XLERATE FINANCIAL, LLC
FACTORING AND SECURITY AGREEMENT
TERMS & CONDITIONS
The following terms and conditions apply to all Factoring and Security Agreements (each, an “Agreement”) with XLerate Financial, LLC, a Florida limited liability company (“Purchaser”):
Section 1 – Definitions
The following terms when used in the Agreement shall have the meanings assigned to them in the UCC (as defined below) as in effect from time to time: “Account”, “Account Debtor”, “Chattel Paper”, “Commercial Tort Claim”, “Deposit Account”, “Documents”, “Electronic Chattel Paper”, “Equipment”, “Fixture”, “General Intangible”, “Goods”, “Instrument”, “Inventory”, “Investment Property”, “Letter of Credit Rights”, “Proceeds”, “Record”, and “Supporting Obligation”.
Terms defined in the UCC and not otherwise defined herein shall have the meaning assigned in the UCC as in effect from time to time.
The following terms when used in the Agreement shall have the meanings assigned to them below:
a. “Baseline Prime Rate” means the Prime Rate in effect as of the date of the Agreement, as reflected in Schedule A attached to the Agreement.
b. “Collateral” means all of Seller's right, title and interest in the following property, now owned or at any time hereafter acquired by Seller or in which Seller now has or at any time in the future may acquire any right, title or interest, and wherever located or deemed located: all Accounts; all cash and currency; all Chattel Paper; all Documents; all Equipment; all Fixtures; all General Intangibles; all Goods; all Instruments; all Intellectual Property; all Inventory; all Investment Property; all Letter of Credit Rights; all Vehicles; all other personal property not otherwise described above; all books and Records pertaining to the Collateral; and to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and Supporting Obligations given by any Person with respect to any of the foregoing;
c. “Dispute” means any dispute, deduction, claim, offset, defense or counterclaim of any kind whatsoever, regardless of whether the same is in an amount greater than, equal to or less than the Account concerned, regardless of whether the same is valid or bona fide, regardless of whether the same in whole or in part relates to the Account on which payment is being withheld or other Accounts or goods or services already paid for, and regardless of whether the same arises by reason of an act of God, civil strife, war, currency restriction, foreign political restriction or regulation, or the like, or any other reason.
d. “Environmental Laws” means any federal, state or local law, rule, regulation or order relating to pollution, waste disposal, industrial hygiene, land use or the protection of human health, safety, or welfare, plant life or animal life, natural resources, the environment or property.
e. “Events of Default” has the meaning as set forth in Section 8.1 herein.
f. “Factoring Fee” has the meaning set forth in Schedule A attached to the Agreement.
g. “Lien” means any mortgage, pledge, hypothecation, assignment, security interest, lien (statutory or otherwise), charge or other encumbrance of any nature, whether voluntary or involuntary, including, without limitation, the interest of any vendor or lessor under any conditional sale agreement, title retention agreement, capital lease or any other lease or arrangement having substantially the same effect as any of the foregoing.
h. “Maximum Credit Line” means the maximum aggregate Net Amount of outstanding Purchased Accounts which Purchaser may advance to Seller pursuant to Schedule A attached to the Agreement.
i. “Minimum Monthly Factoring Fee” has the meaning set forth in Schedule A.
j. “Net Amount” means, with respect to each Account, the gross invoice amount for each such Account less any discount, rebate, refund, allowance, credit, or other amount(s) of any nature that is or may be granted to, claimed by, or allowed to the Account Debtor.
k. “Obligations” means each and all of Seller's covenants and obligations to Purchaser hereunder, including but not limited to the obligation to pay and perform when due all debts and all obligations, liabilities, covenants, agreements, guaranties, warranties and representations of Seller to Purchaser or its affiliates, partners, and subsidiaries, of any and every kind and nature, whether heretofore, now or hereafter owing, arising, due or payable from Seller to Purchaser or its affiliates, partners, and subsidiaries, including but not limited to timely payment in full of Net Amount of each of the Purchased Accounts.
l. “Posted” has the meaning set forth in Section 3.3 herein.
m. “Prime Rate” means, as of any date of determination, a per annum rate of interest equal to the “prime rate” established by Purchaser's primary banking institution.
n. “Purchased Account” has the meaning set forth in Section 2.1 herein.
o. “Purchase Price” has the meaning set forth Section 3.1 herein.
p. “Rate Adjustment Fee” has the meaning set forth Section 3.5 herein.
q. “Reserve” means, with respect to each Purchased Account, an amount equal to the Net Amount of such Account multiplied by the Reserve Percent.
r. “Reserve Percent” has the meaning set forth in Schedule A attached to the Agreement.
s. “Term” means the initial 12-month period commencing on the last execution date on the signature page hereto, plus each succeeding 12-month period thereafter unless earlier terminated in accordance with the Agreement.
t. “UCC” means the Uniform Commercial Code as in effect from time to time in the State of Florida.
u. “Vehicles” means all cars, trucks, trailers, rolling stock, and other vehicles covered by a certificate of title under the laws of any state.
Section 2 – Purchase and Sale of Accounts
2.1 Sale of Accounts. During the Term, Seller shall present to Purchaser for purchase, with recourse, all Accounts arising from the activities and services performed by Seller. Purchaser, in its sole and absolute discretion, may purchase any, all, or none of such Accounts as it may elect from time to time (each, a “Purchased Account”). Seller hereby agrees to sell, assign, transfer, convey, and deliver to Purchaser, free and clear of any and all Liens (other than the Liens granted to Purchaser hereunder), each and all such Purchased Accounts, and shall promptly notify each such Account Debtor of the sale of its Account or Accounts to Purchaser. Purchaser shall become the absolute owner of all Purchased Accounts, free and clear of all Liens (other than the Liens granted to Purchaser hereunder). All remittances or other amounts received by Seller for payment on any Purchased Account shall be held in trust by Seller for the benefit of, and promptly paid over to, Purchaser together with all Documents accompanying any such remittance to Seller. Seller hereby guarantees the timely payment of all amounts represented by the Purchased Accounts.
2.2 Maximum Credit Line. Notwithstanding anything to the contrary in the Agreement, Purchaser shall not be obligated to purchase any Account if, after paying the Purchase Price therefor, the aggregate Net Amount of all outstanding Purchased Accounts will exceed the Maximum Credit Line.
2.3 Assignments and Other Documentation. All bills and invoices for all Purchased Accounts shall bear the following legend: “This account has been assigned to and is owned by and payable only to XLerate Financial, LLC at 650 NE 32ND Street, Suite 5103, Miami, FL 31137. Any objection to this invoice must be reported to XLerate Financial, LLC at said address with a copy by email to [email protected].” Seller shall immediately provide to Purchaser such additional documentation or information as requested by Purchaser relating to any Account.
2.4 Exclusivity. During the Term, Seller shall not offer to sell or sell, transfer, assign, or incur a Lien on any Account to any third party other than Purchaser.
Section 3 – Purchase Price; Payment; Fees; Reserve
3.1 Purchase Price. In consideration of the purchase and sale of each Purchased Account hereunder, Purchaser shall pay to Seller, with respect to each Purchased Account, an amount equal to the Net Amount of such Purchased Account, less the Factoring Fee (the “Purchase Price”).
3.2 Payment. The Purchase Price for each Purchased Account shall be payable by Purchaser to Seller as follows:
a. Upon presentation to Purchaser of all necessary or appropriate documents related to each Purchased Account, as determined by Purchaser, and provided that no Dispute shall then exist with the Account Debtor of such Purchased Account, Purchaser will advance to Seller the Purchase Price for such Purchased Account, less the Reserve for such Purchased Account.
b. In all cases, and for the avoidance of doubt, Purchaser will retain the Factoring Fee.
3.3 Application and Posting of Payments. Checks, instruments and all other non-cash payments delivered to Purchaser in payment or on account of the Purchased Accounts or the Obligations constitute conditional payment only until such items are actually paid in cash to Purchaser, for the purpose of computing fees earned by Purchaser, credit therefore and for bank wire transfers, shall be given after receipt by Purchaser, as provided for in Schedule A attached to the Agreement. All payments made by or on behalf of, and all credits due to Seller, may be applied and reapplied in whole or in part to any of the Obligations to such extent and in such manner, as Purchaser shall determine in its sole discretion. All payments made by an Account Debtor with respect to the Purchased Accounts, and any other payments by or on behalf of Seller to Purchaser pursuant to the Agreement, will be processed for payment by Purchaser and posted to Seller's and/or the Account Debtor's account with Purchaser (“Posted”) as promptly as reasonably practicable following receipt thereof, which may take up to seven (7) days following receipt thereof.
3.4 Minimum Monthly Factoring Fee. If, during any calendar month of the Term, the aggregate dollar amount of Factoring Fees received by Purchaser pursuant to Section 3.1 is less than the Minimum Monthly Factoring Fee, Seller shall promptly remit the difference thereof to Purchaser.
3.5 Rate Adjustment Fee. If, as of the last day of any calendar month of the Term, the Prime Rate is greater than the Baseline Prime Rate, Seller shall promptly pay to Purchaser an amount equal to (a) the aggregate Net Amount of Purchased Accounts for which payment has not Posted as of the first day of such month, multiplied by (b) the difference between (i) the Prime Rate in effect as of the last day of such month, and (ii) the Baseline Prime Rate (such amount, the “Rate Adjustment Fee”).
3.6 Other Fees and Costs. In addition to the Factoring Fee (pursuant to Section 3.1), the Minimum Monthly Factoring Fee (pursuant to Section 3.4), and the Rate Adjustment Fee (pursuant to Section 3.5), Seller shall pay to Purchaser all other fees and costs incurred hereunder immediately when due, including, but not limited to, those other fees and costs described in Schedule A attached to the Agreement.
3.7 Reserves. Provided that Seller is not otherwise in default in any respect under the Agreement, within thirty (30) days following the end of each calendar quarter Purchaser will remit to Seller the Reserve from any Purchased Account for which Purchaser has been paid in full by the Account Debtor during such calendar quarter; provided, however, that Purchaser shall have the right to retain all or any portion of such Reserve as a chargeback against any other delinquent Purchased Account for which Purchaser may exercise its applicable rights hereunder (including but not limited to Section 4.3) or any other amounts due and owing hereunder by Seller.
Section 4 – Security for Obligations
4.1 Grant of Security Interest. Seller hereby grants, pledges and collaterally assigns to Purchaser a continuing first-priority security interest in all of Seller's right, title and interest in and to the Collateral, whether now owned or at any time hereafter acquired by Seller or in which Seller now has or at any time in the future may acquire any right, title or interest, and wherever located or deemed located, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.
4.2 Filing Authorization. Seller hereby authorizes Purchaser to file any document it deems necessary or appropriate to perfect and preserve Purchaser's security interest in the Collateral, including, but not limited to, UCC-1 financing statements and any applicable amendments or continuation statements.
4.3 Repurchase Obligation. All Purchased Accounts purchased by Purchaser from Seller are purchased with full recourse. If Seller breaches any representation or warranty or otherwise violates or defaults on any of its obligations hereunder, or if any Purchased Account is not paid in full within ninety (90) days after the Account invoice date of Purchased Account, then upon request by Purchaser, Seller shall immediately repurchase such Purchased Account from Purchaser for an amount equal to the Net Amount of such Purchased Account (less any payments received by Purchaser on such Purchased Account from the Account Debtor), plus any unpaid fees and other amounts owed relating to the Purchased Account on demand, or at Purchaser's option, by Purchaser's charge to the Reserve.
Section 5 – Term; Termination
5.1 Term. The Agreement shall be in effect for the Term unless terminated by either Party giving the other written notice of non-renewal not less than ninety (90) days but not more than one hundred twenty (120) days, prior to the end of the then-current 12-month Term. In addition, Purchaser may terminate the Agreement at any time following an Event of Default.
5.2 Seller's Post-Termination Liability. After termination or expiration of the Agreement, Seller shall remain liable to Purchaser for the full and prompt payment of the full amount of Purchased Accounts which are then outstanding and unpaid, Disputed or undisputed, as well as any other Obligation then existing or thereafter arising. Purchaser's security interest in the Collateral shall remain in effect until all Obligations of Seller are paid in full.
Section 6 – Representations, Warranties, and Covenants of Seller
6.1 Organization and Power. Seller is a corporation or a limited liability company duly organized or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation.
6.2 Authorization; Enforceability. Seller has taken all necessary corporate or limited liability company action to execute, deliver and perform under the Agreement and has validly executed and delivered the Agreement.
6.3 No Violation. The execution, delivery and performance of the Agreement by Seller do not and will not violate any provision of its organizational documents or contravene any applicable law.
6.4–6.15 Additional representations, warranties and covenants regarding legal name and trade names, place of business, title to collateral, accounts, document genuineness, maintenance of collateral, compliance with law, litigation, complete disclosure, no violation of federal or state law, notification of violations, and continuing effect of all representations and warranties until all Obligations are paid in full.
Section 7 – Additional Covenants of Seller
7.1 Duties Regarding Accounts. Seller shall deliver to Purchaser schedules and assignments of all Accounts on Purchaser's standard form. Purchaser shall have the sole and exclusive right to collect the Purchased Accounts.
7.2 Insurance. Seller shall, at all times, insure all of the insurable Collateral by financially sound and reputable insurers acceptable to Purchaser.
7.3 Reports, Certificates. Seller shall report such information as Purchaser may request regarding the Collateral.
7.4 Access to Collateral, Books and Records. At all times, Purchaser shall have free access to inspect, audit, examine and test the Collateral and any other property of Seller.
7.5 Prohibited Transactions; Notification of Changes. Seller shall not, without prior written notice to Purchaser, make any change in Seller's name, identity, corporate or capital structure.
7.6 Litigation Cooperation. Seller shall make available its officers, employees, agents, books, records, and accounts as Purchaser may deem necessary to prosecute or defend any suit or proceeding.
7.7 Execute Additional Documentation. Seller agrees to execute all documents as Purchaser may deem necessary to perfect and maintain Purchaser's security interest in the Collateral.
Section 8 – Event of Default and Remedies
8.1 Events of Default. The occurrence of any one or more of the following shall constitute an “Event of Default”: (a) Seller fails to pay or perform any Obligation as and when due; (b) commencement of any voluntary or involuntary case under the United States Bankruptcy Code; (c) Seller or any guarantor becomes insolvent; (d) any Lien is issued against the Seller, Purchased Accounts, or the Collateral; (e) Seller breaches any covenant, agreement, warranty, or representation; (f) Seller delivers any false document or report; (g) Purchaser deems itself insecure; (h) any guarantor revokes or fails to perform any guaranty terms.
8.2 Remedies. Upon any Event of Default, Purchaser may cease advancing money, accelerate all Obligations, take possession of Collateral, require Seller to assemble Collateral, place a receiver in control, or demand payment of any Accounts.
8.3 Application of Proceeds. Proceeds from disposition or collection of Collateral shall be applied as Purchaser determines. Seller remains liable for any deficiency.
8.4 Standards of Commercial Reasonableness. After an Event of Default, Purchaser shall have no duty to undertake to collect any Account where collection possibility is outweighed by likely costs.
8.5 Remedies Cumulative. All rights and remedies are cumulative and none is exclusive. Failure or delay to exercise any rights shall not operate as a waiver thereof.
Section 9 – General Provisions
9.1 Notices. Written notices to Purchaser shall be sent to: XLerate Financial, LLC at 650 NE 32ND Street, Suite 5103, Miami, FL 31137 with a copy by email to [email protected].
9.2 Payment in Full Checks. 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.
9.3 No Lien Termination without Release. Purchaser shall not be required to record any terminations of liens on the Collateral unless Seller has executed and delivered a general release in a form suitable to Purchaser.
9.4 Indemnity. Seller shall indemnify and hold Purchaser harmless from and against any and all claims, losses, demands, damages, liabilities, costs and expenses arising from or in connection with the Agreement.
9.5 Attorneys' Fees and Costs. Seller shall pay to Purchaser all actual attorneys' fees and costs incurred under the Agreement.
9.6 Benefit of Agreement. The provisions shall be binding upon the respective successors, assigns, heirs, beneficiaries and representatives of the Parties. Seller may not assign or transfer any rights without Purchaser's prior written consent.
9.7 Section Headings, Construction. Section headings are used for convenience only. The Agreement has been fully reviewed and negotiated between the Parties.
9.8 Severability. Should any provision be held void or unenforceable, the remainder of the Agreement shall remain effective.
9.9 Integration. The Agreement constitutes the entire agreement between Seller and Purchaser.
9.10 Amendment. The terms may not be waived, altered, modified or amended except in writing executed by both parties.
9.11 Governing Law, Jurisdiction; Venue. The Agreement shall be governed by the internal laws of the State of Florida. Exclusive venue shall be Miami-Dade County, State of Florida.
9.12 Data Rights. Seller acknowledges that Purchaser may collect, transmit, store, use, disclose, commercialize, and otherwise process data gathered from the Accounts and Account Debtors for its business purposes, and Purchaser shall be the sole and exclusive owner of all such Data.