SALE OF ACCOUNTS AND SECURITY AGREEMENT
Date:
August 17, 2005.
Coda
Octopus Group, Inc., a Delaware corporation (“Seller”), having offices at 000
Xxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Seller
and Faunus Group International, Inc., a Delaware corporation (“FGI”), having
offices at 00 Xxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, hereby agree to the terms and conditions set forth
in
this Sale of Accounts and Security Agreement (“Agreement”):
Section
1.1 Definitions.
For the
purposes of this Agreement and unless defined otherwise herein, all terms used
shall have the meanings assigned to them on Schedule “A”.
Section
1.2 Other
Referential Provisions.
(a) Except
as
otherwise expressly provided herein, all accounting terms not specifically
defined or specified herein shall have the meanings generally attrib-uted to
such terms under GAAP including, without limitation, applicable statements
and
interpretations issued by the Financial Accounting Standards Board and
bulletins, opin-ions, interpretations and statements issued by the American
Institute of Certified Public Accountants or its committees.
(b) All
personal pronouns used in this Agreement, whether used in the mas-cu-line,
feminine or neuter gender, shall include all other genders; the singular shall
include the plural, and the plural shall include the singular.
(b) The
words
“hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provisions of this Agreement.
(d) Titles
of
Articles and Sections in this Agreement are for convenience only, do not
constitute part of this Agreement and neither limit nor amplify the pro-vi-sions
of this Agreement, and all references in this Agreement to Articles, Sections,
Sub-sections, paragraphs, clauses, sub clauses, Schedules or Exhibits shall
refer to the cor-res-ponding Article, Section, Subsection, paragraph, clause
or
sub clause of, or Schedule or Exhibit attached to, this Agreement, unless
specific reference is made to the articles, sec-tions or other subdivisions
or
divisions of, or to schedules or exhibits to, another docu-ment or
instrument.
(e) Each
definition of a document in this Agreement shall include such doc-u-ment as
amended, modified, supplemented or restated from time to time in accordance
with
the terms of this Agreement.
(f) Except
where specifically restricted, reference to a party to this Agreement includes
that party and its successors and assigns.
(g) All
capitalized terms in this Agree-ment shall have the meanings given those terms
in the UCC.
Section
1.3 Exhibits
and Schedules.
All
Exhibits and Schedules attached here-to are by reference made a part
hereof.
Section
2. Purchase
& Sale of Accounts.
(a) Seller
hereby offers to sell, assign, transfer, convey and deliver to FGI, as absolute
owner, in accordance with the procedure detailed herein, all of Seller’s right,
title and interest in and to Seller’s Accounts.
(b) All
Accounts shall be submitted to FGI on a Schedule of Accounts listing each
Account separately. The Schedule of Accounts shall be in the form attached
hereto as Schedule “2,” or in such other form as required by FGI, and shall be
signed by a person acting or purporting to act on behalf of Seller. At the
time
the Schedule of Accounts is presented, Seller shall also deliver to FGI one
copy
of a sales contract, purchase order, and invoice for each Account together
with
evidence of shipment, furnishing and/or delivery of the Goods or rendition
of
service(s). All invoices shall plainly state on their face the amounts payable
hereunder are payable to FGI at the remittance address or by the wire
instructions set forth below.
1
Wire
Instructions:
Mailing
Address:
Commerce
Bank,
N.A.
00
Xxxx
Xxxxxx
(Comm
BK
Marlton) 00xx
Xxxxx
Xxxxxx
Xxxx,
XX
Xxx
Xxxx,
XX 00000
SWIFT:
CBNAUS33
ABA/Routing
#: 000000000
Credit
to: FGI Finance
Account
#: 7918598116
(c) Any
and
all Purchased Accounts shall be purchased on either a Credit Approved or with
Full Recourse basis. In the absence of written Credit Approval, the Purchased
Accounts shall be purchased at Full Recourse. If Goods are shipped or services
are provided based on a verbal approval, it is Seller’s responsibility to ensure
that such approval is received in writing in a timely manner. Credit Approval(s)
may be withdrawn, either orally or in writing, in FGI’s discretion at any time
if, in FGI’s opinion, a Customer’s credit standing becomes impaired before
actual delivery of Goods or rendering of services. Credit Approval(s) shall
be
limited to the specific terms and amounts indicated, and, notwithstanding any
information subsequently provided to Seller by FGI, such Credit Approval(s)
are
automatically rescinded and withdrawn if the terms of sale vary from the terms
approved by FGI, or if the terms of sale are changed by Seller without FGI’s
written Credit Approval on the new terms, or if the Purchased Account is not
assigned to FGI within ten (10) days from the date of the invoice. Seller
further acknowledges that if Seller ships Goods or provides services to a
customer who has outstanding Accounts from Seller, and such customer’s credit
line and/or outstanding Credit Approval(s) have been withdrawn by FGI, and
the
Accounts created thereby, whether or not they are sold and assigned to FGI,
exceed ten percent (10%) of the amount outstanding on FGI’s books, that any
Credit Approvals applying to those Purchased Accounts outstanding on FGI’s books
are cancelled and all outstanding Purchased Accounts from that customer are
with
Full Recourse.
(d) With
regard to sales without Credit Approval or in excess of any Credit Approvals
to
any given Customer, Seller agrees that any payments or credits applying to
any
Account owing by such Customer will be applied: first,
to any
Credit-Approved Purchased Accounts outstanding on FGI’s books; second,
to any
Full Recourse Purchased Accounts outstanding on FGI’s books; and, third,
to any
Accounts outstanding on Seller’s books. This order of payment applies regardless
of the respective dates the sales occurred and regardless of any notations
on
payment items.
(e) If
FGI
fails to collect a Purchased Account within ninety (90) days of its maturity
for
which Credit Approval has been given, FGI shall pay to Seller the Net Invoice
Amount of such Purchased Account less fees, within a reasonable time period,
subject to the terms and provisions stated herein. Any Purchased Account for
freight, samples or miscellaneous sales (including, without limitation, the
sale
of Goods and/or in quantities not regularly sold by Seller) is always assigned
to FGI at Full Recourse, notwithstanding any written Credit Approval from FGI.
(f) FGI
shall
have no liability of any kind for declining or refusing to give, or for
withdrawing, revoking, or modifying, any Credit Approval pursuant to the terms
of this Agreement, or for exercising or failing to exercise any rights or
remedies FGI may have under this Agreement or otherwise. In the event FGI
declines to give Credit Approval on any order received by Seller from a Customer
and in advising Seller of such decline FGI furnishes Seller with information
as
to the credit standing of the Customer, such information shall be deemed to
have
been requested of FGI by Seller and FGI’s advice containing such information is
recognized as a privileged communication. Seller agrees that such information
shall not be given to Seller’s Customer or to Seller’s sales representative(s).
If necessary, Seller shall merely advise its Customer(s) that credit has been
declined on the account and that any questions should be directed to FGI. Each
Full Recourse Account(s) assigned to and purchased by FGI is with full recourse
to Seller and at Seller’s sole credit risk. FGI shall have the right to charge
back to Seller’s Reserve Account the amount of such Full Recourse Receivables at
any time and from time to time either before or after their maturity. Seller
agrees to pay FGI upon demand the full amount thereof, together with all
expenses incurred by FGI up to the date of such payment, including reasonable
attorney’s fees in attempting to collect or enforce such payment or payment of
such Account(s). FGI’s Credit Approval shall only begin after the first fifteen
percent (15%) of all Purchased Accounts relating to each Account Debtor. For
purposes of determining FGI’s Credit Approval hereunder, the Purchased
Account(s) balance due FGI from any given customer shall be calculated as the
aggregate amount owed by that Customer less any credits to which such Customer
may be entitled, and is not to be construed to mean individual invoices owed
by
that customer.
2
Section
3. Purchase Price
and Commissions.
(a) The
purchase price that FGI shall pay to Seller for each Purchased Account shall
equal the Net Invoice Amount thereof less FGI’s service commission, as specified
below. No discount, credit, allowance or deduction with respect to any Purchased
Account, unless shown on the face of an invoice, shall be granted or approved
by
Seller to any Customer without FGI’s prior written consent.
(b) The
purchase price (as computed above), less (i) any Required Reserve Amount or
credit balance that FGI, in FGI’s sole discretion, determines to hold, (ii)
moneys remitted, paid, or otherwise advanced by FGI to or on behalf of Seller
(including any amounts which Seller may reasonably be obligated to pay in the
future), and (iii) any other charges provided for by this Agreement, shall
be
payable by Seller to FGI on the Date of Collection.
(c) FGI
shall
be entitled to withhold a Required Reserve Amount, and may revise the Required
Reserve Account or Reserve Percentage at any time and from time to time if
FGI
deems it necessary to do so in order to protect FGI’s interests. In no event
shall Seller permit a Reserve Shortfall to occur. FGI may charge against the
Required Reserve Account any amount for which Seller may be obligated to FGI
at
any time, whether under the terms of this Agreement, or otherwise, including
but
not limited to the repayment of any over advance, any damages suffered by FGI
as
a result of Seller’s breach of any provision of Section 4 hereof (whether
intentional or unintentional), any adjustments due and any attorneys’ fees,
costs and disbursements due. Seller recognizes that the Required Reserve Account
represents bookkeeping entries only and not cash funds. It is further agreed
that with respect to the balance in the Required Reserve Account, FGI is
authorized to withhold, without giving prior notice to Seller, such payments
and
credits otherwise due to Seller under the terms of this Agreement for reasonably
anticipated claims or to adequately satisfy reasonably anticipated obligation(s)
Seller may owe FGI. If an Event of Default has occurred and is continuing,
or,
in the event Seller shall cease selling Accounts to FGI, FGI shall be under
no
obligation to pay the amount in the Required Reserve Account until all Accounts
listed on all Schedules of Accounts have been collected or FGI has determined,
in its sole discretion, that it will make no further efforts to collect any
Accounts and all sums due FGI hereunder have been paid.
(d) In
FGI’s
sole discretion, in accordance with the terms of this Agreement, FGI may from
time to time advance to Seller against the purchase price of Purchased Accounts
purchased by FGI hereunder, sums up to eighty percent (80%) of the aggregate
purchase price of Purchased Accounts outstanding at the time any such advance
is
made, less: (1) Any such Purchased Accounts that are in dispute; (2) any such
Purchased Accounts that are not credit approved; and (3) any fees, actual or
estimated, that are chargeable to the Reserve Account. Any advance shall be
payable on demand and shall bear interest at the rate set forth in subsection
(e) below from the date such advance is made until the date FGI would otherwise
be obligated hereunder to pay the purchase price of the Purchased Account(s)
against which such advance was made.
(e) Interest
upon the daily net balance of any monies remitted, paid, advanced or otherwise
charged to Seller’s or for Seller’s account before the payment date (including
any advance made pursuant to subsection 2(d), and interest applicable to the
charges or to the expenses referred to in this Agreement) shall be charged
to
Seller’s Reserve Account as of the last day of each month at a rate greater of
eight percent (8%), per annum or three and one half percent (3.5%) above the
rate of interest designated by FGI as its “Prime Rate” or “Base Rate’, as the
case may be (which as of the date hereof is based upon the Wall Street Journal,
Money Rates Section which is subject to change) on the net daily balance of
all
outstanding Purchased Accounts. In the event that the Wall Street Journal ceases
to publish a Prime Rate, then the Prime Rate shall be the average of the three
largest U.S. money center commercial banks, as determined by FGI. All such
interest shall be computed for the actual number of days elapsed on the basis
of
a year consisting of three hundred sixty (360) days. Any adjustment in FGI’s
interest rate, whether downward or upward will become effective on the first
day
of the month following the month in which the prime rate of interest is reduced
or increased. If during any month, a net credit balance (i.e., the reserve
or
credit balance exceeds outstanding Receivables), then you agree to credit our
reserve account as of the last day of each month with interest at a rate equal
to two percent (2%) below the Prime Rate. All such interest, whether charged
or
credited to our reserve account, shall be computed for the actual number of
days
elapsed on the basis of a year consisting of three hundred sixty (360) days.
Any
adjustment in your interest rate, whether downward or upward, will become
effective on the first day of the month following the month in which the prime
rate of interest is reduced or increased.
3
(f) For
FGI’s
services hereunder, Seller shall pay and FGI shall be entitled to receive a
service commission equal to one and eighty five hundredths of one percent
(1.85%) of the gross invoice amount of each Purchased Account, which commission
shall be due and payable to FGI on the date such Purchased Account arises for
the initial thirty (30) day term, plus an additional fifteen (15) days.
Thereafter, FGI shall be entitled to receive an additional fee of one half
of
one percent (0.5%) for each ten (10) day period after the initial forty five
(45) days. Service commissions shall be chargeable to Seller’s Required Reserve
Account. The minimum service commission on each invoice or credit memo shall
be
Five Dollars ($5.00). FGI shall be entitled to receive a surcharge equal to
two
percent (2%) of the gross invoice amount of all Accounts arising out of sales
to
any Chapter 11, Debtor-In-Possession. The minimum service commission on each
invoice or credit memo shall be Five Dollars ($5.00).
(g) FGI’s
commission is based upon Seller’s maximum selling terms of net thirty (30) days,
and Seller will not grant additional dating to any customer without FGI’s prior
written approval. If and when such extended terms or additional dating are
given
to Seller’s customers, FGI’s commission with respect to the Purchased Accounts
represented thereby shall be increased by two percent (2%) for each thirty
(30)
days, or portion thereof, of extended or additional dating.
(h) The
minimum aggregate service commissions payable under this Agreement for each
contract year hereof shall be thirty five thousand dollars ($35,000). To the
extent of any deficiency (after giving effect to commissions payable under
the
foregoing subsections), the difference between the minimum and the amount
already charged shall be chargeable to Seller’s Required Reserve Account, or at
FGI’s option, payable by Seller on FGI’s demand.
(i) IT
IS THE INTENTION OF THE PARTIES HERETO THAT AS TO ALL PURCHASED ACCOUNTS, THE
TRANSACTIONS CONTEMPLATED HEREBY SHALL CONSTITUTE A TRUE PURCHASE AND SALE
OF
ACCOUNT(S) UNDER § 9-318 OF THE UCC AND AS SUCH, THE SELLER SHALL HAVE NO LEGAL
OR EQUITABLE INTEREST IN THE ACCOUNTS SOLD. NEVERTHELESS, IN THE EVENT ANY
PORTION OF THIS TRANSACTION IS CHARACTERIZED AS A LOAN, THE PARTIES HERETO
INTEND TO CONTRACT IN STRICT COMPLIANCE WITH APPLICABLE USURY LAW FROM TIME
TO
TIME IN EFFECT. IN FURTHERANCE THEREOF SUCH PARTIES STIPULATE AND AGREE THAT
NONE OF THE TERMS AND PROVISIONS CONTAINED IN THIS AGREEMENT SHALL EVER BE
CONSTRUED TO CREATE A CONTRACT TO PAY, FOR THE USE, FORBEARANCE OR DETENTION
OF
MONEY, INTEREST IN EXCESS OF THE MAXIMUM RATE (AS HEREINAFTER DEFINED) FROM
TIME
TO TIME IN EFFECT. NEITHER SELLER, ANY PRESENT OR FUTURE GUARANTOR OR ANY OTHER
PERSON HEREAFTER BECOMING LIABLE FOR THE PAYMENT OF THE ADVANCES, SHALL EVER
BE
LIABLE FOR ANY OBLIGATION THAT MAY BE CHARACTERIZED AS UNEARNED INTEREST THEREON
OR SHALL EVER BE REQUIRED TO PAY ANY OBLIGATION THAT MAY BE CHARACTERIZED AS
INTEREST THEREON IN EXCESS OF THE MAXIMUM AMOUNT THAT MAY BE LAWFULLY CHARGED
UNDER APPLICABLE LAW FROM TIME TO TIME IN EFFECT, AND THE PROVISIONS OF THIS
SECTION SHALL CONTROL OVER ALL OTHER PROVISIONS OF THIS AGREEMENT WHICH MAY
BE
IN CONFLICT THEREWITH. IF ANY INDEBTEDNESS OR OBLIGATION OWED BY SELLER
HEREUNDER IS DETERMINED TO BE IN EXCESS OF THE LEGAL MAXIMUM, OR FGI SHALL
OTHERWISE COLLECT MONEYS WHICH ARE DETERMINED TO CONSTITUTE INTEREST WHICH
WOULD
OTHERWISE INCREASE THE INTEREST ON ALL OR ANY PART OF SUCH OBLIGATIONS TO AN
AMOUNT IN EXCESS OF THAT PERMITTED TO BE CHARGED BY APPLICABLE LAW THEN IN
EFFECT, THEN ALL SUCH SUMS DETERMINED TO CONSTITUTE INTEREST IN EXCESS OF SUCH
LEGAL LIMIT SHALL, WITHOUT PENALTY, BE PROMPTLY APPLIED TO REDUCE THE THEN
OUTSTANDING OBLIGATIONS OR, AT FGI’S OPTION, RETURNED TO SELLER OR THE OTHER
PAYOR THEREOF UPON SUCH DETERMINATION. IF AT ANY TIME THE RATE AT WHICH INTEREST
IS PAYABLE HEREUNDER EXCEEDS THE MAXIMUM RATE, THE AMOUNT OUTSTANDING HEREUNDER
SHALL CEASE BEARING INTEREST UNTIL SUCH TIME AS THE TOTAL AMOUNT OF INTEREST
ACCRUED HEREUNDER EQUALS (BUT DOES NOT EXCEED) THE MAXIMUM RATE APPLICABLE
HERETO. AS USED IN THIS SECTION, THE TERM “APPLICABLE LAW” MEANS THE LAWS OF THE
STATE OF NEW YORK OR, IF DIFFERENT, THE LAWS OF THE STATE OR TERRITORY IN WHICH
THE SELLER RESIDES, WHICHEVER LAW ALLOWS THE GREATER RATE OF INTEREST, AS SUCH
LAWS NOW EXIST OR MAY BE CHANGED OR AMENDED OR COME INTO EFFECT IN THE FUTURE
AND THE TERM “MAXIMUM RATE” MEANS THE MAXIMUM NONUSURIOUS RATE OF INTEREST THAT
FGI IS PERMITTED UNDER APPLICABLE LAW TO CONTRACT FOR, TAKE, CHARGE OR RECEIVE
WITH RESPECT TO THE ADVANCES.
4
(j) Transfer.
Upon
FGI’s acceptance of each Purchased Account, FGI shall be the sole owner and
holder of such Purchased Account. Seller hereby sells, transfers, conveys and
assigns to FGI all of its right, title and interest in and to each Purchased
Account effective at the time of acceptance thereof by FGI. Seller agrees to
execute and deliver to each Account Debtor obligated under an Account and/or
a
Purchased Account such written notice of sale of the Purchased Account as FGI
may request.
(k) Accounting
Information.
FGI
shall provide Seller with information on the Purchased Accounts and a monthly
reconciliation of the relationship relating to billing, collection and account
maintenance such as aging, posting, error resolution and mailing of statements.
All of the foregoing shall be in a format and in such detail, as FGI, in its
sole discretion, deems appropriate. FGI’s books and records shall be admissible
in evidence without objection as prima facie evidence of the status of the
Purchased and non-purchased Accounts and Required Reserve Account between FGI
and Seller. Each statement, report, or accounting rendered or issued by FGI
to
Seller shall be deemed conclusively accurate and binding on Seller unless within
fifteen (15) days after the date of issuance Seller notifies FGI to the contrary
by registered or certified mail, setting forth with specificity the reasons
why
Seller believes such statement, report, or accounting is inaccurate, as well
as
what Seller believes to be correct amount(s) therefore. Seller’s failure to
receive any monthly statement shall not relieve it of the responsibility to
request such statement and Seller’s failure to do so shall nonetheless bind
Seller to whatever FGI’s records would have reported.
Section
4. Seller’s
Representations and Covenants.
Seller,
as well as each of Seller’s principals, represent, warrant and covenant to FGI
that:
(a) Seller
is
either a corporation, limited liability company, limited partnership or other
form of Registered Organization, is duly organized, validly existing and in
good
standing under the laws of the state of its incorporation or organization and
is
qualified and authorized to do business and is in good standing in all states
in
which such qualification and good standing are necessary or desirable.
(b) The
execution, delivery and performance by Seller of this Agreement does not and
will not constitute a violation of any applicable law, violation of Seller’s
articles of incorporation or organization or bylaws or any material breach
of
any other document, agreement or instrument to which Seller is a party or by
which Seller is bound.
(c) The
Agreement is a legal, valid and binding obligation of Seller enforceable against
it in accordance with its terms.
(d) Immediately
prior to the execution and at the time of delivery of each Schedule of Account,
Seller is the sole owner and holder of each of the Account described thereon
and
that upon FGI’s acceptance of each Purchased Account; it shall become the sole
owner and holder of such Purchased Account(s).
(e) No
Purchased Account shall have been previously sold or transferred or be subject
to any lien, encumbrance, security interest or other claim of any kind of
nature. Seller will not factor, sell, transfer, pledge or give a security
interest in any of its Accounts to anyone other than FGI. There are no financing
statements now on file in any public office covering any Collateral of Seller
of
any kind, real or personal, in which Seller is named in or has signed as the
debtor, except the financing statement or statements filed or to be filed in
respect of this Agreement or those statements now on file that have been
disclosed in writing by Seller to FGI as reflected on the attached Schedule
4(e). Seller will not execute any financing statement in favor of any other
Person, except FGI, during the Term of this agreement.
5
(f) The
amount of each Purchased Account is due and owing to Seller and represents
an
accurate statement of a bona fide sale, delivery and acceptance of Goods or
performance of service by Seller to or for an Account Debtor. The terms for
payment of Purchased Accounts are thirty (30) days from date of invoice and
the
payment of such Purchased Accounts is not contingent upon the fulfillment by
Seller of any further performance of any nature whatsoever. Each Account
Debtor’s business is solvent to the best of Seller’s knowledge.
(g) There
are
and shall be no set-offs, allowances, discounts, deductions, counterclaims,
or
disputes with respect to any Purchased Account, either at the time it is
accepted by FGI for FGI or prior to the date it is to be paid. Seller shall
inform FGI, in writing, immediately upon learning that there exists any Account,
which is subject to a Dispute. Seller shall accept no returns and shall grant
no
allowance or credit to any Account Debtor without notice to and the prior
written approval of FGI. Seller shall provide to FGI for each Account Debtor
who
is indebted on a Purchased Account that has been purchased, a weekly report
in a
form and substance satisfactory to FGI itemizing all such returns and allowances
made during the previous week with respect such Purchased Accounts and at FGI’s
option a check (or wire transfer) payable to FGI for the amount thereof or
in
FGI’s sole and exclusive discretion, FGI may accept the issuance of a Credit
Memo and apply same to Seller’s Required Reserve Account.
(h) Seller’s
address, as set forth in any Application submitted to FGI, is Seller’s mailing
address, its chief executive office, principal place of business and the office
where all of the books and records concerning the Purchased Accounts are
maintained which shall not be changed without giving thirty (30) days prior
written notice to FGI.
(i) Seller
shall maintain its books and records in accordance with GAAP and shall reflect
on its books the absolute sale of the Purchased Accounts to FGI. Seller shall
furnish FGI, upon request, such information and statements, as FGI shall request
from time to time regarding Seller’s business affairs, financial condition and
results of its operations. Without limiting the generality of the foregoing,
Seller shall provide FGI, on or prior to the 30th
day of
each month, unaudited financial statements with respect to the prior month
and,
within ninety (90) days after the end of each of Seller’s fiscal years, annual
financial statements and such certificates relating to the foregoing as FGI
may
request including, without limitation, a monthly certificate from the president
and chief financial officer of Seller stating whether any Events of Default
have
occurred and stating in detail the nature of the Events of Default. Seller
will
furnish to FGI upon request a current listing of all open and unpaid accounts
payable and Accounts, and such other items of information that FGI may deem
necessary or appropriate from time to time. Unless otherwise expressly provided
herein or unless FGI otherwise consents, all financial statements and reports
furnished to FGI hereunder shall be prepared and all financial computations
and
determinations pursuant hereto shall be made in accordance with GAAP,
consistently applied.
(j) Seller
has paid and will pay all taxes and governmental charges imposed with respect
to
sale of Goods and furnish to FGI upon request satisfactory proof of payment
and
compliance with all federal, state and local tax requirements.
(k) Seller
will promptly notify FGI of (i) the filing of any lawsuit against Seller
involving amounts greater than $10,000.00, and (ii) any attachment or any other
legal process levied against Seller.
(l) The
Application made or delivered by or on behalf of Seller in connection with
this
Agreement, and the statements made therein are true and correct at the time
that
this Agreement is executed. There is no fact which Seller has not disclosed
to
FGI in writing which could materially adversely affect the properties, business
or financial condition of Seller, or any of the Purchased Accounts or
Collateral, or which is necessary to disclose in order to keep the foregoing
representations and warranties from being misleading.
(m) In
no
event shall the funds paid to Seller hereunder be used directly or indirectly
for personal, family, household or agricultural purposes.
(n) Seller
does business under no trade or assumed names except as indicated
below:
(None)
(o) Any
invoice or written communication that is issued by Seller to FGI by facsimile
transmission is a duplicate of the original.
6
(p) Any
electronic communication of data, whether by e-mail, tape, disk, or otherwise,
Seller remits or causes to be remitted to FGI shall be authentic and
genuine.
Section
5. Notice
of Purchase.
Seller
shall execute and deliver to FGI and/or file at such times and places as FGI
may
designate such financing statements, continuations and amendments thereto as
are
necessary or desirable to give notice of FGI's purchase of the Purchased
Accounts under the UCC in effect in any applicable jurisdiction and FGI’s
security interest in Seller’s Collateral as provided in Section 6
below.
Section
6. Collateral.
In
order to secure the payment of all indebtedness and obligations of Seller to
FGI, in addition to the sale of Purchased Accounts, Seller hereby grants to
FGI
a security interest in and lien upon all of Seller’s right, title and interest
in and to all of Seller’s Collateral. Seller agrees to comply with all
appropriate laws in order to perfect FGI’s security interest in and to the
Collateral and to execute such documents as FGI may, from time to time, require
and to deliver to FGI a list of all locations of its Inventory, Equipment and
Goods. Seller shall provide written notice to FGI of any change in the locations
at which it keeps its Inventory, Equipment and Goods at least thirty (30) days
prior to any such change. The occurrence of any Event of Default shall entitle
FGI to all of the default rights and remedies (without limiting the other rights
and remedies exercisable by FGI either prior or subsequent to an Event of
Default) as available to a Secured Party under the UCC in effect in any
applicable jurisdiction.
Section
7. Collection.
(a) Seller
shall notify all Account Debtors and take other necessary or appropriate means
to insure that all of Seller’s Account(s), whether or not purchased by FGI,
shall be paid directly to FGI at the remittance address or by the wire
instructions set forth below. FGI shall have the right at any time, either
before or after the occurrence of an Event of Default and without notice to
Seller, to notify any or all Account Debtors of the assignment to FGI and to
direct such Account Debtors to make payment of all amounts due or to become
due
to Seller directly to FGI. As to any Account proceeds that do not represent
Purchased Accounts, and so long as Seller is not in default, FGI shall be deemed
to have received any such proceeds of Accounts as a pure pass-through for and
on
account of Seller.
Wire
Instructions:
Mailing
Address:
Commerce
Bank,
N.A.
00
Xxxx
Xxxxxx
(Comm
BK
Marlton)
00xx
Xxxxx
Xxxxxx
Xxxx,
XX
Xxx
Xxxx,
XX 00000
SWIFT:
CBNAUS33
ABA/Routing
#: 000000000
Credit
to: FGI Finance
Account
#: 7918598116
(b) FGI,
as
the sole and absolute owner of the Purchased Accounts, shall have the sole
and
exclusive power and authority to collect each such Purchased Account, through
legal action or otherwise, and FGI may, in its sole discretion, settle,
compromise, or assign (in whole or in part) any of such Purchased Accounts,
or
otherwise exercise, to the maximum extent permitted by applicable law, any
other
right now existing or hereafter arising with respect to any of such Purchased
Accounts. If Seller receives payment of all or any portion of any of such
Purchased Accounts or any other Account, Seller shall notify FGI immediately
and
shall hold all checks and other instruments so received in trust for FGI and
shall deliver to FGI such checks and other instruments without
delay.
Section
8. Payments
Received by Seller. Should
Seller receive payment of all or any portion of any Purchased Account, Seller
shall immediately notify FGI of the receipt of the payment, hold said payment
in
trust for FGI separate and apart from Seller’s own property and funds, and shall
deliver said payment to FGI without delay in the identical form in which
received. Should Seller receive any check or other payment instrument with
respect to a Purchased Account or after default any Account and fail to
surrender and deliver to FGI said check or payment instrument within two (2)
business days, FGI shall be entitled to charge Seller a Misdirected Payment
Fee
to compensate FGI for the additional administrative expenses that the parties
acknowledge is likely to be incurred as a result of such breach. In the event
any Goods, the sale of which gave rise to a Purchased Account, are returned
to
or repossessed by Seller, such Goods shall be held by Seller in trust for FGI,
separate and apart from Seller’s own property and subject to FGI’s sole
direction and control.
7
Section
9. Power
of Attorney.
Seller
grants to FGI an irrevocable power of attorney authorizing and permitting FGI,
at its option, with or without notice to Seller to do any or all of the
following: (a) Endorse the name of Seller on any checks or other evidences
of
payment whatsoever that may come into the possession of FGI regarding Purchased
Accounts or Collateral, including checks received by FGI pursuant to Section
9
hereof; (b) Receive, open and dispose of any mail addressed to Seller and put
FGI’s address on any statements mailed to Account Debtors; (c) Pay, settle,
compromise, prosecute or defend any action, claim, conditional waiver and
release, or proceeding relating to Purchased Accounts or Collateral; (d) Upon
the occurrence of an Event of Default, notify in the name of the Seller, the
U.S. Post Office to change the address for delivery of mail addressed to Seller
to such address as FGI may designate, however, FGI shall turn over to Seller
all
such mail not relating to Purchased Accounts or Collateral; (e) File any
financing statement deemed necessary or appropriate by FGI to protect FGI’s
interest in and to the Purchased Accounts or Collateral, or under any provision
of this Agreement; (f) Effect debits to any Demand Deposit or other account
that
Seller or Seller’s principals who have executed a guaranty agreement maintain at
any Bank for any sums due to or from the Seller under this Agreement; and (g)
To
do all other things necessary and proper in order to carry out this Agreement.
The authority granted to FGI herein is irrevocable until this Agreement is
terminated and all Obligations are fully satisfied.
Section
10. Default
and Remedies.
An
Event of Default shall be deemed to have occurred hereunder and FGI may
immediately exercise its rights and remedies with respect to the Purchased
Accounts and the Collateral under this Agreement, upon the happening of one
or
more of the following: (a) Seller shall fail to pay as and when due any amount
owed to FGI; (b) There shall be commenced by or against Seller any voluntary
or
involuntary case under the Federal Bankruptcy Code, or any assignment for the
benefit of creditors, or appointment of a receiver or custodian; (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; (d)
Any
involuntary lien, garnishment, attachment or the like shall be issued against
or
shall attach to the Purchased Accounts, the Collateral or any portion thereof
and the same is not released within ten (10) days; (e) Seller suffers the entry
against it for a final judgment for the payment of money in excess of
$10,000.00, unless the same is discharged within thirty (30) days after the
date
of entry thereof or an appeal or appropriate proceeding for review thereof
is
taken within such periods and a stay of execution pending such appeal is
obtained; (f) Seller shall breach any covenant, warranty or representation
set
forth herein or same shall be untrue when made; (g) Any report, certificate,
schedule, financial statement, profit and loss statement or other statement
furnished by Seller, or by any other person on behalf of Seller, to FGI is
not
true and correct in any material respect; (h) Seller shall have a federal or
state tax lien filed against any of its properties, or shall fail to pay any
federal or state tax when due, or shall fail to file any federal or state tax
form as and when due; or (i) A material adverse change shall have occurred
in
Seller’s financial conditions, business or operations. Upon an Event of Default,
all obligations due FGI shall become immediately due and owing and FGI shall
be
entitled to any form of equitable relief that may be appropriate without having
to establish any inadequate remedy at law or other grounds other than to
establish that its Collateral is subject to being improperly used, moved,
dissipated or withheld from FGI. FGI shall be entitled to freeze, debit and/or
effect a set-off against any fund or account Seller may maintain with any Bank.
In the event FGI deems it necessary to seek equitable relief, including, but
not
limited to, injunctive or receivership remedies, as a result of and Event of
Default, Seller waives any requirement that FGI post or otherwise obtain or
procure any bond. Alternatively, in the event FGI, in its sole and exclusive
discretion, desires to procure and post a bond, FGI may procure and file with
the court a bond in an amount up to and not greater than $10,000.00
notwithstanding any common or statutory law requirement to the contrary. Upon
FGI’s posting of such bond it shall be entitled to all benefits as if such bond
was posted in compliance with state law. Seller also waives any right it may
be
entitled to, including an award of attorney’s fees or costs, in the event any
equitable relief sought by and awarded to FGI is thereafter, for whatever
reason(s), vacated, dissolved or reversed. All post-judgment interest shall
bear
interest at either the contract rate, 18% per annum or such higher rate as
may
be allowed by law.
Section
11. Cumulative
Rights; Waivers.
All
rights, remedies and powers granted to FGI in this Agreement, or in any other
instrument or agreement given to Seller to FGI or otherwise available to FGI
in
equity or at law, are cumulative and may be exercised singularly or concurrently
with such other rights as FGI may have. These rights may be exercised from
time
to time as to all or any part of the Purchased Accounts purchased hereunder
or
the Collateral as FGI in its discretion may determine. In the event that any
part of this transaction between Seller and FGI is construed to be a loan from
FGI to Seller, any advances or payments made as the Purchase Price for all
Purchased Accounts shall be secured by the Purchased Accounts and the Collateral
and FGI shall have all rights and remedies available to FGI in addition to
its
rights and remedies hereunder. FGI may not be held to have waived its rights
and
remedies unless the waiver is in writing and signed by FGI. A waiver by FGI
of a
right, remedy or default under this Agreement on one occasion is not a waiver
of
any right, remedy or default on any subsequent occasion. Any failure by FGI
to
exercise, or any delay by FGI of such right or any other right, nor in any
manner impair the subsequent exercise by FGI of any of its rights.
8
Section
12. Notices.
Any
notice or communication with respect to this Agreement shall be given in
writing, sent by (i) personal delivery, or (ii) expedited delivery service
with
proof of delivery, or (iii) United States mail, postage prepaid, registered
or
certified mail, or (iv) prepaid telegram, telex or telecopy, addressed to each
party hereto at its address set forth below or to such other address or to
the
attention of such other person as hereafter shall be designated in writing
by
the applicable party sent in accordance herewith. Any such notice or
communication shall be deemed to have been given either at the time of personal
delivery or, in the case of delivery service or mail, as of the date of first
attempted delivery at the address and in the manner provided herein, or in
the
case of telegram, telex or telecopy, upon receipt.
FGI
Finance
Coda
Octopus
00
Xxxx
Xxxxxx 000
Xxxx
Xxxxxx
00xx
Xxxxx
00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Xxx
Xxxx,
XX 00000
Section
13. Term.
The
Original Term of this Agreement shall be from the date hereof until September
1,
2006, provided that this Agreement shall be extended automatically for an
additional one (1) year for each succeeding year unless written notice of
termination is given by one party hereto to the other party hereto at least
sixty (60) days, but not more than ninety (90) days, prior to the end of the
Original Term or any extension thereof. Any such notice of termination, however,
and notwithstanding payment in full of all Obligations by Seller, is conditioned
on Seller’s delivery, to FGI, of a general release in a form reasonably
satisfactory to Purchaser. Seller understands that this provision constitutes
a
waiver of its rights under § 9-513 of the UCC. FGI shall not be required to
record any terminations or satisfactions of any of FGI’s liens on the Collateral
unless and until Seller has executed and delivered to FGI said general release
and Seller shall have no authority to do so without FGI’s express written
consent. In the event prior to maturity this Agreement is terminated for any
reason, Seller shall pay to FGI an early Termination Fee in the amount of thirty
five thousand dollars ($35,000). Any termination of this Agreement shall not
affect FGI’s security interest in the Collateral and FGI’s ownership of the
Purchased Accounts, and this Agreement shall continue to be effective, until
all
transactions entered into and obligations incurred hereunder have been completed
and satisfied in full. Notwithstanding anything to the contrary, and assuming
no
default by Seller in which event FGI may terminate without notice, FGI may
terminate this Agreement at any time by giving not less than thirty (30) days
notice in which event, Seller shall not be obligated to pay any Termination
Fee.
Section
14. Attorney’s
Fees.
Seller
agrees to reimburse FGI upon demand for all reasonable attorney’s fees, court
costs and other expenses incurred by FGI in preparation, negotiation and
enforcement of this Agreement and protecting or enforcing its interest in the
Accounts or the Collateral, in collecting the Accounts or the Collateral, or
in
the representation of FGI in connection with any bankruptcy case or insolvency
proceeding involving Seller, the Collateral, any Account Debtor or any Accounts
including any defense of any Avoidance Claims. Seller hereby authorizes FGI,
at
FGI’s sole discretion, to deduct such fees, costs and expenses from the Required
Reserve Account or may make demand therefore. Notwithstanding the existence
of
any law, statute or rule, in any jurisdiction which may provide Seller with
a
right to attorney’s fees or costs, Seller hereby waives any and all rights to
hereafter seek attorney’s fees or costs hereunder and Seller agrees that FGI
exclusively shall be entitled to indemnification and recovery of any and all
attorney’s fees or costs in respect to any litigation based hereon, arising out
of, or related hereto, whether under, or in connection with, this and/or any
agreement executed in conjunction herewith, or any course of conduct, course
of
dealing, statements (whether verbal or written) or actions of either
party.
9
Section
15. Indemnity.
Seller
hereby indemnifies and agrees to hold harmless and defend FGI from and against
any and all claims, judgments, liabilities, fees and expenses (including
attorney’s fees) which may be imposed upon, threatened or asserted against FGI
at any time and from time to time in any way connected with this Agreement
or
the Collateral. The foregoing indemnification shall apply whether or not such
indemnified claims are in any way or to any extent owed, in whole or in part,
under any claim or theory of strict liability, or are caused, in whole or in
part, by any negligent act or omission of FGI.
Section
16. Severability.
Each
and every provision, condition, covenant and representation contained in this
Agreement is, and shall be construed to be, a separate and independent covenant
and agreement. If any term or provision of this Agreement shall to any extent
be
invalid or unenforceable, the remainder of the Agreement shall not be affected
thereby.
Section
17. Parties
in Interest.
All
grants, covenants and agreements contained in this Agreement shall bind and
inure to the benefit of the parties hereto and their respective successors
and
assigns; provided, however, that Seller may not delegate or assign any of its
duties or obligations under this Agreement without the prior written consent
of
FGI. FGI reserves the right to assign its rights and obligations under this
agreement in whole or in part to any person or entity.
Section
18. Governing
Law: Submission to Process and Venue. This
agreement shall be deemed a contract made under the laws of the State of New
York and shall be construed and enforced in accordance with and governed by
the
internal laws of the State of New York, without reference to the rules thereof
relating to conflicts of law. Seller hereby irrevocably submits itself to the
exclusive jurisdiction of the state and federal courts located in New York,
and
agrees and consents that service of process may be made upon it in any legal
proceeding relating to this agreement, the purchase of Accounts or any other
relationship between FGI and Seller by any means allowed under state or federal
law. Any legal proceeding arising out of or in any way related to this
Agreement, the purchase of Accounts or any other relationship between FGI and
Seller shall be brought and litigated in any of the state or federal courts
located in the State of New York in any county in which FGI has a business
location, the selection of which shall be in the exclusive discretion of FGI.
Seller hereby waives and agrees not to assert, by way of motion, as a defense
or
otherwise, that any such proceeding, is brought in any inconvenient forum or
that the venue thereof is improper.
Section
19. Complete
Agreement. This
Agreement, the written documents executed pursuant to this Agreement, if any,
and the acknowledgment delivered in connection herewith set forth the entire
understanding and agreement of the parties hereto with respect to the
transactions contemplated herein and may not be contradicted by evidence of
prior, contemporaneous, or subsequent oral agreements of the parties. No
modification or amendment of or supplement to this Agreement shall be valid
or
effective unless the same is in writing and signed by the party against whom
it
is sought to be enforced.
Section
20. Miscellaneous.
(a) Seller
acknowledges that there is no, and it will not seek or attempt to establish
any,
fiduciary relationship between FGI and Seller, and Seller waives any right
to
assert, now or in the future, the existence or creation of any fiduciary
relationship between FGI and Seller in any action or proceeding (whether by
way
of claim, counterclaim, crossclaim or otherwise) for damages.
(b) This
Agreement shall be deemed to be one of financial accommodation and not assumable
by any debtor, trustee or debtor-in-possession in any bankruptcy proceeding
without FGI’s express written consent and may be suspended in the event a
petition in bankruptcy is filed by or against Seller.
(c) In
the
event Seller’s principals, officers or directors form a new entity, whether
corporate, partnership, limited liability company or otherwise, similar to
that
of Seller during the term of this Agreement, such entity shall be deemed to
have
expressly assumed the obligations due FGI by Seller under this Agreement. Upon
the formation of any such entity, FGI shall be deemed to have been granted
an
irrevocable power of attorney with authority to execute, on behalf of the newly
formed successor business, a new UCC-1 or UCC-3 financing statement and have
it
filed with the appropriate secretary of state or UCC filing office. FGI shall
be
held-harmless and be relieved of any liability statement or the resulting
perfection of a lien in any of the successor entity’s assets. In addition, FGI
shall have the right to notify the successor entity’s account debtors of FGI’s
lien rights, its right to collect all Accounts, and to notify any new FGI or
lender who has sought to procure a competing lien of FGI’s right is in such
successor entity’s assets.
10
(d) Seller
expressly authorizes FGI to access the systems of and/or communicate with any
shipping or trucking company in order to obtain or verify tracking, shipment
or
delivery status of any Goods regarding a Purchased Account.
(e) Seller’s
principal(s) acknowledge that the duty to accurately complete each Schedule
of
Accounts is critical to this Agreement and as such all obligations with respect
thereto are non-delegable. Each of Seller’s principal(s) acknowledge that he/she
shall remain fully responsible for the accuracy of each Schedule of Accounts
delivered to FGI regardless of who is delegated the responsibility to prepare
and/or complete such Schedule of Accounts.
(f) Seller
shall indemnify FGI from any loss arising out of the assertion of any Avoidance
Claim. Seller shall notify FGI within two (2) business days of it becoming
aware
of the assertion of an Avoidance Claim.
(g) Seller
agrees to execute any and all forms (i.e. Forms 8821 and/or 2848) that FGI
may
require in order to enable FGI to obtain and receive tax information issued
by
the Department of the Treasury, Internal Revenue Service, or receive refund
checks.
(h) Seller
will cooperate with FGI in obtaining a control agreement in form and substance
satisfactory to FGI with respect to Collateral consisting of: Deposit Accounts;
Investment Property; Letter-of-credit rights; and Electronic chattel
paper.
Section
21. Waiver of
Jury Trial, Punitive and Consequential Damages, Etc. Seller and FGI hereby
(a)
irrevocably waive any right either may have to a trial by jury in respect of
any
litigation directly or indirectly at any time arising out of, under or in
connection with this Agreement or any transaction contemplated hereby or
associated herewith; (b) Seller irrevocably waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any such
litigation any special, exemplary, punitive or consequential damages, or damages
other than, or in addition to, actual damages and Seller hereby releases and
exculpates FGI, its officers, employees and designees, from any liability
arising from any acts under this Agreement or in furtherance thereof whether
of
omission or commission, and whether based upon any error of judgment or mistake
of law or fact, except for willful misconduct ; (c) and Seller certifies that
no
party hereto nor any representative or agent or counsel for any party hereto
has
represented, expressly or otherwise, or implied that such party would not,
in
the event of litigation, seek to enforce the foregoing waivers; and (d) Seller
acknowledges that FGI has been induced to enter into this Agreement and the
transactions contemplated hereby, in part, as a result of the mutual waivers
and
certifications contained in this Section.
11
In
Witness Whereof, the parties have set their hands and seals on the day and
year
first hereinabove written.
_______________________ FAUNUS
GROUP INTERNATIONAL, INC.
Witness
By:__________________________________
Name:
Xxxxx X. XxXxxxx
Title:
President
_______________________ CODA
OCTOPUS GROUP, INC.
Witness
By:__________________________________
Name:_______________________________
Title:_________________________________
STATE
OF
___________)
COUNTY
OF
_________)
I
HEREBY
CERTIFY that on this day personally appeared before me, officers duly authorized
to administer oaths and take acknowledgements, ________________________, as
______________ of __________________________, a ____________ Corporation (
) who
has produced the following identification: _____________ or ( ) who is
personally known to me, and who acknowledged before me that he executed the
same
for the purposes therein expressed, as the act and deed of said
corporation.
WITNESS
my hand and official seal in the County and State last aforesaid on this ______
day of ______________, 200_.
_________________________________
Notary
Public, State of ____________
My
Commission Expires:
12
SCHEDULE
“A”
Definitions
“Account(s)”
includes a
right
to payment of a monetary obligation, whether or not earned by performance,
(i)
for property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of or (ii) for services rendered or to be rendered.
“Account
Debtor” or “Customer”
means
any Person who is obligated on an Account, Chattel Paper or General
Intangible.
“Advance”
means
amounts advanced by FGI to the Seller under this Agreement.
“Agreement”
means
this Agreement, including the Ex-hibits and any Schedules hereto, and all
amendments, modifications and supple-ments hereto and thereto and restatements
hereof and thereof.
“Application”
means
each application
made by Seller in connection with this Agreement.
“Avoidance
Claim”
means
any claim that any payment received by FGI from or for the account of an Account
Debtor is avoidable under the Bankruptcy Code or any other debtor relief
statute.
“Chattel
Paper”
means
a
record or records that evidence both a monetary obligation and a security
interest in specific goods, a security interest in specific goods and software
used in the goods, a security interest in specific goods and license of software
used in the goods, a lease of specific goods, or a lease of specific goods
and
license of software used in the goods.
“Collateral”
means
and includes all of the Sellers’ right, title and interest in and to each of the
following, wherever located and whether now or hereafter existing or now owned
or here-after acquired or arising: (a) all Accounts, (b) Chattel Paper, (c)
Commercial Tort Claims, (d) Deposit Accounts, (e) Documents, (f) Equipment,
(g)
General Intangibles, (h) Goods (including but not limited to all files,
correspondence, computer programs, tapes, disks and related data processing
software which contain informa-tion identifying or pertaining to any of the
Collateral or any Account Debtor or showing the amounts thereof or payments
thereon or otherwise necessary or helpful in the realization thereon or the
collection thereof, (i) Inventory, (j) Investments, (k) Investment Property,
(l)
Letters of Credit and Letter of Credit rights and (m) all Supporting
Obligations.
“Commercial
Tort Claim”
means
a
claim arising in tort with respect to which: (A) The claimant is an
organization; or (B) The claimant is an individual and the claim: (i) arose
in
the course of the claimant’s business or profession; and (ii) does not include
damages arising out of personal injury to or the death of an
individual.
“Credit
Approval(s) and Credit Approved”
means,
with regard to a Purchase Account, that FGI has accepted the risk of nonpayment
as specified under the terms and conditions of this Agreement and with regard
to
the specific Purchased Accounts for which written credit approval has been
given. If
a
customer, after receiving and accepting the delivery of Goods or services
(subject to all warranties herein) for which FGI has given written Credit
Approval, fails to pay a Purchased Account when due, and such nonpayment is
due
solely to financial inability to pay, FGI shall bear any loss thereon, subject
to the terms and provisions stated herein. If nonpayment is due to any reason
besides financial inability to pay, however, FGI shall not be responsible.
Specifically, FGI shall not be responsible for any nonpayment of a Credit
Approved Purchased Account: (a) because of the assertion of any claim or dispute
by a customer for any reason whatsoever, including, without limitation, dispute
as to price, terms of sales, delivery, quantity, quality, or other, or the
exercise of any counterclaim or offset (whether or not such claim, counterclaim
or offset relates to the specific Purchased Account); (b) where nonpayment
is a
consequence of enemy attack, civil commotion, strikes, lockouts, the act or
restraint of public authorities, acts of God or force majeure; or (c) if any
representation or warranty made by Seller to FGI in respect of such Purchased
Account has been breached whether intentionally or unintentionally. The
assertion of a dispute by a customer shall have the effect of negating any
Credit Approval on the affected Purchased Account(s) and such Purchased
Account(s) shall be at Full Recourse until paid or otherwise cleared from FGI’s
books.
13
“Date
of Collection”
means
the date a check, draft or other item representing payment on an invoice is
received by FGI plus seven (7) business days.
“Default”
means
any of the events specified in Section 10 of this Agreement that, with the
passage of time or giving of notice or both, would con-stitute an Event of
Default.
“Deposit
Account”
means
any demand, time, savings, passbook or like account maintained with a bank,
savings and loan association, credit union or like organization, other than
an
account evidenced by a certificate of deposit that is an instrument under the
UCC.
“Dispute
or Disputed Account”
means
any
claim, whether or not provable, bona fide, or with or without support, made
by
an Account Debtor as a basis for refusing to pay a Purchased Account, either
in
whole or in part, including, but not limited to, any contract dispute, charge
back, credit, right to return Goods, or other matter which diminishes or may
diminish the dollar amount or timely collection of such Account.
“Documents”
means
a
document of title or a receipt of the type described in UCC
7-201(2).
“Equipment”
means
Goods other than Inventory.
“Event
of Default”
means
any of the events specified in Section 10 of this Agreement.
“Financial
Inability to Pay”
means
an Account Debtor’s insolvency such that the value of its assets are exceeded by
its fixed, liquidated and non-contingent liabilities.
“Financing
Statement”
means
each Uniform Commercial Code financing statement naming FGI as purchaser/secured
party and the Seller as Seller/debtor, in connection with this
Agreement.
“Full
Recourse”
means
those Purchased Accounts for which FGI has not given Credit Approval, for which
Credit Approval has been withdrawn or revoked or with respect to which FGI
is
not responsible under section 2.
“GAAP”
means
generally accepted accounting principles con-sis-tently applied and maintained
throughout the period indicated and consistent with the prior financial practice
of the Person referred to.
“General
Intangible”
means
any personal property, including things in action, other than Accounts, Chattel
Paper, Commercial Tort Claims, Deposit Accounts, Documents, Goods, Inventory,
Investment Property, Letters of Credit rights, Letters of Credit and Money.
Payment Intangibles and software, however, are included.
“Goods”
means
all things that are movable when a security interest attaches. The term does
not
include Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts,
Documents, General Intangibles, Instruments, Investment Property, Letter of
Credit Rights, Letters of Credit or Money.
“Instrument”
means
a
negotiable instrument or any other writing that evidences a right to the payment
of a monetary obligation, is not itself a security agreement or lease, and
is of
a type that in ordinary course of business is transferred by delivery with
any
necessary endorsement or assignment. The term does not include (i) Investment
Property, (ii) Letters of Credit, or (iii) writings that evidence a right to
payment arising out of the use of a credit or charge card or information
contained on or for us with the card.
“Inventory”
means
Goods which are leased by Seller as lessor, are held by Seller for sale or
lease
or to be furnished under a contract of service or raw materials, work in
process, or materials used or consumed in Seller’s business.
“Investment
Property”
means
a
security, whether certificated or uncertificated, security entitlement,
securities account, commodity contract, or commodity account.
14
“Letter
of Credit Right”
a
right
to payment or performance under a Letter of Credit, whether or not the
beneficiary has demanded or is at the time entitled to demand payment or
performance. The term does not include the right of a beneficiary to demand
payment or performance under a Letter of Credit.
“Lien”
means,
as applied to the property of any Person, the filing of, or any agreement to
give, any xxxxx-xxxx statement under the UCC or its equivalent in any
jurisdiction.
"Misdirected
Payment Fee"
means
fifteen percent (15%) of the amount of any payment on account of a Purchased
Account which has been received by Seller and not delivered in kind to FGI
on
the next business day following the date of receipt by Seller.
“Net
Invoice Amount”
means
the
invoice amount of the Purchased Account, less returns (whenever made), all
selling discounts (at FGI’s option, calculated on shortest terms), and credit or
deductions of any kind allowed or granted to or taken by the customer at any
time.
“Obligations”
means
all present and future obligations owing by Seller to FGI whether or not for
the
payment of money, whether or not evidenced by any note or other instrument,
whether direct or indirect, absolute or contingent, due or to become due, joint
or several, primary or secondary, liquidated or unliquidated, secured or
unsecured, original or renewed or extended, whether arising before, during
or
after the commencement of any Bankruptcy Case in which Seller is a Debtor,
including but not limited to any obligations arising pursuant to letters of
credit or acceptance transactions or any other financial accommodations.
“Original
Term”
means
the term of this Agreement as reflected in section 13 and “Term”
means
the Original Term and any extensions thereof.
“Person”
means
an individual, corporation, partnership, assoc-iation, trust or unincorporated
organization or a government or any agency or political subdivision
thereof.
“Purchase
Price”
means
the price that FGI pays Seller for each Purchased Account which price shall
equal the Net Invoice Amount less FGI’s service commission.
“Purchased
Account(s)”
means
an
Account which is deemed acceptable for purchase as determined by FGI in the
exercise of its reasonable sole credit or business judgment and for which FGI
has made payment of the sum specified in Section 2 below constituting FGI’s
acceptance of an Account.
“Reserve
Account”
means
a
bookkeeping account on the books of the FGI representing an unpaid portion
of
the Purchase Price, maintained by FGI to ensure Seller's performance with the
provisions hereof.
“Reserve
Percentage”
means
twenty five percent (20%) of the face amount of the Purchased Accounts and
as
such percent may change in accordance herewith.
“Reserve
Shortfall”
means
the amount by which the Reserve Account is less than the Required Reserve
Amount.
“Required
Reserve Amount”
means
the Reserve Percentage multiplied by the unpaid balance of all Purchased
Accounts.
“Schedule
of Accounts”
-
a
form supplied by FGI from time to time wherein Seller lists those Accounts
it
requests FGI purchase under the terms of this Agreement.
“Security
Interest”
means
the Liens of FGI on and in the Collateral affected hereby or pursuant to the
terms hereof or thereof.
“Supporting
Obligation”
means
a
Letter of Credit Right or secondary obligation that supports the payment or
performance of an Account, Chattel paper, a Document, a General Intangible,
an
Instrument, or Investment Property.
15
“Termination
Fee”
means
a
fee payable to FGI in the event Seller terminates this Agreement prior to
maturity of the Original Term or Term of this Agreement.
“UCC”
means
the Uniform Commercial Code as in effect from time to time in the State of
New
York.
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