Exhibit 10.17
FIRST AMENDMENT TO ACCOUNT TRANSFER
AND PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ACCOUNT TRANSFER AND PURCHASE AGREEMENT (this
"Amendment") is entered into by and between H.E.R.C. PRODUCTS INCORPORATED, a
Delaware corporation, and H.E.R.C. CONSUMER PRODUCTS, INC., an Arizona
corporation (collectively the "Seller"), S. Xxxxxx Xxxx (the "Guarantor") and
KBK FINANCIAL, INC., a Delaware corporation ("KBK").
WHEREAS, Seller and KBK entered into that certain Account Transfer and
Purchase Agreement dated as of September 22, 1997, as amended from time to time
(collectively, the "Purchase Agreement"); and
WHEREAS, pursuant to the Purchase Agreement the parties have provided for
the terms and conditions under which KBK may from time to time purchase certain
of Seller's accounts; and
WHEREAS, the Purchase Agreement and all other documents securing,
governing, guaranteeing and/or pertaining to the Purchase Agreement are
hereinafter referred to collectively as the "Purchase Documents"; and
WHEREAS, the parties hereto now desire to modify the Purchase Agreement as
hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties, and agreements contained herein, and for other valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 The terms used in this Amendment to the extent not otherwise
defined herein shall have the same meanings as in the Purchase Agreement.
ARTICLE II
AMENDMENTS
Section 2.01 Effective as of the date hereof, Section 1 of the Purchase
Agreement is hereby amended in its entirety to read as follows:
"1. OFFER OF ACCOUNTS. At its election from time to time during the term of
this Agreement, Seller agrees to offer for sale to KBK certain of its
accounts arising out of sales of goods, or services rendered, by Seller,
and to sell to KBK on the terms set forth in this Agreement such of the
offered accounts as KBK may accept for purchase in the State of Texas. KBK
shall have the absolute right in its sole discretion to reject any or all
offered accounts, whether or not KBK has previously purchased accounts of
any particular account debtor hereunder. The parties agree that, without
the prior consent of KBK, the maximum Gross Amount (as defined below) of
accounts that KBK may purchase hereunder at any time, together with the
Gross Amount of accounts previously purchased by KBK from Seller hereunder
which then remain outstanding, will not exceed One Million and No/100
Dollars ($1,000,000.00) (the "Facility Amount"). KBK's consent to purchase
accounts in excess of such amount may be evidenced by KBK's acceptance for
purchase of such offered accounts."
Section 2.02 Effective as of the date hereof, "Initial Payment" set forth in
Section 4 of the Purchase Agreement is hereby amended to be eighty-five (85%) of
the Gross Amount of an account.
Section 2.03 Effective as of the date hereof, Section 5 of the Purchase
Agreement is hereby amended in its entirety to read as follows:
"5. FIXED AND VARIABLE DISCOUNTS. "Fixed Discount" means a discount of
seventy-five hundredths percent (.75%) of the Gross Amount of such account.
"Variable Discount" means a discount computed on the Initial Payment and
accruing on the basis of actual days elapsed from the date of Initial
Payment until and including three business days after KBK receives and
deposits the proceeds of collection of such account at a per annum rate
equal to KBK's Base Rate (as hereinafter defined) in effect on the date of
purchase of such account plus one and one-half percent (1.5%) per annum;
provided, however, in no event shall the Variable Discount with respect to
any account purchased hereunder be less than seven percent (7.0%) per
annum. "Base Rate" means that per annum variable rate (expressed as a per
annum percentage based on a year consisting of 360 days) determined from
time to time by KBK without notice to Seller as KBK's Base Rate for
purposes of calculating variable discounts under KBK's account transfer
agreements. The Fixed Discount and the Variable Discount shall be
collectively referred to herein as the "KBK Discounts". The KBK Discounts
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may be subject to one or more adjustments during the term of this Agreement
if a Performance Based Pricing Addendum is attached hereto. If a
Performance Based Pricing Addendum is attached hereto, it is then made a
part hereof as though fully written herein."
Section 2.04 Effective as of the date hereof, the first sentence of Section 7 of
the Purchase Agreement is hereby amended in its entirety to read as follows:
"For the purpose of securing KBK (a) in the payment of any and all sums of
money that may become due and owing KBK from Seller by reason of this
Agreement, (b) in the performance by Seller of Seller's obligations
hereunder, and under any other agreement, contract, document, note or other
instrument in favor of KBK or its assignees and (c) in the performance of
all the obligations of all Affiliates (as hereinafter defined) under each
Affiliate's agreements, contracts, documents, notes or other instruments in
favor of KBK or its assigns, Seller hereby grants to KBK a security
interest in (i) all of Seller's present and future accounts, account and
contract rights, proceeds of inventory, contracts, drafts, acceptances,
documents, instruments, chattel paper, deposit accounts, general
intangibles and all products and proceeds therefrom, including all returned
or repossessed goods, as well as all books and records pertaining to all of
the foregoing, (ii) all amounts due as Residual Payments or withheld by KBK
as the Reserve pursuant to Section 6 hereof and (iii) all money and other
funds of Seller now or hereafter in the possession, custody or control of
KBK, from whatever source."
Section 2.05 Effective as of the date hereof, the second paragraph of Section 12
of the Purchase Agreement is hereby amended in its entirety to read as follows:
"Seller hereby agrees to pay to KBK a termination fee equal to two percent
(2.0%) of the Facility Amount (the "Termination Fee") and the payment shall
be an obligation of Seller secured under Section 7 hereof. This Termination
Fee is payable upon termination of this Agreement by Seller for any reason
or upon termination by KBK at its election for the reasons set forth in the
second sentence of Section 13 below. However, if this Agreement is so
terminated after April 12, 2003, but before April 12, 2004, one-half of the
Termination Fee shall be waived. If the Agreement is terminated after April
12, 2004, all of the Termination Fee shall be waived."
ARTICLE III
REPRESENTATIONS, WARRANTIES, RATIFICATION AND REAFFIRMATION
Section 3.01 Seller hereby represents and warrants that: (i) the representations
and warranties contained in the Purchase Agreement are true and correct on and
as of the date hereof as though made on and as of the date hereof, and (ii) no
event has occurred and is continuing that constitutes an Event of Default or
would constitute an Event of Default but for the requirement of notice or lapse
of time or both.
Section 3.02 The terms and provisions set forth in this Amendment shall modify
and supersede all inconsistent terms and provisions set forth in the Purchase
Agreement, but except as expressly modified and superseded by this Amendment,
the terms and provisions of the Purchase Agreement are ratified and confirmed
and shall continue in full force and effect, Seller hereby agreeing that the
Purchase Agreement and the other Purchase Documents are and shall continue to be
outstanding, validly existing and enforceable in accordance with their
respective terms.
Section 3.03 Guarantor previously executed that certain Limited Guaranty (the
"Guaranty Agreement") dated September 22, 1997, for the benefit of KBK to
unconditionally guarantee the payment by Seller of certain losses incurred by
KBK under the Purchase Agreement, as more fully described therein. Guarantor, by
executing this Amendment, hereby consents to this Amendment and agrees that,
notwithstanding the execution of this Amendment, the Guaranty Agreement remains
in full force and effect and the obligations thereunder remain valid and binding
against Guarantor. Guarantor acknowledges and agrees that there are no claims or
offsets against, or defenses or counterclaims to, the terms and provisions of
the Guaranty Agreement or the obligations created or evidenced thereby.
ARTICLE IV
MISCELLANEOUS
Section 4.01 Each of the Purchase Documents is hereby amended so that any
reference in the Purchase Documents to the Purchase Agreement shall mean a
reference to the Purchase Agreement as amended hereby.
Section 4.02 This Amendment may be executed simultaneously in one or more
counterparts, each of shall be deemed an original, but all of which together
shall constitute one and the same instrument. Delivery of an executed
counterpart of this Amendment by telecopy shall be equally as effective as
delivery of a manually executed counterpart of this Amendment. Any party
delivering an executed counterpart of this Amendment by telecopy also shall
deliver a manually executed counterpart of this Amendment but the failure to
deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Amendment.
Section 4.03 The Agreement and this Amendment have been entered into in Tarrant
County, Texas and shall be performable for all purposes in, Tarrant County,
Texas. THE AGREEMENT, AS AMENDED HEREBY, SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. Courts within the State of Texas
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shall have jurisdiction over any and all disputes arising under or pertaining to
the Agreement, as amended hereby, and venue in any such dispute shall be the
courts located in Tarrant County, Texas.
Section 4.04 This Amendment shall not become effective until executed by KBK.
Section 4.05 SELLER AND GUARANTOR EACH HEREBY ACKNOWLEDGES THAT IT HAS NO
DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR
NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF
ITS LIABILITY TO REPAY THE INDEBTEDNESS AND OBLIGATIONS NOW OR HEREAFTER OWING
BY SELLER AND GUARANOR TO KBK OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY
KIND OR NATURE FROM KBK. SELLER AND GUARANTOR EACH HEREBY VOLUNTARILY AND
KNOWINGLY RELEASES AND FOREVER DISCHARGES KBK, ITS PREDECESSORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR
UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH SELLER AND GUARANTOR MAY
NOW OR HEREAFTER HAVE AGAINST KBK, ITS PREDECESSORS, AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS
ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE,
INCLUDING WITHOUT LIMITATION, ANY SUCH CLAIMS ARISING FROM THE CONTRACTING FOR,
CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE
HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER
THE PURCHASE AGREEMENT OR OTHER PURCHASE DOCUMENTS, AND THE NEGOTIATION FOR AND
EXECUTION OF THIS AMENDMENT.
Section 4.06 Seller agrees to pay KBK a fee equal to $2,500.00 contemporaneously
with the effectiveness of this Amendment in consideration of the financial
accommodations provided by KBK to Seller contained herein.
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EXECUTED as of 2/12/02
SELLER:
H.E.R.C. PRODUCTS INCORPORATED
By:
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Name: S. Xxxxxx Xxxx
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Title: Chief Executive Officer
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H.E.R.C. CONSUMER PRODUCTS, INC.
By:
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Name: S. Xxxxxx Xxxx
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Title: Chief Executive Officer
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GUARANTORS:
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S. XXXXXX XXXX
KBK:
KBK FINANCIAL, INC.
By:
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Name:
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Title:
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Date:
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STATE OF
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COUNTY OF
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The foregoing instrument was acknowledged before me this ____ day of
2/12/02, by S. Xxxxxx Xxxx as Chief Executive Officer of H.E.R.C. PRODUCTS
INCORPORATED and H.E.R.C. CONSUMER PRODUCTS, INC.
Witness my hand and official seal.
My Commission expires:
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(Notary Public)
STATE OF
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COUNTY OF
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The foregoing instrument was acknowledged before me this ____ day of
2/12/02, by S. Xxxxxx Xxxx.
Witness my hand and official seal.
My Commission expires:
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(Notary Public)
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