EXHIBIT 10.25
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AGREEMENT FOR WHOLESALE FINANCING (SECURITY AGREEMENT)
DATED APRIL 8, 1996 BETWEEN THE REGISTRANT AND IBM CREDIT CORPORATION,
INCLUDING LETTER AGREEMENT DATED APRIL 17, 1996 BETWEEN THE PARTIES*
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* Confidential Treatment pursuant to 17 CFR (S)(S) 200.80, 200.83, and 230.406
and 5 USC (S) 502 has been requested regarding certain portions of the indicated
Exhibit, which portions have been filed separately with the Commission.
Exhibit 10.25
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Confidential Treatment Requested
IBM Credit Corporation ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AGREEMENT FOR WHOLESALE FINANCING
(SECURITY AGREEMENT)
TO: IBM CREDIT CORPORATION DATE: April 8, 1996
In the course of our business, we acquire inventory and want you to
finance our purchase of such inventory under the following terms and conditions:
1. You may in your sole discretion from time to time decide the amount
of credit you extend to us, notwithstanding any prior course of conduct between
us. You may combine all of your advances to make one debt owed by us.
2. You may in your sole discretion decide the amount of funds, if any,
you will advance on any inventory we may seek to acquire. We agree that any
decision to advance funds on any inventory will not be binding on you until such
time as the funds are actually advanced.
3. All financing provided by you to us will be used exclusively for the
acquisition of inventory for which you have approved us to receive financing
pursuant to the terms of this Agreement (the "Approved Inventory"). From time
to time, you will identify such trademarks and tradenames to us in writing.
When you advance funds, you may send us a Statement of Transaction or other
statement if you choose. If you do, we will have acknowledged the debt to be an
account stated and we will have agreed to the terms of the financing programs
identified on such statement, unless we notify you in writing of any question or
objection within seven (7) days after it is mailed to us.
4. To secure payment of all of our current and future debts to you
whether under this Agreement, any guaranty that we now or hereafter execute, or
any other agreement between us, whether direct or contingent, we grant you a
security interest in all of our inventory, equipment, fixtures, accounts,
contract rights, chattel paper, instruments, reserves, documents of title,
deposit accounts and general intangibles, whether now owned or hereafter
acquired, and all attachments, accessories, accessions, substitutions and/or
replacements thereto and all proceeds thereof. All of the above assets are
defined pursuant to the provisions of Article 9 of the Uniform Commercial Code
and are hereinafter collectively referred to as the "Goods". This security
interest is also granted to secure our debts to all of your affiliates. We will
hold all of the Goods financed by you, and, unless otherwise agreed to by you,
the proceeds thereof, in trust for you and we will immediately account for and
remit directly to you, unless otherwise agreed to by you, all such proceeds when
payment is required under the terms of our financing program with you. Unless
otherwise agreed to by you, you may directly collect any amount owed to us with
respect to the Goods and credit us with all sums received by you. Your title,
lien or security interest will not be impaired by any payments we make to the
seller or anyone else or by our failure or refusal to account to you for
proceeds.
5. Our principal place of business located at: ▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and we represent that our business is conducted
as a SOLE PROPRIETORSHIP, PARTNERSHIP, X CORPORATION (check applicable
--- --- ---
term). We will notify you immediately of any change in our identity, name, form
of ownership or management, and of any change in our principal place of
business, or any additions or discontinuances of other business locations. The
Goods will be kept at our principal place of business. We will immediately
notify you if any of the Goods are kept at any other address. We and our
predecessors have done business during the last six (6) months only under the
following names: SCANSOURCE, INC. This paragraph is for informational purposes
only, and is not in any manner intended to limit the extent of your security
interest in the Goods.
6. We promise that the Goods are and will remain free from all claims
and liens superior to yours unless otherwise agreed to by you, and that we will
defend the Goods against all other claims and demands. We will not rent, lease,
lend, demonstrate, pledge, transfer or secrete any of the Goods or use any of
the Goods for any purpose other than exhibition and sale to buyers in the
ordinary course of business, without your prior written consent. We will
execute all documents you may request to confirm or perfect your security
interest in the Goods. We warrant and represent that we are not in default in
the payment of any principal, interest or other charges relating to any
indebtedness owed to any third party, and no event has occurred under the terms
of any agreement, document, promissory note or other instrument, which with or
without the passage of time and/or the giving of notice constitutes or would
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constitute an event of default thereunder. We will promptly provide our year-
end financial statement to you after our fiscal year ends and, if requested by
you, we will also promptly provide our financial statement to you after each
calendar quarter.
Each financial statement that we submit to you, is and will be correct and will
accurately represent our financial condition. We further acknowledge your
reliance on the truthfulness and accuracy of each financial statement that we
submit to you in your extension of various financial accommodations to us.
7. We will pay all taxes, license fees, assessments and charges on the
Goods when due. We will immediately notify you of any loss, theft, or
destruction of or damage to any of the Goods. We will be responsible for any
loss, theft or destruction of Goods. We will keep the Goods insured for their
full insurable value against loss or damage under an "all risk" insurance
policy. We will obtain insurance under such terms and in amounts as you may
specify, from time to time, with companies acceptable to you, with a loss-payee
or mortgagee clause payable to you to the extent of any loss to the Goods and
containing a waiver of all defenses against us that is acceptable to you. We
agree to provide you with written evidence of the required insurance coverage
and loss-payee or mortgagee clause. We assign to you all amounts owed to us
under any insurance policy, and we direct any insurance company to make payment
directly to you to be applied to the unpaid debt owed you. We further grant you
an irrevocable power of attorney to endorse any checks or drafts and sign and
file all of the necessary papers, forms and documents to initiate and settle any
insurance claims with respect to the Goods. If we fail to pay any of the above-
referenced costs, charges, or insurance premiums, or if we fail to insure the
Goods, you may pay such costs, charges and insurance premiums, and the amounts
paid will be considered an additional debt owed by us to you.
8. You have the right to enter upon our premises from time to time, as
you in your sole discretion may determine for your sole benefit, and all without
any advance notice to us, to: examine the Goods; appraise them as security;
verify their condition and non-use; verify that all Goods have been properly
accounted for; verify that we have complied with all terms and provisions of
this Agreement; and assess, examine, and make copies of our books and records.
Any collection by you of any amounts we owe under our financing programs with
you at or during your examination of the Goods does not relieve us of our
continuing obligation to pay our indebtedness owed to you in accordance with the
terms of such financing programs.
9. We agree to immediately pay you the full amount of the principal
balance owed you on each item of inventory financed by you at the time such
inventory is sold, lost, stolen, destroyed, or damaged, whichever occurs first,
unless you have agreed in writing to provide financing to us on other terms. We
also agree to provide you, upon your request, an inventory report which
describes all the Approved Inventory in our possession (excluding any inventory
financed by you under the Demonstration and Training Equipment Financing Option
and the Rental Equipment Financing Option). Regardless of the terms of any
scheduled payment financing program with you, if you determine, after conducting
an inspection of all of our inventory, that the current outstanding indebtedness
owed by us to you exceeds the aggregate wholesale invoice price of the Approved
Inventory in our possession, we agree to immediately pay to you an amount equal
to the difference between such outstanding indebtedness and the aggregate
wholesale invoice price of such inventory. We will make all payments to you at
your appropriate branch office. Any checks or other instruments delivered to
you to be applied against our outstanding obligations will constitute
conditional payment until the funds represented by such instruments are actually
received by you. You may apply payments to reduce finance charges first and
then principal, irrespective of our instructions. Further, you may apply
principal payments to the oldest (earliest) invoice for the inventory financed
by you, but, in any case, all principal payments will first be applied to such
inventory which is sold, lost, stolen, destroyed, damaged, or otherwise disposed
of. If we sign any instrument for the amount of credit extended, it will be
evidence of our obligation to pay and will not be payment. Any discount,
rebate, bonus, or credit for the inventory granted to us by any third party will
not, in any way, reduce the debt we owe you, until you have received payment in
cash.
10. During each year or part of a year in which you have extended credit
to us, we will pay you finance charges on the total amount of credit extended to
us in the amount agreed to between us from time to time. The period, during
which any third party provides a finance charge subsidy for us, will be included
in the calculation of the annual percentage rate of the finance charges. Such
finance charges may be applied by you to cover any amounts expended for your:
appraisal and examination of the Goods; maintenance of facilities for payment;
assistance in support of our retail sales; your commitments to manufacturers or
distributors to finance shipments of Goods to us; recording and filing fees;
expenses incurred in obtaining additional collateral or security; and any costs
and expenses incurred by you arising out of the financing you extend to us. We
also agree to pay you additional charges which will include: late payment fees;
flat charges; charges for receiving NSF checks from us; renewal charges; and any
other charges applicable to our financing program with you. Unless we hereafter
otherwise agree in writing, the finance charge and additional charges agreed
upon will be your applicable finance charge and additional charges for the class
of Goods involved, prevailing from time to time at your principal place of
business. You will send us, at monthly or other intervals, a statement of all
charges due on our account with you. We will have acknowledged the charges due,
as indicated on the statement, to be an account stated, unless we object in
writing to you within seven (7) days after it is mailed to us. This statement
may be adjusted by you at any time to conform to applicable law and this
Agreement. It any manufacturer or distributor fails to provide a finance charge
subsidy for us, as agreed, we will be responsible for and pay to you all finance
charges billed to our account.
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11. Any of the following events will constitute a default by us under
this Agreement: we breach any of the terms, warranties or representations
contained in this Agreement or in any other agreements between us or between us
and any of your affiliates; any guarantor of our indebtedness to you under this
Agreement or any other agreements breaches any of the terms, warranties or
representations contained in any guaranty or other agreements between any
guarantor and you; any representation, statement, report or certificate made or
delivered by us or any of our representatives, employees or agents or by any
guarantor to you is not true and correct; we fail to pay any of the liabilities
or indebtedness owed to you or any of your affiliates when due and payable under
this Agreement or under any other agreements between us or between us and any of
your affiliates; you determine that you are insecure with respect to any of the
Goods or the payment of our debt owed to you; we abandon the Goods or any part
thereof; we or any guarantor become in default in the payment of any
indebtedness owed to any third party; a judgement issues on any money demand
against us or any guarantor; an attachment, sale or seizure is issued against us
or any of the Goods; any part of the Goods are seized or taken in execution; the
death of the undersigned if the business is operated as a sole proprietorship or
partnership, or the death of any guarantor; we cease or suspend our business; we
or any guarantor make a general assignment for the benefit of creditors; we or
any guarantor become insolvent or voluntarily or involuntarily become subject to
the Federal Bankruptcy Code, state insolvency laws or any act for the benefit of
creditors; any receiver is appointed for any of our or any guarantor's assets,
or any guaranty pertaining to our indebtedness to you is terminated for any
reason whatsoever; we lose any franchise, permission, license or right to sell
or deal in any Goods which you finance; we or any guarantor misrepresent our
respective financial condition or organizational structure; or you determine, in
your sole discretion, that the Goods, any other collateral given to you to
secure our indebtedness to you, or our or any guarantor's net worth has
decreased in value, and we have been unable, within the time period prescribed
by you, to either provide you with additional collateral in a form and substance
satisfactory to you or reduce our total indebtedness by an amount sufficient to
satisfy you. In the event of a default:
(a) You may, at any time at your election, without notice or demand to
us do any one or more of the following: declare all or any part of the
indebtedness we owe you immediately due and payable, together with all court
costs and all costs and expenses of your repossession and collection activity,
including, but not limited to, all attorney's fees; exercise any or all rights
of a secured party under applicable law; and/or cease making any further
financial accommodations or extending any additional credit to us. All of your
rights and remedies are cumulative.
(b) We will segregate, hold and keep the Goods in trust, in good order
and repair, only for your benefit, and we will not exhibit, transfer, sell,
further encumber, otherwise dispose of or use for any other purpose whatsoever
any of the Goods.
(c) Upon your oral or written demand, we will immediately deliver the
Goods to you, in good order and repair, at a place specified by you, together
with all related documents; or you may, in your sole discretion and without
notice or demand to us, take immediate possession of the Goods, together with
all related documents.
(d) We waive and release: any claims and causes of action which we
may now or ever have against you as a direct or indirect result of any
possession, repossession, collection or sale by you of any of the Goods and the
benefit of all valuation, appraisal and exemption laws. If you seek to take
possession of any of the Goods by court process, we irrevocably waive any
notice, bonds, surety and security relating thereto required by any statute,
court rule or otherwise.
(e) We appoint you or any person you may delegate as our duly
authorized Attorney-In-Fact to do, in your sole discretion, any of the
following: endorse our name on any notes, checks, drafts or other forms of
exchange received as payment on any Goods for deposit in your account; sell,
assign, transfer, negotiate, demand, collect, receive, settle, extend or renew
any amounts due on any of the Goods; and exercise any rights we have in the
Goods.
If we bring any action or assert any claim against you which arises out of this
Agreement, any other agreement or any of our business dealings, in which we do
not prevail, we agree to pay you all costs and expenses of your defense of such
action or claim including, but not limited to, all attorney's fees. If you fail
to exercise any of your rights or remedies under this Agreement, such failure
will in no way or manner waive any of your rights or remedies as to any past,
current or future default.
12. We agree that if you conduct a private sale of any Goods by
soliciting bids from ten (10) or more other dealers or distributors in the type
of Goods repossessed by or returned to you hereunder, any sale by you of such
property in bulk or in parcels within 120 days of (a) your taking physical
possession and control of such Goods or (b) when you are otherwise authorized to
sell such Goods, whichever occurs last, to the bidder submitting the highest
cash bid therefor, will be deemed to be a commercially reasonable means of
disposing of the same. We agree that commercially reasonable notice of any
public or private sale will be deemed given to us if you send us a notice of
sale at least seven (7) days prior to the date of any public sale or the time
after which a private sale will be made. If you dispose of any such Goods other
than as herein contemplated, the commercial reasonableness of such sale will be
determined in accordance with the provisions of the Uniform Commercial Code as
adopted by the state whose laws govern this Agreement.
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We agree that you do not warrant the Goods. We will pay you in full even if the
Goods are defective or fail to conform to any warranties extended by any third
party. Our obligation to you will not be affected by any dispute we may have
with any third party. We will not assert against you any claim or defense we
may have against any third party. We will indemnify and hold you harmless
against any claims or defenses asserted by any buyer of the Goods by reason of:
the condition of any Goods; any representations made about the Goods; or for any
and all other reasons whatsoever.
13. We grant to you a power of attorney authorizing any of your
representatives to: execute or endorse on our behalf any documents, financing
statements and instruments evidencing our obligations to you; supply any omitted
information and correct errors in any documents or other instruments executed by
or for us; do any and every act which we are obligated to perform under this
Agreement; and do any other things necessary to preserve and protect the Goods
and your rights and security interest in the Goods. We further authorize you to
provide to any third party any credit, financial or other information on us that
is in your possession.
14. Time is of the essence in this Agreement. This Agreement will be
effective from the date of its acceptance at your branch office. We acknowledge
receipt of a true copy and waive notice of your acceptance of it. If you commit
to advance funds under this Agreement, you will have accepted it. This
Agreement will remain in force until one of us gives notice to the other that it
is terminated. If we terminate this Agreement, you may declare all or any part
of the indebtedness we owe you due and payable immediately. If this Agreement
is terminated, we will not be relieved from any obligation to you arising out of
your advances or commitments made before the effective date of termination.
Your rights under this Agreement and your security interest in present and
future Goods will remain valid and enforceable until all our debts to you are
paid in full. We agree that we cannot assign this Agreement without your prior
written consent. This Agreement will protect and bind your and our respective
heirs, representatives, successors and assigns. It can be varied only by a
document signed by your and our authorized representatives. 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. If we are a corporation, this Agreement is executed with the
authority of our Board of Directors, and with shareholder approval, if required
by the law. All notices you send to us will be sufficiently given if mailed or
delivered to us at our address shown in paragraph 5.
15. The laws of the State of Georgia will govern this Agreement. We
agree that venue for any lawsuit will be in the State or Federal Court within
the county, parish, or district where your branch office, who provides the
financial accommodations, is located. We hereby waive any right to change the
venue of any action brought against us by you.
16. If we have previously executed any security agreements relating to
the Goods with you, we agree that this Agreement is intended only to amend and
supplement such written agreements, and will not be deemed to be a novation or
termination of such written agreements. In the event the terms of this
Agreement conflict with the terms of any prior security agreement that we
previously executed with you, the terms of this Agreement will control in
determining the agreement between us.
17. We waive all exemptions and homestead laws to the maximum extent
permitted by law. We waive any statutory right to notice or hearing prior to
your attachment, repossession or seizure of the Goods. We further waive any and
all rights of set-off we may have against you. WE AGREE THAT ANY PROCEEDING IN
WHICH WE, OR YOU OR ANY OF YOUR AFFILIATES, OR OUR ASSIGNS ARE PARTIES, AS TO
ALL MATTERS AND THINGS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT, OR
THE RELATIONS AMONG THE PARTIES LISTED IN THIS PARAGRAPH WILL BE TRIED IN A
COURT OF COMPETENT JURISDICTION BY A JUDGE WITHOUT A JURY. WE HEREBY WAIVE ANY
RIGHT TO A JURY TRIAL IN ANY SUCH PROCEEDING.
ATTEST:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ScanSource, Inc.
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Secretary Customer
Print Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: CFO, Treasurer
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(CORPORATE SEAL)
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SECRETARY'S CERTIFICATE OF RESOLUTION
I certify that I am the Secretary and the official custodian of certain
records, including the certificate of incorporation, charter, by-laws and
minutes of the meeting of the Board of Directors of the corporation named below,
and that the following is a true, accurate and compared extract from the minutes
of the Board of Directors of the corporation adopted at a special meeting
thereof held on due notice, at which meeting there was present a quorum
authorized to transact the business described below, and that the proceedings of
the meeting were in accordance with the certificate of incorporation, charter
and by-laws of the corporation, and that they have not been revoked, annulled or
amended in any manner whatsoever.
Upon motion duly made and seconded, the following resolution was
unanimously adopted after full discussion: "RESOLVED, That the several
officers, directors and agents of this corporation, or any one or more of them,
are hereby authorized and empowered on behalf of this corporation: to obtain
financing from IBM Credit Corporation ("IBM Credit") in such amounts and on such
terms as such officers, directors or agents deem proper; to enter into security
and other agreements with IBM Credit relating to the terms upon which financing
may be obtained and security to be furnished by this corporation therefor; from
time to time to supplement or amend any such agreements; and from time to time
to pledge, assign, guaranty, mortgage, grant security interest in and, otherwise
transfer to IBM Credit as collateral security for any obligations of this
corporation to IBM Credit and its affiliated companies; whenever and however
arising, any assets of this corporation, whether now owned or hereafter
acquired; hereby ratifying, approving and confirming all that any of said
officers, directors or agents have done or may do in the premises."
IN WITNESS WHEREOF, I have executed and affixed the seal of the
corporation on the date stated below.
Dated: 4/8, 1996 /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------- ---------------------------------
Secretary
ScanSource, Inc.
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Corporate Name
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Confidential Treatment Requested
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IBM Credit Corporation ▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
800/678-6900
April 17, 1996
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇
Scansource, Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇:
We are pleased to have you as part of the IBM Credit Corporation Remarketer
Financing Program. Your approved credit line is $ [*] .
To facilitate the administration of the program, an IBM Credit Corporation ("IBM
Credit") Dealer Account Number [*] has been established. Please use this
number in your future communications with us regarding this program.
The Remarketer Financing Program you have been approved for is the Scheduled
Payment Plan (SPP). With this program, you remit a single payment in [*].
Depending upon the date of each invoice, payments are due on the 5th, 15th and
25th of the month following your purchase. There are no financing charges
associated with this program for [*].
When the inventory financing program is made available to you, all new orders
will be processed by the franchisor under the inventory financing program.
IBM Credit is dedicated to providing the best possible customer service and
financing programs which meet the changing needs of our customers. Your input
is essential as we strive to remain your first choice for remarketer financing,
and we have found that our most valuable feedback comes immediately following a
completed transaction.
Accordingly, IBM Credit headquarters will be contacting you within the next
several days for your insight into "How we're doing". We would appreciate your
participation in this brief telephone survey which will allow you to share your
ideas and suggestions on how we could make your future business transactions
with us even easier.
IBM Credit sincerely appreciates this opportunity to provide a service to your
organization and we look forward to a mutually beneficial business relationship.
Please contact your Remarketer Financing Advisor, ▇▇▇ ▇▇▇▇▇▇▇, at ▇▇▇-▇▇▇-▇▇▇▇
if you have questions.
Sincerely,
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for
▇▇▇▇▇▇ ▇▇▇▇▇
Contract Administrator
* Redacted pursuant to application for confidential treatment.