EXHIBIT 10.13
BUSINESS FINANCING AGREEMENT
This Business Financing Agreement ("Agreement") is made as of DECEMBER 23, 1996
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between Deutsche Financial Services Corporation ("DFS") and XXXXXX, INC., a
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[_] SOLE PROPRIETORSHIP, [_] PARTNERSHIP, [X] CORPORATION, [_] LIMITED LIABILITY
COMPANY (check applicable term) ("Dealer"), having a principal place of business
located at 00000 XXX XXXXXXX, XXXXXXXX XXXXXXX, XX. 00000.
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1. DEFINITIONS
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1.1 SPECIAL DEFINITIONS. The following terms will have the following
meanings in this Agreement, Agreement for Wholesale Financing and in
the other Agreements:
(a) "Accounts": all accounts, leases, contract rights, chattel paper,
choses in action and instruments, including any lien or other
security interest that secures or may secure any of the foregoing,
plus all books, invoices, documents and other records in any form
evidencing or relating to any of the foregoing, now owned or
hereafter acquired by Dealer.
(b) "Accounts Receivable Facility": a credit facility extended
pursuant to this Agreement.
(c) "Agreement for Wholesale Financing": any Agreement for Wholesale
Financing, as amended from time to time, which Dealer has executed
in conjunction with inventory financing extended by DFS.
(d) "Average Contract Balance": the amount determined by dividing: (a)
the sum of the Daily contract Balances (as defined in
Section 2.1.1) for a billing period; by, (b) the actual number of
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days in such billing period.
(e) "Default": the events or occurrences enumerated in Section 6.
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(f) "Entity": any individual, association, firm, corporation,
partnership, limited liability company, trust, governmental body,
agency or instrumentality whatsoever.
(g) "Guarantee": a guarantor of any of the Obligations.
(h) "Inventory": all of Dealer's presently owned and hereafter
acquired goods which are held for sale or lease.
(i) "Obligations": all liabilities and indebtedness now or hereafter
arising, owing, due or payable from Dealer to DFS (and any of its
subsidiaries and affiliates), including any third party claims
against Dealer satisfied or acquired by DFS, whether primary or
secondary, joint or several, direct, contingent, fixed or
otherwise, and whether or not evidenced by instruments or
evidences of indebtedness, and all covenants, agreements
(including consent to binding arbitration), warranties, duties and
representations, whether such Obligations arise under this
Agreement, the other Agreements or any other agreements
previously, now or hereafter executed by Dealer and delivered to
DFS or by operation of law.
(j) "Other Agreements": all security agreements (including the
Agreement for Wholesale Financing), mortgages, leases,
instruments, documents, guarantees, schedules, certificates,
contracts and similar agreements heretofore, now or hereafter
executed by Dealer and delivered to DFS or delivered by or on
behalf of Dealer to a third party and assigned to DFS by operation
of law or otherwise.
(k) "Prime Rate": the rate of interest which Chase Manhattan Bank
publicly announces from time to time as its prime rate or
reference rate; provided, however, that for purposes of this
Agreement, the interest rate charged to Dealer will at no time be
computed on a Prime Rate of less than SIX percent (6.0%) per
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annum. The Prime Rate will change and take effect for purposes of
this Agreement on the day that Chase Manhattan Bank announces any
change in its Prime Rate or reference rate.
2. CREDIT FACILITY/INTEREST RATES/FEES
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2.1 ACCOUNTS RECEIVABLE FACILITY. Subject to the terms of this Agreement,
DFS agrees to provide to Dealer an Accounts Receivable Facility of
SEVEN MILLION DOLLARS ($7,000,000.00). DFS' decision to advance funds
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will not be binding until the funds are actually advanced.
2.1.1 INTEREST. Dealer agrees to pay interest to DFS on the Daily
Contract Balance at a rate equal to the Prime Rate plus
ONE AND ONE QUARTER percent (1.25%) per annum. Such interest
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will: (i) be computed based on a 360 day year; (ii) be
calculated each day by multiplying the Daily Rate (as defined
below) by the Daily Contract Balance (as defined below); and
(iii) accrue from the date that DFS makes an advance under the
Accounts Receivable Facility until DFS receives the full and
final payment of the principal debt which Dealer owes to DFS.
The "Daily Rate" is the quotient of the applicable annual rate
provided herein divided by 360. The "Daily Contract Balance" is
the amount of the outstanding principal debt which Dealer owes
to DFS on the Accounts Receivable Facility at the end of each
day after DFS has credited the payments which it has received on
the Accounts Receivable Facility, subject to the terms of
Section 3.8 herein.
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2.1.2 FEES. Dealer agrees to pay to DFS an advance fee equal to ZERO
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percent (-0-%) on each advance to Dealer under the Accounts
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Receivable Facility.
2.1.3 MAXIMUM INTEREST. Dealer acknowledges that DFS intends to
strictly conform to the applicable usury laws governing this
Agreement. Regardless of any provision contained herein or in
any other document executed or delivered in connection herewith
or therewith, DFS shall never be deemed to have contracted for,
charged or be entitled to receive, collect or apply as interest
on this Agreement (whether termed interest herein or deemed to
be interest by judicial determination or operation of law), any
amount in excess of the maximum amount allowed by applicable
law, and, if DFS ever receives, collects or applies as interest
any such excess, such amount which would be excessive interest
will be applied first to the reduction of the unpaid principal
balances of advances under this Agreement, and, second, any
remaining excess will be paid to Dealer. In determining whether
or not the interest paid or payable under any specific
contingency exceeds the highest lawful rate, Dealer and DFS
shall, to the maximum extent permitted under applicable law: (a)
characterize any non-principal payment (other than payments
which are expressly designated as interest payments hereunder)
as an expense or fee rather than as interest; (b) exclude
voluntary pre-payments and the effect thereof; and (c) spread
the total amount of interest throughout the entire term of this
Agreement so that the interest rate is uniform throughout such
term.
2.2 PAYMENTS. DFS will send Dealer a monthly billing statement(s)
identifying all charges due on Dealer's account with DFS. The interest
and fee charges specified on each billing statement will be: (a) due
and payable in full immediately on receipt, and (b) an account stated,
unless DFS receives Dealer's written objection thereto within fifteen
(15) days after it is mailed to Dealer. If DFS does not receive, by the
25th day of any given month, payment of all charges accrued to Dealer's
account with DFS during the immediately preceding month, Dealer will
(to the extent allowed by law) pay DFS a late fee ("Late Fee") equal to
the greater of $5 or 5% of the amount of such finance charges (payment
of the Late Fee does not waive the default caused by the late payment).
Dealer will also pay DFS $100 for each of Dealer's checks returned
unpaid for insufficient funds (an "NSF check") (such default caused by
the NSF check). DFS may adjust the billing statement at any time to
conform to applicable law and this Agreement. Dealer waives the right
to direct the application of any payments hereafter received by DFS on
account of the Obligations. DFS will have the continuing exclusive
right to apply and reapply any and all such payments in such manner as
DFS may deem advisable notwithstanding any entry by DFS upon its books
and records.
2.3 ONE LOAN. DFS may combine all of DFS' advances to Dealer or on
Dealer's behalf, whether under this Agreement or any Other Agreements,
and whether provided by one or more of DFS' branch offices, together
with all finance charges, fees and expenses related thereto, to make
one debt owed by Dealer.
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3. ACCOUNTS RECEIVABLE FACILITY -- ADDITIONAL PROVISIONS
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3.1 SCHEDULES. Dealer will, no less than weekly or as otherwise agreed to,
furnish DFS with a schedule of Accounts ("Schedule") which will: (a)
describe all Accounts created or acquired by Dealer since the last
Schedule furnished DFS; (b) inform DFS of any rejection of goods by any
obligor, delays in delivery of goods, non-performance of contracts and
of any assertion of any claim, offset or counterclaim by any obligor;
and (c) inform DFS of any adverse information relating to the financial
condition of any obligor.
3.2 AVAILABLE CREDIT. On receipt of each Schedule, DFS will credit Dealer
with such amount as DFS may deem advisable up to SEVENTY percent (70%)
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of the net amount of the eligible Accounts listed in such Schedule. DFS
will loan Dealer such amounts so credited or a part thereof as
requested provided that at no time will such outstanding loans exceed
Dealer's maximum Accounts Receivable Facility from time to time
established by DFS. No loans need be made by DFS if the Dealer is in
Default.
3.3 INELIGIBLE ACCOUNTS. DFS will have the sole right to determine
eligibility of Accounts and, without limiting DFS' discretion in that
regard, the following Accounts will be deemed ineligible: (a) Accounts
created from the sale of goods and services on non-standard terms
and/or that allow for payment to be made more than thirty (30) days
from the date of sale; (b) Accounts unpaid more than ninety (90) days
from the date of invoice; (c) all Accounts of any obligor with fifty
percent (50%) or more of the outstanding balance unpaid for more than
ninety (90) days from the date of invoice; (d) Accounts for which the
obligor is an officer, director, shareholder, partner, member, owner,
employee, agent, parent, subsidiary, affiliate of, or is related to
Dealer or has common shareholders, officers, directors, owners,
partners or members; (e) consignment sales; (f) Accounts for which the
payment is or may be conditional; (g) Accounts for which the obligor is
not a commercial or institutional entity or is not a resident of the
United States or Canada; (h) Accounts with respect to which any
warranty or representation provided in Subsection 3.4 is not true and
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correct; (i) Accounts which represent goods or services purchased for a
personal, family or household purpose; (j) Accounts which represent
goods used for demonstration purposes or loaned by the Dealer to
another party; (k) Accounts which are progress payment, barter, or
contra accounts; and (l) any and all other Accounts which DFS deems to
be ineligible. If DFS determines that any Account is or becomes an
ineligible Account, immediately upon notice thereof from DFS, Dealer
will pay to DFS an amount equal to the monies loaned by DFS for such
ineligible Account.
3.4 WARRANTIES AND REPRESENTATIONS. For each Account which Dealer lists on
any Schedule, Dealer warrants and represents to DFS that at all times:
(a) such Account is genuine; (b) such Account is not evidenced by a
judgment or promissory note or similar instrument or agreement; (c) it
represents an undisputed bona fide transaction completed in accordance
with the terms of the invoices and purchase orders relating thereto;
(d) the goods sold or services rendered which resulted in the creation
of such Account have been delivered or rendered to and accepted by the
obligor; (e) the amounts shown on the Schedules, Dealer's books and
records and all invoices and statements delivered to DFS with respect
thereto are owing to Dealer and are not contingent; (f) no payments
have been or will be made thereon except payments turned over to DFS;
(g) there are no offsets, counterclaims or disputes existing or
asserted with respect thereto and Dealer has not made any agreement
with any obligor for any deduction or discount of the sum payable
thereunder except regular discounts allowed by Dealer in the ordinary
course of its business for prompt payment; (h) there are no facts or
events which in any way impair the validity or enforceability thereof
or reduce the amount payable thereunder from the amount shown on the
Schedules, Dealer's books and records and the invoices and statements
delivered to DFS with respect thereto; (i) all persons acting on behalf
of obligors thereon have the authority to bind the obligor; (j) the
goods sold or transferred giving rise thereto are not subject to any
lien, claim, encumbrance or security interest which is superior to that
of DFS; and (k) there are no proceedings or actions known to Dealer
which are threatened or pending against any obligor thereon which might
result in any material adverse change in such obligor's financial
condition.
3.5 NOTES. Loans made pursuant to this Agreement need not be evidenced by
promissory notes unless otherwise required by DFS in DFS' sole
discretion.
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3.6 REIMBURSEMENT FOR CHARGES. Dealer will reimburse DFS for all charges
made by banks for collection of checks and other items of payment and
for transfer of funds to or from the Dealer.
3.7 COLLECTIONS. Dealer is authorized to collect Accounts as agent for DFS
and trustee of an express trust for DFS' benefit. Dealer will receive
all payments on Accounts as agent and in trust for DFS and will, as
DFS directs, either transmit to DFS or deposit into an account or
accounts designated by DFS, on the day of receipt thereof, all
original checks, drafts, acceptances, and other evidences of payment
of Accounts, including all cash. Until delivery to DFS, Dealer will
keep such remittances separate and apart from Dealer's own funds so
that they are capable of identification as the property of DFS and
will be held in trust for DFS. DFS may terminate such authorization
upon Default and DFS may notify any obligor of the assignment of
Accounts and collect the same. All proceeds received or collected by
DFS with respect to Accounts, and reserves and other property of
Dealer in possession of DFS at any time or times hereafter, may be
held by DFS without interest to Dealer until all Obligations are paid
in full or applied by DFS on account of the Obligations. DFS may
release to Dealer such portions of such reserves and proceeds as DFS
may determine.
3.8 COLLECTION DAYS. All payments and all amounts received on any Account
will be credited by DFS to Dealer's account (subject to final
collection thereof) after allowing three (3) business days for
collection of checks or other instruments.
3.9 POWER OF ATTORNEY. Dealer irrevocably appoints DFS (and any person
designated by it) as Dealer's true and lawful Attorney with full power
to at any time, in the discretion of DFS (whether or not Default has
occurred) to: (a) endorse the name of Dealer upon any of the items of
payment or proceeds and deposit the same in the account of DFS for
application to the Obligations; (b) sign the name of Dealer to verify
the accuracy of the Accounts; (c) sign the name of Dealer on any
document or instrument that DFS shall deem necessary or appropriate to
perfect and maintain perfected the security interests in the
Collateral under this Agreement and the Other Agreements; and (d)
initiate and settle any insurance claim and endorse Dealer's name on
any check, instrument or other item of payment. In the event of a
Default, Dealer irrevocably appoints DFS (and any person designated by
it) as Dealer's true and lawful Attorney with full power to at any
time, in the discretion of DFS to: (i) demand payment, enforce payment
and otherwise exercise all of Dealer's rights, and remedies with
respect to the collection of any Accounts; (ii) settle, adjust,
compromise, extend or renew any Accounts; (iii) settle, adjust or
compromise any legal proceedings brought to collect any Accounts; (iv)
sell or assign any Accounts upon such terms, for such amounts and at
such time or times as DFS may deem advisable; (v) discharge and
release any Accounts; (vi) prepare, file and sign Dealer's name on any
Proof of claim in Bankruptcy or similar document against any obligor;
(vii) endorse the name of Dealer upon any chattel paper, document,
instrument, invoice, freight xxxx, xxxx of lading or similar document
or agreement relating to any Account or goods pertaining thereto;
(viii) take control in any manner of any item of payments or proceeds
and for such purpose to notify the Postal Authorities to change the
address for delivery of mail addressed to Dealer to such address as
DFS may designate. The power of attorney is for value and coupled with
an interest and is irrevocable so long as any Obligations remain
outstanding and by DFS exercising such right, DFS shall not waive any
right against Dealer until the Obligations are paid in full.
3.10 CONTINUING REQUIREMENTS. Dealer will: (a) if from time to time
required by DFS, immediately upon their creation, deliver to DFS
copies of all invoices, delivery evidences and other such documents
relating to each Account; (b) not permit or agree to any extension,
compromise or settlement or make any change to any Account; (c) affix
appropriate endorsements or assignments upon all such items of payment
and proceeds so that the same may be properly deposited by DFS to DFS'
account; (d) immediately notify DFS in writing which Accounts may be
deemed ineligible as defined in Subsection 3.3; (e) xxxx all chattel
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paper and instruments now owned or hereafter acquired by it to show
that the same are subject to DFS' security interest and immediately
thereafter deliver such chattel paper and instruments to DFS with
appropriate endorsements and assignments to DFS; (f) within ten (10)
days after the end of each month,
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provide DFS with a detailed aging of its Accounts for each month,
together with the names and addresses of all obligors.
3.11 RELEASE. Dealer releases DFS from all claims and causes of action
which Dealer may now or hereafter have for any loss or damage to it
claimed to be caused by or arising from: (a) any failure of DFS to
protect, enforce or collect, in whole or in part, any Account; (b)
DFS' notification to any obligors thereon of DFS' security interest in
any of the Accounts; (c) DFS' directing any obligor to pay any sum
owing to Dealer directly to DFS; and (d) any other act or omission to
act on the part of DFS, its officers, agents or employees, except for
willful misconduct. DFS will have no obligation to preserve rights to
Accounts against prior parties. Dealer waives all rights of offset and
counterclaims Dealer may have against DFS.
3.12 REVIEW. Dealer grants DFS an irrevocable license to enter Dealer's
business locations during normal business hours without notice to
Dealer to: (a) account for and inspect all Collateral; (b) verify
Dealer's compliance with this Agreement; and (c) review, examine, and
make copies of Dealer's books, records, files and business procedures
and practices. Dealer further agrees to pay DFS a review fee of
SEVEN HUNDRED FIFTY (PER PERSON PER DAY DOLLARS ($750.00) for any such
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review, inspection or examination made by DFS. DFS may, without notice
to Dealer and at any time or times hereafter, verify the validity,
amount or any other matter relating to any Account by mail, telephone,
or other means, in the name of Dealer or DFS.
4. SECURITY -- COLLATERAL
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4.1 GRANT OF SECURITY INTEREST. To secure payment of all of Dealer's
current and future Obligations and to secure Dealer's performance of
all of the provisions under this Agreement and the other Agreements,
Dealer grants DFS a security interest in all of Dealer's inventory,
equipment, fixtures, accounts, contract rights, chattel paper,
security agreements, instruments, deposit accounts, reserves,
documents, and general intangibles; and all judgments, claims,
insurance policies, and payments owed or made to Dealer thereon; all
whether now owned or hereafter acquired, all attachments, accessories,
accessions, returns, repossessions, exchanges, substitutions and
replacements thereto, and all proceeds thereof. All such assets are
collectively referred to herein as the "Collateral." All of such terms
for which meanings are provided in the uniform Commercial Code of the
applicable state are used herein with such meanings. Dealer covenants
with DFS that DFS may realize upon all or part of any Collateral in
any order it desires and any realization by any means upon any
Collateral will not bar realization upon any other collateral.
Dealer's liability under this Agreement is direct and unconditional
and will not be affected by the release or nonperfection of any
security interest granted hereunder. All Collateral financed by DFS,
and all proceeds thereof, will be held in trust by Dealer for DFS,
with such proceeds being payable in accordance with this Agreement.
5. WARRANTIES AND REPRESENTATIONS
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5.1 AFFIRMATIVE WARRANTIES AND REPRESENTATIONS. Except as otherwise
specifically provided in the other Agreements, Dealer warrants and
represents to DFS that: (a) Dealer has good title to all Collateral;
(b) DFS' security interest in the Accounts will at all times
constitute a perfected, first security interest in such Accounts and
will not become subordinate to the security interest, lien,
encumbrance or claim of any Entity; (c) Dealer will execute all
documents DFS requests to perfect and maintain DFS' security interest
in the Collateral and to fully consummate the transactions
contemplated under this Agreement and the other Agreements; (d) Dealer
will at all times be duly organized, existing, in good standing,
qualified and licensed to do business in each state, county, or
parish, in which the nature of its business or property so requires;
(e) Dealer has the right and is duly authorized to enter into this
Agreement; (f) Dealer's execution of this Agreement does not
constitute a breach of any agreement to which Dealer is now or
hereafter becomes bound; (g) there are and will be no actions or
proceedings pending or threatened against Dealer which might result in
any material adverse change in Dealer's financial or business
condition or which might in any way adversely affect any of Dealer's
assets; (h) Dealer will maintain the Collateral in good condition and
repair; (i) Dealer has duly filed and will duly file all tax returns
required by law; (j) Dealer has paid and will pay when due all taxes,
levies, assessments and
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governmental charges of any nature; (k) Dealer will maintain a system
of accounting in accordance with generally accepted accounting
principles and account records which contain such information in a
format as may be requested by DFS; (1) Dealer will keep and maintain
all of its books and records pertaining to the Accounts at its
principal place of business designated in this Agreement; (m) Dealer
will promptly supply DFS with such information concerning it or any
Guarantor as DFS hereafter may reasonably request; (n) Dealer will
give DFS thirty (30) days prior written notice of any change in
Dealer's identity, name, form of business organization, ownership,
management, principal place of business, Collateral locations or other
business locations; and before moving any books and records to any
other location; (o) Dealer will observe and perform all matters
required by any lease, license, concession or franchise forming part
of the Collateral in order to maintain all the rights of DFS
thereunder; (p) Dealer will advise DFS of the commencement of material
legal proceedings against Dealer or any Guarantor; (q) Dealer will
comply with all applicable laws and will conduct its business in a
manner which preserves and protects the Collateral and the earnings
and incomes thereof; and (r) Dealer will keep the Collateral insured
for its full insurable value under an "all risk" property insurance
policy with a company acceptable to DFS, naming DFS as a lender loss-
payee or mortgagee and containing standard lender's loss payable and
termination provisions. Dealer will provide DFS with written evidence
of such property insurance coverage and lender's loss-payee or
mortgagee endorsement.
5.2 NEGATIVE COVENANTS. Dealer will not at any time (without DFS' prior
written consent): (a) grant to or in favor of any Entity a security
interest in or permit to exist a lien, claim or encumbrance in the
Accounts which is superior to the interest of DFS; (b) other than in
the ordinary course of its business, sell, lease or otherwise dispose
of or transfer any of its assets; (c) merge or consolidate with
another Entity; (d) acquire the assets or ownership interest of any
other Entity; (e) enter into any transaction not in the ordinary
course of business; (f) guarantee or indemnify or otherwise become in
any way liable with respect to the obligations of any Entity, except
by endorsement of instruments or items of payment for deposit to the
general account of Dealer or which are transmitted or turned over to
DFS on account of the Obligations; (g) redeem, retire, purchase or
otherwise acquire, directly or indirectly, any of Dealer's capital
stock; (h) make any change in Dealer's capital structure or in any of
its business objectives or operations which might in any way adversely
affect the ability of Dealer to repay the Obligations; (i) make any
distribution of Dealer's assets not in the ordinary course of
business; (j) incur any debts outside of the ordinary course of
business except renewals or extensions of existing debts and interest
thereon; and (k) make any loans, advances, contributions or payments
of money or in goods to any affiliated entity or to any officer,
director, stockholder, member or partner of Dealer or of any such
entity (except for compensation for personal services actually
rendered).
5.3 FINANCIAL STATEMENTS. Dealer will deliver to DFS: (a) within ninety
(90) days after the end of each of Dealer's fiscal years, a reasonably
detailed balance sheet as of the last day of such fiscal year and a
reasonably detailed balance sheet as of the last day of such fiscal
year and a reasonably detailed income statement covering Dealer's
operations for such fiscal year, in a form satisfactory to DFS; (b)
within forty-five (45) days after the end of each of Dealer's fiscal
quarters, a reasonably detailed balance sheet as of the last day of
such quarter and an income statement covering Dealer's operations for
such quarter in a form satisfactory to DFS; (c) within ten (10) days
after request therefor by DFS, any other report requested by DFS
relating to the Collateral or the financial condition of Dealer.
Dealer warrants and represents to DFS that all financial statements
and information relating to Dealer or any Guarantor which have been or
may hereafter be delivered by Dealer or any Guarantor to DFS are true
and correct and have been and will be prepared in accordance with
generally accepted accounting principles consistently applied and,
with respect to such previously delivered statements or information,
there has been no material adverse change in the financial or business
condition of Dealer or any Guarantor since the submission to DFS,
either as of the date of delivery, or, if different, the date
specified therein, and Dealer acknowledges DFS' reliance thereon.
6. Default
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6.1 DEFINITION. Dealer will be in default under this Agreement if: (a) Dealer
breaches any terms, warranties or representations contained herein or in
any Other Agreements; (b) any Guarantor of Dealer's debts to DFS breaches
any terms, warranties or representations contained in any guaranty or Other
Agreements; (c) any representation, statement, report, or certificate made
or delivered by Dealer or any Guarantor to DFS is not accurate when made;
(d) Dealer fails to pay any of the Obligations when due and payable; (e)
Dealer abandons any Collateral, (f) Dealer or any Guarantor is or becomes
in default in the payment of any debt owed to any third party; (g) a money
judgment issues against Dealer or any Guarantor; (h) an attachment, sale or
seizure issues or is executed against any assets of Dealer or of any
Guarantor; (i) the undersigned dies while Dealer's business is operated as
a sole proprietorship, any general partner dies while Dealer's business is
operated as a general or limited partnership, or any member dies while
Dealer's business is operated as a limited liability company, as
applicable; (j) any Guarantor dies; (k) Dealer or any Guarantor shall cease
existence as a corporation, partnership, limited liability company or
trust, as applicable; (l) Dealer or any Guarantor ceases or suspends
business; (m) Dealer, any Guarantor or any member while Dealer's business
is operated as a limited liability company, as applicable, makes a general
assignment for the benefit of creditors; (n) Dealer, any Guarantor or any
member while Dealer's business is operated as a limited liability company,
as applicable, becomes insolvent or voluntarily or involuntarily becomes
subject to the Federal Bankruptcy Code, any state insolvency law or any
similar law; (o) any receiver is appointed for any assets of Dealer, any
Guarantor or any member while Dealer's business is operated as a limited
liability company, as applicable; (p) any guaranty of Dealer's debt to DFS
is terminated; (q) Dealer loses any franchise, permission, license or right
to sell or deal in any Collateral which DFS finances; (r) Dealer or any
Guarantor misrepresents Dealer's or such Gurarantor's financial condition
or organizational structure; or (s) DFS determines in good faith that it is
insecure with respect to any of the Collateral or the payment of any part
of Dealer's Obligations.
6.2 RIGHTS OF DFS. in the even of a Default:
(a) DFS may at any time at DFS' election, without notice or demand to
Dealer, do any one or more of the following: declare all or any
of the Obligation immediately due and payable, together with all
costs and expenses of DFS' collection activity, including,
without limitation, all reasonable attorneys' fees; exercise any
or all rights under applicable law (including, without
limitation, the right to possess, transfer and dispose of the
Collateral); and/or cease extending any additional credit to
Dealer (DFS' right to cease extending credit shall not be
construed to limit the discretionary nature of this credit
facility).
(b) Dealer will segregate and keep the Collateral in trust for DFS,
and in good order and repair, and will not sell, rent, lease,
consign, otherwise dispose of or use any Collateral, nor further
encumber any Collateral.
(c) Upon DFS' oral or written demand, Dealer will immediately deliver
the Collateral to DFS, in good order and repair, at a place
specified by DFS, together with all related documents; or DFS
may, in DFS' sole discretion and without notice or demand to
Dealer, take immediate possession of the Collateral together with
all related documents.
(d) DFS may, without notice, apply a default finance charge to
Dealer's outstanding principal indebtedness equal to the default
rate specified in Dealer's financing program with DFS, if any, or
if there is none so specified, at the lesser of 3% per annum
above the rate in effect immediately prior to the Default, or the
highest lawful contract rate of interest permitted under
applicable law.
(e) DFS may, without notice to Dealer and at any time or times
enforce payment and collect, by legal proceedings or otherwise,
Accounts in the name of Dealer or DFS; and take control of any
cash or non-cash items of payment or proceeds of Accounts and of
any rejected, returned, repossessed or stopped in transit goods
relating to Accounts. DFS may at its sole election and without
demand enter, with or without process of law, any premises where
Collateral might be and, without charge or liability to DFS
therefor do one or more of the following: (i) take
7
possession of the Collateral and use or store it in said premises
or remove it to such other place or places as DFS may deem
convenient; (ii) take possession of all or part of such premises
and the Collateral and place a custodian in the exclusive control
thereof until completion of enforcement of DFS' security interest
in the Collateral or until DFS' removal of the Collateral and,
(iii) remain on such premises and use the same, together with
Dealer's materials, supplies, books and records, for the purpose
of performing all acts necessary and incidental to the collection
or liquidation of such Collateral.
All of DFS' rights and remedies are cumulative. DFS' failure to
exercise any of DFS' rights or remedies hereunder will not waive
any of DFS' rights or remedies as to any past, current or future
Default.
6.3 SALE OF COLLATERAL. Dealer agrees that if DFS conducts a private sale
of any Collateral by requesting bids from 10 or more dealers or
distributors in that type of Collateral, any sale by DFS of such
Collateral in bulk or in parcels within 120 days of: (a) DFS' taking
possession and control of such Collateral; or (b) when DFS is
otherwise authorized to sell such Collateral; whichever occurs last,
to the bidder submitting the highest cash bid therefor, is a
commercially reasonable sale of such Collateral under the Uniform
Commercial Code. Dealer agrees that the purchase of any Collateral by
a vendor, as provided in any agreement between DFS and the vendor, is
a commercially reasonable disposition and private sale of such
Collateral under the Uniform Commercial Code, and no request for bids
shall be required. Dealer further agrees that 7 or more days prior
written notice will be commercially reasonable notice any public or
private sale (including any sale to a vendor). Dealer irrevocably
waives any requirement that DFS retain possession and not dispose of
any Collateral until after an arbitration hearin, arbitration award,
confirmation, trial or final judgment. If DFS disposes of any such
Collateral other than as herein contemplated, the commercial
reasonableness of such disposition will be determined in accordance
with the laws of the state governing this Agreement.
7. MISCELLANEOUS
-------------
7.1 TERMINATION. This Agreement will continue in full force and effect and
be non-cancellable by Dealer (except that it may be terminated by DFS
upon thirty (30) days written notice to Dealer or in the exercise of
its rights and remedies upon Default by Dealer) for a period of one
(1) year from the first day of the first month following the date
hereof and for successive one (1) year periods thereafter, subject to
termination as to future transactions at the end of any such period on
at least ninety (90) days prior written notice by Dealer to DFS. If
such notice of termination is given by Dealer to DFS, such notice will
be ineffective unless Dealer pays to DFS all Obligations on or before
the termination date. Any termination of this Agreement by Dealer or
DFS will have the effect of accelerating the maturity of all
Obligations not then otherwise due.
7.1.1 TERMINATION PRIVILEGE. Despite anything to the contrary in
Section 7.1 of this Agreement, this Agreement may be terminated
by Dealer at any time upon ninety (90) days prior written notice
and payment to DFS of the following sum(in addition to payment
of all Obligations, whether or not by their terms then due)
which sum represents liquidated damages for the loss of the
bargain and not as a penalty, and the same is hereby
acknowledged by Dealer: (1) the product of (a) one half percent
(.50%) multiplied by (b) the highest Average Contract Balance
for the last 12 months (or entire term of this Agreement if less
than 12 months) prior to the effective date of termination,
multiplied by (2) the number of months remaining in the original
or renewal term. This sum will also be paid by Dealer if the
Agreement is terminated on account of Dealers Default.
7.1.2 EFFECT OF TERMINATION. Dealer will not be relieved from any
Obligations to DFS arising out of DFS' advances or commitments
made before the effective termination date of this Agreement DFS
will retain all of its rights, interests and remedies hereunder
until Dealer has paid all of Dealer's Obligations to DFS. All
waivers set forth within this Agreement will survive any
termination of this Agreement.
8
7.2 COLLECTION. Checks and other instruments delivered to DFS on account of
the Obligations will constitute conditional payment until such items are
actually paid to DFS.
7.3 DEMAND, ETC. Dealer irrevocably waives notice of: DFS' acceptance of this
Agreement, presentment, demand, protest, nonpayment, nonperformance, and
dishonor. Dealer and DFS irrevocably waive all rights to claim any punitive
and/or exemplary damages. Dealer waives all notices of default and
non-payment at maturity of any or all of the Accounts.
7.4 REIMBURSEMENT. Dealer will assume and reimburse DFS upon demand for all
expenses incurred by DFS in connection with the preparation of this
Agreement and the Other Agreements (including fees and costs of outside
counsel) and all filing and recording fees and taxes payable in connection
with the filing or recording of all documents under this Agreement and the
Other Agreements; provided, however, that such reimbursement by Dealer
hereunder will not exceed the sum of ONE THOUSAND DOLLARS ($1,000.00).
7.5 ADDITIONAL OBLIGATIONS. DFS, without waiving or releasing any Obligation
or Default, may perform any Obligations that Dealer fails or refuses to
perform. All sums paid by DFS on account of the foregoing and any expenses,
including reasonable attorneys' fees, will be a part of the Obligations,
payable on demand and secured by the Collateral.
7.6 NO ORAL AGREEMENTS. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES
TO EXTEND OR RENEW SUCH DEBTS ARE NOT ENFORCEABLE. TO PROTECT DEALER AND
DFS FROM MISUNDERSTANDING OR DISAPPOINTMENT, ALL AGREEMENTS COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING AND THE OTHER AGREEMENTS, WHICH IS
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES,
EXCEPT AS SPECIFICALLY PROVIDED HEREIN OR AS THE PARTIES MAY LATER AGREE IN
WRITING TO MODIFY IT. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE
PARTIES. Time is of the essence regarding Dealer's performance of its
obligations to DFS notwithstanding any course of dealing or custom on DFS'
part to grant extensions of time. DFS will have the right to refrain from
or postpone enforcement of this Agreement or any Other Agreements between
DFS and Dealer without prejudice and the failure to strictly enforce these
agreements will not be construed as having created a course of dealing
between DFS and Dealer contrary to the specific terms of the agreements or
as having modified, released or waived the same. The express terms of this
Agreement will not be modified by any course of dealing, usage of trade, or
custom of trade which may deviate from the terms hereof.
7.7 SEVERABILITY. If any provision of this Agreement or the Other Agreements
or the application thereof is held invalid or unenforceable, the remainder
of this Agreement and the Other Agreements will not be impaired or affected
and will remain binding and enforceable.
7.8 SUPPLEMENT. If Dealer and DFS have heretofore executed Other Agreements in
connection with all or any part of the Collateral, this Agreement shall
supplement each and every Other Agreement previously executed by and
between Dealer and DFS, and in that event this Agreement shall neither be
deemed a novation nor a termination of any such previously executed Other
Agreement nor shall execution of this Agreement be deemed a satisfaction of
any obligation secured by such previously executed Other Agreement. In the
event of any conflict between the terms of this Agreement and any
previously executed Business Financing Agreement between DFS and Dealer,
the terms of this Agreement shall control.
7.9 SECTION TITLES. The Section titles used in this Agreement are for
convenience only and do not define or limit the contents of any Section.
7.10 BINDING EFFECT. Dealer cannot assign its interest in this Agreement or any
Other Agreements without DFS' prior written consent, although DFS may
assign or participate DFS' interest, in whole or in part, without Dealer's
consent. This Agreement and the Other Agreements will protect and bind DFS'
and Dealer's respective heirs, representatives, successors and assigns.
7.11 NOTICES. Except as otherwise stated herein, all notices, arbitration
claims, responses, requests and documents will be sufficiently given or
served if mailed or delivered: (a) to Dealer at Dealer's principal place of
business specified above; and (b) to DFS at 000 Xxxxxxxxx Xxxxxx Xxxxx, Xx.
Xxxxx,
0
Xxxxxxxx 00000-0000, Attention: General Counsel, or such other address
as the parties may hereafter specify in writing.
7.12 RECEIPT OF AGREEMENT. Dealer acknowledges that it has received a true
and complete copy of this agreement. Dealer acknowledges that it has
read and understood this Agreement. Notwithstanding anything herein to
the contrary: (a) DFS may rely on any facsimile copy, electronic data
transmission or electronic data storage of any Schedule, statement,
financial statements or other reports, and (b) such facsimile copy,
electronic data transmission or electronic data storage will be deemed
an original, and the best evidence thereof for all purposes, including,
without limitation, under this Agreement or any Other Agreements, and
for all evidentiary purposes before any arbitrator, court or other
adjudicatory authority.
8. BINDING ARBITRATION
-------------------
8.1 ARBITRABLE CLAIMS. Except as otherwise specified below, all actions,
disputes, claims and controversies under common law, statutory law or in
equity of any type or nature whatsoever (including, without limitation,
all torts, whether regarding negligence, breach of fiduciary duty,
restraint of trade, fraud, conversion, duress, interference, wrongful
replevin, wrongful sequestration, fraud in the inducement, usury or any
other tort, all contract actions, whether regarding express or implied
terms, such as implied covenants of good faith, fair dealing, and the
commercial reasonableness of any Collateral disposition, or any other
contract claim, all claims of deceptive trade practices or lender
liability, and all claims questioning the reasonableness or lawfulness
of any act), whether arising before or after the date of this Agreement,
and whether directly or indirectly relating to: (a) this Agreement or
any Other Agreements and/or any amendments and addenda hereto or
thereto, or the breach, invalidity or termination hereof or thereof; (b)
any previous or subsequent agreement between DFS and Dealer; (c) any act
committed by DFS or by any parent company, subsidiary or affiliated
company of DFS (the "DFS Companies"), or by any employee, agent, officer
or director of an DFS Company whether or not arising within the scope
and course of employment or other contractual representation of the DFS
Companies provided that such act arises under a relationship,
transaction or dealing between DFS and Dealer; and/or (d) any other
relationship, transaction or dealing between DFS and Dealer
(collectively the "Disputes"), will be subject to and resolved by
binding arbitration.
8.2 ADMINISTRATIVE BODY. All arbitration hereunder will be conducted in
accordance with the Commercial Arbitration Rules of The American
Arbitration Association ("AAA"). If the AAA is dissolved, disbanded or
becomes subject to any state or federal bankruptcy or insolvency
proceeding, the parties will remain subject to binding arbitration which
will be conducted by a mutually agreeable arbitral forum. The parties
agree that all arbitrator(s) selected will be attorneys with at least
five (5) years secured transactions experience. The arbitrator(s) will
decide if any inconsistency exists between the rules of any applicable
arbitral forum and the arbitration provisions contained herein. If such
inconsistency exists, the arbitration provisions contained herein will
control and supersede such rules. The site of all arbitration
proceedings will be in the Division of the Federal Judicial District in
which AAA maintains a regional office that is closest to Dealer.
8.3 DISCOVERY. Discovery permitted in any arbitration proceeding commenced
hereunder is limited as follows. No later than thirty (30) days after
the filing of a claim for arbitration, the parties will exchange
detailed statements setting forth the facts supporting the claim(s) and
all defenses to be raised during the arbitration, and a list of all
exhibits and witnesses. No later than twenty-one (21) days prior to the
arbitration hearing, the parties will exchange a final list of all
exhibits and all witnesses, including any designation of any expert
witness(es) together with a summary of their testimony; a copy of all
documents and a detailed description of any property to be introduced at
the hearing. Under no circumstances will the use of interrogatories,
requests for admission, requests for the production of documents or the
taking of depositions be permitted. However, in the event of the
designation of any expert witness(es), the following will occur: (a) all
information and documents relied upon by the expert witness(es) will be
delivered to the opposing party, (b) the opposing party will be
permitted to depose the expert witness(es), (c) the opposing party will
be permitted to
10
designate rebuttal expert witness(es), and (d) the arbitration hearing
will be continued to the earliest possible date that enables the
foregoing limited discovery to be accomplished.
8.4 EXEMPLARY OR PUNITIVE DAMAGES. The Arbitrator(s) will not have the
authority to award exemplary or punitive damages.
8.5 CONFIDENTIALITY OF AWARDS. All arbitration proceedings, including
testimony or evidence at hearings, will be kept confidential, although
any award or order rendered by the arbitrator(s) pursuant to the terms
of this Agreement may be entered as a judgment or order in any state
or federal court and may be confirmed within the federal judicial
district which includes the residence of the party against whom such
award or order was entered. This Agreement concerns transactions
involving commerce among the several states. The Federal Arbitration
Act, Title 9 U.S.C. Sections 1 et seq., as amended ("FAA") will govern
all arbitration(s) and confirmation proceedings hereunder.
8.6 PREJUDGMENT AND PROVISIONAL REMEDIES. Nothing herein will be construed
to prevent DFS' or Dealer's use of bankruptcy, receivership,
injunction, repossession, replevin, claim and delivery, sequestration,
seizure, attachment, foreclosure, dation and/or any other prejudgment
or provisional action or remedy relating to any Collateral for any
current or future debt owed by either party to the other. Any such
action or remedy will not waive DFS' or Dealer's right to compel
arbitration of any Dispute.
8.7 ATTORNEYS' FEES. If either Dealer or DFS brings any other action for
judicial relief with respect to any Dispute (other than those set
forth in Section 8.6), the party bringing such action will be liable
-----------
for and immediately pay all of the other party's costs and expenses
(including attorneys' fees) incurred to stay or dismiss such action
and remove or refer such Dispute to arbitration. If either Dealer or
DFS brings or appeals an action to vacate or modify an arbitration
award and such party does not prevail, such party will pay all costs
and expenses, including attorneys' fees, incurred by the other party
in defending such action. Additionally, if Dealer sues DFS or
institutes any arbitration claim or counterclaim against DFS in which
DFS is the prevailing party, Dealer will pay all costs and expenses
(including attorneys' fees) incurred by DFS in the course of defending
such action or proceeding.
8.8 LIMITATIONS. Any arbitration proceeding must be instituted: (a) with
respect to any Dispute for the collection of any debt owed by either
party to the other, within two (2) years after the date the last
payment was received by the instituting party; and (b) with respect to
any other Dispute, within two (2) years after the date the incident
giving rise thereto occurred, whether or not any damage was sustained
or capable of ascertainment or either party knew of such incident.
Failure to institute an arbitration proceeding within such period will
constitute an absolute bar and waiver to the institution of any
proceeding, whether arbitration or a court proceeding, with respect to
such Dispute.
8.9 SURVIVAL AFTER TERMINATION. The agreement to arbitrate will survive
the termination of this Agreement.
9. INVALIDITY/UNENFORCEABILITY OF BINDING ARBITRATION. IF THIS AGREEMENT IS
FOUND TO BE NOT SUBJECT TO ARBITRATION, ANY LEGAL PROCEEDING WITH RESPECT
TO ANY DISPUTE WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE WITHOUT A JURY. DEALER AND DFS WAIVE ANY RIGHT TO A JURY TRIAL IN ANY
SUCH PROCEEDING.
10. GOVERNING LAW. Dealer acknowledges and agrees that this and all Other
Agreements between Dealer and DFS have been substantially negotiated, and
will be substantially performed, in the state of CALIFORNIA. Accordingly,
----------
Dealer agrees that all Disputes will be governed by, and construed in
accordance with, the laws of such state, except to the extent inconsistent
with the provisions of the FAA which shall control and govern all
arbitration proceedings hereunder.
IN WITNESS WHEREOF, Dealer and DFS have executed this Agreement as of the
date first set forth hereinabove.
11
THIS CONTRACT CONTAINS BINDING ARBITRATION, JURY WAIVER AND PUNITIVE DAMAGE
WAIVER PROVISIONS.
DEUTSCHE FINANCIAL SERVICES CORPORATION XXXXXX, INC.
----------------------------------
Dealer's Name
By: Duetche Bank By: Duetche Bank
--------------------------------- ------------------------------
Print Name: Print Name:
------------------------- -----------------------
Title: Title:
------------------------------- ----------------------------
By:
-------------------------------
Print Name:
-----------------------
Title:
----------------------------
ATTEST:
/s/ Xxxxxxx X. Froch
----------------------------------
Acting Secretary
Print Name: Xxxxxxx X. Froch
-----------------------
12
SECRETARY'S CERTIFICATE OF RESOLUTION
I certify that I am the Secretary or Assistant Secretary of the corporation
named below, and that the following completely and accurately sets forth certain
resolutions of the Board of Directors of the corporation adopted at a special
meeting thereof held on due notice (and with shareholder approval, if required
by law), at which meeting there was present a quorum authorized to transact the
business described below, and that the proceedings of the meeting were in
accordance with the certificate of incorporation, charter and by-laws of the
corporation, and that they have not been revoked, annulled or amended in any
manner whatsoever.
Upon motion duly made and seconded, the following resolution was
unanimously adopted after full discussion:
"RESOLVED, That the several officers, directors, and agents of this
corporation, or any one or more of them, are hereby authorized and empowered on
behalf of this corporation: to obtain financing from Deutsche Financial Services
Corporation ("DFS") in such amounts and on such terms as such officers,
directors or agents deem proper; to enter into financing, security, pledge and
other agreements with DFS relating to the terms upon which such financing may be
obtained and security and/or other credit support is to be furnished by this
corporation therefore; from time to time to supplement or amend any such
agreements; execute and deliver any and all assignments and schedules; and from
time to time to pledge, assign, mortgage, grant security interests, and
otherwise transfer, to DFS as collateral security for any obligations of this
corporation to DFS, whenever and however arising, any assets of this
corporation, whether now owned or hereafter acquired; the Board of Directors
hereby ratifying, approving and confirming all that any of said officers,
directors or agents have done or may do with respect to the foregoing."
I do further certify that the following are the names and specimen
signatures of the officers and agents of said corporation so empowered and
authorized, namely:
President: /s/ Duetsche Bank /s/ Duetsche Bank
------------------------- --------------------------
(Print Name) (Signature)
Vice-President: /s/ Duetsche Bank /s/ Duetsche Bank
------------------------- --------------------------
(Print Name) (Signature)
Acting
Secretary: /s/ Duetsche Bank /s/ Duetsche Bank
------------------------- --------------------------
(Print Name) (Signature)
CFO
Treasurer: /s/ Duetsche Bank /s/ Duetsche Bank
------------------------- --------------------------
(Print Name) (Signature)
Acting Agent /s/ Duetsche Bank /s/ Duetsche Bank
------------------------- --------------------------
(Print Name) (Signature)
IN WITNESS WHEREOF, I have executed and affixed the seal of the corporation
on the date stated below.
Dated: DECEMBER 23, 1996 /s/ Xxxxxxx X. Froch
----------- -- --------------------------
Acting Secretary
XXXXXX, INC.
--------------------------
(SEAL) Corporate Name
13
ADDENDUM TO BUSINESS FINANCING AGREEMENT
This Addendum is made to that certain Business Financing Agreement entered
into by and between Xxxxxx, Inc. ("Dealer") and Deutsche Financial Services
Corporation ("DFS") on ______________, 1997 as amended ("Agreement").
FOR VALUE RECEIVED. DFS and Dealer agree as follows (all capitalized terms
shall have the meanings assigned to them in the Agreement unless otherwise
defined herein).
1. Notwithstanding anything in Section 3.2 of the Agreement to the
contrary. Dealer agreed that DFS will not make any advance to Dealer in excess
of One Million Dollars ($1,000,000.00) with respect to any particular obligor's
eligible Accounts; provided, however, that DFS will advance up to Three Million
Dollars ($3,000,000.00) with respect to the eligible Accounts of any of the
obligors listed on Exhibit A attached hereto.
2. Section 3.3 of the Agreement is hereby amended in its entirety to read
as follows:
"3.3 Ineligible Accounts. DFS will have the sole right to determine
eligibility of Accounts and, without limiting DFS' discretion in that
regard, the following Accounts will be deemed ineligible: (a) Accounts
created from the sale of goods and services on non-standard terms
and/or that allow for payment to be made more than thirty (30) days
from the date of sale: (b) Accounts unpaid more than ninety (90) days
from date of invoice: (c) all Accounts of any obligor with fifty
percent (50%) or more of the outstanding balance unpaid for more than
ninety (90) days from the date of invoice: (d) Accounts for which the
obligor is an officer, director, shareholder, partner, member, owner,
employee, agent, parent, subsidiary, affiliate of, or is related to
Dealer or has common shareholders, officers, directors, owners,
partners or members; (e) consignment sales, (f) Accounts for which the
payment is or may be conditional; (g) Accounts for which the obligor
is not a commercial or institutional entity or is not a resident of
the United States or Canada; (h) Accounts with respect to which any
warranty or representation provided in Subsection 3.4 is not true and
--------------
correct; (i) Account which represent goods or services purchased for a
personal, family or household purpose; (j) Accounts which represent
goods used for demonstration purposes or loaned by the Dealer to
another party; (k) Accounts which are progress payment, barter, or
contra accounts; and (l) any and all other Accounts which DFS deems to
be ineligible. If DFS determines that any Account is or becomes an
ineligible Account, immediately upon notice thereof from DFS, Dealer
will pay to DFS an amount equal to the monies loaned by DFS for such
ineligible Account."
Dealer waives notice of DFS' acceptance of this Addendum.
All other terms and provisions of the Agreement, to the extent not
inconsistent with the foregoing, are ratified and remain unchanged and in full
force and effect.
1
IN WITNESS WHEREOF, Dealer and DFS have executed this Addendum on this __
day of _______________, 19__.
ATTEST: XXXXXX, INC.
By:
-------------------------------- --------------------------------------
(Assistant) Secretary Title:
-----------------------------------
DEUTSCHE FINANCIAL SERVICES CORPORATION
By:
------------------------------------
Title:
----------------------------------
2
EXHIBIT A
Best Buy Co., Inc.
Circuit City Stores, Inc.
Tandy Corporation (D/B/A Computer City)
CompUSA, Inc.
Office Depot, Inc.
Staples, Inc.
