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EXHIBIT 10.19
LOAN AND SECURITY AGREEMENT
Textron Financial Corporation
VALERENT, INC., INTERNETWORK EXPERTS, INC.,
I-SECTOR CORPORATION, ISECOLDSUB, INC.,
STRATASOFT, INC.
1180 Welsh Road, Suite 280
Exact Legal Name
North Wales, PA 19454
6401 SOUTHWEST FREEWAY
Street Address
Houston, TX 77074
City, State, Zip Code
Gentlemen:
1. We
are an authorized Reseller of goods manufactured and/or
distributed by various manufacturers and
distributors (hereinafter called
"Manufacturer"). As such, we from time to
time buy goods from Manufacturer to be
held by us as our inventory for sale by us
in the normal course of our business.
We may, as more fully set forth herein,
from time to time obtain loans from you
in order to finance the purchase of certain
of such goods, including parts and
accessories therefor, from Manufacturer,
and desire by this Agreement to set
forth in writing our understanding of our
loan arrangements with you and secure
repayment of such loans and other related
debts and liabilities we may have to
you, whether now existing or hereafter
arising.
2. Upon
our request from time to time, you may, at your sole
discretion and without any obligation to do
so, make loans to us, under such
terms and with such conditions as you shall
specify, to enable us to acquire
rights in Inventory from Manufacturers
pre-approved by you for financing
programs. We understand that each such loan
will be solely at your discretion,
and we expressly disclaim any right to
expect otherwise, either from the course
of our dealing, our need therefore, your
dealings with others, your arrangements
with Manufacturer, or otherwise.
Conversely, nothing herein will prevent us from
obtaining financing from other sources,
provided that you are completely
satisfied that such other financing will
not jeopardize our ability to comply
with our financial obligations to you and
that adequate procedures will be
implemented to absolutely assure your
ability to identify your Collateral.
Accordingly, we will obtain both your
written permission prior to arranging such
other financing and such acknowledgements
and undertakings from our other
lenders as you may require.
We understand that certain terms and conditions applicable to
loans
obtained by us from you will be set forth
in materials to be made available from
time to time to us and other Resellers, the
terms of which, as revised from time
to time, being deemed incorporated herein
by reference. We understand that these
materials are subject to change by you at
any time and from time to time, and
expressly assume the responsibility of
confirming directly with you, upon our
request for each loan, the exact terms and
conditions then being stated by you,
including without limitation rate of
interest and terms of repayment. In no
event will we view such materials as a
commitment or other offer on your part to
lend, and we will have no right to any loan
under any particular terms until
actually made and under the terms so made.
We understand and agree that the full
amount of each loan will be paid to you on
its due date without deduction for
any sums due from Manufacturer or any
Credit Memo that may have been issued to
you, unless you have previously notified us
that you have received and applied
the amount of the Credit Memo issued by the
Manufacturer.
We understand that you may, from time to time, issue advices to
us.
Such advices may include, but need not be
limited to, periodic or monthly
statements of our account, periodic letter
advices in the nature of statements
of account, issued from time to time, and
letter forms or other forms of notices
of due dates of finance plan payments and
of the specific terms of loans which
we have with you. Unless we, within ten
(10) days from the date of any such
advice, give you written and itemized
objection to the contents of such advice,
we shall be fully bound thereby and
acknowledge that the content of such advice
is true, correct, and complete, and
accurately reflects our obligations to you
as of the date thereof.
In connection with each loan requested, we will deliver to you
such
other writings as you shall require, which
may include notes or other
appropriate evidence of debt. Such notes or
other evidence of debt, Manufacturer
invoices, and other like materials as may
be revised from time to time
("Collateral Documents"), together with
this Agreement, contain our entire
understanding, and we acknowledge that we
will not be relying upon any prior
oral or written promises or undertakings or
future oral promises between us. No
modification hereof or of the Collateral
Documents will be binding upon you
unless in a writing duly executed on your
behalf by an officer holding the rank
of Vice President or higher.
We hereby authorize you to disburse the proceeds of each loan
directly
to Manufacturer on our behalf. Further, we
shall and hereby authorize
Manufacturer to deliver its invoice for
Inventory, together with all
Certificates of Origin, directly to you.
You may assume that all such invoices
so submitted are authentic and accurate and
that they have been submitted on our
behalf and with our permission. Receipt by
you from us or Manufacturer of an
invoice for Inventory shall be your
authority to make a loan to us under terms
and conditions then being stated by you. In
addition we shall and hereby
authorize the Manufacturer to issue all
Credit Memos directly to you.
We acknowledge that the term "Prime Rate", as used in the
Collateral
Documents in reference to the rate of
interest applicable to loans to us, will
mean the average of the Prime Rates (the
base rate for corporate loans at large
U.S. money center commercial banks) quoted
in the Wall Street Journal under the
caption "Money Rates", and agree that the
interest rate applicable to our loans
from you will automatically change from
time to time effective upon each change
in the published Prime Rate. We further
agree that interest on our loans from
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you will be calculated on the basis of a
360 day year but will be chargeable for
the actual days that principal is
outstanding in the then current year.
3. We
acknowledge that our financial arrangements with you are
completely independent of our arrangements
with Manufacturer, and that neither
you nor Manufacturer are an agent for or
acting on behalf of the other. We are
not relying, in our understanding with you,
on any statements, promises or
representations, oral or written, made by
Manufacturer, whether or not
purportedly on your behalf, relating to the
subject matter hereof and of our
loans with you. Although we may receive
official literature, brochures and other
written materials disseminated by you
through Manufacturer, we expressly assume
the risk that the materials so received are
the most current, up to date
materials then authorized by you to be
disseminated. None of our obligations to
you will be affected or impaired, or be
subject to any defense, set-off,
counterclaim, crossclaim or recoupment, by
reason of any claim which we now or
hereafter have against Manufacturer or its
agents, including without limitation
any claim for breach of express or implied
warranty of title, or otherwise
related to the condition of the Collateral
or our dealings with Manufacturer.
4. As
used herein, the following terms shall have the following
meaning:
a)
"Inventory" means all present and future Inventory,
as that term is defined in the Rhode Island
Uniform Commercial Code ("Code"),
together will all parts and accessories,
and all replacements, substitutions and
additions thereof or thereto.
b)
"Accounts" means all present and future Accounts, as
that term is defined in the Code.
c)
"General Intangibles" means all present and future
General Intangibles, as that term is
defined in the Code, and shall include,
without limitation, all Credit Memos and
other sums due from Manufacturer, all
books, records, ledgers, journals, check
books, computer tapes and disks, print
outs and other information and sources of
information, and all licenses,
permits, franchises, tradenames and other
rights and privileges used or useful
in the conduct of our business and the sale
of Inventory.
d)
"Equipment" means all present and future Equipment,
as that term is defined in the CODE,
together with all parts and accessories,
and all replacements, substitutions and
additions thereof or thereto.
e)
"Investment Property" means all present and future
Investment Property, as that term is
defined in the CODE.
f)
"Proceeds" means present and future Proceeds, as that
term is defined in the CODE, and shall
include, without limitation, insurance
payable by reason of loss or damage to any
of the Collateral. All Proceeds
received by us will be held in trust for
you until our loans are paid, and we
will promptly deliver all Proceeds to
you.
g)
"Collateral" means, individually and collectively,
Inventory, Accounts, General Intangibles,
Equipment, Investment Property and
Proceeds.
5. a)
In
order to secure repayment to you of each loan made
by you to us the proceeds of which enable
us to acquire rights in or the use of
Inventory, we hereby grant to you a
purchase money security interest in such
Inventory, the Proceeds thereof and all
General Intangibles related thereto, to
secure repayment of such loan. It is
intended by this subparagraph (a) that only
the Inventory so acquired, with Proceeds
and related General Intangibles, will
secure the loan the proceeds of which
enabled us to acquire rights in or the use
of such Inventory.
b) In
order to secure repayment to you of all debts and
liabilities we may now or hereafter have to
you under this Agreement or any
other agreement, whether such debt or
liability be obtained by you by
assignment, negotiation or otherwise, and
whether direct or indirect, primary or
secondary, absolute or contingent, or
otherwise, including but not limited to
all loans made by you to us to finance the
purchase of Inventory, we hereby
grant to you a security interest in all of
our Inventory, Accounts, General
Intangibles, Equipment and Investment
Property no matter how obtained by us,
whether now existing or hereafter acquired,
and the Proceeds of all of the
foregoing.
c) All
payments made by us will be deemed to be applied
by you first to the loan (i) the proceeds
of which enabled us to acquire rights
in or the use of Inventory which we have
previously sold and (ii) with the
earliest due date.
6. We
hereby represent to you that all information provided by us
to you in connection with our application
for each loan from you is and will be
complete and accurate in every respect. WE
WILL IMMEDIATELY NOTIFY YOU IN
WRITING OF ANY CHANGE IN ANY OF THIS
INFORMATION.
7. We
will from time to time execute and/or deliver or cause to
be executed and/or delivered to you such
financing statements, amendments to
financing statements, continuation
state
