Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is made and
entered into as of the 12th day of March, 2010 (“Effective Date”) by and
between the River Rock Entertainment Authority (“Authority”), a governmental
instrumentality of the Dry Creek Rancheria Band of Pomo Indians (“Tribe”), and
Joseph Callahan (“Employee”).

 

The parties hereto expressly intend that this
Agreement describe Employee’s relationship as an employee of the Tribe and not
as a contractor, including but not limited to the meaning of such term as is
used in 25 USC § 2711 and 25 CFR § 502.15. The parties have purposefully
structured the terms and provisions of this Agreement consistent with, and in
furtherance of this expressed intent.

 

1.                                       Employment. On and subject to
the terms and conditions of this Agreement, the Authority hereby employs
Employee, and Employee hereby accepts employment with the Authority, as the
Chief Financial Officer/Assistant General Manager (CFO/Asst. GM) of the
Authority’s gaming enterprise known as the River Rock Casino (“Casino”).
Employee shall assume overall responsibility for the financial operation of all
gaming related entities (together with the Casino, the “Gaming Enterprise”).
Employee shall report to, be accountable to and work under the authority of the
Authority’s Chief Executive Officer/General Manager (CEO/GM) and when the
CEO/GM is absent shall assume all responsibilities of the CEO/GM.  (See Exhibit A.)

 

2.                                       Reporting. Employee shall report
directly to the CEO/GM with respect to all financial activities of the Gaming
Enterprise, and otherwise to the extent requested by the CEO/GM or the
Authority Board of Directors (“Authority Board”). Without limiting the
foregoing, Employee shall perform such executive duties as are commonly attendant
upon the office of a casino CFO/Asst. GM and such further executive duties as
may be specified from time to time by the CEO/GM, which shall include:

 

(a)                                       Directing and overseeing all the financial activities of the Gaming
Enterprise including preparation of current financial reports as well as
summaries and forecasts for future business growth and general economic
outlook.

 

(b)                                      Responsibility for all financial reports required by the Tribal, State
and Federal agencies.

 

(c)                                       Directing and overseeing investment portfolios with care and diligence to
maximize income within the constraint of maximum safety, growth of income and
long-term appreciation of capital; to ensure liquidity by defining maturities as required by cash flow projections: and to
preserve capital.

 

(d)                                      Responsibility for safeguarding all Gaming Enterprise assets.

 

 

(e)                                       Preparation of annual operating budgets, capital budgets and required
modifications to such budgets for all gaming related entities and
implementation of such budgets;

 

(f)                                         Preparation,
implementation and direction of Authority compliance programs, including
assurance that the Gaming Enterprise meets the requirements of the Indian
Gaming Regulatory Act, the Tribal-State Gaming Compact between the Tribe and
the State of California (the “Compact”), the laws and ordinances of the Tribe,
all SEC reporting requirements and other applicable laws as well as agreements
to which the Tribe and/or the Authority is a party.

 

(g)                                      Preparation,
implementation and direction of programs to assure that the Gaming Enterprise
meets all federal, Tribal and Compact requirements for internal controls,
including establishment and enforcement of policies designed to maintain the
integrity of all gaming operations for the protection of the Tribe, the
Authority, the Authority Board, the Gaming Enterprise. its customers and the
public in accordance with laws and standards in the gaming industry;

 

(h)                                      Organizing and
assisting construction development financial management activities.

 

3.                         Term. The term of this Agreement (“Term”) shall
commence on the Effective Date and shall end three (3) years after the
Effective Date, unless terminated earlier by the parties as provided herein.
Notwithstanding the Term as described herein.

 

3.1                   Full-Time
Service. Employee agrees that during the Term of this
Agreement unless earlier terminated, he will commit his full time and energies
to the duties imposed hereby and, further, agrees that during the term of this
Agreement he will not (whether as an officer, director, member, employee,
partner, proprietor, investor, security holder, lender, associate, consultant,
adviser or otherwise) directly or indirectly, engage in the business of the
Gaming Enterprise as a competitor or otherwise without the express prior
written consent of the Authority Board.

 

4.                         Compensation.

 

(a)                    Employee will
be paid a base salary of Two Hundred Fifty Thousand Dollars ($250,000.00) per
annum (“Base Compensation”), subject to applicable withholding taxes and
required deductions.

 

(b)                   Base Compensation
shall be paid every other work week on the day established by the Authority for
all employees of the Gaming Enterprise.

 

(c)                    Employee will
be paid an annual discretionary bonus, payable within 45 days after the end of
each Contract Year, of not more than thirty percent (30%) of Employee’s Base
Compensation, based on the following criteria:

 

2

 

(i)                                     Employee’s
success in meeting or exceeding Gaming Enterprise performance criteria proposed
by Employee prior to the start of each fiscal year of the Gaming Enterprise and
approved by the CEO/GM and Authority Board of Directors;

 

(ii)                                  Employee’s
success in establishing and implementing all financial internal control,
financial reporting, financial guidance and compliance programs and all other
programs of the Gaming Enterprise with which Employee is charged with
responsibility; and

 

(iii)                               Employee’s
demonstrated leadership and communication skills.

 

(d)                                 Employee will
be entitled, on the same basis as other employees of the Authority, to
participate in and to receive benefits under any of the Authority’s employee
benefit plans, if any, as such plans may be modified from time to time, except
that Employee will be entitled to one week of vacation in excess of the Authority’s
normal vacation policy for employees of the Authority, accrued in accordance
with the Authority’s normal vacation policy.

 

(e)                                  The Authority
will reimburse Employee all reasonable and necessary business expenses incurred
on behalf of his employment during the performance of his duties under this
Agreement, subject to the existing reimbursement policy established by the
Authority. Such reimbursements shall be supported by adequate record-keeping
and other requirements as may be necessary or appropriate to comply with the
Internal Revenue Code.

 

(f)                                    Employee will
have the right to be reimbursed for any legal fees incurred as the result of
defending himself in any third party lawsuit arising out of Employee’s
obligations under this Agreement; provided that all such defenses shall be
managed and controlled by Authority and with counsel reasonably approved by
Authority. Employee is and will continue to be covered under the Authority’s
errors and omissions insurance as such insurance covers all members of the
Board.

 

5.                                  Licensing Issues. Employee
warrants and represents that he is eligible and suitable for a background
clearance and license as being suitable for holding a key employee or manager’s
position in a gaming establishment under Tribal, State and federal law.
Employee agrees to timely apply for any license(s) and background
investigations as may be required under applicable law and as may be necessary
to enable him to engage in his employment hereunder. The Authority or the
Gaming Enterprise shall pay all costs
associated with such licensing and back grounding. Employee will maintain all
gaming licenses and suitability determinations in good standing as a continuing
condition of his employment under this Agreement, and shall 

 

3

 

notify
the Dry Creek Gaming Commission (“DCGC”) of any information that is material
to, or a change from, any information sought or contained in his Tribal gaming
license application or his suitability in general for a gaming license, and
shall do so as soon as possible after such information is known to Employee.

 

6.               Termination.

 

6.1                                 Either the
Authority or the Employee may terminate this Agreement and Employee’s
employment at any time, but any termination shall be subject to the terms set
forth below.

 

6.2                                 The termination, revocation or final disapproval of any license or
suitability determination required by law to be held by or determined with
respect to  Employee in connection with his
employment at or in connection with the Casino or any other gaming activities
of the Authority, or a final determination by any governmental gaming licensing
or backgrounding agency that Employee is unsuitable for employment in Tribal
gaming, shall be grounds for the immediate termination of Employee.  Notwithstanding such termination, it shall
not be deemed to be for “Good Cause” under this Agreement unless such license
termination, revocation or final disapproval, or finding of unsuitability, is
due to Employee’s violation or conduct described in subsections a through j in Section 6.3
below.

 

6.3                                 The Authority
may terminate Employee and this Agreement for “Good Cause” at any time after
such Good Cause has occurred.  For
purposes of this Agreement, Good Cause means:

 

(a)                                  Employee’s conviction in state or federal court of any felony, or
of any crime involving moral turpitude, including, but not limited to those
involving fraud, theft, embezzlement, dishonesty, or a violation of any gaming
law; any act of dishonesty, moral turpitude, or theft; or any conduct which
reflects negatively on the honesty, integrity or fairness of the Tribe, the
Casino or the Authority or its officers, directors, employees, representatives,
or members;

 

(b)                                 Any act or failure to act by Employee that places the Tribe, the
Authority or the Casino in violation of the law, including but not limited to
IGRA, the Compact or the Ordinance;

 

(c)                                  Employee’s gross negligence or willful misconduct in performing,
or the deliberate or intentional refusal or failure (except by reason of disability)
to perform, his duties as CFO/Asst. GM or to follow the lawful directives,
orders or mandates of the NIGC, the State or the DCGC issued in order to carry
out the requirements of IGRA, the Compact or the Ordinance;

 

(d)                                 Employee’s possession, use, or being under the influence of any

 

4

 

unlawful controlled substance during the
Term of this Agreement

 

(e)                                  The discovery or development of a criminal record or any
reputation, prior activities, habits or associations which might reasonably be
deemed to pose a threat to the public interest or to the effective regulation
of gaming, or in Employee’s background which might reasonably be deemed to
create or enhance the dangers of unsuitable, unfair, or illegal practices and
methods and activities in the conduct of gaming;

 

(f)                                    Employee’s intentional omission or misrepresentation of any fact
required to be disclosed on any license, suitability or backgrounding
application or questionnaire, or in any gaming regulatory agency or law
enforcement investigation, in connection with the Casino; Employee’s knowing
failure to timely report any change in any such information when known; or
Employee’s refusal to timely provide such information or cooperate in any
investigation when requested to do so by such regulatory or law enforcement
agency;

 

(g)                                 The physical or mental incapacity of Employee for a period of 90
consecutive days which, in the opinion of a health care provider mutually
acceptable to the parties, renders Employee substantially unable to perform the
essential functions of his CFO/Assistant General Manager position;

 

(h)                                 Aiding a competitor, or the unauthorized disclosure of
confidential or proprietary information;

 

(i)                                     Deliberate failure by Employee to obey lawful orders given by the
Board in connection with his duties as CFO/Asst. GM;

 

(j)                                     Any material breach of this Agreement by Key Employee; or

 

6.4                                 If the
Authority terminates Employee for Good Cause, his employment and this Agreement
shall end immediately upon notification of termination or at such other time
within thirty (30) days thereafter as the Board, in its sole discretion shall
determine (the date actually set for termination is referred to herein as the “Actual
Termination Date”), and if the
Authority so requires, Employee shall faithfully and competently perform his
duties through the Actual Termination Date. 
If the termination is for Good Cause, no compensation or benefits shall
be due, paid or provided to Employee other than the salary and benefits (but
not including any bonuses or severance payments) earned by Employee prior to
the Actual Termination Date, except to the extent required by law.

 

6.5                                 If the Employee
resigns for any reason, the following shall apply:

 

(a.)                               Employee shall provide Authority with at least 30 calendar days’
advance written notice prior to the intended resignation date, provided that
notwithstanding such notice, the
Authority in its sole discretion may waive

 

5

 

any or all of the 30-day notice and accept
Employee’s resignation and terminate his employment and this agreement
effective immediately or as of any date during said 30-day notice period (the “Actual
Termination Date”).

 

(b.)                              Employee agrees that following such notice of resignation and
until the Actual Termination Date, he shall faithfully carry out all of his
employment responsibilities under this Agreement and as the Board shall assign
and shall make no statements concerning his resignation without the written
consent of the Board.

 

(c.)                               Provided that Employee fulfills his employment duties if
employment continues during said 30-day period, Employee will continue to be
paid, on a pro rata basis, his annual salary for services performed through the
Actual Termination Date, but following his notice of resignation shall not
accrue or be paid any PTO with respect to said period, and shall waive any
right to any bonus or severance payment whatsoever.

 

6.6  
Notwithstanding any other provision of this Agreement, any resignation
by Employee will constitute a waiver and release by Employee of all claims
against the Tribe, the Authority and the Casino, and their respective members,
officers, directors, employees, agents, representatives, heirs, assigns,
representatives, attorneys, and their assigns and successors. Following
Employees notice of resignation, Employee shall not accrue or be paid any PTO
with respect to said period, and shall waive any right to any bonus or
severance payment whatsoever.

 

7.                                       Mutual
Termination. Employee and the Authority
may terminate this Agreement by mutual agreement at any time upon such terms
and conditions as are mutually agreeable

 

8.                                       Confidentiality of Proprietary Information. Any information acquired by Employee while in the employ of the
Authority related to employee lists, patron lists, marketing plans, operating procedures and other information
proprietary to the Authority or the Gaming Enterprise are acknowledged by
Employee to be confidential information belonging to the Authority, and Employee
shall not disclose such information without the express written authorization
of the Authority except in the ordinary course of the business of the Gaming
Enterprise. Employee shall, upon termination of this Agreement for any reason
whatsoever, turn over to the Authority any and all copies he may have of
employee lists, patron lists, marketing programs, operating procedures and
other information proprietary to the Authority or the Gaming Enterprise.
Employee acknowledges that employee lists, patron lists, marketing programs,
operating procedures and other information proprietary to the Authority or the
Gaming Enterprise are confidential and proprietary information belonging to the
Authority and the Authority may exercise 

 

6

 

any
and all remedies available to it at law or in equity to enforce this Agreement
with respect to non-disclosure of any such proprietary information to which
Employee has or will become privy while an employee of Authority. Particularly,
the parties agree that, because of the nature of the subject matter of this
paragraph 7, in event of a threat or danger of disclosure of such information,
it could be extremely difficult to determine the actual damages suffered or to
be suffered by Authority in the event of a breach of this Agreement by
Employee. Accordingly, Authority shall be entitled to injunctive relief (both
temporary and permanent), it being acknowledged and agreed that any such actual
or threatened breach will cause irreparable injury to Authority and that money
damages alone will not provide an adequate remedy to Authority. Notwithstanding
the foregoing, Authority also shall be entitled to money damages for any loss
suffered or to be suffered as a consequence of Employee’s breach of this
Agreement. The parties acknowledge that this provision shall survive the
termination of this Agreement.

 

9.                                  Assignment.  This Agreement
may be assigned by the Authority to any entity formed by the Tribe or the
Authority for the express purpose of operating the Gaming Enterprise and any
related economic development activities. This Agreement contemplates the
personal services of Employee and neither this Agreement nor any of the rights
herein granted to Employee or the duties assumed by him hereunder may be
assigned by him.

 

10.                            Miscellaneous.

 

(a)               Employee
represents to Authority that there are no restrictions to which he is subject or agreements to which he is a party
that would be violated by his execution of this Agreement and his employment
hereunder.

 

(b)              This Agreement
and all questions relating to its validity, interpretation, performance and
enforcement shall be governed by and construed in accordance with the laws of
the Dry Creek Rancheria.

 

(c)               No amendment to
this Agreement or any attempted waiver of a provision of this Agreement shall
be effective unless in writing and signed by the parties to this Agreement.

 

(d)              Any controversy
that arises out of this Agreement shall be determined in accordance with the
laws of the Tribe. In no event shall any liability of the Tribe, the Authority,
DCGC or the Gaming Enterprise or any of them exceed an amount equal in total to
three (3) months of the Compensation for a one year period.

 

7

 

The
Parties have executed this Agreement this 12th day of March, 2010, effective as
of the Effective Date first written above.

 

	
  RIVER ROCK ENTERTAINMENT AUTHORITY

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Harvey Hopkins

  	
   

  	
  Date:
  

  	
  3/12/10

  
	
   

  	
  Harvey
  Hopkins, Chairman

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EMPLOYEE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Joseph Callahan

  	
   

  	
  Date:
  

  	
  3/12/10

  
	
   

  	
  Joseph
  Callahan

  	
   

  	
   

  	
   

  

 

8

 

EXHIBIT A

 

CHIEF EXECUTIVE OFFICER /GENERAL MANAGER

 

RESPONSIBILITIES

 

JOB
SUMMARY:  Under the direction of the
River Rock Entertainment Authority (RREA) Board of Directors, the Chief Executive Officer/General
Manager (CEO/GM) is responsible for oversight and direction of all River Rock
Casino activities, including but not limited to, strategic planning, project
development, quality assurance, profitability, budgeting, and assigning and
directing the priorities of Senior Management. The CEO/GM will be responsible
for implementing the strategic goals and objectives of the organizations as
directed by the RREA Board of Directors in order to advance the company’s
mission and objectives to promote revenue, profitability and growth as an
organization.  The CEO/GM ensures that
all gaming operations are performed in accordance with the business plan,
system of internal controls, Tribal Gaming Regulations, Tribal and State
Compact and Gaming Ordinance.  The CEO/GM
will provide direction and leadership to staff to insure that service delivered
to the customers and the public is maintained at the highest levels possible.

 

JOB RESPONSIBILITIES:

 

1.               Growth of successful and
profitable gaming and other operations under the direction of the River Rock
Entertainment Authority.

2.               Development of budgets for
the Casino operations (which includes operating cost, labor and capital
expenditures and improvements).

3.               The timely preparation of
un-audited and audited financial statements in accordance with Generally
Accepted Accounting Principles (GAAP).

4.               Responsible for all Security
Exchange Commission’s reporting requirements.

5.               The establishment of proper
control and allocation of operating expenses among the Tribe, Tribal Gaming
Operation(s) and any other user of shared facilities and services.

6.               Responsible for timely and
accurate payment of gaming operation bills and expenses.

7.               Ensure the accuracy of monthly
financials and other reports that are presented to the River Rock Entertainment
Authority Board and the Tribe detailing the financial performance of the gaming
operations and its other activities.

8.               Establish and ensure a
system for the monitoring and protection of all funds and property.

9.               Work closely with the tribe’s
Human Resources Department to establish the proper number and qualifications of
employees needed to carry on the functions of the gaming and other related
operations.

10.         Work in conjunction with the
Tribe’s Human Resources Department, participates in the hiring process for    Casino’s gaming and non-gaming operational
personnel.

11.         After consultation with
Tribal Human Resources Department, responsible for the selection, assignment, re-assignment,
structure and restructure of any and all employees, departments duties,
responsibilities and organizational charts with RREA Board approval.

 

9

 

12.         Works closely with Tribal
Human Resources to ensure the administration of best practices employment
policies.

13.         Works closely with the RREA
Board in negotiating the acquisition of public safety protection costs and
services.

14.         Acquisition and maintenance
of public liability and property insurance.

15.         Provides leadership in the
conceptual and design phases of planned and ongoing property development
projects.

16.         With direction from the RREA
Board, assists in developing cost-effective project plans and viable schedules
for completion thereof; follows a logical pattern for utilization of resources.

17.         Provides oversight for
development, maintenance and improvement of the gaming facilities.

18.         Forecasts, plans and manages
all matters involving operating capital.

19.         Ensures compliance with all
applicable provisions of the Internal Revenue Code.

20.         Responsible for the
profit/loss of the operation and ensures that the fiscal controls are developed
and implemented.

21.         Responsible for providing
monthly reports to the DCGC.

22.         Responsible for any other
duties as assigned by the DCGC.

23.         Responsible for formulating
and implementing corrective action for all violations of policies and
procedures.

24.         Responsible for prompt and
complete written responses to all requests by any regulatory authorities.

25.         Responsible for ensuring
that all gaming employees follow applicable internal controls and gaming
regulations.

26.         Responsible for overall
guest satisfaction.

27.         Oversees
marketing, promotion, delivery and quality of programs, products and service.

28.         Recommends
yearly budget for RREA Board approval and prudently manages organization’s
resources within those budget guidelines according to current laws and
regulations; develops business plan, identifying products to distribute and
develops the means to distribute products in a cost effective and efficient
manner.

29.         Effectively
manages staff to achieve desired goals according to established policies and
procedures in accordance with current laws and regulations.

30.         Assures that
the organization and its mission, programs, products and services are
consistently presented in a strong, positive image to relevant stakeholders.

31.         Performs other
duties as assigned

 

10EXHIBIT 10.26

 

*** 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.

 

AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT

 

by and among

 

THE FINANCIAL
INSTITUTIONS NAMED HEREIN

 

As Lenders,

 

WACHOVIA CAPITAL
FINANCE CORPORATION (WESTERN)

 

as Agent

 

and

 

PC MALL, INC.

PC MALL SALES, INC.

ELINUX.COM, INC.

CCIT, INC.

WF ACQUISITION SUB, INC.

COMPUTABILITY LIMITED

AF SERVICES, LLC

PC MALL GOV, INC.

SIFY, INC.

ONSALE, INC.

AV ACQUISITION, INC.

MALL ACQUISITION 1, INC.

and

MALL ACQUISITION 2, INC.

as
Borrowers

 

 

*** 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.

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
   

  	
  DEFINITIONS

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
   

  	
  CREDIT
  FACILITIES

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Revolving Loans

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Letter of Credit
  Accommodations

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  2.3

  	
   

  	
  Term Loan

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  2.4

  	
   

  	
  Commitments

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
   

  	
  INTEREST
  AND FEES

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Interest

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Line Increase Fee

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Extension Fee

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  3.4

  	
   

  	
  Syndication Fee

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  3.5

  	
   

  	
  Loan Servicing Fee

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  3.6

  	
   

  	
  Unused Line Fee

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  3.7

  	
   

  	
  Compensation Adjustment

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  3.8

  	
   

  	
  Changes in Laws and
  Increased Costs of Loans

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  CONDITIONS
  PRECEDENT

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Conditions Precedent to
  Agreement

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  4.2

  	
   

  	
  Conditions Precedent to
  All Loans and Letter of Credit Accommodations

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
   

  	
  GRANT
  OF SECURITY INTEREST

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
   

  	
  COLLECTION
  AND ADMINISTRATION

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Borrowers’ Loan Account

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  6.2

  	
   

  	
  Statements

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  6.3

  	
   

  	
  Collection of Accounts

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  6.4

  	
   

  	
  Payments

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  6.5

  	
   

  	
  Taxes

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  6.6

  	
   

  	
  Authorization to Make
  Loans

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  6.7

  	
   

  	
  Use of Proceeds

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  6.8

  	
   

  	
  Pro Rata Treatment

  	
  34

  

 

i

 

*** 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.

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  6.9

  	
   

  	
  Sharing of Payments,
  Etc.

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  6.10

  	
   

  	
  Settlement Procedures

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
   

  	
  COLLATERAL
  REPORTING AND COVENANTS

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Collateral Reporting

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  Accounts Covenants

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  7.3

  	
   

  	
  Inventory Covenants

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  7.4

  	
   

  	
  Equipment Covenants

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  7.5

  	
   

  	
  Power of Attorney

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  7.6

  	
   

  	
  Right to Cure

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  7.7

  	
   

  	
  Access to Premises

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Corporate Existence,
  Power and Authority; Subsidiaries

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  8.2

  	
   

  	
  Financial Statements;
  No Material Adverse Change

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  8.3

  	
   

  	
  Chief Executive Office;
  Collateral Locations

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  8.4

  	
   

  	
  Priority of Liens;
  Title to Properties

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  8.5

  	
   

  	
  Tax Returns

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  8.6

  	
   

  	
  Litigation

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  8.7

  	
   

  	
  Compliance with Other
  Agreements and Applicable Laws

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  8.8

  	
   

  	
  Bank Accounts

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  8.9

  	
   

  	
  Environmental
  Compliance

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  8.10

  	
   

  	
  Employee Benefits

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  8.11

  	
   

  	
  Year 2000 Compliance

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
  8.12

  	
   

  	
  Accuracy and Completeness
  of Information

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
  8.13

  	
   

  	
  Survival of Warranties;
  Cumulative

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
   

  	
  AFFIRMATIVE
  AND NEGATIVE COVENANTS

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Maintenance of
  Existence

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  9.2

  	
   

  	
  New Collateral
  Locations

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  9.3

  	
   

  	
  Compliance with Laws,
  Regulations, Etc.

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  9.4

  	
   

  	
  Payment of Taxes and Claims

  	
  50

  

 

ii

 

*** 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.

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  9.5

  	
   

  	
  Insurance

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  9.6

  	
   

  	
  Financial Statements
  and Other Information

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  9.7

  	
   

  	
  Sale of Assets,
  Consolidation, Merger, Dissolution, Etc.

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  9.8

  	
   

  	
  Encumbrances

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  9.9

  	
   

  	
  Indebtedness

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  9.10

  	
   

  	
  Loans, Investments,
  Guarantees, Etc.

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  9.11

  	
   

  	
  Dividends and
  Redemptions

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  9.12

  	
   

  	
  Transactions with
  Affiliates

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  9.13

  	
   

  	
  Additional Accounts

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  9.14

  	
   

  	
  Compliance with ERISA

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  9.15

  	
   

  	
  Adjusted Tangible Net
  Worth

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  9.16

  	
   

  	
  Costs and Expenses

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  9.17

  	
   

  	
  Further Assurances

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
   

  	
  EVENTS
  OF DEFAULT AND REMEDIES

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Events of Default

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  10.2

  	
   

  	
  Remedies

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
   

  	
  JURY
  TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Governing Law; Choice
  of Forum; Service of Process; Jury Trial Waiver

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  11.2

  	
   

  	
  Waiver of Notices

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
  11.3

  	
   

  	
  Amendments and Waivers

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
  11.4

  	
   

  	
  Waiver of Counterclaims

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
  11.5

  	
   

  	
  Indemnification

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.

  	
   

  	
  THE
  AGENT

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Appointment; Powers and
  Immunities

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
  12.2

  	
   

  	
  Reliance By Agent

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
  12.3

  	
   

  	
  Events of Default

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
  12.4

  	
   

  	
  Wachovia in its
  Individual Capacity

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
  12.5

  	
   

  	
  Indemnification

  	
  68

  

 

iii

 

*** 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.

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  12.6

  	
   

  	
  Non-Reliance
  on Agent and Other Lenders

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
  12.7

  	
   

  	
  Failure
  to Act

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
  12.8

  	
   

  	
  Additional
  Loans

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
  12.9

  	
   

  	
  Concerning
  the Collateral and the Related Financing Agreements

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
  12.10

  	
   

  	
  Field
  Audits; Examination Reports and other Information; Disclaimer by Lenders

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
  12.11

  	
   

  	
  Collateral
  Matters

  	
  70

  
	
   

  	
   

  	
   

  	
   

  
	
  12.12

  	
   

  	
  Agency
  for Perfection

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
  12.13

  	
   

  	
  Failure
  to Respond Deemed Consent

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13.

  	
   

  	
  TERM OF AGREEMENT; MISCELLANEOUS

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Term

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  13.2

  	
   

  	
  Notices

  	
  73

  
	
   

  	
   

  	
   

  	
   

  
	
  13.3

  	
   

  	
  Partial
  Invalidity

  	
  73

  
	
   

  	
   

  	
   

  	
   

  
	
  13.4

  	
   

  	
  Successors

  	
  73

  
	
   

  	
   

  	
   

  	
   

  
	
  13.5

  	
   

  	
  Assignments
  and Participations

  	
  74

  
	
   

  	
   

  	
   

  	
   

  
	
  13.6

  	
   

  	
  Participant’s
  Security Interest

  	
  76

  
	
   

  	
   

  	
   

  	
   

  
	
  13.7

  	
   

  	
  Confidentiality

  	
  77

  
	
   

  	
   

  	
   

  	
   

  
	
  13.8

  	
   

  	
  Entire
  Agreement

  	
  77

  
	
   

  	
   

  	
   

  	
   

  
	
  13.9

  	
   

  	
  Publicity

  	
  77

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.

  	
   

  	
  JOINT AND SEVERAL LIABILITY; SURETYSHIP WAIVERS

  	
  77

  
	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  Independent
  Obligations; Subrogation

  	
  77

  
	
   

  	
   

  	
   

  	
   

  
	
  14.2

  	
   

  	
  Authority
  to Modify Obligations and Security

  	
  78

  
	
   

  	
   

  	
   

  	
   

  
	
  14.3

  	
   

  	
  Waiver
  of Defenses

  	
  78

  
	
   

  	
   

  	
   

  	
   

  
	
  14.4

  	
   

  	
  Exercise
  of Agent’s and Lenders’ Rights

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
  14.5

  	
   

  	
  Additional
  Waivers

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
  14.6

  	
   

  	
  Additional
  Indebtedness

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
  14.7

  	
   

  	
  Subordination

  	
  80

  
	
   

  	
   

  	
   

  	
   

  
	
  14.8

  	
   

  	
  Revival

  	
  80

  
	
   

  	
   

  	
   

  	
   

  
	
  14.9

  	
   

  	
  Understanding of
  Waivers

  	
  81

  

 

iv

 

*** 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.

 

	
  Exhibit A

  	
   

  	
  Form of Assignment
  and Acceptance Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Information
  Certificates

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Inventory Turn
  Calculation

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Adjusted Tangible Net
  Worth Calculation

  
	
   

  	
   

  	
   

  
	
  Schedule 8.4

  	
   

  	
  Other Liens

  
	
   

  	
   

  	
   

  
	
  Schedule 8.8

  	
   

  	
  Accounts

  
	
   

  	
   

  	
   

  
	
  Schedule 8.9

  	
   

  	
  Environmental
  Disclosures

  
	
   

  	
   

  	
   

  
	
  Schedule 9.9

  	
   

  	
  Indebtedness

  

 

v

 

*** 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.

 

Dated:  As of August 1,
2005

 

AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT

 

This Amended and Restated Loan and Security Agreement
(this “Agreement”),dated as of August 1, 2005, is entered into by and
among the financial institutions from time to time parties hereto, whether by
execution of an Assignment and Acceptance Agreement (as defined below) or this
Agreement (each a “Lender” and collectively “Lenders”), WACHOVIA
CAPITAL FINANCE CORPORATION (WESTERN), a California corporation formerly known
as Congress Financial Corporation (Western), as administrative and collateral
agent for Lenders (in such capacity “Agent”), and PC MALL, INC., a
Delaware corporation formerly known as Idea Mall, Inc. (“PC Mall”),
PC MALL SALES, INC., a California corporation formerly known as Creative
Computers, Inc. (“PC Mall Sales”), 
ELINUX.COM, INC., a Delaware corporation (“eLinux”), CCIT, INC.,
a Delaware corporation formerly known as Creative Computers Integrated
Technologies, Inc. (“CCIT”), WF ACQUISITION SUB, INC., a Delaware
corporation (“WF Sub”), COMPUTABILITY LIMITED, a Delaware corporation (“Computability”),
AF SERVICES, LLC, a Delaware limited liability company, as successor by merger
to AF Services, Inc. (“AF Services”), PC MALL GOV, INC., a Delaware
corporation (“PCMG”), SIFY, INC., a Delaware corporation formerly known
as ClubMac, Inc. (“SIFY”), ONSALE, INC., a Delaware corporation (“Onsale”),
AV ACQUISITION, INC., a Delaware corporation (“AV Acquisition”), MALL
ACQUISITION 1, INC., a Delaware corporation formerly known as PCM.com, Inc.
(“Acquisition 1”) and MALL ACQUISITION 2, INC., a Delaware corporation
formerly known as PCMall.com, Inc. (“Acquisition 2”), jointly and
severally as co-borrowers (each a “Borrower” and collectively “Borrowers”).

 

W I T N E S S E T H:

 

WHEREAS, Congress Financial Corporation (Western), now
known as Wachovia Capital Finance Corporation (Western), and  Borrowers previously have entered into that certain Loan
and Security Agreement dated March 7, 2001, as amended by that certain
First Amendment to Loan and Security Agreement and Other Financing Agreements
dated as of August 23, 2002, Second Amendment to Loan and Security
Agreement and Other Financing Agreements dated as of October 31, 2002,
Third Amendment to Loan and Security Agreement dated as of March,  2003, Fourth Amendment to Loan and Security
Agreement dated as of May 14, 2004, Fifth Amendment to Loan and Security
Agreement dated as of May 31, 2004, and Sixth Amendment to Loan and
Security Agreement dated as of February 10, 2005 (as amended, the “Original
Loan Agreement”), pursuant to which Congress Financial Corporation
(Western), now known as Wachovia Capital Finance Corporation (Western), has
provided certain loans and other financial accommodations to Borrowers; and

 

WHEREAS, the parties hereto have agreed to amend and
restate in their entirety the agreements contained in the Original Loan
Agreement as amongst themselves; and

 

 

*** 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.

 

WHEREAS, as affiliated companies under the common
ownership of PC Mall, the financial success of each Borrower is largely
dependant on the financial success of the other Borrowers.  Although certain of the Borrowers operate
separate and distinct core businesses in designated geographical areas,
administrative and other service functions are performed for all of the
Borrowers under the auspices of AF Services and all of the Borrowers are
providing technology-related goods and services for the ultimate benefit of PC
Mall and its shareholders.  It would be
extremely impractical and unfeasible for each Borrower to report separately its
Eligible Accounts and Eligible Inventory and to receive separately the proceeds
of advances based upon such Borrower’s Eligible Accounts and Eligible Inventory
alone.  Borrowers have therefore
requested that Agent and Lenders make funds available to all Borrowers based
upon all of their Eligible Accounts and Eligible Inventory.  All advances and credit accommodations will
thereby benefit all of the Borrowers by providing an available source of credit
for all of the Borrowers, as needed, to fund their working capital needs; and

 

WHEREAS, each Lender is willing to agree (severally
and not jointly) to make such loans and provide such financial accommodations
to Borrowers on a pro rata basis according to its Commitment (as defined below)
on the terms and conditions set forth herein and Agent is willing to act as
administrative and collateral agent for Lenders on the terms and conditions set
forth herein and in the other Financing Agreements (as defined below); and

 

WHEREAS, each Borrower hereby restates, ratifies and
reaffirms each and every term and condition set forth in the Original Loan
Agreement, as amended and restated hereby, and the other Financing Agreements
effective as of the date hereof;

 

NOW, THEREFORE, in consideration of the mutual
conditions and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

SECTION 1. 
DEFINITIONS.

 

All terms used herein which are defined in Article 1
or Article 9 of the California Uniform Commercial Code shall have the
respective meanings given therein unless otherwise defined in this
Agreement.  All references to the plural
herein shall also mean the singular and to the singular shall also mean the
plural.  All references to Agent, Lenders
and Borrowers pursuant to the definitions set forth in the recitals hereto, or
to any other person herein, shall include their respective successors and
assigns.  The words “hereof”, “herein”, “hereunder”,
“this Agreement” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not any particular provision of this
Agreement and as this Agreement now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.  An Event of Default shall exist or continue
or be continuing until such Event of Default is waived in accordance with Section 11.3.  Any accounting term used herein unless
otherwise defined in this Agreement shall have the meaning customarily given to
such term in accordance with GAAP.  For
purposes of this Agreement, the following terms shall have the respective
meanings given to them below.

 

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.

 

1.1           “Accounts” shall mean all present
and future rights of Borrowers to payment for goods sold or leased or for
services rendered, which are not evidenced by instruments or chattel paper, and
whether or not earned by performance.

 

1.2           “Adjusted Eurodollar Rate” shall
mean, with respect to each Interest Period for any Eurodollar Rate Loan, the
rate per annum (rounded upwards, if necessary, to the next one-sixteenth (1/16)
of one (1%) percent) determined by dividing (a) the Eurodollar Rate for
such Interest Period by (b) a percentage equal to:  (i) one (1) minus (ii) the
Reserve Percentage.  For purposes hereof,
“Reserve Percentage” shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not the Reference
Bank actually holds or has made any such deposits or loans.  The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective day of any change in the Reserve
Percentage.

 

1.3           “Adjusted Tangible Net Worth”
shall mean as to any Person, at any time, in accordance with GAAP (except as
otherwise specifically set forth below), on a consolidated basis for such
Person and its subsidiaries (if any), the amount equal to:  (a) the difference between:  (i) the aggregate net book value of all
assets of such Person and its subsidiaries, excluding Intangible Assets,
calculating the book value of inventory for this purpose on a
first-in-first-out basis, after deducting from such book values all appropriate
reserves in accordance with GAAP (including all reserves for doubtful
receivables, obsolescence, depreciation and amortization) and (ii) the
aggregate amount of the indebtedness and other liabilities of such Person and
its subsidiaries (including tax and other proper accruals) plus (b) indebtedness
of such Person and its subsidiaries which is subordinated in right of payment
to the full and final payment of all of the Obligations on terms and conditions
acceptable to Agent.

 

1.4           “Apple Computer” shall mean Apple
Computer, Inc., a California corporation.

 

1.5           “Apple Intercreditor Agreement”
shall mean that certain Intercreditor and Release Agreement dated as of March 7,
2001 between Apple Computer and Congress Financial Corporation (Western), now known
as Wachovia Capital Finance Corporation (Western), as lender under the Original
Loan Agreement, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.

 

1.6           “Appraised Liquidation Value” shall
mean, with respect to Eligible Inventory, the appraised value of such Eligible
Inventory, expressed as a percentage of the Value thereof, as determined by
Agent as of any date on an “orderly liquidation” basis, net of all estimated
liquidation expenses, shrinkage and markdowns, pursuant to an appraisal
conducted, at Borrowers’ expense, by an independent appraisal firm acceptable
to Agent or such value as otherwise determined by Agent in its sole discretion.

 

1.7           “Assignment and Acceptance” shall
mean an Assignment and Acceptance substantially in the form of Exhibit A
attached hereto delivered to Agent in connection with an 

 

3

 

*** 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.

 

assignment of a Lender’s interest hereunder in
accordance with the provisions of Section 13.5 hereof.

 

1.8           “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 an Event of
Default.  Without limiting the generality
of the foregoing, Agent (i) shall 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) 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) shall 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 Apple Computer (or any other
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), provided, that, the Availability Reserve for the
sum of such payables to Apple Computer shall be based upon the amounts reported
from time to time by Apple Computer to Agent pursuant to the Apple
Intercreditor Agreement, as such amounts may be reduced by wire transfers made
by Agent to Apple Computer upon the written instructions of Borrowers, and (iii) shall
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).

 

1.9           “Blocked Account” shall have the
meaning set forth in Section 6.3 hereof.

 

1.10         “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 North Carolina, and a day on which the Reference Bank, 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.

 

4

 

*** 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.

 

1.11         “Closing Date” shall mean the date
on which all of the conditions precedent set forth in Section 4 hereof are
fully satisfied.

 

1.12         “Code” shall mean the Internal
Revenue Code of 1986, as the same now exists or may from time to time hereafter
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.

 

1.13         “Collateral” shall have the
meaning set forth in Section 5 hereof.

 

1.14         “Commitment” shall mean, as to any
Lender, the Revolving Loan Commitment of such Lender, the Term Loan Commitment
of such Lender, if any or the Total Commitment of such Lender, as the context
requires.

 

1.15         “Credit Card/Check Processing
Agreements” shall mean all agreements now or hereafter entered into by any
Borrower with any Credit Card Issuer or Credit Card/Check Processor as the same
may now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.

 

1.16         “Credit Card Issuer” shall mean
any person who issues or whose members issue credit cards used by customers of
any Borrower to purchase goods, including, without limitation, MasterCard or
VISA bank credit or debit cards or other bank credit or debit cards, and
American Express, Discover, Diners Club, Carte Blanche, and other non-bank
credit or debit cards.

 

1.17         “Credit Card/Check Processor”
shall mean any servicing or processing agent or any factor or financial
intermediary who facilities, services, processes, collects, guarantees or
manages the credit authorization, billing transfer and/or payment from a Credit
Card Issuer or on a check and other procedures with respect to any sales
transactions of any Borrower involving credit card, debit card or check
purchases by customers.

 

1.18         “Credit Card/Check Processing
Receivables” shall mean all Accounts consisting of the present and future
rights of any Borrower to payment by Credit Card Issuers or Credit Card/Check
Processors for merchandise sold and delivered to customers of such Borrower who
have purchased such goods using a credit card, debit card or check.

 

1.19         “Defaulting Lender” shall have the
meaning set forth in Section 6.10(d) hereof.

 

1.20         “Eligible Accounts” shall mean
Accounts created by Borrowers which are and continue to be acceptable to Agent
based on the criteria set forth below. 
In general, Accounts shall be Eligible Accounts if:

 

(a)           such Accounts arise from the actual and bona
fide sale and delivery of goods by Borrowers in the ordinary course of
their business which transactions are completed in accordance with the terms
and provisions contained in any documents related thereto;

 

(b)           in the case of Credit Card/Check
Processing Receivables, such Accounts are not unpaid more than five (5) days
after the date of the original invoice for them, and in the case of all other
Accounts, such Accounts are not unpaid more than one hundred twenty (120) 

 

5

 

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.

 

days after the date of the original invoice for them
and are not unpaid more than sixty (60) days after the original due date for
them;

 

(c)           such Accounts comply with the terms and
conditions contained in Section 7.2(d) of this Agreement, and in the
case of Credit Card/Check Processing Receivables, Agent shall have received a
direction letter duly executed and delivered by the Credit Card Issuer or
Credit Card/Check Processor with respect thereto in form and substance reasonably
satisfactory to Agent;

 

(d)           such Accounts do not arise from sales on
consignment, guaranteed sale, sale and return, sale on approval, or other terms
under which payment by the account debtor may be conditional or contingent
(except for returns made in the ordinary course of business and in accordance
with Borrowers’ present practices);

 

(e)           the chief executive office of the account
debtor with respect to such Accounts is located in the United States of America
or Canada, or, at Agent’s option, if either: 
(i) the account debtor has delivered to Borrowers an irrevocable
letter of credit issued or confirmed by a bank satisfactory to Agent and
payable only in the United States of America and in U.S. dollars, sufficient to
cover such Account, in form and substance satisfactory to Agent and, if
required by Agent, the original of such letter of credit has been delivered to
Agent or Agent’s agent and the issuer thereof notified of the assignment of the
proceeds of such letter of credit to Agent, or (ii) such Account is
subject to credit insurance payable to Agent issued by an insurer and on terms
and in an amount acceptable to Agent, or (iii) such Account is otherwise
acceptable in all respects to Agent (subject to such lending formula with
respect thereto as Agent may determine);

 

(f)            such Accounts do not consist of progress
billings, bill and hold invoices or retainage invoices, except as to bill and
hold invoices, if Agent shall have received an agreement in writing from the
account debtor, in form and substance satisfactory to Agent, confirming the
unconditional obligation of the account debtor to take the goods related
thereto and pay such invoice;

 

(g)           the account debtor with respect to such
Accounts has not asserted a counterclaim, defense or dispute and does not have,
and does not engage in transactions which may give rise to, any right of setoff
against such Accounts (but the portion of the Accounts of such account debtor
in excess of the amount at any time and from time to time owed by any Borrower
to such account debtor or claimed owed by such account debtor may be deemed
Eligible Accounts);

 

(h)           there are no facts, events or occurrences
which would impair the validity, enforceability or collectability of such
Accounts (other than the collectability of such Accounts by Agent by virtue of
the Federal Assignment of Claims Act of 1940, as amended or any similar state
or local law, if applicable), or reduce the amount payable or delay payment
thereunder;

 

6

 

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.

 

(i)            such Accounts are subject to the first
priority, valid and perfected security interest of Agent and any goods giving
rise thereto are not, and were not at the time of the sale thereof, subject to
any liens except those permitted in this Agreement;

 

(j)            neither the account debtor nor any
officer or employee of the account debtor with respect to such Accounts is an
officer, employee or agent of or affiliated with any Borrower directly or
indirectly by virtue of family membership, ownership, control, management or
otherwise; provided that, up to $5,000,000 of the Accounts of eCost.com, Inc.
may, at Agent’s commercially reasonable discretion and subject to the other
eligibility criteria set forth herein, be deemed Eligible Accounts;

 

(k)           there are no proceedings or actions which
are threatened or pending against the account debtors with respect to such
Accounts which might result in any material adverse change in any such account
debtor’s financial condition;

 

(l)            such Accounts of a single account debtor
or its affiliates do not constitute more than fifteen percent (15%) of all
otherwise Eligible Accounts (but the portion of the Accounts not in excess of
such percentage may be deemed Eligible Accounts);

 

(m)          such Accounts are not owed by an account
debtor who has Accounts unpaid more than one hundred twenty (120) days after
the date of the original invoice for them or more than sixty (60) days after
the original due date for them which constitute more than fifty percent (50%)
of the total Accounts of such account debtor;

 

(n)           such Accounts are not owed by consumers;

 

(o)           such Accounts are not service Accounts
(other than for a manufacturer or other third party warranty contract);

 

(p)           if a bankruptcy petition is filed by or
against any Borrower, and without limiting Lender’s rights and remedies upon
such filing, such Accounts are not generated from the sale of Inventory subject
to the security interest of IBM Credit Corporation;

 

(q)           such Accounts are owed by account debtors
deemed creditworthy at all times by Agent, as determined by Agent in its
commercially reasonable discretion; and

 

(r)            such Accounts owed by the United States
of America, any State, political subdivision, agency or instrumentality
thereof, with respect to which Borrowers have not fully complied with the
Federal Assignment of Claims Act of 1940, as amended, or any similar state or
local law, if applicable, do not constitute more than twenty percent (20%) of
all otherwise Eligible Accounts (but the portion of such Accounts not in excess
of such percentage may be deemed Eligible Accounts).

 

Any Accounts which are not Eligible Accounts shall
nevertheless be part of the Collateral.

 

1.21         “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’ 

 

7

 

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.

 

warehouse location(s) or retail store(s) and
which are acceptable to Agent 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 in transit to one of Borrowers’ retails
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, Reference Bank 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 Lenders; (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 security interest of IBM Credit Corporation or Hewlett-Packard
Company.  Any Inventory which is not
Eligible Inventory shall nevertheless be part of the Collateral.

 

1.22         “Eligible Transferee” shall mean (a) any
affiliate of Lender; (b) any other commercial bank or other financial
institution and (c) any “accredited investor” (as defined in Regulation D
under the Securities Act of 1933) approved by Agent, and except as otherwise
provided in Section 13.5 hereof, as to any such other commercial bank or
other financial institution or any such accredited investor, as approved by
Borrowers, such approval of Borrowers not to be unreasonably withheld,
conditioned or delayed and such approval to be deemed given by Borrowers if no
objection from Borrowers is received within ten (10) Business Days after
written notice of such proposed assignment has been provided by Agent; provided,
that, neither any Borrower nor any affiliate of any Borrower shall
qualify as an Eligible Transferee.

 

1.23         “Environmental Laws” shall mean
all foreign, Federal, State and local laws (including common law), legislation,
rules, codes, licenses, permits (including any conditions imposed therein),
authorizations, judicial or administrative decisions, injunctions or agreements
between any Borrower and any governmental authority, (a) relating to
pollution and the protection, preservation or restoration of the environment
(including air, water vapor, surface water, ground water, drinking water,
drinking water supply, surface land, subsurface land, plant and animal life or
any other natural resource), or to human health or safety, (b) relating to
the exposure to, or the use, storage, recycling, treatment, generation,
manufacture, processing, 

 

8

 

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.

 

distribution, transportation, handling, labeling,
production, release or disposal, or threatened release, of Hazardous Materials,
or (c) relating to all laws with regard to recordkeeping, notification,
disclosure and reporting requirements respecting Hazardous Materials.  The term “Environmental Laws” includes (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws, and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.

 

1.24         “Equipment” shall mean all of
Borrowers’ now owned and hereafter acquired equipment, machinery, computers and
computer hardware and software (whether owned or licensed), vehicles, tools,
furniture, fixtures, all attachments, accessions and property now or hereafter
affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.

 

1.25         “ERISA” shall mean the United
States Employee Retirement Income Security Act of 1974, as the same now exists
or may hereafter from time to time be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.

 

1.26         “ERISA Affiliate” shall mean any
person required to be aggregated with any Borrower or any of its affiliates
under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.

 

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

 

1.28         “Eurodollar Rate” shall mean with
respect to the Interest Period for a Eurodollar Rate Loan, the interest rate
per annum equal to the arithmetic average of the rates of interest per annum
(rounded upwards, if necessary, to the next one-sixteenth (1/16) of one (1%)
percent) at which Reference Bank is offered deposits of United States dollars
in the London interbank market (or other Eurodollar Rate market selected by
Borrowers and approved by Agent) on or about 9:00 a.m.  (New York time) two (2) Business Days
prior to the commencement of such Interest Period in amounts substantially
equal to the principal amount of the Eurodollar Rate Loans requested by and
available to Borrowers in accordance with this Agreement, with a maturity of
comparable duration to the Interest Period selected by Borrowers.

 

1.29         “Eurodollar Rate Margin” based
upon the audited net income of Borrowers on a consolidated basis during any
twelve (12) month fiscal year shall mean (a) two percent (2.00%) per annum
if such audited net income was greater than Two Million Five Hundred Thousand
Dollars ($2,500,000), (b) two and one-quarter percent (2.25%) per annum if
such audited net income was equal to or less than Two Million Five Hundred
Thousand Dollars ($2,500,000) but 

 

9

 

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.

 

not less than One Dollar ($1), and (c) two and
one-half percent (2.50%) per annum if such audited net income was less than One
Dollar ($1), as adjusted pursuant to Section 3.1(d) hereof, provided,
that, the Eurodollar Rate Margin shall not be reduced if an Event of
Default has occurred and is continuing as determined by Lender.  For the purposes of this Section 1.32,
the ‘audited net income’ of Borrowers on a consolidated basis shall mean such
net income as determined in accordance with GAAP based upon the audited
financial statements furnished to Agent in accordance with clause 9.6(a) hereof,
without, however, giving effect to any net income or loss of eCost.com, Inc.,
a Delaware corporation, any extraordinary gains or extraordinary losses, any
non-cash write-ups or non-cash write-downs or any options given to Borrowers’
employees to acquire the capital stock of PC Mall.

 

1.30         “Event of Default” shall mean the
occurrence or existence of any event or condition described in Section 10.1
hereof.

 

1.31         “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 Lender
hereunder and (ii) the Maximum Credit (less the then outstanding principal
amount of the Term Loan), minus

 

(b)           the amount of all then outstanding and
unpaid Obligations (but not including for this purpose the then outstanding
principal amount of the Term Loan).

 

1.32         “Final Maturity Date” shall mean March 7,
2008.

 

1.33         “Financing Agreements” shall mean,
collectively, this Agreement and all notes, guarantees, security agreements and
other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by any Borrower or any Obligor in connection with
this Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.

 

1.34         “GAAP” shall mean generally
accepted accounting principles in the United States of America as in effect
from time to time as set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public
Accountants and the statements and pronouncements of the Financial Accounting
Standards Boards which are applicable to the circumstances as of the date of
determination consistently applied, except that, for purposes of Section 9.15
hereof, GAAP shall be determined on the basis of such principles in effect on
the date hereof and consistent with those used in the preparation of the
audited financial statements delivered to Agent prior to the date hereof.

 

1.35         “Hazardous Materials” shall mean
any hazardous, toxic or dangerous substances, materials and wastes, including,
without limitation, hydrocarbons (including naturally occurring or man-made
petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde
insulation, radioactive materials, biological substances, polychlorinated
biphenyls, pesticides, herbicides and any other kind and/or type of pollutants
or contaminants (including, without

 

10

 

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.

 

limitation, materials which include hazardous
constituents), sewage, sludge, industrial slag, solvents and/or any other
similar substances, materials, or wastes and including any other substances,
materials or wastes that are or become regulated under any Environmental Law
(including, without limitation any that are or become classified as hazardous
or toxic under any Environmental Law).

 

1.36         “Information Certificates” shall
mean the Information Certificates of Borrowers constituting Exhibit B
hereto containing material information with respect to Borrowers, their
business and assets provided by or on behalf of Borrowers to Agent in
connection with the preparation of this Agreement and the other Financing
Agreements and the financing arrangements provided for herein.

 

1.37         “Intangible Assets” shall mean as
to any Person (a) all loans or advances to, and other receivables owing
from, any officers, employers, subsidiaries or other affiliates of such Person,
(b) all investments of such Person, (c) all goodwill of such Person,
and (d) all other assets of such Person deemed intangible under GAAP or
determined to be intangible by Agent in good faith.

 

1.38         “Interest Period” shall mean for
any Eurodollar Rate Loan, a period of approximately one (1), two (2), or three (3) months
duration as Borrowers may elect, the exact duration to be determined in
accordance with the customary practice in the applicable Eurodollar Rate
market; provided, that, Borrowers may not elect an Interest
Period which will end after the last day of the then-current term of this
Agreement.

 

1.39         “Inventory” shall mean all of
Borrowers’ now owned and hereafter existing or acquired raw materials, work in
process, finished goods and all other inventory of whatsoever kind or nature,
wherever located.

 

1.40         “Inventory Advance Rates” shall
mean the advance rates applicable to Eligible Inventory as determined in
accordance with Section 2.1(a)(ii)(A).

 

1.41         “Letter of Credit Accommodations”
shall mean the letters of credit, merchandise purchase or other guaranties
which are from time to time either (a) issued, opened or provided by Agent
or any Lender for the account of any Borrower or any Obligor or (b) with
respect to which Agent on behalf of Lenders has agreed to indemnify the issuer
or guaranteed to the issuer the performance by any Borrower of its obligations
to such issuer.

 

1.42         “Loans” shall mean the Revolving
Loans and the Term Loan.

 

1.43         “Maximum Credit” shall mean, with
reference to the Revolving Loans, the Term Loan and the Letter of Credit
Accommodations, the amount of One Hundred Million Dollars ($100,000,000).

 

1.44         Net Amount of Eligible Accounts” shall mean the gross amount of Eligible
Accounts less returns, discounts, claims, credits and allowances of any nature
at any time issued, owing, granted, outstanding, available or claimed with
respect thereto.

 

11

 

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.

 

1.45         “New Lending
Office” shall have the meaning set forth in Section 6.5(e) hereof.

 

1.46         “Non-U.S.
Lender” shall have the meaning set forth in Section 6.5(e) hereof.

 

1.47         “Obligations” shall mean any and
all Revolving Loans, the Term Loan, the Letter of Credit Accommodations and all
other obligations, liabilities and indebtedness of every kind, nature and
description owing by any Borrower to Agent or any Lender and/or any of their
respective affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, whether arising under this Agreement or otherwise, 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 any Borrower under the United States Bankruptcy Code or
any similar statute (including, without limitation, the payment of interest and
other amounts which would accrue and become due but for the commencement of
such case), whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or unliquidated,
secured or unsecured, and however acquired by Agent or any Lender.

 

1.48         “Obligor” shall mean any guarantor,
endorser, acceptor, surety or other person liable on or with respect to the
Obligations or who is the owner of any property which is security for the
Obligations, other than Borrowers.

 

1.49         “Original Loan Agreement” shall
have the meaning set forth in the recitals hereto.

 

1.50         “Other Taxes” shall
mean any present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any of the other Financing Agreements.

 

1.51         “Participant” shall mean any
person which at any time participates with any Lender in respect of the Loans,
the Letter of Credit Accommodations or other Obligations or any portion
thereof.

 

1.52         “Payment Account” shall have the
meaning set forth in Section 6.3 hereof.

 

1.53         “Person” or “person” shall
mean any individual, sole proprietorship, partnership, corporation (including,
without limitation, any corporation which elects subchapter S status under the
Internal Revenue Code of 1986, as amended), limited liability company, limited
liability partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.

 

1.54         “Prime Rate” shall mean the rate
from time to time publicly announced by Reference Bank, or its successors, from
time to time as its prime rate, whether or not such announced rate is the best
rate available at such bank.

 

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

 

12

 

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.

 

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

 

(c)           with respect to all other matters
(including the indemnification obligations arising under Section 12.5
hereof), the fraction (expressed as a percentage) the numerator of which is
such Lender’s Total Commitment to make Loans and the denominator of which is
the aggregate amount of all of the Total Commitments of Lenders.

 

1.57         “PTCE 95-60” shall have the
meaning set forth in Section 13.5(a) hereof.

 

1.58         “Real Estate” shall mean the real
estate owned by Creative Computers and commonly known as 1505 Wilshire
Boulevard, Santa Monica, California.

 

1.59         “Records” shall mean all of
Borrowers’ present and future books of account of every kind or nature,
purchase and sale agreements, invoices, ledger cards, bills of lading and other
shipping evidence, statements, correspondence, memoranda, credit files and
other data relating to the Collateral or any account debtor, together with the
tapes, disks, diskettes and other data and software storage media and devices,
file cabinets or containers in or on which the foregoing are stored (including
any rights of Borrowers with respect to the foregoing maintained with or by any
other person).

 

1.60         “Reference Bank” shall mean
Wachovia Bank, National Association, its successor or such other bank as Agent
may from time to time designate.

 

1.61         “Register” shall have the meaning
set forth in Section 13.5(b) hereof.

 

1.62         “Report” and “Reports”
shall have the meaning set forth in Section 12.10(a) hereof.

 

13

 

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SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.

 

1.63         “Required Lenders” shall mean, at any time, those Lenders
whose Pro Rata Shares, based on their respective Total Commitments, aggregate
sixty-six and two-thirds (66 2/3%) percent or more of the aggregate of the
Total Commitments of all Lenders, or if the Commitments shall have been terminated,
Lenders to whom at least sixty-six and two-thirds (66 2/3%) percent of the then
outstanding Obligations are owing.

 

1.64         “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 hereto
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.”

 

1.65         “Revolving Loan Lenders” shall
mean, collectively, those Lenders making Revolving Loans or providing Letter of
Credit Accommodations and their respective successors and assigns; sometimes
being referred to herein individually as a “Revolving Loan Lender.”

 

1.66         “Revolving Loans” shall mean the
loans now or hereafter made by or on behalf of any Revolving Loan Lender or by
Agent for the ratable account of any Revolving Loan Lender, to or for the
benefit of Borrowers on a revolving basis (involving advances, repayments and
readvances) as set forth in Section 2.1 hereof.

 

1.67         “Settlement Period” shall have the
meaning set forth in Section 6.10(b) hereof.

 

1.68         “Slow Moving Inventory” shall mean
Inventory held by Borrowers for more than one hundred twenty (120) days.

 

1.69         “Special Agent Advances” shall have the meaning
set forth in Section 12.11(a) hereof.

 

1.70         “Taxes” shall mean
any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of any Lender, such taxes (including income taxes, franchise taxes or capital
taxes) as are imposed on or measured by such Lender’s net income or capital by
any jurisdiction (or any political subdivision thereof).

 

1.71         “Term Loan Commitment” shall mean,
at any time, as to each Term Loan Lender, the principal amount set forth below
such Lender’s signature on the signature pages hereto designated as the
Term 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 “Term Loan Commitments.”

 

1.72         “Term Loan Lenders” shall mean,
collectively, those Lenders who have made the Term Loans, and their respective
successors and assigns; sometimes being referred to herein individually as a “Term
Loan Lender.”

 

14

 

*** 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.

 

1.73         “Term Loans” shall have the
meaning set forth in Section 2.3 hereof; sometimes being referred to
herein individually as a “Term Loan.”

 

1.74         “Term Notes” shall mean,
collectively, those certain Term Promissory Notes, of even date herewith,
issued by Borrowers to each Term Loan Lender, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

 

1.75         “Total Commitment” shall mean, at
any time, as to each Lender, the principal amount set forth below such Lender’s
signature on the signature pages hereto designated as the Total Commitment
or on Schedule 1 to the Assignment and Acceptance pursuant to which such Lender
become 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 “Total Commitments.”

 

1.76         “Transferee”
shall have the meaning set forth in Section 6.5(a) hereof.

 

1.77         “UCC” shall mean the Uniform
Commercial Code as in effect in the State of California, and any successor
statute, as in effect from time to time (except that terms used herein which
are defined in the Uniform Commercial Code as in effect in the State of
California on the date hereof shall continue to have the same meaning
notwithstanding any replacement or amendment of such statute except as Lender
may otherwise determine.

 

1.78         “Value” shall mean, as determined
by Agent in good faith, with respect to Inventory, the lower of (a) cost
under the first-in-first-out method, net of vendor discounts or (b) market
value.

 

SECTION 2. 
CREDIT FACILITIES.

 

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 the sum of:

 

(i)            eighty-five percent (85%) of the Net
Amount of Eligible Accounts, provided, that, such percentage
advance rate shall be reduced by one percent (1%) for each percentage point by
which the dilution rate on the Accounts, as determined by Lender 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, exceeds five percent (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 Seven Million Five
Hundred Thousand Dollars ($7,500,000) at any time; plus

 

15

 

*** 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.

 

(ii)           the lesser of:

 

(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 Dollars ($2,000,000)
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) seventy-five percent
(75%) 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 credit
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, 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 a current
certificate of Borrowers’ payables and accrued payables to Apple Computer (with
such supporting documentation as Agent may reasonably request and separately
identifying the payables owing for Inventory in transit from Apple Computer to
Borrowers), 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 Ten
Million Dollars ($10,000,000); or

 

(B)           Forty Million Dollars ($40,000,000), provided,
that, such amount shall be reduced to (1) Thirty Million Dollars
($30,000,000) if the turn of Borrowers’ Inventory is slower than twenty-five
(25) days but not slower than thirty (30) days, as determined by Agent on a
rolling six (6) month basis in accordance with Exhibit C
attached hereto as the product of three hundred sixty (360) times the quotient
of the average total Value of Inventory, divided by the cost of all Inventory
sold, and (2) Twenty Million Dollars ($20,000,000) if such turn of
Borrowers’ Inventory is slower than thirty (30) days, and provided  further,
that, if Borrowers do not provide Agent, on or before the tenth (10th) Business Day of any month, with a certificate (in
form satisfactory to Agent) that such turn of Borrowers’ Inventory was not
slower than a specified number of days during the six (6) months ending on
the last day of the immediately preceding month, then such amount shall be
reduced to Twenty Million Dollars ($20,000,000), minus

 

(iii)          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

 

(iv)          any Availability Reserves.

 

16

 

*** 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.

 

(b)           Agent may, in its commercially reasonable
discretion, from time to time, upon not less than ten (10) days prior
notice to Borrowers reduce the lending formula(s) with respect to Eligible
Inventory to the extent that Agent determines that:

 

(i)            the number of days of the turnover, or
the mix, of such Inventory for any period has changed in any materially adverse
respect; or

 

(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 or in establishing
Availability Reserves.

 

(c)           Except in Agent’s discretion, with the
consent of all Lenders, the aggregate amount of the Loans, the Letter of Credit
Accommodations and other Obligations outstanding at any time shall not exceed
the Maximum Credit.  In the event that
the outstanding amount of any component of the Loans and Letter of Credit Accommodations,
or the aggregate amount of the outstanding Loans and Letter of Credit
Accommodations and other Obligations, exceeds the amounts available under the
lending formulas set forth in Section 2.1(a) hereof, the sublimits
for Letter of Credit Accommodations set forth in Section 2.2(d) or the
Maximum Credit, as applicable, such event shall not limit, waive or otherwise
affect any rights of Agent or any Lender in that circumstance or on any future
occasions and Borrowers shall, upon demand by Agent, which may be made at any
time or from time to time, immediately repay to Agent, for the ratable benefit
of Lenders, the entire amount of any such excess(es)  for
which payment is demanded.

 

(d)           For purposes only of applying the
sublimit on Revolving Loans based on Eligible Inventory pursuant to Section 2.1(a)(ii)(B) Agent
may treat the then undrawn amounts of outstanding Letter of Credit
Accommodations for the purpose of purchasing Eligible Inventory as Revolving
Loans to the extent Agent is in effect basing the issuance of the Letter of
Credit Accommodations on the Value of the Eligible Inventory being purchased
with such Letter of Credit Accommodations. 
In determining the actual amounts of such Letter of Credit
Accommodations to be so treated for purposes of the sublimit, the outstanding
Revolving Loans and Availability Reserves shall be attributed first to any
components of the lending formulas in Section 2.1(a) that are not
subject to such sublimit, before being attributed to the components of the
lending formulas subject to such sublimit.

 

2.2           Letter of Credit Accommodations.

 

(a)           Subject to, and upon the terms and
conditions contained herein, at the request of Borrowers, Agent agrees, for the
ratable risk of each Revolving Loan Lender according to its Pro Rata Share, to
provide or arrange for Letter of Credit Accommodations for the account of
Borrowers containing terms and conditions acceptable to Agent and the issuer
thereof.  Any payments made by Agent or
any Lender to any issuer thereof and/or related parties in connection with the
Letter of Credit Accommodations shall constitute additional Revolving Loans to
Borrowers pursuant to this Section 2.

 

17

 

*** 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.

 

(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 rate equal to one and one-half percent
(1.50%) per annum 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; provided, however,
that so long as no Event of Default has occurred and is continuing, such letter
of credit fee shall not be charged on any Letter of Credit Accommodations up to
an aggregate outstanding sum of Twenty Million Dollars ($20,000,000) that are
issued in favor of any financial institution providing floor plan financing to
Borrowers, and provided, further, that so long as no Event of
Default has occurred and is continuing, such letter of credit fee on any Letter
of Credit Accommodations issued in favor of any such floor planning financial
institutions that exceed Twenty Million Dollars ($20,000,000) in the aggregate
outstanding shall be at a rate equal to one percent (1.0%) per annum.  Notwithstanding the foregoing, such letter of
credit fee shall be increased, at Agent’s option without notice, to three and
one-half percent (3.50%) per annum 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.

 

(c)           No Letter of Credit Accommodations shall
be available unless on the date of the proposed issuance of any Letter of
Credit Accommodations, the Revolving Loans available to Borrowers (subject to
the Maximum Credit and any Availability Reserves) are equal to or greater than:

 

(i)            if the proposed Letter of Credit
Accommodation is for the purpose of purchasing Eligible Inventory, the sum of:

 

(A)          the product of the Value or Appraised
Liquidation Value of such Eligible Inventory multiplied by one minus the
Inventory Advance Rate under Section 2.1(a)(ii)(A) as applicable, plus

 

(B)           freight, taxes, duty and other amounts
which Lender estimates must be paid in connection with such Inventory upon
arrival and for delivery to one of Borrowers’ locations for Eligible Inventory
within the United States of America; and

 

(ii)           if the proposed Letter of Credit
Accommodation is for standby letters of credit guaranteeing the purchase of
Eligible Inventory or for any other purpose, an amount equal to one hundred
percent (100%) of the face amount thereof and all other commitments and
obligations made or incurred by Lender with respect thereto.

 

Effective on the issuance of each Letter of Credit
Accommodation, the amount of Revolving Loans which might otherwise be available
to Borrowers shall be reduced by the applicable amount set forth in this Section 2.2(c).

 

18

 

*** 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.

 

(d)           An Availability Reserve shall be
established in the amount set forth in Section 2.2(c)(i) upon the
placement of the order for the purchase of the subject Inventory.  Effective upon the issuance of each Letter of
Credit Accommodation for a purpose other than the purchase of Inventory, an
Availability Reserve shall be established in the amount set forth in Sections
2.2(c)(ii) or (iii), as applicable.

 

(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 Forty
Million Dollars ($40,000,000); provided, that, if the sublimit on
Revolving Loans based upon Eligible Inventory pursuant to Section 2.1(a)(ii)(B) is
reduced to a lesser amount, the amount of all Letter of Credit Accommodations
for the purpose of purchasing Eligible Inventory and all other commitments and
obligations made or incurred by Lenders in connection therewith shall not
exceed such lesser amount.  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.

 

(f)            Each Borrower shall indemnify and hold
Agent and Lenders harmless from and against any and all losses, claims, damages,
liabilities, costs and expenses which Agent or any Lender may suffer or incur
in connection with any Letter of Credit Accommodations and any documents,
drafts or acceptances relating thereto (excluding any of the foregoing to the
extent arising from the gross negligence or willful misconduct of Agent or any
Lender), including, but not limited to, any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation.  Each Borrower assumes all risks with respect
to the acts or omissions of the drawer under or beneficiary of any Letter of
Credit Accommodation and for such purposes the drawer or beneficiary shall be deemed
such Borrower’s agent.  Each Borrower
assumes all risks for, and agree to pay, all foreign, Federal, State and local
taxes, duties and levies relating to any goods subject to any Letter of Credit
Accommodations or any documents, drafts or acceptances thereunder.  Each Borrower hereby releases and holds Agent
and each Lender harmless from and against any acts, waivers, errors, delays or
omissions, whether caused by such Borrower, by any issuer or correspondent or
otherwise, unless caused by the gross negligence or willful misconduct of Agent
or such Lender, with respect to or relating to any Letter of Credit
Accommodation.  The provisions of this Section 2.2(f) shall
survive the payment of Obligations and the termination or non-renewal of this
Agreement.

 

(g)           Nothing contained herein shall be deemed
or construed to grant Borrowers any right or authority to pledge the credit of
Agent or any Lender in any manner. 
Neither Agent nor any Lender shall have any liability of any kind with
respect to any Letter of Credit Accommodation provided by an issuer other than
Agent or any Lender, unless Agent has duly executed and delivered to such
issuer the application or a guarantee or indemnification in writing with
respect to such Letter of Credit Accommodation. 
Each Borrower shall be bound by any interpretation made in good faith by
Agent, or any other issuer or correspondent under or in 

 

19

 

*** 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.

 

connection with any Letter of Credit Accommodation or
any documents, drafts or acceptances thereunder, notwithstanding that such
interpretation may be inconsistent with any instructions of such Borrower.  At any time an Event of Default exists or has
occurred and is continuing, Agent shall have the sole and exclusive right and
authority to, and no Borrower shall, without the prior written consent of Agent:  (i) approve or resolve any questions of
non-compliance of documents, (ii) give any instructions as to acceptance
or rejection of any documents or goods or (iii) execute any and all
applications for steamship or airway guaranties, indemnities or delivery
orders, and  at all times, (iv) grant
any extensions of the maturity of, time of payment for, or time of presentation
of, any drafts, acceptances, or documents, and (v) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of
any of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters
of credit included in the Collateral. 
Agent may take such actions either in its own name or in any Borrower’s
name.

 

(h)           Any rights, remedies, duties or
obligations granted or undertaken by any Borrower to any issuer or
correspondent in any application for any Letter of Credit Accommodation, or any
other agreement in favor of any issuer or correspondent relating to any Letter
of Credit Accommodation, shall be deemed to have been granted or undertaken by
such Borrower to Agent for the ratable benefit of Lenders.  Any duties or obligations undertaken by Agent
or any Lender to any issuer or correspondent in any application for any Letter
of Credit Accommodation, or any other agreement by Agent or any Lender in favor
of any issuer or correspondent relating to any Letter of Credit Accommodation,
shall be deemed to have been undertaken by Borrowers to Agent and Lenders and
to apply in all respects to Borrowers.

 

2.3           Term Loan.

 

(a)           Congress Financial Corporation (Western),
now known as Wachovia Capital Finance Corporation (Western) as lender under the
Original Loan Agreement made a term loan to Borrowers as evidenced by that
certain Fourth Amended and Restated Term Promissory Note dated June 16,
2004 in the original principal sum of $3,500,000 and with an outstanding
principal balance of $2,916,662.  Subject
to the terms and conditions contained herein, each Term Loan Lender severally
(and not jointly) agrees to make a term loan to Borrowers (each a “Term Loan”
and collectively the “Term Loans”) on the Closing Date in an amount
equal to such Term Loan Lender’s Pro Rata Share of such outstanding principal
balance.  The Term Loans shall be (a) evidenced
by the Term Notes, (b) repaid with interest in accordance with this
Agreement, the Term Notes and other Financing Agreements, and (c) secured
by all of the Collateral.

 

(b)           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, (ii) the net proceeds of the
sale or refinance are remitted to Agent for application first to any principal
outstanding on the Term Loans and any accrued but unpaid interest thereon, and
then to any other Obligations, and (iii) upon the application of such net
proceeds that are payable in cash on the closing of the sale or refinance, any
principal outstanding on the Term Loans and any accrued but unpaid interest
thereon would be paid and

 

20

 

*** 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.

 

satisfied in full and the Excess Availability would
not be less than Seven Million Dollars ($7,000,000).  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.

 

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.  The aggregate amount of each Term Loan Lender’s
Pro Rata Share of the Term Loans shall not exceed the amount of such Lender’s
Term Loan Commitment, as the same may from time to time be amended, with the
written acknowledgment of Agent.

 

SECTION 3. 
INTEREST AND FEES.

 

3.1                                 Interest.

 

(a)                                  Except as provided in Sections 3.1(b),
(c), (d) and (e) below, Borrowers shall pay to Agent, for the benefit
of Lenders, interest on the outstanding principal amount of the non-contingent
Obligations at the Prime Rate.

 

(b)                                 Borrowers may from time to time request
that Prime Rate Loans be converted to Eurodollar Rate Loans or that any
existing Eurodollar Rate Loans continue for an additional Interest Period.  Such request from Borrowers shall specify the
amount of the Prime Rate Loans which will constitute Eurodollar Rate Loans
(subject to the limits set forth below) and the Interest Period to be
applicable to such Eurodollar Rate Loans. 
Subject to the terms and conditions contained herein, three (3) Business
Days after receipt by Agent of such a request from Borrowers, such Prime Rate
Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans
shall continue, as the case may be, provided, that, (i) no
Event of Default, or event which with notice or passage of time or both would
constitute an Event of Default exists or has occurred and is continuing, (ii) no
party hereto shall have sent any notice of termination or non-renewal of this
Agreement, (iii) Borrowers shall have complied with such customary
procedures as are established by Agent and specified by Agent to Borrowers from
time to time for requests by Borrowers for Eurodollar Rate Loans, (iv) no
more than four (4) Interest Periods may be in effect at any one time, (v) the
aggregate amount of the Eurodollar Rate Loans must be in an amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof, (vi) the
maximum amount of the Eurodollar Rate Loans at any time requested by Borrowers
shall not exceed the amount equal to eighty-five percent (85%) of the lowest
principal amount of the Loans which it is anticipated will be outstanding
during the applicable Interest Period, in each case as determined by Agent (but
with no obligation of Lenders to make such Loans) and (vii) each Revolving
Loan Lender shall have determined that the Interest Period or Adjusted
Eurodollar Rate is available to such Lender and can be readily determined as of
the date of the request for such Eurodollar Rate Loan by Borrowers.  Any request by Borrowers to convert Prime
Rate Loans to Eurodollar Rate Loans or to continue any existing Eurodollar Rate
Loans shall be irrevocable. 
Notwithstanding anything to the contrary contained herein, Agent,
Revolving Loan Lenders and Reference Bank shall not be required to purchase
United States 

 

21

 

*** 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.

Dollar deposits in the London interbank market or
other applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but
the provisions hereof shall be deemed to apply as if Agent, Revolving Loan
Lenders and Reference Bank had purchased such deposits to fund the Eurodollar
Rate Loans.

 

(c)                                  Any Eurodollar Rate Loans shall
automatically convert to Prime Rate Loans upon the last day of the applicable
Interest Period, unless Agent has received and approved a request to continue
such Eurodollar Rate Loan at least three (3) Business Days prior to such
last day in accordance with the terms hereof. 
Any Eurodollar Rate Loans shall, at Agent’s option, upon notice by Agent
to Borrowers, convert to Prime Rate Loans in the event that (i) an Event
of Default or event which, with the notice or passage of time, or both, would
constitute an Event of Default, shall exist, (ii) this Agreement shall
terminate or not be renewed, or (iii) the aggregate principal amount of
the Prime Rate Loans which have previously been converted to Eurodollar Rate
Loans or existing Eurodollar Rate Loans continued, as the case may be, at the
beginning of an Interest Period shall at any time during such Interest Period
exceed either (A) the aggregate principal amount of the Loans then
outstanding, or (B) the sum of the Revolving Loans then available to
Borrowers under Section 2 hereof. 
Borrowers shall pay to Agent, for the benefit of Lenders, upon demand by
Agent (or Agent may, at its option, charge any loan account of Borrowers) any
amounts required to compensate any Revolving Loan Lender, the Reference Bank or
any Participant with any Revolving Loan Lender for any loss (including loss of
anticipated profits), cost or expense incurred by such person, as a result of
the conversion of Eurodollar Rate Loans to Prime Rate Loans pursuant to any of
the foregoing.

 

(d)                                 Except as provided in Section 3.1(e) below,
Borrowers shall pay to Agent, for the benefit of Lenders, interest on the outstanding
principal amount of the Eurodollar Rate Loans at the rate of two and
three-quarters percent (2.75%) per annum in excess of the Adjusted Eurodollar
Rate (based on the Eurodollar Rate applicable for the Interest Period selected
by Borrowers as in effect three (3) Business Days after the date of
receipt by Agent of the request of Borrowers for such Eurodollar Rate Loans in
accordance with the terms hereof, whether such rate is higher or lower than any
rate previously quoted to Borrowers), provided, that, effective
on the first day of the calendar month immediately following Agent’s receipt of
the audited financial statements of Borrowers for any twelve (12) month fiscal
year (commencing with the twelve (12) month fiscal year ending December 31,
2000), and Agent’s determination that those audited financial statements comply
with the requirements set forth in Section 9.6(a)(ii) hereof, such
interest rate shall be adjusted to such Adjusted Eurodollar Rate plus the
applicable Eurodollar Rate Margin based upon the consolidated net income of
Borrowers during such fiscal year as reflected in those audited financial
statements, and provided further, that, such interest rate shall
not be reduced if those audited financial statements are qualified under GAAP
or if an Event of Default is continuing as determined by Agent, and provided
further, that, if the audited financial statements of Borrowers for
any fiscal year are not furnished to Agent as and when required under Section 9.6(a)(ii) hereof,
such interest rate shall be adjusted to such Adjusted Eurodollar Rate plus the
highest Eurodollar Rate Margin until Agent receives and approves those audited
financial statements.

 

22

 

*** 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.

 

(e)                                  Notwithstanding the foregoing, Borrowers
shall pay to Agent, for the benefit of Lenders, interest, at Agent’s option,
without notice, at a rate two (2.0%) percent per annum greater than the
applicable rate(s) chargeable above:

 

(i)                                     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); and

 

(ii)                                  on the Revolving Loans at any time
outstanding in excess of the amounts available to Borrowers under Section 2
(whether or not such excess(es), arise or are made with or without Agent’s
knowledge or consent and whether made before or after an Event of Default).

 

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.  The interest rate on non-contingent
Obligations (other than Eurodollar Rate Loans) shall increase or decrease by an
amount equal to each increase or decrease in the Prime Rate effective on the
first day of the month after any change in such Prime Rate is announced based
on the Prime Rate in effect on the last day of the month in which any such
change occurs.

 

3.2                                 Line Increase Fee. 
Borrowers shall pay to Agent, for the benefit of Lenders, as a line
increase fee, Sixty-Two Thousand Five Hundred Dollars ($62,500), which fee
shall be fully earned as of and payable on the date hereof.

 

3.3                                 Extension Fee.  Borrowers shall pay to Agent, for the benefit
of Lenders, as an extension fee, One Hundred Thousand Dollars ($100,000), which
fee shall be fully earned as of and payable on the date hereof.

 

3.4                                 Syndication Fee. 
Borrowers shall pay to Agent, for its own account, as a syndication fee,
Twenty-Five Thousand Dollars ($25,000), which fee shall be fully earned as of
and payable on the date hereof.

 

3.5                                 Loan Servicing Fee.  Borrowers shall pay to Agent, for
its own account, a monthly loan servicing fee in an amount equal to One
Thousand Five Hundred Dollars ($1,500), plus out-of-pocket costs and expenses,
in respect of Agent’s services while this Agreement remains in effect and for
so long thereafter as any of the Obligations are outstanding, which fee shall
be payable on a monthly basis, in advance, on the first day of each month.

 

3.6                                 Unused Line Fee.  Borrowers shall pay to Agent, for the benefit of
Lenders, monthly, an unused line fee equal to a rate equal to one-quarter of
one percent (0.25%) per annum calculated upon the amount, if any, by which the
sum of Sixty Million Dollars 

 

23

 

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BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

($60,000,000) exceeds the average daily principal
balance of the outstanding Loans and Letter of Credit Accommodations during the
immediately preceding month while this Agreement is in effect and for so long
thereafter as any of the Obligations are outstanding, which fee shall be
payable on the first day of each month in arrears; provided, that,
if the outstanding principal balance of the Loans and Letter of Credit
Accommodations exceeds Seventy-Five Million Dollars ($75,000,000) at any time,
the foregoing sum of Sixty Million Dollars ($60,000,000) shall then be
permanently increased to Eighty Million Dollars ($80,000,000).

 

3.7                                 Compensation Adjustment.

 

(a)                                  If after the date of this Agreement the
introduction of, or any change in, any law or any governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) having general application to financial institutions of the same type as
Agent or any Lender or any Participant, or any interpretation thereof, or
compliance by Agent or any Lender or any Participant therewith:

 

(i)                                     subjects Agent or any Lender to any tax,
duty, charge or withholding on or from payments due from Borrowers (excluding
franchise taxes imposed upon, and taxation of the overall net income of, Agent
or any Lender or any Participant), or changes the basis of taxation of
payments, in either case in respect of amounts due it hereunder, or

 

(ii)                                  imposes or increases or deems applicable
any reserve requirement or other reserve, assessment, insurance charge, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by Agent or any Lender or any Participant, or

 

(iii)                               imposes any other condition the result of which is to
increase the cost to Agent or any Lender or any Participant of making, funding
or maintaining the Loans or Letter of Credit Accommodations or reduces any
amount receivable by Agent or any Lender or any Participant in connection with
the Loans or Letter of Credit Accommodations, or requires Agent or any Lender
or any Participant to make payment calculated by references to the amount of
loans held or interest received by it, by an amount deemed material by Agent or
any Lender or any Participant, or

 

(iv)                              imposes or increases any capital
requirement or affects the amount of capital required or expected to be
maintained by Agent or any Lender or any Participant or any corporation
controlling Agent or any Lender or any Participant, and Agent or any Lender or
any Participant determines that such imposition or increase in capital
requirements or increase in the amount of capital expected to be maintained is
based upon the existence of this Agreement or the Loans or Letter of Credit
Accommodations hereunder, all of which may be determined by Agent’s reasonable
allocation of the aggregate of its impositions or increases in capital required
or expected to be maintained, and the result of any of the foregoing is to
increase the cost to Agent or any Lender or any Participant of making, renewing
or maintaining the Loans or Letter of Credit Accommodations, or to reduce the
rate of return to Agent or any Lender or any Participant on the Loans or Letter
of Credit Accommodations, then upon demand by Agent, Borrowers shall pay to
Agent, for the benefit of Lenders, and continue to make periodic 

 

24

 

*** 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.

 

payments to Agent, for the benefit of Lenders, such
additional amounts as may be necessary to compensate any Lender or any
Participant for any such additional cost incurred or reduced rate of return realized.

 

(b)                                 A certificate of Agent or any Lender
claiming entitlement to compensation as set forth above will be conclusive in
the absence of manifest error.  Such
certificate will set forth the nature of the occurrence giving rise to such
compensation, the additional amount or amounts to be paid and the compensation
and the method by which such amounts were determined.  In determining any additional amounts due
from Borrowers under this Section 3.5, Agent and each Lender shall act
reasonably and in good faith and will, to the extent that the increased costs,
reductions, or amounts received or receivable relate to Agent or such Lender’s
or a Participant’s loans or commitments generally and are not specifically
attributable to the Loans and commitments hereunder, use averaging and
attribution methods which are reasonable and equitable and which cover all such
loans and commitments by Agent or such Lender or such Participant, as the case
may be, whether or not the loan documentation for such other loans and commitments
permits Agent or such Lender or such Participant to receive compensation costs
of the type described in this Section 3.5.

 

3.8                                 Changes in Laws and Increased Costs of
Loans.

 

(a)                                  Notwithstanding anything to the contrary
contained herein, all Eurodollar Rate Loans shall, upon notice by Agent to
Borrowers, convert to Prime Rate Loans in the event that (i) any change in
applicable law or regulation having general application to financial
institutions of the same type as Agent, any Lender, Reference Bank or any
Participant, as applicable (or the interpretation or administration thereof)
shall either (A) make it unlawful for Agent, any Lender, Reference Bank or
any Participant to make or maintain Eurodollar Rate Loans or to comply with the
terms hereof in connection with the Eurodollar Rate Loans, or (B) shall
result in the increase in the costs to Agent, any Lender, Reference Bank or any
participant of making or maintaining any Eurodollar Rate Loans by an amount
deemed by Agent to be material, or (C) reduce the amounts received or
receivable by Agent or such Lender in respect thereof, by an amount deemed by
Agent to be material or (ii) the cost to Agent, any Lender, Reference Bank
or any Participant of making or maintaining any Eurodollar Rate Loans shall
otherwise increase by an amount deemed by Agent to be material.  Upon demand by Agent, Borrowers shall pay to
Agent, for itself or the applicable Lender (or Agent may, at its option, charge
any loan account of Borrowers) any amounts required to compensate Agent, or the
applicable Lender, Reference Bank or any Participant for any loss (including
loss of anticipated profits), cost or expense incurred by such person as a
result of the foregoing, including, without limitation, any such loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such person to make or maintain the Eurodollar Rate
Loans or any portion thereof.  A
certificate setting forth the basis for the determination of such amount necessary
to compensate the Agent or applicable Lender as aforesaid shall be delivered to
Borrowers and shall be conclusive, absent manifest error.  In determining any additional amounts due
from Borrowers under this Section 3.6, Agent or the applicable Lender shall
act reasonably and in good faith and will, to the extent that the increased
costs, reductions, or amounts received or receivable relate to the Agent’s or
applicable Lender’s or a Participant’s loans or commitments generally and are
not specifically attributable to the Loans and 

 

25

 

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BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

commitments hereunder, use averaging and attribution
methods which are reasonable and equitable and which cover all such loans and
commitments by the Agent or applicable Lender or such Participant, as the case
may be, whether or not the loan documentation for such other loans and
commitments permits the Agent, Lender or such Participant to receive
compensation costs of the type described in this Section 3.6.

 

(b)                                 If any payments or prepayments in respect
of the Eurodollar Rate Loans are received by Agent or the applicable Lender
other than on the last day of the applicable Interest Period (whether pursuant
to acceleration, upon maturity or otherwise), including any payments pursuant
to the application of collections under Section 6.3 or any other payments
made with the proceeds of Collateral, Borrowers shall pay to Agent, for itself
or the applicable Lender (or Agent may, at its option, charge any loan account
of Borrowers) any amounts required to compensate Agent, or the applicable
Lender, Reference Bank or any Participant for any additional loss (including
loss of anticipated profits), cost or expense incurred by such person as a
result of such prepayment or payment, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such person to make or maintain such
Eurodollar Rate Loans or any portion thereof.

 

SECTION 4. 
CONDITIONS PRECEDENT.

 

4.1                                 Conditions Precedent to Agreement. 
Each of the following is a condition precedent to the effectiveness of
this Agreement and to this Agreement amending and restating the Original Loan
Agreement in its entirety:

 

(a)                                  all requisite corporate or company action
and proceedings in connection with this Agreement and the other Financing
Agreements shall be satisfactory in form and substance to Agent, and Agent
shall have received all information and copies of all documents, including,
without limitation, records of requisite corporate or company action and
proceedings which Agent may have requested in connection therewith, such
documents where requested by Agent or its counsel to be certified by
appropriate corporate or company officers or governmental authorities;

 

(b)                                 no material adverse change shall have
occurred in the assets, business or prospects of Borrowers since the date of
Agent’s latest field examination and no change or event shall have occurred
which would impair the ability of any Borrower or any Obligor to perform its
obligations hereunder or under any of the other Financing Agreements to which
it is a party or of Agent to enforce the Obligations or realize upon the
Collateral;

 

(c)                                  Agent shall have received, in form and
substance reasonably satisfactory to Agent, the Term Notes duly executed and
delivered by Borrowers;

 

(d)                                 Agent shall have received, in form and
substance satisfactory to Agent, such opinion letters of counsel to Borrowers
and Obligors with respect to the Financing Agreements and such other matters as
Agent may reasonably request;

 

(e)                                  Agent shall have received a CLTA 110.5
endorsement to its loan policy of title insurance for its deed of trust against
the Real Estate as amended; and

 

26

 

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BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

(f)                                    Agent shall have received, in form and
substance satisfactory to Agent, projections of Borrowers through the end of
the current fiscal year.

 

4.2                                 Conditions Precedent to All Loans and
Letter of Credit Accommodations.  Each of the
following is an additional condition precedent to Lenders (or Agent on behalf
of Lenders) making Loans and/or providing Letter of Credit Accommodations to
Borrowers, including the initial Loans and Letter of Credit Accommodations and
any future Loans and Letter of Credit Accommodations:

 

(a)                                  all representations and warranties
contained herein and in the other Financing Agreements shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of the
making of each such Loan or providing each such Letter of Credit Accommodation
and after giving effect thereto; and

 

(b)                                 no Event of Default and no event or
condition which, with notice or passage of time or both, would constitute an
Event of Default, shall exist or have occurred and be continuing on and as of
the date of the making of such Loan or providing each such Letter of Credit Accommodation
and after giving effect thereto.

 

SECTION 5. 
GRANT OF SECURITY INTEREST.

 

To secure payment and performance of all Obligations, each Borrower
hereby grants to Agent, for itself and the ratable benefit of Lenders, a
continuing security interest in, a lien upon, and a right of set off against,
and hereby assigns to Agent, for itself and the ratable benefit of Lenders, as
security, the following property and interests in property of such Borrower,
whether now owned or hereafter acquired or existing, and wherever located
(collectively, the “Collateral”):

 

5.1                                 all Accounts and other indebtedness owed
to such Borrower;

 

5.2                                 all present and future contract rights,
general intangibles (including, but not limited to, tax and duty refunds,
registered and unregistered patents, trademarks, service marks, copyrights,
trade names, applications for the foregoing, trade secrets, goodwill,
processes, drawings, blueprints, customer lists, mailing lists, licenses,
whether as licensor or licensee, choses in action and other claims and existing
and future leasehold interests in equipment, real estate and fixtures), chattel
paper, documents, instruments, securities, investment property, letters of
credit, proceeds of letters of credit, bankers’ acceptances and guaranties;

 

5.3                                 all present and future monies,
securities, credit balances, deposits, deposit accounts and other property of
such Borrower now or hereafter held or received by or in transit to Agent, any
Lender or any of their respective affiliates or at any other depository or
other institution from or for the account of such Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise, and all
present and future liens, security interests, rights, remedies, title and
interest in, to and in respect of Accounts and other Collateral, including,
without limitation, (a) rights and remedies under or relating to
guaranties, contracts of suretyship, letters of credit and credit and other
insurance related to the Collateral, (b) rights of stoppage in 

 

27

 

*** 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.

 

transit, replevin, repossession, reclamation and other
rights and remedies of an unpaid vendor, lienor or secured party, (c) goods
described in invoices, documents, contracts or instruments with respect to, or
otherwise representing or evidencing, Accounts or other Collateral, including,
without limitation, returned, repossessed and reclaimed goods, and (d) deposits
by and property of account debtors or other persons securing the obligations of
account debtors;

 

5.4                                 all Inventory;

 

5.5                                 all Equipment;

 

5.6                                 all Records;

 

5.7                                 as to Creative Computers, the Real
Estate; and

 

5.8                                 all products and proceeds of the
foregoing, in any form, including, without limitation, insurance proceeds and
any claims against third parties for loss or damage to or destruction of any or
all of the foregoing.

 

SECTION 6. 
COLLECTION AND ADMINISTRATION.

 

6.1                                 Borrowers’ Loan Account. 
Agent shall maintain one or more loan account(s) on its books in
which shall be recorded (a) all Loans, all Letter of Credit Accommodations
and all other Obligations and the Collateral, (b) all payments made by or
on behalf of Borrowers and (c) all other appropriate debits and credits as
provided in this Agreement, including, without limitation, fees, charges,
costs, expenses and interest.  All
entries in the loan account(s) shall be made in accordance with Agent’s
customary practices as in effect from time to time.

 

6.2                                 Statements.  Agent shall
render to Borrowers each month a statement setting forth the balance in the
Borrowers’ loan account(s) maintained by Agent for Borrowers pursuant to
the provisions of this Agreement, including principal, interest, fees, costs
and expenses.  Each such statement shall
be subject to subsequent adjustment by Agent but shall, absent manifest errors
or omissions, be considered correct and deemed accepted by Borrowers and
conclusively binding upon Borrowers as an account stated except to the extent
that Agent receives a written notice from Borrowers of any specific exceptions
of Borrowers thereto within sixty (60) days after the date such statement has
been mailed by Agent.  Until such time as
Agent shall have rendered to Borrowers a written statement as provided above,
the balance in Borrowers’ loan account(s) shall be presumptive evidence of
the amounts due and owing to Agent and Lenders by Borrowers.

 

6.3                                 Collection of Accounts.

 

(a)                                  Borrowers shall establish and maintain,
at their expense, deposit account arrangements and merchant payment
arrangements with the banks set forth on Schedule 8.8 and after prior
written notice to Agent, such other banks as Borrowers may hereafter select as
are acceptable to Agent.  The banks set
forth on Schedule 8.8 constitute all of the banks with whom any Borrower
has deposit account arrangements and merchant payment arrangements as of the
date hereof.

 

28

 

*** 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.

 

(i)                                     Borrowers shall deposit all proceeds from
sales of Inventory in every form (including, without limitation, cash, checks,
credit card sales drafts, credit card sales of charge slip or receipts and
other forms of daily receipts) and all other proceeds of Collateral that are
received at Borrowers’ retail store location(s), on each Business Day into the
deposit accounts of Borrowers used solely for such purpose as set forth on Schedule
8.8.  Borrowers shall irrevocably
authorize and direct in writing, in form and substance satisfactory to Agent,
each of the banks into which proceeds from sales of Inventory and any and all
other proceeds of Collateral are at any time deposited as provided above to
send by wire transfer on a daily basis all funds deposited in such account, and
shall irrevocably authorize and direct in writing their account debtors, Credit
Card Issuers and Credit Card/Check Processors to directly remit payments on
their Accounts, Credit Card Receivables and all other payments constituting
process of Inventory to the Blocked Accounts described in Section 6.3(a)(ii) below.  Notwithstanding the foregoing, so long as no Event of
Default has occurred and is continuing, those of such banks used by Borrowers’
retail store location in Memphis, Tennessee shall remit the foregoing proceeds
received by them to the Blocked Accounts on a weekly basis, instead of a daily
basis, provided, that, the aggregate sum of such proceeds held by
those banks shall not exceed Fifty Thousand Dollars ($50,000) at any time.  Such authorizations and directions shall not
be rescinded, revoked or modified without the prior written consent of Agent.

 

(ii)                                  Borrowers shall establish and maintain,
at their expense, a blocked account or lockboxes and related blocked accounts
(in either case, each a “Blocked Account” and collectively the “Blocked
Accounts”), as Agent may specify, with such bank or banks as are acceptable
to Agent into which Borrowers shall promptly deposit and direct their account
debtors to directly remit all payments on Accounts and all payments constituting
proceeds of Inventory or other Collateral in the identical form in which such
payments are made, whether by cash, check or other manner.  Each bank at which a Blocked Account is
established shall enter into an agreement, in form and substance satisfactory
to Agent, providing (unless otherwise agreed to by Agent) that all items
received or deposited in such Blocked Account are the Collateral of Agent and
Lenders, that the depository bank has no lien upon, or right to setoff against,
the Blocked Accounts, the items received for deposit therein, or the funds from
time to time on deposit therein and that the depository bank will wire, or
otherwise transfer, in immediately available funds, on a daily basis, all funds
received or deposited into such Blocked Account to such bank account of Agent
as Agent may from time to time designate for such purpose (the “Payment
Account”).  Borrowers agree that all
amounts deposited in the Blocked Accounts or other funds received and collected
by Agent or any Lender, whether as proceeds of Inventory, the collection of
Accounts or other Collateral or otherwise shall be the Collateral of Agent and
Lenders.

 

(b)                                 For purposes of calculating interest on
the Obligations, such payments or other funds received will be applied (conditional
upon final collection) to the Obligations one-half of one (1/2) Business Day
following the date of receipt of immediately available funds by Agent in the
Payment Account (such that Borrowers will pay a charge equal to one-half (1/2)
of the additional interest that would have accrued on the sum of such payments
or other funds if the sum was applied to the Obligations one (1) Business
Day after receipt of immediately available funds by Lenders in the Payment
Account).  For purposes of calculating
the amount of the Revolving Loans available to Borrowers such payments will be
applied (conditional upon final collection) to the Obligations on the Business
Day of receipt by Agent in the Payment Account,

 

29

 

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BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

if such payments are received within sufficient time
(in accordance with Agent’s usual and customary practices as in effect from
time to time) to credit Borrowers’ loan account on such day, and if not, then
on the next Business Day.  In the event
that at any time or from time to time there are no Revolving Loans outstanding,
Lenders shall be entitled to an administrative charge in an amount equivalent
to the interest Lenders would have received on account of the above one-half of
one (1/2) Business Day clearance had there been Revolving Loans outstanding.

 

(c)                                  Borrowers and all of their affiliates,
subsidiaries, shareholders, directors, employees or agents shall, acting as
trustee for Agent and Lenders, receive, as the property of Agent and Lenders,
any monies, cash, checks, notes, drafts or any other payment relating to and/or
proceeds of Accounts or from sales of Inventory or other Collateral which come
into their possession or under their control and immediately upon receipt
thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to
Agent.  In no event shall any such
monies, checks, notes, drafts or other payments be commingled with any Borrower’s
own funds.  Borrowers agree to reimburse
Agent and the Lenders on demand for any amounts owed or paid to any bank at
which a Blocked Account is established or any other bank or person involved in
the transfer of funds to or from the Blocked Accounts arising out of Agent’s or
any Lender’s payments to or indemnification of such bank or person, unless such
payment or indemnification obligation of Agent or Lender was a result of Agent’s
or such Lender’s gross negligence or willful misconduct.  The obligation of Borrowers to reimburse
Agent and Lenders for such amounts pursuant to this Section 6.3 shall survive
the termination or non-renewal of this Agreement.

 

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.  Agent may apply payments received
or collected from Borrowers or for the account of Borrowers (including, without
limitation, the monetary proceeds of collections or of realization upon any
Collateral) to such of the Obligations, whether or not then due, in such order
and manner as Agent determines; provided, that, so long as no
Event of 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 the Term Loan or to
contingent Obligations; and provided further, that, if an Event
of Default has occurred and is continuing, proceeds of Collateral shall be
applied to those Obligations owing under or in connection with this Agreement
before being applied to any other Obligations except to the extent that Agent
established (prior to the occurrence of such Event of Default) and is
maintaining an Availability Reserve for such other 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

 

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BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

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.

 

6.5                                 Taxes.

 

(a)                                  Any and all
payments by or on behalf of any Borrower or any Obligor hereunder and under any
other Financing Agreement shall be made, in accordance with Section 6.4 of
this Agreement, free and clear of and without deduction for any and all Taxes,
excluding (i) income taxes imposed on the net income of any Lender (or any
transferee or assignee of such Lender, including any Participant, any such
transferee or assignee being referred to as a “Transferee”) and (ii) franchise
or similar taxes imposed on or determined by reference to the net income of any
Lender (or Transferee), in each case by the United States of America or by the
jurisdiction under the laws of which such Lender (or Transferee) (A) is
organized or any political subdivision thereof or (B) has its applicable
lending office located.  In addition,
each Borrower agrees to pay to the relevant Governmental Authority, in accordance
with applicable law, any Other Taxes.

 

(b)                                 If any Borrower
or any Obligor shall be required by law to deduct or withhold in respect of any
Taxes or Other Taxes from or in respect of any sum payable hereunder to Agent
or any Lender, then:

 

(i)                                     the sum payable
shall be increased as necessary so that after making all required deductions
and withholdings (including deductions and withholdings applicable to
additional sums payable under this Section) such Lender (or Agent on behalf of
such Lender) receives an amount equal to the sum it would have received had no
such deductions or withholdings been made;

 

(ii)                                  such Borrower
or such Obligor shall make such deductions and withholdings;

 

(iii)                               such Borrower
or such Obligor shall pay the full amount deducted or withheld to the relevant
taxing authority or other authority in accordance with applicable law; and

 

(iv)                              to the extent
not paid to Agent and Lenders pursuant to clause (i) above, such Borrower
or such Obligor shall also pay to Agent or any Lender, at the time interest is
paid, all additional amounts which Agent or any Lender specifies as necessary
to preserve the after-tax yield such Lender would have received if such Taxes
or Other Taxes had not been imposed.

 

(c)                                  Within thirty
(30) days after the date of any payment by any Borrower or any Obligor of Taxes
or Other Taxes, such Person shall furnish to Agent the original or a certified
copy of a receipt evidencing payment thereof, or other evidence of payment
reasonably satisfactory to Agent.

 

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HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

(d)                                 Borrowers will
indemnify Agent and each Lender (or Transferee) for the full amount of Taxes
and Other Taxes paid by Agent or such Lender (or Transferee, as the case may
be).  If Agent or such Lender (or
Transferee) receives a refund in respect of any Taxes or Other Taxes for which
Lender (or Transferee) has received payment from any Borrower or any Obligor
hereunder, so long as no Default or Event of Default shall exist or have
occurred and be continuing, Agent or such Lender (as the case may be) shall
credit to the loan account of Borrowers the amount of such refund plus any
interest received (but only to the extent of indemnity payments made, or
additional amounts paid, by any Borrower or any Obligor under this Section 6.5
with respect to the Taxes or Other Taxes giving rise to such refund).  If a Lender (or any Transferee) claims a tax
credit in respect of any Taxes for which it has been indemnified by Borrower or
any Obligor pursuant to this Section 6.5, such Lender will apply the
amount of the actual dollar benefit received by such Lender as a result
thereof, as reasonably calculated by Lender and net of all expenses related
thereto, to the Loans.  If Taxes or Other
Taxes were not correctly or legally asserted, Agent or such Lender shall, upon
Borrower’s request and at Borrowers’ expense, provide such documents to
Borrower as Borrower may reasonably request, to enable Borrowers to contest
such Taxes or Other Taxes pursuant to appropriate proceedings then available to
Borrowers (so long as providing such documents shall not, in the good faith
determination of Agent, have a reasonable likelihood of resulting in any
liability of Agent or any Lender).

 

(e)                                  In the event
any Transferee is organized under the laws of a jurisdiction other than the
United States, any State thereof or the District of Columbia (a “Non-U.S.
Lender”) such Non-U.S. Lender shall deliver to Borrowers two (2) copies
of either United States Internal Revenue Service Form 1001 or Form 4224,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with
respect to payments of “portfolio interest”, a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, a certificate representing that such Non-U.S. Lender is not a
bank for purposes of Section 881(c) of the Code, is not a ten (10%)
percent shareholder (within the meaning of Section 871(h)(3)(B) of
the Code) of any Borrower or any Obligor and is not a controlled foreign
corporation related to any Borrower or any Obligor (within the meaning of Section 864(d)(4) of
the Code)), properly completed and duly executed by such Non-U.S. Lender
claiming complete exemption from U.S. Federal withholding tax on payments by
any Borrower or any Obligor under this Agreement and the other Financing
Agreements.  Such forms shall be
delivered by any Transferee that is a Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of a Transferee that is a
Participant, on or before the date such Participant becomes a Transferee
hereunder) and on or before the date, if any, such Non-U.S. Lender changes its
applicable lending office by designating a different lending office (a “New
Lending Office”).  In addition, a
Non-U.S. Lender shall upon written notice from Borrowers promptly deliver such
new forms as are required by the Code or the regulations issued thereunder to
claim exemption from, or reduction in the rate of, U.S. Federal withholding tax
upon the obsolescence or invalidity of any form previously delivered by such
Non-U.S. Lender.  Notwithstanding any
other provision of this Section 6.5(e), a Non-U.S. Lender shall not be
required to deliver any form pursuant to this Section 6.5(e) that
such Non-U.S. Lender is not legally able to deliver.

 

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HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

(f)                                    Borrowers and
Obligors shall not be required to indemnify any Non-U.S. Lender or to pay any
additional amounts to any Non-U.S. Lender, in respect of United States Federal
withholding tax pursuant to subsections (a) or (d) above to the
extent that (i) the obligation to withhold amounts with respect to United
States Federal withholding tax was applicable on the date such Non-U.S. Lender
became a party to this Agreement (or, in the case of a Transferee that is a
Participant, on the date such Participant became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date such Non-U.S. Lender
designated such New Lending Office with respect to a Loan; provided, that,
this subsection (f) shall not apply (A) to any Transferee or New
Lending Office that becomes a Transferee or New Lending Office as a result of
an assignment, participation, transfer or designation made at the request of
any Borrower or any Obligor and (B) to the extent the indemnity payment or
additional amounts any Transferee, acting through a New Lending Office, would
be entitled to receive (without regard to this subsection (f)) do not exceed
the indemnity payment or additional amounts that the person making the
assignment, participation or transfer to such Transferee making the designation
of such New Lending Office, would have been entitled to receive in the absence
of such assignment, participation, transfer or designation or (ii) the
obligation to pay such additional amounts would not have arisen but for a
failure by such Non-U.S. Lender to comply with the provisions of subsection (e) above.

 

6.6                                 Authorization to Make Loans. 
Agent and each Lender is authorized to make the Loans and provide the
Letter of Credit Accommodations based upon telephonic or other instructions
received from anyone purporting to be an officer of a Borrower or other
authorized person or, at the discretion of Agent or any Lender, if such Loans
are necessary to satisfy any Obligations; provided, that,
proceeds of Loans shall be remitted by Agent and the Lenders to accounts
designated by Borrowers in writing, which accounts shall be accounts of
Borrowers unless otherwise agreed by Agent. 
All requests for Loans or Letter of Credit Accommodations hereunder
shall specify the date on which the requested advance is to be made or Letter
of Credit Accommodations established (which day shall be a Business Day) and
the amount of the requested Loan. 
Requests received at or before 10:30 a.m.  (Los Angeles time) on any Business Day shall
be deemed to have been made as of such Business Day.  Requests received on any day that is not a
Business Day or received after 10:30 a.m. 
(Los Angeles time) on any Business Day shall be deemed to have been made
as of the opening of business on the immediately following Business Day.  Subject to the terms and conditions of this
Agreement, Agent and the Lenders will make the Loans or commence arranging for
the Letter of Credit Accommodations (as requested by Borrowers) on the Business
Day the request is deemed to have been made or such later Business Day as may
be specified by Borrowers.  All Loans and
Letter of Credit Accommodations under this Agreement shall be conclusively
presumed to have been made to, and at the request of and for the benefit of, Borrowers
when deposited to the credit of Borrowers or otherwise disbursed or established
in accordance with the instructions of Borrowers or in accordance with the
terms and conditions of this Agreement.

 

6.7                                 Use of Proceeds. 
Borrowers shall use the initial proceeds of the Loans provided by or on
behalf of Lenders to Borrowers hereunder only for costs, expenses and fees in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Financing Agreements executed in connection herewith.  All other Loans made or Letter of Credit
Accommodations provided by or on behalf of Lenders to Borrowers pursuant to the

 

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HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

provisions hereof shall be used by Borrowers only for
general operating, working capital and other proper corporate purposes of
Borrowers not otherwise prohibited by the terms hereof.  None of the proceeds will be used, directly
or indirectly, for the purpose of purchasing or carrying any margin security or
for the purposes of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose
which might cause any of the Loans to be considered a “purpose credit” within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System, as amended.

 

6.8                                 Pro Rata Treatment.. 
Except to the extent otherwise provided in this Agreement:  (a) (i) 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 Credit Loans, and (ii) the
making of Term Loans shall be made among the Term Loan Lenders based on their
respective Pro Rata Shares as to the Term 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.

 

6.9                                 Sharing of Payments, Etc.

 

(a)                                  Each Borrower agrees that, in addition to
(and without limitation of) any right of setoff, banker’s lien or counterclaim
any Agent or Lender may otherwise have, each Lender shall be entitled, at its
option (but subject, as among Agent and Lenders, to the provisions of Section 6.8(b) hereof),
to offset balances held by it for the account of any Borrower at any of its
offices, in dollars or in any other currency, against any principal of or
interest on any Loans owed to such Lender or any other amount payable to such
Lender hereunder, that is not paid when due (regardless of whether such balances
are then due to Borrower), in which case it shall promptly notify Borrowers and
Agent thereof; provided, that, such Lender’s failure to give such
notice shall not affect the validity thereof.

 

(b)                                 Agent and
Lenders agree that no Lender shall, except upon the prior written consent of
Agent, exercise any right of setoff, banker’s lien or counterclaim such Lender
may have with respect to any property held by such Lender for the account of
any Borrower.  If any Lender (including Agent) shall obtain
from any Borrower payment of any principal of or interest on any Loan owing to
it or payment of any other amount under this Agreement or any other Financing
Agreement through the exercise (in
accordance with the terms hereof) of any right of setoff, banker’s lien
or counterclaim or similar right or otherwise (other than from Agent as
provided herein), and, as a result of such payment, such Lender shall have
received more than its Pro Rata Share of the principal of the Loans or more
than its share of such other amounts then due hereunder or thereunder by such
Borrower to such Lender than the percentage thereof received by any other
Lender, it shall promptly pay to Agent, for the benefit of Lenders, the amount
of such excess and simultaneously purchase from such other Lenders a
participation in the Loans or such other amounts, respectively, owing to such
other Lenders (or such interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all Lenders shall share the benefit of such excess
payment (net of any expenses that may be incurred by such Lender in obtaining
or preserving

 

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HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

such excess payment) in accordance with their
respective Pro Rata Shares or as otherwise agreed by Lenders.  To such end all Lenders shall make
appropriate adjustments among themselves (by the resale of participation sold
or otherwise) if such payment is rescinded or must otherwise be restored.

 

(c)                                  Each Borrower agrees that any Lender so
purchasing a participation pursuant to subsection (b) above (or direct
interest) may exercise, in a manner consistent with this Section, all rights of
setoff, banker’s lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans or other
amounts (as the case may be) owing to such Lender in the amount of such
participation.

 

(d)                                 Nothing contained herein shall require
any Lender to exercise any such right or shall affect the right of any Lender
to exercise, and retain the benefits of exercising, any such right with respect
to any other Indebtedness or obligation of any Borrower.  If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a setoff to which this Section applies, such Lender shall, to the extent
practicable, assign such rights to Agent for the benefit of Lenders and, in any
event, exercise its rights in respect of such secured claim in a manner
consistent with the rights of Lenders entitled under this Section to share
in the benefits of any recovery on such secured claim.

 

6.10                           Settlement Procedures.

 

(a)                                  In order to administer the credit
facility provided hereunder in an efficient manner and to minimize the transfer
of funds between Agent and Lenders, Agent may, subject to the terms of this
Section, make available, on behalf of Lenders, the full amount of the Loans
requested or charged to Borrowers’ loan account(s) or otherwise to be
advanced by Lenders pursuant to the terms hereof, without any requirement of
prior notice to Lenders of the proposed Loans.

 

(b)                                 With respect to all Revolving Loans made
by Agent on behalf of Revolving Loan Lenders as provided in this Section, the
amount of each Revolving Loan Lender’s Pro Rata Share of the outstanding
Revolving Loans shall be computed weekly, and shall be adjusted upward or
downward on the basis of the amount of the outstanding Revolving Loans as of
5:00 p.m. Los Angeles time on the Business Day immediately preceding the
date of each settlement computation; provided, that, Agent
retains the absolute right at any time or from time to time to make the above
described adjustments at intervals more frequent than weekly, but in no event
more than twice in any week.  Agent shall
deliver to each of the Revolving Loan Lenders after the end of each week, or at
such lesser period or periods as Agent shall determine, a summary statement of
the amount of outstanding Revolving Loans for such period (such week or lesser
period or periods being hereinafter referred to as a “Settlement Period”).  If the summary statement is sent by Agent and
received by a Revolving Loan Lender prior to 2:00 p.m. Los Angeles time,
then such Revolving Loan Lender shall make the settlement transfer described in
this Section by no later than 2:00 p.m. Los Angeles time on the next
Business Day following the date of receipt. 
If, as of the end of any Settlement Period, the amount of a Lender’s Pro
Rata Share of the outstanding Revolving Loans is more than such Lender’s Pro
Rata Share of the outstanding Revolving Loans as of the end of the previous
Settlement Period, then such Lender

 

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shall forthwith (but in no event later than the time
set forth in the preceding sentence) transfer to Agent by wire transfer in
immediately available funds the amount of the increase.  Alternatively, if the amount of a Lender’s
Pro Rata Share of the outstanding Revolving Loans in any Settlement Period is
less than the amount of such Lender’s Pro Rata Share of the outstanding
Revolving Loans for the previous Settlement Period, Agent shall forthwith
transfer to such Lender by wire transfer in immediately available funds the
amount of the decrease.  The obligation
of each of the Revolving Loan Lenders to transfer such funds and effect such
settlement shall be irrevocable and unconditional and without recourse to or warranty
by Agent.  Each of Agent and Revolving
Loan Lenders agrees to mark its books and records at the end of each Settlement
Period to show at all times the dollar amount of its Pro Rate Share of the
outstanding Revolving Loans and Letter of Credit Accommodations.  Each Revolving Loan Lender shall only be
entitled to receive interest on its Pro Rata Share of the Loans to the extent
such Loans have been funded by such Lender. 
Because the Agent on behalf of Revolving Loan Lenders may be advancing
and/or may be repaid Revolving Loans prior to the time when Lenders will
actually advance and/or be repaid such Revolving Loans, interest with respect
to Revolving Loans shall be allocated by Agent in accordance with the amount of
Revolving Loans actually advanced by and repaid to each Revolving Loan Lender
and the Agent and shall accrue from and including the date such Loans are so
advanced to but excluding the date such Loans are either repaid by any Borrower
or actually settled with the applicable Lender as described in this Section.

 

(c)                                  To the extent that Agent has made any
such amounts available and the settlement described above shall not yet have
occurred, upon repayment of any Loans by any Borrower, Agent may apply such
amounts repaid directly to any amounts made available by any Agent pursuant to
this Section.  In lieu of weekly or more
frequent settlements, Agent may at any time require each Lender to provide
Agent with immediately available funds representing its Pro Rata Share of each
Loan, prior to Agent’s disbursement of such Loan to any Borrower.  In such event, all Loans under this Agreement
shall be made by the Lenders simultaneously and proportionately to their Pro
Rata Shares.  No Lender shall be
responsible for any default by any other Lender in the other Lender’s
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender be increased or decreased as a result of the default by any other Lender
in the other Lender’s obligation to make a Loan hereunder.

 

(d)                                 If Agent is not funding a particular Loan
to Borrowers pursuant to this Section on any day, Agent may assume that
each Lender will make available to Agent such Lender’s Pro Rata Share of the
Revolving Loan requested or otherwise made on such day and Agent may, in its
discretion, but shall not be obligated to, cause a corresponding amount to be
made available to Borrowers on such day. 
If Agent makes such corresponding amount available to Borrowers and such
corresponding amount is not in fact made available to Agent by such Lender,
Agent shall be entitled to recover such corresponding amount 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 provided for in Section 3.1 hereof. 
During the period in which such Lender has not paid such corresponding
amount to Agent, notwithstanding anything to the contrary contained in this
Agreement or any of the other Financing Agreements, the amount so advanced by
Agent to any Borrower shall, for all purposes hereof, be a Loan made by Agent
for its own account.  Upon any such
failure by a Lender to pay Agent, Agent shall promptly thereafter notify
Borrowers of such failure and Borrowers shall

 

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HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

immediately pay such corresponding amount to Agent for
its own account.  A Lender who fails to
pay Agent its Pro Rata Share of any Loans made available by the Agent on such
Lender’s behalf, or any Lender who fails to pay any other amount owing to
Agent, is a “Defaulting Lender”. 
Agent shall not be obligated to transfer to a Defaulting Lender any
payments made by or on behalf of any Borrower or any Obligor to Agent for the
Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder. 
Amounts payable to a Defaulting Lender shall instead be paid to or
retained by Agent.  Agent may hold and,
in its discretion, re-lend to any Borrower the amount of all such payments
received or retained by it for the account of such Defaulting Lender.  For purposes of voting or consenting to
matters with respect to this Agreement and the other Financing Agreements and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
Lender and such Defaulting Lender’s Commitment shall be deemed to be zero (0).  This Section shall remain effective with
respect to a Defaulting Lender until such default is cured.  The operation of this Section shall not
be construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by any Borrower or any Obligor of their
duties and obligations hereunder.

 

(e)                                  Nothing in this Section or elsewhere
in this Agreement or the other Financing Agreements shall be deemed to require
Agent to advance funds on behalf of any Lender or to relieve any Lender from
its obligation to fulfill its Commitment hereunder or to prejudice any rights
that any Borrower may have against any Lender as a result of any default by any
Lender hereunder in fulfilling its Commitment.

 

SECTION 7. 
COLLATERAL REPORTING AND COVENANTS.

 

7.1                                 Collateral Reporting. 
Borrowers shall provide Agent with the following documents in a form
satisfactory to Agent:  (a) on a
weekly basis, (i) schedules of sales made, credits issued and cash
received, which, after the occurrence of an Event of Default or the filing of a
bankruptcy petition by or against any Borrower, and for so long as such Event
of Default is continuing or such bankruptcy petition has not been dismissed,
shall separately account for sales of Inventory subject to the security interest
of IBM Credit Corporation, (ii) borrowing base certificates, (iii) schedules
of Inventory (net of fixed assets) separately identifying Inventory by vendor,
type, location and age, with perpetual inventory reports, and (iv) schedules
of accounts payable and accrued accounts payable to any vendor holding a
security interest in any property of the Borrowers; (b) on a monthly
basis, on or before the tenth (10th) Business Day of such month for the
immediately preceding month or more frequently as Agent may request, (i) agings
of accounts receivable, (ii) agings of accounts payable, accrued accounts
payable, lease payables and other payables, and (iii) a certificate from
an authorized officer of Borrowers representing that each Borrower has made
payment of sales and use taxes during such month or, at Agent’s request, other
evidence of such payment; (c) upon Agent’s request, (i) copies of
customer statements and credit memos, remittance advices and reports, and
copies of deposit slips and bank statements, (ii) copies of shipping and
delivery documents, and (iii) copies of purchase orders, invoices and
delivery documents for Inventory and Equipment acquired by Borrowers; and (d) such
other reports as to the Collateral or other property which is security for the Obligations
as Agent shall request from time to time. 
Borrowers shall provide Agent, as soon as available, but in any event
not later than five (5) days after receipt by Borrowers, with all
statements received from Apple Computer and any other vendor who may hold a
security interest

 

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in any Borrowers’ assets, together with such
additional information as shall be sufficient to enable Agent to monitor the
accounts payable and accrued accounts payable to them.  If any of Borrowers’ records or reports of
the Collateral or other property which is security for the Obligations are
prepared or maintained by an accounting service, contractor, shipper or other
agent, Borrowers hereby irrevocably authorize such service, contractor, shipper
or agent to deliver such records, reports, and related documents to Agent and
to follow Agent’s instructions with respect to further services at any time
that an Event of Default exists or has occurred and is continuing.

 

7.2                                 Accounts Covenants.

 

(a)                                  Each Borrower shall notify Agent promptly
of the assertion of any claims, offsets, defenses of counterclaims by any
account debtor, or any disputes with any of such persons or any settlement,
adjustment or compromise thereof, in the schedules, certificates and reports
provided pursuant to Section 7.1 hereof.

 

(b)                                 Each Borrower shall notify Agent promptly
of:  (i) any material delay in any
Borrower’s performance of any of its obligations to any account debtor or the
assertion of any claims, offsets, defenses or counterclaims by any account
debtor, or any disputes with account debtors, or any settlement, adjustment or
compromise thereof, (ii) all material adverse information relating to the
financial condition of any account debtor and (iii) any event or
circumstance which, to Borrowers’ knowledge would cause Agent to consider any
then existing Accounts as no longer constituting Eligible Accounts.  No credit, discount, allowance or extension
or agreement for any of the foregoing shall be granted to any account debtor,
Credit Card Issuer or Credit Card/Check Processor except in the ordinary course
of Borrowers’ business in accordance with its most recent past practices and
policies.  So long as no Event of Default
exists or has occurred and is continuing, Borrowers may settle, adjust or
compromise any claim, offset, counterclaim or dispute with any account debtor,
Credit Card Issuer or Credit Card/Check Processor in the ordinary course of
Borrowers’ business in accordance with their most recent past practices and
policies.  At any time that an Event of
Default exists or has occurred and is continuing, Agent shall, at its option,
have the exclusive right to settle, adjust or compromise any claim, offset,
counterclaim or dispute with any account debtor, Credit Card Issuer or Credit
Card/Check Processor or grant any credits, discounts or allowances.  Each Borrower shall notify Agent promptly of (i) any
notice of a material default by any Borrower under any of the Credit Card/Check
Processing Agreements or of any default which might result in the Credit Card
Issuer or Credit Card/Check Processor ceasing to make payments or suspending
payments to Borrowers, (ii) any notice from any Credit Card Issuer or
Credit Card/Check Processor that such person is ceasing or suspending, or will
cease or suspend, any present or future payments due or to become due to
Borrowers from such person, or that such person is terminating or will
terminate any of the Credit Card/Check Processing Agreements, and (iii) the
failure of any Borrower to comply with any material terms of the Credit
Card/Check Processing Agreements or any terms thereof which might result in the
Credit Card Issuer or Credit Card/Check Processor ceasing or suspending
payments to Borrowers.

 

(c)                                  Without limiting the obligation of
Borrowers to deliver any other information to Agent, Borrowers shall promptly
report to Agent any return of Inventory by any

 

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account debtor. 
At any time that Inventory is returned, reclaimed or repossessed, the
Account (or portion thereof) which arose from the sale of such returned,
reclaimed or repossessed Inventory shall not be deemed an Eligible
Account.  In the event any account debtor
returns Inventory when an Event of Default exists or has occurred and is
continuing, Borrowers shall, upon Agent’s request, (i) hold the returned
Inventory in trust for Agent, (ii) segregate all returned Inventory from
all of its other property, (iii) dispose of the returned Inventory solely
according to Agent’s instructions, and (iv) not issue any credits,
discounts or allowances with respect thereto without Agent’s prior written
consent.

 

(d)                                 With respect to each Account and Credit
Card/Check Processing Receivable:  (i) the
amounts shown on any invoice delivered to Agent or schedule thereof delivered
to Agent shall be true and complete, (ii) no payments shall be made
thereon except payments delivered to Agent pursuant to the terms of this
Agreement, (iii) no credit, discount, allowance or extension or agreement
for any of the foregoing shall be granted to any account debtor, Credit Card
Issuer or Credit Card/Check Processor except as reported to Agent in accordance
with this Agreement and except for credits, discounts, allowances or extensions
made or given in the ordinary course of Borrowers’ business in accordance with
practices and policies previously disclosed to Agent, (iv) there shall be
no setoffs, deductions, contras, defenses, counterclaims or disputes existing
or asserted with respect thereto except as reported to Agent in accordance with
the terms of this Agreement, (v) none of the transactions giving rise
thereto will violate any applicable State or Federal Laws or regulations, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in
accordance with its terms.

 

(e)                                  Agent shall have the right at any time or
times, in Agent’s name or in the name of a nominee of Agent, to verify the
validity, amount or any other matter relating to any Account, Credit Card/Check
Processing Receivable or other Collateral, by mail, telephone, facsimile
transmission or otherwise.

 

(f)                                    Borrowers shall deliver or cause to be
delivered to Agent, with appropriate endorsement and assignment, with full
recourse to Borrowers, all chattel paper and instruments which Borrowers now
own or may at any time acquire immediately upon Borrowers’ receipt thereof,
except as Agent may otherwise agree.

 

(g)                                 Agent may, at any time or times that an
Event of Default exists or has occurred, (i) notify any or all account
debtors, Credit Card Issuers or Credit Card/Check Processors that the Accounts
and Credit Card/Check Processing Receivables have been assigned to Agent and
that Agent and the Lenders have a security interest therein and Agent may
direct any or all account debtors, Credit Card Issuers or Credit Card/Check
Processors to make payments of Accounts and Credit Card/Check Processing
Receivables directly to Agent, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Accounts and Credit
Card/Check

 

39

 

*** 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.

 

Processing Receivables or other obligations included
in the Collateral and thereby discharge or release the account debtor, Credit
Card Issuer, Credit Card/Check Processor or any other party or parties in any
way liable for payment thereof without affecting any of the Obligations, (iii) demand,
collect or enforce payment of any Accounts and Credit Card/Check Processing
Receivables or such other obligations, but without any duty to do so, and Agent
shall not be liable for its failure to collect or enforce the payment thereof
or for the negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may deem necessary or desirable for the protection
of its interests.  At any time that an
Event of Default exists or has occurred and is continuing, at Agent’s request,
all invoices and statements sent to any account debtor shall state that the
Accounts due from such account debtor and such other obligations have been
assigned to Agent and are payable directly and only to Agent and Borrowers
shall deliver to Agent such originals of documents evidencing the sale and
delivery of goods or the performance of services giving rise to any Accounts as
Agent may require.

 

7.3                                 Inventory Covenants. 
With respect to the Inventory:

 

(a)                                  Borrowers shall at all times maintain
inventory records reasonably satisfactory to Agent, keeping correct and
accurate records itemizing and describing the kind, type, quality and quantity
of Inventory, Borrowers’ cost therefor and daily withdrawals therefrom and additions
thereto;

 

(b)                                 Borrowers shall cause a third party firm
acceptable to Agent to conduct a complete physical count of the Inventory at a
minimum of once every twelve (12) months but at any time as Agent may
reasonably request upon the occurrence and during the continuance of an Event
of Default, and promptly following such physical count such firm shall supply
Agent with a report in the form and with such specificity as may be reasonably
satisfactory to Agent concerning such physical count;

 

(c)                                  Borrowers shall not remove any Inventory
from the locations set forth or permitted herein, without the prior written
consent of Agent, except for sales of Inventory in the ordinary course of
Borrowers’ business and except to move Inventory directly from one location set
forth or permitted herein to another such location;

 

(d)                                 upon Agent’s request, Borrowers shall, at
their expense, no more than three (3) times in any twelve (12) month
period as to desktop appraisals, and no more than one (1) time in any
twelve (12) month period as to full appraisals, but at any time or times as
Agent may request upon the occurrence and during the continuance of an Event of
Default, deliver or cause to be delivered to Agent written reports or
appraisals as to the Inventory in form, scope and methodology acceptable to
Agent and addressing such issues as Agent may require in its commercially
reasonable judgment, issued by an appraiser acceptable to Agent, and addressed
to Agent and Lenders or upon which Agent and Lenders are expressly permitted to
rely (with the understanding that Agent may revise the definition of ‘Eligible
Inventory’ hereunder or establish Availability Reserves as Agent may deem
advisable in its sole discretion based upon the results of such updated
appraisals);

 

(e)                                  Borrowers shall produce, use, store and
maintain the Inventory, with all reasonable care and caution and in accordance
with applicable standards of any insurance and in conformity with applicable
laws (including, but not limited to, the requirements of the Federal Fair Labor
Standards Act of 1938, as amended and all rules, regulations and orders related
thereto);

 

40

 

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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.

 

(f)            Borrowers assume all responsibility and
liability arising from or relating to the production, use, sale or other
disposition of the Inventory;

 

(g)           Borrowers shall not sell Inventory to any
customer on approval, or any other basis which entitles the customer to return
or may obligate Borrowers to repurchase such Inventory (except for returns made
in the ordinary course of Borrowers’ business pursuant to their existing
policies and in accordance with their industry standards);

 

(h)           Borrowers shall keep the Inventory in
good and marketable condition;

 

(i)            Borrowers shall not, without prior
written notice to Agent, acquire or accept any Inventory on consignment or
approval; and

 

(j)            upon the occurrence and during the
continuance of an Event of Default, Borrowers shall not return any Inventory to
its vendors without the prior consent of Agent.

 

7.4           Equipment Covenants.  With respect
to the Equipment:

 

(a)           upon Agent’s request, Borrowers shall, at
their expense, at any time or times as Agent may request upon the occurrence
and during the continuation of an Event of Default, deliver or cause to be
delivered to Agent written reports or appraisals as to the Equipment in form,
scope and methodology reasonably acceptable to Agent and by an appraiser
acceptable to Agent;

 

(b)           Borrowers shall keep the Equipment in
good order, repair, running and marketable condition (ordinary wear and tear
excepted);

 

(c)           Borrowers shall use the Equipment with
all reasonable care and caution and in accordance with applicable standards of
any insurance and in conformity with all applicable laws;

 

(d)           the Equipment is and shall be used in
Borrowers’ business and not for personal, family, household or farming use;

 

(e)           Borrowers shall not remove any Equipment
from the locations set forth or permitted herein, except to the extent
necessary to have any Equipment repaired or maintained in the ordinary course
of the business of Borrowers or to move Equipment directly from one such
location set forth or permitted herein to another such location and except for
the movement of motor vehicles used by or for the benefit of Borrowers in the
ordinary course of business;

 

(f)            the Equipment is now and shall remain
personal property and Borrowers shall not permit any of the Equipment to be or
become a part of or affixed to real property; and

 

(g)           Borrowers assume all responsibility and
liability arising from the use of the Equipment.

 

41

 

*** 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.

 

7.5           Power of Attorney. 
Each Borrower hereby irrevocably designates and appoints Agent (and all
persons designated by Agent) as such Borrower’s true and lawful
attorney-in-fact, and authorizes Agent, in such Borrower’s or Agent’s name, to:

 

(a)           at any time an Event of Default has occurred and is
continuing:

 

(i)            demand payment on Accounts, Credit
Card/Check Processing Receivables or other proceeds of Inventory or other
Collateral;

 

(ii)           enforce payment of Accounts, Credit
Card/Check Processing Receivables or other Obligations included in the
Collateral by legal proceedings or otherwise;

 

(iii)          exercise
all of such Borrower’s rights and remedies to collect any Account, Credit
Card/Check Processing Receivables or other proceeds of Inventory or other
Collateral;

 

(iv)          sell or assign any Account and Credit
Card/Check Processing Receivables upon such terms, for such amount and at such
time or times as the Agent deems advisable;

 

(v)           settle, adjust, compromise, extend or
renew any Accounts and Credit Card/Check Processing Receivables;

 

(vi)          discharge and release any Accounts and
Credit Card/Check Processing Receivables or other Obligations included in the
Collateral;

 

(vii)         prepare,
file and sign such Borrower’s name on any proof of claim in bankruptcy or other
similar document against an account debtor;

 

(viii)        notify
the post office authorities to change the address for delivery of such Borrower’s
mail to an address designated by Agent, and open and dispose of all mail
addressed to such Borrower, provided, that, any such mail
received by Agent that does not constitute checks or other items of payment
shall be forwarded by Agent to such Borrower promptly after receipt by Agent;
and

 

(ix)           do all acts and things which are
necessary, in Agent’s determination, to fulfill Borrowers’ obligations under
this Agreement and the other Financing Agreements; and

 

(b)           at any time, subject to the terms of the agreement(s) relating
to the Blocked Account(s) to:

 

(i)            take control in any manner of any item of
payment or proceeds thereof;

 

(ii)           have access to any lockbox or postal box
into which Borrowers’ mail is deposited;

 

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*** 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.

 

(iii)          endorse
such Borrower’s name upon any items of payment or proceeds thereof and deposit
the same in the Agent’s account for application to the Obligations;

 

(iv)          endorse such Borrower’s name upon any
chattel paper, document, instrument, invoice, or similar document or agreement
relating to any Accounts or Credit Card/Check Processing Receivables or any
goods pertaining thereto or any other Collateral;

 

(v)           sign such Borrower’s name on any
verification of Accounts or Credit Card/Check Processing Receivables and
notices thereof to account debtors, Credit Card Issuers or Credit Card/Check
Processors; and

 

(vi)          execute in such Borrower’s name and file
any UCC financing statements or amendments thereto as deemed appropriate by
Agent to perfect its security interests in the Collateral.

 

Each Borrower hereby releases Agent and each Lender and each of their
respective officers, employees and designees from any liabilities arising from
any act or acts under this power of attorney and in furtherance thereof,
whether of omission or commission, except as a result of the gross negligence
or willful misconduct of Agent’s or such Lender’s or their respective officers,
employees or designees as determined pursuant to a final non-appealable order
of a court of competent jurisdiction.

 

7.6           Right to Cure. 
After the occurrence and during the continuance of an Event of Default,
Agent may, at its option, (a) cure any default by any Borrower under any
agreement with a third party or pay or bond on appeal any judgment entered
against any Borrower, (b) discharge taxes, liens, security interests or
other encumbrances at any time levied on or existing with respect to the
Collateral and (c) pay any amount, incur any expense or perform any act
which, in Agent’s judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Agent and Lenders with
respect thereto.  Agent and Lenders may
add any amounts so expended to the Obligations and charge Borrowers’ account
therefor, such amounts to be repayable by Borrowers on demand.  Agent and Lenders shall be under no
obligation to effect such cure, payment or bonding and shall not, by doing so,
be deemed to have assumed any obligation or liability of Borrowers.  Any payment made or other action taken by
Agent or any Lender under this Section 7.6 shall be without prejudice to
any right to assert an Event of Default hereunder and to proceed accordingly.

 

7.7           Access to Premises. 
From time to time as requested by Agent, at the cost and expense of
Borrowers, no more than three (3) times in any twelve (12) month period,
but at any time or times as Agent may request upon the occurrence and during
the continuance of an Event of Default, (a) Agent or its designee shall
have complete access to all of Borrowers’ premises during normal business hours
and after two (2) Business Days prior notice to Borrowers, or at any time
and without notice to Borrowers if an Event of Default exists or has occurred
and is continuing, for the purposes of inspecting, verifying and auditing the
Collateral and all of Borrowers’ books and records, including, without
limitation, the Records, and (b) Borrowers shall promptly furnish to Agent
such copies of such books and records or extracts therefrom as Agent may
reasonably request, and (c)Agent may use during normal business hours such of

 

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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.

 

Borrowers’ personnel, equipment, supplies and premises
as may be reasonably necessary for the foregoing and if an Event of Default
exists or has occurred and is continuing for the collection of Accounts or
Credit Card/Check Processing Receivables and realization of other Collateral..

 

SECTION 8. 
REPRESENTATIONS AND WARRANTIES.

 

Each Borrower hereby represents and warrants to Agent and Lenders the
following (which shall survive the execution and delivery of this Agreement),
the truth and accuracy of which are a continuing condition of the making of
Loans and the providing of Letter of Credit Accommodations by Lender to Borrowers:

 

8.1           Corporate Existence, Power and Authority;
Subsidiaries.  Each Borrower is a corporation duly organized
and in good standing under the laws of its state of incorporation and is duly
qualified as a foreign corporation and in good standing in all states or other
jurisdictions where the nature and extent of the business transacted by it or
the ownership of assets makes such qualification necessary, except for those
jurisdictions in which the failure to so qualify would not have a material
adverse effect on such Borrower’s financial condition, results of operation or
business or the rights of Agent or any Lender in or to any of the
Collateral.  The execution, delivery and
performance of this Agreement, the other Financing Agreements to which any Borrower
is a party and the transactions contemplated hereunder and thereunder are all
within such Borrower’s corporate or company powers, have been duly authorized
and are not in contravention of law or the terms of such Borrower’s certificate
of incorporation or formation, by-laws or operating agreement, or other
organizational documentation, or any indenture, agreement or undertaking to
which such Borrower is a party or by which such Borrower or its property are
bound.  This Agreement and the other
Financing Agreements to which any Borrower is a party constitute legal, valid
and binding obligations of such Borrower enforceable in accordance with their
respective terms.  Borrowers do not have
any subsidiaries except as set forth on the Information Certificates.

 

8.2           Financial Statements; No Material Adverse
Change.  All financial statements relating to
Borrowers which have been or may hereafter be delivered by Borrowers to Agent
or any Lender have been prepared in accordance with GAAP and fairly present the
financial condition and the results of operations of Borrowers as at the dates
and for the periods set forth therein. 
Except as disclosed in any interim financial statements furnished by
Borrowers to Agent or any Lender prior to the date of this Agreement, there has
been no material adverse change in the assets, liabilities, properties and
condition, financial or otherwise, of Borrowers, since the date of the most
recent audited financial statements furnished by Borrowers to Agent or any
Lender prior to the date of this Agreement.

 

8.3           Chief Executive Office; Collateral
Locations.  The chief executive office of Borrowers and
Borrowers’ Records concerning Accounts and Credit Card/Check Processing
Receivables are located only at the address set forth below and their only
other places of business and the only other locations of Collateral, if any,
are the addresses set forth in the Information Certificates, subject to the
right of Borrowers to establish new locations in accordance with Section 9.2
below.  The Information Certificates or
any notices delivered pursuant to Section 9.2 correctly identify any of
such locations which are not owned by Borrowers and set forth the

 

44

 

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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.

 

owners and/or operators thereof and, to the best of
Borrowers’ knowledge, the holders of any mortgages on such locations.

 

8.4           Priority of Liens; Title to Properties. 
The security interests and liens granted to Agent, for itself and the
ratable benefit of Lenders, under this Agreement and the other Financing
Agreements to which any Borrower is a party constitute valid and perfected
first priority liens and security interests in and upon the Collateral to which
such Borrower now has or hereafter acquires rights, subject only to the liens
indicated on Schedule 8.4 hereto and the other liens permitted under Section 9.8
hereof.  Each Borrower has good and
marketable title to all of its properties and assets subject to no liens,
mortgages, pledges, security interests, encumbrances or charges of any kind,
except those granted to Agent, for itself and the ratable benefit of Lenders,
and such others as are specifically listed on Schedule 8.4 hereto or
permitted under Section 9.8 hereof.

 

8.5           Tax Returns. 
Each Borrower has filed, or caused to be filed, in a timely manner all
tax returns, reports and declarations which are required to be filed by it
(without requests for extension except as previously disclosed in writing to
Agent and Lenders).  All information in
such tax returns, reports and declarations is complete and accurate in all material
respects.  Each Borrower has paid or
caused to be paid prior to delinquency all taxes due and payable or claimed due
and payable in any assessment received by it, except taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to such Borrower and with respect to which adequate
reserves have been set aside on its books. 
Adequate provision has been made for the payment of all accrued and
unpaid Federal, State, county, local, foreign and other taxes whether or not
yet due and payable and whether or not disputed.

 

8.6           Litigation.  Except as set
forth on the Information Certificates, there is no present investigation by any
governmental agency pending, or to the Borrowers’ actual knowledge threatened,
against or affecting any Borrower, its assets or business and there is no
action, suit, proceeding or claim by any Person pending, or to the Borrowers’
actual knowledge threatened, against any Borrower or its assets or goodwill, or
against or affecting any transactions contemplated by this Agreement, which if
adversely determined against Borrowers would result in any material adverse
change in the assets or business of Borrowers or would impair the ability of
any Borrower to perform its obligations hereunder or under any of the other Financing
Agreements to which it is a party or of Agent or any Lender to enforce any
Obligations or realize upon a material portion of the Collateral.

 

8.7           Compliance with Other Agreements and
Applicable Laws.  Each Borrower is not in default in any
material respect under, or in violation in any material respect of any of the
terms of, any agreement, contract, instrument, lease or other commitment to
which it is a party or by which it or any of its assets are bound and each
Borrower is in compliance in all material respects with all applicable
provisions of laws, rules, regulations, licenses, permits, approvals and orders
of any foreign, Federal, State or local governmental authority, except with
respect to the annual reporting obligations imposed by Sections 103 and 104 of
ERISA and Section 6039D of the Code with respect to the Plans (as defined
in Section 8.10(a) hereof), as to which obligations Borrowers shall
comply promptly.

 

45

 

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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.

 

8.8           Bank Accounts. 
All of the deposit accounts, investment accounts or other accounts in
the name of or used by Borrowers maintained at any bank or other financial
institution are set forth on Schedule 8.8 hereto, subject to the right
of Borrowers to establish new accounts in accordance with Section 9.13
below.

 

8.9           Environmental Compliance.

 

(a)           Except as set forth on Schedule 8.9
hereto, each Borrower has not generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off its premises (whether or not owned by it) in any manner which at any time
violates any applicable Environmental Law or any license, permit, certificate,
approval or similar authorization thereunder and the operations of Borrowers
comply in all material respects with all Environmental Laws and all licenses,
permits, certificates, approvals and similar authorizations thereunder.

 

(b)           Except as set forth on Schedule 8.9
hereto, there has been no investigation, proceeding, complaint, order,
directive, claim, citation or notice by any governmental authority or any other
person nor is any pending or to the best of Borrowers’ knowledge threatened,
with respect to any non-compliance with or violation of the requirements of any
Environmental Law by Borrowers or the release, spill or discharge, threatened
or actual, of any Hazardous Material or the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any
Hazardous Materials or any other environmental, health or safety matter, which
affects any Borrower or its business, operations or assets or any properties at
which such Borrower has transported, stored or disposed of any Hazardous
Materials.

 

(c)           Each Borrower has no material liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials.

 

(d)           Each Borrower has all licenses, permits,
certificates, approvals or similar authorizations required to be obtained or
filed in connection with the operations of such Borrower under any
Environmental Law and all of such licenses, permits, certificates, approvals or
similar authorizations are valid and in full force and effect.

 

8.10         Employee Benefits.

 

(a)           Except with respect to the Creative
Computers 401(k) Plan and Trust, the Creative Computers Group Welfare
Benefit Plan and the Creative Computers Flexible Benefit Plan (collectively,
the “Plans”), each Borrower has not engaged in any transaction in connection
with which such Borrower or any of its ERISA Affiliates could be subject to
either a civil penalty assessed pursuant to Section 502(i) of ERISA
or a tax imposed by Section 4975 of the Code, including any accumulated
funding deficiency described in Section 8.10(c) hereof and any
deficiency with respect to vested accrued benefits described in Section 8.10(d) hereof.  With respect to the Plans, each Borrower has
not engaged in any transaction in connection with which such Borrower or any of
its ERISA Affiliates could be subject to either a civil penalty assessed

 

46

 

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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.

 

pursuant to Section 502(i) of ERISA or a tax
imposed by Section 4975 of the Code and has corrected, or undertaken
reasonable efforts to promptly correct, any such transactions it has identified
during the course of routine plan administration.

 

(b)           No liability to the Pension Benefit
Guaranty Corporation has been or is expected by Borrowers to be incurred with
respect to any employee pension benefit plan of Borrowers or any of their ERISA
Affiliates.  There has been no reportable
event (within the meaning of Section 4043(b) of ERISA) or any other
event or condition with respect to any employee pension benefit plan of
Borrowers or any of their ERISA Affiliates which presents a risk of termination
of any such plan by the Pension Benefit Guaranty Corporation.

 

(c)           Full payment has been made of all amounts
which Borrowers or any of their ERISA Affiliates are required under Section 302
of ERISA and Section 412 of the Code to have paid under the terms of each
employee pension benefit plan as contributions to such plan as of the last day
of the most recent fiscal year of such plan ended prior to the date hereof, and
no accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412
of the Code), whether or not waived, exists with respect to any employee
pension benefit plan, including any penalty or tax described in Section 8.10(a) hereof
and any deficiency with respect to vested accrued benefits described in Section 8.10(c) hereof.

 

(d)           The current value of all vested accrued
benefits under all employee pension benefit plans maintained by Borrowers that
are subject to Title IV of ERISA does not exceed the current value of the
assets of such plans allocable to such vested accrued benefits, including any
penalty or tax described in Section 8.10(a) hereof and any
accumulated funding deficiency described in Section 8.10(c) hereof.  The terms “current value” and “accrued
benefit” have the meanings specified in ERISA.

 

(e)           Neither Borrowers nor any of their ERISA
Affiliates is or has ever been obligated to contribute to any “multiemployer
plan” (as such term is defined in Section 4001(a)(3) of ERISA) that
is subject to Title IV of ERISA.

 

8.11         Year 2000 Compliance. 
Borrowers and any business in which any Borrower holds a substantial
interest and all customers, suppliers and vendors that are material to
Borrowers’ business are Year 2000 Compliant. 
As used herein, “Year 2000 Compliant” shall mean, in regard to
any entity, that all software, hardware, firmware, equipment, goods or systems
utilized by or material to the business operations or financial condition of
such entity, are properly performing date sensitive functions during and after
the year 2000.  Borrowers shall, immediately
upon request, provide to Agent and Lenders such certifications or other
evidence of Borrowers’ compliance with the terms hereof as Agent and Lenders
may from time to time require.

 

8.12         Accuracy and Completeness of Information. 
All information furnished by or on behalf of Borrowers in writing to
Agent or any Lender in connection with this Agreement or any of the other
Financing Agreements or any transaction contemplated hereby or thereby,
including, without limitation, all information on the Information Certificates
is true and correct in all material respects on the date as of which such
information is dated or certified and does not omit

 

47

 

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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.

 

any material fact necessary in order to make such
information not misleading.  No event or
circumstance has occurred which has had or could reasonably be expected to have
a material adverse affect on the business or assets of Borrowers, which has not
been fully and accurately disclosed to Agent and Lenders in writing.

 

8.13         Survival of Warranties; Cumulative. 
All representations and warranties contained in this Agreement or any of
the other Financing Agreements shall survive the execution and delivery of this
Agreement and shall be deemed to have been made again to Agent and Lenders on
the date of each additional borrowing or other credit accommodation hereunder
and shall be conclusively presumed to have been relied on by Agent and Lenders
regardless of any investigation made or information possessed by Agent or any
Lender.  The representations and
warranties set forth herein shall be cumulative and in addition to any other
representations or warranties which Borrowers shall now or hereafter give, or
cause to be given, to Agent and Lenders.

 

SECTION 9. 
AFFIRMATIVE AND NEGATIVE COVENANTS.

 

9.1           Maintenance of Existence. 
Each Borrower shall at all times preserve, renew and keep in full, force
and effect its corporate existence and rights and franchises with respect
thereto and maintain in full force and effect all permits, licenses,
trademarks, trade names, approvals, authorizations, leases and contracts
necessary to carry on the business as presently or proposed to be
conducted.  Each Borrower shall give
Agent thirty (30) days prior written notice of any proposed change in its
corporate name, which notice shall set forth the new name and such Borrower
shall deliver to Agent a copy of the amendment to the Certificate of
Incorporation of such Borrower providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation of such Borrower as
soon as it is available.

 

9.2           New Collateral Locations. 
Any Borrower may open any new location within the continental United
States provided such Borrower:  (a) gives
Agent ten (10) days prior written notice of the intended opening of any
such new location; and (b) executes and delivers, or causes to be executed
and delivered, to Agent such agreements, documents, and instruments as Agent
may deem reasonably necessary or desirable to protect its interests in the
Collateral at such location, including, without limitation, UCC financing
statements and, if such Borrower leases such new location, provides a favorable
landlord waiver or subordination.

 

9.3           Compliance with Laws, Regulations, Etc.

 

(a)           Each Borrower shall, at all times, comply
in all material respects with all laws, rules, regulations, licenses, permits,
approvals and orders applicable to it and duly observe all requirements of any
Federal, State or local governmental authority, including, without limitation,
the Employee Retirement Security Act of 1974, as amended, the Occupational
Safety and Hazard Act of 1970, as amended, the Fair Labor Standards Act of
1938, as amended, and all statutes, rules, regulations, orders, permits and
stipulations relating to environmental pollution and employee health and
safety, including, without limitation, all of the Environmental Laws.

 

48

 

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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

(b)           Borrowers shall take prompt and
appropriate action to respond to any of Borrowers’ non-compliance (to the
extent Borrowers have knowledge thereof or would have knowledge thereof upon
due inquiry) with any of the Environmental Laws and shall report to Agent on
such response.

 

(c)           Borrowers shall give both oral and written notice to
Agent immediately upon Borrowers’ receipt of any notice of, or Borrowers’
otherwise obtaining knowledge of:

 

(i)            the occurrence of any event involving the
release, spill or discharge, threatened or actual, of any Hazardous Material by
any Borrower or upon any of its premises; or

 

(ii)           any investigation, proceeding, complaint, order,
directive, claims, citation or notice with respect to:

 

(A)          any non-compliance with or violation of
any Environmental Law by any Borrower;

 

(B)           the release, spill or discharge,
threatened or actual, of any Hazardous Material by any Borrower or upon any of
its premises;

 

(C)           the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials by any Borrower or upon any of its premises; or

 

(D)          any other environmental, health or safety
matter, which could have a material adverse effect upon any Borrower or its
business, operations or assets or any properties at which any Borrower
transported, stored or disposed of any Hazardous Materials.

 

(d)           Borrowers shall indemnify and hold
harmless Agent, Lenders, and their respective directors, officers, employees,
agents, invitees, representatives, successors and assigns, from and against any
and all losses, claims, damages, liabilities, costs, and expenses (including
attorneys’ fees and legal expenses) directly or indirectly arising out of or
attributable to the use, generation, manufacture, reproduction, storage, release,
threatened release, spill, discharge, disposal or presence of a Hazardous
Material by any Borrower or upon any of its premises, including, without
limitation, the costs of any required or necessary repair, cleanup or other
remedial work with respect to any property of such Borrower and the preparation
and implementation of any closure, remedial or other required plans.  All representations, warranties, covenants
and indemnifications in this Section 9.3 shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.

 

(e)           To the extent any of the provisions of
this Section 9.3 as they pertain to the Real Property are inconsistent
with the provisions of the deed of trust in favor of Agent and Lenders on the
Real Property, the provisions of such deed of trust shall govern.

 

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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

9.4           Payment of Taxes and Claims. 
Each Borrower shall duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to such
Borrower and with respect to which adequate reserves have been set aside on its
books.  Borrowers shall be liable for any
tax or penalties imposed on Agent or any Lender as a result of the financing
arrangements provided for herein and Borrowers agree to indemnify and hold
Agent and Lenders harmless with respect to the foregoing, and to repay to Agent
and Lenders on demand the amount thereof, and until paid by Borrowers such
amount shall be added and deemed part of the Loans, provided, that,
nothing contained herein shall be construed to require Borrowers to pay any
income or franchise taxes attributable to the income of Agent or any Lender
from any amounts charged or paid hereunder to Agent or any Lender.  The foregoing indemnity shall survive the
payment of the Obligations and the termination or non-renewal of this
Agreement.

 

9.5           Insurance.  Borrowers
shall, at all times, maintain with financially sound and reputable insurers
insurance with respect to the Collateral against loss or damage and all other
insurance of the kinds and in the amounts customarily insured against or
carried by corporations of established reputation engaged in the same or
similar businesses and similarly situated. 
Said policies of insurance shall be satisfactory to Agent as to form,
amount and insurer.  Borrowers shall
furnish certificates, policies or endorsements to Agent as Agent shall require
as proof of such insurance, and, if Borrowers fail to do so, Agent is
authorized, but not required, to obtain such insurance at the expense of
Borrowers.  All policies shall provide
for at least thirty (30) days prior written notice to Agent of any cancellation
or reduction of coverage and that Agent may act as attorney for Borrowers in
obtaining, and at any time an Event of Default exists or has occurred and is
continuing, adjusting, settling, amending and canceling such insurance.  Borrowers shall cause Agent to be named as a
loss payee and an additional insured (but without any liability for any
premiums) under such insurance policies and Borrowers shall obtain
non-contributory lender’s loss payable endorsements to all insurance policies
in form and substance satisfactory to Agent. 
Such lender’s loss payable endorsements shall specify that the proceeds
of such insurance shall be payable to Agent, for the ratable benefit of
Lenders, as its interests may appear and further specify that Agent shall be
paid regardless of any act or omission by Borrowers or any of their
affiliates.  Subject to the provisions of
the deed of trust executed by Creative Computers in favor of Agent, at its
option, Agent may apply any insurance proceeds received by Agent at any time to
the cost of repairs or replacement of Collateral and/or to payment of the
Obligations, whether or not then due, in any order and in such manner as Agent
may determine or hold such proceeds as cash collateral for the Obligations.

 

9.6           Financial Statements and Other Information.

 

(a)           Borrowers shall keep proper books and
records in which true and complete entries shall be made of all dealings or
transactions of or in relation to the Collateral and the business of Borrowers
and their subsidiaries (if any) in accordance with GAAP and Borrowers shall
furnish or cause to be furnished to Agent: 
(i) on or before the earlier of the forty-fifth (45th) day after
the end of each fiscal month or, for any fiscal month ending on the last day of
a fiscal quarter, the date on which Borrowers file their Form 10Q with the
Securities and Exchange Commission for such fiscal quarter, monthly unaudited
internally prepared

 

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OMITTED PORTIONS.

 

consolidated and consolidating financial statements
(including in each case balance sheets, statements of income and loss,
statements of cash flow and statements of shareholders’ equity) as of the end
of and through such fiscal month, all in reasonable detail, which financial
statements shall be prepared honestly and in good faith (provided that where
such fiscal month does not end on the last day of a fiscal quarter, Agent
understands that such financial statements are based upon information available
at the time of preparation of such financial statements and may therefore not be
accurate or complete), and where such fiscal month ends on the last day of a
fiscal quarter, shall fairly present the financial position and the results of
the operations of Borrowers and their subsidiaries, provided, that,
if the average daily Excess Availability during any fiscal quarter (as
determined on the dates on which Agent approves the weekly borrowing base
certificates provided pursuant to clause (a) of Section 7.1 hereof)
is not less than Ten Million Dollars ($10,000,000) and so long as no Event of
Default has occurred and is continuing, then during the immediately following
fiscal quarter, such financial statements may be provided on a fiscal quarter
basis on or before the earlier of the forty-fifth (45th) day  after the end of such fiscal quarter or the
date on which Borrowers file their Form 10Q with the Securities and
Exchange Commission for such fiscal quarter, and (ii) within ninety (90)
days after the end of each fiscal year, audited consolidated and consolidating
financial statements of Borrowers and their subsidiaries (including in each
case balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders’ equity), and the accompanying notes thereto, all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Borrowers and their subsidiaries as of the end of and for
such fiscal year, together with the opinion of independent certified public
accountants, which accountants shall be an independent accounting firm selected
by Borrowers and reasonably acceptable to Agent, that such financial statements
have been prepared in accordance with GAAP, and present fairly the results of
operations and financial condition of Borrowers and their subsidiaries as of
the end of and for the fiscal year then ended.

 

(b)           Borrowers shall promptly notify Agent in
writing of the details of (i) any loss, damage, investigation, action,
suit, proceeding or claim which involves an amount in excess of Five Hundred
Thousand Dollars ($500,000) and relates to the Collateral or any other property
which is security for the Obligations or which would result in any material
adverse change in any Borrower’s business, properties, assets, goodwill or
condition, financial or otherwise and (ii) the occurrence of any Event of
Default or event which, with the passage of time or giving of notice or both,
would constitute an Event of Default.

 

(c)           Borrowers shall promptly after the
sending or filing thereof furnish or cause to be furnished to Agent copies of
all financial reports which Borrowers send to their stockholders generally and
copies of all reports and registration statements which Borrowers file with the
Securities and Exchange Commission, any national securities exchange or the
National Association of Securities Dealers, Inc.

 

(d)           Borrowers shall furnish or cause to be
furnished to Agent such budgets, forecasts, projections and other information
in respect of the Collateral and the business of Borrowers, as Agent may, from
time to time, reasonably request.  Agent
and Lenders are hereby authorized to deliver a copy of any financial statement
or any other information relating to the business of Borrowers to any court or
other government agency or, subject to Section 13.5

 

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OMITTED PORTIONS.

 

below, to any participant or assignee or prospective
participant or assignee.  Borrowers
hereby irrevocably authorize and direct all accountants or auditors to deliver
to Agent, at Borrowers’ expense, copies of the financial statements of
Borrowers and any reports or management letters prepared by such accountants or
auditors on behalf of Borrowers and to disclose to Agent such information as
they may have regarding the business of Borrowers.  Any documents, schedules, invoices or other
papers delivered to Agent may be destroyed or otherwise disposed of by Agent
one (1) year after the same are delivered to Agent, except as otherwise
designated by Borrowers to Agent in writing.

 

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 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, 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 One Million Dollars
($1,000,000) for all such Equipment disposed of in any single transaction or in
excess of Two Million Dollars ($2,000,000) for all such Equipment disposed of
in any fiscal year of Borrowers and (iii) a sale of the Real Estate for a
sales price of not less than Two Million Dollars ($2,000,000) cash, so long as
no Event of Default has occurred and is continuing or would result from such
sale, and provided that the sale proceeds are applied first to pay in full the
outstanding principal amount of the Term Loan, together with all accrued but
unpaid interest thereon, and any balance is applied to the outstanding
principal amount of the Revolving Loans), or (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.  Notwithstanding the foregoing, the assets or
capital stock of ecost may be sold, transferred or otherwise disposed, provided
that the proceeds thereof are remitted to Agent, for the benefit of Lenders,
for application to the Revolving Loans, and so long as no Event of Default has
occurred and is continuing or would result therefrom.

 

9.8           Encumbrances. 
Borrowers shall not create, incur, assume or suffer to exist any
security interest, mortgage, pledge, lien, charge or other encumbrance of any
nature whatsoever on any of their assets or properties, including, without
limitation, the Collateral, except:

 

(a)           the liens and security interests of Agent
and Lenders;

 

(b)           liens securing the payment of taxes,
either not yet delinquent or the validity of which are being contested in good
faith by appropriate proceedings diligently pursued and available to Borrowers
and with respect to which adequate reserves have been set aside on their books;

 

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OMITTED PORTIONS.

 

(c)           security deposits in the ordinary course
of business;

 

(d)           non-consensual statutory liens (other than liens
securing the payment of taxes) arising in the ordinary course of Borrowers’
business to the extent:

 

(i)            such liens secure indebtedness which is
not overdue; or

 

(ii)           such liens secure indebtedness relating
to claims or liabilities which are fully insured and being defended at the sole
cost and expense and at the sole risk of the insurer (subject to applicable
deductibles) or being contested in good faith by appropriate proceedings diligently
pursued and available to Borrowers, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on their books;

 

(e)           zoning restrictions, easements, licenses,
covenants and other restrictions affecting the use of real property which do
not interfere in any material respect with the use of such real property or
ordinary conduct of the business of Borrowers as presently conducted thereon or
materially impair the value of the real property which may be subject thereto;

 

(f)            purchase money security interests in
Equipment (including capital leases) and purchase money mortgages on real
estate so long as such security interests and mortgages do not apply to any
property of Borrowers other than the Equipment or real estate so acquired and
any additions or accessions thereto, and the indebtedness secured thereby does
not exceed the cost of the Equipment or real estate so acquired, as the case
may be; and

 

(g)           the security interests and liens set
forth on Schedule 8.4 hereto.

 

9.9           Indebtedness.  Borrowers
shall not incur, create, assume, become or be liable in any manner with respect
to, or permit to exist, any obligations or indebtedness, except:

 

(a)           the Obligations;

 

(b)           trade obligations, operating lease
obligations and other obligations incurred in the ordinary course of the
Borrowers’ business and not for borrowed money, together with normal accruals
in the ordinary course of business not yet due and payable, or with respect to
which the Borrowers are contesting in good faith the amount or validity thereof
by appropriate proceedings diligently pursued and available to Borrowers, and
with respect to which adequate reserves have been set aside on their books;

 

(c)           purchase money indebtedness (including
capital leases) to the extent not incurred or secured by liens (including
capital leases) in violation of any other provision of this Agreement;

 

(d)           obligations or indebtedness set forth on Schedule
9.9 hereto; provided, that, (i) Borrowers may only make
regularly scheduled payments of principal and interest in respect of such
indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such indebtedness as in effect on the date hereof,
(ii) Borrowers shall

 

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not, directly or indirectly, (A) amend, modify,
alter or change the terms of such indebtedness or any agreement, document or
instrument related thereto as in effect on the date hereof, or (B) except
as otherwise permitted under this Agreement, redeem, retire, defease, purchase
or otherwise acquire such indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose, and (iii) Borrowers shall furnish to
Agent all notices or demands in connection with such indebtedness either
received by Borrowers or on their behalf, promptly after the receipt thereof,
or sent by Borrowers or on their behalf, concurrently with the sending thereof,
as the case may be;

 

(e)           indebtedness of any Borrower to another
Borrower;

 

(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; and

 

(g)           indebtedness to the Canadian federal
government in an aggregate sum not to exceed Two Million Dollars ($2,000,000)
(Canadian) on account of advances made by the Canadian federal government
against rebates payable by it to Borrowers.

 

9.10         Loans, Investments, Guarantees, Etc. 
Borrowers shall not, directly or indirectly, make any loans or advance
money or property to any person, or invest in (by capital contribution,
dividend or otherwise) or purchase or repurchase the stock or indebtedness or
all or a substantial part of the assets or property of any person, or
guarantee, assume, endorse, or otherwise become responsible for (directly or
indirectly) the indebtedness, performance, obligations or dividends of any
Person or agree to do any of the foregoing, except:

 

(a)           the endorsement of instruments for
collection or deposit in the ordinary course of business;

 

(b)           investments in:

 

(i)            short-term direct obligations of the
United States Government;

 

(ii)           negotiable certificates of deposit issued
by any bank satisfactory to Agent, payable to the order of the Borrowers or to
bearer and delivered to Agent;

 

(iii)          commercial
paper rated A1 or P1; provided, that, as to any of the foregoing,
unless waived in writing by Lender, Borrowers shall take such actions as are
deemed necessary by Agent to perfect the security interest of Agent and Lenders
in such investments;

 

(c)           the guarantees set forth in the
Information Certificates;

 

(d)           Borrowers may acquire all of the issued and
outstanding capital stock of another Person, or all or substantially all of the
assets of another Person or of a division of another Person (each, a “Target”),
and may form a new wholly-owned subsidiary (a “New

 

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OMITTED PORTIONS.

 

Subsidiary”) and make investments in such New
Subsidiary (“Subsidiary Investments”), subject to the satisfaction in full of
all of the following conditions precedent:

 

(i)            The subject Target or New Subsidiary (as
applicable) shall be in the same or similar type of business as Borrowers;

 

(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 PC Mall (the “Total Consideration”)
or the amount of the subject Subsidiary Investments (as applicable), plus (B) the
aggregate sum of the Total Considerations for all Targets previously acquired
by Borrowers (excluding Pacific Business Systems, Inc. and Wareforce
Incorporated) plus all Subsidiary Investments previously made by Borrowers,
shall not exceed Fifty Million Dollars ($50,000,000) during the terms of the
Original Loan Agreement and this Agreement and Twenty Million Dollars
($20,000,000) during any fiscal year;

 

(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 Excess Availability would not be less than Ten
Million Dollars ($10,000,000);

 

(iv)          The subject Target shall be acquired in
accordance with applicable laws free and clear of any security interest,
mortgage, pledge, lien, charge or other encumbrance except as permitted in Section 9.8
hereof, and free and clear of any obligations or indebtedness except as
permitted in Section 9.9 hereof;

 

(v)           Any portion of the Total Consideration
(excluding any earn-outs and similar contingent payments) that is not payable
on the closing of the acquisition of the subject Target shall, to the extent a
Borrower is obligated to make payment thereof, be subordinated in a manner
satisfactory to Agent or, at Borrowers’ option, Agent may establish an
Availability Reserve for such portion of the Total Consideration;

 

(vi)          The subject Target and the Person
acquiring the subject Target or the subject New Subsidiary (as applicable)
shall guaranty the Obligations, and the assets and capital stock of the subject
Target and such Person or the subject New Subsidiary (as applicable) shall be
pledged to Lender, all pursuant to documents in form and substance satisfactory
to Agent;

 

(vii)         No
Event of Default, or event that with notice or lapse of time or both would
constitute an Event of Default, shall have occurred and be continuing or would
result from the acquisition of the subject Target or the making of the subject
Subsidiary Investments (as applicable);

 

(viii)        Borrowers
shall give prior written notice to Agent of the acquisition of the subject
Target or the making of the subject Subsidiary Investments as soon as

 

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reasonably practicable, but in no event less than
fifteen (15) calendar days prior to the closing thereof if the Total
Consideration for the subject Target and any related Targets or the amount of
the Subsidiary Investments (as applicable) is greater than Two Million Dollars
($2,000,000);

 

(ix)           Agent shall have received true, correct
and complete copies of the acquisition agreement(s) for the subject Target
and all exhibits, schedules, documents and other agreements relating thereto,
together with such financial and other information concerning the subject
Target as Agent may reasonably request; and

 

(x)            Agent shall have received such further agreements,
documents and instruments, and such further acts shall have been completed,
with respect to the subject Target or New Subsidiary (as applicable), as
required by Section 9.17 hereof.

 

At
Borrowers’ request, the subject Target or the Person acquiring the subject
Target or the subject New Subsidiary (as applicable) may be added as a borrower
hereunder, but only at the sole election of Agent.  Regardless of whether the subject Target or
the Person acquiring the subject Target or the subject New Subsidiary (as
applicable) is or becomes a borrower hereunder, and regardless of whether the
Accounts and Inventory of the subject Target or New Subsidiary qualify under
the definition of “Eligible Accounts” and “Eligible Inventory” in this
Agreement, the inclusion of such Accounts and Inventory in Eligible Accounts
and Eligible Inventory shall be subject to:

 

(xi)           Agent’s receipt and approval of full
written appraisals as to the inventory of the subject Target or New Subsidiary
in form, scope and methodology reasonable acceptable to Agent and by an
appraiser reasonably acceptable to Agent, addressed to Agent, and upon which
Agent is expressly permitted to rely;

 

(xii)          The
completion of a field examination by Agent of the subject Target or New
Subsidiary with results reasonably satisfactory to Agent;

 

(xiii)         Such
additional eligibility criteria, Availability Reserves and percentage advance
rates as Agent shall establish in its commercially reasonable discretion in
light of the foregoing appraisals and field examination; and

 

(xiv)        The
chief executive office and jurisdiction of organization of the subject Target
or New Subsidiary (as applicable) shall be in the United State or Canada, and
in any event, only those Accounts generated and invoiced from the United States
or Canada and that Inventory located in the United States or Canada may be
deemed Eligible Accounts or Eligible Inventory;

 

(e)           any Borrower may make loans or advances
to, or investments in, another Borrower, and may guaranty, assume, endorse or
otherwise become responsible for the indebtedness or obligations of another
Borrower; and

 

(f)            Borrowers may make advances to their
employees not to exceed One Million Dollars ($1,000,000) in the aggregate
outstanding at any time.

 

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9.11         Dividends and Redemptions. 
Borrowers shall not, directly or indirectly, declare or pay any
dividends on account of any shares of any class of capital stock of Borrowers
now or hereafter outstanding (except to PC Mall), or set aside or otherwise
deposit or invest any sums for such purpose, or redeem, retire, defease,
purchase, repurchase, recapitalize or otherwise acquire (except from PC Mall)
any shares of any class of capital stock (or set aside or otherwise deposit or
invest any sums for such purpose) for any consideration other than common stock
or apply or set apart any sum, or make any other distribution (by reduction of
capital or otherwise) in respect of any such shares (except to PC Mall) or
agree to do any of the foregoing; provided, that, PC Mall may
repurchase a portion of its capital stock so long as (a) the aggregate sum
of all payments made on account of such repurchases shall not exceed Ten
Million Dollars ($10,000,000) during the term of this Agreement, (b) the
Excess Availability upon giving effect to such repurchases shall not be less
than Five Million Dollars ($5,000,000), and (c) no Event of Default has
occurred and is continuing or would result from such repurchases.

 

9.12         Transactions with Affiliates. 
Borrowers shall not enter into any transaction for the purchase, sale or
exchange of property or the rendering of any service to or by any affiliate,
except in the ordinary course of and pursuant to the reasonable requirements of
Borrowers’ business and upon fair and reasonable terms no less favorable to the
Borrowers than Borrowers would obtain in a comparable arm’s length transaction
with an unaffiliated person.

 

9.13         Additional Accounts. 
Borrowers shall not, directly or indirectly, open, establish or maintain
any deposit account, investment account, credit card or check processing account
or any other account with any bank or other financial institution, other than
the Blocked Accounts and the accounts set forth in Schedule 8.8 hereto,
except:  (a) as to any new or
additional Blocked Accounts and other such new or additional accounts which
contain any Collateral or proceeds thereof, with the prior written consent of
Agent and subject to such conditions thereto as Agent may establish and (b) as
to any accounts used by Borrowers to make payments of payroll, taxes or other
obligations to third parties, after prior written notice to Agent.

 

9.14         Compliance with ERISA. 
Borrowers shall not with respect to any “employee pension benefit plans”
maintained by Borrowers or any of their ERISA Affiliates:

 

(a)           (i)            terminate
any of such employee pension benefit plans so as to incur any liability to the
Pension Benefit Guaranty Corporation established pursuant to ERISA;

 

(ii)           allow or fail to correct promptly after
discovery thereof any prohibited transaction involving any of such employee
pension benefit plans or any trust created thereunder which would subject
Borrowers or such ERISA Affiliate to a tax or penalty or other liability on
prohibited transactions imposed under Section 4975 of the Code or ERISA;

 

(iii)          fail
to pay to any such employee pension benefit plan any contribution which they
are obligated to pay under Section 302 of ERISA, Section 412 of the
Code or the terms of such plan;

 

(iv)          allow or suffer to exist any accumulated
funding deficiency, whether or not waived, with respect to any such employee
pension benefit plan;

 

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(v)           allow or suffer to exist any occurrence
of a reportable event or any other event or condition which presents a material
risk of termination by the Pension Benefit Guaranty Corporation of any such
employee pension benefit plan that is a single employer plan, which termination
could result in any liability to the Pension Benefit Guaranty Corporation; or

 

(vi)          incur any withdrawal liability with
respect to any multiemployer pension plan.

 

(b)           As used in this Section 9.14, the
term “employee pension benefit plans,” “employee benefit plans”, “accumulated
funding deficiency” and “reportable event” shall have the respective meanings
assigned to them in ERISA, and the term “prohibited transaction” shall have the
meaning assigned to it in Section 4975 of the Code and ERISA.

 

9.15         Adjusted Tangible Net Worth. 
Borrowers on a consolidated basis shall maintain Adjusted Tangible Net
Worth, calculated in accordance with Exhibit C attached hereto, of not
less than Six Million Two Hundred Fifteen Thousand Dollars ($6,215,000), tested
as of the last day of each fiscal quarter if the Excess Availability is greater
than Five Million Dollars ($5,000,000) and as of the last day of each month if
the Excess Availability is equal to or less than Five Million Dollars ($5,000,000).

 

9.16         Costs and Expenses. 
Borrowers shall pay to Agent, for itself and the ratable benefit of
Lenders, on demand all reasonable costs, expenses, filing fees and taxes paid
or payable in connection with the preparation, negotiation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense of
the Obligations, Agent’s and Lender’s rights in the Collateral, this Agreement,
the other Financing Agreements and all other documents related hereto or
thereto, including any amendments, supplements or consents which may hereafter
be contemplated (whether or not executed) or entered into in respect hereof and
thereof, including, but not limited to:

 

(a)           all reasonable costs and expenses of
filing or recording (including Uniform Commercial Code financing statement
filing taxes and fees, documentary taxes, intangibles taxes and mortgage
recording taxes and fees, if applicable);

 

(b)           all reasonable costs and expenses and
fees for title insurance and other insurance premiums, environmental audits,
surveys, assessments, engineering reports and inspections, appraisal fees and
search fees;

 

(c)           reasonable costs and expenses of
remitting loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the Blocked Accounts, together with Agent’s and
Lender’s customary charges and fees with respect thereto;

 

(d)           customary charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations;

 

(e)           reasonable costs and expenses of
preserving and protecting the Collateral;

 

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(f)            reasonable costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Agent, for itself and the ratable benefit of
Lenders, selling or otherwise realizing upon the Collateral, and otherwise
enforcing the provisions of this Agreement and the other Financing Agreements
or defending any claims made or threatened against Agent and/or Lenders arising
out of the transactions contemplated hereby and thereby (including, without
limitation, preparations for and consultations concerning any such matters);

 

(g)           all reasonable out-of-pocket expenses and
costs incurred by Agent’s examiners in the conduct of their periodic field
examinations of the Collateral and Borrowers’ operations, plus a per diem
charge at the rate of Seven Hundred Fifty Dollars ($750) per person per day for
such  examiners in the field and office; and

 

(h)           the reasonable fees and disbursements of
counsel (including legal assistants) to Agent, any Lender and any Participant
in connection with any of the foregoing.

 

9.17         Further Assurances. 
At the request of Agent or any Lender at any time and from time to time,
Borrowers shall, at their expense, duly execute and deliver, or cause to be duly
executed and delivered, such further agreements, documents and instruments, and
do or cause to be done such further acts as may be necessary or proper to
evidence, perfect, maintain and enforce the security interests and the priority
thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements.  Agent may at any time and from time to time
request a certificate from an officer of Borrowers representing on behalf of
Borrowers that all conditions precedent to the making of Loans and providing
Letter of Credit Accommodations contained herein are satisfied.  In the event of such request by Agent, Agent
and Lenders may, at Agent’s option, cease to make any further Loans or provide any
further Letter of Credit Accommodations until Agent has received such
certificate and, in addition, Agent has determined that such conditions are
satisfied.  Where permitted by law,
Borrowers hereby authorizes Agent and any Lender to execute and file one or
more UCC financing statements signed only by Agent and any Lender as deemed
appropriate by Agent to perfect Agent’s and Lender’s security interests in the
Collateral.

 

SECTION 10. 
EVENTS OF DEFAULT AND REMEDIES.

 

10.1         Events of Default. 
The occurrence or existence of any one or more of the following events
are referred to herein individually as an “Event of Default,” and
collectively as “Events of Default”:

 

(a)           (i) Borrowers fail to pay any of the
Obligations within two (2) Business Days after the same become due and
payable or (ii) 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 or (B) any failure
by Borrowers to pursue a cure diligently and promptly during such thirty (30)
day period or (iii) any Borrower fails to perform

 

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any of the terms, covenants, conditions or provisions
contained in this Agreement or any of the other Financing Agreements other than
those described in Sections 10.1(a)(i) and 10.1(a)(ii) above;

 

(b)           any representation, warranty or statement
of fact made by any Borrower to Agent or any Lender in this Agreement, the
other Financing Agreements or any other agreement, schedule, confirmatory
assignment or otherwise shall when made or deemed made be false or misleading
in any material respect;

 

(c)           any Obligor revokes, terminates or fails
to perform any of the terms, covenants, conditions or provisions of any
guarantee, endorsement or other agreement of such party in favor of Agent or
any Lender;

 

(d)           any judgment for the payment of money
(excluding any such judgment fully covered by insurance) is rendered against
any of Borrowers or Obligors in excess of Five Hundred Thousand Dollars ($500,000)
in any one case or in excess of One Million Dollars ($1,000,000) in the
aggregate and shall remain undischarged or unvacated for a period in excess of
thirty (30) days or execution shall at any time not be effectively stayed, or
any material judgment other than for the payment of money, or injunction,
attachment, garnishment or execution is rendered against any of Borrowers or
Obligors or any of their assets;

 

(e)           any Obligor (being a natural person or a
general partner of an Obligor which is a partnership) dies or any Borrower or
any Obligor, which is a partnership, limited liability company, or corporation,
dissolves or suspends or discontinues doing business;

 

(f)            any Borrowers or any Obligor becomes
insolvent (however defined or evidenced), makes an assignment for the benefit
of creditors, makes or sends notice of a bulk transfer or calls a meeting of
its creditors or principal creditors;

 

(g)           a case or proceeding under the bankruptcy
laws of the United States of America now or hereafter in effect or under any
insolvency, reorganization, receivership, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction now or hereafter in effect
(whether at law or in equity) is filed against any Borrower or any Obligor or
all or any part of its properties and such petition or application is not
dismissed within thirty (30) days after the date of its filing or any Borrower
or any Obligor shall file any answer admitting or not contesting such petition
or application or indicates its consent to, acquiescence in or approval of, any
such action or proceeding or the relief requested is granted sooner;

 

(h)           a case or proceeding under the bankruptcy
laws of the United States of America now or hereafter in effect or under any
insolvency, reorganization, receivership, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction now or hereafter in effect
(whether at a law or equity) is filed by any Borrower or any Obligor or for all
or any part of its property;

 

(i)            any default by any Borrower or any
Obligor under any agreement, document or instrument relating to any
indebtedness for borrowed money or secured indebtedness owing to any person
other than Agent or any Lender, or any capitalized lease

 

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OMITTED PORTIONS.

 

obligations, contingent indebtedness in connection
with any guarantee, letter of credit, indemnity or similar type of instrument
in favor of any person other than Lender, in excess of One Million Dollars
($1,000,000) in the aggregate, which default continues for more than the
applicable cure period, if any, with respect thereto, or any default by any
Borrower or any Obligor under any material contract, lease, license or other
obligation to any person other than Agent and Lenders, which default continues
for more than the applicable cure period, if any, with respect thereto, unless
(in each case and without limiting Agent’s rights to establish Availability
Reserves for any such defaults) such defaults are being contested in good faith
by appropriate proceedings diligently pursued;

 

(j)            the acquisition by any Person (other than
Frank Khulusi or Sam Khulusi) of the capital stock of PC Mall if the effect of
such acquisition is that such Person together with any of its affiliates hold,
directly or indirectly, fifty percent (50%) or more of the issued and
outstanding capital stock of PC Mall;

 

(k)           the indictment or threatened indictment
of any Borrower or any Obligor under any criminal statute, or the commencement
or threatened commencement of criminal or civil proceedings against any
Borrower or any Obligor, pursuant to which statute or proceedings the penalties
or remedies sought or available include forfeiture of any of the property of
such Borrower or such Obligor;

 

(l)            there shall be a material adverse change
in the business or assets of Borrowers taken as a whole or any Obligor after the
date hereof; or

 

(m)          there shall be an Event of Default as
defined in any of the other Financing Agreements.

 

10.2         Remedies.

 

(a)           At any time an Event of Default exists or
has occurred and is continuing, Agent and Lenders shall have all rights and
remedies provided in this Agreement, the other Financing Agreements, the
Uniform Commercial Code and other applicable law, all of which rights and
remedies may be exercised without notice to or consent by any Borrower or any
Obligor, except as such notice or consent is expressly provided for hereunder
or required by applicable law.  All
rights, remedies and powers granted to Agent and Lenders hereunder, under any
of the other Financing Agreements, the Uniform Commercial Code or other
applicable law, are cumulative, not exclusive and enforceable, in Agent’s
discretion, alternatively, successively, or concurrently on any one or more
occasions, and shall include, without limitation, the right to apply to a court
of equity for an injunction to restrain a breach or threatened breach by
Borrowers of this Agreement or any of the other Financing Agreements.  Subject to Section 12 hereof, Agent
shall, upon the direction of the Required Lenders, at any time or times an
Event of Default has occurred and is continuing, proceed directly against
Borrowers or any Obligor to collect the Obligations without prior recourse to
the Collateral.

 

(b)           Without limiting the foregoing, at any
time an Event of Default exists or has occurred and is continuing, Agent may,
and upon the direction of the Required Lenders, shall

 

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(i) accelerate the payment of all Obligations and
demand immediate payment thereof to Agent, for the ratable benefit of Lenders (provided,
that, upon the occurrence of any Event of Default described in Sections
10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and payable), (ii) with or without judicial process or the
aid or assistance of others, enter upon any premises on or in which any of the
Collateral may be located and take possession of the Collateral or complete
processing, manufacturing and repair of all or any portion of the Collateral, (iii) require
Borrowers, at Borrowers’ expense, to assemble and make available to Agent any
part or all of the Collateral at any place and time designated by Agent, (iv) collect,
foreclose, receive, appropriate, setoff and realize upon any and all
Collateral, (v) remove any or all of the Collateral from any premises on
or in which the same may be located for the purpose of effecting the sale,
foreclosure or other disposition thereof or for any other purpose, (vi) sell,
lease, transfer, assign, deliver or otherwise dispose of any and all Collateral
(including, without limitation, entering into contracts with respect thereto,
public or private sales at any exchange, broker’s board, at any office of Agent
or elsewhere) at such prices or terms as Agent may deem reasonable, for cash,
upon credit or for future delivery, with the Agent or any Lender having the
right to purchase the whole or any part of the Collateral at any such public
sale, all of the foregoing being free from any right or equity of redemption of
Borrowers, which right or equity of redemption is hereby expressly waived and
released by Borrowers and/or (vii) terminate this Agreement.  If any of the Collateral is sold or leased by
Agent upon credit terms or for future delivery, the Obligations shall not be
reduced as a result thereof until payment therefor is finally collected by
Agent, for the ratable benefit of Lenders. 
If notice of disposition of Collateral is required by law, ten (10) days
prior notice by Agent to Borrowers designating the time and place of any public
sale or the time after which any private sale or other intended disposition of
Collateral is to be made, shall be deemed to be reasonable notice thereof and
Borrowers waives any other notice.  In
the event Agent institutes an action to recover any Collateral or seeks
recovery of any Collateral by way of prejudgment remedy, Borrowers waive the
posting of any bond which might otherwise be required.

 

(c)           Agent may apply the cash proceeds of
Collateral actually received by it from any sale, lease, foreclosure or other
disposition of the Collateral to payment of the Obligations, in whole or in
part and in such order as Agent may elect, whether or not then due.  Borrowers shall remain liable to Agent and
Lenders for the payment of any deficiency with interest at the highest rate
provided for herein and all costs and expenses of collection or enforcement,
including attorneys’ fees and legal expenses.

 

(d)           Without limiting the foregoing, upon the
occurrence of an Event of Default, Agent may, and upon the direction of the
Required Lenders, shall, without notice, (i) cease making Loans or arranging
Letter of Credit Accommodations or reduce the lending formulas or amounts of
Loans and Letter of Credit Accommodations available to Borrowers and/or (ii) terminate
any provision of this Agreement providing for any future Loans or Letter of
Credit Accommodations to be made by Agent or Lenders to Borrowers.

 

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OMITTED PORTIONS.

 

SECTION 11. 
JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW.

 

11.1         Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver.

 

(a)           The validity, interpretation and
enforcement of this Agreement and the other Financing Agreements and any
dispute arising out of the relationship between the parties hereto, whether in
contract, tort, equity or otherwise, shall be governed by the internal laws of
the State of California (without giving effect to principles of conflicts of
law).

 

(b)           Borrowers, Agent and Lenders irrevocably consent
and submit to the non-exclusive jurisdiction of the state courts of the County
of Los Angeles, State of California and of the United States District Court for
the Central District of California and waive any objection based on venue or forum
non  conveniens with respect to any action instituted therein
arising under this Agreement or any of the other Financing Agreements or in any
way connected with or related or incidental to the dealings of the parties
hereto in respect of this Agreement or any of the other Financing Agreements or
the transactions related hereto or thereto, in each case whether now existing
or hereafter arising, and whether in contract, tort, equity or otherwise, and
agree that any dispute with respect to any such matters shall be heard only in
the courts described above (except that Agent or any Lender shall have the
right to bring any action or proceeding against Borrowers or their property in
the courts of any other jurisdiction which such Person deems necessary or
appropriate in order to realize on the Collateral or to otherwise enforce its
rights against Borrowers or their property).

 

(c)           Borrowers hereby waive personal service
of any and all process upon them and consent that all such service of process
may be made by certified mail (return receipt requested) directed to their
address set forth on the signature pages hereof and service so made shall
be deemed to be completed five (5) Business Days after the same shall have
been so deposited in the U.S.  mails, or,
at Agent’s or any Lender’s option, by service upon Borrowers in any other
manner provided under the rules of any such courts.  Within thirty (30) days after such service or
such other period as provided by applicable law, Borrowers shall appear in
answer to such process, failing which Borrowers shall be deemed in default and
judgment may be entered by Agent or any Lender against Borrowers for the amount
of the claim and other relief requested.

 

(d)           BORROWERS, AGENT AND EACH LENDER HEREBY
WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING
AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE
OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT,
TORT, EQUITY OR OTHERWISE.  BORROWERS,
AGENT AND EACH LENDER HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS

 

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OMITTED PORTIONS.

 

AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

(e)           Neither Agent nor any Lender shall have
any liability to Borrowers (whether in tort, contract, equity or otherwise) for
losses suffered by Borrowers in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Agreement, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
such Person, that the losses were the result of acts or omissions constituting
gross negligence or willful misconduct.

 

11.2         Waiver of Notices. 
Borrowers hereby expressly waive demand, presentment, protest and notice
of protest and notice of dishonor with respect to any and all instruments and
commercial paper, included in or evidencing any of the Obligations or the
Collateral, and any and all other demands and notices of any kind or nature
whatsoever with respect to the Obligations, the Collateral and this Agreement,
except such as are expressly provided for herein and except to the extent such
waiver is prohibited by applicable law. 
No notice to or demand on Borrowers which Agent or any Lender may elect
to give shall entitle Borrowers to any other or further notice or demand in the
same, similar or other circumstances.

 

11.3         Amendments and Waivers.

 

(a)           Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed as provided in Section 11.3(b) hereof.  Neither Agent nor any Lender shall, by any
act, delay, omission or otherwise be deemed to have expressly or impliedly
waived any of its rights, powers and/or remedies unless such waiver shall be in
writing and signed by an authorized officer of such Person as provided in Section 11.3(b) hereof.  Any such waiver shall be enforceable only to
the extent specifically set forth therein. 
A waiver by Agent or any Lender of any right, power and/or remedy on any
one occasion shall not be construed as a bar to or waiver of any such right,
power and/or remedy which Agent or any Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.

 

(b)           Neither this Agreement nor any other
Financing Agreement nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination
is in writing signed by Agent and the Required Lenders, and as to amendments to
any of the Financing Agreements, by Borrowers; except, that, any
change, waiver, discharge or termination with respect to the following shall
require the consent of Agent and all Lenders:

 

(i)            the extension of the Final Maturity Date
or the due dates for principal payments on the Term Loans;

 

(ii)           reduction in the interest rate or any
fees or the extension of the time of payment of interest or any fees or
reduction in the principal amount of any Loan or Letter of Credit
Accommodations;

 

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(iii)          increase
in the Commitment of any Lender over the amount thereof then in effect or
provided hereunder (it being understood that a waiver of any Event of Default
shall not constitute a change in the terms of any Commitment of any Lender);

 

(iv)          the release of any Collateral (except as
expressly required by the Financing Agreements and except as permitted under Section 12.11(b) hereof);

 

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

 

(vi)          the consent to the assignment or transfer
by any Borrower of any of its rights and obligations under this Agreement; or

 

(vii)         the
increase in the advance rates or the sublimits set forth in Section 2.1(a) hereof.

 

(c)           Notwithstanding anything to the contrary
contained in Section 11.3(b) above, in the event that Borrowers
request that this Agreement or any other Financing Agreements be amended or
otherwise modified in a manner which would require the unanimous consent of all
of the Lenders and such amendment or other modification is agreed to by the
Required Lenders, then, with the consent of Borrowers and the Required Lenders,
Borrowers and the Required Lenders may amend this Agreement without the consent
of the Lender or Lenders which did not agree to such amendment or other
modification (collectively, the “Minority Lenders”) to provide for (i) the
termination of the Commitment of each of the Minority Lenders, (ii) the
addition to this Agreement of one or more other Lenders, or an increase in the
Commitment of one or more of the Required Lenders, so that the Commitments,
after giving effect to such amendment, shall be in the same aggregate amount as
the Commitments immediately before giving effect to such amendment, (iii) if
any Loans are outstanding at the time of such amendment, the making of such
additional Loans by such new Lenders or Required Lenders, as the case may be,
as may be necessary to repay in full the outstanding Loans of the Minority Lenders
immediately before giving effect to such amendment and (iv) the payment of
all interest, fees and other Obligations payable or accrued in favor of the
Minority Lenders and such other modifications to this Agreement as Borrowers
and the Required Lenders may determine to be appropriate.

 

(d)           The consent of Agent shall be required
for any amendment, waiver or consent affecting the rights or duties of Agent
hereunder or under any of the other Financing Agreements, in addition to the
consent of the Lenders otherwise required by this Section.

 

11.4         Waiver of Counterclaims. 
Borrowers waive all rights to interpose any claims, deductions, setoffs
or counterclaims of any nature (other than compulsory counterclaims) in any
action or proceeding with respect to this Agreement, the Obligations, the
Collateral or any matter arising therefrom or relating hereto or thereto.

 

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OMITTED PORTIONS.

 

11.5         Indemnification. 
Borrowers shall indemnify and hold Agent and each Lender, and its
directors, agents, employees and counsel (each an “Indemnified Party”),
harmless from and against any and all losses, claims, damages, liabilities,
costs or expenses imposed on, incurred by or asserted against any of them
(unless arising from the gross negligence or willful misconduct of any
Indemnified Party) in connection with any litigation, investigation, claim or
proceeding commenced or threatened related to the negotiation, preparation,
execution, delivery, enforcement, performance or administration of this
Agreement, any other Financing Agreements, or any undertaking or proceeding
related to any of the transactions contemplated hereby or any act, omission,
event or transaction related or attendant thereto, including, without
limitation, amounts paid in settlement, court costs, and the fees and expenses
of counsel.  To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section 11.5
may be unenforceable because it violates any law or public policy, Borrowers
shall pay the maximum portion which they are permitted to pay under applicable
law to Agent and Lenders in satisfaction of indemnified matters under this Section 11.5.  The foregoing indemnity shall survive the
payment of the Obligations and the termination or non-renewal of this
Agreement.

 

SECTION 12.  THE AGENT

 

12.1         Appointment; Powers and Immunities. 
Each Lender hereby irrevocably designates, appoints and authorizes
Wachovia Capital Finance Corporation (Western) to act as Agent hereunder and
under the other Financing Agreements with such powers as are specifically
delegated to Agent by the terms of this Agreement and of the other Financing
Agreements, together with such other powers as are reasonably incidental
thereto.  Agent: (a) shall have no
duties or responsibilities except those expressly set forth in this Agreement
and in the other Financing Agreements, and shall not by reason of this
Agreement or any other Financing Agreement be a trustee or fiduciary for any
Lender; (b) shall not be responsible to Lenders for any recitals,
statements, representations or warranties contained in this Agreement or in any
other Financing Agreement, or in any certificate or other document referred to
or provided for in, or received by any of them under, this Agreement or any
other Financing Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Financing
Agreement or any other document referred to or provided for herein or therein
or for any failure by any Borrower or any Obligor or any other Person to
perform any of its obligations hereunder or thereunder; and (c) shall not
be responsible to Lenders for any action taken or omitted to be taken by it
hereunder or under any other Financing Agreement or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful
misconduct as determined by a final non-appealable judgment of a court of
competent jurisdiction.  Agent may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good
faith.  Agent may deem and treat the
payee of any note as the holder thereof for all purposes hereof unless and until
the assignment thereof pursuant to an agreement (if and to the extent permitted
herein) in form and substance satisfactory to Agent shall have been delivered
to and acknowledged by Agent.

 

12.2         Reliance By Agent. 
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telecopy, telex, telegram or
cable) believed by it to be genuine and correct and to have been signed or sent
by or on behalf of the

 

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OMITTED PORTIONS.

 

proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other experts selected
by Agent.  As to any matters not
expressly provided for by this Agreement or any other Financing Agreement,
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder or thereunder in accordance with instructions given by the
Required Lenders or all of Lenders as is required in such circumstance, and
such instructions of such Lenders and any action taken or failure to act
pursuant thereto shall be binding on all Lenders.

 

12.3         Events of Default.

 

(a)           Agent shall not be deemed to have
knowledge or notice of the occurrence of an Event of Default or other failure
of a condition precedent to the Loans and Letter of Credit Accommodations
hereunder, unless and until Agent has received written notice from a Lender, a
Borrower or any Obligor specifying such Event of Default or any unfulfilled
condition precedent, and stating that such notice is a “Notice of Default or
Failure of Condition”.  In the event that
Agent receives such a notice, Agent shall give prompt notice thereof to the
Lenders.  Agent shall (subject to Section 12.7)
take such action with respect to any such Event of Default or failure of
condition precedent as shall be directed by the Required Lenders; provided,
that, unless and until Agent shall have received such directions, Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to or by reason of such Event of Default or failure
of condition precedent, as it shall deem advisable in the best interest of
Lenders.  Without limiting the foregoing,
and notwithstanding the existence or occurrence and continuance of an Event of
Default or any other failure to satisfy any of the conditions precedent set
forth in Section 4 of this Agreement to the contrary, Agent may, but shall
have no obligation to, continue to make Loans and issue or cause to be issued
Letter of Credit Accommodations for the ratable account and risk of Lenders
from time to time if Agent believes making such Loans or issuing or causing to
be issued such Letter of Credit Accommodations is in the best interests of
Lenders.

 

(b)           Except with the prior written consent of
Agent, no Lender may assert or exercise any enforcement right or remedy in
respect of the Loans, Letter of Credit Accommodations or other Obligations, as
against any Borrower or any Obligor or any of the Collateral or other property
of any Borrower or any Obligor.

 

12.4         Wachovia in its Individual Capacity. 
With respect to its Commitment and the Loans made and Letter of Credit
Accommodations issued or caused to be issued by it (and any successor acting as
Agent), so long as Wachovia Capital Finance Corporation (Western) shall be a
Lender hereunder, it shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not acting as Agent,
and the term “Lender” or “Lenders” shall, unless the context otherwise
indicates, include Wachovia Capital Finance Corporation (Western) in its
individual capacity as Lender hereunder. 
Wachovia Capital Finance Corporation (Western) (and any successor acting
as Agent) and its Affiliates may (without having to account therefor to any
Lender) lend money to, make investments in and generally engage in any kind of
business with Borrowers and Obligors (and any of their respective Subsidiaries
or Affiliates) as if it were not acting as Agent, and Wachovia Capital Finance
Corporation (Western) and its Affiliates may accept fees and other
consideration from Borrowers

 

67

 

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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

and Obligors for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.

 

12.5         Indemnification. 
Lenders agree to indemnify Agent (to the extent not reimbursed by
Borrowers hereunder and without limiting the Obligations of Borrowers
hereunder) ratably, in accordance with their Pro Rata Shares, for any and all
claims of any kind and nature whatsoever that may be imposed on, incurred by or
asserted against Agent (including by any Lender) arising out of or by reason of
any investigation in or in any way relating to or arising out of this Agreement
or any other Financing Agreement or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or
thereby (including the costs and expenses that Agent is obligated to pay
hereunder) or the enforcement of any of the terms hereof or thereof or of any
such other documents, provided, that, no Lender shall be liable
for any of the foregoing to the extent it arises from the gross negligence or
willful misconduct of the party to be indemnified as determined by a final
non-appealable judgment of a court of competent jurisdiction.

 

12.6         Non-Reliance on Agent and Other Lenders. 
Each Lender agrees that it has, independently and without reliance on
Agent or any other Lender, and based on such documents and information as it
has deemed appropriate, made its own credit analysis of each Borrower and
Obligors and has made its own decision to enter into this Agreement and that it
will, independently and without reliance upon Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under this Agreement or any of the other Financing Agreements.  Agent shall not be required to keep itself
informed as to the performance or observance by any Borrower or any Obligor of
any term or provision of this Agreement or any of the other Financing
Agreements or any other document referred to or provided for herein or therein
or to inspect the properties or books of any Borrower or any Obligor.  Agent will use reasonable efforts to provide
Lenders with any information received by Agent from any Borrower or any Obligor
which is required to be provided to Lenders hereunder and with a copy of any “Notice
of Default or Failure of Condition” received by Agent from any Borrower, any
Obligor or any Lender; provided, that, Agent shall not be liable
to any Lender for any failure to do so, except to the extent that such failure
is attributable to Agent’s own gross negligence or willful misconduct as
determined by a final non-appealable judgment of a court of competent
jurisdiction.  Except for notices,
reports and other documents expressly required to be furnished to Lenders by
Agent hereunder, Agent shall not have any duty or responsibility to provide any
Lender with any other credit or other information concerning the affairs,
financial condition or business of any Borrower or any Obligor that may come
into the possession of Agent.

 

12.7         Failure to Act. 
Except for action expressly required of Agent hereunder and under the
other Financing Agreements, Agent shall in all cases be fully justified in
failing or refusing to act hereunder and thereunder unless it shall receive
further assurances to its satisfaction from Lenders of their indemnification
obligations under Section 12.5 hereof against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take
any such action.

 

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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

12.8         Additional Loans.  Agent shall
not make any Revolving Loans or provide any Letter of Credit Accommodations to
any Borrower on behalf of Lenders intentionally and with actual knowledge that
such Loans or Letter of Credit Accommodations would cause the aggregate amount
of the total outstanding Loans and Letter of Credit Accommodations to Borrowers
to exceed the amount set forth in Section 2.1(a) hereof (the “Borrowing
Base”), without the prior consent of all Lenders, except, that,
Agent may make such additional Loans or provide such additional Letter of
Credit Accommodations on behalf of Lenders, intentionally and with actual
knowledge that such Loans or Letter of Credit Accommodations will cause the
total outstanding Loans and Letter of Credit Accommodations to Borrowers exceed
the Borrowing Base as Agent may deem necessary or advisable in its discretion, provided,
that:  (a) the total
principal amount of the additional Loans or additional Letter of Credit
Accommodations to any Borrower which Agent may make or provide after obtaining
such actual knowledge that the aggregate principal amount of the Loans equal or
exceed the Borrowing Base shall not exceed the amount equal to ten (10%)
percent of the Borrowing Base at the time and shall not cause the total
principal amount of the Loans and Letter of Credit Accommodations to exceed the
Maximum Credit and (b) without the consent of all Lenders, Agent shall not
make any such additional Loans or Letter of Credit Accommodations more than
ninety (90) days from the date of the first such additional Loans or Letter of
Credit Accommodations.  Each Lender shall
be obligated to pay Agent the amount of its Pro Rata Share of any such
additional Loans or Letter of Credit Accommodations provided that Agent is
acting in accordance with the terms of this Section 12.8.

 

12.9         Concerning the Collateral and the Related
Financing Agreements.  Each Lender authorizes and directs Agent to
enter into this Agreement and the other Financing Agreements relating to the
Collateral, for the ratable benefit of Lenders and Agent.  Each Lender agrees that any action taken by
Agent or Required Lenders in accordance with the terms of this Agreement or the
other Financing Agreements relating to the Collateral, and the exercise by
Agent or Required Lenders of their respective powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders.

 

12.10       Field
Audits; Examination Reports and other Information; Disclaimer by Lenders. 
By signing this Agreement, each Lender:

 

(a)           is deemed to have requested that Agent
furnish Lender, promptly after it becomes available, a copy of each field audit
or examination report and a weekly report with respect to the Borrowing Base
prepared by Agent (each field audit or examination report and weekly report
with respect to the Borrowing Base (as defined in Section 12.8 hereof)
being referred to herein as a “Report” and collectively, the “Reports”);

 

(b)           expressly agrees and acknowledges that
Agent (i) does not make any representation or warranty as to the accuracy
of any Report, or (ii) shall not be liable for any information contained
in any Report; provided, that, nothing contained in this Section 12.10
shall be construed to limit the liability of Agent under Section 12.1(c) hereof
in the event of the gross negligence or willful misconduct of Agent as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction;

 

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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

(c)           expressly agrees and acknowledges that
the Reports are not comprehensive audits or examinations, that Agent or other
party performing any audit or examination will inspect only specific
information regarding Borrowers and Obligors and will rely significantly upon
each Borrower’s books and records, as well as on representations of each
Borrower’s personnel; and

 

(d)           agrees to keep all Reports confidential
and strictly for its internal use in accordance with the terms of Section 13.7
hereof, and not to distribute or use any Report in any other manner.

 

12.11       Collateral Matters.

 

(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 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 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 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.

 

(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 Section 9.7
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,

 

70

 

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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

mortgage or lien was granted or at any time
thereafter, or (iv) having a value of less than Five Million Dollars
($5,000,000), 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 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.

 

(c)           Without any manner limiting Agent’s
authority to act without any specific or further authorization or consent by
the Required Lenders, each Lender agrees to confirm in writing, upon request by
Agent, the authority to release Collateral conferred upon Agent under this
Section.  Agent shall (and is hereby
irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the security interest, mortgage or liens
granted to Agent for itself and the benefit of the Lenders upon any Collateral
to the extent set forth above; provided, that, (i) Agent
shall not be required to execute any such document on terms which, in Agent’s
opinion, would expose Agent to liability or create any obligations or entail
any consequence other than the release of such security interest, mortgage or
liens without recourse or warranty and (ii) such release shall not in any
manner discharge, affect or impair the Obligations or any security interest,
mortgage or lien upon (or obligations of any Borrower in respect of) the
Collateral retained by any Borrower.

 

(d)           Agent shall have no obligation whatsoever
to any Lender or any other Person to investigate, confirm or assure that the
Collateral exists or is owned by any Borrower or any Obligor or is cared for,
protected or insured or has been encumbered, or that any particular items of
Collateral meet the eligibility criteria applicable in respect of the Loans or
Letter of Credit Accommodations hereunder, or whether any particular reserves
are appropriate, or that the liens and security interests granted to Agent
herein or pursuant hereto or otherwise have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent in this Agreement
or in any of the other Financing Agreements, it being understood and agreed
that in respect of the Collateral, or any act, omission or event related
thereto, Agent may act in any manner it may deem appropriate, in its
discretion, given Agent’s own interest in the Collateral as a Lender and that
Agent shall have no duty or liability whatsoever to any other Lender.

 

12.12       Agency
for Perfection.  Agent and each Lender hereby appoints each
Lender as agent for the purpose of perfecting the security interests in and
liens upon the Collateral of Agent for itself and the ratable benefit of
Lenders in assets which, in accordance with Article 9 of the UCC can be
perfected only by possession.  Should any
Lender obtain possession of any such Collateral, such Lender shall notify Agent
thereof, and, promptly upon Agent’s request therefor shall deliver such
Collateral to Agent or in accordance with Agent’s instructions.

 

12.13       Failure
to Respond Deemed Consent.  In the event any Lender’s
consent is required pursuant to the provisions of this Agreement and such
Lender does not respond to any

 

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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

request by Agent for such consent within ten (10) days
after such request is made to such Lender, such failure to respond shall be
deemed a consent.

 

SECTION 13. 
TERM OF AGREEMENT; MISCELLANEOUS.

 

13.1         Term.

 

(a)           This Agreement and the other Financing
Agreements shall become effective as of the date set forth on the first page hereof
and shall continue in full force and effect for a term ending on the Final
Maturity Date, unless sooner terminated pursuant to the terms hereof.  Upon the effective date of termination of
this Agreement and the other Financing Agreements, Borrowers shall pay to
Agent, for the ratable benefit of the Lenders, in full, all outstanding and
unpaid non-contingent Obligations and shall furnish cash collateral to Agent,
(or at Agent’s option, a letter of credit issued for the account of Borrowers
and at Borrowers’ expense, in form and substance satisfactory to Agent, by an
issuer acceptable to Agent and payable to Agent as beneficiary, for the ratable
benefit of Lenders) in such amounts as Agent determines are reasonably
necessary to secure (or reimburse) Agent and Lenders from loss, cost, damage or
expense, including attorneys’ fees and legal expenses, in connection with any
contingent Obligations, including issued and outstanding Letter of Credit
Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Agent and Lenders have not yet received final
and indefeasible payment.  Such payments
in respect of the Obligations and cash collateral shall be remitted by wire
transfer in federal funds to such bank account of Agent, as Agent may, in its
discretion, designate in writing to Borrowers for such purpose.  Interest shall be due until and including the
next Business Day, if the amounts so paid by any Borrower to the bank account
designated by Agent are received in such bank account later than 12:00 noon,
Los Angeles time.

 

(b)           No termination of this Agreement or the
other Financing Agreements shall relieve or discharge any Borrower of its
respective duties, obligations and covenants under this Agreement or the other
Financing Agreements until all Obligations have been fully and finally
discharged and paid, provided, that, Lender shall terminate its
security interests in the Collateral upon the payments and furnishing of cash
collateral by Borrowers to Lender in the full sums required in Section 13.1(a) above.

 

(c)           If for any reason this Agreement is
terminated prior to the Final Maturity Date, in view of the impracticality and
extreme difficulty of ascertaining actual damages and by mutual agreement of
the parties as to a reasonable calculation of Agent’s and Lenders’ lost profits
as a result thereof, Borrowers agree to pay to Agent, for itself and the
ratable benefit of Lenders, upon the effective date of such termination, an
early termination fee in the amount set forth below if such termination is
effective in the period indicated:

 

	
   

  	
   

  	
  Amount

  	
   

  	
  Period

  
	
  (i)

  	
   

  	
  0.25% of the Maximum
  Credit

  	
   

  	
  To and including
  March 7, 2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  0.125% of the Maximum
  Credit

  	
   

  	
  After March 7,
  2006 to and including September 7, 2006

  

 

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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

	
   

  	
   

  	
  Amount

  	
   

  	
  Period

  
	
  (iii)

  	
   

  	
  $

  	
  0

  	
   

  	
  After September 7,
  2006

  
						

 

Such early termination fee shall be presumed to be the amount of
damages sustained by Agent and Lenders as a result of such early termination
and Borrowers agree that it is reasonable under the circumstances currently
existing.  Agent and Lenders shall be
entitled to such early termination fee upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h) hereof, even if
Agent and Lenders do not exercise their right to terminate this Agreement, but
elect, at their option, to provide financing to Borrowers or permit the use of
cash collateral under the United States Bankruptcy Code.  The early termination fee provided for in
this Section 12.1 shall be deemed included in the Obligations.  The early termination fee shall be waived if
the Obligations are repaid after the first anniversary of this Agreement, from
the proceeds of loans made by Reference Bank or its affiliates, or from the
proceeds of unsecured loans.

 

13.2         Notices.  All notices,
requests and demands hereunder shall be in writing and (a) made to Agent
and Lenders at their respective addresses set forth below and to Borrowers at
their chief executive office set forth below, or to such other address as
either party may designate by written notice to the other in accordance with
this provision, and (b) deemed to have been given or made:  if delivered in person, immediately upon
delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next Business Day, one (1) Business
Day after sending; and if by certified mail, return receipt requested, five (5) days
after mailing.

 

13.3         Partial Invalidity. 
If any provision of this Agreement is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate this
Agreement as a whole, but this Agreement shall be construed as though it did
not contain the particular provision held to be invalid or unenforceable and
the rights and obligations of the parties shall be construed and enforced only
to such extent as shall be permitted by applicable law.

 

13.4         Successors.  This
Agreement, the other Financing Agreements and any other document referred to
herein or therein shall be binding upon and inure to the benefit of and be
enforceable by Agent, Lenders, Borrowers and their respective successors and
assigns, except that Borrowers may not assign its rights under this Agreement,
the other Financing Agreements and any other document referred to herein or
therein without the prior written consent of Agent and Lenders.   No Lender may assign its rights and
obligations under this Agreement (or any part thereof) without the prior
written consent of all Lenders and Agent, except as permitted under Section 13.5
hereof.  Any purported assignment by a
Lender without such prior express consent or compliance with Section 13.5
where applicable, shall be void.  The
terms and provisions of this Agreement and the other Financing Agreements are
for the purpose of defining the relative rights and obligations of Borrowers,
Obligors, Agent and Lenders with respect to the transactions contemplated
hereby and there shall be no third party beneficiaries of any of the terms and
provisions of this Agreement or any of the other Financing Agreements

 

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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

13.5         Assignments and Participations.

 

(a)           Each Lender may (i) assign all or a
portion of its rights and obligations under this Agreement (including, without
limitation, a portion of its Commitment, the Loans owing to it and its rights
and obligations as a Lender with respect to Letters of Credit Accommodations)
and the other Financing Agreements; to its parent company and/or any Affiliate
of such Lender which is at least fifty (50%) percent owned by such Lender or
its parent company or to one or more Lenders or (ii) assign all, or if
less than all a portion equal to at least $5,000,000 in the aggregate for the
assigning Lender or assigning Lenders, of such rights and obligations under
this Agreement to one or more Eligible Transferees, each of which assignees
shall become a party to this Agreement as a Lender by execution of an
Assignment and Acceptance; provided, that, (A) the consent
of Agent shall be required in connection with any assignment to an Eligible
Transferee pursuant to clause (ii) above, (B) if such Eligible
Transferee is not a bank, Agent shall receive a representation in writing by
such Eligible Transferee that either (1) no part of its acquisition of its
Loans is made out of assets of any employee benefit plan, or (2)  after
consultation, in good faith, with Borrowers and provision by Borrowers of such
information as may be reasonably requested by such Eligible Transferee, the
acquisition and holding of such Commitments and Loans does not constitute a
non-exempt prohibited transaction under Section 406 of ERISA and Section 4975
of the Code, or (3) such assignment is an “insurance company general
account,” as such term is defined in the Department of Labor Prohibited
Transaction Class Exemption 95.60 (issued July 12, 1995) (“PTCE
95-60”), and, as of the date of the assignment, there is no “employee
benefit plan” with respect to which the aggregate amount of such general
account’s reserves and liabilities for the contracts held by or on behalf of
such “employee benefit plan” and all other “employee benefit plans” maintained
by the same employer (and affiliates thereof as defined in Section V(a)(1) of
PTCE 95-60) or by the same employee organization (in each case determined in
accordance with the provisions of PTCE 95-60) exceeds ten (10%) percent of the
total reserves and liabilities of such general account (as determined under
PTCE 95-60) (exclusive of separate account liabilities) plus surplus as set
forth in the National Association of Insurance Commissioners Annual Statement
filed with the state of domicile of such Eligible Transferee and (C) such
transfer or assignment will not be effective until recorded by the Agent on the
Register.  As used in this Section, the
term “employee benefit plan” shall have the meaning assigned to it in Title I of
ERISA and shall also include a “plan” as defined in Section 4975(e)(1) of
the Code.

 

(b)           Agent shall maintain a register of the
names and addresses of Lenders, their Commitments and the principal amount of
their Loans (the “Register”). 
Agent shall also maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and shall modify the Register to give effect to
each Assignment and Acceptance.  Upon its
receipt of each Assignment and Acceptance, Agent will give prompt notice
thereof to Lenders and deliver to each of them a copy of the executed
Assignment and Acceptance.  The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and Borrowers, Obligors, Agent and Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement.  The Register
shall be available for inspection by Borrowers, Obligors and any Lender at any
reasonable time and from time to time upon reasonable prior notice.

 

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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

(c)           Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in each Assignment
and Acceptance, (i) the assignee thereunder shall be a party hereto and to
the other Financing Agreements and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations (including, without limitation, the obligation
to participate in Letter of Credit Accommodations) of a Lender hereunder and
thereunder and (ii) the assigning Lender shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its obligations
under this Agreement.

 

(d)           By execution and delivery of an
Assignment and Acceptance, the assignor and assignee thereunder confirm to and
agree with each other and the other parties hereto as follows:  (i) other than as provided in such
Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any of the other Financing Agreements or the execution, legality,
enforceability, genuineness, sufficiency or value of this Agreement or any of
the other Financing Agreements furnished pursuant hereto, (ii)  the
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrowers, Obligors or
any of their respective Subsidiaries or the performance or observance by any
Borrower or any Obligor of any of the Obligations; (iii) such assignee
confirms that it has received a copy of this Agreement and the other Financing
Agreements, together with such other documents and information it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Financing Agreements, (v) such assignee
appoints and authorizes Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other Financing Agreements as
are delegated to Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto, and (vi) such assignee agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of this Agreement and the other Financing Agreements are
required to be performed by it as a Lender. 
Agent and Lenders may furnish any information concerning Borrowers,
Obligors or their respective Subsidiaries in the possession of Agent or any
Lender from time to time to assignees and Participants.

 

(e)           Each Lender may sell participations to
one or more banks or other entities in or to all or a portion of its rights and
obligations under this Agreement and the other Financing Agreements (including,
without limitation, all or a portion of its Commitments and the Loans owing to
it and its participation in the Letter of Credit Accommodations, without the
consent of Agent or the other Lenders); provided, that, (i) such
Lender’s obligations under this Agreement (including, without limitation, its
Commitment hereunder) and the other Financing Agreements shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, and Borrowers,
Obligors, Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement and the other Financing Agreements, (iii)

 

75

 

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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.

 

the Participant shall not have any rights under this
Agreement or any of the other Financing Agreements (the Participant’s rights
against such Lender in respect of such participation to be those set forth in
the agreement executed by such Lender in favor of the Participant relating
thereto) and all amounts payable by any Borrower or any Obligor hereunder shall
be determined as if such Lender had not sold such participation, and (iv) if
such Participant is not a bank, represent that either (A) no part of its
acquisition of its participation is made out of assets of any employee benefit
plan, or (B) after consultation, in good faith, with Borrowers and
provision by Borrowers of such information as may be reasonably requested by
the Participant, the acquisition and holding of such participation does not
constitute a non-exempt prohibited transaction under Section 406 of ERISA
and Section 4975 of the Code, or (C) such participation is an “insurance
company general account, “ as such term is defined in the “PTCE 95-60”, and, as
of the date of the transfer there is no “employee benefit plan” with respect to
which the aggregate amount of such general account’s reserves and liabilities
for the contracts held by or on behalf of such “employee benefit plan” and all
other “employee benefit plans” maintained by the same employer (and affiliates
thereof as defined in Section V(a)(1) of PTCE 95-60) or by the same
employee organization (in each case determined in accordance with the
provisions of PTCE 95-60) exceeds ten (10%) percent of the total reserves and
liabilities of such general account (as determined under PTCE 95-60) (exclusive
of separate account liabilities) plus surplus as set forth in the National
Association of Insurance Commissioners Annual Statement filed with the state of
domicile of the Participant.

 

(f)            Nothing in this Agreement shall prevent
or prohibit any Lender from pledging its Loans hereunder to a Federal Reserve
Bank in support of borrowings made by such Lenders from such Federal Reserve
Bank.

 

(g)           Borrowers shall assist Agent or any
Lender permitted to sell assignments or participations under this Section 13.5
in whatever manner reasonably necessary in order to enable or effect any such
assignment or participation, including (but not limited to) the execution and
delivery of any and all agreements, notes and other documents and instruments
as shall be requested and the delivery of informational materials, appraisals
or other documents for, and the participation of relevant management in
meetings and conference calls with, potential assignees or Participants.  Each Borrower shall certify the correctness,
completeness and accuracy of all descriptions of such Borrower and its affairs
provided, prepared or reviewed by such Borrower that are contained in any
selling materials and all other information provided by it and included in such
materials.

 

13.6         Participant’s Security Interest. 
If a Participant shall at any time participate with any Lender in the
Loans, Letter of Credit Accommodations or other Obligations, Borrowers hereby
grant to such Participant and such Participant shall have and is hereby given,
a continuing lien on and security interest in any money, securities and other
property of Borrowers in the custody or possession of the Participant,
including the right of setoff, to the extent of the Participant’s participation
in the Obligations, and such Participant shall be deemed to have the same right
of setoff to the extent of its participation in the Obligations, as it would
have if it were a direct lender.

 

76

 

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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.

 

13.7         Confidentiality.  Each Lender
agrees that it will use its reasonable best efforts not to disclose, without
the prior consent of Borrowers, confidential information with respect to
Borrowers, any Obligor or any of their respective Subsidiaries which is
furnished pursuant to this Agreement and which is specifically designated as
confidential in writing by Borrowers; provided, that, any Lender
may disclose any such information (a) to its employees, auditors or
counsel, or to another Lender if the disclosing Lender or such disclosing
Lender’s holding or parent company in its sole discretion determines that any
such party should have access to such information, (b) as has become
generally available to the public without a breach of this Section 13.7, (c) as
may be required or appropriate in any report, statement or testimony submitted
to any Governmental Authority having or claiming to have jurisdiction over such
Lender, (d) as may be required or appropriate in response to any summons
or subpoena or in connection with any litigation, (e) in order to comply
with any statute or regulation, and (f) to any prospective or actual
assignee or Participant in connection with any contemplated transfer or
participation of any of the Commitments or any interest therein by such Lender,
provided, that, such assignee or Participant has agreed in
writing to the confidentiality of any such confidential information in
accordance with the terms of this Section 13.7.  Anything contained herein to the contrary
notwithstanding, the obligations of confidentiality contained herein, as they
relate to the transactions contemplated hereby, shall not apply to the federal
tax structure or federal tax treatment of such transactions, and each party
hereto (and any employee, representative, or agent of any party hereto) may
disclose to any and all Persons, without limitation of any kind, the federal
tax structure and federal tax treatment of such transactions (including all
written materials related to such tax structure and tax treatment).  The preceding sentence is intended to cause
the transactions contemplated hereby to not be treated as having been offered
under conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or
any successor provision) of the Treasury Regulations promulgated under Section 6011
of the United States Internal Revenue Code, and shall be construed in a manner
consistent with such purpose.  In
addition, each party hereto acknowledges that it has no proprietary or
exclusive rights to the tax structure of the transactions contemplated hereby
or any tax matter or tax idea related thereto.

 

13.8         Entire Agreement. 
This Agreement, the other Financing Agreements, any supplements hereto
or thereto, and any instruments or documents delivered or to be delivered in
connection herewith or therewith represents the entire agreement and
understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written.

 

13.9         Publicity.  Borrowers
consent to Agent publishing a tombstone or similar advertising material
relating to the financing transaction contemplated by this Agreement.

 

SECTION 14.  JOINT AND
SEVERAL LIABILITY; SURETYSHIP WAIVERS

 

14.1         Independent Obligations; Subrogation. 
The Obligations of each Borrower hereunder are joint and several.  To the maximum extent permitted by law, each
Borrower hereby waives any claim, right or remedy which either may now have or
hereafter acquire

 

77

 

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THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

against any other Borrower that arises hereunder
including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification, or participation in
any claim, right or remedy of Agent or any Lender against any Borrower or any
Collateral which Agent or any Lender now has or hereafter acquires, whether or
not such claim, right or remedy arises in equity, under contract, by statute,
under common law or otherwise until the Obligations are fully paid and finally
discharged.  In addition, each Borrower
hereby waives any right to proceed against the other Borrowers, now or hereafter,
for contribution, indemnity, reimbursement, and any other suretyship rights and
claims, whether direct or indirect, liquidated or contingent, whether arising
under express or implied contract or by operation of law, which any Borrower
may now have or hereafter have as against the other Borrowers with respect to
the Obligations until the Obligations are fully paid and finally
discharged.  Each Borrower also hereby
waives any rights of recourse to or with respect to any asset of the other
Borrowers until the Obligations are fully paid and finally discharged.

 

14.2         Authority to Modify Obligations and
Security.  Each Borrower authorizes Agent and Lenders,
without notice or demand and without affecting any Borrowers’ liability
hereunder, from time to time, whether before or after any notice of termination
hereof or before or after any default in respect of the Obligations, to: (a) renew,
extend, accelerate, or otherwise change the time for payment of, or otherwise
change any other term or condition of, any document or agreement evidencing or
relating to any Obligations as such Obligations relate to the other Borrowers,
including, without limitation, to increase or decrease the rate of interest
thereon; (b) accept, substitute, waive, defease, increase, release, exchange
or otherwise alter any Collateral, in whole or in part, securing the other
Borrowers’ Obligations; (c) apply any and all such Collateral and direct
the order or manner of sale thereof as Agent and Lenders, in their sole
discretion, may determine; (d) deal with the other Borrowers as Agent or
any Lender may elect; (e) in Agent’s and Lenders’ sole discretion, settle,
release on terms satisfactory to them, or by operation of law or otherwise,
compound, compromise, collect or otherwise liquidate any of the other Borrowers’
Obligations and/or any of the Collateral in any manner, and bid and purchase
any of the collateral at any sale thereof; (f) apply any and all payments
or recoveries from the other Borrowers as Agent or Lenders, in their sole
discretion, may determine, whether or not such indebtedness relates to the
Obligations; all whether such Obligations are secured or unsecured or
guaranteed or not guaranteed by others; and (g) apply any sums realized
from Collateral furnished by the other Borrowers upon any of its indebtedness
or obligations to Agent or Lenders as they in their sole discretion, may
determine, whether or not such indebtedness relates to the Obligations; all
without in any way diminishing, releasing or discharging the liability of any
Borrower hereunder.

 

14.3         Waiver of Defenses. 
Upon an Event of Default by any Borrower in respect of any Obligations,
and except as required in Section 726 of the California Code of Civil
Procedure, Agent or any Lender may, at their option and without notice to any
Borrower, proceed directly against any Borrower to collect and recover the full
amount of the liability hereunder, or any portion thereof, and each Borrower
waives any right to require Agent or any Lender to: (a) proceed against
the other Borrowers or any other person whomsoever; (b) proceed against or
exhaust any Collateral given to or held by Agent or any Lender in connection
with the Obligations; (c) give notice of the terms, time and place of any
public or private sale of any of the Collateral except as otherwise provided
herein; or (d) pursue any other remedy in Agent’s or

 

78

 

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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.

 

any Lender’s power whatsoever.  A separate action or actions may be brought
and prosecuted against any Borrower whether or not action is brought against
the other Borrowers and whether the other Borrowers be joined in any such
action or actions; and each Borrower agrees that any payment of any Obligations
or other act which shall toll any statute of limitations applicable thereto
shall similarly operate to toll such statute of limitations applicable to the
liability hereunder.

 

14.4         Exercise of Agent’s and Lenders’ Rights. 
Each Borrower hereby authorizes and empowers Agent and Lenders in their
sole discretion, without any notice or demand to such Borrower whatsoever and
without affecting the liability of such Borrower hereunder, to exercise any
right or remedy which Agent or any Lender may have available to them against
the other Borrowers.

 

14.5         Additional Waivers. 
Each Borrower waives any defense arising by reason of any disability or
other defense of the other Borrowers or by reason of the cessation from any
cause whatsoever of the liability of the other Borrowers or by reason of any
act or omission of Agent or any Lender or others which directly or indirectly
results in or aids the discharge or release of the other Borrowers or any
Obligations or any Collateral by operation of law or otherwise.  The Obligations shall be enforceable against
each Borrower without regard to the validity, regularity or enforceability of
any of the Obligations with respect to any of the other Borrowers or any of the
documents related thereto or any collateral security documents securing any of
the Obligations.  No exercise by Agent or
any Lender of, and no omission of Agent or any Lender to exercise, any power or
authority recognized herein and no impairment or suspension of any right or
remedy of Agent or any Lender against any Borrower or any Collateral shall in
any way suspend, discharge, release, exonerate or otherwise affect any of the
Obligations or any Collateral furnished by the Borrowers or give to the
Borrowers any right of recourse against Agent or any Lender.  Each Borrower specifically agrees that the
failure of Agent or any Lender: (a) to perfect any lien on or security
interest in any property heretofore or hereafter given any Borrower to secure
payment of the Obligations, or to record or file any document relating thereto
or (b) to file or enforce a claim against the estate (either in
administration, bankruptcy or other proceeding) of any Borrower shall not in
any manner whatsoever terminate, diminish, exonerate or otherwise affect the
liability of any Borrower hereunder.

 

14.6         Additional Indebtedness . 
Additional Obligations may be created from time to time at the request
of any Borrower and without further authorization from or notice to any other
Borrower even though the borrowing Borrower’s financial condition may
deteriorate since the date hereof.  Each
Borrower waives the right, if any, to require Agent or any Lender to disclose
to such Borrower any information it may now have or hereafter acquire
concerning the other Borrowers’ character, credit, Collateral, financial
condition or other matters.  Each
Borrower has established adequate means to obtain from the other Borrowers, on
a continuing basis, financial and other information pertaining to such Borrower’s
business and affairs, and assumes the responsibility for being and keeping
informed of the financial and other conditions of the other Borrowers and of
all circumstances bearing upon the risk of nonpayment of the Obligations which
diligent inquiry would reveal.  Neither
Agent nor any Lender need inquire into the powers of any Borrower or the
authority of any of their respective officers, directors, partners or agents
acting or purporting to act in their behalf, and any Obligations created in
reliance upon the

 

79

 

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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.

 

purported exercise of such power or authority are
hereby guaranteed.  All Obligations of
each Borrower to Agent and Lenders heretofore, now or hereafter created shall
be deemed to have been granted at each Borrower’s special insistence and
request and in consideration of and in reliance upon this Agreement.

 

14.7         Subordination. 
Except as otherwise provided in this Section 14.7, any indebtedness
of any Borrower now or hereafter owing to any other Borrower is hereby subordinated
to the Obligations, whether heretofore, now or hereafter created, and whether
before or after notice of termination hereof, and, following the occurrence and
during the continuation of an Event of Default, no Borrower shall, without the
prior consent of Agent, pay in whole or in part any of such indebtedness nor
will any such Borrower accept any payment of or on account of any such
indebtedness at any time while such Borrower remains liable hereunder.  At the request of Agent, after the occurrence
and during the continuance of an Event of Default, each Borrower shall pay to
Agent all or any part of such subordinated indebtedness and any amount so paid
to Agent at its request shall be applied to payment of the Obligations.  Each payment on the indebtedness of any
Borrower to the other Borrowers received in violation of any of the provisions
hereof shall be deemed to have been received by any other Borrower as trustee
for Agent and Lenders and shall be paid over to Agent immediately on account of
the Obligations, but without otherwise affecting in any manner any such
Borrower’s liability under any of the provisions of this Agreement.  Each Borrower agrees to file all claims
against the other Borrowers in any bankruptcy or other proceeding in which the
filing of claims is required by law in respect of any indebtedness of the other
Borrowers to such Borrower, and Agent and Lenders shall be entitled to all of
any such Borrower’s rights thereunder. 
If for any reason any such Borrower fails to file such claim at least
thirty (30) days prior to the last date on which such claim should be filed,
Agent, as such Borrower’s attorney-in-fact, is hereby authorized to do so in
Borrowers’ name or, in Agent’s discretion, to assign such claim to, and cause a
proof of claim to be filed in the name of, Agent’s nominee.  In all such cases, whether in administration,
bankruptcy or otherwise, the person or persons authorized to pay such claim
shall pay to Agent the full amount payable on the claim in the proceeding, and
to the full extent necessary for that purpose any such Borrower hereby assigns
to Agent, for itself and the ratable benefit of Lenders, all such Borrower’s
rights to any payments or distributions to which such Borrower otherwise would
be entitled.  If the amount so paid is
greater than any such Borrower’s liability hereunder, Agent will pay the excess
amount to the person entitled thereto.

 

14.8         Revival.  If any
payments of money or transfers of property made to Agent or any Lender by any
Borrower should for any reason subsequently be declared to be, or in Agent’s
counsel’s good faith opinion be determined to be, fraudulent (within the
meaning of any state or federal law relating to fraudulent conveyances),
preferential or otherwise voidable or recoverable in whole or in part for any
reason (hereinafter collectively called “voidable transfers”) under the
Bankruptcy Code or any other federal or state law and Agent or any Lender is
required to repay or restore, or in Agent’s counsel’s good faith opinion may be
so liable to repay or restore, any such voidable transfer, or the amount or any
portion thereof, then as to any such voidable transfer or the amount repaid or
restored and all reasonable costs and expenses (including reasonable attorneys’
fees) of Agent or any Lender related thereto, such Borrower’s liability
hereunder shall automatically be revived, reinstated and restored and shall
exist as though such voidable transfer had never been made to Agent or such
Lender.

 

80

 

***
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.

 

14.9         Understanding of Waivers . 
Each Borrower warrants and agrees that the waivers set forth in this Section 14
are made with full knowledge of their significance and consequences.  If any of such waivers are determined to be
contrary to any applicable law or public policy, such waivers shall be
effective only to the maximum extent permitted by law.

 

81

 

***
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.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

 

	
  AGENT

  	
   

  	
  BORROWERS:

  
	
   

  	
   

  	
   

  
	
  WACHOVIA
  CAPITAL FINANCE

  	
   

  	
  PC MALL, INC.

  
	
  CORPORATION
  (WESTERN)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/
  D. B. Laughton

  	
   

  	
  By: 

  	
  /s/ Ted Sanders

  
	
  Name:
  D.B. Laughton

  	
   

  	
  Name: Ted Sanders

  
	
  Title:
  Director

  	
   

  	
  Title: CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
  251 South Lake Avenue,
  Suite 900

  Pasadena, CA 91101

  Attn: Portfolio Manager

  	
   

  	
  PC MALL SALES, INC.

   

   

  
	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ Rory Zaks

  
	
   

  	
   

  	
   

  	
  Name: Rory Zaks

  
	
  LENDER

  	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WACHOVIA
  CAPITAL FINANCE

  	
   

  	
  ELINUX.COM, INC.

  
	
  CORPORATION
  (WESTERN)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Dan DeVries

  
	
  By: 

  	
  /s/
  D. B. Laughton

  	
   

  	
  Name: Dan DeVries

  
	
  Name:
  D.B. Laughton

  	
   

  	
  Title: President

  
	
  Title: Director

  	
   

  	
   

   

  CCIT, INC.

  
	
  Address:

  	
  251 South Lake Avenue,
  Suite 900

  	
   

  	
   

  
	
   

  	
  Pasadena, CA 91101

  	
   

  	
   

  
	
   

  	
  Attn: Portfolio Manager

  	
   

  	
  By: 

  	
  /s/ Rich Hoffman

  
	
   

  	
   

  	
   

  	
  Name: Rich Hoffman

  
	
   

  	
   

  	
   

  	
  Title: Secretary

  
	
  Revolving
  Loan Commitment: $50,000,000

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Term
  Loan Commitment: $1,520,381.50

  	
   

  	
  WF ACQUISITION SUB,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Bill Neary

  
	
   

  	
   

  	
  Name: Bill Neary

  
	
   

  	
   

  	
  Title: President

  
						

 

82

 

*** 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.

 

	
  LENDER

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BANK
  OF AMERICA, NA

  	
   

  	
   

  
	
   

  	
   

  	
  COMPUTABILITY LIMITED

  
	
  By: 

  	
  /s/
  Jang S. Kim

  	
   

  	
   

  
	
  Name:
  Jang S. Kim

  	
   

  	
   

  
	
  Title:
  VP

  	
   

  	
  By: 

  	
  /s/ Kris Rogers

  
	
   

  	
   

  	
  Name: Kris Rogers

  
	
   

  	
   

  	
  Title: President

  
	
  Address:

  	
  335 Madison Ave.

  	
   

  	
   

  
	
   

  	
  NY, NY 10017

  	
   

  	
   

  
	
   

  	
   

  	
  AF SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
  Revolving
  Loan Commitment: $25,000,000

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Simon Abuyounes

  
	
  Term
  Loan Commitment: $760,415.75

  	
   

  	
  Name: Simon Abuyounes

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
  LENDER

  	
   

  	
   

  
	
   

  	
   

  	
  PC MALL GOV, INC.

  
	
  LASALLE
  BUSINESS CREDIT, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/
  Scott R. Busch

  	
   

  	
  By: 

  	
  /s/ Alan Bechara

  
	
  Name:
  Scott R. Busch

  	
   

  	
  Name: Alan Bechara

  
	
  Title:
  EVP

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
  135 S. LaSalle St.

  	
   

  	
  SIFY, INC.

  
	
   

  	
  Suite 425

  	
   

  	
   

  
	
   

  	
  Chicago, IL 60603

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ Chris Parker

  
	
   

  	
   

  	
   

  	
  Name: Chris Parker

  
	
  Revolving
  Loan Commitment: $25,000,000

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
  Term
  Loan Commitment: $760,415.75

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ONSALE, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ Sam Khulusi

  
	
   

  	
   

  	
   

  	
  Name: Sam Khulusi

  
	
   

  	
   

  	
   

  	
  Title: President

  
						

 

83

 

*** 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.

 

	
   

  	
   

  	
   

  	
  AV ACQUISITION, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ Ted Sanders

  
	
   

  	
   

  	
   

  	
  Name: Ted Sanders

  
	
   

  	
   

  	
   

  	
  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MALL ACQUISITION 1,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ Ted Sanders

  
	
   

  	
   

  	
   

  	
  Name: Ted Sanders

  
	
   

  	
   

  	
   

  	
  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MALL ACQUISITION 2,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ Ted Sanders

  
	
   

  	
   

  	
   

  	
  Name: Ted Sanders

  
	
   

  	
   

  	
   

  	
  Title: Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  	
  2555 West 190th Street

  
	
   

  	
   

  	
   

  	
   

  	
  Torrance, California
  90504

  
	
   

  	
   

  	
   

  	
   

  	
  Attn: Chief Financial
  Officer

  
						

 

84

 

*** 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.

 

EXHIBIT A

 

Form of

 

ASSIGNMENT
AND ACCEPTANCE AGREEMENT

 

This ASSIGNMENT AND ACCEPTANCE (this “Assignment and Acceptance”)
dated as of
                          ,
             is
made by and between
                                                    
(the “Assignor”) on the one hand and
                                        
(the “Assignee”) on the other hand.

 

W  I  T  N  E  S
S  E  T  H:

 

WHEREAS, PC MALL, INC., PC MALL SALES, INC., ELINUX.COM, INC., CCIT,
INC., WF ACQUISITION SUB, INC., COMPUTABILITY LIMITED, AF SERVICES, LLC, PC
MALL GOV, INC., SIFY, INC., ONSALE, INC., AV ACQUISITION, INC., MALL
ACQUISITION 1, INC., and MALL ACQUISITION 2, INC. (collectively, “Borrower”),
the financial institutions from time to time party to the Loan Agreement (as
hereinafter defined) as lenders (each a “Lender” and collectively, the “Lenders”),
and Wachovia Capital Finance Corporation (Western), as administrative and
collateral agent for the Lenders (in such capacity, “Agent”) have
entered into that certain Amended and Restated Loan and Security Agreement,
dated as of August 1, 2005 (as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan
Agreement”), pursuant to which the Lenders have and may continue to make
loans and provide other financial accommodations to Borrower.  Capitalized terms not otherwise defined
herein shall have the respective meanings ascribed thereto in the Loan
Agreement.

 

WHEREAS, as provided under the Loan Agreement, Assignor committed to
making Loans (the “Committed Loans”) to Borrower in an aggregate amount
not to exceed
$                            
(the “Commitment”);

 

WHEREAS, Assignor wishes to assign to Assignee [part of] the rights and obligations of
Assignor under the Loan Agreement in respect of its Commitment in an amount
equal to
$                            
(the “Assigned Commitment Amount”) on the terms and subject to the
conditions set forth herein and Assignee wishes to accept assignment of such
rights and to assume such obligations from Assignor on such terms and subject
to such conditions;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:

 

1.                                       Assignment and Acceptance.

 

(a)                                  Subject to the terms and conditions of
this Assignment and Acceptance, (i) Assignor hereby sells, transfers and
assigns to Assignee, and (ii) Assignee hereby purchases, assumes and
undertakes from Assignor, without recourse and without representation or
warranty (except as provided in this Assignment and Acceptance) an interest in (A) the
Commitment and 

 

A-1

 

*** 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.

 

each of the Committed Loans of Assignor and (B) all
related rights, benefits, obligations, liabilities and indemnities of Assignor
under and in connection with the Loan Agreement and the other agreements,
documents and instruments referred to therein or at any time executed and/or
delivered in connection therewith or related thereto (all of the foregoing,
together with the Loan Agreement, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced, being
collectively referred to herein as the “Financing Agreements”), so that
after giving effect thereto, the Commitment of Assignee and the Commitment of
Assignor shall be as set forth in clauses (c) and (d) below and the
Pro Rata Share (as defined in the Loan Agreement) of Assignee shall be
              
percent (    %).

 

(b)                                 With effect on and after the Effective
Date (as defined in Section 5 hereof), Assignee 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 Commitment in an amount equal to the Assigned Commitment Amount.  Assignee 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.  It is the intent of the parties hereto that
the Commitment of Assignor shall, as of the Effective Date, be reduced by an
amount equal to the Assigned Commitment Amount and Assignor shall relinquish
its rights and be released from its obligations under the Loan Agreement to the
extent such obligations have been assumed by Assignee; provided, that,
Assignor shall not relinquish their rights under the Loan Agreement to the
extent such rights relate to the time prior to the Effective Date.

 

(c)                                  After giving effect to the assignment and
assumption set forth herein, on the Effective Date Assignee’s Commitment will
be $                          .

 

(d)                                 After giving effect to the assignment and
assumption set forth herein, on the Effective Date Assignor’s Commitment will
be
$                            .

 

2.                                       Payments.  As
consideration for the sale, assignment and transfer contemplated in Section 1
hereof, Assignee shall pay to Agent, for the benefit of Assignor, on the
Effective Date in immediately available funds an amount equal to
$                        ,
representing Assignee’s Pro Rata Share of the principal amount of all Committed
Loans.

 

3.                                       Reallocation of Payments. 
Any interest, fees and other payments accrued to the Effective Date with
respect to the Commitment, Committed Loans and outstanding Letter of Credit
Accommodations shall be for the account of Assignor.  Except as Assignor or Assignee may otherwise
agree in writing (with or without the consent of Borrower) any interest, fees
and other payments accrued on and after the Effective Date with respect to the
Assigned Commitment Amount shall be for the account of Assignee.  Each of Assignor and Assignee agrees that it
will hold in trust for the other parties any interest, fees and other amounts
which it may receive to which the other party is entitled pursuant to the
preceding sentence and pay to the other party any such amounts which it may
receive promptly upon receipt.

 

4.                                       Independent Credit Decision. 
Assignee (a) acknowledges that it has received a copy of the Loan
Agreement and the Schedules and Exhibits thereto, together with copies of the 

 

A-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.

 

most recent financial statements of Borrower, 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 Assignment and
Acceptance and (b) agrees that it will, independently and without reliance
upon Assignor, 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.

 

5.                                       Effective Date; Notices.

 

(a)                                  As between Assignor and Assignee, the
effective date for this Assignment and Acceptance shall be
                              ,
           (the “Effective
Date”); provided, that, the following conditions precedent
have been satisfied on or before the Effective Date:

 

(i)                                     this Assignment and Acceptance shall be
executed and delivered by Assignor and Assignee;

 

(ii)                                  the consent of Agent as required for an
effective assignment of the Assigned Commitment Amount by Assignor to Assignee
shall have been duly obtained and shall be in full force and effect as of the
Effective Date;

 

(iii)                               written notice of such assignment, together with
payment instructions, addresses and related information with respect to
Assignee, shall have been given to Borrower and Agent; and

 

(iv)                              Assignee shall pay to Assignor all
amounts due to Assignor under this Assignment and Acceptance.

 

(b)                                 Promptly following the execution of this
Assignment and Acceptance, Assignor shall deliver to Borrower and Agent for
acknowledgment by Agent, a Notice of Assignment in the form attached hereto as
Schedule 1.

 

6.                                       Agent.

 

(a)                                  Assignee hereby appoints and authorizes
Wachovia Capital Finance Corporation (Western) 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.

 

(b)                                 [Assignee shall assume
no duties or obligations held by Assignor in its capacity as Agent under the
Loan Agreement.]

 

7.                                       Withholding Tax. 
Assignee (a) represents and warrants to Assignor, Agent and
Borrower that under applicable law and treaties no tax will be required to be
withheld by Assignee, Agent or Borrower with respect to any payments to be made
to Assignee hereunder or under any of the Financing Agreements, (b) agrees
to furnish (if it is organized under the laws of any jurisdiction other than
the United States or any State thereof) to Agent and Borrower prior to the time
that Agent or Borrower are required to make any payment of principal, interest
or fees hereunder, duplicate executed originals of either U.S. Internal Revenue
Service Form 4224 or 

 

A-3

 

*** 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.

 

U.S. Internal Revenue Service Form 1001 (wherein
Assignee claims entitlement to the benefits of a tax treaty that provides for a
complete exemption from U.S. federal income withholding tax on all payments
hereunder) and agrees to provide new Forms 4224 or 1001 upon the expiration of
any previously delivered form or comparable statements in accordance with
applicable U.S. law and regulations and amendments thereto, duly executed and
completed by Assignee, and (c) agrees to comply with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.

 

8.                                       Representations and Warranties.

 

(a)                                  Assignor represents and warrants that (i) it
is the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any security interest, lien,
encumbrance or other adverse claim, (ii) it is duly organized and existing
and it has the full power and authority to take, and has taken, all action
necessary to execute and deliver this Assignment and Acceptance and any other
documents required or permitted to be executed or delivered by it in connection
with this Assignment and Acceptance and to fulfill its obligations hereunder, (iii) no
notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution,
delivery and performance of this Assignment and Acceptance, and apart from any
agreements or undertakings or filings required by the Loan Agreement, no
further action by, or notice to, or filing with, any Person is required of it
for such execution, delivery or performance, and (iv) this Assignment and
Acceptance has been duly executed and delivered by it and constitutes the
legal, valid and binding obligation of Assignor, enforceable against Assignor
in accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors’ rights and to general equitable principles.

 

(b)                                 Assignor makes no representation or
warranty and does not assume any responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Agreement
or any of the other Financing Agreements or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Agreement or any
other instrument or document furnished pursuant thereto.  Assignor makes no representation or warranty
in connection with, nor does it assume any responsibility with respect to, the
solvency, financial condition, asset valuation or realization, or statements of
Borrower, any Obligor or any of their respective Affiliates, or the performance
or observance by Borrower, any Obligor or any other Person, of any of its
respective obligations under the Loan Agreement or any other instrument or
document furnished in connection therewith.

 

(c)                                  Assignee represents and warrants that (i) it
is duly organized and existing and it has full power and authority to take, and
has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to fulfill
its obligations hereunder, (ii) no notices to, or consents, authorizations
or approvals of, any Person are required (other than any already given or
obtained) for its due execution, delivery and performance of this Assignment
and Acceptance, and apart from any agreements or undertakings or filings
required by the Loan Agreement, no further action by, or notice to, or filing
with, any 

 

A-4

 

*** 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.

 

Person is required of it for such execution, delivery
or performance; and (iii) this Assignment and Acceptance has been duly
executed and delivered by it and constitutes the legal, valid and binding
obligation of Assignee, enforceable against Assignee in accordance with the
terms hereof, subject, as to enforcement, to bankruptcy, insolvency,
moratorium, reorganization and other laws of general application relating to or
affecting creditors’ rights to general equitable principles.

 

9.                                       Further Assurances. 
Assignor and Assignee each hereby agree to execute and deliver such
other instruments, and take such other action, as any party hereto may reasonably
request in connection with the transactions contemplated by this Assignment and
Acceptance, including the delivery of any notices or other documents or
instruments to any party to the Loan Agreement, which may be required in
connection with the assignment and assumption contemplated hereby.

 

10.                                 Miscellaneous

 

(a)                                  Any amendment or waiver of any provision
of this Assignment and Acceptance must be in writing and signed by the parties
hereto, except as otherwise provided herein. 
No failure or delay by either party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof and any waiver
of any breach of the provisions of this Assignment and Acceptance shall be
without prejudice to any rights with respect to any other for further breach
thereof.

 

(b)                                 All payments made hereunder shall be made
without any set-off or counterclaim.

 

(c)                                  Assignor and Assignee shall each pay its
own costs and expenses incurred in connection with the negotiation,
preparation, execution and performance of this Assignment and Acceptance.

 

(d)                                 This Assignment and Acceptance may be
executed in any number of counterparts and all of such counterparts taken
together shall be deemed to constitute one and the same instrument.

 

(e)                                  THIS ASSIGNMENT AND ACCEPTANCE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
CALIFORNIA.  Each party hereto
irrevocably submits to the non-exclusive jurisdiction of any State or Federal
court sitting in Los Angeles County, California over any suit, action or
proceeding arising out of or relating to this Assignment and Acceptance and
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such California State or Federal court.  Each party to this Assignment and Acceptance
hereby irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding.

 

(f)                                    EACH PARTY HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR 

 

A-5

 

*** 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.

 

IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE
LOAN AGREEMENT, ANY OF THE OTHER FINANCING AGREEMENTS OR ANY RELATED DOCUMENTS
AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS
(WHETHER ORAL OR WRITTEN).

 

IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment
and Acceptance to be executed and delivered by their duly authorized officers
as of the date first above written.

 

	
   

  	
   

  	
   

  	
  ,

  
	
   

  	
  a

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ,

  
	
   

  	
  a

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

A-6

 

*** 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 1

to Assignment and Acceptance

 

Form of

 

NOTICE OF ASSIGNMENT AND ACCEPTANCE

 

,

 

Wachovia Capital Finance Corporation (Western)

251 South Lake Avenue, Suite 900

Pasadena, California 91101

Attn:

 

                                                        

                                                        

Attn:

 

Re:

 

Ladies and Gentlemen:

 

Reference is hereby made to (a) that certain Amended and Restated
Loan and Security Agreement, dated as of August 1, 2005 (as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced, the “Loan Agreement”) by and among PC MALL, INC.,
PC MALL SALES, INC., ELINUX.COM, INC., CCIT, INC., WF ACQUISITION SUB, INC.,
COMPUTABILITY LIMITED, AF SERVICES, LLC, PC MALL GOV, INC., SIFY, INC., ONSALE,
INC., AV ACQUISITION, INC., MALL ACQUISITION 1, INC., and MALL ACQUISITION 2,
INC. (collectively, “Borrower”), the financial institutions from time to
time party to the Loan Agreement as lenders (each a “Lender” and
collectively, the “Lenders”) and Wachovia Capital Finance Corporation
(Western), as administrative and collateral agent for the Lenders (in such
capacity, “Agent”) pursuant to which the Lenders have and may continue
to make loans and provide other financial accommodations to Borrower, and (b) the
other agreements, documents and instruments referred to in the Loan Agreement
or at any time executed and/or delivered in connection therewith or related
thereto (all of the foregoing, together with the Loan Agreement, as the same
now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, being collectively referred to herein as the “Financing
Agreements”).  Capitalized terms not
otherwise defined herein shall have the respective meanings ascribed thereto in
the Loan Agreement.

 

11.                                 We hereby give you notice of, and request
Agent’s consent to, the assignment by
                                                        
(the “Assignor”) to
                                                      
(the “Assignee”) such that after giving effect to the assignment,
Assignee shall have an interest equal to
                
percent (    %) of the total Commitments pursuant to the
Assignment and 

 

A-7

 

*** 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.

 

Acceptance Agreement attached hereto (the “Assignment
and Acceptance”).  We understand that
Assignor’s Commitment shall be reduced by
$                          .

 

12.                                 Assignee agrees that, upon receiving the
consent of Agent to such assignment, Assignee will be bound by the terms of the
Loan Agreement as fully and to the same extent as if the Assignee were the
Lender originally holding such interest under the Loan Agreement.

 

13.                                 The following administrative details
apply to Assignee:

 

(a)                                  Notice address:

 

Assignee:

Address:

 

Attention:

Telephone:

Telecopier:

 

(b)                                 Payment instructions:

 

Account No.:

At:

ABA No.:

For Credit To:

Reference:

 

14.                                 You are entitled to rely upon the
representations, warranties and covenants of each party to the Assignment and
Acceptance as contained therein.

 

A-8

 

*** 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.

 

IN WITNESS WHEREOF, Assignor and Assignee have each caused this Notice
of Assignment and Acceptance to be executed by its duly authorized officials,
officers or agents as of the date first above mentioned.

 

	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACKNOWLEDGED
  AND CONSENTED TO:

  
	
   

  
	
  WACHOVIA
  CAPITAL FINANCE CORPORATION (WESTERN),

  
	
  a
  California corporation,

  
	
  as
  Agent

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ACKNOWLEDGED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  a

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  

 

A-9

 

*** 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.

 

EXHIBIT
B

 

INFORMATION
CERTIFICATE

OF

 

	
   

  	
  Dated:

  	
   

  

 

Wachovia

251 South Lake Avenue, Suite 900

Pasadena, California 91101

 

In
order to assist you in the continuing evaluation of the financing you are
considering of
                                            
(the “Corporation”) and to expedite the preparation of any documentation
which may be required and to induce you to provide such financing to the
Corporation, we represent and warrant-to you the following information about
the Corporation, its organizational structure and other matters of interest to
you:

 

1.                                       The full and exact name of the
Corporation as set forth in its Certificate of Incorporation is:

 

 

2.                                       The Corporation 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):

 

 

In the
event any trade name appears on an invoice, a sample copy of such invoice is
annexed.

 

3.                                       The date of incorporation of the
Corporation was                             ,
under the laws of the State of                         ,
and the Corporation is in good standing under those laws. The Corporation has
never been involved in a bankruptcy or reorganization except: (explain)

 

 

4.                                       The Corporation is duly qualified and authorized to transact business
as a foreign corporation in the following states and is in good standing in
such states:

 

 

B-1

 

*** 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.

 

5.                                       Since the date of incorporation, the corporate name of the Corporation
has been changed as follows:

 

	
  Date

  	
   

  	
  Prior
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

6.                                       Since the date of incorporation, the Corporation has made or entered
into the following mergers or acquisitions:

 

 

7.                                       The chief executive office of the Corporation is located at:

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Street Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  County

  	
   

  

 

8.                                       The books and records of the Corporation pertaining to accounts,
contract rights, inventory, etc. are located at (if other than the chief
executive office referred to in Section 7 above):

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Street Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  County

  	
   

  

 

9.                                       The Corporation has other places of
business and/or maintains inventory or other assets at the following addresses (indicate whether locations are owned, leased
or operated by third parties and if leased or operated by third parties, their
name and address):

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Street Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  Lessor/Operator

  

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Street Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  Lessor/Operator

  

 

10.                                 The premises listed below owned by the
Corporation are subject to mortgages as follows (state name and address of
mortgagee and approximate principal balance of mortgage):

 

	
  Location

  	
   

  	
  Mortgagee

  	
   

  	
  Principal
  Balance

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

B-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.

 

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

 

None

	
  Street Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  

 

 

	
  Street Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  

 

 

	
  Street Address

  	
   

  	
  City

  	
   

  	
  State

  	
   

  

 

12.                                 The Corporation is affiliated with, or has ownership in, the following
corporations (including subsidiaries):

 

	
  NAME

  	
   

  	
  CHIEF

  EXECUTIVE

  OFFICE

  	
   

  	
  JURISDICATION

  OF

  INCORPORATION

  	
   

  	
  OWNERSHIP

  PERCENTAGE OR

  RELATIONSHIP

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

13.                                 The Federal Employer Identification
Number of the Corporation is as follows:

 

 

14.                                 There is no provision in the Certificate
of Incorporation or By-laws of the Corporation, or in the laws of the State of
its incorporation, requiring any vote or consent of shareholders to borrow or
to authorize the mortgage or pledge of or creation of a security interest in
any assets of the Corporation or any subsidiary. Such power is vested
exclusively in its Board of Directors.

 

15.                                 The officers of the Corporation and their
respective titles are as follows:

 

	
  Title

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

The following will have
signatory powers as to all your of transactions with the Corporation:

 

 

B-3

 

*** 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.

 

16.                                 With respect to the officers noted above,
such officers are affiliated with or have ownership in the following
corporations (indicate name and address of affiliated companies, type of
operations, ownership percentage or other relationship):

 

 

17.                                 The members of the Board of Directors of
the Corporation are:

 

 

18.                                 The name of the stockholders of the
Corporation and their stock holdings are as follows (if stock is widely held
indicate only stockholders owning 10% or more of the voting stock):

 

	
  Name

  	
   

  	
  No. of Shares

  	
   

  	
  Ownership

  Percentage

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

 

20.                                 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:

 

B-4

 

*** 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.

 

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

 

	
  Lienholder

  	
   

  	
  Assets

  	
   

  	
  Amount of

  Debt Secured

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

22.                                 The Corporation guarantees the various
commercial obligations of its subsidiaries.

 

23.                                 The Corporation 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):

.

 

24.                                 The Corporation and its affiliates do 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:

 

	
  Institution

  	
   

  	
  Account Number

  	
   

  	
  Branch Address

  	
   

  	
  Type

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

25.                                 The Corporation’s fiscal year ends:

 

26.                                 With regard to any pension or profit
sharing plan, except as disclosed to Congress:

 

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

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

 

B-5

 

*** 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.

 

27.                                 Certified Public Accountants for the
Corporation is the firm of:

 

	
  Name

  
	
  Address

  
	
  Partner
  Handling Relationship

  
	
  Were
  statements uncertified for any fiscal year?

  

 

28.                                 Prompt written notice will be given you of any change or amendment with
respect to any of
the foregoing. Until such notice is received by you, you shall be entitled to
rely upon the foregoing in all respects.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
  CORPORATE SEAL TO BE

  AFFIXED HEREINBELOW

  	
   

  

 

 

	
   

  	
  By:   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:   

  	
   

  

 

B-6

 

*** 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.

 

EXHIBIT
C

 

Inventory
Turn Calculation

 

	
  pro

  	
  Company
  Name:

  	
   

  	
  IdeaMall, Inc.

  	
   

  	
   

  	
   

  	
  Exam Type

  	
   

  	
  Survey

  	
   

  	
  Curr Exam

  	
   

  	
  09/22/00

  
	
   

  	
  Workpaper
  Name:

  	
   

  	
  Inventory
  Turnover

  	
  Currency

  	
  US

  	
   

  	
  Rounded
  To:

  	
   

  	
  $ 1,000

  	
   

  	
  US $ Equal

  	
   

  	
  1.00

  

 

Sources:

 

	
   

  	
   

  	
  Name

  	
   

  	
  Position

  	
   

  	
  Phone and/ or

  Extension

  	
   

  	
  Notes/ Comments

  
	
  Contacts:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Primary

  	
   

  	
  Ted
  Sanders

  	
   

  	
  CFO

  	
   

  	
  310-354-5600

  	
   

  	
   

  
	
  Secondary

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  	
  Position

  	
   

  	
  Phone and/ or

  Extension

  	
   

  	
  Region Office

  
	
  Preparer:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Primary

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Secondary

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Inventory Component Descriptions From Inventory Components Workpaper

 

	
  Inventory Components

  	
   

  	
  Current

  	
   

  	
  Last FYE

  	
   

  	
  Prior FYE

  	
   

  	
  Comments/

  Conclusions:

  	
   

  
	
  Period Ending (Date)

  	
   

  	
  11/30/00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Raw Materials

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WIP

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Finished Goods

  	
   

  	
  39,315

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fixed Assets

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Other3

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Inventory

  	
   

  	
  $

  	
  39,315

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Average Inventory

  	
   

  	
  $

  	
  33,905

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net Sales

  	
   

  	
  $

  	
  751,114

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  COGS

  	
   

  	
  671,230

  	
   

  	
  89

  	
  %

  	
   

  	
   

  	
  0

  	
  %

  	
   

  	
   

  	
  0

  	
  %

  	
   

  	
   

  	
   

  	
   

  
	
  Gross Profit

  	
   

  	
  $

  	
  79,884

  	
   

  	
  11

  	
  %

  	
  $

  	
  —

  	
   

  	
  0

  	
  %

  	
  $

  	
  —

  	
   

  	
  0

  	
  %

  	
   

  	
   

  	
  28.50

  	
  %

  
	
  Drop Ship Adjust %

  	
   

  	
  29

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  drop

  	
   

  	
  191313

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  thru June

  	
   

  	
   

  	
   

  
	
  Turnover Period Days

  	
   

  	
  334

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Turnover (Days/ Times Per Year)

  	
   

  	
  17

  	
   

  	
  22

  	
   

  	
  —

  	
   

  	
  #DIV/0!

  	
   

  	
  —

  	
   

  	
  #DIV/0!

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  T/O Adj for Drop Ships

  	
   

  	
  23.60

  	
   

  	
  15

  	
   

  	
  —

  	
   

  	
  #DIV/0!

  	
   

  	
  —

  	
   

  	
  #DIV/0!

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

C-1

 

*** 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.

 

EXHIBIT
D

 

Adjusted
Tangible Net Worth Calculation

 

	
  Total
  Stockholders Equity

  	
   

  	
  $

  	
  37,576,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Less
  Intangibles:

  	
   

  	
   

  	
   

  
	
  Goodwill

  	
   

  	
  11,446,000

  	
   

  
	
  Leasehold
  Improvements

  	
   

  	
  2,339,000

  	
   

  
	
  Prepaids

  	
   

  	
  2,791,000

  	
   

  
	
  Deferred
  Taxes

  	
   

  	
  5,785,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tangible
  Net Worth @ 9/30/2000

  	
   

  	
  15,215,000

  	
   

  

 

The date and dollar amounts set forth above are for illustrative
purposes only.

 

D-1

 

*** 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

  	
   

  	
  Assets

  	
   

  	
  Amount of

  Debt Secured

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia

  	
   

  	
  All assets

  	
   

  	
  [***]

  	
   

  
	
  IBM

  	
   

  	
  Inventory

  	
   

  	
  [***]

  	
   

  
	
  Apple

  	
   

  	
  Inventory/AR

  	
   

  	
  [***]

  	
   

  
	
  HP/Compaq

  	
   

  	
  Inventory

  	
   

  	
  [***]

  	
   

  
	
  Lexmark

  	
   

  	
  Inventory

  	
   

  	
  [***]

  	
   

  
	
  Panasonic

  	
   

  	
  Inventory

  	
   

  	
  [***]

  	
   

  
	
  Phillips

  	
   

  	
  Inventory

  	
   

  	
  [***]

  	
   

  
	
  Sharp

  	
   

  	
  Inventory

  	
   

  	
  [***]

  	
   

  

 

 

*** 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 8.8

Accounts

 

PC Mall, Inc.:

 

	
  Institution

  	
   

  	
  Account

  Number

  	
   

  	
  Branch Address

  	
   

  	
  Type

  
	
  Bank of America

  	
   

  	
  [***]

  [***]

  	
   

  	
  150 Long Beach

  Blvd.

  Third Floor

  Long Beach, CA

  90852

  	
   

  	
  [***]

  [***]

  

 

PC Mall
Sales, Inc.:

 

	
  Institution

  	
   

  	
  Account

  Number

  	
   

  	
  Branch Address

  	
   

  	
  Type

  
	
  Bank of America

  	
   

  	
  [***]

  [***]

  [***]

  [***]

  [***]

  	
   

  	
  150 Long Beach

  Blvd.

  Third Floor

  Long Beach, CA

  90852

  	
   

  	
  [***]

  [***]

  [***]

  [***]

  [***]

  

 

CCIT, Inc.:

 

	
  Institution

  	
   

  	
  Account

  Number

  	
   

  	
  Branch Address

  	
   

  	
  Type

  
	
  Bank of America

  	
   

  	
  [***]

  [***]

  	
   

  	
  150 Long Beach

  Blvd.

  Third Floor

  Long Beach, CA

  90852

  	
   

  	
  [***]

  [***]

  

 

WF
Acquisition Sub, Inc.:

 

	
  Institution

  	
   

  	
  Account

  Number

  	
   

  	
  Branch Address

  	
   

  	
  Type

  
	
  Bank of America

  	
   

  	
  [***]

  [***]

  	
   

  	
  150 Long Beach

  Blvd.

  Third Floor

  Long Beach, CA

  90852

  	
   

  	
  [***]

  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Union Bank

  Harbor

  Gateway

  	
   

  	
  [***]

  	
   

  	
  P.O. Box 513840

  Los Angeles, CA

  90051-3840

  	
   

  	
   

  

 

 

*** 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.

 

AF
Services, LLC:

 

	
  Institution

  	
   

  	
  Account

  Number

  	
   

  	
  Branch Address

  	
   

  	
  Type

  
	
  Bank of America

  	
   

  	
  [***]

  [***]

  [***]

  [***]

  [***]

  [***]

  [***]

  [***]

  	
   

  	
  150 Long Beach

  Blvd.

  Third Floor

  Long Beach, CA

  90852

  	
   

  	
  [***]

  [***]

  [***]

  [***]

  [***]

  [***]

  [***]

  [***]

  

 

PC Mall
Gov, Inc.:

 

	
  Institution

  	
   

  	
  Account

  Number

  	
   

  	
  Branch Address

  	
   

  	
  Type

  
	
  Bank of America

  	
   

  	
  [***]

  [***]

  	
   

  	
  150 Long Beach

  Blvd.

  Third Floor

  Long Beach, CA

  90852

  	
   

  	
  [***]

  [***]

  

 

Onsale,
Inc:

 

	
  Institution

  	
   

  	
  Account

  Number

  	
   

  	
  Branch Address

  	
   

  	
  Type

  
	
  Bank of America

  	
   

  	
  [***]

  [***]

  	
   

  	
  150 Long Beach

  Blvd.

  Third Floor

  Long Beach, CA

  90852

  	
   

  	
  [***]

  [***]

  

 

SIFY, Inc.:

 

	
  Institution

  	
   

  	
  Account

  Number

  	
   

  	
  Branch Address

  	
   

  	
  Type

  
	
  Bank of America

  	
   

  	
  [***]

  [***]

  	
   

  	
  150 Long Beach

  Blvd.

  Third Floor

  Long Beach, CA

  90852

  	
   

  	
  [***]

  [***]

  

 

 

*** 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 8.9

Environmental Disclosures

 

None

 

 

*** 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

 

	
  Lienholder

  	
   

  	
  Assets

  	
   

  	
  Amount of

  Debt Secured

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia

  	
   

  	
  All assets

  	
   

  	
  [***]

  
	
  IBM

  	
   

  	
  Inventory

  	
   

  	
  [***]

  
	
  Apple

  	
   

  	
  Inventory/AR

  	
   

  	
  [***]

  
	
  HP/Compaq

  	
   

  	
  Inventory

  	
   

  	
  [***]

  
	
  Lexmark

  	
   

  	
  Inventory

  	
   

  	
  [***]

  
	
  Panasonic

  	
   

  	
  Inventory

  	
   

  	
  [***]

  
	
  Phillips

  	
   

  	
  Inventory

  	
   

  	
  [***]

  
	
  Sharp

  	
   

  	
  Inventory

  	
   

  	
  [***]

  

 

LEASES:

 

PC Mall, Inc.:

 

4725 E. Shelby Drive,
Memphis, TN 38118 - Leased

Street Address             City                State

Lessor/Operator: PDC Properties, Inc., 8395 Jackson Road, Suite F,
Sacramento, CA 95826

 

Suite 100 North
Arlington Heights, Illinois- Leased

Street Address             City                State

Lessor/Operator: NAAOC, LLC 1156A West Shore Drive, Arlington Heights, Il 60004

 

7355 E. Orchard Road, Suite C-300,
Englewood, CO 80111 - Leased

Street
Address             City                State

Lessor/Operator: DJW Properties, LLC, c/o Custom Management Group, 2280 South
Xanadu Way, Suite 107, Aurora, CO 80014

 

N92 W14612 Anthony Ave.,
Menomonee Fall, WI 53051 - Leased

Street
Address             City                State

Lessor/Operator: Wangard Partners, Inc., 1200 N. Mayfair Road, Suite 150,
Milwaukee, WI 53226

 

Suite 210, 14160
Newbrook Drive, Chantilly, Virginia - Leased

Street
Address             City                State

Lessor/Operator: Automotive Parts Remanufacturers Association, 4215 Lafayette
Center Drive, Suite 3, Chantilly, VA 20151-1243

 

Suite 300, 4995
Murphy Canyon Road, San Diego, CA 92123-Leased

Street
Address             City                State

Lessor/Operator: Spectrum Huntington Center, LLC, 4320 La Jolla Village Drive,
San Diego, CA 92122

 

 

*** 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.

 

317 Brick Boulevard, Suite 100,
Brick, New Jersey 08723 -Leased

Street
Address             City                State

Lessor/Operator: W &F Developers, Inc.-Winding River, One
Woodbridge Center, 6th Floor, Woodbridge, New Jersey, 07095

 

1100 University Street,
2nd Floor, Montreal, QE, Canada- Leased

Street
Address             City                State

Lessor/Operator: CANAPREV, 935 de la Gaichetiere Street West, 8th Floor,
Montreal, QE, Canada H3B 2M9

 

19 Morgan Avenue, Irvine,
CA 92618-Leased

Street
Address             City                State

Lessor/Operator: Michael G. McNeill and Juliana Sun, 30 Landport, Newport
Beach, CA 92660

 

829 West Burbank
Boulevard, Burbank, Suite 200, CA- Leased

Street
Address             City                State

Lessor/Operator: C & P Properties #1, 101 S. First Street. # 400,
Burbank, CA 91502

 

5601 W. Slauson Ave. Suite 186,
Culver City, CA 90230-Leased

Street
Address             City                State

Lessor/Operator: Buckingham Heights Business Park, 5731 W. Slauson Ave., Suite 222,
Culver City, CA 90230

 

AF
Services, LLC:

 

4725 E. Shelby Drive,
Memphis, TN 38118 - Leased

Street
Address             City                State

Lessor/Operator: PDC Properties, Inc., 8395 Jackson Road, Suite F,
Sacramento, CA 95826

 

PC Mall
Sales, Inc.:

 

N92 W14612 Anthony Ave.,
Menomonee Fall, WI 53051 - Leased

Street
Address             City                State

Lessor/Operator: Wangard Partners, Inc., 1200 N. Mayfair Road, Suite 150,
Milwaukee, WI 53226

 

19 Morgan Avenue, Irvine,
CA 92618-Leased

Street
Address             City                State

Lessor/Operator: Michael G. McNeill and Juliana Sun, 30 Landport, Newport
Beach, CA 92660

 

CCIT, Inc.:

 

6767 S. Spruce Street,
#125, Englewood, CO 80112 - Leased

Street
Address             City                State

Lessor/Operator: Toric Properties, LLC c/o Panorama Property Management, 6767
S. Spruce Street, #105, Englewood, CO 80112

 

317 Brick Boulevard, Suite 100,
Brick, New Jersey 08723 -Leased

Street
Address             City                State

 

 

*** 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.

 

Lessor/Operator: W &F
Developers, Inc.-Winding River, One Woodbridge Center, 6th Floor,
Woodbridge, New Jersey, 07095

 

Computability
Limited:

 

N92 W14612 Anthony Ave.,
Menomonee Falls WI 53051 - Leased

Street
Address             City                State

Lessor/Operator: Wangard Partners, Inc., 1200 N. Mayfair Road, Suite 150,
Milwaukee, WI 53226

 

WF
Acquisition Sub, Inc.:

 

19 Morgan Avenue, Irvine,
CA 92618-Leased

Street
Address             City                State

Lessor/Operator: Michael G. McNeill and Juliana Sun, 30 Landport, Newport
Beach, CA 92660

 

Suite 300, 4995
Murphy Canyon Road, San Diego, CA 92123-Leased

Street
Address             City                State

Lessor/Operator: Spectrum Huntington Center, LLC, 4320 La Jolla Village Drive, Suite 220,
San Diego, CA 62122

 

829 West Burbank
Boulevard, Burbank, Suite 200, CA- Leased

Street
Address             City                State

Lessor/Operator: C & P Properties #1, 101 S. First Street. # 400,
Burbank, CA 91502

 

5601 W. Slauson Ave. Suite 186,
Culver City, CA 90230-Leased

Street
Address             City                State

Lessor/Operator: Buckingham Heights Business Park, 5731 W. Slauson Ave., Suite 222,
Culver City, CA 90230

 

SIFY, Inc.:

 

19 Morgan Avenue, Irvine,
CA 92618-Leased

Street
Address             City                State

Lessor/Operator: Michael G. McNeill and Juliana Sun, 30 Landport, Newport
Beach, CA 92660

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