EXHIBIT 4.11
LIMITED WAIVER AND AGREEMENT TO AMEND
This Limited Waiver and Agreement to Amend (this "Agreement"), dated
as of April 14, 1997, is entered into by and among (i) Merisel, Inc.
("Merisel"), (ii) Merisel Americas, Inc. ("Merisel Americas"), (iii) Merisel
Europe, Inc. ("Merisel Europe"), (iv) the undersigned holders (each a
"Consenting Lender") of loans (the "Loans") made pursuant to the Revolving
Credit Agreement, dated December 23, 1993, as amended and restated as of April
12, 1996 and as subsequently amended (the "Revolving Credit Agreement"), between
Merisel Americas and Merisel Europe as Borrowers, Merisel as Guarantor, the
lenders party thereto and Citicorp USA, Inc. as Agent and NationsBank of Texas,
N.A. as Co-Agent, (v) the undersigned holders (each a "Consenting Senior
Noteholder") of the senior notes (the "Senior Notes") issued pursuant to the
Amended and Restated Senior Note Purchase Agreement, dated as of December 23,
1993 and as subsequently amended (the "Senior Note Purchase Agreement"), between
the noteholders party thereto and Merisel Americas, and (vi) the undersigned
holders (each a "Consenting Subordinated Noteholder") of the subordinated notes
(the "Subordinated Notes") issued pursuant to the Amended and Restated
Subordinated Note Purchase Agreement, dated as of December 23, 1993 and as
subsequently amended (the "Subordinated Note Purchase Agreement"), between the
noteholders party thereto and Merisel Americas. The capitalized terms used
herein have the meanings ascribed to them in this Agreement.
WITNESSETH:
WHEREAS, Merisel, Merisel Americas and Merisel Europe (collectively,
the "Merisel Entities") and the Consenting Lenders, the Consenting Senior
Noteholders and the Consenting Subordinated Noteholders (collectively, the
"Consenting Noteholders") desire to implement a financial restructuring on the
terms set forth on Appendix I hereto (the "Financial Restructuring");
WHEREAS, in order to implement the Financial Restructuring, the
Merisel Entities and the Consenting Noteholders have agreed to effect certain
amendments to the Revolving Credit Agreement, the Senior Note Purchase Agreement
and the Subordinated Note Purchase Agreement (collectively, the "Debt
Agreements"), in each case on terms set forth on Appendix I; and
WHEREAS, in order to facilitate the implementation of the Financial
Restructuring, each of the Consenting Noteholders is prepared, on the terms and
subject to the conditions of this Agreement, to waive certain defaults
that may occur under the Debt Agreements, to consent to the financial
restructuring of Merisel described in Appendix II (the "Parent Financial
Restructuring") and to execute amendments (the "Amendments") to the applicable
Debt Agree ments, which Amendments shall be in form and substance reasonably
acceptable to the Consenting Noteholders.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Merisel Entities and the Consenting Noteholders hereby agree as follows:
1. Waiver and Consent. Effective as of the "Effective Date" (as
defined in Section 4 of this Agreement) and so long as no "Agreement Termination
Event" (as defined in Section 5 of this Agreement) shall have occurred, each of
the Consenting Noteholders hereby agrees (a) to waive any default or Event of
Default (as defined in the applicable Debt Agreement) that may arise from
(i) the non-payment of interest in respect of the 12-1/2% Senior
Notes due December 31, 2004 (the "Parent Notes") issued by Merisel under an
indenture dated October 15, 1994 (the "Indenture"), including any exercise
of remedies in respect of any such non-payment,
(ii) the receipt by Merisel of a report from its certified public
accountants on its consolidated financial statements for the 1996 fiscal
year that is qualified or that expresses doubts about the ability of
Merisel or its subsidiaries to continue as a going concern,
(iii) the commencement of a case under Title 11 of the United States
Code (the "Chapter 11 Proceedings") in which Merisel is named as the debtor
in connection with a prepackaged Chapter 11 Plan of Reorganization (the
"Prepackaged Plan") on terms consistent with the Parent Financial
Restructuring,
(iv) an exchange offer and consent solicitation (the "Exchange
Offer/Consent Solicitation") of the holders of the Parent Notes on terms
consistent with the Parent Financial Restructuring
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(v) any failure to comply with the provisions of Sections 7.01(h)
through (l) and 7.02(i) of the Revolving Credit Agreement, Section 6.25,
6.29 through 6.32 and 6.37 of the Senior Note Purchase Agreement and
Section 9.10 of the Subordinated Note Purchase Agreement (to the extent
that such Section 9.10 incorporates by reference the foregoing sections
from the Senior Note Purchase Agreement, provided that a failure to comply
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is not waived to the extent that there is a failure with such provisions
as proposed to be modified as set forth on Appendix I,
(vi) failure to maintain at least $315,000,000 of accounts payable
to flooring companies or sellers of inventory that are not secured by any
lien, provided that at least $250,000,000 of such accounts payable shall be
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maintained not secured by any lien,
(vii) participation in Compaq's Flexpaq program, pursuant to which
liens shall be granted to Compaq solely on inventory sold by Compaq to the
Merisel Entities on terms previously disclosed to the Consenting
Noteholders,
(viii) incurrence of capital leases in an aggregate amount not in
excess of $5,000,000 and liens related to such leases,
(ix) failure to report preliminary financial information and weekly
and monthly cash balances, provided that the information otherwise required
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in such reports shall be included in regular monthly financial reports,
(x) reduction below $20,000,000 of the intercompany loan balance
maintained between Merisel Americas and Merisel Canada, Inc.,
(xi) any provision in the Debt Agreements that is in default solely
because such provision pertains to Merisel Europe or Merisel FAB, Inc. or
(xii) any default not otherwise specifically referred to herein under
the Parent Notes so long as the maturity of the Parent Notes has not been
accelerated.
(the Events of Default described in the foregoing clauses (i) through (xii)
being referred to collectively as the "Relevant Defaults") and (b) not (i) to
vote the
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Loans, Senior Notes or Subordinated Notes (collectively, the "Debt"), as the
case may be, in favor of an acceleration of the maturity of such Debt as a
result of the occurrence of the Relevant Defaults or (ii) to direct any agent or
trustee, as the case may be, to accelerate the Debt or to take any other action
as a result of the occurrence of the Relevant Defaults. The Consenting
Noteholders hereby consent to the transactions described in Appendix II.
2. Agreement to Amend; Restriction on Transfer. Each of the
Consenting Noteholders represents that as of the date hereof it is the
beneficial owner of, and/or the investment adviser or manager for the beneficial
owners of (with the power to vote and dispose of such Debt on behalf of such
beneficial owners) the principal amount of Debt set forth opposite its signature
hereto (for each such Consenting Noteholder, the "Relevant Debt"). Effective as
of the Effective Date, each of the Consenting Noteholders hereby agrees that,
subject to the conditions that (i) the disclosure statement in respect of the
Prepackaged Plan or the prospectus or information circular in respect of the
Exchange Of fer/Consent Solicitation contains no information in respect of the
Merisel Entities' business and operations that is materially inconsistent
with the information heretofore provided by Merisel to the Consenting
Noteholders and (ii) the terms of the applicable Amendment are no less favorable
to the Consenting Noteholder than the terms of the Financial Restructuring, it
shall timely execute and deliver in respect of the Relevant Debt (and, so long
as no Agreement Termination Event shall have occurred, not revoke or withdraw)
the applicable Amendment, provided that (i) the Amendments with respect to the
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Revolving Credit Agreement and the Senior Note Purchase Agreement shall not
become effective until they have been signed by the holders of all the Loans and
all Senior Notes, respectively, and (ii) none of the Amendments shall become
effective unless the Exchange Of fer/Consent Solicitation is closed on or prior
to August 31, 1997 or the Prepackaged Plan has been substantially consummated
on or prior to October 31, 1997. In addition, each of the Consenting
Noteholders hereby agrees that, so long as this Agreement has not been
terminated, it shall not sell, transfer or assign any of the Relevant Debt, or
any voting interest therein, unless such transfer is compli ance with applicable
securities laws and the transferee thereof agrees in writing to be bound by all
the terms of this Agreement (which writing may include a trade confirmation
issued by a broker or dealer, acting as principal or as agent for the
transferee, stating that such agreement is a term of such transfer), and the
transferor provides Merisel with a copy of such writing,in which event the
applicable Merisel Entities shall be deemed to have acknowledged that its
obligations to the Consenting Noteholders hereunder shall be deemed to
constitute
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obligations in favor of such transferee, and the Merisel Entities shall confirm
that acknowledgment in writing.
3. Merisel Agreements. Merisel hereby agrees (i) promptly after the
Effective Date to prepare and circulate drafts of the Amendments, (ii) subject
to confirmation from counsel to the Consenting Noteholders that the Consenting
Noteholders have not advised counsel that (a) the information contained in the
prospectus or information circular relating to the Exchange Offer/Consent
Solicitation or the disclosure statement with respect to the Prepackaged Plan in
respect of Merisel's business and operations is materially inconsistent with the
information provided to such Consenting Noteholders or their representatives
prior to the date hereof or (b) the terms of such Exchange Offer/Consent
Solicitation or such Prepackaged Plan are inconsistent with the terms of the
Financial Restructuring, to execute final versions of the Amendments and (iii)
to use its best efforts to cause all the conditions precedent to the
effectiveness of the Amendments to be satisfied or waived at or prior to the
time of the consummation of the Exchange Offer/Consent Solicitation or the
Prepackaged Plan, as the case may be. The Merisel Entities agree to pay a fee,
on or after the Effective Date, to each holder of a Loan or a Senior Note that
executes and delivers a copy of this Agreement prior the earliest to occur of
(1) to the closing of the Exchange Offer/Consent Solicitation, (2) the
substantial consummation of the Prepackaged Plan or (3) the occurrence of an
Agreement Termination Event, the amount of such fee to be equal to 1-1/2% of the
outstanding principal amount of such holder's Loan or Senior Note, as the case
may be. Such fee shall be paid only once with respect to each Loan and each
Senior Note. Holders of Loans and Senior Notes that execute copies of this
Agreement (i) on or before the Effective Date shall be paid such fee when this
Agreement becomes effective on the Effective Date or (ii) after the Effective
Date shall be paid such fee no later than five Business Days following such
execution and delivery. In the event that the Loans and/or Senior Notes are paid
in full prior to the effectiveness of the applicable Amendment, the relevant
Consenting Noteholder will be entitled to receive at such time and the Merisel
Entities will pay, the unpaid portion, if any, of the aggregate 3.5%
modification fee in respect of their respective Loans and/or Senior Notes as
described in Appendix I as being due at or prior to the effectiveness of such
Amendment. For the purpose of this Section 3, a "Business Day" is any day other
than Saturday, Sunday or
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any other day on which on which banks in New York City are permitted or required
to be closed. The Merisel Entities agree that, if the Loans and the Senior Notes
are paid in full prior to the final stated maturity thereof, the Subordinated
Notes shall be paid in full within 90 days after the last payment by the Merisel
Entities to the holders of the Loans and/or the Senior Notes.
4. Conditions to the Effective Date. The agreements of the
Consenting Noteholders set forth in Sections 1 and 2 herein shall not become
effective unless and until the following conditions shall have first been
fulfilled (the date on which all such conditions are first fulfilled, the
"Effective Date"):
(a) The Merisel Entities and the holders of at least 60% of the
outstanding principal amount of the Loans, at least 66-2/3% of the
outstanding principal amount of the Senior Notes and at least 66-2/3%
of the outstanding principal amount of the Subordinated Notes shall
have executed and delivered this Agreement.
(b) Merisel and holders of at least 76% of the outstanding
principal amount of the Parent Notes shall have executed and
delivered an agreement, in the form attached hereto as Appendix II, to
(i) waive their right to receive the interest payments due on June 30,
1997 and December 31, 1997 in respect of the Parent Notes held by them
and to tender such Parent Notes into the Exchange Offer/Consent
Solicitation and/or vote their claims in respect of such Parent Notes
in support of the Prepackaged Plan.
(c) The representations and warranties of the Merisel Entities
in Section 6 shall be true and correct in all material respects as of
the first date on which the condition set forth in clause (a) above
shall have been satisfied.
5. Termination of Agreement. The waiver set forth in Section 1 of
this Agreements as well as all other obligations of the Consenting Noteholders
hereunder shall terminate automatically upon the occurrence of any "Agreement
Termination Event" (as hereinafter defined), unless the occurrence of such
Agreement Termination Event is waived in writing by all of the Consenting
Noteholders.
An "Agreement Termination Event" shall mean any of the following:
(a) the Exchange Offer/Consent Solicitation shall not have been
closed and the Parent Notes tendered thereunder accepted for
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payment, and the Amendments shall not have become effective pursuant
to the terms of the Financial Restructuring, on or prior to August
31, 1997 unless such failure is a result of the commence ment of the
Chapter 11 Proceedings in connection with the filing of the
Prepackaged Plan on or prior to such date;
(b) in the event that the Chapter 11 Proceedings have been
commenced, the Prepackaged Plan shall not have been substantially
consummated, and the Amendments shall not have become effective
pursuant to their terms, on or prior to October 31, 1997;
(c) Merisel shall have made any change in the terms of the
Exchange Offer/Consent Solicitation after the commencement thereof or
in the Prepackaged Plan after the commencement of the Chapter 11
Proceedings such that the terms thereof are no longer consistent with
the Parent Financial Restructuring, unless such change is previously
consented to by all of the Consenting Noteholders;
(d) after the Effective Date, there occurs any "Event of
Default" (other than a Relevant Default) as defined under (i) the
Revolving Credit Agreement, (ii) the Senior Note Purchase Agreement,
(iii) the Amended and Restated Receivables Purchase and Servicing
Agreement, dated as of September 27, 1996, by and among Merisel
Capital Funding, Inc., as Seller, Redwood Receivables Corporation, as
Purchaser, Merisel Americas, Inc., as Servicer, and General Electric
Capital Corporation, as Operating Agent and Collateral Agent or (iv)
the Subordinated Note Purchase Agreement, and, in any such case, (a)
such Event of Default has not been cured or waived within 10 days or
(b) the indebtedness that is the subject of such Event of Default has
been accelerated;
(e) if required to effectuate the Parent Financial
Restructuring, Merisel's Certificate of Incorporation shall not have
been amended to provide for a sufficient increase in the number of
authorized shares of its common stock to implement the Financial
Restructuring on or prior to August 31, 1997;
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(f) there shall have occurred any material adverse change in the
business, assets, operations or condition (financial or otherwise) of
Merisel and its subsidiaries, taken as a whole; or
(g) there shall have occurred a material breach of any
representation, warranty, covenant or agreement of the Merisel
Entities contained in this Agreement.
Upon the occurrence of any Agreement Termination Event, unless such
Agreement Termination Event is waived by each of the Consenting Noteholders,
this Agreement shall terminate and no party hereto shall have any continuing
liability or obligation to any other party hereunder, except as otherwise
provided in Section 13.
6. Representations and Warranties of the Merisel Entities. In order
to induce the Consenting Noteholders to enter into this Agreement, each Merisel
Entity represents and warrants to each Consenting Noteholder that the following
statements are true, correct and complete:
(a) Corporate Power and Authority. Such Merisel Entity has all
requisite corporate power and authority to enter into this Agreement
and to carry out the transactions contemplated by, and perform its
respective obligations under this Agreement;
(b) Authorization. The execution and deliver of this Agreement
and the performance of its obligations hereunder have been duly
authorized by all necessary corporate action by such Merisel Entity;
(c) No Conflicts. The execution, delivery and performance by
such Merisel Entity of this Agreement do not and shall not (i) violate
any provision of law, rule or regulation applicable to it or any of
its subsidiaries or the Certificate of Incorporation or bylaws of such
Merisel Entity or any of its subsidiaries or (ii) conflict with,
result in a breach of or constitute (with due notice or lapse of time
or both) a default under any material contractual obligation of such
Merisel Entity or any of its subsidiaries;
(d) Governmental Consents. The execution, delivery and
performance by such Merisel Entity of this Agreement do not and
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shall not require any registration or filing with, consent or approval
of, or notice to, or other action to, with or by, any Federal, state
or other governmental authority or regulatory body, except such
filings as may be necessary in connection with the commencement of the
Exchange Offer/Consent Solicitation and/or the commencement of a
proxy solicitation of Merisel's shareholders or the filing of the
Prepackaged Plan;
(e) Binding Obligation. This Agreement is the legally valid and
binding obligation of such Merisel Entity, enforceable against such
Merisel Entity in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability; and
(f) Absence of Default. After giving effect to this Agreement,
no event has occurred and is continuing or shall result from the
consummation of the transactions contemplated by this Agreement that
would constitute an Event of Default under the Indenture or the Debt
Agreements, or an event that with the passage of time, the giving or
notice or both would constitute an Event of Default under the
Indenture or the Debt Agreements.
7. Further Acquisition of Securities. This Agreement shall in no
way be construed to preclude the Consenting Noteholders from acquiring
additional Debt of the Merisel Entities. However, any such additional Debt so
acquired shall automatically be deemed to be Relevant Debt and to be subject to
the terms of this Agreement. This Agreement shall in no way be construed to
preclude the Consenting Noteholders from acquiring any other securities of
Merisel. However, the Consenting Noteholders agree that they will vote (or
cause to be voted) any such additional securities in favor of the Financial
Restructuring for so long as this Agreement remains in effect.
8. Amendments. This Agreement may not be modified, amended or
supplemented except in writing signed by the Merisel Entities and each of the
Consenting Noteholders.
9. Disclosure of Individual Holdings. Unless required by applicable
law or regulation, the Merisel Entities shall not disclose any Consent-
9
ing Noteholder's holdings of Relevant Debt without the prior written consent of
such Consenting Noteholder; and if such announcement or disclosure is so
required by law or regulation, the Merisel Entities shall afford such Consenting
Noteholder a reasonable opportunity to review and comment upon any such
announcement or disclosure prior to Merisel's making such announcement or
disclosure. The foregoing shall not prohibit the Merisel Entities from
disclosing the approximate aggregate holdings of Debt by the Consenting
Noteholders as a group.
10. Indemnification Obligations. Each of the Merisel Entities agrees
that it shall fully indemnify each Consenting Noteholder and its directors,
officers, employees, agents, and representatives (including, without limitation,
Price Waterhouse LLP and Wachtell, Lipton, Xxxxx & Xxxx) (all the foregoing
persons, together with the Consenting Noteholders, the "Indemnitees") against
any claims, liabilities, actions, suits, damages, fines, judgments or expenses
(including reasonable attorney's fees), brought or asserted by anyone (other
than any Merisel Entity or any successor thereto with respect to asserted
violations of this Agreement) arising during the course of, or otherwise in
connection with or in any way related to, the negotiation, preparation,
formulation, solicitation, dissemination, implementation, confirmation and
consummation of the Financial Restructuring, and the transactions contemplated
hereby and thereby; provided, however, that this indemnity shall not extend to
any claims asserted by a Consenting Noteholder against any other Indemnitee,
and provided, further, that the foregoing indemnification shall not apply to any
liabilities arising from the gross negligence or willful misconduct of any
Indemnitee. If any claim, action or proceeding is brought or asserted against
an Indemnitee in respect of which indemnity may be sought from any Merisel
Entity, the Indemnitee shall promptly notify such Merisel Entity in writing, and
such Merisel Entity shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnitee, and the payment of all
expenses. The Indemnitee shall have the right to employ separate counsel in any
such claim, action or proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the Indemnitee
unless (a) any Merisel Entity has agreed to pay the fees and expenses of such
counsel, or (b) the Merisel Entities shall have failed promptly to assume the
defense of such claim, action or proceeding and employ counsel reasonably
satisfactory to the Indemnitee in any such claim, action or proceeding, or (c)
the named parties to any such claim, action or proceeding (including any
impleaded parties) include both the Indemnitee and a Merisel Entity, and the
Indemnitee believes in the exercise of its business judgment and in the opinion
of its legal counsel that the joint representation of
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such Merisel Entity and the Indemnitee will likely result in a conflict of
interest (in which case, if the Indemnitee notifies such Merisel Entity in
writing that it elects to employ separate counsel at the expense of such Merisel
Entity, such Merisel Entity shall not have the right to assume the defense of
such action or proceeding on behalf of the Indemnitee). In addition, a Merisel
Entity shall not effect any settlement or release from liability in connection
with any matter for which the Indemnitee would have the right to indemnification
from such Merisel Entity, unless such settlement contains a full and
unconditional release of the Indemnitee or a release of the Indemnitee
reasonably satisfactory in form and substance to the Indemnitee.
11. Governing Law; Jurisdiction. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of
California, without regard to any conflicts of law provision which would require
the application of the law of any other jurisdiction. By its execution and
delivery of this Agreement, each of the parties hereto hereby irrevocably and
unconditionally agrees for itself that any legal action, suit or proceeding
against it with respect to any matter under or arising out of or in connection
with this Agreement or for recognition or enforcement of any judgment rendered
in any such action, suit or proceeding, may be brought in any Federal or State
court in California. By execution and delivery of this Agreement, each of the
parties hereto hereby irrevocably accepts and submits itself to the nonexclusive
jurisdiction of each such court, generally and unconditionally, with respect to
any such action, suit or proceeding.
12. Specific Performance. It is understood and agreed by each of the
parties hereto that money damages would not be a sufficient remedy for any
breach of this Agreement by any party and each non-breaching party shall be
entitled to specific performance and injunctive or other equitable relief as a
remedy of any such breach.
13. Survival. Notwithstanding the sale of the Relevant Debt in
accordance with Section 2 hereof or the termination of the Consenting
Noteholders' obligations hereunder in accordance with Section 5 hereof, the
agreements and obligations of the Merisel Entities in Section 9 and Sections 10
and 12 hereof shall survive such termination and shall continue in full force
and effect for the benefit of the Consenting Noteholders in accordance with the
terms hereof.
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14. Headings. The headings of the Sections, paragraphs and
subsections of this Agreement are inserted for convenience only and shall not
affect the interpretation hereof.
15. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of the parties and their respective successors, assigns,
heirs, executors, administrators and representatives. The agreements,
representations and obligations of the Consenting Noteholders under this
Agreement are several and not joint in all respects.
16. Prior Negotiations. This Agreement and Appendix I supersede all
prior negotiations with respect to the subject matter hereof.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement.
18. No Third-Party Beneficiaries. Unless expressly stated herein,
this Agreement shall be solely for the benefit of the parties hereto and the
Consenting Noteholders who have entered into agreements with the Merisel
Entities substantially identical to this Agreement and no other person or entity
shall be a third-party beneficiary hereof.
19. Fees and Expenses. Until the occurrence of an Agreement
Termination Event, the Merisel Entities shall continue to reimburse the Consent
ing Noteholders for their out of pocket costs and expenses in respect of the
fees and expenses of counsel to the holders of the Loans and the Senior Notes
and counsel to the holders of the Subordinated Notes, as provided in the
Revolving Credit Agreement and the Senior Note Purchase Agreement and the
Subordinated Note Purchase Agreement. In addition, in the event any party brings
an action against any other party based upon a breach by such other party of its
obligations hereunder, the prevailing party shall be entitled to all reasonable
expenses incurred, including reasonable attorney's fees in connection with such
action.
20. Amendment to Revolving Credit Agreement. The following amendment
to the Revolving Credit Agreement shall become effective at the Effective Date:
Section 11.11(a)(iv) is hereby deleted in its entirety and replaced
with the following:
"(iv) the amount of Revolving Facility Commitments of the assigning
Lender being assigned to an assignee (the "Assigned Amount") shall not be less
than the lesser (the "Minimum Threshold") of (x) Five Million Dollars
($5,000,000) and (y) the amount of such assigning Lenders' Revolving Commitments
immediately prior to giving effect to such assignment; provided that the
Assigned Amount may be less than the Minimum Threshold if the aggregate of all
Assigned Amounts being assigned at substantially the same time to such assignee
by such assigning Lender and other assigning Lenders. Plus Revolving Facility
commitments already held such assignee, exceeds $5,000,000."
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered by its duly authorized officer as of the
date first above written.
MERISEL, INC.
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APPENDIX I
RESTRUCTURING PROPOSAL - SENIOR DEBT
TERMS
Issuer: No change.
Instrument: No change.
Principal Amount: No change.
Interest Rate: No change in 1997, increasing 1/2% per quarter
commencing January 31, 1998 and each quarter
thereafter.
Amortization: No change (except that the Issuer will make
reasonable efforts to apply for tax carryback
refunds, and all such tax refunds received will be
applied to amortize senior debt).
Maturity Date: January 31, 1999.
Optional Redemption: Redeemable at any time at par plus accrued
interest.
Modification Fee (in cash):
On Signing and Receipt of 67% Approval:
1.50%
At Closing: 2.00%
On January 31, 1998: 0.25%
On April 30, 1998: 0.50%
On July 31, 1998: 0.75%
RESTRUCTURING PROPOSAL - SUBORDINATED NOTES
TERMS
Issuer: No change.
Security: No change.
Principal Amount: No change.
Interest Rate: No change in 1997, increasing 1/2% per quarter
commencing January 31, 1998 and continuing for the
three quarters thereafter.
Amortization: No change.
Maturity Date: The earlier of (i) no change or (ii) within 90 days
after repayment in full of the senior debt.
Optional Redemption: No change.
Modification Fee: None.
OPERATING COMPANY DEBT COVENANTS
CHANGES IN CONJUNCTION WITH EXTENSION
($ in thousands)
CURRENT PROPOSED
COVENANT TEST TEST
1 Minimum Required Accounts Payable
Q1 1997 $345,000 $300,000
Q2 1997 345,000 300,000
Q3 1997 345,000 330,000
Q4 1997 500,000 350,000
Q1 1998 330,000
Q2 1998 360,000
Q3 1998 410,000
Q4 1998 410,000
2 Accounts Payable to Inventory 0.9x 0.9x Eliminate covenant of 1:1
every two quarters
3 EBITSDA Cumulative
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X0 0000 $ 11,000 $ 10,000
Q2 1997 12,400 20,000
Q3 1997 14,560 33,000
Q4 1997 19,280 50,000
Last Twelve Months
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X0 0000 NA $ 56,000
Q2 1998 NA 60,000
Q3 1998 NA 64,000
Q4 1998 NA 68,000
4 EBITSDA/(I+S)
Q1 1997 0.83x NA Until restructuring completed
Q2 1997 0.89 NA
Q3 1997 1.13 1.30x
Q4 1997 1.44 2.00
Q1 1998 NA 1.30x
Q2 1998 NA 1.60
Q3 1998 NA 1.60
Q4 1998 NA 2.00
OPERATING COMPANY DEBT COVENANTS
CHANGES IN CONJUNCTION WITH EXTENSION
($ in thousands)
CURRENT PROPOSED
COVENANT TEST TEST
5 Capital Expenditures Cumulative
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Q1 1997 $ 4,000
Q2 1997 7,000
Q3 1997 11,000
Q4 1997 13,000 $ 18,000 Unused amount carried forward
Q1 1998 NA
Q2 1998 NA
Q3 1998 NA
Q4 1998 NA $ 27,000
6 Inventory Turnover 9.0x 8.0x
7 Minimum Unsecured Inventory $315,000
Q1 1997 $250,000
Q2 1997 250,000
Q3 1997 250,000
Q4 1997 300,000
Q1 1998 $250,000
Q2 1998 250,000
Q3 1998 300,000
Q4 1998 350,000
8 Audit Opinion Clean Opinion 1996 -- Waived
1997 -- Clean Opinion
OPERATING COMPANY DEBT COVENANTS
CHANGES IN CONJUNCTION WITH EXTENSION
($ in thousands)
COVENANT
9 Ability to participate in Compaq's Flexpaq program (Requires pledging of
Compaq inventory)
10 Lien covenant modified to permit capital leases up to $5.0 million for
purchases on credit versus cash for systems (e.g. SAP); computer equipment;
copiers, etc.
11 Debt covenant needs to be modified to permit the promissory note or capital
lease associated with the lease financing.
12 Requirement to provide standard reports subject to further discussion with
the Noteholders
13 Subject to Noteholder decision the Company will pay for financial advisors
up to $150,000 per year for routine monitoring unless the Company is in
default. The Company will continue to pay reasonable legal fees and
expenses as required by the Revolving Credit Agreement and the Senior Note
Purchase Agreement.
14 Eliminate requirement in Canadian guaranty to maintain $20.0 million in
inter-company loan balance between Merisel Americas and Merisel Canada.
15 Remove European and FAB debt covenants and references in the agreements.
APPENDIX II
FILED SEPARATELY
