EXHIBIT 10.7
IBM GLOBAL FINANCING
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PLATINUM PLAN AGREEMENT (WITH INVOICE
DISCOUNTING)
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IBM BELGIUM FINANCIAL SERVICES S.A.
and
SUPPLIES DISTRIBUTORS S.A.
BUSINESS SUPPLIES DISTRIBUTORS EUROPE B.V.
PFSWEB B.V.
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CONTENTS
<Table>
1. DEFINITIONS............................................................. 1
2. CREDIT LIMIT............................................................ 7
3. SUPPLIER PURCHASE FACILITY.............................................. 7
4. RECEIVABLES, ACQUIRED RECEIVABLES AND VAT RECEIVABLES DISCOUNTING
FACILITY................................................................ 8
5. PREPAYMENTS.............................................................11
6. RECEIVABLES AND RECEIVABLES RIGHTS......................................11
7. CREDIT CHARGES AND PAYMENTS.............................................13
8. REPRESENTATIONS, WARRANTIES AND COVENANTS...............................15
9. DEFAULTS AND REMEDIES...................................................19
10. TERMINATION.............................................................20
11. GENERAL.................................................................20
</Table>
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IBM GLOBAL FINANCING
PLATINUM PLAN AGREEMENT (WITH RECEIVABLES DISCOUNTING)
THIS AGREEMENT is made on the date specified against the signature of IBM GF
below among Suppliers Distributors S.A. with a registered number of RC Liege
208795 with an address of Rue Louis Bleriot 5, B-4460 Grace-Hollogne, Belgium
("SDSA"), and Business Supplies Distributors Europe BV a Netherlands company
registered in Maastricht with a with a Belgian trade registration number of HR
Maastricht 14062763 with an address of Markt 28, 6211 CJ Maastricht, The
Netherlands ("BSDE") (SDSA and BSDE collectively, "YOU"), PFS Web B.V a
Netherlands company registered IN Maastricht under the number 17109541 with a
Belgian trade registration number of R.C. Liege 204162 ("PFS Web B.V.") (SDSA,
BSDE and PFS Web B.V. collectively, the "Loan Parties) and IBM Belgium Financial
Services N.V. with a registered number of R.C. Brussels451.673 with an address
of Square Victoria Regina 1,BE-1210 Brussels VAT BE 424300467 ("IBM GF" or
"US").
WHEREAS we agree to provide you with a Credit Limit in respect of our purchase
of Supplier Invoices and/or Receivables, Acquired Receivables and VAT
Receivables under the terms and conditions of this Agreement.
AGREEMENT
1. DEFINITIONS
1.1 In this Agreement the following terms shall (unless the
context otherwise requires) have the following meanings:-
"ACQUIRED RECEIVABLES": means the BSDE Receivables that you
acquired from BSDE in connection with the Daisytek Stock
Purchase Agreement.
"ADDITIONAL COLLATERAL": means that as specified in the
Schedule, it being understood that Additional Collateral is
not used when calculating the Shortfall Amount, if any, as
described in Clause 7.4;
"AFFILIATE": means with respect to any Person, any other
Person (the "Affiliate") meeting one of the following: (i) at
least 10% of the Affiliate's equity is owned, directly or
indirectly, by such Person; (ii) at least 10% of such Person's
equity is owned, directly or indirectly, by the Affiliate; or
(iii) at least 10% of such Person's equity and at least 10% of
the Affiliate's equity is owned, directly or indirectly, by
the same Person or Persons. All your officers, directors,
joint venturers, and partners shall also be deemed to be
Affiliates for purposes of this Agreement. All of Loan
Parties' officers, directors, joint venturers, and partners
shall also be deemed to be Affiliates of such Loan Party for
purposes of this Agreement.
"AGREEMENT": means this Agreement and all its Schedules and
any supplements to this Agreement as the same may be amended,
supplemented or modified from time to time;
"APPROVED CURRENCY" means any currency other than euro agreed
from time to time by you and us to be an approved currency for
the purposes of this Agreement;
"AUDITORS": means a nationally recognised firm of independent
accountants acceptable to us;
"AUTHORISED OFFICER": means those individuals occupying the
positions listed in Attachment A to this Agreement and who are
authorised by you to provide the instructions, authorisations,
agreements, etc. as specified in such Attachment A;
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"AUTHORISED SUPPLIER": means any supplier, for the purposes of
this Agreement, from whom we have agreed to purchase the
Supplier Invoices generated by their sales of Products to you;
"AVAILABLE CREDIT": means from time to time the Credit Limit
less the aggregate of:
(i) the principal amount of Supplier Obligations due and
outstanding by you to us; and
(ii) the aggregate amount of Prepayments made to you by us
on account of the purchase price of Receivables,
Acquired Receivables, and VAT Receivables which are
outstanding; and
(iii) any other sum due and payable by you to us under the
terms of this Agreement, including interest due and
payable and outstanding Credit Charges;
"BASE RATE": means the rate so referred to in the Schedule;
"BSD": means Business Supplies Distributors, Inc.
"BSD A": means BSD Acquisition Corp., Inc., a corporation duly
organized under the laws of the state of Delaware, with its
principal place of business at 500 North Central Expressway,
Plano, TX 75074;
"BSD COMPANIES": means BSD, BSDE. and BSD (Canada) Inc.;
"BSDE" means as defined in the caption;
"BSDE DEBTORS": means any Debtor required to make payment in
respect to the Acquired Receivables;
"BSDE RECEIVABLES": means the any payment obligation (present,
future or contingent) of a Debtor pursuant to a sales contract
with BSDE (including the future right to recover sums due
following the determination, assessment or agreement of the
amount of such obligation), including any applicable value
added taxes, duties, charges and interest (whether arising by
contract or by law) together with its Receivables Rights;
"BSDE SUPPLIER INVOICES" means undisputed Supplier Invoices
which were issued to BSDE prior to the Merger and which we
will pay the applicable Authorised Supplier on your behalf;
"BUSINESS DAY": means (a) in relation to any payment or to a
rate fixing, any day (other than a Saturday or Sunday) which
is a TARGET DAY; (b) in relation to any other matter (e.g.
notices) any day (other than a Saturday or Sunday) on which
banks are open in Brussels;
"CLOSING DATE": MEANS 25 SEPTEMBER 2001;
"COLLATERAL" means the aggregate value minus ?500,000, in our
assessment, of outstanding Receivables, Acquired Receivables
and VAT Receivables we have purchased from you together with
any Receivables Rights and any other assets, including
stock-in-trade which are charged to us by way of a Lien and
which is not subject to retention of title by any party other
than us.
"COMMENCEMENT DATE": means the commencement date of this
Agreement as specified in the Schedule;
"CONCENTRATION RECEIVABLE": means an Eligible Receivable that,
individually, or when aggregated with all other outstanding
Accounts of the same Debtor and such Debtor's Affiliates,
constitute more than five percent (5%) of the net outstanding
balance of all your Eligible Receivables then outstanding for
all your Debtors.
"CONCENTRATION DEBTOR": means at any time, any Debtor
obligated to you with respect to, or on account of, a
Concentration Receivable.
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"CREDIT CHARGES": means our charges to you (as set out in the
Schedule) for purchasing Supplier Invoices from an Authorised
Supplier as set out in Section 3 of this Agreement and
purchasing Receivables, Acquired Receivables and VAT
Receivables from you pursuant to Section 4 of this Agreement;
"CREDIT LIMIT": means the sum specified in the Schedule which
is subject to change by us;
"DAISYTEK": means Daisytek, Inc.
"DAISYTEK STOCK PURCHASE AGREEMENT": means the Stock Purchase
Agreement dated September 26, 2001 among Daisytek, BSD A, and
PFS.
"DEBTOR": means a customer of yours pursuant to a Sales
Contract who is indebted to you in respect of a Receivable or
who is indebted to you in respect of an Acquired Receivable;
"DEFAULT RATE" means the percentage as detailed as such in the
Schedule;
"DISCOUNT CHARGE" means the charge to be calculated as
described in Clause 5.3 at a rate specified in the Schedule or
such other percentage as we may from time to time agree;
"DUE DATE" means the date that payment is due to us which is,
unless otherwise agreed by us in writing (1) for Supplier
Obligations, the last day of the No Charge Period or the
Extended Credit Period as applicable (2) for Credit Charges,
the date as specified on the billing statement (3) for
Shortfall Amounts, as specified in Clause 7.4 and (4) for
Discount Charges, the date specified on the billing statement
if there is insufficient Available Credit at the time such
Discount Charges are normally credited by us against your
account;
"ELIGIBLE RECEIVABLE": means a Receivable or an Acquired
Receivable or a VAT Receivable which is not (or does not
become) an Ineligible Receivable;
"EVENT OF DEFAULT": means any of the events set out in Clause
9.1 of this Agreement;
"EXTENDED CREDIT CHARGE" means the charge (if any) as
specified in the Schedule incurred for outstanding Supplier
Obligations during an Extended Credit Period or such other
charge as we may from time to time agree;
"EXTENDED CREDIT PERIOD" means (if agreed by us) the period
specified in the Schedule following immediately after the No
Charge Period and extending the time for payment by you of
Supplier Obligations;
"FINANCIAL STATEMENTS": means your balance sheets, statements
of account including profit and loss accounts, and statements
of cash flows prepared in accordance with generally accepted
accounting principles;
"GAAP" means the generally accepted accounting principles in
the United States as in effect from time to time
"GUARANTOR": means Holdings, PFS and BSD A and any other party
that delivers a guaranty in favour of us;
"HOLDINGS": means Business Supplies Distributors Holdings,
LLC, a limited liability company duly organized under the laws
of the state of Delaware, with its principal place of business
at 500 North Central Expressway, Plano, TX 75074
"IBM": means International Business Machines Corporation;
"IBM CREDIT": means IBM Credit Corporation, a Delaware
corporation with a place of business at 4000 Executive
Parkway, Third Floor, San Ramon, CA 94583;
"IBM SINGAPORE": means IBM Singapore, Global Procurement
Services Group - Singapore Trading Center
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"IFP" means Inventory Financing partners, LLC, a US limited
liability corporation;
"INELIGIBLE RECEIVABLE": means any of the following: (i) any
Receivable or Acquired Receivable or VAT Receivable which
remains unpaid for more than 120 days after the date of the
relevant Sales Invoice; (ii) all Receivables or Acquired
Receivables or VAT Receivables of an individual Debtor where
50% or more of the relevant Debtor's aggregate outstanding
balance remains unpaid for more than 120 days after the date
of their respective Sales Invoices; (iii) any Receivable or
Acquired Receivable where the Debtor is an affiliate of yours
by means of common shareholders or officers, or where the
Debtor is an officer, employee, agent, or shareholder of your
company or Acquired Receivables payable by a BSDE Debtor that
is an Affiliate of any Loan Party or BSDE, or an officer,
employee, agent, guarantor, stockholder of Loan Party or an
Affiliate of any Loan Party or BSDE, or is related to or has
common shareholders, officers or directors with any Loan
Party; (iv) any Receivable or Acquired Receivable arising from
a consignment sale; (v) any Receivable or Acquired Receivable
where the Debtor or BSDE Debtor is not a commercial entity, or
is not resident in the countries of Austria, Belgium, Denmark,
Finland, France, Germany, Italy, the Netherlands, Norway,
Portugal, Republic of Ireland, Spain, Sweden, Switzerland and
the United Kingdom, or where the Debtor or BSDE Debtor is
subject to legal proceedings, or any steps under Insolvency
law or bankruptcy law or other law for the relief of debtors;
(vi) any Receivable or Acquired Receivable which arises from
incentive payments, rebates, discounts, credits and refunds
from a Supplier; (vii) any Receivable, Acquired Receivable or
VAT Receivable in respect of which there is a breach of any
undertaking or warranty given to us , or any other obligation
of yours relating to it; (viii) any Receivable or Acquired
Receivable or VAT Receivable expressed in a currency other
than the EURO or another currency approved by us; (ix) any
Receivable or Acquired Receivable in respect of the sale of
Products that have not yet been delivered by you, or in
respect of services invoiced by you in advance of your full
performance of such services; (x) those receivables listed in
the Schedule as Ineligible Receivables; and (xi) any other
Receivable or Acquired Receivable or VAT Receivable which we
deem, in our discretion, to be ineligible except that, In the
event we determine in our sole discretion to deem certain
Receivables, Acquired Receivables or VAT Receivables to be
ineligible pursuant to (xi) above, we will provide written
notification to you of our determination of ineligibility of
such Receivables, Acquired Receivables or VAT Receivables and
such ineligibility shall be applied to such Receivables,
Acquired Receivables or VAT Receivables arising from invoices
dated one Business Day after the date of such notification.;
"INSOLVENCY": in relation to a company means the convening of
a meeting to pass a resolution for voluntary winding up by
reason of insolvency, or the making of a winding up order, or
the issue of an application for the appointment of an
administrator, or the appointment of a receiver (whether in or
out of court) or an administrative receiver of any of the
assets or income of the company; or entry by that company into
a voluntary arrangement, or any informal arrangement generally
for the benefit of creditors or that company consulting with
creditors generally; or any material part of income or assets
being subject to seizure, distress or lien; or enforcement of
security rights; or compounding with creditors; or ceasing to
carry on business (and "INSOLVENT" shall be construed
accordingly);
"IWCF": means that certain Inventory and Working Capital
Financing Agreement among IBM Credit Corporation and Holdings,
IFP, BSD A, PFS and PFSweb
"LIEN(S)": means any mortgage, pledge, lien, charge,
assignment by way of security, hypothecation, security
interest and floating charge or any other security agreement
or arrangement relating to existing or future assets
(including, without limitation, the deposit of monies or
property with a person with the primary intention of affording
such person a right of set-off or lien) but excluding any lien
arising out of rights of consolidation, combination, netting
or set-off over any current and/or deposit accounts with a
bank or financial institution, where it is necessary to agree
to
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those rights in connection with the opening or operation of
any bank accounts or in connection with a treasury management
arrangement operated by you, in each case, in the ordinary
course of your business or risk management provided the
existence of such lien has been notified to us;
"LOAN PARTIES": means as defined in the caption.
"MATERIAL ADVERSE EFFECT": means a significant adverse effect
on (1) any Loan Party, or your parent company's or any of its
subsidiaries' or any guarantor's business operations, results
of operations, assets, or financial condition; or (2) the
value of the Collateral or (3) our rights and remedies under
this Agreement or the Security Documents or any Liens in our
favour;
"MERGER" means the event documented in, and achieved as a
result of the execution of, the Merger Documents;
"MERGER DOCUMENTS": means the (i) Agreement and Plan of Merger
and Reorganization among BSD A and BSD dated September 26,
2001 and (ii) the Certificate of Merger of BSD with and into
BSD A dated September 26, 2001;
"NO CHARGE PERIOD": means the period, if any, so described in
the Schedule, during which we will not charge you Credit
Charges in relation to each Supplier Obligation, which period
shall commence on the date of the Supplier Invoice
corresponding to each such Supplier Obligation;
"NOTIFICATION": means your confirmation to us, in such way and
with such evidence as we specify, of all Receivables and VAT
Receivables which have come into existence after the
Commencement Date, but which have not previously been Notified
to us;
"NOTIFY"/"NOTIFIED"/"NOTIFYING": means inclusion of a
Receivable, Acquired Receivable or VAT Receivable or a credit
in an Offer or Notification delivered to us;
"OFFER": means an unconditional offer to sell a Receivable,
Acquired Receivable or VAT Receivable to us with full title
guarantee to be made in such way and with such evidence of the
performance of the Sales Contract as we may specify, and where
more than one Receivable, Acquired Receivable or VAT
Receivable is at the same time subject to an Offer it shall be
treated as an independent offer to sell us each Receivable,
Acquired Receivable or VAT Receivable so offered which may be
accepted or rejected by us entirely at our discretion;
"PERSON": means any individual, association, firm,
corporation, partnership, trust, unincorporated organization
or other entity whatsoever.
"PFS": means Priority Fulfillment Services, Inc., a US
corporation;
"PFSWEB": means PFSweb, Inc., a corporation duly organized
under the laws of the state of Delaware, with its principal
place of business at 500 North Central Expressway, Plano, TX
75074
"PFS WEB B.V." means as defined in the caption;
"PREPAYMENT": means any payment by us to you or made available
to you under this Agreement on account of the purchase price
of a Receivable, Acquired Receivable and/or VAT Receivable;
"PREPAYMENT PERCENTAGE": means the amount specified as such in
the Schedule or such other percentage as we may from time to
time agree;
"PRODUCT RIGHTS" includes in relation to the Products supplied
to you by an Authorised Supplier any of the following:
(i) all the Authorised Supplier's rights as unpaid vendor
and all other rights of the Authorised Supplier under
or in relation to the relevant Supplier Invoice
(whether such rights arise from or are created by
statute, common law, contract or otherwise
howsoever);
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(ii) documentary evidence of the Supplier Invoice or its
performance or of any disputes arising;
(iii) documents of title, warehouse keepers receipts, bills
of lading, shipping documents, airway bills or
similar documents;
(iv) the benefit of all insurances;
(v) all remittances, instruments, securities, bonds,
guarantees and indemnities and accounting records;
"PRODUCTS": as the context permits means either: (i) hardware
and software and associated products and services agreed by us
and acquired by you from an Authorised Supplier; or (ii)
hardware and software and associated products and services
supplied by you to Debtors;
"PURCHASE PRICE": means the amount payable by us to you in
respect of the purchase of a Receivable or an Acquired
Receivable being the Sales Invoice Price in relation to such
Receivable or Acquired Receivable, or in the case of a VAT
Receivable, the amount stated in your invoice to the Country
of the Netherlands, less the Credit Charges and any other sums
due to us in respect of the purchase of such Receivable,
Acquired Receivable or VAT Receivable;
"RECEIVABLE": means any payment obligation (present, future or
contingent) of a Debtor pursuant to a Sales Contract
(including the future right to recover sums due following the
determination, assessment or agreement of the amount of such
obligation), including any applicable value added taxes,
duties, charges and interest (whether arising by contract or
by law) together with its Receivables Rights;
"RECEIVABLES RIGHTS": includes in relation to any Receivable
and any Acquired Receivable, any of your following rights (i)
all your rights by law or under the Sales Contract as an
unpaid vendor including reservation of title rights; (ii)
documentary evidence of the Sales Contract, or its
performance, or of any disputes arising; (iii) documents of
title, warehouse keepers receipts, bills of lading, shipping
documents, airway bills or similar documents; (iv) the benefit
of all insurances; (v) all remittances, instruments,
securities, bonds, guarantees and indemnities and accounting
records; any assets (other than Receivables and Acquired
Receivables purchased by us pursuant to the terms of this
Agreement) and any guarantee(s) which constitute security in
respect of your obligations to us with respect to the purchase
of Receivables, Acquired Receivables and VAT Receivables by us
pursuant to this Agreement as set out in the Schedule);
"REPURCHASE": means the repurchase by you of a Receivable, an
Acquired Receivable or a VAT Receivable at its Repurchase
Price;
"REPURCHASE PRICE": means a sum equivalent to the Purchase
Price of a Receivable, Acquired Receivable or VAT Receivable
plus all sums (if any) then outstanding and due to us in
respect of any relevant Credit Charges relating to that
Receivable, Acquired Receivable or VAT Receivable;
"SALES CONTRACT": means a contract under which you sell
Products to Debtors;
"SALES INVOICE": means a valid invoice issued by you to a
Debtor under a Sales Contract;
"SALES INVOICE PRICE": means the amount payable by the
relevant Debtor as evidenced by a Sales Invoice in respect of
the supply of Products (including Value Added Tax) less all
and any credit notes, discounts and other deductions to which
the relevant Debtor is entitled and of which he avails
himself;
"SCHEDULE": means the Schedule to this Agreement as amended
from time to time by written agreement between the parties;
"SDSA" means as defined in the caption;
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"SHORTFALL AMOUNT": means the amount set out in Clause 7.4;
"SHORTFALL FEE" means the fee calculated as detailed in the
Schedule;
"SUBSIDIARY" means an entity of which a person has direct or
indirect control or owns directly or indirectly more than 50%
of the share capital or similar right of ownership and
"control" for this purpose means the power to direct the
management and the policies of the entity whether through the
ownership of share capital, contract or otherwise;
"SUPPLIER INVOICE": means a valid invoice issued by an
Authorised Supplier in respect of your acquisition of Products
from such Authorised Supplier;
"SUPPLIER OBLIGATIONS": means the amount owing by you in
respect of a Supplier Invoice that we have purchased from an
Authorised Supplier and a BSDE Supplier Invoice (including the
future right to recover sums due following the determination,
assessment or agreement of the amount of such obligation),
including any applicable value added taxes, duties, charges
and interest (whether arising by contract or by law).
"VAT" means value added tax levied by the appropriate
authorities in a country;
"VAT RECEIVABLES" means a payment obligation of the Country of
the Netherlands or Belgium pursuant to an invoice raised to
the respective country for valid reimbursement of VAT paid by
BSDE or SDSA to the Country of the Netherlands or Belgium (1)
for products purchased from IBM or one of its subsidiaries and
which products were sold by BSDE to customers outside the
Country of the Netherlands or (2) by SDSA to customers outside
the Belgium, (3) for products sold by BSDE to SDSA and (4) for
products supplied by IBM Singapore to SDSA, subject to the
limitation specified in the Schedule;
1.2 INTERPRETATION
In this Agreement:
1.2.1 "YOU" and "US" shall where the context admits,
include our respective personal representatives,
successors in title or permitted assigns (whether
immediate or derivative);
1.2.2 any reference herein to any document, including to
this Agreement includes such document as amended,
novated, supplemented, substituted, extended,
assigned or replaced from time to time and includes
any document which is supplemental hereto or thereto;
1.2.3 where a word or phrase has to be considered in
relation to a jurisdiction outside Belgium and there
is no exact equivalent or such work or phrase then it
shall have the meaning of the closest equivalent in
such jurisdiction; and
1.2.4 "INDEBTEDNESS" includes any obligation (whether
incurred as principal guarantor or surety) for the
payment or repayment of money, whether present or
future, actual or contingent.
The headings in this Agreement are inserted for convenience
only and shall not affect its construction or interpretation.
2. CREDIT LIMIT
2.1 We will establish a Credit Limit for you up to the amount
specified in the Schedule which we may, at our discretion,
purchase Supplier Invoices from Authorised Suppliers and/or
Receivables, Acquired Receivables and VAT Receivables from
you.
3. SUPPLIER PURCHASE FACILITY
3.1 SETTLEMENT OF SUPPLIER INVOICES
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3.1.1 By entering into this Agreement you agree that you
will pay us, and not the Authorised Supplier, in
order to settle (i) Supplier Invoices which we have
purchased and (ii) BSDE Supplier Invoices.
3.1.2 We may, in our discretion and upon written notice to
you, cease to include a supplier as an Authorised
Supplier for the purposes of this Agreement. Any such
cessation will not affect our purchase of Supplier
Invoices then in existence or our obligation to pay
BSDE Supplier Invoices.
3.1.3 You authorise us to collect directly from any
Authorised Supplier any monies due for credits,
rebates, bonuses or discounts owed by such Authorised
Supplier to you. Once received we shall either (in
our discretion) apply such monies against amounts you
owe us or credit the relevant amount to your ledger
account with us and pay such monies into the bank
account referred to in Clause 6.7.1.
3.1.4 You shall pay us for a Supplier Obligation no later
than the Due Date. You agree to pay us the full
amount of such Supplier Obligation.
3.1.5 If an Extended Credit Period is provided (as
specified in the Schedule) payment of the relevant
Supplier Obligation may be deferred for such further
period as is specified in the Schedule after the end
of the No Charge Period but such Supplier Obligation
shall bear interest at the rate specified in the
Schedule during such period.
3.1.6 If you do not pay the Supplier Obligations before the
last day of the No Charge Period (or, if clause 3.1.5
applies, at the end of the Extended Credit Period),
such sum shall bear interest at the Default Rate from
the expiry of the No Charge Period (unless the
Extended Credit Period is applicable) until actual
receipt of such payment by us in cleared funds.
3.2 TITLE TO PRODUCTS
3.2.1 You hereby acknowledge that by virtue of our purchase
from the relevant Authorised Supplier of the Supplier
Invoices or, as applicable, our agreement to pay the
BSDE Supplier Invoices on your behalf, all Product
Rights, including any reservation of title rights,
belong to us until all amounts owing to us in
connection with payment of the relevant Supplier
Obligations and any outstanding Credit Charges are
paid in full by you.
3.2.2 You will not cause or permit any Debtor or other
third party to encumber our Product Rights in any
way. You agree to take such action as may be required
to implement this provision, including your
acknowledgement of, and agreement to the insertion of
written notice in Sales Invoices or, as applicable,
separate notices to BSDE Debtors, to the intent that
IBM GF is the owner of the relevant Product Rights.
4. RECEIVABLES, ACQUIRED RECEIVABLES AND VAT RECEIVABLES DISCOUNTING
FACILITY
Under the terms of this Agreement, we may from time to time purchase
Receivables, Acquired Receivables and VAT Receivables from you.
4.1 PURCHASE AND PAYMENT OF RECEIVABLES, ACQUIRED RECEIVABLES AND
VAT RECEIVABLES
4.1.1 As soon as possible on or after the Commencement Date
and upon the terms and conditions of this Agreement
you will deliver an Offer to sell to us with full
title guarantee each and all Receivables, Acquired
Receivables and VAT Receivables (together with all
Receivable Rights in existence as at the Commencement
Date). We will only accept each such Offer by
crediting to your ledger account with us the Purchase
Price of all such Receivables, Acquired Receivables
and VAT Receivables upon such date. Upon doing so,
our ownership of the Receivables, Acquired
Receivables and VAT Receivables that we have accepted
shall be complete.
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4.1.2 You hereby agree to transfer ownership to us of all
Receivables and VAT Receivables (together with all
Receivables Rights) created after the Commencement
Date until this Agreement ends, or we give you notice
under Clause 4.1.12 that no more Receivables and/or
VAT Receivables will be accepted from a date
designated by us. Such Receivables and VAT
Receivables shall vest in us the moment the
Receivables are created and transfer of ownership of
any such Receivables and VAT Receivables to us shall
take place automatically and with immediate effect.
On that day our receipt of the relevant Notifications
and our ownership of such Receivables and VAT
Receivables shall then be complete. We will credit to
your ledger account with us the Purchase Price of all
such Receivables and VAT Receivables upon such date.
4.1.3 You will pay any duties or similar charges including
any Stamp Duty arising in connection with this
Agreement and the transfer of the Receivables,
Acquired Receivables and VAT Receivables to us.
4.1.4 After the Commencement Date, you will notify us in
the manner agreed with us, and at the frequency
stated in the Schedule of the invoice value of
Receivables and Acquired Receivables, less any
rebates or deductions or other credits given by you,
or to which a Debtor may be entitled. You will
provide on request copies of the relevant Sales
Contracts, Sales Invoices, credit notes, delivery
notes, and other evidence of the fulfilment of the
Sales Contracts as we may reasonably require and PFS
Web B.V. will provide similar information in relation
to VAT Receivables. There will be either be a service
fee for each Notification subject to a minimum
service fee payable in accordance with Clause 7.2.1,
or a monthly service fee, as set out in the Schedule
which you agree to pay to us. The Loan Parties will
promptly when required by us complete any forms of
assignment, documents or other instruments necessary
to ensure the transfer of full ownership of the
Receivables, Acquired Receivables and VAT Receivables
to us or to enable us to collect the Receivables,
Acquired Receivables and VAT Receivables.
4.1.5 If, for any reason, the sale or transfer of
Receivables, Acquired Receivables and/or VAT
Receivables, pursuant to the above provisions of this
Agreement, does not vest ownership of the
Receivables, Acquired Receivables and/or VAT
Receivables in us, the Loan Parties will hold any
such Receivables, Acquired Receivables and/or VAT
Receivables and any monies collected by them in
respect of such Receivables, Acquired Receivables
and/or VAT Receivables in trust for us, and pay any
such monies to us.
4.1.6 We may use the monies we receive from or on behalf of
Debtors in respect of each Receivable, Acquired
Receivable and VAT Receivable to satisfy any monies
then owing to us by you. We will transfer any
remaining amount to your designated bank account
(provided there is no Event of Default) at the
frequency agreed with you subject to the banking
charge specified in the Schedule.
4.1.7 As the absolute owner we have the sole and unfettered
right to enforce payment of and collect any
Receivable, Acquired Receivable and VAT Receivable
purchased by us under this Agreement. However until
further notice from us the Loan Parties will act
diligently and promptly as our undisclosed agent in
administering the accounts of customers and in
collecting and enforcing payment of Receivables,
Acquired Receivables and VAT Receivables at the Loan
Parties expense. However if (a) we consider that your
continued collection of any Receivables, Acquired
Receivables and VAT Receivables would be prejudicial
to us, and that such collection would
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9
be better conducted by us or a third party, rather
than by the Loan Parties; or (b) an Event of Default
has occurred; or (c) this Agreement has terminated
for whatever reason; or (d) there has occurred (in
our reasonable opinion) a Material Adverse Effect, we
reserve the right to, or designate a third party to,
collect payment directly including issuing demands or
legal proceedings either in our own name or in your
name if required. The Loan Parties agree to
co-operate in such collection or proceedings,
including the provision of witnesses or the
production of documents. We can defend or compromise
such legal proceedings in such manner and on such
terms as we may see fit and the Loan Parties will be
bound by the result. Any reasonable expenses incurred
by us in such proceedings, including the payment of
legal and other professional fees, costs and
expenses, will be paid by you, or charged to you by
debiting the relevant accounts. Whilst the Loan
Parties may ask us to cease collection activities
against any Debtor and we will do so upon receiving
payment of the relevant Receivables, Acquired
Receivables and VAT Receivables or upon such terms as
we shall agree with the applicable Loan Party we have
the right to refuse or to accept such Loan Party's
request.
4.1.8 The Loan Parties agree that without our prior written
consent they will not sell, pledge or grant any Lien
over any Receivables, Acquired Receivables and VAT
Receivables to any third party, or agree to do so, or
enter into any other arrangement which might
adversely affect our interest in any Receivables,
Acquired Receivables and VAT Receivables.
4.1.9 After the you Notify a Receivable, Acquired
Receivable and VAT Receivable to us you agree (save
where Clause 4.1.10 applies) not to cancel or vary
any relevant Sales Contract, Sales Invoice or VAT
invoice or its relevant payment terms or settlement
discounts without our prior written consent except
where the change is due to a manifest error in your
invoice, in which case you will notify us of the
resulting change in the Receivable but our written
consent will not be required.
4.1.10 You undertake that if Products are returned to you
and you provide a credit in any form which has the
effect of reducing the amount of the relevant
Receivable or Acquired Receivable, you will promptly
notify us.
4.1.11 For each Notified Receivable, Acquired Receivable and
VAT Receivable the you represent and warrant to us
that: (a) all particulars notified to us are correct
and complete; (b) the Receivable, Acquired Receivable
and VAT Receivable has not been previously Notified
to us; (c) any covenants or undertakings given to us
relating to such Receivable, Acquired Receivable and
VAT Receivable will be complied with; (d) the Sales
Invoice to the Debtor has been issued within seven
days of the delivery of the Products; (e) each
Receivable or Acquired Receivable relates to an
actual and bona fide sale and delivery of Products to
the Debtor, is fully enforceable and is free from any
other charge, pledge, or Lien in favour of a third
party; (f) each VAT Receivable is fully enforceable
and is free from any other charge, pledge, or Lien in
favour of a third party; and (g) such Receivable,
Acquired Receivable and VAT Receivable will be paid
without any claim for set off, counterclaims,
retention or abatement.
4.1.12 The sale or transfer of Receivables and VAT
Receivables will continue until we notify You in
writing that we will accept no more Receivables
and/or VAT Receivables for purchase or until the
termination of this Agreement whichever is the
sooner.
4.2 CREDIT AND COLLECTION POLICY
The Loan Parties will comply in all material respects with the
Loan Parties' credit and collection practices agreed with us
in regard to each Receivable, Acquired Receivable, VAT
Receivable, any Receivables Rights and the related Sales
Contracts and VAT invoice.
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10
5. PREPAYMENTS
5.1 We may, following your written or electronic request, make a
Prepayment available to you in a bank account maintained by
you, subject to any banking charge as set out in the Schedule,
in the amount you select up to the Available Credit. We will
endeavour to effect such Prepayment on the day you make such
request provided we receive such request before 10.00 am on
any Business Day.
5.2 If we make a Prepayment on a day upon which any settlement of
a Supplier Obligation or Credit Charge is due or overdue for
payment, or you owe us any monies for the Repurchase Price of
Receivables, Acquired Receivables and/or VAT Receivables then
we may apply the proceeds of the Prepayment to such payment in
or towards the discharge of the monies so due to us and only
an amount equal to the difference, if any, between the amount
of the Prepayment and the amount being paid or so discharged
shall be made available to you.
5.3 A Discount Charge will accrue from day to day during this
Agreement and be calculated on the outstanding daily balance
of all Prepayments.
5.4 You may at any time pay us for Supplier Obligations and any
outstanding Credit Charges, by requesting us to apply all or
part of any Prepayment for that purpose. Prepayments may not
be used for the repayment of principal owing to us pursuant to
any agreement between yourself as borrower and ourselves as
lender unless expressly agreed by us in writing. In addition
to payment for Supplier Obligations, Prepayments shall only be
used for working capital purposes
6. RECEIVABLES AND RECEIVABLES RIGHTS
6.1 You will provide us with your Receivables Rights and take any
necessary steps to make such Receivables Rights effective and
enforceable. If a Lien is to be provided to us in relation to
any Receivable, Acquired Receivable, VAT Receivable and/or
Receivable Right not effectively purchased hereunder it shall
be a valid first priority interest.
6.2 The Loan Parties agree:-
6.2.1 to promptly execute and deliver such further
instruments and documents, and to take such further
action including any filing or payment of
registration fees at the Loan Parties' expense as we
may reasonably request for the purpose of preserving
or protecting all our rights and interests in the
Receivables, Acquired Receivables and VAT Receivables
(and the Receivables Rights) and our ownership of the
former and our rights in the latter;
6.2.2 report to us with the reports and accounts referred
to in the Schedule at the intervals specified therein
and to provide us with such other reports as may be
agreed; and
6.2.3 to advise us promptly, in reasonably sufficient
detail, of any substantial change relating to the
value, quantity or quality of the Receivables,
Acquired Receivables and VAT Receivables and the
Receivables Rights, including any movement in
location of the Receivables, Acquired Receivables and
VAT Receivables and the Receivables Rights, or any
event which could reasonably be expected to have a
significant adverse effect on the value, quantity or
quality of the Receivables, Acquired Receivables and
VAT Receivables and the Receivables Rights; and
6.2.4 promptly advise us of any loss, destruction of or
damage to the Receivables, Acquired Receivables and
VAT Receivables or the Receivables Rights and to pay
us such amount (if any) as will reduce the Credit
Limit as specified by us in our absolute discretion,
or provide such additional Collateral as we may
require; and
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11
6.2.5 to maintain books and records relating to the
Collateral in such detail, form and scope as is
consistent with good business practice and ensure,
where applicable, such books and records will reflect
our ownership of the Receivables, Acquired
Receivables and VAT Receivables and our interest in
the Receivables Rights.
6.3 NOTICE OF TRANSFER OF OWNERSHIP OF RECEIVABLES
If required by us, for each Receivable, Acquired Receivable
and VAT Receivable, the Loan Parties will give written notice
to the Debtor concerned that we are the owner of the
Receivable, Acquired Receivable or VAT Receivable, as
applicable, and that payment of Receivables, Acquired
Receivables and VAT Receivables, as applicable, must be made
to us directly. The wording of the notice and the manner in
which it is given will be as directed or approved by us. We
may give such written notice to the Debtor directly.
6.4 RECEIVABLES RIGHTS
6.4.1 The Loan Parties hereby acknowledge that all
Receivables Rights belong to us until all amounts
owing to us in connection with such Receivable,
Acquired Receivable or VAT Receivable and any
outstanding Credit Charges are paid in full.
6.4.2 You will not cause and you will use your best
endeavours not to permit any Debtor or other third
party to acquire title in any Products the subject of
Receivables or Acquired Receivables or to encumber
such title in any way before you have delivered the
relevant Products and payment in full of the relevant
Receivable or Acquired Receivable has been made by
such Debtor. You agree to take such action as may be
required to implement this provision, including the
insertion of appropriate clauses in Sales Contracts.
6.5 REPURCHASE
6.5.1 We may require you to buy back any Receivable,
Acquired Receivable or VAT Receivable and pay us the
Repurchase Price of such Receivable, Acquired
Receivable or VAT Receivable as follows in any of the
following situations: (i) if such Receivable,
Acquired Receivable or VAT Receivable is or becomes
an Ineligible Receivable; (ii) if it is the subject
of a dispute; (iii) if payment is withheld for any
reason including a dispute under the Sales Contract
or, if applicable, VAT invoice or any claim to
set-off or counterclaim; (iv) if it is payable by an
Insolvent Debtor; (v) at any time on or after any
Event of Default; or (vi) at any time after
termination of this Agreement. We will either debit
your account with the Repurchase Price if the account
is sufficiently in credit, or if not then we will
require the applicable Loan Party to make a cash
payment of the Repurchase Price in which case such
Loan Party will promptly make such payment to us. On
receipt of payment in full of the Repurchase Price of
each Receivable, Acquired Receivable or VAT
Receivable which we require a Loan Party buy back
together with all other sums due from it to us, we
will upon request assign or transfer that Receivable,
Acquired Receivable or VAT Receivable to you and it
will pay the reasonable costs incurred by us
including any duly documented and properly incurred
legal costs or other professional expenses, stamp
duties, VAT, and similar charges. Any amounts such
Loan Party collects before we receive payment in full
will be held in trust for us and promptly delivered
to us and set against the amounts owed to us and any
amounts we collect after payment in full to us will
be credited to your account.
6.5.2 You will not cancel any notices of assignment given
to Debtors owing Receivables, Acquired Receivables
and VAT Receivables which we have
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12
required you to buy back or attempt to collect such
Receivables, Acquired Receivables and VAT Receivables
for your own account until you have paid us, in
cleared funds, the Repurchase Price and all other
amounts due to us in respect of it.
6.6 CREDITS AND CLAIMS
6.6.1 If any query or claim shall arise concerning or
affecting a Receivable, Acquired Receivable or VAT
Receivable or concerning a credit or set-off by the
Debtor against the Sales Invoice amount or, if
applicable, VAT invoice, including any late delivery
or return of Products or allegation of inadequate
performance of the Sales Contract(s), the applicable
Loan Party will, after complying with Clause 4.1.10,
(i) immediately give full details in the form we
require; (ii) use all reasonable efforts to resolve
the query or claim; and (iii) notify us of any
resulting credit note or other settlement.
6.6.2 If the query or claim affects the value to us of the
Receivable, Acquired Receivable or VAT Receivable it
may be treated by us as being an Ineligible
Receivable.
6.7 BANK ACCOUNT
6.7.1 We will tell you the form of assignment to be
included on the Sales Invoice, the separate notice
for Acquired Receivables and the VAT Receivable. You
will instruct relevant Debtors to pay the amounts of
the Sales Invoices or, if applicable, the VAT invoice
to a bank account in our name or to a bank account
controlled by us and the Loan Parties must do nothing
to prevent payment to us.
6.7.2 If payments are to be made to a bank account in your
name but controlled by us you will enter into
agreements satisfactory to us, enabling the bank
account to be administered so that we have control
over all withdrawals from the bank account. Any
payments collected by the Loan Parties in relation to
Receivables, Acquired Receivables and VAT Receivables
shall be held in trust for us and promptly deposited
in the bank account without being mixed with the Loan
Parties' own funds or negotiated except in our
favour. You will pay all costs and expenses of
setting up and operating bank accounts for this
purpose, including all charges relating to the
collection or attempted collection of cheques or
other instruments of payment.
7. CREDIT CHARGES AND PAYMENTS
7.1 INFORMATION ABOUT YOUR ACCOUNT
We will provide you with information concerning Supplier
Obligations and Prepayments, including amounts due to us and
on request the then amount of the Available Credit. Such
information shall be treated as being correct and binding upon
you in the absence of manifest error provided that such
manifest error is notified to us within a period of 15 days
from the date of the provision of such information to you. We
will keep such accounts as may be required to show the amounts
due to us and the amounts received from you and/or your
Debtors. In any proceedings or disputes a certificate issued
by our Company Secretary, or by one of our Directors or
authorised officers as to the correctness of any financial
statement or any amounts due to us shall be prima facie
evidence of the same.
7.2 CREDIT CHARGES
7.2.1 The Credit Charges payable by you are set out in the
Schedule. They are set out exclusive of VAT and any
other taxes and duties which (if applicable) will be
additionally payable by you. You will receive an
invoice or relevant statement for all Credit Charges
including any applicable VAT stamp or other duties
and will either be debited to your account on a
monthly basis or paid to us on demand. Any minimum
amounts payable by you will be debited to your
account periodically as set out in the Schedule. Some
Credit Charges will fluctuate up or down depending on
changes to the Base Rate as described in Clause
7.2.3.
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7.2.2 If we purchase a Supplier Invoice that does not
include a "No Charge Period", any Supplier
Obligations thereunder will be subject to a set up
fee as specified in the Schedule (or as agreed with
you) and Credit Charges will be levied on you from
and including the date of issue of the relevant
Supplier Invoice. You agree to pay such Credit
Charges or set up fee on their due date together with
payment of the relevant Supplier Obligations.
7.2.3 Where a Credit Charge is related to Base Rate and the
outside reference rate upon which Base Rate is based
at any time changes then, on the first business day
of the next following calendar month, the Base Rate
will be changed to the outside reference rate
existing on the last business day of the previous
calendar month. However, if the outside reference
rate changes by 25 basis points or more at any time
then the Base Rate will be changed by the same amount
on the day of such change or the next following
business day. When the applicable Base Rate is
determined by reference to another published rate and
that rate ceases to be published for any reason, we
will use another appropriate rate as the reference
rate so that you and we remain in an equivalent
financial position.
7.3 PAYMENT
7.3.1 The Loan parties agree to pay, or cause you to pay,
all sums due to us arising from the settlement of
Supplier Obligations and the Repurchase Price of
Receivables, Acquired Receivables and VAT Receivables
and all Credit Charges owed to us and applicable VAT,
stamp or other duties by direct debit, wire transfer,
or such other method of payment that we agree, in
full, without any set off whatsoever. Payment shall
be deemed to be made when such payment is received in
cleared funds in the designated bank account in our
name or controlled by us. The Loan Parties may at any
time prepay, without notice or penalty, in whole or
in part, amounts owed to us under this Agreement. We
may apply payments made to us (whether by you or
otherwise) firstly to pay any Credit Charges owing
under this Agreement and then the amount owing in
respect of each Supplier Obligation, and or the
Repurchase of Receivables, Acquired Receivables and
VAT Receivables. Late payment will be subject to a
late payment charge on the sums unpaid at the Default
Rate from the date following the Due Date until and
including the date payment is received by us in
cleared funds in our account
7.3.2 Your obligations to pay sums due in respect of
Supplier Obligations to us or any Repurchase Price of
Receivables, Acquired Receivables and VAT Receivables
will not be affected by any dispute you may have with
any Authorised Supplier, including defective,
insufficient, late or partly delivered Products. You
waive all rights of set-off or counterclaim against
your liability to pay Supplier Obligations. However,
this does not affect any claim or right or remedy you
may have against the Authorised Supplier. You will
not assert against us any claim or defence you may
have against the Authorised Supplier or any third
party. We have no obligation to you under the
Supplier Invoice. The Loan Parties will indemnify and
hold us harmless against any claims or liabilities
arising from the Products in any way whatsoever.
7.3.3 When Products are returned by you to an Authorised
Supplier it will not affect the amounts due to us
unless and until we receive the amount of a credit
note from the applicable Authorised Supplier relative
to the returned Products and which we shall promptly
upon receipt apply it to your account. Such credit
note amount will be deducted from the amounts due by
you to us.
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7.4 SHORTFALL AMOUNT
If, on any day, the aggregate of the amounts outstanding from
the Loan Parties to us in respect of Supplier Obligations and
the outstanding and unpaid Prepayments we have made in respect
of Receivables, Acquired Receivables and VAT Receivables by
the relevant Debtor exceed the lesser of either the value of
the Collateral or the Credit Limit, then, unless otherwise
agreed, the Loan Parties will pay such "SHORTFALL AMOUNTS" on
the day this becomes known to you either by our advising you
or from your own enquiries. Until this is done, we shall be
under no obligation to purchase Supplier Invoices from
Authorised Suppliers or Receivables or VAT Receivables from
you (whether or not previously agreed) and you will pay a late
payment charge at the Default Rate set out in the Schedule on
the shortfall amounts accruing from day to day. In addition we
may charge the Shortfall Fee if the Shortfall Amounts are not
paid when due.
7.5 POWER OF ATTORNEY
As security for your obligation hereunder the Loan Parties
grant us, our directors and officers an irrevocable power of
attorney:-
(i) to endorse or negotiate cheques, or bankers drafts
and negotiable instruments;
(ii) to initiate and settle any claims (including the
conduct of legal proceedings); and
(iii) to sign or execute any deeds, papers, forms or
documents and file the same as may be necessary to
perfect or preserve any of our rights or to secure
performance of your obligations to us or any Debtor
with respect to the Collateral and ownership of the
Receivables, Acquired Receivables and VAT
Receivables.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 REPRESENTATIONS AND WARRANTIES
By signing the Agreement and (in relation to Clauses 3 and 4)
before each Supplier Invoice or Receivable, Acquired
Receivable or VAT Receivable is purchased or Prepayment is
made you represent and warrant (or are deemed to represent and
warrant) to us as follows:
8.1.1 VALIDITY
Each of the Loan Parties, your parent company, and
each of its subsidiaries is duly organised, is
validly existing and has the full power, authority
and legal right, including compliance with any
governmental and other consents, licenses and
authorisations, to conduct its business and to enter
into this Agreement. This Agreement and any Liens or
other documents provided in relation to the
Receivables, Acquired Receivables and VAT Receivables
and the Receivables Rights and the Products and the
Product Rights are legal, valid and binding
obligations upon you and do not contravene any other
agreement or obligation.
8.1.2 ACTIONS, PROCEEDINGS
No significant or material judgements, orders, writs
or decrees are outstanding against any Loan Party nor
is there pending nor, to the best of the Loan
Parties' knowledge after due inquiry, threatened, any
material litigation, contested claim, investigation,
arbitration, or taxation or governmental proceeding
by or against a Loan Party, nor is any Loan Party in
default of, nor engaged in, any significant or
material dispute under any agreement or document. If
any dispute does arise such Loan Party undertakes to
inform us and promptly resolve it.
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8.1.3 INFORMATION
Each Loan Party has disclosed to us every fact or
matter known or which should reasonably have been
known to it that might influence us whether or not to
enter into this Agreement, or purchase any Supplier
Invoice or Receivable, Acquired Receivable or VAT
Receivable or make any Prepayment, or to accept any
Product Rights and/or Receivables Rights, or to
accept any guarantee or indemnity, and that all
information furnished by each Loan Party or on its
behalf to us or by its Auditors in connection with
this Agreement and the Products and Product Rights,
Receivables, Acquired Receivables and VAT Receivables
and the Receivables Rights is true and accurate in
all material respects and is neither misleading nor
incomplete by the omission of any material fact and
has not changed since being provided to us.
8.2 COVENANTS AND UNDERTAKINGS
Until termination of this Agreement and the complete payment
and satisfaction of all obligations under this Agreement, each
Loan Party agrees as follows:
8.2.1 MERGER, CONSOLIDATION AND SALES
(a) If any Loan Party plans to merge or
consolidate with any other entity, or engage
in any operation or activity materially
different from that presently being
conducted by it, or otherwise intend to
dispose of any substantial part of its
business, or the Receivables, Acquired
Receivables and VAT Receivables or the
Receivables Rights or the Products or the
Product Rights or engage in a significant
corporate restructuring in ownership, then
such Loan Party will:
(i) disclose these facts to us as early
as possible (and if subject to a
confidentiality undertaking in
relation to these matters, will use
best endeavours to obtain the
consent of the counterparty
thereto), and
(ii) reach agreement with us concerning
all remaining payment obligations
under this Agreement or, failing
such agreement, and if so required
by us, immediately discharge such
payment obligations (whether or not
accrued due and payable). For this
purpose all Supplier Obligations
shall forthwith become payable and
all Receivables, Acquired
Receivables and VAT Receivables
shall be treated as Ineligible
Receivables to be re-purchased by
such Loan Party. No Loan Party will
be required to make such disclosure
if, and for so long as, to do so
would be a breach of applicable
laws or regulatory requirements.
Any disclosure under this
sub-clause shall be treated in
confidence by us.
8.2.2 FINANCIAL STATEMENTS AND OTHER INFORMATION
SDSA will give us a copy of its audited Financial
Statements and management accounts prepared in
accordance with generally accepted accounting
principles, whether audited or not, as provided in
the Schedule. SDSA and BSDE will also provide such
other information as we may reasonably request
concerning Sales Contracts and their completion. Each
Loan Party will promptly advise us if any material
action or proceeding is outstanding or pending
against or if, to the best of its knowledge after due
enquiry, any such action or proceeding becomes
threatened.
8.2.3 AUTHORISATION
We can rely upon the signature or the act or
communication from Authorised Officers and Directors
in accordance with Attachment A to this Agreement.
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8.2.4 INSPECTION
Each of the Loan Parties will allow us or our agents
to enter upon its premises during normal business
hours on reasonable notice, and at any time during
the continuance of an Event of Default, for the
purposes of inspecting, taking copies of and/or
verifying the Supplier Invoices and any Product
Rights, the Receivables, Acquired Receivables and VAT
Receivables, any Receivables Rights, Financial
Statements, and its financial status; each Loan Party
will agree to provide us with such information and
documentation that we consider reasonably necessary
to conduct the foregoing activities, including
samplings of purchase orders, invoices and evidences
of delivery or other performance, and that we may
contact such Loan Party's customers directly or
through our agents to verify Receivables, Acquired
Receivables and VAT Receivables.
8.2.5 INSURANCE
8.2.5.1 Each Loan Party will maintain, or cause to
be maintained, with financially sound and
reputable insurance companies, insurance on
its respective properties and assets
(without being required to effect credit
insurance on the Receivables, Acquired
Receivables and VAT Receivables unless such
obligation is specified in the Schedule) to
their full insurable value; you will be
required to maintain insurance against
claims for personal injury or death as a
result of the use of any Products sold by
you; each Loan Party will be required to
maintain insurance coverage against other
business risks; each Loan Party will give us
at least ten days written notice before any
policy is altered or cancelled.
8.2.5.2 Each Loan Party will instruct each insurer
to endorse and to assign the benefit of each
insurance policy covering its properties and
assets in respect of Supplier's Invoices or
Receivables, Acquired Receivables and VAT
Receivables which have been purchased by us
hereunder so that (a) payment of proceeds
with respect to claims thereon will be made
directly to us and (b) no act or default of
such Loan Party or any other person shall
affect our right to recover under the
policies.
8.2.5.3 If such Loan Party fails to pay any costs,
charges or premiums, or if it fails to
insure its properties and assets, we may pay
such costs, charges or premiums on such Loan
Party's behalf. Any such amounts paid by us
shall be considered as an additional debt
owed by such Loan Party's due and payable by
it or you immediately upon receipt of our
invoice.
8.2.6 RIGHT OF SET-OFF
At all times we can set-off amounts due from you to
us (including those prospectively due where they are
likely to become payable) and whether due under this
or any other agreement with us or otherwise due
against whatever we owe you. Where the amount due by
you cannot immediately be ascertained we may make a
reasonable estimate of the amounts concerned.
8.2.7 FINANCIAL COVENANTS
You agree to comply with the Financial Covenants, if
any, set out in the relevant supplements or the
Schedule. You also agree that you will not, without
our consent, make any of the following payments
("Restricted Payments") if you and Holdings are not
in compliance with the Financial Covenants contained
in this Agreement and after giving effect to such
payment, the aggregate amount of such Restricted
Payments under this Agreement and the IWCF does not
cause you or Holdings to violate such Financial
Covenants or exceed Six Hundred Thousand Dollars
($600,00),
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17
without duplication, during any fiscal year (i)
declare or pay any dividend; (ii) issue any warrants,
options or rights to purchase any capital stock;
(iii) make any payment to an Affiliate other than in
the course of normal trading business and interest on
intercompany debt; or (iv) make any other
distribution, whether in cash, shares or property.
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9. DEFAULTS AND REMEDIES
9.1 DEFAULTS
Any one of the following events shall constitute an "EVENT OF
DEFAULT" under the this Agreement:
9.1.1 A Loan Party's failure to make payment to us when due
of any amount, including without limitation Credit
Charges or the Shortfall Amount or part thereof,
under this Agreement or its failure to comply with
any other provision of this Agreement including its
failure to meet the dates by which information or
reports are due under this Agreement;
9.1.2 Any representation, warranty, statement, report or
certificate made or delivered by a Loan Party or on
its behalf is false in any material respect at the
time when made or deemed made;
9.1.3 The occurrence of any event or circumstance,
including adverse comment in Auditors' reports for
any Loan Party, which, in our opinion, could
reasonably be expected by us to have a Material
Adverse Effect;
9.1.4 A Loan Party, your parent company, any subsidiary of
a Loan Party or your parent company, or any of your
guarantors becomes subject to Insolvency, or to a
change of control due to change in shareholders
unless previously agreed to by us in writing;
9.1.5 The use of any Prepayments or the incurring of any
Supplier Obligations for any purpose other than your
normal business operations or as permitted by this
Agreement unless disclosed to us and agreed in
writing before the Prepayment or Supplier Obligation
is made;
9.1.6 Any default by any Loan Party in complying with any
judgement or any demand under a guarantee or
indemnity;
9.1.7 Any breach by any Loan Party, your parent company or
any of your guarantors of any other agreement with us
or with any other lender, including IBM Credit
Corporation, or credit providers or suppliers
(including Authorised Suppliers); or
9.1.8 Any other actions materially adversely affecting our
ownership of Receivables, Acquired Receivables or VAT
Receivables or of Supplier Obligations or reducing
our rights relating to Receivables Rights and/or
Product Rights.
9.1.9 Any failure by Holdings to meet the financial
covenant specified for it in the Schedule.
9.1.10 The dissolution or liquidation of any Loan Party,
your parent company, any of any Loan Party's or your
parent's subsidiaries or any of your guarantors or
the directors or stockholders of such entities taking
action to dissolve or liquidate any such entity.
9.1.11 Any Loan Party, your parent company or any guarantor
suspends business.
9.1.12 a) PFSweb ceases to directly own one hundred percent
(100%) of the capital stock of PFS, and (b) PFS and
IFP cease to directly own One Hundred Percent (100%)
of the interest in members of Holdings or (b)
Holdings ceases to directly own One Hundred Percent
(100%) of the capital stock of BSD A;
9.1.13 BSD A ceases to maintain the extent of its current
ownership of you.
9.2 REMEDIES
9.2.1 In addition to any rights or remedies available at
law or under this Agreement, on or at any time after
an Event of Default that we have not
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waived in writing, we may do any or all of the
following: (a) immediately terminate this Agreement;
(b) immediately reduce the Credit Limit to nil (c)
require you forthwith to buy back from us all
outstanding Receivables, Acquired Receivables and VAT
Receivables but so that no such Receivable, Acquired
Receivable or VAT Receivable shall revest in you
until the Repurchase Price of all such Receivables,
Acquired Receivables and VAT Receivables has been
paid to us together with all other sums then due to
us; (d) declare all payments of Supplier Obligations
and the Repurchase Price of Receivables, Acquired
Receivables and VAT Receivables together with any
Credit Charges to be immediately due and payable; and
(e) to take any action we deem necessary to take
possession of, realise or sell in a commercially
reasonable manner any Receivables, Acquired
Receivables, VAT Receivables or Receivables Rights,
and/or Products and/or Product Rights and/or assets
purchased with money provided by us.
9.2.2 Except as otherwise required by law or provided in
any Lien which encumbers the relevant assets, all
amounts obtained from any actions above will be
applied promptly to reduce or settle the amounts due
from you under this Agreement or any other deed or
agreement between any of and all of the Loan Parties
and IBM GF after deducting all charges, costs and
expenses including reasonable legal costs,
disbursements and other fees incurred in the
collection of such amounts, and any excess amounts
will, to the extent permitted by law and subject to
the rights of any person having priority, be paid to
you.
9.2.3 With respect to any Event of Default which we waive
we reserve the right to make a default charge as
compensation for such waiver.
10. TERMINATION
10.1 This Agreement will remain in force until the earlier of (i)
120 days from the date of this Agreement or such other date as
the Loan Parties and we may agree to in writing from time to
time and (ii) upon not less than 60 days written notice by any
party to the other. However following the occurrence of an
Event of Default that we have not waived in writing we may by
notice with immediate effect terminate this Agreement. Upon
any termination of this Agreement we shall have all the rights
and remedies set out in Clause 9.2 until the complete
discharge of all the Loan Parties' obligations to us. Any such
termination shall not affect any right we have in relation to
the Receivables, Acquired Receivables and VAT Receivables or
the Receivables Rights and the Supplier Obligations and the
Product Rights.
10.2 Following the termination of this Agreement and the discharge
of all the Loan Parties' obligations to us and subject to the
exercise of any rights under this Agreement then any amounts
we hold for you will be paid to you after deduction of all or
any sums then owed to us under this or any other agreement
between any of and all of the Loan Parties and IBM GF.
10.3 Notwithstanding the termination of this Agreement, the
provision of Clauses which should by their nature survive
termination (including without limitation payment obligations
and rights to Receivables, Acquired Receivables and VAT
Receivables and the Supplier Obligations and the Product
Rights and/or Receivables Rights) shall so survive and shall
remain in full force and effect until such time as all rights
and liabilities between the parties have been satisfied.
11. GENERAL
11.1 ASSIGNMENT
We may assign the benefit of this Agreement in whole or in
part. The Loan Parties consent to us novating to any other
person all or any of our obligations, rights, benefits and
remedies under this Agreement. Following such novation this
Agreement (or the novated part) shall bind and enure to the
benefit of our successors and assigns. The Loan Parties may
not assign or change their rights and benefits under this
Agreement or sub-contract any of their obligations without our
prior written consent.
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11.2 LIMITATION OF LIABILITY
No party shall have any liability to any other party with
respect to any special, indirect or consequential damages
suffered in connection with this Agreement.
11.3 GUARANTEE AND INDEMNIFICATION.
Each of BSDE, SDSA and the Guarantors irrevocably and
unconditionally, jointly and severally:
11.3.1 guarantees to each of BSDE and SDSA the due and
punctual observance and performance of all the terms,
conditions and covenants on the part of each of them
contained in this Agreement and agrees to pay from
time to time on demand any and every sum or sums of
money which each of BSDE and SDSA is at any time
liable to pay to us under or pursuant to the
Agreement and which has become due and payable but
has not been paid at the time such demand is made;
and
11.3.2 agrees to indemnify and hold harmless IBM GF and each
of its officers, directors, agents and assigns
(collectively, the "Indemnified Persons") against all
losses, claims, damages, liabilities or other
expenses (including reasonable attorneys' fees and
court costs now or hereinafter arising from the
enforcement of this Agreement, the "Losses") to which
any of them may become subject insofar as such Losses
arise out of or are based upon any event,
circumstance or condition (a) occurring or existing
on or before the date of this Agreement relating to
any financing arrangements IBM GF may from time to
time have with (i) each Loan Party, (ii) any Person
that shall be acquired by any Loan Party or (iii) any
Person that any Loan Party may acquire all or
substantially all of the assets of, or (b) directly
or indirectly, relating to the execution, delivery or
performance of this Agreement or the consummation of
the transactions contemplated hereby or thereby or to
any of the Collateral or to any act or omission of
any Loan Party in connection therewith.
Notwithstanding the foregoing, none of the Borrower
or any of the Guarantors shall be obligated to
indemnify IBM GF for any Losses incurred by IBM GF
which are a result of IBM GF's gross negligence or
wilful misconduct. The indemnity provided herein
shall survive the termination of this Agreement.
11.4 WAIVER
No delay or omission of ours to exercise any right or remedy
whether before or after the occurrence of any Event of
Default, shall impair any such right or remedy or shall
operate as a waiver thereof.
11.5 CHANGE OF TERMS
11.4.1 We may change the terms and conditions of this
Agreement upon sixty days written notice to you, but
no such change shall apply to purchases of Supplier
Invoices or Receivables, Acquired Receivables and VAT
Receivables made before the effective date of such
change of terms.
11.4.2 We reserve the right to serve sixty days written
notice on you designating some or all Receivables,
Acquired Receivables or VAT Receivables as Ineligible
Receivables and on the expiry of such notice you will
promptly buy back the relevant Ineligible Receivables
together with payment of any Credit Charges that
apply.
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11.4.3 In the case mentioned in paragraph 11.4.1 the Loan
Parties shall be entitled to terminate this Agreement
effective on the effective date of the change of
terms by written notice delivered to us within thirty
days of receipt of our notice of change of terms.
11.6 CURRENCY INDEMNITY
11.6.1 Unless otherwise agreed by us where a Receivable,
Acquired Receivable or VAT Receivable is payable
otherwise than in EURO in Belgium, the charges for
both the collection and/or in the case of
Receivables, Acquired Receivables and VAT Receivables
not denominated in EURO, conversion into EURO or into
such other currency as we shall from time to time
determine, shall be deducted in calculating the
Purchase Price and such price shall be computed by
reference to the spot rate of exchange ruling in
London the date of collection but at IBM GF's
discretion, we may provisionally apply the rate
ruling on the date we receive Notification of such
Receivable, Acquired Receivable or VAT Receivable
making such adjustments as shall thereafter be
necessary
11.6.2 We hereby agree prior to the occurrence of an event
referred to in Clause 11.6.1 that we will not convert
any monies received hereunder in a currency other
than EURO into any other currency without your prior
agreement.
11.6.3 If at any time more than one currency or currency
unit are recognised by the central bank of Belgium,
or having jurisdiction in any country as the lawful
currency of that country.
11.6.3.1 for so long as the currency or currency unit
in which the provisions of and obligations
under this Agreement are expressed (the
"EXPRESS CURRENCY") shall remain so
recognised, those provisions and obligations
shall remain denominated and paid or
satisfied in that currency or currency unit;
11.6.3.2 if the express currency ceases to be so
recognised, any reference in this Agreement
to that currency or currency unit shall be
translated into and become payable in the
currency or currency unit of that country
designated by us; and
11.6.3.3 any translation from one currency or
currency unit to another shall be at the
official rate of exchange recognised by the
central bank for the conversion of that
currency or currency unit into the other,
rounded up or down by us in the manner
officially prescribed in relation to such
official rate or, if to the extent not so
recognised or prescribed, in such manner as
we may reasonably determine.
11.6.3.4 If any change in any currency of a country
occurs, this Agreement will be amended to
the extent we after consultation with the
Loan Parties, specify to be necessary in the
light of the change in currency and to put
the parties hereto as far as possible in the
same position as they would have been but
for such change in currency.
11.7 VAT
11.7.1 All charges specified in this Agreement are quoted
exclusive of VAT
11.7.2 The Loan Parties shall comply with any directions
which we may give to them in relation to the relief
or refund on behalf of us of VAT included in any
Receivable or Acquired Receivable purchased by us
pursuant to this Agreement where such relief or
refund may be available to us in respect of the
Insolvency of the Debtor.
11.8 ELECTRONIC COMMUNICATIONS
Any party may communicate with any other party, other than
notices referred to in Clause 11.9, by electronic means and
such communication is acceptable as a signed
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writing. An identification code (called a "USER ID") contained
in an electronic document is sufficient to verify the sender's
identity and the document's authenticity.
11.9 NOTICES
Any notice required or desired to be given under this
Agreement shall be in writing and shall be delivered by
facsimile transmission or registered mail, postage prepaid,
and addressed to the address of the respective party to this
Agreement listed in the Schedule or following the expiry of a
period of 30 Business Days from the delivery of written notice
to the other party, such other address or facsimile number
notified by that party to the other in accordance with this
clause:
11.10 PARTIAL INVALIDITY
If any provision of this Agreement shall be held to be
invalid, illegal or unenforceable under any applicable statute
or rule of law, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected.
11.11 COMPLETE AGREEMENT
This Agreement including the Schedule embodies the entire
agreement between the Loan Parties and us with respect to the
subject matter hereof, and any prior written or oral
statements relating thereto are not to be considered part of
this Agreement.
11.12 MISCELLANEOUS
11.12.1 IBM GF's rights and benefits under this Agreement
shall not be affected by the granting of any time or
indulgence to any Loan Party or to any surety or
guarantor of your obligations to us hereunder or to
any Debtor or by any failure to exercise or delay in
exercising any right or option against such person.
11.12.2 We shall be entitled to rely on any act done and on
any document signed and on any oral or written
communication (including any such communication sent
by facsimile) by any reason purportedly doing or
signing or communicating on behalf of you
notwithstanding any defect in or absence of any
authority in such person except as provided for in
Clause 8.2.3.
11.12.3 Without prejudice to the provisions of Clause 11.5
and except as otherwise provided in this Agreement no
variation of this Agreement shall be binding upon the
parties unless it is evidenced in writing and signed
by or on behalf of IBM GF by an authorised signatory
of IBM GF and on behalf of each Loan Party by a
director or the secretary or officer thereof.
11.13 APPLICABLE LAW AND JURISDICTION
This Agreement shall be construed in accordance with and
governed by the laws of Belgium. The parties hereby submit to
the jurisdiction of the Belgian courts.
BY SIGNING BELOW BOTH PARTIES ACCEPT THE TERMS OF THE AGREEMENT
SIGNED ON BEHALF OF SIGNED ON BEHALF OF
SUPPLIERS DISTRIBUTORS S.A. IBM BELGIUM FINANCIAL SERVICES S.A.
Signed: Signed:
------------------------------ ------------------------------
By Name: By Name:
----------------------------- -----------------------------
Title: Title:
------------------------------- -------------------------------
Signature: Signature:
--------------------------- ---------------------------
Date: Date:
-------------------------------- --------------------------------
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BUSINESS SUPPLIES DISTRIBUTORS PFS WEB B.V.
EUROPE BV
Signed: Signed:
------------------------------ ------------------------------
By Name: By Name:
----------------------------- -----------------------------
Title: Title:
------------------------------- -------------------------------
Signature: Signature:
--------------------------- ---------------------------
Date: Date:
-------------------------------- --------------------------------
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