Exhibit 10.96
FACTORING AGREEMENT
TO: Computone Corporation Date: October 29, 2001
0000 Xxxxxxxx Xxxxx Xxxxxxx, Xxx. 000
Xxxxxxxxxx, XX 00000
PH: 770/625-0000
This Agreement sets out the terms, provisions and conditions on which we
will act as your factor for purchase of accounts receivable from you. References
in this Agreement to "we", "us", or "our" shall refer to Presidential Financial
Corporation. References in this Agreement to "you" or "your" shall refer to the
addressee.
1. PURCHASE OF ACCOUNTS.
We will purchase from you and you will sell to us certain Accounts
Receivable, as defined herein, selected by us created by your sales of goods to
or performance of services for those customers approved by us in amounts
approved by us without recourse to you for insolvency or nonpayment, after the
goods or services have been actually delivered to and finally accepted without
claim or dispute by your customer. An "Account Receivable" or " Account" means
any right to payment of the net amount due from a customer to you for all sales
of goods or performance of services to such customer whether performed or yet to
be performed. You will tender to us for our approval or rejection all of your
Accounts which we have agreed to purchase. This Agreement applies to all
Accounts heretofore or hereafter purchased by us from you. We may at any time in
our sole discretion revoke our approval of any of your customers or reduce the
maximum amount which you may xxxx to any customer, but such reaction or
reduction shall neither affect sales where goods have been shipped or services
have been performed not render us liable to you or any other person or entity
for any loss damaged sustained by reason thereof. We will attempt to notify your
CFO of any accounts declined.
2. PAYMENT FOR ACCOUNTS.
You shall deliver to us immediately after shipment of goods or performance
of services original invoices to be sent to your customers or, at our sole
discretion, such other proof or evidence, including, without limitation,
electronic or computer data, as shall in our sole judgment satisfactorily
confirm and substantiate the creation of an Account Receivable, together with
carrier's receipts or other evidence of shipment suitable to us showing the
delivery of goods or services covered by each invoice. Upon your request, and
upon your certification that an Account has been created, we will remit to you
the net amount of Accounts purchased by us, or such portion thereof as you may
from time to time request, less 20% not advanced. We may at any time set off
against amounts due to you hereunder or we may xxxx you for service charges,
interest, expenses, liability for repurchases, or other items chargeable to you.
We will furnish you with advices of charges set off against amounts due you, and
we will send you a statement as of the closing of business on the last day of
each calendar month or such other closing date as we shall advise you of from
time in writing. Should you purchase goods or services from another of
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our clients and the account arising from such purchase be sold to us, then we
may at any time without notice to you set off the balance due on such account
against amounts we owe you under this Agreement.
3. RESERVE REQUIREMENT. NOT APPLICABLE.
4. CLIENT'S RISK ACCOUNTS.
We may in our sole discretion from time to time purchase Accounts which
arise from sales to customers not approved by us or which are offered to us at
or after their maturity, which shall be known as "Client's Risk Accounts". Any
Client's Risk Account purchased by us shall be with recourse to you for the full
amount thereof. You shall repurchase any Client's Risk Account from us
immediately upon our request, whether or not such Account has matured. Should
our purchase of the Accounts to customers approved by us result in any
indebtedness of such customer to us in an amount in excess of the amount of
credit approved by us, then such amount in excess shall be treated between us as
a Client's Risk Account, and at out request you shall reimburse us such amount
in excess, but we shall not return such Account to you until it is paid in full.
Any payment received by you or us from any source on an Account of a customer,
regardless of how designated, shall be applied first to the reduction of the
credit risk assumed by us as to such customer. If you purchase or lease from
your customer goods or services and your customer claims a right to set-off,
then the Accounts arising from sales to such customers shall automatically
become Client's Risk Accounts.
5. TITLE AND - SECURITY INTEREST.
Delivery to us of an original invoice or of electronic or computer data
evidencing an Account, upon our acceptance thereof, shall assign, transfer and
convey to us title to such Account and its proceeds and all your rights and
interests in the goods sold or services performed and all of your rights and
powers under the sales contract and as unpaid seller, at law or in equity,
including the right to replevin, reclamation and stoppage in transit. Upon our
request you shall deliver to us all documents of title in your control relating
to such goods. Notwithstanding your failure to deliver to us either an invoice
or copy thereof or electronic or computer date evidencing an Account, as
security of your obligations under Agreement and as security for the prompt
repayment of any indebtedness to us, whether now existing or hereafter incurred,
including, without limitation, any indebtedness arising from your purchase of
goods or services from any clients of ours where the account arising from such
purchase has been sold to us, you hereby pledge and assign to us and grant to us
a security interest in all your right, title and interest in and to (i) all of
your Accounts, whether or not such Accounts are factored by us pursuant to this
Agreement; (ii) all of your contract rights related or incident to such
Accounts; (iii) all of your other rights to the payment of money including,
without limitation, rights evidenced by instruments or chattel paper; (iv) all
of your interest of whatever kind and description in goods or inventories, the
sale of which has been given rise to an Account including, without limitation,
goods billed to the Account debtor and held by you in accordance with the
applicable sales contract; (v) all general intangibles arising from or related
or incident to any of your Accounts or any of your goods or inventories, the
sale of which has been given rise to an Account; (vi) all goods, documents of
title, policies and certificates of insurance, securities, instruments, chattel
paper, deposits, cash or other property
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that are now or may hereafter be in our possession or as to which we may now or
hereafter control possession by documents of title or otherwise; and (vii) all
proceeds and products of each of the foregoing, including pre-petition or
post-petition proceeds in bankruptcy (collectively the "Collateral"). We shall
have the right to sell all or any portion of the Collateral at public or private
sale, the right to collect and take control of any proceeds of all or any
portion of the Collateral, and all other rights and remedies of a secured party
under the Uniform Commercial Code of Georgia ("Code"). You will on our request
execute such further assignments, conveyances, financing statements and other
written instruments as we may reasonably request to perfect out little and
security interest in all Collateral.
6. NOTICE OF ASSIGNMENT AND COLLECTIONS.
You shall do all billing on Accounts, and all invoices shall bear the following
legend, or such other legend as we from time to time in our sole discretion may
request:
This account has been assigned to and is owned by Presidential Financial
Corporation. Payment of this account must be made in U.S. funds directly to
Presidential Financial Corporation, CS 105100, Xxxxxx, XX 00000-0000. If this
xxxx is not found to be correct in all respects they must be notified at once.
If necessary to perfect out title or security interest or if requested by us,
each page of your books of Accounts Receivable or duplicate invoices shall show
thereon a notation that the Accounts therein have been sold to us. We may at any
time in out sole discretion give notice of any sale to any person. Any proceeds
received by you of an Account sold to us shall be immediately forwarded to us in
the identical form in which received.
7. RETURNED GOODS.
Should any goods billed to an Account purchased by us either be rejected or
returned or be recovered by you through the exercise of the rights of replevin,
reclamation or stoppage in transit, or otherwise, you shall immediately pay to
us the net sale price of such goods. Until receipt by us of such net sales
price, you shall hold such goods in trust for us at your own risk and expense,
which goods shall be segregated from all other goods set aside and shall be
clearly marked as our property. Upon our request you shall deliver to us all
documents of title in your control relating to such goods. In addition to our
rights and remedies provided in Section 5 above with regard to the Collateral,
we may take possession of all sell such goods at public or private sale at your
expense for the purpose of paying your obligations to us. Such sale shall reduce
your indebtedness to us only to the extent that the net proceeds of the sale are
applied thereto. Should you or your agent grant any allowance or rebate to any
customer, you shall immediately pay us the full amount of such allowance or
rebate.
8. DEDUCTIONS AND DISPUTES.
Should any customer fail or refuse to pay us the full amount of any invoice or
Account or request an adjustment because of any claim or dispute based on
alleged shortage, defects, noncompliance or failure to deliver, set-off or for
any other reason other than the financial inability of such
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customer to pay, you shall immediately notify us and shall adjust any such
dispute of claim at your own expense. When we first have knowledge of a
deduction, claim or dispute we will give you all information we have pertaining
to it, but we shall have no further responsibility to assist you in settling it.
It shall be our policy to permit you thirty (30) days (sixty (60) days in the
case of an alleged failure to deliver) from the earlier of the date we send you
notice of a deduction, claim or dispute or the date you otherwise learn of such
deduction, claim or dispute to effect a settlement. Notwithstanding the
foregoing policy and any extension or leniency which we may grant, if at any
time we, in our sole reasonable judgment, deem it necessary for court
protection, you shall on our written demand repurchase A DISPUTE account or
claim from us. We may at any time set off the claimed or disputed amount of any
Account, or any part thereof, or the amount of any Client's Risk Account, or any
part thereof, against any amount due you or we may charge such amount against
the Reserve or any other, Collateral of yours which we hold. You will indemnify
us for and hold us harmless from and against any liability for or expense on
account of any deduction or claim of your customers arising from any dispute or
claim whatsoever. Any adjustment or credit to an Account by you shall be
immediately communicated to us, and you shall forward to us immediately an
amount equal to the difference between the amount of the Account before
adjustment and its adjusted outstanding balance. Should notice of termination of
this Agreement be sent by either party for any reason you shall immediately
repurchase all disputed Accounts from us an pay us the net amount thereof. After
we have demanded that you repurchase an invoice or Account from us under this
Section, we shall not thereafter be obligated again to purchase such invoice or
Account from you unless we elect to do so after you have resolved all
deductions, claims and disputes affecting it.
9. REPURCHASE OF ACCOUNTS.
When you become obligated to repurchase an invoice or Account, you shall
thereupon be liable to us for the amount thereof, and it shall not be necessary
for us to tender such invoice or Account to you until you have paid us in full.
We may retain such Account and will have a security interest therein as security
for your obligation to pay the repurchase price, and we may sell any such
Account at public or private sale, collect and take control of any proceeds of
any such Account, or exercise any other remedy available to us as a secured
party under the Code and apply the net proceeds of the disposition of an Account
to the satisfaction of such repurchase price of to satisfy any other of your
obligations hereunder.
10. EXCESS CREDIT MEMORANDA AND OVERPAYMENTS.
In the event that you for any reason whatsoever issue in favor of any of your
customers a credit memorandum relating to a specific Account that is in excess
if the amount due on such account or in the event that we for any reason
whatsoever receive payment on an Account from any of your customers in an amount
that is in excess of the amount due on such Account, and such credit memorandum
or overpayment is subsequently remitted to you by us, then you hereby agree to
indemnify and hold us harmless from and against any and all claims, suits,
proceedings, penalties, assessments, costs and expenses of whatsoever kind and
description arising from or relating or incident to the holding and remittance
of credit memoranda and overpayments pursuant to Section 10, including, without
limitation, fees and expenses of legal counsel, and any
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and all claims, penalties and assessments made by any customer, by any federal,
state or local governmental body, agency or taxing authority, or by any other
person or entity.
11. REPRESENTATIONS AND WARRANTIES.
By your execution of this Agreement you represent, warrant and covenant that:
(a) you currently are and at all times during the term of this Agreement shall
continue to be a corporation, partnership or proprietorship duly organized,
validly existing and in good standing under the laws of the state of your
organization, and duly qualified and in good standing in every other
jurisdiction in which the conduct of your business or the ownership of property
makes such qualification necessary under applicable law;
(b) the execution, delivery and performance of this Agreement are within your
organizational powers and are not in contravention of any laws, rule or
regulation, the terms of your organizational papers or any judgment, indenture,
agreement or undertaking to which you are a party or by which you or any of your
property is bound;
(c) you are and at all times during the terms of this Agreement shall be the
owner of all your goods and inventories, and, without our prior written consent,
you shall not create or suffer to exist any lien or encumbrance on or any
security interest in such goods and inventories or on or in any other of the
Collateral, other than the security interest created in our favor by this
Agreement;
(d) each Account offered to us for purchase under this Agreement shall represent
a bona fide sale of goods from you or performance of services by you to your
customer and, with respect to each such Account, you shall be the lawful owner
thereof with good right and title to pledge, assign and sell the same, free and
clear of any lien or encumbrance expect for the security interest created in our
favor by this Agreement;
(e) the net amount shown on each invoice shall be legally owing by such
Customer, and payment to this customer according to the terms of this invoice
including, without limitation, payment with any applicable late fee, penalty,
charge or interest, shall not violate any federal, state or local law, statute,
rule or regulation.
(f) there shall be no set-off, counterclaim or defense to the right to payment
of such net amount shown as due on each such invoice;
(g) the goods sole under each such invoice shall have been delivered to the
customer or to a carrier or, with our consent, shall be held by you after
billing, all in accordance with the sale contract;
(h) the sale evidenced by each such invoice shall not have been in violation of
any law, governmental regulation or order;
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(i) the sales evidenced by each such invoice shall have been approved by us and
our approval shall not have expired or been revoked by us, or shall have given
rise to a Client's Risk Account that we have elected to purchase from you under
Section 4 above;
(j) an invoice shall have been delivered to the customer showing the Account to
have been sold to and payable to us and you shall take such other steps as
required by the laws of your state to perfect our title to the Account and the
goods underlying it; and
(k) at all times during the terms of this Agreement we shall act as your sole
and exclusive factor and you shall not sell, assign, convey, or otherwise
dispose of, or create or suffer to exist any lien or encumbrance on or any
security interest in, any Account to or in favor of any other person or entity.
12. BOOKS AND RECORDS.
You will keep adequate and proper records showing all sales, claims, and
allowances and losses on goods sold, and such books and records and all
correspondence and papers relating thereto shall be open for inspection by us or
our agent at all reasonable times. Annually within ninety (90) days after the
close of your fiscal year you shall furnish us with your balance sheet and
related statement of profit and loss of such year prepared in accordance with
generally accepted accounting principles consistently applied and certified or
reviewed as to their correctness by an independent certified public accountant
acceptable to us, and you will from time to time furnish us interim statements
of condition and other financial information as we may reasonably require.
13. TAXES.
Should any excise, sale, use or other tax or levy be imposed by any federal,
state or local authorities requiring deduction or withholding from the proceeds
of any sale or Account, or if your customer is authorized to withhold or deduct
such tax or levy, then you shall immediately pay us the amount of any tax or
levy so withheld, and you will indemnify us for and hold us harmless from any
loss or expenses on account of such tax or levy.
14. SET OFF.
Any and all sums at any time owed by us to you or deposited by you with us shall
at all times constitute security For any and all liabilities you may now or
hereafter owe us, and we may apply or set off such sums against any liabilities
you owe us at any time whether or not such sums are then due.
15. BREACH OF WARRANTY AND AGREEMENT.
Should you breach or fail to perform any of you obligations or liabilities
hereunder and such breach or failure continue for ten (10) days after you have
notice of such breach or failure or notice thereof has been sent to you, or
should at any time breach a warranty made by you under Section 11 hereof, then
you will on our demand immediately repurchase from us all Accounts then held by
us which were purchased from you, and you will pay us the full amount thereof
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with interest at the highest legal rate from the date of our demand. You agree
to pay all costs and expenses incurred by us associated with the collection of
such amounts, including, without limitation, the actual amount due to us as
attorney's fees if collected by or through an attorney-at-law. Our forbearance,
consent to a deviation from the terms hereof, or failure to exercise any right
or power arising because of a breach by you hereunder shall not constitute a
waiver as to any subsequent breach, whether or not we know about such breach,
unless such right or power shall have been expressly waived by us in writing.
16. OFFER AND ACCEPTANCE.
This writing is an offer by us to you which shall remain open for ten (10) days
from the date first above written, but after ten (10) days from said date your
acceptance hereof shall be deemed a counteroffer to us which we can accept to
reject. Upon your acceptance hereof or our acceptance of your counteroffer, then
this Agreement shall constitute the sole agreement between us concerning our
purchase of your Accounts effective as of the date first above written and shall
supersede all prior agreements between us on the subject hereof. Your acceptance
hereof shall be made by your execution and delivery of this Agreement to us at
our office in Tucker, Georgia, and our acceptance or rejection of your
counteroffer will be made at our office in Tucker, Georgia.
17. TERMINATION.
This Agreement shall continue until either party shall have given the other
thirty (30) days written notice of termination. We may terminate at any time
without notice to you should (i) you make an assignment for the benefit of
creditors; (ii) you make any transfer in bulk and not in the ordinary course of
business of a major part of your materials, supplies, merchandise, or other
inventory; (iii) you file or have filed against you any petition in bankruptcy;
(iv) you petition or apply to any tribunal for the appointment of a custodian,
receiver, or any trustee for you or a substantial part of your assets; (v) you
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, or should you have filed
against you any such petition or application or should you have commenced
against you any such proceeding and, as a result of such petition or application
or in such proceeding an order for relief is entered or such proceeding remains
unstayed and undismissed for a period of thirty (30) days or more; (vi) we
reasonably believe you to be insolvent (on a cash flow or balance sheet basis)
or deem ourselves insecure as to your financial condition; or (vii) you breach
any agreement or warranty or default in the prompt performance of any obligation
hereunder. Upon the effective date of termination our obligation to purchase
from you and your obligation to sell to us shall cease, but the terms of the
Agreement and the security interest granted herein to all Collateral shall
continue in full force and effect until all of your obligations to us are paid
in full.
18. CHOICE OF LAW.
This Agreement is made and is to be performed under and shall in all respects be
governed by and interpreted in accordance with the substantive laws of the State
of Georgia. Any terms herein which are defined in the Code shall be given the
same meaning herein as in the Code (unless otherwise defined herein).
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19. JURSDICTION AND VENUE.
You agree that any civil suit or action arising from or in any way relating or
incident to this Agreement may be brought against you either in the Superior
Court of Dekalb County, Georgia, or in the United States District Court for the
Northern District of Georgia, Atlanta Division, and you hereby irrevocably
waive, to the fullest extent permitted by law, any objections that you may now
or hereafter have to the venue of any such civil suit or action and any claim
that such civil suit or action has been brought in an inconvenient forum, and
you further agree that final judgment in any such civil suit or action shall be
conclusive and binding upon you and may be enforced by a suit upon such judgment
in any court of competent jurisdiction.
20. ATTORNET-IN-FACT.
You hereby appoint us to be your attorney-in-fact authorized to (i) sign and
execute in your name and transfer, conveyance or instrument in writing that may,
in our sole judgment, be necessary or desirable to effect a disposition of all
or any portion of the Collateral, (ii) endorse in your name all checks and
drafts received on an Account that we own or have a security interest in, and
(iii) do all other things that may, in our sole judgment, be necessary or
desirable to protect our security interest or to carry out the intent of this
Agreement. You hereby ratify and approve, to the fullest extent permitted by
law, all acts that we, as your attorney-in-fact, shall do. You further agree
that we shall not be liable to you or to any other person or entity for any loss
or damage resulting from any act of commission or omission, any error of
judgment, or any mistake of fact or of law. This power of attorney, which is
coupled with an interest, is irrevocable for so long as you are obligated or
indebted to us under this Agreement.
21. INDEMNITY.
Expect for acts of gross negligence or willful misconduct, you hereby agree to
protect, indemnify and hold harmless us and all of our directors, officers,
employees and agents from and against any and all (i) claims, demands and causes
of action of any nature whatsoever brought by any third party and arising from
or related or incident to this Agreement, (ii) costs and expenses incident to
the defense of such claims, demands and causes of action including, without
limitation, reasonable attorney's fees and court costs, and (iii) liabilities,
judgments, settlements, penalties and assessments arising from such claims,
demands and causes of action. The indemnity contained in this Section 21 shall
survive the termination of this Agreement.
22. HEADINGS.
The headings used in this Agreement are for your convenience to generally
identify the subject matter of each Section, but they are not a part of this
Agreement and are not a representation that different subject matter does not
appear in a Section.
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23. INTREST AND FACTORING SERVICE CHARGES.
In consideration of the services and risks undertaken by us in this Agreement,
you will pay us the following service charges and the following interest
calculated on the basis of a 360-day year and computed at a rate of interest
equal in amount to the greater of eight percent (8%) per annum or three percent
(3%) per annum above the Wall Street Journal Prime Rate as published in The Wall
Street Journal Money Rates Section, LaGrange, (Georgia edition (the "Prime
Rate") with any change in the rate of interest resulting in a change in the
Prime Rate being effective as of the date of such change.
In addition to the above interest, the following Factoring Service Charge will
apply:
APPLICABLE % NUMBER OF DAYS
------------ --------------
1.________.30% 1-5 days
2.________.50% 6-10 days
3.________.75% 11-20 days
4._______1.00% 21-30 days
5._______1.25% 31-45 days
6._______1.75% 46-60 days
7._______2.50% 61-75 days
8._______3.00% 76-90 days
9.___________% _____ days
the above rate is based upon a eighty percent (80%) advance per invoice and the
above factoring service charge is based on 100% of the invoices factored.
In addition to the above service charges, any draw not paid within ninety (90)
days, or in the event of a declaration of a default by Lender will accrue
interest at the rate of four percent (4%) per month.
24. PURCHASE AMOUNT.
The total aggregate purchase of invoices under the terms of this agreement shall
not exceed SEVEN HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($750,000.00).
25. SPECIAL PROVISIONS.
Attached hereto are special terms and provisions, if any, which are a part of
this Agreement and prevail over any printed provisions to the contrary or
inconsistent therewith.
COMPUTONE CORPORATION PRESIDENTIAL FINANCIAL CORPORATION
By: /s/ E. Xxx Xxxxxx By: /s/ Xxxx Xxxxxx
-------------------------- --------------------------
Its: President Its: Senior Vice President
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