SILICON VALLEY FINANCIAL SERVICES
A Division of Silicon Valley Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ - Fax (▇▇▇) ▇▇▇-▇▇▇▇
FACTORING AGREEMENT
This Factoring Agreement (the "Agreement") is made on this Thirteenth day
of June, 1995, by and between Silicon Valley Financial Services (a division
of Silicon Valley Bank) ("Buyer") having a place of business at the address
specified above and Data Dimensions, Inc., a Delaware corporation, ("Seller")
having its principal place of business and chief executive office at
Street Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇: ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇:
State: Washington
Zip code: 98004
Fax: 206/▇▇▇-▇▇▇▇
1. DEFINITIONS. When used herein, the following terms shall have the
following meanings.
1.1. "Account Balance" shall mean, on any given day, the gross amount of
all Purchased Receivables unpaid on that day.
1.2. "Account Debtor" shall have the meaning set forth in the California
Uniform Commercial Code and shall include any person liable on any Purchased
Receivable, including without limitation, any guarantor of the Purchased
Receivable and any issuer of a letter of credit or banker's acceptance.
1.3. "Adjustments" shall mean all discounts, allowances, returns, disputes,
counterclaims, offsets, defenses, rights of recoupment, rights of return,
warranty claims, or short payments, asserted by or on behalf of any Account
Debtor with respect to any Purchased Receivable.
1.4. "Administrative Fee" shall have the meaning as set forth in Section
3.3 hereof.
1.5. "Advance" shall have the meaning set forth in Section 2.2 hereof.
1.6. "Collateral" shall have the meaning set forth in Section 8 hereof.
1.7. "Collections" shall mean all good funds received by Buyer from or on
behalf of an Account Debtor with respect to Purchased Receivables.
1.8. "Compliance Certificate" shall mean a certificate, in a form provided
by Buyer to Seller, which contains the certification of the chief financial
officer of Seller that, among other things, the representations and
warranties set forth in this Agreement are true and correct as of the date
such certificate is delivered.
1.9. "Event of Default" shall have the meaning set forth in Section 9
hereof.
1.10. "Finance Charges" shall have the meaning set forth in Section 3.2
hereof.
1.11. "Invoice Transmittal" shall mean a writing signed by an authorized
representative of Seller which accurately identifies the receivables which
Buyer, at its election, may purchase, and includes for each such receivable
the correct amount owed by the Account Debtor, the name and address of the
Account Debtor, the invoice number, the invoice date and the account code.
1.12. "Obligations" shall mean all advances, financial accommodations,
liabilities, obligations, covenants and duties owing, arising, due or payable
by Seller to Buyer of any kind or nature, present or future, arising under or
in connection with this Agreement or under any other document, instrument or
agreement, whether or not evidenced by any note, guarantee or other
instrument, whether arising on account or by overdraft, whether direct or
indirect (including those acquired by assignment) absolute or contingent,
primary or secondary, due or to become due, now owing or hereafter arising,
and however acquired; including, without limitation, all Advances, Finance
Charges, Administrative Fees, interest, Repurchase Amounts, fees, expenses,
professional fees and attorneys' fees and any other sums chargeable to Seller
hereunder or otherwise.
1.13. "Purchased Receivables" shall mean all those accounts, receivables,
chattel paper, instruments, contract rights, documents, general intangibles,
letter of credit, drafts, bankers acceptances, and right to payment, and all
proceeds thereof (all of the foregoing being referred to as "receivables"),
arising out of the invoices and other agreements identified on or delivered
with any Invoice Transmittal delivered by Seller to Buyer which Buyer elects
to purchase and for which Buyer makes an Advance.
1.14. "Refund" shall have the meaning set forth in Section 3.5 hereof.
1.15. "Reserve" shall have the meaning set forth in Section 2.4 hereof.
1.16. "Repurchase Amount" shall have the meaning set forth in Section 4.2
hereof.
1.17. "Reconciliation Date" shall mean the last calendar day of each
Reconciliation Period.
1.18. "Reconciliation Period" shall mean each calendar month of every year.
2. PURCHASE AND SALE OF RECEIVABLES.
2.1. OFFER TO SELL RECEIVABLES. During the term hereof, and provided that
there does not then exist any Event of Default or any event that with notice,
lapse of time or otherwise would constitute an Event of Default, Seller may
request that Buyer purchase receivables and Buyer may, in its sole discretion,
elect to purchase receivables. Seller shall deliver to Buyer an invoice
Transmittal with respect to any receivable for which a request for purchase
is made. An authorized representative of Seller shall sign each Invoice
Transmittal delivered to Buyer. Buyer shall be entitled to rely on all the
information provided by Seller to Buyer on or with the Invoice Transmittal
and to rely on the signature on any Invoice Transmittal as an authorized
signature of Seller.
2.2. ACCEPTANCE OF RECEIVABLES. Buyer shall have no obligation to purchase
any receivable listed on an Invoice Transmittal. Buyer may exercise its sole
discretion in approving the credit of each Account Debtor before buying any
receivable. Upon acceptance by Buyer of all or any of the receivables
described on any Invoice Transmittal, Buyer shall pay to Seller 90.0(%)
percent of the face amount of each receivable Buyer desires to purchase. Such
payment shall be the "Advance" with respect to such receivable. Buyer may,
from time to time, in its sole discretion, change the percentage of the
Advance. Upon Buyer's acceptance of the receivable and payment to Seller of
the Advance, the receivable shall become a "Purchased Receivable." It shall
be a condition to each Advance that (i) all of the representations and
warranties set forth in Section 6 of this Agreement be true and correct on
and as of the date of the related Invoice Transmittal and on and as of the
date of such Advance as though made at and as of each such date, and (ii) no
Event of Default or any event or condition that with notice, lapse of time or
otherwise would constitute an Event of Default shall have occurred and be
continuing, or would result from such Advance. Notwithstanding the foregoing,
in no event shall the aggregate amount of all Purchased Receivables
outstanding at any time exceed One Million Two Hundred Fifty Thousand and
No/100 **** Dollars (1,250,000).
Page 1 of 6
2.3. EFFECTIVENESS OF SALE TO BUYER. Effective upon Buyer's payment of an
Advance, and for and in consideration therefor and in consideration of the
covenants of this Agreement, Seller hereby absolutely sells, transfers and
assigns to Buyer, all of Seller's right, title and interest in and to each
Purchased Receivable and all monies due or which may become due on or with
respect to such Purchased Receivable. Buyer shall be the absolute owner of
each Purchased Receivable. Buyer shall have, with respect to any goods
related to the Purchased Receivable, all the rights and remedies of an unpaid
seller under the California Uniform Commercial Code and other applicable law,
including the rights of replevin, claim and delivery, reclamation and
stoppage in transit.
2.4. ESTABLISHMENT OF A RESERVE. Upon the purchase by Buyer of each
Purchased Receivable, Buyer shall establish a reserve. The reserve shall be
the amount by which the face amount of the Purchased Receivable exceeds the
Advance on that Purchased Receivable (the "Reserve"); provided, the Reserve
with respect to all Purchased Receivables outstanding at any one time shall
be an amount not less than 10.0(%) percent of the Account Balance at that
time and may be set at a higher percentage at Buyer's sole discretion. The
reserve shall be a book balance maintained on the records of Buyer and shall
not be a segregated fund.
3. COLLECTIONS, CHARGES AND REMITTANCES.
3.1. COLLECTIONS. Upon receipt by Buyer of Collections, Buyer shall
promptly credit such Collections to Seller's Account Balance on a daily
basis; provided, that if Seller is in default under this Agreement, Buyer
shall apply all Collections to Seller's Obligations hereunder in such order
and manner as Buyer may determine. If an item of collection is not honored or
Buyer does not receive good funds for any reason, the amount shall be
included in the Account Balance as if the Collections had not been received
and Finance Charges under Section 3.2 accrue thereon.
3.2. FINANCE CHARGES. On each Reconciliation Date Seller shall pay to
Buyer a finance charge in an amount equal to 2.0(%) percent per month of the
average daily Account Balance outstanding during the applicable
Reconciliation Period (the "Finance Charges"). Buyer shall deduct the accrued
Finance Charges from the Reserve as set forth in Section 3.5 below. *SEE
ADDENDUM TO FACTORING AGREEMENT.
3.3. ADMINISTRATIVE FEE. On each Reconciliation Date Seller shall pay to
Buyer an Administrative Fee equal to 0(%) percent of the face amount of each
Purchased Receivable first purchased during that Reconciliation Period (the
"Administrative Fee"). Buyer shall deduct the Administrative Fee from the
Reserve as set forth in Section 3.5 below.
3.4 ACCOUNTING. Buyer shall prepare and send to Seller after the close of
business for each Reconciliation Period, an accounting of the transactions
for that Reconciliation Period, including the amount of all Purchased
Receivables, all Collections, Adjustments, Finance Charges, and the
Administrative Fee. The accounting shall be deemed correct and conclusive
unless Seller makes written objection to Buyer within thirty (30) days after
the Buyer mails the accounting to Seller.
3.5. REFUND TO SELLER. Provided that there does not then exist an Event of
Default or any event or condition that with notice, lapse of time or
otherwise would constitute an Event of Default, Buyer shall refund to Seller
by check after the Reconciliation Date, the amount, if any, which Buyer owes
to Seller at the end of the Reconciliation Period according to the accounting
prepared by Buyer for that Reconciliation Period (the "Refund"). The Refund
shall be an amount equal to:
(A)(1) The Reserve as of the beginning of that Reconciliation Period,
plus
(2) Reserve created for each Purchased Receivable purchased during
that Reconciliation Period, minus
(B) The Total for that Reconciliation Period of:
(1) the Administrative Fee;
(2) Finance Charges;
(3) Adjustments;
(4) Repurchase Amounts, to the extent Buyer has agreed to accept
payment thereof by deduction from the Refund;
(5) the Reserve for the Account Balance as of the first day of the
following Reconciliation Period in the minimum percentage set
forth in Section 2.4 hereof; and
(6) all amounts due, including professional fees and expenses, as
set forth in Section 12 for which oral or written demand has been made by
Buyer to Seller during that Reconciliation Period to the extent Buyer has
agreed to accept payment by deduction from the refund.
In the event the formula set forth in this Section 3.5 results in an amount
due to Buyer from Seller, Seller shall make such payment in the same manner
as set forth in Section 4.3 hereof for repurchases. If the formula set forth
in this Section 3.5 results in an amount due to Seller from Buyer, Buyer
shall make such payment by check, subject to Buyer's rights under Section 4.3
and Buyers's rights of offset and recoupment.
4. RECOURSE AND REPURCHASE OBLIGATIONS.
4.1. RECOURSE. Buyer's acquisition of Purchased Receivables from Seller
shall be with full recourse against Seller. In the event the Obligations
exceed the amount of Purchased Receivables and Collateral, Seller shall be
liable for any deficiency.
4.2. SELLER'S AGREEMENT TO REPURCHASE. Seller agrees to pay to Buyer on
demand, the full face amount, or any unpaid portion, of any Purchased
Receivable:
(A) which remains unpaid ninety (90) calendar days after the invoice
date; or
(B) which is owed by any Account Debtor who has filed, or has had
filed against it, any bankruptcy case, assignment for the benefit of
creditors, receivership, or insolvency proceeding or who has become
insolvent (as defined in the United States Bankruptcy Code) or who
is generally not paying its debts as such debts become due; or
(C) with respect to which there has been any breach of warranty or
representation set forth in Section 6 hereof or any breach of any
covenant contained in this Agreement; or
(D) with respect to which the Account Debtor asserts any discount,
allowance, return, dispute, counterclaim, offset, defense, right of
recoupment, right of return, warranty claim, or short payment;
together with all reasonable attorneys' and professional fees and expenses
and all court costs incurred by Buyer in collecting such Purchased Receivable
and/or enforcing its rights under, or collecting amounts owed by Seller in
connection with, this Agreement (collectively, the "Repurchase Amount").
4.3. SELLER'S PAYMENT OF THE REPURCHASE AMOUNT OR OTHER AMOUNTS DUE BUYER.
When any Repurchase Amount or other amount owing to Buyer becomes due, Buyer
shall inform Seller of the manner of payment which may be any one or more of
the following in Buyer's sole discretion: (a) in cash immediately upon
demand therefor; (b) by delivery of substitute invoices and an Invoice
Transmittal acceptable to Buyer which shall thereupon become Purchased
Receivables; (c) by adjustment to the Reserve pursuant to Section 3.5 hereof;
(d) by deduction from or offset against the Refund that would otherwise be due
Page 2 of 6
and payable to Seller; (e) by deduction from or offset against the amount
that otherwise would be forwarded to Seller in respect of any further
Advances that may be made by Buyer; or (f) by any combination of the
foregoing as Buyer may from time to time choose.
4.4. SELLER'S AGREEMENT TO REPURCHASE ALL PURCHASED RECEIVABLES. Upon and
after the occurrence of an Event of Default, Seller shall, upon Buyer's
demand (or, in the case of an Event of Default under Section 9(B),
immediately without notice or demand from Buyer) repurchase all the Purchased
Receivables then outstanding, or such portion thereof as Buyer may demand.
Such demand may, at Buyer's option, include and Seller shall pay to Buyer
immediately upon demand, cash in an amount equal to the Advance with respect
to each Purchased Receivable then outstanding together with all accrued
Finance Charges. Adjustments, Administrative Fees, attorneys' and
professional fees, court costs and expenses as provided for herein, and any
other Obligations. Upon receipt of payment in full of the Obligations, Buyer
shall immediately instruct Account Debtors to pay Seller directly, and return
to Seller any Refund due to Seller. For the purpose of calculating any Refund
due under this Section only, the Reconciliation Date shall be deemed to be
the date Buyer receives payment in good funds of all the Obligations as
provided in this Section 4.4.
5. POWER OF ATTORNEY. Seller does hereby irrevocably appoint Buyer and its
successors and assigns as Seller's true and lawful attorney in fact, and
hereby authorizes Buyer, regardless of whether there has been an Event of
Default, (a) to sell, assign, transfer, pledge, compromise, or discharge the
whole or any part of the Purchased Receivables; (b) to demand, collect,
receive, ▇▇▇, and give releases to any Account Debtor for the monies due or
which may become due upon or with respect to the Purchased Receivables and to
compromise, prosecute, or defend any action, claim, case or proceeding
relating to the Purchased Receivables, including the filing of a claim or the
voting of such claims in any bankruptcy case, all in Buyer's name or
Seller's name, as Buyer may choose; (c) to prepare, file and sign Seller's
name on any notice, claim, assignment, demand, draft, or notice of or
satisfaction of lien or mechanics' lien or similar document with respect to
Purchased Receivables; (d) to notify all Account Debtors with respect to the
Purchased Receivables to pay Buyer directly; (e) to receive, open, and dispose
of all mail addressed to Seller for the purpose of collecting the Purchased
Receivables; (f) to endorse Seller's name an any checks or other forms of
payment on the Purchased Receivables; (g) to execute on behalf of Seller any
and all instruments, documents, financing statements and the like to perfect
Buyer's interests in the Purchased Receivables and Collateral; and (h) to do
all acts and things necessary or expedient, in furtherance of any such
purposes. If Buyers receives a check or item which is payment for both a
Purchased Receivable and another receivable, the funds shall first be applied
to the Purchased Receivable and, so long as there does not exist an Event of
Default or an event that with notice, lapse of time or otherwise would
constitute an Event of Default, the excess shall be remitted to Seller. Upon
the occurrence and continuation of an Event of Default, all of the power of
attorney rights granted by Seller to Buyer hereunder shall be applicable with
respect to all Purchased Receivables and all Collateral.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
6.1. RECEIVABLES' WARRANTIES, REPRESENTATIONS AND COVENANTS. To induce
Buyer to buy receivables and to render its services to Seller, and with full
knowledge that the truth and accuracy of the following are being relied upon
by the Buyer in determining whether to accept receivables as Purchased
Receivables, Seller represents, warrants, covenants and agrees, with respect
to each Invoice Transmittal delivered to Buyer and each receivable described
therein, that:
(A) Seller is the absolute owner of each receivable set forth in the
Invoice Transmittal and has full legal right to sell, transfer and
assign such receivables;
(B) The correct amount of each receivable is as set forth in the
Invoice Transmittal and is not in dispute;
(C) The payment of each receivable is not contingent upon the
fulfillment of any obligation or contract, past or future and any and
all obligations required of the Seller have been fulfilled as of the
date of the Invoice Transmittal;
(D) Each receivable set forth on the Invoice Transmittal is based on an
actual sale and delivery of goods and/or services actually rendered, is
presently due and owing to Seller, is not past due or in default, has
not been previously sold, assigned, transferred, or pledged, and is
free of any and all liens, security interests and encumbrances other
than liens, security interests or encumbrances in favor of Buyer or any
other division or affiliate of Silicon Valley Bank;
(E) There are no defenses, offsets, or counterclaims against any of the
receivables, and no agreement has been made under which the Account
Debtor may claim any deduction or discount, except as otherwise stated
in the Invoice Transmittal;
(F) Each Purchased Receivable shall be the property of the Buyer and
shall be collected by Buyer, but if for any reason it should be paid to
Seller, Seller shall promptly notify Buyer of such payment, shall hold
any checks, drafts, or monies so received in trust for the benefit of
Buyer, and shall promptly transfer and deliver the same to the Buyer;
(G) Buyer shall have the right of endorsement, and also the right to
require endorsement by Seller, on all payments received in connection
with each Purchased Receivable and any proceeds of Collateral;
(H) Seller, and to Seller's best knowledge, each Account Debtor set
forth in the Invoice Transmittal, are and shall remain solvent as that
term in defined in the United States Bankruptcy Code and the California
Uniform Commercial Code, and no such Account Debtor has filed or had
filed against it a voluntary or involuntary petition for relief under
the United States Bankruptcy Code;
(I) Each Account Debtor named on the Invoice Transmittal will not
object to the payment for, or the quality or the quantity of the subject
matter of, the receivable and is liable for the amount set forth on the
Invoice Transmittal;
(J) Each Account Debtor shall promptly be notified, after acceptance by
Buyer, that the Purchased Receivable has been transferred to and is
payable to Buyer, and Seller shall not take or permit any action to
countermand such notification; and
(K) All receivables forwarded to and accepted by Buyer after the date
hereof, and thereby becoming Purchased Receivables, shall comply with
each and every one of the foregoing representations, warranties,
covenants and agreements referred to above in this Section 6.1.
6.2. ADDITIONAL WARRANTIES, REPRESENTATIONS AND COVENANTS. In addition to
the foregoing warranties, representations and covenants, to induce Buyer to
buy receivables and to render its services to Seller, Seller hereby
represents, warrants, covenants and agrees that:
(A) Seller will not assign, transfer, sell, or grant, or permit any
lien or security interest in any Purchased Receivables or Collateral to
or in favor of any other party, without Buyer's prior written consent;
(B) The Seller's name, form of organization, chief executive office,
and the place where the records concerning all Purchased Receivables and
Collateral are kept is set forth at the beginning of this Agreement,
Collateral is located only at the location set forth in the beginning
of this
Agreement, or, if located at any addition location, as set forth on a
schedule attached to this Agreement, and Seller will give Buyer at least
thirty (30) days prior written notice if such name, organization, chief
executive office or other locations of Collateral or records concerning
Purchased Receivables or
Collateral is changed or added and shall execute any documents necessary
to perfect Buyer's interest in the Purchased Receivables and the
Collateral;
(C) Seller shall (i) pay all of its normal gross payroll for employees,
and all federal and state taxes, as and when due, including without
limitation all payroll and withholding taxes and state sales taxes; (ii)
deliver at any time and from
Page 3 of 6
time to time at Buyer's request, evidence satisfactory to Buyer that
all such amounts have been paid to the proper taxing authorities; and
(iii) if requested by Buyer, pay its payroll and related taxes through
a bank or an independent payroll service acceptable to buyer.
(D) Seller has not, as of the ▇▇▇▇ ▇▇▇▇▇▇ delivers to Buyer an Invoice
Transmittal, or as of the ▇▇▇▇ ▇▇▇▇▇▇ accepts any Advance from Buyer,
filed a voluntary petition for relief under the United States
Bankruptcy Code or had filed against it an involuntary petition for
relief;
(E) If Seller owns, holds or has any interest in, any copyrights
(whether registered, or unregistered), patents or trademarks, and
licenses of any of the foregoing, such interest has been disclosed to
Buyer and is specifically listed and identified on a schedule to this
Agreement, and Seller shall immediately notify Buyer if Seller hereafter
obtains any interest in any additional copyrights, patents, trademarks or
licenses that are significant in value or are material to the conduct of
its business; and
(F) Seller shall provide buyer with a Compliance Certificate (i) on a
quarterly basis to be received by Buyer no later than the fifth calendar
day following each calendar quarter, and; (ii) on a more frequent or
other basis if and as requested by Buyer.
7. ADJUSTMENTS. In the event of a breach of any of the representations,
warranties, or covenants set forth in Section 6.1, or in the event any
Adjustment or dispute is asserted buy any Account Debtor, Seller shall
promptly advise Buyer and shall, subject to the Buyer's approval, resolve
such disputes and advise Buyer of any adjustments. Unless the disputed
Purchased Receivable is repurchased by Seller and the full Repurchase Amount
is paid, Buyer shall remain the absolute owner of any Purchased Receivable
which is subject to Adjustment or repurchase under Section 4.2 hereof, and
any rejected, returned, or recovered personal property, with the right to
take possession thereof at any time. If such possession is not taken by
Buyer, Seller is to resell it for Buyer's account at Seller's expense with
the proceeds made payable to Buyer. While Seller retains possession of said
returned goods, Seller shall segregate said goods and ▇▇▇▇ them "property of
Silicon Valley Financial Services."
8. SECURITY INTEREST. To secure the prompt payment and performance to Buyer
of all of the Obligations, Seller hereby grants to Buyer a continuing lien
upon and security interest in all of seller's now existing or hereafter
arising rights and interest in the following, whether now owned or existing
or hereafter created, acquired, or arising, and wherever located
(collectively, the "Collateral"):
(A) All accounts, receivables, contract rights, chattel paper,
instruments, documents, letters of credit, bankers acceptances, drafts,
checks, cash, securities, and general intangibles (including, without
limitation, all claims, causes of action, deposit accounts, guaranties,
rights in and claims under insurance policies (including rights to
premium refunds), rights to tax refunds, copyrights, patents, trademarks,
rights in and under license agreements, and all other intellectual
property);
(B) All inventory, including Seller's rights to any returned or rejected
goods, with respect to which Buyer shall have all the rights of any
unpaid seller, including the rights of replevin, claim and delivery,
reclamation, and stopage in transit;
(C) All monies, refunds and other amounts due Seller, including, without
limitation, amounts due Seller under this Agreement (including Seller's
right of offset and recoupment);
(D) All equipment, machinery, furniture, furnishings, fixtures, tools,
supplies and motor vehicles;
(E) All farm products, crops, timber, minerals and the like (including
oil and gas);
(F) All accessions to, substitutions for, and replacements of, all of
the foregoing;
(G) All books and records pertaining to all of the foregoing; and
(H) All proceeds of the foregoing, whether due to voluntary or
involuntary disposition, including insurance proceeds.
Seller is not authorized to sell, assign, transfer or otherwise convey
any collateral without Buyer's prior written consent, except for the sale of
finished inventory in the Seller's usual course of business. Seller agrees to
sign UCC financing statements, in a form acceptable to Buyer, and any other
instruments and documents requested by Buyer to evidence, perfect, or protect
the interests of Buyer in the collateral. Seller agrees to deliver to Buyer
the originals of all instruments, chattel paper and documents evidencing or
related to Purchased Receivables and Collateral.
9. DEFAULT. The occurrence of any one or more of the following shall
constitute an Event of Default hereunder.
(A) Seller fails to pay any amount owed to Buyer as and when due;
(B) There shall be commenced by or against Seller any voluntary or
involuntary case under the United States Bankruptcy Code, or any
assignment for the benefit of creditors, or appointment of a receiver
or custodian for any of its assets;
(C) Seller shall become insolvent in that its debts are greater than the
fair value of its assets, or Seller is generally not paying its debts as
they become due or is left with unreasonably small capital;
(D) Any involuntary lien, garnishment, attachment or the like is issued
against or attaches to the Purchased Receivables or any Collateral;
(E) Seller shall breach any covenant, agreement, warranty, or
representation set forth herein, and the same is not cured by Buyer's
satisfaction within ten (10) days after Buyer has given Seller oral or
written notice thereof; provided, that if such breach is incapable of
being cured it shall constitute an immediate default hereunder;
(F) seller is not in compliance with, or otherwise is in default under,
any term of any document, instrument or agreement evidencing a debt,
obligation or liability of any kind or character of Seller, now or
hereafter existing, in favor of Buyer or any division or affiliate of
Silcon Valley Bank, regardless of whether such debt, obligation or
liability is direct or indirect, primary or secondary, joint, several or
joint and several, or fixed or contingent, together with any and all
renewals and extensions of such debts, obligations and liabilities, or
any part thereof;
(G) An event of default shall occur under any guaranty executed by any
guarantor of the Obligations of Seller to Buyer under this Agreement, or
any material provision of any such guaranty shall for any reason cease to
be valid or enforceable or any such guaranty shall be repudiated or
terminated, including by operation of law;
(H) A default or event of default shall occur under any agreement
between Seller and any creditor of Seller that has entered into a
subordination agreement with Buyer; or
(I) Any creditor that has entered into a subordination agreement with
Buyer shall breach any of the terms of or not comply with such
subordination agreement.
10. REMEDIES UPON DEFAULT. Upon the occurrence of an Event of Default, (1)
without implying any obligation to buy receivables, Buyer may cease buying
receivables or extending any financial accommodations to Seller; (2) all or a
portion of the Obligations shall be, at the option of and upon demand by
Buyer, or with respect to an Event of Default described in Section 9(B),
automatically and without notice or demand, due and payable in full; and (3)
Buyer shall have and may exercise all the rights and remedies under this
Agreement and under applicable law, including the rights and remedies of a
secured party under the California Uniform Commercial Code, all the power of
attorney rights described in Section 5 with respect to all Collateral, and
the right to collect, dispose of, sell, lease, use, and realize upon all
Purchased Receivables and all Collateral in any commercial reasonable manner.
Seller and Buyer agree that any notice of sale required to be given to Seller
shall be deemed to be reasonable if given five (5) days prior to the date on
or after which the sale may be held. In the event that the Obligations are
accelerated hereunder, Seller shall repurchase all of the Purchased
Receivables as set forth in Section 4.4.
Page 4 of 6
11. ACCRUAL OF INTEREST. If any amount owed by Seller hereunder is not
paid when due, including, without limitation, amounts due under Section 3.5,
Repurchase Amounts, amounts due under Section 12, and any other Obligations,
such amounts shall bear interest at a per annum rate equal to the per annum
rate of the Finance Charges until the earlier of (i) payments in good funds or
(ii) entry of a final thereof, at which time the principal amount of any money
judgment remaining unsatisfied shall accrue interest at the highest rate allowed
by applicable law.
12. FEES, COSTS AND EXPENSES; INDEMNIFICATION. The Seller will pay to Buyer
immediately upon demand all fees, costs and expenses (including fees of
attorneys and professionals and their costs and expenses) that Buyer incurs
or may from time to time impose in connection with any of the following: (a)
preparing, negotiating, administering, and enforcing this Agreement or any
other agreement executed in connection herewith, including any amendments,
waivers or consents in connection with any of the foregoing, (b) any
litigation or dispute (whether instituted by Buyer, Seller or any other
person) in any way relating to the Purchased Receivables, the Collateral,
this Agreement or any other agreement executed in connection herewith or
therewith, (d) enforcing any rights against Seller or any guarantor, or any
Account Debtor, (e) protecting or enforcing its interest in the Purchased
Receivables or the Collateral, (f) collecting the Purchased Receivables and
the Obligations, and (g) the representation of Buyer in connection with
any bankruptcy case or insolvency proceeding involving Seller, any Purchased
Receivable, the Collateral, any Account Debtor, or any guarantor. Seller
shall indemnify and hold Buyer harmless from and against any and all claims,
actions, damages, costs, expenses, and liabilities of any nature whatsoever
arising in connection with any of the foregoing.
13. SEVERABILITY, WAIVER, AND CHOICE OF LAW. In the event that any provision
of this Agreement is deemed invalid by reason of law, this Agreement will be
construed as not containing such provision and the remainder of the Agreement
shall remain in full force and effect. Buyer retains all of its rights,
even if it makes an Advance after a default. If Buyer waives a default, it
may enforce a later default. Any consent or waiver under, or amendment of,
this Agreement must be in writing. Nothing contained herein, or any action
taken or not taken by Buyer at any time, shall be construed at any time to be
indicative of any obligation or willingness on the part of Buyer to amend
this Agreement or to grant to Seller any waivers or consents. This Agreement
has been transmitted by Seller to Buyer at Buyer's office in the State of
California and has been executed and accepted by Buyer in the State of
California. This Agreement shall be governed by and interpreted in accordance
with the internal laws of the State of California.
14. ACCOUNT COLLECTION SERVICES. Certain Account Debtors may
require or prefer that all of Seller's receivables be paid to the same
address and/or party, or Seller and Buyer may agree that all receivables with
respect to certain Account Debtors be paid to one party. In such event Buyer
and Seller may agree that Buyer shall collect all receivables whether owned
by Seller or Buyer and (provided that there does not then exist an Event of
Default or event that with notice, lapse or time or otherwise would
constitute an Event of Default, and subject to Buyer's rights in the
Collateral) Buyer agrees to remit to Seller the amount of the
receivables collections it receives with respect to receivables other than
Purchased Receivables. It is understood and agreed by Seller that this
Section does not impose any affirmative duty on Buyer to do any act other
than to turn over such amounts. All such receivables and collections are
Collateral and in the event of Seller's default hereunder, Buyer shall have
no duty to remit collections of Collateral and may apply such collections to
the obligations hereunder and Buyer shall have the rights of a secured party
under the California Uniform Commercial Code.
15. NOTICES. All notices shall be given to Buyer and Seller at the
addresses or faxes set forth on the first page of this Agreement and shall be
deemed to have been delivered and received: (a) if mailed, three (3) calendar
days after deposited in the United States mail, first class, postage
pre-paid, (b) one (1) calendar day after deposit with an overnight mail or
messenger service; or (c) on the same date of confirmed transmission if sent
by hand delivery, telecopy, telefax or telex.
16. JURY TRIAL. SELLER AND BUYER EACH HEREBY (a) WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL ON ANY CLAIM OR ACTION ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT, ANY RELATED AGREEMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY; (b) RECOGNIZE AND AGREE THAT THE FOREGOING
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT;
AND (c) REPRESENT AND WARRANT THAT IT HAS REVIEWED THIS WAIVER, HAS
DETERMINED FOR ITSELF THE NECESSITY TO REVIEW THE SAME WITH ITS LEGAL
COUNSEL, AND KNOWINGLY AND VOLUNTARILY WAIVES ALL RIGHTS TO A JURY TRIAL.
17. TERM AND TERMINATION. The term of this Agreement shall be for one (1)
year from the date hereof, and from year to year thereafter unless terminated
in writing by Buyer or Seller. Seller and Buyer shall each have the right to
terminate this Agreement at any time. Notwithstanding the foregoing, any
termination of this Agreement shall not affect Buyer's security interest in
the Collateral and Buyer's ownership of the Purchased Receivables, and this
Agreement shall continue to be effective, and Buyer's rights and remedies
hereunder shall survive such termination, until all transactions entered into
and Obligations incurred hereunder or in connection herewith have been
completed and satisfied in full.
18. TITLES AND SECTION HEADINGS. The titles and section headings used
herein are for convenience only and shall not be used in interpreting this
Agreement.
19. OTHER AGREEMENTS. The terms and provisions of this Agreement shall not
adversely affect the rights of Buyer or any other division or affiliate of
Silicon Valley Bank under any other document, instrument or agreement. The
terms of such other documents, instruments and agreements shall remain in
full force and effect notwithstanding the execution of this Agreement. In the
event of a conflict between any provision of this Agreement and any provision
of any other document, instrument or agreement between Seller on the one
hand, and Buyer or any other division or affiliate of Silicon Valley Bank on
the other hand, Buyer shall determine in its sole discretion which provision
shall apply. Seller acknowledges specifically that any security agreements,
liens and/or security interests currently securing payment of any obligations
of Seller owing to Buyer or any other division or affiliate of Silicon
Valley Bank also secure Seller's obligations under this Agreement, and are
valid and subsisting and are not adversely affected by execution of this
Agreement. Seller further acknowledges that (a) any collateral under other
outstanding security agreements or other documents between Seller and Buyer
or any other division or affiliate of Silicon Valley Bank secures the
obligations of Seller under this Agreement and (b) a default by Seller under
this Agreement constitutes a default under other outstanding agreements
between Seller and Buyer or any other division or affiliate of Silicon Valley
Bank.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement on the
day and year above written.
SELLER: DATA DIMENSIONS, INC.
By /s/ [add signature]
--------------------------------
Title Executive VP/CFO
--------------------------------
[add name]
BUYER: SILICON VALLEY FINANCIAL SERVICES
A division of Silicon Valley Bank
By
------------------------------------
Title
----------------------------------
ADDENDUM TO FACTORING AGREEMENT
This Addendum to Factoring Agreement (the "Addendum") is dated as of
June 13, 1995, by and between Silicon Valley Financial Services, a division
of Silicon Valley Bank ("Buyer") and Data Dimensions, Inc. ("Seller"),
and supplements and amends that certain Factoring Agreement dated
concurrently herewith between Buyer and Seller (the "Factoring Agreement").
Now, THEREFORE, in consideration of the foregoing and for other valuable
consideration the receipt and sufficiency of which is hereby acknowledged,
Buyer and Seller hereby agree as follows:
1. The following is added as additional phrase under Subsection 3.2 of the
Financial Charges:
"Buyer shall reduce the Finance Charge by a quarter of a percent (.25%)
to 1.75% on the average daily balance per month, if and when Seller reduces
the Accounts Receivable turnover rate to below 45 days for three (3)
consecutive months. Said turnover rate will be as computed by Buyer's
automated accounting system"
2. This Addendum is incorporated into the Factoring Agreement and made part of
the Factoring Agreement. Except as set forth in this Addendum, the Factoring
Agreement remains unchanged and in full force and effect.
IN WITNESS WHEREOF, Seller and Buyer have executed this Addendum on the
day and year written above.
"Seller"
Data Dimensions, Inc.
By: /s/ [add signature]
-----------------------------------
Title: Executive VP/CFO
[add name]
"Buyer"
Silicon Valley Financial Services,
a division of Silicon Valley Bank
By:
----------------------------------
Title:
-------------------------------