Exhibit 10.3
AGREEMENT FOR WHOLESALE FINANCING
(SECURITY AGREEMENT)
(ILOC COLLATERAL)
This AGREEMENT FOR WHOLESALE FINANCING (as amended, supplemented or otherwise
modified from time to time, this "Agreement") is hereby made this 12th day of
June, 2002, by and between IBM CREDIT CORPORATION, a Delaware corporation with a
place of business at 0000 XxxxxXxxx Xxxxxxx, Xxxxxxx, Xx ("IBM Credit"), and PWR
SYSTEMS, INC. duly organized under the laws of the State of Delaware with its
principal place of business at 0000 Xxxxxxxx Xxxxxxxx Xxxxxxx, Xxxxxxx, XX 00000
("Customer").
In the course of Customer's business, Customer acquires products and
wants IBM Credit to finance Customer's purchase of such products under the
following terms and conditions:
1. IBM Credit may in its sole discretion from time to time decide the
amount of credit IBM Credit extends to Customer, notwithstanding any prior
course of conduct between IBM Credit and Customer. IBM Credit may combine all of
its advances to make one debt owed by Customer.
2. IBM Credit may in its sole discretion decide the amount of funds, if
any, IBM Credit will advance on any products Customer may seek to acquire.
Customer agrees that any decision to finance products will not be binding on IBM
Credit until such time as the funds are actually advanced by IBM Credit.
3. In the course of Customer's operations, Customer intends to purchase
from persons approved in writing by IBM Credit for the purpose of this Agreement
(the "Authorized Suppliers") computer hardware and software products
manufactured or distributed by or bearing any trademark or trade name of such
Authorized Suppliers (the "Approved Inventory"). When IBM Credit advances funds,
IBM Credit may send Customer a Statement of Transaction or other statement. If
IBM Credit does, Customer will have acknowledged the indebtedness to be an
account stated and Customer will have agreed to the terms set forth on such
statement unless Customer notifies IBM Credit in writing of any question or
objection within seven (7) days after such statement is mailed to Customer.
4. To secure payment of all of Customer's current and future
indebtedness to IBM Credit whether under this Agreement, any guaranty or surety
agreement that Customer executes, or any other agreement between Customer and
IBM Credit, whether direct or contingent, Customer hereby agrees to cause an
institution acceptable to IBM Credit to issue in IBM Credit's favor an
Irrevocable Letter of Credit in a form acceptable to IBM Credit ("Letter of
Credit") in the amount of ONE HUNDRED FIFTY THOUSAND Dollars ($150,000.00)
bearing an effective date as of the date of this Agreement and expiring no
earlier than twelve (12) months from the date hereof. At least sixty (60) days
prior to the expiration of the Letter of Credit or any subsequent Letter of
Credit, Customer will renew and extend such Letter of Credit for a term of
twelve (12) months or longer, or will have a new Letter of Credit issued to IBM
Credit for a term of twelve (12) months or longer and in an amount, form and
from an institution acceptable to IBM Credit.
5. Customer represents that its business is conducted as a CORPORATION.
Customer agrees to notify IBM Credit immediately of any change in identity,
name, form of ownership or management, and of any additions or discontinuances
of other business locations.
6. Customer will execute any and all documents IBM Credit may request
to confirm or perfect IBM Credit's title or interest in the Letter of Credit.
Customer will pay all taxes, license fees, assessments and charges when due.
Customer warrants and represents that it is not in default in the payment of any
principal, interest or other charges relating to any indebtedness owed to any
third party for any reason whatsoever, and no event has occurred under the terms
or provisions 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 constitute an event of default thereunder. Each financial
statement that Customer submits to IBM Credit, is and will be correct and will
accurately represent Customer's financial condition. Customer further
acknowledges IBM Credit's reliance on the truthfulness and
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accuracy of each and every financial statement that Customer submits to IBM
Credit in its extension of various financial accommodations to Customer.
7. Customer agrees to immediately pay IBM Credit the full amount of the
principal balance owed IBM Credit, at or before the time payment is required
under the terms of Customer's financing program with IBM Credit. Regardless of
the terms of any scheduled payment program with IBM Credit, if IBM Credit
determines that the current outstanding indebtedness owed by Customer to IBM
Credit exceeds the value of the Letter of Credit in IBM Credit's possession,
Customer agrees to immediately pay to IBM Credit an amount equal to the
difference between such outstanding indebtedness and the Letter of Credit.
Customer will make all payments to IBM Credit according to the remit to
instructions in the billing statement. Any checks or other instruments delivered
to IBM Credit to be applied against Customer's outstanding obligations will
constitute conditional payment until the funds represented by such instruments
are actually received by IBM Credit. IBM Credit may apply payments to reduce
finance charges first and then principal, irrespective of Customer's
instructions. Further, IBM Credit may apply principal payments to the oldest
(earliest) invoice for the Approved Inventory financed by IBM Credit, or to such
Approved Inventory which is sold, lost, stolen, destroyed, damaged, or otherwise
disposed of. If Customer signs any instrument for any outstanding obligations,
it will be evidence of Customer's obligation to pay and will not be payment. Any
discount, rebate, bonus, or credit for Approved Inventory granted to Customer by
any Authorized Supplier will not, in any way, reduce the obligations Customer
owes IBM Credit, until IBM Credit has received payment in good funds, provided,
however, that in the event any such discount, rebate, bonus, or credit must be
returned or disgorged or are otherwise unavailable for application, then
Customer's indebtedness will be reinstated as if such discount, rebate, bonus,
or credit had never been applied.
8. Customer will pay IBM Credit finance charges on the total amount of
credit extended to Customer in the amount agreed to between Customer and IBM
Credit from time to time. The period of any financing will begin on the invoice
date for the Approved Inventory whether or not IBM Credit advances payment on
such date. This period will be included in the calculation of the annual
percentage rate of the finance charges. Customer also agrees to pay IBM Credit
additional charges which will include: late payment fees at a per annum rate
equal to the Prime Rate plus 6.5%; flat charges; charges for receiving NSF
checks from Customer; renewal charges; and any other charges agreed to by
Customer and IBM Credit from time to time. For purposes of this Agreement,
"Prime Rate" will mean the average of the rates of interest announced by banks
which IBM Credit uses in its normal course of business of determining prime
rate. Unless Customer hereafter otherwise agrees in writing, the finance charges
and additional charges agreed upon will be IBM Credit's applicable finance
charges and additional charges for the class of Approved Inventory involved
prevailing from time to time at IBM Credit's principal place of business, but in
no event greater than the highest rate from time to time permitted by applicable
law. If it is determined that amounts received from Customer were in excess of
such highest rate, then the amount representing such excess will be considered
reductions to the outstanding principal of IBM Credit's advances to Customer.
IBM Credit will send Customer, at monthly or other intervals, a statement of all
charges due on Customer's account with IBM Credit. Customer will have
acknowledged the charges due, as indicated on the statement, to be an account
stated, unless Customer objects in writing to IBM Credit within seven (7) days
after such statement is mailed to Customer. This statement may be adjusted by
IBM Credit at any time to conform to applicable law and this Agreement. IBM
Credit shall calculate any free financing period utilizing a methodology that is
consistent with the methodologies used for similarly situated customers of IBM
Credit. The Customer understands that IBM Credit may not offer, may change or
may cease to offer a free financing period for the Customer's purchases of
Approved Inventory. If any Authorized Supplier fails to provide payment of a
finance charge for Customer, as agreed, Customer will be responsible for and pay
to IBM Credit all finance charges billed to Customer's account.
9. Any one or more of the following events shall constitute a default
by Customer under this Agreement: Customer breaches any of the terms, warranties
or representations contained in this Agreement or in any other agreements
between Customer and IBM Credit or between Customer and any of IBM Credit's
affiliates; any guarantor or surety of Customer's indebtedness to IBM Credit
under this Agreement or any other agreements breaches any of the terms,
warranties or representations contained
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in any guaranty, surety agreement or in any other agreements between any
guarantor or surety and IBM Credit or between any guarantor or surety and any of
IBM Credit's affiliates; any representation, statement, report or certificate
made or delivered by Customer or any of Customer's owners, representatives,
employees or agents or any guarantor or surety to IBM Credit is not true and
correct; Customer fails to pay any of the indebtedness owed to IBM Credit or any
of IBM Credit's affiliates when due and payable or declared to be due and
payable under this Agreement or under any other agreements between Customer and
IBM Credit or between Customer and any of IBM Credit's affiliates; IBM Credit
determines that it is insecure with respect to the payment of any part of
Customer's indebtedness owed to IBM Credit; Customer or any guarantor or surety
becomes in default in the payment of any indebtedness owed to any third party,
or any event occurs under the terms or provisions of any agreement, document,
promissory note or other instrument, for any reason whatsoever, which with or
without the passage of time and/or the giving of notice constitutes or would
constitute an event of default thereunder; a judgment issues on any money demand
against Customer or any guarantor or surety which is not paid in full within
sixty (60) days; a writ of capias, attachment, sale or seizure is issued against
Customer or any of Customer's assets; any of Customer's assets 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 or surety;
Customer ceases or suspends its business; Customer or any guarantor or surety
makes a general assignment for the benefit of Customer's or any guarantor's or
surety's creditors; Customer or any guarantor or surety become bankrupt or
insolvent or voluntarily or involuntarily become subject to the provisions of
the Federal Bankruptcy Code, state insolvency laws or any act or code for the
benefit of creditors; any receiver is appointed for any of Customer's or any
guarantor's or surety's properties, assets, businesses or undertakings; any
guaranty or surety agreement pertaining to Customer's indebtedness to IBM Credit
is terminated for any reason whatsoever; Customer loses any franchise,
permission, license or right to sell or deal in any Approved Inventory; if at
least sixty (60) days prior to the expiration of the Letter of Credit or any
subsequent Letter of Credit, such Letter of Credit is not extended for a term of
twelve (12) months or longer, or a new Letter of Credit in an amount, form and
from an institution acceptable to IBM Credit and for a term of twelve (12)
months or longer is not provided to IBM Credit; Customer or any guarantor or
surety misrepresents its respective financial condition or organizational
structure. Following an event of a default:
(a) IBM Credit may, at any time at IBM Credit's election, without
notice or demand to Customer do any one or more of the following: declare all or
any part of the obligations Customer owes IBM Credit immediately due and
payable, together with all court costs and all costs and expenses of IBM
Credit's 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; exercise any and all of IBM Credit's rights to draw upon the
Letter of Credit; and/or cease making any further financial accommodations or
extending any additional credit to Customer; and/or exercise any or all rights
available at law or in equity. All of IBM Credit's rights and remedies are
cumulative.
(b) Customer waives and releases: any and all claims and causes of
action which Customer may now or ever have against IBM Credit arising directly
or indirectly out of this Agreement or Customer's financing program with IBM
Credit.
If Customer brings any action or asserts any claim against IBM Credit which
arises out of this Agreement, any other agreement or any of the business
dealings between IBM Credit and Customer, in which Customer does not prevail,
Customer agrees to pay IBM Credit all costs and expenses of IBM Credit's defense
of such action or claim including, but not limited to, all attorney's fees. If
IBM Credit fails to exercise any of IBM Credit's rights or remedies under this
Agreement, such failure will in no way or manner waive any of IBM Credit's
rights or remedies as to any past, current or future default.
10. Customer agrees that IBM Credit does not warrant the Approved
Inventory. Customer will pay IBM Credit in full even if the Approved Inventory
is defective or fails to conform to any warranties extended by any third party.
Customer's obligations to IBM Credit will not be affected by any dispute
Customer may have with any third party. Customer will not assert against IBM
Credit any claim or defense Customer may have against any third party.
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11. Customer will indemnify and hold IBM Credit harmless against any
claims or defenses asserted by any buyer of the Approved Inventory by reason of:
the condition of any Approved Inventory; any representations made about the
Approved Inventory; or for any and all other reasons whatsoever.
12. Customer further authorizes IBM Credit to provide to any third
party any credit, financial or other information about Customer that is in IBM
Credit's possession.
13. Each party may electronically transmit to or receive from the other
party certain documents specified in the E-Business Schedule A attached hereto
("E-Documents") via the Internet or electronic data interchange ("EDI"). Any
transmission of data which is not an E-Document shall have no force or effect
between the parties. EDI transmissions may be transmitted directly or through
any third party service provider ("Provider") with which either party may
contract. Each party will be liable for the acts or omissions of its Provider
while handling E-Documents for such party, provided, that if both parties use
the same Provider, the originating party will be liable for the acts or
omissions of such Provider as to such E-Document. Some information to be made
available to Customer will be specific to Customer and will require Customer to
register with IBM Credit before access is provided. After IBM Credit has
approved the registration submitted by Customer, IBM Credit will provide an ID
and password(s) to an individual designated by Customer ("Customer Recipient").
Customer accepts responsibility for the designated individual's distribution of
the ID and password(s) within its organization and Customer will take reasonable
measures to ensure that passwords are not shared or disclosed to unauthorized
individuals. Customer will conduct an annual review of all IDs and passwords to
ensure that they are accurate and properly authorized. IBM CREDIT MAY CHANGE OR
DISCONTINUE USE OF AN ID OR PASSWORD AT ITS DISCRETION AT ANY TIME. E-Documents
will not be deemed to have been properly received, and no E-Document will give
rise to any obligation, until accessible to the receiving party at such party's
receipt computer at the address specified herein. Upon proper receipt of an
E-Document, the receiving party will promptly transmit a functional
acknowledgment in return. A functional acknowledgment will constitute conclusive
evidence that an E-Document has been properly received. If any transmitted
E-Document is received in an unintelligible or garbled form, the receiving party
will promptly notify the originating party in a reasonable manner. In the
absence of such a notice, the originating party's records of the contents of
such E-Document will control.
Each party will use those security procedures which are reasonably sufficient to
ensure that all transmissions of E-Documents are authorized and to protect its
business records and data from improper access. Any E-Document received pursuant
to this paragraph 13 will have the same effect as if the contents of the
E-Document had been sent in paper rather than electronic form. The conduct of
the parties pursuant to this paragraph 13 will, for all legal purposes, evidence
a course of dealing and a course of performance accepted by the parties. The
parties agree not to contest the validity or enforceability of E-Documents under
the provisions of any applicable law relating to whether certain agreements are
to be in writing or signed by the party to be bound thereby. The parties agree,
as to any E-Document accompanied by Customer's ID, that IBM Credit can
reasonably rely on the fact that such E-Document is properly authorized by
Customer. E-Documents, if introduced as evidence on paper in any judicial,
arbitration, mediation or administrative proceedings, will be admissible as
between the parties to the same extent and under the same conditions as other
business records originated and maintained in documentary form. Neither party
will contest the admissibility of copies of E-Documents under either the
business records exception to the hearsay rule or the best evidence rule on the
basis that the E-Documents were not originated or maintained in documentary
form.
Neither party will be liable to the other for any special, incidental, exemplary
or consequential damages arising from or as a result of any delay, omission or
error in the electronic transmission or receipt of any E-Document pursuant to
this paragraph 13, even if either party has been advised of the possibility of
such damages. In the event Customer requests IBM Credit to effect a withdrawal
or debit of funds from an account of Customer, then in no event will IBM Credit
be liable for any amount in excess of any amount incorrectly debited, except in
the event of IBM Credit's gross negligence or willful misconduct. No party will
be liable for any failure to perform its obligations pursuant to this paragraph
14 in connection with any E-Document, where such failure results from any act of
God or other cause beyond such party's
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reasonable control (including, without limitation, any mechanical, electronic or
communications failure) which prevents such party from transmitting or receiving
E-Documents.
CUSTOMER RECIPIENT FOR INTERNET TRANSMISSIONS:
(PLEASE PRINT)
NAME OF CUSTOMER'S DESIGNATED CENTRAL CONTACT AUTHORIZED TO RECEIVE IDS AND
PASSWORDS:
Xxxxx Xxxxx
E-MAIL ADDRESS: xxxxxx@xxxxxxx.xxx
PHONE NUMBER: 631 - 981 - 5500
14. Time is of the essence in this Agreement. This Agreement will be
effective from the date of its acceptance at IBM Credit's office. Customer
acknowledges receipt of a true copy and waives notice of IBM Credit's acceptance
of it. If IBM Credit advances funds under this Agreement, IBM Credit will have
accepted it. This Agreement will remain in force until one of the parties gives
notice to the other that it is terminated. If Customer terminates this
Agreement, IBM Credit may declare all or any part of the indebtedness Customer
owes IBM Credit due and payable immediately. If this Agreement is terminated,
Customer will not be relieved from any obligations to IBM Credit arising out of
IBM Credit's advances or commitments made before the effective date of
termination. IBM Credit's rights under this Agreement and IBM Credit's interest
and title in present and future Letters of Credit will remain valid, binding and
enforceable until all Customer's indebtedness to IBM Credit is paid in full.
This Agreement shall be binding upon and inure to the benefit of IBM Credit and
the Customer and their respective successors and assigns; provided, that the
Customer shall have no right to assign this Agreement without the prior written
consent of IBM Credit. This Agreement will protect and bind IBM Credit's and
Customer's respective heirs, representatives, successors and assigns. It can be
varied only by a document signed by IBM Credit's and Customer's 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. This Agreement is executed
with the authority of Customer's Board of Directors, and with shareholder
approval, if required by the law, if Customer is a corporation or if Customer is
a limited liability company, with the authority of authorized members. All
notices IBM Credit sends to Customer will be sufficiently given if mailed or
delivered to Customer at Customer's address first written above.
15. The laws of the State of New York will govern this Agreement.
Customer agrees that venue for any lawsuit will be in the State or Federal Court
within the county, parish, or district where IBM Credit's office, which provides
the financial accommodations, is located. Customer hereby waives any right to
change the venue of any action.
16. If Customer has previously executed any security agreements with
IBM Credit, Customer agrees 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 Customer previously
executed with IBM Credit, the terms of this Agreement will control in
determining the agreement between Customer and IBM Credit.
17. CUSTOMER WAIVES ANY STATUTORY RIGHT TO NOTICE OR HEARING PRIOR TO
IBM CREDIT'S DRAW UPON THE LETTER OF CREDIT. CUSTOMER FURTHER WAIVES ANY AND ALL
RIGHTS OF SETOFF CUSTOMER MAY HAVE AGAINST IBM CREDIT. CUSTOMER AGREES THAT ANY
PROCEEDING IN WHICH CUSTOMER, OR IBM CREDIT OR ANY OF IBM CREDIT'S AFFILIATES,
OR CUSTOMER'S OR IBM CREDIT'S 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. EACH PARTY TO THIS AGREEMENT HEREBY
WAIVES ANY RIGHT TO A JURY TRIAL IN ANY SUCH PROCEEDING.
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ATTEST:
/s/ Xxxx Xxxxxxxxxx PWR Systems, Inc.
------------------- Customer
Secretary
By: /s/ Xxxxx Xxxxx
Print Name: Xxxx Xxxxxxxxxx ---------------
Print Name: Xxxxx Xxxxx
(CORPORATE SEAL) Title: President
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E-BUSINESS SCHEDULE A ("SCHEDULE A)
CUSTOMER NAME: _____________________________________________
EFFECTIVE DATE OF THIS SCHEDULE A: __________________________
E-DOCUMENTS AVAILABLE TO SUPPLIERS:
Invoices
Payment Report/Remittance Advisor
E-DOCUMENTS AVAILABLE TO CUSTOMER:
Invoices
Remittance Advisor
Transaction Approval
Billing Statement
Payment Planner
Auto Cash
Statements of Transaction
Common Dispute Form
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