Document:

EXHIBIT 10.2

 

*** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

 

THIS FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of April 7, 2015, is entered into by and among PCM, INC., a Delaware corporation formerly known as PC Mall, Inc. (“PCM”), PCM SALES, INC., a California corporation formerly known as PC Mall Sales, Inc. (“PCM Sales”), PCM LOGISTICS, LLC, a Delaware limited liability company formerly known as AF Services, LLC (“PCM Logistics”), PCMG, INC., a Delaware corporation formerly known as PC Mall Gov, Inc. (“PCMG”), M2 MARKETPLACE, INC., a Delaware corporation formerly known as Onsale, Inc. (“M2”), ABREON, INC., a Delaware corporation formerly known as AV Acquisition, Inc. (“Abreon”), MALL ACQUISITION SUB 4 INC., a Delaware corporation (“Acquisition 4”), MALL ACQUISITION SUB 5 INC., a Delaware corporation (“Acquisition 5”), PCM BPO, LLC, a Delaware limited liability company formerly known as OSRP, LLC (“PCM BPO”), EN POINTE TECHNOLOGIES SALES, LLC, a Delaware limited liability company (“New Borrower”), and ONSALE HOLDINGS, INC., an Illinois corporation (“Holdings”), jointly and severally as co-borrowers (each a “Borrower” and collectively “Borrowers”), WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company, as administrative and collateral agent for the Lenders (in such capacity, “Agent”) and the Lenders signatory hereto.

 

RECITALS

 

A.                                Agent and the several financial institutions from time to time party to thereto as lenders (“Lenders”) and Borrowers (other than New Borrower) have previously entered into that certain Third Amended and Restated Loan and Security Agreement dated as of March 22, 2013 (as amended, modified, supplemented, extended or restated from time to time, the “Loan Agreement”), pursuant to which Agent and Lenders have made certain loans and financial accommodations available to Borrowers.  Terms used herein without definition shall have the meanings ascribed to them in the Loan Agreement.

 

B.                                 Borrowers have requested that Agent and the Lenders amend the Loan Agreement, which Agent and the Lenders are willing to do pursuant to the terms and conditions set forth herein.

 

C.                                 Borrowers are entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of Agent’s or any Lender’s rights or remedies as set forth in the Loan Agreement are being waived or modified by the terms of this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

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1.                                    Amendments to Loan Agreement.

 

(a)                               The definitions of “Borrower” and “Borrowers” in the preamble of the Loan Agreement are hereby amended to include New Borrower in addition to the other Borrowers, and each reference to a “Borrower” in the Loan Agreement and the other Financing Agreements shall include New Borrower and the other Borrowers.

 

(b)                              The definition of “Adjusted Eurodollar Rate” in Section 1.3 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.3                     Intentionally Omitted.”

 

(c)                               The following definition is hereby added to the Loan Agreement as Section 1.5(A):

 

“1.5(A)                                               “Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to any Borrower or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.”

 

(d)                             The following definition is hereby added to the Loan Agreement as Section 1.7(A):

 

“1.7(A)                                               “Applicable Margin” shall mean, on a monthly basis, the percentage points set forth below based on the “average daily amount” of Excess Availability, as determined by Agent, during the immediately preceding calendar month (such average calculated using the amount of Excess Availability as of the end of each day during the immediately preceding month):

 

	
Pricing
   Level
    	
Average   Excess
   Availability
    	
Applicable   Margin relative
   to Eurodollar Rate Loans
    	
Applicable   Margin
   relative to Prime Rate
   Loans
    
	
I
    	
Less than   $25,000,000
    	
1.75%
    	
0.00%
    
	
II
    	
Greater than or   equal to $25,000,000
    	
1.50%
    	
0.00%
    

 

; provided, however, that (i) from the date hereof until the end of the calendar month ending after the Fourth Amendment Effective Date, the Applicable Margin shall be the percentage points specified for Pricing Level II as set forth in this definition; (ii) after the occurrence and during the continuance of an Event of Default, the Applicable Margin shall be the percentage points specified for Pricing Level I as set forth in this definition; and (iii) if any borrowing base certificate delivered to Agent is subsequently determined to be incorrect in any

 

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material respect, Agent may increase the Applicable Margin retroactively to the beginning of the relevant month to the extent that such error caused the Applicable Margin to be different from the Applicable Margin that would have been in effect if the error was not made.”

 

(e)                               The definition of “Availability Reserves” in Section 1.11 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.11             “Availability Reserves” shall mean, as of any date of determination, such amounts as Agent may from time to time establish and revise in its commercially reasonable discretion reducing the amount of Revolving Loans and Letter of Credit Accommodations which would otherwise be available to Borrowers under the lending formula(s) provided for herein:  (a) to reflect events, conditions, contingencies or risks which, as determined by Agent in good faith, do affect either (i) the Collateral or any other property which is security for the Obligations or its value or (ii) the security interests and other rights of Agent in the Collateral (including the enforceability, perfection and priority thereof) or (b) to reflect Agent’s good faith belief that any collateral report or financial information furnished by or on behalf of any Borrower or any Obligor to any Lender is or may have been incomplete, inaccurate or misleading in any material respect or (c) to reflect any state of facts which Agent determines in good faith constitutes or could constitute an Event of Default.  Without limiting the generality of the foregoing, Agent (i) may establish on the date hereof and maintain throughout the term of this Agreement and throughout any renewal term an Availability Reserve for an amount equal to two (2) months (or one (1) month in the case of the warehouse in Tennessee or for any location leased for 120 days or less) of Borrowers’ gross rent and other obligations as lessee for each leased premises of Borrowers which is either a warehouse location or is located in a state where a landlord may be entitled to a priority lien on Collateral to secure unpaid rent and with respect to each such property the landlord has not executed a form of waiver and consent acceptable to Agent, (ii) may establish on the date hereof and maintain throughout the term of this Agreement and throughout any renewal term an Availability Reserve for an amount equal to the greater of the Value of the Inventory subject to the security interest of any Persons who hold a security interest prior to Agent in the sale proceeds of Inventory, unless and until those Persons have released or subordinated their security interests against Borrowers in a manner satisfactory to Agent, or the sum of the Borrowers’ payables and accrued payables to Apple Computer (or such other Persons), (iii) may establish on the date hereof and maintain throughout the term of this Agreement and throughout any renewal term Availability Reserves for Letter of Credit Accommodations as provided in Section 2.2(c) hereof and without duplication of Section 2.2(c), (iv) may establish and maintain throughout the term of this Agreement and any renewal term Availability Reserves for obligations, liabilities or indebtedness (contingent or otherwise) of Borrowers to Agent or any Bank Product Provider arising under or in connection with any Bank Products or as such Affiliate or Person may otherwise require in connection therewith to the extent that such obligations, liabilities or indebtedness constitute Obligations as

 

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such term is defined herein or otherwise receive the benefit of the security interest of Agent in any Collateral, and (v) may establish and maintain throughout the term of this Agreement and any renewal term an Availability Reserve in an amount determined by Agent to estimate the next monthly payment due by Borrowers on account of the earn-out payable in connection with the acquisition of En Pointe.”

 

(f)                                The following definition is hereby added to the Loan Agreement as Section 1.17(A):

 

“1.17(A)                                       “Borrowed Money” shall mean, with respect to any Borrower or Obligor, without duplication, its (a) indebtedness that (i) arises from the lending of money by any Person to such Borrower or Obligor (other than indebtedness permitted under Section 9.9(e)), (ii) is evidenced by notes, drafts, bonds, debentures, credit documents or similar instruments, (iii) accrues interest or is a type upon which interest charges are customarily paid (excluding floor plan financing consistent with current practice and trade payables, in each case, owing in the ordinary course of business), or (iv) was issued or assumed as full or partial payment for Property (other than indebtedness permitted under Section 9.9(f)); (b) capital leases; (c) reimbursement obligations with respect to letters of credit; and (d) guaranties of any indebtedness of the foregoing types owing by another Person.”

 

(g)                              The definition of “Business Day” in Section 1.18 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.18             “Business Day” shall mean any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of New York or the State of California, and a day on which the Agent and each Lender are open for the transaction of business, except that if a determination of a Business Day shall relate to any Eurodollar Rate Loans, the term Business Day shall also exclude any day on which banks are closed for dealings in dollar deposits in the London interbank market or other applicable Eurodollar Rate market.”

 

(h)                              The definition of “Capital Expenditures” in Section 1.19 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.19             “Capital Expenditures” means, with respect to any Person for any period, the aggregate of all expenditures by such Person and its subsidiaries during such period that are capital expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or financed; provided, however, that Capital Expenditures for any Borrower shall not include the following:

 

(a)                               expenditures of proceeds of insurance settlements, condemnation awards and other settlements in respect of lost, destroyed, damaged or condemned assets, equipment or other property to the extent such expenditures are made to

 

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replace or repair such lost, destroyed, damaged or condemned assets, equipment or other property or otherwise to acquire, maintain, develop, construct, improve, upgrade or repair assets or properties useful in the business of any Borrower;

 

(b)                              unfinanced expenditures (including the purchase price of equipment and building improvements) incurred prior to June 30, 2012 relating to the property located at 1940 E. Mariposa Avenue, El Segundo, CA, in an aggregate amount not to exceed $3,500,000;

 

(c)                               unfinanced expenditures (including the purchase price of equipment and building improvements) relating to the properties listed on Schedule 9.10 in an aggregate amount not to exceed $2,000,000 in any twelve-month period or $4,000,000 in the aggregate for all such properties;

 

(d)                             unfinanced expenditures (including the purchase price of equipment and building improvements) incurred during the fiscal year ending December 31, 2014 relating to the ERP upgrade and the New Albany data center build out;

 

(e)                               expenditures that are accounted for as capital expenditures of such person and that actually are paid for by a third party (excluding any Borrower) and for which no Borrower has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such third party or any other person (whether before, during or after such period);

 

(f)                                the book value of any asset owned by such person prior to or during such period to the extent that such book value is included as a capital expenditure during such period as a result of such person reusing or beginning to reuse such asset during such period without a corresponding expenditure actually having been made in such period; provided that (i) any expenditure necessary in order to permit such asset to be reused shall be included as a Capital Expenditure during the period that such expenditure actually is made and (ii) such book value shall have been included in Capital Expenditures when such asset was originally acquired;

 

(g)                              the purchase price of equipment purchased during such period to the extent the consideration therefor consists of any combination of (i) used or surplus equipment traded in at the time of such purchase and (ii) the proceeds of a concurrent sale of used or surplus equipment, in each case, in the ordinary course of business;

 

(h)                              expenditures to the extent they are financed with the proceeds of a disposition of used, obsolete, worn out or surplus equipment or property in the ordinary course of business;

 

(i)                                  any expenditure made solely with the proceeds of an issuance of equity interests of a Borrower after the date hereof;

 

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(j)                                  the purchase price of real estate acquisitions and investments permitted under this Agreement (including the committed financed portion of the purchase price for the properties listed on Schedule 9.10), together with any acquisition costs and transaction costs incurred in connection with such acquisitions and investments, and expenditures (including the purchase price of equipment and building improvements) relating to such real estate, in each case, solely to the extent made utilizing financing provided by the applicable seller or third party lender(s);

 

(k)                              the purchase price of real estate acquisitions and investments permitted under this Agreement, together with any acquisition costs and transaction costs incurred in connection with such acquisitions and investments, and expenditures (including the purchase price of equipment and building improvements) relating to such real estate, in each case, solely to the extent made from identifiable net proceeds of the sale or refinance of the Real Estate within 180 days of receipt by Borrowers of the net proceeds thereof; and

 

(l)                                  unfinanced expenditures (including the purchase price of equipment and building improvements) incurred during the fiscal year ending December 31, 2015 relating to the ERP upgrade in an aggregate amount not to exceed $4,000,000.”

 

(i)                                  The definition of “Commitment” in Section 1.23 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.23             “Commitment” shall mean, as to any Lender, the Revolving Loan Commitment of such Lender.”

 

(j)                                  The following definition is hereby added to the Loan Agreement as Section 1.23(A):

 

1.23(A)                                              “Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.”

 

(k)                              The following definition is hereby added to the Loan Agreement as Section 1.31(A):

 

“1.31(A)                                       “Eligible Adjacent Real Estate” shall mean the Adjacent Real Estate, so long as it is acceptable to Agent in its Permitted Discretion based on the criteria set forth below.  In general, the Adjacent Real Estate shall not be Eligible Adjacent Real Estate unless: (a) it is owned by a Borrower; (b) Agent has received an appraisal report in form, scope and substance satisfactory to Agent and by an appraiser acceptable to Agent; (c) Agent is satisfied that all actions necessary or desirable in order to create a perfected first priority lien on such real property have been taken, including, the filing and recording of a deed of trust in form and substance satisfactory to Agent; (d) Agent shall have received an environmental assessment report, in form and substance satisfactory to Agent, with respect to such real property, the results of which are satisfactory to Agent;

 

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(e) such real property is adequately protected by fully-paid valid title insurance with endorsements and in amounts acceptable to Agent, insuring that Agent, for the benefit of the Lenders, shall have a perfected first priority lien on such real property, evidence of which shall have been provided in form and substance satisfactory to Agent; and (f) Agent shall have received a letter of opinion with respect to the enforceability and perfection of the deed of trust and any related fixture filings with respect to such real property, in form and substance satisfactory to Agent.”

 

(l)                                  The following definition is hereby added to the Loan Agreement as Section 1.31(B):

 

“1.31(B)                                        “Eligible Adjacent Real Estate Sublimit” means $1,827,000; provided, however, that beginning on May 1, 2015, and on the first day of each calendar month thereafter, the Eligible Adjacent Real Estate Sublimit shall be reduced by $21,750.”

 

(m)                          The definition of “Eligible Inventory” in Section 1.32 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.32             “Eligible Inventory” shall mean Inventory consisting of finished goods held for resale in the ordinary course of the business of Borrowers which are located at Borrowers’ warehouse location(s) or retail store(s) and which are acceptable to Agent in its Permitted Discretion based on the criteria set forth below.  In general, Eligible Inventory shall not include (a) raw materials or work-in-process; (b) components which are not part of finished goods; (c) spare parts for equipment (it being understood that parts held for sale in their then current condition shall not be deemed spare parts for these purposes); (d) packaging and shipping materials; (e) supplies and fixed assets used or consumed in Borrowers’ business; (f) Inventory at premises other than those owned or controlled by Borrowers, except if Agent shall have received an agreement in writing from the person in possession of such Inventory in form and substance satisfactory to Agent acknowledging Agent’s priority security interest in the Inventory, waiving security interests and claims by such person against the Inventory and permitting Agent access to, and the right to remain on, the premises so as to exercise Agent’s rights and remedies and otherwise deal with the Collateral; (g) Inventory in transit, unless such Inventory is (A) provided by Apple Computer and not subject to the reclamation rights of Apple Computer under Section 2.2(a) of the Apple Intercreditor Agreement or (B) in transit to one of Borrowers’ retail stores or warehouse locations under a Letter of Credit Accommodation hereunder, and the bill of lading covering such Inventory names Agent as consignee and otherwise contains terms acceptable to Agent, and all originals of such bill of lading are in the possession of Agent or another bailee acceptable to Agent; (h) Inventory subject to a security interest or lien in favor of any person other than Agent except those permitted in this Agreement; (i) bill and hold goods; (j) unserviceable or obsolete Inventory; (k) Inventory which is not subject to the valid and perfected security interest of Agent, for itself and the ratable benefit of Secured Parties; 

 

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(l) returned (except for closed box returns), damaged and/or defective Inventory; (m) Inventory purchased or sold on consignment; (n) Inventory located at service centers; (o) software, books, magazines, manuals, videos and similar Inventory; (p) Inventory purchased under a Letter of Credit Accommodation that is outstanding as contemplated in Section 2.2(c)(i) hereof; and (q) Inventory subject to the perfected security interest of IBM Credit Corporation or Hewlett-Packard Company; provided that, notwithstanding the foregoing, such Inventory subject to the perfected security interest of Hewlett-Packard Company may, if otherwise eligible pursuant to the terms hereof, constitute Eligible Inventory to the extent the Value of such Inventory exceeds the then existing accounts payable from Borrowers to Hewlett-Packard Company and its Affiliates.  Any Inventory which is not Eligible Inventory shall nevertheless be part of the Collateral.”

 

(n)                              The definition of “Eligible Real Estate” in Section 1.33 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.33             “Eligible Real Estate” shall mean the Real Estate, so long as it is acceptable to Agent in its Permitted Discretion based on the criteria set forth below.  In general, the Real Estate shall not be Eligible Real Estate unless: (a) it is owned by a Borrower; (b) Agent has received an appraisal report in form, scope and substance satisfactory to Agent and by an appraiser acceptable to Agent; (c) Agent is satisfied that all actions necessary or desirable in order to create a perfected first priority lien on such real property have been taken, including, the filing and recording of a deed of trust in form and substance satisfactory to Agent; (d) Agent shall have received an environmental assessment report, in form and substance satisfactory to Agent, with respect to such real property, the results of which are satisfactory to Agent; (e) such real property is adequately protected by fully-paid valid title insurance with endorsements and in amounts acceptable to Agent, insuring that Agent, for the benefit of the Lenders, shall have a perfected first priority lien on such real property, evidence of which shall have been provided in form and substance satisfactory to Agent; and (f) Agent shall have received a letter of opinion with respect to the enforceability and perfection of the deed of trust and any related fixture filings with respect to such real property, in form and substance satisfactory to Agent.”

 

(o)                              The definition of “Eligible Real Estate Sublimit” in Section 1.34 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.34             “Eligible Real Estate Sublimit” means $10,885,000; provided, however, that beginning on May 1, 2015, and on the first day of each calendar month thereafter, the Eligible Real Estate Sublimit shall be reduced by $129,583.33.”

 

(p)                              The following definition is hereby added to the Loan Agreement as Section 1.35(A):

 

“1.35(A)                                       “En Pointe” shall mean Collab9, Inc., a Delaware corporation (formerly known as En Pointe Technologies Sales, Inc.).”

 

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(q)                              The definition of “Eurodollar Rate” in Section 1.40 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.40             “Eurodollar Rate” means, for any day, the rate per annum for United States dollar deposits determined by Agent for the purpose of calculating the effective Interest Rate for loans that reference the Eurodollar Rate as the rate per annum as reported on Reuters Screen LIBOR01 page (or any successor page) in effect from time to time for the one month delivery of funds in amounts approximately equal to the principal amount of such loans (and, if any such rate is below zero, the Eurodollar Rate shall be deemed to be zero).  Borrowers understand and agree that Agent may base its determination of such rate upon such offers or other market indicators of such rate as Agent in its discretion deems appropriate.  When interest is determined in relation to the Eurodollar Rate, each change in the interest rate shall become effective each Business Day that Agent determines that the Eurodollar Rate has changed.”

 

(r)                                 The definition of “Eurodollar Rate Loans” in Section 1.41 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.41             “Eurodollar Rate Loans” shall mean any Loans or portion thereof on which interest is payable based on the Eurodollar Rate in accordance with the terms hereof.”

 

(s)                                The definition of “Eurodollar Rate Margin” in Section 1.42 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.42             Intentionally Omitted.”

 

(t)                                 The definition of “Excess Availability” in Section 1.44 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.44             “Excess Availability” shall mean the amount, as determined by Agent, calculated at any time, equal to:

 

(a)                               the lesser of (i) the amount of the Revolving Loans available to Borrowers as of such time (based on the applicable advance rates set forth in Section 2.1(a) hereof), subject to the sublimits and Availability Reserves from time to time established by Agent hereunder and (ii) the Maximum Credit, minus

 

(b)                              the amount of all then outstanding and unpaid Obligations.

 

provided, however, that: solely for the purposes of determining (A) the Applicable Margin, to the extent the amount set forth in clause (a)(i) above exceeds the amount set forth in clause (a)(ii) above at any time, the Excess Availability as of such time shall be increased by up to Ten Million Dollars ($10,000,000) of the difference between those two (2) amounts; and (B) whether a FCCR Triggering Event has occurred (other than under clause (c) of the definition thereof), to the extent the amount set forth in clause (a)(i) above exceeds the amount set forth in clause (a)(ii) above at any time, the Excess Availability as of such time shall be increased by the difference between those two (2) amounts.”

 

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(u)                              The following definition is hereby added to the Loan Agreement as Section 1.45(A):

 

“1.45(A)                                       “Excluded Swap Obligation” means, with respect to any Obligor, any Swap Obligation if, and to the extent that, all or a portion of the guaranty of such Obligor of, or the grant by such Obligor of a security interest to secure, such Swap Obligation (or any guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Obligor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guaranty of such Obligor or the grant of such security interest becomes effective with respect to such Swap Obligation.  If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guaranty or security interest is or becomes illegal.”

 

(v)                              The definition of “FCCR Triggering Event” in Section 1.48 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.48             “FCCR Triggering Event” shall mean, as of any date of determination, either (a) Excess Availability is less than $10,000,000 as of such date, (b) Average 30 Day Excess Availability is less than $18,750,000 as of such date, or (c) Excess Availability (without giving effect to the proviso contained in the definition thereof) is less than $7,500,000 for a period of five consecutive days ending on such date of determination.”

 

(w)                          The definition of “Final Maturity Date” in Section 1.50 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.50             “Final Maturity Date” shall mean September 30, 2018.”

 

(x)                              The definition of “Fixed Charges” in Section 1.52 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.52             “Fixed Charges” shall mean, with respect to any fiscal period and with respect to Borrowers and their subsidiaries determined on a consolidated basis in accordance with GAAP, the sum, without duplication, of (a) cash paid during such period with respect to Interest Expense, (b) principal payments in respect of Borrowed Money that are required to be paid during such period, and (c) cash paid during such period with respect to federal, state, and local income taxes.”

 

(y)                              The following definition is hereby added to the Loan Agreement as Section 1.53(A):

 

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“1.53(A)                                       “Fourth Amendment” means that certain Fourth Amendment to Third Amended and Restated Loan and Security Agreement, dated as of the Fourth Amendment Effective Date, by and among Borrowers, Agent, and the Lenders.”

 

(z)                               The following definition is hereby added to the Loan Agreement as Section 1.53(B):

 

“1.53(B)                                        “Fourth Amendment Effective Date” means April 7, 2015.”

 

(aa)                        The definition of “Interest Period” in Section 1.62 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.62             Intentionally Omitted.”

 

(bb)                      The following definition is hereby added to the Loan Agreement as Section 1.62(A):

 

“1.62(A)                                       “Interest Rate” means an interest rate equal to: (a) with respect to Eurodollar Rate Loans, the Eurodollar Rate, (b) with respect to Prime Rate Loans, the Prime Rate, and (c) with respect to Special Agent Advances and all other Obligations other than Loans, the Prime Rate.”

 

(cc)                        The definition of “Inventory Sublimit” in Section 1.65 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.65             “Inventory Sublimit” shall mean an amount equal to Seventy Million Dollars ($70,000,000).”

 

(dd)                    The definition of “Loans” in Section 1.68 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.68             “Loans” shall mean the Revolving Loans.”

 

(ee)                        The definition of “Maximum Credit” in Section 1.69 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.69             “Maximum Credit” shall mean, with reference to the Revolving Loans and the Letter of Credit Accommodations, the amount of Two Hundred Fifty Million Dollars ($250,000,000), as such amount may be increased in accordance with Section 2.5 hereof.”

 

(ff)                          The definition of “Obligations” in Section 1.73 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.73             “Obligations” shall mean (a) any and all Loans, Letter of Credit Accommodations and all other obligations, liabilities and indebtedness of every kind, nature and description owing by any or all of Borrowers to Agent or any

 

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Lender or any issuer of a Letter of Credit Accommodation, including principal, interest, charges, fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under this Agreement or any of the other Financing Agreements or on account of any Letter of Credit Accommodations, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of this Agreement or after the commencement of any case with respect to such Borrower under the United States Bankruptcy Code or any similar statute (including the payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, or secured or unsecured and (b) for purposes only of Sections 5, 11.5, 12.11(b), and 13.1 hereof and subject to the priority in right of payment set forth in Section 6.4 hereof, all obligations, liabilities and indebtedness of every kind, nature and description owing by any or all of Borrowers to Agent or any Bank Product Provider arising under or pursuant to any Bank Products, whether now existing or hereafter arising, provided, that, (i) the applicable Bank Product must have been provided on or after the date hereof and Agent shall have received a Bank Product Provider Letter Agreement within 10 days after the date of the provision of the applicable Bank Product to the applicable Borrower and (ii) in no event shall any Bank Product Provider acting in such capacity to whom such obligations, liabilities or indebtedness are owing be deemed a Lender for purposes hereof to the extent of and as to such obligations, liabilities or indebtedness except that each reference to the term “Lender” in Sections 12.1, 12.2, 12.3(b), 12.6, 12.7, 12.9, 12.12 and 13.6 hereof shall be deemed to include such Bank Product Provider and in no event shall the approval of any such person in its capacity as Bank Product Provider be required in connection with the release or termination of any security interest or lien of Agent; provided that, anything to the contrary contained in the foregoing notwithstanding, the Obligations shall exclude any Excluded Swap Obligation.”

 

(gg)                      The definition of “Prime Rate” in Section 1.82 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.82             “Prime Rate” shall mean, at any time, the rate of interest most recently announced by Agent at its principal office as its Prime Rate, with the understanding that the Prime Rate is one of Agent’s base rates, and serves as the basis upon which effective rates of interest are calculated for those loans making reference to it, and is evidenced by its recording in such internal publication or publications as Agent may designate.  Each change in the rate of interest shall become effective on the date each Prime Rate change is announced by Agent.”

 

(hh)                      The definition of “Prime Rate Loans” in Section 1.83 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

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“1.83             “Prime Rate Loans” shall mean any Loans or portion thereof on which interest is payable based on the Prime Rate in accordance with the terms hereof.”

 

(ii)                              The definition of “Prime Rate Margin” in Section 1.84 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.84             Intentionally Omitted.”

 

(jj)                              The definition of “Pro Rata Share” in Section 1.85 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.85             “Pro Rata Share” shall mean:

 

(a)                               with respect to a Revolving Loan Lender’s obligation to make Revolving Loans and receive payments relative thereto, the fraction (expressed as a percentage) the numerator of which is such Lender’s Revolving Loan Commitment and the denominator of which is the aggregate amount of all of the Revolving Loan Commitments of Revolving Loan Lenders, as adjusted from time to time in accordance with the provisions of Section 13.5 hereof; provided, that, if the Revolving Loan Commitments have been terminated, the numerator shall be the unpaid amount of such Lender’s Revolving Loans and its interest in the Letter of Credit Accommodations and the denominator shall be the aggregate amount of all unpaid Revolving Loans and Letter of Credit Accommodations; and

 

(b)                              with respect to all other matters (including the indemnification obligations arising under Section 12.5 hereof), (i) prior to the Revolving Loan Commitments being terminated, the fraction (expressed as a percentage) the numerator of which is such Lender’s Revolving Loan Commitment, and the denominator of which is the aggregate amount of Revolving Loan Commitments of all Lenders, and (ii) from and after the time that the Revolving Loan Commitments have been terminated or reduced to zero, the fraction (expressed as a percentage) the numerator of which is the sum of such Lender’s Revolving Loans and its interest in the Letter of Credit Accommodations, and the denominator of which is the aggregate amount of all unpaid Revolving Loans and Letter of Credit Accommodations.”

 

(kk)                      The following definition is hereby added to the Loan Agreement as Section 1.87(A):

 

“1.87(A)                                       “Qualified ECP Guarantor” means, in respect of any Swap Obligation, each guarantor of, or grantor of a security interest to secure, the Obligations that has total assets exceeding $10,000,000 at the time the relevant guaranty, keepwell, or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.”

 

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(ll)                              The definition of “Reference Bank” in Section 1.90 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.90             Intentionally Omitted.”

 

(mm)              The definition of “Revolving Loan Commitment” in Section 1.95 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.95             “Revolving Loan Commitment” shall mean, at any time, as to each Revolving Loan Lender, the principal amount set forth below such Lender’s signature on the signature pages to the Fourth Amendment designated as the Revolving Loan Commitment or on Schedule 1 to the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 13.5 hereof, as the same may be adjusted from time to time in accordance with the terms hereof; sometimes being collectively referred to herein as “Revolving Loan Commitments”.”

 

(nn)                      The following definition is hereby added to the Loan Agreement as Section 1.97(A):

 

“1.97(A)                                       “Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of the Fourth Amendment Effective Date, Crimea, Cuba, Iran, North Korea, Sudan and Syria).”

 

(oo)                      The following definition is hereby added to the Loan Agreement as Section 1.97(B):

 

“1.97(B)                                        “Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b).”

 

(pp)                      The following definition is hereby added to the Loan Agreement as Section 1.97(C):

 

“1.97(C)                                        “Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State.”

 

(qq)                      The following definition is hereby added to the Loan Agreement as Section 1.103(A):

 

“1.103(A)                               “Swap Obligation” means, with respect to any Borrower or Obligor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.”

 

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(rr)                            The definition of “Term Loan Commitment” in Section 1.105 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.105 Intentionally Omitted.”

 

(ss)                          The definition of “Term Loan Lenders” in Section 1.106 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.106 Intentionally Omitted.”

 

(tt)                            The definition of “Term Loans” in Section 1.107 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.107 Intentionally Omitted.”

 

(uu)                      The definition of “Term Notes” in Section 1.108 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

 

“1.108 Intentionally Omitted.”

 

(vv)                      Section 2.1(a) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“2.1                     Revolving Loans.

 

(a)                               Subject to, and upon the terms and conditions contained herein, each Revolving Loan Lender severally (and not jointly) agrees to fund its Pro Rata Share of Revolving Loans to Borrowers from time to time in amounts requested by Borrowers up to the amount equal to:

 

(i)                                  ninety percent (90%) of the Net Amount of Eligible Accounts, provided, that, such percentage advance rate shall be reduced by the positive difference, rounded to the nearest tenth of a percent, between (I) the dilution rate on the Accounts, as determined by Agent in good faith based on the ratio of (A) the aggregate amount of reductions in Accounts other than as a result of payments in cash, to (B) the aggregate amount of total sales, and (II) three and one-half of one percent (3.5%), and provided further, that, the total sum available under this Section 2.1(a)(i) based upon Credit Card/Check Processing Receivables shall not exceed Fifteen Million Dollars ($15,000,000) at any time; and provided further that, if Borrowers provide reports on such Credit Card/Check Processing Receivables under Section 7.1 on a daily basis, the total sum under this Section 2.1(a)(i) based upon Credit Card/Check Processing Receivables shall not exceed Twenty Million Dollars ($20,000,000) at any time; plus

 

(ii)                              the lesser of:

 

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(A)                          the sum of (1) sixty percent (60%) of the Value of Eligible Inventory not consisting of office supplies (held for sale by Borrowers), refurbished Inventory, Slow Moving Inventory, or the Inventory described in clause (3) immediately below, not to exceed eighty-five percent (85%) of the Appraised Liquidation Value of such Eligible Inventory, plus (2) the lesser of Two Million Five Hundred Thousand Dollars ($2,500,000) or forty percent (40%) of the Value of Eligible Inventory consisting of office supplies (held for sale by Borrowers), refurbished Inventory or Slow Moving Inventory and not consisting of the Inventory described in clause (3) immediately below, not to exceed eighty-five percent (85%) of the Appraised Liquidation Value of such Eligible Inventory, plus (3) the sum of: (x) eighty percent (80%) of the Value of Eligible Inventory that is in its original closed box, that has been held by Borrowers no more than one hundred twenty (120) days, and for which Apple Computer, upon its repossession thereof, is committed to pay to Agent the sum of the purchase prices thereof, net of certain rebates and other allowances, pursuant to the terms and provisions of the Apple Intercreditor Agreement, plus (y) the lesser of (I) the Specified Apple Inventory Sublimit, and (II) sixty-five percent (65%) of the Value of Eligible Inventory consisting of Specified Apple Inventory that is in its original closed box and that has been held by Borrowers more than one hundred twenty (120) days, but less than two hundred forty-one (241) days; provided, that, the total sum available under this Section 2.1(a)(ii)(A) based upon Eligible Inventory that is in transit from Apple Computer to Borrowers shall not exceed Two Million Dollars ($2,000,000) at any time, unless Borrowers have provided Agent with a current borrowing base certificate (separately identifying such in-transit Eligible Inventory and with such supporting documentation acceptable to Agent and Borrowers as Agent may reasonably request), which certificates shall be in form reasonably satisfactory to Agent, in which case, for a period of five (5) Business Days after Lender’s receipt and satisfactory review of such certificates, the total sum available hereunder based upon such in-transit Eligible Inventory shall not exceed Fifteen Million Dollars ($15,000,000); or

 

(B)                           the Inventory Sublimit; plus

 

(iii)                          the lesser of:

 

(A)                          an amount equal to seventy percent (70%) of the “Fair Market Value” of the Eligible Real Estate as set forth in any appraisal of the Real Estate received by Agent; or

 

(B)                           the Eligible Real Estate Sublimit; plus

 

(iv)                          the lesser of:

 

(A)                          an amount equal to seventy percent (70%) of the “Fair Market Value” of the Eligible Adjacent Real Estate as set forth in any appraisal of the Adjacent Real Estate received by Agent; or

 

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(B)                           the Eligible Adjacent Real Estate Sublimit; minus

 

(v)                              the then undrawn amounts of outstanding Letter of Credit Accommodations, multiplied by the applicable percentages as provided for in Section 2.2(c)(i) or Section 2.2(c)(ii) hereof; minus

 

(vi)                          any Availability Reserves.”

 

(ww)              Section 2.1(b)(ii) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(ii)                       the nature and quality of the Inventory has deteriorated in any material respect.  In determining whether to reduce the lending formula(s), Agent may consider events, conditions, contingencies or risks which are also considered in determining Eligible Accounts, Eligible Inventory, Eligible Real Estate, Eligible Adjacent Real Estate, or in establishing Availability Reserves.”

 

(xx)                      Section 2.2(b) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(b)                       In addition to any charges, fees or expenses charged by any bank or issuer in connection with the Letter of Credit Accommodations, Borrowers shall pay to Agent for the benefit of Revolving Loan Lenders, a letter of credit fee at a per annum rate equal to the Applicable Margin relative to Eurodollar Rate Loans on the daily outstanding balance of the Letter of Credit Accommodations for the immediately preceding month (or part thereof), payable in arrears as of the first day of each succeeding month.  Notwithstanding the foregoing, such letter of credit fee shall be increased, at Agent’s option without notice, to two percent (2.00%) per annum above the then applicable rate upon the occurrence and during the continuation of an Event of Default, and for the period on or after the date of termination or non-renewal of this Agreement.  Such letter of credit fee shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed and the obligation of Borrowers to pay such fee shall survive the termination or non-renewal of this Agreement.”

 

(yy)                      Section 2.2(e) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(e)                        Except in Agent’s discretion, with the consent of all Lenders, the amount of all outstanding Letter of Credit Accommodations and all other commitments and obligations made or incurred by Agent or any Lender in connection therewith shall not at any time exceed Fifty Million Dollars ($50,000,000).  At any time an Event of Default exists or has occurred and is continuing, upon Agent’s request, Borrowers will either furnish cash collateral to secure the reimbursement obligations to the issuer in connection with any Letter of Credit Accommodations or furnish cash collateral to Agent for the Letter of Credit Accommodations, and in either case, the Revolving Loans otherwise available to Borrowers shall not be reduced as provided in Section 2.2(c) to the extent of such cash collateral.”

 

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(zz)                        Section 2.3 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“2.3                     [Reserved].”

 

(aaa)                 Section 2.4 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“2.4                     Commitments.  The aggregate amount of each Revolving Loan Lender’s Pro Rata Share of the Revolving Loans and Letter of Credit Accommodations shall not exceed the amount of such Lender’s Revolving Loan Commitment, as the same may from time to time be amended with the written acknowledgment of Agent and such Revolving Loan Lender.”

 

(bbb)              Section 2.5(a) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(a)                        The Maximum Credit may be increased after the Fourth Amendment Effective Date (the increase that satisfies the terms and conditions of this Section, the “Approved Increase”) by an amount equal to $25,000,000 at the option of Borrowers by delivery of a written notice from Borrowers of the proposed increase to Agent if and only if (i) each of the conditions precedent set forth in Section 4.2 are satisfied as of the Increase Effective Date (as if Borrowers were requesting an extension of credit hereunder), (ii) Lenders or other Persons commit to increase or provide Commitments in an aggregate amount equal to the Approved Increase in accordance with Section 2.5(c), and (iii) Borrowers shall have (A) reached agreement with the prospective new Lenders (the “Prospective Lenders”) with respect to the amount of any supplemental closing fee to be paid to such Prospective Lenders on the Increase Effective Date and shall have communicated the amount of such supplemental closing fee to Agent (which closing fee shall not exceed 0.65%), and (B) paid any fees described in clause (A) above to Agent for the account of the Prospective Lenders and Agent, as applicable.  The notice shall specify the date on which the proposed increase is to be effective (the “Increase Effective Date”), which date shall not be less than 10 Business Days after the date of such notice.”

 

(ccc)                 Section 2.5(d) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(d)                      To the extent any Revolving Loans or Letter of Credit Accommodations are outstanding on the Increase Effective Date, each of the Lenders having a Commitment prior to the Increase Effective Date (the “Pre-Increase Revolver Lenders”) shall assign to any Lender which is acquiring a new or additional Commitment on the Increase Effective Date (the “Post-Increase Revolver Lenders”), and such Post-Increase Revolver Lenders shall purchase from each Pre-Increase Revolver Lender, at the principal amount thereof, such interests in the Revolving Loans and participation interests in Letter of Credit

 

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Accommodations on the Increase Effective Date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Revolving Loans and participation interests in Letter of Credit Accommodations will be held by Pre-Increase Revolver Lenders and Post-Increase Revolver Lenders ratably in accordance with their Pro Rata Share (calculated under clause (b) of the definition of Pro Rata Share) after giving effect to such increased Commitments.”

 

(ddd)           Section 2.6 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“2.6                     Real Estate and Adjacent Real Estate.

 

(a)                               Notwithstanding anything to the contrary contained herein, the Real Estate may be sold or refinanced and Agent shall release its liens against the Real Estate in connection with the sale or refinance thereof, provided, that, (i) no Default or Event of Default has occurred and is continuing at the time of such sale or refinance, or would result therefrom and (ii) the proceeds of such sale or refinance are no less than the Eligible Real Estate Sublimit and the proceeds of such sale or refinance in an amount no less than the Eligible Real Estate Sublimit are remitted to Agent for application to the Obligations in accordance with Section 6.4.  Upon any refinance of the Real Estate in accordance with the foregoing, any indebtedness secured solely by the Real Estate and any lien against the Real Estate securing such indebtedness will be permitted for the purposes of Sections 9.8 and 9.9 hereof.

 

(b)                              Notwithstanding anything to the contrary contained herein, the Adjacent Real Estate may be sold or refinanced and Agent shall release its liens against the Adjacent Real Estate in connection with the sale or refinance thereof, provided, that, (i) no Default or Event of Default has occurred and is continuing at the time of such sale or refinance, or would result therefrom and (ii) the proceeds of such sale or refinance are no less than the Eligible Adjacent Real Estate Sublimit and the proceeds of such sale or refinance in an amount no less than the Eligible Adjacent Real Estate Sublimit are remitted to Agent for application to the Obligations in accordance with Section 6.4.  Upon any refinance of the Adjacent Real Estate in accordance with the foregoing, any indebtedness secured solely by the Adjacent Real Estate and any lien against the Adjacent Real Estate securing such indebtedness will be permitted for the purposes of Sections 9.8 and 9.9 hereof.”

 

(eee)                 Section 3.1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“3.1                     Interest.

 

(a)                               Except as provided in Sections 3.1(e) below, Borrowers shall pay to Agent, for the benefit of Lenders, interest on the outstanding principal amount of the non-contingent Obligations at a per annum rate equal to the Interest Rate

 

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plus the Applicable Margin.  Subject to Section 3.6, all Revolving Loans shall be deemed Eurodollar Rate Loans.

 

(b)                              Intentionally Omitted.

 

(c)                               Intentionally Omitted.

 

(d)                             Intentionally Omitted.

 

(e)                               Notwithstanding the foregoing, Borrowers shall pay to Agent, for the benefit of Lenders, interest, at Agent’s option, with notice to Borrowers, at a rate two (2.0%) percent per annum greater than the applicable rate(s) chargeable above on the non-contingent Obligations for the period from and after the date of termination or non-renewal hereof, or the date of the occurrence of an Event of Default, and for so long as such Event of Default is continuing as determined by Agent and until such time as Agent has received full and final payment of all such Obligations (notwithstanding entry of any judgment against Borrowers).  All interest accruing hereunder on and after the occurrence of any of the events referred to in this Section 3.1(e) shall be payable on demand.

 

(f)                                Interest shall be payable by Borrowers to Agent, for the benefit of Lenders, monthly in arrears not later than the first day of each calendar month and shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed.”

 

(fff)                    Section 3.3 of the Loan Agreement is hereby amended by deleting the text “clause (c)” therein and replacing it with the text “clause (b)”.

 

(ggg)              Section 3.4 of the Loan Agreement is hereby amended by deleting the text “clause (c)” therein, and replacing it with the text “clause (b)”.

 

(hhh)              Section 3.6 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“3.6                     Changes in Laws and Increased Costs of Loans.  In the event that (a) any change in market conditions or any law, regulation, treaty, or directive, or any change therein or in the interpretation or application thereof make it unlawful or impractical for Agent or any Lender to fund or maintain extensions of credit with interest based upon the Eurodollar Rate or to continue such funding or maintaining, or to determine or charge interest rates based upon the Eurodollar Rate, (b) Agent or any Lender determines that by reasons affecting the London Interbank Eurodollar market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate, or (c) Agent or any Lender determines that the interest rate based on the Eurodollar Rate will not adequately and fairly reflect the cost to Agent or such Lender of maintaining or funding Loans at the interest rate based upon the Eurodollar Rate, the applicable Lender shall give notice of such changed circumstances to Agent and Agent shall give notice of such changed circumstances to Borrowers and (i) interest on the principal amount of such

 

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extensions of credit thereafter shall accrue interest at a rate equal to the Prime Rate plus the Applicable Margin, and (ii) Borrowers shall not be entitled to elect the Eurodollar Rate until Agent and the Lenders determine that it would no longer be unlawful or impractical to do so or that such increased costs would no longer be applicable.”

 

(iii)                          Section 3.7 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“3.7                     Mitigation Obligations; Replacement of Lenders.  If any Lender requests compensation under Section 3.5 (any such Lender, an “Affected Lender”), then such Affected Lender shall use reasonable efforts to promptly designate a different one of its lending offices or to assign its rights and obligations hereunder to another of its offices or branches, if (i) in the reasonable judgment of such Affected Lender, such designation or assignment would eliminate or reduce amounts payable pursuant to Section 3.5 and (ii) in the reasonable judgment of such Affected Lender, such designation or assignment would not subject it to any material unreimbursed cost or expense and would not otherwise be materially disadvantageous to it.  The Borrowers agree to pay all reasonable out-of-pocket costs and expenses incurred by such Affected Lender in connection with any such designation or assignment.  If, after such reasonable efforts, such Affected Lender does not so designate a different one of its lending offices or assign its rights to another of its offices or branches so as to eliminate Borrowers’ obligation to pay any future amounts to such Affected Lender pursuant to Section 3.5, then the Borrowers (without prejudice to any amounts then due to such Affected Lender under Section 3.5) may, unless prior to the effective date of any such assignment the Affected Lender withdraws its request for such additional amounts under Section 3.5, seek a substitute Lender reasonably acceptable to Agent to purchase the Obligations owed to such Affected Lender and such Affected Lender’s Commitments hereunder (a “Replacement Lender”), and if such Replacement Lender agrees to such purchase, such Affected Lender shall assign to the Replacement Lender its Obligations and Commitments, pursuant to an Assignment and Acceptance, and upon such purchase by the Replacement Lender, such Replacement Lender shall be deemed to be a “Lender” for purposes of this Agreement and such Affected Lender shall cease to be a “Lender” for purposes of this Agreement.”

 

(jjj)                          A new Section 3.8 is added to the Loan Agreement to read in its entirety as follows:

 

“3.8                     Anti-Corruption Laws and Sanctions.  The Borrowers have implemented and maintain in effect policies and procedures designed to ensure compliance by the Borrowers, their respective Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrowers, their respective Subsidiaries and their respective officers and employees and to the knowledge of the Borrowers their respective directors and agents, are in compliance with Anti-Corruption Laws and applicable

 

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Sanctions in all material respects.  None of (a) any Borrower, any Subsidiary or, to the knowledge of such Borrower or such Subsidiary, any of their respective directors, officers or employees, or (b) to the knowledge of any Borrower, any agent of the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.   No Loan or Letter of Credit Accommodation, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions.”

 

(kkk)              Section 5.7 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“5.7                     the Real Estate and the Adjacent Real Estate; and”

 

(lll)                          Section 6.4 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“6.4                     Payments.  All Obligations shall be payable to the Payment Account as provided in Section 6.3 of this Agreement or such other place as Agent may designate from time to time.  Subject to the other terms and conditions contained herein, Agent shall apply payments received or collected from any Borrower or for the account of any Borrower (including the monetary proceeds of collections or of realization upon any Collateral) as follows: first, to pay any fees, indemnities or expense reimbursements then due to Agent and Lenders from any Borrower; second, to pay interest due in respect of any Loans (and including any Special Agent Advances) or Letter of Credit Accommodations; third, to pay or prepay principal in respect of Special Agent Advances; fourth, to pay principal due in respect of the Loans, on a pro  rata basis; fifth, at any time an Event of Default exists or has occurred and is continuing, to provide cash collateral for any Letter of Credit Accommodations; sixth, ratably, up to the amount of the most recently established Availability Reserve established pursuant to clause (iv) of the definition of “Availability Reserve” (and not exceeding the amounts agreed with respect thereto pursuant to the applicable Bank Product Provider Letter Agreement), to pay or prepay any Obligations arising under or pursuant to any Bank Products based upon amounts then certified by the applicable Bank Product Provider to Agent (in form and substance satisfactory to Agent) to be due and payable to such Bank Product Providers on account of Bank Products; seventh, to pay or prepay any other Obligations whether or not then due, in such order and manner as Agent determines and at any time an Event of Default exists or has occurred and is continuing, to provide cash collateral for any contingent Obligations (but not including for this purpose any Obligations arising under or pursuant to any Bank Products); and eighth, to pay or prepay any Obligations arising under or pursuant to any Bank Products and at any time an Event of Default exists or has occurred and is continuing, to provide cash collateral for any contingent Obligations arising under or pursuant to any Bank Products (based upon amounts then certified by the applicable Bank Product Provider to Agent (in form and substance satisfactory to Agent)); provided, that, so long as no Event of

 

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Default has occurred and is continuing, proceeds generated in the ordinary course of Borrowers’ business on Accounts or Inventory will not be applied to any principal amount not yet due and payable on contingent Obligations.  At Agent’s option, all principal, interest, fees, costs, expenses and other charges provided for in this Agreement or the other Financing Agreements may be charged directly to the loan account(s) of Borrowers.  Borrowers shall make all payments to Agents and the Lenders on the Obligations free and clear of, and without deduction or withholding for or on account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions, withholding, restrictions or conditions of any kind.  If after receipt of any payment of, or proceeds of Collateral applied to the payment of, any of the Obligations, Agent or any Lender is required to surrender or return such payment or proceeds to any Person for any reason, then the Obligations intended to be satisfied by such payment or proceeds shall be reinstated and continue and this Agreement shall continue in full force and effect as if such payment or proceeds had not been received by such Person.  Borrowers shall be liable to pay to Agent and Lenders, and do hereby indemnify and hold Agent and each Lender harmless for the amount of any payments or proceeds surrendered or returned.  This Section 6.4 shall remain effective notwithstanding any contrary action which may be taken by Agent or any Lender in reliance upon such payment or proceeds.  This Section 6.4 shall survive the payment of the Obligations and the termination or non-renewal of this Agreement.”

 

(mmm)  Section 6.8 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“6.8                     Pro Rata Treatment.  Except to the extent otherwise provided in this Agreement:  (a) the making and conversion of Revolving Loans shall be made among the Revolving Loan Lenders based on their respective Pro Rate Shares as to the Revolving Loans, and (b) each payment on account of any Obligations to or for the account of one or more of Lenders in respect of any Obligations due on a particular day shall be allocated among the Lenders entitled to such payments based on their respective Pro Rata Shares and shall be distributed accordingly.”

 

(nnn)              Section 7.8 of the Loan Agreement is hereby amended by deleting the text “until repayment of the Term Loan or at any time an Event of Default has occurred and is continuing, “ therein.

 

(ooo)              Section 9.3 of the Loan Agreement is hereby amended by inserting the following as a new clause (f) after clause (e) thereof:

 

“(f)                         The Borrowers will maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrowers, their respective Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.”

 

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(ppp)              Section 9.6(a) of the Loan Agreement is hereby amended by deleting the text “Ten Million Dollars ($10,000,000)” therein and replacing it with the text “Twelve Million Five Hundred Thousand Dollars ($12,500,000)”.

 

(qqq)              Section 9.7 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“9.7                     Sale of Assets, Consolidation, Merger, Dissolution, Etc.  Each Borrower shall not, directly or indirectly, (a) merge into or with or consolidate with any other Person or permit any other Person to merge into or with or consolidate with it, provided, that (A) any Borrower may merge into or with or consolidate with any other Borrower upon not less than twenty (20) days prior written notice to Agent and (B) any Borrower may merge into or consolidate with another Person to effect a transaction permitted under Section 9.10(d) below so long as the Borrower is the surviving entity, or (b) unless otherwise consented to by Agent in writing, which consent shall not be unreasonably withheld or delayed, sell, assign, lease, transfer, abandon or otherwise dispose of any capital stock of a subsidiary or indebtedness to any other Person or any of its assets to any other Person (except for (i) sales of Inventory in the ordinary course of business, (ii) the disposition of worn-out or obsolete Equipment or Equipment no longer used in the business of such Borrower so long as (A) if an Event of Default exists or has occurred and is continuing, any proceeds are paid to Agent, for the ratable benefit of Lenders and (B) such sales for all Borrowers do not involve Equipment having an aggregate fair market value in excess of Two Million Five Hundred Thousand Dollars ($2,500,000) for all such Equipment disposed of in any single transaction or in excess of Seven Million Five Hundred Thousand Dollars ($7,500,000) for all such Equipment disposed of in any fiscal year of Borrowers, (iii) a sale of the Real Estate to the extent permitted under Section 2.6(a), (iv) a sale of the Adjacent Real Estate to the extent permitted under Section 2.6(b) and (v) any sale, assignment, lease, transfer, or other disposition of assets from a Borrower to any other Borrower), (c) form or acquire any subsidiaries (except as provided in Section 9.10(d) below), or (d) wind up, liquidate or dissolve or (e) agree to do any of the foregoing.”

 

(rrr)                       Section 9.9(f) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(f)                         any obligations or indebtedness of Borrowers on account of the deferred payment of the Total Consideration (as defined in Section 9.10 hereof) or any earn-outs or similar contingent payments in connection with the acquisition of a Target (as defined in Section 9.10 hereof), to the extent permitted in Section 9.10(d) hereof; provided, however, that no payments may be made by Borrowers on account thereof (other than with respect to the earn-out payable in connection with the acquisition of En Pointe) unless both before and immediately after giving effect to such payment, Borrowers have at least $10,000,000 in Excess Availability;”

 

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(sss)                    Section 9.9(i) of the Loan Agreement is hereby amended by deleting the text “Indebtedness” therein, and replacing it with the text “indebtedness”.

 

(ttt)                       Section 9.10(d)(ii) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(ii)                       The aggregate sum of (A) the purchase price for the subject Target and any related Targets plus any other consideration payable in connection with the sale of the Target and any related Targets, excluding any earn-outs and similar contingent payments, excluding any obligations or indebtedness of the Target that are assumed (as permitted by Section 9.9 hereof) and excluding any capital stock of PCM (the “Total Consideration”) or the amount of the subject Subsidiary Investments (as applicable), plus (B) the aggregate sum of the Total Consideration for all Targets acquired by Borrowers after the date hereof shall not exceed Fifty Million Dollars ($50,000,000) during the term of this Agreement after the Fourth Amendment Effective Date and Twenty Million Dollars ($20,000,000) during any fiscal year;”

 

(uuu)              Section 9.10(d)(iii) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(iii)                   As of the date of the acquisition of the subject Target and any related Targets or the making of the subject Subsidiary Investments (as applicable) and after giving effect thereto, the Average 30 Day Excess Availability would not be less than $17,000,000;”

 

(vvv)              Section 9.10(h) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(h)                       Borrowers may make acquisitions of or investments in properties numbered 1 through 3 listed on Schedule 9.10, so long as (i) the aggregate amount of such acquisitions and investments, together with any acquisition costs, property improvements and purchase money financing related thereto (excluding acquisitions, investments, costs or improvements made from the identifiable net proceeds of the sale or refinance of the Real Estate within 180 days of receipt by Borrowers of the net proceeds thereof), does not exceed $20,000,000 during the term of this Agreement after the Fourth Amendment Effective Date, (ii) the Borrowers have at least $10,000,000 in Excess Availability both before and after giving effect to each such acquisition or investment, and (iii) no Event of Default has occurred and is continuing at the time of any such acquisition or investment, or would result therefrom;”

 

(www)  Section 9.11 of the Loan Agreement is hereby amended by deleting the text “date hereof” at the end of clause (a) thereof and replacing it with the text “Fourth Amendment Effective Date”.

 

(xxx)              A new Section 9.19 is added to the Loan Agreement to read in its entirety as follows:

 

25

 

“9.19             Use of Proceeds.  No Borrower will request any Loan or Letter of Credit Accommodation, and no Borrower shall use, and each Borrower shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Loan or Letter of Credit Accommodation (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, to the extent such activities, businesses or transaction would be prohibited by Sanctions if conducted by a corporation incorporated in the United States, or (C) in any manner that would result in the violation of  any Sanctions applicable to any party hereto.”

 

(yyy)              Section 10.1(a) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(a)                        (i) Borrowers fail to pay when due any principal amount on the Loans, (ii) Borrowers fail to pay any other Obligations within two (2) Business Days after the same become due and payable or (iii) any Borrower or any Obligor fails to perform any of the covenants contained in this Agreement or the other Financing Agreements and such failure shall continue for thirty (30) days; provided, that, such thirty (30) day period shall not apply in the case of (A) any failure to observe any such covenant which is not capable of being cured at all or within such thirty (30) day period or which has been the subject of a prior failure within the preceding four (4) month period, (B) any failure by Borrowers to pursue a cure diligently and promptly during such thirty (30) day period, or (C) a violation of Section 9.19;”

 

(zzz)                 Section 11.3(b)(i) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(i)                           the extension of the Final Maturity Date;”

 

(aaaa)          Section 11.3(b)(v) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(v)                       the amendment, modification or waiver of:  (A) the terms of the following definitions or any provisions relating thereto:  Eligible Accounts, Eligible Adjacent Real Estate, Eligible Real Estate, Eligible Inventory, Excess Availability, Final Maturity Date, Maximum Credit, Required Lenders or Pro Rata Shares, or (B) any provision of Sections 6.4 or 6.8, or this Section 11.3;”

 

(bbbb)      Section 12.11(a) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(a)                        Agent may, at its option, from time to time, at any time on or after an Event of Default and for so long as the same is continuing or upon any other failure of a condition precedent to the Loans and Letter of Credit

 

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Accommodations hereunder, make such disbursements and advances (“Special Agent Advances”) which Agent, in its sole discretion, deems necessary or desirable either (i) to preserve or protect the Collateral or any portion thereof (provided that in no event shall Special Agent Advances for such purpose exceed Five Million Dollars ($5,000,000) in the aggregate outstanding at any time), provided, that, unless all Lenders otherwise agree in writing, the Special Agent Advances under this clause (i) shall not cause the aggregate outstanding principal amount of the Loans, the Letter of Credit Accommodations and such Special Agent Advances to exceed the Maximum Credit, and Agent shall make commercially reasonable arrangements with Borrowers for the repayment in full of such Special Agent Advances within a reasonable time, or (ii) to pay any other amount chargeable to any Borrower pursuant to the terms of this Agreement consisting of costs, fees and expenses and payments to any issuer of Letter of Credit Accommodations.  Special Agent Advances shall be repayable on demand and be secured by the Collateral.  Special Agent Advances shall not constitute Loans (except that they shall bear interest as if they were Prime Rate Loans) but shall otherwise constitute Obligations hereunder.  Agent shall notify each Lender and Borrowers in writing of each such Special Agent Advance, which notice shall include a description of the purpose of such Special Agent Advance.  Without limitation of its obligations pursuant to Section 6.10, each Lender agrees that it shall make available to Agent, upon Agent’s demand, in immediately available funds, the amount equal to such Lender’s Pro Rata Share of each such Special Agent Advance.  If such funds are not made available to Agent by such Lender, Agent shall be entitled to recover such funds, on demand from such Lender together with interest thereon, for each day from the date such payment was due until the date such amount is paid to Agent at the interest rate then payable by Borrowers in respect of the Revolving Loans as set forth in Section 3.1 hereof.”

 

(cccc)          Section 12.11(b) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“(b)                       Lenders hereby irrevocably authorize Agent, at its option and in its discretion to release any security interest in, mortgage or lien upon, any of the Collateral (i) upon termination of the Commitments and payment and satisfaction of all of the Obligations and delivery of cash collateral to the extent required under Section 13.1 hereof, or (ii) constituting property being sold or disposed of if Borrowers certify to Agent that the sale or disposition is made in compliance with the terms hereof, including Sections 9.7 and 2.3 hereof (and Agent may rely conclusively on any such certificate, without further inquiry), or (iii) constituting property in which any Borrower or any Obligor did not own an interest at the time the security interest, mortgage or lien was granted or at any time thereafter, or (iv) having an aggregate value of less than Five Million Dollars ($5,000,000) during any calendar year, or (v) if approved, authorized or ratified in writing by all of Lenders.  Except as provided above, Agent will not release any security interest in, mortgage or lien upon, any of the Collateral without the prior written authorization of all of Lenders (and any Lender may require that the proceeds from any sale or other disposition of the Collateral to be so released be applied to

 

27

 

the Obligations in a manner satisfactory to such Lender).  Upon request by Agent at any time, Lenders will promptly confirm in writing Agent’s authority to release particular types or items of Collateral pursuant to this Section.”

 

(dddd)  Section 13.1(c) of the Loan Agreement is deleted in its entirety.

 

(eeee)          Section 13.6 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“13.6             Participant’s Compensation.  Borrowers agree that each Participant shall be entitled to the benefits of Sections 3.5, 6.5 and 11.5 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 13.5(a); provided that such Participant agrees to be subject to the provisions of Section 6.9 as if it were an assignee pursuant to Section 13.5(a).  Notwithstanding anything herein to the contrary, a Participant shall not be entitled to receive any greater payment under Section 3.5(a), 6.5 or 11.5 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrowers’ prior written consent.  A Participant that would be a Non U.S.-Lender if it were a Lender shall not be entitled to the benefits of Section 6.5 unless Borrowers are notified of the participation sold to such Participant and such Participant agrees, for the benefit of Borrowers, to comply with Section 6.5(e) as though it were a Lender.”

 

(ffff)              Section 13.10 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

 

“13.10     Amendment and Restatement.  Each of the Lenders having a Commitment prior to the date hereof (the “Pre-Amendment Lenders”) shall assign to any Lender which is acquiring a new or additional Commitment on the date hereof (the “Post-Amendment Lenders”), and such Post-Amendment Lenders shall purchase from each Pre-Amendment Lender, at the principal amount thereof, such interests in the Revolving Loans and participation interests in Letter of Credit Accommodations on the date hereof as shall be necessary in order that, after giving effect to all such assignments and purchases, such Revolving Loans and participation interests in Letter of Credit Accommodations will be held by Pre-Amendment Lenders and Post-Amendment Lenders ratably in accordance with their Pro Rata Share after giving effect to the amendments provided herein.”

 

(gggg)      A new Section 14.10 is added to the Loan Agreement to read in its entirety as follows:

 

“14.10 Keepwell.  Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other guarantor of, or grantor of a security interest to secure, the obligations to guaranty and otherwise honor all Obligations in respect of Swap Obligations (provided, however, that

 

28

 

each Qualified ECP Guarantor shall only be liable under this Section 14.10 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 14.10, or otherwise under the Financing Agreements, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount).  The obligations of each Qualified ECP Guarantor under this Section shall remain in full force and effect until payment in full of the Obligations.  Each Qualified ECP Guarantor intends that this Section 14.10 constitute, and this Section 14.10 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other guarantor of, or grantor of a security interest to secure, the Obligations for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.”

 

(hhhh)      Each Borrower hereby agrees and acknowledges that, concurrently with the entering into of this Amendment, the Lenders will make Revolving Loans, in accordance with their Pro Rata Shares, in an amount sufficient to pay off the Term Loans, as defined in the Loan Agreement as in effect immediately prior to the date hereof, with the proceeds of such Revolving Loans to be used to repay in full such Term Loans.  Agent and each of the Lenders agrees that upon such repayment in full, each of the Term Notes, as defined in the Loan Agreement as in effect immediately prior to the date hereof, will be null and void and of no further force and effect.

 

2.                                    Joinder of New Borrower

 

(a)                               New Borrower hereby acknowledges, agrees and confirms that, by its execution of this Amendment, New Borrower will be deemed to be a “Borrower” for all purposes of the Loan Agreement and the Fee Letter and shall have all of the obligations of a Borrower thereunder as if it had executed the Loan Agreement and the Fee Letter.  New Borrower hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Loan Agreement, including without limitation (i) all of the representations and warranties of Borrowers set forth in Section 8 of the Loan Agreement, (ii) all of the covenants set forth in Sections 7 and 9 of the Loan Agreement and (iii) all of the multiple borrower provisions of Section 14 of the Loan Agreement.  Without limiting the generality of the foregoing terms of this clause (a), New Borrower, hereby agrees, jointly and severally with the other Borrowers, that it is responsible for the prompt payment and performance of the Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in accordance with the terms thereof.

 

(b)                              To secure payment and performance of all Obligations, New Borrower hereby grants to Agent a continuing security interest in, a lien upon, and a right of set off against, and hereby assigns to Agent as security, all Collateral owned by it, whether now owned or hereafter acquired or existing, and wherever located.

 

(c)                               To supplement the amendments set forth in Section 1 of this Amendment, the definition of “Information Certificates” in Section 1.68 of the Loan Agreement shall be deemed to include the Information Certificate of New Borrower attached hereto as Exhibit A in addition to the Information Certificates of the other Borrowers.

 

29

 

(d)                             Schedule 8.4 and Schedule 9.9 to the Loan Agreement are hereby amended and replaced with Schedule 8.4 and Schedule 9.9 attached hereto.

 

(e)                               New Borrower hereby represents and warrants to Agent and the Lenders the truth and accuracy as of the date hereof as though made on and as of the date hereof of all representations and warranties applicable to Borrowers in the Loan Agreement (after giving effect to the inclusions of New Borrower, its Information Certificate and the information set forth on the schedule attached hereto as set forth in clauses (a), (c) and (d) above) other than any such representations or warranties that, by their terms, are specifically made as of a date other than the date hereof.

 

(f)                                The address of New Borrower for purposes of Section 13.2 of the Loan Agreement is as follows:

 

1940 East Mariposa Avenue

El Segundo, CA 90245

 

3.                                    Conditions Precedent to Effectiveness of this Amendment.  This Amendment shall not become effective until all of the following conditions precedent shall have been satisfied in the sole discretion of Agent or waived by Agent:

 

(a)                               Agent shall have received this Amendment fully executed in a sufficient number of counterparts for distribution to all parties;

 

(b)                              Borrowers shall pay to Agent (i) for the benefit of Lenders party to the Loan Agreement as in effect immediately prior to the effectiveness of this Amendment (the “Existing Loan Agreement”), in accordance with their Pro Rata Shares (calculated under clause (c) of the definition of Pro Rata Share as defined in the Existing Loan Agreement), an amendment fee in an amount equal to One Hundred Thousand Dollars ($100,000), which fee shall be fully earned as of and payable on the date hereof; (ii) for the benefit of Wells Fargo Capital Finance, LLC on account of the increase to its Revolving Loan Commitment on the date hereof, $40,000, for the benefit of JPMorgan Chase Bank, N.A. on account of the increase to its Revolving Loan Commitment on the date hereof, $10,000, and for the benefit of Compass Bank on account of the addition of its Revolving Loan Commitment on the date hereof, $50,000; and (iii) for the account of Agent, as and when due and payable under the terms of that certain fee letter, dated as of the date hereof, among Borrowers and Agent, in form and substance satisfactory to Agent (the “Fourth Amendment Fee Letter”), the fees set forth in the Fourth Amendment Fee Letter, each of which fees shall be fully earned as of and payable on the date hereof;

 

(c)                               Agent shall have received such endorsements to its loan policy of title insurance for its respective deeds of trust against the Real Estate and Adjacent Real Estate, each as amended, as it shall reasonably request in connection with this Amendment;

 

(d)                             all requisite corporate or company action and proceedings of New Borrower in connection with this Amendment and the other Financing Agreements executed in connection herewith shall be satisfactory in form and substance to Agent, and Agent shall have received all information and copies of all documents of New Borrower, including, without

 

30

 

limitation, records of requisite corporate or company action and proceedings which Agent may have requested in its Permitted Discretion in connection therewith, such documents where requested by Agent in its Permitted Discretion or its counsel to be certified by appropriate corporate or company officers or Governmental Authorities;

 

(e)                               Agent shall have received a certificate of a duly authorized officer of each Borrower (other than New Borrower), in form and substance satisfactory to Agent, certifying (i) that attached (or previously provided) copies of such Borrower’s organizational and governing documents are true and complete, and in full force and effect, without amendment except as shown; (ii) that an attached copy of resolutions authorizing execution and delivery of the Financing Agreements is true and complete, and that such resolutions are in full force and effect, were duly adopted, have not been amended, modified or revoked, and constitute all resolutions adopted with respect to this Amendment; and (iii) to the title, name and signature of each Person authorized to sign the Financing Agreements;

 

(f)                                Agent shall have received the fully executed Seventh Amendment to Deed of Trust, Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing with respect to the Real Estate and the fully executed First Amendment to Deed of Trust, Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing with respect to the Adjacent Real Estate;

 

(g)                              Agent shall have received such documents as Agent may require to establish that it has a valid, perfected and first priority security interest in the Collateral held by New Borrower, including, without limitation, a Collateral Assignment of Trademarks;

 

(h)                              Agent shall have received an Information Certificate duly executed and delivered by New Borrower;

 

(i)                                  Agent shall have received, in form and substance reasonably satisfactory to Agent, and reviewed to its reasonable satisfaction, UCC, tax lien, litigation, bankruptcy and intellectual property searches from all offices that Agent deems appropriate with respect to New Borrower in its sole discretion;

 

(j)                                  Agent shall have received, in form and substance satisfactory to Agent, an opinion letter of counsel to Borrowers with respect to this Amendment and such other matters as Agent may reasonably request;

 

(k)                              Agent shall have received the Fourth Amendment Fee Letter duly executed and delivered by Borrowers;

 

(l)                                  Borrowers shall have Excess Availability of at least $17,000,000 after giving effect to the effectiveness of this Amendment;

 

(m)                          Agent shall have received evidence of insurance and loss payable endorsements with respect to the insurance policies of New Borrower; and

 

(n)                              Agent shall have received all other documents and legal matters in connection with the transactions contemplated by this Amendment and such documents shall have been delivered or executed or recorded and shall be in form and substance satisfactory to Agent.

 

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4.                                    Joining Lender.  By its execution of this Amendment, Compass Bank hereby confirms and agrees that, with effect on and after the date hereof, it shall be a party to the Loan Agreement and succeed to all of the rights and be obligated to perform all of the obligations of a Lender under the Loan Agreement, including the requirements concerning confidentiality and the payment of indemnification, with a Revolving Loan Commitment in an amount equal to $25,000,000.  Compass Bank (i)(a) acknowledges that it has received a copy of the Loan Agreement and the Schedules and Exhibits thereto, together with copies of the most recent financial statements of Borrowers, and such other documents and information as it has deemed appropriate to make its own credit and legal analysis and decision to enter into this Amendment, and (b) agrees that it will, independently and without reliance upon Agent or any Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit and legal decisions in taking or not taking action under the Loan Agreement; (ii) hereby appoints and authorizes Wells Fargo Capital Finance, LLC in its capacity as Agent to take such action as agent on its behalf to exercise such powers under the Loan Agreement as are delegated to Agent; and (iii) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Agreement are required to be performed by it as a Lender.  For the avoidance of doubt, Borrowers hereby consent to Compass Bank becoming a Lender under the Credit Agreement.

 

5.                                    Representations and Warranties.  Each Borrower represents and warrants as follows:

 

(a)                               Authority.  Each Borrower has the requisite corporate power and authority to execute and deliver this Amendment, and to perform its obligations hereunder and under the Financing Agreements (as amended or modified hereby) to which it is a party.  The execution, delivery and performance by each Borrower of this Amendment have been duly approved by all necessary corporate action, have received all necessary governmental approval, if any, and do not contravene any law or any contractual restriction binding on any Borrower.  No other corporate proceedings are necessary to consummate such transactions.

 

(b)                              Enforceability.  This Amendment has been duly executed and delivered by each Borrower.  This Amendment and each Financing Agreement (as amended or modified hereby) is the legal, valid and binding obligation of each Borrower, enforceable against each Borrower in accordance with its terms, and is in full force and effect.

 

(c)                               Representations and Warranties.  The representations and warranties contained in each Financing Agreement (other than any such representations or warranties that, by their terms, are specifically made as of a date other than the date hereof) are true and correct on and as of the date hereof as though made on and as of the date hereof.

 

(d)                             Due Execution.  The execution, delivery and performance of this Amendment are within the power of each Borrower, have been duly authorized by all necessary corporate or company action, have received all necessary governmental approval, if any, and do not contravene any law or any contractual restrictions binding on such Borrower.

 

32

 

(e)                               No Default.  No event has occurred and is continuing that constitutes a Default or Event of Default.

 

6.                                    Choice of Law.  The validity of this Amendment, the construction, interpretation, and enforcement hereof, and the rights of the parties hereto with respect to all matters arising hereunder or related hereto shall be determined under, governed by, and construed in accordance with the laws of the State of California.

 

7.                                    Counterparts.  This Amendment may be executed in any number of counterparts and by different parties and separate counterparts, each of which when so executed and delivered, shall be deemed an original, and all of which, when taken together, shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment by telefacsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Amendment.

 

8.                                    Reference to and Effect on the Financing Agreements.

 

(a)                               Upon and after the effectiveness of this Amendment, each reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Loan Agreement, and each reference in the other Financing Agreements to “the Loan Agreement”, “thereof” or words of like import referring to the Loan Agreement, shall mean and be a reference to the Loan Agreement as modified and amended hereby.

 

(b)                              Except as specifically set forth in this Amendment, the Loan Agreement and all other Financing Agreements, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed and shall constitute the legal, valid, binding and enforceable obligations of Borrowers to Agent and Lenders without defense, offset, claim or contribution.

 

(c)                               The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Agent or any Lender under any of the Financing Agreements, nor constitute a waiver of any provision of any of the Financing Agreements.

 

9.                                    Ratification.  Each Borrower hereby restates, ratifies and reaffirms each and every term and condition set forth in the Loan Agreement, as amended hereby, and the other Financing Agreements effective as of the date hereof.

 

10.                            Estoppel.  To induce Agent and Lenders to enter into this Amendment and to induce Agent and Lenders to continue to make advances to Borrowers under the Loan Agreement, each Borrower hereby acknowledges and agrees that, after giving effect to this Amendment, as of the date hereof, there exists no Default or Event of Default.

 

11.                            Integration.  This Amendment is a Financing Agreement.  This Amendment, together with the other Financing Agreements, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.

 

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12.                            Severability.  In case any provision in this Amendment shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

13.                            Submission of Amendment.  The submission of this Amendment to the parties or their agents or attorneys for review or signature does not constitute a commitment by Agent or any Lender to waive any of their respective rights and remedies under the Financing Agreements, and this Amendment shall have no binding force or effect until all of the conditions to the effectiveness of this Amendment have been satisfied as set forth herein.

 

14.                            Post-Closing Obligation.  Within 30 days after the date hereof (or such longer period as agreed to by the Agent in its sole discretion), Borrowers shall deliver to Agent Deposit Account Control Agreements by and among Agent, New Borrower and each bank where New Borrower has a deposit account, in each case, duly authorized, executed and delivered by such bank and New Borrower (or Agent shall be the bank’s customer with respect to such deposit account as Agent may specify).

 

[Remainder of Page Left Intentionally Blank]

 

34

 

IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above written.

 

	
 
    	
BORROWERS:
    
	
 
    	
 
    
	
 
    	
PCM, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Brandon LaVerne
    
	
 
    	
Name:  Brandon LaVerne
    
	
 
    	
Title:  CFO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PCM SALES, INC.,
    
	
 
    	
a California   corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Stephen W. Moss
    
	
 
    	
Name:  Stephen W. Moss
    
	
 
    	
Title:  President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PCM LOGISTICS, LLC,
    
	
 
    	
a Delaware limited   liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Sean Mollet
    
	
 
    	
Name:  Sean Mollet
    
	
 
    	
Title:  President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PCMG, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Alan Bechara
    
	
 
    	
Name:  Alan Bechara
    
	
 
    	
Title:  President
    

 

 

	
 
    	
BORROWERS:
    
	
 
    	
 
    
	
 
    	
M2 MARKETPLACE, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Dan DeVries
    
	
 
    	
Name:  Dan DeVries
    
	
 
    	
Title:  President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ABREON, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Howard Schapiro
    
	
 
    	
Name:  Howard Schapiro
    
	
 
    	
Title:  President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MALL ACQUISITION SUB 4 INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Brandon LaVerne
    
	
 
    	
Name:  Brandon LaVerne
    
	
 
    	
Title:  President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MALL ACQUISITION SUB 5 INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Brandon LaVerne
    
	
 
    	
Name:  Brandon LaVerne
    
	
 
    	
Title:  President
    

 

 

	
 
    	
BORROWERS:
    
	
 
    	
 
    
	
 
    	
PCM BPO, LLC,
    
	
 
    	
a Delaware limited   liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Simon Abuyounes
    
	
 
    	
Name:  Simon Abuyounes
    
	
 
    	
Title:  President/Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ONSALE HOLDINGS, INC.,
    
	
 
    	
an Illinois corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Sam Khulusi
    
	
 
    	
Name:  Sam Khulusi
    
	
 
    	
Title:  President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EN POINTE TECHNOLOGIES SALES,   LLC,
    
	
 
    	
a Delaware limited   liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael Rapp
    
	
 
    	
Name:  Michael Rapp
    
	
 
    	
Title:  President
    

 

 

	
AGENT AND LENDERS:
    	
WELLS FARGO CAPITAL FINANCE,   LLC,
    
	
 
    	
as Agent and as a   Lender
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Dennis King
    
	
 
    	
Name:  Dennis King
    
	
 
    	
Title:  Vice President
    
	
 
    	
 
    
	
 
    	
Revolving Loan   Commitment: $100,000,000
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BANK OF AMERICA, N.A.,
    
	
 
    	
as a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Matthew R. Van   Steenhuyse
    
	
 
    	
Name:  Matthew R. Van Steenhuyse
    
	
 
    	
Title:  Senior Vice President
    
	
 
    	
 
    
	
 
    	
Revolving Loan   Commitment: $50,000,000
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PNC BANK, NATIONAL ASSOCIATION
    
	
 
    	
as a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steve Roberts
    
	
 
    	
Name:  Steve Roberts
    
	
 
    	
Title:  Vice President
    
	
 
    	
 
    
	
 
    	
Revolving Loan   Commitment: $40,000,000
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JPMORGAN CHASE BANK, N.A.,
    
	
 
    	
as a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jordan Azar
    
	
 
    	
Name:  Jordan Azar
    
	
 
    	
Title:  Authorized Officer
    
	
 
    	
 
    
	
 
    	
Revolving Loan   Commitment: $35,000,000
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
COMPASS BANK,
    
	
 
    	
as a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jason Nichols
    
	
 
    	
Name:  Jason Nichols
    
	
 
    	
Title:  Senior Vice President
    
	
 
    	
 
    
	
 
    	
Revolving Loan   Commitment: $25,000,000
    

 

 

 

Exhibit A

 

 

Form of Information Certificate

 

 

INFORMATION CERTIFICATE

OF

 

 

 

Dated:  [________]

 

Wells Fargo Capital Finance, LLC
 2450 Colorado Avenue, Suite 3000 West
 Santa Monica, CA 90404

 

In order to assist you in the evaluation of the financing you are considering of ______________ (the “Company”), to expedite the preparation of required documentation, and to induce you to provide financing to the Company, we represent and warrant to you the following information about the Company, its organizational structure and other matters of interest to you:

 

15.       The Company has been formed by filing the following document with the Secretary of State of the State of _________________:

 

q                                  Certificate/Articles of Incorporation

q                                  Certificate/Articles of Organization 

q                                  Other [specify]:________________________________

 

The date of formation of the Company by the filing of the document specified above with the Secretary of State was _______________.

 

16.       The Company was not formed by filing a document with any Secretary of State.  The Company is organized as a [specify type of organization, (e.g., general partnership, sole proprietorship, etc.)] ________________.  The Company’s governing document is a [name legal document, if one exists, (e.g., partnership agreement, etc.)]                   .

 

17.       The full and exact name of the Company as set forth in the document specified in Item 1 or 2, or (if no document is specified in Item 1 or 2) the full and exact legal name used in the Company’s business, is: ________________________

 

18.       The Company uses and owns the following trade name(s) in the operation of its business (e.g. billing, advertising, etc.; note: do not include names which are product names only):

 

_______________________________________

 

 

19.       The Company maintains offices, leases or owns real estate, has employees, pays taxes, or otherwise conducts business in the following States (including the State of its organization): ___________________

 

20.       The Company has filed the necessary documents with the Secretary of State to qualify as a foreign corporation in the following States: ___________________

 

21.       The Company’s authority to do business has been revoked or suspended, or the Company is otherwise not in good standing in the following States: ___________________

 

22.       The Company is the owner of the following licenses and permits, issued by the federal, state or local agency or authority indicated opposite thereto:

 

	
Type of License
    	
 
    	
Issuing Agency or   Authority
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

23.       In conducting its business activities, the Company is subject to regulation by federal, state or local agencies or authorities (e.g., FDA, EPA, state or municipal liquor licensing agencies, federal or state carrier commissions, etc.) as follows:

 

	
Type of Activity
    	
 
    	
Regulatory Agency or   Authority
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

24.       The Company has never been involved in a bankruptcy or reorganization except: [explain] _______________________________

 

25.       Between the date the Company was formed and now, the Company has used other names as set forth below:

 

Period of Time                                                                                                Prior Name 

From ______________ to ______________

From ______________ to ______________

From ______________ to ______________

From ______________ to ______________

 

26.       Between the date the Company was formed and now, the Company has made or entered into mergers or acquisitions with other companies as set forth below:

 

	
Approximate Date
    	
 
    	
Other Entity
    	
 
    	
Description of   Transaction
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

	
 
    	
 
    	
 
    	
 
    	
 
    

 

27.       The chief executive office of the Company is located at the street address set forth below, which is in ________________________ County, in the State of ________________________

 

28.       The books and records of the Company pertaining to accounts, contract rights, inventory, etc. are located at the following street address:

 

___________________________________________

 

29.       In addition to the chief executive office, the Company has inventory, equipment or other assets located at the addresses set forth below. In each case, we have noted whether the location is owned, leased or operated by third parties and the names and addresses of any mortgagee, lessor or third party operator:

 

	
Street Address with County
    	
Company’s Interest
   (e.g., owner, lessee or bailee)
    	
Name and Address of Third Party with Interest in 
   Location 
   (e.g., mortgagee, lessor or 
   warehouseman)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

30.       In the course of its business, the Company’s inventory and/or other assets are handled by the following customs brokers and/or freight forwarders:

 

	
Name
    	
Address
    	
Type of Service/Assets
   Handled
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

31.       The places of business or other locations of any assets used by the Company during the last four (4) months other than those listed above are as follows:

 

	
Street Address
    	
City
    	
State & Zip Code
    	
County
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

 

32.       The Company is affiliated with, or has ownership in, the following entities (including subsidiaries):

 

	
Name of Entity
    	
Chief Executive 
    	
Jurisdiction of 
    	
Ownership
    
	
 
    	
Office
    	
Incorporation
    	
Percentage or Relationship
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

33.       The Federal Employer Identification Number of the Company is _____________________

 

34.       Under the Company’s charter documents, and under the laws of the State in which the Company is organized, the shareholders, members or other equity holders do not have to consent in order for the Company to borrow money, incur debt or obligations, pledge or mortgage the property of the Company, grant a security interest in the property of the Company or guaranty the debt of obligations of another person or entity.

 

	
q   True
    	
q   Incorrect [explain]:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

The power to take the foregoing actions is vested exclusively in the __________________________ [name the body (e.g. Board of Directors) or person (e.g. general partner, sole Manager) that has such authority].

 

35.       The officers of the Company (or people performing similar functions) and their respective titles are as follows:

 

	
Title
    	
Name
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    

 

36.       The Company is governed by _____________ [insert name of governing body or person (e.g. Board of Directors, sole Manager, General Partner)]. The members of such governing body of the Company are: _________________________________

 

37.       The name of the stockholders, members, partners or other equity holders of the Company and their equity holdings are as follows (if equity interests are widely held indicate only equity owners with 10% or more of the equity interests):

 

	
Name
    	
No. of Shares or Units
    	
Ownership Percentage
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

 

38.       There are no judgments or litigation pending by or against the Company, its subsidiaries and/or affiliates or any of its officers/principals, except as follows: ________________________

 

39.       At the present time, there are no delinquent taxes due (including, but not limited to, all payroll taxes, personal property taxes, real estate taxes or income taxes) except as follows: ________________________

 

40.       The Company’s assets are owned and held free and clear of any security interests, liens or attachments, except as follows:

 

	
Lienholder
    	
Assets Pledged
    	
Amount of Debt Secured
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

41.       The Company has not guaranteed and is not otherwise liable for the obligations of others, except as follows:

 

	
Debtor
    	
Creditor
    	
Amount of Obligation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

42.       The Company does not own or license any trademarks, patents, copyrights or other intellectual property, except as follows (indicate type of intellectual property and whether owned or licensed, registration number, date of registration, and, if licensed, the name and address of the licensor):

 

	
Type of Intellectual
   Property
    	
Registration Number
   and Date of
   Registration
    	
Owned or Licensed
    	
Name and Address of
   Licensor
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

43.       The Company owns or uses the following materials (e.g., software, etc.) that are subject to registration with the United States Copyright Office, though at present copyright registrations have not been filed with respect to such materials: ___________________________________________________________
 ____________________________________________________________________________________
 ____________________________________________________________________________________

 

 

44.       The Company does not have any deposit or investment accounts with any bank, savings and loan or other financial institution, except as follows, for the purposes and of the types indicated:

 

	
Bank Name and 
    	
Contact Person and 
    	
Account No.
    	
Purpose/Type
    
	
Branch Address
    	
Phone Number
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

45.       The Company has no processing arrangements for credit card payments or payments made by check (e.g. Telecheck) except as follows:

 

	
Processor Name and Address
    	
Contact Person and Phone
   Number
    	
Account No.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

46.       The Company owns or has registered to it the following motor vehicles, the original title certificates for which shall be delivered to Lender prior to closing:

 

	
State Where Titled
   and, if different,
   Registered
    	
Name of Registrant
   as it appears on the
   Title Certificate
    	
VIN
    	
Year, Make and
   Model
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

47.       With regard to any pension or profit sharing plan: ______________________________

 

(a)                               A determination as to qualification has been issued.

 

(b)                              Funding is on a current basis and in compliance with established requirements.

 

48.       The Company’s fiscal year ends: _______________________________

 

49.       Certified Public Accountants for the Company is the firm of: _______________________________

 

	
Name:
    	
 
    	
 
    
	
Address:
    	
 
    	
 
    
	
Telephone:
    	
 
    	
 
    
	
Facsimile:
    	
 
    	
 
    
	
E-Mail:
    	
 
    	
 
    
	
Partner Handling   Relationship:
    	
 
    	
 
    
	
Were statements   uncertified for any fiscal year?
    	
 
    	
 
    
					

 

 

50.       The Company’s counsel with respect to the proposed loan transaction is the firm of:

 

	
Name:
    	
 
    	
 
    
	
Address:
    	
 
    	
 
    
	
Telephone:
    	
 
    	
 
    
	
Facsimile:
    	
 
    	
 
    
	
E-Mail:
    	
 
    	
 
    
	
Partner Handling Relationship:
    	
 
    	
 
    
				

 

 

 

We agree to give you prompt written notice of any change or amendment with respect to any of the foregoing information. Until you receive such notice, you will be entitled to rely in all respects on the foregoing information.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
[__________________]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    
						

 

 

*** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

SCHEDULE 8.4

 

Other Liens

 

 

	
Lienholder
    	
 
    	
Borrower(s)
    	
 
    	
Assets
    	
 
    	
Amount of
   Debt Secured
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
IBM Credit LLC
    	
 
    	
 

PCM, Inc.

PCM Sales, Inc.

PCMG, Inc.

M2   Marketplace, Inc.

Abreon, Inc.

En Pointe Technologies   Sales, LLC
    	
 
    	
All assets
    	
 
    	
[* * *]
    
	
Apple Inc.
    	
 
    	
 

PCM Sales, Inc.

PCM, Inc.

PCMG, Inc.

M2 Marketplace, Inc.

PCM Logistics, LLC

OnSale Holdings, Inc.

En Pointe Technologies   Sales, LLC
    	
 
    	
Inventory and all   proceeds thereof
    	
 
    	
[* * *]
    
	
Hewlett-Packard Company
    	
 
    	
 

PCM, Inc.

PCM Logistics, LLC

PCM Sales, Inc.

M2 Marketplace, Inc.

PCMG, Inc.

En Pointe Technologies   Sales, LLC
    	
 
    	
Inventory, equipment   and all proceeds thereof
    	
 
    	
[* * *]
    

 

 

*** CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

 

SCHEDULE 9.9

 

Indebtedness

 

 

	
Lender
    	
 
    	
Borrower(s)
    	
 
    	
Maximum Amount of
   Debt
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
IBM Credit LLC
    	
 
    	
 

PCM, Inc.

PCM Sales, Inc.

PCMG, Inc.

M2   Marketplace, Inc.

Abreon, Inc.

En Pointe Technologies   Sales, LLC
    	
 
    	
[* * *]
    
	
Apple Inc.
    	
 
    	
 

PCM Sales, Inc.

PCM, Inc.

PCMG, Inc.

M2 Marketplace, Inc.

PCM Logistics, LLC

OnSale Holdings, Inc.

En Pointe Technologies   Sales, LLC
    	
 
    	
[* * *]
    
	
Hewlett-Packard Company
    	
 
    	
 

PCM, Inc.

PCM Logistics, LLC

PCM Sales, Inc.

M2   Marketplace, Inc.

PCMG, Inc.

En Pointe Technologies   Sales, LLC
    	
 
    	
[* * *]EX-10.1

 Exhibit 10.1 

Share Transfer Agreement 

In relation to Convertergy I Holdings Limited 

Transferor: Convertergy II Holdings Limited 

Transferee: Solar Power Inc. 

Date: May 8, 2015 

 Table of Contents 

 

							
	Table of Contents		 	2	  
			
	1.		Target Share and TARget creditor’s rights		 	3	  
			
	2.		Target company		 	4	  
			
	3.		Share Transfer Price and Payment		 	4	  
			
	4.		Closing		 	5	  
			
	5.		Representations, Warranties and Undertakings of the Transferor and Convertergy Shanghai		 	7	  
			
	6.		Representations, Warranties and Undertakings of the Transferee		 	11	  
			
	7.		Taxes and Expenses		 	11	  
			
	8.		Liabilities for Breach		 	12	  
			
	9.		Modification and Termination		 	14	  
			
	10.		Force Majeure		 	14	  
			
	11.		Governing Law and Dispute Resolution		 	14	  
			
	12.		Miscellaneous		 	15	  

 PARTIES TO THIS AGREEMENT: 

Transferor: Convertergy II Holdings Limited, a company incorporated and validly existing under the laws of the British Virgin Islands, with its company
number being 1871979, its address being at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands, and its authorized signatory being Wong Yun Pun; 

Transferee: Solar Power Inc., a company incorporated and validly existing under the laws of the United States of America, with its company number being
000-50142, its address being in California, U.S. and its authorized signatory being Min Xiahou

; 
 Target Company: Convertergy I Holdings Limited, a company incorporated and validly existing under the laws of the
British Virgin Islands, with its company number being 1872471 and its address being at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands and its authorized signatory being Wong Yun Pun; and 

Convertergy Energy Technology Co., Ltd.

, a company incorporated and validly existing under the laws of the People’s Republic of China, with its company registration number being 310110000543117, its address being at Floor 2, Building 5,
No. 200, Niudun Road, Zhangjiang Hi-tech Park, Shanghai, China (“Convertergy Shanghai”) and its legal representative being Donald Chang Ye. 

(The parties above are collectively referred to as the “Parties”) 

DEFINITIONS 
 For purposes hereof, unless
otherwise required by the context, the following terms and expressions shall have the meanings set forth below: 
  

			
	“Share Transfer”		means the transaction by which the Transferor will transfer to the Transferee all the issued and outstanding shares in the Target Company which are held by the Transferor and consist of only one share.
		
	“Target Share”		means the only one share in the Target Company with a par value of US$1 per share, which represents all the issued and outstanding shares in the Target Company and is held by the Transferor, the sole shareholder of the Target
Company.
		
	“Transfer of Creditor’s Rights”		means the transaction by which the Transferor will transfer to the Transferee the Creditor’s Rights it intends to acquire from its affiliates and hold prior the closing date.
		
	“Creditor’s Rights”		means the creditor’s right towards Perfect Harbour Investments Limited that the Transferor intends to acquire from its affiliates as part of the Equity Restructuring (as defined below), which are as set forth in detail in
Section 1.4 herein below.

  
 1 

			
		
	“Share Transfer Price”		means the price to be paid by the Transferee to the Transferor in consideration of the transfer of the Target Share as contemplated under this Agreement, which shall be equal to US$13,783,401 (expressed in words: Thirteen Million,
Seven Hundred and Eighty-Three Thousand, Four Hundred and One United States Dollars) in aggregate, and shall be paid in the form of shares to be issued by the Transferee and in accordance with the terms and conditions in this Agreement.
		
	“Creditor’s Rights Transfer Price”		means the price to be paid by the Transferee to the Transferor in consideration of the transfer of the Creditor’s Rights in the form of shares to be issued by the Transferee and in accordance with the terms and conditions in
this Agreement, the amount of which is as set forth in Section 3.2 herein below.
		
	“Articles of Association”		means the Memorandum and Articles of Association of the Target Company adopted on May 4, 2015.
		
	“Disclosure”		means the provision of information by the Transferor to the Transferee with respect to the events, situations, information and materials related to the transaction contemplated under this Agreement, especially the events,
situations, information and materials that may have an adverse effect on the Transferee.
		
	“Compensation”		means among the Parties to this Agreement, the payment obligation owed by one Party to any other Party in addition to the subject hereunder and the consideration thereof.
		
	“PRC” or “China”		means the People’s Republic of China, but solely for purposes of this Agreement, excluding the Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan Region; and
		
	“PRC Laws”		means laws, administrative regulations, administrative rules and regulatory documents promulgated by the competent authorities of the PRC that are in effect at present and on the signing date of this Agreement.

 WHEREAS: 
  

	(1)	At the signing date of this Agreement, the registered capital of Convertergy Shanghai is US$8,762,735. The existing shareholders of Convertergy Shanghai propose to reorganize the equity structure of Convertergy Shanghai
to result in the Target Company becoming an indirect shareholder of Convertergy Shanghai and indirectly hold 76.8026% equity interests of Convertergy Shanghai (the “Equity Restructuring”); 

  
 2 

	(2)	The existing shareholder of the Target Company proposes to conduct another strategic restructuring of Convertergy Shanghai through the Share Transfer contemplated under this Agreement, for the purpose of stabilizing the
value of Convertergy Shanghai in the long run; 

  

	(3)	As of the signing date of this Agreement, the Transferor warrants that it duly and completely holds the entire issued and outstanding share capital of the Target Company, which consists of 1 share in aggregate, together
with the relevant interests attached thereto; 

  

	(4)	The Transferor agrees to transfer, and the Transferee agrees to acquire the Target Share (i.e., the entire issued and outstanding share capital of the Target Company, consisting of 1 share in aggregate) and the Target
Creditor’s Rights held by the Transferor in accordance with the terms and conditions in this Agreement; and 

  

	(5)	The Share Transfer contemplated under this Agreement has been approved by the board of directors of the Target Company. 

NOW, THEREFORE, after having reached agreement with respect to the Share Transfer as described above through friendly consultations, the Parties hereby enter
into this Agreement as follows: 
  

	1.	TARGET SHARE AND TARGET CREDITOR’S RIGHTS 

  

	1.1	All Parties agree that the Transferor will transfer to the Transferee all the issued and outstanding shares in the Target Company legally owned by the Transferor, consisting of only 1 share in aggregate. After
completion of the Share Transfer, the Transferee will hold all the issued and outstanding shares in the Target Company, consisting of only 1 share in aggregate. 

  

	1.2	The Transferor confirms and warrants that as of the signing date of this Agreement, the Target Share is free of any lien or security interest in other forms or any third party’s rights, and to the knowledge of the
Transferor, there exists no restrictions or obligations that may prejudice the transfer of Target Share or the exercise of shareholder’s rights by the Transferee; and the Target Share is not subject to any enforcement measures such as
attachment or judicial preservatory measures taken by any competent authorities. 

  

	1.3	The Target Share includes all the shareholder interests to which the Transferor is entitled with respect to the Target Company immediately prior to the effectiveness of this Agreement, i.e., that the Share Transfer
Price shall include all the undistributed profits accrued on the entire issued and outstanding share capital of the Target Company (consisting of only 1 share in aggregate) immediately prior to the signing date of this Agreement, excluding any
dividends that have been received by the Transferor. 

  

	1.4	All Parties acknowledge and confirm that, in order for Perfect Harbour Investments Limited to provide Convertergy Shanghai with a shareholder loan in an amount of US$1,500,000 (the “Shareholder Loan”)
in accordance with the loan agreement executed between Convertergy Shanghai and Perfect Harbour Investment Limited dated October 24, 2014 (the “Loan Agreement”), the affiliates of the Transferor have provided Perfect Harbour
Investments Limited with a loan in the same amount of the Shareholder Loan and have held the corresponding creditor’s rights towards Perfect Harbour Investment Limit as of the signing date of this Agreement. The Transferor intends to acquire
such creditor’s rights from its affiliates prior to the closing date. It’s further confirmed and agreed by the Transferor and Transferee that the Transferor shall transfer the Creditor’s Rights to the Transferee on the closing date in
accordance with the terms and conditions in this Agreement. 

  
 3 

	2.	TARGET COMPANY 

  

	2.1	The Target Company is a company duly incorporated and legally existing with independent legal person status. It has validly obtained all necessary authorizations, approvals, permits and qualifications to operate its
business, and has the requisite power to execute and perform all the contracts in relation to the operation of its business. 

  

	2.2	Ever since its establishment, the Target Company has been conducting its business in compliance with applicable laws, paying taxes in accordance with applicable rules and regulations; it has never conducted any illegal
operation, tax evasion, tax avoiding or tax dodging and never suffered revocation of business license or forced closure. 

  

	2.3	Ever since its establishment, the Target Company has at all times strictly complied with the financial policies and accounting principles required by the laws of the British Virgin Islands; its accounting books,
vouchers, statements and the like are all consistent with the financial policies and accounting principles required by the government of the British Virgin Islands and are true, complete, accurate and correspond to the underlying properties; and all
the bad debts and discarded assets have been written off therefrom (if applicable). 

  

	3.	SHARE TRANSFER PRICE AND PAYMENT 

  

	3.1	Share Transfer Price 

 All Parties agree that the total transfer price of the Target Share under
this Agreement shall be US$13,783,401 (expressed in words: Thirteen Million, Seven Hundred and Eighty-Three Thousand, Four Hundred and One United States Dollars). 

  
 4 

	3.2	Creditor’s Rights Transfer Price 

 All Parties agree that the total consideration for the
transfer of the Creditor’s Rights contemplated under this Agreement shall be the sum of the following two amounts: (1) the principal amount of the Shareholder Loan, i.e. US$1,500,000, and (2) all the interest accrued on the principal
amount specified in Item (1) above in accordance with the Loan Agreement from the date on which the Shareholder Loan was disbursed to the account of Convertergy Shanghai (i.e., October 24, 2014) to the closing date contemplated under this
Agreement at an annual compound interest rate of 10%. 
  

	3.3	Pricing Currency 

 The transfer price of each of the Target Share and the Creditor’s Rights
shall be denominated in US$. 
  

	3.4	Payment of Share Transfer Price and Creditor’s Rights Transfer Price 

 The Share Transfer
Price and Creditor’s Rights Transfer Price shall both be paid by the Transferee to the Transferor on the closing date in the form of shares to be issued by the Transferee, the number of which shares shall be finally determined on the basis of
(1) the average closing price of such shares within the ten trading days immediately prior to the closing date, or (2) the average closing price of such shares within the ten trading days immediately prior to a base date otherwise agreed
by and between the Transferor and Transferee. The Transferee shall deliver the shares issued as above to the Transferor within fifteen (15) business days after the closing date, together with a legal opinion issued by a qualified U.S. law firm
confirming that all procedures required by securities laws and listing rules of the United States for the registration of such shares have been completed, and such shares shall become freely transferrable on the secondary market without any
restriction upon expiration of the ninety (90) days’ lock-up period commencing immediately after the closing date (the “Lock-up Period”); and other than such lock-up restriction, there exist no other encumbrance and
restriction upon such shares. 
  

	3.5	The Transferor shall begin to handle the procedures necessary for the registration of the changes resulting from the transfer of the Target Share within five (5) business days as of the signing date of this
Agreement. The actual implementation of such procedures shall be the responsibility of the Target Company and the Transferor, with necessary and non-delayed assistance from the Transferor and the Transferee. The Target Company shall have the name
and address of the Transferee registered onto its register of members before the closing date specified in Section 4 of this Agreement. 

  

	4.	CLOSING 

  

	4.1	The closing of the Share Transfer as contemplated under this Agreement shall be subject to satisfaction of all the following conditions, and the closing date shall be the date on which the last of the following
conditions is satisfied: 

  

	 	(i)	the Share Transfer has been approved by the board of directors of the Target Company; and resolutions indicating such approval have been executed, of which the original has been submitted to the Transferee;

  
 5 

	 	(ii)	the relevant parties have completed the equity restructuring of Shanghai Longdian New Energy Technology Co., Ltd.

 and Shanghai Dijun New Energy Technology Co., Ltd.

 for the purpose of having the shareholders of such two companies changed to Qingguo Liu

 or a party designated by Qingguo Liu

 and accepted by the Transferee, Zhangqi Huang

, Yongqing Shen

, Lingkong Meng

, Shengping Dai

 and the vehicle accepted by the Transferee to execute the employee stock option plan, and have executed the relevant share transfer agreements and provided to the Transferee the written documents evidencing that the
share transfer involved in such equity restructuring has been submitted to the competent administration for industry and commerce for registration of the resulting changes; 

 

	 	(iii)	the existing shareholders of Convertergy Shanghai have completed the equity restructuring of Convertergy Shanghai, and the Target Company will hold 100% shares in Perfect Harbour Investments Limited and Convertergy
Corporation upon completion of such equity restructuring; Perfect Harbour Investment Limited and Convertergy Corporation have respectively contributed US$5,721,625 and US$1,008,383 to the registered capital of Convertergy Shanghai, and each hold
65.295% and 11.5076% equity interest in Convertergy Shanghai respectively; 

  

	 	(iv)	the Transferor has acquired the Creditor’s Rights from its affiliates; 

  

	 	(v)	The Transferor or its affiliates have entered into the relevant loan agreement with the Target Company, whereby, the Transferor or its affiliates will provide to the Target Company a bridge loan in an amount of
US$1,500,000, for a term of six (6) months, with the interest to accrue at an annual compound interest rate of 10% starting from the actual drawdown date (the “Bridge Loan”). The Transferee shall provide a security interest for
such Bridge Loan to the satisfactory of the Transferor. And the Transferee will execute relevant documents to further undertake that if the Target Company fails to repay the Bridge Loan in full at its due date, the Transferee shall purchase from the
lender of the Bridge Loan the creditor’s rights corresponding to the Bridge Loan at a purchase price equal to the sum of the principal amount of the Bridge Loan and any and all unpaid accrued interest payable as of the purchase date. If the
Transferee intends to use the shares issued by it to pay such purchase price, the number of such shares to be issued to the Transferor shall be calculated based on the closing price of the Transferee’s shares on the signing date of this
Agreement; and 

  

	 	(vi)	the Target Company has the Transferee registered onto its register of members. 

  
 6 

	4.2	From and after the closing date, the Transferee will exercise all the shareholders’ rights of the Transferor in the Target Company, and be responsible for performing all the shareholders’ obligations of the
Transferor towards the Target Company. The shareholders’ rights include voting rights, the right to inspect the Articles of Association, register of members, corporate bond stubs, minutes of the shareholders’ meetings, resolutions of
meetings of board of directors, resolutions of meetings of supervisors, financial accounting reports and the like, and the right to the distribution of dividends and bonus shares and rights of offering, and other rights as provided under laws,
regulations and rules. 

  

	4.3	The completion of the closing of Share Transfer as contemplated under this Agreement is subject to completion of all the actions described in Section 3.4 and Section 3.5 of this Agreement. 

 

	4.4	Within three (3) months as of the closing date, Convertergy Shanghai will provide to the Transferee the confirmation documents executed by the former employees who were fired or quitted within one year immediately
prior to the closing date (as of the signing date of this Agreement, there are two (2) such persons) confirming that they do not have any labour disputes with Convertergy Shanghai. 

 

	5.	REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS OF THE TRANSFEROR AND CONVERTERGY SHANGHAI 

Except as disclosed to the Transferee in the Disclosure Schedule attached hereto as Exhibit A, the Transferor and Convertergy Shanghai
irrevocably make the following representations and warranties: 
  

	5.1	The Transferor has paid in full the par value of the Target Share. 

  

	5.2	As of the signing date of this Agreement, the Transferor has the legal, valid and complete ownership of the Target Share, free from any defect, including without limitation, any pledge, security interest or third
party’s rights. 

  

	5.3	From the signing date of this Agreement to the date on which the Transferee is registered onto the register of members of the Target Company, unless approved by the Transferee in advance, neither the Target Company nor
Convertergy Shanghai will reduce its registered capital, transfer its assets at a lowered price, give out its assets for free, give up its interests without compensation, increase its obligations without compensation, distribute dividends or bonus
or make any arrangement or take any action that may be detrimental to the interest of the Transferee. 

  
 7 

	5.4	From the signing date of this Agreement to the date on which the Transferee is registered onto the register of members of the Target Company, neither the Target Company nor Convertergy Shanghai will enter into in bad
faith any contract, agreement or deed that will be detrimental to the interest of Transferee or the Target Company, and where a contract does need to be executed by either the Target Company or Convertergy Shanghai and the amount of a single
transaction thereunder exceeds RMB500,000 or the aggregate amount of all the transactions thereunder during three months exceeds RMB1,000,000, the Transferor will procure the Target Company to inform the Transferee in writing in advance.

  

	5.5	Except as disclosed to the Transferee in writing, the inventory of Convertergy Shanghai is in good and merchantable condition, of a quality and quantity satisfying the requirements of use and sale in the ordinary course
of business, and is fit for the intended purpose. At the closing date, the inventory of Convertergy Shanghai is good enough for continued use. 

  

	5.6	Except as disclosed to the Transferee in writing, to the knowledge of each of the Transferor and Target Company, there exist no labour disputes or controversies between Convertergy Shanghai and any of its
employees/former employees, management personnel or directors, and Convertergy Shanghai has complied with all relevant laws, regulations and rules governing all aspects of labour issue, and has fully paid all relevant expenses with respect to
employees in a timely manner, including the wages, social securities, housing funds, and compensations and any other amounts that shall be paid to the employees in accordance with the PRC labour laws. 

 

	5.7	Except as disclosed to the Transferee in writing, as of the time immediately prior to the closing date, each of the Target Company and Convertergy Shanghai has fulfilled the obligations imposed on it to file tax returns
and withhold and remit taxes, and has fully paid any and all the taxes and expenses payable by it. Neither the Target Company nor Convertergy Shanghai has ever committed any tax dodging, tax evasion or tax late payment. 

 

	5.8	Except as disclosed to the Transferee in writing, as of the signing date of this Agreement, to the knowledge of each of the Transferor and the Target Company, neither the Target Company nor Convertergy Shanghai is in
default on any debt that is expected to be paid under normal circumstances, and no one is in default on any debt owed to either the Target Company or the Transferor (whether as the original creditor or an assignee of the creditor’s rights) that
may become uncollectable. 

  

	5.9	As of the signing date of this Agreement, other than disclosed to the Transferee in writing, to the knowledge of each of the Transferor and Target Company, neither the Target Company nor Convertergy Shanghai is involved
in any pending lawsuit, arbitration, dispute resolution proceedings or other legal proceedings, and there exist no facts and/or situation that may result in any lawsuit, arbitration, dispute resolution proceedings or other legal proceedings.

  
 8 

	5.10	From January 1, 2015 to the date on which the Transferee is registered onto the register of members of the Target Company, except as disclosed to the Transferee in writing, each of the Target Company and
Convertergy Shanghai undertakes that it will perform in good faith and on time its contractual obligations during such period. 

  

	5.11	In addition to the foregoing representations and warranties, each of the Transferor and Convertergy Shanghai also undertakes and warrants that all the matters, circumstances, information and materials in this Agreement
or relevant documents that have been disclosed to the Transferee are true, accurate and not misleading in any material respect. 

  

	5.12	From the signing date of this Agreement to the closing date, each of the Transferor and Convertergy Shanghai shall make its best commercial efforts to ensure that the Transferee will obtain the right of supervision over
all the operating activities of each of the Target Company and Convertergy Shanghai as soon as possible, including without limitation, formulating rules and policies, making business decisions, executing contracts with third parties, and managing
financial and human resources matters. For the avoidance of doubt, unless otherwise expressly stipulated in Section 5.15 of this Agreement, such right of supervision shall not prejudice the right of either the Target Company or Convertergy
Shanghai to make decisions with respect to its operating activities in its sole discretion. 

  

	5.13	From the signing date of this Agreement to the closing date, each of the Transferor and Convertergy Shanghai undertakes that except for clearing of debts and creditor’s rights, without written consent of the
Transferee, neither the Target Company nor Convertergy Shanghai may engage in any new line of business beyond the current scope of business of Convertergy Shanghai, incur any new borrowings, grant guarantees for any debt, make investment in any
third party or make any capital commitment or otherwise, or make any payment or incur any liability, other than in the ordinary course of business. Without written consent of the Transferee or unless otherwise agreed herein, neither the Target
Company nor Convertergy Shanghai may enter into any pure-obligatory or abnormal contracts outside the ordinary course of business, and Convertergy Shanghai will continue to conduct its daily business in the manners consistent with the customary
practices adopted immediately prior to the signing of this Agreement in accordance its articles of associations, rules and policies, and ensure that none of its existing net assets will suffer any irregular impairment, other than in the ordinary
course of business. 

  

	5.14	From the signing date of this Agreement to the closing date, each of the Transferor and Convertergy Shanghai shall ensure that the existing materials and assets of each of the Target Company and Convertergy Shanghai
will be maintained intact, and that neither the Target Company nor Convertergy Shanghai may dispose of any of its own assets in its sole discretion. 

  
 9 

	5.15	The Transferor warrants that at the signing date of this Agreement and the closing date, other than presented in the management financial statements of each of Perfect Habour Investments Limited and Convertergy
Corporation furnished by the Transferor to the Transferee on April 30, 2015 and May 5, 2015 respectively and other than described in Section 4.1(v) herein above, to the knowledge of the Transferor, none of the Target Company, Perfect
Habour Investments Limited and Convertergy Corporation has any other outstanding debts. The Transferor further covenants that before the closing date of this Agreement, it will further clear the outstanding debts of Perfect Harbour Investments
Limited presented in the abovementioned management financial statements, and will only keep those debts related to the Target Creditor’s Rights. 

  

	5.16	From the signing date of this Agreement to the closing date, each of the Transferor and Convertergy Shanghai will procure that the board of directors and management personnel of each of the Target Company and
Convertergy Shanghai will not make decisions with respect to any of the following major business issues unless a prior consent of the Transferee has been obtained, and if the Transferee has any disagreement in this regard, it shall promptly inform
the Transferor and the Target Company, and communicate and discuss with them in good faith specific resolutions thereto: 

  

	 	(i)	to amend the articles of associations or formulate any other rules and policies; 

  

	 	(ii)	to formulate business policies or investment plans; 

  

	 	(iii)	other than for the performance of this Agreement, to elect and replace the directors or the supervisor served by the shareholder representative; 

 

	 	(iv)	to change the composition of the internal management structure; 

  

	 	(v)	to increase or reduce the registered capital; 

  

	 	(vi)	consolidation, split-off, dissolution or liquidation or the like; 

  

	 	(vii)	to conduct a bulk purchase which if involving a single transaction, has a value exceeding RMB500,000, or if involving a series of transactions, has an aggregate value exceeding RMB1,000,000 during three months;

  

	 	(viii)	to grant any loan to any enterprise, institution or individual, other than any loan below RMB500,000 granted to any of its employees in the ordinary course of business; 

 

	 	(ix)	any acquisition, sale, exchange or other disposal of any fixed assets, which if involving a single transaction has a value exceeding RMB500,000, or which if involving a series of transactions, has an aggregate value
exceeding RMB1,000,000 during three months; 

  
 10 

	 	(x)	to formulate profit distribution proposals and loss-cover plans; 

  

	 	(xi)	to enter into any contract with any third party, which if involving a single transaction, has a value exceeding RMB500,000, or if involving a series of transactions, has an aggregate value exceeding RMB1,000,000 during
three months; or 

  

	 	(xii)	any other major issue that has or may have an effect on its net asset value or operating conditions. 

  

	6.	REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS OF THE TRANSFEREE 

 The Transferee hereby
irrevocably represents, warrants and undertakes as follows: 
  

	6.1	The acquisition and acceptance of the Target Share by the Transferee is in compliance with applicable laws and regulations and its articles of association. All the actions necessary for the execution and performance of
this Agreement by the Transferee, including but not limited to authorizations, approvals and internal decisions, have been duly and validly obtained, free from any legal obstacles. 

 

	6.2	All the certification documents and materials provided to each of the Target Company and the Transferor for the purpose of the execution of this Agreement are true and complete. 

 

	6.3	Upon execution of this Agreement, the Transferee shall perform the undertakings and covenants set forth in this Agreement and the Articles of Association as agreed with the existing shareholder of the Target Company.

  

	6.4	The Transferee shall pay the Share Transfer Price and the Creditor’s Rights Transfer Price to the Transferor in full and on time subject to the conditions set forth in this Agreement, and shall deliver to the
Transferor on time the written certification documents in relation to the payment of the Share Transfer Price and the Creditor’s Rights Transfer Price required to be provided by the Transferee hereunder. 

 

	6.5	Other than the Lock-up Period stipulated in Section 3.4 of this Agreement, the shares that will be delivered to the Transferor by the Transferee under this Agreement are not subject to any other restrictions or
encumbrances. 

  

	7.	TAXES AND EXPENSES 

  

	7.1	The Transferor shall pay only those taxes and expenses (if any) required to be paid by it in relation to the Share Transfer contemplated hereunder. 

 

	7.2	Each of the Transferee and the Target Company shall pay in accordance with applicable laws those taxes and expenses incurred hereunder required to be paid by it pursuant to applicable laws. 

 

	7.3	If any Party has the right or obligation to withhold and remit taxes required to be paid by any other Party under applicable laws, such Party shall withhold and remit such tax in accordance with laws. 

  
 11 

	8.	LIABILITIES FOR BREACH 

  

	8.1	Any Party who breaches any provision of this Agreement shall indemnify the non-breaching Party in full against any and all the losses suffered by the non-breaching party has a result of such breach. 

 

	8.2	The liabilities of any Party for breach of this Agreement shall survive any termination of this Agreement. 

  

	8.3	In case the Share Transfer fails to be completed within fifteen (15) days as of the satisfaction of all the other conditions set forth in Section 4.1 of this Agreement due to any reason on the part of the
Transferor, including but not limited to its failure to execute any necessary documents, provide any necessary certificates or pay any taxes and expenses imposed on it (if any) in a timely manner, then for each day of delay in completing the Share
Transfer, the Transferor shall pay liquidated damages to the Transferee which shall be equal to 0.1% of the Share Transfer Price. If the delay lasts for more than thirty (30) days, the Transferee may require the Transferor to continue the
performance of this Agreement or to terminate this Agreement. If the Transferee chooses to terminate this Agreement, the Transferee may require the Transferor to return all of the amounts it has paid by then (if any), and require the Transferor to
pay liquidated damages in an amount equal to 25% of the total Share Transfer Price. 

  

	8.4	In case the Transferee fails to pay any amount of the Share Transfer Price or the Creditor’s Rights Transfer Price in full and on time in accordance with this Agreement, in addition to the Transferor’s rights
to require the Transferee to continue the performance of obligation for the payment of the Share Transfer Price or the Creditor’s Rights Transfer Price, as the case may be, then for each day on which such amount remains overdue, the Transferee
shall pay the Transferor liquidated damages in cash at the rate of 0.1% of such amount, and until the full payment of the Share Transfer Price and the Creditor’s Rights Transfer Price, the Transferor shall have the right to suspend its
assistance in the completion of the relevant registration formalities required to effectuate the Share Transfer and the transfer of the Target Creditor’s Rights contemplated hereunder. If such amount remains overdue for more than thirty
(30) days, the Transferor may require the Transferee to continue the performance of this Agreement or to terminate this Agreement. If the Transferor chooses to terminate this Agreement, the Transferor shall return the Share Transfer Price it
has received by then (if any); provided, however, that, it is entitled to claim against the Transferee for liquidated damages in an amount equal to 25% of the total Share Transfer Price. 

  
 12 

	8.5	From the signing date of this Agreement to the date on which the Target Company has the Transferee registered onto its register of members, if any Party hereto unilaterally proposes to terminate this Agreement in
writing, such Party shall be deemed as having breached the Agreement, and the other Parties, as non-breaching Parties, may choose to require the breaching Party to continue the performance of this Agreement, or to terminate this Agreement, subject
to the following conditions: 

  

	 	(1)	If the non-breaching Party requires the breaching Party to continue the performance of this Agreement, the breaching Party shall continue the performance. 

 

	 	(2)	If the non-breaching Party agrees to terminate this Agreement: 

  

	 	(i)	If the Transferor is the breaching Party, the Transferor shall return all the amounts paid to it by the Transferee by then (if any), and shall pay liquidated damages in an amount equal to 10% of the total Share Transfer
Price. 

  

	 	(ii)	If the Transferee is the breaching Party, the Transferor shall return all of the amounts paid by the Transferee (if any); provided, however, that, it is entitled to require the Transferee to pay liquidated damages in an
amount equal to 10% of the total Share Transfer Price. 

  

	8.6	Upon completion of the Share Transfer, neither the Transferee nor the Target Company may bring claim against the Transferor other than the obligations provided hereunder. Further, each of the Transferee and the Target
Company shall ensure that none of the other shareholders, customers, suppliers or the like of the Target Company may bring any claim against the Transferor. 

  

	8.7	The Transferor shall not be liable for any damages or losses of any other Parties incurred prior to the execution of this Agreement. All the rights and obligations between the Transferor and the Target Company shall
terminate immediately upon completion of the Share Transfer contemplated hereunder. No person (including but not limited to the Target Company and the Transferee) is entitled to bring any claim against the Transferor for any event occurred prior to
the Share Transfer. 

  

	8.8	In case any Party suffers losses in an amount exceeding RMB1,000,000 as a result of any breach by any other Party of any representations, warranties or undertakings provided hereunder, such suffering Party may bring a
claim of indemnification against the breaching Party within one (1) year after the closing date; provided, however, that, in no case may such indemnification exceed 10% of the total Share Transfer Price. The relevant Parties shall not be liable
for any claim brought after expiration of the foregoing one (1) year period or any excess in any claim over the foregoing limitation. 

  
 13 

	9.	MODIFICATION AND TERMINATION 

  

	9.1	The Parties may modify or terminate this Agreement by mutual consent through consultation. Any modification of or amendment to this Agreement shall be made in writing and attached to this Agreement as appendices.

  

	9.2	Any Party may notify the other Parties in writing to terminate this Agreement upon occurrence of any of the following events prior to the closing date hereunder. 

 

	 	9.2.1	In case any Party goes into bankruptcy or liquidation, any other Party may terminate this Agreement; 

  

	 	9.2.2	In case of material breach of this Agreement by any Party so that the purpose of this Agreement cannot be achieved, and such breach is not remedied within thirty (30) days as of request from the other Parties for
remediation, the other Parties may terminate this Agreement; 

  

	 	9.2.3	In case any Party materially breaches any of its undertakings, representations or warranties set forth herein, and fails to take any remedial measures within thirty (30) days as of request from the other Parties
for remediation, the other Parties may terminate this Agreement. 

  

	10.	FORCE MAJEURE 

  

	10.1	In case any Party fails to perform this Agreement due to a force majeure event, it shall notify the other Parties in writing within five (5) days following the end of such force majeure event so as to mitigate the
losses that may be caused to any other Party. Upon obtaining the evidence of force majeure from the competent authorities, the Parties shall consult with each other as to whether to postpone the performance, to partially perform or to cease to
perform this Agreement based on the extent of impact of such force majeure event on this Agreement, and decide whether to waive the liabilities of breach in part or in whole. 

 

	10.2	Force majeure event means any event that is unforeseeable at the execution of this Agreement and of which the occurrence or consequence is unavoidable or insurmountable, including but not limited to act of god,
earthquake, war, strike, and change of governmental policies or regulations. 

  

	11.	GOVERNING LAW AND DISPUTE RESOLUTION 

  

	11.1	The execution, validity, interpretation, and performance of, and the resolution of any dispute in connection with, this Agreement, shall be governed by the laws of the Hong Kong Special Administrative Region of the PRC.

  
 14 

	11.2	Any and all the disputes arising out of or in relation to this Agreement shall be resolved through amicable consultations among the Parties. If any dispute is unable to be resolved through such consultations, any Party
may submit such dispute to the Hong Kong International Arbitration Centre (“HKIAC”) for arbitration in Hong Kong in accordance with the arbitration procedures and rules of HKIAC then in effect. The arbitration language shall be Chinese. An
arbitral award so made shall be final and legally binding upon all the Parties. 

  

	11.3	When a dispute is under arbitration, other than the matters submitted for arbitration, the Parties shall continue to perform their other obligations in accordance with this Agreement. 

 

	12.	MISCELLANEOUS 

  

	12.1	The exhibits of this Agreement shall have the same legal effect as this Agreement. If when the Parties apply to any competent governmental authority for registration and/or filing of the Share Transfer, such
governmental authority requires the Share Transfer agreements and other relevant documents to be executed in its standard form, the Parties may execute relevant documents according to the requirement of the competent governmental authorities without
prejudice to the principles established hereunder. If there is any discrepancy between the executed standard form and this Agreement, the rights and obligations of the Parties shall be governed by this Agreement. 

 

	12.2	Confidentiality. Other than for the purpose of applying for approvals from or submitting reports to the relevant governmental authorities as required by relevant laws and regulations, the Parties agree to bear
the obligation of confidentiality for this Agreement and the Share Transfer contemplated hereunder. Before the matters related to the Share Transfer contemplated hereunder are disclosed to the public in accordance with relevant laws, no information
and material in relation to this Agreement or the Share Transfer may be disclosed to any third party in any manner, unless otherwise required by the performance of this Agreement. 

 

	12.3	Notice. Any notice in relation to this Agreement to be given by a Party to any other Party shall be in writing and will be delivered by courier or sent by facsimile or mail. If sent by courier, a notice shall be
deemed delivered when it arrives at the following address of the other parties. If sent by fax, a notice shall be deemed delivered when the notifying party receives the report showing successful transmission. If sent by mail, a notice shall be
deemed delivered on the fifth business day after it is sent. 

  
 15 

											
	 	 	Address	 	Postal
Code	 	Attention	 	Telephone	 	Fax
	Transferor	 	 Unit 2301, 23/F, New World Tower 1, 16-18 Queen’s Road Central, Central, Hong Kong

 
	 		 	Yun Pun Wong	 		 	+852 3753 1266
	 	 CC:
  

B23-B, Universal Business Park No. 10 Jiuxianqiao RD Chaoyang District, Beijing 100015, China
	 	100015	 	Sophie Zhang	 	+86 010-56815700	 	+86 010-5681 5788
						
	Transferee	 	Floor 7, Building B, Lane 2145, Jin Sha Jiang Road, Pu Tuo District, Shanghai, China

	 	200333	 	Min Xiahou

	 	+86 021-8012 9001	 	+86 021-8012 9002
						
	Target Company	 	Unit 2301, 23/F, New World Tower 1, 16-18 Queen’s Road Central, Central, Hong Kong	 		 	Yun Pun Wong	 		 	+852 3753 1266
						
		 	 CC:
  

B23-B, Universal Business Park No. 10 Jiuxianqiao RD Chaoyang District, Beijing 100015, China
	 	100015	 	Sophie Zhang	 	+86 010-56815700	 	+86 010-5681 5788
						
	Convertergy Shanghai	 	Floor 2, Building 5, No. 200 Niudun Road, Zhangjiang High-tech Park, Shanghai

	 	201203	 	Zhangqi Huang

	 	+86 021-2023 2188	 	+86 021-2023 2187

  
 16 

	12.4	Language. This Agreement shall be written in Chinese. 

  

	12.5	Execution and Effectiveness. This Agreement shall come into force upon execution by all the Parties. This Agreement shall be executed in five (5) originals, of which the Transferor will hold two (2), and
each of the Transferee, the Target Company and Convertergy Shanghai will hold one (1). Each original shall have the equal legal effect. 

(Remainder of this page intentionally left blank; Signature Page follows) 

  
 17 

 [Signature Page to the Share Transfer Agreement of Convertergy I Holdings Limited] 

In witness whereof, the duly authorized representatives of the Parties have executed this Agreement, as of the date set forth at the end of this signature
page. 
  

					
	Transferor: Convertergy II Holdings Limited
			
	Authorized Representative (signature):		 /s/ Wong Yun Pun
		
	
	Transferee: Solar Power Inc.
			
	Authorized Representative (signature):		 /s/ Min Xiahou
		
	
	Target Company: Convertergy I Holdings Limited
			
	Authorized Representative (signature):		 /s/ Wong Yun Pun
		
	
	Convertergy Energy Technology Co., Ltd.

			
	Legal Representative (signature):		 /s/ Donald Chang Ye
		

 Date: May 8, 2015 

 Exhibit A Disclosure Schedule

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