Exhibit 10.7


 


RECEIVABLES
FINANCE AGREEMENT


 


 


BETWEEN


 


 


LLOYDS
TSB COMMERCIAL FINANCE LIMITED (1)


 


 


AND


 


 


PASCALL
ELECTRONICS LIMITED (2)


 


 


1

















 


RECEIVABLES FINANCE AGREEMENT


 


This Agreement is
made as a deed on                                                                                 2010


 


BETWEEN


 


(1)          WE, LLOYDS TSB COMMERCIAL FINANCE LIMITED (Company Number
733011)  whose registered office is at No
1 Brookhill Way, Banbury, Oxon, OX16 3EL;and


 


(2)          YOU, PASCALL ELECTRONICS LIMITED (Company Number 01316674)
whose registered office is Xcel Works, Brunswick Road, Cobbs Wood, Ashford,
Kent, TN23 1EH.


 


IT IS AGREED that:


 


1.             INTRODUCTION


 


1.1           In this Agreement and in
our Operating Conditions (which are posted on our Website —
www.ltsbcf.co.uk/lloydsterms.html) we set out the terms on which we will make
the Facility set out below available to you. 
These are the only terms binding both of us.  They supersede all previous discussions,
quotations, offer letters, proposals and representations.


 


1.2           We may, by way of a
separate agreement, make stock, plant and machinery, property or cashflow
facilities, hire purchase and/or leasing facilities available to you.


 


1.3           You confirm that you have
read and understood this Agreement and the Operating Conditions and had the
opportunity to take independent legal advice on your and our respective rights
and obligations.


 


1.4           To provide the Facility we
need to have access to and to use and/or disclose Personal Data relating to individuals
associated with your business and/or with your Customers’ businesses.  The terms upon which we will use such
Personal Data are set out in the Operating Conditions.  You agree that you have read and understood
such terms and that you have obtained any necessary consents from relevant
individuals.


 


1.5           The Operating Conditions
are incorporated into and form part of this Agreement. If there is any conflict
between these Commercial Terms and the Operating Conditions then these
Commercial Terms will prevail.


 


1.6           The meanings of defined
terms used in this Agreement are given below and in Part I (and Part VII
and Part VIII if you are a Payroll Finance Client) of the Operating
Conditions.


 


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2.             THE
FACILITY


 


2.1           Terms


 


	
  2.1.1

  	
   

  	
  Type
  of Facility:

  	
   

  	
  Confidential
  Sterling Invoice Discounting

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1.2

  	
   

  	
  Applicable
  Operating Conditions:

  	
   

  	
  Parts
  I, II, III, IV

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1.3

  	
   

  	
  Review
  Limit:

  	
   

  	
  £750,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1.4

  	
   

  	
  Advance
  Rate:

  	
   

  	
  85%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1.5

  	
   

  	
  Funding
  Period:

  	
   

  	
  each
  period of 3 months beginning on the last Working Day of the calendar month in
  which an Invoice is raised

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1.6

  	
   

  	
  Minimum
  Term:

  	
   

  	
  Nil

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1.7

  	
   

  	
  Notice
  Period:

  	
   

  	
  1
  month

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1.8

  	
   

  	
  Payee
  Bank:

  	
   

  	
  Bank
  name: Lloyds TSB Bank PLC

  
	
   

  	
   

  	
   

  	
   

  	
  Bank Address: Lloyds
  TSB Commercial,

  2nd Floor, 25 St George Street, London,

  W1S 1FS

  
	
   

  	
   

  	
   

  	
   

  	
  Sort Code:
  30-91-31

  
	
   

  	
   

  	
   

  	
   

  	
  Account No:
  03959408

  
	
   

  	
   

  	
   

  	
   

  	
  Account name:
  Pascall Electronics Limited

  
	
   

  	
   

  	
   

  	
   

  	
  Currency: GBP

  



 


2.2           Fees
and Charges


 


	
  2.2.1

  	
   

  	
  Discount
  Charge:

  	
   

  	
  2.5%
  above Base Rate

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2.2

  	
   

  	
  Service
  Fee:

  	
   

  	
  0.2%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2.3

  	
   

  	
  Annual
  Minimum Fee:

  	
   

  	
  £15,000
  per annum

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2.4

  	
   

  	
  Documentation
  Fee:

  	
   

  	
  £7,500
  payable on the Start Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2.5

  	
   

  	
  Transmission
  Charges:

  	
   

  	
  CHAPS:
  £20 or an amount equivalent to 0 days Discount Charge on the payment
  (whichever is greater)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2.6

  	
   

  	
  Collection
  Date:

  	
   

  	
  the
  Collection Date as defined in Part I of the Operating Conditions plus 1
  Working Days.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2.7

  	
   

  	
  Trust
  Account Charges:

  	
   

  	
  1p
  per £100 of Notified Invoices

  



 


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2.3           Terms


 


	
  2.3.1

  	
   

  	
  Type
  of Facility:

  	
   

  	
  Confidential
  Export and/or Currency Invoice Discounting

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3.2

  	
   

  	
  Applicable
  Operating Condition:

  	
   

  	
  Part VI

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3.3

  	
   

  	
  Review
  Limit:

  	
   

  	
  £1,000,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3.4

  	
   

  	
  Advance
  Rate:

  	
   

  	
  85%
  of US Dollar Currency Invoices; 85% of Euro Currency Invoices

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3.5

  	
   

  	
  Approved
  Countries:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3.6

  	
   

  	
  Approved
  Currencies:

  	
   

  	
  US
  Dollar; Euro

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3.7

  	
   

  	
  Approval
  Limit:

  	
   

  	
  credit
  insured Invoices owing by Customers in Approved Countries will not exceed 50%
  of all your outstanding Invoices owing at any time

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3.8

  	
   

  	
  Funding
  Period:

  	
   

  	
  each
  period of 3 months beginning on the last Working Day of the month in which an
  Invoice is raised

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3.9

  	
   

  	
  Term:

  	
   

  	
  this
  Facility will become available at the same time as your Sterling Invoice
  Discounting Facility and is subject to the same Minimum Term and Notice
  Period

  



 


2.4           Fees
and Charges


 


	
  2.4.1

  	
   

  	
  Discount
  Charge:

  	
   

  	
  2.5%
  above our cost of funds

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.4.2

  	
   

  	
  Allowance:

  	
   

  	
  0%
  below our cost of funds

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.4.3

  	
   

  	
  Service
  Fee:

  	
   

  	
  0.2%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.4.4

  	
   

  	
  Transmission
  Charges :

  	
   

  	
  CHAPS:
  £20 or an amount equivalent to 0 days Discount Charge on the payment
  (whichever is greater)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.4.5

  	
   

  	
  Collection
  Date:

  	
   

  	
  the
  Collection Date defined in Part I of the Operating Conditions plus 1 Working
  Days.

  



 


3.             SALE
AND PURCHASE OF INVOICES


 


3.1           You hereby assign (or if
such assignment, or assignation in the case of Scottish Invoices, is invalid or
unenforceable for any reason you will by submitting Notifications to us be
treated as assigning) to us on the terms of this Agreement:


 


3.1.1                all your Invoices which are
outstanding on the Start Date; and


 


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3.1.2                all your Invoices which
arise after the Start Date until this Agreement terminates.


 


Neither of us needs
to take any further action to transfer to us ownership of your current and
future Invoices (other than Scottish Invoices) assigned by this clause.


 


3.2           At the same time as you
assign your Invoices to us, you also assign (and by Notifying Invoices to us
will be treated as assigning) to us the Related Rights in relation to those
Invoices.  In respect of Scottish
Invoices the provisions of clauses 3.4, 3.5 and 3.6 below shall apply.


 


3.3           If an Invoice (other than a
Scottish Invoice) or its Related Rights is not assigned to us, you will hold
such Invoice and its Related Rights on trust for us.  If you receive any cash, cheques or other
forms of payment for any Invoices, then:


 


3.3.1                you will hold them on trust
for us; and


 


3.3.2                you will immediately deliver
such payments to us (endorsed to us, if necessary) or pay them into such bank
account as we tell you, but you must not pay them into your own bank account.


 


3.4           This clause contains a
declaration of trust by you in our favour. You are the trustee of that trust
and we are the beneficiary. The trust property, which as trustee you will hold
on trust for us, is as specified in this clause 3.4. By our execution of this
Agreement, we acknowledge that we are aware of the existence of the trust and
the property which is and will be trust property. You and we agree as follows:-


 


3.4.1                if you receive any sums
relating to a Scottish Invoice, you will advise us immediately and will hold it
in trust for us as part of the property of the trust created by this clause
3.4;


 


3.4.2                all Scottish Invoices and
their Related Rights purchased or to be purchased by us under this Agreement
shall be the property of this trust except where, or until, we have a complete
and unencumbered title thereto. The Scottish Invoices and their Related Rights
shall become trust property as soon as they are Notified to us by you;


 


3.4.3                we may at any time give
notice to anyone that this trust exists and you will give the same notice to
any party should we so require;


 


3.4.4                your Notification to us
will constitute notice to us that those Scottish Invoices so Notified and their
Related Rights become trust property save where we have a complete and
unencumbered title to such Scottish Invoice and/or its related Rights; and


 


3.4.5                we may require you at any
time as trustee to transfer legal title to us of all or any of the trust
property and you shall be bound to do so forthwith. The provisions of this
clause 3.4.5 will continue to apply notwithstanding any termination of the
Agreement.


 


3.5           If you are a Factoring
Client or an Invoice Discounting Client whose Agreement is disclosed, ownership
of Scottish Invoices and their Related Rights shall transfer to us upon the
notification of assignation of a Scottish Invoice being made to a Customer as
provided for in condition 8.3.3 of Part II of the Operating Conditions.


 


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3.6           If you are a Factoring
Client or an Invoice Discounting Client whose Agreement is undisclosed,
Scottish Invoices and their Related Rights shall become trust property (as
referred to in clause 3.4.2 above) upon you Notifying us of that Invoice.


 


4.             POWER
OF ATTORNEY


 


4.1           You irrevocably appoint us
and each of our directors and any of our duly authorised senior managers from
time to time jointly and each of them severally to be your attorneys for the
purpose of:


 


·                                                                  perfecting our title to an
Invoice or its Related Rights (including, for the avoidance of doubt perfecting
title to any Scottish Invoices and their Related Rights in accordance with
clause 3.4.5 above); and/or


 


·                                                                  securing the performance of
any of your obligations to us or a Customer.


 


In accordance with
this power, we may without notice to you either in our name or in your name:


 


4.1.1                                             complete, negotiate or
endorse cheques or other instruments representing payment of or security for
Invoices;


 


4.1.2                                             bring, conduct, compromise
or defend any legal or other proceedings;


 


4.1.3                                             execute or sign any deeds
or documents;


 


4.1.4                                             complete or perform any
other acts as we consider reasonably necessary to complete a Contract of Sale;


 


4.1.5                                             dispose of or deal with any
Related Rights;


 


4.1.6                                             obtain payment of Invoices
and if necessary, give notice of the assignment or assignation of Invoices to
us;


 


4.1.7                                             Communicate with HM Revenue
and Customs.


 


Each attorney under
this power may in turn appoint and remove any substitute attorney or
agent.  You will ratify anything lawfully
done by any attorney, substitute attorney or agent under the powers set out
above.  You cannot cancel our powers
under this clause and this power will last until all monies, obligations and
liabilities owing by you to us have been performed or satisfied in full.


 


5.             SPECIAL
TERMS


 


5.1           The following
facilities/Facilities are being provided by us to:


 


Xcel Power Systems
Limited (Facility/facility Type(s): Sterling Invoice Discounting
;Export/Currency)


 


who are members of
the same group of companies as you.


 


The aggregate Review
Limit for all the above facilities/Facilities is £2,750,000


 


The Minimum Fee will
be calculated by reference to all Invoices Notified by you and those companies
referred to above to whom we are providing a facility.


 


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5.2           Other special terms are:


 


Debt turn not to exceed 75 days calculated on a rolling 3 month basis
and if exceeded we will review the level of funding provided.


 


Credit note dilution not to exceed 5% on a rolling 3 month basis and if
exceeded, the initial percentage will be reduced % for %.


 


Repatriation of cash to US parent to only be made in line with prior
agreed budgets. Payments outside of budget to be agreed by LTSBCF prior to
being sent.


 


Monthly aged debtors and aged creditors to be provided within 15 days of
month end, every month.


 


Monthly management accounts to be provided within 30 days of month end,
every month


 


Contra account reserve to be set if necessary and monitored on a monthly
basis.


 


Concentrations over 10% of the gross sales ledger to be supported by
satisfactory credit ratings and appropriate limits agreed.


 


Rebate & settlement reserve to be set if necessary and
monitored on a monthly basis.


 


Export debt to be funded no higher than 10% of the gross sales ledger if
no credit insurance in place. Exports will be funded to maximum 50% of gross
sales ledger if credit insurance is in place and assigned to Lloyds TSB
Commercial Finance, with individual export customers funded to a maximum of
their credit insured limit.


 


Research & Development invoices to be identified monthly and
reserve held.


 


Invoices only to be assigned when delivery is confirmed.


 


Lloyds TSB Commercial Finance to be appointed first loss payee of
existing Atradius credit insurance policy within 1 month of initial drawdown.


 


Reserve to be established and updated monthly for tooling invoices.


 


6.             CONDITIONS
PRECEDENT


 


6.1           We will provide you with
the Facility when we have received in a form and substance satisfactory to us:


 


6.1.1                an all assets debenture or
a bond and floating charge if you are a Scottish company executed by you;


 


6.1.2                a copy of the resolution of
your board of directors approving the execution of this Agreement and any other
security we require from you;


 


6.1.3                any waivers, deeds of
postponement, deeds of priority or ranking agreements in Scotland, guarantees
and assignments or assignations in Scotland of insurance policies entered into
by you, us or other parties as may be required.


 


6.1.4                any information or evidence
we require to comply with our know your customer procedures.


 


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6.1.5                Other conditions precedent
are:


 


Satisfactory completion of all legal documentation.


 


Satisfaction with debtor due diligence including audit and debtor
verification..


 


Group Introduction Certificate from Lloyds TSB or Money laundering
procedures to be undertaken.


 


Confirmation that debentures registered on 12/12/07 in favour of GVEC
Resource IV Inc will be discharged on commencement of our agreement and
confirmation that proceeds of sale of ACC by Emrise Corporation Inc have
cleared all liabilities due to GVEC Resource IV Inc & vendors of ACC
due within 2 years.


 


Rockwell Collins to be added to existing credit insurance policy and
limit advised to LTSBCF.


 


Satisfaction with forecast group position and borrowing requirements
post sale of ACC.


 


Satisfaction with CIFAS listing against Graham Jefferies.


 


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IN WITNESS of which
the parties have executed this Agreement as a Deed on the date set out above.


 


SIGNED and DELIVERED as
a DEED of

LLOYDS
TSB COMMERCIAL FINANCE

LIMITED


acting by:


 


	
  1.

  	
   

  	
   

  	
   

  
	
   

  	
  Name of attorney

  	
   

  	
  Attorney Signature

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  	
   

  
	
   

  	
  Name of attorney

  	
   

  	
  Attorney Signature

  



 


 


In the presence of:


 


Witness


 


	
  Name: **

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Occupation:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Witness signature
  (only required

  
	
   

  	
   

  	
   

  	
  If one attorney
  signs)

  



 


I/We, the undersigned,
confirm that all relevant individuals have either read, understood and accepted
or have otherwise consented to statements about Data Protection which appear on
either the offer letter, quotation, proposal or instruction letter sent to
me/us before your auditors visited me/us and as contained in this Agreement
and/or that the processing in accordance with such statements of personal data
supplied by me/us is otherwise permitted.


 


SIGNED and DELIVERED as
a DEED of

PASCALL
ELECTRONICS LIMITED


 


 


	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name of Director**

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name of
  Director/Company Secretary**

  	
   

  	
  Signature

  



 


 


In the presence of:


Witness


 


	
  Name*:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Occupation:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  *Witness Signature
  (only required if the Company is registered with a sole Director as per the
  Companies Act 2006)

  
	
  Address:

  	
   

  	
   

  
					



 


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