ACCOUNT TRANSFER AND PURCHASE AGREEMENT
This Account Transfer and Purchase Agreement (this "Agreement") is dated
this 18th day of June, 2001, and is between KBK Financial, Inc., a Delaware
corporation authorized to do business in Texas and doing business as BCI/KBK
Acceptance Corporation ("KBK"), and BOOTS & XXXXX SPECIAL SERVICES, INC., a
Texas corporation, and IWC SERVICES, INC., a Texas corporation (collectively,
"Seller"). This Agreement shall become effective as of the day it is accepted in
the State of Texas by KBK as indicated at the end hereof by the date and
signature on behalf of KBK.
WHEREAS, KBK is in the business of purchasing accounts receivable
("accounts"); and
WHEREAS, Seller desires, from time to time during the term of this
Agreement, to sell accounts to KBK; and
WHEREAS, the parties hereto desire to enter into this Agreement to govern
the purchase and sale of accounts;
NOW THEREFORE, in consideration of the premises, the mutual agreements
herein contained and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. OFFER OF ACCOUNTS. At its election from time to time during the term of
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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 FIVE MILLION AND NO/100
DOLLARS ($5,000,000.00) (the "Facility Amount"); provided, however, until
completion of the field audit provided in Section 10 below, the Facility
Amount shall be limited to $2,875,000.00. KBK's consent to purchase
accounts in excess of such amount may be evidenced by KBK's acceptance for
purchase of such offered accounts.
2. PURCHASE AND SALE OF ACCOUNTS. Each account purchased by KBK hereunder
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shall be purchased by KBK without recourse against Seller. All losses
incurred by KBK from the financial inability of the applicable account
debtor to pay such account over and above any and all Residual Payments (as
hereinafter defined) and Reserve (as hereinafter defined) amounts offset
shall be borne solely by KBK; provided, however, that nothing in this
Agreement shall be construed to relieve Seller from liability for any
breach by Seller of any representation, warranty or agreement of Seller
contained herein. Notwithstanding any provision in this Agreement to the
contrary, it is contemplated by and the intention of the parties hereto
that accounts of Seller may be considered and purchased as one account
(herein a "batch") and the terms "account" and "accounts" as used herein
may also refer to and mean a "batch" or "batches," as the case may be.
In connection with each offer of accounts to KBK, Seller agrees to deliver
to KBK a written assignment of such accounts, together with a copy of all
invoices relating to such accounts, and evidence of delivery of the related
goods or performance of the related services (and, if requested, the
original purchase orders from the applicable customers), all in a form
satisfactory to KBK. In order for an account to be eligible for purchase by
KBK, the related invoice must set forth, as the sole address for payment,
the following post of lice box: X.X. Xxx 0000, Xxxx Xxxxx, XX 761 13
("Authorized Remittance Address") (or, upon notice from KBK, another post
of lice box of KBK) and, in the case of payments to be effected by wire
transfer or other electronic means, the related invoice must set forth, as
the sole bank account for such payment, a bank account of KBK (or a third
party designated by KBK) designated by KBK from time to time (except in
each case as otherwise agreed in writing by KBK). KBK's acceptance for
purchase of offered accounts shall be evidenced by KBK's tendering of the
Initial Payment (as hereinafter defined) to Seller or otherwise delivering
to Seller a schedule of accounts accepted for purchase by KBK. Seller's
transference of offered accounts shall not tee effective as to any accounts
not accepted for purchase by KBK.
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
indebtedness or other obligation of Seller to KBK) all right, title and
interest of Seller in and to all accounts accepted by KBK for purchase
hereunder, together with all related rights (but not obligations) of
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Seller with respect thereto, including all contract rights, guarantees,
letters of credit, liens in favor of Seller, insurance and other agreements
and arrangements of whatever character from time to time supporting or
securing payment of 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 applicable Uniform Commercial Code ("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 applicable 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 referred to in Section 7 hereof.
3. TERMS OF ACCOUNTS. Except as otherwise may be agreed to in writing by KBK
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from time to time, the terms of sale offered by Seller to its account
debtors with respect to all accounts offered to KBK for purchase hereunder
shall be NET 30 DAYS. After an account has been purchased by KBK, Seller
shall not have the right to vary the terms of sale set forth in the invoice
relating to such account, or any other aspect of the account, except in
Seller's capacity as agent for KBK for purposes of collection of accounts
purchased by KBK as set forth in Section 8 hereof, and then only with the
prior written consent of KBK.
4. PURCHASE PRICE. The purchase price for each account purchased hereunder
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shall consist of and be paid by the Initial Payment and the Residual
Payment. The Initial Payment shall be payable by KBKto Seller on the
business day that KBK accepts for purchase the related account, and the
Residual Payment shall be payable by KBK to Seller within five business
days after KBK receives and deposits the proceeds of collection for the
subject account in an amount equal to the Net Amount (as hereinafter
defined) of such account (subject to KBK's right to withhold payment of
Residual Payments hereunder, and subject to KBK's right to withhold, offset
and charge, each as described below).
"Initial Payment" means EIGHTY-FIVE PERCENT (85%) of the Gross Amount of an
account, provided that the field audit provided in Section 10 below
indicates dilution does not exceed five percent (5%) and each invoice
submitted should have a balance of not less than $500.00 each. "Gross
Amount of an account means the gross face amount payable pursuant to the
related invoice. "Net Amount" of an account means the Gross Amount of such
account, less all permitted discounts, deductions and allowances. "Residual
Payment" with respect to an account means the aggregate amount collected
with respect to such account, less the sum of (i) the Initial Payment with
respect to such account, (ii) the KBK Discounts (as hereinafter defined),
(iii) any and all attorneys' fees and other costs of collection.
5. FIXED AND VARIABLE DISCOUNTS. "Fixed Discount" means a discount of TWO
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PERCENT (2.0%) of the Gross amount of such account. "Variable Discount"
means a discount computed on the Initial Payment and accruing on the basis
of actual days elapsed from the date of Initial Payment until and including
three (3) business days after KBK receives and deposits the proceeds of
collection of such account at a per annum rate equal to KBK's Base Rate (as
hereinafter defined) in effect on the date of purchase of such account plus
TWO PERCENT (2.0%) per annum; provided, however, in no event shall the
Variable Discount with respect to any account purchased hereunder be less
than seven percent (7.0%) per annum. "Base Rate" means that per annum
variable rate (expressed as a per annum percentage based on a year
consisting of 360 days) determined from time to time by KBK without notice
to Seller as KBK's Base Rate for purposes of calculating variable discounts
under KBK's account transfer agreements. The Fixed Discount and the
Variable Discount shall be collectively referred to herein as the "KBK
Discounts". The KBK Discounts may be subject to one or more adjustments
during the term of this Agreement if a Performance Based Pricing Addendum
is attached hereto. Notwithstanding the foregoing, the minimum KBK Discount
on each account purchased hereunder shall be $10.00.
6. Reserve. In the event that KBK believes Seller has breached any material
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representation, warranty, covenant or agreement contained herein
(including, without limitation, in the event an account purchased by KBK
becomes a Disputed Account as hereinafter defined), any account is not paid
in full within 90 days from the date of purchase of such account, or KBK
deems itself insecure hereunder, KBK may at its election, withhold and
accumulate the payment of the Residual Payments ("Reserve") with respect to
any or all accounts purchased hereunder to the extent necessary to maintain
a Reserve in an amount up to the sum of (a) the total Initial Payments made
by KBK with respect to accounts purchased by KBK hereunder which remain
uncollected, plus (b) the total of the KBK Discounts
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with respect to such accounts and (c) such other amounts which may become
due by Seller to KBK hereunder or under any other agreement. Seller hereby
authorizes KBK to offset and charge any and all amounts for which Seller or
the Reserve may be obligated to pay to KBK pursuant to the terms of this
Agreement against the Reserve, and at KBK's election, against any funds of
Seller in the possession or control of KBK, from whatever source. However,
if, on any business day that KBK regularly makes a payment to Seller for
accounts purchased, none of the foregoing conditions exists and no other
breach of this Agreement by Seller exists, then KBK shall distribute to
Seller the Residual Payments then due and all funds it then has on hand
that it has collected from accounts that KBK has not then purchased.
7. Certain Security. the purpose of securing KBK (a) in the payment of any
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and all sums of money that may become due and owing KBK from Seller by
reason of this Agreement, (b) in the performance by Seller of Seller's
obligations hereunder, and under any other agreement, contract, document,
note or other instrument in favor of KBK or its assignees and (c) in the
performance of all the obligations of all Affiliates (as hereinafter
defined) under each Affiliate's agreements, contracts, documents, notes or
other instruments in favor of KBK or its assigns, Seller hereby grants to
KBK a security interest in (i) all of Seller's present and future accounts
and proceeds (including accounts but excluding cash) created from the sale
by the Seller of inventory, contract rights, documents, instruments,
chattel paper, general intangibles and all products and proceeds therefrom,
including all resumed or repossessed goods, as well as all books and
records pertaining to all of the foregoing, (ii) all amounts due as
Residual Payments or withheld by KBK as the Reserve pursuant to Section 6
hereof, and (id) all money and other funds of Seller now or hereafter in
the possession, custody or control of KBK, from whatever source. The term
"Affiliate" shall mean 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. Seller agrees to execute and deliver such
financing statements under the applicable UCC and other documents, and make
such entries and markings in its books and records and to take all such
other actions, as KBK may request to further evidence, perfect, preserve or
protect the security interest granted to KBK hereunder. KBK shall have all
rights and remedies in respect of the lien and security interest herein
granted as are provided in this Agreement, the UCC and other applicable
law, including the right at any time, before or after any default by Seller
of any of its obligations hereunder, to notify account debtors and obligors
on instruments to make payment to KBK (or its designee) and to take control
of proceeds to which KBK is entitled, and to apply proceeds to (in addition
to other obligations of Seller to KBK) the reasonable attorneys' fees and
legal expenses incurred by KBK in connection with the disposition of
collateral or the other exercise of rights and remedies by KBK.
Seller herein acknowledges and warrants to KBK that it has received and
will receive, direct and indirect benefits by and from granting this
security interest to KBK to secure the obligations of any Affiliate to KBK.
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, including Section 23 hereof, the lien and
security interest herein granted and given to KBK is in renewal and
extension, and not in extinguishment of, all such prior liens and security
interests and are valid and subsisting liens and security interests to
secure all prior, existing and new obligations of Seller to KBK hereunder
and under any such prior agreements, which obligations are likewise herein
renewed and extended, in any manner, including any action required in
connection with or by virtue of the United States Bankruptcy Code (the
"Bankruptcy Code").
8. SERVICING. KBK hereby appoints Seller as servicing agent for KBK
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("Servicer") for the purpose of expediting the payment of accounts
purchased by KBK hereunder which become past due. Servicer agrees to
maintain an active, on-going and regular dialogue with each Account Debtor.
Servicer further agrees to utilize all powers, influences and rights and
take every action within its control in accordance with its customary
practices and applicable law to expedite the collection of the accounts
purchased by KBK which become past due and direct such payments in specie
exclusively to the Authorized Remittance Address. 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 Servicer.
Seller authorizes KBK to forward directly to account debtors statements or
invoices on accounts purchased by KBK hereunder, and to request payment at
such address or to such bank account as may be designated by KBK. Seller
agrees that, if any payment is made to Seller on any account purchased by
KBK from Seller hereunder, Seller (i) will
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hold such payment in trust for KBK, (ii) will not commingle such payment
with any funds of Seller, and (iii) will deliver such payment to KBK, in
the exact form received, by the close of business on the next business day
following receipt thereof by Seller. 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.
Seller authorizes KBK to collect, xxx for and give releases for 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, IT XXXX SPECIFIC 'TENT OF THE PARTIES HERETO THAT KBK SHALL
HAVE NO LIABILITY HEREUNDER FOR ITS OWN NEGLIGENCE except for its own gross
negligence or willful misconduct. 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 presentations for payment, and
agrees that KBK may extend or renew from time to time the payment of, or
vary or 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 of lice 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
accounts purchased hereunder and to deliver same to Seller (or, at the
emotion 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).
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 and agents, 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 paragraph 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 consigns all that said attorneys-in-fact and agents may do or
cause to be done by virtue hereof. This power of attorney is irrevocable
and deemed coupled with an interest.
9. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and
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warrants to KBK with respect to each account offered by Seller to KBK
hereunder that (i) Seller is the sole owner of such account, which account
is free and clear of any liens, claims, equities or encumbrances
whatsoever, and upon each purchase by KBK of such account, KBK will own
such account free and clear of any liens, claims, equities or encumbrances
whatsoever and the consideration received by Seller from KBK for such
account is fair and adequate, (ii) 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 unless otherwise agreed by 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, (iii) 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, (iv) such account arises out of a bona fide sale 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 with the account debtor, and the account debtor has
accepted the goods or services to which the account relates, (v) 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), (vi) such account is current and not past
due as of the date of purchase by KBK, has not been paid by or on behalf of
the account debtor in whole or in part, and is not and will not tee subject
to any dispute, recision, set-off, recoupment, defense or claim by the
account debtor, whether relating to price, quality, quantity, workmanship,
delay in delivery, set off, counterclaim or otherwise, and the account
debtor has not and will not claim any defense of any kind or character
(other than bankruptcy or insolvency arising after the
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date of sale of such account to KBK hereunder) against payment of such
account, and (vii) 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 applicable UCC) and has its principal executive
offices within the United States, unless such account is back by trade
credit insurance or pre-approved by KBK. Seller further represents and
warrants to KBK that (a) the execution, delivery and performance of this
Agreement by Seller have been duly authorized and this Agreement
constitutes the legal, valid and binding obligation of Seller, enforceable
against Seller 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), (b) Seller is not a debtor in any bankruptcy
proceedings, insolvent, undergoing composition or adjustment of debts or
unable to make payment of its obligations when due and no petition in
bankruptcy has been filed by or against Seller or any Affiliate, nor has
Seller or any Affiliate filed any petition seeking an adjustment of its
debts or for any other relief under the Bankruptcy Code, and no application
for appointment of a receiver or trustee for all or a substantial part of
the property of Seller or any Affiliate is pending, nor has Seller or any
Affiliate made any assignment for the benefit of creditors, (c) Seller is
not in default of any debt or obligation to KBK, any other lender or other
creditor, and (d) Seller's principal place of business, chief executive of
lice, the location where all records concerning its books of account and
contract rights are kept, and (except any additional locations listed on
Schedule A attached hereto) the sole location of any property subject to
the security interest granted herein is its "Address for Notices" set forth
on the signature page hereon. Seller agrees not to change the location of
its principal place of business or chief executive of lice, the location
where its records concerning its books of account or contract rights are
kept, or the location of any property subject to the security interest
granted herein, without giving at least 15 days advance written notice
thereof to KBK pursuant to Section 19 herein. Seller does business under no
trade or assumed names except as may be listed on Schedule A attached
hereto.
Each representation and warranty of Seller contained in this Agreement
shall be deemed to be made at and as of the date hereof and at and as of
the date of each sale of accounts to KBK hereunder.
Seller agrees to indemnify and hold all Indemnified Persons (as hereinafter
defined) harmless against any breach by Seller of any representation,
warranty 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. The term
"Indemnified Persons" shall mean KBK and its officers, directors,
shareholders, employees, attorneys, representatives, agents, Affiliates,
successors and assigns.
Seller agrees to notify KBK immediately of any breach by Seller of any
representation, warranty or agreement of Seller contained herein or should
any representation, warranty or agreement made herein become untrue or
false at any time. Seller further 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"). Upon KBK's request, Seller agrees to
settle, at its own expense and for the benefit of KBK, all such Disputed
Accounts; provided, that any such settlement shall be made only with the
prior written consent of KBK. Unless KBK is advised in writing by Seller to
the contrary, any account that has not been approved by the account debtor
within sixty (60) days from the date of the invoice upon which the account
is based, shall be deemed to be a Disputed Account. As to any Disputed
Account, KBK shall have the right, in its sole discretion, (i) to settle at
the expense of Seller (including all attorneys' fees and expenses of KBK)
and for the benefit of KBK any such dispute or claim upon such terms as KBK
may in its sole discretion deem advisable or (ii) to assign the related
account to Seller, without recourse to KBK, and charge any unpaid balance
with respect thereto (up to the amount of the Initial Payment with respect
thereto and KBK's Discounts through the date of such charge with respect
thereto) against the Reserve or deduct such unpaid balance from any Initial
Payments or against any money or other funds of Seller in the possession,
custody or control of KBK, from whatever source. Seller agrees that, in
lieu of KBK charging any such unpaid balance against the Reserve, Initial
Payments or against such other funds, KBK may require Seller to pay (and
Seller hereby agrees to pay) to KBK on demand any such unpaid balance. An
account with respect to which the account debtor has asserted an Insolvency
Claim is not a Disputed Account. As used herein, "Insolvency Claim" means
any defense or other claim by an account debtor with respect to an account
sold to KBK hereunder arising solely out of the bankruptcy or insolvency of
the account debtor or the financial inability of the account debtor to pay,
if Seller has not breached its representation contained in clause (vi) of
the first paragraph of this Section. Notwithstanding anything herein to the
contrary, KBK shall have the right to charge all accounts not paid because
of an Insolvency Claim against the Reserve and such charge shall have
priority over and be paid before any Disputed Account charge.
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10. FINANCIAL STATEMENTS. Seller represents and warrants that all financial
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and other information provided by Seller to KBK in connection with or in
Seller's application to KBK or to induce KBK to enter into this Agreement
is true, complete and correct in all material respects. Seller agrees to
furnish to KBK (i) within 90 days after the last day of each fiscal year of
Seller, a consolidated statement of income and a consolidated statement of
cash flows of Seller for such fiscal year, and a consolidated balance sheet
of Seller as of the last day of such fiscal year, in each case audited by
an independent certified public accounting firm acceptable to KBK, together
with a copy of any report to management delivered to Seller by such
accountants in connection therewith, and (ii) within 30 days after the last
day of each fiscal month of Seller, an unaudited consolidated statement of
income and statement of cash flows of Seller for such fiscal month, and an
unaudited consolidated balance sheet of Seller as of the last day of such
fiscal 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 for the period
set forth therein, and that each such balance sheet will fairly present, in
all material respects, the financial condition of Seller as of the date set
forth therein, all in accordance with generally accepted accounting
principles applied on a consistent basis, except as otherwise noted in the
accompanying auditors' report (or, with respect to unaudited financial
statements, in the notes thereto). Seller also agrees to furnish to KBK,
upon request, such additional financial and business information concerning
Seller and its business as KBK may reasonably request, including copies of
its Form 941 returns filed with the Internal Revenue Service and evidence
of payment of related taxes. KBK and its agents, representatives and
accountants shall have the right, at all times during normal business hours
and without prior notice to Seller, to conduct an audit or other
examination of the financial and business records of Seller and to examine
and make copies of all books and records of Seller for the purpose of
assuring or verifying compliance by Seller with the terms of this
Agreement, and Seller agrees to cooperate fully with KBK and its agents,
representatives and accountants in connection therewith and to timely pay
all costs associated with such audits at a rate equal to $750.00 per day,
per person, plus out-of-pocket expenses. Seller agrees to properly reflect
the effect of this Agreement, and all sales 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 will be excluded from Seller's reported
accounts receivable balances. Seller also specifically agrees to
immediately notify KBK of any material adverse change in Seller's financial
condition or business.
11. TAXES. All taxes and governmental charges of any kind imposed with
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respect to the sale of goods or the rendering of services relating to
accounts purchased by KBK hereunder shall be for the account of, and paid
by, Seller.
12. Fees. Seller hereby agrees to pay to KBK on the execution hereof a
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one-time origination fee (the "Origination Fee") of TEN THOUSAND AND NO/100
DOLLARS ($10,000.00). Seller and KBK acknowledge and agree that the
Origination Fee is intended as reasonable compensation to KBK for making
this facility available under the terms of this Agreement and for no other
purpose.
Seller hereby agrees to pay to KBK on the first day of each calendar
quarter an availability fee equal to ONE PERCENT (1.00%) per annum
(computed on the basis of a year consisting of 360 days and actual days
elapsed) on the average daily amount of the Facility Amount which was
unused during the immediately preceding quarter (the "Availability Fee").
If the first calendar quarter covers less than a full quarter, the
Availability Fee for such quarter shall be prorated. Such fee shall be paid
to KBK so long as this Agreement is in effect. Seller and KBK acknowledge
and agree that the Availability Fee is intended as reasonable compensation
to KBK for making this facility available under the terms of this Agreement
and for no other purpose.
Seller hereby agrees to pay to KBK a termination fee equal to TWO PERCENT
(2.00%) 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 the expiration of one (1) year from the
date of KBK's execution hereof, but on or before September 1, 2002,
one-half (1/2) of the Termination Fee shall be waived. However, if this
Agreement is so terminated after the expiration of one (1) year from the
date of KBK's execution hereof, but after September 1, 2002, but before
expiration of two (2) years, one-half (1/2) of the Termination Fee shall be
waived. If the Agreement is terminated more than two (2) years after the
date of KBK's execution hereof, all of the Termination Fee shall be waived.
Acct Transfer Agreement/RAR 6 ~6/16/l
13. TERMINATION. This Agreement may be terminated by either party hereto by
------------
delivery of written notice of termination of this Agreement to the other
party specifying the date of termination, which date shall be at least 30
days after the date such notice is given. KBK may, at its election,
terminate this Agreement immediately and without the requirement of notice
to Seller if (i) Seller shall fail to perform any of its obligations
hereunder or shall breach any of its representations and warranties
hereunder, (ii) Seller or any of its Affiliates shall become insolvent or
suspend all or a substantial part of its or their business, (iii) a
petition under the Bankruptcy Code or any other insolvency or debtor
statute shall be filed by or against Seller or any Affiliate or any
receivership proceedings with respect thereto shall commence, (iv) any
guarantee of any of Seller's obligations hereunder shall be terminated or
become impaired, (v) an event of default occurs under any other agreement
now or hereafter executed between Seller and KBK, or (vi) KBK otherwise
determines that it is insecure hereunder.
Termination of this Agreement shall not affect the rights and obligations
of the parties hereunder with respect to transactions occurring on or prior
to the date of such temptation, and this Agreement shall continue to govern
the rights and obligations of the parties hereto with respect to accounts
purchased by KBK from Seller on or prior to the date of such termination.
All security interests granted or contemplated by this Agreement shall
survive the termination of this Agreement until all amounts payable to KBK
with respect to transactions occurring on or prior to the date of
termination have been paid to KBK, and Seller has performed all its
obligations to KBK with respect to such transactions and all obligations
under this Agreement including but not limited to payment of any fees owing
hereunder.
14. NOTICE OF PROPOSED REFINANCING Seller hereby agrees that in the event (a)
------------------------------
Seller receives a written proposal from any 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
("Offeror"), Seller will immediately advise KBK in writing of the identity
of the Offeror, the complete terms and conditions of the Proposed
Refinancing and provide KBK 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 10 busyness days after delivery of the foregoing
items to KBK.
15. ATTORNEY'SFEES,LITIGATION EXPENSE. Seller agrees to reimburse KBK upon
----------------------------------
demand for KBK's attorneys' fees, court costs and other fees and expenses
recurred in collecting any sums due or to become due to KBK hereunder,
enforcing any of KBK's rights under this Agreement and all actions taken by
KBK that it deems necessary or desirable under the Bankruptcy Code or
should any provisions of the Bankruptcy Code be applicable to any rights or
obligations of any party to this Agreement, as well as all appearances,
motions and actions to which KBK may be or become a party in any
bankruptcy case.
16. GOVERNINA LAW: VENUE: SUBMISSION TO JURISDICTION. THIS AGREEMENT SHALL BE
-------------------------------------------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF,
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. THIS AGREEMENT IS PERFORMABLE BY THE PARTIES IN
TARRANT COUNTY, TEXAS. SELLER AND KBK EACH AGREE THAT TARRANT COUNTY, TEXAS
SHALL BE THE EXCLUSIVE VENUE FOR LITIGATION OF ANY DISPUTE OR CLAIM ARISING
UNDER OR RELATING TO THIS AGREEMENT, AND THAT SUCH COUNTY IS A CONVENIENT
FORUM IN WHICH TO DECIDE ANY SUCH DISPUTE OR CLAIM. SELLER AND KBK EACH
CONSENT TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS
LOCATED IN TARRANT COUNTY, TEXAS FOR THE LITIGATION OF ANY SUCH DISPUTE OR
CLAIM. SELLER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
17. 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
Acct Transfer Agreement/RAR 7 ~6/16/l
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.
18. Amendments: Waivers. This Agreement may be amended only in writing
--------------------
signed by the parties hereto. No failure on the part of KBK to exercise,
and no delay by KBK in exercising, and no course of dealing by KBK with
respect to, any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder by KBK preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The remedies of KBK hereunder are cumulative and not exclusive
of any remedies provided by law.
19. Notices. All notices and other communications provided for herein shall
--------
be given or made in writing and telecopied or delivered by courier or mail
to the intended recipient at the "Address for Notices" specified opposite
its name on the signature page hereto, or at such other address or telecopy
number as shall be designated by a party to the other party in the manner
specified in this Section. All such notices and other communications shall
be deemed to have been duly given when transmitted by telecopier (with
receipt thereof confirmed by telecopier) or personally delivered or, in the
case of a mailed notice, upon deposit in the United States Postal System
postage prepaid and properly addressed, in each case given or addressed as
aforesaid.
20. INDEMNIFICATION. Seller agrees to indemnify, defend and hold the
----------------
Indemnified Persons harmless from and against any and all loss, liability,
obligation, damage, penalty, judgment, claim, deficiency and expense
(including interest, penalties, attorneys' fees and amounts paid in
settlement) owing to any third party to which any Indemnified Person may
become subject arising out of or based upon this Agreement as well as any
prior relationship of Seller with any Indemnified Person, WHETHERBY ALLEGED
OR ACTUAL NEGLIGENCE OF ANY INDEMNIFIED PERSON, except and to the extent
caused by the gross negligence or willful misconduct of any Indemnified
Person.
21. WAIVER AND RELEASE. Seller, by its execution of this Agreement, does
---------------------
hereby covenant, warrant and represent that (i) Seller is not in default
and no default exists under any prior agreements or transactions xxxxx KBK,
(ii) Seller releases, relinquishes and waives any and all defenses to the
enforceability of any prior agreements or transactions with KBK in
connection therewith to which Seller may have otherwise been entitled as of
the date hereof, (iii) Seller relinquishes, waives and releases KBK from
any and all claims known or unknown which Seller may or might have against
KBK arising directly or indirectly out of or from any prior agreements or
transactions between Seller and KBK, (iv) the benefit received and to be
received by Seller as a result of this Agreement shall and does constitute
sufficient and valuable consideration to Seller for entering into and
performing its obligations under this Agreement, (v),the execution,
delivery and performance by Seller of this Agreement and the consummation
of the transaction contemplated thereby are (a) not prohibited by any
indenture, contract or agreement, law or corporate or partnership
documents, including, but not limited to the Bylaws and Articles of
Incorporation or Certificate of Incorporation, as the case may be, if
Seller is a corporation, or Seller's partnership agreement, if Seller is a
partnership, (b) duly ( authorized by appropriate action of Seller, and (c)
legally valid and binding obligations of Seller and will continue to be
such and enforceable against the Seller according to their 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), (vi) that this Agreement will be executed
and delivered by properly authorized officers of Seller, (vii) KBK has no
obligation to continue the prior agreements or enter into this Agreement
except for the considerations herein expressed, and (viii) the
representations and warranties set forth herein will survive the execution
and delivery of this Agreement.
22. CAPTIONS: FINAL AGREEMENT: COUNTERPARTS: SUCCESSORS AND ASSIGNS.
---------------------------------------------------------------------
Captions and headings appearing herein are included solely for convenience
of reference and are not intended to affect the interpretation of any
provision of this Agreement. This Agreement represents the final agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior proposals, negotiations, agreements and
understandings, oral or written, related to such subject maker. This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument. Delivery of an
executed counterpart of this Agreement by telecopy shall be equally as
effective as delivery of a manually executed counterpart of this Agreement.
Any party delivering an executed counterpart of this Agreement by telecopy
also shall deliver a manually executed counterpart of this Agreement but
the failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement. This
Agreement may not be assigned by Seller without the prior written consent
of KBK. This Agreement may be assigned by KBK, and any
Acct Transfer Agreement/RAR 8 ~6/16/l
accounts purchased by KBK hereunder, together with all rights and interests
related thereto granted to KBK hereunder, may be assigned by KBK, all
without notice to or the consent of Seller. This Agreement shall be binding
upon the parties hereto and their respective successors and permitted
assigns.
23. EFFECTIVENESS OF AGREEMENT. This Agreement shall become effective only
-----------------------------
upon acceptance by KBK at its offices in Fort Worth, Tarrant County, Texas
as evidenced by KBK's signature hereon.
24. TRUE SALES. Seller and KBK acknowledge and agree that the sale of
-----------
accounts contemplated and covered hereby are fully intended by the parties
hereto as true sales governed by the provisions of Article 5069-lH.103 of
the Texas Revised Civil Statutes and Section 9.102 of the Texas Business
and Commerce Code, as each may be amended from time to time, and,
accordingly, legal and equitable title in all of Seller's accounts sold to
and purchased by KBK from time to time hereunder will pass to KBK.
IN WITNESS WHEREOF, the parties hereto, heretofore duly authorized, have
executed this Agreement as of the date first set forth above.
Address for Notices: SELLER:
000 Xxxx Xxx Xxxx., 0xx Xxxxx
Xxxxxxx, XX 00000 BOOTS & XXXXX SPECIAL SERVICES, INC.
BY:______________________________________
Xxxxx X. Xxxxxxx, CEO/Chairman of the Board
Telecopy No.: IWC SERVICES, INC.
(000) 000-0000
By:______________________________________
Xxxxx X. Xxxxxxx, CEO/Chairman of the Board
Address for Notices: KBK FINANCIAL, INC.
000 XXXXXXXX XXXXXX
2200 CITY CENTER By:______________________________________
XXXX XXXXX, XXXXX 00000 Xxxxx X. Xxxxx, Vice President
Telecopy No.: (000)000-0000 Date:____________________________________
STATE OF TEXAS
COUNTY OF XXXXXX
The foregoing instrument was acknowledged before me this ____ day of June,
2001, by Xxxxx X. Xxxxxxx, CEO/Chairman of the Board, for and on behalf of BOOTS
& XXXXX SPECIAL SERVICES, INC., a Texas corporation.
Witness my hand and official seal.
My Commission expires:________________ ________________________________
(Notary Public)
Acct Transfer Agreement/RAR 9 ~6/16/l
STATE OF TEXAS
COUNTY OF XXXXXX
The foregoing instrument was acknowledged before me this day of June,
---
2001, by Xxxxx X. Xxxxxxx, CEO/Chairman of the Board, for and on behalf of IWC
SERVICES, INC., a Texas corporation.
Witness my hand and official seal.
My Commission expires:_____________ ______________________________
(Notary Public)
STATE OF TEXAS
COUNTY OF XXXXXX
The foregoing instrument was acknowledged before me this
day of June, 2001, by Xxxxx X. Xxxxx, Vice President for and on behalf of KBK
--
FINANCIAL, INC., a Delaware corporation.
Witness my hand and official seal.
My Commission expires:_____________ ______________________________
(Notary Public)
Acct Transfer Agreement/RAR 10 ~6/16/l
