EXECUTED 10/28/99
AGREEMENT FOR PURCHASE AND SALE
OF FINANCING ARRANGEMENTS
This Agreement for Sale and Purchase of Financing Arrangements (this
"Agreement") is made as of the 29th day of October 1999 by and between Metro
Factors, Inc., a Texas corporation ("Buyer") and Allstate Financial Corporation,
a Virginia corporation ("Seller").
I. RECITALS
WHEREAS, Seller desires to offer for sale to Buyer and Buyer desires to
purchase from Seller, on the terms and subject to the conditions set forth
herein, all rights and certain obligations of Seller pursuant to those certain
factoring and other lending agreements by and between Seller and Assigned
Clients as identified herein (the "Financing Agreements").
WHEREAS, Buyer and Seller are each in the business of, among other
things, originating, buying, servicing and selling, and otherwise dealing in,
factoring of accounts receivable in the ordinary course of each of their
respective businesses, and lending on an occasional basis.
WHEREAS, Buyer and Seller desire to enter into this Agreement to govern
the sale and purchase of such Financing Arrangements.
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants contained herein, the parties hereto agree as follows:
II. INCORPORATION BY REFERENCE
The Recitals to this Agreement are incorporated herein by this
reference thereto as though restated in their entirety herein.
III. DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
A. ACCOUNTS: All presently existing and hereafter created accounts, accounts
receivable, contract rights and general intangibles relating thereto, notes,
drafts and other forms of obligations owed to or owned by any Assigned Client
arising or resulting from the sale of goods or the rendering of services by any
such Assigned Client, all proceeds thereof, all guaranties and security
therefor, and all goods and rights represented thereby or arising therefrom
including, but not limited to, the right of stoppage in transit, replevin and
reclamation.
B. ACCOUNT DEBTOR: The person, firm, corporation or other entity that is
obligated to make payment on an Account.
C. ACCOUNT DEBTOR CREDITS: Open credits reflected on Seller's books
which cannot be allocated to a specific unpaid Account and may be payable to
Account Debtors, also referred to as "Exchanges" on Seller's FMIS Reports.
D. ACCOUNT PAYMENTS: All payments on Accounts by Account Debtors
or others.
E. ACCOUNT PURCHASE PRICE: The price paid by Seller for an Assigned
Client's Account(s) pursuant to the terms of a Factoring Agreement, which price
is reflected on Seller's FMIS Reports as "Gross Purchase."
F. AFFILIATE GUARANTIES: Those certain guaranties of the Assigned
Clients' affiliated entities pursuant to which the collections of the Assigned
Clients' Accounts are guaranteed.
G. AGREEMENT: Shall mean this Agreement as same may be amended and
supplemented from time to time. The parties agree that this Agreement shall be
used as the master sale and purchase agreement for those Financing Arrangements
purchased by Buyer from Seller in the future, unless otherwise agreed in writing
by the parties.
H. AMOUNT AT RISK: The Account Purchase Price, less collections to date
as reflected on Seller's FMIS Reports as "Collections", less any unpaid
holdbacks,less discounts owed, plus uncollected adjustments, plus or minus any
items in the Assigned Client's general ledger accounts as reflected on the "Net
Out Report" generated by Seller's FMIS Reports, plus the balance of Assigned
Client Loans, the subtotal of which is the "Net Out Subtotal" on the "Net Out
Report" ($6,044,937.44 as at October 28, 1999), less fifty percent (50%) of the
Earned Discounts ($54,685.13 as at October 28, 1999). *
I. AMOUNT DUE ASSIGNED CLIENTS: The credit balance reflected on
Seller's books which is due to Assigned Clients as of such date, or which, with
the passage of time or otherwise, may become due by Seller to such Assigned
Clients arising out of the purchase of Accounts pursuant to Financing
Agreements, also referred to as the "Discount Owed" on Seller's FMIS Reports.
J. ASSIGNED CLIENT: Any entity included in Assigned Client Group
One, Assigned Client Group Two, or Assigned Client Group Three.
K. ASSIGNED CLIENT GROUP ONE:
*
L. ASSIGNED CLIENT GROUP TWO:
*
M. ASSIGNED CLIENT GROUP THREE:
*
SCHEDULE A attached hereto, sets forth a general description of each of
the above Assigned Client Financing Arrangements. *
N. BASE LENDING RATE: The Base Lending Rate from time to time published as the
"Prime Rate" in The Wall Street Journal, on the date such Base Lending Rate must
be determined.
O. ASSIGNED CLIENT LOANS:
*
ASSIGNED CLIENT LOANS ( Con't):
*
P. CLOSING DATE: shall mean October 29, 1999.
Q. COLLATERAL: shall mean the property which is the security for the
Accounts, the Accounts Purchase Price, Client Loans and all other Obligations
R. DEDUCTIBLE COSTS AND EXPENSES: Those costs and expenses incurred by Buyer in
connection with the Financing Arrangements limited to the following; and with
respect items 2 through 10 below, only to the extent they are specifically
charged to Assigned Clients, in each case:
1) Interest at the Base Lending Rate with allowance for the same number of
collection days as provided in the Financing Arrangements.
2) Buyer's cost of wire transfers and ACH transfers as same may be
increased of decreased after the Closing Date. Such fees as of the Closing Date
are $8.50 for domestic wire transfers, $25.00 for international wire transfers,
and $2.00 for ACH transfers.
3) Per diem charges of field auditor per Factoring Agreement.
4) Buyer's out-of-pocket expenses incurred in connection with field auditor
related to the Financing Arrangements.
5) Buyer's out-of-pocket professional fees and expenses incurred in
connection with the interpretation or enforcement of the Financing Arrangements
including, but not limited to, attorney's, accountants, and expert witnesses. If
Buyer's in-house general counsel is used in lieu of an outside independent
attorney, such in-house general counsel's time shall be charged at the rate of
$25.00 per quarter hour or part thereof.
6) Buyer's cost of expedited delivery services and postage at current
postage rate.
7) Long distance telephone expense at the rate of $.50 per call for
purposes of collection of Accounts related to the Financing Arrangements.
8) $.50 per invoice or past due statement mailed to Account Debtors in
connection with the Financing Arrangements.
9) Buyer's cost of credit agency reports incurred in connection with
Performing credit checks of Account Debtors related to die Financing
Arrangements.
10) Buyer's cost of public records search and filing fees related to the
Financing Arrangements.
S. EARNED DISCOUNTS: That discount due Seller pursuant to the Financing
Agreements with the following Assigned Clients:
*
T. EARNED INTEREST: All interest due and payable pursuant to the Financing
Arrangements.
U. FACTORING OBLIGATIONS: Outstanding liabilities and commitments (contingent or
otherwise) of Seller for advances and other financial accommodations to the
Assigned Clients pursuant to the Financing Agreements.
V. FINANCING AGREEMENTS: The Agreements between Seller and the
Assigned Clients pursuant to which the Financing Arrangements are specified.
W. FINANCING ARRANGEMENTS: The servicing of Assigned Clients'
Accounts pursuant to the terms and conditions of the Financing Agreements
and Assigned Client Loans, with the Assigned Clients.
X. FINANCING ARRANGEMENT FILES: All legal documents and credit files
in connection with the Financing Arrangements, more particularly described in
Article IV.A herein.
Y. FMIS REPORTS: Computer software program used by Seller to record
transactions related to Accounts, payments on Accounts, and Client Loans.
X. XXXXX INCOME: All fees and expenses of every kind and character including,
but not limited to, the following:
1) Factor's commission/discount
2) Interest
3) Wire transfer fees
4) ACH transfer fees
5) Renewal fees
6) Commitment fees
7) Prefunding fees
8) Charge back fees
9) Repurchase fees
10) Same day advance fees
11) A.M. advance fees
12) Per diem field audit fees
13) Assigned Client field audit expenses
14) Handling fees including postage at current postage rates, and any
charges for long-distance phone usage
15) Public records search and filing fees
16) Professional fees and expenses (i.e., attorneys, accountants, and expert
witnesses)
17) Expedited delivery fees
18) Supplemental Discount fees
19) Credit investigation fees
20) Minimum invoice fee
21) Concentration fee
22) Sticker and stamp fee
AA. GUARANTIES: The Individual Guaranties, the Corporate Guaranties
collectively and the Validity Guaranties.
CC. INDIVIDUAL GUARANTIES: Those certain Guaranties of the Assigned
Clients' principals pursuant to which the collections of the Assigned Clients'
Accounts are guaranteed.
DD. OBLIGATIONS: All advances, debts, liabilities, obligations,
covenants and duties owing by an Assigned Client to Seller, direct or indirect
, absolute or contingent, due or to become due, now existing or hereafter
arising, including, without limitation, invoices for goods or services
purchased by an Assigned Client from any company whose accounts are factored or
financed by Seller and indebtedness arising under any guaranty made by an
Assigned Client or issued by Seller on an Assigned Client's behalf pursuant to
the Financing Agreements.
EE. PREFUNDING OR PREFUNDED: Amounts advanced by Seller to
Assigned Clients for which no invoice representing an amount due for goods
delivered or services rendered exists.
FF. PREMIUM INCOME: The Gross Income received by Buyer from Assigned
Client Group One, Assigned Client Group Two, and Assigned Client Group Three
after subtracting Deductible Costs and Expenses.
GG. PURCHASE PRICE (BASE): The purchase price for the Financing
Arrangements shall be the aggregate of the Amount at Risk for the Assigned
Clients as of the close of business Wednesday, October 27, 1999. ($5,990,252.31)
HH. PURCHASE PRICE (PREMIUM).
*
II. REPURCHASED ACCOUNTS: Accounts designated on Seller's FMIS Reports
for which the payment terms have been extended and the Account re-verified.
II. UNPAID ACCOUNTS: Accounts that the Account Debtor or other party has
not paid Seller in full.
JJ. VALIDITY GUARANTIES: Those certain guaranties of the Assigned Clients
as to the Accounts' existence and validity and the bona fide obligations of the
Account Debtors for the Accounts.
IV. PURCHASE AND SALE OF FINANCING ARRANGEMENTS
A. CONVEYANCE OF FINANCING ARRANGEMENTS: For each Financing Arrangement with an
Assigned Client, the Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to Buyer as of the Closing Date, without recourse but subject
to the terms of this Agreement, all the right, title, interest, duties and
obligations of Seller in and to the Financing Arrangements; including, but not
limited to, those open and Unpaid Accounts listed on the Aged Trial Balances as
of the opening of business on October 28, 1999, copies of which will be supplied
to Buyer by 9:00 AM Eastern Time on the Closing Date (any Prefunded amounts
appearing thereon shall be conspicuously indicated on the face of such Aged
Trial Balance), the Financing Arrangement Files, the Obligations, the
Collateral, the Factoring Obligations, the Amount due Assigned Clients, the
Account Debtor Credits, and the Client Loans. Contemporaneously with such
transfer, Buyer agrees to make available, and Seller agrees to purchase, a one
hundred percent (100%) participation interest in the Client Loans, such
participation being more particularly described in Article XII hereof. Each
Financing Arrangement File shall be delivered by Seller to Buyer or a custodian
designated by Buyer, in exchange for a receipt therefor. Each Financing
Arrangement File shall contain the following documents:
1) The original Factoring Agreement;
2) The original notes and/or agreements evidencing
Assigned Client Loans, properly endorsed to Buyer and
all related documentation;
3) All original Individual Guaranties, if applicable;
4) All original Affiliate Guaranties, if applicable;
5) All original Validity Guaranties, if applicable,
6) The original resolutions of the Assigned Client and
any Affiliate Guarantor authorizing their actions in
connection with the Financing Arrangements;
7) Original UCC-2 or UCC-3 Assignments, as applicable,
assigning the interests in personal property security
and any other collateral security secured by all
UCC-1 Financing Statements relating to the
obligations signed by Seller in blank in form for
filing in the applicable public recording office;
8) Any and all amendment modifications, supplements, and waivers related
to any of the foregoing;
9) All notification letters;
10) All Account Debtor credit files;
11) The operative documents creating the Client Loans, if any, and
12) Any and all other documents, instruments, collateral agreements,
and assignments and endorsements for all documents, instruments and collateral
agreements, referred to in the Financing Agreements, or related thereto,
including, without limitation and without duplication of items 1 through 11
hereof and all files, books, papers, ledger cards, reports and records including
, without limitation, loan applications, Borrower financial statements, credit
reports and appraisals, relating to the Financing Agreements, all cash receipts
records related to the Financing Arrangements for the period commencing 60 days
prior to the Closing Date and any other documents, certificates, papers or
records relating to the Financing Arrangements in Seller's possession as of the
Closing Date. Seller shall not destroy or fail to maintain control of and
accessibility to any other records relating to the Financing Arrangements in
Seller's possession as of the Closing Date without giving Buyer at least ten
(10) business days advance written notice of its intent to do so, in which case
Buyer may take possession of all such records.
Notwithstanding the foregoing, in the event that, in
connection with any Financing Arrangement, Seller cannot deliver an original
counterpart of any of the documents required to be delivered pursuant to
Articles IV.A. 1-7 above, Seller shall deliver, or cause to be delivered, to
Buyer a duplicate original or true copy of such document certified by Seller.
Notwithstanding the foregoing, in the event that Seller cannot
deliver to Buyer any UCC-2 or UCC-3 Assignment with the filing information of
the UCC-1 Financing Statement being assigned, solely because of a delay caused
by the public filing office where such UCC-1 Financing Statement has been
delivered for filing, Seller shall deliver or cause to be delivered to Buyer a
photocopy of such UCC-2 or UCC-3 Assignment with the filing information left
blank. Seller, promptly upon receipt of the applicable filing information of the
UCC-1 Financing Statement being so assigned, shall deliver to Buyer the original
UCC-2 or UCC-3 Assignment with all appropriate filing information set forth
thereon.
B. ADDITIONAL SELLER CLOSING DELIVERIES. In addition to the items to be
delivered by Seller to Buyer under Article IV.A. Seller shall deliver or cause
to be delivered to Buyer the following:
1) A Limited Power of Attorney from Seller in favor of Buyer which covers
Buyer's ability to endorse, as Buyer deems necessary or appropriate, any checks
received payable to Seller in connection with the Accounts which shall be
satisfied by delivery of this Agreement containing such power of attorney in
Article X.
2) UCC-2 or UCC-3 Amendments reasonably deemed necessary by Buyer to
properly reflect the transactions contemplated by this Agreement.
3) Release from IBJ Whitehall Business Credit Company f/k/a IBJ Xxxxxxxx
Bank & Trust Company (Bank) of Bank's security interest in all of the Financing
Arrangements sold and assigned to Buyer pursuant to this Agreement in such form
and substance as is acceptable to Buyer.
C. REFERRALS. Seller hereby agrees, for a period of two (2) years after the
Closing Date, to refer to Buyer all inquiries made to Seller for the factoring
services formerly provided by Seller that fall within Buyer's defined parameters
for such transactions. Such referrals shall be transmitted via facsimile to the
attention of Xxxxxxx Xxxxxx at (000) 000-0000 in exchange for normal
commissions. Buyer agrees, for a period of two (2) years after the Closing Date,
to refer to Seller all asset based lending inquiries made of Buyer falling
within Seller's defined parameters for such loans. Such referrals shall be
transmitted via facsimile to the attention of Xxxxxxx X. Xxxxxxx at (703)
931-2034 in exchange for normal commissions.
D. PAYMENT ARRANGEMENTS. The Purchase Price (Base) shall be paid before 3:00 PM
Eastern Time on the Closing Date, in immediately available funds, less the
aggregate Assigned Client Loan balance on such date ($1,528,796.16), by wire
transfer in the amount of $4,461,456.16 to the following account:
IBJ Whitehall Bank & Trust Co.
ABA No. 026 00 7825
Account: Allstate Financial Corporation
No. 43589603
Upon payment of the Purchase Price (Base), all assignments to Buyer under this
Agreement shall be deemed to have FINALLY AND CONCLUSIVELY OCCURRED. THE
PURCHASE PRICE (PREMIUM) SHALL BE PAID BY THE FIFTEENTH (15TH) business day of
the month immediately following the month for which such payments are due and
shall be accompanied by a report on a per Assigned Client basis listing all
amounts of Gross Income and Deductible Costs and Expenses by category. Buyer
shall timely make scheduled payments of principal and interest to Seller for
Assigned Client Loans as set forth in Article III.O of this Agreement, provided
such Assigned Clients are not in default to Buyer and provided that such
payments shall be from funds due to the Assigned Client by Buyer. Payments of
the Purchase Price (Premium) and Assigned Client Loans shall be by wire transfer
in immediately available funds sufficient to cover the funding of Assigned
Clients which is approved by Buyer. Seller shall then wire transfer the amount
of funding approved by Buyer to the respective Assigned Clients as soon as
possible after Seller's receipt of funds from Buyer. Seller shall not purchase
any invoices received from the Assigned Clients on or after the Closing Date.
All such invoices shall be purchased or not purchased at Buyer's discretion.
Nowtwithstanding the payment of the Purchase Price (Base), Seller shall continue
to purchase accounts under the Financing Arrangements for the period October 28,
and October 29, 1999. Buyer shall wire transfer to Seller on such dates funds an
amount equal to the advances to be made to the Assigned Clients. Seller shall
not enter accounts purchased on such dates into the FMIS reports, and as between
Seller and Buyer, such accounts shall be deemed to have been purchased by Buyer
from the Assigned Clients effective the Closing Date. Such funds shall be wired
transferred to Seller as follows:
Bank of America
ABA No: 000-000-000
ACCOUNT: Allstate Financial Corporation
No. 000-0000-0000
E. PAYMENT OF CHARGES. As between Buyer and Seller, Buyer will be liable for,
and will pay directly, all charges imposed as a result of the purchase of the
Financing Arrangements hereunder for invoices purchased directly from Assigned
Clients by Buyer on or after Closing Date including, without limitation, sales
or use taxes, transfer or other taxes and governmental charges or levies
exclusive of charges imposed upon, or measured by, the net income attributable
to the factoring business of Seller, and Buyer shall indemnify and hold harmless
Seller from and against any reasonable loss, cost, expense, penalty or damage
arising out of or relating to the failure of Buyer to pay the such charges.
V. ALLOCATION OF COLLECTIONS
A. All monies received by wire transfer, or otherwise and posted to the FMIS
Reports by Seller prior to the close of business on October 27, 1999 in
connection with the Assigned Clients shall be the property of Seller.
B. All monies received by wire transfer, or otherwise, and posted to the FMIS
Reports by Seller on or after the close of business on October 28, 1999 or
received by Seller but not posted to the FMIS Reports in connection with the
Assigned Clients (excluding funds wired to Seller by Buyer for the purpose of
funding Assigned Clients on October 28 and 29, 1999) shall be the property of
Buyer and shall be forwarded to Buyer on the next business day following their
receipt.
C. Seller shall, on the day of receipt, send to Buyer all checks and
correspondence related to the Assigned Clients received by Seller on or after
the Closing Date via Federal Express "next business day"' service and charge
such delivery fees to Buyer's account.
D. If Seller receives any funds related to the Assigned Clients on or after the
Closing Date, Seller shall immediately cause to have the amount of such funds
wire transferred to Buyer. Buyer shall reimburse Seller the cost of such wire
transfer and include such payment with payments made pursuant to Article IV.D of
this Agreement. Further, Seller shall immediately deliver to Buyer via Federal
Express any documentation Seller has which explains the application of such
funds.
E. Seller agrees to cooperate with Buyer in transferring control from Seller to
Buyer of the Lockbox established for the collection of Accounts purchased from
Xxxxxx X. Xxxxxxx, Inc. and until such change of control is accomplished, Seller
agrees to timely forward all funds received in such Lockbox and copies of checks
received therein together with all other correspondence received in connection
therewith.
VI. REPRESENTATIONS AND WARRANTIES OF THE SELLER
A. REPRESENTATIONS AND WARRANTIES OF SELLER -- GENERAL. It is understood and
agreed by Seller and Buyer that as a material inducement to Buyer to enter into
this Agreement, Seller hereby represents and warrants to Buyer as follows:
1) Seller is duly organized, validity existing and in good standing under
the laws of the state in which it is domiciled, and is duly qualified to do
business in all jurisdictions wherein the character of the property owned or
leased or the nature of the business transacted by it makes qualification
necessary.
2) The execution and delivery of the Agreement by Seller and the
performance by Seller of the obligations to be performed by it hereunder have
been duly authorized by all necessary corporate or other similar action. At
least one(1) business day prior to the Closing Date, Seller shall have delivered
to Buyer certified copies of relevant corporate or similar resolutions.
3) The execution and delivery of this Agreement by Seller and the
performance by Seller of the obligations to be performed by it hereunder do not,
and will not, violate any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination oil or award presently in effect
having applicability to Seller of to the character or bylaws of Seller.
4) The execution and delivery of this Agreement by Seller and the
performance by Seller of the obligations to be performed by it hereunder do not
and will not result in a breach of, or constitute a default under, any indenture
or local or credit agreement or any other agreement, lease or instrument to
which Seller is a party or by which it or its properties may be bound or
affected.
5) This Agreement constitutes, when duly executed and delivered by Seller,
a legal, valid and binding obligation of Seller enforceable against Seller
according to its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium, or similar laws affecting
creditors' rights in general, including equitable remedies.
6) Seller has not engaged the services of a broker or other representative
for the purpose of selling the Financing Arrangements and no commission or other
fee is due to any other party in connection with the sale of the Financing
Arrangements hereunder.
7) At least one(1) business day prior to the Closing Date Seller shall have
delivered to Buyer original copies of written consents to this Agreement duly
executed by any and all parties who have a lien and/or a security interest in
any of the Financing Arrangements which are sold and assigned to Buyer hereunder
together with such parties' agreement to execute any and all UCC-2 or UCC-3
forms or other documents necessary to evidence termination of such parties' lien
and/or security interests in all of such Financing Arrangements upon payment by
Buyer of that portion of the Purchase Price (Base) specified in Article IV.D
above.
B. REPRESENTATIONS AND WARRANTIES OF SELLER AS TO EACH FINANCING ARRANGEMENT. It
is understood and agreed by Seller and Buyer that as a material inducement to
Buyer to enter into this Agreement, Seller hereby represents and warrants the
following to Buyer as of the Closing Date;
1) Seller is the sole owner of and has good title to the Financing
Arrangements. Seller has not sold, assigned or otherwise transferred any right
or interest in or to any of the Financing Arrangements to any party other than
Bank.
2) Seller represents and warrants to Buyer that each of the Financing
Arrangements to be sold by Seller to Buyer at the Closing Date will be genuine,
legal, valid and binding obligations of each of the Assigned Clients thereto and
that all subordinations necessary for Buyer to have a first lien security
interest in all of Assigned Client's presently existing and hereafter acquired
accounts receivable exist or will be granted by any holder of a security
interest or lien in or on such accounts receivable that is superior to Buyer's
security interest absent such subordination.
3) That as of the Closing Date, the Amount at Risk for each Assigned Client
shall not exceed the contractual advance rate as stipulated in the related
FactoringAgreement, i.e., there will exist no "over advance" to any Assigned
Client other than the Client Loans and over advances specifically approved by
Buyer.
4) Seller represents and warrants that all of the Financing Arrangements
and Accounts are assignable without the consent of the Assigned Clients.
VII. REPRESENTATIONS AND WARRANTIES OF BUYER
It is understood and agreed by Seller and Buyer that as a material
inducement to Seller to enter into this Agreement Buyer hereby represents and
warrants to Seller, as follows:
A. Buyer is an organization as set forth in the introductory article and is duly
organized, validly existing and in good standing under laws applicable to its
organization's existence.
B. The execution and delivery of this Agreement by Buyer and the performance by
Buyer of the obligations by it to be performed hereunder have been duly
authorized by all necessary corporate resolutions.
C. The execution and delivery of this Agreement by Buyer and the performance by
Buyer of the obligations by it to be performed hereunder do not, and will not,
violate any provision of any law, rule, regulations, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to Buyer or to the charter or bylaws of Buyer.
D. This Agreement constitutes, when duly executed and delivered by Buyer, a
legal, valid and binding obligation of Buyer enforceable against Buyer according
to its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or similar laws affecting
creditors' rights in general, including equitable remedies.
E. Buyer has not engaged the services of a broker or other representative for
the purpose of buying the Financing Arrangements and no commission or other fee
is due to any other party in connection with the sale of the Financing
Arrangements hereunder.
F. Buyer is a sophisticated investor and his extensive experience in
consummating transactions similar to those contemplated hereunder. Buyer fully
understands and hereby acknowledges that it is fully and exclusively assuming
the risk that the face amount of the Accounts may not be collected. The
transactions contemplated by this Agreement are exempt from all state and
federal securities laws.
VIII. INDEMNIFICATION
A. Seller agrees to protect, indemnify, and hold Buyer and its employees,
officers, directors and agents (the "'Buyer Indemnities") harmless against, and
in respect of, any and all losses, liabilities, costs and EXPENSES (INCLUDING
REASONABLE ATTORNEY'S FEES), JUDGMENTS, DAMAGES, CLAIMS, counterclaims, demands,
actions or proceedings, by whomsoever asserted, including but not limited to the
Assigned Clients or Account Debtors, against any Buyer Indemnities or the
settlement or compromise of any of the foregoing, providing, however, only if
any of the foregoing arises out of, is connected with or results from: (i) any
breach of any representations, covenant or warranties made by Seller hereunder,
(ii) Seller's misapplication of credits for Collections; (iii) data entry errors
made by Seller on the FMIS Reports prior to the Closing Date; (iv) any actions
or omissions by Seller that is the basis of any claim or cause of action against
Buyer by or on behalf of any Assigned Client or Account Debtor; and (v) Seller
having advanced monies to an Assigned Client or Assigned Clients after the
earlier of forty-five (45) days after the filing of a government tax lien or
Seller's actual knowledge of the filing of such a lien.
B. Buyer agrees to protect, indemnify, and hold Seller and its employees,
officers, directors and agents (the "Seller Indemnities") harmless against, and
in respect of, any and all losses, liabilities, costs and expenses (including
reasonable attorney's fees), judgments, damages, claims, counterclaims, demands,
actions or proceedings, by whomsoever asserted, including but not limited to,
the Assigned Clients or Account Debtors, against any Seller Indemnities or the
settlement or compromise of any of the foregoing, providing, however, any of the
foregoing arises out of, is connected with or results from: (i) any breach of
any representations, covenants or warranties made by Buyer hereunder, (ii)
Buyers retention of any monies that do not constitute Collections of Accounts
beyond the time period permitted hereunder (iii) all Collections returned for
insufficient funds within thirty (30) days of October 27, 1999; and (iv) any
actions or omissions by Buyer that is the basis of any claim or cause of action
against Seller by or on behalf of any Assigned Client or Account Debtor.
IX. COVENANT NOT TO SOLICIT CLIENTS
For a period of two (2) years from and after the Closing Date, neither
Seller, any of its affiliates, its parent nor any other related entity will
solicit any Assigned Client for any factoring services.
X. BUYER'S LIMITED POWER OF ATTORNEY
Seller hereby irrevocably appoints Buyer as its attorney-in-fact for
the limited and exclusive purpose of endorsing Collections received by Buyer
after the Closing Date. Buyer hereby acknowledges that this power of attorney is
limited only to Collections and Buyer agrees to indemnify and hold Seller
harmless for Buyer's endorsement of any items that do not constitute
Collections.
XI. ADDITIONAL COVENANTS
A. ADDITIONAL BUYERS COVENANTS. In addition to the other agreements and
obligations of Buyer hereunder, Buyer hereby agrees to:
1) Within five (5) business days after the Closing Date, file with the
appropriate United States Bankruptcy Courts, notices pursuant to Federal Rules
of Bankruptcy Procedure, Rule 3001, to the effect that the Financing
Arrangements have been assigned to Buyer for those Assigned Clients that have
file proceedings under Chapter 11 of Title II of the United States Code, if any,
Buyer shall provide Seller with copies of all such notices, within five (5)
business days after filing.
2) Within ten (10) business days after the Closing Date, file all necessary
or appropriate notices or documents with the appropriate departments of the
United States government in order to receive consent from such United States
Government Department of the assignment of any Account purchased hereunder for
which the Account Debtor is the United States Government of any department or
sub-division thereof, if any. Buyer shall use all reasonable best efforts to
obtain all such necessary consents to assignment within sixty (60) business days
after the Closing Date. Buyer shall provide Seller with copies of all such
documents or notices within five (5) business days after their transmittal.
3) Prepare and deliver, at Buyer's expense, to Seller for execution within
thirty (30) business days after the Closing Date all (UCC-2 or UCC-3 Assignments
necessary to assign Seller's security interests in the Collateral to Buyer.
4) As soon as possible after the Closing Date, Buyer shall initiate
procedures to redirect all payments of collections to Buyer's address.
5) At closing, provide to Seller for its execution, a letter to the
Assigned Clients and Account Debtors constituting notice of due sale of the
Financing Arrangements to Buyer with a directive to remit all Account Payments
to Buyer.
6) Prior to the Closing Date, not attempt to renegotiate the terms or
conditions of any Financing ARRANGEMENT WITH ANY ASSIGNED CLIENT AND NOT
INDICATE ITS INTENTION TO renegotiate any terms or conditions of any Financing
Arrangement with any Assigned Client, except as may be approved in writing by
Seller.
B. ADDITIONAL SELLER'S COVENANTS. In addition to the other agreements
and obligations of Seller hereunder, Seller hereby agrees to comply with all
reasonable requests for information or assistance by Buyer with respect to
Buyer's covenant in Article X.A.2 herein.
XII. PARTICIPATION
On the Closing Date, Seller shall purchase a one hundred percent (100%)
participation interest in all Client Loans and in the Collateral, in form and
substance acceptable to the parties; it being understood and agreed, however,
that in the event of a default by the Assigned Client and liquidation of the
Collateral, the proceeds therefrom shall be distributed as follows until the
parties shall have been paid in full:
1) The proceeds of all Accounts shall be distributed first to
Buyer until Buyer has been paid in full, with the balance, if
any, to be paid to Seller until paid in full.
2) The proceeds of all machinery, equipment, inventory and all
other tangible assets shall be distributed first to Seller
until Seller shall has been paid in full, with the balance, if
any, to be paid to Buyer until paid in full.
XIII. MISCELLANEOUS
A. CONFIDENTIALITY. Buyer and Seller agree to keep the terms of this Agreement
confidential except as required by legal process, until the Closing Date,
provided, however that Buyer may disclose to the Assigned Clients that it is
scheduled to purchase their Financing Arrangements on the Closing Date if such
is done in the process of attempting to renegotiate any Financing Arrangements.
B. ARBITRATION. Any dispute, controversy or claim arising under or in relation
to this Agreement or any modification thereof, shall be settled only by
arbitration which shall be held in the City of Arlington, Virginia in accordance
with the laws of the State of Virginia and the rules of the American Arbitration
Association. The parties hereto consent to the jurisdiction of the courts of the
State of Virginia and of the United States District Court for the District of
Virginia and further consent that any process or notice or other application to
any court or a judge thereof may be served within or without the State of
Virginia or the District of Virginia by certified mail or by personal service,
provided a reasonable time for appearance is allowed. Judgment upon the award
rendered by the Arbitrator(s) may be entered in any State or Federal court
having jurisdiction thereof
C. WAIVER OF JURY TRIAL. Each of the parties hereto agrees that if any issue,
claim, controversy or other matter arising under or out of this Agreement is
tried in a court of law in any jurisdiction, such trial or other proceeding
shall be without a jury, and each of the parties hereto expressly waives its
right to a trial by jury in connection with any such trial or other proceeding.
D. SURVIVAL OF COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES: SUCCESSORS
AND ASSIGNS. All warranties, representations and covenants made by either party
in this Agreement or in any other instrument delivered by either party to the
other, shall he considered to have been relied upon by die other party (unless
otherwise agreed in writing by the parties) and shall survive the Closing Date.
E. SEVERABILITY. If any provision, or part thereof, of this Agreement is invalid
or unenforceable under any law, such provision, or part thereof, is and will be
totally ineffective to that provision, but the remaining provisions, or pan
thereof, will be unaffected.
F. ATTORNEYS' FEES. Anything to the contrary notwithstanding, in the event of
any action at law, in equity, arbitration or otherwise between the parties in
relation to this Agreement or any Loan or other instrument or agreement required
or purchased or sold hereunder, the non-prevailing party, in addition to any
other sums which such party shall be required to pay pursuant to the terms and
conditions of this Agreement, at law, equity, arbitration of otherwise shall
also be required to pay to the prevailing party all costs and expenses of such
litigation, including reasonable attorney fees.
G. WAIVERS. No waiver of any term, provision or condition of this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as a further or continuing waiver of any such term,
provision or condition, or any other term, provision or condition of this
Agreement.
H. NOTICE. Any notice or other communication in this Agreement provided or
permitted to be given by one party to the other must be in writing and given by
personal delivery by depositing the same in the United States mail (certified
mail, return receipt requested), addressed to the other party to be notified,
postage prepaid or by facsimile transmission. For purposes of notice, the
addresses of the parties shall be as follows:
SELLER: ALLSTATE FINANCIAL CORPORATION
0000 X. Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
ATTENTION: Xxxxxxx X. Xxxxxxx, President
(000) 000-0000 (fax)
(000) 000-0000 (phone)
BUYER: METRO FACTORS, INC.
Walnut Xxxx Tower
0000 Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 752314316
ATTENT1ON: Xxxxxxx Xxxxxx, President
(000) 000-0000 (fax)
(000) 000-0000 (phone)
The above address may be changed from time to time by written notice
from one party to the other.
I. ASSIGNMENT. Neither Buyer nor Seller shall without the prior written consent
of the other, assign any of its rights or obligations hereunder except that
Buyer may assign its rights in the Financing Arrangements to its secured
lenders.
J. CAPTIONS. Article or other headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
K. ENTIRE AGREEMENT. This Agreement and the documents referred to herein or
executed concurrently herewith constitute the entire agreement between the
parties hereto with regard to the subject matter hereof, and there are no prior
agreements, understandings, restrictions, warranties or representations between
the parties with respect thereto.
L. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Virginia. This Agreement shall be
interpreted fairly in accordance with its provisions and without regard to which
party drafted it.
M. SOLICITATION OF EMPLOYEES. Seller agrees to cooperate with Buyer, at Buyer's
election, in its efforts TO SECURE THE EMPLOYMENT SERVICES OF XXXXXX XXXXXX AND
XXXXXXX XXXXXXXX on terms and conditions acceptable to Buyer. This Agreement,
however, is not contingent upon such employment.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
[SIGNATURE PAGE FOLLOWS]
SELLER: ALLSTATE FINANCIAL CORPORATION,
a Virginia Corporation
By:___________/s/__________________
Xxxxxxx X. Xxxxxxx, President
Date: October 28,1999
WIRE TRANSFER INSTRUCTIONS:
Bank of America
ABA No. 000-000-000
Account: Allstate Financial Corporation
No. 000-0000-0000
BUYER: METRO FACTORS, INC.,
a Texas corporation
By:___________/s/_______________
Xxxxxxx X. Xxxxxx, President
Date: October 28,1999
WIRE TRANSFER INSTRUCTIONS:
KeyBank National Association
ABA No. 000000000
Account: Metro Factors, Inc.
No. 1000598694
