RECEIVABLES TRANSFER AGREEMENT
Dated as of March 10, 2000
by and between
MERISEL OPEN COMPUTING ALLIANCE, INC.
and
MERISEL CAPITAL FUNDING, INC.
TABLE OF CONTENTS
Page
Article I DEFINITIONS AND INTERPRETATION.......................................................1
SECTION 1.01 Definitions............................................................1
SECTION 1.02 Other Terms and Interpretation.........................................1
Article II TRANSFERS OF RECEIVABLES.............................................................2
SECTION 2.01 Agreement to Transfer..................................................2
SECTION 2.02 Grant of Security Interest.............................................3
Article III CONDITIONS OF SALE...................................................................4
SECTION 3.01 Conditions Precedent to the Initial Sale...............................4
SECTION 3.02 Conditions Precedent to All Sales......................................6
Article IV REPRESENTATIONS, WARRANTIES AND COVENANTS............................................7
SECTION 4.01 Representations and Warranties of the Originator.......................7
SECTION 4.02 Covenants of the Originator...........................................15
SECTION 4.03 Negative Covenants of the Originator..................................20
SECTION 4.04 Breach of Representations, Warranties or Covenants....................22
Article V INDEMNIFICATION.....................................................................23
SECTION 5.01 Indemnification.......................................................23
SECTION 5.02 Assignment of Indemnities.............................................25
Article VI MISCELLANEOUS.......................................................................25
SECTION 6.01 Notices, Etc..........................................................25
SECTION 6.02 No Waiver; Remedies...................................................25
SECTION 6.03 Binding Effect; Assignability.........................................25
SECTION 6.04 No Proceedings........................................................25
SECTION 6.05 Amendments; Consents and Waivers......................................26
SECTION 6.06 GOVERNING LAW; CONSENT TO JURISDICTION; ................................
WAIVER OF JURY TRIAL..................................................26
SECTION 6.07 Execution in Counterparts; Severability...............................27
SECTION 6.08 Descriptive Headings..................................................27
SECTION 6.09 No Setoff.............................................................27
SECTION 6.10 Further Assurances....................................................27
SECTION 6.11 Confidentiality.......................................................27
SECTION 6.12 Assignment of Agreement...............................................28
Receivables Transfer Agreement, dated as of March 10, 2000
(this "Agreement"), between Merisel Open Computing Alliance, Inc., a Delaware
corporation (the "Originator") and MERISEL CAPITAL FUNDING, INC., a Delaware
corporation ("MCF").
R E C I T A L S
A. The Originator and MCF desire to enter into this
Agreement pursuant to the terms and conditions set forth herein.
B. The Originator presently is a wholly owned direct
subsidiary of Merisel Americas, Inc.
C. The capital stock of the originator will be distributed by
Merisel Americas, Inc. to the parent, Merisel, Inc. causing the Originator to
become a wholly-owned direct subsidiary of Merisel, Inc.
D. MCF is a wholly owned subsidiary of Merisel Americas, Inc.
E. MCF has been formed for the sole purpose of purchasing or
otherwise acquiring certain trade receivables originated by Merisel, Inc. and/or
its subsidiaries.
F. The Originator intends to sell, and MCF intends to
purchase, certain trade receivables originated by the Originator, from time to
time, as described herein.
The parties agree as follows:
Article I
DEFINITIONS AND INTERPRETATION
SECTION 1.01 Definitions. Except as otherwise expressly provided herein or
unless the context otherwise requires, capitalized terms not otherwise defined
herein shall have the meanings assigned to such terms in Annex X hereto, which
is incorporated by reference herein. All other capitalized terms used herein
shall have the meanings specified herein.
SECTION 1.02 Other Terms and Interpretation. All other terms and the
interpretation of this Agreement shall be as set out in Annex X hereto.
SECTION 1.03 Definition of Receivables, Transferred Receivables and Contract.
When the terms "Receivables," "Transferred Receivables" and "Contracts" are used
herein, such term shall mean only those Receivables, Transferred Receivables and
Contracts (as such terms are defined in Annex X) originated by, or in respect
of, the Originator, and no other Subsidiary of Merisel, Inc.
Article II
TRANSFERS OF RECEIVABLES
SECTION 2.01 Agreement to Transfer. (a) On and after the date of this Agreement,
the Originator agrees to sell to MCF all Receivables originated by the
Originator. On or before the MOCA Effective Date, the Originator and MCF shall
enter into a separate Certificate of Assignment substantially in the form of
Exhibit A hereto (the "Assignment").
(b) The Originator shall, on the date hereof and on each date thereafter (or if
such date is not a Business Day, the following Business Day, each such date, a
"Transfer Date"), transfer to MCF all outstanding Receivables originated and
owned by the Originator through such date. On each Transfer Date, the Originator
shall identify all outstanding Receivables originated through such date which
are owned by the Originator on such date, and which are to be purchased by MCF
and sold by the Originator (the "Sold Receivables"). Each such identification
shall be made as of the close of business of the Originator on each Transfer
Date. The Originator may deliver to MCF a Request Notice making the
identification of such Receivables, provided that the Originator shall keep such
records necessary to promptly deliver a Request Notice in respect of each prior
Transfer Date if requested by MCF or the Operating Agent. To the extent not
identified by the Originator as being sold, the transfer of such Receivables to
MCF shall be deemed to have been a purchase by MCF and sale by the Originator on
such Transfer Date.
(c) The price paid for the Sold Receivables shall be the Sale Price. Such Sale
Price shall be paid by means of (i) an immediate cash payment to the Originator
or, (ii) upon the agreement of the Originator and MCF, indebtedness owed by MCF
to the Originator evidenced by, and payable with interest pursuant to a note in
the form of Exhibit B (the "MOCA Subordinated Note") or both, provided that the
indebtedness under the MOCA Subordinated Note shall not be increased on any day
if, after giving effect thereto and to the effect of any increase in any other
subordinated note issued by MCF to an Originator, MCF's Net Worth Percentage
would be less than 15%. On each Transfer Date the Sold Receivables shall be
assigned, and on such Transfer Date MCF shall pay the Sale Price for such Sold
Receivables. The portion of the Sale Price payable in cash shall be payable by
wire transfer on the Transfer Date to an account designated by the Originator
(and approved by the Operating Agent).
(d) On and after each Transfer Date hereunder, MCF shall own the Transferred
Receivables (assuming payment by MCF in accordance with Section 2.01(c) hereof)
and the Originator shall not take any action inconsistent with such ownership,
nor shall the Originator claim any ownership interest in any such Transferred
Receivables.
(e) Until the occurrence of an Event of Servicer Termination or a resignation of
the Servicer pursuant to the Purchase Agreement, (i) the Servicer, shall conduct
the servicing, administration and collection of such Transferred Receivables and
shall take, or cause to be taken, all such actions as may be necessary or
advisable to service, administer and collect such Transferred Receivables, from
time to time, all in accordance with (A) the terms of the Purchase Agreement,
(B) customary and prudent servicing procedures for trade receivables of a
similar type and (C) all applicable laws, rules and regulations, and (ii)
documents relating to Transferred Receivables shall be held in trust by the
Servicer, for the benefit of MCF and its assignees as the owners thereof, and
possession of any incident relating to the Transferred Receivables and Contracts
so retained is for the sole purpose of facilitating the servicing of the
Transferred Receivables. Such retention and possession thereof is at the will of
MCF and its assignees and in a custodial capacity for their benefit only. Each
sale by the Originator to MCF is made without recourse to the Originator, except
as set forth in Section 4.04 hereof
SECTION 2.02 Grant of Security Interest. (a) It is the intention of the parties
hereto that each transfer of Receivables transferred hereunder shall constitute
a purchase and sale, and not a loan. In the event, however, that a court of
competent jurisdiction were to hold that any transaction provided for hereby
constitutes a loan and not a purchase and sale or for any reason such purchase
and sale is not effective, it is the intention of the parties hereto that this
Agreement shall constitute a security agreement under applicable law and that
the Originator shall be deemed to have granted to MCF and the Originator hereby
grants to MCF for such purpose a first priority security interest in all of the
Originator's right, title and interest in, to and under the Receivables
transferred hereunder (or any other Receivables which would have been
transferred hereunder if the transactions contemplated hereunder were deemed to
be a purchase or sale and not a loan), all payments of principal, interest,
fees, charges and indemnities on or under such Receivables and all Proceeds of
any such Receivables as security for the prompt payment or performance when due,
whether at stated maturity, by acceleration or otherwise of all MOCA Secured
Obligations.
SECTION 2.03 (b) To the extent a Receivable relates to a returned good or
inventory, the security interest granted under this Agreement with respect
thereto shall terminate and MCF shall automatically release such security
interest immediately upon the payment to MCF of the Billed Amount of the
Receivable relating to such returned good or inventory less all Collections
thereon in accordance with Section 4.04 of this Agreement and MCF shall, at the
request of the Originator, provide such additional documentation requested by
the Originator to evidence such release of the security interest.
SECTION 2.04 Termination of Obligations. (a) At any time the Originator
may terminate its obligations hereunder if:
--------------------------
(i) the Originator shall have given MCF and its assigns not less than 60
days' prior written notice of its intention to terminate,
(ii) an Authorized Officer of the Originator shall have certified that the
termination by the Originator of its obligations hereunder will not
have a material adverse effect on the business, financial condition or
operations of MCF, and
(iii) both immediately before and after giving effect to the termination by
the Originator, no Termination Event shall have occurred and be
continuing or shall reasonably be expected to occur as a result of such
termination.
The termination by the Originator shall become effective on
the first Business Day that follows the day on which the requirements of clauses
(a)(i) through (iii) shall have been satisfied (or such later date specified in
the notice or certificate referred to in the clauses). The termination by the
Originator shall terminate its rights and obligations hereunder; provided,
however, that the termination shall not relieve the Originator of obligations
which relate to Transferred Receivables originated by or obligations of the
Originator prior to the effective date of the termination.
(b) The Originator's right and obligation to sell its Receivables to MCF shall
terminate immediately if the Originator ceases to be a Subsidiary or Affiliate
of the Parent; provided, however, that the termination shall not relieve the
Originator of obligations which relate to Transferred Receivables originated by
or obligations of the Originator prior to the effective date of the termination.
Article III
CONDITIONS OF SALE
SECTION 3.01 Conditions Precedent to the Initial Sale. The initial Sale
hereunder is subject to the conditions precedent that MCF shall have received on
or before the MOCA Effective Date, each dated such date (unless otherwise
indicated), in form and substance satisfactory to MCF:
(i) an Assignment executed by the Originator;
(ii) a copy of resolutions duly adopted by the Board of Directors of the
Originator approving this Agreement, the Assignment and the other
documents to be delivered by it hereunder and the transactions and
matters contemplated hereby, certified by its Secretary or Assistant
Secretary;
(iii) the charter, as amended, of the Originator, certified by the Secretary
of State of the Originator's state of incorporation, dated not earlier
than 10 days prior to the Effective Date;
(iv) a good standing certificate for the Originator issued by the Secretary
of State of the Originator's state of incorporation, dated not earlier
than 10 days prior to the Effective Date;
(v) a copy of the Originator's by-laws, as amended, certified by
the Originator's Secretary or Assistant Secretary;
(vi) a certificate of the Secretary or Assistant Secretary of the Originator
certifying the names and true signatures of the officers authorized on
behalf of the Originator to sign this Agreement, the Assignment, and
the other documents to be delivered by the Originator hereunder (on
which certificate MCF may conclusively rely until such time as MCF
shall receive from the Originator a revised certificate meeting the
requirements of this Subsection (vi)) and certifying that (A) the
charter of the Originator has not changed since the date of the
certificate referred to in Section 3.01(iii), (B) the Originator is
still in good standing in all jurisdictions where it is qualified to do
business, including, without limitation, that referred to in Section
3.01(iv), (C) all representations and warranties made by the Originator
in this Agreement are true and correct in all material respects (except
with respect to Section 4.01(b) and those already so qualified which
are true and correct in all respects) and (D) no financing statements
or other similar instruments relating to the Receivables have been
filed in any jurisdiction, other than those financing statements, other
similar instruments and documents shown on the certified copies of the
requests for information or copies (Form UCC-1)(or a similar search
report certified by a party acceptable to the Operating Agent) provided
pursuant to clause (ix);
(vii) copies of proper financing statements (Form UCC-1), dated on or prior
to the MOCA Effective Date, naming the Originator as the assignor of
the Transferred Receivables and MCF as assignee, or other similar
instruments or documents, in form and substance sufficient for filing
under the UCC or any comparable law of any and all jurisdictions as may
be necessary or, in the reasonable opinion of the Operating Agent
desirable to perfect MCF's ownership interest in all Transferred
Receivables, in each case in which an interest may be assigned
hereunder;
(viii) copies of properly executed termination statements or statements of
release (Forms UCC-2 or UCC-3) or other similar instruments or
documents, if any, in form and substance satisfactory for filing under
the UCC or any comparable law of any and all jurisdictions as may be
necessary or, in the reasonable opinion of the Operating Agent,
desirable to release all security interests and similar rights of any
Person in the Transferred Receivables previously granted by the
Originator;
(ix) certified copies of requests for information or copies (Form UCC-11)
(or a similar search report certified by a party acceptable to the
Operating Agent), dated a date reasonably near and prior to the
Effective Date, listing all effective financing statements and other
similar instruments and documents, which name the Originator (under its
present name and any previous name) as debtor and which are filed in
the jurisdictions in which filings are to be made pursuant to such
Subsections (vii) and (viii) above, together with copies of such
financing statements, none of which shall cover any Transferred
Receivables unless termination statements or statements of release are
provided with respect thereto pursuant to Subsection (viii) above;
(x) any necessary third party consents to the closing of the transactions
contemplated hereby, in the form and substance reasonably satisfactory
to the Operating Agent;
(xi) the Lockbox Agreements in respect of each Lockbox Account, in each case
duly executed by the parties thereto and acknowledged and agreed to by
the applicable Lockbox Bank; and
(xii) such legal opinions as may be requested by the Operating Agent,
including, without limitation, (i) a "true sale" opinion (which shall
cover the transfer between MOCA and MCF and Merisel Americas, Inc. and
MCF, (ii) a backup security interest opinion, and (iii) a customary
corporate and enforceability opinion, each in form and substance
satisfactory to the Operating Agent.
SECTION 3.02 Conditions Precedent to All Sales. The obligation of MCF to pay for
each Sold Receivable on each Transfer Date (including the initial Transfer Date)
shall be subject to the further conditions precedent that on such Transfer Date:
(a) The following statements shall be true (and delivery by the Originator of a
Request Notice and the acceptance by the Originator of the Sale Price for any
Receivables on any Transfer Date shall constitute a representation and warranty
by the Originator that on such Transfer Date such statements are true):
(i) the representations and warranties of the Originator contained in
Section 4.01 shall be correct on and as of such Transfer Date in all
material respects (except with respect to Section 4.01(b) and those
already so qualified which are true and correct in all respects),
before and after giving effect to the Sale of Receivables on such
Transfer Date and to the application of proceeds therefrom, as though
made on and as of such date; and
(ii) the Originator is in compliance with each of its covenants and other
agreements set forth herein.
(b) The Originator shall have taken such other action, including delivery of
approvals, consents, opinions, documents and instruments as MCF may reasonably
request.
Article IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.01 Representations and Warranties of the Originator. The Originator
represents and warrants to MCF as of each Transfer Date, that:
(a) With respect to the Originator:
(i) the Originator is a corporation duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of
incorporation and is duly qualified to do business and is in good
standing in every jurisdiction in which the nature of its business
requires it to be so qualified except where the failure to be so
qualified would not materially and adversely affect (1) the performance
of MCF or the Originator of its obligations under this Agreement or any
of the Related Documents, (2) the validity or enforceability of this
Agreement or any of the Related Documents, (3) the Transferred
Receivables, the Contracts or the interests of MCF or its assigns
therein, or (4) the business, operations, financial condition or
prospects of MCF or the Originator;
(ii) the Originator has the corporate power and authority to own, pledge,
mortgage, operate and convey all of its properties and assets, to
execute and deliver this Agreement and the Related Documents to which
it is a party and to perform the transactions contemplated hereby and
thereby;
(iii) the execution, delivery and performance by the Originator of this
Agreement and the Related Documents to which it is a party and the
transactions contemplated hereby and thereby (A) have been duly
authorized by all necessary corporate or other action on the part of
the Originator, (B) do not contravene or cause the Originator to be in
default under (1) the Originator's certificate or articles of
incorporation or by-laws, (2) any contractual restriction with respect
to any Debt of the Originator or contained in any material indenture,
loan or credit agreement, lease, mortgage, security agreement, bond,
note, or other material agreement or instrument binding on or affecting
the Originator, its affiliates or their or its respective property or
(3) any law, rule, regulation, order, writ, judgment, award, injunction
or decree applicable to, binding on or affecting the Originator, or its
property and (C) do not result in or require the creation of any
Adverse Claim upon or with respect to any of its properties (other than
in favor of MCF with respect to this Agreement and Redwood and the
Collateral Agent under the Purchase Agreement);
(iv) this Agreement and the Related Documents to which it is a party have each
been duly executed and delivered by the Originator;
(v) no approval or consent of, notice to, filing with or licenses, permits,
qualifications or other action by any Governmental Authority or any
other party, is required or necessary for the conduct of the
Originator's business as currently conducted and for the due
execution, delivery and performance by the Originator of this
Agreement or any of the Related Documents to which it is a
party or for the perfection of or the exercise by MCF, Redwood, the
Operating Agent or the Collateral Agent of any of their rights or
remedies thereunder or hereunder, except (A) approvals, consents,
notices, filings and other actions which have been obtained or made and
complete copies of which have been provided to Redwood, the
Operating Agent and the Collateral Agent (other than
confirmation statements in respect of any such filings) and (B)
where the failure to obtain such approval, consent, license, permit or
qualification, make or present such notice or filing, or take such
other action would not materially and adversely affect (1) the
performance of MCF or the Originator of its obligations under this
Agreement or any of the Related Documents to which it is a party, (2)
the validity or enforceability of this Agreement or any of the
Related Documents to which it is a party, (3) the Transferred
Receivables, the Contracts or the interests of MCF or its assigns
therein, or (4) the business, operations, financial condition or
prospects of MCF or the Originator;
(vi) this Agreement and the other Related Documents delivered by the
Originator are the legal, valid and binding obligations of the
Originator enforceable against the Originator in accordance with their
respective terms subject to (A) any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting the enforceability of creditors' rights
generally and (B) general equitable principles, whether applied in a
proceeding at law or in equity;
(vii) there is no pending or, to the knowledge of the Originator, threatened,
nor, to the knowledge of the Originator, any reasonable basis for,
any action, suit or proceeding against or affecting the Originator, its
officers or directors, or the property of the Originator, in any
court or tribunal, or before any arbitrator of any kind or before or
by any Governmental Authority (A) asserting the invalidity of this
Agreement or any of the Related Documents, (B) seeking to prevent
the transfer, sale or pledge of any Receivable or the
consummation of any of the transactions contemplated hereby or
thereby, (C)seeking any determination or ruling that might
materially and adversely affect (1) the performance by MCF or the
Originator of its obligations under this Agreement or any of the
Related Documents, (2) the validity or enforceability of this
Agreement or any of the Related Documents, or (3) the
Transferred Receivables, the Contracts or the interests of MCF or its
assigns therein, or (D) reasonably likely to result in damages or
penalties in an uninsured amount in excess of $1,000,000;
(viii) no injunction, writ, restraining order or other order (collectively,
"Orders") of any nature adverse to the Originator or the conduct of
its business or which is inconsistent with the due
consummation of the transactions contemplated by this Agreement or the
Purchase Agreement or any of the other Related Documents to which it
is a party has been issued by a Governmental Authority nor been
sought by any Person except such Orders that would not materially and
adversely affect (1) the performance of MCF or the Originator of its
obligations under this Agreement or any of the Related Documents to
which it is a party, (2) the validity or enforceability of this
Agreement or any of the Related Documents to which it is a party,
(3) the Transferred Receivables or the Contracts or the interests of
MCF or its assigns therein, or the business, operations, financial
condition or prospects of MCF or the Originator;
(ix) the principal place of business, the chief executive office and all
other places of business of the Originator are located at the addresses
of the Originator referred to in Schedule 1 and there are now no, and
during the past four months there have not been any, other locations
where the Originator is located (as that term is used in the UCC of the
jurisdiction where such principal place of business is located) or
keeps Records;
(x) the legal name of the Originator is as set forth at the beginning of
this Agreement and the Originator has not changed its name in the last
six years, and during such period the Originator did not use, nor does
the Originator now use, any trade names, fictitious names, assumed
names or "doing business as" names other than as set forth in Schedule
1;
(xi) the Originator is solvent and will not become insolvent after giving
effect to the transactions contemplated by this Agreement and the
Related Documents; the Originator is paying its Debts as they mature;
the Originator has not incurred Debts beyond its ability to pay as they
mature; and the Originator, after giving effect to the transactions
contemplated by this Agreement and the Related Documents, will have an
adequate amount of capital to conduct its business in the foreseeable
future;
(xii) for federal income tax, reporting and accounting purposes (except in
any consolidated financial statements and consolidated tax returns),
the Originator will treat the sale of each Sold Receivable sold or
assigned pursuant to this Agreement as a sale of, or absolute
assignment of, its full right, title and ownership interest in such
Receivable to MCF, and the Originator has not in any other respect
accounted for or treated the transactions contemplated by this
Agreement or the Related Documents.
(xiii) the Originator has complied in all material respects with all
applicable laws, rules, regulations, and orders with respect to it, its
business and properties and all Transferred Receivables and related
Contracts (including without limitation, all applicable environmental,
health and safety requirements) and all restrictions contained in any
indenture, loan or credit agreement, mortgage, security agreement,
bond, note or other agreement or instrument binding on or affecting the
Originator or its property;
(xiv) without limiting the generality of the prior representation, no
condition exists or event has occurred which, in itself or with the
giving of notice or lapse of time or both, would result in the
suspension, revocation, impairment, forfeiture or non-renewal of any
Governmental Consent applicable to the Originator or any Subsidiary
except where such conditions or events would not, separately or in the
aggregate, have a material adverse effect on (A) the performance by MCF
or the Originator of its obligations under this Agreement or any of the
Related Documents to which it is a party, (B) the validity or
enforceability of this Agreement or any of the Related Documents to
which it is a party, or (C) the Transferred Receivables or the
Contracts or the interests of MCF or Redwood therein;
(xv) the Originator has filed on a timely basis all tax returns, tax reports
and statements (federal, state and local) required to be filed and has
paid or made adequate provisions for the payment of all taxes, fees,
assessments and other governmental charges due from the Originator
(other than taxes, fees, amendments or governmental charges which the
Originator is contesting in good faith with such taxing authority and
in respect of which no final unappealable order has been made against
the Originator), no tax lien or similar Adverse Claim has been
filed, and no claim is being asserted, with respect to any such
tax, fee, assessment, or other governmental charge. Any taxes, fees,
assessments and other governmental charges payable by the Originator
in connection with the execution and delivery of this Agreement
and the Related Documents and the transactions contemplated hereby
or thereby have been paid or shall have been paid when due, at or
prior to such Transfer Date;
(xvi) the Originator is licensed or otherwise has the lawful right to use all
patents, trademarks, servicemarks, tradenames, copyrights, technology,
know-how and processes used in or necessary for the conduct of its
business as currently conducted which are material to its financial
condition, business, operations, assets and prospects, individually or
taken as a whole;
(xvii) as of the date of each Request Notice delivered by the Originator, such
Request Notice contains an accurate list of the aggregate amount of all
Transferred Receivables sold by the Originator to MCF as of the
relevant Transfer Date;
(xviii) each Obligor of a Transferred Receivable has been directed, and is
required to, remit all payments with respect to such Receivable for
deposit in a Lockbox Account or a Lockbox;
(xix) the Originator is in compliance with ERISA and has not incurred and
does not expect to incur any liabilities (except for premium payments
arising in the ordinary course of business) payable to the PBGC (or any
successor thereof) under ERISA or the Internal Revenue Code;
(xx) each pension plan or profit sharing plan to which the Originator or any
Affiliate is a party has been administered and fully funded in
accordance with the obligations the Originator under law and as set
forth in such plan, and the Originator has complied with the applicable
provisions of ERISA or the Internal Revenue Code in effect as of such
Transfer Date;
(xxi) the Originator has not agreed to pay any fee or commission to any
agent, broker, finder or other person for or on account of services
rendered as a broker or finder in connection with this Agreement or the
Related Documents or the transactions contemplated hereby or thereby
which would give rise to any valid claim against MCF for any brokerage
commission or finder's fee or like payment;
(xxii) all information heretofore or hereafter furnished with respect to the
Originator to MCF in connection with any transaction contemplated by
this Agreement or the Related Documents is and will be true and
complete in all material respects and does not and will not omit to
state a material fact necessary to make the statements contained herein
or therein not misleading, provided that any projections, pro forma or
preliminary financial information furnished are based on good faith
estimates and assumptions believed by the Originator to be reasonable
at the time made and MCF acknowledges that such projections as to
future events are not to be viewed as facts and that actual results for
such period may differ from the projected results;
(xxiii) no part of the proceeds received by the Originator or any Affiliate
from the Sale Price will be used directly or indirectly for the purpose
of purchasing or carrying, or for payment in full or in part of, Debt
that was incurred for the purposes of purchasing or carrying any
"margin stock," as such term is defined in Regulations T and U of the
Board of Governors of the Federal Reserve System;
(xxiv) there are not now, nor will there be at any time in the future, any
agreement or understanding between the Originator and MCF (other than
as expressly set forth herein) providing for the allocation or sharing
of obligations to make payments or otherwise in respect of any taxes,
fees, assessments or other governmental charges;
(xxv) no transaction contemplated by this Agreement or any of the Related
Documents requires compliance with any bulk sales act or similar law;
(xxvi) the Request Notice with respect to such Transfer Date is accurate in all
material respects;
(xxvii) each purchase of Receivables under this Agreement will constitute (A) a
"current transaction" within the meaning of Section 3(a)(3) of the
Securities Act of 1933, as amended, and (B) a purchase or other
acquisition of notes, drafts, acceptances, open accounts receivables or
other obligations representing part or all of the sales price of
merchandise, insurance or services within the meaning of Section
3(c)(5) of the Investment Company Act of 1940, as amended;
(xxviii) (A) the Originator is not a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to
any charter or corporation restriction that is reasonably likely to
have, and no provision of applicable law or governmental regulation is
reasonably likely to have, a material adverse effect on the ability of
the Originator to carry out its obligations under this Agreement and
the other Related Documents to which the Originator is a party and (B)
the Originator is not in default under or with respect to any contract,
agreement, lease or other instrument to which the Originator is a party
and which is material to the Originator's ability to perform its
obligations hereunder or to the quality or collectibility of the
receivables, and the Originator has not delivered or received any
notice of default thereunder;
(xxix) the Originator is not an "investment company" or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended. The purchase or acquisition of the Transferred
Receivables by MCF, the application of the proceeds and the
consummation of the transactions contemplated by this Agreement and the
other Related Documents to which the Originator is a party will not
violate any provision of such Act or any rule, regulation or order
issued by the Securities and Exchange Commission thereunder;
(xxx) the bylaws or the articles of incorporation of the Originator require
it to maintain (A) books and records of account, and (B) minutes of the
meetings and other proceedings of its shareholders and board of
directors;
(xxxi) the Lockboxes and the Lockbox Accounts are the only lockboxes and
accounts maintained by the Originator into which Collections of any
Transferred Receivables are deposited; and
(xxxii) each of the representations and warranties of the Originator contained
in the Related Documents (other than this Agreement) is true and
correct in all material respects and the Originator hereby makes each
such representation and warranty to, and for the benefit of, the
Collateral Agent, the Operating Agent and Redwood as if the same were
set forth in full herein.
(b) On each Transfer Date and as of the date of each Investment Base Certificate
delivered under the Purchase Agreement with respect to each Transferred
Receivable designated as an Eligible Receivable:
(i) such Receivable is an Eligible Receivable and is a receivable created
through the provision of merchandise, goods or services by the
Originator in the ordinary course of its business;
(ii) such Receivable was created in accordance with and satisfies in all
material respects all applicable requirements of the Credit and
Collection Policies;
(iii) such Receivable represents the genuine, legal, valid and binding
obligation in writing of the Obligor enforceable by the holder thereof
in accordance with its terms, subject to (A) any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the enforceability of
creditors' rights generally and (B) general equitable principles,
whether applied in a proceeding at law or in equity and neither such
Receivable nor its related Contract has been satisfied, subordinated,
rescinded or amended in any manner which would impair the
collectibility of such Receivable, adjust the value of such Receivable,
or modify the payment terms of such Receivable after its creation;
(iv) such Receivable is not and will not be subject to any exercise of any
right of rescission, set-off, recoupment, counterclaim or defense;
(v) prior to its sale to MCF such Receivable was owned by the Originator
free and clear of any Adverse Claim, and the Originator had the right
to sell, assign and transfer the same and interests therein as
contemplated under this Agreement, upon such sale, MCF will have
acquired good and marketable title to and the sole record and
beneficial ownership interest in such Receivable, free and clear of any
Adverse Claim and, after such sale, such Receivable did not become
subject to any Adverse Claim as a result of any action or inaction of
the Originator;
(vi) this Agreement and the Assignment constitute a valid sale, transfer,
assignment, setover and conveyance to MCF of all right, title and
interest of the Originator in and to such Receivable;
(vii) such Receivable allows the holder thereof to bring suit or otherwise
enforce its remedies against an Obligor through judicial process, is
entitled to be paid pursuant to the terms of the related Contract, has
not been paid in full or been compromised, adjusted, extended,
satisfied, subordinated, rescinded or modified, and is not subject to
compromise, adjustment, extension, satisfaction, subordination,
rescission, or modification by the Originator except in accordance with
any applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or effecting
the enforceability of creditors' rights generally;
(viii) the Originator has submitted all necessary documentation for payment of
such Receivable to the Obligor and has fulfilled all its other
obligations in respect thereof;
(ix) the stated term of such Receivable, if any, is not greater than 90 days;
(x) such Receivable is an "account" within the meaning of the UCC of the
jurisdiction where the Originator's chief executive office is located;
(xi) neither such Receivable nor its related Contract contravenes in any
material respect any laws, rules or regulations applicable thereto
(including, without limitation, laws, rules and regulations relating to
usury, consumer protection, truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection
practices and privacy) and no party to such related Contract is in
violation of any such law, rule or regulation in any material respect;
(xii) such Receivable does not represent "billed but not yet shipped" goods
or merchandise, unperformed services, consigned goods or "sale or
return" goods; nor does such Receivable arise from a transaction for
which any additional performance by MCF or acceptance or other act of
the Obligor remains to be performed as a condition to any payments on
such Receivable;
(xiii) there are no proceedings or investigations pending or to the
Originator's knowledge threatened before any Governmental Authority (A)
asserting the invalidity of such Receivable or such Contract, (B)
asserting the bankruptcy or insolvency of the related Obligor, (C)
seeking the payment of such Receivable or payment and performance of
such Contract, or (D) seeking any determination or ruling that might
materially and adversely affect the validity or enforceability of such
Receivable or such Contract;
(xiv) as of the relevant Transfer Date hereunder, no Obligor on such
Receivable is bankrupt or insolvent, is unable to make payment of its
obligations when due, is the debtor in a voluntary or involuntary
bankruptcy proceeding, or is the subject of a comparable receivership
or insolvency proceeding, other than Obligors under the protection of a
bankruptcy court or receivership which has approved payment by any such
Obligor of such Receivable; and
(xv) the Originator has no knowledge of any fact (including any defaults by
the Obligor on any other accounts) which leads it or should have led it
to expect that any payments on such Receivable will not be paid in full
when due or to expect any other material adverse effect on (A) the
performance by MCF or the Originator of its obligations under this
Agreement or any of the Related Documents, (B) the validity or
enforceability of this Agreement or any of the Related Documents to
which it is a party, or (C) the Transferred Receivables or the
Contracts or the interests of MCF or Redwood therein.
It is understood and agreed that the representations and warranties described in
this Section 4.01 shall survive the sale of the Transferred Receivables to MCF,
any subsequent assignment of the Transferred Receivables by MCF, and the
termination of this Agreement and the Purchase Agreement and shall continue so
long as any Transferred Receivable shall remain outstanding.
SECTION 4.02 Covenants of the Originator.
(a) Offices and Records. The Originator shall keep its chief place of business
and chief executive offices and the office where it keeps its Records at the
respective locations specified in Schedule I hereto or, upon at least 30 days
prior written notice to MCF and the Collateral Agent, at such other location in
a jurisdiction where all action required by Section 4.02(d) shall have been
taken with respect to the Transferred Receivables. The Originator shall, for not
less than three years or for such longer period as may be required by law, from
the date on which any Transferred Receivable arose, maintain adequate Records
with respect to each Transferred Receivable, including records of all payments
received, credits granted and merchandise returned. Upon prior notice to the
Originator, except after the occurrence of any Termination Event, the Originator
will permit representatives of MCF, the Servicer, the Operating Agent or the
Collateral Agent at any time and from time to time during normal business hours,
and at such times outside of normal business hours as MCF, the Servicer, the
Operating Agent or the Collateral Agent shall reasonably request, (i) to inspect
and make copies of and abstracts from such records, (ii) to visit the properties
of the Originator utilized in connection with the collection, processing or
servicing of the Transferred Receivables for the purpose of examining such
Records, and (iii) to discuss matters relating to the Transferred Receivables or
the Originator's performance under this Agreement or the affairs, finances and
accounts of the Originator with any of its officers, directors, employees,
representatives or agents and with its independent certified accountants. The
Originator will advise its independent certified accountants that MCF, the
Operating Agent, the Servicer and the Collateral Agent have been authorized to
review and discuss with such accountants any and all financial statements and
other information of any kind that they may have with respect to the Originator
and deliver a letter (the "Accountants' Letter") addressed to such accountants
instructing them to make available to MCF, the Operating Agent, the Servicer and
the Collateral Agent such information and records as MCF, the Operating Agent,
the Servicer and the Collateral Agent may reasonably request and to otherwise
comply with the provisions of this Section 4.02(a). The Originator shall be
given prior notice of any discussions with its accountants and the opportunity
to participate; provided that the Originator's failure or inability to
participate shall not prevent any of MCF, the Operating Agent, the Servicer and
the Collateral Agent from engaging in such discussions. After the Effective
Date, if the Originator engages the services of accountants other than Deloitte
& Touche, it shall deliver a letter addressed to such accountants containing the
same terms and provisions as the Accountants' Letter. In connection with the
foregoing, in the event any of the Originator, the Operating Agent or the
Collateral Agent determines that a deterioration has or is reasonably likely to
occur in the quality of servicing of the Transferred Receivables, any of them,
individually or collectively, may institute procedures to permit it to confirm
the Obligor's outstanding balances in respect of any Transferred Receivables.
The Originator agrees to render to MCF, the Operating Agent and the Collateral
Agent, at the Originator's own cost and expense, such clerical and other
assistance as may be reasonably requested with regard to the foregoing. If a
Termination Event under the Purchase Agreement shall have occurred and be
continuing, promptly upon request therefor, the Originator shall assist MCF in
delivering to the Operating Agent records reflecting activity through the close
of business on the immediately preceding Business Day.
(b) Compliance With Credit and Collection Policies. The Originator shall comply
in all material respects with the Credit and Collection Policies with regard to
each Transferred Receivable and the related Contracts, and with the terms of
such Receivables and Contracts.
(c) Notice of Adverse Claim. The Originator shall advise MCF and any assignees,
promptly, in reasonable detail, (i) of any Adverse Claim known to it made or
asserted against any of the Transferred Receivables, (ii) of any determination
that a Sold Receivable, or any other Receivable designated as an Eligible
Receivable in a Request Notice or otherwise, was not an Eligible Receivable at
such time and (iii) of the occurrence of any event which would have a material
adverse effect on the aggregate value of the Transferred Receivables or on the
validity of the transfers in this Agreement.
(d) Further Assurances: Financing Statements.
(i) The Originator agrees that at any time and from time to time, at its
expense, upon the request of MCF or MCF's assignees it shall
promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or, in the
reasonable opinion of MCF or any assignee, desirable or that MCF or
any assignee may reasonably request to perfect, preserve,
continue and maintain fully and protect the transfers made and the
right, title and interests (including any security interests) granted
to MCF by this Agreement or to enable MCF or any assignee to exercise
and enforce its rights and remedies under this Agreement or any of the
Related Documents to which it is a party with respect to any
Transferred Receivables. Without limiting the generality of the
foregoing, the Originator shall execute and file such financing or
continuation statements, or amendments thereto, and such other
instruments or notices as may be necessary or in the reasonable
opinion of MCF or any assignee desirable or that MCF or any assignee
may reasonably request to protect and preserve and perfect the
transfers and security interests granted by this Agreement, free and
clear of all Adverse Claims.
(ii) The Originator hereby authorizes MCF and the Collateral Agent to file
one or more financing or continuation statements, and amendments
thereto, relating to all or any part of the Transferred Receivables
without the signature of the Originator where permitted by law. A
carbon, photographic or other reproduction of this Agreement or any
notice or financing statement covering the Transferred Receivables or
any part thereof shall be sufficient as a notice or financing statement
where permitted by law. MCF will promptly send to the Originator any
financing or continuation statements thereto which it files without the
signature of the Originator except, in the case of filings of copies of
this Agreement as financing statements, MCF will promptly send the
Originator the filing or recordation information with respect thereto.
(e) Assignment. The Originator acknowledges and agrees that, to the extent
permitted under the Purchase Agreement, MCF may assign all of its right, title
and interest in, to and under the Transferred Receivables and its right, title
and interest under this Agreement, including its right to exercise the remedies
created by Section 4.04. The Originator agrees that, upon such assignment, the
assignee under the Purchase Agreement may enforce directly, without joinder of
MCF, the repurchase obligations of the Originator set forth in Section 4.04 with
respect to breaches of the representations and warranties or covenants set forth
in Section 4.01(b) and 4.02(b) and (c).
(f) Compliance With Agreements and Applicable Laws. The Originator shall perform
each of its obligations under this Agreement and the Related Documents and
comply with all material requirements of any law, rule or regulation applicable
to it, provided that the Originator shall be deemed to have complied with any
such requirements for as long as the Originator contests in good faith the
application of such requirement, a stay has been granted with respect to any
penalty imposed on the Originator in respect of such requirement and no final
unappealable order in respect of such requirement has been made against the
Originator (notwithstanding the foregoing, this proviso shall not be effective
unless the Originator gives prior written notice of any such notice to MCF and
its assignees and such non-compliance does not adversely affect their rights in
respect of the Transferred Receivables or impair their ability to exercise any
of their rights or remedies hereunder) except for any noncompliance with laws
which would not have a material adverse effect on (1) the performance of MCF or
the Originator of its obligations under this Agreement or any of the Related
Documents, (2) the validity or enforceability of this Agreement or any of the
Related Documents, (3) the Transferred Receivables or the Contracts or the
interests of MCF or its assigns therein, or the business, operations, financial
condition or prospects of MCF or the Originator.
(g) Corporate Existence. Subject to Section 4.03(d), the Originator shall
maintain its corporate existence and shall at all times continue to be duly
organized under the laws of the state of its incorporation and duly qualified
and duly authorized (as described in Section 4.01) and shall conduct its
business in accordance with the terms of its certificate of incorporation and
bylaws.
(h) Notice of Material Event. The Originator shall promptly inform MCF and any
assignee (except in respect of clause (i), in which event the Originator shall
immediately inform MCF and any assignee) in writing of the occurrence of any of
the following:
(i) the submission of any claim or the initiation of any legal process,
litigation or administrative or judicial investigation against the
Originator or with respect to or in connection with all or any portion
of the Transferred Receivables, in excess of $1,000,000 or which, if
adversely determined, would be reasonably likely to have a material
adverse effect on the Originator or its ability to perform its
obligations hereunder;
(ii) any change in the location of the Originator's principal office or any
change in the location of the Originator's books and records;
(iii) the commencement or threat of any rule making or disciplinary
proceedings or any proceedings instituted by or against the Originator
in any federal, state or local court or before any governmental body or
agency, or before any arbitration board, or the promulgation of any
proceeding or any proposed or final rule which, if adversely
determined, would have a material adverse effect with respect to the
Originator or its ability to perform its obligations hereunder;
(iv) the commencement of any proceedings, or written threat to commence any
proceedings, by or against the Originator under any applicable
bankruptcy, reorganization, liquidation, rehabilitation, insolvency or
other similar law now or hereafter in effect or of any proceeding in
which a receiver, liquidator, conservator, trustee or similar official
shall have been, or may be, appointed or requested for the Originator
or any of its assets;
(v) the receipt of notice that (A) the Originator is being placed under
regulatory supervision, (B) any license, permit, charter, registration
or approval necessary for the conduct of the Originator's business is
to be, or may be, suspended or revoked, or (C) the Originator is to
cease and desist any practice, procedure or policy employed by the
Originator in the conduct of its business, and such cessation may have
a material adverse effect with respect to the Originator or its ability
to perform its obligations hereunder; or
(vi) any other event, circumstance or condition that has had, or has a
material possibility of having, a material adverse effect in respect of
the Originator or its ability to perform its obligations hereunder.
(i) Maintenance of Licenses. The Originator shall maintain all licenses,
permits, charters and registrations which are material to the conduct of its
business.
(j) Use of Proceeds. The Originator shall apply its funds towards general
corporate purposes (including the retirement or repayment of third party debt)
and towards the other sums payable by the Originator under this Agreement and
the Related Documents in connection with the transactions contemplated hereby
and by the Related Documents and for no other purpose.
(k) Separate Identity.
(i) The Originator shall maintain corporate records and books of account
separate from those of MCF.
(ii) The financial statements of the Parent and its consolidated
Subsidiaries shall (i) disclose the effects of the Originator's
transactions in accordance with GAAP and (ii) either (a) disclose that
the assets of MCF are not available to pay creditors of the Originator
or any other Affiliate of the Originator or (b) contain the language
set forth in Section 4.02(k)(iii)(b).
(iii) The annual financial statements of the Parent and its consolidated
subsidiaries (including MCF) will contain footnotes or other
information to the effect that with respect to MCF: (a) MCF's business
consists of the purchase of the Receivables from the Originator and
Merisel Americas, Inc. and (b) MCF is a separate corporate entity with
its own separate creditors, which upon its liquidation will be entitled
to be satisfied out of MCF's assets prior to any value in MCF becoming
available to MCF's equityholders.
(iv) The resolutions and other instruments underlying the transactions
described in this Agreement shall be continuously maintained by the
Originator as official records.
(v) The Originator shall use its best efforts to maintain an arm's-length
relationship with MCF and will not hold itself out as being liable for
the debts of MCF.
(vi) The Originator shall use its best efforts to keep its assets (except
with respect to any Records necessary for the servicing of the
Transferred Receivables) and its liabilities wholly separate from those
of MCF.
(vii) The Originator will conduct its business solely in its own name
(including any trade or fictitious name) through its duly authorized
officers or agents so as not to mislead others as to the identity of
the Originator.
(viii) The Originator will use its best efforts to avoid the appearance of
conducting business on behalf of MCF or that the assets of the
Originator are available to pay the creditors of MCF.
(l) ERISA. The Originator shall give the Operating Agent prompt notice of each
of the following events (but in no event more than 30 days after the occurrence
of the event): (i) an Accumulated Funding Deficiency, (ii) the failure to make a
material required contribution to a Plan or Multiemployer Plan (but in no event
will a contribution failure sufficient to give rise to a lien under ss.302(f) of
ERISA be considered immaterial), (iii) a Reportable Event, (iv) any action by a
Commonly Controlled Entity to terminate any Plan or withdraw from any
Multiemployer Plan, (v) any action by the PBGC to terminate or appoint a trustee
to administer a Plan, (vi) the reorganization or insolvency of any Multiemployer
Plan and (vii) an aggregate Underfunding for all Underfunded Plans in excess of
$100,000.
(m) Cooperation With Requests for Information or Documents. The Originator will
cooperate fully with all reasonable requests of MCF or any assignee regarding
the provision of any information or documents, necessary, including the
provision of such information or documents in electronic or machine-readable
format, or desirable to allow MCF and each assignee to carry out its
responsibilities under the Related Documents.
(n) Payment, Performance and Discharge of Obligations. The Originator will pay,
perform and discharge all of its obligations and liabilities, including, without
limitation, all taxes, assessments and governmental charges upon its income and
properties when due the non-payment, performance or discharge of which would
materially and adversely affect (1) the performance of MCF or the Originator of
its obligations under this Agreement or any of the Related Documents to which
the Originator is a party, (2) the validity or enforceability of this Agreement
or any of the Related Documents to which the Originator is a party, (3) the
Transferred Receivables or the Contracts or the interests of MCF or its assigns
therein, or (4) the business, operations, financial condition or prospects of
MCF or the Originator, unless and to the extent only that such obligations,
liabilities, taxes, assessments and governmental charges shall be contested in
good faith and by appropriate proceedings and that, to the extent required by
GAAP, proper and adequate book reserves relating thereto are established by the
Originator and then only to the extent that a bond is filed in cases where the
filing of a bond is necessary to avoid the creation of an Adverse Claim against
any of its properties.
SECTION 4.03 Negative Covenants of the Originator. The Originator shall not,
without the written consent of MCF and each assignee of MCF's rights:
(a) sell, assign (by operation of law or otherwise) or otherwise dispose of, or
create or suffer to exist any Adverse Claim upon or with respect to, or assign
any right to receive income in respect of any Transferred Receivable or related
Contract with respect thereto, or upon or with respect to any Lockbox or any
Lockbox Account;
(b) extend, amend, forgive, discharge, compromise, cancel or otherwise modify
the terms of any Transferred Receivable, or amend, modify or waive any term or
condition of any Contract related thereto (except as to the Originator in its
capacity as the Sub-Servicer under the Sub-Servicing Agreement and in the case
of any such Contracts, any amendments or modifications to any provision thereof
other than payment terms or any term adversely affecting the payment of such
Receivable), provided that the foregoing shall not prohibit the Servicer or
Sub-Servicer from offering early pay discounts to the extent permitted by the
Credit and Collection Policy;
(c) make any change in its instructions to Obligors regarding payments to be
made to MCF or payments to be deposited to a Lockbox or a Lockbox Account other
than (i) changes of a purely administrative nature which do not alter any
directions to Obligors regarding the method, timing or place of payment, or (ii)
changes to the method or timing of payments which are in accordance with the
Credit and Collections Policy, or (iii) changes redirecting payments from one
Lockbox or Lockbox Account to another Lockbox Account in respect of which all
actions required under Section 6.01 of the Purchase Agreement have been taken;
(d) merge with or into, consolidate with or into, convey, transfer, lease or
otherwise dispose of all or substantially all of its assets (whether now owned
or hereafter acquired) to, or acquire all or substantially all of the assets or
capital stock or other ownership interest of, any Person (whether in one
transaction or in a series of transactions) except where such action would not
have a material adverse effect on the business of the Originator or the ability
of the Originator to perform its obligations under this Agreement and the Rating
Agency Condition is satisfied;
(e) make statements or disclosures or prepare any financial statements which
shall account for the transactions contemplated by this Agreement in any manner
other than as a sale or absolute assignment of the Transferred Receivables to
MCF, or in any other respect account for or treat the transactions contemplated
hereby (including but not limited to, for accounting, tax and reporting
purposes) in any manner other than as a sale or absolute assignment of the
Transferred Receivables;
(f) (i) take any action, or fail to take any action, with respect to the
Transferred Receivables, if such action or failure to take action may interfere
with the enforcement of any rights under this Agreement or the Related Documents
that are material to the rights, benefits or obligations of MCF or any assignee
(however, nothing herein shall be construed to constitute a guarantee of
collectibility by the Originator); (ii) take any action, with respect to the
Transferred Receivables, or fail to take any action, if such action or failure
to take action may materially interfere with the enforcement of any rights with
respect to the Transferred Receivables; or (iii) fail to pay any tax,
assessment, charge, fee or other obligation of the Originator with respect to
the Transferred Receivables, or fail to defend any action, if such failure to
pay or defend may adversely affect the priority or enforceability of the first
priority perfected interest of MCF in the Transferred Receivables or the
Originator's right, title or interest in the Transferred Receivables;
(g) neither the Originator nor any Commonly Controlled Entity will:
(i) terminate any Plan so as to incur any material liability to the PBGC;
(ii) knowingly participate in any "prohibited transaction" (as defined in
ERISA) involving any Plan or Multiemployer Plan or any trust created
thereunder which would subject any of them to a material tax or penalty
on prohibited transactions imposed under Section 4975 of the Internal
Revenue Code or ERISA;
(iii) fail to pay to any Plan or Multiemployer Plan any contribution which it
is obligated to pay under the terms of such Plan or Multiemployer Plan,
if such failure would cause such plan to have any material Accumulated
Funding Deficiency, whether or not waived; or
(iv) allow or suffer to exist any occurrence of a Reportable Event, or any
other event or condition, which presents a material risk of termination
by the PBGC on any Plan or Multiemployer Plan, to the extent that the
occurrence or nonoccurrence of such Reportable Event or other event or
condition is within the control of it or any Commonly Controlled
Entity;
(h) make any material change to the Credit and Collection Policies without the
prior written consent of MCF and each assignee; or
(i) take or permit (other than with respect to actions taken or to be taken
solely by a Government Authority) to be taken any action which would have the
effect directly or indirectly of subjecting interest on any of the Purchases or
the Commercial Paper to withholding taxation in the hands of, respectively, MCF,
Redwood or holders of the Commercial Paper generally who are residents of the
United States and will perform all of the Originator's obligations under this
Agreement and the Related Documents to prevent or cure any default by the
Originator which would have the effect, directly or indirectly, of subjecting
interest on any of the Purchases or the Commercial Paper to withholding
taxation.
(j) permit, cause, or suffer the creation, incurrence or assumption of any Debt
secured by a lien (other than capital leases and Debt owing to vendors of the
Originator in connection with the provision of goods) without first having
entered into an intercreditor agreement, in form and substance satisfactory to
MCF and each assignee of MCF's rights hereunder.
SECTION 4.04 Breach of Representations, Warranties or Covenants. Upon discovery
by the Originator, MCF, or any assignee of MCF's rights hereunder, that any of
the representations, warranties or covenants described in Sections 4.01(b),
4.02(b) or (c) or 4.03(a), (b) or (c) have been breached such that they are or
were untrue or incorrect in any respect, which breach is reasonably likely to
have a material adverse effect on the value of a Transferred Receivable or the
interests of MCF or any assignee therein, the party discovering the same shall
give prompt written notice to the other parties. Thereafter, if requested by
notice from MCF or any assignee, or if the Originator so desires, the Originator
shall, on the next succeeding Business Day, either (i) repurchase such
Transferred Receivable from MCF in consideration of cash or a reduction of the
outstanding indebtedness under the Subordinated Note or both (and MCF shall
transfer such Receivable to the Originator), or (ii) transfer ownership of a new
Eligible Receivable or new Eligible Receivables on such Business Day, in the
case of clauses (i) and (ii) in an amount equal to the Billed Amount of such
Transferred Receivable less Collections received in respect thereof.
Notwithstanding the foregoing, if any Receivable is not paid in full on account
of any Dilution Factors, the Originator's repurchase obligation under this
Section 4.04 shall be reduced by the amount of any such Dilution Factors taken
into account in the Sale Price.
Article V
INDEMNIFICATION
SECTION 5.01 Indemnification. (a) Without limiting any other rights that MCF,
any of its shareholders, officers or agents, or any assignee of MCF's rights
hereunder or such assignee's shareholders, officers, employees or agents (each,
an "Indemnified Party") may have hereunder or under applicable law, the
Originator hereby agrees to indemnify each Indemnified Party from and against
any and all claims, losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, and costs and expenses of any nature whatsoever
related thereto, including reasonable attorneys fees and disbursements (all of
the foregoing being collectively referred to as "Indemnified Amounts") which may
be imposed on, incurred by or asserted against an Indemnified Party in any way
arising out of or resulting from this Agreement or the use by the Originator of
proceeds of any purchase or assignment hereunder or in respect of any
Transferred Receivable or any Contract, excluding, however, (A) Indemnified
Amounts to the extent resulting from gross negligence or willful misconduct on
the part of such Indemnified Party, (B) recourse for uncollectible or
uncollected Transferred Receivables or (C) consequential, indirect, punitive or
exemplary damages; provided, however, that if a court of competent jurisdiction
in a final non-appealable order determines that such Indemnified Amounts arose
in part from such Indemnified Party's gross negligence or willful misconduct,
the Originator shall reimburse such Indemnified Party for the portion of such
Claim not resulting from such Indemnified Party's gross negligence or willful
misconduct. To the extent such a determination of gross negligence or willful
misconduct is made, after payment of any Indemnified Amounts related thereto,
the Originator shall be repaid any amounts reimbursed under the preceding clause
that due to such determination it should not have paid. Without limiting or
being limited by the foregoing, the Originator shall pay on demand to each
Indemnified Party any and all Indemnified Amounts necessary to indemnify such
Indemnified Party from and against any and all Indemnified Amounts relating to
or resulting from:
(i) reliance on any representation or warranty made or deemed made by the
Originator (or any of its officers) under or in connection with this
Agreement or any Related Document, any report or any other information
delivered by the Originator pursuant hereto, which shall have been
incorrect in any material respect when made or deemed made or
delivered;
(ii) the failure by the Originator to comply with any term, provision or
covenant contained in this Agreement, any Related Document or any
agreement executed in connection with this Agreement, with any
applicable law, rule or regulation with respect to any Transferred
Receivable or the related Contract, or the nonconformity of any
Transferred Receivable or the related Contract with any such applicable
law, rule or regulation; or
(iii) the failure to vest and maintain vested in MCF, or to transfer to MCF,
legal and equitable title to and ownership of the Receivables which
are, or are purported to be, Transferred Receivables, together with all
Collections and Proceeds in respect thereof, free and clear of any
Adverse Claim (except as permitted hereunder) whether existing at the
time of the proposed sale of such Receivable or at any time thereafter;
excluding, however, (A) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party or (B)
recourse for uncollectible or uncollected Transferred Receivables or (C)
consequential, indirect, punitive or exemplary damages; provided, however, that
if a court of competent jurisdiction in a final non-appealable order determines
that such Indemnified Amounts arose in part from such Indemnified Party's gross
negligence or willful misconduct, the Originator shall reimburse such
Indemnified Party for the portion of such Claim not resulting from such
Indemnified Party's gross negligence or willful misconduct. To the extent such a
determination of gross negligence or willful misconduct is made, after payment
of any Indemnified Amounts related thereto, the Originator shall be repaid any
amounts reimbursed under the preceding clause that due to such determination it
should not have paid.
(b) If indemnification is to be sought hereunder by an Indemnified Party, then
such Indemnified Party shall promptly notify the Originator of the commencement
of any litigation, proceeding or other action in respect thereof; provided,
however, that the failure to notify the Originator shall not relieve the
Originator from any liability or obligation that it may have hereunder or
otherwise to such Indemnified Party, except to the extent the Originator is
actually prejudiced thereby. Each Indemnified Party shall have the right to
control its own defense, but shall consult from time to time with the Originator
and in no event shall the Originator, in connection with any one action or
proceeding or separate but substantially similar or related actions or
proceedings arising out of the same general allegations or circumstances, be
liable for the fees and expense of more than one firm of attorneys (together
with any appropriate local counsel) at any time acting for GE Capital, GE
Capital Markets Group Inc. or their employees, directors or officers
(collectively "GE Persons"), unless any such GE Person has been advised by legal
counsel that (a) the representation of such GE Person by legal counsel acting
for other GE Persons would be inappropriate due to actual or potential conflicts
of interest or (b) there may be legal defenses available to such GE Person that
are different from or additional to those available to any other GE Person
represented by such legal counsel; provided, that any Indemnified Party other
than any GE Person shall not be restricted from hiring separate legal counsel
the fees and expenses for which the Originator shall be liable as provided
herein. Notwithstanding anything to the contrary contained herein, the
Originator shall not have any obligation to hold harmless or indemnify any
Indemnified Party for the amount of any cash settlement if any Indemnified Party
enters into any such cash settlement of a claim without the prior written
consent of the Originator, which consent will not be unreasonably withheld or
delayed and in the event the Originator shall not consent to any proposed
settlement, then the Originator shall notify such Indemnified Party in writing
of the amount which the Originator is willing to pay (and if no such written
notification is provided, the Originator will be deemed to consent to the entire
cash settlement); provided that the Originator shall in any event continue to be
obligated to hold harmless and indemnify such Indemnified Party for legal costs
in relation to such Indemnified Amount as provided herein. If, for any reason,
no settlement is made, all indemnity obligations under this Article V shall
continue.
SECTION 5.02 Assignment of Indemnities. The Originator acknowledges that, to the
extent permitted under the Purchase Agreement, MCF may assign its rights of
indemnity granted hereunder and upon such assignment, such assignee shall have
all rights of MCF hereunder and may in turn assign such rights. The Originator
agrees that, upon such assignment, such assignee may enforce directly, without
joinder of MCF, the indemnities set forth in this Article V.
Article VI
MISCELLANEOUS
SECTION 6.01 Notices, Etc. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including
facsimile, telex and express mail) and mailed or telecommunicated, or delivered
as to each party hereto, at its address set forth under its name on the
signature page hereof or at such other address as shall be designated by such
party in a written notice to the other parties hereto. All such notices and
communications shall not be effective until received by the party to whom such
notice or communication is addressed.
SECTION 6.02 No Waiver; Remedies. No failure on the part of an Originator or MCF
or any assignee of MCF to exercise, and no delay in exercising, any right
hereunder or under any Assignment shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any other remedies provided by law.
SECTION 6.03 Binding Effect; Assignability. This Agreement shall be binding upon
and inure to the benefit of the Originator and MCF, and their respective
successors and permitted assigns. Except as contemplated herein, none of the
parties may assign any of its rights and obligations hereunder or any interest
herein without the prior written consent of the other parties. This Agreement
shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until its
termination; provided, that the rights and remedies pursuant to Section 4.04
with respect to any breach of any representation, warranty or covenants made by
the Originator pursuant to Sections 4.01(b), 4.02(b) and (c) and 4.03(a), (b)
and (c) and the indemnification and payment provisions of Article V shall be
continuing and shall survive any termination of this Agreement.
SECTION 6.04 No Proceedings. The Originator hereby agrees that it will not,
directly or indirectly, including, without limitation, by exercising any rights
under the Subordinated Note, institute, or cause to be instituted, against MCF
any proceeding of the type referred to in Section 9.01(c) of the Purchase
Agreement so long as there shall not have elapsed one year plus one day since
the latest maturing commercial paper issued by Redwood and allocated to MCF has
been paid in full in cash.
SECTION 6.05 Amendments; Consents and Waivers. No modification, amendment or
waiver of, or with respect to, any provision of this Agreement, the Purchase
Agreement and any exhibits or schedules hereto or thereto, nor consent to any
departure by the Originator or MCF from any of the terms or conditions hereof,
shall be effective unless it shall be in writing and signed by each of the
parties hereto, and prior written consent is given by Redwood and the Collateral
Agent. Any waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No consent or demand in any case shall, in
itself, entitle any party to any other consent or further notice or demand in
similar or other circumstances. This Agreement and the documents referred to
herein embody the entire agreement of the Originator and MCF with respect to the
Transferred Receivables and supersede all prior agreements and understandings
relating to the subject hereof.
SECTION 6.06 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. (a)
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF
CALIFORNIA.
(b) THE ORIGINATOR AND MCF HEREBY SUBMIT TO THE JURISDICTION OF THE COURTS OF
THE STATE OF CALIFORNIA, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL
DIRECTED TO THE ADDRESS SET FORTH ON THE SIGNATURE PAGE HEREOF AND SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN
DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE ORIGINATOR AND MCF HEREBY
WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF
ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE ORIGINATOR OR MCF TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW.
(c) THE ORIGINATOR AND MCF HEREBY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT.
INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT
A JURY.
SECTION 6.07 Execution in Counterparts; Severability. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and both of which when taken together
shall constitute one and the same agreement. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations in any jurisdiction, or of such provision or
obligation in any jurisdiction, shall not in any way be affected or impaired
thereby.
SECTION 6.08 Descriptive Headings. The descriptive headings of the various
sections of this Agreement are inserted for convenience of reference only and
shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
SECTION 6.09 No Setoff. The Originator's obligations under this Agreement shall
not be affected by any right of setoff, counterclaim, recoupment, defense or
other right the Originator might have against MCF, Redwood, the Operating Agent,
the Collateral Agent or any assignee, all of which rights are hereby waived by
the Originator.
SECTION 6.10 Further Assurances. The Originator agrees to do such further acts
and things and to execute and deliver to MCF, Redwood, the Operating Agent or
any assignee such additional assignments, agreements, powers and instruments as
MCF, Redwood, the Operating Agent or any assignee may require or deem advisable
to carry into effect the purposes of this Agreement or to better assure and
confirm unto any such party its respective rights, powers and remedies
hereunder.
SECTION 6.11 Confidentiality. (a) The Originator and MCF agree to maintain the
confidentiality of this Agreement (and all drafts of this agreement and
documents ancillary to this Agreement) in their communications with third
parties other than any Affected Party or any Indemnified Party and otherwise and
not to disclose, deliver or otherwise make available to any third party (other
than its directors, officers, employees, accountants or counsel) the original or
any copy of all or any part of this Agreement (or any draft of this Agreement
and documents ancillary to this Agreement) except to an Affected Party or an
Indemnified Party.
(b) Notwithstanding Section 6.11(a), (i) the general terms of the transactions
contemplated by this Agreement and the Related Documents may be disclosed to any
existing lender to or potential investor in the Parent that has agreed in
writing not to disclose such terms, and (ii) this Agreement and the Related
Documents may be disclosed (A) if required to be filed publicly with the
Securities and Exchange Commission, (B) to the certified public accountants of
the Parent to the extent necessary, (C) to the extent otherwise required by
applicable law, rule or regulation, (D) to the extent required under a valid and
appropriately limited subpoena or equivalent legal process or (E) if the
Affected Party otherwise consents in writing.
(c) The Originator agrees that it shall not (and shall not permit any of its
Subsidiaries to) issue any news release or make any public announcement
pertaining to the transactions contemplated by this Agreement and the Related
Documents without the prior written consent of MCF and its assignees (which
consent shall not be unreasonably withheld) unless such news release or public
announcement is required by law, in which case the Originator shall consult with
MCF and its assignees prior to the issuance of such news release or public
announcement.
SECTION 6.12 Assignment of Agreement. The Originator acknowledges that, to the
extent permitted under the Purchase Agreement, MCF may assign its rights granted
hereunder, including any rights in the Collateral granted under Article II, and
upon such assignment, such assignee shall have all rights of MCF hereunder and,
to the extent permitted under the Purchase Agreement, may in turn assign such
rights. The Originator agrees that, upon such assignment, such assignee may
enforce directly, without joinder of MCF, the rights set forth in this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Receivables Transfer
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
MERISEL OPEN COMPUTING ALLIANCE, INC.
By:
Name: βββββββ ββββββββ
Title: Treasurer
Address: βββ βββββββββββ βββββββββ
ββ βββββββ, ββ βββββ
Attention: βββββββ ββββββββ, Treasurer
MERISEL CAPITAL FUNDING, INC.
By:
Name: βββββββ ββββββββ
Title: Treasurer
Address: βββ βββββββββββ βββββββββ
ββ βββββββ, ββ βββββ
Attention: βββββββ ββββββββ