EXHIBIT 10.37
AGREEMENT FOR THE PURCHASE OF DEBTS
1 PARTIES
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(1) VENTURE FINANCE PLC ("Venture") of Sussex House Perrymount
Road Haywards Heath West Sussex RH16 1DN incorporated in
England with registered number 2281768.
(2) THE CLIENT ("Client") named in paragraph 1(a) of the Schedule
("the Schedule") annexed to and forming part of this Agreement
("this Agreement").
2 DATE
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This Agreement shall be treated as being made on the date which the
last of either Venture or the Client shall execute it.
3 DEFINITIONS AND INTERPRETATION
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(1) The expressions specified in Appendix A forming part of this
Agreement shall have the meanings assigned to them therein.
This Agreement shall be construed in accordance with Appendix
B.
(2) Where in connection with any legal jurisdiction outside
England and Wales a word or phrase in this Agreement has no
precise counterpart, then this Agreement shall be interpreted
as if that word or phrase referred to the closest equivalent
in the jurisdiction concerned.
4 TRANSFER OF OWNERSHIP OF DEBTS
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(1) This Agreement is for the Sale by the Client and the Purchase
by Venture of all Debts, which are in existence at the
Commencement Date or which afterwards arise during the
currency of this Agreement. On the Commencement Date the
Client shall deliver an Offer in respect of each such Debt
unpaid at that date. Venture shall only accept such Offer by
crediting the value of the Debt, as shown in the Offer, to the
Debts Purchased Account, where upon Venture's ownership of
such Debt shall be complete.
(2) The ownership of every Debt coming into existence after the
Commencement Date and until the ending of this Agreement shall
vest in Venture automatically upon such Debt coming into
existence without any further act on the part of either
Venture or the Client.
(3) Upon the vesting in Venture of each Debt pursuant to clauses
4(1) and 4(2) there shall also vest in Venture the ownership
of all Related Rights to such Debt.
5 PERFECTION OF FACTOR'S TITLE
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The Client shall at any time, at the request of Venture and at the
expense of the Client, execute and deliver to Venture a formal written
assignment (with the applicable stamp duty endorsed thereon) of any
Debt or Related Rights owned by Venture. The Client shall hold in trust
for Venture (and separately from the Client's own property) any Debt or
Related Rights purchased by Venture of which the ownership shall fail
to vest in Venture for any reason.
6 PURCHASE PRICE AND NOTIFICATION OF DEBTS
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(1) Subject to the other provisions of this Agreement the Purchase
Price of each Debt, together with its Related Rights, shall be
equivalent to the amount payable by the Debtor in respect of
such Debt, including any tax or duty, according to the
relevant Sale Contract, after there has been deducted
therefrom:
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(i) any discount, allowance or other deduction allowed or
allowable by the Client to the Debtor; and
(ii) the Discount Charge in respect of such Debt,
calculated in accordance with clause 9(3).
(2) The Client shall promptly notify Venture of each Debt created
after the Commencement Date and vesting in Venture in such
manner and with such particulars and documents evidencing the
Debt as Venture may from time to time require. Notification
shall be as soon as the relevant Goods have been Delivered, or
at any other time if so required by Venture. A Notification
shall not include any Debt previously notified or subject to
an offer.
(3) If in relation to any Debt the Client is unable to give to
Venture every one of the warranties and undertakings contained
in this Agreement, then the Client shall notify such Debt to
Venture separately from other Debts and clearly mark the
relevant Notification to that effect. All such Debts shall be
Disapproved Debts.
7 CREDIT OF THE PURCHASE PRICE AND PAYMENT BY VENTURE
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(1) Following receipt of a Notification, Venture shall on the next
Working Day credit the Purchase Price to the Debts Purchased
Account. For administrative convenience Venture may make such
credit before the deduction of any of the items which, in
accordance with clause 6(1), are to be deducted in computing
the Purchase Price. Venture may consequently, if it so wishes,
aggregate and debit all such items at any time thereafter to
either the Debts Purchased Account or the Current Account.
(2) Venture shall make appropriate accounting entries on the
Transfer Date to effect the transfer of the Purchase Price of
a Debt from the Debts Purchased Account to the credit of the
Current Account. The Transfer Date shall be:
(i) where it is specified in paragraph 8 of the Schedule
that Venture is to collect the Debts:-
(a) and where the relevant remittance is by
Sterling cheque or Bill of Exchange drawn on
or accepted for payment at a bank in the
United Kingdom: whichever is the later of
the day Venture lodges the instrument of
payment with its banker for collection or
the day the instrument of payment shall be
payable or the day Venture shall identify
such payment as being in respect of a
specific Notified Debt;
(b) but where the relevant remittance is by
cheque or Bill of Exchange otherwise than in
Sterling and/or by cheque or by Bill of
Exchange drawn on or accepted for payment at
a bank not in the United Kingdom: whichever
is the later of either the day Venture
receives notice it has received value for
such remittance or the day Venture shall
identify such payment as being in respect of
a Notified Debt;
(c) but where the payment is made by an
electronic funds transfer direct to
Venture's bank account: whichever is the
later of either one Working Day after it is
credited to such account or the day Venture
shall identify it to be in respect of a
specific Notified Debt;
(d) but where it is specified in paragraph 5 of
the Schedule that the general nature of this
Agreement is "With Bad Debt Protection" and
the Purchase Price of a Credit Approved Debt
shall not have been transferred to the
Current Account: whichever is the earlier of
five Working Days after the end of the
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fourth calendar month following the end of
the month in which the Debt shall have
fallen due for payment or five Working Days
after Venture receives confirmation of the
Insolvency of the Debtor, (except in respect
of Export Debts when it shall be the date
referred to in the rider to the Schedule -
as varied at Venture's discretion from time
to time - by reference to the country to
which the relevant invoice is addressed); or
(ii) where it is specified in paragraph 8 of the Schedule
that the Client is to act as Agent of Venture:-
(a) one Working Day after the credit of the
relevant remittance to the bank account,
established by Venture for the purpose of
receiving such remittances; or
(b) where it is specified in paragraph 5 of the
Schedule that the general nature of this
Agreement is "With Bad Debt Protection" and
the Purchase Price of a Credit Approved Debt
shall not have been transferred to the
Current Account and the Client has provided
evidence of the validity of the Debt and of
compliance with the matters referred to in
clause 12(4)(i)(c):- five Working Days after
Venture shall receive confirmation of the
Insolvency of the Debtor, (except in respect
of Export Debts when it shall be the date
referred to in the rider to the Schedule -
as varied at Venture's discretion from time
to time - by reference to the country to
which the relevant invoice is addressed).
(3) Where the Purchase Price of a Debt is to be transferred in
accordance with clause 7(2)(i)(d) or 7(2)(ii)(b) Venture may
prior to such transfer deduct the amount of any Client Bad
Debt Risk but so that the total amount so deducted in relation
to a single debtor shall not exceed the amount specified in
paragraph 14 of the Schedule.
(4) If, following receipt of an instrument of payment from a
Debtor, but prior to receipt of notification of its clearance
for fate, Venture shall have transferred the Purchase Price of
a Debt to the Current Account, then Venture shall be entitled
to reverse such accounting entries on notification that the
instrument has failed to be so cleared for fate.
(5) In maintaining the Debts Purchased Account, Venture shall be
entitled to debit thereto any discount, allowance or other
deduction nature claimed by a Debtor at the time of making
payment of any Debt to Venture and shall give notice thereof
to the Client. However, upon written notice of objection by
the Client within 14 days of such notice the deduction shall
be credited back to the Debts Purchased Account and shall be
treated as a Disapproved Debt.
(6) The Client may at any time request Venture to pay to the
Client, but in each case subject to Venture's right of
set-off:
(i) any amount standing to the credit of the Client on
the Current Account; or
(ii) amounts up to the equivalent of the Availability.
Any payment made by Venture shall be sent in a sterling cheque
by post either to the Client or to any bank account of the
Client or, if the Client and Venture so agree verbally or in
writing, shall be made by Bankers Automated Clearing System
(sometimes known as BACS). If the Client and Venture agree
verbally or in writing that instead of payment by cheque or
BACS that Venture may make payments by the Clearing House
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Automated Payment System (sometimes known as "CHAPS") then the
Purchase Price shall be adjusted by a Supplementary Discount
Charge and Venture shall be entitled to a transaction charge,
(the amount of which shall be advised by Venture from time to
time) in respect of each payment. Any payment shall be debited
to the Current Account on the day Venture shall send a cheque
or on the day Venture gives instructions to its bank for a
payment by BACS or CHAPS.
(7) Venture shall send or make available to the Client a statement
of its accounts with the Client not less than once in each
month or at such other intervals as may be agreed. Such
statement shall be treated as correct and binding on the
Client, except for manifest errors or errors in law or any
error notified by the Client to Venture within fourteen days
of its despatch.
(8) Venture shall at any time be entitled to debit to the Current
Account all liabilities of the Client to Venture, whether or
not arising under this Agreement, present, future, contingent
or prospective (including liability to Venture as the customer
of another Client of Venture or for Value Added Tax). Where
the amount can not be immediately ascertained Venture shall be
entitled to make a reasonable estimate thereof. Until such
liabilities shall be so debited Venture may set off the amount
thereof against amounts payable to the Client.
8 FOREIGN CURRENCY DEBTS
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(1) For the purpose of computing the Purchase Price of a Foreign
Currency Debt and crediting it to the Debts Purchased Account
in accordance with clause 7(1) Venture shall be entitled to
use the Conversion Rate on the day it is so credited.
(2) For the purpose of transferring the Purchase Price of a
Foreign Currency Debt to the Current Account in accordance
with clause 7(2) Venture shall be entitled to use the
Conversion Rate on the Transfer Date. If the converted amount
of the Debt transferred is more than the converted amount of
the Purchase Price of that Debt, the difference shall be
treated as an increase in the Purchase Price and if it is
lower the difference shall be treated as a reduction in the
Purchase Price.
(3) On Recourse or Reassignment of any Foreign Currency Debt, the
Repurchase Price shall be computed by reference to the
Conversion Rate applied in crediting the Purchase Price to the
Debts Purchased Account.
9 FACTORING FEES, DISCOUNT CHARGES, BANK AND OTHER CHARGES
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(1) Venture shall, upon delivery of a Notification, be entitled
forthwith to charge a Factoring Fee equivalent to the
percentage specified in paragraph 15 of the Schedule (or such
other percentage or amounts as may be agreed by the parties in
writing) of the notified value of such Debt and credit notes
before the deduction of any discount or other allowance
allowed or allowable at any time to the Debtor. Venture shall
immediately debit the Factoring Fee to the Current Account.
(2) If the total Factoring Fees during the period of three months
immediately following the occurrence of a Right of Immediate
Termination shall be less than the total Factoring Fees during
the period of three months ended immediately before such right
shall arise, then the Client shall pay to Venture a sum equal
to the difference or Venture may debit the same to the Current
Account. This shall be payable even if this Agreement shall
end before the expiry of the three months and shall not affect
any other rights of Venture arising out of such events. Should
a Collection Transfer Fee become payable pursuant to clause
12(4)(ii) the relevant percentage for calculating the
Factoring Fee in respect of all Debts Notified thereafter
shall be the percentage stated in paragraph 17(ii) of the
Schedule as being the Revised Factoring Fee, in substitution
for that appearing in paragraph 15 of the Schedule.
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(3) The Discount Charge to be deducted in computing the Purchase
Price of each Debt, in relation to which a Prepayment shall be
made, shall be equivalent to the rate per annum specified in
paragraph 16 of the Schedule (or such other rate as may be
agreed by the parties in writing) calculated daily, with
monthly rests, on the amount of such Prepayment from the date
on which it is debited to the Current Account until four
Working Days after the Transfer Date. For administrative
convenience Venture may calculate the Discount Charge by
reference to the Funds in Use at the end of each day. The
total of the Discount Charges so calculated shall then be
debited monthly.
(4) Venture shall be entitled to debit the Current Account and /
or the Debts Purchased Account with:
(i) all bank charges incurred by Venture in respect of an
instrument of payment not cleared for fate as
described in Clause 7(4) for a Debt which is not a
Credit Approved Debt;
(ii) if so provided in paragraph 15 of the Schedule, all
banking charges and other costs and expenses it may
incur in relation to any account to which it directs
that any payments by Debtors shall be credited;
(iii) such other charges or fees as are referred to in the
Schedule or any rider to the Schedule and all bank
charges incurred in collecting Export Debts and
converting the proceeds of a Foreign Currency Debt
into Sterling;
(iv) any amount due to Venture in relation to the matters
referred to in clauses 14 and 18(2)(v);
(v) any other amounts due to Venture.
(5) Any amount debited to the Current Account shall be treated as
a Prepayment for the purpose of calculating the Discount
Charge.
(6) All charges and fees to which Venture shall be entitled under
the terms of this Agreement shall be calculated or charged
exclusive of value added tax. Value added tax shall be payable
upon issue by Venture of a value added tax invoice.
10 DISPUTES AND CREDIT NOTES
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(1) If a Debtor disputes its liability to pay the full Notified
amount of any Debt (less any discount or allowance approved by
Venture) the Client shall forthwith notify Venture of such
dispute (if the same has not already been advised to the
Client by Venture) and undertakes:
(i) to use its best endeavours promptly to settle every
such dispute, subject to the right of Venture itself
to settle or compromise any such dispute or to
require that the Client should settle or compromise
it on such terms as Venture may in its absolute
discretion think fit;
(ii) to perform promptly all further and continuing
obligations of the Client to the Debtor under any
Sale Contract and to give evidence to Venture of such
performance and to agree that in the event of the
failure of such performance Venture may itself
perform such obligations at the expense of the
Client;
(iii) to issue promptly all credit notes due in respect of
Debts and to Notify same within three Working Days of
issue subject to the right of Venture to require that
no credit note shall be authorised or issued without
Venture's consent and that the originals of such
credit notes shall be sent to Venture;
and the Client shall be bound by anything done by or at the
direction of Venture in accordance with this sub-clause (1),
including any corresponding reduction in the Purchase Price.
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(2) (i) The amount of every credit note Notified pursuant
to clause 10(1)(iii) shall be treated as a reduction
of the Purchase Price of the Debt to which the credit
note relates and shall be debited to the Debts
Purchased Account.
(ii) The Client shall, if requested by Venture, give
Venture a cheque, in favour of Venture, drawn on a
London clearing bank for the amount of the credit
note. On collection of the cheque its amount shall be
credited to the Current Account.
11 DISAPPROVED DEBTS
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(1) A Debt shall become a Disapproved Debt:
(i) if (when aggregated with all other Outstanding Debts
owing by the same Debtor) it is not for the time
being within the Funding Limit or within the Debtor
Concentration; or
(ii) where paragraph 5 of the Schedule specifies that the
general nature of this Agreement is "Without Bad Debt
Protection" - at any time after the expiry of the
recourse period specified in paragraph 13 of the
Schedule; or
(iii) where the cost and expense in effecting its
collection shall, in Venture's view, exceed its
Purchase Price (except Credit Approved Debts) - at
any time after Venture takes that view; or
(iv) where the Debtor claims to be unable to pay because
of any laws, rules or regulations having the force of
law (other than arising solely from the Debtor's
insolvency) - at any time after such claim is made;
or
(v) where it is the subject of a dispute described in
clause 10 (1) - when such dispute arises; or
(vi) where there is a breach of warranty or undertaking
given by the client - at the time of such breach; or
(vii) where it is (or is required to be) notified
separately in accordance with clause 6 (3) - at the
time when such notification is (or should be) made;
or
(viii) where it does not fall within paragraph 6 of the
Schedule - at the time that such Debt comes into
existence; or
(ix) Upon Venture exercising its rights under clause
19(2).
(2) Venture shall have Recourse in respect of:
(i) a Debt which is a Disapproved Debt because of clause
11(1)(v) - at any time after the sixtieth day after
the arising of the dispute;
(ii) any other Disapproved Debt - at any time after the
day on which it is due for payment or the day of its
Disapproval;
(iii) any Debt which is not a Credit Approved Debt where
paragraph 5 of the Schedule specifies that the
general nature of this Agreement is "With Bad Debt
Protection" - at any time after the day on which it
is due for payment;
(iv) the amount of any Client Bad Debt Risk - at the time
it is deducted from the Purchase Price of a Debt in
accordance with clause 7(3).
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12 NOTICES TO AND COLLECTIONS FROM DEBTORS
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(1) Whilst the ownership of any Debt remains vested in Venture or
any Debt is held in trust for Venture pursuant to Clause 5,
Venture shall have the sole right to enforce payment of and
determine whether such Debt shall be collected by Venture or
by the Client (as the agent of Venture) and to institute,
carry on, defend or compromise proceedings in its own name or
the name of the Client in such manner and upon such terms as
it may in its absolute discretion think fit. The Client shall
co-operate in such enforcement, collection or proceedings and
in the recovery of any Transferred Goods.
(2) Where paragraph 7 of the Schedule specifies that notice of
assignment shall be given such notice shall state, inter alia,
that the Debt to which it relates has been purchased by and
assigned to Venture and the Client undertakes:-
(i) in respect of every Debt vesting in Venture, to give
such notice in the manner and form prescribed by
Venture; and
(ii) to use its best endeavours to ensure that each Debtor
makes payment in accordance with such notice and,
without affecting such obligation, at its own expense
to despatch a letter in terms stipulated by Venture
to any Debtor ignoring such notice or any part
thereof and to send to Venture a copy of each such
letter.
(3) Even though paragraph 7 of the Schedule specifies that no
notice of assignment shall be given Venture may, at any time
by notice to the Client, require that the Client shall
forthwith give the notices prescribed in Clause 12(2) in such
form and manner as Venture may direct.
(4) Where there is reference to "Agent" in paragraph 8 of the
Schedule:
(i) Venture hereby appoints the Client as the agent of
Venture, until notice to the contrary and without
prejudice to Venture's rights pursuant to Clause
12(1), for the purpose of administering the accounts
of Debtors and procuring the collection of Debts for
the benefit of Venture. The Client hereby accepts
such appointment and undertakes:
(a) to act promptly and efficiently in carrying
out such tasks; and
(b) not to hold itself out as the agent of
Venture, except while the provisions of this
clause 12(4) apply, and while such
provisions apply not to hold itself out as
the agent of Venture for any other purpose;
and
(c) to obtain the prior written approval of
Venture to the debt collection procedures to
be adopted and shall at all times adhere to
these and obtain approval to any variations;
and
(d) to furnish Venture, by such date in each
month as Venture may direct, with copies of
such records, statements and accounts of
Debtors and such reconciliation's to the
Debts Purchased Account as Venture may
require.
(ii) Venture may, at any time by notice to the Client,
withdraw such appointment. Upon or at any time after
such withdrawal Venture shall be entitled to debit
the Current Account with the Collection Transfer Fee
calculated in the manner specified in paragraph 17(i)
of the Schedule.
(5) The Client shall at its own cost forthwith deliver to Venture
or, if so required by Venture, directly to a bank account
designated by Venture the actual cash, cheque, instrument or
payment received by the Client in or on account of the
discharge of each Debt. Until so delivered, the Client shall
meanwhile hold such cash, cheque, instrument or payment in
trust for Venture. The Client shall not deal with, negotiate
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or pay the same into any bank account unless so directed by
Venture. If it be necessary for any instrument to be endorsed
to enable Venture to receive payment then the Client shall
endorse the same prior to its delivery to Venture. If so
required, the Client shall give an indemnity to Venture's
bankers in respect of "account payee" cheques made payable to
the Client and so endorsed.
(6) Any Transferred Goods shall be notified by the Client to
Venture and shall be set aside and marked with Venture's name
as owner. Venture shall have the right without notice to the
Client to take possession of and sell any Transferred Goods
upon such terms and at such prices as Venture may in its
absolute discretion decide.
13 CREDIT LIMITS AND ALLOCATION OF PAYMENTS
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(1) Credit Limits will be established by Venture only where
Paragraph 5 of the Schedule specifies that the general nature
of this Agreement is to be `With Bad Debt Protection'.
(2) Any Credit Limit may, in Venture's absolute discretion, be
increased, reduced or cancelled by Venture at any time. Any
increase must be by written or electronic notice to the Client
or by making the same available by electronic interrogation of
Venture's computer. Any such change shall take immediate
effect, except that no reduction or cancellation shall affect
any Debt which:
(i) shall have arisen from Goods Delivered before the
service of notice on the Client of such reduction or
cancellation; and
(ii) at the time of such service shall be (when totalled
with all other Debts owing by the Debtor) within the
Credit Limit.
(3) Where two or more Debts are owing by the same Debtor they
shall be treated as falling within the Credit Limit in the
order in which they are Notified.
(4) When a Credit Approved Debt shall be discharged by a Debtor
then the next Debt in the order referred to in clause 13(3)
shall become a Credit Approved Debt to the extent that it
falls within a Credit Limit.
(5) When Credit Approved Debts and other Debts are owing by the
same Debtor Venture shall have the right to allocate any
payment by the Debtor or any credit or allowance granted by
the Client to the Debtor or any sum by way of dividend or
benefit in satisfaction of any Credit Approved Debt in
priority to any other Debt, despite any contrary allocation by
the Debtor or the Client.
(6) The Client shall not disclose to the Debtor or any third party
the amount of or absence of any Credit Limit or the reasons
for such Credit Limit.
14 CREDIT BALANCES
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The Client hereby irrevocably authorises Venture to make payment to any
Debtor on account of or in settlement of any credit balance appearing
on its account in the records of Venture, whether such credit balance
arises from the issue of a credit note by the Client or otherwise.
Until such payment shall be made by Venture any such credit balance
shall be a prospective liability of the Client to Venture.
15 RECOVERY OF VALUE ADDED TAX
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(1) For the purpose of enabling the client to recover from H.M.
Customs and Excise any value added tax included in any Credit
Approved Debt unpaid for such period as would have enabled the
Client to make a claim for value added tax bad debt relief but
for its assignment to Venture, the following provisions shall
apply.
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(2) Venture may reassign the Debt to the Client for a
consideration equal to the amount of value added tax included
in the Debt and any dividend or benefit recovered. The Client
also irrevocably authorises Venture in the name of the Client
to submit a proof of debt in the estate of the relevant
Debtor.
(3) The Client shall immediately upon receipt pay to Venture (or
in Venture's absolute discretion Venture may debit the Current
Account with) and meanwhile hold in trust for Venture the
amount of any dividend or other benefit received or receivable
in reduction of such Debt.
(4) On the Transfer Date Venture may set off against the Purchase
Price of an Outstanding Credit Approved Debt the amount of any
value added tax included in the Debt.
(5) Any payment by Venture to the Client in respect of a Credit
Approved Debt shall not discharge the consideration due from
the Debtor to the Client for the taxable supply.
16 CLIENT'S ACCOUNTS AND RECORDS
-----------------------------
(1) Whether or not the Client is a body corporate, it shall
provide for Venture:
(i) a signed copy of its and in addition such Associates'
audited balance sheet and accounts as Venture may
require for each year or accounting reference period
(as defined in the Companies Act 1985) ending during
the currency of this Agreement, within six months of
the end of such period (and shall promptly advise
Venture of any change to its accounting reference
period); and
(ii) such other accounts or statements of its financial
position or affairs as Venture may at any time
require.
(2) The Client, if so required by Venture, shall procure at its
own expense that the Client's auditors report directly to
Venture on any matters relating to the financial affairs of
the Client.
(3) The Client shall promptly provide Venture (at the Client's
expense) with such of the Financial Records included in the
Related Rights or copies of them and of any other records or
documents of the Client as Venture may at any time require or
any other evidence of the performance of Contracts of Sale.
(4) Any official or duly authorised representative or agent of
Venture may at any time (at the Client's expense) enter upon
any premises at which the Client carries on business and
inspect and/or take copies of the Financial Records or other
records or documents of the Client.
(5) The Client shall permit or procure the verification of Debts
in such manner as shall be determined by Venture in its
absolute discretion.
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17 POWER OF ATTORNEY
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(1) The Client hereby irrevocably appoints Venture and the
Directors and the Company Secretary and every other officer
for the time being of Venture jointly and each of them
severally to be the Client's attorney in the name of the
Client to execute such deeds or documents and to complete and
endorse such instruments and to institute or defend such
proceedings and to perform such other acts as Venture may
consider requisite in order to perfect Venture's title to any
Debt or Related Rights and to secure performance of any of the
Client's obligations under this Agreement or under any Sale
Contract or to obtain payment of Debts.
(2) Venture or its Directors and the Company Secretary and every
other officer of Venture for the time being are empowered to
appoint and remove at will any substitute attorney or agent
for the Client in respect of any of the matters referred to in
clause 17(1).
(3) The Client agrees to ratify and confirm whatever Venture or
its Directors or Company Secretary or Officers substitutes and
agents shall lawfully do pursuant to the above power of
attorney.
18 WARRANTIES AND UNDERTAKINGS OF THE CLIENT
-----------------------------------------
(1) In addition to and without affecting any other undertaking
given elsewhere in this Agreement the Client warrants and the
same shall be deemed repeated on the delivery of each
Notification, namely:
(i) that save as disclosed by the Client to Venture in
writing no disposition, charge, trust or encumbrance
(whether created by the Client or otherwise) affects
or may affect any of the Debts or Related Rights
vesting in Venture and that no supplier to the Client
has or may have any claim to any such Debt or Related
Rights, whether or not by equitable tracing right;
(ii) that before entry into this Agreement the Client has
disclosed to Venture every fact or matter known to
the Client which the Client knew or should reasonably
have known might influence Venture in any decision:
(a) whether or not to enter into this Agreement;
or
(b) to accept any person as a guarantor or
indemnifier for the Client's obligations to
Venture; or
(c) as to the terms of this Agreement; or
(d) as to the making of any Prepayment; or
(e) the designation of any Debt as a Credit
Approved Debt.
(2) The Client undertakes to Venture:
(i) to disclose promptly to Venture any such fact or
matter of which the Client becomes aware during the
currency of this Agreement, including (without
affecting the generality of clause 18(1)(ii)) any
change or prospective change in the constitution or
control of the Client or of any guarantor or
indemnifier of the Client's obligations to Venture or
any prospective security right to be created by the
Client affecting any of its assets;
(ii) immediately after notifying Venture of any Debt, to
make an appropriate entry in the Client's Financial
Records regarding the sale of such Debt and in all
cases in which the Client acts as agent of Venture
pursuant to clause 12(4) to ensure that all accounts
and records relating to Debtors are clearly marked
that the Debts so recorded thereon have been sold to
Venture;
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(iii) to indemnify Venture against all costs and expenses
(including administrative costs, legal fees,
disbursements, opponent's and third party's costs)
incurred by Venture in enforcing or attempting to
enforce payment and collection of all Debts (other
than Credit Approved Debts) and in settling or
compromising any dispute or claim (whether justified
or not) by a Debtor;
(iv) to pay to Venture all costs and expenses incurred by
Venture in entering into this Agreement and in
enforcing its terms or in obtaining a release or
waiver in respect of the matters referred to in
clause 18(1)(i);
(v) to indemnify Venture against all claims actions and
demands made by any Debtor against Venture and all
costs interest and expenses arising therefrom except
where the same arises solely from the misconduct of
Venture;
(vi) to ensure that all statements contained in and all
signatures appearing on every order, invoice and
other documents (including in particular all
Notifications) supplied to Venture as evidence of or
relating to the Debt are true and genuine.
(3) The inclusion of any Debt in a Notification (other than a
Notification pursuant to clause 6(3)) or in any report made to
Venture pursuant to clause 12(4)(i)(d) shall be treated as a
warranty by the Client that:
(i) the Sale Contract does not include any prohibition
against the assignment of the Debt;
(ii) the Goods have been Delivered and the Debt is a
legally binding obligation of the Debtor for the
Notified amount and has arisen from a Sale Contract
made in the ordinary course of the Client's business
specified in paragraph 1(e) of the Schedule which:
(a) provides for the invoice to be expressed and
payment to be made in a currency specified
in paragraph 1(f)(i) of the Schedule and on
terms of payment (which shall be stated on
each and every invoice) not more liberal
than those specified in paragraph 1(f)(ii)
of the Schedule;
(b) is subject to the law of a country specified
in paragraph 1(f)(iii) of the Schedule;
(c) is not regulated by the Consumer Credit Act
1974; and
(d) is otherwise as approved by Venture
and the Client will not vary or attempt to vary any
of the terms of any such Sale Contract without the
prior written consent of Venture;
(iii) the Client has no obligations to the Debtor, other
than under any Sale Contract and there exists no
agreement between the Client and the Debtor for
set-off or for abatement or whereby the amount of the
Debt specified in the Notification may otherwise be
reduced, except in accordance with the terms of the
Sale Contract approved by Venture;
(iv) the Client is not in breach of any of its obligations
under the relevant Sale Contract and the Debtor will
accept the Goods and the invoice therefor without any
dispute or claim, including claims for release of
liability (or of inability to pay) because of force
majeure or because of the requirements of any law
wherever applying or of rules orders or regulations
having the force of law in any jurisdiction; and
-11-
(v) the Debtor has an established place of business and
is not an Associate, subsidiary, co-subsidiary,
parent or associated company of the Client or under
the same director or shareholder control as the
Client.
19 COMMENCEMENT AND TERMINATION
----------------------------
(1) This Agreement shall commence on the Commencement Date and,
unless terminated pursuant to clause 19(2), shall continue for
the minimum period set out in paragraph 3 of the Schedule and
thereafter for successive periods equal to such minimum period
unless terminated in accordance with this clause. Either party
may give notice in writing to the other terminating this
Agreement. Such a notice from Venture may be served at any
time. Such a notice from the Client must be served in the
calendar month immediately preceding the calendar month in
which the anniversary of the commencement of this Agreement
falls. In each case such notice shall be of not less than the
period specified in paragraph 4 of the Schedule.
(2) If any of the following events happen, Venture shall have the
right by notice to the Client to terminate this Agreement
forthwith or at any time thereafter:
(i) the Client's Insolvency or its calling any meeting of
its creditors; or any petitions or applications being
issued before a Court with a view to the Client's
Insolvency;
(ii) a petition for an administration order pursuant to
the Insolvency Act 1986 in relation to the Client
(being a body corporate) or a resolution of its
members for its winding up;
(iii) the dissolution of any partnership comprising the
Client or any change in the constitution, composition
or legal personality of the Client, whether by death,
retirement, amalgamation, reconstruction, addition or
otherwise;
(iv) the Client's income or assets or any part thereof
being seized under any execution legal process or
distress for rent or the making or threat of a
garnishee order on any person indebted to the Client
or the attachment or attempt of attachment to
Outstanding Debts or any amount owed by Venture to
the Client;
(v) if any of the Client's obligations to third parties
for the repayment of borrowed money shall be declared
due prior to their stated maturity dates by reason of
default or shall not be paid when due;
(vi) if at any time the Client (whether or not a body
corporate) is unable to pay its debts as defined in
paragraph 123(1) of the Insolvency Act 1986, or if a
statutory demand under the Insolvency Act 1986 be
served on the Client, or if at any time the value of
its assets disclosed in any balance sheet or
financial statement shall be less than the amount of
its liabilities (including any contingent or
prospective liabilities), or if an encumbrancer shall
take possession of any part of its income or assets,
or the making of any garnishee order on Venture
following a judgement against the Client;
(vii) the occurrence of any of the events similar to those
referred to in paragraphs (i) to (vi) inclusive of
this clause, in relation to any person who has given
a guarantee or indemnity in respect of the Client's
obligations under this Agreement or the death of any
such person or the termination or attempted
termination of any such guarantee or indemnity;
(viii) any breach of any covenant or undertaking given by
any person in reliance upon which Venture entered
into or continued this Agreement or the withdrawal or
attempted withdrawal of any waiver release or
priority given to Venture in relation to any security
right affecting any asset of the Client;
(ix) the cessation or threatened cessation of the Client's
business;
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(x) any change in the business of the Client specified in
paragraph 1(e) of the Schedule or change in ownership
of 25% or more of the issued shares of the Client as
at the date hereof or any change in the constitution
or control of any other person referred to in clause
18(1)(ii)(b);
(xi) any breach of any of the Client's obligations,
warranties or undertakings to Venture whether arising
under this Agreement or any other agreement between
Venture and the Client or under any guarantee or
charge given by the Client to Venture or otherwise
howsoever arising;
(xii) the failure by the Client to deliver any Notification
for a period in excess of six weeks or the failure to
deliver sufficient Notifications in any period of six
consecutive weeks to provide Factoring Fees to
Venture of at least (pound)100 (Pounds Sterling One
Hundred) exclusive of Value Added Tax.
(3) Upon or at any time following an event referred to in clause
19(2), Venture shall have:
(i) immediate Recourse in respect of all Outstanding
Debts but so that the ownership of none of such Debts
shall vest in the Client until the Repurchase Price
of all such Debts has been received by Venture; and
(ii) the right to do any or all of the following:
(a) reduce the Prepayment Percentage to zero;
(b) demand immediate payment of all Funds in
Use;
(c) treat all Credit Approved Debts as
Disapproved Debts;
(d) increase the Discount Charge by 2% (which
the Client and Venture agree is an
acceptable increase to compensate Venture
for its increased risk in such
circumstances)
(e) treat Debts which are afterwards Notified as
Disapproved Debts.
(4) Venture shall have no obligations to pay any sum to the Client
whilst any petition or application shall be pending relating
to the Client's Insolvency.
(5) (i) Following the occurrence of an event referred
to in clause 19(2), Venture shall be entitled to
debit the Current Account with the amount of all and
any losses, damage, costs and/or expenses whether
actual or contingent suffered or incurred by Venture
(including all additional out of pocket expenses (of
whatsoever nature and howsoever arising) and the cost
of all additional management time and effort expended
by Venture in protecting or enforcing Venture's
rights and interests acquired pursuant to this
Agreement) as a consequence of the occurrence of such
event. For the purposes of calculating the cost of
such additional management time and effort Venture
shall apportion the salary costs of its personnel
involved on a pro rata basis according to the time
spent by such personnel in managing the Client's
account taking account only of such time as would not
have been spent by such personnel had such event
referred to in clause 19(2) not occurred.
(ii) In addition to all other sums payable by the Client
under this Agreement should an event occur which is
referred to in clause 19(2) which event has the
consequence of Venture not being able to earn from
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the Client the fees and charges provided for in this
Agreement for any period between the happening of
such event and the earliest possible date upon which
this Agreement could be validly terminated by notice
from the Client, Venture shall be entitled to debit
the Current Account with the amount of such fees and
charges which Venture would have earned during such
period had such event not occurred (or where such
fees and charges are incapable of precise
calculation, Venture's reasonable estimate of such
fees and charges calculated in a reasonable manner
consistent with the performance and forecasts of the
Client prior to the happening of such event).
(6) The Client agrees to be bound by a certificate (except as to
manifest errors or errors in law) signed by the Company
Secretary or a Director of Venture as to:
(i) the amount of the losses, damage, costs and/or
expenses (actual or contingent) referred to in clause
19(5)(i) and the fees and charges referred to in
clause 19 (5)(ii) and/or
(ii) the amount at any time owed by the Client to Venture
or vice versa and however arising.
(7) Unless specifically provided to the contrary termination of
this Agreement shall neither affect the rights and obligations
of either party in relation to Debts which are in existence on
the date of termination nor the continued calculation of the
Discount Charge. Such rights and obligations shall remain in
full force and effect until duly extinguished.
20 EXCLUSION OF OTHER TERMS AND PRESERVATION OF VENTURE'S RIGHTS
-------------------------------------------------------------
(1) This Agreement (including the appendices hereto and the
Schedule and any special conditions set out therein and any
procedural steps stipulated pursuant to clause 20(4)) and any
other document executed as a deed by both parties contains all
the terms agreed between Venture and the Client, to the
exclusion of any agreement, statement or representation
however made by or on behalf of Venture prior to the making of
this Agreement. In the event of any conflict between the terms
of this Agreement and the procedural steps then this Agreement
shall prevail. Except to the extent provided for in this
Agreement, no variation of this Agreement shall be valid
unless it is in writing and signed on behalf of the Client and
signed on behalf of Venture by a Director or the Company
Secretary or by any person from time to time authorised to
sign on behalf of Venture.
(2) Venture's rights under this Agreement shall not be affected in
any way by the granting of time or indulgence by Venture to
the Client or to any other person nor by any failure or delay
in the exercise of any right or option under this Agreement or
otherwise.
(3) Venture shall be entitled to rely upon any act done or
document signed or any telex or facsimile or oral
communication sent by any person purporting to act, sign, send
or make on behalf of the Client despite any defect in or
absence of authority vested in such person.
(4) The Client shall carry out the procedural steps stipulated by
Venture for the efficient working of this Agreement.
(5) The Client's obligations to Venture shall continue without any
right of set-off or counterclaim by the Client against Venture
until all moneys due to Venture hereunder have been paid.
(6) Venture may supply a copy of this Agreement or any variation
of it to any party having security over the Client's assets.
21 COUNTER INDEMNITY
-----------------
(1) Venture will from time to time grant an indemnity (the
"Indemnity") to its bankers in respect of facilities granted
or to be granted to its Clients (including the Client).
(i) In consideration of Venture entering into the
Agreement the Client undertakes:-
-14-
(a) to pay Venture upon demand any sum which may
actually or contingently be payable by
Venture to its bankers under the Indemnity;
and
(b) to indemnify Venture and keep Venture
indemnified and hold Venture harmless
against all losses which may be incurred,
suffered, claimed and/or made against
Venture under the Indemnity.
(2) The Client irrevocably authorises Venture to debit to any
account in the Client's name in Venture's records the whole or
any part of:-
(i) any sum demanded by Venture pursuant to clause 1 (i)
(a) above;
(ii) any losses and any sums that may prospectively or
contingently become due under this Indemnity
(3) Venture may also set off all and any Losses or sums demanded or
due from the Client against any amount that Venture may at any
time owe to the Client. Where the amount of any Losses or other
amount due from the Client cannot be immediately ascertained
then Venture may make a reasonable estimate of them for the
purpose of making such debit or set off.
(4) The Client agrees that any request or demand, made upon Venture
appearing or purporting to be made by or on behalf of its
bankers, for payment of any sum under the Indemnity shall be
sufficient authority for Venture to make any such payment.
Venture need not enquire whether any such amount shall in fact
be due or whether the demand or request has been properly made.
(5) Venture may at all times set off and retain against monies due
to the Client under the Agreement such sums as may actually or
contingently be due by Venture to its bankers.
22 PROVISION OF ELECTRONIC DATA INTERCHANGE SERVICES
-------------------------------------------------
(1) Venture will provide access via their web site to their
Electronic Data Interchange Facility and on line help screens.
(2) The Client undertakes to Venture:
(i) to ensure that all Messages it sends are correct and
complete;
(ii) to comply at all times with the requirements and
directions appearing in Venture'sweb site;
(iii) to use the Services only for the Client's own needs ;
(iv) ensure that all persons within the Client's
organisation keep the security access codes
confidential and to change access codes when a person
with such knowledge leaves their organisation;
(v) to pay to Venture all charges which Venture may from
time to time notify to the Client as being payable in
respect of the provision by Venture at the Client's
request of any on-site technical assistance in
respect of the Services.
(3) Commencement
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Venture will advise the Client that the Service is available
by issuing to the Client the initial security access code.
(4) Mutual Obligations
Each party undertakes:
(i) to maintain adequate computer systems (hardware and
software) for the use of the Services and computer
record security;
(ii) to use its best endeavours to maintain its computer
systems virus free;
(iii) to take reasonable precautions to prevent
unauthorised access to the Services;
(iv) to keep secret and confidential the method of
operation of the Services, user identification codes,
passwords, test keys, access codes and security
procedures;
(v) to notify the other promptly if it learns or suspects
that there has occurred any failure or delay in
receiving or transmitting any Message, any error or
fraud in affecting the sending or receiving of any
Message or any programming error or defect or
corruption of any Message, and to co-operate with the
other party in trying to remedy the same;
(vi) to take all such appropriate steps and establish and
maintain all appropriate procedures so as to ensure
that as far as reasonably practicable Messages are
properly stored, are not accessible to unauthorised
persons, are not altered, lost or destroyed, and are
capable of being retrieved only by properly
authorised persons;
(vii) to ensure that any Message containing confidential
information as designated by the sender of the
Message is maintained by the recipient in confidence
and is not disclosed to any unauthorised person or
used by the recipient other than for the purposes of
the business transaction to which it relates.
Messages shall not be regarded as containing
confidential information to the extent that such
information is in the public domain, or the recipient
is already in receipt of it prior to transmission by
the sender or receives the information from a third
party entitled to disclose it. Any authorised
disclosure to another person shall be on the same
terms as to confidentiality as required by the sender
or as contained in this clause;
(viii) upon becoming aware of any breach of security in
relation to any Message or the Electronic Data
Interchange Facility, or in relation to the
procedures implemented under this clause, to
immediately inform the other party to this Agreement
of such breach and shall use all reasonable
endeavours to rectify the cause of such a breach as
soon as possible;
(ix) to notify the other party immediately if it knows of
or suspects any misuse or likely misuse of, or breach
or likely breach of secrecy in respect of the
Services, any Message (or any part thereof) or any
passwords, access codes or other similar information.
(5) Where permitted by law, the parties may apply special
protection to Messages by encryption thereof or by any other
agreed means.
(6) Logging & Copyright
(i) Venture's Master Log of Messages and data received or
transmitted by Venture shall in the absence of
manifest error, be conclusive proof and evidence of
-16-
the Messages sent or received by Venture in
connection with or referable to the Services and of
the constituents of such Messages and the times at
which they were sent or received.
(ii) The copyright and all other rights in Venture's web
site and in any software used or provided by Venture
or Venture's licensors in connection with Venture's
web site or the Services shall at all times remain
vested in Venture, or if the terms of any contract
that Venture has with any licensor, otherwise
specified, in such licensor. The Client will not copy
any of the same without Venture's prior written
consent.
(7) Liability
(i) Every message sent by the Client must identify the
sender. Venture may accept and act upon any message
ostensibly sent by the Client even though it may not
originate from the Client or the person purporting to
send the message shall lack authority and Venture
shall be under no obligation to enquire as to any
such matter;
(ii) The Client accepts that data available through the
Services will be subject to change during the hours
of business each day, particularly the details of
items posted to the accounts of the Client with
Venture and Venture shall not in any circumstances
whatsoever have any liability to the Client for a
change in such data occurring after the Client shall
have acted in reliance thereon. In particular the
Client should under no circumstances initiate payment
to any third party based upon a message purporting to
show that monies may be drawn by the Client from
Venture. Venture shall confirm in accordance with its
normal procedures the transmission of payments to the
Client which payments shall only be made in
accordance with the terms of the Agreement;
(iii) Venture shall not be liable for or in respect of any
loss or damage or any failure to comply, or any delay
in complying with its obligations hereunder or any
other obligation in respect of the Services which is
caused directly or indirectly by;
(a) any downtime, unavailability, failure or
malfunction of any computer hardware
equipment or software, or of any telephone
line or other communication system, service,
link or equipment, whether the property of
Venture or the Client or any Internet
service provider or any other party;
(b) suspension, alteration or withdrawal of the
Services;
(c) any error, discrepancy, corruption,
incorrect formatting of or ambiguity in any
Message received by Venture;
(d) industrial dispute, abnormal operating
conditions, act or omission of the Client or
any third party;
(e) force majeure;
(iv) Venture shall not be liable to the Client for any
consequential, special secondary or indirect loss or
damage or any loss of or damage to goodwill, profits
or anticipated savings suffered by the Client by
reason of any of the matters referred to in clause
22.4 (1) to (ix) inclusive (however caused);
(v) The Client hereby agrees to indemnify Venture and
keep Venture indemnified against all liabilities,
damages and expenses arising out of the transmission
or the receipt by Venture of incorrect, corrupted,
ambiguous or inaccurate Messages (however caused);
-17-
(vi) All terms and conditions implied into this Agreement
by law are expressly excluded to the fullest extent
permissible by law;
(vii) Nothing in this clause 22.6 shall operate to excuse
Venture from liability for loss or damage caused to
or suffered by the Client which loss or damage is
directly attributable to the negligence or fraud of
any of Venture's officers.
(8) Messages
(i) Each party agrees to accord the messages the same
status as would be accorded to a document or to
information sent other than by electronic means,
unless such Messages can be shown to have been
corrupted during or upon transmission to Venture;
(ii) Where there is evidence that a Message has been
corrupted or if any Message is identified or capable
of being identified as incorrect it shall be
re-transmitted by the sender as soon as practicable
with a clear indication that it is a corrected
Message. Any liability of the sender which would
otherwise accrue from the sender's failure to comply
with the provisions of this clause 22.8(ii) shall not
accrue if clause 22.8(iii) applies;
(iii) Notwithstanding clauses 22.8(i) and 22.8(ii) Venture
will not be liable for the consequences of an
incomplete or incorrect Message if the error is or
should in all the circumstances be reasonably obvious
to the Client. In such event the Client must
immediately notify Venture thereof;
(iv) If the recipient has reason to believe that a Message
is not intended for him he should notify the sender
and should delete from his system the information
contained in such Message but not the record of its
receipt.
(9) Suspension and Withdrawal
(i) Venture shall have the right without liability to the
Client and without notice, at any time and from time
to time, to suspend the operation of the Services
whereupon no further Messages shall be sent or
enquiries made by either party until Venture has
agreed to re-activate the Services;
(ii) This service can be suspended or withdrawn for any
reason, clauses 22.(1), 22.(2) and 22.(9) shall
survive withdrawal of this Service;
(iii) Withdrawal of this service shall not affect any
action required to complete or implement Messages,
which are received by either of the parties prior to
such withdrawal.
(10) General
Venture shall provide to the Client a telephone number and
e-mail address for access to Venture's "help desk" support for
the Services. Venture is not bound to maintain the
availability of the "help desk" and when available the "help
desk" will be staffed by Venture only during Venture's normal
business hours. The "help desk" will only provide assistance
with regard to the Services and not in respect of any other
software applications.
-18-
23 CONSTITUTION AND PLURALITY OF CLIENT
------------------------------------
(1) If the Client comprises a partnership:
(i) references to the Client in clauses 12(5), 19(2) and
19(4) shall be treated as references to any one or
more of the partners;
(ii) all undertakings and warranties given to Venture
shall be treated as having been given by every one of
the partners;
(iii) the liability of the partners to Venture shall be
joint and several and Venture may release or
compromise with any one or more of the partners,
without affecting its rights against the others;
(iv) Venture may in its absolute discretion treat any
notice to or demand on any one or more of the
partners as notice to or demand on them all and any
notice to Venture by any one or more of the partners
as notice by them all;
(v) all the persons who have executed this Agreement
warrant that all the present partners of such
partnership are named herein and without prejudice to
Venture's rights will advise Venture of any changes.
(2) If the Client is an individual or a partnership (and not a
body corporate):
(i) except as provided in clause 19(2) this Agreement and
all the terms hereof shall remain in full force and
effect notwithstanding any change in the constitution
of the Client whether by death retirement addition or
otherwise;
(ii) the Client shall fully co-operate with Venture, when
requested, to enable this Agreement to be registered
at the Bills of Sale Registry;
(iii) the Client consents to Venture storing and processing
information about the Client on Venture's and/or the
ABN AMRO Holdings NV's computers and in any other
way. The Client is aware that this will be used by
Venture and other companies in the ABN AMRO Holdings
NV to decide whether to continue with this Agreement
or to vary its terms, for training purposes, credit
or financial assessments, market and product
analysis, making payments, recovering monies and
preparing statistics. Information about the Client
may also be used so that Venture can develop, improve
and market its services to the Client and other
clients and to protect Venture's interests (including
establishing credit limits for the benefit of other
clients or obtaining settlement of any liability of
the Client to Venture). Venture may also use such
information to prevent fraud and money laundering.
(iv) Venture will tell the Client if Venture makes a
significant decision about the Client solely using an
automatic decision making process. The Client can
them request a review by Venture.
(v) Venture may from time to time make searches of the
Client's record at one or more trade, credit
reference or fraud prevention agencies. The Client's
record with such agencies includes searches made and
information given by other businesses. The details of
Venture's search(es) will be kept by such agencies.
(vi) Venture may give information about the Client, its
finances, this Agreement and any Debts sold to
Venture to:-
(a) Venture's or the Client's insurers - so they
can quote for and issue any policy or deal
with any claims
-19-
(b) the Department of Trade and Industry in
connection with an application under the
Small Firms Loan Guarantee Scheme
(c) any guarantor or indemnifier of this
Agreement - so they can assess their
obligations to Venture or so Venture can
enforce such obligations
(d) any business acting on Venture's behalf or
the Client's behalf including accountants,
bankers or solicitors - so they can carry
out their services to Venture or the Client
(e) any business providing a similar service to
Venture to whom the Client may wish to
transfer - to facilitate such a transfer
(f) any business to whom Venture may wish to
transfer the Debts - to facilitate such
transfer
(g) anyone else to whom Venture transfers its
rights or duties under this Agreement - so
they can comply with or enforce this
Agreement
(h) any introducer - so Venture can advise of
income earned and commission due
Venture may also give out information about the
Client if Venture has a duty to do so or if the law
allows Venture to do so.
(vii) Unless the Client objects or has objected Venture
(and other members of the ABN AMRO Holdings NV) may
also contact the Client (by letter, telephone, fax or
e-mail):
(a) about services and products which they
consider may be of interest to the Client;
or
(b) to carry out market research about their
services and products (or those of third
parties)
(viii) Unless the Client objects or has objected the Client
consents to Venture giving the Client's name,
address, business details and a short description of
the facility contained in this Agreement to:
(a) carefully selected/reputable/associated
businesses/Group Companies;
(b) joint venture partners
(c) brokers and introducers of business to
Venture Finance Plc
(d) the Department of Trade and Industry
(e) insurers
(ix) the Client consents to Venture disclosing or
transferring information held about the Client to
countries outside the European Economic Area. The
Client acknowledges its awareness that such countries
may not have a level of data protection equivalent to
that of the United Kingdom. These disclosures and
transfers will be made for the purposes of:-
(a) debt collecting
(b) processing
(c) head office reporting
(d) statistical analysis
(x) For training and/or security purposes the Client's
phone calls to Venture may be monitored and/or
recorded
(xi) In respect of information about its sole trader and
partnership Debtors any such information disclosed to
Venture will be accurate and fully comply with the
Data Protection Act 1998.
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24 ASSIGNMENT OR DELEGATION BY CLIENT
----------------------------------
The Client shall not be entitled to assign or charge or declare a trust
over any of its rights or delegate any of its obligations under this
Agreement without the prior written consent of Venture.
25 NOTICES
-------
(1) Any notice or demand to be served or made by Venture under the
terms of this Agreement shall be validly served or made:
(i) if handed to the Client or to any officer of or
partner in the Client as appropriate; or
(ii) if delivered, or sent by facsimile transmission or
post, to the address stated in the Schedule or the
address of the Client last known to Venture or to any
address at which the Client carries on business; or
(iii) if sent by electronic mail to the Client's e-mail
address advised to Venture.
Notice or demands served personally by Venture shall take
effect upon such service and those made by facsimile shall be
treated as being received upon transmission. Notices sent and
demands made by Venture by post or electronic mail shall be
conclusively deemed to have been received no later than 10.00
a.m. on the next Working Day following the posting or
despatch.
(2) Any notice to be served on Venture must be in writing and
delivered by Recorded Delivery post to the registered office
of Venture or such other office, as Venture shall notify to
the Client for the purpose of this sub-clause. They shall take
effect at the time of delivery so recorded.
26 APPLICABLE LAW
--------------
The proper law of this Agreement both as to form and substance shall be
the law of England and the Client hereby submits to the jurisdiction of
the English Courts but without prejudice to the right of Venture to
bring proceedings in the Courts of any territory in which the Client
carries on business or may have assets.
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THE SCHEDULE
(forming part of an agreement for the purchase of Debts between Venture Finance
PLC and the Client named in section 1(a) hereof)
All references in this Schedule to definitions shall be those in Appendix A to
this Agreement
1 (a) Name of Client (clause 1(2)): Xcel Power Systems Limited
(b) Trading address of Client: Brunswick Road
Cobbs Wood
Ashford
Kent
TN23 1EB
(c) Country of Incorporation: England
(d) Registered Number: 00575679
(e) Nature of Client's business Design and Manufacture of
(clauses 18(3)(ii) and 19(2)(x)) Power Supplies
(f) Key provisions of Client's Sale Contract:
(i) Currency Sterling
(clause 18(3)(ii)(a)):
(ii) Terms of payment Up to 90 days with maximum
(clause 18(3)(ii)(a)): settlement discount of 5%
(iii) Governing Law England
(clause 18(3)(ii)(b)):
2 Commencement Date 12th November 2002
(clause 19(1) and definition of
Commencement Date):
3 Minimum Period of Agreement Thirty Six Calendar Months
(clause 19(1):
4 Period of Notice of Termination Six Calendar Months
(clause 19(1)):
5 General Nature of Agreement Without Bad Debt
(clauses 7(2)(i)(d) and (ii)(b), 11(1)(ii), Protection
11(2)(iii) and 13(1):
6 Class or description of Debts for approval All Debtors
(clause 11(1)(viii)):
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7 Provision for Notice of Assignment No notice of assignment
(clauses 12(2) and 12(3)):
8 Collection Arrangements The Client shall collect
(clauses 7(2)(i) and (ii), 12(1) and 12(4)): the Debts as Agent of
Venture in accordance with
Clause 12(4)
9 Prepayment Percentage 85%
(definition of Availability and definition
of Prepayment Percentage):
10 Review Limit (pound)1,500,000 (Pounds
(definition of Availability and definition Sterling One Million
of Review Limit): Five Hundred Thousand)
including an Advantage
Facility of up to(pound)
225,000 (Pounds Sterling
Two Hundred and Twenty
Five Thousand), a Term
Loan of up to (pound)
80,000 (Pounds Sterling
Eighty Thousand) and a
Cashflow Advance of up to
(pound)350,000 (Pounds
Sterling Three Hundred and
Fifty Thousand)
11 Debtor Concentration Up to 50% on BAE and up to
(clause 11(1)(i) and definition of Debtor 20% on all others unless
Concentration): otherwise approved.
12 Funding Limit N/A
(clause 11(1)(i) and definition of Funding
Limit):
13 Recourse period 90 days from end of month
(clause 11(1)(ii): of invoice date
14 Client Bad Debt Risk N/A
(clauses 7(3) and 11(2)(iv)):
15 Factoring Fee, bank and other charges 0.25% plus VAT at the rate
(clauses 9(1), 9(2) and 9(4) and definition applicable, plus Bank
of Factoring Fee and Export Charges): charges
16 Discount Charge 2.0% over the Base Rate of
(clause 9(3) and definition of Discount Venture's Bankers for the
Charge): time being in force for
Prepayments in Pounds
Sterling. 2.0% over
Venture cost of funds for
the time being in force
for Prepayments in agreed
currencies other than
Pounds Sterling.
17 (i) Collection Transfer Fee 6% of the notified amount
(Clause 12(4)(ii)) of all Outstanding Debts
18 (ii) Revised Factoring Fee 2% (in substitution for
(Clause 9(2)) the percentage stated in
paragraph 15 above)
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18 Special Conditions:
1. Prior to Venture making any Prepayment or payment due to the
Client under this Agreement a release of the Debts will be
required from any Debenture which exists or which may come
into existence in the future and Venture will take a Fixed and
Floating Charge over the assets of Xcel Power Systems Limited.
Venture will require priority from any other chargeholder in
respect of all assets and will additionally require any other
floating chargeholder to either:
a) Not appoint a receiver without the prior written consent of
Venture or
b) Provide not less than 28 days prior written notice to
Venture of any intention to appoint a receiver.
Where the terms of any release require that all Prepayments or
payments by Venture to the Client shall be sent to a bank
account designated in the release then Venture will make
payment accordingly.
2. The Agreement is to be supported by the Corporate Guarantee
and Indemnity of Microtel International Inc.
3. The Agreement is to be supported by the Cross Corporate
Guarantees and Indemnities of all associated companies,
currently, Xcel Corporation Limited, Belix Power Conversion
Limited and Belix Wound Components Limited. In support of
Cross Corporate Guarantees and indemnities, Venture will take
Fixed and Floating Charges over the assets of Xcel Corporation
Limited, Belix Power Conversion Limited and Belix Wound
Components Limited.
4. Prior to Venture making any Prepayment, Venture will require
to be named as First Loss Payee and Joint Insured under the
terms of the stock and Buildings Contents insurance policy
held by the Client.
5. Prior to Venture making any Prepayment subordination of all
loans to the Group from Microtel International Inc. will be
required by Venture.
6. Venture will charge an Arrangement Fee of (pound)1,000 (Pounds
Sterling One Thousand) plus VAT at the rate applicable.
7. Prior to Venture making any Prepayment confirmation and
subordination of inter-company loans to the value of
(pound)200,000 (Pounds Sterling Two Hundred Thousand) will be
required by Venture.
8. All legal fees incurred by Venture in satisfaction of the
conditions are for the account of the Client.
9. Venture will require signed audited accounts to be provided
within six months of each year-end. Monthly management
accounts (including both profit and loss account and balance
sheet) will be required within 21 days of each month end.
Should these not be received within the agreed timescale,
Venture reserves the right to reduce the Prepayment
Percentage.
10. Venture will require an annotated open item aged debt analysis
and sales ledger control account reconciliation, agreed back
to the Debts Purchased Account, within 5 working days of each
month end.
11. Venture will require that a Letter be sent to all Debtors,
which pay by BACS, advising them of the change in bank account
details.
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12. Venture will require that a copy of the Client's Purchase
Ledger be forwarded within 5 working days of each month end,
and Venture reserves the right to hold contingency reserves in
respect of contra accounts as it deems appropriate, such
reserves shall be deemed as Disapproved Debts for the purposes
of calculating Availability.
13. Venture requires that the Client obtain signed proofs of
delivery or collection in respect of each Debt and that these
be retained for inspection by Venture from time to time.
14. In the event that the balance of Debts more than 90 days from
the end of month of invoice date exceeds 10% of the value of
Debts Notified to Venture then Venture reserves the right to
reduce the Prepayment Percentage.
15. Venture will carry out periodic audits during the Agreement at
a cost to the Client of (pound)500 (Pounds Sterling Five
Hundred) per audit day, plus VAT at the rate applicable.
16. Venture requires that the Fixed Charge cover, measured as the
ratio of Earnings Before Interest, Tax, Depreciation and
Amortisation (EBITDA), less non-financed capital expenditure
to Total Interest Costs (net of any interest receivable) and
scheduled term loan repayments, does not fall below 2 times
when measured on a rolling 3 month basis.
17. The Eligible Collateral Formula for the AdVantage Facility in
respect of stock will be Raw Materials x 25% plus Work in
Progress x 25% less preferential creditors subject to an
AdVantage Limit of (pound)225,000 (Pounds Sterling Two Hundred
and Twenty Five Thousand).
18. Venture will require a detailed stock listing on a monthly
basis. This report will be required within five working days
of each period end and is to include details of all categories
of stock and preferential creditor balances.
19. The Eligible Collateral Formula for the AdVantage Loan
Facility in respect of Plant & Machinery will be plant &
machinery x 100% subject to an AdVantage Limit of
(pound)80,000 (Pounds Sterling Eighty Thousand).
20. Venture will require an annual valuation of any Fixed Assets
detailed within the Eligible Collateral Formula to be
conducted by a Valuer acceptable to Venture.
21. Either
Venture will require a waiver from the Landlord in respect of
any premises where stock and/or Plant & Machinery is located,
which is made available to us as collateral:
Or
Venture will hold a reserve in respect of 3 months rent in
respect of any premises where stock and/or Plant & Machinery
is located, which is made available to us as collateral.
22. There will be a Cashflow Loan of (pound)350,000 (Pounds
Sterling Three Hundred and Fifty Thousand). An annually
renewable Arrangement Fee of (pound)3,500 (Pounds Sterling
Three Thousand Five Hundred) plus VAT at the rate applicable
will apply.
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IN WITNESS whereof such of the parties have executed this Deed in the manner
described below.
EXECUTED AND DELIVERED AS A DEED by
PAUL BEVERIDGE /S/ PAUL BEVERIDGE
- -------------- ------------------
as Attorney for VENTURE FINANCE PLC
in the presence of:
PAUL ARPS /S/ PAUL ARPS
- -------------- ------------------
Address of Witness SUSSEX HOUSE, PERRYMOUNT ROAD, HAYWARDS HEATH
---------------------------------------------
on the 12 day of November 2002
Signed as a Deed by Xcel Power Systems Limited
on the )
)
23 day of October 2002 )
Acting by:
C.T. OLIVA Director ) /S/ CARMINE T. OLIVA
- ----------------------- -------------------------------
)
GRAHAM JEFFERIES Director/Secretary ) /S/ GRAHAM JEFFERIES
- ----------------------- -------------------------------
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Signed and Delivered as a Deed
by
as attorney for and on behalf of )
LLOYDS TSB BANK Plc in the )
presence of )
Witness signature: (ILLEGIBLE)
-------------------------------------------
Witness name: /S/ (ILLEGIBLE)
------------------------------------------------
Witness Address: LLOYDS TSB BANK plc
HORLEY SECURITIES CENTRE
P.O. BOX 104
13 HIGH STREET
HORLEY SURREY RH6 7YA
EXECUTED AND DELIVERED AS A DEED by
PAUL BEVERIDGE /S/ PAUL BEVERIDGE
- -------------- ------------------
as Attorney for VENTURE FINANCE PLC
in the presence of:
PAUL ARPS /S/ PAUL ARPS
- -------------- ------------------
Address of Witness SUSSEX HOUSE, PERRYMOUNT ROAD, HAYWARDS HEATH, WEST SUSSEX
----------------------------------------------------------
Signed as a Deed by
XCEL POWER SYSTEMS LIMITED
acting by Graham Jefferies ) /S/ GRAHAM JEFFERIES
-------------------------------
a director and )
Carmine T. Oliva ) /S/ CARMINE T. OLIVA
-------------------------------
another director/the secretary )
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APPENDIX A - DEFINITIONS
"ABN AMRO HOLDINGS NV"
Any company in which ABN AMRO Holdings NV of the Netherlands has a beneficial
shareholding either directly or indirectly or through any intermediary.
"ASSOCIATE"
An associate as defined in paragraph 184 of the Consumer Credit Act 1974 of the
Client or a director or shareholder or employee of the Client.
"AVAILABILITY"
The lesser of:
(i) an amount calculated by applying the Prepayment Percentage to the
credit balance on the Debts Purchased Account after deducting therefrom
the total value of Disapproved Debts, or
(ii) the Review Limit, if any, shown in paragraph 10 of the Schedule and
then, as applicable, either:
(iii) adding thereto the credit balance on the Current Account, or
(iv) deducting therefrom the Funds in Use.
"BASE RATE"
The Base Rate set by Venture Bankers subject to a minimum rate of 4%
"CLIENT BAD DEBT RISK"
For a Debtor the amount, if any, specified in paragraph 14 of the Schedule which
will be subject to Venture's rights of Recourse and Reassignment regardless of
the amount of any Credit Limit established in respect of the Debtor and the
designation of Debts as Credited Approved Debts".
"COLLECTION TRANSFER FEE" The fee referred to in clause 12(4)(ii).
"COMMENCEMENT DATE"
The date of the commencement of this Agreement which is specified in paragraph 2
of the Schedule.
"CONVERSION RATE"
The spot buying rate notified by Venture's Bankers for the Currency of the
Debts.
"CREDIT APPROVED DEBT"
If the Schedule states that the general nature of this facility is to be "With
Bad Debt Protection" then any Notified Debt which is (when aggregated with all
other Outstanding Debts owing by the same Debtor):
(i) for the time being within a Credit Limit;
(ii) not one in respect of which the Client is in breach of any obligation
under this Agreement;
(iii) not in existence on the Commencement Date;
(iv) not one in respect of which Venture has Recourse. shall be a Credit
Approved Debt.
"CREDIT LIMIT"
A limit established by Venture in its absolute discretion in relation to a
Debtor.
"CURRENT ACCOUNT"
Any account maintained by Venture in the name of the Client for the recording of
transactions between Venture and the Client.
"DATA LOG"
The complete record of transmissions exchanged between Venture and the Client
representing Messages.
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"DEBT"
Any book or other debt or monetary claim of any nature due or owing to the
Client (including any financial obligation of a Debtor under a Sale Contract)
together with any applicable tax or duty payable by the Debtor to the Client)
and where the context so admits a part of a Debt.
"DEBTOR"
Any person, including any body of persons corporate or unincorporate, incurring
any obligation to the Client (whether under a present, future or prospective
Sale Contract or otherwise) and where the context so permits the person having
the duty to administer the Debtor's estate upon death or Insolvency.
"DEBTOR CONCENTRATION"
The maximum amount of the Outstanding Debts of a single Debtor equivalent to the
percentage specified in paragraph 11 of the Schedule of all Outstanding Debts.
"DEBTS PURCHASED ACCOUNT"
Any account maintained in the records of Venture in the name of the Client for
the purpose of recording the Purchase Price of Debts (together with any Related
Rights pertaining thereto).
"DELIVERED"
In the case of Goods, means they have been despatched to or to the order of the
Debtor and, in the case of services, means they have been completed.
"DISAPPROVED DEBT"
A Debt which is disapproved in accordance with clause 11(1).
"DISCOUNT CHARGE"
The charge for Prepayments (if any) made by Venture.
"ELECTRONIC DATA INTERCHANGE FACILITY"
An Internet web site and/or any other form of electronic communication and/or
software maintained and made available for the purpose of enabling data to be
transmitted between Venture and the Client.
"EXPORT CHARGES"
A charge in addition to the Factoring Fee for each invoice. Additionally where
the general nature of this facility is "With Bad Debt Protection", a charge for
each credit application. A list of charges is available on request.
"EXPORT DEBT"
A Debt evidenced by an invoice addressed to a Debtor outside the United Kingdom.
"FACTORING FEE" The fee referred to in clause 9(1).
"FINANCIAL RECORDS"
The ledgers, computer data, records, documents, disks, machine readable material
on or by which the financial or other information pertaining to a Debt is
recorded or evidenced and any equipment necessary for reading or amending the
same.
"FOREIGN CURRENCY DEBT"
Any Debt which is represented by an invoice expressed otherwise than in Sterling
or is payable otherwise than in Sterling in the United Kingdom in accordance
with the Sale Contract giving rise to it.
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"FORCE MAJEURE"
In relation to any party, any circumstances beyond the reasonable control of
that party (including without limitation, any strike, lock-out or other form of
industrial action).
"FUNDING LIMIT"
In relation to a Debtor:- the amount specified in paragraph 12 of the Schedule
or such other amount as Venture may from time to time in its absolute discretion
determine.
"FUNDS IN USE"
The debit balance, if any, on the Current Account arrived at by aggregating all
Prepayments made by Venture to the Client which have been debited to a Current
Account (together with all sums treated as Prepayments by virtue of clause 9(5))
and deducting therefrom the aggregate of Debts transferred to the Current
Account in accordance with clause 7(2).
"GOODS"
Any goods, services or work done with materials supplied or hiring which are the
subject of a Sale Contract.
"INSOLVENCY"
(i) in the case of an individual:- bankruptcy or sequestration;
(ii) in the case of a partnership:- winding up by the court or bankruptcy or
sequestration;
(iii) in the case of a body corporate:- winding up by the court or voluntary
winding up by reason of its inability to pay its debts or the
appointment of an administrator pursuant to the Insolvency Act 1986 or
of a receiver of any part or all of its income or assets; and
(iv) in any case:- any informal or voluntary arrangement (whether or not in
accordance with the Insolvency Act 1986) with or for the benefit of the
general body of creditors of the individual the partnership or the body
corporate.
"MESSAGE"
Data and any e-mail or Internet message transmitted electronically between the
parties via the Electronic Data Interchange Facility.
"NOTIFICATION"
An offer pursuant to Clause 4(1) or a notification of a Debt by the Client to
Venture pursuant to clause 6(2) and a credit note pursuant to clause 10(1)(iii)
and "Notified" and "Notify" shall be construed accordingly.
"OFFER"
An unconditional offer by the Client to sell a Debt and its Related Rights to
Venture with full title guarantee to be made in such form and with such evidence
of the performance of the Sale Contract as Venture may specify and where more
than one Debt is at the same time subject to an Offer it shall be treated as an
independent offer to sell to Venture each Debt so offered, which may be accepted
or rejected by Venture entirely at Venture's absolute discretion.
"ONSET OF INSOLVENCY"
(i) in the case of sequestration or bankruptcy or winding up by the Court:-
the date of the sequestration award or the bankruptcy or winding up
order respectively;
(ii) in the case of voluntary winding up:- the date of the effective
resolution for winding up by members of the body corporate;
(iii) in the case of the appointment of a receiver or administrator or
judicial factor:- the date of his appointment;
(iv) in the case of any arrangement:- the date when it is made;
(v) in the case of a trust deed for creditors:- the date of its execution.
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"OUTSTANDING DEBT"
Any Debt which has been included in a Notification and which remains vested in
Venture and unpaid; and "Outstanding" shall be construed accordingly.
"PREPAYMENT"
A payment made by Venture to the Client on account of any Purchase Price (before
the Transfer Date thereof).
"PREPAYMENT PERCENTAGE"
The percentage of the Purchase Price of each Debt which is specified in
paragraph 9 of the Schedule or such other higher or lower percentage of the
Purchase Price that Venture may from time to time in its absolute discretion
determine.
"PURCHASE PRICE"
The amount payable by Venture to the Client for each Debt (and any Related
Rights) vested in Venture and calculated in accordance with clause 6(1).
"REASSIGNMENT"
The transfer of ownership of a Debt from Venture to the Client.
"RECOURSE"
The right of Venture to require the Client to repurchase a Debt (together with
its Related Rights) at its Repurchase Price or such lesser amount as Venture may
require.
"RECOURSE DEBT"
A Debt in respect of which Venture shall have Recourse as provided in clause
11(2).
"RELATED RIGHTS"
(i) all the Client's rights as an unpaid Client, under the Sale Contract
giving rise to a Debt, other than rights relating to ownership of Goods
but without any obligation on Venture to complete the Sale Contract;
(ii) the benefit of all guarantees, indemnities, insurance's, instruments
and securities given to or held by the Client in relation to such Debt;
(iii) all cheques, bills of exchange and other instruments held by or
available to the Client in relation to such Debt;
(iv) the Financial Records;
(v) the Transferred Goods;
(vi) the right to call for the transfer to Venture of any Goods (except
Transferred Goods) subject to a Sale Contract, except where ownership
thereof has already vested in the Debtor.
"REPURCHASE PRICE"
In respect of a Recourse Debt the Notified amount of the Debt or the unrecovered
proportion of it.
"REVIEW LIMIT"
The maximum Funds in Use as specified in paragraph 10 of the Schedule or as
otherwise agreed by Venture.
"REVISED FACTORING FEE"
The fee referred to in the final sentence of clause 9(2).
"RIGHT OF IMMEDIATE TERMINATION"
The right of Venture to terminate this Agreement forthwith by notice in the
circumstances described in clause 19(2), whether or not Venture shall have
exercised that right.
"SALE CONTRACT"
A contract for the supply of Goods by the Client.
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"SERVICES"
The provision to the Client of an electronic messaging capability and of certain
information via the Electronic Data Interchange Facility for the purposes of
operating the Agreement.
"STERLING"
The lawful currency of Great Britain and Northern Ireland.
"SUPPLEMENTARY DISCOUNT CHARGE"
A sum calculated by applying to the amount of any payment made by Venture to the
Client by CHAPS, as provided by clause 7(6), the rate per annum specified in
paragraph 16 of the Schedule for a period of four calendar days.
"TRANSFER DATE"
The day on which the Purchase Price of a Debt is to be transferred from the
Debts Purchased Account to the Current Account as specified in clause 7(2).
"TRANSFERRED GOODS"
(i) Any Goods included in the Sale Contract which shall not have been
Delivered before the Debt relating to such Goods shall have been
notified to Venture in breach of the terms hereof; or
(ii) Goods which any Debtor shall reject or shall return to Venture or to
the Client or indicate a wish so to do; or
(iii) Goods which the Client or Venture recovers from the Debtor.
"UNITED KINGDOM"
Great Britain and Northern Ireland, but excluding the Channel Islands and the
Isle of Man.
"VENTURES BANKERS"
HSBC Bank Plc or such other bank as Venture may from time to time, at its sole
discretion, appoint as its bankers.
"WORKING DAY"
A day when both Venture and the bankers of Venture are both open for the usual
conduct of business.
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APPENDIX B - INTERPRETATION
(1) In this Agreement except where the context otherwise requires:
(i) the singular shall include the plural and vice versa;
(ii) any of the three genders shall include the other two;
(iii) references to Venture shall include Venture's successors and
assigns;
(iv) references to a "clause" (except where otherwise specified)
are to clauses of this Agreement;
(v) references to any statute shall be treated as including its
statutory modification or re-enactment or any relevant
subordinate legislation.
(2) Headings to clauses are for reference only and shall not affect or
limit the meaning or extent of any clause.
(3) References in the Schedule to clauses are to clauses of this Agreement
and references to the Appendix are to the Appendix to this Agreement.
(4) References to "Agreement" shall be treated as including the Schedule
and the Appendices.
(5) Invalidity and Severability
In the event of a conflict between any provision of clause 22 of the
Agreement and any law regulation or decree affecting clause 22 of the
Agreement then provision of clause 22 of the Agreement so affected
shall be regarded as null and void or shall, where practicable, be
curtailed and limited to the extent necessary to bring it within the
requirements of such law regulation or decree but otherwise it shall
not render null and void any other provision of clause 22 of the
Agreement
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