Exhibit 10.25
AGREEMENT FOR THE
SALE AND PURCHASE
OF DEBTS
BETWEEN
ELCOM GROUP LTD
AND
DEUTSCHE FINANCIAL SERVICES (UK) LTD
DEUTSCHE FINANCIAL SERVICES (UK) LTD.
AGREEMENT FOR THE SALE AND PURCHASE
OF DEBTS
PARTICULARS
1. PARTIES: 1.1 DFS: Deutsche Financial Services (UK)
Limited.
Of: 0 Xxxxxxx Xxxx
Xxxxxxxxx
Xxxxxx
XX0 0XX
Incorporated in England and Wales
with official number 2549477
AND
1.2 The Client: Elcom Group Ltd
Of: Xxxxx Xxxxx
Xxxxxxx Xxxxxxxx Xxxxxx
Xxxxxxx
Xxxxxxxxx
XX0 0XX
Incorporated in England and Wales
with official number 297666
1.2 DATE: This Agreement is made on the day that the last of either DFS
or the Client executes it.
1.3 The Commencement date shall be 3rd December 1997 and the Minimum Period
of this Agreement shall be 12 months, provided that if the financing
agreement between Catalink Direct Inc and Catalink Direct
(Pennsylvania) Inc and Deutsche Financial Services Corporation (the "US
Agreement") terminates, then the minimum period shall end on the date
that such termination takes effect. (Condition 2.1)
1.4 The Client and DFS must give at least 6 months written notice to the
other at any time to terminate this Agreement or such shorter period
as may be permitted for the giving of notice to terminate the US
Agreement. ("the Minimum Notice Period") (Condition 2.1)
1.5 This Agreement shall apply to the following Debts or classes of Debts:
All Debts arising from Goods supplied .
(Condition 3.1)
2
1.6 Permitted Countries: The United Kingdom and the other member states of
the European Union as at the date hereof and Switzerland and Norway.
(Definition of "Permitted Contract").
1.7 The Client's maximum Terms of Payment are 60 Days from invoice date.
(Definition of "Terms of Payment" and Condition 10.2(i)).
1.8 The Business of the Client and the Subsidiaries is:
The supply, sale and distribution of computer and related equipment and
the provision of related services.
(Definition of Permitted Contract and Condition 20.1(viii)).
1.9 The prepayment in respect of each Scheduled Approved Debts shall be an
amount equal to 85% (eighty five per cent) of the Net Value of each
Scheduled Approved Debt. (Conditions 5.4(i) and (ii) and 5.6(i))
1.10 The Concentration Percentage shall be 20%.
(Definitions of "Concentration Percentage" and "Ineligible Debt").
1.11 The Funding Limit shall be (pound)30,000,000 (Thirty Million Pounds).
(Condition 5.6(i)(b)).
1.12 The Administration Fee shall be (pound)6,000 per month. (Condition 6.1
(i)).
1.13 The Discounting Charge shall be 1.25% ( one and one quarter per cent)
above the Base Rate of National Westminster Bank plc from time to time
in force.
(Condition 6.1 (ii)).
1.14 The Reporting Date shall be 15 days from month end.
(Condition 7.6)
1.15 The Recourse Period shall be 90 days from the Invoice Date.
(Condition 11.1(i))
PURPOSE
2. This Agreement is for the sale by the Client and the purchase by DFS of
those Debts to which this Agreement applies.
INCORPORATION OF CONDITIONS
3. This Agreement incorporates DFS' Standard Terms and Conditions for the
Purchase of Debts ("the Conditions") which have been supplied to the
Client and are signed for identification purposes on behalf of both
parties. Reference to the "Agreement" here and in the Conditions shall
include both this document and the Conditions. The terms set out in
this document and the Conditions are the only terms agreed between the
3
Client and DFS. Certain words and phrases with initial letters in
capitals have special meanings which are explained in Condition 1. In
the event of any inconsistency between this document and the
Conditions, the Conditions shall prevail.
SALE AND PURCHASE OF DEBTS
4. Subject to the terms of this Agreement, the Client agrees to sell and
DFS agrees to purchase all of the Debts to which this Agreement applies
and their Related Rights arising under Contracts of Sale entered into
by the Client with its Customers which shall be in existence on the
Commencement Date or which shall arise during the currency of this
Agreement.
THE PARTICULARS
5. The Particulars, which apply to this Agreement are those set out above.
The Conditions referred to in parentheses in the Particulars indicate
where, inter alia, such Particulars apply to the Conditions.
ABSENCE OF NOTICE OF ASSIGNMENT
6. Until notice from DFS to the Client, which notice may be given at any
time following a Termination Event for so long as the same is
continuing unremedied and unwaived, neither DFS nor the Client shall
give notice to Customers of the assignment of Debts. However, on
request by DFS, following a Termination Event for so long as the same
is continuing unremedied and unwaived (whether or not the Client's
agency referred to in Clause 7 below shall have been terminated) the
Client shall promptly give notice, in such form as DFS may reasonably
require, to all or any of its Customers of the assignment to DFS of the
Debts.
CLIENT TO ACT AS AGENT TO PROCURE COLLECTION OF DEBTS
7.1 Until further notice from DFS to the contrary, the Client is appointed
to act as the collection agent in respect of Debts vested in DFS. The
Client hereby accepts such appointment.
7.2 As DFS' collection agent the Client shall collect and attempt to
enforce payment of all sums due in respect of Debts as and when they
become due and administer the accounts of and render statements to
Customers at the Client's cost and expense, subject at all times to
DFS' right in its reasonable discretion to direct and control such
activities.
7.3 In performing the functions and duties as the collection agent of DFS,
the Client shall exercise the same care that the Client would exercise
in the collection of Debts for its own account, which standard of care
shall not be less than the standard of care prevalent in the industry
in which the Client engages.
7.4 DFS may request from time to time information relating to all Debts and
Client will promptly provide DFS with any information reasonably
requested. If DFS appoints
4
another person as the collection agent, DFS may make credit
adjustments for the Client's account.
7.5 In no event shall the Client knowingly take any action that would make
DFS a party to any litigation without DFS' express prior written
consent.
7.6 DFS may at any time following a Termination Event, for so long as the
same is continuing unremedied and unwaived, terminate the Client's
functions as the collection agent by delivery to the Client of a
written notice of such termination. Upon such termination, and without
limitation:
(i) DFS, or a third party designated by DFS, shall administer the
administrative, servicing and collection functions with
respect to Debts vested in DFS to the standard of a reasonable
and prudent purchaser of Debts, and
(ii) DFS shall, at any time thereafter, be entitled to notify
Customers to make payment of amounts due thereunder directly
to DFS at an address designated by DFS or to such third party
or a bank or other recipient as may be designated by DFS; and
(iii) The Client will pay all reasonable costs and expenses, legal
or otherwise, incurred or payable by DFS thereafter in
maintaining the Customers accounts or in exercising its rights
under Condition 17 in respect of Debts and of enforcing
Related Rights.
7.7 The Client will not hold itself out as DFS' agent for any other
purpose. The Client will not appoint any other person as agent for the
collection of Debts (including external debt collection agents or
lawyers) without DFS' prior approval, such approval not to be
unreasonably withheld or delayed provided that the Client shall be
entitled to appoint such an agent in circumstances where:-
(i) the aggregate indebtedness in respect of which all such agents
have been appointed is less than (pound)50,000; or
(ii) the Debt or Debts in question have been outstanding for 90
days or more after the relevant Invoice Date(s).
Whilst such agency subsists Conditions 17.1 to 17.3 inclusive will not
be enforced by DFS and Condition 17.5 will only be used without
referring to DFS by name.
ACCOUNTS
8. Until further notice from DFS, the Client will maintain accounts in the
names of each Customer to which Debts at their Scheduled value shall be
debited and their respective Collections shall be credited. The Client
will supply up to date copies of such accounts to DFS at any time upon
request. Each day the Client will send DFS a list showing all
Collections from Customers on that day. The Client will allocate such
Collections to the accounts of Customers.
5
POWER OF ATTORNEY
9.1 As security for the performance of the Client's obligations, the Client
irrevocably appoints DFS, its Directors, its Company Secretary and
every Manager of DFS jointly and each of them severally to be the
Client's attorney, both during and after termination of the Agreement
however occurring and until all monies due to DFS have been paid and
all obligations of the Client to DFS have been discharged. The power of
attorney granted pursuant to this Clause 9 shall only be used for the
purpose of perfecting DFS' title to any Debt or its Related Rights,to
obtain payment of Debts and to secure performance of any of the
Client's obligations under the Agreement or otherwise or to Customers.
9.2 By such irrevocable appointment DFS may at any time (but subject as
provided in clause 9.1):
(i) execute or sign deeds and documents (including assignments); (ii)
obtain payment of Debts; (iii) complete, deal with or endorse cheques
and other instruments and remittances; (iv) institute, conduct or
defend proceedings; (v) settle the Client's indebtedness to DFS or to
Customers;
(vi) perform such other lawful acts as DFS may in its reasonable
discretion consider necessary or expedient.
9.3 The Client irrevocably authorises DFS to allow any assignee of DFS to
perform any of the acts set out in Clause 9.2.
9.4 The Client agrees to ratify anything lawfully done by any attorney, or
agent under the powers set out above.
UNDERSTANDING
10. The Client acknowledges:
(i) having read and understood the Agreement; and
(ii) having had the opportunity before signing to take independent
legal advice as to the rights and obligations of the Client
and DFS under this Agreement.
ASSIGNMENT BY SUBSIDIARIES
11. It is acknowledged by the Client and DFS that each of the Client's
subsidiary companies listed below (each of which is called a
"Subsidiary") has assigned or has agreed to assign to the Client the
debts due and to become due by each such subsidiary's customers
together with their related rights ("Subsidiaries' Debts") and has
permitted to the Client to discount and assign such debts to DFS. In
consideration of the Client accounting for the net proceeds of them to
each Subsidiary, DFS
6
has agreed that Subsidiaries' Debts shall be sold by the Client and
purchased by DFS in accordance with the terms of this Agreement and its
conditions.
THE SUBSIDIARIES
Data Supplies Limited - Company Number 1645676
AMA (UK) Limited.. - Company Number 2419522
Portable Computers Limited - Company Number 2448018
Elcom Information Services Limited - Company Number 2834456
12. Accordingly this Agreement and its Conditions shall be treated as
having been amended mutatis mutandis. Without affecting the generality
of the foregoing. DFS will not keep separate accounts for each
Subsidiary and shall treat the Client as the only party to whom it has
any obligations.
CONDITIONS PRECEDENT
13. Prepayments will not be available until:
(i) Elcom International Inc and Catalink Direct Inc have each
entered into a collateralised guarantee with DFS in an agreed
form;
(ii) Elcom International Inc and Catalink Direct Inc have executed
and have delivered to DFS, UCC financing statements which
evidence DFS' security interest in the collateral set forth in
the collateralised guarantees referenced above in (i);
(iii) Each of the Subsidiaries and Elcom Holdings Limited, Prophet
Group Limited, Able Computer Distribution Limited, Portable
Computers Limited, DS Datacare Limited, Elite Computer
Distribution Limited, Rapid Recall Limited, and Elcom
Information Services Limited have given guarantees to DFS in
respect of the Client's obligations hereunder and passed and
carried into effect such resolutions in respect thereof as DFS
may reasonably require;
(iv) Each of the Subsidiaries and the Client have entered into
charges over non-vesting debts in DFS' favour;
(v) Each of the Subsidiaries have entered into an Agency Agreement with
the Client and DFS;
(vi) Trust Bank Accounts as specified by DFS have been opened.
To indicate their respective intentions to be bound by the terms of this
document it has been duly executed as a deed on behalf of DFS and the Client.
7
SIGNED and DELIVERED as a Deed on... )
behalf of ELCOM GROUP LIMITED )
)
on 3rd December 1997 )
)
by (insert full name of Director) )
)
Xxxxx X. Xxxxxxxx ) /s/ Xxxxx X. Xxxxxxxx
Director ) Signature of Director
)
and by (insert full name of )
(Company Secretary) )
)
Xxxxx Xxxxxxxx ) /s/ Xxxxx Xxxxxxxx
) Signature of Company Secretary
DEUTSCHE FINANCIAL SERVICES (UK) LTD.
SIGNED and DELIVERED as a Deed on )
behalf of DEUTSCHE FINANCIAL SERVICES )
(UK) LTD. on 3rd December 1997 )
by )
Full Names: Xxxxxxx Xxxxx ) /s/ Xxxxxxx Xxxxx
(Director) ) Signature of Director
and by )
Full Names: Xxxxx X. Xxxxxxx ) /s/ Xxxxx X. Xxxxxxx
(Company Secretary) ) Signature of Company Secretary
*Delete as applicable.
