Factoring Agreement
This
Agreement, dated January 5, 2007 (the "Effective Date"), is between Lighting
Science Group Corporation with offices at 0000 XxXxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000 (hereinafter called "Seller"), and Allied Capital Partners,
L.P., with offices at 0000 Xxxx Xxxx Xx., Xxxxx 000, Xxxxxx, Xxxxx 00000
(hereinafter called "Allied").
The
Seller desires to sell its Accounts to Allied on the following terms, conditions
and provisions and, therefore, it is agreed as follows:
| 1. |
Definitions.
As used in this Agreement and all other documents or instruments executed
and delivered in connection with this
Agreement:
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| 1.1 |
The
capitalized words used herein (singular, plural or in any tense) shall
have the same definitions as those set forth in the Uniform Commercial
Code as adopted by the State of Texas, effective July 1,
2001.
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| 1.2 |
"Without
Recourse" shall mean the Seller of Accounts is not obligated to pay
or
repurchase an Account sold to Allied unless Seller breaches its warranties
or representations concerning such Account. “With Recourse” or "Recourse"
means Seller shall pay or repurchase Accounts acquired by Allied that
are
not paid according to the terms of the
invoice.
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| 1.3 |
“Face
Amount” shall mean the total amount of each Account, including taxes,
delivery charges, etc.
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| 1.4 |
An
Account shall be deemed to be "Disputed" if (i) the Account Debtor
disputes an Account, including the amount owing, timely delivery of
the
goods, conformity of the goods or services to the order, or any other
aspect of the sale giving rise to the Account for any reason whatsoever,
even if the dispute has no merit, is in bad faith or is unreasonable,
(ii)
the Account contains mistakes, is not correct or was sent in error,
or
(iii) all of the following three conditions exist: (a) the Account
is not
paid within 90 days of its invoice date unless Factor agrees in writing
to
other terms, (b) the Account Debtor will not communicate the reason
for
non-payment to Allied, and (c) the Seller fails to produce, within
such
time period, good and sufficient evidence that nonpayment is due to
the
Account Debtor's financial inability to pay, the pendency of a bankruptcy
proceeding by or against the Account Debtor or some reason other than
a
dispute of the type referred to above.
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| 1.5 |
“New
Commitment” shall mean any written commitment Seller may receive during
the Term of this Agreement from a
|
third
party to provide working capital financing or factoring to Seller, which
commitment Seller intends to accept.
1.6
“Discount” shall mean the sum of the following, subject to adjustment as set
forth below: (i)1.75% of the Face Amount of each Account sold to Allied under
this Agreement for the Initial Payment Period and (ii) .066% for each 1 day
period (or portion thereof) that the Account remains unpaid after the Initial
Payment Period (as hereinafter defined), until the earlier of (a) the date
it is
paid in full or repurchased by the Seller in accordance with this Agreement,
or
(b) if the Account is not one that the Seller is or becomes obligated to pay
or
repurchase, 150 days from the date of the invoice of the Account. In the event
the Wall
Street Journal
Prime
shall have increased or decreased on the first business day of each calendar
quarter during the Term from its percentage as of the first business day of
the
previous calendar quarter, or as of the Effective Date if this term is applied
on the first business day of the calendar quarter immediately following the
Effective Date, the Discount shall increase or decrease
proportionally.
| 1.7 |
“Initial
Payment Period” shall mean the period of 30 days from the date Allied has
purchased an Account under this
Agreement.
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| 1.8 |
“Purchase
Price” shall mean the Face Amount of the Account less the
Discount.
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| 1.9 |
“Wall
Street Journal Prime”
shall mean the “prime rate” quoted by The
Wall Street Journal
as
the national average base rate on loans posted by at least 75% of the
nation’s largest banks.
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| 1.10 |
“Seller’s
Business” is manufacture and distribution of LED lighting
applications.
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Other
words used herein, which are capitalized, shall have the definitions prescribed
herein. Variations of words defined herein shall have the same meaning as the
defined terms.
| 2. |
Offer
to Sell.
Seller may, at its option, offer to sell, assign and transfer to Allied
its existing and hereinafter arising, acquired or created Accounts.
Any
such offer shall be made on an assignment form prescribed by Allied
(the
"Schedule") sent to Allied at its above stated office and accompanied
by a
copy of (i) each invoice, (ii) the xxxx of lading, shipping documents
or
other proof of delivery, (iii) the contract or purchase order (or purchase
order number which corresponds with the invoice), and (iv) such other
documentation as may be requested by Allied for each Account listed
on the
Schedule.
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| 3. |
Acceptance
of Offer.
Allied may accept Seller's offer to sell Accounts at its above stated
office by either (i) paying the Purchase Price (less the Reserve, defined
below) with respect to all Accounts appearing on the Schedule submitted
to
Allied, or (ii) by marking out the Accounts which appear on the Schedule
and which Allied is unwilling to purchase, paying the Purchase Price
(less
the Reserve) for the remaining Accounts, and sending a copy of the
Schedule to Seller which shows which Accounts were rejected. Allied
shall
not be obligated to purchase any Account that Seller offers to sell
to
Allied.
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| 4. |
Reserve.
Allied may, at its sole option and discretion, defer making payment
to
Seller of a portion of the Purchase Price payable for all Accounts
purchased under this Agreement which have not been paid by the Account
Debtor or paid or repurchased by Seller's payment of the Repurchase
Price
to Allied, up to an aggregate amount equal to18.25% of the Face Amount
of
all such Accounts (the "Reserve"). The Reserve shall not bear interest.
The remaining portion of the Purchase Price payable for each Account
purchased hereunder and which constitutes part of the Reserve is payable
by Allied to Seller, on request of Seller (limited to one request per
week), after the earlier of (i) the date the Account is paid to Allied,
or
(ii) 150 days from the date of the invoice of the Account, unless the
Reserve is increased as herein provided or the Account is or becomes
one
that the Seller is obligated to repurchase or pay. An
Account is not deemed paid to Allied unless the payment instrument
is
actually paid and, in the case of payments of more than $500,000, until
after 5 days from receipt of the payment instrument excluding wire
transfers. Notwithstanding
the preceding limitation on the Reserve, in the event Seller breaches
any
representation, warranty, term, condition or provision of this Agreement,
or if in Allied's reasonable judgment it is necessary to increase the
Reserve to protect Allied from losses due to a Dispute of any Account,
returns or other contingencies, or Seller's unsatisfied obligations
and
liabilities, Allied is entitled to increase the amount of the Reserve
without Seller's consent. If any Account owned by Allied is not paid
within 75 days of the date of the invoice related thereto, Allied may
presume that the Account may be Disputed and may increase the Reserve
by
an amount equal to that portion of the Purchase Price previously paid
by
Allied plus the Discount unless Factor agrees in writing to other terms.
In the event Allied notifies Seller that it has increased the Reserve,
Seller shall immediately refund to Allied a portion of the Purchase
Price
previously paid by Allied for the purchase of Seller's Accounts which
is
equal to the increased amount of the Reserve. After the Term of this
Agreement defined below has expired and Seller has paid its liabilities
to
Allied and fulfilled its obligations arising hereunder, Allied shall
pay
the balance of the Purchase Price payable for all Accounts purchased
hereunder which constitutes Reserve (if any) to Seller. The purpose
of the
Reserve is to provide Allied with additional collateral to secure payment
of Seller's liabilities and performance of Seller's obligations arising
under this Agreement. Allied shall be entitled to offset or recoup
from
the Reserve the amount of any liabilities owing by Seller to Allied,
whether presently existing or hereinafter arising, and whether or not
arising under this Agreement, including, but not limited to, Seller's
obligation to repurchase Accounts or to pay Accounts pursuant to the
provisions of this Agreement. Seller acknowledges that the Reserve
is not
a cash deposit, but represents the balance of Allied's liability to
Seller
for payment of the Purchase Price, subject to its right of offset or
recoupment and its security interest in the Reserve. Allied shall provide
Seller with a monthly statement of accounting of transactions affecting
the Reserve.
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| 5. |
Seller’s
Repurchase Obligation.
In
addition to all other rights of Allied hereunder, Allied may require
that
Seller repurchase, by payment of the Repurchase Price together with
any
other unpaid fees then owing to Allied, any Account that has been
purchased by Allied: (i) for which Seller has breached its warranty
or
representation concerning such Account as set forth herein; or (ii)
which
was purchased by Allied With Recourse. If any Account purchased by
Allied
is one that Seller is or becomes obligated to pay or repurchase under
this
Agreement and is not paid within the Initial Payment Period, Allied,
at
Allied’s sole discretion, may elect to: (i) retain ownership of the
Account until the earlier of either the date the Account is paid by
the
Account Debtor or 90 days after the invoice date of the Account unless
Factor agrees in writing to other terms, or (ii) at any time require
Seller to repurchase the Account at the Repurchase Price. The purchase
price for any Account, which Seller is required to repurchase from
Allied
under this Agreement is the Face Amount of the Account (the “Repurchase
Price”). If Seller ever becomes obligated to repurchase an Account from
Allied, it shall not become the owner of such Account until it has
paid
the Repurchase Price to Allied.
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| 6. |
Minimum
Sales.
If Seller fails to offer to sell and assign to Allied a monthly minimum
of
$0 in Accounts which are acceptable to Allied, Seller will pay to Allied
the difference between the Discount on all Accounts purchased by Allied
from Seller during the month and $0.
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| 7. |
Recourse.
Except as provided below, all Accounts sold and purchased hereunder
are
sold With Recourse on Seller. Allied and Seller may agree in writing
that
the Accounts of a specific Account Debtor or specific Accounts shall
be
purchased Without Recourse on Seller.
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| 8. |
Account
Warranties.
Seller warrants, represents, covenants and agrees that the presently
existing and hereafter arising, acquired or created Accounts of Seller
sold to Allied or in which Allied obtains a security interest: (i)
are not
and will not be Disputed; (ii) will be paid when due (unless the Account
was purchased Without Recourse); (iii) are owned solely by Seller,
which
has the power to transfer the Accounts, and that its title to the Accounts
is free of all adverse claims, liens, security interests and restrictions
on transfer, encumbrance or pledge, except as created by this Agreement;
(iv) set forth the correct and complete terms of sale, which have not
been
and will not be altered or amended; (v) are valid and owing, and all
goods
and services giving rise to the Accounts have been provided or delivered
in accordance with Seller's agreement with the Account Debtor; (vi)
will
not be paid by a preference payment or fraudulent transfer (as defined
by
the Bankruptcy Code or the relevant law of any state); (vii) are not
and
shall not become subject to a defense or claim in recoupment or setoff
that can be asserted against Allied; (viii) are not owing by Account
Debtors that were subject to insolvency or bankruptcy proceedings
concerning which Seller had any notice as of the date the Account is
sold,
or in which Seller owns an interest of any kind; (ix) shall be reflected
on Seller's books and records as having been transferred, sold and
conveyed to Allied if Allied purchases such Accounts; and (x) shall
be
evidenced by an invoice, and each invoice shall have printed on the
face
thereof a statement, approved by Allied, notifying the Account Debtor
that
the invoice has been sold and assigned to Allied and is payable only
to
Allied (or jointly to Allied and Seller) at the address designated
in such
notice and that, if the Account is paid, the Account will be paid by
the
Account Debtor in accordance with such instructions. The warranties
and
representations set forth herein shall apply as of the date each Account
is sold hereunder and shall continue with respect to each Account until
each such Account is paid. If Seller breaches any warranty, covenant
or
agreement set forth above, Seller shall repurchase the applicable Account
for the Repurchase Price, or pay the Account; such payment or repurchase
shall cure Seller’s default for breach of warranty with respect to such
Account. All warranties and representations of Seller under this Agreement
are continuing warranties and representations.
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| 9. |
Other
Warranties and Covenants of Seller.
Seller further warrants, represents, covenants and agrees that as of
the
Effective Date and at all times during the Term of this Agreement:
(i)
Seller is and shall be able to pay its debts as they become due; (ii)
Seller's (a) principal executive office is located in the State of
Texas,
(b) Seller’s Jurisdiction of Organization or state of incorporation or
charter is the State of Delaware and (c) exact legal name is as set
forth
in the first paragraph of this Agreement, and Seller does not operate
under any trade name or assumed name except: LSG, LSGC, Lighting Science
Group; (iii) Allied is and shall remain Seller's sole factor, and Seller
will not sell its Accounts to any other person, firm or corporation
during
the Term; (iv) after written notice by Allied to Seller and automatically,
without notice, after Seller's default under this Agreement, Seller
shall
not, without the prior written consent of Allied in each instance,
(a)
grant any extension of time for payment of any Accounts or any other
Collateral which includes a monetary obligation, (b) compromise or
settle
any Accounts or any such other Collateral for less than the full amount
thereof, (c) release in whole or in part any Account Debtor or other
person liable for payment of Accounts or any other such Collateral,
or (d)
grant any credits, discounts, allowances, deductions, return
authorizations or the like with respect to any Accounts or any such
other
Collateral; (v) before sending any invoice to an Account Debtor with
respect to an Account that has been sold to Allied, Seller shall xxxx
the
same with a notice of assignment as may be required by Allied; (vi)
Seller
maintains and shall continue to maintain complete and accurate business
records of the type normally maintained by businesses similar to Seller,
and all financial records, statements, books and other documents shall
be
made available for Allied's inspection and shall be true and accurate
in
all respects; (vii) the Accounts and Collateral are and shall at all
times
remain free and clear of liens, claims and encumbrances other than
the
security interests granted to Allied hereunder; (viii) the Accounts
assigned to Allied by Seller shall become the sole property of Allied
and
Seller’s sale and assignment of accounts shall pass legal and equitable
title to Allied free and clear of liens, claims and encumbrances; (ix)
Seller insures and shall continue to insure its business and its assets
in
a manner customary for businesses of the type of Seller's business,
and
Seller will insure its inventory and goods in transit for their full
value
or the maximum attainable; (x) Seller will not sell, encumber or move
the
Collateral except in the ordinary course of its business, without the
prior written consent of Allied; (xi) Seller is and shall remain in
compliance with all federal, state and local tax laws, rules and
regulations and shall furnish Allied with evidence thereof on demand;
(xii) Seller will preserve its present legal formation and existence
and
not, in one transaction or series of related transactions, merge into
or
consolidate with any other entity, change the form of its legal existence,
or sell all or substantially all of its assets; (xiii) Seller will
not
change the state where it is located, will not change the state where
it
is incorporated or organized and will not change its organizational
documents, and will not change its name without providing Allied with
at
least 30 days prior written notice; and, (xiv)
Seller shall from time to time realize sales or income from other business
activity; however, Allied will not factor any of Seller’s other business
activity other than those business activities set forth in Paragraph
1.10
above.
Seller also agrees that, if an Account purchased by Allied authorizes
the
Account Debtor to discount the Face Amount of the Account for prompt
payment, the Seller shall pay to Allied an amount equal to the discount
taken by the Account Debtor (even if not properly taken) and Allied
is
authorized to offset such discount against the Reserve. All warranties
and
representations of Seller under this Agreement are continuing warranties
and representations.
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| 10. |
Notice
to Allied.
Seller shall immediately notify Allied of (i) a Dispute of any Account
sold or encumbered under this Agreement, (ii) any other breach of warranty
or default in Seller's covenants and agreements set forth herein, (iii)
Seller’s discovery of evidence of Insolvency of an Account Debtor, and
(iv) the filing and service of a lawsuit or adversary proceeding related
to an Account purchased by Allied or the payment related thereto
(including, but not limited to, preference or fraudulent transfer
litigation), (v) any claim of a lien in the Collateral of Allied
(including federal tax liens), (vi) any change in controlling ownership
of
Seller, and (vii) Seller’s failure to pay any tax it may owe at any time
for any reason, when due.
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| 11. |
Security
Interest in Collateral.
To secure Seller’s payment to Allied of all amounts owing to Allied
hereunder or damages arising due to Seller’s breach of the terms,
warranties, representations, or conditions of this Agreement or any
other
agreement by and between Allied and Seller, whether now or hereafter
owing
to Allied, Seller grants to Allied a Security Interest in all of its
presently existing and hereafter arising, acquired or created: All
amounts
owing to Seller under this Factoring Agreement including the Purchase
Price and Reserve and all proceeds thereof, Accounts (including Accounts
that are proceeds of Inventory) and the following property of Seller
(but
only to the extent it constitutes proceeds, payment, or secures or
assures
payment of Accounts, or is returned goods): Chattel Paper, Supporting
Obligations, Instruments, Inventory that is goods returned by an Account
Debtor, Documents and Letter-of Credit Rights. Seller agrees as follows
with respect to the aforementioned Collateral: (i) Allied shall have
the
right at any time and in its sole discretion to enforce Seller's rights
against the Account Debtors and obligors; (ii) Seller will not pledge,
hypothecate or encumber the Collateral during the Term of this Agreement
and while it is indebted or otherwise obligated to Allied; (iii) Allied
may exercise all rights and remedies of an unpaid seller with respect
to
Accounts, Supporting Obligations, and Chattel Paper constituting
Collateral hereunder, including the right of replevin, reclamation
and
stoppage in transit; (iv) Seller has the risk of loss of the Collateral;
(v) Allied shall have no duty to collect the Collateral or preserve
or
enforce any rights relating to the Collateral; and (vi) Factor may,
at its
sole discretion, be willing to subordinate its first lien position
in
certain accounts that Factor has declined to purchase. Any such release
must be in writing and signed by Allied to be
effective.
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| 12. |
Inspection
of Records.
Any agent of Allied may audit, check, make abstracts from or copies
of the
books, records, receipts, correspondence, memoranda, and other papers
or
data relating to the Collateral, Accounts purchased under this Agreement,
the obligations of Seller to Allied and any other transactions between
Seller and Allied, or generally audit all of Seller's books and records
at
Seller's place of business upon Allied's demand therefore with 24-hour
notice provided to Seller. Seller shall at all times maintain a complete
set of books and records containing up-to-date posting of all of its
cash
and accrual transactions of any nature.
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| 13. |
Property
of Allied/Proceeds and Returned Goods Held in Trust.
After Allied has purchased an Account from Seller, (i) the Account
and all
proceeds thereof shall become the sole and absolute property of Allied,
(ii) Allied may at any time in its sole discretion notify all Account
Debtors of Accounts purchased by Allied that such Accounts have been
sold
and assigned to Allied and are payable only to Allied at the address
provided by Allied, (iii) Seller shall immediately make proper entries
on
its books and records disclosing the absolute sale of such Accounts
to
Allied, (iv) Seller shall not hinder, delay or interfere with payment
of
Accounts and shall cooperate with and assist Allied in connection with
Allied's handling, collection or other dealings with the Accounts and
Account Debtors, including, without limitation, assisting Allied in
obtaining written confirmation, statements or agreements from Account
Debtors which specify or confirm any information requested by Allied
with
respect to the Accounts, and (v) Seller shall hold any check, commercial
paper, notes, cash or other forms of payment of any Account sold to
Allied
which may come into Seller's possession or under its control (even
if such
payment is payable to Seller) in
trust
for the benefit of Allied and shall immediately turn over and deliver
to
Allied all such payments, in kind, and in the exact form received.
Seller
shall endorse any instrument or other form of payment which is payable
to
Seller, but which is paid on an Account sold to Allied hereunder. In
the
event of the return or non-acceptance, in whole or in part, of property,
the sale of which resulted in Accounts which were sold and assigned
to
Allied, the Seller shall hold such property in
trust
for Allied, give to Allied immediate notice of such return or
non-acceptance, immediately turn over such property to the custody
and
control of Allied, and legibly xxxx such merchandise as the property
of
Allied; thereafter, upon demand, Seller shall repurchase such property
from and pay to Allied the invoice price thereof, and upon such payment
the Seller shall be entitled to the redelivery of such property. If
Seller
fails to make such purchase and payment immediately upon demand, it
shall
be in default hereunder and Allied shall be entitled (in addition to
its
other remedies) to sell such property at public or private sale and
to
charge Seller's account with the difference between the invoice price
of
such property and the amount realized upon the sale, plus all charges,
fees and commissions upon such sale. Allied may become a bidder and
purchaser at any such sale.
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| 14. |
Breach
of Trust Fee.
Seller's strict adherence to the provisions of Paragraph 13 is essential
in order for Allied to purchase Seller's Accounts at the Discount and
on
the other terms set forth in this Agreement. Seller agrees that the
provisions of such paragraph are of the essence of this Agreement and
agrees to implement policies and procedures to ensure its consistent
and
prompt performance of its obligations hereunder. In the event Seller
breaches its obligations under such paragraph for reasons other than
excusable neglect (which shall be determined solely by Allied in its
sole
judgment and discretion), (i) Allied may immediately terminate this
Agreement and charge the Termination Fee, as defined in Xxxxxxxxx 00
xxxxx, (xx) Seller shall pay to Allied a fee equal to 15% of the amount
of
any payment or other property which was received by Seller as property
of
Allied in addition to all other amounts owing to Allied, and (iii)
Seller,
at Allied's option, shall immediately repurchase all Accounts acquired
by
Allied which are then owing by the Account Debtors by payment of the
Repurchase Price to Allied, even if such Accounts were purchased Without
Recourse.
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| 15. |
Power
of Attorney.
Seller makes, constitutes and appoints Allied as Seller's true and
lawful
attorney-in-fact with power of substitution and with power and authority
to: (i) endorse the name of Seller or of any of its officers or agents
upon any notes, checks, drafts, money orders, or other instruments
of
payment; (ii) sign and endorse the name of Seller or any of its agents
upon any invoice, freight or express xxxx, xxxx of lading, storage
or
warehouse receipt, drafts against Account Debtors, assignments,
verifications, demands under letters of credit and notices in connection
with Accounts acquired by Allied or which are Collateral under this
Agreement, and any instrument or document relating thereto or to Seller's
rights therein; (iii) execute any agreement compromising and settling
any
Dispute or collection of any Account owned by Allied or owned by Seller,
if Seller is in default hereunder, on terms and conditions acceptable
to
Allied in its sole discretion; (iv) bring suit in the name of Seller
or
Allied to collect any Account; (v) amend the terms of any Account owned
by
Allied or owned by Seller, if Seller is in default hereunder; (vi)
execute
any financing statements (including amendments) to perfect Allied's
Security Interest granted by this Agreement; (vii) execute and file
in the
name of Seller or Allied, or both, mechanics' liens and all related
notices and claims under any payment bond, in connection with goods
or
services sold by Seller for the improvement of realty; (viii) notify
any
Account Debtor obligated with respect to any Account purchased by Allied
that the underlying Account has been assigned to Allied by Seller and
that
payment thereof is to be made to the order of and directly and solely
to
Allied; (ix) communicate directly with Account Debtors to verify the
amount and validity of any Account and to collect payment; (x) if Allied
(in its sole and absolute discretion) declares Seller to be in default
hereunder, give written notice to such office and officials of the
United
States Post Office to effect such change or changes of address that
all
mail addressed to Seller may be delivered directly to Allied; and (xi)
exercise reclamation rights of Seller and to file a claim in a bankruptcy
proceeding of an Account Debtor (which Seller requests Allied to do).
Seller's attorney-in-fact is hereby granted full power to do all necessary
things to accomplish the above as fully and effectively as could Seller.
Seller ratifies all that the attorney-in-fact shall lawfully do or
cause
to be done by virtue hereof. The power of attorney shall be irrevocable
for the Term of this Agreement and all transactions
hereunder.
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| 16. |
Default.
Except as specifically provided herein, the following events shall
constitute a default under this Agreement: (i) Seller fails to pay
any
amounts owing hereunder or fails to fulfill its other obligations under
this Agreement or fails to make payments or fulfill obligations under
any
other agreements that it may have with Allied, (ii) Seller's warranties
or
representations set forth herein prove to be untrue or false in any
respect, (iii) Seller or any guarantor of the payment and performance
of
obligations hereunder becomes subject to any debtor-relief proceedings,
(iv) any such guarantor fails to perform or observe any of such
guarantor's obligations to Allied or to notify Allied of its intention
to
rescind, modify, terminate, or revoke any guaranty, or any such guaranty
ceases to be in full force and effect for any reason whatsoever, or
(v)
Allied, for any reason, in good faith, deems itself insecure with respect
to the prospect of repayment or performance of the obligations of Seller.
If Client does not pay or perform its liabilities or obligations hereunder
or any other event of default exists (in Allied’s sole determination),
Allied may, without notice (except as required by Texas law), (i) enforce
and foreclose its Security Interest in the Collateral in accordance
with
its rights under the Texas Uniform Commercial Code, (ii) notify any
Account Debtor to make payment of any Account directly to Allied,
regardless of whether such Accounts have been purchased by Allied or
Allied has a Security Interest therein, (iii) initiate electronic debit
or
credit entries through the ACH system to Seller’s bank accounts or other
deposit account maintained by Seller, wherever located, to collect
all
amounts owing to Allied by Seller, and (iv) exercise any one or all
of its
other rights and remedies set forth in this
Agreement.
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| 17. |
Term.
Unless sooner terminated by either of the parties hereto, the initial
Term
of this Agreement shall commence on the Effective Date and continue
for
twelve months thereafter, and this Agreement shall automatically renew
for
additional twelve-month renewal Terms at the end of the initial Term
and
each renewal Term unless either party hereto gives written notice to
the
other at least 30 days prior to the end of the original Term or any
renewal Term that the Term is not renewed. (Such initial Term and renewal
Term is the "Term.") Allied may terminate this Agreement at any time
(i)
if the Seller is in default under this Agreement, by giving written
notice
to Seller, or (ii) by giving 30 days advance written notice to Seller.
Provided Seller is not in default hereunder, Seller may terminate this
Agreement at any time by giving 90
days prior written notice to Allied, accompanied by the Termination
Fee. A
fee of 4% of $1,000,000 (the facility amount in Buyer’s proposal, accepted
by Seller, dated December 14, 2006) shall be paid by Seller to Allied
if
this Agreement is terminated by Seller (except as hereinafter provided)
or
if this Agreement is terminated by Allied due to Seller's breach of
any
warranty, term, condition or provision of this Agreement (the "Termination
Fee"); provided, however, the Termination Fee is waived if Seller is
not
in default and obtains a bank loan, secured by its Accounts, and pays
all
of its obligations to Allied from the loan proceeds or if Allied is
paid
off from the proceeds of additional equity offerings. The Termination
Fee
is not a penalty, but is a reasonable estimate of the damages Allied
is
likely to suffer as a result of termination, and constitutes agreed
liquidated damages. All obligations hereunder shall continue in full
force
and effect with respect to all transactions entered into and obligations,
whether absolute or contingent, existing or incurred before the end
of the
Term.
|
| 18. |
Right
of First Offer.
Seller hereby agrees that in the event Seller receives a New Commitment,
Seller will (i) advise Allied in writing of the identity of the offeror
of
the New Commitment and the complete terms of the New Commitment, and
(ii)
accept Allied’s commitment if Allied elects, in its sole discretion, to
offer to modify this Agreement to contain the same terms as the New
Commitment.
|
| 19. |
Miscellaneous.
The parties agree to the following additional
terms:
|
19.1
This
Agreement shall be binding upon and inure to the benefit of both parties and
their legal representatives, successors and assigns.
19.2
This
Agreement shall be construed and enforced in accordance with and governed by
the
laws of the State of Texas. Venue for the institution of any legal proceeding
shall be in Dallas County, Texas. Each sale of an Account to Allied under this
Agreement is an “Account Purchase Transaction” as defined by section 306.001(1)
of the Texas Finance Code and is subject to such subtitle of the Texas Finance
Code.
19.3
If
any term of this Agreement is held to be illegal, invalid, or unenforceable,
such determination shall not affect the validity of the remaining terms. Time
is
of the essence of this Agreement.
19.4
Seller authorizes Allied to file a Financing Statement describing the above
described Collateral (and all amendments thereto and renewals thereof) any
place
Allied may deem necessary or appropriate, with or without the signature of
Seller thereon.
19.5
All
notices under this Agreement shall be in writing and delivered personally,
faxed
or mailed by certified mail, return receipt requested, postage prepaid. The
parties shall use the addresses or fax number set forth below for all notices,
unless the party giving the notice has received written notice from the
recipient of a change of address or fax number at least 10 days prior to the
notice given under this Agreement.
Allied
Capital Partners, L.P.
XX
Xxx 000000
Xxxxxx,
XX 00000-0000
Hand
Delivery or overnight delivery only:
0000
Xxxxxxxx Xxxx, Xxx. 000
Xxxxxx,
XX 00000
Facsimile:
000-000-0000
Seller:
Lighting
Science Group Corporation
0000
XxXxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
Facsimile:
000-000-0000
19.6
Seller waives all notices of default, opportunity to cure, presentment, demand,
protest, and notice of dishonor.
19.7
This
Agreement constitutes the entire understanding between the parties. It may
not
be changed or terminated except in an instrument signed by both
parties.
19.8
Allied shall not be deemed to have waived any of its rights and remedies unless
the waiver is in writing and signed by Allied. A waiver by Allied of a right
or
remedy under this Agreement on one occasion shall not constitute a waiver of
the
right or remedy on any subsequent occasion.
19.9
Each
statement of Seller’s account which Allied sends to Seller shall be deemed
acceptable and binding upon Seller unless Allied receives written notice from
Seller stating in detail and with particularity any exception thereto within
30
days after the date thereof.
19.10
Seller shall reimburse Allied for the following costs incurred by Allied in
the
course of performing its functions under this Agreement: credit research,
certified mail postage, UCC searches and UCC filing fees, and wire transfer
fees. The cost of credit reports and all other costs shall be reimbursed at
Allied's actual cost. Seller also agrees to reimburse Allied the actual amount
of costs and expenses, including reasonable attorney's fees, incurred by Allied
in protecting, preserving or enforcing any lien, security interest, title,
Collateral or other right granted by Seller to Allied or arising under
applicable law, whether or not suit is brought, including but not limited to
the
defense of fraudulent transfer and preference claims, enforcement of this
Agreement or recovery of any damages incurred by Allied as a result of the
Seller's default. Seller shall also reimburse Allied for its actual costs in
assuring Seller’s compliance with this Agreement, such as the cost of the
federal tax lien search, UCC searches and Secretary of State Confirmations
and
certificates.
19.11
Seller agrees to execute any further documents and to take any further actions
reasonably requested by Allied to evidence or perfect the Security Interest
granted herein or the assignments of Accounts pursuant hereto, or to give effect
to any of the rights granted to Allied under this Agreement.
19.12
Seller has signed this agreement and submits the Agreement to Allied for
acceptance at Allied’s offices in Dallas, Dallas County, Texas. Seller and
Allied shall make all payments and perform all other obligations arising
hereunder at Dallas County, Texas, and this Agreement is made and entered into
at Dallas County, Texas. Dallas County, Texas, shall be the venue for any
litigation arising under this Agreement. Client acknowledges that Allied Capital
Partners, L.P. is the assumed name of Allied Capital Services, L.P., a Texas
Limited Partnership, and that Allied Capital Services, L.P. also does business
under the assumed name, TCC. All contracts, UCC filings and this factoring
agreement shall only be binding upon and inure to the benefit of Allied Capital
Services, L.P., if executed or filed in the name of Allied Capital Services,
L.P. or in one of its aforementioned assumed names. In the event it becomes
necessary for Allied to obtain a temporary restraining order or other injunctive
relief in order to enforce the provisions of this Agreement, Seller hereby
agrees to such an order, and the parties agree that the Court may require a
bond
which does not exceed the sum of $1,000.00 as a condition therefor, and such
bond shall be reasonable and adequate in all respects and under all
circumstances.
19.13
All
amounts payable to Allied by Seller under this Agreement are payable on demand
by Allied, except amounts payable under Paragraph 13 of this Agreement, for
which no demand is required; Allied is authorized, at its sole option, to
collect any payments owing by Seller to Allied under this Agreement by debit,
offset or recoupment from or against the Reserve. In the event Seller is in
default under any of the terms of this Agreement, Allied may, at its option,
require Seller to repurchase all unpaid Accounts that were purchased by Allied,
even if such Accounts were purchased Without Recourse. Interest shall accrue
on
all sums owing to Allied by Seller at 17% per annum, but not to exceed the
highest rate permitted by law, as amended from time to time. The determination
of the highest rate permitted by applicable Texas law shall be made by using
the
weekly ceiling, as applicable and as limited by statutorily fixed interest
rate
ceilings (the “Maximum Rate”). In no event shall the amount paid, or agreed to
be paid to or charged by Allied for the use, forbearance, of detention of money
or for the payment of performance of any covenant or obligation contained herein
exceed the Maximum Rate, and if Allied receives interest which otherwise would
cause the amount paid, charged, collected or demanded to exceed the Maximum
Rate, and Allied receives interest which otherwise would exceed the Maximum
Rate, such amount which would be excessive interest shall be applied to the
reduction of the principal indebtedness and the balance, if any, shall be
refunded the Seller.
Seller:
Lighting
Science Group Corporation
By:
Name: Xxxxxxx
X. Xxxxxxxx
Title: Chief
Financial Officer
Date: ____________________________
Accepted
at Dallas, Dallas County, Texas by Allied Capital Partners, L.P. on the ________
day of ________________________, 2007.
ALLIED
CAPITAL PARTNERS, L.P.
By: ________________________________________
Name: Xxxx
Xxxxxx
Title: Chief
Executive Officer
