Bank of America Commercial Finance
Factoring
Factoring Agreement
entered into between
XxXxxx.xxx, Inc.
and
Banc of America Commercial Corporation
Banc of America Commercial Corporation
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
We are pleased to confirm the following agreement by which you are to act
as sole factor for sales made by us:
SECTION 1. DEFINITIONS
1.1 "Banking Day" shall mean a day for dealings by and between banks,
excluding Saturday, Sunday and any day which shall be a legal holiday in the
City of Atlanta, Georgia, and any other day on which banking institutions are
authorized to close in the City of Atlanta, Georgia.
1.2 "Credit Risk" shall mean the risk of loss resulting solely and
exclusively from a Customer's failure to pay at maturity because of its
financial inability.
1.3 "Customer Dispute" shall mean any cause for nonpayment of Receivables,
other than the financial inability of the Customer, including, without
limitation, any alleged defense, offset, or counterclaim.
1.4 "Customers" shall mean the account debtors obligated on the
Receivables.
1.5 "Default" shall mean the occurrence of any of the following events: (a)
nonpayment when due of any amount payable on any of the Obligations or failure
to perform any agreement or meet any obligation of ours contained herein or in
any agreement out of which any of the Obligations arose; (b) default by us in
repayment when due of any indebtedness of $10,000 or greater now or hereafter
owed for monies borrowed from any one other than you; (c) any material
statement, representation, or warranty of ours made orally or in writing herein
or in any other writing or statement at any time furnished or made by us to you
is untrue in any material respect as of the date furnished or made; (d)
suspension of the operation of our present business; (e) any Obligor becomes
insolvent or unable to pay debts as they mature, makes an assignment for the
benefit of creditors, or a proceeding is instituted by or against any Obligor
alleging that such Obligor is insolvent or unable to pay debts as they mature,
or a petition under any provision of Title 11 of the United States Code
(entitled "Bankruptcy"), as amended is brought by or against any Obligor; (f)
death of any Obligor who was a natural person, or death or withdrawal of any
partner of any Obligor which is a partnership, or dissolution, merger, or
consolidation of any Obligor which is a corporation; (g) sale, transfer or
exchange, either directly or indirectly, of a controlling stock interest of any
Obligor which is a corporation; (h) termination or withdrawal of any guaranty
for the Obligations; (i) appointment of a receiver for any collateral pledged
for the Obligations or for any property in which we have an interest; (j) the
Pension Benefit Guaranty Corporation shall commence proceedings under Section
4042 of the Employee Retirement Income Security Act
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of 1974 (ERISA) to terminate any employee pension benefit plan of Debtor; or (k)
you in good xxxxx xxxx the prospect of our payment or performance of the
Obligations to have been materially impaired.
1.6 "Net Amount" of Receivables shall mean the gross amount of Receivables,
less maximum discounts, less returns, less credits or allowances of any nature
at any time issued, owing, granted or outstanding, and less also your commission
as set forth herein.
1.7 "Obligations" shall mean all of our obligations to you hereunder,
including without limitation advances of the purchase price of Receivables, all
obligations of ours to you under any note, contract of surety, guaranty, or
accommodation, or with respect to letters of credit or acceptances, sums owing
to you for goods and/or services purchased from any other firm factored or
financed by you, and all other obligations of ours to you, however and whenever
created, arising or evidenced, whether direct or indirect, through assignment
from third parties in the ordinary course of your business, absolute, contingent
or otherwise, now or hereafter existing or due or to become due.
1.8 "Obligor" shall mean: us and each other party primarily or secondarily,
directly or indirectly liable on any of the Obligations.
1.9 "Payment Date" shall mean: (a) for each credit-approved Receivable for
which you retain the Credit Risk, two (2) Banking Days after the date on which
the Receivable is credited by you to our account or, if such Receivable is not
paid, one hundred twenty (120) days after the due date of the Receivable or, if
such day is not a Banking Day, the next Banking Day; and (b) for each Receivable
for which you do not bear the Credit Risk, Two (2) Banking Days after the date
on which the Receivable is credited by you to our account.
1.10 "Prime Rate" shall mean the rate of interest announced by Bank of
America, N.A. from time to time as its Prime Rate, such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate.
1.11 "Receivables" shall mean all accounts, instruments, contract rights,
chattel paper, documents, and general intangibles arising from our Sales, and
the proceeds thereof, and all security and guaranties therefor, whether now
existing or hereafter created.
1.12 "Sales" shall mean the sale of goods and/or the rendition of services
by us in the ordinary course of our business to Customers in the United States
of America and Puerto Rico.
SECTION 2. SALE AND APPROVAL; PURCHASE PRICE; COMMISSION; ADVANCES; RESERVE
2.1 We hereby assign and sell to you as absolute owner, without recourse,
except as hereinafter set forth, our entire interest in all of our present and
future Receivables.
2.2 Notwithstanding any other provision of this Agreement, each of our
Receivables in a gross amount of One Hundred Dollars ($100) or less is assigned
and sold to you under this Agreement with full recourse.
2.3 All orders for Sales shall be submitted to you for credit approval
prior to shipment of the goods or rendition of the services so ordered, and each
approved Sale shall be made only in accordance with such approval. All credit
approvals must be in writing. Receivables arising from orders not so approved by
you, in whole or in part, shall be with full recourse to us to the extent and in
the respects not so approved. A credit approval shall not be effective if (a)
the approved terms of sale are changed, (b) delivery of the goods to the
Customer is not made by us within forty-five (45) days after the shipping date
specified in our request for credit approval, or if no such date is specified,
within forty-five (45) days of the credit approval, or (c) the invoice
representing the Sale is not delivered to you within twenty (20) days after the
shipment date. Credit approval may be by credit line. While a credit line
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remains in force, Receivables (or parts thereof) in excess of such line will
succeed amounts within the line which are paid by or credited to the Customer;
the succession of Receivables (or parts thereof) shall take place in the order
of maturity and shall be limited to amounts then so paid or credited. The right
of succession ceases when the line is cancelled. On all credit-approved Sales
you assume the Credit Risk up to the amount so approved and will bear the credit
loss on the amount of the uncollected Receivables if a Customer, after
delivery/rendition and acceptance of the goods/services, fails on due date to
pay in full solely because of financial inability, but you are not to be
responsible where nonpayment results from any Customer Dispute, acts of God,
war, civil strife, currency restrictions, or foreign political impediments,
because we assume all other risks. Credit approvals, once granted, may be
withdrawn by you prior to shipment/rendition of the goods/services if you
believe there have been negative changes in the Customer's ability to pay. With
regard to Sales without credit approval or in excess of any approved amount of
credit, as to any given Customer, we agree that any payments or credits on any
Receivables owing from such Customer may be applied first to any credit-approved
Receivables which may at any time be unpaid, regardless of the respective dates
such Sales occurred and regardless of any notations on payment items, or may be
applied in such other manner as you in your sole discretion shall deem
appropriate.
2.4 We will provide you with listings of Receivables in form satisfactory
to you, together with Customers' invoices, shipping documents, and such other
documents and proof of delivery/rendition as you may at any time require. After
the date that is ninety (90) days after the effective date hereof (the "On-Line
Date"), all orders, invoices, credits and reports will be submitted to you via
electronic transmission. In the event that we are unable to submit such
information electronically, you shall charge our account a fee in the amount of
Five Dollars ($5.00) for each invoice for which electronic transmission is not
utilized after the On-Line Date. Billing on invoices by whomever done shall be
conclusive evidence of assignment and sale hereunder of such Receivables whether
or not we execute any other instrument with regard thereto. All invoices to
Customers shall state plainly on the face thereof that the Receivables
represented by such invoices have been assigned, sold, and are payable to you
only. All remittances obtained by us against Receivables will be received in
trust for you, and will turn over to you the identical remittances as speedily
as possible; provided, however, that nothing herein authorizes us to collect
Receivables.
2.5 The purchase price of Receivables is to be the Net Amount thereof,
which, less any charges and reserves, will be due and payable on Payment Date.
We shall pay you a commission as follows: the standard commission shall be one
half of one percent (0.50%) of the gross amount of such Receivables, except one
quarter of one percent (0.25%) of the gross amount of Receivables at our Credit
Risk which Receivables we shall assign on separate schedules, for the first
sixty (60) day term or part thereof plus one quarter of one percent (0.25%) of
such amount for each additional thirty (30) day term or part thereof; provided,
however, that the minimum per invoice commission shall be five Dollars ($5.00)
(the standard commission and the per invoice commission hereinafter referred to
collectively as the "Standard Commissions"); and further provided that the
minimum commissions paid by us each contract year, beginning 1 June and ending
31 May, shall be One Hundred Thousand Dollars ($100,000). You may retain from
sums payable to us a reserve, which reserve may be revised from time to time at
your discretion, in order to provide for Customer Disputes, possible credit
losses on unapproved Receivables, sums owing to you for goods/services purchased
by us from any other firm factored or otherwise financed by you, and the
Obligations. A discount, credit, or allowance after issuance or granting may not
be claimed by us, but may be claimed solely by the Customer; no third party
beneficiary rights are created hereby.
2.6 Prior to Payment Date, upon our request and at your sole discretion,
you may advance to us up to zero percent (0%) of the purchase price of
Receivables less charges and reserves. Any additional amounts advanced to us
shall also be repaid immediately and shall in all other respects be subject to
this Agreement. We agree that we will use the proceeds of such advances and/or
overadvances solely for our company's working capital purposes.
2.7 We shall pay to you on demand any advances or charges at any time
outstanding in our account.
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2.8 You will render a statement of account monthly, and such statement
shall be binding upon us except as to specific matters for which you are
notified in writing to the contrary within sixty (60) days after the date of
such statement.
SECTION 3. INTEREST
Interest shall be charged for the number of days that advances of the
purchase price are made prior to Payment Date and for the number of days that
advances or other charges to our account remain outstanding at the rate of the
Prime Rate per annum; except, however, that the interest rate shall in no event
be less than five percent (5%) per annum. Interest shall be computed on the
basis of a year of three hundred sixty (360) days, for actual days elapsed.
After termination or upon a Default hereunder, we shall pay interest on our
obligations hereunder at the rate of the Prime Rate per annum, with changes to
such rate of interest to take effect as hereinbefore provided. For the purpose
of interest calculation, commissions earned during each month shall be deemed
charged to our account on the fifteenth (15th) day of each month.
SECTION 4. POWER OF ATTORNEY
We hereby appoint you as our attorney-in-fact to receive, open, and dispose
of all mail addressed to us pertaining to Receivables; to endorse our name upon
any notes, acceptances, checks, drafts, money orders, and other evidences of
payment of Receivables that may come into your possession and to deposit or
otherwise collect the same; and to do all other acts and things necessary to
carry out the terms of this Agreement. This power, being coupled with an
interest, is irrevocable while any Receivable shall remain unpaid. You, as
attorney-in-fact, shall not be liable for any errors of judgment or mistake of
fact.
SECTION 5. SECURITY INTEREST
We hereby grant you a security interest in all of our present and future
accounts, instruments, contract rights, chattel paper, documents and general
intangibles, (whether arising before or after termination of this Agreement) and
all returned, repossessed, and reclaimed goods, and books and records relating
thereto, to secure all of the Obligations. We further sell and assign to you all
our title and/or interest in the goods (unless released by you) represented by
Receivables as well as goods returned by or repossessed from Customers, all of
our rights as an unpaid vendor or lienor, all or our rights of stoppage in
transit, replevin and reclamation relating thereto, and all of our rights
thereto; we will cooperate with you in exercising any rights with respect to the
goods. In addition, we hereby grant you a security interest in the reserve
established pursuant to Section 2.5 hereof, to secure all of the Obligations.
SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1 We represent and warrant that we are fully authorized to enter into
this Agreement and perform hereunder and covenant that we will continue to be so
for the duration of this Agreement.
6.2 We represent and warrant that we are solvent.
6.3 We represent and warrant that our Receivables are, and covenant that
they shall be, at the time of their creation, bona fide and existing obligations
of our Customers arising out of our Sales, free and clear of all security
interests, liens, and claims whatsoever.
6.4 We represent and warrant that our inventory is not subject to any
security interest, lien or encumbrance whatsoever, and we covenant that we shall
not permit it to become so encumbered without your prior written consent.
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6.5 We represent and warrant with respect to each Receivable as it
arises:
(a) We will have made delivery of the goods or will have
rendered the services ordered;
(b) The Customer will accept the goods and/or services;
(c) No Customer Dispute will exist in any respect;
(d) We will have preserved and will continue to preserve any
liens and any rights to liens available by virtue of Sales;
and
(e) The Customer will not be our affiliate.
SECTION 7. CUSTOMER DISPUTES, CHARGEBACKS AND RETURNS
We will notify you promptly and will settle all Customer Disputes, but you
have the right at all times to do so directly and to compromise, adjust, or
litigate all such Customer Disputes. If a Customer Dispute exists or is asserted
with regard to any Receivable, or if we breach any representation, warranty or
covenant with respect to any Receivable, you may charge back to our account the
Net Amount of such Receivable, as well as all other Receivables owing by the
same Customer. You may charge back to our account at any time any unapproved
Receivable, whether before or after its due date. A chargeback shall not be
deemed a reassignment of the Receivable, and title thereto and to the goods
represented thereby shall remain in you until you execute a reassignment. All
returned, replevied, and reclaimed goods coming into our possession shall be
held in trust by us for you.
SECTION 8. BOOKS AND RECORDS; FINANCIAL STATEMENTS
You and your representatives shall at all reasonable times have the right
to examine all of our books and records. We agree to prepare and furnish you
within forty-five (45) days after the close of each quarter, financial
statements unaudited and in such form and detail as you may reasonably require.
We also agree to have prepared, and to furnish you within ninety (90) days after
the close of our fiscal year, financial statements which have been audited and
certified by an independent certified public accountant suitable to you.
SECTION 9. INDEMNITY
We shall indemnify you for all losses, costs and expenses incurred by you
in connection with Receivables for which credit approval has not been given and
in connection with Receivables which are unpaid at maturity for reasons other
than financial inability. Further, we shall indemnify you for any liability for
duties, forwarder's fees, storage, shipping charges, sales or excise taxes or
other expenses in connection with the Receivables and for any losses occasioned
by claims of Customers under Receivables. This indemnity shall survive the
termination of this Agreement.
SECTION 10. APPLICABLE LAW
This Agreement shall be governed by, construed and enforced according to
the laws of the State of California.
SECTION 11. EFFECTIVE DATE; TERMINATION; BINDING EFFECT
If accepted by you, this Agreement shall be effective on the ________ day
of ________________, 2000, and shall continue in full force and effect until:
(a) terminated by you at any time by giving to us not less than sixty (60) days
prior written notice.; or (b) terminated by us at any time by giving you at
least sixty (60) days notice and further provided we have paid you at least
$100,000 minimum commission in the contract year in which we terminate this
Agreement. This Agreement may be terminated at any time by you without notice to
us should any Default occur. Upon termination, we will pay all of our
Obligations to you, and in any event we will remain liable to you for any
deficiency remaining after determination of our liability hereunder and
liquidation of any collateral. Also,
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upon termination you may withhold any payment to us unless supplied with an
indemnity satisfactory to you. This Agreement shall bind us, our successors and
assigns and shall inure to the benefit of you, your successors and assigns; we
agree that you may delegate your duties hereunder.
SECTION 12. EXPENSES; ATTORNEYS' FEES; NO WAIVER; SEVERABILITY; NOTICES;
HEADINGS
We shall pay all reasonable expenses incurred by you in connection with the
execution of this Agreement, including expenses incurred in connection with the
filing of financing statements, continuation statements, record searches and
reasonable attorneys' fees. We shall also pay you such wire transfer and similar
fees as you charge from time to time and, in connection with your examinations
of our books and records, such examination fees as you charge from time to time
as well as your out-of-pocket expenses. Upon liquidation of any collateral,
settlement or prosecution of Customer Disputes, or enforcement of any obligation
of ours hereunder, you may charge to our account all costs and expenses incurred
including fifteen percent (15%) of the amount involved as attorneys' fees, if
collection is by or through an attorney and such costs, expenses and fees shall
constitute obligations hereunder. No delay or failure on your part in exercising
any right, privilege, or option hereunder shall operate as a waiver of such or
of any other right, privilege, or option, and no waiver, amendment, or
modification of any provision of this Agreement shall be valid, unless in
writing signed by you and then only to the extent therein stated. Should any
provision of this Agreement be prohibited by or invalid under applicable law,
the validity of the remaining provisions shall not be affected thereby. Any
notices, requests, demands or other communications given by you under this
Agreement may be sent by mail, telex, telegraph, delivery or telecopy to our
most current address as reflected in your records. The headings used herein are
intended to be for convenience of reference only and shall not define or limit
the scope, extent or intent or otherwise affect the meaning of any portion
hereof.
SECTION 13. ENTIRE AGREEMENT; WAIVER OF JURY TRIAL
This Agreement embodies our entire agreement as to the subject matter and
supersedes all prior agreements as to the subject matter. EACH OF US HEREBY
WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO
TRANSACTIONS UNDER THIS AGREEMENT.
SECTION 14. TRADE STYLES
Receivables under this Agreement shall include those created by our doing
business under the following trade styles, all of which have been duly and
properly registered:
GlobalPC
SECTION 15. SPECIAL STIPULATIONS
None.
XxXxxx.xxx, Inc.
By: _______________________________________
(Title)
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ACCEPTANCE
The foregoing Factoring Agreement is accepted in Atlanta, Georgia as of
the ______ day of _______________, 2000.
Banc of America Commercial Corporation
By: __________________________________
(Title)
Funds Employed
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