AMENDMENT No. 4 AND WAIVER TO PURCHASE AGREEMENT
AMENDMENT No. 4 AND WAIVER TO PURCHASE AGREEMENT, dated as of February 22, 1999,
among MERISEL AMERICAS, INC ("Merisel Americas"), MERISEL CAPITAL FUNDING, INC.
("Merisel Capital Funding"), REDWOOD RECEIVABLES CORPORATION ("Redwood") and
GENERAL ELECTRIC CAPITAL CORPORATION ("GE Capital").
WHEREAS, Merisel Capital Funding, as seller (in such capacity,
the "Seller"), Redwood as purchaser (in such capacity, the "Purchaser"), GE
Capital, as operating agent (in such capacity, the "Operating Agent") and
collateral agent (in such capacity, the "Collateral Agent") and Merisel Americas
(in such capacity, the "Servicer") are parties to an Amended and Restated
Receivables Purchase and Servicing Agreement, dated as of September 27, 1996, as
amended by Amendment No. 1, dated as of November 7, 1996, Amendment No. 2, dated
as of December 19, 1997 and Amendment No. 3, dated as of July 31, 1998 (the
"Purchase Agreement");
WHEREAS, the Seller and the Servicer have requested that the
Purchaser, the Operating Agent and the Collateral Agent waive and amend certain
financial covenants contained in the Purchase Agreement, subject to the terms
and conditions hereof.
WHEREAS, the parties hereto desire to amend the Purchase
Agreement (such amendments collectively referred to herein as the "Amendments").
FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY OF WHICH ARE
HEREBY ACKNOWLEDGED, THE PARTIES HERETO, INTENDING TO BE LEGALLY BOUND HEREBY,
AGREE AS FOLLOWS:
ARTICLE I
DEFINITIONS
All capitalized terms used herein, unless otherwise defined,
are used as defined in the Purchase Agreement.
ARTICLE II
AMENDMENT NO. 4 TO PURCHASE AGREEMENT
(a) Section 2.02(b) of the Purchase Agreement is hereby
amended by changing "December 31, 1999" to "December 31, 2001."
(b) Section 14.02 is hereby amended by adding ", GE Capital
sponsored conduit," after the phrase "Affiliate of GE Capital" each time such
phrase appears.
(c) Schedule 3 is hereby amended by:
(i) deleting the definition of "Daily Margin" and
substituting therefor the following definition of "Daily Margin":
"'Daily Margin' means as of any date, a percentage
per annum (the "Reference Percentage") divided by 360, which
Reference Percentage shall be determined by reference to the
Daily Margin Interest Coverage Ratio for the four fiscal
quarters of the Parent ended on or most recently prior to such
date as set forth below:
MARGIN LEVEL
Daily Margin
Interest Coverage Reference
Ratio Percentage
Level I
Less than or equal to
1.00 1.25%
Level II
Greater than 1.00, but
less than or equal to
1.40 1.00%
Level III
Greater than 1.40, but
less than or equal to
1.65 0.75%
Level IV
Greater than 1.65, but
less than or equal to
2.00 0.60%
Level V
Greater than 2.00 0.45%
Notwithstanding the foregoing, Daily Margin shall mean 0.75% until May 15, 1999,
and thereafter Daily Margin shall be computed for the fiscal quarters ending
April 3, 1999, July 3, 1999, October 2, 1999 and January 1, 2000 by reference to
the Fixed Charge Coverage Ratio of the Parent as set forth below:
For the Fiscal Quarter ending April 3, 1999:
Fixed Charge Coverage Ratio Reference %
Level A Less than 0.62 0.75
Level B Greater than or equal to 0.62 Refer to Daily Margin Interest
Coverage Ratio
For the Fiscal Quarter ending July 3, 1999:
Fixed Charge Coverage Ratio Reference %
Level A Less than 0.68 0.75
Level B Greater than or equal to 0.68 Refer to Daily
Margin Interest
Coverage Ratio
For the Fiscal Quarter ending October 2, 1999:
Fixed Charge Coverage Ratio Reference %
Level A Less than 0.77 0.75
Level B Greater than or equal to 0.77 Refer to Daily
Margin Interest
Coverage Ratio
For the Fiscal Quarter ending January 1, 2000:
Fixed Charge Coverage Ratio Reference %
Level A Less than 0.90 0.75%
Level B Greater than or equal to 0.90 Refer to Daily
Margin Interest
Coverage Ratio
The Daily Margin shall be determined by reference to the
Daily Margin Interest Coverage Ratio or the Fixed Charge
Coverage Ratio, as applicable, in effect from time to
time; provided, that (A) no change in the Daily Margin
shall be effective until one Business Day after the date
on which the Operating Agent and the Purchaser receive
financial statements pursuant to Section 5.02(c) or
Section 5.02(e) and a certificate of the chief financial
officer of the Parent demonstrating the computation of the
Daily Margin Interest Coverage Ratio or the Fixed Charge
Coverage Ratio, as applicable, and (B) if the Operating
Agent and Purchaser have not received the information
described in clause (A) of this proviso within ten days of
the day required under Section 5.02(c), or Section
5.02(e), as the case may be, or if a Termination Event or
Incipient Event has occurred and is continuing, the Daily
Margin shall be determined with reference to Level I for
so long as such information has not been received by the
Operating Agent and Purchaser or such Termination Event or
Incipient Event continues; provided that the Daily Margin
Interest Coverage Ratio with respect to any period of four
fiscal quarters that ends before the Fourth Quarter of
1998 are to be adjusted on a pro-forma basis to remove
Restructuring Costs as if (a) the indebtedness that was
refinanced or retired in connection with the issuance of
the Stonington Convertible Note had been refinanced or
retired by the Stonington Convertible Note as of the last
day preceding the four fiscal quarters in respect of which
such ratio is to be calculated and (b) the Stonington
Convertible Note was converted into common stock of the
Parent as of the last day preceding the four fiscal
quarters in respect of which such ratio is to be
calculated; provided, further, that the pro-forma
adjustments referred to in foregoing proviso shall be
reasonably satisfactory to the Operating Agent as
evidenced by the written approval of the Operating Agent;
provided, further, that if the adjustments are not
reasonably satisfactory to the Operating Agent, the
parties to the Purchase Agreement shall negotiate in good
faith to resolve any differences; and
(ii) amending and restating the definition of Daily Margin
Interest Coverage Ratio to read as follows:
"Daily Margin Interest Coverage
Ratio" means, with respect to any Person and its
consolidated subsidiaries for any period for the preceding
four fiscal quarters, the ratio of (i) EBITDA to (ii) Cash
Interest Expense on all Funded Debt;
(d) Exhibit H of the Purchase Agreement is hereby amended
by deleting the chart as it appears in such Exhibit
and substituting in lieu thereof the following:
FINANCIAL COVENANTS
(a) Except as provided in (b) below, all covenants
(i) shall be calculated on the basis of the financial ratios and net worth
percentages for the most recent four consecutive fiscal quarters just completed,
ending in each case with one of the quarters specified in the tables below, and
(ii) shall be calculated on a quarterly basis. For the Fixed Charge Coverage
Ratio covenants and Interest Coverage Ratio covenants, with respect to any
period of four fiscal quarters that ends before the Fourth Quarter of 1998, such
covenants are to be calculated on a pro-forma basis including without limitation
with respect to interest expense, principal payments 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 refinanced or retired by
the Stonington Convertible Note as of the last day preceding the four fiscal
quarters in respect of which such covenants are to be calculated and (B) the
Stonington Convertible Note was converted into common stock of the Parent as of
the last day preceding the four fiscal quarters in respect of which such
covenants are to be calculated; provided that the pro-forma adjustments referred
to in this sentence shall be reasonably satisfactory to the Operating Agent as
evidenced by the written approval of the Operating Agent; provided, further,
that if the adjustments are not reasonably satisfactory to the Operating Agent,
the parties to the Purchase Agreement shall negotiate in good faith to resolve
any differences. For purposes of determining the covenants set forth in this
Exhibit H, Funded Debt shall include any notes, bonds, certificates or other
interests issued in a securitization of assets of the Originator or any of its
Subsidiaries and principal payments on Funded Debt shall include any payments in
respect of principal of such securities and Cash Interest Expense shall include
any payments or distributions in respect of interest on such securities. (b) The
Fixed Charge Coverage Ratio shall be calculated on
the basis of the following measurement periods
Period End Date Measurement Period
April 3, 1999 First Quarter of 1999
July 3, 1999 First and Second Quarters of 1999
October 2, 1999 First, Second, and Third
Quarters of 1999
January 1, 2000 Most recent four quarters
and the last day of each
fiscal quarter thereafter
Covenant Covenant Level
I. Parent Fixed Charge Coverage Ratio (minimum)
Fourth Quarter of 1997 1.00 to 1.00
First Quarter of 1998 1.00 to 1.00
Second Quarter of 1998 1.00 to 1.00
Third Quarter of 1998 0.85 to 1.00
Fourth Quarter of 1998 0.70 to 1.00
First Quarter of 1999 0.46 to 1.00
Second Quarter of 1999 0.60 to 1.00
Third Quarter of 1999 0.41 to 1.00
Fourth Quarter of 1999 0.73 to 1.00
First Quarter of 2000 1.00 to 1.00
Second Quarter of 2000 1.00 to 1.00
Third Quarter of 2000
and thereafter 1.10 to 1.00
Interest Coverage Ratio (minimum)
Fourth Quarter of 1997 1.10 to 1.00
First Quarter of 1998 1.10 to 1.00
Second Quarter of 1998 1.15 to 1.00
Third Quarter of 1998 1.25 to 1.00
Fourth Quarter of 1998
and each quarter thereafter 1.40 to 1.00
II. Seller Net Worth Percentage (minimum) 15%
III. Parent Tangible Net Worth (minimum) $125,000,000
(commencing
1/3/1998) plus
the greater of
85% of Net Income
and zero
[END OF CHART]
(c) The definition of "Fixed Charge Coverage Ratio" is hereby amended by (a)
adding the phrase "except as provided in paragraph (b) under the heading
"Financial Covenants" in this Exhibit H" after the word "and" in the fourth line
thereof and (b) adding the following language at the end thereof:
"provided, however, that for purposes of determining compliance with
the Fixed Charge Coverage Ratio covenant for the fiscal quarters ended
April 3, 1999 and July 3, 1999, "Fixed Charge Coverage Ratio" means
with respect to any Person and its consolidated subsidiaries, the ratio
of (i) EBITDA to (ii) Fixed Charges plus Capital Expenditures."
ARTICLE III
WAIVER OF DEFAULT UNDER
PURCHASE AGREEMENT
The Operating Agent, the Collateral Agent and the Purchaser
agree to waive any potential Termination Event resulting from any breach of the
Fixed Charge Coverage Ratio covenant contained in Exhibit H of the Purchase
Agreement as applicable to the Parent that may occur for the fiscal quarter
ended December 31, 1998.
ARTICLE IV
CONDITIONS PRECEDENT
The effectiveness of these Amendments is subject to the
conditions precedent that the Collateral Agent, the Operating Agent, the
Liquidity Agent, the LOC Agent and the Purchaser shall have received each of the
following, in form and substance satisfactory to each such party:
(a) All consents required under the Reimbursement Agreement,
Liquidity Loan Agreement and Insurance Agreement and confirmation from each
Rating Agency that the Rating Agency Condition has been satisfied.
(b) A certificate of the Secretary of each of the Seller and
the Servicer, dated the date of these Amendments and certifying (i) that
attached thereto is a true and complete copy of a resolution of the Board of
Directors of the Seller or the Servicer, as the case may be, authorizing the
execution, delivery and performance of these Amendments, and all other documents
required or necessary to be delivered hereunder and that such resolution has not
been modified, rescinded or amended and is in full force and effect and (ii) as
to the incumbency and specimen signature of each Person's officers executing
these Amendments, and all other documents required or necessary to be delivered
hereunder.
(c) A certificate of an officer of each of the Seller and the
Servicer, dated the date of these amendments, certifying that each of the
representations and warranties made by the Seller and the Servicer in these
Amendments is true and correct in all material respects as of the date hereof.
(d) The opinion of counsel to the Seller, in form and
substance reasonably satisfactory to the Purchaser, the LOC Agent, the Liquidity
Agent, the Operating Agent and the Collateral Agent, as to certain matters
including, without limitation, (i) the valid existence and good standing of the
Seller and Servicer, (ii) the power and authority of the Seller and Servicer (or
Originator, as the case may be) to execute the Amendments, (iii) the due
authorization, execution and delivery of the Amendments by the Seller and
Servicer (or Originator, as the case may be), (iv) the enforceability of the
Amendments against the Seller and Servicer (or Originator, as the case may be),
and (v) that the execution and delivery of the Amendments (x) does not conflict
with the organizational documents of the Seller or Servicer and (y) does not
violate or constitute a default under any material financing agreements of the
Seller or Servicer.
(e) An Officer's Certificate in form and substance
satisfactory to the Operating Agent to the effect that all of representations
and Warranties in the Transfer Agreement and Purchase Agreement are true and
correct in all material respects as of the date hereof.
(f) The Seller shall pay the fees and expenses of the
Purchaser as set forth in the letter agreement between the Seller and Purchaser
dated the date hereof (including, without limitation, reasonable legal fees and
expenses).
ARTICLE V
SELLER'S AND SERVICER'S REPRESENTATIONS
AND WARRANTIES
Each of the Seller and the Servicer represents and warrants
that:
(a) these Amendments have been duly authorized, executed and
delivered pursuant to its corporation power;
(b) these Amendments constitute its legal, valid and binding
obligation subject to the effect of bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally; and
(c) after giving effect to the amendments referred to herein,
there does not exist any Termination Event.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Confirmation of Purchase Agreement. Each of the
Seller and the Servicer agree that, except for the specific amendments and
waiver set forth herein, nothing herein shall be deemed to be a waiver or
amendment of any covenant or agreement contained in the Purchase Agreement and
each of the other documents executed in connection therewith are ratified and
confirmed in all respects and shall remain in full force and effect in
accordance with its terms. Each reference in the Purchase Agreement to "this
Agreement" and in each of the other documents to be executed in connection
therewith to the "Purchase Agreement," shall mean the Purchase Agreement as
amended by these Amendments and as each such agreement may be hereinafter
amended or restated. Nothing herein shall obligate the Seller, the Servicer, the
Purchaser, Liquidity Agent, the LOC Agent, the Operating Agent or the Collateral
Agent to enter into any future amendment (whether similar or dissimilar).
SECTION 6.2 Waiver by the Seller. Except for manifest errors
on the part of the Operating Agent, each of the Seller and the Servicer hereby
waives any claim, defense, demand, action or suit of any kind or nature
whatsoever against the Purchaser, the LOC Provider, the LOC Agent, the Operating
Agent and the Collateral Agent arising on or prior to the date hereof in
connection with the Purchase Agreement or the transactions contemplated
thereunder.
SECTION 6.3 Counterparts. Delivery of an executed counterpart
of a signature page to these Amendments by facsimile shall be effective as
delivery of a manually executed counterpart of these Amendments. These
Amendments may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
SECTION 6.4 Governing Law. These Amendments shall be
governed by, and construed in accordance with, California law.
SECTION 6.5 Effective Date of Amendments. Upon the execution
and delivery of these Amendments by the parties hereto and the satisfaction of
the conditions precedent set forth herein, the Purchase Agreement shall be
amended by these Amendments, effective as of the date hereof.
* * *
IN WITNESS WHEREOF, the Seller, the Servicer, the Collateral
Agent, the Operating Agent, the Liquidity Agent, the LOC Agent, the LOC Provider
and the Purchaser have caused these Amendments to be duly executed by their
respective authorized officers as of the date and year first above written.
MERISEL CAPITAL FUNDING, INC.,
as Seller
By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Title: Vice President and Treasurer
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
MERISEL AMERICAS, INC.,
as Servicer
By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Title: Vice President and Treasurer
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
GENERAL ELECTRIC CAPITAL CORPORATION,
as Operating Agent and Collateral Agent
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
GENERAL ELECTRIC CAPITAL CORPORATION,
as LOC Agent, Liquidity Agent and LOC Provider
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
REDWOOD RECEIVABLES CORPORATION,
as Purchaser
By:/s/▇▇▇▇▇▇ ▇▇▇▇▇
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Title: Assistant Secretary
Name: ▇▇▇▇▇▇ ▇▇▇▇▇