ACCOUNT TRANSFER AGREEMENT
Exhibit
10.19
This
Account Transfer Agreement (this
“Agreement”) is dated this 1st day of March, 2007, and is between Xxxxx
Fargo Bank, National Association through its Xxxxx Fargo Business Credit
operating division (“WFBC”) and Accountabilities, Inc.
(“Seller”), a Delaware Corporation. This Agreement shall become effective as of
the day it is accepted by WFBC as indicated at the end hereof by the date
and
signature on behalf of WFBC.
Whereas,
WFBC 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 WFBC; 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
this Agreement, Seller agrees to offer for sale to WFBC certain of its accounts
arising out of sales of goods, or services rendered, by Seller, and to sell
to
WFBC no less than $3,000,000 nor more than $8,000,000 a month, of such accounts
on the terms set forth in this Agreement such of the offered accounts as
WFBC
may accept for purchase. WFBC shall have the absolute right in its sole
discretion to reject any or all offered accounts, whether or not WFBC has
previously purchased accounts of any particular account debtor hereunder.
The
parties agree that without the prior consent of WFBC, the maximum face amount
of
accounts that WFBC may purchase hereunder at any time, together with the
then
outstanding face amount of outstanding accounts previously purchased by WFBC
from Seller hereunder, will not exceed Eight Million Dollars and no cents
($8,000,000.00) (the “Maximum Credit Facility”). WFBC’s consent to purchase
accounts in excess of such amount may be evidenced by WFBC’s acceptance for
purchase of such offered accounts.
Overadvance. WFBC
will also provide Seller with a permitted overadvance in an amount not to
exceed
Five Hundred Thousand Dollars and no/Cents ($500,000.00) during the term
of this
Agreement. The overadvance will not remain outstanding and unpaid for
more than one year, and will only be made available upon the successful
completion of the proposed Restaff Services, Inc. d/b/a Xxxxxxxx.xxx acquisition
and the subsequent addition of at least $1,000,000 in accounts receivable,
the
overadvance will be made under the same terms and conditions outlined in
this
Agreement.
2. Purchase
and Sale of Accounts. Each account purchased by WFBC hereunder
shall be purchased with recourse by WFBC against Seller as to the financial
ability of the applicable account debtor to pay such account, and all losses
incurred by WFBC from the financial inability of such account debtor to pay
such
account shall be borne solely by Seller; and WFBC and Seller agree that any
account which WFBC purchases that has not been paid within 90 days of invoice
date will result in WFBC having the option to determine that the applicable
account debtor is financially unable to pay such account, and require the
Seller
to immediately pay the sums due and owing under such account to
WFBC. 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 of this
Agreement to the contrary, it is contemplated by and
the intention of the parties hereto that certain accounts of Seller may be
considered and purchased as one account (herein a “schedule”) and the
term “account” and “accounts” as used herein may also refer to a
“schedule” or “schedules,” as the case may be.
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In
connection with each offer by Seller
of accounts to WFBC, Seller agrees to deliver to WFBC 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 WFBC. In order for an
account to be eligible for purchase by WFBC, the related invoice must set
forth,
as the sole address for payment, the following post office
box: X.X. Xxx 000000, Xxxxxx, Xxxxx 00000 (or, upon
notice from WFBC, another post office box of WFBC (or a third party designated
by WFBC)) 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 payments, a bank account of WFBC (or a third party designated by
WFBC).
WFBC’s acceptance for purchase of offered accounts shall be
evidenced by WFBC’s tendered of the Initial Payment to Seller or
otherwise delivering to Seller a schedule of accounts accepted for purchase
by
WFBC. Seller’s assignment of offered accounts shall not be effective
as to any accounts not accepted for purchase by WFBC.
Seller
hereby sells, transfers, assigns
and otherwise conveys to WFBC (as a sale by Seller and a purchase by WFBC,
and
not as a security interest) all right, title and interest of Seller in and
to
all accounts accepted by WFBC of purchase hereunder, together with all related
rights (but not obligations) of Seller with respect thereto, including all
contract rights, guarantees, letters of credit, liens in favor of Seller,
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
WFBC 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 WFBC may
request to further evidence or protect the sales and assignments of accounts
and
related rights to WFBC hereunder, as well as WFBC’s interest in any returned
goods referred to in Section 8 hereof.
3. Terms
of Accounts. Except as otherwise may be agreed to in writing by
WFBC from time to time, the terms of sale offered to Seller to its account
debtors with respect to all accounts offered to WFBC for purchase hereunder
shall be NET 30 DAYS. After an account has been purchased by WFBC, 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 WFBC for purposes of collection of the accounts purchased by
WFBC
as set forth in Section 8 hereof, and then only with the prior written consent
of WFBC.
4. Purchase
Price. The purchase price for each account purchased
hereunder shall consist of and be paid the Initial Payment and the Reserve.
The
Initial Payment shall be payable by WFBC to Seller on the business day that
WFBC
accepts for purchase the related account, and the Reserve shall be payable
by
WFBC to Seller within three (3) business days after WFBC receives, in collected
funds, the Net amount of the related account (subject to WFBC’s right to
withhold payment of Reserves hereunder, and subject to WFBC’s right to withhold,
offset and charge, each as described below).
“Initial
Payment” means Ninety
percent (90%) of the Net Amount of an account. “Net Amount” of an account
means the gross face amount payable pursuant to the related invoice, less
taxes
and all permitted discounts, deductions and allowances,
calculated on the basis of the shortest payment period provided with respect
to
such invoice. “Reserve” with respect to an account means aggregate amount
collected with respect to such account, less the sum of (i) the Initial Payment
with respect to such account and (ii) WFBC’s Discount and Fees.
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5.
Variable Discounts. WFBC’s “Variable Discount” means a
discount computed on the Initial Payment from the date of payment of the
Initial Payment to the date of receipt by WFBC of the proceeds of
collection of such account at a per annum rate equal to WFBC’s Prime Rate in
effect on the date of purchase of such account plus one and a half percent
(1.50%) per annum. WFBC’s “Prime Rate”
shall
mean the highest of the Prime Rate published by Xxxxx Fargo
Bank, N.A. as the base rate on corporate loans. In the event the
Prime Rate as published by Xxxxx Fargo Bank, N.A. ceases to exist or
Xxxxx Fargo Bank, N.A. ceases publishing a Prime Rate, the holder
hereof will substitute a comparable index which is outside the control of
the
holder. In the event of an error by Xxxxx Fargo Bank, N.A.,
the “Prime Rate” will be based upon the Prime Rate as corrected. Any
increase or decrease in the Prime Rate shall be effective as of the next
business day following such adjustment and such adjusted Prime Rate shall
be the
applicable Prime Rate in determining the rate of interest payable
hereunder.
Termination
Fee. If the Agreement is terminated by WFBC upon the
occurrence of an Event of Default, or is terminated by Seller, in view of
the
impracticability and extreme difficulty of ascertaining actual damages and
by
mutual agreement of the parties as to a reasonable calculation of WFBC's
lost
profits as a result thereof, in addition to payment of all principal, interest,
fees, expenses and other Obligations, Seller shall pay WFBC upon the effective
date of such termination a fee in an amount equal to: (a) three
percent (3%) of the Maximum Credit Facility plus the then outstanding principal
balance of any term loans or Advances other than under this Credit Facility,
if
such termination occurs on or prior to the first (1st) anniversary of the
commencement date of the Initial Term; (b) two percent (2%) of the Maximum
Credit Facility plus the then outstanding principal balance of any term loans
or
Advances other than under the Maximum Credit Facility if such termination
occurs
after the first (1st) anniversary of the commencement date of the Initial
Term
and on or prior to the second (2nd) anniversary of the commencement date
of the
Initial Term, or (c) one percent (1%) of the Maximum Credit Facility plus
the
then outstanding principal balance of any term loans or Advances other than
under this Credit Facility if such termination occurs within a successive
renewal term. Such fee shall be presumed to be the amount of damages
sustained by WFBC as the result of termination and Seller acknowledges that
it
is reasonable under the circumstances currently existing.
6. Default
and Remedies. The occurrence of any of the following
events shall be events of default hereunder: Seller shall fail to pay
any indebtedness to WFBC when due or repurchase any Account when required
hereunder; Seller shall breach any term, provision, promise, warranty,
representation or covenant under this Agreement, or under any other agreements,
contracts, between Seller and WFBC or obligation to WFBC; the appointment
of any
receiver or trustee of all or a substantial portion of the assets of Seller;
Seller shall become insolvent or unable to pay debts as they mature, shall
make
a general assignment for the benefit of creditors or shall voluntarily file
a
petition under the United States Bankruptcy Code or any similar law; any
involuntary petition in bankruptcy shall be filed against Seller and is not
dismissed within 60 days or an order for relief is entered against Seller
under
the United States Bankruptcy Code; any levies, attachment, executions, tax
assessments or similar process shall be issued against the Collateral; any
financial statements, profit and loss statements, or schedules, other statements
or documents furnished by Seller to WFBC are false or incorrect in any material
respect; any documents submitted by Seller to WFBC for the purchase of an
Account are mistaken, fraudulent, incorrect and/or erroneous in any material
respect, or if the Seller fails to submit any document required by WFBC under
this Agreement for the purchase of that Account or if any guarantor withdraws
a
guaranty of this agreement. Upon the occurrence of an event of default, WFBC
may
declare immediately due and payable, and to charge back, all indebtedness
of
Customer to WFBCI, including without limitation (i) outstanding purchased
Accounts and (ii) all other fees, costs and expenses as required hereunder
and exercise any or all rights available to a secured creditor with
respect to the Seller and the Collateral (as defined below) under the Uniform
Commercial Code (the “UCC”). After the occurrence of an event of default,
interest shall accrue on any unpaid balance due to WFBC at the default rate
of
18%.
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7. Reserve.
Should WFBC, using sound and reasonable business judgment, deem itself to
be
insecure hereunder, and inany event upon the occurrence of an event of default
hereunder, WFBC may at its election, withhold payment of the Initial Payment
and/or the Reserve with respect to any or all accounts purchased hereunder
to
the extent necessary to accumulate a reserve in an amount up to the sum of
(a)
the total Initial Payments made by WFBC with respect to accounts purchased
by
WFBC hereunder which remain uncollected, plus (b) the total of WFBC’s Discount
and Fees owed to WFBC with respect to such accounts and (c)
such other amounts which may become owed by Seller to WFBC. Seller
hereby authorizes WFBC to offset and charge any and all amounts for which
Seller
may be obligated to WFBC pursuant to the terms of this Agreement against
the
amounts so withheld, and at WFBC’s election, against any funds
of Seller in the possession or control of WFBC, from whatever
source. However, if, on any business day that WFBC regularly makes a
payment to Seller for accounts purchased, none of the foregoing conditions
exist, no other breach of this Agreement by Seller exists and WFBC determines,
in its sole discretion, that the Reserve is adequate to cover the total of
(a),
(b) and (c) above, after taking into account the
following described distribution, then WFBC shall distribute to
Seller all funds it then has on hand that it has collected from accounts
that
WFBC has not then purchased.
8. Certain
Security. For the purpose of securing WFBC in the
payment of any and all sums of money that may become due and owing WFBC from
Seller by reason of this Agreement and securing WFBC in the performance by
Seller of Seller’s obligations hereunder, Seller hereby grants to WFBC a
security interest in (i) all of Seller’s present and future inventory, accounts,
account and contract rights, contracts and the proceeds therefrom, together
with
all notes, drafts, acceptances, documents, instruments, chattel paper, general
intangibles and products and proceeds thereof including all returned or
repossessed goods, (ii) all amounts withheld by WFBC pursuant to Section
7
hereof and (iii) all funds of Seller in the possession or control of WFBC,
from
whatever source (all, the “Collateral”). 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 WFBC may request to further evidence, perfect, preserve or protect
the security interest granted to WFBC hereunder. WFBC
shall have all rights and remedies in respect of the
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 payments to WFBC (or its designee) and
to
take control of proceeds to which WFBC is entitled, and to apply proceeds
to (in
addition to other obligations of Seller to WFBC) the reasonable attorneys’ fees
and legal expenses incurred by WFBC in connection with the disposition of
collateral or the other exercise of rights and remedies by WFBC.
In
the event a security interest has
heretofore been granted and given to WFBC by Seller in a
prior agreement(s) to secure certain
obligations, then, in such event, and not withstanding anything in this
Agreement to the contrary, including paragraph 16 hereof,
the security interest granted and given to WFBC is in renewal and extension,
and
not in extinguishment of, all such prior security
interests and are valid and subsisting liens to secure all prior, existing
and
new obligations of Seller to WFBC hereunder and under any such prior agreements,
which obligations are likewise herein renewed and extended.
9. Collection
of Receivables. To the extent necessary, WFBC hereby
appoints Seller as agent for WFBC for purposes of collection of accounts
purchased by WFBC hereunder. As WFBC’s agent for the collection of accounts
purchased by WFBC hereunder, Seller agrees to collect accounts sold to WFBC
in
accordance with Seller’s customary practices and in compliance with applicable
law. Seller will furnish to WFBC, upon request, any and all papers, documents
and records in its possession or control related to accounts purchased by
WFBC
hereunder, or related to Seller’s business relationship with the respective
account debtors, and agrees to cooperate fully with WFBC on all
matters related to collection of accounts purchased by WFBC hereunder. WFBC
reserves the right to terminate such agency at any time or
without cause or notice to Seller. Seller authorizes WFBC to forward directly
to
account debtors statements or invoices on accounts purchased by WFBC hereunder,
and to request payment at such address or to such bank account or lock box
as
may be designated by WFBC. Seller agrees that, if
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any
payment made to Seller on any account purchased by WFBC from Seller hereunder,
Seller (i) will hold such payment in trust for WFBC, (ii) will not commingle
such payment with any funds of Seller, and (iii) WILL DELIVER SUCH PAYMENT
TO
WFBC, IN THE EXACT FORM RECEIVED, BY THE CLOSE OF BUSINESS ON THE NEXT BUSINESS
DAY FOLLOWING RECEIPT THEREOF BY SELLER. Seller shall pay a misdirected payment
fee in the amount of fifteen percent (15%) of the amount of any payment on
account of a purchased Account which has been received by Customer and not
delivered in kind to WFBC on the second business day following the date of
receipt by Seller. If any goods relating to an account purchased by WFBC
hereunder shall be returned to or repossessed by Seller, Seller shall give
prompt notice thereof to WFBC and shall hold such goods in trust
for WFBC, separate and apart from Seller’s own property, and such goods shall be
owned solely by WFBC and be subject to WFBC’s direction and control. Seller
shall properly store and protect such goods and agrees to cooperate fully
with
WFBC in any subsequent disposition thereof for the benefit of WFBC.
Seller
authorizes WFBC to collect, xxx
for and give releases for, in the name of Seller or WFBC in WFBC’s sole
discretion, all amounts due on accounts sold to WFBC hereunder.
Seller specifically authorizes WFBC 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 WFBC hereunder and made payable to
Seller. WFBC shall have no liability to Seller for any mistake in the
application of any payment received with respect to any account; provided
WFBC
has not acted in bad faith or has not be grossly negligent, it being the
specific intent of the parties hereto that WFBC shall have no liability
hereunder for its own negligence. Seller hereby waives notice of nonpayment
of
any account sold to WFBC hereunder as well as any and all other notices with
respect to such accounts, demands or presentations for payment, and agrees
that
WFBC may extend or renew from time to time the payment of, or vary, reduce
the
amount payable under or compromise any of the terms of, any account purchased
by
WFBC, in each case without notice to or the consent of Seller. Seller
further authorizes WFBC (or its designee) to open and remove the
contents of any post office box of Seller or WFBC (or its designee) which
WFBC
believes contains mail relating to accounts, and in connection therewith
or
otherwise, to receive, open and dispose of mail addressed to Seller which
WFBC
believes may relate to accounts, and in order to further assure receipt by
WFBC
(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 at such address as WFBC may
designate. WFBC 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 election of WFBC, 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 WFBC to take possession thereof, WFBC may dispose of such contents without
any liability to Seller.) Seller hereby irrevocably appoints WFBC
(and any employee, agent or other person designated by WFBC, any of whom
may act
without joinder to 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 WFBC (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 confirms all that said attorneys-in-fact
and
agents may do or cause to be done by virtue hereof.
10. Representations,
Warranties and Covenants of Seller. Seller hereby
represents and warrants to WFBC with respect to each account offered by Seller
to WFBC 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 WFBC of such account, WFBC will own
such
account free and clear of any liens, claims, equities or encumbrances whatsoever
and the consideration received by Seller from WFBC 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 WFBC
hereunder, and the date of sale of such account is not more
than 60 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 WFBC, 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,
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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 creditor’s rights generally), (vi) such account is current and
not past due, has not been paid by or on behalf of the account debtor in
whole
or in part, and is not and will not be subject to any
dispute, recision, set-off, recoupment, defense or claim by the account debtor,
whether relating to price, quality, 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 date of sale of such account to WFBC hereunder)
against payment of such account, and (vii) as of the date of purchase by
WFBC of
such account the account debtor with respect to such account 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 the account
debtor is located (within the meaning of Section 9-103 of the applicable
UCC)
and has its principle executive offices within the United States. Seller
further
represents and warrants to WFBC 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, (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 thereof,
nor has
Seller or any of its affiliates filed any petition seeking an arrangement
of its
debtors or for any other relief under the United States Bankruptcy Code (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
thereof is pending, nor has Seller or any affiliate thereof made any assignment
for the benefit of creditors, (c) Seller is not in default of any debt or
obligation to any lender or other creditor, and (d) Seller’s principle place of
business, chief executive office, location where the records concerning its
books of account and contract rights are kept, and location of any property
subject to the security interest granted in Section 7 hereof, unless changed
upon notice to WFBC complying with the next following sentence and Section
15 of
this Agreement, is its “Address for Notices” described in Section 15
hereof, (e) Seller and each Guarantor is solvent, is able to pay its or his
debts as they become due, and has no outstanding liens, suits, garnishments,
bankruptcies, or court actions which could render it or him insolvent, (f)
all
federal, state, county, city, and other taxes, including without limitation,
income taxes, payroll taxes, real estate taxes, and sales taxes which are
due
and owing by Seller have been paid, and by the execution hereof, Seller
certifies that all future taxes, of any kind and character, will be paid
when
due. Seller agrees not to change the location of its principal place of business
or chief executive office, 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 in Section 7 hereof, without giving at least
15
days advance written notice thereof to WFBC.
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 WFBC
hereunder.
Seller
agrees to indemnify and hold
WFBC 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.
Seller
agrees to notify WFBC
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
WFBC immediately of the assertion by any account debtor of any dispute or
other
claim (including any defense or offset asserted by
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any
account debtor) with respect to any account sold to WFBC hereunder, or with
respect to any related goods or services. Upon WFBC’s request, Seller agrees to
settle, at its own expense and for the benefit of WFBC any such dispute or
claim
upon such terms as WFBC may in its sole discretion deem advisable or (ii)
to
assign the related account to Seller, without recourse to WFBC,
and charge any unpaid balance with respect thereof (up to
the amount of the Initial Payment with respect thereto and WFBC’s Discount and
Fees (through the date of such change) with respect thereto) against any
amounts
withheld by WFBC from Reserves pursuant to Section 6 hereof or against such
other funds, WFBC may require Seller to pay (and Seller hereby agrees to
pay) to
WFBC on demand any such unpaid balance. Seller agrees to notify WFBC in advance
of the filing of any voluntary bankruptcy proceeding or any other voluntary
insolvency proceeding.
11. Financial
Statements. Seller represents and warrants that all
financial and other information provided by Seller to WFBC in connection
with
Seller’s factoring application to WFBC or to induce WFBC to enter into this
Agreement is true, complete and correct in all
material respects. Seller agrees to furnish to
WFBC (i) within 120 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 the fiscal year, together with an auditor’s report thereon by an
independent certified public accountant (if Seller generally obtains such
an
auditor’s report), (ii) within 45 days after the last day of each quarter,
quarterly unaudited consolidated statements of income and statement of cash
flows of Seller for each quarter and unaudited consolidated balance sheets
of
Seller as of the end of each quarter. 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 WFBC, upon request,
such
additional financial and business information
concerning Seller and its business as WFBC may reasonably
request, including copies of its Form 941 returns filed with the Internal
Revenue Service and evidence of payment of related taxes. WFBC and its agents,
representatives and accountants 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 or 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 WFBC and its agents, representatives, and
accountants in connection therewith. 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 WFBC will be excluded from Seller’s reported accounts receivable
balances. Seller also specifically agrees to immediately notify WFBC of any
material adverse change in Seller’s financial condition or
business.
12. Taxes. All
taxes and governmental charges of any kind imposed with respect to the sale
of
goods or the rendering of services relating to accounts purchased by WFBC
hereunder shall be for the account of, and paid by, Seller.
13. Termination. This
Agreement shall not be terminated by either party prior to twenty four (24)
months after the execution of this Agreement and shall be automatically renewed
for successive renewal terms of twenty four (24) months each unless terminated
at the end of the initial term or any renewal term by any party giving the
other
written notice of termination at least thirty (30) days prior to the end
of such
period. WFBC 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 status shall be filed by or against Seller or
any
affiliate or any receivership proceedings with respect thereto shall commence,
(iv) any guarantee of any
7
of
Seller’s obligations hereunder shall be terminated or become impaired, or (v)
WFBC otherwise determines, using sound and reasonable business judgment,
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 termination, and this
Agreement shall continue to govern the rights and obligations of the parties
hereto with respect to accounts purchased by WFBC 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 WFBC with respect to transactions occurring on or prior to the
date
of termination have been paid to WFBC, and Seller has performed all its
obligations to WFBC with respect to such transactions.
Seller
agrees to reimburse WFBC upon
demand for WFBC’s attorneys’ fees, court costs, and other fees and expenses
incurred in enforcing any of WFBC’s rights under this Agreement.
14. Governing
Law; Submission to Jurisdiction; Waiver of Jury Trial. 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. SELLER HEREBY SUBMITS (IF FEDERAL JURISDICTION IS AVAILABLE)
TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, OR (IF FEDERAL JURISDICTION
IS NOT
AVAILABLE) TO THE EXCLUSIVE JURISDICTION OF ANY TEXAS STATE COURT SITTING
IN
DALLAS, TEXAS FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. SELLER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH SELLER 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.
SELLER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
15. Amendments;
Waivers. This Agreement may be amended only in
writing signed by the parties hereto. No failure on the part of WFBC to
exercise, and no delay by WFBC in exercising, and no course of dealing by
WFBC
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 WFBC preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
The
remedies of WFBC hereunder are cumulative and not exclusive of any remedies
provided by law.
16. 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 15.
All
such notices and other communications shall be deemed to have been duly given
when transmitted by telecopies (with receipt thereof confirmed by telecopies)
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.
17. 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 matter. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute
8
one
and
the same agreement. This Agreement may not be assigned by Seller without
the
prior written consent of WFBC. This Agreement may be assigned by WFBC, and
any
accounts purchased by WFBC hereunder, together with all rights and interests
related thereto granted to WFBC hereunder, may be assigned by WFBC, all without
notice to or the consent of Seller. This Agreement shall be binding upon
the
parties hereto and their respective successors and permitted
assignees.
In
Witness Whereof, the
parties hereto, heretofore duly authorized, have executed
this Agreement as of the date first set forth above.
| Address for Notices: | ACCOUNTABILITIES, INC. | ||
| Accountabilities, Inc. | |||
|
000
Xxxxx Xxxx,
Xxx. 000
|
By:
|
/s/ Xxxxx Xxxxxxx | |
| Xxxxxxxxx, XX 00000 | Name: Xxxxx Xxxxxxx | ||
| Telecopy No. (000) 000-0000 | Title: President | ||
| Date: 7 March 2007 | |||
| Address for Notices: | XXXXX FARGO BANK, NATIONAL ASSOCIATION | ||
| Xxxxx Fargo Business Credit | |||
|
X.X.
Xxx
0000
|
By:
|
/s/ Xxxxx X. XxXxxxx | |
| Xxxxxxx, XX 00000 | Name: Xxxxx X. XxXxxxx | ||
| Telecopy No. (000) 000-0000 | Title: Division Manager | ||
| Date: March 7, 2007 | |||
9
