Exhibit 10.38
DEALER LOAN AND SECURITY AGREEMENT
Textron Financial Corporation I-Sector Corporation
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0000 Xxxxx Xxxx, Xxxxx 000 0000 Xxxxxxxxx Xxxxxxx
Xxxxx Xxxxx, XX 00000 Xxxxxxx XX 00000
Gentlemen:
1. We are an authorized dealer 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 dealers, 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 thirty (30) 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 financed by you, 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 shipped to us or against one of our
valid purchase orders 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 for
inventory financed by 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 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 statements, documents of title,
manufacturers' certificates of origin, warehouse receipts, bills of lading,
vehicle titles, waivers, consents and such other manner of things, and take all
manner of actions, as you may from time to time request which are in your sole
opinion necessary or desirable in order to perfect, protect, maintain, continue,
realize and/or enforce your rights and security interests granted herein. This
shall include, without limitation, the written waiver by the landlord of each
location at which any Collateral is located. A carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement and
may be filed in any public office as a financing statement.
8. We will maintain the Inventory in excellent, salable condition,
consistent with the highest standards in the industry, and will comply with all
applicable laws relating to our use thereof. We will provide you or your
designated representatives with access, at any time, during normal business
hours, whether announced or unannounced, to each location at which any
Collateral is located, to inspect and examine the Inventory and other Collateral
and business records, including without limitation all financial records. We
agree, at our sole cost, to keep all Inventory insured against risks covered by
standard forms of fire, theft and extended coverage and such other risks as may
be reasonably required by you and under policies issued by an insurance company
or companies and in amounts satisfactory to you in an amount equal to or greater
than the inventory value as listed on our inventory reports at all times. You
shall be named to the extent your interest may appear under a Lender's Loss
Payable Clause in such policy, which shall provide that the insurance cannot be
canceled without at least thirty (30) days prior written notice to you and shall
insure you notwithstanding any act or neglect on our part. At our expense, we
shall furnish you with evidence of the same in form satisfactory to you, and
shall provide you with a Certificate thereof naming you as certificate holder.
We will promptly remit to you in the form received, with all necessary
endorsements, any Proceeds of such insurance. You may make and settle claims and
endorse our name on any checks or drafts. You may apply any Proceeds of
insurance which may be received by you toward payment of any obligations or
liabilities owed to you by us, whether or not then due, in such order of
application as you may determine.
Loss, damage or destruction of all or any of the Collateral shall
not affect or diminish our liabilities to you and we assume all responsibility
and risk for the existence, character, quality, condition, value, and delivery
of Inventory.
9. We will pay and/or cause to be paid all taxes, levies and other
governmental charges and assessments payable on or with respect to the
Collateral and any premises at which the Collateral is located, which if unpaid
may result in a lien or imposition thereon. Such taxes, levies, charges and
assessments will be paid prior to the date that any penalty for late payment may
be assessed with respect thereto, and if requested by you we will, at our
expense, provide you with receipts or other evidence of payment in form
satisfactory to you.
10. We will not suffer or permit any lien, security interest, charge,
claim or encumbrance to be placed on any of the Collateral, other than in your
favor, or suffer or permit any interest to exist therein which is adverse to
your own. We represent that we are, and agree to remain, the sole and absolute
owner of the Collateral, until sold in the ordinary course of our business, and
are and will remain qualified under the terms of all applicable laws and under
our dealership arrangements with Manufacturer to conduct our business as
presently conducted, with all necessary governmental and other licenses,
consents and authorizations having been obtained.
11. At your option, without any obligation to do so, you may pay and
discharge taxes, liens, levies, security interests or other encumbrances against
the Collateral, may pay for insurance on and for the maintenance and
preservation of the Collateral and perform on our behalf any other obligation
required to be performed by us hereunder but which we have failed to so do. We
shall reimburse you on demand for any payment made or any expense incurred by
you pursuant to the authority hereof, with interest at the highest rate
chargeable on any of our loans with you, and will pay you a late charge of 1.5%
per month of the amount due to you, or the highest legally permissible rate if
lower.
12. We will furnish you such information regarding our business and
financial condition as you may request from time to time, including without
limitation such financial statements, in such form and bearing such
certifications, as you shall require. We agree that you may audit or cause to be
audited our books and records upon reasonable notice, during normal business
hours, whether announced or unannounced, and to permit you access to each
location at which any of our General Intangibles are located.
13. We will provide you with written notice of the following matters
immediately upon the occurrence thereof:
a) A change in any information provided by us to you herein, in
any application made by us in connection with any loan, or otherwise, including
without limitation, any change in the location of any Collateral or in any other
circumstances regarding the Collateral or our business operations;
b) Loss, theft, or substantial damage or destruction of any of the
Collateral or related to our business operations generally; or
c) Any other matter which might have a material adverse affect on
our financial condition or operations or which, upon the giving of notice or
passage of time, or both, would result in an event of default by us hereunder.
14. Any one or more of the following shall be an event of default by us
under this Agreement:
a) Failure by us or any person jointly or otherwise liable to you
for our obligations to you, as surety, guarantor or otherwise ("Other Obligor")
to pay any amount due you, as and when due, contained or referred to herein or
in any other instrument, document, or agreement to which we or such Other
Obligor are a party or by which we or such Other Obligor are bound to you,
whether now existing or hereafter created; or
b) Failure by us or any Other Obligor to perform or comply with
any other obligation, covenant or liability contained or referred to herein or
in any other instrument, document, or agreement to which we or such Other
Obligor are a party or by which we or such Other Obligor are bound to you,
whether now existing or hereafter created, and such failure, if reasonably
susceptible of cure, is not cured within fifteen (15) days of the notice by you
to us via U.S. certified mail return receipt requested or overnight delivery
service with proof of delivery ; or
c) If any warranty, representation, or statement made or furnished
to you by us or on our behalf or on behalf of an Other Obligor, including any
representation made on our behalf by Manufacturer, proves to be false,
misleading or incomplete in any respect; or
d) Loss, theft or substantial damage or destruction of any of the
Collateral, or the making of any levy, seizure, or attachment thereof or
thereon; or
e) Dissolution, merger, consolidation, sale or other disposition
of a controlling interest in our ownership or of substantially all of our
assets, termination of existence, insolvency, business failure, appointment of a
receiver, trustee, sequestrator, conservator, or other judicial representative,
whether similar or dissimilar, for us or for all or any part of our property,
assignment by us for the benefit of creditors or the commencement of any
proceeding by or against us under any provision of any federal or state
bankruptcy or insolvency laws; or
f) Failure by us to pay any obligation(s) or liability(ies)
whatsoever, past, present or future, when due to any other creditor, or the
occurrence of any event of default by us under any agreement with any of our
respective creditors, including without limitation the occurrence of an event of
default under any lease relating to any premises upon which all or any part of
our Inventory or other Collateral is located; or
g) If we give notice of a Bulk Sale or intended Bulk Sale, or call
a meeting of our respective unsecured creditors or offer a composition or
extension to such creditors, or cease to operate our respective business.
15. Upon the occurrence of an event of default, you shall have the
right to repossess the Inventory and also any and all rights available under the
Code, including, without limitation, the right to declare any and all unpaid
balances of principal, interest, costs and expenses arising out of any and all
of our obligations or liabilities to you, whether past, present or future,
direct or indirect, matured or unmatured, liquidated or unliquidated,
immediately due and payable without notice to or demand on us. We irrevocably
authorize you or your agent to enter all premises to take possession of and
remove the Inventory and other Collateral and release you from any and all
liability with respect to such entry or removal. We shall in case of default, if
you so request, assemble and deliver the Inventory and other Collateral, at our
expense, to a place to be designated by you. We shall pay all of the costs you
incur in the enforcement of any of our obligations to you or the collection of
any liabilities owed to you by us, including, without limitation, costs,
expenses and reasonable attorneys' fees. If any notification of intended
disposition of any of the Inventory or other Collateral is required by law, such
notification shall be deemed reasonably and properly given if mailed by U.S.
certified mail return receipt requested or overnight delivery service with proof
of delivery at least ten (10) days before such disposition, postage prepaid,
addressed to us, either at our address shown in this Agreement, or at such other
address as we may have designated to you in writing.
16. Any law, custom or usage to the contrary notwithstanding, you shall
have the right at all times to enforce the covenants and provisions of this
Agreement in strict accordance with the terms hereof, notwithstanding any
conduct or custom on your part in refraining from so doing at any time or times.
Your failure at any time to invoke your rights under the covenants and
provisions of this Agreement strictly in accordance with the same shall not be
construed as having created a custom in any way or manner contrary to the
specific terms and provisions of this Agreement or as having in any way or
manner modified, altered or waived the same. Time is of the essence in our
performance hereunder and under all other agreements with you. All of your
remedies are cumulative and not alternative, and can be exercised in any order
and in any manner, separately or simultaneously, and from time to time until all
liabilities and obligations to you are satisfied in full.
17. This Agreement may be assigned by you, but we may not assign this
Agreement without your prior written consent. If you assign this Agreement, you
shall have no further obligation hereunder. All of your rights hereunder shall
inure to the benefit of your successors and assigns and all our obligations
shall bind our successors and assigns. If there be more than one party obligated
to you under this Agreement, their obligations hereunder shall be joint and
several, and the terms "we" "us" or "our" as used herein shall refer to them
jointly and severally.
18. We authorize and empower you or your employees, agents or
representatives, on our behalf, and in our name, to complete and supply any
omission or blank spaces in financing statements including amendments and
continuations thereof under the Code. All of the foregoing may be executed in
such form and substance as you in your sole discretion may deem necessary or
proper.
19. Our officers, by execution hereof, warrant and represent to you
that we are a duly formed corporation and are qualified to do business in the
state(s) in which our place(s) of business is (are) located; and, at a Board of
Directors meeting duly convened, our officer(s) were properly authorized to
execute and deliver this Agreement and all other documents whether hereunder or
otherwise; that the execution and delivery of this Agreement does not contravene
the Articles of Incorporation, By-Laws, or any agreement, document or instrument
to which we are a party or by the terms of which we are bound.
20. Any provision or part thereof in this Agreement found upon judicial
interpretation or construction to be prohibited by law shall be ineffective to
the extent of such prohibition, without invalidating the remaining provisions
hereof. All words used shall be understood and construed to be of such gender or
number as the circumstances may reasonably require.
21. THIS AGREEMENT SHALL BE DEEMED EFFECTIVE WHEN ACCEPTED AND EXECUTED
BY YOU IN THE STATE OF RHODE ISLAND, AND THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF RHODE ISLAND.
22. AS AN INDEPENDENT COVENANT, WE IRREVOCABLY CONSENT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF RHODE ISLAND IN ANY AND ALL ACTIONS
BETWEEN US WHETHER UNDER THIS AGREEMENT OR OTHERWISE AND TO THE SERVICE OF
PROCESS THEREIN BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO US AT THE
ADDRESS AS SET FORTH HEREIN OR ON YOUR RECORDS, AND IRREVOCABLY WAIVE JURY TRIAL
AND THE RIGHT THERETO IN ANY AND ALL ACTIONS BETWEEN US, WHETHER UNDER THIS
AGREEMENT OR OTHERWISE.
WE HEREBY ACKNOWLEDGE THAT WE HAVE READ AND UNDERSTAND ALL OF THE
TERMS AND PROVISIONS OF THIS AGREEMENT.
Intending to be legally bound, signed and delivered on January
31, 2002:
I-Sector Corporation
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(Corporate Name)
By:
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Xxxxx X. Xxxx
Chief Executive Officer
Attest:
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Xxxxxx X. Xxxxxxxx,
Secretary
(CORPORATE SEAL)
APPROVED AND ACCEPTED
TEXTRON FINANCIAL CORPORATION
(Secured Party)
BY: _______________________________________
DATE: _______________________________________
Tax ID#: 00-0000000
Filename: DLSA broad
