase
Agreement.
ARTICLE X
THE AGENT AND CO-AGENT
SECTION 10.01. Powers.
------
(a) Each Lender hereby irrevocably appoints and authorizes CUSA to act as
Agent under this Agreement and the other Loan Documents and Nationsbank to act
as Co-Agent under this Agreement and the other Loan Documents. The Agent and the
Co-Agent shall have and may exercise such powers under this Agreement and the
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other Loan Documents as are specifically delegated to the Agent and the Co-Agent
by the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. Neither the Agent nor the Co-Agent shall have any duties or
responsibilities except those expressly set forth herein or in the applicable
Loan Documents. As to any matters not expressly provided for by the Loan
Documents (including, without limitation, enforcement or collection of the
Obligations), neither the Agent nor the Co-Agent shall be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in acting or refraining from acting)
upon the instructions of the Majority Lenders or all the Lenders, as the case
may be, and such instructions shall be binding upon all Lenders; provided,
--------
however, that neither the Agent nor the Co-Agent shall be required to take any
- -------
action that exposes it to personal liability or that is contrary to any Loan
Document or applicable law. No Lender other than the Agent shall have the right
to give any notice required or permitted under the Subordinated Note Purchase
Agreement and the Agent shall at the request, or may with the consent, of the
Majority Lenders deliver a "Blockage Notice" to Merisel Americas in accordance
with the terms of the Subordinated Note Purchase Agreement.
(b) The Designated Issuer shall have all of the benefits and immunities
(i) provided to the Agent in this Article X with respect to any acts taken or
omissions suffered by the Designated Issuer in connection with Letters of Credit
Issued by it or proposed to be Issued by it and the Applications and
reimbursement agreements pertaining to the Letters of Credit as fully as if the
term "Agent", as used in this Article X, included the Designated Issuer with
respect to such acts or omissions, and (ii) as otherwise provided in this
Agreement with respect to the Designated Issuer.
SECTION 10.02. Agent and Co-Agent in its Capacity as a Lender. With
----------------------------------------------
respect to its Revolving Facility Commitment and the Advances made by it and
Letters of Credit Issued by the Designated Issuer on its behalf, the Agent and
the Co-Agent shall have the same rights and powers under this Agreement and the
other Loan Documents as any Lender and may exercise the same as though it were
not the Agent or Co-Agent, as the case may be, and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include the Agent in its
capacity as a Lender hereunder. CUSA and Nationsbank and their respective
direct and
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indirect parents, subsidiaries and affiliates may accept deposits from, lend
money to, act as trustee under indentures of, and generally engage in any kind
of business with, the Borrowers, Merisel Parent, any of their respective
Subsidiaries and any Person who may do business with or own securities of any
Borrower, Merisel Parent or any such Subsidiary, all as if CUSA and Nationsbank
were not the Agent and the Co-Agent and without any duty to account therefor to
the Lenders.
SECTION 10.03. Independent Credit Analysis. Each Lender acknowledges and
---------------------------
agrees that it has, independently and without reliance upon the Agent, the Co-
Agent, any other Lender, or the directors, officers, agents, attorneys or
employees of the Agent, the Co-Agent, or of any other Lender, and instead in
reliance upon information supplied to it by or on behalf of the Borrowers and
upon such other documents and information as it has deemed appropriate, made its
own independent credit analysis and decision to enter into this Agreement, and
that it shall independently and without reliance upon the Agent, the Co-Agent,
any other Lender, or the directors, officers, agents, attorneys or employees of
the Agent, the Co-Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
independent credit analyses and decisions in acting or not acting hereunder or
under the Loan Documents.
SECTION 10.04. General Immunity. None of the Agent, the Co-Agent or any
----------------
of their respective directors, officers, agents, attorneys or employees shall be
liable to any Lender for any action taken or omitted to be taken by it or them
hereunder or under the other Loan Documents or in connection therewith, except
for its or their own gross negligence or willful misconduct. Without limiting
the generality of the foregoing, the Agent and the Co-Agent (i) make no warranty
or representation to any Lender and shall not be responsible to any Lender for
any statements, warranties or representations made hereunder or under the other
Loan Documents or any agreement or document relative thereto or for the
financial condition of any Borrower or other Loan Party; (ii) shall not be
responsible to any Lender for the authenticity, accuracy, completeness, value,
validity, effectiveness, due execution, legality, genuineness, enforceability or
sufficiency of this Agreement or any of the other Loan Documents or any other
agreements or any assignments, certificates, requests, financial statements,
projections, notices, schedules, opinions of counsel
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or any other document or notice furnished pursuant thereto; (iii) shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions hereof or of any other Loan Document and
shall have no duty to inspect the property (including the books and records) of
any Borrower or other Loan Party; (iv) shall incur no liability under or in
respect of this Agreement or any other Loan Document or any other document or
collateral by acting upon any notice (which may in the case of a Notice of
Revolving Facility Borrowing be by telephone), consent, certificate or other
instrument or writing (which may be by telegram, cable or telex) believed by it
to be genuine and delivered, signed or sent by the proper party; (v) may consult
with legal counsel (including counsel for any Borrower or other Loan Party),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith in accordance
with the advice of such counsel, accountants or experts; (vi) may treat the
holder of any Obligation as the holder thereof until the Agent receives written
notice of the assignment or transfer thereof signed by such holder and in form
satisfactory to the Agent; (vii) shall not be liable for the payment of a pro
rata portion of fees by any Lender to any assignee pursuant to Section 4.05(a)
and (viii) shall not be liable, so long as it has acted in good faith, for any
neglect, error, or delay in giving any notices, or disseminating any
information, which it may be required to give or disseminate hereunder.
SECTION 10.05. Right to Indemnity. The Lenders agree to indemnify the
------------------
Agent and the Co-Agent (to the extent not reimbursed by the Borrowers), ratably
according to their Total Outstanding Pro Rata Shares, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against the Agent or the Co-Agent in
any way relating to or arising out of this Agreement or the other Loan
Documents, or any of them, or the transactions contemplated hereby or thereby,
or the enforcement of any of the terms hereof or thereof or of any other
documents or any action taken or omitted or event occurring in connection
therewith; provided that no Lender shall be liable for any portion of such
--------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements which proximately results from the
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Agent's or the Co-Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent and the
Co-Agent promptly upon demand, ratably as aforesaid, for all expenses and other
expenditures for which it is entitled to receive, but has not received,
reimbursement pursuant to Section 11.03(a) hereof.
SECTION 10.06. Agent's and Co-Agent's Resignation. The Agent may resign
----------------------------------
any time as Agent under the Loan Documents by giving written notice of its
intention to do so to each Lender and to the Borrowers. Upon any such notice,
the Lenders shall have the right to appoint a successor Agent; provided that if
--------
such successor shall not be signatory to this Agreement, such appointment shall
be subject to the consent of the Borrowers, which consent shall not be
unreasonably withheld. If no successor Agent shall have been so appointed and
shall have accepted such appointment within 20 days after the resigning Agent
gave such notice of resignation then the resigning Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Agent under the Loan Documents by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent and the
resigning Agent shall be discharged from its duties and obligations under this
Agreement. In any case after the resigning Agent's resignation, the provisions
of this Article X shall continue to inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under the Loan Documents. The
Co-Agent may resign any time as Co-Agent under the Loan Documents by giving
written notice of its intention to do so to each Lender and to the Borrowers.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Amendments, Etc. No amendment or modification of any
----------------
provision of this Agreement or the Loan Documents (other than the Letters of
Credit), and no waiver of any provision of this Agreement or the Loan Documents
(other than the Letters of Credit) and no consent to any departure by any of
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the Borrowers shall in any event be effective unless the same shall be in
writing and signed by the Majority Lenders and the Borrowers, and then such
amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
--------
however, that no amendment, modification, waiver or consent shall, unless in
- -------
writing and signed by all the Lenders, do any of the following: (a) waive any of
the conditions specified in Section 5.01 or 5.02, (b) increase the Revolving
Facility Commitments of the Lenders or the maximum amount of Letters of Credit
or subject the Lenders to any additional obligations, (c) reduce the principal
of, or interest on, the Revolving Facility Advances or any fees or other amounts
payable hereunder or under any other Loan Document, or change the ratable
distribution of funds received by the Agent for account of the Lenders
hereunder, (d) postpone any date fixed for payment of principal of, or interest
on, the Revolving Facility Advances, the required maturity or expiration date of
the Letters of Credit, or any fees or other amounts payable hereunder or under
any other Loan Document, (e) increase the maximum length of the Interest
Periods, (f) alter the obligations of the Lenders to Issue Letters of Credit,
(g) change the definitions of Majority Lenders or any provision of this
Agreement requiring the instruction or consent of the Majority Lenders for the
Lenders or any of them to take any action under any Loan Document or (h) amend
this Section 11.01; and provided further, that no amendment, modification,
-------- -------
waiver or consent shall, unless in writing and signed by the Agent in addition
to the Lenders required above to take such action, affect the rights or duties
of the Agent under any Loan Document.
SECTION 11.02. No Waiver; Remedies. No failure on the part of the Lenders
-------------------
or the Agent to exercise, and no delay in exercising, any right under any Loan
Document or any failure to require strict performance by any Borrower of any
provision or term of this Agreement, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right under any Loan Document
preclude any other or further exercise thereof or the exercise of any other
right. The remedies provided in the Loan Documents are cumulative and not
exclusive of any remedies provided by law.
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SECTION 11.03. Costs and Expenses.
------------------
(a) The Borrowers agree to pay on demand (i) all the actual and reasonable
cost and expenses of preparation of the Loan Documents and any consents,
amendments, waivers or other modifications thereto; (ii) all the costs of the
Borrowers' and Merisel Parent's performance of and compliance with all
agreements and conditions on their part to be performed or complied with under
this Agreement and the other Loan Documents; (iii) the reasonable fees, expenses
and disbursements of O'Melveny & Myers, counsel to the Agent, in connection with
the negotiation, preparation, execution and administration of the Loan Documents
and any consents, amendments, waivers or other modifications thereto and any
other documents or matters requested by the Borrowers or Merisel Parent; (iv)
the reasonable fees, expenses and disbursements of Price Waterhouse LLP,
financial adviser to the Agent; (v) all other actual and reasonable costs and
expenses (including, without limitation, travel and other out-of-pocket
expenses) incurred by the Agent, the Co-Agent, the Syndication Agent and the
Lenders (other than fees and expenses of counsel and financial advisors) in
connection with the syndication of the Commitments and the negotiation,
preparation, execution and administration of the Loan Documents and any
consents, amendments, waivers or other modifications thereto and the
transactions contemplated thereby; and (vi) after the occurrence of an Event of
Default, all costs and expenses including reasonable attorneys' fees (including
costs of internal counsel) and costs of settlement, incurred by the Agent, the
Co-Agent and the Lenders in enforcing any Obligations of or in collecting any
payments due from the Borrowers hereunder or under the other Loan Documents by
reason of such Event of Default or pursuant to any insolvency or bankruptcy
proceedings. In addition, the Borrowers agree to pay any and all stamp and
other taxes, fees and expenses payable or determined to be payable in connection
with the execution, delivery, filing and recording of the Loan Documents and the
other documents to be delivered under the Loan Documents and agrees to save the
Agent and each Lender harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes,
fees and expenses.
(b) If any payment of principal of any Eurodollar Rate Advance is made by a
Borrower to or for the account of a Lender
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other than on the last day of the Interest Period for such Advance, as a result
of acceleration of the maturity of the Obligations or the Notes pursuant to
Section 8.01 or for any other reason, the Borrower shall, upon demand by such
Lender (with a copy of such demand to the Agent), pay to the Agent for the
account of such Lender any amounts required to compensate such Lender for any
additional losses, costs or expenses which it may reasonably incur as a result
of such payment, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to fund or
maintain such Advance.
SECTION 11.04. Right of Set-off. Upon (i) the occurrence and during the
----------------
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 8.01 to authorize the Agent to
declare the Obligations due and payable pursuant to the provisions of Section
8.01, each Lender and the Designated Issuer is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits general or special, time or demand, provisional or final,
at any time held and other indebtedness at any time owing by such Lender or the
Designated Issuer, as the case may be, to or for the credit or the account of
any Borrower against any and all of the Obligations owing to such Lender or the
Designated Issuer, as the case may be, by that Borrower or any other Borrower,
irrespective of whether or not such Lender or the Designated Issuer, as the case
may be, shall have made any demand under this Agreement and although such
obligations may be unmatured. Each Lender and the Designated Issuer agrees
promptly to notify the Borrowers after any such set-off and application made by
such Lender or the Designated Issuer, as the case may be; provided that the
--------
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender and the Designated Issuer under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Lender or the Designated Issuer,
as the case may be, may have.
SECTION 11.05. Binding Effect; Governing Law. This Agreement shall be
-----------------------------
binding upon and inure to the benefit of the Borrowers, the Agent, each Lender
and the Designated Issuer and its successors and assigns, except that no
Borrower shall have
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the right to assign its rights hereunder or any interest herein without the
prior written consent of the Lenders. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
SECTION 11.06. Independence of Covenants. Subject to Section 11.18, all
-------------------------
covenants hereunder shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants, the fact that it
would be permitted by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid the occurrence of an Event of Default or
Incipient Default if such action is taken or condition exists.
SECTION 11.07. Severability. In case any provision or obligation under
------------
this Agreement or any other Loan Document shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 11.08. Entire Agreement. This Agreement with Exhibits and
----------------
Schedules and the other Loan Documents embody the entire agreement and
understanding between the parties hereto and supersede all prior agreements and
understandings relating to the subject matter hereof (except to the extent that
Section 4.05 incorporates certain arrangements relating to the payment of fees).
SECTION 11.09. Notices. Except as otherwise provided herein, all notices
-------
and other communications provided for hereunder shall be in writing (including
telegraphic communication) and mailed, telegraphed, telecopied or delivered,if
to a Borrower, the Agent or any Financial Institution, at its address set forth
under its name on the signature pages hereof; and if to any other Lender, at its
Domestic Lending Office specified in the Assignment and Acceptance or
Designation Agreement pursuant to which it became a Lender; or as to any such
Person, at such other address as shall be designated by such Person in a written
notice to the other parties hereto. All such notices and other communications
shall, when mailed, telegraphed, or telecopied respectively, be effective three
days after deposited in the mails or when
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delivered to the telegraph company, telecopied, or delivered, respectively,
addressed as aforesaid, except that notices and communications to the Agent
pursuant to Articles II and III shall not be effective until received by the
Agent.
SECTION 11.10. Change in Accounting Principles. If any changes in
-------------------------------
accounting principles from those used in the preparation of the financial
statements referred to in Section 6.01(e) hereafter occasioned by the
promulgation of rules, regulations, pronouncements and opinions by or required
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants (or successors thereto or agencies with similar
functions) result in a change in the method of calculation of financial
covenants, standards or terms found in Articles I and VII hereof, the parties
hereto agree to enter into negotiations in order to amend such provisions so as
to equitably reflect such changes with the desired result that the criteria for
evaluating the financial condition of any Borrower and its Subsidiaries shall be
the same after such changes as if such changes had not been made.
SECTION 11.11. Assignments and Participations.
------------------------------
(a) Each Lender may assign to one or more banks or other entities all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Revolving Facility Commitment, the Revolving
Facility Advances owing to it, its participation in Swing Line Advances, but
excluding in the case of the Swing Line Lender its obligation to make Swing Line
Advances hereunder); provided, however, that (i) each such assignment shall be
-------- -------
of a constant, and not a varying, percentage of all rights and obligations under
this Agreement (other than any right to make in the case of the Swing Line
Lender its Swing Line Commitment and any Swing Line Advances owing to it, and
except as provided in clause (iii) below); (ii) each such assignment (other than
an assignment to an Affiliate of the assigning Lender) shall require the consent
of the Borrowers, which consent shall not be unreasonably withheld, and of the
Agent, which consent shall not be unreasonably withheld; (iii) if the assigning
Lender shall have Issued Letters of Credit that are available for drawing at the
time of the assignment, the rights and obligations of such Lender with respect
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to such Letters of Credit shall not be assigned but such assigning Lender shall
continue to be a party hereto with respect to such rights and obligations and
the assigning Lender shall transfer to the assignee in accordance with Section
11.11(h) a participation interest therein equal to percentage referred to in
clause (i) above; (iv) the amount of the Revolving Facility Commitments of the
assigning Lender being assigned pursuant to each such assignment shall not be
less than Five Million Dollars ($5,000,000), and (v) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with a
processing and recordation fee of $2,500 and any other documents specified
therein. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations under the Loan Documents have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender and
Issuing Lender hereunder and under the Loan Documents, and (y) the assigning
Lender thereunder shall, to the extent that rights and obligations under the
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Loan Documents.
(b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency,
or value of any Loan Document or any other instrument or document furnished
pursuant hereto; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Borrower or the performance or observance by any Borrower of any of its
obligations under any Loan Document or any other instrument or document
furnished pursuant hereto; (iii) such assignee confirms that it has received a
copy of this Agreement and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter in such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, the Designated Issuer, such
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assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
Assignee appoints and authorizes the Agent and the Designated Issuer to take
such action as agent on its behalf and to exercise such powers under this
Agreement and the Loan Documents as are delegated to the Agent and the
Designated Issuer by the terms hereof and thereof, together with such powers as
are reasonably incidental thereto; and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations which, by the
terms of this Agreement, are to be performed by it as a Lender or Issuing
Lender.
(c) Upon receipt of an executed Assignment and Acceptance and the fee
referred to above, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit K hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrowers. If requested by
the assigning Lender or the assignee, the Borrowers will, promptly upon receipt
of such notice from the Agent, in exchange for the existing Revolving Facility
Advance Note of the assigning Lender and, if applicable, the assignee, issue new
Revolving Facility Advance Notes hereunder to such assigning Lender and the
assignee in conformity with the requirements of Section 2.01 hereof in order to
reflect their revised Revolving Facility Commitments and, if applicable,
Revolving Facility Advances. Any Revolving Facility Advance Notes received by
the Agent from the assigning Lender or the assignee in exchange for such new
Revolving Facility Advance Notes shall be marked "canceled by replacement" and
returned to the Borrowers.
(d) The Agent shall maintain at its address listed on the signature pages
hereto a register for the recordation of the names and addresses of each of the
Lenders and the Revolving Facility Commitment of, principal amount of the
Revolving Facility Advances owing to, and Letters of Credit Issued by each such
Lender from time to time (the "Register"). The entries in the Register shall be
--------
conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for the purposes of this
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Agreement. The Register shall be available for inspection by the Borrowers or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Revolving
Facility Commitment, the Advances owing to it and any Letters of Credit Issued
by it; provided, however, that (i) such Lender's obligations under this
-------- -------
Agreement (including, without limitation, its Revolving Facility Commitment to
the Borrowers and its obligation to Issue Letters of Credit shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the Borrowers, the Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and (iv) a participant shall not be entitled to require the Lender to
take or omit to take any action hereunder except action directly effecting a
reduction of any of the aggregate principal amount of, the rate of interest
payable on or the fees or other amounts payable in connection with the types of
Advances or other extensions of credit that are the subject of its
participation, or postponement of the time for payment of any such amount.
(f) No assignment or participation pursuant to this Section 11.11 shall,
without the consent of the Borrowers, (i) require any Borrower to file a
registration statement with the Securities and Exchange Commission or apply to
qualify the Revolving Facility Advances under the blue sky laws of any state or
(ii) require any Borrower to qualify to do business as a foreign corporation in
any jurisdiction in which the Borrower is not so qualified.
(g) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 11.11, disclose to
the assignee or participant or proposed assignee or participant, any information
relating to any Borrower or Merisel Parent furnished to such Lender by or on
behalf of the Borrowers; provided that such potential assignee or participant
--------
has been identified by a Borrower to the Agent or that prior to any such
disclosure, (i) such Lender shall notify the Borrowers of such proposed
assignment or participation and
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identify the proposed assignee or participant, (ii) the Borrowers shall consent
or no written objection shall be received from the Borrowers by such Lender
within 10 days of the notification or, in the event any such objection is
received, such objection is found to be unreasonable by Majority Lenders and
(iii) the proposed assignee or proposed participant shall agree to preserve the
confidentiality of any information relating to the Borrowers or Merisel Parent
received by it from such Lender, subject to reasonable and customary industry
standards and exceptions.
(h) Notwithstanding anything else contained herein, each Lender may
assign, as collateral or otherwise, any of its rights (including, without
limitation, rights to payments of principal or interest) under this Agreement to
any Federal Reserve Bank (or to any Affiliate of such Lender for purposes of
assignment to any Federal Reserve Bank) without notice to or the consent of the
Borrowers or the Agent and without any requirement that the assignee assume any
obligations of such Lender hereunder.
SECTION 11.12. Execution in Counterparts. This Agreement may be executed
-------------------------
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 11.13. WAIVER OF JURY TRIAL. EACH BORROWER, MERISEL PARENT AND
--------------------
EACH OF THE AGENT, THE DESIGNATED ISSUER AND THE LENDERS HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENT OR THE ADVANCES, OR L/C LIABILITY OR
THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.
SECTION 11.14. Judgment.
--------
(a) If for the purposes of obtaining judgment in any court it is necessary
to convert a sum due hereunder in any currency (the "Original Currency") into
-----------------
another currency (the "Other Currency") the parties hereto agree, to the fullest
--------------
extent that they may effectively do so, that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Agent could
purchase the Original Currency with the Other
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Currency at 11:00 A.M. (London time) on the second Business Day preceding that
on which final judgment is given.
(b) The obligation of a Borrower in respect of any sum due in the Original
Currency from it to any Lender or the Agent hereunder shall, notwithstanding any
judgment in any Other Currency, be discharged only to the extent that on the
Business Day following receipt by such Lender or the Agent (as the case may be)
of any sum adjudged to be so due in such Other Currency such Lender or the Agent
(as the case may be) may in accordance with normal banking procedures purchase
Dollars with such Other Currency; if the amount of the Original Currency so
purchased is less than the sum originally due to such Lender or the Agent (as
the case may be) in the Original Currency, the Borrowers agree, as a separate
obligation and notwithstanding any such judgment, to indemnify such Lender or
the Agent (as the case may be) against such loss, and if the amount of the
Original Currency so purchased exceeds the sum originally due to any Lender or
the Agent (as the case may be) in the Original Currency, such Lender or the
Agent (as the case may be) agrees to remit to the Borrowers such excess.
SECTION 11.15. Submission to Jurisdiction. Each Borrower and Merisel
--------------------------
Parent hereby irrevocably submits to the jurisdiction of any California state or
Federal court sitting in Los Angeles, California in any action or proceeding
arising out of or relating to this Agreement or any other Loan Document as it
may be amended from time to time, and each Borrower and Merisel Parent hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such California state or Federal court. Each
Borrower and Merisel Parent hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of any inconvenient forum to the maintenance
of such action or proceeding. Each Borrower and Merisel Parent also irrevocably
consents to the service of any and all process in any such action or proceeding
by the mailing of copies of such process to it at its address specified on the
signatures pages hereof. Each Borrower and Merisel Parent agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing herein shall affect the right of the Agent, the
Designated Issuer or any Lender to serve legal process in any other manner
permitted by law or affect the right of the Agent, the Designated Issuer or any
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Lender to bring any action or proceeding against any Borrower or Merisel Parent
or their respective property in the courts of any other jurisdiction.
SECTION 11.16. Indemnification. Each Borrower and Merisel Parent agrees
---------------
to pay, and on demand to indemnify and hold harmless the Agent, the Syndication
Agent, each Lender and the Designated Issuer, and their respective affiliates,
and each of their respective successors, assigns, directors, officers,
employees, servants, attorneys and agents (collectively, the "Indemnitees") from
-----------
and against any and all claims, including claims based on strict liability in
tort, damages, losses, liabilities, demands, suits, penalties, judgments, causes
of action and all legal proceedings, whether civil, criminal, administrative or
in arbitration, whether or not such Indemnitee is a party thereto, penalties,
fines and other sanctions and expenses, including, without limitation fees and
disbursements of counsel, which may be imposed on incurred by or asserted
against any Indemnitee:
(a) by reason of or in connection with the execution, delivery,
performance, administration or enforcement of this Agreement or any proposal,
fee, or commitment letter relating thereto, or any transaction contemplated by
this Agreement; or
(b) arising under or pursuant to activities of any Borrower that violate
Hazardous Materials Laws; or
(c) arising out of or relating to the use of proceeds of the Advances or
the Letters of Credit;
provided, however, that neither any Borrower nor Merisel Parent shall be liable
- -------- -------
to any Indemnitee for any portion of such claims, damages, liabilities and
expenses that a court of competent jurisdiction shall have determined to have
directly resulted from such Indemnitee's gross negligence or willful misconduct.
To the extent that the undertaking to indemnify, pay and hold harmless set forth
in the immediately preceding sentence may be unenforceable because it is
violative of any law or public policy, each Borrower and Merisel Parent shall
contribute the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnified liabilities
incurred by the Indemnitees or any of them.
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SECTION 11.17. Survival of Warranties and Certain Agreements.
---------------------------------------------
(a) All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement, the making of the
Revolving Facility Advances hereunder and the Issuance of the Letters of Credit.
(b) Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of the Borrowers and Merisel Parent set forth in
Sections 2.08, 2.09, 2.10, 3.04, 3.05, 4.03, 11.03 and 11.16 and the agreements
of Lenders and the Designated Issuer set forth in Sections 4.04, 10.05 and 11.04
shall survive the payment of the Revolving Facility Advances, the cancellation
or expiration of the Letters of Credit and the termination of this Agreement.
SECTION 11.18. Compliance with Indenture. (a) For purposes of this
-------------------------
Section 11.18 only, capitalized terms used in this Section 11.18 (other than the
definitions of "Agreement" and "Prior Credit Agreement") shall have the meanings
assigned to such terms in the Indenture.
(b) If any provision of this Agreement (including, without limitation, any
provision incorporated herein pursuant to Section 7.03 of this Agreement) would,
directly or indirectly, cause or create any consensual encumbrance or
restriction of any kind on the ability of any Subsidiary of the Company to (i)
pay dividends, in cash or otherwise, or make any other distributions on its
Capital Stock or any other interest or participation in, measured by, its
profits owned by the Company or a Subsidiary of the Company, (ii) make any loans
or advances to, or pay any Indebtedness owed to, the Company or any Subsidiary
of the Company or (iii) transfer any of its properties or assets to the Company
or to any Subsidiary of the Company, such provision or provisions, if any, of
this Agreement which cause or create encumbrances or restrictions shall be
unenforceable and void ab initio to the extent, but only to the extent, that the
-- ------
terms and conditions of any such restriction are materially less favorable in
the aggregate to the Holders of the Securities than those under or pursuant to
the Prior Credit Agreement in effect on the Issue Date.
127
<PAGE>
(c) To the extent, but only to the extent that any encumbrance or
restriction is unenforceable pursuant to clause (b) of this Section 11.18, such
encumbrance or restriction shall be deemed to be amended to conform with the
provision or provisions of the Prior Credit Agreement in effect on the Issue
Date which encumbers or restricts the same transaction.
SECTION 11.19. Headings. Section and subsection headings in this
--------
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
[the balance of this page is intentionally left blank]
128
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by its officers thereunto duly authorized, as of the date first above
written.
Addresses for notices, Domestic Lending Offices and Eurodollar Lending
Offices are listed on Schedule VIII.
THE BORROWERS
-------------
MERISEL AMERICAS, INC.
By: /s/ Timothy Jenson
-------------------------------
Name: Timothy Jenson
Title: Vice President & Treasurer
MERISEL EUROPE, INC.
By: /s/ Timothy Jenson
-------------------------------
Name: Timothy Jenson
Title: Vice President & Treasurer
THE PARENT GUARANTOR
--------------------
MERISEL, INC.
By: /s/ Timothy Jenson
-------------------------------
Name: Timothy Jenson
Title: Vice President & Treasurer
THE AGENT
---------
CITICORP USA, INC., as Agent
By: /s/ Claire Wibroe
-------------------------------
Name: Claire Wibroe
Title: Vice President
THE CO-AGENT
------------
NATIONSBANK OF TEXAS, N.A., as Co-Agent
By: /s/ William E. Livingstone, IV
-------------------------------
Name: William E. Livingstone, IV
Title: Senior Vice President
S-1
<PAGE>
THE DESIGNATED ISSUER
---------------------
CITIBANK, N.A., as Designated Issuer
By: /s/ Claire Wibroe
-------------------------------
Name: Claire Wibroe
Title: Vice President
S-2
<PAGE>
REVOLVING PERCENT OF THE LENDERS
- --------- ---------- -----------
FACILITY AGGREGATE
- -------- ---------
COMMITMENT REVOLVING
- ---------- ---------
FACILITY
--------
COMMITMENTS
-----------
CITICORP USA, INC.
$20,000,000 13.333%
SWING LINE
- ----------
COMMITMENT
- ----------
$5,000,000 By: /s/ Claire Wibroe
------------------------
Name: Claire Wibroe
Title: Vice President
S-3
<PAGE>
REVOLVING PERCENT OF
- --------- ----------
FACILITY AGGREGATE
- -------- ---------
COMMITMENT REVOLVING
- ---------- ---------
FACILITY
--------
COMMITMENTS
-----------
NATIONSBANK OF TEXAS, N.A.
$20,000,000 13.333%
By: /s/ William E. Livingstone, IV
--------------------------------
Name: William E. Livingstone, IV
Title: Senior Vice President
S-4
<PAGE>
REVOLVING PERCENT OF
- --------- ----------
FACILITY AGGREGATE
- -------- ---------
COMMITMENT REVOLVING
- ---------- ---------
FACILITY
--------
COMMITMENTS
-----------
UNION BANK OF CALIFORNIA
$20,000,000 13.333%
By: /s/ Christiana Creekbaum
------------------------
Name: Christiana Creekbaum
Title: Vice President
S-5
<PAGE>
REVOLVING PERCENT OF
- --------- ----------
FACILITY AGGREGATE
- -------- ---------
COMMITMENT REVOLVING
- ---------- ---------
FACILITY
--------
COMMITMENTS
-----------
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES
AGENCY
$17,500,000 11.667%
By: /s/ Motokazu Uematsu
------------------------
Name: Motokazu Uematsu
Title:
S-6
<PAGE>
REVOLVING PERCENT OF
- --------- ----------
FACILITY AGGREGATE
- -------- ---------
COMMITMENT REVOLVING
- ---------- ---------
FACILITY
--------
COMMITMENTS
-----------
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
$15,000,000 10.0%
By: /s/ Toshinari Iyoda
------------------------
Name: Toshinari Iyoda
Title: Senior Vice President
S-7
<PAGE>
REVOLVING PERCENT OF
- --------- ----------
FACILITY AGGREGATE
- -------- ---------
COMMITMENT REVOLVING
- ---------- ---------
FACILITY
--------
COMMITMENTS
-----------
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
$15,000,000 10.0%
By: /s/ Mark M. Harden
------------------------
Name: Mark M. Harden
Title: Vice President
S-8
<PAGE>
REVOLVING PERCENT OF
- --------- ----------
FACILITY AGGREGATE
- -------- ---------
COMMITMENT REVOLVING
- ---------- ---------
FACILITY
--------
COMMITMENTS
-----------
NBD BANK
$12,500,000 8.333%
By: ________________________
Name:
Title:
S-9
<PAGE>
REVOLVING PERCENT OF
- --------- ----------
FACILITY AGGREGATE
- -------- ---------
COMMITMENT REVOLVING
- ---------- ---------
FACILITY
--------
COMMITMENTS
-----------
WESTDEUTSCHE LANDESBANK
GIROZENTRALE,
New York Branch
$10,000,000 6.667%
By: /s/ A. Kumbrer
------------------------
Name: A. Kumbrer
Title: Managing Director
By: /s/ J.M. Malloy
------------------------
Name: J.M. Malloy
Title: Vice President
S-10
<PAGE>
REVOLVING PERCENT OF
- --------- ----------
FACILITY AGGREGATE
- -------- ---------
COMMITMENT REVOLVING
- ---------- ---------
FACILITY
--------
COMMITMENTS
-----------
HEINE SECURITIES CORPORATION
$10,000,000 6.667%
By: /s/ Edward J. Bradley
------------------------
Name: Edward J. Bradley
Title: Chief Financial Officer
S-11
<PAGE>
REVOLVING PERCENT OF
- --------- ----------
FACILITY AGGREGATE
- -------- ---------
COMMITMENT REVOLVING
- ---------- ---------
FACILITY
--------
COMMITMENTS
-----------
COMMERZBANK AG, LOS ANGELES
BRANCH
$10,000,000 6.667%
By: /s/ Steven F. Larsen
------------------------
Name: Steven F. Larsen
Title: Vice President
By: /s/ Wolter Mehring
------------------------
Name: Wolter Mehring
Title: Vice President
S-12
<PAGE>
EXHIBIT 10.45
AMENDMENT NO.1 AND WAIVER
TO RECEIVABLES PURCHASE AND SERVICING AGREEMENT
AMENDMENT NO. 1 AND WAIVER dated as of April 12, 1996 among Merisel
Capital Funding, Inc. (the "Seller"). Redwood Receivables Corporation (the
"Purchaser"), General Electric Capital Corporation (the "Operating Agent" and
"Collateral Agent") and Merisel Americas, Inc. (the "Servicer").
WHEREAS, the Seller, the Purchaser, the Operating Agent, the
Collateral Agent and the Servicer are parties to a Receivables Purchase and
Servicing Agreement dated as of October 2, 1995 (the "Purchase Agreement").
WHEREAS, the parties to the Purchase Agreement desire to amend such
Purchase Agreement.
WHEREAS, as of December 30, 1995, the Parent (as defined in the
Purchase Agreement) breached certain financial covenants contained in the
Purchase Agreement and the Seller and the Servicer have requested that the
Purchaser, the Operating Agent and the Collateral Agent waive such breaches,
subject to the terms and conditions hereof.
THE PARTIES AGREE AS FOLLOWS:
SECTION 1. Definitions. All capitalized terms used herein, unless
-----------
otherwise defined, are used as defined in the Purchase Agreement.
SECTIONS 2. Amendment to Purchase Agreement. The Purchase Agreement
-------------------------------
is amended effective as of the date hereof as follows:
(a) The words "Subordinated Debt" in the definition of "Tangible Net
Worth" in Exhibit H are deleted and the words "subordinated debt" substituted
therefor.
(b) Exhibit H is amended by the addition of the following words at
the end thereof:
"For the period from December 31, 1995 to and including December 28, 1996,
compliance with the Fixed Charge Coverage Ratio and the Tangible Net Worth
covenants in this Exhibit H shall not be required and, in their stead, the
covenants contained Sections 7.01(i) and 7.01(g) of the Revolving Credit
Agreement dated as of December 23, 1993, as amended and restated as of
April 12, 1996, among the Servicer and Merisel Europe, Inc., as borrowers,
Merisel, Inc., as guarantor, the Lenders party thereto, Citicorp USA, Inc.,
as agent NationsBank of Texas, N.A. as co-agent and Citibank N.A. as
designated
<PAGE>
issuer, shall apply, which covenants and associated definitions shall be
incorporated herein by reference (without giving effect to any amendments
or modifications thereto to which the Purchaser, Operating Agent and
Collateral Agent have not consented to in writing)."
SECTION 3. Waiver of Purchase Agreement. The Operating Agent, the
-----------------------------
Collateral Agent and the Purchaser agree to waive the Fixed Charge Coverage
Ration contained in Exhibit H of the Purchase Agreement as it applies to the
Parent solely as such financial covenant relates to the period from the
Effective Date through to and including December 30, 1995.
SECTION 4. Conditions Precedent.
---------------------
(a) The effectiveness of this Amendment No. 1 and Waiver is subject
to the conditions precedent that the Collateral Agent, the Operating Agent and
the Purchaser shall have received each of the following, in form and substance
satisfactory to each such party:
(i) A certificate of the Secretary of the Seller and the
Servicer, dated the date of this Amendment No. 1 and Waiver and certifying
(A) that attached thereto is a true and complete copy of a resolution of
the Board of Directors of the Seller or the Servicer, as the case may be,
authorizing the execution, delivery and performance of this Amendment No. 1
and Waiver and all other documents requires or necessary to delivered
hereunder and that such resolution has not been modified, rescinded or
amended and is in full force and effect, and (B) as to the incumbency and
specimen signature of each Person's officers executing this Amendment No. 1
and Waiver and all other documents required or necessary to be delivered
hereunder.
(ii) An executed copy of and payment of the amounts set forth
in the fee letter among the parties hereto dated as of the date hereto
(the "Fee Letter").
(iii) Such other approvals, opinions or documents as the
Collateral Agent or the Operating Agent may reasonably request.
SECTION 5. Confirmation of Agreement and Loan Documents. Each of the
---------------------------------------------
Seller and the Servicer agree that, except for the specific waiver set forth in
Section 3 and the specific amendments set forth in Section 2, nothing herein
shall be deemed to be waiver or amendment of any covenant or agreement contained
in the Purchase Agreement and the Purchase Agreement and each of the other
documents executed in connection therewith are ratified and confirmed in all
respects and shall
2
<PAGE>
remain in full force and effect in accordance with its terms. Each reference in
the Purchase Agreement to "this Agreement" and in each of the other documents to
be executed in connection therewith to the "Purchase Agreement" shall mean the
Purchase Agreement as amended by this Amendment No. 1 and Waiver, and as
hereinafter amended or restated.
SECTION 6. Seller's and Servicer's Representations and Warranties
------------------------------------------------------
Each of the Seller and the Servicer represents and warrants that:
(a) this Amendment No. 1 and Waiver has been duly authorized,
executed and delivered pursuant to its corporate power;
(b) this Amendment No. 1 and Waiver constitutes its legal, valid and
binding obligation; and
(c) after giving effect to the amendments referred to herein, there
does not exist any Termination Event.
SECTION 7. Expenses. The Seller and the Servicer jointly and
--------
severally agree to pay on demand the fees set forth in the Fee Letter.
SECTION 8. Counterparts. Delivery of an executed counterpart of a
------------
signature page of this Amendment No. 1 and Waiver by facsimile shall be
effective as delivery of a manually executed counterpart of this Amendment No. 1
and Waiver. This Amendment No.1 and Waiver may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
SECTION 9. Governing Law. This Amendment No. 1 and Waiver shall be
-------------
governed by, and construed in accordance with, California law.
3.
<PAGE>
IN WITNESS WHEREOF, the Seller, the Collateral Agent, the Operating
Agent, the Servicer and the Purchaser have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
MERISEL CAPITAL FUNDING. INC.,
as Seller
By: /s/ Timothy N. Jenson
----------------------------------------
Name: Timothy N. Jenson
Title: Vice President & Treasurer
MERISEL AMERICAS, INC.,
as Servicer
By: /s/ Timothy N. Jenson
----------------------------------------
Name: Timothy N. Jenson
Title: Vice President & Treasurer
GENERAL ELECTRIC CAPITAL CORPORATION,
as Operating Agent and Collateral Agent
By: /s/ Dan Pengue
----------------------------------------
Name: Dan Pengue
Title: Authorized Signatory
REDWOOD RECEIVABLES CORPORATION,
as Purchaser
By: /s/ Catharine L. Midkiff
----------------------------------------
Name: Catharine L. Midkiff
Title: Assistant Secretary
4.
<PAGE>
April 12, 1996
Merisel Capital Funding, Inc.
200 Continental Boulevard
EL Segundo, CA 90245
Ladies and Gentlemen:
We refer to Amendment No.1 and Waiver to the Receivables Purchase and
Servicing Agreement dated as of the date hereof (the "Amendment") among Merisel
Capital Funding, Inc. as Seller, Redwood Receivables Corporation, as Purchaser,
General Electric Capital Corporation, as Operating Agent and Collateral Agent
and Merisel Americas, Inc., as Servicer. Terms not otherwise defined in this
latter shall have the meaning assigned to them under the Amendment.
This letter is the Fee Letter referred to in the Amendment and sets
forth our understanding with respect to certain fees that are payable by the
Seller pursuant to the Amendment.
The parties to this letter agree as follows:
1. The Seller shall pay a fee of $250,000 to the Operating Agent on
the date hereof.
2. The Seller shall pay the fees and expenses of counsel to the
Operating Agent incurred in connection with the Amendment.
3. The provisions of Section 14.04 of the Purchase Agreement are
incorporated herein.
<PAGE>
April 12, 1996
4. This letter shall be governed by, and construed in accordance
with, California law.
Very truly yours.
GENERAL ELECTRIC CAPITAL
CORPORATION, as Operating Agent
By: /s/ Dan Pergue
__________________________________
Name: Dan Pergue
Title: Authorized Signatory
REDWOOD RECEIVABLES CORPORATION,
as Purchaser
By: /s/ Katharine L. Midkiff
__________________________________
Name: Katharine L. Midkiff
Title: Assistant Secretary
Agreed and accepted as of
the date first above written:
MERISEL CAPITAL FUNDING, INC.
as Seller
By: /s/ Timothy N. Jenson
---------------------------------
Name: TIMOTHY N. JENSON
Title: VICE PRESIDENT & TREASURER
2
<PAGE>
April 12, 1996
MERISEL AMERICAS, INC.
as Servicer
By: /s/ Timothy Jenson
------------------------------
Name: Timothy Jenson
Title: V.P. & Treasurer
<PAGE>
EXHIBIT 10.46
SECOND AMENDMENT AND WAIVER TO AMENDED AND
RESTATED SUBORDINATED NOTE PURCHASE AGREEMENT
Re: $22,000,000 of Amended and Restated 11.78%
Subordinated Notes due March 10, 2000
Dated as of April 12, 1996
This Second Amendment and Waiver (the "Amendment") to the Amended and
---------
Restated Subordinated Note Purchase Agreement, dated as of December 23, 1993, as
amended as of September 30, 1994 (the "Existing Agreement"), is entered into as
------------------
of April 12, 1996 by an among the Noteholders identified on the signature pages
hereof (the "Noteholders") and Merisel Americas, Inc., a Delaware corporation
-----------
(the "Company"). Capitalized terms used herein without definition shall have
-------
the same meanings herein as set forth in the Existing Agreement.
RECITAL
The parties hereto have agreed to amend the Existing Agreement as
hereinafter set forth.
IN CONSIDERATION of the mutual promises and covenants set forth herein, the
parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE EXISTING AGREEMENTS.
(a) Section 1.1 of the Existing Agreement is hereby amended by
deleting in its entirety the text of such Section, and inserting in its place
the following:
"The Company has authorized the issuance for exchange of $17,600,000 in
aggregate principal amount of its Amended and Restated Subordinated Notes
due March 10, 2000, to be dated (except as otherwise set forth in
<PAGE>
(S)(S) 8.2 and 8.3) the date of original issuance thereof and to be
substantially in the form of Exhibit A hereto (the "Notes"). Each Note
shall bear interest (i) from the date thereof through the date of the
Second Amendment and Waiver to the Agreement at the rate of 11.28% per
annum and (ii) from the date of the Second Amendment and Waiver to the
Agreement until such Note shall become due and payable in accordance with
the terms thereof and hereof (whether at maturity, by acceleration or
otherwise) at the rate of 11.78% per annum (the interest rate applicable at
any time, the "Interest Rate"), payable in arrears on September 10, 1996,
and on each December 10, March 10, June 10, September 10, and December 10
thereafter (each, an "Interest Payment Date") and shall have a stated
maturity of March 10, 2000. Interest on the Notes shall be computed on the
basis of a 360-day year of twelve 30-day months. Any overdue installment of
interest shall bear interest at a rate equal to lesser of (a) 12.78% or (b)
the highest rate permitted by applicable law, until paid (the "Default
Rate"). During any period in which an Event of Default has occurred and is
continuing, the Notes shall bear interest at the Default Rate. Each Note
shall be issued in a denomination of $500,000 or more.
(b) Paragraph (a) of Section 7.1 of the Existing Agreement is hereby
amended by deleting in its entirety the first sentence of such paragraph, and
inserting in its place the following:
"The Company will, without notice, prepay or pay, without premium,
$4,400,000 aggregate principal amount of the Notes on each of January 20,
1997, March 10, 1998 and March 10, 1999, together, in each case, with
interest accrued on the amount to be
2
<PAGE>
prepaid to the date of prepayment or payment.
(c) Section 9.10 of the Existing Agreement is hereby amended by
deleting Section 9.10 of the Existing Agreement and inserting in its place the
following:
"(S) 9.10 Incorporated Covenants. The covenants set forth in Sections
----------------------
6.6, 6.7, 6.9, 6.13, 6.14, 6.23 (only insofar as it relates to the
Indenture (as defined therein)), 6.25 through 6.32, and 6.35 through 6.40
(the "Incorporated Covenants") of the Senior Note Purchase Agreement, as
amended by the Third Amendment and Waiver thereto dated as of the date
hereof (as amended, the "Senior Note Agreement"), are incorporated by
reference into this agreement as if stated herein in full, together with
all defined terms used therein, provided, however, that (i) such
--------
Incorporated Covenants, as incorporated herein, shall reflect that they are
delivered to run in favor of the Noteholders, rather than to the parties
set forth therein and (ii) any amendments or modifications to, waivers as
to, or expiration or cancellation of (by cancellation, amendment or
termination of the Senior Note Agreement or otherwise), such Incorporated
Covenants subsequent to April 15, 1996 shall only be deemed to amend, waive
compliance with, or terminate, as the case may be, such Incorporated
Covenants, as incorporated herein, if approved or consented to by the
Required Noteholders; and provided further that all references in such
-------- -------
Incorporated Covenants, as incorporated herein, to payments on the notes
issued under the Senior Note Agreement shall be deemed to continue to refer
to payments on such notes; and provided further that the incorporation
-------- -------
herein of the Incorporated Covenants shall be limited to
3
<PAGE>
the extent, and only to the extent. necessary to avoid any prohibition or
limitation on any payment to the Noteholders; and provided further that if
-------- -------
the Senior Note Agreement is renewed or replaced by financing on terms that
contain covenants affording protection to the Noteholders substantially
equivalent to, or greater than, the protection provided the Incorporated
Covenants, as to substantially the same matters as are covered by the
Incorporated Covenants (financing on such terms, the "Replacement
Financing"), such covenants contained in such renewal or replacement
financing shall be deemed incorporated herein. The Company shall, on or
before the later of (i) 60 days after the the date on which all Designated
Senior Debt (and, to the extent not otherwise included therein, all
interest, fees, costs, expenses, and other obligations thereunder) has been
repaid in full in cash and all commitments for such Debt have been
terminated and (ii) July 31, 1997, obtain such Replacement Financing. In
the event that the Company renews or extends the Senior Note Agreement, the
last clause of the first sentence of this Section 9.10 shall also apply to
any Replacement Financing that replaces such Senior Note Agreement as
renewed or extended.";
(d) Section 9.11, 9.12, 9.13, 9.14 and 9.15 of the Existing
Agreement are hereby amended by deleting in its entirety the text of each such
Section, and inserting in its place the following:
"[intentionally omitted]";
(e) clause (iii) of Section 9.16(a) of the Existing Agreement is
hereby amended by deleting in its entirety the text of such clause, and
inserting in its place the following:
"[intentionally omitted]";
4
<PAGE>
(f) a new Section 9.19 is added to the Existing Agreement to
read in its entirety as follows:
"(S) 9.19 Additional Reports. The Company shall deliver to each
------------------
Noteholder a copy of each of the reports that it is obligated to
provide to the holders of the notes issued under the Senior Note
Agreement in accordance with Sections 6.17(d)-(f) and 6.17(i)-(l) of
the Senior Note Agreement, provided that to the extent that any
--------
Noteholder shall also be a holder of the notes issued under the Senior
Note Agreement, the Company shall only deliver to such Noteholder one
copy of such reports. Such delivery shall occur within one business
day after the day on which the Company is obligated to deliver such
reports to the holders of the notes issued under the Senior Note
Agreement.";
(g) a new Section 9.20 is added to the Existing Agreement to read in
its entirety as follows:
"(S) 9.20 Business Plan. The Company shall, on or before January 31,
-------------
1997, deliver to the Noteholders a business plan for the Company's
1997 fiscal year, in a form comparable to the business plan for the
Company's 1996 fiscal year that was delivered to the Noteholders on
or before April 12, 1996."
(h) a new Section 9A is added to the Existing Agreement to read
it its entirety as follows:
"Section 9A. Compliance With Indenture. (a) For purposes of this
Section 9A only, capitalized terms (other than "Agreement") used in
this Section 9A shall have the meanings assigned to them in the
Indenture
(b) If any provision of this Agreement would, directly or indirectly,
cause or create, any consensual encumbrance or restriction of any kind
on the ability of any Subsidiary of the Company to (i) pay dividends,
in cash or otherwise, or make any other distributions on its Capital
5
<PAGE>
Stock or any other interest or participation in, or measured by, its
profits owned by the Company or a Subsidiary of the Company, (ii) make
any loans or advances to, or pay any Indebtedness owed to, the Company
or any Subsidiary of the Company or (iii) transfer any of its
properties or assets to the Company or any Subsidiary of the Company,
then such provision or provisions of this Agreement which cause or
create such encumbrances or restrictions shall be unenforceable and
shall be void ab initio to the extent, but only to the extent, that
-- ------
the terms and conditions of any such restriction are materially less
favorable in the aggregate to the Holders of the Securities than those
under or pursuant to this Agreement as in effect on the Issue Date.
(c) To the extent, but only to the extent, that any encumbrance or
restriction is unenforceable pursuant to clause (b) of this Section
9A, such encumbrance or restriction shall be replaced by the
provision or provisions of this Agreement as in effect on the Issue
Date, if any, which encumbers or restricts the same transaction."
(i) Section 10.4 of the Existing Agreement is hereby amended by
deleting in its entirety the text of such Section and inserting in its place the
following:
"Each set of consolidated financial statements delivered pursuant to
subsection (a) of (S) 10.1 shall be accompanied by a report of the
independent certified public accountants who shall have reported on
such consolidated financial statements (i) stating that in connection
with their audit examination, nothing has come to their attention that
caused them to believe that Merisel, Inc. or its Subsidiaries failed
to comply with the terms, covenants, provisions or conditions of in
Section 9.10 of this Agreement insofar as they relate to
6
<PAGE>
financial and accounting matters (which such report may state that
such audit examination was not directed primarily toward obtaining
knowledge of noncompliance with such sections) and (ii) setting forth
in reasonable detail the calculations made as of the end of the
related fiscal year in determining compliance with the provisions of
Sections 6.6, 6.9, 6.11, 6.14(c), 6.25, 6.28, 6.29, 6.30, 6.31, 6.32,
6.33, 6.37, 6.38 of the Senior Note Agreement as and to the extent
such covenants are incorporated in (S) 9.10.";
(j) Paragraph (d) of Section 11.1 of the Existing Agreement is
hereby amended by deleting in its entirety the text of such paragraph, Section
and inserting in its place the following:
"the Company shall default in the due and punctual performance or
compliance with any covenant, condition or agreement to be performed
or observed by it under (S) 9.10 and, if such default is capable of
being remedied, such default shall continue unremedied for 30 days
after the Company is given notice of such de fault by any Noteholder;
or"; and
(k) Exhibit A to the Existing Agreement is hereby deleted in its
entirety and replaced by Exhibit A to this Amendment.
SECTION 2. WAIVER. On the terms of this Amendment, and subject to
the conditions precedent set forth in Section 3, each of the Noteholders (i)
hereby waives all Events of Default existing on or prior to December 30, 1995
and (ii) hereby agrees that all of the amendments contained in Section 1 hereof
shall be deemed effective as of December 31, 1995.
7
<PAGE>
SECTION 3. CONDITIONS TO EFFECTIVENESS.
The amendments set forth in Section 1 and the waiver set forth in
Section 2 of this Amendment shall become effective on April 15, 1996 only upon
the satisfaction of each of the following conditions precedent on or prior to
such date:
(a) the execution and delivery of this Amendment by the Company
and the requisite Noteholders in accordance with Section 14.4 of the Existing
Agreement ;
(b) the representations and warranties in this Amendment and the
Existing Agreement as amended by this Amendment (the "Amended Agreement") shall
-----------------
be true, correct and complete in all respects on and as of the date hereof, as
though made on such date (except to the extent that such representations and
warranties relate solely to an earlier date, in which case they are true,
correct and complete in all material respects as of such earlier date), provided
--------
that for purposes of this Section 2(b) of this Amendment:
- ----
(i) Section 2.5 of the Existing Agreement shall be deemed
to read as follows:
"(S) 2.5 No Material Adverse Change. Since December 31, 1995,
--------------------------
there has been no material adverse change in the business, earn-
ings, prospects, properties or condition (financial or otherwise)
of the Company or its Subsidiaries, other than those that have
been disclosed in writing to the Noteholders. Since December 31,
1995, neither the Company nor any Subsidiary has directly or
indirectly declared, ordered, paid, made or set apart any sum or
property for any Restricted Payment or agreed to do so.";
(ii) Section 2.8 of the Existing Agreement shall be deemed
by adding the following to the end of Section 2.8:
"other than any consent of the holders of the notes issued under
the Senior Note Agreement or the Lenders (the "Lenders") under
that certain Revolving Credit Agreement, dated as of December
23, 1993, among the Company and Merisel Europe, Inc., as
8
<PAGE>
borrowers, Merisel, Inc., as guarantor, the lenders listed on the
signature pages thereof, Citicorp USA, Inc., as agent,
NationsBank of Texas, N.A., as co-agent, and Citibank, N.A., as
designated issuer.";
(iii) Section 2.17 of the Existing Agreement shall be
deemed to read as follows:
"(S) 2.17 Consents, etc. Except as have been made or received,
-------------
no prior consent, approval or authorization of, registration,
qualification, designation, declaration or filing with, or notice
to (a) any federal, state or local governmental or public
authority or agency, or (b) any stockholder, creditor, lessor or
other non-governmental person, other than the holders of Senior
Notes issued pursuant to the Senior Note Purchase Agreement or
the Lenders, is required for (i) the valid execution, delivery
and performance of this Agreement by the Company, (ii) the valid
offer, issuance, sale, delivery and performance of the Notes by
the Company, or (iii) the consummation of the Restructuring
Transactions, except those of which the failure to make or
receive would not have a material adverse effect on the Company
and the Subsidiaries, taken as a whole. No consent, approval or
authorization of, declaration or filing with, or notice to, any
federal, state or local governmental or public authority or
agency on the part of the Company or any Subsidiary is necessary
for the continued conduct by the Company or any Subsidiary of its
business as now conducted or as proposed to be conducted, except
for routine corporate filings all of which have been or will be
duly and properly obtained and are or will be in full force and
effect on the Closing Date.";
(c) no Default or Event of Default shall result from the
consummation of the transactions contemplated herein;
9
<PAGE>
(d) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the consummation of the
transactions contemplated herein shall have been issued and remain in force by
any governmental authority against the Company or Merisel, Inc.;
(e) the Company shall have duly executed and issued for exchange
Amended and Restated Subordinated Notes due March 10, 2000, to the order of each
Noteholder in substantially the form of Exhibit A to this Amendment (the "New
---
Notes"). The Existing Amended and Restated Subordinated Notes due March 10,
- -----
2000 held by each such Noteholder (the "Exchanged Notes") shall, upon the
---------------
effectiveness of this Amendment, be deemed to have been replaced and superseded
by the New Notes. Each Noteholder agrees upon the effectiveness of this
Amendment to return the Exchanged Notes held by it promptly to the Company.
(f) the Company shall have delivered to each of the Noteholders
a favorable opinion of Skadden, Arps, Slate, Meagher & Flom, special counsel for
the Company, in form and substance, where applicable, substantially similar to
the opinion delivered to the holders of the notes issued under the Senior Note
Agreement in connection with the Third Amendment and Waiver thereto, dated as
of the date hereof.
(g) the Company shall have complied with the terms of that
certain letter dated as of the date hereof from the Company to the Noteholders;
(h) the Company shall have paid all of the reasonable fees,
costs and expenses Andrews & Kurth incurred by the Noteholders in connection
with this Amendment as evidenced by invoice delivered to the Company;
(i) all conditions to the effectiveness of the Third Amendment
and Waiver to the Senior Note Agreement, dated as of the date hereof, shall have
been satisfied and such Third Amendment and Waiver to the Senior Note Agreement
shall have become effective; and
(j) the Company shall have delivered to each of the Noteholders
the documents described in Sections 3(a)(v), 3(a)(vii), 3(a)(x), 3(a)(xiii),
3(a)(xv)(1), and 3(a)(xvi) of the Third Amendment and Waiver to the Senior Note
Agreement (each of which shall be reasonably satisfactory in form and substance
to the
10
<PAGE>
Noteholders and their counsel), each as relates to the Company, and each shall
be delivered addressed to the Noteholders, as applicable.
(k) upon execution of this Amendment by Noteholders holding at
least 66-2/3% aggregate principal amount of the notes outstanding, this
Amendment shall be effective in all respects other than with respect to any
matter that would require consent of all Noteholders in accordance with Section
14.4 of the Existing Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
In order to induce the requisite Noteholders under (S) 14.4 of the
Existing Agreement to enter into this Amendment and to amend the Existing
Agreement in the manner provided herein, the company represents and war rants to
each Noteholder that the following statements are true, correct and complete:
(a) Corporate Power and Authority. The Company has all
-----------------------------
requisite corporate power and authority to enter into this Amendment and to
carry out the transactions contemplated by, and perform its obligations under
the Amended Agreement.
(b) Authorization of Agreements. The execution and delivery
---------------------------
of this Amendment and the performance of the Amended Agreement have been duly
authorized by all necessary corporate action by the Company.
(c) No Conflict. The execution and delivery by the Company of
-----------
this Amendment and the performance by the Company of the Amended Agreement do
not and will not (i) violate any provision of law, rule or regulation
applicable to the Company or any of its Subsidiaries, the Certificate of
Incorporation or bylaws of the Company or any of its Subsidiaries, (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any material contractual obligation of the Company or any
of its Subsidiaries, (iii) result in or require the creation or imposition of
any Lien upon any of its properties or assets, or (iv) require any approval of
stockholders or any approval or consent of any Person under the any contractual
obligation of the Company or any of its Subsidiaries.
11
<PAGE>
(d) Conditions Met. The conditions contained in Sections 3(c),
--------------
3(d), 3(g), and 3(i) hereof have been satisfied.
(e) Governmental Consents. The execution and delivery by the
---------------------
Company and the performance by the Company of the Amended Agreement do not and
will not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any Federal, state or other governmental authority
or regulatory body or other Person.
(f) Binding Obligation. This Amendment and the Amended
------------------
Agreement are the legally valid and binding obligations of the Company,
enforceable against it in accordance with their respective terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or limiting creditors' rights generally or by
equitable principles to enforceability.
(g) Other Representations And Warranties. Each of the
------------------------------------
representations and warranties contained in Section 4 of the Third Amendment and
Waiver to the Senior Note Agreement is true and correct in all material
respects.
SECTION 5. REPRESENTATION AND WARRANTY OF THE NOTEHOLDERS
The Noteholders represent, warrant, and ac knowledge that the debt
evidenced by the (i) 9.58% notes due May 31, 1997, issued under the Senior Note
Agreement and (ii) all instruments issued under the Revolving Credit Agreement,
dated as of December 23, 1993, as amended and restated as of April 12, 1996,
among the Company, Merisel Europe, Merisel, Inc., as guarantor, the lenders
party thereto, Citicorp USA, Inc., as agent, NationsBank of Texas, N.A., as co-
agent, and Citibank, N.A., as designated issuer, constitutes Senior Debt and
Designated Senior Debt for all purposes under the Agreement.
SECTION 6. MISCELLANEOUS.
(a) Reference to and Effect on the Existing Agreement. On and
-------------------------------------------------
after the effective date of this Amendment, each reference in the Existing
Agreement to "this Agreement", "hereunder", "hereof", "herein", or words of like
import referring to the Existing Agreement,
12
<PAGE>
shall mean and be a reference to the Existing Agreement as amended by this
Amendment.
(b) Execution and Counterparts. This Amendment may be executed,
--------------------------
including by facsimile, in any number of counterparts, and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts taken together shall
constitute one and the same instrument.
(c) Headings. Section and subsection headings in this
--------
Amendment are included herein for evidence of reference only and shall not
constitute a part of this Amendment for any other purpose of be given any
substantive effective.
(d) Applicable Law. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO AND ALL OTHER ASPECTS HEREOF SHALL BE DEEMED
TO BE MADE UNDER, SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
13
<PAGE>
IN WITNESS HEREOF, the Company and the Noteholders have caused this
Amendment to be duly executed by their respective duly authorized officers, all
as of the day and year first above written.
MERISEL AMERICAS, INC.
By:
-------------------------------
Name:
Title:
INCE & CO. as nominee for
THE CANADA LIFE ASSURANCE COMPANY,
By:
---------------------------
Name:
Title:
GUARANTEE MUTUAL LIFE COMPANY
By:
---------------------------
Name:
Title:
14
<PAGE>
[Signature page to Second Amendment and Waiver to Amended
and Restated Subordinated Note Purchase Agreement]
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
PAN AMERICAN LIFE INSURANCE COMPANY
By:
---------------------------
Name:
Title:
15
<PAGE>
EXHIBIT A
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT
WHILE A REGISTRATION IS IN EFFECT OR PURSUANT TO AN EXEMPTION UNDER SAID
ACT.
MERISEL AMERICAS, INC.
Amended and Restated Subordinated Note
due March 10, 2000
R- December 23, 1993
$________________ Los Angeles, California
MERISEL AMERICAS, INC. (the "Company"), a Delaware corporation, for
-------
value received, hereby promises to pay to ___________ or registered assigns, the
principal sum of _____________ DOLLARS ($) on March 10, 2000; and to pay
interest on the unpaid principal balance thereof from the date of this Note at
the rates, on the dates and in the manner specified in the Amended and Restated
Subordinated Note Purchase Agreement, dated as of December 23, 1993, between the
Company and the original Noteholders as defined therein (as amended,
supplemented or otherwise modified from time to time, the "Note Purchase
-------------
Agreement").
- ---------
This Note is one of a series of the Amended and Restated Subordinated
Notes due March 10, 2000 (the "Notes") issued in the aggregate principal amount
-----
of $17,600,000 under the Note Purchase Agreement and pursuant to the Second
Amendment and Waiver thereto, dated as of April 12, 1996, and is entitled to the
benefits thereof. As and to the extent provided in the Note Purchase
Agreement, this Note is subject to prepayment, in whole or in part, in certain
cases without premium and in other cases with premium. The Company agrees to
make required prepayments on account of this Note in accordance with the
provisions of the Note Purchase Agreement. This Note is subject to the
subordination provisions of the Note Purchase Agreement. The Note Purchase
Agreement may be examined at the office of the Company at 200 Continental
Boulevard, El Segundo, California, 90245-0984.
16
<PAGE>
Under certain circumstances, as specified in the Note Purchase
Agreement, the principal of and accrued interest on this Note may be declared
due and payable in the manner and with the effect provided in the Note Purchase
Agreement.
This Note has not been registered under the Securities Act of 1933, as
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such Act and
applicable state laws or under an exemption from such registration available
under such Act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Note Purchase
Agreement. Prior to presentation of this Note for registration of transfer, the
Company shall treat the registered holder hereof as the owner and holder of this
Note for the purpose of receiving all payments of principal and interest hereon
and for all other purposes whatsoever, whether or not this Note shall be
overdue, and the Company shall not be affected by notice to the contrary.
The Company agrees to perform and observe duly and punctually each of
the covenants and agreements set forth in the Note Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Note Purchase Agreement.
This Note shall be governed by and construed in accordance with the
law of the State of California.
17
<PAGE>
IN WITNESS WHEREOF, MERISEL AMERICAS, INC. has caused this Note to be
duly executed.
MERISEL AMERICAS, INC.,
a Delaware corporation
By:___________________________
Name:
Title:
18
