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EXHIBIT 10.44
COLLECTION DATE FACTORING AGREEMENT
This Collection Date Factoring Agreement (this "AGREEMENT"), dated and
effective as of the Effective Date, is entered into between XXXXXX FINANCIAL,
INC. ("XXXXXX"), with offices at 000 X. Xxxxx Xxxx., Xxxxxxxx, XX 00000,
Telecopy No: (000) 000-0000, and JALATE, LTD. ("CLIENT"), whose address is 0000
X. Xxxxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000, Telecopy No. (000) 000-0000, and
will constitute the terms upon which Xxxxxx will act as the sole factor of
Client. Capitalized terms used herein will have the meanings assigned to such
terms in Section 12 of this Agreement.
SECTION 1. SALE AND APPROVAL OF ACCOUNTS
1.1 Client does hereby sell, assign and transfer to Xxxxxx, and Xxxxxx
hereby agrees to purchase, all of Client's Accounts created on or after
the Effective Date, with full power to Xxxxxx to collect and otherwise
deal with such Accounts as the sole and exclusive owner thereof.
1.2 (a) Client will submit for Xxxxxx'x credit approval the credit
requirements of Client's customers, a description of Client's normal
selling terms and such other information as Xxxxxx requests concerning
Client's customers. Xxxxxx may, in Xxxxxx'x sole credit judgment,
establish credit lines for sales to Client's customers on Client's
normal selling terms or on other selling terms approved by Xxxxxx by
Written Notice. Client may also submit for Xxxxxx'x credit approval
specific orders from Client's customers and Xxxxxx may, in Xxxxxx'x
sole credit judgment, approve such orders on a single order credit
approval basis. All of Xxxxxx'x credit approvals will be delivered to
Client by Written Notice and/or Transmission.
(b) Xxxxxx may amend or withdraw a credit line or single order credit
approval at any time prior to Delivery by notifying Client verbally
and/or by Written Notice or Transmission. Notwithstanding the
foregoing, during the sixty (60) day period commencing on the date on
which Xxxxxx advises Client of such amendment or withdrawal (the
"Advice Date"), Client may continue to ship goods with respect to which
piece goods were ordered prior to the Advice Date or which were in
production prior to the Advice Date and the amendment or withdrawal of
the credit line shall not be effective with respect to Client's sales
of such goods during such sixty (60) day period; provided, however,
that if such goods are shipped under a single order credit approval,
the sales of such goods shall be on the selling terms approved by
Xxxxxx when Xxxxxx originally gave such single order approval. If a
single order approval is not amended or withdrawn as set forth above,
such single order credit approval will automatically expire in the
event Delivery of the goods ordered is not made on or prior to the
expiration date indicated on the single order credit confirmation form
Xxxxxx sends to Client by Written Notice or Transmission. In addition,
a single order approval will automatically terminate in the event any
change is made in any of the terms of a sale under a single order
approval without Xxxxxx'x prior consent by Written Notice or
Transmission.
(c) Xxxxxx will have no liability to Client or to any customer for
Xxxxxx'x refusal to credit approve an Account or Xxxxxx'x withdrawal or
amendment of a credit approval.
1.3 Xxxxxx will assume the Credit Risk on all Approved Accounts. Xxxxxx
will have full recourse to Client for all Non-Approved Accounts.
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1.4 In the event that monies are at any time owing by a customer for both
Approved Accounts and Non-Approved Accounts, any amount when paid by or
credited to the customer will be applied as follows:
(a) If Xxxxxx issued single order approvals, all amounts paid by or
credited to the customer will be deemed applied first to Approved
Accounts.
(b) If Xxxxxx established a credit line for such customer and if the
credit line was in force at the time amounts were received from or
credited to the customer, such amounts will be deemed applied first to
Non-Approved Accounts. If the credit line is canceled, any amount
thereafter received or credited will be deemed applied first to
Approved Accounts.
1.5 If a bankruptcy or insolvency proceeding is instituted by or against a
customer and if Xxxxxx agrees by Written Notice to Client to make a
claim in such proceeding for Non-Approved Accounts, all amounts
distributed to Xxxxxx in such proceeding will be shared pro rata
between Approved Accounts and Non-Approved Accounts.
SECTION 2. ADVANCES, PAYMENT AND FEES
2.1 As payment for an Account, (a) the Collected Amount of the Purchase
Price of an Account will be credited to Client's account as of the
Collection Date and (b) if an approved Account which remains partially
or fully unpaid solely as a result of the financial inability of the
customer thereon to pay such Approved Account and if such Account is
not subject to a Dispute, the Purchase Price of such Approved Account
less any Collected Amounts previously credited to Client's account with
respect to such Approved Account will be credited to Client's account
on the Approved Payment Date for such Approved Account. The payments,
when credited to Client's account, shall first be applied to all
advances, interest, and other amounts due Xxxxxx hereunder.
2.2 Subject to the terms and conditions of this Agreement, Xxxxxx may, upon
Client's request, and in Xxxxxx'x sole discretion, make advances to
Client or for Client's account in amounts, in Xxxxxx'x sole discretion,
of up to one hundred percent (100%) of the Purchase Price of such
Accounts. Notwithstanding the foregoing, if at any time the aggregate
Net Amount of Accounts arising from sales to a single customer exceeds
an amount equal to fifty percent (50%) of the total Net Amount of all
Accounts from all customers outstanding at such time, Xxxxxx does not
intend to make any advances on any such Accounts in excess of said
amount.
2.3 At the time Xxxxxx purchases an Account, Xxxxxx will charge Client's
account with a factoring commission of forty-five hundredths of one
percent (0.45%) of the Net Amount of the Account; provided, however,
that on such date during a Contract Year that the aggregate Net Amount
of all Accounts purchased by Xxxxxx form Client exceeds $50,000,000
(the "$50,000,000 Date"), the factoring commission on each Account
purchased by Xxxxxx from Client during such Contract Year in excess of
said $50,000,000 shall be reduced to four tenths of one percent (0.4%)
of the Net Amount of such Account and Xxxxxx will credit Client's
account with an amount equal to five hundredths of one percent (0.05%)
of the total Net Amount of all Accounts purchased by Xxxxxx during such
Contract Year prior to the $50,000,000 Date. On Accounts bearing
payment terms in excess of ninety (90) days, the
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factoring commission will be increased by one tenth of one percent
(0.10%) for each thirty (30) days or part thereof that the stated terms
exceed ninety (90) days.
2.4 Client will pay to Xxxxxx or Xxxxxx may charge Clients account with (i)
wire transfer fees on all wire transfers; (ii) all data transmission
telephone charges relating to Transmissions; (iii) exchanges on checks,
changes for returned items and all other bank charges; (iv) all Costs;'
(v) all other amounts owing by Client to Xxxxxx under the Agreement; and
(vi) all other Obligations. Notwithstanding the foregoing, Xxxxxx will
not charge Client's account with the amount of any Ledger Debt with
respect to which Client asserts a Dispute unless Xxxxxx determines,
through an examination of Client's financial statements and Client's
payment trend with respect to amounts owing by Client to other Xxxxxx
Clients or to other suppliers of Client, that Client's failure to pay
such Ledger Debt is due to Client's financial inability to pay such
Ledger Debt.
2.5 Xxxxxx may, in its sole credit judgment, establish credit lines for
sales to Client by Xxxxxx Clients or approve specific orders from Client
to Xxxxxx Clients on a single order approval basis; provided, however,
that the aggregate amount of all Ledger Debt outstanding at any time
shall not exceed $1,500,000.
SECTION 3. INTEREST AND COLLECTION CLEARANCE CHARGE
3.1 Client will pay Xxxxxx interest on the Daily Balance. Interest will be
calculated daily at a rate per annum equal to two and one-half percent
(2.5%) plus the LIBOR Rate (the "Interest Rate") and will be charged to
Client's account monthly at the end of each month. The Interest Rate
will also be charged to Client on all other Obligations, except those
specifying a different rate, from the date incurred through the date
paid. The LIBOR Rate will be adjusted on the last Business day of each
month for the following month and the adjusted Interest Rate will remain
in effect during such month. After the occurrence of an Event of Default
and after any applicable cure period, all the Obligations will, at
Xxxxxx'x option, bear interest at a rate per annum equal to two and
one-half percent (2.5%) plus the Interest Rate. Interest will be
calculated on the basis of a 360-day year for the actual number of days
elapsed. In no event will the total amount of interest received by
Xxxxxx pursuant to the terms of this Agreement exceed the maximum rate
permitted by applicable law and in the event excess interest is
determined by a court of competent jurisdiction to have been paid by
Client to Xxxxxx, such excess interest will be applied as a credit
against the outstanding Obligations and Client will not have any action
against Xxxxxx for any damages arising out of the payment or collection
of such excess interest.
3.2 If funds remain with Xxxxxx past the Payment Date, and there are no
outstanding Obligations ("matured funds"), Xxxxxx will credit Client's
account with interest on such matured funds at the rate per annum equal
to the LIBOR Rate.
3.3 If an Account or any payment is charged back to Client after the Payment
Date, Client will pay Xxxxxx interest at the Interest Rate on the Net
Amount of such Account or on such payment from the Payment Date to the
charge back date.
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3.4 To allow for collection clearance on all checks and other payments
remitted by Client's customers, Client will, pay Xxxxxx each month a
collection clearance charge based on two (2) calendar days for that
month's collections at the Interest Rate. Xxxxxx will charge Client's
account at the end of each month for the collection clearance charge.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Client represents, warrants and covenants as to each Account that, at the
time of its sale and assignment to Xxxxxx, the Account is a valid, bona
fide account, representing an undisputed indebtedness incurred by the
named customer for goods actually sold and delivered or for services
completely rendered; the Account is payable in United States dollars;
there are no setoffs, offsets, counterclaims or other defenses, genuine
or otherwise, to the payment or collection of the Account; the Account
does not represent a sale to any of Client's subsidiaries, affiliates,
directors, officers, agents, stockholders, or employees, or a consignment
sale, guaranteed sale, or xxxx and hold transaction, or a cash on
delivery sale; no agreement exists permitting any deduction or discount
(other than the discount stated on the invoice); Client is the lawful
owner of the Account and has the right to sell and assign the same to
Xxxxxx; the Account is free of all security interests, liens and
encumbrances (including tax liens) other than those in favor of Xxxxxx,
and the Account is due and payable in accordance with its terms.
4.2 Client will not grant or suffer to exist in favor of any party other than
Xxxxxx or Bank, any lien upon or security interest in Client's inventory.
4.3 Client is a solvent corporation, duly incorporated and in good standing
under the laws of the State of California and qualified in all States
where such qualification is required; the execution, delivery and
performance of this Agreement have been duly authorized and are not in
contravention of any applicable law, Client's corporate charter or
by-laws or any agreement or order by which Client is bound; Client is
not, to the best of Client's knowledge, in violation of any law,
ordinance, rule, regulation, order or other requirement of any government
or any instrumentality or agency thereof.
4.4 Client will not change Client's corporate name or the location of
Client's office or open any new offices without giving Xxxxxx at least
thirty (30) days prior Written Notice. At the present time, Client
carries on business only at the above address and the addresses set forth
below.
0000 Xxxxxxxx Xxxxxx, Xxxx xx Xxxxxxxx, XX 00000
4.5 All books and records pertaining to the Accounts or to any inventory
owned by Client will be maintained solely and exclusively at the above
address or the addresses listed in Section 4.4 hereof and no such books
and records will be moved or transferred without giving Xxxxxx thirty
(30) days prior Written Notice.
4.6 After Xxxxxx'x request, Client will hold all returned, replevined or
reclaimed goods relating to Accounts coming into Client's possession in
trust for Xxxxxx and all such goods will be segregated and identified as
held in trust for Xxxxxx'x benefit and Client will, at
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Xxxxxx'x request, and at Xxxxxx'x expense, deliver such goods to such
place or places as Xxxxxx may designate.
4.7 The trade names or styles set forth below are the only trade names or
styles under which Client transacts business; Accounts sold to Xxxxxx
hereunder and represented by invoices bearing such trade names or
styles are wholly owned by Client; the undertakings, representations
and warranties made in connection therewith will be identical to and of
the same force and effect as those made with respect to invoices
bearing Client's corporate name; Client's use of any trade names or
styles is in compliance with all laws regarding the use of such trade
names or styles. Client will give Xxxxxx thirty (30) days prior Written
Notice of the change of any trade name or style or Client's use of any
new trade name or style.
JALATE
JALATE KIDS
XXXXXX
Client hereby grants to Xxxxxx, effective after the occurrence of any
Event of Default hereunder and after any applicable cure period, the
non-exclusive license to use all trade names, marks and styles owned or
used by Client together with any goodwill associated therewith, but
only to the extent necessary to enable Xxxxxx to sell returned,
reclaimed and repossessed goods. Such license is granted free of charge
without requirement that any monetary payment whatsoever be made to
Client or any third party by Xxxxxx.
4.8 Client may, in the ordinary course of business, issue, grant or allow
discounts, credits and allowances on Accounts to customers and accept
returns until Xxxxxx notifies Client to the contrary by Written Notice
or Transmission. Such discounts, credits or allowances once issued may
be claimed only by the customer. Client will promptly issue and assign
to Xxxxxx all full invoice credit memos.
4.9 to the best of Client's knowledge, (a) there are no judgments
outstanding against or affecting Client, its officers, directors or
affiliates or any of Client's property, (b) there are no actions,
charges, claims, demands, suits, proceedings, or governmental
investigations now pending or threatened against Client or any of
Client's property, and (c) none of Client's inventory has been produced
in violation of the Fair Labor Standards Act or any similar law, nor
imported in violation of any United States customs regulation.
4.10 Client agrees that no provision in this Agreement and no course of
dealing between the parties shall be deemed to create any fiduciary
duty by Xxxxxx to Client. Client agrees that neither Xxxxxx nor any of
Xxxxxx'x affiliates, officers, directors, shareholders, employees,
attorneys, or agents shall have any liability with respect to, and
Client hereby waives, releases, and agrees not to xxx any of them upon,
any claim for any special, indirect, incidental, consequential or
punitive damages suffered or incurred by Client in connection with,
arising out of, or in any way related to this Agreement or any of the
transactions contemplated by this Agreement.
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4.11 Client shall at all times maintain Tangible Net Worth of at least the
amounts set forth below during the periods set forth below.
PERIOD TANGIBLE NET WORTH
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June 1, 1997 through
September 29, 1997 $3,200,000
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September 30, 1997 through
March 30, 1998 $4,000,000
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March 31, 1998 and
at all times thereafter $4,200,000
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4.12 From June 1, 1997 through September 29, 1997, Client shall maintain a
ratio of total Liabilities to Tangible Net Worth no greater than 1.75:1.0.
On September 30, 1997 and at all times thereafter, Client shall maintain a
ratio of total Liabilities to Tangible Net Worth no greater than 1.40:1.0.
4.13 Client shall at all times maintain a Current Ratio of at least 1.25:1.0.
4.14 Client shall at all times maintain Working Capital of at least $2,000,000.
4.15 Client will give Xxxxxx Written Notice of: (a) the occurrence of a default
or event of default under any of the Bank Agreements; (b) any waiver of
any such default or event of default; and/or (c) the suspension by the
Securities and Exchange Commission of the public trading of Client's
stock.
SECTION 5. DISPUTES, CHARGEBACKS AND RESERVES
5.1 With respect to any Account, upon the occurrence of a breach of any of the
representations or warranties contained in Section 4.1, or upon the
assertion by a customer of a Dispute, such Account may, at Xxxxxx'x
option, be charged back to Client. In the event Client does not, within
fifteen (15) days of Xxxxxx'x request, deliver to Xxxxxx a copy of the
invoice and such other information as Xxxxxx requests relating to an
Account with respect to which information was transmitted to Xxxxxx
through Transmission, Xxxxxx will have the right to charge back such
Account to Client.
5.2 Client will promptly notify Xxxxxx, by Written Notice, in the event that a
customer alleges any Dispute, or returns or desires to return any goods
purchased from Client relating to an Account. After an Event of Default
and after any applicable cure period, Xxxxxx may but is not obligated to
settle, compromise, adjust or litigate all such Disputes or returns upon
such terms as Xxxxxx deems advisable.
5.3 Client will supply customers, in the format required by customers, with
all forms, documents, certificates, etc. that customer requires to process
the Account for payment. If Xxxxxx notifies Client verbally and/or by
Written Notice or transmission that a customer which only accepts invoices
for payment from Client through Transmission is requesting that Client
review its invoice data for correctness and re-transmit invoices by
Transmission and if after thirty (30) days from the date of such Notice
such invoices remain unposted to such customer's records, Xxxxxx will
place the Accounts evidenced by such invoices in Dispute.
5.4 Xxxxxx may, at Xxxxxx'x option, charge back to Client all amounts owing on
Non-Approved Accounts which are not paid when due.
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5.5 Client will pay Xxxxxx, or Xxxxxx may charge Client's account with, the
amount of any payment which Xxxxxx receives with respect to a Non-Approved
Account if such payment is subsequently disgorged by Xxxxxx, whether as a
result of any proceeding in bankruptcy or otherwise.
5.6 Client shall purchase promptly all Accounts charged back by Xxxxxx,
provided, however, that until payment by Client to Xxxxxx of all monies
due with respect to such charged back Account, title thereto shall remain
with Xxxxxx. At such time as Client shall pay to Xxxxxx all monies due
with respect to such charged back account, title shall pass to Client
subject, however, to Xxxxxx'x security interest therein. Client agrees to
indemnify and save Xxxxxx harmless from and against any and all loss,
costs and expenses caused by or arising out of disputed Accounts,
including, but not limited to, collection expenses and attorney's fees
incurred with respect thereto.
5.7 Xxxxxx may maintain such reserves as Xxxxxx, in Xxxxxx'x sole discretion,
deems advisable as security for the payment and performance of the
Obligations, including, without limitation, reserves for the amount of any
Account which is subject to a Dispute.
SECTION 6. ADMINISTRATION
6.1 Client will, from time to time, (i) execute and deliver to Xxxxxx
confirmatory schedules of Accounts assigned to Xxxxxx (each an "Assignment
Schedule"), together with one copy of each invoice, acceptable evidence of
shipment and such other documentation and proofs of delivery as Xxxxxx may
require or (ii) transmit to Xxxxxx by Transmission information concerning
Accounts in a format acceptable to Xxxxxx and, upon Xxxxxx'x request,
deliver to Xxxxxx copies of invoices, acceptable evidence of shipment and
such other documentation and proofs of delivery as Xxxxxx may require
relating to Accounts so transmitted. Client will not deliver Assignment
Schedules in connection with Transmissions, but Client acknowledges and
agrees that every invoice transmitted to Xxxxxx by Transmission will be
deemed to have been sent pursuant to the terms and conditions of an
Assignment Schedule. Each invoice relating to an Account and all copies
and Transmissions thereof will bear a notice, in form satisfactory to
Xxxxxx, that the Account has been sold and assigned to and is payable only
to Xxxxxx. Client agrees that Client will not change such notice on
invoices and will not direct its customers to pay Client or any third
party amounts due under invoices. Client agrees to prepare and mail (or
when required, send by Transmission) all invoices relating to Accounts,
but Xxxxxx may do so at Xxxxxx'x option. Client agrees to execute and
deliver to Xxxxxx such further instruments of assignment, financing
statements and instruments of further assurance as Xxxxxx may reasonably
require. Client authorizes Xxxxxx to execute on Client's behalf and file
such UCC financing statements as Xxxxxx may deem necessary in order to
perfect and maintain the security interests granted by Client in
accordance with this Agreement. Client further agrees that Xxxxxx may file
this Agreement or a copy thereof as such UCC financing statement.
6.2 On any day when Client desires to have advances made in accordance with
subsection 2.2 Client shall give Xxxxxx telephone notice of the requested
advance by 12:00 noon Los Angeles time. Xxxxxx shall not incur any
liability to Client for acting upon any telephonic notice that Xxxxxx
believes in good faith to have been given by a duly authorized officer or
other person authorized to request advances on
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Client's behalf or for otherwise acting in good faith under this
subsection.
6.3 If any remittances are made directly to Client or Client's employees or
agents, Client will act as trustee of an express trust for Xxxxxx'x
benefit, hold the same as Xxxxxx'x property and deliver the same to
Xxxxxx forthwith in kind. Xxxxxx and/or such designee as Xxxxxx may
from time to time appoint are hereby appointed Client's
attorney-in-fact to endorse Client's name on any and all checks or
other forms of remittances received by Xxxxxx where such endorsement is
required to effect collection and to transmit notices to customers, in
Client's or Xxxxxx'x name, that amounts owing by them have been
assigned and are payable directly to Xxxxxx; this power, being coupled
with an interest, is irrevocable.
6.4 Client shall permit Xxxxxx and any representatives designated by Xxxxxx
to visit and inspect any of the properties of Client, including its
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its affairs, finances, and business with its
officers at such times during normal business hours and as often as
Xxxxxx requests. Xxxxxx may, at any time after the occurrence of an
Event of Default, remove from Client's premises copies of all such
records, files and books relating to Accounts.
6.5 If Xxxxxx determines that the credit standing of a customer has
deteriorated after Xxxxxx has assumed the Credit Risk on an Account,
Client will, at Xxxxxx'x request, exercise such rights as Client may
have to reclaim or stop the goods in transit, and Client hereby grants
to Xxxxxx the right to take such steps in Client's or Xxxxxx'x name.
6.6 Xxxxxx will render a monthly statement of account to Client within
twenty (20) days after the end of each month. Such statement of account
will constitute an account stated unless Client makes objection thereto
by Written Notice within thirty (30) days from the date such statement
is rendered to Client.
6.7 Client will maintain a system of accounting established and administered
in accordance with sound business practices to permit preparation of
financial statements in conformity with GAAP. Client will promptly
furnish Xxxxxx with such statements prepared by or for Client showing
Client's financial condition and the results of Client's operations as
Xxxxxx requests verbally or by Written Notice, including without
limitation for each of Client's fiscal years: (i) as soon as available
but not later than ninety (90) days after the end of each fiscal year,
Client's balance sheet, income statement and the related statement of
cash flows for and as at the end of such fiscal year and a statement of
stockholder's equity for such fiscal year, audited by Client's
independent certified public accountants and reported by such
accountants as unqualified with respect to going concern and scope of
audit and certified by Client to be prepared in accordance with GAAP and
to fairly present Client's financial position and results of operations
for such fiscal year; and (ii) as soon as available but not later than
sixty (60) days after the end of the first, second and third quarters of
each fiscal year, Client's balance sheet, income statement and the
related statement of cash flows for and as at the end of, the portion
of Client's fiscal year then elapsed and a statement of stockholder's
equity for such period, reviewed by Client's independent certified
public accountants and certified by Client to fairly present Client's
financial position and results of operations for such period; and (iii)
as soon as available
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but not later than thirty (30) days after the end of each month, Client's
internally prepare balance sheet and income statement of Client as at the
end of such month for the period from the beginning of the then current
fiscal year to the end of such month. Upon the request of Xxxxxx, in its
sole discretion, Client shall promptly provide to Xxxxxx the projected
income statement, balance sheet and statement of cash flows of Client for
the forthcoming ninety (90) day period from the date of such a request.
Client authorizes Xxxxxx to communicate, with Client's consent, directly
with Client's independent certified public accountants and authorizes
such accountants to discuss Client's financial condition and financial
statements directly with Xxxxxx.
6.8 Client authorizes Xxxxxx to disclose such information as Xxxxxx deems
appropriate to persons making credit inquiries about Client.
SECTION 7. COLLATERAL SECURITY
As collateral security for all Obligations, Client hereby assigns and grants
to Xxxxxx a continuing security interest in all of the following property,
whether now owned by Client or hereafter created or acquired by Client or
arising in Client's favor: (i) Accounts; (ii) general intangibles (as
defined in the UCC) excluding Client's trade marks; (iii) monies, securities
and other property now or hereafter held or received by, or in transit to
Xxxxxx from or for Client, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all of Client's deposits,
reserves, and credit balances in Xxxxxx'x possession; (iv) books, records
and other property at any time evidencing or relating to any of the
foregoing property; and (v) proceeds of any of the foregoing property
including, without limitation, the proceeds of any insurance policies
covering any of the foregoing property. Recourse to the collateral security
herein provided will not be required, and Client will at all times remain
liable for the payment and performance of the Obligations upon demand by
Xxxxxx.
SECTION 8. EVENTS OF DEFAULT
The occurrence of any of the following acts or events will constitute an
Event of Default: (a) if Client fails to make payment of any of the
Obligations when due; (b) if Client fails to make any remittance required by
this Agreement; (c) if Client commits any breach of any of the terms,
representations, warranties, covenants, conditions or provisions of this
Agreement (including subsections 4.11, 4.12, 4.13 and 6.7), or of any
present or future supplement or amendment hereto or of any other agreement
between Xxxxxx and Client; (d) if Client becomes insolvent or unable to meet
Client's debts as they mature; (e) if Client fails to pay when due any
material obligations or liabilities owing by Client to any person or entity
(including without limitation, any United States and state taxes); (f) if
Client delivers to Xxxxxx a false financial statement or if any
representation, warranty, certification, or other statement made by Client to
Xxxxxx is false in any material respect when made; (g) if Client calls or
agrees to the calling by a third party of a meeting of creditors; (h) if any
bankruptcy proceeding, insolvency arrangement or similar proceeding is
commenced by or against Client including, without limitation, an assignment
for the benefit of creditors; (i) if Client suspends or discontinues doing
business for any reason; (j) if a receiver or trustee of any kind is
appointed for Client or any of Client's property; (k) to the extent there
are at any time any guarantors of Client's Obligations, if any such
guarantor dies or becomes insolvent or has commenced by or against such
guarantor any bankruptcy proceeding, insolvency arrangement or similar
proceeding including, without limitation, an assignment for the benefit of
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creditors; (l) to the extent there are at any time any guaranties of Client's
Obligations, if any such guaranty is terminated or any guarantor alleges that
any such guaranty is unenforceable, or if there is a default under any such
guaranty; (m) if there shall be a change in the beneficial ownership and
control, directly or indirectly, of the majority of the outstanding voting
securities or other interests entitled (without regard to the occurrence of any
contingency) to elect or appoint members of the board of directors or other
managing body of Client; (n) if a notice of lien, money judgment, levy,
assessment, seizure or writ, or warrant of attachment is entered or filed
against Client or with respect to the Accounts or any other collateral in which
Client has granted Xxxxxx a security interest; (o) if Client sells, leases,
transfers or otherwise disposes of all or substantially all of Client's property
or assets, or consolidates with or merges into or with any corporation or
entity; or (p) if any default or event of default occurs under the Related
Agreement or any of the Bank Agreements.
Client shall have a cure period of thirty (30) days from (i) the commencement of
any arrangement or proceeding under subpart (h) above, to the extent Client did
not commence the proceeding, or under subpart (k) above, to the extent such
guarantor did not commence the proceeding, to have such arrangement or
proceeding dismissed or (ii) the date of the entering or filing of a notice of
lien, money judgment, levy, assessment, seizure or writ or warrant of attachment
under subpart (n) above to have such lien, judgment, levy, assessment, seizure
or writ or warrant of attachment discharged.
Notwithstanding anything contained herein to the contrary, Xxxxxx may, in its
discretion, suspend making advances hereunder during any of the cure periods set
forth above.
If Client fails to cure or have cured an Event of Default within any applicable
cure period or upon the occurrence of any other Event of Default, Xxxxxx will
have the right to terminate this Agreement and all other arrangements existing
between Client and Xxxxxx forthwith and without notice, and the Obligations will
mature and become immediately due and payable and Xxxxxx will have the right to
withhold any further payments to Client until all Obligations have been paid in
full. In addition, Xxxxxx will have all of the rights of secured party under the
UCC, including, without limitation, the right to take possession of any
collateral in which Xxxxxx has a security interest and to dispose of same at
public or private sale and Client will be liable for any deficiency. Xxxxxx will
not be required to proceed against any collateral but may proceed against Client
directly.
If either party to this Agreement shall bring any action for any relief against
the other, declaratory or otherwise, arising out of this Agreement, the losing
party shall pay to the prevailing party a reasonable sum for attorney fees
incurred in bringing such suit and/or enforcing any judgment granted therein,
all of which shall be deemed to have accrued upon the commencement of such
action and shall be paid whether or not such action is prosecuted to judgment.
Any judgment or order entered in such action shall contain a specific provision
providing for the recovery of attorney fees and costs incurred in enforcing such
judgment. For the purposes of this section, attorney fees shall include, without
limitation, fees incurred in the following: (1) postjudgment motions; (2)
contempt proceedings; (3) garnishment, levy, and debtor and third party
examinations; (4) discovery; and (5) bankruptcy litigation.
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SECTION 9. TERM AND TERMINATION
This Agreement will continue in effect for an original term of one year from
the Effective Date and shall remain in force thereafter, but it may be
terminated at the end of the original one year term or at any time
thereafter by either Xxxxxx or Client giving the other party not less than
sixty (60) days prior Written Notice thereof.
Notwithstanding any such Written Notice of termination, Client's and
Xxxxxx'x respective rights and obligations arising out of transactions
having their inception prior to the date of termination of this Agreement
will not be affected by the termination of this Agreement and all terms,
provisions and conditions hereof, including but not limited to, the security
interests hereinabove granted to Xxxxxx (including Xxxxxx'x security
interest in Accounts arising, acquired or created after the date of
termination of this Agreement), will continue in full force and effect until
all Obligations have been paid in full. All of the representations,
warranties, indemnities and covenants made by Client herein (including
without limitation the undertaking set forth in Section 5.5 hereof) will
survive the termination of this Agreement.
SECTION 10. MODIFICATIONS, WAIVERS, NOTICES AND MISCELLANEOUS PROVISIONS
This Agreement may not be changed or terminated orally; it constitutes the
entire agreement between Client and Xxxxxx and will be binding upon Client's
and Xxxxxx'x respective successors and assigns, but may not be assigned by
Client without Xxxxxx'x prior written consent. No delay or failure on
Xxxxxx'x part in exercising any right, privilege, or option hereunder will
operate as a waiver thereof or of any other right, privilege or option. No
waiver whatsoever will be valid unless in a Written Notice, signed by
Xxxxxx, and then only to the extent therein set forth. If any term or
provision of this Agreement is held invalid under any statute, rule or
regulation of any jurisdiction competent to make such a decision, the
remaining terms and provisions will not be affected, but will remain in full
force and effect.
Any Written Notice to be given under this Agreement will be in writing
addressed to the respective party as set forth in the heading to this
Agreement (or such other address as may have been designated in a Written
Notice) and will be personally served, telecopied or sent by overnight
courier service or United States mail and will be deemed to have been given:
(a) if delivered in person, when delivered; (b) if delivered by telecopy, on
the date of transmission if transmitted on a Business Day before 4:00 p.m.
Los Angeles time or, if not, on the next succeeding Business Day; (c) if
delivered by overnight courier, two (2) days after delivery to such courier
properly addressed; or (d) if by U.S. Mail, four (4) Business Days after
depositing in the United States mail, with postage prepaid and properly
addressed.
Xxxxxx conducts business under California Finance Lender License number
603-2495.
SECTION 11. GOVERNING LAW, VENUE AND WAIVER OF JURY
THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO ANY CONFLICT OF LAWS
PRINCIPLES. CLIENT HEREBY CONSENTS TO THE JURISDICTION OF ANY LOCAL, STATE
OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF LOS ANGELES, THE STATE OF
CALIFORNIA. IF CLIENT PRESENTLY IS, OR IN THE FUTURE BECOMES, A NON-RESIDENT
OF THE STATE OF CALIFORNIA, CLIENT HEREBY WAIVES PERSONAL SERVICE
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OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE
BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO CLIENT,
AT CLIENT'S ADDRESS APPEARING IN XXXXXX'X RECORDS AND SERVICE SO MADE SHALL BE
COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED AS AFORESAID.
WAIVER OF JURY TRIAL. CLIENT AND XXXXXX HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, OR ANY OTHER DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT,
OR ANY DEALINGS BETWEEN CLIENT AND XXXXXX RELATING TO THE SUBJECT MATTER OF
THIS TRANSACTION AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED.
CLIENT AND XXXXXX ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH OF CLIENT AND XXXXXX HAS ALREADY
RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH OF CLIENT
AND XXXXXX WILL CONTINUE TO RELY ON THE WAIVER IN THE RELATED FUTURE DEALINGS
BETWEEN CLIENT AND XXXXXX. CLIENT AND XXXXXX FURTHER WARRANT AND REPRESENT THAT
THEY KNOWINGLY AND VOLUNTARILY WAIVE THEIR RESPECTIVE JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
SECTION 12. DEFINITIONS
"Accounts" -- All presently existing or outstanding and all hereafter
created or acquired accounts (as that term is defined in the UCC),
contract rights, documents, notes, drafts, instruments and other forms
of obligations owed to or owned by Client arising or resulting from the
sale of goods or the rendering of services by Client, all general
intangibles relating thereto, all proceeds thereof, all guaranties and
security therefor, and all goods and rights represented thereby or
arising therefrom, including, but not limited to, returned, reclaimed
and repossessed goods and the rights of stoppage in transit, replevin
and reclamation.
"Affiliate" -- means any Person in which Client and/or any one or more
of Client's Stockholders has or controls, directly or indirectly,
jointly and/or severally, now or at any time or times hereafter, an
equity or other ownership interest that is either (a) equal to or in
excess of twenty percent (20%) of the total equity of or other
ownership interest in such Person, or (b) sufficient to materially
influence or control such Person.
"Approved Account" -- An Account representing a sale to a customer
within the credit line established for such customer on Client's normal
selling terms or within the single order credit approval given by
Xxxxxx for orders from such customer provided that Delivery is
completed while the credit line or single order credit approval remains
in effect and which has not been charged back to Client.
"Approved Payment Date" -- The date which is one hundred twenty (120)
days after the due date for payment of an Approved Account.
"Assets" -- has the meaning usually ascribed to such term in accordance
with GAAP.
"Bank" -- means Xxxxx Fargo HSBC Trade Bank, N.A.
"Bank Agreements" -- All instruments, documents, and agreements between
Client and Bank, including, without limitation, that certain Credit
Agreement dated as of June 1, 1996 and that certain Loans Against
Imports Note dated March 17, 1997, all as amended from time to time.
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"Business Day" -- Any day excluding Saturday, Sunday and any day which
is a legal holiday under the laws of the State of Illinois,
Pennsylvania, or California or is a day on which banking institutions
located in any such state are closed.
"Collected Amount" -- The amount received by Xxxxxx from a customer in
payment of an Account up to the Net Amount of such Account.
"Collection Date" -- The date on which Xxxxxx receives payment of an
Account.
"Contract Year" -- The twelve month period commencing on the Effective
Date or any anniversary thereof.
"Costs" -- All costs fees and expenses (including attorney's fees)
incurred by Xxxxxx in connection with (i) the administration of this
Agreement or the Related Agreement, or any waiver, forbearance,
amendment or modification thereof (ii) the perfection, protection,
preservation or enforcement of Xxxxxx'x rights in any collateral in
which Xxxxxx has been granted a security interest and (iii) all filing
fees, filing taxes or search reports.
"Credit Risk" -- The risk that a customer will be financially unable to
pay an Account at maturity, provided that the merchandise has been
received or services rendered and accepted by the customer without
Dispute.
"Current Ratio" -- Client's current Assets divided by Client's current
Liabilities, in accordance with GAAP.
"Daily Balance" -- The outstanding balance of all monies remitted, paid
or otherwise advanced to Client or for Client's account plus all
commissions, fees, charges and expenses charged to Client's account in
accordance with the terms hereof less all amounts credited to Client's
account in accordance with subsection 2.1 hereof.
"Delivery" -- The delivery of goods or performance of services in
accordance with the terms agreed to in writing between Client and a
customer, provided that if no such terms are specified in writing,
delivery shall mean delivery of goods or performance of services at the
customer's place of business.
"Dispute" -- A dispute or claim, bona fide or otherwise, as to price,
terms, quantity, quality, Delivery, or any claim or defense to
collection or payment of an Account whatsoever other than the financial
inability of a customer to pay the Account.
"Effective Date" -- The date set forth below Xxxxxx'x signature hereto.
"GAAP" -- Generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are
applicable to the circumstances as of the date of determination.
"Xxxxxx Clients" -- Any Persons (other than Client) which have entered
into factoring, intercredit or financing agreements with Xxxxxx.
"Indebtedness" -- shall mean, obligations and liabilities owing by
Client to any Person (including without limitation all debts, claims
and indebtedness) whether primary, secondary, direct, contingent, fixed
or
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otherwise, heretofore now and/or from time to time hereafter owing, due or
payable, however evidenced, created, incurred, acquired or owing and however
arising, whether under written or oral agreement, operation of law or otherwise.
"Ledger Debt" -- Obligations owing to Xxxxxx as a result of Xxxxxx'x purchases
of invoices evidencing sales to Client by Xxxxxx Clients.
"Liabilities" -- has the meaning usually ascribed to such term in accordance
with GAAP; provided, however, that both current Liabilities and total
Liabilities shall include Indebtedness which is subordinated to the Obligations
(as defined herein) owing to Xxxxxx and/or the Obligations (as defined in the
Bank Agreements) owing to Bank, in subordination agreements, in form and
substance acceptable to Xxxxxx and/or Bank, as applicable.
"LIBOR Rate" -- The one month London Interbank Offered Rate (LIBOR) announced
from time to time in the Wall Street Journal as the average of Interbank offered
rates for dollar deposits in the London Market based on quotations at five major
banks.
"Net Amount" -- the gross amount of an Account less the discount offered by
Client and taken by Xxxxxx at the time Xxxxxx purchases such Account.
"Non-Approved Account" -- (a) An Account with respect to which Xxxxxx has not
issued a credit approval or has subsequently withdrawn a credit approval or (b)
an Approved Account that has been charged back to Client.
"Obligations" -- All loans, advances, debts, indebtedness, liabilities,
obligations, covenants and duties owing by Client to Xxxxxx, direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, whether under this Agreement, the Related Agreement, any
other agreement between Xxxxxx and client or otherwise, including, without
limitation, Ledger Debt and indebtedness arising under any guaranty made by
Client for Xxxxxx'x benefit or issued by Xxxxxx on Client's behalf.
"Payment Date" -- The Collection Date or the Approved Payment Date as
applicable.
"Person" -- Any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, company,
institution, entity, party or government (whether national, federal, state,
county, city, municipal or otherwise, including without limitation, any
instrumentality, division, agency, body or department of any such government).
"Purchase Price" -- An amount equal to the Net Amount of an Account, less
factoring commissions, credits (including, without limitation, merchandise
returns and credit memos), charge backs, allowances, and all other fees and
charges provided hereunder.
"Related Agreement" -- That certain Revolving Loan Agreement dated as of the
Effective Date, as amended from time to time.
"Stockholder" -- Any owner (beneficial or of record) of Client's stock.
"Tangible Net Worth" -- means an amount equal to the excess of total Assets over
total Liabilities determined in accordance with GAAP, excluding, however, in
determining total Assets (i) all Assets which
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would be classified as intangible assets under GAAP, including, but not
limited to, goodwill, licenses, patents, trademarks, trade names,
copyrights, capitalized software and organizational costs, licenses and
franchises, and (ii) Assets which Xxxxxx determines, in its business
judgment, would not be available or would be of relatively small value
in a liquidation of Client's business, including, but not limited to,
prepaid expenses, loans to officers, Stockholders, employees or
Affiliates and other items.
"Transmission" -- Transmission through Xxxxxx'x proprietary system or
through Electronic Data Interchange.
"UCC" -- The Uniform Commercial Code as in effect on the date hereof in
the State of California, as amended from time to time, and any
successor statute.
"Working Capital" -- means an amount equal to: (a) Client's current
Assets; less (b) Client's current Liabilities; and less (c) the amount
of any obligations owing by Affiliates or Stockholders to Client.
"Written Notice" -- Notice given in writing in accordance with Section
10 of this Agreement.
In Witness Whereof, the undersigned have caused this agreement to be executed
and delivered by their thereunto duly authorized officers as of the Effective
Date.
XXXXXX FINANCIAL, INC. JALATE, LTD.
By: [SIG] By: [SIG]
------------------------------- -------------------------------
Title: S.V.P. Title: V.P. Finance [ILLEGIBLE]
---------------------------- ----------------------------
Effective Date: June 30, 1997
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