CAPCO
FINANCIAL
CONTRACT OF SALE
SECURITY AGREEMENT
(LOC Form 5)
This Contract of Sale and Security
Agreement dated for purposes of reference
July 18, 2005; is between the undersigned,
CCI TELECOM, INC., hereinafter called
"CLIENT", and CAPCO FINANCIAL COMPANY- A
DIVISION OF GREATER BAY BANK N.A.
hereinafter called "CAPCO ", agree as
follows:
PURPOSE OF AGREEMENT:
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1. CLIENT desires to obtain
short-term financing by selling, to CAPCO ALL
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Accounts
receivable. CAPCO agrees to Purchase CLIENT's Accounts from
time
to time at a
discount below face value, utilizing an advance formula for
the purchase of
ALL Accounts based upon advances against
Acceptable/Eligible Accounts. It is clearly understood by both
parties that
ALL Accounts of
CLIENT are to be sold to CAPCO.
DEFINITIONS:
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2. "Account" means any right of
payment for goods sold, or leased, and
delivered, or
services rendered, any specific transaction, or any right of
payment.
3. "Advance Formula" means the
maximum amount available to CLIENT from CAPCO
for the purchase
of All Accounts will not exceed 85% of Acceptable/Eligible
Accounts.
4. "Acceptable/Eligible
Account" means an Account conforming to the Warranties
and terms set
forth herein that has not been outstanding for more than 90
DAYS from the
date of invoice, has been underwritten and approved by CAPCO,
and has not been
reduced from the original amount billed by, credit memo,
offset,
adjustment of any kind, or partial payment subsequent to
invoice
date.
5. "Customer" means CLIENT'S
Customer or the Account debtor.
6. "CLIENT" means the seller of
All Accounts.
7. "Collateral" means the
intangible or tangible property given as security to
CAPCO by CLIENT
for any obligations and liabilities of CLIENT to CAPCO
under the
Agreement.
8. "Warrant" means to
guarantee, as a material element of this Agreement.
9. "Credit Problem" means
Customer is unable to pay his debts because of
problems or
insolvency.
10. "Customer Dispute" means any claim
by Customer against CLIENT, of any kind
whatsoever,
valid or invalid, that reduces the amount collectible from
Customer by
CAPCO.
CLIENT COVENANTS:
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11. CLIENT agrees to sell to CAPCO ALL
ACCOUNTS RECEIVABLE, (Accounts)
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mechanic's
lien(s), and rights to payment under any stop notice(s), or
bonded stop
notice(s) securing payment of those Accounts created by CLIENT
in the course of
its business, existing as of the date of this agreement or
thereafter
created during the term of this agreement, subject to approval
and verification
by CAPCO. CAPCO is not obligated to advance funds for the
purchase of All
Accounts from CLIENT. When CLIENT notifies CAPCO of it's
Accounts, CLIENT
shall provide a copy of the original Assigned Account
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(Invoice) a copy
of the bill of lading contract, purchase order, purchase
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order number,
and/or any other requisite supporting documentation
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corresponding to
said Accounts and appropriate to the business of CLIENT,
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as requested by
CAPCO.
12. CLIENT shall prepare and give to
CAPCO proper written assignments of
Accounts,
mechanic's lien(s) on forms provided by CAPCO. The execution of
said assignments
shall transfer to CAPCO all of CLIENT's right, title and
ownership to ALL
Accounts. CLIENT or CAPCO by this agreement will properly
mark Accounts,
as assigned and sold to CAPCO, and CAPCO is authorized to
notify Customer
of said sale and assignment.
13. CLIENT represents and Warrants to
CAPCO that:
a. CLIENT is sole and absolute
owner of any and all Accounts and
mechanic's liens
and rights to payment under any stop notices, or bonded
stop notices,
sold and assigned hereunder, and CLIENT has full legal right
to make said
sale, assignment, and/or transfer.
b. All Accounts sold to CAPCO
are an accurate statement of a bonafide
sale, delivery
and acceptance of merchandise, or performance of service by
CLIENT to / for
Account-debtor. Accounts are not contingent upon
Form Date 6/97
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the fulfillment
by CLIENT and each Account-debtor's business is believed to
be solvent. The
terms for payment of said Accounts are 30 days or as
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expressly set
forth on the face of said sold and assigned Accounts, and the
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payment of said
Accounts are not contingent upon the fulfillment by CLIENT
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of any further
performance of any nature whatsoever. CLIENT shall accept no
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returns and
shall grant no allowances or credits to any sold and Assigned
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Account of any
Account-debtor without the prior written approval of CAPCO.
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c. There are no known setoffs,
Customer Disputes, adverse claims,
defenses, and/or
liens whatsoever against the payment of Accounts, and
Account's
mechanic's liens have not been previously assigned or
encumbered
by CLIENT in any
manner whatsoever. CLIENT will, immediately upon sale of
Accounts to
CAPCO make proper entries on its books and records disclosing
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the absolute
sale of Accounts to CAPCO and CLIENT will post no payment
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unless it is
reflected in a payment report from CAPCO.
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d. CLIENT will promptly notify
CAPCO in writing of any proposed change in
CLIENT'S place
of business, name, legal entity, corporate structure,
record-keeping
location, and/or as to any additional place of business, or
expiration of
any special license(s), or transfer of assets, or technology,
to a third
party, or proposed change in ownership in excess of twenty five
percent, (25%),
of outstanding shares;
e. CLIENT does not own,
control, manage, participate in management, or
have any
involvement and/or association whatsoever with the business of
any
Account-debtor
related to any Accounts sold and assigned hereunder;
f. There are no financing
statements now on file in any public office
governing, any
Account, Inventory or work in process of CLIENT in which
CLIENT is named
in or has signed as the debtor, except the financing
statement or
statements filed or to be filed in respect to this Agreement,
or those
statements now on file that have been disclosed in writing by
CLIENT to CAPCO.
CLIENT will not execute any financing statements pledging
Accounts
receivables, inventory or work in process, in favor of any
other
person or entity, excepting
CAPCO, for the term of this Agreement;
g. CLIENT'S taxes are not
delinquent nor has CLIENT been subject to a tax
levy by any
governmental entity nor are there now on file in any public
office tax liens
affecting CLIENT other than those delinquencies, levies
and/or liens
which have been disclosed by CLIENT to CAPCO;
h. All records, statements,
books, or other documents shown to CAPCO by
CLIENT at any
time, either before, or after the signing of the Agreement
are true and
accurate;
i. CLIENT has served or caused
to be served any and all preliminary
10-day notices
required by law to perfect or enforce any mechanic's lien
for All Accounts
to insure perfection of ownership for CAPCO and the
information
contained on those preliminary 10-day notices is true, correct,
and properly
recorded, to Seller's knowledge and belief;
j. Waivers and releases for all
labor, services, equipment, or material
of CLIENT and
others will be submitted on CAPCO's form concurrent with
Accounts.
14. CLIENT and CAPCO agree that CAPCO
will have FULL RECOURSE against CLIENT
and CLIENT shall
be liable to repay to CAPCO any amount paid by CAPCO to
CLIENT in
consideration for the sale, transfer, and assignment of
Accounts.
15. All Accounts shall be the sole
property of CAPCO, but if for any reason a
payment owing on
said Accounts shall be paid to CLIENT; CLIENT shall
promptly notify
CAPCO of such payment, shall hold any check, draft or money
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so received in
trust and for the benefit of CAPCO, and shall pay over such
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check or draft
in-kind, or money, to CAPCO promptly and without delay. All
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of CLIENT'S
invoices shall bear the address of a LOCK BOX ACCEPTABLE TO
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CAPCO; as the
"REMIT TO" address, and CLIENT agrees that ALL remittances
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for payment on
ALL Accounts shall be made to the LOCK BOX or other
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repository
authorized in writing by CAPCO.
16. CLIENT will furnish CAPCO periodic
statements, accounts receivable agings,
journals, bank
records, and other information as requested by CAPCO from
time to
time.
17. CLIENT will not pledge the credit
of CAPCO to any other person, or business
for any
purpo
