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EXHIBIT 10.35
COLLATERAL SECURITY AGREEMENT
This Agreement effective the 1st day of November 1997 by and between Teknion,
Inc. ("Teknion") a New Jersey corporation with offices at 000 Xxxxxxx Xxxxx
Xxxx, Xxxxxxx, Xxx Xxxxxx 00000, and Business Resource Group ("BRG"), a
California corporation with offices at 0000 Xxxxx 0xx Xxxxxx, Xxxxx 000, Xxx
Xxxx, Xxxxxxxxxx 00000, (collectively, the "Parties").
WITNESSETH:
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WHEREAS, by the execution of this Agreement, the Parties intend to provide
security from BRG to Teknion in consideration of the acceptance by Teknion of
purchase orders for Teknion products from BRG;
NOW, THEREFORE, intending to be legally bound hereby and in consideration of the
mutual covenants contained herein, the Parties agree as follows:
1. This Agreement shall commence as of the date above written and shall
expire on October 31, 1998 unless terminated prior to that date by
Teknion, within its sole discretion, upon written notice to BRG
pursuant to Section 10. Provided, that notwithstanding such
termination, this Agreement shall continue to apply to BRG purchase
orders that have not shipped as of such termination, and to Teknion
invoices to BRG that remain unpaid, until all such purchase orders
have been shipped, and all Teknion invoices to BRG have been paid in
full at which point BRG shall have no further obligation to Teknion
under this Agreement.
2. In consideration of the account terms that Teknion may from time to
time extend to BRG, BRG hereby irrevocably agrees to each of the
following conditions as a precondition to Teknion's acceptance of a
BRG purchase order for Teknion product. Provided, however, that this
Agreement shall not be construed to require Teknion to accept any BRG
purchase orders or to affect any aspect of the purchase and sale
transaction between Teknion and BRG except as expressly provided
herein and, except as set forth in this Agreement, all purchases and
sales of Teknion's products shall be governed by Teknion's standard
terms and conditions of sale.
(A) Within 10 business days following the execution of this
Agreement by the Parties, BRG shall procure and maintain in
favor of Teknion, as security for BRG's payment to Teknion of the
purchase price and all other obligations due from BRG to Teknion
associated with the purchase of Teknion products, an irrevocable
stand-by letter of credit ("Letter of Credit") in the form of
Exhibit "A" annexed hereto and made a part hereof in the amount
of $3,000,000 with an expiration date not less than 12 months
from the effective date of this Agreement. Provided, further,
that BRG shall take whatever steps may be necessary during the
initial term or any renewed term of this Agreement to issue to
Teknion, at least ten (10) business days prior to the expiration
of the initial or any renewal term of this Agreement a new
Letter of Credit in an amount not less than $3,000,000 in favor
of Teknion with an expiration date not less than 12 months from
the expiration of the initial or any renewed term of this
Agreement.
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(B) BRG hereby covenants and agrees to pay all invoices rendered by
Teknion on account of BRG purchases of Teknion product within 30
calendar days following the receipt by BRG of such invoice.
3. Notwithstanding the fulfillment of the preconditions set forth in Section 2
above by BRG, Teknion shall be entitled, within its sole and absolute
discretion, to deem itself insecure with respect to BRG's ability to
perform pursuant to the terms and conditions of this Agreement in the
event: (1) that BRG fails to pay any one or more of Teknion's invoices
governed hereby within thirty (30) calendar days following the receipt of
such invoices by BRG but only if the amount of any invoice exceeds $10,000
individually or cumulatively, $100,000; and/or (ii) in the event the Letter
of Credit fails to remain in existence and available for draws by Teknion
as described in Section 2(A) above in a form and issued by an issuer
continuously satisfactory to Teknion, in Teknion's sole and absolute
discretion.
In the event that Teknion shall deem itself insecure and notify BRG of such
decision in writing, Teknion shall have the rights recited in Section (A)
of this Section 3 together with all rights and remedies available to
Teknion under applicable law. In addition to Teknion's rights and remedies
available under applicable law and under Section 3(A) below, BRG shall
notify Teknion within three (3) business days following receipt of
Teknion's notice of insecurity of its choice of remedy between those set
forth in Sections (B) and (C) of this Section 3. In the event BRG fails to
elect such choice of remedy within such three (3) business day time frame,
BRG shall be deemed for all purposes of this agreement to have elected the
remedy set forth in Section (C) of this Section 3 and the Parties shall
perform accordingly.
(A) Teknion shall have the right, in its sole and absolute discretion, to
draw upon the Letter of Credit to the extent of Teknion invoices
outstanding to BRG at any time and from time to time during the term
hereof.
(B) Within five (5) business days following receipt of Teknion's notice of
insecurity as set forth above, BRG shall provide Teknion with
additional Letters of Credit in the dollar amount of purchase orders
previously submitted by BRG to Teknion for Teknion products which have
not yet been shipped to BRG or its customers. Said Letter of Credit
shall be in form of Exhibit "A" annexed hereto and made a part hereof
and shall have an initial term of 12 calendar months; or
(C) BRG shall, within five (5) business days following receipt of
Teknion's notice of insecurity set forth above, in writing in the form
of Exhibit "B" annexed hereto and made a part hereof, empower Teknion
and authorize and direct all or any of BRG's customers to reissue to
the order of Teknion those open purchase orders previously submitted
to BRG, and in turn submitted by BRG to Teknion for Teknion products,
eliminating BRG from the purchase and sale transaction. BRG hereby
further empowers and authorizes Teknion to communicate and deal
directly with such BRG customers on all matters pertaining to BRG's
purchase order for Teknion products governed hereby.
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(1) In the event BRG elects this remedy in lieu of item (B)
above, BRG hereby forever waives all of its right to the
purchase orders of such BRG customers other than the right
of payment set forth in Section (2) of this Section 3 (C)
below, previously submitted to it by such customers and
assigns to Teknion all of BRG's right, title and interest in
and to such purchase orders to every nature whatsoever
including, without limitation, any collateral security
therefore.
Provided, further, that in the event BRG elects this remedy
in lieu of item (B) above, BRG shall, in addition to the
requirements set forth in this Section (1), remit to Teknion
within five (5) business days following receipt of Teknion's
notice of insecurity all deposits received by it on orders
chosen by Teknion to be reissued in accordance with this
Section 3 (C). In the event that BRG shall fail to so remit
the required deposits, Teknion shall have the right, in its
sole discretion, to offset excess payments to BRG on one or
more of the customer orders redirected to Teknion against
such unpaid deposit obligations.
(2) In the event that BRG shall choose this remedy and Teknion
shall directly receive purchase orders from BRG customers
for Teknion products, then, and in that event, upon receipt
by Teknion of payment on account of such purchase orders,
all such funds received from BRG's customers shall be
utilized to first satisfy the amount due Teknion from BRG
pursuant to the original purchase order placed by BRG with
Teknion and Teknion shall thereafter remit any excess
payments received from such BRG customer directly to BRG.
(D) Provided, however, that in the event this Section 3 is invoked,
Teknion shall have no obligation to ship Teknion product related to
BRG purchase orders which have not been dealt with to Teknion's sole
and absolute satisfaction as described in either Sections (B) or (C)
above as of the scheduled date of shipment.
4. BRG covenants and agrees, that during the term of this Agreement it shall
allow Teknion reasonable access during normal business hours to all
information and documentation of BRG relating to BRG's customer's purchase
orders governed hereby for Teknion products.
5. The failure of either Party to exercise any right hereunder shall not be
construed as a waiver of the right to exercise the same or any other right
at any other time.
6. This Agreement shall be binding upon and inure to the benefit of the
Parties, their respective successors and assigns.
7. This Agreement, including all documents incorporated by reference, embodies
all of the terms and conditions between the Parties with respect to the
subject matter hereof and may not be altered orally. Any prior agreements
whether written or oral, are hereby merged into this document.
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8. Neither Party shall assign the benefits and burdens of this Agreement
without the consent of the other party, which consent shall not be
unreasonably withheld.
9. Notices - Any notices required or permitted to be given or made in this
Agreement shall be in writing. Such notice shall be deemed to be duly
given or made when it shall have been delivered by certified mail, return
receipt requested, or by overnight courier to the Party to which it is
required to be given or made at such Party's address specified below.
Buyer: Business Resource Group
0000 Xxxxx 0xx Xxxxxx
Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxx, President
Teknion: Teknion, Inc.
000 Xxxxxxx Xxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
10. Teknion shall have the right to terminate this Agreement, within its sole
discretion, at any time. Such termination shall be effective as of the
first day of BRG's fiscal quarter immediately following the date of
Teknion's notice of termination, provided, however, notwithstanding such
termination, this Agreement shall continue to apply to BRG purchase orders
that have not shipped as of such termination, and Teknion invoices to BRG
that remain unpaid, until all such purchase orders have been shipped, and
all Teknion invoices to BRG have been paid in full at which point BRG
shall have no further obligation to Teknion under this Agreement.
11. Teknion shall reimburse BRG for the fiscal cost to BRG of any Letter of
Credit issued pursuant to the terms of this Agreement, provided, that in
no event shall the amount of such reimbursement exceed one percent (1%) of
the face amount of such Letter of Credit. Teknion will submit such
reimbursement to BRG within ten (10) days of receipt by Teknion of an
invoice from the issuer of the Letter of Credit.
12. This Agreement may be executed in any number of copies, and by the Parties
hereto on the same or separate counterparts, each of which shall be deemed
to be an original instrument. This Agreement shall be legally enforceable
and binding upon a Party hereto no later than upon receipt by the other
Party of an executed copy of this Agreement by facsimile.
13. This Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey.
14. This Agreement may be amended only by a written instrument executed and
delivered by each Party hereto.
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15. This Agreement, including all documents incorporated by reference,
embodies all of the terms and conditions between the Parties with respect to
the subject matter hereof. Any prior agreements whether written or oral, are
hereby merged into this document.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives as of the date indicated.
Date 1-26-98 TEKNION, INC.
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By /s/ XXXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx, President
Date 1-23-98 BUSINESS RESOURCE GROUP
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By: /s/ XXXX XXXX
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Xxxx Xxxx, President
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