PURCHASE AND SALE AGREEMENT
Exhibit
10.1
THIS AGREEMENT is made by and between CCA
Financial Services, Inc.,
a
Nevada company (“Factor”),
whose address is X.X. Xxx 00000, Xxxxx Xxxx, XX 00000, and ATSI COMMUNICATIONS,
INC , a
Nevada
corporation,
whose
address is 0000 Xxxxxx Xxxxx Xxxxx, Xxxxx X000, Xxx Xxxxxxx, XX 00000 (the
“Seller”).
WHEREAS, Factor is engaged in, among other things, the business of purchasing
accounts receivable and other rights to payment from persons or firms selling
goods or rendering services to others, and Seller desires from time to time
to
sell accounts receivable and other rights to Factor pursuant to the terms of
this Agreement;
DEFINITIONS
“Account Debtor” shall mean the party or parties obligated to pay a
Receivable.
“Agreement” shall mean this Purchase and Sale Agreement, together with the
Schedules attached hereto.
“Avoidance
Claim” shall mean any claim that any payment received by Factor from or for the
account of an Account Debtor is avoidable under the Bankruptcy Code or any
other
debtor relief statute.
“Collateral” shall have the meaning ascribed thereto in the Security
Agreement.
“Dispute” shall mean any dispute, deduction, claim, offset, defense or
counterclaim of any kind asserted by an Account Debtor and pertaining to a
Receivable or the goods or services giving rise thereto.
“Factor” shall have the meaning given in the first paragraph of this
Agreement.
“Legal Holiday” shall mean any day on which national banks doing business in the
State of Texas are closed for regular business.
“Misdirected
Payment Fee” shall mean five percent (5 %) of the amount of any payment on
account of a Receivable, which has been received by Seller and not delivered
in
kind to Factor on the next business day following the date of receipt by
Seller.
“Payments” shall have the meaning given in Section 31 of this
Agreement
“Purchase Price” shall have the meaning given in Section 6 of this
Agreement.
“Receivables”
shall mean the accounts receivable and other forms of rights to payment
described on Schedule
A
attached
hereto and/or as set forth on a supplemental Schedule
A
to be
attached in the future and signed by Factor and Seller.
“Reserve Account” shall have the meaning given in Section 7 of this
Agreement.
“Reserve Payment Worksheet” shall have the meaning given in Section 14 of this
Agreement.
“Secured Liabilities” shall have the meaning ascribed thereto in the Security
Agreement.
“Security Agreement” shall mean that certain Security Agreement between Factor
and Seller executed of even date herewith.
“Seller” shall have the meaning given in the first paragraph of this Agreement.
“UCC” shall mean the Texas Uniform Commercial Code.
AGREEMENT
For and in consideration of the mutual promises herein contained, and other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Factor and Seller hereby agree as follows:
1. Purchase
and Sale of Accounts Receivable and other Rights.
Seller hereby sells, assigns, transfers, conveys and delivers to Factor, as
an
outright conveyance and not as a security interest all right, title and interest
of Seller in the Receivables and other forms of rights to payment described
on
Schedule
A
attached
hereto and made a part hereof. Seller represents and warrants that in the
event invoices are attached to Schedule
A,
such
invoices represent true and correct copies of invoices for the
Receivables. In the event Schedule
A
is not
attached to this Agreement at the time of its original execution, the parties
agree that actual purchases of receivables will be evidenced by the completion
and execution by both parties of Schedule
A
in the
future. Whether or not an initial Schedule
A
is
attached to this Agreement, it is anticipated that additional Receivables will
be sold by Seller to Factor (although Factor is not agreeing to purchase any
particular Receivable or any additional Receivables hereby), and such future
purchases will be evidenced by the completion and execution of additional
schedules in form similar to Schedule
A.
Upon execution by both Factor and Seller of such a supplemental schedule, the
accounts receivable described therein shall become Receivables subject in all
respects to the terms of this Agreement. Seller acknowledges that the
transactions contemplated by Agreement are each an “Account Purchase
Transaction” as that term is used in Finance Code Section 306.001 of the Texas
Codes.
2. Returned
Receivables.
Seller has herein represented and warranted to Factor that all Receivables
are
free and clear of any Disputes. Seller hereby acknowledges that Factor
would not purchase any Receivable if Factor had knowledge that the same was
subject to a Dispute. Seller agrees that (i) should Seller or Factor
discover that any Receivables are subject to a Dispute, (ii) any Receivable
is
owing from an Account Debtor which in Factor’s reasonable credit judgment has
become insolvent, or (iii) any representation or warranty with respect to a
Receivable provided in Section 11 below shall be false in any respect, Factor
shall have the right to return such Receivable(s) to Seller in accordance with
this Section 2 and other applicable Sections of this Agreement. Seller must
immediately notify Factor of any Disputes upon receipt of its knowledge thereof.
Any receivable that is not collected within 45 days of its purchase by Factor
pursuant to the terms hereof shall be deemed subject to a Dispute. Upon
Factor’s election to return and charge-back a Receivable subject to a Dispute,
Seller shall pay to Factor the face amount of the invoice less the sum of any
payments theretofore received on such invoice by Factor and any unearned
discount. In order to fund such return and charge-back, Factor may, at its
option, take any one or more of the following actions: (a) charge the
Reserve Account for such amount, (b) subtract such amount from the Purchase
Price for the next Receivable sold by Seller to Factor, or (c) otherwise invoice
Seller for such amount, with such invoice being payable upon receipt. Upon
payment to Factor of such amount, Factor shall assign, transfer, convey and
deliver such Receivable to Seller without recourse.
3. Transfer
of Related Interests.
In addition to the Receivables, Seller hereby sells, assigns, transfers, conveys
and delivers to Factor all other rights, title and interests (but not
obligations) now or hereafter existing in connection with the Receivables,
including, but not limited to, liens, security interests and guarantees securing
payment of the Receivables, Seller's interest in returned goods arising with
respect to the Receivables, and all other rights and remedies of Seller related
to the Receivables such as rights of stoppage in transit, replevin, reclamation
and lawsuits to collect the Receivables. If any Receivable is ever
represented by a promissory note or other written evidence of obligation, Seller
shall endorse and deliver the same to Factor and take any other action requested
by Factor to effectuate such transfer.
4. Further
Assurances.
Seller agrees to execute and deliver to Factor such notices of assignment and
other documents as Factor may request from time to time to further document
the
sale and assignment of Receivables hereunder.
5. Terms
- Seller's Customers.
Except as may otherwise be agreed to in writing from time to time, all
Receivables shall be due upon receipt by the Account Debtor of the invoice
from
Seller, and invoices to be factored pursuant hereto will be forwarded to the
Account Debtor upon delivery of the goods or the services that are the subject
of the Receivable. Seller shall not vary the terms of sale, terms of
payment, or location of payment set forth in the invoice relating to any
Receivable without Factor's prior written consent, it being understood that
any
Receivable is the property of Factor.
6.
Purchase
Price; Discounts; Additional Fees.
The Purchase Price (herein so called) for Receivables shall be the gross amount
of the invoice, including any miscellaneous charges such as sales taxes, less
any early payment or special discounts offered to Seller's customers as
previously disclosed to Factor, and less a discount equal to 10% of such gross
amount of the invoice. As an inducement for Seller to sell only invoices
from which prompt payment can be expected, Factor will remit a rebate as
follows. If Factor receives payment of an invoice within 15 days of
the purchase thereof, a rebate of 8.75% of the gross amount of the invoice
will
be remitted to Seller; if Factor receives payment of an invoice after 15 days,
but on or before 30 days of the purchase, a rebate of 7.5% of the gross amount
of the invoice will be remitted to Seller. If the total gross amount of
invoices factored in a one month period exceeds $500,000, the rebate amount
will
be increased to 9% if invoices are paid within 15 days and to 8% if paid within
30 days. Until an invoice is collected or is repurchased by Seller, an
additional factoring fee shall accrue and be owing after 30 days in the amount
of 5% of the gross amount of the invoice for each 15 day period (or portion
thereof) the invoice remains uncollected or not repurchased after 30 days.
A Seller shall be permitted to stop the accrual of any such additional fee
at
any time by repurchasing the uncollected invoice. In addition to the other
fees described herein, Seller shall pay to Factor the Misdirected Payment Fee
immediately upon its accrual. The Purchase Price, less the deduction for
the Reserve Account described below, shall be paid only after execution by
Seller and Factor of a Schedule covering such Receivable. Any applicable
rebates shall be credited to the Reserve Account (as defined in Section 7)
upon
collection of each Receivable.
7.
Payments
on Accounts Purchased; Reserve Account.
In addition to the discount set forth in Section 6 hereof, Factor shall deduct
from the Purchase Price of each Receivable an amount initially equal to 10%
of
the gross amount of the Receivable, such deduction to be placed in an account
under the exclusive control of Factor (as further described in this Section
7,
herein referred to as the "Reserve Account"). The balance in the Reserve
Account shall at all times be maintained in a minimum amount equal to no less
than 10% of the aggregate gross amount of all Receivables outstanding at a
particular time; provided, however, (i) the applicable percentage deduction
from
the Purchase Price described in the immediately preceding section may be
increased as necessary to maintain such minimum balance, and (ii) the amount
required to be maintained in the Reserve Account as a percentage of the gross
amount of all Receivables outstanding may be increased or decreased upon notice
by Factor to Seller. Upon preparation of the Reserve Payment Worksheet (as
such term is defined in Section 14 hereof), Factor shall release to Seller
amounts, if any, in the Reserve Account in excess of the balance required
pursuant to this Section 7. The Reserve Account shall accrue no interest.
8. Offset;
Security Interest.
Factor is authorized to offset and charge against the Reserve Account any amount
for which Seller may become obligated to Factor at any time under this Agreement
or otherwise. In addition to such right of offset and for the purpose of
securing Factor in the payment of any and all sums of money that may become
due
and owing to Factor from Seller, Seller agrees to grants to Factor a lien and
security interest in certain of its assets, all pursuant to and as described
in
the Security Agreement. To the extent that the sale to Factor of any
Collateral is deemed inconsistent with the granting of a security interest
pursuant to the Security Agreement, the security interest granted in the
Security Agreement as to such Collateral only shall automatically terminate
and
be of no further force and effect. The terms of the prior sentence to the
contrary notwithstanding, in the event a Receivable is charged-back as provided
in Section 2 hereof, such account shall then constitute Collateral and be then
subject to a new security interest in favor of Factor. Seller agrees that
Factor may file financing statements from time to time to perfect Factor's
security interest in the Collateral.
9. Verification
and Collection of Accounts.
Seller hereby authorizes Factor to contact each Account Debtor at any time
for
purposes of verification or collection of Receivables. Seller shall
cooperate with Factor to the maximum extent possible to provide information
necessary for Factor to accomplish verification or collection of any Receivable.
Unless otherwise agreed by Factor in writing, Seller shall provide the original
invoice and any necessary copies required by the Account Debtor and one copy
to
Factor ready for mailing with the required postage to the Account Debtor.
All invoices shall direct that payment be made by wire transfer to a bank
account owned and controlled by Factor, to be provided by Factor. If
requested by Factor, Seller agrees to furnish evidence of shipment of the
related merchandise and/or performance of services rendered, and a written
assignment and xxxx of sale of such Receivable, all in a form satisfactory
to
Factor, including the original purchase order from the Account Debtor. If
requested by Factor, all invoices for Receivables shall plainly state on their
faces in language acceptable to Factor that the amounts payable thereunder
have
been sold to and are payable directly to Factor. If payment is made to
Seller under any circumstances, such payment shall be held in trust by Seller
for Factor and shall not be negotiated or commingled in any way with any of
Seller's funds. Notwithstanding that Seller has agreed to pay the
Misdirected Payment Fee, Seller shall, within one business day after receipt,
deliver any such payments to Factor in the original form as received by
Seller. In the event the form of such payment is made payable to Seller,
Seller shall endorse such instrument to the order of Factor. In the event
that on at least two occasions within a twelve month period, Seller does not
deliver to Factor within one business day payments that were made by an Account
Debtor directly to Seller, Factor shall be permitted upon three days notice
to
Seller, to redirect Seller’s mail to Factor. Seller agrees to furnish
Factor, upon request, any and all papers, documents or records of whatever
nature related directly or indirectly, to any Receivables.
10.
Collection
by Factor.
Seller specifically authorizes Factor, to the extent permitted by applicable
law, to notify each Account Debtor to pay directly to Factor all accounts that
are Receivables or Collateral, regardless of whether Seller has defaulted
hereunder. Factor is authorized, but not obligated, to collect, xxx for and
give
releases for all monies or other items of value due on all Receivables.
Factor is hereby specifically authorized to endorse all checks, drafts or other
forms of trade acceptances that are made payable to Seller, whether tendered
in
payment of Receivables or otherwise, and to apply such payments against the
applicable Receivables or, if such payment does not relate to a particular
Receivable, against any other obligation of Seller to Factor. Seller
authorizes Factor to accept, indorse and deposit on behalf of Seller any checks
tendered by an account debtor “in full payment” of its obligation to
Seller. Seller shall not assert against Factor any claim arising
therefrom, irrespective of whether such action by Factor effects an accord
and
satisfaction of Seller's claims, under §3-311 of the Uniform Commercial Code, or
otherwise. Seller
hereby waives notice of nonpayment of any Receivables as well as all other
notices, demands or presentations for payment hereunder, and Seller expressly
agrees that Factor may extend or renew from time to time the payment of any
Receivable without notice to or consent by Seller. In the event it becomes
necessary for Factor to employ an attorney and incur other expenses to collect
any Receivable or to enforce any of the terms of this Agreement by reason of
a
breach or default by Seller, Seller agrees to pay to Factor an amount equal
to
all reasonable attorneys' fees, expenses and costs incurred by Factor. In
the event any merchandise represented by any Receivable shall be returned to
or
repossessed by the Seller, such merchandise shall be held by the Seller
in
trust
for
Factor, separate and apart from the Seller's own property, and subject to
Factor’s directions and control. With respect to any returned or
repossessed merchandise, Seller shall, at its sole cost and expense, (a) provide
proper storage therefor, (b) maintain adequate insurance coverage thereon,
(c)
prepare the same for sale, (d) defend title thereto, (e) take any other action
necessary for the protection thereof, (f) pay all freight and related shipping
costs, and (g) be responsible for any other costs or expenses incurred in
connection with the foregoing, including, without limitation, attorneys'
fees.
In
order to satisfy any of the Secured Liabilities, Factor is hereby authorized
by
Seller to initiate electronic debit or credit entries through the ACH system
to
any deposit account maintained by Seller wherever located.
11. Representations
and Warranties of Seller.
Seller hereby represents, warrants and guarantees to Factor that the information
contained in any application previously submitted by Seller, Seller's financial
statements and any other materials previously submitted in connection herewith
is true, correct and complete in all respects as of the date specified therein
and fully and accurately represent the financial condition of Seller as of
the
dates specified, with no material adverse change having occurred in the
financial condition of the Seller since the dates of the financial statements;
that all federal, state and local tax returns and payments of any kind due
or
owing have been filed or paid, and no part of the purchase price for any
Receivable shall be used to pay any wage or salary unless appropriate
withholdings have been deposited; that assignment of each Receivable will
thereby vest in Factor absolute ownership of each Receivable free from any
liens, claims or equities of third parties; that Seller is the sole owner of
and
has good, free and unencumbered title to each Receivable; that execution and
performance of this Agreement has been fully authorized by all necessary
actions; that no assignment, pledge, security interest or encumbrance exists
with respect to any Receivable; that each Receivable is based upon a bona fide
sale of goods or services and represents a completed delivery or completed
furnishing of property or services in fulfillment of all the terms and
provisions of a fully executed and unexpired contract with the Account Debtor
and is a valid and enforceable obligation of the Account Debtor; that each
Account Debtor has accepted goods or services covered by the applicable
Receivable; that all Receivables are current, are not past due, have not been
paid in whole or in part, are outstanding in the amounts reflected in
Schedule
A
and are
not and will not be subject to any dispute or claim as to price, quality,
quantity, physical condition, workmanship, delay in shipment, set off,
counterclaim or other defense, that no product or service was provided on a
guaranteed-sale basis or buy-back agreement, and the Account Debtor has not
and
will not claim any defense of any kind or character or object for any reason
whatsoever against payment of such Receivable; that Seller's chief executive
office and the location where all books and records pertaining to each
Receivable are kept are at the address shown below for notice to Seller; and
no
Receivable is subject to a Dispute. Seller further represents and warrants
that
Seller is a corporation duly organized, validly existing under the laws of
the
state of its incorporation and in good standing under the laws of the State
of
Texas; that Seller is solvent, properly licensed and authorized to operate
the
business under the trade name represented within the meaning of any and all
applicable federal, state or local laws; that no petition in bankruptcy has
been
filed by or against Seller nor has Seller filed any petition seeking an
arrangement of its debts or for any other relief under the Bankruptcy Code
of
the United States; that no application for appointment of a receiver or trustee
for all or a substantial part of Seller's property is pending; and that Seller
has made no assignment for the benefit of creditors. Seller further warrants
that Seller does not own, control or exercise dominion over, in any way
whatsoever, the business of any Account Debtor and that the Account Debtor
is
solvent to the best knowledge and information of Seller.
12. Certain
Covenants of Seller.
Seller covenants and agrees to (i) notify Factor in writing immediately upon
any
Dispute and upon imposition or assessment of any lien, levy, tax lien,
assessment or similar action against Seller or any of Seller's assets; and
(ii)
furnish Factor, upon request, any and all papers, documents or records of
whatever nature related directly or indirectly to any Receivables. Seller
agrees that it will not, without prior, written notice to Factor, (a) sell
or
factor accounts other than to Factor for the period of this Agreement; (b)
move
either its chief executive office or the location where books and records
pertaining to the Receivable are kept to a location outside of Houston,
Texas; (c) change its legal name; (d) change its state of incorporation;
(e) use any trade name; (f) merge or consolidate with any other corporation
or
entity; (g) dissolve or cease its operations as they are now conducted; or
(g)
without Factor’s written consent, take or omit taking any actions that would
render any of Seller's representations and warranties incorrect or incomplete,
or take any action that would cause or induce any Account Debtor on any
Receivable to fail to pay the Receivable in a timely manner.
13. Survival
of Agreement, Representations, Warranties and Covenants.
All
warranties, representations and covenants made by Seller herein or in any other
instrument delivered by Seller or on Seller’s behalf in connection with this
Agreement shall be considered to have been relied upon by Factor and shall
survive the purchase of the Receivables regardless of any investigation made
by
Factor or on Factor’s behalf and shall continue in full force and effect so long
as any amount due or to become due hereunder is outstanding and unpaid and
so
long as this Agreement has not terminated. Specifically, all warranties,
representations and covenants made by Seller in this Agreement shall be deemed
reaffirmed by Seller upon execution of each supplemental Schedule
A
hereto.
14. Reserve
Payment Worksheet and Financial Statements.
Factor shall prepare and provide to Seller on a bi-monthly basis Reserve Payment
Worksheets (herein so called) showing aggregate outstanding Receivables as
of
the end of the applicable period, total collections during the period, debits
and credits to the Reserve Account, present balance of the Reserve Account
and
discounts charged. Seller shall provide to Factor as soon as practicable
monthly balance sheets and statements of income.
15. Interest
on Unpaid Charges; Attorneys' Fees and Costs of Enforcement.
All payment obligations of Seller to Factor provided herein not discharged
when
due shall bear interest, if demanded by Factor, at the rate of 18% per annum,
payable on the first day of each month if demand is not sooner made. If
Seller defaults hereunder or if a Dispute arises, Seller shall pay all costs
of
enforcement incurred by Factor against Seller or the Account Debtor as
appropriate, including but not limited to attorney's fees incurred.
16. Disputes;
No Assumption of Liability by Factor; Indemnification.
Seller shall immediately notify Factor of the assertion by any Account Debtor
of
any Dispute. Seller has heretofore represented to Factor that no Receivable
is
subject to a Dispute. Therefore, Seller shall settle, at its own expense, all
Disputes, subject to Factor's approval, but Factor shall have the right, in
its
discretion, to settle any Dispute directly with the Account Debtor involved
upon
such terms as Factor may deem advisable and at Seller's expense. Seller
specifically acknowledges and agrees that Factor is not assuming any liability
or obligation of any kind to any Account Debtor or in any way relating to the
Receivables. Seller hereby represents and warrants to Factor that no
Receivable, or any invoice, credit application, xxxx, billing memorandum,
correspondence, or any other documents relating to a Receivable contracts for
or
charges anything of value that constitutes interest in excess of the maximum
non-usurious rate allowed to be charged such Account Debtor pursuant to
applicable law. Seller acknowledges that Factor, as the owner of a
Receivable, may be subject to a claim of usury by an Account Debtor in the
event
an invoice, credit application, xxxx, billing memorandum, correspondence or
other document provides for the payment of interest or any other charge or
fee
which may deemed to be interest, which is in excess of the maximum non-usurious
rate allowed by applicable law. In the event an Account Debtor raises a
claim of usury in connection with a Receivable, such Receivable shall be deemed
to be subject to a Dispute and subject to the charge-back provisions of this
Agreement. Seller shall promptly indemnify and hold harmless Factor from
and against any and all claims, causes of action, counterclaims and other
liabilities and costs of any kind (including attorneys' fees incurred by Factor
in connection therewith) that may be asserted against Factor by any Account
Debtor or otherwise arising in connection with the Receivables, except as may
be
based on the acts or omissions of Factor.
Seller shall notify Factor within two business days of it becoming aware of
the
assertion of an Avoidance Claim, and shall indemnify Factor from any loss
arising out of the assertion of any Avoidance Claim.
17. Books
and Records.
Seller agrees to permit Factor access to all books and records of the Seller
during normal business hours that relate to the Collateral.
18. Taxes.
All taxes and governmental charges imposed with respect to the sale of
Receivables shall be charged to Seller, and Seller shall be liable for all
sales
taxes and other taxes due in connection with any sale or rendering of services
resulting in a Receivable.
19. Termination.
Seller and Factor recognize that future purchases of Receivables are to be
made
only with mutual consent of Seller and Factor, through joint execution by Seller
and Factor of a supplemental Schedule
A.
Accordingly, this Agreement shall continue in full force and effect unless
and
until each of the following occur: (i) written notice of the termination of
this
Agreement as it relates to future Receivables by any party hereto and subject
to
the terms specified by the letter of intent executed by Factor and Seller,
(ii)
the payment in full of all obligations of Seller to Factor pursuant hereto
and
(iii) the collection of all outstanding Receivables sold by Seller to Factor
that, in the sole discretion of Factor, can be collected. Either party may
immediately terminate this Agreement as to future transactions, without cause
within its sole discretion, and nothing contained in this Agreement shall
constitute an agreement or commitment to purchase any accounts until such
accounts have been approved by Factor and a supplemental Schedule describing
such Receivables has been executed by Factor and Seller. In the event
Seller shall have breached any provision of this Agreement or any other
agreement with Factor, or if either party shall have given notice to the other
of the termination of this Agreement as to future Receivables, the Reserve
Account and any other monies, balances or credits otherwise due by Factor to
the
Seller may be retained and applied by Factor from time to time to reduce such
obligations. The balance in the Reserve Account shall not be released to
Seller unless all of Seller's obligations hereunder have been paid in
full. Seller acknowledges that it has the obligation hereunder to sell to
Factor only Receivables that are free and clear of any Dispute. As
provided in Section 2(a) hereof, Factor has the right to charge the Reserve
Account for any Receivables that are returned and charged-back to Seller as
a
result of a Dispute. Accordingly, in the event any Receivable remains
uncollected by Factor at the date of notice of termination of this Agreement
as
to future Receivables, the Reserve Account shall not be released to Seller
until
such time as Factor has determined, in its sole discretion, that there are
no
uncollected Receivables subject to a Dispute. At the discretion of Factor,
upon written notice of the termination of this Agreement as it relates to future
Receivables by any party hereto, Factor may return and charge back to Seller
any
and all outstanding Receivables in the manner described in Section 2
above. In addition and notwithstanding any provision of this Agreement to
the contrary, Factor shall not be obligated to release the Reserve Account
unless and until Seller has executed and delivered to Factor a general release
in the form attached hereto as Exhibit
“A”.
Furthermore, upon termination of this Agreement as to future Receivables, the
security interest granted to Factor by Seller pursuant to the Security Agreement
shall be released by Factor only upon determination by Factor, in its sole
discretion, that no additional obligations of Seller are owed to Factor
hereunder and no uncollected Receivable is subject to a Dispute. In recognition
of Factor's
right to have its attorneys' fees and other expenses incurred in connection
with
this Agreement secured by the Collateral, notwithstanding payment in full of
all
Secured Liabilities by Seller, Factor shall not be required to record any
terminations or satisfactions of any of Factor's liens on the Collateral unless
and until Seller has executed and delivered to Factor a general release in
the
form of Exhibit
“A”
hereto. Seller
understands that this provision constitutes a waiver of its rights under §9-513
of the UCC.
Termination
of this Agreement shall not affect the rights and obligations of the parties
accruing with respect to prior transactions.
20. Waiver.
Any failure by Factor to exercise any of its rights hereunder, shall not be
deemed to be a waiver by Factor of such or any other rights, nor in any manner
impair the subsequent exercise of the same or any other right, and any waiver
by
Factor of any default shall not constitute a waiver of any subsequent
default.
21. Choice
of Law.
The parties hereto agree that the transaction described herein is expected
to be
a Qualified transaction, as defined in Section 35.51 of the Texas Business
and
Commerce Code (although no assurance is given that Factor will purchase any
specific amount of Receivables pursuant hereto), and that to the maximum extent
permitted by applicable law, all issues relating to the transaction described
herein shall be construed according to the laws of the State of
Texas.
22. Entire
Agreement.
This Agreement represents the entire Agreement between the parties, and may
not
be amended or modified except by written instrument executed by Factor and
Seller. This Agreement supersedes and replaces any prior agreement among
the parties, oral or written. No representations, whether oral or written,
are being relied upon which are not expressly set forth in this Agreement.
The parties recognize that any oral representations and prior written
representations are “merged” into this Agreement and no reliance can be placed
thereon.
23. Successors
and Assigns.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective administrators, legal representatives, successors
and assigns. Factor may, at its discretion, sell or assign its rights and
interests hereunder in any manner, by sale of participation interest or
otherwise.
24. Severability.
If any provision of this Agreement shall, for any reason, be held to violate
any
applicable law, then the remaining portion of this Agreement shall remain in
full force and effect.
25. Headings,
Construction.
The headings contained in this Agreement are for reference purposes only and
shall not modify or affect the terms of this Agreement in any
manner.
26. Saturday,
Sunday or Legal Holiday.
If any day provided in this Agreement for the performance of any obligation
should fall on a Saturday, Sunday or Legal Holiday, the compliance with such
obligation or delivery shall be deemed acceptable on the next business day
following such day.
27. Receipt
of Payment.
Any payment received by Factor on a Saturday, Sunday or Legal Holiday, or any
payment that is received by Factor after 3:00 p.m., shall be deemed received
on
the next day that is not a Saturday, Sunday or Legal Holiday.
28. Notices.
Any notice, demand or request permitted, required or desired to be given under
this Agreement shall be in writing and shall be deemed effectively given when
actually hand delivered or when sent by United States certified or registered
mail, return receipt requested, postage prepaid, or sent by private, receipted
carrier guaranteeing same-day or next-day delivery, addressed as
follows:
If to Factor: CCA Financial Services,
Inc.
X.X. Xxx 00000
Xxxxx
Xxxx, Xxxxx 00000
Attention:
Xxxxx Xxxxxx
If to Seller: ATSI Communications,
Inc
0000 Xxxxxx Xxxxx Xxxxx, Xxxxx X000
Xxx Xxxxxxx, XX 00000
Attention: Xxx Xxxxx
29. Determination
of Purchase Price.
The Purchase Price of the Receivables has been determined pursuant to
negotiations between Factor and Seller and represents the fair market value
thereof, after due consideration has been given to the nature of the Receivable,
the probability of prompt collection thereof, the credit worthiness of the
Account Debtor, the payment history of the Account Debtor and other economical
factors relative to the Receivables. Further, in arriving at the Purchase Price,
consideration has been given to services rendered and services that will be
rendered in the future by Factor in connection with credit investigations of
Account Debtor, supervising the ledgering of accounts purchased, supervising
the
collection of accounts purchased, and the assumption of certain credit
risks. The parties hereto acknowledge that the purchase of the Receivables
by Factor constitutes an outright conveyance by the Seller to
Factor.
30. Provision
Regarding Usury.
Nothing contained herein, nor any course of dealing in the future, shall be
construed to be anything other than an outright purchase and sale of such
Receivables. All right, title and interest of the Seller has been conveyed
to Factor and such transaction is not subject to a security interest in the
Receivables and the Purchase Price paid to Seller by Factor constitutes
consideration for the acquisition of the Receivables and under no circumstances
shall be construed as a loan and no consideration herein set forth is for the
use, forbearance or detention of money. Nothing contained herein shall be
construed as to require the payment of interest; however, should a court of
competent jurisdiction rule that any consideration paid hereunder are in fact
or
in law to be treated as interest, in no event shall Seller be obligated to
pay
that interest at a rate in excess of the maximum amount permitted by law, and
all agreements, conditions, or stipulations contained herein, if any, which
may
in any event or contingency whatsoever operate to bind, obligate, or compel
Seller to pay a rate of interest exceeding the maximum rate of interest
permitted by law shall be without binding force or effect at law or in equity
to
the extent only of the excess of interest over such maximum rate of interest
permitted by law. Also in such event, Factor may “spread” all charges
characterized as interest over the entire term of all transactions with Seller
and will refund to Seller the excess of any payments made over the highest
lawful rate. It is the intention of the parties hereto that in the
construction and interpretation of this Agreement, the foregoing sentence shall
be given precedence over any other agreement, condition, or stipulation herein
contained which is in conflict with same.
31. Power
of Attorney.
For so long as this Agreement has not been terminated, Factor is hereby
irrevocably authorized as Seller’s Attorney-in-Fact, with full authority in the
place of Seller and in the name of Seller or otherwise, in Factor’s discretion,
to take any action and to execute any instrument which Factor may deem necessary
or advisable to accomplish the purposes of this Agreement, including, without
limitation:
(a) To endorse in the name of Seller,
and to take all actions necessary to collect for deposit to Factor’s account,
all checks, drafts and other forms of trade acceptances, negotiable instruments
and other forms of payment (hereinafter collectively referred to as the
“Payments”) which are tendered in payment of Receivables or in payment of
insurance claims relating to the Receivables, or which are received by
Factor. The authorization includes, without limitation, the power to open,
cash, endorse, deposit and otherwise collect all such Payments in the event
they
are not made payable to Factor;
(b) To contact Account Debtors at any
time in order to verify and/or collect Receivables;
(c) To contact the Internal Revenue
Service and other State and local taxing authorities in order to ascertain
Seller’s tax liability;
(d) To obtain and adjust insurance
required to be paid to Factor;
(e) To ask, demand, collect, xxx for,
recover, compound, receive and give acquittance and receipts for moneys due
and
to become due under or in respect of any of the Receivables;
(f) To file, at Seller’s
expense, any claims or take any action or institute any proceedings which Factor
may deem necessary or desirable for the collection of any of the Receivables
or
any of the collateral securing payment of the Receivables or otherwise to
enforce the rights of Factor with respect to the Receivables.
This
Power of Attorney is irrevocable and coupled with an interest. Seller
hereby acknowledges that Seller is not entitled to any notice, demand or
presentation with respect to payment of any Receivable and agrees that Factor
may extend or renew from time to time the payment of any Receivable without
notice to or consent by Seller.
32. Joint
and Several Obligations.
If more than one party is executing this Agreement as Seller, each party agrees
that its obligations hereunder are joint and several, and that its obligations
shall be not released, diminished, impaired or affected by the occurrence of
any
one or more of the following events, all of which may occur without notice
to or
consent of any other Seller:
(a) Any release, partial release,
subordination or loss of any security, guaranty or collateral and any time
existing in connection with the obligations contained herein;
(b) The death, insolvency, bankruptcy,
disability or incapacity of any Seller, guarantor, or any other party now or
hereafter obligated hereon;
(c) Any renewal, extension, and/or
rearrangement of all or any portion of the obligations contained
herein;
(d) Any neglect, delay, omission,
failure or refusal of Factor to take or prosecute any action for the collection
of the obligations provided herein;
(e) The unenforceability for any
reason of all or any part of the obligations contained herein against any
Seller, guarantor or other party;
(f) The finding of any payment
by any Seller to constitute a preference under bankruptcy or similar debtor
relief law;
(g) Any release or partial release of
liability of any Seller, guarantor or other party; and
(h) Any other action that might impair
rights in the nature of contribution or subrogation that any Seller might
otherwise have.
33. Waiver
of Consumer Rights.
IN CONNECTION WITH THIS AGREEMENT, SELLER WAIVES SELLER'S RIGHTS, IF ANY, UNDER
THE DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT, TEXAS BUSINESS AND
COMMERCE CODE SECTION 17.41 ET SEQ., A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS
AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF SELLER'S OWN
SELECTION, SELLER VOLUNTARILY CONSENTS TO THIS WAIVER.
34. Submission
to Jurisdiction.
(a)
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT AND THE OTHER
DOCUMENTS TO WHICH SELLER AND FACTOR ARE A PARTY MAY BE BROUGHT IN THE COURTS
OF
THE STATE OF TEXAS OR OF THE UNITED STATES LOCATED IN XXXXXX COUNTY, TEXAS
AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, SELLER HEREBY IRREVOCABLY ACCEPTS
FOR ITSELF AND IN RESPECT OF SELLER’S PROPERTY, UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS WITH RESPECT TO ANY SUCH ACTION OR
PROCEEDING. SELLER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO
SELLER PURSUANT TO SECTION 28, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30)
DAYS
AFTER SUCH MAILING. NOTHING IN THIS AGREEMENT SHALL AFFECT THE RIGHT OF
FACTOR TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST SELLER IN ANY OTHER
JURISDICTION.
(b) SELLER HEREBY IRREVOCABLY WAIVES
ANY OBJECTION WHICH SELLER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF
ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH
THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) OF THIS SECTION
34 AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN
ANY
SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN
BROUGHT IN AN INCONVENIENT FORUM.
35.
Waiver
of Jury Trial.
SELLER
HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION WITH
THIS AGREEMENT, AND AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT
ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
36. No
Obligation to Purchase Further Receivables.
Seller specifically acknowledges and agrees that, anything herein to the
contrary notwithstanding, Factor has the right to approve or reject any or
all
future accounts receivable proposed for sale under this Agreement IN ITS SOLE
DISCRETION, and no course of conduct or prior course of dealing shall establish
any commitment, obligation or agreement to purchase future accounts
receivable.
37. Use
of
Facsimiles.
The parties acknowledge and agree that it is anticipated that execution of
this
Agreement, as well as schedules or other documents executed in connection
herewith, may be evidenced by facsimile signatures, and such documents
containing facsimile signatures shall be of the same force and effect as if
original signatures had been obtained.
(Remainder
of Page Intentionally Left Blank)
EXECUTED as of this day
of __________, 2006.
FACTOR:
CCA
FINANCIAL SERVICES, INC.
By:
Xxxxx X. Xxxxxx
SELLER:
ATSI
COMMUNICATIONS, INC.
By:
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
SCHEDULE
A
DATED
________________, 2006 BETWEEN
CCA
FINANCIAL SERVICES, INC AND
ATSI
COMMUNICATIONS, INC.
Receivables
Initials
______
Seller
______
Factor
EXHIBIT
“A”
GENERAL
RELEASE
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which are
hereby acknowledged, the undersigned and each of them (collectively "Releasor")
hereby forever releases, discharges and acquits CCA
FINANCIAL SERVICES, INC.
("Releasee"), its parent, officers, directors, shareholders, agents and
employees, of and from any and all claims of every type, kind, nature,
description or character, and irrespective of how, why, or by reason of what
facts, whether heretofore existing, now existing or hereafter arising, or which
could, might, or may be claimed to exist, of whatever kind or name, whether
known or unknown, suspected or unsuspected, liquidated or unliquidated, each
as
though fully set forth herein at length, to the extent that they arise out
of or
are in way connected to or are related to that certain Purchase and Sale
Agreement between Releasee and Releasor dated __________ __, 200_ (collectively,
the “Claims”).
Releasor agrees that the matters released herein are not limited to matters
which are known or disclosed.
Releasor
acknowledges that factual matters now unknown to it may have given or may
hereafter give rise to Claims which are presently unknown, unanticipated and
unsuspected, and it acknowledges that this Release has been negotiated and
agreed upon in light of that realization and that it nevertheless hereby intends
to release, discharge and acquit the Releasee from any such unknown
Claims.
Acceptance of this Release shall not be deemed or construed as an admission
of
liability by any party released.
Releasor
acknowledges that either (a) it has had advice of counsel of its own choosing
in
negotiations for and the preparation of this release, or (b) it has knowingly
determined that such advise is not needed.
DATED:
Individual
Releasor:
(Xxxxxx
X. Xxxxx individually)
Entity
Releasor: ATSI
Communications, Inc.
By:
Name:
Title:
