Exhibit
10.1
ACCOUNT TRANSFER AND PURCHASE
AGREEMENT
This Account Transfer
and Purchase Agreement (this “Agreement”) is dated this
13th day of July,
2006, and is between Marquette Commercial
Finance, Inc., a Minnesota corporation authorized to do business in
Texas (“MCF”), and ADSOUTH
MARKETING, LLC , a Delaware Limited Liability Company
(“Seller”). This Agreement shall become effective
as of the day it is accepted in the State of Texas by MCF as
indicated at the end hereof by the date and signature on behalf of
MCF.
WHEREAS, MCF 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 MCF; 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 MCF certain of its accounts arising out of sales of goods,
or services rendered, by Seller, and to sell to MCF on the terms
set forth in this Agreement such of the offered accounts as MCF may
accept for purchase in the State of Texas. MCF shall have the
absolute right in its sole discretion to reject any or all offered
accounts, whether or not MCF has previously purchased accounts of
any particular account debtor hereunder. The parties agree
that, without the prior consent of MCF, the maximum Gross Amount
(as defined below) of accounts that MCF may purchase hereunder at
any time, together with the Gross Amount of accounts previously
purchased by MCF from Seller hereunder which then remain
outstanding, will not exceed Two Million and
No/100 Dollars ($2,000,000) (the “Facility Amount”).
MCF's consent to purchase accounts in excess of such amount
may be evidenced by MCF’s acceptance for purchase of such
offered accounts.
2.
Purchase and Sale
of Accounts . Each account purchased by MCF
hereunder shall be purchased by MCF without recourse against
Seller. All losses incurred by MCF from the financial
inability of the applicable account debtor to pay such account over
and above any and all Residual Payments (as hereinafter defined)
and Reserve (as hereinafter defined) amounts offset shall be borne
solely by MCF; provided, however, that nothing in this Agreement
shall be construed to relieve Seller from liability for any breach
by Seller of any representation, warranty or agreement of Seller
contained herein. Notwithstanding any provision in this
Agreement to the contrary, it is contemplated by and the intention
of the parties hereto that accounts of Seller may be considered and
purchased as one account (herein a “batch”) and the
terms “account” and “accounts” as used
herein may also refer to and mean a “batch” or
“batches,” as the case may be.
In connection with each
offer of accounts to MCF, Seller agrees to deliver to MCF 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 MCF. In order for an account to be
eligible for purchase by MCF, the related invoice must set forth,
as the sole address for payment, the following post office box:
P.O. Box 933040, Atlanta, Georgia 31193-3040 (“Authorized
Remittance Address”) (or, upon notice from MCF, another post
office box of MCF) and, in the case of payments to be effected by
wire transfer or other electronic means, the related invoice must
set forth, as the sole bank account for such payment, a bank
account of MCF (or a third party designated by MCF) designated by
MCF from time to time (except in each case as otherwise agreed in
writing by MCF). MCF’s acceptance for purchase of
offered accounts shall be evidenced by MCF’s tendering of the
Initial Payment (as hereinafter defined) to Seller or otherwise
delivering to Seller a schedule of accounts accepted for purchase
by MCF. Seller’s transference of offered accounts shall
not be effective as to any accounts not accepted for purchase by
MCF.
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Seller hereby sells,
transfers, assigns and otherwise conveys to MCF (as a sale by
Seller and a purchase by MCF, and not as security for any
indebtedness or other obligation of Seller to MCF) all right, title
and interest of Seller in and to all accounts accepted by MCF 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 MCF of any obligation of Seller or any other
person in connection with the accounts or related rights or under
any agreement or instrument relating thereto. Seller agrees
to execute and deliver such bills of sale, assignments, letters of
credit, notices of assignment, financing statements (including
continuation statements) under the applicable UCC and other
documents, and make such entries and markings in its books and
records, and to take all such other actions (including the
negotiation, assignment or transfer of negotiable documents,
letters of credit or other instruments) as MCF may request to
further evidence or protect the sales and assignments of accounts
and related rights to MCF hereunder, as well as MCF’s
interest in any returned goods referred to in Section 7
hereof.
3.
Terms of
Accounts . Except as otherwise may be
agreed to in writing by MCF from time to time, the terms of sale
offered by Seller to its account debtors with respect to all
accounts offered to MCF for purchase hereunder shall be NET 30
DAYS. After an account has been purchased by MCF, 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 MCF for purposes
of collection of accounts purchased by MCF as set forth in Section
8 hereof, and then only with the prior written consent of
MCF.
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 MCF to
Seller on the business day that MCF accepts for purchase the
related account, and the Residual Payment shall be payable by MCF
to Seller within five business days after MCF receives and deposits
the proceeds of collection for the subject account in an amount
equal to the Net Amount (as hereinafter defined) of such account
(subject to MCF’s right to withhold payment of Residual
Payments hereunder, and subject to MCF’s right to withhold,
offset and charge, each as described below).
“Initial
Payment” means eighty percent (80%) of the Gross Amount of an
account. “Gross Amount” of an account means the
gross face amount payable pursuant to the related invoice.
“Net Amount” of an account means the Gross Amount
of such account, less all permitted discounts, deductions and
allowances. “Residual Payment” with respect to an
account means the aggregate amount collected with respect to such
account, less the sum of (i) the Initial Payment with respect to
such account, (ii) the MCF Discounts (as hereinafter defined),
(iii) any and all attorneys’ fees and other costs of
collection.
5.
Fixed and Variable
Discounts. “Fixed Discount”
means a discount of three-quarters of one percent (0.75%) of the
Gross Amount of such account. Notwithstanding the foregoing,
the minimum Fixed Discount on each account purchased hereunder
shall be $15.00. “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 and until and
including three business days after MCF received and deposits the
proceeds of collection of such account at a per annum rate equal to
(based on a year consisting of 360 days) equal to the Prime Rate
(as hereinafter defined) in effect on the date of purchase of such
account plus two percent (2.0%) per annum; provided, however, in no
event shall the Variable Discount with respect to any account
purchased hereunder be less than seven percent (7.0%) per annum.
The term “Prime Rate” means the rate of interest
quoted in the "Money Rates" section of The Wall Street
Journal from time to time and designated as the "Prime Rate."
If such prime rate, as so quoted is split between two or more
different interest rates, then the Prime Rate shall be the highest
of such interest rates. If such prime rate shall cease to be
published or is published infrequently or sporadically, then the
Prime Rate shall be the rate of interest per annum established from
time to time by Meridian Bank, N.A. (the “Bank”) and
designated as its base or prime rate, which may not necessarily be
the lowest interest rate charged by the Bank and is set by the Bank
in its sole discretion. Upon the occurrence of any change in
the Prime Rate, MCF shall have up to five business days to effect a
change in the Prime Rate for purposes of determining the Variable
Discount. The Fixed Discount and the Variable Discount shall be
collectively
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referred to herein as
the “MCF Discounts”. Seller
hereby authorizes MCF, in MCF’s sole discretion, to collect
any amounts that are attributable to the MCF Discounts by (i)
deducting from the Residual Payments, (ii) debiting the Debit
Account (as hereinafter defined), or (iii) using any combination of
the foregoing. As used herein, “Debit Account”
shall mean any account that Seller has supplied to MCF over which
MCF has express written authority to debit pursuant to the Debit
and Funding Instruction Form.
Seller hereby agrees to pay MCF a
servicing fee on the first day of each calendar month equal to (i)
$1,000 minus (ii) the total Fixed Discount purchased during the
previous month (the “Servicing Fee”).
Seller
hereby authorizes MCF, in MCF’s sole discretion, to collect
any amounts that are attributable to the Servicing Fee by
(i) by reducing
the Initial Payment, (ii)
deducting from the Residual Payments, (iii) debiting the Debit
Account, or (iv) using any combination of the foregoing.
Such fee
shall be paid to MCF so long as this Agreement is in effect.
Seller and MCF acknowledge and agree that the Servicing Fee
is intended as reasonable compensation to MCF for making this
facility available under the terms of this Agreement and for no
other purpose.
6.
Reserve. In the event that MCF believes
Seller has breached any material representation, warranty, covenant
or agreement contained herein (including, without limitation, in
the event an account purchased by MCF becomes a Disputed Account as
hereinafter defined), any account is not paid in full within 90
days from the date of purchase of such account, or MCF deems itself
insecure hereunder, MCF may at its election, withhold and
accumulate the payment of the Residual Payments
(“Reserve”) with respect to any or all accounts
purchased hereunder to the extent necessary to maintain a Reserve
in an amount up to the sum of (a) the total Initial Payments made
by MCF with respect to accounts purchased by MCF hereunder which
remain uncollected, plus (b) the total of the MCF Discounts with
respect to such accounts and (c) such other amounts which may
become due by Seller to MCF hereunder or under any other agreement.
Seller hereby authorizes MCF to offset and charge any and all
amounts for which Seller or the Reserve may be obligated to pay to
MCF pursuant to the terms of this Agreement against the Reserve,
and at MCF’s election, against any funds of Seller in the
possession or control of MCF, from whatever source. However,
if, on any business day that MCF 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
MCF shall distribute to Seller the Residual Payments then due and
all funds it then has on hand that it has collected from accounts
that MCF has not then purchased.
7.
Certain
Security . For the purpose of securing
MCF (a) in the payment of any and all sums of money that may become
due and owing MCF from Seller by reason of this Agreement, (b) in
the performance by Seller of Seller's obligations hereunder, and
under any other agreement, contract, document, note or other
instrument in favor of MCF or its assignees and (c) in the
performance of all the obligations of all Affiliates (as
hereinafter defined) under each Affiliate’s agreements,
contracts, documents, notes or other instruments in favor of MCF or
its assigns, Seller hereby grants to MCF a security interest in (i)
all of Seller's present and future inventory, accounts, account and
contract rights, contracts, drafts, acceptances, documents,
instruments, chattel paper, deposit accounts, general intangibles
and all products and proceeds therefrom, including all returned or
repossessed goods, as well as all books and records pertaining to
all of the foregoing, (ii) all amounts due as Residual Payments or
withheld by MCF as the Reserve pursuant to Section 6 hereof and
(iii) all money and other funds of Seller now or hereafter in the
possession, custody or control of MCF, from whatever source (the
“Collateral”). The term “Affiliate”
shall mean with respect to any person or entity in question, any
other person or entity owned or controlled by, or which owns or
controls or is under common control or is otherwise affiliated with
such person or entity in question. Seller agrees to execute
and deliver such financing statements under the applicable UCC and
other documents, and make such entries and markings in its books
and records and to take all such other actions, as MCF may request
to further evidence, perfect, preserve or protect the security
interest granted to MCF hereunder. MCF shall have all rights
and remedies in respect of the lien and security interest herein
granted as are provided in this Agreement, the UCC and other
applicable law, including the right at any time, before or after
any default by Seller of any of its obligations hereunder, to
notify account debtors and obligors on instruments to make payment
to MCF (or its designee) and to take control of proceeds to which
MCF is entitled, and to apply proceeds to (in addition to other
obligations of Seller to MCF) the reasonable attorneys' fees and
legal expenses incurred by MCF in connection with the disposition
of collateral or the other exercise of rights and remedies by
MCF.
Seller hereby authorizes
MCF to file in any jurisdiction MCF may deem appropriate, without
the signature of
3
Seller, one or more
financing statements, and all amendments and continuations with
respect thereto, relating to the Collateral and hereby ratifies,
confirms and consents to any such filings made by MCF prior to the
date hereof. Seller further agrees that a carbon,
photographic or other reproduction of this Agreement or any
financing statement describing any Collateral is sufficient as a
financing statement and may be filed in any jurisdiction MCF may
deem appropriate.
Seller herein
acknowledges and warrants to MCF that it has received and will
receive, direct and indirect benefits by and from granting this
security interest to MCF to secure the obligations of any Affiliate
to MCF.
In the event a security
interest has heretofore been granted and given to MCF by Seller in
a prior agreement(s) or document(s) to secure certain obligations,
then, in such event, and notwithstanding anything in this Agreement
to the contrary, including Section 23 hereof, the lien and security
interest herein granted and given to MCF 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 MCF hereunder and under any such prior agreements, which
obligations are likewise herein renewed and extended, in any
manner, including any action required in connection with or by
virtue of the United States Bankruptcy Code (the “Bankruptcy
Code”).
8.
Servicing
. MCF hereby
appoints Seller as servicing agent for MCF (“Servicer”)
for the purpose of expediting the payment of accounts purchased by
MCF hereunder which become past due. Servicer agrees to
maintain an active, on-going and regular dialogue with each Account
Debtor. Servicer further agrees to utilize all powers,
influences and rights and take every action within its control in
accordance with its customary practices and applicable law to
expedite the collection of the accounts purchased by MCF which
become past due and direct such payments in specie exclusively to
the Authorized Remittance Address. Seller will furnish to
MCF, upon request, any and all papers, documents and records in its
possession or control related to accounts purchased by MCF
hereunder, or related to Seller’s business relationship with
the respective account debtors, and agrees to cooperate fully with
MCF in all matters related to collection of accounts purchased by
MCF hereunder. MCF reserves the right to terminate such
servicing relationship at any time with or without cause and
without notice to Servicer.
Seller authorizes MCF to
forward directly to account debtors statements or invoices on
accounts purchased by MCF hereunder, and to request payment at such
address or to such bank account as may be designated by MCF.
Seller agrees that, if any payment is made to Seller on any
account purchased by MCF from Seller hereunder, Seller (i) will
hold such payment in trust for MCF, (ii) will not commingle such
payment with any funds of Seller, and (iii) will deliver such
payment to MCF, in the exact form received, by the close of
business on the next business day following receipt thereof by
Seller. With respect to all accounts purchased by MCF from
Seller hereunder, Seller shall direct all account debtors for such
accounts to remit all payments pertaining to such accounts directly
to the Authorized Remittance Address. If any payment on such
accounts is received by Seller (rather than sent to the Authorized
Remittance Address), Seller shall give prompt notice thereof to
MCF. Without limiting the other rights and remedies of MCF
under this Agreement or otherwise, Seller’s failure to
strictly comply with this Section 8 shall constitute an immediate
breach of and default under this Agreement, entitling MCF (in
MCF’s discretion) to immediately terminate this Agreement.
If any goods relating to an account purchased by MCF
hereunder shall be returned to or repossessed by Seller, Seller
shall give prompt notice thereof to MCF and shall hold such goods
in trust for MCF, separate and apart from Seller's own property,
and such goods shall be owned solely by MCF and be subject to MCF's
direction and control. Seller shall properly store and
protect such goods and agrees to cooperate fully with MCF in any
subsequent disposition thereof for the benefit of MCF.
Seller authorizes MCF to collect,
sue for and give releases for in the name of Seller or MCF in
MCF’s sole discretion, all amounts due on accounts sold to
MCF hereunder. Seller specifically authorizes MCF to
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