SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT



 EXHIBIT 10.45 
  

  
 SECOND AMENDMENT TO 
 AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT 
  
 Dated as of July 29, 2002 
  
 AMONG 
  
 CITIZENS BANK OF MASSACHUSETTS 
 (AS LENDER AND AS AGENT) 
  
 AND

  
 THE FINANCIAL INSTITUTIONS PARTY HERETO 
 FROM TIME TO TIME 
 (AS LENDERS) 
  
 WITH 
  
 PC CONNECTION, INC. 
 (AS BORROWER) 
  
 AND 
  
 COMTEQ FEDERAL OF NEW HAMPSHIRE, INC. 
 GOVCONNECTION, INC. 
 MERRIMACK SERVICES
CORPORATION 
 PC CONNECTION SALES CORPORATION 
 PC CONNECTION SALES OF MASSACHUSETTS, INC. 
 MOREDIRECT, INC. 
 (AS GUARANTORS) 
  








 SECOND AMENDMENT TO  
 AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT 
  
 This SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT is entered into as of July 29, 2002 by and among PC CONNECTION, INC., a Delaware corporation (the “Borrower”), as borrower, COMTEQ
FEDERAL OF NEW HAMPSHIRE, INC., a Delaware corporation, GOVCONNECTION, INC., a Maryland corporation, MERRIMACK SERVICES CORPORATION, a Delaware corporation, PC CONNECTION SALES CORPORATION, a Delaware corporation, PC CONNECTION SALES OF
MASSACHUSETTS, INC., a Delaware corporation and MOREDIRECT, INC., a Florida corporation (together, the “Guarantors” and each, a “Guarantor”), as guarantors, CITIZENS BANK OF MASSACHUSETTS (the “Agent”), as agent and the
lenders’ party thereto (the “Lenders”), as lenders. 
  
 Recitals 
  
 The Borrower, the Lenders, the
Guarantors and the Agent are parties to an Amended and Restated Credit and Security Agreement dated as of May 31, 2002, as amended (the “Loan Agreement”). The Borrower, the Lenders, the Guarantors and the Agent desire to amend the Loan
Agreement as set forth below. All capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Loan Agreement. 
  
 NOW, THEREFORE, the Borrower, the Lenders, the Guarantors and the Agent hereby amend the Loan Agreement as follows: 
  
 Section 1. Definitions. Article I of the Loan Agreement is hereby
amended as follows: 
  
 (a) Section 1.2 of the Loan Agreement is
amended by adding the definition “DFS” in appropriate alphabetical order thereto: 
  
 “DFS” shall be Deutsche Financial Services Corporation, a Nevada corporation. 
  
 (b) Section 1.2 of the Loan Agreement is amended by deleting the definition of “Maximum Advance Amount” in its entirety and replacing it with
the following: 
  
 “Maximum Advance Amount” shall mean
$45,000,000. 
  
 (c) The definition of “Obligations” in
Section 1.2 of the Loan Agreement is amended by adding the following sentence at the end thereof: 
  
 Notwithstanding the foregoing, the definition of Obligations shall not include any loans, advances, debts, liabilities, obligations, covenants or duties
owing by the Borrower or any Guarantor to DFS or any of its affiliates in connection with any inventory or equipment financing (other than Advances made by DFS hereunder). 
  
 (d) The definition of “Permitted Vendor Debt” in Section 1.2 of the Loan Agreement is amended by deleting the
reference to Deutsche Financial Services Corporation and replacing it with the phrase “DFS (other than Advances made by DFS hereunder)” 







 Section 2. Revolving Advances. Article II of the Loan Agreement is hereby amended by deleting
Section 2.1(c) in its entirety. 
  
 Section 3. Collateral
Audit. Article III of the Loan Agreement is hereby amended by adding the following sentence at the end of Section 3.4 thereof: 
  
 Any Lender may accompany the Agent during the performance of a Collateral Audit at such Lender’s expense. 
  
 Section 4. Monthly Financial Statements. Article IX of the Loan
Agreement is hereby amended by deleting Section 9.9 in its entirety and replacing it with the following: 
  
 9.9 Bi-Monthly Financial Reporting. Furnish Agent within ten (10) days after the end of the second full week of each month and as of the end of
each month, including the last month of the fiscal year and the second full week of such last month (a) accounts receivable agings, (b) accounts payable schedules and (c) a Borrowing Base Certificate in form and substance reasonably satisfactory to
Agent, provided that none of the foregoing reports shall be binding upon Agent or restrictive of Agent’s rights under this Agreement. 
  
 Section 5. Events of Default. Article X of the Loan Agreement is hereby amended by deleting the reference to “Other Agreement” in Section
10.1(d) and replacing it with “Other Document.” 
  
 Section 6. Entire Understanding. Article XV of the Loan Agreement is hereby amended as follows: 
  
 (a) Section 15.2(b) of the Loan Agreement is hereby amended by deleting subparagraphs (i) through (vii) and replacing such provision with the following
subparagraphs (i) through (ix): 
  
 (i) increase the Commitment
Percentage, the maximum dollar commitment of any Lender or the Maximum Advance Amount; 
  
 (ii) extend the maturity of any Note or the due date for any amount payable hereunder, or increase or decrease the rate of interest or reduce any fee or Indebtedness payable by Borrower to Lenders pursuant to this
Agreement; 
  
 (iii) alter the definition of the term
Required Lenders or alter, amend or modify this Section 15.2(b); 
  
 (iv) release any Collateral during any calendar year (other than in accordance with the provisions of this Agreement, including Section 7.1 hereof); 
  
 (v) change the rights and duties of Agent; 
  
 (vi) increase or decrease the Advance Rates or reserves above or below the Advance Rates and reserves in effect on the
Closing Date; 







 (vii) release any Guarantor; 
  
 (viii) waive, amend or change any financial covenant or Section 2.1(a)(y)(v) hereof; or 
  
 (ix) permit any acquisition by the Borrower or any Guarantor for an aggregate
consideration of greater than $5,000,000. 
  
 (b) Section 15.2(b)
of the Loan Agreement is hereby amended by deleting the last two paragraphs thereof. 
  
 Section 7. Commitment Transfer and Waiver of Transfer Fee. Upon the satisfaction of the conditions set forth in Section 8 hereof, the Commitment Percentage of Citizens Bank of Massachusetts shall be 55.56%, of
Fleet National Bank shall be 22.22% and of Deutsche Financial Services Corporation shall be 22.22%. The parties hereto hereby agree to waive payment by DFS as Purchasing Lender of the $3,500 transfer fee required to be paid pursuant to the terms of
Section 15.3(d) of the Loan Agreement. 
  
 Section 8.
Effectiveness; Conditions to Effectiveness. This Second Amendment shall become effective upon execution hereof by the Borrower and the Lenders and satisfaction of the following conditions: 
  
 (a) Execution and delivery to the Agent of a Commitment Transfer Supplement
by and among Citizens Bank of Massachusetts, Deutsche Financial Services Corporation and the Borrower; 
  
 (b) Execution and delivery to the Agent of (i) a $10,000,000 Revolving Credit Note by the Borrower in favor of Deutsche Financial Services Corporation and
(ii) a $25,000,000 Amended and Restated Revolving Credit Note in favor of Citizens Bank of Massachusetts (collectively, the “Revised Notes”); 
  
 (c) Receipt by Deutsche Financial Services Corporation of an amendment fee of $16,666.67 from the Borrower; 
  
 (d) Copies of resolutions of the Board of Directors of the Borrower and the
Guarantors authorizing the execution, delivery and performance by the Borrower and the Guarantors under this Second Amendment and by the Borrower under the Revised Notes and certified by a Secretary or an Assistant Secretary of the Borrower and the
Guarantors, which certificates shall state that the resolutions are in full force and effect; 
  
 (e) Certificate of the Secretary or Assistant Secretary of the Borrower and the Guarantors certifying the name and signatures of the officers of the Borrower and the Guarantors authorized to sign this Second
Amendment, the Revised Notes and other documents to be delivered in connection therewith, as well as certifying that the articles of incorporation and by-laws of the Borrower and the Guarantors have not been amended since the last date that such
corporate documents were delivered to the Agent; 
  
 (f) Legal
Opinions of counsel to the Borrower and the Guarantors in form and substance satisfactory to Agent; 







 (g) Certificates of legal existence and good standing dated as of a recent date for each of the Borrower
and Guarantors issued by the appropriate governmental authorities. 
  
 (h) All other documents as the Agent and the Lenders may reasonably request. 
  
 Section 9. Miscellaneous. 
  
 (a) The Borrower agrees that each of the Documents shall remain in full force and effect after giving effect to this Second Amendment. The guarantees of the Borrower’s Subsidiaries guarantee all of the Obligations as may be amended by
this Second Amendment. 
  
 (b) This Second Amendment represents
the entire agreement among the parties hereto relating to this Second Amendment, and supersedes all prior understandings and agreements among the parties relating to the subject matter of this Second Amendment. 
  
 (c) The Borrower agrees to pay on demand all of the Agent’s reasonable
expenses in preparing, executing and delivering this Second Amendment, and all related instruments and documents, including, without limitation, the reasonable fees and out-of-pocket expenses of the Agent’s special counsel. 
  
 (d) The Borrower hereby confirms to the Agent that the representations and
warranties of the Borrower set forth in Article 5 of the Loan Agreement (as amended and supplemented hereby) are true and correct as of the date hereof, as if set forth herein in full. 
  
 (e) The Borrower has reviewed the provisions of this Second Amendment and all documents executed in connection therewith or
pursuant thereto or incident or collateral hereto or thereto from time to time and there is no Event of Default thereunder, and no condition which, with the passage of time or giving of notice or both, would constitute an Event of Default
thereunder. 
  
 (f) The Borrower represents and warrants that the
execution, delivery or performance by the Borrower of any of the obligations contained in this Second Amendment or in any other Document do not require the consent, approval or authorization of any person or governmental authority or any action by
or on account of with respect to any person or governmental authority. 
  
 (g) This Second Amendment shall be a Document and shall be governed by and construed and enforced under the laws of The Commonwealth of Massachusetts without regard to principles relating to choice of law. 
  
 [Signature page to follow] 







 IN WITNESS WHEREOF, the Borrower, the Lenders, the Guarantors and the Agent have caused this Second
Amendment to Amended and Restated Credit and Security Agreement to be executed by their duly authorized officers as of the date first set forth above. 
  

			
	 PC CONNECTION, INC., as Borrower

		
	 By:
	 	 /s/ Mark A Gavin


	 Name:
	 	 Mark A. Gavin

	 Title:
	 	 CFO

	
	 COMTEQ FEDERAL OF NEW HAMPSHIRE,
 INC., as Guarantor

		
	 By:
	 	 /s/ Gary Sorkin


	 Name:
	 	 Gary Sorkin

	 Title:
	 	 Treasurer

	
	 GOVCONNECTION, INC., as Guarantor

		
	 By:
	 	 /s/ Gary Sorkin


	 Name:
	 	 Gary Sorkin

	 Title:
	 	 President

	
	 MERRIMACK SERVICES CORPORATION, as
 Guarantor

		
	 By:
	 	 /s/ Mark A Gavin


	 Name:
	 	 Mark A. Gavin

	 Title:
	 	 CFO

	
	 PC CONNECTION SALES CORPORATION,
 as Guarantor

		
	 By:
	 	 /s/ Robert Wilkins


	 Name:
	 	 Robert Wilkins

	 Title:
	 	 Treasurer











			
	 PC CONNECTION SALES OF
 MASSACHUSETTS, INC., as Guarantor

		
	 By:
	 	 /s/ Robert Wilkins


	 Name:
	 	 Robert Wilkins

	 Title:
	 	 Treasurer

	
	 MOREDIRECT, INC., as Guarantor

		
	 By:
	 	 /s/ Scott Modist


	 Name:
	 	 Scott Modist

	 Title:
	 	 CFO

	
	 CITIZENS BANK OF MASSACHUSETTS, as
 Lender and as Agent

		
	 By:
	 	 /s/ James C. Gregg


	 Name:
	 	 James C. Gregg

	 Title:
	 	 Senior Vice President & Managing Director

	
	 28 State Street
 13th Floor
 Boston, Massachusetts 02109



	
	 FLEET NATIONAL BANK

		
	 By:
	 	 /s/ Kenneth R. Sheldon


	 Name:
	 	 Kenneth R. Sheldon

	 Title:
	 	 Vice President

	
	 1155 Elm Street

	 Manchester, NH 03101











			
	 DEUTSCHE FINANCIAL SERVICES
 CORPORATION

		
	 By:
	 	 /s/ Kenneth C. MacDonell


	 Name:
	 	 Kenneth C. MacDonell

	 Title:
	 	 Vice President

	
	 625 Maryville Center Drive, Suite 200
 St Louis, MO 63141