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EXHIBIT 10.19
THIS AGREEMENT IS SUBJECT TO THE TERMS OF A CERTAIN AMENDED AND RESTATED
INTERCREDITOR AGREEMENT DATED AS OF APRIL 21, 1995, AMONG IBM CREDIT
CORPORATION, ITT COMMERCIAL FINANCE CORP., HEWLETT-PACKARD COMPANY, FINOVA
CAPITAL CORPORATION, CITIBANK, N.A. AND ENTEX HOLDINGS, INC.(COLLECTIVELY, THE
"ENTEX LENDERS"), AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, AS THE SAME HAS
BEEN AND MAY BE AMENDED, SUPPLEMENTED, OR OTHERWISE MODIFIED FROM TIME TO TIME
IN ACCORDANCE WITH ITS TERMS (THE "INTERCREDITOR AGREEMENT"), AND THE OTHER
AGREEMENTS AS DEFINED THEREIN
DEALER LOAN AND SECURITY AGREEMENT
FINOVA Capital Corporation ENTEX INFORMATION SERVICES, INC.
0000 Xxxxx Xxxxxx Exact Legal Name
Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000 SIX INTERNATIONAL DRIVE
Street Address
RYE BROOK, NY 10573-1058
City, State, Zip Code
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 have specified in your letter dated April 17, 1995 as
such letter may be modified upon notice to us, 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 therefor, 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
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implemented to absolutely assure your ability to identify your Collateral.
Accordingly, with respect to other financing arrangements pursuant to which we
intend to grant a security interest or lien in the Collateral in which, pursuant
to the Intercreditor Agreement your lien and security interest is prior to the
liens and security interests of all other parties to the Intercreditor Agreement
(the "FINOVA Priority Collateral"), or except as otherwise agreed by you in the
Agreement between us and the ENTEX Lenders dated as of April 21, 1995, we will
obtain both your written permission prior to arranging such other financing and
such acknowledgements and undertakings from our other lenders to whom we xxxxx x
xxxx or security interest in the FINOVA Priority Collateral 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 fifteen (15) 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
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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 many 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
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
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Inventory, as that term is defined in the New York 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) "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.
e) "Collateral" means, individually and collectively, Inventory,
Accounts, General Intangibles 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, and in all Accounts and General Intangibles 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
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provided by us to you in connection with our application for each loan from you
is and will be complete and accurate in every material 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 FINOVA Priority 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, provided, however, that you shall promptly provide us with a copy of
any such filing of this Agreement in any public office, with such copy
reflecting the acknowledgement of the filing by such public office.
8. We will maintain the Inventory unopened and in its original packaging,
except for such Inventory as we may configure (subject to normal wear and tear
incident to such configuration), 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, upon 48 hours prior notice (so long as
no event of default has occurred under this Agreement) 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. If an event of default has occurred under this Agreement, we agree that
you do not have to provide us with notice prior to conducting such an inspection
or examination. 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. 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 in excess of $200,000 in the
aggregate, except that if an event of default has occurred hereunder, we will
promptly remit to you in the form received, with all necessary endorsements, all
such Proceeds. You may make
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and settle insurance claims and endorse our name on any checks or drafts
constituting Proceeds of insurance. 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. Except as provided in the Intercreditor Agreement, 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,
provided, however, that you will provide us with written notice that you have
done any of the foregoing, as soon thereafter as is reasonably practicable under
the circumstances. 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
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records at any and all times, upon 48 hours prior notice (so long as no event of
default has occurred under this Agreement), during normal business hours, and to
permit you access to each location at which any of our General Intangibles
pertaining to the FINOVA Priority Collateral are located. If an event of default
has occurred under this Agreement, we agree that you do not have to provide us
with notice prior to conducting such an audit.
13. We will provide you with written notice of the following matters
immediately upon the occurrence thereof:
a) A change in any material 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 in excess of
$75,000 of any of the Collateral, or related to our business operations
generally at either our Rye Brook, NY headquarters, or our Erlanger Kentucky
location; 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 material 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 occurrence
thereof; 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
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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, in either case where the amount of the Collateral involved exceeds
$75,000; 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) in
excess of $5,000,000 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 pursuant to which our obligations exceed
$5,000,000, 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, provided, however, that any event of
default under any such lease which results in the lessor taking action against
us shall be considered an event of default hereunder, regardless of the dollar
amount involved; 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
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deemed reasonably and properly given if mailed by ordinary mail or overnight
delivery service 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. 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 (addressing ministerial matters only) in this Agreement
and in any documents or financing statements executed by us and including
amendments and continuations thereof under the Code; to execute and/or have
acknowledged any form of security instruments, notes, drafts and documents; and
to make any requisite affidavits which may be necessary or required by you,
and/or which you may desire to evidence or secure advances made by you pursuant
to the terms of this Agreement. So long as the foregoing are consistent in all
material respects with the terms of this Agreement, all of the foregoing may be
executed in such form and substance as you in your sole discretion may deem
necessary or proper, and this power of attorney, being coupled with an interest,
is irrevocable.
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
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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 NEW YORK, AND THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK.
22. AS AN INDEPENDENT COVENANT, WE IRREVOCABLY CONSENT TO THE SERVICE OF
PROCESS 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 April 21,
1995:
ENTEX INFORMATION SERVICES, INC.
(Corporate Name)
By: /s/ signature illegible
Vice President, Treasurer
Attest: /s/ Xxxxx X. Xxxxxxx
Assistant Secretary
(CORPORATE SEAL)
APPROVED AND ACCEPTED IN KING OF PRUSSIA, PENNSYLVANIA
FINOVA CAPITAL CORPORATION
(Secured Party)
BY: /s/ signature illegible
DATE: 4/25/95
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[FINOVA LETTERHEAD]
April 17, 1995
Xx. Xxxxxxxx Xxxxx, Vice President and Treasurer
ENTEX Information Services, Inc. ("ENTEX")
Xxx Xxxxxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000-0000
RE: Credit Line for Inventory Financing
Dear Xx. Xxxxx:
We are pleased to advise you that FINOVA Capital Corporation ("FINOVA") has
conditionally approved an inventory financing credit line of $20,000,000.00 (the
"Credit Line"), based upon completing the information listed below. In addition,
the Credit Line is subject to the terms and conditions set forth in the Dealer
Loan and Security Agreement to be executed in connection herewith (the
"Agreement"), and any default in the terms and conditions set forth herein shall
constitute an event of default under the Agreement.
The terms under which such financing will be provided will be Net 60 days for
Apple Computer, Inc. products. Invoices will be financed under a common due date
system where invoices will be grouped by date to provide approximately six
payment dates per month. From time to time, FINOVA may offer different terms to
be commensurate with Manufacturer programs. You will receive transaction
confirmations and monthly statements from us.
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Entex Information Services, Inc.
April 17, 1995
Page 2
In order to activate the Credit Line, the following documentation needs to be
completed:
All enclosed Loan and Security Documentation including but not limited to:
1. Standard Broad Lien UCC Documentation for determined locations.
2. Dealer Loan and Security Agreement.
3. Intercreditor Agreement with all lenders giving FINOVA a first lien
priority in all products financed and identifiable cash and insurance
proceeds.
4. FINOVA will complete an initial physical review of the inventory to
be financed and an overall review of the inventory control and
procedures at the ENTEX warehouse in Erlanger, KY.
5. Landlord lien waivers will be needed for all necessary locations.
These will need to be in place no later than 60 days from activation
of the Credit Line.
6. Insurance coverage will be needed in the amount of $20,000,000.00
naming FINOVA Capital Corporation as Lender's Loss Payee.
In addition, to maintain this Credit Line, you must maintain full
compliance with the following terms and conditions:
1. Weekly collateral monitoring and monthly collateral reconciliations
as outlined below:
a. FINOVA will receive weekly inventory reports of the products
being financed only. These reports will be delivered to FINOVA's
King of Prussia, PA location every Wednesday with the report
reflecting inventory as of the close of business the previous
Sunday.
b. FINOVA will also obtain weekly reports of credit memos, returns,
and price protections for products financed to cover the same
time period as the inventory report. The process for these items
will also be reviewed during the review of inventory prior to
activation.
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Entex Information Services, Inc.
April 17, 1995
Page 3
c. The items above will be reconciled to FINOVA's outstanding
balance as follows:
FINOVA outstandings ______________________
Less: Inventory Report ______________________
PP's, Rtns', CM's ______________________ MDF funds
will not be
eligible
Less: product invoiced to
ENTEX but not rec'd ______________________
Plus: Products rec'd by ______________________
ENTEX but not yet ______________________
invoiced ______________________
Net collateral (shortfall) ______________________
Plus: Amounts of next ______________________
two payments ______________________
Total collateral reconcil- ______________________
iation (shortfall) ______________________
d. This same calculation will be used to reconcile the collateral at
each ENTEX fiscal month end. If there is a shortfall in the total
collateral reconciliation at the end of each fiscal month, then
ENTEX will be required to make up this shortfall with a cash
payment to the FINOVA loan balance, immediately upon the results
of the reconciliation.
e. FINOVA will physically review the inventory at the Erlanger,
Kentucky location on a monthly basis for the first three (3)
months following the initial funding, and on a quarterly basis
for the year thereafter. Our analysis will include:
a) test costs of the inventory
b) spot verification of inventory report cost
versus invoice cost
c) credit memo verification
2. Quarterly financial reporting no later than 45 days after the end of
each fiscal quarter.
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Entex Information Services, Inc.
April 17, 1995
Page 4
3. Monthly Financial reporting will be required no more than thirty
days after the end of the month.
4. Audit fiscal financial statement will be required no more than 120
days after the end of the fiscal year end.
5. Projections for the next fiscal twelve months will be required not
later than 30 days before the end of the fiscal year.
To maintain this Credit Line, you must also maintain full compliance with the
terms and conditions of the Agreement. We reserve the right to discontinue this
Credit Line at any time at our sole discretion. Any invoice not paid within the
period listed above will be charged at a default rate of Prime Rate plus two
percent for any payments received between one and five days after the due date
and Prime Rate plus six percent from six days after the due date until the
payment is received. Offset to payments to your account are not to be made
unless authorized by FINOVA. Any authorized offsets will be charged the standard
default rate.
Your account, once activated will be handled on a daily basis by Account Manager
Xxxx Xxxxxxxxx. If you have any questions concerning the items above please
contact Xxxx, or myself at your convenience.
We look forward to a lasting relationship with you and your company. Let me
take this opportunity to thank you for allowing us to be of service. If we can
be of further assistance, please feel free to contact us at 0-000-000-0000.
Please return the documents to us promptly, along with an acknowledgement copy
of this letter.
Sincerely,
/s/ XXXXXXX XXXXX
-----------------
Xxxxxxx Xxxxx Acknowledged and Accepted
Vice President of Operations
By: /s/ XXXXXXXX X. XXXXX
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CC: Xxxx Xxxx Xxxxxxxx X. Xxxxx
Xxx Xxxxxxx Vice President, Treasurer
Xxxx Xxxxxxxxx ENTEX Information Services, Inc.
15
[FINOVA LETTERHEAD]
May 17, 1996
Xx. Xxxxxxxx Xxxxx, Vice President and Treasurer
ENTEX Information Services, Inc. ("ENTEX")
Xxx Xxxxxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000-0000
RE: Credit Line for Inventory Financing
Dear Xx. Xxxxx:
We are pleased to advise you that FINOVA Capital Corporation ("FINOVA") has
conditionally approved an inventory financing credit line of $120,000,000.00
(the "Credit Line"), based upon completing the information listed below as well
as the continuation of participations totaling $20,000,000.00. The Credit Line
will be allocated under the following parameters: Maximum $95,000,000.00 in
aggregate outstandings (invoices purchased by FINOVA) and the balance of
$25,000,000.00 for open approvals (invoices approved for financing but not yet
purchased). In addition, the Credit Line is subject to the terms and conditions
set forth in the Dealer Loan and Security Agreement executed on April 21, 1995
in connection herewith (the "Agreement"), and any default in the terms and
conditions set forth herein shall constitute an event of default under the
Agreement.
Thank You.
Sincerely,
/s/ Xxxxxxx Xxxxx
--------------------------------
Xxxxxxx Xxxxx
Vice President Portfolio Manager
