Termination Agreement - Cyberian Outpost Inc., PC Connection Inc., Merrimack Services Corp and Fry's Electronics Inc.
TERMINATION AGREEMENT, dated as of September 4, 2001, by and among
Cyberian Outpost, Inc., a Delaware corporation (the "Company"), PC Connection,
Inc., a Delaware corporation ("PCC"), Merrimack Services Corporation, a Delaware
corporation and an affiliate of PCC ("MSC"), and Fry's Electronics, Inc., a
Delaware corporation ("Fry's").
WHEREAS, the Company and PCC are parties to a Merger Agreement, dated
as of May 29, 2001 (the "Merger Agreement");
WHEREAS, in connection with the execution of the Merger Agreement, (i)
the Company and PCC entered into a Stock Warrant Agreement, dated as of May 29,
2001 (the "Stock Warrant Agreement"); (ii) the Company and MSC entered into a
Credit and Supply Agreement, Security Agreement and related Working Capital
Promissory Note, each dated as of May 29, 2001 (the "Credit Agreement," the
"Security Agreement" and the "Note," respectively); and (iii) certain
stockholders of the Company granted irrevocable proxies in favor of PCC with
respect to the transactions contemplated by the Merger Agreement (the "Proxies"
and, collectively with the Merger Agreement, the Stock Warrant Agreement, the
Credit Agreement, the Security Agreement and the Note, the "Transaction
WHEREAS, the Company desires to enter into a Merger Agreement with
Fry's (the "Fry's Agreement");
WHEREAS, , upon and in connection with the execution of the Fry's
Agreement, the Company will have secured financing sufficient to enable the
Company to pay MSC in full all amounts outstanding under the Credit Agreement
and the Note;
WHEREAS, PCC is willing to consent to the Company's execution of the
Fry's Agreement, subject to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the premises and for other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Subject to the conditions set forth below, and notwithstanding
any provision to the contrary contained in the Transaction Documents, PCC hereby
consents to the Company's entering into the Fry's Agreement.
SECTION 2. Simultaneous with the execution of the Fry's Agreement, the
Company hereby agrees:
(a) To pay to MSC, by wire transfer of immediately available funds,
the sum of $4,845,761.88, representing all amounts now or hereafter to
become due from the Company to MSC, PCC and any of their Affiliates (as
such term is defined in the Merger Agreement) under the Credit Agreement,
the Security Agreement and the Note. Concurrently herewith MSC shall
designate in writing the account to which such funds shall be paid; and
(b) To cause Paymentech, LLC, to release and forever discharge PCC
and MSC from their obligations under that certain Credit Card Processing
Services Agreement Guaranty Addendum dated May 30, 2001 (the "Guaranty
SECTION 3. PCC and MSC agree that the foregoing payment and release of the
Guaranty Addendum shall be in full satisfaction of any obligation of the Company
to MSC, PCC or any of their Affiliates under any of the Transaction Documents,
and upon MSC's receipt of such payment and release, the Company shall have no
further obligation to MSC, PCC or any of their Affiliates with respect to any of
the same. PCC and MSC agree that each of them shall use its reasonable best
efforts to cause to be filed as promptly as practicable UCC-2s, or comparable
termination statements, as well as any other documents reasonably requested by
the Company, so as to terminate any security interest, lien or UCC filing of PCC
or MSC with respect to the Company or any of its assets.
SECTION 4. Upon MSC's receipt of the payment pursuant to and at the time
required by Section 2(a), and Paymentech's release of PCC and MSC from the
Guaranty Addendum pursuant to and at the time required by Section 2(b):
(a) The Transaction Documents shall terminate and become void,
effective immediately; and
(b) The following releases shall immediately become effective:
(i) PCC and MSC hereby release, acquit, and forever discharge
the Company and any of its subsidiaries, successors and assigns from (i)
any interest PCC or MSC may have in the Company or any of its any assets
and (ii) any obligation of the Company otherwise arising under or in
connection with the Credit Agreement, the Security Agreement and the Note;
(ii) PCC hereby terminates and forever releases any rights it
may have under or with respect to the Proxies, and each of them, and
covenants and agrees that it shall not seek to exercise any of the same;
and PCC acknowledges and agrees that the Company stockholders granting such
Proxies are third-party beneficiaries of this Section 4(b)(ii); and
(iii) PCC and MSC hereby release, acquit, and forever discharge
the Company, Fry's and their respective Affiliates, officers, directors,
successors and assigns (the "Company Releasees" and the "Fry's Releasees",
respectively), from all actions, causes of action, damages, judgments,
losses, liabilities, demands and claims which PCC or MSC ever had, now has
or may have, against the Company Releasees and the Fry's Releasees, from
the beginning of the world to the effective time of this release, including
but not limited to any and all actions, causes of action, damages,
judgments, losses, liabilities, demands and claims arising out of or
relating to the Transaction Documents and the Company's or Fry's actions or
omissions in connection therewith.
(iv) The Company and Fry's hereby release, acquit, and forever
discharge PCC, MSC and their respective Affiliates, officers, directors,
successors and assigns (the "PCC Releasees"), from all actions, causes of
action, damages, judgments, losses,
liabilities, demands and claims which the Company or Fry's ever had, now
has or may have, against the PCC Releasees, from the beginning of the world
to the effective time of this release, including but not limited to any and
all actions, causes of action, damages, judgments, losses, liabilities,
demands and claims arising out of or relating to the Transaction Documents
(including without limitation any funding or lack thereof or any provision
of or failure to provide inventory) and PCC's or MSC's actions or omissions
in connection therewith.
SECTION 5. PCC and MSC hereby represent and warrant that neither of them
has sold, assigned or otherwise transferred, directly or indirectly, any
interest either or both of them may have in, under or with respect to any of the
Transaction Documents or the transactions contemplated thereby.
SECTION 6. This Termination Agreement may be executed in one or more
counterparts, each of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 7. This Termination Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8. This Termination Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware applicable to contracts
executed and to be performed entirely within that State. Any dispute under this
Agreement shall be brought and determined in the Chancery or other Courts of the
State of Delaware.
IN WITNESS WHEREOF, the Company, PCC, MSC and Fry's have caused this
Termination Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
CYBERIAN OUTPOST, INC.
/s/ Darryl Peck
Name: Darryl Peck
PC CONNECTION, INC.
/s/ Wayne L. Wilson
Name: Wayne L. Wilson
Title: President & COO
MERRIMACK SERVICES CORPORATION
/s/ Mark A. Gavin
Name: Mark A. Gavin
Title: SVP of Finance & CFO
FRY'S ELECTRONICS, INC.
/s/ Kathryn J. Kolder
Name: Kathryn J. Kolder
Title: Executive Vice-President