Exhibit 10.27
AMENDMENT TO AGREEMENT FOR WHOLESALE FINANCING
This Amendment to Agreement for Wholesale Financing is made to that
certain Agreement for Wholesale Financing entered into by and between PC
Connection, Inc., a Delaware corporation ("Dealer") and Deutsche Financial
Services Corporation ("DFS") on March 25, 1998, as amended ("Agreement").
FOR VALUE RECEIVED, Dealer and DFS agree to amend the Agreement as
follows:
1. Dealer and DFS agree to amend paragraph 3 of the Agreement to provide
as follows:
"3. To secure payment of all of Dealer's current and future debts to
DFS, whether under this Agreement or any current or future guaranty
or other agreement, Dealer grants DFS a security interest in all
Dealer's:
(a) inventory and equipment, manufactured or sold by or bearing any
trademark or trade name of Compaq Computer Corporation, Acer America
Corporation, Apple Computer, Inc., Digital Equipment Corporation,
Hewlett-Packard Company, Hitachi Sales Corporation of America, Power
Computing, Texas Instruments Incorporated, Toshiba America
Information Systems, Inc., NEC Technologies, Inc., Oki America, Inc.
(Okidata division), Canon U.S.A., Inc., Packard Xxxx Electronics,
Inc., Epson America, Inc., Xerox Corporation, Tektronix, Inc., and
Toshiba America Information Systems, Inc. or any of their
subsidiaries or affiliated companies, whether now owned or hereafter
acquired, and all attachments, accessories, accessions, returns,
repossessions, exchanges, substitutions and replacements thereto,
and all proceeds thereof; and
(b) rebates, discounts, credits and incentive payments, now or
hereafter due Dealer, relating to any of the above described
inventory and equipment, and all proceeds thereof.
All such assets are collectively referred to herein as the
'Collateral.' All of such terms for which meanings are provided in
the Uniform Commercial Code are used herein with such meanings. All
Collateral financed by DFS, and all proceeds thereof, will be held
in trust by Dealer for DFS, with such proceeds being payable in
accordance with this Agreement."
2. Dealer and DFS agree to amend paragraph number 9 of the Agreement to
provide as follows:
"9. Payment Terms/Paydown. Dealer will immediately pay DFS the principal
indebtedness owed DFS on each item of Collateral financed by DFS (as
shown on the Statement of Transaction identifying such Collateral)
on the earliest occurrence of any of the following events: (a) when
such Collateral is lost. stolen or damaged; (b) for Collateral
financed under Pay-As-Sold (PAS") terms (as shown on the Statement
of Transaction identifying such Collateral), when such Collateral is
sold,
any warranties extended by any third party; (2) not assert against
DFS any claim or defense Dealer has against any third party; and (3)
indemnify and hold DFS harmless against all claims and defenses
asserted by any buyer of the Collateral relating to the condition
of, or any representations regarding, any of the Collateral. Dealer
waives all rights of offset Dealer may have against DFS."
3. DFS and Dealer agree that the following paragraph is incorporated into
the Agreement as if fully and originally set forth therein:
"7.1 Financial Covenants. Dealer will at all times maintain:
(a) a Tangible Net Worth and Subordinated Debt in the combined
amount of not less than Eleven Million Dollars ($11,000,000.00); and
(b) a ratio of Debt minus Subordinated Debt to Tangible Net Worth
and Subordinated Debt, measured quarterly, of not more than the
ratio shown below during the period corresponding thereto:
Period Ratio
------ -----
First quarter of
each fiscal year 3.25 to 1.0
Second quarter of
each fiscal year 3.25 to 1.0
Third quarter of
each fiscal year 3.25 to 1.0
Fourth quarter of
each fiscal year 4.00 to 1.0
For purposes of this paragraph: (i) 'Tangible Net Worth' means the
book value of Dealer's assets less liabilities, excluding from such
assets all Intangibles; (ii) 'Intangibles' means and includes
general intangibles (as that term is defined in the Uniform
Commercial Code); accounts receivable and advances due from
officers, directors, employees, stockholders and affiliates; good
will; covenants not to compete; the excess of cost over book value
of acquired assets; franchise fees; organizational costs; finance
reserves held for recourse obligations; capitalized research and
development costs; and such other similar items as DFS may from time
to time determine in DFS' sole discretion; (iii) 'Debt' means all of
Dealers liabilities and indebtedness for borrowed money of any kind
and nature whatsoever, whether direct or indirect, absolute or
contingent, and including obligations under capitalized leases,
guaranties, or with respect to which Dealer has pledged assets to
secure performance, whether or not direct recourse liability has
been assumed by Dealer except that accounts payable corresponding to
intransit inventory shall not be included in the definition of Debt;
and (iv) 'Subordinated Debt' means all of Dealer's Debt which is
subordinated to the payment of Dealer's liabilities to DFS by an
agreement in form and substance satisfactory to DFS. The foregoing
terms shall be
transferred, rented, leased, otherwise disposed of or matured; (c)
in strict accordance with any curtailment schedule for such
Collateral (as shown on the Statement of Transaction identifying
such Collateral); (d) for Collateral financed under Scheduled Parent
Program ("SPP") terms (as shown on the Statement of Transaction
identifying such Collateral), in strict accordance with the
installment payment schedule; and (e) when otherwise required under
the terms of any financing program agreed to in writing by the
parties. Dealer will forward to DFS by the 15th day of each month a
Collateral Summary Report (as defined below) dated as of the last
day of the prior month. Regardless of the SPP terms pertaining to
any Collateral financed by DFS, and notwithstanding any scheduled
payments made by Dealer after the Determination Date (as defined
below), if DFS determines, after reviewing the Collateral Summary
Report, after conducting an inspection of the Collateral or
otherwise, that (i) the total current outstanding indebtedness owed
by Dealer to DFS as of the date of the Collateral Summary Report,
inspection or any other date on which a paydown is otherwise
required hereunder, as applicable (the 'Determination Date'),
exceeds (ii) the Collateral Liquidation Value (as defined below) as
of the Determination Date, Dealer will immediately upon demand pay
DFS the difference between (i) Dealer's total current outstanding
indebtedness owed to DFS as of the Determination Date, and (ii) the
Collateral Liquidation Value as of the Determination Date.
The term 'Collateral Summary Report' is defined herein to mean a
report compiled by Dealer specifying the total aggregate wholesale
invoice price of all of Dealer's inventory financed by DFS that is
unsold and in Dealer's possession and control as of the date of such
Report to the extent DFS has a first priority, fully perfected
security interest therein.
The term 'Collateral Liquidation Value' is defined herein to mean
one hundred percent (100%) of the total aggregate wholesale invoice
price of all of Dealer's inventory financed by DFS that is unsold
and in Dealer's possession and control as of the date of the
Collateral Summary Report and to the extent DFS has a first
priority, fully perfected security interest therein. If Dealer from
time to time is required to make immediate payment to DFS of any
past due obligation discovered during any Collateral audit, upon
review of a Collateral Summary Report or at any other time, Dealer
agrees that acceptance of such payment by DFS shall not be construed
to have waived or amended the terms of its financing program. The
proceeds of any Collateral received by Dealer will be held by Dealer
in trust for DFS' benefit, for application as provided in this
Agreement. Dealer will send all payments to DFS' branch office(s)
responsible for Dealer's account. DFS may apply: (i) payments to
reduce finance charges first and then principal, regardless of
Dealer's instructions; and (ii) principal payments to the oldest
(earliest) invoice for Collateral financed by DFS, but, in any
event, all principal payments will first be applied to such
Collateral which is sold, lost, stolen, damaged, rented, leased, or
otherwise disposed of or unaccounted for. Any third party discount,
rebate, bonus or credit granted to Dealer for any Collateral will
not reduce the debt Dealer owes DFS until DFS has received payment
therefor in cash. Dealer will (1) pay DFS even if any Collateral is
defective or fails to conform to
determined in accordance with generally accepted accounting
principles consistently applied, and, if applicable, on a
consolidated basis."
All other terms as they appear in the Agreement, to the extent consistent
with the foregoing, are ratified and remain unchanged and in full force and
effect.
IN WITNESS WHEREOF, Dealer and DFS have executed this Amendment to
Agreement for Wholesale Financing this 25th day of March, 1998.
PC CONNECTION, INC.,
a Delaware corporation
ATTEST: By: /s/ Xxxx X. Xxxxxxxx
/s/ [ILLEGIBLE] ------------------------------
---------------------- Title: Treasurer
(Assistant) Secretary ---------------------------
DEUTSCHE FINANCIAL SERVICES CORPORATION
By:
------------------------------
Title:
---------------------------
