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EXHIBIT 10.24
FACTORING AGREEMENT AND SECURITY AGREEMENT
This Agreement, by and between METRO FACTORS, INC. DBA METRO FINANCIAL
SERVICES, a Texas corporation with its principal place of business located in
Dallas, Texas (herein called METRO) and XXXXX X. XXXXXXXXX AND ASSOCIATES, INC.,
a Texas corporation (herein individually called XXXXXXXXX), SOFTWARE CONSULTING
SERVICES AMERICA, INC., a Delaware corporation (herein individually called SCS
AMERICA), SOFTWARE INNOVATORS, INC., an Arkansas corporation (herein
individually called SII), and INTEGRATED CONTROLS, INC., a Louisiana corporation
(herein individually called ICON), is effective as of the date of acceptance by
METRO as indicated below. XXXXXXXXX, SCS AMERICA, SII, and ICON are collectively
called CLIENTS herein. Reference to CLIENTS herein shall include one or any
combination of XXXXXXXXX, SCS AMERICA, SII, and/or ICON. For good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
CLIENTS agree to sell to METRO and METRO agrees to purchase from CLIENTS all
presently existing INVOICES and all INVOICES hereafter acquired and arising
during the term of this Agreement for the sale of inventory or goods or the
rendering of services or labor upon the following terms and conditions:
1. DEFINITIONS:
1.1 CUSTOMER. That person or business entity legally
obligated to pay an INVOICE sold and/or assigned by
CLIENTS to METRO.
1.2 INVOICE. Any right to payment (account receivable,
note, contract, etc.) for the sale of inventory or
goods or the rendering of services or labor by
CLIENTS.
1.3 RECOURSE BASIS. The purchase of INVOICES from CLIENTS
by METRO wherein CLIENTS retain the risk of
non-payment of an INVOICE by a CUSTOMER for any
reason whatsoever.
1.4 DISPUTE. Any defense, dispute, offset, or claim
asserted by a CUSTOMER with respect to an INVOICE
whether valid or invalid.
1.5 NET CASH EMPLOYED. The total amount of all unpaid
advances made to CLIENTS by METRO, together with all
commissions, fees and interest payable to METRO by
CLIENTS which have not been paid either directly by
CLIENTS or through METRO'S application of collections
on INVOICES purchased from CLIENTS.
1.6 MAXIMUM NET CASH EMPLOYED. The aggregate NET CASH
EMPLOYED by CLIENTS shall not exceed the lesser of
$6,000,000 or 80.0% of ELIGIBLE INVOICES.
1.7 ELIGIBLE INVOICE. An INVOICE which complies with all
terms, representations, warranties, and covenants of
this Agreement which is not greater than ninety (90)
days old from original date of such INVOICE.
1.8 CLOSING DATE. On or before January ________, 1999.
1.9 RESERVE FUNDS. At any time, the aggregate outstanding
balances of all outstanding INVOICES plus the amounts
of net cash proceeds held by METRO which are payable
to CLIENTS, less the current amounts of NET CASH
EMPLOYED. In the event that METRO holds cash proceeds
from INVOICES which have not been applied to
repayment of NET CASH EMPLOYED or to the payment of
fees and expenses hereunder, such funds will be
deemed to comprise a portion of "net cash proceeds
held by METRO which are payable to CLIENTS" for
purposes of determining the amounts of CLIENTS'
RESERVE FUNDS.
1.10 REQUIRED RESERVE BALANCES. The REQUIRED RESERVE
BALANCES are the minimum amounts of ELIGIBLE INVOICES
(at face value thereof) and cash, if any, included in
CLIENTS'
INITIALS:
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RESERVE FUNDS in excess of the amount of NET CASH
EMPLOYED which are required to be maintained by
CLIENTS pursuant to this Agreement. At any time the
REQUIRED RESERVE BALANCES shall be equal to the
product of the current amounts of NET CASH EMPLOYED
multiplied by 1.25 multiplied by 0.20.
2. BASIC TERMS OF PROPOSED TRANSACTIONS.
2.1 AGREEMENT TO SELL INVOICES. Pursuant to this
Agreement, and so long as it is in effect, CLIENTS
will sell, and METRO will purchase, all of CLIENTS'
presently existing INVOICES and all of CLIENTS'
INVOICES hereafter arising. In connection with such
purchase and sale of such INVOICES, under Section 17
below, CLIENTS grant to METRO a security interest in
and a lien on all of CLIENTS' accounts receivable,
including the INVOICES. The aggregate purchase price
for such INVOICES shall be 100% of the face amount
thereof, minus the FACTOR'S COMMISSION pursuant to
Section 5.2, and upon collection of such INVOICES,
proceeds thereof shall reduce NET CASH EMPLOYED by
the amount of such collections (NET CASH EMPLOYED may
be thus reduced below zero and may be further reduced
as a negative number). To the extent that the
balances of the CLIENTS' RESERVE FUNDS exceed the
amounts of outstanding INVOICES, METRO shall pay such
excess funds to CLIENTS or their designees upon
request. If METRO receives payment of any INVOICE in
an amount which is different from the amount of the
INVOICE by $1 or more, METRO shall promptly notify
CLIENTS of such discrepancy.
2.2 AGREEMENT TO PROVIDE ADVANCES. In addition to the
application of all funds collected in connection with
purchased INVOICES to reduce the amount of NET CASH
EMPLOYED, as provided in Section 4 below, METRO will
provide cash advances from time to time at the
request of CLIENTS with respect to unpaid INVOICES
purchased by METRO. Such advances, together with all
unpaid commissions, fees and interest payable to
METRO by CLIENT shall not exceed the amounts of
MAXIMUM NET CASH EMPLOYED. The ratio of the total of
CLIENTS' INVOICES and the INVOICES sold to METRO
hereunder less the amount of all DISPUTES to the NET
CASH EMPLOYED will not be less than 1.75:1.0. As an
additional condition of such advances, CLIENTS shall
at all times maintain an amount of ELIGIBLE INVOICES,
at face value, plus cash, if any, in CLIENTS' RESERVE
FUNDS equal to an amount not less than the amount of
the REQUIRED RESERVE BALANCE. In the event that the
amount of the REQUIRED RESERVE BALANCE exceeds the
face amount of ELIGIBLE INVOICES plus cash, if any,
included in CLIENTS' RESERVE FUNDS (such excess is
the "RESERVE DEFICIENCY"), CLIENTS shall deliver
additional ELIGIBLE INVOICES or cash as required to
eliminate the RESERVE DEFICIENCY. METRO may reserve
and withhold from any payments or credits otherwise
to be made to CLIENTS, an aggregate amount equal to
the RESERVE DEFICIENCY. Subject to the terms and
conditions of this Agreement, CLIENTS can receive and
repay advances at their discretion from time to time
during the term hereof.
2.3 SALE OF ACCOUNTS. All INVOICES sold to METRO shall be
identified by separate and subsequent written
assignments in a form approved by METRO, which form
shall include, but not be limited to, all forms of
electronic transfers. CLIENTS will immediately upon
sale of INVOICES to METRO make proper entries on its
books and records disclosing the sale of all such
INVOICES to METRO. All INVOICES purchased by METRO
from CLIENTS constitute a sale of accounts and legal
and equitable title to said INVOICES shall pass to
METRO.
3. CREDIT APPROVAL. Prior to the purchase of any INVOICE, METRO
shall be permitted to exclude from ELIGIBLE INVOICES any
INVOICE from any CUSTOMER, which METRO reasonably believes is
unlikely to make payment on such INVOICE. METRO may, but shall
not be obligated to, establish maximum credit limits upon any
CUSTOMER and INVOICES of such CUSTOMERS shall be deemed
ELIGIBLE INVOICES only to the extent that the aggregate amount
thereof does not exceed such maximum amount. METRO will
promptly notify CLIENTS of any CUSTOMER which it reasonably
believes is unlikely to make payment on its
INITIALS:
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INVOICES and inform CLIENTS of the maximum credit limits of
such CUSTOMER beyond which such CUSTOMER'S INVOICES will not
be ELIGIBLE INVOICES. All INVOICES are purchased by METRO on a
RECOURSE BASIS.
4. ADVANCES (NET CASH EMPLOYED). CLIENTS shall have the right at
any time to be advanced funds from METRO in an aggregate
amount equal to the lesser of 80.0% of the total face amount
of outstanding and unpaid ELIGIBLE INVOICES purchased from
CLIENTS by METRO or $6,000,000, subject to the adequacy of the
RESERVE FUNDS as provided herein. Any advance request received
by METRO before 10:00 a.m. Dallas, Texas time, will be funded
that business day, and any advance request received by METRO
after such time will be funded the next business day. Each
advance request pursuant to this Agreement will be funded by
wire transfer of immediately available funds to the account
designated by CLIENTS.
5. INTEREST, FEES, AND EXPENSES.
5.1 INTEREST ON NET CASH EMPLOYED. CLIENTS agree to pay
interest to METRO upon the NET CASH EMPLOYED at an
annual rate equal to the lesser of the BASE LENDING
RATE plus 2.0% or the maximum rate allowed by
applicable state or federal law. Such interest shall
be calculated on a daily basis upon a year consisting
of 360 days and shall be due and payable daily as it
accrues. BASE LENDING RATE as used herein shall be
the BASE LENDING RATE from time to time announced by
KEYBANK NATIONAL ASSOCIATION, Cleveland, Ohio (herein
called KEYBANK) on the date such BASE LENDING RATE
must be determined. Each change in the BASE LENDING
RATE shall be effective without notice to CLIENTS on
the date on which a change in the BASE LENDING RATE
shall have been made by KEYBANK. KEYBANK charges its
customers interest at rates at, above, or below its
BASE LENDING RATE. The BASE LENDING RATE of KEYBANK
is currently 7.75%. For purposes of calculating
interest, CLIENTS' accounts shall be credited with
payments received from CUSTOMERS after allowance of
three banking days (Collection Days). In no event
shall the rate charged by METRO exceed the maximum
rate of interest permitted by applicable state or
federal law. All sums of money which shall not be
paid to METRO by CLIENTS when due, including
deficiencies in the RESERVE FUNDS, shall bear
interest at the lower of 18.0% per annum or the
highest rate allowed by law from such due date until
paid in full. To the extent that the balances of the
CLIENTS' RESERVE FUNDS exceed the amounts of
outstanding INVOICES, METRO shall pay interest to
CLIENT at the BASE LENDING RATE of KEYBANK minus 2.0%
or the maximum amount permitted by state or federal
law, whichever is less.
5.2 FACTOR'S COMMISSION. For each calendar month or part
thereof, CLIENTS agree to pay METRO a commission
equal to 125.0% of the average daily balance of NET
CASH EMPLOYED during the calendar month for which
such calculation is made multiplied by 1.0% as
consideration for METRO'S services in, among other
things, making credit investigations, supervising the
ledgering and collection of INVOICES purchased
hereunder, generation of management accounting
reports, and being prepared to advance CLIENTS up to
$6,000,000 NET CASH EMPLOYED. Such commission shall
be due and payable in the amount of $75,000 on the
CLOSING DATE and $75,000 on the first day of each
calendar month thereafter, provided, however, that
METRO shall rebate to CLIENTS any unearned commission
on the last day of each calendar month and shall be
deducted from any sums otherwise due CLIENTS.
Notwithstanding the foregoing, the minimum aggregate
commission due to METRO hereunder during the term of
this Agreement shall equal the greater of $133,000 or
$40,000 per calendar month or part thereof.
5.3 PROCESSING FEES. CLIENTS agree to pay METRO
processing fees as follows:
A. Wire transfers: $15 each
B. Courier deliveries: $15 each
INITIALS:
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5.4 INITIAL SETUP FEE. CLIENTS agree to reimburse METRO
for out-of-pocket fees and expenses incurred by METRO
in the preparation of this Agreement for public
records search fees and UCC filing fees.
6. REQUIRED RESERVE FUND BALANCES. In the event that the REQUIRED
RESERVE BALANCES exceed the sum of the amounts of ELIGIBLE
INVOICES plus cash, if any, included in CLIENTS' RESERVE
FUNDS, METRO may reserve and withhold from any payments or
credits otherwise to be made to CLIENTS, an aggregate amount
equal to the RESERVE DEFICIENCY. Such amounts reserved and
withheld by METRO shall immediately reduce the amount of NET
CASH EMPLOYED. Any underpayments on INVOICES due to a DISPUTE
shall be debited to the RESERVE FUNDS and any overpayments on
INVOICES to which CLIENTS are legally entitled shall be
credited to the RESERVE FUNDS. METRO may charge to such
RESERVE FUNDS any indebtedness of CLIENTS to METRO. CLIENTS
shall be obligated to pay METRO deficiencies, if any, in such
RESERVE FUNDS. METRO may withhold such additional amounts in
the RESERVE FUNDS as it may reasonably deem necessary to cover
and provide for any DISPUTES, unpaid INVOICES which are more
than ninety (90) days old, and any other present or potential
indebtedness of CLIENTS to METRO. RESERVE FUNDS in excess of
those necessary to satisfy the above requirements shall be
available to be paid to CLIENTS as CLIENTS so instruct METRO.
7. HOLD IN TRUST. If any payment of any INVOICES purchased by
METRO shall be received by CLIENTS from a CUSTOMER, such
payment shall be held by CLIENTS in trust for METRO, and
CLIENTS shall use their best efforts to hold such payment
separate and apart from CLIENTS' own funds and immediately
deliver such payment to METRO in the identical form in which
it was received. If such payment is inadvertently or otherwise
deposited to a bank account other than the following, CLIENTS
shall immediately notify METRO and METRO shall have the
election to either charge back such payment to CLIENTS'
RESERVE FUNDS or require that CLIENTS remit payment to METRO
in cash or cashier's check in an amount equal to the amount of
payment. Failure to timely deliver such payment shall give
METRO, at its option, the right to terminate this Agreement
and/or resort to the collection of said sums due from the
RESERVE FUNDS and/or other balances or credits otherwise due
to or held for CLIENTS by METRO without demand or notice.
Should CLIENTS come into possession of a payment comprised of
amounts owing to both METRO and CLIENTS, CLIENTS shall remit
such payment in the identical form in which it was received to
METRO and METRO shall refund CLIENTS' portion directly to
CLIENTS or credit CLIENTS' RESERVE FUNDS with CLIENTS' portion
thereof when such check has cleared the bank upon which it was
drawn. Without waiving any other right of METRO hereunder,
METRO may charge CLIENTS a service fee of up to 3.0% of the
amount of any payments due to METRO not remitted by CLIENTS as
herein provided.
8. SETTLEMENT OF DISPUTE. CLIENTS shall at their own expense
settle all DISPUTES. In the event of a DISPUTE or other breach
of warranty hereunder as to any INVOICE, METRO may in its
discretion immediately or at such time as METRO may elect,
charge the unpaid balance of the related INVOICE (or any
DISPUTED portion thereof) to CLIENTS' RESERVE FUNDS.
9. REPURCHASE OF UNPAID INVOICES. If any INVOICE purchased by
METRO remains unpaid for any reason ninety (90) days after
date of such INVOICE or sooner if in METRO'S sole discretion
such INVOICE is determined to be uncollectible, CLIENTS agree
to repurchase such INVOICES from METRO at the full face amount
of such INVOICE if METRO so elects. In any event, if more than
25.0% of a CUSTOMER'S account is unpaid after ninety (90) days
from dates of the respective INVOICES, CLIENTS agree to
repurchase the unpaid balance of such account. The purchase
price for such unpaid balance shall be paid by offset against
METRO'S aggregate unpaid balance of INVOICES purchased from
CLIENTS.
10. WARRANTIES, REPRESENTATIONS, AND COVENANTS OF CLIENTS. As an
inducement for METRO to enter into this Agreement, and with
full knowledge that the truth and accuracy of the WARRANTIES,
REPRESENTATIONS, AND COVENANTS in this Agreement are being
relied upon by METRO, CLIENTS warrant, represent and/or
covenant that (a) CLIENTS are properly licensed and authorized
to operate their businesses under all applicable state and
federal laws in the name and/or trade name designated for
CLIENTS
INITIALS:
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herein; (b) CLIENTS' businesses are solvent; (c) Each of
CLIENTS' CUSTOMER'S businesses are solvent to the best of
CLIENTS' knowledge and belief; (d) Except for liens assigned
to METRO concurrently with the execution of this Agreement,
CLIENTS have good and clear title to the INVOICES sold and/or
assigned to METRO and to all property in which a security
interest is granted to METRO herein; (e) Assignment to METRO
of each INVOICE purchased by METRO hereunder will thereby vest
absolute ownership of such INVOICE in METRO free from any
liens, claims, security interests, or equities of third
parties; (f) Each INVOICE shall, on the date of assignment, be
based upon a bona fide rendering of services or sale of goods
or products by CLIENTS and shall be a valid and enforceable
obligation of the CUSTOMER who is designated upon the face of
the INVOICE; (g) To the best of CLIENTS knowledge and belief,
there will be no DISPUTE associated with any INVOICE at the
time of sale of such INVOICE to METRO by CLIENTS and CLIENTS
agree to immediately notify METRO in writing of any DISPUTE
which may adversely affect payment of any INVOICE assigned or
sold to METRO; (h) Neither CLIENTS nor any officer or director
of CLIENTS own, control, or in any way whatsoever exercise
dominion over the business of any CUSTOMER, the INVOICES of
which are sold hereunder to METRO except as the owner of
publicly traded stock of a corporation other than CLIENTS or
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC. (herein called
BRIGHTSTAR); (i) That no INVOICE (or the goods or services
related thereto) sold to METRO hereunder is subject to or
affected by any of the following types of agreement:
consignment, sale on approval, conditional sale, guaranteed
sale, sell or return, buy-back, xxxx and hold, or any similar
type of agreement however named nor is there any debt owing by
CLIENTS to any CUSTOMER related to any INVOICE sold to METRO
hereunder; (j) All financial records, statements, books, or
other documents relating to the businesses of CLIENTS which
are supplied to METRO by CLIENTS or any of their authorized
representatives, either before or after the signing of this
Agreement, are true and accurate; (k) CLIENTS will not
transfer, pledge, or give a security interest in any of their
INVOICES to any other party during the life of this Agreement;
(l) CLIENTS will not permit a lien or encumbrance to be
created upon any of the INVOICES sold and/or COLLATERAL
assigned to METRO hereunder; (m) CLIENTS will maintain such
insurance covering CLIENTS' businesses and/or the property of
CLIENTS' CUSTOMERS as is customary or required by law for
businesses similar to the businesses of CLIENTS; (n) CLIENTS
will promptly notify METRO in writing of any proposed or
actual change in their owners, officers, and/or directors,
location of their principal offices, location of the offices
in which books and records concerning INVOICES and COLLATERAL
are kept, change of CLIENTS' names, bankruptcy or dissolution
of their owner, any sale or purchase of assets of CLIENTS out
of the regular course of CLIENTS' businesses, and any other
material change in the business or financial affairs of
CLIENTS; (o) CLIENTS will promptly pay all sums due METRO when
due; (p) Each INVOICE sold and/or assigned to METRO is genuine
and in all respects what it purports to be and is not a
duplicate of another INVOICE covering the same charges; (q) In
the event that CLIENTS fail to repurchase INVOICES subject to
DISPUTE, CLIENTS will fully cooperate with METRO in any
litigation between METRO and a CUSTOMER relating to any
INVOICES purchased and/or assigned to METRO hereunder,
including but not limited to furnishing at CLIENTS' expense
any witnesses (other than METRO'S employees) and documentation
which is or should be under CLIENTS' control; (r) CLIENTS will
promptly pay when due all federal, state and local taxes and
will immediately notify METRO in writing if any such taxes are
not paid when due; (s) CLIENTS will immediately notify METRO
of the filing of any Local, State, or Federal Tax Lien or Levy
or if any agreement is made with any taxing authority to pay
out any due and unpaid taxes; (t) CLIENTS will immediately
notify METRO of the filing of any petition of bankruptcy by or
against CLIENTS, the composition of CLIENTS' creditors, or the
appointment of a trustee or receiver for CLIENTS' businesses;
(u) CLIENTS will immediately notify METRO of any change, or
intent to change, the nature of their businesses as it relates
to the products or services presently sold to CUSTOMERS.
11. CHANGE IN OWNERSHIP. METRO shall have the right to immediately
terminate this Agreement if CLIENTS' ownership changes
subsequent to the execution of this Agreement.
12. BILLING REQUIREMENTS. CLIENTS further warrant, represent,
and/or covenant that all INVOICES submitted for sale to METRO
shall be presented to METRO within thirty (30) days after the
sale of inventory or goods or the rendering of services or
labor related to such INVOICE and shall conform to the
following requirements:
INITIALS:
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12.1 The original of all such INVOICES and any supporting
documentation required by the CUSTOMER as a
pre-condition to payment of the INVOICE shall have
been delivered to the CUSTOMER.
12.2 A copy of all such INVOICES together with supporting
documentation shall be delivered to METRO as
requested by METRO.
12.3 Be legible.
12.4 Clearly state the full legal name and address of
CUSTOMER and the party to whom such INVOICE is to be
mailed.
12.5 Be stamped or imprinted with instructions to remit
payment directly the following bank lockbox addresses
which addresses shall not be changed by CLIENTS
without the prior written consent of METRO:
A. For XXXXXXXXX:
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B. For SCS AMERICA:
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C. For SII:
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D. For ICON:
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In connection herewith, CLIENTS agree that all funds
received at such bank lockbox addresses shall be
deposited to bank accounts under the exclusive
control of METRO.
12.6 Except as METRO may otherwise consent, the terms of
CUSTOMER'S payment of INVOICES shall be "Net 30 days"
or less.
12.7 CLIENTS shall timely issue credit memos when
appropriate and immediately deliver the original of
such credit memos to the respective CUSTOMER and a
copy to METRO.
12.8 Be verifiable by the CUSTOMER to METRO'S
satisfaction.
13. EVENT OF DEFAULT. CLIENTS shall be in default of this
Agreement upon the happening of any of the following events
(herein called EVENT OF DEFAULT):
The breach of any warranty, covenant, or representation made
herein or in connection herewith, whether written or oral, the
filing of an involuntary petition of bankruptcy against
CLIENTS, or the filing of a voluntary petition in bankruptcy
by CLIENTS. CLIENTS will give METRO at least forty-eight (48)
hours advance notice of the filing of any voluntary petition
of bankruptcy by CLIENTS.
14. REMEDIES. Upon the occurrence of an EVENT OF DEFAULT, and at
any time thereafter, METRO may elect to declare any and all
indebtedness hereby secured immediately due and payable,
CLIENTS hereby expressly waiving notice, demand, and
presentment. METRO shall be entitled to all rights and
remedies of a Secured Party under the Uniform Commercial Code
of Texas as presently existing or hereafter amended, including
the right to enter upon the premises where any COLLATERAL is
located and take immediate possession of such
INITIALS:
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COLLATERAL and remove same from such premises. To the extent
deemed reasonably necessary by METRO to aid in the collection
of its collateral, METRO shall have the right to the use of
any computer hardware or software used by CLIENTS pertaining
to their accounts receivable. METRO shall be entitled to avail
itself of all such other rights and remedies as may now or
hereafter exist at law or in equity for collection of said
indebtedness and the enforcement of the covenants, warranties,
and representations herein and the resort to any one or
combination of such remedies provided hereunder shall not
prevent the concurrent or subsequent employment of any other
appropriate remedy. CLIENTS shall be liable to METRO for any
deficiencies after foreclosure of METRO'S security interest
herein. The waiver by METRO of the breach of any term of this
Agreement or the compliance therewith shall not be construed
as a waiver of any subsequent breach or compliance. CLIENTS
agree to reimburse METRO for any out-of-pocket expenses
incurred by METRO as a result of an EVENT OF DEFAULT or in
connection therewith.
15. ARBITRATION, JURISDICTION, VENUE, AND AGENT FOR SERVICE OF
PROCESS. All DISPUTES arising out of or in connection with
this Agreement or any transaction hereunder shall be finally
settled under the Commercial Arbitration Rules of the American
Arbitration Association then in effect by an arbitrator chosen
from such association's blind pool of arbitrators with
significant knowledge and experience in the field of factoring
of accounts receivable who shall be appointed in accordance
with such Rules. The arbitrator's award shall be final and
binding. Judgment upon the award rendered may be entered in
any court having jurisdiction over the party against which the
award is rendered. The parties expressly consent to the
jurisdiction of the federal and state courts situated in the
State of Texas for the purpose of enforcing any arbitration
award rendered pursuant to this Paragraph 16 and the parties
further agree that venue shall be Dallas County, Texas. The
arbitration shall take place in Dallas, Texas, or such other
place as the parties may agree. The arbitration shall include
(i) a provision that the prevailing party in such arbitration
shall recover its costs of the arbitration and reasonable
attorneys' fees from the other party or parties, and (ii) the
amount of such fees and costs. In the event CLIENTS have no
agent appointed for the service of process in the State of
Texas, CLIENTS authorize service upon the Secretary of the
State of Texas on their behalf.
16. SECURITY INTEREST. METRO, in addition to the outright
ownership of those INVOICES purchased from CLIENTS hereunder,
is hereby granted a continuing security interest in all of
CLIENTS' presently owned and existing and hereafter acquired
and arising accounts receivable, all other forms of
obligations owing to CLIENTS with respect to the INVOICES, all
contract rights and general intangibles pertaining to accounts
receivable, and all instruments, documents, books, and records
pertaining to any of the foregoing together with all damage
claims and insurance proceeds of any of the foregoing,
together with all guarantees, securities, and liens for
payment of any INVOICES and all products and proceeds of any
of the foregoing. All of the foregoing is sometimes
collectively called herein COLLATERAL. Such security interest
in such COLLATERAL is to be security for any and all
obligations or indebtedness of any kind, direct or indirect,
absolute or contingent, owing by CLIENTS to METRO however
incurred or evidenced and however and whenever same shall
arise or have arisen, and whether such COLLATERAL is now or
hereafter existing.
17. FINANCIAL STATEMENTS, BOOKS AND RECORDS, AND RIGHT OF
INSPECTION. As often as such are prepared, but no less than
within thirty (30) days after the close of each month, CLIENTS
shall furnish METRO with a copy of CLIENTS' most recent profit
and loss statements and balance sheets. Within ninety (90)
days after the close of each fiscal year, CLIENTS shall
furnish METRO with a profit and loss statement and balance
sheet as of the close of such fiscal year, prepared and signed
by an independent certified public accountant. CLIENTS agree
to timely furnish METRO such additional financial information
as METRO shall request. METRO and METRO'S agents shall have
the right at all times between the hours of 8:00 a.m. and 6:00
p.m. Monday through Friday to examine and make extracts from
all books and records of CLIENTS. Failure to comply with this
paragraph may at METRO'S discretion be deemed an EVENT OF
DEFAULT.
18. INDEMNITY. All taxes and governmental charges imposed upon
CLIENTS with respect to the sale of inventory or goods or the
rendering of services or labor by CLIENTS shall be the sole
responsibility of CLIENTS and CLIENTS shall indemnify and hold
METRO harmless from and against all liabilities for any acts
or omissions of CLIENTS.
INITIALS:
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19. NON-ASSIGNABILITY BY CLIENTS. CLIENTS may not assign any of
their rights or obligations hereunder without METRO'S prior
written consent; however, METRO may assign to KEYBANK, its
successors or assigns, any of its rights and remedies with
respect to CLIENTS.
20. AGREEMENT BINDING. This Agreement shall be binding upon
CLIENTS and METRO, their heirs, successors, and assigns.
21. SEVERABILITY. The provisions of this Agreement are severable
and if any of these provisions shall be held by any court of
competent jurisdiction to be unenforceable such holdings shall
not affect or impair any other provisions hereof.
22. ENTIRE AGREEMENT. It is expressly acknowledged and agreed by
CLIENTS that (a) No representations have been made, whether
oral or written, except as expressly set forth in this
Agreement or in a writing signed by a corporate officer of
METRO, or (b) If any such representations have been made and
are not expressly set forth herein, that any such
representations have no binding effect whatsoever. CLIENTS
have not relied on any inducement to enter into this Agreement
except as wholly set forth herein or as communicated in
writing by a duly constituted and authorized corporate officer
of METRO. This Agreement may only be changed, modified,
supplemented or amended by a written document signed by all
parties hereto. This Agreement may be signed in any number of
counterparts, each of which when so executed shall be deemed
to constitute one and the same agreement, whether signed and
delivered via facsimile or otherwise.
23. NOTICES. Notices from either party to the other shall be given
in writing and delivered via facsimile and/or mailed postage
prepaid, registered or certified mail, or placed in the hands
of a national overnight delivery service addressed to the
addresses set forth at the end of this Agreement, or at such
other address as either party may advise the other in writing.
If mailed, notice shall be deemed to have been received three
(3) days after the date of postmark. Otherwise, notice shall
be deemed to be received upon actual receipt thereof, and if
via facsimile, a confirmation thereof shall constitute
acknowledgment of receipt thereof.
24. ACCEPTANCE AND TERMINATION. This Agreement will become
effective when accepted by METRO as evidenced by signature of
any duly authorized officer of METRO, shall continue until
terminated as provided herein. METRO shall have the right to
terminate this Agreement at any time by giving thirty (30)
days prior written notice to CLIENTS. CLIENTS shall have the
right to terminate this Agreement at any time by giving METRO
at least ten (10) days prior written notice of such
termination. In the event of termination, METRO shall provide
payoff information, terminate, or assign without recourse to
or warranties and representations by METRO, its liens, as
requested, and otherwise cooperate with CLIENTS, provided such
terminations or assignments shall not be effective until METRO
has received payment in full of amounts secured hereby.
Notwithstanding such notice, CLIENTS shall have no right to
terminate this Agreement until all obligations (direct or
contingent) owing by CLIENTS to METRO hereunder or otherwise
shall have been paid in full, whether or not such obligations
are due or are to become due in the future. Upon the
occurrence of an EVENT OF DEFAULT, or if any guaranty of the
obligations of CLIENTS hereunder shall be terminated by the
guarantor, METRO may at METRO'S election consider such
occurrence an anticipatory repudiation of this Agreement
and/or immediately terminate this Agreement as to future
transactions without notice. No termination of this Agreement
shall in any way affect or impair any right of METRO arising
prior thereto or by reason thereof, nor shall any such
termination relieve CLIENTS or any of their guarantors of any
obligation to METRO under this Agreement or otherwise until
all of said obligations are fully paid and performed, nor
shall any such termination affect any right or remedy of METRO
arising from any such obligation, and all agreements,
warranties, representations, and covenants of CLIENTS or their
guarantors shall survive termination. In the event that
CLIENTS shall have breached any provision of this Agreement or
if notice of termination is given by either party, the RESERVE
FUNDS and any other balances or credits otherwise due by METRO
to CLIENTS may be retained and applied by METRO from time to
time upon any indebtedness then or thereafter due from CLIENTS
and the RESERVE FUNDS may at METRO'S discretion upon such
breach or notice of termination, be increased to an amount
equal to the then total unpaid face amount of all INVOICES
purchased by METRO hereunder and
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other present or potential indebtedness of CLIENTS to METRO,
whether matured or unmatured. In such event, as the RESERVE
FUNDS exceed all present and potential indebtedness of CLIENTS
to METRO, METRO shall remit such excess to CLIENTS. Upon
payment in full by CLIENTS of all obligations arising under
this Agreement, METRO shall record any terminations or
satisfactions of any of METRO'S liens on the COLLATERAL;
provided, however, that in the event of a DISPUTE arises
concerning the amounts owed by CLIENTS, METRO shall not be
obligated to record terminations or satisfactions of METRO'S
liens unless and until CLIENTS provide a commercially
reasonable form of bond or other assurance of payment in an
amount equal to the amount in controversy.
25. POWER OF ATTORNEY. In order to carry out this Agreement,
CLIENTS irrevocably appoint METRO, or any authorized designee
of METRO, as CLIENTS' special attorney-in-fact with power:
25.1 In the EVENT OF DEFAULT, to delete CLIENTS' address
on all INVOICES sold and/or assigned to METRO by
CLIENTS and insert METRO'S address in its place.
25.2 To receive, accept, open and dispose in a
commercially reasonable manner of all mail addressed
to CLIENTS which may come into METRO'S possession.
25.3 To endorse the name of CLIENTS on any checks or other
instruments or evidence of payment that may come into
the possession of METRO on INVOICES purchased by
METRO from CLIENTS or in which CLIENTS have granted
METRO a security interest.
25.4 In the EVENT OF DEFAULT, in CLIENTS' name, or
otherwise, to demand, xxx for, collect and obtain
releases for any and all monies due or to become due
on INVOICES purchased by METRO from CLIENTS or in
which CLIENTS have granted METRO a security interest.
25.5 In the EVENT OF DEFAULT, to compromise, prosecute or
defend any action, claim or proceeding as to INVOICES
purchased by METRO from CLIENTS or in which CLIENTS
have granted METRO a security interest.
25.6 In the EVENT OF DEFAULT, to notify, direct or
instruct CLIENTS' CUSTOMER in CLIENTS' name of the
proper remittance address and of procedures for
making payment on any INVOICES that are sold to METRO
by CLIENTS or in which CLIENTS have granted METRO a
security interest.
25.7 To execute on CLIENTS' behalf and file such UCC
financing statements as METRO may deem necessary in
order to perfect and maintain the security interests
granted by CLIENTS in accordance with this and any
other agreement between CLIENTS and METRO, and
CLIENTS further agree that METRO may file this
Agreement or a copy thereof as such UCC financing
statement.
26. This Agreement includes all assumed names, tradestyles, and
divisions of CLIENTS unless specifically agreed to in writing
by METRO. Further, notwithstanding anything herein to the
contrary, this Agreement is conditioned upon there being no
change in the nature of CLIENT'S business which is presently
providing implementation of enterprise resource planning (ERP)
software systems and enterprise-wide business and technology
solutions, consulting, software application development,
systems integration, outsourcing, training, upgrades, support,
and other computer or information technology related services.
27. This Agreement is contingent upon the delivery of the
corporate guaranty of BRIGHTSTAR, ancillary documentation to
METRO, in a form approved by METRO, and receipt by METRO of an
assignment from Banque Paribas of their security interest in
the COLLATERAL.
28. This Agreement is an amendment and restatement of all of
CLIENTS' obligations and indebtedness to Paribas pursuant only
to that certain Promissory Note dated November 10, 1998,
executed by BRIGHTSTAR and payable in the original principal
amount of $2,500,000 to Paribas and related Interim Security
Agreement dated
INITIALS:
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November 10, 1998, executed and delivered by BRIGHTSTAR and
various subsidiaries and affiliates thereof, including but not
limited to, CLIENTS (herein called the "Assigned Documents").
CLIENTS hereby authorize METRO to pay $2,500,000 to Paribas
for the benefit of BRIGHTSTAR, Account No. 00000000, for
further credit to Account Xx. 000000 Xxxxxxx Xxxxxxx Cayman
and to receive from Paribas an assignment of all their right,
title, and interest in the Assigned Documents, all guaranties
thereof, and all assets previously assigned to Paribas but
only to the extent of the COLLATERAL as defined herein. All
warranties, representations, covenants, terms, and conditions
of this Agreement shall apply as fully to any such COLLATERAL
as if the sale or assignment had been made initially and
directly to METRO rather than Paribas.
29. CLIENTS WARRANT AND REPRESENT TO METRO THAT CLIENTS HAVE READ
THIS AGREEMENT IN ITS ENTIRETY PRIOR TO SIGNING AND THAT PRIOR
TO SIGNING THIS AGREEMENT, ALL BLANKS WERE FILLED IN (EXCEPT
FOR DATES AND SIGNATURES) AND ALL ALTERNATIONS OF THIS
AGREEMENT WERE INITIALED BY CLIENTS.
CLIENTS:
XXXXX X. XXXXXXXXX AND ASSOCIATES, INC.
By:
----------------------------------------------------
Xxxxxxx X. Xxxxx, Authorized Agent
Date Signed:
--------------------------------------------
Physical Address: 0000 XxXxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxx Xxxxxx, Xxxxx
00000
Mailing Address:
-----------------------------------------
SOFTWARE CONSULTING SERVICES AMERICA, INC.
By:
----------------------------------------------------
Xxxxxxx X. Xxxxx, Authorized Agent
Date Signed:
--------------------------------------------
Physical Address: 000 Xxxxx Xxxx, Xxxxx 0000, Xxxxxx Xxxx, Xxx Xxxxx Xxxxxx,
Xxxxxxxxxx 00000
Mailing Address:
----------------------------------------
SOFTWARE INNOVATORS, INC.
By:
-------------------------------------------------------
Xxxxxxx X. Xxxxx, Authorized Agent
Date Signed:
--------------------------------------------
INITIALS:
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Physical Address: 0000 Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx Xxxx, Xxxxxxx
Xxxxxx, Xxxxxxxx 00000
Mailing Address:
----------------------------------------
INTEGRATED CONTROLS, INC.
By:
----------------------------------------------------
Xxxxxxx X. Xxxxx, Authorized Agent
Date Signed:
--------------------------------------------
Physical Address: 000 Xxxx Xxxx., Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx Xxxxxx,
Xxxxxxxxx 00000
Mailing Address:
----------------------------------------
METRO FACTORS, INC.
By:
------------------------------------------------------
Its:
-----------------------------------------------------
Date Signed:
-------------------------------------------
Physical Address: 0000 Xxxxxx Xxxx Xxxx, Xxxxx 0000, Xxxxxx, Xxxxxx Xxxxxx,
Xxxxx 00000-0000
Mailing Address: P. X. Xxx 00000, Xxxxxx, Xxxxxx Xxxxxx, Xxxxx 00000
Attested By:
----------------------------------------------
Xxxxx Xxxxxx, Assistant Secretary
INITIALS:
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