BANKRUPTCY PROCEEDING BY OR AGAINST THE
APPLICABLE ACCOUNT DEBTOR THAT FAILED TO PAY IN FULL BY THE DUE DATE, AND IN
ADDITION TO ANY OTHER OBLIGATIONS OF SELLER HEREUNDER, SELLER SHALL PAY TO BUYER
AN AMOUNT WHICH IS EQUAL TO (I) THE PRODUCT OF THE DISCOUNT RATE AND THE AVERAGE
DAILY BALANCE OF SUCH PURCHASED RECEIVABLE OUTSTANDING DURING THE PERIOD FROM
THE DUE DATE UNTIL THE FIRST TO OCCUR OF PAYMENT IN FULL, 90 DAYS AFTER THE DUE
DATE OR THE FILING OF A BANKRUPTCY PROCEEDING BY OR AGAINST THE APPLICABLE
ACCOUNT DEBTOR THAT FAILED TO PAY IN FULL BY THE DUE DATE (THE "LATE PAYMENT
SETTLEMENT PERIOD") MULTIPLIED BY (II) A FRACTION THE NUMERATOR OF WHICH IS THE
NUMBER OF DAYS IN THE LATE PAYMENT SETTLEMENT PERIOD AND THE DENOMINATOR OF
WHICH IS 360 ("LATE PAYMENT SETTLEMENT FEE").
2.3
FACILITY FEE. A FULLY EARNED, NON-REFUNDABLE
FACILITY FEE OF SEVENTY-FIVE THOUSAND DOLLARS ($75,000.00) IS DUE TO BUYER FROM
SELLER UPON EXECUTION OF THIS AGREEMENT.
2.4
NATURE OF TRANSACTION. IT IS THE INTENT OF THE
PARTIES HERETO THAT EACH PURCHASE AND SALE OF RECEIVABLES HEREUNDER IS AND SHALL
BE A TRUE SALE OF SUCH RECEIVABLES FOR ALL PURPOSES AND NOT A LOAN ARRANGEMENT.
EACH SUCH SALE SHALL BE, SUBJECT TO THE TERMS HEREOF, ABSOLUTE AND IRREVOCABLE,
PROVIDING BUYER WITH THE FULL RISKS AND BENEFITS OF OWNERSHIP OF THE PURCHASED
RECEIVABLES (SUCH THAT THE PURCHASED RECEIVABLES WOULD NOT BE PROPERTY OF THE
SELLER'S ESTATE IN THE EVENT OF THE SELLER'S BANKRUPTCY).
THE PARTIES AGREE
THAT APPROPRIATE UCC FINANCING STATEMENTS HAVE BEEN OR SHALL PROMPTLY BE FILED
TO REFLECT THAT SELLER IS THE SELLER AND BUYER IS THE PURCHASER OF RECEIVABLES
HEREUNDER.
3
COLLECTIONS, CHARGES AND REMITTANCES.
3.1
APPLICATION OF PAYMENTS.
ALL PAYMENTS IN
RESPECT OF ANY PURCHASED RECEIVABLE, WHETHER RECEIVED FROM AN ACCOUNT DEBTOR OR
ANY OTHER SOURCE AND WHETHER RECEIVED BY SELLER OR BUYER, SHALL BE THE PROPERTY
OF BUYER AND SELLER SHALL HAVE NO OWNERSHIP INTEREST THEREIN.
3.2
COLLECTION BY SELLER.
IN ORDER TO FACILITATE
THE COLLECTION OF THE PURCHASED RECEIVABLES IN THE ORDINARY COURSE OF BUSINESS,
SELLER AGREES TO ACT AS BUYER'S AGENT FOR COLLECTION OF THE PURCHASED
RECEIVABLES.
ACCORDINGLY, BUYER HEREBY APPOINTS THE SELLER ITS ATTORNEY-IN-FACT
TO ASK FOR, DEMAND, TAKE, COLLECT, SUE FOR AND RECEIVE ALL PAYMENTS MADE IN
RESPECT OF THE PURCHASED RECEIVABLES AND TO ENFORCE ALL RIGHTS AND REMEDIES
THEREUNDER AND DESIGNATES SELLER AS BUYER'S ASSIGNEE FOR COLLECTION; PROVIDED
THAT SUCH APPOINTMENT OF SELLER AS SUCH ATTORNEY-IN-FACT OR ASSIGNEE FOR
COLLECTION MAY BE REVOKED BY BUYER AT ANY TIME.
SELLER, AS SUCH
ATTORNEY-IN-FACT, SHALL USE DUE DILIGENCE AND COMMERCIALLY REASONABLE LAWFUL
EFFORTS IN ACCORDANCE WITH ITS USUAL POLICIES AND PRACTICES TO COLLECT ALL
AMOUNTS OWED BY THE ACCOUNT DEBTORS ON EACH PURCHASED RECEIVABLE WHEN THE SAME
BECOME DUE.
IN THE ENFORCEMENT OR THE COLLECTION OF PURCHASED RECEIVABLES,
SELLER SHALL COMMENCE ANY LEGAL PROCEEDINGS ONLY IN ITS OWN NAME AS AN ASSIGNEE
FOR COLLECTION OR ON BEHALF OF BUYER OR, WITH BUYER'S PRIOR WRITTEN CONSENT, IN