Exhibit 10.35
SUPPLEMENT TO FACTORING OR SECURITY AGREEMENT
SECURITY INTEREST IN INVENTORY UNDER UNIFORM COMMERCIAL CODE
Century Business Credit Corporation August 14, 2000
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
RE: BREAKING WAVES, INC.
000 XXXX 00XX XXXXXX
XXX XXXX, XX 00000
Gentlemen:
This is a supplement to our Factoring or Security Agreement (Accounts
Receivable-Financing) or both, as the case may be, with you effective the date
hereof (the "Agreement"). It is hereby incorporated therein, shall have a term
concurrent therewith and is a part thereof.
1. In addition to your other security, we hereby grant you a continuing
security interest in all Inventory now and hereafter owned by us wherever
located, all contract rights with respect thereto and all documents representing
the same (all herein referred to as "Collateral") and all proceeds of the
Collateral. The term "Inventory" means and includes all goods intended for sale
or lease by us, or to be furnished by us under contracts of service and all raw
materials, goods in process, finished goods, materials and supplies of every
nature used or useable in connection with the manufacture, packing, shipping,
advertising, selling, leasing or furnishing of such goods.
2. Your security interest in the Inventory shall continue through all
stages of manufacture and shall, without further act, attach to raw materials,
to goods in process, to the finished goods, to the Receivables (as defined in
the Agreement) or other proceeds resulting from the sale or other disposition
thereof and to all such Inventory as may be held for us by agents or processors.
We represent, warrant and covenant that all Inventory is and will be owned by
us, free of all other liens and encumbrances, shall be kept by us at the
location identified on Schedule 1 hereto and that we shall not (without your
prior written approval) remove the Inventory therefrom except for the purposes
of sale in the regular course of business.
3. The collateral and all proceeds thereof shall be security for all
obligations owing to you including but not limited to loans and advances to the
undersigned under the Agreement, as originally existing and as hereby and at any
time heretofore or hereafter supplemented or amended as well as for all other
loans and advances to us or for our account by you or your parent or your
subsidiaries and for all commissions, obligations, indebtedness, interest,
charges and expenses chargeable to our account or due from us from time to time,
however arising, and whether or not evidenced by notes or other instruments.
Until all obligations have been fully satisfied, your security interest in the
Collateral and all proceeds thereof shall continue in full force and effect and
upon the occurrence of a default under the Agreement, you will at all times have
the right to take physical possession of the Inventory and to maintain such
possession on our premises or to remove the Inventory or any part thereof to
such other places as you may desire. If you exercise your right to take
possession of the Inventory, we shall, upon your demand, assemble the Inventory
and make it available to you at a place reasonably convenient to you. In
addition, with respect to all Collateral and proceeds, as well as all
Receivables and other security, you shall have all of the rights and remedies
set forth in the Agreement and all the rights and remedies provided in the
Uniform Commercial Code.
4. Upon our request you may make loans or advances to us prior to our
sale of Inventory. Any such loans or advances will be made at your sole
discretion, will be charged by you to our account and will bear interest payable
in the manner and at the rate specified in the Agreement and shall in all
respects be governed thereby. All such loans or advances shall be payable on
demand and recourse to any security held therefor shall not be required. The
amounts of any such loans or advances and their relation to the Inventory shall
not exceed 50% of the value (determined as the lower of cost or market value, on
a first-in-first out basis) of Inventory consisting of finished goods which you
in your sole discretion deem eligible and shall be determined by you in your
sole discretion. Inventory which is eligible may include Inventory which is in
transit to a location in the United States only if (a) title to such Inventory
has passed to us, (b) such inventory is insured to the full value thereof and
(c) you shall have in your possession (i) all negotiable bills of lading
relating to such Inventory properly endorsed and (ii) all non-negotiable bills
of lading relating to such Inventory issued in your name.
5. We shall not sell, encumber, grant a security interest in or dispose
of or permit the sale, encumbrance or disposal of any Collateral without your
prior written consent except for the sales of Inventory in the ordinary course
of our business. If sales are made for cash, we shall immediately deliver to you
the identical checks, cash or other forms of payment which we receive. As sales
are made in the regular course of business, we shall, in accordance with the
provisions of the Agreement, immediately execute and deliver to you schedules
and assignments of all Receivable created thereby. All payments received by you
on account of Receivables or other proceeds or on account of cash sales of
Inventory will be credited to our account in accordance with the provisions of
the Agreement.
6. We shall perform any and all steps requested by you to perfect your
security interest in the Collateral, such as leasing warehouses to you or your
designee, placing and maintaining signs, appointing custodians, executing and
filing financing or continuation statements in form and substance satisfactory
to you, maintaining stock records and transferring Inventory to warehouses. If
any Inventory is in the possession or control of any of our agents or
processors, we shall notify such agents or processors of your security interest
therein, and upon request instruct them to hold all such Inventory for your
account and subject to your instructions. You shall have the right (but shall
not be obligated) to complete any Inventory in order to dispose of same or
otherwise enforce your rights upon our default hereunder, including the right to
pay and to charge to our account at any time any dyeing, finishing, processing
or warehousing charges, landlord's bills or other claims against or liens upon
the Inventory or any of the Collateral, whether before or after our default. A
physical listing of all Inventory, wherever located, shall be taken by us at
least one every year and whenever requested by you, and a copy of each such
physical listing shall be supplied to you. You may examine and inspect the
Inventory at any time. All excise, floor, sales and any other taxes that may be
assessed upon or paid by you with respect to any of the Inventory shall be
charged to and paid by us, and we agree to indemnify you against loss by reason
of any such taxes. No later than the fifteenth (15th) day of each month, we
shall deliver to you a fully completed and executed Inventory Report and
Certification in the form of Schedule 2 hereto as the end of the immediately
preceding month.
7. We shall insure the Inventory in your name against loss or damage by
fire, theft, burglary, pilferage, loss in transit and such other hazards as you
shall specify, in amounts and under policies by insurers acceptable to you, and
all premiums thereon shall be paid by us and the policies delivered to you. If
we fail to do so, you may procure such insurance and charge the cost to our
account.
Very truly yours,
BREAKING WAVES, INC.
By: /s/ Xxxxxx Xxxxxxxx
XXXXXX XXXXXXXX
PRESIDENT
Accepted at New York, New York
on August __, 2000
CENTURY BUSINESS CREDIT CORPORATION
By:/s/_____________________________
Title:_____________________________
SCHEDULE 1
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
000 Xxxxxxx Xxxxxx
Xxxx Xx Xxxxxxxx, Xxxxx. 00000
15530 Xxxx Xxxx Xxxxxx
Xxxx Xx Xxxxxxxx, Xxxxx. 00000
15600 Xxxx Xxxx Xxxxxx
Xxxx Xx Xxxxxxxx, Xxxxx. 00000
