Exhibit 10.1
FIRST AMENDMENT AGREEMENT
     THIS FIRST AMENDMENT AGREEMENT (this “First Amendment Agreement”) is dated
as of September 9, 2005 by and among (i) VALERENT, INC., a Delaware corporation
(“Valerent”), (ii) INTERNETWORK EXPERTS, INC., a Delaware corporation
(“Internetwork Experts”), (iii) I-SECTOR CORPORATION, a Delaware corporation
(“I-Sector”), and (iv) STRATASOFT, INC., a Texas corporation (“Stratasoft;”
Valerent, Internetwork Experts, I-Sector, and Stratasoft are referred to herein,
individually and collectively, as the case may be, as “Borrower”), and
(v) TEXTRON FINANCIAL CORPORATION, a Delaware corporation (”TEXTRON”).
Recitals
     A. Borrower, ISECOLDSUB, INC., a Delaware corporation (“Isecoldsub”), and
TEXTRON entered into that certain Loan and Security Agreement, dated
September 30, 2004 (as amended prior to the date on which this First Amendment
Agreement becomes effective, said Loan and Security Agreement is referred to
herein as the “Existing LSA” and, after giving effect to this First Amendment
Agreement, as the “Amended LSA” and the Schedule attached to the Existing LSA is
referred to herein as the “Existing Schedule” and, after giving effect to this
First Amendment Agreement, as the “Amended Schedule”) pursuant to which TEXTRON
extended to Borrower a $25,000,000 secured credit facility for floorplan
financing.
     B. Borrower has requested TEXTRON (i) to extend to it a multiple advance
working capital credit facility in the maximum amount of $4,000,000, (ii) to
permit the extension of revolving credit loans up to a maximum sublimit of
$10,000,000 on the terms and conditions set forth below under the Existing LSA,
and (iii) to make the other changes set forth below to the Existing LSA, the
Existing Schedule and the existing Loan Documents (as such term is defined in
the Existing LSA; such existing Loan Documents are referred to herein as the
“Existing Loan Documents” and, as amended hereby, are referred to herein as the
“Amended Loan Documents”).
     C. Isecoldsub has been dissolved and Borrower requests that it be
discharged and released from any and all of its obligations under the Existing
LSA.
     D. Borrower and TEXTRON have agreed to amend the Existing LSA, the Existing
Schedule and the Existing Loan Documents on the terms and conditions as set
forth below in this First Amendment Agreement.
     NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt, adequacy, and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used herein and not defined herein shall have
the meanings assigned to such terms in the Existing LSA. The Recitals to this
Agreement are fully incorporated herein by this reference thereto.
2. Discharge of Isecoldsub. Isecoldsub is hereby released and discharged from
all of its duties and obligations under the Existing LSA and Existing Schedule.
The term “Borrower” in the Existing LSA and the Existing Schedule and the other
Loan Documents shall exclude Isecoldsub. The name of Isecoldsub on the cover
page of the Existing LSA and the cover page of the Existing Schedule is hereby
removed and deleted. The Borrowers hereby reconfirm their joint and several
obligations under the Existing LSA, the Existing Schedule, the Amended LSA

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and the Amended Schedule notwithstanding the discharge and release of Isecoldsub
therefrom as provided for herein.
3. New Definitions. The following new or existing definitions are hereby added
or amended and restated, as the case may be, to or in respect of Section 1 of
the Existing LSA such that the alphabetical ordering of such defined terms is
preserved:
          “Deposit Accounts” has the meaning set forth in Section 9-102 of the
Code.
          “Earnings Before Taxes, Interest, Depreciation and Amortization”
(“EBITDA”) with respect to any period means consolidated net income of Borrower
for such period determined in accordance with GAAP plus all income taxes,
interest expenses and depreciation and amortization charges and non-cash charges
or non-recurring charges previously approved by Textron deducted in the
computation thereof.”
          “2005 Facility” means that certain Multiple Loan and Security
Agreement between Borrowers and TEXTRON dated as of September 9, 2005, as
amended from time to time.
4. Intentionally Omitted.
5. Intentionally Omitted.
6. Existing Schedule — Second Paragraph. The second paragraph on the first page
of the Existing Schedule is amended and restated in its entirety as follows:
          The only facility being extended by TEXTRON to the Borrowers hereunder
is a Revolving Credit Loan and Floorplan Loan facility as described below. To
the extent that any term or provision in the Loan and Security Agreement to
which this Schedule is attached is inconsistent with any term or provision in
this Schedule, the term or provision in this Schedule shall govern.
7. Existing Schedule — Definition of Eligible Receivables. The definition of
“Eligible Receivable” in the Existing Schedule is amended and restated in its
entirety as follows:
          “Eligible Receivables” means Receivables arising in the ordinary
course of Borrower’s business from the sale of goods or rendition of services,
which TEXTRON, in its Permitted Discretion, shall deem eligible based on such
considerations as TEXTRON may from time to time deem appropriate. Without
limiting the foregoing, (a) no Receivable shall qualify as an Eligible
Receivable if (i) the account debtor has failed to pay the Receivable within a
period of ninety (90) days after invoice date, to the extent of any amount
remaining unpaid after such period; (ii) the account debtor has failed to pay
more than the percentage specified below (“Cross-Age Percentage”) of all other
outstanding Receivables owed by it to Borrower within ninety (90) days after
invoice date in respect thereof; (iii) the account debtor is an Affiliate of
Borrower; (iv) the Borrower is not the lawful and unconditional owner of the
Receivable; (v) the goods relating thereto are placed on consignment, guaranteed
sale, “bill and hold,” “COD” or other terms pursuant to which payment by the
account debtor may be conditional; (vi) the account debtor is not located in the
United States or Canada, unless the Receivable is supported by a letter of
credit, credit insurance, or other form of guaranty or security, in each case in
form and substance satisfactory to TEXTRON; (vii) the account debtor is the

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United States of America or any state, city, municipality, or other political
subdivision thereof, or any department, agency or instrumentality thereof,
unless the provisions of the applicable Assignment of Claims Act has been
complied with,; (viii) Borrower is or may become liable to the account debtor
for goods sold or services rendered by the account debtor to Borrower; (ix) the
account debtor’s total obligations to Borrower exceed the percentage specified
below (“Concentration Limit”) of all Eligible Receivables, to the extent of such
excess; (x) the account debtor disputes liability or makes any claim with
respect thereto (up to the amount of such liability or claim), or is subject to
any insolvency or bankruptcy proceeding, or becomes insolvent, fails or goes out
of a material portion of its business; (xi) the amount thereof consists of late
charges or finance charges; (xii) the amount thereof consists of a credit
balance more than ninety (90) days after invoice date; (xiii) the face amount
thereof exceeds the amount specified below (“Proof of Shipment Threshold”),
unless accompanied by evidence of shipment of the goods relating thereto
satisfactory to TEXTRON in its Permitted Discretion; (xiv) the invoice in
respect of such Receivable constitutes a progress billing on a project not yet
completed, except that the final billing at such time as the matter has been
completed and delivered to the customer may be deemed an Eligible Receivable and
except that any progress or interim billing may be deemed an Eligible Receivable
if the customer has agreed in writing to accept and pay specific interim
percentage invoices; or (xv) the amount thereof is not yet represented by an
invoice or bill issued in the name of the applicable account debtor and (b) no
DISD Receivable shall qualify as an Eligible Receivable.

             
 
  (i)   Cross-Age Percentage:   50%
 
           
 
  (ii)   Concentration Limit:   25%
 
           
 
  (iii)   Proof of Shipment Threshold:   $100,000 and all invoices dated the
last day of each month

8. Existing Schedule — Definition of Minimum Working Capital. The definition of
“Minimum Working Capital” in the Existing LSA is amended and restated in its
entirety as follows:
          “Minimum Working Capital” at any date means an amount equal to (i) the
sum of the amount at which Borrower’s cash, Receivables and Inventory
(calculated at the lower of cost or market and determined on a first-in,
first-out basis) would be shown on a consolidated balance sheet of Borrower at
such date prepared in accordance with GAAP, provided that amounts due from
Affiliates shall be excluded therefrom, minus (ii) Adjusted Current Liabilities
(as defined below in this definition) at such date determined on a consolidated
basis. “Adjusted Current Liabilities” for this definition shall mean at any time
the sum of the Credit Loans (as defined in the 2005 Facility), acounts payable,
Revolving Credit Loans and Floorplan Loans payable, current portion of long term
notes payable, accrued expenses (less Stratasoft warranty reserves), all as
would be shown on a consolidated balance sheet of the Borrowers prepared in
accordance with GAAP.

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9. Existing Schedule — Definition of Total Liabilities. The definition of “Total
Liabilities” in the Existing LSA is amended and restated in its entirety as
follows:
          “Total Liabilities” at any date means all accounts payable, all
short-term and long-term notes payable, loans and bonds (including, without
limitation, the Credit Loans (as defined in the 2005 Facility), the Revolving
Credit Loans and Floorplan Loans but excluding all Subordinated Debt of
Borrower) and all accrued expenses and payables and all payables as a result of
discontinued operations, all determined on a consolidated basis in accordance
with GAAP.
10. Existing Schedule — Total Facility (Section 2.1): Total Facility
(Section 2.1) of the Existing Schedule is amended and restated in its entirety
as follows:
          Twenty-Five Million Dollars ($25,000,000), provided that the Total
Facility shall never exceed the “Borrowing Limit” as provided for under NEGATIVE
COVENANTS (Section 6.2) below and provided that the Total Facility shall be
reduced on a dollar-for-dollar basis for all outstanding principal under the
2005 Facility and all Loan Reserves (as defined in the 2005 Facility) under the
2005 Facility.
11. Existing Schedule — Loans (Section 2.2): Loans (Section 2.2) of the Existing
Schedule is amended and restated in its entirety as follows:
          Revolving Credit Loans: A working capital revolving line of credit is
being extended to Borrower (each loan under such working capital revolving line
of credit is referred to, individually, as a “Revolving Credit Loan” and,
collectively, as the “Revolving Credit Loans”) in an aggregate outstanding
principal amount not to exceed $10,000,000. No individual Revolving Credit Loan
shall exceed at the time of the extension thereof the lesser of (a) and
(b) below:
               (a) the remainder of (1) $10,000,000, minus (2) the aggregate
outstanding principal balance of Revolving Credit Loans previously extended to
Borrower together with Loan Reserves minus (3) the Credit Loans (as defined in
the 2005 Facility) and Loan Reserves (as defined in the 2005 Facility) under the
2005 Facility; or
               (b) the remainder of (1) the Total Facility, minus (2) the
aggregate outstanding principal balance of Floorplan Loans previously extended
to Borrower, minus (3) the aggregate outstanding principal balance of Revolving
Credit Loans previously extended to Borrower, minus (4) the aggregate amount of
all Loan Reserves, minus (5) 100% of the aggregate amount of all open approvals
(based on prices to be invoiced to Borrower) given by TEXTRON in its sole
discretion to any one or more manufacturers of Floorplanned Inventory other than
Cisco Systems, Inc. in respect of the acquisition by Borrower from such
manufacturer or manufacturers of Floorplanned Inventory, minus (6) 50% of the
aggregate amount of open approvals (based on prices to be invoiced to Borrower)
given by TEXTRON in its sole discretion to Cisco Systems, Inc. in respect of the
acquisition by Borrower from Cisco Systems, Inc. of Floorplanned Inventory.
          The aggregate principal amount of all Revolving Credit Loans made to
or for the benefit of Borrower (including all Loan Reserves) shall not exceed at
any time the lesser

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of (1) $10,000,000 minus the Credit Loans (as defined in the 2005 Facility) and
Loan Reserves (as defined in the 2005 Facility) under the 2005 Facility or
(2) the Total Facility, minus the aggregate principal amount of all Floorplan
Loans made to or for the benefit of Borrower (including the sum of (A) 100% of
the aggregate amount of all open approvals (based on prices to be invoiced to
Borrower) given by TEXTRON in its sole discretion to any one or more
manufacturers of Floorplanned Inventory other than Cisco Systems, Inc. in
respect of the acquisition by Borrower from such manufacturer or manufacturers
of Floorplanned Inventory, plus (B) 50% of the aggregate amount of all open
approvals (based on prices to be invoiced to Borrower) given by TEXTRON in its
sole discretion to Cisco Systems, Inc. in respect of the acquisition by Borrower
from Cisco Systems, Inc. of Floorplanned Inventory and outstanding at such
time).
          The availability of Revolving Credit Loans is subject to Operational
Condition No. 6 below.
          Floorplan Loans: A floorplan line of credit is being extended to
Borrower consisting of loans against (i) Floorplanned Inventory not constituting
DISD Inventory and (ii) Floorplanned Inventory consisting of DISD Inventory that
qualifies as Eligible Inventory payable as provided below (collectively
“Floorplan Loans”) in an aggregate principal amount not to exceed at any time
the Total Facility. No individual Floorplan Loan shall exceed at the time of the
extension thereof the lesser of (a) and (b) below:
               (a) one hundred percent (100%) of the manufacturer’s invoice
price for the Floorplanned Inventory or Eligible Inventory, as the case may be,
in respect thereof; or
               (b) the remainder of (1) the Total Facility, minus (2) the
aggregate outstanding principal balance of Floorplan Loans previously extended
to Borrower, minus (3) the aggregate outstanding principal balance of Revolving
Credit Loans previously extended to Borrower, minus (4) the aggregate amount of
all Loan Reserves, minus (5) 100% of the aggregate amount of all open approvals
(based on prices to be invoiced to Borrower) given by TEXTRON in its sole
discretion to any one or more manufacturers of Floorplanned Inventory other than
Cisco Systems, Inc. in respect of the acquisition by Borrower from such
manufacturer or manufacturers of Floorplanned Inventory, minus (6) 50% of the
aggregate amount of open approvals (based on prices to be invoiced to Borrower)
given by TEXTRON in its sole discretion to Cisco Systems, Inc. in respect of the
acquisition by Borrower from Cisco Systems, Inc. of Floorplanned Inventory.
          The aggregate principal amount of all Floorplan Loans made to or for
the benefit of Borrower (including the sum of (A) 100% of the aggregate amount
of all open approvals (based on prices to be invoiced to Borrower) given by
TEXTRON in its sole discretion to any one or more manufacturers of Floorplanned
Inventory other than Cisco Systems, Inc. in respect of the acquisition by
Borrower from such manufacturer or manufacturers of Floorplanned Inventory, plus
(B) 50% of the aggregate amount of all open approvals (based on prices to be
invoiced to Borrower) given by TEXTRON in its sole discretion to Cisco Systems,
Inc. in respect of the acquisition by Borrower from Cisco Systems, Inc. of
Floorplanned Inventory and outstanding at such time) shall not exceed at any
time the remainder of (1) the Total Facility minus (2) aggregate

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outstanding principal amount of the Revolving Credit Loans and the Loan Reserves
(said remainder is sometimes also referred to herein as the “Maximum Floorplan
Amount”).
          Without in any way limiting TEXTRON’s full discretion in granting or
not granting approvals to Cisco Systems, Inc., as contemplated above, Borrower
acknowledges and agrees that the aggregate amount of all such open approvals
will not exceed $20,000,000 unless TEXTRON expressly consents to the same in
writing.
          No Floorplan Loans shall be made against Eligible Inventory consisting
of DISD Inventory at such time as Borrower’s undertakings in respect of E-rate
Year 6 under the Master DISD Contract have been fully performed or if, after
giving effect thereto, the Borrowing Limit under NEGATIVE COVENANTS (SECTION
6.2) below would be breached. No Revolving Credit Loans shall be made if, after
giving effect thereto, the Borrowing Limit under NEGATIVE COVENANTS (SECTION
6.2) below would be breached. No Revolving Credit Loans will be made against any
DISD Receivables. No Floorplan Loans shall be made against Eligible Inventory
consisting of DISD Inventory after September 9, 2005.
          The reference in Section 2.3(b) of the Loan and Security Agreement to
“approvals given by TEXTRON to a manufacturer or vendor of Floorplanned
Inventory” shall have the meaning set forth above with respect to open approvals
given to manufacturers other than Cisco Systems, Inc. and open approvals given
to Cisco Systems, Inc.
          All collections received on any DISD Receivables on and after the
Closing Date shall be applied to the outstanding principal balance of the Credit
Loans (as defined in the 2005 Facility), to cash collateralize all Loan Reserves
(as defined in the 2005 Facility) under the 2005 Facility and to any other
Obligations under the 2005 Facility (other than Obligations arising under this
Loan and Security Agreement) and then will be applied to the outstanding
Obligations hereunder. All other proceeds of Collateral will be applied first to
the outstanding Obligations under and as defined in this Loan and Security
Agreement and then to the outstanding Obligations under the 2005 Facility.
12. Existing Schedule — Interest and Fees (Section 2.6 and 2.7): Interest and
Fees (Section 2.6 and 2.7) of the Existing Schedule is amended and restated in
its entirety as follows:
      Interest Rate:
Revolving Interest Rate. Borrower shall pay TEXTRON interest on the daily
outstanding balance of Borrower’s Revolving Credit Loans at a per annum rate
one-half of one percentage point (0.50%) in excess of the Base Rate (“Revolving
Interest Rate”).
Floorplan Credit Line Interest. Amounts financed under the Floorplan Credit Line
in respect of Floorplanned Inventory shall not accrue interest until the
expiration of any manufacturer interest free period and thereafter shall bear
interest at the per annum rate of one-half (0.5%) percent in excess of the Base
Rate until maturity. Interest shall be due and payable on demand and accrued and
unpaid interest in respect of each Floorplan Loan shall be due and payable, in
any case, on the maturity date thereof. All Floorplan Loans shall mature and be
due and payable sixty (60) days from the date made or such earlier date as
provided for in Exhibit A to this

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Agreement, provided that TEXTRON may increase or decrease such maturity date so
as to conform it to TEXTRON’s common due date program of the 1st, 10th and 20th
day of each month; in any case, such maturity date may be extended as provided
for below or as provided for in Section 2.10(a) of this Agreement. Interest on
any amount past due under the Floorplan Credit Line pursuant to Section 2.6(b)
shall accrue from the maturity date or any extended maturity date in respect
thereof at a per annum rate of four percent (4.0%) in excess of the Base Rate.
The Borrower may ask for an extension of any aforesaid maturity date for a
maximum of 30 days subject to TEXTRON’s review of Borrower’s collateral reports
and its determination, in its PERMITTED DISCRETION, that sufficient collateral
coverage exists for any such extension. If TEXTRON shall permit such extension,
interest shall accrue on any Obligations in respect of such Floorplan Loan at
the rate of two and one-half (2.5%) percent in excess of the Base Rate (on the
average daily balance of such Loan) until the extended maturity date with
respect thereto. Thereafter, interest shall accrue on such Floorplan Loan at a
per annum rate of four percent (4.0%) in excess of the Base Rate.
Floating Rate. In all applications, unless a fixed interest rate is specified,
the interest rate chargeable hereunder shall be increased or decreased as the
case may be, without notice or demand of any kind, upon the announcement of any
change in the Base Rate. Each change in the Base Rate shall be effective
immediately. In all applications unless specified otherwise, interest charges
and all other fees and charges shall be computed on the basis of a year of
360 days and actual days elapsed and shall be payable to TEXTRON in arrears on
the first Business Day of each month.
Default Interest Rate on Revolving Credit Loans. Base Rate plus four percentage
points (4%).
TEXTRON Right to Vary Terms. From time to time TEXTRON may offer different terms
to Borrower after notice with respect to the Revolving Credit Loans and/or
Floorplan Loans. Such terms will become effective at the end of any notice
period in respect thereof provided by TEXTRON. Borrower will receive from
TEXTRON weekly transaction confirmations and monthly statements which will
reflect all applicable terms.
      Amount of Fees:
Examination Fee. Borrower shall pay TEXTRON an examination fee equal to the
actual fees and costs and expenses accrued by the field examiners
(the“Examination Fee”), which shall be deemed fully earned on the date such
payment is due.
13. Existing Schedule — Insurance (Section 3.4); States Qualified to be Business
(Section 5.1); Existing Locations (Section 5.16): Insurance (Section 3.4) of the
Existing Schedule is amended and restated in its entirety as follows:
          Insurance required in the amount equal to the amount of Inventory and
other assets listed on the most recent quarterly financial report of Borrower
but, to the extent that inventory and asset levels of Borrower exceed such
amount (on a consistent basis as determined by TEXTRON in its sole discretion),
the insurance shall be increased to amounts sufficient to cover the higher
inventory levels.

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     States qualified to be business (Section 5.1) of the Existing Schedule is
amended and restated in its entirety as follows:
States Qualified to Do Business (Section 5.1):
All Borrowers — Texas
InterNetwork Experts, Inc. — New Mexico, Oregon and Washington
     Locations (Section 5.16) of the Existing Schedule is amended and restated
in its entirety as follows:

     
 
  Locations (Section 5.16):
 
  6401 Southwest Freeway
 
  Houston, TX 77074
 
   
 
  1955 Lakeway Drive, Suite 200
 
  Lewisville, TX 75057 (Sales Office)
 
   
 
  720 Louisiana Blvd, Suite 301
 
  Albuquerque, NM 87110
 
  2225 Coburg Road
 
  Eugene, Or 97401
(San Antonio, TX Sales Office)
 
   
 
  (Austin , TX Sales Office)
 
   
 
  (Portland, OR Sales Office)
 
   
 
  (Seattle, WA Sales Office)
 
   
 
  (Canada Sales Office)

14. Existing Schedule — Affirmative Covenants (Section 6.1): Under Financial
Covenants (Section 6.1.13) of Affirmative Covenants (Section 6.1) of the
Existing Schedule, the following covenants are amended and restated in their
entirety:
Current Ratio. Borrower shall maintain a ratio of Current Assets to Current
Liabilities (each determined on a consolidated basis under GAAP) of not less
than 1.25 to 1.0 as of the end of each fiscal quarter occurring after the
Closing Date except that Borrower shall maintain a ratio of Current Assets to
Current Liabilities (each determined on a consolidated basis under GAAP) of not
less than 1.15 to 1.0 for, but only for, the fiscal quarter ending on September
30, 2005.
Minimum Tangible Capital Funds. Borrower shall have maintained Tangible Capital
Funds of not less than Two Million Two Hundred Thousand Dollars ($2,200,000) as
of the end of each fiscal quarter occurring prior to the Closing Date. Borrower
shall maintain Tangible Capital Funds of not less than Nine Million Five Hundred
Thousand Dollars ($9,500,000) as of the end of each fiscal quarter occurring
from and after the Closing Date and prior to September 30, 2005. Borrower shall
maintain Tangible Capital Funds of not less than Ten Million Five Hundred
Thousand Dollars ($10,500,000) as of the end of each fiscal quarter occurring on
and after September 30, 2005.

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EBITDA. Borrower shall, for each fiscal quarter ending after the Closing Date
and on or prior to September 30, 2005, cause Earnings Before Interest Taxes
Depreciation and Amortization determined for such fiscal quarter to exceed
$100,000. Borrower shall, for each fiscal quarter ending after September 30,
2005, cause Earnings Before Interest Taxes Depreciation and Amortization
determined for such fiscal quarter to exceed $300,000.
The “Minimum Cash on Hand” covenant is deleted.
Accounts. Borrower shall not transfer or move its depository, operating and
investment accounts from Amegy Bank National Association without the prior
written consent of TEXTRON (which consent will not unreasonably be withheld) and
it shall maintain not less than 85% of its cash and other liquid assets in such
accounts. Borrower shall deliver account control agreements in form and
substance acceptable to Lender from each financial institution at which Borrower
maintains an account (including, without limitation, Amegy Bank National
Association). As contemplated in Section 2.10(c) of this Agreement, each
Borrower will direct and otherwise cause all of its Receivables to be paid into
the Blocked Account or pursuant to the Dominion of Funds Agreement referred to
below.
15. Existing Schedule — Negative Covenants (Section 6.2): Affiliate Transaction
and Borrowing Limit under Negative Covenants (Section 6.2) of the Existing
Schedule are amended and restated in its entirety as follows:
         Affiliate Transaction (6.2.12): The Borrower leases office space from
Allstar Equites, Inc., a Texas corporation (“Equities”), a company wholly-owned
by James Long. The current lease was executed on February 1, 2002, has an
expiration date of January 31, 2007 and has rental rates of $37,000 per month.
         Borrowing Limit The aggregate outstanding principal amount of all
Credit Loans (as defined in the 2005 Facility), Revolving Credit Loans and
Floorplan Loans shall not, at any time, exceed the sum of
               (a) 30% of the aggregate net invoice prices of all Eligible DISD
Receivables (as defined in the 2005 Facility), provided that upon the later of
the payment in full of all obligations in respect of the 2005 Facility or the
termination of the 2005 Facility, this subclause (a) shall be deemed to be $0,
plus
               (b) 80% of the aggregate net invoice prices of all Eligible
Receivables plus
               (c) (i) for so long as the Borrower is discharging its
undertakings in respect of the Master DISD Contract or any DISD Receivable is
owing to it, 90% of the invoice price of (1) all Floorplanned Inventory and
(2) all DISD Inventory that is Eligible Inventory, provided that the sum of the
amounts in clauses (1) and (2) above shall be limited to the lesser of
$10,000,000 or 35% of the net invoice prices of all outstanding Eligible
Receivables and (ii) after the Borrower has discharged its undertakings in
respect of the Master DISD Contract and all DISD Receivables owing to it have
been paid, the least of (1) 90% of the invoice price

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of all Floorplanned Inventory, (2) 35% of the net invoice prices of all
outstanding Eligible Receivables and (3) $10,000,000. Borrower shall, within two
(2) Business Days of the aggregate outstanding principal amount of the Credit
Loans (as defined in the 2005 Facility), Floorplan Loans and Revolving Credit
Loans exceeding at any time the aforesaid sum, prepay the Credit Loans, the
Floorplan Loans and/or the Revolving Credit Loans in an aggregate principal
amount sufficient so that this covenant shall not be violated.
          Clause (x) of the definition of “Floorplan Collateral Coverage
Reconciliation” in this Agreement shall be determined as provided for in clause
(b) above.
16. Existing Schedule — Default and Remedies (Section 7): Additional Events of
Default are added to “Default and Remedies (Section 7)” of the Existing Schedule
as set forth below:
          Material Adverse Change. If any DISD Receivables are reduced or
disallowed in any amount by the DISD and/or USAC (other than any reductions or
disallowances that are made in the ordinary course of business and in amounts
and for reasons that are consistent with past Master DISD Contract practices and
procedures).
          2005 Facility. Any Event of Default (as defined in the 2005 Facility)
shall exist or any event shall exist which, with the lapse of time or giving of
notice or both, could become an “Event of Default” under the 2005 Facility.
All Events of Default set forth in the Existing Schedule, as amended hereby, are
added to Section 7 of the Existing LSA.
17. Existing Schedule — Term (Section 9.2(a)): Term (Section 9.2(a)) of the
Existing Schedule is amended and restated in its entirety as set forth below:
TERM (SECTION 9.2(a)):
Subject to the following paragraphs, the term of this Agreement shall be two
(2) years (the “Term”) and shall terminate on September 9, 2007, unless
terminated earlier as provided in Section 7 or 9.2 of this Agreement.
The Floorplan Facility set forth in LOANS (Section 2.2) above is fully
discretionary on the part of TEXTRON and is not and does not constitute a
committed line of credit or other committed facility. TEXTRON may cease making
Floorplan Loans hereunder in its sole discretion at any time. All Floorplan
Loans will mature hereunder as provided for in INTEREST AND FEES (SECTION 2.6
and 2.7) above. For the avoidance of doubt, if the Floorplan Facility shall have
not been previously terminated, as provided above and in this Agreement, it
shall terminate at the end of the Term (without the need of any action on the
part of TEXTRON or any other Person) and all Obligations in respect of the
Floorplan Loans (including, without limitation, all principal, accrued and
unpaid interest and fees and expenses) shall immediately become due and payable.
The Revolving Credit Facility set forth in Loans (Section 2.2) above shall
terminate at the end of the Term (without the need of any action on the part of
TEXTRON or any other Person) and all Obligations in respect of the Revolving
Credit Loans (including, without limitation, all principal, accrued and unpaid
interest and fees and expenses) shall immediately become due and payable.

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18. Existing Schedule — Termination Fee (Section 9.2(d)): Termination Fee
(Section 9.2(d)) of the Existing Schedule is amended and restated in its
entirety as set forth below:
TERMINATION FEE (Section 9.2 (d)):
Intentionally Omitted.
19. Existing Schedule — Disbursement (Section 9.11): Disbursement (Section 9.11)
of the Existing Schedule is amended and restated in its entirety as set forth
below:
DISBURSEMENT (SECTION 9.11):
Unless and until Borrower otherwise directs TEXTRON in writing, all Revolving
Credit Loans shall be wired to Borrower’s following operating account:
Amegy Bank National Association, Five Post Oak Park, 4400 Post Oak Parkway,
Houston, Texas 77027 and deposit account # 0133329.
20. Existing Schedule — Operational Conditions: Operational Conditions of the
Existing Schedule are amended and restated in its entirety as set forth below:
                    Operational Conditions

             
 
    1.     Collateral Audits to be performed every calendar quarter.
 
    2.     Covenants to be monitored on a quarterly basis.
 
    3.     Certificate of Corporate Borrowing Resolution on each of the
Borrowers.
 
    4.     First priority broad lien and UCC filing on all Collateral of
Borrowers (excluding Stratasoft Patents with respect to which there is a senior
secured party).
 
    5.     Evidence of casualty insurance in an amount equal to the inventory
and other assets shown on the most recent fiscal quarterly balance sheet with a
lenders loss payable endorsement favoring TEXTRON.
 
    6.     No Revolving Credit Loan shall be made unless and until the Borrower,
TEXTRON and Amegy Bank National Association have entered into a lockbox
agreement (providing for, among other things, the establishment of a post office
lockbox and lockbox depository account) and blocked account agreement in respect
of the lockbox depository account which are in form and substance satisfactory
to TEXTRON.
 
    7.     Said lockbox agreement and said blocked account agreement shall,
among other things, provide for the following: Borrower shall not at any time
have access to the post office lockbox (only Amegy Bank National Association
shall have access to such post office lockbox) and Borrower shall not have
access to or the right to remove funds from the lockbox depository account (and
Amegy Bank National Association will not deliver such funds to Borrower but
rather to TEXTRON pursuant to wire instructions received from TEXTRON).
 
    8.     Subordination of all debt of Borrower held by shareholders (other
than shareholders holding publicly traded stock of I-Sector Corporation).

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    9.     Borrower not to consent to any amendment or modification to Dominion
of Funds Agreement made as of June 20, 2005 or Amended and Restated Letter
Agreement dated June 20, 2005 without written consent of TEXTRON
 
    10.     All remittances of funds under the Dominion of Funds Agreement to
Borrower to be made directly to TEXTRON; any of such funds disgorged by TEXTRON
pursuant to Section 12 of said Dominion of Funds Agreement to be promptly
reimbursed to TEXTRON by Borrower upon demand therefor.

21. Existing Schedule — Reporting Requirements: Reporting Requirements of the
Existing Schedule are amended and restated in its entirety as set forth below:
                    Reporting Requirements

             
 
    1.     Monthly consolidated internally prepared financial statements within
30 days after each month’s end beginning with the June, 2005 reporting.
 
    2.     Quarterly consolidated prepared financial statements (on Form 10-Q)
within 45* days after each fiscal quarter’s end.
 
    3.     Annual projections of monthly income statements, balance sheets and
cash flow statements for the following year within 60 days prior to fiscal
year’s end and as available as updated during any fiscal year.
 
    4.     Annual CPA audited consolidating and consolidated financial
statements (on Form 10-K with annual reports) within 90* days after fiscal
year’s end.
 
    5.     All filings with, and correspondence to, SEC by I-Sector Corporation
(including, without limitation, all reports on Form 8-K but excluding routine
correspondence), including, without limitation, any financial statements,
reports, notices, and proxy statements.
 
    6.     Prompt reports of any legal actions pending or threatened against
Borrower in which damages equal to or more than $100,000 are claimed or prayed
for.
 
    7.     Such other budgets, sales projections, operating plans, Master DISD
Contract information or other financial information requested by TEXTRON.

*If I-Sector Corporation qualifies as an “accelerated” filer under applicable
SEC rules and regulations so that quarterly and annual reports on Forms 10-Q and
10-K, respectively, are required to be filed sooner than 45 days after each
fiscal quarter’s end and sooner than 90 days after each fiscal year’s end, as
the case may be, then the 45 days and 90 days set forth above shall
automatically become such shorter time periods.
To the extent the foregoing is inconsistent with the reporting requirements
under Section 9.1(b) of the Agreement, the foregoing provisions shall govern;
otherwise the reporting requirements of Section 9.1(b) shall continue in full
force and effect as provided in this Agreement.
22. Existing Schedule — Collateral Reporting and Other Requirements: Collateral
Reporting and Other Requirements of the Existing Schedule are amended and
restated in its entirety as set forth below:
                    Collateral Reporting and Other Requirements

             
 
    1.     Weekly collateral reports of Receivables, DISD Receivables,
Inventory, DISD Inventory, accounts payable together with a borrowing base
certificate

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          showing the calculations set forth in LOANS (SECTION 2.2) and NEGATIVE
COVENANTS (SECTION 6.2) — Borrowing Limit above, within 2 days of each week’s
end if any Revolving Credit Loans shall be outstanding.
 
    2.     Annual insurance renewals
 
    3.     Continuing program and repurchase agreements with all manufacturers
and vendors on basis of 100% repurchase price of new, unopened and unaltered
inventory within 180 days after invoice date

                    Other Requirements

     
 
  1. Borrowers shall have executed and delivered a Secured Revolving Credit Note
in the stated principal amount of $10,000,000 to TEXTRON.

23. Conditions To Effectiveness. This First Amendment Agreement shall become
effective (the “First Amendment Effective Date”) on the date on which all of the
following conditions precedent have either been satisfied in the sole
determination of TEXTRON or waived in TEXTRON’s sole determination:
      23.1 This First Amendment Agreement shall have been executed and delivered
by Borrower.
      23.2 Borrower shall have executed and delivered to TEXTRON a Secured
Revolving Credit Note in form and substance satisfactory to TEXTRON.
      23.3 Borrower shall have executed and delivered to TEXTRON a Certificate
of Resolution in form and substance satisfactory to TEXTRON authorizing Borrower
to enter into this First Amendment Agreement and the other documents and
agreements related thereto.
      23.4 Borrower shall have delivered an Officer’s Certificate in form and
substance satisfactory to TEXTRON.
      23.5 No Event of Default shall exist under the Existing LSA or, after
giving effect to this First Amendment Agreement, under the Amended LSA.
      23.6 Borrower shall have paid the costs, expenses, and fees described in
Section 30 below.
      23.7 De Lage Landen Financial Services shall have executed a participation
agreement with TEXTRON in form and substance satisfactory to TEXTRON.
      23.8 All actions taken in connection with the execution of this First
Amendment Agreement and all documents and papers relating hereto shall be
satisfactory to TEXTRON and its counsel.
      24. Reaffirmation of Representations and Warranties. As an inducement to
TEXTRON to enter into this First Amendment Agreement, Borrower represents and
warrants to TEXTRON that all of the representations and warranties set forth in
the Existing LSA are true and correct on the date hereof as if made on the date
hereof.

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      25. Additional Representations and Warranties by Borrower. Borrower
represents and warrants to TEXTRON that:
            25.1 The execution and delivery by Borrower of this First Amendment
Agreement, and the performance by Borrower of its obligations hereunder and
under the Amended LSA and Amended Loan Documents, have been duly authorized and
approved by all necessary corporate action by Borrower and its respective
directors, officers, and stockholders, as the case may be.
            25.2 The execution and delivery by Borrower of this First Amendment
Agreement, and the performance by Borrower of its obligations hereunder and
under the Amended LSA and the Amended Loan Documents, do not and will not
(i) conflict with, (ii) result in any violation of or default (with or without
notice or lapse of time or both) under, (iii) give rise to a right of
termination, cancellation, or acceleration under, (iv) result in the creation or
imposition of any lien, security interest, or other encumbrance under, or
(v) result in the loss of a material benefit under or with respect to (1) any
provision of the organizational documents of Borrower, (2) any provision of
applicable law, (3) any order of any court or other agency of government, or
(4) any provision of any indenture, agreement or other instrument to which
Borrower is a party or by which any of its properties or assets is bound.
            25.3 This First Amendment Agreement and related documents have been
duly executed and delivered by Borrower and this First Amendment Agreement and
the Amended LSA and Amended Loan Documents constitute legal, valid and binding
obligations of Borrower, enforceable in accordance with their respective terms.
            25.4 No Borrower is required to give any notice to, make any filing
with, or obtain any authorization, consent, permit, certificate, or approval of
any governmental authority or third party in order to consummate or perform the
transactions contemplated by this First Amendment Agreement.
            25.5 All liens and security interests granted pursuant to the
Existing LSA are first priority, perfected liens and security interests in, to,
and against the Collateral.
            25.6 No Event of Default or any event which, with the lapse of time
or the giving of notice or both, could become an Event of Default exists.
      26. Existing Loan Documents. All of the Existing Loan Documents are hereby
amended and conformed to the amendments and modifications set forth in this
First Amendment Agreement without the requirement of any further formal
documentation. For the avoidance of doubt, the defined term “Loan Documents” in
the Existing LSA shall mean and include this First Amendment Agreement.
      27. Further Assurances.
            27.1 Borrower shall promptly execute and deliver to TEXTRON such
further documents, agreements, instruments, certificates, and assurances and
take such further action as TEXTRON from time to time may reasonably request in
order to carry out the intent and purpose of this First Amendment Agreement and
to establish and protect the rights and remedies created or intended to be
created in favor of TEXTRON under the Amended LSA and Amended Loan Documents.

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            27.2 Without limiting the generality of Section 27.1 above, Borrower
shall, upon request of TEXTRON, furnish to TEXTRON such further information,
execute and deliver to TEXTRON such documents and instruments and do such other
acts and things, as TEXTRON may at any time reasonably request relating to the
perfection or protection of the liens and security interests contemplated by
this First Amendment Agreement and the Existing LSA, as amended pursuant to this
First Amendment Agreement.
      28. No Other Modifications; No Novation. Except as specifically modified
by this First Amendment Agreement, the Existing LSA and the other Existing Loan
Documents remain unmodified and in full force and effect. Borrower hereby
ratifies and confirms all of its obligations, liabilities, and indebtedness
under the Existing LSA and the Existing Loan Documents, as amended by this First
Amendment Agreement. Nothing contained in this First Amendment Agreement shall
be construed to extinguish, release, terminate, discharge, effect a novation of,
or otherwise impair any of the obligations, indebtedness, and liabilities of any
Borrower under the Existing LSA or the Existing Loan Documents, or any of the
liens and security interests created thereby. Each of Valerent, Internetwork
Experts, I-Sector, and Stratasoft hereby acknowledges and agrees that all of the
obligations and liabilities of each of them, as Borrower, hereunder and under
the Amended LSA and Amended Loan Documents are joint and several obligations and
liabilities.
      29. Counterparts. This First Amendment Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
      30. Expenses. Borrower shall pay upon demand all costs, expenses, and fees
(including, without limitation, attorneys’ fees) incurred by TEXTRON and Amegy
Bank National Association, as participant, in connection with the preparation
and execution of this First Amendment Agreement and the consummation of the
transactions contemplated hereby.
      31. Binding Effect. This First Amendment Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns.
      32. Severability. If any provision (or any part of any provision)
contained in this First Amendment Agreement shall for any reason be held to be
invalid, illegal, or unenforceable in any respect, then such invalidity,
illegality, or unenforceability shall not affect any other provision (or
remaining part of the affected provision) of this First Amendment Agreement, and
this First Amendment Agreement shall be construed as if such invalid, illegal,
or unenforceable provision (or part thereof) had never been contained herein,
but only to the extent such provision (or part thereof) is invalid, illegal, or
unenforceable.
      33. Governing Law. This First Amendment Agreement shall be governed by and
construed in accordance with the internal laws of the State of Rhode Island,
without giving effect to its conflicts of laws provisions.
      34. Survival. The representations, warranties, and covenants contained in
this First Amendment Agreement shall survive the execution and delivery hereof.
      35. Entire Agreement; Amendment; Waiver. The Existing LSA and Existing
Loan Documents, as amended pursuant to this First Amendment Agreement and the
other documents executed in connection herewith, contain the entire
understanding and agreement among the

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parties hereto with respect to the subject matter thereof, and supersede all
prior discussions, understandings, and agreements (whether oral or written)
between them with respect hereto and thereto. No amendment to, or modification
or waiver of, any of the terms of this First Amendment Agreement shall be valid
unless in writing and signed by the party against whom enforcement of such
amendment, modification or waiver is sought.

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     IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
Agreement dated as of September 9, 2005.

     
Borrower: I-Sector Corporation
 
 
 
 
 
 
 
By /s/ James H. Long                                                   (Seal)

Name James H. Long                                          
Title Chairman & CEO                                            
 
 
 
(Notary Seal)
 
 
 
 
 
Borrower: Internetwork Experts, Inc.
 
 
 
 
 
 
 
By /s/ James H. Long                                                     (Seal)

Name James H. Long                                          
Title Chairman & CEO                                            
 
 
 
(Notary Seal)
 
 
 
 
 
 
 
 
 
Borrower: Valerent, Inc.
 
 
 
 
 
 
 
By /s/ James H. Long                                                    (Seal)

Name James H. Long                                               
Title Chairman & CEO                                            
 
 
 
(Notary Seal)
 
 
 

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Borrower: STRATASOFT, INC.
 
 
 
 
 
 
 
By /s/ James H. Long                                            (Seal)

Name James H. Long                                               
Title Chairman & Secretary                                  
 

     (Notary Seal)
 
 
 
 
 

     
Lender and
 
Secured Party: TEXTRON FINANCIAL
 
CORPORATION
 
 
 
By /s/ Keith E. Boudreau                                       (Seal)

Name Keith E.
Boudreau                                                                      
Title Division
President                                                                       
 
 
 
 
 
 
 

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