RECEIVABLE SALES AGREEMENT Dated as of October 24, 2008 between General DataComm, Inc., having an office at and Howard S. Modlin, having an office at
EXHIBIT
99.1
Dated as
of October 24, 2008
between
General
DataComm, Inc., having an office at
▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, as Seller
and
▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, having an office at
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, as Buyer
WHEREAS,
Seller desires to sell to Buyer certain Receivables owned from time to time by
Seller and Buyer is willing to purchase Receivables on the terms and conditions
contained herein;
NOW,
THEREFORE in consideration of the premises and the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
I
Purchase
of Receivables
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Section
1.1
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Purchase of
Receivables.
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(a) Effective
on the date hereof, in consideration of the Purchase Price and upon the terms
and conditions contained herein, Seller hereby sells, assigns, transfers and
otherwise conveys to Buyer, without recourse except as specifically provided
herein, and Buyer does hereby purchase from Seller all of Seller’s right, title
and interest in the initial Receivables listed in Schedule 1(a).
(b) From
time to time, on each business day on which such sale takes place, Seller will
sell, assign, transfer and otherwise convey and Buyer will purchase all of
Seller’s right, title and interest in and to the additional Receivables listed
on documents in the form of Schedule 1(b). Nothing herein shall obligate Buyer
to purchase any particular receivable or any minimum amount of additional
Receivables.
(c) It
is the intention of the parties hereto that each sale of Receivables made
hereunder shall constitute a “sale of accounts” (as such term is used in Article
9 of the UCC), which sale is absolute and irrevocable and shall provide Buyer
with the full benefits of ownership of the Receivables and the associated
Related Security. Each sale of Receivables hereunder is made without
recourse to Seller; provided, however, that (i) Seller shall be liable to Buyer
for all representations, warranties, covenants and indemnities made by Seller
pursuant to the terms of the Transaction Documents to which Seller is a party
and breaches thereof, and (ii) such sale does not constitute and is not intended
to result in an assumption by Buyer of any obligations of Seller or any other
Person arising in connection with the Receivables, the related contracts or
Invoices and/or other Related Security or any other obligations of
sale. In view of the intention of the parties hereto that the
acquisitions of Receivables made hereunder shall constitute outright sales of
such Receivables rather than loans secured thereby, Seller agrees that it will,
on or prior to the Applicable Closing Date, ▇▇▇▇ its master data
processing records relating to its Receivables with the legend required by
Section 3.1(c) hereof. Upon the request of Buyer Seller authorizes
Buyer and its attorneys to execute and file such financing or continuation
statements, or amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate to perfect and
maintain the perfection of Buyer’s ownership interest in the Receivables and the
Related Security or as Buyer may reasonably request. Seller acknowledges Buyer
may utilize Seller’s attorneys to prepare and file such
documents.
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Section
1.2.
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Payment for the
Purchases.
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The
Purchase Price for each purchase of Initial Receivables and Related Security
from Seller shall be payable in full by Buyer to Seller by delivery of
immediately available funds by Seller at a price of 97.5 % of the net
amount of such Receivable.
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Section
1.3.
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Purchase Price
Credit.
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If on any
day, Seller is deemed to have received a Deemed Collection with respect to any
Receivable sold by it to Buyer hereunder, then, in such event, Buyer shall be
entitled to a credit (each, a “Purchase Price Credit”) against the Purchase
Price otherwise payable to Seller hereunder in an amount equal to such Deemed
Collection.
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Section
1.4.
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Payments and
Computations, Etc.
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All
amounts to be paid or deposited by Buyer hereunder, shall be paid or deposited
in accordance with the terms hereof on the day when due in immediately available
funds to the account of Seller. In the event that any payment owed by
Buyer or Seller hereunder becomes due on a day that is not a Business Day, then
such payment shall be made on the next succeeding Business Day. If
Seller fails to pay any amount hereunder due Buyer under Section 4.1(i) when
due, Seller agrees to pay, on demand, interest on the past due amount at the
Default Rate until paid in full; provided, however, that such interest shall not
at any time exceed the maximum rate permitted by applicable law.
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Section
1.5.
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Transfer of
Records.
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(a) In
connection with the sales of Receivables hereunder, Seller hereby sells,
transfers, assigns and otherwise conveys to Buyer all of Seller’s right, title,
and interest in the Records relating to all Receivables sold by Seller
hereunder, without the need for any further documentation in connection with any
sale. In connection with such transfer, Seller hereby grants to Buyer
an irrevocable, non-exclusive license to use, without royalty or payment of any
kind, all software used by Seller to account for its Receivables, to the extent
necessary to administer such Receivables, whether such software is owned by
Seller or is owned by others and used by such Seller under license agreements
with respect thereto, provided that should the consent of any licensor of Seller
to such grant of the license described herein be required, Seller agrees that
upon the request of Buyer, Seller will use its reasonable efforts to obtain the
consent of such third-party licensor. The license granted hereby
shall be irrevocable, and shall terminate on the date on which all Aggregate
Unpaids under this Receivables Sales Agreement have been paid in
full.
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(b) Seller
(i) shall take such action requested by Buyer from time to time hereunder, that
may be necessary or reasonably appropriate to ensure that Buyer has an
enforceable right (whether by license or sublicense or otherwise) to
use all of the computer software used to account for such Receivables and/or to
recreate such Records.
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Section
1.6.
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Characterization;
Granting Clause.
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If,
notwithstanding the intention of the parties expressed in Section 1.1(c), any
sale to Buyer of Receivables hereunder shall be characterized as a secured loan
and not as a sale, then this Agreement shall be deemed to constitute a security
agreement under the UCC and other applicable law. For this purpose
and without being in derogation of the parties’ intention that such sale of
Receivables hereunder shall constitute a true sale thereof. Seller hereby grants
to Buyer a duly perfected security interest in all of Seller’s right, title and
interest in, to and under all of Seller’s Receivables now existing and hereafter
arising sold hereunder, and in all Related Security with respect thereto, which
security interest shall be prior to all other Adverse Claims
thereto. As long as Seller shall be in material default of its
covenants and agreements herein, Buyer shall have as against Seller, in addition
to the rights and remedies which it may have under this Agreement, all other
rights and remedies provided to a secured creditor after default under the UCC
and other applicable law, which rights and remedies shall be
cumulative.
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ARTICLE
II
Representations
and Warranties
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Section
2.1.
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Representations of
Seller.
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In order
to induce Buyer to enter into this Agreement and to make purchases hereunder,
Seller makes the following representations and warranties, as of the date of
each sale by it hereunder:
(a) Existence and
Power. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of
Delaware. Seller is duly qualified to do business and is in good
standing as a foreign corporation and has and holds all organizational power and
all governmental licenses, authorizations, consents and approvals required to
carry on its business in each jurisdiction in which its business is conducted
except where the failure to so qualify or so hold could not reasonably be
expected to have a Material Adverse Effect.
(b) Power and Authority; Due
Authorization, Execution and Delivery. The execution and
delivery by Seller of this Agreement and each other Transaction Document, and
the performance of its obligations hereunder and thereunder, and Seller’s use of
the proceeds of purchases made hereunder, are within its corporate powers and
authority and have been duly authorized by all necessary corporate action on its
part. This Agreement and each other Transaction Document has been
duly executed and delivered by Seller.
(c) No
Conflict. The execution and delivery by Seller of this
Agreement and each other Transaction Document and the performance of its
obligations hereunder and thereunder do not contravene or violate (i) its
certificate of incorporation or by-laws (ii) any law, rule or regulation
applicable to it, (iii) any restrictions under (a) any agreement, contract or
instrument to which it is a party or by which it or any of its property is
bound, or (iv) any order, writ, judgment, award, injunction or decree binding on
or affecting it or its property, and do not result in the creation or imposition
of any Adverse Claim on assets of Seller (other than as created under the
Transaction Documents) except, in any case, where such contravention or
violation could not reasonably be expected to have a Material Adverse Effect,
and no transaction contemplated hereby requires compliance with any bulk sales
act or similar law.
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(d) Governmental
Authorization. Other than the filing of the financing
statements required hereunder, no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution and delivery by Seller of this Agreement and
each other Transaction Document to which it is a party and the performance of
its obligations hereunder and thereunder.
(e) Actions,
Suits. Except as disclosed in Seller’s reports on SEC Form
10-K or 10-Q, there are no actions, suits or proceedings pending, or to the best
of Seller’s knowledge, threatened, against or affecting Seller or any of its
properties, in or before any court, arbitrator or other body, that could be
reasonably expected to have a Material Adverse Effect. Seller is not
in default with respect to any order of any court, arbitrator or governmental
body.
(f)
Binding
Effect. This Agreement and each other Transaction Document
constitutes the legal, valid and binding obligation of Seller enforceable
against Seller in accordance with their respective terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization
or other similar laws relating to or limiting creditors’ rights generally and by
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
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(g) Accuracy of
Information. All information heretofore furnished by Seller to
Buyer for purposes of or in connection with this Agreement, any of the other
Transaction Documents or any transaction contemplated hereby or thereby is, and
all such information hereafter furnished by Seller to Buyer will be, true and
accurate in every material respect on the date such information is stated or
certified and does not and will not contain any material misstatement of fact or
omit to state a material fact or any fact necessary to make the statements
contained therein not misleading.
(h) Use of
Proceeds. No proceeds of any purchase hereunder will be used
(i) for a purpose that violates, or would be inconsistent with, Regulation T, U
or X promulgated by the Board of Governors of the Federal Reserve System from
time to time or (ii) to acquire any security in any transaction which is subject
to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as
amended.
(i)
Good
Title. Immediately prior to each purchase hereunder, Seller
shall be the legal and beneficial owner of the Receivables and Related Security
with respect thereto, free and clear of any Adverse Claim, except as created by
the Transaction Documents.
(j)
Perfection. This
Agreement, together with the filing of the financing statements contemplated
hereby, is effective to, and shall, upon each purchase hereunder, transfer to
Buyer (and Buyer shall acquire from Seller), a valid and perfected first
priority ownership interest in each Receivable originated by Seller, whether now
existing or hereafter arising, and in the Related Security and Collections with
respect thereto, free and clear of any Adverse Claim except as created by the
Transaction Documents. There have been delivered to the Seller in
form suitable for filing all financing statements or other similar instruments
or documents necessary under the UCC (or any comparable law) of all appropriate
jurisdiction, to perfect Buyer ownership interest in each Receivable, its
Collections and the Related Security.
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(k) Places of Business and
Locations of Records. The principal place of business and
chief executive office of Seller and the office where it keeps all of its
Records is located at ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
(l)
Collections. The
conditions and requirements set forth in Section 4.1(i) have at all times since
the Effective Date been satisfied and duly performed.
(m) Material Adverse
Effect. Since September 30, 2008 except as disclosed in Form
8-K dated October 3, 2008, no event has occurred that would have a Material
Adverse Effect on (i) the ability of Seller to perform its obligations under
this Agreement, or (ii) the collectibility of the Receivables originated by
Seller generally or any material portion of such Receivables.
(n) Compliance with
Law. Seller has complied in all respects with all applicable
laws, rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject, except where the failure to so comply could
not reasonably be expected to have a Material Adverse Effect. Seller represents
and warrants that each Receivable originated by it, together with the Contract
and Invoice related thereto, does not contravene any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and regulations
relating to truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy), and no part of
such contract or Invoice is in violation of any such law, rule or regulation,
except where such contravention or violation could not reasonably be expected to
have a Material Adverse Effect.
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(o) Accounting. The
manner in which Seller accounts for the transactions contemplated by this
Agreement does not jeopardize the true sale analysis.
(p) Enforceability of
Invoices. Each Invoice with respect to each Receivable
originated by Seller is effective to create, and has created, a legal, valid and
binding obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder (subject to adjustment, to the extent provided
therein) and any accrued interest thereon, enforceable against the Obligor in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or limiting creditors’ rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
(q) Accounts. Each
Receivable originated by Seller is an “account” under and as defined in the UCC
of all applicable jurisdictions.
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Section
2.2
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Knowledge of
Buyer
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In
connection with the representations of Seller set forth in Section 2.1 above,
Buyer acknowledges he is the Chief Executive Officer of Seller and as such
familiar with its business and operations. Nevertheless Buyer is
relying on the employees of Seller to provide Seller with the information on
which such representations are based.
ARTICLE
III
Conditions
of Purchases
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Section
3.1.
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Conditions Precedent
to Initial Purchase.
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The
Initial purchase from Seller hereunder is subject to the condition precedent
that Buyer shall have received in form and substance satisfactory to Buyer the
following:
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(a) Copies
of the proper financing statements (Form UCC-1) naming Seller as the debtor or
seller, Buyer as the purchaser or secured party, in each case, describing in
reasonable detail the Receivables and the Related Security to be sold by Seller
to Buyer pursuant to this Agreement or other similar instruments or documents,
as may be necessary under the UCC of all appropriate jurisdictions or any
comparable law of all appropriate jurisdictions to perfect Buyer’s ownership
interest in such Receivables and Related Security.
(b) Evidence
(i) of the execution and delivery by each of the parties thereto of each of the
other Transaction Documents to be executed and delivered in connection herewith
and (ii) that each of the conditions precedent to the execution, delivery and
effectiveness of such other Transaction Documents has been satisfied to Buyer’s
satisfaction.
(c) A
certificate from an officer of Seller to the effect that Seller has placed on
its most recent, and have taken all steps reasonably necessary to ensure that
there shall be placed on subsequent, master ledger (including computerized
records) the following legend:
“THE
RECEIVABLES DESCRIBED HEREIN, TOGETHER WITH CERTAIN RELATED SECURITY, HAVE BEEN
SOLD, ARE NO LONGER OWNED BY GENERAL DATACOMM, INC., AND ARE SUBJECT TO A
SECURITY INTEREST IN FAVOR OF ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
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Section
3.2.
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Conditions Precedent
to All Purchases.
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Each
purchase shall be subject to the further conditions precedent that:
(a) Buyer
shall have received such other approvals, opinions or documents as it may
reasonably request; and
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(b) on
the date of such purchase, each of the representations and warranties of Seller
set forth in Article II hereof are true and correct in all material respects on
and as of the date of such purchase (and after giving effect thereto) as though
made on and as of such date.
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Section
3.3.
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Reaffirmation of
Representations and
Warranties.
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Seller by
accepting the Purchase Price related to each purchase of such Receivables and
Related Security, shall be deemed to have certified that the representations and
warranties of Seller contained in Article II are true and correct on and as of
the date of such purchase, with the same effect as though made on and as of such
day, and that each of the applicable conditions precedent set forth in this
Article III has been satisfied as of the date of such purchase.
ARTICLE
IV
Covenants
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Section
4.1.
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Affirmative
Covenants.
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Until the
date on which this Agreement terminates in accordance with its
terms:
(a) Reporting. From
time to time upon request of Buyer, Seller will provide Buyer with such
available information as Buyer may request.
(b) Notices. Seller
will notify Buyer in writing of any of the following promptly upon learning of
the occurrence thereof, describing the same and, if applicable, the steps being
taken with respect thereto:
(i) Judgment
and Proceedings. The entry of any judgment or decree against Seller
if the aggregate amount of all judgments and decrees then outstanding against
Seller exceeds $10,000 after deducting the amount with respect to which they are
insured.
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(ii) The
occurrence of any Material Adverse Effect or any condition reasonably likely to
result in a Material Adverse Effect.
(iii) The
occurrence of a default or event of default under any (x) financing arrangement
or (y) contract with any customer subject to an assigned
Receivable.
(c) Compliance with Laws and
Preservation of Corporate Existence. Seller will comply in all
respects with all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except where the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect. Seller will preserve and maintain its corporation existence,
rights, franchises and privileges in the jurisdiction of its incorporation, and
qualify and remain qualified in good standing as a foreign corporation in each
jurisdiction where its business is conducted, except where the failure to so
preserve and maintain or qualify could not reasonably be expected to have a
Material Adverse Effect.
(d) Audits. Seller
will furnish to Buyer from time to time such information with respect to it and
the Receivables sold by it as Buyer may reasonably request. Seller
will, from time to time during regular business hours as requested by Buyer upon
reasonable notice and at the sole cost of Seller, permit Buyer (i) to examine
and make copies of and abstracts from all Records of Seller in the possession or
under the control relating to the Receivables originated by it and the
associated collections and Related Security, including, without limitation, the
related Invoices, and (ii) to visit the offices and properties of Seller for the
purpose of examining such materials described in clause (i) above, and to
discuss matters relating to such Receivables and the associated Collections and
Related Security or Seller’s (a) performance under any of the Transaction
Documents to which it is a party or any Person’s performance under the Invoices
evidencing any Receivables and, in each case, with any of the officers or
employees having knowledge of such matters.
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(e) Keeping and Marking of
Records and Books.
(i) Seller
will maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Receivables
originated by it in the event of the destruction of the originals thereof), and
keep and maintain all documents, books, records and other information reasonably
necessary or advisable for the collection of all such Receivables (including,
without limitation, records adequate to permit the immediate identification of
each new Receivable originated by it and all Collections of and adjustments to
each such existing Receivable).
(ii) Seller
will on or prior to the date hereof, ▇▇▇▇ its master data processing records and
other books and records relating to the Receivables with the legend required by
Section 3.1(c) hereof.
(f)
Compliance with
Contracts, Invoices and Credit and Collection Policy. Seller
will timely and fully (i) perform and comply with all material provisions,
covenants and other promises required to be observed by it under the Contracts
and Invoices related to the Receivables originated by it, and (ii) comply in all
material respects with the Credit and Collection Policy in regard to each such
Receivable and the related Invoice.
(g) Ownership. Seller
will take all necessary action to (i) vest legal and equitable title to the
Receivables originated by it and the associated Related Security and Collections
irrevocably in Buyer, free and clear of any Adverse Claims other than Adverse
Claims arising under the Transaction Documents (including, without limitation,
the filing of all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect Buyer’s interests in such Receivables, Related Security and
Collections and such other action to perfect, protect or more fully evidence the
interest of Buyer as Buyer may reasonably request, and (ii) establish and
maintain, in favor of Buyer, a valid and perfected first priority ownership
interest (and/or a valid and perfected first priority security interest) in all
such Receivables, Related Security and Collections to the full extent
contemplated herein, free and clear of any Adverse Claims other than Adverse
Claims arising under the Transaction Documents (including, without limitation,
the filing of all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect Buyer’s interest in such Receivables, Related Security and
Collections and such other action to perfect, protect or more fully evidence the
interests of Buyer as Buyer (or its assigns) may reasonably
request.
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(h) Not
used.
(i)
Collections. Seller
shall direct all Obligors to make payments of such Receivables either directly
(i) to a bank account or (ii) if feasible to a Lock Box under the control of
Buyer. To the extent any Obligor makes payment to Seller, Seller
further agrees to hold such payments in trust and to immediately remit any
Collections (including any security deposits applied to the Outstanding Balance
of any Receivable) that it receives to Buyer.
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Section
4.2.
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Negative
Covenants.
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Until the
date on which this Agreement terminates in accordance with its terms, Seller
shall not:
(a) Name Change, Offices and
Records. Change its name, identity or organizational structure
(within the meaning of Section 9-402(7) of any applicable enactment of the UCC)
or relocate its chief executive office or any office where Records are kept
unless it shall have: (i) given Buyer at least thirty (30) days’
prior written notice thereof and (ii) delivered to Buyer (or its assigns) all
financing statements, instruments and other documents requested by
Buyer (or its assigns) in connection with such change or
relocation.
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(b) Change in Payment
Instructions to Obligors. Make any change in the instructions
to Obligors regarding payments to be made to any bank account or Lock-Box ,
unless Buyer shall have received, at least ten (10) days before the proposed
effective date thereof, (i) written notice of such addition, termination or
change and (ii) with respect to the addition of a bank account, or Lock-Box, an
executed Agreement with respect to the new account
or Lock-Box.
(c) Modifications to
Invoices: Extend, amend or otherwise modify the terms of any
Receivable or any Invoice related thereto except as approved in writing by
Buyer.
(d) Sales,
Liens. Except pursuant to the Transaction Documents, sell,
assign (by operation of law or otherwise) or otherwise dispose of, or grant any
option with respect to, or create or suffer to exist any Adverse Claim upon
(including, without limitation, the filing of any financing statement) or with
respect to, any Receivable originated by it or the associated Collections and
other Related Security, or upon or with respect to any Invoice under which any
such Receivable arises, and will defend the right, title and interest of Buyer
in, to and under any of the foregoing property, against all claims of third
parties claiming through or under Seller.
(e) Mergers, Consolidations and
Acquisitions. Liquidate or dissolve, consolidate with, or
merge into or with, any other Person without the consent of Buyer and if such
merger could reasonably be expected to have a Material Adverse Effect or to
result in a material adverse change in the nature or characteristics of
outstanding Receivables taken as a whole, provided that, in connection with any
consolidation or merger (regardless of whether Buyer and its assigns’ consent is
required pursuant hereto):
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(A) Buyer
receives prior written notice of such consolidation or merger, and the successor
or surviving entity (if not Seller) unconditionally assumes Seller’s obligations
under the Transaction Documents to which it is a party immediately prior to
giving effect to such consolidation or merger.
(B)
all UCC financing statements necessary to maintain the validity and perfection
of Buyer’s ownership interests in the Receivables and Related Security acquired
or to be acquired from such survivor under this Agreement have been duly
executed and filed in all necessary jurisdictions, and
(C) if
the surviving entity in such transaction(s) is not Seller under this Agreement,
all other documents required to be delivered in connection with a Joinder
Agreement hereunder have been duly executed and delivered substantially
contemporaneously with such transaction(s).
(D) Receivables
Not to be Evidenced by Promissory Notes. Take any action to cause or
permit any Receivable generated by it to become evidenced by any “instrument”
(as defined in the applicable UCC), except in connection with the collection of
overdue Receivables, provided that the original of any such instrument is
delivered to Buyer for immediate delivery to its assignees, duly
endorsed.
(E) Accounting
for Purchases. Account for the transactions contemplated hereby in
any manner other than as a sale by Seller of Receivables and the associated
Collections and Related Security.
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ARTICLE
V
(Not
Used)
ARTICLE
VI
Additional
Rights and Obligations in
Respect
of the Receivables
Section
6.1. Rights of
Buyer. Seller hereby authorizes Buyer or its respective
designees and assigns to take any and all steps in Seller’s name, necessary or
desirable, in Buyer’s determination, to collect all amounts due under any and
all Receivables originated by Seller, including, without limitation, endorsing
Seller’s name on checks and other instruments representing Collections and
enforcing such Receivables, the Invoices and the provisions of the related
Contracts and Related Security that concerns payment and/or enforcement of
rights to payment.
Section
6.2. Responsibilities of
Seller. Anything herein to the contrary
notwithstanding:
(a) Performance Under
Contracts. Seller shall remain responsible for performing its
obligations hereunder and under the Contracts and Invoices, and the exercise by
Buyer or its designees or assigns of their rights hereunder shall not relieve
Seller from such obligations.
(b) Power of
Attorney. Seller hereby grants to Buyer an irrevocable power
of attorney, with full power of substitution, coupled with an interest, to take
in the name of Seller, all steps necessary or advisable to endorse, negotiate or
otherwise realize on any writing or other right of any kind held or transmitted
by Seller or transmitted or received by Buyer (whether or not from Seller) in
connection with any Receivables generated by Seller.
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Section
6.3. Further Action Evidencing
Purchases. Seller agrees that from time to time, at its
expense, it will promptly execute and deliver all further instruments and
documents, and take all further action that Buyer may reasonably request in
order to perfect, protect or more fully evidence Buyer’s ownership of the
Receivables generated by Seller (and the Related Security) purchased by Buyer
hereunder, or to enable Buyer to exercise or enforce any of its rights hereunder
or under any other Transaction Document. Without limiting the
generality of the foregoing, upon the request of Buyer, Seller
will:
(a) authorize
Buyer to execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate; and
(b) ▇▇▇▇
its master ledger with the legend set forth in Section 3.1(c).
Seller
hereby authorizes Buyer or its designees or assigns to file one or more
financing or continuation statements, and amendments thereto and assignment
thereof, relative to all or any of the Receivables (and the related Security)
now existing or hereafter sold. If Seller fails to perform any of its
agreements or obligations under this Agreement, Buyer or its designee may (but
shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the expenses of Buyer or its designee incurred in
connection therewith shall be payable by Seller.
Section
6.4. Application of
Collections. Except as otherwise specified by such Obligor or
required by the underlying Contract or Invoice or applicable law, any payment by
an Obligor in respect of any indebtedness owed by it to Seller or to Buyer shall
be applied first, as a Collection of any Receivable or Receivables then
outstanding of such Obligor in the order of the age of such Receivables,
starting with the oldest of such Receivables (unless another reasonable basis
for allocation of such payments to the Receivables of such Obligor exists), and
second, to any other indebtedness of such Obligor.
18
ARTICLE
VII
Indemnification
Section
7.1. Indemnities by the
Seller. Without limiting any other rights that Buyer may have
hereunder or under applicable law, Seller hereby agrees to indemnify (and pay
upon demand to) Buyer, and its assigns, officers, managers, directors, agents
and employees (each an “Indemnified Party”) from and against any and all
damages, losses, claims, taxes, liabilities, costs, expenses and for all other
amounts payable, including reasonable attorneys’ fees (which attorneys may be
employees of any Indemnified Party) and disbursements (all of the foregoing
being collectively referred to as “Indemnified Amounts”) awarded against or
incurred by any of them arising out of or as a result of this Agreement or the
acquisition, either directly or indirectly, by Buyer of a Receivable, excluding,
however, in all of the foregoing instances:
(a) Indemnified
Amounts to the extent a final judgment of a court of competent jurisdiction
holds that such Indemnified Amounts resulted from gross negligence or willful
misconduct on the part of the Indemnified Party seeking
indemnification;
(b) Indemnified
Amounts to the extent the same includes losses in respect of Receivables that
are uncollectible on account of the insolvency, bankruptcy or lack of
creditworthiness of the related Obligor; or
(c) taxes
imposed by the jurisdiction in which such Indemnified Party’s principal
executive office is located, on or measured by the overall net income of such
Indemnified Party to the extent that the computation of such taxes is consistent
with the characterization for income tax purposes of the acquisition by Buyer of
the Receivables as a true sale to Buyer of such receivables and
Related Security.
19
Notwithstanding
the foregoing, Indemnification shall include losses in Receivables resulting
from
(i) representation
or warranty made by Seller (or by its officers) under or in connection with this
Agreement, any other Transaction Document to which Seller is a party or any
other information or report delivered by such person pursuant hereto or thereto,
which shall have been false or incorrect when made or deemed made;
(ii) the
failure by Seller to comply with any applicable law, rule or regulation with
respect to any Receivable originated by it, or any Contract or Invoice related
thereto, or the nonconformity of any such Receivable, Contract or Invoice with
any such applicable law, rule or regulation or any failure of Seller to keep or
perform any of its obligations, express or implied, with respect to any such
contract or Invoice;
(iii) any
failure of Seller to perform its duties, covenants or other obligations in
accordance with the provisions of this Agreement or any other Transaction
Document to which it is a party;
(iv) any
products liability, personal injury or damage suit, or other similar claim
arising out of or in connection with goods that are the subject of any contract
or Invoice or any Receivable originated by Seller;
(v)
any dispute, claim, offset or defense (other than discharge in bankruptcy of the
Obligor) of the Obligor to the payment of any Receivable originated by Seller
(including, without limitation, a defense based on such Receivable or the
related Contract or Invoice not being a legal, valid and binding obligation of
such Obligor enforceable against it in accordance with its terms), or any other
claim resulting from the sale of goods related to such Receivable or the
furnishing or failure to furnish such goods;
20
(vi) the
commingling of Collections of such Receivables at any time with other
funds;
(vii) any
investigation, litigation or proceeding related to or arising from this
Agreement or any other Transaction Document to which Seller is a party, the
transactions contemplated hereby, the use by Seller of the proceeds of any
purchase from it hereunder or any other investigation, litigation or proceeding
relating to Seller in which any Indemnified Party becomes involved as a result
of any of the transactions contemplated hereby;
(viii) any
inability to litigate any claim against any Obligor in respect of any such
Receivable as a result of such Obligor being immune from civil and commercial
law and suit on the grounds of sovereignty or otherwise from any legal action,
suit or proceeding;
(ix) (A)
failure of Seller generally to pay its debts as such debts become due or
admission by Seller in writing of its inability to pay its debts generally or
any making by Seller of a general assignment for the benefit of creditors; or
(B) the institution of any proceeding by or against Seller seeking to adjudicate
it bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or any substantial part of
its property, or (C) the taking by Seller of any corporate action to authorize
any of the actions set forth in clauses (A) or (B) above in this clause
(ix);
21
(x) any
failure to vest and maintain vested in Buyer (subject to the Transaction
Document), or to transfer to Buyer, legal and equitable title to, and ownership
of, a first priority perfected ownership interest in the Receivables originated
by Seller and the associated Related Security and Collections, free and clear of
any Adverse Claim (except as created by the Transaction Documents);
and
(xi) the
failure to have filed, or any delay in filing, financing statements or other
similar instruments or documents under the UCC of any applicable jurisdiction or
other applicable laws with respect to any such Receivable, the Related Security
and Collections with respect thereto, and the proceeds of any thereof, whether
at the time of sale to Buyer or at any subsequent time.
|
Section
7.2.
|
Costs, Expenses and
Taxes.
|
In
addition to the obligations of Seller under Section 7.1, Seller agrees to pay on
demand:
(a) all
reasonable costs and expenses, including attorney’s fees, in connection with the
enforcement against Seller of this Agreement and the other Transaction Documents
executed by Seller; and
(b) all
stamp duties and other similar filing or recording taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing and
recording of this Agreement or the other Transaction Documents executed by
Seller, and Seller agrees to indemnify Indemnified Parties against any
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees.
22
ARTICLE
VIII
Miscellaneous
Section
8.1. Waivers and
Amendments. The provisions of this Agreement may from time to
time be amended, restated, otherwise modified or waived, if such amendment,
modification or waiver is in writing and consented to by Buyer. No
failure or delay on the part of Buyer, or any third party beneficiary in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other power or
right. No notice to or demand on any party hereto, in any case shall
entitle it to any notice or demand in similar or other
circumstances. No waiver or approval by Buyer or its assigns under
this Agreement shall, except as may otherwise be stated in such waiver or
approval, be applicable to subsequent transactions. No waiver or
approval under this Agreement shall require any similar or dissimilar waiver or
approval thereafter to be granted hereunder.
Section
8.2. Notices,
etc. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by express
mail or courier or by certified mail, postage-prepaid, or by facsimile to the
intended party at its address set forth above, or, in each of the foregoing
cases, at such other address or facsimile number as shall be designated by such
party in a written notice to the other parties hereto. All such
notices and communications shall be effective, (i) if personally delivered or
sent by express mail or courier or if sent by certified mail, when received, and
(ii) if transmitted by facsimile, when sent, receipt confirmed by telephone or
electronic means.
23
Section
8.3. Cumulative
Remedies. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section
8.4. Binding Effect;
Assignability. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns; provided, however, that Seller may not assign its rights hereunder or
any interest herein without the prior written consent of Buyer. This
Agreement shall create and constitute continuing obligations of the parties
hereto in accordance with its terms, and shall remain in full force and effect
until the date which all Aggregate Unpaids under the Receivables Purchase
Agreement have been paid in full. The rights and remedies with
respect to any breach of any representation and warranty made by Seller pursuant
to Article II and the indemnification and payment provisions of Article VII
shall be continuing and shall survive any termination of this
Agreement.
Section
8.5. (Not
Used).
Section
8.6. Submission to
Jurisdiction. EACH PARTY HERETO HEREBY IRREVOCABLY (a) SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY CONNECTICUT STATE OR UNITED STATES
FEDERAL COURT SITTING IN STAMFORD, CONNECTICUT, OVER ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT; (b) AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH COURT; (c) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING; (d) CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH
PERSON AT ITS ADDRESS SPECIFIED IN SECTION 8.2; AND (e) TO THE EXTENT ALLOWED BY
LAW, AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS SECTION 8.6
SHALL AFFECT BUYER’S RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO BRING ANY ACTION OR PROCEEDING AGAINST SELLER OR ITS PROPERTY IN
THE COURTS OF ANOTHER JURISDICTION.
24
Section
8.7. Waiver of Jury
Trial. EACH PARTY HERETO EXPRESSLY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR UNDER ANY AMENDMENT, INSTRUMENT,
JOINDER AGREEMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED
BY IT OR ON ITS BEHALF IN CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
Section
8.9. Captions and Cross
Reference; Incorporation by Reference. The various
captions in this Agreement are included for convenience only and
shall not affect the meaning or interpretation of any provision of this
Agreement. References in this Agreement to any underscored Section or
Exhibit are to such Section or Exhibit of this Agreement, as the case may
be. The Exhibits hereto are hereby incorporated by reference into and
made a part of this Agreement.
25
Section
8.10. Execution in
Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
<signature
pages follow>
26
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and
delivered as of the date first above written.
|
GENERAL
DATACOMM, INC.
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
Vice
President
|
||
|
▇▇▇▇▇▇
▇.
▇▇▇▇▇▇
|
|||
27
EXHIBIT
A
DEFINITIONS
A.
Incorporation of Receivable Sales Agreement
Definitions. Unless otherwise defined herein, terms that are
capitalized and used throughout this Agreement are used as defined in the
Receivable Sales Agreement (hereinafter defined).
B.
Certain Defined Terms. The following terms have the respective
meanings indicated hereinbelow:
“Additional
Receivables” shall mean, with respect to Seller, all Receivables arising after
the close of Seller’s business on the Initial Closing Date and sold to Buyer
hereunder.
“Adverse
Claim” means any claim of a third party with respect to right, title or interest
in a Receivable.
“Agreement”
means this Receivables Sale Agreement, as it may be amended or modified and in
effect from time to time in accordance with the terms hereof.
“Aggregate
Unpaids” means the aggregate of all amounts owing under Receivables and
Additional Receivables.
“Business
Day” means any day which is not a Saturday or Sunday or other day on which
national banks are authorized or required to close.
“Buyer”
has the meaning specified in the preamble of this Agreement.
“Collection
Policy” means Seller’s policy in effect from time to time on collection of
outstanding invoices.
“Collections”
shall mean receipt of payment.
“Contract”
means the agreement pursuant to which Seller sold equipment, goods and/or
services giving rise to the Receivable.
“Deemed
Collections” shall mean the aggregate of all amounts Seller shall have been
deemed to have received as a Collection of a Receivable sold by
it. Seller shall be deemed to have received a Collection (but only to
the extent of the reduction or cancellation identified below) of a Receivable
sold by it if at any time (i) the Outstanding Balance of any such Receivable is
either (x) reduced as a result of any defective or rejected goods, any discount
or any adjustment or otherwise by such Seller (other than cash Collections on
account of the Receivables) or (y) reduced or canceled as a result of a setoff
in respect of any claim by any Person (whether such claim arises out of the same
or a related transaction or an unrelated transaction) or (ii) any of the
representations or warranties in Article II were not true with respect to such
Receivable at the time of its sale hereunder.
28
“Default
Rate” means the sum of the Prime Rate plus 2.0% per annum (computed for actual
days elapsed on the basis of a year consisting of 365, or when appropriate, 366
days).
“Initial
Receivables” means all Receivables that were sold on Initial Closing
Date.
“Invoice”
means Seller’s ▇▇▇▇ or statement with respect to Receivables.
“Material
Adverse Effect” means with respect to Seller, a material adverse effect on (i)
the ability of Seller to perform its obligations under this Agreement, (ii) the
legality, validity or enforceability of this Agreement or any other Transaction
Document to which Seller is a party, (iii) Buyer’s ownership interest in the
Receivables generally or in any significant portion of the Receivables, the
Related Security or the Collections with respect thereto, in each case, relating
to Receivables sold by Seller hereunder, or (iv) the collectibility of the
Receivables generally or of any material portion of the Receivables, in each
case, relating to Receivables sold by Seller hereunder.
“Obligor”
means a person or entity liable for the payment of a Receivable whether as the
primary purchaser from Seller or as guarantor or otherwise by law.
“Outstanding
Balance” means the net amount owed on a Receivable.
“Person”
means any natural person or entity, irrespective of whether it is a legal
entity.
“Purchase
Price” means, with respect to any purchase of Receivables and their Related
Security on any date, the aggregate price to be paid therefor by
Buyer.
“Purchase
Price Credit” has the meaning set forth in Section 1.3 hereof.
“Receivables”
shall mean all Initial Receivables and Additional Receivables sold to Buyer
hereunder.
“Record”
shall mean any information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable
form.
“Related
Security” means, with respect to any Receivable:
(i) all
of the Seller’s interest in the inventory and goods (including returned or
repossessed inventory or goods), if any, the sale, financing or lease of which
by Seller gave rise to such Receivable, and all insurance contracts with respect
thereto.
(ii) all
other security interests or liens and property subject thereto from time to
time, if any, purporting to secure payment of such Receivable, whether pursuant
to the Contract or Invoice related to such Receivable or otherwise, together
with all financing statements and security agreements describing any collateral
securing such Receivable.
29
(iii) all
guaranties, letters of credit, insurance and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract or Invoice related to such
Receivable or otherwise.
(iv)
all Records related to such Receivable, and
(v)
all proceeds of any of the foregoing;
provided,
however, that in no event shall “Related Security” include any right, duty or
obligation of Buyer under any Contract other than the right to receive payments
thereunder (and any collateral for, guaranty of or letter of credit, surety bond
or other credit support for any such payment right).
“Seller”
has the meaning specified in the preamble of this Agreement.
“Transaction
Documents” mean this Agreement and any assignment of a Receivable in form of
Schedule 1(b) or otherwise.
30
Schedule
1A
Receivable
Sale
10/24/2008
|
Customer
Name
|
GDC Invoice #
|
Date
of Invoice
|
Amount
of Invoice
|
||||
|
Verizon
|
80372ADV
|
10/23/2008
|
$
|
19,921.09 | |||
|
Indyne
|
484502
|
10/23/2008
|
$
|
13,308.02 | |||
|
ChoiceCom
|
484501
|
10/23/2008
|
$
|
1,561.13 | |||
|
Verizon
|
484500
|
10/23/2008
|
$
|
2,955.00
|
|||
|
NEC
Philips
|
484489
|
10/17/2008
|
$
|
15,080.64 | |||
|
NEC
Philips
|
484490
|
10/17/2008
|
$
|
4,975.36 | |||
|
ChoiceCom
|
484491
|
10/21/2008
|
$
|
7,191.60 | |||
|
Globecom
Systems
|
484492
|
10/22/2008
|
$
|
125.08 | |||
|
Indyne
|
484494
|
10/22/2008
|
$
|
40,441.83 | |||
|
Anixter
|
484495
|
10/22/2008
|
$
|
18,804.00 | |||
|
Verizon
|
484496
|
10/22/2008
|
$
|
652.00 | |||
|
Verizon
|
484497
|
10/22/2008
|
$
|
1,304.00 | |||
|
Verizon
|
484498
|
10/22/2008
|
$
|
2,550.00 | |||
|
NEC
Philips
|
FI701373
|
9/24/2008
|
$
|
21,630.68 | |||
|
City
of LA
|
FI701375
|
9/25/2008
|
$
|
35,991.00 | |||
|
City
of LA
|
FI701376
|
9/25/2008
|
$
|
12,911.26 | |||
|
ATT
|
FI701383
|
10/3/2008
|
$
|
1,529.00 | |||
|
ATT
|
FI701384
|
10/3/2008
|
$
|
1,269.00 | |||
|
ATT
|
FI701385
|
10/8/2005
|
$
|
4,995.00 | |||
|
First
Energy
|
FI701389
|
10/20/2008
|
$
|
2,005.82 | |||
|
ATT
|
484486
|
10/16/2008
|
$
|
1,040.00 | |||
|
Qwest
|
484483
|
10/15/2008
|
$
|
1,467.00 | |||
|
Tripler
Army Med Ctr
|
484475
|
10/14/2008
|
$
|
2,556.00 | |||
|
NEC
Philips
|
484464
|
10/8/2008
|
$
|
2,142.00 | |||
|
ATT
|
FI701382
|
9/30/2008
|
$
|
36,460.00 | |||
|
▇▇▇▇▇▇ Tech
|
484431
|
9/18/2008
|
$
|
3,375.30 | |||
|
|
|||||||
|
$
|
256,241.81 | ||||||
31