EXHIBIT 99.1
MERISEL AMERICAS, INC.
REVOLVING CREDIT AGREEMENT AND
CONVERTIBLE PROMISSORY NOTE DUE JULY 2, 1998
$46,500,000.00 New York, New York
January 26, 1998
FOR VALUE RECEIVED, MERISEL AMERICAS, INC., a Delaware
corporation ("Company"), unconditionally promises to pay to the order of BANKERS
TRUST COMPANY (together with its successors and permitted assigns as provided in
Section 14(h) hereof, "Lender"), on or before the Final Maturity Date (as
hereinafter defined), in the manner and at the place hereinafter provided, the
lesser of (x) FORTY-SIX MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($46,500,000.00) and (y) the aggregate unpaid principal amount of all advances
made hereunder as Loans (capitalized terms used herein and not otherwise defined
herein shall have the meanings provided in Section 13 hereof).
1. Commitment; Loans; Repayment of Loans. (a) Subject to the
terms and conditions of this Note and in reliance upon the representations and
warranties of Credit Parties set forth in the Credit Documents, Lender hereby
agrees to lend to Company, from time to time during the period from the Closing
Date to but excluding June 1, 1998 (the "Commitment Termination Date"), an
aggregate amount not exceeding $46,500,000 (the "Commitment"). The Commitment
shall expire on the Commitment Termination Date, and amounts borrowed under this
Note may be repaid and reborrowed to but excluding the Commitment Termination
Date; provided that no further borrowings shall be permitted under this Note
during the period from the Commitment Termination Date through the Final
Maturity Date.
(b) All Loans and all other amounts owed hereunder with respect
to the Loans and the Commitment shall be paid in full no later than July 2, 1998
(the "Final Maturity Date").
2. Borrowing Mechanics. (a) Each Loan shall be in a minimum
amount of $500,000 and integral multiples of $100,000 in excess of that amount.
(b) Whenever Company desires that Lender make a Loan it shall
deliver to Lender a Notice of Borrowing no later than 1:00 P.M (New York City
time) at least two Business Days in advance of the proposed Funding Date (in the
case of a Eurodollar Rate Loan) or on the proposed Funding Date (in the case of
a Base Rate Loan). In lieu of delivering the above-described Notice of
Borrowing, Company may give Lender telephonic notice by the required time of any
proposed borrowing under this Section 2; provided that such notice shall be
promptly confirmed in writing by delivery of a Notice of Borrowing to Lender
prior to funding of the applicable Loan on the applicable Funding Date. Subject
to the provisions of Section 3(c) hereof, any Notice of Borrowing (or telephonic
notice in lieu thereof) shall be irrevocable on and after the related Interest
Rate Determination Date, and Company shall be bound to make a borrowing in
accordance therewith.
(c) Upon satisfaction or waiver of the conditions precedent
specified in Sections 8(a) (in the case of Loans made on the Closing Date) and
8(b) (in the case of all Loans) hereof, Lender shall make the proceeds of each
Loan available to Company on the applicable Funding Date by causing an amount of
same day funds in Dollars equal to the proceeds of such Loan to be credited to
the account of Company at the Funding and Payment Office.
3. Interest; Yield Protection. (a) Subject to the provisions of
Section 3(c) hereof, Company shall pay interest on the unpaid principal amount
of this Note from the date hereof until paid in full at a rate per annum that is
at all times equal to (i) the Base Rate plus 2.00% or (ii) the Adjusted
Eurodollar Rate plus 3.00%, in each case as specified by Company in the
applicable Notice of Borrowing or Notice of Conversion/Continuation; provided
that, upon the occurrence and during the continuation of any Event of Default,
the outstanding principal amount of all Loans and, to the extent permitted by
applicable law, any interest payments thereon not paid when due and any fees and
other amounts then due and payable hereunder, shall thereafter bear interest
(including post-petition interest in any proceeding under the Bankruptcy Code or
other applicable bankruptcy laws) payable upon demand at a rate that is 2.00%
per annum in excess of the interest rate otherwise payable under this Agreement
with respect to the applicable Loans (or, in the case of any such fees and other
amounts, at a rate which is 2.00% per annum in excess of the interest rate
otherwise payable under this Agreement for Base Rate Loans), it being understood
that payment or acceptance of the increased rates of interest provided for in
this Section 3(a) is not a permitted alternative to timely payment and shall not
constitute a waiver of any Event of Default or otherwise prejudice or limit any
rights or remedies of Lender. Interest on this Note shall be payable in arrears
on each Interest Payment Date, upon any prepayment of this Note (to the extent
accrued on the amount being prepaid) and at maturity. All computations of
interest shall be made by Lender on the basis of a 360-day year (in the case of
Eurodollar Rate Loans) or a 365-day or 366-day year, as the case may be (in the
case of Base Rate Loans), in each case for the actual number of days elapsed in
the relevant period (including the first day but excluding the last day).
(b) Subject to the provisions of Section 3(c) hereof, Company
shall have the option (i) to convert at any time all or any part of its
outstanding Loans equal to $500,000 and integral multiples of $100,000 in excess
of that amount from Loans bearing interest at a rate determined by reference to
one basis to Loans bearing interest at a rate determined by reference to an
alternative basis or (ii) upon the expiration of any Interest Period applicable
to a Eurodollar Rate Loan, to continue all or any portion of such Loan equal to
$500,000 and integral multiples of $100,000 in excess of that amount as a
Eurodollar Rate Loan; provided, however, that a Eurodollar Rate Loan may only be
converted into a Base Rate Loan on the expiration date of an Interest Period
applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to
Lender no later than 1:00 P.M. (New York City time) on the proposed conversion
date (in the case of a conversion to a Base Rate Loan) and at least two Business
Days in advance of the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan). In lieu of
delivering the above-described Notice of Conversion/Continuation, Company may
give Lender telephonic notice by the required time of any proposed
conversion/continuation under this Section 3(b); provided that such notice shall
be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Lender on or before the proposed
conversion/continuation date. Subject to the provisions of Section 3(c) hereof,
a Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Company shall be
bound to effect a conversion or continuation in accordance therewith.
(c) In consideration of Lender's agreement to make Loans to
Company hereunder, Company and Lender hereby agree that the provisions of Annex
A attached hereto are hereby incorporated into this Section 3(c) and made a part
of this Note as if fully set forth herein.
4. Commitment Fees. Company agrees to pay to Lender commitment
fees for the period from and including the Closing Date to and excluding the
Commitment Termination Date equal to the average of the daily excess of the
Commitment over the aggregate principal amount of outstanding Loans multiplied
by 0.50% per annum, such commitment fees to be calculated on the basis of a
360-day year and the actual number of days elapsed and to be payable monthly in
arrears on the first Business Day of each month, commencing on the first such
date to occur after the Closing Date, and on the Commitment Termination Date.
5. Payments. All payments of principal and interest in respect
of this Note shall be made in lawful money of the United States of America in
same day funds not later than 3:00 P.M. (New York City time) on the date due at
the Funding and Payment Office; funds received by Lender after that time on such
due date shall be deemed to have been paid by Company on the next succeeding
Business Day. Whenever any payment on this Note is stated to be due on a day
that is not a Business Day, such payment shall instead be made on the next
Business Day, and such extension of time shall be included in the computation of
interest payable on this Note. Each payment made hereunder shall be credited
first to interest then due and the remainder of such payment shall be credited
to principal, and interest shall thereupon cease to accrue upon the principal so
credited.
6. Prepayments. Subject to the provisions of Section 3(c)
hereof, Company shall have the right at any time and from time to time to prepay
the principal of this Note in whole or in part, without premium or penalty, upon
written notice given by Company to Lender prior to 3:00 P.M. (New York City
time) on the date of prepayment; provided that each such prepayment shall be in
a minimum amount of $500,000 (or such lesser amount as shall constitute the
principal amount of all Loans then outstanding) and integral multiples of
$100,000 in excess of that amount.
7. Equity Conversion Right. (a) In the event Lender exercises
its right to compel Equity Sub to purchase and assume this Note pursuant to the
terms of the Note Put Agreement as in effect on the date hereof, Equity Sub
shall have the right at its option, at any time from and after the effectiveness
of such purchase and assumption, to require Holdings to exchange the unpaid
principal of and interest on this Note for shares of Holdings Common Stock
("Conversion Shares") at a price per share equal to the Conversion Price (as
defined below); provided that (i) the Conversion Shares are authorized for
issuance by Holdings and (ii) in the event the Conversion Shares would represent
20% or more of all issued and outstanding Holdings Common Stock, the
stockholders of Holdings shall have approved the issuance of the Conversion
Shares (which approval Holdings hereby undertakes to use its best efforts to
obtain).
(b) In order to exercise the conversion right provided in
Section 7(a) hereof, Equity Sub shall deliver irrevocable written notice to
Holdings of its exercise of such right, such notice to be given not more than 30
days nor less than five days prior to the date Equity Sub intends to exercise
such right. Any such notice delivered by Equity Sub pursuant to this Section
7(b) shall be irrevocable on the part of Equity Sub. During the period from the
date any such notice is delivered by Equity Sub to Holdings in accordance with
this Section 7(b) until the Conversion Date (as defined below), interest shall
continue to accrue and to be payable on the outstanding principal amount of this
Note on each Interest Payment Date.
(c) In order to give effect to any conversion of this Note
pursuant to this Section 7, upon the date designated in the conversion notice
delivered by Equity Sub (the "Conversion Date"), at a time and place to be
mutually agreed upon by Holdings and Equity Sub, Equity Sub shall surrender this
Note to Holdings for cancellation against the issuance and delivery of a
certificate or certificates, in the name of Equity Sub (or its permitted
transferee or assignee), representing the number of Conversion Shares into which
this Note is being converted in accordance with the provisions of Section 7(a)
hereof. Such conversion shall be deemed to have been effected as of the close of
Holdings' business on the Conversion Date, and Equity Sub (or such transferee or
assignee, as the case may be) shall be deemed to have become the holder of
record of such Conversion Shares at such time and all rights of Equity Sub (or
such transferee or assignee, as the case may be) under this Note shall cease at
such time.
(d) In connection with the conversion of all or any portion of
this Note in accordance with Section 7(a) hereof, Holdings hereby agrees that
(i) it shall, at all times between the date hereof and the payment in full of
all amounts owing hereunder, reserve and keep available, free from preemptive
rights, out of its unissued Holdings Common Stock, for the purpose of effecting
the conversion of all or any portion of this Note hereunder, the full number of
shares of Holdings Common Stock issuable upon such conversion to the extent such
shares are authorized, (ii) the Conversion Shares to be issued upon such
conversion shall be duly authorized, validly issued, fully paid and
non-assessable and free of any preemptive rights in respect thereof, and (iii)
it shall use its best efforts to cause such Conversion Shares to have been
authorized for listing on the NASDAQ National Market System at the time of such
conversion, subject to official notice of issuance. In addition, Holdings hereby
agrees that the definition of "Registrable Shares" in the Registration Rights
Agreement dated September 19, 1997, as amended, among Company, Holdings and
Phoenix Acquisition Company II, L.L.C. will be amended to include any Conversion
Shares issued upon the conversion of all or any portion of this Note.
(e) For purposes of this Section 7:
"Conversion Price" means a price per share of Holdings
Common Stock equal to the average closing trading price of Holdings
Common Stock reported on the NASDAQ National Market System during the
period commencing on the fifteenth trading day prior to the Conversion
Date and ending on the trading day immediately preceding the Conversion
Date.
8. Conditions to Closing and Making of Loans. The obligations
of Lender to make Loans are subject to the satisfaction of the following
conditions.
(a) Conditions to Closing. The obligation of Lender to make a
Loan on the Closing Date is, in addition to the conditions precedent specified
in Section 8(b) hereof, subject to prior or concurrent satisfaction of the
following conditions:
(i) On or before the Closing Date, Company shall
deliver to Lender the following, each, unless otherwise noted, dated
the Closing Date:
A. A copy of the Certificate of Incorporation of
Company, certified by the Secretary of State of the State of
Delaware, together with a good standing certificate from the
Secretary of State of the State of Delaware, each dated a
recent date prior to the Closing Date;
B. A copy of the ByLaws of Company, certified as of
the Closing Date by the corporate secretary or an assistant
secretary of Company as being in full force and effect without
modification or amendment;
C. Resolutions of the Board of Directors of Company
approving and authorizing the execution, delivery and
performance of this Note, certified as of the Closing Date by
the corporate secretary or an assistant secretary of Company as
being in full force and effect without modification or
amendment;
D. Signature and incumbency certificates of the
officers of Company executing this Note;
E. An executed original of this Note; and
F. Such other documents as Lender may reasonably
request.
(ii) On or before the Closing Date, each other Credit
Party shall have delivered to Lender the following, each, unless
otherwise noted, dated the Closing Date:
A. Certified copies of the charter documents of such
Person, together with a good standing certificate from the
Secretary of State of its jurisdiction of incorporation, each
dated a recent date prior to the Closing Date;
B. Resolutions of the Board of Directors of such
Person (or, if such Person is a limited partnership, of the
general partner of such Person) approving and authorizing the
execution, delivery and performance of the Credit Documents to
which it is a party, certified as of the Closing Date by the
corporate secretary or an assistant secretary of such Person
(or such general partner, as the case may be) as being in full
force and effect without modification or amendment;
C. Signature and incumbency certificates of the
officers of such Person (or, if such Person is a limited
partnership, of the general partner of such Person) executing
the Credit Documents to which it is a party;
D. Executed originals of the Credit Documents to
which such Person is a party; and
E. Such other documents as Lender may reasonably
request.
(iii) Lender and its counsel shall have received
originally executed copies of one or more favorable written opinions of
(A) Xxxxx X. Xxxxxxx, counsel for Company and Holdings, in form and
substance reasonably satisfactory to Lender and its counsel, dated as
of the Closing Date and setting forth substantially the matters in the
opinions designated in Exhibit VI annexed hereto and as to such other
matters as Lender may reasonably request, and (B) Xxxxxx X.
Xxxxxxxxxxxx, counsel for the other Credit Parties, in form and
substance reasonably satisfactory to Lender and its counsel, dated as
of the Closing Date and setting forth substantially the matters in the
opinions designated in Exhibit VII annexed hereto and as to such other
matters as Lender may reasonably request.
(iv) Company shall have paid to Lender a
non-refundable facility fee in the amount of $125,000.
(b) Conditions to all Loans. The obligation of Lender to make a
Loan on each Funding Date is subject to the following further conditions
precedent:
(i) Lender shall have received before that Funding
Date, in accordance with the provisions of Section 2(b) hereof, an
originally executed Notice of Borrowing, in each case signed by the
chief executive officer, the chief financial officer or the treasurer
of Company or by any officer of Company designated by any of the
above-described officers on behalf of Company in a writing delivered to
Lender.
(ii) As of that Funding Date:
A. The representations and warranties of each Credit
Party contained herein and in the other Credit Documents shall
be true, correct and complete in all material respects on and
as of that Funding Date to the same extent as though made on
and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which
case such representations and warranties shall have been true,
correct and complete in all material respects on and as of such
earlier date;
B. No event shall have occurred and be continuing or
would result from the consummation of the borrowing
contemplated by such Notice of Borrowing that would constitute
an Event of Default or a Potential Event of Default;
C. Each Credit Party shall have performed in all
material respects all agreements and satisfied all conditions
which each Credit Document provides shall be performed or
satisfied by it on or before that Funding Date;
D. No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin or
restrain Lender from making the Loan to be made on that Funding
Date; and
E. The making of the Loan requested on such Funding
Date shall not violate any law including Regulation G,
Regulation T, Regulation U or Regulation X of the Board of
Governors of the Federal Reserve System.
9. Covenants. Until this Note is paid in full:
(a) Each of Holdings and Company covenants and agrees that it
will, promptly upon request therefor by Lender, deliver or cause to be delivered
to Lender such financial and other information with respect to Credit Parties as
Lender from time to time may reasonably request; and
(b) Holdings covenants and agrees that it shall not permit the
Interest Coverage Ratio for any four-fiscal quarter period ending on the last
day of any fiscal quarter of Holdings and its subsidiaries set forth below to be
less than the correlative amount indicated:
Fiscal Quarter Interest Coverage Ratio
Fourth Quarter 1997 1.10:1.00
First Quarter 1998 1.10:1.00
Second Quarter 1998 1.15:1.00
Third Quarter 1998 1.25:1.00
Fourth Quarter 1998 1.40:1.00
and thereafter
10. Representations and Warranties. Company hereby represents
and warrants to Lender, as of the date hereof and as of each Funding Date, that:
(a) each of Company and Holdings has all requisite corporate
power and authority to execute and deliver each Credit Document to which it is a
party;
(b) each Credit Document to which Company or Holdings is a
party constitutes the duly authorized, legally valid and binding obligation of
Company or Holdings, as the case may be, enforceable against Company or
Holdings, as the case may be, in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability;
(c) all consents and grants of approval required to have been
granted by any Person in connection with the execution, delivery and performance
of the Credit Documents have been granted;
(d) the execution, delivery and performance by Company and
Holdings of the Credit Documents to which they are parties do not and will not
(i) violate any law, governmental rule or regulation, court order or agreement
(including without limitation the Holdings Indenture) to which Company or
Holdings is subject or by which its properties are bound or the charter
documents or bylaws of Company or Holdings or (ii) result in the creation of any
lien or other encumbrance with respect to the property of Company or Holdings;
(e) the proceeds of the loan evidenced by this Note shall be
used by Company for short-term working capital purposes; provided that no part
of such proceeds will be used by Company in any manner that 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 such Board, in each case as in
effect on the date or dates of such borrowing and such use of proceeds; and
(f) each of the preliminary statements or recitals contained in
each of the Credit Documents is true and correct in all material respects.
11. Events of Default. The occurrence of any of the following
events shall constitute an "Event of Default":
(a) failure of Company to pay any principal under this Note
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise, or failure of Company to pay any interest or
other amount due under this Note within five days after the date due; or
(b) failure of any Credit Party to perform or observe any other
term, covenant or agreement to be performed or observed by it pursuant to any
Credit Document; or
(d) any representation or warranty made by any Credit Party to
Lender in connection with the Credit Documents shall prove to have been false in
any material respect when made; or
(e) (i) a court having jurisdiction in the premises shall enter
a decree or order for relief in respect of any Credit Party in an involuntary
case under the Bankruptcy Code or any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, which decree or order is not stayed; or
any other similar relief shall be granted under any applicable federal or state
law; or (ii) an involuntary case shall be commenced against any Credit Party
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect; or (iii) a decree or order of a court having jurisdiction
in the premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over any Credit Party
or over all or a substantial part of its property shall have been entered; or
(iv) the involuntary appointment of an interim receiver, trustee or other
custodian of any Credit Party for all or a substantial part of its property
shall have occurred; or (v) a warrant of attachment, execution or similar
process shall have been issued against any substantial part of the property of
any Credit Party, and, in the case of any event described in clause (ii) through
(v) above, such event shall have continued for 60 days unless dismissed, bonded
or discharged; or
(f) an order for relief shall be entered with respect to any
Credit Party, or any Credit Party shall commence a voluntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or shall consent to the entry of an order for relief
in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or any Credit Party shall make an assignment
for the benefit of creditors; or any Credit Party shall be unable or fail, or
shall admit in writing its inability, to pay its debts as such debts become due;
or the Board of Directors of any Credit Party (or any committee thereof) shall
adopt any resolution or otherwise authorize action to approve any of the
foregoing; or
(g) any Credit Party shall fail to preserve and keep in full
force and effect its corporate or partnership existence, or an order, judgment
or decree shall be entered against any Credit Party decreeing the dissolution or
split up of such Credit Party and such order shall remain undischarged or
unstayed for a period in excess of 30 days; or
(h) any Credit Party or any Person acting by or on behalf of
any Credit Party shall (i) challenge, or institute any proceedings to challenge,
the validity, binding effect or enforceability of any Credit Document or any
obligation thereunder or (ii) deny or disaffirm any Credit Party's obligations
under any Credit Document; or
(i) any Credit Document or any material provision thereof shall
cease to be in full force or effect or shall be declared to be null or void or
otherwise unenforceable in whole or in part; or
(j) Equity Sub shall incur or guaranty any Indebtedness except
as expressly contemplated by the Credit Documents; or
(k) any money judgment, writ or warrant of attachment or
similar process shall be entered or filed against Equity Sub or any of its
assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of 60 days (or in any event later than five days prior to the date of any
proposed sale thereunder); or
(l) a "Termination Event" under and as defined in the GE
Facility shall occur and the "Operating Agent" (as defined in the GE Facility)
shall declare that the "Facility Termination Date" under and as defined in the
GE Facility has occurred:
12. Remedies. Upon the occurrence of any Event of Default
specified in Section 11(e) or 11(f) hereof, the Commitment shall terminate and
the principal amount of this Note together with accrued interest thereon and all
other amounts payable by Company under this Note shall become immediately due
and payable, without presentment, demand, notice, protest or other requirements
of any kind (all of which are hereby expressly waived by Company). Upon the
occurrence and during the continuance of any other Event of Default, Lender may,
by written notice to Company, terminate the Commitment and declare the principal
amount of this Note together with accrued interest thereon and all other amounts
payable by Company under this Note to be due and payable, and the principal
amount of this Note together with such interest and other amounts shall
thereupon immediately become due and payable without presentment, further
notice, protest or other requirements of any kind (all of which are hereby
expressly waived by Company).
13. Definitions. The following terms used in this Note shall
have the following meanings:
"Adjusted Eurodollar Rate" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Loan, the
rate per annum obtained by dividing (i) the offered quotation (rounded
upward to the nearest 1/16 of one percent) to first class banks in the
interbank Eurodollar market by Lender for U.S. dollar deposits of
amounts in same day funds comparable to the principal amount of the
Loan for which the Adjusted Eurodollar Rate is then being determined
with maturities comparable to such Interest Period as of approximately
10:00 a.m. (New York time) on such Interest Rate Determination Date by
(ii) a percentage equal to 100% minus the stated maximum rate of all
reserve requirements (including any marginal, emergency, supplemental,
special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve System in
respect of "Eurocurrency liabilities" as defined in Regulation D (or
any successor category of liabilities under Regulation D).
"Assignment of Equity Proceeds" means the Assignment of Equity
Proceeds executed and delivered by Equity Sub and Lender on the Closing
Date, substantially in the form of Annex A to the Equity Subscription
Agreement, as such Assignment of Equity Proceeds may thereafter be
amended, supplemented or otherwise modified from time to time.
"Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor
statute.
"Base Rate" means, at any time, the higher of (x) the Prime
Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds
Effective Rate.
"Base Rate Loan" means a Loan bearing interest at a rate
determined by reference to the Base Rate as provided in Section 3(a)
hereof.
"Business Day" means any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the State of New York or
California.
"Cash Interest Expense" means, for any period, an amount equal
to the sum of (i) the aggregate amount of cash interest payable on all
Debt of Holdings and its consolidated subsidiaries during such period
(other than interest expense eliminated in consolidation with respect
to Holdings and such subsidiaries in accordance with GAAP) plus (ii)
the aggregate amount of any payments or distributions during such
period in respect of interest on any notes, bonds, certificates or
other interests issued in a securitization of assets of Holdings or any
of its subsidiaries.
"Closing Date" means the date on which the conditions precedent
set forth in Section 8(a) hereof are satisfied and the initial Loan is
made.
"Credit Document" means, collectively, this Note, each Notice
of Borrowing and Notice of Conversion/Continuation, the Note Put
Agreement, the Equity Subscription Agreement, the General Partner
Undertaking, the Assignment and Assumption Agreement (as defined in the
Note Put Agreement) and the Assignment of Equity Proceeds.
"Credit Party" means each of Company, Holdings, the Fund,
General Partner and Equity Sub, and "Credit Parties" means all such
Persons, collectively.
"Debt" means, with respect to any Person, all indebtedness,
obligations and liabilities of such Person (i) for borrowed money, (ii)
evidenced by bonds, debentures, notes or other similar instruments
(excluding accrued interest), (iii) to pay the deferred purchase price
of property or services (it being understood that Debt shall not
include obligations classified as accounts payable, accrued liabilities
or income taxes payable under GAAP), or (iv) in respect of principal
obligations as lessee under leases which have been or should be, in
accordance with GAAP, recorded as capital leases; provided that no
obligation, indebtedness or liability included in Debt shall be
included in more than one of clauses (i) through (iv).
"EBITSDA" means, for any period, (i) consolidated net income of
Holdings and its consolidated subsidiaries for such period plus (ii) in
each case to the extent deducted in determining such net income, the
sum of the amounts for such period of (a) depreciation and amortization
of Holdings and such subsidiaries, (b) Cash Interest Expense, (c) any
provisions for taxes based on income or profits of Holdings and such
subsidiaries, and (d) any other non-cash charges of Holdings and such
subsidiaries.
"Equity Sub" means Stonington Financing Inc., a Delaware
corporation wholly owned by the Fund.
"Equity Subscription Agreement" means the Equity Subscription
Agreement executed and delivered by Equity Sub and the Fund on the
Closing Date, substantially in the form of Exhibit IV annexed hereto,
as such Equity Subscription Agreement may thereafter be amended,
supplemented or otherwise modified from time to time with the written
consent of Lender.
"Eurodollar Rate Loan" means a Loan bearing interest at a rate
determined by reference to the Adjusted Eurodollar Rate as provided in
Section 3(a) hereof.
"Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate 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 Lender from three Federal funds brokers of
recognized standing selected by Lender.
"Fund" means Stonington Capital Appreciation 1994 Fund, L.P., a
Delaware limited partnership.
"Funded Debt" means all Debt of Holdings and its consolidated
subsidiaries which by the terms of the agreement governing or
instrument evidencing such Debt matures more than one year from, or is
directly or indirectly renewable or extendible at the option of the
debtor under a revolving credit or similar arrangement obligating the
lender or lenders to extend credit over a period of more than one year
form, the date of creation thereof, including current maturities of
long-term debt, revolving credit, and short-term debt extendible beyond
one year at the option of the debtor; provided that Funded Debt shall
in any event include any notes, bonds, certificates or other interests
issued in a securitization of assets of Holdings or any of its
subsidiaries and principal payments on Funded Debt shall in any event
include any payments in respect of principal on any such notes, bonds,
certificates or other interests.
"Funding and Payment Office" means the office of Lender located
at One Bankers Trust Plaza, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 or such other office of Lender as Lender may from time to time
hereafter designate in a written notice delivered to Company.
"Funding Date" means the date of the funding of a Loan.
"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.
"GE Facility" means, collectively, (i) the Amended and Restated
Receivables Transfer Agreement, as amended, dated as of December 19,
1997, by and between Company and Merisel Capital Funding, Inc. and (ii)
the Receivables Purchase and Service Agreement dated as of October 2,
1995, as amended, by and among Merisel Capital Funding, Inc., Redwood
Receivables Corporation and General Electric Capital Corporation.
"General Partner" means Stonington Partners, L.P., a Delaware
limited partnership that is the general partner of the Fund.
"General Partner Undertaking" means the General Partner
Undertaking executed and delivered by General Partner on the Closing
Date, substantially in the form of Exhibit V annexed hereto, as such
General Partner Undertaking may thereafter be amended, supplemented or
otherwise modified from time to time with the written consent of
Lender.
"Holdings" means Merisel, Inc., a Delaware corporation that
owns 100% of the outstanding capital stock of Company.
"Holdings Common Stock" means common stock of Holdings, par
value $0.01 per share.
"Holdings Indenture" means that certain Indenture dated as of
October 15, 1994 by and between Holdings, as Issuer, and NationsBank of
Texas, N.A., as Trustee, pursuant to which Holdings has issued and
outstanding $125,000,000 in 12 1/2% Senior Notes Due 2004.
"Indebtedness", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with
respect to Capital Leases that is properly classified as a liability on
a balance sheet in conformity with GAAP, (iii) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money, (iv) any obligation owed for all or any
part of the deferred purchase price of property or services (excluding
any such obligations incurred under ERISA), which purchase price is (a)
due more than six months from the date of incurrence of the obligation
in respect thereof or (b) evidenced by a note or similar written
instrument, and (v) all indebtedness secured by any lien on any
property or asset owned or held by that Person regardless of whether
the indebtedness secured thereby shall have been assumed by that Person
or is nonrecourse to the credit of that Person.
"Interest Coverage Ratio" means, for any period, the ratio of
(i) EBITSDA to (ii) Cash Interest Expense on all Funded Debt; provided
that, for purposes of calculating the Interest Coverage Ratio with
respect to any four-fiscal quarter period of Holdings and its
subsidiaries ending prior to the fourth fiscal quarter of 1998, such
calculation shall be made on a pro forma basis (including without
limitation in respect of Cash Interest Expense and Restructuring Costs)
as if (a) the Indebtedness that was refinanced or retired in connection
with the issuance of the Stonington Convertible Note had been so
refinanced or retired as of the last day immediately preceding the
commencement of such four-fiscal quarter period and (b) the Stonington
Convertible Note had been converted into Holdings Common Stock as of
such last day.
"Interest Payment Date" means (i) with respect to any Base Rate
Loan, the first Business Day of each month, commencing on the first
such date to occur after the Closing Date, and (ii) with respect to any
Eurodollar Rate Loan, the last day of each Interest Period applicable
to such Loan.
"Interest Period" means, with respect to any Eurodollar Rate
Loan, a one-month period commencing on the Funding Date in respect of
such Loan, in the case of a Loan initially made as a Eurodollar Rate
Loan, or on the date specified in the applicable Notice of
Conversion/Continuation, in the case of a Loan converted to a
Eurodollar Rate Loan; provided that:
(i) in the case of immediately successive Interest
Periods applicable to a Eurodollar Rate Loan continued as such
pursuant to a Notice of Conversion/Continuation, each
successive Interest Period shall commence on the day on which
the next preceding Interest Period expires;
(ii) if an Interest Period would otherwise expire on a
day that is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day; provided that, if
any Interest Period would otherwise expire on a day that is not
a Business Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(iii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall, subject to clause (v)
of this definition, end on the last Business Day of a calendar
month;
(iv) no Interest Period with respect to any portion of
the Loans shall commence after Lender has given to Equity Sub a
Notice of Put Exercise (as defined in the Note Put Agreement);
(v) no Interest Period with respect to any portion of
the Loans shall extend beyond the Commitment Termination Date;
and
(vi) there shall be no more than 20 Interest Periods
outstanding at any time.
"Interest Rate Determination Date" means, with respect to any
Interest Period, the second Business Day prior to the first day of such
Interest Period.
"Loan" means an advance by Lender to Company pursuant to
Section 1(a) hereof, and "Loans" means all such advances, collectively.
"Note" means this Revolving Credit Agreement and Convertible
Promissory Note Due July 2, 1998, as amended, supplemented or otherwise
modified from time to time.
"Note Put Agreement" means the Note Put Agreement executed and
delivered by Equity Sub and Lender on the Closing Date, substantially
in the form of Exhibit III annexed hereto, as such Note Put Agreement
may thereafter be amended, supplemented or otherwise modified from time
to time.
"Notice of Borrowing" means a notice substantially in the form
of Exhibit I annexed hereto delivered by Company to Lender pursuant to
Section 2(b) hereof with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice
substantially in the form of Exhibit II annexed hereto delivered by
Company to Lender pursuant to Section 3(b) hereof with respect to a
proposed conversion or continuation of the applicable basis for
determining the interest rate with respect to the Loans specified
therein.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability
companies, limited liability partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land
trusts, business trusts or other organizations, whether or not legal
entities, and governments (whether federal, state or local, domestic or
foreign, and including political subdivisions thereof) and agencies or
other administrative or regulatory bodies thereof.
"Potential Event of Default" means a condition or event that,
after notice or lapse of time or both, would constitute an Event of
Default.
"Prime Rate" means the rate that Bankers Trust Company
announces from time to time as its prime lending rate, as in effect
from time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any
customer. Bankers Trust Company may make commercial loans or other
loans at rates of interest at, above or below the Prime Rate.
"Restructuring Costs" means and includes all costs incurred by
Holdings and its consolidated subsidiaries in connection with the
Stonington Convertible Note and the transactions contemplated thereby
and all costs incurred by Holdings and its consolidated subsidiaries in
connection with the proposed restructuring of the Indebtedness
outstanding under the Holdings Indenture and the transactions
contemplated thereby, in each case including all fees of advisors and
legal counsel and similar fees and expenses.
"Stonington Convertible Note" means that certain Convertible
Promissory Note in the principal amount of $137,100,000 issued by
Holdings and Company on September 19, 1997 to Phoenix Acquisition
Company II, L.L.C., a Delaware limited liability company of which the
Fund is the sole member.
"Tax" or "Taxes" means any present or future tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied,
collected, withheld or assessed; provided that "Tax on the overall net
income" of a Person shall be construed as a reference to a tax imposed
by the jurisdiction in which that Person is organized or in which that
Person's principal office (and/or, in the case of Lender, its lending
office) is located or in which that Person (and/or, in the case of
Lender, its lending office) is deemed to be doing business on all or
part of the net income, profits or gains (whether worldwide, or only
insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person
(and/or, in the case of Lender, its lending office).
14. Miscellaneous.
(a) Whether or not the transactions contemplated hereby shall
be consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Credit Documents and any consents,
amendments, waivers or other modifications thereto; (ii) all the costs of
furnishing all opinions by counsel for Company (including any opinions
reasonably requested by Lender as to any legal matters arising hereunder) and of
Company's performance of and compliance with all agreements and conditions on
its part to be performed or complied with under this Note and the other Credit
Documents; (iii) the reasonable fees, expenses and disbursements of counsel to
Lender in connection with the negotiation, preparation, execution and
administration of the Credit Documents and any consents, amendments, waivers or
other modifications thereto and any other documents or matters requested by
Company; (iv) all other actual and reasonable costs and expenses incurred by
Lender in connection with the negotiation, preparation and execution of the
Credit Documents and any consents, amendments, waivers or other modifications
thereto and the transactions contemplated thereby; and (v) after the occurrence
of an Event of Default, all costs and expenses, including reasonable attorneys'
fees (including allocated costs of internal counsel) and costs of settlement,
incurred by Lender in enforcing any of the Credit Documents or in collecting any
payments due from any Credit Party hereunder or under the other Credit Documents
by reason of such Event of Default or in connection with any refinancing or
restructuring of the credit arrangements provided under this Note in the nature
of a "work-out" or pursuant to any insolvency or bankruptcy proceedings.
(b) In addition to the payment of expenses pursuant to section
14(a), whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless Lender, and the officers, directors, employees,
agents and affiliates of Lender (collectively called the "Indemnitees"), from
and against any and all Indemnified Liabilities (as hereinafter defined);
provided that Company shall not have any obligation to any Indemnitee hereunder
with respect to any Indemnified Liabilities to the extent such Indemnified
Liabilities arise from the gross negligence or willful misconduct of that
Indemnitee as determined by a final judgment of a court of competent
jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively,
any and all liabilities, obligations, losses, damages (including natural
resource damages), penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including the reasonable
fees and disbursements of counsel for Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto, and any fees or expenses incurred by Indemnitees in
enforcing this indemnity), whether direct, indirect or consequential and whether
based on any federal, state or foreign laws, statutes, rules or regulations
(including securities and commercial laws, statutes, rules or regulations), on
common law or equitable cause or on contract or otherwise, that may be imposed
on, incurred by, or asserted against any such Indemnitee, in any manner relating
to or arising out of this Note or the other Credit Documents or the transactions
contemplated hereby or thereby (including Lender's agreement to make the Loans
hereunder or the use or intended use of the proceeds thereof, or any enforcement
of any of the Credit Documents.
To the extent that the undertakings to defend, indemnify, pay
and hold harmless set forth in this Section 14(b) may be unenforceable in whole
or in part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
(c) In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence of any Event of Default, Lender is hereby authorized by Company at
any time or from time to time, without notice to Company or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate and
to apply any and all deposits (general or special, including Indebtedness
evidenced by certificates of deposit, whether matured or unmatured, but not
including trust accounts) and any other Indebtedness at any time held or owing
by Lender to or for the credit or the account of Company against and on account
of the obligations and liabilities of Company to Lender under this Note,
irrespective of whether or not (i) Lender shall have made any demand hereunder
or (ii) the principal of or the interest on the Loans shall have become due and
payable and although said obligations and liabilities, or any of them, may be
contingent or unmatured.
(d) Unless otherwise specifically provided herein, any notice
or other communication herein required or permitted to be given shall be in
writing and may be personally served or sent by telefacsimile or United States
mail or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile, or three Business
Days after depositing it in the United States mail with postage prepaid and
properly addressed; provided that notices to Lender shall not be effective until
received. For the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof or such other
address as shall be designated by such party in a written notice delivered to
the other parties hereto.
(e) No failure or delay on the part of Lender in the exercise
of any power, right or privilege hereunder or under any other Credit Document
shall impair such power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing under
this Note and the other Credit Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
(f) In case any provision in or obligation under this Note
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.
(g) Company and any endorser of this Note hereby consent to
renewals and extensions of time at or after the maturity hereof, without notice,
and hereby waive diligence, presentment, protest, demand and notice of every
kind and, to the full extent permitted by law, the right to plead any statute of
limitations as a defense to any demand hereunder.
(h) This Note shall be binding on the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and permitted assigns of Lender; provided that Lender
shall only be permitted to assign its rights and obligations hereunder (a) to
Bankers Trust Delaware, an affiliate of Lender, or (b) as otherwise contemplated
by the Note Put Agreement. Neither Company's rights or obligations hereunder nor
any interest therein may be assigned or delegated by Company without the prior
written consent of Lender.
(i) THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
(j) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING
OUT OF OR RELATING TO THIS NOTE OR ANY OTHER CREDIT DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN XXX XXXXX, XXXXXX XXX XXXX XX XXX XXXX. BY EXECUTING AND
DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF
SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING
IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE
WITH SECTION 14(d) HEREOF;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDER RETAINS THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST
COMPANY IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 14(j) RELATING
TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE
FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
(k) EACH OF THE PARTIES TO THIS NOTE HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party hereto acknowledges that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on this waiver in entering into this Agreement, and that each will continue to
rely on this waiver in their related future dealings. Each party hereto further
warrants and represents that it has reviewed this waiver with its legal counsel
and that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SECTION 14(k) AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
[Remainder of this page intentionally left blank]
IN WITNESS WHEREOF, Company, Lender and, for purposes of
Sections 7 and 9 hereof, Holdings, have caused this Note to be executed and
delivered by their duly authorized officers as of the day and year and at the
place first above written.
MERISEL AMERICAS, INC.
By: /S/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
Notice Address:
000 Xxxxxxxxxxx Xxxx.
Xx Xxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
MERISEL, INC.
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
Notice Address:
000 Xxxxxxxxxxx Xxxx.
Xx Xxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
BANKERS TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Vice President
Notice Address:
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
TRANSACTIONS ON PROMISSORY NOTE
Amount of Amount of Outstanding
Amount of Principal Interest Principal
Loan Made Paid Paid Balance Notation
Date This Date This Date This Date This Date Made By
---- --------- --------- --------- ---------- -------
ANNEX A
YIELD-PROTECTION AND RELATED PROVISIONS
A. Special Provisions Governing Eurodollar Rate Loans
Notwithstanding any other provision of this Note to the
contrary, the following provisions shall govern with respect to Eurodollar Rate
Loans as to the matters covered (capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Note):
1. Determination of Applicable Interest Rate. As soon as
practicable after 10:00 A.M. (New York City time) on each Interest Rate
Determination Date, Lender shall determine (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties) the interest
rate that shall apply to the Eurodollar Rate Loans for which an interest rate is
then being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company.
2. Inability to Determine Applicable Interest Rate. In the
event that Lender shall have determined (which determination shall be final and
conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Lender shall
on such date give notice (by telefacsimile or by telephone confirmed in writing)
to Company Lender of such determination, whereupon (i) no Loans may be made as,
or converted to, Eurodollar Rate Loans until such time as Lender notifies
Company that the circumstances giving rise to such notice no longer exist and
(ii) any Notice of Borrowing or Notice of Conversion/Continuation given by
Company with respect to the Loans in respect of which such determination was
made shall be deemed to be rescinded by Company.
3. Illegality or Impracticability of Eurodollar Rate Loans. In
the event that on any date Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with Company) that the making, maintaining or
continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of
compliance by Lender in good faith with any law, treaty, governmental rule,
regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause Lender material hardship, as a result of
contingencies occurring after the date of this Note which materially and
adversely affect the interbank Eurodollar market or the position of Lender in
that market, then, and in any such event, Lender shall on that day give notice
(by telefacsimile or by telephone confirmed in writing) to Company of such
determination. Thereafter (a) the obligation of Lender to make Loans as, or to
convert Loans to, Eurodollar Rate Loans shall be suspended until such notice
shall be withdrawn by Lender, (b) to the extent such determination by Lender
relates to a Eurodollar Rate Loan then being requested by Company pursuant to a
Notice of Borrowing or a Notice of Conversion/Continuation, Lender shall make
such Loan as (or convert such Loan to, as the case may be) a Base Rate Loan, (c)
Lender's obligation to maintain its outstanding Eurodollar Rate Loans (the
"Affected Loans") shall be terminated at the earlier to occur of the expiration
of the Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
Base Rate Loans on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by Lender as described above relates to a
Eurodollar Rate Loan then being requested by Company pursuant to a Notice of
Borrowing or a Notice of Conversion/Continuation, Company shall have the option,
subject to the provisions of Section A.4 of this Annex A, to rescind such Notice
of Borrowing or Notice of Conversion/Continuation by giving notice (by
telefacsimile or by telephone confirmed in writing) to Lender of such rescission
on the date on which Lender gives notice of its determination as described
above.
4. Compensation For Breakage or Non-Commencement of Interest
Periods. Company shall compensate Lender, upon written request by Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by
Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate
Loans and any loss, expense or liability sustained by Lender in connection with
the liquidation or re-employment of such funds) which Lender may sustain: (i) if
for any reason (other than a default by Lender) a borrowing of any Eurodollar
Rate Loan does not occur on a date specified therefor in a Notice of Borrowing
or a telephonic request for borrowing, or a conversion to or continuation of any
Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of
Conversion/Continuation or a telephonic request for conversion or continuation,
(ii) if any prepayment or other principal payment or any conversion of any of
its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest
Period applicable to that Loan, (iii) if any prepayment of any of its Eurodollar
Rate Loans is not made on any date specified in a notice of prepayment given by
Company, or (iv) as a consequence of any other default by Company in the
repayment of its Eurodollar Rate Loans when required by the terms of this Note.
Such losses, expenses and liabilities shall be deemed to include an amount
determined by Lender to be the excess, if any, of (a) the amount of interest
which would have accrued on the principal amount of the applicable Eurodollar
Rate Loan had the relevant event described in clauses (i)-(iv) above not
occurred, calculated at the Adjusted Eurodollar Rate that would have been
applicable to such Eurodollar Rate Loan (without regard to any interest rate
margin otherwise payable in addition thereto) for the period from the date of
such event to the last day of the then current Interest Period applicable to
such Eurodollar Rate Loan (or, in the case of failure to borrow, convert or
continue a Eurodollar Rate Loan, for the period that would have been the
Interest Period applicable to such Eurodollar Rate Loan had such event not
occurred) over (b) the amount of interest which would accrue on such principal
amount for such period at the interest rate which Lender would bid if it were to
bid, at the commencement of such period, for dollar deposits of a comparable
amount and period from other banks in the interbank Eurodollar market.
5. Booking of Eurodollar Rate Loans. Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of Lender.
6. Assumptions Concerning Funding of Eurodollar Rate Loans.
Calculation of all amounts payable to Lender under this Section A and under
Section B.1 of this Annex A shall be made as though Lender had actually funded
each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar
deposit bearing interest at the rate obtained pursuant to clause (i) of the
definition of Adjusted Eurodollar Rate in an amount equal to the amount of such
Eurodollar Rate Loan and having a maturity comparable to the relevant Interest
Period and through the transfer of such Eurodollar deposit from an offshore
office of Lender to a domestic office of Lender in the United States of America;
provided, however, that Lender may fund each of its Eurodollar Rate Loans in any
manner it sees fit and the foregoing assumptions shall be utilized only for the
purposes of calculating amounts payable under this Section A and under said
Section B.1.
7. Eurodollar Rate Loans After Default. After the occurrence of
and during the continuation of a Potential Event of Default or an Event of
Default, (i) Company may not elect to have a Loan be made or maintained as, or
converted to, a Eurodollar Rate Loan after the expiration of any Interest Period
then in effect for that Loan and (ii) subject to the provisions of Section A.4
of this Annex A, any Notice of Borrowing or Notice of Conversion/Continuation
given by Company with respect to a requested borrowing or
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Company.
. B. Increased Costs; Taxes; Capital Adequacy
1. Compensation for Increased Costs and Taxes. Subject to the
provisions of Section B.2 of this Annex A (which shall be controlling with
respect to the matters covered thereby), in the event that Lender shall
determine (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) that any law, treaty or
governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by Lender with any
guideline, request or directive issued or made after the date hereof by any
central bank or other governmental or quasi-governmental authority (whether or
not having the force of law):
a. subjects Lender (or its applicable lending office)
to any additional Tax (other than any Tax on the overall net income of
such Lender) with respect to this Note or any of its obligations
hereunder or any payments to such Lender (or its applicable lending
office) of principal, interest, fees or any other amount payable
hereunder;
b. imposes, modifies or holds applicable any reserve
(including any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in
or for the account of, or advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of Lender
(other than any such reserve or other requirements with respect to
Eurodollar Rate Loans that are reflected in the definition of Adjusted
Eurodollar Rate); or
c. imposes any other condition (other than with
respect to a Tax matter) on or affecting Lender (or its applicable
lending office) or its obligations hereunder or the interbank
Eurodollar market;
and the result of any of the foregoing is to increase the cost to Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by Lender (or its applicable lending office) with respect
thereto; then, in any such case, Company shall promptly pay to Lender, upon
receipt of the statement referred to in the next sentence, such additional
amount or amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as Lender in its sole discretion shall
determine) as may be necessary to compensate Lender for any such increased cost
or reduction in amounts received or receivable hereunder. Lender shall deliver
to Company a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this Section B.1,
which statement shall be conclusive and binding upon all parties hereto absent
manifest error.
2. Withholding of Taxes.
a. Payments to Be Free and Clear. All sums payable by
Company under this Note shall (except to the extent required by law) be
paid free and clear of, and without any deduction or withholding on
account of, any Tax (other than a Tax on the overall net income of
Lender) imposed, levied, collected, withheld or assessed by or within
the United States of America or any political subdivision in or of the
United States of America or any other jurisdiction from or to which a
payment is made by or on behalf of Company or by any federation or
organization of which the United States of America or any such
jurisdiction is a member at the time of payment.
b. Grossing-up of Payments. If Company or any other
Person is required by law to make any deduction or withholding on
account of any such Tax from any sum paid or payable by Company to
Lender under any of the Loan Documents:
(1) Company shall notify Lender of any such
requirement or any change in any such requirement as soon as
Company becomes aware of it;
(2) Company shall pay any such Tax before the
date on which penalties attach thereto, such payment to be made
(if the liability to pay is imposed on Company) for its own
account or (if that liability is imposed on Lender) on behalf
of and in the name of Lender;
(3) the sum payable by Company in respect of
which the relevant deduction, withholding or payment is
required shall be increased to the extent necessary to ensure
that, after the making of that deduction, withholding or
payment, Lender receives on the due date a net sum equal to
what it would have received had no such deduction, withholding
or payment been required or made; and
(4) within 30 days after paying any sum from
which it is required by law to make any deduction or
withholding, and within 30 days after the due date of payment
of any Tax which it is required by clause (b) above to pay,
Company shall deliver to Lender evidence satisfactory to it of
such deduction, withholding or payment and of the remittance
thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to
Lender under clause (c) above except to the extent that any change
after the date hereof in any such requirement for a deduction,
withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from
that in effect at the date of this Note in respect of payments to
Lender.
3. Capital Adequacy Adjustment. If Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the date
hereof of any law, rule or regulation (or any provision thereof) regarding
capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Lender (or its applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of Lender or any
corporation controlling Lender as a consequence of, or with reference to,
Lender's Loans or the Commitment or other obligations hereunder with respect to
the Loans to a level below that which Lender or such controlling corporation
could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
Lender or such controlling corporation with regard to capital adequacy), then
from time to time, within five Business Days after receipt by Company from
Lender of the statement referred to in the next sentence, Company shall pay to
Lender such additional amount or amounts as will compensate Lender or such
controlling corporation on an after-tax basis for such reduction. Lender shall
deliver to Company a written statement, setting forth in reasonable detail the
basis of the calculation of such additional amounts, which statement shall be
conclusive and binding upon all parties hereto absent manifest error.
EXHIBIT I
[FORM OF]
NOTICE OF BORROWING
Pursuant to that certain Revolving Credit Agreement and
Convertible Promissory Note Due July 2, 1998, as amended, supplemented or
otherwise modified to the date hereof (as so amended, supplemented or otherwise
modified, the "Note", the terms defined therein and not otherwise defined herein
being used herein as therein defined), by and among Merisel Americas, Inc., a
Delaware corporation ("Company"), and Bankers Trust Company ("Lender"), this
represents Company's request to borrow $___________ from Lender for value on
_________, 1998 as a [Base][Eurodollar] Rate Loan. The proceeds of such Loans
are to be deposited in Company's account at the Funding and Payment Office, and
Company hereby requests Lender to transfer such proceeds immediately thereafter
from such account to Company's account No.55-87492 at the office of First
Chicago Bank, National Association located at Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000, ABA No.0000-0000-0.
The undersigned officer, to the best of his or her knowledge,
and Company certify that:
(i) The representations and warranties of Company and Holdings
contained in the Note and the other Credit Documents are and will be true,
correct and complete in all material respects on and as of the date hereof and
on and as of the proposed Funding Date set forth above, in each case to the same
extent as though made on and as of the date hereof or such Funding Date, as the
case may be, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties were true, correct and complete in all material respects on and as of
such earlier date;
(ii) No event has occurred and is continuing or would result
from the consummation of the borrowing contemplated hereby that would constitute
an Event of Default or a Potential Event of Default; and
(iii) Each of Company and Holdings has performed in all
material respects all agreements and satisfied all conditions which the Credit
Documents provide shall be performed or satisfied by it on or before the date
hereof.
DATED: ____________________ MERISEL AMERICAS, INC.
By: __________________________
Title: ________________________
EXHIBIT II
[FORM OF]
NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain Revolving Credit Agreement and
Convertible Promissory Note Due July 2, 1998, as amended, supplemented or
otherwise modified to the date hereof (as so amended, supplemented or otherwise
modified, the "Note", the terms defined therein and not otherwise defined herein
being used herein as therein defined), by and among Merisel Americas, Inc., a
Delaware corporation ("Company"), and Bankers Trust Company ("Lender"), this
represents Company's request to convert or continue a Loan as follows:
4. Date of conversion/continuation: __________, 1998
5. Amount of Loan being converted/continued: $________
6. Nature of conversion/continuation:
|_| a. Conversion of Base Rate Loan to Eurodollar Rate Loan
|_| b. Conversion of Eurodollar Rate Loan to Base Rate Loan
|_| c. Continuation of Eurodollar Rate Loan
In the case of a conversion to or continuation of a Eurodollar
Rate Loan, the undersigned officer, to the best of his or her knowledge, and
Company certify that no Event of Default or Potential Event of Default has
occurred and is continuing.
DATED: _____________________ MERISEL AMERICAS, INC.
By: __________________________
Title: ________________________
EXHIBIT III
[FORM OF]
NOTE PUT AGREEMENT
This NOTE PUT AGREEMENT (this "Agreement"), dated as of January
26, 1998, is entered into by and between STONINGTON FINANCING INC., a Delaware
corporation ("Equity Sub"), and BANKERS TRUST COMPANY, a New York banking
corporation ("Lender").
RECITALS
WHEREAS, Merisel Americas, Inc., a Delaware corporation
("Merisel Americas"), and Lender are concurrently herewith entering into that
certain Revolving Credit Agreement and Convertible Promissory Note Due July 2,
1998 (as hereafter amended, supplemented or otherwise modified from time to
time, the "Note"; terms defined therein and not otherwise defined herein being
used herein as therein defined) pursuant to which Lender has agreed to extend
credit to Merisel Americas on the terms and conditions set forth therein;
WHEREAS, the Fund currently owns approximately 62% of the
issued and outstanding common stock of Holdings (on a fully-diluted basis),
Holdings owns 100% of the outstanding capital stock of Merisel Americas, and
Equity Sub is a wholly-owned subsidiary of the Fund;
WHEREAS, the Fund expects to receive direct and indirect
benefits from the agreements, terms and provisions of the Note and, accordingly,
the Fund has agreed to cause Equity Sub to enter into this Agreement with
Lender;
WHEREAS, the execution and delivery of this Agreement is a
condition precedent to the effectiveness of the Note; and
WHEREAS, in consideration of the premises and in order to
induce Lender to make Loans pursuant to the Note, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Equity Sub has agreed to enter into this Agreement with Lender.
NOW, THEREFORE, in consideration of the foregoing, Equity Sub
and Lender agree as follows:
7. Definitions. The following terms, as used in
------------
this Agreement, shall have the following meanings:
"Assignment and Assumption Agreement" shall mean the Assignment
and Assumption Agreement, substantially in the form attached hereto as
Annex A, to be executed and delivered by Equity Sub and Lender upon the
exercise by Lender of the Put Right.
"Commitment Fees" shall mean fees accruing in respect of the
unused Commitment pursuant to Section 4 of the Note.
"Notice of Put Exercise" shall mean a notice, substantially in
the form of Annex B attached hereto, given by Lender to Equity Sub in
accordance with Section 2.
"Party" shall mean Equity Sub or Lender.
"Put Exercise Date" shall have the meaning assigned to that
term in Section 2.
"Put Purchase Price" shall mean, in relation to any exercise of
the Put Right, an amount equal to the sum of (1) the aggregate
principal amount of Loans outstanding under the Note on the Put
Exercise Date, (2) all unpaid interest accruing in respect thereof
prior to the Put Exercise Date (including any interest accruing at any
default rate of interest), and (3) all unpaid Commitment Fees accruing
prior to the Put Exercise Date.
"Put Right" shall have the meaning assigned to that term in
Section 2.
8. Exercise of Put Right. (a) Lender shall
have the right (the "Put Right"), in its sole discretion, to assign to Equity
Sub all of Lender's interests in and to (i) the Commitment and (ii) all
outstanding Loans and other amounts owed by Merisel Americas to Lender under the
Note, in each case upon the terms and conditions set forth herein.
(b) Upon the occurrence and at any and all times during the
continuation of an Event of Default, Equity Sub hereby agrees that, upon receipt
of a Notice of Put Exercise from Lender, it shall (i) purchase from Lender its
entire interest in all unpaid amounts outstanding under the Note on the Put
Exercise Date for an amount equal to the Put Purchase Price and (ii) assume the
Commitment. Such purchase and assumption shall be effective on the date (the
"Put Exercise Date") specified in the Notice of Put Exercise, which date shall
be not less than twenty-two Business Days after the Notice of Put Exercise is
given by Lender to Equity Sub.
(c) Anything contained in any of the Credit Documents to the
contrary notwithstanding, in the event that any Loans or other amounts owed by
Merisel Americas to Lender under the Note are outstanding on the Commitment
Termination Date, Lender shall give Equity Sub a Notice of Put Exercise on the
Commitment Termination Date specifying a Put Exercise Date of July 2, 1998.
(d) The effectiveness of any purchase and assumption by Equity
Sub pursuant to clause (b) or (c) above shall be subject to satisfaction of the
following conditions: (1) the execution and delivery of an Assignment and
Assumption Agreement by Equity Sub and Lender, (2) Lender's delivery to Equity
Sub of the Note, endorsed by Lender to Equity Sub without representation,
warranty or recourse (other than a representation by Lender that the Note has
not been pledged to any party (including the Federal Reserve Bank of New York)
or otherwise encumbered by Lender), and (3) payment by Equity Sub to Lender of
the Put Purchase Price. Any such purchase shall be made on the Put Exercise Date
pursuant to the terms of, and at the time and place specified in, the Assignment
and Assumption Agreement to be executed and delivered by Equity Sub and Lender
upon Lender's exercise of the Put Right.
(e) Equity Sub agrees that the purchase of the Loans and other
amounts outstanding under the Note (and the endorsement and transfer of the Note
to Equity Sub in connection therewith) shall be without recourse to or
representation or warranty by Lender (other than a representation by Lender that
the Note has not been pledged to any party (including the Federal Reserve Bank
of New York) or otherwise encumbered by Lender). In furtherance of the
foregoing, Lender shall not be responsible to Equity Sub for (1) the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of any of the Credit Documents, (2) any representations, warranties,
recitals or statements made therein or in any written or oral statements or any
financial or other statements, instruments, reports or certificates or other
documents furnished by Lender to Equity Sub or by or on behalf of Merisel
Americas to Lender or to Equity Sub in connection with the Credit Documents and
the transactions contemplated thereby, or (3) the financial condition or
business affairs of Merisel Americas or any other Person liable for the payment
of any obligations outstanding under the Note, nor shall Lender be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in any of the Credit
Documents or as to the use of the proceeds of the Loans or as to the existence
or possible existence of any Default or Event of Default.
(f) In the event that Lender applies any payments received
(either directly or through Equity Sub) by Lender pursuant to the Assignment of
Equity Proceeds to the payment of the Put Purchase Price, such application
shall, to the extent of such amount so applied, satisfy the obligation of Equity
Sub under this Agreement to make a payment in a corresponding amount in respect
of the Put Purchase Price.
9. Assignment and Assumption Agreement. At such
time as Lender exercises the Put Right, Equity Sub and Lender shall execute, as
of the Put Exercise Date, an Assignment and Assumption Agreement, completed in
accordance with the specific monetary terms of the assignment and assumption
which are described above in Section 2.
10. Transfer Upon Equity Sub's Default. If, on
the Put Exercise Date, Lender tenders an executed Assignment and Assumption
Agreement and the Note (endorsed in accordance with the provisions of Section 2)
and Equity Sub fails either to execute and deliver such Assignment and
Assumption Agreement or to pay the Put Purchase Price in accordance with the
provisions of such Assignment and Assumption Agreement, then, at 12:00 noon on
the Put Exercise Date specified in the Notice of Put Exercise, the title to the
Note shall pass to Equity Sub without any further act or demand on the part of
Equity Sub or Lender; provided that Lender shall hold, and retain a security
interest in and to, the Note as collateral for the payment of the Put Purchase
Price and such other amounts as shall be payable to Lender as a result of such
failure of Equity Sub. If Equity Sub shall fail to pay the Put Purchase Price
for the Note as aforesaid, Equity Sub (i) agrees that it will be unconditionally
liable to Lender for liquidated damages (for the loss of a bargain and not as a
penalty) in the amount of the Put Purchase Price as well as for all costs and
expenses, if any, incurred by Lender in enforcing this Agreement and (ii)
irrevocably waives, to the full extent permitted by applicable law, any right or
defense that Equity Sub may have to cause Lender to prove the cause or amount of
such damages or to mitigate the same.
11. Primary Obligation. This Agreement is a
primary and original obligation of Equity Sub, is not the creation of a surety
relationship, and is an absolute, unconditional, and continuing agreement which
shall remain in full force and effect irrespective of:
(i) any lack of genuineness, legality, validity,
enforceability or value of the Note or any other Credit Document;
(ii) any change in the time, manner or place of payment of, or in
any other term of, the Note or any other Credit Document, or any other
amendment or waiver of or any consent to departure from the Note or any
other Credit Document;
(iii) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any
guaranty, for the Note;
(iv) any failure to pay any taxes which may be payable with respect
to the issuance or transfer of the Note; or any failure to obtain any
authorization or approval from or other action by, or to notify or make
any filing with, any governmental authority or regulatory body required
in connection with the issuance or transfer of the Note;
(v) any future changes in any law; or
(vi) any impossibility or impracticality of performance, force
majeure, any act of any government, or any other circumstance which
might constitute a defense available to, or a discharge of, Merisel
Americas in respect of the Note or Equity Sub in respect of this
Agreement or any other circumstance, event or happening whatsoever,
whether foreseen or unforeseen and whether similar or dissimilar to
anything referred to above in this Section 5.
Equity Sub agrees that its liability hereunder shall be immediate and shall not
be contingent upon the exercise or enforcement by Lender of whatever remedies it
may have against Merisel Americas or any guarantor, or the enforcement of any
lien or realization upon any security Lender may at any time possess.
Equity Sub hereby waives, for the benefit of Lender: (a) any
right to require Lender, as a condition of payment or performance by Equity Sub
of its obligations hereunder, to (i) proceed against Merisel Americas, any
guarantor of Merisel Americas' obligations under the Note or any other Person,
(ii) proceed against or exhaust any security held from Merisel Americas, any
guarantor of Merisel Americas' obligations under the Note or any other Person,
(iii) proceed against or have resort to any balance of any deposit account or
credit on the books of Lender in favor of Merisel Americas or any other Person,
or (iv) pursue any other remedy in the power of Lender whatsoever; (b) any
defense arising by reason of the incapacity, lack of authority or any disability
or other defense of Merisel Americas including, without limitation, any defense
based on or arising out of or by reason of (i) the lack of validity or the
unenforceability of the Note or any other Credit Documents or Merisel Americas'
obligations thereunder or the cessation of the liability of Merisel Americas
thereunder from any cause other than indefeasible payment in full of all
obligations outstanding under the Note or (ii) any proceeding by or against
Merisel Americas under the Bankruptcy Code or any other bankruptcy or insolvency
law now or hereafter in effect, including by reason of the application of the
automatic stay under Section 362 of the Bankruptcy Code in respect of the
obligations of Merisel Americas under the Note or the enforcement thereof, or
(iii) any other limitation or restriction imposed by law or judicial order on
the obligations of Merisel Americas under the Note; (c) any defense based upon
any statute or rule of law which provides that the obligation of a surety must
be neither larger in amount nor in other respects more burdensome than that of
the principal; (d) any defense based upon Lender's errors or omissions in the
administration of the Note or any other Credit Document, except behavior which
amounts to bad faith; (e) (i) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this Agreement
and any legal or equitable discharge of Equity Sub's obligations hereunder, (ii)
the benefit of any statute of limitations affecting Equity Sub's liability
hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments
and counterclaims, and (iv) promptness, diligence and any requirement that
Lender protect, secure, perfect or insure any security interest or lien or any
property subject thereto; (f) notices, demands, presentments, protests, notices
of protest, notices of dishonor and notices of any action or inaction, including
acceptance of this Agreement, notices of default under the Note, any Credit
Document or any agreement or instrument related thereto, notices of any renewal,
extension or modification of Merisel Americas' obligations under the Note or any
agreement related thereto, notices of any extension of credit to Merisel
Americas and any right to consent to any thereof; and (g) to the fullest extent
permitted by law, any defenses or benefits that may be derived from or afforded
by law which limit the liability of or exonerate guarantors or sureties, or
which may conflict with the terms of this Agreement.
Equity Sub agrees that any release which may be given by Lender
to Merisel Americas or any guarantor shall not release Equity Sub from its
obligations hereunder. The obligations of Equity Sub under this Agreement shall
not be subject to reduction, termination or other impairment by reason of any
set-off, recoupment, counterclaim or defense or for any other reason.
12. Indefeasible Payment. Any payment made by
Merisel Americas to Lender under or in respect of the Note prior to the
effectiveness of any purchase and assumption by Equity Sub pursuant to clause
(b) or (c) of Section 2 shall not be considered to have been made for purposes
of this Agreement unless and until such payment shall have been made more than
90 days (the "90-Day Period") prior to the date of the filing of a case by or
against Merisel Americas under the Bankruptcy Code. In the event that, for any
reason, all or any portion of any such payment made by Merisel Americas to
Lender during the 90-Day Period is set aside or recovered from Lender, whether
voluntarily or involuntarily, after the making thereof, the amount of such
payment so set aside or recovered shall be deemed to have been outstanding as of
the date of such purchase and assumption by Equity Sub (it being understood that
no interest shall accrue on the amount so set aside or recovered during the
period from the date such amount was paid by Merisel Americas to the date such
payment is set-aside or recovered from Lender), and Equity Sub's obligation
hereunder to purchase such amount (and the obligation of Merisel Americas
represented thereby) shall be revived and continued in full force and effect as
if such payment by Merisel Americas had not been made.
13. Information; Non-Reliance on Lender.
a. Documents and Information. Equity Sub confirms that it has received
and reviewed copies of the Note and the other Credit Documents, and that it is
familiar with, and has independent and adequate means for at all times
ascertaining and evaluating, the financial condition and prospects of Merisel
Americas.
b. Non-Reliance. Equity Sub acknowledges and confirms to Lender that
Equity Sub has, independently and without reliance on Lender, based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement.
14. Attorney's Fees and Costs. Equity Sub will
upon demand pay to Lender the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel (including all
allocated costs of in-house counsel), which Lender may incur in connection with
the exercise or enforcement of any of the rights or interests of Lender
hereunder.
15. Notices. All notices or demands by one Party
to another Party relating to this Agreement shall be in writing and either
personally served or sent by registered or certified mail, postage prepaid,
return receipt requested, or by prepaid telefacsimile, and shall be deemed to be
given for purposes of this Agreement on the day that such writing is received by
the Party to whom it is sent. Unless otherwise specified in a notice sent or
delivered in accordance with the provisions of this section, such writing shall
be sent to such Party, as applicable, at the following address:
If to Equity Sub: Stonington Financing Inc.
c/o Stonington Partners, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
If to Lender: Bankers Trust Company
One Bankers Trust Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xx Xxxxx
Telecopy: (000) 000-0000
With a copy to: Bankers Trust Company
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxx Xxxxx
Telecopy: (000) 000-0000
16. Cumulative Remedies. No remedy under this
Agreement or under the Note is intended to be exclusive of any other remedy, but
each and every remedy shall be cumulative and in addition to any and every other
remedy given under this Agreement, under the Note, and those provided by law. No
delay or omission by any Party to exercise any right under this Agreement shall
impair any such right nor be construed to be a waiver thereof. No failure on the
part of any Party to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right.
17. Severability of Provisions. Any provision of
this Agreement which is prohibited or unenforceable under applicable law shall
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.
18. Entire Agreement; Amendments. This Agreement
together with the Assignment and Assumption Agreement constitute the entire
agreement between the Parties pertaining to the subject matter contained herein.
This Agreement may not be altered, amended, or modified, nor may any provision
hereof be waived or noncompliance therewith consented to, except by means of a
writing executed by each of the Parties hereto; provided that any alteration,
amendment or modification to Section 2(b), this Section 12, or Section 13 shall
not be effective without the prior written consent of Merisel Americas. Any such
alteration, amendment, modification, waiver, or consent shall be effective only
to the extent specified therein and for the specific purpose for which given. No
course of dealing and no delay or waiver of any right or default under this
Agreement shall be deemed a waiver of any other, similar or dissimilar, right or
default or otherwise prejudice the rights and remedies of any Party hereunder.
19. Successors and Assigns. This Agreement shall
be binding upon Equity Sub and Lender and their successors and assigns and shall
inure to the benefit of their successors and assigns; provided, however, that
(a) Lender shall not assign the benefit of this Agreement to any Person other
than an assignee of the Note and (b) Equity Sub shall not assign this Agreement
or delegate any of its duties hereunder without Lender's prior written consent
and any unconsented to assignment shall be absolutely void. In the event of any
assignment or other transfer of rights by Lender, the rights and benefits herein
conferred upon Lender shall automatically extend to and be vested in such
assignee or other transferee.
20. CHOICE OF LAW AND VENUE. THE VALIDITY OF
THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE
RIGHTS OF THE PARTIES HEREUNDER, SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. TO THE
MAXIMUM EXTENT PERMITTED BY LAW, THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT MAY BE TRIED AND
DETERMINED IN THE STATE AND FEDERAL COURTS LOCATED IN XXX XXXX XX XXX XXXX,
XXXXX XX XXX XXXX. TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE PARTIES HEREBY
EXPRESSLY WAIVE ANY RIGHT THEY MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION.
21. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT
PERMITTED BY LAW, THE PARTIES HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY
OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING ARISING UNDER OR
WITH RESPECT TO THIS AGREEMENT, OR IN ANY WAY CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT TO THIS AGREEMENT OR THE
TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE.
TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE PARTIES HEREBY AGREE THAT ANY SUCH
ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING SHALL BE DECIDED BY A
COURT TRIAL WITHOUT JURY AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OF
THIS SECTION WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT
OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have executed and delivered
this Agreement as of the date first hereinabove written.
STONINGTON FINANCING INC.
By:
Name:
Title:
BANKERS TRUST COMPANY
By:
Name:
Title:
