EXHIBIT 10.12
Factoring Agreement
This Agreement, dated October 15, 2004 (the "Effective Date"), is
between Systems Evolution Incorporated with offices at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.,
▇▇▇. ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (hereinafter called "Seller"), and Allied
Capital Partners, L.P., with offices at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ (hereinafter called "Allied").
The Seller desires to sell its Accounts to Allied on the following
terms, conditions and provisions and, therefore, it is agreed as
follows:
1. Definitions. As used in this Agreement and all other documents
or instruments executed and delivered in connection with this
Agreement:
1.1 The following words shall have the same definitions as
those set forth in the Uniform Commercial Code as adopted
by the State of Texas effective July 1, 2001: "Accounts,"
"Account Debtor," "Chattel Paper," "Collateral,"
"Financing Statement," "Insolvent," "Proceeds," "Security
Interest," and "Supporting Obligations."
1.2 "Without Recourse" shall mean the Seller of Accounts is
not obligated to pay or repurchase an Account sold to
Allied unless Seller breaches its warranties or
representations concerning such Account. "With Recourse"
or "Recourse" means Seller shall pay or repurchase
Accounts acquired by Allied that are not paid according to
the terms of the invoice.
1.3 "Face Amount" shall mean the total amount of each Account, including
taxes, delivery charges, etc.
1.4 An Account shall be deemed to be "Disputed" if (i) the
Account Debtor disputes any of the terms of an Account,
including the amount owing, timely delivery of the goods,
conformity of the goods or services to the order, or any
other aspect of the sale giving rise to the Account for
any reason whatsoever, even if the dispute has no merit,
is in bad faith or is unreasonable, (ii) the Account
contains mistakes, is not correct or was sent in error, or
(iii) all of the following three conditions exist: (a) the
Account is not paid within 90 days of its invoice date,
(b) the Account Debtor will not communicate the reason for
non-payment to Allied, and (c) the Seller fails to
produce, within such time period, good and sufficient
evidence that nonpayment is due to the Account Debtor's
financial inability to pay, the pendency of a bankruptcy
proceeding by or against the Account Debtor or some reason
other than a dispute of the type referred to above.
1.5 "Discount" shall mean the sum of the following: (i) 1.75%
of the Face Amount of each Account sold to Allied under
this Agreement for the Initial Payment Period and (ii)
.06% for each 1 day period that the Account remains unpaid
after the Initial Payment Period (as hereinafter defined),
until the earlier of (a) the date it is paid in full or
repurchased by the Seller in accordance with this
Agreement, or (b) if the Account is not one that the
Seller is or becomes obligated to pay or repurchase, 150
days from the date of the invoice of the Account.
1.6 "Initial Payment Period" shall mean the period of 30 days
from the date Allied has purchased an Account under this
Agreement.
1.7 "Purchase Price" shall mean the Face Amount of the Account
less the Discount.
Other words used herein, which are capitalized, shall have the
definitions prescribed herein. Variations of words defined herein shall
have the same meaning as the defined terms.
2. Offer to Sell. Seller may, at its option, offer to sell, assign
and transfer to Allied its existing and hereinafter arising,
acquired or created Accounts. Any such offer shall be made on
an assignment form prescribed by Allied (the "Schedule") sent
to Allied at its above stated office and accompanied by a copy
of (i) each invoice, (ii) the ▇▇▇▇ of lading, shipping
documents or other proof of delivery, (iii) the contract or
purchase order (or purchase order number which corresponds with
the invoice), and (iv) such other documentation as may be
requested by Allied for each Account listed on the Schedule.
3. Acceptance of Offer. Allied may accept Seller's offer to sell
Accounts at its above stated office by either (i) paying the
Purchase Price (less the Reserve, defined below) with respect
to all Accounts appearing on the Schedule submitted to Allied,
or (ii) by marking out the Accounts which appear on the
Schedule and which Allied is unwilling to purchase, paying the
Purchase Price (less the Reserve) for the remaining Accounts,
and sending a copy of the Schedule to Seller which shows which
Accounts were rejected. Allied shall not be obligated to
purchase any Account that Seller offers to sell to Allied.
4. Reserve. Allied may, at its sole option and discretion, defer
making payment to Seller of a portion of the Purchase Price
payable for all Accounts purchased under this Agreement which
have not been paid by the Account Debtor or paid or repurchased
by Seller's payment of the Repurchase Price to Allied, up to an
aggregate amount equal to 13.25% of the Face Amount of all such
Accounts (the "Reserve"). The Reserve shall not bear interest.
The remaining portion of the Purchase Price payable for each
Account purchased hereunder and which constitutes part of the
Reserve is payable by Allied to Seller, on request of Seller
(limited to one request per week), after the earlier of (i) the
date the Account is paid to Allied, or (ii) 150 days from the
date of the invoice of the Account, unless the Reserve is
increased as herein provided or the Account is or becomes one
that the Seller is obligated to repurchase or pay.
Notwithstanding the preceding limitation on the Reserve, in the
event Seller breaches any representation, warranty, term,
condition or provision of this Agreement, or if in Allied's
reasonable judgment it is necessary to increase the Reserve to
protect Allied from losses due to a Dispute of any Account,
returns or other contingencies, or Seller's unsatisfied
obligations and liabilities, Allied is entitled to increase the
amount of the Reserve without Seller's consent. If any Account
owned by Allied is not paid within 75 days of the date of the
invoice related thereto, Allied may presume that the Account
may be Disputed and may increase the Reserve by an amount equal
to that portion of the Purchase Price previously paid by Allied
plus the Discount. In the event Allied notifies Seller that it
has increased the Reserve, Seller shall immediately refund to
Allied a portion of the Purchase Price previously paid by
Allied for the purchase of Seller's Accounts which is equal to
the increased amount of the Reserve. After the Term of this
Agreement defined below has expired and Seller has paid its
liabilities to Allied and fulfilled its obligations arising
hereunder, Allied shall pay the balance of the Purchase Price
payable for all Accounts purchased hereunder which constitutes
Reserve (if any) to Seller. The purpose of the Reserve is to
provide Allied with additional collateral to secure payment of
Seller's liabilities and performance of Seller's obligations
arising under this Agreement. Allied shall be entitled to
offset or recoup from the Reserve the amount of any liabilities
owing by Seller to Allied, whether presently existing or
hereinafter arising, and whether or not arising under this
Agreement, including, but not limited to, Seller's obligation
to repurchase Accounts or to pay Accounts pursuant to the
provisions of this Agreement. Seller acknowledges that the
Reserve is not a cash deposit, but represents the balance of
Allied's liability to Seller for payment of the Purchase Price,
subject to its right of offset or recoupment and its security
interest in the Reserve. Allied shall provide Seller with a
monthly statement of accounting of transactions affecting the
Reserve.
5. Seller's Repurchase Obligation. In addition to all other rights of
Allied hereunder, Allied may require that Seller repurchase, by payment
of the Repurchase Price together with any other unpaid fees then owing
to Allied, any Account that has been purchased by Allied: (i) for which
Seller has breached its warranty or representation concerning such
Account as set forth herein; or (ii) which was purchased by Allied With
Recourse. If any Account purchased by Allied is one that Seller is or
becomes obligated to pay or repurchase under this Agreement and is not
paid within the Initial Payment Period, Allied, at Allied's sole
discretion, may elect to: (i) retain ownership of the Account until the
earlier of either the date the Account is paid by the Account Debtor or
90 days after the invoice date of the Account, or (ii) at any time
require Seller to repurchase the Account at the Repurchase Price. The
purchase price for any Account, which Seller is required to repurchase
from Allied under this Agreement is the Face Amount of the Account (the
"Repurchase Price"). If Seller ever becomes obligated to repurchase an
Account from Allied, it shall not become the owner of such Account until
it has paid the Repurchase Price to Allied.
6. Minimum Sales. If Seller fails to offer to sell and assign to Allied a
monthly minimum of $0 in Accounts which are acceptable to Allied, Seller
will pay to Allied the difference between the Discount on all Accounts
purchased by Allied from Seller during the month and $0.
7. Recourse. Except as provided below, all Accounts sold and purchased
hereunder are sold Without Recourse on Seller. Allied may notify Seller
in writing that the Accounts of a specific Account Debtor shall be
purchased only With Recourse; thereafter, any Accounts of such Account
Debtor which are purchased by Allied shall be purchased only With
Recourse on Seller.
8. Account Warranties. Seller warrants, represents, covenants and agrees
that the presently existing and hereafter arising, acquired or created
Accounts of Seller sold to Allied or in which Allied obtains a security
interest: (i) are not and will not be Disputed; (ii) will be paid when
due (unless the Account was purchased Without Recourse); (iii) are owned
solely by Seller, which has the power to transfer the Accounts, and that
its title to the Accounts is free of all adverse claims, liens, security
interests and restrictions on transfer, encumbrance or pledge, except as
created by this Agreement; (iv) set forth the correct and complete terms
of sale, which have not been and will not be altered or amended; (v) are
valid and owing, and all goods and services giving rise to the Accounts
have been provided or delivered in accordance with Seller's agreement
with the Account Debtor; (vi) will not be paid by a preference payment
or fraudulent transfer (as defined by the Bankruptcy Code or the
relevant law of any state); (vii) are not and shall not become subject
to a defense or claim in recoupment or setoff that can be asserted
against Allied; (viii) are not owing by Account Debtors that were
subject to insolvency or bankruptcy proceedings concerning which Seller
had any notice as of the date the Account is sold, or in which Seller
owns an interest of any kind; (ix) shall be reflected on Seller's books
and records as having been transferred, sold and conveyed to Allied if
Allied purchases such Accounts; and (x) shall be evidenced by an
invoice, and each invoice shall have printed on the face thereof a
statement, approved by Allied, notifying the Account Debtor that the
invoice has been sold and assigned to Allied and is payable only to
Allied (or jointly to Allied and Seller) at the address designated in
such notice and that, if the Account is paid, the Account will be paid
by the Account Debtor in accordance with such instructions. The
warranties and representations set forth herein shall apply as of the
date each Account is sold hereunder and shall continue with respect to
each Account until each such Account is paid. If Seller breaches any
warranty, covenant or agreement set forth above, Seller shall repurchase
the applicable Account for the Repurchase Price, or pay the Account;
such payment or repurchase shall cure Seller's default for breach of
warranty with respect to such Account.
9. Other Warranties and Covenants of Seller. Seller further warrants,
represents, covenants and agrees that as of the Effective Date and at
all times during the Term of this Agreement: (i) Seller is and shall be
able to pay its debts as they become due; (ii) Seller's (a) chief
executive office is located in the State of Texas, (b) state of
incorporation or charter is the State of Texas and (c) exact legal name
is as set forth in the first paragraph of this Agreement, and Seller
does not operate under any trade name or assumed name except: Systems
Evolution Inc.; (iii) Allied is and shall remain Seller's sole factor,
and Seller will not sell its Accounts to any other person, firm or
corporation during the Term; (iv) after written notice by Allied to
Seller and automatically, without notice, after Seller's default under
this Agreement, Seller shall not, without the prior written consent of
Allied in each instance, (a) grant any extension of time for payment of
any Accounts or any other Collateral which includes a monetary
obligation, (b) compromise or settle any Accounts or any such other
Collateral for less than the full amount thereof, (c) release in whole
or in part any Account Debtor or other person liable for payment of
Accounts or any other such Collateral, or (d) grant any credits,
discounts, allowances, deductions, return authorizations or the like
with respect to any Accounts or any such other Collateral; (v) before
sending any invoice to an Account Debtor with respect to an Account that
has been sold to Allied, Seller shall ▇▇▇▇ the same with a notice of
assignment as may be required by Allied; (vi) Seller maintains and shall
continue to maintain complete and accurate business records of the type
normally maintained by businesses similar to Seller, and all financial
records, statements, books and other documents shall be made available
for Allied's inspection and shall be true and accurate in all respects;
(vii) the Accounts and Collateral are and shall at all times remain free
and clear of liens, claims and encumbrances other than the security
interests granted to Allied hereunder; (viii) Seller insures and shall
continue to insure its business and its assets in a manner customary for
businesses of the type of Seller's business, and Seller will insure its
inventory and goods in transit for their full value; (ix) Seller will
not sell, encumber or move the Collateral except in the ordinary course
of its business, without the prior written consent of Allied; (x) Seller
is and shall remain in compliance with all federal, state and local tax
laws, rules and regulations and shall furnish Allied with evidence
thereof on demand; (xi) Seller will preserve its corporate existence and
not, in one transaction or series of related transactions, merge into or
consolidate with any other entity, change the form of its legal
existence, or sell all or substantially all of its assets; and (xii)
Seller will not change the state where it is located, will not change
the state where it is incorporated, will not amend its corporate
charter, and will not change its corporate name without providing Allied
with at least 30 days prior written notice. Seller also agrees that, if
an Account purchased by Allied authorizes the Account Debtor to discount
the Face Amount of the Account for prompt payment, the Seller shall pay
to Allied an amount equal to the discount taken by the Account Debtor
(even if not properly taken) and Allied is authorized to offset such
discount against the Reserve.
10. Notice to Allied. Seller shall immediately notify Allied of (i) a
Dispute of any Account sold or encumbered under this Agreement, (ii) any
other breach of warranty or default in Seller's covenants and agreements
set forth herein, (iii) Seller's discovery of evidence of Insolvency of
an Account Debtor, and (iv) the filing and service of a lawsuit or
adversary proceeding related to an Account purchased by Allied or the
payment related thereto (including, but not limited to, preference or
fraudulent transfer litigation).
11. Security Interest in Collateral. To secure Seller's payment to Allied of
all amounts owing to Allied hereunder or damages arising due to Seller's
breach of the terms, warranties, representations, or conditions of this
Agreement or any other agreement by and between Allied and Seller,
whether now or hereafter owing to Allied, Seller grants to Allied a
Security Interest in all of its presently existing and hereinafter
arising, acquired or created: Accounts, Chattel Paper, Supporting
Obligations, and all amounts owing to Seller hereunder, including the
Purchase Price and Reserve, and all Proceeds thereof. Seller agrees as
follows with respect to the aforementioned Collateral: (i) Allied shall
have the right at any time and in its sole discretion to enforce
Seller's rights against the Account Debtors and obligors; (ii) Seller
will not pledge, hypothecate or encumber the Collateral during the Term
of this Agreement and while it is indebted or otherwise obligated to
Allied; (iii) Allied may exercise all rights and remedies of an unpaid
seller with respect to Accounts, Supporting Obligations, and Chattel
Paper constituting Collateral hereunder, including the right of
replevin, reclamation and stoppage in transit; (iv) Seller has the risk
of loss of the Collateral; and (v) Allied shall have no duty to collect
the Collateral or preserve or enforce any rights relating to the
Collateral.
12. Inspection of Records. Any agent of Allied may audit, check, make
abstracts from or copies of the books, records, receipts,
correspondence, memoranda, and other papers or data relating to the
Collateral, Accounts purchased under this Agreement, the obligations of
Seller to Allied and any other transactions between Seller and Allied,
or generally audit all of Seller's books and records at Seller's place
of business upon Allied's demand therefore. Seller shall at all times
maintain a complete set of books and records containing up-to-date
posting of all of its cash and accrual transactions of any nature.
13. Property of Allied/Proceeds and Returned Goods Held in Trust. After
Allied has purchased an Account from Seller, (i) the Account and all
proceeds thereof shall become the sole and absolute property of Allied,
(ii) Allied may at any time in its sole discretion notify all Account
Debtors of Accounts purchased by Allied that such Accounts have been
sold and assigned to Allied and are payable only to Allied at the
address provided by Allied, (iii) Seller shall immediately make proper
entries on its books and records disclosing the absolute sale of such
Accounts to Allied, (iv) Seller shall not hinder, delay or interfere
with payment of Accounts and shall cooperate with and assist Allied in
connection with Allied's handling, collection or other dealings with the
Accounts and Account Debtors, including, without limitation, assisting
Allied in obtaining written confirmation, statements or agreements from
Account Debtors which specify or confirm any information requested by
Allied with respect to the Accounts, and (v) Seller shall hold any
check, commercial paper, notes, cash or other forms of payment of any
Account sold to Allied which may come into Seller's possession or under
its control (even if such payment is payable to Seller) in trust for the
benefit of Allied and shall immediately turn over and deliver to Allied
all such payments, in kind, and in the exact form received. Seller shall
endorse any instrument or other form of payment which is payable to
Seller, but which is paid on an Account sold to Allied hereunder. In the
event of the return or non-acceptance, in whole or in part, of property,
the sale of which resulted in Accounts which were sold and assigned to
Allied, the Seller shall hold such property in trust for Allied, give to
Allied immediate notice of such return or non-acceptance, immediately
turn over such property to the custody and control of Allied, and
legibly ▇▇▇▇ such merchandise as the property of Allied; thereafter,
upon demand, Seller shall repurchase such property from and pay to
Allied the invoice price thereof, and upon such payment the Seller shall
be entitled to the redelivery of such property. If Seller fails to make
such purchase and payment immediately upon demand, it shall be in
default hereunder and Allied shall be entitled (in addition to its other
remedies) to sell such property at public or private sale and to charge
Seller's account with the difference between the invoice price of such
property and the amount realized upon the sale, plus all charges, fees
and commissions upon such sale. Allied may become a bidder and purchaser
at any such sale.
14. Breach of Trust Fee. Seller's strict adherence to the provisions of
Paragraph 13 is essential in order for Allied to purchase Seller's
Accounts at the Discount and on the other terms set forth in this
Agreement. Seller agrees that the provisions of such paragraph are of
the essence of this Agreement and agrees to implement policies and
procedures to ensure its consistent and prompt performance of its
obligations hereunder. In the event Seller breaches its obligations
under such paragraph for reasons other than excusable neglect (which
shall be determined solely by Allied in its sole judgment and
discretion), (i) Allied may immediately terminate this Agreement and
charge the Termination Fee, as defined in ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, (▇▇)
Seller shall pay to Allied a fee equal to 15% of the amount of any
payment or other property which was received by Seller as property of
Allied in addition to all other amounts owing to Allied, and (iii)
Seller, at Allied's option, shall immediately repurchase all Accounts
acquired by Allied which are then owing by the Account Debtors by
payment of the Repurchase Price to Allied, even if such Accounts were
purchased Without Recourse.
15. Power of Attorney. Seller makes, constitutes and appoints Allied as
Seller's true and lawful attorney-in-fact with power of substitution and
with power and authority to: (i) endorse the name of Seller or of any of
its officers or agents upon any notes, checks, drafts, money orders, or
other instruments of payment; (ii) sign and endorse the name of Seller
or any of its agents upon any invoice, freight or express ▇▇▇▇, ▇▇▇▇ of
lading, storage or warehouse receipt, drafts against Account Debtors,
assignments, verifications, demands under letters of credit and notices
in connection with Accounts acquired by Allied or which are Collateral
under this Agreement, and any instrument or document relating thereto or
to Seller's rights therein; (iii) execute any agreement compromising and
settling any Dispute or collection of any Account owned by Allied or
owned by Seller, if Seller is in default hereunder, on terms and
conditions acceptable to Allied in its sole discretion; (iv) bring suit
in the name of Seller or Allied to collect any Account; (v) amend the
terms of any Account owned by Allied or owned by Seller, if Seller is in
default hereunder; (vi) execute any financing statements (including
amendments) to perfect Allied's Security Interest granted by this
Agreement; (vii) execute and file in the name of Seller or Allied, or
both, mechanics' liens and all related notices and claims under any
payment bond, in connection with goods or services sold by Seller for
the improvement of realty; (viii) notify any Account Debtor obligated
with respect to any Account purchased by Allied that the underlying
Account has been assigned to Allied by Seller and that payment thereof
is to be made to the order of and directly and solely to Allied; (ix)
communicate directly with Account Debtors to verify the amount and
validity of any Account and to collect payment; (x) if Allied (in its
sole and absolute discretion) declares Seller to be in default
hereunder, give written notice to such office and officials of the
United States Post Office to effect such change or changes of address
that all mail addressed to Seller may be delivered directly to Allied.
Seller's attorney-in-fact is hereby granted full power to do all
necessary things to accomplish the above as fully and effectively as
could Seller; and (xi) exercise reclamation rights of Seller and to file
a claim in a bankruptcy proceeding of an Account Debtor (which Seller
requests Allied to do). Seller ratifies all that the attorney-in-fact
shall lawfully do or cause to be done by virtue hereof. The power of
attorney shall be irrevocable for the Term of this Agreement and all
transactions hereunder.
16. Default. Except as specifically provided herein, the following events
shall constitute a default under this Agreement: (i) Seller fails to pay
any amounts owing hereunder or fails to fulfill its other obligations
under this Agreement or fails to make payments or fulfill obligations
under any other agreements that it may have with Allied, (ii) Seller's
warranties or representations set forth herein prove to be untrue or
false in any respect, howsoever minor, (iii) Seller or any guarantor of
the payment and performance of obligations hereunder becomes subject to
any debtor-relief proceedings, (iv) any such guarantor fails to perform
or observe any of such guarantor's obligations to Allied or to notify
Allied of its intention to rescind, modify, terminate, or revoke any
guaranty, or any such guaranty ceases to be in full force and effect for
any reason whatsoever, or (v) Allied, for any reason, in good faith,
deems itself insecure with respect to the prospect of repayment or
performance of the obligations of Seller. All warranties and
representations of Seller under this Agreement
are continuing warranties and representations.
17. Term. Unless sooner terminated by either of the parties hereto, the
initial Term of this Agreement shall commence on the Effective Date and
continue for twelve months thereafter, and this Agreement shall
automatically renew for additional six-month renewal Terms at the end of
the initial Term and each renewal Term unless either party hereto gives
written notice to the other at least 30 days prior to the end of the
original Term or any renewal Term that the Term is not renewed. (Such
initial Term and renewal Term is the "Term.") Allied may terminate this
Agreement at any time (i) if the Seller is in default under this
Agreement, by giving written notice to Seller, or (ii) by giving 30 days
advance written notice to Seller. Provided Seller is not in default
hereunder, Seller may terminate this Agreement at any time by giving 30
days prior written notice to Allied, accompanied by the Termination Fee.
A fee of 2% of the lesser of (a) $1,500,000 or (b) the maximum amount of
outstanding Accounts purchased by Allied at any time during the Term
shall be paid by Seller to Allied if this Agreement is terminated by
Seller (except as hereinafter provided) or if this Agreement is
terminated by Allied due to Seller's breach of any warranty, term,
condition or provision of this Agreement (the "Termination Fee");
provided, however, the Termination Fee is waived if Seller is not in
default and obtains a bank loan, secured by its Accounts, and pays all
of its obligations to Allied from the loan proceeds. The Termination Fee
is not a penalty, but is a reasonable estimate of the damages Allied is
likely to suffer as a result of termination, and constitutes agreed
liquidated damages. All obligations hereunder shall continue in full
force and effect with respect to all transactions entered into and
obligations, whether absolute or contingent, existing or incurred before
the end of the Term.
18. Miscellaneous. The parties agree to the following additional terms:
18.1 This Agreement shall be binding upon and inure to the benefit of
both parties and their legal representatives, successors and assigns.
18.2 This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Texas. Venue for the
institution of any legal proceeding shall be in Dallas County, Texas.
Each sale of an Account to Allied under this Agreement is an "Account
Purchase Transaction" as defined by section 306.001(1) of the Texas
Finance Code and is subject to such subtitle of the Texas Finance Code.
18.3 If any term of this Agreement is held to be illegal, invalid, or
unenforceable, such determination shall not affect the validity of the
remaining terms. Time is of the essence of this Agreement.
18.4 Seller authorizes Allied to file a Financing Statement describing
the above described Collateral (and all amendments thereto and renewals
thereof) any place Allied may deem necessary or appropriate, with or
without the signature of Seller thereon. Allied may enforce and
foreclose its Security Interest in the Collateral in accordance with its
rights under the Texas Uniform Commercial Code.
18.5 All notices under this Agreement shall be in writing and delivered
personally, faxed or mailed by certified mail, return receipt requested,
or postage prepaid. The parties shall use the addresses or fax number
set forth below for all notices, unless the party giving the notice has
received written notice from the recipient of a change of address or fax
number at least 10 days prior to the notice given under this Agreement.
Allied Capital Partners, L.P.
▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Hand Delivery or overnight delivery only:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Seller:
Systems Evolution Incorporated
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
18.6 Seller waives all notices of default, opportunity to cure,
presentment, demand, protest, and notice of dishonor.
18.7 This Agreement constitutes the entire understanding between the
parties. It may not be changed or terminated except in an instrument
signed by both parties.
18.8 Allied shall not be deemed to have waived any of its rights and
remedies unless the waiver is in writing and signed by Allied. A waiver
by Allied of a right or remedy under this Agreement on one occasion
shall not constitute a waiver of the right or remedy on any subsequent
occasion.
18.9 Each statement of Seller's account which Allied sends to Seller
shall be deemed acceptable and binding upon Seller unless Allied
receives written notice from Seller stating in detail and with
particularity any exception thereto within 30 days after the date
thereof.
18.10Seller shall reimburse Allied for the following costs incurred by
Allied in the course of performing its functions under this
Agreement: credit research, certified mail postage, UCC searches
and UCC filing fees, and wire transfer fees. The cost of credit
reports shall be reimbursed at $20.00 per report; all other costs
shall be reimbursed at Allied's actual cost. Seller also agrees to
reimburse Allied the actual amount of costs and expenses,
including reasonable attorney's fees, incurred by Allied in
protecting, preserving or enforcing any lien, security interest,
title, collateral or other right granted by Seller to Allied or
arising under applicable law, whether or not suit is brought,
including but not limited to the defense of fraudulent transfer
and preference claims, enforcement of this Agreement or recovery
of any damages incurred by Allied as a result of the Seller's
default.
18.11 Seller agrees to execute any further documents and to
take any further actions reasonably requested by Allied
to evidence or perfect the Security Interest granted
herein or the assignments of Accounts pursuant hereto, or
to give effect to any of the rights granted to Allied
under this Agreement. If Allied (in its sole and absolute
discretion) declares Seller to be in default hereunder,
Allied may, at any time: (i) notify any Account Debtor to
make payment of any Account directly to Allied,
regardless of whether such Accounts have been purchased
by Allied or Allied has a Security Interest therein, and
(ii) initiate electronic debit or credit entries through
the ACH system to Seller's bank accounts or other deposit
account maintained by Seller, wherever located, to
collect all amounts owing to Allied by Seller.
18.12 Seller has signed this agreement and submits the
Agreement to Allied for acceptance at Allied's offices in
Dallas, Dallas County, Texas. Seller and Allied shall
make all payments and perform all other obligations
arising hereunder at Dallas County, Texas, and this
Agreement is made and entered into at Dallas County,
Texas. Dallas County, Texas, shall be the venue for any
litigation arising under this Agreement. In the event it
becomes necessary for Allied to obtain a temporary
restraining order or other injunctive relief in order to
enforce the provisions of this Agreement, Seller hereby
agrees to such an order, and the parties agree that the
Court may require a bond which does not exceed the sum of
$1,000.00 as a condition therefor, and such bond shall be
reasonable and adequate in all respects and under all
circumstances.
18.13 All amounts payable to Allied by Seller under this
Agreement are payable on demand by Allied, except amounts
payable under Paragraph 13 of this Agreement, for which
no demand is required; Allied is authorized, at its sole
option, to collect any payments owing by Seller to Allied
under this Agreement by debit, offset or recoupment from
or against the Reserve. In the event Seller is in default
under any of the terms of this Agreement, Allied may, at
its option, require Seller to repurchase all unpaid
Accounts that were purchased by Allied, even if such
Accounts were purchased Without Recourse. Interest shall
accrue on all past due sums owing to Allied by Seller at
18% per annum if Seller is a corporation or 10% per annum
if Seller is not a corporation.
Seller:
Systems Evolution Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
Title: CEO
Date:
Accepted at Dallas, Dallas County, Texas by Allied on the --day of
______________, 2004.
ALLIED CAPITAL PARTNERS, L.P.
BY: ▇▇▇▇▇▇ Capital Corporation
Its: General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
