EXHIBIT 10.2
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made by and between CSI BUSINESS FINANCE, INC., a
Texas company ("Factor"), whose address is 000 Xxxxx Xxxx Xxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxx 00000, and ATSI COMMUNICATIONS, INC , a Nevada corporation, whose
address is 0000 Xxxxxxxx, Xxxxx 000X, Xxx Xxxxxxx, XX 00000 (the "Seller").
WHEREAS, Factor is engaged in, among other things, the business of
purchasing accounts receivable and other rights to payment from persons or firms
selling goods or rendering services to others, and Seller desires from time to
time to sell accounts receivable and other rights to Factor pursuant to the
terms of this Agreement;
DEFINITIONS
"Account Debtor" shall mean the party or parties obligated to pay a
Receivable.
"Agreement" shall mean this Purchase and Sale Agreement, together with
the Schedules attached hereto.
"Avoidance Claim" shall mean any claim that any payment received by
Factor from or for the account of an Account Debtor is avoidable under the
Bankruptcy Code or any other debtor relief statute.
"Collateral" shall have the meaning ascribed thereto in the Security
Agreement.
"Dispute" shall mean any dispute, deduction, claim, offset, defense or
counterclaim of any kind asserted by an Account Debtor and pertaining to a
Receivable or the goods or services giving rise thereto.
"Factor" shall have the meaning given in the first paragraph of this
Agreement.
"Legal Holiday" shall mean any day on which national banks doing
business in the State of Texas are closed for regular business.
"Misdirected Payment Fee" shall mean five percent (5 %) of the amount
of any payment on account of a Receivable, which has been received by Seller and
not delivered in kind to Factor on the next business day following the date of
receipt by Seller.
"Payments" shall have the meaning given in Section 31 of this Agreement
"Purchase Price" shall have the meaning given in Section 6 of this
Agreement.
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"Receivables" shall mean the accounts receivable and other forms of
rights to payment described on Schedule A attached hereto and/or as set forth on
a supplemental Schedule A to be attached in the future and signed by Factor and
Seller.
"Reserve Account" shall have the meaning given in Section 7 of this
Agreement.
"Reserve Payment Worksheet" shall have the meaning given in Section 14
of this Agreement.
"Secured Liabilities" shall have the meaning ascribed thereto in the
Security Agreement.
"Security Agreement" shall mean that certain Security Agreement between
Factor and Seller executed of even date herewith.
"Seller" shall have the meaning given in the first paragraph of this
Agreement.
"UCC" shall mean the Texas Uniform Commercial Code.
AGREEMENT
For and in consideration of the mutual promises herein contained, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Factor and Seller hereby agree as follows:
1. Purchase and Sale of Accounts Receivable and other Rights. Seller
hereby sells, assigns, transfers, conveys and delivers to Factor, as an outright
conveyance and not as a security interest all right, title and interest of
Seller in the Receivables and other forms of rights to payment described on
Schedule A attached hereto and made a part hereof. Seller represents and
warrants that in the event invoices are attached to Schedule A, such invoices
represent true and correct copies of invoices for the Receivables. In the event
Schedule A is not attached to this Agreement at the time of its original
execution, the parties agree that actual purchases of receivables will be
evidenced by the completion and execution by both parties of Schedule A in the
future. Whether or not an initial Schedule A is attached to this Agreement, it
is anticipated that additional Receivables will be sold by Seller to Factor
(although Factor is not agreeing to purchase any particular Receivable or any
additional Receivables hereby), and such future purchases will be evidenced by
the completion and execution of additional schedules in form similar to Schedule
A. Upon execution by both Factor and Seller of such a supplemental schedule, the
accounts receivable described therein shall become Receivables subject in all
respects to the terms of this Agreement. Seller acknowledges that the
transactions contemplated by Agreement are each an "Account Purchase
Transaction" as that term is used in Finance Code Section 306.001 of the Texas
Codes.
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2. Returned Receivables. Seller has herein represented and warranted to
Factor that all Receivables are free and clear of any Disputes. Seller hereby
acknowledges that Factor would not purchase any Receivable if Factor had
knowledge that the same was subject to a Dispute. Seller agrees that should (i)
Seller or Factor discover that any Receivables are subject to a Dispute, (ii)
any Receivable be owing from an Account Debtor which in Factor's reasonable
credit judgment has become insolvent, or (iii) any representation or warranty
with respect to a Receivable provided in Section 11 below be false in any
respect, Factor shall have the right to return such Receivable(s) to Seller in
accordance with this Section 2 and other applicable Sections of this Agreement.
Seller must immediately notify Factor of any Disputes upon receipt of its
knowledge thereof. Any receivable that is not collected within 90 days of its
purchase by Factor pursuant to the terms hereof shall be deemed subject to a
Dispute. Upon Factor's election to return and charge-back a Receivable subject
to a Dispute, Seller shall pay to Factor the face amount of the invoice less the
sum of any payments theretofore received on such invoice by Factor and any
unearned discount. In order to fund such return and charge-back, Factor may, at
its option, take any one or more of the following actions: (a) charge the
Reserve Account for such amount, (b) subtract such amount from the Purchase
Price for the next Receivable sold by Seller to Factor, or (c) otherwise invoice
Seller for such amount, with such invoice being payable upon receipt. Upon
payment to Factor of such amount, Factor shall assign, transfer, convey and
deliver such Receivable to Seller without recourse.
3. Transfer of Related Interests. In addition to the Receivables,
Seller hereby sells, assigns, transfers, conveys and delivers to Factor all
other rights, title and interests (but not obligations) now or hereafter
existing in connection with the Receivables, including, but not limited to,
liens, security interests and guarantees securing payment of the Receivables,
Seller's interest in returned goods arising with respect to the Receivables, and
all other rights and remedies of Seller related to the Receivables such as
rights of stoppage in transit, replevin, reclamation and lawsuits to collect the
Receivables. If any Receivable is ever represented by a promissory note or other
written evidence of obligation, Seller shall endorse and deliver the same to
Factor and take any other action requested by Factor to effectuate such
transfer.
4. Further Assurances. Seller agrees to execute and deliver to Factor
such notices of assignment and other documents as Factor may request from time
to time to further document the sale and assignment of Receivables hereunder.
5. Terms - Seller's Customers. Except as may otherwise be agreed to in
writing from time to time, all Receivables shall be due upon receipt by the
Account Debtor of the invoice from Seller, and invoices to be factored pursuant
hereto will be forwarded to the Account Debtor upon delivery of the goods or the
services that are the subject of the Receivable. Seller shall not vary the terms
of sale, terms of payment, or location of payment set forth in the invoice
relating to any Receivable without Factor's prior written consent, it being
understood that any Receivable is the property of Factor.
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6. Purchase Price; Discounts; Additional Fees. The Purchase Price
(herein so called) for Receivables shall be the gross amount of the invoice,
including any miscellaneous charges such as sales taxes, less any early payment
or special discounts offered to Seller's customers as previously disclosed to
Factor, and less a discount equal to 10% of such gross amount of the invoice. As
an inducement for Seller to sell only invoices from which prompt payment can be
expected, Factor will remit a rebate as follows. If Factor receives payment of
an invoice within 15 days of the purchase thereof, a rebate of 8.75 % of the
gross amount of the invoice will be remitted to Seller; if Factor receives
payment of an invoice after 15 days, but on or before 30 days of the purchase, a
rebate of 7.5% of the gross amount of the invoice will be remitted to Seller.
Until an invoice is collected or is repurchased by Seller, an additional
factoring fee shall accrue and be owing after 30 days in the amount of 5% of the
gross amount of the invoice for each 15 day period (or portion thereof) the
invoice remains uncollected or not repurchased after 30 days. A Seller shall be
permitted to stop the accrual of any such additional fee at any time by
repurchasing the uncollected invoice. ( Any account that is 30 days past due and
subject to the additional factoring fee will be identified in the reserve
payment worksheet defined in Section 14 below. In addition to the other fees
described herein, Seller shall pay to Factor the Misdirected Payment Fee
immediately upon its accrual. The Purchase Price, less the deduction for the
Reserve Account described below, shall be paid only after execution by Seller
and Factor of a Schedule covering such Receivable. Any applicable rebates shall
be credited to the Reserve Account (as defined in Section 7) upon collection of
each Receivable.
7. Payments on Accounts Purchased; Reserve Account. In addition to the
discount set forth in Section 6 hereof, Factor shall deduct from the Purchase
Price of each Receivable an amount initially equal to 10% of the gross amount of
the Receivable, such deduction to be placed in an account under the exclusive
control of Factor (as further described in this Section 7, herein referred to as
the "Reserve Account"). The balance in the Reserve Account shall at all times be
maintained in a minimum amount equal to no less than 10% of the aggregate gross
amount of all Receivables outstanding at a particular time; provided, however,
(i) the applicable percentage deduction from the Purchase Price described in the
immediately preceding sentence may be increased as necessary to maintain such
minimum balance, and (ii) the amount required to be maintained in the Reserve
Account as a percentage of the gross amount of all Receivables outstanding may
be increased or decreased upon notice by Factor to Seller. Upon preparation of
the Reserve Payment Worksheet (as such term is defined in Section 14 hereof),
Factor shall release to Seller amounts, if any, in the Reserve Account in excess
of the balance required pursuant to this Section 7. The Reserve Account shall
accrue no interest.
8. Offset; Security Interest. Factor is authorized to offset and charge
against the Reserve Account any amount for which Seller may become obligated to
Factor at any time under this Agreement or otherwise. In addition to such right
of offset and for the purpose of securing Factor in the payment of any and all
sums of money that may become due and owing to Factor from Seller, Seller agrees
to grants to Factor a lien and security interest in certain of its assets, all
pursuant to and as described in the Security Agreement. To the extent that the
sale to Factor of any Collateral is deemed inconsistent with the granting of a
security interest pursuant to the Security Agreement, the security interest
granted in the Security Agreement as to such Collateral only shall automatically
terminate and be of no further force and effect. The terms of the prior sentence
to the contrary notwithstanding, in the event a Receivable is charged-back as
provided in Section 2 hereof, such account shall then constitute Collateral and
be then subject to a new security interest in favor of Factor. Seller agrees
that Factor may file financing statements from time to time to perfect Factor's
security interest in the Collateral.
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9. Verification and Collection of Accounts. Seller hereby authorizes
Factor to contact each Account Debtor at any time for purposes of verification
or collection of Receivables. Seller shall cooperate with Factor to the maximum
extent possible to provide information necessary for Factor to accomplish
verification or collection of any Receivable. Unless otherwise agreed by Factor
in writing, Seller shall provide the original invoice and any necessary copies
required by the Account Debtor and one copy to Factor ready for mailing with the
required postage to the Account Debtor. All invoices shall direct that payment
be made to a post office box or other address owned and controlled by Factor, to
be provided by Factor. If requested by Factor, Seller agrees to furnish evidence
of shipment of the related merchandise and/or performance of services rendered,
and a written assignment and xxxx of sale of such Receivable, all in a form
satisfactory to Factor, including the original purchase order from the Account
Debtor. If requested by Factor, all invoices for Receivables shall plainly state
on their faces in language acceptable to Factor that the amounts payable
thereunder have been sold to and are payable directly to Factor. If payment is
made to Seller under any circumstances, such payment shall be held in trust by
Seller for Factor and shall not be negotiated or commingled in any way with any
of Seller's funds. Notwithstanding that Seller has agreed to pay the Misdirected
Payment Fee, Seller shall, within one business day after receipt, deliver any
such payments to Factor in the original form as received by Seller. In the event
the form of such payment is made payable to Seller, Seller shall endorse such
instrument to the order of Factor. In the event that on at least two occasions
within a twelve month period, Seller does not deliver to Factor within one
business day payments that were made by an Account Debtor directly to Seller,
Factor shall be permitted, upon three days notice to Seller, to redirect
Seller's mail to Factor. Seller agrees to furnish Factor, upon request, any and
all papers, documents or records of whatever nature related directly or
indirectly, to any Receivables.
10. Collection by Factor. Seller specifically authorizes Factor, to the
extent permitted by applicable law, to notify each Account Debtor to pay
directly to Factor all accounts that are Receivables or Collateral, regardless
of whether Seller has defaulted hereunder. Factor is authorized, but not
obligated, to collect, xxx for and give releases for all monies or other items
of value due on all Receivables. Factor is hereby specifically authorized to
endorse all checks, drafts or other forms of trade acceptances that are made
payable to Seller, whether tendered in payment of Receivables or otherwise, and
to apply such payments against the applicable Receivables or, if such payment
does not relate to a particular Receivable, against any other obligation of
Seller to Factor. Seller authorizes Factor to accept, indorse and deposit on
behalf of Seller any checks tendered by an account debtor "in full payment" of
its obligation to Seller. Seller shall not assert against Factor any claim
arising therefrom, irrespective of whether such action by Factor effects an
accord and satisfaction of Seller's claims, under ss.3-311 of the Uniform
Commercial Code, or otherwise. Seller hereby waives notice of nonpayment of any
Receivables, as well as all other notices, demands or presentations for payment
hereunder, and Seller expressly agrees that Factor may extend or renew from time
to time the payment of any Receivable without notice to or consent by Seller. In
the event it becomes necessary for Factor to employ an attorney and incur other
expenses to collect any Receivable or to enforce any of the terms of this
Agreement by reason of a breach or default by Seller, Seller agrees to pay to
Factor an amount equal to all reasonable attorneys' fees, expenses and costs
incurred by Factor. In the event any merchandise represented by any Receivable
shall be returned to or repossessed by the Seller, such merchandise shall be
held by the Seller in trust for Factor, separate and apart from the Seller's own
property, and subject to Factor's directions and control. With respect to any
returned or repossessed merchandise, Seller shall, at its sole cost and expense,
(a) provide proper storage therefor, (b) maintain adequate insurance coverage
thereon, (c) prepare the same for sale, (d) defend title thereto, (e) take any
other action necessary for the protection thereof, (f) pay all freight and
related shipping costs, and (g) be responsible for any other costs or expenses
incurred in connection with the foregoing, including, without limitation,
attorneys' fees. In order to satisfy any of the Secured Liabilities, Factor is
hereby authorized by Seller to initiate electronic debit or credit entries
through the ACH system to any deposit account maintained by Seller wherever
located.
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11. Representations and Warranties of Seller. Seller hereby represents,
warrants and guarantees to Factor that the information contained in any
application previously submitted by Seller, Seller's financial statements and
any other materials previously submitted in connection herewith is true, correct
and complete in all material respects as of the date specified therein and fully
and accurately represent the financial condition of Seller as of the dates
specified, with no material adverse change having occurred in the financial
condition of the Seller since the dates of the most recent financial statements;
that all federal, state and local tax returns and payments of any kind due or
owing have been filed or paid, and no part of the Purchase Price for any
Receivable shall be used to pay any wage or salary unless appropriate
withholdings have been deposited; that assignment of each Receivable will
thereby vest in Factor absolute ownership of each Receivable free from any
liens, claims or equities of third parties; that Seller is the sole owner of and
has good, free and unencumbered title to each Receivable; that execution and
performance of this Agreement has been fully authorized by all necessary
actions; that no assignment, pledge, security interest or encumbrance exists
with respect to any Receivable; that each Receivable is based upon a bona fide
sale of goods or services and represents a completed delivery or completed
furnishing of property or services in fulfillment of all the terms and
provisions of a fully executed and unexpired contract with the Account Debtor
and is a valid and enforceable obligation of the Account Debtor; that each
Account Debtor has accepted goods or services covered by the applicable
Receivable; that all Receivables are current, are not past due, have not been
paid in whole or in part, are outstanding in the amounts reflected in Schedule A
and are not and will not be subject to any dispute or claim as to price,
quality, quantity, physical condition, workmanship, delay in shipment, set off,
counterclaim or other defense, that no product or service was provided on a
guaranteed-sale basis or buy-back agreement, and the Account Debtor has not and
will not claim any defense of any kind or character or object for any reason
whatsoever against payment of such Receivable; that Seller's chief executive
office and the location where all books and records pertaining to each
Receivable are kept are at the address shown below for notice to Seller; and no
Receivable is subject to a Dispute. Seller further represents and warrants that
Seller is a corporation duly organized, validly existing under the laws of the
state of its incorporation and in good standing under the laws of the State of
Texas; that Seller is solvent, properly licensed and authorized to operate the
business under the trade name represented within the meaning of any and all
applicable federal, state or local laws; that no petition in bankruptcy has been
filed by or against Seller nor has Seller filed any petition seeking an
arrangement of its debts or for any other relief under the Bankruptcy Code of
the United States; that no application for appointment of a receiver or trustee
for all or a substantial part of Seller's property is pending; and that Seller
has made no assignment for the benefit of creditors. Seller further warrants
that Seller does not own, control or exercise dominion over, in any way
whatsoever, the business of any Account Debtor and that the Account Debtor is
solvent to the best knowledge and information of Seller.
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12. Certain Covenants of Seller. Seller covenants and agrees to (i)
notify Factor in writing immediately upon any Dispute and upon imposition or
assessment of any lien, levy, tax lien, assessment or similar action against
Seller or any of Seller's assets; and (ii) furnish Factor, upon request, any and
all papers, documents or records of whatever nature related directly or
indirectly to any Receivables. Seller agrees that it will not, without prior,
written notice to Factor, (a) sell or factor accounts other than to Factor for
the period of this Agreement; (b) move either its chief executive office or the
location where books and records pertaining to the Receivable are kept to a
location outside of San Antonio, Texas; (c) change its legal name; (d) change
its state of incorporation; (e) use any trade name not listed on the Perfection
Certificate; (f) merge or consolidate with any other corporation or entity; (g)
dissolve or cease its operations as they are now conducted; or (g) without
Factor's written consent, take or omit taking any actions that would render any
of Seller's representations and warranties materially incorrect or incomplete,
or take any action that would cause or induce any Account Debtor on any
Receivable to fail to pay the Receivable in a timely manner- other than to
terminate service on an account seriously in arrears. Seller will notify Factor
of any termination of service for any account seriously in arrears.
13. Survival of Agreement, Representations, Warranties and Covenants.
All warranties, representations and covenants made by Seller herein or in any
other instrument delivered by Seller or on Seller's behalf in connection with
this Agreement shall be considered to have been relied upon by Factor and shall
survive the purchase of the Receivables regardless of any investigation made by
Factor or on Factor's behalf and shall continue in full force and effect so long
as any amount due or to become due hereunder is outstanding and unpaid and so
long as this Agreement has not terminated. Specifically, all warranties,
representations and covenants made by Seller in this Agreement shall be deemed
reaffirmed by Seller upon execution of each supplemental Schedule A hereto.
14. Reserve Payment Worksheet and Financial Statements. Factor shall
prepare and provide to Seller on a weekly basis Reserve Payment Worksheets
(herein so called) showing aggregate outstanding Receivables as of the end of
the applicable period, total collections during the period, debits and credits
to the Reserve Account, present balance of the Reserve Account discounts
charged, and an identification and aging of receivables exceeding 30 days.
Seller shall provide to Factor as soon as practicable monthly balance sheets and
statements of income.
15. Interest on Unpaid Charges; Attorneys' Fees and Costs of
Enforcement. All payment obligations of Seller to Factor provided herein not
discharged when due shall bear interest, if demanded by Factor, at the rate of
18% per annum, payable on the first day of each month if demand is not sooner
made. If Seller defaults hereunder or if a Dispute arises, Seller shall pay all
costs of enforcement incurred by Factor against Seller or the Account Debtor as
appropriate, including but not limited to attorney's fees incurred.
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16. Disputes; No Assumption of Liability by Factor; Indemnification.
Seller shall immediately notify Factor of the assertion by any Account Debtor of
any Dispute. Seller has heretofore represented to Factor that no Receivable is
subject to a Dispute. Therefore, Seller shall settle, at its own expense, all
Disputes, subject to Factor's approval, but Factor shall have the right, in its
discretion, to settle any Dispute directly with the Account Debtor involved upon
such terms as Factor may deem advisable and at Seller's expense. Seller
specifically acknowledges and agrees that Factor is not assuming any liability
or obligation of any kind to any Account Debtor or in any way relating to the
Receivables. Seller hereby represents and warrants to Factor that no Receivable,
or any invoice, credit application, xxxx, billing memorandum, correspondence, or
any other documents relating to a Receivable contracts for or charges anything
of value that constitutes interest in excess of the maximum non-usurious rate
allowed to be charged such Account Debtor pursuant to applicable law. Seller
acknowledges that Factor, as the owner of a Receivable, may be subject to a
claim of usury by an Account Debtor in the event an invoice, credit application,
xxxx, billing memorandum, correspondence or other document provides for the
payment of interest or any other charge or fee which may deemed to be interest,
which is in excess of the maximum non-usurious rate allowed by applicable law.
In the event an Account Debtor raises a claim of usury in connection with a
Receivable, such Receivable shall be deemed to be subject to a Dispute and
subject to the charge-back provisions of this Agreement. Seller shall promptly
indemnify and hold harmless Factor from and against any and all claims, causes
of action, counterclaims and other liabilities and costs of any kind (including
attorneys' fees incurred by Factor in connection therewith) that may be asserted
against Factor by any Account Debtor or otherwise arising in connection with the
Receivables, except as may be based on the acts or omissions of Factor. Seller
shall notify Factor within two business days of it becoming aware of the
assertion of an Avoidance Claim, and shall indemnify Factor from any loss
arising out of the assertion of any Avoidance Claim.
17. Books and Records. Seller agrees to permit Factor access to all
books and records of the Seller during normal business hours that relate to the
Collateral.
18. Taxes. All taxes and governmental charges imposed with respect to
the sale of Receivables shall be charged to Seller, and Seller shall be liable
for all sales taxes and other taxes due in connection with any sale or rendering
of services resulting in a Receivable.
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19. Termination. Seller and Factor recognize that future purchases of
Receivables are to be made only with mutual consent of Seller and Factor,
through joint execution by Seller and Factor of a supplemental Schedule A.
Accordingly, this Agreement shall continue in full force and effect unless and
until each of the following occur: (i) written notice of the termination of this
Agreement as it relates to future Receivables by any party hereto, (ii) the
payment in full of all obligations of Seller to Factor pursuant hereto and (iii)
the collection of all outstanding Receivables sold by Seller to Factor that, in
the sole discretion of Factor, can be collected. Either party may immediately
terminate this Agreement as to future transactions, without cause within its
sole discretion, and nothing contained in this Agreement shall constitute an
agreement or commitment to purchase any accounts until such accounts have been
approved by Factor and a supplemental Schedule describing such Receivables has
been executed by Factor and Seller. In the event Seller shall have breached any
provision of this Agreement or any other agreement with Factor, or if either
party shall have given notice to the other of the termination of this Agreement
as to future Receivables, the Reserve Account and any other monies, balances or
credits otherwise due by Factor to the Seller may be retained and applied by
Factor from time to time to reduce such obligations. The balance in the Reserve
Account shall not be released to Seller unless all of Seller's obligations
hereunder have been paid in full. Seller acknowledges that it has the obligation
hereunder to sell to Factor only Receivables that are free and clear of any
Dispute. As provided in Section 2(a) hereof, Factor has the right to charge the
Reserve Account for any Receivables that are returned and charged-back to Seller
as a result of a Dispute. Accordingly, in the event any Receivable remains
uncollected by Factor at the date of notice of termination of this Agreement as
to future Receivables, the Reserve Account shall not be released to Seller until
such time as Factor has determined, in its sole discretion, that there are no
uncollected Receivables subject to a Dispute. At the discretion of Factor, upon
written notice of the termination of this Agreement as it relates to future
Receivables by any party hereto, Factor may return and charge back to Seller any
and all outstanding Receivables in the manner described in Section 2 above. In
addition and notwithstanding any provision of this Agreement to the contrary,
Factor shall not be obligated to release the Reserve Account unless and until
Seller has executed and delivered to Factor a general release in the form
attached hereto as Exhibit "A". Furthermore, upon termination of this Agreement
as to future Receivables, the security interest granted to Factor by Seller
pursuant to the Security Agreement shall be released by Factor only upon
determination by Factor, in its reasonable discretion, that no additional
obligations of Seller are owed to Factor hereunder and no uncollected Receivable
is subject to a Dispute. In recognition of Factor's right to have its attorneys'
fees and other expenses incurred in connection with this Agreement secured by
the Collateral, notwithstanding payment in full of all Secured Liabilities by
Seller, Factor shall not be required to record any terminations or satisfactions
of any of Factor's liens on the Collateral unless and until Seller has executed
and delivered to Factor a general release in the form of Exhibit "A" hereto.
Seller understands that this provision constitutes a waiver of its rights under
ss.9-513 of the UCC. Termination of this Agreement shall not affect the rights
and obligations of the parties accruing with respect to prior transactions.
20. Waiver. Any failure by Factor to exercise any of its rights
hereunder, shall not be deemed to be a waiver by Factor of such or any other
rights, nor in any manner impair the subsequent exercise of the same or any
other right, and any waiver by Factor of any default shall not constitute a
waiver of any subsequent default.
21. Choice of Law. The parties hereto agree that the transaction
described herein is expected to be a Qualified transaction, as defined in
Section 35.51 of the Texas Business and Commerce Code (although no assurance is
given that Factor will purchase any specific amount of Receivables pursuant
hereto), and that to the maximum extent permitted by applicable law, all issues
relating to the transaction described herein shall be construed according to the
laws of the State of Texas.
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22. Entire Agreement. This Agreement represents the entire Agreement
between the parties, and may not be amended or modified except by written
instrument executed by Factor and Seller. This Agreement supersedes and replaces
any prior agreement among the parties, oral or written. No representations,
whether oral or written, are being relied upon which are not expressly set forth
in this Agreement. The parties recognize that any oral representations and prior
written representations are "merged" into this Agreement and no reliance can be
placed thereon.
23. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective administrators,
legal representatives, successors and assigns. Factor may, at its discretion,
sell or assign its rights and interests hereunder in any manner, by sale of
participation interest or otherwise.
24. Severability. If any provision of this Agreement shall, for any
reason, be held to violate any applicable law, then the remaining portion of
this Agreement shall remain in full force and effect.
25. Headings, Construction. The headings contained in this Agreement
are for reference purposes only and shall not modify or affect the terms of this
Agreement in any manner.
26. Saturday, Sunday or Legal Holiday. If any day provided in this
Agreement for the performance of any obligation should fall on a Saturday,
Sunday or Legal Holiday, the compliance with such obligation or delivery shall
be deemed acceptable on the next business day following such day.
27. Receipt of Payment. Any payment received by Factor on a Saturday,
Sunday or Legal Holiday, or any payment that is received by Factor after 3:00
p.m., shall be deemed received on the next day that is not a Saturday, Sunday or
Legal Holiday.
28. Notices. Any notice, demand or request permitted, required or
desired to be given under this Agreement shall be in writing and shall be deemed
effectively given when actually hand delivered or when sent by United States
certified or registered mail, return receipt requested, postage prepaid, or sent
by private, receipted carrier guaranteeing same-day or next-day delivery,
addressed as follows:
If to Factor: CSI BUSINESS FINANCE, INC.
000 Xxxxx Xxxx Xxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
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If to Seller: ATSI Communications, Inc
0000 Xxxxxxxx, xxxxx 000X
Xxx Xxxxxxx, XX 00000
Attention: Xxx Xxxxx
29. Determination of Purchase Price. The Purchase Price of the
Receivables has been determined pursuant to negotiations between Factor and
Seller and represents the fair market value thereof, after due consideration has
been given to the nature of the Receivable, the probability of prompt collection
thereof, the credit worthiness of the Account Debtor, the payment history of the
Account Debtor and other economical factors relative to the Receivables.
Further, in arriving at the Purchase Price, consideration has been given to
services rendered and services that will be rendered in the future by Factor in
connection with credit investigations of Account Debtor, supervising the
ledgering of accounts purchased, supervising the collection of accounts
purchased, and the assumption of certain credit risks. The parties hereto
acknowledge that the purchase of the Receivables by Factor constitutes an
outright conveyance by the Seller to Factor.
30. Provision Regarding Usury. Nothing contained herein, nor any course
of dealing in the future, shall be construed to be anything other than an
outright purchase and sale of such Receivables. All right, title and interest of
the Seller has been conveyed to Factor and such transaction is not subject to a
security interest in the Receivables and the Purchase Price paid to Seller by
Factor constitutes consideration for the acquisition of the Receivables and
under no circumstances shall be construed as a loan and no consideration herein
set forth is for the use, forbearance or detention of money. Nothing contained
herein shall be construed as to require the payment of interest; however, should
a court of competent jurisdiction rule that any consideration paid hereunder are
in fact or in law to be treated as interest, in no event shall Seller be
obligated to pay that interest at a rate in excess of the maximum amount
permitted by law, and all agreements, conditions, or stipulations contained
herein, if any, which may in any event or contingency whatsoever operate to
bind, obligate, or compel Seller to pay a rate of interest exceeding the maximum
rate of interest permitted by law shall be without binding force or effect at
law or in equity to the extent only of the excess of interest over such maximum
rate of interest permitted by law. Also in such event, Factor may "spread" all
charges characterized as interest over the entire term of all transactions with
Seller and will refund to Seller the excess of any payments made over the
highest lawful rate. It is the intention of the parties hereto that in the
construction and interpretation of this Agreement, the foregoing sentence shall
be given precedence over any other agreement, condition, or stipulation herein
contained which is in conflict with same.
31. Power of Attorney. For so long as this Agreement has not been
terminated, Factor is hereby irrevocably authorized as Seller's
Attorney-in-Fact, with full authority in the place of Seller and in the name of
Seller or otherwise, in Factor's discretion, to take any action and to execute
any instrument which Factor may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:
(a) To endorse in the name of Seller, and to take all actions
necessary to collect for deposit to Factor's account, all checks, drafts
and other forms of trade acceptances, negotiable instruments and other
forms of payment (hereinafter collectively referred to as the "Payments")
which are tendered in payment of Receivables or in payment of insurance
claims relating to the Receivables, or which are received by Factor. The
authorization includes, without limitation, the power to open, cash,
endorse, deposit and otherwise collect all such Payments in the event they
are not made payable to Factor;
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(b) To contact Account Debtors at any time in order to verify and/or
collect Receivables;
(c) To contact the Internal Revenue Service and other State and
local taxing authorities in order to ascertain Seller's tax liability;
(d) To obtain and adjust insurance required to be paid to Factor;
(e) To ask, demand, collect, xxx for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Receivables;
(f) To file, at Seller's expense, any claims or take any action or
institute any proceedings which Factor may deem necessary or desirable for
the collection of any of the Receivables or any of the collateral securing
payment of the Receivables or otherwise to enforce the rights of Factor
with respect to the Receivables.
This Power of Attorney is irrevocable and coupled with an interest. Seller
hereby acknowledges that Seller is not entitled to any notice, demand or
presentation with respect to payment of any Receivable and agrees that Factor
may extend or renew from time to time the payment of any Receivable without
notice to or consent by Seller.
32. Joint and Several Obligations. If more than one party is executing
this Agreement as Seller, each party agrees that its obligations hereunder are
joint and several, and that its obligations shall be not released, diminished,
impaired or affected by the occurrence of any one or more of the following
events, all of which may occur without notice to or consent of any other Seller:
(a) Any release, partial release, subordination or loss of any
security, guaranty or collateral and any time existing in connection with
the obligations contained herein;
(b) The death, insolvency, bankruptcy, disability or incapacity of
any Seller, guarantor, or any other party now or hereafter obligated
hereon;
(c) Any renewal, extension, and/or rearrangement of all or any
portion of the obligations contained herein;
(d) Any neglect, delay, omission, failure or refusal of Factor to
take or prosecute any action for the collection of the obligations
provided herein;
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(e) The unenforceability for any reason of all or any part of the
obligations contained herein against any Seller, guarantor or other party;
(f) The finding of any payment by any Seller to constitute a
preference under bankruptcy or similar debtor relief law;
(g) Any release or partial release of liability of any Seller,
guarantor or other party; and
(h) Any other action that might impair rights in the nature of
contribution or subrogation that any Seller might otherwise have.
33. Waiver of Consumer Xxxxxx.XX CONNECTION WITH THIS AGREEMENT, SELLER
WAIVES SELLER'S RIGHTS, IF ANY, UNDER THE DECEPTIVE TRADE PRACTICES-CONSUMER
PROTECTION ACT, TEXAS BUSINESS AND COMMERCE CODE SECTION 17.41 ET SEQ., A LAW
THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN
ATTORNEY OF SELLER'S OWN SELECTION, SELLER VOLUNTARILY CONSENTS TO THIS WAIVER.
34. Submission to Jurisdiction. (a) ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT AND THE OTHER DOCUMENTS TO WHICH SELLER AND FACTOR ARE
A PARTY MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED
STATES LOCATED IN XXXXXX COUNTY, TEXAS AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, SELLER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF
SELLER'S PROPERTY, UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS
WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. SELLER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO SELLER PURSUANT TO SECTION 28, SUCH SERVICE
TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING IN THIS
AGREEMENT SHALL AFFECT THE RIGHT OF FACTOR TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
SELLER IN ANY OTHER JURISDICTION.
(b) SELLER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH SELLER MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE
COURTS REFERRED TO IN CLAUSE (a) OF THIS SECTION 34 AND HEREBY FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
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35. Waiver of Jury Trial. SELLER HEREBY WAIVES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION WITH THIS AGREEMENT, AND AGREES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
36. No Obligation to Purchase Further Receivables. Seller specifically
acknowledges and agrees that, anything herein to the contrary notwithstanding,
Factor has the right to approve or reject any or all future accounts receivable
proposed for sale under this Agreement IN ITS SOLE DISCRETION, and no course of
conduct or prior course of dealing shall establish any commitment, obligation or
agreement to purchase future accounts receivable.
37. Use of Facsimiles. The parties acknowledge and agree that it is
anticipated that execution of this Agreement, as well as schedules or other
documents executed in connection herewith, may be evidenced by facsimile
signatures, and such documents containing facsimile signatures shall be of the
same force and effect as if original signatures had been obtained.
(Remainder of Page Intentionally Left Blank)
-14-
EXECUTED as of this 20th day of February, 2006.
FACTOR:
CSI BUSINESS FINANCE, INC.
By: /s/Xxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxx, CEO
SELLER:
ATSI COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx, President & CEO
SCHEDULE A
TO PURCHASE AND SALE AGREEMENT
DATED FEBRUARY 20, 2006 BETWEEN
CSI BUSINESS FINANCE, INC. AND
ATSI COMMUNICATIONS, INC.
Initials
--------
Seller
--------
Factor
EXHIBIT "A"
GENERAL RELEASE
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which
are hereby acknowledged, the undersigned and each of them (collectively
"Releasor") hereby forever releases, discharges and acquits CSI BUSINESS
FINANCE, INC. ("Releasee"), its parent, officers, directors, shareholders,
agents and employees, of and from any and all claims of every type, kind,
nature, description or character, and irrespective of how, why, or by reason of
what facts, whether heretofore existing, now existing or hereafter arising, or
which could, might, or may be claimed to exist, of whatever kind or name,
whether known or unknown, suspected or unsuspected, liquidated or unliquidated,
each as though fully set forth herein at length, to the extent that they arise
out of or are in way connected to or are related to that certain Purchase and
Sale Agreement between Releasee and Releasor dated February 20, 2006
(collectively, the "Claims").
Releasor agrees that the matters released herein are not limited to
matters, which are known or disclosed.
Releasor acknowledges that factual matters now unknown to it may have
given or may hereafter give rise to Claims which are presently unknown,
unanticipated and unsuspected, and it acknowledges that this Release has been
negotiated and agreed upon in light of that realization and that it nevertheless
hereby intends to release, discharge and acquit the Releasee from any such
unknown Claims.
Acceptance of this Release shall not be deemed or construed as an
admission of liability by any party released.
Releasor acknowledges that either (a) it has had advice of counsel of
its own choosing in negotiations for and the preparation of this release, or (b)
it has knowingly determined that such advise is not needed.
DATED: February 20, 2006
Individual Releasor:
-----------------------------------
[Name of individual], individually
Entity Releasor:
------------------------------------
[Name of entity]
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxx X. Xxxxx
-----------------------------
Title: President & CEO
-----------------------------
