Exhibit 10.13
FACTORING CONTRACT
AND SECURITY AGREEMENT
BETWEEN
FIRST FACTORS
CORPORATION
HIGH POINT, NORTH CAROLINA
AND
GUILDMASTER, INC.
0000 XXXXX XXXXXXX XXXXXXXX XXXXX
XXXXXXXXXXX, XXXXXXXX 00000
FACTORING CONTRACT
AND SECURITY AGREEMENT
GUILDMASTER, INC.
0000 XXXXX XXXXXXX XXXXXXXX XXXXX
XXXXXXXXXXX, XXXXXXXX 00000
hereinafter referred to as "Client," and First Factors Corporation, a North
Carolina corporation with its principal office at 000 Xxxxx Xxxx Xxxxxx, Post
Office Xxx 0000, Xxxx Xxxxx, Xxxxx Xxxxxxxx 00000, hereinafter referred to as
"Factor," hereby agree as follows:
1. Appointment. Client appoints Factor as its sole factor with respect
to all sales of its merchandise or rendition of services to customers and hereby
offers to sell and assign only to Factor, as absolute owner, all accounts
receivable (as hereinafter defined) arising out of such sales or services.
"Accounts receivable" or "receivable," as used herein, shall collectively mean
and include accounts, contract rights, instruments, chattel paper, general
intangibles, returned or repossessed goods arising out of or relating to the
sale or other disposition of goods at any time or from time to time, the
proceeds thereof, and merchandise represented thereby. The assignment of
accounts receivable to Factor shall vest in Factor all of Client's rights,
securities, guaranties and liens with respect to each receivable, including all
rights of stoppage in transit, replevin, reclamation, and all claims of lien
filed by Client or held by Client on personal property, and all rights and
interest in the merchandise sold but Factor shall not be obligated to and shall
not be liable for exercising or refusing to exercise any rights granted to
Factor hereby.
2. Purchase of Accounts Receivable. Factor agrees to purchase from
Client at the office of Factor all accounts receivable first approved by Factor
in writing as to credit risk and terms of sale. All orders from customers shall
be submitted to Factor for prior written approval, which is subject to
withdrawal at anytime prior to delivery of merchandise or rendition of services,
and which may be granted or withheld at Factor's sole discretion. Subject to
Client's warranties and representations herein contained, Factor will assume the
credit loss on accounts receivable first approved in writing as to credit risk
and terms of sale and specifically assigned to Factor within twenty one days
from the invoice date or shipping date, whichever occurs earlier, if a customer,
after receiving and accepting delivery of goods or services, fails to pay when
due solely because of financial inability to pay. If, however, such failure to
pay is due in whole or in part to any other cause, Factor shall not be
responsible and shall have full recourse to Client. Factor at its option may
purchase accounts receivable not approved as to credit risk or terms of sale,
but such purchases shall be with full recourse to Client and Client agrees to
pay Factor on demand for each arch receivable.
3. Purchase Price. The purchase price of accounts receivable is the net
face amount less Factor's commission. The term "net face amount" means the gross
amount of accounts receivable less any discounts to customers (which shall be
computed on the shortest terms where optional terms are given), and credits and
allowances to customers of any nature. After purchase of accounts receivable by
Factor, any discount, credit, unidentifiable payment, or allowance may be
claimed solely by the customer and if not so claimed, such discount, credit,
payment or allowance shall be the property of Factor.
4. Client Reserve Account. Factor shall establish on its books in
Client's name a Reserve Account which Factor shall credit with the gross amount
of all accounts receivable purchased by Factor from Client and which Factor
shall debit with all advancements made to Client or on its behalf, as well as
all credits, discounts available to Client's customers, anticipations earned by
Client's customers, factoring charges, interest and any other amounts chargeable
to Client hereunder. Factor shall furnish Client with advices of all credits and
debits entered in the Reserve Account. Factor shall furnish Client with a
monthly statement of its Reserve Account, and, unless exception is taken to this
statement in writing mailed to Factor at the above address by certified mail,
return receipt requested, within thirty (30) days after receipt by Client, the
monthly statement shall be deemed correct and conclusively binding upon Client.
5. Remittance of Funds to Client. As goods are shipped and accounts
receivable, evidenced by invoices and shipping documents, are submitted to
Factor with duly executed assignment schedules, Factor will advance to Client
upon request the amount due Client less a reserve equal to twenty percent (20%)
of all unpaid accounts receivable held by Factor hereunder. Factor retains the
right to revise said reserve from time to time if in Factor's sole judgement it
is necessary to protect Factor with regard to any indebtedness owing by Client
to Factor, including accounts receivable purchased by Factor with full recourse
to Client, or to protect Factor against possible returns, claims or defenses of
Client's customers, or any other contingencies. If Client's Reserve Account is
in a debit position, funds may be made available to Client solely in the
discretion of Factor, and Client agrees to repay Factor on demand any debit
balance in Client's Reserve Account. Client's Reserve Account may be debited by
Factor from time to time for any obligation owing by Client to Factor from
whatever source, including any amounts owing by Client to Factor for merchandise
purchased from any other concern factored by Factor or otherwise. All payments
made by a customer to either Factor or Client shall be first applied toward
payment of all invoices on which Factor has the credit risk, and thereafter
toward payment of any indebtedness of customer to Client, regardless of any
instruction or designation by customer, and Factor shall have recourse to Client
to the extent any such payment is made directly to Client.
6. Warranties and Representations. Client warrants and represents that
each account receivable assigned and sold to Factor hereunder: (a) shall be
genuine and valid and shall represent a completed delivery or performance in
fulfillment in every respect of the terns, conditions and specifications of a
bona fide, uncancelled and unexpired sale or service in the ordinary course of
business to a customer which is not affiliated with Client in full compliance
with the specifications of such customer, (b) Client shall be at the time of
delivery or performance
the absolute owner of all merchandise and other property involved; (c) except
for Factor's interest therein, there are no security interests, liens or
encumbrances thereon: (d) will be subject to no dispute or claim by the customer
in whole or in part as to price, terms, quality, quantity, delay in shipment,
offsets, counterclaims, contra accounts or any other defense of any other kind
and character, real or claimed; (e) will be subject to no discounts, deductions,
allowances, offsets, counterclaims or other contra items or to no special terms
of payment which are not shown on the face of the invoice thereof; (f) will not
represent a delivery of merchandise upon "consignment," "guaranteed sale," "sale
or return," "payment on reorder" or similar terms; and (g) will not represent a
"pack, xxxx and hold" transaction unless Client furnishes Factor with a copy of
the customer's purchase order and has obtained customer's agreement to grant
Factor a security interest in the merchandise and to pay for the merchandise at
the maturity date of the invoice irrespective of whether or not Client has
received instructions to deliver the same.
7. Additional Collateral. As security for all obligations and
indebtedness of Client to Factor, now existing or hereafter incurred, whether
created under the agreement or otherwise, including without limitation,
obligations owed by Client to others which Factor obtains by assignment, Client
assigns to Factor and grants Factor a security interest in all of Client's
present and future accounts receivable and the proceeds thereof, notwithstanding
the fact that assignment schedules may not be submitted by Client for certain
specific accounts receivable, and in all sums standing to the credit of Client
and in any property of Client in Factor's possession. Recourse to security shall
not at any time be required and Client shall at all times remain liable for the
repayment upon demand of all obligations at any time owing by Client to Factor.
During the term of this agreement, Client shall not sell or assign, negotiate,
pledge or grant any security interest in its account, receivable and inventory
and proceeds thereof to anyone other than Factor, without Factor's prior written
consent.
8. Invoicing. All invoices for merchandise sold or services rendered
shall be prepared by Client and shall bear a notice that they have been assigned
to, are owned by and are payable directly and only to Factor. Copies of all
invoices shall be furnished to Factor, accompanied by duly executed assignment
schedules and evidence of delivery satisfactory to Factor. Each invoice shall
bear the terms stated in the approval order and no change from the original
terms of sale shall be made without Factor's prior written consent. Factor
reserves the right to mail original invoices to Client's customers at Client's
expense; however, mailing; sending or delivery by Factor of a xxxx or invoice
shall not be deemed to be any representation by Factor with respect thereto.
9. Remittances. All remittances received by Client with respect to
accounts receivable purchased by Factor shall be held in trust for Factor and
Client shall immediately deliver to Factor the identical checks, drafts, monies
or other forms of payment received and Factor shall have the right to endorse
Client's name on any check, draft or other form of remittance received, where
such endorsement is required to effect collection. Client hereby appoints Factor
or such person as Factor may name as its attorney-in-fact to execute all
necessary documents in Client's name and do all things necessary to carry out
this agreement. Client ratifies and approves all acts of the attorney and agrees
that neither Factor nor the attorney shall be liable for any acts of commission
or omission nor for any error of judgement or mistake of fact or law. This power
being coupled with an interest is irrevocable as long as Client is indebted to
Factor in any manner. Any payments from or credits issued to customers owing
both approved and disapproved accounts receivable shall first apply to the
payment of the approved accounts receivable upon which Factor has assumed the
risk of loss pursuant to the terms hereof, irrespective of the dates of the
accounts receivable or the manner in which payment is made.
10. Customer Disputes. Client agrees to notify Factor immediately of
all returns and allowances and of all disputes with and claims made by customers
and to adjust all such claims and disputes at its own expense, issuing credit
memoranda promptly, but subject to Factor's approval. It is Factor's practice to
allow a reasonable time for the settlement of disputes between Client and
Client's customers without waiving Factor's right to charge back at any time the
full amount of the accounts receivable involved. However, Factor may immediately
charge Client's Reserve Account the amount of any customer deduction of not more
than one hundred dollars. If the customer rejects or returns goods or makes any
claim, real or imaginary, with respect thereto, or disclaims delivery thereof,
or refuses to pay the full purchase price therefor before, at or after maturity
on the grounds that such customer is not obligated for any reason to pay the
same, or that it has an offset, counterclaim, contra account or other defense or
claim thereto or to some part thereof (regardless of the final disposition
thereof), or if Client breaches any of its warranties and representations herein
contained, Factor shall have no responsibility or liability with respect
thereto, and the entire responsibility of collecting such accounts receivable
shall be assumed and borne by Client. Thereupon, or at any time thereafter,
Factor may charge back the full amount of such accounts receivable to Client's
Reserve Account. Such charge back shall not be deemed to constitute a
reassignment of the account receivable and Factor shall retain a security
interest therein as security for all Client's obligations to Factor. Should any
goods be returned or rejected by Client's customers or otherwise recovered by
Client, Client shall pay Factor the net selling price of such rejected or
returned goods and shall hold such goods in trust for Factor, but at Client's
sole risk and expense, until the selling price thereof is received by Factor,
and Factor shall have the right at its option to take possession of and sell
such goods at public or private sale at Client's expense, for the purpose of
paying Client's obligations to Factor. Factor shall have the right at all times
to settle, compromise or litigate disputes or claims directly with Client's
customers upon such arms and conditions as Factor may deem advisable and to sell
or cause to be sold without notice to Client rejected or returned goods at
prices and to such customers and upon such terms as Factor may deem advisable,
retaining in all cases the right to charge Client for all deficiencies, costs
and expenses.
11. Commissions. Client agrees to pay Factor a commission at the
following rate on the gross amount of accounts receivable assigned to Factor
hereunder, which shall be charged to Client's Reserve Account as of the date of
receipt by Factor of the assignment schedules of the accounts receivable: In no
event, however, shall the commission payable on each invoice assigned to Factor
be less than $0.00.
Rate: Annual Factored Volume Rate
$0 - $2,000,000.00 1.0%
$2,000,001.00+ 0.9%
The foregoing factoring commission is based upon Client's regular
selling terms of net 30, net 60. On sales for which additional terms are
granted, the commission shall be increased by one quarter of one percent for
each additional thirty (30) days or fraction thereof by which Client's regular
selling terms are extended. Annual minimum commissions shall amount to
$24,000.00 for each contract year or part thereof that this agreement is in
effect. Such annual commissions shall be fully earned on the first day of the
contract year, and any deficiency shall be payable in full on the last day of
the contract year or on the earlier termination of this agreement. "Funds
Employed" (i.e. gross accounts receivable outstanding on Factor's books less any
balance outstanding in the Reserve Account to the credit of Client, or plus any
debit balance in the Reserve Account as the case may be) shall not exceed $N/A
without Factor's express written approval.
12. Interest Client shall pay interest upon the average daily Funds
Employed at the close of business each day at a rate equal to the Prime Rate.
"Funds Employed" shall be defined as gross accounts receivable outstanding on
Factor's books less any balance outstanding in the Reserve Account to the credit
of Client. (If the Reserve Account should show a debit balance, such debit
balance shall be added to gross accounts receivable outstanding in determining
Funds Employed.) Prime Rate shall mean the published prime commercial loan
interest rate charged by the First Union National Bank of North Carolina.
Interest will be calculated on a daily basis (computed on the actual number of
days elapsed over a year of 360 days) and shall be charged to Client's Reserve
Account as of the last day of each month. If average daily Funds Employed
reflect a credit balance, Factor shall credit Client's Reserve Account, as of
the last day of the month, with interest on such average daily credit balance at
a rate equal to three percent (3%) below the Prime Rate. In computing interest,
all customer checks received by Factor shall be subject to bank clearance of
three business days from the date of deposit.
13. Financial Statements; Inspection. Client shall furnish Factor with
annual financial statements prepared by an independent accountant acceptable to
Factor and also furnish on a timely basis interim financial statements and other
financial information upon Factor's request. Factor may at all times inspect,
audit, make extracts from and verify Client's books and records.
14. Financial Condition. Client warrants that it is solvent and shall
remain solvent during the term of this agreement; that any financial statements
which have been delivered to Factor accurately and fairly state Client's
financial condition, that there has been no material adverse change in Client's
financial condition as reflected in the statements since the date thereof nor do
the statements fail to disclose any fact or facts which might materially
adversely affect Client's financial condition; and there is no litigation
pending or threatened, which taken in the aggregate if adversely determined,
might have a material adverse affect on Client's financial condition.
15. Subsequent Trade Names and Styles. The provisions of this agreement
shall also govern all assignments of receivables to Factor by Client under any
trade names or styles now or hereafter owned, registered or used by Client.
16. Term of Agreement. This agreement shall take effect on a date of
acceptance by Factor and shall remain in full force and effect until thirty (30)
days after either party hereto gives written notice to the other, by certified
mail, return receipt requested, of its election to terminate. Notwithstanding
the foregoing, this agreement may be terminated immediately at any time and
without notice by Factor if Client shall fail to pay when due any obligation or
indebtedness to Factor under this or any other agreement; or Client shall become
insolvent, seek relief under the Bankruptcy Code or any similar insolvency law,
be the subject of a petition thereunder, call a meeting of creditors, make an
assignment for the benefit of creditors, suspend its business, fail or be unable
to pay its debts when due, or suffer the appointment of a receiver or custodian;
or any judgement for more than $5,000 shall be entered against Client and shall
not be paid or bonded within 30 days thereafter, or Client shall breach or
violate any term or provision of this or any other agreement with Factor; or any
representation by Client in this or any other agreement with Factor shall have
been false or misleading when made; or any guarantor shall die or give notice of
the revocation or termination of his or its guarantee; or Factor shall deem
itself insure or its collateral impaired. Upon the effective date of
termination, all obligations of client to factor shall become immediately due
and payable without further notice or demand irrespective of any maturity dates
established prior thereto. In addition, all the terms, provisions and conditions
hereof, including the security interests herein granted to Factor shall continue
to remain in full force and effect until all of Client's obligations to Factor
are paid in full. In the event Factor shall cease to act as Factor for Client,
Client agrees to furnish Factor with indemnity satisfactory to Factor that will
protect Factor against possible charges to Client under the terms of this
agreement and with a release satisfactory to Factor of all claims Client may
have against Factor, and until Client does so, Factor may hold any balance
remaining to Client's credit in the Client's Reserve Account as security for all
obligations of Client to Factor. Client shall pay Factor upon demand all costs
and expenses, including reasonable attorney fees, incurred by Factor to obtain
or enforce payment of any obligations due from Client to Factor or in the
prosecution or successful defense of any action or proceeding concerning any
matter growing out of or related to this agreement, the factoring of Client's
accounts receivable by Factor, or any obligations owing by Client to Factor.
17. Shipping Documents. Factor may require Client to furnish and
deliver shipping documents to Factor at the time invoices are delivered to
Factor, and Client agrees to furnish such shipping documents upon request; but
at some times, and for some Clients, at its discretion, Factor will not require
furnishing of shipping documents.
18. Preferences. In the event that any claim is ever made upon Factor
for the repayment or recovery of any amount received by Factor in payment of any
account receivable which has been purchased by Factor with full recourse to
Client ("Client Risk Receivable") by the payor or legal representative thereof
(including a trustee in bankruptcy or assignee for the benefit of creditors) on
the grounds of preference under the provisions of the Bankruptcy Code or any
other federal or state insolvency law, then, in addition to all of Factor's
other rights under this agreement, Client shall pay to Factor on demand the full
net face amount of any such Client Risk Receivable, or if Factor so elects in
its sole discretion, Factor shall have the right to charge against Client's
Reserve Account the full net face amount of any such Client Risk Receivable, but
such charge back shall not be deemed a reassignment thereof. The provisions of
this paragraph shall survive and continue in effect, notwithstanding the
termination of this agreement, and Client hereby indemnifies and holds Factor
harmless from any loss or expense (including attorneys' fees) arising out of the
assertion of any such claim against Factor with respect to a Client Risk
Receivable.
19. WAIVER OF JURY TRIAL. FACTOR AND CLIENT HEREBY WAIVE, IRREVOCABLY
AND UNCONDITIONALLY, TRIAL BY JURY IN ANY ACTION BROUGHT ON, UNDER OR BY VIRTUE
OF OR RELATING IN ANY WAY TO THIS AGREEMENT OR ANY OF THE DOCUMENTS EXECUTED IN
CONNECTION HEREWITH, OR ANY CLAIM, DEFENSE, RIGHT OF SETOFF OR OTHER ACTION
PERTAINING HERETO, OR TO ANY OF THE FOREGOING.
20. Benefit of Agreement. This agreement is intended solely for the
benefit of Factor and Client, and no other person or party (including any
guarantor), is intended to be benefited hereby in any way.
21. Miscellaneous. This agreement contains the entire agreement between
the parties with respect to the subject matter hereof and cannot be modified,
altered, changed or amended orally. Client shall execute, acknowledge and/or
deliver such other instruments as assurances as may reasonably be requested to
effectuate the purposes of this agreement. Client will at any time on request of
Factor sign UCC financing statements referencing Factor's collateral and pay all
filing fees, costs and expenses related thereto, or Factor is authorized as
agent of Client to execute on behalf of Client and file such UCC financing
statements. This agreement maybe filed by Factor or Client with the appropriate
UCC filing officer and in such event shall constitute a UCC-1 financing
statement. This agreement is made and accepted and shall be construed,
interpreted and enforced in accordance with the laws of the State of North
Carolina, without regard to conflict of law principles, and Client irrevocably
consents and submits to the jurisdiction of state courts of, and federal courts
in, the state of North Carolina, for the purpose of any suit, action or
proceeding relating hereto. Failure of Factor to exercise any rights granted to
it hereunder upon any breach or default by Client shall not be deemed a waiver
thereof in the event of further breaches or defaults. The remedies of Factor
hereunder shall be deemed to be cumulative and not exclusive. This agreement
shall be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns and shall become effective only from the date
of the Factor's written acceptance
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement.
GUILDMASTER, INC.
(Client)
By: /s/ Xxx Xxxxx President
------------------------------
(Title)
Date: June 25, 1998
Accepted in High Point, North Carolina
FIRST FACTORS CORPORATION
By: /s/ , President
--------------------------------
(Title)
Date: 6/29/98
CERTIFIED RESOLUTIONS OF BOARD OF DIRECTORS
I, Xxxxx Xxxxxxx, do hereby certify that I am the Secretary of
GuildMaster, Inc., a corporation duly organized and validly existing under the
laws of the State of Missouri, having its principle place of business in the
City of Springfield, County of Xxxxxx, State of Missouri; that I am the keeper
of the corporate records and the seal of said corporation; that the following is
a true and correct copy of Resolutions duly adopted and ratified at a meeting of
the Board of Directors of said corporation duly convened and held in accordance
with its bylaws and the laws of said state at the office of said corporation on
the 25th day of June, 1998, at which a quorum was present and acting throughout,
as taken and transcribed by me from the minutes of said meeting; that the same
has not in any way been modified, repealed or rescinded, but are in full force
and effect; and that the certificate of incorporation and bylaws of said
corporation contain no provision requiring a vote or consent of stockholders to
authorize the action of the Board of Directors set forth in the following
resolutions and that the said resolutions do not contravene any article of
incorporation or bylaws of the corporation:
RESOLVED, that the President, Vice-President, Secretary, Treasurer or
other officers, and their respective successors in office, or any agent of the
corporation, or any one or more of them, be, and they hereby are, authorized,
empowered and directed to make, execute and deliver in the name of this
corporation any agreements, contracts, notes instruments or other financing
documents, and any modifications, renewals, extensions or supplements thereto,
with First Factors Corporation (hereinafter referred to as Factor) with respect
to the factoring of accounts or borrowing of money or obtaining of credit or
extending of financial or credit accommodations from Factor to this corporation,
which documents may contain any terms and provisions whatsoever which the
officers or agents executing the same may deem appropriate or proper, including
without limitation, the granting to Factor of a security interest or lien in any
and all assets now or hereafter held, owned or controlled by the corporation as
collateral therefor, and it is further
RESOLVED, that for the purposes aforesaid, any one or more of said
officers or agents be, and they hereby are, authorized, empowered and directed
to make, execute and deliver to Factor any and all assignments, schedules,
transfers, endorsements, contracts, notes, guaranties, mortgages, security
agreements, financing agreements, financing and continuation statements,
instruments of pledge and all other agreements or instruments in respect
thereof, and to do and perform all such other acts and things deemed by such
officers or agents necessary, convenient or proper to carry out, modify or
supplement any such agreement and arrangements made with Factor, hereby
ratifying, approving and confirming all that any of said officers or agents have
done or may do in the premises; and it is further
RESOLVED, that any one of said officers or agents or any person
hereafter and from time to time designated by any of them to act for this
corporation be, and they hereby are, authorized, empowered and directed to
endorse the name of this corporation to any and all checks, drafts and other
instruments or orders for the payment of money, payable to this corporation or
its order, for the purpose of depositing the same in any account or accounts of
Factor with any bank, banker or trust company, and to deal with any and all such
checks, drafts and other instruments or orders for the payment of money and the
proceeds thereof as the property of Factor; and it is further
RESOLVED, that any bank, banker or trust company be, and it hereby is,
authorized and requested to receive for deposit to the credit of Factor without
further inquiry, all such checks, drafts and other orders or instruments for the
payment of money, payable to this corporation or its order, and that said bank
shall be under no liability to this corporation for the disposition which Factor
may or shall make of the said instruments or the proceeds thereof, and it is
further
RESOLVED, that Factor shall be furnished with a certified copy of these
resolutions and that the powers and authorizations hereby conferred by this
Board of Directors shall be binding upon the corporation until such time when
notice of any changes, modifications or rescissions thereof have been duly
communicated to Factor and accepted by Factor in writing; and it is further
RESOLVED, that the Secretary of this corporation be, and he hereby is,
authorized, empowered and directed to certify to the passage of the foregoing
resolutions under the seal of this corporation.
I DO FURTHER CERTIFY that the following named persons are the officers
and agents of said corporation, duly executed, qualified and acting as such, and
that the signatures set opposite their names are their genuine signatures and
may be accepted as such by Factor pursuant to the foregoing resolutions:
President: Xxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
----------------------------------- ------------------------------
(Print Name) (Signature)
Vice-President: Xxx Xxxxx /s/ Xxx Xxxxx
------------------------------ ------------------------------
(Print Name) (Signature)
Secretary: Xxxxx Xxxxxxx /s/ Xxxxx Xxxxxxx
------------------------------------ ------------------------------
(Print Name) (Signature)
Treasurer: Xxxxx Xxxxxx /s/ Xxxxx Xxxxxx
------------------------------------ ------------------------------
(Print Name) (Signature)
Agent:
---------------------------------------- ------------------------------
(Print Name) (Signature)
IN WITNESS WHEREOF, I have hereunto set my hand as Secretary of
corporation and affixed corporate seal, by order of the Board of Directors, on
this 25th day of June, 1998 (SEAL)
/s/ Xxxxx Xxxxxxx (SEAL)
-------------------------------
[CORPORATE SEAL]
GUARANTY OF VALIDITY OF ACCOUNTS
FOR VALUE RECEIVED, the undersigned, XXXXX X. XXXXXXX, hereby
unconditionally guarantees to FIRST FACTORS CORPORATION, a North Carolina
corporation (herein called "Factor"), its successors and assigns, that: (a) all
accounts of GUILDMASTER, INC. (herein called "Client"), which have been or may
in the future be assigned to Factor by Client pursuant to that certain Factoring
Contract and Security Agreement between Factor and Client dated June 25, 1998,
as such agreement has been or may hereafter be amended from time to time, and
all papers, documents, instruments, assignments and schedules of accounts and
other assignments relating thereto, are and shall be genuine and in all respects
what they purport to be; (b) that said accounts are and will be valid and
subsisting and have arisen and will arise out of the bonafide sale of goods,
wares and merchandise or other property sold and delivered to and accepted by
the customers of Client, or by reason of services rendered by Client to its
customers, in full compliance with the specifications of such customers; (c)
that the amount of such accounts represented as owing by each customer is the
correct amount actually owing by such customer, is not disputed, is not subject
to any defense, setoff, credit, deduction or contra-charge, and the payment
thereof is not contingent or conditioned on the fulfillment of any contract,
condition, or warranty, past or future, express or implied; (d) that proper
entries have been made and will be made on the books of Client disclosing the
absolute and unconditional sale of said accounts to Factor, and that Client has
and will have absolute and good title to each such account and good right to
sell and transfer the same, and has no knowledge of any fact which would impair
the validity thereof; (e) that there is and will be owing (after allowing all
charges, setoffs, and counterclaims) on each such account the total amount
represented by Client as owing thereon; (f) that Client will promptly repurchase
from Factor for the full amount thereof each and every such account as to which
there may be a breach of Client's warranties in respect of the matters
hereinabove set forth; and (g) that all monies, checks, notes, drafts or other
things of value collected or received by Client with respect to said accounts
shall belong to Factor and shall be accounted for and transmitted by Client to
Factor, in the original form in which the same were received immediately upon
receipt, but in no event later than the day following receipt thereof by Client
and that Client shall not use any of the proceeds of such collections or
commingle the same with its own funds.
The undersigned hereby waives notice of acceptance hereof or other
agreements or the acceptance of all papers, documents, instruments, assignments
of schedule of accounts and other assignments thereunder or relating thereto, or
the giving or extension of credit to Client and also waives notice of default,
nonpayment, partial payment, presentment, demand, protest and all other notifies
to which the undersigned might be otherwise entitled, it being
further understood and agreed that Factor shall not be chargeable for, nor shall
the undersigned be relieved from liability hereunder, because of any negligence,
mistake, act or omission of any accountant, examiner, agent or attorney employed
by Factor in making examinations, investigations, collections or otherwise.
This Guaranty is accepted by Factor in the State of North Carolina and
shall be governed by, construed and interpreted in accordance with the laws of
the State of North Carolina. No modification, waiver or discharge of the
liability of the undersigned shall be valid unless in writing, signed and
subscribed by Factor. This Guaranty shall bind the undersigned, and inure to the
benefit of Factor, and its successors and assigns. All legal actions or
proceedings between Factor and the undersigned may be brought in any court of
competent jurisdiction in the State of North Carolina, and the undersigned
hereby waives objection to summons, service of process, personal jurisdictions
over the person or venue of any such court. Any summons or other service of
process may be served on the undersigned in accordance with the provisions of
the General Statutes of North Carolina relating to service of process or by
forwarding a copy of the summons and complaint or other documents by certified
or registered mail, return receipt requested, to the undersigned and the receipt
thereof by the undersigned or any agent executing the receipt shall constitute
personal service of process on the undersigned. In the event that it shall be
necessary for Factor to refer this Guaranty to an attorney for collection, the
undersigned agrees to pay Factor its reasonable attorney's fees equal to fifteen
percent (15%) of the unpaid indebtedness due hereunder.
WITNESS the hand and seal of the undersigned this 25th day of June,
1998.
/s/ Xxxxx X. Xxxxxxx
------------------------
XXXXX X. XXXXXXX
ACCEPTED:
FIRST FACTORS CORPORATION
By: /s/
INTER-CREDITOR AGREEMENT
THIS INTER-CREDITOR AGREEMENT, made and executed this 29th day of June,
1998, by and between SAC RIVER VALLEY BANK (hereinafter called "Creditor"); and
FIRST FACTORS CORPORATION (hereinafter called "Factor");
WITNESSETH
WHEREAS, Creditor mid GUILDMASTER, INC. (hereinafter called "Debtor")
have entered into certain agreements (such agreements, as they have heretofore
or may be hereafter amended from time to time, being hereinafter collectively
called the "Creditor Agreement"), and Creditor has filed or intends to file
financing statements pursuant to the provisions of the applicable Uniform
Commercial Code (hereinafter called the "Code"), giving notice of a security
interest in, certain assets of Debtor; and
WHEREAS, Factor and Debtor have entered into a Factoring Contract and
Security Agreement (the said agreement, as it has heretofore or may be hereafter
supplemented or amended from time to time, being hereinafter collectively called
the "Factoring Agreement"), and Factor has filed or intends to file financing
statements pursuant to the provisions of the Code giving notice of a security
interest in certain assets of Debtor; and
WHEREAS, Creditor and Factor desire to avoid any possible conflict of
security interest arising from the execution of the Creditor Agreement and the
Factoring Agreement and the filings of said financing statements;
NOW, THEREFORE, for and in consideration of the premises and of the sum
of ten dollars ($10.00) and other good and valuable considerations, the receipt
and sufficiency of which are hereby expressively acknowledged, the parties agree
as follows:
1. Any provision in the Creditor Agreement to the contrary
notwithstanding, any and all liens and security interest which Creditor now has
or may hereafter claim in and to any of the Collateral (as hereinafter defined)
of Debtor shall be and remain subordinate and junior in priority to any liens
and security interest which Factor now has or may hereafter claim in and to any
of the Collateral at all times during which Debtor shall be indebted to Factor
in any manner and for any amount whatsoever. For the purposes of this Agreement,
the term "Collateral" shall mean the following property of Debtor:
All present and future accounts, contract rights, instruments, chattel
paper, general intangibles, all returned or repossessed goods arising
out of or relating to the sale or other disposition of goods at any
time or from time to time, the proceeds thereof and the merchandise
represented thereby.
This subordination relates only to items sold by the company and the accounts
receivable related to said sales. Sac River Valley Bank will retain a first lien
on inventory and equipment.
2. This Agreement shall remain in full force and effect until it is
terminated by written notice of termination received by Factor from Creditor;
provided, however, that no such notice of termination received by Factor shall
impair the rights or priorities created or acquired hereunder by Factor prior to
the receipt of such notice of termination. All notices given hereunder shall be
sent by first class certified mail, postage prepaid, return receipt requested,
addressed as follows:
(a) If to Creditor: Sac River Valley Bank
XX Xxx X
Xxxxxxxx, Xxxxxxxx 00000
(b) If to Factor: First Factors Corporation
Xxxx Xxxxxx Xxx 0000
Xxxx Xxxxx, Xxxxx Xxxxxxxx 00000
3. The parties agree to execute, acknowledge and deliver to any other
party such other and further instruments, documents or assurances that may be
reasonably requested to give full force and erect to the provisions of this
Agreement.
4. Except as herein otherwise expressly provided, priorities between
the parties shall be determined in accordance with the provisions of the Code.
5. The Agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their respective heirs, personal representatives,
successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.
SAC RIVER VALLEY BANK
By: /s/ President (Seal)
-------------------------------
Title: President
FIRST FACTORS CORPORATION
By: /s/ (Sea])
-------------------------------
Title: Vice President
