exhibit10_1.htm


    EXHIBIT
10.1

    


    AMENDMENT
NO. 2

    TO

    CREDIT
AGREEMENT

     

    AMENDMENT
NO. 2, dated as of February 27, 2008 (this “Amendment No. 2”),
made by and among COLOR EDGE LLC (f/k/a MCEI, LLC), a Delaware limited liability
company (“MCEI”), COLOR EDGE
VISUAL LLC (f/k/a MCEV, LLC), a Delaware limited liability company (“MCEV”), and CRUSH
CREATIVE LLC (f/k/a MCRU, LLC), a Delaware limited liability company (“MCRU”; each of MCEI, MCEV,
and MCRU, referred to as a “Borrower” and,
collectively, as the “Borrowers”), the
Corporate Guarantors signatory hereto, and AMALGAMATED BANK, a New York banking
corporation (the “Lender”).

     

     

    This Amendment No. 2 amends that
certain Credit Agreement, dated as of March 1, 2005, as amended by Amendment No.
1 thereto, dated as of August 8, 2005 (as amended, supplemented or otherwise
modified prior to the date hereof, the “Existing Credit
Agreement”) among the Borrowers, MERISEL,
INC., a Delaware corporation (“Merisel”), MERISEL
AMERICAS, INC., a Delaware corporation (“Merisel Americas”)
and certain other affiliates of the Borrowers as guarantors (“Subsidiary
Guarantors”; each of Merisel, Merisel Americas and the Subsidiary
Guarantors, a “Corporate Guarantor”
and, collectively, the “Corporate
Guarantors”) and Lender.

     

     

    WITNESSETH:

     

     

    WHEREAS, capitalized terms not
otherwise defined herein shall have the same meanings as specified in the
Existing Credit Agreement;

     

     

    WHEREAS, the Loan Parties have
requested that Lender agree to amend the Existing Credit Agreement as more
specifically set forth herein; and

     

     

    WHEREAS, the Lender has
indicated its willingness to agree to such amendment of the Existing Credit
Agreement on the terms and subject to the satisfaction of the conditions set
forth herein.

     

     

    NOW, THEREFORE, in
consideration of the premises and of the mutual covenants and agreements
contained herein, the parties hereto hereby agree as follows:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
1

     

    AMENDING
PROVISIONS

     

    


    Section
1.1 Amendment. As of the
Second Amendment Effective Date (as defined in Section 3 hereof):

     

    (a) The
definition of “Borrower” in Section
1.1 of the Existing Credit Agreement is hereby amended by deleting it in its
entirety and inserting, in lieu thereof, the following:

     

     

    ““Borrower”:  collectively,
the Revolving Credit Borrowers and the Term Loan Borrowers.”

     

    (b) The first
sentence of the definition of “Borrowing Base” in
Section 1.1 of the Existing Credit Agreement is hereby amended by deleting it in
its entirety and inserting, in lieu thereof,: ““Borrowing Base”, at
any time, 85% of the then Eligible Accounts”.

     

    (c) The
definition of “Eligible Inventory”
in Section 1.1 of the Existing Credit Agreement is hereby amended by deleting it
in its entirety, together with all references to such definition throughout the
Loan Documents.

     

    (d) The
definition of “Loan
Parties” in Section 1.1 of the Existing Credit Agreement is hereby
amended by deleting it in its entirety and inserting, in lieu thereof, the
following:

     

     

    ““Loan Parties”: the
Revolving Credit Borrower(s), the Term Loan Borrowers, Merisel, Merisel
Americas, and each of their present and future Subsidiaries (except for Merisel
Properties, Inc.) as Corporate Guarantors.”

     

    (e) The
definition of “Revolving Credit
Commitment” in Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following immediately preceding the end thereof: “The
aggregate amount of the Revolving Credit Commitment as of the Second Amendment
Effective Date is $15,500,000.”

     

    (f) The
definition of “Revolving Credit Termination
Date” in Section 1.1 of the Existing Credit Agreement is hereby amended
by deleting it in its entirety and inserting, in lieu thereof, the following:
““Revolving Credit
Termination Date” means March 1, 2011.”

     

    (g) The
following definitions are added to Section 1.1 of the Existing Credit
Agreement:

     

     

    ““Amendment No. 2”
means that certain Amendment No. 2 to Credit Agreement by and among the
Borrowers, Corporate Guarantors and Lender dated as of February 27,
2008.”

     

     

    ““Second Amendment Effective
Date” means February 27, 2008.”

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (h) Section
8.12 of the Existing Credit Agreement is hereby amended by deleting the title
“Reserved” and inserting, in lieu thereof, the following:

     

    “Control
Agreements.

     

    (a)           Subject
to Sections 8.12(b) and (c) below, the Loan Parties shall grant and maintain at
all times a perfected Lien in all of its “deposit accounts” and “security
accounts” (as such terms are defined in the Uniform Commercial Code in effect in
the State of New York) to the Lender.

     

    (b)           The
security interest contemplated by Section 8.12(a) shall not apply to (i) any
“deposit account” exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of the Loan Parties’ employees
or (ii) any “deposit account” used by any Loan Party in the ordinary course of
business in which not more than $50,000 is held at any time; provided that the
aggregate amount of funds maintained in all such deposit accounts under this
clause (ii) shall not exceed $200,000 at any one time.

     

    (b)           The
Loan Parties shall within 30 days of the Second Amendment Effective Date, use
commercially reasonable best efforts to deliver to the Lender, all control
agreements that, in the reasonable judgment of the Lender, are required for the
Loan Parties to comply with Section 8.12(a), each duly executed by, in addition
to the applicable Loan Party, the applicable financial institution, each in form
and substance reasonably satisfactory to the Lender.”

     

    (i) The Debt
Service Coverage ratio in Section 9.1 of the Existing Credit Agreement is hereby
amended by deleting the ratio “1.10 to 1.0” in clause (b) thereof in its
entirety and inserting, in lieu thereof, “1.30 to 1.0”.

     

    (j) Clause
(c) of Section 9.1 of the Existing Credit Agreement is hereby amended by
deleting it in its entirety and inserting, in lieu thereof, the following:
“Permit Consolidated Tangible Net Worth on any date to be less than
$20,000,000.

     

    (k) Clause
(d) of Section 9.1 of the Existing Credit Agreement is hereby deleted in its
entirety.

     

    (l) Section
11.2 of the Existing Credit Agreement is hereby amended by inserting the
following immediately preceding the words “with a copy (which shall not
constitute notice) to”:

    COMP 24,
LLC

    c/o
Merisel, Inc.

    127 West
30th Street, 5th
Floor,

    New York,
New York 10001

    Attention:  Jon
H. Peterson

    Telephone:  (212)
502-6570

    Facsimile:
(212) 502-9497

    Email:  jon.peterson@merisel.com

     

    (m) Schedules
1.0, 1.1, 6.4, 6.6, 6.15, 6.16, 6.19, 7.1(r), 9.2, 9.3 and 9.4 to the Existing
Credit Agreement are hereby amended or supplemented, as applicable, if an
amendment or supplement to any such Schedule is attached to this Amendment No. 2
as Annex A, by
including or substituting the items listed on such supplement to such Schedule
in such Schedule.

     

    (n) Exhibit
A-1 to the Existing Credit Agreement, referred to in Section 5.4(e) of the
Existing Credit Agreement, is hereby amended by deleting it in its entirety and
inserting, in lieu thereof, Exhibit A-1 attached
hereto.

     

    (o) Exhibit H
to the Existing Credit Agreement, referred to in the definition of “Borrowing Base
Certificate” in Section 1.1 of the Existing Credit Agreement, is hereby
amended by deleting it in its entirety and inserting, in lieu thereof, Exhibit H attached
hereto.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
2

     

    COVENANTS
AND LIMITATIONS

     

    


    Section
2.1 Certain Covenants and
Limitations.  In consideration of the execution and delivery of
this Amendment No. 2 by the Lender, the Loan Parties hereby agree as
follows:

     

    (a) Upfront
Fee.  Borrowers shall pay to the Lender a non-refundable
upfront fee in an amount equal to 0.50% of the Commitments as of the Second
Amendment Effective Date (the “Upfront Fee”) on or
before the Second Amendment Effective Date (as defined herein).  The
failure to pay such fee on or before the Second Amendment Effective Date (x)
shall be an Event of Default and (y) shall render each of the amendments set
forth herein to be no longer of any force or effect.

     

    (b) Costs and
Expenses.  Borrowers shall pay all costs and expenses of
Lender, including the fees associated with the accounts receivable audit review,
and of its counsel, Nixon Peabody LLP, incurred in connection herewith or
otherwise due and owing as of the date hereof pursuant to Section 11.5 of the
Credit Agreement.

     

    (c) Joinder.  By
executing and delivering this Amendment No. 2, each Corporate Guarantor agrees
to continue, extend or become, as applicable, and effective upon the Second
Amendment Effective Date, shall continue, extend or become (i) a Corporate
Guarantor under, and to be bound by, and to comply with, the terms and
conditions of the Credit Agreement, and (ii) a Corporate Guarantor under and
party to each other appropriate Loan Document, and to be bound by, and to comply
with, the terms and conditions of such Loan Document.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
3

     

    CONDITIONS

     

    


    Section
3.1 Conditions Precedent to the
Effectiveness of this Amendment No. 2.  This Amendment No. 2
shall become effective as of the date hereof (the “Second Amendment
Effective
Date”) provided that each of the following conditions precedent shall
have been satisfied on or before such date:

     

    (a) Amendment.  Lender
has received counterparts of this Amendment No. 2 executed and delivered by an
authorized officer of each of the Loan Parties and the Lender.

     

    (b) Revolving Credit
Note.  Lender shall have received an amendment and restatement
of the then outstanding Revolving Credit Note, substantially in the form of
Exhibit A-1 to this Amendment No. 2, reflecting the applicable amendments to the
Credit Agreement set forth herein, in form and substance satisfactory to such
Lender, executed by a duly authorized officer of each Revolving Credit Borrower
(as defined in Section 1 hereof).

     

    (c) Reaffirmation of Security
Agreement, Pledge Agreement and Corporate Guarantee.  Lender
shall have received a Reaffirmation and Confirmation Agreement (Security
Documents) in form and substance satisfactory to Lender, executed by each party
thereto.

     

    (d) Filings, Registrations and
Recordings.  Each Uniform Commercial Code financing statement
required by the Security Documents or reasonably requested by the Lender to be
filed, registered or recorded in order to create in favor of Lender, a perfected
Lien on the Collateral described therein, prior and superior in right to any
other Person (other than with respect to Liens expressly permitted by Section
9.3 of the Credit Agreement), shall have been registered and recorded, as
applicable.

     

    (e) Secretary’s
Certificates.  The Lender shall have received a certificate by
(or on behalf of)  each Loan Party, dated the Second Amendment
Effective Date, substantially in the form of Exhibit F to the
Credit Agreement, with appropriate insertions and attachments (or
representations that the insertions and attachments previously delivered have
not be amended or otherwise modified since the date previously delivered to the
Lender), satisfactory in form and substance to the Lender, executed by the
President or any Vice President and the Secretary or any Assistant Secretary,
manager and/or sole member of each Loan Party.

     

    (f) Borrowing Base
Certificate.  The Lender shall have received a Borrowing Base
Certificate showing the Borrowing Base as of December 31, 2007, satisfactory in
form and substance to the Lender, executed by the Chief Financial Officer of
Merisel Americas, Inc., the sole shareholder of each Borrower.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (g) Organizational Proceedings
of the Loan Parties.  The Lender shall have received a copy of
the resolutions, in form and substance satisfactory to the Lender, of the board
of directors, the managers or the consent of the sole member, as the case may
be, of each Loan Party authorizing (i) the execution, delivery and
performance of this Amendment No. 2 and the other documents related thereto to
which it is a party, and (ii) the borrowings contemplated hereunder,
certified by the Secretary or an Assistant Secretary (or sole member or
managers, as applicable) of each Loan Party as of the Second Amendment Effective
Date, which certification shall be included in the certificate delivered in
respect of such Loan Party pursuant to Section 3.1(d) hereof, shall be in
form and substance satisfactory to the Lender and shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded.

     

    (h) Good Standing
Certificates.  The Lender shall have received certificates
dated as of a recent date from the Secretary of State or other appropriate
authority, evidencing the good standing of each Loan Party (i) in the
jurisdiction of its organization and (ii) in the jurisdiction of its
principal place of business.

     

    (i) Fees.  The
Lender shall have received the Upfront Fee.

     

    (j) Legal
Opinions.  The Lender shall have received the executed legal
opinion of Rosner & Napierala LLP, counsel to the Loan Parties, in form and
substance satisfactory to the Lender.  The legal opinion shall cover
such other matters incident to the transactions contemplated by this Amendment
No. 2 as the Lender may reasonably require.

     

    (k) Lien
Searches.  The Lender shall have received the results of a
recent search by a Person satisfactory to the Lender, of the Uniform Commercial
Code, judgment and tax lien filings which may have been filed with respect to
personal property of the Loan Parties, and the results of such search shall be
satisfactory to the Lender.

     

    (l) Audit.  The
Lender shall have received copies of an audit, in form and substance
satisfactory to the Lender, of the accounts receivable of the Loan Parties
prepared by representatives of Solutions for Management.

     

    (m) Insurance.  The
Lender shall have received evidence in form and substance satisfactory to it
that all of the requirements of Section 8.5 of the Credit Agreement and
Section 5(m) of the Security Agreement are satisfied.

     

    (n) Representations and
Warranties.  The representations and warranties contained in
Section 4 of this Amendment No. 2 shall be true and correct in all material
respects on and as of the Second Amendment Effective Date, as though made on and
as of such date (except for any such representation and warranty that by its
terms refers to a specific date other than the date first above written, in
which case it shall be true and correct in all material respects as of such
earlier date); and each Loan Party hereby restates each of the representations
and warranties set forth in the Existing Credit Agreement, as amended by this
Amendment No. 2 (including without limitation the Schedules delivered therein),
and represents and warrants to Lender that such representations and warranties
as so amended are true and correct on and as of the date hereof in all material
respects and with the same effect as if made on the date hereof (except for any
such representation and warranty that by its terms refers to a specific date
other than the date first above written, in which case it shall be true and
correct in all material respects as of such earlier date).  Each Loan
Party further hereby agrees that all representations and warranties made herein
shall be deemed to be part of the Existing Credit Agreement for all
purposes.

     

    (o) No Default or Event of
Default.  No Default or Event of Default shall have occurred
and be continuing or shall occur after giving effect to this Amendment No.
2.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ARTICLE
4

     

    MISCELLANEOUS

     

    


    Section
4.1 Reference to and Effect on
the Loan Documents.  As of the Second Amendment Effective Date,
any reference in any Loan Document to the Existing Credit Agreement shall be to
the Existing Credit Agreement, as amended hereby and any references in any Loan
Document to the Borrowers, the Loan Parties or the Corporate Guarantors shall be
to the Borrowers, Loan Parties or Corporate Guarantors, as the case may be, as
amended hereby.  The execution, delivery and effectiveness of this
Amendment No. 2 shall not operate as a waiver of any right, power or remedy of
the Lender under any of the Loan Documents, nor constitute a waiver of any
provision of any of the Loan Documents.

     

    Section
4.2 Integration.  This
Amendment No. 2 represents the agreement of the Borrowers and the Lender with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Lender relative to subject matter hereof
not expressly set forth or referred to herein.

     

    Section
4.3 No Third Party
Beneficiaries.  This Amendment No. 2 shall be binding upon and
inure to the benefit of the Loan Parties and the Lender and their respective
successors and assigns.  No Person other than the parties hereto shall
have any rights hereunder or be entitled to rely on this Amendment No. 2, and
all third-party beneficiary rights are hereby expressly disclaimed.

     

    Section
4.4 Execution in
Counterparts. This Amendment No. 2 may be executed by one or more of the
parties to this Amendment No. 2 on any number of separate counterparts
(including by facsimile transmission of signature pages hereto), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.

     

    Section
4.5 Governing
Law.  THIS AMENDMENT NO. 2 AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

     

     

    [signature
pages follow]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

     

     

    
      	
               
      

            	
              BORROWERS:

            


    

     

     

    
      	
               
      

            	
              CRUSH
      CREATIVE, LLC

            


    

     

    
      	
               
      

            	
              f/k/a
      MCRU, LLC

            


    

     

    
      	
               
      

            	
              By:
      MERISEL AMERICAS, INC., as Sole
Member

            


    

     

    
      	
               
      

            	
              By:  /s/ Jon H.
      Peterson

            


    

    
      	
               
      

            	
                    Name:
      Jon H. Peterson

            


    

    
      	
               
      

            	
                    Title:   Chief
      Financial Officer

            


    

     

     

    
      	
               
      

            	
              COLOR
      EDGE, LLC

            


    

     

    
      	
               
      

            	
              f/k/a
      MCEI, LLC

            


    

     

    
      	
               
      

            	
              By:
      MERISEL AMERICAS, INC., as Sole
Member

            


    

     

    
      	
               
      

            	
              By:  /s/ Jon H.
      Peterson

            


    

    
      	
               
      

            	
                    Name:
      Jon H. Peterson

            


    

    
      	
               
      

            	
                    Title:   Chief
      Financial Officer

            


    

     

     

    
      	
               
      

            	
              COLOR
      EDGE VISUAL, LLC

            


    

     

    
      	
               
      

            	
              f/k/a
      MCEV, LLC

            


    

     

    
      	
               
      

            	
              By:
      MERISEL AMERICAS, INC., as Sole
Member

            


    

     

    
      	
               
      

            	
              By:  /s/Jon H.
      Peterson

            


    

    
      	
               
      

            	
                    Name:  Jon
      H. Peterson

            


    

    
      	
               
      

            	
                    Title:    Chief
      Financial Officer

            


    

     

     

    
      	
               
      

            	
              CORPORATE
      GUARANTORS:

            


    

     

     

    
      	
               
      

            	
              MERISEL,
      INC.

            


    

     

    
      
        	
                 
      

              	
                By:  /s/Jon H.
      Peterson

              


      

      
        	
                 
      

              	
                      Name:  Jon
      H. Peterson

              


      

      
        	
                 
      

              	
                      Title:    Chief
      Financial Officer

              


      

       

       

    

    
      	
               
      

            	
              MERISEL
      AMERICAS, INC.

            


    

    
       

      
        
          	
                   
      

                	
                  By:  /s/Jon H.
      Peterson

                


        

        
          	
                   
      

                	
                        Name:  Jon
      H. Peterson

                


        

        
          	
                   
      

                	
                        Title:    Chief
      Financial Officer

                


        

      

       

       

    

    
      	
               
      

            	
              COMP 24, LLC (f/k/a
      MC24, LLC)

            


    

    
      	
               
      

            	
              FUEL
      DIGITAL, LLC

            


    

    
      	
               
      

            	
              DENNIS
      CURTIN STUDIOS, LLC

            


    

    
      	
               
      

            	
              MADP,
      LLC

            


    

     

    
      	
               
      

            	
              By:
      MERISEL AMERICAS, INC., as Sole Member of each of the above-named
      entities

            


    

     

    
      
        	
                 
      

              	
                By:  /s/Jon H.
      Peterson

              


      

      
        	
                 
      

              	
                      Name:  Jon
      H. Peterson

              


      

      
        	
                 
      

              	
                      Title:    Chief
      Financial Officer

              


      

    

     

     

    
      	
               
      

            	
              ADVERTISING
      PROPS, INC.

            


    

     

    
      	
               
      

            	
              By:
      MADP LLC, as Sole Shareholder

            


    

     

    
      	
               
      

            	
              By:  /s/Jon H.
      Peterson

            


    

    
      	
               
      

            	
                    Name:  Jon
      H. Peterson

            


    

    
      	
               
      

            	
                    Title:    Manager

            


    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              LENDER:

            


    

     

    
      	
               
      

            	
              AMALGAMATED
      BANK

            


    

     

    
      	
               
      

            	
              By:  /s/George N.
      Jarvis

            


    

    
      	
               
      

            	
                    Name:  George
      N. Jarvis

            


    

    
      	
               
      

            	
                    Title:   
      Executive Vice
President