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EXHIBIT 10.62
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
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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.
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
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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 from 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 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
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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.
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
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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
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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 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.
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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.
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 $3,200,000
September 29, 1997
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September 30, 1997 $4,000,000
through March 30, 1998
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March 31, 1998 and at $4,200,000
all times thereafter
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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.
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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.
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.
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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
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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
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.
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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 but not later than thirty (30) days
after the end of each month, Client's internally prepared 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
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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 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
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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 a 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
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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.
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
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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 NONRESIDENT OF THE STATE OF
CALIFORNIA, CLIENT HEREBY WAIVES PERSONAL SERVICE 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
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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.
"Business Day" -- Any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the States 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.
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"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 otherwise, heretofore
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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).
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"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 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:__________________________________ By:____________________________________
Title:_______________________________ Title:_________________________________
Effective Date: _____________________
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