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EXHIBIT 10.4
REVOLVING ACCOUNT TRANSFER
AND PURCHASE AGREEMENT
(BATCH)
THIS REVOLVING ACCOUNT TRANSFER AND PURCHASE AGREEMENT (Batch) (this
"Agreement") dated as of December 24, 1996 is entered into by and between
▇▇▇▇▇▇ INDUSTRIES, INC., a Delaware corporation ( "Seller") and KBK FINANCIAL,
INC., a Delaware corporation doing business as PII/KBK Acceptance Corporation
("KBK"). In consideration of the mutual covenants and agreements contained
herein, Seller and KBK hereby agree as follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS. The following definitions shall apply throughout this
Agreement:
"ACCOUNT PAYMENT" means that portion of the purchase price paid by KBK
to Seller from time to time for the Accounts purchased hereunder.
"ACCOUNT PAYMENT BASE" means an amount equal to 80% of Eligible
Accounts, as determined by KBK from time to time in its sole and
absolute discretion.
"ACCOUNT(S)" means the right of the Seller to payment for goods sold
or leased or for services rendered which is not evidenced by a
promissory note, together with anything else defined as an "account"
in the UCC, whether now existing or hereafter created or arising.
Accounts may also include chattel paper satisfactory to KBK in its
sole discretion.
"ACCOUNT DEBTOR" means the person or entity which is obligated on an
Account.
"AFFILIATE" means with respect to any person or entity in question,
any other person or entity owned or controlled by, or which owns or
controls or is under common control or is otherwise affiliated with
such person or entity in question.
"AVAILABILITY POOL" means, at the time of determination thereof, the
maximum amount available for an Account Payment to Seller, as
determined in accordance with the Availability Certificate.
"AVAILABILITY CERTIFICATE" means a certificate in the form of Exhibit
A attached hereto duly executed by an authorized officer of Seller.
"BASE RATE" means the per annum variable rate (based on a 360 day year
and actual days elapsed) established from time to time by KBK without
notice to Seller as its Base Rate for purposes of calculating variable
discounts under KBK's account transfer agreements.
"BATCH BALANCE" means, at the time of determination thereof, (i) the
sum of all Account Payments paid by KBK to Seller, plus all fees,
expenses and Discounts owing by Seller hereunder which are deducted
from the Availability Pool from time to time, less (ii) the amount of
all payments and collections received by KBK on the Accounts purchased
hereunder.
"▇▇▇▇ OF SALE" means the ▇▇▇▇ of Sale in the form attached hereto as
Exhibit A-1 duly executed by an authorized officer of Seller.
"COLLATERAL" has the meaning given it in Section 8.1 hereof.
"COLLECTION REPORT" means a report that provides the daily collection
activity detailed by transaction which is in form and detail
satisfactory to KBK, such detail to include the customer's name,
payment date, invoice number and amount of payment for each
transaction.
"CONCENTRATION LIMIT" means the maximum amount of Accounts owing by
any single Account Debtor that may qualify as Eligible Accounts. In
no event shall the Concentration Limit for any Account Debtor exceed
five percent (5%) of Eligible Accounts.
"DEBIT ACCOUNT" means Account No. 1824132698 that Seller has with
BancOne Texas, N.A., Houston, Texas, over which KBK shall have
express written authority to debit pursuant to the terms of the
Agreement.
"DEFAULT RATE" means a per annum rate of interest (based on a 360 day
year and actual days elapsed) equal to the maximum rate permitted by
applicable law with respect to commercial loans.
"DISCOUNT" has the meaning given it in Section 4.1 hereof.
"DISCOUNT RATE" means a variable discount rate equal to the Base Rate
in effect on such day, plus (subject to adjustment as provided in
Section 4.1 and Schedule 4.1 hereof) five and one-half percent (5.50%)
per annum; provided, however, in no event shall the Discount Rate be
less than seven percent (7%) per annum and upon the occurrence of an
Event of Default, the Discount Rate shall automatically be eighteen
percent (18%) per annum. If the Base Rate changes after the date
hereof, the Discount Rate shall be automatically increased or
decreased, as the case may be, without notice to the Seller from time
to time as of the effective time of each change in the Base Rate.
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"DISPUTED ACCOUNTS" has the meaning given it in Section 9.5.
"ELIGIBLE ACCOUNTS" means, at the time of determination thereof, all
Accounts (including, for purposes of this Agreement, chattel paper
deemed satisfactory for purchase by KBK in its sole discretion)
purchased hereunder except the following: (i) any Account which by its
terms is payable more than thirty (30) days from the invoice date,
(ii) any Account which has been outstanding for more than ninety (90)
days from the invoice date, (iii) to the extent that the aggregate
outstanding amount owed by any single Account Debtor exceeds the
Concentration Limit, any amount in excess of the Concentration Limit
owed by such Account Debtor, (iv) any Account that is owed by an
Account Debtor which is an Affiliate of the Seller or an officer or
employee of the Seller, (v) any Account that arises out of a sale
made, goods shipped or services performed outside of the United States
or that is owed by an Account Debtor located outside the United States
(but KBK may, in its sole and absolute discretion, grant written
consent to Seller to include within Eligible Accounts some or all of
the Accounts owed to Seller by certain Account Debtors located outside
the United States), (vi) any Account that is owed by an Account Debtor
which is a creditor or supplier of the Seller, (vii) any Account that
is owed by an Account Debtor which has asserted any defense or offset
or which has contested any liability with respect to such Account,
(viii) any Account owed by an Account Debtor if more than 5% (in
dollar amount) of such Account Debtor's Accounts are ninety (90) days
or more past due, (ix) any Account the Account Debtor of which is the
United States or any department, agency or instrumentality thereof,
unless the right to payment under such Account is assigned to KBK in
full compliance with the Assignment of Claims Act of 1940, as amended
(31 U.S.C. 3727), (x) any Account the Account Debtor of which is any
state or any department, agency or subdivision thereof unless the
right to payment under such Account is assigned to KBK in full
compliance with such state's laws pertaining to the assignment of
claims, if any, (xi) any Account with respect to which Seller has
furnished a payment and/or performance bond and that portion of any
Account representing retainage, (xii) any Account owing by an Account
Debtor for which there has been instituted a proceeding in bankruptcy
or a reorganization under the United States Bankruptcy Code or other
law, whether state or federal, now or hereafter existing for the
relief of debtors, (xiii) any Account with respect to which goods are
placed on consignment or other terms by reason of which payment by the
Account Debtor may be conditioned, and (xiv) any Account (or portion
of an Account) which, KBK may designate from time to time, in its
reasonable discretion, for exclusion from Eligible Accounts. In
addition to the foregoing, (1) an Account shall not be deemed an
Eligible Account unless each of the representations and warranties set
forth in Section 7 of this Agreement are true and correct (and remain
true and correct at all times) with respect to such Account, and (2)
for purposes of determining the amount of an Account, all discounts,
allowances, credits and adjustments relating to such Account,
calculated on the basis of the shortest payment period provided with
respect to the related invoice, shall be deducted from the gross face
amount payable pursuant to such invoice.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and
foreign statutes, laws, regulations, rules, orders, licenses,
agreements or other governmental restrictions relating to the
environment or to emissions, discharges or releases of pollutants or
industrial, toxic or hazardous substances into the environment, or
otherwise relating to the manufacture, processing, treatment,
transport or handling of pollutants or industrial, toxic or hazardous
substances.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations
promulgated with respect thereto.
"ERISA PLAN" means any pension benefit plan subject to Title IV of
ERISA maintained by the Seller or any Affiliate thereof with respect
to which the Seller or any Affiliate has a fixed or contingent
liability.
"EVENT OF DEFAULT" has the meaning given it in Section 12.
"FACILITY AMOUNT" means the amount of $4,000,000.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting
Standards Board (or any generally recognized successor), consistently
applied throughout the period involved.
"INDEMNIFIED CLAIMS" means any and all claims, demands, actions,
causes of action, judgments, suits, liabilities, obligations, losses,
damages and consequential damages, penalties, fines, costs, fees,
expenses and disbursements (including without limitation, fees and
expenses of attorneys and other professional consultants and experts
in connection with any investigation or defense) of every kind or
nature, known or unknown, existing or hereafter arising, foreseeable
or unforeseeable, which may be imposed upon, threatened or asserted
against or incurred or paid by any Indemnified Person at any time and
from time to time, because of or resulting from, in connection with or
in any way relating to or arising out of the purchase of any Account
hereunder or any other transaction, act, omission, event or
circumstance in any way connected with or contemplated by this
Agreement or the other Purchase Documents or any action taken or
omitted by any such Indemnified Person under or in connection with any
of the foregoing (including, but not limited to any investigation,
litigation, proceeding, enforcement of KBK's rights, or defense of
KBK's actions related to or arising out of this Agreement, the other
Purchase Documents, or the Account Payments or the use of the proceeds
thereof), whether or not any Indemnified Person is a party thereto.
"INDEMNIFIED PERSONS" shall collectively mean KBK and its officers,
directors, shareholders, employees, attorneys, representatives,
agents, Affiliates, successors and assigns.
"INVENTORY" means all goods, now owned or hereafter acquired by the
Seller and wherever located, which are held for sale or lease or are
to be furnished under any contract of service (including, but not
limited to raw materials, work in process, finished goods and
materials used or consumed in the manufacture or production
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thereof, goods in which the Seller has an interest in mass or a joint
or other interest or rights of any kind, and goods which have been
returned to or repossessed or stopped in transit by the Seller) and
anything else defined as "inventory" in the UCC. Without limitation
of the foregoing, Inventory shall include Seller's (i) revenue
producing tools, (ii) components, subassemblies, and expendable
(replacement) parts of or for revenue producing tools, (iii) revenue
producing tools in production, and (iv) raw materials used to build
the assets described in the foregoing clauses (i), (ii) and (iii).
"INVOICES AND RELATED DATA" has the meaning given it in Section 6.5.
"LOAN AGREEMENT" means that certain Loan Agreement dated as of
November 27, 1996 by and between Seller, as borrower, and KBK, as
lender.
"LOAN DOCUMENTS" means the Loan Agreement and all promissory notes,
security agreements, pledge agreements, documents, instruments,
guarantees, certificates and agreements executed and/or delivered by
Seller, as borrower, any guarantor or third party in favor of KBK in
connection with the Loan Agreement.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties or
condition (financial or otherwise) of Seller and its Subsidiaries
taken as a whole, or Seller, or the Guarantor; (b) a material
impairment of the ability of Seller or the Guarantor to perform under
any Purchase Document or Loan Document to which it is a party; or (c)
a material adverse effect upon the legality, validity, binding effect
or enforceability against Seller or the Guarantor of any Purchase
Document or Loan Document to which it is a party.
"OBLIGATIONS" means all indebtedness, obligations and liabilities
owing by Seller to KBK arising under this Agreement and the other
Purchase Documents, and all other indebtedness, obligations and
liabilities owing by Seller to KBK, whether presently existing or
hereafter arising, direct or indirect, primary or secondary, joint,
several, or joint and several, fixed or contingent, and whether
originally payable to KBK or to a third party and subsequently
acquired by KBK (including, without limitation, all indebtedness,
obligations and liabilities of Seller to KBK arising by promissory
note, discount, indemnity, guaranty, letter of credit or as
established by law or by a court of competent jurisdiction).
"PURCHASE DOCUMENTS" means this Agreement and the documents,
agreements and instruments required by KBK to be executed and
delivered in connection herewith (including, without limitation, all
other documents, agreements and instruments evidencing, securing,
governing, guaranteeing and/or pertaining to the Obligations owing
hereunder).
"REMITTANCE ADDRESS" means ▇.▇. ▇▇▇ ▇▇▇-▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
"RESERVE" has the meaning given it in Section 5.1.
"SALES JOURNAL" means a report that will provide the daily sales
activity of Seller detailed by transaction which is in form and detail
satisfactory to KBK, such detail to include the customer's name, date
of sale, invoice number and sales amount for each transaction.
"SUBSIDIARY" means any corporation of which more than 50 percent of
the issued and outstanding securities having ordinary voting power for
the election of directors is owned or controlled, directly or
indirectly, by a Person and, or, one or more of its Subsidiaries.
"TERM" has the meaning given it in Section 14.4.
"TERMINATION EVENT" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) of
ERISA or (ii) any other reportable event described in Section 4043 of
ERISA other than a reportable event not subject to the provision for
30-day notice to the Pension Benefit Guaranty Corporation pursuant to
a waiver by such corporation under Section 4043(a) of ERISA, (b) the
withdrawal of the Seller or any Affiliate of the Seller from any ERISA
Plan during a plan year in which it was a 'substantial employer" as
defined in Section 4001(a)(2) of ERISA, or (c) any event or condition
which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
ERISA Plan.
"UCC" means the Uniform Commercial Code as in effect in the State of
Texas.
1.2 CONSTRUCTION. Terms defined in the UCC which are used and not
otherwise defined herein shall have the meanings given them in the
UCC. The terms defined in this Agreement which refer to a particular
agreement, instrument or document also refer to and include all
renewals, extensions and modifications of such agreement, instrument
or document. All addenda, exhibits and schedules attached to this
Agreement are a part hereof for all purposes. Words in the singular
form shall be construed to include the plural and vice versa, unless
the context otherwise requires.
1.3 CALCULATIONS AND DETERMINATIONS. The Batch Balance shall be increased
by the amount of each Account Payment from the date each such payment
is made by KBK to Seller and shall be decreased within three business
days after KBK receives, in collected and immediately available funds,
proceeds of collection of Accounts. Unless otherwise expressly
provided herein or unless KBK otherwise consents, all financial
statements and reports furnished to KBK hereunder shall be prepared
and all financial computations and determinations pursuant hereto
shall be made in accordance with GAAP.
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SECTION 2. PURCHASES OF ACCOUNTS AND ACCOUNT PAYMENTS
2.1 ACCOUNT PAYMENTS. Subject to the terms of this Agreement, Seller
agrees to offer for sale from time to time and KBK agrees to purchase
all Accounts of Seller. It is the intention of the parties hereto
that all Accounts sold to KBK from time to time hereunder will be
considered and sold as one account or batch. The Account Payment paid
to Seller at any time hereunder shall be an amount up to the
Availability Pool at such time, as requested by Seller on the most
recent Availability Certificate delivered to KBK.
2.2 PURCHASE PRICE. The purchase price for Accounts which are Eligible
Accounts at the time of their sale to KBK is the amount of increase in
the Availability Pool on the date of, and as a result of, such sales,
plus the amount of increase in the Availability Pool when such
Accounts are collected, less the respective Discount. The
consideration provided by KBK to Seller for the purchase of any
Accounts which are not Eligible Accounts at the time of their sale to
KBK is the contingent increase in, and the amount of any increase in,
the Availability Pool if and when such Accounts are collected, less
the respective Discount; provided, however, if any such Accounts
become Eligible Accounts after their sale to KBK, the consideration
for the purchase of such Accounts shall also include the amount of
increase in the Availability Pool resulting from such Accounts
becoming Eligible Accounts.
2.3 NOTICE OF SALES. In connection with the initial sale of Accounts
hereunder, Seller shall deliver to KBK a signed and completed
Availability Certificate and a ▇▇▇▇ of Sale which has a detailed aging
of Accounts attached thereto, all in form and detail satisfactory to
KBK. The Seller must give prior written notice to KBK of any
subsequent sales of Accounts by delivering to KBK a properly completed
Availability Certificate, together with (i) the Seller's Sales Journal
listing each Account originated or generated since the date of the
previous Availability Certificate, (ii) the Seller's Collection
Report listing all collections received on Accounts since the date of
the previous Availability Certificate, and (iii) the Seller's
Debit/Credit memo journal listing all returns, deductions and disputes
on Accounts since the date of the previous Availability Certificate.
2.4 VERIFICATION. Promptly after receiving each Availability Certificate
and other reports required by Section 2.3, KBK shall, based upon such
Availability Certificate and such other information provided or
otherwise available to KBK, verify and, if necessary, redetermine the
Availability Pool, which verification or redetermination, as the case
may be, shall take effect immediately and remain in effect until the
next such verification or redetermination. If all conditions
precedent to the sale of Accounts and the Account Payment requested by
such Availability Certificate have been met, then KBK will on the date
specified in such request purchase the subject Accounts and pay the
appropriate Account Payment to Seller by wire or ACH transfer to the
Debit Account or such other account of Seller as may hereafter be
designated in writing by Seller. KBK's acceptance of the Accounts
offered for sale by Seller from time to time hereunder shall be
evidenced by KBK adjusting the Availability Pool as a result of the
purchase of such Accounts. In the event KBK does not receive an
appropriately completed Availability Certificate and the other reports
required by Section 2.3, KBK shall have no obligation to verify the
Availability Pool, purchase any further Accounts or pay any additional
Account Payments until such time as KBK shall have received such
information.
2.5 SALE OF ACCOUNTS. Seller hereby sells, transfers, assigns and
otherwise conveys to KBK (as a sale by Seller and a purchase by KBK,
and not as security for any of the Obligations) all right, title, and
interest of Seller in and to the Accounts, together with all related
rights (but not obligations) of Seller with respect thereto, including
all contract rights, guarantees, letters of credit, liens in favor of
Seller, collateral, insurance and other agreements and arrangements of
whatever character from time to time supporting or securing payment of
such Accounts, all of the Invoices and Related Data (as defined in
Section 6.5 hereof) with respect to such Accounts and all right, title
and interest of Seller in any related goods, including Seller's rights
and remedies under Article 2, Part 7 of the UCC. The foregoing sale,
transfer, assignment and conveyance does not constitute and is not
intended to result in an assumption by KBK of any obligation of Seller
or any other person in connection with the Accounts or related rights
or under any agreement or instrument relating thereto. Seller agrees
to execute and deliver such bills of sale, assignments, letters of
credit, notices of assignment, financing statements (including
continuation statements) under the UCC and other documents, and make
such entries and markings in its books and records, and to take all
such other actions (including the negotiation, assignment or transfer
of negotiable documents, letters of credit or other instruments) as
KBK may request to further evidence or protect the sales and
assignments of Accounts and related rights to KBK hereunder, as well
as KBK's interest in any returned goods.
2.6 EXCESS BATCH BALANCE. The Batch Balance shall not at any time exceed
the lesser of (i) the Account Payment Base, and (ii) the Facility
Amount. If for any reason the Batch Balance should ever exceed the
Account Payment Base or the Facility Amount, whichever is less, Seller
shall immediately remit to KBK, in immediately available funds, an
amount equal to such excess, to be held by KBK as a Reserve pursuant
to the provisions of Section 5 hereof.
SECTION 3. CONDITIONS PRECEDENT
3.1 CONDITIONS PRECEDENT TO INITIAL PURCHASE. KBK's obligation hereunder
to purchase any Accounts or pay any Account Payment for the purchase
of any such Accounts (including the first purchase) under the terms
and conditions of this Agreement shall be subject to the conditions
precedent that as of the date of any such purchase or payment and
after giving effect thereto: (i) KBK has received this Agreement and
all other Purchase Documents which have all been appropriately
executed by Seller and all other proper parties, (ii) all
representations and warranties made in this Agreement and the other
Purchase Documents are true on and as of the date of such Account
Payment (except to the extent that the facts upon which such
representations and warranties are based have been changed by the
transactions contemplated in this Agreement) as if such
representations and warranties had been made as of the date of such
purchase of Accounts and Account Payment, (iii) Seller has performed
and complied with all agreements and conditions required in the
Purchase Documents to be performed or complied with by it on or prior
to the date of such purchase of Accounts and
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Account Payment, (iv) no Event of Default, or an event with which the
passage of time or the giving of notice, or both, shall become an
Event of Default, has occurred hereunder or under any of the other
Purchase Documents, (v) the most recent financial statements of Seller
supplied to KBK show no Material Adverse Effect, (vi) such purchase of
Accounts or Account Payment shall not be prohibited by any law or any
regulation or any order of any court or governmental agency or
authority, and (vii) all fees and expenses owing by Seller to KBK
hereunder have been paid.
SECTION 4. DISCOUNTS, FEES, EXPENSES AND TAXES
4.1 DISCOUNTS. The purchase price for the Accounts will be reduced by a
discount (the "Discount). The Discount will be computed on a daily
basis by multiplying the Batch Balance (provided that the Batch
Balance is greater than $0) by the Discount Rate in effect from day to
day. Seller hereby authorizes KBK, in KBK's sole discretion, to make
the adjustment to the purchase price of the Accounts from time to time
(but not less frequently than monthly) which is attributable to the
Discount by (i) reducing the Availability Pool, (ii) deducting the
Discount from any Account Payment, (iii) debiting the Debit Account,
or (iv) using any combination of the foregoing. KBK shall use
reasonable efforts to notify Seller of the amount of each debit and
the application thereof to the Obligations, but KBK shall not have any
liability to Seller for failure to give any such notice. Once each
fiscal year during the term of this Agreement, the portion of the
Discount Rate in excess of the Base Rate (the "fixed portion") may be
increased or decreased on the terms and conditions set forth below.
The fixed portion of the Discount Rate may be decreased upon request
by Seller made within 60 days after receipt by KBK of Seller's annual
audited financial statements if Seller satisfies the conditions for a
decrease in the fixed portion of the Discount Rate set forth in the
Tiered Pricing Schedule attached hereto as Schedule 4.1. The fixed
portion of the Discount Rate may be increased by KBK within 60 days
after receipt by KBK of Seller's annual audited financial statements
if the conditions set forth in the Tiered Pricing Schedule for an
increase in the fixed portion of the Discount Rate are found to exist.
All such changes to the fixed portion of the Discount Rate shall be
effective as of the first day of the month following the month in
which Seller's request for a decrease is received, with respect to a
decrease in the fixed portion of the Discount Rate, or the first day
of the month following the month in which Seller's annual audited
financial statements are received, with respect to an increase in the
fixed portion of the Discount Rate. Following any such increase or
decrease in the fixed portion of the Discount Rate, the fixed portion
of the Discount Rate shall not be adjusted prior to receipt of
Seller's annual audited financial statements for the succeeding fiscal
year. Notwithstanding the foregoing, the portion of the Discount Rate
consisting of the Base Rate shall vary as provided herein.
4.2 COMMITMENT FEE. Seller shall pay to KBK a commitment fee in the
amount of one percent (1%) of the Facility Amount concurrently with
the execution hereof. Seller hereby authorizes KBK, in KBK's sole
discretion, to deduct the commitment fee from the first Account
Payment. The portion of any up-front deposit delivered to KBK by the
Seller which is in excess of KBK's costs, legal fees and expenses may,
at KBK's option, be applied by KBK to the payment of the commitment
fee. Seller and KBK acknowledge and agree that the commitment fee is
reasonable compensation to KBK for making the facility available under
the terms of this Agreement and for no other purpose.
4.3 This Section has been intentionally omitted.
4.4 ATTORNEYS' FEES. Seller agrees to pay or reimburse KBK upon demand for
all reasonable attorneys' fees, court costs and other expenses
incurred by KBK (whether or not litigation is commenced or judgment
issued, and if litigation is commenced whether at trial or any
appellate level) in preparation, negotiation, and enforcement of this
Agreement and protecting or enforcing its ownership interest in the
Accounts or its security interest in the Collateral, in collecting the
Accounts, or in the representation of KBK in connection with any
bankruptcy case or insolvency proceeding involving Seller, the
Collateral or any Account Debtor. Seller hereby authorizes KBK, in
KBK's sole discretion, to collect such fees, costs and expenses (i) by
reducing the Availability Pool, (ii) by deducting such amounts from
any Account Payment(s), (iii) by debiting the Debit Account, or (iv)
by using any combination of the foregoing. This authorization shall
not affect Seller's obligation to pay such sums when due. KBK shall
use reasonable efforts to notify Seller of the amount of each debit
and the application thereof to the Obligations, but KBK shall not have
any liability to Seller for failure to give any such notice.
4.5 EXPENSES. KBK shall be entitled to reimbursement upon demand for all
out of pocket expenses incurred by KBK in the course of performing its
functions with respect to this Agreement, including without
limitation, the following: lock box charges, long-distance telephone
charges, postage, credit reports, wire transfers, check copying
charges, overnight mail delivery, UCC and tax lien searches and filing
fees. Seller hereby authorizes KBK, in KBK's sole discretion, to
collect such expenses (i) by reducing the Availability Pool, (ii) by
deducting such amounts from any Account Payment(s), (iii) by debiting
the Debit Account, or (iv) by using any combination of the foregoing.
This authorization shall not affect Seller's obligation to pay such
sums when due. KBK shall use reasonable efforts to notify Seller of
the amount of each debit and the application thereof to the
Obligations, but KBK shall not have any liability to Seller for
failure to give any such notice.
4.6 DEFAULT RATE. All past due amounts owed by Seller to KBK hereunder,
including but not limited to past due fees and expenses, shall bear
interest at the Default Rate and shall be payable on demand, and may,
in KBK's sole discretion, be collected by (i) reducing the
Availability Pool, (ii) deducting such amounts from Account
Payment(s), (iii) debiting the Debit Account, or (iv) using any
combination of the foregoing. Upon the occurrence of an Event of
Default, all Obligations shall bear interest at the Default Rate. This
authorization shall not affect Seller's obligation to pay such sums
when due. KBK shall use reasonable efforts to notify Seller of the
amount of each debit and the application thereof to the Obligations,
but KBK shall not have any liability to Seller for failure to give any
such notice.
4.7 TAXES. All taxes and governmental charges of any kind imposed with
respect to the sale of goods or rendering of services relating to the
Accounts shall remain for the account of, and be paid by, Seller.
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SECTION 5. RESERVE
5.1 ESTABLISHMENT OF RESERVE. At any time after the occurrence of an
Event of Default (as defined in Section 12 hereof), KBK may, at its
election, withhold and accumulate all or any portion of any Account
Payment to maintain a reserve ("Reserve") or reduce the Availability
Pool, in an amount that KBK, in its sole and absolute discretion,
deems necessary to collect any Obligations which may become due by
Seller to KBK. Funds may also be remitted to KBK as a Reserve
pursuant to Section 2.6 hereof.
5.2 OFFSET AGAINST RESERVE. Seller hereby authorizes KBK to offset,
without prior notice to Seller, and charge against the Reserve any and
all Obligations which Seller may owe to KBK.
5.3 DISTRIBUTION OF THE RESERVE. To the extent the conditions or
insecurity for which KBK established the Reserve or decreased the
Availability Pool, as the case may be, no longer exist, KBK will
increase the Availability Pool by the amount of the Reserve and/or by
the amount it previously decreased the Availability Pool.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants, and upon each delivery to KBK of an
Availability Certificate further represents and warrants as of the date of
delivery of the Availability Certificate, to KBK as follows:
6.1. EXISTENCE. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation
and is qualified and authorized to do business and is in good standing
in all states in which such qualification and good standing are
necessary. Seller has all requisite power and authority to execute
this Agreement and deliver the other Purchase Documents to which
Seller is a party.
6.2 NO VIOLATION OF LAW. The execution, delivery and performance by
Seller of this Agreement and the other Purchase Documents to which
Seller is a party do not and will not constitute a violation of any
applicable law or of Seller's articles or certificate of incorporation
or Bylaws or any material breach of any other document, agreement or
instrument to which Seller is a party or by which Seller is bound.
6.3 BINDING OBLIGATIONS. The execution, delivery and performance of this
Agreement and the other Purchase Documents to which Seller is a party
have been duly authorized by all necessary corporate action by Seller
and constitute legal, valid and binding obligations of Seller
enforceable against Seller in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors' rights
and except to the extent specific remedies may generally be limited by
equitable principles.
6.4 CHIEF EXECUTIVE OFFICE. The address set forth below Seller's
signature hereon is Seller's mailing address and its chief executive
office. Seller's books and records concerning the Accounts are
maintained at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇.
6.5 POSSESSION OF INVOICES AND RELATED DATA. Seller has and will retain
possession of the following in trust for the benefit of KBK
(collectively, the "Invoices and Related Data"): (a) true and correct
copies of all invoices evidencing each Account sold to KBK hereunder;
(b) evidence of delivery of all goods or completion of all services
relating to each such Account; and (c) a current listing of all open
and unpaid Accounts sold to KBK hereunder, together with the names,
addresses, contact persons and telephone numbers of each Account
Debtor until such time as KBK picks up or, at KBK's request, Seller
delivers to KBK, the Invoices and Related Data. Although the Invoices
and Related Data are in the possession of Seller, ownership thereof is
transferred to KBK contemporaneously with the purchase of the related
Accounts.
6.6 TRUE AND CORRECT INFORMATION. All information provided by Seller to
KBK during its evaluation of the transactions anticipated by and in
connection with this Agreement, including applications, reports,
financial statements, and the statements made therein were true and
correct at the time made and remain true and correct at the time that
this Agreement is executed.
6.7 TAXES. Seller has filed all federal, state and local tax reports and
returns required by any law or regulation to be filed by it and has
either duly paid all taxes, duties and charges indicated due on the
basis of such returns and reports, or made adequate provision for the
payment thereof, and the assessment of any material amount of
additional taxes in excess of those paid and reported is not
reasonably expected. There is no tax lien notice against Seller
presently on file, judgment entered against Seller or levy on or
attachment of its property outstanding or reasonably anticipated.
6.8 FULL DISCLOSURE. There is no fact which Seller has not disclosed to
KBK in writing which could materially adversely affect the properties,
business or financial condition of Seller, the Accounts sold hereunder
or any of the Collateral, or which is necessary to be disclosed in
order to keep any of the representations and warranties contained
herein or in any other Purchase Document from being misleading.
6.9 ERISA COMPLIANCE. Seller is in compliance with ERISA concerning
Seller's ERISA Plan, if any, or is not required to contribute to any
"multi-employer plan" as defined in Section 4001 of ERISA.
6.10 COMPLIANCE WITH LAWS. Seller is conducting its business in material
compliance with all applicable laws, including but not limited to
applicable Environmental Laws and the Fair Labor Standards Act and has
and is in compliance with all licenses and permits required under any
such laws. Seller does not have any known material contingent
liability under any Environmental Law. Seller will continue to comply
in all material respects with all Environmental Laws now or hereafter
applicable to Seller and shall obtain, at or prior to the time
required by applicable Environmental Laws, all environmental, health
and safety permits, licenses and other authorizations
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necessary for its operations. Seller will promptly furnish to KBK all
written notices of violation, complaints, penalty assessments, suits
or other proceedings received by Seller with respect to any alleged
violation of or non-compliance with any Environmental Laws.
6.11 ASSUMED NAMES. Except as may be listed on Schedule 6.11 attached
hereto, the Seller does business under no trade or assumed names, has
no Subsidiaries and is not a Subsidiary of any other corporation.
SECTION 7. ACCOUNTS
Seller hereby represents and warrants to KBK with respect to each Account
offered for sale by Seller to KBK hereunder as follows:
7.1 OWNER. Seller is the sole owner of such Account, which Account is
free and clear of any liens, claims, equities and encumbrances
whatsoever, and upon the purchase by KBK of such Account, KBK will own
such Account free and clear of any liens, claims, equities and
encumbrances whatsoever and the consideration received by Seller from
KBK for such Account is fair and adequate.
7.2 AUTHORITY TO SELL. Seller is the sole obligee under such Account and
has full power and is duly authorized to sell, assign and transfer
such Account to KBK hereunder, and, except as disclosed to KBK in
writing concurrently with the sale of such Account to KBK, the date of
sale of such Account is not more than 30 days after the date of the
original invoice relating to such Account.
7.3 FULL PAYMENT EXPECTED. Seller has no knowledge of any fact which
would lead it to expect that, at the date of sale of such Account to
KBK, such Account will not be paid in the full stated amount when due,
except as disclosed to KBK in writing concurrently with the sale of
such Account to KBK.
7.4 BONA FIDE ACCOUNT. Such Account is valid and enforceable and arises
out of a bona fide sale or lease of conforming goods or the bona fide
rendition of services by Seller, and all underlying goods have been
delivered to the Account Debtor, or all underlying services have been
rendered by Seller, in complete fulfillment of all of the terms and
conditions of a fully executed, delivered and unexpired contract or
purchase order with the Account Debtor, and the Account Debtor has
accepted the goods or services to which the Account relates, except as
otherwise disclosed to KBK in writing.
7.5 PAYABLE IN U.S. DOLLARS. Such Account is denominated and payable only
in United States dollars and constitutes the legal, valid and binding
payment obligation of the Account Debtor, enforceable in accordance
with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally).
7.6 ACCOUNT IS NOT PAST DUE. Such Account is current and not past due
(except as otherwise disclosed to KBK in writing), has not been paid
by or on behalf of the Account Debtor in whole or in part, and, if it
is an Eligible Account, is not and will not be subject to any dispute,
recision, setoff, recoupment, defense or claim by the Account Debtor,
whether relating to price, quality, quantity, workmanship, delay in
delivery, setoff, counterclaim or otherwise, and, if it is an Eligible
Account, the Account Debtor has not and will not claim any defense of
any kind or character (other than bankruptcy or insolvency arising
after the date of sale of such Account to KBK hereunder) against
payment of such Account.
7.7 U.S. ACCOUNT DEBTOR. As of the date of purchase by KBK of such
Account, the Account Debtor with respect to such Account is located
(within the meaning of Section 9-103 of the UCC) and has its principal
executive offices within the United States (but KBK may, in its sole
and absolute discretion, grant written consent to Seller to include
within Eligible Accounts some or all of the Accounts owed to Seller by
certain Account Debtors located outside the United States), except as
disclosed to KBK in writing concurrently with the sale of such Account
to KBK.
7.8 REMITTANCE ADDRESS. The invoice related to such Account sets forth as
its sole address for payment the Remittance Address.
SECTION 8. COLLATERAL
8.1 GRANT OF SECURITY INTEREST.
(a) In order to secure the payment of all Obligations,
Seller hereby grants to KBK a security interest in and lien upon all
of Seller's right, title and interest in and to (a) all Accounts not
purchased hereunder and all present and future contract rights,
chattel paper, deposit accounts and general intangibles now or
hereafter owned by Seller (including, without limitation, the
Reserve), and all of Seller's right, title and interest in the goods
purchased and represented thereby including all of Seller's rights in
and to returned goods and rights of stoppage in transit, replevin and
reclamation as unpaid vendor; (b) all Inventory and all accessions
thereto and products thereof and documents therefor; (c) all books and
records pertaining to the foregoing, including but not limited to
computer programs, data, certificates, records, circulation lists,
subscriber lists, advertiser lists, supplier lists, customer lists,
customer and supplier contracts, sales orders, and purchasing records;
and (d) all proceeds of the foregoing, including without limitation,
all insurance payable by reason of loss or damage (collectively, the
"Collateral").
(b) The representations and warranties of Seller set
forth in this Agreement and the other Purchase Documents will be
guaranteed by ▇▇▇▇▇▇ - Delaware (sometimes referred to herein as the
"Guarantor"), such guaranty to be evidenced by a Limited Guaranty in
form and substance satisfactory to KBK.
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(c) Seller will, and will cause ▇▇▇▇▇▇ - Delaware and any
other U.S. Subsidiary acquiring assets pursuant to Section 9.15 hereof
to, execute, acknowledge and deliver to KBK such instruments, chattel
mortgages, security agreements, security agreement-pledges,
statements, assignments and financing statements, in form and
substance acceptable to KBK as in the good faith and discretion of
counsel for KBK may be necessary to enforce, grant to KBK and perfect
the security interests, liens, assignments and mortgages on the
Collateral. Each of Seller and KBK agrees that all Collateral now or
hereafter securing any of the Obligations hereunder also shall serve
any and all other indebtedness and liabilities now or hereafter owing
by Seller to KBK.
8.2 PERFECTION. Seller agrees to comply with all applicable laws in order
to perfect KBK's security interest in and to the Collateral, to
execute any financing statement(s) or additional documents as KBK may
require and to deliver to KBK landlord and or mortgagee lien waivers
with respect to each site where Inventory is located and which is
either leased by Seller or has been mortgaged by Seller, upon request
by KBK.
8.3 REPRESENTATIONS AND WARRANTIES. Seller represents and warrants to KBK
as follows with respect to the Collateral:
(a) Seller has not executed any other security agreement currently
affecting the Collateral or any financing statement regarding
the Collateral (other than those in favor of KBK and Permitted
Liens (as such term is defined in the Loan Agreement)), and no
financing statement executed by Seller is now on file (other
than in favor of KBK and the holders of Permitted Liens);
(b) All Collateral is and will be owned by Seller, free and clear
of all other liens, encumbrances, security interests and
claims (except in favor of KBK and Permitted Liens), and shall
be kept at Seller's address set forth below Seller's signature
hereon and at such other addresses as may be listed in
Schedule 8.3(b) attached hereto, and Seller shall not (without
the written consent of KBK) remove the Collateral therefrom
except for the purpose of selling or leasing Inventory in the
ordinary course of business.
8.4 EXISTING SECURITY INTEREST. In the event a security interest has
heretofore been granted and given to KBK by Seller in a prior
agreement(s) or document(s) to secure certain obligations, then, in
such event, and notwithstanding anything in this Agreement to the
contrary, the lien and security interest herein granted and given to
KBK hereunder is in renewal and continuation, and not in
extinguishment of, all such prior liens and security interests and
continue to be valid and subsisting liens and security interests to
secure all prior, existing and future Obligations.
8.5 CROSS-COLLATERALIZATION; LIMITATIONS. All present and future
Collateral securing the Obligations of Seller under this Agreement and
the other Purchase Documents shall also secure all obligations of
Seller, as borrower, to KBK under the Loan Documents. Any and all
collateral heretofore or at any time hereafter granted by Seller to
KBK as security for Seller's Obligations, as borrower, under the Loan
Agreement and the other Loan Documents shall also secure all
Obligations of Seller under this Agreement and the other Purchase
Documents. All Collateral shall be subject to the rules on
preferential application of proceeds of Collateral set forth in
Section 2.H of the Loan Agreement.
SECTION 9. COVENANTS
So long as this Agreement shall be in effect or any of the Obligations shall be
outstanding, Seller agrees and covenants that, unless KBK shall otherwise
consent in writing:
9.1 SALE OF ACCOUNTS. Subject to the terms of this Agreement, Seller
will sell all Accounts to KBK hereunder concurrently with the delivery
of the Availability Certificate delivered to KBK which is due
immediately after such Accounts are created or arise.
9.2 BOOKS AND RECORDS. Seller will maintain its books and records in
accordance with GAAP, applied on a consistent basis, at its chief
executive office as set forth in Section 6.4 hereof; provided,
however, that Seller's books and records concerning the Accounts will
be maintained at Seller's Alice, Texas office.
9.3 NO OTHER LIENS. Seller will not execute any security agreement or
financing statement covering any of the Accounts purchased hereunder
or the Collateral, except in favor of KBK.
9.4 NOTICE OF FALSE REPRESENTATION. Seller agrees to notify KBK
immediately of any breach by Seller of any representation, warranty or
covenant contained herein or in the event any representation or
warranty made herein becomes false at any time.
9.5 NOTICE OF DISPUTED ACCOUNT. Seller agrees to notify KBK immediately
of the assertion by any Account Debtor of any dispute or other claim
(including any defense or offset asserted by any Account Debtor) with
respect to any Account sold to KBK hereunder, or with respect to any
related goods or services ("Disputed Accounts"). Seller agrees to
settle, at its own expense and for the benefit of KBK, all Disputed
Accounts; provided, that any such settlement shall be remitted to the
Remittance Address; and provided further, that Seller shall notify KBK
prior to settling any single Account or series of Accounts with a
single Account Debtor with an original aggregate balance in excess of
$100,000.00.
9.6 RIGHT OF INSPECTION. Seller agrees to permit KBK to visit its
properties and installations and to examine, audit and make and take
away copies or reproductions of Seller's books and records, at all
reasonable times (but subject to the limitations contained in the Loan
Agreement). Seller also agrees to pay an auditing fee of up to $2,000
per audit (inclusive of, and not cumulative of, auditing fees charged
by KBK to Seller pursuant to the Loan Agreement).
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9.7 NOTICE OF MATERIAL CHANGE/LITIGATION. Seller shall promptly notify
KBK in writing of (a) any condition, event or act which comes to its
attention that would or might cause a Material Adverse Effect, and (b)
any litigation filed by Seller against an Account Debtor or any
litigation filed against Seller, in each instance in excess of
$100,000.00.
9.8 NOTICE OF NAME OR ADDRESS CHANGE. Seller will notify KBK in writing
30 days prior to any change in (a) the name of Seller or any of the
names under which it is conducting business as specified on Schedule
6.11, (b) the address of Seller's chief executive office as described
in Section 6.4 hereof, (c) the location of the office where the
records concerning Accounts are maintained, (d) the opening of any new
place of business or location where Collateral may be kept, and (e)
the closing of any of its existing places of business or locations
described on Schedule 8.3(b). Seller agrees to execute and deliver to
KBK financing statements and such other documents as KBK may request
in order to obtain and/or maintain a perfected security interest in
the Collateral.
9.9 PROPER REPORTING. Seller agrees to properly reflect the effect of
this Agreement, and all sales of Accounts related thereto, in all
financial reports and disclosures, written or otherwise, provided to
Seller's creditors and other interested parties. Seller specifically
agrees that all Accounts purchased by KBK hereunder will be excluded
from Seller's reported accounts receivable balances.
9.10 DELIVERY OF AVAILABILITY CERTIFICATE. Seller shall deliver to KBK an
updated Availability Certificate (i) with each request for an Account
Payment, and (ii) on a weekly basis throughout the term hereof,
whether or not Seller request an Account Payment, in each instance
accompanied by the related reports described in Section 2.3 hereof.
9.11 ACCOUNTS AGING. Seller agrees to deliver to KBK within 30 days after
each month, an Accounts aging report, in form and detail satisfactory
to KBK.
9.12 FINANCIAL STATEMENTS. Seller agrees to furnish to KBK :
(a) As soon as available, but in any event within 120
days after the last day of each fiscal year of Seller, a consolidated
and consolidating statement of income and a consolidated and
consolidating statement of cash flows of Seller and its Subsidiaries
for such fiscal year, and a consolidated and consolidating balance
sheet of Seller and its Subsidiaries as of the last day of such fiscal
year, together with an auditors' report thereon (with no material
qualifications) by an independent certified public accountant, and (b)
within 45 days after the last day of each month, monthly unaudited
consolidated and consolidating statements of income and statement of
cash flows of Seller and its Subsidiaries for each month and unaudited
consolidated and consolidating balance sheets of Seller and its
Subsidiaries as of the end of each month. Seller represents and
warrants that each such statement of income and statement of cash
flows will fairly present, in all material respects, the results of
operations and cash flows of Seller and its Subsidiaries for the
period set forth therein, and that each such balance sheet will fairly
present, in all material respects, the financial condition of Seller
and its Subsidiaries as of the date set forth therein, all in
accordance with GAAP consistently applied.
(b) Within 45 days after the last day of each month, a
compliance certificate (which may be combined with the Availability
Certificate) for (and executed by an authorized representative of)
Seller concurrently with and dated as of the date of delivery of each
of the financial statements as required in paragraphs (i) and (ii)
above, containing a certification that (a) the financial statements of
even date are true and correct, and (b) the Seller is not in default
under the terms of this Agreement, any other agreement with KBK or any
other agreement for borrowed money or lease agreement with any other
party, and (c) the computations and conclusions, with respect to
compliance with this Agreement, and the other Loan Documents,
including computations of all quantitative covenants have been
accurately calculated in compliance with the methods detailed herein.
(c) Promptly upon their becoming available, copies of:
(a) all financial statements, reports, notices and proxy statements
sent or made available by the Seller or any of its Subsidiaries to
security holders; (b) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by the Seller
or any of its Subsidiaries with any securities exchange or with the
U.S. Securities and Exchange Commission or any governmental authority;
and (c) all press releases and other statements made available by the
Seller or any of its Subsidiaries to the public concerning the
financial condition of the Seller or any of its Subsidiaries.
(d) Such additional information, reports and records
respecting the business operations and financial condition of Seller
and the Subsidiaries, respectively, from time to time, as KBK may
reasonably request, including copies of its tax returns filed with the
Internal Revenue Service and evidence of payment of related taxes.
9.13 FINANCIAL COVENANTS. Seller agrees to maintain the following
financial covenants while this Agreement remains in effect determined
in accordance with GAAP, in each instance calculated for Seller and
its Subsidiaries on a consolidated basis:
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(a) DEBT SERVICE COVERAGE RATIO. A ratio of (a) earnings before
interest, depreciation and amortization at the end of each
fiscal quarter, to (b) all principal and interest due in such
quarter on all amortizing loans, all interest due in such
quarter on all non-amortizing loans, all payments due in such
quarter on capital leases, and all Discounts due KBK hereunder
in such quarter, of not less than: 1.15 to 1.0 as of the
fiscal quarter ending August 31, 1997; 1.25 to 1.0 as of the
fiscal quarter ending November 30, 1997 and as of the end of
each fiscal quarter thereafter through the fiscal quarter
ending May 31, 1998; and 1.50 to 1.0 as of the fiscal quarter
ending August 31, 1998 and as of the end of each fiscal
quarter thereafter.
(b) TANGIBLE NET WORTH. Tangible Net Worth on a proforma basis
(i.e., add back purchased Accounts and factored balance) of
not less than $13,500,000 at all times.
9.14 TAXES AND OTHER OBLIGATIONS. Seller shall pay all of its taxes,
assessments and other obligations, including, but not limited to,
taxes, costs or other expenses arising out of this transaction, as the
same becomes due and payable, except to the extent the same are being
contested in good faith by appropriate proceedings in a diligent
manner.
9.15 LIMITATIONS ON FUNDAMENTAL CHANGES; DISPOSITION OF ASSETS. Seller
shall not, and shall not permit any of its Subsidiaries to: (a) enter
into any merger or consolidation with or into any Person, except (i)
any Subsidiary of Seller may merge, consolidate or combine with or
into Seller (provided that Seller shall be the continuing or surviving
corporation), or with any one or more Subsidiaries of Seller (provided
that, if any such transaction shall be between (A) a Subsidiary and a
wholly owned Subsidiary, the wholly owned Subsidiary shall be the
continuing or surviving corporation and (B) a Subsidiary and an U.S.
Subsidiary, the U.S. Subsidiary shall be the continuing or surviving
corporation), and (ii) Seller may merge, consolidate or combine with
or into any other Person (provided that (A) Seller shall be the
continuing or surviving corporation, (B) no Default or Event of
Default has occurred and is continuing, and (C) no Default or Event of
Default would occur as a result of such merger, consolidation or
combination); (b) form any new Subsidiary; (c) liquidate or dissolve
itself (or suffer any liquidation or dissolution); (d) convey, sell,
lease (other than leases of inventory entered into in the ordinary
course of business), charter or otherwise dispose of all or
substantially all of its property, assets or business; provided that
Seller may transfer all or substantially all of the assets of any of
Seller's divisions to an existing or hereafter acquired U.S.
Subsidiary, so long as (i) no Default or Event of Default has occurred
and is continuing, (ii) no Default or Event of Default would occur as
a result thereof, (iii) any and all such U.S. Subsidiaries shall,
prior to any such transfers, enter into a valid, binding and
enforceable (A) security agreement (granting KBK a first priority
perfected security interest in such U.S. Subsidiaries of the types
described in the Security Agreement) and take all other action
necessary to grant to KBK a first priority security interest in such
assets, and (B) guaranty agreement guarantying the payment and
performance of the Obligations, in each case in form and substance
acceptable to KBK, and (iv) in each instance each such U.S. Subsidiary
promptly delivers an opinion of counsel acceptable to KBK in form,
scope and substance acceptable to KBK with respect thereto, or (e)
except in the ordinary course of business, enter into any arrangement,
directly or indirectly, whereby Seller or its applicable Subsidiary
would sell or transfer any properties (other than real property),
either now owned or thereafter acquired, and then or thereafter lease
as lessee such properties or any part thereof or any other property
(other than real property) to be used for substantially the same
purpose.
9.16 LIENS. Seller shall not, and shall not permit any of its
Subsidiaries to, grant, suffer or permit any contractual or
noncontractual Lien on or security interest in its assets, except in
favor of KBK, or fail to promptly pay when due all lawful claims,
whether for labor, materials or otherwise except for Permitted Liens.
SECTION 10. RIGHTS OF KBK
10.1 NOTIFICATION OF ACCOUNT DEBTORS. KBK shall have the right at any
time, either before or after the occurrence of an Event of Default and
without notice to Seller, to notify any or all Account Debtors of the
sale of the Accounts to KBK and to direct such Account Debtors to make
payment of all amounts due or to become due to Seller directly to KBK
to enforce collection of any Accounts purchased hereunder or
collection of any of the Collateral and to adjust, settle or
compromise the amount or payment thereof.
10.2 COLLECTIONS. All payments and collections of Accounts received by KBK
shall belong to KBK as owner of the Accounts.
10.3 RIGHT TO COLLECT. Seller authorizes KBK to collect, ▇▇▇ for and give
releases for and in the name of Seller or KBK in KBK's sole
discretion, all amounts due on Accounts sold to KBK hereunder. Seller
specifically authorizes KBK to endorse, in the name of Seller, all
checks, drafts, trade acceptances or other forms of payment tendered
by Account Debtors in payment of Accounts sold to KBK hereunder and
made payable to Seller. KBK shall have no liability to Seller for any
mistake in the application of any payment received with respect to any
Account; provided KBK has not acted in bad faith or has not been
grossly negligent; IT BEING THE SPECIFIC INTENT OF THE PARTIES HERETO
THAT KBK SHALL HAVE NO LIABILITY HEREUNDER FOR ITS OWN NEGLIGENCE.
Seller hereby waives notice of nonpayment of any Account sold to KBK
hereunder as well as any and all other notices with respect to such
Accounts, demands or
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presentations for payment, and agrees that KBK may extend, renew or
modify from time to time the payment of, or vary, reduce the amount
payable under or compromise any of the terms of, any Account purchased
by KBK, in each case without notice to or the consent of Seller.
Seller further authorizes KBK (or its designee) to open and remove the
contents of any post office box of Seller or KBK (or its designee)
which KBK believes contains mail relating to Accounts, and in
connection therewith or otherwise, to receive, open and dispose of
mail addressed to Seller which KBK believes may relate to Accounts,
and in order to further assure receipt by KBK (or its designee) of
mail relating to such Accounts, to notify other parties including
customers and postal authorities to change the address for delivery of
such mail addressed to Seller to such address as KBK may designate.
KBK agrees to use reasonable measures to preserve the contents of any
such mail which does not relate to the Accounts of Seller and to
deliver same to Seller (or, at the election of KBK, to notify Seller
of the address where Seller may take possession of such contents;
provided, if Seller does not take possession of such contents within
30 days after notice from KBK to take possession thereof, KBK may
dispose of such contents without any liability to Seller).
10.4 POWER OF ATTORNEY. Seller hereby irrevocably appoints KBK (and any
employee, agent or other person designated by KBK, any of whom may act
without joinder of the others) as Seller's attorneys-in-fact in
Seller's name, place and stead, to take all actions, execute and
deliver all notices, negotiate such instruments and other documents,
as may be necessary or advisable to permit KBK (or its designee) to
take any and all of the actions described in this Agreement or to
carry out the purpose and intent thereof, as fully and for all intents
and purposes as Seller could itself do, and hereby ratifies and
confirms all that said attorneys-in-fact may do or cause to be done by
virtue hereof, including, without limitation, (i) to demand, collect,
▇▇▇ for, recover, receive and give acquittance and receipts for moneys
due and to become due under the Accounts purchased hereunder or the
Collateral, and (ii) to file any claims or take any action or
institute any proceedings which KBK may deem necessary or appropriate
for the collection and/or preservation of the Accounts purchased
hereunder and the Collateral or otherwise to enforce the rights of KBK
with respect to the Accounts purchased hereunder and the Collateral.
This power of attorney is irrevocable and deemed coupled with an
interest.
10.5 UCC FILINGS. Seller hereby authorizes KBK to file, with or without
the signature of Seller, one or more financing or continuation
statements, and amendments thereto, relating to the Collateral.
Seller further agrees that a carbon, photographic or other
reproduction of this Agreement or any financing statement describing
any Collateral is sufficient as a financing statement and may be filed
in any jurisdiction KBK may deem appropriate.
10.6 RIGHT TO PERFORM. If Seller fails to perform any agreement or
obligation provided herein or in any of the other Purchase Documents
(including without limitation, the payment and discharge of any taxes,
liens or encumbrances affecting the Collateral), KBK may itself
perform, or cause performance of, such agreement or obligation, and
the expenses of KBK incurred in connection therewith shall be a part
of the Obligations, secured by the Collateral and payable by Seller on
demand.
10.7 RIGHT OF SETOFF. KBK shall have the right of setoff against the
Obligations at any and all times and in any and all proceedings and
instances including, but not limited to, bankruptcy, reorganization,
receivership or insolvency of Seller, without prior notice to Seller.
SECTION 11. SERVICING
11.1 APPOINTMENT OF SERVICING AGENT. KBK hereby appoints Seller as
servicing agent for KBK for the purpose of expediting the collection
of past due Accounts purchased by KBK hereunder. Seller, as servicing
agent, agrees to maintain an active, on-going and regular dialog with
each delinquent Account Debtor. Seller further agrees, as servicing
agent, to utilize all powers, influences, rights and to take every
action within its control in accordance with its customary practices
and applicable law to expedite the collection of the past due Accounts
purchased by KBK hereunder and direct such payments in specie
exclusively to the Remittance Address.
11.2 PROTECTION OF KBK'S RIGHTS. Seller, as servicer, shall take no action
which, nor omit to take any action the omission of which, would
substantially impair the rights of KBK in any Accounts purchased
hereunder by KBK. Seller, as servicer, agrees to defend at its
expense KBK's ownership of the Accounts sold hereunder.
11.3 PROCEEDS OR RETURNED GOODS RECEIVED BY SELLER. All amounts and
proceeds (including instruments and writings) received by Seller at
any time in respect of any Accounts purchased hereafter shall be
received in trust for the benefit of KBK hereunder, shall be
segregated from other funds of Seller and shall be promptly paid over
to KBK in the same form as so received (with any necessary
endorsement) to be applied in the same manner as payments received
directly by KBK. If any goods relating to an Account purchased by KBK
hereunder shall be returned to or repossessed by Seller, Seller shall
give prompt notice thereof to KBK and shall hold such goods in trust
for KBK, separate and apart from Seller's own property, and such goods
shall be owned solely by KBK and be subject to KBK's direction and
control. Seller shall properly store and protect such goods and
agrees to cooperate fully with KBK in any subsequent disposition
thereof for the benefit of KBK.
11.4 DELIVERY OF INVOICES AND RELATED DATA. The Invoices and Related Data,
although owned by KBK, shall remain in Seller's possession and held in
trust by Seller for the benefit of KBK. Seller agrees to deliver the
Invoices and Related Data to KBK upon KBK's request and to allow KBK
to visit its offices to inspect, make copies or take the originals
thereof, along with any computer data related thereto, at all
reasonable times.
11.5 ADDITIONAL DOCUMENTATION; TERMINATION. Seller will furnish to KBK,
upon request, any and all papers, documents and records in its
possession or control related to Accounts purchased by KBK hereunder,
or related to Seller's business relationship with the respective
Account Debtors, and agrees to cooperate fully with KBK in all matters
related to collection of Accounts purchased by KBK hereunder. KBK
reserves the right to terminate such servicing relationship at any
time with or without cause and without notice to Seller.
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SECTION 12. EVENTS OF DEFAULT
An event of default ("Event of Default") shall be deemed to have occurred
hereunder upon the occurrence of one or more of the following:
(a) Seller shall fail to pay as and when due any Obligations owed
to KBK;
(b) Seller or the Guarantor fails to timely and properly observe,
keep or perform any obligation or other term, covenant,
agreement or condition of the Loan Agreement or the other Loan
Documents, or any other agreement, promissory note, security
agreement, assignment or other contract securing or evidencing
any other obligation or agreement between Seller or the
Guarantor and KBK or any affiliate of KBK, and such failure
continues after the applicable grace or notice period, if any,
specified in the relevant document, or the occurrence of any
other Event of Default under the Loan Agreement or the other
Loan Documents, or Seller or KBK terminates any Loan Document
for any reason;
(c) Any representation or warranty of Seller or the Guarantor made
herein or in the Loan Documents or the other Purchase
Documents, or in any report, certificate, schedule, financial
statement, profit and loss statement or other statement
furnished by Seller or the Guarantor, or by any other person
on behalf of Seller or the Guarantors, to KBK is not true and
correct in any material respect when made;
(d) Any of Seller or its Subsidiaries shall fail to timely and
properly observe, keep or perform any term, covenant,
agreement or condition made herein or in the other Purchase
Documents; provided, however, if any of Seller or its
Subsidiaries shall fail to timely and properly observe, keep
or perform any term, covenant, agreement or condition in
Sections 9.11 or 9.12 hereof, such failure with respect to
Sections 9.11 or 9.12 hereof shall be an Event of Default if
such failure with respect to Sections 9.11 or 9.12 hereof
shall continue unremedied for a period of ten (10) days after
the earlier of (A) the date upon which the Seller knew or
reasonably should have known of such failure with respect to
Sections 9.11 or 9.12 or (B) the date upon which written
notice thereof is given to the Seller by KBK;
(e) There shall be commenced by or against Seller or any of its
Subsidiaries any voluntary or involuntary case under the
United States Bankruptcy Code, or any assignment for the
benefit of creditors, or the appointment of a receiver,
trustee, conservator or custodian for a substantial portion of
its assets;
(f) Seller or any of its Subsidiaries shall become insolvent in
that its debts and obligations are greater than the fair value
or fair saleable value of its assets, or Seller or any of its
Subsidiaries is generally not paying its debts as they become
due;
(g) The occurrence of a Material Adverse Effect;
(h) Seller or any Subsidiary shall have a federal or state tax
lien filed against any of its properties;
(i) Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code of 1986, as
amended) in excess of $25,000.00 exists with respect to any
ERISA Plan of Seller, or (ii) any Termination Event occurs
with respect to any ERISA Plan of Seller and the then current
value of such ERISA Plan's benefit liabilities exceeds the
then current value of such ERISA Plan's assets available for
the payment of such benefit liabilities by more than
$25,000.00;
(j) Seller or any Subsidiary suffers the entry against it of a
final judgment for the payment of money in excess of
$100,000.00 that continues to be unstayed and in effect for a
period of 15 days (not covered by insurance satisfactory to
KBK in its sole discretion);
(k) The failure of Seller to sell to KBK any Account by means of
and through the Availability Certificate which is due and
shall be delivered by Seller immediately after such Account
arises; or
(l) If the obligations of any guarantor under the Purchase
Documents is limited or terminated by operation of law or by
the guarantor, or any such guarantor becomes the subject of an
insolvency proceeding.
Upon the occurrence of an Event of Default described in subsections (e) or (f)
of this Section, all of the Obligations owing by Seller to KBK (including but
not limited to all fees and discounts owed hereunder) shall thereupon be
automatically and immediately due and payable, without demand, presentment,
notice of demand or of dishonor and nonpayment, or any other notice or
declaration of any kind, all of which are hereby expressly waived by Seller.
Upon the occurrence of any other Event of Default, KBK, at its option, at any
time and from time to time may without notice to Seller declare any or all of
the Obligations owing by Seller to KBK (including but not limited to all fees
and discounts owed hereunder) immediately due and payable, all without demand,
presentment, notice of demand or of dishonor and nonpayment, or any notice or
declaration of any kind, all of which are hereby expressly waived by Seller.
After the occurrence any Event of Default, any obligation of KBK to purchase
any further Accounts hereunder, to pay any further Account Payments hereunder
or to make loans under any other agreement with Seller shall be terminated.
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SECTION 13. REMEDIES AND APPLICATION OF PROCEEDS
13.1 REMEDIES. In addition to, and without limitation of, the foregoing
provisions of this Agreement, if an Event of Default shall have
occurred and be continuing, KBK may from time to time in its
discretion, without limitation and without notice except as expressly
provided below, do any one or more of the following:
(a) Exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein, under the other
Purchase Documents or otherwise available to it, all the
rights and remedies of a secured party on default under the
UCC (whether or not the UCC applies to the affected
Collateral).
(b) Require Seller to, and Seller hereby agrees that it will at
its expense, assemble all or part of the Collateral as
directed by KBK and make it available to KBK at a place to be
designated by KBK which is reasonably convenient to both
parties.
(c) Reduce its claim to judgment or foreclose or otherwise
enforce, in whole or in part, the security interest created
hereby by any available judicial procedure.
(d) Dispose of, at its office, on the premises of Seller or
elsewhere, all or any part of the Collateral, as a unit or in
parcels, by public or private proceedings.
(e) Buy the Collateral, or any part thereof, at any public sale,
or at any private sale if the Collateral is of a type
customarily sold in a recognized market or is of a type which
is the subject of widely distributed standard price
quotations.
(f) Apply by appropriate judicial proceedings for appointment of a
receiver for the Collateral, or any part thereof, and Seller
hereby consents to any such appointment.
(g) At KBK's discretion, retain the Collateral in satisfaction of
the Obligations whenever the circumstances are such that KBK
is entitled to do so under the UCC or otherwise.
Seller agrees that, to the extent notice of sale shall be required by
law, at least five (5) days notice to Seller of the time and place of
any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. KBK shall not be obligated
to make any sale of Collateral regardless of notice of sale having
been given. KBK may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to
which it was so adjourned.
13.2 APPLICATION OF PROCEEDS. If any Event of Default shall have occurred
and be continuing, KBK may in its discretion apply any Reserves, and
any cash proceeds received by KBK in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral, to any or all of the following in such order as KBK may
elect:
(a) To the repayment of reasonable costs and expenses, including
reasonable attorneys' fees and legal expenses, incurred by KBK
in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any
Collateral, (iii) the exercise or enforcement of any of the
rights of KBK hereunder, or (iv) the failure of Seller to
perform or observe any of the provisions hereof.
(b) To the payment of the Obligations and the reimbursement of KBK
for the amount of any obligations of Seller paid or discharged
by KBK, and of any expenses of KBK payable by Seller hereunder
or under the other Purchase Documents.
(c) By holding the same as Collateral.
(d) To the payment of any other amounts required by applicable law
(including, without limitation, Part 5 of Article 9 of the UCC
or any successor or similar, applicable statutory provision).
(e) To the payment or other satisfaction of any liens and other
encumbrances upon any of the Collateral.
(f) By delivery to Seller or to whomsoever shall be lawfully
entitled to receive the same or as a court of competent
jurisdiction shall direct.
SECTION 14. MISCELLANEOUS
14.1 EQUITABLE RELIEF. Seller acknowledges that in the event that Seller
commits any act or omission which prevents or unreasonably interferes
with: (a) KBK's exercise of the rights and privileges arising under
the power of attorney granted under this Agreement; or (b) KBK's
perfection of or levy upon the security interest granted in the
Collateral, including any seizure of any Collateral, such conduct will
cause immediate, severe, incalculable and irreparable harm and injury
for which there is no adequate remedy at law, and shall constitute
sufficient grounds to entitle KBK to an injunction, writ of
possession, or other applicable relief in equity, and to make such
application for such relief in any court of competent jurisdiction,
without any prior notice to Seller.
14.2 CUMULATIVE RIGHTS. All rights, remedies and powers granted to KBK in
this Agreement, or in any other instrument or agreement given by
Seller to KBK or otherwise available to KBK in equity or at law, are
cumulative and may be exercised singularly or concurrently with such
other rights as KBK may have. These rights may be exercised from time
to time as to all or any part of the Accounts purchased hereunder or
the Collateral as KBK in its discretion may determine. KBK shall not
be deemed to have waived any of its rights and remedies unless the
waiver is in writing and signed by KBK. A waiver by KBK of a right or
remedy under this Agreement on one occasion is not a waiver of the
right or remedy on any subsequent occasion. The purchase of
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Accounts by KBK during the continuance of an Event of Default shall
not obligate KBK to make any further purchases during the continuation
of such Event of Default.
14.3 NOTICES. Any notice or communication with respect to this Agreement
shall be given in writing, sent by (i) personal delivery, (ii)
expedited delivery service with proof of delivery, or (iii) United
States mail, postage prepaid, registered or certified mail, addressed
to each party hereto at its address set forth below their signature
hereon or to such other address or to the attention of such other
person as hereafter shall be designated in writing by the applicable
party sent in accordance herewith. Any such notice or communication
shall be deemed to have been given either at the time of personal
delivery or, in the case of delivery service or mail, as of the date
of first attempted delivery at the address and in the manner provided
herein. Seller hereby agrees that KBK may publicize the transaction
contemplated by this Agreement in newspapers, trade and similar
publications including, without limitation, the publication of a
"tombstone".
14.4 TERM; TERMINATION.
(a) The term of this Agreement shall be for two (2) years from the
date hereof (the "Term").
(b) Upon the termination of this Agreement, Seller shall
repurchase from KBK all uncollected Accounts purchased by KBK
hereunder. The consideration paid or given by Seller to KBK
for the repurchase of such Accounts shall be (i) the payment
to KBK of an amount equal to the Batch Balance; provided,
however, if the Batch Balance is a negative amount at the time
of any such repurchase, KBK shall pay to Seller such amount,
(ii) the payment to KBK of any expenses and costs (including,
without limitation, attorneys' fees) incurred by KBK in
connection with the enforcement or collection of the Accounts
being repurchased, and (iii) the release of KBK by Seller of
all liabilities, claims, damages and obligations arising from,
relating to or in connection with (1) this Agreement and/or
the other Purchase Documents, and (2) the Accounts (including,
without limitation, any Accounts repurchased by Seller). Upon
receipt of such consideration, KBK shall sell such Accounts to
Seller without recourse or warranty, express or implied.
(c) KBK agrees that upon the request and at the expense of Seller,
KBK shall transfer all pending enforcement actions and
bankruptcy claims with respect to any of the Accounts being
repurchased by Seller upon termination of this Agreement.
(d) Seller shall also pay to KBK upon termination of this
Agreement all Obligations owing to KBK hereunder and under the
other Purchase Documents.
(e) Any termination of this Agreement shall not otherwise affect
KBK's ownership of Accounts purchased hereunder or its
security interest in the Collateral, and this Agreement shall
continue to be effective until all transactions entered into
and Obligations incurred hereunder have been completed and
satisfied in full.
14.5 NOTICE OF OFFER. Seller hereby agrees that in the event (a) the Seller
receives a written proposal either during or at the end of the Term
from a third party to provide financing or factoring ("Proposed
Refinancing"), (b) the terms of the Proposed Refinancing are
acceptable to Seller, and (c) Seller is considering accepting the
Proposed Refinancing from the offeror (the "Offeror"), Seller will
advise KBK in writing of the identity of the Offeror, the complete
terms and conditions of the Proposed Refinancing and a full and
complete copy of all written correspondence between Seller and Offeror
describing the Proposed Refinancing. Seller agrees not to accept the
Proposed Refinancing from the Offeror until at least ten (10) business
days after delivery of the foregoing items to KBK.
14.6 SEVERABILITY. Each and every provision, condition, covenant and
representation contained in this Agreement is, and shall be construed,
to be a separate and independent covenant and agreement. If any term
or provision of this Agreement shall to any extent be invalid or
unenforceable, the remainder of the Agreement shall not be affected
thereby.
14.7 INDEMNITY. Seller hereby indemnifies and agrees to hold the
Indemnified Persons harmless against any breach by Seller of any
representation, warranty, covenant or agreement of Seller contained in
this Agreement, and against any claims or damages arising out of the
manufacture, sale, possession or use of, or otherwise relating to,
goods, or the performance of services, associated with or relating to
Accounts or related rights purchased (or with respect to which a
security interest is granted) hereunder. Seller also hereby
indemnifies and agrees to hold harmless and defend all Indemnified
Persons from and against any and all Indemnified Claims. THE
FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH INDEMNIFIED
CLAIMS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART,
UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE
OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY INDEMNIFIED
PERSON, but shall exclude any of the foregoing resulting from such
Indemnified Person's gross negligence or willful misconduct. Upon
notification and demand, Seller agrees to provide defense of any
Indemnified Claim and to pay all costs and expenses of counsel
selected by any Indemnified Person in respect thereof. Any
Indemnified Person against whom any Indemnified Claim may be asserted
reserves the right to settle or compromise any such Indemnified Claim
as such Indemnified Person may determine in its sole discretion, and
the obligations of such Indemnified Person, if any, pursuant to any
such settlement or compromise shall be deemed included within the
Indemnified Claims. Except as specifically provided in this section,
Seller waives all notices from any Indemnified Person. The provisions
of this Section shall survive the termination of this Agreement.
14.8 BENEFITS; ASSIGNMENT. All grants, covenants and agreements contained
in this Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns; provided, however,
that Seller may not delegate or assign any of its duties or
obligations under this Agreement without the prior written consent of
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KBK and any assignment without such consent shall be void. KBK
RESERVES THE RIGHT TO ASSIGN ITS RIGHTS AND OBLIGATIONS UNDER THIS
AGREEMENT IN WHOLE OR IN PART TO ANY PERSON OR ENTITY. To the extent
KBK assigns its rights and obligations hereunder to a third party, KBK
shall thereafter be released from such assigned obligations to Seller
and such assignment shall effect a novation between Seller and such
third party. Without limiting the generality of the foregoing, KBK
may from time to time grant participations in all or any part of the
Obligations to any person or entity on such terms and conditions as
may be determined by KBK in its sole and absolute discretion, provided
that the grant of such participation shall not relieve KBK of its
obligations hereunder nor create any additional obligations of the
Seller. Seller consents to KBK disclosing any financial and any other
information available to KBK concerning Seller to any prospective
participant.
14.9 CAPTIONS. The captions in this Agreement are for convenience only and
shall not define or limit the provisions hereof.
14.10 GOVERNING LAW, SUBMISSION TO PROCESS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF
PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS. SELLER
HEREBY IRREVOCABLY SUBMITS ITSELF TO THE EXCLUSIVE JURISDICTION OF THE
STATE AND FEDERAL COURTS LOCATED IN TEXAS, AND AGREES AND CONSENTS
THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING
RELATING TO THIS AGREEMENT, ANY OTHER PURCHASE DOCUMENTS, THE PURCHASE
OF ACCOUNTS OR ANY OTHER RELATIONSHIP BETWEEN KBK AND SELLER BY ANY
MEANS ALLOWED UNDER APPLICABLE LAW. ANY LEGAL PROCEEDING ARISING OUT
OF OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER PURCHASE
DOCUMENTS, THE PURCHASE OF ACCOUNTS OR ANY OTHER RELATIONSHIP BETWEEN
KBK AND SELLER SHALL BE BROUGHT AND LITIGATED EXCLUSIVELY IN ANY ONE
OF THE STATE OR FEDERAL COURTS LOCATED IN THE STATE OF TEXAS HAVING
JURISDICTION. THE PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO
ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY SUCH
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE
THEREOF IS IMPROPER.
14.11 WAIVER OF JURY TRIAL. SELLER AND KBK EACH HEREBY IRREVOCABLY WAIVES,
TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT
ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH.
14.12 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER PURCHASE DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT
TO THE TRANSACTIONS CONTEMPLATED HEREIN AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. THIS AGREEMENT ALSO AMENDS AND SUPERSEDES ANY OF THE TERMS
OF ANY PRIOR WRITTEN AGREEMENTS WITH RESPECT TO THE MATTERS SET FORTH
IN THIS AGREEMENT.
14.13 AMENDMENTS. No modification or amendment of or supplement to this
Agreement shall be valid or effective unless the same is in writing
and signed by the party against whom it is sought to be enforced.
14.14 EFFECTIVENESS OF AGREEMENT. This Agreement shall become effective
only upon acceptance by KBK at its offices in Fort Worth, Texas as
evidenced by KBK's signature hereon. Subject to the foregoing, this
Agreement may be executed in multiple original counterparts, all of
which counterparts taken together shall be deemed to constitute one
and the same instrument
14.15 USURY SAVINGS. The parties hereto intend that the transactions
covered hereby are true sales hereof according to the provisions of
Article 5069-1.14, of the Texas Revised Civil Statutes (as more fully
described in Section 14.16 hereof) and that none of the Obligations
under this Agreement or the other Purchase Documents will constitute
loans or credit sales or interest on principal of a loan or credit
sale as determined under applicable laws; provided, however, if this
Agreement or any of the other Purchase Documents are deemed to require
the payment or permit the payment, taking, reserving, receiving,
collection, or charging of any sums constituting interest under
applicable laws, the following provisions of this Section will apply:
(a) It is the intention of the parties hereto to comply strictly
with applicable usury laws; accordingly, notwithstanding any
provision to the contrary in this Agreement or any of the
other Purchase Documents, in no event whatsoever shall this
Agreement or any of the other Purchase Documents require the
payment or permit the payment, taking, reserving, receiving,
collection or charging of any sums constituting interest under
applicable laws which exceed the maximum amount permitted by
such laws. If any such excess interest is called for,
contracted for, charged, taken, reserved, or received in
connection with this Agreement or any of the other Purchase
Documents, or in any communication by KBK or any other person
to Seller or any other person, or in the event all or part of
the principal or interest hereof shall be prepaid or
accelerated, so that under any of such circumstances or under
any other circumstance whatsoever the amount of interest
contracted for, charged, taken, reserved, or received on the
amount of principal actually outstanding from time to time
under this Agreement or any of the other Purchase Documents
shall exceed the maximum amount of interest permitted by
applicable usury laws, then in any such event it is agreed as
follows: (i) the provisions of this Section shall govern and
control, (ii) neither Seller nor any other person or entity
now or hereafter liable for payments under this Agreement or
any of the other Purchase Documents shall be obligated to pay
the amount of such
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interest to the extent such interest is in excess of the
maximum amount of interest permitted by applicable usury laws,
(iii) any such excess which is or has been received
notwithstanding this Section shall be credited against the
then unpaid principal balance of the Obligations under this
Agreement and the other Purchase Documents or, if this
Agreement or any of the other Purchase Documents has been or
would be paid in full by such credit, refunded to Seller, and
(iv) the provisions of this Agreement or any of the other
Purchase Documents, and any communication to Seller, shall
immediately be deemed reformed and such excess interest
reduced, without the necessity of executing any other
document, to the maximum lawful rate allowed under applicable
laws as now or hereafter construed by courts having
jurisdiction hereof or thereof. Without limiting the
foregoing, all calculations of the rate of interest contracted
for, charged, taken, reserved, or received in connection
herewith which are made for the purpose of determining whether
such rate exceeds the maximum lawful rate shall be made to the
extent permitted by applicable laws by amortizing, prorating,
allocating and spreading during the period of the full term of
this Agreement or any of the other Purchase Documents,
including all prior and subsequent renewals and extensions,
all interest at any time contracted for, charged, taken,
reserved, or received. The terms of this Section shall be
deemed to be incorporated into every Purchase Document.
(b) If at any time the rate at which any interest is payable on
any Obligation hereunder exceeds the Maximum Rate, the amount
outstanding hereunder shall bear interest at the Maximum Rate
only, but shall continue to bear interest at the Maximum Rate
until such time as the total amount of interest accrued
hereunder equals (but does not exceed) the total amount of
interest which would have accrued hereunder had there been no
Maximum Rate applicable hereto.
(c) Seller and KBK agree that Tex. Rev. Civ. Stat. ▇▇▇ art. ▇▇▇▇
▇▇. 15 (which regulates certain revolving loan accounts and
revolving tri-party accounts) shall not apply to any revolving
loan accounts created under this Agreement or maintained in
connection therewith.
(d) To the extent that the interest rate laws of the State of
Texas are applicable to this Agreement, the applicable
interest rate ceiling is the indicated (weekly) ceiling
determined in accordance with Article 5069-1.04(a)(1) of the
Texas Revised Civil Statutes, as amended, and, to the extent
that this Agreement is deemed an open end account as such term
is defined in Article 5069-1.01(f) of the Texas Revised Civil
Statutes, as amended, KBK retains the right to modify the
interest rate in accordance with applicable law.
(e) As used in this Section, (i) the term "applicable law" means
the laws of the State of Texas or the laws of the United
States of America, whichever laws allow the greater interest,
as such laws now exist or may be changed or amended or come
into effect in the future, and (ii) the term "Maximum Rate"
means, at the time of determination, the maximum rate of
interest which, under applicable law, may then be charged on
the Obligations hereunder.
14.16 APPLICABILITY OF ARTICLE 5069-1.14 . Seller and KBK acknowledge,
agree, and fully intend that the transactions contemplated and covered
hereby are true sales and are covered and governed by the provisions
of Article 5069- 1.14 of the Texas Revised Civil Statutes.
The undersigned have entered into this Agreement as of the date first written
above.
KBK FINANCIAL, INC. ▇▇▇▇▇▇ INDUSTRIES, INC.
By: By:
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Name: Name:
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Title: Title:
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Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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Attn: Legal Department Attn: Chief Financial Officer
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Telecopy No.(▇▇▇) ▇▇▇-▇▇▇▇ Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
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