EXHIBIT 10.1
XXXXX FARGO CENTURY, INC.
FACTORING AGREEMENT
CLIENT: IRONCLAD PERFORMANCE WEAR CORPORATION
ADDRESS: 0000 XXXX XXXXX, XXXXX 000
XX XXXXXXX, XXXXXXXXXX 00000
DATE: SEPTEMBER 15, 2006
This Factoring Agreement is entered into on the above date between XXXXX FARGO
CENTURY, INC. ("Xxxxx Fargo Century"), whose address is 000 X. Xxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxxxxx, XX 00000 and the client named above ("Client"), whose
chief executive office is located at the above address ("Client's Address"). The
Schedule to this Agreement (the "Schedule") being signed concurrently is an
integral part of this Agreement. (Definitions of certain terms used in this
Agreement are set forth in Section 8 below.)
1. FACTORING.
1.1 FACTORING. Xxxxx Fargo Century will act as the sole factor to
the Client on the terms and conditions set forth in this Agreement. Xxxxx Fargo
Century hereby purchases from Client, and Client hereby sells and assigns to
Xxxxx Fargo Century, all of Client's Receivables. The purchase price for the
Receivables shall be an amount equal to the net amount thereof, after all
discounts available or taken, as herein defined, less the amount of Xxxxx Fargo
Century's commission on the purchase of such Receivables as provided in the
Schedule hereof. Such purchase price, less any reserves which Xxxxx Fargo
Century may have established as herein provided and less any sums advanced,
remitted or otherwise paid to Client or for Client's account or debited to
Client's account hereunder shall be payable by Xxxxx Fargo Century to Client the
next business day after collection of the Receivables purchased. Xxxxx Fargo
Century is not assuming the credit risk or any other risk with respect to the
Receivables. Without limiting the generality of the foregoing, Xxxxx Fargo
Century is not assuming the risk of non-payment for any reason of any
Receivable, Xxxxx Fargo Century shall have no obligation to pay the purchase
price for any Receivable except to the extent the same is finally collected in
immediately available funds, and Xxxxx Fargo Century is not assuming any duty or
responsibility to expend any collection effort with respect to any Receivable.
Client shall not be entitled to pledge Xxxxx Fargo Century's credit for any
purpose whatsoever.
1.2 ADVANCES. Xxxxx Fargo Century may, at Client's request but in
Xxxxx Fargo Century's sole and absolute discretion, make advance payments to
Client on the purchase price of Receivables prior to the aforesaid time or times
of Xxxxx Fargo Century's obligation to make payment thereof, in an amount up to
the Advance Limit set forth on the Schedule. (All of the foregoing are referred
to in this Agreement as "Advances".) Nothing herein shall limit or restrict
Xxxxx Fargo Century's right to adjust advance formulas upward or downward based
upon Xxxxx Fargo Century's lending criteria which is established in Xxxxx Fargo
Century's sole and absolute discretion and on Xxxxx Fargo Century's own
collateral evaluations. All Advances shall be debited by Xxxxx Fargo Century to
Client's account with Xxxxx Fargo Century, and all Advances and all other
monetary Obligations shall bear Interest at the CONTRACT RATE set forth in the
Schedule from the date of advance to the date repaid. For purposes of
calculating interest all payments received on the collection of Receivables
shall be credited to Client's account TWO (2)
BUSINESS DAYS after the date of actual collection of the Receivable in
immediately available funds. Xxxxx Fargo Century may reserve out of the purchase
price of all Receivables sold and assigned to Xxxxx Fargo Century and any
Advances that may otherwise be available to Client an amount which, in Xxxxx
Fargo Century's judgment, is sufficient to protect Xxxxx Fargo Century against
possible returns, claims, allowances, expenses and recourse to Client on
Receivables sold and assigned to Xxxxx Fargo Century and against other
contingencies for which Client may be chargeable hereunder. As used herein, the
term "net amount" of Receivables shall mean the gross amount of Receivables less
returns, allowances and discounts to customers upon shortest or longest selling
terms, as Xxxxx Fargo Century may elect. If at any time or for any reason the
total of all outstanding Advances and all other Obligations exceeds the Advance
Limit, Client shall immediately pay the amount of the excess to Xxxxx Fargo
Century, without notice or demand.
1.3 COMMISSION. For Xxxxx Fargo Century's services hereunder, (i)
Xxxxx Fargo Century shall receive a COMMISSION equal to the percentage shown on
the Schedule multiplied by the gross amount of each Receivable of Client; and
(ii) in the case of any Receivables from a customer who is a
debtor-in-possession, Xxxxx Fargo Century shall receive an additional commission
equal to no less than one (1%) percent for 15 day selling terms and two (2%)
percent for 30 day selling terms, of the gross invoice amount of each
Receivable, which commission shall be due and payable by Client as of the date a
Receivable arises, and shall then be chargeable to Client's account with Xxxxx
Fargo Century, and (iii) in the case of any Receivable due from a customer now
or hereafter listed on Schedule "A" annexed hereto as a "Special Customer",
Factor shall receive an additional commission as set forth alongside the name of
such Special Customer", all of which commissions shall be due and payable as of
the date a Receivable arises, and shall then be chargeable to Client's account.
The minimum commission on each invoice in respect of any Receivable shall be
$3.00. Xxxxx Fargo Century's commission specified in the Schedule, is based upon
maximum SELLING TERMS OF 90 DAYS, and no more extended terms or additional
dating shall be granted by Client to any customer without Xxxxx Fargo Century's
prior written approval. The minimum aggregate factoring commissions payable
under this Agreement for each contract year hereof shall be the amount shown in
the Schedule, which, to the extent of any deficiency (after giving effect to
commissions payable hereunder), shall be chargeable to Client's account with
Xxxxx Fargo Century yearly, or on any early termination of this Agreement
(including without limitation termination by reason of an Event of Default). On
any early termination of this Agreement (including without limitation
termination by Xxxxx Fargo Century reason of an Event of Default), the full
minimum commission for the entire year in which termination occurs shall be
payable. "Contract year" means the twelve-month period commencing on the date
hereof and each subsequent twelve-month period.
2. SECURITY INTEREST.
2.1 SECURITY INTEREST. To secure the payment and performance of
all of the Obligations when due, Client hereby grants to Xxxxx Fargo Century a
security interest in all of the following (collectively, the "Collateral"): all
right, title and interest of Client in and to the following, whether now owned
or hereafter arising or acquired and wherever located:
All Receivables;
All Inventory;
All Equipment;
All General Intangibles (including without limitation all Intellectual
Property and Deposit Accounts);
All Investment Property;
All Other Property; and
2
Any and all claims, rights and interests in any of the above, and all
guaranties and security for any of the above, and all substitutions and
replacements for, additions, accessions, attachments, accessories, and
improvements to, and proceeds (including proceeds of any insurance policies,
proceeds of proceeds and claims against third parties) of, all of the above, and
all Client's books relating to any of the above.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CLIENT.
In order to induce Xxxxx Fargo Century to enter into this Agreement and
to make Advances, Client represents and warrants to Xxxxx Fargo Century as
follows, and Client covenants that the following representations will continue
to be true, and that Client will at all times comply with all of the following
covenants:
3.1 CORPORATE EXISTENCE AND AUTHORITY. Client is and will continue
to be, duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization. Client is and will
continue to be qualified and licensed to do business in all jurisdictions in
which any failure to do so would have a material adverse effect on Client. The
execution, delivery and performance by Client of this Agreement, and all other
documents contemplated hereby (i) have been duly and validly authorized, (ii)
are enforceable against Client in accordance with their terms, (iii) do not
violate Client's articles or certificate of incorporation, or Client's by-laws,
or any law or any material agreement or instrument which is binding upon Client
or its property, and (iv) do not constitute grounds for acceleration of any
material indebtedness or obligation under any material agreement or instrument
which is binding upon Client or its property.
3.2 NAME; TRADE NAMES AND STYLES. The name of Client set forth in
the heading to this Agreement is its correct name. Listed on the Schedule are
all prior names of Client and all of Client's present and prior trade names.
Client shall give Xxxxx Fargo Century 30 days' prior written notice before
changing its name or doing business under any other name. Client has complied,
and will in the future comply, with all laws relating to the conduct of business
under a fictitious business name.
3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set
forth in the heading to this Agreement is Client's chief executive office. In
addition, Client has places of business and Collateral is located only at the
locations set forth on the Schedule. Client will give Xxxxx Fargo Century at
least 30 days prior written notice before opening any additional place of
business, changing its chief executive office, or moving any of the Collateral
to a location other than Client's Address or one of the locations set forth on
the Schedule.
3.4 TITLE TO COLLATERAL. Client is now, and will at all times in
the future be, the sole owner of all the Collateral, except for specific items
of Equipment which are leased by Client. The Collateral now is and will remain
free and clear of any and all liens, charges, security interests, encumbrances
and adverse claims, except for the security interest in favor of Xxxxx Fargo
Century and purchase money security interests in specific items of equipment.
Xxxxx Fargo Century now has, and will continue to have, a first-priority
perfected and enforceable security interest in all of the Collateral (except for
purchase money security interests in specific items of equipment), and Client
will at all times defend Xxxxx Fargo Century and the Collateral against all
claims of others. None of the Collateral now is or will be affixed to any real
property in such a manner, or with such intent, as to become a fixture. Client
will keep in full force and effect, and will comply with all the terms of, any
lease of real property where any of the Collateral now or in the future may be
located.
3.5 MAINTENANCE OF COLLATERAL. Client will maintain the Collateral
in good working condition, ordinary wear and tear excepted, and Client will not
use the Collateral for any unlawful
3
purpose. Client will immediately advise Xxxxx Fargo Century in writing of any
material loss or damage to the Collateral.
3.6 BOOKS AND RECORDS. Client has maintained and will maintain at
Client's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.
3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial
statements now or in the future delivered to Xxxxx Fargo Century have been, and
will be, prepared in conformity with generally accepted accounting principles
and now and in the future will completely and fairly reflect the financial
condition of Client, at the times and for the periods therein stated. Between
the last date covered by any such statement provided to Xxxxx Fargo Century and
the date hereof, there has been no material adverse change in the financial
condition or business of Client. Client is now and will continue to be solvent
at all times.
3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Client has
timely filed, and will timely file, all tax returns and reports required by
applicable law, and Client has timely paid, and will timely pay, all applicable
taxes, assessments, deposits and contributions now or in the future owed by
Client.
3.9 COMPLIANCE WITH LAW. Client has complied, and will comply, in
all material respects, with all provisions of all applicable laws and
regulations, including, but not limited to, those relating to Client's ownership
of real or personal property, the conduct and licensing of Client's business,
and all environmental matters. All proceeds of all Advances shall be used solely
for lawful business purposes.
3.10 LITIGATION. Except as disclosed in the Schedule, there is no
claim, suit, litigation, proceeding or investigation pending or threatened
against or affecting Client involving more than $100,000. Client will promptly
inform Xxxxx Fargo Century in writing of any claim, proceeding, litigation or
investigation in the future threatened or instituted by or against Client
involving any claim of $100,000 or more.
4. RECEIVABLES.
4.1 REPRESENTATIONS RELATING TO RECEIVABLES. Client represents and
warrants to Xxxxx Fargo Century as follows: Each Receivable with respect to
which Advances are requested by Client shall, on the date each Advance is
requested and made, represent an undisputed, bona fide, existing, unconditional
obligation of the Account Debtor created by the sale, delivery, and acceptance
of goods or the rendition of services, in the ordinary course of Client's
business.
4.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE.
Client represents and warrants to Xxxxx Fargo Century as follows: All statements
made and all unpaid balances appearing in all invoices, instruments and other
documents evidencing the Receivables are and shall be true and correct and all
such invoices, instruments and other documents and all of Client's books and
records are and shall be genuine and in all respects what they purport to be,
and all signatories and endorsers have the capacity to contract. All sales and
other transactions underlying or giving rise to each Receivable shall comply
with all applicable laws and governmental rules and regulations. All signatures
and endorsements on all documents, instruments, and agreements relating to all
Receivables are and shall be genuine, and all such documents, instruments and
agreements are and shall be legally enforceable in accordance with their terms.
4.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES. Client shall
deliver to Xxxxx Fargo Century transaction reports and loan requests, schedules
and assignments of all Receivables and the invoices relating thereto, and
schedules of collections, all on Xxxxx Fargo Century's standard forms, on a
daily basis; but Client's failure to execute and deliver the same shall not
affect or limit Xxxxx Fargo Century's security interest and other rights in all
of Client's Receivables, nor shall Xxxxx Fargo Century's failure to advance or
lend against a specific Receivable affect or limit
4
Xxxxx Fargo Century's security interest and other rights therein. Together with
each such schedule and assignment, or later if requested by Xxxxx Fargo Century,
Client shall furnish Xxxxx Fargo Century with copies (or, at Xxxxx Fargo
Century's request, originals) of all contracts, orders, invoices, and other
similar documents, and all original shipping instructions, delivery receipts,
bills of lading, and other evidence of delivery, for any goods the sale or
disposition of which gave rise to such Receivables, and Client warrants the
genuineness of all of the foregoing. Client shall also furnish to Xxxxx Fargo
Century an aged accounts receivable trial balance in such form and at such
intervals as Xxxxx Fargo Century shall request. In addition, Client shall
deliver to Xxxxx Fargo Century the originals of all instruments, chattel paper,
security agreements, guarantees and other documents and property evidencing or
securing any Receivables, immediately upon receipt thereof and in the same form
as received, with all necessary endorsements.
4.4 COLLECTION OF RECEIVABLES. Before any Advances are made
hereunder, Client, Xxxxx Fargo Century and a bank acceptable to Xxxxx Fargo
Century shall enter into a lockbox agreement, in form acceptable to Xxxxx Fargo
Century in its sole discretion, and said agreement shall continue in full force
and effect throughout the term of this Agreement and so long as any Obligations
remain unpaid. Client shall direct all Account Debtors to make all payments on
all Receivables to the account established pursuant to said lockbox agreement
(the "Lockbox"), and all invoices issued by Client shall state that payment
thereon is to be made to the Lockbox. Said lockbox agreement shall provide that
all collections received shall be remitted, on a daily basis, to Xxxxx Fargo
Century, to be applied to the Obligations in such order as Xxxxx Fargo Century
shall determine in its sole discretion. If, for any reason, Client shall receive
payment of any Receivables or any proceeds of any other Collateral, Client shall
hold all of the same in trust for Xxxxx Fargo Century, and Client shall
immediately deposit all such payments in the Lockbox, within one business day
after receipt of the same, in their original form, duly endorsed.
4.5 DISPUTES. Client shall notify Xxxxx Fargo Century promptly of
all disputes or claims relating to Receivables on the regular reports to Xxxxx
Fargo Century. Client shall not forgive, or settle any Receivable for less than
payment in full, or agree to do any of the foregoing, without Xxxxx Fargo
Century's prior written consent; PROVIDED, that so long as no Event of Default
exists, Client may settle any Receivable in the original amount less than
$25,000 for less than payment in full without Xxxxx Fargo Century's consent.
4.6 RETURNS. Provided no Event of Default has occurred and is
continuing, if any Account Debtor returns any Inventory to Client in the
ordinary course of its business, Client shall promptly determine the reason for
such return and promptly issue a credit memorandum to the Account Debtor in the
appropriate amount (sending a copy to Xxxxx Fargo Century). In the event any
attempted return occurs after the occurrence of any Event of Default, Client
shall (i) not accept any return without Xxxxx Fargo Century's prior written
consent, (ii) hold the returned Inventory in trust for Xxxxx Fargo Century,
(iii) segregate all returned Inventory from all of Client's other property, (iv)
conspicuously label the returned Inventory as Xxxxx Fargo Century's property,
and (v) immediately notify Xxxxx Fargo Century of the return of any Inventory,
specifying the reason for such return, the location and condition of the
returned Inventory, and on Xxxxx Fargo Century's request deliver such returned
Inventory to Xxxxx Fargo Century.
4.7 VERIFICATION. Xxxxx Fargo Century may, from time to time,
verify directly with the respective Account Debtors the validity, amount and
other matters relating to the Receivables, by means of mail, telephone or
otherwise, either in the name of Client or Xxxxx Fargo Century or such other
name as Xxxxx Fargo Century may choose, and Xxxxx Fargo Century or its designee
may, at any
5
time, notify Account Debtors that the Receivables have been assigned and
transferred to Xxxxx Fargo Century.
4.8 NO LIABILITY. Xxxxx Fargo Century shall not under any
circumstances be responsible or liable for any shortage or discrepancy in,
damage to, or loss or destruction of, any goods, the sale or other disposition
of which gives rise to a Receivable, or for any error, act, omission, or delay
of any kind occurring in the settlement, failure to settle, collection or
failure to collect any Receivable, or for settling any Receivable in good faith
for less than the full amount thereof, nor shall Xxxxx Fargo Century be deemed
to be responsible for any of Client's obligations under any contract or
agreement giving rise to a Receivable.
5. ADDITIONAL DUTIES OF THE CLIENT.
5.1 INSURANCE. Client shall, at all times, insure all of the
Collateral and carry such other business insurance, with insurers reasonably
acceptable to Xxxxx Fargo Century, in such form and amounts as Xxxxx Fargo
Century may reasonably require, and Client shall provide evidence of such
insurance to Xxxxx Fargo Century, so that Xxxxx Fargo Century is satisfied that
such insurance is, at all times, in full force and effect. All such insurance
policies shall name Xxxxx Fargo Century as the exclusive additional loss payee,
and shall contain a lenders loss payee endorsement in form reasonably acceptable
to Xxxxx Fargo Century. Upon receipt of the proceeds of any such insurance,
Xxxxx Fargo Century shall apply such proceeds in reduction of the Obligations in
such order as Xxxxx Fargo Century shall determine in its sole discretion. If
Client fails to provide or pay for any insurance, Xxxxx Fargo Century may, but
is not obligated to, obtain the same at Client's expense. Client shall promptly
deliver to Xxxxx Fargo Century copies of all reports made to insurance
companies.
5.2 REPORTS. Client, at its expense, shall provide Xxxxx Fargo
Century with the written reports set forth in the Schedule, and such other
written reports with respect to Client, as Xxxxx Fargo Century shall from time
to time reasonably specify, including without limitation accounts payable
agings, aged by invoice date, and outstanding or held check registers, and
inventory reports, all in such form and with such detail as Xxxxx Fargo Century
shall specify. Client shall also cause all individual Guarantors, if any, to
furnish to Xxxxx Fargo Century his/her personal financial statement in form and
substance acceptable to Xxxxx Fargo Century (but no more frequently than once in
any twelve-month period).
5.3 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times,
and on one Business Day's notice, Xxxxx Fargo Century, or its agents, shall have
the right to inspect the Collateral, and the right to audit and copy Client's
books and records. The foregoing inspections and audits shall be at Client's
expense and the charge therefor shall be $750 per person per day for the time of
Xxxxx Fargo Century's personnel, or such other amount as shall represent Xxxxx
Fargo Century's then standard charge for the same, plus all out-of-pocket
expenses incurred by Xxxxx Fargo Century in connection therewith.
5.4 REMITTANCE OF PROCEEDS. Except for sums to be deposited in the
Lockbox as provided in Section 4.4 above, all proceeds arising from the sale or
other disposition of any Collateral shall be delivered, in kind, by Client to
Xxxxx Fargo Century in the original form in which received by Client not later
than the following business day after receipt by Client, to be applied to the
Obligations in such order as Xxxxx Fargo Century shall determine. Client shall
not commingle proceeds of Collateral with any of Client's other funds or
property, and shall hold such proceeds separate and apart from such other funds
and property and in an express trust for Xxxxx Fargo Century. Nothing in this
Section limits the restrictions on disposition of Collateral set forth elsewhere
in this Agreement.
5.5 NEGATIVE COVENANTS. Client shall not, without Xxxxx Fargo
Century's prior written consent, do any of the following: (i) merge or
6
consolidate with another corporation or entity; (ii) acquire any assets, except
in the ordinary course of business; (iii) enter into any other transaction
outside the ordinary course of business; (iv) sell or transfer any Collateral,
except that, provided no Default or Event of Default has occurred and is
continuing, Client may sell finished Inventory in the ordinary course of
Client's business and Client may trade-in or dispose of obsolete or unneeded
Equipment in good faith arm's length transactions, in the ordinary course of
business; (v) store any Inventory or other Collateral with any warehouseman or
other third party, except for storage of Inventory with a public warehouse in
the ordinary course of business where there is in place an agreement between
Xxxxx Fargo Century and such warehouseman in form and substance satisfactory to
Xxxxx Fargo Century in its discretion; (vi) sell any Inventory on a
sale-or-return, guaranteed sale, consignment, or other contingent basis; (vii)
make any loans of any money or other assets, or purchase the stock or other
securities of, or make any other investment in, any other Person; (viii) incur
any debts, outside the ordinary course of business; (ix) guarantee or otherwise
become liable with respect to the obligations of another party or entity; (x)
pay or declare any dividends on Client's stock (except for dividends payable
solely in stock of Client); (xi) redeem, retire, purchase or otherwise acquire,
directly or indirectly, any of Client's stock; (xii) make any change in Client's
capital structure which would have a material adverse effect on Client or on the
prospect of repayment of the Obligations; or (xiii) dissolve or elect to
dissolve; or (xiv) make any Capital Expenditure in excess of $250,000 in any
fiscal year; (xv) amend, modify or waive any term or provision of its
Certificate of Incorporation or By-Laws unless required by law; or (xvi) agree
to do any of the foregoing.
5.6 LITIGATION COOPERATION. Should any third-party suit or
proceeding be instituted by or against Xxxxx Fargo Century with respect to any
Collateral or in any manner relating to Client, Client shall, without expense to
Xxxxx Fargo Century, make available Client and its officers, employees and
agents, and Client's books and records, without charge, to the extent that Xxxxx
Fargo Century may deem them reasonably necessary in order to prosecute or defend
any such suit or proceeding.
5.7 NOTIFICATION OF CHANGES. Client will promptly notify Xxxxx
Fargo Century in writing of any change in its officers or directors, the opening
of any new bank account or other Deposit Account, and any material adverse
change in the business or financial affairs of Client.
5.8 FURTHER ASSURANCES. Client agrees, at its expense, on request
by Xxxxx Fargo Century, to execute all documents and take all actions, as Xxxxx
Fargo Century may deem reasonably necessary or useful in order to perfect and
maintain Xxxxx Fargo Century's perfected security interest in the Collateral,
and in order to fully consummate the transactions contemplated by this
Agreement.
5.9 INDEMNITY. Client hereby agrees to indemnify the following
persons (collectively, the "Indemnitees"): Xxxxx Fargo Century and its
affiliates, subsidiaries, parent, directors, officers, employees, agents, and
attorneys, and to hold them harmless from and against any and all claims, debts,
liabilities, demands, obligations, actions, causes of action, penalties, costs
and expenses (including attorneys' fees), of every nature, character and
description, which any Indemnitee may sustain or incur based upon or arising out
of any of the Obligations, any actual or alleged failure to collect and pay over
any withholding or other tax relating to Client or its employees, any
relationship or agreement between Xxxxx Fargo Century and Client, any actual or
alleged failure of Xxxxx Fargo Century to comply with any writ of attachment or
other legal process relating to Client or any of its property, or any other
matter, cause or thing whatsoever occurred, done, omitted or suffered to be done
by any Indemnitee relating to Client or the Obligations. Notwithstanding any
provision in this Agreement to the contrary, the indemnity agreement set forth
in this Section shall survive any termination of this Agreement and shall for
all purposes continue in full force and effect.
7
6. TERM.
6.1 MATURITY DATE. Subject to early termination as provided in
Section 6.2, this Agreement shall continue in effect until the maturity date set
forth on the Schedule (the "Maturity Date"); provided that the Maturity Date
shall automatically be extended, and this Agreement shall automatically and
continuously renew, for successive additional terms of one year each, unless
Client gives written notice to Xxxxx Fargo Century, not less than sixty days
prior to the next Maturity Date, that Client elects to terminate this Agreement
effective on the next Maturity Date.
6.2 EARLY TERMINATION. This Agreement may be terminated by Xxxxx
Fargo Century prior to the Maturity Date (i) at any time (whether or not an
Event of Default has occurred) effective 60 days after written notice of
termination is given to Client; or (ii) at any time after the occurrence of an
Event of Default, without notice, effective immediately.
6.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, Client shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether or
not all or any part of such Obligations are otherwise then due and payable.
Notwithstanding any termination of this Agreement, all of Xxxxx Fargo Century's
security interests in all of the Collateral and all of the terms and provisions
of this Agreement shall continue in full force and effect until all Obligations
have been paid and performed in full; provided that, without limiting the fact
that Advances are subject to the discretion of Xxxxx Fargo Century, Xxxxx Fargo
Century may, in its sole discretion, refuse to make any further Advances after
termination. No termination shall in any way affect or impair any right or
remedy of Xxxxx Fargo Century, nor shall any such termination relieve Client of
any Obligation to Xxxxx Fargo Century, until all of the Obligations have been
paid and performed in full.
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an "Event of Default" under this Agreement, and Client
shall give Xxxxx Fargo Century immediate written notice thereof: (a) Any
warranty, representation, statement, report or certificate made or delivered to
Xxxxx Fargo Century by Client or any of Client's officers, employees or agents,
now or in the future, shall be untrue or misleading in a material respect; or
(b) Client shall fail to pay when due any Advance or any interest thereon or any
other monetary Obligation; or (c) the total Advances and other Obligations
outstanding at any time shall exceed the Advance Limit (except pursuant to a
written agreement between Xxxxx Fargo Century and Client); or (d) Client shall
fail to perform any non-monetary Obligation; or (e) any levy, assessment,
attachment, seizure, lien or encumbrance is made on all or any part of the
Collateral which is not cured within 10 days after the occurrence of the same;
or (f) Client breaches any material contract or obligation, which has or may
reasonably be expected to have a material adverse effect on Client's business or
financial condition; or (g) dissolution, termination of existence, insolvency,
business failure or temporary or permanent suspension of business of Client or
any Guarantor; or appointment of a receiver, trustee or custodian, for all or
any part of the property of, assignment for the benefit of creditors by, or the
commencement of any proceeding by or against Client or any Guarantor under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect; or (h) revocation or termination of, or limitation or denial
of liability upon, any guaranty of the Obligations or any attempt to do any of
the foregoing or death of any Guarantor; or (i) revocation or termination of, or
limitation or denial of liability upon, any pledge of any certificate of
deposit, securities or other property or asset pledged by any third party to
secure any or all of the Obligations, or any attempt to do any of the foregoing,
or commencement of proceedings by or against any such third party under any
bankruptcy
8
or insolvency law; or (j) Any Person or "group" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) who is not a
shareholder of the Client on the date hereof is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of
1934, except that a Person will be deemed to have "beneficial ownership" of all
securities that such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than thirty five percent (35%) of the voting power of all
classes of shares of the Client; or (k) Client shall generally not pay its debts
as they become due, or Client shall conceal, remove or transfer any part of its
property, with intent to hinder, delay or defraud its creditors, or make or
suffer any transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or (l) there shall be a
material adverse change in Client's business or financial condition.
7.2 REMEDIES. Upon the occurrence and during the continuance of
any Event of Default, and at any time thereafter, Xxxxx Fargo Century, at its
option, and without notice or demand of any kind (all of which are hereby
expressly waived by Client), may do any one or more of the following: (a) Cease
making Advances or otherwise extending credit to Client under this Agreement or
any other document or agreement; (b) Accelerate and declare all or any part of
the Obligations to be immediately due, payable, and performable, notwithstanding
any deferred or installment payments allowed by any instrument evidencing or
relating to any Obligation; (c) Take possession of any or all of the Collateral
wherever it may be found, and for that purpose Client hereby authorizes Xxxxx
Fargo Century without judicial process to enter onto any of Client's premises
without interference to search for, take possession of, keep, store, or remove
any of the Collateral, and remain on the premises or cause a custodian to remain
on the premises in exclusive control thereof, without charge for so long as
Xxxxx Fargo Century deems it reasonably necessary in order to complete the
enforcement of its rights under this Agreement or any other agreement; provided,
however, that should Xxxxx Fargo Century seek to take possession of any of the
Collateral by Court process, Client hereby irrevocably waives: (i) any bond and
any surety or security relating thereto required by any statute, court rule or
otherwise as an incident to such possession; (ii) any demand for possession
prior to the commencement of any suit or action to recover possession thereof;
and (iii) any requirement that Xxxxx Fargo Century retain possession of, and not
dispose of, any such Collateral until after trial or final judgment; (d) Require
Client to assemble any or all of the Collateral and make it available to Xxxxx
Fargo Century at places designated by Xxxxx Fargo Century which are reasonably
convenient to Xxxxx Fargo Century and Client, and to remove the Collateral to
such locations as Xxxxx Fargo Century may deem advisable; (e) Complete the
processing, manufacturing or repair of any Collateral prior to a disposition
thereof and, for such purpose and for the purpose of removal, Xxxxx Fargo
Century shall have the right to use Client's premises, vehicles, hoists, lifts,
cranes, equipment and all other property without charge; (f) Sell, lease or
otherwise dispose of any of the Collateral, in its condition at the time Xxxxx
Fargo Century obtains possession of it or after further manufacturing,
processing or repair, at one or more public and/or private sales, in lots or in
bulk, for cash, exchange or other property, or on credit, and to adjourn any
such sale from time to time without notice other than oral announcement at the
time scheduled for sale. Xxxxx Fargo Century shall have the right to conduct
such disposition on Client's premises without charge, for such time or times as
Xxxxx Fargo Century deems reasonable, or on Xxxxx Fargo Century's premises, or
elsewhere and the Collateral need not be located at the place of disposition.
Xxxxx Fargo Century may directly or through any affiliated company purchase or
lease any Collateral at any such public disposition, and if permissible under
applicable law, at any private disposition. Any sale or other disposition of
Collateral shall not relieve Client of any liability Client may have if any
Collateral is defective as to title or physical condition or otherwise at the
time
9
of sale; (g) Demand and receive possession of any of Client's federal and state
income tax returns and the books and records utilized in the preparation thereof
or referring thereto. All reasonable attorneys' fees, expenses, costs,
liabilities and obligations incurred by Xxxxx Fargo Century with respect to the
foregoing shall be added to and become part of the Obligations, shall be due on
demand, and shall bear interest at a rate equal to the highest Contract Rate
applicable to any of the Obligations. Without limiting any of Xxxxx Fargo
Century's rights and remedies, from and after the occurrence of any Event of
Default, the Contract Rate applicable to the Obligations shall be increased by
an additional four percent per annum.
7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Client
and Xxxxx Fargo Century agree that a sale or other disposition (collectively,
"sale") of any Collateral which complies with the following standards will
conclusively be deemed to be commercially reasonable: (i) Notice of the sale is
given to Client at least seven days prior to the sale, and, in the case of a
public sale, notice of the sale is published at least seven days before the sale
in a newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by Xxxxx
Fargo Century, with or without the Collateral being present; (iv) The sale
commences at any time between 8:00 a.m. and 6:00 p.m.; (v) Payment of the
purchase price in cash or by cashier's check or wire transfer is required; (vi)
With respect to any sale of any of the Collateral, Xxxxx Fargo Century may (but
is not obligated to) direct any prospective purchaser to ascertain directly from
Client any and all information concerning the same. Xxxxx Fargo Century shall be
free to employ other methods of noticing and selling the Collateral, in its
discretion, if they are commercially reasonable.
7.4 POWER OF ATTORNEY. Client grants to Xxxxx Fargo Century an
irrevocable power of attorney coupled with an interest, authorizing and
permitting Xxxxx Fargo Century (acting through any of its employees, attorneys
or agents) at any time, at its option, but without obligation, with or without
notice to Client, and at Client's expense, to do any or all of the following, in
Client's name or otherwise, but Xxxxx Fargo Century agrees to exercise the
following powers in a commercially reasonable manner: (a) Execute on behalf of
Client any documents that Xxxxx Fargo Century may, in its sole discretion, deem
advisable in order to perfect and maintain Xxxxx Fargo Century's security
interest in the Collateral, or in order to exercise a right of Client or Xxxxx
Fargo Century, or in order to fully consummate all the transactions contemplated
under this Agreement, or under any and all other present and future agreements;
(b) Take control in any manner of any cash or non-cash items of payment or
proceeds of Collateral; endorse the name of Client upon any instruments, or
documents, evidence of payment or Collateral that may come into Xxxxx Fargo
Century's possession; (c) After the occurrence and during the continuance of any
Event of Default, without limiting Xxxxx Fargo Century's other rights and
remedies, do any of the following: (i) Grant extensions of time to pay,
compromise claims and settle Receivables and Other Property for less than face
value and execute all releases and other documents in connection therewith; (ii)
Pay any sums required on account of Client's taxes or to secure the release of
any liens therefor; (iii) Settle and adjust, and give releases of, any insurance
claim that relates to any of the Collateral and obtain payment therefor; (iv)
instruct the post office authorities to direct the Client's mail to Xxxxx Fargo
Century.
7.5 APPLICATION OF PROCEEDS. All proceeds realized as the result
of any sale or other disposition of the Collateral shall be applied by Xxxxx
Fargo Century first to the reasonable costs, expenses, liabilities, obligations
and attorneys' fees incurred by Xxxxx Fargo Century in the exercise of its
rights under this Agreement, second to the interest due upon any of the
Obligations, and third to the principal of the Obligations, in such order as
Xxxxx Fargo Century shall determine in its sole discretion. Any surplus shall be
paid to Client or other persons legally entitled thereto; Client shall
10
remain liable to Xxxxx Fargo Century for any deficiency. If Xxxxx Fargo Century,
in its sole discretion, directly or indirectly enters into a deferred payment or
other credit transaction with any purchaser at any sale of Collateral, Xxxxx
Fargo Century shall have the option, exercisable at any time, in its sole
discretion, of either reducing the Obligations by the principal amount of
purchase price or deferring the reduction of the Obligations until the actual
receipt by Xxxxx Fargo Century of the cash therefor.
7.6 REMEDIES CUMULATIVE. In addition to the rights and remedies
set forth in this Agreement, Xxxxx Fargo Century shall have all the other rights
and remedies accorded a secured party under the Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between Xxxxx Fargo Century and Client, and all of such
rights and remedies are cumulative and none is exclusive. Exercise or partial
exercise by Xxxxx Fargo Century of one or more of its rights or remedies shall
not be deemed an election, nor bar Wells Fargo Century from subsequent exercise
or partial exercise of any other rights or remedies. The failure or delay of
Xxxxx Fargo Century to exercise any rights or remedies shall not operate as a
waiver thereof, but all rights and remedies shall continue in full force and
effect until all of the Obligations have been fully paid and performed.
8. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"ACCOUNT DEBTOR" means the obligor on a Receivable.
"ADVANCES" has the meaning set forth in Section 1.2 above.
"AGREEMENT" and "THIS AGREEMENT" means this Factoring Agreement and all
modifications and amendments thereto, extensions thereof, and replacements
therefor.
"CAPITAL EXPENDITURES" means all expenditures made and liabilities
incurred for the acquisition of any fixed asset or improvement, replacement,
substitution or addition thereto which has a useful life of more than one year
and including, without limitation, those arising in connection with Capital
Leases.
"CAPITAL LEASE" means any lease of property by Client that, in
accordance with generally accepted accounting principles, should be capitalized
for financial reporting purposes and reflected as a liability on the balance
sheet of Client.
"CODE" means the Uniform Commercial Code as adopted and in effect in
the State of California on the date hereof.
"COLLATERAL" has the meaning set forth in Section 2.1 above.
"DEFAULT" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"DEPOSIT ACCOUNT" means all of the following, now owned and hereafter
acquired by Client: all "deposit accounts" as defined in the Code in effect on
the date hereof with such additions to such term as may hereafter be made, and
includes without limitation all general and special bank accounts, demand
accounts, checking accounts, savings accounts and certificates of deposit.
"ELIGIBLE RECEIVABLES" means Receivables which meet the following
minimum requirements and criteria: (a) shipment of the merchandise or the
rendition of services has been completed; (b) no return, rejection or
repossession of the merchandise has occurred; (c) the merchandise or services
has not have been rejected or disputed by the customer and there shall not have
been asserted any offset, defense or counterclaim; (d) the Receivable continues
to be in full conformity with the representations and warranties made by Client
to Xxxxx Fargo Century with respect thereto; (e) Xxxxx
11
Fargo Century is, and continues to be, satisfied with the credit standing of the
Account Debtor in relation to the amount of credit extended; (f) the Receivable
is documented by an invoice in a form approved by Xxxxx Fargo Century and is not
to be unpaid more than 60 days from its original due date; (g) less than 25% of
the unpaid amount of invoices due from such Account Debtor remain unpaid more
than 60 days from its original due date (cross ageing); (h) the Receivable is
not evidenced by chattel paper or an instrument of any kind with respect to or
in payment of the Receivable unless such instrument is duly endorsed to Xxxxx
Fargo Century and in Xxxxx Fargo Century's possession or represents a check in
payment of a Receivable; (i) if the customer is located outside of the United
States, the goods which gave rise to such Receivable were shipped after receipt
by Xxxxx Fargo Century from or on behalf of the customer of an irrevocable
letter of credit, assigned and delivered to Xxxxx Fargo Century and confirmed by
a financial institution acceptable to Xxxxx Fargo Century and is in form and
substance acceptable to Xxxxx Fargo Century, payable in the full amount of the
Receivable in United States dollars at a place of payment located within the
United States; (j) the Receivable is not subject to any lien; (k) the Receivable
does not arise out of transactions with any of Client's employees, officers,
agents, directors, stockholders or affiliates; (l) the Receivable is payable to
Client; (m) the Receivable does not arise out of a xxxx and hold sale prior to
shipment, and if the Receivable arises out of a sale to any customer to whom
Client is indebted, the amount of such indebtedness, and any anticipated
indebtedness, is deducted in determining the face amount of such Receivable; (n)
the Receivable is net of any returns, discounts, claims, credits and allowances;
(o) if the Receivable arises out of contracts between Client and the United
States, any state, or any department, agency or instrumentality of any of them,
Client has so notified Xxxxx Fargo Century, in writing, prior to the creation of
such Receivable, and, if Xxxxx Fargo Century so requests, there has been
compliance with any governmental notice or approval requirements, including
without limitation, compliance with the Federal Assignment of Claims Act; (p)
the Receivable is a good and valid account representing an undisputed bona fide
indebtedness incurred by the Account Debtor therein named, for a fixed sum as
set forth in the invoice relating thereto with respect to an unconditional sale
and delivery upon the stated terms of goods sold by Client, or work, labor
and/or services rendered by Client; (q) the total unpaid Receivables from such
Account Debtor does not exceed twenty-five percent (25%) of all Eligible
Receivables (customer concentration); (r) the Receivable does not arise out of
progress xxxxxxxx prior to completion of the order; and (s) the Receivable is
otherwise satisfactory to Xxxxx Fargo Century as determined in good faith in the
reasonable exercise of Xxxxx Fargo Century's discretion.
"EQUIPMENT" means all of the following, now owned and hereafter
acquired by Client: all "equipment" as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation all machinery, fixtures, goods, vehicles (including motor
vehicles and trailers), and any interest in any of the foregoing.
"EVENT OF DEFAULT" means any of the events set forth in Section 7.1 of
this Agreement.
"GENERAL INTANGIBLES" means all of the following, now owned and
hereafter acquired by Client: all "general intangibles" as defined in the Code
in effect on the date hereof with such additions to such term as may hereafter
be made, and includes without limitation all Intellectual Property, Deposit
Accounts, royalties, contract rights, goodwill, franchise agreements, purchase
orders, customer lists, route lists, telephone numbers, domain names, claims,
income tax refunds, security and other deposits, options to purchase or sell
real or personal property, rights in all litigation presently or hereafter
pending (whether in contract, tort or otherwise), insurance policies (including
without limitation key man, property damage, and business interruption
insurance),
12
payments of insurance and rights to payment of any kind.
"GUARANTOR" means any Person who has guaranteed any of the Obligations.
"INTELLECTUAL PROPERTY" means all of the following, now owned and
hereafter acquired by Client: all (a) copyrights, copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work thereof, whether published or unpublished, (b)
trade secret rights, including all rights to unpatented inventions and know how,
and confidential information; (c) mask work or similar rights available for the
protection of semiconductor chips; (d) patents, patent applications and like
protections including without limitation improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same; (e)
trademarks, servicemarks, trade styles, and trade names, whether or not any of
the foregoing are registered, and all applications to register and registrations
of the same and like protections, and the entire goodwill of the business of
Client connected with and symbolized by any such trademarks; (f) computer
software and computer software products; (g) designs and design rights; (h)
technology; (i) all claims for damages by way of past, present and future
infringement of any of the rights included above; (j) all licenses or other
rights to use any property or rights of a type described above.
"INVENTORY" means all of the following, now owned and hereafter
acquired by Client: all "inventory" as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Client's custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.
"INVESTMENT PROPERTY" means all of the following, now owned and
hereafter acquired by Client: all investment property, securities, stocks,
bonds, debentures, debt securities, partnership interests, limited liability
company interests, options, security entitlements, securities accounts,
commodity contracts, commodity accounts, and all financial assets held in any
securities account or otherwise, wherever located, and all other securities of
every kind, whether certificated or uncertificated,
"OBLIGATIONS" means all present and future Advances, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Client or any of its subsidiaries or affiliates to Xxxxx Fargo
Century or its parent or any of its subsidiaries or affiliates, whether
evidenced by this Agreement or any note or other instrument or document, whether
arising from an extension of credit, loan, guaranty, indemnification or
otherwise, whether direct or indirect (including, without limitation, those
acquired by assignment or as a result of the factoring by Xxxxx Fargo Century,
or by Xxxxx Fargo Century's parent, subsidiary or affiliates, of the accounts
owing from Client to others, or as a result of any participation by Xxxxx Fargo
Century in Client's debts owing to others), absolute or contingent, due or to
become due, including, without limitation, all interest, charges, expenses,
fees, attorney's fees, expert witness fees, audit fees, loan fees, termination
fees, minimum interest charges and any other sums chargeable to Client under
this Agreement or under any other present or future instrument or agreement
between Client and Xxxxx Fargo Century.
"OTHER PROPERTY" means all of the following, now owned and hereafter
acquired by Client: all of the following as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and all
rights relating thereto: "documents", "instruments", "chattel paper", "letters
of credit", "fixtures", and "money", and all other tangible and intangible
personal property and rights of any other kind which are not included in the
other items of Collateral, whether or not covered by the Code.
13
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"RECEIVABLES" means all of the following, now owned and hereafter
acquired by Client: all "accounts" as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made (whether or not
earned by performance), and all guaranties and other security therefor, and all
rights of stoppage in transit and all other rights or remedies of an unpaid
vendor, lienor or secured party.
OTHER TERMS. All accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in accordance
with generally accepted accounting principles, consistently applied. All other
terms contained in this Agreement, unless otherwise indicated, shall have the
meanings provided by the Code, to the extent such terms are defined therein.
9. GENERAL PROVISIONS.
9.1 COMPUTATIONS. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by Xxxxx Fargo
Century (including proceeds of Receivables and payment of the Obligations in
full) shall be deemed applied by Xxxxx Fargo Century on account of the
Obligations two business days after receipt by Xxxxx Fargo Century of
immediately available funds. Xxxxx Fargo Century shall not, however, be required
to credit Client's account for the amount of any item of payment which is
unsatisfactory to Xxxxx Fargo Century in its discretion, and Xxxxx Fargo Century
may charge Client's account for the amount of any item of payment which is
returned to Xxxxx Fargo Century unpaid.
9.2 APPLICATION OF PAYMENTS; ACCOUNTINGS. All payments with
respect to the Obligations may be applied, and in Xxxxx Fargo Century's sole
discretion reversed and re-applied, to the Obligations, in such order and manner
as Xxxxx Fargo Century shall determine in its sole discretion. Xxxxx Fargo
Century may, in its discretion, require that Client pay monetary Obligations in
cash to Xxxxx Fargo Century, or charge them to Client's account, in which event
they will bear interest at the same rate applicable to the Advances. Xxxxx Fargo
Century shall provide Client monthly with an account of advances, charges,
expenses and payments made pursuant to this Agreement. Such account shall be
deemed correct, accurate and binding on Client and an account stated (except for
reverses and reapplications of payments made and corrections of errors
discovered by Xxxxx Fargo Century), unless Client notifies Xxxxx Fargo Century
in writing to the contrary within sixty days after each account is rendered,
describing the nature of any alleged errors or admissions.
9.3 NOTICES. All notices to be given under this Agreement shall be
in writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, or certified mail return receipt
requested, addressed to Xxxxx Fargo Century or Client at the addresses shown in
the heading to this Agreement, or at any other address designated in writing by
one party to the other party. All notices shall be deemed to have been given
upon delivery in the case of notices personally delivered, or at the expiration
of one business day following delivery to the private delivery service, or two
business days following the deposit thereof in the United States mail, with
postage prepaid.
9.4 ATTORNEYS FEES AND COSTS. Client shall reimburse Xxxxx Fargo
Century for all reasonable attorneys' fees and all filing, recording, search,
title insurance, appraisal, audit, and other reasonable costs incurred by Xxxxx
Fargo Century, pursuant to, or in connection with, or relating to this Agreement
(whether or not a lawsuit is filed), including, but not limited to, all
reasonable attorneys' fees and costs Xxxxx Fargo Century incurs in order to do
the following: prepare and negotiate this Agreement and any present or future
14
documents relating to this Agreement and any waiver, amendment, supplement,
consent or modification hereof or thereof; obtain legal advice in connection
with this Agreement or Client; enforce, or seek to enforce, any of its rights;
prosecute actions against, or defend actions by, Account Debtors; obtaining or
enforcing payment of any Obligation, commence, intervene in, or defend any
action or proceeding; initiate any complaint to be relieved of the automatic
stay in bankruptcy; file or prosecute any probate claim, bankruptcy claim,
third-party claim, or other claim; protect, obtain possession of, lease, dispose
of, or otherwise enforce Xxxxx Fargo Century's security interest in, the
Collateral; and otherwise represent Xxxxx Fargo Century in any litigation
relating to Client. If either Xxxxx Fargo Century or Client files any lawsuit
against the other predicated on a breach of this Agreement, the prevailing party
in such action shall be entitled to recover its reasonable costs and attorneys'
fees, including (but not limited to) reasonable attorneys' fees and costs
incurred in the enforcement of, execution upon or defense of any order, decree,
award or judgment.
9.5 WAIVERS. The failure of Xxxxx Fargo Century at any time or
times to require Client to strictly comply with any of the provisions of this
Agreement or any other present or future agreement between Client and Xxxxx
Fargo Century shall not waive or diminish any right of Xxxxx Fargo Century later
to demand and receive strict compliance therewith. Any waiver of any default
shall not waive or affect any other default, whether prior or subsequent, and
whether or not similar. None of the provisions of this Agreement or any other
agreement now or in the future executed by Client and delivered to Xxxxx Fargo
Century shall be deemed to have been waived by any act or knowledge of Xxxxx
Fargo Century or its agents or employees, but only by a specific written waiver
signed by an authorized officer of Xxxxx Fargo Century and delivered to Client.
Client waives demand, protest, notice of protest and notice of default or
dishonor, notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, instrument, account, Receivable,
General Intangible, document or guaranty at any time held by Xxxxx Fargo Century
on which Client is or may in any way be liable, and notice of any action taken
by Xxxxx Fargo Century, unless expressly required by this Agreement. NEITHER
XXXXX FARGO CENTURY NOR ITS PARENT, NOR ANY OF ITS AFFILIATES, SUBSIDIARIES,
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR ATTORNEYS SHALL BE RESPONSIBLE OR
LIABLE TO CLIENT OR TO ANY OTHER PARTY FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF ANY FINANCIAL
ACCOMMODATION HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT
OR ANY OTHER OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.
9.6 GENERAL. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors, assigns, heirs,
beneficiaries and representatives of Client and Xxxxx Fargo Century; provided,
however, that Client may not assign or transfer any of its rights under this
Agreement without the prior written consent of Xxxxx Fargo Century, and any
prohibited assignment shall be void. No consent by Xxxxx Fargo Century to any
assignment shall release Client from its liability for the Obligations. If
Client consists of more than one Person, their liability shall be joint and
several, and the compromise of any claim with, or the release of, any Client
shall not constitute a compromise with, or a release of, any other Client. This
Agreement and all acts and transactions hereunder and all rights and obligations
of Xxxxx Fargo Century and Client shall be governed by the laws of the State of
California. Client (i) agrees that all actions and proceedings relating directly
or indirectly to this Agreement shall, at Xxxxx Fargo Century's option, be
litigated in courts located within , and that the exclusive venue therefor shall
be the State of California; (ii) consents to the jurisdiction and
15
venue of any such court and consents to service of process in any such action or
proceeding by personal delivery or any other method permitted by law; and (iii)
waives any and all rights Client may have to object to the jurisdiction of any
such court, or to transfer or change the venue of any such action or proceeding.
Paragraph headings are only used in this Agreement for convenience, and shall
not be used in any manner to construe, limit, define or interpret any term or
provision of this Agreement. The term "including", whenever used in this
Agreement, shall mean "including (but not limited to)". This Agreement has been
fully reviewed and negotiated between the parties and no uncertainty or
ambiguity in any term or provision of this Agreement shall be construed strictly
against Xxxxx Fargo Century or Client under any rule of construction or
otherwise. Should any provision of this Agreement be held by any court of
competent jurisdiction to be void or unenforceable, such defect shall not affect
the remainder of this Agreement, which shall continue in full force and effect.
This Agreement and such other written agreements, documents and instruments as
may be executed in connection herewith are the final, entire and complete
agreement between Client and Xxxxx Fargo Century and supersede all prior and
contemporaneous negotiations and oral representations and agreements, all of
which are merged and integrated in this Agreement. THERE ARE NO ORAL
UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES WHICH ARE NOT
SET FORTH IN THIS AGREEMENT OR IN OTHER WRITTEN AGREEMENTS SIGNED BY THE PARTIES
IN CONNECTION HEREWITH. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by Client and a duly authorized
officer of Xxxxx Fargo Century. Time is of the essence in the performance by
Client of each and every obligation under this Agreement.
9.7 MUTUAL WAIVER OF JURY TRIAL. CLIENT AND XXXXX FARGO CENTURY
EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER
PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN XXXXX FARGO CENTURY AND
CLIENT, OR ANY CONDUCT, ACTS OR OMISSIONS OF XXXXX FARGO CENTURY OR CLIENT OR
ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER
PERSONS AFFILIATED WITH XXXXX FARGO CENTURY OR CLIENT, IN ALL OF THE FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
9.8 REFERENCE PROVISION.
(a) The parties prefer that any dispute between them be
resolved in litigation subject to a Jury Trial Waiver as set forth in the
Factoring Documents (defined below), but the California Supreme Court has held
that pre-dispute Jury Trial Waivers not authorized by statute are unenforceable.
This Reference Provision will be applicable until: (i) the California Supreme
Court holds that a pre-dispute Jury Trial Waiver provision similar to that
contained in the Factoring Documents is valid or enforceable; or (ii) the
California Legislature enacts a statute which becomes law, authorizing
pre-dispute Jury Trial Waivers of the type in the Factoring Documents and, as a
result, such waivers become enforceable.
(b) Other than (i) nonjudicial foreclosure of security
interests in real or personal property, (ii) the appointment of a receiver or
(iii) the exercise of other provisional remedies (any of which may be initiated
pursuant to applicable law), any controversy, dispute or claim (each, a "Claim")
between the parties arising out of or relating to this Agreement or any other
document, instrument or agreement between the Factor and the Client
(collectively in this Section, the "Factoring Documents"), will be resolved by a
reference proceeding in California in accordance with the provisions of Section
638 et seq. of the California Code of Civil Procedure ("CCP"), or their
successor sections, which shall constitute the exclusive
16
remedy for the resolution of any Claim, including whether the Claim is subject
to the reference proceeding. Except as otherwise provided in the Factoring
Documents, venue for the reference proceeding will be in the Superior Court or
Federal District Court in the County or District where the real property, if
any, is located or in a County or District where venue is otherwise appropriate
under applicable law (the "Court").
(c) The referee shall be a retired Judge or Justice
selected by mutual written agreement of the parties. If the parties do not
agree, the referee shall be selected by the Presiding Judge of the Court (or his
or her representative). A request for appointment of a referee may be heard on
an ex parte or expedited basis, and the parties agree that irreparable harm
would result if ex parte relief is not granted. The referee shall be appointed
to sit with all the powers provided by law. Pending appointment of the referee,
the Court has power to issue temporary or provisional remedies.
(d) The parties agree that time is of the essence in
conducting the reference proceedings. Accordingly, the referee shall be
requested, subject to change in the time periods specified herein for good cause
shown, to (a) set the matter for a status and trial-setting conference within
fifteen (15) days after the date of selection of the referee, (b) if
practicable, try all issues of law or fact within ninety (90) days after the
date of the conference and (c) report a statement of decision within twenty (20)
days after the matter has been submitted for decision.
(e) The referee will have power to expand or limit the
amount and duration of discovery. The referee may set or extend discovery
deadlines or cutoffs for good cause, including a party's failure to provide
requested discovery for any reason whatsoever. Unless otherwise ordered based
upon good cause shown, no party shall be entitled to "priority" in conducting
discovery, depositions may be taken by either party upon seven (7) days written
notice, and all other discovery shall be responded to within fifteen (15) days
after service. All disputes relating to discovery which cannot be resolved by
the parties shall be submitted to the referee whose decision shall be final and
binding.
(f) Except as expressly set forth in this Agreement, the
referee shall determine the manner in which the reference proceeding is
conducted including the time and place of hearings, the order of presentation of
evidence, and all other questions that arise with respect to the course of the
reference proceeding. All proceedings and hearings conducted before the referee,
except for trial, shall be conducted without a court reporter, except that when
any party so requests, a court reporter will be used at any hearing conducted
before the referee, and the referee will be provided a courtesy copy of the
transcript. The party making such a request shall have the obligation to arrange
for and pay the court reporter. Subject to the referee's power to award costs to
the prevailing party, the parties will equally share the cost of the referee and
the court reporter at trial.
(g) The referee shall be required to determine all issues
in accordance with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the State
of California will be applicable to the reference proceeding. The referee shall
be empowered to enter equitable as well as legal relief, provide all temporary
or provisional remedies, enter equitable orders that will be binding on the
parties and rule on any motion which would be authorized in a trial, including
without limitation motions for summary judgment or summary adjudication. The
referee shall issue a decision and pursuant to CCP ss.644 the referee's decision
shall be entered by the Court as a judgment or an order in the same manner as if
thE action had been tried by the Court. The final judgment or order or from any
appealable decision or order entered by the referee shall be fully appealable as
provided by law. The parties reserve the right to findings of fact, conclusions
of laws, a written statement of decision, and the right to move for a new trial
or a different
17
judgment, which new trial, if granted, is also to be a reference proceeding
under this provision.
(h) If the enabling legislation which provides for
appointment of a referee is repealed (and no successor statute is enacted), any
dispute between the parties that would otherwise be determined by reference
procedure will be resolved and determined by arbitration. The arbitration will
be conducted by a retired judge or Justice, in accordance with the California
Arbitration Act ss.1280 through ss.1294.2 of the CCP as amended from time to
tiME. The limitations with respect to discovery set forth above shall apply to
any such arbitration proceeding.
(i) THE PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES
RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY
A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL
OF THEIR OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL
BENEFIT AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY DISPUTE BETWEEN
THEM WHICH ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR THE FACTORING
DOCUMENTS.
10. USA PATRIOT ACT.
The Factor shall have received, sufficiently in advance of the closing
date, all documentation and other information required by bank regulatory
authorities under applicable "know your customer" and anti-money laundering
rules and regulations, including without limitation the United States PATRIOT
Act (Title III of Pub L. 107-56) (the "Act"). The Factor hereby notifies the
Client that pursuant to the requirements of the Act, its is required to obtain,
verify and record information that identifies the Client, which information
includes the name and addresses of the Client, and other information that will
allow Factor to identify the Client in accordance with the Act. The Client shall
and shall cause its subsidiaries, to provide such information and take such
actions
18
as requested by the Factor in order to assist the Factor in maintaining
compliance with the Act.
CLIENT:
IRONCLAD PERFORMANCE WEAR CORPORATION
BY /s/ Xxxxxx Xxxxx
-----------------------------
NAME Xxxxxx Xxxxx
TITLE EVP & CFO
XXXXX FARGO CENTURY:
XXXXX FARGO CENTURY, INC.
BY /s/ Xxxxxx Xxxxxxxx
-----------------------------
NAME Xxxxxx Xxxxxxxx
TITLE SVP
19
XXXXX FARGO CENTURY, INC.
SCHEDULE TO
FACTORING AGREEMENT
CLIENT: IRONCLAD PERFORMANCE WEAR CORPORATION
ADDRESS: 0000 XXXX XXXXX, XXXXX 000
XX XXXXXXX, XXXXXXXXXX 00000
DATE: JULY __, 2006
This Schedule is an integral part of the Factoring Agreement between XXXXX FARGO
CENTURY, INC. ("Xxxxx Fargo Century") and the above client ("Client") of even
date.
================================================================================
1. ADVANCE LIMIT
(Section 1.1):
An amount not to exceed the lesser of $3,000,000 or 85% of the net
amount of Client's Eligible Receivables (as defined in Section 8
above).
================================================================================
2. INTEREST.
Contract Rate (Section 1.2):
A rate equal to the "Prime Rate" (as defined below), in effect from
time to time, plus 0.0% per annum with respect to all Advances.
Interest shall be calculated on the basis of a 360-day year for the
actual number of days elapsed. The Contract Rate in each month shall be
based on the Prime Rate on the last business day of the preceding
month. "Prime Rate" means the "prime rate" announced from time to time
by Xxxxx Fargo Bank N.A. (or such other bank as Xxxxx Fargo Century
shall select in its discretion) as its "prime" or base rate for
commercial loans, whether or not that rate is the lowest interest rate
charged by said bank.
At any time from and after the occurrence and during the continuation
of an Event of Default, Factor may in its discretion increase the
Contract Rate by up to 3% per annum.
================================================================================
3. COMMISSION
1
(Section 1.3):
COMMISSION:
0.25% of the gross invoice amount of each Receivable, computed as
provided in, and subject to the provisions of, Section 1.3 and the
other provisions of this Factoring Agreement.
MINIMUM ANNUAL COMMISSION:
$15,000 per contract year.
================================================================================
4. MATURITY DATE
(Section 6.1):
SEPTEMBER 15, 2008, subject to automatic renewal as provided in Section
6.1 above, and early termination as provided in Section 6.2 above.
================================================================================
5. REPORTING
(Section 5.3):
Client shall provide Xxxxx Fargo Century with the following:
1. Quarterly 10-Q reports, as soon as available, and in any event
by no later than the date on which such report is filed with
the appropriate filing agency.
2. Monthly receivable agings, aged by due date, accounts payable
aging report, by vendor, and copies of investment account
statements, all within 10 days after the end of each month.
3. Annual financial statements, as soon as available, and in any
event within 90 days after the end of each of Client's fiscal
years, in form and substance acceptable to Xxxxx Fargo Century
and audited by an independent certified public accountant
acceptable to Xxxxx Fargo Century.
4. Cash flow projections updated semi-annually or as needed.
5. Daily reports of collection remittances, in form and substance
satisfactory to Xxxxx Fargo Century.
================================================================================
2
6. ADDITIONAL PROVISIONS.
CLOSING CONDITIONS.
Client shall deliver to Xxxxx Fargo Century landlord/warehouse waivers,
in form and substance satisfactory to Xxxxx Fargo Century, by no later
than 60 days after the date of this Factoring Agreement.
================================================================================
CLIENT:
IRONCLAD PERFORMANCE WEAR CORPORATION
By /s/ Xxxxxx Xxxxx
-------------------------------
Name Xxxxxx Xxxxx
Title EVP & CFO
XXXXX FARGO CENTURY:
Xxxxx Fargo Century, Inc.
By /s/ Xxxxxx Xxxxxxxx
-------------------------------
Name Xxxxxx Xxxxxxxx
Title SVP
3
