EX-10.39 3 j2831_ex10d39.htm EX-10.39 Silicon Valley Bank Santa Clara, Ca. 95054 ACCOUNTS RECEIVABLE PURCHASE AGREEMENT
Exhibit 10.39
Silicon Valley Bank
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xx. 00000
(000) 000-0000 - Fax (000) 000-0000
ACCOUNTS RECEIVABLE PURCHASE AGREEMENT
This ACCOUNTS RECEIVABLE PURCHASE AGREEMENT, dated November 20, 2001, (the “Agreement”) is entered into between SILICON VALLEY BANK (“Buyer”) and AML COMMUNICATIONS, INC. (“Seller”), with reference to that certain Accounts Receivable Financing Agreement dated November 10, 2000 (as amended, the “Existing Agreement”). The Existing Agreement and all related documents, instruments and agreements are referred to collectively in this Agreement as the “Loan Documents”. Capitalized terms used in this Agreement, which are not defined shall have the meanings set forth in the Existing Agreement.
The Parties agree, as follows:
Seller acknowledges that the present unpaid principal balance of the Seller’s indebtedness, liabilities and obligations to Buyer under the Loan Documents, including interest accrued through 11/21/01 is $98,974.65 (the “Financed Receivable Balance”), and that said sum is due and owing without any defense, offset, or counterclaim of any kind.
Effective immediately, the Financed Receivable Balance shall be converted to Purchased Receivables, as defined in this Agreement, which Buyer in its sole discretion accepts to purchase under Section 2. This Agreement shall replace all financial accommodations under the Loan Documents, and as of this date, Buyer shall not be obligated to provide any further financial accommodations under any of the Loan Documents.
1. Definitions. When used herein, the following terms shall have the following meanings.
“Account Balance” shall mean, on any given day, the gross amount of all Purchased Receivables unpaid on that day.
“Account Debtor” shall have the meaning set forth in the California 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.
“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.
“Advance” shall have the meaning set forth in Section 2.2 hereof.
“Collateral” shall have the meaning set forth in Section 8 hereof.
“Collateral Handling Fee” shall have the meaning set forth in Section 3.3 hereof.
“Collections” shall mean all good funds received by Buyer from or on behalf of an Account Debtor with respect to
Purchased Receivables.
“Compliance Certificate” shall mean a certificate, in a form provided by Buyer to Seller, which contains the certification of the chief financial officer of Seller that, among other things, the representations and warranties set forth in this Agreement are true and correct as of the date such certificate is delivered.
“Event of Default” shall have the meaning set forth in Section 9 hereof.
“Facility Fee” shall have the meaning set forth in Section 3.6 hereof.
“Finance Charges” shall have the meaning set forth in Section 3.2 hereof.
“Invoice Transmittal” shall mean a writing signed by an authorized 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, the invoice date and the account code.
“Obligations” shall mean all advances, financial accommodations, liabilities, obligations, covenants and duties owing, arising, due or payable by Seller to Buyer of any kind or nature, present or future, arising under or in connection with this Agreement or under any other document, instrument or agreement, whether or not evidenced by any note, guarantee or other instrument, whether arising on account or by overdraft, whether direct or indirect (including those acquired by assignment) absolute or contingent, primary or secondary, due or to become due, now owing or hereafter arising, and however acquired; including, without limitation, all Advances, Finance Charges, Collateral Handling Fees, interest, Repurchase Amounts, fees, expenses, professional fees and attorneys’ fees and any other sums chargeable to Seller hereunder or otherwise.
“Prime Rate” shall mean the Buyer’s most recently announced “prime rate,” even if it is not Buyer’s lowest rate.
“Purchased Receivables” shall mean all those accounts, receivables, chattel paper, instruments, contract rights, documents, general intangibles, letters of credit, drafts, bankers acceptances, and rights to payment, and all proceeds thereof (all of the foregoing being referred to as “receivables”), arising out of the invoices and other agreements identified on or delivered with any Invoice Transmittal delivered by Seller to Buyer which Buyer elects to purchase and for which Buyer makes an Advance.
“Refund” shall have the meaning set forth in Section 3.5 hereof.
“Reserve” shall have the meaning set forth in Section 2.4 hereof.
“Repurchase Amount” shall have the meaning set forth in Section 4.2 hereof.
“Reconciliation Date” shall mean the last calendar day of each Reconciliation Period.
“Reconciliation Period” shall mean each calendar month of every year.
2. Purchase and Sale of Receivables.
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 hereby absolutely sells, transfers and assigns 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. Buyer shall be the absolute owner of each Purchased Receivable. Buyer shall have, with respect to any goods related to the Purchased Receivable, all the rights and remedies of an unpaid seller under the California Uniform Commercial Code and other applicable law, including the rights of replevin, claim and delivery, reclamation and stoppage in transit.
3. Collections, Charges and Remittances.
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Adjustments, Finance Charges, and the Collateral Handling Fee. The accounting shall be deemed correct and conclusive unless Seller makes written objection to Buyer within thirty (30) days after the Buyer mails the accounting to Seller.
(A) (1) The Reserve as of the beginning of that Reconciliation Period, plus
(2) the Reserve created for each Purchased Receivable purchased during that Reconciliation Period, minus
(B) The total for that Reconciliation Period of:
(1) the Collateral Handling Fee;
(2) Finance Charges;
(3) Adjustments;
(4) Repurchase Amounts, to the extent Buyer has agreed to accept payment thereof by deduction from the Refund;
(5) the Reserve for the Account Balance as of the first day of the following Reconciliation Period in the minimum percentage set forth in Section 2.4 hereof; and
(6) all amounts due, including professional fees and expenses, as set forth in Section 12 for which oral or written
demand has been made by Buyer to Seller during that Reconciliation Period to the extent Buyer has agreed to accept payment thereof by deduction from the Refund.
In the event the formula set forth in this Section 3.5 results in an amount due to Buyer from Seller, Seller shall make such payment in the same manner as set forth in Section 4.3 hereof for repurchases. If the formula set forth in this Section 3.5 results in an amount due to Seller from Buyer, Buyer shall make such payment by check, subject to Buyer’s rights under Section 4.3 and Buyer’s rights of offset and recoupment.
3.6. Facility Fee. A fully earned, non–refundable facility fee of $7,500.00 shall be due upon execution of this Agreement and Seller authorizes Buyer to deduct the Facility Fee from the Reserve.
4. Recourse and Repurchase Obligations.
(A) which remains unpaid ninety (90) calendar days after the invoice date; or
(B) which is owed by any Account Debtor who has filed, or has had filed against it, any bankruptcy case, assignment for the benefit of creditors, receivership, or insolvency proceeding or who has become insolvent (as defined in the United States Bankruptcy Code) or who is generally not paying its debts as such debts become due; or
(C) 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
(D) with respect to which the Account Debtor asserts any discount, allowance, return, dispute, counterclaim, offset, defense, right of recoupment, right of return, warranty claim, or short payment;
together with all reasonable attorneys’ and professional fees and expenses and all court costs incurred by Buyer in collecting such Purchased Receivable and/or enforcing its rights under, or collecting amounts owed by Seller in connection with, this Agreement (collectively, the “Repurchase Amount”).
4.3. Seller’s Payment of the Repurchase Amount or Other Amounts Due Buyer. When any Repurchase Amount or other amount owing to Buyer becomes due, Buyer shall inform Seller of the manner of payment which may be any one or more of the following in Buyer’s sole discretion: (a) in cash immediately upon demand therefor; (b) by delivery of substitute invoices and an Invoice Transmittal acceptable to Buyer which shall thereupon become Purchased Receivables; (c) by adjustment to the Reserve pursuant to Section 3.5 hereof; (d) by deduction from or offset against the Refund that would otherwise be due and payable to Seller; (e) by deduction from or offset against the amount that otherwise would be forwarded to Seller in respect of any further Advances that may be made by Buyer; or (f) by any combination of the foregoing as Buyer may from time to time choose.
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under this Section only, the Reconciliation Date shall be deemed to be the date Buyer receives payment in good funds of all the Obligations as provided in this Section 4.4.
6. Representations, Warranties and Covenants.
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 Invoice Transmittal delivered to Buyer and each receivable described therein, that:
(A) Seller is the absolute owner of each receivable set forth in the Invoice Transmittal and has full legal right to sell, transfer and assign such receivables;
(B) The correct amount of each receivable is as set forth in the Invoice Transmittal and is not in dispute;
(C) 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 Invoice Transmittal;
(D) Each receivable set forth on the Invoice Transmittal is based on an actual sale and delivery of goods and/or services actually rendered, is presently due and owing to Seller, is not past due or in default, has not been previously sold, assigned, transferred, or pledged, 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 or affiliate of Silicon Valley Bank;
(E) There are no defenses, offsets, or counterclaims against any of the receivables, and no agreement has been made under which the Account Debtor may claim any deduction or discount, except as otherwise stated in the Invoice Transmittal;
(F) Each Purchased Receivable shall be the property of the Buyer and shall be collected by Buyer, but if for any reason it should be paid to Seller, Seller shall promptly notify Buyer of such payment, shall hold any checks, drafts, or monies so received in trust for the benefit of Buyer, and shall promptly transfer and deliver the same to the Buyer;
(G) Buyer shall have the right of endorsement, and also the right to require endorsement by Seller, on all payments received in connection with each Purchased Receivable and any proceeds of Collateral;
(H) Seller, and to Seller’s best knowledge, each Account Debtor set forth in the Invoice Transmittal, are and shall remain solvent as that term is defined in the United States Bankruptcy Code and the California Uniform Commercial Code, and no such Account Debtor has filed or had filed against it a voluntary or involuntary petition for relief under the United States Bankruptcy Code;
(I) Each Account Debtor named on the Invoice Transmittal will not object to the payment for, or the quality or the quantity of the subject matter of, the receivable and is liable for the amount set forth on the Invoice Transmittal;
(J) Seller shall continue to notify and direct all of its Account Debtor’s to make all payment’s to a lockbox account established with the Buyer (“Lockbox”) or to wire transfer payments to a cash collateral account that Buyer controls; and
(K) All receivables forwarded to and accepted by Buyer after the date hereof, and thereby becoming Purchased Receivables, shall comply with each and every one of the foregoing representations, warranties, covenants and agreements referred to above in this Section 6.1.
(A) Seller will not assign, transfer, sell, or grant , or permit any lien or security interest in any Purchased Receivables or Collateral to or in favor of any other party, without Buyer’s prior written consent;
(B) The Seller’s name, form of organization, chief executive office, and the place where the records concerning all Purchased Receivables and Collateral are kept is set forth at the beginning of this Agreement, Collateral is located only at the location set forth in the beginning of this Agreement, or, if located at any additional location, as set forth on
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a schedule attached to this Agreement, and Seller will give Buyer at least thirty (30) days prior written notice if such name, organization, chief executive office or other locations of Collateral or records concerning Purchased Receivables or Collateral is changed or added and shall execute any documents necessary to perfect Buyer’s interest in the Purchased Receivables and the Collateral;
(C) Seller shall (i) 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; (ii) deliver at any time and from time to time at Buyer’s request, evidence satisfactory to Buyer that all such amounts have been paid to the proper taxing authorities; and (iii) if requested by Buyer, pay its payroll and related taxes through a bank or an independent payroll service acceptable to Buyer.
(D) Seller has not, as of the xxxx Xxxxxx delivers to Buyer an Invoice Transmittal, 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;
(E) If Seller owns, holds or has any interest in, any copyrights (whether registered, or unregistered), patents or trademarks, and licenses of any of the foregoing, such interest has been disclosed to Buyer and is specifically listed and identified on a schedule to this Agreement, and Seller shall immediately notify Buyer if Seller hereafter obtains any interest in any additional copyrights, patents, trademarks or licenses that are significant in value or are material to the conduct of its business;
(F) Seller shall provide Buyer with a Compliance Certificate (i) on a quarterly basis to be received by Buyer no later than the fifth calendar day following each calendar quarter, and; (ii) on a more frequent or other basis if and as requested by Buyer;
(G) Provide Buyer with, as soon as available, but no later than 30 days following each Reconciliation Period, a deferred revenue report, an aged listing of accounts receivable and accounts payable, a company prepared balance sheet and income statement, prepared under GAAP, consistently applied, covering Seller’s operations during the period; and
(H) On request by Buyer, Seller will promptly furnish any information Buyer may reasonably request to determine financial condition of Seller, including, but not limited to all of Seller’s Obligations, and the condition of any of Seller’s receivables which may include but are not limited to Purchased Receivables.
(A) All accounts, receivables, contract rights, chattel paper, instruments, documents, letters of credit, bankers acceptances, drafts, checks, cash, securities, and general intangibles (including, without limitation, all claims, causes of action, deposit accounts, guaranties, rights in and claims under insurance policies (including rights to premium refunds), rights to tax refunds, copyrights, patents, trademarks, rights in and under license agreements, and all other intellectual property);
(B) All inventory, including Seller’s rights to any returned or rejected goods, with respect to which Buyer shall have all the rights of any unpaid seller, including the rights of replevin, claim and delivery, reclamation, and stoppage in transit;
(C) All monies, refunds and other amounts due Seller, including, without limitation, amounts due Seller under this Agreement (including Seller’s right of offset and recoupment);
(D) All equipment, machinery, furniture, furnishings, fixtures, tools, supplies and motor vehicles;
(E) All farm products, crops, timber, minerals and the like (including oil and gas);
(F) All accessions to, substitutions for, and replacements of, all of the foregoing;
(G) All books and records pertaining to all of the foregoing; and
(H) All proceeds of the foregoing, whether due to voluntary or involuntary disposition, including insurance proceeds.
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 UCC financing statements, in a form acceptable to Buyer, and any other instruments and documents requested by Buyer to evidence, perfect, or protect the interests of Buyer in the Collateral. Seller agrees to deliver to Buyer the originals of all instruments, chattel paper and documents evidencing or related to Purchased Receivables and Collateral.
(A) Seller fails to pay any amount owed to Buyer as and when due;
(B) 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;
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(C) Seller 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;
(D) Any involuntary lien, garnishment, attachment or the like is issued against or attaches to the Purchased Receivables or any Collateral;
(E) Seller shall breach any covenant, agreement, warranty, or representation shall constitute an immediate default hereunder;
(F) Seller is not in compliance with, or otherwise is in default under, any term of any document, instrument or agreement evidencing a debt, obligation or liability of any kind or character of Seller, now or hereafter existing, in favor of Buyer or any division or affiliate of Silicon Valley Bank, regardless of whether such debt, obligation or liability is direct or indirect, primary or secondary, joint, several or joint and several, or fixed or contingent, together with any and all renewals and extensions of such debts, obligations and liabilities, or any part thereof;
(G) An event of default shall occur under any guaranty executed by any guarantor of the Obligations of Seller to Buyer under this Agreement, or any material provision of any such guaranty shall for any reason cease to be valid or enforceable or any such guaranty shall be repudiated or terminated, including by operation of law;
(H) A default or event of default shall occur under any agreement between Seller and any creditor of Seller that has entered into a subordination agreement with Buyer;
(I) Any creditor that has entered into a subordination agreement with Buyer shall breach any of the terms of or not comply with such subordination agreement; or
(J) (i) There is a material adverse change in the business, operations, or condition (financial or otherwise) of the Seller, or (ii) there is a material impairment of the prospect of repayment of any portion of the Obligations or (iii) there is a material impairment of the value or priority of Buyer’s security interests in the Collateral.
10. Remedies Upon Default. Upon the occurrence of an Event of Default, (1) without implying any obligation to buy receivables, Buyer may cease buying receivables or extending any financial accommodations to Seller; (2) all or a portion of the Obligations shall be, at the option of and upon demand by Buyer, or with respect to an Event of Default described in Section 9(B), automatically and without notice or demand, due and payable in full; and (3) Buyer shall have and may exercise all the rights and remedies under this Agreement and under applicable law, including the rights and remedies of a secured party under the California Uniform Commercial Code, all the power of attorney rights described in Section 5 with respect to all Collateral, and the right to collect, dispose of, sell, lease, use, and realize upon all Purchased Receivables and all Collateral in any commercial reasonable manner. Seller and Buyer agree that any notice of sale required to be given to Seller shall be deemed to be reasonable if given five (5) days prior to the date on or after which the sale may be held. In the event that the Obligations are accelerated hereunder, Seller shall repurchase all of the Purchased Receivables as set forth in Section 4.4.
13. Severability, Waiver, and Choice of Law. 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. Buyer retains all of its rights, even if it makes an Advance after an Event of Default. If Buyer waives an Event of Default, it may enforce a later Event of Default. Any consent or waiver under, or amendment of, this Agreement must be in writing. Nothing contained herein, or any action taken or not taken by Buyer at any time, shall be construed at any time to be indicative of any obligation or willingness on the part of Buyer to amend this Agreement or to grant to Seller any waivers or consents. This Agreement has been transmitted by Seller to Buyer at Buyer’s office in the State of 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 internal laws of the State of California.
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the United States mail, first class, postage pre-paid, (b) one (1) calendar day after deposit with an overnight mail or messenger service; or (c) on the same date of confirmed transmission if sent by hand delivery, telecopy, telefax or telex.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement on the day and year above written.
SELLER: AML COMMUNICATIONS, INC.
By |
/s/Xxxxx Xxxxx |
Title |
President & Chief Executive Officer |
BUYER: SILICON VALLEY BANK
By |
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Title |
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Silicon Valley Bank
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
(000) 000-0000 - Fax (000) 000-0000
CERTIFICATION of OFFICERS
The undersigned, being all the officers of AML COMMUNICATIONS, INC., a Delaware corporation (the “Corporation”), hereby certify to Silicon Valley Bank (“SVB”) that:
1. The correct name of the Corporation is AML COMMUNICATIONS, INC., as set forth in the Articles of Incorporation.
2. The Corporation was incorporated on December 1995, under the laws of the State of Delaware, and is in good standing under such laws.
3. The Corporation’s place of business and chief executive office being the place at which the Corporation maintains its books and records pertaining to accounts, accounts receivables, contract rights, chattel paper, general intangibles, instruments, documents, inventory, and equipment, is located at:
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
4. The Corporation has other places of business at the following addressees:
5. There is no provision in the Certificate of Incorporation, Articles of Incorporation, or Bylaws of the Corporation, or in the laws of the State of its incorporation, requiring any vote or consent of shareholders to authorize the sale of receivables or the grant of a security interest in any assets of the Corporation. Such power is vested exclusively in the Corporation’s Board of Directors.
6. The officers of the Corporation, and their respective titles and signatures are as follows:
President: |
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Xxxxx Xxxxx |
/s/ Xxxxx Xxxxx |
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(Signature) |
Vice President: |
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Xxxxxxx Xxxxxx |
/s/ Xxxxxxx Xxxxxx |
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(Signature) |
Secretary: |
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Xxxxx X. XxXxxx |
/s/ Xxxxx X. XxXxxx |
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(Signature) |
Treasurer: |
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Xxxxx X. Xxxxxx |
/s/ Xxxxx X. Xxxxxx |
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(Signature) |
Other Officer: |
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Title: |
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(Signature) |
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7. Except as indicated in this paragraph 7, each of the officers listed in paragraph 6 has signatory powers with respect to all the Corporation’s transactions with SVB. Explanation of exceptions:
8. The undersigned shall give SVB prompt written notice of any change or amendment with respect to any of the foregoing. Until such written notice is received by SVB, SVB shall be entitled to rely upon the foregoing in all respects.
IN WITNESS WHEREOF, the undersigned have executed this Certification of Officers on 11/20/2001.
President: |
/s/ Xxxxx Xxxxx |
Vice President: |
/s/ Xxxxxxx Xxxxxx |
Secretary: |
/s/ Xxxxx X. XxXxxx |
Treasurer: |
/s/ Xxxxx X. Xxxxxx |
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Silicon Valley Bank
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
(000) 000-0000 - Fax (000) 000-0000
SECRETARY’S CERTIFICATE OF RESOLUTION
The undersigned, as Secretary of AML COMMUNICATIONS, INC., a Delaware corporation (the “Corporation”), hereby certifies to Silicon Valley Bank that at a meeting duly convened at which a quorum was present the following resolutions were adopted by the Board of Directors of the Corporation and that such resolutions have not been modified, amended, or rescinded in any respect and are in full force and effect as of today’s date.
RESOLVED, that this corporation be and hereby is authorized to sell this corporation’s accounts receivable to Silicon Valley Bank, and to grant Silicon Valley Bank a security interest in this corporation’s assets, including, without limitation, accounts, accounts receivable, contract rights, chattel paper, general intangibles, instruments, documents, letters of credit, drafts, inventory and equipment, presently owned or hereafter acquired and proceeds and products of the foregoing (the “ Collateral,” as defined in the Accounts Receivable Purchase Agreement).
RESOLVED, that this corporation be and hereby is authorized and directed to execute and deliver certain agreements in connection with the sale of receivables, and granting of security interests in the Collateral to Silicon Valley Bank including, without limitations, an Accounts Receivable Purchase Agreement and UCC-1 financing statement.
RESOLVED, that the following named officers of this corporation (“Authorized Officers”) be, and any of them hereby are, authorized, empowered, and directed to execute and deliver to Silicon Valley Bank on behalf of this corporation all such further agreements and instruments as may be deemed necessary or advisable in order to fully effectuate the purposes and intent of the foregoing resolutions.
Print Names of Authorized Officers: |
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Title: |
Xxxxx Xxxxx |
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President & CEO |
Xxxxx X. Xxxxxx |
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Director of Finance |
Xxxxx X. XxXxxx |
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Secretary & VP of Sales |
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RESOLVED, that the Secretary or Assistant Secretary of this corporation be, and hereby is authorized, empowered and directed to certify to the passage of the foregoing resolutions under the seal of this corporation.
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/s/ Xxxxx X. XxXxxx |
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Signature |
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Secretary of AML COMMUNICATIONS, INC. |
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