Exhibit 10.26
AGREEMENT FOR WHOLE SALE FINANCING
This Agreement for Wholesale Financing ("Agreement") is made as of March 25,
1998, between Deutsche Financial Services Corporation ("DFS") and PC Connection,
Inc., a Delaware corporation ("Dealer"), having a principal place of business
located at 6 Mill Street, Marlow, NH 03456.
1. Extension of Credit. Subject to the terms of this Agreement, DFS may
extend credit to Dealer from time to time to purchase inventory from DFS
approved vendors ("Vendors") and for other purposes. If DFS advances funds
to Dealer following Dealer's execution of this Agreement, DFS will be
deemed to have entered into this Agreement with Dealer, whether or not
executed by DFS. DFS' decision to advance funds will not be binding until
the funds are actually advanced. DFS may combine all of DFS' advances to
Dealer or on Dealer's behalf, whether under this Agreement or any other
agreement, and whether provided by one or more of DFS' branch offices,
together with all finance charges, fees and expenses related thereto, to
make one debt owed by Dealer. DFS may, at any time and without notice to
Dealer, elect not to finance any inventory sold by particular Vendors who
are in default of their obligations to DFS, or with respect to which DFS
reasonably feels insecure. This is an agreement regarding the extension of
credit, and not the provision of goods or services.
2. Financing Terms and Statements of Transaction. Dealer and DFS agree that
certain financial terms of any advance made by DFS under this Agreement,
whether regarding finance charges, other fees, maturities, curtailments or
other financial terms, are not set forth herein because such terms depend,
in part, upon the availability of Vendor discounts, payment terms or other
incentives, prevailing economic conditions, DFS' floorplanning volume with
Dealer and with Dealer's Vendors, and other economic factors which may
vary over time. Dealer and DFS further agree that it is therefore in their
mutual best interest to set forth in this Agreement only the general
terms of Dealer's financing arrangement with DFS. Upon agreeing to finance
a particular item of inventory for Dealer, DFS will send Dealer a
Statement of Transaction identifying such inventory and the applicable
financial terms. Unless Dealer notifies DFS in writing of any objection
within fifteen (15) days after a Statement of Transaction is mailed to
Dealer: (a) the amount shown on such Statement of Transaction will be an
account stated; (b) Dealer will have agreed to all rates, charges and
other terms shown on such Statement of Transaction; (c) Dealer will have
agreed that DFS is financing the items of inventory referenced in such
Statement of Transaction at Dealer's request; and (d) such Statement of
Transaction will be incorporated herein by reference, will be made a part
hereof as if originally set forth herein, and will constitute an addendum
hereto.
3. Grant of Security Interest. 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 of Dealer's inventory, equipment, fixtures, accounts, contract
rights, chattel paper, security agreements, instruments, deposit accounts,
reserves, documents, and general intangibles; end all judgments, claims,
insurance policies, and payments owed or made to Dealer thereon; all
whether now owned or hereafter acquired, all attachments, accessories,
accessions, returns, repossessions, exchanges, substitutions and
replacements thereto, 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 of the
applicable state 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 Section 9.
4. Affirmative Warranties and Representations. Dealer warrants and represents
to DFS that: (a) Dealer has good title to all Collateral; (b) DFS'
security interest in the Collateral financed by DFS is not now and will
not become subordinate to the security interest, lien, encumbrance or
claim of any person: (c) Dealer will execute all documents DFS requests to
perfect and maintain DFS' security interest in the collateral; (d) Dealer
will deliver to DFS immediately upon each request, and DFS way retain,
each Certificate of Title or Statement of Origin issued for Collateral
financed by DFS; (e) Dealer will at all times be duly organized,
existing, in good standing, qualified and licensed to do business in each
state, county, or parish, in which the nature of its business or property
so requires; (f) Dealer has the right and is duly authorized to enter into
this Agreement; (g) Dealer's execution of this Agreement does not
constitute a breach of any agreement to which Dealer is now or hereafter
becomes bound; (h) there are and will be no actions or proceedings pending
or threatened against Dealer which might result in any material adverse
change in Dealer's financial or business condition or which might in any
way materially adversely affect any of Dealer's assets, except as set
forth on Exhibit B, attached hereto; (i) Dealer will maintain the
Collateral in good condition and repair; (j) Dealer has duly filed and
will duly file all tax returns required by law; (k) Dealer has paid and
will pay when due all taxes, levies, assessments and governmental charges
of any nature; (l) Dealer will keep and maintain all of its books and
records pertaining to the Collateral at its principal place of business
designated in this Agreement; (m) Dealer will promptly supply DFS with
such information concerning it or any guarantor as DFS hereafter may
reasonably request; (n) all Collateral will be kept at Dealer's principal
place of business listed above, and such other locations, if any, of which
Dealer has notified DFS in writing or as listed on any current or future
Exhibit "A" attached hereto which written notice(s) to DFS and Exhibit
A(s) are incorporated herein by reference; (o) Dealer will give DFS thirty
(30) days prior written notice of any change in Dealer's identity, name,
form of business organization, ownership, management, principal place of
business, Collateral locations or other business locations, and before
moving any books and records to any other location, unless due to
circumstances (e.g. termination of a manager) under which such notice
would be impractical, in which case Dealer shall, provide DFS with notice
as soon as possible; (p) Dealer will observe and perform all matters
required by any lease, license, concession or franchise forming part of
the Collateral in order to maintain all the rights of DFS thereunder; (q)
Dealer will advise DFS of the commencement of material legal proceedings
against Dealer or any guarantor; and (r) Dealer will comply with all
applicable laws and will conduct its business in a manner which preserves
and protects the Collateral and the earnings and incomes thereof.
5. Negative Covenants. Dealer will not at any time (without DFS' prior
written consent): (a) other than in the ordinary course of its business,
sell, lease or otherwise dispose of or transfer any of its assets; (b)
rent, lease, demonstrate, consign, or use any Collateral financed by DFS;
or (c) merge or consolidate with another entity.
6. Insurance. Dealer will immediately notify DFS of any loss, theft or damage
to any Collateral. Dealer will keep the Collateral insured for its full
insurable value under an "all risk" property insurance policy with a
company acceptable to DFS, naming DFS as a lender loss-payee or mortgagee
and containing standard lender's loss payable and termination provisions.
Dealer will provide DFS with written evidence of such property insurance
coverage and lender's loss-payee or mortgagee endorsement.
7. Financial Statements. Dealer will deliver to DFS: (a) within ninety (90)
days after the end of each of Dealer's fiscal years, a reasonably detailed
balance sheet as of the last day of such fiscal year and a reasonably
detailed income statement covering Dealer's operations for such fiscal
year, in a form satisfactory to DFS; (b) within forty-five (45) days after
the end of each of Dealer's fiscal quarters, a reasonably detailed balance
sheet as of the last day of such quarter and an income statement covering
Dealer's operations for such quarter, in a form satisfactory to DFS; and
(c) within ten (10) days after request therefor by DFS, any other report
requested by DFS relating to the Collateral or the financial condition or
Dealer. Dealer warrants and represents to DFS that all financial
statements and information relating to Dealer or any guarantor which have
been or may hereafter be delivered by Dealer or any guarantor are true and
correct and have been and will be prepared in accordance with generally
accepted accounting principles consistently applied and, with respect to
such previously delivered statements or information, there has been no
material adverse change in the financial or business condition of Dealer
or any guarantor since the submission to DFS, either as of the date of
delivery, or, if different, the date specified therein, and Dealer
acknowledges DFS' reliance thereon.
8. Reviews. Dealer grants DFS an irrevocable license to enter Dealer's
business locations, with accompaniment by Dealer, during normal business
hours without
notice to Dealer to: (a) account for and inspect all Collateral; (b)
verify Dealer's compliance with this Agreement; and (c) examine and copy
Dealer's books and records related to the Collateral.
9. Payment Terms. 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, 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 Payment 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.
Regardless of the SPP terms pertaining to any Collateral financed by DFS,
if DFS determines that the current outstanding debt which Dealer owes to
DFS exceeds the aggregate wholesale invoice price of such Collateral in
Dealer's possession, Dealer will immediately upon demand pay DFS the
difference between such outstanding debt and the aggregate wholesale
invoice price of such Collateral. If Dealer from time to time is required
to make immediate payment to DFS of any past due obligation discovered
during any Collateral audit, 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 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.
10. Calculation of Charges. Dealer will pay finance charges to DFS on the
outstanding principal debt which Dealer owes DFS for each item of
Collateral financed by DFS at the rate(s) shown on the Statement of
Transaction identifying such Collateral, unless Dealer objects thereto as
provided in Section 2. The finance charges attributable to the rate shown
on the Statement of Transaction will: (a) be computed based on a 360 day
year; (b) be calculated by multiplying the Daily Charge (as defined
below) by the actual number of days in the applicable billing period; and
(c) accrue from the invoice date of the Collateral identified on such
Statement of Transaction until DFS receives full payment in good funds of
the principal debt Dealer owes DFS for each item of such Collateral in
accordance with DFS' payment recognition policy and DFS applies such
payment to Dealer's principal debt in accordance with the terms of this
Agreement. The "Daily Charge" is the product of the Daily Rate (as defined
below) multiplied by the Average Daily Balance (as defined below). The
"Daily Rate" is the quotient of the annual rate shown on the Statement of
Transaction divided by 360, or the monthly rate shown on the Statement of
Transaction divided by 30. The "Average Daily Balance" is the quotient of
(i) the sum of the outstanding principal debt owed DFS on each day of a
billing period for each item of Collateral identified on a Statement of
Transaction, divided by (ii) the actual number of days in such billing
period. Dealer will also pay DFS $100 for each check returned unpaid for
insufficient funds (an "NSF check") (such $100 payment repays DFS'
estimated administrative costs; it does not waive the default caused by
the NSF check). The annual percentage rate of the finance charges relating
to any item of Collateral financed by DFS will be calculated from the
invoice date of such Collateral, regardless of any period during which any
finance charge subsidy shall be paid or payable by any third party. Dealer
acknowledges that DFS intends to strictly conform to the applicable usury
laws governing this Agreement. Regardless of any provision contained
herein or in any other document executed or delivered in connection
herewith or therewith, DFS shall never be deemed to have contracted for,
charged or be entitled to receive, collect or apply as interest on this
Agreement (whether termed interest herein or deemed to be interest by
judicial determination or operation of law), any amount in excess of the
maximum amount allowed by applicable law, and, if DFS ever receives,
collects or applies as interest any such excess, such amount which would
be excessive interest will be applied first to the reduction of the unpaid
principal balances of advances under this Agreement, and, second, any
remaining excess will be paid to Dealer. In determining whether or not the
interest paid or payable under any specific contingency exceeds the
highest lawful rate, Dealer and DFS shall, to the maximum extent permitted
under applicable law: (A) characterize any non-principal payment (other
than payments which are expressly designated as interest payments
hereunder) as an expense or fee rather than as interest; (B) exclude
voluntary prepayments and the effect thereof; and (C) spread the total
amount of interest throughout the entire term of this Agreement so that
the interest rate is uniform throughout such term.
11. Billing Statement. DFS will send Dealer a monthly billing statement
identifying all charges due on Dealer's account with DFS. The charges
specified on each billing statement will be: (a) due and payable in full
immediately on receipt; and (b) an account stated, unless DFS receives
Dealer's written objection thereto within 15 days after it is mailed to
Dealer. If DFS does not receive, by the 25th day of any given month,
payment of all charges accrued to Dealer's account with DFS during the
immediately preceding month, Dealer will (to the extent allowed by law)
pay DFS a late fee ("Late Fee") equal to the greater of $5 or 5% of the
amount of such finance charges (payment of the Late Fee does not waive the
default caused by the late payment). DFS may adjust the billing statement
at any time to conform to applicable law and this Agreement.
12. Default. Dealer will be in default under this Agreement if: (a) Dealer
breaches any terms, warranties or representations contained herein, in any
Statement of Transaction to which Dealer has not objected as provided in
Section 2, or in any other agreement between DFS and Dealer; (b) any
guarantor of Dealer's debts to DFS breaches any terms, warranties or
representations contained in any guaranty or other agreement between the
guarantor and DFS; (c) any representation, statement, report or
certificate made or delivered by Dealer or any guarantor to DFS is not
accurate when made; (d) Dealer fails to pay any portion of Dealer's debts
to DFS when due and payable hereunder or under any other agreement between
DFS and Dealer; (e) Dealer abandons any Collateral; (f) Dealer or any
guarantor is or becomes in default in the payment of any debt owed to any
third party; (g) a money judgment issues against Dealer or any guarantor
that materially affects Dealer or guarantor, as applicable; (h) an
attachment, sale or seizure issues or is executed against any assets of
Dealer or of any guarantor; (i) the undersigned dies while Dealer's
business is operated as a sole proprietorship, any general partner dies
while Dealer's business is operated as a general or limited partnership,
or any member dies while Dealer's business is operated as a limited
liability company, as applicable; (j) any guarantor dies; (k) Dealer or
any guarantor shall cease existence as a corporation, partnership, limited
liability company or trust, as applicable; (l) Dealer or any guarantor
ceases or suspends business; (m) Dealer, any guarantor or any member while
Dealer's business is operated as a limited liability company, as
applicable, makes a general assignment for the benefit of creditors; (n)
Dealer, any guarantor or any member while Dealer's business is operated as
a limited liability company, as applicable, becomes insolvent or
voluntarily or involuntarily becomes subject to the Federal Bankruptcy
Code, any state insolvency law or any similar law; (o) any receiver is
appointed for any assets of Dealer, any guarantor or any member while
Dealer's business is operated as a limited liability company, as
applicable; (p) any guaranty of Dealer's debts to DFS is terminated; (q)
Dealer loses any franchise, permission, license or right to sell or deal
in any Collateral which DFS finances; (r) Dealer or any guarantor
misrepresents Dealer's or such guarantor's financial condition or
organizational structure; or (s) DFS determines in good faith that it is
insecure with respect to any of the Collateral or the payment of any part
of Dealer's obligation to DFS.
13. Rights of DFS Upon Default. In the event of a default:
(a) DFS may at any time at DFS' election, without notice or demand to
Dealer, do any one or more of the following: declare all or any part
of the debt
Dealer owes DFS immediately due and payable, together with all costs
and expenses of DFS' collection activity, including, without
limitation, all reasonable attorneys' fees; exercise any or all
rights under applicable law (including, without limitation, the
right to possess, transfer and dispose of the Collateral); and/or
cease extending any additional credit to Dealer (DFS' right to cease
extending credit shall not be construed to limit the discretionary
nature of this credit facility).
(b) Dealer will segregate and keep the Collateral in trust for DFS, and
in good order and repair, and will not sell, rent, lease, consign,
otherwise dispose of or use any Collateral, nor further encumber any
Collateral.
(c) Upon DFS' oral or written demand, Dealer will immediately deliver
the Collateral to DFS, in good order and repair, at a place
specified by DFS, together with all related documents; or DFS may,
in DFS' sole discretion and without notice or demand to Dealer, take
immediate possession of the Collateral together with all related
documents.
(d) DFS may, without notice, apply a default finance charge to Dealer's
outstanding principal indebtedness equal to the default rate
specified in Dealer's financing program with DFS, if any, or if
there is none so specified, at the lesser of 3% per annum above the
rate in effect immediately prior to the default, or the highest
lawful contract rate of interest permitted under applicable law.
All of DFS' rights and remedies are cumulative. DFS' failure to
exercise any of DFS' rights or remedies hereunder will not waive any
of DFS' rights or remedies as to any past, current or future
default.
14. Sale of Collateral. Dealer agrees that if DFS conducts a private sale of
any Collateral by requesting bids from 10 or more dealers or distributors
in that type of Collateral, any sale by DFS of such Collateral in bulk or
in parcels within 120 days of: (a) DFS' taking possession and control of
such Collateral; or (b) when DFS is otherwise authorized to sell such
Collateral; whichever occurs last, to the bidder submitting the highest
cash bid therefor, is a commercially reasonable sale of such Collateral
under the Uniform Commercial Code. Dealer agrees that the purchase of any
Collateral by a Vendor, as provided in any agreement between DFS and the
Vendor, is a commercially reasonable disposition and private sale of such
Collateral under the Uniform Commercial Code, and no request for bids
shall be required. Dealer further agrees that 7 or more days prior written
notice will be commercially reasonable notice of any public or private
sale (including any sale to a Vendor). Dealer irrevocably waives any
requirement that DFS retain possession and not dispose of any Collateral
until after an arbitration hearing, arbitration award, confirmation, trial
or final judgment. If DFS disposes of any such Collateral other than as
herein contemplated, the commercial reasonableness of such disposition
will be determined in accordance with the laws of the state governing this
Agreement.
15. Power of Attorney. Dealer grants DFS an irrevocable power of attorney: (a)
upon the occurrence of a default to: (i) execute or endorse on Dealer's
behalf any checks pertaining to the Collateral, or (ii) initiate and
settle any insurance claim pertaining to the Collateral; and (b) at any
time to: (i) supply any omitted information and correct errors in any
documents between DFS and Dealer, (ii) execute or endorse on Dealer's
behalf any financing statements or instruments pertaining to the
Collateral; and (iii) do anything to preserve and protect the Collateral
and DFS' rights and interest therein.
16. Information. DFS may provide to any third party any credit information on
Dealer that DFS may from time to time possess. DFS may obtain from any
Vendor any credit, financial or other information regarding Dealer that
such Vendor may from time to time possess.
17. Termination. Either party may terminate this Agreement at any time by
written notice received by the other party. If DFS terminates this
Agreement, Dealer agrees that if Dealer: (a) is not in default hereunder,
30 days prior notice of termination is reasonable and sufficient (although
this provision shall not be construed to mean that shorter periods may
not, in particular circumstances, also be reasonable and sufficient); or
(b) is in default hereunder, no prior notice of termination is required.
Dealer will not be relieved from any obligation to DFS arising out of DFS'
advances or commitments made before the effective termination date of this
Agreement. DFS will retain all of its rights, interests and remedies
hereunder until Dealer has paid all of Dealer's debts to DFS. All waivers
set forth within this Agreement will survive any termination of this
Agreement.
18. Binding Effect. Dealer cannot assign its interest in this Agreement
without DFS' prior written consent, although DFS may assign or participate
DFS' interest, in whole or in part, without Dealer's consent. This
Agreement will protect and bind DFS' and Dealer's respective heirs,
representatives, successors and assigns.
19. Notices. Except as otherwise stated herein, all notices, arbitration
claims, responses, requests and documents will be sufficiently given or
served if mailed or delivered: (a) to Dealer at Dealer's principal place
of business specified above; and (b) to DFS at 655 Maryville Centre Drive,
St. Louis, Missouri 63141--5832, Attention: General Counsel, or such other
address as the parties may hereafter specify in writing.
20. NO ORAL AGREEMENTS. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES
TO EXTEND OR RENEW SUCH DEBTS ARE NOT ENFORCEABLE. TO PROTECT DEALER AND
DFS FROM MISUNDERSTANDING OR DISAPPOINTMENT, ALL AGREEMENTS COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, EXCEPT AS SPECIFICALLY
PROVIDED HEREIN OR AS THE PARTIES MAY LATER AGREE IN WRITING TO MODIFY IT.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
21. Other Waivers. Dealer irrevocably waives notice of: DFS' acceptance of
this Agreement, presentment, demand, protest, nonpayment, nonperformance,
and dishonor. Dealer and DFS irrevocably waive all rights to claim any
punitive and/or exemplary damages.
22. Severability. If any provision of this Agreement or its application is
invalid or unenforceable, the remainder of this Agreement will not be
impaired or affected and will remain binding and enforceable.
23. Supplement. If Dealer and DFS have heretofore executed other agreements in
connection with all or any part of the Collateral, this Agreement shall
supplement each and every other agreement previously executed by and
between Dealer and DFS, and in that event this Agreement shall neither be
deemed a novation nor a termination of such previously executed agreement
nor shall execution of this Agreement be deemed a satisfaction of any
obligation secured by such previously executed agreement.
24. Receipt of Agreement. Dealer acknowledges that it has received a true and
complete copy of this Agreement. Dealer acknowledges that it has read and
understood this Agreement. Notwithstanding anything herein to the
contrary: (a) DFS may rely on any facsimile copy, electronic data
transmission or electronic data storage of this Agreement, any Statement
of Transaction, billing statement, invoice from a Vendor, financial
statements or other reports, and (b) such facsimile copy, electronic data
transmission or electronic data storage will be deemed an original, and
the best evidence thereof for all purposes, including, without limitation,
under this Agreement or any other agreement between DFS and Dealer, and
for all evidentiary purposes before any arbitrator, court or other
adjudicatory authority.
25. Miscellaneous. Time is of the essence regarding Dealer's performance of
its obligations to DFS notwithstanding any course of dealing or custom on
DFS' part to grant extensions of time. Dealer's liability under this
Agreement is direct and unconditional and will not be affected by the
release or nonperfection of any security interest granted hereunder. DFS
will have the right to refrain from or postpone enforcement of this
Agreement or any other agreements between DFS and Dealer without prejudice
and the failure to strictly enforce these agreements will not be construed
as having created a course of dealing between DFS and Dealer contrary to
the specific terms of the agreements or as having modified, released or
waived the same. The express terms of this Agreement will not be modified
by any course of dealing, usage of trade, or custom of trade which may
deviate from the terms hereof. If Dealer fails to pay any taxes, fees or
other obligations which may impair DFS' interest in the Collateral, or
fails to keep the Collateral insured, DFS may, but shall not be required
to, pay such taxes, fees or obligations and pay the cost to insure the
Collateral, and the amounts paid will be: (a) an additional debt owed by
Dealer to DFS, which shall be subject to finance charges as
provided herein; and (b) due and payable immediately in full. Dealer
agrees to pay all of DFS' reasonable attorneys' fees and expenses incurred
by DFS in enforcing DFS' rights hereunder. The Section titles used in this
Agreement are for convenience only and do not define or limit the contents
of any Section.
26. BINDING ARBITRATION.
26.1 Arbitrable Claims. Except as otherwise specified below, all actions,
disputes, claims and controversies under common law, statutory law
or in equity of any type or nature whatsoever (including, without
limitation, all torts, whether regarding negligence, breach of
fiduciary duty, restraint of trade, fraud, conversion, duress,
interference, wrongful replevin, wrongful sequestration, fraud in
the inducement, usury or any other tort, all contract actions,
whether regarding express or implied terms, such as implied
covenants of good faith, fair dealing, and the commercial
reasonableness of any Collateral disposition, or any other contract
claim, all claims of deceptive trade practices or lender liability,
and all claims questioning the reasonableness or lawfulness of any
act), whether arising before or after the date of this Agreement,
and whether directly or indirectly relating to: (a) this Agreement
and/or any amendments and addenda hereto, or the breach, invalidity
or termination hereof; (b) any previous or subsequent agreement
between DFS and Dealer; (c) any act committed by DFS or by any
parent company, subsidiary or affiliated company of DFS (the "DFS
Companies"), or by any employee, agent, officer or director of a DFS
Company whether or not arising within the scope and course of
employment or other contractual representation of the DFS Companies
provided that such act arises under a relationship, transaction or
dealing between DFS and Dealer; and/or (d) any other relationship,
transaction or dealing between DFS and Dealer (collectively the
"Disputes"), will be subject to and resolved by binding arbitration.
26.2 Administrative Body. All arbitration hereunder will be conducted in
accordance with the Commercial Arbitration Rules of The American
Arbitration Association ("AAA"). If the AAA is dissolved, disbanded
or becomes subject to any state or federal bankruptcy or insolvency
proceeding, the parties will remain subject to binding arbitration
which will be conducted by a mutually agreeable arbitral forum. The
parties agree that all arbitrator(s) selected will be attorneys with
at least five (5) years secured transactions experience. The
arbitrator(s) will decide if any inconsistency exists between the
rules of any applicable arbitral forum and the arbitration
provisions contained herein. If such inconsistency exists, the
arbitration provisions contained herein will control and supersede
such rules. The site of all arbitration proceedings will be in the
Division of the Federal Judicial District in which AA maintains a
regional office that is closest to Dealer.
26.3 Discovery. Discovery permitted in any arbitration proceeding
commenced hereunder is limited as follows. No later than thirty (30)
days after the filing of a claim for arbitration, the parties will
exchange detailed statements setting forth the facts supporting the
claim(s) and all defenses to be raised during the arbitration, and a
list of all exhibits and witnesses. No later than twenty-one (21)
days prior to the arbitration hearing, the parties will exchange a
final list of all exhibits and all witnesses, including any
designation of any expert witness(es) together with a summary of
their testimony; a copy of all documents and a detailed description
of any property to be introduced at the hearing. Under no
circumstances will the use of interrogatories, requests for
admission, requests for the production of documents or the taking of
depositions be permitted. However, in the event of the designation
of any expert witness(es), the following will occur: (a) all
information and documents relied upon by the expert witness(es) will
be delivered to the opposing party, (b) the opposing party will be
permitted to depose the expert witness(es), (c) the opposing party
will be permitted to designate rebuttal expert witness(es), and (d)
the arbitration hearing will be continued to the earliest possible
date that enables the foregoing limited discovery to be
accomplished.
26.4 Exemplary or Punitive Damages. The Arbitrator(s) will not have the
authority to award exemplary or punitive damages.
26.5 Confidentiality of Awards. All arbitration proceedings, including
testimony or evidence at hearings, will be kept confidential,
although any award or order rendered by the arbitrator(s) pursuant
to the terms of this Agreement
may be entered as a judgment or order in any state or federal court
and may be confirmed within the federal judicial district which
includes the residence of the party against whom such award or order
was entered. This Agreement concerns transactions involving commerce
among the several states. The Federal Arbitration Act, Title 9
U.S.C. Sections 1 et seq., as amended ("FAA") will govern all
arbitration(s) and confirmation proceedings hereunder.
26.6 Prejudgment and Provisional Remedies. Nothing herein will be
construed to prevent DFS' or Dealer's use of bankruptcy,
receivership, injunction, repossession, replevin, claim and
delivery, sequestration, seizure, attachment, foreclosure, dation
and/or any other prejudgment or provisional action or remedy
relating to any Collateral for any current or future debt owed by
either party to the other. Any such action or remedy will not waive
DFS' or Dealer's right to compel arbitration of any Dispute.
26.7 Attorneys' Fees. If either Dealer or DFS brings any other action for
judicial relief with respect to any Dispute (other than those set
forth in Section 26.6), the party bringing such action will be
liable for and immediately pay all of the other party's costs and
expenses (including attorneys' fees) incurred to stay or dismiss
such action and remove or refer such Dispute to arbitration. If
either Dealer or DFS brings or appeals an action to vacate or modify
an arbitration award and such party does not prevail, such party
will pay all costs and expenses, including attorneys' fees, incurred
by the other party in defending such action. Additionally, if one
party sues the other party or institutes any arbitration claim or
counterclaim against such other party in which such other party is
the prevailing party, the party instituting such claim will pay all
costs and expenses (including attorneys' fees) incurred by the
prevailing party in the course of defending such action or
proceeding.
26.8 Limitations. Any arbitration proceeding must be instituted: (a) with
respect to any Dispute for the collection of any debt owed by either
party to the other, within two (2) years after the date the last
payment was received by the instituting party; and (b) with respect
to any other Dispute, within two (2) years after the date the
incident giving rise thereto occurred, whether or not any damage was
sustained or capable of ascertainment or either party knew of such
incident. Failure to institute an arbitration proceeding within such
period will constitute an absolute bar and waiver to the institution
of any proceeding, whether arbitration or a court proceeding, with
respect to such Dispute.
26.9 Survival After Termination. The agreement to arbitrate will survive
the termination of this Agreement.
27. INVALIDITY/UNENFORCEABILITY OF BINDING ARBITRATION. IF THIS AGREEMENT IS
FOUND TO BE NOT SUBJECT TO ARBITRATION, ANY LEGAL PROCEEDING WITH RESPECT
TO ANY DISPUTE WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE WITHOUT A JURY. DEALER AND DFS WAIVE ANY RIGHT TO A JURY TRIAL IN
ANY SUCH PROCEEDING.
28. Governing Law. Dealer acknowledges and agrees that this and all other
agreements between Dealer and DFS have been substantially negotiated, and
will be substantially performed, in the state of Massachusetts.
Accordingly, Dealer agrees that all Disputes will be governed by, and
construed in accordance with, the laws of such state, except to the extent
inconsistent with the provisions of the FAA which shall control and govern
all arbitration proceedings hereunder.
IN WITNESS WHEREOF, Dealer and DFS have executed this Agreement as of the
date first set forth hereinabove.
THIS CONTRACT CONTAINS BINDING ARBITRATION, JURY WAIVER AND PUNITIVE DAMAGE
WAIVER PROVISIONS.
DEUTSCHE FINANCIAL SERVICES PC CONNECTION, INC.,
CORPORATION a Delaware corporation
By: By: /s/ Jack L. Ferguson
--------------------------- --------------------------------
Print Name: Print Name: Jack L. Ferguson
------------------- ------------------------
Title: Title: Treasurer
------------------------ -----------------------------
ATTEST:
/s/ Steve Markiewicz
------------------------------------
(Assistant) Secretary
Print Name: Steve Markiewicz
------------------------
SECRETARY'S CERTIFICATE OF RESOLUTION
I certify that I am the Secretary or Assistant Secretary of the
corporation named below, and that the following completely and accurately sets
forth certain resolutions of the Board of Directors of the corporation adopted
at a special meeting thereof held on due notice (and with shareholder approval,
if required by law), at which meeting there was present a quorum authorized to
transact the business described below, and that the proceedings of the meeting
were in accordance with the certificate of incorporation, charter and by-laws of
the corporation, and that they have not been revoked, annulled or amended in any
manner whatsoever.
Upon motion duly made and seconded, the following resolution was
unanimously adopted after full discussion:
"RESOLVED, That the several officers, directors, and agents of this
corporation, or any one or more of them, are hereby authorized and empowered on
behalf of this corporation: to obtain financing from Deutsche Financial Services
Corporation ("DFS") in such amounts and on such terms as such officers,
directors or agents deem proper; to enter into financing, security, pledge and
other agreements with DFS relating to the terms upon which such financing may be
obtained and security and/or other credit support is to be furnished by this
corporation therefor; from time to time to supplement or amend any such
agreements; and from time to time to pledge, assign, mortgage, grant security
interests, and otherwise transfer, to DFS as collateral security for any
obligations of this corporation to DFS, whenever and however arising, any assets
of this corporation, whether now owned or hereafter acquired; the Board of
Directors hereby ratifying, approving and confirming all that any of said
officers, directors or agents have done or may do with respect to the
foregoing."
IN WITNESS WHEREOF, I have executed and affixed the seal of the
corporation on the date stated below.
Dated: 3/27, 1998 /s/ Steve Markiewicz
-------------------------------------------
(Assistant) Secretary
PC Connection, Inc., a Delaware Corporation
Corporate Name
(SEAL)
EXHIBIT A
COLLATERAL LOCATIONS
EXHIBIT B
EXHIBIT B