Factoring of Accounts Receivable Agreement

(This provides for the sale of accounts receivable under a factoring agreement.)


____________, referred to as SELLER, and ___________________, Pty Ltd., referred to as FACTOR, agree:

SELLER manufacturers and sells software, and sales are usually made on credit; FACTOR is desirous of purchasing the accounts receivable related to the following products manufactured by SELLER: all lines of products SELLER shall provide to FACTOR notice of all proposed sales on credit arising from the sale of all lines of products. FACTOR may provide to SELLER forms for applications for credit and other transactions, which shall be used by SELLER as to such accounts which it desires to sell to FACTOR.

Upon receipt of written authorization from FACTOR, SELLER shall ship the goods purchased to the ultimate buyer, and shall simultaneously provide to FACTOR the original invoices and other certificates of indebtedness related to all sales.

Upon shipment, FACTOR shall have the sole right to elect to invoke a seller's right of stoppage in transit, or other reclamation prior to delivery. All merchandise once shipped shall be the property of FACTOR in the event of its return. FACTOR shall not be obligated to accept any particular account which is offered to it, nor shall FACTOR be liable for its exercise of right of stoppage or reclamation.

As to all accounts receivable which are accepted by FACTOR, the assignment of the accounts shall be without recourse to SELLER. FACTOR shall bear all credit risk related to all such accounts. However, FACTOR may charge back any sums uncollected due to a bona fide dispute as to value or quality of the merchandise between SELLER and its customers. As to such charged back accounts, the FACTOR shall reassign the receivable to SELLER, who may retain all sums collected, if any, from such receivables.

From time to time the FACTOR may, but is not obligated, to authorize purchase of "non-qualifying" accounts. Such acceptances are for proposed extensions of credit which the FACTOR determines are not sufficiently credit worthy to purchase outright. In the event that non-qualifying accounts do not pay, the FACTOR shall have a full right of recourse as to all unpaid sums.

SELLER shall notify FACTOR of all rejections and returns of goods, or other disputes related to goods sold. SELLER shall promptly adjust and settle any bona fide disputes with customers. In the event that merchandise is returned, SELLER and FACTOR shall jointly sell the same in a commercially reasonable manner. In the event of a deficiency after sale, the FACTOR shall diligently pursue collection of the balance due. If after a period of 90 days any deficiency balance remains, the same shall be charged to SELLER.

FACTOR shall be entitled to off set any amounts due on account of charge backs against all future sums due to SELLER.

Disputes between FACTOR and SELLER regarding whether a dispute is bona fide in regard to value or quality shall be arbitrated under the rules of the American Arbitration Association, with a single arbiter. Such arbiters decision shall be final.

As to all accounts receivable purchased by FACTOR, SELLER shall mark its internal books and records to reflect the assignment. FACTOR shall be entitled to make periodic audits of the books and records of SELLER to verify compliance. FACTOR shall have the right to notify SELLER's debtors of the assignment of accounts, or to require SELLER to notify account debtors of assignments.

The purchase price for accounts receivable under this agreement shall be the face amount of the receivable, calculated as a net amount on the most favorable discount for prompt payment offered by, multiplied by 10 percent. Remittances shall be made to SELLER on a monthly basis.

To induce FACTOR to purchase accounts, SELLER warranties as to each such account:

that it has not assigned the same to any other entity; that unless notified in writing by SELLER, at the earliest opportunity possible, that there are no general liens against the property of SELLER, or specific liens against the accounts assigned; that SELLER is solvent, and will notify ASSIGNEE of its insolvency, whether under the equitable or legal test for the same, immediately, should insolvency occur; that any and all accounts assigned, are legally enforceable and valid.

SELLER shall be responsible to FACTOR for any damages caused by a breach of the warranties specified herein.

SELLER appoints FACTOR its attorney in fact with the power to endorse, negotiate or otherwise cause or facilitate payment of any notes, checks, drafts, or other remittances on account of sums due under accounts assigned to FACTOR.

Upon request, SELLER shall provide to FACTOR periodic financial statements, tax returns or other information reasonably required by FACTOR regarding SELLERS financial condition.

Upon request, SELLER shall require entities to which it sells on credit to prepare credit applications and financial statements in forms acceptable to FACTOR, and provide the same to FACTOR.

This contract constitutes the entire agreement of the parties, and correctly set forth the terms and conditions of the agreement between the parties.

This agreement may only be modified in writing executed by both parties.

Dated: _____________.