Terms & Conditions

1.1. The parties agree that the purpose of this Agreement and the financing provided herein is commercial in nature. All terms not defined herein shall have the meaning set forth in the Factoring Services Agreement and vice versa or the Uniform Commercial Code.

Account – All “Accounts” as defined in the Uniform Commercial Code and all goods represented therefrom.

Account Debtor – The person or entity obligated to pay an account, including but not limited to, general intangibles and chattel paper.

Advance Rate – Percentage of the face value of any Eligible Account as set forth in the Factoring Services Agreement.

Agreement Term – The length of term as indicated on the Factoring Services Agreement under the label Agreement Term. The Agreement will automatically renew for a subsequent term provided that Cancellation under paragraph 9.2 has not occurred.

Cancellation – The Agreement may be cancelled pursuant to the terms set forth herein, provided that all Obligations have been met.

Chosen State – California (CA)

Clearance Days – Two (2) business day on all checks and electronic funds transfers, for all purposes of this Agreement, Clearance Days will be added to the date on which any payment is received by Purchaser.

Closed – a Purchased Account for which payment in full has been received from Account Debtor or the advanced amount on the invoice, including fees has been charged to the Reserve Account pursuant to this Agreement.

Collateral – All Accounts, Equipment, Inventory, Deposit Accounts, Chattel Paper, Electronic Chattel Paper, Letters of Credit, Letter of Credit Rights, Investment Property, Instruments, General Intangibles, all monies held in the Reserve Account, all books, records, files and computer data relating to the foregoing, and all products, profits and proceeds of the foregoing, currently owned or acquired hereafter by Seller or Guarantor.

Dilution – The percentage of chargeback debits divided by the total payments received for any specific period selected.

Dispute – Any dispute or claim, bona fide or not, as to the price, terms, amount, quantity, quality, setoff, claims in recoupment or other defense to payment asserted by an Account Debtor.

Eligible Account – An Account, which means a right to payment for goods sold or services provided, which is acceptable for purchase at the discretion of Purchaser in the sole exercise of its credit and business judgment.

Events of Default – As set forth in Paragraph 4 herein.

Exposed Payments – Payments received by Purchaser from an Account Debtor which has become subject to a bankruptcy proceeding, to the extent such payments cleared said Account Debtor’s deposit account within ninety days prior to the commencement of said bankruptcy case.

Face Value – The amount presented as due on an Account at the time of Purchase.

Factoring Fee – As specified in the Factoring Services Agreement multiplied by the original face value of a Purchased Account, for each Factoring Fee Period or portion thereof, computed from Purchase Date by Purchaser through and including the Late Payment Date.

Factoring Fee Period(s) – As specified in the Factoring Services Agreement, the period in which the corresponding Factoring Fee will be applied to such Eligible Account(s) after payment has been received by Purchaser and after said Clearance Days have passed.

Financial Inability – Means that the Account Debtor is unable to pay the Seller and all other similarly situated creditors in the ordinary course of its business, solely as a result of its financial inability and for no other reason.

Funded Amount – The face value of an Account multiplied by the Advanced Rate, less any amounts due to Purchaser from Seller.

Insolvent – An Account Debtor has become Insolvent if it is the subject of (i) a petition under any state or federal debtor relief or liquidation statute filed within the Insolvency Period, (ii) a proceeding under Chapters 11, 7 or 13 of the Bankruptcy Code filed on or after the Purchase Date and within the Insolvency Period, or (iii) the Financial Inability of an Account Debtor.

Insolvency Period – The earlier of (i) the Late Payment Date or (ii) the date on which the Seller could be required to repurchase an Account under Paragraph 2.5 herein entitled “Repurchase of Accounts.”

Late Charge – 0.10% of the Face Value of an Account, for each day computed from the first day after the Late Payment Date, provided however that any Late Charge with respect to any Reserve Shortfall shall be computed from the date such Reserve Shortfall occurred.

Late Payment Date – The final day in which an invoice is considered not-late as represented on the Factoring Services Agreement. Invoices which are not paid after the Late Payment Date become subject to a Late Charge.

Misdirected Payment Fee – fifteen percent (15%) of the original face value of a purchased account for which payment has been received by Seller and not delivered in kind to the Purchaser on the next business day following the receipt by Seller.

Missing Notation Fee – Fifteen percent (15%) of the face value of Account.

Non-Recourse Account – A Purchased Account that is not a Recourse Account as defined herein.

Obligation – all present and future obligations owing by Seller to Purchaser whether or not for the payment of money, whether or not evidenced by any note, invoice or other instrument, whether direct or indirect, absolute or contingent, due or to become due, joint or several, primary or secondary, liquidated or unliquidated, secured or unsecured, original or renewed or extended, whether arising before, during or after the commencement of any bankruptcy case in which Seller is a debtor, including but not limited to any obligations arising pursuant to letters of credit or acceptance transactions or any other financial accommodations.

Parties – Seller and Purchaser

Prime Rate – the “prime rate” as set forth in The Wall Street Journal. Purchaser may adjust the Factoring Fee to reflect changes in the Prime Rate.

Purchase Date – the date on which Seller has been advised in writing, or by update to Purchaser maintained website, that Purchaser has agreed to purchase an Account.

Purchased Accounts – Accounts that have been purchased pursuant to this Agreement which have not been Closed.

Recourse Accounts – See Paragraph 2.1.3

Repurchased – an Account has been Closed pursuant to Paragraph 2.5.

Reserve Account – A bookkeeping account maintained by Purchaser representing the un-advanced portion of invoices that have been paid by Seller’s Account Debtor before Purchaser’s fees are applied.

Reserve Percentage – A percentage calculated by subtracting the Advance Rate from 100%, provided that Purchaser in its sole discretion, from time to time, may increase the Reserve Percentage to the extent that Purchaser determines that: (i) the dilution with respect to the Accounts for any period has increased in any material respect or may be reasonably anticipated to increase in any material respect above historical levels, (ii) the general creditworthiness of the Seller’s Account Debtors has declined, or (iii) Seller’s failure to comply to the Terms and Conditions.

Reserve Shortfall – occurs when the Reserve Account balance is less than zero ($0).

Special Accommodation – the financial accommodations provided for a fee to Seller in Purchaser’s sole discretion as set forth on the Factoring Services Agreement, or in addendum thereto.

Term – As set forth in Paragraph 9 herein

Unnoted Advance Fee – ten percent (10%) or one-hundred dollars ($100), whichever is greater, of the original face value of any Account which has been sold to Purchaser by Seller whereby any monies have been advanced to Seller against the Account and have not otherwise been disclosed to Purchaser in writing prior to Purchase of said Account.

2. Factoring

2.1. Sale and Assignment

2.1.1. Seller agrees to sell Accounts to Purchaser as Seller’s sole factor. Purchaser shall be under no obligation to purchase Seller’s Accounts and shall only purchase Eligible Accounts.

2.1.2. Purchaser may, but need not purchase from Seller such Accounts as Purchaser determines to be Eligible Accounts, so long as the unpaid balance of Purchased Accounts does not exceed, before and after such purchase, the Purchase Facility Amount as specified on the Factoring Services Agreement. Purchaser may, in Purchaser’s sole credit judgment exercised in good faith, either increase or decrease the Purchase Facility Amount. To the extent Purchaser’s purchase of any Purchased Account shall cause the total outstanding Face Amount of the Purchased Accounts to exceed the Purchase Facility Amount, the then existing Purchase Facility Amount shall, as of the date of such purchase, be immediately increased to the resulting total Face Value of all Purchased Accounts.

2.1.3. Notwithstanding the foregoing, Purchaser may also from time to time purchase Accounts from Seller with full recourse to Seller (“Recourse Accounts”.) Pursuant to Paragraph 2.6, such Accounts shall be listed on a statement to Seller indicating those Accounts that are being purchased as Recourse Accounts.

2.2. Reserve

2.2.1. Seller shall pay to Purchaser on demand the amount of any Reserve Shortfall.

2.2.2. So long as there is no Event of Default or pending Dispute that may result in an offset of monies due to Purchaser, Purchaser shall pay to Seller bi-monthly, the Reserve Account balance provided that by doing so Purchaser is not at risk in the event of such Dispute.

2.2.3. Purchaser may charge the Reserve Account with any Obligation, including any amounts due from Seller to Purchase hereunder.

2.2.4. Purchaser may pay any amounts due Seller hereunder by a credit to the Reserve Account.

2.2.5. Upon Cancellation of this Agreement, Purchaser may retain the Reserve Account: For ninety (90) days thereafter to be applied to payment of any Obligations unknown to Purchaser at the time of Cancellation, and/or unless and until Seller has executed and delivered to Purchaser a General Release of Liability.

2.3. Fees and Expenses. Seller shall pay to Purchaser

2.3.1. Factoring Fee. On all Accounts purchased by Purchaser.

2.3.2. Misdirected Payment Fee. Immediately upon an event of a Misdirected Payment.

2.3.3. Missing Notation Fee. On any Account that is sent by Seller to an Account Debtor which does not contain the notice as required by Paragraph 5.3.

2.3.4. Late Charge. On demand on all past due amounts due to Purchaser from Seller hereunder and the amount of any Reserve Shortfall.

2.4. Account Disputes

2.4.1. Disputes. Seller shall notify Purchaser promptly of and, if requested by Purchaser, will settle all disputes concerning any Purchased Account, at Seller’s sole cost and expense. Purchaser may, but is not required to, attempt to settle, compromise, or litigate (collectively, “Resolve”) the dispute upon such terms, as Purchaser in its sole discretion deem advisable, for Seller’s account and risk and at Seller’s sole expense. Upon the occurrence of an Event of Default Purchaser may resolve such issues with respect to any Account of Seller.

2.5. Repurchase of Accounts. Purchaser may require that Seller repurchase, by payment of the then unpaid Face Amount thereof together with any unpaid fees relating to the Purchased Account on demand:

2.5.1. any Purchased Account;

2.5.2. the payment of which has been disputed by the Account Debtor obligated thereon, Purchaser being under no obligation to determine the bona fides of such dispute;

2.5.3. for which Seller has breached any warranty as set forth in the Paragraph 7.4;

2.5.4. any Account where the Account Debtor does not pay for any reason other than the Account Debtor being Insolvent during the Insolvency Period; and

2.5.5. upon the occurrence of an Event of Default, or upon the Cancellation date of this Agreement.

2.5.6. any Account purchased as a Recourse Account which remains unpaid beyond the Late Payment Date.

2.6. Exposed Payments.

2.6.1. Upon termination of this Agreement Seller shall pay to Purchaser (or Purchaser may retain), to hold in a non- segregated non-interest bearing account the amount of all Exposed Payments (the “Preference Reserve”.)

2.6.2. Purchaser may charge the Preference Reserve with the amount of any Exposed Payments which Purchaser pays to the bankruptcy estate of the Account Debtor which made the Exposed Payment, on account of a claim asserted under Section 547 of the Bankruptcy Code.

2.6.3. Purchaser shall refund to Seller from time to time that balance of the Preference Reserve for which a claim under Section 547 of the Bankruptcy Code can no longer be asserted due to the passage of the statute of limitations, settlement with the bankruptcy estate of the Account Debtor or otherwise.

2.6.4. Purchaser may retain the Reserve Account unless and until Seller has executed and delivered to Purchaser a general release.

2.7. Account Stated. Purchaser shall make available to Seller a statement setting forth the transactions arising hereunder. Each statement shall be considered correct and binding upon Seller as an account stated, except to the extent that Purchaser receives, within fifteen (15) days after the delivery of such statement, written notice from Seller of any specific exceptions by Seller to that statement, and then it shall be binding against Seller as to any items to which it has not objected.

3. Authorization to Purchaser

3.1. Seller hereby irrevocably authorizes Purchaser at Seller’s expense, to exercise at any time any of the following powers until all of the Obligations have been paid in full: (a) receive, take, endorse, assign, deliver, accept and deposit, in the name of Purchaser or Seller, any and all cash, checks, commercial paper, drafts, remittances and other instruments and documents relating to the Collateral or the proceeds thereof, (b) take or bring, in the name of Purchaser or Seller, all steps, actions, suits or proceedings deemed by Purchaser necessary or desirable to effect collection of or other realization upon the accounts and other Collateral, (c) after an Event of Default, change the address for delivery of mail to Seller and to receive and open mail addressed to Seller, (d) after an Event of Default, extend the time of payment of, compromise or settle for cash, credit, return of merchandise, and upon any terms or conditions (in compliance with PACA if it applies), any and all accounts or other Collateral which includes a monetary obligation and discharge or release any Account Debtor or other obligor (including filing of any public record releasing any lien granted to Seller by such Account Debtor), without affecting any of the Obligations, (e) pay any sums necessary to discharge any lien or encumbrance which is senior to Purchaser’s security interest in the Collateral, which sums shall be included as Obligations hereunder, and in connection with which sums the Late Charge shall accrue and shall be due and payable, (f) file in the name of Seller or Purchaser or both, (1) mechanics lien or related notices or (2) claims under any payment bond, in connection with goods or services sold by Seller in connection with the improvement of realty, and (g) notify any Account Debtor obligated with respect to any Account, that any and all Accounts have been assigned to Purchaser by Seller and that payment thereof is to be made to the order of and directly and solely to Purchaser, and (h) communicate directly with Seller’s Account Debtors to verify the amount and validity of any Account created by Seller, and (i) do any and all things necessary to carry out the purpose of the Agreement and to protect Seller’s and Purchaser’s interest in the Collateral. The exercise of any of the foregoing powers shall be in the sole discretion of Purchaser.

3.2. Security Interest. As collateral securing the Obligations, Seller hereby grants to Purchaser a continuing first priority security interest in and to the Collateral, and;

3.2.1. Notwithstanding the creation of the above security interest, the relationship of the parties shall be that of Purchaser and Seller of accounts, and not that of lender and borrower.

3.2.2. By signing this Agreement, Seller acknowledges that the Parties hereunder exclusively engage in the purchase and sale of Accounts, and that none of these transactions constitute a lending arrangement or a loan: Seller waives any and all positions or arguments to the contrary.

3.3. The Seller authorizes the Purchaser at any time and from time to time to file any initial financing statements and amendments thereto that:

3.3.1. indicate the Collateral as all assets of the Seller or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC, or as being of an equal or lesser scope or with greater detail;

3.3.2. contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including (i) whether the Seller is an organization, the type of organization, and any organization identification number issued to the Seller and, (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral, or a sufficient description of real property to which the Collateral relates; and

3.3.3. contain a notification that the Seller has granted a negative pledge to the Purchaser, and that any subsequent lien or may be tortuously interfering with Purchaser’s rights.

3.4. No Lien Cancellation without Release. In recognition of the Purchaser’s right to have its attorneys’ fees and other expenses incurred in connection with this Agreement secured by the Collateral, notwithstanding payment in full of all Obligations by Seller, Purchaser shall not be required to record any Cancellations or satisfactions of any of Purchaser’s liens on the Collateral unless and until Seller has executed and delivered to Purchaser a general release. Seller understands that this provision constitutes a waiver of its rights under §9-513 of the UCC.

3.5. Seller hereby releases and exculpates Purchaser, its officers, employees and designees, from any liability arising from any acts under this Agreement or in furtherance thereof whether of omission or commission, and whether based upon any error of judgment or mistake of law or fact, except for willful misconduct. In no event will Purchaser have any liability to Seller for lost profits or other special or consequential damages. Without limiting the generality of the foregoing, Seller releases Purchaser from any claims which Seller may now or hereafter have arising out of Purchaser’s endorsement and deposit of checks issued by Seller’s customers stating that they were in full payment of an account, but issued for less than the full amount which may have been owed on the account.

3.6. Seller authorizes Purchaser to accept, endorse and deposit on behalf of Seller any checks tendered by an account debtor “in full payment” of its obligation to Seller. Seller shall not assert against Purchaser any claim arising therefrom, irrespective of whether such action by Purchaser effects an accord and satisfaction of Seller’s claims, under §3-311 of the Uniform Commercial Code, or otherwise.

3.7. Subject to the Terms and Conditions of this Agreement, Purchaser is authorized to purchase Accounts upon telephonic, facsimile or other instructions received from anyone purporting to be an officer, employee or representative of Seller.

3.8. Billing. Purchaser may send a monthly statement to all Account Debtors itemizing their account activity during the preceding billing period. All Accounts Debtors will be instructed to make payments to Purchaser.

3.9. Depository Authorizations. In order to satisfy any of the Obligations and to correct any errors, Purchaser is hereby authorized by Seller to: (a) initiate electronic debit or credit entries through the ACH system to any deposit account maintained by Seller wherever located, (b) to debit and credit any third-party fuel account, including but not limited to EFS, maintained by Seller wherever located and (c) Seller acknowledges that Money Codes issued by Purchaser are valid for a period of three (3) months at which point they expire and any remaining balance shall be forfeited without further notice to seller.

3.10. Seller hereby authorizes Purchaser to obtain any and all credit reports through a credit reporting company chosen by Purchaser. Seller understands that this credit report will be retained on file at Purchaser and that the information will not be disclosed to anyone without Seller’s prior written consent.

3.11. Offset. Purchaser shall have the right to offset, recoup, and apply all funds it may receive, including from the reserve account, to satisfy the Obligations owed to it under any Agreement(s) it may have with Seller.

4. Default

4.1. Events of Default. The following events will constitute an Event of Default hereunder: (a) Seller defaults in the payment of any Obligation or in the performance of any provision hereof or of any other agreement now or hereafter entered into with Purchaser, or any warranty or representation contained herein proves to be false in any way, howsoever minor, (b) Seller or any guarantor of the Obligation becomes subject to any debtor-relief proceedings, (c) any such guarantor fails to perform or observe any of such Guarantor’s obligations to Purchaser or shall notify Purchaser of its intention to rescind, modify, terminate or revoke any guaranty of the Obligations, or any such guaranty shall cease to be in full force and effect for any reason whatever, (d) Purchaser for any reason, in good faith, deems itself insecure with respect to the prospect of repayment or performance of the Obligations, (e) Seller enters into any agreement with another factor or (f) Seller enters into any other agreement which puts the security interest of Purchaser at risk.


4.3. Effect of Default. Upon the occurrence of any Event of Default, in addition to any rights Purchaser has under this Agreement or applicable law;

4.3.1. Purchaser may immediately terminate this Agreement, at which time all Obligations shall immediately become due and payable without notice.

4.3.2. The Late Charge shall accrue and is payable on demand on any Obligation not paid when due.

4.3.3. Purchaser may in its sole discretion, deny Seller access to any remotely accessed reporting or credit system (including any online or telephone systems) that may be maintained by Purchaser.

4.3.4. Upon any waiver by Purchaser or any Event of Default hereunder, Seller shall pay to Purchaser a default waiver fee equal to one percent (1%) of the then existing Purchase Facility Amount. Any failure by Purchaser to assess such default waiver fee immediately upon the occurrence of an Event of Default shall not be deemed a waiver by Purchaser to charge such fee. Nothing provided herein shall in any way obligate Purchaser to waive any Event of Default.

5. Covenants By Seller

5.1. After written notice by Purchaser to Seller, and automatically, without notice, after an Event of Default, Seller shall not, without the prior written consent of Purchaser in each instance, (a) grant any extension of time for payment of any of the Accounts, (b) compromise or settle any of the Accounts for less than the full amount thereof, (c) release in whole or in part any Account Debtor, or (d) grant any credits, discounts, allowances, deductions, return authorizations or the like with respect to any of the Accounts. The Seller authorizes the Purchaser at any time and from time to time to file any initial financing statements and amendments thereto that:

5.2. From time to time as requested by Purchaser, at the sole expense of Seller, Purchaser or its designee shall have access, during reasonable business hours if prior to an Event of Default and at any time if on or after an Event of Default, to all premises where Collateral is located for the purposes of inspecting (and removing, if after the occurrence of an Event of Default) any of the Collateral, including Seller’s books and records, and Seller shall permit Purchaser or its designee to make copies of such books and records or extracts therefrom as Purchaser may request. Without expense to Purchaser, Purchaser may use any of Seller’s personnel, equipment, including computer equipment, programs, printed output and computer readable media, supplies and premises for the collection of accounts and realization on other Collateral as Purchaser, in its sole discretion, deems appropriate. Seller hereby irrevocably authorizes all accountants and third parties to disclose and deliver to Purchaser at Seller’s expense all financial information, books and records, work papers, management reports and other information in their possession relating to Seller.

5.3. Before sending any Account to an Account Debtor, Seller shall mark same with a notice of assignment as may be required by Purchaser.

5.4. Seller shall pay when due all payroll and other taxes, and shall provide proof thereof to Purchaser in such form as Purchaser shall reasonably require.

5.5. Seller shall not create, incur, assume or permit to exist any lien upon or with respect to any Collateral now owned or hereafter acquired by Seller.

5.6. Seller shall maintain insurance on all insurable property owned or leased by Seller in the manner, to the extent and against at least such risks (in any event, including but not limited to fire and business interruption insurance) as usually maintained by owners of similar businesses and properties in similar geographic areas. All such insurance shall be in amounts and form and with insurance companies acceptable to Purchaser in its sole discretion. Seller shall furnish to Purchaser: (a) upon written request, any and all information concerning such insurance carried; (b) as requested by Purchaser, lender loss payable endorsements (or their equivalent) in favor of Purchaser. All policies of insurance shall provide for not less than thirty (30) day’s prior written cancellation notice to Purchaser.

5.7. Notwithstanding that Seller has agreed to pay the Misdirected Payment Fee, Seller shall deliver in kind to Purchaser on the next banking day following the date of receipt by Seller of the amount of any payment on account of a Purchased Account.

6. Avoidance Claims

6.1. Seller shall indemnify Purchaser from any loss arising out of the assertion of any Avoidance Claim other than such claims that relate to Purchased Accounts that are owed by an Account Debtor which was Insolvent, and shall pay to Purchaser on demand the amount thereof.

6.2. Seller shall notify Purchaser within two business days of it becoming aware of the assertion of an Avoidance Claim.

6.3. This provision shall survive Cancellation of this Agreement.

7. Representation and Warranties. Seller represents and warrants that:

7.1. It is fully authorized to enter into this Agreement and to perform hereunder;

7.2. This Agreement constitutes its legal, valid and binding obligation; and

7.3. Seller is solvent and in good standing in the State of its organization.

7.4. The Purchased Accounts are and will remain:

7.4.1. bona fide existing obligations created by the sale and delivery of goods or the rendition of services in the ordinary course of Seller’s business;

7.4.2. unconditionally owed and will be paid to Purchaser without defenses, disputes, offsets, counterclaims, or rights of return or cancellation;

7.4.3. not sales to any entity which is affiliated with Seller or in any way not an “arm’s length” transaction.

7.5. Seller has not received notice of actual or imminent bankruptcy, insolvency, or material impairment of the financial condition of any applicable Account Debtor regarding Purchased Accounts.

8. Waiver

8.1. No failure to exercise and no delay in exercising any right, power, or remedy hereunder shall impair any right, power, or remedy which Purchaser may have, nor shall any such delay be construed to be a waiver of any of such rights, powers, or remedies, or any acquiescence in any breach or default hereunder; nor shall any waiver by Purchaser of any breach or default by Seller hereunder be deemed a waiver of any default or breach Successively occurring. All rights and remedies granted to Purchaser hereunder shall remain in full force and effect notwithstanding any single or partial exercise of, or any discontinuance of action begun to enforce, any such right or remedy. The rights and remedies specified herein are cumulative and not exclusive of each other or of any rights or remedies that Purchaser would otherwise have. Any waiver, permit, consent or approval by Purchaser of any breach or default hereunder must be in writing and shall be effective only to the extent set forth in such writing and only as to that specific instance.

9. Cancellation and Term

9.1. This Agreement will be effective on the date accepted by Purchaser, and will continue in full force and effect for an initial term equal to the Agreement Term specified in the Factoring Services Agreement, and shall be further extended automatically for periods equal to the Agreement Term (“Successive Term(s)”) unless cancelled earlier pursuant to this Agreement.

9.2. Seller may cancel this Agreement effective at the end of the Agreement Term or at the end of any Successive Term(s) by providing Purchaser a written notice of Cancellation at least sixty (60) days, but not more than ninety (90) days, prior to the end of the Agreement Term or Successive Term(s). If Seller is in default of this Agreement at the time notice of Cancellation is given, or subsequently thereafter, such notice shall not be effective and all provisions of this Agreement shall still apply.

9.3. Purchaser in its sole discretion may cancel this Agreement (i)at the end of the Agreement Term or successive term(s) without further notice to Seller, (ii) at any time regardless of Agreement Term or successive term(s) after providing Seller 30 days written notice, Or, (iii) in Event of Default, Purchaser may cancel this Agreement immediately. If Purchaser cancels this Agreement following the occurrence of an Event of Default, upon the effective date of such Cancellation, Seller shall pay to Purchaser a Cancellation fee equal to ten percent of the then existing balance of the face value of Seller’s Purchased Accounts or two thousand five hundred dollars, whichever is greater, (the “Cancellation Amount”).

9.4. Seller hereby acknowledges and agrees that Purchaser will incur significant time and expense establishing this factoring relationship (the “Underwriting Expense”). Seller hereby agrees to pay Purchaser a reasonable fee to cover the Underwriting Expense in the event that Seller (i) cancels this Agreement without having provided Eligible Accounts equaling at least fifty percent of the Purchased Invoices Limit, for any reason, for purchase to Purchaser under this Agreement, (ii) provides no Eligible Accounts for purchase to Purchaser for a period of 90 days, (iii) elects to move their accounts from Purchaser to another financing company, or (iv) cancels this agreement in contravention of section 9.2 for any reason whatsoever.
9.5. Notwithstanding the foregoing if at the time, Seller has sent an effective notice of Cancellation setting forth the intended Cancellation date, but fails to pay all the Obligations in cash by the intended Cancellation date, then Purchaser may, but shall not be required to, reinstate this Agreement as if notice to terminate had not been given.

9.6. Any payments received by Purchaser from any Account Debtor following the Cancellation of this Agreement may be, at Purchaser’s option, (i) be applied to repay any outstanding Obligations hereunder, (ii) forwarded to Seller, or (iii) returned to such Account Debtor. Purchaser shall (i) not bear any responsibility or liability with respect to any such payments, and (ii) shall retain one percent of the amount of any such payments received to cover Purchaser’s costs of handling such payments.

10. Amendment and Entire Agreement

10.1. Neither this Agreement nor any provisions hereof may be changed, waived, discharged or terminated, nor may any consent to the departure from the terms hereof be given, orally (even if supported by new consideration), but only by an instrument in writing signed by all parties to this Agreement. Any waiver or consent so given shall be effective only in the specific instance and for the specific purpose for which given.

10.2. This Agreement supersedes all other agreements and understandings between the parties hereto; verbal or written, express or implied, relating to the subject matter hereof. No promises of any kind have been made by Purchaser or any third party to induce Seller to execute this Agreement. No course of dealing, course of performance or trade usage, and no parol evidence of any nature, shall be used to supplement or modify any terms of this Agreement.

11. Severability, Survival, Conflict, and Enforcement

11.1. Severability. In the event any one or more of the provisions contained in this Agreement is held to be invalid, illegal or unenforceable in any respect, then such provision shall be ineffective only to the extent of such prohibition or invalidity, and the validity, legality, and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

11.2. Survival. All representations, warranties and agreements herein contained shall be effective so long as any portion of this Agreement remains executory.

11.3. Conflict. Unless otherwise expressly stated in any other agreement between Purchaser and Seller, if a conflict exists between the provisions of this Agreement and the provisions of such other agreement, the provisions of this Agreement shall control.

11.4. Enforcement. This Agreement and all agreements relating to the subject matter hereof is the product of negotiation and preparation by and among each party and its respective attorneys, and shall be construed accordingly.

12. Attorney’s Fees

12.1. Seller agrees to reimburse Purchaser on demand for the actual amount of all costs and expenses, including attorneys’ fees, which Purchaser has incurred or may incur in:

12.1.1. negotiating, preparing, or administering this Agreement and any documents prepared in connection herewith, all of which shall be paid contemporaneously with the execution hereof;

12.1.2. any way arising out of this Agreement;

12.1.3. protecting, preserving or enforcing any lien, security interest or other right granted by Seller to Purchaser or arising under applicable law, whether or not suit is brought, including but not limited to the defense of any Avoidance Claims;

12.1.4. the actual costs, including photocopying (which, if performed by Purchaser’s employees, shall be at the rate of $.10/page), travel, and attorneys’ fees and expenses incurred in complying with any subpoena or other legal process attendant to any litigation in which Seller is a party;

12.1.5. the actual amount of all costs and expenses, including attorneys’ fees, which Purchaser may incur in enforcing this Agreement and any documents prepared in connection herewith, or in connection with any federal or state insolvency proceeding commenced by or against Seller, including those (i) arising out the automatic stay, (ii) seeking dismissal or conversion of the bankruptcy proceeding or (ii) opposing confirmation of Seller’s plan thereunder.

13. Choice of Law

13.1. This Agreement and all transactions contemplated hereunder and/or evidenced hereby shall be governed by, construed under, and enforced in accordance with the internal laws of the Chosen State.



15. Venue and Jurisdiction

15.1. The parties agree that 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 any court sitting in the Chosen State (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, irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement, and waives any and all objections to jurisdiction or venue that it may have under the laws of the Chosen State 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.

16. Assignment

16.1. Purchaser may assign its rights and delegate its duties hereunder. Upon such assignment, Seller shall be deemed to have attorned to such assignee and shall owe the same obligations to such assignee and shall accept performance hereunder by such assignee as if such assignee were Purchaser.