EXHIBIT 10.37
CONFIDENTIAL TREATMENT REQUESTED
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE PORTIONS OF THIS AGREEMENT
MARKED [*]. THE OMITTED PORTIONS OF THIS AGREEMENT HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
REVOLVING ACCOUNT TRANSFER
AND PURCHASE AGREEMENT
(BATCH)
THIS REVOLVING ACCOUNT TRANSFER AND PURCHASE AGREEMENT (Batch) (this
"Agreement") dated as of March 2, 1998 is entered into by and between ORYX
TECHNOLOGY CORP., a Delaware corporation ("[*]"), SURGX CORPORATION, a Delaware
corporation ("Surgx") (both collectively referred to herein as "Seller") and
[*], a [*] corporation doing business as [*] ("[*]"). In consideration of the
mutual covenants and agreements contained herein, Seller and [*] hereby agree
as follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS. The following definitions shall apply throughout this
Agreement:
"ACCOUNT PAYMENT" means that portion of the purchase price paid by [*]
to Seller from time to time for the Accounts purchased hereunder.
"ACCOUNT PAYMENT BASE" means an amount equal to 85% of Eligible
Accounts.
"ACCOUNT(s)" means the right of Seller to payment for goods sold or
leased or for services rendered which are not evidenced by a
promissory note or chattel paper, together with anything else
defined as an "account" in the UCC, whether now existing or
hereafter created or arising.
"ACCOUNT DEBTOR" means the person or entity which is obligated on an
Account.
"AFFILIATE" means with respect to any person or entity in question,
any other person or entity owned or controlled by, or which owns or
controls or is under common control or is otherwise affiliated with
such person or entity in question.
"AVAILABILITY POOL" means, at the time of determination thereof,
the maximum amount available for an Account Payment to Seller, as
determined in accordance with the Availability Certificate.
"AVAILABILITY CERTIFICATE" means a certificate in the form of SCHEDULE
A attached hereto duly executed by an authorized officer of Seller.
"BASE RATE" means the per annum variable rate (based on a year
consisting of 360 days and actual days elapsed) established from
time to time by [*]without notice to Seller as its Base Rate for
purposes of calculating variable discounts under [*]'s account
transfer agreements.
"BATCH BALANCE" means, at the time of determination thereof; (i)
the sum of all Account Payments paid by to Seller, PLUS all fees,
expenses and Discounts owing by Seller hereunder which are deducted
from the Availability Pool from time to time, LESS (ii) the amount
of all payments and collections received by on the Accounts
purchased hereunder. If the amount in clause (ii) is greater than
the sum of the amounts in clause (i), the Batch Balance shall be a
negative number.
"▇▇▇▇ OF SALE" means the ▇▇▇▇ of Sale in the form attached hereto as
SCHEDULE A-1 duly executed by an authorized officer of Seller.
"COLLATERAL" has the meaning given it in SUBSECTION 8.1.
"COLLECTION REPORT" means a report that provides the daily
collection activity detailed by transaction which is in form and
detail satisfactory to [*], such detail to include the customer's
name, payment date, invoice number and amount of payment for each
transaction.
"CONCENTRATION LIMIT" means the maximum amount of Accounts owing by
any single Account Debtor that may qualify as Eligible Accounts.
The Concentration Limit for any Account Debtor shall be $25,000.00
unless [*], in [*]'s reasonable discretion, consents otherwise;
provided, however, in no event shall the Concentration Limit for
any Account Debtor exceed twenty-five percent (25%) of the Eligible
Accounts.
1
"DEBIT ACCOUNT" means Account No. [*] that Seller has with [*] over
which [*] shall have express written authority to debit pursuant to
the terms of the Agreement.
"DEFAULT RATE" means a per annum rate of interest equal to the Base
Rate, plus six and one-half percent (6.5%).
"DISCOUNT" has the meaning given it in SUBSECTION 4.1.
"DISCOUNT RATE" means a variable discount rate equal to the Base
Rate in effect on such day, plus one and twenty-five hundredths
percent (1.25%) per annum, provided, however, in no event shall the
Discount Rate be less than seven percent (7%) per annum and upon
the occurrence of an Event of Default, the Discount Rate shall
automatically be equal to the Default Rate. If the Base Rate
changes after the date hereof, the Discount Rate shall be
automatically increased or decreased, as the case may be, without
notice to Seller from time to time as of the effective time of each
change in the Base Rate.
"DISPUTED ACCOUNTS" has the meaning given it in SUBSECTION 9.5.
"ELIGIBLE ACCOUNTS" means, at the time of determination thereof,
all Accounts purchased hereunder EXCEPT the following: (i) any
Account which by its terms is payable more than thirty (30) days
from the invoice date, unless otherwise agreed to in writing by [*];
(ii) any Account which has been outstanding for more than ninety
(90) days from the invoice date; (iii) to the extent that the
aggregate outstanding amount owed by any single Account Debtor
exceeds the Concentration Limit, any amount in excess of the
Concentration Limit owed by such Account Debtor; (iv) any Account
that is owed by an Account Debtor which is an Affiliate of Seller
or an officer or employee of Seller; (v) any Account that arises
out of a sale made, goods shipped or services performed outside of
the United States or that is owed by an Account Debtor located
outside the United States unless such Account Debtor is subject to
the jurisdiction of courts in the United States with respect to
such Account and unless otherwise agreed to in writing by [*]; (vi)
any Account that is owed by an Account Debtor which is a creditor
or supplier of Seller; (vii) any Account that is owed by an Account
Debtor which has asserted any defense or offset or which has
contested any liability with respect to such Account; (viii) any
Account owed by an Account Debtor to Seller if more than 25% (in
dollar amount) of such Account Debtor's Accounts owing to Seller
are outstanding for more than ninety (90) days from the invoice
date; (ix) any Account the Account Debtor of which is the United
States or any department, agency or instrumentality thereof, unless
the right to payment under such Account is assigned to [*] in full
compliance with the Assignment of Claims Act of 1940, as amended
(31 U.S.C. 3727); (x) any Account the Account Debtor of which is
any state or any department, agency or subdivision thereof unless
the right to payment under such Account is assigned to [*] in full
compliance with such state's laws pertaining to the assignment of
claims, if any; (xi) any Account with respect to which Seller has
furnished a payment and/or performance bond and that portion of any
Account representing retainage; (xii) any Account owing by an
Account Debtor for which there has been instituted a proceeding in
bankruptcy or a reorganization under the United States Bankruptcy
Code or other law, whether state or federal, now or hereafter
existing for the relief of debtors; (xiii) any Account with respect
to which goods are placed on consignment or other terms by reason
of which payment by the Account Debtor may be conditioned; and
(xiv) any Account (or portion of an Account) which [*] may
designate from time to time, in its reasonable discretion, for
exclusion from Eligible Accounts. In addition to the foregoing,
(1) an Account shall not be deemed an Eligible Account unless each
of the representations and warranties set forth in SECTION 7 of
this Agreement are true and correct (and remain true and correct at
all times) with respect to such Account, and (2) the gross face
amount payable pursuant to the invoice related to an Account shall
be used for purposes of determining the amount of an Account.
"ENVIRONMENTAL LAWS" means any and all federal, state and local
laws, regulations, rules, orders, licenses, agreements or other
governmental restrictions relating to the environment or to
emissions, discharges or releases of pollutants or industrial,
toxic or hazardous substances into the environment, or otherwise
relating to the manufacture, processing, treatment, transport or
handling of pollutants or industrial, toxic or hazardous substances.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, together with all rules and
regulations promulgated with respect thereto.
"ERISA PLAN" means any pension benefit plan subject to Title IV of
ERISA maintained by Seller or any Affiliate thereof with respect to
which Seller or any Affiliate has a fixed or contingent liability.
"EVENT OF DEFAULT" has the meaning given it in SECTION 12.
"FACILITY AMOUNT" means the amount of $500,000.00.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting
Standards Board (or any generally recognized successor),
consistently applied throughout the period involved.
"INDEMNIFIED CLAIMS" means any and all claims, demands, actions,
causes of action, judgments, suits, liabilities, obligations,
losses, damages and consequential damages, penalties, fines, costs,
fees, expenses and disbursements (including without limitation,
fees and expenses of attorneys and other professional
2
consultants and experts in connection with any investigation or
defense) of every kind or nature, known or unknown, existing or
hereafter arising, foreseeable or unforeseeable, which may be
imposed upon, threatened or asserted against or incurred or paid by
any Indemnified Person at any time and from time to time, because
of or resulting from, in connection with or in any way relating to
or arising out of the purchase of any Account hereunder or any
other transaction, act, omission, event or circumstance in any way
connected with or contemplated by this Agreement or the other
Purchase Documents or any action taken or omitted by any such
Indemnified Person under or in connection with any of the foregoing
(including but not limited to any investigation, litigation,
proceeding, enforcement of [*]'s rights or defense of [*]'s
actions related to or arising out of this Agreement, the other
Purchase Documents, or the Account Payments or use of the proceeds
thereof), whether or not any Indemnified Person is a party hereto;
provided, however, the term "Indemnified Claims" shall not include
losses incurred by [*] from the financial inability of the Account
Debtors to pay Accounts.
"INDEMNIFIED PERSONS" shall collectively mean [*] and its officers,
directors, shareholders, employees, attorneys, representatives,
agents, Affiliates, successors and assigns.
"INVENTORY" means all goods, now owned or hereafter acquired by
Seller and wherever located, which are held for sale or lease or
are to be furnished under any contract of service (including, but
not limited to raw materials, work in process, finished goods and
materials used or consumed in the manufacture or production
thereof, goods in which Seller has an interest in mass or a joint
or other interest or rights of any kind, and goods which have been
returned to or repossessed or stopped in transit by Seller) and
anything else defined as "inventory" in the UCC.
"INVOICES AND RELATED DATA" has the meaning given it in SUBSECTION
6.5.
"OBLIGATIONS" means all indebtedness, obligations and liabilities
owing by Seller to [*] arising under this Agreement and the other
Purchase Documents, and all other indebtedness, obligations and
liabilities owing by Seller to [*], whether presently existing or
hereafter arising, direct or indirect, primary or secondary, joint,
several, or joint and several, fixed or contingent, and whether
originally payable to [*] or to a third party and subsequently
acquired by [*] (including, without limitation, all indebtedness,
obligations and liabilities of Seller to [*] arising by promissory
note, indemnity, guaranty, letter of credit or as established by
law or by a court of competent jurisdiction); provided, that the
term "Obligations" does not include any Discounts.
"PURCHASE DOCUMENTS" means this Agreement and the documents,
agreements and instruments required by [*] to be executed and
delivered in connection herewith (including, without limitation,
all documents, agreements and instruments evidencing, securing,
governing, guaranteeing and/or pertaining to the Obligations owing
hereunder).
"REMITTANCE ADDRESS" means ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇
"RESERVE" has the meaning given it in SUBSECTION 5.1.
"SALES JOURNAL" means a report that will provide the daily sales
activity of Seller detailed by transaction which is in form and
detail satisfactory to [*], such detail to include the customer's
name, date of sale, invoice number and sales amount for each
transaction.
"SUBORDINATED DEBT" means indebtedness owing by Seller to a
creditor other than [*] which has been subordinated and subject in
right of payment to the prior payment of all indebtedness and
obligations now or hereafter owing by Seller to [*], such
subordination to be evidenced by a written agreement between Seller
and the subordinated creditor which is in form and substance
satisfactory to [*].
"TANGIBLE NET WORTH" means, as of any date, the amount by which, on
a consolidated basis, [*]'s total assets exceeds its total
liabilities, plus Subordinated Debt, less any intangible assets (as
defined by GAAP, including, without limitation, trademarks,
patents, copyrights, goodwill, covenants not to compete and
customer lists), less deferred charges.
"TERM" has the meaning given it in SUBSECTION 14.4.
"TERMINATION EVENT" means (a) the occurrence with respect to any
ERISA Plan of (i) a reportable event described in Sections
4043(b)(5) of ERISA or (ii) any other reportable event described in
Section 4043 of ERISA other than a reportable event not subject to
the provision for 30-day notice to the Pension Benefit Guaranty
Corporation pursuant to a waiver by such corporation under Section
4043(a) of ERISA, (b) the withdrawal of Seller or any Affiliate of
Seller from any ERISA Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA,
or (c) any event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any ERISA Plan.
"UCC" means the Uniform Commercial Code as in effect in the State of
[*], as amended from time to time.
3
1.2 CONSTRUCTION. Terms defined in the UCC which are used and not
otherwise defined herein shall have the meanings given them in the
UCC. The terms defined in this Agreement which refer to a
particular agreement, instrument or document also refer to and
include all renewals, extensions and modifications of such
agreement, instrument or document. All addenda, exhibits and
schedules attached to this Agreement are a part hereof for all
purposes. Words in the singular form shall be construed to include
the plural and vice versa, unless the context otherwise requires.
1.3 CALCULATIONS AND DETERMINATIONS. The Batch Balance shall be
increased by the amount of each Account Payment from the date each
such payment is made by [*] to Seller and shall be decreased within
3 business days after [*] receives and deposits the proceeds of
collection of Accounts. If such collections cause the Batch
Balance to be a negative amount, such negative amount shall be
algebraically subtracted in computing the Availability Pool in line
14 of the Availability Certificate so as to increase the
Availability Pool. The purchase price for Accounts in SUBSECTION
2.2 shall be calculated, insofar as determining the increase in the
Availability Pool for the purpose of such calculation, by taking
into consideration such Accounts and the collections thereof
without giving effect to the concurrent fluctuations in the
Availability Pool based on other factors, including without
limitation, Account Payments, fees, Discounts, expenses and the
collections of other Accounts. For the purpose of SUBSECTION 14.5,
the amount of "Gross Sales" on and after the Termination Date, as
set forth in each Availability Certificate prepared on or after the
Termination Date, shall be deemed to be zero. Unless otherwise
expressly provided herein or unless [*] otherwise consents, all
financial statements and reports furnished to [*] hereunder shall
be prepared and all financial computations and determinations
pursuant hereto shall be made in accordance with GAAP.
SECTION 2. PURCHASES OF ACCOUNTS AND ACCOUNT PAYMENTS
2.1 ACCOUNT PAYMENTS. Subject to the terms of this Agreement, Seller
agrees to offer for sale from time to time and [*] agrees to
purchase all Accounts of Seller. It is the intention of the
parties hereto that all Accounts sold to [*] from time to time
hereunder will be considered and sold as one account or batch. The
Account Payment paid to Seller at any time hereunder shall be an
amount up to the Availability Pool at such time, as requested by
Seller on the most recent Availability Certificate delivered to [*]
(or as determined by [*] on or after the Termination Date pursuant
to SUBSECTION 14.5).
PURCHASE PRICE. Except as set forth herein, the purchase price for
Accounts which are Eligible Accounts at the time of their sale to
[*] is the amount of increase in the Availability Pool on the date
of, and as a result of, such sales, PLUS the amount of increase in
the Availability Pool when such Eligible Accounts are collected,
LESS the respective Discount. The consideration provided by [*] to
Seller for the purchase of any Accounts which are not Eligible
Accounts at the time of their sale to [*]is the contingent increase
in, and the amount of any increase in, the Availability Pool if and
when such Accounts are collected, LESS the respective Discount;
provided, however, if any such Accounts become Eligible Accounts
after their sale to [*], the consideration for the purchase of such
Accounts shall also include the amount of increase in the
Availability Pool resulting from such Accounts becoming Eligible
Accounts. All Accounts purchased during any time in which the
Account Payment Base exceeds the Facility Amount shall be deemed to
be ineligible Accounts for which the purchase price shall be as
provided in the second sentence of this SUBSECTION 2.2, and for
this purpose such ineligible Accounts may become Eligible Accounts
if and to the extent that the Account Payment Base no longer
exceeds the Facility Amount.
2.3 NOTICE OF SALES. In connection with the initial sale of Accounts
hereunder, Seller shall deliver to [*] a signed and completed
Availability Certificate and a ▇▇▇▇ of Sale which has a detailed
aging of Accounts attached thereto, all in form and detail
satisfactory to [*]. Seller must give prior written notice to [*]
of any subsequent sales of Accounts by delivering to [*] a properly
completed Availability Certificate, together with (i) Seller's
Sales Journal listing each Account originated or generated since
the date of the previous Availability Certificate; (ii) Seller's
Collection Report listing all collections received on Accounts
since the date of the previous Availability Certificate, and (iii)
Seller's Debit/Credit memo journal listing all returns, deductions
and disputes on Accounts since the date of the previous
Availability Certificate.
2.4 VERIFICATION. Promptly after receiving each Availability
Certificate and other reports required by SUBSECTION 2.3, [*]
shall, based upon such Availability Certificate and such other
information provided or otherwise available to [*], verify and, if
necessary, redetermine the Availability Pool, which verification or
redetermination, as the case may be, shall take effect immediately
and remain in effect until the next such verification or
redetermination. If all conditions precedent to the sale of
Accounts and the Account Payment requested by such Availability
Certificate have been met, then [*] will on the date specified in
such request purchase the subject Accounts and pay the appropriate
Account Payment to Seller by wire or ACH transfer to an account of
Seller, as designated in writing by Seller. [*]'s acceptance of the
Accounts offered for sale by Seller from time to time hereunder
shall be evidenced by [*] adjusting the Availability Pool as a
result of the purchase of such Accounts. In the event [*] does not
receive an appropriately completed Availability Certificate and the
other reports required by SUBSECTION 2.3, [*] shall have no
obligation to verify the Availability Pool, purchase any further
Accounts or pay any additional Account Payments until such time as
[*] shall have received such information.
2.5 SALE OF ACCOUNTS. Seller hereby sells, transfers, assigns and
otherwise conveys to [*] (as a sale by Seller and a purchase by [*],
and not as security for any of the Obligations), without recourse
except to the limited extent expressly provided herein, all right,
title, and interest of Seller in and to the Accounts represented by
the invoices listed on the attachments to any ▇▇▇▇ of Sale or
Availability Certificate delivered to [*] pursuant
4
to this Agreement, together with all related rights (but not
obligations) of Seller with respect thereto, including all contract
rights, guarantees, letters of credit, liens in favor of Seller,
collateral, insurance and other agreements and arrangements of
whatever character from time to time supporting or securing payment
of such Accounts, all of the Invoices and Related Data (as defined
in SUBSECTION 6.5) with respect to such Accounts and right, title
and interest of Seller in any related goods, including Seller's
rights and remedies under Article 2, Part 7 of the UCC. The
foregoing sale, transfer, assignment and conveyance does not
constitute and is not intended to result in an assumption by [*] of
any obligation of Seller or any other person in connection with
Accounts or related rights or under any agreement or instrument
relating thereto. Seller agrees to execute and deliver such bills
of sale, assignments, letters of credit, notices of assignment,
financing statements (including continuation statements) under the
UCC and other documents, and make such entries and markings in its
books and records, and to take all such other actions (including
the negotiation, assignment or transfer of negotiable documents,
letters of credit or other instruments) as [*] may request to
further evidence or protect the sale and assignments of Accounts
and related rights to [*] hereunder, as well as [*]'s interest in
any returned goods.
2.6 EXCESS BATCH BALANCE. The Batch Balance shall not at any time
exceed the lesser of (i) the Account Payment Base, and (ii) the
Facility Amount. If for any reason the Batch Balance should ever
exceed the Account Payment Base or the Facility Amount, whichever
is less, all Accounts purchased by [*] while such excess exists and
continues shall be deemed to be ineligible Accounts for which the
purchase price shall be as provided in the second sentence of
SUBSECTION 2.2, and for this purpose such ineligible Accounts may
become Eligible Accounts if and to the extent that such excess no
longer exists.
SECTION 3. CONDITIONS PRECEDENT
3.1 CONDITIONS PRECEDENT. [*]'s obligation hereunder to purchase any
Accounts or pay any Account Payment the purchase of any such
Accounts (including the first purchase) under the terms and
conditions of Agreement shall be subject to the conditions
precedent that as of the date of any such purchase or payment and
after giving effect thereto: (i) [*] has received this Agreement
and all other Purchase Documents which have all been appropriately
executed by Seller and all other proper parties; (ii) all
representations and warranties made in this Agreement and the other
Purchase Documents are true on and as of the date of such Account
Payment (except to the extent such representations and warranties
are with respect to financial statements which are delivered to [*]
that speak as of a particular date and to the extent that the facts
upon which such representations and warranties are based have been
changed by the transactions contemplated in this Agreement) as if
such representations and warranties had been made as of the date of
such purchase of Accounts and Account Payment; (iii) Seller has
performed and complied with agreements and conditions required in
the Purchase Documents to be performed or complied with by it on or
prior to the date of such purchase of Accounts and Account Payment;
(iv) no Event of Default, or an event with which the passage of
time or the giving of notice, or both, shall become an Event of
Default, has occurred hereunder or under any of the other Purchase
Documents; (v) there has been no material adverse change in
Seller's financial condition or its business since the date of the
most recent financial statements of Seller supplied to [*]; (vi)
such purchase of Accounts or Account Payment shall not be
prohibited by any law or a regulation or any order of any court or
governmental agency or authority; and (vii) [*] shall have received
all fees and expenses owing hereunder.
SECTION 4. DISCOUNTS, FEES, EXPENSES AND TAXES
4.1 DISCOUNTS. The purchase price for the Accounts will be reduced by
a discount (the "Discount"). The Discount will be computed on a
daily basis by multiplying the Batch Balance by the Discount Rate
in effect from day to day. Seller hereby authorizes [*], in [*]'s
sole discretion, to make the adjustment to the purchase price of
the Accounts from time to time (but not less frequently than
monthly) which is attributable to the Discount by (i) reducing the
Availability Pool; (ii) deducting the Discount from any Account
Payment; (iii) debiting the Debit Account, or (iv) using any
combination of the foregoing.
4.2 [INTENTIONALLY OMITTED]
4.3 SERVICING FEE. Seller hereby agrees to pay a monthly servicing fee
on the first day of each calendar month during the Term equal to
one tenth of one percent (.10%) based on the average daily Batch
Balance during the immediately preceding month. If the first
calendar month covers less than a full month, the servicing fee for
such month shall be prorated. Seller hereby authorizes [*], in [*]'s
sole discretion, to collect the servicing fee (i) by reducing
the Availability Pool by the amount of such fee; (ii) by deducting
such fee from the first Account Payment after such fee is due;
(iii) by debiting the Debit Account, or (iv) by using any
combination of the foregoing. Such fee shall be paid to [*] so
long as this Agreement is in effect. This authorization shall not
affect Seller's obligation to pay such sums to [*] when due.
Seller and acknowledge and agree that the availability fee is
reasonable compensation to [*] for continuing to make the facility
available under the terms of this Agreement and for no other
purpose.
4.4 [INTENTIONALLY OMITTED]
4.5 ATTORNEYS' FEES. Seller agrees to pay or reimburse [*] upon demand
for all reasonable attorneys' fees, court costs and other expenses
incurred by [*] (whether or not litigation is commenced or judgment
issued, and if litigation is commenced whether at trial or any
appellate level) in preparation, negotiation, and enforcement of
this Agreement and protecting or enforcing its ownership interest
in the Accounts or its
5
security interest in the Collateral, in collecting the Accounts, or
in the representation of [*] in connection with any bankruptcy
case or insolvency proceeding involving Seller, the Collateral or
any Account Debtor. Seller hereby authorizes [*], in [*]'s sole
discretion, to collect such fees, costs and expenses (i) by
reducing the Availability Pool; (ii) by deducting such amounts from
any Account Payment(s); (iii) by debiting the Debit Account, or
(iv) by using any combination of the foregoing. This authorization
shall not affect Seller's obligation to pay such sums to [*]on
demand.
4.6 EXPENSES. [*] shall be entitled to reimbursement upon demand for
all out of pocket expenses incurred by in the course of performing
its functions with respect to this Agreement, including without
limitation, the following: lock box charges, long-distance
telephone charges, postage, credit reports, wire transfers, check
copying charges, overnight mail delivery, UCC and tax lien searches
and filing fees. Seller hereby authorizes [*], in [*]'s sole
discretion, to collect such expenses (i) by reducing the
Availability Pool; (ii) by deducting such amounts from any Account
Payment(s); (iii) by debiting the Debit Account, or (iv) by using
any combination of the foregoing. This authorization shall not
affect Seller's obligation to pay such sums to [*] on demand.
4.7 DEFAULT RATE. All past due amounts owed by Seller to [*]
hereunder, including but not limited to past due fees and expenses,
shall bear interest at the Default Rate and shall be payable on
demand. Seller hereby authorizes [*], in [*]'s sole discretion, to
collect such amounts by (i) reducing the Availability Pool; (ii)
deducting such amounts from Account Payment(s); (iii) debiting the
Debit Account, or (iv) using any combination of the foregoing.
Upon the occurrence of an Event of Default, all Obligations shall
bear interest at the Default Rate. This authorization shall not
affect Seller's obligation to pay such sums to [*] on demand.
4.8 TAXES. All taxes and governmental charges of any kind imposed with
respect to the sale of goods or rendering of services relating to
the Accounts shall remain for the account of, and be paid by,
Seller.
SECTION 5. RESERVE
5.1 ESTABLISHMENT OF RESERVE. At any time after the occurrence of an
Event of Default hereunder, [*] may, at its election, withhold and
accumulate all or any portion of any Account Payment to maintain a
reserve ("Reserve") in an amount that [*] reasonably deems
necessary to collect any Obligations which may become due by Seller
to [*].
5.2 OFFSET AGAINST RESERVE. Seller hereby authorizes [*] to offset,
without prior notice to Seller, and charge against the Reserve any
and all Obligations which Seller may owe to [*].
5.3 DISTRIBUTION OF THE RESERVE. To the extent an Event of Default for
which [*] established the Reserve is cured in a manner reasonably
acceptable to [*] and [*] has not exercised [*]'s rights to
terminate this Agreement because of such Event of Default, [*] will
increase the Availability Pool by the amount of the Reserve and
will no longer be entitled to withhold and accumulate Account
Payments pursuant to SUBSECTION 5.1 or to offset and charge against
the Reserve pursuant to SUBSECTION 5.2, provided that [*]'s rights
under SECTION 5 shall be reinstituted if a subsequent Event of
Default occurs.
SECTION 6. REPRESENTATIONS AND WARRANTIES OP SELLER
Each Seller represents and warrants with respect to such Seller, and upon each
delivery to [*] of an Availability Certificate further represents and warrants
as of the date of delivery of the Availability Certificate, to [*] as follows:
6.1 EXISTENCE. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation and is qualified and authorized to do business and is
in good standing in all states in which such qualification and good
standing are necessary. Seller has all requisite power and
authority to execute this Agreement and the other Purchase
Documents to which Seller is a party.
6.2 NO VIOLATION OF LAW. The execution, delivery and performance by
Seller of this Agreement and the other Purchase Documents to which
Seller is a party do not and will not constitute a violation of any
applicable law or of Seller's articles or certificate of
incorporation or Bylaws or any material breach of any other
document, agreement or instrument to which Seller is a party or by
which Seller is bound.
6.3 BINDING OBLIGATIONS. The execution, delivery and performance of
the Agreement and the other Purchase Documents to which Seller is a
party have been duly authorized by all necessary corporate action
by Seller and constitute legal, valid and binding obligations of
Seller enforceable against Seller in accordance with their
respective terms, except as may be limited by bankruptcy,
insolvency or similar laws of general application relating to the
enforcement of creditors' rights and except to the extent specific
remedies may generally be limited by equitable principles.
6.4 EXECUTIVE OFFICE. The address set forth below Seller's signature
hereon is Seller's mailing address, its chief executive office,
principal place of business and the office where all of the books
and records concerning the Accounts are maintained.
6.5 POSSESSION OF INVOICES AND RELATED DATA. Seller has and will
retain possession of the following in trust for the benefit of [*]
(collectively, the "Invoices and Related Data"): (a) true and
correct copies of all
6
invoices evidencing each Account sold to [*] hereunder; (b)
evidence of delivery of all goods or completion of all services
relating to each such Account; and (c) a current listing of all
open and unpaid Accounts sold to [*] hereunder, together with the
names, addresses, contact persons and telephone numbers of each
Account Debtor until such time as [*] picks up or, at [*]'s
request, Seller delivers to [*], the Invoices and Related Data.
Although the Invoices and Related Data are in the possession of
Seller, ownership thereof is transferred to [*] contemporaneously
with the purchase of the related Accounts.
6.6 TRUE AND CORRECT INFORMATION. All information provided by Seller
to [*] during its evaluation of the transactions anticipated by and
in connection with this Agreement, including applications, reports,
financial statements, and the statements made therein were true and
correct at the time made and remain true and correct at the time
that this Agreement is executed, except to the extent the financial
statements speak as of a particular date.
6.7 TAXES. Seller has filed all federal, state and local tax reports
and returns required by any law or regulation to be filed by it and
has either duly paid all taxes, duties and charges indicated due on
the basis of such returns and reports, or made adequate provision
for the payment thereof, and the assessment of any material amount
of additional taxes in excess of those paid and reported is not
reasonably expected. There is no tax lien notice against Seller
presently on file, judgment entered against Seller or levy on or
attachment of its property outstanding or reasonably anticipated.
6.8 FULL DISCLOSURE. There is no fact which Seller has not disclosed
to [*] in writing which could materially adversely affect the
properties, business or financial condition of Seller, the Accounts
sold hereunder or any of the Collateral, or which is necessary to
be disclosed in order to keep any of the representations and
warranties contained herein or in any other Purchase Document from
being misleading.
6.9 ERISA COMPLIANCE. Seller is in compliance with ERISA concerning
Seller's ERISA Plan, if any, or is not required to contribute to
any "multi-employer plan" as defined in Section 4001 of ERISA.
6.10 COMPLIANCE WITH LAWS. Seller is conducting its business in
material compliance with all applicable laws, including but not
limited to applicable Environmental Laws and the Fair Labor
Standards Act and has and is in compliance with all licenses and
permits required under any such laws. Seller does not have any
known material contingent liability under any Environmental Law.
Seller will continue to comply in all material respects with all
Environmental Laws now or hereafter applicable to Seller and shall
obtain, at or prior to the time required by applicable
Environmental Laws, all environmental, health and safety permits,
licenses and other authorizations necessary for its operations.
Seller will promptly furnish to [*] all written notices of
violation, complaints, penalty assessments, suits or other
proceedings received by Seller with respect to any alleged
violation of or non-compliance with any Environmental Laws.
6.11 ASSUMED NAMES. Except as may be listed on SCHEDULE B attached
hereto, Seller does business under no trade or assumed names.
SECTION 7. ACCOUNTS
As to the Accounts of each Seller, such Seller hereby represents and warrants to
[*] with respect to each Account offered for sale by such Seller to [*]
hereunder as follows:
7.1 OWNER. Seller is the sole owner of such Account, which Account is
free and clear of any liens, claims, equities and encumbrances
whatsoever, and upon the purchase by [*] of such Account, [*] will
own such Account free and clear of any liens, claims, equities and
encumbrances whatsoever and the consideration received by Seller
from [*] for such Account is fair and adequate.
7.2 AUTHORITY TO SELL. Seller is the sole obligee under such Account
and has full power and is duly authorized to sell, assign and
transfer such Account to [*] hereunder, and, except as such Account
is disclosed to as an ineligible Account concurrently with the
sale of such Account to [*], the date of sale of such Account is
not more than 30 days after the date of the original invoice
relating to such Account.
7.3 FULL PAYMENT EXPECTED. Seller has no knowledge of any fact which
would lead it to expect that, at the date of sale of such Account
to [*], such Account will not be paid in the full stated amount
when due, except as such Account is disclosed to [*] as an
ineligible Account.
7.4 BONA FIDE ACCOUNT. Such Account is valid and enforceable and
arises out of a bona fide sale or lease of conforming goods or the
bona fide rendition of services by Seller, and all underlying goods
have been delivered to the Account Debtor, or all underlying
services have been rendered by Seller, in complete fulfillment of
all of the terms and conditions of a fully executed, delivered and
unexpired contract or purchase order with the Account Debtor, and
the Account Debtor has accepted the goods or services to which the
Account relates, except as such Account is otherwise disclosed to
[*] as an ineligible Account. Such Account constitutes the legal,
valid and binding payment obligation of the Account Debtor,
enforceable in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally), except as such Account
is disclosed to [*]as an ineligible Account.
7.5 PAYABLE IN U.S. DOLLARS. Such Account is denominated and payable only
in United States dollars.
7
7.6 ACCOUNT IS NOT PAST DUE. Such Account is current and not past due
as of the date of sale of such Account to [*] (except as such
Account is otherwise disclosed to [*] as an ineligible Account),
has not been paid by or on behalf of the Account Debtor in whole or
in part, and, if it is an Eligible Account, is not and will not be
subject to any dispute, recision, setoff, recoupment, defense or
claim by the Account Debtor, whether relating to price, quality,
quantity, workmanship, delay in delivery, setoff, counterclaim or
otherwise, and, if it is an Eligible Account, the Account Debtor
has not and will not claim any defense of any kind or character
(other than bankruptcy or insolvency arising after the date of such
sale of such Account to hereunder) against payment of such Account.
7.7 U.S. ACCOUNT DEBTOR. As of the date of purchase by [*] of such
Account, the Account Debtor with respect to such Account is located
(within the meaning of Section 9-103 of the UCC) and has its
principal executive offices within the United States, except as
such Account is disclosed to [*] as an ineligible Account
concurrently with the sale of such Account to [*].
7.8 REMITTANCE ADDRESS. The invoice related to such Account sets forth
as its sole address for payment the Remittance Address.
SECTION 8. COLLATERAL
8.1 GRANT OF SECURITY INTEREST. In order to secure the payment of all
Obligations, Seller hereby grants to a security interest in and
lien upon all of Seller's right, title and interest in and to (a)
all Accounts not purchased hereunder and all present and future
contracts, contract rights, chattel paper, documents, instruments,
drafts, acceptances, deposit accounts and general intangibles now
or hereafter owned by Seller (including, without limitation, the
Reserve), all money and other funds of Seller which may now or
hereafter come into the possession, custody or control of [*] and
in any case where an account arises from the sale of goods, all of
Seller's right, interest and interest in such goods (including,
without limitation, all returned or repossessed goods and all of
Seller's rights of stoppage in transit, replevin and reclamation as
unpaid vendor); (b) all Inventory and all accessions thereto and
products thereof and documents therefor; (c) all books and records
pertaining to the foregoing, including but not limited to computer
programs, data, certificates, records, circulation lists,
subscriber lists, advertiser lists, supplier lists, customer lists,
customer and supplier contracts, sales orders, and purchasing
records; and (d) all proceeds of the foregoing, including without
limitation, all insurance payable by reason of loss or damage
(collectively, the "Collateral").
8.2 PERFECTION. Seller agrees to comply with all applicable laws in
order to perfect [*]'s security interest in and to the Collateral,
to execute any financing statement(s) or additional documents as [*]
may require and to deliver to [*] landlord and or mortgagee lien
waivers with respect to each site where Inventory is located and
which is either leased by Seller or has been mortgaged by Seller,
upon request by [*].
8.3 REPRESENTATIONS AND WARRANTIES. Seller represents and warrants to [*]
as follows with respect to the Collateral:
(a) Seller has not executed any other security agreement currently
affecting the Collateral or any financing statement regarding
the Collateral (other than those in favor of [*] and those
covering leased equipment or otherwise disclosed to and
consented by [*] in writing), and no financing statement
executed by Seller is now on file which covers any of the
Collateral (other than in favor of [*], those to be released
with the closing of this facility, those that may cover Power
Products' equipment located in Mexico, those covering leased
equipment or as otherwise disclosed to and consented by [*] in
writing);
(b) All Collateral is and will be owned by Seller, free and clear
of all other liens, encumbrances, security interests and
claims (except as otherwise consented by [*] in writing), and
shall be kept at address set forth below Seller's signature
hereon and at such other addresses as may be listed in
SCHEDULE C attached hereto, and Seller shall not (without the
written consent of [*]) remove the Collateral therefrom except
for the purpose of selling or leasing Inventory in the
ordinary course of business.
8.4 EXISTING SECURITY INTEREST. In the event a security interest has
heretofore been granted and given to by Seller in a prior
agreement(s) or document(s) to secure certain obligations, then in
such event, and notwithstanding anything in this Agreement to the
contrary, the lien and security interest herein granted and given
to [*] hereunder is in renewal and continuation, and not in
extinguishment of, all such prior liens and security interests and
continue to be valid and subsisting liens and security interests to
secure all prior, existing and future Obligations.
SECTION 9. COVENANTS
So long as this Agreement shall be in effect or any of the Obligations shall be
outstanding, Seller agrees and covenants that, unless [*] shall otherwise
consent in writing:
8
9.1 SALE OF ACCOUNTS. Subject to the terms and conditions of this
Agreement, Seller will sell to [*] hereunder all Accounts existing
at the time of each Availability Certificate permitted or required
to be delivered to under SUBSECTION 9.14.
9.2 BOOKS AND RECORDS. Seller will maintain its books and records in
accordance with GAAP, applied on a consistent basis, at its chief
executive office set forth in SUBSECTION 6.4.
9.3 NO OTHER LIENS. Seller will not execute any security agreement or
financing statement covering any of the Accounts purchased
hereunder or the Collateral, other than (i) liens and security
interests securing indebtedness owing to [*], (ii) pledges or
deposits to secure the payment of obligations under any worker's
compensation laws or similar laws, (iii) deposits to secure the
payment of public or statutory obligations, (iv) mechanic's,
carriers', ▇▇▇▇▇▇▇'▇, repairman's or other liens arising by
operation of law in the ordinary course of business which secure
obligations that are not overdue or are being contested in good
faith and for which Borrower has established adequate reserves in
accordance with generally accepted accounting principles, (v) liens
securing purchase money indebtedness permitted hereunder provided
such lien does not extend beyond the property purchased with such
indebtedness, (vi) liens securing capital leases provided such lien
does not extend beyond the property subject to such lease, and
(vii) liens and security interest existing as of the date hereof
which have been disclosed to and approved by [*] in writing
(including those financing statements covering leased equipment).
9.4 NOTICE OF FALSE REPRESENTATION. Seller agrees to notify [*]
immediately of any breach by Seller of any representation, warranty
or covenant contained herein or in the event any representation or
warranty made herein becomes false at any time.
9.5 NOTICE OF DISPUTED ACCOUNT. Seller agrees to notify [*]
immediately of the assertion by any Account Debtor of any dispute
or other claim (including any defense or offset asserted by any
Account Debtor) with respect to any Account sold to [*] hereunder,
or with respect to any related goods or services ("Disputed
Accounts"). Upon [*]'s request, Seller agrees to settle, at its
own expense and for the benefit of [*], all Disputed Accounts;
provided, that any such settlement shall be made only with the
prior written consent of [*].
9.6 RIGHT OF INSPECTION. Seller agrees to permit [*] to visit its
properties and installations and to examine, audit and make and
take away copies or reproductions of Seller's books and records, at
all reasonable times. Seller also agrees to pay all costs
associated with any such audits, which are currently $700.00 per
day, per person, plus out-of-pocket expenses, but prior to an Event
of Default, Seller shall not be required to pay for more than one
such audit per fiscal quarter.
9.7 NOTICE OF MATERIAL CHANGE/LITIGATION. Seller shall promptly notify
[*] in writing (a) any material adverse change in Seller's
financial condition or its business, and (b) any litigation or
claims affecting Seller which could materially adversely affect the
financial condition of Seller.
9.8 NOTICE OF NAME OR ADDRESS CHANGE. Seller will notify [*] in
writing 30 days prior to any change in (a) the name of Seller or
any of the names under which it is conducting business as specified
on SCHEDULE B, (b) the address of Seller's chief executive office
or principal place of business as described in SUBSECTION 6.4, (c)
the location of the office where the records concerning Accounts
are maintained, (d) the opening of any new place of business or
location where Collateral may be kept, and (e) the closing of any
of its existing places of business or locations described on
SCHEDULE C. Seller agrees to execute and deliver to
financing statements and such other documents as [*] may request in
order to obtain and/or maintain a perfected security interest in
the Collateral.
9.9 TAXES. Seller will pay and discharge when due all assessments,
taxes, governmental charges and levies, of every kind and nature,
imposed upon Seller or its properties, income or profits, prior to
the date penalties would attach, and all lawful claims that, if
unpaid, might become a lien or charge upon any of Seller's
property, income or profits: provided, however, Seller will not be
required to pay and discharge any such assessment, tax, charge,
levy or claim so long as (i) same shall be contested in good faith
by appropriate judicial, administrative or other legal proceedings
timely instituted, and (ii) Seller shall have established adequate
reserves with respect to such contested assessment, tax, charge,
levy or claim in accordance with generally accepted accounting
principles, consistently applied.
9.10 LIQUIDATIONS; MERGERS. Seller shall not merge or consolidate with
or into any other entity (except a merger of Surgx into [*] or into
another subsidiary of [*]) or liquidate, dissolve or otherwise
cease conducting business.
9.11 SALE OF ASSETS. Seller shall not sell, transfer or otherwise
dispose of its assets, other than (i) inventory in the ordinary
course of its business, and (ii) as necessary to replace obsolete
equipment.
9.12 TRANSFER OF OWNERSHIP. [*] shall not permit the sale, pledge or
other disposition of any ownership interest in Surgx.
9.13 PROPER REPORTING. Seller agrees to properly reflect the effect of
this Agreement, and all sales of Accounts related thereto, in all
financial reports and disclosures, written or otherwise, provided
to Seller's creditors
9
and other interested parties. Seller specifically agrees that all
Accounts purchased by [*] hereunder will be excluded from Seller's
reported accounts receivable balances.
9.14 DELIVERY OF AVAILABILITY CERTIFICATE. Seller shall deliver to
[*] an updated Availability Certificate (i) with each request for
an Account Payment, and (ii) on a weekly basis throughout the Term,
whether or not Seller requests an Account Payment, in each instance
accompanied by the related reports described in SUBSECTION 2.3.
9.15 ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE AGING. Seller agrees to
deliver to [*] within three (3) days after each week, an Accounts
Receivable aging report and an Accounts Payable aging report, in
form and detail satisfactory to [*].
9.16 FINANCIAL STATEMENTS. Seller agrees to furnish to [*] (a) within
90 days after the last day of each fiscal year of Seller a
consolidated statement of income and a consolidated statement of
cash flows of Seller for such fiscal year, and a consolidated
balance sheet of Seller as of the last day of such fiscal year,
together with an auditor's report thereon by an independent
certified public accountant (if Seller generally obtains such an
auditor's report), (b) within 45 days after the last day of each
fiscal quarter of Seller, an unaudited consolidated statement of
income and statement of cash flows of Seller for such fiscal
quarter, and an unaudited consolidated balance sheet of Seller as
of the last day of such fiscal quarter, and (c) within 30 days
after the last day of each month, monthly unaudited consolidated
statements of income and statements of cash flows of Seller and any
affiliates for each month an unaudited balance sheets of Seller and
any affiliates as of the end of each month. Seller represents and
warrants that each such statement of income and statement of cash
flows will fairly present, in all material respects, the results of
operations and cash flows of Seller for the period set forth
therein, and that each such balance sheet will fairly present, in
all material respects, the financial condition of Seller as of the
date set forth therein, all in accordance with GAAP, (or, with
respect to unaudited financial statements, in the notes thereto).
Seller also agrees to furnish to [*], upon request, such additional
financial and business information concerning Seller and its
business as [*] may reasonably request, including copies of its
Form 941 returns filed with the Internal Revenue Service and
evidence of payment of related taxes.
9.17 FINANCIAL COVENANTS. Seller agrees to maintain the following
financial covenant while this Agreement remains in effect:
(a) TANGIBLE NET WORTH. At the end of each fiscal quarter, the
Tangible Net Worth, calculated on a pro forma basis (i.e., add
back purchased Accounts and factored balance), of not less than
$2,500,000.00; provided, however, Seller shall have an opportunity
to cure any breach of this financial covenant within 25 five days
from the earlier of (i) the date which [*] is due to receive
financial statements which would show a violation of this
covenant, or (ii) the date of [*]'s receipt of financial
statements showing a violation of such covenant.
SECTION 10. RIGHTS OF
10.1 NOTIFICATION OF ACCOUNT DEBTORS. [*] shall have the right at any
time (i) after the occurrence of an Event of Default and without
notice to Seller, (ii) if [*] believes in good faith the prospect
for payment or performance under this Agreement and the other
Purchase Documents is impaired, or (iii) [*] in good faith believes
Seller is not diligently pursuing appropriate collection efforts
against a particular Account Debtor which is delinquent
(collectively, the "Notification Events"), to notify any or all
Account Debtors of the sale of the Accounts to [*] and to direct
such Account Debtors to make payment of all amounts due or to
become due to Seller directly to [*] to enforce collection of any
Accounts purchased hereunder or collection of any of the Collateral
and to adjust, settle or compromise the amount or payment thereof.
agrees to attempt to give prior notice to Seller of [*]'s
notification of Account Debtors based upon clause (i) in the
foregoing sentence but [*] shall have no liability for failure to
provide any such notice and Seller's obligations hereunder and the
provisions of this Agreement shall not be affected by [*]'s failure
to give any such notice. [*] agrees to give prior written notice to
Debtor if [*] notifies Account Debtors as a result of the
Notification Events described in clause (ii) and (iii) in the first
sentence of this Subsection, and to only notify the Account Debtor
which is delinquent if notification is based solely on clause (iii).
10.2 COLLECTIONS. All payments and collections of Accounts received by
[*]shall belong to [*] as owner of the Accounts.
10.3 RIGHT TO COLLECT. After the occurrence of any Notification Event,
Seller authorizes [*] to collect, ▇▇▇ for and give releases for and
in the name of Seller or [*] in [*]'s sole discretion, all amounts
due on Accounts sold to [*] hereunder. Seller specifically
authorizes [*] to endorse, in the name of Seller, all checks,
drafts, trade acceptances or other forms of payment tendered by
Account Debtors in payment of Accounts sold to hereunder and made
payable to Seller. [*] shall have no liability to Seller for any
mistake in the application of any payment received with respect
to any Account, IT BEING THE SPECIFIC INTENT OF THE PARTIES HERETO
THAT [*]SHALL HAVE NO LIABILITY HEREUNDER FOR ITS OWN NEGLIGENCE,
except for its own gross negligence and willful misconduct. After
the occurrence of any Notification Event, Seller hereby waives
notice of nonpayment of any Account sold to [*] hereunder as well
as any and all other notices with respect to such Accounts, demands
or presentations for payment and agrees that [*] may extend, renew
or modify from time to time the payment of, or vary, reduce the
amount
10
payable under or compromise any of the terms of, any Account
purchased by [*], in each case without notice to or the consent of
Seller. After the occurrence of any Notification Event, Seller
further authorizes (or its designee) to open and remove the
contents of any post office box of Seller which [*] believes
contains mail relating to Accounts, and in connection therewith or
otherwise, to receive, open and dispose of mail addressed to Seller
which [*] believes may relate to Accounts, and in order to further
assure receipt by [*] (or its designee) of mail relating to such
Accounts, to notify other parties including customers and postal
authorities to change the address for delivery of such mail
addressed to Seller to such address as may designate. [*]agrees
to use reasonable measures to preserve the contents of any such
mail which does not relate to the Accounts of Seller and to deliver
same to Seller (or, at the election of [*], to notify Seller of the
address where Seller may take possession of such contents;
provided, if Seller does not take possession of such contents
within 30 days after notice from [*] to take possession thereof, [*]
may dispose of such contents without any liability to Seller).
10.4 POWER OF ATTORNEY. Seller hereby irrevocably appoints [*] (and any
employee, agent or other person designated by [*], any of whom may
act without joinder of the others) as Seller's attorneys-in-fact in
Seller's name, place, place and stead, to take, after the
occurrence of any Notification Event, all actions, execute and
deliver all notices, negotiate such instruments and other
documents, as may be necessary or advisable to permit [*] (or its
designee) to take any and all of the actions described in this
Agreement or to carry out the purpose and intent thereof, as fully
and for all intents and purposes as Seller could itself do, and
hereby ratifies and confirms all that said attorneys-in-fact may do
or cause to be done by virtue hereof, including, without
limitation; (i) to demand, collect, ▇▇▇ for, recover, receive and
give acquittance and receipts for moneys due and to become due
under the Accounts purchased hereunder or the Collateral, and (ii)
to file any claims or take any action or institute any proceedings
which [*] may deem necessary or appropriate for the collection
and/or preservation of the Accounts purchased hereunder and the
Collateral or otherwise to enforce the rights of [*] with respect
to the Accounts purchased hereunder and the Collateral. This power
of attorney is irrevocable and deemed coupled with an interest.
10.5 UCC FILINGS. Seller hereby authorizes [*] to file, with or without
the signature of Seller, one or more financing or continuation
statements, and amendments thereto, relating to the Collateral.
Seller further agrees that a carbon, photographic or other
reproduction of this Agreement or any financing statement
describing any Collateral is sufficient as a financing statement
and may be filed in any jurisdiction may deem appropriate.
10.6 RIGHT TO PERFORM. If Seller fails to perform any agreement or
obligation provided herein or in any of the other Purchase
Documents (including without limitation, the payment and discharge
of any taxes, liens or encumbrances affecting the Collateral), [*]
may itself perform, or cause performance of, such agreement or
obligation, and the expenses of [*]incurred in connection therewith
shall be a part of the Obligations, secured by the Collateral and
payable by Seller on demand.
10.7 RIGHT OF SETOFF. [*] shall have the right of setoff against the
Obligations at any and all times and in any and all proceedings and
instances including, but not limited to, bankruptcy,
reorganization, receivership or insolvency of Seller, without prior
notice to Seller.
SECTION 11. SERVICING
11.1 APPOINTMENT OF SERVICING AGENT. [*] hereby appoints Seller as
servicing agent for [*] for the purpose of expediting the
collection of past due Accounts purchased by [*] hereunder.
Seller, as servicing agent, agrees to maintain an active, on-going
and regular dialog with each delinquent Account Debtor. Seller
further agrees, as servicing agent, to utilize all powers,
influences, rights and to take every action within its control in
accordance with its customary practices and applicable law to
expedite the collection of the past due Accounts purchased by [*]
hereunder and direct such payments exclusively to the Remittance
Address. [*] reserves the right to terminate Seller as [*]'s
servicing agent at any time with or without cause or notice to
Seller.
11.2 PROTECTION OF [*]'S RIGHTS. Seller, as servicer, shall take no
action which, nor omit to take any action the omission of which,
would substantially impair the rights of [*] in any Accounts
purchased hereunder by [*]. Seller, as servicer, agrees to defend
at its expense [*]'s ownership of the Accounts sold hereunder.
11.3 PROCEEDS OR RETURNED GOODS RECEIVED BY SELLER. All amounts and
proceeds (including instruments and writings) received by Seller at
any time in respect of any Accounts purchased hereafter shall be
received in trust for the benefit of [*] hereunder, shall be
segregated from other funds of Seller and shall be promptly paid
over to [*] in the same form as so received (with any necessary
endorsement) to be applied in the same manner as payments received
directly by [*]. If any goods relating to an Account purchased by
[*] hereunder shall be returned to or repossessed by Seller, Seller
shall give prompt notice thereof to [*] and shall hold such goods
in trust for [*], separate and apart from Seller's own property,
and such goods shall be owned solely by [*] and be subject to [*]'s
direction and control. Seller shall properly store and protect
such goods and agrees to cooperate fully with [*] in any subsequent
disposition thereof for the benefit of [*]. The provisions of
this Subsection shall survive the termination of this Agreement.
11.4 DELIVERY OF INVOICES AND RELATED DATA. The Invoices and Related
Data, although owned by [*], shall remain in Seller's possession
and held in trust by Seller for the benefit of [*]. Seller agrees
to deliver the
11
Invoices and Related Data to [*] upon [*]'s request and to allow [*]
to visit its offices to inspect, make copies or take the originals
thereof, along with any computer data related thereto, at all
reasonable times.
11.5 ADDITIONAL DOCUMENTATION; TERMINATION. Seller will furnish to [*],
upon request, any and all papers, documents and records in its
possession or control related to Accounts purchased by [*]
hereunder, or related to Seller's business relationship with the
respective Account Debtors, and agrees to cooperate fully with [*]
in all matters related to collection of Accounts purchased by [*]
hereunder. [*] reserves the right to terminate such servicing
relationship at any time with or without cause and without notice
to Seller.
SECTION 12. EVENTS OF DEFAULT
An event of default ("Event of Default") shall be deemed to have occurred
hereunder upon the occurrence of one or more of the following:
(a) Seller shall fail to pay as and when due any Obligations owed
to [*].
(b) Seller shall breach any covenant or agreement made herein, in any
of the other Purchase Documents or in any other agreement now or
hereafter entered into between Seller and [*].
(c) Any warranty or representation made herein or in any of the other
Purchase Documents shall be false or misleading in any material
respect when made.
(d) The occurrence of an event of default under any of the other
Purchase Documents or any other agreement now or hereafter
entered into between Seller and [*].
(e) Any report, certificate, schedule, financial statement, profit
and loss statement or other statement furnished by Seller, or
by any other person on behalf of Seller, to [*] is not true
and correct in any material respect.
(f) The occurrence of any event which permits the acceleration of
the maturity of any indebtedness in excess of $50,000.00 owing
by Seller to any third party under any agreement or
undertaking.
(g) The filing of a voluntary or involuntary case by or against
Seller under the United States Bankruptcy Code or other
present or future federal or state insolvency, bankruptcy or
similar laws, or the appointment of a receiver, trustee,
conservator or custodian for a substantial portion of Seller's
assets and, with respect to an involuntary case, the case is
consented to by Seller or is not dismissed within 60 days
after the effective date thereof.
(h) Seller shall become insolvent, make a transfer in fraud of
creditors or make an assignment for the benefit of creditors.
(i) The filing or commencement of any involuntary lien,
garnishment, attachment or the like shall be issued against or
with respect to the Collateral.
(j) Seller shall have a federal or state tax lien filed against any
of its properties.
(k) The Collateral or any portion thereof is taken on execution or
other process of law.
(l) Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code of 1986, as
amended) in excess of $50,000 exists with respect to any ERISA
Plan of Seller, or (ii) any Termination Event occurs with
respect to any ERISA Plan of Seller and the then current value
of such ERISA Plan's benefit liabilities exceeds the then
current value of such ERISA Plan's assets available for the
payment of such benefit liabilities by more than $50,000.
(m) If any of the obligations of any guarantor under the Purchase
Documents is limited or terminated by operation of law or by
the guarantor, or any such guarantor becomes the subject of an
insolvency proceeding.
(n) The entry against Seller of a final and nonappealable judgment
for the payment of money in excess of $50,000 (not covered by
insurance satisfactory to [*] in its sole discretion).
(o) The occurrence of an Event of Default under that certain Loan
Agreement dated May 29, 1997 between [*] and [*], as may be
amended from time to time.
Upon the occurrence of an Event of Default described in subsections (g) or (h)
of this Section, all of the Obligations owing by Seller to [*] (including but
not limited to all fees and discounts owed hereunder) shall thereupon be
automatically and immediately due and payable, without demand, presentment,
notice of demand or of dishonor and nonpayment, or any other notice or
declaration of any kind, all of which are hereby expressly waived by Seller.
Upon the occurrence of any other Event of Default, [*], at its option, at any
time and from time to time may without notice to Seller declare any or all of
the Obligations owing by Seller to [*] (including but not limited to all fees
and discounts owed hereunder) immediately due and payable, all without demand,
presentment, notice of demand or of dishonor and nonpayment, or any notice or
declaration of any kind, all of which are hereby expressly waived by
12
Seller. After the occurrence of any Event of Default, any obligation of [*]
to purchase any further Accounts hereunder, to pay any further Account
Payments hereunder (except as provided in SUBSECTION 14.5) or to make loans
under any other agreement with Seller may be terminated by [*] at [*]'s
option to be exercised in its sole discretion.
SECTION 13. REMEDIES AND APPLICATION OF PROCEEDS
13.1 REMEDIES. In addition to, and without limitation of, the foregoing
provisions of this Agreement, if an Event of Default shall have
occurred and be continuing, [*] may from time to time in its
discretion, without limitation and without notice except as
expressly provided below, do any one or more of the following:
(a) Terminate this Agreement; provided that any such termination
shall be subject to SUBSECTIONS 11.3, 14.4, 14.5 AND 14.8.
(b) Exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein, under the other
Purchase Documents or otherwise available to it, all the
rights and remedies of a secured party on default under the
UCC (whether or not the UCC applies to the affected
Collateral).
(c) Require Seller to, and Seller hereby agrees that it will at
its expense, assemble all or part of the Collateral as
directed by [*] and make it available to [*] at a place to be
designated by [*] which is reasonably convenient to both
parties.
(d) Reduce its claim to judgment or foreclose or otherwise
enforce, in whole or in part, the security interest created
hereby by any available judicial procedure.
(e) Dispose of, at its office, on the premises of Seller or
elsewhere, all or any part of the Collateral, as a unit or in
parcels, by public or private proceedings.
(f) Buy the Collateral, or any part thereof, at any public sale,
or at any private sale if the Collateral is of a type
customarily sold in a recognized market or is of a type which
is the subject of widely distributed standard price quotations.
(g) Apply by appropriate judicial proceedings for appointment of a
receiver for the Collateral, or any part thereof, and Seller
hereby consents to any such appointment.
(h) At [*]'s discretion, retain the Collateral in satisfaction of
the Obligations whenever the circumstances are such that [*]
is entitled to do so under the UCC or otherwise.
Seller agrees that, to the extent notice of sale shall be required
by law, at least five (5) days notice to Seller of the time and
place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. [*] shall
not be obligated to make any sale of Collateral regardless of
notice of sale having been given. [*] may adjourn any public or
private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
13.2 APPLICATION OF PROCEEDS. If any Event of Default shall have occurred
and be continuing, [*] may in its discretion apply any Reserve, and
any cash proceeds received by [*] in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral, to any or all of the following in such order as [*] may
elect:
(a) To the repayment of reasonable costs and expenses, including
reasonable attorneys' fees and legal expenses, incurred by [*]
in connection with (i) the administration of this Agreement;
(ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any
Collateral; (iii) the exercise or enforcement of any of the
rights of [*] hereunder, or (iv) the failure of Seller to
perform or observe any of the provisions hereof.
(b) To the payment of the Obligations and the reimbursement of [*]
for the amount of any obligations of Seller paid or discharged
by [*], and of any expenses of [*] payable by Seller
hereunder or under the other Purchase Documents.
(c) By holding the same as Collateral.
(d) To the payment of any other amounts required by applicable law
(including, without limitation, Part 5 of Article 9 of the UCC
or any successor or similar, applicable statutory provision).
(e) To the payment or other satisfaction of any liens and other
encumbrances upon any of the Collateral.
(f) By delivery to Seller or to whomsoever shall be lawfully
entitled to receive the same or as a court of competent
jurisdiction shall direct.
13
SECTION 14. MISCELLANEOUS
14.1 EQUITABLE RELIEF. Seller acknowledges that in the event that
Seller commits any act or omission which prevents or unreasonably
interferes with: (a) [*]'s exercise of the rights and privileges
arising under the power of attorney granted under this Agreement;
or (b) [*]'s perfection of or levy upon the security interest
granted in the Collateral, including any seizure of any Collateral,
such conduct will cause immediate severe, incalculable and
irrevocable harm and injury for which there is no adequate remedy
at law, and shall constitute sufficient grounds to entitle [*] to
an injunction, writ of possession, or other applicable relief in
equity, and to make such application for such relief in any court
of competent jurisdiction, without any prior notice to Seller.
14.2 CUMULATIVE RIGHTS. All rights, remedies and powers granted to [*]
in this Agreement, or in any other instrument or agreement given by
Seller to [*] or otherwise available to [*] in equity or at law, or
accumulative and may be exercised singularly or concurrently with
such other rights as [*]may have. These rights may be exercised
from time to time as to all or any part of the Accounts purchased
hereunder or the Collateral as [*] in its discretion may determine.
[*] shall not be deemed to have waived any of its rights and
remedies unless the waiver is in writing and signed by [*]. A
waiver by [*] of a right or remedy under this Agreement on one
occasion is not a waiver of the right or remedy on any subsequent
occasion. The purchase of Accounts by [*] during the continuance
of an Event of Default shall not obligate [*] to make any further
purchases during the continuation of such Event of Default.
14.3 NOTICES. Any notice or communication with respect to this
Agreement shall be in writing sent by (i) personal delivery; (ii)
expedited delivery service with proof of delivery; (iii) United
States mail, postage prepaid, registered or certified mail, or (iv)
prepaid telegram, telex or telecopy, addressed to each party
thereto at its address set forth below their signature hereon or to
such other address or to the attention of such other person as
hereafter shall be designated in writing by the applicable party
sent in accordance herewith. Any such notice or communication
shall be deemed to have been given either at the time of personal
delivery or, in the case of delivery service or mail, as of the
date of first attempted delivery at the address and in the manner
provided herein, or in the case of telegram, telex or telecopy,
upon receipt. Seller hereby agrees that [*] may publicize the
transaction contemplated by this Agreement in newspapers, trade and
similar publications including without limitation, the publication
of a "tombstone".
14.4 TERM. The term of this Agreement shall be for one (1) year from
the date hereof (the "Term"). Seller acknowledges that it shall
have no right to terminate this Agreement prior to the end of the
Term, that termination of this Agreement by Seller at any time
prior to the end of the Term would result in the loss by of
benefits under this Agreement and that the damages incurred by [*]
as a result of such early termination are and would be difficult
and impractical to ascertain. Therefore, in the event this
Agreement is terminated by Seller for any reason or by [*] because
of an Event of Default during the Term, Seller shall pay to [*] an
early termination fee, as liquidated damages, in the amount of
three percent (3%) of the Facility Amount. Notwithstanding the
foregoing, in the event that [*] Base Rate exceeds the Prime Rate
published in THE WALL STREET JOURNAL by more than 100 basis points
for more than 30 consecutive days (the "Rate Termination Event"),
Seller shall have the right for 30 days after such event to
terminate this Agreement without payment of the termination fee;
provided, however, Seller must notify [*] in writing of its
intention to so terminate within 10 days after the occurrence of a
Rate Termination Event.
14.5 TERMINATION. Upon termination of this Agreement, Seller shall be
entitled to receive from [*] the remainder, if any, of the purchase
price for the Accounts provided for in SUBSECTION 2.2 which has not
theretofore been paid to Seller, in accordance with the following
provisions:
(a) [*] shall pay to Seller, within one (1) business day after the
termination date of this Agreement (the "Termination Date"),
an amount equal to any remaining Availability Pool as of the
Termination Date, less any Discounts, costs and expenses to
which [*] is entitled hereunder. As additional collections
are received after the Termination Date with respect to
Accounts sold on or before the Termination Date, [*] will on
a weekly basis during the 180 day period following the
Termination Date recompute the remaining Availability Pool and
disburse such amount to Seller, less any Discounts, costs and
expenses to which [*] is entitled hereunder. The final
computation and disbursement, if any, will be made as of the
180th day following the Termination Date, and any final
payment due to Seller will be paid within five (5) business
days following such 180th day.
(b) The provision of SUBSECTION 14.5(a) shall be subject to the
following: (i) [*] shall have no obligation to make any
computation or to pay any amount pursuant to SUBSECTION
14.5(a) if Seller shall not have provided such information as
[*] reasonably requests for the purpose of computing the
remaining Availability Pool; and (ii) [*]'s obligation to pay
any amount to Seller pursuant to SUBSECTION 14.5(a) is subject
to [*]'s rights under SECTION 5.
(c) The representations, covenants, agreements, indemnities and
other provisions of the following sections and SUBSECTIONS OF
THIS AGREEMENT shall continue to be effective during the
180-day period referred to in SUBSECTION 14.5(a) and shall
also continue to be effective thereafter to the extent that
other provisions of this Agreement provide for their
survival: 4.1, 4.4 - 4.7, 5 - 8, 9.2 -9.10, 9.13, 9.15 and 10
- 14.
14
In lieu of the above provisions in this SUBSECTION 14.5, after
termination of this Agreement, [*] may sell, and Seller may
purchase, all outstanding Accounts purchased hereunder by [*] if
both parties agree to such action at a mutually agreeable price.
14.6 NOTICE OF OFFER. Seller hereby agrees that in the event (a) Seller
receives a written proposal either during or at the end of the Term
from a third party to provide financing or factoring ("Proposed
Refinancing"), (b) the terms of the Proposed Refinancing are
acceptable to Seller, and (c) Seller is considering accepting the
Proposed Refinancing from the offeror (the "Offeror"), Seller will
provide [*] in writing an outline of the complete terms and
conditions of the Proposed Refinancing. Seller agrees not to
accept the Proposed Refinancing from the Offeror until at least
five (5) business days after delivery of the foregoing item to [*].
14.7 SEVERABILITY. Each and every provision, condition, covenant and
representation contained in this Agreement is, and shall be
construed, to be a separate and independent covenant and agreement.
If any term or provision of this Agreement shall to any extent be
invalid or unenforceable, the remainder of the Agreement shall not
be affected thereby.
14.8 INDEMNITY. Seller hereby indemnifies and agrees to hold the
Indemnified Persons harmless against any breach by Seller of any
representation, warranty, covenant or agreement of Seller contained
in this Agreement, and against any claims or damages arising out of
the manufacture, sale, possession or use of, or otherwise relating
to, goods, or the performance of services, associated with or
relating to Accounts or related rights purchased (or with respect
to which a security interest is granted) hereunder. Seller also
hereby indemnifies and agrees to hold harmless and defend all
Indemnified Persons from and against any and all Indemnified
Claims. THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT
SUCH INDEMNIFIED CLAIMS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN
WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR
ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION
OF ANY INDEMNIFIED PERSON, but shall exclude any of the foregoing
resulting from such Indemnified Person's gross negligence or
willful misconduct. If Seller or any third party ever alleges any
gross negligence or willful misconduct by any Indemnified Person,
the indemnification provided for in this Section shall nonetheless
be paid upon demand, subject to later adjustment or reimbursement,
until such time as a court of competent jurisdiction enters a final
judgment as to the extent and affect of the alleged gross
negligence or willful misconduct. Upon notification and demand,
Seller agrees to provide defense of any Indemnified Claim and to
pay all costs and expenses of counsel selected by any Indemnified
Person in respect thereof. Any Indemnified Person against whom any
Indemnified Claim may be asserted reserves the right to settle or
compromise any such Indemnified Claim as such Indemnified Person
may determine in its sole discretion, and the obligations of such
Indemnified Person, if any, pursuant to any such settlement or
compromise shall be deemed included within the Indemnified Claims.
Except as specifically provided in this section, Seller waives all
notices from any Indemnified Person. The provisions of this
Section shall survive the termination of this Agreement.
14.9 BENEFITS; ASSIGNMENT. All grants, covenants and agreements
contained in this Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns;
provided, however, that Seller may not delegate or assign any of
its duties or obligations under this Agreement without the prior
written consent of [*] and any assignment without such consent
shall be void. [*] RESERVES THE RIGHT TO ASSIGN ITS RIGHTS AND
OBLIGATIONS UNDER THIS AGREEMENT IN WHOLE OR IN PART TO ANY PERSON
OR ENTITY; provided, however, any assignee of [*]'s obligations
hereunder must have financial resources, liquidity and operational
expertiese comparable to [*]. To the extent [*] assigns its rights
and obligations hereunder to a third party, [*] shall thereafter
be released from such assigned obligations to Seller and such
assignment shall effect a novation between Seller and such third
party. Without limiting the generality of the foregoing, [*] may
from time to time grant participations in all or any part of the
Obligations to any person or entity on such terms and conditions as
may be determined by [*] in its sole and absolute discretion,
provided that the grant of such participation shall not relieve [*]
of its obligations hereunder nor create any additional obligations
of Seller. Seller consents to disclosing any financial and any
other information available to [*] concerning Seller to any
prospective participant or assignee as long as such prospect signs
an agreement to maintain the confidentiality of any such
information.
14.10 CAPTIONS. The captions in this Agreement are for convenience only
and shall not define or limit the provisions hereof.
14.11 GOVERNING LAW; VENUE; SUBMISSION TO JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS
OF LAWS THEREOF, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF
PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF [*]. THIS
AGREEMENT IS PERFORMABLE BY THE PARTIES IN [*] COUNTY, [*].
SELLER AND [*] EACH AGREE THAT [*] COUNTY, [*] SHALL BE THE
EXCLUSIVE VENUE FOR LITIGATION OF ANY DISPUTE OR CLAIM ARISING
UNDER OR RELATING TO THIS AGREEMENT, AND THAT SUCH COUNTY IS A
CONVENIENT FORUM IN WHICH TO DECIDE ANY SUCH DISPUTE OR CLAIM.
SELLER
15
AND [*] EACH CONSENT TO THE PERSNAL JURISDICTION OF THE STATE AND
FEDERAL COURTS LOCATED IN [*] COUNTY, [*] FOR THE LITIGATION OF
ANY SUCH DISPUTE OR CLAIM. SELLER IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
14.12 WAIVER OF JURY TRIAL. SELLER AND [*] EACH HEREBY IRREVOCABLY
WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR ASSOCIATED
HEREWITH.
14.13 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER PURCHASE DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES. THIS AGREEMENT ALSO AMENDS AND
SUPERSEDES ANY OF THE TERMS OF ANY PRIOR WRITTEN AGREEMENTS WITH
RESPECT TO THE MATTERS SET FORTH IN THIS AGREEMENT.
14.14 AMENDMENTS. No modification or amendment of or supplement to this
Agreement shall be valid or effective unless the same is in writing
and signed by the party against whom it is sought to be enforced.
14.15 EFFECTIVENESS OF AGREEMENT. This Agreement shall become effective
only upon acceptance by [*] at its offices in [*], [*] County, [*]
as evidenced by [*]'s signature hereon.
14.16 USURY SAVINGS. The parties hereto intend that the transactions
covered hereby are true sales according to the provisions of
Article [*], of the [*] Revised Civil Statutes (as more fully
described in SUBSECTION 14.17) and that none of the Obligations
under this Agreement or other Purchase Documents will constitute
loans or credit sales or interest on principal of a loan or credit
sale as determined under applicable laws; PROVIDED, HOWEVER, if
this Agreement or any of the other Purchase Documents are deemed to
require the payment or permit the payment, taking, reserving,
receiving, collection, or charging of any sums constituting
interest under applicable laws, the following provisions of this
Subsection will apply:
(a) It is the intention of the parties hereto to comply strictly
with applicable usury laws; accordingly, notwithstanding any
provision to the contrary in this Agreement or any of the
other Purchase Documents, in no event whatsoever shall this
Agreement or any of the other Purchase Documents require the
payment or permit the payment, taking, reserving, receiving,
collection or charging of any sums constituting interest under
applicable laws which exceed the maximum amount permitted by
such laws. If any such excess interest is called for,
contracted for, charged, taken, reserved, or received in
connection with this Agreement or any of the other Purchase
Documents, or in any communication by [*] or any other person
to Seller or any other person, or in the event all or part of
the principal or interest shall be prepaid or accelerated, so
that under any of such circumstances or under any other
circumstance whatsoever the amount of interest contracted for,
charged, taken, reserved, or received on the amount of
principal actually outstanding from time to time under this
Agreement or any of the other Purchase Documents shall exceed
the maximum amount of interest permitted by applicable usury
laws, then in any such event it is agreed as follows: (i) the
provisions of this Subsection shall govern and control; (ii)
neither Seller nor any other person or entity now or hereafter
liable for payments under this Agreement or any of the other
Purchase Documents shall be obligated to pay the amount of
such interest to the extent such interest is in excess of the
maximum amount of interest permitted by applicable usury laws;
(iii) any such excess which is or has been received
notwithstanding this subsection shall be credited against the
then unpaid principal balance of the Obligations under this
Agreement and the other Purchase Documents or, if this
Agreement or any of the other Purchase Documents has been or
would be paid in full by such credit, refunded to Seller, and
(iv) the provisions of this Agreement or any of the other
Purchase Documents, and any communication to Seller, shall
immediately be deemed reformed and such excess interest
reduced, without the necessity of executing any other
document, to the maximum lawful rate allowed under applicable
laws as now or hereafter construed by courts having
jurisdiction hereof or thereof. Without limiting the
foregoing, all calculations of the rate of interest contracted
for, charged, taken, reserved, or received in connection
herewith which are made for the purpose of determining whether
such rate exceeds the maximum lawful rate shall be made to the
extent permitted by applicable laws by amortizing, prorating,
allocating and spreading during the period of the full term of
this Agreement or any of the other Purchase Documents,
including all prior and subsequent renewals and extensions,
all interest at any time contracted for, charged, taken,
reserved, or received. The terms of this Subsection shall be
deemed to be incorporated into every Purchase Document.
(b) If at any time the rate at which any interest is payable on
any Obligation hereunder exceeds the Maximum Rate, the amount
outstanding hereunder shall bear interest at the Maximum Rate
only,
16
but shall continue to bear interest at the Maximum Rate until
such time as the total amount of interest accrued hereunder
equals (but does not exceed) the total amount of interest
which would have accrued hereunder had there been no Maximum
Rate applicable hereto.
(c) Seller and [*] agree that [*] Rev. Civ. Stat. ▇▇▇ art. [*]
(which regulates certain revolving loan accounts and revolving
tri-party accounts) shall not apply to any revolving loan
accounts created under this Agreement or maintained in
connection therewith.
(d) To the extent that the interest rate laws of the State of [*]
are applicable to this Agreement, the applicable interest rate
ceiling is the indicated (weekly) ceiling determined in
accordance with Article [*] of the [*] Revised Civil Statutes,
as amended, and, to the extent that this Agreement is deemed
an open end account as such term is defined in Article [*] of
the [*] Revised Civil Statutes, as amended, [*] retains the
right to modify the interest rate in accordance with
applicable law.
(e) As used in this Subsection; (i) the term "applicable law"
means the laws of the State of [*] laws or the United States
of America, whichever laws allow the greater interest, as such
laws now exist or may be changed or amended or come into
effect in the future, and (ii) the term "Maximum Rate" means,
at the time of determination, the maximum rate of interest
which, under applicable law, may then be charged on the
Obligations hereunder.
14.17 TRUE SALES. Seller and [*] acknowledge and agree that the sale of
Accounts contemplated and covered hereby are fully intended by the
parties hereto as true sales governed by the provisions of Article
[*] of the [*] Revised Civil Statutes and Section 9.102 of the [*],
as each may be amended from time to time, and, accordingly, legal
and equitable title in all of Seller's Accounts sold to and
purchased by [*]from time to time hereunder will pass to [*].
The undersigned have entered into this Agreement as of the date first written
above.
ORYX TECHNOLOGY CORP.
By: By:
------------------------------- --------------------------------
Name: Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------- Title: Chief Executive Officer
Title:
-----------------------------
SURGX CORPORATION
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
Address: Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
--------------------------- --------------------------
--------------------------- Fremont, California
--------------------------- --------------------------
94538
--------------------------
Attn: --------------------------- Attn: --------------------------
Telecopy No. Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
----------------------- --------------------------
17
SCHEDULE A
TO REVOLVING ACCOUNT TRANSFER AND PURCHASE AGREEMENT (BATCH)
DATED MARCH 2, 1998
BY AND BETWEEN
([*]d/b/a [*]/[*]),
ORYX TECHNOLOGY CORP.
AND
SURGX CORPORATION
AVAILABILITY CERTIFICATE
-----------------------------------------------------------------------------------------------------------------
Seller Date
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Activity Amount
-----------------------------------------------------------------------------------------------------------------
1. GROSS ACCOUNTS AS OF LAST CERTIFICATE
-----------------------------------------------------------------------------------------------------------------
2. Add: Gross Sales since last certificate (Per attached Sales Journal) (+)
-----------------------------------------------------------------------------------------------------------------
3. Deduct: Collections since last certificate (Per attached Collection Journal) (-)
-----------------------------------------------------------------------------------------------------------------
4. Debit Memos (-)
-----------------------------------------------------------------------------------------------------------------
5. Dilutive Credit Memos (-)
-----------------------------------------------------------------------------------------------------------------
6. Credit Adjustments (-)
-----------------------------------------------------------------------------------------------------------------
7. GROSS ACCOUNTS AS OF THIS CERTIFICATE (=)
-----------------------------------------------------------------------------------------------------------------
8. Deduct: Ineligible Accounts (Per Attached) (-)
-----------------------------------------------------------------------------------------------------------------
9. ELIGIBLE ACCOUNTS AS OF THIS CERTIFICATE (=)
-----------------------------------------------------------------------------------------------------------------
10. Lesser of (i) Account Payment Base (line 9 x 85%), or (ii) $500,000.00
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
11. BEGINNING BATCH BALANCE (ENDING BATCH BALANCE AS OF LAST CERTIFICATE)
-----------------------------------------------------------------------------------------------------------------
12. Deduct: Collections since last certificate (same as line 3) (-)
-----------------------------------------------------------------------------------------------------------------
13. BATCH BALANCE BEFORE ANY ACCOUNT PAYMENT UNDER THIS CERTIFICATE (=)
-----------------------------------------------------------------------------------------------------------------
14. AVAILABILITY POOL (LINE 10 LESS LINE 13)
-----------------------------------------------------------------------------------------------------------------
15. Deduct: Account Payment Requested (-)
-----------------------------------------------------------------------------------------------------------------
16. Fees, Discounts and Expenses (-)
-----------------------------------------------------------------------------------------------------------------
17. REMAINING AVAILABILITY POOL (=)
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
18. ENDING BATCH BALANCE (sum of lines 13, 15 and 16)
-----------------------------------------------------------------------------------------------------------------
Seller, for value received, hereby sells, assigns, transfers and sets over to
[*] ("[*]") the accounts receivable ("Accounts") represented by (a) the invoices
listed described on the account receivable aging attached to the ▇▇▇▇ of Sale
(if any) being delivered concurrently herewith, or (b) the sales journal and
other records attached hereto relating to sales since the date of the last
Availability Certificate delivered by Seller to [*], all in accordance with and
subject to the terms and conditions set forth in that certain Revolving Account
and Purchase Transfer Agreement (Batch) dated March 2 ,1998 between Seller and
[*] (the "Purchase Agreement"), together with all Invoices and Related Data (as
such term is defined in the Purchase Agreement). The undersigned, as an
authorized officer of Seller, represents and warrants to [*] that (i) the
Accounts arise from the bona fide sales of Seller's products or ▇▇▇▇▇▇▇▇ for its
services, and are obligations of Seller's customers, payable at full value; (ii)
all goods and materials have been received by each of Seller's customers or all
services completed to each of customer's satisfaction for which the Accounts
arose; (iii) the goods or services meet the requirements of Seller's customers
(as to quality, quantity, delivery timeliness, etc.); (iv) the Accounts are not
subject to any known offsets, disputes or counterclaims, except as disclosed to
[*] in writing; (v) the Accounts are Eligible Accounts (as defined in the
Purchase Agreement), except as disclosed to [*] in writing; (vi) the Accounts
are payable according to terms disclosed and agreed to by [*]; (vii) the
Accounts remain unpaid when purchased by [*]; (viii) no Event of Default has
occurred under the Purchase Agreement or any other Purchase Document; (ix)
Seller has not converted any proceeds of previously purchased Accounts, and (x)
all representations and warranties contained in the Purchase Agreement and all
other Purchase Documents are true and correct as of the date hereof.
ORYX TECHNOLOGY CORP. SURGX CORPORATION
By: By:
-------------------------------- -------------------------------
Printed Name: Name:
---------------------- -----------------------------
Title: Title:
------------------------------ -----------------------------
18
19
SCHEDULE A-1
▇▇▇▇ OF SALE
The undersigned duly authorized corporate officer of ORYX TECHNOLOGY CORP.
and SURGX CORPORATION ("Seller"), on behalf of Seller, does hereby
irrevocably sell, assign, set-over and transfer to [*] ("[*]") doing
business as [*]/[*] all rights and proceeds of the accounts receivable
represented by the invoices described on the accounts receivable aging
attached hereto, together with all Invoices and Related Data, as such term is
defined in that certain Revolving Account Transfer and Purchase Agreement
(Batch) dated March 2, 1998 between [*] and Seller.
ORYX TECHNOLOGY CORP.
By:
------------------------------
Printed Name:
--------------------
Title:
---------------------------
Date:
---------------------------
SURGX CORPORATION
By:
----------------------------
Name:
---------------------------
Title:
---------------------------
20
SCHEDULE B
TO
REVOLVING ACCOUNT TRANSFER AND PURCHASE AGREEMENT (BATCH)
DATED MARCH 2, 1998
BY AND BETWEEN
([*] D/B/A [*]/[*]),
ORYX TECHNOLOGY CORP.
AND
SURGX CORPORATION
Any trade or assumed names referenced in Subsection 6.11 are:
NONE
21
SCHEDULE C
TO
REVOLVING ACCOUNT TRANSFER AND PURCHASE AGREEMENT (BATCH)
DATED MARCH 2, 1998
BY AND BETWEEN
([*] D/B/A [*]/[*]),
ORYX TECHNOLOGY CORP.
AND
SURGX CORPORATION
The addresses of any other locations of Collateral referenced in Subsection
8.3(b) are:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
22