[LETTERHEAD OF THE CIT GROUP]
[ARTWORK] November 11, 1997
XXXXXXXX, XXXXXX, XXXXXX & XxXXXXXX, INC.
000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
ACCOUNTS RECEIVABLE PURCHASE AGREEMENT
Ladies and Gentlemen:
We are pleased to confirm the terms and conditions that are to govern our
accounts receivable purchase arrangement with you.
1. You hereby sell, transfer and assign to us, and we agree to purchase as
absolute owner, all of the accounts receivable created by or arising from your
sales of goods or rendition of services which are listed on the Schedule
attached hereto consisting of 2 pages (herein "Accounts"). All Accounts shall
become our property effective this date.
2. We have given credit approval on all the Accounts, therefore, the entire
Credit Risk (customer's failure to pay an invoice in full when due at its
maturity because of its financial inability to pay) will be assumed by us on
each Account as to which the customer has actually received and finally accepted
delivery of the goods or services. Without our prior written consent, you will
not change the amount or terms of any Account, or grant any other indulgence
with respect thereto.
3. Your invoices do not bear a notice that the Accounts have been assigned
to us. You will give us: copies of all invoices relating to the Accounts;
confirmation of the assignment and transfer of Accounts to us; proof of shipment
or delivery; reports on collections, credits and deductions; and such other
information and/or reports relating to the Accounts and the proceeds thereof,
all as we may from time to time request (including without limitation the
information and reports set forth in paragraph 5 hereof). We are authorized to
regard your printed name or rubber stamp signature on confirmatory schedules of
assigned Accounts as the equivalent of a manual signature by one of your
authorized officers or agents.
4. You hereby represent and warrant that: each Account is based on an
actual and bona fide sale and delivery of goods or rendition of services in the
ordinary course of your business; the goods and inventory sold and the Accounts
created are your exclusive property and are not and shall not be subject to any
lien, consignment arrangement, encumbrance, security interest or financing
statement whatsoever, other than in our favor; your customers have accepted the
goods or services and owe and are obligated to
pay the full amounts stated in the invoices according to their terms, without
dispute, offset, deduction, defense or counterclaim; shipment has not been
deferred on goods which you have sold and invoiced to a customer (that is, the
goods are not "bill and hold"); none of the Accounts arise from sales to
consumers of goods to be used for personal, family or household purposes; all
Accounts are payable in United States Dollars; any taxes or fees relating to the
Accounts or goods are solely your responsibility; and none of the Accounts
represent sales to any subsidiary, parent or affiliated company of yours. If
there is a breach of any of these representations and warranties, we shall be
released from liability for the Credit Risk on all Accounts involved.
You also warrant and represent that you are a duly organized and validly
existing corporation and are qualified in all states where necessary. You agree
to maintain such books and records regarding the Accounts and collections
thereon as we may request, and you agree that they will reflect our interest in
the Accounts and the proceeds thereof. These books and records will be available
to us during reasonable business hours, and you agree to furnish us with such
other information regarding your business affairs and financial condition, all
as we may reasonably request from time to time. You further agree promptly to
notify us of any change in your name, place(s) of business or corporate
structure.
You agree to comply with all appropriate laws in order to perfect our
interest in the Accounts, and to execute any financing or additional documents
as we may request in order to effectuate the foregoing and to carry out this
Agreement.
5. We shall purchase the Accounts for the gross amount of the respective
invoices, less factoring fees or commissions (the "Purchase Price of Accounts").
Our purchase of the Accounts shall be reflected on the Statements of Account
which we shall render to you. We will pay to you, upon execution and delivery of
this Agreement and accompanying documents, a sum equal to eighty per cent (80%)
of the Purchase Price of some Accounts*. However, all amounts owing to us by
you, including, without limitation, any advances which may be made to you
prior to collection and any debit balance in your account with us, shall be
payable to us on demand, but, in any event shall automatically be due and
payable ninety (90) days from the date of this Agreement.
For our services hereunder, we shall be entitled to a factoring fee or
commission of two per cent (2%) on the gross face amount of all Accounts but, in
no event, shall such factoring fee or commission be less than $37,500. The
factoring fee or commission shall be due and charged to your account hereunder
upon our purchase of the underlying Account.
At our request, but not more than twice a month, you agree to furnish us
with a report of collections of the Accounts, the initial report to cover the
period commencing as of this date and ending with collections through the Friday
of the week ending immediately prior to the date of the report, and subsequent
reports to commence as of the ending date of the previous report through the
Friday of the week ending immediately prior to the date of the report. Within
ten (10) business days after the end of each month hereafter, you will furnish
to us an aged accounts receivable trial balance relating to the Accounts, as of
the close of the immediately preceding month, which will include the names and
addresses of all of the customers pertaining to the Accounts.
Within fifteen (15) days after the close of each month, we shall render to
you a statement of your account with us showing the accountings for our charges
and other transactions between us during that month. Should such statement
indicate any debit balance in your account, the amount thereof shall be
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*30% of others and 0% on the balance as agreed.
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due and payable by you to us promptly upon your receipt of such statement. Our
monthly statement of your account with us shall be deemed correct and binding
upon you and shall constitute an account stated between us, unless we receive a
written statement of your exceptions within thirty (30) days after same is
mailed to you.
6. You will, in your name for our benefit and on our behalf (but at your
expense), enforce, collect and receive all amounts owing on the Accounts. The
aforesaid privileges shall terminate automatically upon the institution by or
against you of any proceeding under any bankruptcy or insolvency law, code or
act, or upon the breach by you of any provision of this agreement. Any
out-of-pocket collection, legal or litigation expenses incurred or to be
incurred by you with respect to Accounts at our Credit Risk may be incurred for
our account only if you obtain our prior written consent and approval.
Any and all checks, cash, notes or other instruments or property received
by you with respect to Accounts shall be held by you in trust for us, separate
from your own property and funds, and turned over to us, no less than once a
week, with proper assignments or endorsements. At our option, this shall be
accomplished either by your depositing same in our bank account(s) at such bank
or banks as we may from time to time designate to you, or by your instructing
all of your customers to remit funds to lock box(es), which lock box(es) shall
be maintained at such bank or banks as are acceptable to us, and which shall be
under our exclusive control. You shall provide us with copies of the deposit
slips for each day's deposits on the next following business day, and on the
first business day of each week, you shall provide us with a report of all
collections for the preceding week, showing the gross amount of such Accounts
and the net amount collected thereon. All amounts received by us in payment of
Accounts will be credited to your account immediately upon our receipt thereof,
however, we shall debit your account monthly with the cost of five (5)
additional business days on all such amounts. No checks, drafts or other
instruments received by us shall constitute final payment to us unless and until
such instruments have actually cleared and been collected. The aforesaid
privilege of collection shall terminate automatically upon the institution by or
against you of any proceeding under any bankruptcy or insolvency law, act or
code, or upon the breach by you of any provision of this Agreement, or on the
termination of this Agreement. If and when no debit balance exists in your
factoring account with us, all Obligations have been paid in full and no
further Obligations can arise, you may retain the amounts received in payment of
Accounts unless such amounts pertain to Accounts which have been matured to us
pursuant to Paragraph 9, below.
We may, at any time, in our discretion, notify any customer that has past
due Accounts owing on which we bear any of the Credit Risk, of our interest in
the Accounts owing by such customer, instruct such customer to make all payments
thereafter directly to us on all Accounts (whether we bear the Credit Risk or
not), and otherwise deal with such customer directly in your name or our name in
all respects.
We shall have the right at any time to request verification of balances
owing on any and all Accounts owing from a customer, using your name or ours,
with the responses directed to an address under our exclusive control.
7. If monies are owing to you from a customer for both Accounts (on which
we bear the Credit Risk) and other accounts receivable (on which we do not bear
the Credit Risk), you agree that any payments or recoveries received in respect
of any such Accounts or accounts receivable may be applied first to the Accounts
(on which we bear the Credit Risk), regardless of any notation or instructions
to the contrary on or accompanying payment items or the due dates of such
Accounts or accounts receivable, and whether such payments were made in the
ordinary course or otherwise.
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8. You agree to notify us promptly of any matters affecting the value,
enforceability of collectibility of any Account and of all customer disputes,
offsets, deductions, defenses, counterclaims, returns and rejections. You agree
to issue credit memoranda promptly (with duplicates to us) upon accepting
returns or granting allowances. We shall cooperate and assist you in the
adjustment of any such customer disputes, but we may at any time charge your
account with the amount of (and such charge shall constitute a repurchase of
such items by you from us): (a) each Account with respect to which any alleged
customer dispute, offset, deduction, defense, or counterclaim is asserted or
which is not paid in full at maturity for any reason other than Credit Risk
(including, but not limited to, non-payment due to acts of God, civil strife,
war and the like); (b) any Account as to which there is any breach of any
warranty; and (c) any Account on which you have not made a collection effort
satisfactory to us. You may tender to us Accounts which are satisfactory to us,
in substitution of charged back Accounts. If no such satisfactory Accounts are
tendered you will pay us, on demand, the portion of the purchase price which
pertains to such charged back Accounts. Furthermore, we shall be released from
liability for all Credit Risks if you do not: (x) pay any commissions, interest
or other amounts owing to us pursuant to this Agreement within fifteen (15) days
of the due date thereof; or (y) provide us with any aged trial balance or
collection report within fifteen (15) days of the date on which it is to be
delivered to us pursuant to paragraph 5 above.
9. You agree to submit to us your written request for adjustment of past
due receivables asking us to mature invoices at our Credit Risk no later than
ninety (90) days after the longest maturity date of the invoice. The amount of
Net Sales for any Account at our Credit Risk and as to which you have duly given
us such a written request and which remains unpaid at its maturity (based on its
longest optional terms) solely due to Credit Risk, will be deemed collected and
will be credited to your account with us as of the earlier of the following
dates:
(a) as of the date of the Account's longest maturity, if
such customer makes an assignment for the benefit of its creditors, or
calls a formal meeting of its creditors; or if any proceeding or
petition is instituted or filed by or against such customer for
relief under any federal or state bankruptcy or insolvency law, act
or code; or if a receiver or trustee is appointed for all of the
assets of the customer; or
(b) as of the last day of the third month following its
longest maturity date, if such Account remains unpaid as of said date
without the happening of any of the events specified in (a)
hereinabove.
As to all such Accounts which you are maturing, you shall furnish us with an
assignment in form acceptable to us, true copies of the invoices, the original
proofs of delivery, a written report of the efforts made by you to effect
collection thereof and confirmation of your prior notification to us of a
collectibility problem, pursuant to paragraph 8 hereof. Should it subsequently
be determined that any such Account remained unpaid due to any reason other than
Credit Risk, we shall have the right to reverse said credit and to charge your
account accordingly.
10. We shall have the right to bring suit, in your name or ours, and
generally shall have all other rights respecting Accounts which are past due,
including without limitation the right to: accelerate or extend the time of
payment, settle, compromise, release in whole or in part any amounts owing on
any Accounts and issue credits in your name or ours. We may endorse or sign
your name or ours on any checks or other instruments with respect to Accounts or
the goods covered thereby. Any and all returned, reclaimed or repossessed
inventory and goods relating to Accounts shall be set aside by you, marked with
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our name and held by you in trust for us as owner, and for our account. Further,
you shall promptly notify us of the receipt of all such inventory and goods and,
at our direction, deliver the same to us or sell the same for our account and
remit the full proceeds to us.
You agree to make your records, files and books of account available to us
on request, and to allow us to visit your premises during normal business hours
to examine such records, files and books of account and to make copies or
extracts thereof, and to allow us to conduct such examinations as we deem
reasonably necessary. We shall be entitled to charge your account the sum of
$750 per day for each examiner involved in such examination.
11. Interest on any debit balance in your account with us (including the
advance of the purchase price as set forth above) shall be calculated at the
rate of ten percent (10%) per annum, based on the eight and one-half percent
(8.5%) per annum "Chase Rate" as of November 1, 1997. The Chase Rate is the rate
of interest publicly announced by The Chase Manhattan Bank in New York, New York
from time to time as its Prime Rate. (The Prime Rate is not intended to be the
lowest rate of interest charged by The Chase Manhattan Bank to its borrowers.)
In the event of any change in the aforesaid Chase Rate, the rate of interest
hereunder shall change 1/4 of 1% for each 1/4 of 1% change in the Chase
Rate, as of the first of the month following any such change. Interest shall be
calculated based on a 360 day year.
12. We have mutually agreed to charge you a reasonable facility
initialization and documentation fee (legal) of not more that $7,500 for the
initial setup and implementation of your account with us. This facility
initialization fee shall be in addition to any other fees or commissions under
this Agreement, and shall be charged to your account as of the date hereof.
13. In addition to the sale of Accounts hereunder, and without the
necessity of any further formality, writing or evidence, you hereby transfer and
assign to us and grant us a security interest in all of your right, title and
interest in and to all of your now existing and future: (a) accounts receivable
(whether or not the same constitute Accounts purchased by us hereunder),
together with related instruments, documents, chattel paper, general
intangibles, and any and all other forms of obligations, related to the accounts
receivable, owing to you; (b) unpaid seller's rights relating to any of the
foregoing or arising therefrom; (c) rights to any goods represented by any of
the foregoing; (d) reserves and credit balances arising hereunder; (e)
guarantees for any of the foregoing (including, without limitation, rights under
any letters of credit or other credit enhancements in your favor); (f) rights
relating to any of the foregoing; (g) cash and non-cash proceeds of any and all
of the foregoing; and (i) Books and Records (as defined above in paragraph 10)
evidencing or pertaining to any of the foregoing. (It is understood that we
shall have no obligation to perform in any respect, any contracts relating to
any Accounts.)
You shall comply with the requirements of all applicable laws to perfect our
security interest in collateral granted to us hereunder, and execute such
financing statements and other documents as we may require to effectuate the
foregoing and implement this Agreement. To the extent permitted by applicable
law, you hereby authorize us to sign your name on your behalf on financing
statements covering the collateral and to file financing statements without your
signature in order to perfect or maintain our security interest in the
collateral. The security interest granted herein will terminate if and when no
debit balance exists in your factoring account with us, all Obligations have
been paid in full and no further Obligations can arise.
14. The security interest granted hereunder, and any lien or security
interest that we may have in any of your other assets or property, shall secure
the payment and performance of all of your now existing and future indebtedness
and obligations to us, whether absolute or contingent, and whether arising
hereunder or
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under any other agreement or arrangement between us, or by operation of law or
otherwise, including, without limitation, indebtedness for goods and services
purchased by you from any party whose accounts receivable are factored or
financed by us, and indebtedness arising under any guaranty, credit enhancement
or other credit support executed by you in our favor (herein "Obligations"). Any
reserves or balances to your credit and any other property or assets of yours in
our possession shall constitute security for any and all Obligations. We may, in
our discretion, debit your account at any time with the amount of any and all
Obligations.
15. An "Event of Default" shall be deemed to have occurred under this
Agreement upon: (a) the cessation of your business or the calling of a meeting
of your creditors; (b) your failure to meet your debts as they mature; (c) the
commencement by or against you of any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceedings under any federal or state
law; (d) breach by you of any representation, warranty or covenant contained
herein; or (e) your failure to pay any Obligation when due.
Upon and after the occurrence of an Event of Default, this Agreement may be
terminated by us immediately at any time, without notice to you, and all
Obligations shall, at our option and without notice or demand of any kind (all
of which you hereby expressly waive), become due and payable immediately.
Further, we may remove, from any premises where the same may be located, any and
all documents, instruments, Books and Records (and any receptacles or cabinets
containing the same) pertaining to the Accounts or other collateral hereunder
and/or we may use (at your expense) such of your personnel, supplies and space
at your place of business or elsewhere, as may be necessary to properly
administer and enforce our rights in the Accounts and any other collateral
hereunder, and to facilitate the collection thereof and realization thereon. We
may sell, assign or otherwise dispose of any returned, reclaimed or repossessed
inventory, goods or other property relating thereto, whether held by you or by
us, at public or private sale, for cash, on credit or otherwise, at such price
and on such terms as we in our sole option and discretion may determine, and we
may bid or become purchasers at any such sale, or acquire an interest in or
dispose of said property. You hereby acknowledge that you have no right to
notice, or to an accounting or right of redemption with respect to any such sale
or other disposition of the aforesaid Accounts or aforesaid goods. With respect
to any other property or collateral in which we have a security interest, we
shall have all of the rights and remedies of a secured party under Article 9 of
the Uniform Commercial Code. If notice of intended disposition of any of said
property or collateral is required by law, it is agreed that five (5) days
notice shall constitute reasonable notice. The net cash proceeds resulting from
the exercise of any of the foregoing rights, after deducting all charges, costs
and expenses (including reasonable attorneys' fees) shall be applied by us to
the payment or satisfaction of the Obligations, whether due or to become due, in
such order as we may elect, and you shall remain liable to us for any
deficiencies.
16. This constitutes the entire agreement between us; supersedes any prior
oral or written agreements or understandings; can be changed only by a writing
signed by both of us; and shall bind and benefit each of us and our respective
successors and assigns. Our failure or delay to exercise any right hereunder
shall not constitute a waiver thereof, nor bar us from exercising any of our
rights at any time; nor shall any course of dealing between us change or modify
this Agreement. The validity, interpretation and enforcement of this Agreement
shall be governed by the laws of the State of New York.
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17. We each hereby waive any right to a trial by jury in any action or
proceeding arising out of this arrangement, or any other agreement or
transactions between us.
If the foregoing is in accordance with your understanding, please so
indicate by signing and returning to us the original and one copy of this
Agreement. This Agreement shall take effect as of the date set forth above,
after being accepted below by one of our officers in New York, N.Y., after
which, we shall forward your copy to you with signatures completed for your
files.
Very truly yours,
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Vice President
Read and Agreed to:
GIRGENTI, XXXXXX,
XXXXXX & XxXXXXXX, INC.
By /s/ Xxxxxx Xxxxxxx
-----------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President of Finance
Accepted at New York, N.Y.
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President
