COLLECTION SERVICES AGREEMENT
This Collection Services Agreement (the "Agreement"), dated as of
October 5, 1999, is entered into by and among Utopia Marketing, Inc., a
Florida corporation ("Utopia"), Sumitomo Corporation of America, a New York
corporation ("SCOA"), and Ipanema Shoe Corporation, a New York corporation
("Ipanema").
WHEREAS, pursuant to an Asset Purchase Agreement dated as of the
date hereof among Utopia, Ipanema and SCOA (the "Asset Purchase Agreement"),
Utopia is purchasing certain assets of Ipanema as specified in the Asset
Purchase Agreement, and Ipanema is retaining its other assets, including
without limitation the Back Orders, Inventory and Receivables and the Retained
Liabilities;
WHEREAS, as a material inducement for each party hereto to enter
into the Asset Purchase Agreement, Ipanema and SCOA desire that Ipanema grant
to Utopia, and Utopia desires to assume, the exclusive right and
responsibility, acting as Ipanema's agent, to manage the process of collecting
amounts payable to Ipanema under the Receivables, on the terms and subject to
the conditions set forth herein; and
WHEREAS, all capitalized terms used but not defined in this
Agreement shall have the meaning ascribed to them in the Asset Purchase
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1. Services Provided. Subject to the terms and conditions set
forth in this Agreement, Ipanema hereby retains and appoints Utopia as its
exclusive agent for the purpose of managing the process of collecting amounts
payable to Ipanema in respect of any and all Receivables. Commencing on the
date hereof and during the term of this Agreement, Utopia, at no cost or
expense to Ipanema or SCOA (other than as provided in this Agreement), shall
provide such collection management and other services as may be commercially
reasonable to maximize the collection of Receivables on behalf of Ipanema
(individually, a "Service", and collectively, the "Services"). Utopia shall
maintain adequate sources of funding to support its operations and perform the
Services with no less commitment with respect to resources and quality than it
would in engaging in the Services for its own account, and in any event shall
perform the Services in good faith and in a commercially reasonable manner in
accordance with the terms of this Agreement. Ipanema and SCOA recognize and
agree that, during the term of this Agreement and subject to the terms and
conditions hereof, Utopia shall have the exclusive right (to the exclusion of
Ipanema and SCOA) and responsibility to manage the process of collecting
amounts payable to Ipanema in respect of any and all Receivables, provided
that each party hereto also recognizes that it will be necessary for Utopia to
receive the assistance of Ipanema personnel who effectively may be performing
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certain of the Services on a day-to-day basis until October 31, 1999.
Notwithstanding the foregoing, each party hereto further understands that all
rights and responsibilities with respect to ultimate decision making with
respect to the collection management of all Receivables will be retained by
Utopia exclusively, subject to the rights of Ipanema and SCOA hereunder in
respect of outsourcing/subcontracting and the arbitration of disputes pursuant
to Section 5. Utopia shall grant Markdowns and settle other Customer
Liabilities of Ipanema in a commercially reasonable manner. In performing the
Services hereunder Utopia shall be permitted to outsource or subcontract with
qualified third parties, subject to Ipanema's consent, which shall not be
unreasonably withheld, including with Atlas and ACI (parties with whom
Ipanema has contracted for similar services in the past).
2. Collection of Receivables Proceeds; Fees and Payment.
(a) All customers and other third parties making payment with
respect to the Receivables have been and shall continue to be instructed to
make payment solely to Ipanema's lock box account, account number 000-000-000
at Chase Manhattan Bank, NYC, ABA (Routing Number) 000000000 (the "Lock Box
Account"). Except as provided in Section 2(b) below, neither Utopia nor any
of its Representatives or any other party acting with their authority, shall
have any right to receive or retain any payments from customers or other
third parties with respect to the Receivables (collectively, the "Customer
Payments") or with respect to any other Retained Assets. Utopia shall cause
any Customer Payment received by any of such Persons to be remitted to the
Lock Box Account within three (3) business days following their receipt
thereof. No part of any Customer Payments received by any of such Persons may
be reduced due to any counterclaim, setoff, adjustment or other right which
Utopia or any other Person may have against Ipanema, SCOA or any other Person.
(b) In consideration of the Services, Ipanema shall pay to
Utopia 30% of each Customer Payment received hereunder. Such payment shall be
made in accordance with Section 2(c) below.
(c) Ipanema shall deliver to Utopia, on each Friday during the
term of this Agreement for the week ending the previous Friday (each a
"Payment Period"), beginning with the first Payment Period, a written report
describing, for the applicable Payment Period: (x) the total Customer Payments
remitted to the Lock Box Account; and (y) the amount of the payment owing to
Utopia pursuant to Section 2(b). Each such report shall be in sufficient
detail for the accuracy of the calculation of the resulting payment owing to
Utopia pursuant to Section 2(b) to be verified. Simultaneously with each such
report with respect to a Payment Period, Ipanema or SCOA, on Ipanema's behalf,
shall make full payment to Utopia of the amount payable to Utopia pursuant to
Section 2(b) by wire transfer of immediately available funds to such U.S. bank
account as Utopia may designate in writing from time to time.
(d) On not less than three (3) business days' prior written
notice to Ipanema, Utopia's independent auditor (who shall not be Ipanema's
independent auditor) shall have full access to the books and records of
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Ipanema pertaining to Customer Payments and shall have the right to make
copies therefrom at Utopia's expense. Utopia's independent auditor shall have
such access at all reasonable times and from time to time during normal
business hours during the term of this Agreement and for a period of one year
thereafter. Prompt adjustment shall be made by the proper party to compensate
for any errors or omissions disclosed by such audit, with interest accruing on
such adjustment amount at a rate equal to 10% from the date as of which the
payee originally had the right to receive the adjustment amount. All reports
and payments not disputed as to correctness by Utopia within one year after
receipt thereof shall thereafter conclusively be deemed correct for all
purposes of this Agreement.
3. Personnel.
(a) Utopia shall maintain such staff and facilities as may be
reasonably necessary to perform the Services. Until October 31, 1999, Ipanema
shall use commercially reasonable efforts to retain a skeleton staff of
Ipanema employees identified in Annex A to assist Utopia in the performance of
the Services, it being acknowledged by Utopia that Ipanema cannot guaranty
that such personnel shall not leave its employ, nor shall Ipanema be under any
obligation to replace any such personnel who leave its employ notwithstanding
its commercially reasonable efforts to retain them through October 31, 1999.
(b) Utopia shall permit SCOA and Ipanema and their respective
employees and agents access during regular business hours (or otherwise upon
reasonable prior notice) to individuals responsible for the Services and to
any Computer Equipment purchased by Utopia pursuant to Section 2.1(d) of the
Asset Purchase Agreement, and shall provide SCOA with such data and records as
SCOA may reasonably request for the purposes of allowing SCOA to monitor the
performance of the Services. Without limiting the generality of the
foregoing, SCOA shall have the right to second at least one Representative
(collectively, "Seconded Employees") at the facilities of Utopia where the
Services are to be provided, in order to monitor and have full access to and
participate in the Services (including, without limitation, the granting of
Markdowns and settlement of other Customer Liabilities of Ipanema); provided
that (i) SCOA shall be responsible for all amounts payable in relation to the
Seconded Employees (including wages, salaries and other benefits, and social
security or similar taxes); and (ii) all Seconded Employees, while at the
facilities of Utopia, shall comply with all reasonable rules and regulations
established by Utopia, and shall abide by appropriate confidentiality
restrictions.
(c) Utopia shall make available any of its employees whose
assistance, testimony or presence is necessary to assist SCOA and/or Ipanema
in evaluating or defending any claims, including the presence of such persons
as witnesses in hearings or trials for such purpose; provided that SCOA shall
reimburse Utopia or the employee, for any direct out-of-pocket costs in
connection with such employee's assistance, testimony or presence, promptly
following receipt of appropriate documentation of such out-of-pocket costs.
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(d) Each party shall designate a relationship manager to report
and discuss issues with respect to the provision of Services under this
Agreement. Utopia hereby designates Xxxxxx Xxxxxxx and SCOA hereby
designates Xxxx Xxxxxxx as their respective initial relationship managers.
The relationship managers shall meet to discuss the performance of the
Services (including without limitation a detailed report of any and all
Markdowns granted or being considered since the last meeting) as often as
reasonably necessary to ensure the orderly provision of the Services, and in
any event at least weekly, and shall have authority to address and remedy
problems related to the provision of Services to the extent consistent with
this Agreement. Each party shall designate successor relationship managers in
the event that a designated individual is not available to perform such role
hereunder.
4. Term. This Agreement shall commence as of the date hereof
and continue in effect thereafter until March 31, 2000, provided that Ipanema
(or SCOA, as its successor) shall have diligently pursued its remedies under
its credit insurance policies during the term hereof with respect to the
Designated Receivables (as hereinafter defined), and, if as of Xxxxx 00, 0000
Xxxxxx shall not have been compensated hereunder with respect to the
Designated Receivables, the parties shall enter into good faith discussions to
amicably resolve such matter. For purposes hereof, "Designated Receivables"
means Ipanema's accounts receivable from the following customers for the
following accounts: (i) Filene's Basement for $20,706.84; (ii) Xxxxxxxx'x for
$64,629.00; and (iii) MTB for $1,579.87. The term of this Agreement may be
reduced or extended by written agreement of the parties. Upon termination of
this Agreement, or upon expiration of the term hereof: (i) Ipanema shall
deliver to Utopia by wire transfer an amount equal to 30% of the outstanding
balance of the Lock Box on the date of termination or expiry of this
Agreement; and (ii) Utopia shall retain all books and records, or copies
thereof, pertaining to the disposition of the Receivables used or generated in
the course of the provision of Services hereunder. Thereafter Utopia shall
have the right to dispose of such books and records, but will not do so unless
it has given SCOA at least 90 days' prior notice of such disposition and the
reasonable opportunity, to the extent practicable, to have such books and
records copied or delivered to SCOA at SCOA's expense. If requested by SCOA,
Utopia will afford SCOA reasonable access to such books and records during
normal business hours at SCOA's expense and shall permit SCOA at its expense
to copy or to take original copies of such books and records to the extent
such books and records pertain solely to the disposition of the Receivables
and to copy such books and records to the extent such books and records
pertain to the disposition of the Receivables only in part.
5. Dispute Resolution. In the event any dispute arises under
this Agreement, the parties hereto agree to negotiate in good faith to resolve
such dispute prior to seeking relief in a court of law in accordance with
Section 15. Either Utopia on one hand, or SCOA and/or Ipanema on the other
hand, may at any time deliver a notice to the other that it (they) wishes to
refer a dispute to senior executives of SCOA and Utopia, respectively.
Following receipt of such notice, each of Utopia and SCOA shall designate one
of its senior executives to negotiate in good faith to resolve such dispute
within 5 days (or such longer period of time as such executives may agree
upon). If at the end of such 5-day (or longer if properly extended) period
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the designated executives have not fully resolved the dispute to their mutual
satisfaction, any party may thereafter seek relief in a court of law in
accordance with Section 15, provided that any dispute arising from the
granting or settlement of Markdowns or other Customer Liabilities of Ipanema
shall be referred to binding arbitration before Xxxxxx Xxxxxxx or, if he is
unavailable, such other individual as the parties mutually agree upon,
pursuant to procedures to be mutually determined by the parties; provided
further that any such Markdowns or other Customer Liabilities not disputed by
SCOA and/or Ipanema in writing within 10 business days following notice
thereof from Utopia pursuant to Section 3(d) shall be deemed accepted by
Ipanema and SCOA.
6. Confidentiality; Data.
(a) The materials, data and/or information of Utopia that may be
provided to SCOA and/or Ipanema concerning the business, operations or results
of Utopia (including any such information learned during an audit), and
Ipanema's materials, data and/or information provided to Utopia or generated
in connection with the Services concerning the disposition of the Receivables,
are proprietary trade secrets and confidential information ("Confidential
Information") of Utopia and Ipanema, respectively, and no party shall possess
any interest, title, lien or right in any Confidential Information of any
other. Utopia on one hand, and SCOA and Ipanema on the other hand, agree not
to (i) disclose the Confidential Information of the other to any third party
or (ii) use the Confidential Information of the other except as necessary to
perform its obligations under this Agreement, in either case without the
express prior written consent of the other, and each party shall be
responsible for any breaches of this Section 6 by its affiliates, directors,
officers, employees, representatives (including financial advisors, attorneys
and accountants) or agents (the "Representatives").
(b) The term Confidential Information will not, however, include
information which (i) is or becomes publicly available other than as a result
of a disclosure by any party receiving the Confidential Information
("Receiving Party") or its Representatives or (ii) is or becomes available to
the Receiving Party on a nonconfidential basis from a source (other than the
party providing, directly or indirectly, its Confidential Information
("Providing Party") or its Representatives) which, to the best of the
Receiving Party's knowledge after due inquiry, is not prohibited from
disclosing such information to it by a legal, contractual or fiduciary
obligation to the Providing Party.
(c) Upon the earliest to occur of expiration or termination of
this Agreement or at such time as any Confidential Information ceases to be
required by the Receiving Party to perform or receive Services hereunder, or
at the request of a Providing Party, a Receiving Party shall promptly return,
and cause to be returned, all or any requested portion of such Confidential
Information and shall destroy, or cause to be destroyed, all copies (including
electronic versions) of any compilations, analyses, studies or other documents
prepared by the Receiving Party or its Representatives containing or
reflecting any such Confidential Information.
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(d) Notwithstanding the other provisions of this Section 6,
either party may disclose any Confidential Information of the other party to
the minimum extent required by applicable law, regulation or legal process;
provided that either party that is requested pursuant to, or required by,
applicable law, regulation or legal process to disclose any Confidential
Information shall provide the Providing Party with prompt prior written notice
of such request or requirement, and shall cooperate with the Providing Party
to seek an appropriate protective order or other remedy, to take steps to
resist or narrow the scope of such request or legal process.
7. Good Faith. The parties hereto agree that all negotiations
and consultations provided for in this Agreement shall be undertaken in good
faith in order to achieve mutually agreeable understandings.
8. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by overnight courier service, by cable, by facsimile, by telegram, by
telex or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or to such
other persons with respect to specific provisions hereof or at such other
address for a party, in each case, as shall be specified in a notice given in
accordance with this Section 8):
If to SCOA and/or Ipanema:
Sumitomo Corporation of America
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: General Manager, Investment Division
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
If to Utopia:
Utopia Marketing, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telecopier: (000) 000-0000
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with a copy to:
Holland & Knight LLP
000 Xxxxxxxx Xxxxxx
Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Telecopier: (000) 000-0000
9. Public Announcements. Subject to the express terms of
Section 9.3 of the Asset Purchase Agreement, except as may be required by law
or stock exchange rules, no party to this Agreement shall make any public
announcements in respect of this Agreement or the transactions contemplated
hereby or otherwise communicate with any news media without the consent of to
the other parties (such consent not to be unreasonably withheld). With
respect to the public announcement concerning the transactions contemplated by
this Agreement and the Asset Purchase Agreement, the parties shall cooperate
as to the timing and contents of any such announcement.
10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the greatest extent possible.
11. Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, among
the parties with respect to the subject matter hereof.
12. Binding Effect; Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement may not be
assigned or otherwise transferred, by any party hereto, whether voluntarily or
by operation of law, without the prior written consent of the other parties,
provided that such consent shall not be required if: (i) the rights of Utopia
hereunder are encumbered by and/or assigned to a financial institution which
is providing financing to Utopia; or (ii) the right and obligations of
Ipanema hereunder are assigned to SCOA. Any attempted assignment, delegation
or other transfer without the prior written consent of the other parties, if
required pursuant hereto, shall be void and of no legal force or effect.
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13. No Third Party Beneficiaries. This Agreement is for the
sole benefit of the parties hereto and their permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon any other
person or entity any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
14. Relationship of the Parties. The parties hereto are
independent contractors. This Agreement shall not be construed as
constituting either Utopia on one hand, or SCOA and Ipanema on the other hand,
as partners or joint venturers, or as creating any other form of legal
association or arrangement which would impose liability on one for the act or
omission of the other(s).
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York
without giving effect to any choice or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
16. Recovery of Litigation Expenses. In connection with any
suit, action or proceeding between or among any parties hereto arising out of
or related to this Agreement, the prevailing party or parties in such suit,
action or proceeding shall be entitled to recover all of its and their costs
and expenses in connection with such suit, action or proceeding, including,
without limitation, all costs and expenses in investigating and prosecuting or
defending such suit, action or proceeding, including, without limitation,
reasonable fees and expenses of counsel, auditors and other consultants.
17. Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by the parties hereto.
18. Waiver. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but
no such waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party waiving such term or condition. No
waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by law or otherwise afforded, will be
cumulative and not alternative.
19. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this Agreement.
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20. No Presumption. This Agreement shall be construed without
regard to any presumption or rule requiring construction or interpretation
against the party drafting or causing any instrument to be drafted.
21. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
22. Force Majeure. Any failure or omission by a party in the
performance of any obligation under this Agreement shall not be deemed a
breach of this Agreement or create any liability, if the same arises from any
cause or causes beyond the control of such party, including, but not limited
to, the following, which, for purposes of this Agreement shall be regarded as
beyond the control of each of the parties hereto: acts of God, fire, storm,
flood, earthquake, governmental regulation or direction, acts of the public
enemy, war, rebellion, insurrection riot, invasion, strike or lockout;
provided that such party shall resume the performance whenever such causes are
removed. Notwithstanding the foregoing, if such party cannot perform any
obligation under this Agreement for a period of 45 days due to such cause or
causes, the parties shall in good faith negotiate an interim arrangement for
the performance of services hereunder.
23. Specific Performance. To the extent permitted by applicable
law, the parties hereto agree that irreparable damage will occur if any
provision of this Agreement is not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity; provided that
each of the parties agrees to provide the others with written notice at least
two (2) business days prior to filing any motion or other pleading seeking a
temporary restraining order, a temporary or permanent injunction, specific
performance, or any other equitable remedy and to give the others and their
respective counsel a reasonable opportunity to attend and participate in any
judicial or administrative hearing or other proceeding held to adjudicate or
rule upon any such motion or pleading.
24. Annexes. Any Annexes to this Agreement are deemed a part of
this Agreement and are subject to all of the provisions herein.
25. Authority. Each party hereto represents and warrants to the
other parties hereto as follows: (i) it has the full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby; (ii) the
execution and delivery by it of this Agreement and the performance by it of
its obligations hereunder have been duly and validly authorized by all
necessary corporate action; (iii) this Agreement has been duly and validly
executed and delivered by it and constitutes its legal, valid and binding
obligations, enforceable against it in accordance with its terms, subject to
the effect of any applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws from time to time in effect and affecting
creditors' rights generally and subject, as to enforceability, to the effect
of general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written by their respective officers
thereunto duly authorized.
UTOPIA MARKETING, INC.
By________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
SUMITOMO CORPORATION OF AMERICA
By________________________________
Name: Xxxxxx Xxxxxx
Title: Vice President
IPANEMA SHOE CORPORATION
By________________________________
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
[Signature Page to Collection Services Agreement]
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ANNEX A
IPANEMA PERSONNEL
Remaining Ipanema Employees
(as of September 30, 1999)
Name Title
Executive Staff
Xxx Xxxxxxxx President and Chief Operating Officer
Xxxx Xxxxxxx Vice President of Finance
Xxxxxx Xxxxxxxx Vice President of MIS and Logistics
Support Staff
Xxxxxx Xxxxxxxxx Supervisor, Accounts Payable
Xxx Xxxxxxx Accountant
Xxxxxx X.Xxxxxxxxx Samples
Xxxxxxx XxXxxxxx Senior Corporate Accountant
Xxxxxxxxx Xxxxxxx Senior Customer Service Representative
Xxxxxx Xxxxxxxx Manager, Order Entry
Xxxxxx So EDI and Billing
Xxxxx Xxxxx Xxxxxxx General Manager, Customer Service
Shen X. Xxxx Supervisor, EDI and Billing
Xxxxx Xxxxx Supervisor, Traffic and Inventory
