Exhibit 10.4(a)
---------------
MERCHANT SERVICES AGREEMENT
Merchant: AMERICAN FIRE RETARDANT CORP LENDER: ST XXXXXX BANK AND TRUST CO
000 XXXXX XXXX X0 XXX 000
XXXXXXXXX, XX 00000 ST XXXXXXXXXXX, LA 70582
THIS AGREEMENT is between the Bank and the Merchant identified above. We and you
agree to the following terms and conditions with respect to your participation
in our Cash Flow Manager Program (the "Program"):
Section 1. Definitions
1.1 "Account" means one of your Customer's credit accounts with you, any part
of which is assigned by you to us in conjunction with the Program.
1.2 "Account Statement" means the statement of Account activity billed to your
Customer by us on a monthly basis.
1.3 "Credit Agreement" means any written installment or other written form
of Credit Agreement between you and a Customer.
1.4 "Credit Memo" means the form reflecting a credit, other than a credit
arising from a payment, to a Customer's Account.
1.5 "Customer" means a debtor obligated to you on Receivables that arise from
goods which you sold or services you have rendered to a customer, client or
patient.
1.6 "Discount Fee" means the fixed percentage charge that you agree to pay us
for the Receivables purchased by us from you pursuant to this Agreement.
Subject to the limitations set forth in Section 6.2 of this Agreement, we
may amend the Discount Fee from time to time upon written notice to you
based upon considerations of transaction volume, delinquency, current
economic conditions, and other factors described herein. Initially, and
except as otherwise provided the Discount Fee will be equal to the
following % of the Receivables purchased by us:
3% PERCENT(___%) OF THE FACE AMOUNT.
Bank Initials [__] Merchant Initials [__]
1.7 "Face Amount" means the cash price for the goods you sold and/or services
you rendered to a Customer, less any downpayment paid by a Customer, plus
any taxes imposed on such sales transaction.
1.8 "Initial Purchase" means the first purchase of Receivables by us from you
pursuant to the terms of this Agreement.
1.9 "Invoice" means the form reflecting the sale of goods or services to a
Customer.
1.10 "Line of Credit" means any funded or unfunded Line of Credit and/or
promissory note) established by us pursuant to this Agreement to secure
your obligation to repurchase Receivables as set forth in Section 6 of this
Agreement.
1.11 "Net Amount" of a Receivable means the gross amount of a Receivable, less
the Discount Fee and other discounts, returns, credits or allowances of any
nature at any time issued, owing, granted or outstanding.
Page 1
MERCHANT SERVICES AGREEMENT
1.12 "Obligations" means all of your obligations to us, whether pursuant to this
Agreement, or under any Line of Credit agreement, note, contract. guaranty,
accommodation or otherwise, however and whenever created, arising or
evidenced, whether direct or indirect, liquidated or contingent, now
existing or arising hereafter.
1.13 "Operating Account" means the depository account maintained by you with us
for funding of the Receivables purchased by us from you.
1.14 "Receivables" means all accounts, instruments, contract rights, chattel
paper, documents and general intangibles that are acceptable to us and
arise from your sale of goods or services, and the proceeds thereof, and
all security and guaranties therefor, whether now existing or arising
hereafter.
1.15 "Related Agreements" mean any other agreement(s) we have with you which
relate to the Program. Initially, these Related Agreements include those
set forth in the following documents or instruments (as indicated by an x):
_____ Line of Credit Agreement dated:
_____ Note & Security Agreement dated:
_____ Note dated:
_____ Security Agreement dated:
Bank Initials [__] Merchant Initials [__]
1.16 "Reserve Account" means the interest or non-interest bearing deposit
account established pursuant to Section 3 as a reserve against delinquent
accounts.
Section 2. Term of Agreement and Termination
2.1 Effective Date. This Agreement will become effective when it is executed
and will continue in full force thereafter until it is terminated in
accordance with this Agreement.
2.2 Termination. This Agreement may be terminated by you or us upon the giving
of sixty (60) days prior written notice to the other party of such
termination.
2.3 Termination In the Event of Default In Obligations. We may terminate this
Agreement immediately upon written notice to you in the event you are in
default of any of your Obligations. In the event of such termination, all
further services, obligations or agreements to be performed by us pursuant
to this Agreement, or under any Related Agreements, will immediately
terminate.
2.4 Winding Up. Upon termination of this Agreement for any reason, any and all
outstanding charges shall be immediately due and payable, and all
Receivables then hold by us may, at our sole option, be reassigned to you
in accordance with Section 6, or held by us until all amounts due to us
pursuant to [hose Receivables have boon fully paid.
Section 3. Purchase and Sale of Receivables; Reserve Account
3.1 Assignment and Sale. We agree to purchase, and you agree to assign and
sell, and hereby assign and sell, to us as absolute owner, with full
recourse, your entire interest in such of your presently outstanding
Receivables as we determine acceptable, as well as all of your future
Receivables which are in our sole discretion acceptable to us and that are
reflected by the Invoices you deliver to us. The assignment of Receivables
to us shall automatically become effective on the date the Receivables are
funded by us by credit to your Operating Account.
3.2 Purchase Price. The purchase price of the Receivables will be Net Amount
thereof, which shall be payable by credit to your Operating Account with us
on or before the next banking day after delivery to us of acceptable
Invoices.
Page 2
3.3 Reserve Account. We may retain a portion of the sums payable to you, the
amount of which we may adjust from time to time in our reasonable
discretion, as a reserve to provide for the delinquency of the Receivables
we purchase. Amounts retained by us pursuant to this provision shall be
credited to your Reserve Account. No amounts may be drawn from the Reserve
Account without out consent. The initial reserve percentage will .be the
following percentage of the Face Amount of the acceptable Invoices
submitted to us.
10% PERCENT(___%) OF THE FACE AMOUNT.
Bank Initials [__] Merchant Initials [__]
Section 4. Billing and Other Services To Be Performed By The Bank
4.1 Training. We will provide you with such training, manuals and forms and
related support services as may be required for your participation in the
Program.
4.2 Billing of Receivables, Finance Charges. With respect to Receivables
purchased by us, we will send a monthly Account Statement to each of your
Customers with an outstanding balance on their Account, itemizing the
Customer's Account activity for the preceding billing period, in accordance
with the credit terms applicable to that Customer's Account. In addition, a
finance charge will accrue on and be payable with respect to the
Receivables purchased by us in accordance with the following provisions
(check applicable box or boxes):
[__] Except as otherwise agreed or provided herein, interest (hereinafter
referred to as a 'Customer Finance Charge") will accrue on and be billed by
us to Customer Accounts in accordance with the applicable Credit Agreement
in effect with respect to that Customer at the Customer Finance Charge rate
(APR) set forth below. In the event we agree to purchase a Receivable from
you which for any reason cannot be billed, or you do not want billed, to
your Customer at the Customer Finance Charge rate provided for herein, you
agree to pay us the difference between the amount of the Customer Finance
Charge, it any, billed to your Customer, and the amount of the Customer
Finance Charge that we otherwise would have been entitled to receive
pursuant to this paragraph. In addition, if this box __ is checked, you
agree that we may reassign and charge back to you all or any portion of the
Customer Finance Charge billed to your Customer which is not paid in
accordance with the payment terms applicable to that Customer. Provided,
however, this agreement to pay all or any portion of a Customer Finance
Charge is expressly made subject to the limitations set forth in Section
6.2 of this Agreement, and you do not agree to pay and we do not intend to
contract for, reserve, charge or collect any rate of interest which is
higher than the maximum rate of interest we could charge under applicable
law for an extension of credit to you.
CUSTOMER FINANCE CHARGE RATE (APR):____ %
Bank Initials [__] Merchant Initials [__]
[__] Except as otherwise agreed or provided herein, Interest (hereinafter
retorted to as a 'Merchant Payable Finance Charge*) will accrue and be
payable by you on the unpaid balances of Customer Accounts at the
Merchant Payable Finance Charge rate (APR) set forth below. The Merchant
Payable Finance Charge will be payable by you to us at the close of each
month by charge to the Reserve Account established pursuant to this
Agreement. Provided, however, this agreement to pay a Merchant Payable
Finance Charge is expressly made subject to the limitations set forth in
Section 6.2 at this Agreement, and you do not agree to pay and we do not
intend to contract lot, reserve, charge or collect any late of interest
which is higher than the maximum rate at interest we could charge under
applicable law for an extension of credit to you.
MERCHANT PAYABLE FINANCE CHARGE RATE (APR): 12%
Bank Initials [__] Merchant Initials [__]
4.3 Application of Payments. Payments received by us from your Customers will
be applied by us to your Customer's Account, and payment will be deemed
to have been made when it is received by us. All variations,
modifications or extensions of indebtedness on Receivables purchased by
us will be made solely by us. Nothing in this Agreement authorizes you to
collect any of the Receivables assigned by you to us in connection with
the Program, but, in the event you do, you agree to remit the same to us,
property endorsed, no later than the next banking day. You agree to pay
to us any finance charges incurred by a Customer because of delay on your
part in delivering any payments or Credit Memos to us.
Page 3
4.4 Power of Attorney. You hereby appoint us as your attorney-in-fact to
receive, open, and dispose of all mail addressed to us pertaining to your
Receivables; to endorse our name upon any notes, acceptances, checks,
drafts, money orders and other evidences of payment of Receivables that may
come into our possession, and to deposit or otherwise collect the same, and
to do any and all other acts and things necessary to carry out the terms of
this Agreement. This power, being coupled with an interest, is irrevocable
while any Receivable remains unpaid.
4.5 Payment. The Discount Fee shall be deducted from the gross amount of the
receivables purchased by us and is payable on the banking day the
Receivables purchase is funded by us.
Section 5. Procedures and Forms
5.1 Documentation. You agree to provide us on a timely basis with a copy of
your Customer's Credit Agreement (it a Customer Finance Charge is to be
billed to your Customer) in accordance with the forms set forth in Section
4.2 above, Invoices and Credit Memos (it applicable) related to all sales
creating Customer Receivables, ,together with such other documents and
proof of delivery at goods or rendition of services as we may reasonably
require. You also agree to notify your Customer that your Customer's
Account has been assigned by you to us and to direct your Customer to make
payment directly to us. In the event we agree to purchase a Customer's
Receivable prior to receiving satisfactory evidence of a signed Credit
Agreement with that Customer, the Customer Finance Charge on that
Customer's Account may be billed to your Customer at the maximum applicable
statutory nonusurious rate. In such event, and unless otherwise waived by
us in writing. you agree, subject to the limitations of Section 6.2, to pay
us interest on the unpaid balance of that Customer's Account in accordance
with Section 4.2 until you have furnished us with satisfactory evidence at
a signed Credit Agreement with that Customer.
5.2 Responsibility for Documentation. You agree that you will be solely
responsible for the adequacy, completeness and accuracy of the data that
you supply to us and its preparation in accordance with the format
prescribed by us. You agree to indemnity and hold us (or anyone else
providing data processing services on our behalf) harmless from any claim
or liability sustained by virtue of acting in reliance on the data that you
supply to us.
You understand and agree that it is your sole responsibility to obtain and
maintain an executed written Credit Agreement with each of your credit
Customers, unless otherwise agreed by us in writing.
You also acknowledge that you understand that the form of Credit Agreement
you may use should be reviewed by your legal counsel.
You agree to Indemnify and hold us harmless from any claim or liability we
may sustain by virtue of acting In reliance on your obligation to obtain or
maintain written Credit Agreements with your Customers, or to provide any
disclosures required under applicable state or federal law.
Section 6. Reassignment of Receivables; Security Interest
6.1 Reassignment of Receivables. We may reassign and charge back to you all or
any portion of your outstanding Receivables purchased by us pursuant to
this Agreement:
(a) it payment thereon is not received by us within ninety (90) days after
the date payment on the Account has become due as reflected by the
Account Statement sent to the Customer obligated to pay such
Receivables; or
(b) ninety (90) days after any portion of that Customer's Receivables
becomes delinquent or in default, as determined by the terms of the
Credit Agreement between you and that Customer; or
(c) if any dispute arises with the Customer regarding the Receivable,
including without limitation, any alleged deduction, defense, offset
or counterclaim; or
Page 4
(d) it you are in default under the terms of this Agreement or under any
other agreement or Obligation you have with us; or
(e) if this Agreement is terminated.
6.2 Effect of Reassignment. To reassign Receivables, we may charge first
against your Reserve Account, then to your Operating Account or other
account with the Bank, an amount equal to the unpaid balance of the
reassigned Receivables, including accrued and unpaid finance charges on the
date of reassignment. The reassignment shall be effective automatically
upon the chargeback to you. In the event the reserve or other account is
insufficient to satisfy the balance of the reassigned Receivable, you agree
that we may immediately fund and make advances pursuant to your Line of
Credit with us as necessary to pay the deficiency amount due to us.
Notwithstanding any provision to the contrary, you do not agree to pay and
we do not intend to contract for, reserve, charge or collect any rate of
interest which is higher than the maximum rate of interest we could charge
under applicable law for the extension of credit that is agreed to in this
Agreement. If any notice of interest accrual is sent and is in error, you
and we mutually agree to correct it, and if we actually collect more
interest than allowed by law and this Agreement, we agree to refund the
excess portion. Any interest in excess of that maximum amount shall be
credited to the principal amount of your Obligations relating to this
Agreement, or, it the principal amount of the debt has been paid, refunded
to your Operating Account.
6.3 Security Interest. You hereby grant to us a security interest in your
present and future Receivables and all returned, repossessed and reclaimed
goods, and related books and records, to secure all of your Obligations,
and agree to execute and deliver an appropriate UCC-1 financing statement
and other related instruments as we may require. You further sell and
assign to us all of your rights as an unpaid vendor or lienor, all of your
related rights of stoppage in transit, replevin and reclamation and rights
against third parties, and you agree to cooperate with us in exercising
these rights. In addition, you hereby pledge and grant to us a security
interest in the Reserve Account established pursuant to Section 3.3 of this
Agreement.
Section 7. Representations, Warranties and Covenants
7.1 Merchant's Covenants. You covenant that you will supply, or allow us to
review, financial information and necessary documents on you or on any
Customer upon our request.
7.2 Merchant's Representations and Warranties. You represent and warrant:
(a) that you are fully authorized to enter into this Agreement and to
perform hereunder;
(b) that this Agreement constitutes a valid and binding obligation;
(c) that you are solvent and in good standing in the State of your
formation;
(d) that your Receivables are and will be in the future bona fide and
existing obligations of your Customers arising out of your sales of
goods and/or services, free and clear of all security Interests, liens
or claims of any kind whatsoever of third parties;
(e) that you have a valid Credit Agreement with your Customer or have
Identified each Customer with whom you do not have an existing written
Credit Agreement; and
(f) that your inventory is not subject to any security interests, liens or
encumbrances of any kind whatsoever, and that you will not permit it
to become so encumbered without our prior written consent.
(g) you will have made delivery of the goods or tendered the services to
which the receivable relates, that the documentation pertaining to the
sale is valid and genuine, and that the goods or services have been
accepted by the Customer;
Page 5
(h) you will have preserved and will continue to preserve any liens and
any rights to liens available by virtue of [he sale of goods or
services;
(i) the Customer will not be affiliated with you;
(j) you will have no knowledge of any dispute or potential dispute that
might impair the validity of the transaction or the Customer's
obligation to pay the related Receivable in accordance with its terms;
(k) you have the right to render the services or to sell the goods
creating the Receivable, and will have done so in accordance with any
applicable laws; and
(1) you will have paid, or provided for the payment of, all taxes arising
from the transaction creating the Receivable.
7.3 Bank's Representations and Warranties. We represent and warrant that the
services rendered by us pursuant to the terms of this Agreement will be
performed timely and in a professional manner; provided, however, you agree
that we will not be responsible for any indirect, special or consequential
loss or damage, such as loss of anticipated revenues or other consequential
economic loss in connection with or arising out of any unintentional breach
of this Agreement. Nor will we be liable for any errors in judgment or
mistakes that may be made in good faith when acting as your
attorney-in-fact pursuant to Section 4.4 at this Agreement. Nor will we be
liable for any delay in the performance of our duties caused by strike,
lawsuit, riot, civil disturbance, fire, shortage of supplies, or materials
or any other cause reasonably beyond our control.
Section 8. Default
8.1 Events of Default. The following events will constitute a Default under the
terms of this Agreement:
(a) You fail to pay or to perform any Obligation, covenant or liability in
connection with this Agreement and ten (10) days pass after we give
written notice to you of such default, or if you fail to pay any other
indebtedness which you may have to us under any other agreement with
us in accordance with its terms; or
(b) Any warranty, representation or statement whenever made by you in
connection with this Agreement proves to be false in any material
respect when made, or if you fail to disclose that any such warranty,
representation or statement has become untrue in any material respect;
or
(c) The dissolution or termination of your corporate existence or, it an
Individual, your death; or
(d) Your insolvency; or
(e) The assignment for the general benefit of your creditors, the
appointment of a receiver or trustee for your assets, the commencement
of any proceeding under any bankruptcy or insolvency laws by or
against you or any proceeding for the dissolution, liquidation or
settlement of claims against you or winding up of your affairs; or
(f) The termination or withdrawal of any guaranty for your Obligations; or
(g) The failure to pay any tax imposed upon you in connection with any
transaction creating a Receivable; of
(h) If any judgment against you remains unpaid, unslayed on appeal,
undischarged, unbonded or undismissed for a period of thirty (30)
days; or
(i) You discontinue your business as a going concern; or
(j) We deem in good faith that the prospect for your payment or
performance of your Obligations to have been impaired.
Page 6
8.2 Effect of Default. Upon the occurrence of any Default, we may immediately
terminate this Agreement upon written notice of termination to you, at
which time all amounts owed to us for the services rendered pursuant to
this Agreement shall become immediately due and payable, and our
obligations with respect to the further performance of services hereunder
shall, at our sole option, immediately terminate.
Section 9. Applicable Law
9.1 This Agreement shall be construed under, governed and enforced in
accordance with the laws of the Slate where we are located, as shown by our
address on Page 1 of this Agreement.
Section 10. General Provisions.
10.1 Expenses and Attorney's Fees. In the event of any default or dispute
between us and you arising under this Agreement, the party prevailing in
such dispute shall be entitled to a recovery at expenses incurred by that
party in enforcing this Agreement, including costs of court and a
reasonable attorney's fees.
10.2 Non-Waiver. No delay or failure on our part in exercising any right,
privilege or option hereunder shall be deemed a waiver of any such tight,
privilege or option and no waiver, amendment, or modification of any
provision of this Agreement shall be valid unless it is in writing and
signed by us and you.
10.3 Severability. Should any provision of this Agreement be prohibited by or
invalid under applicable law, the validity of the remaining provisions
shall not be affected thereby.
10.4 Headings. The headings heroin are for convenience only and shall not define
or limit the scope, extent, meaning or intent of this Agreement.
10.5 Notices. All notices contemplated or required by this Agreement shall be
deemed to have been duly given when given in writing and hand delivered to
the other party, or deposited in the U.S. Mail, postage prepaid, certified
mail, return receipt requested, to the other party's address set forth in
this Agreement. Any party may change the address for notice purposes by
giving notice in accordance with this Agreement.
10.6 Entire Agreement Construction. This agreement together with the Related
Agreements, embody the entire agreement between us and you with respect to
the Program, and you acknowledge that there are no oral statements or
representations upon which you are relying in executing this agreement. In
the event of any inconsistency arising between this Agreement and any of
the Related Agreements, the agreement applicable to the specific right,
duty or obligation of yours or ours shall control to the extent necessary
to effect the purposes of this Agreement.
Section 11. Special Provisions
IN WITNESS WHEREOF this Agreement has been executed by the parties and is
effective on the Date shown at the top of Page 1 of this Agreement. You are
hereby acknowledge receiving a copy of this Agreement on the date you executed
it.
Merchant Signature
/s/ Xxxxxx X. Xxxxxxx, Xx.
---------------------------------------
By: Xxxxxx X. Xxxxxxx Xx.
Its: Senior V.P./Secretary
Dated: 13 March 1997
Page 7
