EXHIBIT 10.12
DEALER LOAN AND SECURITY AGREEMENT
FINOVA Capital Corporation Data net International, Inc.
1060 First Avenue 1304 John Reed Court
Suite 100 City of Industry, CA 91745
King of Prussia, PA 19406
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 mere 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 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
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 acknowledgments 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 risk of confirming directly with
you, upon our request for each loan, the exact terms and conditions then
being stated by you, including without limitation rate of interest and terms
of repayment. In no event will we view such materials as a commitment or
other offer on your part to lend, and we will have no right to any loan under
any particular terms until actually made and under the terms so made. We
understand and agree that the full amount of each loan will be paid to you on
its due date without deduction for any sums due from Manufacturer or any
Credit Memo that may have
been issued to you, unless you have previously notified us that you have
received and applied the amount of the Credit Memo Issued by the Manufacturer.
We understand that you may, from time to time, issue advices to us. Such
advices may include, but need not be limited to, periodic or monthly
statements of our account, periodic letter advices in the nature of
statements of account, issued from time to time, and letter forms or other
forms of notices of due dates of finance plan payments and of the specific
terms of loans which we have with you. Unless we, within ten (10) days from
the date of any such advice, give you written and itemized objection to the
contents of such advice, we shall be fully bound thereby and acknowledge that
the content of such advice is true, correct, and complete, and accurately
reflects our obligations to you as 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 evidences of debt, Manufacturer
invoices, and other like materials as may be revised from time to time
("Collateral Documents"), together with this Agreement, contain our entire
understanding, and we acknowledge that we will not be relying upon any prior
oral or written promises or undertakings or future oral promises between us.
No modification hereof or of the Collateral Documents will be binding upon
you unless in a writing duly executed on your behalf by an officer holding
the rank of Vice President or higher.
We hereby authorize you to disburse the proceeds of each loan directly to
Manufacturer on our behalf. Further, we shall and hereby authorize
Manufacturer to deliver its invoice for Inventory, together with all
Certificates of Origin, directly to you. You may assume that all such
invoices so submitted are authentic and accurate and that they have been
submitted on our behalf and with our permission. Receipt by you from us or
Manufacturer of an invoice for Inventory shall be your authority to make a
loan to us under terms and conditions then being stated by you. In addition
we shall and hereby authorize the Manufacturer to issue all Credit Memos
directly to you.
We acknowledge that the term "Prime Rate," as used in the Collateral
Documents in reference to the rate of interest applicable to loans to us,
will mean the average of the Prime Rates (the base rate for corporate loans
at large U.S. money center commercial banks) quoted in the Wall Street
Journal under the caption "Money Rates," and agree that the interest rate
applicable to our loans from you will automatically change from time to time
effective upon each change in the published Prime Rate. We further agree
that interest on our loans from 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
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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 Pennsylvania Uniform Commercial Code ("Code"),
together with 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. 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.
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 relate 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 enable 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 whither direct or indirect, primary
or secondary, absolute or contingent, or otherwise, including but not limited
to all loans made by you to us, whither now existing or hereafter acquired,
and the Proceeds of all of the foregoing.
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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 interest 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. 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
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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 he 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 at any and all times, 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.
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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 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
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,
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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 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. To the extent permitted by applicable law, we authorize you, your
designee, the Clerk of the Court, or any attorney of any Court, in the
Commonwealth of Pennsylvania or any other state, to appear for us at any time
in any and all actions and to confess judgment against us for all sums then
owed to you, whether or not then payable, together with an attorney's fee of
15% of all sums then owed and/or for the recovery of any or all of the
Inventory in our possession. Wherever this provision is prohibited,
unenforceable or unlawful, it is deemed stricken from this Agreement.
17. 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, n notwithstanding any
conduct or custom on your part in refraining from so doing at any time or
times. Your failure at any time to invoice 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.
18. 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.
19. 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 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
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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. 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.
20. 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.
21. 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.
22. THIS AGREEMENT SHALL BE DEEMED EFFECTIVE WHEN ACCEPTED AND EXECUTED
BY YOU IN THE COMMONWEALTH OF PENNSYLVANIA. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA.
23. AS AN INDEPENDENT COVENANT, WE IRREVOCABLY CONSENT TO THE
JURISDICTION OF THE COURTS OF COMMON PLEAS OF PHILADELPHIA, PENNSYLVANIA
AND/OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF
PENNSYLVANIA 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, 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 June 3rd,
1997:
DATA NET INTERNATIONAL, INC.
- ----------------------------
(Corporate Name)
By: /s/ JAMES UNG
-------------------------
President
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Attest: /s/ MEI YANG
--------------------
Secretary
(CORPORATE SEAL)
APPROVED AND ACCEPTED
IN KING OF PRUSSIA, PENNSYLVANIA
FINOVA CAPITAL CORPORATION
(Secured party)
BY: /s/
---------------------------------
DATE:
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