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Exhibit 10.15
This Agreement is made as of the last date signed below between CLIENT
identified on the last page of this Agreement (herein called CLIENT) and METRO
FACTORS, INC. a Texas corporation with its principal place of business located
in Dallas, Texas (herein called METRO). For good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, CLIENT agrees to sell
to METRO and METRO agrees to purchase from CLIENT accounts receivable for the
sale of inventory or goods or rendering of services or labor upon the following
terms and conditions:
1. DEFINITIONS
1.1. CUSTOMER. That person or business entity legally obligated to pay an
INVOICE sold and/or assigned by CLIENT to METRO.
1.2. INVOICE. Any right to payment for the sale of inventory or goods or
the rendering of services or labor by CLIENT.
1.3. ELIGIBLE INVOICE. An INVOICE that complies with all representations,
warranties, and covenants of this Agreement, is not more than ninety
(90) days old from the original date of such INVOICE, and is within
approved credit limits pursuant to Paragraph 3 of this Agreement, and
is due from a CUSTOMER whose debt to METRO which is more than ninety
(90) days from the date of INVOICE does not exceed 25.0% of such
CUSTOMER'S total debt to METRO.
1.4. RECOURSE BASIS. The purchase of INVOICES from CLIENT by METRO wherein
CLIENT retains the risk of non-payment of an INVOICE by a CUSTOMER for
any reason whatsoever.
1.5. DISPUTE. Any defense, dispute, offset, or claim asserted by a CUSTOMER
with respect to an INVOICE.
1.6. NET CASH EMPLOYED. The total outstanding and unpaid face amount of
INVOICES purchased by METRO from CLIENT minus CLIENT'S RESERVE FUND on
the day such figure must be determined.
1.7. MAXIMUM NET CASH EMPLOYED. The NET CASH EMPLOYED shall not exceed
$2,000,000.
1.8. UCC. Any word or phrase used in the Uniform Commercial Code of Texas
("UCC") and not defined in this Agreement has the meaning given to the
word or phrase in the UCC.
1.9. SOLVENT. As the term relates to CLIENT, the ability of CLIENT to pay
its debts in a manner that does not have a material adverse effect
upon CLIENT'S performance of all its obligations to CUSTOMERS whose
INVOICES have been sold to METRO by CLIENT or in which METRO has a
security interest that will, or reasonably may prevent or
significantly delay the payment of such INVOICES within the terms of
such INVOICES.
2. SALE OF ACCOUNTS. In CLIENT'S sole discretion, CLIENT shall determine the
INVOICES that are to be offered for sale to METRO; however if any INVOICES
of a particular CUSTOMER are offered for sale to and purchased by METRO.
Which such purchases will not be unreasonably refused by METRO, CLIENT
agrees to offer for sale to METRO all INVOICES due form respective CUSTOMER
provided that CLIENT may elect at the time of offer for sale to METRO for
METRO to purchase such INVOICES on a non-advance basis and shall so
designate by submitting such INVOICES to METRO on a separate schedule of
assignment and under a separate account number established for such
purpose. INVOICES purchased by METRO on a non-advances basis shall be
subject to a reduced commission rate (see Paragraph 5.2) and an increased
RESERVE FUND requirement (see Paragraph 6). All such INVOICES offered for
sale to METRO shall be identified by separate and subsequent written
assignments in a form approved by METRO, which form shall include, but not
be limited to, all forms of electronic transfers. METRO shall delete from
such assignments any INVOICES not purchased by METRO and return a copy of
such assignment to CLIENT with such deletions so marked. CLIENT will
immediately upon sale of INVOICES to METRO make proper entries on its books
and records disclosing the absolute sale of all such INVOICES to METRO. All
INVOICES purchased by METRO from CLIENT constitute a sale of accounts and
legal and equitable title to said INVOICES shall pass to METRO. All
ELIGIBLE INVOICES for which a fully completed assignment to METRO is
received by METRO by 11:00 a.m. on any given BANKING DAY shall be included
by METRO on the immediately following BANKING DAY and thereafter for
purposed of determining the amount of funds available to be received by
CLIENT as an ADVANCE. METRO shall make all reasonable efforts to initiate,
by 12:00 noon of a BANKING DAY, a wire transfer to CLIENT of all funds
available to CLIENT which have been requested by CLIENT by 10:00 a.m. of
the day CLIENT desires such wire transfer to be made.
3. CREDIT APPROVAL. METRO reserves the right to approve credit of any CUSTOMER
prior to the purchase of any INVOICE due from such CUSTOMER. METRO may, but
shall not be obligated to, establish maximum credit limits upon any
CUSTOMER. METRO may withdraw any credit approval at any time before
delivery or performance by CLIENT. All INVOICES are purchased by METRO on a
RECOURSE BASIS.
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4. ADVANCES (NET CASH EMPLOYED). CLIENT shall have the right at any time to be
advanced funds from METRO in an amount up to 80.0% of the total face amount
of outstanding and unpaid INVOICES purchased from CLIENT by METRO, subject
to the adequacy of the RESERVE FUND as provided herein. INVOICES offered
for sale to METRO on a non-advance basis will not be considered for
purposes of this paragraph.
5. INTEREST, FEES, AND EXPENSES.
5.1. INTEREST ON NET CASH EMPLOYED. CLIENT agrees to pay interest to METRO
upon the NET CASH EMPLOYED at an annual rate equal to the lessor of
the BASE LENDING RATE plus 1.5% or the maximum rate allowed by
applicable state or federal law. Such interest shall be calculated on
a daily basis upon a year consisting of 360 days and shall be due and
payable daily as it accrues. BASE LENDING RATE as used herein shall be
the BASE LENDING RATE from time to time announced by KeyBank National
Association, Cleveland, Ohio on the date such BASE LENDING RATE must
be determined. Each change in the BASE LENDING RATE shall be effective
without notice to CLIENT on the date on which a change in the BASE
LENDING RATE shall have been made by the bank. The bank charges its
customers interest at rates at, above, or below its BASE LENDING RATE.
The BASE LENDING RATE of KeyBank National Association is currently
4.75%. For purposes of calculating interest, CLIENT'S account shall be
credited with payments received by METRO relating to CLIENT after
allowance of three (3) banking days (Collection Days). In no event
shall the rate charged by METRO exceed the maximum rate of interest
permitted by applicable state or federal law. All sums of money which
shall not be paid to METRO by CLIENT when due, including deficiencies
in the RESERVE FUND, shall bear interest at the highest rate allowed
by law from such due date until paid in full. In an EVENT OF DEFAULT
and for so long as an EVENT OF DEFAULT persists, METRO may increase
the interest rate upon the NET CASH EMPLOYED up to the highest rate
allowed by law which rate is presently 18.0% per annum. Any delay in
the election to increase such interest rate shall not be deemed a
waiver of METRO'S right to do so at any time subsequent to an EVENT OF
DEFAULT. On any day the balance of the CLIENT'S RESERVE FUND exceeds
the balance of unpaid INVOICES which have been sold to METRO and not
repurchased from METRO by CLIENT, METRO shall pay CLIENT interest on
such excess balance at an annual rate equal to the BASE LENDING RATE
minus 2.0%.
5.2. FACTOR'S COMMISSION. CLIENT agrees to pay METRO a base commission
equal to .75% of the face amount of INVOICES purchased by METRO from
CLIENT as consideration for METRO'S services in, among other things,
making credit investigations, supervising the ledgering and collection
of INVIOCES purchased hereunder, generation of management accounting
reports, and assuming the CREDIT RISK when applicable. Such commission
shall be due and payable at the time such INVOICES are purchased and
shall be deducted from any sums otherwise due CLIENT. Beginning with
the 43rd day from date of INVOICE an additional commission of .1% will
be due for each ten (10) day period or part thereof that an INVOICE
purchased by METRO remains unpaid to METRO. The minimum commission
hereunder shall be $5,000 per calendar month or part thereof. For any
INVOICES issued on terms greater than "Net 31 days," the base
commission shall be increased by 25.0% for each fifteen (15) day
period or part thereof that the terms exceed thirty (30) days;
provided however, that METRO'S prior written consent to terms
exceeding thirty-one (31) days shall be obtained by CLIENT.
Notwithstanding anything to the contrary herein, the base commission
shall be .5% of the face amount of each INVOICE purchased by METRO
from CLIENT which is outstanding as of the effective date of this
Agreement. Notwithstanding anything to the contrary herein, for those
INVOICES offered for sale to METRO on a non-advance basis the
commission shall be .2% of the face amount of such INVOICES.
5.3. PROCESSING FEES. CLIENT agrees to pay METRO processing fees as
follows:
5.3.1. $.50 per INVOICE purchased by METRO hereunder. CLIENT agrees to
an adjustment of such processing fee equivalent to an
adjustment of postage rates , if any, established by the
United States Postal Service. Notwithstanding anything to
the contrary herein, METRO waives the per INVOICE fee for
each INVOICE purchased from CLIENT which is outstanding as
of the effective date of this Agreement.
5.3.2. Expedited delivery fees (Federal Express, Express Mail, wire
transfers @ $15 each, etc.) incurred by METRO on behalf of
CLIENT.
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5.3.3. $30 per month for tax lien searches on CLIENT in jurisdictions
relevant to CLIENT.
5.3.4. Fees and expenses incurred by METRO for public records search
and filing fees (UCC-3 Amendment(s), Continuation(s), etc.)
5.3.5. 1.0% of the amount of any increase of the MAXIMUM NET CASH
EMPLOYED as stated herein.
5.4. INITIAL SETUP FEE. CLIENT agrees to pay to METRO an origination fee of
N/A % of the MAXIMUM NET CASH EMPLOYED and to reimburse METRO for fees
and expenses incurred by METRO in the negotiations and preparation of
this Agreement. If METRO uses an attorney who is full-time employee of
METRO to perform legal services beyond basic documentation such
attorney's time shall be charged at the rate of $150 per hour.
5.5. FIELD REVIEW FEES AND EXPENSES. METRO shall perform two (2) scheduled
field reviews at CLIENT'S place of business each twelve (12) months.
CLIENT shall pay METRO $500 per review plus reasonable expenses of the
reviewer's travel, lodging, and meal incurred in connection therewith,
if any.
5.6. All fees and expenses in this Agreement except the BASE LENDING RATE
shall be adjusted on each anniversary date of this Agreement in
conformance with increases in "The Consumer Price Index for All Urban
Consumers (CPI-U_ for the U.S. City Average of All Items, 1982-84=
100" (herein called CPI) on an unadjusted seasonal basis over such CPI
for the month in which the effective date of this Agreement occurs.
6. RESERVE FUND. METRO may reserve and withhold from any payments or credits
otherwise to be made to CLIENT an amount in a RESERVE FUND equal to 20.0%
of the total outstanding and unpaid face amount of INVOICES purchased by
METRO from CLIENT which are ELIGIBLE INVOICES and 100.0% of all such
INVOICES which are not ELIGIBLE INVOICES or which are purchased by METRO on
a non-advance basis. Any under payments on INVOICES due to a DISPUTE shall
be debited to the RESERVE FUND and any over payments on INVOICES to which
CLIENT shall be legally entitled shall be credited to the RESERVE FUND.
METRO may charge to such RESERVE FUND any indebtedness of CLIENT to METRO.
CLIENT shall be obligated to pay METRO deficiencies, if any, in such
RESERVE FUND. METRO may withhold such additional amounts in the RESERVE
FUND as it may commercially reasonably deem necessary to cover and provide
for any DISPUTES, unpaid INVOICES which are more than ninety (90) days old,
any other present or potential indebtedness of CLIENT to METRO. RESERVE
FUNDS in excess of those necessary to satisfy the above requirements shall
be available to be advanced to CLIENT as CLIENT so instructs METRO.
7. HOLD IN TRUST. If any payment of any INVOICES purchased by METRO shall be
received by CLIENT from a CUSTOMER, such payment shall be held by CLIENT in
trust for METRO, separate and apart from CLIENT'S own funds, and shall be
immediately delivered to METRO in identical form in which it was received.
Failure to so deliver said payment shall give METRO, at its option, the
right to terminate this Agreement provided that METRO has a reasonable
basis to believe that such failure to so deliver such payment to METRO was
intentional and/or resort to the collection of said sums due from the
RESERVE FUND and/or other balances or credits otherwise due to or held for
CLIENTS by METRO with notice to CLIENT or to demand immediate payment from
CLIENT by cash or cashier's check. Should CLIENT come into possession of a
payment comprised of amounts owing to both METRO and CLIENT, CLIENT shall
remit such payment in the identical form in which it was received to METRO
and METRO shall refund CLIENT'S portion directly to CLIENT or credit
CLIENT'S RESERVE FUND with CLIENT'S portion thereof when such check has
cleared the bank upon which it was drawn. Without waiving any other right
of METRO hereunder, METRO may charge CLIENT a service fee of up to 15.0% of
the amount of any INVOICES for which payments due to METRO are not remitted
by CLIENT as herein provided, but in no event not less than $25.
8. SETTLEMENT OF DISPUTE. CLIENT shall at its own expense settle all DISPUTES.
If an EVENT OF DEFAULT exists which has not been cured within the cure
period, if any, designated herein, METRO shall have the right to settle or
litigate any DISPUTE directly with the CUSTOMER or other cliamant and METRO
may charge to CLIENT'S RESERVE FUND any deficiencies, costs, and expenses
including reasonable attorneys' fees incurred in connection with such
DISPUTE. In the event of a DISPUTE or other breach of warranty hereunder as
to any INVOICE, METRO may in its discretion immediately or at such time as
METRO may
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elect, charge the unpaid balance of the related INVOICE (or an DISPUTED
portion thereof) to CLIENT'S RESERVE FUND and such charge to CLIENT'S
RESERVE FUND shall be deemed to be a reassignment of such INVOICE to
CLIENT, subject to METRO'S retention of its security interest.
Notwithstanding anything to the contrary herein, METRO shall give at least
ten (10) days prior notice to CLIENT of the terms of any proposed
settlement during which time CLIENT shall have the opportunity to pay the
full amount of such settlement in immediately available funds.
9. REPURCHASE OF UNPAID INVOICES. If any INVOICE purchase by METRO remains
unpaid for any reason ninety (90) days after date of such INVOICE or sooner
if in METRO'S sole discretion such INVOICE is determined to be
uncollectible, CLIENT agrees to repurchase such INVOICES from METRO at the
full face amount of such INVOICE. In any event, if more than 25.0% of a
CUSTOMER'S account is unpaid after ninety (90) days from dates of the
respective INVOICES, CLIENT agrees to repurchase the entirety of such
account.
10. ACCOUNT STATED. All transactions between METRO and CLIENT shall be recorded
by METRO and statements of such transactions shall be regularly supplied to
CLIENT. Such statement shall be deemed an ACCOUNT STATED unless METRO
received writtent notice from CLIENT of any specific exception thereto
within sixty (60) days after date of receipt by CLIENT of such statement.
11. WARRANTIES, REPRESENTATIONS, AND COVENANTS OF CLIENT. As an inducement for
METRO to enter into this Agreement, and with full knowledge that the truth
and accuracy of the WARRANTIES, REPRESENTATIONS, AND COVENANTS in this
Agreement are being relied upon by METRO, CLIENT warrants, represents
and/or covenants that (a) CLIENT is properly licensed and authorized to
operated its business under all applicable state and federal laws in the
name and/or trade name designated for CLIENT at the end of this Agreement;
(b) CLIENT'S business is solvent; (c) Each of CLIENT'S CUSTOMER'S business
is solvent to the best of CLIENT'S knowledge and belief; (d) CLIENT has
good and clear title to the INVOICES sold and/or assigned to METRO and to
all property in which a security interest is granted to METRO herein; (e)
Assignment to METRO of each INVOICE purchased by METRO hereunder will
thereby vest absolute ownership of such INVOICE in METRO free from any
liens, claims, security interests, or equities of third parties; (f) Each
INVOICE shall, on the date of assignment, be based upon a bona fide
rendering of services or sale of goods or products by CLIENT and shall be
valid and enforceable obligation of the CUSTOMER who is designated to be
invoiced upon the face of the INVOICE; (g) To the best of CLIENT'S
knowledge, such INVOICE shall be accepted and retained by the CUSTOMER
without assertion of any DISPUTE and CLIENT agrees to immediately notify
METRO in writing of any DISPUTE which may adversely affect payment of any
INVOICE assigned or sold to METRO whether such DISPUTE exists at the time
such INVOICE is sold to METRO or arises thereafter; (h) Other than as a
shareholder of less than 5.0% of a publicly traded company, neither CLIENT
nor any employee, officer, director, agent, shareholder, or owner of
CLIENT, owns, controls, or in any way whatsoever exercises dominion over
the business of any CUSTOMER, the INVOICES of which are sold hereunder to
METRO; (i) That no INVOICE (or the goods or services related thereto) sold
to METRO hereunder is subject to or affected by any of the following types
of agreement: consignment, sale on approval, conditional sale, guaranteed
sale, sell or return, buy-back, ▇▇▇▇ and hold, or any similar type of
agreement however named nor is there any debt owing by CLIENT to any
CUSTOMER related to any INVOICE sold to METRO hereunder; (j) All financial
records, statements, books, or other documents relating to business of
CLIENT which are supplied to METRO by CLIENT or any of its authorized
representatives, either before or after the signing of this Agreement, are
true and accurate; (k) CLIENT will not transfer, pledge, or give a security
interest in any of its INVOICES to any other party during the life of this
Agreement; (l) CLIENT will not change or modify that payment terms of the
original INVOICE unless METRO first consents in writing to such change; (m)
CLIENT will not permit a lien or encumbrance to be created upon any of this
invoices sold and/or COLLATERAL pledged herein to METRO except those to
which METRO consents in writing; (n) CLIENT will maintain such insurance
covering CLIENT'S business and/or property of CLIENT'S CUSTOMERS as is
customary or required by law for businesses similar to the business of
CLIENT and if reasonably deemed necessary for the protection of METRO'S
interest in any INVOICES or other COLLATERAL CLIENT shall name METRO as a
loss payee of any such insurance; (o) CLIENT will promptly notify METRO in
writing of any proposed or actual change in its owners, officers, and/or
directors, location of its principal offices, location of the office in
which books and records concerning INVOICES and COLLATERAL are kept, change
of the CLIENT'S name, death of any co-owner, any sale or purchase of assets
of CLIENT out of the regular course of CLIENT'S business, any other
material change in the business or financial affairs of CLIENT; (p)CLIENT
will promptly pay all sums due MERO when due or declared due; (q) Each
INVOICE sold and/or assigned to METRO is genuine and in all respects what
it proports to be an is not a duplicate of another INVOICE covering
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the same charges nor ahs it been invoiced directly by CLIENT to CUSTOMER
unless a special written agreement is entered into by CLIENT with METRO
concerning the terms of purchase of such INVOICES; (r) CLIENT will fully
cooperate with METRO in any litigation between METRO and a CUSTOMER
relating to INVOICES purchased and/or assigned to METRO hereunder,
including but not limited to furnishing at CLIENT'S expense any witnesses
(other than METRO'S employees) and documentation which is or should be
under CLIENT'S control; (s) CLIENT will promptly pay when due all federal
state and local taxes and will immediately notify METRO in writing if any
such taxes are not paid when due; (t) CLIENT will immediately notify METRO
of the filing of any Federal Tax Lien or Levy or if any agreement is made
with any taxing authority to pay out any due and unpaid taxes; (u) CLIENT
will immediately notify METRO of the filing of any petition of bankruptcy
by or against CLIENT, the composition of CLIENT'S creditors, or the
appointment of a trustee or receiver for CLIENT'S business; (v) CLIENT will
immediately notify METRO of any change, or intent to change, the nature of
its business as it relates to the products or services presently sold to
CUSTOMERS.
12. CHANGE IN OWNERSHIP. METRO shall have the right to immediately terminate
this Agreement if control of CLIENT'S ownership changes subsequent to the
execution of this Agreement.
13. INVOICING REQUIREMENTS. CLIENT further represents, and/or covenants that
all INVOICES submitted for sale to METRO shall be presented to METRO within
thirty (30) days after the sale of inventory or goods or the rendering of
services or labor related to such INVOICE and shall conform to the
following requirements:
13.1. Be the original INVOICE (unless special written arrangements are made
for METRO to purchase INVOICES, the originals of which have already
been delivered to CUSTOMER).
13.2. Be accompanied by as many additional copies as are required by
CUSTOMER plus one (1) file copy to be retained by METRO.
13.3. Be legible.
13.4. Clearly state CLIENT'S full legal name, physical principal business
address, type of entity, if applicable, and the state in which such
entity is organized, if applicable (NOTE: In addition, CLIENT'S duly
registered assumed or fictitious name may be reflected)
13.5. Clearly state the full legal name and address of CUSTOMER and the
party to whom such INVOICES is to be mailed.
13.6. If requested by METRO, be accompanied by the original purchase order
and/or contract and any amendments or modifications thereof, signed
bills of lading (if any), or proof of delivery and acceptance signed
by CUSTOMER.
13.7. Be attached to any supporting information or documentation required
by CUSTOMER as a precondition to payment. (NOTE: Copies of any
and all such documentation shall also be attached to METRO'S file
copy of the related INVOICE).
13.8. Be stamped or imprinted with a notice of sale of such INVOICE to
METRO with instructions to remit payment directly to METRO in
language approved by METRO.
13.9. Except as METRO may otherwise consent in writing, the terms of
CUSTOMER'S payment of INVOICES shall be "Net 31 days" or less.
13.10. CLIENT shall timely issue credit memos when appropriate and
immediately deliver two (2) copies of such credit memos to METRO,
one (1) of which will be mailed by METRO to the related CUSTOMER.
13.11. Be verifiable by the CUSTOMER to METRO'S satisfaction.
14. EVENT OF DEFAULT. CLIENT shall be in default of this Agreement upon the
happening of any of the following events (herein called EVENT OF DEFAULT):
the breach of any warranty, covenant, or representation made herein or in
connection herewith, whether written or oral, the filing of an involuntary
petition of bankruptcy
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against CLIENT, or the filing of a voluntary petition in bankruptcy by
CLIENT. CLIENT will give METRO at least forty-eight (48) hours advance
notice of the filing of any voluntary petition of bankruptcy by CLIENT.
15. REMEDIES. Upon the occurrence of an EVENT OF DEFAULT, and at any time
thereafter, METRO may elect to declare any and all indebtedness hereby
secured immediately due and payable; provided however that CLIENT shall
have ten (10) days from the date of written notice by METRO of such EVENT
OF DEFAULT to cure such EVENT OF DEFAULT; provided however, that there
shall be no prior notice required or period in which to cure an EVENT OF
DEFAULT if METRO has a commercially reasonable basis to believe that CLIENT
is engaged in fraudulent conduct. METRO shall be entitled to all rights and
remedies of a Secured Party under the Uniform Commercial Code of Texas as
presently existing or hereafter amended, including the right to enter upon
the premises where any COLLATERAL is located and take immediate possession
of such COLLATERAL and remove same from such premises. To the extent deemed
reasonably necessary by METRO to aid in the collection of its collateral,
METRO shall have the right to use any computer hardware or software used by
CLIENT pertaining to its accounts receivable. METRO shall be entitled to
avail itself of all such other rights and remedies as may now or hereafter
exist at law or in equity for collection of said indebtedness and the
enforcement of the covenants, warranties, and representations herein and
the resort to any one or combination of such remedies provided hereunder
shall not prevent the concurrent or subsequent employment of any other
appropriate remedy. CLIENT shall be liable to METRO for any deficiencies
after foreclosure of METRO'S security interest herein. The waiver by METRO
of the breach of any term of this Agreement or the compliance therewith
shall not be construed as a waiver of any subsequent breach or compliance.
CLIENT agrees to reimburse METRO for any out-of-pocket expenses include,
but not limited to, reasonable attorney's fees, court costs, expenses of
litigation, and auditor's fees incurred by METRO as a result of an EVENT OF
DEFAULT or in connection therewith. METRO'S in-house general counsel's time
shall be billed at the rate of $1500 per hour and in-house auditor's time
shall be billed at $500 per day or part thereof.
16. JURISDICTION, VENUE, WAIVER OF JURY TRIAL, AGENT FOR SERVICE OF PROCESS.
CLIENT agrees that this Agreement is accepted and made in the State of
Texas and is subject to the laws of the State of Texas and that all sums
due hereunder are payable in the State of Texas. CLIENT subjects itself to
the jurisdiction of the courts of the State of Texas and agrees that venue
shall be in Dallas County, Texas for the purpose of enforcement of this
Agreement. Recognizing the inherent delays of jury trials and desiring a
speedy resolution of any litigation between CLIENT and METRO, CLIENT WAIVES
ITS RIGHT TO TRIAL BY JURY and agrees to submit all disputed issues to the
judge of the court in which any litigation is pending. In the event CLIENT
has no agent appointed for the service of process in the State of Texas,
CLIENT authorizes service upon the Secretary of the State of Texas on its
behalf, provided that METRO has made reasonable efforts to effect personal
service upon CLIENT.
17. SECURITY INTEREST. METRO, in addition to the outright ownership of those
INVOICES purchased form CLIENT hereunder, is hereby granted a continuing
security interest in all of CLIENT'S presently owned and existing and
hereafter acquired and arising accounts, chattel paper, inventory,
equipment, instruments (including promissory notes), investment property,
documents, deposit accounts, letter-of-credit rights, general intangibles,
supporting obligations, and to the extent not listed above as original
collateral, proceeds and products of the foregoing. All of the foregoing is
sometimes collectively called herein COLLATERAL. Such security interest in
such COLLATERAL is to be security for any and all obligations or
indebtedness of any kind, direct or indirect, absolute or contingent, owing
by CLIENT to METRO however incurred or evidenced and however and whenever
same shall arive or have arisen. Notwithstanding anything to the contrary
herein, METRO'S security interest shall be subject to the terms and
conditions of that certain Intercreditor Agreement by and among CLIENT,
METRO, and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
18. FINANCIAL STATEMENTS, BOOKS AND RECORDS, AND RIGHT OF INSPECTION. As often
as such are prepared, but no less than within sixty (60) days after the
close of each quarter , CLIENT shall furnish METRO with a copy of CLIENT'S
most recent profit and loss statement and balance sheet. Within ninety (90)
days after the close of each fiscal year, CLIENT shall furnish METRO with a
profit and loss statement and balance sheet as of the close of such fiscal
year, prepared and signed by a certified public accountant. CLIENT agrees
to timely furnish METRO such additional financial information, as METRO
shall request. CLIENT agrees to provide METRO by the 10th day of each month
a detailed accounts receivable aging reflecting all open and unpaid
INVOICES for all non-factored CUSTOMERS as of the last day of the
immediately preceding month. METRO and METRO'S agents shall have the right
at all times between the hours of 8:00 a.m. and 6:00 p.m.
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Monday through Friday to examine and make extracts from all books and
records of CLIENT. Failure to comply with this paragraph may at METRO'S
discretion be deemed an EVENT OF DEFAULT.
19. INDEMNITY. All taxes and governmental charges imposed upon CLIENT with
respect to the sale of inventory or goods or the rendering of services or
labor by CLIENT shall be the sole responsibility of CLIENT and CLIENT shall
indemnify and hold METRO harmless from and against all liabilities for any
acts or omissions of CLIENT.
20. NON-ASSIGNABILITY BY CLIENT; ASSIGNABILITY BY METRO. CLIENT may not assign
any of its rights or obligations hereunder without METRO'S prior written
consent; however, METRO may assign any of its rights and remedies with
respect to CLIENT, including METRO'S rights in all INVOICES purchased
hereunder and all COLLATERAL described herein as security for loans to
METRO.
21. AGREEMENT BINDING. This Agreement shall be binding upon CLIENT and METRO,
their heirs, successors, and assigns.
22. SEVERABILITY. The provisions of this Agreement are severable and if any of
these provisions shall be held by any court of competent jurisdiction to be
unenforceable such holdings shall not affect or impari any other provisions
hereof.
23. ENTIRE AGREEMENT. It is expressly acknowledged and agreed by CLIENT that
(a) No representations have been made whether oral or written, except as
expressly set forth in this Agreement or in a writing signed by a corporate
officer of METRO, or (b) If any such representations have been made and are
not expressly set forth herein, that any such representations have no
binding effect whatsoever. CLIENT has not relied on any inducement to enter
into this Agreement except as wholly set forth herein or as communicated in
writing by a duly constituted and authorized corporate officer of METRO.
This Agreement may only be changed, modified, supplemented or amended by a
written document signed by all parties hereto. This Agreement may be signed
in any number of counterparts, each of which when so executed shall be
deemed to constitute one and the same agreement, whether signed and
delivered via facsimile or otherwise.
24. NOTICES. Notices from either party to the other shall be given in writing
and delivered via facsimile and/or mailed postage prepaid, registered or
certified mail, or placed in the hands of a national overnight delivery
service addressed to the addresses set forth at the end of this Agreement,
or at such other address as either party may advise the other in writing.
If mailed, notice shall be deemed to have been received three (3) days
after the date of the postmark. Otherwise, notice shall be deemed to be
received upon actual receipt thereof, and if via facsimile, a confirmation
thereof shall constitute acknowledgement of receipt thereof.
25. ACCEPTANCE, TERM, AND TERMINATION. This Agreement will become effective
when accepted by METRO as evidenced by signature of any duly authorized
officer of METRO, shall continue for a term of one (1) year hereafter (the
"Initial Term") , and shall be automatically renewed thereafter for
successive periods of one (1) year (the "Renewal Term") unless terminated
as provided herein. METRO and CLIENT shall have the right to terminate this
Agreement at the end of the Initial TERM or at the end of any Renewal Term
by giving the other at least ninety (90) days prior written notice of such
intended termination. Notwithstanding the foregoing, CLIENT shall have the
right to terminate this Agreement (a) at any time prior to the end of the
Initial Term or any Renewal Term by giving METRO at least five (5) business
days prior written notice CLIENT'S intent to terminate and by paying to
METRO, for loss of the bargain and not as a penalty, an early termination
fee equal to the greater of (i) $5,000 or (ii) 50.0% of the average monthly
total commission and interest paid by CLIENT to METRO during the six (6)
calendar months (or part thereof if less than six (6) calendar months has
elapsed from the effective date of this Agreement to the termination date)
immediately preceding the termination date multiplied by the number of
calendar months or part thereof remaining from the termination date to the
end of the respective TERM hereof or (b) without an early termination fee
if CLIENT'S Lowe's Master Standard Buying Agreement in effect as of the
effective date of this Agreement as same may be from time to time amended,
modified, restated, or substituted for is terminated by ▇▇▇▇'▇ Companies,
Inc. provided that METRO has been paid aggregate commissions pursuant to
this Agreement of at least $50,000 as of the date of termination of this
Agreement and provided that CLIENT gives METRO written notice of such
intended termination at least thirty (30 ) days prior to such intended
termination date. If CLIENT ceases to offer for sale to METRO any INVOICES
for a continuous period of thirty (30) days or more, METRO may deem such
action as notice of early termination by CLIENT. Such early termination fee
shall be in addition to the NET CASH
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EMPLOYED and all unpaid fees and expenses due to METRO as of the
termination date. Notwithstanding any such termination notice, CLIENT shall
have no right to terminate this Agreement until all obligations (direct or
contingent) owing by CLIENT to METRO hereunder or otherwise shall have been
paid in full, whether or not such obligations are due or are to become due
in the future and CLIENT and any guarantors of CLIENT, may request have
executed and delivered to METRO a general release in a form reasonably
satisfactory to METRO by which METRO and all its owners, directors,
officers, employees, and agents shall be released of any liability to
CLIENT and CLIENT'S guarantors for any acts or omissions in relation to
this Agreement and any other Agreement related to CLIENT. Upon the
occurrence of an EVENT of DEFAULT which is not cured within the applicable
cure period, if any, METRO may at METRO'S election consider such occurrence
an anticipatory repudiation of this Agreement and/or immediately terminate
this Agreement as to future transactions. No termination of this Agreement
shall in any way affect or impair any right of METRO arising prior thereto
or by reason thereof, nor shall any such termination relieve CLIENT or any
of its guarantors of any obligation to METRO under this Agreement or
otherwise until all of said obligations are fully paid and performed, nor
shall any such termination affect any right or remedy of METRO arising from
any such obligation, and all agreements, warranties, representations, and
covenants of CLIENT or its guarantors shall survive termination. In the
event that CLIENT shall have breached any provision of this Agreement or if
notice of termination is given by either party, the RESERVE FUND and any
other balances or credits otherwise due by METRO to CLIENT may be retained
and applied by METRO from time to time upon any indebtedness then or
thereafter due from CLIENT and the RESERVE FUND may at METRO'S discretion
upon such breach or notice of termination, be increased to an amount equal
to the then total unpaid face amount of all INVOICES purchased by METRO
hereunder and other present or potential indebtedness of CLIENT to METRO,
whether matured or unmatured. In such an event, as the RESERVE FUND exceeds
all present and potential indebtedness of CLIENT to METRO, METRO shall
remit such excess to CLIENT upon request by CLIENT.
26. POWER OF ATTORNEY. In order to carry out this Agreement, CLIENT irrevocably
appoints METRO, or any authorized designee of METRO, as CLIENT'S special
attorney-in-fact with power:
26.1. To delete CLIENT'S addresses on all INVOICES sold and/or assigned to
METRO by CLIENT and insert METRO'S address in its place.
26.2. To receive, accept, open and dispose of all mail addressed to CLIENT
which may come into METRO'S possession. METRO will timely forward to
CLIENT all mail other than checks and remittance advices.
26.3. To endorse the name of CLIENT on any checks or other instruments or
evidence of payment that may come into the possession of METRO on
INVOICES purchased by METRO from CLIENT or in which CLIENT has
granted METRO a security interest.
26.4. In CLIENT'S name, or otherwise, to demand, ▇▇▇ for, collect and
obtain released for any and all monies due or to become due on
INVOICES purchased by METRO from CLIENT or in which CLIENT has
granted METRO a security interest.
26.5. To compromise, prosecute or defend any action, claim or proceeding as
to INVOICES purchased by METRO from CLIENT or in which CLIENT has
granted METRO a security interest.
26.6. To notify, direct or instruct CLIENT'S CUSTOMER in CLIENT'S name of
the proper remittance address and of procedures for making payment on
any INVOICES that are sold to METRO by CLIENT or in which CLIENT has
granted METRO a security interest.
26.7. To execute on CLIENT'S behalf and file such UCC financing statements
as METRO may deem necessary in order to perfect and maintain the
security interests granted by CLIENT in accordance with this and ant
other agreement between CLIENT and METRO, and CLIENT further agrees
that METRO may file this Agreement or a copy thereof as such UCC
financing statement.
26.8. To do any and all things in CLIENT'S name necessary and proper to
carry out the purposes intended by this Agreement.
27. This Agreement includes all assumed names, tradestyles, and divisions of
CLIENT unless specifically agreed to in writing by METRO. Further,
notwithstanding anything herein to the contrary, this Agreement is
condi-
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tioned upon there being not substantial change in the nature of CLIENT'S
business, which is presently the manufacturing and retailing of power
woodworking tools and related products.
28. This Agreement is contingent upon the delivery of the Validity Guaranty
Agreements of ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and
ancillary documentation to METRO, all in a form approved by METRO.
29. CLIENT WARRANTS AND REPRESENTS TO METRO THAT CLIENT HAS READ THIS AGREEMENT
IN ITS ENTIRETY PRIOR TO SIGNING ANG THAT PRIOR TO SIGNING THIS AGREEMENT
ALL BLANKS WERE FILLED IN (EXCEPT FOR DATES AND SIGNATURES) AND ALL
ALTERATIONS OF THIS AGREEMENT WERE INITIALED BY CLIENT.
CLIENT: SHOPSMITH, INC. (an Ohio corporation)
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. Folketh, President
Date Signed: 12/27/01
Physical Address: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Mailing Address: Same
Attested By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman
METRO FACTORS, INC.
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇
Its: President
Date Signed: 12/30/01
Physical Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇
Mailing Address: ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attested By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, Assistant Secretary
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