Exhibit 10.1
Client #: 17TE00
ACCOUNT PURCHASE AGREEMENT
This Account Purchase Agreement ("Agreement") is executed this 2nd day of May,
2001 between Torque Engineering Corporation, a Delaware Corporation ("Seller")
and Crown Financial, L. L. C. ("Purchaser").
RECITALS
A. Seller desires to obtain cash on an accelerated basis by selling to
Purchaser certain rights to payment for goods sold or leased and
services rendered to third parties evidenced by one or more invoices
("Invoice(s)") constituting accounts receivable ("Account(s)") due
Seller from a customer ("Customer") approved by Purchaser.
B. Seller and Purchaser desire to establish a contractual format under
which Seller would sell and Purchaser would purchase certain Accounts
owed Seller by Customer.
C. This Agreement shall serve as the master agreement between Seller and
Purchaser concerning the purchase and sale of certain Accounts of
Customer.
NOW, THEREFORE, in consideration of the promises and undertakings set
forth herein, the benefits accruing to Seller and Purchaser, and other
good and valuable consideration, Seller and Purchaser hereby agree as
follows:
AGREEMENTS
1. Purchase of Sale and Certain Accounts. Seller hereby sells, assigns,
transfers, conveys and delivers to Purchaser and Purchaser hereby
purchases and receives from Seller all right, title and interest of
Seller in and to the Accounts due from Customer to Seller, including,
without limitation, the full power and authority to collect the
Accounts through legal action or otherwise. In order to qualify as an
Account under this Agreement, a specific Invoice of an approved
Customer must have been approved by Purchaser in Purchaser's sole and
absolute discretion. Evidence of acceptance of an Account shall be
indicated on Purchaser's standard Accounts Receivable Funding Report
("ARFR") form. The ARFR shall identify the Customer, the number(s) of
the Invoice(s), the purchase price, the initial payment and the
Discount (defined below).
2. Purchase Price. The purchase price ("Purchase Price") of a qualifying
Account will be determined out of the initial payment made by
Purchaser indicated on the ARFR (which shall be sixty five percent
(65%) of the net Invoice, unless stated otherwise on the ARFR), less
an amount ("Discount") equal to:
(a) 2.00% of the Invoice if the Invoice is paid within 20 days from
the date of the initial payment by Purchaser, or
(b) 3.75% of the Invoice if the Invoice is paid within 40 days from
the date of the initial payment by Purchaser; or
(c) 5. 25% of the Invoice if the Invoice is paid within 50 days from
the date of the initial payment by Purchaser: or
(d) 6.25% of the Invoice if the Invoice is paid within 60 days from
the date of the initial payment by Purchaser; or
(e) 7.75% of the Invoice if the Invoice is paid within 80 days from
the date of the initial payment by Purchaser, or
(f) 9.00% of the Invoice if the Invoice is paid within 90 days from
the date of the initial payment by Purchaser; or
(g) 13.00% of the Invoice if the invoice is paid within 120 days from
the date of the initial payment by Purchaser, or
(h) 17.00% of the Invoice if the invoice is paid within 150 days from
the date of the initial payment by Purchaser, or
(i) 21.00% of the Invoice if the invoice is paid within 180 days from
the date of the initial payment by Purchaser, or
(j) 35.00% of the Invoice if the invoice is paid after 180 days from
the date of the initial payment by Purchaser, or
The difference, if any, between the Purchase Price and the amount
paid on the Invoice shall be the "Discount" earned by Purchaser.
The percentage amounts indicated above to determine the Discount
shall be called the "Discount Percentage."
Initials______
3. Contingent Reserve. Each ARFR may provide for a hypothetical
contingent reserve (the "Contingent Reserve") representing a holdback
from the Purchase Price for the Invoice in the amount of the maximum
possible Discount. The Contingent Reserve may only be applied by
Purchaser to pay the Discount applicable to the specific Invoice for
which it is created in the applicable ARFR. The Contingent Reserve as
to each Invoice shall be promptly paid by Purchaser to Seller once the
Discount is determined in accordance with Section 2 of this Agreement
to be less than the amount of the Contingent Reserve. Upon the
termination of the Agreement, or sooner in Purchaser's sole
discretion, any unused portion of the Contingent Reserve shall be paid
by Purchaser to Seller, without interest thereon.
4. Qualifying Accounts Receivable. Purchaser shall have no obligation to
acquire any Accounts from Seller under this Agreement. If Seller
desires to sell an Invoice to Purchaser, however, the terms of the
purchase and sale shall be governed by this Agreement. Purchaser
reserves the right to reject any and all requests by Seller to sell an
Account to Purchaser. All Accounts sold to Purchaser under this
Agreement shall contain terms that payment is due within 30 days of
invoice, shall be on invoice forms acceptable to Purchaser, and Seller
must furnish Purchaser with proof of delivery of goods and/or services
satisfactory to Purchaser. Original invoices, together with
appropriate copies, shall also be furnished to Purchaser at the time
of any acquisition of an Account under this Agreement.
5. Investigations by Purchaser. Prior to the purchase of any Account or
any time thereafter, Purchaser shall have the right to conduct such
investigations of the Customer and the transaction giving rise to the
Account as purchaser deems appropriate. Purchaser shall have the right
periodically to verify that the Customer owing the Account is
satisfied with the goods and/or services furnished by Seller in
connection therewith and to conduct credit searches on the Customer.
Any investigations or other information obtained by Purchaser with
respect to the Customer is for the sole benefit of Purchaser.
6. Notification to Customer. Purchaser shall have the right to require
acknowledgement from the Customer of the sale of an Account and direct
that all payments made on the Account purchased by Purchaser be made
directly to Purchaser.
7. Representations and Warranties of Seller. As an inducement for
Purchaser to enter into this Agreement, and with knowledge that the
truth and accuracy of such representations and warranties are being
relied upon by Purchaser (notwithstanding any investigation by
Purchaser), Seller represents and warrants to Purchaser that:
(a) Seller is the sole owner and beneficiary of the Accounts and has
not previously assigned, transferred or encumbered the Accounts
or any interest therein, in whole or in part.
(b) Seller has the full power and authority to sell the Accounts to
Purchaser and has duly authorized its sale to Purchaser in
accordance with this Agreement.
(c) The applicable Invoice is for the amount stated in the
corresponding ARFR and there are no setoffs, deductions,
disputes, contingencies or counterclaims against Seller of any
kind whatsoever which could affect payment of the Accounts.
(d) No sums have been collected on any invoice, the full amount of
each Invoice is presently due and owing to Seller and payment
thereon by Customer is not contingent upon fulfillment of any
other obligation at any time.
(e) The Accounts are the result of a bona fide sale and delivery of
goods or performance of services rendered by Seller to Customer
in a commercial enterprise and not merely a purchase order.
(f) To the best of Seller's knowledge, all financial information
concerning Seller or Customer delivered by Seller to Purchaser in
connection with this Agreement or the purchase and sale of the
Accounts are true, accurate and complete in all material
respects.
(g) Seller will not modify the terms of the Accounts with Customer
unless Purchaser's prior written consent is given.
(h) To the best of Seller's knowledge, Seller has all requisite
licenses, patents and trademarks to allow it to lawfully complete
the transaction made the subject of each Invoice.
8. Covenants of Seller Seller hereby covenants and agrees with Purchaser
as follows:
(a) Should Seller receive payment of all or any portion of an
Account, Seller shall promptly notify Purchaser and shall hold
all checks and other payments in trust for Purchaser and deliver
to Purchaser such checks and other payments within two (2)
business days of receipt of same.
(b) Seller shall deliver to Purchaser upon request such resolutions
or certificates as Purchaser may reasonably request from time to
time to evidence Seller's power and authority to act under this
Agreement.
(c) Seller shall not change its corporate structure, existence or
name without the prior written consent of Purchaser, which
consent shall not be unreasonably withheld.
(d) Seller shall promptly notify Purchaser of any change of address
of Seller.
(e) Seller shall not sell, transfer, pledge, encumber or grant a
security interest in any of the Accounts than to Purchaser.
(f) Seller shall promptly notify Purchaser of any disagreement or
dispute with Customer.
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9. Recourse Nature of Sale. If the Account is not paid by Customer within
90 days from the date of the initial payment by Purchaser, Seller
shall repurchase the Account from Purchaser within ten (10) working
days of demand at a re-purchase price (the "Repurchase Price") equal
to one hundred percent (100%) of the Purchase Price, unless stated
otherwise on the ARFR and Purchaser shall be entitled to retain the
entire amount of the Contingent Reserve in payment of the Discount.
The Re-Purchase Price shall be reduced by the amount of any monies
collected by Purchaser on the Account from the Customer.
10. Closing of Invoice. Upon Purchaser's good faith determination that a
particular transaction relating to an Invoice has been completed,
Purchaser shall close out such transaction by collecting its Discount
out of the Contingent Reserve, then adjusting payment of the Purchase
Price (and making any additional payments to Seller in accordance with
Section 2 of this Agreement), and then refunding to Seller any
remaining Contingent Reserve not applied on the Purchase Price of the
particular Accounts acquired by Purchaser under this Agreement.
Purchaser shall be entitled to a Discount on each Invoice calculated
as follows: (I) if an Invoice is paid in full by a single payment, the
Discount shall be the difference between the Purchase Price and the
amount collected on the Invoice: and (ii) if an Invoice is paid in
full but with more than one payment, the Discount shall be the
difference between the Purchase Price and the amount collected from
the Customer (calculated using a weighted average of the Discount
taking into account different Discount Percentages applied on the
amount collected with each payment).
11. Right to Settle Accounts. If Seller fails to perform under its
re-purchase obligation set forth in Section 9 of this Agreement,
Purchaser may, in its good faith discretion, settle or compromise any
Account due to a disagreement or dispute with the Customer, including,
without limitation, invoicing error, dissatisfaction with the goods
and/or services rendered by Seller or the inability or difficulty of
the Customer to pay the full amount of the Account Receivable.
12. No Assumption. Purchaser does not, by this Agreement, assume any
obligation of Seller under any Account.
13. Security Agreement. Contemporaneous with the execution of this
Agreement, Seller is entering into a security agreement ("Security
Agreement") with Purchaser, whereby Seller is granting to Purchaser a
first Lien and security interest in the Accounts and the other rights
and appurtenances relating thereto. Any default by Seller under the
Security Agreement shall additionally constitute a default by Seller
under this Agreement.
14. Remedies. In the event of a breach by Seller of any of its
representations, warranties and covenants set forth in this Agreement,
or in the event Seller otherwise defaults on its obligations
hereunder, Purchaser may exercise any one or more of the following
remedies, to the maximum extent allowed by law:
(a) Require Seller to re-purchase the Account pursuant to Section 9
of this Agreement;
(b) Enforce Purchaser's rights and remedies under the Security
Agreement.
(c) If same can be accomplished peaceably, enter Seller's business
premises, at a mutually agreeable time for Purchaser to review
and copy all books and records relating to the Accounts.
(d) Exercise any other rights or remedies available at law or in
equity.
15. Termination. This Agreement shall continue in full force and effect
until terminated by either party upon 30 days written notice to the
other. No termination shall relieve either party of any rights or
obligations accrued as of the date of termination.
16. Further Assurances. Seller and Purchaser agree to execute such further
documents as may be reasonably required by the other to further the
intent of this Agreement.
17. Attorney- in- Fact. Seller hereby irrevocably appoints Purchaser, or
any person designated by Purchaser, its true and lawful special
attorney-in-fact and agent, with power to do the following:
(a) Receive, open and dispose of all mail addressed to Seller and
received at Setter's/Purchaser's P.O. Box.
(b) Endorse the name of Seller on any notes, acceptances, checks,
drafts, money orders or other remittances for payment of the
Accounts.
(c) Endorse the name of Seller on any invoice, freight, or express
xxxx or xxxx of lading, storage receipt, warehouse receipt or
other instrument or document in respect to any Account.
(d) Sign the name of Seller to drafts against Seller, assignments or
verifications of Accounts and notices to Customer.
(e) Send notices and file liens against third parties to the same
extent that Seller could do so.
(f) Do all other acts and things necessary to carry out the intent of
this Agreement.
18. Wavier. The waiver by Purchaser of any breach or default of this
Agreement on the part of Seller shall not be construed as a waiver of
any subsequent breach or default. Moreover, the failure by Purchaser
to exercise any right or remedy hereunder shall not operate as a
waiver of such right in the future, and all rights and remedies herein
provided are cumulative.
19. Attorneys' Fees. In the event of a breach by Seller of any of its
representations, warranties or covenants set forth herein and a
lawsuit or other legal proceeding is initiated seeking enforcement or
interpretation of this Agreement or otherwise relating thereto,
Purchaser shall be entitled to recover its reasonable attorneys' fees.
20. Interest. All monies owing pursuant to this Agreement shall bear
interest commencing ten (10) days after their due date at the lesser
of (a) twelve percent (12%) per annum, or (b) the maximum rate allowed
by applicable law.
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21. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
22. Severability. If any provision of this Agreement is held illegal or
unenforceable, such illegality or unenforceability shall not affect
the remainder of this Agreement.
23. Entire Agreement. This Agreement and the following documents
constitute the entire agreement and understanding between Seller and
Purchaser.
(a) Officers Certification;
(b) One or more ARFRs;
(c) Security Agreement;
(d) UCC Financing Statement; and
(e) Notice(s) to Customer(s).
24. Type of Transaction. This Agreement constitutes an account purchase
transaction pursuant to Article 5069-1.14 of the Texas Revised Civil
Statutes.
25 Modifications. This Agreement may only be modified by a written
instrument signed by Seller and Purchaser.
25. Binding Effect. Subject to the provisions hereof, this Agreement shall
be binding upon and inure to the benefit of Seller and Purchaser and
their respective heirs, successors and assigns.
CROWN FINANCIAL L. L. C., "PURCHASER"
By: ___/s/ Xxxxxxx X. Tribe_____
--------------------
Name: Xxxxxxx X. Tribe
Title: Manager
TORQUE ENGINEERING CORPORATION, "SELLER"
By: __/s/ I. Paul Arcuri_______
------------------
Name: I. Xxxx Xxxxxx
Title: V.P./CFO
STATE OF INDIANA
COUNTY OF ELKHART
This instrument was acknowledged before me on May 4, 2001, by
Xxxxxxx X. Tribe, The Manager of Crown Financial, L.L.C., a Texas
Limited liability ompany, on behalf of said corporation.
Xxxxxx Xxxxxx
---------------------------------------------
Notary Public in and for the State of Indiana
County of Elkhart
My Commission Expires xx 00-00-00
XXXXX XX XXXXXXX
XXXXXX XX XXXXXXX
This instrument was acknowledged before me on _May 4, 2001, by
Xxxx Xxxxxx, VP/CFO Torque Engineering, on behalf of said company.
Xxxxxx Xxxxxx
---------------------------------------------
Notary Public in and for the State of Indiana
Initials KJT
County of Elkhart
My Commission Expires on 11-17-07
Page 4
SECURITY AGREEMENT
Accounts Receivable
This Security Agreement (the "Security Agreement") dated as of the 2nd
day of May, 2001, between Torque Engineering Corporation whose address is 0000
Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxx 00000 ("Debtor"), and Crown Financial, L.L.C.
whose address is 00000 Xxxx Xxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000,
("Secured Party"), sets forth the following agreements
between Debtor and Secured Party:
I.
Collateral and Grant of Security Interest.
In order to secure the prompt and unconditional performance by Debtor
of all of its duties and obligations under that certain Purchase and Sale
Agreement (the "Purchase and Sale Agreement") of even date herewith executed by
Debtor and Secured Party (herein the "Obligations"), Debtor hereby grants to
Secured Party a security interest in, mortgages, assigns, transfers, delivers,
pledges and sets over to Secured Party the collateral ("Collateral") more fully
described on attached Exhibit "A".
All defined terms used in the attached Exhibit shall have the same
meaning in this Security Agreement ascribed to such defined terms in Exhibit
"A".
II.
Payment Obligations of Debtor.
1. Debtor shall pay or cause to be paid to Secured Party any sum or
sums due or which may become due pursuant to the Obligations or
any instrument or instruments executed by Debtor to evidence all
or any portion of the Obligations in accordance with the terms of
this Security Agreement or otherwise.
2. Debtor shall account fully and faithfully to Secured Party for
proceeds from disposition of the Collateral in any manner
requested by Secured Party and shall, upon request by Secured
Party, pay or turn over promptly in cash, negotiable instruments,
drafts, assigned accounts or chattel paper; all the proceeds so
paid or turned over to Secured Party to be applied to the
Obligations, subject, if other than cash, to final payment or
collection.
3. Debtor shall pay to Secured Party on demand all expenses and
expenditures, including reasonable attorneys' fees and other
legal expenses incurred or paid by Secured Party in exercising or
protecting its interests, rights and remedies under this Security
Agreement, plus interest thereon at the maximum nonusurious rate
permitted by applicable laws from the date such expense or
expenditure was incurred or paid until repaid by Debtor.
III.
Debtor's Representations, Warranties and Agreements.
In order to induce Secured Party to enter into this Security Agreement,
Debtor covenants, represents and warrants to Secured Party (which covenants,
representations and warranties will survive the delivery of this Security
Agreement) that as of the date hereof and at all times when the Obligations
remain outstanding that:
1. Debtor is the owner and holder of all the Collateral free from
any adverse claim, security interest, encumbrance or other right,
title or interest of any person other than Secured Party; and
Debtor has full power and lawful authority to sell and assign the
Collateral and to grant to Secured Party a security interest
therein as herein provided, and the execution, delivery and
performance hereof is not in contravention of any indenture,
agreement or undertaking to which Debtor is a party or by which
he is bound; and Debtor will defend, preserve and protect the
Collateral against all claims and demands of all persons at any
time claiming the same or any interest therein.
2. Debtor has not heretofore signed any financing statement, and no
financing statement is now on file in any public office covering
the Collateral. Debtor authorizes Secured Party to file, in
jurisdictions where this authorization will be given effect, a
financing statement signed only by Secured Party covering the
Collateral; and at the request of Secured Party, Debtor will join
Secured Party in executing one or more financing statements,
pursuant to the Uniform Commercial Code, in form reasonably
satisfactory to Secured Party, and will pay the cost of filing
the same or filing or recording this Security Agreement in all
public offices at any time and from time to time whenever filing
or recording of any such financing statement or of this Security
Agreement is deemed by Secured Party to be necessary or
desirable, it being further stipulated in this regard that
Secured Party may also at any time or times sign any counterpart
of this Security Agreement signed by Debtor and file same as a
financing statement if Secured Party shall elect so to do.
Initials________
3. Debtor's principal place of business is at the address set forth
herein.
4. The Collateral shall be used solely in the ordinary course of
Debtor's business, which shall not include the sale of the whole
or a part of Debtor's business unless Secured Party consents in
advance in writing to another use.
5. Debtor will promptly notify Secured Party in writing of any
addition to, change in or discontinuance of: (a) its address as
shown herein; and (b) the location of its principal place of
business as set forth in this Security Agreement.
6. Debtor shall, at its own expense, do, make, procure, execute and
deliver all acts, things, writings and assurances as Secured
Party may at any time reasonably request to protect, assure or
enforce its interests, rights and remedies created by, provided
in or emanating from this Security Agreement. Debtor shall
furnish or cause to be furnished to Secured Party, within ten
(10) days of a written request, financial information on any of
the Collateral in a form satisfactory to Secured Party.
7. All proceeds, money, income and benefits attributable to or
accruing to the Collateral that have been sold to Secured Party
pursuant to the Purchase and Sale Agreement, which Debtor is or
may hereafter become entitled to receive on account of the
Collateral shall be delivered immediately upon receipt thereof by
Debtor to Secured Party until the Obligations are paid in full.
8. Debtor will maintain insurance in responsible companies in such
amounts and against such risks as is usually carried by owners of
similar businesses and properties in the same general areas in
which the Debtor operates. Upon the request of the Secured Party,
Debtor will furnish Secured Party a schedule setting forth in
reasonable detail the insurance coverage maintained by the
Debtor, together with suitable evidence of the maintenance of
such insurance.
IV.
Events of Default
At the option of the Secured Party and without necessity of
demand for payment, any other required demand, or notice (of default,
of intent to accelerate maturity, of the Obligations), the Obligations
shall immediately become due and payable irrespective of any agreed
maturity or period of grace upon the happening of any of the following
events or conditions (herein called "Event of Default"):
1. Failure, refusal or omission to pay when due all or any portion
of the Obligations or default in the performance of any
obligation or covenant set forth, directly or indirectly, in this
Security Agreement, or under any instrument heretofore, now or
hereafter executed in connection with and as security for the
Obligations, including under the Purchase and Sale Agreement.
2. Any warranty, representation, or statement contained in this
Security Agreement or any financial statement made or furnished
to Secured Party by or on behalf of Debtor in connection with
this Security Agreement or the Purchase and Sale Agreement proves
to have been false in any material respect when made or
furnished.
3. Any encumbrance or sale of or to any of portion of the Collateral
occurs (except with the express prior written consent of the
Secured Party) or the making of any levy, seizure or attachment
thereof or thereon.
4. Dissolution, merger or consolidation or transfer of a substantial
part of the property of Debtor.
5. The death of Debtor, if Debtor is a natural person.
6. Any event occurs which causes Secured Party to believe in good
faith that the prospect of payment of the Obligations secured
hereby or the performance under this Security Agreement is
impaired.
V.
Secured Party's Rights and Remedies.
A. Rights Exclusive of Default.
1. This Security Agreement, Secured Party's rights hereunder or the
Obligations hereby secured may be assigned from time to time, and
in any such case Secured Party's assignee shall be entitled to
all of the rights, privileges and remedies granted in this
Security Agreement to Secured Party, and Debtor will assert no
claim or defenses it may have against Secured Party against
Secured Party's assignee, except those arising out of this
Security Agreement.
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2. Secured Party may execute, sign, endorse, transfer or deliver in
the name of Debtor any documents, necessary to evidence, perfect
or realize upon the security interest and obligations created by
this Security Agreement.
B. Rights in Event of Default.
If an Event of Default shall occur or at any time thereafter,
Secured Party may, at its option, declare all Obligations secured
hereby, or any of them (notwithstanding any provision thereof),
immediately due and payable without demand for payment, any other
demand or notice of any kind, including notice of intent to accelerate
or notice of acceleration and the same thereupon shall immediately
become and be due and payable without demand or notice of any kind, and
Secured Party shall have the right to take immediate possession of the
Collateral, as more fully described on attached Exhibit "A." Debtor
shall remain liable for any deficiency resulting from any foreclosure
on or other lawful disposition of the Collateral.
VI.
Additional Agreements.
1. The execution and delivery of this Security Agreement in no
manner shall impair or affect any other security (by endorsement
or otherwise) for the payment of the Obligations and no security
taken hereafter as security for payment of the Obligations shall
impair in any manner or affect this Security Agreement, all such
present and future additional security to be considered as
cumulative security. Any of the Collateral may be released from
this Security Agreement without altering, varying or diminishing
in any way the force, effect, lien, security interest, or charge
of this Security Agreement as to the Collateral not expressly
released, until all the Obligations secured hereby have been paid
in full. Any future assignment or attempted assignment of the
interest of Debtor in and to any of the Collateral shall not
deprive Secured Party of the right to sell or otherwise dispose
of or utilize all of the Collateral as above provided or
necessitate the sale or disposition thereof in parcels or in
severalty.
2. This Security Agreement shall not be construed as relieving
Debtor from liability on the Obligations secured hereby and for
any deficiency thereon, to the extent Debtor has liability under
the Purchase and Sale Agreement.
3. With respect to the Obligations and this Security Agreement,
Debtor and all guarantors hereby waive notice of default, demand
for payment, notice of intent to accelerate, notice of
acceleration, presentment, notice of dishonor and any requirement
that Secured Party first attempt to collect the Obligations from
any other party. Debtor and all guarantors also waive all
defenses of a surety at law or in equity, including, without
limitation, those set forth in Rule 31 of the Texas Rules of
Civil Procedure, Sections 17.001 and 34.005 of the Texas Civil
Practice and Remedies Code, and Chapter 34 of the Texas Business
and Commerce Code.
4. Any notice required hereunder, or sent to any party hereto or in
connection herewith shall be in writing and shall be considered
properly given if mailed by first class U.S. Mail, postage
prepaid, certified or registered with return receipt requested,
or delivered in person to the intended addressee, and shall be
addressed to Debtor and/or Secured Party, as the case may be, at:
If to Debtor: Torque Engineering Corporation
0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
If to Secured Party: Crown Financial, L. L. C.
00000 Xxxx Xxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
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Written Notice shall be deemed received three (3) calendar days after deposit in
the U.S. Mail, postage prepaid, certified or registered with return receipt
requested, addressed to a party hereto, as the case may be, at the address set
forth above. Any party may change its mailing address at any time by giving
written notice of such change to the other party in the manner provided for
herein at least thirty (300 days prior to the dates such change is effected.
Debtor agrees and stipulates that written notice mailed to Debtor ten (10) days
prior to the date of any foreclosure sale or other lawful disposition of the
Collateral or any portion thereof shall constitute reasonable notice.
5. Subject to the provisions hereof, all rights of Secured Party
hereunder shall inure to the benefit of its successors and
assigns; and all obligations of Debtor shall bind its heirs,
successor or assigns.
6. This Security Agreement has been made in and shall be governed by
the laws of the State of Texas in all respects, including matters
of construction, validity, enforcement and performance, and may
not be amended (nor may any of its terms be waived) except in
writing duly signed by Secured Party or an authorized officer of
Secured Party and Debtor. Except as the context may otherwise
require, any term used herein that is defined in Articles 1, 5 or
9 of the Texas Uniform Commercial Code shall have the meaning
given therein. The Obligations of Debtor under this Security
Agreement are performable in Houston, Xxxxxx County, Texas.
7. As used in this Security Agreement and when required by the
context, each number (singular and plural) shall include all
numbers, and each gender shall include all genders; and unless
the context otherwise requires, the word "person" shall include
"corporation, firm or association."
EXECUTED at different times and different places but the
parties hereto agree that the day and year first above written
shall be the effective date hereof.
TORQUE ENGINEERING CORPORATION "DEBTOR"
By: /S/I. XXXX XXXXXX
-----------------
Name: I. Xxxx Xxxxxx
Title: V.P./CFO
CROWN FINANCIAL, L. L. C., "SECURED PARTY"
By: /S/XXXXXXX X. TRIBE
-------------------
Name: Xxxxxxx X. Tribe
Title: Manager
STATE OF INDIANA
COUNTY OF ELKHART
This instrument was acknowledged before me on May 4 , 2001, by I. Xxxx
Xxxxxx, , on behalf of said company.
/S/XXXXXX XXXXXX
--------------------------------------------
Notary Public in and for the State of Indiana
STATE OF TEXAS
COUNTY OF ______________
This instrument was acknowledged before me on
___________________, 2001 by _____________________, Individual on behalf of said
company.
----------------------------------
Notary Public in and for the State of Texas
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EXHIBIT "A"
COLLATERAL
All of Debtor's accounts receivable presently existing or hereafter
acquired accounts, general intangibles and any and all proceeds and replacements
thereof (all such terms having the same meanings assigned them in the Uniform
Commercial Code), plus all equipment, furniture, fixtures, and procee
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GUARANTY AGREEMENT
1. The undersigned (hereinafter called "Guarantors," whether one or more
and sometimes "Guarantor," if only one), for value received, the
receipt and sufficiency of which is hereby acknowledged, and for and
in consideration of Crown Financial, L. L. C. ("Purchaser") entering
into that certain Purchase and Sale Agreement (the "Agreement") of
even date herewith between Purchaser and Torque Engineering
Corporation, ("Seller") as well as in consideration for Purchaser
acquiring from time to time certain accounts receivable from Seller
pursuant to the Agreement, do hereby, jointly and severally,
absolutely and unconditionally, guarantee to Purchaser the prompt and
full performance by Seller of the representations, warranties and
covenants (hereinafter together call "Obligations"), of Seller to
Purchaser under or relating to the Agreement.
2. This is a continuing guaranty and shall not be wholly or partially
satisfied or extinguished by Guarantors' performance hereunder,
including payment of all amounts due as of any specified date, but
shall continue in full force and effect as against each of the
respective Guarantors for the full amount above specified as to all
Obligations created, incurred or arising prior to the time notice of
termination is give by the respective Guarantors to Purchaser under
the provisions of paragraph 3, and until full performance by Seller
under the Agreement.
3. Guarantors, or any one of them, may give written notice, in accordance
with this paragraph, to Purchaser that the Guarantor or Guarantors
giving such notice will not be liable hereunder for any Obligations
created, incurred or arising on accounts receivable acquired by
Purchaser more than sixty (60) days after the effective date of such
notice. Such notice will be effective as to the Guarantor or
Guarantors who give such notice from and after (but not before) such
time as said written notice is actually delivered to, received by and
receipted for in writing by Purchaser; provided however, such notice
shall not in any way affect, impair or limit the liability of the
Guarantor or Guarantors giving such notice with respect to Obligations
created, incurred or arising prior to the effective date of such
notice, or in respect to interest or costs of collection thereafter
accruing on or with respect to such Obligations, or with respect to
such Obligations, or with respect to attorneys' fees thereafter
becoming payable hereunder with respect to such Obligations.
4. In the event of death of any Guarantor, the Obligations of the
deceased Guarantor shall continue in full force and effect as to all
indebtedness that shall have been created or incurred by Seller or
which may thereafter be incurred for which Purchaser has, prior to
Guarantor's death, legally committed to lend to Seller prior to the
time when Purchaser shall have received notice, in writing, of
termination in accordance with paragraph 3. Notwithstanding the death
of a Guarantor, this guaranty shall continue in full force and effect
as a guaranty by the surviving Guarantors.
5. The release by Purchaser of one or more Guarantors under this guaranty
shall not affect the remaining Guarantors hereunder who shall remain
fully liable in accordance with the terms of this guaranty.
6. Guarantors further, jointly and severally, agree to pay to Purchaser
or to its successors or assigns, all reasonable attorneys' fees
incurred in enforcing this guaranty, or, the holder hereof may elect
to recover fifteen percent (15%) of the amount then unpaid by
Guarantors as attorneys' fees, if the indebtedness and Obligations
guaranteed hereunder are not paid by the Guarantors upon demand when
due as required herein or if this guaranty is enforced by suit or
through probate or bankruptcy court or through any judicial
proceedings whatsoever, and should it be necessary to reduce
Purchaser's claim to judgment, said judgment shall bear interest at
the rate of ten percent (10%) per annum.
7. All indebtedness of Seller to Guarantors, whether now existing or
hereafter arising (including indebtedness resulting from this
guaranty) is hereby assigned to Purchaser to the extent of the amount
of this guaranty as security for the payment of all liability or
liabilities of Seller or Purchaser. To the extent the indebtedness of
Seller to Guarantors (whether now existing or hereafter arising)
exceeds the amount of this guaranty, such indebtedness is hereby
subordinated to all liability or liabilities of Seller to Purchaser.
8. Guarantors waive notice of acceptance of this guaranty and of any
liability to which it applies or may apply, and waive presentment and
demand for payment thereof, notice of dishonor or nonpayment thereof,
notice of acceleration, collection or instigation of suit or any other
action by Purchaser in collection thereof including any notice of
default in payment thereof or other notice to, or demand of payment
therefor on, any party. Guarantors waive all defenses of a surety, at
law or in equity, with respect to this guaranty, including, without
limitation, (a) any rights of a surety to insist upon a creditor first
exhausting all remedies against the primary obligor of a debt or other
collateral securing the debt, and (b) those set forth in Rule 31 of
the Texas Rules of Civil Procedure, Sections 17.001 and 34.005 of the
Texas Civil Practice and Remedies Code, and Chapter 34 of the Texas
Business and Commerce Code.
9. Purchaser may, at its option, at any time without the consent of or
notice to Guarantors, without incurring responsibility to Guarantors,
without impairing or releasing the Obligations of the Guarantors, upon
or without any items or conditions and in whole or in part (a) change
the manner, place or terms of payment or change or extend the time of
performance of, renew, or alter any liability of Seller hereby
guaranteed, or any liabilities incurred directly or indirectly
hereunder, and the guaranty herein made shall apply to the liabilities
of Seller, changed, extended, renewed or altered in any manner, (b)
sell, exchange, release, surrender, realize upon or otherwise deal
with in any manner and in any order any property at any time pledged
or mortgaged to secure or securing the liabilities hereby guaranteed
or any liabilities incurred directly or indirectly hereunder or any
offset against any said liabilities, (c) exercise or refrain from
exercising any rights against Seller to others, or otherwise act or
refrain from acting, and (d) settle or compromise any liabilities
hereby guaranteed or hereby incurred, and may subordinate the payment
of all or any part of such liabilities to the payment of any
liabilities which may be due to Purchaser or others. Purchaser may, at
its option, without the consent of or notice to Guarantors, apply to
the payment of the liability created by this guaranty, at any time
after such liability becomes payable, any monies, property, or balance
on deposit belonging to any of Guarantors.
10. Suit may be brought against the Guarantors, jointly and severally, and
against one or more of them, less than all, without joining Seller or
any account debtor as a party, and without impairing the rights of
Purchaser, its successors or assigns, against each of Guarantors; and
Purchaser may release one or more of the Guarantors or settle with
such persons as Purchaser deems fit without releasing or impairing the
rights of Purchaser to demand and collect the balance of such
indebtedness from the other remaining Guarantors not so released. It
is agreed among the Guarantors, however, that such settlement and
release shall in no way impair the rights of the Guarantors as among
themselves.
11. This guaranty is for the benefit of Purchaser, and for such other
persons as may from time to time become or be the beneficiaries of
Purchaser's rights under the Agreement, and this guaranty shall be
transferable and negotiable, with the same force and effect and to the
same extent as Purchaser's rights under the Agreement may be
transferable; it being understood that upon the assignment or transfer
by Purchaser of any of Purchaser's rights under the Agreement, the
legal owner of Purchaser's rights under the Agreement shall have all
of the rights granted to Purchaser under this guaranty.
12. Purchaser, its successors and assigns shall not be liable for failure
to use diligence in the collection of any matters hereby guaranteed,
or in preserving the liability of any person liable thereon, and the
Guarantors hereby waive presentment for payment, notice of nonpayment,
notice of acceleration, protest and notice thereof, and diligence in
bringing suit against any person liable for any Obligations hereby
guaranteed. Payment of all amounts hereunder shall be made at the
offices of Purchaser in Houston, Xxxxxx County, Texas.
13. If this guaranty is given by a corporation, then the undersigned
guaranteeing corporation does hereby acknowledge that it has
investigated fully the benefits and advantages which will be derived
by it from execution of and performance under this guaranty, and the
Board of Directors of the guaranteeing corporation has decided that,
and the guaranteeing corporation does hereby acknowledge, warrant and
represent that, a direct or an indirect benefit will accrue to the
guaranteeing corporation by reason of execution of and performance
under this guaranty and that a resolution to such effect has been duly
adopted by the board of directors of the corporation.
EXECUTED 2nd day of May, 2001.
ADDRESS 0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
I. Xxxx Xxxxxx
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I. Xxxx Xxxxxx
STATE OF INDIANA
COUNTY OF ELKHART
This instrument was acknowledged before me on May 4, , 2001, by
I. Xxxx Xxxxxx, individually.
Xxxxxx X. Xxxxxx
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Notary Public in and for the State of Indiana
Elkhart County
My Commission Expires on 11-17-07
