|
Exhibit
10.1
RECEIVABLES PURCHASE
AND SECURITY AGREEMENT
THIS RECEIVABLES PURCHASE AND SECURITY
AGREEMENT is made as of May 8, 2008, by and between Lightpath
Technologies, Inc. (“Seller”) and LSQ FUNDING GROUP
L.C. (“Purchaser”).
1. Sale; Purchase Price; Billing;
Reserve .
1.1. Assignment and
Sale .
1.1.1. Seller shall offer to
sell to Purchaser as absolute owner such of Seller’s Accounts
as are listed from time to time on a Schedule of
Accounts.
1.1.2. Each Schedule of
Accounts shall be accompanied by such documentation supporting and
evidencing the Account as Purchaser shall from time to time
reasonably request.
1.1.3. Purchaser shall
purchase from Seller such Accounts as Purchaser agrees to purchase
in its sole discretion.
1.1.4. Purchaser shall credit
the Purchase Price, less any amounts due to Purchaser from Seller,
including, without limitation, any amounts due under
Section 1.3.2 hereof, of any Purchased Account, to
Seller’s Reserve Account, within one (1) Business Day of
the Purchase Date, whereupon such Account shall be deemed purchased
hereunder.
1.2. Billing .
Purchaser shall send a monthly statement to all Account Debtors
itemizing their account activity during the preceding billing
period. All Account Debtors will be instructed to make payments to
Purchaser.
1.3. Reserve Account
.
1.3.1. Purchaser may apply a
portion of any Purchase Price to the Reserve Account in the amount
of the Reserve Shortfall.
1.3.2. Seller shall pay to
Purchaser on written demand the amount of any Reserve
Shortfall.
1.3.3. Purchaser shall pay to
Seller upon Seller’s request, any amount by which Reserve
Account exceeds the Required Reserve Amount. Upon termination of
this Agreement or upon the occurrence of any Event of Default,
which is not cured or waived, these payments by Purchaser to Seller
shall be made no more frequently than once a month.
1.3.4. Purchaser may charge
the Reserve Account with any Obligation, including any amounts due
from Seller to Purchaser hereunder.
1.3.5. Purchaser may pay any
amounts due Seller hereunder by a credit to the Reserve
Account.
Initial
2. Authorization for
Purchases . Subject to the terms and conditions of this
Agreement, and notwithstanding Section 1.1.1, Purchaser is
authorized to purchase Accounts upon telephonic, facsimile, or
other instructions received from Jim Gaynor or Dorothy
Cipolla.
3. Fees and Expenses .
Seller shall pay to Purchaser:
3.1. Factoring Fees
.
3.1.1. Funds Usage Fee
.
3.1.1.1. A Funds Usage Fee,
earned daily, to be paid monthly on the last day of the month in
which it accrues.
3.1.1.2. Notwithstanding
Section 3.1.1.1, the Funds Usage Fee shall not accrue and be
payable on any funds subject to the Default Charge.
3.1.2. Discount Fee .
the Discount Fee, payable in consideration of the rendering of the
Credit and Collection Services, which will be deducted from the
Purchase Price.
3.1.3. Service Charge
. The Service Charge, payable on the date on which a Purchased
Account is paid in full or Repurchased.
3.1.4. Adjustment Fee
. The fees set forth in this Section 3.1 have been established
after negotiation between the Seller and the Purchaser based on the
Purchaser purchasing a minimum of $1,000,000.00 of Eligible
Accounts per each semi-annual period (“Adjustment Fee
Calculation Period”) of the Scheduled Term or the Rescheduled
Term (the “Base Sales Amount if Purchaser does not purchase
Eligible Accounts of at least the Base Sales Amount in any
Adjustment Fee Calculation Period for any reason, then Seller shall
pay to Purchaser an adjustment fee at the end of such Adjustment
Fee Calculation Period equal to (i)(a) the actual aggregate fees
earned by the Purchaser for the applicable Adjustment Fee
Calculation Period (the “Partial Fee”) multiplied by
(b) a fraction, the numerator of which is the Base Sales
Amount and the denominator which is the Eligible Purchased Accounts
sold to Purchaser for such Adjustment Fee Calculation Period minus
(ii) the Partial Fee; provided, however, if Seller does not
sell any Accounts to Purchaser in such Adjustment Fee Calculation
Period, then Seller shall pay to Purchaser an adjustment fee at the
end of such Adjustment Fee Calculation Period equal to (i) the
Base Sales Amount multiplied by (ii) a fraction, the numerator
of which is the aggregate fees earned by the Purchaser pursuant to
this Agreement and the denominator of which is the actual aggregate
amount of all Eligible Accounts purchased by the Purchaser pursuant
to this Agreement (the “No Delivery Fee”). If the
aggregate fees earned by the Purchaser pursuant to this Agreement
equal zero (0) then the No Delivery fee shall be calculated by
multiplying (i) the Base Sales Amount by (ii) a fraction,
the numerator of which is the Discount Fee and the denominator of
which is .5%. Notwithstanding anything to the contrary herein,
Purchaser may terminate this Agreement,
Initial
in its sole discretion with
three days notice, if, for a period of 45 days, Seller does not
sell any Accounts to Purchaser pursuant to this Agreement. If this
Agreement is terminated for any reason (other than upon a breach
hereto by Purchaser) before the Scheduled Term or a Rescheduled
Term, Seller shall pay to Purchaser the No Delivery Fee for the
unexpired period of time remaining in the Scheduled Term or
Rescheduled Term, as applicable.
3.2. Other Fees
.
3.2.1. Misdirected Payment
Fee . Any Misdirected Payment Fee immediately upon its
accrual.
3.2.2. Default Charge
. The Default Charge, immediately upon its accrual, on:
3.2.2.1. All past due amounts
due from Seller to Purchaser hereunder; and
3.2.2.2. The amount of any
Reserve Shortfall.
3.2.3. Early Termination
Fee . A fee earned if Seller terminates this Agreement without
the notice required in Section 13.
3.2.4. Missing Notation
Fee . The Missing Notation Fee on any invoice that is sent by
Seller to an Account Debtor which does not contain the notice as
required by Section 8.3 hereof.
3.3. Reimbursable
Expenses . The actual, out-of-pocket expenses directly and
reasonable incurred by Purchaser in the administration of this
Agreement such as wire transfer fees, overnight mail delivery,
check certification, UCC filing and search fees, and audit fees.
These fees are due immediately upon payment by
Purchaser.
4. Repurchase Of Accounts
.
4.1. Purchaser may require
that Seller repurchase, by payment of the unpaid Face Amount
thereof together with any unpaid fees relating to the Purchased
Account on demand, or, at Purchaser’s option, by
Purchaser’s charge to the Reserve Account:
4.1.1. Any Purchased Account,
the payment of which has been disputed by the Account Debtor
obligated thereon, Purchaser being under no obligation to determine
the bona fides of such dispute;
4.1.2. Any Purchased Account
for with Seller has materially breached its warranty under
Section 11 hereunder.
4.1.3. Any Purchased Account
owing from an Account Debtor which in Purchaser’s reasonable
credit judgment has become insolvent.
4.1.4. All Purchased Accounts
upon the occurrence of an Event of Default, or upon the effective
date of termination of this Agreement;
Initial
4.1.5. Any Purchased Account
which remains unpaid beyond the Late Payment Date.
4.2. The repurchase of a
Purchased Account shall not constitute a reassignment thereof and
Purchaser shall retain its security interest therein upon such
reassignment.
5. Clearance Days . For
all purposes under this Agreement, Clearance Days will be added to
the date on which any payment is received by Purchaser.
6. Security Interest
.
6.1. To secure payment and
performance of the Obligations, Seller grants to Purchaser a
security interest in and to the Collateral.
6.2. Notwithstanding the
creation of the above security interest, the relationship of the
parties shall be that of Purchaser and Seller of accounts, and not
that of lender and borrower.
7. Authorization to
Purchaser .
7.1. Seller hereby
irrevocably authorizes Purchaser and any designee of Purchaser, at
Seller’s sole expense, to exercise at any times in
Purchaser’s or such designee’s discretion all or any of
the following powers until all of the Obligations have been paid in
full: (a) receive, take, endorse, assign, deliver, accept and
deposit, in the name of Purchaser or Seller, any and all cash,
checks, commercial paper, drafts, remittances and other instruments
and documents relating to the Collateral or the proceeds thereof,
(b) take or bring, in the name of Purchaser or Seller, all
steps, actions, suits or proceedings deemed by Purchaser necessary
or desirable to effect collection of or other realization upon the
Collateral, (c) after an Event of Default, extend the time of
payment of, compromise or settle for cash, credit, return of
merchandise, and upon any terms or conditions, any and all
Collateral which includes a monetary obligation and discharge or
release any Account Debtor (including filing of any public record
releasing any Lien granted to Seller by such account debtor),
without affecting any of the Obligations, (d) execute in the
name of Seller and file against Seller in favor of Purchaser
financing statements or amendments with respect to the Collateral,
(e) pay any sums necessary to discharge any lien or
encumbrance which is senior to Purchaser’s security interest
in the Collateral, which sums shall be included as Obligations, and
in connection with which sums the Default Charge shall accrue and
shall be due and payable, (f) at any time, irrespective of
whether an Event of Default has occurred, without notice to or the
assent of Seller, notify any Account Debtor obligated with respect
to any Purchased Account, that the underlying Purchased Account has
been assigned to Purchaser by Seller and that payment thereof is to
be made to the order of and directly and solely to Purchaser, and
(g) communicate directly with Seller’s Account Debtors
to verify the amount and validity of any Purchased Account created
by Seller.
Initial
7.2. Seller hereby release
and exculpates Purchaser’s officers, employees and designees
from any liability arising from any acts under this Agreement or in
furtherance thereof whether of omission or commission, and whether
based upon any error of judgment or mistake of law or fact, except
for willful misconduct or gross negligence. Notwithstanding the
foregoing, Purchaser shall remain liable for any acts of its
officers, employees and designees. In no event will Purchaser have
liability to Seller for lost profits or other special or
consequential damages.
7.3 Seller authorizes
Purchaser to accept, endorse, and deposit on behalf of Seller any
checks tendered by an Account Debtor “in full payment”
of its obligation to Seller. Seller shall not assert against
Purchaser any claim arising therefrom, irrespective of whether such
action by Purchaser effects an accord and satisfaction of
Seller’s claims, under §3-311 of the UCC, or
otherwise.
7.4. ACH Authorization
. In order to satisfy any of the Obligations, Purchaser is hereby
authorized by Seller to initiate electronic debit or credit entries
through the ACH system to Purchaser’s Account maintained by
Seller wherever located. Seller may only terminate this
authorization by giving Purchaser ten (10) days prior written
notice of termination.
8. Covenants by Seller
.
8.1. After written notice by
Purchaser to Seller, and automatically, without notice, after an
Event of Default, Seller shall not, without the prior written
consent of Purchaser in each instance, (a) grant any extension
of time for payment of any of the Purchased Accounts,
(b) compromise or settle any of the Purchased Accounts for
less than the full amount thereof, (c) release in whole or in
part any Account Debtor, or (d) grant any credits, discounts,
allowances, deductions, return authorizations, or the like with
respect to any of the Purchased Accounts.
8.2. From time to time as
reasonably requested by Purchaser, at the sole expense of Seller,
Purchaser or its designee shall have access, during reasonable
business hours to all premises where Collateral is located for the
purposes of inspecting the Collateral, including Seller’s
books and records (solely to the extent related to the Collateral),
and Seller shall permit Purchaser or its designee to make copies of
such books and records or extracts there from as Purchaser may
request. Without expense to Purchaser, Purchaser may use any of
Seller’s personnel, equipment, including computer equipment,
programs, printed output and computer readable media, supplies, and
premises for the collection of Collateral.
8.3. Before sending any
invoice evidencing a Purchased Account to the Account Debtor,
Seller shall mark same with the Notice of Assignment as may be
required by Purchaser.
8.4. Seller shall pay when
due all payroll and other taxes and shall provide proof thereof to
Purchaser in such form as Purchaser shall reasonably
require.
Initial
8.5. Seller shall not create,
incur, assume, or permit to exist any Lien upon or with respect to
the Collateral.
8.6. Notwithstanding that
Seller has agreed to pay the Misdirected Payment Fee pursuant to
Section 3.2.1 hereof, Seller shall deliver in kind to
Purchaser on the next Business Day following the date of receipt by
Seller of the amount of any payment on account of a Purchased
Account.
8.7. Avoidance Claims
.
8.7.1. Seller shall indemnify
Purchaser from any loss arising out of the assertion of any
Avoidance Claims and shall pay to Purchaser on demand the amount
thereof.
8.7.2. Seller shall notify
Purchaser within two (2) Business Days of its becoming aware
of the assertion of an Avoidance Claim.
8.7.3. This Section shall
survive the termination of this Agreement.
9. Account Disputes .
Seller shall notify Purchaser promptly all disputes concerning any
Purchased Account. However, Seller shall not, without
Purchaser’s prior written consent, compromise or adjust any
Purchased Account or grant any additional discounts, allowances or
credits thereon. Purchaser may, but is not required to, attempt to
settle, compromise, or litigate (collectively,
“Resolve”) the dispute upon such terms as Purchaser in
its reasonable discretion deem advisable, for Seller’s
account and risk and at Seller’s sole expense. Upon the
occurrence of an Event of Default Purchaser may Resolve such issues
with respect to any Purchased Account.
10. Perfection of Security
Interest . Seller shall execute and deliver to Purchaser
such documents and instruments, including, without limitation, UCC
financing statements, as Purchaser may request from time to time in
order to evidence and perfect its security interest in the
Collateral securing the Obligations.
11. Representations and
Warranties . To induce Purchaser to enter into this
Agreement and to purchase the Purchased Accounts hereunder, Seller
hereby represents and warrants to Purchaser as follows (each of
which representations and warranties shall be deemed to be
continuing and to have been restated and reaffirmed on each
occasion that Seller submits a Schedule of Accounts to
Purchaser):
11.1. It is fully authorized
to enter into this Agreement and to perform hereunder;
11.2. This Agreement
constitutes a legal and valid obligation that is binding upon it
and that is enforceable against it in accordance with the terms
hereof.
11.3. Seller is solvent and
in good standing in the state of its organization.
Initial
11.4. There are no pending
actions, suits, or other legal proceedings of any kind (whether
civil or criminal) now pending (or, to Seller’s knowledge,
threatened) against Seller, the adverse result of which would in
any material respect affect the property or financial condition of
Purchaser;
11.5. Except as disclosed in
filings with the Securities and Exchange Commission, Seller has not
conducted business under or used any other name, whether legal or
fictitious;
11.6. Each financial
statement of Seller provided to Purchaser, whether provided prior
to or after the date of this Agreement, is true and correct in all
material respects.
11.7. The Purchased Accounts
are and will remain:
11.7.1. Bona fide existing
obligation created by the sale and delivery of goods or the
rendition of services in the ordinary course of Seller’s
business; and
11.7.2. Unconditionally owed
and will be paid to Purchaser without defenses, disputes, offsets,
counterclaims, or rights of return or cancellation;
11.8. Other than what has
been or is disclosed by Seller to Purchaser, Seller has not
received notice of actual or imminent bankruptcy, insolvency, or
material impairment of the financial condition of any applicable
Account Debtor regarding Purchased Accounts.
12. Default .
12.1. Events of
Default . The occurrence or existence of any of the following
events or conditions shall constitute an Event of Default
hereunder: (a) Seller defaults in the payment of any of the
Obligations or in the performance of any provision hereof or of any
other agreement now or hereafter entered into with Purchaser, or
any warranty or representation contained herein proves to be false
in any material respect where made, and (b) Seller becomes
subject to any debtor-relief proceedings, including by way of
t
| 
