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EXHIBIT 10.4
ACCOUNT TRANSFER AND PURCHASE AGREEMENT
This Account Transfer and Purchase Agreement (this "Agreement") is
dated this 20th day of August, 1996, and is between KBK Financial, Inc., a
Delaware corporation authorized to do business in California and doing business
as VPT/KBK Acceptance Corporation ("KBK"), and VOICE POWERED TECHNOLOGY
INTERNATIONAL, INC., a California corporation ("Seller"). This Agreement shall
become effective as of the day it is accepted in the State of Texas by KBK as
indicated at the end hereof by the date and signature on behalf of KBK.
WHEREAS, KBK is in the business of purchasing accounts receivable
("accounts"); and
WHEREAS, Seller desires, from time to time during the term of this
Agreement, to sell accounts to KBK; and
WHEREAS, the parties hereto desire to enter into this Agreement to
govern the purchase and sale of accounts;
NOW THEREFORE, in consideration of the premises, the mutual
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. OFFER OF ACCOUNTS. At its election from time to time during the
term of this Agreement, Seller agrees to offer for sale to KBK certain of its
accounts arising out of sales of goods, or services rendered, by Seller, and to
sell to KBK on the terms set forth in this Agreement such of the offered
accounts as KBK may accept for purchase in the State of Texas. KBK shall have
the absolute right in its sole discretion to reject any or all offered accounts,
whether or not KBK has previously purchased accounts of any particular account
debtor hereunder. The parties agree that, without the prior consent of KBK, the
maximum face amount of accounts that KBK may purchase hereunder at any time,
together with the then outstanding face amount of outstanding accounts
previously purchased by KBK from Seller hereunder, will not exceed THREE MILLION
AND NO/100 dollars ($3,000,000.00). KBK's consent to purchase accounts in
excess of such amount may be evidenced by KBK's acceptance for purchase of such
offered accounts.
2. PURCHASE AND SALE OF ACCOUNTS. Each account purchased by KBK
hereunder shall be purchased by KBK without recourse against Seller. All
losses incurred by KBK from the financial inability of such account debtor to
pay such account over and above any and all Residual and Reserve amounts offset
shall be borne solely by KBK; provided, however, that nothing in this Agreement
shall be construed to relieve Seller from liability for any breach by Seller of
any representation, warranty or agreement of Seller contained herein.
Notwithstanding any provision in this Agreement to the contrary, it is
contemplated by and the intention of the parties hereto that accounts of Seller
may be considered and purchased as one account (herein a "batch") and the term
"account" and "accounts" as used herein may also refer to and mean a "batch" or
"batches," as the case may be.
In connection with each offer of accounts to KBK, Seller agrees to
deliver to KBK a written assignment of such accounts, together with a copy of
all invoices relating to such accounts, and evidence of delivery of the related
goods or performance of the related services (and, if requested, the original
purchase orders from the applicable customers), all in a form satisfactory to
KBK. In order for an account to be eligible for purchase by KBK, the related
invoice must set forth, as the sole address for payment, the following post
X.X. Xxx 00000, Xxx Xxxxxxx, XX 00000-0000 ("Authorized Remittance Address")
(or, upon notice from KBK, another post office box of KBK) and, in the case of
payments to be effected by wire transfer or other electronic means, the related
invoice must set forth, as the sole bank account for such payment, the following
bank account of KBK Acct. #1690007172, Bank One Texas, Texas, N.A., ABA Routing
#000000000, Reference: Voice Powered Technology ("Authorized Remittance
Address") (or a third party designated by KBK) previously designated by KBK
(except in each case as otherwise agreed in writing by KBK). KBK's acceptance
for purchase of offered accounts shall be evidenced by KBK's tendering of the
Initial Payment to Seller or otherwise delivering to Seller a schedule of
accounts accepted for purchase by KBK. Seller's transference of offered accounts
shall not be effective as to any accounts not accepted for purchase by KBK.
Seller hereby sells, transfers, assigns and otherwise conveys to KBK
(as a sale by Seller and a purchase by KBK, and not as security for any
indebtedness or other obligation of Seller to KBK) all right, title and interest
of Seller in and to all accounts accepted by KBK for purchase hereunder,
together with all related rights (but not obligations) of Seller with respect
thereto, including all contract rights, guarantees, letters of credit, liens in
favor of Seller, insurance and other agreements and arrangements of whatever
character from time to time supporting or securing payment of such accounts and
all right, title and interest of Seller in any related goods, including
Seller's rights and remedies under Article 2, Part 7 of the applicable Uniform
Commercial Code ("UCC"). The foregoing sale, transfer, assignment and
conveyance does not constitute and is not intended to result in an assumption
by KBK of any obligation of Seller or any other person in connection with the
accounts or related rights or under any agreement or instrument relating
thereto. Seller agrees to execute and deliver such
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bills of sale, assignments, letters of credit, notices of assignment financing
statements (including continuation statements) under the applicable UCC and
other documents, and make such entries and markings in its books and records,
and to take all such other actions (including the negotiation, assignment or
transfer of negotiable documents, letters of credit or other instruments) as
KBK may request to further evidence or protect the sales and assignments of
accounts and related rights to KBK hereunder, as well as KBK's interest in any
returned goods referred to in Section 8 hereof.
3. TERMS OF ACCOUNTS. Except as set forth on Exhibit "A" attached
hereto and as otherwise may be agreed to in writing by KBK from time to time,
the terms of sale offered by Seller to its account debtors with respect to all
accounts offered to KBK for purchase hereunder shall be NET 30 DAYS. After an
account has been purchased by KBK, Seller shall not have the right to vary the
terms of sale set forth in the invoice relating to such account, or any other
aspect of the account except in Seller's capacity as agent for KBK for purposes
of collection of accounts purchased by KBK as set forth in Section 8 hereof, and
then only with the prior written consent of KBK.
4. PURCHASE PRICE. The purchase price for each account purchased
hereunder shall consist of and be paid by the Initial Payment and the Residual
Payment. The Initial Payment shall be payable by KBK to Seller on the business
day that KBK accepts for purchase the related account, and the Residual Payment
shall be payable by KBK to Seller within five business days after KBK receives,
in collected and immediately available funds, the Net Amount of the related
account (subject to KBK's right to withhold payment of Residuals hereunder, and
subject to KBK's right to withhold, offset and charge, each as described
below).
"Initial Payment" means SIXTY FIVE percent (65%) of the Net Amount of
an account. "Net Amount" of an account means the gross face amount payable
pursuant to the related invoice, less taxes and all permitted discounts,
deductions and allowances, calculated on the basis of the shortest payment
period provided with respect to such invoice. "Residual Payment" with respect
to an account means aggregate amount collected with respect to such account,
less the sum of (i) the Initial Payment with respect to such account and (ii)
KBK's Discounts (hereinafter defined), and (iii) any and all attorneys fees and
other costs of collection.
5. FIXED AND VARIABLE DISCOUNTS, "Fixed Discount" means a discount
of TWO percent (2.0%) of the Net Amount of such account. "Variable Discount"
means a discount computed on the Initial Payment and accruing on the basis of
actual days elapsed from the date of Initial Payment until and including five
business days after KBK receives, in collected and immediately available funds,
receipt of the proceeds of collection of such account at a per annum rate equal
to KBK's Base Rate in effect on the date of purchase of such account plus TWO
percent (2.0%) per annum; provided, however, in no event shall the Variable
Discount with respect to any account purchased hereunder be less than seven
(7.0%) per annum. "Base Rate" means that per annum variable rate (expressed as a
per annum percentage based on a 360 day year) determined from time to time by
KBK without notice to its Seller as KBK's base rate for purposes of calculating
variable discounts under KBK's Account Transfer Agreement. The Fixed Discount
and the Variable Discount (herein collectively referred to as KBK Discounts) may
be subject to one or more adjustments during the term of this Agreement if a
Performance Based Pricing Addendum is attached hereto. If an Addendum is
attached hereto, it is then made a part hereof as though fully written herein.
6. RESERVE. In the event that KBK has reason to believe Seller
has breached any material representation, warranty or agreement contained
herein, (including, without limitation, in the event of an account purchased by
KBK becomes a Disputed Account as hereinafter defined) any account is not paid
in full within 90 days from the date of invoice of such account or should KBK
deem itself insecure hereunder, KBK may at its election, withhold and
accumulate the payment of the Residual ("Reserve") with respect to any or all
accounts purchased hereunder to the extent necessary to maintain a Reserve in
an amount up to the sum of (a) the total Initial Payments made by KBK with
respect to accounts purchased by KBK hereunder which remain uncollected, plus
(b) the total of KBK's Discounts with respect to such accounts and (c) such
other amounts which may become due by Seller to KBK hereunder or under any
other agreement. Seller hereby authorizes KBK to offset and charge any and all
amounts for which Seller or the Reserve may be obligated to KBK pursuant to the
terms of this Agreement against the Reserve, and at KBK's election, against any
funds of Seller in the possession or control of KBK, from whatever source.
However, if, on any business day that KBK regularly makes a payment to Seller
for accounts purchased, none of the foregoing conditions exists, and no other
breach of this Agreement by Seller exists, then KBK shall distribute to Seller
the Residuals then due and all funds it then has on hand that it has collected
from accounts that KBK has not then purchased.
7. CERTAIN SECURITY. For the purpose of securing KBK (a) in the
payment of any and all sums of money (including, without limitation, all
attorneys' fees and other fees and costs) that may become due and owing KBK from
Seller by reason of this Agreement, (b) in the performance by Seller of Seller's
obligations hereunder, and under any other agreement contract document, note or
legal instrument in favor of KBK or its assignees and (c) in the performance of
all the obligations of all Affiliates under each Affiliate's agreements,
contracts, documents, note or legal instruments in favor of KBK or its assigns,
Seller hereby grants to KBK a security interest in (i) all of Seller's present
and future inventory, accounts, account and contract rights, contracts, notes,
drafts, acceptances, documents, instruments, chattel paper, general intangibles
(including, but not limited to, all
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trademarks, goodwill of Seller, customer lists, and books and records), and all
products and proceeds therefrom, including all returned or repossessed goods,
as well as all books and records pertaining to all of the foregoing, (ii) all
amounts due as Residuals or withheld by KBK as the Reserve pursuant to Section
6 hereof and (iii) all funds of Seller in the possession or control of KBK,
from whatever source (including, but not limited to, all funds now or hereafter
held in the Collateral Account (described below) and the Collateral Account
itself). Affiliate, for purposes of this Agreement shall mean any subsidiary,
parent, brother, sister, commonly controlled or related parties including but
not limited to NONE.
Seller agrees to execute and deliver such financing statements under
the applicable UCC and other documents, and make such entries and markings in
its books and records and to take all such other actions, as KBK may request to
further evidence, perfect, preserve or protect the security interest granted to
KBK hereunder. KBK shall have all rights and remedies in respect of the lien
and security interest herein granted as are provided in this Agreement, any
document, agreement, or instrument executed in connection with this Agreement,
the UCC and other applicable law, including the right at any time, before or
after any default by Seller of any of its obligations hereunder, to notify
account debtors and obligors on instruments to make payment to KBK (or its
designee) and to take control of proceeds to which KBK is entitled, and to
apply proceeds to (in addition to other obligations of Seller to KBK) the
reasonable attorneys' fees and legal expenses incurred by KBK in connection
with the disposition of collateral or the other exercise of rights and remedies
by KBK.
To further secure the obligations described in the first paragraph of
this Section 7, Seller covenants and agrees to maintain at all times, from and
after the date of this Agreement, (i) a deposit account at Bank One, Texas,
National Association, P. O. box 2629, Xxxxxxx, Xxxxx 00000, Account Number
1820766580 (the "Collateral Account); and (ii) the following sums in the
Collateral Account (which shall be based on the aggregate amount of accounts
purchase by KBK under this Agreement that remain uncollected):
Amount of Accounts Purchased
that remain uncollected Cash Collateral Required
equal to or less than $350,000 $ -0-
$350,000-750,000 $ 75,000
$750,001-1,250,000 $150,000
$1,250,001-1,750,000 $300,000
$1,750,001-2,250,000 $450,000
$2,250,001-2,750,000 $600,000
$2,750,001-3,000,000 $750,000
The beneficial owner of the Collateral Account shall be KBK (provided
that the Collateral Account may be held in the name of both KBK and Seller).
Seller shall have no right to withdraw any funds from the Collateral Account at
any time, it being agreed that KBK will permit excess funds to be released to
Seller from the Collateral Account in accordance with the foregoing schedule
(provided no default or breach of any provision of this Agreement has
occurred). Seller shall be responsible for notifying KBK of its right to
receive such excess funds. If Seller fails to maintain the requisite level of
funds in the Collateral Account, KBK may withhold amounts otherwise payable to
Seller by KBK under this Agreement and deposit such amounts into the Collateral
Account until such time as the Collateral Account is funded in accordance with
the foregoing schedule. The requirements of this Section 7 are in addition to
all other requirements of this Agreement (including, without limitation, the
Reserve described in paragraph 6 above).
Seller herein acknowledges and warrants to KBK that it has received
and will receive, direct and indirect benefits by and from granting this
security interest to KBK to secure the obligations of any Affiliate to KBK.
In the event a security interest has heretofore been granted and
given to KBK by Seller in a prior agreement(s) or documents to secure certain
obligations, then, in such event, and not withstanding anything in this
Agreement to the contrary, including paragraph 19 hereof, the lien and security
interest herein granted and given to KBK is in renewal and extension, and not
in extinguishment of, all such prior liens and security interests and are valid
and subsisting liens and security interests to secure all prior, existing and
new obligations of Seller to KBK hereunder and under any such prior agreements,
which obligations are likewise herein renewed and extended, in any manner,
including any action required in connection with or by virtue of the United
States Bankruptcy Code.
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8. Servicing. KBK hereby appoints Seller as servicing agent for
KBK ("Servicer") for the purpose of expediting the payment of accounts
purchased by KBK hereunder. Servicer agrees to maintain an active, on-going
and regular dialog with each Account Debtor. Servicer further agrees to
utilize all powers influences, rights and take every action within its control
in accordance with its customary practices and applicable law to expedite the
collection of the accounts purchased by KBK and direct such payments in specie
exclusively to the Authorized Remittance Address, as herein defined. Seller
will furnish to KBK, upon request, any and all papers, documents and records in
its possession or control related to accounts purchased by KBK hereunder, or
related to Seller's business relationship with the respective account debtors,
and agrees to cooperate fully with KBK in all matters related to collection of
accounts purchased by KBK hereunder. KBK reserves the right to terminate such
Servicer relationship at any time with or without cause and without notice to
Servicer.
Seller authorizes KBK to forward directly to account debtors
statements or invoices on accounts purchased by KBK hereunder, and to request
payment at such address or to such bank account as may be designated by KBK.
Seller agrees that, if any payment is made to Seller on any account purchased
by KBK from Seller hereunder, Seller (i) will hold such payment in trust for
KBK, (ii) will not commingle such payment with any funds of Seller, and (iii)
will deliver such payment to KBK, in the exact form received, by the close of
business on the next business day following receipt thereof by Seller. If any
goods relating to an account purchased by KBK hereunder shall be returned to or
repossessed by Seller, Seller shall give prompt notice thereof to KBK and shall
hold such goods in trust for KBK, separate and apart from Seller's own
property, and such goods shall be owned solely by KBK and be subject to KBK's
direction and control. Seller shall properly store and protect such goods and
agrees to cooperate fully with KBK in any subsequent disposition thereof for
the benefit of KBK.
Seller authorizes KBK to collect, xxx for and give releases for in
the name of Seller or KBK in KBK's sole discretion, all amounts due on accounts
sold to KBK hereunder. Seller specifically authorizes KBK to endorse, in the
name of Seller, all checks, drafts, trade acceptances or other forms of payment
tendered by account debtors in payment of accounts sold to KBK hereunder and
made payable to Seller. KBK shall have no liability to Seller for any mistake
in the application of any payment received with respect to any account;
provided KBK has not acted in bad faith or has not been grossly negligent, IT
BEING THE SPECIFIC INTENT OF THE PARTIES HERETO THAT KBK SHALL HAVE NO
LIABILITY HEREUNDER EXCEPT FOR ITS OWN GROSS NEGLIGENCE AND WILLFUL MISCONDUCT.
Seller hereby waives notice of nonpayment of any accounts old to KBK hereunder
as well as any and all other notices with respect to such accounts, demands or
presentations for payment, and agrees that KBK may extend or renew from time to
time the payment of, or vary, reduce the amount payable under or compromise any
of the terms of, any account purchased by KBK, in each case without notice to
or the consent of Seller. Seller further authorizes KBK (or its designee) to
open and remove the contents of any post office box of Seller or KBK (or its
designee) which KBK believes contains mail relating to accounts, and in
connection therewith or otherwise, to receive, open and dispose of mail
addressed to Seller which KBK believes may relate to accounts, and in order to
further assure receipt by KBK (or its designee) of mail relating to such
accounts, to notify other parties including customers and postal authorities to
change the address for delivery of such mail addressed to Seller to such
address as KBK may designate. KBK agrees to use reasonable measures to
preserve the contents of any such mail which does not relate to accounts
purchased hereunder and to deliver same to Seller (or, at the election of KBK,
to notify Seller of the address where Seller may take possession of such
contents; provided, if Seller does not take possession of such contents within
30 days after notice from KBK to take possession thereof, KBK may dispose of
such contents without any liability to Seller). Seller hereby irrevocably
appoints KBK (and any employee, agent or other person designated by KBK, any of
whom may act without joinder of the others) as Seller's attorneys-in-fact and
agents, in Seller's name, place and stead, to take all actions, execute and
deliver all notices, negotiate such instruments and other documents, as may be
necessary or advisable to permit KBK (or its designee) to take any and all of
the actions described in this paragraph or to carry out the purpose and intent
thereof, as fully and for all intents and purposes as Seller could itself do,
and hereby ratifies and confirms all that said attorneys-in-fact and agents may
do or cause to be done by virtue hereof. This power of attorney is irrevocable
and deemed coupled with an interest.
9. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants to KBK with respect to each account offered by Seller
to KBK hereunder that (i) Seller is the sole owner of such account, which
account is free and clear of any liens, claims, equities or encumbrances
whatsoever, and upon each purchase by KBK of such account, KBK will own such
account free and clear of any liens, claims, equities or encumbrances
whatsoever and the consideration received by Seller from KBK for such Account
is fair and adequate, (ii) Seller is the sole obligee under such account, and
has full power and is duly authorized to sell, assign and transfer such account
to KBK hereunder, and the date of sale of such account is not more than 30
days after the date of the original invoice relating to such account, (iii)
Seller has no knowledge of any fact which would lead it to expect that, at the
date of sale of such account to KBK, such account will not be paid in the full
stated amount when due, (iv) such account arises out of a bona fide sale of
conforming goods or the bona fide rendition of services by Seller, and all
underlying goods have been delivered to the account debtor, or all underlying
services have been rendered by Seller, in complete fulfillment of all of the
terms and conditions of a fully executed, delivered and unexpired contract with
the account debtor, and the account debtor has accepted the goods or services
to which the account relates, (v) such account is denominated and payable only
in United States dollars and constitutes the legal, valid and binding payment
obligation of the account debtor, enforceable in accordance with its terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium
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or other similar laws affecting the enforcement of creditors' rights
generally), (vi) such account is current and not past due, has not been paid by
or on behalf of the account debtor in whole or in part, and is not and will not
be subject to any dispute, recision, set-off, recoupment, defense or claim by
the account debtor, whether relating to price, quality, quantity, workmanship,
delay in delivery, set off, counterclaim or otherwise, and the account debtor
has not and will not claim any defense of any kind or character (other than
bankruptcy or insolvency arising after the date of sale of such account to KBK
hereunder) against payment of such account, and (vii) as of the date of
purchase by KBK of such account, the account debtor with respect to such
account is located (within the meaning of Section 9-103 of the applicable UCC)
and has its principal executive offices within the United States. Seller
further represents and warrants to KBK that (a) the execution, delivery and
performance of this Agreement by Seller have been duly authorized and this
Agreement constitutes the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, (b) Seller is not a
debtor in any bankruptcy proceedings, insolvent, undergoing composition or
adjustment of debts or unable to make payment of its obligations when due and
no petition in bankruptcy has been filed by or against Seller or any affiliate
thereof nor has Seller or any of its affiliates filed any petition seeking an
arrangement of its debts or for any other relief under the United States
Bankruptcy Code (the "Bankruptcy Code"), and no application for appointment of
a receiver or trustee for all or a substantial part of the property of Seller
or any affiliate thereof is pending, nor has Seller or any affiliate thereof
made any assignment for the benefit of creditors, (c) Seller is not in default
of any debt or obligation to any lender or other creditor, and (d) Seller's
principal place of business, chief executive office, location where the records
concerning its books of account and contract rights are kept, and location of
any property subject to the security interest granted in Section 7 hereof is,
unless changed upon notice to KBK complying with the next following sentence
and Section 17 of this Agreement, its "Address for Notices" described in
Section 17 hereof. Seller agrees not to change the location of its principal
place of business or chief executive office, the location where its records
concerning its books of account or contract rights are kept, or the location of
any property subject to the security interest granted in Section 7 hereof,
without giving at least 15 days advance notice thereof to KBK.
Each representation and warranty of Seller contained in this
Agreement shall be deemed to be made at and as of the date hereof and at and as
of the date of each sale of accounts to KBK hereunder.
Seller agrees to indemnify and hold KBK harmless against any breach
by Seller of any representation, warranty or agreement of Seller contained in
this Agreement, and against any claims or damages arising out of the
manufacture, sale, possession or use of, or otherwise relating to, goods, or
the performance of services, associated with or relating to accounts or related
rights purchased (or with respect to which a security interest is granted)
hereunder.
Seller agrees to notify KBK immediately of any breach by Seller of
any representation, warranty or agreement of Seller contained herein or should
any representation, warranty or agreement made herein become untrue or false at
any time. Seller further agrees to notify KBK immediately of the assertion by
any account debtor of any dispute or other claim (including any defense or
offset asserted by any account debtor) with respect to any account sold to KBK
hereunder, or with respect to any related goods or services ("Disputed
Accounts"). Upon KBK's request, Seller agrees to settle, at its own expense
and for the benefit of KBK, all such Disputed Accounts; provided, that any such
settlement shall be made only with the prior written consent of KBK. Unless KBK
is advised in writing by Seller to the contrary, any account that has not been
approved by the account debtor within sixty (60) days from the date of the
invoice upon which the account is based, shall be deemed to be a Disputed
Account. As to any Disputed Account, KBK shall have the right, in its sole
discretion, (i) to settle at the expense of Seller and for the benefit of KBK
any such dispute or claim upon such terms as KBK may in its sole discretion
deem advisable or (ii) to assign the related account to Seller, without
recourse to KBK, and charge any unpaid balance with respect thereto (up to the
amount of the Initial Payment with respect thereto and KBK's Discounts (through
the date of such charge) with respect thereto) against the Reserve, deduct such
unpaid balance from any Initial Payments or against any funds of Seller in the
possession or control of KBK, from whatever source. Seller agrees that in lieu
of KBK charging any such unpaid balance against the Reserve, Initial Payments
or against such other funds, KBK may require Seller to pay (and Seller hereby
agrees to pay) to KBK on demand any such unpaid balance. An account with
respect to which the account debtor has asserted an Insolvency Claim is not a
Disputed Account. As used herein, "Insolvency Claim" means any defense or other
claim by an account debtor with respect to an account sold to KBK hereunder
arising solely out of the bankruptcy or insolvency of the account debtor or the
financial inability of the account debtor to pay, if Seller has not breached
its representation contained in clause (vi) of the first paragraph of this
Section 9. Notwithstanding anything herein to the contrary, KBK shall have
the right to charge all accounts not paid because of an Insolvency Claim
against the Reserve and such charge shall have priority over and be paid before
any Disputed Account charge.
10. FINANCIAL STATEMENTS. Seller represents and warrants that all
financial and other information provided by Seller to KBK in connection with or
in Seller's application to KBK or to induce KBK to enter into this Agreement is
true, complete and correct in all material respects. Seller agrees to furnish
to KBK (i) within 90 days after the last day of each fiscal year of Seller a
consolidated statement of income and a consolidated statement of cash flows of
Seller for such fiscal year, and a consolidated balance sheet of Seller as of
the last day of such fiscal year, together with an auditors' report thereon by
an independent certified public accountant (if Seller generally obtains such an
auditors' report), (ii) within 45 days after the last day of each fiscal
quarter of Seller, an unaudited consolidated statement of income and statement
of cash flows of Seller for such fiscal
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quarter, and an unaudited consolidated balance sheet of Seller as of the last
day of such fiscal quarter, and (iii) within 30 days after the last day of each
month, monthly unaudited consolidated statements of income and statements of
cash flows of Seller and any affiliates for each month and unaudited
consolidated balance sheets of Seller and any affiliates as of the end of each
month. Seller represents and warrants that each such statement of income and
statement of cash flows will fairly present, in all material respects, the
results of operations and cash flows of Seller for the period set forth
therein, and that each such balance sheet will fairly present, in all material
respects, the financial condition of Seller as of the date set forth therein,
all in accordance with generally accepted accounting principles applied on a
consistent basis, except as otherwise noted in the accompanying auditors'
report (or, with respect to unaudited financial statements, in the notes
thereto). Seller also agrees to furnish to KBK, upon request, such additional
financial and business information concerning Seller and its business as KBK
may reasonably request, including copies of its Form 941 returns filed with the
Internal Revenue Service and evidence of payment of related taxes. KBK and its
agents, representatives and accountants shall have the right, at all times
during normal business hours and without prior notice to Seller, to conduct an
audit or other examination of the financial and business records of Seller and
to examine and make copies of all books and records of Seller for the purpose
of assuring or verifying compliance by Seller with the terms of this Agreement,
and Seller agrees to cooperate fully with KBK and its agents, representatives
and accountants in connection therewith and to timely pay all KBK reasonable
audit fees and expense. Seller agrees to properly reflect the effect of this
Agreement, and all sales related thereto, in all financial reports and
disclosures, written or otherwise, provided to Seller's creditors and other
interested parties. Seller specifically agrees that all accounts purchased by
KBK will be excluded from Seller's reported accounts receivable balances.
Seller also specifically agrees to immediately notify KBK of any material
adverse change in Seller's financial condition or business.
11. TAXES. All taxes and governmental charges of any kind imposed
with respect to the sale of goods or the rendering of services relating to
accounts purchased by KBK hereunder shall be for the account of, and paid by,
Seller.
12. COMMITMENT, FACILITY, AND TERMINATION FEES; TERMINATION.
Seller hereby agrees to pay to KBK, concurrently with the first purchase of an
account hereunder, a commitment fee (the "Commitment Fee") of THIRTY THOUSAND
and no/100 dollars ($30,000). On August l5, 1997, and each anniversary
thereafter, Seller hereby agrees to pay to KBK an additional THIRTY THOUSAND
and no/100 dollars ($30,000.00) on each such date as a facility fee ("Facility
Fee"). Seller and KBK acknowledge and agree that the Commitment Fee and the
Facility Fee are intended as reasonable compensation to KBK for making the
facility available under the terms of this Agreement and for no other purpose.
Seller hereby agrees to pay to KBK a termination fee equal to TWO
percent (2.0%) of the maximum dollar amount of aggregate outstanding accounts
allowed according to Section 1 (the "Termination Fee") and the payment shall be
an obligation of Seller secured under Section 7 hereof. This Termination Fee
is payable upon termination of this Agreement by Seller for any reason or upon
termination by KBK at its election for the reasons set forth in Sections 12(i)
through 12(iv) below. However, if this Agreement is terminated as above set
forth after the expiration of 12 months from the date of its execution, but
before the expiration of 24 months, three-quarters of the Termination Fee shall
be waived. If the Agreement is terminated more than twenty-four (24) months
after the date of its execution, all of the Termination Fee shall be waived.
Notwithstanding anything to the contrary, if, at any time, the Base Rate should
exceed the "Prime Rate" published in the Western Edition of the Wall Street
Journal, on the first business day of each of Seller's fiscal quarters, by more
than 100 basis points, Seller shall have five (5) business days thereafter to
terminate this Agreement without having to pay any Termination Fee.
This Agreement may be terminated by either party hereto by delivery
of written notice of termination of this Agreement to the other party specifying
the date of termination, which date shall be at least 30 days after the date
such notice is given. KBK may, at its election, terminate this Agreement
immediately and without the requirement of notice to Seller if (i) Seller shall
fail to perform any of its obligations hereunder or shall breach any of its
representations and warranties hereunder, (ii) Seller or any of its Affiliates
shall become insolvent or suspend all or a substantial part of its or their
business, (iii) a petition under the Bankruptcy Code or any other insolvency or
debtor statute shall be filed by or against Seller or any affiliate or any
receivership proceedings with respect thereto shall commence, (iv) any
guarantee of any of Seller's obligations hereunder shall be terminated or
become impaired, or (v) KBK otherwise determines that it is insecure hereunder.
Termination of this Agreement shall not affect the rights and
obligations of the parties hereunder with respect to transactions occurring on
or prior to the date of such termination, and this Agreement shall continue to
govern the rights and obligations of the parties hereto with respect to
accounts purchased by KBK from Seller on or prior to the date of such
termination. All security interests granted or contemplated by this Agreement
shall survive the termination of this Agreement until all amounts payable to KBK
with respect to transactions occurring on or prior to the date of termination
have been paid to KBK, and Seller has performed all its obligations to KBK with
respect to such transactions, and all obligations under this Agreement
including but not limited to payment of the Fees.
13. NOTICE OF PROPOSED REFINANCING. Seller hereby agrees that in
the event Seller receives a written proposal from any third party to provide
financing or factoring ("Proposed Refinancing"), Seller will immediately
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advise KBK in writing of the identity of the offeror ("Offeror") the complete
terms and conditions of the Proposed Refinancing and provide KBK a full and
complete copy of all written correspondence between Seller and Offeror
describing the Proposed Refinancing.
14. Attorney's Fees, Litigation Expense. Seller agrees to
reimburse KBK upon demand for KBK's attorneys' fees, court costs and other fees
and expenses incurred in collecting any sums due or to become due to KBK
hereunder, enforcing any of KBK's rights under this Agreement and all actions
taken by KBK that it deems necessary or desirable under the United States
Bankruptcy Code or should any provisions of the United States Bankruptcy Code
be applicable to any rights or obligations of any party to this Agreement, as
well as all appearances, motions and actions to which KBK may be or become a
party in any bankruptcy case.
15. Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS
OF LAWS THEREOF. SELLER HEREBY SUBMITS (IF FEDERAL JURISDICTION IS AVAILABLE)
TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS, FORT WORTH DIVISION, OR (IF FEDERAL JURISDICTION IS
NOT AVAILABLE) TO THE EXCLUSIVE JURISDICTION OF ANY TEXAS STATE COURT SITTING IN
FORT WORTH, TEXAS FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. SELLER IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. SELLER HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
16. Amendments; Waivers. This Agreement may be amended only in
writing signed by the parties hereto. No failure on the part of KBK to
exercise, and no delay by KBK in exercising, and no course of dealing by KBK
with respect to, any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder by KBK preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies of KBK hereunder are cumulative and not exclusive of any remedies
provided by law.
17. Notices. All notices and other communications provided for
herein shall be given or made in writing and telecopied or delivered by courier
or mail to the intended recipient at the "Address for Notices" specified
opposite its name on the signature page hereto, or at such other address or
telecopy number as shall be designated by a party to the other party in the
manner specified in this Section 17. All such notices and other communications
shall be deemed to have been duly given when transmitted by telecopier (with
receipt thereof confirmed by telecopier) or personally delivered or, in the
case of a mailed notice, upon deposit in the United States Postal System
postage prepaid and properly addressed, in each case given or addressed as
aforesaid.
18. Indemnification. Seller agrees to indemnify, defend and hold
KBK harmless from and against any and all loss, liability, obligation, damage,
penalty, judgment, claim, deficiency and expense (including interest,
penalties, attorneys' fees and amounts paid in settlement) owing to any third
party to which KBK may become subject arising out of or based upon this
Agreement as well as any prior relationship of Seller with KBK, WHETHER BY
ALLEGED OR ACTUAL NEGLIGENCE OR OTHERWISE, except and to the extent caused by
the gross negligence or willful misconduct of KBK.
19. Waiver and Release. Seller, by its execution of this
Agreement, does hereby covenant, warrant and represent that, (i) Seller is not
in default and no default exists under any prior agreements or transactions
with KBK; (ii) Seller releases, relinquishes and waives any and all defenses to
the enforceability of any prior agreements or transactions with KBK in
connection therewith to which Seller may have otherwise been entitled as of the
date hereof; (iii) Seller relinquishes, waives and releases KBK from any and
all claims known or unknown which Seller may or might have against KBK arising
directly or indirectly out of or from any prior agreements or transactions
between Seller and KBK; (iv) the benefit received and to be received by Seller
as a result of this Agreement shall and does constitute sufficient and valuable
consideration to Seller for entering into and performing its obligations under
this Agreement; (v) the execution and delivery by Seller of this Agreement and
the Limited Guaranty executed by, inter alia, Seller of even date herewith, the
performance by Seller of this Agreement and the consummation of the transaction
contemplated thereby are, (a) not prohibited by any indenture, contract or
agreement, law or corporate documents, including, but not limited to, By-Laws
and Articles of Incorporation, (b) duly authorized by appropriate corporate
action of Seller, and (c) legally valid and binding obligations of Seller and
will continue to be such and enforceable against the Seller according to their
terms; (vi) that this Agreement will be executed and delivered by properly
authorized officers of Seller; (vii) KBK has no obligation to continue the
prior agreements or enter into this Agreement except for the considerations
herein expressed; and (viii) the representations and warranties set forth
herein will survive the execution and delivery
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of this Agreement.
20. CAPTIONS; FINAL AGREEMENT; COUNTERPARTS; SUCCESSORS AND
ASSIGNS. Captions and headings appearing herein are included solely for
convenience of reference and are not intended to affect the interpretation of
any provision of this Agreement. This Agreement represents the final agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior proposals, negotiations, agreements and understandings,
oral or written, related to such subject matter. This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument. This Agreement may not be assigned by
Seller without the prior written consent of KBK. This Agreement may be assigned
by KBK, and any accounts purchased by KBK hereunder, together with all rights
and interests related thereto granted to KBK hereunder, may be assigned by KBK,
all without notice to or the consent of Seller. This Agreement shall be
binding upon the parties hereto and their respective successors and permitted
assigns.
IN WITNESS WHEREOF, the parties hereto, heretofore duly authorized,
have executed this Agreement as of the date first set forth above.
Address for Notices: VOICE POWERED TECHNOLOGY
00000 Xxxxxxx Xxxxxxxxx INTERNATIONAL, INC.
Xxxxx 0000
XXXXXXX XXXX, XX 00000
Fax No.: (000) 000-0000 By: /s/ XXXXXX X. XXXXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
By: /s/ XXXXXXXX XXXXX
----------------------------
Name: Xxxxxxxx Xxxxx
Title: Vice President Finance
& Operations
Address for Notices: KBK FINANCIAL, INC.
2200 CITY CENTER
000 XXXXXXXX XXXXXX
XXXX XXXXX, XXXXX 00000 By: /s/ XXXXXXX X. XXXXX, XX.
Fax No.:(000) 000-0000 ----------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Vice Chairman
Date: August 22, 1996
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Exhibit "A"
The terms of sale offered by Seller to the following account debtors with
respect to all accounts (owing by such account debtors) that are offered to KBK
for purchase under the Agreement shall be no longer than NET 60 DAYS:
1. Best Distributors
2. Day Xxxx
3. Xxxxxxxxxx Xxxx
4. Macy's
5. Office Max
6. Staples
7. Clockwise Inc.
8. Daytons/Xxxxxxxx Xxxxxx
9. Fedco
10. Let's Talk Cellular
11. State Street Discount
12. Ultimate Electronics
13. Service Merchandise (provided that with respect to accounts owing from
Service Merchandise terms of sale which do not exceed NET 90 DAYS for
any goods shipped prior to October 15, 1996, shall be acceptable).
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PERFORMANCE BASED PRICING ADDENDUM
to Account Transfer and Purchase Agreement between KBK Financial, Inc, dba
VPT/KBK Acceptance Corporation ("KBK"), and Voice Powered Technology
International, Inc. ("Seller") dated August 20, 1996.
This Addendum sets forth the criteria for and the amount of any adjustment in
the Fixed Discount and the Variable Discount (collectively the "Discount
Rates") as set forth in the above referenced Account Transfer and Purchase
Agreement (the "Agreement"), the rates set forth therein being referred to
herein as the "Contract Rates". The Discount Rates set for the initial
purchases under the Agreement and until changed according to this Addendum
("Initial Rates") are the following:
Fixed Discount 1.25% Variable Discount: Base Rate Plus 2.00%
Beginning after the first three (3) full calendar months after the date of
the Agreement ("Initial Quarter") and every three (3) months thereafter, Seller
may apply for a change in the Discount Rates (an "Adjustment"), based on Seller
achieving certain financial conditions set forth in the following table:
# PROFIT ROLLING 6
ROLLING MOS.
VARIABLE FIXED CURRENT MOS. OUT OF CUMM.
DISC. DISC. RATIO(1) DEBT/TNW(2) LAST6(3) PROFIT(4)
---------- ----- ------- --------- ----------- ---------
BASE+1.00 .25 *2.25:1 <2.50:1 6 >$250,000
1.25 .50 2.00:1 3.00:1 5 $250,000
1.50 .75 1.75:1 3.50:1 4 $150,000
1.75 1.00 1.50:1 4.00:1 2 $50,000
2.00 1.25 1.25:1 4.50:1 0 $<0
2.00 1.50 0.75:1 5.00:1 0 $
