EXHIBIT 10.31
LEGEND: [ * ] = INFORMATION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.
AMENDMENT NO. 15, dated as of March 28, 1997 to
the DISTRIBUTION AND SERVICES AGREEMENT originally
dated as of January 31, 1994, as amended through
the date hereof (the "Services Agreement") between
VANSTAR CORPORATION, a Delaware corporation,
("VANSTAR") and COMPUTERLAND CORPORATION, a
California corporation, ("COMPUTERLAND"), a
wholly-owned subsidiary of SYNNEX Information
Technologies, Inc. ("SYNNEX").
R E C I T A L S
a. VANSTAR and MERISEL FAB, INC. ("FAB") were parties to the Services
Agreement; it has been amended repeatedly by agreement of VANSTAR and FAB,
and the most recent amendment is Amendment No. 14, dated December 16, 1996.
b. COMPUTERLAND has agreed to purchase and assume substantially all of
the assets and certain of the liabilities of the business conducted by FAB,
subject to the terms and conditions of an Asset Purchase Agreement dated
January 15, 1997. COMPUTERLAND, VANSTAR and FAB have agreed to the assignment
of the Services Agreement under the terms of an "Assignment, Consent to
Assignment and Release Agreement" dated March 31, 1996. COMPUTERLAND's
agreement to such assignment, and VANSTAR's consent to such assignment are
conditioned, among other things, on the agreement of COMPUTERLAND and VANSTAR
to the terms set forth in this Amendment No. 15.
c. COMPUTERLAND and VANSTAR signed a "Term Sheet" in letter form and
dated March 14, 1997; this Amendment No. 15 constitutes the amendments to the
Services Agreement contemplated by the Term Sheet.
NOW, THEREFORE, for good and valuable consideration, the parties do
hereby agree as follows:
1. CAPITALIZED TERMS; EFFECTIVENESS OF AMENDMENTS. Capitalized terms
not otherwise defined herein shall have the meanings set forth in the
Services Agreement. Except as otherwise provided in this Amendment No. 15,
all amendments and prior
letters of agreement executed between the parties shall continue in effect
through the end of the Winding Down Period or the earlier termination of the
Agreement except for the following amendments and letters of agreement which
were terminated in accordance with the terms of Amendment No. 13: Amendments
No. 1, 2 and 7; letter of agreement dated March 31, 1995 entitled "Drop Ship
Fee Reduction" and letter of agreement dated September 15, 1995 relating to
Apple Computer distribution fees and rebates.
2. AMENDMENT OF HEADING. The heading of the Services Agreement is
amended to read:
"DISTRIBUTION AND SERVICES AGREEMENT dated as of January 31,
1994, as amended through the date hereof (the "Agreement"),
between VANSTAR CORPORATION, a Delaware corporation formerly
known as ComputerLand Corporation (the "Seller"), and
COMPUTERLAND CORPORATION, a California corporation (the "Buyer")."
3. AMENDMENTS TO SECTION 1.1
(a) The definitions of the following defined terms are deleted:
Additional Extended Payment Amount
Baseline Adjustment Event
Basic Extended Payment Amount
Baseline Revenue
Buyer Prohibited Transferees
Calculation Period
Excess Percentage
Extended Payment Termination Date
Merisel
Minimum Growth Target
Other Merisel Distribution Business
Private Placement Closing Date
Rolling Average Net Payment Amount
(b) The definition of "Base Percentage" is amended to read:
"BASE PERCENTAGE" means [ * ].
(c) The definition of "Designated Territory is amended to read:
"DESIGNATED TERRITORY" means the 00 xxxxxx xx xxx Xxxxxx Xxxxxx
xx Xxxxxxx and the District of Columbia."
(d) The definition of "Monthly Distribution Fee" shall read:
2
"MONTHLY DISTRIBUTION FEE means, for each month during
the Distribution Period and the Winding down Period, an
amount equal to [ * ] for such month TIMES [ * ]."
(e) The definition of "Scheduled Termination Date" (originally set
forth in Amendment No. 13) is amended to read:
"SCHEDULED TERMINATION DATE means September 30, 1997, provided,
however:
(i) in the event that Buyer gives Seller written notice not
later than July 1, 1997 of its election to terminate the
Distribution Period effective on July 31, 1997, then the Scheduled
Termination Date shall mean July 31, 1997; and
(ii) in the event that Buyer gives Seller written notice not
later than August 1, 1997 of its election to terminate the
Distribution Period effective on August 31, 1997, then the Scheduled
Termination Date shall mean August 31, 1997; and
(iii) in the event that Buyer gives Seller written notice of
its intention not later than September 1, 1997 of its election to
terminate the Distribution Period on December 31, 1997, then the
Scheduled Termination Date shall mean December 31, 1997.
In any case, and unless otherwise agreed by the parties, the
Scheduled Termination Date shall be followed by a [ * ] Winding
Down Period in accordance with Article VII.
(f) The definition of "Applicable Revenue" is amended to read:
"APPLICABLE REVENUE" for any period means the gross revenues of the
Subject Business recognized by Buyer for such period, determined in
accordance with GAAP, including Gross Sales, Royalties and any other
Revenue, in each case for such period, but excluding revenue
attributable to shipments of product by parties other than Seller.
4. AMENDMENT TO SECTION 2.1. Subsection 2.1(c) is amended by adding
the following:
"Sales of product by Seller to Buyer for resale to SYNNEX and
affiliates of SYNNEX shall be subject to credit limits and terms
and conditions established by Seller, which credit limits and terms
and conditions may be changed by Seller in its sole discretion. A
3
material breach by Seller of its obligations in the preceding
sentence shall be considered a Material Default."
5. AMENDMENT TO SECTION 2.2. Section 2.2 is amended by adding new
subsection (i):
(i) Notwithstanding anything set forth in Section 2.2 to
the contrary, Seller agrees to grant Buyer, during the Distribution
Period, reasonable access to its mainframe for order entry and
other legitimate purposes limited, however, to access at Seller's
Pleasanton, California facilities. Seller further agrees to
cooperate with Buyer in Buyer's efforts to develop either an order
entry/product availability look-up function through mainframe
access or an EDI-based order entry system from SYNNEX's Fremont,
California and Greenville, South Carolina facilities."
6. AMENDMENT TO SECTION 2.3. The second sentence of Section 2.3(g) is
amended to read:
"In that connection, each party shall use commercially reasonable
efforts (i) to inform the other party regarding any significant
meetings, telephone conversations, correspondence and other
contracts with vendors if an ordinarily prudent person would
reasonably determine that such contact significantly concerns the
interests of the other party, and in the case of any such meetings
for which such party has reasonable advance notice and which are
expected to cover issues that an ordinarily prudent person would
consider important to the other party under the circumstances, to
permit a representative of the other party to participate therein."
7. AMENDMENT TO SECTION 2.3(k). Section 2.3(k) is deleted in its
entirety.
8. AMENDMENT TO SECTION 2.7. Section 2.7 is amended by adding new
Subsection (e), to read:
"(e) Notwithstanding anything set forth in this Section 2.7 or an
amendment to the contrary, Seller has advised Buyer of recent
increases and further anticipated increases to freight costs, and
of Seller's intention to procure the services of alternative
shipping providers in the near future. Buyer has agreed to pay
such increased costs in accordance with the procedures required
under the terms of the Services Agreement. In addition, within 30
days of the termination of the Winding Down Period, Buyer agrees to
pay Seller, if a positive figure, and Seller agrees to pay Buyer,
if a negative figure, a sum (the "Excess Freight Settlement") equal
to one half of the difference between [ * ] and the amount by which
the
4
freight costs paid during the period from March 31, 1997 to the
end of the Winding Down Period exceeds [ * ] of the freight costs
that would have been incurred by Buyer if the freight rates during
such period had been equal to the freight rates applicable on
January 1, 1997."
9. AMENDMENT TO SECTION 2.8. Subsection (iv) of Section 2.8(b) is deleted
in its entirety, and Subsection (v) is renumbered as Subsection (iv) and is
amended to read in its entirety:
"(iv) the amount of any wire transfer made by Buyer to Seller
on such Business Day pursuant to Section 2.5(a) (to the extent
that Buyer shall have given notice of such wire transfer
pursuant to such Section 2.5(a))."
The first full paragraph following previous subsection (v) (and set forth in
Amendment No. 13) is amended to read:
"Subject to the further provisions of this Section 2.8(a), (i) if
the Daily Net Payment Amount is positive, then Buyer shall pay
that amount to Seller by the following Business Day pursuant
to Section 2.5(a), and (ii) if the Daily Net Payment Amount is
negative, then Seller shall pay that amount to Buyer by the
following Business Day by wire transfer of immediately
available funds, in accordance with Section 2.12(c). Seller
shall provide Buyer, on a monthly basis, with a printed
summary of all transactions completed hereunder, in a form
reasonably acceptable to Buyer. Buyer shall reimburse Seller
on a monthly basis for the postage costs of mailing printed
invoices."
10. AMENDMENT TO SECTION 2.9. Section 2.9 is amended to read:
"2.9 FEES. Buyer shall pay to Seller the following fees:
(a) An amount equal to the Monthly distribution
Fee for each month during the Distribution Period
and the Winding Down Period, payable as provided
in Section 2.10; and
(b) A "Fixed Services Fee" of [ * ] per month,
for the period April 1, 1997 through November 30,
1997, payable on the first day of each month
commencing April 1, 1997; and
(c) An "Additional Services Fee," which is in
5
addition to the Monthly distribution Fee and the
Fixed Services Fee, in an amount to be determined
by the date of the termination of the Winding Down
Period, and as is set forth below:
If the termination of the Then the following Additional Service
Winding Down Fee shall be paid to Seller on the date(s)
Period is on indicated:
10/31/97 11/31/97 12/31/97 1/31/98 2/28/98 3/31/98
-------- -------- -------- ------- ------- -------
10/31/97 [ * ]
11/30/97 [ * ]
12/31/97 [ * ]
3/31/98 [ * ] [ * ] [ * ] [ * ]
11. AMENDMENT TO SECTION 2.10. Subsection (e)(i)(E) is amended to read:
"(E) interest payable pursuant to Section 2.5(b), as
certified pursuant to Section 2.10(b)(ii)(20);"
Subsection (e)(ii)(F) is amended to read:
(F) interest payable pursuant to Section 2.5(b), as
certified pursuant to Section 2.10(b)(ii)(20);"
Subsection (g) is amended by rewriting the first sentence to read:
"(g) Within 45 days after the end of each month, Buyer shall
certify to Seller in writing the Applicable Revenue of the Subject
Business for such month, as determined by Buyer in accordance with
generally accepted accounting principles, applied in a manner
consistent with the accounting principles used by Buyer for
financial reporting purposes."
12. AMENDMENT TO SECTION 2.16. Subsection (a) is amended to read:
"Seller (on its own behalf) may sell any product to any person at
any location, whether or not such location is served by Buyer or
any Customer, or engage in such other business or businesses as
Seller may from time to time determine."
13. AMENDMENT TO SECTION 2.17. Section 2.17 is amended to read:
"Subject to the terms and conditions of this Section 2.17, during
the Distribution Period, Buyer may (i) [ * ] from
6
Seller, for the Subject Business, one or more specified products, or
all products of one or more specified vendors, [ * ]
[ * ] Seller hereunder or (ii) without prejudice to any
obligation Buyer may have under any [ * ] or
[ * ] or this Agreement, [ * ]provided, however, that in (i) above
Buyer shall give written notice of such election at least 60 and
not more than 120 days prior to the effectiveness thereof; further,
PROVIDED, HOWEVER, that such notice requirement shall not apply to
any [ * ] of a [ * ] by Seller if Buyer purchases such vendor's
products pursuant to Section 2.23."
14. AMENDMENT TO SECTION 2.19. Subsections (b) and (c) are deleted, and
subsection (a) is amended to read:
"2.19. PROMPT PAYMENT DISCOUNTS. (a) If any vendor shall offer
to Seller a Prompt Payment Discount in respect of any amounts payable
for products of the types held for sale to Buyer hereunder purchased
by Seller from such vendor during the Distribution Period, and the
interest rate equivalent of such Prompt Payment Discount, determined
as provided in Section 2.19(d), is a rate per annum not less than the
Prime Rate plus [ * ] per annum, then [ * ] shall have the option,
but not the obligation, to use commercially reasonable efforts to
[ * ] such [ * ] with respect to its [ * ] from [ * ] by [ * ]
within the [ * ], except as otherwise provided in this Section 2.19.
To the extent that [ * ] does not elect to [ * ] any such [ * ] that
has an interest rate equivalent of at least prime plus [ * ], [ * ]
shall offer to [ * ] the right to require [ * ] to [ * ] all or a
portion of any such [ * ] that [ * ] otherwise would elect not to
[ * ] by [ * ] on terms mutually acceptable to the parties. Any
party that [ * ] any portion of a [ * ] shall be entitled to [ * ]
an amount equal to interest on such portion at an annual rate of
prime plus [ * ] out of the [ * ]. Any remaining [ * ] shall be
apportioned between Seller and Buyer in accordance with the
respective amounts [ * ] by Seller and Buyer; provided, that if
any such apportionment would cause any party to receive an amount
(including any amount received pursuant to the immediately
preceding sentence) that would exceed such party's pro rata share
of the maximum [ * ], then the excess will be given to the
other party. For the purposes of determining the pro rata share of
any party referred to in the foregoing proviso, the allocation
percentage applicable to such party pursuant to Section 2.22 of the
Agreement for the relevant products shall be used.
15. AMENDMENT TO SECTION 2.22. Subsection (h) is added to read:
(h) Notwithstanding anything set forth in this Section 2.22 to the
7
contrary, the parties agree that in those instances in which an
original equipment manufacturer has determined to exclude `strategic
allocations' in allocating product among its aggregators,
distributors and customers, and has informed the Seller in writing
of such allocation, the methodology for allocation of product
between Buyer and Seller shall also exclude such `strategic
allocations' beginning in the month following such notification."
16. AMENDMENT TO SECTION 2.33. Subsection (b) is deleted in its
entirety.
17. AMENDMENT TO SECTION 2.34. Section 2.34 is deleted in its entirety.
18. AMENDMENT TO SECTION 2.36. Section 2.36 is deleted in its entirety.
19. AMENDMENT TO ARTICLE II. Article II is amended by adding new Section
2.37 to read:
"2.37. SECURITY INTEREST. Buyer agrees to grant Seller, as
security for Buyer's performance of its obligations, a first priority
security interest in all of Buyer's inventory and receivables on the
terms set forth in Exhibit A attached hereto."
20. AMENDMENTS TO SECTIONS 4.2, 4.3, 4.4, AND 4.5. Sections 4.2, 4.3,
4.4, and 4.5 are deleted in their entirety.
21. AMENDMENT TO SECTION 4.6. Subsection (e) is added to read:
"(e) Notwithstanding anything set forth in Section 4.6 or Amendment
No. 10 to the contrary, the parties agree: (i) that Seller shall not
be obligated to continue the MASTER program after June 30, 1997; and
(ii) that in no event shall the value of accounts receivable financing
under the MASTER program exceed five million dollars ($5,000,000)."
22. AMENDMENTS TO SECTION 5.7. Section 5.7 is deleted in its entirety.
23. AMENDMENT TO ARTICLE VII. The first two paragraphs of Section 7.1(a)
of the Agreement (as amended by Amendment No. 13) are amended to read in their
entirety:
"(a) The Seller and the Buyer shall continue to negotiate in
good faith to establish a timetable and procedures for the
termination of the Logistics Services provided pursuant to Article
II. Such negotiations shall include (i) discussions regarding the
Seller's proposed maintenance of inventories solely at the
Indianapolis DDC from which all shipments to Customers on buyer's
behalf hereunder would be made during the Winding Down Period (as
defined below); and (ii) discussions regarding
8
Buyer's purchase of inventory from Seller during the Winding Down
Period.
If the Seller and the Buyer shall be unable to agree upon such a
timetable and procedures prior to July 1, 1997, the Distribution
Period shall automatically deemed to be the [ * ] following the
Scheduled Termination Date (such [ * ] period being referred to as
the "Winding Down Period"). As shall be reasonably requested by
Buyer, Seller shall provide Buyer with information necessary for
Buyer and Seller to manage inventory prior to and during the
Winding Down Period including but not limited to information
pertaining to SKU's, on-hand inventory, orders, product
availability and Buyer's daily run rate.
24. AMENDMENT TO SECTION 9.3.
if to the Buyer, to:
Attn. Xxxxx X. Xxxxxx
General Counsel
COMPUTERLAND CORPORATION
0000 X. Xxx Xxxxxxx Xxxx.
Xxxxxxxxxx, XX 00000
Fax: 510/000-0000
with a copy to:
Attn: Xxxxxx Xxxxx
President
SYNNEX Information Technologies, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
if to the Seller, to:
Attn: H. Xxxxxxxxxxx Xxxxxxxxx
Senior Vice President and General Counsel
Vanstar Corporation
0000 X. Xxx Xxxxxxx Xxxx.
Xxxxxxxxxx, XX 00000-0000
Fax: 510/000-0000
with a copy to:
9
Attn: Xxxxxxxxx X. Xxxxxxx, Esq.
X'Xxxxxxxx Graev & Karabell
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Fax: 212/000-0000
25. AMENDMENT TO ARTICLE 9. Article 9 is amended by adding a new Section
9.13 to read:
"9.13 PURCHASE OF BUYER FRANCHISEES. Seller agrees that it
shall not, prior to the end of the Winding Down Period purchase, or
agree to purchase, any franchisee of Buyer."
26. AMENDMENT TO SCHEDULES. Each of the following schedules to the
Agreement is hereby terminated in its entirety and replaced with
"[Intentionally omitted]."
SCHEDULE 1.1-2A
27. ASSIGNMENT TO SUBLEASE. FAB has agreed to assign its interest in
the "Sublease" for its office premises on West Las Positas Blvd. In
Pleasanton to Buyer. Vanstar agrees to use all reasonable efforts to obtain
from the landlord the landlord's consent to such assignment.
28. CONTINUED EFFECT OF AGREEMENT. Except as amended hereby, the
Agreement shall remain in full force and effect in accordance with its terms
and conditions. The extension to the Distribution and Services Period
provided by this Amendment No. 15 shall not obligate any party to the
Agreement to agree to any further extension to such Period.
29. MISCELLANEOUS. This Amendment No. 15 (a) shall be governed by the
laws of the State of California, (b) shall be binding upon and inure to the
benefit of the Seller and the Buyer and their respective successors and
permitted assigns, (c) shall not be amended or modified except by written
instrument signed by the Seller and the Buyer and (d) represents the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior written and oral agreements and understandings with
respect thereto, including those portions of the Term Sheet contemplating the
amendments provided hereby.
30. COUNTERPARTS. This Amendment No. 15 may be executed in counterpart
by the parties hereto.
IN WITNESS WHEREOF, the parties have set their hands as of the date first
written above.
VANSTAR CORPORATION
10
By: /s/ XXXXX XXXXXXXXX
-----------------------
Name: Xxxxx Xxxxxxxxx
Title: Sr. Vice President and
General Manager, Operations
COMPUTERLAND CORPORATION
By: /s/ C. XXXXX XXXXXX
------------------------
Name: C. Xxxxx Xxxxxx
Title: CFO
11
