May 26, 2011
Pursuant to your request, Company Financial, Inc. (“Company”) is pleased to offer Company. (“Client”) a Terms Letter for accounts receivable and inventory financing with the following terms and conditions. This letter does not set forth all the terms and conditions of the credit facility offered herein. Rather, it is only an outline, in summary format, of the major points of understanding which shall be the basis of the final agreement and documentation which shall be drafted by Company.
Discount Fee: Option 1:
Beginning on the first day of funding, a discount fee in the amount of six tenths of one percent (0.60%) calculated on the gross amount of each invoice every ten (10) days shall accrue and be collected in arrears.
A discount fee in the amount of 1.75% calculated on the gross amount of each invoice shall be collected in advance on all invoices aged 01-30 days from funding date. Beginning on the 31st day from funding date, an additional discount fee of seven tenths of one percent (0.7%) calculated on the gross amount of each invoice every ten (10) days shall accrue and be collected in arrears.
Advance Rate: Option 1: 80% of the face amount of each invoice.
Option 2: 81.75% of the face amount of each invoice less initial discount fee equaling a net advance of 80%.
Credit Line Amount: A $750,000 credit line shall be established on the gross Accounts Receivable of the Client.
Inventory Facility: Company will advance the lesser of 40% of the Eligible Inventory Balance (recorded at cost) or 40% of the funded Accounts Receivable Balance up to a maximum exposure of $100,000.
Inventory Facility Fee: A daily per diem of 0.065% calculated on the average monthly outstanding inventory balance shall accrue and be collected on the monthly reserve release date.
Concentrations: Company will not fund individual account...