1
EXHIBIT 10.29
ACCOUNT TRANSFER AND PURCHASE AGREEMENT
This Account Transfer and Purchase Agreement (this "Agreement") is dated this
29th day of March, 2001, and is between KBK Financial, Inc., a Delaware
corporation authorized to do business in Texas and doing business as PLM/KBK
Acceptance Corporation ("KBK"), and Basis, Inc. an Arizona corporation
("Seller"). This Agreement shall become effective as of the day it is accepted
in the State of Texas by KBK as indicated at the end hereof by the date and
signature on behalf of KBK.
WHEREAS, KBK is in the business of purchasing accounts receivable
("accounts"); and
WHEREAS, Seller desires, from time to time during the term of this
Agreement, to sell accounts to KBK; and
WHEREAS, the parties hereto desire to enter into this Agreement to
govern the purchase and sale of accounts;
NOW THEREFORE, in consideration of the premises, the mutual agreements
herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
agree 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 Three Million Dollars ($3,000,000)
(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.
2. PURCHASE AND SALE OF ACCOUNTS. Each account purchased by KBK hereunder
shall be purchased by KBK without recourse against Seller. All losses
incurred by KBK from the financial inability of the applicable account
debtor to pay such account over and above any and all Residual Payments
(as hereinafter defined) and Reserve (as hereinafter defined) amounts
offset shall be borne solely by KBK; provided, however, that nothing in
this Agreement shall be construed to relieve Seller from liability for
any breach by Seller of any representation, warranty or agreement of
Seller contained herein. Notwithstanding any provision in this
Agreement to the contrary, it is contemplated by and the intention of
the parties hereto that accounts of Seller may be considered and
purchased as one account (herein a "batch") and the terms "account" and
"accounts" as used herein may also refer to and mean a "batch" or
"batches," as the case may be.
In connection with each offer of accounts to KBK, Seller agrees to
deliver to KBK a written assignment of such accounts, together with a
copy of all invoices relating to such accounts, and evidence of
delivery of the related goods or performance of the related services
(and, if requested, the original purchase orders from the applicable
customers), all in a form satisfactory to KBK. In order for an account
to be eligible for purchase by KBK, the related invoice must set forth,
as the sole address for payment, the following post office box: P.O.
Box _________ , _________ , ________ _________ ("Authorized Remittance
Address") (or, upon notice from KBK, another post office box of KBK)
and, in the case of payments to be effected by wire transfer or other
electronic means, the related invoice must set forth, as the sole bank
account for such payment, a bank account of KBK (or a third party
designated by KBK) designated by KBK from time to time (except in each
case as otherwise agreed in writing by KBK). KBK's acceptance for
purchase of offered accounts shall be evidenced by KBK's tendering of
the Initial Payment (as hereinafter defined) to Seller or otherwise
delivering to Seller a schedule of accounts accepted for purchase by
KBK. Seller's transference of offered accounts shall not be effective
as to any accounts not accepted for purchase by KBK.
Seller hereby sells, transfers, assigns and otherwise conveys to KBK
(as a sale by Seller and a purchase by KBK, and not as security for any
indebtedness or other obligation of Seller to KBK) all right, title and
interest of Seller in and to all accounts accepted by KBK for purchase
hereunder, together with all related rights (but not obligations) of
Seller with respect thereto, including all contract rights, guarantees,
letters of credit, liens in favor of Seller, insurance and other
agreements and arrangements of whatever character from time to time
supporting or securing payment of such accounts and all right, title
and interest of Seller in any related goods, including Seller's rights
and remedies under Article 2, Part 7 of the applicable Uniform
Commercial Code ("UCC"). The foregoing sale, transfer, assignment and
conveyance does not constitute and is not intended to result in an
assumption by KBK of any obligation of Seller or any other person in
connection with the accounts or related rights or under any agreement
or instrument relating thereto. Seller agrees to execute and deliver
such bills of sale, assignments, letters of credit, notices of
assignment, financing statements (including continuation statements)
under the applicable UCC and other documents, and make such entries and
markings in its books and records, and to take all such other actions
(including the negotiation, assignment or transfer of negotiable
documents, letters of credit or other instruments) as KBK may request
to further evidence or protect the sales and assignments of accounts
and related rights to KBK hereunder, as well as KBK's interest in any
returned goods referred to
1
2
in Section 7 hereof.
3. TERMS OF ACCOUNTS. Except as otherwise may be agreed to in writing by
KBK from time to time, the terms of sale offered by Seller to its
account debtors with respect to all accounts offered to KBK for
purchase hereunder shall be NET 30 DAYS. After an account has been
purchased by KBK, Seller shall not have the right to vary the terms of
sale set forth in the invoice relating to such account, or any other
aspect of the account, except in Seller's capacity as agent for KBK for
purposes of collection of accounts purchased by KBK as set forth in
Section 8 hereof, and then only with the prior written consent of KBK.
4. PURCHASE PRICE. The purchase price for each account purchased hereunder
shall consist of and be paid by the Initial Payment and the Residual
Payment. The Initial Payment shall be payable by KBK to Seller on the
business day that KBK accepts for purchase the related account, and the
Residual Payment shall be payable by KBK to Seller within three (3)
business days after KBK receives and deposits the proceeds of
collection for the subject account in an amount equal to the Net Amount
(as hereinafter defined) of such account (subject to KBK's right to
withhold payment of Residual Payments hereunder, and subject to KBK's
right to withhold, offset and charge, each as described below).
"Initial Payment" means eighty percent (80%) of the Gross Amount of an
account. "Gross Amount" of an account means the gross face amount
payable pursuant to the related invoice. "Net Amount" of an account
means the Gross Amount of such account, less all permitted discounts,
deductions and allowances. "Residual Payment" with respect to an
account means the aggregate amount collected with respect to such
account, less the sum of (i) the Initial Payment with respect to such
account, (ii) the KBK Discounts (as hereinafter defined), (iii) any and
all attorneys' fees and other costs of collection.
5. FIXED AND VARIABLE DISCOUNTS. "Fixed Discount" means a discount of
one-half of one percent (0.5%) of the Gross Amount of such account;
provided, that with respect to accounts that remain outstanding for
more than ninety (90) days after the invoice date thereof, "Fixed
Discount" shall mean a discount of one percent (1.0%) of the Gross
Amount of such accounts. "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 five 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 two
percent (2.0%) 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 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.
6. RESERVE. In the event that KBK believes Seller has breached any
material representation, warranty, covenant or agreement contained
herein (including, without limitation, in the event an account
purchased by KBK becomes a Disputed Account as hereinafter defined),
any account is not paid in full within 90 days from the date of
purchase of such account, or KBK deems itself insecure hereunder, KBK
may at its election, withhold and accumulate the payment of the
Residual Payments ("Reserve") with respect to any or all accounts
purchased hereunder to the extent necessary to maintain a Reserve in an
amount up to the sum of (a) the total Initial Payments made by KBK with
respect to accounts purchased by KBK hereunder which remain
uncollected, plus (b) the total of the KBK Discounts with respect to
such accounts and (c) such other amounts which may become due by Seller
to KBK hereunder or under any other agreement. Seller hereby authorizes
KBK to offset and charge any and all amounts for which Seller or the
Reserve may be obligated to pay to KBK pursuant to the terms of this
Agreement against the Reserve, and at KBK's election, against any funds
of Seller in the possession or control of KBK, from whatever source.
However, if, on any business day that KBK regularly makes a payment to
Seller for accounts purchased, none of the foregoing conditions exists
and no other breach of this Agreement by Seller exists, then KBK shall
distribute to Seller the Residual Payments then due and all funds it
then has on hand that it has collected from accounts that KBK has not
then purchased.
7. CERTAIN SECURITY. 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 inventory, 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. The term
"Affiliate" shall mean with respect to any person or entity in
question, any other person or entity owned or controlled by, or which
owns or controls or is under common control or is otherwise affiliated
with such person or entity in question. Seller agrees to execute and
deliver such financing statements under the applicable UCC and other
documents, and make such entries and markings in its books and records
and to take all such other
2
3
actions, as KBK may request to further evidence, perfect, preserve or
protect the security interest granted to KBK hereunder. KBK shall have
all rights and remedies in respect of the lien and security interest
herein granted as are provided in this Agreement, the UCC and other
applicable law, including the right at any time, before or after any
default by Seller of any of its obligations hereunder, to notify
account debtors and obligors on instruments to make payment to KBK (or
its designee) and to take control of proceeds to which KBK is
entitled, and to apply proceeds to (in addition to other obligations
of Seller to KBK) the reasonable attorneys' fees and legal expenses
incurred by KBK in connection with the disposition of collateral or
the other exercise of rights and remedies by KBK.
Seller herein acknowledges and warrants to KBK that it has received
and will receive, direct and indirect benefits by and from granting
this security interest to KBK to secure the obligations of any
Affiliate to KBK.
In the event a security interest has heretofore been granted and given
to KBK by Seller in a prior agreement(s) or document(s) to secure
certain obligations, then, in such event, and notwithstanding anything
in this Agreement to the contrary, including Section 23 hereof, the
lien and security interest herein granted and given to KBK is in
renewal and extension, and not in extinguishment of, all such prior
liens and security interests and are valid and subsisting liens and
security interests to secure all prior, existing and new obligations of
Seller to KBK hereunder and under any such prior agreements, which
obligations are likewise herein renewed and extended, in any manner,
including any action required in connection with or by virtue of the
United States Bankruptcy Code (the "Bankruptcy Code").
8. SERVICING. KBK hereby appoints Seller as servicing agent for KBK
("Servicer") for the purpose of expediting the payment of accounts
purchased by KBK hereunder which become past due. Servicer agrees to
maintain an active, on-going and regular dialogue with each Account
Debtor. Servicer further agrees to utilize all powers, influences and
rights and take every action within its control in accordance with its
customary practices and applicable law to expedite the collection of
the accounts purchased by KBK which become past due and direct such
payments in specie exclusively to the Authorized Remittance Address.
Seller will furnish to KBK, upon request, any and all papers, documents
and records in its possession or control related to accounts purchased
by KBK hereunder, or related to Seller's business relationship with the
respective account debtors, and agrees to cooperate fully with KBK in
all matters related to collection of accounts purchased by KBK
hereunder. KBK reserves the right to terminate such servicing
relationship at any time with or without cause and without notice to
Servicer.
Seller authorizes KBK to forward directly to account debtors statements
or invoices on accounts purchased by KBK hereunder, and to request
payment at such address or to such bank account as may be designated by
KBK. Seller agrees that, if any payment is made to Seller on any
account purchased by KBK from Seller hereunder, Seller (i) will hold
such payment in trust for KBK, (ii) will not commingle such payment
with any funds of Seller, and (iii) will deliver such payment to KBK,
in the exact form received, by the close of business on the next
business day following receipt thereof by Seller. If any goods relating
to an account purchased by KBK hereunder shall be returned to or
repossessed by Seller, Seller shall give prompt notice thereof to KBK
and shall hold such goods in trust for KBK, separate and apart from
Seller's own property, and such goods shall be owned solely by KBK and
be subject to KBK's direction and control. Seller shall properly store
and protect such goods and agrees to cooperate fully with KBK in any
subsequent disposition thereof for the benefit of KBK.
Seller authorizes KBK to collect, xxx for and give releases for in the
name of Seller or KBK in KBK's sole discretion, all amounts due on
accounts sold to KBK hereunder. Seller specifically authorizes KBK to
endorse, in the name of Seller, all checks, drafts, trade acceptances
or other forms of payment tendered by account debtors in payment of
accounts sold to KBK hereunder and made payable to Seller. KBK shall
have no liability to Seller for any mistake in the application of any
payment received with respect to any account, IT BEING THE SPECIFIC
INTENT OF THE PARTIES HERETO THAT KBK SHALL HAVE NO LIABILITY HEREUNDER
FOR ITS OWN NEGLIGENCE except for its own gross negligence or willful
misconduct. Seller hereby waives notice of nonpayment of any account
sold to KBK hereunder as well as any and all other notices with respect
to such accounts, demands or presentations for payment, and agrees that
KBK may extend or renew from time to time the payment of, or vary or
reduce the amount payable under or compromise any of the terms of, any
account purchased by KBK, in each case without notice to or the consent
of Seller. Seller further authorizes KBK (or its designee) to open and
remove the contents of any post office box of Seller or KBK (or its
designee) which KBK believes contains mail relating to accounts, and in
connection therewith or otherwise, to receive, open and dispose of mail
addressed to Seller which KBK believes may relate to accounts, and in
order to further assure receipt by KBK (or its designee) of mail
relating to such accounts, to notify other parties including customers
and postal authorities to change the address for delivery of such mail
addressed to Seller to such address as KBK may designate. KBK agrees to
use reasonable measures to preserve the contents of any such mail which
does not relate to accounts purchased hereunder and to deliver same to
Seller (or, at the election of KBK, to notify Seller of the address
where Seller may take possession of such contents; provided, if Seller
does not take possession of such contents within 30 days after notice
from KBK to take possession thereof, KBK may dispose of such contents
without any liability to Seller). Seller hereby irrevocably appoints
KBK (and any employee, agent or other person designated by KBK, any of
whom may act without joinder of the others) as Seller's
attorneys-in-fact and agents, in Seller's name, place and stead, to
take all actions, execute and deliver all notices, negotiate such
instruments and other documents, as may be necessary or advisable to
permit KBK (or its designee) to take any and all of the actions
described in this paragraph or to carry out the purpose and intent
thereof, as fully and for all intents and purposes as Seller could
itself do, and hereby ratifies and confirms all that said
attorneys-in-fact and agents may do or cause to be done by virtue
hereof. This
3
4
power of attorney is irrevocable and deemed coupled with an interest.
9. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and
warrants to KBK with respect to each account offered by Seller to KBK
hereunder that (i) Seller is the sole owner of such account, which
account is free and clear of any liens, claims, equities or
encumbrances whatsoever, and upon each purchase by KBK of such account,
KBK will own such account free and clear of any liens, claims, equities
or encumbrances whatsoever and the consideration received by Seller
from KBK for such account is fair and adequate, (ii) Seller is the sole
obligee under such account, and has full power and is duly authorized
to sell, assign and transfer such account to KBK hereunder, and the
date of sale of such account is not more than 30 days after the date of
the original invoice relating to such account, (iii) Seller has no
knowledge of any fact which would lead it to expect that, at the date
of sale of such account to KBK , such account will not be paid in the
full stated amount when due, (iv) such account arises out of a bona
fide sale of conforming goods or the bona fide rendition of services by
Seller, and all underlying goods have been delivered to the account
debtor, or all underlying services have been rendered by Seller, in
complete fulfillment of all of the terms and conditions of a fully
executed, delivered and unexpired contract with the account debtor, and
the account debtor has accepted the goods or services to which the
account relates, (v) such account is denominated and payable only in
United States dollars and constitutes the legal, valid and binding
payment obligation of the account debtor, enforceable in accordance
with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally),
(vi) such account is current and not past due as of the date of
purchase by KBK, has not been paid by or on behalf of the account
debtor in whole or in part, and is not and will not be subject to any
dispute, rescission, set-off, recoupment, defense or claim by the
account debtor, whether relating to price, quality, quantity,
workmanship, delay in delivery, set off, counterclaim or otherwise, and
the account debtor has not and will not claim any defense of any kind
or character (other than bankruptcy or insolvency arising after the
date of sale of such account to KBK hereunder) against payment of such
account, and (vii) as of the date of purchase by KBK of such account,
the account debtor with respect to such account is located (within the
meaning of Section 9-103 of the applicable UCC) and has its principal
executive offices within the United States. Seller further represents
and warrants to KBK that (a) the execution, delivery and performance of
this Agreement by Seller have been duly authorized and this Agreement
constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally), (b) Seller is not a debtor
in any bankruptcy proceedings, insolvent, undergoing composition or
adjustment of debts or unable to make payment of its obligations when
due and no petition in bankruptcy has been filed by or against Seller
or any Affiliate, nor has Seller or any Affiliate filed any petition
seeking an adjustment of its debts or for any other relief under the
Bankruptcy Code, and no application for appointment of a receiver or
trustee for all or a substantial part of the property of Seller or any
Affiliate is pending, nor has Seller or any Affiliate made any
assignment for the benefit of creditors, (c) Seller is not in default
of any debt or obligation to KBK, any other lender or other creditor,
and (d) Seller's principal place of business, chief executive office,
the location where all records concerning its books of account and
contract rights are kept, and (except any additional locations listed
on Schedule A attached hereto) the sole location of any property
subject to the security interest granted herein is its "Address for
Notices" set forth on the signature page hereon. Seller agrees not to
change the location of its principal place of business or chief
executive office, the location where its records concerning its books
of account or contract rights are kept, or the location of any property
subject to the security interest granted herein, without giving at
least 15 days advance written notice thereof to KBK pursuant to Section
20 herein. Seller does business under no trade or assumed names except
as may be listed on Schedule A attached hereto.
Each representation and warranty of Seller contained in this Agreement
shall be deemed to be made at and as of the date hereof and at and as
of the date of each sale of accounts to KBK hereunder.
Seller agrees to indemnify and hold all Indemnified Persons (as
hereinafter defined) harmless against any breach by Seller of any
representation, warranty or agreement of Seller contained in this
Agreement, and against any claims or damages arising out of the
manufacture, sale, possession or use of, or otherwise relating to,
goods, or the performance of services, associated with or relating to
accounts or related rights purchased (or with respect to which a
security interest is granted) hereunder. The term "Indemnified Persons"
shall mean KBK and its officers, directors, shareholders, employees,
attorneys, representatives, agents, Affiliates, successors and assigns.
Seller agrees to notify KBK immediately of any breach by Seller of any
representation, warranty or agreement of Seller contained herein or
should any representation, warranty or agreement made herein become
untrue or false at any time. Seller further agrees to notify KBK
immediately of the assertion by any account debtor of any dispute or
other claim (including any defense or offset asserted by any account
debtor) with respect to any account sold to KBK hereunder, or with
respect to any related goods or services ("Disputed Accounts"). Upon
KBK's request, Seller agrees to settle, at its own expense and for the
benefit of KBK, all such Disputed Accounts; provided, that any such
settlement shall be made only with the prior written consent of KBK.
Unless KBK is advised in writing by Seller to the contrary, any account
that has not been approved by the account debtor within sixty (60) days
from the date of the invoice upon which the account is based, shall be
deemed to be a Disputed Account. As to any Disputed Account, KBK shall
have the right, in its sole discretion, (i) to settle at the expense of
Seller (including all attorneys' fees and expenses of KBK) and for the
benefit of KBK any such dispute or claim upon such terms as KBK may in
its sole discretion deem advisable or (ii) to assign the related
account to Seller, without recourse to KBK , and charge any unpaid
balance with respect thereto (up to the amount of the
4
5
Initial Payment with respect thereto and KBK's Discounts through the
date of such charge with respect thereto) against the Reserve or
deduct such unpaid balance from any Initial Payments or against any
money or other funds of Seller in the possession, custody or control
of KBK, from whatever source. Seller agrees that, in lieu of KBK
charging any such unpaid balance against the Reserve, Initial Payments
or against such other funds, KBK may require Seller to pay (and Seller
hereby agrees to pay) to KBK on demand any such unpaid balance. An
account with respect to which the account debtor has asserted an
Insolvency Claim is not a Disputed Account. As used herein,
"Insolvency Claim" means any defense or other claim by an account
debtor with respect to an account sold to KBK hereunder arising solely
out of the bankruptcy or insolvency of the account debtor or the
financial inability of the account debtor to pay, if Seller has not
breached its representation contained in clause (vi) of the first
paragraph of this Section. Notwithstanding anything herein to the
contrary, KBK shall have the right to charge all accounts not paid
because of an Insolvency Claim against the Reserve and such charge
shall have priority over and be paid before any Disputed Account
charge.
10. FINANCIAL STATEMENTS; OTHER DOCUMENTS. Seller represents and warrants
that all financial and other information provided by Seller to KBK in
connection with or in Seller's application to KBK or to induce KBK to
enter into this Agreement is true, complete and correct in all material
respects. Seller agrees to furnish to KBK (i) within 90 days after the
last day of each fiscal year of Seller, a consolidated statement of
income and a consolidated statement of cash flows of Seller for such
fiscal year, and a consolidated balance sheet of Seller as of the last
day of such fiscal year, in each case audited by an independent
certified public accounting firm acceptable to KBK, together with a
copy of any report to management delivered to Seller by such
accountants in connection therewith, (ii) within 45 days after the last
day of each fiscal quarter of Seller, an unaudited consolidated
statement of income and statement of cash flows of Seller for such
quarter, and an unaudited consolidated balance sheet of Seller as of
the last day of such quarter, (iii) within 45 days after the last day
of each calendar month of Seller, an unaudited consolidated statement
of income and statement of cash flows of Seller for such month, and an
unaudited consolidated balance sheet of Seller as of the last day of
such month, and (iv) promptly after the end of each month, evidence of
Seller's payment of all payroll taxes. Seller represents and warrants
that each such statement of income and statement of cash flows will
fairly present, in all material respects, the results of operations and
cash flows of Seller for the period set forth therein, and that each
such balance sheet will fairly present, in all material respects, the
financial condition of Seller as of the date set forth therein, all in
accordance with generally accepted accounting principles applied on a
consistent basis, except as otherwise noted in the accompanying
auditors' report (or, with respect to unaudited financial statements,
in the notes thereto). Seller also agrees to furnish to KBK, upon
request, such additional financial and business information concerning
Seller and its business as KBK may reasonably request, including copies
of its Form 941 returns filed with the Internal Revenue Service and
evidence of payment of related taxes. KBK and its agents,
representatives and accountants shall have the right, at all times
during normal business hours and upon twenty-four (24) hours prior
notice to Seller so long as Seller is in compliance with the terms
hereof, to conduct an audit or other examination of the financial and
business records of Seller and to examine and make copies of all books
and records of Seller for the purpose of assuring or verifying
compliance by Seller with the terms of this Agreement, and Seller
agrees to cooperate fully with KBK and its agents, representatives and
accountants in connection therewith and to timely pay all costs
associated with such audits at a rate equal to $700.00 per day, per
person, plus out-of-pocket expenses. Seller agrees to properly reflect
the effect of this Agreement, and all sales related thereto, in all
financial reports and disclosures, written or otherwise, provided to
Seller's creditors and other interested parties. Seller specifically
agrees that all accounts purchased by KBK will be excluded from
Seller's reported accounts receivable balances. Seller also
specifically agrees to immediately notify KBK of any material adverse
change in Seller's financial condition or business.
11. FINANCIAL COVENANTS.
(a) Tangible Net Worth. Borrower shall maintain a Tangible Net Worth
of no less than $400,000.00. For purposes hereof, (i) "Tangible
Net Worth" shall mean the amount by which Borrower's total assets
exceeds its total liabilities, plus any Subordinated Debt, less
any intangible assets (as determined by generally accepted
accounting principles and practices which are recognized as such
by the Financial Accounting Standards Board (or any generally
recognized successor), consistently applied), and (ii)
"Subordinated Debt" shall mean any indebtedness owing by Borrower
to a creditor other than KBK which has been subordinated and
subject in right of payment to the prior payment of all
indebtedness and obligations now or hereafter owing by Borrower
to KBK, such subordination to be evidenced by a written agreement
between KBK and the subordinated creditor which is in form and
substance satisfactory to KBK.
12. TAXES. All taxes and governmental charges of any kind imposed with
respect to the sale of goods or the rendering of services relating to
accounts purchased by KBK hereunder shall be for the account of, and
paid by, Seller.
13. FEES. Seller hereby agrees to pay to KBK a termination fee equal to one
percent (1.0%) 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 14
below. KBK's right to a termination fee expires after one (1) year from
the date of the Agreement.
14. TERMINATION. This Agreement may be terminated by either party hereto by
delivery of written notice of termination of this Agreement to the
other party specifying the date of termination, which date shall be at
5
6
least 30 days after the date such notice is given. KBK may, at its
election, terminate this Agreement immediately and without the
requirement of notice to Seller if (i) Seller shall fail to perform any
of its obligations hereunder or shall breach any of its representations
and warranties hereunder, (ii) Seller or any of its Affiliates shall
become insolvent or suspend all or a substantial part of its or their
business, (iii) a petition under the Bankruptcy Code or any other
insolvency or debtor statute shall be filed by or against Seller or any
Affiliate or any receivership proceedings with respect thereto shall
commence, (iv) any guarantee of any of Seller's obligations hereunder
shall be terminated or become impaired, (v) an event of default occurs
under any other agreement now or hereafter executed between Seller and
KBK, or (vi) KBK otherwise determines that it is insecure hereunder.
Termination of this Agreement shall not affect the rights and
obligations of the parties hereunder with respect to transactions
occurring on or prior to the date of such termination, and this
Agreement shall continue to govern the rights and obligations of the
parties hereto with respect to accounts purchased by KBK from Seller on
or prior to the date of such termination. All security interests
granted or contemplated by this Agreement shall survive the termination
of this Agreement until all amounts payable to KBK with respect to
transactions occurring on or prior to the date of termination have been
paid to KBK, and Seller has performed all its obligations to KBK with
respect to such transactions and all obligations under this Agreement
including but not limited to payment of any fees owing hereunder.
15. NOTICE OF PROPOSED REFINANCING. Seller hereby agrees that in the event
(a) Seller receives a written proposal from any third party to provide
financing or factoring ("Proposed Refinancing"), (b) the terms of the
Proposed Refinancing are acceptable to Seller, and (c) Seller is
considering accepting the Proposed Refinancing from the offeror
("Offeror"), Seller will immediately advise KBK in writing of the
identity of the Offeror, the complete terms and conditions of the
Proposed Refinancing and provide KBK a full and complete copy of all
written correspondence between Seller and Offeror describing the
Proposed Refinancing. Seller agrees not to accept the Proposed
Refinancing from the Offeror until at least 10 business days after
delivery of the foregoing items to KBK.
16. ATTORNEY'S FEES, LITIGATION EXPENSE. Seller agrees to reimburse KBK
upon demand for KBK's attorneys' fees, court costs and other fees and
expenses incurred in collecting any sums due or to become due to KBK
hereunder, enforcing any of KBK's rights under this Agreement and all
actions taken by KBK that it deems necessary or desirable under the
Bankruptcy Code or should any provisions of the Bankruptcy Code be
applicable to any rights or obligations of any party to this Agreement,
as well as all appearances, motions and actions to which KBK may be or
become a party in any bankruptcy case.
17. GOVERNING LAW; VENUE; SUBMISSION TO JURISDICTION. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION
OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF TEXAS. THIS AGREEMENT IS
PERFORMABLE BY THE PARTIES IN TARRANT COUNTY, TEXAS. SELLER AND KBK
EACH AGREE THAT TARRANT COUNTY, TEXAS SHALL BE THE EXCLUSIVE VENUE FOR
LITIGATION OF ANY DISPUTE OR CLAIM ARISING UNDER OR RELATING TO THIS
AGREEMENT, AND THAT SUCH COUNTY IS A CONVENIENT FORUM IN WHICH TO
DECIDE ANY SUCH DISPUTE OR CLAIM. SELLER AND KBK EACH CONSENT TO THE
PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
TARRANT COUNTY, TEXAS FOR THE LITIGATION OF ANY SUCH DISPUTE OR CLAIM.
SELLER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
18. WAIVER OF JURY TRIAL. SELLER AND KBK EACH HEREBY IRREVOCABLY WAIVES, TO
THE MAXIMUM EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH.
19. AMENDMENTS; WAIVERS. This Agreement may be amended only in writing
signed by the parties hereto. No failure on the part of KBK to
exercise, and no delay by KBK in exercising, and no course of dealing
by KBK with respect to, any right, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder by KBK
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The remedies of KBK hereunder are
cumulative and not exclusive of any remedies provided by law.
20. NOTICES. All notices and other communications provided for herein shall
be given or made in writing and telecopied or delivered by courier or
mail to the intended recipient at the "Address for Notices" specified
opposite its name on the signature page hereto, or at such other
address or telecopy number as shall be designated by a party to the
other party in the manner specified in this Section. All such notices
and other communications shall be deemed to have been duly given when
transmitted by telecopier (with receipt thereof confirmed by
telecopier) or personally delivered or, in the case of a mailed notice,
upon deposit in
6
7
the United States Postal System postage prepaid and properly
addressed, in each case given or addressed as aforesaid.
21. INDEMNIFICATION. Seller agrees to indemnify, defend and hold the
Indemnified Persons harmless from and against any and all loss,
liability, obligation, damage, penalty, judgment, claim, deficiency and
expense (including interest, penalties, attorneys' fees and amounts
paid in settlement) owing to any third party to which any Indemnified
Person may become subject arising out of or based upon this Agreement
as well as any prior relationship of Seller with any Indemnified
Person, WHETHER BY ALLEGED OR ACTUAL NEGLIGENCE OF ANY INDEMNIFIED
PERSON, except and to the extent caused by the gross negligence or
willful misconduct of any Indemnified Person.
22. WAIVER AND RELEASE. Seller, by its execution of this Agreement, does
hereby covenant, warrant and represent that (i) Seller is not in
default and no default exists under any prior agreements or
transactions with KBK, (ii) Seller releases, relinquishes and waives
any and all defenses to the enforceability of any prior agreements or
transactions with KBK in connection therewith to which Seller may have
otherwise been entitled as of the date hereof, (iii) Seller
relinquishes, waives and releases KBK from any and all claims known or
unknown which Seller may or might have against KBK arising directly or
indirectly out of or from any prior agreements or transactions between
Seller and KBK, (iv) the benefit received and to be received by Seller
as a result of this Agreement shall and does constitute sufficient and
valuable consideration to Seller for entering into and performing its
obligations under this Agreement, (v) the execution, delivery and
performance by Seller of this Agreement and the consummation of the
transaction contemplated thereby are (a) not prohibited by any
indenture, contract or agreement, law or corporate or partnership
documents, including, but not limited to the Bylaws and Articles of
Incorporation or Certificate of Incorporation, as the case may be, if
Seller is a corporation, or Seller's partnership agreement, if Seller
is a partnership, (b) duly authorized by appropriate action of Seller,
and (c) legally valid and binding obligations of Seller and will
continue to be such and enforceable against the Seller according to
their terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally), (vi)
that this Agreement will be executed and delivered by properly
authorized officers of Seller, (vii) KBK has no obligation to continue
the prior agreements or enter into this Agreement except for the
considerations herein expressed, and (viii) the representations and
warranties set forth herein will survive the execution and delivery of
this Agreement.
23. CAPTIONS; FINAL AGREEMENT; COUNTERPARTS; SUCCESSORS AND ASSIGNS.
Captions and headings appearing herein are included solely for
convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement. This Agreement
represents the final agreement between the parties hereto with respect
to the subject matter hereof, and supersedes all prior proposals,
negotiations, agreements and understandings, oral or written, related
to such subject matter. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the
same instrument. Delivery of an executed counterpart of this Agreement
by telecopy shall be equally as effective as delivery of a manually
executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telecopy also shall deliver a
manually executed counterpart of this Agreement but the failure to
deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement. This Agreement
may not be assigned by Seller without the prior written consent of KBK.
This Agreement may be assigned by KBK, and any accounts purchased by
KBK hereunder, together with all rights and interests related thereto
granted to KBK hereunder, may be assigned by KBK, all without notice to
or the consent of Seller. This Agreement shall be binding upon the
parties hereto and their respective successors and permitted assigns.
24. EFFECTIVENESS OF AGREEMENT. This Agreement shall become effective only
upon acceptance by KBK at its offices in Fort Worth, Tarrant County,
Texas as evidenced by KBK's signature hereon.
25. TRUE SALES. Seller and KBK acknowledge and agree that the sale of
accounts contemplated and covered hereby are fully intended by the
parties hereto as true sales governed by the provisions of Article
5069-1H.103 of the Texas Revised Civil Statutes and Section 9.102 of
the Texas Business and Commerce Code, as each may be amended from time
to time, and, accordingly, legal and equitable title in all of Seller's
accounts sold to and purchased by KBK from time to time hereunder will
pass to KBK.
IN WITNESS WHEREOF, the parties hereto, heretofore duly authorized, have
executed this Agreement as of the date first set forth above.
Address for Notices: SELLER:
0000 X. Xxxxxxxx Xxxxxx, #000
Xxxxxx, Xxxxxxx 00000 BASIS, INC.
Telecopy No.: 000-000-0000 By: /s/ Xxxxx Xxxx
----------------------------
Name: Xxxxx Xxxx
----------------------------
Title: Sec./Treas.
----------------------------
Address for Notices: KBK FINANCIAL, INC.:
000 XXXXXXXX XXXXXX
0000 XXXX CENTER By: /s/ Xxxxxx XxXxx
----------------------------
XXXX XXXXX, XXXXX 00000 Name: Xxxxxx XxXxx
7
8
Telecopy No.: (000) 000-0000 Title: Vice President
----------------------------
Date: April 5, 2001
----------------------------
STATE OF
---------------------------
COUNTY OF
--------------------------
The foregoing instrument was acknowledged before me this ____ day of
___________, 2001, by _________________ as _____________ of _____________.
Witness my hand and official seal.
My Commission expires: /s/
------------------------------
As a representative of KBK
8
9
SCHEDULE A
TO
ACCOUNT TRANSFER AND PURCHASE AGREEMENT
Dated March 29, 2001
By and Between
KBK FINANCIAL, INC.
AND
BASIS, INC.
The addresses of any other locations of Collateral referenced in Section 9:
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Any trade or assumed names referenced in Section 9: [NONE]
9
