EXHIBIT 10.18
LIMITED FRAUD GUARANTY
This Limited Guaranty is executed as of August 11, 2003, by Xxxxx. X.
Xxxx ("Guarantor") in favor of Textron Financial Corporation ("Textron") and
each of Textron's affiliates (individually and collectively, "Textron"). For
purposes of this Limited Guaranty, any party that controls Textron, is
controlled by Textron, or is under common control with Textron, shall be deemed
an affiliate of Textron.
RECITALS
A. Whereas, Textron has entered into one or more loan agreements
(as amended, replaced, substituted or supplemented from time to time, the "Loan
Agreements") with:
I-SECTOR CORPORATION ("I-Sector"), together with
its following subsidiary companies:
STRATASOFT, INC. ("Stratasoft"),
INTERNETWORK EXPERTS, INC. ("INX"),
VALERENT, INC., formerly ALLSTAR SOLUTIONS, INC. ("Valerent"),
(I-Sector, Stratasoft, INX and Valerent are referred to herein,
individually, as an "Obligor" and, collectively, as the "Obligors"); and
B. Whereas, Textron is agreeable to increasing the availability
in respect of the existing Loan Agreements by an amount that has been agreed to
among Textron and the Obligors on the condition that Guarantor shall execute and
deliver this Guaranty to Textron.
AGREEMENT
In consideration of Textron's increasing the availability in respect of
the Loan Agreements, as set forth above (which availability shall in all cases
continue to be subject to the terms and conditions of the Loan Agreements),
Guarantor hereby agrees as follows:
1. Limited Nature of Guaranty. In the event that Textron shall at any time
determine, in good faith, that one or more of the Obligors and/or the Guarantor
shall have committed a fraud upon Textron under or in connection with the Loan
Agreements or this Limited Guaranty (including, without limitation, in
connection with the obtaining and/or repayment of loans and credit extended
under the Loan Agreements) or shall have made a misrepresentation to Textron of
a material fact or circumstance under or in connection with the Loan Agreements
or this Limited Guaranty (including, without limitation, in connection with the
obtaining and/or repayment of loans and credit extended under the Loan
Agreements), which has or could have, in the reasonable opinion of Textron, a
material adverse effect on (a) the timely payment of the loans and other credit
and amounts payable under the Loan Agreements, (b) the collateral securing such
loans, credits and other amounts, (c) the business and/or prospects of any of
the Obligors, (d) the Guarantor or (e) this Limited Guaranty (a "Triggering
Determination"), Guarantor shall be liable for all amounts payable and all
obligations to be performed by Obligors under the Loan Agreements as set forth
therein and herein ("Guarantor Liability"). For the avoidance of doubt, Textron
shall not assert any Guarantor Liability against Guarantor hereunder unless and
until a Triggering Determination shall have been made and communicated in
writing to Guarantor.
2. Limited Scope of Guaranty. Subject to the terms and conditions of
Section 1 above, Guarantor guarantees to Textron the prompt payment and/or
performance of all indebtedness, obligations and liabilities of Obligors at any
time owing to Textron, whether direct or indirect, matured or unmatured,
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primary or secondary, certain or contingent or acquired or created by Textron
(individually, a "Guaranteed Obligation" and, collectively, the "Guaranteed
Obligations"). This Limited Guaranty is a guaranty of payment. Subject to the
terms and conditions of Section 1 above, Guarantor guarantees to Textron the
punctual and faithful performance by Obligors of each and every Guaranteed
Obligation. Without limiting the generality of the foregoing, in the event of
Guarantor Liability, as referred to in Section 1 above, if any Obligor defaults
in the payment or performance of any Guaranteed Obligation, if there exists any
event or condition which, with notice and/or the passage of time, would
constitute a default under any Guaranteed Obligation (including, without
limitation, any cross-defaults by or among the Obligors), or if there is a
liquidation, bankruptcy, assignment for the benefit of creditors or similar
proceeding affecting the status, existence, assets or obligations of any
Obligor, Guarantor shall pay directly to Textron the sums which the Obligors are
obligated to pay to Textron, whether by acceleration or otherwise, and promptly
perform all other Guaranteed Obligations. In the event of Guarantor Liability,
as referred to in Section 1 above, and if Textron is required to return any
payment made to Textron by or on behalf of any Obligor, whether as a result of
such Obligor's bankruptcy, reorganization or otherwise, Guarantor acknowledges
that this Limited Guaranty covers all such amounts, notwithstanding that the
original of this Guaranty may have been returned to Guarantor and/or otherwise
canceled.
3. Continuing Nature of Guaranty. This Limited Guaranty is a continuing
guarantee and shall apply without regard to the form or amount of the Guaranteed
Obligations in existence at any time with the following exceptions:
(a) In the event that Guarantor ceases to function as both (i)
the Chairman of the Board of Directors and the Chief Executive Officer
of I-Sector and (ii) the majority shareholder of I-Sector ("Loss Of
Control") and Textron shall have approved of such, in writing prior to
the occurrence of the Loss Of Control, which approval shall not be
unreasonably withheld, this Limited Guarantee shall apply only to
Textron debt obligations of the Obligors that were created from
transactions between Textron and the Obligors dated prior to the date
of Loss Of Control, and once all debt obligations that were created
prior to the Loss Of Control have been fully, finally and indefeasibly
repaid to Textron this Limited Guarantee shall terminate without any
further action by Guarantor or Textron and all obligations hereunder
shall be deemed satisfied in their entirety.
(b) In the event that Guarantor notifies Textron, in writing,
that Guarantor will no longer prospectively guarantee the performance
of the terms and conditions, including repayment, of monies loaned or
financial accommodations provided to any one of the individual Obligors
(up to and including all of the Obligors) (the "Terminated Obligor")
pursuant to the Loan Agreements ("Termination Notice"), the Guarantor
Liability shall be limited to financing extended by Textron to such
Terminated Obligor through the date of receipt by Textron of such
Termination Notice. If Textron continues to provide financing
accommodations, credit, loans or other financing services to any
Terminated Obligor after receipt of such Termination Notice, this
Limited Guarantee shall apply only to Textron debt obligations of the
Terminated Obligor that were created from transactions between Textron
and such Terminated Obligor prior to the date of receipt by Textron of
such Termination Notice and any credit extended by Textron to the
Terminated Obligor after the date of receipt by Textron of such
Termination Notice shall not be considered a Guaranteed Obligation. The
Guarantor and the Obligors acknowledge and agree that the delivery of a
Termination Notice may result, in the sole discretion of Textron, in
the immediate cessation of all fundings and loans to the affected
Obligor or Obligors by Textron.
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4. Nature of Guaranty. In the event of Guarantor Liability, as referred to
in Section 1 above, the obligations of Guarantor under this Guaranty shall be
absolute and unconditional except as set forth in Section 3 above, and such
obligations shall not be reduced, diminished or discharged for any reason,
including, :
(a) Modifications and Indulgences. Any modification, renewal
or alteration of any agreement, document or instrument relating to any
Guaranteed Obligation, or any indulgence, adjustment, preference,
extension or compromise made by Textron in favor of any Obligor or
Guarantor.
(b) Condition of Obligors or Guarantor. Any insolvency,
bankruptcy, arrangement, adjustment, composition, liquidation,
disability, dissolution or similar proceeding affecting any Obligor or
Guarantor; any sale, lease or other disposition of any of the assets of
any Obligor or Guarantor; any reorganization of, or change in the
composition of the shareholders, partners or members of, any Obligor or
Guarantor; or any termination of, or other change in, the relationship
between any Obligor and Guarantor.
(c) Invalidity of Guaranteed Obligations. The invalidity,
illegality or unenforceability of any Guaranteed Obligation for any
reason whatsoever, including, but not limited to: the existence of
valid defenses, counterclaims or off-sets to any Guaranteed Obligation;
the violation of applicable usury laws by any Guaranteed Obligation; or
the inauthenticity of any document or instrument relating to the
Guaranteed Obligations.
(d) Release of Obligors. Any complete or partial release of
any Obligor or any other party from any Guaranteed Obligation (other
than as set forth in Section 3 above).
(e) Release of Collateral; Care of Collateral; Status of
Liens. Any release, surrender, exchange, deterioration, waste, loss or
impairment of any collateral securing payment of any Guaranteed
Obligation (the "Collateral"), even if due to Textron's negligence; the
failure of Textron or any other party to exercise reasonable care in
the preservation, protection, sale or other treatment of any of the
Collateral; the failure of Textron to create or properly perfect any
security interest intended to be given by any Obligor in connection
with any Guaranteed Obligation (a "Security Interest"); the
unenforceability of any Security Interest; the subordination of any
Security Interest to any other lien or encumbrance; or the taking or
accepting by Textron of any other security for, or assurance of payment
of, any Guaranteed Obligation.
(f) Other Action or Inaction. Any other action or inaction on
the part of Textron, other than a willful action or inaction, whether
or not such action or inaction prejudices Guarantor or increases the
likelihood that Guarantor will be required to pay or perform any
Guaranteed Obligation pursuant to the terms hereof.
It is the obligation of Guarantor to discharge the Guaranteed
Obligations when due, notwithstanding any occurrence, circumstance, event,
action or omission whatsoever, whether or not particularly described herein.
Guarantor is not entering into this Guaranty in reliance on the value or the
availability of any of the Collateral. Guarantor acknowledges that Guarantor may
be required to pay the Guaranteed Obligations, in full, without the assistance
or support of any other party. Guarantor has not been induced to enter into this
Guaranty on the basis that any party other than Obligors will be liable to
perform any Guaranteed Obligation or that Textron will look to any other party
to perform any Guaranteed Obligation. If this Guaranty is signed by more than
one party, the obligations of such parties are joint and several and Textron may
release, or settle with, any of such parties without affecting the
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liability of any other party to this Guaranty. To the extent that this Guaranty
is secured by property of Guarantor, Textron shall not be obligated to release
its security interest in such property until all applicable preference periods
have passed with respect to payments made to Textron by or on behalf of
Obligors.
5. Waivers. Guarantor waives:
(a) Action Against Others. Any right to require Textron to:
institute suit or exhaust remedies against Obligors or any other party
liable for any Guaranteed Obligation; enforce Textron's rights in any
of the Collateral or other security which is at any time given to
secure any Guaranteed Obligation; enforce Textron's rights against any
other guarantor of any Guaranteed Obligation; join Obligors or any
other party liable for any Guaranteed Obligation in any action seeking
to enforce this Guaranty; or exhaust any other remedies available to
Textron or resort to any other means of obtaining payment or
performance of any Guaranteed Obligation.
(b) Notices. Notice of the amount of credit extended by
Textron to Obligors at any time, whether primary or secondary; notice
of the modification or extension of any Guaranteed Obligation; notice
of a default or other non-performance by Obligors in connection with
any Guaranteed Obligation; notice of the transfer or disposition by
Textron of any Guaranteed Obligation; notice of the repossession, sale
or other disposition of any of the Collateral; notice of the acceptance
of this Guaranty by Textron; demand and presentation for payment upon
Obligors or any other party liable for any Guaranteed Obligation;
protest, notice of protest and diligence of bringing suit against
Obligors or any other party; and any other action or inaction on the
part of Textron in connection with this Guaranty or any Guaranteed
Obligation.
(c) Subrogation. Any right which Guarantor may at any time
have against Obligors, or any other party liable for any Guaranteed
Obligation, as the result of the performance by Guarantor of its
obligations under this Limited Guaranty, including, but not limited to,
contractual, statutory and common law rights of subrogation,
reimbursement and indemnification, provided, however, upon the full,
final payment to Textron of all of the Guaranteed Obligations by
Guarantor hereunder, Guarantor shall, anything contained herein to the
contrary notwithstanding, have all contractual, statutory and common
law rights of subrogation and reimbursement against the Obligors. In
the event that Textron has to disgorge a payment or payments made by
the Obligors or the Guarantor for Guaranteed Obligations and, after
giving effect to such disgorgement, there remains any Guaranteed
Obligations owed to Textron, Guarantor shall remain liable to Textron
for such Guaranteed Obligations and this Limited Guaranty, if
necessary, shall be deemed reinstated with respect to such Guaranteed
Obligations.
(d) Election of Remedies. All defenses Guarantor may have
based upon any election of remedies by Textron which destroys or
impairs Guarantor's subrogation rights or Guarantor's rights to proceed
against Obligors or any other person for reimbursement, including,
without limitation, any loss of rights that Guarantor may suffer by
reason of any rights, powers or remedies of Obligors in connection with
any anti-deficiency laws or any other laws limiting, qualifying or
discharging indebtedness of or remedies against Obligors or any other
party. The foregoing waivers include any requirement of law that
Textron exhaust any security for any loan before proceeding under this
Guaranty and any act or omission by Textron which directly or
indirectly results in or aids the loss, limitation or impairment of the
right to recover any deficiency from Obligors due to Textron's election
to proceed under a power of sale set forth in any deed of trust or any
other deed of trust, mortgage or lien on real property or due to any
fair
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value limitations or determinations in connection with a judicial
foreclosure of the real property securing any loan. Without limitation
of the foregoing, Guarantor waives all rights and defenses arising out
of an election of remedies by a creditor, even though that election of
remedies, such as a non-judicial foreclosure with respect to security
for a Guaranteed Obligation, has destroyed the guarantor's rights of
subrogation and reimbursement against the principal.
6. Representations and Warranties. Guarantor represents and warrants to
Textron that:
(a) Benefit. Guarantor has received, or will receive, direct
or indirect benefit from the creation of the Guaranteed Obligations.
Guarantor is the, direct or indirect, beneficial owner of more than a
majority of the outstanding shares of each of the Obligors.
(b) No Representation by Textron. Neither Textron nor any
other party has made any representation, warranty or statement to
Guarantor in order to induce Guarantor to execute this Guaranty.
(c) Financial Condition. As of the date hereof, and after
giving effect to this Guaranty and the contingent nature of the
obligations contained herein and after giving effect to any subrogation
rights provided to Guarantor hereunder, and assuming that the Obligors'
assets, collectively, exceed their liabilities, collectively, as of the
date hereof, Guarantor is solvent and has assets which, when fairly
valued, exceed its liabilities.
7. Governing Law; Miscellaneous. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF RHODE ISLAND, WITHOUT
REFERENCE TO APPLICABLE CONFLICT OF LAW PRINCIPLES. GUARANTOR CONSENTS TO THE
JURISDICTION AND VENUE OF RHODE ISLAND COURTS IN CONNECTION WITH TEXTRON'S
ENFORCEMENT OF ANY OF GUARANTOR'S OBLIGATIONS UNDER THIS GUARANTY. This Guaranty
shall not be deemed to create any right in any party except as provided herein
and shall inure to the benefit of, and be binding upon, the successors and
assigns of Guarantor and Textron. THIS GUARANTY CONSTITUTES THE ENTIRE AGREEMENT
OF GUARANTOR AND TEXTRON RELATIVE TO THE SUBJECT MATTER HEREOF. NO MODIFICATION
OF, OR SUPPLEMENT TO, THIS GUARANTY SHALL BIND TEXTRON UNLESS THE SAME IS IN
WRITING AND IS SIGNED BY AN AUTHORIZED OFFICER OF TEXTRON. Upon the request of
Textron, Guarantor shall deliver to Textron certified personal and/or business
financial statement(s) and such other financial information as Textron may
reasonably request. Guarantor agrees that Textron may, without the consent of,
or notice to, Guarantor, assign all or any portion of its rights hereunder to
any other party to which any Guaranteed Obligation is transferred, assigned or
negotiated. Guarantor shall be liable for all attorneys' fees and other costs
and expenses incurred by Textron in connection with Textron's enforcement of
this Guaranty.
8. Notices. All notices required to be given hereunder shall be given by
U.S. Postal Service Certified Mail, Return Receipt requested, or by receipted
overnight delivery using any nationally recognized delivery service, or hand
delivered evidenced by a written receipt. Unless otherwise notified in writing,
notices shall be provided at the following addresses:
For Textron:
Textron Financial Corporation
0000 XXXXX XXXX, XXXXX 000
XXXXX XXXXX, XX 00000
Attn: VICE PRESIDENT, CREDIT
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For Guarantor:
Xxxxx X. Xxxx
000 Xxxxxx Xxxx Xxxxx,
Xxxxx Xxxx, Xxxxx 00000
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NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, GUARANTOR'S LIABILITY
HEREUNDER SHALL BE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN SECTION 1
ABOVE.
The undersigned, pursuant to due corporate or partnership authority, as
appropriate, has or have caused this Guaranty to be executed as of the date set
forth above.
GUARANTOR:
/s/ Xxxxx X. Xxxx
------------------
Xxxxx X. Xxxx
Agreed to And Approved By I-Sector Corporation:
/s/ Xxxxxxxx Xxxxxxxx
----------------------
Xxxxxxxx Xxxxxxxx, Secretary, Vice President and Controller
Agreed to And Approved By Internetwork Experts, Inc.:
/s/ Xxxx X. Xxxx
------------------------
Xxxx X. Xxxx, President
Agreed to And Approved By Stratasoft, Inc.:
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxxx, Vice President and Controller
Agreed to And Approved By Valerent, Inc.:
/s/ Xxxxx Xxxx
-------------------------
Xxxxx Xxxx, President
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF XXXXXX
Before me, a Notary Public in and for said County and State or
Commonwealth, on this day personally appeared Xxxxx X. Xxxx, known to me to be
the person whose name is subscribed to the foregoing instrument, who
acknowledged that he executed said instrument as his or her free and voluntary
act and the free and voluntary act of Borrower.
Given under my hand and Notarial Seal this _______ day of ____, 20____.
___________________________
Notary Public
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