Document:

exv10w42

 

Exhibit 10.42

AGREEMENT FOR WHOLESALE FINANCING

This Agreement for Wholesale Financing (“Agreement”) is made between GE
Commercial Distribution Finance Corporation (“CDF”) and En Pointe Technologies
Sales, Inc., a [  ] SOLE PROPRIETORSHIP, [  ] PARTNERSHIP, [X] CORPORATION,
[  ] LIMITED LIABILITY COMPANY (check applicable term) (“Dealer”), having its
chief executive office located at 100 North Sepulveda Blvd., 19th Floor, El
Segundo, CA 90245. Terms not otherwise defined herein shall have the meanings
ascribed to them in the Business Financing Agreement dated June 25, 2004, by
and between CDF and Dealer.

	1.	 	Extension of Credit. Subject to the terms of this Agreement, CDF may
extend credit to Dealer from time to time to purchase inventory from CDF
approved vendors (“Vendors”) and for other purposes. CDF’s decision to
advance funds is discretionary, and will not be binding until the funds
are actually advanced. CDF may combine all of CDF’s advances to Dealer or
on Dealer’s behalf, whether under this Agreement or any other agreement,
and whether provided by one or more of CDF’s branch offices, together with
all finance charges, fees and expenses related thereto, to make one debt
owed by Dealer. CDF may, without notice to Dealer, elect not to finance
any inventory sold by particular Vendors who are in default to CDF, or
with respect to which CDF reasonably feels insecure. This Agreement
concerns the extension of credit, and not the provision of goods or
services.
	 
	2.	 	Financing Terms. Certain financial terms of any advance which CDF makes
under this Agreement are not set forth herein because such terms depend,
in part, upon many variable factors, including the availability of Vendor
discounts, payment terms or other incentives, and CDF’s floorplanning
volume with Dealer and with Vendors. Therefore, CDF and Dealer agree to
set forth in this Agreement only the general terms of Dealer’s financing
arrangement with CDF. Upon agreeing to finance an item of inventory for
Dealer, CDF will send Dealer a Statement of Transaction (“SOT”)
identifying such inventory and the applicable financial terms. Dealer’s
failure to notify CDF in writing of any objection to an SOT within fifteen
(15) days after an SOT is mailed to Dealer shall constitute Dealer’s: (a)
acceptance of all terms thereof; (b) agreement that CDF is financing such
inventory at Dealer’s request; and (c) agreement that such SOT will be
incorporated herein by reference. If Dealer objects to the terms of any
SOT, Dealer will pay CDF for such inventory in accordance with the most
recent terms for similar inventory to which Dealer has not objected (or,
if there are no prior terms, at the lesser of 16% per annum or at the
maximum lawful contract rate of interest permitted under applicable law),
but CDF may then elect to terminate Dealer’s inventory financing program.
Such termination will not accelerate the maturities of advances previously
made, unless Dealer is otherwise in default of this Agreement.
	 
	3.	 	Security Interest. To secure payment of all of Dealer’s current and
future debts to CDF, whether under this Agreement or any current or future
guaranty or other agreement, Dealer grants CDF a security interest in all
of Dealer’s inventory, equipment, fixtures, accounts, chattel paper,
instruments, deposit accounts, documents, general intangibles, and letter
of credit rights and other supporting obligations, and all judgments,
claims, insurance policies, and payments owed or made to Dealer thereon;
all whether now owned or hereafter acquired, and all attachments,
accessories, accessions, returns, repossessions, exchanges, substitutions
and replacements thereto, and all proceeds thereof (collectively
“Collateral”). All of such terms for which meanings are provided in the
Uniform Commercial Code of the applicable state, as the same may be
amended, are used herein with such meanings.
	 
	4.	 	Affirmative Warranties and Representations. Dealer warrants and
represents to CDF that: (a) Dealer has good title to all Collateral; (b)
CDF’s security interest in the Collateral financed by CDF is not now and
will not become subordinate to the security interest or claim of any
person; (c) Dealer will execute all documents CDF requests to perfect and
maintain CDF’s security interest in the Collateral, and will cause all
third parties in possession of Collateral to provide such acknowledgment
or control of CDF’s security interest as CDF may require; (d) Dealer will
deliver to CDF immediately upon each request, and CDF may retain, each
Certificate of Title or Statement of Origin issued for Collateral financed
by CDF; (e) Dealer will at all times be duly organized, existing, in good
standing, qualified and licensed to do business in each jurisdiction in
which the nature of its business or property so requires, except where a
failure would not have a material adverse effect on Dealer; (f) Dealer has
the right and is duly authorized to enter into this Agreement; (g)
Dealer’s execution of this Agreement does not, and will not, constitute a
breach of any law or agreement to which Dealer is now or hereafter becomes
bound, except where such breach would not have a material adverse effect
on Dealer; (h) there are and, to Dealer’s knowledge, will be no actions or
proceedings pending or threatened against Dealer which might result in any
material adverse change in Dealer’s financial or business condition, other
than those actions disclosed in En Pointe Technologies, Inc.’s filings
with the Securities and Exchange Commission; (i) Dealer will maintain the
Collateral in good condition, ordinary wear and tear excepted; (j) Dealer
has duly filed and will duly file all tax returns required by law, and
will pay when due all taxes, levies, assessments and governmental charges
other

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Exhibit 10.42

	 	 	than any amounts disputed in good faith; (k) Dealer will keep and maintain
all of its books and records pertaining to the Collateral at its chief
executive office designated in this Agreement or at such other location
designated in writing to CDF in subparagraph 4(m) below; (l) Dealer will
keep all Collateral at its chief executive office listed herein, and other
locations within the United States of America of which Dealer has notified
CDF in writing or has listed on any current or future Exhibit “A” attached
hereto; (m) Dealer will give CDF thirty (30) days prior written notice of
any change in Dealer’s identity, name, form of business organization,
ownership, chief executive office, Collateral locations or other business
locations; (n) Dealer will notify CDF of the commencement of material legal
proceedings against Dealer or any guarantor; (o) Dealer will comply with all
applicable laws, except where a failure to comply would not have a material
adverse effect on Dealer; and (p) Dealer has provided CDF with a copy of
Dealer’s Certificate of Incorporation, and will provide any subsequent
amendments thereto bearing indicia of filing from the appropriate
governmental authority, or such other documents verifying Dealer’s true and
correct legal name.
	 
	5.	 	Negative Covenants. Dealer will not at any time without CDF’s prior
written consent: (a) other than in the ordinary course of its business,
sell, lease, or otherwise dispose of or transfer any of its assets; (b)
rent, lease, demonstrate, consign, license, or use any Collateral financed
by CDF; (c) merge or consolidate with another entity; (d) move any
Collateral financed by CDF out of the United States of America, except for
Collateral that has been acquired by Dealer as a fixed asset and moved to
Dealer’s outsourcing location in Pakistan, not to exceed Three Hundred
Thousand Dollars ($300,000.00) in the aggregate during any twelve month
period, and will not be included in any inventory reports.
	 
	6.	 	Insurance. Dealer will immediately notify CDF of any loss, theft or
damage to any Collateral. Dealer will keep the Collateral insured for its
full insurable value under an “all risk” property insurance policy with a
company reasonably acceptable to CDF, naming CDF as a lender loss-payee
and containing standard lender’s loss payable and termination provisions.
Dealer will provide CDF with written evidence of such property insurance
coverage and lender’s loss-payee endorsement.
	 
	7.	 	Financial Statements. Dealer will deliver to CDF, in a form satisfactory
to CDF: (a) within ninety (90) days after the end of each of Dealer’s
fiscal years, a reasonably detailed balance sheet and income statement as
of the last day of such fiscal year covering Dealer’s operations for such
fiscal year; (b) within forty-five (45) days after the end of each of
Dealer’s fiscal quarters, a reasonably detailed balance sheet and income
statement as of the last day of such quarter covering Dealer’s operations
for such quarter; and (c) within ten (10) days after CDF’s request, any
other information relating to the Collateral or the financial condition of
Dealer or any guarantor. Dealer represents that all financial statements
and information which have been or may hereafter be delivered by Dealer or
any guarantor are and will be correct in all material respects and
prepared in accordance with generally accepted accounting principles
consistently applied, and there has been no material adverse change in the
financial or business condition of Dealer or any guarantor since the
submission to CDF of such financial statements, and Dealer acknowledges
CDF’s reliance thereon.
	 
	8.	 	Reviews. Dealer grants CDF an irrevocable license to enter Dealer’s
business locations during normal business hours with three (3) days notice
to Dealer (unless Dealer is in default under this Agreement or would be in
default hereunder with the passage of time, the giving of notice, or both,
in any such event no advance notice will be required hereunder) to: (a)
account for and inspect all Collateral; and (b) examine and copy Dealer’s
books and records related to the Collateral.
	 
	9.	 	Payment Terms. Dealer will immediately pay CDF the principal
indebtedness owed CDF on each item of Collateral financed by CDF on the
earliest occurrence of any of the following events: (a) when such
Collateral is lost, stolen or damaged; (b) for Collateral financed under
Pay-As-Sold (“PAS”) terms, when such Collateral is sold, transferred,
rented, leased, otherwise disposed of, or its payment term has matured;
(c) for Collateral financed under Scheduled Payment Program (“SPP”) terms
in strict accordance with the installment payment schedule; (d) in strict
accordance with any curtailment schedule for such Collateral; and (e) when
otherwise required under the terms of any financing program agreed to in
writing by the parties. The PAS, SPP and curtailment terms are set forth
in the SOT. If Dealer is required to make immediate payment to CDF of any
past due obligation discovered during any Collateral review, or at any
other time, CDF’s acceptance of such payment shall not be construed to
have waived or amended the terms of its financing program. Dealer will
send all payments to CDF’s branch office(s) responsible for Dealer’s
account. CDF may apply: (i) payments to reduce finance charges first and
then principal, regardless of Dealer’s instructions; and (ii) principal
payments to the oldest (earliest) invoice for Collateral financed by CDF,
but, in any event, all principal payments will first be applied to such
Collateral which is sold, lost, stolen, damaged, rented, leased, or
otherwise disposed of or unaccounted for. Any third party discount,
rebate, bonus or credit granted to Dealer for any Collateral will not

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Exhibit 10.42

	 	 	reduce the debt Dealer owes CDF until CDF has received payment therefor in
cash. Dealer will: (1) pay CDF even if any Collateral is defective or
fails to conform to any warranties extended by any third party; (2) not
assert against CDF any claim or defense Dealer has against any third party;
and (3) indemnify and hold CDF harmless against all claims and defenses
asserted by any buyer of the Collateral. Dealer waives all rights of offset
Dealer may have against CDF. Any payment hereunder which would otherwise be
due on a day which is not a Business Day, shall be due on the next
succeeding Business Day, with such extension of time included in any
calculation of applicable finance charges. A “Business Day” shall mean any
day other than a Saturday, Sunday or other days on which commercial banks
are authorized or required to be closed under the laws of the United States.
	 
	10.	 	Calculation of Charges. Dealer will pay finance charges to CDF on the
outstanding principal debt which Dealer owes CDF for each item of
Collateral financed by CDF at the rate(s) shown on the SOT for such
Collateral, unless Dealer objects thereto as provided in Section 2. CDF
will calculate such finance charges by multiplying the Daily Charge by the
actual number of days in the applicable billing period. Such finance
charges will accrue from the invoice date of the Collateral identified on
such SOT until CDF is paid in full in accordance with CDF’s payment
recognition policy, and CDF applies such payment to Dealer’s principal
debt as provided in this Agreement. The “Daily Charge” is the Daily Rate
multiplied by the Average Daily Balance. The “Daily Rate” is the annual
rate shown on the SOT divided by 360, or the monthly rate shown on the SOT
divided by 30. The “Average Daily Balance” equals: (i) the sum of the
outstanding principal debt owed CDF on each day of a billing period for
each item of Collateral identified on a SOT, divided by (ii) the actual
number of days in such billing period. Dealer will pay CDF $100 (or such
other amount as may be communicated pursuant to Section 11(b) below) for
each check returned unpaid for insufficient funds (an “NSF check”) (such
payment repays CDF’s estimated administrative costs; it does not waive the
default caused by the NSF check). The annual percentage rate of the
finance charges for any item of Collateral financed by CDF will be
calculated from the invoice date of such Collateral, regardless of any
period for which a third party pays a finance charge subsidy. CDF intends
to strictly conform to the usury laws governing this Agreement.
Regardless of any provision contained herein, in any SOT, or in any other
document, CDF shall never be deemed to have contracted for, charged or be
entitled to receive, collect or apply as interest, any amount in excess of
the maximum amount allowed by applicable law. If CDF ever receives any
amount which, if considered to be interest, would exceed the maximum
amount permitted by law, CDF will apply such excess amount to the
reduction of the unpaid principal balance which Dealer owes, and then will
pay any remaining excess to Dealer. In determining whether the interest
paid or payable exceeds the highest lawful rate, Dealer and CDF shall, to
the maximum extent permitted under applicable law: (A) characterize any
non-principal payment (other than payments which are expressly designated
as interest payments hereunder) as an expense or fee rather than as
interest; (B) exclude voluntary pre-payments and the effect thereof; and
(C) spread the total amount of interest throughout the entire term of this
Agreement so that the interest rate is uniform throughout such term. CDF
will recognize and credit payments made by check, ACH, federal wire, or
other means, according to its payment recognition policies from time to
time in effect, or as otherwise agreed. Information regarding CDF payment
recognition policies is available from Dealer’s CDF representative, the
CDF website, or will be communicated pursuant to Section 11(b) below.
	 
	11.	 	Billing Statement/Fees. (a) CDF will send Dealer a monthly billing
statement identifying all charges due on Dealer’s account with CDF. The
charges specified on each billing statement will be: (i) due and payable
in full immediately on receipt; and (ii) an account stated, unless CDF
receives Dealer’s written objection thereto within fifteen (15) days after
it is mailed to Dealer. If CDF does not receive, by the 25th day of any
given month, payment of all charges accrued to Dealer’s account with CDF
during the immediately preceding month, Dealer will (to the extent allowed
by law) pay CDF a late fee equal to the greater of $5 or 5% of the amount
of such finance charges (payment of such fee does not waive the default
caused by the late payment). CDF may adjust the billing statement at any
time to conform to applicable law and this Agreement.
	 
	 	 	(b) From time to time, CDF may provide written notice to Dealer of new or
changed fees, finance charges, policies, practices and other costs
(collectively, “Fees”) payable by, or applicable to, Dealer and relating to
Dealer’s account generally, or in connection with specific services, or
events, to be effective no earlier than five (5) Business Days following
receipt by Dealer of such notice as CDF shall advise. Such notice may be
delivered by mail, courier or electronically in a separate writing, or set
forth in the SOT and/or the billing statement. Dealer shall be deemed to
have accepted such Fees by either: (i) making any request for financing
after the effective date of such notice; or (ii) failing to notify CDF in
writing of any objection to an SOT, billing statement or written notice
advising of such Fee within fifteen (15) days after such notice has been
sent to Dealer. If Dealer objects to any Fee, such Fee shall not be
imposed, but CDF may charge or implement the last Fee to which Dealer has
not objected, and may elect to terminate Dealer’s financing program. Such
termination will not accelerate the maturities of advances previously made,
unless Dealer is otherwise in default of this Agreement, or unless otherwise
provided in Dealer’s agreements with CDF.

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Exhibit 10.42

	12.	 	Default. Dealer will be in default under this Agreement if: (a) Dealer
breaches any terms in this Agreement, or in any other agreement between
CDF and Dealer and such breach is not cured within five (5) Business Days
from the date of notice of breach from CDF, it being understood that no
such cure period will be available for a breach of Dealer’s financial
covenants, a breach under subsection 12(b) and any other subsentence of
this Section 12 for which no express cure period is provided; (b) Dealer
fails to pay any debt to CDF when due and payable hereunder or under any
other agreement between CDF and Dealer; (c) any guarantor of Dealer’s
debts to CDF (“Guarantor”) terminates its guaranty, or otherwise breaches
any terms contained in any guaranty or other agreement between the
Guarantor and CDF and such breach is not cured within five (5) Business
Days from notice of breach from CDF; (d) any representation, statement,
report or certificate which Dealer or any Guarantor makes or delivers to
CDF is not accurate when made; (e) Dealer abandons Collateral in excess of
Fifty Thousand Dollars ($50,000.00) in the aggregate during the terms of
this Agreement; (f) Dealer or any Guarantor is or becomes in default in
the payment of any debt in excess of $500,000.00 in the aggregate in any
twelve month period owed to any third party, after expiration of any
applicable cure period, or Dealer is or becomes in default under any loan
agreement, after expiration of any applicable cure period; (g) an
attachment, sale or seizure issues or is executed against any assets of
Dealer or of any Guarantor in excess of Fifty Thousand Dollars
($50,000.00) in the aggregate during the terms of this Agreement; (h)
[intentionally deleted] (i) Dealer or any Guarantor ceases existence as a
corporation or ceases or suspends business; (j) Dealer or any Guarantor,
as applicable, makes a general assignment for the benefit of creditors;
(k) Dealer or any Guarantor, as applicable, becomes insolvent or
voluntarily or involuntarily becomes subject to the Federal Bankruptcy
Code, any state insolvency law or any similar law, provided however, that
Dealer or any Guarantor shall have a period of sixty (60) days within
which to discharge any involuntary bankruptcy action or proceeding (it
being agreed by Dealer, however, that CDF will not be obligated to make
any additional advances during such sixty (60) day period); (l) any
receiver is appointed for any assets of Dealer or any Guarantor, as
applicable; (m) Dealer loses, or is in default of, any franchise, license
or right to deal in any Collateral which CDF finances, except where such
loss or default would not have a material adverse effect on Dealer; (n)
Dealer or any Guarantor misrepresents Dealer’s or such Guarantor’s
financial condition.
	 
	13.	 	Rights of CDF Upon Default. In the event of a default:

	(a)	 	CDF may at any time, without notice or demand to Dealer, do any
one or more of the following: declare all or any part of the debt
Dealer owes CDF immediately due and payable, together with all costs
and expenses of CDF’s collection activity, including all reasonable
attorneys’ fees; exercise any rights under applicable law; and/or
cease extending any additional credit to Dealer which shall not be
construed to limit the discretionary nature of this credit facility.
	 
	(b)	 	Dealer will segregate and keep the Collateral in trust for CDF,
and will not dispose of or use any Collateral, nor further encumber
any Collateral.
	 
	(c)	 	Upon CDF’s demand, Dealer will immediately deliver the Collateral
to CDF at a place specified by CDF, together with all related
documents; or CDF may, without notice or demand to Dealer, take
immediate possession of the Collateral together with all related
documents.
	 
	(d)	 	CDF may, without notice, apply a default finance charge to
Dealer’s outstanding principal indebtedness equal to the default rate
specified in Dealer’s financing program with CDF, if any, or if there
is none so specified, at the lesser of 3% per annum above the rate in
effect immediately prior to the default, or the highest lawful
contract rate of interest permitted under applicable law.

	 	 	All of CDF’s rights and remedies are cumulative. CDF’s failure to exercise
any of its rights or remedies hereunder will not waive any of CDF’s rights
or remedies as to any past, current or future default.
	 
	14.	 	Sale of Collateral. If CDF conducts a sale of any Collateral by
requesting bids from ten (10) or more dealers or distributors in that type
of Collateral, or pursuant to any internet auction or sale posting on a
third party auction sale site, any sale by CDF of such Collateral in bulk
or in parcels within one hundred twenty (120) days of: (a) CDF’s taking
possession and control of such Collateral; or (b) when CDF is otherwise
authorized to sell such Collateral; whichever occurs last, to the bidder
submitting the highest cash bid therefor, is a commercially reasonable
sale of such Collateral under the Uniform Commercial Code. Dealer agrees
that the purchase of any Collateral by a Vendor, as provided in any
agreement between CDF and the Vendor, is a commercially reasonable
disposition and private sale of such Collateral under the Uniform
Commercial Code, and no request for bids shall be required. Dealer
further agrees that seven (7) or more days prior written notice will be
commercially reasonable notice of any public or private sale (including
any sale to a Vendor). Dealer irrevocably waives any requirement that CDF
retain possession and not dispose of any Collateral until after an
arbitration hearing, arbitration award, confirmation, trial or final
judgment. If CDF disposes of any Collateral other than as herein
contemplated, the laws of the state governing this Agreement will
determine the commercial

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Exhibit 10.42

	 	 	reasonableness of such disposition. Dealer and CDF irrevocably waive all
rights to claim punitive and/or exemplary damages.
	 
	15.	 	Power of Attorney. Dealer grants CDF an irrevocable power of attorney
to: execute or endorse on Dealer’s behalf any checks, financing
statements, instruments, and Certificates of Title and Statements of
Origin pertaining to the Collateral, to the extent consistent with the
terms of this Agreement; supply any omitted information and correct errors
in any documents between CDF and Dealer; initiate and resolve any
insurance claim pertaining to the Collateral (such right to settle an
insurance claim shall only be exercisable if Dealer is in default) and do
anything to protect and preserve the Collateral and CDF’s rights and
interest therein.
	 
	16.	 	Information. CDF may provide to any third party any standard credit
information on Dealer that CDF may from time to time possess in response
to a request for a credit rating, and any other information on Dealer that
CDF may from time to time possess if required by law. CDF may obtain from
any Vendor any credit, financial or other information regarding Dealer
that such Vendor may from time to time possess.
	 
	17.	 	Termination. Either party may terminate this Agreement at any time by
written notice received by the other party. If CDF terminates this
Agreement, Dealer agrees that if Dealer is not in default hereunder,
thirty (30) days prior notice of termination is reasonable and sufficient
(although this provision shall not be construed to mean that shorter
periods may not, in particular circumstances, also be reasonable and
sufficient). Dealer will be obligated to CDF for CDF’s advances or
commitments made before the effective termination date of this Agreement.
CDF will retain all of its rights, interests and remedies hereunder until
Dealer has paid CDF in full. All waivers, and the agreement to arbitrate,
set forth in this Agreement will survive any termination of this
Agreement.
	 
	18.	 	Binding Effect. Dealer cannot assign its interest in this Agreement
without CDF’s prior written consent. CDF may assign or participate CDF’s
interest, in whole or in part, without Dealer’s consent. This Agreement
will protect and bind CDF’s and Dealer’s respective heirs,
representatives, successors and assigns.
	 
	19.	 	Notices. Except as otherwise stated herein, all notices, arbitration
claims, responses, requests and documents will be sufficiently given or
served if mailed or delivered: (a) to Dealer at Dealer’s chief executive
office specified above; and (b) to CDF at 655 Maryville Centre Drive, St.
Louis, Missouri 63141-5832, Attention: General Counsel, or such other
address as the parties may hereafter specify in writing.
	 
	20.	 	NO ORAL AGREEMENTS. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES
TO EXTEND OR RENEW SUCH DEBTS ARE NOT ENFORCEABLE. TO PROTECT DEALER AND
CDF FROM MISUNDERSTANDING OR DISAPPOINTMENT, ALL AGREEMENTS COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, EXCEPT AS SPECIFICALLY
PROVIDED HEREIN OR AS THE PARTIES MAY LATER AGREE IN WRITING TO MODIFY IT.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
	 
	21.	 	Severability. If any provision of this Agreement or its application is
invalid or unenforceable, the remainder of this Agreement will not be
impaired or affected and will remain binding and enforceable.
	 
	22.	 	Supplement. If Dealer and CDF have previously executed other agreements
pertaining to all or any part of the Collateral, this Agreement will
supplement such agreement, and this Agreement will neither be deemed a
novation nor a termination of such agreement, nor will execution of this
Agreement be deemed a satisfaction of any obligation secured by such
agreement.
	 
	23.	 	Receipt of Agreement. Dealer acknowledges that it has received a true
and complete copy of this Agreement. Dealer has read and understood this
Agreement. Notwithstanding anything herein to the contrary, CDF may rely
on any facsimile copy, electronic data transmission, or electronic data
storage of: this Agreement, any SOT, billing statement, financing
statement, authorization to pre-file financing statements, invoice from a
Vendor, financial statements or other reports, which will be deemed an
original, and the best evidence thereof for all purposes.
	 
	24.	 	Miscellaneous. Time is of the essence regarding Dealer’s performance of
its obligations to CDF. Dealer’s liability to CDF is direct and
unconditional and will not be affected by the release or nonperfection of
any security interest granted hereunder. CDF may refrain from or postpone
enforcement of this Agreement or any other agreements between CDF and
Dealer without prejudice, and the failure to strictly enforce these
agreements will not create a course of dealing which waives, amends or
modifies such agreements. The express terms of this

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Exhibit 10.42

	 	 	Agreement will not be modified by any course of dealing, usage of trade, or
custom of trade which may deviate from the terms hereof. If Dealer fails to
pay any taxes, fees or other obligations which may impair CDF’s interest in
the Collateral, or fails to keep the Collateral insured, CDF may, but shall
not be required to, pay such amounts. Such paid amounts will be: (a) an
additional debt which Dealer owes to CDF, which shall be subject to finance
charges as provided herein; and (b) due and payable immediately in full.
Dealer will pay all of CDF’s reasonable attorneys’ fees and expenses which
CDF incurs in enforcing CDF’s rights hereunder. The Section titles used
herein are for convenience only, and do not define or limit the contents of
any Section.
	 
	25.	 	BINDING ARBITRATION.

	25.1	 	Arbitrable Claims. Except as otherwise specified below, all actions,
disputes, claims and controversies under common law, statutory law or in
equity of any type or nature whatsoever, whether arising before or after
the date of this Agreement, and whether directly or indirectly relating
to: (a) this Agreement and/or any amendments and addenda hereto, or the
breach, invalidity or termination hereof; (b) any previous or subsequent
agreement between CDF and Dealer; (c) any act committed by CDF or by any
parent company, subsidiary or affiliated company of CDF (the “CDF
Companies”), or by any employee, agent, officer or director of a CDF
Company whether or not arising within the scope and course of employment
or other contractual representation of the CDF Companies provided that
such act arises under a relationship, transaction or dealing between CDF
and Dealer; and/or (d) any other relationship, transaction or dealing
between CDF and Dealer (collectively the “Disputes”), will be subject to
and resolved by binding arbitration. Notwithstanding the foregoing, the
parties agree that either party may pursue claims against the other that
do not exceed Fifteen Thousand Dollars ($15,000) in the aggregate in a
court of competent jurisdiction. Service of arbitration claims shall be
acceptable if made by U.S. mail or overnight delivery to the address for
the party described herein.
	 
	25.2	 	Administrative Body. All arbitration hereunder will be conducted in
accordance with the Commercial Arbitration Rules of either: (a) The
American Arbitration Association (“AAA”); or (b) United States
Arbitration & Mediation (“USA&M”). The party first filing an
arbitration claim shall designate which arbitration forum and rules are
to be applied for all disputes between the parties. The arbitration
rules are found at www.adr.org for AAA, and at www.usam-midwest.com for
USA&M. AAA claims may be filed in any AAA office. Claims filed with
USA&M shall be filed in their Midwest office located at 720 Olive
Street, Suite 2020, St. Louis, Missouri 63101. All arbitrator(s)
selected will be attorneys with at least five (5) years secured
transactions experience. A panel of three arbitrators shall hear all
claims exceeding One Million Dollars ($1,000,000), exclusive of
interest, costs and attorneys’ fees. The arbitrator(s) will decide if
any inconsistency exists between the rules of the applicable arbitral
forum and the arbitration provisions contained herein. If such
inconsistency exists, the arbitration provisions contained herein will
control and supersede such rules. The arbitrator shall follow the terms
of this agreement and the applicable law, including without limitation,
the attorney-client privilege and the attorney workproduct doctrine.
	 
	25.3	 	Hearings. Each party hereby consents to a documentary hearing for
all arbitration claims, by submitting the dispute to the arbitrator(s)
by written briefs and affidavits, along with relevant documents.
However, arbitration claims will be submitted by way of an oral hearing,
if any party requests an oral hearing within forty (40) days after
service of the claim, and that party remits the appropriate deposit for
AAA’s fees and arbitrator compensation within ten (10) days of making
the request. The site of all oral arbitration hearings will be in the
Division of the Federal Judicial District in which AAA or USA&M
maintains a regional office that is closest to Dealer.
	 
	25.4	 	Discovery. Discovery permitted in any arbitration proceeding
commenced hereunder is limited as follows. No later than forty (40)
days after the filing and service of a claim for arbitration, the
parties in contested cases will exchange detailed statements setting
forth the facts supporting the claim(s) and all defenses to be raised
during the arbitration, and a list of all exhibits and witnesses. No
later than twenty-one (21) days prior to the oral arbitration hearing,
the parties will exchange a final list of all exhibits and all
witnesses, including any designation of any expert witness(es) together
with a summary of their testimony; a copy of all documents and a
detailed description of any property to be introduced at the hearing.
Under no circumstances will the use of interrogatories, requests for
admission, requests for the production of documents or the taking of
depositions be permitted. However, in the event of the designation of
any expert witness(es), the following will occur: (a) all information

and documents relied upon by the expert witness(es) will be delivered to
the opposing party; (b) the opposing party will be permitted to depose
the expert witness(es); (c) the opposing party will be permitted to
designate rebuttal expert witness(es); and (d) the arbitration hearing
will be continued to the earliest possible date that enables the
foregoing limited discovery to be accomplished.
	 
	25.5	 	Exemplary or Punitive Damages. The arbitrator(s) will not have the
authority to award exemplary or punitive damages.

6

 

Exhibit 10.42

	25.6	 	Confidentiality of Awards. All arbitration proceedings, including
testimony or evidence at hearings, will be kept confidential, although
any award or order rendered by the arbitrator(s) pursuant to the terms
of this Agreement may be confirmed as a judgment or order in any state
or federal court of competent jurisdiction within the federal judicial
district which includes the residence of the party against whom such
award or order was entered. This Agreement concerns transactions
involving commerce among the several states. The Federal Arbitration
Act, Title 9 U.S.C. Sections 1 et seq., as amended (“FAA”) will govern
all arbitration(s) and confirmation proceedings hereunder.
	 
	25.7	 	Prejudgment and Provisional Remedies. Nothing herein will be
construed to prevent CDF’s or Dealer’s use of bankruptcy, receivership,
injunction, repossession, replevin, claim and delivery, sequestration,
seizure, attachment, foreclosure, and/or any other prejudgment or
provisional action or remedy relating to any Collateral for any current
or future debt owed by either party to the other. Any such action or
remedy will not waive CDF’s or Dealer’s right to compel arbitration of
any Dispute.
	 
	25.8	 	Attorneys’ Fees. If either Dealer or CDF brings any other action for
judicial relief with respect to any Dispute (other than those set forth
in Sections 25.1 or 25.7), the party bringing such action will be liable
for and immediately pay all of the other party’s costs and expenses
(including attorneys’ fees) incurred to stay or dismiss such action and
remove or refer such Dispute to arbitration. If either Dealer or CDF
brings or appeals an action to vacate or modify an arbitration award and
such party does not prevail, such party will pay all costs and expenses,
including attorneys’ fees, incurred by the other party in defending such
action. Additionally, if either Dealer or CDF sues the other party or
institutes any arbitration claim or counterclaim against the other
party, the losing party will pay all costs and expenses (including
attorneys’ fees) incurred by the prevailing party in the course of
bringing or defending such action or proceeding.
	 
	25.9	 	Limitations. Any arbitration proceeding must be instituted: (a)
with respect to any Dispute for the collection of any debt owed by
either party to the other, within two (2) years after the date the last
payment by or on behalf of the payor was received and applied in respect
of such debt by the payee; and (b) with respect to any other Dispute,
within two (2) years after the date the incident giving rise thereto
occurred, whether or not any damage was sustained or capable of
ascertainment or either party knew of such incident. Failure to
institute an arbitration proceeding within such period will constitute
an absolute bar and waiver to the institution of any proceeding, whether
arbitration or a court proceeding, with respect to such Dispute.
	 
	25.10	 	Survival After Termination. The agreement to arbitrate will survive
the termination of this Agreement.

	26.	 	INVALIDITY/UNENFORCEABILITY OF BINDING ARBITRATION. IF THIS AGREEMENT IS
FOUND TO BE NOT SUBJECT TO ARBITRATION, ANY LEGAL PROCEEDING WITH RESPECT
TO ANY DISPUTE WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE WITHOUT A JURY. DEALER AND CDF WAIVE ANY RIGHT TO A JURY TRIAL IN
ANY SUCH PROCEEDING.
	 
	27.	 	Governing Law. This Agreement and all other agreements between Dealer
and CDF have been substantially negotiated, and will be substantially
performed, in the state of Missouri. Accordingly, all Disputes will be
governed by, and construed in accordance with, the laws of such state,
except to the extent inconsistent with the provisions of the FAA which
shall govern all arbitration proceedings hereunder.

THIS CONTRACT CONTAINS BINDING ARBITRATION, JURY WAIVER AND PUNITIVE DAMAGE
WAIVER PROVISIONS.

This Agreement is dated this 25th day of June, 2004.

	 	 	 	 	 
	 	 	En Pointe Technologies Sales, Inc.
	 
	 	 	 	 
	ATTEST:
	 	 	 	 
	

	 	By:
	 	/s/ Attiazaz “Bob” Din
	

	 	 	 	

	/s/ Robert A. Mercer	 	Attiazaz “Bob” Din
	

	 	Chief Executive Officer
	Robert A. Mercer, Secretary	 	 	 	 
	 
	 	 	 	 
	 	 	GE COMMERCIAL DISTRIBUTION
	 	 	FINANCE CORPORATION
	 
	 	 	 	 
	

	 	By:
	 	/s/ David J. Lynch
	

	 	 	 	

	 	 	David J. Lynch

7exv10w43

 

Exhibit 10.43

 ADDENDUM TO BUSINESS FINANCING AGREEMENT AND

AGREEMENT FOR WHOLESALE FINANCING

     This Addendum is made to (i) that certain Business Financing Agreement
executed on the 25 day of June, 2004, between En Pointe Technologies Sales,
Inc. (“Dealer”) and GE Commercial Distribution Finance Corporation (“CDF”), as
amended (“BFA”) and (ii) that certain Agreement for Wholesale Financing between
Dealer and CDF dated June 25, 2004 as amended (“AWF”).

     FOR VALUE RECEIVED, CDF and Dealer agree as follows:

     1. Section 2.1 of the BFA is hereby amended to read as follows
(capitalized terms shall have the same meaning as defined in the BFA unless
otherwise indicated):

“2.1 Accounts Receivable Facility. Subject to the terms of this
Agreement, CDF agrees to provide to Dealer an Accounts Receivable
Facility equal to: (i) the total initial one time advance made by
CDF to IBM Credit LLC and Foothill Capital Corporation on Dealer’s
behalf, said advance to liquidate through scheduled payments to CDF
as per existing IBM Credit LLC payment planner subject to the terms
of Section 3.2
 (defined as “Initial Advance”); and (ii) up to a
maximum of Two Million Five Hundred Thousand Dollars ($2,500,000.00)
in additional cash advances; provided however, that at no time will
the principal amount outstanding under the Accounts Receivable
Facility and Dealer’s inventory floorplan credit facility with CDF
exceed, in the aggregate,Thirty Million Dollars ($30,000,000.00).
CDF’s decision to advance funds is discretionary, and will not be
binding until the funds are actually advanced.

     In addition, subject to the terms of the AWF, CDF agrees to provide to
Dealer an inventory floorplan credit facility of Thirty Million Dollars
($30,000,000.00); provided, however, that at no time will the principal
amount outstanding under Dealer’s inventory floorplan credit facility with
CDF and Dealer’s Accounts Receivable Facility exceed, in the aggregate Thirty
Million Dollars ($30,000,000.00). CDF’s decision to advance funds will not
be binding until the funds are actually advanced.”

     2. Section 3.2 of the BFA is hereby amended to read as follows, and, to
the extent applicable, the following provision shall also amend the AWF
(capitalized terms shall have the same meaning as defined in the BFA unless
otherwise indicated):

“3.2 Available Credit; Paydown. On receipt of each Schedule, CDF
will credit Dealer with such amount as CDF may deem advisable, up to
the remainder of seventy percent (70%) of the net amount of eligible
Accounts listed in such Schedule, minus the amount of Dealer’s SPP
Deficit (as defined below) under Dealer’s Agreement for Wholesale
Financing (the ‘AWF’) with CDF, as in effect from time to time, but
in no event will CDF credit Dealer with more than Dealer’s maximum
Accounts Receivable Facility from time to time established by CDF
(the ‘Available Credit’). Upon completion of CDF field exam and
receipt of results satisfactory to CDF, the 70% rate shall be
increased to 85%.

Dealer’s ‘SPP Deficit’ shall mean the amount, if any, by which
Dealer’s total current outstanding indebtedness to CDF under the AWF
as of the date of the Inventory Report (as defined below) exceeds
the Inventory Value (as defined below) as determined by, and as of
the date of, the Inventory Report. Such SPP Deficit, if any, will
remain in effect for purposes of this Agreement until the
preparation and delivery
by Dealer to CDF of a new Inventory Report. Dealer will forward to
CDF by the 10th

 

 

Exhibit 10.43

day of every month an Inventory Report dated as of
the last day of the prior month which specifies the total aggregate
wholesale invoice price of all of Dealer’s inventory financed by CDF
under the AWF that is unsold and in Dealer’s possession and control
as of the date of the Inventory Report.

The term ‘Inventory Value’ is defined herein to mean zero percent
(0%) of the total aggregate wholesale invoice price of all of
Dealer’s inventory financed by CDF under the AWF that is unsold and
in Dealer’s possession and control as of the date of the Inventory
Report and to the extent that CDF has a first priority, fully
perfected security interest therein. Upon completion of CDF field
exam and receipt of results satisfactory to CDF, the 0% Inventory
Value rate shall be increased to 90%.

If, for any reason, Dealer’s outstanding loans under Dealer’s
Accounts Receivable Facility shall at any time exceed Dealer’s
Available Credit, Dealer will immediately repay to CDF the amount of
such excess.

Furthermore, as an amendment to the AWF, in the event Dealer’s SPP
Deficit exceeds at any time (a) seventy percent (70%) of the net
amount of eligible Accounts, minus (b) Dealer’s outstanding loans
under Dealer’s Accounts Receivable Facility, Dealer will immediately
pay to CDF, as a reduction of Dealer’s total current outstanding
indebtedness to CDF under the AWF, such excess. Upon completion of
CDF field exam and receipt of results satisfactory to CDF, the 70%
rate shall be increased to 85%.

No advances or loans need be made by CDF if Dealer is in Default.”

     3. The following paragraph is incorporated into the BFA as if fully and
originally set forth therein:

“Facility Fee. Dealer agrees to pay CDFan annual facility fee
in connection with the Accounts Receivable Facility, payable in
advance, on the execution of this Agreement, and on each
anniversary date thereof through the term of this Agreement,
each in an amount equal to Twenty Five Thousand Dollars
($25,000.00). Once received by CDF an annual facility fee shall
not be refundable by CDF for any reason; provided, however, that
in the event CDF terminates the Agreement on other than the
anniversary date and Dealer is not then in Default then CDF
shall refund to Dealer a portion of the facility fee equal to
the number of whole months remaining in the current annual term
(or renewal term) of this Agreement multiplied by an amount
equal to one twelfth (1/12th) of the facility fee paid by Dealer
for that term.”

     4. The following paragraph is incorporated into the AWF and BFA as if
fully and originally set forth therein:

“En Pointe Technologies, Inc., Guarantor of Dealer’s obligations to
CDF under a Collateralized Guaranty dated June 25, 2004
(“Guarantor”), will as of each quarter end maintain:

	(a)	 	a Tangible Net Worth and Subordinated Debt in the
combined amount of not less than Fourteen Million Dollars
($14,000,000.00);

 

 

Exhibit 10.43

	(b)	 	a ratio of Debt minus Subordinated Debt to Tangible Net
Worth and Subordinated Debt of not more than three and one-half
to one (3.5:1.0);
	 
	(c)	 	a ratio of Current Tangible Assets to current liabilities
of not less than one and twenty one-hundredths to one (1.20:1);
and
	 
	(d)	 	beginning with the fiscal quarter ending June 30, 2004, a
ratio of EBITDA for the twelve month period ending on the last
day of each such fiscal quarter, to interest expense for the
twelve month period ending on the last day of such fiscal quarter
of not less than one and twenty-five one hundredths to one
(1.25:1).

For purposes of this paragraph: (i) ‘Tangible Net Worth’ means the
book value of Dealer’s assets less liabilities, excluding from such
assets all Intangibles; (ii) ‘Intangibles’ means and includes
general intangibles; software (purchased or developed in-house);
accounts receivable and advances due from officers, directors,
employees, stockholders, members, owners and affiliates; leasehold
improvements net of depreciation; licenses; good will; prepaid
expenses; escrow deposits; covenants not to compete; the excess of
cost over book value of acquired assets; franchise fees;
organizational costs; finance reserves held for recourse
obligations; capitalized research and development costs; the
capitalized cost of patents, trademarks, service marks and
copyrights net of amortization; and such other similar items as CDF
may from time to time determine in CDF’s sole discretion; (iii)
‘Debt’ means all of Dealer’s liabilities and indebtedness for
borrowed money of any kind and nature whatsoever, whether direct or
indirect, absolute or contingent, and including obligations under
capitalized leases, guaranties, or with respect to which Dealer has
pledged assets to secure performance, whether or not direct
recourse liability has been assumed by Dealer; (iv) ‘Subordinated
Debt’ means all of Dealer’s Debt which is subordinated to the
payment of Dealer’s liabilities to CDF by an agreement in form and
substance satisfactory to CDF; (v) ‘Current Tangible Assets’ means
Dealer’s current assets less, to the extent otherwise included
therein, all Intangibles and (vi) ‘EBITDA’ means, for any period of
calculation, the net income of Dealer before provision for income
taxes, interest expense (including without limitation, implicit
interest expense on capitalized leases), depreciation and
amortization, excluding therefrom (to the extent included): (A)
non-operating gains (including, without limitation, extraordinary
or nonrecurring gains and losses, gains and losses from
discontinuance of operations and gains and losses arising from the
sale of assets other than inventory) during the applicable period;
(B) net earnings or losses of any business entity in which Dealer
has an ownership interest (other than a wholly owned subsidiary)
unless such net earnings shall have actually been received by
Dealer in the form of cash distributions; (C) any portion of the
net earnings of any subsidiary which for any reason is unavailable
for payment of dividends to Dealer; (D) the earnings of any entity
to which any assets of Dealer shall have been sold, transferred or
disposed of, or into which Dealer shall have merged, or been a
party to any consolidation or other form of reorganization, prior
to the date of such transaction; (E) any gain or loss arising from
the acquisition or disposition of any securities of Dealer; and (F)
non-operating losses arising from the sale of capital assets during
such period. All terms used herein to the extent not defined shall
be used in accordance with generally accepted accounting principles
consistently applied. All amounts, if applicable, shall be
calculated on a consolidated basis.”

 

 

Exhibit 10.43

     5. The following paragraph is incorporated into the BFA as if fully and
originally set forth therein:

 “Upon completion of CDF field exam and receipt of results
satisfactory to CDF, the thirty (30) day termination period set
forth in Section 7 of the BFA and Section 17 of the AWF shall be
increased to sixty (60) days.”

Dealer waives notice of CDF’s acceptance of this Addendum.

     All other terms and provision of the BFA and AWF, to the extent consistent
with the foregoing, are hereby ratified and will remain unchanged and in full
force and effect.

     IN WITNESS WHEREOF, Dealer and CDF have both read this Addendum to the BFA
and AWF , understand all the terms and provisions hereof, and agree to be bound
thereby and subject thereto as of this 25 day of June, 2004.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	En Pointe Technologies Sales, Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	By:	 	/s/ Attiazaz “Bob” Din
	 	 	 	 	 	 	
	 	 
	

	 	 	 	 	 	 	 	Attiazaz “Bob” Din	 	 
	/s/ Robert A. Mercer	 	 	 	 	 	Chief Executive Officer	 	 
	
	 	 	 	 	 	 	 	 
	Robert A. Mercer, Secretary	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	GE COMMERCIAL DISTRIBUTION FINANCE	 	 
	 	 	 	 	CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	/s/ David J. Lynch	 	 
	 	 	 	 	 	 	
	 	 
	

	 	 	 	 	 	 	 	David J. Lynch	 	 
	

	 	 	 	 	 	 	 	Vice President of Operations	 	 

ACKNOWLEDGEMENT BY GUARANTOR:

En Pointe Technologies, Inc.

By /s/ Attiazaz
“Bob” Din

        Attiazaz
“Bob” Din

        President

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