Document:

sfgs8k2010319ex.htm

    
      

      

    

    PURCHASE
AND SALE AGREEMENT BETWEEN

    SFG
FINANCIAL CORPORATION AND NCG MARKETS CORPORATION

     

    THIS
AGREEMENT, made as of the 8th day of March 2010 between NCG MARKETS CORPORATION
(“NCG”),  with an address of 215-15 50th AVENUE, BAYSIDE,
NY  11364, CHANGYING ZHU, LEE CHEN, individuals with an address of
215-15 50th AVENUE, .BAYSIDE, NEW YORK 11364. NCG, CHANGYING ZHU and LEE CHEN
are collectively hereinafter referred to as SELLERS (“Sellers”) and SFG
FINANCIAL CORPORATION, (“SFG” ) a Delaware Corporation with an address of 575
MADISON AVENUE, NEW YORK, NEW YORK 10022, hereinafter referred to as
PURCHASER.

    

    W I T N E
S E T H:

    

    WHEREAS,
SELLERS are the Owners of  200 Shares of the issued and outstanding
Shares of NCG Markets Corporation Common Stock, no par value, , such shares
representing100% of the issued and outstanding shares of Capital Stock of NCG
Markets Corporation (the “NCG Common Stock”); and

    

    WHEREAS,
NCG is a member of the National Futures Association (the “NFA”)  and
the Commodities Futures Trading Commission (“CFTC”) as a non-guaranteed
Introducing Broker and it is duly registered pursuant to the Commodity Exchange
Act (the “CEA”);

    

    WHEREAS,
SELLERS wish to sell to the PURCHASER an aggregate of 100% of the issued and
outstanding shares of the NCG Markets Corporation Common Stock, (“NCG Common
Stock shall hereinafter collectively referred to the “NCG Shares”), which said
Shares of NCG constitutes 100% of the issued and outstanding NCG Shares, and the
PURCHASER is desirous of acquiring the 100% of the NCG Markets Corporation
Shares on the terms and conditions hereinafter set forth; and

    

    WHEREAS,
PURCHASER  has agreed to acquire NCG Shares for $50,000 Dollars, and
other good and valuable consideration.

    

    NOW, THEREFORE, in consideration of the
mutual agreements herein, the sufficiency of which is hereby acknowledged, each
of the parties hereto agrees as follows:

    

        1.          
    Sale and Delivery of the Securities.  Subject to
and contingent upon the terms and conditions of this Agreement, SELLER hereby
agrees to sell, assign and transfer to the PURCHASER and the PURCHASER hereby
agrees to purchase from SELLER all right, title and interest in NCG Markets
Corporation Common Stock Shares.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

        2.              
Purchase Price.

    

    (a)         The
purchase price for the securities shall be $50,000 Dollars (the “Purchase
Price”), which shall be allocated to SELLER.. The Purchase Price shall be paid
by the delivery to Seller in the form of a certified or bank cashier’s checks in
New York Clearing House Funds, payable to the order of the SELLER or, at the
SELLER’s option, by wire transfer of immediately available funds into the
account designated by the seller.

     

        3.          
    Closing.

     

    (a)    Subject to the
fulfillment of the conditions to closing as set forth in Section 6 herein and
conditioned thereon, the closing of the transactions contemplated thereon,
hereby, shall take place subject to the condition precedent set forth in this
Agreement, at the offices of Sichenzia Ross Friedman Ference LLP, 61 Broadway,
New York, New York 10006, at 10:00 a.m. on May 30 ___, 2010 or such other time,
date or place as the SELLER and the PURCHASER mutually agreed upon in writing
(the “Closing Date”) and shall be deemed to have been consummated and become
effective for all purposes as of the close of business on the Closing
Date.

     

    (b)      At the
Closing:

     

    
             (i)   SELLER
shall deliver to the PURCHASER certificate(s) with fully executed stock powers,
signature guaranteed, representing the NCG Common Stock Shares.

    

    
           

             (ii)   PURCHASER
shall deliver to the SELLER, , in certified check or bank check or by wire
transfer to the SELLER’s designated bank account, the Purchase
Price.

    

     

    
             (iii)    Said
shares shall be distributed at the direction of SFG Financial Corporation
(“SFG”) to parties named on an allocation list supplied by SFG to the Seller
prior to Closing.

    

     

    (c)       Within
ten (10) days from the Closing Date the SELLER shall prepare and file such
documents as are required by the CFTC, NFA, and applicable states listing the
new additional shareholders of NCG Market Corporation..

     

        4.              
Representations and Warranties of SELLER and NCG.

     

    SELLERS,
jointly and severally, represent, warrant, with such representations, warranties
and agreements surviving the Closing and continuing thereafter, as
follows:

     

        4.1.            Corporate
Organization. NCG Markets Corporation is a corporation duly organized and
validly existing in good standing under the laws of the State of New York and
has the corporate power to own its property and to carry on its business as now
being conducted.  NCG Markets Corporation is duly qualified to
transact business and is in good standing in each jurisdiction wherein the
nature of the business transacted by it makes such
qualification.  There are no pending actions or proceedings to limit
or impair NCG Markets Corporation’s power to engage in business or to dissolve
NCG.  A certified copy of the Articles of Incorporation will be
ordered from the Secretary of State of New York and shall be delivered to the
Purchaser promptly upon receipt from New York Secretary of State, but no later
than seventy-two hours prior to Closing.

     

        4.2           
 Authorized Capital.  The authorized capital stock of NCG Markets
Corporation is 200 shares of Common Stock, no par value, of which 200 are issued
and outstanding.  There are no authorized or outstanding options,
warrants or other rights to purchase or encumber any authorized or outstanding
share of stock.

     

        4.3.           
Title to NCG Markets Corporation Shares.  SELLERS have good title,
beneficially and of record, to the NCG Markets Corporation Shares, free and
clear of all claims, liens and encumbrances; such shares are validly issued and
outstanding, fully paid and non-assessable; and SELLERS have full legal right,
power and authority to sell, assign and transfer the NCG Markets
Shares.  When delivered as provided in Section 1 of this Agreement,
the certificates for the NCG Markets Corporation Shares so delivered will vest
ownership of such shares of Stock in the PURCHASER free and clear of all claims,
liens and encumbrances of SELLER or created by SELLER, which certificates will
then represent 100% of the outstanding shares of the capital stock of
NCG.  NCG has not created or granted any other option, warrant or
right with regard to shares of NCG Markets Corporation Common
Stock.

     

        4.4          
  Financial Statements.  The audited financial statements of
NCG Markets Corporation for  the year ended December 31, 2009,
prepared by Zhuang Mu Liu and the un-audited financial statements for the twelve
months period ended March 8, 2010 and attached as Annex A (collectively, the
“Financial Statements”), are true and correct, having been prepared in
accordance with statutes, regulations and principles prescribed by the IRS, SEC
and CFTC or other relevant Federal, State or local governmental authority, with
statutes, regulations and principles have been consistently adhered to
throughout the periods indicated, and fairly and accurately indicate the
financial condition of NCG Markets Corporation and the results of its operations
as of the date and throughout the periods indicated.  NCG Markets
Corporation had no liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, including without limitation, tax liabilities
due or to become due, except as disclosed in schedule 4.4.

     

        4.5      
      CFTC Registration.  NCG Markets
Corporation is registered as an Introducing Broker dealer under the Commodity
Exchange Act, and is a member firm of the CFTC and NFA in good
standing.

     

        4.6         
   CFTC Restrictions. NCG Markets Corporation is subject to the rules
and regulation of the CFTC, NFA and other pertinent regulatory bodies. NCG
Markets Corporation is current in payments incident to all financial obligations
to the aforementioned agencies. .

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

        4.7        
   Transactions since March 1, 2010.   Except as
disclosed herein, since March 1, 2010, there is no material adverse position or
property of NCG Markets Corporation. Other than provided for herein, NCG Markets
Corporation has not since March 1, 2010:

     

    
           (a)   issued or
sold or made any agreement of any kind to issue or sell any of the shares of its
stock, bonds or other corporate securities, or merged or consolidated with any
other corporation;

    

     

    
           (b)   incurred
any debt, obligation or liability (fixed or contingent), except debts,
obligations and liabilities incurred in the ordinary course of
business;

    

     

    
           (c)   discharged
or satisfied any lien or encumbrance or paid any obligation or liability (fixed
or contingent) other than current liabilities included in the Financial
Statements and current liabilities incurred since that date in the ordinary
course of business;

    

     

         (d)    declared or made any
payment or distribution to shareholders;

     

         (e)    purchased or redeemed
any shares of its capital stock;

     

    
           (f)   made any
general wage or salary increase or increased compensation of any officers or
management employee nor paid or accrued any bonus or salary (which is defined
herein to include pension and profit sharing contributions) to
Sellers;

    

     

    
           (g)   mortgaged,
pledged or subjected to lien or otherwise encumbered any of its assets, tangible
or other intangible;

    

     

    
           (h)   sold,
assigned or transferred any patents, trademarks, trade names, copyrights,
licenses or other intangible assets;

    

     

    
           (i)   suffered
any event or condition of any character materially and adversely affecting NCG
Markets Corporation’s business or future prospects (including, without
limitation, knowledge of or notification by any state or federal securities
regulatory agency of any violation or claim arising from the conduct of the
securities business);

    

     

    
           (j)   suffered
any material net operating loss or any extraordinary loss or waived any rights
of substantial value or entered into any transaction not in the ordinary course
of business; or

    

     

    
           (k)   become a
party to any agreement which affects or may affect materially and adversely NCG
Markets Corporation.

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

        4.8.         
  Loans; Indebtedness.   NCG Markets Corporation
represents that NCG Markets Corporation has no outstanding loans or
indebtedness, subordinated or otherwise.

     

        4.9           
Net Capital.

     

    (a)         The
net capital of NCG shall comply with rules set forth by the CFTC and NFA and
other pertinent regulatory State and Federal agencies at the date of this
Agreement and on the Closing Date.

     

    (b)         Immediately
following the Closing, Purchaser shall permit Seller to withdraw funds held by
NCG Markets Corporation, as well as all securities held in the name of NCG
Markets Corporation, and the cash in the bank account identified in Section 4.23
hereof. Notwithstanding the above, Seller shall cause to maintain net capital
amounts sufficient to insure continued compliance with all net capital
requirements for a period not to exceed the earlier of, the 60th
anniversary day from the Closing or the purchase of NCG Markets Corporation
Common Stock, subject to the receipt of appropriate Regulatory
Approval.

     

        4.10           Contracts.   NCG
Markets Corporation is not a party to any written or oral contract, employment
contract, contract with any labor union or association, bonus, pension plan,
profit sharing, retirement, stock purchase, hospitalization, insurance or other
plan providing employee benefits; lease with respect to any property, real or
personal, whether as lessor or lessee; contract or commitment for capital
expenditures; or contract (in the ordinary course of business or
otherwise).

     

        4.11           Tax
Returns.   All tax returns and reports of NCG Markets Corporation
required by law (including without limitation, all income tax, unemployment
compensation, social security, sales and excise tax laws of the United States or
any state, territory or municipal or political subdivision thereof) to be filed
have been duly filed, and all taxes, assessments, contributions, fees and other
government charges (other than those presently payable without penalty or
interest and those currently being contested in good faith) which are due and
payable as shown by said tax returns or reports have been paid. NCG Markets
Corporation has paid wages or salaries and has withheld from the salaries and
wages of its employees any income taxes required to be withheld and NCG Markets
Corporation is not delinquent in the payment to the Internal Revenue Service of
such funds. NCG Markets Corporation knows and does not have reasonable grounds
to know of any additional assessments or any basis for any additional
assessments in respect to the United States or state taxes upon or measured by
income of NCG Markets Corporation. The Financial Statements contain adequate
provision for all federal income, federal excess profits, state income,
franchise, real property and all other taxes of NCG Markets Corporation,
including interest and penalties in respect thereof, for all periods ended on or
before March 1, 2010.

     

        4.12           Compliance
with Laws.   To the best knowledge of NCG Markets Corporation,
neither the execution and delivery of this Agreement nor compliance with the
terms and provisions of this Agreement on the part of SELLER , subject to the
receipt of appropriate regulatory approvals, breach any statute or regulation of
any governmental authority, domestic or foreign, or will at Closing conflict
with or result in a breach of any of the terms, conditions or provisions of any
agreement or instrument to which the SELLER or SFG are a party or by which they
are or may be bound or constitute a default thereunder, or result in the
creation of an  imposition of any lien, charge, encumbrance or
restriction of rights, including rights of termination or
cancellation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

        4.13           Insurance.   NCG
maintains no insurance policies or broker’s fidelity bonds.

     

        4.14           No
Suits Pending or Imminent.   There are no outstanding and unpaid
judgments, liens or security agreements as a result of which NCG Markets
Corporation is or may become a judgment debtor.  Further, there are no
actions at law or equity or SEC or other administrative proceedings or CFTC or
NFA proceedings known to be contemplated or pending against NCG Markets
Corporation or its officers or in which it will be a plaintiff or
petitioner.  There are no actions at law or equity or administrative
proceedings pending in which it is anticipated that NCG Market Corporation will
join or be joined as a party.  There is no litigation pending,
contemplated or threatened relating to the shares or relating to any other
ownership interest in NCG Markets Corporation.   There is no
pending, contemplated or threatened litigation or proposed violation of law or
regulation of any nature whatsoever (including, but not limited to, CFTC, NFA,
SEC, OSHA fire codes or similar laws and regulations).

     

        4.15.           No
Dividends.   The Board of Directors of NCG Markets Corporation
has not declared any dividends, nor are there any dividends unpaid that were
declared in an earlier period.

     

        4.16.           No
Salary Increases; No New Employees.   Since March 1, 2010, NCG
Markets Corporation has not increased any employee’s salary or hired any new
employees.  At the Closing Date, other than as discussed herein, NCG
Markets Corporation will have no contractual obligations to
employees.

     

        4.17.           Officers
and Directors.   The sole officer and director of NCG Markets
Corporation is Lee Chen.

     

        4.18.           Articles
of Incorporation.   The Articles of Incorporation, as amended to
the date hereof, and the By-Laws, as amended to the date hereof, of NCG Markets
Corporation, which are being delivered to the Purchaser concurrently herewith,
are true and correct copies in effect at the date hereof.

     

        4.19.           Minute
Books.                                   A
copy of the minute books of NCG Markets Corporation, including minutes of
meetings of stockholders and directors which are being delivered to the
Purchaser concurrently herewith are true, complete and correct copies at the
date hereof.  There are no omissions from such minute books of the
minutes of any meetings, proceedings and/or actions of the stockholders or the
Board of Directors of NCG Markets Corporation or any committee
thereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

        4.20.           No
Subsidiaries.   NCG Markets Corporation does not have any
subsidiaries and does not own any shares of stock or other securities of or
interest in any other corporation, firm, partnership or
association.

     

        4.21.           Contractual
Performance.                                           To
the best of NCG’s knowledge, information and belief, all obligations that NCG
has been required to comply with have been fully satisfied and the Seller is not
in default on any lease, contract, agreement, etc.

     

        4.22.           Other
Agreements.   Neither SELLERS nor NCG Markets Corporation is a
party to any agreement, oral, written or otherwise, direct or indirect, other
than this agreement, to sell, option or transfer any shares of stock of NCG
Markets Corporation; any assets of NCG Markets Corporation or otherwise, nor are
the securities of NCG subject to any agreement other than provided
herein.

     

        4.23.           Bank
& Brokerage Accounts.   Other than the bank accounts and
Clearing Accounts maintained by NCG as listed schedules on Schedule 4.23, there
are no other depositories where funds of NCG are held.

     

        4.24.           No
Misrepresentation.   NCG represents and warrants that no
representation or warranty by NCG in this Agreement and no statement or
certificate furnished to PURCHASER pursuant hereto or in connection with the
transactions contemplated hereby will contain any untrue statement of a material
fact or will omit statements of a material fact necessary to make the statements
contained herein or therein not misleading. NCG has disclosed in writing to
PURCHASER all events, conditions or facts which materially and adversely affect
or have any effect on the condition (financial, business operations, liquidity,
assets, liabilities or obligations) of NCG.

     

        5.           PURCHASER’s
Warranties.   The Purchaser represents warrants, and agrees that
the following items shall survive the Closing and continue thereafter, as
follows:

     

         (a)           The
PURCHASER has full legal right, power and authority to enter into this Agreement
and to consummate all the transactions hereby contemplated;

     

         (b)           The
PURCHASER is purchasing the Securities for its own account and investment and
not with a view to distribution or resale;

     

         (c)           The
PURCHASER acknowledges that all documents, records and books requested by the
PURCHASER have been made available for inspection and have been inspected by the
PURCHASER;

     

               Certain
Covenants of SELLER and NGC

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

         (a)            
All licenses held by NCG Markets Corporation with the NFA are valid and in good
standing as of the date hereof.

     

        6.              
Conditions to Closing.

     

        6.1.            Documents
Delivered.   As conditions to Closing, Seller or the appropriate
person holding such item shall deliver:

     

    (a)         to
the PURCHASER, stock certificates of NCG Markets Corporation, as provided in
Section 1 hereof;

     

       
(b)         to the
PURCHASER, NCG’s books of account and business records, tax returns, minute
book, stock transfer book, blank stock certificates and seal;

     

    (c)         to
the PURCHASER, copies of all agreements, contracts and leases to which NCG is a
party;

     

    (d)         to
the PURCHASER, any other documents so requested related to this
transaction.

     

        6.2.           
Conditions Precedent.

     

    (a)          The
representations, warranties, covenants and agreements of the SELLER herein are
conditions precedent to this Agreement.  The breach by the SELLER of
any of the aforesaid Sections shall entitle the other party to rescind this
Agreement at any time after discovery of said breach and to recover upon demand
any and all sums paid hereunder as well as any other damages resulting there
from, whether direct or consequential.

     

    (b)         The
obligations of PURCHASER under this Agreement, including without limitation,
PURCHASER’s obligation to consummate the transactions contemplated hereby, are
subject to the receipt of appropriate regulatory approvals prior to Closing, as
may be necessary.

     

        6.3.           
Due Diligence.   PURCHASER shall have contemplated to its full
satisfaction diligence of NCG Markets Corporation and shall have been provided
with full access to all documents, records and other information.

     

        7.             
 Indemnification.   The Parties the Agreement agree agrees
to indemnify and hold each Party, and its successors and assigns, harmless from
all claims, actions, proceedings, damages, expenses, liabilities and/or
judgments of whatsoever nature arising out of or in connection with any and all
transactions, business, or occurrences of any kind resulting from the Seller’s
ownership or operation of NCG Markets Corporation.  The PURCHASER, or
its successors and assigns, shall notify SELLER of any such liability, asserted
liability, or any claims against PURCHASER, with reasonable promptness:
provided, however, that the failure to notify Seller shall not impact in any
manner SELLER’s indemnification obligations hereunder.

     

        8.             
Miscellaneous.

     

        8.1.           Laws
of New York to Govern.   This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the conflicts of laws, principles, thereof and the actual domicile of the
parties.

     

        8.2.           Notices.   All
notices, requests, demands and other communications hereunder shall be deemed
given only if in writing, signed by sender and delivered at or mailed (by
certified or registered mail, postage prepaid) to the receiving party’s address
below or to such other address as the receiving party may designate beforehand
by giving notice, referring to this Agreement, to the sender.

     

        8.3.           Headings.   The
headings in this Agreement are inserted for convenience only and do not
constitute a part hereof.

     

        8.4.           Agreement
Binding.   This Agreement is binding upon and shall insure to the
benefit of the parties heirs, executors, administrators, successors and
assigns.

     

        8.5         
  Finder.                           Seller
represents that there are no finder fees being paid in connection with this
Agreement.

       

        8.6.           Amendments.  This
Agreement may not be modified, amended or terminated except by agreement in
writing executed by the parties hereto.

     

        8.7.           Survival.
The parties agree that all warranties, representations, covenants and
obligations contained herein shall (notwithstanding any investigation or inquiry
which any party hereto or any representative of any party hereto may have made)
forever survive the execution, delivery and closing of this Agreement and any
and all documents delivered in connection herewith and any and all performances
in accordance herewith.

     

        8.8.           Counterparts.   This
Agreement may be signed in one or more counterparts with the same effect as if
the parties signed the same document.  All counterparts shall be
construed together and shall constitute one document.

     

        8.9.           Confidentiality.
Unless otherwise required by law, the parties hereto agree not to disclose any
and all terms of this Agreement or any document related to the sale by this
Agreement to a third party.

       

        8.10.          Severability.
In the event that any one or more of the provisions contained in the Agreement
or any application thereof shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this agreement and other applications thereof shall not in any way be
affected or impaired.

     

        8.11.          Entire
Agreement. This Agreement and all schedules hereto, all of which are hereby made
as part hereof as if fully set forth in the Agreement, contain the entire
agreement between the parties with respect to the transaction contemplated
herein and supersede all prior agreements or understandings between the parties
related to the transaction contemplated by this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the undersigned parties have hereunder set their hands as of
the date set forth below.

     

    Signatures

     

     

    SFG
Financial Corporation

    
      	
               

              /s/ Michael C.
      Caska             
      

            	 
      
	
              BY:  Michael
      C. Caska

            	
              Dated:
      March 8, 2010

            
	
              Title:
      Chief Executive Officer

            	 
      
	 	 
	
              NCG
      Markets Corporation, Inc.

            	 
      
	 	 
	
              /s/ Lee
      Chen        
      

            	
               Dated:
      March 8, 2010

            
	
              BY:
      Lee Chen

            	 
      
	
              Title:  President

            	 
      
	 
      	 
      
	
              /s/ Lee
      Chen

            	
              Dated:
      March 8, 2010

            
	
              Lee
      Chen

            	 
      
	 
      	 
      
	
              /s/ Changying
      Zhu

            	
              Dated:
      March 8, 2010

            
	
              Changying
      ZhuExhibit 10.1

 

Execution Copy

 

DATED 
of March 2010

 

 

(1)              CORGENIX UK LIMITED

 

(2)              FAUNUS GROUP
INTERNATIONAL, INC.

 

 

RECEIVABLES FINANCE AGREEMENT

 

 

THIS AGREEMENT is made the day of March 2010

 

BETWEEN:

 

(1)                                                             Corgenix
UK Limited  a Lynchwood
corporation  (03167445) whose registered office is at
40
Commerce Road, Lynchwood, Peterborough, PE2 6LR (“you”);

 

(2)                                                             FAUNUS GROUP INTERNATIONAL, INC. a
Delaware corporation, whose office is at 80 Broad Street, 22nd Floor, New York, NY 10004 (“we”, “us”, “our”,
or “ours”);

 

The clause headings used in this Agreement are for
guidance only and are not intended to affect its interpretation.  These general conditions must be read in
conjunction with any agreement of which they are expressed to form part.  A list of general definitions can be found in
Clause 25.

 

1.                                     Sale and
Purchase of Debts

 

(a)                                 This
Agreement will commence on Commencement and will continue until terminated in
accordance with its terms.

 

(b)                                On
or as soon as possible after Commencement, you will offer to sell or assign to
us all Debts together with all rights relating to such Debts owing to you at
Commencement and all your Debts arising during the life of this Agreement.  Such an offer will be unconditional and made
in writing in the form set out in Schedule 1 (Form of
Offer).  We shall accept each
such offer by crediting the notified value of such Debts to the account
specified in Clause 3. We shall own your Debts and any related rights from
Commencement or as soon as they come into existence even if not yet entered in
your books or records as due to you.

 

(c)                                 Should
any Debts or related rights not come into our ownership (whatever the reason
may be) you must account to us for such Debts or related right when received
and you will hold such Debts and the proceeds of the same on trust for us
absolutely.  You will co-operate with us
in the execution of any necessary documents, deeds, instruments, policies,
security, and any other action necessary to perfect the assignment and transfer
to us or the trust in our favour in relation to, any Debts (and/or any related
rights), the proceeds of the same or to put this Agreement into effect.

 

(d)                                You
will assign to us the benefit of any insurance policies relating to Debts or
any goods sold which give rise to any Debts;

 

(e)                                 You
shall promptly upon the execution of the Agreement (and promptly after you
become entitled to a new Debt) notify the relevant Customer (with a copy to us)
of the sale, transfer and assignment of such Debt by serving notice
substantially in the form attached as Schedule 2 (Form of Customer
Notification Letter).

 

(f)                                   On
signing this Agreement and as soon as a Debt arises you will notify us on the
form and in the manner we specify together with such information and original
or copy documents proving the existence of such Debt, the delivery of goods or
the performance of your services in respect of the Debts as we may request.
Such Debts are Approved Debts.

 

 

(g)                                Should
we request, you will sign, pay stamp duty on and deliver to us a document in a
form that we approve legally assigning to us any Debt or Debts together with
the benefit of all guarantees given to you by your Customer and other related
securities and, if we ask, you will immediately give written or other notice in
a form and manner that we approve to any Customer whose Debt has been assigned
in this way.

 

(h)                                You
will print, stamp or otherwise mark each invoice and every credit note with a
notice of assignment or sale of Debts shown on any invoice in a form which we
shall specify such notice to be printed on your invoices within three months
from the date of this Agreement and until such time we shall provide you with
an adequate supply of self adhesive labels bearing appropriate notification
language.

 

(i)                                    Should
we decide that we do not wish you to deliver invoices or credit notes to a
specific Customer, we will inform you of this in writing. After receipt of such
notification, you will not deliver any invoice or credit note direct to such
Customer.

 

(j)                                    If
your Customer becomes entitled to a credit or Customer discount in respect of
any Debt you will notify us promptly and send to us a copy of the credit note
in respect of the credited or discounted Debt with any other documents and
information which we may request. In addition you will repay to us the amount
of each credit note so that we are not out of pocket.

 

2.                                  Disapproval
and Re-Approval

 

(a)                                  Because we pay you before your
Customer pays us we may at any time deduct from amounts which we would
otherwise be required to send you a sum equivalent to any Disapproved Debts
previously purchased by us.

 

(b)                                 If we disapprove Debts in this
way we shall (at our discretion) be allowed to sell them back to you or
re-approve them for the purposes of calculating amounts which you are entitled
to draw.

 

(c)                                  All Disapproved Debts will
continue to be owned by us until termination or earlier re-assignment and you
will forward to us forthwith any sums received by you in respect of any
disapproved debts.

 

3.             Payments to you

 

(a)                                 At
any stage during the provision of the service you will have a rolling account
with us the balance of which will be calculated as follows:

 

(i)                                     add the Gross Invoice Value of
Debts notified to us;  then

 

(ii)                                  multiply that amount by the
Payment Percentage in your agreement; then

 

(iii)                               deduct from that amount the
value of any advances made by us to you; 
then

 

(iv)                              deduct from that sum any
Discount, Administration Fees, Disbursements or other fees due to us and the
value of any Disapproved Debts (including any book debts aged 90 days or more);  then

 

(v)                                 add the value of any
re-approved debts and the value of any Debts received from your Customers and
the sum so calculated, if shown as being due to you is your “Entitlement”.

 

2

 

(b)                                          You
may request payments of your Entitlement in the manner agreed between us and
you from time to time.

 

(c)                                           You will not be entitled to request or receive
any payment from us under paragraph (b) above:

 

(i)                                    if
and to the extent that the relevant payment would result in the aggregate
amount of all payments from us at any time exceeding the lower of:

 

(A)                                                          the amount determined
by deducting the aggregate of the Gross Invoice Value of all Disapproved Debts
that are outstanding at that time from the aggregate of the Gross Invoice Value
of all Debts at that time, and multiplying the result by the Payment
Percentage; and

 

(B)                  the Entitlement Limit;

 

(ii)                                 if we are of the opinion that
you are, or are reasonably likely to become, Insolvent; or

 

(iii)                               at any time at which we are
entitled to terminate this Agreement under Clause 13.2, whether or not we
actually exercise any such right.

 

(d)                                We
will make payments to an account (which must, unless we agree otherwise in our
absolute discretion) be an account in your name and maintained with a United
Kingdom branch of any major bank or financial institution) by such method of
transmission as we may approve from time to time.

 

(e)                                 Each payment made by us to you will be
denominated in the same currency as the purchase price of the Debt to which it
relates.  It is your responsibility to
ensure that the account to which such payment is to be transmitted is suitable
for the receipt of funds in the relevant currency.  We will not be liable for any loss or damage
suffered by you in the event that the bank or other institution at which such
account is maintained declines to accept a payment transmitted to it in that
currency.

 

(f)                                   We will debit your rolling account with each
amount paid to you under Clause 3(b) on the Business Day on which we give
instructions to our bankers to transmit that payment to your account under
paragraph (d) above.

 

(g)                                 Upon the occurrence of a
Termination Event any further advances to you will cease automatically and from
any balance due to you, we shall be entitled to deduct all commissions and
expenses as provided in this agreement.

 

4.             Charges

 

4.1                                 Charges will arise either as
Discount, Fees or Disbursements as follows:-

 

(a)                                  Discount will be charged on a
basis similar to that upon which simple interest is calculated at a margin over
the US prime rate as published by the Wall Street Journal, Money Rates Section from
time to time.

 

(b)                                 Discount will be charged on
the daily net total balance outstanding and due from Customers to us in respect
of the Gross Invoice Value of all Debts purchased applied on a daily basis.

 

3

 

(c)                                  Any receipt from your Customer
will be credited to your account with us two working days after the day of
banking, but not including the day of banking.

 

(d)                                 Payments made to you will be
debited from your account with us on the day on which they are made whether the
payment is made to you by cheque or bank transfer.

 

4.2           Fees

 

(a)                                  We shall charge Administration
Fees as a percentage of the Gross Invoice Value.

 

(b)                                 Occasionally Administration
Fees may be charged on a fixed monthly basis, monthly in advance.

 

(c)                                  We reserve the right, to cover
our initial costs in taking you on as a customer, to charge a Closing Fee upon
our commencing the provision of the receivables finance service.

 

4.3                                 Deficiency
Assessment Fee

 

We will charge Deficiency Assessment Fee in
the event that your actual Entitlement for each month following the
commencement of the provision of the receivables finance service falls below
the Monthly Minimum Entitlement and shall be chargeable to You, or at Our
option, payable by You on Our demand; The Deficiency Assessment Fee will
continue to be payable notwithstanding the occurrence of any of the events
described in Clause 13 (insolvency and other
events entitling us to terminate this agreement).

 

4.4                                 Bank Fee

 

(a)                                  We shall charge a transfer fee
each time funds are transferred by us or received by us in connection with this
Agreement.

 

(b)                                 You shall pay us all bank
commission and other charges and expenses incurred or payable by us in relation
to this Agreement and the arrangements contemplated in it on demand.

 

4.5                                 Over-payment
Fees

 

We shall
charge over-payment fees when you require funds in excess of your agreed
Entitlement from time to time.  The
over-payment fee will be calculated by increasing by 50% the Administration Fee
payable during the period that you have drawn in excess of your Entitlement.

 

4.6                                 Recoveries
Fee

 

(a)                                  If you cease to trade or if
you suffer the appointment of an administrator, administrative receiver, a
liquidator, or if you propose a voluntary arrangement or winding up of your
company, then we shall charge, (to reflect the increased risk of debtor default
and cost of collection in the event of insolvency or cessation of trading) a
recoveries management fee which shall be 10% of the Gross Invoice Value of
debts then uncollected and which shall be in addition to any other fees to
which we shall be entitled under the terms of this Agreement.

 

4

 

(b)                                 We shall charge a late payment
fee of 0.5% on all balances due from your Customers which are more than 3
months old but which are not Disapproved Debts.

 

(c)                                  We reserve the right to charge
to you the legal and other professional costs and expenses and disbursements
which we may incur as a result of the occurrence of any of the events described
in sub-paragraph (a) of this clause.

 

(d)                                 All fees and other expenses
incurred by Us in protecting or enforcing its interest in the Debts or
collateral, in collecting the Debts or the collateral, including reimbursement
for premiums incurred by Us to insure against non-payment of the Debts or other
insurable losses to the collateral shall be chargeable to you.

 

4.7                                 Disbursements

 

(a)                                  In calculating your
Entitlement, we shall deduct, in accordance with clause 3(a)(iv) (Payments  to you) all
disbursements which are identifiable as being attributable to you including, reasonable
and documented attorney’s fees, court costs and other expenses incurred by us
in the set-up, preparation, negotiation and enforcement of this Agreement and
protecting or enforcing our interest in any Debt, in collecting the Debts or
any security for this Agreement, including reimbursement for premiums incurred by us to  insure against
non-payment of any Debt or other insurable losses to the security for this Agreement, and credit reference fees,
(such disbursements, “Disbursements”);
provided, that our travel costs, bank charges and other out-of-pocket expenses
and overheads are not Disbursements hereunder.

 

(b)                                 Notwithstanding
anything in Clause 4.7(a), you have, prior to Commencement, paid to us, and we
have received and hold, an Expense Deposit to reimburse us for our
actual costs and expenses incurred in connection with our review and approval
process in relation to this Agreement, as well as field auditor fees, and
reasonable and documented attorneys’ fees and expenses incurred in the
negotiation, execution, amendment or enforcement of this Agreement or the
Ancillary Documents (“Approval Process Expenses”).  We will provide you with a written accounting
of all Approval Process Expenses, which shall be conclusive, absent manifest
error.  That portion of the Expense
Deposit equal to the Approval Process Expenses is non-refundable, irrespective
of whether Commencement under this Agreement ever occurs.

 

The excess of the Expense Deposit over the Approval Process Expenses
will be paid to you upon demand and any Approval Process Expenses in excess of
the Expense Deposit shall be paid by you on demand, unless this transaction
does not close as the direct result of our gross negligence or wilful
misconduct.

 

5.                                      Collection
from Customers

 

(a)                                  From the commencement of the
receivables finance service we shall have the sole and exclusive right to
collect and enforce payment of every Debt other than debts sold back to you and
you have no right to collect any Debt (including any Disapproved Debt ) unless
we authorise you to do so in advance in writing.

 

(b)                                 You will assist our collection
efforts if we so request by promptly providing all information required and you
agree that for collection purposes we may institute and conduct legal
proceedings in your name under our full control.  You also agree to co-operate in any such
proceedings (including the giving of evidence) and agree to be bound by
anything done by us under this clause.

 

5

 

(c)                                  You will immediately pass to
us or to any bank we direct any payment a Customer makes to you directly in
respect of a book debt and you agree not to mark or endorse any negotiable
instrument relating to such payment otherwise than in our favour.  You will hold any payment you receive for a
book debt on trust for us until we receive it. 
You must not bank any such payment for your own account. Should you
receive any check or other payment instrument with respect to a book debt or
after default any book debt and fail to surrender and deliver to us said check
or payment instrument on the next business day following the date of receipt by
Customer, we shall be entitled to charge you a Misdirected Payment Fee to
compensate us for the additional administrative expenses that the parties
acknowledge is likely to be incurred as a result of such breach.  This
is without prejudice to any other remedies that may be available to us at law.

 

(d)                             If a Customer makes a general
payment either to us or to you without specifying which debts are covered by it
then we shall apply it firstly against any Debts outstanding, Secondly against
the discharge of your liability to us, if any, whether arising under this
Agreement or otherwise, and any balance shall be paid as you wish.

 

(e)                                  If there is shown in our books
a credit balance with any Customer which remains outstanding we shall be
entitled at our discretion to make repayments of such credit balance to the
Customer out of monies available to you.

 

(f)                                    If any Debt received from any
Customer is received by us in a currency other than US dollars and the amount
produced by converting the other currency to US dollars is less than the amount
of any sum advanced by us in relation to the Debt in question, then we shall be
entitled to recoup any such short-fall from any Entitlement and you will in any
event as an independent obligation indemnify us for the deficiency and any loss
sustained as a result.

 

(g)                                 Unless agreed by us in writing
in advance any payments due hereunder shall be made in US dollars, Sterling,
and Euros.  Any such conversion shall be
made at the prevailing rate of exchange on the date of clearance of any effects
banked by us in such market as is determined by us as being most appropriate
for such conversion, and you will in addition pay to us, or we shall be
entitled to deduct from your Entitlement all costs, charges and expenses
relating to the collection of and Debt; and/or in the case of a Debt not
denominated in US dollars, Sterling or Euros conversion of amounts collected
into such currencies (or into such other currency as we determine from time to
time) of such conversion.

 

6.             Disputed Goods

 

If any goods relating to any Debt are returned by a
Customer or delivery is refused or the goods are rejected or repossessed by
you, you will issue a credit note to the Customer within 14 days of the goods
being returned, rejected or repossessed and provide a copy of such credit note
to us. In addition, you will repay to us the amount of such credit note so that
we are not out of pocket. In the event that you do not issue a credit note
within 14 days, you will put those goods on one side, mark them clearly and
prominently with our name as owner and hold them strictly to our order (as
trustee) until they are resold at our direction or until we are fully
reimbursed in relation to any Debt in respect of such goods.

 

6

 

7.            Accounts and Set-Off

 

(a)                                  We shall keep a permanent
record to show all sums payable or paid to you, all payments received in
relation to Debts and all fees, expenses and other sums payable or paid by you
under this Agreement or otherwise.  No
later than 10 working days from the last day of each month we will send to you
a copy of such account which shall be taken as undisputed evidence of the
matters stated in it at the date of its preparation unless within 14 days from
despatch you notify us in writing of any discrepancy.

 

(b)                                 We may at any time draw up an
account to record all amounts due to you from us and to us from you.

 

(c)                                  We may at any time set off any
monies due to us from you whether pursuant to this Agreement or otherwise
against any sums due from us to you.  We
shall only ever be obliged to pay you sums which are net of any discount costs
expenses fees and disbursements due to us.

 

8.                                      Accounting
and Access to Information

 

You agree that
you will:

 

(a)                                  keep full detailed up to date
and proper accounting records and allow us or our properly authorised agents to
enter your premises whenever we wish to inspect them and such other papers as
we may wish relating to your business debts generally and allow us to take
possession of such material to enable us to make copies provided that we return
such material to you within a reasonable time;

 

(b)                                 permit us or our agents to
verify with your debtors by sampling or such other means as we may deem
appropriate the existence and collectability of Debts prior to commencement and
at any time thereafter;

 

(c)                                  cause a proper audit to be
completed of the books of account for yourself and your subsidiaries, if any,
for each financial year and send an audited report and accounts to us as soon
as they are available and in any event within three months from the end of each
financial year;

 

(d)                                 keep us informed at all times
after becoming aware of any change to the credit worthiness of your Customers;

 

(e)                                  keep us informed at all times
of the validity of each Debt and in particular of any counter-claims, right of
set off or other contra items raised by your Customers in relation to any Debt
and assist us in every way to safeguard our interests;

 

(f)                                    as and when produced, send us
management accounts for your business and at our request for any Related
Company in a format and at intervals acceptable to us;

 

(g)                                 if we require, send to us
within 10 days from the end of each month an aged list of your creditors or a
copy of your bought ledger;

 

(h)                                 report to us immediately about
reclaimed, repossessed or returned merchandise, Customers’ claims and disputes,
and any other matters affecting any Debts;

 

(i)                                     provide us with specimen
signatures (electronic or otherwise) of persons authorised to sign any
documents relating to this Agreement together with a Board resolution
authorising for this purpose such persons and inform us immediately of any
change in the signatories;

 

7

 

(j)                                     on completion provide us with
a signed letter in the form set out in Schedule 3 (Notice to
Existing and New Bank Accounts) for all existing bank accounts (and
whenever you open a new bank account) requesting the bank to pay over to us
monies received directly from your Customers;

 

(k)                                  notify us in writing

 

(i)                                   immediately
when you become aware of any event which affects or may affect your warranties
or our rights of immediate termination;

 

(ii)                                of
any existing mortgages charges liens or other security over your assets;

 

(iii)                             immediately
when there are any changes in the nature of your business, your directors or
company secretary or a material change in your ownership (a holding by a
person, firm or company of 10 per cent or more of your equity is for this
purpose deemed to be material);

 

(iv)                            of
any company which becomes or ceases to be a related company;

 

(v)                               of
any Customer which is your Associate or an Associate of any of your directors
or might otherwise fairly be regarded as connected to you or any of your
directors;

 

(vi)                            of
the terms upon which any goods are supplied to you and obtain such waivers or
variation to such terms as we may require.

 

9.            Warranties

 

9.1                                 You warrant generally that:-

 

(a)                                  The obligations to be assumed
by you in this Agreement are valid binding and enforceable on you in accordance
with their terms.

 

(b)                                 Neither you, nor any Related
Company has taken any corporate action or any other step nor have any legal
proceedings been threatened or served for the winding-up administration,
receivership, administrative receivership or other insolvency or recovery
process.

 

(c)                                  Neither you, nor any Related
Company is in breach or default under any agreement to which it is a party or
which may affect it or any of its assets to an extent or in a manner which
would reasonably be expected to have a material adverse effect on the business
or financial condition of you and your Related Companies, taken as a whole.

 

(d)                                 All financial statements
delivered to us unless otherwise expressly stated have been prepared in
accordance with UKGAAP consistently applied and give a true and fair view of
your financial condition at the date as of which they were prepared and the
result of your operations for the period to which they relate.

 

(e)                                 All
information provided by you is true complete, accurate and up to date in all
material respects and you are not aware of any material facts or circumstances
that have not been disclosed to us which if disclosed might adversely affect
our willingness to enter into this Agreement or accept any person to be a
guarantor or indemnifier of your obligations and liabilities.

 

8

 

9.2                                 You warrant in respect of each
Debt that:-

 

(a)                                  you will not waive or modify
your normal trading terms with any Customer without obtaining our prior written
consent and in particular you will not extend the time for payment;

 

(b)                                 we shall obtain a valid
binding and enforceable title to the full amount owing to you on each Debt sold
to us and to all assigned rights and remedies included in the sale of the Debt
to us and that no supplier to you will retain title to any goods sold by you
which are the subject matter of a Debt;

 

(c)                                  you have already performed all
the obligations required for enforcement of the Debt including delivery of
goods or performance of services and are not aware of any actual or threatened
dispute arising from or relating to such obligations;

 

(d)                                 the Customer will pay the full
amount of each Debt no later than 90 days from the invoice date;

 

(e)                                  the Customer has an
established place of business, is not connected or associated with you and has
no right which would reduce or extinguish the Gross Invoice Value of the Debt.

 

the supply contract giving
rise to that Debt:

 

(i)                                   is
valid, binding and enforceable against the Customer;

 

(ii)                                has
been made in the ordinary course of your business;

 

(iii)                             is
governed by English law or other law approved by us in writing, and provides
for the Customer’s submission to the jurisdiction of the English courts;

 

(iv)                            contains
no prohibition against assignment of the Debt or any related right by us;

 

(v)                               is
not regulated by the Consumer Credit Act 1974 or subordinate legislation;

 

(vi)                            provides
for payment in Sterling/US dollars;

 

(g)                                you
have taken all reasonable steps to ascertain the creditworthiness of the
Customer prior to the delivery of goods or the rendering of services;

 

(h)                                you have no reason to believe that the Customer
will be unable to, or will not for any reason, pay the Debt in full when it
falls due;

 

(i)                                    the Debt:

 

(i)                                  is a
bona fide Debt owed by the Customer to you in the amount notified to us by the
you;

 

(ii)                               has
not previously been notified to us;

 

(iii)                            has
not been sold, assigned (whether absolutely or by way of security), mortgaged,
charged, pledged, hypothecated or otherwise disposed of or 

 

9

 

transferred to, or encumbered in favour of,
to any other person, nor has any agreement been made to do so; and

 

(iv)                              is
not subject to withholding tax; and

 

(j)                                    the Customer has no right of set-off, deduction,
abatement or counterclaim in respect of the Debt.

 

10.         Undertakings

 

You will:

 

(a)                                 keep us informed at all times of the
creditworthiness of all Customers and (without prejudice to any of your other
obligations under this Agreement) of any counterclaim, right of set-off,
deduction, abatement or contra-item raised by a Customer at any time;

 

(b)                                 if we so require:

 

(i)                                     instruct your auditors to
report directly to us at the your expense; and/or

 

(ii)                                  procure that each bank or
similar financial institution with which you maintain accounts provides us with
copies of statements of those accounts; and

 

(c)                                 notify us immediately upon becoming aware of any
matter or circumstance that constitutes (or would, with the passing of time or
the giving of notice, constitute) a Termination Event.

 

10.1
                    Negative
Undertakings

 

You will not:

 

(a)                                 sell, assign, transfer, mortgage, charge, pledge
or otherwise dispose of or encumber any Debt and/or its related rights and/or
the proceeds of a Debt or its related rights or your rights under this
Agreement, or agree or purport to do so, other than in favour of us;

 

(b)                                without our prior written consent, waive or
modify (or purport to waive or modify) any of the terms on which you supply
goods or provide services and, in particular you will not extend the time for
payment of any Debt or purport to do so.

 

(c)                                 without our prior written consent, waive or
modify (or purport to waive or modify) any of the terms on which you purchase
goods from your suppliers and, in particular, you will not permit any supplier
to retain title to goods supplied to you.

 

10.2                       Positive
Undertakings

 

You will:

 

(a)                                 execute and deliver or (as the case may be)
procure that the relevant person or persons execute and deliver the Ancillary
Documents;

 

10

 

(b)                                comply in all material respects with all
legislation and regulatory requirements relating to its business or assets
where failure to do so might adversely affect your business, assets or
financial condition;

 

(c)                                 promptly perform its continuing obligations
under every supply contract giving rise to a Debt, including without limitation
the repair and/or maintenance of goods supplied, to ensure that the Customer
will accept the invoice relating to it (or, if the Customer is insolvent, the
Customer’s trustee in bankruptcy or liquidator will accept a proof of the
unpaid balance of the Debt) without any dispute or claim whatsoever (whether or
not justifiable);

 

(d)                                if so required by us,
deliver to us a letter, signed by you in such form as we may specify, addressed
to each bank or financial institution at which you maintain an account,
instructing such bank or financial institution as to the disposition of remittances
received or to be received by it in purported settlement of any Debt;

 

(e)                                 promptly notify us in
writing of any dispute of any kind between you and the Customer and to use all
reasonable endeavours promptly to settle every such dispute;

 

(f)                                   provide, and procure
that any relevant Associate provides, safety briefings and equipment to our
staff as necessary to comply with their responsibility under the Health and
Safety at Work Act 1974 and ensure a safe system of work for such staff whilst
on your or any such Associate’s premises.

 

11.          Recourse

 

(a)                             We may require you, at any
time after we have served a written notice (a “Repurchase
Notice”) on you, to repurchase immediately any Debt:

 

(i)              in respect of which the
representations and warranties contained in clause 9 are untrue or misleading
in any material respect; or

 

(ii)          that is the subject of any
dispute by the Debtor, or in respect of which the Debtor asserts any right of
retention, lien, set-off or counterclaim.

 

(b)           Each
Repurchase Notice will set out in reasonable detail:

 

(i)             the description of each Debt
to be repurchased; and

 

(ii)          the repurchase price
applicable to each such Debt.

 

(c)                                 Until all the moneys payable
by you under the relevant Repurchase Notice have been paid to us, the Debts included
in such notice and their respective related rights (together with any goods
relating to them) will remain vested in us. We will, if we so decide upon
receiving payment of all such moneys and having our expenses paid by you,
re-assign the relevant Debts and their related rights (and the relevant goods,
if any) to you, and may give or require you to give an accompanying notice to
each relevant Customer to that effect

 

(d)                                After the ownership of any
Debt has revested in you under paragraph (a) above, we will pay to you
with all sums subsequently received or recovered by us in relation to that
Debt, after deduction of any amounts then due and owing by you to us.

 

11

 

(e)                                 We have an additional right to
require you to repurchase any Debt at any time in our absolute discretion,
whether or not you are in breach of your obligations under this Agreement.

 

12.          Power
of Attorney

 

You irrevocably appoint us as your attorney
both during and after termination of this Agreement to act in your name and on
your behalf to execute all documents and do all things necessary to give effect
to this Agreement or our rights including making any arrangement or compromise,
taking or defending any proceedings endorsing any negotiable instrument on your
behalf and executing legal assignments of all or any Debt.  This means that we can act on your behalf
without reference to you in connection with the collection of Debt.

 

13.          Duration
of Agreement

 

13.1                           This Agreement will remain in
operation for three (3) years from
Commencement, after which, this Agreement shall be extended automatically for
an additional one (1) year for each
succeeding year. After two years from Commencement, this Agreement may be
terminated by you by providing us with three months notice. We may terminate
this Agreement at any time by providing you with thirty days notice.

 

13.2                           Our rights of immediate
termination are set out below.

 

We may by giving you written notice
terminate this Agreement forthwith if:

 

(a)                                  you commit a breach of any
term of this Agreement such breach is not cured or waived within ten (10) days
of the occurrence thereof; or

 

(b)                                 the nature or volume of your
business is substantially changed; or

 

(c)                                  there is any change in the
person or persons who Control you; or

 

(d)                                 any of our payments to you are
not used in the ordinary course of your business; or

 

(e)                                  any monies owing from you to
us are not paid within 7 days after they become due; or

 

(f)                                    any distress or execution or
attachment is levied upon any of your goods or premises or any garnishee order
is made on any person indebted to you; or

 

(g)                                 you or any person who has
given to us a guarantee or indemnity (including but not limited to the
Guarantee) in respect of your obligations under this Agreement, becomes
Insolvent; or

 

(h)                                 you convene a meeting for the
purpose of passing a resolution for creditors voluntary winding up, or are the
subject of a compulsory winding up order or a petition for an administration
order is presented and you cease to carry on business or call a meeting of
creditors to make an arrangement or composition with creditors or permit a
judgment to remain unsatisfied for seven days; or

 

(i)                                     if any person who has provided
to us a waiver or who has executed a deed of priorities or given any other
consent withdraws or purports to withdraw the same in circumstances where we
may be materially adversely affected; or

 

12

 

(j)                                     we in our absolute discretion
at any time consider that your financial position has deteriorated to the point
at which we believe that repayments of any amounts due or which may become due
from you to us may be put at risk.

 

Any reference
in this Clause 13 to you shall be taken to include any of your subsidiaries.

 

14.          Consequence
of Termination

 

(a)                                  Termination of this Agreement
will not affect the rights or obligations of either you or us in relation to
any Debt nor affect the continued accrual of Discount, Administration Fee or
any other fees or expense payable under this Agreement and this Agreement will
continue to bind us both as long as it is necessary to satisfy these rights and
obligations.

 

(b)                                 In
the event of termination of this Agreement by You prior to maturity or upon the
occurrence of a Termination Event then without prejudice to our accrued rights
and remedies under this Agreement you agree to pay us forthwith upon written
demand Termination Fee plus the amount of all payments we have made to you
under this Agreement plus all fees and charges which have accrued during the
Agreement.

 

(c)                                  In the event of termination or
upon the occurrence of a Termination Event then without prejudice to our
accrued rights and remedies under this Agreement you agree to pay us forthwith
upon written demand a sum equal to the amount of all payments we have made to
you under this Agreement plus all fees and charges which have accrued during
the Agreement less the amounts which we have received from your Customers and
which have been allocated to your account with us.

 

(d)                                 In the event of termination or
upon the occurrence of a Termination Event we may retain any amount received by
us in respect of any Debt pending the drawing up of a final account and the
payment of any amount consequently due to us.

 

(e)                                  Following the drawing up of a
final account and any consequent payment to us we shall re-assign to you
without payment any Debt still outstanding.

 

15.          Security

 

You will grant us such fixed or floating
charges as we may from time to time require as security for the payment of all
sums due or becoming due to us under this Agreement and you will not give any
new charge or other security to any third party without first obtaining our
written consent.

 

We may from time to time require as a
precondition to the continuation of the facilities provided to you under the
terms of this Agreement the execution of other security documents or agreements
providing for the subordination of certain of your debts.

 

16.          Indemnity

 

(a)                                  You agree to indemnify us
against any claim by a Customer and any loss incurred by us as a result of a
third party claim based upon our entering into this Agreement.  For purposes of clarification, save as set
out in section 16(b), you need not indemnify us against any loss incurred by us
due to operation of our business or losses incurred due to our financial
performance under this Agreement.  No
waiver 

 

13

 

forbearance or indulgence granted by us to
you or to any Customer will in any way discharge you from your liabilities to
us or establish a precedent.

 

(b)                                 You irrevocably agree to
indemnify us against any cost, loss or expense that we may suffer or incur in
respect of:

 

(i)                                               any breach of the warranties
or obligations by you or any other person (other than us) under this Agreement
or any Ancillary Document;

 

(ii)                                            any stamp, documentary,
registration or similar duty or tax (including any penalty for late payment)
imposed on or paid in respect of this Agreement or any Ancillary Document;

 

(iii)                                         acting on instructions appearing
to come from you and given by telephone, facsimile or other electronic means,
regardless of the capacity of the person actually giving those instructions;

 

(iv)                                        taking any action to collect
Debts, including collecting any cheque or negotiable instrument payable to you
or endorsed in your favour; or

 

(v)                                           any claim made on us by any
Customer in relation to a Debt or its related rights.

 

17.          Transfer
of Rights

 

We shall be entitled to assign or charge
this Agreement or any of our rights and obligations hereunder.  You may not assign or otherwise deal with
this Agreement or your rights and obligations hereunder without our prior
written consent.

 

18.          Variation

 

This Agreement may only be varied by a
document signed by us and by you.

 

19.          Applicable
Law and Notices

 

This Agreement is to be interpreted in
accordance with and governed by English Law. 
Any notices to be given by either of us to the other may be either
delivered by hand to the other party or its authorised agent or sent by
pre-paid first class letter, registered post, recorded delivery fax
transmission or telex to such party as its principal place of business or at
its registered office.  Notice of
Termination from you to us is only effective seven days after receipt by us.

 

20.                               Third
Parties

 

No person who is not a party to this
Agreement shall have any rights under the Contracts (Rights of Third Parties)
Act 1999 to enforce any term of this Agreement.

 

21.                               Electronic
Communications

 

We shall take all reasonable steps to
ensure that Electronic Communications are properly stored, not accessible to
unauthorised persons, not altered lost or destroyed and are capable of being
retrieved during such period as you remain a customer.

 

In return you undertake and agree that we
may accept rely and act upon any information received in an Electronic
Communication even though it may not

 

14

 

originate from you or any authorised
officer of yours.  Moreover if you use
any intermediary to transmit log or process messages then you do so at your own
risk and shall be responsible for your intermediary’s acts and omissions.  You will indemnify us from and against all
losses arising from any incomplete or inaccurate information contained in or
failure to receive any Electronic Communication.

 

22.                               Data
Protection

 

We each acknowledge that we are subject to the
provisions of the Data Protection Act 1998 (“the Act”) insofar as the Act shall
apply to the provisions of this Agreement and we each warrant to the other that
we will comply with the eight data protection principles set out in the Act for
so long as either of us holds information governed by the Act and we agree that
our servants and agents shall at all times take proper steps to safeguard
information held from unauthorised access or disclosure.

 

We hereby confirm that we have applied for and will
maintain for as long as is reasonably necessary registration as a data
controller under the Act.

 

You hereby warrant that you have applied for and will
maintain for so long as is reasonably necessary registration as a data
controller under the Act and shall meet all associated registration costs.

 

We shall each use, store, transfer, disclose or
process information provided by the other only for purposes and in a manner
permitted by the Act, and not further or otherwise.

 

Each party shall save and keep the other party fully
and sufficiently indemnified against any liability arising from any breach of
their respective warranties contained in this Clause 20.

 

23.                               Identification

 

As a condition precedent to the advance of any funds
to a new client we are required by the Money Laundering Regulations 1993 to
apply “Know Your Customer” procedures which involve the production by you of
identification evidence, normally in the form of copies of passports, driving
licences and similar documents.  We are
under no obligation to advance funds until these requirements, as amended from
time to time, have been satisfied.

 

24.
                            Counterparts

 

This Agreement may be
executed in any number of counterparts, and on separate counterparts, but shall not be effective until at least one
counterpart has been executed on behalf of each party.

 

Each counterpart shall constitute an original of this
Agreement, but all the counterparts shall together constitute but one and the
same instrument.

 

15

 

25.          Interpretation

 

·                                          ‘Administration
Fee’
means one and one fifteenth of one percent
(1.15%) of the gross invoice value of a
Debt;

 

·                                          ‘Ancillary
Documents’ means the Debentures, the Guarantees and the
Floating Charge;

 

·                                          ‘Approved
Debt’
means any Debt in respect of which the Payment Percentage has been advanced or
is payable and which has not been disapproved by us or which is previously
Disapproved has since been Reapproved; and ‘Approve’
in relation to any Debt will be construed accordingly;

 

·                                          ‘Associate’ means any relative, or any
partner director shareholder or employee of you or of any Related Company;

 

·                                          ‘Closing
Fee’  means
ten thousand dollars (US$10,000);

 

·                                          ‘Commencement’ means the date of this
Agreement;

 

·                                          ‘Control’ means the power to secure
that the affairs of a company or a group of people are conducted in accordance
with the wishes of those holding such power;

 

·                                          ‘Corgenix Inc.’  means Corgenix Inc., a company incorporated in Delaware whose registered number is                       
and whose registered office is 11575 Main Street Broomfield, CO 80020

 

·                                          ‘Corgenix Medical Corporation’  means Corgenix Medical Corporation, a company incorporated in Nevada whose registered number is C6200-1994 and whose registered office is 11575 Main Street Broomfield, CO 80020

 

·                                          ‘Customer’ means any person to whom you
supply goods or for whom you perform services;

 

·                                          ‘Debentures’ means the debenture dated on
or about the date of this Agreement to be entered into by you;

 

·                                          ‘Debt’ means an amount which is owed
to you for goods supplied or services performed calculated at Gross Invoice
Value and includes the benefit of the sale or supply contract relating to such
goods or services and all rights and remedies arising in connection with such
contract including retention of title to goods, right of lien, stoppage in
transit, or recover of possession;

 

·                                          ‘Deficiency
Assessment Fee’ means charges as set forth in Section 4 applied
to the difference between the actual entitlement for the month and the Monthly
Minimum Entitlement chargeable to you on a monthly basis.

 

·            ‘Disapproved Debt’ means any Debt:

 

(i)            that
remains wholly or partly unpaid after its due date for payment;

 

(ii)                                  in respect of which the
representations and warranties contained in Clause 9 (Warranties)
are untrue or misleading in any material respect;

 

16

 

(iii)                       that is the subject of any
dispute by the Customer, or in respect of which the Customer asserts any right
of retention, lien, set-off or counterclaim;

 

(iv)                       that is aged ninety (90) days or more;

 

(v)                        where a particular Customer has exceeded either your
credit limits or those which we have notified to you; or

 

(vi)                       that we disapprove of;

 

·              ‘Disbursements’  has  the
meaning given to it in clause 4.7(a) (Disbursements);

 

·              ‘Discount’
means the greater of eight and one half percent (8.50%) or one and one half
percent (1.5%) per annum above the Wall Street Journal, Money Rates Section US
prime rate;

 

·              ‘Expense
Deposit’  means ten thousand
US dollars (US$10,000)

 

·              ‘Electronic Communication(s)’ has the meaning ascribed
thereto in Section 15 of the Electronic Communications Act 2000;

 

·              ‘Entitlement
Limit’ means seven hundred
and fifty thousand dollars (US$750,000);

 

·              ‘Floating Charge’  means  the floating
charge dated on or about the date of this Agreement to be entered into by us;

 

·              ‘Gross Invoice Value’ of a Debt is the total amount thereof including VAT
and before taking into consideration any allowances in respect of discounts for
prompt payment or any other allowable deduction;

 

·              ‘Guarantee’  means the cross-company
guarantee to be entered into on or about the date of this Agreement by you and Corgenix Medical Corporation and Corgenix Inc.
in favour of us;

 

·              ‘Immediately’ and ‘promptly’ mean within the greater of
forty-eight (48) hours or two Business Days after the event.

 

·              ‘Insolvent’ means in
relation to a natural or legal person (which includes a partnership,
association, company or other incorporated entity), means any of the following:

 

(i)            the relevant person is
unable to pay his or its debts within the meaning of section 123 of the
Insolvency Act 1986;

 

(ii)           a statutory demand is served
on the relevant person and the statutory demand is not set aside within 21
days;

 

(iii)          the relevant person applies
for an interim order under section 253 of the Insolvency Act 1986 or an arrangement
or a composition is made for the benefit of creditors (or a class of creditors)
whether or not pursuant to the Insolvency Act 1986;

 

(iv)          a bankruptcy order is made
in relation to a partner in the relevant person, or a partner applies for an interim
order under section 253 of the Insolvency Act 

 

17

 

1986 or an arrangement or a composition is made for the benefit of
creditors (or a class of creditors) whether or not pursuant to the Insolvency Act
1986;

 

(v)           a petition is presented, or
other proceedings are commenced, or a meeting is called to pass a resolution,
for the relevant person’s bankruptcy, winding up or administration or for a
corporate voluntary arrangement or similar procedure;

 

(vi)          a receiver, administrative
receiver, administrator or similar official is appointed in respect of the
relevant person or his or its assets;

 

(vii)         the relevant person’s assets
are seized, distrained or executed against;

 

(viii)        the relevant person ceases or threatens to
cease to carry on business or suspends payment of his or its debts;

 

(ix)           a judgment or other money
order is obtained against the relevant person, or his or its assets, which is
not satisfied within 7 days;

 

(x)            the occurrence, in relation
to that person, or his or its assets, of anything analogous to the matters set
out in paragraphs (i) to (x) (inclusive) above under the laws of any
other jurisdiction to which that person or his or its assets may at any time be
subject;

 

(xi)           any other amount due, owing
or incurred by the person in respect of any indebtedness is not paid when it
becomes due, or becomes capable of being declared due and payable prior to its
stated maturity for any reason;

 

·              ‘Misdirected Payment Fee’  means 15% of the amount of any
payment on book debt which has been received by you and not delivered in kind
to us on the next business day following the date of receipt by you;

 

·              ‘Monthly Minimum Entitlement’  means two hundred thousand dollars (US$200,000);

 

·              ‘Payment Percentage’ means 85% of the Approved Debt payable on notification as adjusted in
accordance with Clause 3;

 

·              ‘Reassignment’ means in relation to any
Approved Debt or disapproved debt our crediting the same to your sales ledger
control account and debiting the same to your Client Account to reflect the
fact that you have repurchased the debt;

 

·              ‘Related Company’ means a company which either
you Control or which Controls you or which is Controlled by the same person,
firm or company which Controls you;

 

·              ‘Termination
Fee’ means twenty five
thousand US dollars (US$25,000)

 

·              ‘Termination Event’ means any of the events defined in clause
13.2.

 

18

 

Schedule 1

 

Form of Offer

 

Schedule of Accounts
Sold/Bill of Sale

 

	
  Client’s Name: Corgenix UK Limited

  	
  Schedule Number

  
	
   

  	
   

  
	
  Page         
  of

  	
  Date
               
  200

  

 

	
  Invoice Date

  	
   

  	
  Invoice

  Number

  	
   

  	
  Name of

  Account

  Debtor

  	
   

  	
  Location

  	
   

  	
  Invoice

  Amount

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

ASSIGNMENT:

 

KNOW ALL MEN BY THERE
PRESENTS  that the undersigned for value
received has sold transferred and assigned and does hereby sell transfer and
assign to Faunus Group International, Inc. (hereinafter called the “Buyer”),
its successors and assigns, in accordance with the provision of that certain
Receivables Financing Agreement heretofore duly executed and delivered by the
undersigned and duly accepted by the Buyer and any amendments thereto
(hereinafter called the “Agreement”) each Account listed hereon and all right,
title and interest of the undersigned in and to such Account(s) and in and
to all merchandise, the sale of which shall have given rise to such Account(s),
including all of the undersigned’s rights of stoppage in transit replevin
and reclamation as an unpaid vendor. 
Each account is made a part hereof as if attached or incorporated herein
for specific terms, conditions, provisions and descriptions of said Account(s).

 

For the purpose of inducing
the Buyer to purchase such Account(s), the undersigned hereby reaffirms all
warranties under the agreement applicable to such Account(s) and account
debtors.  In the event of any breach of
any such warranty, the Buyer, its successors and assigns, shall have such
rights, inter alia, as are provided in the Agreement.

 

The undersigned in his/her
business capacity and PERSONALLY warrants and represents that, with respect to
each account, since the last sale of Accounts by the undersigned to the Buyer,
no merchandise has been returned or rejected, no defence, dispute, claim,
offset or counterclaim has developed or has been asserted with respect to any
account heretofore sole, transferred and assigned by the undersigned to the
Buyer, which has not been or is not contemporaneously being reported in writing
by the undersigned to the Buyer.

 

IN WITNESS WHEREOF, the
undersigned has hereunto set its hand and seal this
         day of
                          ,
200      .

 

	
  By:

  	
   

  	
   

  	
  Print Name

  	
   

  	
   

  	
  Title:

  	
   

  

 

(Signature)

 

19

 

Schedule 2

Notice to Customers

 

 

Form of notice to be served
on completion by Corgenix UK Limited on its
customers pursuant to clause 8(i) of the receivables finance agreement.

 

 

[On the headed notepaper of Corgenix UK Limited]

 

FGI Finance (“FGI”)

 

We
hereby notify you that we have assigned our present and future receivables to
FGI.

 

To the
extent that you are now indebted or may in the future become indebted to us on
an account (i.e., invoices) or a general intangible, payment thereof is to be
delivered and made payable only to FGI and not to us or any other entity.  Payment in any other way will not constitute
payment and will not discharge your obligation.

 

The
payments should be wired only to FGI Finance with the following instructions

 

Pound Only:

Bank:

Swift:

IBAN  Code:

Beneficiary:

 

[Please reference invoice
numbers on all wire transfers]

 

All checks should be written to FGI Finance and mailed to
the address below:

 

FGI Finance

80 Broad Street

22nd Floor

New York, NY 10004

 

This
letter may only be revoked by a writing signed by one of FGI’s officers whose
signature may only be relied on if acknowledged before a notary public.

 

Please fax a copy of this letter to FGI at +01 212 248 3404 and to us
at + [·] to verify your receipt and
acceptance.

 

Thank
you.

Very truly yours,

 

	
  Corgenix UK Limited

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ASSIGNMENT CONFIRMED:

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  By:

  	
  [Receivables Debtor]

  
	
   

  	
   

  	
   

  	
  Company:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
						

 

20

 

Schedule 3

Notice to Existing and New
Account Banks

 

 

Form of notice to be served
on completion by Corgenix UK Limited on its account banks pursuant to clause
8(j) of the receivables finance agreement.

 

 

[On the
headed notepaper of Corgenix UK Limited]

 

[Account Bank]

 

For the attention of [·]

 

[date]

 

Dear Sirs

 

Receivables finance agreement
dated [·] (the “Receivables Finance
Agreement”) between Corgenix UK Limited (“CORGENIX”) and Faunus Group
International, Inc (the “FGI”)

 

1.      This
letter constitutes notice to you that, under the Receivables Finance Agreement,
we have:

 

(a)   sold and assigned all of
our Debts (as defined in the Receivables Finance Agreement) to CORGENIX that
are owing at Commencement of the Receivables Finance Agreement and those Debts
arising thereafter; and

 

(b)   agreed to instruct you to
pay or transfer from our account held with you (account number [·]) (the “Collections
Account”), all moneys which you receive in respect of the Debts into FGI’s
account (account number 4001212330 held with Citizens Bank) (the “Account”), and,
pending such payment or transfer, to hold all money on behalf of FGI .

 

2.         We
each hereby irrevocably and unconditionally instruct and authorise you
(notwithstanding any previous instructions which we may have given you to the
contrary):

 

(a)   to comply with the terms of
any written instructions relating or purporting to relate to the Collections
Account which you may receive at any time and from time to time from FGI
without any reference to or further authority from us and without any enquiry
from you as to the justification for such notice, statement or instructions or
its or their validity; and

 

(b)   not to act upon our
instructions with regard to the Collections Account unless FGI confirms those
instructions to you in writing.

 

3.         We
are not permitted to withdraw from the Collections Account any amount relating
to Debts without the prior written consent of FGI.

 

4.         The
instructions and authorisations contained in this letter shall remain in full
force and effect until we and FGI together give you notice in writing revoking
them.

 

21

 

5.         The
terms defined in the Receivables Finance Agreement shall, where the context so
admits, have the same meaning in this letter.

 

6.         This letter shall be governed by and construed in
accordance with the laws of England and Wales.

 

7.         Please will you acknowledge receipt of this letter
and confirm your acceptance of the instructions and authorisations contained in
it by sending a letter addressed to us and to FGI in the form attached to this
letter.

 

Yours
faithfully

 

 

	
   

  	
   

  
	
  For and on behalf of

  	
   

  
	
  Corgenix UK Limited

  	
   

  

 

22

 

[On the headed notepaper of
Account Bank]

 

To:

 

Faunus Group International, Inc

80 Broad St

22nd Floor

New York

NY 10004

 

For the attention of [·]

 

[date]

 

Dear Sirs

 

Accounts

 

We hereby acknowledge receipt of a letter (a copy of
which is attached) dated [·] (the “Notice”) addressed to us by
Corgenix UK Limited.

 

We hereby agree that we:

 

(a)   accept the instructions
contained in the Notice and undertake to act in accordance and comply with the
Notice;

 

(b)   have not received notice of
the interest of any third party in the Collections Account;

 

(c)   shall not accept from
CORGENIX any further instructions received by us in respect of the Collections
Account without having received your written confirmation of such instructions;

 

(d)   shall pay all moneys
received by us in respect of Debts into the Account; and

 

(e)   shall not permit any amount
to be withdrawn from the Collections Account in respect of Debts without your
prior written consent.

 

(f)    The capitalised
terms used or incorporated by reference in the Notice shall, unless the context
otherwise require, have the same meanings in this letter.

 

This letter shall be governed by and construed in accordance with the
laws of England and Wales.

 

Yours faithfully

 

 

	
   

  	
   

  
	
  For
  and on behalf of [·]

  	
   

  

 

23

 

IN WITNESS this Deed has been duly executed and
delivered by each of the Parties hereto on the day and year first before
written.

 

 

 

Executed and delivered as a Deed

by Corgenix
UK Limited

 

 

Director

 

 

Director/Secretary

 

 

 

Executed and delivered as a Deed

by FAUNUS GROUP INTERNATIONAL, INC.

 

 

President

 

 

Vice-President

 

24

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}]]