EXHIBIT 10.5
EXECUTION COPY
Asta Funding, Inc.
Form 10-QSB December 31, 2000
Exhibit 10.5
PURCHASE AGREEMENT
between
ASTA FUNDING, INC.
as Purchaser
and
XXXXXX-XXXXXX FURNITURE COMPANY
as Seller
Dated as of January 18 2001
Table of Contents
Page
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EXHIBIT A Master File Information......................................A-1
EXHIBIT B Form of Order to Sell Assets.................................B-1
EXHIBIT C Wire Transfer Instructions...................................C-1
EXHIBIT D Omitted
EXHIBIT E Form of Interest Rebate Certificate..........................E-1
EXHIBIT F Electronic Data..............................................F-1
EXHIBIT G Form of Goodbye Letter.......................................G-1
(i)
PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") is made this 18th
day of January, 2001, by and between Asta Funding Inc., a Delaware corporation
("Purchaser"), and Xxxxxx-Xxxxxx Furniture Company, a North Carolina corporation
("Seller"), operating as a debtor in possession under the United States
Bankruptcy Code.
Recitals
WHEREAS, on August 16, 2000 Seller filed a voluntary petition
for relief under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code") in the United States Bankruptcy Court for the Eastern
District of Virginia (the "Bankruptcy Court"). Seller's and its affiliated
debtors' chapter 11 cases are being jointly administrated under case number
00-34533 (collectively, the "Bankruptcy Case"). Seller is currently operating
its business and managing its property as a debtor-in-possession; and
WHEREAS, Seller is engaged in, among other businesses, the
business of selling furniture, bedding, accessories and related products and
services and in connection therewith provides financing to customers purchasing
its products and services; and
WHEREAS, Seller owns certain installment contracts pursuant to
written purchase agreements with consumers; and
WHEREAS, Seller desires to sell, assign and transfer all of
its right, title and interest in certain purchase contracts identified on a
master file agreed to by Seller and Purchaser, containing the information with
respect to each Contract as set forth on Exhibit A hereto, including the related
receivables and any credit insurance (collectively, the "Contracts"), to
Purchaser and Purchaser is desirous of purchasing same;
NOW, THEREFORE, in consideration of the mutual covenants,
promises, representations, warranties and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Defined Terms Used in This Agreement. As used in this
Agreement:
"120 Day Excluded Contracts" means
(i) Contracts where each of the obligors thereof
is deceased prior to the Cut-Off Date and such Contracts are not covered by
credit insurance;
(ii) Contracts where each of the obligors thereof
was the subject of bankruptcy proceedings during such time as the account was
open (excluding such Contracts where the obligor has reaffirmed its respective
Contract during its bankruptcy case) and the bankruptcy filing date is prior to
the Cut-Off Date;
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(iii) Contracts which are unenforceable under the
applicable statute of limitations as of the Cut-Off Date;
(iv) Loaner Contracts ("Type L" Contracts);
(v) Contracts set up for NSF checks ("Type C"
Contracts);
(vi) Contracts with a principal balance as of the
Cut-Off Date of less than $10.00; and
(vii) Contracts that include only interest and
insurance payments.
"180 Day Excluded Contracts" means
(i) Contracts where the obligors have been
released of liability by a court or Seller prior to the Cut-Off Date;
(ii) Contracts which are fraudulent and in which
Seller's employee or agent is involved in the fraud;
(iii) Contracts which are subject to actual or
asserted claims, customer disputes, settlements, cancellations, refunds,
counterclaims, offsets or other defenses (subject to Seller's right to review
the foregoing customer disputes and engage in settlement negotiations with the
obligor to mitigate and cure such claims as provided in Section 2.3(b) herein);
(iv) Missing Contracts that are more than 59 days
past due unless Purchaser elects to keep such Contract;
(v) Contracts with asserted legal claims or
counter claims by obligors in which legal action has been initiated prior to the
Cut-Off Date; and
(vi) Contracts which are unenforceable under
applicable state or federal law.
"Acquisition Proposal" has the meaning set forth in Section
8.1(a) hereof.
"Aggregate Cut-Off Date Balance" means for all the Purchased
Contracts, the Cut-Off Date Balance, excluding unearned interest and insurance
premiums.
"Alternative Transaction" has the meaning set forth in Section
8.3(a) hereof.
"Auction" has the meaning set forth in Section 8.3(a) hereof.
"Bankruptcy Case" has the meaning set forth in the first
recital hereof.
"Bankruptcy Code" has the meaning set forth in the first
recital hereof.
"Bankruptcy Court" has the meaning set forth in the first
recital hereof.
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"Bidding Procedures Hearing" has the meaning set forth in
Section 8.1(b) hereof.
"Bidding Procedures Order" shall mean the Order: (A) Approving
Break-Up Fee; (B) Establishing Bidding Procedures With Respect To Sale Of
Certain Receivables; And (C) Granting Related Relief entered by the Bankruptcy
Court in this Bankruptcy Case.
"Business Day" shall mean any day other than a Saturday or
Sunday on which banking institutions in the State of Virginia and the State of
New York are not authorized or obligated by applicable Law, regulation or
executive order to close.
"Claim" has the meaning set forth in Section 105(5) of the
Bankruptcy Code.
"Closing Date" shall mean, provided all conditions precedent
to close, as set forth in Article 6, have been satisfied or waived in accordance
with the terms hereof, the next Business Day following the date of entry of the
Sale Order, or such later date as may be agreed to by Seller and Purchaser, but
in no event later than January 31, 2001.
"Contracts" has the meaning set forth in the fourth recital
hereto.
"Contract Credit Files" means collectively (i) the obligor
contract, (ii) an application of the obligor, (iii) a credit statement on the
obligor, (iv) a payment history from inception, (v) any default or delinquency
notices and (vi) any other information relating to such Contract that Seller may
possess.
"Cure Notice" has the meaning set forth in Section 2.3(b)
hereof.
"Cure Period" has the meaning set forth in Section 2.3(b)
hereof.
"Cut-Off Date" shall mean October 31, 2000.
"Cut-Off Date Balance" shall mean with respect to each
Purchased Contract, the principal balance thereof after taking into account all
payments received in respect of principal on or before the Cut-Off Date.
"DIP Lenders" means the group of lenders providing
debtor-in-possession financing to Seller pursuant to the Debtor-in-Possession
Credit Agreement, dated as of August 16, 2000.
"Dispute Notice" has the meaning set forth in Section 2.3(b)
hereof.
"Xxxxxxx Money Deposit" has the meaning set forth in Section
2.2 hereof.
"Escrow Agent" means Branch Banking and Trust Company or such
other bank acceptable to Seller and Purchaser.
"Excluded Contracts" shall mean (x) prior to the Closing Date,
the Pre-Closing Date Excluded Contracts, (y) from the Closing Date until May 31,
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2001, the 120 Day Excluded Contracts and the 180 Day Excluded Contracts, and (z)
from June 1, 2001 to July 31, 2001, the 180 Day Excluded Contracts.
"Excluded Contract Report" has the meaning set forth in
Section 2.3(b) hereof.
"Final Order" means an order that has not been reversed or
vacated, is no longer subject to an appeal or request for a rehearing and has
not been stayed.
"Fleet" means Fleet Retail Finance, Inc., the Administrative
Agent and Collateral Agent for the DIP Lenders under the Debtor-in-Possession
Credit Agreement.
"Goodbye Letter" has the meaning set forth in Section 3.1(f)
hereof.
"Governmental Authority" shall mean any government, any state,
or any other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, in each case whether national, state or local.
"Holdback Account" has the meaning set forth in Section 2.3(a)
hereof.
"Holdback Amount" means an amount equal to 10% of the Purchase
Price plus any amounts to be held in escrow pursuant to Section 2.6 hereof.
"Holdback Period" shall mean the period from the Closing Date
to October 31, 2001.
"Indemnified Amounts" has the meaning set forth in Section
7.1(a) hereof.
"Indemnified Parties" has the meaning set forth in Section
7.1(a) hereof.
"Insurance Proceeds" means the proceeds of any insurance
policy which relate to the Contracts.
"Interest Determination Date" has the meaning set forth in
Section 2.3(b) hereof.
"Interest Rebate Contract" means the Contracts subject to an
interest rebate certificate, in the form set forth on Exhibit E, which still
qualify for an interest rebate pursuant to the terms of such Contract.
"Interest Rebate Reserve" means the interest paid by any
obligor pursuant to any Contract which is an Interest Rebate Contract.
"Law" shall mean all laws, codes, statutes, ordinances, rules,
regulations, decrees and orders of any Governmental Authority.
"Lien" means lien, mortgage, security interest, pledge,
charge, hypothecation, right of setoff, right of counterclaim, right of
recoupment, equity, encumbrance or interest of any kind whatsoever with respect
to any Contract.
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"Lockbox" has the meaning set forth in Section 2.5(b) hereof.
"Material Adverse Change" means that collections on the
Contracts from the Cut-Off Date through and including January 15, 2001 were less
than $9,000,000.
"Minimum Purchase Price" means the Purchase Price minus the
Holdback Amount.
"Missing Contract" means any Contract which is not delivered
by Seller to Purchaser pursuant to the terms hereof or any Contract which is
delivered by Seller to Purchaser but is not signed by the obligor.
"Mississippi Contracts" shall have the meaning set forth in
Section 2.6 hereof.
"Mississippi Evidence Date" means the earlier of (a) thirty
(30) days after the Closing Date or (b) the date the evidence referred to in
Section 2.6 is provided by Seller to Purchaser.
"Mississippi Purchase Price" shall have the meaning set forth
in Section 2.6 hereof.
"Mississippi Servicing Excess" means, if the Mississippi
Contracts are acquired by Purchaser pursuant to Section 2.6 hereof after the
Closing Date, 25% multiplied by all proceeds of the Purchased Contracts from the
Cut-Off Date through and including January 15, 2001 in excess of $9,000,000
(excluding the Servicing Fee) less any Servicing Excess on the Purchased
Contracts (excluding the Mississippi Contracts) paid to, or retained by, Seller.
"Mitigation Notice" has the meaning set forth in Section
2.3(b) hereof.
"Motion" means that certain motion to be filed by Seller with
the Bankruptcy Court seeking approval of this Agreement.
"Party" has the meaning set forth in Section 7.3 hereof.
"Pre-Closing Date Dispute Notice" has the meaning set forth in
Section 2.3(g) hereof.
"Pre-Closing Date Excluded Contracts" has the meaning set
forth in Section 2.3(g) hereof.
"Pre-Closing Date Excluded Contract Report" has the meaning
set forth in Section 2.3(g) hereof.
"Protected Party" has the meaning set forth in Section 5.1(b)
hereof.
"Purchase Price" has the meaning set forth in Section 2.2
hereof.
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"Purchase Price Adjustment" means with respect to each
Excluded Contract determined pursuant to Section 2.3(b), 2.3(c) and 2.3(g), an
amount equal to the Cut-Off Date Balance multiplied by the Purchase Price
Factor, less any principal payments and interest received on account of such
Excluded Contract from the Cut-Off Date through the date of calculation (whether
from or on behalf of an obligor or on account of credit insurance), plus
interest earned on such amount in the Holdback Account.
"Purchase Price Factor" means 32.00%.
"Purchased Contracts" means the Contracts, purchased pursuant
to Section 2.1 hereof.
"Purchaser Servicing Fee" means the fee payable by Seller to
Purchaser for servicing the Mississippi Contracts from the Servicing Transfer
Date to the Mississippi Evidence Date, in an amount equal to 5% of gross cash
receipts collected by Purchaser on the Mississippi Contracts from the Servicing
Transfer Date to the Mississippi Evidence Date.
"Sale Hearing" has the meaning set forth in Section 8.1(b)
hereof.
"Sale Order" shall mean an order of the Bankruptcy Court,
substantially in the form annexed hereto as Exhibit B, approving this Agreement.
"Seller Indemnified Amounts" has the meaning set forth in
Section 7.2(a) hereof.
"Servicing Excess" means (a) if, on or prior to the Closing
Date, Seller has provided Purchaser satisfactory evidence that the class action
lawsuit against the Seller in the State of Mississippi relating to the
Mississippi Contracts has been dismissed with prejudice by Final Order, 25%
multiplied by all proceeds of the Purchased Contracts from the Cut-Off Date
through and including January 15, 2001 in excess of $9,000,000 (excluding the
Servicing Fee) or (b) if the evidence required is not so provided on or prior to
the Closing Date, 25% multiplied by all proceeds of the Purchased Contracts less
all proceeds of the Mississippi Contracts from the Cut-Off Date through and
including January 15, 2001 in excess of $8,549,010 (excluding the Servicing
Fee).
"Servicing Fee" means the fee payable by Purchaser to Seller
for servicing the Purchased Contracts from the Cut-Off Date through the
Servicing Transfer Date, in an amount equal to 5% of gross cash receipts
collected by Seller on the Purchased Contracts from the Cut-Off Date through the
Servicing Transfer Date.
"Servicing Transfer Date" means fifteen (15) days after the
Closing Date or such earlier date as determined by the Purchaser.
"Third-Party Accountants" has the meaning set forth in Section
2.3(d) hereof.
"Topping Offer" has the meaning set forth in Section 8.3(a)
hereof.
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ARTICLE 2
PURCHASE AND SALE
2.1. Purchase and Sale.
(a) On the Closing Date, subject to the terms and
conditions set forth in this Agreement, Seller shall sell, transfer and assign
to Purchaser and Purchaser shall purchase and acquire from Seller, all of
Seller's right, title and interest in and to the Purchased Contracts in
accordance with the terms of this Agreement. Seller shall deliver to Purchaser,
to the extent available, the related Contract Credit Files as soon as reasonably
possible following the Closing Date, but in any event no later than 30 (thirty)
days after the Closing Date. Seller agrees that all of its right, title and
interest in and to the Purchased Contracts shall be assigned to Purchaser free
and clear of Liens and Claims pursuant to Section 363 of the Bankruptcy Code in
accordance with the terms of this Agreement.
(b) Seller will provide to Purchaser a Xxxx of Sale in a
form acceptable to Purchaser and Seller.
2.2 Purchase Price.
(a) The purchase price for the Purchased Contracts shall
be (i) the Aggregate Cut-Off Date Balance of the Purchased Contracts times the
Purchase Price Factor plus (ii) $467,673 (the "Purchase Price").
(b) Upon execution of this Agreement, Purchaser shall
deposit in an interest bearing escrow account $3,176,732 (the "Xxxxxxx Money
Deposit"), to be held by the Escrow Agent until the Closing Date. If the Seller
has not received the consent of the DIP Lenders required pursuant to Section
6.2(iii) hereof on or before January 23, 2001, the Xxxxxxx Money Escrow Deposit
shall, upon request of the Purchaser, be returned immediately to the Purchaser.
In the event that Purchaser so requests return of the Xxxxxxx Money Deposit and
Seller subsequently obtains the consent of the DIP Lenders, the Purchaser shall
be required to re-deposit the Xxxxxxx Money Deposit with the Escrow Agent the
day following the Seller's delivery of the consent of the DIP Lenders to the
Purchaser. If Purchaser fails to re-deposit the Xxxxxxx Money Escrow, Seller
shall have the right to immediately terminate this Agreement.
(c) Subject to the satisfaction or waiver of the
conditions set forth in Article 6, on the Closing Date, Purchaser shall remit by
wire transfer in immediately available funds to Seller the sum of (i) the
Minimum Purchase Price; (ii) the Servicing Excess; and (iii) the Servicing Fee
on any collections on the Purchased Contracts from the Cut-Off Date through the
day that is three (3) Business Days prior to the Closing Date, less the sum of
(i) any collections on the Purchased Contracts from the Cut-Off Date through the
day that is three (3) Business Days prior to the Closing Date which are retained
by Seller and (ii) the Xxxxxxx Money Deposit which Seller and Purchaser shall
direct the Escrow Agent to remit to the Seller.
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2.3. Holdback Account
(a) On the Closing Date, Purchaser shall deposit the
Holdback Amount in an interest bearing segregated account with the Escrow Agent
(the "Holdback Account"). The Holdback Account shall require the signatures of
both Seller and Purchaser for any transfers or withdrawals from the account.
(b) As Purchaser identifies Excluded Contracts and
Interest Rebate Contracts which are still entitled to rebates on or after the
Closing Date, Purchaser shall provide Seller with (i) a written report (the
"Excluded Contract Report") of the Purchased Contracts that Purchaser believes
fall within the definition "Excluded Contract" and a calculation of the Purchase
Price Adjustment for all such Purchased Contracts up to the date of the
applicable report and (ii) a list of the Interest Rebate Contracts which are
still entitled to rebates. The Excluded Contract Report will also state the
reason each such Purchased Contract has, in Purchaser's opinion, become an
Excluded Contract. Within five (5) Business Days from the time a Purchased
Contract is first included in the Excluded Contract Report and such report is
received by the Seller, Seller shall (a) notify Purchaser that it accepts the
Purchased Contract as an Excluded Contract; (b) notify Purchaser that it will
attempt to mitigate or cure the asserted reason for excludability (the
"Mitigation Notice"); or (c) notify Purchaser that it disputes Purchaser's
determination that a Purchased Contract is an Excluded Contract pursuant to
Section 2.3(d) (the "Dispute Notice"). If Seller does not provide the notice
required by clause (b) or (c) within five (5) Business Days from receipt of the
applicable Excluded Contract Report, the Purchased Contract for which no such
notice is given shall be deemed an Excluded Contract. Seller shall have thirty
(30) days from receipt of each Excluded Contract Report to mitigate or cure the
asserted reason for excludability of any Purchased Contract identified in the
Mitigation Notice (the "Cure Period"), provided that Seller has delivered the
Mitigation Notice in a timely manner. Any such Purchased Contract for which the
asserted reason for excludability is not mitigated or cured within the Cure
Period shall be deemed an Excluded Contract. To the extent there is a cost for
such cure or mitigation, Seller may use funds in the Holdback Account for such
purpose, provided however, in no case shall (x) an amount equal to more than the
Purchase Price Factor multiplied by the Cut-Off Date Balance be used to mitigate
or cure any particular Excluded Contract, and (y) any amount be used from the
Holdback Account unless the reason for excludability of any Excluded Contract
will be cured or mitigated upon payment of such amount. Upon Seller's cure or
mitigation of the asserted reason for excludability of any Purchased Contract
which is the subject of a timely Mitigation Notice, Seller shall notify
Purchaser of such cure or mitigation (the "Cure Notice"), but in no event later
than five (5) Business Days after the expiration of the Cure Period. For each
Excluded Contract (i) that is not cured or mitigated within the Cure Period, as
set forth in a Cure Notice or (ii) for which no Mitigation Notice or Dispute
Notice was received, or (iii) was determined to be an Excluded Contract,
Purchaser shall (subject to Section 2.3(d) below) be entitled to receive from
the Holdback Account an amount equal to the Purchase Price Adjustment, but not,
in the aggregate, in excess of the Holdback Amount. Such amounts may be
withdrawn not more than once every two (2) weeks. For each Interest Rebate
Contract, the Interest Rebate Reserve shall be calculated by the Purchaser and
such amount shall be agreed to by the Seller on every second Friday after the
Closing Date. On the following Monday after the calculation (the "Interest
Determination Date"), if Seller and Purchaser agree on such amount, Purchaser
shall withdraw from the Holdback Account an amount equal to the Interest Rebate
Reserve. If Seller and Purchaser do not agree on such amount by the close of
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business on the Interest Determination Date, any dispute related thereto shall
be resolved pursuant to Section 2.3(d) hereof.
(c) For any Purchased Contract for which the Purchaser
has received a Purchase Price Adjustment, Purchaser shall convey such Purchased
Contract to Seller and the related Contract Credit File to the extent received
by the Purchaser (and containing any new information collected by the Purchaser)
will be returned to Seller by Purchaser within fifteen (15) days of such
payment.
(d) In the event that Seller disputes Purchaser's
determination that a Purchased Contract is an Excluded Contract, Seller shall
have the right, within five (5) Business Days after receipt of the Excluded
Contract Report identifying such Excluded Contract for the first time, to give a
Dispute Notice to Purchaser in accordance with Section 2.3(b) hereof stating
that it will submit such dispute to an agreed upon accountant or a mutually
agreed upon nationally recognized firm of independent certified public
accountants (the "Third-Party Accountants") to resolve such dispute. In the
event that Purchaser disputes Seller's determination that it has cured or
mitigated the asserted reason that a Purchased Contract is an Excluded Contract,
Purchaser shall have the right, within five (5) Business Days after receipt of
the Cure Notice, to give notice to Seller that it will submit such dispute to
the Third Party Accountant to resolve such dispute. In the event Purchaser and
Seller disagree on the appropriate amount of the Interest Rebate Reserve
pursuant to Section 2.3(b) hereof, either party may give notice to the other
party stating that it will submit such dispute to the Third Party Accountants
for resolution. The Third-Party Accountants' determination of such matters
submitted to it shall be conclusive and binding upon the parties hereto. The
costs incurred for such Third-Party Accountants shall be shared equally by
Seller and Purchaser. No amounts shall be distributed from the Holdback Account
to Purchaser or Seller on account of any such "Excluded Contract" or Interest
Rebate Reserve dispute until the dispute related thereto is resolved by
agreement of the parties or by the Third-Party Accountant. If, upon resolution
of any disputes as to the determination of whether a Purchased Contract is an
Excluded Contract or whether an Interest Rebate Reserve payment should be made
to Purchaser, a Purchased Contract is determined to be an Excluded Contract or
an Interest Rebate Reserve dispute is resolved (whether by agreement of the
parties or as determined by the Third Party Accountant), Purchaser shall be
entitled to receive an amount from the Holdback Account on account of such
Excluded Contract or Interest Rebate Contract in accordance with Section 2.3(b).
(e) After May 31, 2001, the Purchaser shall not be
entitled to receive from the Holdback Account any amounts with respect to 120
Day Excluded Contract unless such Purchased Contract was identified on an
Excluded Contract Report delivered to Seller prior to May 31, 2001. After July
31, 2001, the Purchaser shall not be entitled to receive from the Holdback
Account any amounts with respect to 180 Day Excluded Contract unless such
Purchased Contract was identified on an Excluded Contract Report delivered to
Seller prior to July 31, 2001
(f) Subject to retention in the Holdback Account of
amounts submitted by Purchaser to Seller for reimbursement from the Holdback
Account which have not yet been paid by Seller, on October 31, 2001, any amounts
remaining in the Holdback Account shall be distributed to the Seller.
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(g) On the fifth Business Day prior to the scheduled
Closing Date, Purchaser shall provide Seller with a written report (the
"Pre-Closing Date Excluded Contract Report") of the Contracts that Purchaser
believes fall within clause (i) or (ii) of the definition of "120 Day Excluded
Contract" hereof (collectively, excluding any Contracts identified by Seller in
the Pre-Closing Date Dispute Notice (as defined below), the "Pre-Closing Date
Excluded Contracts") and a calculation of the Purchase Price Adjustment for all
such Contracts so identified by Purchaser. The Pre-Closing Date Excluded
Contract Report also shall state the reason why each such Contract falls, in
Purchaser's opinion, within clause (i) or (ii) of the definition of "120 Day
Excluded Contract" hereof. Within three (3) Business Days from the xxxx Xxxxxx
receives the Pre-Closing Date Excluded Contract Report, Seller shall (a) notify
Purchaser that it accepts any or all of the Contracts as Pre-Closing Date
Excluded Contracts, and/or (b) notify Purchaser that it disputes Purchaser's
determination that a Contract falls within clause (i) or (ii) of the definition
of "120 Day Excluded Contract" hereof (the "Pre-Closing Date Dispute Notice").
If Seller does not provide the Pre-Closing Date Dispute Notice within three (3)
Business Days from its receipt of the Pre-Closing Date Excluded Contract Report,
the Contracts for which no such notice is given shall not be Purchased Contracts
on the Closing Date. There shall not be any Purchase Price Adjustment with
respect to any Contract listed on a Pre-Closing Date Dispute Notice, and any
such Contract shall (x) be considered a Purchased Contract hereunder and (y) be
listed on the first Excluded Contract Report delivered by Purchaser to Seller
hereunder; provided, however, that the Holdback Amount shall be increased, with
respect to any Contract listed on a Pre-Closing Date Dispute Notice, by an
amount equal to the Cut-Off Date Balance multiplied by the Purchase Price
Factor, less any principal payments and interest received on account of such
Contract from the Cut-Off Date through the date that is three (3) Business Days
prior to the Closing Date.
2.4. Servicing Fee
As described in Section 2.2(c), Purchaser shall pay to Seller
on the Closing Date, the Servicing Fee on amounts received by Seller on the
Purchased Contracts from and after the Cut-Off Date to three (3) Business Days
prior to the Closing Date. Seller shall compute the remainder of the Servicing
Fee within ten (10) Business Days after the Servicing Transfer Date and shall be
entitled to deduct such amount from any payments received by Seller on the
Purchased Contracts prior to Seller remitting such collections to Purchaser
pursuant to Section 3.1(e) hereof. If deductions made by Seller pursuant to the
immediately preceding sentence are not sufficient to satisfy fully the balance
of the Servicing Fee, Purchaser shall promptly remit to Seller such balance upon
written demand from Seller. From the Cut-Off Date through the Servicing Transfer
Date, Seller shall service the Purchased Contracts in accordance with Seller's
historical practices and shall not offer obligors any settlements. All such
collection practices shall be in accordance with the standards set forth in the
Fair Debt Collection Practices Act, the Fair Credit Billing Act and the Fair
Credit Reporting Act.
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2.5. Trust Funds; Lockbox.
(a) Prior to the Servicing Transfer Date, Seller shall
post all payments to its system and remit the cash pursuant to Sections 2.2, 2.4
and 3 hereof. After the Servicing Transfer Date, Seller agrees (subject to
Section 2.4 hereof) to promptly deliver to Purchaser all checks, drafts or any
form of payment following the Closing Date which represent payment or Insurance
Proceeds for all or any portion of the Purchased Contracts. Following receipt by
Seller of any payments due to Purchaser, Seller shall hold all such payments
(subject to Section 2.4 hereof) in trust for the account of Purchaser and said
funds shall be considered (subject to Section 2.4 hereof) trust funds not
property of Seller's bankruptcy estate. In the event Seller shall have received
any Insurance Proceeds after the Cut-Off Date, Seller shall promptly transfer
such Insurance Proceeds to Purchaser.
(b) On the Closing Date, Seller shall transfer to
Purchaser Seller's lockbox number 96069 with First Union National Bank (the
"Lockbox") and Purchaser shall be entitled to exercise dominion and control over
the Lockbox. Purchaser agrees to assume all costs related to the Lockbox
incurred from and after the Closing Date. Following receipt by Purchaser of any
payments due to Seller, Purchaser shall hold all payments in trust for the
account of Seller and said funds shall be considered trust funds not property of
Purchaser. Purchaser shall immediately remit such funds to Seller or at its
direction.
(c) On or before the Closing Date, Purchaser shall
establish its own account with First Union and the link between the Lockbox and
such account.
2.6. Mississippi Contracts.
On or prior to the Closing Date, Seller shall provide
Purchaser satisfactory evidence that the class action lawsuit against the Seller
in the State of Mississippi relating to such Contracts (the "Mississippi
Contracts") has been dismissed with prejudice by Final Order. If Seller is not
able to so provide this evidence, the Holdback Amount shall be adjusted to
include an amount equal to the Cut-Off Date Balance multiplied by the Purchase
Price Factor of the Mississippi Contracts (the "Mississippi Purchase Price")
plus any collections received on such Mississippi Contracts from the Cut-Off
Date through three (3) days prior to the Closing Date which have not been
retained by the Seller pursuant to Section 2.2. After such date and until the
Mississippi Evidence Date, all collections received with respect to the
Mississippi Contracts by or on behalf of Purchaser or Seller shall be deposited
in the Holdback Account. From the Servicing Transfer Date, the Mississippi
Contracts shall be serviced by or on behalf of the Purchaser in the manner of
the other Purchased Contracts. If the evidence required is not so provided by
the date that is thirty (30) days after the Closing Date, Purchaser shall be
entitled to receive from the Holdback Account the Mississippi Purchase Price
plus interest thereon and any Purchaser Servicing Fees and Seller shall be
entitled to receive from the Holdback Account any collections on the Mississippi
Contracts from the Cut-Off Date through the Mississippi Evidence Date less any
Purchaser Servicing Fees. If the evidence required is so provided on or before
the date that is thirty (30) days after the Closing Date, Seller shall be
entitled to receive from the Holdback Account the Mississippi Purchase Price and
any Mississippi Servicing Excess and Servicing Fees from the Cut-Off Date to the
Servicing Transfer Date plus interest thereon and Purchaser shall be entitled to
receive from the Holdback Account any collections on the Mississippi Contracts
from the Cut-Off Date through the Mississippi Evidence Date net of any
Mississippi Servicing Excess and Servicing Fees payable to Seller plus interest
thereon.
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ARTICLE 3
COLLECTIONS
3.1. Collections.
(a) Purchaser shall begin collecting on the Purchased
Contracts on the Servicing Transfer Date.
(b) On the Closing Date, Seller shall be entitled to the
Servicing Excess which is to be paid in accordance with Section 2.2(c). The
remainder of all collections from the Cut-Off Date to January 15, 2001, shall be
payable to the Purchaser. Purchaser shall be entitled to all proceeds of the
Purchased Contracts received after January 15, 2001 through and including the
Closing Date less the Servicing Fee.
(c) Should Seller come into possession of any instrument
from an obligor relating to the Purchased Contracts, Seller shall promptly
endorse said instrument in favor of Purchaser, if appropriate, or transfer title
to such property and deliver said instrument or other property to Purchaser.
(d) From and after the Closing Date, Purchaser shall have
the sole and exclusive right to collect on the Purchased Contracts and all such
collection practices used by Purchaser shall be in accordance with the standards
set forth in the Fair Debt Collection Practices Act, the Fair Credit Billing Act
and the Fair Credit Reporting Act.
(e) Subject to Section 2.4 hereof, any collections on the
Purchased Contracts received by Seller at any time after the date which is three
(3) days prior to the Closing Date (if any) shall be remitted to Purchaser on a
weekly basis less the Servicing Fee on such Purchased Contract. Any checks
received from obligors under such Purchased Contracts shall be forwarded by
Seller to the Lockbox as set forth in Section 2.5. In the event an obligor of an
Excluded Contract remits a payment to Purchaser after the Closing Date,
Purchaser shall remit such payment to Seller after it has received the Purchase
Price Adjustment for such Excluded Contract.
(f) Purchaser may at any time notify obligors of any
Purchased Contract that their contract and the servicing thereof has been sold
and assigned to Purchaser and that amounts due with respect thereto shall be
paid directly to Purchaser. Seller shall, at Purchaser's request and cost, and
in a form acceptable to both Seller and Purchaser, substantially in the form set
forth on Exhibit G which may be revised to comply with applicable laws, notify
obligors that their account has been sold or otherwise assigned to Purchaser
(the "Goodbye Letter"),. Subsequent to such notice, Seller will not be liable if
such obligors continue to remit payments to Seller. Seller will remit such
payments to Purchaser in accordance with Sections 3.1 and 2.5.
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(g) Purchaser shall notify obligors of Interest Rebate
Contracts that their contract has been transferred to Purchaser and any requests
for rebates should be made directly to Purchaser or its representatives. Such
notice shall state that any interest rebate certificates should be submitted to
Purchaser.
(h) Seller agrees to make any endorsement necessary to
permit collection by Purchaser of the Purchased Contracts. Seller shall also at
Purchaser's reasonable request provide a letter to Purchaser's depositing
institution instructing such depositing institution to accept Purchaser's
endorsement of Seller's signature or such other instruction so as to allow
Purchaser to collect on the Purchased Contracts.
(i) Purchaser may use Seller's name, including any other
name under which the Purchased Contracts were generated, solely for the purpose
of describing accurately the source of the obligations that generated the
Purchased Contracts, which description may be used, to the extent permitted by
Law in the lawful credit and collection activities of Purchaser with respect to
the Purchased Contracts and in connection with the institution of collection
proceedings brought by Purchaser under its own name, provided however, that any
communications that use Seller's name in the manner set forth above shall
clearly indicate that the Purchased Contracts are owned by Purchaser and any
such collection is being done on Purchaser's behalf. Prior to so using Seller's
logo, Purchaser shall provide Seller with the form in which Seller's logo is to
be used and Purchaser must obtain the consent of Seller, which shall not be
unreasonably withheld, in order to use Seller's logo in the manner proposed.
(j) Seller shall retain the right to sell the account
names and to continue to market merchandise to the obligors of the Purchased
Contracts in accordance with applicable laws, including the Xxxxx-Xxxxx-Xxxxxx
Financial Modernization Act.
(k) Purchaser in acquiring the Purchased Contracts
pursuant to this Agreement, is not assuming any liability or any obligation of
Seller, including any litigation threatened, pending or instituted against
Seller, unpaid sales or intangible taxes or any products liability claim.
(l) On the Closing Date and thereafter upon reasonable
request by Purchaser, Seller will execute and deliver a Uniform Commercial Code
Form UCC-1 Financing Statement from time to time as a protective measure
evidencing the sale of the Purchased Contracts.
(m) After the Servicing Transfer Date, Seller shall
provide notices at the stores from which Purchased Contracts have been sold that
such Purchased Contracts have been sold and the address and phone number of
Purchaser at no expense to Seller. At the expense of Purchaser, Purchaser may
provide to the stores payment envelopes for obligors. Seller, at Purchaser's
expense, shall take such other actions as are reasonably requested by Purchaser
to enable Purchaser to properly service the Purchased Contracts after the
Servicing Transfer Date.
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ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1. Representations, Warranties and Covenants of Seller.
Subject to the receipt of the Sale Order, Seller represents,
warrants and covenants to Purchaser as follows:
(i) Seller is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction and
incorporation, with (subject to entry of the Sale Order) all requisite power and
authority to enter into this Agreement.
(ii) Except for the Sale Order, no consent,
authorization or approval is required by Seller to assign and transfer to
Purchaser all of Seller's right, title and interest in and to the Purchased
Contracts free and clear of all Liens and Claims.
(iii) Seller has, at no expense to Purchaser,
filed a motion seeking approval of this Agreement and will use its reasonable
best efforts to obtain entry of the Sale Order in the form of Exhibit B hereto.
(iv) There is no pending or, to the best of
Seller's knowledge, threatened litigation against Seller which would materially
affect Seller's ability to perform each and every one of its obligations under
this Agreement.
(v) Seller has committed no acts or omissions
which would result in any claim or offset by any obligor under a Contract that
would impair the value of the Purchased Contract.
(vi) All representations and warranties set forth
above are true and correct as of the date hereof and will be true and correct on
the Closing Date, and shall survive the closing of this transaction for a period
of 180 days following the Closing Date.
(vii) No class action lawsuits or similar actions
are pending, threatened or have been filed affecting the Purchased Contracts as
of the Closing Date except as set forth in Section 2.6 hereof.
(viii) Through the Servicing Transfer Date,
Seller's Collection practices shall be in accordance with the standards set
forth in the Fair Debt Collection Practices Act, the Fair Credit Billing Act and
the Fair Credit Reporting Act.
4.2. Representations, Warranties and Covenants of
Purchaser.
Purchaser represents, warrants and covenants to Seller as
follows:
(i) Purchaser is an entity duly formed, validly
existing and in good standing under the laws of the state of its formation, with
all requisite power and authority to enter into this Agreement.
(ii) Purchaser is duly and legally authorized to
enter into this Agreement and the undersigned representative is authorized to
act on behalf of and bind it to the terms of this Agreement. This Agreement
constitutes the valid and legally binding obligation of Purchaser.
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(iii) There is no proceeding, action,
investigation or litigation pending or the best of Purchasers' knowledge,
threatened against Purchaser, which would have a material adverse effect on this
Agreement or any of Purchasers' obligations hereunder.
(iv) In collecting and servicing the Purchased
Contracts, Purchaser shall adhere to the procedures and standards set forth in
the Fair Debt Collection Practices Act and the Fair Debt Billing Act.
(v) Purchaser has the intent and financial
wherewithal to perform its obligations under this Agreement.
(vi) All representations and warranties set forth
above are true and correct as of the date hereof and will be true and correct on
the Closing Date, and shall survive the closing of this transaction.
ARTICLE 5
CERTAIN COVENANTS
5.1. Mutual Covenants and Agreements.
Seller and Purchaser hereby covenant and agree that:
(a) Cooperation: They shall cooperate fully with each
other in furnishing any information or performing any action reasonably
requested by such party, which information or action is necessary to the speedy
and successful consummation of the transactions contemplated by this Agreement.
Subject to their further rights under this Agreement, they shall promptly cause
the consummation of this Agreement to occur on the Closing Date.
(b) Confidentiality. All information furnished by one
party (the "Protected Party") to the other party in connection with this
Agreement and the transactions contemplated hereby shall be kept confidential by
such other party (and shall be used by it only in connection with this Agreement
and the transactions contemplated hereby, provided that Seller or Purchaser
shall be permitted to make disclosures which it in good xxxxx xxxxx necessary
and appropriate, including for purposes of obtaining approval of this Agreement
after consultation with legal counsel) except to the extent that such
information: (i) is already lawfully known to such other party when received and
not otherwise subject to restrictions of confidentiality; (ii) thereafter
becomes lawfully obtainable from other sources; (iii) is required to be
disclosed to a Governmental Authority; or (iv) is, in the opinion of counsel,
required by Law to be disclosed by such other party, provided that notice of
such disclosure has been given to the Protected Party, when legally permissible,
and that such other party making the disclosure uses its reasonable efforts to
take legal action to prevent the disclosure. However, after the transaction
becomes public knowledge, Purchaser and its lenders and assignees may (subject
to Seller's reasonable approval) issue press releases related to the
transaction. If the transactions contemplated by this Agreement shall fail to be
consummated, such other party shall promptly cause all originals and copies of
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documents, and extracts thereof, containing any such information and data as to
the Protected Party to be returned to the Protected Party or destroyed and shall
cause an officer so to certify to the Protected Party.
(c) Advice of Changes. Between the date hereof and the
Closing Date, each party shall promptly advise the other in writing of any fact
which, if existing or known at the date hereof, would have been required to be
set forth or disclosed in or pursuant to this Agreement or of any fact which, if
existing or known at the date hereof, would have been made any of the
representations contained herein untrue in any material respect.
ARTICLE 6
CONDITIONS PRECEDENT TO CLOSING
6.1. Conditions Precedent to Purchaser's Obligation to
Close.
Purchaser's obligation to close the transaction contemplated
by this Agreement is subject to the following conditions being performed on or
before closing:
(i) The representations and warranties of Seller
shall be true and correct in all material respects as set forth in an officers
certificate delivered to Purchaser on the Closing Date.
(ii) The Bankruptcy Court shall have entered the
Bidding Procedures Order and the Sale Order authorizing the sale of all of the
Contracts in one transaction and the Sale Order shall not have been reversed,
vacated or stayed.
(iii) Purchaser has received the electronic data
as described in the manner set forth in Exhibit F hereto.
(iv) Purchaser shall have received evidence to
its reasonable satisfaction from Seller that the actual cash collected on the
Contracts from September 1, 2000 through November 30, 2000 shall be at least
$17, 200,000.
(v) Seller shall have delivered to Purchaser a
report in a form satisfactory to Purchaser and Seller, showing cash collections,
Servicing Fees and the Servicing Excess for the period from the Cut-Off Date
through a day that is three (3) days prior to the Closing Date. Since the
Cut-Off Date, Seller shall have serviced the Contracts in accordance with
Seller's historical practices and not offered obligors any settlements.
(vi) Seller shall have delivered to Purchaser the
documents described herein in a mutually acceptable form.
(vii) Seller shall have delivered the consent
specified in Section 6.2(iii) hereof.
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6.2. Conditions Precedent to Seller's Obligation to Close.
(i) The representations and warranties of
Purchaser shall be true and correct in all material respects as of the Closing
Date.
(ii) The Bankruptcy Court shall have entered the
Bidding Procedures Order and the Sale Order and Sale Order shall not have been
reversed, vacated or stayed.
(iii) Seller shall have received the irrevocable
consent (subject to the bidding process contemplated hereby) of the DIP Lenders
under Seller's debtor in possession financing facility with Fleet.
(iv) Seller shall have received the amount
specified in Section 2.2(c) for the Purchased Contracts from Purchaser.
(v) Purchaser shall have delivered to Seller the
documents described herein in a mutually acceptable form.
ARTICLE 7
INDEMNIFICATION
7.1. Indemnification by Seller.
(a) Seller agrees to indemnify, defend and hold harmless
Purchaser and its respective officers, directors, managers and employees,
(collectively, the "Indemnified Parties") in an amount not to exceed, in the
aggregate, the amount on deposit in the Holdback Account (excluding any increase
in the Holdback Account due to the Mississippi Contracts) from and against any
and all damages, losses, claims, liabilities and related costs and expenses,
including reasonable attorneys' and experts' fees and disbursements (all of the
foregoing being collectively referred to as "Indemnified Amounts"), awarded
against or incurred by any of them, excluding however, Indemnified Amounts
resulting solely from or caused solely by the negligence, bad faith or willful
misconduct on the part of an Indemnified Party to which such Indemnified Amount
would otherwise be due, to the extent arising out of or resulting from:
(i) any representation, warranty or covenant
made by Seller under or in connection with this Agreement, and any information
or report delivered by or on behalf of Seller pursuant hereto, that shall have
been false or incorrect in any material respect when made or deemed made or
material other failure by Seller to adhere to the material covenants, provisions
or duties under this Agreement;
(ii) any and all claims made by any obligor,
governmental authority or other party based upon any actual or alleged failure
by Seller to comply with any laws relating to the Contracts;
(iii) any claim or action arising out of or in
connection with any Purchased Contracts (except to the extent that the claim or
action is based solely on any act or omission by Purchaser, its officers,
directors, agents, employees, or representatives with respect to any Purchased
Contracts), including without limitation any claim or action initiated by an
obligor as a result of inaccurate information received by Purchaser from Seller
hereunder or any dispute involving warranties, service agreements or customer
satisfaction guaranties associated with the Purchased Contracts;
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(iv) any other act or omission by Seller, its
officers, directors, agents, employees, or representatives with respect to any
breach by Seller of any material representation or warranty or covenant
hereunder; and
(v) any losses or expenses incurred by the
Purchaser as a result of Seller's failure to forward all premiums paid by
obligors to the appropriate insurance companies.
(b) An Indemnified Party hereunder shall have recourse
only against amounts on deposit in the Holdback Account. All claims for
indemnification or payments from the Holdback Amount under this Agreement,
including under this Section 7.1 or under Articles 3 or 4, shall be entitled to
administrative priority in the Bankruptcy Court (provided an Indemnified Parties
right to seek indemnity under Section 7.1 shall be limited to amounts on deposit
in the Holdback Account).
(c) Any obligation of Seller to indemnify Purchaser shall
terminate 180 days after the Closing Date, unless the party seeking
indemnification within such period, notifies the other party it is seeking
indemnification hereunder as to a specific claim. In that instance, the
indemnity obligation shall survive solely as to the specific claim until
resolved and amounts necessary to satisfy such specific claim shall remain in
the Holdback Account. Thereafter all rights of indemnity shall terminate.
7.2. Indemnification by Purchaser.
(a) Purchaser agrees to indemnify, defend and hold
harmless Seller and its respective officers, directors, managers and employees
(collectively, the "Seller Indemnified Parties") in an amount not to exceed, in
the aggregate, the Holdback Amount (excluding an increase in the Holdback
Account due to the Mississippi Contracts) from and against any and all damages,
losses, claims, liabilities and related costs and expenses including reasonable
attorneys' and experts' fees and disbursements (all of the foregoing being
collectively referred to as "Seller Indemnified Amounts") awarded against or
incurred by any of them, excluding however, Indemnified Amounts resulting solely
from or caused solely by the negligence, bad faith or willful misconduct on the
part of a Seller Indemnified Party to which such Indemnified Amount would
otherwise be due, to the extent arising out of or resulting from:
(i) any representation, warranty or covenant
made by Purchaser under or in connection with this Agreement, and any
information or report delivered by or on behalf of Purchaser pursuant hereto,
that shall have been false or incorrect in any material respect when made or
deemed made, or other material failure by Purchaser to adhere to the material
covenants, provisions or duties under this Agreement;
(ii) any and all claims made by any obligor,
governmental authority or other party based upon any actual failure by Purchaser
(with respect to actions or occurrences after the Closing Date), to comply with
any laws relating to the Purchased Contracts; or
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(iii) any other act or omission by Purchaser, its
officers, directors, agents, employees, or representatives with respect to any
Purchased Contract after the Closing Date.
(b) Subject to the limitations contained in Section
7.2(a), a Seller Indemnified Party shall have recourse against both Purchaser
and amounts on deposit in the Holdback Account (excluding any increase in the
Holdback Account resulting from the Mississippi Contracts) with respect to
claims made pursuant to Section 7.2 hereof.
7.3. Procedure for Indemnification
(a) Any amounts to be distributed from the Holdback
Account pursuant to Section 7.1 or 7.2 shall be distributed pursuant to an
escrow agreement to be mutually agreed upon by both parties on or prior to the
Closing Date.
(b) Within ten (10) days after receipt by a Indemnified
Party or a Seller Indemnified Party (together the "Party") of a third party
claim, the indemnified Party shall, if any claim in respect thereof is to be
made against the indemnifying Party under this Agreement, deliver a claim notice
to the indemnifying Party; provided, however, that the omission so to notify the
indemnifying Party shall not relieve the indemnifying Party from any liability
which the indemnifying Party may have to the indemnified Party otherwise than
under this subsection. In the event that any third party claim is made against
the indemnified Party and the indemnified Party notifies the indemnifying Party
of the commencement thereof, the indemnifying Party shall be entitled to
participate therein and, to the extent that it shall wish, to assume the defense
thereof, with counsel satisfactory to the indemnified Party (who shall not
except with the consent of the Party, be counsel to the indemnifying Party). The
indemnified Party shall have the right to employ separate counsel in any action
or claim and to participate in the defense thereof at the expense of the
indemnifying Party if the retention of such counsel has been specifically
authorized by the indemnifying Party, if such counsel is retained because the
indemnifying Party does not notify the indemnified Party within twenty (20) days
after receipt of a claim notice that it elects to undertake the defense thereof,
or if there is a reasonable basis on which the indemnified Party's interests may
differ from those of the indemnifying Party.
ARTICLE 8
BANKRUPTCY COURT ORDERS; BIDDING PROCEDURES
8.1. Bankruptcy Court Orders. In connection with the
transactions contemplated by this Agreement, Seller shall seek entry of the Sale
Order. Seller shall use its reasonable best efforts to provide counsel to
Purchaser with a copy of each notice, application, proposed order and other
related pleadings regarding these transactions prepared by Seller and to be
filed with the Bankruptcy Court in advance of the filing of such documents in
the Bankruptcy Court.
8.2. No Solicitation. The parties acknowledge and agree
that Seller is required to provide certain information to other interested
parties and that Seller will: (i) provide notices of the transactions
contemplated by this Agreement, the Motion and the Sale Hearing and related
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matters as required by applicable Law (including to parties that Seller believes
may be interested in submitting an alternative Acquisition Proposal); (ii)
respond to any inquiries concerning the sale of the Purchased Contracts; (iii)
provide any and all information and reasonable access to competing bidders; (iv)
meet with competing bidders if so requested by such bidders to discuss the terms
of an Alternative Transaction and (v) undertake such further or other action
with respect to interested parties as Seller believes may be required by its or
its management's fiduciary duties or as advised by its counsel is required.
Subject to the foregoing, unless required by order of the Bankruptcy Court,
Seller shall not request or solicit, and shall use its reasonable efforts to
prevent its representative from expressly requesting or soliciting, a proposal
or offer from a third party relating to any acquisition of all or any
substantial part of the Purchased Contracts.
8.3. Overbid Procedures. Purchaser acknowledges that
Seller has entered into a Agreement dated January 4, 2000 with WCIC Furniture,
Inc. and Purchaser acknowledges and agrees that it is submitting this Agreement
as a "Topping Offer" as described therein.
8.4. Bankruptcy Covenant of Purchaser
Purchaser acknowledges and agrees that the following shall in
no event be deemed to be a breach by Seller of any representation, warranty,
covenant, condition or term contained herein :
(a) the pendency of the Chapter 11 Case of Seller and its
affiliated debtors; and
(b) following the Closing Date, the conversion of the
Chapter 11 Case for any or all of Seller or its affiliated debtors to a case
under chapter 7 of the Bankruptcy Code or the appointment of an examiner,
trustee or receiver in any such cases.
8.5. Bankruptcy Court Approval
Notwithstanding any provision of this Agreement to the
contrary, Seller shall not have any obligation to consummate a sale hereunder
unless and until the Bankruptcy Court has approved this Agreement and entered
the Sale Order, and such order is not reversed or vacated and is not subject to
any stay pending appeal.
ARTICLE 9
TERMINATION
9.1. Termination. This Agreement may be terminated as
follows:
(a) By Purchaser if:
(i) [omitted]
(ii) the Bankruptcy Court fails (through no fault
of Purchaser) to enter the Sale Order by January 23, 2001; or
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(iii) Seller breaches any material
representations, warranties or covenants made herein; or
(iv) the transaction fails to close on or before
January 31, 2001 (through no fault of the Purchaser); or
(v) on or prior to the Closing Date Seller sells
the Contracts to any entity other than Purchaser (provided Purchaser did not
breach this Agreement); or
(vi) (x) the Bankruptcy Court (through no fault
of the Purchaser) does not approve or denies approval of this Agreement by
January 30, 2001; or
(vii) a Material Adverse Change occurs; or
(viii) if prior to the Closing Date, the Chapter 11
Case is converted for any or all of Seller or its affiliated debtors to a case
under chapter 7 of the Bankruptcy Code or an examiner, trustee or receiver is
appointed.
(b) By Seller, if:
(i) Purchaser fails to perform its material
obligations under this Agreement and, within five (5) days of notice of such
failure, Purchaser has not performed; or
(ii) the transaction fails to close on or before
January 31, 2001 (through no fault of Seller); or
(iii) Seller executes definitive documentation
with respect to an Alternative Transaction; or
(iv) Purchaser breaches any material
representations or warranties made herein and, within five (5) days of notice of
such breach, Purchaser has not cured such breach; or
(v) the Bankruptcy Court denies approval of this
Agreement or such Agreement is not approved because Seller has received a higher
or better offer in accordance with Section 8.3 hereof.
9.2. Effects of Termination.
(a) If this Agreement is terminated by Purchaser,
pursuant to Section 9.1(a)(ii), 9(a)(iii), 9(a)(iv), 9(a)(vi)(x), 9(a)(vii) or
9(a)(viii), Seller shall, within five (5) days of the termination of this
Agreement, reimburse Purchaser the amount of the Xxxxxxx Money Deposit plus
interest thereon.
(b) If this Agreement is terminated by Purchaser,
pursuant to Section 9(a)(v), Seller shall within five (5) days of the
termination of this Agreement reimburse Purchaser the amount of the Xxxxxxx
Money Deposit plus interest thereon.
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(c) If this Agreement is terminated by Purchaser,
pursuant to Section 9(a)(vi)(y), Seller shall (provided Purchaser is not then in
breach of this Agreement), within five (5) days of the termination of this
Agreement, reimburse Purchaser the amount of the Xxxxxxx Money Deposit plus
interest thereon.
(d) If this Agreement is terminated by Seller, pursuant
to Section 9(b)(i) or 9.1(b)(iv), Seller shall be entitled to retain the Xxxxxxx
Money Deposit plus interest thereon as liquidated damages which shall be
Seller's sole recourse against Purchaser and Seller shall not be entitled to any
monies from Purchaser in excess of the Xxxxxxx Money Deposit.
(e) If this Agreement is terminated by Seller, pursuant
to Section 9(b)(ii), 9(b)(iii) or 9(b)(v), Seller shall (provided Purchaser is
not then in breach of this Agreement), within five (5) days of termination of
this Agreement, reimburse Purchaser the amount of the Xxxxxxx Money Deposit plus
interest thereon.
(f) Notwithstanding the foregoing, no failure on the part
of Seller or Purchaser to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right including the right to seek specific
performance. The remedies herein provided are cumulative and not exclusive of
any other remedies provided by law.
ARTICLE 10
MISCELLANEOUS
10.1. Wire Transfer. Unless Seller directs otherwise, all
sums required to be paid to Purchaser by Seller under this Agreement which
exceed $10,000 shall be made by wire transfer as set forth in Exhibit C hereto.
10.2. Notices. All notices, requests, instructions,
consents and other communications to be given pursuant to this Agreement shall
be in writing and shall be deemed received (i) on the same day if delivered in
person, by same-day courier or by facsimile transmission (transmission
confirmed); (ii) on the next day if delivered by over-night mail or courier; or
(iii) on the date indicated on the return receipt, or if there is no such
receipt, on the third calendar day (excluding Saturdays and Sundays) if
delivered by certified or registered mail, postage prepaid, to the Party for
whom intended to the following addresses:
If to Purchaser: Asta Funding Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxx
Fax No.: (000) 000-0000
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With a copy to: Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax No. (000) 000-0000
If to Seller: Xxxxx X. Xxxxxx
Xxxxxx-Xxxxxx Company
00000 Xxxx Xxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Fax No.:(000) 000-0000
With a copy to: FTI/Xxxxxxxx & Xxxxx
Xxxxxxxx & Xxxxx LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx
Fax No.: (000) 000-0000
With a copy to: Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
10.3. Limited Power of Attorney. If Purchaser receives a
check, bank draft, money order or other negotiable instrument payable to Seller
with respect to an Contract; Seller hereby nominates, constitutes and appoints
Purchaser as its true and lawful attorney in fact, with full right, title and
authority to endorse and negotiate such instrument in Seller's name, place and
stead, and shall otherwise reasonably cooperate with respect to such endorsement
and negotiation. Seller shall at the Servicing Transfer Date, deliver 50
separate powers of attorney containing similar terms.
10.4. Governing Law: Consent to Jurisdiction. This
Agreement shall be construed and enforced under the laws of the State of New
York and the Bankruptcy Code. The Bankruptcy Court shall retain exclusive
jurisdiction over any disputes with respect to this Agreement. Purchaser hereby
consents to the exclusive jurisdiction of the Bankruptcy Court. In the event any
provision of this Agreement shall be declared invalid by a court of competent
jurisdiction, said invalidity shall not invalidate the Agreement as a whole, but
said Agreement shall be construed as if the invalidated provision was omitted
from the Agreement.
10.5. Entire Agreement. This Agreement and shall constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof. This Agreement supersedes and cancels any and all other contracts
referring to the subject matter herein. No modifications, alteration or waiver
of this Agreement shall be effective unless in writing, executed by the parties
hereto.
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10.6. Assignability. This Agreement shall inure to the
benefit of the parties hereto, their successors and assigns. Purchaser may not
assign its obligations under this Agreement without giving notice to Seller. Any
assignment of Purchaser's rights under this Agreement or any portion thereof by
Purchaser shall operate to vest in the assignee, the rights and powers and
obligations of Purchaser hereunder to the extent of such assignment.
Notwithstanding anything to the contrary, no assignment of this Agreement shall
release Purchaser of its obligations hereunder.
10.7. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but all of
which counterparts collectively shall constitute one instrument representing the
Agreement between the parties hereto.
10.8. Captions. Captions of the various sections contained
in this Agreement are intended to be used solely for convenience of the parties
hereto and are not intended, nor are they deemed to modify, or explain or to be
used as an aid in the construction of any of the provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals.
XXXXXX-XXXXX FURNITURE COMPANY ASTA FUNDING INC.
By: ________________________________ By: ________________________
Name: Xxxxx X. Xxxxxx Name: Xxxx Xxxxx
Title: Senior Vice President-Credit Title: President
-25-
EXHIBIT A
MASTER FILE INFORMATION
----------------------------------------------------------------------------------------------------------------------
Loan Gross Unpaid Aggregate Aggregate Aggregate Net
Count Principal Balance Outstanding Accrued Interest Balance
Insurance Rebate
----------------------------------------------------------------------------------------------------------------------
115006 $112,145,030.94 $2,624,121.48 $10,248,012.09 $99,272,897.37
----------------------------------------------------------------------------------------------------------------------
"NPV Files" dated December 27, 2000
"NONSEC" file dated November 22, 2000
"NONSECTX" file dated November 22, 2000
A-1
EXHIBIT B
FORM OF ORDER TO SELL ASSETS
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Richmond Division
In re: )
) Chapter 11
XXXXXX-XXXXXX COMPANY, et al., )
) Case No. 00-34533 (DOT)
Debtors )
) Jointly Administered
ORDER AUTHORIZING AND APPROVING SALE OF
CERTAIN RECEIVABLES TO ASTA FURNITURE,
INC., AND GRANTING RELATED RELIEF
Upon the motion of Xxxxxx-Xxxxxx Company, a Virginia
Corporation, Xxxxxx-Xxxxxx Furniture Company, a North Carolina corporation,
Xxxxxx-Xxxxxx Furniture West, Inc., an Arizona corporation, HMY Star, Inc., a
Virginia Corporation, HMY RoomStore, Inc., a Virginia Corporation, and MacSaver
Financial Services, Inc., a Delaware Corporation, the above-captioned debtors
and debtors in possession (collectively, the "Debtors") dated December 22, 2000
(the "Motion"), for an order, pursuant to sections 105 and 363 of title 11 of
the United States Code (the "Bankruptcy Code"), as complemented by Rules 2002
and 6004 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"),
seeking, inter alia, authorization for and approval of: (a) the assignment and
sale by the Debtors of certain receivables (the "Customer Receivables"),
pursuant to and as more particularly described in the Purchase Agreement dated
December __, 2000 (the "WCIC Purchase Agreement"), between Xxxxxx-Xxxxxx
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Furniture Company ("HMFC"), one of the Debtors herein, and WCIC Furniture, Inc.
("WCIC") or to such other party as may submit a higher and better offer in
accordance with the requirements set forth in Article VIII of the WCIC Purchase
Agreement, free and clear of all liens, claims, and encumbrances; (b) certain
related relief; and it appearing that such a higher and better offer has been
made by Asta Funding, Inc.("Asta"), a Delaware corporation, pursuant to the
Purchase Agreement ("Purchase Agreement") dated January 18, 2001 between Asta
and HMFC and upon consideration of the Motion, the arguments of counsel made at
the hearings on the Motion, the Bidding Procedures Order (as defined in the
Motion), and the full record in these cases; and it appearing that the relief
requested in the Motion is in the best interests of the Debtors, their estates,
creditors and other parties in interest; and notice of the Motion and the
hearings held in respect thereof having been provided in the manner set forth in
the Motion and in the Bidding Procedures Order; and it appearing that no other
or further notice is necessary or required; and upon due deliberation and
sufficient cause appearing therefore, it is
FOUND, that:
A. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Motion, except as such
terms may be otherwise defined herein.
B. Notice of the Motion has been provided in the manner
required by the Bidding Procedures Order and no other or further notice is
necessary or required.
C. The Court has jurisdiction to hear and determine the
propriety of entering this Order pursuant to 28 U.S.C. xx.xx. 157 and 1334.
Venue of this proceeding in this district is proper pursuant to 28 U.S.C. ss.
1409. The hearings on the Motion constitute core proceedings pursuant to
28 U.S.C. ss. 157(b)(2)(A), (N) and (O).
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D. A reasonable opportunity to object or be heard
regarding the requested relief has been afforded to all interested parties and
entities, including all known parties who claim interests in or liens against
the Customer Receivables.
E. Sufficient business justification exists for the
assignment and sale of the Customer Receivables pursuant to section 363(b) of
the Bankruptcy Code in that the sale enables the Debtors to obtain significant
value for such assets and is the highest or otherwise best bid for such assets.
F. The Purchase Agreement was: (a) negotiated, proposed
and entered into in good faith, from arm's length bargaining positions, by HMFC
and ASTA; and (b) constitutes the highest or otherwise best offer for the
Customer Receivables. ASTA is entitled to the protections and benefits conferred
upon a good faith purchaser pursuant to section 363(m) of the Bankruptcy Code
with respect to the transactions approved hereby.
G. The sale of the Customer Receivables pursuant to the
Purchase Agreement is in the best interest of the Debtors, their estates,
creditors and other parties in interest.
NOW, THEREFORE, it is ORDERED, that:
1. The terms and conditions of the Purchase Agreement
(together with any non-material modifications the Debtors shall hereafter agree
to) and the other documents and instruments executed in connection therewith
hereby are approved in all respects, and the sale of the Customer Receivables
pursuant thereto hereby is authorized and approved pursuant to sections 363(b),
363(f), and 363(m) of the Bankruptcy Code.
2. The Debtors hereby are authorized and empowered to:
(a) execute the Purchase Agreement and the other instruments and documents
necessary to consummate the transactions contemplated thereby; and (b) to fully
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perform under, consummate and implement the Purchase Agreement, together with
all additional instruments and documents that may be reasonably necessary or
desirable to consummate the transactions contemplated by the Purchase Agreement
and the transfer of the Customer Receivables to ASTA.
3. Pursuant to section 363(f) of the Bankruptcy Code,
the Customer Receivables shall be transferred to ASTA free and clear of any
claims, debts, obligations, rights, restrictions, interests, liens, and
encumbrances (collectively, the "Encumbrances"), with all such Encumbrances to
attach to the proceeds of sale with the same validity, force and effect as they
now have with respect to the Customer Receivables.
4. All persons and entities holding Encumbrances of any
kind and nature with respect to the Customer Receivables hereby are barred from
asserting such Encumbrances of any kind and nature against ASTA, its successors
or assigns, or the Customer Receivables.
5. If any person or entity that has filed financing
statements or other documents or agreements evidencing Encumbrances against the
Customer Receivables shall not have delivered to ASTA prior to the date of the
transfer, in proper form for filing and executed by the appropriate parties,
termination statements, instruments of satisfaction, releases of all
Encumbrances or other interests which the person or entity has with respect to
the Customer Receivables, the Debtors hereby are authorized to execute and file
such statements, instruments, releases and other documents on behalf of the
person or entity with respect to the Customer Receivables.
6. The net proceeds of the sale of the Customer
Receivables shall be applied in accordance with the Adequate Protection Order.
For the purposes of this paragraph "net proceeds" shall be net of, inter alia,
the 506(c) Surcharge as agreed to by the Debtors and the Prepetition Lenders or
determined by the Court.
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7. Any amounts payable by the Debtors to ASTA pursuant
to the Purchase Agreement or any transactions contemplated thereby: (a) shall
(subject to the terms of the Purchase Agreement) constitute administrative
priority expenses of the Debtors' estates pursuant to sections 503(b) and
507(a)(1) of the Bankruptcy Code; and (b) may be paid by the Debtors in the time
and manner provided in the Purchase Agreement without further order of this
Court.
8. The Debtors are authorized and empowered to pay, or
establish an escrow account for, all of their obligations under the Purchase
Agreement.
9. Except as expressly set forth in the Purchase
Agreement or this Order, ASTA shall have no liability or responsibility for any
liability or other obligation of the Debtors arising under or related to the
Customer Receivables. The transfer of the Customer Receivables pursuant to the
Purchase Agreement shall not subject ASTA to any liability with respect to the
operation of the Debtors' business prior to the Closing Date.
10. Except as expressly set forth in the Purchase
Agreement or this Order, the Debtors shall have no liability or responsibility
for any liability or other obligation of ASTA arising under or related to the
Customer Receivables, and the Debtors shall have no liability for any claim
related to the Customer Receivables first arising on or after the Closing Date.
11. Upon entry of this Order, with respect to the
Purchase Agreement, ASTA shall be entitled to the protection of section 363(m)
of the Bankruptcy Code. The transactions contemplated by the Purchase Agreement
are undertaken by ASTA in good faith, as that term is used in section 363(m) of
the Bankruptcy Code and, accordingly, the reversal or modification on appeal of
this Order and the authorization to consummate the transaction provided herein
shall not affect the validity of any transfer under the Purchase Agreement and
this Order to ASTA, unless such transfer is duly stayed pending appeal.
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12. The terms and provisions of the Purchase Agreement
and this Order shall be binding in all respects upon, and shall inure to the
benefit of, the Debtors and their estates, creditors and interest holders and
ASTA, and each of their respective affiliates, successors and assigns, and any
affected third parties including, but not limited to, all persons asserting a
claim against the Customer Receivables, notwithstanding any subsequent
appointment of any trustee(s) or receiver(s) for any of the Debtors or their
estates under any chapter of the Bankruptcy Code, as to which trustee(s) or
receiver(s) such terms and provisions likewise shall be binding in all respects.
13. This Court retains jurisdiction: (a) to enforce and
implement the terms and provisions of the Purchase Agreement, all amendments
thereto, any waivers and consents thereunder, and of any other agreements
executed in connection therewith; (b) to resolve any disputes arising under or
related to the Purchase Agreement; and (c) to interpret, implement and enforce
the provisions of this Order.
14. As permitted by Bankruptcy Rule 6004(g),
notwithstanding Bankruptcy Rule 7062, this Order shall be effective and
enforceable immediately upon entry.
Dated: January __, 2001
------------------------------------
CHIEF UNITED STATES BANKRUPTCY JUDGE
B-6
