ACCOUNT RECEIVABLE FINANCE AGREEMENT
This ACCOUNT RECEIVABLE FINANCE AGREEMENT (the "AGREEMENT"), is made as
of February 5, 2004, between Windswept Environmental Group, Inc., a Delaware
corporation ("WINDSWEPT"), Trade Winds Environmental Restoration, Inc., a
Delaware corporation ("TRADE WINDS"; and together with Windswept hereinafter
referred to as the "SELLER") each with its principal place of business at 000
Xxxxxxxxxx Xxxxxx, Xxx Xxxxx, Xxx Xxxx 00000 and Spotless Plastics (USA) Inc., a
Delaware corporation, with its principal place of business at 000 Xxxxx Xxxxxxx,
Xxxxx 000, Xxxxxxxxx, Xxx Xxxx 00000 (the "PURCHASER").
WHEREAS, the Seller wishes to sell to Purchaser certain of its account
receivable, and the Purchaser desires to purchase from Seller the same, on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
premises, covenants, representations and warranties herein contained, the
parties hereby agree as follows:
1. Purchase and Sale of the Account Receivable.
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1.1 Sale of the Account Receivable. (a) In reliance on the
representations and warranties contained herein and subject to the terms and
conditions hereof, the Seller hereby from time to time during the term of this
Agreement (the "TERM") will offer to sell to the Purchaser, all of Seller's
right, title and interest in and Accounts, invoices, book debts, notes, drafts,
acceptances, contracts, choses in action and other rights to payment arising in
the ordinary course of Seller's business (each individually an "ACCOUNT" and
collectively, "ACCOUNTS"), and Purchaser will purchase those accounts offered by
Seller that Purchaser deems acceptable in its sole discretion subject to the
conditions and on the terms set forth herein.
(b) Seller shall offer Accounts for sale to Purchaser by listing such
Accounts on a schedule in a form approved by Purchaser (each such schedule a
"SCHEDULE OF ACCOUNTS") and delivering such Schedule of Accounts to Purchaser
along with all invoices, evidences of indebtedness, shipping documents and/or
other supporting documents relating to each Account listed on such Schedule of
Accounts. Each Schedule of Accounts delivered by Seller to Purchaser hereunder
shall contain one or more Accounts having a total minimum face value of not less
than $10,000.
1.2 Purchase Price and Payment. (a) Upon receiving a Schedule of
Accounts, Purchaser shall determine in its sole discretion which, if any, of the
Accounts listed on such Schedule of Accounts are acceptable to Purchaser for
purchase. Purchaser will pay to Seller at the time of purchase of acceptable
Accounts (to the extent such funds are not otherwise applied by Purchaser, with
Seller's consent, to the Obligations (as defined below)) an amount equal to 85%
of the face value thereof, as adjusted by Purchaser in its sole discretion (each
such payment, an "ADVANCE" and, collectively, the "ADVANCES"). Upon payment by
Purchaser of an Advance (or application of Advance amount to the Obligations)
with respect to an Account, all the Seller's right, title and interest in, to
and under said Account, including without limitation the right of stoppage in
transit, and all security and guaranties relating thereto and all goods
represented
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thereby (including returned, repossessed, rejected or unshipped goods), shall
automatically and immediately be vested in Purchaser.
1.3 No Assumption of Liabilities. The Purchaser shall not assume or
have any liability for any liabilities or obligations of the Seller relating to
the Accounts or otherwise, and the Seller shall pay, perform and discharge all
its liabilities and obligations relating to the Accounts or otherwise which are
not so assumed by the Purchaser.
1.4 Obligations. As used herein, the term "OBLIGATIONS" means any and
all present and future payment, reimbursement and other performance obligations
of Seller (or its affiliates) to Purchaser (or its affiliates), whether arising
under this Agreement, any Related Agreement or otherwise, however evidenced
(including without limitation, direct, indirect, contingent, primary, secondary,
joint, several and joint and several liabilities), whether matured or unmatured,
including without limitation (i) Seller's obligations hereunder, all obligations
to pay discounts, together with accrued discounts and all fees, charges and
expenses in connection therewith, (ii) the payment of all amounts (including,
without limitation, discount, interest, fees, costs and other charges) that may
accrue hereunder or under any Related Agreement after the imposition of the
automatic stay under Section 362 of the U.S. Bankruptcy Code, as amended (Title
II U.S.C. ss.101 et seq. as it may be modified, supplemented, amended or
replaced from time to time, or any similar or successor law, the "Bankruptcy
Code"), (iii) any and all sums advanced by Purchaser to obtain, create,
preserve, protect, perfect, defend and enforce the obligations described above
or the security interest granted hereby or otherwise granted by Seller or any
other person to Purchaser, to collect any of such obligations or any collateral
therefor, or as a result of any breach or misrepresentation hereunder or under
any other agreement or arrangement at any time with or for the benefit of
Purchaser or otherwise (including without limitation the expenses or retaking,
holding preparing for sale, selling or otherwise disposing of or realizing on
any Collateral), (iv) whether or not suit is brought, and whether or not such
amount is expended before or after the imposition of the automatic stay under
Section 362 of the Bankruptcy Code, any and all costs (including without
limitation court costs), expense advances and attorney's fees (including without
limitation internally allocated costs of in-house counsel) that may be made or
incurred by Purchaser in the collection of the foregoing or enforcement of any
of the foregoing or the exercise by Purchaser of any of its rights hereunder or
under any Related Agreement or otherwise or in and to any Collateral or any
other rights of Purchaser against Seller or any other person, (v) any and all
amounts that Purchaser may at any time be required to disgorge or pay as a
result of any payment made (or obligation incurred) by or for the benefit of
Seller or any other person to (or for the benefit of) Purchaser being avoided or
set aside (A) as a preference under Sections 547 or 550 of the Bankruptcy Code,
(B) as a fraudulent conveyance under Section 548 of the Bankruptcy Code, or (C)
under any state laws governing insolvency or creditors' rights, (vi) Seller's
indemnification obligations related hereto howsoever arising (vii) all
extensions, renewals, replacements, refundings or modifications of any of the
foregoing, and (viii) any awards of damages, judgments or settlement obligations
relating to any of the foregoing.
2. Obligations of the Seller.
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2.1 Collection and Remittance of Accounts. (a) At no cost to the
Purchaser, the Seller, at its own cost and expense, shall make all reasonable
efforts to collect and enforce the
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obligations due under the Accounts, including but not limited to the diligent
prosecution of the litigation against the Account debtor (the "CUSTOMER").
Furthermore, the Seller shall remit to the Purchaser promptly, but in no event
later than two (2) business days after receipt thereof, all amounts received by
the Seller in satisfaction of or with respect to the Accounts.
(b) (i) Upon payment in full to Purchaser of all amounts due on all
Accounts listed on a Schedule of Accounts, Purchaser shall promptly, subject to
a period of at least five (5) business days for clearance of payments, normal
business administration of payments received and the other terms and conditions
hereof, apply to the Obligations an amount equal to the amounts actually
received with respect to such Accounts (the "COLLECTIONS") less (A) Advances
made with respect to such Accounts, (B) discounts earned with respect to such
Accounts (calculated as set forth below) and (C) any other amounts that may be
retained by Purchaser hereunder, under any Related Agreement (as hereinafter
defined) or otherwise. As used herein the term "Related Agreement" means any
agreement, instrument, guaranty or other document at any time whether currently
or in the future, entered into by Seller and (or for the benefit of) Purchaser.
(ii) Discounts to be charged on a monthly basis with respect to each
purchase of an Account shall be charged on the face value of the Account
purchased (as such value may be adjusted by Purchaser in its sole discretion),
not on the amount of cash paid, and will be calculated based on the number of
days from and including the day on which such Advance is made to and including
the fifth business day following receipt of payment on the Account, as follows:
1 - 30 days................................ 1.0% Discount
31 - 60 days............................... 1.5% Discount
61 - 90 days............................... 2.0% Discount
over 90 days............................... 3.0% Discount
(c) The parties contemplate a continuous course of sales of Accounts
by Seller to Purchaser and concurrent Advances by Purchaser to Seller during the
Term (as defined below).
2.2 Grant of Security Interest. In order to secure the prompt payment,
performance and observance in full of its obligations under this Agreement, the
Seller hereby sells, assigns, pledges, transfers, sets over and grants to the
Purchaser a continuing security interest in and lien on all of the Seller's
right, title and interest in, to and arising under, and all amounts payable with
respect to the Accounts (the "COLLATERAL").
3. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Purchaser as follows:
3.1 Corporate Status. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full corporate power and authority to carry on its business as now
conducted.
3.2 Authority for Agreement. The Seller has the power and authority to
execute and deliver this Agreement and to carry out its obligations hereunder.
The execution, delivery and
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performance by the Seller of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Seller and this Agreement constitutes the
valid and legally binding obligation of the Seller enforceable against the
Seller in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization and similar laws of
general application relating to or affecting the rights and remedies of
creditors.
3.3 No Conflicts. The execution, delivery and performance of this
Agreement and the consummation of all of the transactions contemplated hereby:
(i) do not and will not require the consent, waiver, approval, license,
designation or authorization of, or declaration with, any person or public
authority; (ii) do not and will not with or without the giving of notice or the
passage of time or both, violate or conflict with or result in a breach or
termination of any provision of, or constitute a default under, or accelerate or
permit the acceleration of the performance required by the terms of, or result
in the creation of any Lien upon the Account pursuant to, or otherwise give rise
to any liability or obligation under, any agreement, mortgage, deed of trust,
indenture, license, permit or any other agreement or instrument or any order,
judgment, decree, statute, regulation or any other restriction of any kind or
description to which the Seller is a party or by which the Seller or the Account
may be bound; and (iii) will not terminate or result in the termination of any
such agreement or instrument, or in any way affect or violate the terms and
conditions of, or result in he cancellation, modification, revocation or
suspension of, any rights included in the Account.
3.4. The Accounts.
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(a) The Seller is not a party to or bound by any oral or written
contracts, obligations, commitments or understandings relating to the Accounts.
(b) Each Account was generated in the ordinary course of business and
is the valid obligation of the Customer.
(c) The rights and interests of the Seller in the Accounts may be
assigned to the Purchaser without the consent of any other person and upon each
purchase the Purchaser will acquire all such rights and interests.
(d) The Seller owns all good and valid title to the Accounts, free and
clear of any security interests, liens, charges, pledges, causes of action or
other encumbrances ("LIENS") other than Liens in favor of the Purchaser or its
affiliates, and after the purchase of any Accounts pursuant hereto good and
valid title to the Accounts shall be owned by the Purchaser, free and clear of
any Liens.
(e) Seller's principal place of business, its financial books and
records relating to the Accounts and the other Collateral are, and for the past
four months have been, located at the address for receipt of notices set forth
below, and Seller shall not change any such location or locations or add
additional locations without giving at least 30 days prior written notice of
such change or addition to Purchaser;
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(f) Seller has not at any time used any other corporate, trade,
fictitious or other name, has not changed its identity or corporate structure,
is not the successor to any other corporation or any other person or entity, has
not been the surviving entity in any merger or other type of business
reorganization or acquired or owned any other business;
(g) Seller will not assign, sell, mortgage, lease, transfer, pledge,
grant a security interest in, encumber, allow any lien or encumbrance to be
created or recorded with respect to or otherwise dispose of or abandon any part
or all of the Accounts or the other Collateral without obtaining the prior
written consent of Purchaser;
(h) Seller, where appropriate, has made and will maintain proper
entries upon its books and records, disclosing the absolute sale to Purchaser of
Accounts purchased by Purchaser and the security interest of Purchaser in all
other Accounts and the other Collateral;
(i) each Customer named in each Account has the legal capacity to
contract and is indebted to Seller in the amount indicated in the books and
records of Seller and (with respect to Accounts submitted to Purchaser for
purchase) as set forth in the respective Schedule of Accounts relating to such
Account;
(j) Seller is not and will not be a party to any agreements or
arrangements with any Customer regarding guaranteed sales, consignments,
guaranteed returns, price protection, stock balancing or any other mechanism
that may lead to a claim by such Customer against amounts payable by such
Customer on its Accounts with Seller;
(k) all invoices, instruments, promissory notes, leases, chattel paper,
other evidences of indebtedness and all back up documentation relating to each
Account listed on a Schedule of Accounts have been or immediately upon receipt
thereof will be delivered to Purchaser, and such documents and all supporting
documents are and will be complete, current, valid and enforceable in accordance
with their terms, and all signatures and endorsements that appear thereon are
and will be genuine and all signatories and endorsers have and will have full
capacity to contract;
(l) Seller shall promptly and completely fulfill or cause to be
fulfilled all of its contractual or other obligations relating to payments to be
made on the Accounts or any other Collateral;
(m) Seller will make due and timely payment or deposit of all taxes,
assessments or contributions required by law which may be lawfully levied or
assessed with respect to it, the Collateral or other sales represented by the
Accounts and will execute and deliver to Purchaser, on demand, appropriate
certificates attesting to the timely payment or deposit of all such taxes,
assessments or contributions;
(n) All Accounts arise and will arise from lawful business activities
of the Seller, and Seller will engage in and use the collateral only for lawful
business purposes, with reasonable care and caution and Seller shall maintain
all Collateral at its own expense in first class order, repair or condition;
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(o) Seller shall at all times keep the Collateral insured against any
and all risks, and shall obtain and maintain such other insurance as may be
required by Purchaser from time to time, all in such amounts and with one or
more insurance carriers as Purchaser in its sole discretion may deem
satisfactory, and all proceeds of such policies shall be made payable solely to
Purchaser and shall be otherwise endorsed to Purchaser's satisfaction;
(p) If any of the Accounts arise out of contracts with or claims
(including tax refund claims) against the United States of America or any state
or any political subdivision thereof, or any department, agency or
instrumentality of any thereof, the monies due and to become due under such
contracts or claims are hereby assigned to Purchaser, and the Seller shall take
all actions Purchaser may deem necessary, appropriate or desirable so that such
monies shall be validly assigned to Purchaser under the Federal Assignment of
Claims Act or other laws or regulations relating to the assignment of claims
against and/or payments from such governmental entities; and
(q) Seller will permit Purchaser (and its agents and designees) to
visit and inspect any of the properties of Seller, to examine all Seller's books
of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss Seller's affairs, finances and accounts with and be
advised as to same by, Seller, its officers, employees and its financial
advisors (including, without limitation, its independent accountants) (and by
this provision the Seller authorizes such accountants to discuss with Purchaser
and its agent and designees the affairs, finances and accounts of Seller) all at
such times and intervals and to such extent as Purchaser may deem necessary or
appropriate in its sole discretion.
3.5. Litigation. Seller will list on any Schedule of Accounts any
pending or threatened actions, suits, proceedings, arbitrations or governmental
investigations pending or threatened against, by or affecting the Seller (or, to
the best of the Seller's knowledge, any basis therefor) in which, individually
or in the aggregate, an unfavorable determination could materially affect its
prospects, earnings or condition (financial or otherwise) or the Accounts or
result in any material liability on the part of the Purchaser or prevent or
impair the execution, delivery or performance of this Agreement or any of the
transactions or events contemplated hereby or could declare this Agreement
unlawful or cause the rescission of any of the transactions hereunder or require
Purchaser to divest itself of any part of the Accounts to be acquired pursuant
hereto.
3.6 Compliance. To the best knowledge of the Seller, the Seller has
complied and is in compliance in all material respects with all laws, rules,
regulations, ordinances, orders, decrees, writs, injunctions, or other
governmental restrictions applicable to the Accounts.
3.7. Brokers, Finders, etc. The Seller has not employed any finder,
broker, agent or other intermediary in connection with the negotiation or
consummation of this Agreement or any of the transactions contemplated hereby.
4. Representations and Warranties of Purchaser. The Purchaser
represents and warrants to the Seller as follows:
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4.1. Corporate Status. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full corporate power and authority to carry on its business as now
conducted.
4.2 Authority for Agreements. The Purchaser has the power and authority
to execute and deliver this Agreement and to carry out its obligations
hereunder. The execution, delivery and performance by the Purchaser of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Purchaser
and this Agreement constitutes the valid and legally binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws of general application relating to or affecting
the rights and remedies of creditors.
4.3. No Conflicts. The execution, delivery and performance of this
Agreement and the consummation of all of the transactions contemplated hereby by
the Purchaser: (i) do not and will not require the consent, waiver, approval,
license, designation or authorization of, or declaration with, any person or
public authority; and (ii) do not and will not with or without the giving, of
notice or the passage of time or both, violate or conflict with or result in a
breach or termination of any provision of, or constitute a default under, or
accelerate or permit the acceleration of the performance required by the terms
of, or result in the creation of any Lien upon any of the Accounts pursuant to,
or otherwise give rise to any liability or obligation under, any agreement,
mortgage, deed of trust, indenture, license, permit or any other agreement or
instrument or any order, judgment, decree, statute, regulation or any other
restriction of any kind or description to which the Purchaser is a party or by
which the Purchaser may be bound.
5. Covenants.
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5.1 Notice of Impairment. Each party hereto shall promptly advise the
other party hereto of any event (other than one generally known to the public)
that is likely to materially impair such party's ability to perform its
obligations under this Agreement.
5.2. Consents. This Agreement shall not constitute an agreement to
assign any interest in any instrument, contract, lease, permit or other
agreement or arrangement of the Seller or any claim, right or benefit arising
thereunder or resulting, therefrom, if an assignment without the consent of a
third party would constitute a breach or violation thereof or adversely affect
the rights of the Purchaser or the Seller thereunder. If a consent of a third
party which is required in order to assign any instrument, contract, lease,
permit or other agreement or arrangement or any claim, right or benefit arising
thereunder or resulting therefrom, which consent the Seller shall use its best
efforts to obtain prior to the Closing, is not obtained prior to the Closing, or
if an attempted assignment would be ineffective or would adversely affect the
ability of the Seller to convey its interest to the Purchaser, the Seller will
cooperate with the Purchaser to provide that the Purchaser shall receive the
Seller's interest in the benefits under any such instrument, contract, lease,
permit or other agreement or arrangement; and any transfer or assignment to the
Purchaser by the Seller of any interest under any such instrument, contract,
lease, permit or other agreement or arrangement that requires the consent of a
third party shall be made subject to such consent or approval being obtained.
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5.3. Expenses. The Purchaser and the Seller shall bear their own
respective expenses incurred in connection with this Agreement and in connection
with all obligations required to be performed by each of them under this
Agreement.
5.4. Sales Taxes. The Seller shall pay any state or local sales or use
taxes payable in connection with the sale of the Account pursuant to this
Agreement.
5.5. Further Assurances. Seller will execute and deliver to Purchaser
any and all instruments or documents, and do any and all things, including
without limitation, execution, delivery and/or filing of such financing
statements or assignments as Purchaser may deem necessary, appropriate or
desirable to obtain, create, perfect, preserve, protect, enforce or defend the
interests of Purchaser in the Accounts and the other Collateral, to carry into
effect the provisions of this Agreement or any Related Agreement and to
facilitate the collection of any Accounts or the disposition of any Collateral,
and in the event Client receives payment directly from any Customer on any
Account purchased by Purchaser, such payment shall be held by Customer in trust
for Purchaser and shall be immediately forwarded to Purchaser by recognized
overnight courier in the same form received with all appropriate endorsements.
6. Events of Default; Remedies; Termination.
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6.1 Events of Defaults. The occurrence of any one of more of the
following shall constitute an "EVENT OF DEFAULT" under this Agreement:
(a) The Seller fails to pay or perform any of its obligations under
this Agreement;
(b) Any representation, warranty or statement made by or on behalf of
the Seller in connection with this Agreement proves to have been inaccurate,
incomplete or misleading in any material respect when made or deemed to have
been made;
(c) The Seller fails to comply at any time with any covenant made in
this Agreement; or
(d) The Seller (i) suspends business voluntarily or involuntarily, (ii)
makes an assignment for the benefit of creditors, (iii) applies for or becomes
subject to the appointment of a receiver, trustee, custodian or liquidator for
itself or any of its property, (iv) admits in writing its inability to pay its
debts as they may mature, (v) is adjudicated an insolvent, (vi) files or is
subject to any petition in bankruptcy whether under state law or under the U.S.
Bankruptcy Code (and whether for reorganization or liquidation) or (vii) files
or becomes subject to any petition in equity for receivership or any other
action under any insolvency, reorganization, receivership, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction now or hereafter
in effect (whether at law or in equity).
6.2 Remedies. Upon the occurrence and during the continuation of any
Event of Default, the Purchaser may automatically take any or all of the
following actions:
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(a) The Purchaser may, in its own name or in the name of the Seller or
otherwise, but at the expense of the Seller, collect, demand, receive, assign,
sell, xxx for and/or compromise any or all of the Collateral; make any
disposition of the Collateral or any other collateral in which the Purchaser has
been granted a security interest or any part thereof in such order and at such
times in one or more parcels as the Purchaser may determine in its sole
discretion, and give good and sufficient releases thereof; and file any claims
or take any action or proceedings either in its own name or in the name of the
Seller or otherwise that the Purchaser may determine necessary or advisable in
its sole discretion; and
(b) Without limiting the foregoing, exercise all any of the rights,
remedies and powers available to it from time to time under Article 9 or the
Uniform Commercial Code in effect in the State of New York or otherwise
available under applicable law or in equity.
6.3 Termination.
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6.3 TERMINATION. (a) Upon indefeasible payment or repayment in full to
Purchaser, and complete performance by Client, of any and all Obligations,
whether or not arising hereunder, including, without limitation, all of Seller's
obligations hereunder, Purchaser shall, upon Seller's written request and at
Seller's expense, terminate this Agreement, without recourse to Purchaser and
without any representation or warranty by Purchaser, (the date of such
termination being the "TERMINATION DATE"); provided that, notwithstanding any
termination hereof, Seller's obligations under Paragraph 7 below shall continue
in full force and effect. To the extent Seller becomes obligated to Purchaser
under the circumstances contemplated in the immediately preceding sentence, this
Agreement shall be deemed to be reinstated without any further action by Seller
or Purchaser and such obligations shall be fully secured by the Collateral.
(b) If the Seller has not sold acceptable Accounts to Purchaser three
(3) months from the date first written above, Purchaser may, in its sole
discretion, terminate Seller's right, if any, to sell Accounts to Purchaser
hereunder, provided that such termination shall have no effect on the amount of
the Obligations for which Seller is liable.
7. Indemnification; Survival.
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7.1 Indemnification.
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(a) From and after the Closing, the Seller will indemnify the
Purchaser, its employees, officers, directors and stockholders, against, and
hold the Purchaser, its officers, directors and stockholders, harmless from, any
and all liability, damage, deficiency, loss, cost or expense (including
reasonable attorneys' fees and expenses) that are based upon or that arise out
of, subject to Section 7.2 hereof, (i) any misrepresentation or breach of any
warranty or agreement made by the Seller herein, (ii) any obligation, debt or
liability of the Seller to the extent that the same is not expressly assumed
herein by Purchaser, or (iii) the ownership of the Account on or prior to the
Closing Date.
(b) The Purchaser will indemnify the Seller against, and hold the
Seller harmless from, any and all liability, damage, deficiency, loss, cost or
expense (including reasonable
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attorneys' fees and expenses) that are based upon or that arise out of, subject
to Section 7.2 hereof, the material breach or default of any representation,
warranty or agreement made by the Purchaser herein.
(c) Each party entitled to indemnification under this Agreement (the
"INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
becomes aware of any claim by a third party for which indemnification is
available hereunder, the delivery of which notice shall require the Indemnifying
Party (at its expense) to assume the defense of any claim or any litigation
resulting therefrom, provided that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be reasonably
satisfactory to the Indemnified Party, and the Indemnified Party may participate
in such defense, but only at such Indemnified Party's expense, and provided
further, that the omission by any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its indemnification
obligations under this Agreement except to the extent that the omission results
in a failure of actual notice to the Indemnifying Party and such Indemnifying
Party is irreparably damaged as a result of the failure to give notice. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to the entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability with respect to such claim or litigation.
Notwithstanding the foregoing, the Indemnified Party shall have the right at all
times to take over and assume control of the defense, settlement, negotiations
or lawsuit relating to any claim or demand, provided, however, that if the
Indemnified Party does so take over and assume control, the amount of the
indemnity by the Indemnifying Party shall be limited to the amount which the
Indemnifying Party has immediately prior to such time indicated it would be
willing to pay to adjust and settle such claim or demand. In the event that the
Indemnifying Party does not accept the defense of any matter as above provided,
the Indemnified Party shall have the full right to defend against any such claim
or demand, and shall be entitled to settle or agree to pay in full such claim or
demand, in its sole discretion, and all costs and expenses relating thereto
(including without limitation legal fees and expenses) shall be borne by the
Indemnifying Party. In any event, the Seller and the Purchaser shall cooperate
in the defense of such action and the records of each shall be available to the
other with respect to such defense.
7.2. Survival. The representations, warranties, agreements and
indemnities contained in this Agreement shall survive the execution and delivery
of this Agreement, any examination by or on behalf of such parties, and the
completion of the transactions contemplated herein.
8. True Sale; Consent to Relief from Automatic Stay.
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(a) The Seller and the Purchaser each expressly acknowledges and agrees
that it is the intent of each of them that the purchase of the Account by the
Purchaser under the terms of Section 1 of this Agreement will constitute a true
sale of such Account and not merely a secured financing.
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(b) The Seller hereby agrees that if it (i) files with a United States
Bankruptcy Court of competent jurisdiction or becomes the subject of any
petition under the U.S. Bankruptcy Code, (ii) becomes the subject of any order
for relief issued under the U.S. Bankruptcy Code, (iii) files or becomes the
subject of any petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy, insolvency,
assignment for benefit of creditors, or other relief, (iv) seeks, consents to,
or acquiesces in the appointment of any trustee, receiver, conservator or
liquidator, or (v) becomes the subject of any order, judgment, or decree entered
by any court of competent jurisdiction approving a petition filed by or against
the Seller for any realization, arrangement, composition, readjustment,
liquidation, dissolution, assignment for benefit of creditors or similar relief
under any present of future federal or state act or law relating to bankruptcy,
insolvency, or relief for the Seller, the Purchaser will thereupon be entitled
to immediate relief from any automatic stay imposed by the U.S. Bankruptcy Code,
or from any other stay or suspension of remedies imposed in any other manner
with respect to the exercise of the rights and remedies otherwise available to
the Purchaser under this Agreement or under applicable law relating to the
Account purported to be purchased by the Purchaser from the Seller. The Seller
hereby acknowledges and stipulates that relief from the automatic stay (or any
such other provision of law having a similar effect) with respect to the Account
purported to be purchased the Purchaser is in the Seller's best interest in that
continued collection of said Account by the Purchaser will operate to reduce the
obligations of the Seller under this Agreement. The Seller hereby further
stipulates, acknowledges, and reaffirms that said Account does not constitute
property of a "debtor's estate" as that term is defined under the U.S.
Bankruptcy Code (and do not constitute property of the Seller for purposes of
any other federal or state law relating to bankruptcy, insolvency, assignment
for the benefit of, or relief from, creditors) and that (subject to terms and
provisions of this Agreement) the Seller has no right, title, or interest in
said Account Receivable. The Seller hereby further stipulates, acknowledges and
agrees that should the Purchaser request the relief specified in this Section 8,
the Seller will not object to or oppose the Purchaser from having immediate
relief, subject to court approval (if necessary), from the automatic stay under
Section 362 of the U.S. Bankruptcy Code (or any such other provision of law
having a similar effect) or such other relief as set forth below, such relief
being limited to modification of the stay (or such other provision of law) (i)
to permit the Purchaser to collect the Account purported to be purchased by the
Purchaser from the Seller and apply the proceeds to the obligations of the
Seller under this Agreement, and (ii) to obtain the Seller's cooperation and
assistance in collection and recovery of all amounts due on the Account
purported to be purchased by the Purchaser from the Seller.
(c) In addition to, and without limiting the foregoing, in the event
that the Seller files a petition under the U.S. Bankruptcy Code or under any
other similar federal or state law, the Seller hereby unconditionally and
irrevocably agrees that the Purchaser will be entitled, and the Seller hereby
unconditionally and irrevocably consents, to relief from the automatic stay so
as to allow the Purchaser to exercise its rights and remedies under this
Agreement with respect to the Collateral, including taking possession of the
Collateral, collecting amounts due, or otherwise exercising its rights and
remedies with respect to the Collateral. In such event, the Seller hereby agrees
that it will not, in any manner, oppose or otherwise delay any motion filed by
the Purchaser for relief from the automatic stay. The Purchaser's enforcement of
the right granted herein for relief from the automatic stay is subject to the
approval of the bankruptcy court in
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which the case is then pending.
9. Power of Attorney. Seller hereby appoints and authorizes each of
Purchaser, Xxxxxxx X. Xxxxx, Xx. and Xxxxxx Xxxxxx, or any designee of any of
them, as its attorney-in-fact, with full power of substitution, to execute and
endorse on its behalf Seller's name on and, as applicable, to file such
agreements, instruments, documents or other writings as Purchaser may deem
necessary, desirable or appropriate (i) to obtain, create, perfect, preserve,
protect, enforce or defend the interests of Purchaser in the Collateral and/or
the Accounts, including without limitation, UCC Financing Statements, Statements
of Amendment and other similar documents to reflect any change of name or
organizational structure of the Seller, any change of location of the Collateral
or of any place of business or record keeping of Seller or the addition of any
new place of business or record keeping of Seller and (ii) in connection with
any sale or other disposition of Collateral after an Event of Default. Seller
hereby appoints and authorizes each of Purchaser, Xxxxxxx X. Xxxxx, Xx. and
Xxxxxx Xxxxxx, or any designee of any of them, as its attorney-in-fact to
endorse on its behalf Seller's name on checks, or other forms of remittance
received where such endorsement may be required to effect collections and as to
any forms of collateral, such as letters of credit, deeds of trust, notices,
deeds, etc., where said collateral must be looked to by Purchaser for collection
of the Obligations. These powers shall permit Purchaser to deal generally in all
respects, without restriction, in and with any of the property that constitutes
either the Accounts, or the other Collateral or any other collateral securing
the Obligations. These powers of attorney shall be deemed to be coupled with an
interest and may not and shall not be revoked except with the prior written
consent of Purchaser.
10. General.
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10.1 Severability. If any provision of this Agreement shall be held of
or deemed to be of or shall, in fact, be inoperative of or unenforceable as
applied in any particular case because it conflicts with any other provision of
or provisions hereof of or any constitution of or statute of or rule of public
policy, of or for any other reason, such circumstances shall not have the effect
of rendering the provision in question inoperative of or unenforceable in any
other case of or circumstance, of or of rendering any other provision of or
provisions herein contained invalid, inoperative, of or unenforceable to any
extent whatever. The invalidity of any one of or more phrases, sentences,
clauses, sections, of or subsections of this Agreement shall not affect the
remaining portions of this Agreement.
10.2. Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein and all legal process in
regard hereto shall be validly given, made or served, if in writing and
delivered personally of or sent by registered of or certified mail (return
receipt requested), postage prepaid, or by nationally recognized overnight
courier service or by facsimile transmission electronically confirmed during
normal business hours, (i) if to the Seller at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxx,
Xxx Xxxx 00000, Fax No.: (000) 000-0000, Attn.: Xxxxxxx X'Xxxxxx, with a copy to
Xxxxxxx & Associates, LLC, 00 Xxxxxxx Xxxxxxxxx Xxxx., Xxxxx 000, Xxxxxxxxx, Xxx
Xxxx 00000, Attn.: Xxxx X. Xxxxxxx, Esq., Fax No.: (000) 000-0000; and (ii) if
to the Purchaser, at 000 Xxxxx Xxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000, Fax No.:
(000) 000-0000, Attn: Xxxxxx Xxxxxx, or, in each case, at such other address as
may be specified in writing to the other party.
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10.3. Waiver. Each of the parties hereto may waive compliance by the
other party with any of the provisions of this Agreement. No waiver of any
provision shall be construed as a waiver of any other provision. Any waiver must
be in writing.
10.4. Amendment. This Agreement may not be amended except by an
instrument in writing duly executed and delivered on behalf of each of the
parties hereto.
10.5. Miscellaneous. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning of or
interpretation of this Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, and all of which shall constitute one and the same instrument. This
Agreement shall be governed in all respects, including validity, interpretation
and effect, by the laws of the State of New York, applicable to contracts made
and to be performed in New York. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the parties hereto. The rights
and obligations contained in this Agreement are solely for the benefit of the
parties hereto and are not intended to benefit of or be enforceable by any other
party, under the third party beneficiary doctrine of or otherwise.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
WINDSWEPT ENVIRONMENTAL GROUP, INC.
By: /s/ Xxxxxxx X'Xxxxxx
---------------------------------------
Xxxxxxx X'Xxxxxx
President
TRADE WINDS ENVIRONMENTAL
RESTORATION, INC.
By: /s/ Xxxxxxx X'Xxxxxx
----------------------------------------
Xxxxxxx X'Xxxxxx
President
SPOTLESS PLASTICS (USA) INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President - Finance & Administration
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