Factoring Agreement (2002)Full Document 

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FACTORING AGREEMENT

        This Factoring Agreement (the "Agreement") is made as of October 18, 2002, by and between Bay View Funding ("Buyer") having a place of business at 2121 S. El Camino Real, Suite B-100, San Mateo, CA 94403-1897, and SSP Solutions, Inc., a corporation ("Seller") having its principal place of business and chief executive office at 17861 Cartwright Road, Irvine, CA 92614, with an additional location at: 12110 Sunset Hills Road, Reston, VA 20190.

Section 1.    DEFINITIONS.    When used herein, the following terms shall have the following meanings:

        1.1    "Account Balance"    shall mean, on any given day, the gross amount of all Purchased Receivables unpaid on that day.

        1.2    "Account Debtor"    shall have the meaning set forth in the Uniform Commercial Code and shall include any person liable on any Purchased Receivable, including without limitation, any guarantor of the Purchased Receivable and any issuer of a letter of credit or banker's acceptance.

        1.3    "Adjustments"    shall mean all discounts, allowances, returns, disputes, counterclaims, offsets, defenses, rights of recoupment, rights of return, warranty claims, or short payments, asserted by or on behalf of any Account Debtor with respect to any Purchased Receivable.

        1.4    "Advance Percentage"    shall be eighty-five percent (85%).

        1.5    "Collections"    shall mean all good funds received by Buyer from or on behalf of an Account Debtor with respect to Purchased Receivables.

        1.6    "Insolvent"    shall mean with respect to an Account Debtor that such Account Debtor has filed, or has had filed against it, any bankruptcy case, or has made an assignment for the benefit of creditors.

        1.7    "Schedule of Accounts"    shall mean a Bill of Sale signed by a representative of Seller which accurately identifies the Receivables which Buyer, at its election, may purchase, and includes for each such Receivable the correct amount owed by the Account Debtor, the name and address of the Account Debtor, the invoice number, and the invoice date.

        1.8    "Payment Period"    shall be 90 calendar days from an invoice date.

        1.9    "Purchased Receivables"    shall mean all Receivables arising out of the invoices and other agreements identified on or delivered with any Schedule of Accounts delivered by Seller to Buyer which Buyer elects to purchase and for which Buyer makes an Advance.

        1.10    "Receivable"    shall mean accounts, chattel paper, instruments, contract rights, documents, general intangibles, letters of credit, drafts, bankers acceptances, and rights to payment, and all proceeds thereof.

        1.11    "Reconciliation Period"    shall, unless otherwise notified by Buyer to Seller, mean a semi-monthly calendar period.

        1.12    "Repurchased Receivable"    shall refer to a Purchased Receivable which the Seller has become obligated to Repurchase under Section 4.1 hereof.

        1.13    "Write Off Period"    shall mean twelve (12) calendar months from the date Buyer purchases a Receivable.

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        1.14    "Dispute"    shall mean a dispute, claim, or defense of any kind whatsoever, whether valid or invalid, asserted by an Account Debtor, that may reduce the amount collectible by Buyer from an Account Debtor.

Section 2.    PURCHASE AND SALE OF RECEIVABLES

        2.1    Offer to Sell Receivables.    Seller may, on the terms provided herein, from time to time factor, sell and assign to Buyer, Receivables acceptable to Buyer in its sole discretion, at a discount below face value. Seller will notify each Account Debtor of a Receivable purchased by Buyer that all payments thereon must be made only to Buyer. Seller shall deliver to Buyer a signed Schedule of Accounts along with copies of invoices and purchase orders, contracts, and proof of delivery or service, with respect to any Receivable for which a request for purchase is made. Buyer shall be entitled to rely on all of the information provided by Seller to Buyer on the Schedule of Accounts and to rely on the signature on any Schedule of Accounts as an authorized signature of Seller. Each invoice shall bear a notice, in form satisfactory to Buyer, that it has been sold and assigned to and is payable only to Buyer.

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