EXHIBIT 10.27
SECOND AMENDMENT TO ACCOUNT TRANSFER
AND PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO ACCOUNT TRANSFER AND PURCHASE AGREEMENT (this
"Amendment") is entered into by and between H.E.R.C. PRODUCTS INCORPORATED, a
Delaware corporation, and H.E.R.C. CONSUMER PRODUCTS, INC., an Arizona
corporation (collectively the "Seller"), S. Xxxxxx Xxxx (the "Guarantor") and
KBK FINANCIAL, INC., a Delaware corporation ("KBK").
WHEREAS, Seller and KBK entered into that certain Account Transfer and Purchase
Agreement dated as of September 22, 1997, as amended from time to time
(collectively, the "Purchase Agreement"); and
WHEREAS, pursuant to the Purchase Agreement the parties have provided for the
terms and conditions under which KBK may from time to time purchase certain of
Seller's accounts; and
WHEREAS, the Purchase Agreement and all other documents securing, governing,
guaranteeing and/or pertaining to the Purchase Agreement are hereinafter
referred to collectively as the "Purchase Documents"; and
WHEREAS, the parties hereto now desire to modify the Purchase Agreement as
hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties, and agreements contained herein, and for other valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01 The terms used in this Amendment to the extent not otherwise
defined herein shall have the same meanings as in the Purchase Agreement.
ARTICLE II
Amendments
Section 2.01 Effective as of the date hereof, Section 1 of the Purchase
Agreement is hereby amended in its entirety to read as follows:
"1. OFFER OF ACCOUNTS. At its election from time to time during the term of this
Agreement, Seller agrees to offer for sale to KBK certain of its accounts
arising out of sales of goods, or services rendered, by Seller, and to sell to
KBK on the terms set forth in this Agreement such of the offered accounts as KBK
may accept for purchase in the State of Texas. KBK shall have the absolute right
in its sole discretion to reject any or all offered accounts, whether or not KBK
has previously purchased accounts of any particular account debtor hereunder.
The parties agree that, without the prior consent of KBK, the maximum Gross
Amount (as defined below) of accounts that KBK may purchase hereunder at any
time, together with the Gross Amount of accounts previously purchased by KBK
from Seller hereunder which then remain outstanding, will not exceed One Million
Five Hundred Thousand and No/100 Dollars ($1,500,000.00) (the "Facility
Amount"). KBK's consent to purchase accounts in excess of such amount may be
evidenced by KBK's acceptance for purchase of such offered accounts."
Section 2.02 Effective as of the date hereof, the second paragraph of Section 12
of the Purchase Agreement is hereby amended in its entirety to read as follows:
"Seller hereby agrees to pay to KBK a termination fee equal to two percent
(2.0%) of the Facility Amount (the "Termination Fee") and the payment shall be
an obligation of Seller secured under Section 7 hereof. This Termination Fee is
payable upon termination of this Agreement by Seller for any reason or upon
termination by KBK at its election for the reasons set forth in the second
sentence of Section 13 below. However, if this Agreement is so terminated after
May 19, 2004, but before May 19, 2005, one-half of the Termination Fee shall be
waived. If the Agreement is terminated after May 19, 2005, all of the
Termination Fee shall be waived."
ARTICLE III
Representations, Warranties, Ratification and Reaffirmation
Section 3.01 Seller hereby represents and warrants that: (i) the representations
and warranties contained in the Purchase Agreement are true and correct
on and as of the date hereof as though made on and as of the date hereof, and
(ii) no event has occurred and is continuing that constitutes an Event of
Default or would constitute an Event of Default but for the requirement of
notice or lapse of time or both.
Section 3.02 The terms and provisions set forth in this Amendment shall modify
and supersede all inconsistent terms and provisions set forth in the Purchase
Agreement, but except as expressly modified and superseded by this Amendment,
the terms and provisions of the Purchase Agreement are ratified and confirmed
and shall continue in full force and effect, Seller hereby agreeing that the
Purchase Agreement and the other Purchase Documents are and shall continue to be
outstanding, validly existing and enforceable in accordance with their
respective terms.
Section 3.03 Guarantor previously executed that certain Limited Guaranty (the
"Guaranty Agreement") dated September 22, 1997, for the benefit of KBK to
unconditionally guarantee the payment by Seller of certain losses incurred by
KBK under the Purchase Agreement, as more fully described therein. Guarantor, by
executing this Amendment, hereby consents to this Amendment and agrees that,
notwithstanding the execution of this Amendment, the Guaranty Agreement remains
in full force and effect and the obligations thereunder remain valid and binding
against Guarantor. Guarantor acknowledges and agrees that there are no claims or
offsets against, or defenses or counterclaims to, the terms and provisions of
the Guaranty Agreement or the obligations created or evidenced thereby.
ARTICLE IV
Miscellaneous
Section 4.01 Each of the Purchase Documents is hereby amended so that any
reference in the Purchase Documents to thePurchase Agreement shall mean a
reference to the Purchase Agreement as amended hereby.
Section 4.02 This Amendment may be executed simultaneously in one or more
counterparts, each of shall be deemed an original, but all of which together
shall constitute one and the same instrument. Delivery of an executed
counterpart of this Amendment by telecopy shall be equally as effective as
delivery of a manually executed counterpart of this Amendment. Any party
delivering an executed counterpart of this Amendment by telecopy also shall
deliver a manually executed counterpart of this Amendment but the failure to
deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Amendment.
Section 4.03 The Agreement and this Amendment have been entered into in Tarrant
County, Texas and shall be performable for all purposes in, Tarrant County,
Texas. THE AGREEMENT, AS AMENDED HEREBY, SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. Courts within the State of Texas
shall have jurisdiction over any and all disputes arising under or pertaining to
the Agreement, as amended hereby, and venue in any such dispute shall be the
courts located in Tarrant County, Texas. Section 4.04 This Amendment shall not
become effective until executed by KBK.
Section 4.05 Seller agrees to pay KBK a fee equal to One Thousand Five Hundred
and NO/100 Dollars ($1,500.00) contemporaneously with the effectiveness of
this Amendment in consideration of the financial accommodations provided by
KBK to Seller contained herein.
EXECUTED as of May 19, 2003.
SELLER:
H.E.R.C. PRODUCTS INCORPORATED
By:
Name: S. Xxxxxx Xxxx
Title: Chief Executive Officer
H.E.R.C. CONSUMER PRODUCTS, INC.
By:
Name: S. Xxxxxx Xxxx
Title: Chief Executive Officer
GUARANTORS:
S. XXXXXX XXXX
KBK:
KBK FINANCIAL, INC.
By:
Name:
Title:
Date:______________________________
STATE OF VIRGINIA
COUNTY OF PORTSMOUTH
The foregoing instrument was acknowledged before me this 19th day of May,
2003, by S. Xxxxxx Xxxx as Chief Executive Officer of H.E.R.C. Products
Incorporated and of H.E.R.C. Consumer Products, Inc. and Individually, as
Guarantor.
Witness my hand and official seal.
My Commission expires: (Notary Public)
