AMENDMENTS TO SECURITIZATION AGREEMENTS
AMENDMENTS TO SECURITIZATION AGREEMENTS, dated as of December
19, 1997, among MERISEL AMERICAS, INC ("Merisel Americas"), MERISEL CAPITAL
FUNDING, INC. ("Merisel Capital Funding"), REDWOOD RECEIVABLES CORPORATION
("Redwood") and GENERAL ELECTRIC CAPITAL CORPORATION ("GECC").
WHEREAS, Merisel Americas, as originator (in such capacity,
the "Originator"), and Merisel Capital Funding are parties to an Amended and
Restated Receivables Transfer Agreement, dated as of September 27, 1996, as
amended by Amendment No. 1, dated as of November 7, 1996 (the "Transfer
Agreement");
WHEREAS, Merisel Funding, as seller (in such capacity, the
"Seller"), Redwood as purchaser (in such capacity, the "Purchaser"), GECC, 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 on November 7, 1996 (the "Purchase Agreement");
WHEREAS, Redwood and GECC, in its capacity as Collateral
Agent, Letter of Credit Provider (in such capacity, the "LOC Provider") and
Letter of Credit Agent (in such capacity, the "LOC Agent") are parties to a
Second Amended and Restated Letter of Credit Reimbursement Agreement, dated as
of June 29, 1995 (the "Reimbursement Agreement"), and Redwood, the LOC Agent and
the LOC Provider are parties to a Reimbursement Agreement Supplement, dated as
of October 2, 1995 (the "RFC Supplement," and, together with the Transfer
Agreement, the Purchase Agreement, the Reimbursement Agreement and the RFC
Supplement, the "Securitization Agreements"); and
WHEREAS, the parties hereto desire to amend the Securitization
Agreements (such amendment 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
Section 1.1 Definitions. All capitalized terms used herein,
unless otherwise defined, are used as defined in the Purchase Agreement.
ARTICLE II
AMENDMENT NO. 1 TO ANNEX X
Section 2.1 Amendment to Annex X. (a) The definition of
"Purchase Discount Rate" in Annex X is hereby amended by replacing the amount
set forth in clause (b) thereof with "20%".
(b) The following definitions are hereby added:
"Restructuring Costs" means the transaction charges
related to (i) the indebtedness that was refinanced or retired
in connection with the issuance of the Stonington Convertible
Note and (ii) the conversion of the Stonington Convertible
Note into common stock of the Parent, including, without
limitation, printing costs, fees and expenses for attorneys,
accountants and investment advisory services, unamortized debt
placement fees, up-front fees, contingent payments and
make-whole payments, which with respect to the third fiscal
quarter of 1997, were approximately $9,324,000 in the
aggregate.
"Stonington Convertible Note" means that certain
Convertible Promissory Note, dated September 19, 1997, issued
by the Parent and the Originator, as amended.
ARTICLE III
AMENDMENT NO. 2 TO PURCHASE AGREEMENT
Section 3.1 Amendment to Section 2.02(b).
(a) Section 2.02(b) is hereby amended by adding the following
sentence at the end thereof:
"In the event that the Purchaser gives notice that it intends
to terminate the Maximum Purchase Limit under this Section
2.02(b) and such termination is to be effective on or prior to
October 31, 1998, a condition precedent to such termination is
the receipt by the Purchaser of a prepayment fee in the amount
of $750,000."
Section 3.2 Amendment to Section 5.01(a). Section 5.01(a) of
the Purchase Agreement is hereby amended by adding the phrase "(including,
without limitation, the financial covenants set forth in Exhibit H)" after the
word "Agreement" the second time such word appears in Section 5.01(a).
Section 3.3 Amendment to Section 5.02. Section 5.02 of the
Purchase Agreement is hereby amended by adding the following paragraph (k) at
the end thereof:
"(k) a report showing the computation of the
financial covenants contained in Exhibit H which report shall
accompany the financial statements and certifications to be
delivered pursuant to Section 5.02(c) and Section 5.02(e)."
Section 3.4 Amendment to Schedule 3. Schedule 3 of the
Purchase Agreement by
(i) deleting the definition of "Daily Margin" and substituting
therefor the following definition of "Daily Margin":
"'Daily Margin' 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 Seller 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%
The Daily Margin shall be determined by reference to the Daily
Margin Interest Coverage Ratio 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 Seller
demonstrating the computation of the Daily Margin Interest
Coverage Ratio 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.
(ii) adding the following definition:
"Daily Margin Interest Coverage Ratio" means, with
respect to any Person and its consolidated subsidiaries for
any period, the ratio of (i) EBITDA to (ii) Cash Interest
Expense on all Funded Debt;
Section 3.5 Amendment to Exhibit H. Exhibit H of the
Purchase Agreement is amended by:
(a) deleting the chart as it appears in such Exhibit and
substituting in lieu thereof the following chart:
FINANCIAL COVENANTS
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, (ii) shall be calculated on a quarterly basis and
(iii) with respect to any period of four fiscal quarters that ends before the
Fourth Quarter of 1998 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 the foregoing clause (iii) 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.
Covenant Level Convenant
--------- ----- ---------
I. Parent Fixed Charge Coverage Ratio (minimum)
Fourth Quarter of 1997 1.0 to 1.0
First Quarter of 1998 1.0 to 1.0
Second Quarter of 1998 1.0 to 1.0
Third Quarter of 1998 1.0 to 1.0
Fourth Quarter of 1998 1.1 to 1.0
and each quarter thereafter
Interest Coverage Ratio (minimum)
Fourth Quarter of 1997 1.1 to 1.0
First Quarter of 1998 1.1 to 1.0
Second Quarter of 1998 1.15 to 1.0
Third Quarter of 1998 1.25 to 1.0
Fourth Quarter of 1998 1.40 to 1.0
and each quarter thereafter
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
(b) The definition of Fixed Charges is hereby amended
and restated to read:
"'Fixed Charges'" means, with respect to any
Person for any period, the sum of the following
amounts payable during such period by such Person and
its consolidated subsidiaries: (i) Cash Interest
Expense in respect of Funded Debt, (ii) regularly
scheduled principal payments on Funded Debt, (iii)
Capital Expenditures, and (iv) cash taxes.
(c) adding the following definitions immediately after the
definition of "Funded Debt";
"'Interest Coverage Ratio'" means, with
respect to any Person and its consolidated
subsidiaries for any period, the ratio of (i) EBITDA
to (ii) Cash Interest Expense on all Funded Debt.
"Net Income" means, for any Person with respect to
any period, the consolidated net income of such Person and its
consolidated subsidiaries.
ARTICLE IV
AMENDMENT NO. 2 TO TRANSFER AGREEMENT
Section 4.1 Amendment to Section 6.04 of the Transfer
Agreement. Section 6.04 is hereby amended by adding the following phrase, which
phrase shall appear immediately after the word "indirectly":
",including, without limitation, by exercising any rights
under the Subordinated Note".
ARTICLE V
AMENDMENT NO. 1 TO RFC SUPPLEMENT.
Section 5.1 Amendment to the RFC Supplement. The RFC
Supplement is hereby amended by deleting "20%" as the LOC Draw Percentage and
substituting in lieu thereof "25%."
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.1. 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
and Liquidity Loan 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 (A) that
attached thereto is a true and complete copy of a resolution of the Board of
Directors of the Seller or the Servicer, as the case may be, authorizing the
execution, delivery and performance of 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, (B) 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 and (C) that each of the representations and warranties made by the
Seller and the Servicer in these Amendments is true and correct as of the date
hereof.
(c) the opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
in form and substance 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 to execute the Amendments in respect of the Purchase Agreement and
Transfer Agreement, (iii) the due authorization, execution and delivery of the
Amendments in respect of the Purchase Agreement and the Transfer Agreement by
the Seller and Servicer, (iv) the enforceability of the Amendments against the
Seller and Servicer and (v) that the execution and delivery of the Amendments in
respect of the Purchase Agreement and the Transfer Agreement (A) does not
conflict with the organizational documents of the Seller or Servicer and (B)
does not violate or constitute a default under any material agreements of the
Seller or Servicer.
(d) evidence, in form reasonably satisfactory to the Operating
Agent, of the conversion of the Stonington Convertible Note.
(d) such other approvals, opinions or documents as the
Collateral Agent, the Liquidity Agent, the LOC Agent, or the Operating Agent may
reasonably request.
ARTICLE VII
SELLER'S AND SERVICER'S REPRESENTATIONS
AND WARRANTIES
SECTION 7.1 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; and
(c) after giving effect to the amendments
referred to herein, there does not exist any Termination Event.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Confirmation of Securitization Agreements. Each of
the Seller and the Servicer agree that, except for the specific amendments set
forth herein, nothing herein shall be deemed to be a waiver or amendment of any
covenant or agreement contained in the Securitization Agreements 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, Annex X, the Reimbursement
Agreement and the RFC Supplement to "this Agreement" and in each of the other
documents to be executed in connection therewith to the "Purchase Agreement,"
"Annex X," the "Reimbursement Agreement," and the "RFC Supplement," as the case
may be, shall mean such respective agreement as amended by these Amendments and
as each such agreement may be hereinafter amended or restated. Nothing herein
shall obligate 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 8.2 Waiver by the Seller. 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 8.3 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 8.4 Governing Law. These Amendments shall be governed
by, and construed in accordance with, California law.
SECTION 8.5 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 Securitization Agreements shall
be amended by these Amendments, effective as of the date hereof.
IN WITNESS WHEREOF, the Seller, the Servicer, the Originator,
the Collateral Agent, the Operating Agent, the Liquidity Agent, the LOC Agent
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:___________________________
Title:
Name:
MERISEL AMERICAS, INC.,
as Originator and Servicer
By:___________________________
Title:
Name:
GENERAL ELECTRIC CAPITAL CORPORATION,
as Operating Agent and Collateral Agent
By:___________________________
Title:
Name:
GENERAL ELECTRIC CAPITAL CORPORATION,
as LOC Agent and LOC Provider
By:__________________________
Title:
Name:
REDWOOD RECEIVABLES CORPORATION,
as Purchaser
By:___________________________
Title:
Name: