LETTERHEAD OF O’MELVENY & MYERS LLP
Exhibit 7.1
LETTERHEAD OF O’MELVENY & XXXXX LLP
June 9, 2008
VIA FACSIMILE AND FIRST CLASS MAIL
Xxxxxxx X. Xxxxx, Xx., Esq.
Xxxxxxxx Xxxx Lodge & Hutz LLP
The Nemours Building
0000 Xxxxx Xxxxxx Xxxxxx
Wilmington, Delaware 19899
Xxxxxxx X. Xxxxxx, Esq.
Xxxx, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
New York, New York 10001
Re: | March 28, 2008 Agreement and Plan of Merger (“Agreement”) by and among Merisel, Inc. (“Company”), TU Holdings, Inc. (“Parent”) and TU Merger, Inc. (“Merger Sub”) |
Gentlemen:
We are writing in connection with the above-captioned Agreement. (Capitalized terms used but not defined in this letter have the meanings given to them in the Agreement.) As you know, as part of the negotiations of the Agreement and related documentation, the parties agreed that Parent has the right to terminate the Agreement, without the need in certain circumstances to wait for the expiration of any time period, in the event that any representation or warranty was inaccurate when made and/or is not capable of being made as of the Effective Time. The specific language, set forth in Section 6.1 is:
“This Agreement may be terminated and the Merger contemplated hereby may be abandoned at any time prior to the Effective Time, whether before or after the Company Stockholder Approval is obtained…(f) by Parent: (i) in the event … (B) that any representation or warranty of the Company set forth in the Agreement shall have been inaccurate when made or shall not be capable of being made as of the Effective Time which would reasonably be expected to result in the condition set forth in Section 5.3(a)(ii) not being satisfied…”
As previously communicated, based on information currently available, it seems clear that (1) Xxxxxxx has experienced a Company Material Adverse Effect to its business, which is continuing, such that Xxxxxxx will not be able to satisfy the Agreement’s closing conditions and (2) certain of the representations and warranties made by Xxxxxxx in the Agreement were untrue
when made, including without limitation the representation in Section 2.6(b) that, from December 31, 2007 through the date of the Agreement, there had not been any event, development or state of circumstances that had, individually or in the aggregate, a Company Material Adverse Effect. We also note that, contrary to the June 5 letter, Xxxxxxx has materially breached its obligation under the Agreement to provide access to its books and records as it has not provided information relating to its financial performance from and after April 1, 2008, as previously requested.
Because a breach of the representations and warranties set forth in Section 2.6(b) is, by its nature, not curable, the cure period set forth in Section 6.1(f)(i) is inapplicable. Similarly, because Xxxxxxx has not used its commercially reasonable efforts to provide the financial information requested pursuant to the Agreement, no cure period is applicable to that breach. Accordingly, pursuant to authority provided to us by Parent, Parent hereby terminates the Agreement pursuant to Section 6.1(f)(i) thereof, and Parent, Merger Sub and ACAS have no obligations under the Agreement. Parent, Merger Sub and ACAS reserve all legal and equitable rights and remedies under and in connection with the Agreement.
Very truly yours, |
Xxxxxx X. Xxxxxx |
of O’MELVENY & XXXXX LLP |
Enclosure
cc: | Merisel, Inc. 000 Xxxx 00xx Xxxxxx, 0xx xxxxx Xxx Xxxx, Xxx Xxxx 00000 Fax: (000) 000-0000 Attn: Xx. Xxxxxx X. Xxxx
Xxxxxxx X. Xxxxx Xxxxxx & Xxxxxx LLP 000 Xxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000 Fax: (000) 000-0000 |