EXHIBIT 10.11
AVALON FUNDING CORPORATION
ACCOUNTS RECEIVABLE AND TRADE FINANCING PURCHASE
AND SECURITY AGREEMENT
This Factoring Agreement (the "Agreement") is made as of February 24, 2006, by
and between AVALON FUNDING CORPORATION ("Buyer") having a place of business
00000 Xxxxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxx, XX 00000, and SEALIFE MARINE
PRODUCTS, INC., a California Corporation ("Seller") having its principal place
of business and chief executive office located at 0000 X. Xxxxxxx Xxx., Xxxxx
000, Xxxxxx Xxxx, XX 00000.
SECTION 1. DEFINITIONS.
Capitalized terms used herein shall have the meanings given such terms
throughout this agreement, including the following:
1.1 "ACCOUNT BALANCE" shall mean, on any given day, the gross amount of all
Purchased Receivables unpaid on that day.
1.2 "ACCOUNT DEBTOR" shall have the meaning set forth in the Uniform
Commercial Code and shall include any person liable on any Purchased
Receivable, including without limitation, any guarantor of the
Purchased Receivable and any issuer of a letter of credit or banker's
acceptance.
1.3 "ADJUSTMENTS" shall mean all discounts, allowances, returns, disputes,
counterclaims, offsets, defenses, rights of recoupment, rights of
return, warranty claims, or short payments, asserted by or on behalf of
any Account Debtor with respect to any Purchased Receivable.
1.4 "ADVANCE PERCENTAGE" shall be EIGHTY PERCENT (80 %).
1.5 "COLLECTIONS" shall mean all good funds received by Buyer from or on
behalf of an Account Debtor with respect to Purchased Receivables.
1.6 "INSOLVENT" shall mean with respect to an Account Debtor that such
Account Debtor has filed for bankruptcy, or has filed against it, any
bankruptcy case, or has made an assignment for the benefit of
creditors.
1.7 "SCHEDULE OF ACCOUNTS" shall mean a Xxxx of Sale signed by a
representative of Seller which accurately identifies the Receivables
which Buyer, at its election, may purchase, and includes for each such
Receivable the correct amount owed by the Account Debtor, the name and
address of the Account Debtor, the invoice number, and the invoice
date.
1.8 "PAYMENT PERIOD" shall be 30 calendar days from an invoice date.
1.9 "PURCHASED RECEIVABLES" shall mean all Receivables arising out of the
invoices and other agreements identified on or delivered with any
Schedule of Accounts delivered by Seller to Buyer which Buyer elects to
purchase and for which Buyer makes an Advance.
1.10 "RECEIVABLE" shall mean accounts, chattel paper, instruments, contract
rights, documents, general intangibles, letters of credit, drafts,
bankers acceptances, and rights to payment, and all proceeds thereof.
1.11 "RECONCILIATION PERIOD" shall, unless otherwise notified by Buyer to
Seller, means a 1 calendar month period.
1.12 "REPURCHASED RECEIVABLE" shall refer to a Purchased Receivable which
the Seller has become obligated to Repurchase under Section 4.1 hereof.
1.13 "WRITE OFF PERIOD" shall mean twelve (12) calendar months from the date
Buyer purchases a Receivable.
1.14 "DISPUTE" shall mean a dispute, claim, or defense of any kind
whatsoever, whether valid or invalid, asserted by an Account Debtor,
that may reduce the amount collectible by Buyer from an Account Debtor.
SECTION 2. PURCHASE AND SALE OF RECEIVABLES
2.1 OFFER TO SELL RECEIVABLES. Seller may, on the terms provided herein,
from time to time factor, sell and assign to Buyer, Receivables
acceptable to Buyer in its sole discretion, pursuant to the terms
hereof. Seller will notify each Account Debtor of a Receivable
purchased by Buyer that all payments thereon must be made only to
Buyer. Seller shall deliver to Buyer a signed Schedule of Accounts
along with TWO (original/copies of) invoices and purchase orders,
contracts, and proof of delivery or service, with respect to any
Receivable for which a request for purchase is made. Buyer shall be
entitled to rely on all of the information provided by Seller to Buyer
on the Schedule of Accounts and to rely on the signature on any
Schedule of Accounts as an authorized signature of Seller. Each invoice
shall bear a notice, in form satisfactory to Buyer, that it has been
sold and assigned to and is payable only to Buyer.
2.2 ACCEPTANCE OF RECEIVABLES. Buyer shall have no obligation to purchase
any Receivable listed on a Schedule of Accounts. Upon acceptance, Buyer
shall pay to Seller the Advance Percentage of the face amount of each
Receivable Buyer desires to purchase. Such payment shall be the
"Advance" with respect to such Receivable. The purchase price of any
Receivables purchased hereunder shall be the sum of the Advance, plus
the amount of any Reserve payable by Buyer to Seller relating to such
Receivable. The aggregate amount of all outstanding Advances shall not
at any time exceed the lesser of $150,000.00_ (THE MAXIMUM CREDIT) or
an amount equal to the sum of all undisputed Purchased Receivables
multiplied by the Advance Percentage. Seller shall not request and
Buyer shall not make an Advance that would cause the resulting total of
all Advances to exceed the foregoing limitation. In the event the
aggregate outstanding Obligations shall at any time exceed the
foregoing limitation, Seller shall immediately repay the Advances in
the amount of such excess.
2.3 EFFECTIVENESS OF SALE TO BUYER. Effective upon Buyer's payment of an
Advance, and for and in consideration therefor and in consideration of
the covenants of this Agreement, Seller will have absolutely sold,
transferred and assigned to Buyer, all of Seller's right, title and
interest in and to each Purchased Receivable and all monies due or
which may become due on or with respect to such Purchased Receivable.
2.4 ESTABLISHMENT OF A RESERVE. Upon the purchase by Buyer of each
Purchased Receivable, Buyer shall, unless waived by Buyer in its sole
discretion, establish a Reserve. The Reserve initially shall be the
amount by which the face amount of the Purchased Receivable exceeds the
Advance (the "Reserve"). For the purpose of calculating the Refund
pursuant to SECTION 5 or the Repurchase Price pursuant to SECTION 4.1,
the Reserve shall be reduced by the amount of any collections received
with respect to such Purchased Receivable in excess of the amount of
the related Advance. The Reserve shall be a book balance maintained on
the records of Buyer and shall not be a segregated fund.
SECTION 3. COLLECTIONS, CHARGES AND REMITTANCES
3.1 COLLECTIONS. All Collections will go directly to Buyer and Buyer shall
apply all Collections to Seller's Obligations hereunder in such order
and manner as Buyer may determine. Seller will hold in trust and
safekeeping, as the sole property of Buyer, and immediately turn over
to Buyer, in identical form received, any payment on a Purchased
Receivable that comes into Seller's possession. In the event Seller
comes into possession of a remittance comprising payments of both a
Purchased Receivable and Receivable which has not been purchased by
Buyer, Seller shall hold same in accordance with the provisions set
forth above and immediately turn same over to Buyer, in identical form
received. Upon collection of such item, Buyer shall remit to Seller its
portion thereof. Seller agrees to indemnify and save Buyer harmless
from and against any and all claims, loss, costs and expenses caused by
or arising out of the Receivables or any attempt by Buyer to collect
same or resolve any Dispute.
3.2 FACTORING FEE. Seller shall pay to Buyer upon purchase of Receivables
by Buyer, a Factoring Fee ("Factoring Fee"), calculated by taking the
gross face value of a Purchased Receivable and multiplying it by FOUR
PERCENT (4%). IN THE EVENT THE PURCHASED INVOICE IS NOT COLLECTED
WITHIN 30 DAYS FROM PURCHASE, SELLER SHALL PAY TO BUYER AN ADDITIONAL
FACTORING FEE OF .00133 PER DAY on the gross value of the purchased
receivable until the invoice is paid in full or otherwise repurchased
by Seller or otherwise written off by Buyer within the Write Off
Period.
3.3 FINANCE FEE. N/A.
3.4 ACCOUNTING. Seller shall immediately upon sale of Receivables to Buyer,
make proper entries on its books and records disclosing the sale
thereof to Buyer. Seller will immediately furnish Buyer financial
statements, tax records and other information as reasonably requested
by Buyer. Buyer shall prepare and send to Seller after the close of
business for each calendar month, an accounting of the transactions for
that calendar month, including the amount of all Purchased Receivables,
all Collections, Adjustments, Factoring Fees, and Finance Rate. The
accounting shall be deemed correct and conclusive unless Seller makes
written objection to Buyer within sixty (60) days after the date Buyer
mails the accounting to Seller.
3.5 REFUND TO SELLER. Provided that there does not then exist an Event of
Default, as defined in Section 9, or any event or condition that with
notice, lapse of time or otherwise would constitute an Event of
Default, Buyer shall refund to Seller, the amount, if any, which Buyer
owes to Seller at the end of the Reconciliation Period according to the
accounting prepared by Buyer for that Reconciliation Period (the
"Refund"). The Refund shall be an amount equal to:
3.5.1 The Reserves as of the beginning of that Reconciliation
Period, plus
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3.5.2 The Reserves created for each Purchased Receivable paid during
that Reconciliation Period, minus 3.5.3 The total for that
Reconciliation Period of:
3.5.3.1 Factoring Fee;
3.5.3.2 ADJUSTMENTS; BANK WIRE FEES ($15.00), FedEx Fees, and
other reasonable miscellaneous administrative fees
3.5.3.3 Repurchase Receivables, to the extent Buyer has
agreed to accept payment thereof by deduction from
the Refund; and
3.5.3.4 The Reserves for the Account Balance as of the first
day of the following Reconciliation Period.
In the event the formula set forth in this Section 3.5 results in an
amount due to Buyer from Seller, Seller shall immediately make such
payment to Buyer.
3.6 FACILITY FEE. Seller shall pay Buyer on the date hereof, an annual
facility fee (the "Facility Fee") in the amount of N/A of the Maximum
Credit, which fee is fully earned and non-refundable as of the date of
this Agreement.
3.7 AUDIT FEES. Buyer or its designee may conduct 2 examinations of the
Collateral and Seller's operations, unless an Event of Default has
occurred and is continuing, in which event the number of audits
conducted will be in Buyer's reasonable discretion. Seller shall
reimburse Buyer audit fees not to exceed $500.00 per day plus expenses
per audit. Audit fees shall be payable upon demand by Buyer.
3.8 MONTHLY MINIMUM FEE. Buyer would not have entered into this Agreement
and agreed to provide Seller with the factoring arrangements hereunder
unless Seller guaranteed Buyer that the sum of the Factoring Fees paid
to Buyer in each month would be at least N/A (or N/A) of the Maximum
Credit (the "Monthly Minimum Fee"). In the event the aggregate Finance
and Factoring Fees paid during any month is less than the Monthly
Minimum Fee, then Seller shall pay to Buyer the amount of any
deficiency (the "Supplemental Fee"). The Supplemental Fee, if any, for
any month shall be calculated and due and payable on the first business
day of the succeeding month.
3.9 COSTS AND EXPENSES. Seller shall pay to Buyer immediately upon Buyer's
demand, all fees and expenses, including reasonable fees and expenses
of attorneys and other professionals, incurred by Buyer in connection
with any and all of the following: (a) enforcing Buyer's interest in
the Collateral, (b) collecting the Obligations, or (c) defending or in
any way addressing any claims made or litigation initiated by or
against Buyer as a result of Buyer's relationship with Seller or any
guarantor. All such fees and expenses shall be payable to Buyer whether
incurred before, during or after any bankruptcy case or insolvency
proceeding involving Seller, any guarantor or any Account Debtor. At
Buyer's option, all fees, costs, expenses and other charges provided
for in this Agreement, or in any other Document may be charged to
Seller's account of Seller maintained by Buyer either by (a) deducting
such amounts from any amount otherwise payable to Seller pursuant to
this Agreement, (b) deducting such amounts from any Advance requested
by Seller and made by Buyer, or (c) treating such amounts as additional
Advances.
3.10 CREDITING OF PAYMENTS. For purposes of determining availability under
this Agreement, payments on Purchased Receivables and other payments
with respect to the collateral and Obligations will be credited to the
Purchased Receivables of Seller upon the date of Buyer's receipt of
advice from Buyer's bank that such payments have been credited to
Buyer's account or in the case of payments received directly in kind by
Buyer, upon the date of Buyer's deposit thereof at Buyer's bank,
subject in either case to final payment and collection. Solely for the
purpose of calculating fees under this Agreement, payments on Purchased
Receivables and other payments with respect to collateral and
Obligations shall be deemed received by Buyer 3 BUSINESS days after the
date of Buyer's receipt of advice from Buyer's bank that such payments
have been credited to Buyer's account or in the case of payments
received directly in kind by Buyer, 3 BUSINESS days after the date of
Buyer's deposit thereof at Buyer's bank, subject in either case to
final payment and collection.
SECTION 4. RECOURSE AND REPURCHASE OBLIGATIONS
4.1 SELLER'S AGREEMENT TO REPURCHASE. Buyer agrees to sell and assign to
Seller upon Seller's demand, the full face amount of any Purchased
Receivable, or any unpaid portion of any Purchased Receivable, for a
price equal to to such full face amount or unpaid portion thereof, less
the amount of any remaining Reserve at the date of such sale with
respect to such Purchased Receivable (the "Repurchase Price"). In
addition, Seller agrees to purchase from Buyer on Buyer's demand, any
Purchased Receivable, or any unpaid portion of, any Purchased
Receivable for the applicable Repurchase Price of any such Purchased
Receivable:
4.1.1 Which remains unpaid for the Payment Period; or --- unless,
prior to the expiration of the Payment Period, the subject
Account Debtor has become Insolvent; or
4.1.2 With respect to which there has been any breach of warranty or
representation set forth in Section 6 hereof or any breach of
any covenant contained in this Agreement; or
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4.1.3 With respect to which the Account Debtor asserts any Dispute.
SECTION 5. POWER OF ATTORNEY.
In order to carry out the sale of Purchased Receivables to Buyer hereunder,
Seller does hereby irrevocably appoint Buyer and its successors and assigns as
Seller's true and lawful attorney in fact, with respect to Purchased Receivables
and hereby authorizes Buyer, regardless of whether there has been an Event of
Default, (a) to sell, assign, transfer or pledge the whole or any part of the
Purchased Receivables; (b) to demand, collect, receive, xxx, and give releases
to any Account Debtor for the monies due or which may become due upon or with
respect to the Purchased Receivables and to compromise, prosecute, or defend any
action, claim, case or proceeding relating to the Purchased Receivables,
including the filing of a claim or the voting of such claims in any bankruptcy
case, all in Buyer's name or Seller's name as Buyer may choose; (c) to prepare,
file and sign Seller's name on any notice, claim, assignment, demand, draft or
notice of or satisfaction of lien or mechanic's lien or similar document; (d) to
receive, open, and dispose of all mail addressed to Seller for the purpose of
collecting the Purchased Receivables; (e) to endorse Seller's name on any checks
or other forms of payment on the Purchased Receivable; and (f) to do all acts
and things necessary or expedient, in furtherance of any such purposes.
SECTION 6. REPRESENTATIONS, WARRANTIES, AND COVENANTS.
6.1 RECEIVABLES' WARRANTIES, REPRESENTATIONS AND COVENANTS. To induce Buyer
to buy Receivables and to render its services to Seller, and with full
knowledge that the truth and accuracy of the following are being relied
upon by the Buyer in determining whether to accept Receivables as
Purchased Receivables, Seller represents, warrants, covenants and
agrees, with respect to each Schedule of Accounts delivered to Buyer
and each Receivable described therein, that:
6.1.1 Seller is the absolute owner of each Receivable set forth in
the Schedule of Accounts and has full legal right to sell,
transfer and assign such Receivables;
6.1.2 The correct face amount of each Receivable is as set forth in
the Schedule of Accounts and is not in Dispute;
6.1.3 The payment of each Receivable is not contingent upon the
fulfillment of any obligation or contract, past or future, and
any and all obligations required of the Seller have been
fulfilled as of the date of the Schedule of Accounts;
6.1.4 Each Receivable set forth on the Schedule of Accounts is based
on the actual sale and delivery of goods and/or services
actually rendered on terms not to exceed 30 days, does not
represent a sale to a parent, subsidiary or affiliate of
Seller, is presently due and owing to Seller, is not past due
or in default, has not been previously sold, assigned,
transferred, or pledged, is not a consignment sale or xxxx and
hold transaction, and is free of any and all liens, security
interests and encumbrances other than liens, security
interests or encumbrances in favor of Buyer or any other
division of or affiliate of Buyer;
6.1.5 There are no defenses, offsets, or counterclaims against any
of the Purchased Receivables, and no agreement has been made
under which the Account Debtor may claim any deduction or
discount, except as otherwise stated in the Schedule of
Accounts;
6.1.6 At the time that Buyer makes an Advance relating to a
Receivable, the Account Debtors set forth in the Schedule of
Accounts, are then not insolvent and Seller has no knowledge
that the Account Debtors are insolvent or may become insolvent
within the Payment Period;
6.1.7 Seller shall not take or permit any action to countermand
notification to Account Debtors of Buyer's ownership of
Purchased Receivables.
6.2 ADDITIONAL WARRANTIES, REPRESENTATIONS, AND COVENANTS. In addition to
the foregoing warranties, representations and covenants, to induce
Buyer to buy Receivables and to render its services to Seller, Seller
hereby represents, warrants, covenants and agrees that:
6.2.1 Seller will not assign, transfer, sell or grant any security
interest in any Collateral to any other party, without Buyer's
prior written consent;
6.2.2 The Seller's name, form of organization, place of business and
the place where the records concerning all receivables herein
referred to are kept is set forth at the beginning of this
Agreement, and Seller will give Buyer 30 days advance notice
in writing if such name, organization, place of business or
record keeping is to be changed or a new place of business or
record keeping is to be added and shall execute any documents
necessary to perfect Buyer's interest in Purchased Receivables
and the Collateral;
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6.2.3 Seller shall pay all of its normal gross payroll for
employees, and all federal and state taxes, as and when due,
including without limitation all payroll and withholding taxes
and state sales taxes;
6.2.4 Seller has not, as of the xxxx Xxxxxx delivers to Buyer a
Schedule of Accounts, or as of the xxxx Xxxxxx accepts any
Advance from Buyer, filed a voluntary petition for relief
under the United States Bankruptcy code or had filed against
it an involuntary petition for relief;
6.2.5 Seller, is California Corporation and is duly qualified in all
States where lack of such qualification would have a material
adverse affect on the Seller's business. Seller has all
required licenses to operate its business and transacts
business under no trade names or trade styles other than
SeaLife Corporation.
6.2.6 Seller shall at all time be in complete compliance pursuant to
the terms, conditions and standards that is required by law
for a manufacturer and distributor of like products.
SECTION 7. NOTICE OF ADJUSTMENTS.
In the event of a breach of any of the representations, warranties, or covenants
set forth in Section 6, or in the event any Dispute is asserted by any Account
Debtor, Seller shall promptly advise Buyer and shall, subject to the Buyer's
approval, resolve such disputes and advise Buyer of an Adjustment. Until the
disputed Purchased Receivable is repurchased by Seller and the full amount of
the Purchased Receivable is paid, Buyer shall remain the absolute owner of any
Purchased Receivable which is subject to Adjustment or repurchase under Section
4.1 hereof, and any rejected, returned, or recovered personal property, with the
right to take possession thereof at any time.
SECTION 8. SECURITY INTEREST.
In order to secure all of Seller's now existing or hereafter arising obligations
and indebtedness to Buyer, howsoever arising, whether under this Agreement or
otherwise (collectively the "Obligations"), Seller hereby grants to Buyer a
continuing lien upon and security interest in all Seller's now existing or
hereafter arising: accounts; chattel paper; general intangibles; contract
rights; investment property; Reserves, Reserve Accounts, Refunds; deposit
accounts; inventory; equipment and fixtures; documents, instruments, letters of
credit and bankers' acceptances; books and records relating to any of the above;
and accessions, substitutions for and all replacements, products, and cash and
non-cash proceeds of the foregoing, in whatever form, including, without
limitation, all insurance proceeds and all claims against third parties for loss
or destruction of or damage to any of the foregoing (collectively, the
"Collateral").
Seller is not authorized to sell, assign, transfer or otherwise convey any
Collateral without Buyer's prior written consent, except for the sale of
finished inventory in the Seller's usual course of business. Seller agrees to
sign and to allow Buyer to file UCC financing statements, in a form acceptable
to Buyer. Seller agrees to deliver to Buyer the originals of all instruments,
chattel paper and documents evidencing or related to Receivables.
SECTION 9. DEFAULT.
The occurrence of any one of more of the following shall constitute an Event of
Default hereunder: (i) Seller fails to pay or perform any material Obligation as
and when due; (ii) there shall be commenced by or against Seller any voluntary
or involuntary case under the United States Bankruptcy Code, or any assignment
for the benefit of creditors, or appointment of a receiver or custodian for any
of its assets, or Seller makes or sends notice of a bulk transfer; (iii) Seller
or any guarantor of the Obligations shall become insolvent in that its debts are
greater than the fair value of its assets, or Seller is generally not paying its
debts as they become due or is left with unreasonably small capital; (iv) any
lien, garnishment, attachment, execution or the like is issued against or
attaches to the Seller, the Purchased Receivables, or the Collateral; (v) Seller
shall breach any covenant, agreement, warranty, or representation set forth
herein; (vi) Seller delivers any document, financial statement, schedule or
report to Buyer which is false or incorrect in any material respect; or (vii)
any present or future guarantor of the Obligations revokes, terminates or fails
to perform any of the terms of any guaranty, endorsement or other agreement of
such party in favor of Buyer or any affiliate of Buyer.
SECTION 10. REMEDIES UPON DEFAULT.
Upon the occurrence of an Event of Default, the Obligations shall bear interest
at a rate of the Factoring Fee, and Buyer may, without implying any obligation
to buy Receivables, cease buying Receivables or extending any financial
accommodations to Seller, and (i) declare all Obligations immediately due and
payable; (ii) withhold any further payments
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to Seller until all Obligations have been paid in full; (iii) notify all Account
Debtors to pay Buyer directly, whether such Receivable is a Purchased Receivable
or not; (iv) direct the U.S. Post Office or other party to forward mail to an
address specified by Buyer; (v) exercise all rights under the power of attorney
set forth in Section 5 above with respect to all Collateral and all remedies set
forth herein; (vi) settle, compromise, adjust or litigate Receivables on such
terms as Buyer deems necessary to protect its rights in said Receivables; (vii)
proceed against Seller or any guarantor directly without any obligation to
proceed against the Collateral; (viii) remove from Seller's premises and take
possession of the Collateral and dispose of same at public or private sale; (ix)
exercise any right or remedy with respect to Seller or the Collateral granted
under applicable law or this Agreement.
The Seller will pay to Buyer immediately upon demand all reasonable fees and
expenses of attorneys and other professionals that Buyer incurs in enforcing
this Agreement or any other agreement executed in connection herewith,
protecting or enforcing its interest in the Purchased Receivables or the
Collateral, or collection of the Purchased Receivables and the Obligations.
SECTION 11. SEVERABILITY, WAIVER OF RIGHTS.
This Agreement constitutes the entire Agreement between the parties and may not
be modified or amended or any right or remedy of Buyer waived, except by
agreement of the parties in writing. In the event that any provision of this
Agreement is deemed invalid by reason of law, this Agreement will be construed
as not containing such provision and the remainder of the Agreement shall remain
in full force and effect. This Agreement shall be binding upon the Seller and
Buyer and their successors and assigns, but may not be assigned by Seller
without Buyer's written consent. Any delay or failure by Buyer to exercise any
right or remedy hereunder shall not operate as a waiver thereof. A waiver by
Buyer of a right or a remedy on one occasion shall not be deemed a waiver of the
right or remedy on any subsequent occasion.
SECTION 12. CHOICE OF LAW, JURISDICTION, WAIVER OF JURY TRIAL.
This Agreement has been transmitted by Seller to Buyer at Buyer's office in
Orange County California and has been executed and accepted by Buyer in the
State of California. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California. Seller hereby irrevocably
submits to the jurisdiction of any California State or Federal court sitting in
ORANGE COUNTY in any action or proceeding arising out of or relating to this
Agreement, or any other agreements, and Seller hereby irrevocably agrees that
all claims with respect to such action or proceeding may be heard and determined
in such California State court or, to the extent permitted by law, in such
Federal court. Seller consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to Seller's
address specified in the Agreement. SELLER HEREBY WAIVES ITS RIGHT TO TRIAL BY
JURY IN ANY SUIT OR PROCEEDING ARISING UNDER OR RELATING TO THIS AGREEMENT.
SECTION 13. EFFECTIVENESS: TERM.
This Agreement shall only become effective upon execution and delivery by Seller
and acceptance by Buyer and, unless earlier terminated as provided in this
Agreement, shall continue in full force and effect for an initial term of TWELVE
( 12) months from the date hereof and shall be deemed automatically renewed for
successive TWELVE (12) month periods. Unless earlier terminated as provided in
this Agreement, all Obligations shall be due and payable in full at the
expiration of the last renewal term. This Agreement may be terminated prior to
the end of the initial term or any renewal term (each, a "Term") as follows: (a)
Seller may terminate this Agreement at the end of the Term or any renewal term
without payment of an Early Termination Fee, provided Seller gives at least
thirty (30) days written notice prior to the end of the initial term or any
renewal term. (b) Seller may terminate this Agreement at any time after giving
Buyer at least thirty (30) days prior written notice and paying Buyer an Early
Termination Fee equal to 1.33% of the Maximum Credit prorated monthly. (The
"Early Termination Fee"). Any partial month remaining in such Term shall
constitute a full month for the purpose of calculating the Early Termination
Fee. Any such termination shall be effective upon payment to Buyer in full of
all Obligations, including the Early Termination Fee; and (c) This Agreement
shall automatically terminate following the occurrence of an Event of Default
under Section 9. Upon any such termination following an Event of Default, all
Obligations, including the Early Termination Fee, shall be due and payable in
full.
Notwithstanding the foregoing, any termination of this Agreement shall not
affect Buyer's security interest in the Collateral and Buyer's ownership of the
Purchased Receivables, and this Agreement shall continue to be effective, and
Buyer's rights
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and remedies hereunder shall survive such termination, until all transactions
entered into and Obligations incurred hereunder or in connection herewith have
been completed and satisfied in full.
SECTION 14. PARTICIPATIONS; ASSIGNMENTS.
Seller understands that Buyer may from time to time transfer and assign its
rights under this Agreement to one or more assignees. Seller hereby consents to
these transfers and assignments by Buyer to one or more assignees. Seller hereby
consents that any such assignee may exercise the rights of the Buyer hereunder.
Seller further hereby consents and acknowledges that any and all defenses,
claims or counterclaims that it may have against the Buyer shall be limited to,
and may only be brought against, Buyer and may not extend to any assignee,
including but not limited to the funding obligations.
Seller and Buyer intend that any and all direct or indirect assignees of the
Buyer of the type set forth above shall be the third party beneficiaries of this
Agreement.
IN WITNESS WHEREOF, Seller has executed and delivered this Agreement for
acceptance by Buyer as of the day and year above written. If this Agreement is
not witnessed by an authorized employee of Buyer, Seller must have their
signature acknowledged by a Notary Public.
SELLER BUYER
SEALIFE MARINE PRODUCTS, INC. AVALON FUNDING CORPORATION
By: /s/ Xxxxxx XxXxxxxx By: /s/ Xxx Xxxxxxxx
----------------------------------- ---------------------------
Xxxxxx XxXxxxxx, President and CEO Xxx Xxxxxxxx, President
INSTRUCTIONS TO NOTARY PUBLIC: Use an ACKNOWLEDGMENT FORM as the Buyer requires
identity verification.
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