Celerity Solutions, Inc.
Exhibit 10.56 Account receivable Factoring Agreement
IMPERIAL BANK
AGREEMENT FOR PURCHASE OF RECEIVABLE
(Full Recourse)
This AGREEMENT is made on February 18, 1999 by and between Celerity Solutions,
Inc. having its principal place of business at 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxx
of Norfolk, State of MA 02026, (the "Seller") and Financial Accounts Management
Services, a division of Imperial Bank, having a place of business at 220 Air
port Parkway, Xxx Xxxx, Xxxxxxxxxx, 00000 (the "Purchaser".)
1. Definitions. The following terms shall the meanings stated:
1.1 "Account Balance" - on any given day, the gross amount of all Purchased
Receivables and other Obligations unpaid on that day.
1.2 "Account Debtor" - the obligor on a Purchased Receivable.
1.3 "Adjustments" - all discounts, allowances, returns, disputes,
counterclaims, offsets, defenses, rights of recoupment, rights of return,
warranty claims, or short payments assigned by or on behalf of any Account
Debtor with respect to any Purchased Receivable.
1.4 "Advance" - the dollar amount computed with respect to each Purchased
Receivable, equal to the Advance Rate multiplied by the face amount of the
Purchased Receivable.
1.5 "Advance Rate" - 80%
1.6 "Collateral"
1.6.1. All now owned and hereafter acquired right title and interest in, to
and in respect of all accounts, interests in goods represented by accounts,
returned, reclaimed or repossessed goods with respect thereto and rights as an
unpaid vendor contract rights, chattel paper, general intangibles (including,
but not limited to tax refunds, registered and unregistered patents, trademarks,
service marks, copyrights, trade names, applications for the foregoing, trade
secrets, goodwill, customer lists, licenses, whether as a licenser or licensee,
chooses in action and other claims, and existing and future leasehold interests
in equipment, real estate and fixtures), documents, instruments, letters of
credit, bankers' acceptances or guaranties; deposits, securities, bank accounts
deposit accounts, credits and other property now or hereafter held in any
capacity by Purchaser or its affiliates.
1.6.2 All now owned and hereafter acquired right title and interest in, to
and in respect of all goods, including but not limited to:
1.6.2.1 All inventory, wherever located, whether now owned or
hereafter acquired, of whatever kind, nature or description, including all
new materials, work-in-process, finished goods.
1.6.2.2 All equipment and fixtures, wherever located, whether now
owned or hereafter acquired, and any and all additions, substitutions,
replacements (including spare parts) and accessions thereof and thereto.
1.6.2.3 All present and future books and records relating to any of
the above including, without limitation, all computer programs, printed
output and computer readable data in the possession or contract of the
Seller, any computer service bureau or other third party.
1.6.2.4 All products and proceeds of the foregoing in whatever form
and wherever located, including, without limitation, all insurance
proceeds, all claims against third parties for loss or destruction of or
damage to any of the foregoing, and all income from the lease or rental of
any of the foregoing.
1.7 "Customer Payments" - all good funds received by Purchaser from or on
behalf of an Account Debtor with respect to Purchased Receivables.
1.8 "Face Amount of Purchased Receivables" - the gross amount due from the
Account Debtor, less any discounts allowed to the Account Debtor, computed on
the shortest selling terms stated in the invoice evidencing the Purchased
Account.
1.9 "Factor Fee" - rate of 1.75% - 25% of Face Amount of each invoice.
(Italicized verbiage added and initialed)
1.10 "Administrative Fee" - The minimum monthly fee of $0.00.
1.11 "Obligations" - all obligations now or hereafter owed by the Seller to
the Purchaser, including but not limited to the obligations created hereunder.
1.12 "Obligor" - the Seller and all guarantors and other entities who may
be obligated to pay the Obligations.
1.13 "Purchased Receivables" - all those accounts, chattel paper,
instruments, contract rights, documents, general intangibles, and rights to
payment, and proceeds thereof, arising out of the invoices and other agreements
identified on or delivered with any Transmittal Sheet provided by Seller to
Purchaser.
1.14 "Receivables" - all present and future accounts and general
intangibles of the Seller.
1.15 "Remittance" - the amount, if any, which Purchaser owes to Seller at
each Settlement Date, according to the accounting prepared by Purchaser equal
to:
1.15.1: The sum of:
1.15.1.1 The base as of the beginning of the last Settlement
Date, Plus
1.15.1.1.1 The Reserve created for each Purchased Receivable
purchased during since last Settlement Date, Minus
1.15.2 The total since the last Settlement Date of
1.15.2.1 Administrative Fees on paid Purchased Receivables.
1.15.2.2 Factor Fee on paid Purchased Receivables.
1.15.2.3 Adjustments
1.15.2.4 Repurchase Amounts (to the extent Purchaser has agreed
to accept payment thereof or deduction from the Remittance: and
1.15.2.5 The Reserve based on the Account Balance as of the
Settlement Date.
1.16 "Repurchase Amount" - See 4.1 below.
1.17 "Reserve" - A percentage of the Account Balance, computed as the
difference between the Face Amount of Purchased Receivables and the Advance,
which shall be determined by Purchaser in its reasonable sole discretion, based
on the nature and quality of the Purchased Receivables, and which shall not be
less than 20% less all fees on unpaid Purchased Receivables. The Reserve shall
be the book balance maintained in the records of Purchaser and shall not be a
segregated fund.
1.18 "Settlement Date" - the day that remittance is calculated and paid.
1.19 "Transmittal Sheet" - the forms supplied by Purchaser to Seller which
identify the receivables of Seller which it requests that Purchaser purchase.
2. Purchase Receivables
2.1 Seller for and in consideration of the Advances and other valuable
consideration, does hereby absolutely sell, assign and transfer to Purchaser all
of Seller's right, title and interest in and to the Purchased Receivables and
all moneys due or which may become due upon such Purchased Receivables.
2.2 Purchaser is not obligated to purchase any Receivables from Seller.
2.3 Purchaser may exercise its sole discretion in approving the credit of
each Account Debtor before buying any receivables.
2.3 Purchaser may have with respect to the Purchased Receivables, all the
rights and remedies of an unpaid seller under the Uniform Commercial Code and
other applicable law, including the rights of replevin, claim and delivery,
reclamation, and stoppage in transit.
3. Terms of Purchase
3.1 Each Transmittal Sheet shall reasonably identify the Purchased
Receivables, correctly state the amount owed by the Account Debtor, and shall be
signed by an authorized signatory of Seller.
3.2 Seller hereby authorizes Purchaser to insert in the Transmittal Sheet
information to describe the Purchased Receivables.
3.3 Purchaser is entitled to rely on the contents of any Transmittal Sheet
delivered by Seller, to treat the Receivables described therein as Purchased
Receivables, and to rely on the signature as an authorized signatory of Seller.
3.4 Upon acceptance and purchase by Purchaser of the Receivables described
on each Transmittal Sheet and upon Seller's request, Purchaser shall pay the
Advance to Seller.
3.5 Should Purchaser determine at any time in the reasonable exercise of
its discretion that the nature and quality of the Purchased Receivables has
deteriorated, Purchaser may change the Advance Rate with respect to all future
purchases of Receivables.
3.6. As Purchaser collects Customer Payments from or on behalf of Account
Debtors, Purchaser shall promptly credit the Customer Payments to the Account
Balance on a daily basis as funds clear, as determined by Seller in its
reasonable discretion. In the alternative, Purchaser shall have the right to
delay credit to the Account Balance for a reasonable (no more than 5 days)
number of days with respect to all Customer Payments, to allow for clearance and
collection of funds. Note: Italicized verbiage added, dated, and initialed.
3.7 If Seller is in default under this Agreement, all Customer Payments
will be applied to any Obligations in such order and manner as Purchaser shall
determine, irrespective of contrary instructions which may be received from
Seller or the payer.
3.8 Purchaser shall charge and be entitled to and Seller shall pay on each
Settlement Date the Administrative Fee and the Factor Fee on all past Purchased
Receivables.
3.9 Purchaser shall prepare and send to Seller, after close of business
each month, an accounting of the transactions for that month. The accounting
shall be deemed correct and conclusive, and shall constitute an account started
between the parties unless Seller makes written objection to Purchaser within 30
days after mailing of the accounting to the Seller.
3.10 Purchaser shall pay the Remittance to Seller within 3 days after the
Settlement Date.
3.11 In the event the calculation of the Remittance results in an amount
due to Purchaser from Seller, Seller shall make such payment in the same manner
as set forth in Section 4.2.
4. Repurchases and Recourse Purchaser's purchase of Purchased Receivables from
Seller shall be with full recourse.
4.1 Purchaser may increase the Reserve, and Seller agrees to pay to
Purchaser on demand, the full amount or any unpaid portion thereof, of any
Purchased Receivable (the "Repurchase Amount").
4.1.1 Which remains unpaid ninety (90) calendar days after invoice date:
4.1.2 Which is owed by an Account Debtor which has filed, or has had filed
against it, any bankruptcy case or insolvency proceeding or who has become
insolvent (as defined in the Federal Bankruptcy Code) or who is generally not
paying as not paying its debts as such debts become due:
4.1.3 With respect to which there has been any breach of warranty set forth
in Section 6 hereof, or any breach of any covenant contained in this Agreement,
or
4.1.4 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 court costs incurred by
Purchaser in collecting the Purchased Receivable and/or enforcing its rights
under this agreement.
4.2 Purchaser may, in its sole discretion, demand that the Repurchase
Amount to be paid by Seller (A) in cash immediately upon demand thereof; (B) by
delivery of substitute invoices acceptable to Purchaser which shall thereupon
become Purchased Receivables; (C) by deduction from the Remittance which would
otherwise be due to Seller, or by any combination of the foregoing as Purchaser
may from time to time choose.
5. Power of Attorney Seller hereby irrevocably appoints Purchaser and its
successors and assigns as Seller's true and lawful attorney in fact, with
respect to Purchased Receivables and Collateral (A) to sell, assign, transfer,
pledge, compromise, or discharge the whole or any part of such Receivables; (B)
to demand, collect receive, xxx, and give releases for moneys due or which may
become due upon such receivables and to compromise, prosecute, or demand any
action, claim, case, or proceeding relating to such receivables, including the
filing of a claim or the voting of such claims in any bankruptcy case, all in
Purchaser's name or Seller's name, as Purchaser may choose; (C) to prepare, file
and sign Seller's name on any notice, claim, assignment, or satisfaction of lien
or mechanics' lien or similar document; (D) to rectify all account debtors to
pay Purchaser directly; (E) to receive, open, and dispose of all mail addressed
to Seller for the purpose of collecting such Receivables; (F) to endorse
Seller's name on any checks or other forms of payment on receivables; (G) to
sign Seller's name to any form UCC-1 or other document necessary to perfect any
security interest granted by Seller to Purchaser; (H) to complete, execute and
file any franchise tax return or other document necessary to qualify Seller to
do business in any state which Purchaser deems necessary to enforce collection
of Receivables, and to pay on Seller's behalf any taxes or fees which may be due
by Seller in connection therewith (all such fees and dues shall be added to the
Account Balance); and (I) to do all acts and things necessary or expedient in
furtherance of any such purpose.
6. Representations, Warranties & Covenants To induce Purchaser to render its
services available to Seller, and with full knowledge that the truth and
accuracy of the following are being relied upon by the Purchaser in determining
whether to accept purchase Receivables the Seller represents, warrants,
covenants, and agrees, with respect to each Transmittal Sheet delivered to
Purchaser, then:
6.1 The Seller is the absolute owner of each receivable set forth in each
Transmittal Sheet and has full legal right to make said sale, assignment and
transfer thereof;
6.2 The correct amount of each Receivable is as set forth in the
Transmittal Sheet and is not in dispute.
6.3 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 each Transmittal
Sheet;
6.4 Each Receivable set forth in a Transmittal Sheet 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 encumbrance or lien
except to Purchaser.
6.5 There are no defenses, offsets, or counterclaims against any of the
Receivables, and no agreement has been made under which the Account Debtor may
deem any deduction or discount, except as otherwise stated on each invoice
submitted to Purchaser which is listed on the Transmittal Sheet;
6.6 Each Purchased Receivable shall be the property of the Purchaser and
shall be paid directly to Purchaser, but if for any reason it should be paid to
Seller, Seller shall promptly notify Purchaser of such payment, shall void any
checks, drafts, or moneys so received in trust for the benefit of Purchaser, and
shall promptly transfer and deliver the same to the Purchaser.
6.7 Purchaser shall have the right to endorse, and also the right to
require endorsement by Seller, on all payments received in connection with each
Purchased Receivable and any proceeds of Collateral.
6.8 The Seller, and to Seller's best knowledge, each account Debtor set
forth in the Transmittal Sheet is and shall remain solvent as that term is
defined in the Federal Bankruptcy Code.
6.9 Each Account Debtor named in the Transmittal Sheet will not object to
the payment for or the quality or quantity of the subject matter of the
Receivable and is liable for the amount set forth on the Transmittal Sheet.
6.10 Each Account Debtor shall be promptly notified after acceptance by
Purchaser that the Purchased Receivable has been transferred to and is payable
to Purchaser, and Seller shall not take or permit any action to countermand such
notification.
6.11 The Seller's place of business, and the place where records concerning
all Receivables herein referred to are kept, is the one set forth at the
beginning of the Agreement, and Seller will promptly advise Purchaser in writing
if such place of business or record keeping is changed or a new place of
business or record keeping is added.
6.12 Sell is not and will not hold any letter of credit or negotiable
instrument as support for or in payment of any Purchased Receivable, and any
such documentation received by Seller will be immediately turned over to
Purchaser, with any necessary assignment or endorsement.
6.13 Seller will not assign, transfer, sell, or grant any lien or security
interest in the Collateral to any other party without Purchaser's prior written
consent and
6.14 No Account Debtor is affiliated with Seller, either by common
ownership or family relationship.
6.15 All Receivables forwarded to and accepted by Purchaser 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.
7. Adjustments. In the event of a breach of any of the representations,
warranties, or covenants set forth in Section 6, or in the event any adjustment
or dispute is asserted by any Account Debtor, Seller shall promptly advise
Purchaser and shall, subject to the Purchaser's approval, resolve such disputes
and advise Purchaser of any adjustment. Unless reassigned to Seller, Purchaser
shall remain the absolute owner of any Purchased Receivable, which is subject to
Adjustment or Repurchase under Sections 1.3 or 4 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 Purchaser, Seller is to
resell it for Purchaser's account at Seller's expense with the proceeds made
payable to Purchaser. While Seller retains possession of said returned goods,
Seller shall segregate said goods and xxxx them "property of Financial Accounts
Management Services."
8. Security Interest
8.1 This Agreement for Purchase of Receivables is the security agreement
referred to in the Transmittal Sheet.
8.2 In order to secure the Obligations, Seller hereby grants to Purchaser a
continuing lien upon and security interest in all Seller" now existing or
hereafter ensuing rights and interest in the Collateral.
8.3 Seller is not authorized to sell, transfer, or otherwise convey any
Collateral without Purchaser's consent, except for the sale of finished goods
inventory in the Seller's ordinary course of business. Purchaser shall have the
right, upon default by Seller hereunder, to withdraw its consent to Seller's
sale of finished goods inventory, and Seller agrees that Purchaser may notify
the Account Debtors of this withdrawal of consent.
8.4 Seller agrees to sign all UCC financing statements required by and in a
form satisfactory to Purchaser.
8.5 Purchaser shall have the right at any time to notify Seller's Account
Debtors of its security interest. Email notification may be in the form of
Exhibit A hereto: (Italicized verbiage crossed out, initialed, and dated.)
9. Default
9.1 The following shall constitute Events of Default:
9.1.1 Seller fails to pay as when due any Obligations owed to Purchaser.
9.1.2 There shall be commenced by or against any Obligor any voluntary or
involuntary case under the Federal Bankruptcy Code, or any assignment for the
benefit of creditors or appointment of a receiver or custodian for a substantial
portion of its assets.
9.1.3 Any Obligor shall become insolvent in that its debts are greater than
the fair value of its assets, or such entity is generally not paying its debts
as they become due.
9.1.4 Any involuntary lien, levy, garnishment, attachment or the like is
issued against or attaches to the Purchased Receivables or the Collateral and
the same is not released within ten (10) days, or
9.1.5 Seller shall breach any covenant, agreement, warranty, or
representation set forth herein, and the same is not cured to Purchaser's
satisfaction within ten (10) days after Purchaser has given Seller oral or
written notice thereof.
9.2 Upon the occurrence of an Event of Default.
9.2.1 Without implying the existence of any obligation to Purchaser to buy
receivables, which implication is specifically negated by the terms hereof,
Purchaser may cease buying Receivables.
9.2.2 Purchaser may immediately exercise its rights and remedies with
respect to the Purchased Receivables and Collateral, as a secured party under
this Agreement, the uniform Commercial Code, and applicable law.
9.2.3 Purchaser shall have the rights as set forth in Section 8 hereof.
10. Nonpayment of Obligations. If any Obligation is not paid when due (including
amounts due under Section 3.11, Repurchase Amounts due under Section 4, or
professional fees and expenses under Section 11), such amount may be added to
the Account Balance and shall be subject to the Factor Fee rate until payment in
full.
11. Professional Fees. The Seller will pay all reasonable fees and expenses of
attorney's and other professionals that Purchaser incurs in negotiating,
amending, and enforcing this Agreement and protecting or enforcing its interest
in the Purchased Receivables or the Collateral, in collecting Purchased
Receivables, or in the representation of the Purchaser in connection with any
bankruptcy date or insolvency proceeding involving Seller, the Collateral, any
Account Debtor, or any Purchased Receivable.
12. Severabilty and Choice of Law. In the event that any provision of this
Agreement is deemed invalid by reason of Law, this Agreement will be constituted
as not containing such provision and the remainder of the Agreement shall remain
in full force and effect. This Agreement has been transmitted by Seller to
Purchaser at Purchaser's office in the State of California and has been executed
and accepted by Purchaser in the State of California. This Agreement shall be
governed by and interpreted in accordance with the laws of the State of
California without reference to choice of law.
13. Account Collection Service. In the event that Purchaser requires that all of
Seller's Receivables be paid to Purchaser subject to Purchaser's rights in the
Collateral. Purchaser agrees to remit the amount of collections on the
Receivables it receives and does not own to Seller after deducting a handling
fee of $0.00 of such amount received. It is understood and agreed by Seller that
this Section does not impose any affirmative duty on Purchaser 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. Purchaser shall have
to duty to remit collection of Collateral and may apply same to the Obligations
until said Default is cured.
14. 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 Purchaser or Seller. Seller and Purchaser each have the right to
terminate at any time provided that there is no outstanding Account Balance and
no fees, charges or other obligations owed to Purchaser at the time of
termination. Any termination of this Agreement shall not affect Purchaser's
security interest in the Collateral and Purchaser's ownership of the Purchased
Receivables, and this Agreement shall continue to be effective, until all
transactions entered into and Obligations incurred hereunder have been completed
and satisfied in full.
IN WITNESS WHEREOF, the Seller has executed this Agreement on the day and
year above written, and the Purchaser has accepted by its authorized
representative.
SELLER: Celerity Solutions, Inc.
(Signed) L. Kopeikina
BY: ___________________________
Xxxx Xxxxxxxxx
ACCEPTED AT SAN JOSE, CALIFORNIA
FINANCIAL ACCOUNTS MANAGEMENT SERVICES,
A division of Imperial Bank
(Signed) Xxxx Xxxxxxxx
BY: ___________________________
Xxxx Xxxxxxxx, President
