EXHIBIT 10.3
ASSIGNMENT OF ACCOUNTS RECEIVABLE
---------------------------------
THIS ASSIGNMENT is made and entered into as of September 7, 2001, by
and between Telenetics Corporation, a California corporation ("Assignor") and
Comtel Electronics Inc., a Delaware corporation ("Assignee"), together, called
the "Parties," as follows:
RECITALS
--------
WHEREAS, the Assignor is indebted to the Assignee for certain products
manufactured and delivered to the Assignor, such indebtedness being evidenced by
one or more accounts payable of Assignor to Assignee, being described more
particularly on Schedule "A" annexed hereto (herein, the "Payables"); and
WHEREAS, the Payables have aged beyond the net sixty day payment terms
agreed to in a previous manufacturing agreement between the Parties;
WHEREAS, the Assignee and its secured lender, UPS Capital Corporation
("UPSC"), require payment in some form and fashion to alleviate this payment
delinquency;
WHEREAS, the Parties intend to establish a mechanism by which the
Assignor shall assign certain accounts receivable that have been approved by
UPSC to the Assignee in return for reducing the outstanding balance of the
Payables:
AGREEMENT
---------
NOW THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, and other valuable consideration the receipt
and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ASSIGNMENT
----------
1. For value received, Assignor hereby sells, transfers and assigns to
Assignee all of Assignor's right, title, and interest in and to all those
accounts receivable of Assignor set forth on Schedule "B" annexed hereto
(herein, the "Accounts"). All assigned interests in the Accounts are to be WITH
FULL RECOURSE, shall take effect as of the date hereof and shall include any
security or guaranties given to or held by Assignor, including proceeds of any
credit insurance that is or that may become due and payable with respect to the
Accounts.
CREDIT
------
2. In consideration of the foregoing assignment, Assignee hereby
credits against the indebtedness of Assignor to Assignee under the Payables an
amount equal to the "Credited Sum" specified on Schedule "B" annexed hereto,
effective on the date hereof; but, Assignor shall be and remain liable to
Assignee for the balance owing on the Payables, after application thereto of the
Credited Sum. The Credited Sum shall be applied to the Payables in chronological
order, from the earliest listed to the latest.
RIGHTS OF ASSIGNEE
------------------
3. The rights transferred to Assignee in respect of the Accounts
include the following:
(a) Notwithstanding paragraph 4 below, the right (but not the
obligation) to make and effect collections from the account debtors in
Assignee's own name and for its own benefit; and
(b) The right to endorse and deposit in Assignee's own bank
account any payments, commercial paper, notes, or other acceptances
received in full or partial payment of the Accounts or the goods
represented by and sold under such Accounts. In the event goods
represented by the Accounts are not received or accepted, or are
returned by the purchasers, the title to any account, contract, or any
goods created through the resale or exchange of the rejected goods,
including all sums of money due and to become due, shall be the
property of Assignee.
NOTIFICATION OF ACCOUNT DEBTORS
-------------------------------
4. Assignor and Assignee shall jointly notify the account debtors of
this Assignment of the Accounts, which notice shall provide that the account
debtors shall pay Assignee directly all sums due or to become due with respect
to the Accounts. The notification shall be substantially in the same form as
Exhibit "A" hereto. Assignor shall provide Assignee with copies of all notices
sent in accordance with this paragraph.
REPORTING AND ASSIGNMENT OF NEW ACCOUNTS
----------------------------------------
5. So long as any balance of the Payables remains outstanding and
unpaid, within three (3) business days of the close of each calendar month,
Assignor shall provide Assignee with a schedule (the "New Account Report"), in
substantially the same form and containing substantially the same information as
Schedule "B" annexed hereto, listing all accounts coming into existence after
the date of the previous New Account Report (or, in the case of the first New
Account Report, all accounts coming into existence after the date of this
Assignment). Upon receipt of each such New Account Report, Assignor may (and, at
the request of UPSC, Assignor shall) require that Assignor make further
assignments of such accounts to Assignor. In such event, Assignee shall review
all new accounts and notify Assignor which are approved for assignment and
Assignor shall thereupon transfer and assign such accounts to Assignee, in
substantially the same form and manner as set forth herein.
COLLECTION OF ACCOUNTS
----------------------
6. Except to the extent Assignee notifies Assignor otherwise, Assignee
shall take all reasonable and appropriate steps to enforce and collect the
Accounts, at Assignor's expense, and to direct payment of the Accounts to
Assignee. To the extent any account debtor directs payment on an Accounts
Receivable to Assignor instead of to Assignee, Assignor shall immediately
deliver to Assignee any payments, commercial paper, notes, or other acceptances
received by Assignor. Throughout the term of this agreement, Assignor shall
promptly provide Assignee with such information, notices and other cooperation
as Assignee may reasonably request to facilitate collection of the Accounts.
-2-
REPRESENTATIONS OF ASSIGNOR
---------------------------
7. Assignor represents and warrants that the following statements are
true and correct:
(a) Copies of any and all financial statements, invoices,
orders, proofs of delivery, and other documents submitted to Assignee
in connection with this Assignment, including the information contained
in Schedule "B" hereto, are factual and genuine. The same is true of
information to be supplied in New Account Reports;
(b) This Assignment is exclusive and made solely to the
Assignee. None of the Accounts has been or will be sold or assigned to
any other party, no security interest in the Accounts has been or will
be granted to any other party (or if any security interest has been
granted, it is no longer in effect), and no other person or entity
other than Assignor otherwise has acquired or will acquire any lien,
right, title, or claim to the Accounts;
(c) All existing Accounts are valid and fully collectible from
the account debtors. There are no offsets or counterclaims against any
of the existing Accounts. There are no other circumstances entitling
the account debtors to decline to pay existing Accounts or to decrease
the price of the goods as originally agreed upon in the invoices. The
account debtors are unconditionally indebted to Assignor for the
amounts set forth in Schedule "B" hereto. The foregoing will be true as
to all accounts listed in New Account Reports;
(d) The goods described in and covered by the Account invoices
and statements listed in Schedule "B" hereto were sold in strict
accordance with the specifications provided by the purchasers, and such
goods have been sold pursuant to unconditional contracts of sale and
not by consignment or sale on approval. The same will be true with
respect to goods covered by Account invoices listed in all New Account
Reports;
(e) Assignor delivered goods described in and covered by the
Account invoices and statements listed in Schedule "B" hereto pursuant
to genuine purchase orders issued by the purchasers. Delivery was made
at the request of the purchasers and in accordance with the shipping
instructions included in those purchase orders. As of the date of this
Assignment, none of the purchase orders received by the Assignor has
been cancelled or otherwise altered by purchasers or their agents. The
same will be true of goods described and covered by account invoices
listed in all New Account Reports;
(f) The goods described in and covered by the Account invoices
and statements listed in Schedule "B" have not been previously sold,
conveyed, or encumbered by Assignor or its agents. The same will be
true of goods covered by the Account invoices and statements listed in
all New Account Reports;
-3-
(g) As of the date of this Assignment, the account debtors
have not paid to Assignor, or its agents, all or part of the purchase
price of the goods described in and covered by the Account invoices and
statements listed in Schedule "B". The same will be true of amounts
listed in all New Account Reports.
Upon Assignee's request, Assignor shall execute written affirmations of
the foregoing warranties and representations in connection with each New Account
Report. Assignor acknowledges that Assignee intends to collateralize certain
financing with the Accounts and that Assignee, its lender(s), and other third
parties intend to rely on the foregoing representations and warranties as well
as other representations made hereto.
FILING AND EXECUTION OF FINANCING STATEMENT(S)
----------------------------------------------
8. Filing and Execution of Financing Statement(s):
(a) Assignee and its agents shall be and hereby is authorized
to file one or more UCC-1 financing statements and related documents to
effectuate the terms hereof, and to execute the same on Assignor's
behalf. To the extent necessary and allowed by law, Assignor hereby
irrevocably appoints Assignee, acting singly, as the Assignor's
attorney-in-fact, which power is coupled with an interest, with full
authority in the place and stead of Assignor, to execute any financing
statement, amendment thereto, or continuation thereof, relative to all
or any portion of the Accounts in the name of Assignor or without the
signature of Assignor.
(b) Assignee and its agents shall be and hereby is authorized
to file one or more UCC-1 financing statements and related documents to
effectuate the terms hereof, and to execute the same on Assignor's
behalf. To the extent necessary and allowed by law, Assignor hereby
irrevocably appoints Assignee, acting singly, as the Assignor's
attorney-in-fact, which power is coupled with an interest, with full
authority in the place and stead of Assignor, to execute any financing
statement, amendment thereto, or continuation thereof, relative to all
or any portion of the Accounts in the name of Assignor or without the
signature of Assignor.
MAINTENANCE AND INSPECTION OF RECORDS
-------------------------------------
9. Assignor shall at all times keep complete and accurate records
concerning the Accounts, all of which records shall be available for inspection
and/or copying on demand by Assignee during usual business hours.
TIME OF ESSENCE
---------------
10. Time is of the essence in this Assignment.
EFFECT ON SUCCESSORS
--------------------
11. This Assignment, and each of its provisions, shall be binding on
and shall inure to the benefit of the respective heirs, devisees, legatees,
executors, administrators, trustees, successors, and assigns of the parties to
this Assignment. Without limitation of the foregoing, Assignor acknowledges and
-4-
agrees that Assignor has assigned all of its rights (but none of its
obligations) hereunder to UPSC and that UPSC, in the place and stead of
Assignee, may enforce the terms of this Assignment against Assignor hereafter as
fully and completely as Assignor may do, provided that, in doing so, UPSC shall
be subject to no right of setoff, defense or counterclaim which Assignor now
has, or hereafter may have, against Assignee unrelated to this Assignment.
AMENDMENT
---------
12. This Assignment may be amended only by a writing signed by the
party against whom or against whose successors and assigns enforcement of the
change is sought. In any event, no amendment, modification, waiver or other
alteration made to this Assignment or in respect of any Account which is made
without the prior written consent of UPSC shall bind UPSC.
EFFECT OF PARTIAL INVALIDITY
----------------------------
13. If any term or provision of this Assignment or any application
thereof shall be held invalid or unenforceable, the remainder of this Assignment
and any application of the terms and provisions shall not be affected thereby,
but shall remain valid and enforceable.
NOTICES
-------
14. All notices, demands, or other communications between Assignor and
Assignee shall be in writing and addressed as set forth immediately below
(unless and except to the extent that either Party receives written notice from
the other Party as to change of address). All such communications shall be
deemed effective upon the earliest of (i) actual delivery if delivered by
personal delivery, or (ii) three (3) calendar days after deposit, first class
postage prepaid, with the United States Mail.
Telenetics Corporation
00000 Xxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Attn: Chief Financial Officer
Comtel Electronics Inc.
00000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Attn: Chief Financial Officer
GOVERNING LAW
-------------
15. This Assignment shall be governed by and construed in accordance
with the laws of the State of California.
[SIGNATURES APPEAR ON NEXT PAGE.]
-5-
IN WITNESS WHEREOF, the parties have executed this Assignment as of the
date first written above.
TELENETICS CORPORATION,
a California corporation
By: /S/ XXXXX XXXXXXXX XXXX
------------------------------------
,President
By: /S/ XXXXX X. XXXXX
------------------------------------
,Secretary
COMTEL ELECTRONICS INC.,
a Delaware corporation
By: /S/ XXXX XXXXXX
------------------------------------
,CEO
By: /S/ XXXXXXX XXXX
------------------------------------
,Secretary
-6-
EXHIBIT "A" SAMPLE NOTIFICATION
-------------------------------
______________________
Attn: Accounts Payable
______________________
______________________
Dear Sir or Madam:
Please take notice that on September 7, 2001, Telenetics Corporation
assigned and transferred to Comtel Electronics Inc. all of its right, title, and
interest in and to the following accounts:
Invoice # _____ Amount Due $ ________
You are directed to make all further payments on the above-described
invoices as follows:
FOR CHECKS PLEASE MAIL TO:
--------------------------
Comtel Electronics Inc.
Bank of America Lockbox Services
Lockbox #56690
0000 X. Xxxxxx Xx., Xxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
FOR WIRE TRANSFERS:
-------------------
Swift Code: XXXXXX00
Account Name: UPS CAPITAL CORP COMTEL CA
ABA #: 000000000
ACCOUNT #: 3751784575
Lockbox #: 056690 (Optional)
Please contact Xxxx Xxxxx, (000) 000-0000, at Comtel Electronics if you have any
questions.
Your payment to the designated assignee shall discharge you from your
obligation under the invoices described above.
TELENETICS CORPORATION
By: _______________________________
____________________, President
By: _______________________________
____________________, Secretary
-7-
SCHEDULE "B" SCHEDULE OF ACCOUNTS
---------------------------------
Telenetics Accounts Receivable Balances to be assigned are as follows:
AMOUNT APPROVED FOR
NAME ACCOUNT BALANCE ASSIGNMENT
---- --------------- ----------
Black Box Corp...................................... $43,023.21 $40,725.71
Data Connect Enterprises............................ $843,024.52 $253,609.61
Xxxxxx Micro........................................ $286,502.53 $286,502.53
Open Systems Inter.................................. $7,940.34 $7,940.00
XX Xxxxxx Energy Systems 101........................ $9,256.19 $9,256.19
XX Xxxxxx Energy Systems 107........................ $47,917.23 $47,917.23
XX Xxxxxx Energy Systems 108........................ $6,251.50 $6,251.50
CREDITED SUM: $652,202.77
===========
-8-
