CREDIT AGREEMENT

Exhibit 10.25

CREDIT AGREEMENT 

This Credit Agreement is effective as of January 1, 2014 (the “Effective Date”) by and among CASTLE PINES CAPITAL LLC (“CPC”), a Delaware limited liability company having its chief executive office located at 116 Inverness Drive East, Suite 375, Englewood, Colorado  80112, and PC CONNECTION, INC. and PC CONNECTION SALES CORPORATION,  each a Delaware corporation having their chief executive office located at 730 Milford Road, Merrimack, NH  03054, MOREDIRECT, INC., a Florida corporation having its chief executive office located at 1001 Yamato Road, Ste. 200, Boca Raton, FL  33431,  and GOVCONNECTION, INC., a Maryland corporation having its chief executive office located at 7503 Standish Place, Rockville, MD (each a “Reseller” and collectively, “Resellers”).  Since there is more Person who is a Reseller hereunder, the words “a Reseller”,  ”any Reseller”, “each Reseller” and “every Reseller” refer to such Person both separately and collectively, as though such Person were actually listed, and the obligations and liabilities of all such Persons hereunder are joint and several in all respects.  Unless otherwise defined within this Credit Agreement, capitalized terms have the meaning set forth in Section 23, below.  

a.Financed Inventory - General.    Upon the terms and conditions set forth herein, CPC may finance:

Resellers’ purchases of Eligible Inventory from Vendors (“Financed Inventory”), for which payment shall be due on the Payment Due Date.

If CPC agrees to finance an item of Financed Inventory, CPC will send Resellers a TS, identifying such Financed Inventory and if not otherwise provided herein, the interest rate applicable to such Financed Inventory.

CPC may withdraw any approval to finance Inventory at any time prior to Shipment.

b.Discretionary Nature of the Inventory Line of Credit.  This Agreement contains the terms and conditions upon which CPC presently expects to make Advances to a  Reseller in the future.  Each Advance shall be in CPC’s sole discretion, and CPC does not need to show that an adverse change has occurred in the business operations or financial condition of any Reseller, or show that any conditions of this Agreement have not been met, in order to refuse to make an Advance.

c.Overlines.  Reseller may request and CPC may be willing in its sole and absolute discretion to make Advances to Resellers in excess of the Inventory Line of Credit (each an “Overline” and collectively, the “Overlines”).  The aggregate amount of permitted Overlines and the duration of time such Overlines may be available to Resellers shall be communicated to such Reseller via a separate written communication from CPC, the terms of which shall be incorporated herein by reference.

business as a foreign organization, and is in good standing under the laws of, all jurisdictions in which it is required by applicable law to maintain such qualification and good standing except to the extent that the failure to qualify or maintain good standing could not reasonably be expected to have a Material Adverse Effect, (iii) does not conduct business under any trade styles or trade name(s) except as listed in Exhibit A attached hereto, (iv) has all the necessary authority to enter into and perform this Agreement, and such agreement and performance will not violate Reseller’s Organizational Documents or any law, regulation or agreement binding upon it;

interests, (iv) Liens arising from judgments, decrees or attachments arising from circumstances that do not constitute a Default hereunder, for which Reseller maintains adequate reserves and are inferior to any lien of CPC, (v) Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of Reseller in accordance with GAAP, (vi) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being reasonably contested and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of Reseller, (vii) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any lien imposed by ERISA, (viii) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, security bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business, and (ix) other Liens not described above arising in the ordinary course of business and not having or not reasonably likely to have a Material Adverse Effect on Reseller and which are inferior to any lien of CPC (clauses (i) through (ix) above, collectively, “Permitted Liens”).

is superior or pari passu with the security interest granted to CPC under this Agreement; (9) grant a security interest to any third party in any Accounts, other than Permitted Liens; or (10) store Financed Inventory with any third party, except in the ordinary course of business consistent with Reseller’s past practices.

and properly given if sent to a  Reseller at least 10 days before such disposition.  All of CPC’s rights and remedies shall be cumulative.  At CPC’s request, or without request in the event of an Automatic Default, Resellers shall pay all Vendor Credits to CPC as soon as the same are received for application to Indebtedness.  Resellers authorize CPC to collect Vendor Credits directly from Vendors and, upon request of CPC, shall instruct Vendors to pay CPC directly.  Additionally, in the event of an Automatic Default, the obligations of CPC, if any, shall automatically terminate, all Indebtedness shall automatically become immediately due and payable and Resellers shall automatically be obligated to repay all of such Indebtedness in full, without presentment, demand, protect or notice or other requirements of any kind, all of which are expressly waived by Resellers.  Resellers irrevocably waive any requirement that CPC retain possession and not dispose of any Collateral until after an arbitration hearing, arbitration award, confirmation, trial or final judgment.  CPC’s election to extend or not extend credit to a  Reseller is solely at CPC’s discretion and does not depend on the absence or existence of a Default.

former or current creditors or other persons (including, without limitation, TRW’s or other credit reports, tax lien, litigation, Lexis/Nexis®, criminal, motor vehicle, license or other public record searches, employment history, verification of educational or professional credentials, interviews with third person and requests for other information with respect to any Reseller and any equity holders of a  Reseller as deemed necessary or appropriate by CPC or such agent or contractor in connection with such credit approval process.  All background investigations described herein will be performed subject to the Wells Fargo Privacy Policy of Wells Fargo).  CPC may provide to third parties (including, without limitation, any Vendors to or suppliers or customers of Reseller, any financial, credit or other information regarding Reseller that CPC may at any time possess, whether such information was supplied by Reseller to CPC or otherwise obtained by CPC. Further, Reseller irrevocably authorizes and instructs any third parties (including, without limitation, any Vendors to or suppliers or customers of Reseller) to provide to CPC any credit, financial or other information regarding Reseller that such third parties may at any time possess, whether such information was supplied by Reseller to such third parties or otherwise obtained by such third parties. 

Account has the meaning set forth in the UCC.

Advance means the advance of an item of Financed Inventory.

Authorized Employee has the meaning set forth in Section 29.

Automatic Default has the meaning set forth in Section 11.

Business Day means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close pursuant to the rules and regulations of the Federal Reserve System.

Collateral means (a) Inventory of any Reseller, whether now owned or hereafter acquired by any Reseller parts, accessories, accessions, exchanges, substitutions, replacements, reclaimed units, returns and repossessions thereof, and all additions and attachments thereto, and all documents of title arising therefrom; (b) price protection payments, Vendor Credits, discounts, incentive payments, rebates, and refunds which at any time are due to any Reseller with respect to or in connection with any Inventory; and (c) insurance proceeds payable by reason of loss or damage to any of the foregoing.

CPC has the meaning set forth in the introductory paragraph.

CPC Account means that certain bank account designated by CPC, information for which has been separately provided to Resellers.

Default has the meaning set forth in Section 11.

Default Rate has the meaning set forth in Section 9.

Documents means, collectively, this Agreement and any amendments hereto, EDI transmissions, each TS, and any other instruments or documents currently or hereafter required or contemplated hereunder.

Due Date has the meaning set forth in Section 8.

EDI has the meaning set forth in Section 8.

Eligible Inventory means only Inventory which satisfies the following requirements: 

(a)Resellers have good, valid, and marketable title thereto, free and clear of any (i) title defect, (ii) any liens, (iii) bill of lading or other document of title, (iv) third party trademark, licensing or other proprietary rights (unless CPC is satisfied that such Inventory can be freely sold by CPC on and after the occurrence of a Default despite such third party rights), or (v) any interests of others; provided, that, the Inventory is subject to the security interest in favor of CPC or security interests that are subordinated to the security interest of CPC.

(b)Resellers have actual and exclusive possession thereof (either directly or through a bailee or agent of a  Reseller) at one of the locations in the continental United States set forth on Exhibit A to this Agreement (or in-transit from one such location to another such location).

(c)It is financed by CPC and such financing is noted on the applicable invoice for the Inventory.

(d)It is factory sealed, unused and has not been modified.

(e)It does not consist of goods that (i) are obsolete or slow moving, restrictive or custom items, work-in-process, raw materials; (ii) constitute spare parts, packaging and shipping materials, supplies used or consumed in Resellers’ business, bill and hold goods, defective goods, “seconds,” or Inventory acquired on consignment, or (iii) have been returned or rejected by Resellers’ customers.

(f)The Inventory is otherwise acceptable to CPC, in its sole discretion.

In determining the dollar amount to be so included in Eligible Inventory, Inventory shall be valued at the lower of cost or market on a basis consistent with Resellers’ historical accounting practices.

ERISA means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time.  References to sections of ERISA shall be construed to also refer to any successor sections.

Financed Inventory has the meaning set forth in Section 2(a).

GAAP means, at any time, generally accepted accounting principles and practices as promulgated by the American Institute of Certified Public Accountants, applied on a basis consistent with past practices.

Indebtedness means the full principal amount of all invoices with respect to Financed Inventory related to each Advance, all debts, principal, interest (including any interest that accrues after the commencement of any insolvency proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such insolvency proceeding), premiums, liabilities, obligations (including indemnification obligations), fees, guaranties, and all covenants and duties of any other kind and description owing by a  Reseller arising out of, under, pursuant to, in connection with, or evidenced by this Agreement or any of the other Documents and irrespective of whether for the payment of money, whether direct or indirect absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all other expenses or other amounts the Resellers are required to pay or reimburse by the documents or by law or otherwise in the Documents.  Without limiting the generality of the foregoing, the Indebtedness of Resellers under the Documents includes the obligation to pay (i) the principal of the Advances, (ii) interest accrued on the Financed Inventory (if any), (iii) fees payable under this Agreement or any of the other Documents and (iv) indemnities and other amounts payable by the Resellers under any Documents.  Any reference in this Agreement or in the Documents to Indebtedness or obligations shall include all or any portion thereof and any extensions, modifications, renewals or alterations thereof, both prior and subsequent to any insolvency proceeding.

Indemnified Claims means any and all claims, demands, actions, causes of action, judgments,

liabilities, damages and consequential damages, penalties, fines, costs, fees, expenses and disbursements (including, without limitation, fees and expenses of attorneys and other professional consultants and experts in connection with any investigation or defense) of every kind, known or unknown, existing or hereafter arising, foreseeable or unforeseeable, which may be imposed upon, threatened or asserted against or incurred or paid by any Indemnified Person at any time and from time to time, because of, resulting from, in connection with or arising out of any transaction, act, omission, event or circumstance in any way connected with the Collateral, the Documents (including but not limited to (i) enforcement of the rights thereunder by any Indemnified Person or the defense of the actions of any Indemnified Person thereunder and (ii) Resellers access to or use of the Portal), excluding with respect to any Indemnified Persons, any of the foregoing directly caused by such Indemnified Person's gross negligence or willful misconduct.

Indemnified Persons means CPC, Wells Fargo, and each of their respective successors and assigns and their respective officers, directors, shareholders, members, managers, employees, attorneys, representatives and affiliates.

Inventory has the meaning set forth in the UCC.

Inventory Line of Credit has the meaning set forth in Section 1.

Liens has the meaning set forth in Section 5(a).

Loss Date has the meaning set forth in Section 7.

Material Adverse Effect means (a) a material adverse effect on the properties, assets, liabilities, business, operations, prospects, income or condition (financial or otherwise) of any Reseller, (b) material impairment of the ability of a  Reseller to perform any of its obligations under this Agreement or any other Document or (c) material impairment of the enforceability of the rights of, or benefits available to CPC under this Agreement or any other Document.

Organizational Documents means, relative to any entity, its certificate and articles of incorporation or organization and its by-laws, operating or partnership agreements, as applicable.

Overline has the meaning set forth in Section 2(i).

Patriot Act means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L. 107-56, as amended.

Payment Due Date means that date identified as the “Payment Due Date” on the TS.

Permitted Liens has the meaning set forth in Section 5(a).  

Permitted Locations means, collectively, the chief executive office of any Reseller together with (a) such locations identified in Exhibit A, attached hereto, and (b) such additional locations in the United States  as are identified by Resellers to CPC by at least 30 days prior written notice of its intent to keep Collateral at such additional location.

Person means any individual, corporation, joint venture, partnership, trust, limited liability company, unincorporated organization or governmental entity or agency.

Portal has the meaning set forth in Section 29.

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

Repurchase Agreement has the meaning set forth in Section 12.

Shipment  will be deemed to have occurred upon shipment by the Vendor.

Subsidiary means, with respect to any person at any date, any corporation, limited liability

company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power is or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held by the parent or one or more subsidiaries of the parent.

TS means “Transaction Statement”, which is sent by CPC to Resellers upon the financing of each item of Financed Inventory, identifying in each instance the item of Financed Inventory and the Payment Due Date..  Each TS shall be incorporated into this Agreement by reference.

UCC means the Uniform Commercial Code as in effect in the State of Colorado or, when the context implies, the Uniform Commercial Code as in effect from time to time in any other applicable jurisdiction.

Vendor Credits means all of Resellers’ rights to any price protection payments, rebates, discounts, credits, factory holdbacks, incentive payments and other amounts which at any time are due Reseller from a Vendor.

Vendors has the meaning set forth in Section 1.

Wells Fargo means Wells Fargo Bank, National Association, a national banking association.

Irreparable Harm; Right to Injunction.  Resellers acknowledge that in the event that any Reseller commits any act or omission that prevents or unreasonably interferes with (a) CPC's exercise of the rights and privileges arising under the power of attorney granted in Section 13 of this Agreement; or (b) CPC's perfection of or levy upon the security interest granted in the Collateral including any seizure of any Collateral, such conduct will cause immediate, severe, incalculable and irreparable harm and injury, and Resellers agree that such conduct shall constitute sufficient grounds to entitle CPC to an injunction, writ of possession, or other applicable relief in equity, and to make such application for such relief in any court of competent jurisdiction, without any prior notice to Resellers.

one or more internet web sites (the “Portal”) to: obtain items or information and take other actions in connection with this Agreement, subject to the following: 

a.Resellers shall access and use the Portal solely through duly authorized employees of Reseller to whom CPC has issued a user name and password (an “Authorized Employee”);

b.submission of a user name and password to access and use the Portal, constitutes Resellers’, and the applicable Authorized Employee’s, representation that the person submitting such user name and password is the specific person identified by such user name and password and that such person is, at the time of such access and use, Resellers’ employee duly authorized to act for and on behalf of Resellers; and

c.CPC may, from time to time at its sole option and without notice or liability,

(i).amend the terms for use of the Portal by posting amended terms on the Portal (and such amended terms shall automatically be effective upon posting) and

(ii).suspend or revoke Resellers’ and/or an Authorized Employee’s access to, and use of the Portal and/or modify, update or discontinue all or any portion of the Portal.

(a)Arbitration.  The parties hereto agree, upon demand by any party, whether made before the institution of a judicial proceeding or not more than 60 days after service of a complaint, third party complaint, cross-claim, counterclaim or any answer thereto or any amendment to any of the above to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, shareholders, members, managers, attorneys, and other agents), whether in tort, contract or otherwise arising out of or relating to in any way (i) the loan and related Documents which are the subject of this Agreement and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination; or (ii) requests for additional credit; provided however that the parties agree that, notwithstanding the foregoing, each party retains the right  to pursue in small claims court any dispute within that court’s jurisdiction.  In the event of a court ordered arbitration, the party requesting arbitration shall be responsible for timely filing the demand for arbitration and paying the appropriate filing fee within the 30 days of the abatement order or the time specified by the court. Failure to timely file the demand for arbitration as ordered by the court will result in that party’s right to demand arbitration being automatically terminated.

(b)Governing Rules.  Any arbitration proceeding will (i) proceed in a location in Colorado selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”).  If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control.  Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute.

(c)No Waiver of Provisional Remedies, Self-Help and Foreclosure.  The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding.  This exclusion does not constitute a waiver of the right or obligation of any

party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.

(d)Arbitrator Qualifications and Powers.  Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00.  Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations.  The arbitrator will be a neutral attorney licensed in the State of Colorado or a neutral retired judge of the state or federal judiciary of Colorado, mutually agreeable to the parties, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated.  The arbitrator will determine whether or not an issue is arbitrable and will give effect to the statutes of limitation in determining any claim.  In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator's discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication.  The arbitrator shall resolve all disputes in accordance with the substantive law of Colorado and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award.  The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the Colorado Rules of Civil Procedure or other applicable law.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.  The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.

(e)Discovery.  In any arbitration proceeding, discovery will be permitted in accordance with the Rules.  All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date.  Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that no alternative means for obtaining information is available.

(f)Class Proceedings and Consolidations.  Neither party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

(g)Payment Of Arbitration Costs And Fees.  The arbitrator shall award all costs and expenses of the arbitration proceeding.

(i)Miscellaneous.  To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA.  No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation.  If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the Documents or the subject matter of the dispute shall control.  This arbitration provision shall survive termination, amendment or expiration of any of the Documents or any relationship between the parties.

(j)Small Claims Court.  Notwithstanding anything herein to the contrary, each party retains the right to pursue in small claims court any dispute in which the remedy sought is entirely within that court’s jurisdiction.

any of the Indebtedness or any collateral security therefor until such time as all of the Indebtedness have been paid in full in cash.  Any claim which any Reseller may have against any other Reseller with respect to any payments to CPC hereunder are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Indebtedness arising hereunder or thereunder, to the prior payment in full in cash of the Indebtedness and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding under the laws of any jurisdiction relating to any Reseller, its debts or its assets, whether voluntary or involuntary, all such Indebtedness shall be paid in full in cash before any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other Reseller therefor.

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person or entity that opens an account, including any deposit account, treasury management account, loan, other extension of credit, or other financial services product.  What this means for the Reseller:  When the Reseller opens an account, if the Reseller is not an individual a financial institution will ask for the Reseller's name, taxpayer identification number, business address, and other information that will allow such financial institution to identify the Reseller. A financial institution may also ask to see the Reseller's legal organizational documents or other identifying documents.

[signature page(s) to follow]

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

EXHIBIT A

TRADE NAME(S)/TRADE STYLES OF RESELLER

COLLATERAL LOCATIONS

1.  Trade Name(s) / Trade Styles:  n.a.

2.  Collateral Locations: