Exhibit 10
Silicon Valley Financial Services
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xx. 00000
(000) 000-0000 - Fax (000) 000-0000
ACCOUNTS RECEIVABLE PURCHASE AGREEMENT
This Accounts Receivable Purchase Agreement (the "Agreement") is made
on this 22nd day of March, 1999 by and between Silicon Valley Bank ("Buyer")
having a place of business at the address specified above and Focus
Enhancements, Inc., a Delaware corporation, ("Borrower") having its principal
place of business and chief executive office at 000 Xxxxxxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxxx.
1. Definitions. When used herein, the following terms shall have the
following meanings.
1.1. "Account Balance" shall mean, on any given day, the gross amount
of all Purchased Receivables unpaid on that day.
1.2. "Account Debtor" shall have the meaning set forth in the
Massachusetts Uniform Commercial Code and shall include any person liable on any
Purchased Receivable, including without limitation, any guarantor of the
Purchased Receivable and any issuer of a letter of credit or banker's
acceptance.
1.3. "Adjustments" shall mean all discounts, allowances, returns,
disputes, counterclaims, offsets, defenses, rights of recoupment, rights of
return, warranty claims, or short payments, asserted by or on behalf of any
Account Debtor with respect to any Purchased Receivable.
1.4. "Administrative Fee" shall have the meaning as set forth in
Section 3.3 hereof.
1.5. "Advance" shall have the meaning set forth in Section 2.2 hereof.
1.6. "Collateral" shall have the meaning set forth in Section 8 hereof.
1.7. "Collections" shall mean all good funds received by Buyer from or
on behalf of an Account Debtor with respect to Purchased Receivables.
1.8. "Compliance Certificate" shall mean a certificate, in a form
provided by Buyer to Seller, which contains the certification of the chief
financial officer of Seller that, among other things, the representations and
warranties set forth in this Agreement are true and correct as of the date such
certificate is delivered.
1.9. "Event of Default" shall have the meaning set forth in Section 9
hereof.
1.10. "Finance Charges" shall have the meaning set forth in Section 3.2
hereof.
1.11. "Invoice Transmittal" shall mean a writing signed by an
authorized representative of Seller which accurately identifies the receivables
which Buyer, at its election, may purchase, and includes for each such
receivable the correct amount owed by the Account Debtor, the name and address
of the Account Debtor, the invoice number, the invoice date and the account
code.
1.12. "Obligations" shall mean all advances, financial accommodations,
liabilities, obligations, covenants and duties owing, arising, due or payable by
Seller to Buyer of any kind or nature, present or future, arising under or in
connection with this Agreement or under any other document, instrument or
agreement, whether or not evidenced by any note, guarantee or other instrument,
whether arising on account or by overdraft, whether direct or indirect
(including those acquired by assignment) absolute or contingent, primary or
secondary, due or to become due, now owing or hereafter arising, and however
acquired; including, without limitation, all Advances, Finance Charges,
Administrative Fees, interest, Repurchase Amounts, fees, expenses, professional
fees and attorneys' fees and any other sums chargeable to Seller hereunder or
otherwise.
1.13. "Prime Rate" shall mean the rate announced from time to time by
Silicon Valley Bank as its Prime Rate.
1.14. "Purchased Receivables" shall mean all those accounts,
receivables, chattel paper, instruments, contract rights, documents, general
intangibles, letters of credit, drafts, bankers acceptances, and rights to
payment, and all proceeds thereof (all of the foregoing being referred to as
"receivables"), arising out of the invoices and other agreements identified on
or delivered with any Invoice Transmittal delivered by Seller to Buyer which
Buyer elects to purchase and for which Buyer makes an Advance.
1.15. "Reconciliation Date" shall mean the last calendar day of each
Reconciliation Period.
1.16. "Reconciliation Period" shall mean each calendar month of every
year.
1.17. "Refund" shall have the meaning set forth in Section 3.6 hereof.
1.18. "Reserve" shall have the meaning set forth in Section 2.4 hereof.
1.19. "Repurchase Amount" shall have the meaning set forth in Section
4.2 hereof.
2. Purchase and Sale of Receivables.
2.1. Offer to Sell Receivables. During the term hereof, and provided
that there does not then exist any Event of Default or any event that with
notice, lapse of time or otherwise would constitute an Event of Default, Seller
may request that Buyer purchase receivables and Buyer may, in its sole
discretion, elect to purchase receivables provided further that the Seller is in
compliance with all of the terms and conditions herein, including, without
limitation, Section 2.2 below. Seller shall deliver to Buyer an Invoice
Transmittal with respect to any receivable for which a request for purchase is
made. An authorized representative of Seller shall sign each Invoice Transmittal
delivered to Buyer. Buyer shall be entitled to rely on all the information
provided by Seller to Buyer on or with the Invoice Transmittal and to rely on
the signature on any Invoice Transmittal as an authorized signature of Seller.
2.2. Acceptance of Receivables. Buyer shall have no obligation to
purchase any receivable listed on an Invoice Transmittal. Buyer may exercise its
sole discretion in approving the credit of each Account Debtor before buying any
receivable. Upon acceptance by Buyer of all or any of the receivables described
on any Invoice Transmittal, Buyer shall pay to Seller a percentage, to be
established by Buyer in its sole and absolute discretion, and agreed to by
Seller, of the face amount of each receivable Buyer desires to purchase. The
acceptance by the Seller of an Advance shall be deemed to be acceptance by
Seller of the terms and conditions established by the Buyer relating to such
Advance. Such payment shall be the "Advance" with respect to such receivable.
Buyer may, from time to time, in its sole discretion, change the percentage of
the Advance. Upon Buyer's acceptance of the receivable and payment to Seller of
the Advance, the receivable shall become a "Purchased Receivable." It shall be a
condition to each Advance that: (i) all of the representations and warranties
set forth in Section 6 of this Agreement be true and correct on and as of the
date of the related Invoice Transmittal and on and as of the date of such
Advance as though made at and as of each such date, and (ii) no Event of Default
or any event or condition that with notice, lapse of time or otherwise would
constitute an Event of Default shall have occurred and be continuing, or would
result from such Advance. In no event shall the aggregate amount of all Advances
outstanding at any time exceed Three Million Six Hundred Thousand Dollars
($3,600,000.00). Notwithstanding the foregoing, until agreed to by the Buyer in
writing, after the date hereof, the maximum aggregate amount of all Advances
outstanding at any time shall not exceed Two Million Dollars ($2,000,000.00).
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2.3. Effectiveness of Sale to Buyer. Effective upon Buyer's payment of
an Advance, and for and in consideration therefor and in consideration of the
covenants of this Agreement, Seller hereby absolutely sells, transfers and
assigns to Buyer, all of Seller's right, title and interest in and to each
Purchased Receivable and all monies due or which may become due on or with
respect to such Purchased Receivable. Buyer shall be the absolute owner of each
Purchased Receivable. Buyer shall have, with respect to any goods related to the
Purchased Receivable, all the rights and remedies of an unpaid seller under the
Massachusetts Uniform Commercial Code and other applicable law, including the
rights of replevin, claim and delivery, reclamation and stoppage in transit.
2.4. Establishment of a Reserve. Upon the purchase by Buyer of each
Purchased Receivable, Buyer shall establish a reserve. The reserve shall be the
amount by which the face amount of the Purchased Receivable exceeds the Advance
on that Purchased Receivable (the "Reserve"); provided, the Reserve with respect
to all Purchased Receivables outstanding at any one time shall be an amount not
less than Twenty Percent (20.0) of the Account Balance at that time and may be
set at a higher percentage at Buyer's sole discretion. The reserve shall be a
book balance maintained on the records of Buyer and shall not be a segregated
fund.
3. Collections, Charges and Remittances.
3.1. Collections. Upon receipt by Buyer of Collections, Buyer shall
promptly credit such Collections to Seller's Account Balance on a daily basis;
provided, that if Seller is in default under this Agreement and only until such
default is cured to the satisfaction of Buyer, Buyer shall apply all Collections
to Seller's Obligations hereunder in such order and manner as Buyer may
determine. If an item of collection is not honored or Buyer does not receive
good funds for any reason, the amount shall be included in the Account Balance
as if the Collections had not been received and Finance Charges under Section
3.2 shall accrue thereon.
3.2. Finance Charges. On each Reconciliation Date Seller shall pay to
Buyer a finance charge in an amount equal to a per annum rate equal to the
aggregate of the Bank's Prime Rate, plus four percent (4.0%), multiplied by the
average daily Account Balance outstanding during the applicable Reconciliation
Period (the "Finance Charges"). Buyer shall deduct the accrued Finance Charges
from the Reserve as set forth in Section 3.6 below.
3.3. Administrative Fee. On each Reconciliation Date Seller shall pay
to Buyer an Administrative Fee equal to 0.78125% of the amounts Advanced with
respect to each Purchased Receivable first purchased during that Reconciliation
Period (the "Administrative Fee"). Buyer shall deduct the Administrative Fee
from the Reserve as set forth in Section 3.6 below.
3.4. Commitment Fee. The Borrower has paid a commitment fee of
$5,000.00 to the Bank. In the event any Obligations are outstanding on the
ninetieth day following the date of execution of this Agreement, the Borrower
shall pay to the Bank an additional commitment fee of $5,000.00. All commitment
fees shall be deemed fully earned and non-refundable.
3.5. Accounting. Buyer shall prepare and send to Seller after the close
of business for each Reconciliation Period, an accounting of the transactions
for that Reconciliation Period, including the amount of all Purchased
Receivables, all Collections, Adjustments, Finance Charges, and the
Administrative Fee. The accounting shall be deemed correct and conclusive unless
Seller makes written objection to Buyer within thirty (30) days after the Buyer
mails the accounting to Seller. In addition, Buyer shall provide to Seller
copies of all checks, drafts, wire transfers and other forms of payment received
by Buyer for account of Seller.
3.6. Refund to Seller. Provided that there does not then exist an Event
of Default or any event or condition that with notice, lapse of time or
otherwise would constitute an Event of Default, Buyer shall refund to Seller by
check after the Reconciliation Date, the amount, if any, which Buyer owes to
Seller at the end of the Reconciliation Period according to the accounting
prepared by Buyer for that Reconciliation Period (the "Refund"). The Refund
shall be an amount equal to:
(A) (1) The Reserve as of the beginning of that
Reconciliation Period, plus
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(2) the Reserve created for each Purchased Receivable
purchased during that Reconciliation Period, minus
(B) The total for that Reconciliation Period of:
(1) the Administrative Fee;
(2) Finance Charges;
(3) Adjustments;
(4) Repurchase Amounts, to the extent Buyer has
agreed to accept payment thereof by deduction from the Refund;
(5) the Reserve for the Account Balance as of the
first day of the following Reconciliation Period in the
minimum percentage set forth in Section 2.4 hereof; and
(6) all amounts due, including professional fees and
expenses, as set forth in Section 12 for which oral or written
demand has been made by Buyer to Seller during that
Reconciliation Period to the extent Buyer has agreed to accept
payment thereof by deduction from the Refund.
In the event the formula set forth in this Section 3.6 results in an amount due
to Buyer from Seller, Seller shall make such payment in the same manner as set
forth in Section 4.3 hereof for repurchases. If the formula set forth in this
Section 3.6 results in an amount due to Seller from Buyer, Buyer shall make such
payment by check, subject to Buyer's rights under Section 4.3 and Buyer's rights
of offset and recoupment.
4. Recourse and Repurchase Obligations.
4.1. Recourse. Buyer's acquisition of Purchased Receivables from Seller
shall be with full recourse against Seller. In the event the Obligations exceed
the amount of Purchased Receivables and Collateral, Seller shall be liable for
any deficiency.
4.2. Seller's Agreement to Repurchase. Seller agrees to pay to Buyer on
demand, the full face amount, or any unpaid portion, of any Purchased
Receivable:
(A) which remains unpaid ninety (90) calendar days after the
invoice date; or
(B) which is owed by any Account Debtor who has filed, or has
had filed against it, any bankruptcy case, assignment for the benefit
of creditors, receivership, or insolvency proceeding or who has become
insolvent (as defined in the United States Bankruptcy Code) or who is
generally not paying its debts as such debts become due; or
(C) with respect to which there has been any breach of
warranty or representation set forth in Section 6 hereof or any breach
of any covenant contained in this Agreement; or
(D) with respect to which the Account Debtor asserts any
discount, allowance, return, dispute, counterclaim, offset, defense,
right of recoupment, right of return, warranty claim, or short payment;
together with all reasonable attorneys' and professional fees and expenses and
all court costs incurred by Buyer in collecting such Purchased Receivable and/or
enforcing its rights under, or collecting amounts owed by Seller in connection
with, this Agreement (collectively, the "Repurchase Amount").
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4.3. Seller's Payment of the Repurchase Amount or Other Amounts Due
Buyer. When any Repurchase Amount or other amount owing to Buyer becomes due,
Buyer shall inform Seller of the manner of payment which may be any one or more
of the following in Buyer's sole discretion: (a) in cash immediately upon demand
therefor; (b) by delivery of substitute invoices and an Invoice Transmittal
acceptable to Buyer which shall thereupon become Purchased Receivables; (c) by
adjustment to the Reserve pursuant to Section 3.6 hereof; (d) by deduction from
or offset against the Refund that would otherwise be due and payable to Seller;
(e) by deduction from or offset against the amount that otherwise would be
forwarded to Seller in respect of any further Advances that may be made by
Buyer; or (f) by any combination of the foregoing as Buyer may from time to time
choose.
4.4. Seller's Agreement to Repurchase All Purchased Receivables. Upon
and after the occurrence of an Event of Default, Seller shall, upon Buyer's
demand (or, in the case of an Event of Default under Section 9(B), immediately
without notice or demand from Buyer) repurchase all the Purchased Receivables
then outstanding, or such portion thereof as Buyer may demand. Such demand may,
at Buyer's option, include and Seller shall pay to Buyer immediately upon
demand, cash in an amount equal to the Advance with respect to each Purchased
Receivable then outstanding together with all accrued Finance Charges,
Adjustments, Administrative Fees, attorney's and professional fees, court costs
and expenses as provided for herein, and any other Obligations. Upon receipt of
payment in full of the Obligations, Buyer shall immediately instruct Account
Debtors to pay Seller directly, and return to Seller any Refund due to Seller.
For the purpose of calculating any Refund due under this Section only, the
Reconciliation Date shall be deemed to be the date Buyer receives payment in
good funds of all the Obligations as provided in this Section 4.4. The foregoing
notwithstanding, Seller may at Seller's sole discretion repurchase any or all
Purchased Receivables from Buyer. Further, if Seller repurchases the Purchased
Receivables on or before April 15, 1999, the applicable Administrative Fee shall
be limited to one quarter of one percent (0.25%). The Seller shall remain
responsible for all other amounts due hereunder upon the repurchase by the
Seller of any Purchased Receivable.
5. Power of Attorney. Seller does hereby irrevocably appoint Buyer and its
successors and assigns as Seller's true and lawful attorney in fact, and hereby
authorizes Buyer, regardless of whether there has been an Event of Default, (a)
to sell, assign, transfer, pledge, compromise, or discharge the whole or any
part of the Purchased Receivables; (b) to demand, collect, receive, xxx, and
give releases to any Account Debtor for the monies due or which may become due
upon or with respect to the Purchased Receivables and to compromise, prosecute,
or defend any action, claim, case or proceeding relating to the Purchased
Receivables, including the filing of a claim or the voting of such claims in any
bankruptcy case, all in Buyer's name or Seller's name, as Buyer may choose; (c)
to prepare, file and sign Seller's name on any notice, claim, assignment,
demand, draft, or notice of or satisfaction of lien or mechanics' lien or
similar document with respect to Purchased Receivables; (d) to notify all
Account Debtors with respect to the Purchased Receivables to pay Buyer directly;
(e) to receive, open, and dispose of all mail addressed to Seller for the
purpose of collecting the Purchased Receivables, provided, however, that copies
of same shall be forwarded to Seller; (f) to endorse Seller's name on any checks
or other forms of payment on the Purchased Receivables; (g) to execute on behalf
of Seller any and all instruments, documents, financing statements and the like
to perfect Buyer's interests in the Purchased Receivables and Collateral; and
(h) to do all acts and things necessary or expedient, in furtherance of any such
purposes. If Buyer receives a check or item which is payment for both a
Purchased Receivable and another receivable, the funds shall first be applied to
the Purchased Receivable and, so long as there does not exist an Event of
Default or an event that with notice, lapse of time or otherwise would
constitute an Event of Default, the excess shall be remitted to Seller. Upon the
occurrence and continuation of an Event of Default, all of the power of attorney
rights granted by Seller to Buyer hereunder shall be applicable with respect to
all Purchased Receivables and all Collateral.
6. Representations, Warranties and Covenants.
6.1. Receivables' Warranties, Representations and Covenants. To induce
Buyer to buy receivables and to render its services to Seller, and with full
knowledge that the truth and accuracy of the following are being relied upon by
the Buyer in determining whether to accept receivables as Purchased Receivables,
Seller represents, warrants, covenants and agrees, with respect to each Invoice
Transmittal delivered to Buyer and each receivable described therein, that:
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(A) Seller is the absolute owner of each receivable set forth
in the Invoice Transmittal and has full legal right to sell, transfer
and assign such receivables;
(B) The correct amount of each receivable is as set forth in
the Invoice Transmittal and is not in dispute;
(C) The payment of each receivable is not contingent upon the
fulfillment of any obligation or contract, past or future and any and
all obligations required of the Seller have been fulfilled as of the
date of the Invoice Transmittal;
(D) Each receivable set forth on the Invoice Transmittal is
based on an actual sale and delivery of goods and/or services actually
rendered, is presently due and owing to Seller, is not past due or in
default, has not been previously sold, assigned, transferred, or
pledged, and is free of any and all liens, security interests and
encumbrances other than liens, security interests or encumbrances in
favor of Buyer or any other division or affiliate of Silicon Valley
Bank;
(E) There are no defenses, offsets, or counterclaims against
any of the receivables, and no agreement has been made under which the
Account Debtor may claim any deduction or discount, except as otherwise
stated in the Invoice Transmittal;
(F) Each Purchased Receivable shall be the property of the
Buyer and shall be collected by Buyer, but if for any reason it should
be paid to Seller, Seller shall promptly notify Buyer of such payment,
shall hold any checks, drafts, or monies so received in trust for the
benefit of Buyer, and shall promptly transfer and deliver the same to
the Buyer;
(G) Buyer shall have the right of endorsement, and also the
right to require endorsement by Seller, on all payments received in
connection with each Purchased Receivable and any proceeds of
Collateral;
(H) Seller, and to Seller's best knowledge, each Account
Debtor set forth in the Invoice Transmittal, are and shall remain
solvent as that term is defined in the United States Bankruptcy Code
and the Massachusetts Uniform Commercial Code, and no such Account
Debtor has filed or had filed against it a voluntary or involuntary
petition for relief under the United States Bankruptcy Code;
(I) Each Account Debtor named on the Invoice Transmittal will
not object to the payment for, or the quality or the quantity of the
subject matter of, the receivable and is liable for the amount set
forth on the Invoice Transmittal;
(J) Each Account Debtor shall promptly be notified, after
acceptance by Buyer, that the Purchased Receivable has been transferred
to and is payable to Buyer, and Seller shall not take or permit any
action to countermand such notification; and
(K) All receivables forwarded to and accepted by Buyer after
the date hereof, and thereby becoming Purchased Receivables, shall
comply with each and every one of the foregoing representations,
warranties, covenants and agreements referred to above in this Section
6.1.
6.2. Additional Warranties, Representations and Covenants. In addition
to the foregoing warranties, representations and covenants, to induce Buyer to
buy receivables and to render its services to Seller, Seller hereby represents,
warrants, covenants and agrees that:
(A) Seller will not assign, transfer, sell, or grant , or
permit any lien or security interest in any Purchased Receivables or
Collateral to or in favor of any other party, without Buyer's prior
written consent;
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(B) The Seller's name, form of organization, chief executive
office, and the place where the records concerning all Purchased
Receivables and Collateral are kept is set forth at the beginning of
this Agreement, Collateral is located only at the location set forth in
the beginning of this Agreement, or, if located at any additional
location, as set forth on a schedule attached to this Agreement, and
Seller will give Buyer at least thirty (30) days prior written notice
if such name, organization, chief executive office or other locations
of Collateral or records concerning Purchased Receivables or Collateral
is changed or added and shall execute any documents necessary to
perfect Buyer's interest in the Purchased Receivables and the
Collateral;
(C) Seller shall (i) pay all of its normal gross payroll for
employees, and all federal and state taxes, as and when due, including
without limitation all payroll and withholding taxes and state sales
taxes; (ii) deliver at any time and from time to time at Buyer's
request, evidence satisfactory to Buyer that all such amounts have been
paid to the proper taxing authorities; and (iii) if requested by Buyer,
pay its payroll and related taxes through a bank or an independent
payroll service acceptable to Buyer.
(D) Seller has not, as of the xxxx Xxxxxx delivers to Buyer an
Invoice Transmittal, or as of the xxxx Xxxxxx accepts any Advance from
Buyer, filed a voluntary petition for relief under the United States
Bankruptcy Code or had filed against it an involuntary petition for
relief;
(E) If Seller owns, holds or has any interest in, any
copyrights (whether registered, or unregistered), patents or
trademarks, and licenses of any of the foregoing, such interest has
been disclosed to Buyer and is specifically listed and identified on a
schedule to this Agreement, and Seller shall immediately notify Buyer
if Seller hereafter obtains any interest in any additional copyrights,
patents, trademarks or licenses that are significant in value or are
material to the conduct of its business; and
(F) Seller shall provide Buyer with a Compliance Certificate
(i) on a quarterly basis to be received by Buyer no later than the
fifth calendar day following each calendar quarter, and; (ii) on a more
frequent or other basis if and as requested by Buyer.
7. Adjustments. In the event of a breach of any of the representations,
warranties, or covenants set forth in Section 6.1, or in the event any
Adjustment or dispute is asserted by any Account Debtor, Seller shall promptly
advise Buyer and shall, subject to the Buyer's approval, resolve such disputes
and advise Buyer of any adjustments. Unless the disputed Purchased Receivable is
repurchased by Seller and the full Repurchase Amount is paid, Buyer shall remain
the absolute owner of any Purchased Receivable which is subject to Adjustment or
repurchase under Section 4.2 hereof, and any rejected, returned, or recovered
personal property, with the right to take possession thereof at any time. If
such possession is not taken by Buyer, Seller is to resell it for Buyer's
account at Seller's expense with the proceeds made payable to Buyer. While
Seller retains possession of said returned goods, Seller shall segregate said
goods and xxxx them "property of Silicon Valley Financial Services."
8. Security Interest. To secure the prompt payment and performance to Buyer of
all of the Obligations, Seller hereby grants to Buyer a continuing lien upon and
security interest in all of Seller's now existing or hereafter arising rights
and interest in the following, whether now owned or existing or hereafter
created, acquired, or arising, and wherever located (collectively, the
"Collateral"):
(A) All accounts, receivables, contract rights, chattel paper,
instruments, documents, letters of credit, bankers acceptances, drafts,
checks, cash, securities, and general intangibles (including, without
limitation, all claims, causes of action, deposit accounts, guaranties,
rights in and claims under insurance policies (including rights to
premium refunds), rights to tax refunds, copyrights, patents,
trademarks, rights in and under license agreements, and all other
intellectual property);
(B) All inventory, including Seller's rights to any returned
or rejected goods, with respect to which Buyer shall have all the
rights of any unpaid seller, including the rights of replevin, claim
and delivery, reclamation, and stoppage in transit;
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(C) All monies, refunds and other amounts due Seller,
including, without limitation, amounts due Seller under this Agreement
(including Seller's right of offset and recoupment);
(D) Investment Property;
(E) All equipment, machinery, furniture, furnishings,
fixtures, tools, supplies and motor vehicles (the "Equipment");
(F) All farm products, crops, timber, minerals and the like
(including oil and gas);
(G) All accessions to, substitutions for, and replacements of,
all of the foregoing;
(H) All books and records pertaining to all of the foregoing;
and
(I) All proceeds of the foregoing, whether due to voluntary or
involuntary disposition, including insurance proceeds.
Seller is not authorized to sell, assign, transfer or otherwise convey any
Collateral without Buyer's prior written consent, except for the sale of
finished inventory in the Seller's usual course of business. Seller agrees to
sign UCC financing statements, in a form acceptable to Buyer, and any other
instruments and documents requested by Buyer to evidence , perfect, or protect
the interests of Buyer in the Collateral. Seller agrees to deliver to Buyer the
originals of all instruments, chattel paper and documents evidencing or related
to Purchased Receivables and Collateral.
9. Default. The occurrence of any one or more of the following shall constitute
an Event of Default hereunder.
(A) Seller fails to pay any amount owed to Buyer as and when
due;
(B) There shall be commenced by or against Seller any
voluntary or involuntary case under the United States Bankruptcy Code,
or any assignment for the benefit of creditors, or appointment of a
receiver or custodian for any of its assets;
(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,
in excess of $25,000.00 in the aggregate is issued against or attaches
to the Purchased Receivables or any Collateral, which is not removed
within thirty (30) days;
(E) Seller shall breach any covenant, agreement, warranty, or
representation set forth herein, and the same is not cured to Buyer's
satisfaction within ten (10) days after Buyer has given Seller oral or
written notice thereof; provided, that if such breach is incapable of
being cured it shall constitute an immediate default hereunder;
(F) Seller is not in compliance with, or otherwise is in
default under, any term of any document, instrument or agreement
evidencing a debt, obligation or liability of any kind or character of
Seller, now or hereafter existing, in favor of Buyer or any division or
affiliate of Silicon Valley Bank, regardless of whether such debt,
obligation or liability is direct or indirect, primary or secondary,
joint, several or joint and several, or fixed or contingent, together
with any and all renewals and extensions of such debts, obligations and
liabilities, or any part thereof;
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(G) An event of default shall occur under any guaranty
executed by any guarantor of the Obligations of Seller to Buyer under
this Agreement, or any material provision of any such guaranty shall
for any reason cease to be valid or enforceable or any such guaranty
shall be repudiated or terminated, including by operation of law;
(H) A default or event of default shall occur under any
agreement between Seller and any creditor of Seller that has entered
into a subordination agreement with Buyer; or
(I) Any creditor that has entered into a subordination
agreement with Buyer shall breach any of the terms of or not comply
with such subordination agreement.
10. Remedies Upon Default. Upon the occurrence of an Event of Default, (1)
without implying any obligation to buy receivables, Buyer may cease buying
receivables or extending any financial accommodations to Seller; (2) all or a
portion of the Obligations shall be, at the option of and upon demand by Buyer,
or with respect to an Event of Default described in Section 9(B), automatically
and without notice or demand, due and payable in full; and (3) Buyer shall have
and may exercise all the rights and remedies under this Agreement and under
applicable law, including the rights and remedies of a secured party under the
Massachusetts Uniform Commercial Code, all the power of attorney rights
described in Section 5 with respect to all Collateral, and the right to collect,
dispose of, sell, lease, use, and realize upon all Purchased Receivables and all
Collateral in any commercial reasonable manner. Seller and Buyer agree that any
notice of sale required to be given to Seller shall be deemed to be reasonable
if given five (5) days prior to the date on or after which the sale may be held.
In the event that the Obligations are accelerated hereunder, Seller shall
repurchase all of the Purchased Receivables as set forth in Section 4.4.
11. Accrual of Interest. If any amount owed by Seller hereunder is not paid when
due, including, without limitation, amounts due under Section 3.6, Repurchase
Amounts, amounts due under Section 12, and any other Obligations, such amounts
shall bear interest at a per annum rate equal to the per annum rate of the
Finance Charges until the earlier of (i) payment in good funds or (ii) entry of
a final judgment thereof, at which time the principal amount of any money
judgment remaining unsatisfied shall accrue interest at the highest rate allowed
by applicable law.
12. Fees, Costs and Expenses; Indemnification. The Seller will pay to Buyer
immediately upon demand all fees, costs and expenses (including fees of
attorneys and professionals and their costs and expenses ) that Buyer incurs or
may from time to time impose in connection with any of the following: (a)
preparing, negotiating , administering, and enforcing this Agreement or any
other agreement executed in connection herewith, including any amendments,
waivers or consents in connection with any of the foregoing, (b) any litigation
or dispute (whether instituted by Buyer, Seller or any other person) in any way
relating to the Purchased Receivables, the Collateral, this Agreement or any
other agreement executed in connection herewith or therewith, (d) enforcing any
rights against Seller or any guarantor, or any Account Debtor, (e) protecting or
enforcing its interest in the Purchased Receivables or the Collateral, (f)
collecting the Purchased Receivables and the Obligations, and (g) the
representation of Buyer in connection with any bankruptcy case or insolvency
proceeding involving Seller, any Purchased Receivable, the Collateral, any
Account Debtor, or any guarantor. Seller shall indemnify and hold Buyer harmless
from and against any and all claims, actions, damages, costs, expenses, and
liabilities of any nature whatsoever arising in connection with any of the
foregoing.
13. Severability, Waiver, and Choice of Law. In the event that any provision of
this Agreement is deemed invalid by reason of law, this Agreement will be
construed as not containing such provision and the remainder of the Agreement
shall remain in full force and effect. Buyer retains all of its rights, even if
it makes an Advance after a default. If Buyer waives a default, it may enforce a
later default. Any consent or waiver under, or amendment of, this Agreement must
be in writing. Nothing contained herein, or any action taken or not taken by
Buyer at any time, shall be construed at any time to be indicative of any
obligation or willingness on the part of Buyer to amend this Agreement or to
grant to Seller any waivers or consents. This Agreement has been transmitted by
Seller to Buyer at Buyer's office in the Wellesley, Massachusetts and has been
executed and accepted by Buyer in the State of Massachusetts. This Agreement
shall be governed by and interpreted in accordance with the internal laws of the
Commonwealth of Massachusetts.
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14. Account Collection Services. Certain Account Debtors may require or prefer
that all of Seller's receivables be paid to the same address and/or party, or
Seller and Buyer may agree that all receivables with respect to certain Account
Debtors be paid to one party. In such event Buyer and Seller may agree that
Buyer shall collect all receivables whether owned by Seller or Buyer and
(provided that there does not then exist an Event of Default or event that with
notice, lapse or time or otherwise would constitute an Event of Default, and
subject to Buyer's rights in the Collateral) Buyer agrees to remit to Seller the
amount of the receivables collections it receives with respect to receivables
other than Purchased Receivables. It is understood and agreed by Seller that
this Section does not impose any affirmative duty on Buyer to do any act other
than to turn over such amounts. All such receivables and collections are
Collateral and in the event of Seller's default hereunder, Buyer shall have no
duty to remit collections of Collateral and may apply such collections to the
obligations hereunder and Buyer shall have the rights of a secured party under
the Massachusetts Uniform Commercial Code.
15. Notices. All notices shall be given to Buyer and Seller at the addresses or
faxes set forth on the first page of this Agreement and shall be deemed to have
been delivered and received: (a) if mailed, three (3) calendar days after
deposited in the United States mail, first class, postage pre-paid, (b) one (1)
calendar day after deposit with an overnight mail or messenger service; or (c)
on the same date of confirmed transmission if sent by hand delivery, telecopy,
telefax or telex.
16. Jury Trial. SELLER AND BUYER EACH HEREBY (a) WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL ON ANY CLAIM OR ACTION ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, ANY RELATED AGREEMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY; (b) RECOGNIZE AND AGREE THAT THE FOREGOING WAIVER CONSTITUTES
A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT; AND (c) REPRESENT AND
WARRANT THAT IT HAS REVIEWED THIS WAIVER, HAS DETERMINED FOR ITSELF THE
NECESSITY TO REVIEW THE SAME WITH ITS LEGAL COUNSEL, AND KNOWINGLY AND
VOLUNTARILY WAIVES ALL RIGHTS TO A JURY TRIAL.
17. Term and Termination. The term of this Agreement shall be for one (1) year
from the date hereof, and from year to year thereafter unless terminated in
writing by Buyer or Seller. Seller and Buyer shall each have the right to
terminate this Agreement at any time. Notwithstanding the foregoing, any
termination of this Agreement shall not affect Buyer's security interest in the
Collateral and Buyer's ownership of the Purchased Receivables, and this
Agreement shall continue to be effective, and Buyer's rights and remedies
hereunder shall survive such termination, until all transactions entered into
and Obligations incurred hereunder or in connection herewith have been completed
and satisfied in full.
18. Titles and Section Headings. The titles and section headings used herein are
for convenience only and shall not be used in interpreting this Agreement.
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19. Other Agreements. The terms and provisions of this Agreement shall not
adversely affect the rights of Buyer or any other division or affiliate of
Silicon Valley Bank under any other document, instrument or agreement. The terms
of such other documents, instruments and agreements shall remain in full force
and effect notwithstanding the execution of this Agreement. In the event of a
conflict between any provision of this Agreement and any provision of any other
document, instrument or agreement between Seller on the one hand, and Buyer or
any other division or affiliate of Silicon Valley Bank on the other hand, Buyer
shall determine in its sole discretion which provision shall apply. Seller
acknowledges specifically that any security agreements, liens and/or security
interests currently securing payment of any obligations of Seller owing to Buyer
or any other division or affiliate of Silicon Valley Bank also secure Seller's
obligations under this Agreement, and are valid and subsisting and are not
adversely affected by execution of this Agreement. Seller further acknowledges
that (a) any collateral under other outstanding security agreements or other
documents between Seller and Buyer or any other division or affiliate of Silicon
Valley Bank secures the obligations of Seller under this Agreement and (b) a
default by Seller under this Agreement constitutes a default under other
outstanding agreements between Seller and Buyer or any other division or
affiliate of Silicon Valley Bank.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as an
instrument under seal under the laws of the Commonwealth of Massachusetts as of
the day and year above written.
SELLER: FOCUS ENHANCEMENTS, INC.
By: /s/ Xxxxxx X. Xxxxxx
Title: President & CEO
BUYER: SILICON VALLEY BANK
By: /s/ Xxx Xxxxxxx
Title: Vice President
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EXHIBIT "A"
TO FINANCING STATEMENT AND SECURITY AGREEMENT
This FINANCING STATEMENT and SECURITY AGREEMENT covers the following types or
items of property (in addition to, and without limiting the types of property
set forth on page 1 hereof):
A) All accounts, receivables, contract rights, chattel paper, instruments,
documents, letters of credit, bankers acceptances, drafts, checks,
cash, securities, deposit accounts, and general intangibles (including,
without limitation, all claims, causes of action, guaranties, rights in
and claims under insurance policies (including rights to premium
refunds), rights to tax refunds, copyrights, patents, trademarks,
rights in and under license agreements, and all other intellectual
property);
B) All inventory, including Seller's rights to any returned or rejected
goods, with respect to which Buyer shall have all the rights of any
unpaid seller, including the rights of replevin, claim and delivery,
reclamation, and stoppage in transit;
C) All monies, refunds and other amounts due Seller, including, without
limitation, amounts due Seller under this Agreement (including Seller's
right of offset and recoupment);
D) All equipment, machinery, furniture, furnishings, fixtures, tools,
supplies and motor vehicles;
E) All farm products, crops, timber, minerals and the like (including oil
and gas);
F) All accessions to, substitutions for, and replacements of, all of the
foregoing;
G) All books and records pertaining to all of the foregoing; and
H) All proceeds of the foregoing, whether due to voluntary or involuntary
disposition, including insurance proceeds.
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