EXHIBIT 10.4
REVOLVING ACCOUNTS RECEIVABLE FUNDING AGREEMENT
AGREEMENT between Hippo, Inc., a Delaware corporation having its principal place
of business at 0000 X. Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxx Xxxxx, XX 00000,
hereinafter "Seller", and Gibraltar Financial Corporation, an Illinois
corporation, X.X. Xxx 00, Xxxxxxxxx, XX, 00000, hereinafter "Purchaser". THE
PARTIES HEREBY AGREE AS FOLLOWS:
DEFINITIONS
As used in this Agreement:
The Maximum Advance Rate shall be seventy five percent (75%).
Indebtedness shall mean the amount owed by Seller to Purchaser from time to
time, i.e., all Cash Advances from Purchaser to Seller, less all collections
from the Purchased Accounts or from Seller applied to the Indebtedness.
The Maximum Indebtedness shall be one million dollars ($1,000,000.00).
Eligible Purchased Accounts shall mean Purchased Accounts less: a) Purchased
Accounts subject to repurchase pursuant to paragraph 7 hereunder; and b) the sum
of all Purchased Accounts belonging to a single Account Debtor [the party(ies)
obligated to pay the Account] if greater than ten (10%) of the then balance
owing by said Account Debtor remains unpaid after ninety (90)* days from the
date of Seller's original invoice evidencing same. * 120 days if the payment
terms of a Purchased Account is greater than net 60 days.
1. PURCHASE OF ACCOUNTS. From time to time, Seller may tender to Purchase some
or all of its Accounts which are defined as Seller's rights to payment for goods
sold or leased or services rendered. All of Seller's said Accounts, irrespective
of whether same are purchased by Purchaser are herein called "Account(s)".
Purchaser is not obligated to purchase any Account tendered and shall have the
right to purchase such Account(s) tendered as Purchaser, in its sole and
absolute discretion, shall determine. Purchaser will evidence its agreement to
purchase specific Account(s) tendered by issuance of its check or wire transfer
to Seller in the amount set forth in Paragraph 2 hereof. Said accounts are
hereinafter collectively called Purchase Account(s).
2. PAYMENT FOR ACCOUNTS. Purchaser shall, in its sole discretion from time to
time, make cash advances to Seller as the Purchase Price for the Purchased
Accounts ("Cash Advance"); provided, however; a) Seller is not then in default
to Purchase hereunder nor will Seller be in default to Purchaser immediately
after any Cash Advance; b) the ratio of the Indebtedness to Eligible Purchased
Accounts immediately after any Cash Advance is less than the Maximum Advance
Rate; and c) in no event and at no time shall the Indebtedness hereunder be in
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excess of the Maximum Indebtedness. Seller shall deliver the original invoices
(or, at Purchaser's option, copies of same) relating to Purchased Accounts to
Purchaser at such time, and such Purchased Accounts shall be deemed sold and
assigned to Purchaser at such time without any formal assignment being required.
Such Cash Advances made by Purchaser hereunder shall be deemed Indebtedness or
Seller to Purchaser hereunder. At Purchaser's election Indebtedness of Seller to
Purchase hereunder may be further evidenced by notes or other instruments
requested by, and in form satisfactory to Purchaser which Seller agrees to
execute. Any such notes shall be for the amount of the Maximum Indebtedness
above shown or such lesser amount as may exist from time to time hereunder.
3. CHARGES. In consideration of the purchase of said Purchased Accounts, Seller
agrees to pay charges ("Charges") to Purchaser with respect to each Purchased
Account of an amount equal to the sum of: (a) one and one half* (1.5*%) percent
of the face amount thereof due at time of Purchase which shall be deducted from
any Cash Advance; plus (b) interest on the Indebtedness outstanding from time to
time at the rate of twenty four percent (24%) per annum calculated on a 360 day
year and payable monthly. All Charges, unless otherwise provided for herein,
shall be payable monthly and Seller hereby authorized Purchaser to add each
month's Charges as appropriate to Seller's Indebtedness hereunder as of the last
day of the month the Charges were incurred. The calculation by Purchaser of all
Charges and of the Indebtedness for a particular month shall be deemed accepted
by Seller unless contested in writing to Purchaser within thirty (30) days
following the end of such month. *Two (2) percent if the payment terms of a
Purchased Account is greater than net 60 days.
4. COLLECTIONS. All collections from Accounts will be applied to Seller's
Indebtedness hereunder and will be considered collected 5 business days after
receipt assuming same is in fact collected. Seller shall direct all Accounts
Debtors to send all payments for all Accounts directly to Purchaser.
5. POWER OF ATTORNEY. At any time after purchase of a Purchased Account, or if
Seller shall be in default hereunder, Purchaser shall have the right to notify
Account Debtors of Purchaser's rights with respect to the Accounts and to notify
Account Debtors to make payment of the Accounts directly to Purchaser. Purchaser
shall also have the right in its name to compromise or extend the time for
payment of any Account for such amounts, and upon such terms as Purchaser may
determine; to demand, collect, receive and xxx for any and all amounts due or to
become due on the Accounts; and to take control of cash and other proceeds of
any Accounts. Seller hereby constitutes Purchaser's President, or any other
person designated by Purchaser, as Seller's attorney-in-fact with full authority
to act for Seller; to endorse Seller's name upon notes, acceptances, checks,
drafts, money orders or other evidences of payment or collateral that may come
into Purchaser's possession; to sign Seller's name on any invoice, freight xxxx,
xxxx of lading, storage or warehouse receipt, or other instrument or document in
respect to any Account, to sign Seller's name on UCC financing statements and on
notices to Account Debtors; to send notices and verifications of Accounts to and
collect Accounts from Account Debtors; and to open Seller's mail and take
payments for Accounts. Seller shall in all other ways do all acts and things
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necessary or appropriate to protect, preserve and realize upon the Accounts for
the benefit of Purchaser and to carry out this Agreement and shall not
interfere, directly or indirectly, with any of the rights given Purchaser in
this paragraph. Seller hereby ratified and approves all acts of such attorney or
designee, and such attorney shall not be liable for any acts of omission or
commission, nor for any error of judgment or mistake of fact or law. The powers
granted in this paragraph are coupled with an interest, and are irrevocable
while any Purchased Accounts are unpaid or sums are otherwise owned by Seller to
Purchaser and until this agreement is terminated.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS. To induce Purchaser to
purchase Accounts from Seller, with full knowledge that the truth and accuracy
of the following are being relied upon by the Purchaser in the purchase of and
payment for the Purchased Accounts, Seller represents, warrants and covenants to
Purchaser and agrees that: (a) Seller is the sole and absolute owner of each
account and has full legal right to make said sale, assignment and transfer
thereof hereunder; (b) The correct amount owed on each Account is as set forth
on the document tendering such Account to Purchaser and such amount is not in
dispute; (c) The payment of each Account is not contingent upon the fulfillment
of any obligation or condition, past or future, and any and all obligations
required of the Seller with regard to such Account have been fulfilled by
Seller; (d) Each Account is based on an actual sale and delivery of goods and/or
services actually rendered for which an invoice has been tendered to the Account
Debtor, is presently due and owing to Seller, is not past due or in default, has
not been previously sold, assigned, transferred or pledged, and is free of any
encumbrance or lien; (e) There are no defenses, offsets, or counterclaims with
respect to any of the Accounts and no agreement has been made under which the
Account Debtor may claim any deduction or discount, except as otherwise stated
in any of the invoices submitted to Purchaser in connection with the tender of
such Account for purchase; (f) Upon purchase, Seller will convey to Purchaser
good and marketable title to each Purchased Account free and clear of all liens
and encumbrances which shall thereafter be the sole and exclusive property of
the Purchaser; (g) Each Account Debtor is not insolvent as that term is defined
in the United States Bankruptcy Code; (h) The Seller's place of business and the
place where the records concerning all Accounts herein referred to are kept is
the one set forth at the beginning of this Agreement, Seller will promptly
advise Purchaser in writing if such place of business or record keeping is
changed or a new place of business or record keeping is added; (i) All Accounts,
now existing or hereafter arising, shall comply with each and every one of the
representations, warranties, covenants and agreements referred to in this
Paragraph and as otherwise supplemented pursuant to this Agreement; (j) All
sales and other taxes imposed with respect to the Accounts have been remitted by
Seller to the propr taxing authority; (k) All invoices with respect to Purchased
Accounts shall state that the Account is payable to Purchaser at Purchaser's
address; (l) no Account is evidenced by a note or other instrument; (m) Seller
will not, during the terms of this Agreement, sell, transfer, pledge, grant a
security interest in or hypothecate any of its Accounts to any party other than
Purchaser. Seller hereby agrees to indemnify and hold harmless Purchaser from
and against any and all losses, claims, demands, liabilities, suits, actions,
causes of action, administrative proceedings or costs (including attorneys' fees
and costs and expenses of defense) arising out of (1) any breach or violation of
any representation, guarantee or warranty set forth in this Agreement, (2) any
rejection of goods or
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services or alleged claims, defenses or offsets of every kind and nature by any
Account Debtor, or (3) any other breach or violation of this Agreement by
Seller. Each Account shall be the property of the Purchaser and shall be
collected by Purchaser, but if for any reason it should be paid to Seller,
Seller shall promptly notify Purchaser of such payment, shall hold any checks,
drafts, or monies so received in trust for the benefit of Purchaser, and shall
promptly endorse, transfer and deliver the same to the Purchaser, however,
failure to deliver said payment to Purchaser within five business days of
receipt shall result in an additional charge to be paid by Seller to Purchaser
of ten percent of said payment.
7. ASSUMPTION OF RISK. Seller hereby assumes full risk of non-payment, and
hereby unconditionally guarantees the full and prompt payment of the full face
amount of all Purchased Accounts. If any Purchased Account shall remain unpaid
after ninety (90)* days from the date of Seller's original invoice evidencing
same, or if Purchaser shall otherwise deem itself insecure for any reason
whatsoever, or if any Account Debtor shall become bankrupt, insolvent or the
subject or a reorganization, or makes an assignment for the benefit of
creditors, then or any time thereafter, Purchaser, upon notice to Seller, may,
at Purchaser's election a) require Seller to repurchase within five (5) days
thereafter such Purchased Account(s) in which event Seller shall pay to
Purchaser an amount equal to the uncollected balance of such Purchased Account
plus Purchaser's costs relating to the collection of such Purchased Account plus
all other Charges and amounts owed to Purchaser hereunder with respect thereto
or b) deduct such Purchased Account from Eligible Purchased Accounts. Seller's
obligations hereunder shall not be affected by Purchaser's actions or inaction
with respect to such Accounts. *120 days if the payment terms of a Purchased
Account is greater than 60 days.
8. SECURITY INTEREST. As security for the performance of all Seller's
obligations hereunder, including, but not limited to the payment of all amounts
owing Purchaser, and to secure the repayment by Seller to Purchaser of any
amounts which Purchaser, at its option, may hereafter loan to Seller independent
of this agreement, Seller hereby grants to Purchaser a first priority security
interest in all of Seller's presently owned or hereafter acquired assets
including, without limitation, all Accounts, accounts receivable, contract
rights, investment property, chattel paper, general intangibles, instruments,
inventory, equipment, furniture, fixtures, all books, records (computerized or
manual), computer disks and software in connection with all the foregoing, and
all proceeds and products of the foregoing including but not limited to
insurance proceeds, lock box proceeds and deposit accounts. The security
interest specifically includes, without limitation, Seller's rights to any
returned personal property from Account Debtors and also shall include all right
of repleven, reclamation, and stoppage in transit. In the event of any default
by Seller under this Agreement and/or pursuant to any loan which Purchaser may
make to Seller, Purchaser shall have all rights with respect to the aforesaid
collateral of a secured party under the Uniform Commercial Code of the state in
which Seller is located. Seller agrees that it will execute and deliver to
Purchaser such documents, including financing statements, all in form
satisfactory to
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Purchaser, as Purchaser shall, from time to time desire to perfect the security
interest granted to it hereunder. In addition, at Purchaser's request Seller
agrees to enter into and execute, a lock box agreement with a bank designated by
Purchaser in form satisfactory to Purchaser to be applicable to the full term of
this Agreement and thereafter so long as any amounts are, or may be, owed to
Purchaser hereunder.
9. DEFAULT AND REMEDIES. The occurrence of any one or more of the following
events shall constitute a default ("Default") of this Agreement by Seller: (i)
the failure of Seller to repurchase any Purchased Account when required pursuant
to Paragraph 7 hereof; (ii) the failure of Seller to perform any other covenant
or agreement contained herein; (iii) if any warranty or representation of seller
made herein shall be untrue; (iv) the dissolution or termination of existence of
Seller or any of Seller's guarantors hereof (Guarantor); (v) the death of any
Seller or Guarantor if Seller or Guarantor shall be an individual; (vi) if
Seller or Guarantor shall file or have filed against it a petition in bankruptcy
or for reorganization or adjustment of its debts or if Seller or Guarantor shall
make an assignment for the benefit of creditors; (vii) if a tax lien shall be
filed against Seller; (viii) if a judgment shall be entered against Seller which
is not promptly satisfied or if a levy or attachment shall be filed against
Seller or its property; (ix) if the ratio of Indebtedness divided by Eligible
Purchased Accounts is, at any time, in excess of the Maximum Advance Rate; (x)
if the Indebtedness exceeds the Maximum Indebtedness; and/or (xi) if Purchaser
shall deem itself insecure for any reason whatsoever. In the event a Default
shall occur: i) Purchaser shall have the right to require Seller to immediately
repurchase all of the Purchased Accounts for an amount equal to the Indebtedness
then owed by Seller to Purchaser plus all Charges and other amounts due
Purchaser; ii) Seller shall pay to Purchaser all other damages, costs and losses
caused to it by reason of such Default, including, but not limited to reasonable
attorneys' fees, court costs, other collection expenses and all other expenses
and costs incurred or paid by Purchaser to obtain performance or to enforce any
covenant or agreement of Seller hereunder; and iii) Purchaser shall have the
right to enforce all rights which it may have with respect to the security
interest granted to it pursuant to this agreement and specifically, but not by
way of limitation, to notify all Account Debtors of Seller's Accounts to make
all payments directly to Purchaser, to notify and require the U.S. Post Office
to deliver Seller's mail to Purchaser, and to open Seller's mail and take and
endorse for deposit in the name of Seller all payments received upon any of
Seller's Accounts and to deposit same for benefit of Purchaser. In addition to
the Charges in Paragraph 3 above, Seller shall pay Purchaser a late payment
charge equal to eighteen per cent (18%) per annum of any amounts not paid when
due to the date of payment thereof. To the extent permitted by law, Seller
hereby irrevocably authorizes any attorney of any court of record to appear for
Seller in such court, in term time or vacation, at any time after a default
hereunder and confess judgment against Seller, without process in favor of
Purchaser, its successors or assigns, for such amount as may appear due, owing
and unpaid hereunder, together with costs of collection including reasonable
attorney's fees, and to waive and release all errors which may intervene in any
such proceedings, and consent to immediate execution upon such judgment, hereby
ratifying and confirming all that said attorney may do by virtue hereof.
10. TERM AND TERMINATION. This Agreement shall commence as of the date hereof
and shall continue in force and effect beginning from the date that the first
Purchased Account is purchased and continuing for a period of six (6) months
(Initial Term) and shall be automatically
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renewed for successive periods of six (6) months (Renewal Term) unless
terminated as follows: seller may terminate this agreement by so notifying
Purchaser in writing 30 days before the end of any Initial or Renewal term
hereof, provided, however, that all of Purchaser's security interests in assets
of Seller as provided for in paragraph 8 hereof and otherwise and all other
rights pursuant to Paragraphs 5 and 8 hereof shall survive such termination
until all of Seller's obligations to Purchaser have been paid in full and
discharged. Any and all of Seller's representations, agreements, covenants,
obligations, liabilities and undertakings under this Agreement or any collateral
agreements existing prior to any termination hereof shall not be affected by a
termination of this Agreement and shall survive such termination. Seller agrees
that if Purchaser has not purchased accounts during any Initial or Renewal Term
hereof which, in the aggregate, exceed $n/a/ (Minimum Amount), Seller agrees to
pay to Purchaser, on demand, an additional amount equal to what the Charges
pursuant to paragraph 3 a) hereof would have been on said Minimum Amount, less
the actual Charges pursuant to paragraph 3 a) hereof paid by Seller to Purchaser
during said Initial or Renewal Term.
11. NOTICES. Notices required or permitted hereunder shall be in writing and
shall be given by personal delivery or certified or registered mail, postage
prepaid, to the parties at their addresses hereinabove set forth. Such notice
shall be deemed given when delivered or mailed as aforesaid. Either party shall
have the right to change its address by notice as herein provided.
12. CONSTRUCTION. The laws of Illinois shall govern the construction of this
Agreement and the rights, remedies, duties and obligations of the parties hereto
with respect to all transactions hereunder. Any matter or controversy between
Seller and Purchaser shall only be litigated in the state or federal courts
located at Chicago, Illinois, and Seller hereby expressly consents to such
jurisdiction and venue, except that Purchaser shall also have the right to
initiate legal proceedings in any other jurisdiction wherein Purchaser's
collateral may be located and each party hereby submits to the jurisdiction of
such courts. TO THE EXTENT PERMITTED BY LAW, SELLER AND PURCHASER WAIVE THEIR
RIGHT TO TRIAL BY JURY.
13. ASSIGNMENT BY PURCHASER. Purchaser, without notice to Seller, may assign
and/or pledge all of Purchaser's rights hereunder to Purchaser's lender
(Assignee). Seller hereby consents to any such Assignment and agrees that in
such event, upon request of Assignee, it will render all acts, performance and
payment directly to Assignee, said Assignee having all of Purchaser's rights
hereunder but none of Purchaser's obligations.
14. GENERAL. Waiver by Purchaser of any breach or default of this Agreement or
of any warranty, representation, covenant, obligation or guaranty herein shall
not be construed as waiver of any subsequent breach or default. Failure by
Purchaser to exercise any right or remedy hereunder shall not operate as a
waiver of any subsequent breach or default. All rights and remedies are
cumulative and not alternative. This Agreement contains the entire agreement of
the parties and may not be modified except by a written agreement executed by
Seller and Purchaser.
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15. SEVERABILITY. If any provision of this Agreement is held or found to be
illegal, invalid or unenforceable, all other provisions shall nevertheless
continue to be binding on the parties hereto and shall be of full force and
effect.
SELLER: HIPPO, INC.
BY: /S/ Xxx Xxxxxxx President DATE: November 25, 1997
--------------------------------
Xxx Xxxxxxx (Title)
Accepted at Northbrook, IL this ______________ day of ____________________, 19__
PURCHASER: Gibraltar Financial Corporation
BY:
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Xxx Xxxxxxxx, President
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