EXHIBIT 10.4
FTC
COMMERCIAL CORP.
0000 XXXXX XXXXXXXX XXXXXX
XXX XXXXXXX, XX 00000
TEL: 000-000-0000 FAX: 000-000-0000
AMENDMENT NO. 1 TO FACTORING AGREEMENT
This Amendment No. 1 to Factoring Agreement (this "Amendment") is
entered into as of September 30, 2005 by and between FTC COMMERCIAL CORP.
("FTC", "we" or "us") and VERSATILE ENTERTAINMENT, INC., a California limited
liability company ("Client" or "you"), with reference to the following:
A. FTC and Client are parties to a Factoring Agreement dated
October 14, 2004 (the "Factoring Agreement"), the provisions of which are
incorporated into this Amendment.
B. FTC and Client desire to amend the Factoring Agreement, as set
forth herein.
NOW, THEREFORE, FTC and Client agree as follows:
1. Initially capitalized terms used herein which are not
otherwise defined shall have the meanings assigned to them in the Factoring
Agreement.
2. The second paragraph of Section 2 of the Factoring Agreement
is hereby amended in its entirety to read as follows:
Outstanding factoring advances shall not at any time exceed
the "maximum factoring advances amount", which shall be
defined, as of any date of determination, as an amount equal
to (i) up to eighty-five percent (85%) of the purchase price
of all accounts purchased by us from you from time to time
pursuant to this Agreement less (ii) such reserves as we, in
our sole discretion, elect to establish, including, without
limitation, reserves for concentration accounts, "client's
risk accounts" (as defined in SECTION 4 below), disputed
accounts, and non-disputed accounts. We shall not make a
factoring advance to the extent such factoring advance would
cause the aggregate amount of factoring advances then
outstanding to exceed the maximum factoring advances amount.
If at any time an overadvance exists, then you shall pay to
us, or we may charge the Factoring Account (as defined in
SECTION 3 below) with, such amount as may be necessary to
eliminate the overadvance. Without affecting your obligation
to immediately repay the overadvance, you agree to pay us a
fee in the amount of three percent (3.0%) above Prime Rate as
defined in SECTION 27 for each day that an overadvance exists.
Amounts owing by you under this SECTION 2 may be repaid and
made available again to you at any time prior to the earliest
of (i) acceleration of your obligations to us pursuant to
Section 17 or (ii) the termination date of this Agreement.
3. Section 3 of the Factoring Agreement is hereby amended in its
entirety to read as follows:
Fifteen percent (15%) of all unpaid accounts purchased by us
and one hundred percent (100%) of all accounts which are
disputed or which you may be obligated to repurchase
(including, without limitation, any "client's risk account" as
defined in SECTION 4) shall be held by us as cash collateral
(hereinafter the "RESERVE") against which we may at any time
charge any liability you may now or hereafter owe us, directly
or indirectly. We shall have the right to change the
percentage of unpaid accounts at which the reserve will be
maintained at any time without notice to you as we in our sole
discretion shall deem necessary for our protection. Should any
notice of termination of this Agreement be sent by either
party or should we terminate without notice as provided for in
SECTION 17,
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then we may hold one hundred percent (100%) of all unpaid
accounts as such reserve. We may, in our sole discretion,
withhold a reserve from any payment to you should we have
reason to believe sufficient objection to the amount owed may
be raised by a customer, court of competent jurisdiction, or
other relevant third party. The reserve required hereunder
shall be maintained with us in an account designated as the
"Factoring Account."
4. The first sentence under the heading FACTORING SERVICE CHARGE
in Section 23 of the Factoring Agreement is hereby amended to read as follows:
You shall pay us a commission in an amount equal to eight
tenths of one percent (.80%) of the net amount of each account
receivable for the first sixty (60) day term or part thereof,
plus one quarter of one percent (.25%) of such net amount for
each additional thirty (30) day term or part thereof, but in
no event less than three dollars ($3.00) per invoice.
5. Subpart 3 under the heading INTEREST RATE in Section 23 of the
Factoring Agreement is amended in its entirety to read as follows:
3. The interest rate charged will be the Prime Rate plus one
percent (1.0%) pursuant to this Section 23 or as otherwise set
forth in this Agreement.
6. The definition of "Prime Rate" in Section 27 of the Factoring
Agreement is amended in its entirety to read as follows:
"Prime Rate" shall mean the average money center bank prime
lending rate as quoted in the Wall Street Journal, Western
Edition, as may be adjusted from time to time, which such rate
may not be the lowest or best lending rate made available by
such banks.
7. Except as amended hereby, the Factoring Agreement shall remain
in full force and effect and unmodified. Client hereby reaffirms each and every
one of its representations, warranties and covenants under the Factoring
Agreement.
8. Any reference in the Factoring Agreement to "this Agreement",
"herein", "hereunder" or words of similar meaning shall mean the Factoring
Agreement as amended by this Amendment.
9. Client hereby represents and warrants to FTC that this
Amendment has been duly authorized by all necessary action on the part of Client
and constitutes a valid and legally binding obligation of Client, enforceable
against Client in accordance with its terms.
10. This Amendment shall be governed by the laws of the State of
California without regard to the conflicts of law principles thereof.
11. The Factoring Agreement, as amended by this Amendment,
constitutes the entire agreement between FTC and Client as to the subject matter
hereof and may not be altered or amended except by written agreement signed by
FTC and Client. No provision hereof may be waived by FTC except upon written
waiver executed by FTC.
12. This Amendment may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
Executed at Los Angeles, California, as of the date first set forth
above.
FTC COMMERCIAL CORP. VERSATILE ENTERTAINMENT, INC.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx Xxxx
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Xxxxxxx X. Xxxxxxx, President Title: President
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