Exhibit 10.2
ACCOUNTS RECEIVABLE
PURCHASE & SECURITY AGREEMENT
This Accounts Receivable
Purchase & Security Agreement (the
“Agreement”), effective January 27, 2009, is
entered into by and between
(hereafter “Client”) and PACIFIC BUSINESS CAPITAL
CORPORATION, a California corporation (hereinafter
“PBCC”). The parties agree as follows:
PURPOSE OF
AGREEMENT
1. Client desires to obtain short term financing by
factoring, selling and assigning to PBCC acceptable accounts
receivable at a discount below face value. The purpose of
this financing is commercial in nature, and not for household,
family, and/or personal use.
DEFINITIONS
2. “Account” or “Account
Receivable” means any right to payment of a monetary
obligation as defined in Commercial Code Section 9102 and
includes, without limitation, goods sold, leased, and/or delivered,
or services rendered which are not evidenced by an instrument or
chattel paper.
3. “Acceptable Account” means an Account
conforming to the warranties and terms set forth herein.
4. “Customer” means Client’s customer or
the account debtor.
5. “Client” means the seller and assignor of the
Accounts.
6. “Collateral” means the intangible or tangible
property given as security to PBCC by Client for any obligations
and liabilities of Client to PBCC under this Agreement.
7. “Warrant” means to guarantee, as a material
element of this Agreement. Each separate warranty herein is
also an independent condition to PBCC’s duties under this
Agreement.
8. “Credit Problem” means a customer is unable to
pay his debts because of insolvency, the filing of a voluntary
petition in bankruptcy, the quitting of business, and the
like.
9. “Customer Dispute” means a claim, by customer
against Client, of any kind whatsoever, that reduces the amount
collectible from customer by PBCC.
(a) A “Customer Dispute” may arise from any kind
of disagreement between customer and Client whatsoever, valid or
invalid.
(b) A “Customer Dispute” may arise at anytime,
both before and/or after the signing of this agreement or the
purchase of the Account.
WARRANTIES AND COVENANTS BY
CLIENT
10. As an inducement for PBCC to enter into this Agreement,
and with full knowledge that the truth and accuracy of the
warranties in this Agreement are being relied upon by PBCC instead
of the delay of a complete credit investigation, Client warrants
and/or covenants that:
11. Client is properly licensed and authorized to operate its
business under the trade name of
and
Client’s trade name(s) has been properly filed and
published as required by applicable law.
12. Client’s business is solvent, and Client has made
and shall continue to make timely payment on deposit of any tax
required to be deducted and withheld by Client from the wages of
any employee of Client.
13. Each customer’s business is solvent to the best of
Client’s information and knowledge.
14. Client is, at the time of purchase by PBCC, the lawful
owner of and has good and undisputed title to the Accounts
purchased by PBCC.
15. Each Account offered for sale to PBCC is an accurate and
undisputed statement of indebtedness by customer to Client for a
certain sum which is due and payable in thirty days or less, or
within such time as is agreed to, in writing, by PBCC and
Client.
16. Each Account offered for sale to PBCC is an accurate
statement of a bonafide sale, delivery and acceptance of
merchandise or performance of service by Client to
customer.
17. Client does not own, control or exercise dominion over,
in any way whatsoever, the business of any customer/account debtor
to be factored by Client to PBCC.
18. All financial records, statements, books or other
documents shown to PBCC by Client at anytime, either before or
after the signing of this Agreement are true and
accurate.
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19. Client will not, under any circumstances or in any manner
whatsoever, interfere with any of PBCC’s rights under this
Agreement.
20. Client will not factor or sell Accounts except to PBCC
for the period of this Agreement, and/or for as long as any
indebtedness whatsoever remains owing by Client to PBCC.
21. Client has not transferred, pledged or granted a security
interest in Client’s Accounts or other personal property to
any other party which Client has not fully disclosed in writing to
PBCC and Client will not transfer, pledge or grant a security
interest to any other party in said Accounts or personal property
for the term of this Agreement and for as long as Client is
indebted to PBCC hereunder.
22. Client will not change or modify the terms of the
original Account with customer unless PBCC first consents to such
change in writing. For example, Client may not extend credit
to a customer beyond thirty days without prior written consent from
PBCC.
23. Client shall not consent to the placement of any lien,
security interest or encumbrance upon Client’s fixtures,
personal property of any type and wherever located except upon
written notice to PBCC, and Client shall provide written notice to
PBCC within ten days of Client obtaining any knowledge, from any
source, of the filing, recording or perfection by any means, of any
non-consensual lien, claim or encumbrance against the
aforementioned property of Client.
24. Client will maintain such insurance covering
Client’s business and/or the property of Client’s
customers as is customary for businesses similar to the business of
Client and, at the request of PBCC, name PBCC as loss payee of such
insurance.
25. Client will notify PBCC in writing prior to any change in
the location of Client’s place of business or, if Client has
or intends to acquire any additional place(s) of business, or
prior to any change in Client’s chief executive office, the
office or offices where Client’s books and records concerning
Accounts are kept.
26. Client will immediately notify PBCC in writing of any
proposed change of Client’s name, identity, legal entity,
corporate structure, use of additional trade name(s), and/or any
proposed change in any of the officers, principals, partners,
and/or owners of Client.
FURTHER PROMISES
27. SECURITY INTEREST/COLLATERAL : As a further
inducement for PBCC to enter into this Agreement, Client gives to
PBCC, as collateral for the repayment of any and all obligations
and liabilities whatsoever of Client to PBCC, a security interest,
under the Uniform Commercial Code, in the following described
property hereinafter collectively called “Collateral”:
ALL ASSETS, including, without limitation, any and all presently
existing, or hereafter arising, now owned or hereafter acquired
Accounts, Accounts Receivable, contract rights, chattel paper,
choses in action, documents, instruments, reserves, reserve
accounts, rebates, and general intangibles, and all books and
records pertaining to Accounts and all proceeds of the foregoing
property, and all property set forth in
Exhibit “A” attached hereto and incorporated by
reference herein.
28. NOTIFICATION : PBCC may at any time and at
its sole discretion notify any customer/account debtor of Client to
make payments directly to PBCC.
29. ASSIGNMENT : Client shall from time to time
at Client’s option sell, transfer and assign Accounts to PBCC
and said Accounts shall be identified by separate and subsequent
written assignments on a form to be provided to Client by PBCC
known as Schedule of Accounts.
30. APPROVAL : PBCC will not purchase an Account
unless such Account is first submitted to PBCC by Client for
approval. PBCC is not obligated to buy any Account from
Client.
31. DISCOUNT : PBCC agrees to buy Acceptable
Accounts from Client at a minimum discount (fee) of 1.0 Percent
(.01) of the face value of each Account.
32. RESERVE : PBCC may reserve and withhold an
amount in a reserve account equal to Twenty Percent
(20%) or more of the gross face amount of all Accounts
purchased. Said reserve account may be held by PBCC and
applied by PBCC against charge-backs or any obligations of Client
to PBCC, known or anticipated, and said reserve account is not due
and payable to Client until any and all such obligations are fully
paid and/or satisfied. Client gives to PBCC a security
interest in this reserve account which secures all obligations and
indebtedness arising hereunder.
33. PURCHASE TERMS : The purchase price for each
Acceptable Account shall be the gross amount
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due of each Account, less
PBCC’s earned discount of 1.0 Percent (.01) of said gross
amount. In the event that any Account remains unpaid after
the fifteenth (15th) day from the date said Account was
purchased by PBCC, the purchase price shall be reduced by an
additional service discount of .067 Percent (.00067) per
day, until said Account is paid in full commencing from the
sixteenth (16th) day after purchase of each such
Account. The additional service discount shall be
consideration for PBCC’s prolonging the period its funds are
outstanding and the additional services required in collecting
Accounts which are paid after the initial fifteen (15) day period
contemplated in this Agreement. The service discount fees
stated herein assume an advance rate of eighty percent (80%).
In the event the advance rate is more or less than eighty percent
(80%), the service discount fees applicable thereto shall be
adjusted pro-rata, as applicable, in order to maintain the same
effective yield assuming an eighty percent (80%) advance
rate. PBCC will not apply any partial payments against
factored invoices. Partial payments shall be held by PBCC
until such time as the Client repurchases the invoice(s) in
full and complete payment is received from the customer. PBCC
shall continue to charge its full service fee on the gross invoice
amount until full payment is received. PBCC reserves the
right to renegotiate its discount rate on specific Accounts, and/or
all Accounts purchased pursuant to this Agreement, as market
conditions, interest rates, and credit risks warrant. Any
payments received by Client on PBCC’s Accounts shall be the
sole property of PBCC and Client agrees and commits to hold the
exact payment instrument, (e.g., check received from any account
debtor in partial or full settlement of Accounts sold to PBCC) and
to remit to PBCC said payment instrument immediately. The
receipt of any check or other items of payment from account debtors
or Client, shall not be considered a payment on account until such
check or other item of payment is presented to PBCC’s bank
for payment, in which event, said check or other item of payment
shall be deemed to have been paid to PBCC three (3)
calendar days after advise of receipt of funds in PBCC’s
account at WELLS FARGO BANK located in Orange County
California. Should Client intercept and deposit checks
into Client’s bank account which represent payment on any
invoice(s) purchased by PBCC and fail to reimburse PBCC for
the full amount of such intercepted funds within two
(2) business days after receipt of funds by Client, in
addition to the discounts earned and due under the terms of this
Agreement, Client shall forfeit the entire initial reserve
associated with the invoices involved as well as be charged any
and all reasonable collection and/or legal fees associated with the
collection of the same.
34. RESERVES . As set forth in Paragraph 32
above, t
