Exhibit 10.29
XXXXXX
TRANSLATION
FACTORING AGREEMENT
between
XXXXXX BANK AG
Xxxxxxxxxxxx 00, X-00000 Xxxxx
- hereinafter called "the Bank" -
and
- hereinafter called "Client" -
1. BASIC FACTS
In accordance with this agreement the bank purchases the Client's
accounts receivable against his customers and thus assumes the risk
of their insolvency. In addition the bank will relieve the Client
- also of those accounts receivable which up until now have not
been purchased - of the accounts receivable administration
including xxxxxxx procedures and collection. The assignment of the
Client's purchased accounts receivable against his customers is not
made in order to secure a loan granted. These accounts receivable
will remain with the bank ultimately as an equivalent for the
purchase price the bank pays to the Client. The claims the Client
has against the bank and the payments resulting from them will not
serve as a security for loans granted to the Client by third
parties but are to be at the Client's entire disposal in order to
enable him to meet his liabilities to his suppliers making use of
the advantages resulting from immediate payment. The bank's
decision to buy the accounts receivable largely depends on the
information on the accounts receivable and the customers provided
by the Client. Therefore, the correctness and reliability of this
data is of great importance. The factoring agreement creates a
permanent confidential relationship between the contracting
parties.
2. PURCHASE OFFER: COPIES OF INVOICES
2.1 The Client herewith offers to the bank for purchase all of his
present and future accounts receivable against his customers
resulting from sales and services.
2.2 As soon as the Client has delivered the counter-performance in
return for the account receivable, he will inform the bank of the
account receivable by sending a copy of the invoice. In this
invoice the customer, the reason for the accrual of the account
receivable, the amount and the maturity data must be stated in
detail. The Client may only submit copies of invoices of which the
originals were received by the customer and for which the
counter-performance was delivered completely and free from defects.
2.3 The Client will provide the bank besides invoice copies
according to No. 2.2 with these invoice and credit note data by
data carrier or data distance transfer for automatic filing
according to prior agreement. The Client is exclusively liable for
the correctness and the completeness of these data; he will
discharge the bank from all claims of third parties.
3. ACCEPTANCE
3.1 The sales contract for the individual account receivable is
concluded by the bank's acceptance. The acceptance is confirmed by
booking the account receivable to the Client's factoring account.
An advice of this entry does not have to be sent to the Client.
3.2 The bank undertakes to continuously inform the Client of the
bookings of the accounts receivable. The Client may also connect
himself by a data line with the data processing system of the bank
and will then have simultaneous access to each booking operation
and to the entire sales ledger concerning the factoring
relationship.
3.3 The bank undertakes to purchase each account receivable in the
order of the receipt of the invoices, provided that it meets the
following requirements:
a) The account receivable is within the scope of the credit line
established for the customer and of the total maximum investment
for the Client as agreed upon. As far as these requirements are
only partly met, the bank undertakes to purchase that part of the
account receivable which is covered by credit line and the total
amount of the maximum investment.
b) The customer has not been granted a term of payment exceeding
90 days after the invoice date.
c) The copy of the invoice is received by the bank not later than
14 days after the invoice date.
d) The account receivable actually exists, is free of objections
and disputes, it is assignable and not burdened with rights of
third parties.
e) The account receivable is not a claim against an associated
company.
3.4 The bank is also entitled to purchase accounts receivable
which do not meet the requirements as stated in No. 3.3. The bank
will become obliged to purchase an account receivable that
originally was not bought but subsequently meets the requirements
of No. 3.3 (subsequent procedure). If there are several accounts
receivable of this kind they will be purchased in the order of the
invoice dates.
3.5 The bank is not obliged to purchase an account receivable
according to No. 3.3 and No. 3.4 if it has any reason to assume
that the Client does not meet his obligations to suppliers whose
purchase terms include extended property rights.
3.6 The bank will book accounts receivable it does not purchase
after the copy of the invoice was submitted, to a special account
of the Client. These accounts receivable remain offered to the
bank for purchase at any time. The Client may, however, set a
limit of 10 days for the acceptance of such accounts receivable by
the bank. If this period of time has expired without result, the
purchase offer becomes invalid. The acceptance may be confirmed by
the advice of the booking to the factoring account.
4. PURCHASE PRICE
4.1 The purchase price to be paid by the bank equals the amount of
the existing account receivable purchased (less boni and trade
discounts) after the deduction of the factoring commission -
charged on the gross receivables - and the amount of discount. The
amount of discount consists of the interests on the part of the
purchase price paid to the Client for the period of time from this
payment until the payment of the receivable by the customer or
until the occurrence of a bad debt case (No. 6). The amount of the
factoring commission and the interest rate are stated in the letter
"Cooperation".
4.2 The purchase price less the part of the purchase price which
is retained (see No. 8) is due for payment immediately upon the
purchase of the account receivable. The part of the purchase price
which is retained is due for payment as soon as the customer has
paid the purchased account receivable to the bank completely or
when the bad debt case has occurred (No. 6).
5. GUARANTEE
The Client guarantees the legal validity of the account receivable
purchased, in particular that the claim is due for payment as
stated in the copy of the invoice, that the claim exists, that it
is free of objections and disputes, that it is assignable and not
subject to any rights of third parties and that the account
receivable will remain in this condition until collected by the
bank.
6. RISK OF INSOLVENCY OF THE CUSTOMER ("BAD DEBT CASE")
6.1 The bank will assume the risk that the customer is not able to
pay the account receivable purchased.
6.2 The customer's insolvency will be presumed if the customer
does not pay the invoice within 120 days after maturity. The
presumption does not apply if the customer disputes his obligation
to pay within or not within this period of time. In this case the
customer's insolvency has to be proved.
7. CREDIT LINE
7.1 The bank establishes the credit line for the individual
customer, at its own discretion, taking especially into
consideration aspects of credit rating and reliability. In
accordance with the above the bank subsequently has the right to
modify or cancel credit lines at any time.
7.2 A modification of a credit line effects neither the accounts
receivable already purchased nor the accounts receivable for which
the Client has before the receipt of the notice of modification
already delivered the counter-performance by delivery to the
customer and is not able to reclaim it.
8. RETAINED PART OF PURCHASE PRICE
The part of the purchase price retained serves the bank to cover
possible claims the bank might have against the Client. The bank
is entitled to increase the amount retained of the purchase price
even to a higher amount than the one agreed upon, if and as far as
facts justify the apprehension that a) the Client will not meet his
obligations to the bank, in particular because he is in danger to
be verging on insolvency, b) the part of the purchase price
retained up until this point in time does not suffice to cover the
average, justified shortening of the receivables in particular due
to objections of the customer or credit notes of the Client.
9. COLLECTION OF ACCOUNTS RECEIVABLE NOT PURCHASED
9.1 The bank will collect accounts receivable not purchased in its
own name and for the Client's account.
9.2 As compensation for the administration of the accounts
receivable not purchased the bank will receive the administration
fee agreed upon, which becomes due with the first booking of the
account receivable.
10. ACCOUNTS PAYABLE ACCOUNTING
10.1 The bank will carry out the administration of the entire
accounts receivable ledger on the basis of the invoices submitted
to it and in accordance with the governing regulations of the
commercial and taxation laws. The bank will provide the Client
with the bookkeeping records in writing or by an EDP-connection.
From this time the Client will keep all documents or data provided
to him at his own risk.
11. ASSIGNMENT
11.1 Herewith the Client assigns to the bank under the suspensory
effect of the purchase of the respective receivable by the bank all
existing and future accounts receivable against his customers,
which resulted from deliveries and services. The bank herewith
accepts this assignment. Thus the acceptance of the purchase offer
the bank becomes the owner of the account receivable purchased. If
only a part of an account receivable is purchased only this part is
assigned.
11.2 In the event that the bank will not purchase the account
receivable offered to it by the Client immediately (marked by
booking to the special account) the Client assigns this receivable
to the bank already today for the purpose of collection of this
account receivable by the bank and of covering all claims of the
bank against the Client which result from this business
relationship with him. The bank herewith accepts this assignment.
11.3 All accounts receivable the Client has assigned or will
assigned to his suppliers within the scope of extended property
rights (real partial waiver clause) are exempt from the assignment
according to No. 11.2. To the extent he is entitled to, the Client
will authorize the bank to collect these accounts receivable which
are not assigned in its own name for third account.
11.4 If the extended property rights regarding an account
receivable to which No. 11.3 is applicable subsequently become
invalid, the receivable will remain assigned according to No. 11.2.
11.5 If the bank subsequently purchases an account receivable
according to No. 3.4, 3.6, the assignment according to No. 11.2 or
the authorization to collect according to No. 11.3 become invalid
and the receivable remains assigned according to No. 11.1.
11.6 For the assignment of the accounts receivable according to
11.2, as well as for all securities which were registered in the
past or will be registered in the future in favor of the bank
according to the factoring agreement and its supplements as well as
to other agreements applies that:
- The bank can enforce its right on registration or
strengthening of the securities until the liquidatable value
of all securities equals the total amount of all claims
resulting from the business relation (limit for cover).
- If the liquidatable value of all securities exceeds the limit
for cover not only temporarily, the bank has - upon the
Client's request - to release securities at its option, namely
in the amount of the sum exceeding the limit for cover; when
choosing the securities to be released the bank will respect
the entitled demands of the Client and of a third licensee,
who has ordered securities for the Client's liabilities.
12. COMMENCEMENT AND END OF THE AGREEMENT
12.1 The commencement and the end of the agreement are stated in
the letter "Cooperation". If the agreement is not canceled three
months before its expiration it will always extend for one year.
12.2 The notice of cancellation must be in writing.
12.3 At the time of expiration of the agreement all purchase offers
not yet accepted will become void. All transactions still pending
will be handled in accordance with this agreement.
13. ADDITIONAL ELEMENTS OF CONTRACT
13.1 The elements of contract in addition to the wording of this
contract are the Additional Business Terms for factoring, the
General Business Terms of the bank and the letter "Cooperation".
13.2 The Client will be notified on modifications of the Additional
Business Terms for factoring or of the General Business Terms of
the bank in writing. They are taken for approved, unless the
Client makes an objection in writing. The bank will expressly draw
the Client's attention to this consequence upon notification. The
Client has to make the objection not later than within one month
following the bank's notification about the modifications.
14. CONCLUDING PROVISIONS
If provisions of this agreement or of the attachments to it should
be or become completely or partially ineffective, the validity of
the remaining provisions is not effected by this. This applies in
particular if the invalidity concerns only certain accounts
receivable or parts of accounts receivable. Instead of the
inoperative provision another appropriate provision should apply,
which is legally effective and comes closest to the economical
purpose intended. As far as real business (assignments of accounts
receivable and expectancies, transfers) should become ineffective,
the contracting parties are, as far as legally permissible, obliged
to handle the transactions among one another as if it was
effective. In addition, they are obliged to transact the real
business without delay taking into consideration requirements which
until this time had possibly not been observed.
This agreement is executed in German and translated into the
English language. In the event of any discrepancies between the
two texts the German version will prevail.
XXXXXX
TRANSLATION
XXXXXX BANK
Aktiengesellschaft
Postfach 2420, 55014 Mainz
ADDITIONAL TERMS OF BUSINESS FOR FACTORING (11/94)
1. ASSOCIATED COMPANIES
Associated with the Client are such companies which are indirectly
or directly participating in the Client's enterprise, or in which
the Client is indirectly or directly participating, or the partners
of which are indirectly or directly identical with the Client's
partners, or if at least some of the persons authorized to
represent the company are identical with the persons authorized to
represent the Client's enterprise.
2. CALCULATION OF CREDIT LINES AND TOTAL AMOUNT OF MAXIMUM
INVESTMENT
2.1 For calculating the utilization of the credit line (Nos. 3.3
and 7 of the Factoring Agreement) all purchased and still unpaid
accounts receivable against one customer will be added up.
Accounts receivable, for the settlement of which drafts were given
for rediscounting, also have to be included until the drafts are
paid.
2.2 The utilization of the total amount of the maximum investment
(No. 3.3 of the Factoring Agreement) is calculated accordingly, but
this calculation is based on the parts of the purchase prices paid
out to the Client for still unpaid accounts receivables against all
of the Client's customer.
3. BANK'S OBLIGATION TO INFORM, QUARTERLY STATEMENT, APPROVAL BY
SILENCE
3.1 The bank will inform the Client without delay of decisions
regarding credit lines or of their modifications. Clients who are
connected by EDP to the sales ledger administrated for them can
obtain such information directly at any time.
3.2 In addition to the booking documents (No. 10 of the Factoring
Agreement) the bank provides the Client with a survey made out for
the quarterly statement regarding all accounts relating to the
cooperation, each within 10 days following the ending of a quarter
(quarterly statement).
3.3 Any objection a Client may have concerning the incorrectness
or incompleteness of a quarterly statement must be raised not later
than within one month following its receipt; if the objections are
made in writing, it is sufficient to dispatch these within the
period of one months. Failure to make objections in due time will
be considered approval and is regarded as reaching of an agreement
that the notified accounts correctly describe the mutual rights and
legal relationships and are to be taken as basis for further
cooperation. when issuing the quarterly statement the bank will
expressly draw the Client's attention to this consequence.
3.4 The Client may demand a correction of the quarterly statement
even after expiry of this period, but must then prove that and how
far the quarterly statement was made wrongly.
3.5 Silence following the quarterly statement according to the
above mentioned is regarded as final acceptance concerning the
interest rates calculated during this quarter, commissions and
other fees; when dispatching the quarterly statement this is
expressly pointed out as well.
3.6 Incorrect credit entries may be reversed by the bank through
an according correction entry. If the bank ascertains an incorrect
credit entry after a quarterly statement has been issued and the
period according to No. 3.2 has expired, it will notify the Client
of any reverse entries to be made. If the Client objects to the
correction entry, the bank will re-credit the corrected amount and
assert the resulting claim separately.
4. GUARANTEE
4.1 Upon the occurrence of the warranty case (No. 5 of the
Factoring Agreement) the Client has to put the bank, by payment of
a corresponding sum, in the same position in which it would have
been if the customer had completely paid the assigned account
receivable. Instead of this the bank itself may have remedied the
objection or dispute against the claim - in particular it is
entitled to have certain work carried out in order to remedy
complaints - and it may demand reimbursement of the costs from the
Client, provided that the bank had before unsuccessfully reminded
the Client by setting a time limit and threatening to exercise this
right. Other rights according to 437, 440 GBG (German Civil
Code) are not affected.
4.2 In the event that the customer asserts to the bank that he is
not liable to pay, the bank will inform the Client of this fact
stating the customer's objections and defense. Thus the Client is
given the opportunity to remove the reason for non-payment. As
long as the customer disputes his liability to pay, the bank may,
up to the amount of the purchase price it has paid for the account
receivable, retain payments which would become due in the future as
special parts of the purchase price retained, which may exceed the
part of the purchase price that is retained generally. The bad
debt risk will remain with the bank. The Client may obtain such
special parts of the purchase price retained by giving adequate
security, in particular by providing a bank guarantee. The special
part of the purchase price retained has to be paid out as soon as
it is established that the objections and the defense brought
forward do not exist.
4.3 In the event that the customer has paid in foreign currency
and differences in the rate of exchange result from the period of
time between the date of the invoice and the date of payment, the
Client is liable to pay these differences to the bank.
4.4 The bank is allowed, but not obliged, to enforce maturity and
accumulated interest against the customer. The bank has to assign
such claims against the customer to the Client upon his request.
If the bank collects such claims - before re-assignment to the
Client - it compensates those accounts receivable with the Client's
investment with the bank.
5. BAD DEBT CASE
5.1 In the event that the customer has become insolvent the bank
will hand a respective certificate to the Client (bad debt
voucher). With this certificate the Client will file an
application for sales tax refund with the tax office for this loss.
Taking into consideration the sales tax refund to be expected from
the tax office the bank's obligation to make a bad debt payment is
at first limited to the amount of the account receivable without
sales tax. To the extent the tax office might refuse a sales tax
refund by giving the decision in writing, although the application
for refund was properly filed, the bank is obliged to also pay this
amount. The Client then is obliged to institute and carry through
legal proceedings against the tax office, in accordance with the
instructions by the bank, and to assign to the bank the claims for
payment against the tax office.
5.2 In the event that a customer pays by check against a draft
made out by the Client and accepted by the customer, the bank's
obligation to make a bad debt payment expires when the check is
cashed. Consequently the bank does not cover the risk of the
customer's inability to pay the Client's recourse claim against the
customer resulting from the draft. It will not incorporate such
drafts in its portfolio.
6. INTEREST CHANGE, REIMBURSEMENT
6.1 The bank may at its reasonable discretion adjust (increase or
decrease) an interest rate designated with "until further notice"
in its approval letter according to 315 BGB within an adequate
term, if its re-financing conditions change due to money market
related modifications.
6.2 The bank will collect purchased accounts receivable under its
own name and for its own account. The Client has to reimburse the
bank for court costs, attorney's fees and the bank's own expenses
resulting from the fact that the customer rightfully disputes his
liability to pay. The bank will bear any expenses resulting from
the customer's insolvency; the Client's account will first be
charged and will then be reimbursed with the bad debt payment.
6.3 The Client has to reimburse the bank for expenses in
connection with the collection of accounts receivable not purchased
as well as for all court costs, attorney's fees and other expenses
that will accrue in this respect and upon request he has to pay an
adequate advance on these costs.
6.4 In the event that only a part of an account receivable was
purchased, No. 6.2 will apply to the purchased part of the
receivable and No. 6.3 will apply to the part of the receivable
that was not purchased.
6.5 The customer shall bear all out-of-pocket expenses which are
incurred when the bank carries out the instructions or acts in the
presumed interests of the customer (in particular telephone costs,
postage, travel expenses and similar costs) or when credit security
is furnished, administered, released or realized (in particular,
notarial fees, storage charges, cost of guarding items serving as
collateral).
7. TRUST RELATIONSHIP PAYMENTS BY CUSTOMERS
7.1 In the event that payments for assigned accounts receivable
are received by the Client or if they are credited to the Client's
accounts with other banks, the Client will receive them for the
bank as a trustee and has to pass them on to the bank immediately
together with all original vouchers - bank transfer forms, postal
checks, letters containing instructions for the allocation of the
payments, etc. The Client herewith already assigns his credits due
from his respective banks up to the amount of the payment made by
the customer, and he will grant the bank an irrevocable power of
attorney to order the bank to transfer to the bank these credits
due to the Client.
7.2 In the event that the Client receives such sums in other means
of payment (in particular drafts, checks or open postal checks) the
bank and the Client already now agree that the ownership in these
instruments will pass to the bank as soon as the Client acquires
it. Furthermore, the Client assigns to the bank in advance his
rights resulting from these means of payment. Already now the
transfer of the checks and drafts which the Client becomes personal
possession of is replaced by a custodianship which the bank and the
Client herewith agree upon, and by the fact that the Client will
assign to the bank his right to claim restitution from third
parties, in the event that he will not become the actual possessor.
The Client will endorse the means of payment - as far as this is
required - and he will immediately deliver them to the bank. Until
the time of delivery to the bank the Client has to take all
measures necessary to preserve the rights resulting from the
instruments of payment. The Client authorizes the bank to sign in
his name drafts as the drawer as well as to endorse drafts and
checks in his name.
7.3 If the bank credits the countervalue of cheques, direct debits
and of drafts prior to their clearing, this is done on condition of
payment. In case of any return debit, the bank may demand the
Client to be put in the same position as if the open account
related to the return debit had not been paid from the beginning.
The bank is allowed to make the resulting correction booking
regardless of whether or not a quarterly statement has been issued
in the meantime.
8. SECURITIES, SECONDARY RIGHTS
8.1 Together with the assigned account receivable the Client will
assign to the bank all his claims he obtains from his contract with
the customer, in particular claims for restitution in the event
that the contract would be cancelled.
8.2 The Client and the bank already now agree that property
subject to retention of title and pledged property with which the
Client has secured an assigned account receivable will become the
property or joint property of the bank upon the assignment of the
secured account receivable - but at the time the Clients obtains
the property or joint property at the latest.
The Client and the bank also agree that all existing and future
expectancy rights which the Client obtains to objects included in
invoices regarding assigned accounts receivable are transferred to
the bank immediately. At the same time the Client assigns to the
bank his future claim for recovery against the customer or any
third party who personally owns the goods subject to retention of
title or the pledged property. If the Client still is in personal
possession of such objects, he will held them in trust for the bank
free of charges and separated from other goods.
8.3 If the assigned account receivable has resulted from a sales
contract including the shipment of the goods the Client already now
assigns to the bank his claims against the shipping agent and his
right of pursuit to the goods.
8.4 The Client already now assigns to the bank all of his possible
insurance claims with respect to the assigned accounts receivable
and assigned goods. If the assignment is subject to special
requirements, the Client undertakes to effect the assignment in the
form required.
8.5 As far as secondary rights are not already transferred by
operation of law, the Client will transfer, together with the
assigned account receivable, all rights supporting the security and
enforcement of the purchased account receivable.
8.6 If facts become known which make the customer's proper
fulfillment of the contract, an account receivable resulting from
which was assigned to the bank, seem endangered, the Client has to
take back the goods by order of the bank. The bank will bear the
costs for taking back goods with respect to purchased accounts
receivable, the Client will bear the costs for receivables not
purchased.
8.7 The Client will keep in trust for the bank, free of charges
and separated from other goods, goods the Client again got
possession of, regardless of the reasons for this recovery. The
Client has to inform the bank immediately of resuming possession of
the goods and to obtain its instructions. In the event that the
goods are not already owned by the bank, the Client and the bank
agree that the bank will become the owner as soon as the Client
reacquires the goods. The goods have to be marked as the property
of the bank. No. 8.7 does not apply to goods returned with respect
to accounts receivable that were not assigned to the bank.
8.8 The Client is obliged to support the bank to the best of his
ability in realizing and selling of all securities put at the
bank's disposal. The bank may demand the Client to sell the
objects serving as security best possible by himself. In this case
the Client will act as a trustee for the bank and will have to give
extensive account of the realization and he has to turn everything
he receives from it over to the bank immediately.
As from termination of contract and after the repayment of the
Client's investment the bank may at her option either reassign
those accounts receivable not collected and not purchased yet to
the Client or collect them according to this contract by paying out
the earnings after foregoing deduction of the costs. This right
only refers to those accounts receivable which occurred by the date
of the contract termination.
8.9 In the event that a customer does not pay as assigned account
receivable when due, the bank is entitled to take possession of the
objects serving as security for it or to store them at a third
location, even if the securities are in the Client's possession.
8.10 The bank will only realize the pledged goods, if the Client is
in default of payments regarding considerable accounts receivable
and if the payment term of at least 2 weeks which the Client was
granted by the bank to settle the claim in connection with the
threat of realization in case of non-fulfillment has passed without
any success.
In case of realization the bank may choose between several security
items. When realizing security and selecting the items to be
realized the bank will take into account the legitimate concerns of
the Client and any third party, who may have provided security for
the Client's obligations.
The realization of the accounts receivable assigned as security is
made through their collection and compensation with the Client's
liabilities with the bank.
The bank may at its reasonable discretion realize objects serving
as security, also by voluntary sale.
The bank will use the net proceeds of the realization after
deduction of all costs which arose in connection with the
realization and of an appropriate substitute amount for own
expenses to cover the secured accounts receivable. The bank will
deliver possible surpluses.
8.11 The bank may demand that the Client provide the usual form of
security for any claims that may arise from overdrafts of the
factoring clearing account or from other banking relations not
concerning factoring, even if such claims are conditional. If the
customer has assumed a liability for another Client's obligations
toward the bank (e.g., as a surety), the bank is, however, not
entitled to demand that security be provided or increased for the
debt resulting from such liability incurred before the maturity of
the debt.
If the bank, upon the creation of claims against the customer, has
initially dispensed wholly or partly with demanding that security
be provided or increased, it may nonetheless make such a demand at
a later time, provided, however, that circumstances occur or become
known which justify a higher risk assessment of the claims against
the customer. This may, in particular, be the case if
- the economic status of the customer has changed or threatens
to change in a negative manner or
- the value of the existing security has deteriorated or
threatens to deteriorate.
The bank has no right to demand security if it has been expressly
agreed that the Client either does not have to provide any security
or must only provide that security which has been specified.
The bank will allow adequate time to provide or increase security.
If the bank intends to make use of its right of termination without
notice, should the Client fail to comply with the obligation to
provide or increase securities within such time period, it will
draw the Client's attention to this consequence before doing so.
8.12 The Client and the bank agree that the bank acquires a lien on
the securities and chattels which, within the scope of business
relation, have come or may come into possession of the bank. The
bank also acquires a lien on any claims which the customer has or
may in future have against the bank arising from the business
relationship (e.g. credit balances).
The lien serves to secure all existing, future and contingent
claims arising from the banking relationship which the bank with
all its domestic and foreign offices is entitled to against the
Client. If the Client has assumed a liability for another Client's
obligation towards the bank (e.g. as a surety), the lien shall not
secure the debt resulting from the liability incurred before the
maturity of the debt.
If funds or other assets come into the power of disposal of the
bank under the reserve that they may only be used for a specified
purpose, the bank's lien does not extend to these assets.
9. TRUSTEESHIP CONCERNING NOT ASSIGNABLE ACCOUNTS RECEIVABLE
9.1 The Client will keep for the bank as a trustee accounts
receivable which cannot be assigned. If the impediment for the
assignment disappears, the assignment will become effective and the
bank will become the holder of the right.
9.2 In case of assignments of accounts receivable effective
according to 354 of HGB, the Client is obliged to transact legal
acts regarding the substantiated claim not without the bank's
approval and to omit especially agreements concerning balancing of
accounts, retention, deduction and respite, even if they are
effective in relation to the creditor. The Client will accept
incoming payments as a trustee on behalf of the bank; above-mentioned
No. 7 applies. In addition the bank reserves the right
to demand the Client to make all xxxxxxx procedures against the
Client directly, namely within a certain rhythm to be arranged with
the bank.
10. NOTIFICATION OF THE CUSTOMERS
10.1 The bank is entitled and the Client is obliged to notify the
customers of the factoring relationship and the assignment of the
accounts receivable and of the rights to the securities.
10.2 After consultation with the bank the Client has to include
into his General Terms of Business, effective for his customers, an
unequivocal indication regarding the cooperation with the bank in
factoring as well as the assignment of the accounts receivable, of
the secondary rights as well as of the transfer of rights to the
deliveries of goods made in this connection. Also on his invoices
he will clearly visible state this indication of the assignment of
the account receivable invoiced to the bank.
10.3 The bank is entitled to demand the Client to hand over
original invoices in order to pass them on to the customer.
11. OBLIGATIONS CONCERNING CONTRACT TERMS
11.1 In addition the Client undertakes to draw up his General Terms
of Business, effective for his customers, in a way that will
exclude the effectiveness of conflicting conditions of the
customers, contradict a nonassignment clause or a restriction of
the assignment which might be included in the customer's General
Terms of Business, and include the agreement that the venue will be
Mainz or alternatively the Client's location. Furthermore, the
Clients Terms have to include all customary and legally permissible
security agreements, especially a property rights clause including
extended property rights. In addition they have to restrict, as
far as legally permissible, offsets and assertions of rights of
retention by the customer. In addition it has to be stipulated
that payments received from the customer always have to be put to
account according to 366 Abs. 2 BGB (German Civil Code).
In the beginning of cooperation between the Client and the bank the
Client will submit to the bank for review his General Terms of
Business and he will take into consideration suggestions for
modifications and supplementation made by the bank. It is herewith
emphasized that the bank will not give legal advice with respect to
the drawing up of the Client's General Terms of Business but that
it will make this review only in its own interest. As far as
legally permissible the Client will comply with the suggestions
made by the bank. The Client may modify his General Terms of
Business only in agreement with the bank. Furthermore, without the
consent by the bank the Client will not conclude any individual
agreement with the customer which is inconsistent with the
obligations stated above.
11.2 Without the consent by the bank the Client will not conclude
any agreements with his suppliers according to which the assignment
of the accounts receivable based on their purchase within the scope
of factoring procedures is forbidden.
12. OBLIGATIONS TO CONVEY INFORMATION, AUDIT PRIVILEGE
12.1 The Client undertakes to inform the bank immediately of all
circumstances that become know to him, which concern the accounts
receivable against the customers and which might affect the
interests of the bank. This obligation to convey information
especially applies to the following:
a) Objections and disputes, rights of compensation, of avoidance
and of retention concerning the accounts receivable made known by
the copy of the invoice. The Client has so inform the bank of such
facts in the fastest way possible and he has to issue a respective
credit note without delay.
b) Each disputing of an account receivable by the customer, even
if the Client considers this dispute not justified. If the
customer expresses himself in writing, the Client has to provide
the bank with a copy without delay and in the fastest way possible.
c) All information concerning the credit worthiness of the
customers that is available to the Client.
d) All changes in the General Terms of Business of the Client's
suppliers, as far as they concern extended property rights.
e) Measures of attachment and other measures of execution as well
as any other assertion of rights of third parties concerning
accounts receivable against customers.
f) To hand to the bank upon request documents proving the actual
existence of the accounts receivable offered for purchase, like
bills of delivery, contracts, order confirmations, etc.
12.2 The Client will support the bank at the best of his ability in
disputes - extra-judicial as well as judicial - concerning an
account receivable or a security right. In particular the Client
is obliged to completely inform the bank on the subject of the
dispute, to provide all relevant documents and to specify all other
relevant evidence.
12.3 In addition the Client is obliged to inform the bank without
delay of all essential circumstances concerning his enterprise and
to hand to the bank the respective documents. This obligation
concerns:
a) All balance sheets, profit and loss statements and other
short-term income statements.
b) Existing loan agreements with other banks and possible
assignments of the accounts receivable against customers as
securities.
c) Existing powers to collect granted to third parties; such
powers of attorney may not be granted without the consent of the
bank, powers of attorney already granted have to be withdrawn
immediately.
d) All arrears in bookkeeping of more than four weeks; more
comprehensive arrears in bookkeeping must not accrue.
e) Each substantial deterioration of the Client's general
financial and business situation; each change in the Client's
enterprise concerning company laws or rights of representation; all
facts that make another enterprise become an associated company in
the meaning of No. 1.
12.4 The bank or third parties ordered by the bank are entitled to
inspect at any time the books, accounts and other documents and
files of the Client at the Client's premises. Requested records
have to be presented to the bank completely. For the purpose of
auditing the bank has the right to enter the Client's business
premises at the customary office hours unimpededly.
12.5 The Client will discharge the bank and its affiliated
companies, and - as far as requests for information by the bank are
concerned - all commercial banks cooperating with him from bank
secrecy and authorizes the bank to request all information relevant
to the Client from the Client's commercial banks. In addition the
bank is herewith given an irrevocable power to demand documents or
information from the tax advisor, auditors or any other person
keeping the Client's accounts or issuing his balance sheet. These
persons are discharged from their professional secrecy concerning
information given to the bank.
12.6 The bank will continuously inform the Client of the
developments of legal proceedings and will give him the opportunity
to express his views on disputes and objections raised by the
customer. The bank will agree to judicial and extrajudicial
compromises resulting from disputes or objections by the customer
only with the consent of the Client. The bank will incorporate the
Client's comments into the legal proceedings and upon the Client's
request the bank will by a third party notice given him the
possibility to join the law suit taking the side of the bank.
However, complying with the obligations of information and
consideration agreed upon the results of a law suit between the
bank and the customer are binding in the relationship between the
bank and the Client, even if a third party notice was not issued.
13. ASSIGNABILITY OF THE CLAIMS AGAINST THE BANK
The Client's claims against the bank may be assigned to third
parties only with the consent of the bank. The bank may refuse its
consent for cause; such cause could especially be the fact that the
intended assignment might appear to be of disadvantage to the
Client's suppliers.
14. ACCOUNTING UNIT
All accounts of a Client, no matter from which legal relationship,
form an accounting unit and may be offset against each other as far
as this is legally possible. The Client only may offset against
the bank's claims, if his claims have been established undisputed
or by a court of law.
The bank may within its relationship to the Client offset payments
made by a customer, which are received after the cancellation of a
credit line established for this customer, against accounts
receivable purchased from the same customer, regardless of the
instructions for allocation by the customers, provided that
regarding the account receivable against which the payment should
be offset no extended property rights in favor of a supplier were
agreed upon.
The same applies to the bank's claims against the Client resulting
from the guarantee according to No. 5 of the Factoring Agreement
together with No. 4 of these Additional Terms of Business for
Factoring as well as for credit notes issued by the Client and for
possible returns from utilizations.
15. TERMINATION FOR CAUSE
For an important reason the Factoring Agreement may be canceled
effective immediately. Such important reason especially exists, if
the other contracting party severely infringes an essential
obligation resulting from the contract or if its financial
situation deteriorates considerably and thus jeopardizes the
fulfillments of its contractual obligations. An important reason
would also exist, if the Client would not meet his obligations to
his suppliers, especially if he would not pay checks and drafts
due.
16. DISCRETIONARY CREDIT LINES
16.1 As a supplement to No. 7 of the factoring agreement the bank
authorizes the Client to determine the credit lines for the
individual customers, until the bank might pass another decision.
For discretionary credit lines the bank will also assume the bad
debt risk. As the granting of the credit line considerably
determines the extent of the bad debt risk, the Client is obliged
to examine the requirements for granting a credit line with special
diligence. This obligation of the Client is an obligation to
perform to the bank.
16.2 The Clientele to whom the Client may grant discretionary
credit lines and the maximum amount of the credit line (standard
credit line) which the Client is authorized to grant to an
individual customer are stated in the letter "cooperation".
16.3 The Client will name to the bank those customers, to whom he
wishes to grant a credit line. If the Client does not declare
anything to the contrary the naming of the customer is to be
understood as the granting of a credit line in the amount of the
standard credit line (No. 16.2).
The manner in which the customer is named is irrelevant. The
submittance of the first invoice concerning the respective customer
the bank has to understand as the granting of the standard credit
line, provided that the Client does not give any declaration to the
contrary when submitting the invoice.
If the Client wants to grant another but the standard credit line,
he will expressly notify the bank of this fact in writing. The
same applies if the Client subsequently modifies a determined
credit line. A newly determined credit line is always effective
for accounts receivable not yet purchased.
16.4 A Client's decision regarding a credit line will not become
effective if the bank objects to it immediately upon receipt. A
Client's decision regarding a credit line is also ineffective, if
the bank had already before determined a credit line for the
customer and if the Client had received this decision.
The bank is entitled to subsequently modify decisions regarding
credit lines passed by the Client. No. 7.1 sentence 2 and No. 7.2
of the Factoring Agreement remain in effect.
16.5 The Client will determine the amount of the credit line with
the attention of a conscientious businessman. If any negative
facts regarding the solvency or the paying habits of the customer
are realizable to the Client, he may not grant a credit line.
Otherwise the granting of credit lines has to be handled as
follows:
a) In cases of "old customers" the Client may, without any further
examination, grant a credit line of up to 150 per cent of the
maximum balance (total of all of the Client's accounts receivable
against the customer unpaid at one time) granted to the respective
customer during the past 12 months. Granting higher credit lines
is only permissible in accordance with the provisions for "new
customers".
b) In cases of "new customers" the amount of the credit line must
be justified beyond doubt by a written information by a commercial
information agency or by a banker's reference which have to be
obtained in writing before the credit line is granted. The
information must not be older than 12 months.
An "old customer" is a customer who has been in business relations
with the Client for at least one year before the credit line is
granted, who has bought goods at least twice during the past 12
months and has paid for them correctly 60 days after the maturity
date at the latest. All other customers are "new customers".
If the Client infringes his obligations when granting credit lines
he will be liable for damages to the bank.
Upon request the Client has to answer for the fulfillment of his
obligations regarding the granting of credit lines. In this case
the Client has to submit the appertaining written documents as well
as information regarding the customers or proof for the fact that
the customer concerned is an "old customer".
16.6 Both contracting parties may cancel the agreement regarding
the granting of discretionary credit lines with a 10 days notice
effective at the end of each month.
The right of termination for cause effective immediately is not
affected hereby.
The legal consequence of the cancellation is that the authorization
to grant discretionary credit lines is terminated and that the
remaining contractual provisions remain in effect unchanged.
17. PLACE OF PERFORMANCE AND VENUE
Place of performance and venue for all disputes that might arise
from this agreement is Mainz.
This agreement is executed in German and translated into English
language. In the event of any discrepancies between the two texts
the German version shall prevail.
