EX-10.21



 Exhibit 10.21 
 AMENDMENT #4 
 TO 

AGREEMENT FOR INVENTORY FINANCING 
 This AMENDMENT (“Amendment”) to AGREEMENT FOR INVENTORY FINANCING is made as of May 11, 2006 by and between PC Connection, Inc., a corporation, duly organized under the laws
of the State of Delaware (“PC Connection”), Merrimack Services Corporation a corporation, duly organized under the laws of the State of Delaware (“Merrimack”), GovConnection, Inc., a corporation, duly
organized under the laws of the State of Maryland (“GovConnection”), and MoreDirect, Inc., a corporation, duly organized under the laws of the State of Florida (“MoreDirect”) (PC Connection, Merrimack, GovConnection
and MoreDirect are referred to herein as a “Customer” or, collectively, the “Customers”) and IBM Credit LLC, a Delaware limited liability company, formerly IBM Credit Corporation (“IBM Credit”). 

RECITALS: 

WHEREAS, the Customer and IBM Credit have entered into that certain Agreement for Inventory Financing dated as of October 31,
2002 (as amended, supplemented or otherwise modified from time to time, the “Agreement”); and 
 WHEREAS, The
parties have agreed to modify the Agreement as more specifically set forth below, upon and subject to the terms and conditions set forth herein. 
 AGREEMENT 
 NOW THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Customer and IBM Credit hereby agree as follows: 
 Section 1. Definitions. All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Agreement. 

Section 2. Amendment. The Agreement is hereby amended as follows: 
 A. Schedule 1 to Attachment A has been added. 
 B. Section 1.1
of the Agreement is hereby amended by deleting the definition of Maximum Advance Amount in its entirety and substituting, in lieu thereof, the following new definition: 
 ““Maximum Advance Amount”: the lesser of (1) the Credit Line and (2) the Borrowing Base at such time; provided, however that if IBM Credit notifies the Customer in writing that
the Customer has met or exceeded the Flexibility Criteria then the Maximum Advance Amount shall be the Credit Line until such time as IBM Credit notifies the Customer that the Customer no longer satisfies the Flexibility Criteria, in IBM
Credit’s sole determination.” 
 C. Section 1.1 of the Agreement is hereby amended by adding the following
new definition: 
 “Flexibility Criteria”: shall mean the conditions set forth on Schedule 1 to Attachment A as IBM Credit may modify
such Schedule 1 from time to time in its reasonable discretion without the consent of the Customer.” 







 D. Section 4.1 of the Agreement is hereby amended by deleting such section in
its entirety and substituting, in lieu thereof, the following new section: 
 “4.1. Grant. To secure Customers’ full and
punctual payment and performance of the Obligations (including obligations under any leases Customer may enter into, now or in the future, with IBM Credit) when due (whether at the stated maturity, by acceleration or otherwise), each Customer hereby
grants IBM Credit a security interest in all of such Customer’s right, title and interest in and to the following, whether now owned or hereafter acquired or existing and wherever located: 

(A) all goods manufactured or sold by International Business Machines Corporation (“IBM”), or Lenovo (United States) Inc.
(“Lenovo”), or Lexmark International, Inc. (“Lexmark”), or bearing the trademarks or trade names of IBM, or Lenovo, or Lexmark, including, inventory and equipment and all parts thereof, attachments, accessories and accessions
thereto, products thereof and documents therefor, but excluding, however, each Customer’s capital equipment; 
 (B) all
price protection payments, credits, discounts, incentive payments, rebates, and refunds which at any time are due to Customers with respect to or in connection with any inventory and equipment described in (A) above; 

(C) all substitutions and replacements for all of the foregoing, and all products and cash proceeds of all of the foregoing and, to the
extent not otherwise included, all payments under insurance or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing. 
 All of the above assets shall be collectively defined herein as the “Collateral”. 
 Each
Customer covenants and agrees with IBM Credit that: (a) the security constituted to by this Agreement is in addition to any other security from time to time held by IBM Credit; (b) the security hereby created is a continuing security
interest and will cover and secure the payment of all Obligations both present and future of Customers to IBM Credit; and (c) any transfer of Collateral between GovConnection, Merrimack and MoreDirect is subject to IBM Credit’s continuing
security interest in the Collateral of the transferor as well as IBM Credit’s continuing security interest in the Collateral of the transferee.” 
 E. Section 7.1. (J) of the Agreement is hereby amended by deleting such section in its entirety and substituting, in lieu thereof, the following new section: 

“(J) if the Customer at any time ceases to meet or exceed the Flexibility Criteria, Customer shall provide a Collateral Management Report as of a
date no earlier than the last day of the immediately preceding month, within 5 days of IBM Credit’s request, and each month thereafter by the fifth (5th) day of each month, or as otherwise agreed in writing;” 

Section 3. Notice. Customer is hereby notified that, as of the execution date of this Amendment, Customer meets or exceeds the
Flexibility Criteria. 
 Section 4. Representations and Warranties. Customer makes to IBM Credit the following representations and
warranties all of which are material and are made to induce IBM Credit to enter into this Amendment. 
 Section 4.1 Accuracy and
Completeness of Warranties and Representations. All representations made by Customer in the Agreement were true and accurate and complete in every respect as of the date made, and, as amended by this Amendment, all representations made by
Customer in the Agreement are true, accurate and complete in every material respect as of the date hereof, and do not fail to disclose any material fact necessary to make representations not misleading. 

Section 4.2 Violation of Other Agreements. The execution and delivery of this Amendment and the performance and observance of the covenants
to be performed and observed hereunder do not violate or cause Customer not to be in compliance with the terms of any agreement to which Customer is a party. 







 Section 4.3 Litigation. Except as has been disclosed by Customer to IBM Credit in writing, there
is no litigation, proceeding, investigation or labor dispute pending or threatened against Customer, which, if adversely determined, would materially adversely affect Customer’s ability to perform Customer’s obligations under the Agreement
and the other documents, instruments and agreements executed in connection therewith or pursuant hereto. 
 Section 4.4 Enforceability
of Amendment. This Amendment has been duly authorized, executed and delivered by Customer and is enforceable against Customer in accordance with its terms. 
 Section 5. Ratification of Agreement. Except as specifically amended hereby, all of the provisions of the Agreement shall remain unamended and in full force and effect. Customer hereby
ratifies, confirms and agrees that the Agreement, as amended hereby, represents a valid and enforceable obligation of Customer, and is not subject to any claims, offsets or defenses. 
 Section 6. Governing Law. This Amendment shall be governed by and interpreted in accordance with the laws which govern the Agreement. 
 Section 7. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute one agreement. 







 IN WITNESS WHEREOF, this Amendment has been executed by duly authorized officers of
the undersigned as of the day and year first above written. 
  

									
	IBM Credit LLC	 		 	PC Connection, Inc.
					
	By:	 	 /S/ THOMAS HARAHAN 
	 		 	By:	 	 /S/ JACK FERGUSON

					
	Print Name:	 	 Thomas Harahan 
	 		 	Print Name:	 	 Jack Ferguson 

					
	Title:	 	 Senior Credit Officer 
	 		 	Title:	 	 CFO and Treasurer

			
	Merrimack Services Corporation	 		 	GovConnection, Inc.
					
	By:	 	 /S/ JACK FERGUSON
	 		 	By:	 	 /S/ GARY ANDERSON

					
	Print Name:	 	 Jack Ferguson 
	 		 	Print Name:	 	 Gary Anderson 

					
	Title:	 	 Treasurer
	 		 	Title:	 	 Treasurer

				
	MoreDirect, Inc.	 		 		 	
					
	By:	 	 /S/ GARY ANDERSON
	 		 		 	
					
	Print Name:	 	 Gary Anderson 
	 		 		 	
					
	Title:	 	 Treasurer
	 		 		 	








 ATTACHMENT A 
 TO 
 AGREEMENT FOR INVENTORY FINANCING 

DATED OCTOBER 31, 2002 

EFFECTIVE DATE OF THIS : OCTOBER 31, 2002 

Section 1: LOAN PARTIES: 
  

			
	 NAME:
	  	ORGANIZATION NO. (Assigned by State of Org)
		
	 PC Connection, Inc.
	  	Delaware File Number 3149279
	 Merrimack Services Corporation
	  	Delaware File Number 3149077
	 GovConnection, Inc.
	  	Maryland ID Number 03712387
	 MoreDirect, Inc.
	  	Florida File Number P9400072462

 Section 2: FEES, RATES AND REPAYMENT TERMS: 

(A) Credit Line: Twenty-five Million Dollars ($25,000,000.00); 
 (B) Borrowing Base: 
 (i) 100% of the Customer’s inventory in
the Customer’s possession as of the date of determination as reflected in the Customer’s most recent Collateral Management Report constituting Products (other than service parts) financed through a Product Advance by IBM Credit, so long as
(i) IBM Credit has a first priority security interest in such Products; (ii) such Products are in new and unopened boxes, and (iii) the invoice date reflecting the sale of such Products by Authorized Supplier is not greater than one
hundred eighty (180) days prior to the date of determination. The value to be assigned to such inventory shall be based upon the Authorized Supplier’s invoice price to Customer for Products net of all applicable price reduction credits.

 (C) Inventory Insurance Amount: Twenty-five Million Dollars ($25,000,000.00) 

(D) Delinquency Fee Rate: Prime Rate plus 6.500% 
 (E) Shortfall Transaction Fee: Shortfall Amount multiplied by 0.30% 
 (F) Free
Financing Period Exclusion Fee: For each Product Advance made by IBM Credit pursuant to Customer’s financing plan where there is no Free Financing Period associated with such Product Advance there will be a fee equal to the Free Financing
Period Exclusion Fee. For a 30 day payment plan when Prime Rate is 8% the Free Financing Period Exclusion Fee is 1.08% of the invoice amount. This fee will vary by .0125% with each .25% change in Prime Rate (e.g. Prime Rate of 7.25%, the charge is
1.0425% of the invoice amount). The fee accrues as of the Date of Note and is payable as stated in the billing Statement. 
 Section 3:
FINANCIAL COVENANTS: 
 (A) Definitions: The following terms shall have the following respective meanings in this Attachment.
All amounts shall be determined in accordance with generally accepted accounting principles (GAAP). 
 “Consolidated EBIT” shall mean
for any period the sum of (a) Consolidated Net Income and (b) all amounts deducted in computing Consolidated Net Income in respect of (i) interest expense on Indebtedness and (ii) taxes based on or measured by income, in each
case for the period under review. 
 “Consolidated EBITDA” shall mean the sum of (a) Consolidated EBIT, plus (b) the
aggregate amount of consolidated depreciation and amortization expense plus (c) non-cash extraordinary or non-recurring losses less (d) extraordinary or non-recurring gains. 







 “Consolidated Net Income” shall mean, for any period, the net income (or loss), after taxes, of PC
Connection and subsidiaries on a consolidated basis for such period determined in accordance with GAAP. 
 “Consolidated Net Worth”
(the amount of owner’s or stockholder’s ownership in an enterprise) is equal to Consolidated Total Assets minus Consolidated Total Liabilities. 
 “Current” shall mean within the ongoing twelve month period. 
 “Current
Assets” shall mean assets that are cash or expected to be expensed or become cash within the ongoing twelve months. 
 “Current
Liabilities” shall mean payment obligations resulting from past or current transactions that require settlement within the ongoing twelve month period. All indebtedness to IBM Credit shall be considered a Current Liability for purposes of
determining compliance with the Financial Covenants. 
 “EBITDA” shall mean, for any period (determined on a consolidated basis in
accordance with GAAP), (a) the Consolidated Net Income for such period, plus (b) each of the following to the extent reflected as an expense in the determination of such Consolidated Net Income: (i) provisions for taxes based on
income for such period; (ii) Interest Expense for such period; and (iii) depreciation and amortization of tangible and intangible assets for such period. 
 “Funded Debt Ratio”: shall mean, with respect to any fiscal quarter, the ratio of (a) the average daily outstanding Advances over such fiscal quarter under the Second Amended and Restated
Credit and Security Agreement dated June 29, 2005 by and among PC Connection and its subsidiaries, inc. and Citizens Bank of Massachusetts and the other parties thereto to (b) the rolling four fiscal quarter Consolidated EBITDA (including
such fiscal quarter) of Customers. 
 “Interest Expense” shall mean, for any period, the aggregate consolidated interest expense of PC
Connection and subsidiaries during such period in respect of Indebtedness determined on a consolidated basis in accordance with GAAP, including, without limitation, amortization of original issue discount on any Indebtedness and of all fees payable
in connection with the incurrence of such Indebtedness (to the extent included in interest expense), the interest portion of any deferred payment obligation and the interest component of any capital lease obligations. 

“Long Term” shall mean beyond the ongoing twelve month period. 
 “Long Term Assets” shall mean assets that take longer than a year to be expensed or converted to cash. They are divided into four categories: tangible assets, investments, intangibles and other.

 “Long Term Debt” shall mean payment obligations of indebtedness which mature more than twelve months from the date of
determination, or mature within twelve months from such date but are renewable or extendible at the option of the debtor to a date more than twelve months from the date of determination. 
 “Revenue” shall mean the monetary expression of the aggregate of products or services transferred by an enterprise to its customers for which said customers have paid or are obligated to pay,
plus other income as allowed. 
 “Subordinated Debt” shall mean PC Connection’s indebtedness to third parties as evidenced by an
executed Notes Payable Subordination Agreement in favor of IBM Credit. 
 “Total Assets” shall mean the total of Current Assets and
Long Term Assets. 







 “Total Liabilities” shall mean the Current Liabilities and Long Term Debt less Subordinated Debt,
resulting from past or current transactions, that require settlement in the future. 
 “Total Net Worth” (the amount of owner’s
or stockholder’s ownership in an enterprise) is equal to Total Assets minus Total Liabilities. 
 “Working Capital” shall mean
Current Assets minus Current Liabilities. 
 (B) PC Connection will be required to maintain the following financial ratios,
percentages and amounts as of the last day of the fiscal period under review by IBM Credit: 
 Minimum Consolidated Net Worth: Maintain a
minimum Consolidated Net Worth of (i) $150,000,000 plus (ii) on a cumulative basis, an amount equal to fifty percent (50%) of the Consolidated Net Income in each quarter thereafter, commencing with the fiscal quarter ended
December 31, 2005. 
 Maximum Funded Debt Ratio: Maintain a Funded Debt Ratio of not greater than 2.0:1.0. 

Section 4: ADDITIONAL CONDITIONS PRECEDENT PURSUANT TO SECTION 5.1H OF THE AGREEMENT: 

(i) Executed Collateralized Guaranty of PC Connection Sales Corporation on behalf of the Customers 

(ii) Executed Collateralized Guaranty of PC Connection, Inc. on behalf of the Customers; 

(iii) Executed Waiver of Landlord Lien for all premises in which a landlord has the right of levy for rent; 

(iv) Fiscal year-end consolidated financial statements of PC Connection together with the consolidated financial
statements as of end of PC Connection’s prior fiscal year audited by an independent certified public accountant; 
 (v) Compiled fiscal quarter-end consolidated financial statements of PC Connection( as of end of PC Connection’s prior fiscal quarter; 

(vi) A Certificate of Location of Collateral whereby the Customers certify where Customers presently keep or sell
Collateral; 
 (vii) Subordination or Intercreditor Agreements from all creditors having a lien which is superior
to IBM Credit in any assets that IBM Credit relies on to satisfy the Loan Party’s obligations to IBM Credit; 
 (viii) A Collateral Management Report in the form of as of the most recent scheduled report date; 
 (ix) A Compliance Certificate in the form of as to PC Connection’s compliance with the financial covenants set forth in as of the last fiscal quarter of PC Connection for which financial statements
have been published; 
 (x) A Corporate Secretary’s Certificate substantially in the form and substance of
certifying to, among other items, the resolutions of the Loan Party’s Board of Directors authorizing borrowing by each Loan Party; 
 (xi) Termination or release of Uniform Commercial Code filing by another creditor as required by IBM Credit; 
 A copy of an all-risk insurance certificate pursuant to Section 7.8(A) of the Agreement; 







 SCHEDULE 1, to Attachment A 
 AGREEMENT FOR INVENTORY FINANCING DATED October 31, 2002 
 EFFECTIVE
DATE MAY 11, 2006 
 Definition: The following term shall have the following meaning in this Schedule 1, to Attachment A. All amounts shall
be determined in accordance with generally accepted accounting principles (GAAP).* 
  

	*	All definitions not contained herein shall have the respective meanings as set forth in Attachment A. 


“Tangible Net Worth” shall mean: 
 Total Net Worth minus; 
 (a) goodwill, organizational expenses, pre-paid expenses,
deferred charges, research and development expenses, software development costs, leasehold expenses, trademarks, trade names, copyrights, patents, patent applications, privileges, franchises, licenses and rights in any thereof, and other similar
intangibles (but not including contract rights) and other current and non-current assets as identified in Customer’s financial statements; 
 (b) all accounts receivable from employees, officers, directors, stockholders and affiliates; and 
 (c) all callable/redeemable preferred stock. 
 In order for the Flexibility Criteria to be
satisfied in IBM Credit’s determination, the Customer shall maintain the following financial ratios, percentages and amounts as of the last day of the fiscal period under review by IBM Credit. 

 

	(A)	Revenues (annualized) greater than $500 million; 

  

	(B)	Tangible Net Worth greater than $100 million; and 

  

	(C)	Total Liabilities to Tangible Net Worth less than 2.0:1.0