Exhibit 10.22
AeroFund Financial
AGREEMENT FOR PURCHASE OF ACCOUNTS
THIS AGREEMENT is made on October 20, 2003 by and between Nico Intenational
Inc., (a Delaware Corporation) having its principal place of business at 5655
Lindero Canyon Road, Suite 120, City of Westlake Village, County of Los Angeles,
State of California, 91362 hereinafter referred to as Seller and AEROFUND
FINANCIAL, INC., having an established place of business at 6910 Santa Teresa
Boulevard, San Jose CA 95119, hereinafter referred to as Purchaser.
1. PURCHASE OF ACCOUNTS. Seller for and in consideration of the sums set
forth in the annexed Exhibit A (such Exhibit A as the same may be supplemented
or added to from time to tune being hereinafter called "Exhibit A") and in
annexed Exhibit B, and other good and valuable consideration, receipt of which
is acknowledged, does hereby sell to the Purchaser, its successors and assigns,
all of Seller's right, tide and interest in and to Seller's accounts receivable
set form in Exhibit A which is made a part hereof and all monies due or which
may become due upon such accounts receivable. Seller authorizes Purchaser to
insert me Exhibit A required account information whenever accounts are
subsequently purchased. Exhibit A may be sent by FAX, mail or hand delivered to
Purchaser, and this Agreement and Exhibits A and B hereto shall govern all
subsequently purchased accounts. Purchaser is not obligated to buy any account
from Seller. Purchaser may exercise its sole discretion in approving me credit
of each account debtor before buying any account Purchaser shall have, with
respect to the purchased accounts, all me rights and remedies of any unpaid
seller under the Uniform Commercial Code and other applicable law, including the
rights of replevin, claim and delivery, reclamation, and stoppage in transit.
2. AUTHORITY OF PURCHASER. Seller hereby acknowledges and agrees that
Purchaser, and its successors and assign, shall have me irrevocable authority
(a) to sell, set over, pledge, compromise, or discharge the whole, or any part,
of such accounts; (b) to ask, demand, collect, receive, sue, and give releases
for the monies due, or which may become due, upon such accounts receivable and
to compromise, prosecute, or defend any action, claim, case, or proceeding
relating to accounts purchased by Purchaser, including me filing of a claim or
the voting for or against a plan in any bankruptcy case, all in Purchaser's name
or Seller's name, as Purchaser may choose; (c) to prepare, file, and sign
Seller's name on any notice of lien, claim of mechanic's lien, assignment or
satisfaction of lien or mechanic's lien or similar document; (d) at any time,
whether or not Seller is in default hereunder, to notify all account debtors to
pay Purchaser directly; (e) to receive, open, and dispose of all mail addressed
to Seller for the purpose of collecting accounts and shall be appointed as
limited agent with no fiduciary responsibility to execute Seller's name on any
post office change of address form; (f) to endorse Seller's name on any chocks
or other forms of payment on accounts assigned to Purchaser; and (g) to do all
acts and things necessary or proper, in furtherance of any such purposes.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS. To induce Purchaser to
render its services available to Seller, and with fall knowledge that the truth
and accuracy of the following are being relied upon by the Purchaser in the
purchase and remittance for me accounts receivable acceptable to Purchaser, the
Seller represents, warrants, covenants and agrees that:
a. Seller is properly licensed and authorized to operate the
business of distributor under the trade name(s) of Nico
International, and Seller's trade name(s) has been properly
filed and published as required by applicable law. Seller has
fulfilled all me federal, state and local requirements of law in
properly registering itself to do business at all addresses in
which it is located.
b. The Seller is the absolute owner of each account receivable set
forth in Exhibit A and has full legal right to make said sale
thereof;
c. The correct amount of each receivable is as set forth in Exhibit
A and is not in dispute;
INITIAL ____
d. The payment of each account receivable is not contingent upon the
fulfillment of any obligation or contract, past or future, and any and
all obligations required of the Seller have been fulfilled as of the
date of this Agreement;
e. Each account receivable set forth in Exhibit A is based on an actual
sale and delivery of goods and/or services actually rendered, is
presently due and owing to Seller, is not in default, has not been
previously sold, assigned, transferred, or pledged, and is free of any
encumbrance or lien;
f. There are no defenses, offsets, or counterclaims against any of the
accounts receivable, and no agreement has been made under which the
account debtor may claim any deduction or discount, except as otherwise
stated in any of the accounts receivable set forth in Exhibit A;
g. Each account receivable set forth in Exhibit A shall be the property
of the Purchaser and shall be collected directly by Purchaser, but if
for any reason it should be paid to Seller, Seller shall promptly
notify Purchaser of such payment, shall hold any checks, drafts, or
monies so received in trust for the benefit of Purchaser, and shall
promptly endorse, transfer and deliver the same to Purchaser;
h. Purchaser shall have the right of endorsement, and also the right to
require endorsement by Seller, on all payments received by Purchaser on
Seller's account;
i. The Seller and, to Seller's best knowledge, each account debtor set
forth in Exhibit A is, are, and shall remain solvent as that term is
defined in the Federal Bankruptcy Code;
j. Each account debtor named in Exhibit A will not object to the
payment for, or the quality or the quantify of, the subject matter of
the account receivable and is liable for the amount set forth in
Exhibit A;
k. Each account debtor set forth in Exhibit A shall be promptly
notified after acceptance by Purchaser that the account receivable has
been transferred to and is payable to Purchaser,
l. The Seller's place of business and the place where the records
concerning all accounts receivable herein referred to are kept is the
one set forth at the beginning of this Agreement, and Seller will
promptly advise Purchaser in writing if such place of business or
record keeping is changed or a new place of business or record keeping
is added;
m, All accounts receivable forwarded to Purchaser and acceptable to
Purchaser after me date hereof, shall comply with each and every one of
the foregoing representations, warranties, covenants and agreements
referred to above in this Paragraph 3; and
n. Seller will not assign, transfer, sell, or grant any lien or
security interest in accounts to any other party, without Purchaser's
prior written consent.
o. Seller will, upon sale to Purchaser, make proper entries on its
books and records disclosing the absolute sale of said accounts to
Purchaser.
4. ADJUSTMENTS. CHARGE BACKS, AND INDEMNIFICATION. In the event of a
breach of any of the representations, warranties, and covenants set forth in
Paragraph 3, including a dispute between the Seller and any account debtor set
forth in Exhibit A, Seller shall promptly advise Purchaser and shall, subject to
the Purchaser's approval, adjust such disputes and advise Purchaser of
adjustment. Purchaser shall have the right at any time to charge back to
Seller's account the amount of any allowance, return or account receivable, full
or partial payment of which is delayed or refused by an asserted counterclaim,
defense or offset by an account debtor, or by reason of an account debtor's
insolvency or financial inability to pay, and any expenses and legal fees
incurred by Purchaser in any
attempt to collect any disputed account, together with fees pursuant to Exhibits
A and B from the date of purchase of the account in dispute, whether such
dispute is valid or invalid.
5. SECURITY INTEREST. In order to secure Seller's now existing or
hereafter arising obligations to Purchaser under Paragraph 3, 4, 10 and 11
hereof; and the legal fees and expenses set forth in Paragraph 8 hereof, Seller
hereby grants to Purchaser a continuing lien upon and security interest in
Seller's now existing or hereafter arising rights and interest in the following
(the "Collateral"): All now owned and hereafter acquired persona) property and
fixtures, and proceeds thereof, (including proceeds of proceeds) including
without limitation Accounts, Chattel Paper, Goods, Inventory, Equipment,
Instruments, including Promissory Notes, Investment property, Documents, and
General Intangibles; excluding Patent Rights. Seller is not authorized to sell,
transfer or otherwise convey any Collateral, except for the sale of finished
inventory held for sale in the Seller's usual course of business, without
Purchaser's consent Seller agrees to sign such financing statements, in a form
satisfactory to Purchaser, which Purchaser may at any time desire to file in
order to protect or perfect Purchaser's security interest.
6. DEFAULT. An event of default shall be deemed to have occurred, and
(without implying any obligation of Purchaser to buy accounts) Purchaser may
cease buying accounts and may immediately exercise its rights and remedies with
respect to the Collateral as a secured party under this Agreement, the Uniform
Commercial Code, and applicable law, upon the happening of one or more of the
following:
(a) Seller shall fail to make any payments required to be made to
Purchaser under this Agreement including, without limitation, any
payments required to be made in accordance with Paragraph 10;
(b) Seller shall commence any voluntary case under the Federal
Bankruptcy Code, or shall make as assignment of the benefit of
creditors, or shall consent to the appointment of a receiver or
custodian for a substantial portion of its assets;
(c) An involuntary case under the Federal Bankruptcy Code is filed
against Seller,
(d) Seller shall become insolvent in that its debts are greater than the
fair value of its assets, or Seller is generally not paying its debts as
they become due;
(e) Any involuntary lien, levy, garnishment, attachment or me like is
issued against or attached to the accounts purchased by Purchaser or the
Collateral, and the same is not released within ten (10) days; or
(f) Seller shall breach any covenant set forth in Paragraphs 3, 4, or
10, or any warrant or representation set forth in Paragraph 3 shall
prove to be false when made.
7. PAYMENT. Upon acceptance by Purchaser of Exhibit A and purchase by
Purchaser of the accounts described thereon, Purchaser agrees to pay Seller the
amount set forth as the "ADVANCE" on Exhibit A. Purchaser further agrees, upon
collection in full of Advances and Fees set forth in Exhibits A & B, to promptly
pay over the further sum set forth in Exhibit B, less any deduction discount,
indemnification, or charge backs provided for in Paragraphs 3 or 4, and less any
repurchase obligations under Paragraph 10, plus an amount of money for payment
to Purchaser by account debtor within the certain number of days set forth in
the annexed Exhibit B, plus any costs or fees incurred tinder Paragraph 8, if
applicable.
8. ATTORNEYS' FEES. If the Seller is in default as set forth in
Paragraph 6, the Seller will pay any and all legal expenses and reasonable
attorneys' fees that Purchaser incurs (a) in negotiating, preparing, or
administering this Agreement and any documents prepared in connection herewith;
or (b) in any way arising out of this Agreement; (c) in enforcing this Agreement
against Seller or protecting or enforcing its security interest in the
Collateral or any other right granted by Seller to Purchaser or arising under
applicable law, whether or not suit is brought; or (d) in collecting accounts
for which there has been a breach of any of the warranties, representations, or
covenants set forth in Paragraphs 3, 4, or 10, or a partial or total failure or
delay in payment by me account debtor for any reason, including insolvency,
bankruptcy, or financial inability to pay; or (e) in the representation of
Purchaser in connection
with any bankruptcy case or insolvency proceeding involving Seller, the
Collateral, any account debtor, or any accounts purchased by Purchaser.
9. SEVERABILITY AND CHOICE OF LAW. In the event that any provision of
this Agreement is deemed invalid by reason of the operation of any law, or by
reason of any interpretation placed on any law by the courts, this Agreement
will be construed as not containing such provision and the remainder of the
Agreement shall remain in full force and effect. This Agreement has been
transmitted by Seller to Purchaser at Purchaser's office in the State of
California and has been executed and accepted by Purchaser in me State of
California. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of California.
10. REPURCHASE AND RECOURSE. Seller further agrees that if any account
or portion thereof is not paid by the account debtor within ninety (90) days of
the date of invoice for any reason, including the account debtor's insolvency or
financial inability to pay. Seller shall, upon demand by Purchaser, repay to
Purchaser any amount paid by Purchaser to Seller in consideration for the sale
of said account, plus the Purchaser's earned fee in accordance with Exhibit B.
Purchaser can apply any contingency and fee refunds due to Seller under Exhibit
B and Paragraph 7 to Seller's obligations under this paragraph. Purchaser's
security interest in the Collateral will secure Seller's obligations under this
paragraph.
11. NO LIEN TERMINATION WITHOUT RELEASE. In recognition of Purchaser's
right to have all its attorneys' fees and other expenses incurred in connection
with this Agreement secured by its Collateral, not withstanding payment in full
of all obligations by Seller, Purchaser shall not be required to record any
terminations or satisfactions of any of its liens on the Collateral unless and
until Seller and all guarantors of Seller's obligations to Purchaser have
executed and delivered to Purchaser releases in the form of Exhibit "C" of all
claims, known and unknown which exist as of the date thereof. Seller understands
that this provision constitutes a waiver of its rights under Section 9-513 of
the Uniform Commercial Code.
12. VENUE. The parties agree (hat any suit, action or proceeding arising
out of the subject matter hereof, or the interpretation, performance or breach
of this Agreement, shall, if Purchaser so elects, be instituted in the United
States District Court for the Northern District of California or any court of
the State of California located in San Francisco, California (the "Acceptable
Forums"). Each party agrees that the Acceptable Forums are convenient to it, and
each party irrevocably submits to the jurisdiction of the Acceptable Forums and
waives any and all objections to jurisdiction or venue that it may have under
the laws of the State of California or otherwise in those courts in any such
suit, action or proceeding. Should such proceeding be initiated in any other
forum, Seller waives any right to oppose any motion or application made by
Purchaser as a consequence of such proceeding having been commenced in a forum
other than an Acceptable Forum.
13. TERM AND TERMINATION. The term of this Agreement shall be one (1)
month from the date hereof, and from month to month thereafter, unless
terminated in writing by Purchaser or Seller on any monthly anniversary. Any
termination of this Agreement shall not affect the security interest granted
hereby or the warranties, covenants, or obligations of Seller hereunder, and
this Agreement shall continue to be effective until all transactions entered
into and obligations incurred hereunder have been completed and satisfied in
full.
IN WITNESS WHEREOF, the Seller has executed this Agreement on (he day and year
above written, and the Purchaser has noted its acceptance by its authorized
representative.
ACCEPTED SAN JOSE, CALIFORNIA:
AeroFund Financial International Inc.
By: /s/ Raymond LaBelle By: /s/ Steve Reder
------------------------------------- --------------------------------
Name, Title: Raymond LaBelle, SVP/Manager Name, Title: Steve Reder,
President
Rebate and Retention
Schedule
Exhibit "B"
CLIENT: Nico International Inc. DATE: October 20,2003
1. ADVANCE RATE. PURCHASER shall advance 80% of the net face amount of
purchased invoices; retaining (subject to the rebate provision below) 20% as the
Discount for its services hereunder.
2. REBATE. A portion of the Discount shall be rebated to the SELLER
based upon the number of days between the purchase date of the invoice and the
date of full payment of the account debtor(s) and based upon the calendar
monthly volume sold to result in a fee schedule as follows;
Monthly Calendar Volume
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
2.000% 1.750% 1.500% 1.500% 1.500% 1.500%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
2.500% 2.000$ 1.500% 1.500% 1.500% 1.500%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
3.000% 2.250% 2.000% 2.000% 1.750% 1.500%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
3.500% 2.500% 2.250% 2.500% 2.250% 1.750%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
4.000% 3.000% 2.850% 2.500% 2.300% 2.000%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
4.625% 3.500% 3.300% 2.925% 2.700% 2.350%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
5.250% 4.000% 3.750% 3.350% 3.100% 2.700%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
5.875% 4.500% 4.200% 3.775% 3.500% 3.050%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
6.500% 5.000% 4.650% 4.200% 3.900% 3.400%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
7.125% 5.500% 5.100% 4.625% 4.300% 3.750%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
7.750% 6.000% 5.550% 5.050% 4.700% 4.100%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
8.375% 6.500% 6.000% 5.475% 5.100% 4.450%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
9.000% 7.000% 6.450% 5.900% 5.500% 4.800%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
9.625% 7.500% 6.900% 6.325% 5.900% 5.150%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
10.250% 8.00% 7.350% 6.750% 6.300% 5.500%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
10.875% 8.500% 7.800% 7.175% 6.700% 5.850%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
11.500% 9.000% 8.250% 7.600% 7.100% 6.200%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
12.750% 10.250% 9.500% 8.850% 8.350% 7.450%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
14.000% 11.500% 10.750% 10.100% 9.600% 8.700%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
15.250% 12.750% 12.000% 11.350% 10.850% 9.950%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
16.500% 14.000% 13.250% 12.600% 12.100% 11.200%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
17.750% 15.250% 14.500% 13.850% 13.350% 12.450%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
20.000% 20.000% 20.000% 20.000% 20.000% 20.000%
- ---------------- -------------- ------------------ ------------------ ------------------ ------------------
The collection period days shall be calculated by counting the days from the
date of the Advance through and including the date upon which payments are
received from said account debtors(s).
3. BREACH OF WARRANTY. All invoices that remain unpaid after 30 days due
to SELLER'S breach of contractual representation, warranty, or covenant, .shall
accrue additional fees at the rate of 1.0% for every 15 days until paid.
Initials ____ Initials ____
AeroFund Financial
Rebate and Retention Schedule
(continued)
Exhibit "B"
4. SPECIAL FEES. "Misdirected Payment fee" - SELLER shall pay to
PURCHASER on demand a fee of fifteen percent (15%) of the amount of any payment
on account of a account purchased hereunder which has been received by SELLER
and not delivered in kind to PURCHASER on the next business day following the
date of receipt by SELLER.
"Missing Notation Fee" - Seller shall pay to Purchaser on demand a fee of
fifteen percent (15%) of the face amount of any invoice evidencing a purchased
account that is sent by Seller to an account debtor which does not contain a
notification that the account as been assigned to and payment thereunder is to
be made only to Purchaser.
5. SET UP CHARGE. There will be a one-time set up charge of $300.00,
due at the signing off the contract.
6. MAXIMUM FACILITY. The maximum facility shall be the maximum amount
of invoices purchased by PURCHASER and unpaid by the account debtor(s) at any
given time. The Maximum Facility shall not exceed $1.500,000.00(one million five
hundred thousand dollars)
7. EARLY TERMINATION. SELLER shall pay PURCHASER a penalty of one per
cent (1 %) of the maximum facility amount for each month left in the term of the
contract if SELLER terminated the agreement prior to the expiration of the term
as defined in paragraph 13 of the AGREEMENT FOR PURCHASE OF ACCOUNTS.
ACCEPTED: SAN JOSE, CALIFORNIA
AEROFUND FINANCIAL, INC. Seller QT 5, Inc.
BY: /s/ Raymond LaBelle By: /s/ Steve Reder
-------------------------------------- --------------------------------
Name, Title: Raymond LaBelle, SVP/Manager Name, Title: Steve Reder, President