EXHIBIT 10.44
AGREEMENT FOR WHOLESALE FINANCING
This Agreement for Wholesale Financing ("Agreement") is made as of March 15,
2001 among Deutsche Financial Services Corporation ("DFS") and IdeaMall, Inc., a
Delaware corporation having a principal business located at 2555 W. 190th
Street, Torrance, California 90504 ("IMI"), Creative Computers, Inc., a
California corporation having a principal place of business located at 2555 W.
190th Street, Torrance, California 90504 ("CCI"), ecost.com, Inc., a Delaware
corporation having a principal place of business located at 2555 W. 190th
Street, Torrance, California 90504 ("ECI"), eLinux.com, Inc., a Delaware
corporation having a principal place of business located at 2555 W. 190th
Street, Torrance, California 90504 ("ELI"), Creative Computers Integrated
Technologies, Inc., a Delaware corporation having a principal place of business
located at 2555 W. 190th Street, Torrance, California 90504 ("CCIT") and
ComputAbility Limited, a Delaware corporation having a principal place of
business located at 2555 W. 190th Street, Torrance, California 90504 ("CAL"),
(IMI, CCI, ECI, ELI, CCIT and CAL are referred to herein, individually,
collectively, and jointly and severally, as "Dealer").
1. Extension of Credit/Shared Credit Facility. 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") up to a maximum amount
outstanding (including, without limitation, the amount of all approvals
issued by DFS to Vendors for which DFS has not transferred funds and all
accrued and unpaid interest charges and unused facility fees) at any time
not to exceed Twenty Million Dollars ($20,000,000.00), subject to increase
pursuant to the last sentence of Section 3, below (the "Inventory Facility
Amount"). 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.
Each Dealer is part of an integrated family of companies, and, accordingly
each Dealer desires to have the availability of one common credit facility
instead of separate credit facilities, and each Dealer has requested that
DFS extend such a common credit facility. Each Dealer acknowledges that DFS
will be lending against, and relying on a lien upon, all of its assets even
though the proceeds of any particular loan made hereunder may not be
advanced directly to such Dealer, and such Dealer will nevertheless benefit
by the making of all such loans by DFS and the availability of a single
credit facility of a size greater than each could independently warrant.
Each Dealer hereby appoints CCI as its agent ("Borrowing Agent") for the
purpose of requesting and/or agreeing to changes to the credit facility
provided hereunder, and for receiving all communications, notices,
Statements of Transaction, billing statements, and funds transfers from DFS.
DFS may rely upon the Borrowing Agent with respect to any requests or
instructions and Dealer holds DFS harmless from and against any and all
liabilities, expenses, losses, damages and claims arising from DFS' reliance
upon the Borrowing Agent.
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
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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. If Dealer objects to the terms of any
Statement of Transaction, Dealer agrees to pay DFS for such inventory in
accordance with the most recent terms for similar inventory to which Dealer
has not objected (or, if there are no prior terms, at the lesser of 16% per
annum or at the maximum lawful contract rate of interest permitted under
applicable law), but Dealer acknowledges that DFS may then elect to
immediately terminate Dealer's financing program with the applicable Vendor
for such inventory, and cease making additional advances to Dealer for
Dealer's purchases of such inventory from the applicable Vendor. However,
such termination will not accelerate the maturities of advances previously
made, unless Dealer shall otherwise be in default of this Agreement.
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; and 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 10.
Dealer hereby agrees to cause an institution acceptable to DFS to issue in
favor of DFS one or more Irrevocable Letters of Credit (each, a "Letter of
Credit"), in a total amount equal to the Inventory Facility Amount (subject
to the provisions of the last sentence of the second-to-last paragraph of
Section 18 below) and in the form attached hereto as Exhibit A. Dealer may
cause the Inventory Facility Amount to be increased from time to time up to
a maximum total Inventory Facility Amount of Forty Million Dollars
($40,000,000.00), upon delivery to DFS of a like increase in the Letter of
Credit, so long as, at the time of any increase, Dealer is not in default
hereunder or would be in default hereunder with the giving of notice, the
passage of time, or both.
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 other than Congress Financial Corporation (Western) ("Congress");
(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 may 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 adversely affect any of
Dealer's assets; (i) Dealer will maintain the Collateral in good condition
and repair; (j) Dealer has duly filed and will duly file all tax returns
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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, which are listed on the current or any future Exhibit "B"
attached hereto which Exhibit B(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; (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 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. Unused Facility Fee. Dealer hereby agrees to pay DFS a monthly unused
facility fee equal to the product of (i) the daily equivalent of an annual
rate of twenty-five (25) basis points (0.02083% per month), multiplied by
(ii) the difference between Forty Million Dollars and the average daily
principal balance of Dealer's inventory credit facility during such month.
The unused facility fee shall be calculated and payable monthly in arrears
and due pursuant to DFS' monthly billing statement.
7. 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 and containing standard
lender's loss payable and termination provisions (subject to the rights of
other floorplan lenders regarding inventory not financed by DFS and subject
to the rights of Congress). Dealer will provide DFS with written evidence
of such property insurance coverage and lender's loss-payee endorsement.
8. 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 of Dealer. Dealer
will also deliver to DFS true copies of the Congress Loan Agreement (as
defined below) and all amendments thereto, immediately upon the execution
thereof, and copies of all notices of Default or Event of Default thereunder
delivered by either Dealer or Congress to the other, immediately upon
Dealer's delivery or receipt thereof, as applicable. In addition, Dealer
will deliver to DFS copies of all covenant and other compliance
certificates, immediately upon Dealer's delivery thereof to Congress.
Dealer warrants and represents to DFS that all financial statements and
information relating to Dealer which have been or may hereafter be delivered
by Dealer 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 since the submission to DFS, either as of
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the date of delivery, or, if different, the date specified therein, and
Dealer acknowledges DFS' reliance thereon.
9. Reviews. Dealer grants DFS an irrevocable license to enter Dealer's
business locations during normal business hours upon three (3) days' notice
to Dealer (unless Dealer is in default hereunder, or would be in default
hereunder with the passage of time, the giving of notice, or both, in which
event no advance notice hereunder will be required) 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.
10. 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. 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.
11. 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
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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 pre-payments 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.
12. 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.
13. 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 (which breach is
not covered by another section of this Section 13) and such breach shall
continue for twenty (20) days; provided, that, such twenty (20) day period
shall not apply in the case of (A) any failure to observe any such term,
representation or warranty which is not capable of being cured at all or
within such twenty (20) day period or which has been the subject of a prior
breach within the preceding six (6) month period or (B) any failure by
Dealer to pursue a cure diligently and promptly during such twenty (20) day
period; (b) any representation, statement, report or certificate made or
delivered by Dealer to DFS is not accurate when made; (c) Dealer fails to
pay any portion of Dealer's debts to DFS within two (2) business days after
the same becomes due and payable; (d) Dealer abandons any Collateral; (e)
Dealer is or becomes in default in the payment of any debt owed to any third
party which in the aggregate exceeds at any time Five Hundred Thousand
Dollars ($500,000.00); (f) a money judgment issues against Dealer which in
the aggregate exceeds at any time Five Hundred Thousand Dollars
($500,000.00); (g) an attachment, sale or seizure issues or is executed
against any assets of Dealer; (h) Dealer shall cease existence as a
corporation, partnership, limited liability company or trust, as applicable;
(i) Dealer ceases or suspends business; (j) Dealer makes a general
assignment for the benefit of creditors; (k) Dealer becomes insolvent or
voluntarily or involuntarily becomes subject to the Federal Bankruptcy Code,
any state insolvency law or any similar law (and, in the case of an
involuntary proceeding, such proceeding has not been dismissed within ninety
(90) days of the filing thereof; provided, however, that DFS' obligation to
provide any financing to Dealer during such ninety (90) day period shall be
subject to the terms of the Intercreditor Agreement, as defined below); (l)
any receiver is appointed for any assets of Dealer;. (m) Dealer loses any
material franchise, permission, license or right to sell or deal in any
Collateral which DFS finances; (n) Dealer misrepresents Dealer's financial
condition or organizational structure; (o) there shall occur a material
adverse change in the financial or other condition or business prospects of
Dealer; (p) DFS determines in good faith that it is insecure with respect to
the payment of any part of Dealer's
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obligation to DFS; (q) any Default or Event of Default occurs under the
Congress Loan Agreement (as defined in that certain Intercreditor and
Subordination Agreement between DFS and Congress dated even date herewith,
as modified and amended from time to time (the "Intercreditor Agreement")),
without giving effect to any waiver or forbearance regarding any such
Default or Event of Default which may be given by Congress or any amendment
to the Congress Loan Agreement which has the effect of causing such Default
or Event of Default to not occur; (r) any Stop Approval Notice (as defined
in the Intercreditor Agreement) is issued by Congress to DFS; (s) the
Intercreditor Agreement is terminated or cancelled for any reason; or (t)
thirty (30) days prior to the expiration date of any Letter of Credit or any
subsequent or substitute Letter of Credit accepted by DFS, such Letter of
Credit is not extended for a term of twelve (12) months or longer, or a new
Letter of Credit in the amount of the Inventory Facility Amount and in form
and from an institution reasonably acceptable to DFS and for a term of
twelve months or longer is not provided to DFS.
14. 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); exercise any or all of
DFS' rights to draw on any Letter of Credit or any subsequent or
substitute Letter of Credit; 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) Subject to the rights of other floorplan lenders with respect to
inventory not financed by DFS and subject to the rights of Congress
pursuant to terms of the Intercreditor Agreement, 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) Subject to the rights of other floorplan lenders with respect to
inventory not financed by DFS and subject to the rights of Congress
pursuant to terms of the Intercreditor Agreement, 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.
15. 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
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(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.
16. Power of Attorney. Dealer grants DFS an irrevocable power of attorney to do
anything to preserve and protect the Collateral (including the execution of
financing statements pertaining to the Collateral) and the Letter(s) of
Credit and DFS' rights and interest therein. Dealer grants DFS an
irrevocable power of attorney exercisable after the occurrence and during
the continuance of a default hereunder to: execute or endorse on Dealer's
behalf any checks, instruments, Certificates of Title and Statements of
Origin pertaining to the Collateral; supply any omitted information and
correct errors in any documents between DFS and Dealer; and initiate and
settle any insurance claim pertaining to the Collateral.
17. Information. With the written consent of Dealer, DFS may provide to any
third party any credit, financial or other information on Dealer that DFS
may from time to time possess. DFS may obtain from Congress and any Vendor
any credit, financial or other information regarding Dealer that Congress or
such Vendor may from time to time possess.
18. Termination. Except as set forth in this Section 18, this Agreement shall
terminate on March 14, 2004 (the "Scheduled Termination Date").
Notwithstanding the foregoing, DFS may immediately terminate any financing
program for particular inventory prior to the Scheduled Termination Date
under any of the following circumstances: (i) in the event the Vendor for
such inventory is at any time no longer a DFS approved Vendor; (ii) in
accordance with the second-to-last sentence of the first paragraph of
Section 1 above; or (iii) in accordance with the second-to-last sentence of
Section 2 above.
Notwithstanding the foregoing, DFS may terminate this Agreement prior to the
Scheduled Termination Date (i) immediately, in the event of a default by
Dealer, in accordance with Section 14 above, or (ii) with such termination
to be effective any time on or after the date on which the Congress Loan
Agreement is terminated, regardless of the length of the notice period given
by DFS.
Notwithstanding the foregoing, Dealer may reduce the Inventory Facility
Amount, or terminate this Agreement prior to the Scheduled Termination Date,
upon at least ninety (90) days' advance notice to DFS; provided, however,
that Dealer may terminate this Agreement, with such termination to be
effective any time on or after the date on which the Congress Loan Agreement
is terminated, regardless of the length of the notice period given by
Dealer. Dealer acknowledges and agrees that any notice given pursuant to
the preceding sentence will be irrevocable. Dealer further acknowledges and
agrees that no reduction by it of the Inventory Facility Amount will be
accompanied by a reduction in the amount of the Letter(s) of Credit required
under this Agreement, unless and until the outstanding balance of Dealer's
obligations to DFS (including, without limitation, the amount of all
approvals issued by DFS to Vendors for which DFS has not transferred funds
and all accrued and unpaid interest charges and unused facility fees) is not
more than the Inventory Facility Amount, as reduced.
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.
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19. 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, provided that in
the case of a participation by DFS, Dealer will not be required to deal
directly with any participant. This Agreement will protect and bind DFS'
and Dealer's respective heirs, representatives, successors and assigns.
20. 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 Borrowing Agent'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.
21. 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.
22. 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.
23. 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.
24. 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.
25. 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.
26. 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
8
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.
27. Joint and Several Obligations. Each Dealer shall be jointly and severally
liable with each other Dealer for the obligations of each Dealer hereunder,
each Dealer shall be obligated and responsible for the performance of each
other Dealer under this Agreement, and a default by any Dealer shall be a
default by each other Dealer. Each Dealer waives: (i) any right of
contribution from any other Dealer until all of the obligations to DFS have
been paid in full; (ii) any right to require DFS to institute any action or
suit or to exhaust DFS' rights and remedies against any Collateral or any
Dealer before proceeding against such Dealer; and (iii) any obligation of
DFS to marshal any assets in favor of any Dealer. Each Dealer consents that
DFS may, without in any manner affecting such Dealer's joint and several
liability for any obligations to DFS: (a) extend in whole or in part (by
renewal or otherwise), modify, accelerate, change or release any obligation
of any other Dealer; (b) sell, release, surrender, modify, impair, exchange,
substitute or extend the duration or the time for the performance or payment
of any and all Collateral or other property, of any nature and from
whomsoever received, held by DFS as security for the payment or performance
of any obligations to DFS of any Dealer or any obligations of any Dealer;
and (c) settle, adjust or compromise any of DFS' claims against any other
Dealer.
28. BINDING ARBITRATION.
28.1 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.
28.2 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 arbitration 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
9
any applicable arbitration 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 AAA maintains a regional office
that is closest to Dealer.
28.3 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. Depositions shall be permitted but no more
than two (2) for each party and no single deposition shall extend for
more than two (2) days nor more than seven (7) hours during any one-
day period. Requests for the production of documents shall be
responded to (or objected to) within twenty (20) days of the request.
All objections shall be ruled upon by the arbitrator. Requests for
admission shall be permitted but no more than twenty-five (25) in the
aggregate. Under no circumstances will the use of interrogatories 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.
28.4 Exemplary or Punitive Damages. The Arbitrator(s) will not have the
authority to award exemplary or punitive damages.
28.5 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.
28.6 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.
28.7 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 28.6), 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 either Dealer or DFS
institutes any arbitration claim or counterclaim against the other
party, the non-prevailing party will pay all costs and expenses
(including attorneys' fees) incurred by the prevailing party in the
course of bringing or defending such action or proceeding, as the case
may be.
28.8 Survival After Termination. The agreement to arbitrate will survive
the termination of this Agreement.
10
29. 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.
30. 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 California. 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.
11
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 IDEAMALL, INC.
CORPORATION
By: /s/ Kenneth C. MacDonell By: /s/ Frank Khulusi
------------------------------ -----------------------------------
Print Name: Kenneth C. MacDonell Print Name: Frank Khulusi
--------------------- -----------------------------
Title: Vice President Title: CEO
--------------------------- ---------------------------------
ATTEST:
/s/ Ted Sanders
---------------------------------------
(Assistant) Secretary
Print Name: Ted Sanders
----------------------------
CREATIVE COMPUTERS, INC.
By: /s/ Frank Khulusi
------------------------------------
Print Name: Frank Khulusi
----------------------------
Title: CEO
---------------------------------
ATTEST:
/s/ Ted Sanders
--------------------------------------
(Assistant) Secretary
Print Name: Ted Sanders
---------------------------
ECOST.COM, INC.
By: /s/ Doug Falk
-----------------------------------
Print Name: Doug Falk
---------------------------
Title: President
--------------------------------
ATTEST:
/s/ Ted Sanders
--------------------------------------
(Assistant) Secretary
Print Name: Ted Sanders
---------------------------
12
ELINUX.COM, INC.
By: /s/ Ted Sanders
------------------------------------
Print Name: Ted Sanders
----------------------------
Title: CFO
---------------------------------
ATTEST:
/s/ Frank Khulusi
---------------------------------------
Print Name: Frank Khulusi
----------------------------
CREATIVE COMPUTERS INTEGRATED
TECHNOLOGIES, INC.
By: /s/ Ted Sanders
------------------------------------
Print Name: Ted Sanders
----------------------------
Title: CFO
---------------------------------
ATTEST:
/s/ Frank Khulusi
---------------------------------------
Print Name: Frank Khulusi
----------------------------
COMPUTABIILITY LIMITED
By: /s/ Ted Sanders
------------------------------------
Print Name: Ted Sanders
----------------------------
Title: CFO
---------------------------------
ATTEST:
/s/ Frank Khulusi
---------------------------------------
Print Name: Frank Khulusi
----------------------------
13