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LEGEND: [ * ] = CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING
CONFIDENTIAL TREATMENT FILED BY THE REGISTRANT UNDER RULE 24B-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
AMENDMENT NO. 15, dated as of March 28, 1997
to the DISTRIBTUION 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
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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:
"Monthly Distribution Fee means, for each month during the
Distribution Period and the Winding down Period, an amount
equal to [ * ] for such month times [ * ]."
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(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 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.
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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 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
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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 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 incicated:
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 [ * ] [ * ] [ * ] [ * ]
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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
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
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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 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."
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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 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:
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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:
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.
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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
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
